Exhibit 10.1

 

 

CREDIT AGREEMENT,

dated as of October 31, 2005,

among

CHAMPION HOME BUILDERS CO.,

as the Borrower,

CHAMPION ENTERPRISES, INC.,

as the Parent,

VARIOUS FINANCIAL INSTITUTIONS AND OTHER PERSONS FROM TIME TO TIME

PARTIES HERETO,

as the Lenders,

and

CREDIT SUISSE, CAYMAN ISLANDS BRANCH,

as Administrative Agent

LEAD ARRANGER &

SOLE BOOK RUNNER:

CREDIT SUISSE, CAYMAN ISLANDS BRANCH

 

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ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

1

 

SECTION 1.1.

Defined Terms

1

 

SECTION 1.2.

Use of Defined Terms

33

 

SECTION 1.3.

Cross-References

34

 

SECTION 1.4.

Accounting and Financial Determinations; Time

34

 

 

ARTICLE II

    COMMITMENTS, BORROWING AND ISSUANCE PROCEDURES, NOTES AND
                     LETTERS OF CREDIT

35

 

SECTION 2.1.

Commitments

35

 

SECTION 2.1.1.

Revolving Loan Commitment

35

 

SECTION 2.1.2.

Revolving Letters of Credit

35

 

SECTION 2.1.3.

Term Loan Commitment

36

 

SECTION 2.1.4.

Synthetic Deposit Account

36

 

SECTION 2.1.5.

Synthetic Letters of Credit

38

 

SECTION 2.2.

Reduction of the Commitment Amounts

39

 

SECTION 2.2.1.

Optional Reductions

39

 

SECTION 2.3.

Borrowing Procedures

39

 

SECTION 2.3.1.

Term Loans and Revolving Loans

39

 

SECTION 2.3.2.

Synthetic Deposits

40

 

SECTION 2.4.

Continuation and Conversion Elections

40

 

SECTION 2.5.

Funding

41

 

SECTION 2.6.

Issuance Procedures

41

 

SECTION 2.6.1.

Other Lenders’ Participation

41

 

SECTION 2.6.2.

Disbursements

42

 

SECTION 2.6.3.

Reimbursement

42

 

SECTION 2.6.4.

Deemed Disbursements

43

 

SECTION 2.6.5.

Nature of Reimbursement Obligations

44

 

SECTION 2.7.

Register; Notes

44

ARTICLE III

REPAYMENTS, PREPAYMENTS, INTEREST AND FEES

45

 

SECTION 3.1.

Repayments and Prepayments; Application

45

 

SECTION 3.1.1.

Repayments and Prepayments

45

 

 

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SECTION 3.1.2.

Application

48

 

SECTION 3.2.

Interest Provisions

49

 

SECTION 3.2.1.

Rates; Fees

49

 

SECTION 3.2.2.

Post-Default Rates

49

 

SECTION 3.2.3.

Payment Dates

50

 

SECTION 3.3.

Fees

50

 

SECTION 3.3.1.

Commitment Fee

50

 

SECTION 3.3.2.

Arranger’s Fees

51

 

SECTION 3.3.3.

Letter of Credit Fees

51

ARTICLE IV

CERTAIN LIBO RATE AND OTHER PROVISIONS

51

 

SECTION 4.1.

LIBO Rate Lending Unlawful

51

 

SECTION 4.2.

Deposits Unavailable

52

 

SECTION 4.3.

Increased LIBO Rate Loan Costs, etc

52

 

SECTION 4.4.

Funding Losses

52

 

SECTION 4.5.

Increased Capital Costs

53

 

SECTION 4.6.

Taxes

54

 

SECTION 4.7.

Payments, Computations, etc

57

 

SECTION 4.8.

Sharing of Payments

58

 

SECTION 4.9.

Setoff

58

 

SECTION 4.10.

Change of Lending Office

59

 

SECTION 4.11.

Replacement of Lenders

59

 

SECTION 4.12.

Application to Participation Fees

60

ARTICLE V

CONDITIONS TO CLOSING

60

 

SECTION 5.1.

Initial Credit Extension

60

 

SECTION 5.1.1.

Resolutions, etc

60

 

SECTION 5.1.2.

Closing Date Certificate

61

 

SECTION 5.1.3.

Material Adverse Change

61

 

SECTION 5.1.4.

Consummation of Transaction

61

 

SECTION 5.1.5.

Delivery of Notes

62

 

SECTION 5.1.6.

Financial Information

62

 

 

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SECTION 5.1.7.

Solvency, etc

62

 

SECTION 5.1.8.

Opinions of Counsel

62

 

SECTION 5.1.9.

Subsidiary Guaranty

63

 

SECTION 5.1.10.

Collateral Documents

63

 

SECTION 5.1.11.

Filing Agent, etc

65

 

SECTION 5.1.12.

Intellectual Property Security Agreements

65

 

SECTION 5.1.13.

Control Agreements

65

 

SECTION 5.1.14.

Insurance

65

 

SECTION 5.1.15.

Rating of Loans

65

 

SECTION 5.1.16.

PATRIOT Act Disclosures

65

 

SECTION 5.2.

All Credit Extensions

66

 

SECTION 5.2.1.

Compliance with Warranties, No Default, etc

66

 

SECTION 5.2.2.

Credit Extension Request, etc

66

 

SECTION 5.2.3.

Satisfactory Legal Form

66

ARTICLE VI

REPRESENTATIONS AND WARRANTIES

66

 

SECTION 6.1.

Organization, etc

66

 

SECTION 6.2.

Due Authorization, Non-Contravention, etc

67

 

SECTION 6.3.

Government Approval, Regulation, etc

67

 

SECTION 6.4.

Validity, etc

67

 

SECTION 6.5.

Financial Information

67

 

SECTION 6.6.

No Material Adverse Change

68

 

SECTION 6.7.

Litigation, Labor Controversies, etc

68

 

SECTION 6.8.

Subsidiaries

68

 

SECTION 6.9.

Ownership of Properties

69

 

SECTION 6.10.

Taxes; Other Laws

69

 

SECTION 6.11.

Pension and Welfare Plans

69

 

SECTION 6.12.

Environmental Warranties

70

 

SECTION 6.13.

Accuracy of Information; Projections

71

 

SECTION 6.14.

Regulations U and X

71

 

SECTION 6.15.

Solvency

71

 

 

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SECTION 6.16.

Deposit Account and Cash Management Accounts

72

 

SECTION 6.17.

Labor Matters

72

ARTICLE VII

AFFIRMATIVE COVENANTS

72

 

SECTION 7.1.

Financial Information, Reports, Notices, etc

72

 

SECTION 7.2

Maintenance of Existence; Compliance with Contracts, Laws, etc

74

 

SECTION 7.3.

Maintenance of Properties

75

 

SECTION 7.4.

Insurance

75

 

SECTION 7.5.

Books and Records

76

 

SECTION 7.6.

Environmental Laws

76

 

SECTION 7.7.

Use of Proceeds

76

 

SECTION 7.8.

Subsidiary Guarantors, Security, etc

77

 

SECTION 7.9.

Maintenance of Corporate Separateness

77

 

SECTION 7.10.

Maintenance of Rating of Loans

78

 

SECTION 7.11.

Cash Management

78

 

SECTION 7.12.

Post-Closing Obligations

78

ARTICLE VIII

NEGATIVE COVENANTS

79

 

SECTION 8.1.

Business Activities

79

 

SECTION 8.2.

Indebtedness

79

 

SECTION 8.3.

Liens

82

 

SECTION 8.4.

Financial Condition and Operations

84

 

SECTION 8.5.

Investments

84

 

SECTION 8.6.

Restricted Payments, etc

86

 

SECTION 8.7.

Capital Expenditures

88

 

SECTION 8.8.

Issuance of Capital Securities

88

 

SECTION 8.9.

Consolidation, Merger; Permitted Acquisitions, etc

88

 

SECTION 8.10.

Permitted Dispositions

90

 

SECTION 8.11.

Modification of Certain Agreements

90

 

SECTION 8.12.

Transactions with Affiliates

90

 

SECTION 8.13.

Restrictive Agreements, etc

90

 

 

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SECTION 8.14.

Accounting Changes

91

 

SECTION 8.15.

Activities of the Parent

91

 

SECTION 8.16.

CDC Subsidiaries

91

ARTICLE IX

EVENTS OF DEFAULT

92

 

SECTION 9.1.

Listing of Events of Default

92

 

SECTION 9.1.1.

Non-Payment of Obligations

92

 

SECTION 9.1.2.

Breach of Warranty

92

 

SECTION 9.1.3.

Non-Performance of Certain Covenants and Obligations

92

 

SECTION 9.1.4.

Non-Performance of Other Covenants and Obligations

92

 

SECTION 9.1.5.

Default on Other Indebtedness

92

 

SECTION 9.1.6.

Judgments

93

 

SECTION 9.1.7.

Pension Plans

93

 

SECTION 9.1.8.

Impairment of Security, etc

93

 

SECTION 9.1.9.

Bankruptcy, Insolvency, etc

93

 

SECTION 9.1.10.

Change in Control

94

 

SECTION 9.2.

Action if Bankruptcy

94

 

SECTION 9.3.

Action if Other Event of Default

94

ARTICLE X

THE ADMINISTRATIVE AGENT

95

 

SECTION 10.1.

Actions

95

 

SECTION 10.2.

Funding Reliance, etc

96

 

SECTION 10.3.

Exculpation; Notice of Default

96

 

SECTION 10.4.

Successor

97

 

SECTION 10.5.

Credit Extensions by the Administrative Agent and each Issuer

97

 

SECTION 10.6.

Credit Decisions

98

 

SECTION 10.7.

Copies, etc

98

 

SECTION 10.8.

Reliance by the Administrative Agent and Issuers

98

 

SECTION 10.9.

The Administrative Agent and the Issuers

98

 

SECTION 10.10.

Posting of Approved Electronic Communications

99

 

 

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ARTICLE XI

PARENT GUARANTY

100

 

SECTION 11.1.

Guaranty

100

 

SECTION 11.2.

Acceleration of Obligations Hereunder

100

 

SECTION 11.3.

Obligations Hereunder Absolute, etc

101

 

SECTION 11.4.

Reinstatement, etc

102

 

SECTION 11.5.

Waiver, etc

102

 

SECTION 11.6.

Postponement of Subrogation

102

 

SECTION 11.7.

Successors, Transferees and Assigns; Transfers of Notes, etc

102

ARTICLE XII

MISCELLANEOUS PROVISIONS

103

 

SECTION 12.1.

Waivers, Amendments, etc

103

 

SECTION 12.2.

Notices; Time

104

 

SECTION 12.3.

Payment of Costs and Expenses

104

 

SECTION 12.4.

Indemnification

105

 

SECTION 12.5.

Survival

107

 

SECTION 12.6.

Severability

107

 

SECTION 12.7.

Headings

107

 

SECTION 12.8.

Execution in Counterparts, Effectiveness, etc

107

 

SECTION 12.9.

Governing Law; Entire Agreement

107

 

SECTION 12.10.

Successors and Assigns

107

 

SECTION 12.11.

Sale and Transfer of Credit Extensions; Participations in Credit Extensions;
Notes

108

 

SECTION 12.12.

Other Transactions

112

 

SECTION 12.13.

Independence of Covenants and Default Provisions

112

 

SECTION 12.14.

Confidentiality

113

 

SECTION 12.15.

Forum Selection and Consent to Jurisdiction

114

 

SECTION 12.16.

Waiver of Jury Trial

114

 

SECTION 12.17.

Counsel Representation

115

 

SECTION 12.18.

PATRIOT Act

115

 

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SCHEDULE I

-

Disclosure Schedule

 

SCHEDULE II

-

Percentages; LIBOR Office; Domestic Office

SCHEDULE III

-

Existing Letters of Credit

 

EXHIBIT A-1

-

Form of Revolving Note

 

EXHIBIT A-2

-

Form of Term Note

 

EXHIBIT B-1

-

Form of Borrowing Request

 

EXHIBIT B-2

-

Form of Issuance Request

 

EXHIBIT C

-

Form of Continuation/Conversion Notice

 

EXHIBIT D

-

Form of Lender Assignment Agreement

 

EXHIBIT E

-

Form of Compliance Certificate

 

EXHIBIT F

-

Form of Subsidiary Guaranty

 

EXHIBIT G

-

Form of Pledge and Security Agreement

 

EXHIBIT H

-

Form of Collateral Trust Agreement

 

EXHIBIT I

-

Form of Closing Date Certificate

 

 

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CREDIT AGREEMENT

THIS CREDIT AGREEMENT, dated as of October 31, 2005, is made by and among
CHAMPION HOME BUILDERS CO., a Michigan corporation (the “Borrower”), CHAMPION
ENTERPRISES, INC., a Michigan corporation (the “Parent”), the various financial
institutions and other Persons (as defined below) from time to time parties
hereto (the “Lenders”), and CREDIT SUISSE, CAYMAN ISLANDS BRANCH (“Credit
Suisse”), as the administrative agent (in such capacity, the “Administrative
Agent”).

W I T N E S S E T H:

WHEREAS, the Borrower wishes to obtain senior secured credit facilities for the
purpose of (i) financing the Borrower’s tender offer and related consent
solicitation (the “Debt Tender”) for all of its 11.25% Senior Notes due 2007
(the “2007 Notes”), (ii) refinancing the Borrower’s indebtedness under the Loan
and Security Agreement, dated as of January 17, 2003, among the various agents
party thereto, the lenders party thereto and the Borrower (as amended,
supplemented, amended and restated or otherwise modified, the “Existing Credit
Agreement”), (iii)  paying fees and expenses incurred in connection with the
foregoing (the “Transaction Costs”) (the transactions described in clauses (i)
through (iii) being herein referred to collectively as the “Transaction”) and
(iv) funding working capital and providing liquidity; and

WHEREAS, the Lenders and the Issuers are willing, on the terms and subject to
the conditions hereinafter set forth, to extend the Commitments and make Loans
to the Borrower and issue (or participate in) Letters of Credit;

NOW, THEREFORE, the parties hereto agree as follows.

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

SECTION 1.1. Defined Terms. The following terms (whether or not underscored)
when used in this Agreement, including its preamble and recitals, shall, except
where the context otherwise requires, have the following meanings (such meanings
to be equally applicable to the singular and plural forms thereof):

“2007 Notes” is defined in the first recital.

“2007 Notes Indenture” means the Indenture among the Borrower, the guarantors
named therein, and JP Morgan Trust Company NA, as successor to Bank One Trust
Company, as trustee, dated as of April 22, 2002.

“2009 Notes” means the Parent’s 7.625% Senior Notes due 2009.

“2009 Notes Indenture” means the Indenture among the Parent, the subsidiary
guarantors named therein, and Wells Fargo Bank, N.A., as successor to The First
National Bank of Chicago, as trustee, dated as of May 3, 1999.

 

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“Account” means any account (as that term is defined in Section 9-102 of the
UCC) of the Parent or any of its Subsidiaries arising from the sale or lease of
goods or rendering of services.

“Adjusted Base Rate” means, for any day, a rate per annum equal to the greater
of (a) the Base Rate in effect on such day, and (b) the Federal Funds Effective
Rate in effect on such day plus ½ of 1%. Any change in the Adjusted Base Rate
due to a change in the Base Rate or the Federal Funds Effective Rate shall be
effective from and including the effective date of such change in the Base Rate
or the Federal Funds Effective Rate, respectively. The Administrative Agent will
give notice promptly to the Borrower and the Lenders of changes in the Adjusted
Base Rate; provided that the failure to give such notice shall not affect the
Adjusted Base Rate in effect after any such change.

“Adjusted LIBO Rate” means, with respect to any LIBO Rate Loan for any Interest
Period, an interest rate per annum equal to (a) the LIBO Rate of such Interest
Period multiplied by (b) the Statutory Reserve Rate.

“Administrative Agent” is defined in the preamble and includes each other Person
appointed as the successor Administrative Agent pursuant to Section 10.4.

“Affected Lender” is defined in Section 4.11.

“Affiliate” of any Person means any other Person which, directly or indirectly,
controls, is controlled by or is under common control with such Person.
“Control” of a Person means the power, directly or indirectly, (a) to vote
(under ordinary circumstances) 10% or more of the Capital Securities (on a fully
diluted basis) of such Person for the election of directors, managing members or
general partners (as applicable) or (b) to direct or cause the direction of the
management and policies of such Person (whether by contract or otherwise)

“Agreement” means, on any date, this Credit Agreement as originally in effect on
the Closing Date and as thereafter from time to time amended, supplemented,
amended and restated or otherwise modified from time to time in accordance with
its terms and in effect on such date.

“Annualized Basis” means, with respect to the determination of any amount for
any period (for purposes of this definition, the “Subject Period”), the product
obtained by multiplying (a) the amount accrued during the period commencing with
(and including) the Closing Date and ending on the last day of the Subject
Period and (b) the quotient obtained by dividing (i) 365 by (ii) the number of
days from (and including) the Closing Date to (and including) the last day of
the Subject Period.

 

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“Applicable Commitment Fee Margin” means the applicable percentage set forth
below corresponding to the relevant Leverage Ratio:

Leverage

    Ratio    

 

Applicable Commitment

      Fee Margin           

greater than 2.50:1

 

0.75%

equal to or less than 2.50:1

 

0.50%

 

Notwithstanding anything to the contrary set forth in this Agreement (including
the then effective Leverage Ratio), the Applicable Commitment Fee Margin from
the Closing Date through (and including) the date on which the Borrower delivers
to the Administrative Agent the Compliance Certificate with respect to the
Fiscal Quarter ending March 30, 2006 shall be equal to 0.75%. The Leverage Ratio
used to compute the Applicable Commitment Fee Margin shall be that set forth in
the Compliance Certificate most recently delivered by the Borrower to the
Administrative Agent. Changes in the Applicable Commitment Fee Margin resulting
from a change in the Leverage Ratio shall become effective upon delivery by the
Borrower to the Administrative Agent of a new Compliance Certificate pursuant to
clause (c) of Section 7.1. If the Borrower fails to deliver a Compliance
Certificate within 45 days after the end of any Fiscal Quarter (or within
90 days, in the case of the last Fiscal Quarter of the Fiscal Year), the
Applicable Commitment Fee Margin from and including the 46th (or 91st, as the
case may be) day after the end of such Fiscal Quarter to, but not including, the
date the Borrower delivers to the Administrative Agent a Compliance Certificate
shall equal the highest Applicable Commitment Fee Margin set forth above.

“Applicable Margin” means (a) (i) 2.50% for Term Loans maintained as LIBO Rate
Loans and (ii) 1.50% for Term Loans maintained as Base Rate Loans, (b) (i) 2.50%
for Revolving Loans maintained as LIBO Rate Loans and (ii) 1.50% for Revolving
Loans maintained as Base Rate Loans and (c) with respect to all Participation
Fees, 2.50%. Notwithstanding any of the foregoing, commencing the date on which
the Borrower delivers to the Administrative Agent the Compliance Certificate
with respect to the Fiscal Quarter ending March 30, 2006, the Applicable Margin
for Revolving Loans shall be the applicable percentage set forth below
corresponding to the relevant Leverage Ratio:

Leverage

    Ratio    

 

Applicable

Margin   

 

 

LIBO Rate Loans

Base Rate Loans

greater than or equal to 2.00:1

 

2.50%

1.50%

less than 2.00:1

 

2.25%

1.25%

 

The Leverage Ratio used to compute the Applicable Margin for Revolving Loans
shall be that set forth in the Compliance Certificate most recently delivered by
the Borrower to the Administrative Agent. Changes in the Applicable Margin
resulting from a change in the Leverage Ratio shall become effective upon
delivery by the Borrower to the Administrative Agent of a new Compliance
Certificate pursuant to clause (c) of Section 7.1. If the Borrower fails to
deliver a Compliance Certificate within 45 days after the end of any Fiscal
Quarter (or within 90 days, in the case of the last Fiscal Quarter of the Fiscal
Year), the Applicable Margin

 

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from and including the 46th (or 91st, as the case may be) day after the end of
such Fiscal Quarter to but not including the date the Borrower delivers to the
Administrative Agent a Compliance Certificate shall equal the highest Applicable
Margin set forth above.

“Approved Fund” means any Person (other than a natural Person) that (a) 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, and (b) is administered or managed by a Lender, an Affiliate of a
Lender or a Person or an Affiliate of a Person that administers or manages a
Lender.

“Authorized Officer” means, relative to any Obligor, any individual holding the
position of chairman of the board (if an officer), chief executive officer,
president or one of its vice presidents (or equivalent thereof), and such
Obligor’s chief financial officer or chief accounting officer.

“Base Rate” means, at any time, the rate of interest then most recently
established by the Administrative Agent in New York as its base rate for Dollars
loaned in the United States. The Base Rate is not necessarily intended to be the
lowest rate of interest determined by the Administrative Agent in connection
with extensions of credit.

“Base Rate Loan” means a Loan bearing interest at a fluctuating rate determined
by reference to the Adjusted Base Rate.

“Base Return” means an amount equal to the Adjusted LIBO Rate for the applicable
Investment Period if such deposit were deemed to be a LIBO Rate Loan hereunder
for such Investment Period (exclusive of any Applicable Margin that would
otherwise be applicable thereto).

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

“Borrower” is defined in the preamble.

“Borrowing” means the Loans of the same type and, in the case of LIBO Rate
Loans, having the same Interest Period made by all Lenders required to make such
Loans on the same Business Day and pursuant to the same Borrowing Request in
accordance with Section 2.3.

“Borrowing Request” means a request and certificate duly executed by an
Authorized Officer of the Borrower substantially in the form of Exhibit B-1
hereto.

“Business Day” means any day that is not a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to
remain closed; provided, that when used in connection with a LIBO Rate Loan, the
term “Business Day” shall also exclude any day on which banks are not open for
dealings in Dollar deposits in the London interbank market.

“Capital Expenditures” means for any period, the sum of (a) the aggregate amount
of all expenditures of the Parent and its Subsidiaries for fixed or capital
assets made during such period

 

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which, in accordance with GAAP, would be classified as capital expenditures, and
(b) the aggregate amount of the principal component of all Capitalized Lease
Liabilities incurred during such period by the Parent and its Subsidiaries;
provided, that Capital Expenditures shall not include (a) any Permitted
Acquisition or (b) any such expenditures or any such principal component funded
with (i) any Net Casualty Proceeds, as permitted under clause (f) of Section
3.1.1 or (ii) any Net Disposition Proceeds, as permitted under clause (f) of
Section 3.1.1 or (iii) the net proceeds received from any Disposition of
obsolete equipment permitted under clause (a) of Section 8.10.

“Capital Securities” means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated, whether
voting or non-voting) of such Person’s capital, whether now outstanding or
issued after the Closing Date.

“Capitalized Lease Liabilities” means, all monetary obligations of the Borrower
or any of its Subsidiaries under any leasing or similar arrangement which have
been (or, in accordance with GAAP, should be) classified as capitalized leases.

“Carry-Forward Amount” is defined in Section 8.7.

“Cash Collateralize” means, with respect to any Letter of Credit, the deposit of
immediately available funds into a cash collateral account maintained with (or
on behalf of) the Administrative Agent on terms reasonably satisfactory to the
Administrative Agent in an amount equal to 105% of the Stated Amount of such
Letter of Credit.

“Cash Equivalent Investment” means, at any time:

(a)               any direct obligation of (or unconditionally guaranteed by)
the United States (or any agency or political subdivision thereof, to the extent
such obligations are supported by the full faith and credit of the United
States) maturing not more than one year from the date of acquisition thereof;

(b)               commercial paper maturing not more than 365 days from the date
of acquisition and rated A-1 or higher by S&P or P-1 or higher by Moody’s;

(c)               any certificate of deposit, time deposit, or bankers
acceptance, maturing not more than one year after its date of acquisition, or
any demand deposit accounts which, in any case, is issued by or established at
any bank organized under the laws of the United States (or any State thereof)
and which (i) has (A) a credit rating of A2 or higher from Moody’s or A or
higher from S&P and (B) a combined capital and surplus greater than $250,000,000
or (ii) is a Lender;

(d)               any repurchase agreement having a term of 7 days or less
entered into with any Lender or any commercial banking institution satisfying
the criteria set forth in clause (c) which (i) is secured by a fully perfected
security interest in any obligation of the type described in clause (a), and
(ii) has a market value at the time such repurchase agreement is entered into of
not less than 100% of the repurchase obligation of such commercial banking
institution thereunder;

 

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(e)               taxable and tax exempt auction rate securities rated AAA by
S&P and Aaa by Moody’s and with a reset of less than 90 days;

(f)                shares of investment companies that are registered under the
Investment Company Act of 1940, as amended, and that invest solely in one or
more of the types of securities described in clauses (a) through (e) above; or

(g)               other investments similar to the foregoing as may from time to
time be approved in writing by the Administrative Agent in its reasonable
discretion.

“Cash Flow Basket” means, initially, zero, as increased from time to time on
each date a mandatory prepayment is required under clause (d) of Section 3.1.1,
by the amount equal to the product of (i) the Excess Cash Flow for the Fiscal
Year immediately preceding such date times (ii) the percentage equal to 100%
minus the then applicable Proceeds Percentage, and decreased each time any
Investment is made pursuant to clause (m)(ii) of Section 8.5, by the amount
expended in respect of such Investment, and further decreased each time any
Restricted Payment is made pursuant to subclause (i)(y) of clause (e) of Section
8.6, by the amount expended in respect of such Restricted Payment.

“Casualty Event” means the damage, destruction or condemnation, as the case may
be, of any property of the Borrower or any of its Subsidiaries.

“CDC Subsidiaries” means Champion Development Corp. and each of its direct and
indirect Subsidiaries set forth on Item 1.1(a) of the Disclosure Schedule.

“CERCLA” means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended.

“CERCLIS” means the Comprehensive Environmental Response Compensation Liability
Information System List.

“Change in Control” means

(a)               any person or group (within the meaning of Sections 13(d) and
14(d) under the Exchange Act) becoming the ultimate “beneficial owner” (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act) directly or indirectly,
of Voting Securities representing 35% or more of the Voting Securities of the
Parent on a fully diluted basis; or

(b)               the failure of the Parent at any time to directly own
beneficially and of record on a fully diluted basis 100% of the outstanding
Voting Securities of the Borrower, such Voting Securities to be held free and
clear of all Liens (other than Liens granted under a Loan Document); or

(c)               during any period of 24 consecutive months, individuals who at
the beginning of such period constituted the Board of Directors (or similar
governing body) of the Parent (together with any new directors whose election to
such Board or whose nomination for election by the stockholders of the Parent
was approved by a vote of a

 

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majority of the directors then still in office who were either directors at the
beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
Board of Directors (or similar governing body) of the Parent then in office.

“Closing Date” means the date of the initial Credit Extension hereunder.

“Closing Date Certificate” means the closing date certificate executed and
delivered by an Authorized Officer of the Borrower substantially in the form of
Exhibit I.

“Code” means the Internal Revenue Code of 1986, and the regulations thereunder,
in each case as amended, reformed or otherwise modified from time to time.

“Collateral Trust Agreement” means the Collateral Trust Agreement, executed and
delivered by each Person party thereto, substantially in the form of Exhibit H
hereto, as amended, supplemented, amended and restated or otherwise modified
from time to time.

“Collateral Trustee” means Wells Fargo Bank, N.A.

“Collections” means all cash, checks, notes, instruments and other items of
payment (including insurance proceeds, proceeds of cash sales, rental proceeds
and tax refunds) of the Parent and its Subsidiaries.

“Commitment” means, as the context may require, the Term Loan Commitment,
Revolving Loan Commitment, Revolving Letter of Credit Commitment or Synthetic
Letter of Credit Commitment.

“Commitment Amount” means, as the context may require, the Term Loan Commitment
Amount, the Revolving Loan Commitment Amount, the Revolving Letter of Credit
Commitment Amount or the Synthetic Facility Available Amount.

“Commitment Termination Event” means

(a)               the occurrence of any Event of Default described in clauses
(a) through (d) of Section 9.1.9, with respect to the Parent or the Borrower; or

(b)               the occurrence and continuance of any other Event of Default
and either (i) the declaration of all or any portion of the Loans to be due and
payable pursuant to Section 9.3, or (ii) the giving of notice by the
Administrative Agent, acting at the direction of the Required Lenders, to the
Borrower that the Commitments have been terminated.

“Communications” is defined in clause (a) of Section 10.10.

“Compliance Certificate” means, a certificate duly completed and executed by the
chief financial officer or chief accounting officer of the Parent, substantially
in the form of Exhibit E hereto, together with such changes thereto as the
Administrative Agent may from time to time

 

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reasonably request in writing for the purpose of monitoring the Parent’s and the
Borrower’s compliance with the financial covenants contained herein.

“Consent Required Leased Property” is defined in Section 7.12.

“Contingent Liability” means any agreement, undertaking or arrangement by which
any Person guarantees, endorses or otherwise becomes or is contingently liable
upon (by direct or indirect agreement, contingent or otherwise, to provide funds
for payment, to supply funds to, or otherwise to invest in, a debtor, or
otherwise to assure a creditor against loss) the Indebtedness of any other
Person (other than by endorsements of instruments in the course of collection or
deposit), or guarantees the payment of dividends or other distributions upon the
Capital Securities of any other Person. The amount of any Person’s obligation
under any Contingent Liability shall be deemed, without duplication, to be the
outstanding principal amount of the debt, obligation or other liability
guaranteed thereby (reduced to the extent that such Person’s obligation
thereunder is reduced by applicable law or valid contractual agreement).

“Continuation/Conversion Notice” means a notice of continuation or conversion
and certificate duly executed by an Authorized Officer of the Borrower,
substantially in the form of Exhibit C hereto.

“Control Agreement” means an agreement in form and substance reasonably
satisfactory to the Administrative Agent which provides for the Administrative
Agent to have “control” (as defined in Section 8-106 of the UCC, as such term
relates to investment property (other than certificated securities or commodity
contracts), or as used in Section 9-106 of the UCC, as such term relates to
commodity contracts, or as used in Section 9-104(a) of the UCC, as such term
relates to deposit accounts).

“Controlled Group” means all members of a controlled group of corporations and
all members of a controlled group of trades or businesses (whether or not
incorporated) under common control which, together with the Borrower, are
treated as a single employer under Section 414(b) or 414(c) of the Code or
Section 4001 of ERISA.

“Copyright Security Agreement” means any Copyright Security Agreement executed
and delivered by any Obligor in substantially the form of Exhibit C to the
Pledge and Security Agreement, as amended, supplemented, amended and restated or
otherwise modified from time to time in accordance with its terms.

“Credit Extension” means, as the context may require,

(a)

the making of a Loan or a Synthetic Deposit by a Lender; or

(b)               the issuance of any Letter of Credit, the increase of the
Stated Amount of any existing Letter of Credit or the extension of any Stated
Expiry Date of any existing Letter of Credit, by an Issuer (whether
automatically by its terms or upon request of the Borrower).

“Credit Parties” means, collectively, the Lenders, the Issuers and the
Administrative Agent and each of their respective successors, transferees and
assigns.

 

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“Credit Suisse” is defined in the preamble.

“Current Assets” means, at any time, consolidated current assets of the Parent
and its Subsidiaries at such time, but excluding cash, Cash Equivalent
Investments and liabilities owed to the Parent or any of its Subsidiaries by any
Affiliates thereof.

“Current Liabilities” means, at any time, consolidated current liabilities of
the Parent and its Subsidiaries at such time, and in any event shall include all
Indebtedness payable on demand or within one year from any date of determination
without any option on the part of the obligor thereunder to extend or renew
beyond such year and all accruals for federal or other taxes based on or
measured by income and payable within such year, but excluding the current
portion of long-term debt required to be paid within one year.

“Debt Tender” is defined in the first recital.

“Default” means any Event of Default or any condition, occurrence or event
which, after notice or lapse of time or both, would constitute an Event of
Default.

“Deferred Acquisition Obligations” is defined in clause (f) of the definition of
Indebtedness.

“Deposit Account” means a “deposit account” as that term is defined in Section
9-102(a) of the UCC.

“Disbursement” is defined in Section 2.6.2.

“Disbursement Date” is defined in Section 2.6.2.

“Disclosure Schedule” means the Disclosure Schedule attached hereto as
Schedule I, as it may be amended, supplemented, amended and restated or
otherwise modified from time to time by the Borrower with the written consent of
the Required Lenders.

“Disposition” (or similar words such as “Dispose”) means any sale, transfer,
lease, contribution or other conveyance (including by way of merger) of, or the
granting of options, warrants or other rights to, any of the Borrower’s or its
Subsidiaries’ assets (including accounts receivable and Capital Securities of
Subsidiaries) to any other Person (other than to another Obligor) in a single
transaction or series of related transactions, other than with respect to any
such sale, transfer, lease, contribution or other conveyance for aggregate
consideration of less than $500,000 with respect to any asset or group of
related assets.

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

“Domestic Office” means the office of a Lender designated as its “Domestic
Office” on Schedule II hereto or in a Lender Assignment Agreement, or such other
office within the United States as may be designated from time to time by notice
from such Lender to the Administrative Agent and the Borrower.

 

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“Domestic Subsidiary” means any Subsidiary that is incorporated or organized in
or under the laws of the United States, any state thereof or the District of
Columbia.

“Due Date” is defined in Section 7.12.

“EBITDA” means, for any applicable period, the sum for the Parent and its
Subsidiaries (other than, solely for purposes of the definition of Leverage
Ratio, the CDC Subsidiaries) on a consolidated basis of

(a)

Net Income, plus

(b)               to the extent deducted in determining Net Income, the sum of
(i) amounts attributable to amortization, (ii) expenses for Michigan state
single business taxes, franchise taxes, federal, state, local and foreign taxes,
in each case based on income or profits, (iii) Interest Expense, (iv)
depreciation of assets, (v) Transaction Costs, (vi) non-cash losses and non-cash
impairment charges, including goodwill impairment charges, (vii) non-cash
restructuring and closing costs associated with the closure of facilities and
operations and non-cash operating losses of such closed facilities and
operations in the month of and subsequent to their closure and (viii) losses
from repurchases or extinguishment of debt issued by the Parent or any of its
Subsidiaries, minus

(c)               to the extent included in such Net Income, (i) non-cash items
of income for such period, (ii) gains from repurchases or extinguishment of debt
issued by the Parent or any of its Subsidiaries and (iii) income tax credits,
minus

(d)               the amount of all cash payments made in such period to the
extent that such payments relate to a non-cash loss, non-cash charge or non-cash
cost incurred in a previous period that was added back in determining EBITDA
hereunder pursuant to the preceding subclauses (b)(vi) and (vii).

“Eligible Assignee” means:

(a)               in the case of an assignment of a Term Loan or Synthetic
Deposit, (i) a Lender, (ii) an Affiliate of a Lender, (iii) an Approved Fund or
(iv) any other Person approved, unless an Event of Default has occurred and is
continuing, by the Borrower (such approval of the Borrower not to be
unreasonably withheld or delayed), and

(b)               in the case of any assignment of the Revolving Loan
Commitment, (i) a Revolving Loan Lender or (ii) any other Person approved,
unless an Event of Default has occurred and is continuing, by the Borrower (such
approval of the Borrower not to be unreasonably withheld or delayed);

provided that any other Person approved pursuant to either clause (a)(iv) or
(b)(ii) above shall not be (v) a natural Person, (w) the Borrower, (x) any
Affiliate of the Borrower, (y) any other Person taking direction from, or
working in concert with, the Borrower or any of the Borrower’s Affiliates or (z)
any Person who is (i) listed on the Specially Designated Nationals and Blocked
Persons List maintained by the U.S. Department of Treasury Office of Foreign
Asset Control (the “OFAC”) and/or on any other similar list that is readily
accessible to the public and

 

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maintained by the OFAC pursuant to any authorizing statute, Executive Order or
regulation; or (ii) either (A) included within the term “designated national” as
defined in the Cuban Asset Control Regulations, 31 C.F.R. Part 515, or (B)
designated under Sections 1(a), 1(b), 1(c) or 1(d) of Executive Order No. 13224,
66 Fed. Reg. 49079 (published September 25, 2001) or similarly designated under
any related enabling legislation or any other similar Executive Orders that are
readily accessible to the public.

“Engagement Letter” means the confidential engagement letter, dated September
28, 2005, between the Borrower and Credit Suisse.

“Environmental Laws” means all applicable and legally binding federal, state or
local statutes, laws, ordinances, codes, rules, regulations and guidelines
(including consent decrees and administrative orders) relating to public health
and safety and protection of the environment.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
and any successor statute thereto of similar import, together with the
regulations thereunder, in each case as in effect from time to time. References
to Sections of ERISA also refer to any successor Sections thereto.

“Event of Default” is defined in Section 9.1.

“Excess Cash Flow” means, for any Fiscal Year, the excess (if any), of

(a)               the sum of (i) EBITDA for such Fiscal Year, (ii) to the extent
not included in such EBITDA, cash actually received by the Parent and its
Subsidiaries during such Fiscal Year in respect of gains from Dispositions made
pursuant to clause (d) of Section 8.10 and (iii) reductions (if any) to working
capital (excluding cash and Cash Equivalent Investments) of the Parent and its
Subsidiaries for such Fiscal Year (i.e., the decrease (if any) in Current Assets
minus Current Liabilities from the beginning to the end of such Fiscal Year)
other than reductions attributable to (x) the reclassification of any
Indebtedness from “long term debt” to “Current Liabilities” or (y) the return of
the Travelers Deposit to the Borrower

over

(b)               the sum (for such Fiscal Year) of (i) the aggregate amount of
all principal payments, whether scheduled payments, mandatory prepayments or
voluntary prepayments, paid by the Parent and its Subsidiaries on all
Indebtedness during such period (including the principal portion of payments in
respect of Capitalized Leases but excluding principal payments in respect of any
revolving-type facility (including the Revolving Loans) except in connection
with a permanent reduction in the commitment relating to such revolving-type
facility), in each case, to the extent permitted to be made under this Agreement
and so long as not made with, or on account of, proceeds of Indebtedness or
equity issuances or other proceeds that would not be included in EBITDA,
(ii) all Interest Expense paid in cash during such Fiscal Year (including the
interest portion of Capitalized Lease Obligations paid in cash and the interest
portion of any deferred payment obligation paid in cash during such Fiscal
Year), (iii) all Capital Expenditures made by the Parent and its Subsidiaries
paid or payable in cash to the extent

 

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permitted to be made under this Agreement and so long as not financed with the
proceeds of Indebtedness or equity issuances or other proceeds that would not be
included in EBITDA; provided that, for the avoidance of doubt, amounts deducted
under this clause may be deducted in only one Fiscal Year, (iv) all expenditures
made by the Parent and its Subsidiaries in cash during such period in respect of
Permitted Acquisitions so long as not financed with the proceeds of debt or
equity issuances or other proceeds that would not be included in EBITDA, (v) all
Taxes paid by the Parent and its Subsidiaries in cash during such Fiscal Year,
to the extent such payments are in respect of income all determined on a
consolidated basis, (vi) to the extent not subtracted in determining EBITDA for
such Fiscal Year, cash actually paid by the Parent and its Subsidiaries during
such Fiscal Year in respect of losses from Dispositions made pursuant to
clause (d) of Section 8.10, (vii) to the extent added to Net Income in
determining EBITDA for such Fiscal Year, Transaction Costs actually paid in cash
by the Parent and its Subsidiaries during such Fiscal Year, (viii) to the extent
not subtracted in determining EBITDA for such Fiscal Year, cash actually paid by
the Parent and its Subsidiaries during such Fiscal Year in respect of any loss,
and (ix) additions (if any) to working capital (excluding cash and Cash
Equivalent Investments) of the Parent and its Subsidiaries for such Fiscal Year
(i.e., the increase (if any) in Current Assets minus Current Liabilities from
the beginning to the end of such Fiscal Year).

“Exemption Certificate” is defined in clause (f) of Section 4.6.

“Existing Credit Agreement” is defined in the first recital.

“Existing Letter of Credit” is defined in clause (b) of Section 2.1.5.

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

“Federal Funds Effective Rate” means, for any day, the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for
such day for such transactions received by the Administrative Agent from three
Federal funds brokers of recognized standing selected by it.

“Filing Agent” is defined in Section 5.1.12.

“Filing Statements” is defined in Section 5.1.12.

“Fiscal Quarter” means a fiscal quarter of the Parent.

“Fiscal Year” means a fiscal year of the Parent; references to a Fiscal Year
with a number corresponding to any calendar year (e.g., the “2005 Fiscal Year”)
refer to the Fiscal Year ending on or about December 31 of such calendar year.

“Floor-Plan Financing Lines” means Indebtedness in the form of inventory
financings or purchase money obligations used solely to fund working capital or
the acquisition of the same or

 

 

similar property; provided that such Indebtedness (i) is provided by a Person
that is not an Affiliate of the Borrower, (ii) is secured only by otherwise
unencumbered retail inventory of the Borrower or any of its Subsidiaries, and
fixtures, furniture and other household items attached to or inside such
inventory, and the proceeds thereof, and (iii) constitutes Non-Recourse Debt.

“Foreign Pledge Agreement” means any supplemental pledge agreement governed by
the laws of a jurisdiction other than the United States or a State thereof
executed and delivered from time to time by the Parent, the Borrower or any
Subsidiary Guarantor pursuant to the terms of the Pledge and Security Agreement,
in form and substance reasonably satisfactory to the Administrative Agent, as
may be necessary or desirable under the laws of organization or incorporation of
a Subsidiary to further protect or perfect the Lien on and security interest in
any Collateral (as defined in the Pledge and Security Agreement).

“Foreign Subsidiary” means any Subsidiary that is not a Domestic Subsidiary.

“Free Leased Property” is defined in Section 7.12.

“GAAP” means, with respect to the interpretation of all accounting terms used
herein and in each other Loan Document, the calculation of all accounting
determinations and computations required to be made hereunder or thereunder
(including under Section 8.4 and in respect of any defined terms used herein or
in any other Loan Document), those U.S. generally accepted accounting principles
applied in the preparation of the audited consolidated financial statements of
the Parent for the Fiscal Year ended December 31, 2004, copies of which are
required to be delivered pursuant to clause (a) of Section 5.1.7, as amended
from time to time.

“Government Account” means any Account the debtor of which is the United States
or any department or instrumentality thereof.

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

“Guarantor” means the Parent, each Subsidiary Guarantor and each other party
that has guaranteed the Obligations.

“Guaranty” means each of the Subsidiary Guaranty and the guaranty entered into
by the Parent under Article XI.

“Hazardous Material” means

(a)

any “hazardous substance”, as defined by CERCLA;

(b)        any “hazardous waste”, as defined by the Resource Conservation and
Recovery Act, as amended;

 

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(c)

any petroleum product; or

(d)               any pollutant or contaminant or hazardous, dangerous or toxic
chemical, material or substance (including any petroleum product) within the
meaning of any other Environmental Laws.

“Hedging Obligations” means, with respect to any Person, all liabilities of such
Person under currency exchange agreements, interest rate swap agreements,
interest rate cap agreements, interest rate collar agreements, commodity price
protection agreements, equity derivative agreements and all other agreements or
arrangements designed to protect a Person against fluctuations in interest rates
or, currency exchange rates, commodity prices or equity security prices or
values.

“herein”, “hereof”, “hereto”, “hereunder” and similar terms contained in any
Loan Document refer to such Loan Document as a whole and not to any particular
section, paragraph or provision of such Loan Document.

“Immaterial Subsidiary” means, as of any date of determination, (a) each
Subsidiary of the Parent identified on Item 1.1(b) of the Disclosure Schedule
and (b) each other such Subsidiary notified to the Lenders as being an
“Immaterial Subsidiary” pursuant to a certificate executed by an Authorized
Officer of the Parent certifying to each of the items set forth in the
immediately succeeding proviso; provided that a Subsidiary shall not be an
Immaterial Subsidiary if (i) its assets exceeded 2% of the consolidated assets
of the Parent and its Subsidiaries as of the last day of the most recently
completed Fiscal Quarter, (ii) its revenues exceeded 2% of the consolidated
revenues of the Parent and its Subsidiaries for the most recently completed
Fiscal Quarter, (iii) the assets of all Immaterial Subsidiaries exceeded 5% of
the consolidated assets of the Parent and its Subsidiaries as of the last day of
the most recently completed Fiscal Quarter or (iv) the aggregate revenue of all
Immaterial Subsidiaries exceeded 5% of the consolidated revenues of the Parent
and its Subsidiaries for the most recently completed Fiscal Quarter; provided
further that, in the event all Subsidiaries otherwise designated as Immaterial
Subsidiaries (other than the CDC Subsidiaries) by the Borrower should not be
Immaterial Subsidiaries as a result of clause (iii) or (iv) of the immediately
preceding proviso and the Borrower has not designated which Subsidiary (or
Subsidiaries) should no longer constitute Immaterial Subsidiaries pursuant to
the Compliance Certificate most recently delivered pursuant to clause (c) of
Section 7.1, the Administrative Agent may designate which Subsidiary (or
Subsidiaries) no longer constitute Immaterial Subsidiaries. Notwithstanding any
of the foregoing, the CDC Subsidiaries shall be Immaterial Subsidiaries at all
times.

“Impermissible Qualification” means, relative to the opinion or certification of
any independent public accountant as to any financial statement of any Obligor,
any qualification or exception to such opinion or certification (i) which is of
a “going concern” or similar nature, (ii) which relates to the limited scope of
examination of matters relevant to such financial statement (except, in the case
of matters relating to any acquired business or assets, in respect of the period
prior to the acquisition by such Obligor of such business or assets), (iii)
which relates to the treatment or classification of any item in such financial
statement and which, as a condition to its removal, would require an adjustment
to such item the effect of which would be to cause the Borrower to be in default
of any of its obligations under Section 8.4 or (iv) which is

 

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another material qualification or exception (other than a material qualification
or exception that results directly from changes promulgated by the Financial
Accounting Standards Board).

“including” and “include” means including without limiting the generality of any
description preceding such term, and, for purposes of each Loan Document, the
parties hereto agree that the rule of ejusdem generis shall not be applicable to
limit a general statement, which is followed by or referable to an enumeration
of specific matters, to matters similar to the matters specifically mentioned.

“Indebtedness” of any Person means, without duplication:

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

(b)               all obligations, contingent or otherwise, relative to the face
amount of all letters of credit, whether or not drawn, and banker’s acceptances
issued for the account of such Person;

(c)

all Capitalized Lease Liabilities;

 

(d)

net Hedging Obligations of such Person;

(e)               whether or not so included as liabilities in accordance with
GAAP, all obligations secured by any Lien on any property or assets owned or
held by that Person regardless of whether the obligations secured thereby shall
have been assumed by that Person or is non-recourse to the credit of that
Person; provided, that the amount of any Indebtedness of others that constitutes
Indebtedness of such Person solely by reason of this clause (e) shall, in the
event that such Indebtedness is limited recourse to such property (without
recourse to such Person), for purposes of this Agreement, be equal to the lesser
of the amount of such obligation and the fair market value of the property or
assets to which the Lien attaches, determined in good faith by such Person;

(f)                whether or not so included as liabilities in accordance with
GAAP, all obligations of such Person to pay the deferred purchase price of
property or services (excluding trade accounts payable in the ordinary course of
business which are not overdue for a period of more than 120 days or, if overdue
for more than 120 days, as to which a dispute exists and adequate reserves in
conformity with GAAP have been established on the books of such Person),
including obligations of such Person (“Deferred Acquisition Obligations”),
whether liquidated or unliquidated, fixed or contingent, arising from the
acquisition of a business or a line of business (whether pursuant to an
acquisition of Capital Securities, assets or otherwise) and payable to the
seller or sellers thereof, including obligations in respect of deferred purchase
price or “earn-outs” or other contingent payments (whether based on revenue or
otherwise);

(g)               for purposes of Section 9.1.5 only, all other items which, in
accordance with GAAP, would be included as liabilities on the liability side of
the balance sheet of such Person as of the date at which Indebtedness is to be
determined;

 

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(h)

obligations arising under Synthetic Leases;

 

(i)

Redeemable Capital Securities; and

 

(j)

all Contingent Liabilities of such Person in respect of any of the foregoing.

The Indebtedness of any Person shall include the Indebtedness of any other
Person (including any partnership in which such Person is a general partner) to
the extent such Person is liable therefor as a result of such Person’s ownership
interest in or other relationship with such Person, except to the extent that
such Person is not liable therefor (by contract, as a matter of law or
otherwise). Notwithstanding any of the foregoing, Indebtedness shall not include
(i) Repurchase Obligations, (ii) operating lease obligations, (iii) short term
notes evidencing earnest money deposits received in the ordinary course of
business from purchasers of inventory of the Parent or any of its Subsidiaries,
(iv) any obligation in respect of minimum guaranteed commissions, rebates or
other similar payments to such purchasers, minimum returns to such purchasers,
or indemnification obligations owed to such purchasers, in each case pursuant to
contracts to provide services to such purchasers entered into in the ordinary
course of business, and (v) account credits to participants under any
compensation plan entered into in the ordinary course of business.

“Indemnified Liabilities” is defined in Section 12.4.

“Indemnified Parties” is defined in Section 12.4.

“Interest Coverage Ratio” means, at the end of any Fiscal Quarter, the ratio
computed for the period consisting of such Fiscal Quarter and each of the three
immediately prior Fiscal Quarters of:

(a)

EBITDA (for all such Fiscal Quarters)

to

(b)               the portion of Interest Expense that is payable in cash by the
Parent and its Subsidiaries for all such Fiscal Quarters; provided that, in the
event the applicable four-Fiscal-Quarter period would include any period of time
prior to the Closing Date, Interest Expense for the purposes of this clause (b)
shall be determined on an Annualized Basis.

“Interest Expense” means, for any applicable period, the aggregate consolidated
interest expense of the Parent and its Subsidiaries for such applicable period,
including, without duplication, the portion of any payments made in respect of
Capitalized Lease Liabilities allocable to interest expense, including up-front
and annual fees and expenses relating to Interest Expense, and the amortization
of all deferred financing costs, minus (a) to the extent included in such
consolidated interest expense, other non-cash charges and expenses and (b)
interest income of the Parent and its Subsidiaries for such period.

“Interest Period” means, relative to any LIBO Rate Loan, the period beginning on
(and including) the date on which such LIBO Rate Loan is made or continued as,
or converted into, a LIBO Rate Loan pursuant to Sections 2.3 or 2.4 and shall
end on (but exclude) the day which

 

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numerically corresponds to such date one, two, three, six or, if available to
all Lenders, nine or twelve months thereafter (or, if such month has no
numerically corresponding day, on the last Business Day of such month), as the
Borrower may select in its relevant notice pursuant to Sections 2.3 or 2.4;
provided that,

(a)               the Borrower shall not be permitted to select Interest Periods
to be in effect at any one time which have expiration dates occurring on more
than eight different dates (it being understood that there shall not be more
than eight contracts in respect of LIBO Rate Loans in effect at any one time);

(b)               if such Interest Period would otherwise end on a day which is
not a Business Day, such Interest Period shall end on the next following
Business Day (unless such next following Business Day is the first Business Day
of a calendar month, in which case such Interest Period shall end on the
Business Day next preceding such numerically corresponding day); and

(c)               no Interest Period for any Loan may end later than the Stated
Maturity Date for such Loan.

“Investment” means, relative to any Person,

(a)               any loan, advance or extension of credit made by such Person
to any other Person, including the purchase by such Person of any bonds, notes,
debentures or other debt securities of any other Person; and

(b)

any Capital Securities acquired by such Person in any other Person.

The amount of any Investment shall be the original principal or capital amount
thereof less all returns of principal or equity thereon and shall, if made by
the transfer or exchange of property other than cash, be deemed to have been
made in an original principal or capital amount equal to the fair market value
of such property at the time of such Investment.

“Investment Period” means, relative to any Synthetic Deposits earning a
Participation Fee, the period beginning on (and including) the date on which
such Synthetic Deposit is deposited or on the last day of the proceeding
Investment Period and ending on (but excluding) the day which numerically
corresponds to such date three months thereafter; provided, however, that (a) if
any such Investment Period would otherwise end on a day which is not a Business
Day, such Investment Period shall end on the next following Business Day (unless
such next following Business Day is the first Business Day of a calendar month,
in which case such Investment Period shall end on the Business Day next
preceding such numerically corresponding day) and (b) the first Investment
Period after the Closing Date shall be comprised of the period beginning on (and
including) the Closing Date and ending on December 31, 2005.

“Investment Returns” is defined in Section 8.5.

“ISP Rules” is defined in Section 12.9.

 

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“Issuance Request” means a Letter of Credit request and certificate duly
executed by an Authorized Officer of the Borrower, substantially in the form of
Exhibit B-2 hereto.

“Issuers” means the Revolving Issuer and the Synthetic Issuer.

“Lender Assignment Agreement” means an assignment agreement substantially in the
form of Exhibit D hereto.

“Lenders” is defined in the preamble and includes each Revolving Loan Lender,
Term Loan Lender and Synthetic Lender and any Person that becomes one of them
pursuant to Section 12.11.

“Lender’s Environmental Liability” means any and all losses, liabilities,
obligations, penalties, claims, litigation, demands, defenses, costs, judgments,
suits, proceedings, damages (including consequential damages), disbursements or
expenses of any kind or nature whatsoever (including reasonable attorneys’ fees
at trial and appellate levels and experts’ fees and disbursements and expenses
reasonably incurred in investigating, defending against or prosecuting any
litigation, claim or proceeding) which may at any time be imposed upon, or
asserted or awarded against, the Administrative Agent, the Syndication Agent,
any Lender, the Issuers or any of such Person’s Affiliates, shareholders,
directors, officers, employees, and agents in connection with or arising from:

(a)               any Hazardous Material on, in, under or affecting all or any
portion of any property of the Borrower or any of its Subsidiaries, the
groundwater thereunder, or any surrounding areas thereof to the extent caused by
Releases from the Borrower’s or any of its Subsidiaries’ or any of their
respective predecessors’ properties;

(b)               any investigation, claim, litigation or proceeding related to
personal injury arising from exposure or alleged exposure to Hazardous Materials
handled by the Borrower or any of its Subsidiaries;

(c)               any misrepresentation, inaccuracy or breach of any warranty,
contained or referred to in Section 6.12;

(d)               any violation or claim of violation by the Borrower or any of
its Subsidiaries of any Environmental Laws; or

(e)               the imposition of any lien for damages caused by or the
recovery of any costs for the cleanup, release or threatened release of
Hazardous Material by the Borrower or any of its Subsidiaries, or in connection
with any property owned or formerly owned by the Borrower or any of its
Subsidiaries.

“Letter of Credit” means, as the context may require, a Revolving Letter of
Credit and/or a Synthetic Letter of Credit.

“Letter of Credit Outstandings” means, as the context may require, the Revolving
Letter of Credit Outstandings and/or the Synthetic Letter of Credit
Outstandings, in each case, after giving effect to the participation of the
Lenders therein pursuant to Section 2.6.1.

 

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“Leverage Ratio” means, at the end of any Fiscal Quarter, the ratio of

(a)

Total Debt outstanding on the last day of such Fiscal Quarter

to

(b)               EBITDA for the period of four consecutive Fiscal Quarters
ended on such date.

“LIBO Rate” means, with respect to any LIBO Rate Loans for any Interest Period,
the rate per annum determined by the Administrative Agent at approximately
11:00 a.m. (London time) on the date that is two Business Days prior to the
beginning of the relevant Interest Period by reference to the British Bankers’
Association Interest Settlement Rates for deposits in Dollars (as set forth by
the Bloomberg Information Service or any successor thereto or any other service
reasonably selected by the Administrative Agent which has been nominated by the
British Bankers’ Association as an authorized information vendor for the purpose
of displaying such rates) for a period equal to such Interest Period; provided
that, to the extent that an interest rate is not ascertainable pursuant to the
foregoing provisions of this definition, the “LIBO Rate” shall be the interest
rate per annum reasonably determined by the Administrative Agent to be the
average of the rates per annum at which deposits in Dollars are offered for such
relevant Interest Period to major banks in the London interbank market in
London, England by the Administrative Agent at approximately 11:00 a.m. (London
time) on the date that is two Business Days prior to the beginning of such
Interest Period.

“LIBO Rate Loan” means a Loan bearing interest, at all times during an Interest
Period applicable to such Loan, at a rate of interest determined by reference to
the Adjusted LIBO Rate.

“LIBOR Office” means the office of a Lender designated as its “LIBOR Office” on
Schedule II hereto or in a Lender Assignment Agreement, or such other office
designated from time to time by notice from such Lender to the Borrower and the
Administrative Agent, whether or not outside the United States, which shall be
making or maintaining the LIBO Rate Loans of such Lender.

“Lien” means any security interest, mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or otherwise), charge against
or interest in property, or other priority or preferential arrangement of any
kind or nature whatsoever, to secure payment of a debt or performance of an
obligation.

“Lien Waiver and Consent” is defined in Section 7.12.

“Liquidity” means, at any time, the sum of (a) unrestricted cash on hand of the
Borrower and the Subsidiary Guarantors at such time, that is free of all Liens
(other than Liens contemplated by clauses (a), (i), (l) and (solely with respect
to Liens contemplated by such foregoing clauses) (o) of Section 8.3), plus
(b) the aggregate amount of unused Revolving Commitments at such time.

“Loan Documents” means, collectively, this Agreement, the Letters of Credit, the
Notes, the Subsidiary Guaranty, the Pledge and Security Agreement, each
Mortgage, the Collateral

 

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Trust Agreement, the Engagement Letter, each other agreement pursuant to which
the Administrative Agent is granted a Lien to secure the Obligations, each Rate
Protection Agreement and each other agreement, certificate, document or
instrument delivered in connection with any Loan Document, whether or not
specifically mentioned herein or therein.

“Loans” means, as the context may require, a Revolving Loan or a Term Loan of
any type.

“Material Adverse Effect” means a material adverse effect on (i) the business,
assets, liabilities, operations, condition (financial or otherwise), operating
results or prospects of the Parent and its Subsidiaries taken as a whole,
(ii) the rights and remedies of any Secured Party under any Loan Document or
(iii) the validity or enforceability of any Loan Document.

“Moody’s” means Moody’s Investors Service, Inc.

“Mortgage” means each mortgage, leasehold mortgage, deed of trust, leasehold
deed of trust or other agreement, in any case in form and substance reasonably
satisfactory to the Administrative Agent, executed and delivered by any Obligor
in favor of the Collateral Trustee for the benefit of the Secured Parties (as
defined in the Collateral Trust Agreement), pursuant to the requirements of this
Agreement, under which a Lien is granted on the real property, fixtures and/or
the leasehold estate described therein, in each case as amended, supplemented,
amended and restated or otherwise modified from time to time in accordance with
its terms.

“Mortgaged Property” means all real property owned by any Obligor on the Closing
Date identified as “Mortgaged Property” in Item 5.1.11(b)(i) of the Disclosure
Schedule.

“NAIC” means the National Association of Insurance Commissioners.

“Net Casualty Proceeds” means, with respect to any Casualty Event, the cash
amount of any insurance proceeds (other than for business interruption) under
any casualty insurance policy or condemnation awards received by the Parent or
any of its Subsidiaries in connection therewith, but excluding any proceeds or
awards required to be paid to a creditor (other than the Lenders) which holds a
Lien on the property which is the subject of such Casualty Event which Lien
(i) is a Permitted Lien and (ii) has priority over the Liens securing the
Obligations less amounts expended by the Parent or any of its Subsidiaries on
legal, accounting and other professional fees, expenses and charges incurred in
connection with collecting such insurance proceeds (including in connection with
the adjustment or settlement of any such claims).

“Net Debt Proceeds” means with respect to the incurrence, sale or issuance by
the Parent or any of its Subsidiaries of any Indebtedness (other than any
Indebtedness permitted by Section 8.2, as such Section may be amended or
modified with the consent of the Required Lenders), the excess of:

(a)               the gross cash proceeds received by such Person from such
incurrence, sale or issuance,

over

 

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(b)               all reasonable and customary underwriting commissions and
legal, investment banking, brokerage and accounting and other professional fees,
sales commissions and disbursements and all other reasonable fees, expenses and
charges, in each case actually incurred in connection with such incurrence, sale
or issuance.

“Net Disposition Proceeds” means, with respect to any Disposition of any assets
of the Parent or any of its Subsidiaries permitted pursuant to clause (e) or (f)
of Section 8.10, the excess of

(a)               the gross cash proceeds received by such Person from any such
Disposition and any cash payments when received in respect of promissory notes
or other non-cash consideration delivered to such Person in respect thereof,

over

(b)               the sum of (i) all reasonable and customary fees and expenses
with respect to legal, investment banking, brokerage and accounting and other
professional fees, sales commissions and disbursements and all other reasonable
fees, expenses and charges, in each case actually incurred in connection with
such Disposition, (ii) all Taxes and other governmental costs and expenses
actually paid or estimated by such Person (in good faith) to be payable in cash
in connection with such Disposition, (iii) payments (including premiums or
penalties) made by such Person to retire Indebtedness (other than the Credit
Extensions) of such Person where payment of such Indebtedness is required in
connection with such Disposition and (iv) reserves for purchase price
adjustments and retained fixed liabilities that are payable by the Borrower or
such Subsidiary in cash to the extent required under GAAP in connection with
such Disposition;

provided, however, that if, after the payment of all Taxes, purchase price
adjustments and retained fixed liabilities with respect to such Disposition, the
amount of estimated Taxes, purchase price adjustments, and retained fixed
liabilities, if any, pursuant to clause (b)(ii) or (b)(iv) above exceeded the
amount of Taxes, purchase price adjustments, and retained fixed liabilities
amount actually paid in cash in respect of such Disposition, the aggregate
amount of such excess shall, at such time, constitute Net Disposition Proceeds.

“Net Equity Proceeds” means with respect to the sale or issuance by the Parent
or any of its Subsidiaries to any Person of any Capital Securities thereof, or
any warrants or options with respect to any such Capital Securities or the
exercise of any such warrants or options after the Closing Date, the excess of:

(a)               the gross cash proceeds received by such Person from such
sale, exercise or issuance,

over

(b)               all reasonable and customary underwriting commissions and
legal, investment banking, brokerage, accounting and other professional fees,
sales commissions and disbursements and all other reasonable fees, expenses and
charges, in each case actually incurred in connection with such sale or
issuance.

 

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Notwithstanding the foregoing, Net Equity Proceeds shall not include any such
gross cash proceeds received from the Parent or any of its Subsidiaries or from
any current or former directors, officers, employees or consultants of the
Parent or any of its Subsidiaries.

“Net Income” means, for any period, the aggregate of all amounts which would be
included in determining net income from continuing operations on the
consolidated financial statements of the Parent and its Subsidiaries for such
period excluding, to the extent included in such calculation: (i) extraordinary
gains and losses, (ii) gains and losses from Dispositions made pursuant to
clause (d), (e) or (f) of Section 8.10, (iii) the income or loss of any Person
in which the Parent or any of its Subsidiaries has an Investment (but such
Person is not a Subsidiary), except (x) in the case of any such income, to the
extent that any such income is actually received by the Parent or such
Subsidiary in the form of dividends or similar distributions and (y) in the case
of any such loss, to the extent funded or committed to be funded by the Parent
or any of its Subsidiaries, and (iv) the income or loss of any Subsidiary of the
Parent (that is not a Subsidiary Guarantor) to the extent (x) in the case of any
such income, that the declaration or payment of dividends or similar
distributions by such Subsidiary is not at the time permitted by the terms of
any contractual obligation or requirement of law applicable to such Subsidiary
and (y) in the case of loss, to the extent not funded or committed to be funded
by the Parent or any of its Subsidiaries.

“Non-Domestic Credit Party” means any Credit Party that is not a “United States
person”, as defined under Section 7701(a)(30) of the Code.

“Non-Excluded Taxes” means any Taxes other than net income and franchise Taxes
imposed with respect to any Credit Party by a Governmental Authority under the
laws of which such Credit Party is organized or in which it maintains its
applicable lending office.

“Non-Recourse Debt” shall mean Indebtedness of any Person for which the
principal legal recourse for collection of principal, premium, interest or any
other obligation with respect to such Indebtedness is against the specific
property identified in the instruments evidencing or securing such Indebtedness,
which property was acquired with the proceeds of such Indebtedness or such
Indebtedness was incurred within 180 days after the acquisition of such
property, without any liability on the part of any such Person for any
deficiency with respect to principal, premium, interest or any other obligation,
and with respect to which Indebtedness no Obligor (A) provides credit support of
any kind (including any undertaking, agreement or instrument that would
constitute Indebtedness), (B) is directly or indirectly liable as a guarantor or
otherwise or (C) constitutes the lender; provided that Indebtedness that is
otherwise Non-Recourse Debt shall not lose its character as Non-Recourse Debt
because (i) the Parent guarantees such Indebtedness or (ii) there is recourse to
the Borrower, any guarantor or any other Person for (a) environmental warranties
and indemnities or (b) indemnities for and liabilities arising from fraud,
misrepresentation, waste, mechanics’ liens and misapplication or non-payment of
rents, profits, insurance, condemnation proceeds and other sums actually
received by the Borrower from secured assets to be paid to the lender of such
Indebtedness.

“Non-U.S. Lender” means any Lender that is not a “United States person”, as
defined under Section 7701(a)(30) of the Code.

 

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“Note” means, as the context may require, a Revolving Note or a Term Note.

“Obligations” means all obligations (monetary or otherwise, whether absolute or
contingent, matured or unmatured) of each Obligor arising under or in connection
with a Loan Document, including Reimbursement Obligations and the principal of
and premium, if any, and interest (including interest accruing during the
pendency of any proceeding of the type described in Section 9.1.9, whether or
not allowed in such proceeding) on the Loans and all Reimbursement Obligations.

“Obligor” means, as the context may require, the Borrower, each Guarantor and
each other Person (other than a Secured Party) that is a party to any Loan
Document.

“Offer to Purchase” means the Borrower’s Offer to Purchase for Cash Any and All
of its $88,430,000 Outstanding Principal Amount of 11¼% Senior Notes Due 2007
and Solicitation of Consents for Proposed Amendments to the Related Indenture,
dated as of September 30, 2005.

“Optional Redemption” is defined in clause (a) of Section 5.1.4.

“Organic Document” means, relative to any Person, as applicable, its certificate
of incorporation, by-laws, certificate of partnership, partnership agreement,
certificate of formation, limited liability agreement and all shareholder
agreements, voting trusts and similar arrangements applicable to any of such
Person’s partnership interests, limited liability company interests or
authorized shares of Capital Securities.

“Other Taxes” means any and all stamp, documentary or similar taxes, or any
other excise or property taxes or similar levies that arise on account of any
payment made or required to be made under any Loan Document or from the
execution, delivery, registration, recording or enforcement of any Loan
Document.

“Outstanding” means, with respect to any 2009 Note, such 2009 Note to the extent
that it shall remain outstanding and amounts shall not have been set aside for
the repurchase or retirement thereof, on terms and conditions reasonably
satisfactory to the Administrative Agent.

“Participant” is defined in clause (d) of Section 12.11.

“Participation Fees” is defined in clause (b) of Section 3.2.1.

“Patent Security Agreement” means any Patent Security Agreement executed and
delivered by any Obligor in substantially the form of Exhibit A to the Pledge
and Security Agreement, as amended, supplemented, amended and restated or
otherwise modified from time to time in accordance with its terms.

“PATRIOT Act” means the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed
into law October 26, 2001)), as amended or otherwise modified from time to time.

“PATRIOT Act Disclosures” means all documentation and other information which
the Administrative Agent or any Lender reasonably requests in order to comply
with its ongoing

 

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obligations under applicable “know your customer” and anti-money laundering
rules and regulations, including the PATRIOT Act.

“PBGC” means the Pension Benefit Guaranty Corporation and any entity succeeding
to any or all of its functions under ERISA.

“Pension Plan” means a “pension plan”, as such term is defined in Section 3(2)
of ERISA, which is subject to Title IV of ERISA (other than a multiemployer plan
as defined in Section 4001(a)(3) of ERISA), and to which the Parent or any
corporation, trade or business that is, along with the Parent, a member of a
Controlled Group, may have liability, including any liability by reason of
having been a substantial employer within the meaning of Section 4063 of ERISA
at any time during the preceding five years, or by reason of being deemed to be
a contributing sponsor under Section 4069 of ERISA.

“Percentage” means, as the context may require, any Lender’s Revolving Loan
Percentage, Term Loan Percentage or Synthetic Deposit Percentage.

“Permitted Acquisition” means a transaction satisfying the requirements of
clause (b) of Section 8.9.

“Permitted Lien” is defined in Section 8.3.

“Permitted Receivables Transaction” means any transaction providing for the
assignment of Government Accounts with customary limited recourse obligations
for breach of seller representations and warranties that are standard in
Accounts-sales transactions.

“Permitted Refinancing” means, as to any Indebtedness (other than the
Obligations), the incurrence of other Indebtedness (whether with the same or
different lenders) to refinance such existing Indebtedness or the amendment,
renewal or other modification of such existing Indebtedness; provided that, in
the case of such other Indebtedness or modified Indebtedness, the following
conditions are satisfied:

(a)               the weighted average life to maturity of such refinancing or
modified Indebtedness shall be greater than or equal to the weighted average
life to maturity of the Indebtedness being refinanced or modified, and the first
scheduled principal payment in respect of such refinancing or modified
Indebtedness shall not be earlier than the first scheduled principal payment in
respect of the Indebtedness being refinanced or modified;

(b)               the principal amount of such refinancing or modified
Indebtedness shall be less than or equal to the principal amount then
outstanding of the Indebtedness being refinanced or modified;

(c)               each obligor on the refinancing or modified Indebtedness shall
have been an obligor on the Indebtedness being refinanced or modified;

(d)               the security, if any, for the refinancing or modified
Indebtedness shall be the same as that for the Indebtedness being refinanced or
modified (except to the extent

 

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that less security is granted to holders of the refinancing Indebtedness or
modified Indebtedness); and

(e)               the refinancing or modified Indebtedness is subordinated to
the Obligations to the same degree, if any, or to a greater degree as the
Indebtedness being refinanced or modified.

“Permitted Seller Debt” is defined in clause (k) of Section 8.2.

“Person” means any natural person, corporation, limited liability company,
partnership, joint venture, association, trust or unincorporated organization,
Governmental Authority or any other legal entity, whether acting in an
individual, fiduciary or other capacity.

“Platform” is defined in clause (b) of Section 10.10.

“Pledge and Security Agreement” means the Pledge and Security Agreement executed
and delivered by an Authorized Officer of each Obligor, substantially in the
form of Exhibit G hereto, together with any supplemental Foreign Pledge
Agreements delivered from time to time pursuant to any Loan Document, in each
case as amended, supplemented, amended and restated or otherwise modified from
time to time in accordance with its terms.

“Proceeds Percentage” means, at any time of determination with respect to a
mandatory prepayment or commitment reduction in respect of Excess Cash Flow
pursuant to clause (d) of Section 3.1.1 or Net Equity Proceeds pursuant to
clause (g) of Section 3.1.1, (i) if the Leverage Ratio set forth in the
Compliance Certificate most recently delivered by the Parent to the
Administrative Agent pursuant to clause (c) of Section 7.1.1 is greater than
2.25:1, 50%, (ii) if such Leverage Ratio is less than or equal to 2.25:1 but
greater than 1.75:1, 25%, and (iii) if such Leverage Ratio is less than or equal
to 1.75:1, 0%.

“Projections” shall mean the projections required to be delivered pursuant to
clause (c) of Section 5.1.7, it being understood that the Projections and any
such other projections or data are subject to significant uncertainties and
contingencies, many of which are beyond the control of the Parent, the Borrower
and their respective Subsidiaries, and no assurance can be given that the
Projections or any such other projections or data will be realized.

“Quarterly Payment Date” means the last Business Day of March, June, September
and December.

“Rate Protection Agreement” means, collectively, any agreements with respect to
Hedging Obligations entered into by the Borrower or any of its Subsidiaries
under which the counterparty of such agreement is (or at the time such agreement
was entered into, was) the Administrative Agent, a Lender or an Affiliate of a
Lender or an Affiliate of the Administrative Agent.

“Redeemable Capital Securities” means Capital Securities of the Parent that,
either by its terms, by the terms of any security into which it is convertible
or exchangeable or otherwise, (i) are or upon the happening of an event or
passage of time would be required to be redeemed in whole or in part (except for
consideration comprised of Capital Securities of the Parent which are

 

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not Redeemable Capital Securities) on or prior to the seven and one-half year
anniversary of the Closing Date, (ii) are redeemable in whole or in part at the
option of the holder thereof (except for consideration comprised of Capital
Securities of the Parent which are not Redeemable Capital Securities) at any
time prior to such date or (iii) are convertible into or exchangeable (in whole
or in part) for Indebtedness of the Parent or any of its Subsidiaries at any
time prior to such date.

“Register” is defined in clause (b) of Section 2.7.

“Reimbursement Obligation” means a Revolving Reimbursement Obligation and/or a
Synthetic Reimbursement Obligation.

“Release” means a “release”, as such term is defined in CERCLA.

“Replacement Lender” is defined in Section 4.11.

“Repurchase Obligations” means obligations incurred pursuant to inventory
repurchase agreements entered into in the ordinary course of the business of the
Borrower and its Subsidiaries consistent with reasonable and customary industry
practices in such business in connection with floor-plan financing arrangements
provided by financial institutions to retailers; provided that in no event shall
the terms of such obligations require the obligor thereof to make any cash
payment in respect thereof until title to such inventory has been transferred to
the Borrower or any such Subsidiary, as applicable.

“Required Lenders” means, at any time, Lenders holding more than 50% of the
Total Exposure Amount (it being understood that, for purposes of calculating
such percentage, the Revolving Lenders holding the Revolving Reimbursement
Obligations, and not the Revolving Issuer with respect thereto, shall be treated
as holding the Revolving Letter of Credit Outstandings).

“Resource Conservation and Recovery Act” means the Resource Conservation and
Recovery Act, 42 U.S.C. Section 6901, et seq., as amended.

“Restricted Payment” means (i) the declaration or payment of any dividend (other
than dividends to be paid or in fact paid in Capital Securities of the Parent
(other than Redeemable Capital Securities)) on, or the making of any payment or
distribution on account of, or setting apart assets for a sinking or other
analogous fund for, the purchase, redemption, defeasance, retirement or other
acquisition of any class of Capital Securities of the Parent or any of its
Subsidiaries or any warrants or options to purchase any such Capital Securities,
whether now or hereafter outstanding, or the making of any other payment or
distribution (other than in Capital Securities (other than Redeemable Capital
Securities) of the Parent) in respect thereof, either directly or indirectly,
whether in cash or property, obligations of the Parent or any of its
Subsidiaries or otherwise or (ii) (x) the making of any payment or prepayment of
principal of, or premium or interest on, the 2009 Notes other than the stated,
scheduled date for payment of interest set forth in the 2009 Notes Indenture,
(y) the redemption, retirement, purchase, defeasance or other acquisition of any
2009 Notes or (z) the making of any deposit (including the payment of amounts
into a sinking fund or other similar fund) for any of the foregoing purposes.

 

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“Revolving Issuer” means the Administrative Agent in its capacity as Issuer of
Revolving Letters of Credit. At the request of the Administrative Agent and with
the Borrower’s consent (not to be unreasonably withheld), another Lender or an
Affiliate of the Administrative Agent may issue one or more Revolving Letters of
Credit hereunder.

“Revolving Letter of Credit” is defined in Section 2.1.2.

“Revolving Letter of Credit Commitment” means the Revolving Issuer’s obligation
to issue Letters of Credit pursuant to clause (a) of Section 2.1.2 and, with
respect to each Revolving Loan Lender, such Lender’s Revolving Letter of Credit
Participation Obligation.

“Revolving Letter of Credit Commitment Amount” means, on any date, a maximum
amount of $30,000,000, as such amount may be permanently reduced from time to
time pursuant to Section 2.2.

“Revolving Letter of Credit Participation Obligation” is defined in clause (a)
of Section 2.6.1.

“Revolving Letter of Credit Outstandings” means, at any time of determination,
the sum of (i) the aggregate Stated Amount of all issued and outstanding
Revolving Letters of Credit plus (ii)  all outstanding Revolving Reimbursement
Obligations.

“Revolving Loan” is defined in clause (a) of Section 2.1.1.

“Revolving Loan Commitment” means, relative to any Lender, such Lender’s
obligation (if any) to make Revolving Loans pursuant to clause (a) of Section
2.1.1.

“Revolving Loan Commitment Amount” means, on any date, $40,000,000 as such
amount may be reduced from time to time pursuant to Section 2.2.

“Revolving Loan Commitment Termination Date” means the earliest of

(a)

Revolving Loan Maturity Date;

(b)               the date on which the Revolving Loan Commitment Amount is
terminated in full or reduced to zero pursuant to the terms of this Agreement;
and

(c)

the date on which any Commitment Termination Event occurs.

Upon the occurrence of any event described above, the Revolving Loan Commitments
shall terminate automatically and without any further action.

“Revolving Loan Exposure” means, as of any date of determination, (i) prior to
the termination of the Revolving Loan Commitments, the aggregate amount of all
Revolving Loan Commitments; and (ii) after the termination of the Revolving
Commitments, the sum of (a) the aggregate outstanding principal amount of all
Revolving Loans and (b) all Revolving Letter of Credit Outstandings.

 

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“Revolving Loan Lender” is defined in clause (a) of Section 2.1.1.

“Revolving Loan Maturity Date” means (i) if, as of February 3, 2009, more than
$25,000,000 in aggregate principal amount of the 2009 Notes is Outstanding,
February 3, 2009 and (ii) otherwise, October 31, 2010.

“Revolving Loan Percentage” means, relative to any Revolving Loan Lender, the
applicable percentage relating to Revolving Loans set forth opposite its name on
Schedule II hereto under the Revolving Loan Commitment column or set forth in a
Lender Assignment Agreement under the Revolving Loan Commitment column, as such
percentage may be adjusted from time to time pursuant to Lender Assignment
Agreements executed by such Lender and its Assignee Lender and delivered
pursuant to Section 12.11. A Lender shall not have any Revolving Loan Commitment
if its percentage under the Revolving Loan Commitment column is zero.

“Revolving Note” means a promissory note of the Borrower payable to any
Revolving Loan Lender, in the form of Exhibit A-1 hereto (as such promissory
note may be amended, endorsed or otherwise modified from time to time),
evidencing the aggregate Indebtedness of the Borrower to such Revolving Loan
Lender resulting from outstanding Revolving Loans, and also means all other
promissory notes accepted from time to time in substitution therefor or renewal
thereof.

“Revolving Reimbursement Obligation” is defined in Section 2.6.3.

“S&P” means Standard & Poor’s Rating Services, a division of The McGraw-Hill
Companies, Inc.

“SEC” means the United States Securities and Exchange Commission.

“Secured Parties” means, collectively, the Lenders, the Issuers, the
Administrative Agent, each counterparty to a Rate Protection Agreement and each
of their respective successors, transferees and assigns.

“Solvent” means, with respect to any Person on a particular date, that, on such
date, without giving effect to intercompany balances between Obligors (a) the
fair value of the property of such Person is greater than the total amount of
liabilities, including contingent liabilities, of such Person, (b) the present
fair salable value of the assets of such Person is not less than the amount that
will be required to pay the probable liability of such Person on its debts as
they become absolute and matured, (c) such Person does not intend to incur debts
or liabilities beyond the ability of such Person to pay as such debts and
liabilities mature, and (d) such Person is not engaged in business or a
transaction, and such Person is not about to engage in business or a
transaction, for which the property of such Person would constitute an
unreasonably small capital. The amount of contingent liabilities at any time
shall be computed as the amount that, in light of all the facts and
circumstances existing at such time, can reasonably be expected to become an
actual or matured liability.

“Stated Amount” means, on any date and with respect to any Letter of Credit, the
total amount then available to be drawn under such Letter of Credit.

 

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“Stated Expiry Date” means, with respect to any Letter of Credit, its date of
expiration.

“Stated Maturity Date” means

(a)

with respect to all Term Loans, the Term Loan Maturity Date;

(b)               with respect to all Revolving Loans, the Revolving Loan
Maturity Date; and

(c)               with respect to all Synthetic Deposits, the Synthetic Facility
Maturity Date.

“Statutory Reserve Rate” means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
of one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is subject with
respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred
to as “Eurocurrency Liabilities” in Regulation D of the Board). Such reserve
percentages shall include those imposed pursuant to such Regulation D. LIBO Rate
Loans shall be deemed to constitute eurocurrency funding and to be subject to
such reserve requirements without benefit of or credit for proration, exemptions
or offsets that may be available from time to time to any Lender under such
Regulation D or any comparable regulation. The Statutory Reserve Rate shall be
adjusted automatically on and as of the effective date of any change in any
reserve percentage.

“Subsidiary” means, with respect to any Person, any corporation, limited
liability company, partnership or other entity (“Other Person”) of which more
than 50% of the Voting Securities of such Other Person (irrespective of whether
at the time Capital Securities of any other class or classes of such Other
Person shall or might have voting power upon the occurrence of any contingency)
is at the time directly or indirectly owned or controlled by such Person, by
such Person and one or more other Subsidiaries of such Person, or by one or more
other Subsidiaries of such Person.

“Subsidiary Guarantor” means each Subsidiary that has executed and delivered the
Subsidiary Guaranty to the Administrative Agent.

“Subsidiary Guaranty” means the subsidiary guaranty executed and delivered by
each Subsidiary Guarantor pursuant to the terms of this Agreement, substantially
in the form of Exhibit F hereto, as amended, supplemented, amended and restated
or otherwise modified from time to time in accordance with its terms.

“Survey” shall mean a survey of any Mortgaged Property, Consent Required Leased
Property or Free Leased Property (and all improvements thereon) (a) prepared by
a surveyor or engineer licensed to perform surveys in the state where such
Mortgaged Property, Consent Required Leased Property or Free Leased Property is
located, (b)  dated (or redated) not earlier than six months prior to the date
of delivery thereof unless there shall have occurred within six months prior to
such date of delivery any exterior construction on the site of such Mortgaged
Property, Consent Required Leased Property or Free Leased Property, in which
event such

 

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survey shall be dated (or redated) after the completion of such construction or
if such construction shall not have been completed as of such date of delivery,
not earlier than 20 days prior to such date of delivery, (c) certified by the
surveyor (in a manner reasonably acceptable to the Administrative Agent) to the
Administrative Agent and the title company issuing the Title Policy specified in
Section 5.1.11 of this Agreement, (d) complying in all respects with the minimum
detail requirements of the American Land Title Association as such requirements
are in effect on the date of preparation of such survey and (e) sufficient for
the company issuing a Title Policy to remove all standard survey exceptions from
the title insurance policy (or commitment) relating to such Mortgaged Property,
Consent Required Leased Property or Free Leased Property and issue the
endorsements of the type required by clause (b)(vii) of Section 5.1.11 or such
other survey as is in form and substance reasonably acceptable to the
Administrative Agent. Notwithstanding the foregoing, the Surveys delivered with
respect to Mortgaged Properties set forth in Item 5.1.11(b)(ii) of the
Disclosure Schedule need not satisfy the requirements of clauses (a) through (d)
above so long as the surveys delivered for such Mortgaged Properties shall be
sufficient for the company issuing a Title Policy to remove all standard survey
exceptions from the title insurance policy (or commitment) relating to such
Mortgaged Property, Consent Required Leased Property or Free Leased Property and
issue the endorsements of the type required by clause (b)(vii) of Section
5.1.11.

“Synthetic Account Balance” means, at any time, the amount on deposit in the
Synthetic Deposit Account excluding any interest accrued thereon and deposited
or credited therein.

“Syndication Agent” shall mean Credit Suisse, Cayman Islands Branch and includes
each other Person appointed as the successor Syndication Agent pursuant to
Section 10.4.

“Synthetic Deposit” is defined in clause (b) of Section 2.1.4.

“Synthetic Deposit Account” means the account established by the Administrative
Agent or an Affiliate thereof at Credit Suisse with the title “Synthetic Lenders
(Champion Home Builders) Credit-Linked Deposit Account” pursuant to clause (a)
of Section 2.1.4.

“Synthetic Deposit Amount” means, with respect to any Synthetic Lender as of any
date, an amount equal to the product of (a) such Lender’s Synthetic Deposit
Percentage as of such date multiplied by (b) the Synthetic Facility Available
Amount as of such date.

“Synthetic Deposit Sub-Account” is defined in clause (a) of Section 2.1.4.

“Synthetic Deposit Percentage” means, relative to any Lender, the applicable
percentage relating to Synthetic Deposits set forth opposite its name on
Schedule II hereto under the Synthetic Deposit column or set forth in a Lender
Assignment Agreement under the Synthetic Deposit column, as such percentage may
be adjusted from time to time pursuant to Lender Assignment Agreements executed
by such Lender and its assignee Lender and delivered pursuant to Section 12.11.

“Synthetic Deposit Return” is defined in clause (d) of Section 2.1.4.

“Synthetic Facility Available Amount” means, as of any date, (i) $60,000,000
minus (ii) the aggregate amount of Disbursements reimbursed by the Borrower
during the 91-day

 

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period immediately preceding such date; provided that reimbursements of
Disbursements under Letters of Credit supporting industrial revenue bonds
permitted hereunder shall not reduce the Synthetic Facility Available Amount,
solely to the extent that such Disbursements are in respect of scheduled
interest payments under such bonds.

“Synthetic Facility Maturity Date” means (i) if, as of February 3, 2009, more
than $25,000,000 in aggregate principal amount of the 2009 Notes is Outstanding,
February 3, 2009 and (ii) otherwise, October 31, 2012.

“Synthetic Issuer” means Credit Suisse in its capacity as issuer of the
Synthetic Letters of Credit, or another Lender acting in such capacity at the
request of Credit Suisse and with the consent of the Borrower (which consent
shall not be unreasonably withheld or delayed), in either case together with its
permitted successors and assigns in such capacity.

“Synthetic Lease” means, as applied to any Person, any lease (including leases
that may be terminated by the lessee at any time) of any property (whether real,
personal or mixed) (a) that is not a capital lease in accordance with GAAP and
(b) in respect of which the lessee retains or obtains ownership of the property
so leased for federal income tax purposes, other than any such lease under which
that Person is the lessor.

“Synthetic Lender” means, as of any time of determination, any Lender which has
a Synthetic Deposit Percentage pursuant to Schedule II hereto or pursuant to a
Lender Assignment Agreement which, in either case, is greater than 0%.

“Synthetic Letter of Credit” is defined in clause (a) of Section 2.1.5.

“Synthetic Letter of Credit Commitment” means the Synthetic Issuer’s obligation
to issue Synthetic Letters of Credit pursuant to Section 2.1.5 and, with respect
to each Synthetic Lender, such Lender's Synthetic Letter of Credit Participation
Obligation.

“Synthetic Letter of Credit Outstandings” means, at any time of determination,
the sum of (i) the aggregate Stated Amount of all issued and outstanding
Synthetic Letters of Credit plus (ii) all outstanding Synthetic Reimbursement
Obligations.

“Synthetic Letter of Credit Participation Obligation” is defined in clause (b)
of Section 2.6.1.

“Synthetic Reimbursement Obligation” is defined in Section 2.6.3.

“Taxes” means any and all income, stamp or other taxes, duties, levies, imposts,
charges, assessments, fees, deductions or withholdings, now or hereafter
imposed, levied, collected, withheld or assessed by any Governmental Authority,
and all interest, penalties or similar liabilities with respect thereto.

“Term Loan” is defined in Section 2.1.3.

“Term Loan Commitment” means, relative to any Term Loan Lender, such Lender’s
obligation to make Term Loans pursuant to Section 2.1.3.

 

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“Term Loan Commitment Amount” means $100,000,000.

“Term Loan Lender” is defined in Section 2.1.3.

“Term Loan Maturity Date” means (i) if, as of February 3, 2009, more than
$25,000,000 in aggregate principal amount of the 2009 Notes is Outstanding,
February 3, 2009 and (ii) otherwise, October 31, 2012.

“Term Loan Percentage” means, relative to any Lender, the applicable percentage
relating to Term Loans set forth opposite its name on Schedule II hereto under
the Term Loan Amount column or set forth in a Lender Assignment Agreement under
the Term Loan Amount column, as such percentage may be adjusted from time to
time pursuant to Lender Assignment Agreements executed by such Lender and its
Assignee Lender and delivered pursuant to Section 12.11.

“Term Note” means a promissory note of the Borrower payable to any Lender, in
the form of Exhibit A-2 hereto (as such promissory note may be amended, endorsed
or otherwise modified from time to time), evidencing the aggregate Indebtedness
of the Borrower to such Lender resulting from outstanding Term Loans, and also
means all other promissory notes accepted from time to time in substitution
therefor or renewal thereof.

“Termination Date” means the date on which all Obligations have been paid in
full (other than indemnity obligations not yet due and payable) in cash, the
Synthetic Lenders have received the full amount of their Synthetic Deposits, all
Letters of Credit have been terminated, expired or Cash Collateralized and all
Commitments shall have terminated.

“Terrorism Laws” means any of the following (a) Executive Order 13224 issued by
the President of the United States, (b) the Terrorism Sanctions Regulations
(Title 31 Part 595 of the U.S. Code of Federal Regulations), (c) the Terrorism
List Governments Sanctions Regulations (Title 31 Part 596 of the U.S. Code of
Federal Regulations), (d) the Foreign Terrorist Organizations Sanctions
Regulations (Title 31 Part 597 of the U.S. Code of Federal Regulations), (e) the
PATRIOT Act, (f) all other present and future legal requirements of any
Governmental Authority addressing, relating to, or attempting to eliminate,
terrorist acts and acts of war and (g) any regulations promulgated pursuant
thereto or pursuant to any legal requirements of any Governmental Authority
governing terrorist acts and acts of war.

“Title Policy” is defined in clause (b)(iii) of Section 5.1.11.

“Total Debt” means, without duplication and on any date, the outstanding
principal amount of all Indebtedness of the Parent and its Subsidiaries (other
than the CDC Subsidiaries) reported on the consolidated balance sheet of the
Parent and its Subsidiaries in accordance with GAAP (other than (i) all
obligations relative to the undrawn amount of letters of credit, (ii)
Indebtedness described in clause (d) of the definition of Indebtedness and
(iii) Deferred Acquisition Obligations (A) that have not been liquidated or
(B) to the extent such obligations may, in accordance with their terms, be
satisfied at the sole option of the obligor thereof at any time regardless of
the occurrence of any event by the delivery of Capital Securities (other than
Redeemable Capital Securities) of the Parent).

 

 

“Total Exposure Amount” means, on any date of determination, the sum of (i) the
outstanding principal amount of all Term Loans, plus (ii) the Revolving Loan
Exposure plus (iii) the aggregate amount of all Synthetic Deposits.

“Trademark Security Agreement” means any Trademark Security Agreement executed
and delivered by any Obligor substantially in the form of Exhibit C to any
Security Agreement, as amended, supplemented, amended and restated or otherwise
modified from time to time in accordance with its terms.

“Transaction” is defined in the first recital.

“Transaction Costs” is defined in the first recital.

“Travelers” means The St. Paul Travelers Companies, Inc.

“Travelers Deposit” means the cash deposit in the amount of $6,500,000 securing
a portion of the Borrower’s obligation to reimburse Travelers for the deductible
portion of payments made under insurance policies provided by Travelers to the
Borrower.

“type” means, relative to any Loan, the portion thereof, if any, being
maintained as a Base Rate Loan or a LIBO Rate Loan.

“UCC” means the Uniform Commercial Code as in effect from time to time in the
State of New York; provided, that if, with respect to any Filing Statement or by
reason of any provisions of law, the perfection or the effect of perfection or
non-perfection of the security interests granted to the Administrative Agent
pursuant to the applicable Loan Document is governed by the Uniform Commercial
Code as in effect in a jurisdiction of the United States other than New York,
UCC means the Uniform Commercial Code as in effect from time to time in such
other jurisdiction for purposes of the provisions of each Loan Document and any
Filing Statement relating to such perfection or effect of perfection or
non-perfection.

“United States” or “U.S.” means the United States of America, its fifty states
and the District of Columbia.

“Voting Securities” means, with respect to any Person, Capital Securities of any
class or kind ordinarily having the power to vote (that is, not contingent on
the happening of any event) for the election of directors, managers or other
voting members of the governing body of such Person.

“Welfare Plan” means a “welfare plan”, as such term is defined in Section 3(1)
of ERISA.

“wholly owned Subsidiary” refers to any Subsidiary all of the outstanding common
stock (or similar equity interest) of which (other than any director’s
qualifying shares or investments by foreign nationals mandated by applicable
laws) is owned directly or indirectly by the Parent.

SECTION 1.2. Use of Defined Terms. Unless otherwise defined or the context
otherwise requires, terms for which meanings are provided in this Agreement
shall have such

 

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meanings when used in each other Loan Document and the Disclosure Schedule, and
each notice and other communication delivered from time to time in connection
with any Loan Document.

SECTION 1.3. Cross-References. Unless otherwise specified, references in a Loan
Document to any Schedule, Article or Section are references to such Schedule,
Article or Section of such Loan Document, and references in any Schedule,
Article, Section or definition to any clause are references to such clause of
such Schedule, Article, Section or definition.

SECTION 1.4. Accounting and Financial Determinations; Time. (a) Unless otherwise
specified, all accounting terms used in each Loan Document shall be interpreted,
and all accounting determinations and computations thereunder (including under
Section 8.4 and the definitions used in such calculations) shall be made, in
accordance with GAAP. Unless otherwise expressly provided, all financial
covenants and defined financial terms shall be computed on a consolidated basis
for the Parent and its Subsidiaries, in each case without duplication.

(b) For purposes of computing the Leverage Ratio and the Interest Coverage
Ratio, such ratios (and any financial calculations or components required to be
made or included therein) shall be determined, with respect to the relevant
period, after giving pro forma effect to each Permitted Acquisition and
Disposition of a Person, business or asset consummated during such period,
together with all transactions relating thereto consummated during such period
(including any incurrence, assumption, refinancing or repayment of
Indebtedness), as if such Permitted Acquisition, Disposition and related
transactions had been consummated on the first day of such period, in each case
(i) based on historical results accounted for in accordance with GAAP and (ii)
prepared in a manner consistent with Regulation S-X under the Securities Act of
1933 (as amended) and, with respect to all calculations made in clauses (i) and
(ii), to the extent applicable, based upon reasonable assumptions that are
specified in reasonable detail in the relevant Compliance Certificate or other
certificate furnished to the Administrative Agent or Lender in connection with
the terms of this Agreement; provided that, in preparing the calculations
contemplated by the foregoing provisions of this clause (b), synergies generated
by any such Permitted Acquisition, Disposition and related transactions may be
taken into account if (i) the Administrative Agent has given its written
approval thereof and (ii) such Compliance Certificate or other certificate
includes a certification as to the Parent’s good faith belief that such
synergies will be achieved.

(c) If the Borrower notifies the Administrative Agent that the Borrower wishes
to amend any covenant in Article VII or VIII or any related definition to
eliminate the effect of any change in GAAP occurring after the date of this
Agreement on the operation of such covenant (or if the Administrative Agent
notifies the Borrower that the Required Lenders wish to amend Article VII or
VIII or any related definition for such purpose), then the Borrower’s compliance
with such covenant shall be determined on the basis of GAAP in effect
immediately before the relevant change in GAAP became effective, until either
such notice is withdrawn or such covenant is amended in a manner satisfactory to
the Borrower and the Required Lenders. In the event of any such notification
from the Borrower or the Administrative Agent and until such notice is withdrawn
or such covenant is so amended, the Borrower will furnish to each Lender and the
Administrative Agent, in addition to the financial statements required to be
furnished pursuant to Section 7.1 (the “Current GAAP Financials”), (i) the
financial statements described in such

 

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Section based upon GAAP as in effect at the time such covenant was agreed to
(the “Prior GAAP Financials”) and (ii) a reconciliation between the Prior GAAP
Financials and the Current GAAP Financials.

(d) Unless otherwise indicated, all references to the time of a day in a Loan
Document shall refer to New York, New York time.

ARTICLE II

COMMITMENTS, BORROWING AND ISSUANCE

PROCEDURES, NOTES AND LETTERS OF CREDIT

SECTION 2.1. Commitments. On the terms and subject to the conditions of this
Agreement, the Lenders and the Issuers severally agree to make Credit Extensions
as set forth below.

SECTION 2.1.1. Revolving Loan Commitment. From time to time on any Business Day
occurring after the Closing Date but prior to the Revolving Loan Commitment
Termination Date,

(a)               each Lender that has a Revolving Loan Commitment (referred to
as a “Revolving Loan Lender”), agrees that it will make loans (relative to such
Lender, its “Revolving Loans”) to the Borrower equal to such Lender’s Revolving
Loan Percentage of the aggregate amount of each Borrowing of the Revolving Loans
requested by the Borrower to be made on such day; and

(b)               on the terms and subject to the conditions hereof, the
Borrower may from time to time borrow, prepay and reborrow Revolving Loans. No
Revolving Loan Lender shall be permitted or required to make any Revolving Loan
if, after giving effect thereto, the aggregate outstanding principal amount of
all Revolving Loans of such Revolving Loan Lender, together with such Lender’s
Revolving Loan Percentage of the aggregate amount of all Revolving Letter of
Credit Outstandings, would exceed such Lender’s Revolving Loan Percentage of the
then existing Revolving Loan Commitment Amount.

SECTION 2.1.2. Revolving Letters of Credit. From time to time on any Business
Day occurring from the Closing Date but thirty days prior to the Revolving Loan
Maturity Date, each Issuer agrees that it will, to the extent requested by the
Borrower,

(a)               issue one or more letters of credit (relative to such Issuer,
its “Revolving Letter of Credit”) for the account of the Borrower or any
Subsidiary Guarantor in the Stated Amount requested by the Borrower on such day;
or

(b)               extend the Stated Expiry Date of an existing Revolving Letter
of Credit previously issued hereunder.

The Stated Expiry Date of each Revolving Letter of Credit shall be no later than
the earlier to occur of (i) five Business Days before the Revolving Loan
Commitment Termination Date and (ii) one year from the date of such issuance or
extension. Any Revolving Letter of Credit may provide for automatic renewal
thereof for additional periods of up to 12 months so long as no Revolving Letter
of Credit will, in any event, have a Stated Expiry Date that is later

 

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than five Business Days before the Revolving Loan Commitment Termination Date.
No Issuer shall be permitted or required to issue any Revolving Letter of Credit
if, after giving effect thereto, (i) the aggregate amount of all Revolving
Letter of Credit Outstandings would exceed the Revolving Letter of Credit
Commitment Amount or (ii) the sum of the aggregate amount of all Revolving
Letter of Credit Outstandings plus the aggregate principal amount of all
Revolving Loans then outstanding would exceed the Revolving Loan Commitment
Amount.

SECTION 2.1.3. Term Loan Commitment. In a single Borrowing (which shall be a
Business Day) occurring on the Closing Date, each Lender that has a Term Loan
Commitment (referred to as a “Term Loan Lender”) agrees that it will make loans
(relative to such Lender, its “Term Loans”) to the Borrower equal to such
Lender’s Term Loan Percentage of the aggregate amount of the Borrowing of
Term Loans requested by the Borrower to be made on such day. No amounts paid or
prepaid with respect to Term Loans may be reborrowed.

SECTION 2.1.4. Synthetic Deposit Account. (a) On or prior to the Closing Date,
the Administrative Agent shall establish the Synthetic Deposit Account. The
Administrative Agent shall maintain records enabling it to determine at any time
the amount of the interest of each Synthetic Lender in the Synthetic Deposit
Account (the interest of each Synthetic Lender in the Synthetic Deposit Account,
as evidenced by such records, being referred to as such Lender’s “Synthetic
Deposit Sub-Account”). The Administrative Agent shall establish such additional
Synthetic Deposit Sub-Accounts for assignee Lenders as shall be required
pursuant to Section 12.11. No Person (other than the Administrative Agent or any
of its sub-agents) shall have the right to make any withdrawals from the
Synthetic Deposit Account or exercise any other right or power with respect
thereto, except as expressly provided herein. Without limiting the generality of
the foregoing, each party hereto acknowledges and agrees that no amount on
deposit at any time in the Synthetic Deposit Account (i) shall be the property
of any Secured Party (other than the Administrative Agent for the benefit of the
Synthetic Issuer) and (ii) shall constitute “collateral” under the Loan
Documents other than in favor of the Synthetic Issuer in respect of Synthetic
Letter of Credit Participation Obligations. In addition, each Synthetic Lender
hereby grants to the Administrative Agent for the benefit of the Synthetic
Issuer a security interest in its rights and interests in such Synthetic
Lender’s Synthetic Deposit to secure the obligations of such Synthetic Lender
hereunder. Each Synthetic Lender agrees that its right, title and interest with
respect to the Synthetic Deposit Account shall be limited to the right to
require amounts in its Synthetic Deposit Sub-Account to be used as expressly set
forth herein and that it will have no right to require the return of its
Synthetic Deposit other than as expressly provided herein (each Synthetic Lender
hereby acknowledging that its Synthetic Deposit constitutes payment for its
Synthetic Letter of Credit Participation Obligations and that the Synthetic
Issuer will be issuing, amending, renewing and extending Synthetic Letters of
Credit in reliance on the availability of such Lender’s Synthetic Deposit to
discharge such Lender’s obligations in accordance with clause (c) of this
Section 2.1.4 and Section 2.6.3). The funding of the Synthetic Deposits and the
agreements with respect thereto set forth in this Agreement constitute
arrangements solely among the Administrative Agent, the Synthetic Issuer and the
Synthetic Lenders with respect to the funding and reimbursement obligations of
the Synthetic Lenders under this Agreement, and do not constitute loans,
extensions of credit or other financial accommodations to any Obligor.

 

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(b) On the Closing Date, each Synthetic Lender shall deposit in the Synthetic
Deposit Account an amount in Dollars equal to such Lender’s Synthetic Deposit
Amount (each amount so deposited, such Lender’s “Synthetic Deposit”).

(c) Each Synthetic Lender irrevocably and unconditionally agrees that its
Synthetic Deposit in the Synthetic Deposit Account shall be withdrawn and
distributed as follows:

(i)                In the event the Borrower does not reimburse the Synthetic
Letter of Credit Issuer pursuant to Section 2.6.2, the Administrative Agent
shall withdraw from the Synthetic Deposit Account the amount of such
unreimbursed Disbursement (and debit the Synthetic Deposit Sub-Account of each
Synthetic Lender in the amount of such Synthetic Lender’s Synthetic Deposit
Percentage of such unreimbursed Disbursement) and make such amount available to
the Synthetic Issuer and the Synthetic Facility Available Amount shall be
reduced by such amount.

(ii)               In the event the Borrower voluntarily decides to permanently
reduce the Synthetic Facility Available Amount, the Administrative Agent will
withdraw from the Synthetic Deposit Account an amount equal to such reduction,
and pay to each Synthetic Lender an amount equal to the product of (A) such
Lender’s Synthetic Deposit Percentage multiplied by (B) the aggregate amount of
such reduction. In no event shall the Synthetic Facility Available Amount be
reduced to an amount that is less than the aggregate amount of the Synthetic
Letter of Credit Outstandings.

(iii)              Concurrently with the effectiveness of any assignment by any
Synthetic Lender of all or any portion of its Synthetic Deposit, the
corresponding portion of the assignor’s Synthetic Deposit Sub-Account shall be
transferred from the assignor’s Synthetic Deposit Sub-Account to the assignee’s
Synthetic Deposit Sub-Account in accordance with Section 12.11 and, if required
by Section 12.11, the Administrative Agent shall close such assignor’s Synthetic
Deposit Sub-Account.

(iv)              Upon the occurrence of the Termination Date (other than the
return of the portion of the Synthetic Deposit of each Synthetic Lender on
deposit in the Synthetic Deposit Account), in the event that all Synthetic
Letters of Credit have been returned, replaced, cancelled or Cash Collateralized
(including with Synthetic Deposits), all amounts remaining in the Synthetic
Deposit Account shall be returned to the Synthetic Lenders based on such
Synthetic Lender’s Synthetic Deposit Percentage.

(d) On each day on which Participation Fees are required to be paid with respect
to all or any portion of the Synthetic Deposits pursuant to clause (b) of
Section 3.2.1, the Administrative Agent shall pay to each Synthetic Lender an
amount (the “Synthetic Deposit Return”) equal to (i) the Base Return for the
relevant Investment Period less an amount equal to 0.10% per annum on such
Synthetic Deposits multiplied by (ii) such Synthetic Lender’s Synthetic Deposit
Percentage. Any amounts earned and received with respect to Synthetic Deposits
during any applicable Investment Period in excess of the Base Return shall be
for the account of the Administrative Agent. No Person other than the
Administrative Agent shall have any obligation under or in respect of this
clause.

 

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(e) Notwithstanding anything to the contrary in this Agreement, the Borrower
shall not be liable for any losses due to (i) the misappropriation of any Base
Return or Synthetic Deposit or (ii) the failure of the Administrative Agent to
pay the Synthetic Deposit Return to any Synthetic Lender (it being understood
and agreed for greater certainty that this clause shall not limit any obligation
of the Borrower hereunder to pay any Participation Fee). Neither the
Administrative Agent, the Synthetic Issuer nor any other Person guarantees any
rate of return on the investment of any Synthetic Deposit held in the Synthetic
Deposit Account.

(f) Notwithstanding any other provision of this Agreement, no Synthetic Letter
of Credit shall be issued nor any Stated Amount of any Synthetic Letter of
Credit increased, if, after giving effect thereto, the Synthetic Letter of
Credit Outstandings would exceed the Synthetic Account Balance.

(g) If the Synthetic Issuer is enjoined from taking any action referred to in
clause (c) of this Section 2.1.4, or if the Synthetic Issuer reasonably
determines that, by operation of law, it may reasonably be precluded from taking
any such action, or if any Obligor or Synthetic Lender challenges in any legal
proceeding any of the acknowledgements, agreements or characterizations set
forth in any of clause (a) of this Section 2.1.4, then, in any such case (and so
long as such event or condition shall be continuing), and notwithstanding
anything contained herein to the contrary, the Synthetic Issuer shall not be
required to issue, renew or extend any Synthetic Letter of Credit.

(h) In the event any payment of a Synthetic Reimbursement Obligation shall be
required to be refunded by the Synthetic Issuer to the Borrower after the return
of the Synthetic Deposits to the Synthetic Lenders as permitted hereunder, each
Synthetic Lender agrees to acquire and fund a participation in such refunded
amount equal to the lesser of its Synthetic Deposit Percentage thereof and the
amount of its Synthetic Deposit that shall have been so returned.

SECTION 2.1.5. Synthetic Letters of Credit. (a) From time to time on any
Business Day occurring from the Closing Date but thirty days prior to the
Synthetic Facility Maturity Date, the Synthetic Letter of Credit Issuer agrees
that it will, to the extent requested by the Borrower,

(i)                issue one or more letters of credit (its “Synthetic Letter of
Credit”) for the account of the Borrower or any Subsidiary Guarantor in the
Stated Amount requested by the Borrower on such day; or

(ii)               extend the Stated Expiry Date of an existing Synthetic Letter
of Credit previously issued hereunder.

The Stated Expiry Date of each Synthetic Letter of Credit shall be no later than
the earlier to occur of (x) five Business Days before the Synthetic Facility
Maturity Date and (y) one year from the date of such issuance or extension. Any
Synthetic Letter of Credit may provide for automatic renewal thereof for
additional periods of up to 12 months so long as no Synthetic Letter of Credit
will, in any event, have a Stated Expiry Date that is later than five Business
Days before the Synthetic Facility Maturity Date. The Synthetic Letter of Credit
Issuer shall not be permitted or required to issue any Synthetic Letter of
Credit if, after giving effect thereto, (i) the

 

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aggregate amount of all Synthetic Letter of Credit Outstandings would exceed the
Synthetic Facility Available Amount or (ii) the sum of the aggregate amount of
all Synthetic Letter of Credit Outstandings would exceed the amount on deposit
in the Synthetic Deposit Account.

(b) Schedule III contains a description of certain letters of credit and issued
for the account of the Borrower and/or one or more of its Subsidiaries and
outstanding on the Closing Date. Each such letter of credit, including any
extension or renewal thereof (each, as amended from time to time in accordance
with the terms thereof and hereof, an “Existing Letter of Credit”) shall
constitute a “Synthetic Letter of Credit” for all purposes of this Agreement,
issued, for purposes of clause (a) of Section 2.6, on the Closing Date. In
addition, on any date after the Closing Date on which any financial institution
or other Person becomes a Lender hereunder, with the consent of the Borrower,
the Administrative Agent and such Lender, any letters of credit issued by such
Lender for the account of the Borrower and/or one or more of its Subsidiaries
may be designated as Existing Letters of Credit (so long as such letters of
credit satisfy the requirements of Section 2.6 at such time), and if any such
letters of credit are so designated, Schedule III shall be deemed amended to
include same and same shall constitute “Synthetic Letters of Credit” for all
purposes of this Agreement, issued, for purposes of clause (a) of Section 2.6,
on the date of such designation. Any Lender hereunder to the extent it has
issued an Existing Letter of Credit that is to remain outstanding on the Closing
Date shall constitute a “Synthetic Issuer” for all purposes of this Agreement.

SECTION 2.2. Reduction of the Commitment Amounts. The Commitment Amounts are
subject to reduction from time to time pursuant to this Section.

SECTION 2.2.1. Optional Reductions. The Borrower may, from time to time on any
Business Day occurring on and after the Closing Date, voluntarily reduce the
amount of any Commitment Amount on the Business Day so specified by the
Borrower; provided, however, that all such reductions shall require at least
three Business Day’s prior notice to the Administrative Agent and be permanent,
and any partial reduction of any Commitment Amount shall be in a minimum amount
of $1,000,000 and in an integral multiple of $500,000. Any optional or mandatory
reduction of the Revolving Loan Commitment Amount pursuant to the terms of this
Agreement which reduces the Revolving Loan Commitment Amount below the Revolving
Letter of Credit Commitment Amount shall result in an automatic and
corresponding reduction of the Revolving Letter of Credit Commitment Amount to
an aggregate amount not in excess of the Revolving Loan Commitment Amount, as so
reduced.

SECTION 2.3. Borrowing Procedures.

SECTION 2.3.1. Term Loans and Revolving Loans. By delivering a Borrowing Request
to the Administrative Agent on or before 12:00 noon on a Business Day, the
Borrower may from time to time irrevocably request, on not less than one
Business Day’s notice in the case of Base Rate Loans, or three Business Days’
notice in the case of LIBO Rate Loans, and in either case not more than ten
Business Days’ notice, that a Borrowing be made, in the case of LIBO Rate Loans,
in a minimum amount of $1,000,000 and an integral multiple of $500,000, in the
case of Base Rate Loans, in a minimum amount of $1,000,000 and an integral
multiple of $500,000 or, in either case, in the unused amount of the applicable
Commitment. Each such irrevocable request shall be made by telephone confirmed
promptly by hand delivery or facsimile to the

 

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Administrative Agent of the applicable Borrowing Request. On the terms and
subject to the conditions of this Agreement, each Borrowing shall be comprised
of the type of Loans, and shall be made on the Business Day, specified in such
Borrowing Request. On or before 1:00 p.m. on such Business Day each Lender that
has a Commitment to make the Loans being requested shall deposit with the
Administrative Agent same day funds in an amount equal to such Lender’s
Percentage of the requested Borrowing. Such deposit will be made to an account
which the Administrative Agent shall specify from time to time by notice to the
Lenders. Unless the Administrative Agent shall have received notice from a
Lender prior to such time that such Lender will not make such deposit, the
Administrative Agent may assume that such Lender has made such deposit on such
Business Day and may, in reliance upon such assumption, make available to the
Borrower a corresponding amount. In such event, if a Lender has not in fact made
such deposit, then the applicable Lender and the Borrower each agrees to pay to
the Administrative Agent forthwith on demand (without duplication) such
corresponding amount with interest thereon, for each day from and including the
date such amount is made available to the Borrower to but excluding the date of
payment to the Administrative Agent, at (i) in the case of such Lender, the
greater of (A) (1) the Federal Funds Effective Rate, and (2) the rate reasonably
determined by the Administrative Agent to be the cost to it of funding such
amount, and (B) a rate determined by the Administrative Agent in accordance with
banking industry rules on interbank compensation or (ii) in the case of the
Borrower, the Adjusted Base Rate. If such Lender pays such amount to the
Administrative Agent, then such amount shall constitute such Lender’s Loan
included in such Borrowing. If the Borrower pays such amount to the
Administrative Agent, then such amount shall constitute a reduction of such
Borrowing. No Lender’s obligation to make any Loan shall be affected by any
other Lender’s failure to make any Loan.

SECTION 2.3.2. Synthetic Deposits. In the case of any Synthetic Deposits, the
Borrower may irrevocably request that Synthetic Deposits be made by the
applicable Lenders by delivering a Borrowing Request to the Administrative Agent
on or prior to the Closing Date.

SECTION 2.4. Continuation and Conversion Elections. By delivering a
Continuation/Conversion Notice to the Administrative Agent on or before
12:00 noon on a Business Day, the Borrower may from time to time irrevocably
elect, on not less than one Business Day’s notice in the case of Base Rate
Loans, or three Business Days’ notice in the case of LIBO Rate Loans, and in
either case not more than ten Business Days’ notice, that all, or any portion in
an aggregate minimum amount of $1,000,000 and an integral multiple of $500,000
be, in the case of Base Rate Loans, converted into LIBO Rate Loans or be, in the
case of LIBO Rate Loans, converted into Base Rate Loans or continued as LIBO
Rate Loans (in the absence of delivery of a Continuation/Conversion Notice with
respect to any LIBO Rate Loan at least three Business Days (but not more than
ten Business Days) before the last day of the then current Interest Period with
respect thereto, such LIBO Rate Loan shall, on such last day, automatically
convert to a Base Rate Loan); provided however, that (a) each such conversion or
continuation shall be pro rated among the applicable outstanding Loans of all
Lenders that have made such Loans, and (b) no portion of the outstanding
principal amount of any Loans may be continued as, or be converted into, LIBO
Rate Loans when any Default has occurred and is continuing. Each such
irrevocable election shall be made by telephone confirmed promptly by hand
delivery or facsimile to the Administrative Agent of the applicable
Continuation/Conversion Notice.

 

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SECTION 2.5. Funding. Each Lender may, if it so elects, fulfill its obligation
to make, continue or convert LIBO Rate Loans hereunder by causing one of its
foreign branches or Affiliates (or an international banking facility created by
such Lender) to make or maintain such LIBO Rate Loan; provided however, that,
such LIBO Rate Loan shall nonetheless be deemed to have been made and to be held
by such Lender, and the obligation of the Borrower to repay such LIBO Rate Loan
shall nevertheless be to such Lender for the account of such foreign branch,
Affiliate or international banking facility. In addition, the Borrower hereby
consents and agrees that, for purposes of any determination to be made for
purposes of Sections 4.1, 4.2, 4.3 or 4.4, it shall be conclusively assumed that
each Lender elected to fund all LIBOR Rate Loans by purchasing Dollar deposits
in its LIBOR Office’s interbank eurodollar market.

SECTION 2.6. Issuance Procedures. By delivering to the Administrative Agent an
Issuance Request on or before 12:00 noon on a Business Day, the Borrower may
from time to time irrevocably request on not less than two nor more than ten
Business Days’ notice, in the case of an initial issuance of a Letter of Credit
and not less than two Business Days’ prior notice, in the case of a request for
the extension of the Stated Expiry Date of a standby Letter of Credit (in each
case, unless a shorter notice period is agreed to by the applicable Issuer, in
its sole discretion), that such Issuer issue, or extend the Stated Expiry Date
of, a Revolving Letter of Credit in such form as may be requested by the
Borrower and approved by such Issuer, solely for the purposes described in
Section 7.7. Each Issuer will make available to the beneficiary thereof the
original of the Letter of Credit which it issues.

SECTION 2.6.1. Other Lenders’ Participation. (a) Upon the issuance of each
Revolving Letter of Credit or an increase in the Stated Amount thereof, and
without further action, each Revolving Loan Lender (other than the applicable
Revolving Issuer) shall be deemed to have irrevocably purchased, to the extent
of its Revolving Loan Percentage, a participation interest in such Revolving
Letter of Credit (each, a “Revolving Letter of Credit Participation Obligation”)
and such Revolving Loan Lender shall, to the extent of its Revolving Loan
Percentage, be responsible for reimbursing within one Business Day of receiving
notice from the applicable Revolving Issuer for Revolving Reimbursement
Obligations which have not been reimbursed by the Borrower in accordance with
Section 2.6.3 (with the terms of this Section surviving the termination of this
Agreement). In addition, such Revolving Loan Lender shall, to the extent of its
Revolving Loan Percentage, be entitled to receive a ratable portion of the
Letter of Credit fees payable pursuant to Section 3.3.3 with respect to each
Revolving Letter of Credit (other than the fees payable to the Revolving Issuer
of such Revolving Letter of Credit pursuant to the last two sentences of Section
3.3.3) and of interest payable pursuant to Section 3.2 with respect to any
Revolving Reimbursement Obligation. To the extent that any Revolving Loan Lender
has reimbursed any Revolving Issuer for a Disbursement, such Revolving Loan
Lender shall be entitled to receive its ratable portion of any amounts
subsequently received (from the Borrower or otherwise) in respect of such
Disbursement.

(b)               Upon the issuance of each Synthetic Letter of Credit or an
increase in the Stated Amount thereof, and without further action, each
Synthetic Lender shall be deemed to have irrevocably purchased, to the extent of
its Synthetic Deposit Percentage, a participation interest in such Synthetic
Letter of Credit, including any Contingent Liability or Synthetic Reimbursement
Obligation created as a result of any issuance thereof or Disbursement with
respect thereto (each, a “Synthetic Letter of Credit Participation Obligation”).
Each Synthetic

 

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Lender’s Synthetic Letter of Credit Participation Obligation shall be cash
collateralized (as provided in Section 2.1.4), in favor of the Synthetic Issuer,
by such Synthetic Lender’s Synthetic Deposit. Such Synthetic Lender’s Synthetic
Deposit shall be available for withdrawal by the Administrative Agent, in the
amounts contemplated by and otherwise in accordance with clause (c)(i) of
Section 2.1.4, to reimburse the Synthetic Issuer for Synthetic Reimbursement
Obligations.

SECTION 2.6.2. Disbursements. The applicable Issuer will promptly notify the
Borrower and the Administrative Agent by telephone (confirmed by facsimile) of
the presentment for payment of any Letter of Credit issued by such Issuer,
together with notice of the date (the “Disbursement Date”) such payment shall be
made (each such payment, a “Disbursement”). Subject to the terms and provisions
of such Letter of Credit and this Agreement, the applicable Issuer shall make
such payment to the beneficiary (or its designee) of such Letter of Credit.
Prior to 1:00 p.m. on the first Business Day following the Disbursement Date,
the Borrower will reimburse the Administrative Agent, not later than the first
Business Day following the Disbursement Date for the account of the applicable
Issuer, for all amounts which such Issuer has disbursed under such Letter of
Credit, together with interest thereon at a rate per annum equal to the rate per
annum then in effect for Base Rate Loans (with the then Applicable Margin for
(i) in the case of Revolving Letters of Credit, Revolving Loans and (ii) in the
case of Synthetic Letters of Credit, Term Loans, accruing on such amount)
pursuant to Section 3.2 for the period from the Disbursement Date through the
date of such reimbursement. Without limiting in any way the foregoing and
notwithstanding anything to the contrary contained herein or in any separate
application for any Letter of Credit, the Borrower hereby acknowledges and
agrees that it shall be obligated to reimburse the applicable Issuer upon each
Disbursement of a Letter of Credit, and it shall be deemed to be the obligor for
purposes of each such Letter of Credit issued hereunder (whether the account
party on such Letter of Credit is the Borrower or a Subsidiary Guarantor).

SECTION 2.6.3. Reimbursement. The obligation (a “Revolving Reimbursement
Obligation” in the case of a drawing under a Revolving Letter of Credit and a
“Synthetic Reimbursement Obligation” in the case of a drawing under a Synthetic
Letter of Credit) of the Borrower under Section 2.6.2 to reimburse, without
duplication, the applicable Issuer and applicable Lenders with respect to each
Disbursement (including interest thereon), each Revolving Loan Lender’s
obligation under Section 2.6.1 to pay to such Revolving Issuer its applicable
Percentage of any drawing under a Letter of Credit, and the right of the
Synthetic Issuer to be paid with amounts on deposit in the Synthetic Deposit
Account pursuant to clause (c)(i) of Section 2.1.4, shall be absolute and
unconditional under any and all circumstances and irrespective of any setoff,
counterclaim or defense to payment which the Borrower or such Lender may have or
have had against such Issuer or any Lender, including any defense based upon the
failure of any Disbursement to conform to the terms of the applicable Letter of
Credit (if, in such Issuer’s good faith opinion, such Disbursement is determined
to be appropriate) or any non-application or misapplication by the beneficiary
of the proceeds of such Letter of Credit; provided, however, that after paying
in full its Reimbursement Obligation hereunder or paying its Percentage of any
drawing under a Letter of Credit, as the case may be, nothing herein shall
adversely affect the right of the Borrower or such Lender, as the case may be,
to commence any proceeding against such Issuer for any wrongful Disbursement
made by such Issuer under a

 

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Letter of Credit as a result of acts or omissions constituting gross negligence
or willful misconduct on the part of such Issuer.

SECTION 2.6.4. Deemed Disbursements. (a) Upon the occurrence and during the
continuation of any Event of Default under Section 9.1.9 or upon notification by
the Administrative Agent (acting at the direction of the Required Lenders) to
the Borrower of its obligations under this Section, following the occurrence and
during the continuation of any other Event of Default,

(i)                the aggregate Stated Amount of all Revolving Letters of
Credit shall, without demand upon or notice to the Borrower or any other Person,
be deemed to have been paid or disbursed by the applicable Revolving Issuer of
such Revolving Letters of Credit (notwithstanding that such amount may not in
fact have been paid or disbursed);

(ii)               the Borrower shall be immediately obligated to reimburse such
Revolving Issuer for the amount deemed to have been so paid or disbursed by such
Revolving Issuer; and

(iii)              the Borrower shall be immediately obligated to deposit with
(or for the benefit of) such Revolving Issuer an amount equal to 5% of the
amount deemed to have been paid or disbursed by such Revolving Issuer pursuant
to the preceding clause (i).

(b)               Upon the occurrence and during the continuation of any Event
of Default under Section 9.1.9 or upon notification by the Administrative Agent
(acting at the direction of the Synthetic Issuer) to the Borrower of its
obligations under this Section, following the occurrence and during the
continuation of any other Event of Default,

(i)                the aggregate Stated Amount of all Synthetic Letters of
Credit shall, without demand upon or notice to the Borrower or any other Person,
be deemed to have been paid or disbursed by the Synthetic Issuer
(notwithstanding that such amount may not in fact have been paid or disbursed);

(ii)               the Borrower shall be immediately obligated to reimburse such
Synthetic Issuer for the amount deemed to have been so paid or disbursed by such
Synthetic Issuer; and

(iii)              the Borrower shall be immediately obligated to deposit with
(or for the benefit of) such Synthetic Issuer an amount equal to 5% of the
amount deemed to have been paid or disbursed by such Synthetic Issuer pursuant
to the preceding clause (i).

Amounts payable by the Borrower pursuant to this Section shall be deposited in
immediately available funds with the Administrative Agent and held as collateral
security for the Reimbursement Obligations. When all the Events of Default
giving rise to the deemed disbursements under this Section have been cured or
waived the Administrative Agent shall return to the Borrower all amounts then on
deposit with the Administrative Agent pursuant to this Section (together with
any interest accrued thereon) which have not been applied to the satisfaction of
the Reimbursement Obligations.

 

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SECTION 2.6.5. Nature of Reimbursement Obligations. The Borrower, each other
Obligor and, to the extent set forth in Section 2.6.1, each Revolving Loan
Lender and Synthetic Lender, shall assume all risks of the acts, omissions or
misuse of any Letter of Credit by the beneficiary thereof. No Issuer (except to
the extent of its own gross negligence or willful misconduct) shall be
responsible for:

(a)               the form, validity, sufficiency, accuracy, genuineness or
legal effect of any Letter of Credit or any document submitted by any party in
connection with the application for and issuance of a Letter of Credit, even if
it should in fact prove to be in any or all respects invalid, insufficient,
inaccurate, fraudulent or forged;

(b)               the form, validity, sufficiency, accuracy, genuineness or
legal effect of any instrument transferring or assigning or purporting to
transfer or assign a Letter of Credit or the rights or benefits thereunder or
the proceeds thereof in whole or in part, which may prove to be invalid or
ineffective for any reason;

(c)               failure of the beneficiary to comply fully with conditions
required in order to demand payment under a Letter of Credit;

(d)               errors, omissions, interruptions or delays in transmission or
delivery of any messages, by mail, cable, telegraph, telex or otherwise; or

(e)               any loss or delay in the transmission or otherwise of any
document or draft required in order to make a Disbursement under a Letter of
Credit.

None of the foregoing shall affect, impair or prevent the vesting of any of the
rights or powers granted to any Issuer or any Lender hereunder. In furtherance
and not in limitation or derogation of any of the foregoing, any action taken or
omitted to be taken by an Issuer in good faith (and not constituting gross
negligence or willful misconduct) shall be binding upon each Obligor and each
such Secured Party, and shall not put such Issuer under any resulting liability
to any Obligor or any Secured Party, as the case may be.

SECTION 2.7. Register; Notes. The Register shall be maintained on the following
terms:

(a)               Each Lender may maintain in accordance with its usual practice
an account or accounts evidencing the Indebtedness of the Borrower to such
Lender resulting from each Loan made by such Lender, including the amounts of
principal and interest payable and paid to such Lender from time to time
hereunder. In the case of a Lender that does not request, pursuant to clause (c)
below, execution and delivery of a Note evidencing the Loans made by such Lender
to the Borrower, such account or accounts shall, to the extent not inconsistent
with the notations made by the Administrative Agent in the Register, be
conclusive and binding on the Borrower absent manifest error; provided, however,
that the failure of any Lender to maintain such account or accounts or any error
in any such account shall not limit or otherwise affect any Obligations of any
Obligor.

 

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(b)               The Borrower hereby designates the Administrative Agent to
serve as the Borrower’s agent, solely for the purpose of this clause, to
maintain a register (the “Register”) on which the Administrative Agent will
record each Lender’s Commitments, the Loans made by each Lender and each
repayment in respect of the principal amount of the Loans of each Lender and
annexed to which the Administrative Agent shall retain a copy of each Lender
Assignment Agreement delivered to the Administrative Agent pursuant to Section
12.11. Failure to make any recordation, or any error in such recordation, shall
not affect the Borrower’s obligation in respect of such Loans. The entries in
the Register shall be conclusive, in the absence of manifest error, and the
Borrower, the Administrative Agent and the Lenders shall treat each Person in
whose name a Loan is registered as the owner thereof for all purposes of this
Agreement, notwithstanding notice or any provision herein to the contrary. A
Lender’s Commitment and the Loans made pursuant thereto may be assigned or
otherwise transferred in whole or in part only by registration of such
assignment or transfer in the Register. Any assignment or transfer of a Lender’s
Commitment or the Loans made pursuant thereto shall be registered in the
Register only upon delivery to the Administrative Agent of a Lender Assignment
Agreement duly executed by the assignor thereof and the compliance by the
parties thereto with the other requirements of Section 12.11. No assignment or
transfer of a Lender’s Commitment or the Loans made pursuant thereto shall be
effective unless such assignment or transfer shall have been recorded in the
Register by the Administrative Agent as provided in this Section.

(c)               The Borrower agrees that, upon the request of any Lender, the
Borrower will execute and deliver to such Lender, as applicable, a Note
evidencing the Loans made by such Lender. The Borrower hereby irrevocably
authorizes each Lender to make (or cause to be made) appropriate notations on
the grid attached to such Lender’s Notes (or on any continuation of such grid),
which notations, if made, shall evidence, inter alia, the date of, the
outstanding principal amount of, and the interest rate and Interest Period
applicable to the Loans evidenced thereby. Such notations shall, to the extent
not inconsistent with the notations made by the Administrative Agent in the
Register, be conclusive and binding on the Borrower absent manifest error;
provided, however, that the failure of any Lender to make any such notations or
any error in any such notations shall not limit or otherwise affect any
Obligations of any Obligor. A Note and the obligation evidenced thereby may be
assigned or otherwise transferred in whole or in part only in accordance with
Section 12.11.

ARTICLE III

REPAYMENTS, PREPAYMENTS, INTEREST AND FEES

SECTION 3.1. Repayments and Prepayments; Application. The Borrower agrees that
the Loans shall be repaid and prepaid pursuant to the following terms.

SECTION 3.1.1. Repayments and Prepayments. The Borrower shall repay in full the
unpaid principal amount of each Loan upon the applicable Stated Maturity Date
therefor. Prior thereto, payments and prepayments of the Loans and refunding of
the Synthetic Deposits shall or may be made as set forth below.

 

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(a)               (i)From time to time on any Business Day, the Borrower may
make a voluntary prepayment, in whole or in part, of the outstanding principal
amount of any Loans; provided that (A) any prepayment of Term Loans is to be
applied pro rata among the Term Loans so prepaid of the same type and, if
applicable, having the same Interest Period of all Lenders that have made such
Term Loans (to be applied as set forth in Section 3.1.2), and any such
prepayment of Revolving Loans shall be made pro rata among the Revolving Loans
of the same type and, if applicable, having the same Interest Period of all
Lenders that have made such Revolving Loans; (B) all such voluntary prepayments
shall require at least one but no more than five Business Days’ (and at least
three Business Days in the case of LIBO Rate Loans) prior telephonic notice
(promptly confirmed by facsimile) to the Administrative Agent; and (C) all such
voluntary partial prepayments of any Loans shall be in an aggregate minimum
amount of $1,000,000 and an integral multiple of $500,000.

(ii)               From time to time on any Business Day, the Borrower may cause
the Synthetic Deposits to be returned to the Synthetic Lenders by reducing the
Synthetic Facility Available Amount; provided that (A) all such voluntary
reductions shall require at least one but no more than five Business Days’ prior
telephonic notice (promptly confirmed by facsimile) to the Administrative Agent;
and (B) all such voluntary partial returns shall be in an aggregate minimum
amount of $1,000,000 and an integral multiple of $500,000.

(b)               (i)On each date when the sum of (A) the aggregate outstanding
principal amount of all Revolving Loans and (B) the aggregate amount of all
Revolving Letter of Credit Outstandings exceeds the Revolving Loan Commitment
Amount, the Borrower shall make a mandatory prepayment of Revolving Loans and,
if necessary, Cash Collateralize all Revolving Letter of Credit Outstandings, in
an aggregate amount equal to such excess.

(ii)               On each date when the aggregate amount of all Synthetic
Letter of Credit Outstandings exceeds the Synthetic Facility Available Amount,
the Borrower shall Cash Collateralize all Synthetic Letter of Credit
Outstandings in an aggregate amount equal to such excess.

(iii)              In the event the Synthetic Issuer has made a withdrawal from
the Synthetic Deposit Account to repay unreimbursed Synthetic Reimbursement
Obligations, the Borrower shall make a mandatory deposit in the Synthetic
Deposit Account equal to such amount.

(c)               On each Quarterly Payment Date, beginning with the Quarterly
Payment Date occurring on December 31, 2005, the Borrower shall make a scheduled
repayment of the aggregate outstanding principal amount, if any, of all Term
Loans in an amount equal to $250,000 with the remaining amount of Term Loans due
and payable in full on the Stated Maturity Date for Term Loans.

(d)               Within 100 days after the close of each Fiscal Year (beginning
with the close of the 2006 Fiscal Year) the Borrower shall make a mandatory
prepayment of the

 

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Loans in an amount equal to the product of (i) Excess Cash Flow (if any) for
such Fiscal Year, multiplied by (ii) the Proceeds Percentage, to be applied as
set forth in Section 3.1.2.

(e)               No later than one Business Day following the receipt by the
Parent or any of its Subsidiaries of any Net Debt Proceeds, the Borrower shall
deliver to the Administrative Agent a calculation of the amount of such Net Debt
Proceeds and make a mandatory prepayment of the Loans in an amount equal to 100%
of such Net Debt Proceeds, to be applied as set forth in Section 3.1.2.

(f)                No later than five Business Days following the receipt by the
Borrower or any of its Subsidiaries of any Net Disposition Proceeds or Net
Casualty Proceeds by the Borrower or any of its Subsidiaries deliver to the
Administrative Agent a calculation of the amount of such proceeds, and, to the
extent the aggregate amount of such proceeds received by the Parent and its
Subsidiaries exceeds $5,000,000, the Borrower shall make a mandatory prepayment
of the Loans in an amount equal to 100% of such Net Disposition Proceeds or Net
Casualty Proceeds, to be applied as set forth in Section 3.1.2; provided that,
upon telephonic notice (promptly confirmed by facsimile) by the Borrower to the
Administrative Agent not more than 5 Business Days following receipt of any Net
Disposition Proceeds or Net Casualty Proceeds, such proceeds may be retained by
the Parent and its Subsidiaries (and be excluded from the prepayment
requirements of this clause) if (i) the Parent informs the Administrative Agent
in such notice of its good faith intention to apply (or cause one or more of the
Subsidiaries to apply) such Net Disposition Proceeds or Net Casualty Proceeds to
the acquisition of other assets or properties consistent with the businesses
permitted to be conducted pursuant to Section 8.1 (including by way of merger or
Investment) or, in the case of any Casualty Event, to restore the property
subject thereto, and (ii) within 365 days following the receipt of such Net
Disposition Proceeds or Net Casualty Proceeds, such proceeds are applied or
committed to such acquisition. The amount of such Net Disposition Proceeds or
Net Casualty Proceeds unused or uncommitted after such 365 day period shall be
applied to prepay the Loans as set forth in Section 3.1.2.

(g)               No later than one Business Day following the receipt by the
Parent or any of its Subsidiaries of any Net Equity Proceeds (other than from
the Parent or any of its Subsidiaries), the Borrower shall make a mandatory
prepayment of the Loans in an amount equal to the product of (i) such Net Equity
Proceeds, multiplied by (ii) the Proceeds Percentage, to be applied as set forth
in Section 3.1.2.

(h)               Immediately upon any acceleration of the Stated Maturity Date
of any Loans pursuant to Section 9.2 or Section 9.3, the Borrower shall repay
all the Loans, unless, pursuant to Section 9.3, only a portion of all the Loans
is so accelerated (in which case the portion so accelerated shall be so repaid).

Each prepayment of any Loans made pursuant to this Section shall be without
premium or penalty, except as may be required by Section 4.4. The Borrower shall
give prior telephonic notice (promptly confirmed by facsimile) of any mandatory
prepayment required under clauses (d), (e), (f) and (g) of this Section 3.1.1
(including the date and an estimate of the aggregate

 

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amount of such mandatory prepayment at least five Business Days prior thereto);
provided that the failure to give such notice shall not relieve the Borrower of
its obligation to make such mandatory prepayments on or prior to the dates set
forth in such clauses (d), (e), (f) and (g), and the Borrower shall be permitted
to make such mandatory prepayments, on or prior to such dates.

SECTION 3.1.2. Application. Amounts prepaid pursuant to Section 3.1.1 shall be
applied as set forth in this Section.

(a)               Subject to clause (b), each prepayment or repayment of the
principal of the Loans shall be applied, to the extent of such prepayment or
repayment, first, to the principal amount thereof being maintained as Base Rate
Loans, and second, subject to the terms of Section 4.4, to the principal amount
thereof being maintained as LIBO Rate Loans.

(b)               Each prepayment of Loans made pursuant to clause (a) of
Section 3.1.1 shall be applied to the remaining amortization payments for the
Term Loans, or the outstanding Revolving Loans, in such amounts as the Borrower
shall determine. Each prepayment of the Loans made pursuant to clauses (d), (e),
(f) and (g) of Section 3.1.1 shall be applied (i) first, pro rata to a
prepayment of the outstanding principal amount of all Term Loans (with the
amount of such prepayment of the Term Loans being applied (x) to the remaining
amortization payments of the Term Loans during the twelve-month period
immediately following such prepayment, in direct order thereof, and (y) to such
remaining payments scheduled thereafter pro rata thereto) and (ii) second, once
all Term Loans have been repaid in full, pro rata to the repayment of any
outstanding Revolving Loans; provided that, subject to the terms set forth in
the immediately succeeding clause (c), each Term Loan Lender entitled to receive
any mandatory prepayment of its Loans under this clause may waive its right to
receive any such mandatory prepayment, and the aggregate amount of such
prepayments so waived shall be offered to the Term Loan Lenders that did not
waive their rights to such prepayments for application in accordance with this
clause. In no event shall prepayments of the Loans made pursuant to clauses (d),
(e), (f) or (g) of Section 3.1.1 be applied to the reduction of the Synthetic
Facility Availability Amount.

(c)               So long as the Administrative Agent has received prior written
notice from the Borrower of a mandatory prepayment that may be waived by the
Term Loan Lenders pursuant to the immediately preceding clause (b), the
Administrative Agent shall provide notice of such mandatory prepayment to the
Term Loan Lenders. Unless the Administrative Agent shall otherwise so provide,
in the event a Term Loan Lender does not notify the Administrative Agent in
writing of its waiver of the right to receive

(i)

its pro rata share of such mandatory prepayment; and

(ii)               its pro rata share (such pro rata share to be based on the
percentage obtained by dividing the principal amount of Term Loans held
immediately prior to such mandatory prepayment by such Term Loan Lender by the
aggregate principal amount of Term Loans held immediately prior to such
mandatory prepayments by the Term Loan Lenders that do not waive their right to
receive a

 

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portion of the mandatory prepayment described in this clause) of any portion (if
any) of such mandatory prepayment that may be waived by Term Loan Lenders,

within two Business Days of the providing of such notice by the Administrative
Agent, the Administrative Agent may assume that such Term Loan Lender will
receive its applicable pro rata share of such mandatory prepayment and such
portion (if any) of such mandatory prepayment that has actually been waived by
the Term Loan Lenders. It is understood and agreed by the Borrower that,
notwithstanding receipt by the Administrative Agent of any such mandatory
prepayment, the Term Loans shall not be deemed repaid, unless otherwise
consented to by the Administrative Agent, until five Business Days have elapsed
from the delivery to the Administrative Agent of the notice described in the
last paragraph of Section 3.1.1.

SECTION 3.2. Interest Provisions. Interest on the outstanding principal amount
of the Loans shall accrue and be payable in accordance with the terms set forth
below.

SECTION 3.2.1. Rates; Fees. (a) Pursuant to an appropriately delivered Borrowing
Request or Continuation/Conversion Notice, the Borrower may elect that the Loans
comprising a Borrowing accrue interest at a rate per annum:

(i)                on that portion maintained from time to time as a Base Rate
Loan, equal to the sum of the Adjusted Base Rate from time to time in effect
plus the Applicable Margin; and

(ii)               on that portion maintained as a LIBO Rate Loan, during each
Interest Period applicable thereto, equal to the sum of the Adjusted LIBO Rate
for such Interest Period plus the Applicable Margin.

All LIBO Rate Loans shall bear interest from and including the first day of the
applicable Interest Period to (but not including) the last day of such Interest
Period at the interest rate determined as applicable to such LIBO Rate Loan.

Upon the deposit of the Synthetic Deposits in the Synthetic Deposit Account, the
fees (“Participation Fees”) relative to the Synthetic Deposits shall accrue at a
rate per annum equal to the sum of the Adjusted LIBO Rate for the relevant
Investment Period plus the Applicable Margin; provided that the amount due and
payable by the Borrower under this clause shall be the amount set forth above
less the Synthetic Deposit Return payable by the Administrative Agent to the
Synthetic Lenders pursuant to clause (d) of Section 2.1.4 for the applicable
period.

All Synthetic Deposits shall accrue fees at all times that they are on deposit
in the Synthetic Deposit Account.

SECTION 3.2.2. Post-Default Rates. After the date any principal amount of any
Loan is due and payable (whether on any Stated Maturity Date, upon acceleration
or otherwise), or after any other monetary Obligation of the Borrower shall have
become due and payable, at the request of the Administrative Agent or the
Required Lenders, the Borrower shall pay, but only to the extent permitted by
law, interest (after as well as before judgment) on such amounts at a rate per
annum equal to (a) in the case of overdue principal on any Loan, the rate of
interest that

 

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otherwise would be applicable to such Loan plus 2% per annum; and (b) in the
case of overdue interest, fees, and other monetary Obligations, the Alternate
Base Rate, plus the Applicable Margin for Term Loans accruing interest at the
Base Rate, plus 2% per annum.

SECTION 3.2.3. Payment Dates. (a) Interest accrued on each Loan shall be
payable, without duplication:

(i)

on the Stated Maturity Date therefor;

(ii)               on the date of any payment or prepayment, in whole or in
part, of principal outstanding on any Loan which is a LIBO Rate Loan, on the
principal amount so paid or prepaid;

(iii)              with respect to Base Rate Loans, on each Quarterly Payment
Date beginning with the Quarterly Payment Date occurring on December 31, 2005;

(iv)              with respect to LIBO Rate Loans, on the last day of each
applicable Interest Period (and, if such Interest Period shall exceed three
months, on the date occurring on each three-month interval occurring after the
first day of such Interest Period);

(v)               with respect to any Base Rate Loans converted into LIBO Rate
Loans on a day when interest would not otherwise have been payable pursuant to
clause (iii), on the date of such conversion; and

(vi)              on that portion of any Loans the Stated Maturity Date of which
is accelerated pursuant to Section 9.2 or Section 9.3, immediately upon such
acceleration.

Interest accrued on Loans or other monetary Obligations after the date such
amount is due and payable (whether on the Stated Maturity Date, upon
acceleration or otherwise) shall be payable upon demand.

(b) Participation Fees accrued on each Synthetic Deposit shall be payable,
without duplication:

(i)

on the Stated Maturity Date for such Synthetic Deposit;

(ii)               on the date of any return of a Synthetic Deposit pursuant to
clause (a)(ii) of Section 3.1.1, on the amount of such deemed Synthetic Deposits
so returned;

(iii)              on each Quarterly Payment Date occurring after the Closing
Date beginning with the Quarterly Payment Date occurring on December 31, 2005.

SECTION 3.3. Fees. The Borrower agrees to pay the fees set forth below. All such
fees shall be non-refundable.

SECTION 3.3.1. Commitment Fee. The Borrower agrees to pay to the Administrative
Agent for the account of each Lender, for the period (including any portion
thereof when any of

 

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its Commitments are suspended by reason of the Borrower’s inability to satisfy
any condition of Section 5.2) commencing on the Closing Date and continuing
through the Revolving Loan Commitment Termination Date, a commitment fee in a
per annum amount equal to the Applicable Commitment Fee Margin, in each case on
such Revolving Loan Lender’s Revolving Loan Percentage of the sum of the average
daily unused portion of the Revolving Loan Commitment Amount (less the face
amount of all issued Revolving Letters of Credit). All Commitment Fees payable
pursuant to this Section shall be calculated on a year comprised of 360 days and
payable by the Borrower on each Quarterly Payment Date in arrears, commencing
with the Quarterly Payment Date occurring on December 31, 2005 and on the
Revolving Loan Maturity Date.

SECTION 3.3.2. Arranger’s Fees. The Borrower agrees to pay to Credit Suisse, for
its own account, the fees in the amounts and on the dates set forth in the
Engagement Letter.

SECTION 3.3.3. Letter of Credit Fees. The Borrower agrees to pay to the
Administrative Agent for the pro rata account of the applicable Revolving Issuer
and each Revolving Loan Lender, a Revolving Letter of Credit fee in a per annum
amount equal to the Applicable Margin for Revolving Loans maintained as LIBO
Rate Loans multiplied by the Stated Amount of each such Revolving Letter of
Credit, such fees being calculated on a year comprised of 360 days and payable
quarterly in arrears on each Quarterly Payment Date following the date of
issuance of each Revolving Letter of Credit and on the Revolving Loan Commitment
Termination Date. The Borrower further agrees to pay to each applicable Issuer
quarterly in arrears on each Quarterly Payment Date following the date of
issuance of each Letter of Credit and on the applicable Maturity Date a fronting
fee in a per annum amount equal to 0.10% multiplied by the Stated Amount of such
Letter of Credit, such fee being calculated on a year comprised of 360 days, or
such other fronting fee as otherwise agreed to by the Borrower and the
applicable Issuer. In addition, the Borrower agrees to pay to each applicable
Issuer the customary issuance, presentation, amendment and other processing
fees, and other standard costs and charges, of such Issuer relating to Letters
of Credit as from time to time in effect. Such customary fees and standard costs
and charges are due and payable on demand and are non-refundable.

ARTICLE IV

CERTAIN LIBO RATE AND OTHER PROVISIONS

SECTION 4.1. LIBO Rate Lending Unlawful. If any Lender shall determine (which
determination shall, upon notice thereof to the Borrower and the Administrative
Agent, be conclusive and binding on the Borrower) that the introduction of or
any change in or in the interpretation of any law, after the Closing Date, makes
it unlawful, or any Governmental Authority asserts that it is unlawful, for such
Lender to make or continue any Loan as, or to convert any Loan into, a LIBO Rate
Loan, the obligations of such Lender to make, continue or convert any such LIBO
Rate Loan shall, after the determination thereof, forthwith be suspended until
such Lender shall notify the Administrative Agent that the circumstances causing
such suspension no longer exist, and all outstanding LIBO Rate Loans payable to
such Lender shall automatically convert into Base Rate Loans at the end of the
then current Interest Periods with respect thereto or sooner, if required by
such law or assertion.

 

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SECTION 4.2. Deposits Unavailable. If the Administrative Agent shall have
determined that

(a)               Dollar deposits in the relevant amount and for the relevant
Interest Period are not available to it in its relevant market; or

(b)               by reason of circumstances affecting its relevant market,
adequate means do not exist for ascertaining the interest rate applicable
hereunder to LIBO Rate Loans;

then, upon notice by telephone or facsimile from the Administrative Agent to the
Borrower and the Lenders, the obligations of all Lenders under Section 2.3 and
Section 2.4 to make or continue any Loans as, or to convert any Loans into, LIBO
Rate Loans shall forthwith be suspended until the Administrative Agent shall
notify the Borrower and the Lenders that the circumstances causing such
suspension no longer exist.

SECTION 4.3. Increased LIBO Rate Loan Costs, etc. The Borrower agrees to
reimburse each Lender and each Issuer for any increase in the cost to such
Lender or such Issuer of, or any reduction in the amount of any sum receivable
by such Credit Party in respect of, such Credit Party’s Commitments and the
making of Credit Extensions hereunder (including the making, continuing or
maintaining (or of its obligation to make or continue) any Loans as, or of
converting (or of its obligation to convert) any Loans into, LIBO Rate Loans) or
such Credit Party’s Synthetic Deposit that arise in connection with any change
in, or the introduction, adoption, effectiveness, interpretation,
reinterpretation or phase-in after the Closing Date of, any law or regulation,
directive, guideline, decision or request (whether or not having the force of
law) of any Governmental Authority, except for (i) such changes with respect to
increased capital costs and Taxes which are governed by Sections 4.5 and 4.6,
respectively, and (ii) increased costs which are already included in the
determination of the Statutory Reserve Rate. Each affected Credit Party shall
promptly notify the Administrative Agent and the Borrower in writing of the
occurrence of any such event, stating the reasons therefor and the additional
amount required fully to compensate such Credit Party for such increased cost or
reduced amount. Such additional amounts shall be payable by the Borrower
directly to such Credit Party within ten days of its receipt of such notice, and
such notice shall, in the absence of manifest error, be conclusive and binding
on the Borrower. Such notice shall be in reasonable detail and shall certify
that the claim for additional amounts referred to therein is generally
consistent with such Lender’s treatment of similarly situated customers of such
Lender whose transactions with such Lender are similarly affected by the change
in circumstances giving rise to such payment, but such Lender shall not be
required to disclose any confidential or proprietary information therein.

SECTION 4.4. Funding Losses. In the event any Lender shall incur any loss or
expense (including any loss or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Lender to make or
continue any portion of the principal amount of any Loan as, or to convert any
portion of the principal amount of any Loan into, a LIBO Rate Loan) as a result
of

 

 

 

(a)       any conversion or repayment or prepayment of the principal amount of
any LIBO Rate Loan on a date other than the scheduled last day of the Interest
Period applicable thereto, whether pursuant to Article III or otherwise;

(b)        any Loans not being made as LIBO Rate Loans in accordance with the
Borrowing Request therefor;

(c)        any Loans not being continued as, or converted into, LIBO Rate Loans
in accordance with the Continuation/Conversion Notice therefor; or

(d)        any LIBO Rate Loans not being prepaid in accordance with any notice
delivered pursuant to clause (a) of Section 3.1.1 (as a result of a revocation
of such notice or as a result of such payment not being made);

but in each case other than due to such Lender’s failure to fulfill its
obligations hereunder, then, upon the written notice of such Lender to the
Borrower, the Borrower shall, within ten days of its receipt thereof, pay
directly to such Lender such amount as will (in the reasonable determination of
such Lender) reimburse such Lender for such loss or expense. Such written notice
(which shall include calculations in reasonable detail) shall, in the absence of
manifest error, be conclusive and binding on the Borrower.

SECTION 4.5. Increased Capital Costs. If, after the Closing Date, any change in,
or the introduction, adoption, effectiveness, interpretation, reinterpretation
or phase-in of, any law or regulation, directive, guideline, decision or request
(whether or not having the force of law) of any Governmental Authority affects
or would affect the amount of capital required or expected to be maintained by
any Credit Party or any Person controlling such Credit Party, and such Credit
Party determines (in good faith but in its sole and absolute discretion) that
the rate of return on its or such controlling Person’s capital as a consequence
of the Commitments or the Credit Extensions made, or the Letters of Credit
participated in, by such Credit Party is reduced to a level below that which
such Credit Party or such controlling Person could have achieved but for the
occurrence of any such circumstance, then upon notice from time to time by such
Credit Party to the Borrower, the Borrower shall within five days following
receipt of such notice pay directly to such Credit Party additional amounts
sufficient to compensate such Credit Party or such controlling Person for such
reduction in rate of return. A statement of such Credit Party as to any such
additional amount or amounts shall, in the absence of manifest error, be
conclusive and binding on the Borrower. In determining such amount, such Credit
Party may use any reasonable method of averaging and attribution that it (in its
sole and absolute discretion) shall deem applicable. Such statement shall be in
reasonable detail and shall certify that the claim for additional amounts
referred to therein is generally consistent with such Lender’s treatment of
similarly situated customers of such Lender whose transactions with such Lender
are similarly affected by the change in circumstances giving rise to such
payment, but such Lender shall not be required to disclose any confidential or
proprietary information therein. Failure or delay on the part of any Lender to
demand compensation pursuant to Sections 4.3 or 4.4 or this Section 4.5 shall
not constitute a waiver of such Lender’s right to demand such compensation;
provided that the Borrower shall not be required to compensate a Lender pursuant
to such Sections for any increased costs incurred more than 90 days prior to the
date that such Lender notifies the Borrower of the change giving rise to such
increased costs and of such Lender’s

 

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intention to claim compensation therefor; provided further that, if the change
giving rise to such increased costs is retroactive, then the 90-day period
referred to above shall be extended to include the period of retroactive effect
thereof. If a Lender demands compensation under Sections 4.3 or 4.4 or this
Section 4.5 with respect to LIBO Rate Loans, the Borrower may, upon at least
three Business Days’ notice to the Lender (with a copy of such notice to the
Administrative Agent), elect that, until the circumstances causing such demand
for compensation no longer apply to such Lender, all LIBO Rate Loans that would
otherwise be made by such Lender as part of any Borrowing shall be made instead
as Base Rate Loans and all payments of principal of and interest on such Base
Rate Loans shall be made at the same time as payments on the LIBO Rate Loans
otherwise constituting part of such Borrowing. Each Lender will use all
reasonable efforts to give prompt notice to the Borrower of the event giving
rise to any such demand for compensation.

SECTION 4.6. Taxes. The Borrower covenants and agrees as follows with respect to
Taxes.

(a)               Any and all payments by any Obligor or the Administrative
Agent under each Loan Document shall be made without setoff, counterclaim or
other defense, and free and clear of, and without deduction or withholding for
or on account of, any Taxes, except to the extent any Taxes are imposed by law.
In the event that any Taxes are required by law to be deducted or withheld from
any payment required to be made by any Obligor or the Administrative Agent to or
on behalf of any Credit Party under any Loan Document, then:

(i)                subject to clause (g), if such Taxes are Non-Excluded Taxes,
the amount of such payment shall be increased as may be necessary such that such
payment is made, after withholding or deduction for or on account of such
Non-Excluded Taxes, in an amount that is not less than the amount provided for
in such Loan Document (and for the avoidance of doubt, it shall be the sole
responsibility of the Borrower to pay such increased amounts without regard to
whether such Taxes are imposed on the Borrower or another party); and

(ii)               each Obligor or Administrative Agent, as the case may be,
shall withhold the full amount of such Taxes from such payment (as increased
pursuant to clause (a)(i), if applicable) and shall pay such amount to the
Governmental Authority imposing such Taxes in accordance with applicable law.

(b)               In addition, the Borrower shall pay any and all Other Taxes
imposed on or with respect to a Credit Party to the relevant Governmental
Authority imposing such Other Taxes in accordance with applicable law.

(c)               As promptly as practicable after the payment of any Taxes or
Other Taxes, and in any event within 45 days of any such payment, the Borrower
shall furnish to the Administrative Agent a copy of an official receipt (or a
certified copy thereof) or if obtaining such receipt or copy is impractical,
other documentation necessary for purposes of claiming a foreign tax credit
evidencing the payment of such Taxes or Other Taxes.

 

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The Administrative Agent shall make copies thereof available to any Lender upon
request therefor.

(d)               Subject to clause (g), the Borrower shall indemnify each
Lender, within 30 days after written demand therefor, for the full amount of any
Non-Excluded Taxes or Other Taxes withheld by the Administrative Agent with
respect to any and all payments of the Synthetic Deposit Return to the Lenders
(including Non-Excluded Taxes or Other Taxes imposed or asserted on or
attributable to amounts payable under this Section), whether or not such
Non-Excluded Taxes or Other Taxes were correctly or legally imposed or asserted
by the relevant Governmental Authority. A certificate as to the amount of such
payment or liability delivered to the Borrower by a Lender, or by the
Administrative Agent on behalf of the applicable Lender, shall be conclusive
absent manifest error. If the Lender or Administrative Agent, as applicable,
fails to give notice to Borrower of the imposition of any Non-Excluded Taxes or
Other Taxes within 120 days following its receipt of actual written notice of
the imposition of such Non-Excluded Taxes or Other Taxes, there will be no
obligation for Borrower to pay interest or penalties attributable to the period
beginning after such 120th day and ending 7 days after Borrower receives notice
from the Lender or Administrative Agent, as applicable. In addition, the
Borrower will not be obligated to pay interest or penalties attributable to any
Non-Excluded Taxes or Other Taxes if such interest or penalties resulted from
the gross negligence or willful misconduct of the Administrative Agent or such
Lender.

(e)               Subject to clause (g), the Borrower shall indemnify each
Credit Party for any Non-Excluded Taxes and Other Taxes levied, imposed,
assessed on or actually paid by or on behalf of such Credit Party (whether or
not such Non-Excluded Taxes or Other Taxes are correctly or legally asserted by
the relevant Governmental Authority). Promptly upon having actual knowledge that
any such Non-Excluded Taxes or Other Taxes have been levied, imposed or
assessed, and promptly upon notice thereof by any Credit Party, the Borrower
shall pay such Non-Excluded Taxes or Other Taxes directly to the relevant
Governmental Authority. In addition, the Borrower shall indemnify each Credit
Party for any incremental Taxes that are paid or payable by such Credit Party as
a result of any failure of the Borrower to pay any Taxes when due to the
appropriate Governmental Authority or to deliver to the Administrative Agent,
pursuant to clause (c), documentation evidencing the payment of Taxes or Other
Taxes, provided that if the Lender or Administrative Agent, as applicable, fails
to give notice to Borrower of the imposition of any Non-Excluded Taxes or Other
Taxes within 120 days following its receipt of actual written notice of the
imposition of such Non-Excluded Taxes or Other Taxes, there will be no
obligation for Borrower to pay interest or penalties attributable to the period
beginning after such 120th day and ending 7 days after Borrower receives notice
from the Lender or Administrative Agent, as applicable. In addition, the
Borrower will not be obligated to pay interest or penalties attributable to any
Non-Excluded Taxes or Other Taxes if such interest or penalties resulted from
the gross negligence or willful misconduct of the Administrative Agent or such
Lender. With respect to indemnification for Non-Excluded Taxes and Other Taxes
actually paid by any Credit Party or the indemnification provided in the
immediately preceding sentence, such indemnification shall be made within 30
days after the date such Credit Party makes written demand therefor. The
Borrower acknowledges that any payment made to any Credit Party or to

 

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any Governmental Authority in respect of the indemnification obligations of the
Borrower provided in this clause shall constitute a payment in respect of which
the provisions of clause (a) and this clause shall apply.

(f)                Each Non-Domestic Credit Party, on or prior to the date on
which such Non-Domestic Credit Party becomes a Credit Party hereunder (and from
time to time thereafter upon the request of the Borrower or the Administrative
Agent, but only for so long as such Non-Domestic Credit Party is legally
entitled to do so), shall deliver to the Borrower and the Administrative Agent
either

(i)                two properly completed and duly executed copies of Internal
Revenue Service Form W-8BEN or W-8ECI or an applicable successor form; or

(ii)               in the case of a Non-Domestic Credit Party that is not
legally entitled to deliver either form listed in clause (f)(i), (x) a
certificate of a duly authorized officer of such Non-Domestic Credit Party to
the effect that such Non-Domestic Credit Party is not (A) a “bank” within the
meaning of Section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of
the Borrower within the meaning of Section 881(c)(3)(B) of the Code, or (C) a
controlled foreign corporation receiving interest from a related person within
the meaning of Section 881(c)(3)(C) of the Code (such certificate, an “Exemption
Certificate”) and (y) two properly completed and duly executed copies of
Internal Revenue Service Form W-8BEN or W-8ECI or applicable successor form.

(g)               The Borrower shall not be obligated to gross up any payments
to any Credit Party pursuant to clause (a)(i), or to indemnify any Credit Party
pursuant to clause (d) or clause (e), in respect of United States federal
withholding taxes to the extent imposed as a result of (i) the failure of such
Credit Party to deliver to the Borrower the form or forms and/or an Exemption
Certificate, as applicable to such Credit Party, pursuant to clause (f), (ii)
such form or forms and/or Exemption Certificate not establishing a complete
exemption from U.S. federal withholding Tax or the information or certifications
made therein by the Credit Party being untrue or inaccurate on the date
delivered in any material respect, or (iii) the Credit Party designating a
successor lending office at which it maintains its Loans which has the effect of
causing such Credit Party to become obligated for Tax payments in excess of
those in effect immediately prior to such designation; provided, however, that
the Borrower shall be obligated to gross up any payments to any such Credit
Party pursuant to clause (a)(i), and to indemnify any such Credit Party pursuant
to clause (d) and clause (e), in respect of United States federal withholding
Taxes if (i) any such failure to deliver a form or forms or an Exemption
Certificate or the failure of such form or forms or Exemption Certificate to
establish a complete exemption from U.S. federal withholding Tax or inaccuracy
or untruth contained therein resulted from a change in any applicable statute,
treaty, regulation or other applicable law or any interpretation of any of the
foregoing occurring after the date on which such Credit Party became a Credit
Party hereunder, which change rendered such Credit Party no longer legally
entitled to deliver such form or forms or Exemption Certificate or otherwise
ineligible for a complete exemption from U.S. federal withholding Tax, or
rendered the information or certifications made in such form or

 

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forms or Exemption Certificate untrue or inaccurate in a material respect, (ii)
the redesignation of such Credit Party’s lending office was made at the request
of the Borrower or (iii) the obligation to gross up payments to any such Credit
Party pursuant to clause (a)(i) or to indemnify any such Credit Party pursuant
to clause (d) or clause (e) is with respect to an assignee Credit Party as a
result of an assignment made at the request of the Borrower.

SECTION 4.7. Payments, Computations, etc. Unless otherwise expressly provided in
a Loan Document, all payments by the Borrower pursuant to each Loan Document
shall be made by the Borrower to the Administrative Agent for the pro rata
account of the Secured Parties entitled to receive such payment. All payments
shall be made without setoff, deduction or counterclaim not later than 1:00 p.m.
on the date due in same day or immediately available funds to such account as
the Administrative Agent shall specify from time to time by notice to the
Borrower. Funds received after that time shall be deemed to have been received
by the Administrative Agent on the next succeeding Business Day. The
Administrative Agent shall promptly remit in same day funds to each Secured
Party its share, if any, of such payments received by the Administrative Agent
for the account of such Secured Party. All interest (including interest on LIBO
Rate Loans) and fees shall be computed on the basis of the actual number of days
(including the first day but excluding the last day) occurring during the period
for which such interest or fee is payable over a year comprised of 360 days (or,
in the case of interest on a Base Rate Loan calculated at other than the Federal
Funds Effective Rate, 365 days or, if appropriate, 366 days). Except as
otherwise set forth herein, payments due on a day other than a Business Day
shall be made on the preceding Business Day. Except as otherwise set forth in
any Loan Document, during the existence of an Event of Default, all payments
made under any Loan Document shall be applied upon receipt (a) first, to the
payment of all Obligations owing to the Administrative Agent, in its capacity as
the Administrative Agent (including the fees and expenses of counsel to the
Administrative Agent); (b) second, to the payment of accrued interest on and
then principal of any portion (without duplication) of (i) Revolving Loans that
the Administrative Agent may have advanced on behalf of any Revolving Loan
Lender for which the Administrative Agent has not then been reimbursed by such
Revolving Loan Lender or the Borrower, (ii) payments that the Administrative
Agent may have advanced to the Secured Parties in accordance with this
Section 4.7 for which the Administrative Agent has not been reimbursed by the
Borrower, any other Obligor or the Secured Parties and (iii) Disbursements that
an Issuer may have honored under a Revolving Letter of Credit for which such
Issuer has not been reimbursed by the Borrower; (c) third, after payment in full
in cash of the amounts specified in clauses (a) through (b), to the ratable
payment of all interest and fees owing with respect to the Credit Extensions
(including Participation Fees) and all costs and expenses owing to the Secured
Parties pursuant to the terms of this Agreement, until paid in full in cash;
(d) fourth, after payment in full in cash of the amounts specified in clauses
(a) through (c), to the ratable payment of the principal amount of the Loans
then outstanding and the credit exposure of Secured Parties under Rate
Protection Agreements, the aggregate Reimbursement Obligations then owing and
Cash Collateralization for contingent liabilities under Letter of Credit
Outstandings (and each Synthetic Lender shall be entitled to receive amounts in
the Deposit Account to the extent such amounts are not being used, after giving
effect to this clause, to cash collateralize Synthetic Letters of Credit
Outstandings); (e) fifth, after payment in full in cash of the amounts specified
in clauses (a) through (d), to the ratable payment of all other Obligations
owing to the Secured Parties; and (f) sixth, after payment in full in cash of
the amounts specified in clauses (a) through

 

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(e); and following the Termination Date, to each applicable Obligor or any other
Person lawfully entitled to receive such surplus pursuant to an order of a
Governmental Authority. For purposes of this Section, the “credit exposure” at
any time of any Secured Party with respect to a Rate Protection Agreement to
which such Secured Party is a party shall be determined (i) in accordance with
any applicable schedule between the Borrower and such Secured Party, if any, or
(ii) otherwise at such time in accordance with the customary methods of
calculating credit exposure under similar arrangements by the counterparty to
such arrangements, taking into account potential interest rate movements and the
respective termination provisions and notional principal amount and term of such
Rate Protection Agreement, so long as such Rate Protection Agreement has been
terminated by the applicable counterparty.

SECTION 4.8. Sharing of Payments. If any Credit Party shall obtain any payment
or other recovery (whether voluntary, involuntary, by application of setoff or
otherwise) on account of any Credit Extension or Reimbursement Obligation (other
than pursuant to the terms of Section 4.3, 4.4, 4.5 or 4.6) in excess of its pro
rata share of payments obtained by all Credit Parties, such Credit Party shall
purchase from the other Credit Parties such participations in Credit Extensions
made by them as shall be necessary to cause such purchasing Credit Party to
share the excess payment or other recovery ratably (to the extent such other
Credit Parties were entitled to receive a portion of such payment or recovery)
with each of them; provided, however, that if all or any portion of the excess
payment or other recovery is thereafter recovered from such purchasing Credit
Party, the purchase shall be rescinded and each Credit Party which has sold a
participation to the purchasing Credit Party shall repay to the purchasing
Credit Party the purchase price to the ratable extent of such recovery together
with an amount equal to such selling Credit Party’s ratable share (according to
the proportion of (a) the amount of such selling Credit Party’s required
repayment to the purchasing Credit Party to (b) total amount so recovered from
the purchasing Credit Party) of any interest or other amount paid or payable by
the purchasing Credit Party in respect of the total amount so recovered. The
Borrower agrees that any Credit Party purchasing a participation from another
Credit Party pursuant to this Section may, to the fullest extent permitted by
law, exercise all its rights of payment (including pursuant to Section 4.9) with
respect to such participation as fully as if such Credit Party were the direct
creditor of the Borrower in the amount of such participation. If under any
applicable bankruptcy, insolvency or other similar law any Credit Party receives
a secured claim in lieu of a setoff to which this Section applies, such Credit
Party shall, to the extent practicable, exercise its rights in respect of such
secured claim in a manner consistent with the rights of the Credit Parties
entitled under this Section to share in the benefits of any recovery on such
secured claim.

SECTION 4.9. Setoff. Each Credit Party shall, upon the occurrence and during the
continuance of any Default described in clauses (a) through (d) of Section 9.1.9
or, with the consent of the Required Lenders, upon the occurrence and during the
continuance of any other Event of Default, have the right to appropriate and
apply to the payment of the Obligations owing to it (whether or not then due),
and (as security for such Obligations) the Borrower hereby grants to each Credit
Party a continuing security interest in, any and all balances, credits,
deposits, accounts (other than any trust accounts comprised entirely of moneys
held in trust for the benefit of Persons other than the Borrower or its
Affiliates) or moneys of the Borrower then or thereafter maintained with such
Credit Party (other than any Deposit Accounts or Securities Accounts subject to
a Control Agreement); provided, however, that any such appropriation and
application shall be subject to the provisions of Section 4.8. Each Credit Party
agrees promptly

 

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to notify the Borrower and the Administrative Agent after any such setoff and
application made by such Credit Party; provided, however, that the failure to
give such notice shall not affect the validity of such setoff and application.
The rights of each Credit Party under this Section are in addition to other
rights and remedies (including other rights of setoff under applicable law or
otherwise) which such Credit Party may have.

SECTION 4.10. Change of Lending Office. Each Credit Party agrees that if it
makes any demand for payment under Section 4.3, 4.5 or 4.6, or if any adoption
or change of the type described in Section 4.1 shall occur with respect to it,
it will, if requested by the Borrower, file a certificate or document reasonably
requested by the Borrower and/or use reasonable efforts (in either case,
consistent with its internal policy and legal and regulatory restrictions and so
long as such efforts would not be disadvantageous to it, as determined in its
sole discretion) to designate a different lending office if the filing of such
certificate or document or the making of such a designation would reduce or
obviate the need for the Borrower to make payments under Section 4.3, 4.5 or
4.6, or would eliminate or materially reduce the effect of any adoption or
change described in Section 4.1; provided, however, that nothing in this Section
shall affect or postpone any of the Obligations of the Borrower or the right of
any Credit Party provided in Section 4.1, 4.3, 4.5 or 4.6.

SECTION 4.11. Replacement of Lenders. If any Lender (an “Affected Lender”) (a)
fails to consent to an election, consent, amendment, waiver or other
modification to this Agreement or other Loan Document that requires the consent
of a greater percentage of the Lenders than the Required Lenders and such
election, consent, amendment, waiver or other modification is otherwise
consented to by the Required Lenders or (b) makes a demand upon the Borrower for
(or if the Borrower is otherwise required to pay) amounts pursuant to Section
4.3, 4.5 or 4.6 (and the payment of such amounts are, and are likely to continue
to be, more onerous in the reasonable judgment of the Borrower than with respect
to the other Lenders), or (c) gives notice pursuant to Section 4.1 requiring a
conversion of such Affected Lender’s LIBO Rate Loans to Base Rate Loans or
suspending such Lender’s obligation to make Loans as, or to convert Loans into,
LIBO Rate Loans, the Borrower may, within 30 days following such failure to
consent or receipt by the Borrower of such demand or notice, as the case may be,
give notice (a “Replacement Notice”) in writing to the Administrative Agent and
such Affected Lender of its intention to cause such Affected Lender to sell all
or any portion of its Loans, Commitments, Notes and/or Synthetic Deposit to
another financial institution or other Person (a “Replacement Lender”)
designated in such Replacement Notice; provided, however, that no Replacement
Notice may be given by the Borrower if (i) such replacement conflicts with any
applicable law or regulation, (ii) any Event of Default shall have occurred and
be continuing at the time of such replacement or (iii) prior to any such
replacement, such Lender shall have taken any necessary action under Section 4.5
or 4.6 (if applicable) so as to eliminate the continued need for payment of
amounts owing pursuant to Section 4.5 or 4.6. If the Administrative Agent shall,
in the exercise of its reasonable discretion and within 30 days of its receipt
of such Replacement Notice, notify the Borrower and such Affected Lender in
writing that the Replacement Lender is satisfactory to the Administrative Agent
(such consent not to be unreasonably withheld or delayed and not being required
where the Replacement Lender is already a Lender), then such Affected Lender
shall, subject to the payment of any amounts due pursuant to Section 4.4,
assign, in accordance with Section 12.11, the portion of its Commitments, Loans,
Notes (if any), Synthetic Deposits and other rights and obligations under this
Agreement and all other Loan

 

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Documents (including Reimbursement Obligations, if applicable) designated in the
replacement notice to such Replacement Lender; 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 Lender and such
Replacement Lender, (ii) the purchase price paid by such Replacement Lender
shall be in the amount of such Affected Lender’s Loans designated in the
Replacement Notice, Synthetic Deposits and/or its Percentage of outstanding
Reimbursement Obligations, as applicable, together with all accrued and unpaid
interest and fees in respect thereof, plus all other amounts (including the
amounts demanded and unreimbursed under Sections 4.3, 4.5 and 4.6), owing to
such Affected Lender hereunder and (iii) the Borrower shall pay to the Affected
Lender and the Administrative Agent all reasonable out-of-pocket expenses
incurred by the Affected Lender and the Administrative Agent in connection with
such assignment and assumption (including the processing fees described in
Section 12.11). Upon the effective date of an assignment described above, the
Replacement Lender shall become a “Lender” for all purposes under the Loan
Documents. Each Lender hereby grants to the Administrative Agent an irrevocable
power of attorney (which power is coupled with an interest) to execute and
deliver, on behalf of such Lender as assignor, any assignment agreement
necessary to effectuate any assignment of such Lender’s interests hereunder in
the circumstances contemplated by this Section.

SECTION 4.12. Application to Participation Fees. The foregoing provisions of
this Article IV shall apply, mutatis mutandis, to Participation Fees as if
Participation Fees were interest on Loans and to Synthetic Deposits as if
Synthetic Deposits were LIBO Rate Loans.

ARTICLE V

CONDITIONS TO CLOSING

SECTION 5.1. Initial Credit Extension. The obligations of the Lenders and each
Issuer to make the initial Credit Extension shall be subject to the prior or
concurrent satisfaction or waiver of each of the conditions precedent set forth
in this Article.

SECTION 5.1.1. Resolutions, etc. The Administrative Agent shall have received
from each Obligor, as applicable, (i) a copy of a good standing certificate,
dated a date reasonably close to the Closing Date, for each such Person and
(ii) a certificate, dated as of the Closing Date, duly executed and delivered by
such Person’s Secretary or Assistant Secretary, managing member or general
partner, as applicable, as to

(a)               resolutions of each such Person’s Board of Directors (or other
managing body, in the case of other than a corporation) then in full force and
effect authorizing the execution, delivery and performance of each Loan Document
to be executed by such Person and the transactions contemplated hereby and
thereby;

(b)               the incumbency and signatures of those of its officers,
managing member or general partner, as applicable, authorized to act with
respect to each Loan Document to be executed by such Person; and

(c)               the full force and validity of each Organic Document of such
Person and copies thereof;

 

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upon which certificates each Secured Party may conclusively rely until it shall
have received a further certificate of the Secretary, Assistant Secretary,
managing member or general partner, as applicable, of any such Person canceling
or amending the prior certificate of such Person.

SECTION 5.1.2. Closing Date Certificate. The Administrative Agent shall have
received the Closing Date Certificate, dated the Closing Date and duly executed
and delivered by an Authorized Officer of the Borrower, in which certificate the
Borrower shall agree and acknowledge that the statements made therein shall be
deemed to be true and correct representations and warranties in all material
respects of the Borrower as of such date, and, at the time each such certificate
is delivered, such statements shall in fact be true and correct in all material
respects (it being understood that the Borrower shall not have to certify as to
any matter set forth in this Agreement to the extent that the determination
thereof is to be made (as expressly provided for in this Agreement) by the
Administrative Agent or any Lender). All documents and agreements required to be
appended to the Closing Date Certificate shall be in form and substance
reasonably satisfactory to the Administrative Agent.

SECTION 5.1.3. Material Adverse Change. There not having occurred any event,
change or condition since December 31, 2004 that, individually or in the
aggregate, has had, or could reasonably be expected to have, a Material Adverse
Effect.

SECTION 5.1.4. Consummation of Transaction. The Administrative Agent shall have
received evidence reasonably satisfactory to it that:

(a)               (i)(x) the Debt Tender has been consummated in accordance with
the Offer to Purchase, (y) all 2007 Notes tendered pursuant to the Debt Tender
have been purchased and (z) after giving effect to such purchase (and pro forma
effect to any optional redemption commenced pursuant to a notice of redemption
issued pursuant to Article III of the 2007 Notes Indenture (the “Optional
Redemption”) on the Closing Date), no more than $22,000,000 in aggregate
principal amount of 2007 Notes remains outstanding and (ii) the aggregate
principal amount of Term Loans borrowed by the Borrower shall not exceed the
aggregate amount necessary (x) to consummate the Debt Tender, including payment
of accrued interest on the 2007 Notes tendered and the related tender premium,
(y) to consummate any Optional Redemption, including payment of any accrued
interest on the 2007 Notes to be redeemed and the related redemption premium
(provided that any portion of the proceeds of the Term Loans intended to be used
to consummate such Optional Redemption shall be deposited in a segregated
Deposit Account subject to a Control Agreement and shall not be used for any
purpose other than consummating such Optional Redemption; provided further that
no disbursement from such segregated Deposit Account shall be permitted unless
the chief financial officer of the Borrower shall have previously certified in
writing to the Administrative Agent as to the amount of such disbursement and
that the proceeds of such disbursement are to be used solely for the purpose of
consummating such Optional Redemption) and (z) to pay the Transaction Costs; and

(b)               concurrently with the making of the Loans hereunder, the
Existing Credit Agreement, together with all interest and other amounts due and
payable with respect thereto, shall be paid in full and the commitments in
respect of such Indebtedness shall be

 

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terminated (other than Existing Letters of Credit which will be outstanding
hereunder or letters of credit issued under the Existing Credit Agreement and
either Cash Collateralized or backed by Synthetic Letters of Credit) and all (i)
Liens securing payment of any such Indebtedness shall be released and (ii) the
Administrative Agent shall have received all Uniform Commercial Code Form UCC 3
termination statements or other instruments as may be necessary, in the
reasonable judgment of the Administrative Agent, in connection therewith.

SECTION 5.1.5. Delivery of Notes. The Administrative Agent shall have received,
for the account of each Lender that has requested a Note in writing three
Business Days prior to the Closing Date, such Lender’s Notes duly executed and
delivered by an Authorized Officer of the Borrower.

SECTION 5.1.6. Arranger’s Fees, Closing Fees, Expenses, etc. The Administrative
Agent shall have received, for its own account, or for the account of each
Lender, as the case may be, all fees, costs and expenses due and payable
pursuant to the Engagement Letter, and Sections 3.3 and 12.3 to the extent then
invoiced.

SECTION 5.1.7. Financial Information. The Administrative Agent shall have
received:

(a)               unaudited consolidated balance sheets and related statements
of income, stockholders’ equity and cash flows of the Parent for (i) each
subsequent Fiscal Quarter ended 45 days before the Closing Date and (ii) each
fiscal month after the most recent Fiscal Quarter for which financial statements
were received by the Administrative Agent as described above and ended 30 days
before the Closing Date, which financial statements shall not be materially
inconsistent with the financial statements or Projections and shall have been
prepared in accordance with GAAP;

(b)               a pro forma consolidated balance sheet and related pro forma
consolidated statement of income of the Parent as of and for the twelve-month
period ending as of the most recent month ended at least 30 days prior to the
Closing Date, prepared after giving effect to the Transaction as if the
Transaction had occurred as of such date (in the case of such balance sheet) or
at the beginning of such period (in the case of such other financial
statements), which financial statements shall not be materially inconsistent
with the Projections; and

(c)               a detailed business plan for the Parent and its Subsidiaries
for 2005, and projections for the years 2006 – 2010, and for the quarters
beginning with the first Fiscal Quarter of 2005 and through the fourth Fiscal
Quarter of 2006, in form and substance reasonably satisfactory to the
Administrative Agent.

SECTION 5.1.8. Solvency, etc. The Administrative Agent shall have received a
certificate duly executed and delivered by the chief financial officer or chief
accounting officer of the Parent (in his capacity as such Authorized Officer),
certifying that each of the Parent, the Borrower and the Subsidiary Guarantors,
individually, after giving effect to the transactions contemplated hereby, is
Solvent, dated as of the Closing Date, in form and substance reasonably
satisfactory to the Administrative Agent.

 

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SECTION 5.1.9. Opinions of Counsel. The Administrative Agent shall have received
opinions, dated the Closing Date and addressed to the Administrative Agent and
all Lenders, from

(a)               Skadden, Arps, Slate, Meagher & Flom LLP, New York counsel to
the Obligors, in form and substance reasonably satisfactory to the
Administrative Agent;

(b)               Dykema Gossett PLLC, Michigan counsel to the Obligors, in form
and substance reasonably satisfactory to the Administrative Agent;

(c)               local counsel to the Obligors, in form and substance, and from
counsel, in each case reasonably satisfactory to the Administrative Agent, from
each state set forth on Item 5.1.9(c) of the Disclosure Schedule.

SECTION 5.1.10. Subsidiary Guaranty. The Administrative Agent shall have
received the Subsidiary Guaranty, dated as of the Closing Date, duly executed
and delivered by an Authorized Officer of each Subsidiary Guarantor.

SECTION 5.1.11. Collateral Documents. The Administrative Agent shall have
received:

(a)               the Pledge and Security Agreement, dated as of the Closing
Date, duly executed and delivered by an Authorized Officer of the Parent, the
Borrower and each Subsidiary Guarantor together with

(i)                the certificates evidencing all of the issued and outstanding
shares of Capital Securities pledged pursuant to the Pledge and Security
Agreement, which certificates in each case shall be accompanied by undated
instruments of transfer duly executed in blank, or, if any such shares of
Capital Securities pledged pursuant to the Pledge and Security Agreement are
uncertificated securities, the Collateral Trustee shall have obtained “control”
(as defined in the UCC) over such shares of Capital Securities) and such other
instruments and documents as shall be necessary in the reasonable opinion of the
Administrative Agent under applicable law to perfect (subject to certain
Permitted Liens) the first priority security interest of the Collateral Trustee
in such shares of Capital Securities;

(ii)               executed copies of UCC financing statements (Form UCC-1)
naming each such Obligor executing the Pledge and Security Agreement as a debtor
and the Collateral Trustee as the secured party, or other similar instruments or
documents to be filed under the UCC of all jurisdictions as may be necessary in
the reasonable opinion of the Administrative Agent and its counsel, to perfect
the security interests of the Collateral Trustee pursuant to the Pledge and
Security Agreement; and

(iii)              certified copies of UCC Requests for Information or Copies
(Form UCC-11), or a similar search report certified by a party reasonably
acceptable to the Administrative Agent, dated a date reasonably near to the
Closing Date, listing effective financing statements which name such Obligor
(under its present name

 

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and certain of its previous names) as the debtor and which are filed in certain
of the jurisdictions in which filings are to be made pursuant to clause (ii)
above, together with copies of such financing statements; and

(b)               counterparts of a Mortgage, dated as of the Closing Date,
encumbering each Mortgaged Property and duly executed by the respective Obligor
holding a fee interest in such Mortgaged Property, in form for recording in the
recording office of each political subdivision where such Mortgaged Property is
located, together with

(i)                evidence of the completion (or satisfactory arrangements for
the completion) of all recordings and filings of such Mortgage as may be
necessary or, in the reasonable opinion of the Administrative Agent or
Collateral Trustee, desirable effectively to create a valid, perfected first
priority Lien, subject to Permitted Liens, against the Mortgaged Property
purported to be covered thereby;

(ii)               evidence of the payment of (or satisfactory arrangements for
the payment of) all Title Policy premiums, search and examination charges and
related charges, mortgage recording taxes, fees, costs and expenses of filing of
each Mortgage as may be necessary in the reasonable opinion of the
Administrative Agent, to create a valid, perfected first priority Lien against
the Mortgaged Property identified in such Mortgage, subject only to Permitted
Liens;

(iii)              with respect to each Mortgage, a mortgagee’s title insurance
policy or signed commitment to issue such policy in favor of the Collateral
Trustee, as mortgagee for the ratable benefit of the Secured Parties, in an
amount equal to 105% of the fair market value of the Mortgaged Property, and in
form and substance and issued by insurers, in each case reasonably satisfactory
to the Administrative Agent, with respect to the property purported to be
covered by such Mortgage, insuring that title to such property is marketable and
that the interest created by the Mortgage constitutes a valid first priority
perfected Lien on the Mortgaged Property and fixtures described therein free and
clear of all defects and encumbrances, other than Permitted Liens, such policy
to include, to the extent available, a revolving credit endorsement,
comprehensive endorsement, variable rate endorsement, first loss, last dollar,
survey, contiguity, doing business, access and utilities endorsements,
mechanic’s lien endorsement, and such other endorsements as the Administrative
Agent shall reasonably request, and such policy to be accompanied by evidence of
the payment in full of all premiums thereon (such policy, the “Title Policy”);

(iv)              with respect to each Mortgage, such UCC financing statements
as may be necessary to perfect the Lien of the Collateral Trustee, for the
benefit of the Secured Parties (as defined in the Collateral Trust Agreement) on
the fixtures granted in such Mortgage;

(v)               opinions of counsel to the Obligors in each jurisdiction set
forth in Item 5.1.9(c) of the Disclosure Schedule where a Mortgaged Property is
located,

 

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in each case in form and substance, and from counsel, reasonably satisfactory to
the Administrative Agent;

(vi)

a Survey with respect to each Mortgaged Property;

(vii)             such other affidavits, certificates, approvals, opinions or
documents as the Administrative Agent may reasonably request; and

(c)               the Collateral Trust Agreement, dated as of the Closing Date,
duly executed and delivered by each Person party thereto.

The Administrative Agent and its counsel shall be reasonably satisfied that (i)
the Lien granted to the Collateral Trustee, for the benefit of the Secured
Parties (as defined in the Collateral Trust Agreement), in the Collateral
(subject to certain Permitted Liens) is a first priority (or local equivalent
thereof) security interest, and (ii) no Lien exists on any of the Collateral (as
defined in the Pledge and Security Agreement) other than Permitted Liens and the
Lien created in favor of the Collateral Trustee, for the benefit of the Secured
Parties (as defined in the Collateral Trust Agreement), pursuant to a Loan
Document.

SECTION 5.1.12. Filing Agent, etc. All UCC financing statements (Form UCC-1) or
other similar financing statements and UCC termination statements (Form UCC-3)
required pursuant to the Loan Documents (collectively, the “Filing Statements”)
shall have been delivered to Corporation Service Company or another similar
filing service company acceptable to the Administrative Agent (the “Filing
Agent”). The Filing Agent shall have acknowledged in a writing satisfactory to
the Administrative Agent and its counsel (i) the Filing Agent’s receipt of all
Filing Statements, (ii) that the Filing Statements have either been submitted
for filing in the appropriate filing offices or will be submitted for filing in
the appropriate offices within 10 days following the Closing Date and (iii) that
the Filing Agent will notify the Administrative Agent and its counsel of the
results of such submissions within 30 days following the Closing Date.

SECTION 5.1.13. Intellectual Property Security Agreements. The Administrative
Agent shall have received the Patent Security Agreement, the Copyright Security
Agreement and the Trademark Security Agreement, as applicable, each dated as of
the Closing Date, duly executed and delivered by an Authorized Officer of each
Obligor that has delivered the Pledge and Security Agreement and owns the
intellectual property pledged thereunder.

SECTION 5.1.14. Control Agreements. The Administrative Agent shall have received
fully executed Control Agreements with respect to Deposit Accounts and
Securities Accounts, each of which shall be in form and substance reasonably
satisfactory to the Administrative Agent, so as to be in compliance with the
provisions of Section 7.11.

SECTION 5.1.15. Insurance. The Administrative Agent shall have received
certificates of the liability and property insurance policies, from one or more
insurance companies reasonably satisfactory to the Administrative Agent,
evidencing coverage required to be maintained pursuant to each Loan Document.

SECTION 5.1.16. Rating of Loans. The Loans shall have been rated by each of
Moody’s and S&P.

 

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SECTION 5.1.17. PATRIOT Act Disclosures. The Administrative Agent and each
Lender shall have received all PATRIOT Act Disclosures requested by them prior
to execution of this Agreement.

SECTION 5.2. All Credit Extensions. The obligation of each Lender and each
Issuer to make any Credit Extension shall be subject to the satisfaction or
waiver of each of the conditions precedent set forth below.

SECTION 5.2.1. Compliance with Warranties, No Default, etc. Both immediately
before and immediately after giving effect to any Credit Extension (but, if any
Default of the nature referred to in Section 9.1.5 shall have occurred with
respect to any other Indebtedness, without giving effect to the application,
directly or indirectly, of the proceeds thereof) the following statements shall
be true and correct:

(a)               the representations and warranties set forth in each Loan
Document shall, in each case, be true and correct (i) in the case of
representations and warranties not qualified by references to “materiality” or a
Material Adverse Effect, in all material respects and (ii) otherwise, in all
respects, in each case with the same effect as if then made (unless stated to
relate solely to an earlier date, in which case such representations and
warranties shall be true and correct in all material respects as of such earlier
date); and

(b)

no Default shall have then occurred and be continuing.

SECTION 5.2.2. Credit Extension Request, etc. The Administrative Agent shall
have received a Borrowing Request if Loans are being requested, or an Issuance
Request if a Letter of Credit is being requested or extended. Each of the
delivery of a Borrowing Request or Issuance Request and the acceptance by the
Borrower of the proceeds of such Credit Extension shall constitute a
representation and warranty by the Borrower that on the date of such Credit
Extension (both immediately before and after giving effect to such Credit
Extension and the application of the proceeds thereof) the statements made in
Section 5.2.1 are true and correct in all material respects.

SECTION 5.2.3. Satisfactory Legal Form. All documents executed or submitted
pursuant hereto by or on behalf of any Obligor shall be reasonably satisfactory
in form and substance to the Administrative Agent and its counsel. The
Administrative Agent and its counsel shall have received all information,
approvals, opinions, documents or instruments as the Administrative Agent or its
counsel may reasonably request, so long as, in the case of Credit Extensions
following the initial Credit Extension, the Administrative Agent believes in
good faith that a Default has occurred and is continuing or believes it
necessary to confirm that the Obligors are in compliance with the Loan
Documents.

ARTICLE VI

REPRESENTATIONS AND WARRANTIES

In order to induce the Credit Parties to enter into this Agreement and to make
Credit Extensions hereunder, each of the Parent and the Borrower represents and
warrants as set forth in this Article.

 

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SECTION 6.1. Organization, etc. Each Obligor (i) is validly organized and
existing and in good standing under the laws of the state or jurisdiction of its
incorporation or organization, (ii) is duly qualified to do business and is in
good standing as a foreign entity in each jurisdiction where the nature of its
business requires such qualification, and (iii) has full power and authority and
holds all requisite governmental licenses, permits and other approvals to enter
into and perform its Obligations under each Loan Document to which it is a party
and to own and hold under lease its property and to conduct its business
substantially as currently conducted by it except, in the case of clauses (ii)
and (iii) above, where the failure to so comply, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.

SECTION 6.2. Due Authorization, Non-Contravention, etc. The execution, delivery
and performance by each Obligor of each Loan Document executed or to be executed
by it, each such Obligor’s participation in the consummation of all aspects of
the Transaction, and the execution, delivery and performance by the Borrower or
(if applicable) any other Obligor of the agreements executed and delivered by it
in connection with the Transaction are in each case within each such Person’s
powers, have been duly authorized by all necessary action, and do not

(a)               contravene any (i) Obligor’s Organic Documents, (ii)
contractual restriction binding on or affecting any Obligor (other than any such
contractual restriction that shall have been waived on or prior to the Closing
Date), (iii) court decree or order binding on or affecting any Obligor or (iv)
law or governmental regulation binding on or affecting any Obligor; or

(b)               result in, or require the creation or imposition of, any Lien
on any Obligor’s properties (except as permitted or required by this Agreement).

Each of the Parent, the Borrower and their respective Subsidiaries has complied
in all material respects with all of their respective obligations under all
material agreements to which the Parent, the Borrower or such Subsidiary is a
party, except where the failure to so comply could not reasonably be expected to
have a Material Adverse Effect.

SECTION 6.3. Government Approval, Regulation, etc. No authorization or approval
or other action by, and no notice to or filing with, any Governmental Authority
or other Person (other than those which have been, or on the Closing Date will
be, duly obtained or made and which are, or on the Closing Date will be, in full
force and effect) is required for the consummation of the Transaction or the due
execution, delivery or performance by any Obligor of any Loan Document to which
it is a party. None of the Parent, the Borrower or any of its Subsidiaries is an
“investment company” within the meaning of the Investment Company Act of 1940,
as amended, or a “holding company”, or a “subsidiary company” of a “holding
company”, or an “affiliate” of a “holding company” or of a “subsidiary company”
of a “holding company”, within the meaning of the Public Utility Holding Company
Act of 1935, as amended.

SECTION 6.4. Validity, etc. Each Loan Document to which any Obligor is a party
constitutes the legal, valid and binding obligation of such Obligor, enforceable
against such Obligor in accordance with its respective terms (except, in any
case, as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors’ rights generally
and by principles of equity).

 

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SECTION 6.5. Financial Information. (a) The consolidated financial statements of
the Parent and its Subsidiaries furnished to the Administrative Agent and each
Lender pursuant to clause (a) of Section 5.1.7), and the audited consolidated
balance sheets and related statements of income, stockholders’ equity and cash
flows of the Parent for the 2002, 2003 and 2004 Fiscal Years, have been prepared
in accordance with GAAP consistently applied, and present fairly in all material
respects the consolidated financial condition of the Persons covered thereby as
at the dates thereof and the results of their operations for the periods then
ended.

(b) The pro forma consolidated balance sheets furnished to the Administrative
Agent and each Lender pursuant to clause (b) of Section 5.1.7 fairly present in
all material respects the pro forma estimated financial condition of the Parent
and its Subsidiaries as of the date thereof.

(c) All balance sheets, all statements of operations, shareholders’ equity and
cash flow and all other financial information (other than projections) of each
of the Parent, and its respective Subsidiaries furnished pursuant to Section 7.1
have been and will for periods following the Closing Date be prepared in
accordance with GAAP consistently applied, and do or will present fairly in all
material respects the consolidated financial condition of the Persons covered
thereby as at the dates thereof and the results of their operations for the
periods then ended.

(d) There are no material liabilities of any Obligor of any kind whatsoever,
whether accrued, contingent, absolute, determined, determinable or otherwise,
other than (i) liabilities provided for or disclosed in the financial statements
referred to in clause (a) of Section 5.1.7 for the 2004 Fiscal Year or the notes
thereto, (ii) liabilities that have been disclosed in the Disclosure Schedule,
(iii) liabilities associated with any litigation, action, proceeding,
application, petition to deny, complaint, investigation or labor controversy not
required to be set forth on Item 6.7 of the Disclosure Schedule in order for the
representation and warranty set forth in Section 6.7 to be true and correct, and
(iv) liabilities arising in the ordinary course of business since December 31,
2004.

SECTION 6.6. No Material Adverse Change. There has been no material adverse
change in the business, assets, liabilities, operations, condition (financial or
otherwise), operating results, or prospects of the Parent and its Subsidiaries,
taken as a whole, since December 31, 2004.

SECTION 6.7. Litigation, Labor Controversies, etc. There is no pending or, to
the knowledge of the Parent or any of its Subsidiaries, threatened litigation,
action, proceeding or labor controversy

(a)               except as disclosed in Item 6.7 of the Disclosure Schedule,
affecting the Parent or any of its Subsidiaries or any of their respective
properties, businesses, assets or revenues, which could reasonably be expected
to have a Material Adverse Effect, and no adverse development has occurred in
any labor controversy, litigation, arbitration or governmental investigation or
proceeding disclosed in Item 6.7; or

(b)               which purports to affect the legality, validity or
enforceability of any Loan Document or the Transaction.

 

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SECTION 6.8. Subsidiaries. Neither the Parent nor the Borrower have any
Subsidiaries, except those Subsidiaries

(a)               existing on the Closing Date which are identified in Items
1.1(a) and 6.8 of the Disclosure Schedule, or

(b)               which are permitted to have been organized or acquired in
accordance with Section 8.5 or 8.9.

Item 6.8 of the Disclosure Schedule (a) lists, with respect to each Subsidiary
of the Parent, (i) the state or jurisdiction of such Subsidiary’s incorporation
or organization and (ii) the percentage of shares or interests of the Capital
Securities of such Subsidiary owned by the Parent or another Subsidiary, (b)
identifies each Subsidiary of the Parent which is a Foreign Subsidiary and (c)
identifies each Immaterial Subsidiary. The Capital Securities of the Parent and
each of its Subsidiaries have been duly authorized and validly issued and are
fully paid and non-assessable. Except as set forth on Item 6.8 of the Disclosure
Schedule, as of the date hereof, there is no existing option, warrant, call,
right, commitment or other agreement to which the Parent or any of its
Subsidiaries is a party requiring, and there is no membership interest or other
Capital Securities of the Parent or any of its Subsidiaries outstanding upon
which conversion or exchange would require, the issuance by the Parent or any of
its Subsidiaries of any additional membership interests or other Capital
Securities of the Parent or any of its Subsidiaries or other Capital Securities
convertible into, exchangeable for or evidencing the right to subscribe for or
purchase, a membership interest or other Capital Securities of the Parent or any
of its Subsidiaries.

SECTION 6.9. Ownership of Properties. The Parent and each of its Subsidiaries
owns (i) in the case of owned real property, good and marketable fee title to,
and (ii) in the case of owned personal property, good and valid title to, or, in
the case of leased or licensed real or personal property, valid and enforceable
leasehold interests or license rights (as the case may be) in, all of its
properties and assets, real and personal, tangible and intangible, of any nature
whatsoever, free and clear in each case of all Liens or claims, except for
Permitted Liens, and except where the failure to do so with respect to any such
property could not reasonably be expected to interfere in any material respect
with the value or use of such property.

SECTION 6.10. Taxes; Other Laws. Each of the Parent and its Subsidiaries has
filed all Federal, State and other material Tax returns and reports required by
law to have been filed by it and has paid all Taxes and governmental charges
thereby shown to be due and owing, except any such Taxes or charges which are
being diligently contested in good faith by appropriate proceedings and for
which adequate reserves in accordance with GAAP shall have been set aside on its
books. The Parent and its Subsidiaries have complied with all applicable laws,
rules, regulations and orders (other than any relating to the payment of Taxes
covered by the previous sentence), except to the extent the failure to comply
with all such laws, rules, regulations and orders would not result in a Material
Adverse Effect.

SECTION 6.11. Pension and Welfare Plans. During the twelve-consecutive-month
period prior to the Closing Date and prior to the date of any Credit Extension
hereunder, no steps have been taken to terminate any Pension Plan, and no
contribution failure has occurred with

 

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respect to any Pension Plan sufficient to give rise to a Lien under Section
302(f) of ERISA. No condition exists or event or transaction has occurred with
respect to any Pension Plan which might result in the incurrence by the Parent,
the Borrower or any member of the Controlled Group of any material liability,
fine or penalty. Except as disclosed in Item 6.11 of the Disclosure Schedule,
none of the Parent, the Borrower or any member of the Controlled Group has any
contingent liability with respect to any post-retirement benefit under a Welfare
Plan, other than liability for continuation coverage described in Part 6 of
Title I of ERISA.

SECTION 6.12. Environmental Warranties. Except as set forth in Item 6.12 of the
Disclosure Schedule:

(a)               all facilities and property (including underlying groundwater)
owned or leased by the Parent, the Borrower or any of their respective
Subsidiaries have been, and continue to be, owned or leased by the Parent, the
Borrower and their respective Subsidiaries in material compliance with all
Environmental Laws;

(b)               there have been no past, and there are no pending or
threatened (in writing) (i) claims, complaints, notices or requests for
information received by the Parent, the Borrower or any of their respective
Subsidiaries with respect to any alleged violation of any Environmental Law, or
(ii) complaints, notices or inquiries to the Parent, the Borrower or any of
their respective Subsidiaries regarding potential liability under any
Environmental Law, except, in the case of clauses (i) and (ii) of this Section
6.12(b), where the existence of any of the foregoing, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect;

(c)               there have been no Releases of Hazardous Materials at, on or
under any property now or previously owned or leased by the Parent, the Borrower
or any of their respective Subsidiaries that, individually or in the aggregate,
have, or could reasonably be expected to have, a Material Adverse Effect;

(d)               the Parent, the Borrower and each of their respective
Subsidiaries have been issued and are in compliance in all material respects
with all permits, certificates, approvals, licenses and other authorizations
relating to environmental matters;

(e)               no property now or previously owned or leased by the Parent,
the Borrower or any of their respective Subsidiaries is listed or proposed for
listing (with respect to owned property only) on the National Priorities List
pursuant to CERCLA, on the CERCLIS or on any similar state list of sites
requiring investigation or clean-up;

(f)                there are no underground storage tanks, active or abandoned,
including petroleum storage tanks, on or under any property now or previously
owned or leased by the Parent, the Borrower or any of their respective
Subsidiaries that individually or in the aggregate, have, or could reasonably be
expected to have, a Material Adverse Effect;

(g)               none of the Parent, the Borrower or any of their respective
Subsidiaries has directly transported or directly arranged for the
transportation of any Hazardous Material to any location which is listed or
proposed for listing on the National Priorities List pursuant to CERCLA, on the
CERCLIS or on any similar state list or which is the

 

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subject of federal, state or local enforcement actions or other investigations
which may lead to material claims against the Parent, the Borrower or such
Subsidiary for any remedial work, damage to natural resources or personal
injury, including claims under CERCLA;

(h)               there are no polychlorinated biphenyls or friable asbestos
present at any property now or previously owned or leased by the Parent, the
Borrower or any of their respective Subsidiaries that, individually or in the
aggregate, have or could reasonably be expected to have, a Material Adverse
Effect; and

(i)                no conditions exist at, on or under any property now or
previously owned or leased by the Parent, the Borrower or any of their
respective Subsidiaries which, with the passage of time, or the giving of notice
or both, would give rise to liability under any Environmental Law that has, or
could reasonably be expected to have, a Material Adverse Effect.

SECTION 6.13. Accuracy of Information; Projections. (a) None of the information
(other than the Projections and forward-looking industry data) heretofore or
contemporaneously furnished, when furnished, to any Secured Party by or on
behalf of any Obligor in connection with any Loan Document or any transaction
contemplated hereby (including the Transaction), taken together as a whole with
all other information with which such Secured Party had previously been
furnished, contained any untrue statement of a material fact, or omitted to
state any material fact necessary to make such information not misleading in
light of the circumstances under which furnished on the date such information
was furnished, and no other information (other than the Projections and
forward-looking industry data) hereafter furnished in connection with any Loan
Document by or on behalf of any Obligor to any Secured Party, taken together as
a whole with all other information with which such Secured Party has previously
been furnished, will contain any untrue statement of a material fact or will
omit to state any material fact necessary to make such information not
misleading in light of the circumstances under which furnished on the date as of
which such information is dated or certified.

(b) The Projections and any other projections or forward-looking industry data
furnished in connection with any Loan Document have been prepared in good faith
based upon (other than in the case of forward-looking industry data) accounting
principles consistent with the historical audited financial statements of the
Parent and upon assumptions that are reasonable at the time made.

SECTION 6.14. Regulations U and X. No Obligor is engaged in the business of
extending credit for the purpose of buying or carrying margin stock, and no
proceeds of any Credit Extensions will be used to purchase or carry margin stock
or otherwise for a purpose which violates, or would be inconsistent with, Board
Regulation U or Regulation X. Terms for which meanings are provided in Board
Regulation U or Regulation X or any regulations substituted therefor, as from
time to time in effect, are used in this Section with such meanings.

SECTION 6.15. Solvency. The Transaction (including the execution and delivery by
the Subsidiary Guarantors of the Subsidiary Guaranty) will not involve or result
in any fraudulent transfer or fraudulent conveyance under the provisions of
Section 548 of the Bankruptcy Code

 

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(11 U.S.C. §101 et seq., as from time to time hereafter amended, and any
successor or similar statute) or any applicable state law relating to fraudulent
transfers or fraudulent conveyances. Each of the Obligors, individually, both
before and after giving effect to any Credit Extensions, is Solvent.

SECTION 6.16. Deposit Account and Cash Management Accounts. Set forth on
Item 6.16(a) of the Disclosure Schedule is a complete and accurate list, as of
the Closing Date, of all Deposit Accounts of each Obligor and set forth on
Item 6.16(b) of the Disclosure Schedule is a complete and accurate list, as of
the Closing Date, of all Securities Accounts (as defined in the UCC) of each
Obligor, if any.

SECTION 6.17. Labor Matters. (a) Except as set forth in Item 6.17 of the
Disclosure Schedule, none of the Parent, the Borrower or any of their respective
Subsidiaries is a party to any material labor dispute and there are no strikes
or walkouts relating to any labor contracts to which such Person is a party or
is otherwise subject; (b) there is no unfair labor practice complaint pending
against the Parent, the Borrower or any of their respective Subsidiaries or, to
the knowledge of the Parent or the Borrower, threatened against any of them,
before the National Labor Relations Board that could reasonably be expected to
have a Material Adverse Effect; (c) there is no grievance or significant
arbitration proceeding arising out of or under any collective bargaining
agreement pending against the Parent, the Borrower or any of their respective
Subsidiaries or, to the knowledge of the Parent or the Borrower, threatened in
writing against any of them that could reasonably be expected to have a Material
Adverse Effect; (d) no slowdown or stoppage is pending against the Parent, the
Borrower or any of their respective Subsidiaries, or to the knowledge of the
Parent or the Borrower, threatened against the Parent, the Borrower or any of
their respective Subsidiaries, that could reasonably be expected to have a
Material Adverse Effect; (e) none of the Parent, the Borrower or any of their
respective Subsidiaries is engaged in any unfair labor practice that could
reasonably be expected to have a Material Adverse Effect; and (f) except as set
forth in Item 6.17 of the Disclosure Schedule (none of which items disclosed
therein, singly or in the aggregate, have, or may reasonably be expected to
have, a Material Adverse Effect), there are no pending or threatened (in
writing) claims, complaints, notices, inquiries or requests for information
received by the Parent, the Borrower or any of their respective Subsidiaries
with respect to any alleged violation of, or potential liability under, any law
relating to employee health and safety (including the Occupational Safety and
Health Act, 29 U.S.C.A. §651 et seq.) which could reasonably be expected to
result in a Material Adverse Effect. As of the Closing Date, no Obligor is a
party to or bound by any collective bargaining agreement.

ARTICLE VII

AFFIRMATIVE COVENANTS

Each of the Parent and the Borrower covenants and agrees with each Lender, each
Issuer and the Administrative Agent that until the Termination Date has
occurred, the Parent and the Borrower will, and will cause their respective
Subsidiaries to, perform or cause to be performed the obligations set forth
below.

 

 

 

SECTION 7.1. Financial Information, Reports, Notices, etc. The Parent will
furnish the Administrative Agent with copies of the following financial
statements, reports, notices and information:

(a)        as soon as available and in any event within 45 days after the end of
each of the first three Fiscal Quarters of each Fiscal Year, an unaudited
consolidated balance sheet of the Parent and its Subsidiaries as of the end of
such Fiscal Quarter and consolidated statements of income and cash flow of the
Parent and its Subsidiaries for such Fiscal Quarter and for the period
commencing at the end of the previous Fiscal Year and ending with the end of
such Fiscal Quarter, and including (in each case), in comparative form the
figures for the corresponding Fiscal Quarter in, and year to date portion of,
the immediately preceding Fiscal Year, certified as complete and correct in all
material respects, by the chief financial officer or chief accounting officer of
the Parent (subject to normal year end adjustments);

(b)        as soon as available and in any event within 90 days after the end of
each Fiscal Year, a copy of the consolidated balance sheets of the Parent and
its Subsidiaries, and the related consolidated statements of income and cash
flow of the Parent and its respective Subsidiaries for such Fiscal Year, setting
forth in comparative form the figures for the immediately preceding Fiscal Year,
audited (without any Impermissible Qualification) by independent public
accountants acceptable to the Administrative Agent;

(c)        concurrently with the delivery of the financial information pursuant
to clauses (a) and (b), a Compliance Certificate, executed by the chief
financial officer or chief accounting officer of the Parent, (i) showing
compliance with the financial covenants set forth in Section 8.4 and stating
that no Default has occurred and is continuing (or, if a Default has occurred,
specifying the details of such Default and the action that the Parent, the
Borrower or an Obligor has taken or proposes to take with respect thereto), (ii)
stating that no Subsidiary has been formed or acquired, and no subsidiary has
ceased to be an Immaterial Subsidiary, since the delivery of the last Compliance
Certificate (or, if a Subsidiary has been formed or acquired, or a Subsidiary
has ceased to be an Immaterial Subsidiary, since the delivery of the last
Compliance Certificate, a statement that such Subsidiary has complied in all
material respects with Section 7.8), and (iii) in the case of a Compliance
Certificate delivered concurrently with the financial information pursuant to
clause (b), a calculation of Excess Cash Flow;

(d)        as soon as available and in any event no later than the earlier to
occur of (i) 30 days after the approval thereof by the Board of Directors of the
Parent and (ii) 45 days after the first day of the Fiscal Year of the Parent, an
annual budget, prepared on a monthly basis for such Fiscal Year and containing
consolidated projected financial statements (including balance sheets and
statements of operations and cash flows) of the Parent, the Borrower and their
respective Subsidiaries, prepared in a manner consistent with the Projections;

(e)        as soon as possible and in any event within three Business Days after
the Parent, the Borrower or any other Obligor obtains knowledge of the
occurrence of a Default, a statement of an Authorized Officer of the Parent
setting forth details of such

 

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Default and the action which the Parent, the Borrower or such Obligor has taken
and proposes to take with respect thereto;

(f)                as soon as possible and in any event within three Business
Days after the Parent, the Borrower or any other Obligor obtains knowledge of
(i) the occurrence of any material adverse development with respect to any
litigation, action, proceeding or labor controversy described in Item 6.7 of the
Disclosure Schedule, (ii) the commencement of any litigation, action, proceeding
or labor controversy of the type and materiality described in Section 6.7, or
(iii) the occurrence of a Material Adverse Effect, notice thereof and, to the
extent the Administrative Agent reasonably requests, copies of all documentation
relating thereto;

(g)               promptly upon becoming aware of (i) the institution of any
steps by any Person to terminate any Pension Plan, (ii) the failure to make a
required contribution to any Pension Plan if such failure is sufficient to give
rise to a Lien under Section 302(f) of ERISA, (iii) the taking of any action
with respect to a Pension Plan which could result in the requirement that any
Obligor furnish a bond or other security to the PBGC or such Pension Plan, or
(iv) the occurrence of any event with respect to any Pension Plan which could
result in the incurrence by any Obligor of any material liability, fine or
penalty, notice thereof and copies of all documentation relating thereto;

(h)               promptly upon receipt thereof, copies of all “management
letters” submitted to the Parent, the Borrower or any other Obligor by the
independent public accountants referred to in clause (b) of this Section 7.1 in
connection with each audit made by such accountants;

(i)                promptly (i) if the Parent or the Borrower obtains knowledge
that one or more of the Parent, the Borrower or any Person which owns, directly
or indirectly, any Capital Securities of the Parent or the Borrower or any other
holder at any time of any direct or indirect equitable, legal or beneficial
interest therein is the subject of any of the Terrorism Laws, the Parent or the
Borrower, as applicable, will notify the Administrative Agent and (ii) upon the
request of any Lender, the Parent and the Borrower will provide any information
such Lender believes is reasonably necessary to be delivered to comply with the
PATRIOT Act; and

(j)                such other financial and other information as any Lender or
Issuer through the Administrative Agent may from time to time reasonably request
(including information and reports in such detail as the Administrative Agent
may reasonably request with respect to the terms of and information provided
pursuant to the Compliance Certificate).

SECTION 7.2. Maintenance of Existence; Compliance with Contracts, Laws, etc.
Each of the Parent and the Borrower will, and will cause each of their
respective Subsidiaries to:

(a)               preserve and maintain its legal existence and qualification as
a foreign corporation in each jurisdiction where the nature of its business or
the location of its

 

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assets requires it to be so qualified (except in the case of any Immaterial
Subsidiary or as otherwise permitted by Section 8.9);

(b)               perform in all material respects their obligations under
material agreements to which the Parent, the Borrower or a Subsidiary (other
than any Immaterial Subsidiary) is a party;

(c)               comply in all material respects with all applicable laws,
rules, regulations and orders, including the payment (before the same become
delinquent) of all Taxes, imposed upon the Parent, the Borrower or a Subsidiary
or upon their property except to the extent being diligently contested in good
faith by appropriate proceedings and for which adequate reserves in accordance
with GAAP have been set aside on the books of the Parent, the Borrower or a
Subsidiary, as applicable; and

(d)               ensure that no portion of the Loans will be used, disbursed or
distributed for any purpose, or to any Person, directly or indirectly, in
violation of any of the Terrorism Laws and take all necessary action to comply
with all Terrorism Laws with respect thereto.

SECTION 7.3. Maintenance of Properties. Each of the Parent and the Borrower
will, and will cause each of their respective Subsidiaries to, maintain,
preserve, protect and keep its and their respective properties in good repair,
working order and condition (ordinary wear and tear excepted), and make
necessary repairs, renewals and replacements so that the business carried on by
the Parent, the Borrower and their respective Subsidiaries may be properly
conducted at all times, unless the Parent, the Borrower or such Subsidiary
determines in good faith that the continued maintenance of such property is no
longer economically desirable, necessary or useful to the business of the
Parent, the Borrower or any of their respective Subsidiaries or the Disposition
of such property is otherwise permitted by Sections 8.9 or 8.10.

SECTION 7.4. Insurance. Each of the Parent and the Borrower will, and will cause
each of their respective Subsidiaries (other than any Immaterial Subsidiary) to
maintain:

(a)               insurance on its property with financially sound and reputable
insurance companies against loss and damage in at least the amounts (and with
only those deductibles) customarily maintained, and against such risks as are
typically insured against in the same general area, by Persons of comparable
size engaged in the same or similar business as the Parent, the Borrower and
their respective Subsidiaries; and

(b)               all worker’s compensation, employer’s liability insurance or
similar insurance as may be required under the laws of any state or jurisdiction
in which it may be engaged in business;

provided that, in any event, the Parent and the Borrower will maintain at a
minimum (with respect to itself and each of their respective Subsidiaries)
insurance (including loss of use of operating facilities and business
interruption insurance) against loss (including loss of profits) and damage
covering substantially all of the tangible real and personal property and
improvements of the Parent and each of its Subsidiaries by reason of any Insured
Peril (as defined below), as shall be reasonable and customary and sufficient to
prevent the insured named

 

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therein from becoming a co-insurer of any loss under such policy. For purposes
hereof, the term “Insured Peril” shall mean, collectively, all risks (as such
term is customarily used in the market for insurance) of physical loss including
flood, earthquake and windstorm in the jurisdictions where the properties owned
or operated by the Parent, the Borrower or any of their respective Subsidiaries
are located.

Without limiting the foregoing, all insurance policies required pursuant to this
Section shall (i) name the Collateral Trustee on behalf of the Secured Parties
as mortgagee (in the case of property insurance) or additional insured (in the
case of liability insurance), as applicable, and provide that no cancellation or
modification of the policies will be made without thirty days’ prior written
notice to the Collateral Trustee and Administrative Agent, and (ii) be in
addition to any requirements to maintain specific types of insurance contained
in the other Loan Documents.

SECTION 7.5. Books and Records. Each of the Parent and the Borrower will, and
will cause each of their respective Subsidiaries to, keep books and records in
accordance with GAAP which accurately reflect in all material respects all of
its business affairs and transactions and permit each Secured Party or any of
their respective representatives, at reasonable times and intervals and upon
reasonable notice to the Parent and the Borrower, to visit each Obligor’s
offices, to discuss such Obligor’s financial matters with its officers and
employees, and its independent public accountants (and each of the Parent and
the Borrower hereby authorizes such independent public accountant to discuss
each Obligor’s financial matters with the Administrative Agent or any of its
representatives whether or not any representative of such Obligor is present;
provided that the Parent and Borrower shall have been given reasonable prior
notice of such discussions so that such Obligor may be present) and to examine
(and photocopy extracts from) any of such Person’s books and records. The
Borrower shall pay any fees of such independent public accountant incurred in
connection with any Secured Party’s exercise of its rights pursuant to this
Section.

SECTION 7.6. Environmental Laws. Each of the Parent and the Borrower will, and
will cause each of their respective Subsidiaries to,

(a)               use and operate all of its and their facilities and properties
in material compliance with all Environmental Laws, keep all necessary permits,
approvals, certificates, licenses and other authorizations relating to
environmental matters in effect and remain in material compliance therewith, and
handle all Hazardous Materials in material compliance with all applicable
Environmental Laws; and

(b)               promptly notify the Administrative Agent and provide copies
upon receipt of all written claims, complaints, notices or inquiries relating to
the condition of its facilities and properties in respect of, or as to
compliance with, Environmental Laws that, if adversely determined, individually
or in the aggregate, could reasonably be expected to have a Material Adverse
Effect, and shall promptly resolve any non-compliance with Environmental Laws
and keep its property free of any Lien imposed by any Environmental Law.

 

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SECTION 7.7. Use of Proceeds. The Parent and the Borrower will apply the
proceeds of the Credit Extensions to consummate the Transaction and for working
capital and general corporate purposes of the Obligors.

SECTION 7.8. Subsidiary Guarantors, Security, etc. Subject to the succeeding
provisions of this Section, each of the Parent and the Borrower will, and will
cause each Subsidiary (other than any Immaterial Subsidiary) to, execute any
documents, Filing Statements, agreements and instruments, and take all further
action (including filing Mortgages) that may be required under applicable law,
or that the Administrative Agent may reasonably request, in order to effectuate
the transactions contemplated by the Loan Documents and in order to grant,
preserve, protect and perfect the validity and first priority (subject to
Permitted Liens) of the Liens created or intended to be created by the Loan
Documents; provided that no Foreign Subsidiary shall be required to take any
such actions if to do so would result in adverse tax consequences to the Parent,
the Borrower or their respective Subsidiaries. The Parent and the Borrower will
cause any subsequently acquired or organized Subsidiary (other than any
Immaterial Subsidiary), and any Subsidiary that ceases to be an Immaterial
Subsidiary, to execute a supplement (in form and substance reasonably
satisfactory to the Administrative Agent) to the Subsidiary Guaranty and each
other applicable Loan Document in favor of the Secured Parties; provided that
(i) no Foreign Subsidiary shall be required to execute such supplement or any
other such Loan Document if to do so would result in adverse tax consequences to
the Parent, the Borrower or their respective Subsidiaries, and (ii) no
Subsidiary formed solely for the purpose of consummating a Disposition permitted
under clause (d), (e) or (f) of Section 8.10 shall be required to execute such
supplement or any other such Loan Document. In addition, from time to time, the
Parent and the Borrower will, at their cost and expense, promptly secure the
Obligations by pledging or creating, or causing to be pledged or created,
perfected Liens with respect to such of its assets and properties as the
Administrative Agent or the Required Lenders shall designate (it being agreed
that it is the intent of the parties that the Obligations shall be secured by,
among other things, substantially all the assets of the Parent, the Borrower and
each of their Domestic Subsidiaries, other than Immaterial Subsidiaries, and it
also being understood that, in determining whether to obtain any such security,
the Administrative Agent shall take into consideration the cost of obtaining
such security in relation to the benefit to the Lenders of obtaining such
security); provided that none of the Parent, the Borrower or their respective
Subsidiaries shall be required to pledge (i) more than 65% of the Voting
Securities of any Foreign Subsidiary unless such pledge would not result in
adverse tax consequences to the Parent, the Borrower or their respective
Subsidiaries or (ii) any of the Capital Securities of any Subsidiary formed
solely for the purpose of consummating a Disposition permitted under clause (d),
(e) or (f) of Section 8.10. Such Liens will be created under the Loan Documents
in form and substance reasonably satisfactory to the Administrative Agent, and
the Parent and the Borrower, as applicable, shall deliver, or cause to be
delivered, to the Administrative Agent all such instruments and documents
(including legal opinions, title insurance policies and lien searches) as the
Administrative Agent shall reasonably request to evidence compliance with this
Section.

SECTION 7.9. Maintenance of Corporate Separateness. Each of the Parent and the
Borrower will, and will cause each of their respective Subsidiaries to, satisfy
customary corporate formalities, including the holding of regular board of
directors’ and shareholders’ meetings and the maintenance of corporate offices
and records. None of the Parent, the

 

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Borrower or any of their respective Subsidiaries shall knowingly take any
action, or conduct its affairs in a manner, which is likely to result in the
corporate existence of any Subsidiary Guarantor which is a direct Subsidiary of
the Parent, the Borrower or any Subsidiary which is not a Subsidiary Guarantor
being ignored by any court of competent jurisdiction, or in the assets and
liabilities of the Parent, the Borrower or any Subsidiary which is not a
Subsidiary Guarantor being substantively consolidated with those of any
Subsidiary Guarantor in a bankruptcy, reorganization or other insolvency
proceeding.

SECTION 7.10. Maintenance of Rating of Loans. Each of the Parent and the
Borrower will cause a senior secured credit rating with respect to the Loans
from each of S&P and Moody’s to be available at all times until the later to
occur of (a) the Term Loan Maturity Date and (b) the Synthetic Facility Maturity
Date.

SECTION 7.11. Cash Management. Except as set forth in the proviso to this
Section, the Borrower will, and will cause each Subsidiary Guarantor to,
deposit, or cause to be deposited, promptly, and in any event no later than the
end of the Business Day immediately following receipt thereof, all of such
Person’s Collections into Deposit Accounts and/or Securities Accounts that are
subject to a Control Agreement; provided that at no time shall more than
$10,000,000 in the aggregate of the cash and Cash Equivalent Investments of the
Obligors be held other than in Deposit Accounts and/or Securities Accounts that
are subject to a Control Agreement.

SECTION 7.12. Post-Closing Obligations. (a) With respect to the properties set
forth in Item 5.1.11(b)(iii) of the Disclosure Schedule, each of which is leased
by an Obligor (each such property, a “Consent Required Leased Property”), the
Borrower shall use commercially reasonable efforts to obtain a landlord’s lien
waiver and consent to mortgage (“Lien Waiver and Consent”), duly executed by the
landlord of such Consent Required Leased Property and the applicable Obligor, in
form and substance reasonably acceptable to the Administrative Agent, within 90
days following the Closing Date (the “Due Date”); provided that the failure to
obtain any Lien Waiver and Consent shall not constitute a Default or Event of
Default. Upon the Borrower’s receipt of each fully executed Lien Waiver and
Consent, the Borrower shall promptly deliver a copy thereof to the Collateral
Trustee, and within 30 days following the date of such receipt, the Borrower
shall deliver to the Collateral Trustee

(i)                an executed counterpart of a Mortgage, dated as of the date
of the Lien Waiver and Consent, encumbering the Consent Required Leased Property
which is the subject of the Lien Waiver and Consent;

(ii)               evidence of the completion (or satisfactory arrangements for
the completion) of all recordings and filings of such Mortgage as may be
necessary or, in the reasonable opinion of the Administrative Agent or
Collateral Trustee, desirable effectively to create a valid, perfected first
priority Lien, subject to Permitted Liens, against the Consent Required Leased
Property purported to be covered thereby;

(iii)              evidence of the payment of (or satisfactory arrangements for
the payment of) all Title Policy premiums, search and examination charges and
related charges, mortgage recording taxes, fees, costs and expenses of filing of
each such Mortgage as

 

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may be necessary, in the reasonable opinion of the Administrative Agent, to
create a valid, perfected first priority Lien against the Consent Required
Leased Property identified in such Mortgage, subject only to Permitted Liens;

(iv)

a Title Policy with respect to each such Mortgage;

(v)               with respect to each such Mortgage, such UCC financing
statements as may be necessary to perfect the Lien of the Collateral Trustee,
for the benefit of the Secured Parties (as defined in the Collateral Trust
Agreement), on the fixtures granted in such Mortgage;

(vi)              opinions of counsel to the Obligors in each jurisdiction where
any such Consent Required Leased Property is located, in each case in form and
substance, and from counsel, reasonably satisfactory to the Administrative
Agent;

(vii)             a Survey with respect to each such Consent Required Leased
Property; and

(viii)            such other affidavits, certificates, approvals, opinions or
documents as the Administrative Agent may reasonably request.

(b)               With respect to the Mortgaged Properties set forth in Item
5.1.11(b)(iv) of the Disclosure Schedule, each of which is leased by an Obligor
(each such property, a “Free Leased Property”), the Borrower shall use
commercially reasonable efforts to obtain a Lien Waiver and Consent, duly
executed by the landlord of such Free Leased Property and the applicable
Obligor, in form and substance reasonably acceptable to the Administrative Agent
by the Due Date; provided that the failure to obtain any Lien Waiver and Consent
shall not constitute a Default or Event of Default; provided further that, if
the Borrower shall be unable to obtain a Lien Waiver and Consent with respect to
a Free Leased Property by the Due Date, then, on the Due Date, the Borrower
shall deliver to the Administrative Agent each of the items referenced in
clauses (a)(i) through (a)(viii) above with respect to such Free Leased
Property.

ARTICLE VIII

NEGATIVE COVENANTS

Each of the Parent and the Borrower covenants and agrees with each Lender, each
Issuer and the Administrative Agent that until the Termination Date has
occurred, the Parent and the Borrower will, and will cause their respective
Subsidiaries to, perform or cause to be performed the obligations set forth
below.

SECTION 8.1. Business Activities. The Parent and the Borrower will not, and will
not permit any of their respective Subsidiaries to, engage in any business
activity except those business activities engaged in on the date of this
Agreement and activities reasonably related, ancillary, complimentary or
incidental thereto.

SECTION 8.2. Indebtedness. The Parent and the Borrower will not, and will not
permit any of their respective Subsidiaries (other than Immaterial Subsidiaries)
to, create, incur, assume or permit to exist any Indebtedness, other than:

 

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(a)

Indebtedness in respect of the Obligations;

(b)               Indebtedness existing as of the Closing Date which is
identified in Item 8.2(b) of the Disclosure Schedule;

(c)               Indebtedness (i) incurred in the ordinary course of business
of the Borrower or any of its Subsidiaries (including open accounts extended by
suppliers on normal trade terms in connection with purchases of goods and
services which are not overdue for a period of more than 120 days or, if overdue
for more than 120 days, as to which a dispute exists and adequate reserves in
conformity with GAAP have been established on the books of the Borrower or such
Subsidiary), (ii) in respect of performance bonds, workers’ compensation claims,
surety, statutory, bid or appeal bonds, completion guarantees or reimbursement
obligations with respect to self-insurance or similar obligations, in each case
provided in the ordinary course of business and (iii) in respect of
reimbursement or indemnification obligations owed to (including in respect of
letters of credit obtained for the benefit of) any Person with respect to (x)
workers’ compensation, health, disability or other employee benefits or (y)
property, casualty or liability insurance, provided by such Person to the
Borrower or any of its Subsidiaries, in the case of each of clauses (x) and (y),
in the ordinary course of business; but excluding (in the case of each of
clauses (i), (ii) and (iii)) Indebtedness incurred through the borrowing of
money or Contingent Liabilities in respect of Indebtedness so incurred;

(d)               Indebtedness of the Borrower or any of its Subsidiaries (i) in
respect of industrial revenue bonds or other similar governmental or municipal
bonds, (ii) evidencing the deferred purchase price of newly acquired property or
incurred to finance repairs, improvements or additions to property, or the
acquisition of property of the Borrower and its Subsidiaries (pursuant to
purchase money mortgages or otherwise, whether owed to the seller or a third
party) used in the ordinary course of business of the Borrower or its
Subsidiaries; provided, that, such Indebtedness is incurred within 120 days
following the acquisition of such property, and (iii) in respect of Capitalized
Lease Liabilities; provided that the aggregate amount of all Indebtedness
outstanding pursuant to this clause shall not at any time exceed $35,000,000;

(e)               Indebtedness of any Subsidiary of the Parent owing to the
Parent or any of its other Subsidiaries, or Contingent Liabilities of the Parent
or any of its Subsidiaries incurred with respect to the Indebtedness of any
other such Subsidiary, which Indebtedness

(i)                shall, if payable to the Parent, the Borrower or a Subsidiary
Guarantor, be evidenced by one or more promissory notes in form and substance
reasonably satisfactory to the Administrative Agent, duly executed and delivered
in pledge to the Collateral Trustee Agent pursuant to a Loan Document, and shall
not be forgiven or otherwise discharged for any consideration other than payment
in full or in part in cash or pursuant to a Permitted Refinancing (provided that
only the amount repaid in part shall be discharged); and

 

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(ii)               if (x) incurred by a Subsidiary (other than any CDC
Subsidiary) of the Borrower that is not a Subsidiary Guarantor owing to an
Obligor, or (y) a Contingent Liability incurred by an Obligor with respect to
the Indebtedness of a Subsidiary (other than any CDC Subsidiary) of the Borrower
that is not a Subsidiary Guarantor, shall not, in the case of both clauses (x)
and (y) (when aggregated with the amount of Investments made by way of
contributions to capital or purchases of Capital Securities by the Borrower and
the Subsidiary Guarantors in Subsidiaries (other than any CDC Subsidiary) which
are not Subsidiary Guarantors under clause (y) of the proviso to clause (e) of
Section 8.5), less Investment Returns, exceed $20,000,000 in the aggregate at
any time; and

(f)                Indebtedness of San Jose Advantage Homes, Inc. under Floor
Plan Financing Lines in an aggregate amount not exceeding $50,000,000 at any
time;

(g)

Indebtedness incurred in respect of Permitted Receivables Transactions;

(h)               Indebtedness of a Person existing at the time such Person
became a Subsidiary of the Borrower, but only if such Indebtedness was not
created or incurred in contemplation of such Person becoming such a Subsidiary
and the aggregate outstanding amount of all Indebtedness existing pursuant to
this clause does not exceed $25,000,000 at any time;

(i)                Hedging Obligations of the Borrower or any of its
Subsidiaries in respect of the Credit Extensions or otherwise entered into by
the Borrower or such Subsidiary to hedge against interest rate or currency
exchange rate fluctuations, in each case arising in the ordinary course of
business of the Borrower and its Subsidiaries and not for speculative purposes;

(j)                Indebtedness in respect of netting services, overdraft
protections and otherwise in connection with deposit accounts;

(k)               Indebtedness that is subordinated (on terms reasonably
satisfactory to the Administrative Agent) to the Obligations in respect of the
deferred portion of the purchase price of a Permitted Acquisition that does not
require the payment of any cash interest or principal prior to six months after
the maturity of the Term Loans (“Permitted Seller Debt”) and Indebtedness
consisting of Deferred Acquisition Obligations; provided that any Deferred
Acquisition Obligations are unsecured and subordinated in right of payment to
the Obligations and on terms reasonably satisfactory to the Administrative
Agent;

(l)                other Indebtedness of the Borrower and its Subsidiaries
(other than Indebtedness of Foreign Subsidiaries owing to the Borrower or
Subsidiary Guarantors) in an aggregate amount at any time outstanding not to
exceed $25,000,000; and

(m)              Permitted Refinancings of the Indebtedness listed above (other
than Indebtedness of the type permitted under clause (a) hereof; provided that,
in the case of any Permitted Refinancing of any Indebtedness under the 2009
Notes, the Indebtedness

 

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refinancing or modifying the Indebtedness under the 2009 Notes shall not provide
for any payments, repayments, purchases or repurchases of principal prior to the
date that is seven and one-half years after the Closing Date;

provided, however, that no Indebtedness otherwise permitted by clauses (d),
(e)(ii), (f), (g), (h), (i), (k), (l) or (m) shall be assumed, created or
otherwise incurred if a Default has occurred and is then continuing or would
result therefrom.

SECTION 8.3. Liens. The Parent and the Borrower will not, and will not permit
any of their respective Subsidiaries (other than Immaterial Subsidiaries) to,
create, incur, assume or permit to exist any Lien upon any of its property
(including Capital Securities of any Person), revenues or assets, whether now
owned or hereafter acquired, except (solely, other than with respect to clause
(a) below, in the case of the Borrower and its Subsidiaries) the following
(each, a “Permitted Lien”):

(a)               Liens securing payment of the Obligations and Liens securing
payment of the 2009 Notes to the extent provided in the Collateral Trust
Agreement;

(b)               Liens existing as of the Closing Date and disclosed in Item
8.3(b) of the Disclosure Schedule securing Indebtedness described in clause (b)
of Section 8.2, and refinancings of such Indebtedness; provided that no such
Lien shall encumber any additional property and the amount of Indebtedness
secured by such Lien is not increased from that existing on the Closing Date (as
such Indebtedness may have been permanently reduced subsequent to the Closing
Date);

(c)               Liens securing Indebtedness of the type permitted under clause
(d) of Section 8.2; provided that (i) such Lien is granted within 120 days after
such Indebtedness is incurred, (ii) the Indebtedness secured thereby does not
exceed 100% of the lesser of the cost or the fair market value of the applicable
property, improvements or equipment at the time of such acquisition (or
construction) and (iii) such Lien secures only the assets that are the subject
of the Indebtedness referred to in such clause;

(d)               Liens securing Indebtedness permitted by clause (h) of Section
8.2; provided that such Liens existed prior to such Person becoming a
Subsidiary, were not created in anticipation thereof and attach only to specific
tangible assets of such Person (and not assets of such Person generally);

(e)               Liens in favor of carriers, warehousemen, mechanics,
materialmen and landlords granted in the ordinary course of business for amounts
not overdue or being diligently contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP shall have
been set aside on its books;

(f)                Liens incurred or deposits made in the ordinary course of
business in connection with worker’s compensation, unemployment insurance or
other forms of governmental insurance or benefits (other than Liens under
ERISA), or to secure performance of or in connection with tenders, statutory
obligations, bids, self-insurance arrangements, surety bonds, statutory or
appeal bonds, performance bonds, contested

 

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taxes or import duties, leases or similar obligations (other than for borrowed
money) entered into in the ordinary course of business;

(g)               judgment Liens which are being contested in good faith and
which do not otherwise result in an Event of Default under Section 9.1.6;

(h)               easements, rights-of-way, zoning restrictions, minor defects
or irregularities in title, encroachments, encumbrances disclosed by surveys,
and other similar encumbrances not interfering in any material respect with the
value or use of the property to which such Lien is attached; and

(i)                Liens for Taxes not at the time delinquent or thereafter
payable without penalty or being diligently contested in good faith by
appropriate proceedings and for which adequate reserves in accordance with GAAP
shall have been set aside on its books.

(j)                leases, subleases, licenses and sublicenses granted to third
parties in the ordinary course of business, in each case not interfering in any
material respect with the operations or business of the Borrower and its
Subsidiaries;

(k)               landlord Liens arising under any lease contracts entered into
by the Borrower or any of its Subsidiaries in the ordinary course of business
for amounts not overdue or being diligently contested in good faith by
appropriate proceedings and for which adequate reserves in accordance with GAAP
shall have been set aside on its books;

(l)                statutory Liens of depository or collecting banks on items in
collection and any accompanying documents or the proceeds thereof;

(m)              Liens securing Indebtedness of the type permitted by clauses
(f), (g) or (i) of Section 8.2;

(n)               Liens arising from precautionary UCC financing statement
filings regarding operating leases;

(o)               extensions, renewals and replacements of any of the foregoing
Liens to the extent and for so long as the Indebtedness secured thereby remains
outstanding;

(p)               other Liens on assets of the Borrower and its Subsidiaries
provided that the fair market value of the property encumbered by Liens
described in this clause, and the Indebtedness and other obligations secured
thereby, does not exceed $7,500,000;

(q)               customary rights of setoff upon deposits of cash in favor of
banks or other depository institutions in which such cash is maintained in the
ordinary course of business;

(r)                Liens in favor of customs and revenue authorities arising as
a matter of law or pursuant to a bond to secure payment of customs duties in
connection with the importation of goods; and

 

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(s)               Liens securing reimbursement obligations under commercial
letters of credit permitted hereunder and issued for the account of the Borrower
or any of its Subsidiaries in the ordinary course of business; provided that
such Liens secure solely the assets whose purchase the applicable Letter of
Credit is supporting.

SECTION 8.4. Financial Condition and Operations. The Parent and the Borrower
will not permit any of the events set forth below to occur.

(a)               The Parent and the Borrower will not permit the Leverage Ratio
as of the last day of any Fiscal Quarter set forth below to be greater than the
ratio set forth opposite such period:

Fiscal Quarter

Leverage Ratio

The fourth Fiscal Quarter of 2005 and the first and second Fiscal Quarters of
2006

4.00:1

The third and fourth Fiscal Quarters of 2006

3.50:1

The first, second and third Fiscal Quarters of 2007

3.25:1

The fourth Fiscal Quarter of 2007

3.00:1

Each Fiscal Quarter thereafter

2.75:1

 

(b)               The Parent and the Borrower will not permit the Interest
Coverage Ratio as of the last day of any Fiscal Quarter to be less than 3.00:1.

SECTION 8.5. Investments. The Parent and the Borrower will not, and will not
permit any of their respective Subsidiaries (other than Immaterial Subsidiaries)
to, purchase, make, incur, assume or permit to exist any Investment in any other
Person, except:

(a)               Investments existing as of the Closing Date and identified in
Item 8.5(a) of the Disclosure Schedule;

(b)

Cash Equivalent Investments;

(c)               Investments received in connection with the bankruptcy or
reorganization of, or a composition or readjustment of debts, or settlement of
delinquent accounts and disputes with customers and suppliers, in each case in
the ordinary course of business;

(d)               Investments permitted as (i) Capital Expenditures pursuant to
Section 8.7 (including any such Investments which would otherwise constitute
Capital Expenditures but for the operation of clause (i) of the proviso to the
definition of “Capital

 

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Expenditures”), (ii) Indebtedness pursuant to Section 8.2 and (iii) Restricted
Payments pursuant to Section 8.6;

(e)               Investments by the Parent in any of its Subsidiaries or by any
Subsidiary of the Parent in any other Subsidiary of the Parent; provided that
the sum of (x) the aggregate amount of intercompany loans made, and Contingent
Liabilities incurred, pursuant to clause (e)(ii) of Section 8.2 plus (y) the
aggregate amount of Investments under this clause by way of contributions to
capital or purchases of Capital Securities made by Obligors in Subsidiaries
(other than any CDC Subsidiaries) that are not Subsidiary Guarantors, minus (z)
Investment Returns, shall not exceed the amount set forth in clause (e)(ii) of
Section 8.2 at any time;

(f)                Investments made by the Parent, the Borrower and their
respective Subsidiaries that constitute (i) accounts receivable arising, (ii)
trade debt granted, or (iii) deposits made in connection with the purchase price
of goods or services, in each case in the ordinary course of business;

(g)               Investments made by the Parent, the Borrower and their
Subsidiaries constituting Permitted Acquisitions permitted pursuant to Section
8.9;

(h)               Investments consisting of the deferred portion of the sales
price received, in cash or otherwise, by the Borrower or any Subsidiary in
connection with any Disposition permitted under Section 8.10;

(i)                Investments made with Net Casualty Proceeds or Net
Disposition Proceeds in accordance with the provisions of clause (f) of Section
3.1.1;

(j)                Investments in respect of loans and advances made by the
Parent and its Subsidiaries in the ordinary course of business and consistent
with past practices to their respective employees, including for moving, travel
and emergency expenses and other similar expenses or for income tax liabilities,
so long as the aggregate principal amount thereof at any one time outstanding
(determined without regard to any write-downs or write-offs of such loans and
advances), less Investment Returns, does not exceed $2,000,000 in the aggregate
for all employees;

(k)               Investments in Persons engaged in the retail sale of the
Borrower’s and its Subsidiaries’ inventory, in the ordinary course of business
consistent with industry practices, less Investment Returns, not to exceed
$5,000,000 outstanding at any time;

(l)                Investments made in connection with the purchase of assets
pursuant to Repurchase Obligations; and

(m)              other Investments made by the Borrower and its Subsidiaries,
less Investment Returns, (i) in an amount not to exceed $10,000,000 over the
term of this Agreement and (ii) so long as the Leverage Ratio as at the end of
the Fiscal Quarter most recently completed prior to the making of such
Investment with respect to which, pursuant to Section 7.1, financial statements
have been, or are required to have been, delivered by the Parent, was 2.5:1 or
less, in an amount not to exceed the Cash Flow

 

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Basket at the time of making such Investment (provided that, after giving effect
to any such Investment pursuant to this subclause (ii), (x) the Borrower and the
Subsidiary Guarantors shall have Liquidity of at least $35,000,000 and (y)
before making any such Investment (or series of related Investments) in an
amount exceeding $2,500,000, the Administrative Agent shall have received a
Compliance Certificate executed by the chief financial officer of the Borrower
certifying and, if reasonably requested by the Administrative Agent, showing (in
reasonable detail and with appropriate calculations and computations in all
respects reasonably satisfactory to the Administrative Agent) that on a
historical pro forma basis (after giving effect to such Investment and related
transactions and all Investments and related transactions made pursuant to this
subclause prior thereto during the applicable periods thereunder) as of the last
day of the most recently completed Fiscal Quarter with respect to which,
pursuant to Section 7.1, financial statements have been, or are required to have
been, delivered by the Parent, the Parent would be in compliance with clause (b)
of Section 8.4 and would have a Leverage Ratio of 2.5:1 or less, in each case as
of the last day of such Fiscal Quarter);

provided, however, that

(i)                any Investment which when made complies with the requirements
of the definition of the term “Cash Equivalent Investment” may continue to be
held notwithstanding that such Investment if made thereafter would not comply
with such requirements; and

(ii)               no Investment otherwise permitted by clause (e) (to the
extent constituting an Investment by an Obligor in a Subsidiary that is not a
Subsidiary Guarantor)), (g), (h), (j), (k), (l) or (m) shall be permitted to be
made if any Default has occurred and is continuing or would result therefrom.

“Investment Returns” means, with respect to any Investment by the Parent or any
of its Subsidiaries in any Person after the Closing Date pursuant to clauses
(e), (j), (k) or (m) of this Section 8.5 or clause (e)(ii) of Section 8.2, cash
received by the Parent or any of its Subsidiaries from such Person after the
making of such Investment (but in an aggregate amount not exceeding the amount
of such Investment), other than interest, dividends or other distributions not
in the nature of a return or repurchase of capital or a repayment of principal.

SECTION 8.6. Restricted Payments, etc. The Parent and the Borrower will not, and
will not permit any of their respective Subsidiaries to, declare or make a
Restricted Payment, or make any deposit for any Restricted Payment, except:

(a)               Restricted Payments payable by any non-wholly owned Subsidiary
to its shareholders or members generally, so long as the Borrower or a
Subsidiary Guarantor receives, directly or indirectly, a pro rata share of such
dividends (based upon the aggregate equity interests of such non-wholly owned
Subsidiary held by the Borrower and its Subsidiaries);

(b)               Restricted Payments payable (i) by any Subsidiary to the
Borrower or any other Subsidiary Guarantor (that is a wholly owned Subsidiary)
or (ii) by any Subsidiary

 

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that is not a Subsidiary Guarantor to any other Subsidiary that is not a
Subsidiary Guarantor;

(c)               so long as a Default has not occurred and is not continuing,
Parent or the Borrower may redeem or repurchase Capital Securities of the Parent
or the Borrower, respectively, held by officers, directors or employees of the
Parent or any of its Subsidiaries following the termination of employment or
service of such Person in an aggregate amount not to exceed with respect to all
redemptions or purchases pursuant to this clause (c) in the aggregate during any
Fiscal Year, $2,500,000;

(d)               Restricted Payments comprised of (x) the making of any payment
or prepayment of principal of, or premium or interest on, the 2009 Notes, (y)
the redemption, retirement, purchase, defeasance or other acquisition of any
2009 Notes or (z) the making of any deposit (including the payment of amounts
into a sinking fund or other similar fund) for any of the foregoing purposes;
provided that (i) at the time of making any such Restricted Payment, no Default
shall have occurred and be continuing, (ii) after giving effect to any such
Restricted Payment, the Borrower and the Subsidiary Guarantors shall have
Liquidity of at least $35,000,000 and (iii) before making any such Restricted
Payment (or series of related Restricted Payments) in an amount exceeding
$2,500,000, the Administrative Agent shall have received a Compliance
Certificate executed by the chief financial officer of the Borrower certifying
and, if reasonably requested by the Administrative Agent, showing (in reasonable
detail and with appropriate calculations and computations in all respects
reasonably satisfactory to the Administrative Agent) that on a historical pro
forma basis (after giving effect to such Restricted Payment and related
transactions and all Restricted Payments and related transactions made pursuant
to this clause prior thereto during the applicable periods thereunder) as of the
last day of the most recently completed Fiscal Quarter with respect to which,
pursuant to Section 7.1, financial statements have been, or are required to have
been, delivered by the Parent, the Parent would be in compliance with Section
8.4 as of the last day of such Fiscal Quarter; and

(e)               (i) other Restricted Payments by the Parent (x) in an amount
not to exceed $5,000,000 over the term of this Agreement or (y) so long as the
Leverage Ratio as at the end of the Fiscal Quarter most recently completed prior
to the making of such Restricted Payment with respect to which, pursuant to
Section 7.1, financial statements have been, or are required to have been,
delivered by the Parent, was 2.5:1 or less, in an amount not to exceed the Cash
Flow Basket at the time of making such Restricted Payment, and (ii) other
Restricted Payments by the Borrower to the Parent solely to enable the Parent to
make the foregoing Restricted Payments; provided that (x) at the time of making
any such Restricted Payment, no Default shall have occurred and be continuing,
(y) after giving effect to any such Restricted Payment, the Borrower and the
Subsidiary Guarantors shall have Liquidity of at least $35,000,000 and (z)
before making any such Restricted Payment (or series of related Restricted
Payments) in an amount exceeding $2,500,000), the Administrative Agent shall
have received a Compliance Certificate executed by the chief financial officer
of the Borrower certifying and, if reasonably requested by the Administrative
Agent, showing (in reasonable detail and with appropriate calculations and
computations in all respects reasonably satisfactory to the

 

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Administrative Agent) that on a historical pro forma basis (after giving effect
to such Restricted Payment and related transactions and all Restricted Payments
and related transactions made pursuant to this clause prior thereto during the
applicable periods thereunder) as of the last day of the most recently completed
Fiscal Quarter with respect to which, pursuant to Section 7.1, financial
statements have been, or are required to have been, delivered by the Parent, the
Parent would be in compliance with Section 8.4 as of the last day of such Fiscal
Quarter and, in the case of a Restricted Payment to be made pursuant to
subclause (i)(y) of this clause (e), would have a Leverage Ratio of 2.5:1 or
less as of the last day of such Fiscal Quarter.

SECTION 8.7. Capital Expenditures. Subject (in the case of Capitalized Lease
Liabilities) to clause (d) of Section 8.2, the Parent and the Borrower will not,
and will not permit any of their respective Subsidiaries (other than Immaterial
Subsidiaries) to, make or commit to make Capital Expenditures which aggregate in
excess of $30,000,000 in any Fiscal Year; provided that, to the extent the
amount of Capital Expenditures permitted to be made in any Fiscal Year pursuant
to the preceding terms of this Section exceeds the aggregate amount of Capital
Expenditures actually made by the Borrower and its Subsidiaries during such
Fiscal Year, such excess amount (a “Carry Forward Amount”) may be carried
forward to the next succeeding Fiscal Year.

SECTION 8.8. Issuance of Capital Securities. The Parent and the Borrower will
not, and will not permit any of their respective Subsidiaries to, issue any
Capital Securities (whether for value or otherwise) to any Person other than (a)
in the case of any Subsidiary of the Parent, (i) if such Subsidiary is a wholly
owned Subsidiary, to the Parent, the Borrower or another wholly owned Subsidiary
and (ii) if such Subsidiary is not a wholly owned Subsidiary, to its
shareholders or members so long as the Parent or Subsidiary of the Parent which
owns the equity interest in such non-wholly owned Subsidiary does not have its
percentage ownership of the Capital Securities of such non-wholly owned
Subsidiary reduced after giving effect to such issuance, (b) for transfers or
replacements of then outstanding shares of Capital Securities, (c) for stock
splits, stock dividends and issuances which do not reduce the percentage
ownership of the Parent or any of its Subsidiaries in any class of the Capital
Securities of such Subsidiary (and for which the Secured Parties continue to
have a first priority pledge of such Capital Securities), (d) to qualified
directors to the extent required by applicable law, (e) for issuances by newly
created or acquired Subsidiaries in accordance with the terms of this Agreement,
and (f) in the case of the Parent, to any Person, so long as the Net Equity
Proceeds from such issuance are applied to repay the Loans as required by the
terms of this Agreement and such Capital Securities are not Redeemable Capital
Securities.

SECTION 8.9. Consolidation, Merger; Permitted Acquisitions, etc. The Parent and
the Borrower will not, and will not permit any of their respective Subsidiaries
(other than Immaterial Subsidiaries) to, liquidate or dissolve, consolidate
with, or merge into or with, any other Person, or purchase or otherwise acquire
any substantial part of the assets of any Person (or any division thereof),
except

(a)               any Subsidiary may liquidate or dissolve voluntarily into, and
may merge with and into, the Parent or the Borrower (so long as the Parent or
the Borrower, as applicable, is the surviving corporation) or any other
Subsidiary (provided that a

 

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Subsidiary Guarantor may only liquidate or dissolve into, or merge with and
into, the Parent, the Borrower or another Subsidiary Guarantor), and the assets
or Capital Securities of any Subsidiary may be purchased or otherwise acquired
by the Parent, the Borrower or any other Subsidiary (provided that the assets or
Capital Securities of any Subsidiary Guarantor may only be purchased or
otherwise acquired by the Parent, the Borrower or another Subsidiary Guarantor);
provided that in no event shall any Subsidiary Guarantor consolidate with or
merge with and into any Subsidiary other than another Subsidiary Guarantor
unless after giving effect thereto, the Administrative Agent shall have a
perfected pledge of, and security interest in and to, at least the same
percentage of the issued and outstanding interests of Capital Securities (on a
fully diluted basis) of the surviving Person as the Administrative Agent had
immediately prior to such merger or consolidation in form and substance
reasonably satisfactory to the Administrative Agent and its counsel, pursuant to
such documentation and opinions as shall be necessary in the reasonable opinion
of the Administrative Agent to create, perfect or maintain the collateral
position of the Secured Parties therein; and

(b)               the Parent or any of its Subsidiaries may effect an
acquisition of Capital Securities (by merger, consolidation, purchase or
otherwise) or of all or substantially all of the assets by the Borrower or any
Subsidiary from any Person, if:

(i)                no Default has occurred and is continuing or would occur
after giving effect thereto;

(ii)               (A) such acquisition, if an acquisition of Capital
Securities, shall result in the issuer of such Capital Securities becoming a
wholly owned Subsidiary that is incorporated or organized under the laws of the
United States (whether by merger, stock purchase or otherwise); and (B) upon the
consummation of such acquisition, the provisions of Section 7.8 are complied
with;

(iii)              such acquisition was not preceded by an unsolicited tender
offer for the Capital Securities of the Person subject to such acquisition by,
or by a proxy contest initiated by, the Parent, the Borrower or any of their
respective Subsidiaries;

(iv)              after giving effect to such acquisition, the Borrower and the
Subsidiary Guarantors shall have Liquidity of at least $50,000,000; and

(v)               the Administrative Agent shall have received a Compliance
Certificate executed by the chief financial Authorized Officer of the Borrower
certifying and, if reasonably requested by the Administrative Agent, showing (in
reasonable detail and with appropriate calculations and computations in all
respects reasonably satisfactory to the Administration Agent) that (A) each of
the conditions set forth in the preceding clauses (i), (ii), (iii) and (iv) have
been satisfied and (B) on a historical pro forma basis (after giving effect to
such acquisition and all transactions related thereto (including all
Indebtedness that would be assumed or incurred as a result of such acquisition)
and all acquisitions

 

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consummated prior thereto during the applicable periods thereunder) as of the
last day of the most recently completed Fiscal Quarter with respect to which,
pursuant to Section 7.1, financial statements have been, or are required to have
been, delivered by the Borrower, the Borrower would be in compliance with
Section 8.4 as of the last day of such Fiscal Quarter.

SECTION 8.10. Permitted Dispositions. The Parent and the Borrower will not, and
will not permit any of their respective Subsidiaries (other than Immaterial
Subsidiaries) to, dispose of any of the Parent’s, the Borrower’s or such
Subsidiaries’ assets (including accounts receivable and Capital Securities of
Subsidiaries) to any Person in one transaction or a series of transactions
unless such Disposition is (a) of inventory, or obsolete, damaged, worn out or
surplus property Disposed of in the ordinary course of business, Intellectual
Property Collateral (as defined in the Pledge and Security Agreement) let to
lapse pursuant to clauses (a) and (e) of Section 4.5 of the Pledge and Security
Agreement, or a Disposition permitted under clause (j) of Section 8.3, (b)
permitted by Section 8.9, (c) a Permitted Receivables Transaction, (d) of the
assets set forth on Item 8.10(d) of the Disclosure Schedule, (e) of the assets
set forth on Item 8.10(e) of the Disclosure Schedule, or (f) of other assets,
the Net Disposition Proceeds of which, together with the Net Disposition
Proceeds of all other assets Disposed of pursuant to this clause (f) during the
same Fiscal Year, does not exceed $10,000,000; provided that, in the case of any
Disposition pursuant to either clause (e) or (f), such Disposition shall be for
fair market value and consideration consisting of no less than 75% cash and the
Net Disposition Proceeds thereof shall be applied in accordance with Sections
3.1.1 and 3.1.2.

SECTION 8.11. Modification of Certain Agreements. The Parent and the Borrower
will not, and will not permit any of their respective Subsidiaries to, consent
to any amendment, supplement, waiver or other modification of, or enter into any
forbearance from exercising any rights with respect to the terms or provisions
contained in,

(a)               any of the 2007 Notes, the 2007 Notes Indenture, the 2009
Notes, the 2009 Notes Indenture and the Offer to Purchase (other than, in each
case, (i) ministerial amendments, supplements, waivers or modifications or (ii)
other amendments, supplements, waivers or modifications that do not affect the
Lenders in an adverse manner); or

(b)               the Organic Documents of the Parent, the Borrower or any of
their respective Subsidiaries, if the result would have an adverse effect on the
rights or remedies of any Secured Party.

SECTION 8.12. Transactions with Affiliates. The Parent and the Borrower will
not, and will not permit any of their respective Subsidiaries to, enter into or
cause or permit to exist any arrangement, transaction or contract (including for
the purchase, lease or exchange of property or the rendering of services) with
any of its other Affiliates, unless such arrangement, transaction or contract is
(i) on fair and reasonable terms no less favorable to the Parent, the Borrower
or such Subsidiary than it could obtain in an arm’s-length transaction with a
Person that is not an Affiliate and (ii) of the kind which would be entered into
by a prudent Person in the position of the Parent, the Borrower or such
Subsidiary with a Person that is not one of its Affiliates; provided, that the
following shall in any event be permitted: (i) the Transaction, (ii)
transactions

 

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permitted under this Agreement among the Obligors and (iii) loans and advances
permitted under clause (j) of Section 8.5.

SECTION 8.13. Restrictive Agreements, etc. The Parent and the Borrower will not,
and will not permit any of their respective Subsidiaries (other than Immaterial
Subsidiaries) to, enter into any agreement prohibiting:

(a)               the creation or assumption of any Lien upon its properties,
revenues or assets, whether now owned or hereafter acquired;

(b)               the ability of any Obligor to amend or otherwise modify any
Loan Document; or

(c)               the ability of any Subsidiary to make any payments, directly
or indirectly, to the Parent or the Borrower, including by way of dividends,
advances, repayments of loans, reimbursements of management and other
intercompany charges, expenses and accruals or other returns on investments.

The foregoing prohibitions shall not apply to (x) restrictions in any Loan
Document or (y) in the case of clause (a) or (c), (i) restrictions arising under
applicable law, (ii) customary provisions restricting subletting or assignment
of any lease governing a leasehold interest of the Borrower or any of its
Subsidiaries, (iii) customary restrictions on dispositions of real property
interests found in reciprocal easement agreements of the Borrower or any of its
Subsidiaries, (iv) restrictions arising under contractual obligations in
existence on the Closing Date and set forth on Item 8.13 of the Disclosure
Schedule, (v) restrictions arising under any agreement governing any
Indebtedness permitted by clause (d) of Section 8.2 as to the assets financed
with the proceeds of such Indebtedness, (vi) restrictions in any agreement
governing any Indebtedness permitted by clause (f) of Section 8.2 as to the
inventory financed with the proceeds of such Indebtedness, (vii) restrictions in
any agreement governing any Indebtedness permitted by clause (h) of Section 8.2,
(viii) restrictions in the 2007 Notes Indenture and the 2009 Notes Indenture,
(ix) customary provisions in any agreement for the sale or other disposition of
a Subsidiary that restricts distributions by such Subsidiary pending such sale
or other disposition, (x) provisions in agreements or instruments which prohibit
the payment of dividends or the making of other distributions with respect to
any class of Capital Securities of a Person other than on a pro rata basis, (xi)
customary provisions restricting assignments or other transfers of the direct
interests in a joint venture contained in the related joint venture agreement
and (xii) customary provisions restricting assignments or other transfers
contained in licenses.

SECTION 8.14. Accounting Changes. The Parent will not, and will not permit any
of its Subsidiaries to, change its Fiscal Year from the period of 52 or 53
consecutive weeks ending on the Saturday nearest to December 31 in any calendar
year.

SECTION 8.15. Activities of the Parent. Notwithstanding anything to the contrary
contained herein, the Parent shall not engage in any business or other activity
other than (i) owning the Capital Securities of the Borrower, (ii) performing
its Obligations under the Loan Documents (including Article VII), (iii)
performing its obligations under the 2009 Notes and the 2009 Notes Indenture and
(iv) executing and delivering, and performing its obligations under,

 

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guarantees that it is permitted to incur or maintain under this Agreement, and,
in the case of each of clauses (i), (ii), (iii) and (iv) activities reasonably
related thereto.

SECTION 8.16. CDC Subsidiaries. Notwithstanding anything to the contrary
contained herein (including this Article), neither the Parent nor any of its
Subsidiaries shall make any Investment in, incur any Contingent Liability with
respect to the Indebtedness of, or otherwise transfer any asset to any CDC
Subsidiary other than pursuant to (i) cash equity contributions or (ii) cash
loans evidenced by one or more promissory notes in form and substance reasonably
satisfactory to the Administrative Agent, duly executed and delivered in pledge
to the Collateral Trustee pursuant to a Loan Document, which shall not be
forgiven or otherwise discharged for any consideration other than payment in
full or in part in cash or pursuant to a Permitted Refinancing (provided that
only the amount repaid in part shall be discharged); provided that the aggregate
amount of such contributions and loans in any Fiscal Year shall not exceed
$500,000.

ARTICLE IX

EVENTS OF DEFAULT

SECTION 9.1. Listing of Events of Default. Each of the following events or
occurrences described in this Article shall constitute an “Event of Default”.

SECTION 9.1.1. Non-Payment of Obligations. Any Obligor shall default in the
payment or prepayment when due of

(a)               any principal of any Loan, any Reimbursement Obligation or any
deposit of cash for collateral purposes pursuant to Section 2.6.4; or

(b)               interest on any Loan or any fee described in Article III and
such default shall continue unremedied for a period of three Business Days after
such amount was due; or

(c)               any other monetary Obligations and such default shall continue
unremedied for a period of seven Business Days after such amount was due.

SECTION 9.1.2. Breach of Warranty. Any representation or warranty of any Obligor
made or deemed to be made in any Loan Document (including any certificates
delivered pursuant to Article V) is or shall be incorrect when made or deemed to
have been made in any material respect.

SECTION 9.1.3. Non-Performance of Certain Covenants and Obligations. Any Obligor
shall default in the due performance or observance of any of its obligations
under Sections 7.1, 7.2(a) (other than as a result of the failure to qualify as
a foreign corporation in a jurisdiction where failure to so qualify could not
reasonably be expected to have a Material Adverse Effect), 7.7, 7.8 or Article
VIII.

SECTION 9.1.4. Non-Performance of Other Covenants and Obligations. Any Obligor
shall default in the due performance or observance of any other agreement
contained in any Loan Document to which such Obligor is party, and such default
shall continue unremedied for a period of 30 days after the earlier to occur of
(i) notice thereof having been given to the

 

 

Borrower by the Administrative Agent or any Lender or (ii) the date on which any
Obligor first obtains knowledge of such default.

SECTION 9.1.5. Default on Other Indebtedness. A default shall occur in the
payment of any amount when due (subject to any applicable grace period), whether
by acceleration or otherwise, of any principal or stated amount of, or interest
or fees on, of any Indebtedness (other than Indebtedness described in Section
9.1.1) of any Obligor having a principal or stated amount, individually, in
excess of $5,000,000, or, in the aggregate, in excess of $10,000,000, or a
default shall occur in the performance or observance of any obligation or
condition with respect to such Indebtedness if the effect of such default is to
accelerate the maturity of any such Indebtedness or such default shall continue
unremedied for any applicable period of time sufficient to permit the holder or
holders of such Indebtedness, or any trustee or agent for such holders, to cause
or declare such Indebtedness or to become due and payable or to require such
Indebtedness to be prepaid, redeemed, purchased or defeased, or require an offer
to purchase or defease such Indebtedness to be made, prior to its expressed
maturity.

SECTION 9.1.6. Judgments. Any judgment or order for the payment of money,
individually, in excess of $5,000,000, or, in the aggregate, in excess of
$10,000,000 (exclusive of any amounts fully covered by insurance (less any
applicable deductible) and as to which the insurer has acknowledged its
responsibility to cover such judgment or order) shall be rendered against any
Obligor and such judgment shall not have been vacated or discharged or stayed or
bonded pending appeal within 30 days after the entry thereof or enforcement
proceedings shall have been commenced by any creditor upon such judgment or
order.

SECTION 9.1.7. Pension Plans. Any of the following events shall occur with
respect to any Pension Plan

(a)        the institution of any steps by the Parent or the Borrower, any
member of their respective Controlled Group or any other Person to terminate a
Pension Plan if, as a result of such termination, the Parent, the Borrower or
any such member could be required to make a contribution to such Pension Plan,
or could reasonably expect to incur a liability or obligation to such Pension
Plan, in excess of $10,000,000; or

(b)        a contribution failure occurs with respect to any Pension Plan
sufficient to give rise to a Lien under section 302(f) of ERISA.

SECTION 9.1.8. Impairment of Security, etc. Any Loan Document, or any Lien
thereunder with respect to an asset or assets of the Obligors whose fair market
value in the aggregate is greater than $250,000, shall (except in accordance
with its terms), in whole or in part, terminate, cease to be effective or cease
to be the legally valid, binding and enforceable obligation of any Obligor party
thereto, in each case for any reason other than the failure of the Collateral
Trustee or any Secured Party to take any action within its control; any Obligor
or any other party shall, directly or indirectly, contest in any manner such
effectiveness, validity, binding nature or enforceability; or, except as
permitted under any Loan Document, any Lien securing any Obligation shall, in
whole or in part, cease to be a perfected first priority Lien.

SECTION 9.1.9. Bankruptcy, Insolvency, etc. Any Obligor shall:

 

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(a)               become insolvent or generally fail to pay, or admit in writing
its inability or unwillingness generally to pay, debts as they become due;

(b)               apply for, consent to, or acquiesce in the appointment of a
trustee, receiver, sequestrator or other custodian for any substantial part of
the property of any thereof, or make a general assignment for the benefit of
creditors;

(c)               in the absence of such application, consent or acquiescence in
or permit or suffer to exist the appointment of a trustee, receiver,
sequestrator or other custodian for a substantial part of the property of any
thereof, and such trustee, receiver, sequestrator or other custodian shall not
be discharged within 60 days; provided that each Obligor hereby expressly
authorizes each Secured Party to appear in any court conducting any relevant
proceeding during such 60-day period to preserve, protect and defend their
rights under the Loan Documents;

(d)               permit or suffer to exist the commencement of any bankruptcy,
reorganization, debt arrangement or other case or proceeding under any
bankruptcy or insolvency law or any dissolution, winding up or liquidation
proceeding, in respect thereof, and, if any such case or proceeding is not
commenced by any Obligor, such case or proceeding shall be consented to or
acquiesced in by such Person or shall result in the entry of an order for relief
or shall remain for 60 days undismissed; provided, that the each Obligor hereby
expressly authorizes each Secured Party to appear in any court conducting any
such case or proceeding during such 60-day period to preserve, protect and
defend their rights under the Loan Documents; or

(e)

take any action authorizing, or in furtherance of, any of the foregoing.

SECTION 9.1.10. Change in Control. A Change in Control shall occur.

SECTION 9.2. Action if Bankruptcy. If any Event of Default described in clauses
(a) through (d) of Section 9.1.9 with respect to the Parent or the Borrower
shall occur, the Commitments (if not theretofore terminated) shall automatically
terminate and the outstanding principal amount of all outstanding Loans and all
other Obligations (including Reimbursement Obligations) shall automatically be
and become immediately due and payable, without notice or demand to any Person
and each Obligor shall automatically and immediately be obligated to Cash
Collateralize all Letter of Credit Outstandings in accordance with Section
2.6.4.

SECTION 9.3. Action if Other Event of Default. If any Event of Default (other
than any Event of Default described in clauses (a) through (d) of Section 9.1.9
with respect to the Parent or the Borrower) shall occur for any reason, whether
voluntary or involuntary, and be continuing, the Administrative Agent, upon the
direction of the Required Lenders, shall by notice to the Parent and the
Borrower declare all or any portion of the outstanding principal amount of the
Loans and other Obligations (including Reimbursement Obligations) to be due and
payable and/or the Commitments (if not theretofore terminated) to be terminated,
whereupon the full unpaid amount of such Loans and other Obligations which shall
be so declared due and payable shall be and become immediately due and payable,
without further notice, demand or presentment, and/or, as the case may be, the
Commitments shall terminate and the Borrower

 

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shall automatically and immediately be obligated to Cash Collateralize all
Letter of Credit Outstandings in accordance with Section 2.6.4.

ARTICLE X

THE ADMINISTRATIVE AGENT

SECTION 10.1. Actions. Each Lender hereby appoints Credit Suisse as its
Syndication Agent and Administrative Agent under and for purposes of each Loan
Document. Each Lender hereby appoints Wells Fargo Bank, N.A. as its collateral
trustee under and for purposes of the Collateral Trust Agreement and each other
Loan Document. Each Lender agrees and acknowledges that the Collateral Trustee,
in addition to being appointed by and acting on behalf of the Lenders hereto, is
also, as of the date hereof, being appointed by and acting on behalf of Wells
Fargo Bank, N.A., as trustee (the “Indenture Trustee”) under the 2009 Notes
Indenture and that, accordingly, the Collateral Trustee is agent of and is
acting for and on behalf of the Lenders and, in addition, the Indenture Trustee.
Each Lender authorizes the Administrative Agent to act on behalf of such Lender
under each Loan Document (including the Collateral Trust Agreement) and, in the
absence of other written instructions from the Required Lenders received from
time to time by the Administrative Agent (with respect to which the
Administrative Agent agrees that it will comply, except as otherwise provided in
this Section or as otherwise advised by counsel in order to avoid contravention
of applicable law), to exercise such powers hereunder and thereunder as are
specifically delegated to or required of the Administrative Agent by the terms
hereof and thereof, together with such powers as may be incidental thereto
(including the release of Liens on assets Disposed of in accordance with the
terms of the Loan Documents). Each Lender irrevocably authorizes the
Administrative Agent to release any Guarantor from its obligations under this
Agreement or the Subsidiary Guaranty upon the occurrence of the Termination Date
or in connection with the release of any Guarantor pursuant to any Disposition
permitted under Section 8.10, so long as such release is otherwise permitted
under the terms of a Loan Document; provided, however, that the Administrative
Agent may, prior to any such release, request that the Borrower certify in a
written notice delivered to the Administrative Agent (with such detail as the
Administrative Agent may reasonably request) that the release is made in
compliance with the terms of the Loan Documents. Each Lender irrevocably
authorizes the Administrative Agent to cause the Collateral Trustee to release
any Lien granted to or held by or in favor of the Collateral Trustee for the
benefit of the Secured Parties (as defined in the Collateral Trust Agreement)
upon the occurrence of the Termination Date or in connection with (i) the
Disposition of collateral under the Loan Documents or (ii) the release of any
Guarantor, so long as, in the case of either clause (i) or (ii), such
Disposition or release is otherwise permitted under the terms of a Loan
Document; provided, however, that the Administrative Agent may, prior to any
such release, request that the Borrower certify in a written notice delivered to
the Administrative Agent (with such detail as the Administrative Agent may
reasonably request) that such Disposition or release is made in compliance with
the terms of the Loan Documents. Each Lender hereby indemnifies (which indemnity
shall survive any termination of this Agreement) the Administrative Agent, pro
rata according to such Lender’s proportionate Total Exposure Amount, from and
against any and all liabilities, obligations, losses, damages, claims, costs or
expenses of any kind or nature whatsoever 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 any Loan Document (including attorneys’ fees), and as to
which the Administrative Agent is not reimbursed by the Borrower; provided,
however, that no Lender shall be liable for the payment

 

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of any portion of such liabilities, obligations, losses, damages, claims, costs
or expenses which are determined by a court of competent jurisdiction in a final
proceeding to have resulted from the Administrative Agent’s gross negligence or
willful misconduct. The Administrative Agent shall not be required to take any
action under any Loan Document, or to prosecute or defend any suit in respect of
any Loan Document, unless it is indemnified hereunder to its satisfaction. If
any indemnity in favor of the Administrative Agent shall be or become, in the
Administrative Agent’s determination, inadequate, the Administrative Agent may
call for additional indemnification from the Lenders and cease to do the acts
indemnified against hereunder until such additional indemnity is given.

SECTION 10.2. Funding Reliance, etc. Unless the Administrative Agent shall have
been notified in writing by any Lender by 3:00 p.m. on the Business Day prior to
a Borrowing that such Lender will not make available the amount which would
constitute its Percentage of such Borrowing on the date specified therefor, the
Administrative Agent may assume that such Lender has made such amount available
to the Administrative Agent and, in reliance upon such assumption, make
available to the Borrower a corresponding amount. If and to the extent that such
Lender shall not have made such amount available to the Administrative Agent,
such Lender and the Borrower severally agree to repay the Administrative Agent
forthwith on demand such corresponding amount together with interest thereon,
for each day from the date the Administrative Agent made such amount available
to the Borrower to the date such amount is repaid to the Administrative Agent,
at the interest rate applicable at the time to Loans comprising such Borrowing
(in the case of the Borrower) and (in the case of a Lender), at the Federal
Funds Effective Rate (for the first two Business Days after which such amount
has not been repaid), and thereafter at the interest rate applicable to Loans
comprising such Borrowing.

SECTION 10.3. Exculpation; Notice of Default. (a) Neither the Administrative
Agent nor any Issuer nor any of their respective directors, officers, employees
or agents shall be liable to any Secured Party for any action taken or omitted
to be taken by it under any Loan Document, or in connection herewith or
therewith, except for its own willful misconduct or gross negligence, nor
responsible for any recitals or warranties herein or therein, nor for the
effectiveness, enforceability, validity or due execution of any Loan Document,
nor for the creation, perfection or priority of any Liens purported to be
created by any of the Loan Documents, or the validity, genuineness,
enforceability, existence, value or sufficiency of any collateral security, nor
to make any inquiry respecting the performance by any Obligor of its
Obligations. Any such inquiry which may be made by the Administrative Agent
shall not obligate it to make any further inquiry or to take any action. The
Administrative Agent shall be entitled to rely upon advice of counsel concerning
legal matters and upon any notice, consent, certificate, statement or writing
which the Administrative Agent believes to be genuine and to have been presented
by a proper Person.

The Administrative Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default hereunder unless the Administrative Agent has received
a written notice from any Issuer, a Lender or the Borrower referring to this
Agreement, describing such Default and stating that such notice is a “notice of
default”. In the event that the Administrative Agent receives such a notice, the
Administrative Agent shall give prompt notice thereof to the Lenders and
Issuers. The Administrative Agent shall (subject to Section 10.1) take such
action with respect to such Default as shall be directed by the Required
Lenders; provided that, unless and until the

 

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Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default as it shall deem advisable in
the best interest of the Secured Parties except to the extent that this
Agreement expressly requires that such action be taken, or not be taken, only
with the consent or upon the authorization of the Required Lenders or all
Lenders.

SECTION 10.4. Successor. The Syndication Agent may resign as such upon one
Business Day’s notice to the Borrower and the Administrative Agent. The
Administrative Agent may resign as such at any time upon at least 30 days’ prior
notice to the Borrower and all Lenders. If the Administrative Agent at any time
shall resign, the Required Lenders may appoint another Lender as a successor
Administrative Agent (subject to the Borrower’s consent, not to be unreasonably
withheld or delayed, unless an Event of Default shall have occurred and be
continuing) which shall thereupon become the Administrative Agent hereunder. If
no successor Administrative Agent shall have been so appointed by the Required
Lenders, and shall have accepted such appointment, within 30 days after the
retiring Administrative Agent’s giving notice of resignation, then the retiring
Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent (subject to the Borrower’s consent, not to be unreasonably
withheld or delayed, unless an Event of Default shall have occurred and be
continuing), which shall be one of the Lenders or a commercial banking
institution organized under the laws of the United States (or any State thereof)
or a U.S. branch or agency of a commercial banking institution, and having a
combined capital and surplus of at least $500,000,000; provided, that, if, such
retiring Administrative Agent is unable to find a commercial banking institution
which is willing to accept such appointment and which meets the qualifications
set forth above, the retiring Administrative Agent’s resignation shall
nevertheless thereupon become effective and the Lenders shall assume and perform
all of the duties of the Administrative Agent hereunder until such time, if any,
as the Required Lenders appoint a successor as provided for above. Upon the
acceptance of any appointment as Administrative Agent hereunder by a successor
Administrative Agent, such successor Administrative Agent shall be entitled to
receive from the retiring Administrative Agent such documents of transfer and
assignment as such successor Administrative Agent may reasonably request, and
shall thereupon succeed to and become vested with all rights, powers, privileges
and duties of the retiring Administrative Agent, and the retiring Administrative
Agent shall be discharged from its duties and obligations under the Loan
Documents. After any retiring Administrative Agent’s resignation hereunder as
the Administrative Agent, the provisions of this Article shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was the
Administrative Agent under the Loan Documents, and Sections 12.3 and 12.4 shall
continue to inure to its benefit.

Any resignation by Credit Suisse as Administrative Agent pursuant to this
Section shall also constitute its resignation as a Revolving Issuer and
Synthetic Issuer. Upon the acceptance of a successor’s appointment as
Administrative Agent hereunder, (a) such successor shall succeed to and become
vested with all of the rights, powers, privileges and duties of the retiring
Issuers, (b) the retiring Issuers shall be discharged from all of its duties and
obligations hereunder or under the other Loan Documents, and (c) the successor
Issuers shall issue letters of credit in substitution for the Letters of Credit
issued by the retiring Issuers, if any, outstanding at the time of such
succession or make other arrangement reasonably satisfactory to the retiring
Issuers to effectively assume the obligations of the retiring Issuers with
respect to such Letters of Credit.

 

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SECTION 10.5. Credit Extensions by the Administrative Agent and each Issuer. The
Administrative Agent and each Issuer, in its individual capacity as a Lender,
shall have the same rights and powers with respect to (a)(i) in the case of the
Administrative Agent, the Credit Extensions made by it or any of its Affiliates
and (ii) in the case of an Issuer, the Loans made by it or any of its
Affiliates, and (b) the Notes held by it or any of its Affiliates as any other
Lender and may exercise the same as if it were not the Administrative Agent or
Issuer. The Administrative Agent, each Issuer and each of their respective
Affiliates, in each case, in its individual capacity, may accept deposits from,
lend money to, and generally engage in any kind of business with the Parent, the
Borrower or any Subsidiary or Affiliate of the Borrower as if the Administrative
Agent or Issuer were not the Administrative Agent or Issuer hereunder.

SECTION 10.6. Credit Decisions. Each Lender acknowledges that it has,
independently of the Administrative Agent and each other Lender, and based on
such Lender’s review of the financial information of the Parent, the Borrower
and their respective Subsidiaries, the Loan Documents (the terms and provisions
of which being satisfactory to such Lender) and such other documents,
information and investigations as such Lender has deemed appropriate, made its
own credit decision to extend its Commitments and make Credit Extensions. Each
Lender also acknowledges that it will, independently of the Administrative Agent
and each other Lender, and based on such other documents, information and
investigations as it shall deem appropriate at any time, continue to make its
own credit decisions as to exercising or not exercising from time to time any
rights and privileges available to it under the Loan Documents.

SECTION 10.7. Copies, etc. The Administrative Agent shall give prompt notice to
each Lender of each notice or request required or permitted to be given to the
Administrative Agent by the Borrower pursuant to the terms of the Loan Documents
(unless concurrently delivered to the Lenders by the Borrower). The
Administrative Agent will distribute to each Lender each document or instrument
received for its account and copies of all other communications received by the
Administrative Agent from the Borrower for distribution to the Lenders by the
Administrative Agent in accordance with the terms of the Loan Documents.

SECTION 10.8. Reliance by the Administrative Agent and Issuers. The
Administrative Agent and each Issuer shall be entitled to rely upon any
certification, notice or other communication (including any thereof by
telephone, telecopy, telegram or cable) believed by it to be genuine and correct
and to have been signed or sent by or on behalf of the proper Person, and upon
advice and statements of legal counsel, independent accountants and other
experts selected by the Administrative Agent or such Issuer, as the case may be.
As to any matters not expressly provided for by the Loan Documents, the
Administrative Agent and each Issuer shall in all cases be fully protected in
acting, or in refraining from acting, hereunder or thereunder in accordance with
instructions given by the Required Lenders or all of the Lenders as is required
in such circumstance, and such instructions of such Lenders and any action taken
or failure to act pursuant thereto shall be binding on all Secured Parties.

SECTION 10.9. The Administrative Agent and the Issuers. Notwithstanding anything
else to the contrary contained in any Loan Document, the Administrative Agent
and the Issuers, in their respective capacities as such, shall have no duties or
responsibilities under any Loan Document nor any fiduciary relationship with any
Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into any Loan Document or

 

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otherwise exist against the Administrative Agent or any Issuer, as applicable,
in such capacity, except as are explicitly set forth in any such Loan Document.

SECTION 10.10. Posting of Approved Electronic Communications. (a) Each of the
Parent and the Borrower hereby agrees, unless directed otherwise by the
Administrative Agent or unless the electronic mail address referred to below has
not been provided by the Administrative Agent to the Parent or the Borrower, as
the case may be, that each will, or will cause their respective Subsidiaries to,
provide to the Administrative Agent all information, documents and other
materials that each is obligated to furnish to the Administrative Agent pursuant
to the Loan Documents or to the Lenders under Section 7.1, including all
notices, requests, financial statements, financial and other reports,
certificates and other information materials, but excluding any such
communication that (i) is or relates to a Borrowing Request, a
Continuation/Conversion Notice or an Issuance Request, (ii) relates to the
payment of any principal or other amount due under this Agreement prior to the
scheduled date therefor, (iii) provides notice of any Default or Event of
Default under this Agreement or any other Loan Document or (iv) is required to
be delivered to satisfy any condition precedent to the effectiveness of this
Agreement and/or any Borrowing or other extension of credit hereunder (all such
non-excluded communications being referred to herein collectively as
“Communications”), by transmitting the Communications in an electronic/soft
medium that is properly identified in a format acceptable to the Administrative
Agent to an electronic mail address as directed by the Administrative Agent. In
addition, each of the Parent and the Borrower agrees, and agrees to cause their
respective Subsidiaries, to continue to provide the Communications to the
Administrative Agent or the Lenders, as the case may be, in the manner specified
in the Loan Documents but only to the extent requested by the Administrative
Agent.

Each of the Parent and the Borrower further agrees that the Administrative Agent
may make the Communications available to the Lenders by posting the
Communications on Intralinks or a substantially similar electronic transmission
system (the “Platform”).

THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE”. THE INDEMNIFIED PARTIES DO
NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE COMMUNICATIONS OR THE ADEQUACY
OF THE PLATFORM AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS OR OMISSIONS IN THE
COMMUNICATIONS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY,
INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE
DEFECTS IS MADE BY THE INDEMNIFIED PARTIES IN CONNECTION WITH THE COMMUNICATIONS
OR THE PLATFORM. IN NO EVENT SHALL THE INDEMNIFIED PARTIES HAVE ANY LIABILITY TO
ANY OBLIGOR, ANY LENDER OR ANY OTHER PERSON FOR DAMAGES OF ANY KIND, WHETHER OR
NOT BASED ON STRICT LIABILITY AND INCLUDING DIRECT OR INDIRECT, SPECIAL,
INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOSSES OR EXPENSES (WHETHER IN TORT,
CONTRACT OR OTHERWISE) ARISING OUT OF ANY OBLIGOR’S OR THE ADMINISTRATIVE
AGENT’S TRANSMISSION OF COMMUNICATIONS THROUGH THE INTERNET, EXCEPT TO THE
EXTENT THE LIABILITY OF ANY INDEMNIFIED PARTY IS FOUND IN A FINAL RULING BY A
COURT OF COMPETENT JURISDICTION

 

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TO HAVE RESULTED PRIMARILY FROM SUCH INDEMNIFIED PARTY’S GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT.

The Administrative Agent agrees that the receipt of the Communications by the
Administrative Agent at its e-mail address set forth above shall constitute
effective delivery of the Communications to the Administrative Agent for
purposes of the Loan Documents. Each Lender agrees that receipt of notice to it
(as provided in the next sentence) specifying that the Communications have been
posted to the Platform shall constitute effective delivery of the Communications
to such Lender for purposes of the Loan Documents. Each Lender agrees to notify
the Administrative Agent in writing (including by electronic communication) from
time to time of such Lender’s e-mail address to which the foregoing notice may
be sent by electronic transmission and that the foregoing notice may be sent to
such e-mail address.

Nothing herein shall prejudice the right of the Administrative Agent or any
Lender to give any notice or other communication pursuant to any Loan Document
in any other manner specified in such Loan Document.

ARTICLE XI

PARENT GUARANTY

SECTION 11.1. Guaranty. The Parent hereby absolutely, unconditionally and
irrevocably

(a)               guarantees the due, prompt and faithful performance of, and
compliance with, all obligations, covenants, terms, conditions and agreements of
the Borrower and each other Obligor now or hereafter existing under this
Agreement and each other Loan Document to which the Borrower and each other
Obligor is or may become a party in accordance with the terms thereof, including
the full and punctual payment when due, whether at stated maturity, by required
prepayment, declaration, acceleration, demand or otherwise, of all Obligations
of the Borrower and each other Obligor now or hereafter existing under this
Agreement and each other Loan Document to which the Borrower and each other
Obligor is or may become a party, whether for principal, interest, fees,
expenses or otherwise (including all such amounts which would become due but for
the operation of the automatic stay under Section 362(a) of the United States
Bankruptcy Code, 11 U.S.C. §362(a), and the operation of Sections 502(b) and
506(b) of the United States Bankruptcy Code, 11 U.S.C. §502(b) and §506(b)), and

(b)               indemnifies and holds harmless each Secured Party and each
holder of a Note for any and all costs and expenses (including reasonable
attorney’s fees and expenses) incurred by such Secured Party or such holder, as
the case may be, in enforcing any rights under this Article XI.

This Article XI constitutes a guaranty of payment when due and not of
collection, and the Parent specifically agrees that it shall not be necessary or
required that any Secured Party or any holder of any Note exercise any right,
assert any claim or demand or enforce any remedy whatsoever against the Borrower
or any other Obligor (or any other Person) before or as a condition to the
obligations of the Parent hereunder.

 

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SECTION 11.2. Acceleration of Obligations Hereunder. The Parent agrees that, in
the case of an Event of Default described in Section 9.1.9, and if such Event of
Default shall occur at a time when any of the Obligations of the Borrower or any
Subsidiary Guarantor may not then be due and payable, the Parent agrees that it
will pay to the Lenders forthwith the full amount which would be payable
hereunder by the Parent if all such Obligations were then due and payable.

SECTION 11.3. Obligations Hereunder Absolute, etc. The obligations of the Parent
under this Article XI shall in all respects be a continuing, absolute,
unconditional and irrevocable guaranty of performance and payment and shall
remain in full force and effect until all Obligations of the Borrower and each
other Obligor have been indefeasibly paid in full in cash and all obligations of
the Parent hereunder shall have been indefeasibly paid in full in cash. The
Parent guarantees that the Obligations of the Borrower and each other Obligor
will be paid strictly in accordance with the terms of this Agreement and each
other Loan Document under which they arise, regardless of any law, regulation or
order now or hereafter in effect in any jurisdiction affecting any of such terms
or the rights of any Secured Party or any holder of any Note with respect
thereto. The liability of the Parent under this Article XI shall be absolute,
unconditional and irrevocable irrespective of:

(a)               any lack of validity, legality or enforceability of the other
provisions of this Agreement, any Note or any other Loan Document;

(b)

the failure of any Secured Party or any holder of any Note

(i)                to assert any claim or demand or to enforce any right or
remedy against the Borrower, any other Obligor or any other Person (including
any other guarantor (including the Parent)) under the provisions of this
Agreement, any Note, any other Loan Document or otherwise, or

(ii)               to exercise any right or remedy against any other guarantor
(including the Parent) of, or collateral securing, any Obligations of the
Borrower or any other Obligor;

(c)               any change in the time, manner or place of payment of, or in
any other term of, all or any of the Obligation of the Borrower or any other
Obligor, or any other extension, compromise or renewal of any Obligation of the
Borrower or any other Obligor;

(d)               any reduction, limitation, impairment or termination of any
Obligation of the Borrower or any other Obligor for any reason, including any
claim of waiver, release, surrender, alteration or compromise, and shall not be
subject to (and the Parent hereby waives any right to or claim of) any defense
or setoff, counterclaim, recoupment or termination whatsoever by reason of the
invalidity, illegality, nongenuineness, irregularity, compromise,
unenforceability of, or any other event or occurrence affecting, any Obligation
of the Borrower, any other Obligor or otherwise;

(e)               any amendment to, rescission, waiver, or other modification
of, or any consent to departure from, any of the terms of this Agreement, any
Note or any other Loan Document;

 

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(f)                any addition, exchange, release, surrender or non-perfection
of any collateral, or any amendment to or waiver or release or addition of, or
consent to departure from, any other guaranty, held by any Secured Party or any
holder of any Note securing any of the Obligations of the Borrower or any other
Obligor; or

(g)               any other circumstance which might otherwise constitute a
defense available to, or a legal or equitable discharge of, the Borrower, any
other Obligor, any surety or any guarantor.

SECTION 11.4. Reinstatement, etc. The Parent agrees that this Article XI shall
continue to be effective or be reinstated, as the case may be, if at any time
any payment (in whole or in part) of any of the Obligations is rescinded or must
otherwise be restored by any Secured Party or any holder of any Note, upon the
insolvency, bankruptcy or reorganization of the Borrower or any other Obligor or
otherwise, all as though such payment had not been made.

SECTION 11.5. Waiver, etc. The Parent hereby waives promptness, diligence,
notice of acceptance and any other notice with respect to any of the Obligations
of the Borrower or any other Obligor and this Article XI and any requirement
that the Administrative Agent, any other Secured Party or any holder of any Note
protect, secure, perfect or insure any security interest or Lien, or any
property subject thereto, or exhaust any right or take any action against the
Borrower, any other Obligor or any other Person (including any other guarantor)
or any collateral securing the Obligations of the Borrower or any other Obligor,
as the case may be.

SECTION 11.6. Postponement of Subrogation. The Parent agrees that it will not
exercise any rights which it may acquire by way of rights of subrogation under
this Article XI by any payment made hereunder or otherwise, until the prior
indefeasible payment in full in cash of all Obligations of the Borrower and each
other Obligor. Any amount paid to the Parent on account of any such subrogation
rights prior to the indefeasible payment in full in cash of all Obligations of
the Borrower and each other Obligor shall be held in trust for the benefit of
the Secured Parties and each holder of a Note and shall immediately be paid to
the Administrative Agent for the benefit of the Secured Parties and each holder
of a Note and credited and applied against the Obligations of the Borrower and
each other Obligor, whether matured or unmatured, in accordance with the terms
of this Agreement.

In furtherance of the foregoing, for so long as any Obligations remain
outstanding, the Parent shall refrain from taking any action or commencing any
proceeding against the Borrower or any other Obligor (or its successors or
assigns, whether in connection with a bankruptcy proceeding or otherwise) to
recover any amounts in respect of payments made under this Article XI to any
Secured Party or any holder of a Note.

SECTION 11.7. Successors, Transferees and Assigns; Transfers of Notes, etc. This
Article XI shall:

(a)               be binding upon the Parent, and its successors, transferees
and assigns; and

(b)               inure to the benefit of and be enforceable by the
Administrative Agent and each other Secured Party.

 

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Without limiting the generality of Section 12.11, any Lender may assign or
otherwise transfer (in whole or in part) any Note or Loan held by it to any
other Person, and such other Person shall thereupon become vested with all
rights and benefits in respect thereof granted to such Lender under any Loan
Document (including this Article XI) or otherwise, subject, however, to any
contrary provisions in such assignment or transfer, and to the provisions of
Section 12.11 and Article XII.

ARTICLE XII

MISCELLANEOUS PROVISIONS

SECTION 12.1. Waivers, Amendments, etc. The provisions of each Loan Document
(other than any Letter of Credit or a Rate Protection Agreement) under which
amendments, modifications and waivers may be effected by the parties thereto)
may from time to time be amended, modified or waived, if such amendment,
modification or waiver is in writing and consented to by the Borrower and the
Required Lenders; provided, however, that no such amendment, modification or
waiver shall:

(a)               modify clause (b) of Section 4.7, Section 4.8 (as it relates
to sharing of payments) or this Section, in each case, without the consent of
all Lenders;

(b)               increase the aggregate amount of any Credit Extensions
required to be made by any Lender pursuant to its Commitments, extend any
Commitment of any Lender, extend any Stated Maturity Date for any Lender’s Loan
or Synthetic Deposit, or reduce any fees described in Article III payable to any
Lender, in each case without the consent of such Lender (it being agreed,
however, that any vote to rescind any acceleration made pursuant to Section 9.2
and Section 9.3 of amounts owing with respect to the Loans and other Obligations
shall only require the vote of the Required Lenders);

(c)               reduce the principal amount of or reduce the rate of interest
on any Lender’s Loan, reduce any fees described in Article III payable to any
Lender or extend the date on which interest or fees are payable to any Lender,
in each case without the consent of such Lender (provided that, the vote of
Required Lenders shall be sufficient to waive the payment, or reduce the
increased portion, of interest accruing under Section 3.2.2);

(d)               reduce the percentage set forth in the definition of “Required
Lenders” or modify any requirement hereunder that any particular action be taken
by all Lenders without the consent of all Lenders;

(e)               increase the Stated Amount of any Letter of Credit unless
consented to by the Issuer of such Letter of Credit;

(f)                except as otherwise expressly provided in a Loan Document,
release (i) the Borrower from its Obligations under the Loan Documents or any
Guarantor from its obligations under a Guaranty or (ii) all or substantially all
of the collateral under the Loan Documents, in each case without the consent of
all Lenders;

 

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(g)               amend, modify or waive Section 5.2.1, unless, in either case,
such amendment, modification or waiver shall have been consented to by the
Lenders holding a majority of the aggregate amount of the Revolving Loan
Exposure;

(h)               change any provision of this Agreement in a manner that by its
terms adversely affects the rights in respect of payments due to either
Revolving Loan Lenders, Term Loan Lenders or Synthetic Lenders, differently from
the other Lenders, without the consent of either the Revolving Loan Lenders,
Term Loan Lenders or Synthetic Lenders, as applicable, holding a majority in
interest of the applicable portion of the Total Exposure Amount of such
adversely affected Lenders;

(i)                affect adversely the interests, rights or obligations of the
Administrative Agent (in its capacity as the Administrative Agent) or any
Issuer, unless consented to by the Administrative Agent or such Issuer, as the
case may be; or

(j)                with respect to any LIBO Rate Loan, amend, waive or modify
the requirement that the Interest Period relative to any such Loan be one, two,
three, six or, if available to all Lenders, nine or twelve months in duration,
unless consented to by each Lender making such Loan.

No failure or delay on the part of any Secured Party in exercising any power or
right under any Loan Document shall operate as a waiver thereof, nor shall any
single or partial exercise of any such power or right preclude any other or
further exercise thereof or the exercise of any other power or right. No notice
to or demand on any Obligor in any case shall entitle it to any notice or demand
in similar or other circumstances. No waiver or approval by any Secured Party
under any Loan Document shall, except as may be otherwise stated in such waiver
or approval, be applicable to subsequent transactions. No waiver or approval
hereunder shall require any similar or dissimilar waiver or approval thereafter
to be granted hereunder.

SECTION 12.2. Notices; Time. All notices and other communications provided under
each Loan Document shall be in writing or by facsimile and addressed, delivered
or transmitted, if to the Parent, the Borrower or the Administrative Agent, at
its address or facsimile number set forth on Schedule II hereto, and if to a
Lender or Issuer, to the applicable Person at its address or facsimile number
set forth on Schedule II hereto or set forth in the Lender Assignment Agreement
pursuant to which such Lender became a Lender hereunder, or, in any case, at
such other address or facsimile number as may be designated by any such party in
a notice to the other parties. Any notice, if mailed and properly addressed with
postage prepaid or if properly addressed and sent by pre-paid courier service,
shall be deemed given when received; any notice, if transmitted by facsimile,
shall be deemed given when the confirmation of transmission thereof is received
by the transmitter. Electronic mail and Internet and intranet websites may, at
the discretion of the Administrative Agent, be used to distribute routine
communications, such as financial statements and other information as provided
in Section 7.1, to distribute Loan Documents for execution by the parties
thereto and distribute executed Loan Documentation and may not be used for any
other purpose.

SECTION 12.3. Payment of Costs and Expenses. The Borrower agrees to pay on
demand all reasonable fees and expenses of the Administrative Agent (including
the fees and

 

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out-of-pocket expenses of Mayer, Brown, Rowe & Maw LLP, or such other counsel to
the Administrative Agent and of local counsel, if any, who may be retained by or
on behalf of the Administrative Agent) in connection with

(a)               the negotiation, preparation, execution and delivery of each
Loan Document, including schedules and exhibits, and any amendments, waivers,
consents, supplements or other modifications to any Loan Document as may from
time to time hereafter be required, whether or not the transactions contemplated
hereby are consummated;

(b)               the filing, recording, refiling or rerecording of any Loan
Document (including the Filing Statements) and all amendments, supplements,
amendment and restatements and other modifications to any thereof, searches made
following the Closing Date in jurisdictions where Filing Statements (or other
documents evidencing Liens in favor of the Secured Parties) have been filed or
recorded and any and all other documents or instruments of further assurance
required to be filed or recorded, or refiled or rerecorded by the terms of any
Loan Document; and

(c)               the preparation and review of the form of any document or
instrument relevant to any Loan Document.

The Borrower further agrees to pay, and to save each Secured Party harmless from
all liability for, any stamp or other Taxes which may be payable in connection
with the execution or delivery of each Loan Document, the Credit Extensions or
the issuance of the Notes. The Borrower also agrees to reimburse each Secured
Party upon demand for all reasonable out-of-pocket expenses (including
reasonable attorneys’ fees and legal expenses of counsel to each Secured Party)
incurred by such Secured Party in connection with (x) the negotiation of any
restructuring or “work-out” with the Borrower, whether or not consummated, of
any Obligations and (y) the enforcement of any Obligations.

SECTION 12.4. Indemnification. In consideration of the execution and delivery of
this Agreement by each Secured Party, each of the Parent and the Borrower hereby
indemnifies, exonerates and holds each Secured Party and each of their
respective officers, directors, employees and agents (collectively, the
“Indemnified Parties”) free and harmless from and against any and all actions,
causes of action, suits, losses, costs, liabilities and damages, and expenses
incurred in connection therewith (irrespective of whether any such Indemnified
Party is a party to the action for which indemnification hereunder is sought),
including reasonable attorneys’ fees and disbursements, whether incurred in
connection with actions between or among the parties hereto or the parties
hereto and third parties (collectively, the “Indemnified Liabilities”), incurred
by the Indemnified Parties or any of them as a result of, or arising out of, or
relating to

(a)               any transaction financed or to be financed in whole or in
part, directly or indirectly, with the proceeds of any Credit Extension,
including all Indemnified Liabilities arising in connection with the
Transaction;

 

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(b)               the entering into and performance of any Loan Document by any
of the Indemnified Parties (including any action brought by or on behalf of the
Parent or the Borrower, as applicable, as the result of any determination by the
Required Lenders pursuant to Article V not to fund any Credit Extension,
provided that, any such action is resolved in favor of such Indemnified Party);

(c)               any investigation, litigation or proceeding related to any
acquisition or proposed acquisition by any Obligor or any Subsidiary thereof of
all or any portion of the Capital Securities or assets of any Person, whether or
not an Indemnified Party is party thereto;

(d)               any investigation, litigation or proceeding (including any
threatened investigation, litigation or proceeding) related to any environmental
cleanup, audit, compliance or other matter relating to any Obligor or any
Subsidiary with respect to the protection of the environment or relating to the
Release by any Obligor or any Subsidiary thereof of any Hazardous Material;

(e)               the presence on or under, or the escape, seepage, leakage,
spillage, discharge, emission, discharging or releases from, any real property
owned or operated by any Obligor or any Subsidiary of any Hazardous Material
(including any losses, liabilities, damages, injuries, costs, expenses or claims
asserted or arising under any Environmental Law), regardless of whether caused
by, or within the control of, such Obligor or such Subsidiary; or

(f)                each Lender’s Environmental Liability (the indemnification
herein shall survive repayment of the Obligations and any transfer of the
property of any Obligor or any of its Subsidiaries by foreclosure or by a deed
in lieu of foreclosure for any Lender’s Environmental Liability, regardless of
whether caused by, or within the control of, such Obligor or such Subsidiary);

except for Indemnified Liabilities (x) determined in the final judgment of a
court of competent jurisdiction to have arisen for the account of a particular
Indemnified Party by reason of the relevant Indemnified Party’s gross negligence
or willful misconduct or (y) arising out of or in connection with any claim,
litigation, investigation or proceeding that does not involve an act or omission
by the Borrower or any of its Affiliates and that is brought by an Indemnified
Party against another Indemnified Party (other than, in the case of this clause
(y), any Indemnified Liabilities incurred by the Administrative Agent). Except
with respect to such gross negligence or willful misconduct, each Obligor and
its successors and assigns hereby waive, release and agree not to make any claim
or bring any cost recovery action against, any Indemnified Party under CERCLA or
any state equivalent, or any similar law now existing or hereafter enacted. It
is expressly understood and agreed that to the extent that any Indemnified Party
is strictly liable under any Environmental Laws, each Obligor’s obligation to
such Indemnified Party under this indemnity shall likewise be without regard to
fault on the part of any Obligor with respect to the violation or condition
which results in liability of an Indemnified Party. If and to the extent that
the foregoing undertaking may be unenforceable for any reason, each Obligor
agrees to make the maximum contribution to the payment and satisfaction of each
of the Indemnified Liabilities which is permissible under applicable law.

 

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SECTION 12.5. Survival. The obligations of the Parent and the Borrower, as the
case may be, under Sections 4.3, 4.4, 4.5, 4.6, 12.3 and 12.4, and the
obligations of the Lenders under Section 10.1, shall in each case survive any
assignment from one Lender to another (in the case of Sections 12.3 and 12.4)
and the occurrence of the Termination Date. The representations and warranties
made by each Obligor in each Loan Document shall survive the execution and
delivery of such Loan Document.

SECTION 12.6. Severability. Any provision of any Loan Document which is
prohibited or unenforceable in any jurisdiction shall, as to such provision and
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of such Loan
Document or affecting the validity or enforceability of such provision in any
other jurisdiction.

SECTION 12.7. Headings. The various headings of each Loan Document are inserted
for convenience only and shall not affect the meaning or interpretation of such
Loan Document or any provisions thereof.

SECTION 12.8. Execution in Counterparts, Effectiveness, etc. This Agreement may
be executed by the parties hereto in several counterparts, each of which shall
be an original (whether such counterpart is originally executed or an electronic
copy of an original and each party hereto expressly waives its rights to receive
originally executed documents other than with respect to any Notes) and all of
which shall constitute together but one and the same agreement. This Agreement
shall become effective when counterparts hereof executed on behalf of the
Parent, the Borrower, Administrative Agent and each Lender (or notice thereof
satisfactory to the Administrative Agent) shall have been received by the
Administrative Agent.

SECTION 12.9. Governing Law; Entire Agreement. EACH LOAN DOCUMENT (OTHER THAN
THE LETTERS OF CREDIT, TO THE EXTENT SPECIFIED BELOW AND EXCEPT AS OTHERWISE
EXPRESSLY SET FORTH IN A LOAN DOCUMENT) WILL EACH BE DEEMED TO BE A CONTRACT
MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING
FOR SUCH PURPOSE SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF
THE STATE OF NEW YORK). EACH LETTER OF CREDIT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OR RULES DESIGNATED IN SUCH LETTER OF
CREDIT, OR IF NO LAWS OR RULES ARE DESIGNATED, THE INTERNATIONAL STANDBY
PRACTICES (ISP98--INTERNATIONAL CHAMBER OF COMMERCE PUBLICATION NUMBER 590 (THE
“ISP RULES”)) AND, AS TO MATTERS NOT GOVERNED BY THE ISP RULES, THE LAWS OF THE
STATE OF NEW YORK. The Loan Documents constitute the entire understanding among
the parties hereto with respect to the subject matter thereof and supersede any
prior agreements, written or oral, with respect thereto.

SECTION 12.10. Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns; provided, however, that neither the Parent nor the Borrower may
assign or transfer its rights or obligations hereunder without the consent of
all of the Lenders.

 

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SECTION 12.11. Sale and Transfer of Credit Extensions; Participations in Credit
Extensions; Notes. Each Lender may assign, or sell participations in, its Loans,
Letters of Credit and Commitments to one or more other Persons in accordance
with the terms set forth below:

(a)               Any Lender may, with the consent of (x) the Administrative
Agent (such consent not to be unreasonably withheld or delayed) and (y) each
Revolving Letter of Credit Issuer in the case of any assignment of a Revolving
Loan Commitment (such consent not to be unreasonably withheld or delayed),
assign to one or more Eligible Assignees all or a portion of its rights and
obligations under this Agreement (including all or a portion of its Commitments,
Loans or Synthetic Deposits at the time owing to it); provided that:

(i)                the aggregate amount of the Commitments (which for this
purpose includes Loans and Synthetic Deposits outstanding thereunder), principal
outstanding balance of the Loans or aggregate Synthetic Deposit of the assigning
Lender subject to each such assignment (determined as of the date the Lender
Assignment Agreement with respect to such assignment is delivered to the
Administrative Agent) shall not be less than $1,000,000, unless (A) the
Administrative Agent and, so long as no Event of Default has occurred and is
continuing, the Borrower otherwise consents (each such consent not to be
unreasonably withheld or delayed); (B) such assignment is an assignment of the
entire remaining amount of the assigning Lender’s Commitments, Loans or
Synthetic Deposits at the time owing to it with respect to the Commitments,
Loans or Synthetic Deposits being assigned, or (C) such assignment is an
assignment to a Lender or an Affiliate of a Lender or an Approved Fund with
respect to a Lender; provided that simultaneous assignments to or by two or more
Related Funds shall be treated as one assignment for purposes of the minimum
assignment amount requirement;

(ii)               each partial assignment shall be made as an assignment of a
proportionate part of all the assigning Lender’s rights and obligations under
this Agreement with respect to the Loans, Synthetic Deposits and/or the
Commitments assigned, except that this clause (ii) shall not prohibit any Lender
from assigning all or a portion of its rights and obligations among separate
tranches on a non-pro rata basis; and

(iii)              the parties to each assignment shall (A) execute and deliver
to the Administrative Agent a Lender Assignment Agreement via an electronic
settlement system acceptable to the Administrative Agent (or, if previously
agreed with the Administrative Agent, manually), (B) pay to the Administrative
Agent a processing and recordation fee of $3,500 (which fee may be waived or
reduced in the sole discretion of the Administrative Agent) and (C) if the
Eligible Assignee is not a Lender, administrative details information with
respect to such Eligible Assignee and applicable tax forms.

(b)               Subject to acceptance and recording thereof by the
Administrative Agent pursuant to clause (c), from and after the effective date
specified in each Lender

 

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Assignment Agreement, (i) the Eligible Assignee thereunder shall be a party
hereto and, to the extent of the interest assigned by such Lender Assignment
Agreement, have the rights and obligations of a Lender under this Agreement, and
(ii) the assigning Lender thereunder shall, to the extent of the interest
assigned by such Lender Assignment Agreement, subject to Section 12.5, be
released from its obligations under this Agreement (and, in the case of a Lender
Assignment Agreement covering all of the assigning Lender’s rights and
obligations under this Agreement, such Lender shall cease to be a party hereto,
but shall continue to be entitled to the benefits of any provisions of this
Agreement which by their terms survive the termination of this Agreement). Any
term or provision hereof to the contrary notwithstanding, no portion of any
Synthetic Deposit of any assigning Synthetic Lender shall be refunded in
connection with any assignment by such Synthetic Lender, but instead (x) the
applicable Eligible Assignee shall purchase from such assigning Synthetic Lender
that portion of the Synthetic Deposit identified in the applicable Lender
Assignment Agreement for such consideration as mutually agreed upon by such
parties; and (y) such assigned portion of such Synthetic Deposit shall remain on
deposit in the Synthetic Deposit Account and, upon the effectiveness of such
assignment, shall become the Synthetic Deposit of such Eligible Assignee. Any
assignment or transfer by a Lender of rights or obligations under this Agreement
that does not comply with clauses (a) and (b) shall be treated for purposes of
this Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with clause (d). If the consent of the Borrower to an
assignment or to an Eligible Assignee is required hereunder (including a consent
to an assignment which does not meet the minimum assignment thresholds specified
in this Section), the Borrower shall be deemed to have given its consent ten
days after the date notice thereof has been delivered by the assigning Lender
(through the Administrative Agent or ClearPar, LLC) unless such consent is
expressly refused by the Borrower prior to such tenth day.

(c)               The Administrative Agent shall record each assignment made in
accordance with this Section in the Register pursuant to clause (b) of Section
2.7. The Register shall be available for inspection by the Borrower and any
Lender, at any reasonable time and from time to time upon reasonable prior
notice. In connection with each assignment of Synthetic Deposit Amounts, the
Synthetic Deposit of the assignor Lender shall not be released, but shall
instead be purchased by the relevant assignee and continue to be held for
application (to the extent not already applied) in accordance with Article II to
satisfy such assignee’s obligations in respect of Synthetic Deposit Account
Loans and Synthetic Deposit Letters of Credit. Each Synthetic Lender agrees that
immediately prior to each assignment by a Synthetic Lender (i) the
Administrative Agent shall establish a new Synthetic Deposit Sub-Account in the
name of the assignee, (ii) unless otherwise consented to by the Administrative
Agent, a corresponding portion of the Synthetic Deposit credited to the
Synthetic Deposit Sub-Account of the assignor Lender shall be purchased by the
assignee and shall be transferred from the assignor’s Synthetic Deposit
Sub-Account to the assignee’s Synthetic Deposit Sub-Account and (iii) if after
giving effect to such assignment the Synthetic Deposit of the assignor Lender
shall be zero, the Administrative Agent shall close the Synthetic Deposit
Sub-Account of such assignor Lender.

 

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(d)               Any Lender may, without the consent of, or notice to, the
Borrower or the Administrative Agent, sell participations to one or more banks
or other entities (a “Participant”) in all or a portion of such Lender’s rights
and/or obligations under this Agreement (including all or a portion of its
Commitments, Loans and/or the Synthetic Deposits owing to it); provided that (i)
such Lender’s obligations under this Agreement shall remain unchanged, (ii) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations and (iii) the Borrower, the Administrative Agent
and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender’s rights and obligations under this
Agreement. Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and to approve any amendment, modification or waiver of
any provision of this Agreement; provided that such agreement or instrument may
provide that such Lender will not, without the consent of the Participant, agree
to any amendment, modification or waiver with respect to any of the items set
forth in clauses (a) through (d) or (f) of Section 12.1, in each case except as
otherwise specifically provided in a Loan Document. Subject to clause (e), the
Borrower agrees that each Participant shall be entitled to the benefits of
Sections 4.3, 4.4, 4.5, 4.6, 7.1, 12.3 and 12.4 to the same extent as if it were
a Lender and had acquired its interest by assignment pursuant to clause (b). To
the extent permitted by law, each Participant also shall be entitled to the
benefits of Section 4.9 as though it were a Lender, provided such Participant
agrees to be subject to Section 4.8 as though it were a Lender. Each Lender
shall, as agent of the Borrower solely for the purpose of this Section, record
in book entries maintained by such Lender the name and the amount of the
participating interest of each Participant entitled to receive payments in
respect of any participating interests sold pursuant to this Section.

(e)               Each Credit Party that sells a Participation interest in any
Loan Commitment or other interest to a Participant shall, as agent for the
Borrower solely for the purpose of this Section 12.11, record in book entries
maintained by such Credit Party the name and amount of the participating
interest of each Participant entitled to receive payments in respect of such
interest.

(f)                A Participant shall not be entitled to receive any greater
payment under Sections 4.3, 4.4, 4.5, 4.6, 12.3 and 12.4 than the applicable
Lender would have been entitled to receive with respect to the participation
sold to such Participant, unless the sale of the participation to such
Participant is made with the Borrower’s prior written consent. A Participant
that would be a Non-U.S. Credit Party if it were a Lender shall not be entitled
to the benefits of Section 4.6 unless the Borrower is notified of the
participation sold to such Participant and such Participant agrees, for the
benefit of the Borrower, to comply with the requirements set forth in Section
4.6 as though it were a Lender. In addition, if at the time of the sale of such
participation, any greater Taxes subject to payment under Section 4.6 would
apply to the Participant than applied to the applicable Lender, then such
Participant shall not be entitled to any payment under Section 4.6 with respect
to the portion of such Taxes as exceeds the Taxes applicable to the Lender at
the time of the sale of the participation unless the Participant’s request for
the Borrower’s prior written consent for the Participation described in the
first sentence of this clause states that such greater Taxes would be applicable
to such Participant.

 

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

(h)               In the event that (i) a Revolving Loan Lender or Synthetic
Lender is an Affected Lender, (ii) a Revolving Loan Lender’s or Synthetic
Lender’s capital status, as determined by its principal federal or state
supervisor or other applicable Governmental Authority (if applicable), is rated
at or below “undercapitalized”, (iii) S&P or Moody’s shall, after the date that
any Person becomes a Revolving Loan Lender or Synthetic Lender, downgrade the
long-term certificate of deposit or unsecured long-term debt ratings of such
Lender, and the resulting ratings shall be below BBB- or Baa3, respectively, or
the equivalent, or (iv) in the case of a Revolving Loan Lender or Synthetic
Lender that does not have a long-term certificate of deposit rating provided by
both S&P and Moody’s or a long-term unsecured debt rating provided by both S&P
and Moody’s, such Revolving Loan Lender or Synthetic Lender, as applicable,
suffers a material adverse change in its financial condition or a material
impairment in its ability to honor its obligation to fund any Loan or to
reimburse any Issuer for any Reimbursement Obligation pursuant to Section 2.6.1,
each Issuer and, in the case of an event described in clauses (i) through (iii)
above, the Borrower shall each have the right, but not the obligation, upon
notice to such Revolving Loan Lender or Synthetic Lender, as applicable, and the
Administrative Agent, to replace such Revolving Loan Lender or Synthetic Lender,
as applicable, with a financial institution (a “Replacement Lender”) acceptable
to the Borrower and the Administrative Agent (such consents not to be
unreasonably withheld or delayed; provided that no such consent shall be
required if the Replacement Lender is an existing Revolving Loan Lender or
Synthetic Lender, as applicable), and upon the occurrence of any event described
in clauses (i) through (iv) above, each such Revolving Loan Lender or Synthetic
Lender, as applicable, hereby agrees to transfer and assign (in accordance with
this Section) all of its Commitments and other rights and obligations under the
Loan Documents (including Reimbursement Obligations) to such Replacement Lender;
provided that (i) such assignment shall be without recourse, representation or
warranty (other than that such Lender owns the Commitments, Loans and Notes
being assigned, free and clear of any Liens) and (ii) the purchase price paid by
the Replacement Lender shall be in the amount of (x) in the case of any
Revolving Loan Lender, such Revolving Loan Lender’s Loans and its Percentage of
outstanding Reimbursement Obligations and (y) in the case of any Synthetic
Lender, such Synthetic Lender’s Synthetic Deposit and its Percentage of
outstanding Reimbursement Obligations, in each case, together with all accrued
and unpaid interest and fees in respect thereof, plus all other amounts (other
than the amounts (if any) demanded and unreimbursed under Sections 4.2 through
(and including) 4.6, which shall be paid by the Borrower), owing to such
Revolving Loan Lender or Synthetic Lender, as applicable, hereunder. Upon any
such termination or assignment, such Revolving Loan Lender or Synthetic Lender,
as applicable, shall cease to be a party hereto but shall continue to be
entitled to the benefits of, and subject to the obligations of, any provisions
of this Agreement which by their terms survive the termination of this
Agreement.

 

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(i)                Notwithstanding anything to the contrary contained herein,
any Lender (a “Granting Lender”) may grant to a special purpose funding vehicle
(a “SPC”), identified as such in writing from time to time by the Granting
Lender to the Administrative Agent and the Borrower, the option to provide to
the Borrower all or any part of any Loan that such Granting Lender would
otherwise be obligated to make to the Borrower pursuant to this Agreement;
provided that (i) nothing herein shall constitute a commitment by any SPC to
make any Loan and (ii) if an SPC elects not to exercise such option or otherwise
fails to provide all or any part of such Loan, the Granting Lender shall be
obligated to make such Loan pursuant to the terms hereof. The making of an Loan
by an SPC hereunder shall utilize the Commitment of the Granting Lender to the
same extent, and as if, such Loan were made by such Granting Lender. Each party
hereto hereby agrees that no SPC shall be liable for any indemnity or similar
payment obligation under this Agreement (all liability for which shall remain
with the Granting Lender). In furtherance of the foregoing, each party hereto
hereby agrees (which agreement shall survive the termination of this Agreement)
that, prior to the date that is one year and one day after the payment in full
of all outstanding commercial paper or other senior indebtedness of any SPC, it
will not institute against, or join any other person in instituting against,
such SPC any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings under the laws of the United States or any State thereof. In
addition, notwithstanding anything to the contrary contained in this clause, any
SPC may (i) with notice to, but without the prior written consent of, the
Borrower, the Administrative Agent or the Syndication Agent and without paying
any processing fee therefor, assign all or a portion of its interests in any
Loans to the Granting Lender or to any financial institutions (consented to by
the Borrower, the Syndication Agent and the Administrative Agent) providing
liquidity and/or credit support to or for the account of such SPC to support the
funding or maintenance of Loans and (ii) disclose on a confidential basis any
non-public information relating to its Loans to any rating agency, commercial
paper dealer or provider of any surety, guarantee or credit or liquidity
enhancement to such SPC. This section may not be amended without the written
consent of the SPC. The Borrower acknowledges and agrees, subject to the next
sentence, that, to the fullest extent permitted under applicable law, each SPC,
for purposes of Sections 4.3, 4.4, 4.5, 4.6, 4.8, 4.9, 12.3 and 12.4, shall be
considered a Lender. The Borrower shall not be required to pay any amount under
Sections 4.3, 4.4, 4.5, 4.6, 12.3 and 12.4 that is greater than the amount which
it would have been required to pay had no grant been made by a Granting Lender
to a SPC.

SECTION 12.12. Other Transactions. Nothing contained herein shall preclude the
Administrative Agent, any Issuer or any other Lender from engaging in any
transaction, in addition to those contemplated by the Loan Documents, with the
Parent, the Borrower or any of their respective Affiliates in which the Parent,
the Borrower or such Affiliate is not restricted hereby from engaging with any
other Person.

SECTION 12.13. Independence of Covenants and Default Provisions. All covenants
and default provisions contained in this Agreement or any other Loan Document
shall be given independent effect such that, in the event a particular action or
condition is not permitted by any of such covenants or default provisions, the
fact that it would be permitted by an exception to, or be otherwise within the
limitations of, another covenant or default provision shall not, unless

 

 

expressly so provided in such first covenant or default provision, avoid the
occurrence of a Default if such action is taken or such condition exists.

SECTION 12.14. Confidentiality. (a) Subject to the provisions of clause (b) of
this Section 12.14, each Lender agrees that it will use its reasonable best
efforts not to disclose without the prior written consent of the Borrower (other
than to its employees, auditors, advisors or counsel or to another Lender if the
Lender or such Lender’s holding or parent company in its sole discretion
determines that any such party should have access to such information, provided
such Persons shall be subject to the provisions of this Section 12.14 to the
same extent as such Lender) any information which is now or in the future
furnished pursuant to this Agreement or any other Loan Document, provided that
any Lender may disclose any such information (i) as has become generally
available to the public other than by virtue of a breach of this clause by the
respective Lender or any other Person to whom such Lender has provided such
information as permitted by this Section 12.14, (ii) as may be required or
appropriate in any report, statement or testimony submitted to any municipal,
state or Federal regulatory body having or claiming to have jurisdiction over
such Lender or to the Federal Reserve Board or the Federal Deposit Insurance
Corporation or similar organizations (whether in the United States or elsewhere)
or their successors, (iii) as may be required or appropriate in respect to any
summons or subpoena or in connection with any litigation, (iv) in order to
comply with any law, order, regulation or ruling applicable to such Lender, (v)
to the Administrative Agent, (vi) to any pledgee referred to in clause (g) of
Section 12.11 or any prospective or actual transferee or participant in
connection with any contemplated transfer or participation of any of the Notes
or Commitments or any interest therein by such Lender, provided that such
prospective transferee agrees to be bound by the confidentiality provisions
contained in this Section, (vii) to any direct or indirect contractual
counterparty in swap agreements or such contractual counterparty’s professional
advisor (so long as such contractual counterparty or professional advisor to
such contractual counterparty agrees to be bound by the provisions of this
Section 12.14) and (viii) to the NAIC or any similar organization or any
nationally recognized rating agency that requires access to information about a
Lender’s investment portfolio in connection with ratings issued with respect to
such Lender.

Each of the Parent and the Borrower hereby acknowledges and agrees that each
Lender may share with any of its Affiliates, and such Affiliates may share with
such Lender, any information related to the Parent, the Borrower or any of their
respective Subsidiaries, provided such Persons shall be subject to the
provisions of this Section 12.14 to the same extent as such Lender.

Notwithstanding the foregoing paragraphs of this Section 12.14, any party to
this Agreement (and each Affiliate, director, officer, employee, agent or
representative of the foregoing or such Affiliate) may disclose to any and all
persons, without limitation of any kind, the tax treatment and tax structure of
the transactions contemplated herein and all materials of any kind (including
opinions or other tax analyses) that are provided to such party relating to such
tax treatment or tax structure. The foregoing language is not intended to waive
any confidentiality obligations otherwise applicable under this Agreement except
with respect to the information and materials specifically referenced in the
preceding sentence. This authorization does not extend to disclosure of any
other information, including (a) the identity of participants or potential
participants in the transactions contemplated herein, (b) the existence or
status of any negotiations, or (c) any financial, business, legal or personal
information of or regarding a party or its affiliates, or of or regarding any
participants or potential participants in the transactions

 

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contemplated herein (or any of their respective affiliates), in each case to the
extent such other information is not related to the tax treatment or tax
structure of the transactions contemplated herein.

SECTION 12.15. Forum Selection and Consent to Jurisdiction. ANY LITIGATION BASED
HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, ANY LOAN DOCUMENT, OR
ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN)
OR ACTIONS OF THE ADMINISTRATIVE AGENT, THE LENDERS, ANY ISSUER, THE PARENT OR
THE BORROWER IN CONNECTION HEREWITH OR THEREWITH SHALL BE BROUGHT AND MAINTAINED
IN THE COURTS OF THE STATE OF NEW YORK OR IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK; PROVIDED THAT, ANY SUIT SEEKING
ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE
ADMINISTRATIVE AGENT’S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH
COLLATERAL OR OTHER PROPERTY MAY BE FOUND. EACH OF THE PARENT AND THE BORROWER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE
PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK AT THE
ADDRESS FOR NOTICES SPECIFIED IN SECTION 12.2. EACH OF THE PARENT AND THE
BORROWER HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE
LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO
ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM. TO THE EXTENT THAT EITHER OF THE PARENT OR THE BORROWER HAS OR HEREAFTER
MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL
PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT,
ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS
PROPERTY, EACH OF THE PARENT AND THE BORROWER HEREBY IRREVOCABLY WAIVES TO THE
FULLEST EXTENT PERMITTED BY LAW SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS
UNDER THE LOAN DOCUMENTS.

SECTION 12.16. Waiver of Jury Trial. THE ADMINISTRATIVE AGENT, EACH LENDER, EACH
ISSUER, THE PARENT AND THE BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE TO THE FULLEST EXTENT PERMITTED BY LAW ANY RIGHTS THEY MAY
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING
OUT OF, UNDER, OR IN CONNECTION WITH, EACH LOAN DOCUMENT, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF
THE ADMINISTRATIVE AGENT, SUCH LENDER, SUCH ISSUER, THE PARENT OR THE BORROWER
IN CONNECTION THEREWITH. EACH OF PARENT AND THE BORROWER ACKNOWLEDGES AND AGREES
THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND
EACH OTHER PROVISION OF EACH OTHER LOAN DOCUMENT TO WHICH IT IS A PARTY) AND
THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE ADMINISTRATIVE

 

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

AGENT, EACH LENDER AND EACH ISSUER ENTERING INTO THE LOAN DOCUMENTS.

SECTION 12.17. Counsel Representation. EACH OF THE PARENT AND THE BORROWER
ACKNOWLEDGES AND AGREES THAT IT HAS BEEN REPRESENTED BY COMPETENT COUNSEL IN THE
NEGOTIATION OF THIS AGREEMENT, AND THAT ANY RULE OR CONSTRUCTION OF LAW ENABLING
THE BORROWER TO ASSERT THAT ANY AMBIGUITIES OR INCONSISTENCIES IN THE DRAFTING
OR PREPARATION OF THE TERMS OF THIS AGREEMENT SHOULD DIMINISH ANY RIGHTS OR
REMEDIES OF THE ADMINISTRATIVE AGENT OR THE OTHER SECURED PARTIES ARE HEREBY
WAIVED BY THE BORROWER.

SECTION 12.18. PATRIOT Act. Each Lender hereby notifies the Parent and the
Borrower that pursuant to the requirements of the PATRIOT Act, it is required to
obtain, verify and record information that identifies the Parent and Borrower,
which information includes the name and address of the Parent and the Borrower
and other information that will allow such Lender to identify the Parent and the
Borrower in accordance with the PATRIOT Act.

[SIGNATURE PAGES FOLLOW]

 

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

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers thereunto duly authorized as of the day and year
first above written.

CHAMPION HOME BUILDERS CO.

 

By: __/s/ JOHN J. COLLINS, JR.__

Name: John J. Collins, Jr.

          Title: Vice President

 

CHAMPION ENTERPRISES, INC.

 

By: __/s/ JOHN J. COLLINS, JR.__

Name: John J. Collins, Jr.

Title: Senior Vice President

 

 

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

 

CREDIT SUISSE, CAYMAN ISLANDS BRANCH, as Administrative Agent and as a Lender

 

By:__/s/ ROBERT HETU___

Name: Robert Hetu

Title: Director

 

 

 

By:___/s/ CASSANDRA DROOGAN____

Name: Cassandra Droogan

Title: Associate

 

 

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

 

COMERICA BANK

 

By:__/s/ BLAKE ARNETT_______

Name: Blake Arnett

Title: Account Officer

 

 

 

FIFTH THIRD BANK

 

By:__/s/ DAVID MANNARINO_______

Name: David Mannarino

Title: Assistant Vice President

 

 

 

GENERAL ELECTRIC CAPITAL CORPORATION

 

By:__/s/ DWAYNE COTSER_______

Name: Dwayne Cotser

Title: Duly Authorized Signatory

 

 

 

NATIONAL CITY BANK OF THE MIDWEST

 

By:__/s/ OLIVER J. GLENN_______

Name: Oliver J. Glenn

Title: Vice President

 

 

 

 

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

 

EXHIBIT A-1

FORM OF REVOLVING NOTE

 

 

$[________]

__________ __, 20__

 

FOR VALUE RECEIVED, CHAMPION HOME BUILDERS CO., a Michigan corporation (the
“Borrower”), promises to pay to the order of [Name of Lender] (the “Lender”) on
the Stated Maturity Date the principal sum of [_______________________]
($[___________]) or, if less, the aggregate unpaid principal amount of all
Revolving Loans shown on the schedule attached hereto (and any continuation
thereof) made (or continued) by the Lender pursuant to that certain Credit
Agreement, dated as of October 31, 2005 (as amended, supplemented, amended and
restated or otherwise modified from time to time, the “Credit Agreement”), among
the Borrower, Champion Enterprises, Inc., as Parent, the various financial
institutions and other Persons from time to time parties thereto (including the
Lender), and Credit Suisse, Cayman Islands Branch, as Administrative Agent for
the Lenders. Terms used in this Revolving Note, unless otherwise defined herein,
have the meanings provided in the Credit Agreement.

The Borrower also promises to pay interest on the unpaid principal amount hereof
from time to time outstanding from the date hereof until maturity (whether by
acceleration or otherwise) and, after maturity, until paid, at the rates per
annum and on the dates specified in the Credit Agreement.

Payments of both principal and interest are to be made in Dollars in same day or
immediately available funds to the account designated by the Administrative
Agent pursuant to the Credit Agreement.

This Revolving Note is one of the Revolving Notes referred to in, and evidences
Indebtedness incurred under, the Credit Agreement, to which reference is made
for a description of the security for this Revolving Note and for a statement of
the terms and conditions on which the Borrower is permitted and required to make
prepayments and repayments of principal of the Indebtedness evidenced by this
Revolving Note and on which such Indebtedness may be declared to be immediately
due and payable.

All parties hereto, whether as makers, endorsers or otherwise, severally waive
presentment for payment, demand, protest and notice of dishonor.

 

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

 

THIS REVOLVING NOTE HAS BEEN DELIVERED IN NEW YORK, NEW YORK AND SHALL BE DEEMED
TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF
NEW YORK (INCLUDING FOR SUCH PURPOSE SECTIONS 5-1401 AND 5-1402 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK). THIS REVOLVING NOTE INCORPORATES BY
REFERENCE, AND THE BORROWER AND LENDER HEREBY AGREE TO BE SUBJECT TO, THE
PROVISIONS SET FORTH IN SECTION 12.15 OF THE CREDIT AGREEMENT.

 

CHAMPION HOME BUILDERS CO., as Borrower

 

 

By:_________________________________

Title:

 

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

 

REVOLVING LOANS AND PRINCIPAL PAYMENTS

 

 

Date

Amount of
Revolving Loan Made

Interest
Period

Amount of Principal
Repaid

Unpaid Principal
Balance

 

Notation
Made By

Alternate

Base Rate

LIBO
Rate

Alternate
Base Rate

LIBO Rate

Alternate
Base Rate

LIBO
Rate

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

EXHIBIT A-2

FORM OF TERM NOTE

$[________]

__________ __, 20__

 

FOR VALUE RECEIVED, CHAMPION HOME BUILDERS CO., a Michigan corporation (the
“Borrower”), promises to pay to the order of [Name of Lender] (the “Lender”) on
the Stated Maturity Date the principal sum of [_______________________]
($[___________]) or, if less, the aggregate unpaid principal amount of all Term
Loans shown on the schedule attached hereto (and any continuation thereof) made
(or continued) by the Lender pursuant to that certain Credit Agreement, dated as
of October 31, 2005 (as amended, supplemented, amended and restated or otherwise
modified from time to time, the “Credit Agreement”), among the Borrower,
Champion Enterprises, Inc., as Parent, the various financial institutions and
other Persons from time to time parties thereto (including the Lender), and
Credit Suisse, Cayman Islands Branch, as Administrative Agent for the Lenders.
Terms used in this Term Note, unless otherwise defined herein, have the meanings
provided in the Credit Agreement.

The Borrower also promises to pay interest on the unpaid principal amount hereof
from time to time outstanding from the date hereof until maturity (whether by
acceleration or otherwise) and, after maturity, until paid, at the rates per
annum and on the dates specified in the Credit Agreement.

Payments of both principal and interest are to be made in Dollars in same day or
immediately available funds to the account designated by the Administrative
Agent pursuant to the Credit Agreement.

This Term Note is one of the Term Notes referred to in, and evidences
Indebtedness incurred under, the Credit Agreement, to which reference is made
for a description of the security for this Term Note and for a statement of the
terms and conditions on which the Borrower is permitted and required to make
prepayments and repayments of principal of the Indebtedness evidenced by this
Term Note and on which such Indebtedness may be declared to be immediately due
and payable.

All parties hereto, whether as makers, endorsers, or otherwise, severally waive
presentment for payment, demand, protest and notice of dishonor.

 

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

 

THIS TERM NOTE HAS BEEN DELIVERED IN NEW YORK, NEW YORK AND SHALL BE DEEMED TO
BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW
YORK (INCLUDING FOR SUCH PURPOSE SECTIONS 5-1401 AND 5-1402 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK). THIS TERM NOTE INCORPORATES BY
REFERENCE, AND THE BORROWER AND LENDER HEREBY AGREE TO BE SUBJECT TO, THE
PROVISIONS SET FORTH IN SECTION 12.15 OF THE CREDIT AGREEMENT.

CHAMPION HOME BUILDERS CO., as Borrower

 

 

By_________________________________

Title:

 

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

 

TERM LOANS AND PRINCIPAL PAYMENTS

 

Date

Amount of
Term Loan Made

Amount of Principal
Repaid

Unpaid Principal
Balance

Total

Notation

Made By

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

EXHIBIT B-1

FORM OF BORROWING REQUEST

Credit Suisse, Cayman Islands Branch,

as Administrative Agent

1 Madison Avenue

New York, NY 10010

Attention: Thomas Lynch

Telephone: (212) 325-9205

Facsimile: (212) 325-8304

CHAMPION HOME BUILDERS CO.

Ladies and Gentlemen:

This Borrowing Request is delivered to you pursuant to Section 2.3 of the Credit
Agreement, dated as of October 31, 2005 (as amended, supplemented, amended and
restated or otherwise modified from time to time, the “Credit Agreement”), among
Champion Home Builders Co. (the “Borrower”), Champion Enterprises, Inc., as
Parent, the various financial institutions and other Persons from time to time
parties thereto (each a “Lender”), and Credit Suisse, Cayman Islands Branch, as
Administrative Agent and for the Lenders. Terms used herein, unless otherwise
defined herein, have the meanings provided in the Credit Agreement.

The Borrower hereby requests that a [Revolving Loan] [Term Loan] [Synthetic
Deposit] be made in the aggregate principal amount of $______________ on
____________ ___, _____ [as a [Base Rate Loan] [LIBO Rate Loan having an
Interest Period of _____ months]]1.

The Borrower hereby acknowledges that, pursuant to Section 5.2.2 of the Credit
Agreement, each of the delivery of this Borrowing Request and the acceptance by
the Borrower of [the proceeds of the Loans][the Synthetic Deposit] requested
hereby constitutes a representation and warranty by the Borrower that, on the
date of the making of such [Loans][Synthetic Deposit], and both before and after
giving effect thereto and to the application of the proceeds therefrom, all
statements set forth in Section 5.2.1 of the Credit Agreement are true and
correct to the extent set forth in clause (a) thereof.

The Borrower agrees that if prior to the time of the [Borrowing][Synthetic
Deposit] requested hereby any matter certified to herein by it will not be true
and correct to the extent set forth in clause (a) of Section 5.2.1 of the Credit
Agreement at such time as if then made, it will immediately so notify the
Administrative Agent. Except to the extent, if any, that prior to the time of
the [Borrowing] [Synthetic Deposit] requested hereby the Administrative Agent
shall receive written notice to the contrary from the Borrower, each matter
certified to herein shall be deemed once again to be certified as true and
correct to such extent at the date of such [Borrowing] [Synthetic Deposit] as if
then made.

[Please wire transfer the proceeds of the Borrowing to the accounts of the
following persons at the financial institutions indicated respectively:

 

_________________________

1Insert as applicable for Borrowing Requests relating to Revolving Loans or Term
Loans.

 

 

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

 

 

Amount to

be Transferred

Person to be Paid

Name                              Account No.

Name, Address, etc.

Of Transferee Lender

$____________

____________            __________

____________________

____________________

Attention: ____________

$____________

____________            __________

____________________

____________________

Attention: ____________

$____________

____________            __________

____________________

____________________

Attention: ____________

Balance of such proceeds

 

The Borrower

 

____________________

____________________

Attention: ____________]2

 

 

_________________________

2Insert for Borrowing Requests relating to Revolving Loans or Term Loans.

 

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

 

IN WITNESS WHEREOF, the Borrower has caused this Borrowing Request to be
executed and delivered, and the certifications and warranties contained herein
to be made, by its duly Authorized Officer this _____ day of ____________,
______.

 

CHAMPION HOME BUILDERS CO.

By

Title:

 

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

 

EXHIBIT B-2

FORM OF ISSUANCE REQUEST

Credit Suisse, Cayman Islands Branch,

as Administrative Agent

1 Madison Avenue

New York, NY 10010

 

Attention: Thomas Lynch

Telephone: (212) 325-9205

Facsimile: (212) 325-8304

 

CHAMPION HOME BUILDERS CO.

Ladies and Gentlemen:

 

This Issuance Request is delivered to you pursuant to Section 2.6 of the Credit
Agreement, dated as of October 31, 2005 (as amended, supplemented, amended and
restated or otherwise modified from time to time, the “Credit Agreement”), among
Champion Home Builders Co. (the “Borrower”), Champion Enterprises, Inc., as
Parent, the various financial institutions and other Persons from time to time
parties thereto (each a “Lender”), and Credit Suisse, Cayman Islands Branch, as
Administrative Agent for the Lenders. Terms used herein, unless otherwise
defined herein, have the meanings provided in the Credit Agreement.

The Borrower hereby requests that on ____________ ___, _____ (the “Date of
Issuance”) [Name of Issuer] (the “[Revolving][Synthetic] Issuer”) [issue a
[Revolving] [Synthetic] Letter of Credit in the initial Stated Amount of
$____________ with a Stated Expiry Date (as defined therein) of ____________
___, _____] [extend the Stated Expiry Date (as defined under Letter of Credit
No. ___, issued on ____________ ___, _____, in the initial Stated Amount of
$____________) to a revised Stated Expiry Date (as defined therein) of
____________ ___, _____].

The beneficiary of the requested [Revolving] [Synthetic] Letter of Credit will
be _________________________, and such [Revolving] [Synthetic] Letter of Credit
will be in support of _________________________.

The Borrower hereby acknowledges that, pursuant to Section 5.2.2 of the Credit
Agreement, each of the delivery of this Issuance Request and the acceptance by
the Borrower of the [issuance] [extension] of the [Revolving] [Synthetic] Letter
of Credit requested hereby constitutes a representation and warranty by the
Borrower that, on the date of such [issuance] [extension], and both before and
after giving effect thereto and to the application of the proceeds or benefits
of the [Revolving] [Synthetic] Letter of Credit [issued] [extended] in
accordance herewith, all statements set forth in Section 5.2.1 of the Credit
Agreement are true and correct to the extent set forth in clause (a) of such
Section.

 

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

 

The Borrower agrees that if prior to the time of the [issuance] [extension] of
the [Revolving] [Synthetic] Letter of Credit requested hereby any matter
certified to herein by it will not be true and correct to the extent set forth
in clause (a) of Section 5.2.1 of the Credit Agreement at such time as if then
made, it will immediately so notify the Administrative Agent. Except to the
extent, if any, that prior to the time of the [issuance] [extension] of the
[Revolving] [Synthetic] Letter of Credit requested hereby the Administrative
Agent shall receive written notice to the contrary from the Borrower, each
matter certified to herein shall be deemed once again to be certified as true
and correct to such extent at the date of such [issuance] [extension] as if then
made.

 

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

 

IN WITNESS WHEREOF, the Borrower has caused this Issuance Request to be executed
and delivered, and the certifications and warranties contained herein to be
made, by its duly Authorized Officer this _____ day of ____________, _____.

 

CHAMPION HOME BUILDERS CO.

By

Title:

 

 

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

 

EXHIBIT C

CONTINUATION/CONVERSION NOTICE

Credit Suisse, Cayman Islands Branch,

as Administrative Agent

11 Madison Avenue

New York, NY 10010

Attention: [  

]

CHAMPION HOME BUILDERS CO.

Ladies and Gentlemen:

This Continuation/Conversion Notice is delivered to you pursuant to Section 2.4
of the Credit Agreement, dated as of October 31, 2005 (as amended, supplemented,
amended and restated or otherwise modified from time to time, the “Credit
Agreement”), among Champion Home Builders Co. (the “Borrower”), Champion
Enterprises, Inc., as Parent, the various financial institutions and other
Persons from time to time parties thereto (each a “Lender”), and Credit Suisse,
Cayman Islands Branch, as Administrative Agent for the Lenders. Terms used
herein, unless otherwise defined herein, have the meanings provided in the
Credit Agreement.

The Borrower hereby requests that on ____________ ___, _____,

(1)               $____________ of the presently outstanding principal amount of
the [Revolving Loans] [Term Loans] originally made on ____________ ___, _____,
presently being maintained as [Base Rate Loans] [LIBO Rate Loans],

(2)

be [converted into] [continued as],

(3)               *3[LIBO Rate Loans having an Interest Period of _____ months]
[Base Rate Loans].

The Borrower hereby:

 

(a)

certifies and warrants that no Default has occurred and is continuing; and

 

(b)

agrees that if prior to the time of the [continuation] [conversion] requested
hereby any matter certified to herein by it will not be true and correct in all
material respects at such time as if then made, it will immediately so notify
the Administrative Agent.

Except to the extent, if any, that prior to the time of the [continuation]
[conversion] requested hereby the Administrative Agent shall receive written
notice to the contrary from the Borrower, each matter

 

_________________________

3       Insert appropriate interest rate option and, if applicable, the number
of months with respect to LIBO Rate Loans.

 

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

certified to herein shall be deemed once again to be certified as true and
correct to the extent set forth in clause (a) of Section 5.2.1 of the Credit
Agreement at the date of such [continuation] [conversion] as if then made.

IN WITNESS WHEREOF, the Borrower has caused this Continuation/Conversion Notice
to be executed and delivered, and the certifications and warranties contained
herein to be made, by its duly Authorized Officer this _____ day of
____________, _____.

 

CHAMPION HOME BUILDERS CO.

By

Title:

 

 

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

 

 

 

 

EXHIBIT D

LENDER ASSIGNMENT AGREEMENT

_____________ ___, _____

To:

Champion Home Builders Co.,

as Borrower

2701 Cambridge Court, Suite 300

Auburn Hills, MI 48326

 

Champion Enterprises, Inc.,

as Parent

2701 Cambridge Court, Suite 300

Auburn Hills, MI 48326

 

Credit Suisse, Cayman Islands Branch,

as Administrative Agent

11 Madison Avenue

New York, NY 10010

 

CHAMPION HOME BUILDERS CO.

Ladies and Gentlemen:

This Lender Assignment Agreement (the “Assignment and Acceptance”) is dated as
of the Effective Date set forth below and is entered into by and between [Insert
name of Assignor] (the “Assignor”) and [Insert name of Assignee] (the
“Assignee”). Capitalized terms used but not defined herein shall have the
meanings given to them in the Credit Agreement identified below, receipt of a
copy of which is hereby acknowledged by the Assignee. The Standards Terms and
Conditions set forth in Annex 1 attached hereto are hereby agreed to be
incorporated herein by reference and made a part of this Assignment.

For an agreed consideration, the Assignor hereby irrevocably sells and assigns
to the Assignee, and the Assignee hereby irrevocably purchases and assumes from
the Assignor, subject to and in accordance with the Standard Terms and
Conditions and the Credit Agreement, as of the Closing Date inserted by the
Administrative Agent as contemplated below (i) all of the Assignor’s rights,
benefits, obligations, liabilities and indemnities in its capacity as a Lender
under (and in connection with) the Credit Agreement and any other Loan Documents
to the extent related to the amount and percentage interest identified below of
all of such outstanding rights and obligations of the Assignor under the
respective facilities identified below (including without limitation any letters
of credit, guarantees, revolving or term loans or synthetic deposits included in
such facilities) and (ii) to the extent permitted to be assigned under
applicable law, all claims, suits, causes of action and any other right of the
Assignor (in its capacity as a Lender)

 

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

against any Person, whether known or unknown, arising under or in connection
with the Credit Agreement, the other Loan Documents or in any way based on or
related to any of the foregoing, including, but not limited to, contract claims,
tort claims, malpractice claims, statutory claims and all other claims at law or
in equity related to the rights and obligations sold and assigned pursuant to
clause (i) above (the rights and obligations sold and assigned pursuant to
clauses (i) and (ii) above being referred to herein collectively as, the
“Assigned Interest”). Such sale and assignment is without recourse to the
Assignor and, except as expressly provided in this Assignment and Acceptance,
without representation or warranty by the Assignor.

This agreement shall be effective as of the Effective Date upon the written
consent of the Administrative Agent and, unless an Event of Default shall have
occurred and be continuing, the Borrower being subscribed in the space indicated
below.

1.

Assignor:

______________________________

2.

Assignee:

______________________________

[and is an Affiliate/Approved Fund of [identify Lender]]

 

3.

Borrower:

Champion Home Builders Co.

 

 

4.

Administrative Agent:              Credit Suisse, Cayman Islands Branch, as the
administrative agent under the Credit Agreement (the “Administrative Agent”)

 

 

5.

Credit Agreement:   The Credit Agreement, dated as of October 31, 2005 (as
amended, supplemented, amended and restated or otherwise modified from time to
time, the “Credit Agreement”), among the Borrower, Champion Enterprises, Inc.,
as Parent, the various financial institutions and other Persons from time to
time parties thereto (each a “Lender”), and Credit Suisse, Cayman Islands
Branch, as Administrative Agent for the Lenders.

 

 

6.

Assigned Interest:

 

Facility Assigned

Aggregate Amount of Commitment/ Loans/ Synthetic Deposits for all Lenders

Amount of Commitment/ Loans/ Synthetic Deposits Assigned

Percentage Assigned of Commitment/ Loans/ Synthetic Deposits

Revolving Loan

$

$

%

Term Loan

$

$

%

Synthetic Deposit

$

$

%

 

 

Effective Date:                                        [MONTH] __, 20__

 

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

 

The terms set forth in this Assignment and Acceptance are hereby agreed to as of
the Effective Date:

ASSIGNOR

[NAME OF ASSIGNOR]

 

By:______________________________

Name:

Title:

 

 

ASSIGNEE

[NAME OF ASSIGNEE]

 

By:______________________________

Name:

Title:

 

 

 

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

 

Consented to and Accepted:

CREDIT SUISSE, CAYMAN ISLANDS BRANCH,

as the Administrative Agent

 

By:______________________________

Title:

 

 

[CHAMPION HOME BUILDERS CO.,

as Borrower

 

By_________________________________

Name:

 

Title:]1

 

 

 

_________________________

1 Consent of the Borrower is required for assignments unless an Event of Default
(as defined in the Credit Agreement) has occurred and is continuing.

 

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

 

ANNEX 1

[img1.gif]
STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ACCEPTANCE

1.

Representations and Warranties.

1.1              Assignor. The Assignor (a) represents and warrants that (i) it
is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned
Interest is free and clear of any lien, encumbrance or other adverse claim and
(iii) it has full power and authority, and has taken all action necessary, to
execute and deliver this Assignment and Acceptance and to consummate the
transactions contemplated hereby; and (b) except as provided in clause (a)
above, assumes no responsibility with respect to (i) any statements, warranties
or representations made in or in connection with the Credit Agreement or any
other Loan Document, (ii) the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Loan Documents or any collateral
thereunder, (iii) the financial condition of the Parent, the Borrower or any of
their respective Subsidiaries or Affiliates or any other Person obligated in
respect of any Loan Document or (iv) the performance or observance by the
Parent, the Borrower or any of their respective Subsidiaries or Affiliates or
any other Person of any of their respective obligations under any Loan Document.

1.2           Assignee. The Assignee (a) represents and warrants that (i) it has
full power and authority, and has taken all action necessary, to execute and
deliver this Assignment and Acceptance and to consummate the transactions
contemplated hereby and to become a Lender under the Credit Agreement, (ii) it
meets all requirements of an Eligible Assignee under the Credit Agreement
(subject to receipt of such consents as may be required under the Credit
Agreement), (iii) from and after the Effective Date, it shall be bound by the
provisions of the Credit Agreement as a Lender thereunder and, to the extent of
the Assigned Interest, shall have the obligations of a Lender thereunder,
(iv) it has received a copy of the Credit Agreement, together with copies of the
most recent financial statements delivered pursuant to Section 5.1.7 or 7.1
thereof, as applicable, and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
this Assignment and Acceptance and to purchase the Assigned Interest on the
basis of which it has made such analysis and decision independently and without
reliance on the Administrative Agent or any other Lender, (v) if it is a
Non-U.S. Lender, attached to the Assignment and Acceptance is any documentation
required to be delivered by it pursuant to the terms of the Credit Agreement,
duly completed and executed by the Assignee, and (vii) it shall not be (A) a
natural Person, (B) the Borrower, (C) any Affiliate of the Borrower, (D) any
other Person taking direction from, or working in concert with, the Borrower or
any of the Borrower’s Affiliates or (E) any Person who is (i) listed on the
Specially Designated Nationals and Blocked Persons List maintained by the U.S.
Department of Treasury Office of Foreign Asset Control (the “OFAC”) and/or on
any other similar list that is readily accessible to the public and maintained
by the OFAC pursuant to any authorizing statute, Executive Order or regulation;
or (ii) either (1) included within the term “designated national” as defined in
the Cuban Asset Control Regulations, 31 C.F.R. Part 515, or (2) designated under
Sections 1(a), 1(b), 1(c) or 1(d) of Executive Order No. 13224, 66 Fed. Reg.
49079 (published September 25, 2001) or similarly designated under any related
enabling

 

 

legislation or any other similar Executive Orders that are readily accessible to
the public; and (b) agrees that (i) it will, independently and without reliance
on the Administrative Agent, the Assignor or any other Lender, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the Loan
Documents, and (ii) it will perform in accordance with their terms all of the
obligations which by the terms of the Loan Documents are required to be
performed by it as a Lender.

2.    Payments. From and after the Effective Date, the Administrative Agent
shall make all payments in respect of the Assigned Interest (including payments
of principal, interest, fees and other amounts) to the Assignor for amounts
which have accrued to but excluding the Effective Date and to the Assignee for
amounts which have accrued from and after the Effective Date.

3.    General Provisions. This Assignment and Acceptance shall be binding upon,
and inure to the benefit of, the parties hereto and their respective successors
and assigns. This Assignment and Acceptance may be executed in any number of
counterparts, which together shall constitute one instrument. Delivery of an
executed counterpart of a signature page of this Assignment and Acceptance by
telecopy shall be effective as delivery of a manually executed counterpart of
this Assignment and Acceptance. This Assignment and Acceptance shall be deemed
to be a contract made under, governed by, and construed in accordance with, the
laws of the State of New York (including for such purposes Sections 5-1401 and
5-1402 of the General Obligations Law of the State of New York) without regard
to conflicts of laws principles.

 

 

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EXHIBIT E

COMPLIANCE CERTIFICATE

CHAMPION ENTERPRISES, INC.

 

[__________ ___, 20__]

This Compliance Certificate (this “Certificate”) is delivered by CHAMPION
ENTERPRISES, INC., a Michigan corporation (the “Parent”) pursuant to clause (c)
of Section 7.1 of that certain Credit Agreement, dated as of October 31, 2005
(as amended, supplemented, amended and restated or otherwise modified from time
to time, the “Credit Agreement”), among Champion Home Builders Co. (the
“Borrower”), the Parent, the various financial institutions and other Persons
from time to time parties thereto (each a “Lender”), and Credit Suisse, Cayman
Islands Branch, as Administrative Agent for the Lenders. Unless otherwise
defined herein or the context otherwise requires, terms used herein have the
meanings provided in the Credit Agreement.

This Certificate relates to the ______ [Fiscal Quarter] [Fiscal Year],
commencing on _________, ______ and ending on __________, _____ (such latter
date being the “Computation Date”).

The undersigned is duly authorized to execute and deliver this Certificate on
behalf of the Parent. By executing this Certificate the undersigned hereby
certifies to the Administrative Agent and Lenders that as of the Computation
Date:

(a)

Attached hereto as Annex I  

[are the unaudited consolidated balance sheets of the Parent and its
Subsidiaries as at the Fiscal Quarter ended [___________] and the consolidated
statements of income and cash flow of the Parent and its Subsidiaries for such
Fiscal Quarter and including (in each case), in comparative form the figures for
the corresponding Fiscal Quarter in, and year to date portion of, the
immediately preceding Fiscal Year, certified as complete and correct in all
material respects, by the chief financial officer or chief accounting officer of
the Parent (subject to normal year end adjustments).]1

[are copies of the consolidated balance sheets of the Parent and its
Subsidiaries, and the related consolidated statements of income and cash flow of
the Parent and its Subsidiaries, for the Fiscal Year ended [___________],
setting forth in comparative form the figures for the immediately preceding
Fiscal Year, audited (without any Impermissible Qualification) by independent
public accountants acceptable to the Administrative Agent.]2

 

_________________________

1 INCLUDE FOR QUARTERLY FINANCIAL DELIVERABLES.

2 INCLUDE FOR ANNUAL FINANCIAL DELIVERABLES.

 

 

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(b)               The financial statements delivered with this Certificate in
accordance with clauses (a) and/or (b) of Section 7.1 of the Credit Agreement
are correct and complete in all material respects.

(c)               Any other information presented in connection with this
Certificate (including the schedules hereto) is correct and complete in all
material respects.

(d)               The Leverage Ratio as of ______________ was [___:1], as
computed on Schedule 3 hereto. The maximum Leverage Ratio for such period
permitted pursuant to clause (a) of Section 8.4 of the Credit Agreement is
[___:1] and, accordingly, the terms of such clause [have] [have not] been
complied with.

(e)               The Interest Coverage Ratio as of ______________ was [___:1],
as computed on Schedule 7 hereto. The maximum Interest Coverage Ratio permitted
pursuant to clause (b) of Section 8.4 of the Credit Agreement is 3.00:1 and,
accordingly, the terms of such clause [have] [have not] been complied with.

(f)                No Default or Event of Default has occurred and is
continuing, except as set forth on Schedule 4 hereto, which includes a
description of the nature and period of existence of such Default or Event of
Default and what action the Parent, the Borrower or any other Obligor has taken,
is taking and proposes to take with respect thereto.

(g)               [Excess Cash Flow, as demonstrated by the calculation on
Schedule 5 hereto, for the Fiscal Year ending __________ equals $_________.]3

(h)               Except as set forth on Schedule 6 hereto, subsequent to the
date of the most recent Compliance Certificate submitted by the undersigned
pursuant to clause (c) of Section 7.1 of the Credit Agreement, no Obligor has
formed or acquired any new Subsidiary, and no Subsidiary has ceased to be an
Immaterial Subsidiary. With respect to any Subsidiaries identified in Schedule 6
hereto, each such Subsidiary (other than an Immaterial Subsidiary) is in
compliance in all material respects with the requirements of Section 7.8 of the
Credit Agreement. Schedule 6 hereto also sets forth in reasonable details the
assets and revenues of each of the Parent’s Subsidiaries so as to demonstrate
whether or not such Subsidiaries previously certified to the Lenders as being
“Immaterial Subsidiaries” continue to be Immaterial Subsidiaries in compliance
with the Credit Agreement.

 

_________________________

3 INCLUDE FOR ANNUAL FINANCIAL DELIVERABLES.

 

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

 

IN WITNESS WHEREOF, the undersigned has caused this Certificate to be executed
and delivered, and the certification and warranties contained herein to be made,
by its chief financial officer or chief accounting officer as of the date first
above written.

 

CHAMPION ENTERPRISES, INC.

 

 

By:

 

 

Name:

 

Title:

 

 

 

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

 

ALL AMOUNTS ARE WITHOUT DUPLICATION AND, UNLESS OTHERWISE INDICATED, ARE
CALCULATED FOR THE PARENT, THE BORROWER AND THEIR RESPECTIVE SUBSIDIARIES ON A
CONSOLIDATED BASIS (OTHER THAN, SOLELY FOR PURPOSES OF THE DEFINITION OF
LEVERAGE RATIO, THE CDC SUBSIDIARIES)

 

SCHEDULE 1

INDEBTEDNESS

1. Indebtedness is defined as follows:4

 

(a) all obligations for borrowed money or advances and all obligations evidenced
by bonds, debentures, notes or similar instruments;

$_____________

(b  all obligations, contingent or otherwise, relative to the face amount of all
letters of credit, whether or not drawn, and banker’s acceptances issued;

$_____________

(c)          all Capitalized Lease Liabilities;

$_____________

(d)          whether or not so included as liabilities in accordance with GAAP,
all obligations secured by any Lien on any property or assets owned or held by
any Person regardless of whether the obligations secured thereby shall have been
assumed by that Person or are non-recourse to the credit of such Person;5

 

 

$_____________

(e)          net Hedging Obligations;

$_____________

 

 

_________________________

4       Indebtedness of any Person shall include the Indebtedness of any other
Person (including any partnership in which such Person is a general partner) to
the extent such Person is liable therefor as a result of such Person’s ownership
interest in or other relationship with such Person, except to the extent that
such Person is not liable therefor (by contract, as a matter of law or
otherwise). Notwithstanding any of the foregoing, Indebtedness shall not include
(i) Repurchase Obligations, (ii) operating lease obligations, (iii) short term
notes evidencing earnest money deposits received in the ordinary course of
business from purchasers of inventory of the Parent or any of its Subsidiaries,
(iv) any obligation in respect of minimum guaranteed commissions, rebates or
other similar payments to such purchasers, minimum returns to such purchasers,
or indemnification obligations owed to such purchasers, in each case pursuant to
contracts to provide services to such purchasers entered into in the ordinary
course of business, and (v) account credits to participants under any
compensation plan entered into in the ordinary course of business.

5       The amount of any Indebtedness of others that constitutes Indebtedness
of such Person solely by reason of this item shall, in the event that such
Indebtedness is limited recourse to such property (without recourse to such
Person), for purposes of the Credit Agreement, be equal to the lesser of the
amount of such obligation and the fair market value of the property or assets to
which the Lien attaches, determined in good faith by such Person.

 

 

 

(f)          whether or not so included as liabilities in accordance with GAAP,
all obligations of such Person to pay the deferred purchase price of property or
services (excluding trade accounts payable in the ordinary course of business
which are not overdue for a period of more than 120 days or, if overdue for more
than 120 days, as to which a dispute exists and adequate reserves in conformity
with GAAP have been established on the books of such Person), including
obligations of such Person, whether liquidated or unliquidated, fixed or
contingent, arising from the acquisition of a business or a line of business
(whether pursuant to an acquisition of Capital Securities, assets or otherwise)
and payable to the seller or sellers thereof, including obligations in respect
of deferred purchase price or “earn-outs” or other contingent payments (whether
based on revenue or otherwise);

 

 

 

 

 

$_____________

(g)          obligations arising under Synthetic Leases;

$_____________

(h)          Redeemable Capital Securities; and

$_____________

(i)           all Contingent Liabilities in respect of any of the foregoing.

$_____________

2. Indebtedness (the sum of Items (a) through (i) above)

$                          

 

 

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

 

SCHEDULE 2

EBITDA

 

1. EBITDA: for the four consecutive Fiscal Quarters ending on
___________________ (the “Computation Period”), the sum (without duplication) of

 

(a)          Net Income for the Computation Period:

 

(i)           the aggregate of all amounts which would be included in
determining net income from continuing operations on the consolidated financial
statements of the Parent and its Subsidiaries for the Computation Period
excluding, to the extent included in such calculation: (a) extraordinary gains
and losses, (b) gains and losses from Dispositions made pursuant to clause (d),
(e) or (f) of Section 8.10 of the Credit Agreement, (c) the income or loss of
any Person in which the Parent or any of its Subsidiaries has an Investment (but
such Person is not a Subsidiary), except (x) in the case of any such income, to
the extent that any such income is actually received by the Parent or such
Subsidiary in the form of dividends or similar distributions and (y) in the case
of any such loss, to the extent funded or committed to be funded by the Parent
or any of its Subsidiaries, and (d) the income or loss of any Subsidiary of the
Parent (that is not a Subsidiary Guarantor) to the extent (x) in the case of any
such income, that the declaration or payment of dividends or similar
distributions by such Subsidiary is not at the time permitted by the terms of
any contractual obligation or requirement of law applicable to such Subsidiary
and (y) in the case of loss, to the extent not funded or committed to be funded
by the Parent or any of its Subsidiaries.

 

 

 

 

 

 

 

$_____________

Plus:

 

(b) In each case to the extent deducted in the calculation of Net Income, but
without duplication:

 

(i)           amounts attributable to amortization;

$_________   ___

(ii)          expenses for Michigan state single business taxes, franchise
taxes, federal, state, local and foreign taxes, in each case based on income or
profits;

 

$_____________

(iii)        Interest Expense (as calculated in Item 1(b)(i) of Schedule 5
hereto);

$_____________

(iv)         depreciation of assets;

$_____________

(v)          Transaction Costs;

$_____________

 

 

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

 

 

(vi)         non-cash losses and non-cash impairment charges, including goodwill
impairment charges;

 

$_____________

(vii) non-cash restructuring and closing costs associated with the closure of
facilities and operations and non-cash operating losses of such closed
facilities and operations in the month of and subsequent to their closure;

 

 

 

$_____________

(viii) losses from repurchases or extinguishment of debt issued by the Parent or
any of its Subsidiaries;

 

 

$_____________

(ix) the sum of Item 1(b)(i) through (viii) hereto

 

$_____________

Less:

 

(c)          In each case to the extent included in the calculation of Net
Income, but without duplication:

 

(i)           non-cash items of income for such period;

 

$_____________

(ii)          gains from repurchases or extinguishment of debt issued by the
Parent or any of its Subsidiaries;

 

$_____________

(iii)        income tax credits;

 

$_____________

(iv)         the sum of Items 1(c)(i) through (iii) hereto

 

$_____________

Less:

 

(d) the amount of all cash payments made in such Computation Period to the
extent that such payments relate to a non-cash loss, non-cash charge or non-cash
cost incurred in a previous period that was added back in determining EBITDA
hereunder pursuant to the preceding Item 1(b)(vi) and (vii).

 

 

 

$_____________

2. EBITDA (Item 1(a)(i) plus Item 1(ix) minus Item 1(c)(iv)) minus Item 1(d)

$                          

 

 

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

 

 

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

 

SCHEDULE 3

LEVERAGE RATIO

 

for the Fiscal Quarter

ending on ___________, _____

 

1. Leverage Ratio is calculated for the Parent and its Subsidiaries as of
____________ and is defined as follows:

 

(a)          Total Debt1 outstanding as of ____________

$_____________

(b)          EBITDA (as calculated in Schedule 2 hereto)

$_____________

2. Leverage Ratio (the ratio of Item 1(a) to Item 1(b))

                          

 

 

_________________________

1       Total Debt equals the outstanding principal amount of all Indebtedness
of the Parent and its Subsidiaries (other than the CDC Subsidiaries) reported on
the consolidated balance sheet of the Parent and its Subsidiaries in accordance
with GAAP (as calculated on Schedule 1 hereto) other than (i) all obligations
relative to the undrawn amount of letters of credit, (ii) Indebtedness listed in
Item 1(e) of Schedule 1 and (iii) Deferred Acquisition Obligations (A) that have
not been liquidated or (B) to the extent such obligations may, in accordance
with their terms, be satisfied at the sole option of the obligor thereof at any
time regardless of the occurrence of any event by the delivery of Capital
Securities (other than Redeemable Capital Securities) of the Parent).

 

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

 

SCHEDULE 4

CONDITIONS OR EVENTS WHICH CONSTITUTE A DEFAULT OR

EVENT OF DEFAULT

[If any condition or event exists that constitutes a Default or Event of
Default, specify nature and period of existence and what action the Parent, the
Borrower or any other Obligor has taken, is taking or proposes to take with
respect thereto; if no condition or event exists, state “None.”]

 

 

 

 

SCHEDULE 5

EXCESS CASH FLOW

 

1. Excess Cash Flow is calculated for the Parent and its Subsidiaries for the
Fiscal Year ended [_________], and is defined as follows:

 

(a)          the sum of:

 

(i) EBITDA (as calculated in Schedule 2 hereto (for the Fiscal Year ended
[_________]));

 

$_____________

(ii)         to the extent not included in such EBTDA  cash actually received by
the Parent and its Subsidiaries during such Fiscal Year in respect of gains from
Dispositions made pursuant to clause (d) of Section 8.10 of the Credit
Agreement;

$_____________

(iii)       reductions (if any) to working capital (excluding cash and Cash
Equivalent Investments) of the Parent and its Subsidiaries for such Fiscal Year
(i.e., the decrease (if any) in Current Assets minus Current Liabilities from
the beginning to the end of such Fiscal Year) other than reductions attributable
to (x) the reclassification of any Indebtedness from “long term debt” to
“Current Liabilities” or (y) the return of the Travelers Deposit to the
Borrower;

$_____________

(iv)        the sum of Items 1(a)(i) through (iii)

$_____________

(b)          the sum of:

 

(i)           all Interest Expense paid in cash during such Fiscal Year
(including the interest portion of Capitalized Lease Obligations paid in cash
and the interest portion of any deferred payment obligation paid in cash during
such Fiscal Year);

 

 

$_____________

(ii)          the aggregate amount of all principal payments, whether scheduled
payments, mandatory prepayments or voluntary prepayments, paid by the Parent and
its Subsidiaries on all Indebtedness during such period (including the principal
portion of payments in respect of Capitalized Leases but excluding principal
payments in respect of any revolving-type facility (including the Revolving
Loans) except in connection with a permanent reduction in the commitment
relating to such revolving-type facility), in each case, to the extent permitted
to be made under this Agreement and so long as not made with, or on account of,
proceeds of Indebtedness or equity issuances or other proceeds that would not be
included in EBITDA; provided that, for the avoidance of doubt, amounts deducted
under this item may be deducted in only one Fiscal Year;

 

 

 

 

$_____________

 

 

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

 

 

(iii)        all Taxes paid by the Parent and its Subsidiaries in cash during
such Fiscal Year, to the extent such payments are in respect of income all
determined on a consolidated basis;

 

$_____________

(iv)         all Capital Expenditures made by the Parent and its Subsidiaries
paid or payable in cash to the extent permitted to be made under the Credit
Agreement and so long as not financed with the proceeds of Indebtedness or
equity issuances or other proceeds that would not be included in EBITDA;
provided that, for the avoidance of doubt, amounts deducted under this clause
may be deducted in only one Fiscal Year;

 

 

 

$_____________

(v) all expenditures made by the Parent and its Subsidiaries in cash during such
period in respect of Permitted Acquisitions so long as not financed with the
proceeds of debt or equity issuances or other proceeds that would not be
included in EBITDA;

 

 

$_____________

(vi)         to the extent not subtracted in determining EBITDA for such Fiscal
Year, cash actually paid by the Parent and its Subsidiaries during such Fiscal
Year in respect of losses from Dispositions made pursuant to clause (d) of
Section 8.10 of the Credit Agreement,

 

 

 

$_____________

(vii)       to the extent added to Net Income in determining EBITDA for such
Fiscal Year (as calculated in Item (1)(a) of Schedule 2 hereto (for the Fiscal
Year ended [_________])), Transaction Costs paid in cash by the Parent and its
Subsidiaries during such Fiscal Year;

 

 

 

$_____________

(viii)      to the extent not subtracted in determining EBITDA for such Fiscal
Year, cash actually paid by the Parent and its Subsidiaries during such Fiscal
Year in respect of any loss;

 

$_____________

(ix)         additions (if any) to working capital (excluding cash and Cash
Equivalent Investments) of the Parent and its Subsidiaries for such Fiscal Year
(i.e., the increase (if any) in Current Assets minus Current Liabilities from
the beginning to the end of such Fiscal Year).

$_____________

(x)          the sum of Items 1(b)(i) through (ix).

$_____________

2. Excess Cash Flow (Item (1)(a)(iv) minus Item (1)(b)(x))

$                          

 

SCHEDULE 6

ORGANIZATION CHANGES

[If any Obligor has formed or acquired any new Subsidiary, or any Subsidiary has
ceased to be an Immaterial Subsidiary, such change shall be specified below.]

 

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

 

SCHEDULE 7

INTEREST COVERAGE RATIO

 

for the Fiscal Quarter

ending on ___________, _____ and each of the three immediately prior Fiscal
Quarters

 

1. Interest Coverage Ratio is calculated for the Parent and its Subsidiaries as
of _____________ and is defined as follows:

 

(a)          EBITDA (as calculated in Schedule 2 hereto)

$_____________

(b)          the portion of the Interest Expense (as calculated in Item 1(b)(i)
of Schedule 5 hereto) that is payable in cash by the Parent and its
Subsidiaries; provided that, in the event the applicable four-Fiscal-Quarter
period would include any period of time prior to the Closing Date, Interest
Expense for the purposes of this Item 1(b) shall be determined on an Annualized
Basis.

$_____________

2. Interest Coverage Ratio (the ratio of Item 1(a) to Item 1(b))

                          

 

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Annex I

Financial Information

 

 

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EXHIBIT F

FORM OF SUBSIDIARY GUARANTY

This SUBSIDIARY GUARANTY (as amended, supplemented, amended and restated or
otherwise modified from time to time, this “Subsidiary Guaranty”), dated as of
October 31, 2005, is made by each Subsidiary of Champion Home Builders Co., a
Michigan corporation (the “Borrower”), from time to time party hereto (each
individually, a “Subsidiary Guarantor” and, collectively, the “Subsidiary
Guarantors”), in favor of Credit Suisse, Cayman Islands Branch, as
administrative agent (together with its successor(s) thereto in such capacity,
the “Administrative Agent”) for each of the Secured Parties (capitalized terms
used herein have the meanings set forth in or incorporated by reference in
Article I).

W I T N E S S E T H:

WHEREAS, pursuant to a Credit Agreement, dated as of October 31, 2005 (as
amended, supplemented, amended and restated or otherwise modified from time to
time, the “Credit Agreement”), among the Borrower, Champion Enterprises, Inc.,
as Parent, the various financial institutions and other Persons from time to
time parties thereto (each a “Lender”), and Credit Suisse, Cayman Islands
Branch, as Administrative Agent for the Lenders, the Lenders and the Issuers
have extended Commitments to make Credit Extensions to the Borrower; and

WHEREAS, as a condition precedent to the making of the Credit Extensions under
the Credit Agreement, each Subsidiary Guarantor is required to execute and
deliver this Subsidiary Guaranty; and

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, each Subsidiary Guarantor agrees, for the
benefit of each Secured Party, as follows:

ARTICLE I

DEFINITIONS

 

SECTION 1.1. Certain Terms. The following terms (whether or not underscored)
when used in this Subsidiary Guaranty, including its preamble and recitals,
shall have the following meanings (such definitions to be equally applicable to
the singular and plural forms thereof):

“Administrative Agent” is defined in the preamble.

“Borrower” is defined in the preamble.

“Credit Agreement” is defined in the first recital.

“Guaranteed Obligations” means all of the Obligations of each Obligor; provided
however, that such Obligations shall not include, either directly or indirectly,
any Obligations of the Parent.

 

 

“Subsidiary Guarantor” and “Subsidiary Guarantors” are defined in the preamble.

“Subsidiary Guaranty” is defined in the preamble.

SECTION 1.2. Credit Agreement Definitions. Unless otherwise defined herein or
the context otherwise requires, terms used in this Subsidiary Guaranty,
including its preamble and recitals, have the meanings provided in the Credit
Agreement.

ARTICLE II

SUBSIDIARY GUARANTY PROVISIONS

 

SECTION 2.1. Subsidiary Guaranty. Each Subsidiary Guarantor hereby jointly and
severally absolutely, unconditionally and irrevocably

(a) guarantees the full and punctual payment when due, whether at stated
maturity, by required prepayment, declaration, acceleration, demand or
otherwise, of all Guaranteed Obligations now or hereafter existing, whether for
principal, interest (including interest accruing at the then applicable rate
provided in the Credit Agreement after the occurrence of any Default set forth
in Section 9.1.9 of the Credit Agreement, whether or not a claim for post-filing
or post-petition interest is allowed under applicable law following the
institution of a proceeding under bankruptcy, insolvency or similar laws), fees,
Reimbursement Obligations, expenses or otherwise (including all such amounts
which would become due but for the operation of the automatic stay under Section
362(a) of the United States Bankruptcy Code, 11 U.S.C. §362(a), and the
operation of Sections 502(b) and 506(b) of the United States Bankruptcy Code, 11
U.S.C. §502(b) and §506(b)); and

(b) indemnifies and holds harmless each Secured Party for any and all costs and
expenses (including reasonable attorneys’ fees and expenses) incurred by such
Secured Party in enforcing any rights under this Subsidiary Guaranty;

provided, however, that each Subsidiary Guarantor shall only be liable under
this Subsidiary Guaranty for the maximum amount of such liability that can be
hereby incurred without rendering this Subsidiary Guaranty, as it relates to
such Subsidiary Guarantor, voidable under applicable law relating to fraudulent
conveyance or fraudulent transfer, and not for any greater amount. This
Subsidiary Guaranty constitutes a guaranty of payment when due and not of
collection, and each Subsidiary Guarantor specifically agrees that it shall not
be necessary or required that any Secured Party

 

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

exercise any right, assert any claim or demand or enforce any remedy whatsoever
against any Obligor or any other Person before or as a condition to the
obligations of such Subsidiary Guarantor hereunder.

SECTION 2.2. Reinstatement, etc. Each Subsidiary Guarantor hereby jointly and
severally agrees that this Subsidiary Guaranty shall continue to be effective or
be reinstated, as the case may be, if at any time any payment (in whole or in
part) of any of the Guaranteed Obligations is invalidated, declared to be
fraudulent or preferential, set aside, rescinded or must otherwise be restored
by any Secured Party, including upon the occurrence of any Default set forth in
Section 9.1.9 of the Credit Agreement or otherwise, all as though such payment
had not been made.

SECTION 2.3. Guaranty Absolute, etc. This Subsidiary Guaranty shall in all
respects be a continuing, absolute, unconditional and irrevocable guaranty of
payment, and shall remain in full force and effect until the Termination Date
has occurred. Each Subsidiary Guarantor jointly and severally guarantees that
the Guaranteed Obligations will be paid strictly in accordance with the terms of
each Loan Document under which they arise, regardless of any law, regulation or
order now or hereafter in effect in any jurisdiction affecting any of such terms
or the rights of any Secured Party with respect thereto. The liability of each
Subsidiary Guarantor under this Subsidiary Guaranty shall be joint and several,
absolute, unconditional and irrevocable irrespective of:

(a) any lack of validity, legality or enforceability of any Loan Document;

(b) the failure of any Secured Party

(i) to assert any claim or demand or to enforce any right or remedy against any
Obligor or any other Person (including any other guarantor) under the provisions
of any Loan Document or otherwise, or

(ii) to exercise any right or remedy against any other guarantor (including any
Guarantor) of, or collateral securing, any Guaranteed Obligations;

(c) any change in the time, manner or place of payment of, or in any other term
of, all or any part of the Guaranteed Obligations, or any other extension,
compromise or renewal of any Guaranteed Obligation;

(d) any reduction, limitation, impairment or termination of any Guaranteed
Obligations for any reason, including any claim of waiver, release, surrender,
alteration or compromise, and shall not be subject to (and each Subsidiary
Guarantor hereby waives any right to or claim of) any defense or setoff,
counterclaim, recoupment or termination whatsoever by reason of the invalidity,
illegality, nongenuineness, irregularity, compromise,

 

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

unenforceability of, or any other event or occurrence affecting, any Guaranteed
Obligations or otherwise;

(e) any amendment to, rescission, waiver, or other modification of, or any
consent to or departure from, any of the terms of any Loan Document;

(f) any addition, exchange or release of any collateral or of any Person that is
(or will become) a guarantor (including a Subsidiary Guarantor hereunder) of the
Guaranteed Obligations, or any surrender or non-perfection of any collateral, or
any amendment to or waiver or release or addition to, or consent to or departure
from, any other guaranty held by any Secured Party securing any of the
Guaranteed Obligations; or

(g) any other circumstance which might otherwise constitute a defense available
to, or a legal or equitable discharge of, any Obligor, any surety or any
guarantor.

SECTION 2.4. Setoff. Each Subsidiary Guarantor hereby irrevocably authorizes the
Administrative Agent and each Lender, without the requirement that any notice be
given to such Subsidiary Guarantor (such notice being expressly waived by each
Subsidiary Guarantor), upon the occurrence and during the continuance of any
Default described in clauses (a) through (d) of Section 9.1.9 of the Credit
Agreement or, with the consent of the Required Lenders, upon the occurrence and
during the continuance of any other Event of Default, to set-off and appropriate
and apply to the payment of the Guaranteed Obligations (whether or not then due,
and whether or not any Secured Party has made any demand for payment of the
Guaranteed Obligations), any and all balances, claims, credits, deposits
(general or special, time or demand, provisional or final), accounts or money of
such Subsidiary Guarantor then or thereafter maintained with such Secured Party;
provided, however, that any such appropriation and application shall be subject
to the provisions of Section 4.8 of the Credit Agreement. Each Secured Party
agrees to notify the applicable Subsidiary Guarantor and the Administrative
Agent after any such setoff and application made by such Secured Party; provided
further, however, that the failure to give such notice shall not affect the
validity of such setoff and application. The rights of each Secured Party under
this Section are in addition to other rights and remedies (including other
rights of setoff under applicable law or otherwise) which such Secured Party may
have.

SECTION 2.5. Waiver, etc. Each Subsidiary Guarantor hereby waives promptness,
diligence, notice of acceptance and any other notice with respect to any of the
Guaranteed Obligations and this Subsidiary Guaranty and any requirement that any
Secured Party protect, secure, perfect or insure any Lien, or any property
subject thereto, or exhaust any right or take any action against any Obligor or
any other Person (including any other guarantor) or entity or any collateral
securing the Guaranteed Obligations, as the case may be.

 

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SECTION 2.6. Postponement of Subrogation, etc. Each Subsidiary Guarantor agrees
that it will not exercise any rights which it may acquire by way of rights of
subrogation under any Loan Document to which it is a party, nor shall any
Subsidiary Guarantor seek or be entitled to seek any contribution or
reimbursement from any Obligor, in respect of any payment made under any Loan
Document or otherwise, until following the Termination Date. Any amount paid to
any Subsidiary Guarantor on account of any such subrogation rights prior to the
Termination Date shall be held in trust for the benefit of the Secured Parties
and shall immediately be paid and turned over to the Administrative Agent for
the benefit of the Secured Parties in the exact form received by such Subsidiary
Guarantor (duly endorsed in favor of the Administrative Agent, if required), to
be credited and applied against the Guaranteed Obligations, whether matured or
unmatured, in accordance with Section 2.7; provided, however, that if any
Subsidiary Guarantor has made payment to the Secured Parties of all or any part
of the Guaranteed Obligations and the Termination Date has occurred, then at
such Subsidiary Guarantor’s request, the Administrative Agent (on behalf of the
Secured Parties) will, at the expense of such Subsidiary Guarantor, execute and
deliver to such Subsidiary Guarantor appropriate documents (without recourse and
without representation or warranty) necessary to evidence the transfer by
subrogation to such Subsidiary Guarantor of an interest in the Guaranteed
Obligations resulting from such payment. In furtherance of the foregoing, at all
times prior to the Termination Date, each Subsidiary Guarantor shall refrain
from taking any action or commencing any proceeding against any Obligor (or its
successors or assigns, whether in connection with a bankruptcy proceeding or
otherwise) to recover any amounts in respect of payments made under this
Subsidiary Guaranty to any Secured Party.

SECTION 2.7. Payments; Application. Each Subsidiary Guarantor hereby agrees with
each Secured Party as follows:

(a) Each Subsidiary Guarantor agrees that all payments made by such Subsidiary
Guarantor hereunder will be made in Dollars to the Administrative Agent, without
set-off, counterclaim or other defense and in accordance with Sections 4.6 and
4.7 of the Credit Agreement, free and clear of and without deduction for any
Taxes, each Subsidiary Guarantor hereby agreeing to comply with and be bound by
the provisions of Sections 4.6 and 4.7 of the Credit Agreement in respect of all
payments made by it hereunder and the provisions of which Sections are hereby
incorporated into and made a part of this Subsidiary Guaranty by this reference
as if set forth herein; provided, that references to the “Borrower” in such
Sections shall be deemed to be references to each Subsidiary Guarantor, and
references to “this Agreement” in such Sections shall be deemed to be references
to this Subsidiary Guaranty.

(b) All payments made hereunder shall be applied upon receipt as set forth in
Section 4.7 of the Credit Agreement.

 

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For purposes of this Subsidiary Guaranty, the “credit exposure” at any time of
any Secured Party with respect to a Rate Protection Agreement to which such
Secured Party is a party shall be determined at such time in accordance with the
customary methods of calculating credit exposure under similar arrangements by
the counterparty to such arrangements, taking into account potential interest
rate movements and the respective termination provisions and notional principal
amount and term of such Rate Protection Agreement.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

In order to induce the Secured Parties to enter into the Credit Agreement and
make Credit Extensions thereunder, and to induce the Secured Parties to enter
into Rate Protection Agreements, each Subsidiary Guarantor represents and
warrants to each Secured Party as set forth below.

SECTION 3.1. Credit Agreement Representations and Warranties. The
representations and warranties contained in Article VI of the Credit Agreement,
insofar as the representations and warranties contained therein are applicable
to any Subsidiary Guarantor and its properties, are true and correct in all
material respects, each such representation and warranty set forth in such
Article (insofar as applicable as aforesaid) and all other terms of the Credit
Agreement to which reference is made therein, together with all related
definitions and ancillary provisions, being hereby incorporated into this
Subsidiary Guaranty by this reference as though specifically set forth in this
Article.

SECTION 3.2. Financial Condition, etc. Except with respect to the Parent, each
Subsidiary Guarantor has knowledge of each other Obligor’s financial condition
and affairs and that it has adequate means to obtain from the each such Obligor
on an ongoing basis information relating thereto and to such Obligor’s ability
to pay and perform the Guaranteed Obligations, and agrees to assume the
responsibility for keeping, and to keep, so informed for so long as this
Subsidiary Guaranty is in effect. Each Subsidiary Guarantor acknowledges and
agrees that the Secured Parties shall have no obligation to investigate the
financial condition or affairs of any Obligor for the benefit of such Subsidiary
Guarantor nor to advise such Subsidiary Guarantor of any fact respecting, or any
change in, the financial condition or affairs of any other Obligor that might
become known to any Secured Party at any time, whether or not such Secured Party
knows or believes or has reason to know or believe that any such fact or change
is unknown to such Subsidiary Guarantor, or might (or does) materially increase
the risk of such Subsidiary Guarantor as guarantor, or might (or would) affect
the willingness of such Subsidiary Guarantor to continue as a guarantor of the
Guaranteed Obligations.

SECTION 3.3. Best Interests. It is in the best interests of each Subsidiary
Guarantor to execute this Subsidiary Guaranty inasmuch as such Subsidiary
Guarantor will, as a result of being a Subsidiary of the Borrower, derive
substantial direct and

 

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indirect benefits from the Credit Extensions made from time to time to the
Borrower by the Lenders and the Issuers pursuant to the Credit Agreement and the
execution and delivery of Rate Protection Agreements between the Borrower, other
Obligors (other than the Parent) and certain Secured Parties, and each
Subsidiary Guarantor agrees that the Secured Parties are relying on this
representation in agreeing to make Credit Extensions to the Borrower.

ARTICLE IV

COVENANTS, ETC.

Each Subsidiary Guarantor covenants and agrees that, at all times prior to the
Termination Date, it will perform, comply with and be bound by all of the
agreements, covenants and obligations contained in the Credit Agreement
(including Articles VII and VIII and Section 9.1.9 of the Credit Agreement)
which are applicable to such Subsidiary Guarantor or its properties, each such
agreement, covenant and obligation contained in the Credit Agreement and all
other terms of the Credit Agreement to which reference is made in this Article,
together with all related definitions and ancillary provisions, being hereby
incorporated into this Subsidiary Guaranty by this reference as though
specifically set forth in this Article.

ARTICLE V

MISCELLANEOUS PROVISIONS

SECTION 5.1. Loan Document. This Subsidiary Guaranty is a Loan Document executed
pursuant to the Credit Agreement and shall (unless otherwise expressly indicated
herein) be construed, administered and applied in accordance with the terms and
provisions thereof, including Article XII thereof.

SECTION 5.2. Binding on Successors, Transferees and Assigns; Assignment. This
Subsidiary Guaranty shall remain in full force and effect until the Termination
Date has occurred, shall be jointly and severally binding upon each Subsidiary
Guarantor and its successors, transferees and assigns and shall inure to the
benefit of and be enforceable by each Secured Party and its successors,
transferees and assigns; provided, however, that no Subsidiary Guarantor may
(unless otherwise permitted under the terms of the Credit Agreement) assign any
of its obligations hereunder without the prior written consent of all Lenders.

SECTION 5.3. Amendments, etc. No amendment to or waiver of any provision of this
Subsidiary Guaranty, nor consent to any departure by any Subsidiary Guarantor
from its obligations under this Subsidiary Guaranty, shall in any event be
effective unless the same shall be in writing and signed by the Administrative
Agent (on behalf of the Lenders or the Required Lenders, as the case may be,
pursuant to Section 12.1 of the Credit Agreement) and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.

SECTION 5.4. Notices. All notices and other communications provided for
hereunder shall be in writing or by facsimile and addressed, delivered or

 

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transmitted to the appropriate party at the address or facsimile number of such
party (in the case of any Subsidiary Guarantor, in care of the Borrower) set
forth on Schedule II to the Credit Agreement or at such other address or
facsimile number as may be designated by such party in a notice to the other
party. Any notice, if mailed and properly addressed with postage prepaid or if
properly addressed and sent by pre-paid courier service, shall be deemed given
when received; any such notice, if transmitted by facsimile, shall be deemed
given when the confirmation of transmission thereof is received by the
transmitter.

SECTION 5.5. Additional Guarantors. Upon the execution and delivery by any other
Person of a supplement in the form of Annex I hereto, such Person shall become a
“Subsidiary Guarantor” hereunder with the same force and effect as if it were
originally a party to this Subsidiary Guaranty and named as a “Subsidiary
Guarantor” hereunder. The execution and delivery of such supplement shall not
require the consent of any other Subsidiary Guarantor hereunder, and the rights
and obligations of each Subsidiary Guarantor hereunder shall remain in full
force and effect notwithstanding the addition of any new Guarantor as a party to
this Subsidiary Guaranty.

SECTION 5.6. Release of Guarantor. Upon the occurrence of the Termination Date,
this Subsidiary Guaranty and all obligations of each Subsidiary Guarantor
hereunder shall terminate, without delivery of any instrument or performance of
any act by any party. In addition, at the request of the Borrower, and at the
sole expense of the Borrower, a Subsidiary Guarantor shall be released from its
obligations hereunder in the event that the Capital Securities of such
Subsidiary Guarantor are Disposed of in a transaction permitted by the Credit
Agreement; provided, that the Borrower shall have delivered to the
Administrative Agent, at least three Business Days prior to the date of the
proposed release, a written request for release identifying the relevant
Subsidiary Guarantor and a certification by the Borrower stating that such
transaction is in compliance with the Loan Documents.

SECTION 5.7. No Waiver; Remedies. In addition to, and not in limitation of,
Sections 2.3 and 2.5, no failure on the part of any Secured Party to exercise,
and no delay in exercising, any right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.

SECTION 5.8. Section Captions. Section captions used in this Subsidiary Guaranty
are for convenience of reference only, and shall not affect the construction of
this Subsidiary Guaranty.

SECTION 5.9. Severability. Wherever possible each provision of this Subsidiary
Guaranty shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Subsidiary Guaranty shall be
prohibited by or invalid under such law, such provision shall be ineffective to
the

 

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extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Subsidiary Guaranty.

SECTION 5.10. Governing Law, Entire Agreement, etc. THIS SUBSIDIARY GUARANTY
WILL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF
THE STATE OF NEW YORK (INCLUDING FOR SUCH PURPOSE SECTIONS 5-1401 AND 5-1402 OF
THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK). This Subsidiary Guaranty
and the other Loan Documents constitute the entire understanding among the
parties hereto with respect to the subject matter thereof and supersede any
prior agreements, written or oral, with respect thereto.

SECTION 5.11. Forum Selection and Consent to Jurisdiction. ANY LITIGATION BASED
HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, ANY LOAN DOCUMENT, OR
ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN)
OR ACTIONS OF THE ADMINISTRATIVE AGENT, THE LENDERS, THE ISSUER OR ANY
SUBSIDIARY GUARANTOR IN CONNECTION HEREWITH OR THEREWITH MAY BE BROUGHT AND
MAINTAINED IN THE COURTS OF THE STATE OF NEW YORK OR IN THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK; PROVIDED, HOWEVER, THAT
ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE
BROUGHT, AT THE ADMINISTRATIVE AGENT’S OPTION, IN THE COURTS OF ANY JURISDICTION
WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. EACH SUBSIDIARY GUARANTOR
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE
PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK AT THE
ADDRESS FOR NOTICES SPECIFIED FOR THE BORROWER IN SECTION 12.2 OF THE CREDIT
AGREEMENT. EACH SUBSIDIARY GUARANTOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR
HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY
SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT ANY SUBSIDIARY GUARANTOR
HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM
ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO
JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR
ITS PROPERTY, SUCH SUBSIDIARY GUARANTOR HEREBY IRREVOCABLY WAIVES TO THE FULLEST
EXTENT PERMITTED BY LAW SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THE
LOAN DOCUMENTS.

 

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SECTION 5.12. Waiver of Jury Trial. THE ADMINISTRATIVE AGENT (ON BEHALF OF
ITSELF AND EACH OTHER SECURED PARTY) AND EACH SUBSIDIARY GUARANTOR HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE TO THE FULLEST EXTENT PERMITTED
BY LAW ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, EACH LOAN
DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL
OR WRITTEN) OR ACTIONS OF THE ADMINISTRATIVE AGENT, SUCH LENDER, THE ISSUER OR
SUCH SUBSIDIARY GUARANTOR IN CONNECTION THEREWITH. EACH SUBSIDIARY GUARANTOR
ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION
FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH OTHER LOAN DOCUMENT TO
WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE
ADMINISTRATIVE AGENT, EACH LENDER AND THE ISSUER ENTERING INTO THE LOAN
DOCUMENTS.

SECTION 5.13. Counterparts. This Subsidiary Guaranty may be executed by the
parties hereto in several counterparts, each of which shall be deemed to be an
original and all of which shall constitute together but one and the same
agreement.

 

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IN WITNESS WHEREOF, each Subsidiary Guarantor has caused this Subsidiary
Guaranty to be duly executed and delivered by its Authorized Officer as of the
date first above written.

CHAMPION ENTERPRISES MANAGEMENT CO.

 

By:___________________________________

Name:

Title:

 

CHAMPION RETAIL, INC.

 

By:___________________________________

Name:

Title:

 

 

 

DUTCH HOUSING, INC.

 

By:___________________________________

Name:

Title:

 

 

 

HOMES OF MERIT, INC.

 

By:___________________________________

Name:

Title:

 

 

 

MODULINE INTERNATIONAL, INC.

 

By:___________________________________

Name:

Title:

 

 

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NEW ERA BUILDING SYSTEMS, INC.

 

By:___________________________________

Name:

Title:

 

REDMAN HOMES, INC.

 

By:___________________________________

Name:

Title:

 

 

 

REDMAN INDUSTRIES, INC.

 

By:___________________________________

Name:

Title:

 

SAN JOSE ADVANTAGE HOMES, INC.

 

By:___________________________________

Name:

Title:

 

 

 

STAR FLEET, INC.

 

By:___________________________________

Name:

Title:

 

WESTERN HOMES CORPORATION

 

By:___________________________________

Name:

Title:

 

 

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ACCEPTED AND AGREED FOR ITSELF

AND ON BEHALF OF THE SECURED PARTIES:

CREDIT SUISSE, CAYMAN ISLANDS BRANCH,

as Administrative Agent

 

By_________________________________

Title:

 

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ANNEX I to

the Subsidiary Guaranty

THIS SUPPLEMENT, dated as of ____________ ___, _____ (this “Supplement”), is to
the Subsidiary Guaranty, dated as of October 31, 2005 (as amended, supplemented,
amended and restated or otherwise modified from time to time, the “Subsidiary
Guaranty”), among the Subsidiary Guarantors (such capitalized term, and other
terms used in this Supplement, to have the meanings set forth in Article I of
the Subsidiary Guaranty) from time to time party thereto, in favor of Credit
Suisse, Cayman Islands Branch, as administrative agent (together with its
successor(s) thereto in such capacity, the “Administrative Agent”) for each of
the Secured Parties.

W I T N E S S E T H:

WHEREAS, pursuant to the provisions of Section 5.5 of the Subsidiary Guaranty,
each of the undersigned is becoming a Subsidiary Guarantor under the Subsidiary
Guaranty; and

WHEREAS, each of the undersigned desires to become a “Subsidiary Guarantor”
under the Subsidiary Guaranty in order to induce the Secured Parties to continue
to extend Credit Extensions under the Credit Agreement;

NOW, THEREFORE, in consideration of the premises, and for other consideration
(the receipt and sufficiency of which is hereby acknowledged), each of the
undersigned agrees, for the benefit of each Secured Party, as follows.

SECTION 1. Party to Subsidiary Guaranty, etc. In accordance with the terms of
the Subsidiary Guaranty, by its signature below, each of the undersigned hereby
irrevocably agrees to become a Subsidiary Guarantor under the Subsidiary
Guaranty with the same force and effect as if it were an original signatory
thereto and each of the undersigned hereby (a) agrees to be bound by and comply
with all of the terms and provisions of the Subsidiary Guaranty applicable to it
as a Subsidiary Guarantor and (b) represents and warrants that the
representations and warranties made by it as a Subsidiary Guarantor thereunder
are true and correct in all material respects as of the date hereof. In
furtherance of the foregoing, each reference to a “Subsidiary Guarantor” and/or
“Subsidiary Guarantors” in the Subsidiary Guaranty shall be deemed to include
each of the undersigned.

SECTION 2. Representations. Each of the undersigned hereby represents and
warrants that this Supplement has been duly authorized, executed and delivered
by it and that this Supplement and the Subsidiary Guaranty constitute the legal,
valid and binding obligation of each of the undersigned, enforceable against it
in accordance with its terms, except as enforceability may be limited by

 

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applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors’ rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or
at law).

SECTION 3. Full Force of Subsidiary Guaranty. Except as expressly supplemented
hereby, the Subsidiary Guaranty shall remain in full force and effect in
accordance with its terms.

SECTION 4. Severability. Wherever possible each provision of this Supplement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Supplement shall be prohibited by
or invalid under such law, such provision shall be ineffective to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Supplement or the Subsidiary
Guaranty.

SECTION 5. Indemnity; Fees and Expenses, etc. Without limiting the provisions of
any other Loan Document, each of the undersigned agrees to reimburse the
Administrative Agent for its reasonable out-of-pocket expenses incurred in
connection with this Supplement, including reasonable attorney’s fees and
expenses of the Administrative Agent’s counsel.

SECTION 6. Governing Law, Entire Agreement, etc. THIS SUPPLEMENT WILL BE DEEMED
TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF
NEW YORK (INCLUDING FOR SUCH PURPOSE SECTIONS 5-1401 AND 5-1402 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK). This Supplement and the other Loan
Documents constitute the entire understanding among the parties hereto with
respect to the subject matter thereof and supersede any prior agreements,
written or oral, with respect thereto.

SECTION 7. Counterparts. This Supplement may be executed by the parties hereto
in several counterparts, each of which shall be deemed to be an original and all
of which shall constitute together but one and the same agreement.

 

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IN WITNESS WHEREOF, each of the undersigned has caused this Supplement to be
duly executed and delivered by its Authorized Officer as of the date first above
written.

[NAME OF ADDITIONAL SUBSIDIARY]

 

By_________________________________

Title:

[NAME OF ADDITIONAL SUBSIDIARY]

 

By_________________________________

Title:

[NAME OF ADDITIONAL SUBSIDIARY]

 

By_________________________________

Title:

ACCEPTED AND AGREED FOR ITSELF

AND ON BEHALF OF THE SECURED PARTIES:

CREDIT SUISSE, CAYMAN ISLANDS BRANCH,

as Administrative Agent

 

By_________________________________

Title:

 

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EXHIBIT G

FORM OF PLEDGE AND SECURITY AGREEMENT

This PLEDGE AND SECURITY AGREEMENT, dated as of October 31, 2005 (as amended,
supplemented, amended and restated or otherwise modified from time to time, this
“Security Agreement”), is made by Champion Home Builders Co., a Michigan
corporation (the “Borrower”), Champion Enterprises, Inc., a Michigan corporation
(the “Parent”), and each Subsidiary Guarantor (terms used in the preamble and
the recitals have the definitions set forth in or incorporated by reference in
Article I) from time to time a party to this Security Agreement (each
individually a “Grantor” and collectively, the “Grantors”), in favor of Wells
Fargo Bank, N.A., having an address at 230 West Monroe Street, Suite 2900,
Chicago, Illinois 60606, as the Collateral Trustee for the Secured Parties (as
defined below) under the Collateral Trust Agreement referred to below (in such
capacity and together with its successors and assigns from time to time acting
as Collateral Trustee under such Collateral Trust Agreement, the “Collateral
Trustee”).

W I T N E S S E T H :

WHEREAS, pursuant to the terms, conditions and provisions of the Credit
Agreement, dated as of the date hereof (as amended, restated, supplemented or
otherwise modified from time to time, the “Credit Agreement”), among the
Borrower, the Parent, the various financial institutions and other Persons from
time to time parties thereto (each a “Lender”), Credit Suisse, Cayman Islands
Branch, as administrative agent (the “Administrative Agent”), the Lenders have
agreed to make Loans to, and to issue Letters of Credit for the account of, the
Borrower in the maximum original principal amount of TWO HUNDRED MILLION AND
00/100 DOLLARS ($200,000,000) (such Loans and Letters of Credit are hereinafter
referred to collectively as the “Credit Extensions”).

WHEREAS, pursuant to an Indenture, dated as of May 3, 1999 (the “2009 Notes
Indenture”), between the Parent, the Subsidiary Guarantors named therein, and
The First National Bank of Chicago, as indenture trustee, the Parent issued and
sold its 7.625% Senior Notes due 2009 (the “2009 Notes”).

WHEREAS, the Parent has unconditionally guaranteed the Obligations (as defined
in the Credit Agreement) (the “Parent Obligations”) and the Subsidiary
Guarantors have unconditionally guaranteed the Obligations (as defined in the
Subsidiary Guaranty) (the “Subsidiary Obligations”, and together with the Parent
Obligations, the “Credit Agreement Obligations”).

WHEREAS, under the 2009 Notes Indenture, the Parent issued the 2009 Notes and
certain of its Subsidiaries from time to time have unconditionally guaranteed
the obligations under the 2009 Notes Indenture (the “2009 Notes Obligations”
and, together with the Credit Agreement Obligations, the “Secured Obligations”).

WHEREAS, the Borrower, the Parent, the Subsidiaries of the Parent listed on the
signature pages thereof and the Collateral Trustee have entered into a
Collateral Trust Agreement, dated as of the date hereof (the “Collateral Trust
Agreement”).

 

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NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, each Grantor agrees, for the benefit of each
Secured Party, as follows:

ARTICLE I

DEFINITIONS

SECTION 1.1. Certain Terms. The following terms (whether or not underscored)
when used in this Security Agreement, including its preamble and recitals, shall
have the following meanings (such definitions to be equally applicable to the
singular and plural forms thereof):

“2009 Notes” is defined in the second recital.

“2009 Notes Indenture” is defined in the second recital.

“2009 Notes Obligations” is defined in the fourth recital.

“Administrative Agent” is defined in the first recital.

“Borrower” is defined in the preamble.

“Collateral” is defined in Section 2.1.

“Collateral Accounts” is defined in clause (b) of Section 4.3.

“Collateral Trust Agreement” is defined in the fifth recital.

“Collateral Trustee” is defined in the preamble.

“Computer Hardware and Software Collateral” means:

(a)               all computer and other electronic data processing hardware,
integrated computer systems, central processing units, memory units, display
terminals, printers, features, computer elements, card readers, tape drives,
hard and soft disk drives, cables, electrical supply hardware, generators, power
equalizers, accessories and all peripheral devices and other related computer
hardware, including all operating system software, utilities and application
programs in whatsoever form;

(b)               all software programs (including both source code, object code
and all related applications and data files), designed for use on the computers
and electronic data processing hardware described in clause (a) above;

(c)

all firmware associated therewith;

(d)               all documentation (including flow charts, logic diagrams,
manuals, guides, specifications, training materials, charts and pseudo codes)
with respect to such hardware, software and firmware described in the preceding
clauses (a) through (c); and

 

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(e)               all rights with respect to all of the foregoing, including
copyrights, licenses, options, warranties, service contracts, program services,
test rights, maintenance rights, support rights, improvement rights, renewal
rights and indemnifications and any substitutions, replacements, improvements,
error corrections, updates, additions or model conversions of any of the
foregoing.

“Control Agreement” means an authenticated record in form and substance
reasonably satisfactory to the Collateral Trustee, that provides for the
Collateral Trustee to have “control” (as defined in the UCC) over certain
Collateral.

“Copyright Collateral” means all of the Grantors’ right, title and interest in
and to all copyrights, registered or unregistered and whether published or
unpublished, now or hereafter in force throughout the world including copyrights
registered in the U.S. Copyright Office or anywhere else in the world, including
the copyrights which are the subject of a registration or application referred
to in Item A of Schedule V, and registrations and recordings thereof and all
applications for registration thereof, whether pending or in preparation, all
copyright licenses, including each copyright license referred to in Item B of
Schedule V, the right to sue for past, present and future infringements of any
of the copyrights, and for breach or enforcement of any of the copyright
licenses, all rights corresponding thereto, all extensions and renewals of any
thereof and all Proceeds of the foregoing, including (whether or not within the
definition of “Proceeds” pursuant to Section 1.3) licenses, royalties, income,
payments, claims, damages and Proceeds of infringement suits.

“Credit Agreement” is defined in the first recital.

“Credit Agreement Obligations” is defined in the third recital.

“Credit Extensions” is defined in the first recital.

“Distributions” means all dividends paid on Capital Securities, liquidating
dividends paid on Capital Securities, shares (or other designations) of Capital
Securities resulting from (or in connection with the exercise of) stock splits,
reclassifications, warrants, options, non-cash dividends, mergers,
consolidations, and all other distributions (whether similar or dissimilar to
the foregoing) on or with respect to any Capital Securities constituting
Collateral.

“Foreign Subsidiary” means, with respect to any Grantor, any corporation,
partnership, limited liability company or other business entity (i) which is
organized under the laws of a jurisdiction other than a state of the United
States or the District of Columbia and (ii) of which securities or other
ownership interests representing more than 50% of the equity, more than 50% of
the ordinary voting power, more than 50% of the general partnership interests or
more than 50% of the limited liability company membership interests are, at the
time any determination is being made, owned directly by such Grantor or one or
more Grantors.

“General Intangibles” means all “general intangibles” and all “payment
intangibles”, each as defined in the UCC, and shall include all interest rate or
currency protection or hedging arrangements, all tax refunds, all licenses,
permits, concessions and authorizations and all Intellectual Property Collateral
(in each case, regardless of whether characterized as general intangibles under
the UCC).

 

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“Grantor” and “Grantors” are defined in the preamble.

“Intellectual Property Collateral” means, collectively, the intangible
components of the Computer Hardware and Software Collateral, the Copyright
Collateral, the Patent Collateral, the Trademark Collateral and the Trade
Secrets Collateral.

“Patent Collateral” means all of the Grantors’ right, title and interest in all:

(f)                inventions and discoveries, whether patentable or not, all
letters patent and applications for letters patent throughout the world,
including all patent applications in preparation for filing, and each patent and
patent application referred to in Item A of Schedule III;

(g)               all reissues, divisions, continuations, continuations-in-part,
extensions, renewals and reexaminations of any of the items described in clause
(a);

(h)               all patent licenses, and other agreements providing such
Grantor with the right to use any items of the type referred to in clauses (a)
and (b) above, including each patent license referred to in Item B of Schedule
III; and

(i)                all Proceeds of the foregoing (including (whether or not
within the definition of “Proceeds” pursuant to Section 1.3) licenses, royalties
income, payments, claims, damages and Proceeds of infringement suits), the right
to sue third parties for past, present or future infringements of any patent or
patent application, and for breach or enforcement of any patent license.

“Permitted Liens” means all Liens permitted by Section 8.3 of the Credit
Agreement or any other Loan Document.

“San Jose Inventory” is defined in clause (n)(v) of Section 2.1.

“Secured Instrument” shall have the meaning assigned to such term in the
Collateral Trust Agreement.

“Secured Obligations” is defined in the fourth recital.

“Secured Party” shall have the meaning assigned to such term in the Collateral
Trust Agreement.

“Securities Act” is defined in clause (a) of Section 6.2.

“Security Agreement” is defined in the preamble.

“Specified Default” means the occurrence and continuance of (a) an Event of
Default or (b) a Default under clauses (a) through (d) of Section 9.1.9 of the
Credit Agreement.

“Trademark Collateral” means all of the Grantors’ right, title and interest in:

 

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(a)               (i) all trademarks, trade names, corporate names, company
names, business names, fictitious business names, trade styles, service marks,
certification marks, collective marks, logos and other source or business
identifiers, now existing or hereafter adopted or acquired including those which
are the subject of a registration or application referred to in Item A of
Schedule IV, whether currently in use or not, all registrations and recordings
thereof and all applications in connection therewith, whether pending or in
preparation for filing, including registrations, recordings and applications in
the U.S. Patent and Trademark Office or in any office or agency of the United
States of America, or any State thereof or any other country or political
subdivision thereof or otherwise, and all common-law rights relating to the
foregoing, and (ii) the right to obtain all renewals of the foregoing
(collectively referred to as the “Trademarks”);

(b)               all trademark licenses for the grant by or to such Grantor of
any right to use any trademark, including each trademark license referred to in
Item B of Schedule IV; and

(c)               all of the goodwill of the business connected with the use of,
and symbolized by the items described in, clause (a), and to the extent
applicable clause (b);

(d)               the right to sue third parties for past, present and future
infringements of any Trademark Collateral described in clause (a) and, to the
extent applicable, clause (b); and

(e)               all Proceeds of, and rights associated with, the foregoing,
including (whether or not within the definition of “Proceeds” pursuant to
Section 1.3) any claim by such Grantor against third parties for past, present
or future infringement or dilution of any of the foregoing, or for any injury to
the goodwill connected with the use of or symbolized by any Trademarks or for
breach or enforcement of any Trademark license and all rights corresponding
thereto throughout the world.

“Trade Secrets Collateral” means all of the Grantors’ right, title and interest
in all common law and statutory trade secrets and all other confidential,
proprietary or useful information and all know-how obtained by or used in or
contemplated at any time for use in the business of a Grantor (all of the
foregoing being collectively called a “Trade Secret”), whether or not such Trade
Secret has been reduced to a writing or other tangible form, including in the
form of all Documents and things embodying, incorporating or referring in any
way to such Trade Secret, all Trade Secret licenses, including each Trade Secret
license referred to in Schedule VI, and including the right to sue for and to
enjoin and to collect damages for the actual or threatened misappropriation of
any Trade Secret and for the breach or enforcement of any such Trade Secret
license.

SECTION 1.2. Credit Agreement Definitions. Unless otherwise defined herein or
the context otherwise requires, terms used in this Security Agreement, including
its preamble and recitals, have the meanings provided in the Credit Agreement.

SECTION 1.3. UCC Definitions. When used herein the terms Account, Certificated
Securities, Chattel Paper, Commercial Tort Claim, Commodity Account, Commodity
Contract,

 

 

Deposit Account, Document, Electronic Chattel Paper, Equipment, Goods,
Instrument, Inventory, Investment Property, Letter-of-Credit Rights, Proceeds,
Promissory Notes, Securities Account, Security Entitlement, Supporting
Obligations and Uncertificated Securities have the meaning provided in Article 8
or Article 9, as applicable, of the UCC. Letters of Credit has the meaning
provided in Section 5-102 of the UCC.

ARTICLE II

SECURITY INTEREST

SECTION 2.1. Grant of Security Interest. Each Grantor hereby grants to the
Collateral Trustee, for its benefit and the ratable benefit of each other
Secured Party, a continuing security interest in all of such Grantor’s following
property, whether now or hereafter existing, owned or acquired by such Grantor,
and wherever located, (collectively, the “Collateral”):

(a)

Accounts;

 

(b)

Chattel Paper;

(c)        Commercial Tort Claims listed on Item I of Schedule II (as such
schedule may be amended or supplemented from time to time);

(d)

Deposit Accounts;

 

(e)

Documents;

 

(f)

General Intangibles;

 

(g)

Goods;

 

(h)

Instruments;

 

(i)

Investment Property;

 

(j)

Letter-of-Credit Rights and Letters of Credit;

(k)

Supporting Obligations;

 

(l)         all books, records, writings, databases, information and other
property relating to, used or useful in connection with, evidencing, embodying,
incorporating or referring to, any of the foregoing in this Section;

(m)       all Proceeds of the foregoing and, to the extent not otherwise
included, in Proceeds (A) all payments under insurance (whether or not the
Collateral Trustee is the loss payee thereof) and (B) all tort claims; and

(n)

all other property and rights of every kind and description and interests
therein.

Notwithstanding the foregoing, the term “Collateral” shall not include:

 

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(i)                such Grantor’s real property interests (including fee real
estate, leasehold interests and fixtures);

(ii)               any General Intangibles or other rights arising under any
contracts, instruments, licenses, leases or other documents (each, a “Contract”)
or any asset or property that is subject to any Contract thereof as to which the
grant of a security interest would (A) constitute or result in the abandonment,
invalidation or unenforceability of any right, title or interest of any Grantor
under such Contracts, (B) constitute a violation of a valid and enforceable
restriction in favor of a third party on such grant, unless and until any
required consents shall have been obtained, (C) give any other party to such
Contract the right to terminate its obligations thereunder or the Grantor’s use
of such asset would result in a breach or violation of, or constitute a default
under any such Contract, or (D) would result in the loss of use of such asset
subject to any such Contract;

(iii)              Investment Property consisting of Capital Securities of a
Foreign Subsidiary of such Grantor, in excess of 65% of the total combined
voting power of all Capital Securities of each such Foreign Subsidiary ;

(iv)              any asset, the granting of a security interest in which would
be void or illegal under any applicable governmental law, rule or regulation, or
pursuant thereto would result in, or permit the termination of such asset or
Grantor’s rights in such asset; or

(v)               any retail inventory of San Jose Advantage Homes, Inc., and
fixtures, furniture and other household items attached to or inside such
inventory (the “San Jose Inventory”), and the proceeds thereof to the extent
that the San Jose Inventory is subject to a Lien granted in connection with
Floor-Plan Financing Lines.

SECTION 2.2. Security for Secured Obligations. This Security Agreement and the
Collateral in which the Collateral Trustee for the benefit of the Secured
Parties is granted a security interest hereunder by the Grantors secure the
payment and performance of all of the Secured Obligations.

SECTION 2.3. Grantors Remain Liable. Anything herein to the contrary
notwithstanding:

(a)               the Grantors will remain liable under the contracts and
agreements included in the Collateral to the extent set forth therein, and will
perform all of their duties and obligations under such contracts and agreements
to the same extent as if this Security Agreement had not been executed;

(b)               the exercise by the Collateral Trustee of any of its rights
hereunder will not release any Grantor from any of its duties or obligations
under any such contracts or agreements included in the Collateral; and

(c)               no Secured Party will have any obligation or liability under
any contracts or agreements included in the Collateral by reason of this
Security Agreement, nor will any Secured

 

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Party be obligated to perform any of the obligations or duties of any Grantor
thereunder or to take any action to collect or enforce any claim for payment
assigned hereunder.

SECTION 2.4. Distributions on Pledged Shares. In the event that any Distribution
with respect to any Capital Securities pledged hereunder is permitted to be paid
(in accordance with Section 8.6 of the Credit Agreement), such Distribution or
payment may be paid directly to the applicable Grantor. If any Distribution is
made in contravention of Section 8.6 of the Credit Agreement, such Grantor shall
hold the same segregated and in trust for the Collateral Trustee until paid to
the Collateral Trustee in accordance with Section 4.1.5.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

The Grantors represent and warrant to each Secured Party as set forth below.

SECTION 3.1. As to Capital Securities of the Subsidiaries, Investment Property.

(a)

With respect to any direct Subsidiary of any Grantor that is

(i)                a corporation, business trust, joint stock company or similar
Person, all Capital Securities issued by such Subsidiary is duly authorized and
validly issued, fully paid and non-assessable, and represented by a certificate;
and

(ii)               a partnership or limited liability company, no Capital
Securities issued by such Subsidiary (A) is dealt in or traded on securities
exchanges or in securities markets, (B) expressly provides that such Capital
Securities is a security governed by Article 8 of the UCC or (C) is held in a
Securities Account, except, with respect to this clause (a)(ii), Capital
Securities (x) for which either the Collateral Trustee is the registered owner
or (y) with respect to which the issuer has agreed in an authenticated record
with such Grantor and the Collateral Trustee that, upon the occurrence and
during the continuance of a Specified Default, such issuer will comply with any
instructions of the Collateral Trustee without the consent of such Grantor.

(b)               Each Grantor has delivered all Certificated Securities
constituting Collateral held by such Grantor on the Closing Date to the
Collateral Trustee, together with duly executed undated blank stock powers, or
other equivalent instruments of transfer reasonably acceptable to the Collateral
Trustee.

(c)               With respect to Uncertificated Securities constituting
Collateral owned by any Grantor, such Grantor has caused the issuer thereof
either to (i) register the Collateral Trustee as the registered owner of such
security or (ii) agree in an authenticated record with such Grantor and the
Collateral Trustee that, upon the occurrence and during the continuance of a
Specified Default, such issuer will comply with instructions with respect to
such security originated by the Collateral Trustee without further consent of
such Grantor.

(d)               The percentage of the issued and outstanding Capital
Securities of each Subsidiary pledged by each Grantor hereunder is as set forth
on Schedule I.

 

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SECTION 3.2. Grantor Name, Location, etc.

(a)               The jurisdiction in which each Grantor is located for purposes
of Sections 9-301 and 9-307 of the UCC is set forth in Item A of Schedule II.

(b)               Each location a secured party would have filed a UCC financing
statement in the five years prior to the date hereof to perfect a security
interest in Equipment, Inventory and General Intangibles owned by such Grantor
is set forth in Item B of Schedule II.

(c)               The Grantors do not have any trade names other than those set
forth in Item C of Schedule II hereto.

(d)               During the four months preceding the date hereof, no Grantor
has been known by any legal name different from the one set forth on the
signature page hereto, nor has such Grantor been the subject of any merger or
other corporate reorganization, except as set forth in Item D of Schedule II
hereto.

(e)               Each Grantor’s federal taxpayer identification number is (and,
during the four months preceding the date hereof, such Grantor has not had a
federal taxpayer identification number different from that) set forth in Item E
of Schedule II hereto.

(f)                No Grantor is a party to any federal, state or local
government contract except as set forth in Item F of Schedule II hereto.

(g)               No Grantor maintains any Deposit Accounts, Securities Accounts
or Commodity Accounts with any Person, in each case, except as set forth on Item
G of Schedule II.

(h)               No Grantor is the beneficiary of any Letters of Credit, except
as set forth on Item H of Schedule II.

(i)                No Grantor has Commercial Tort Claims except as set forth on
Item I of Schedule II.

(j)                The name set forth on the signature page attached hereto is
the true and correct legal name (as defined in the UCC) of each Grantor.

(k)               Each Grantor has obtained a legal, valid and enforceable
consent of each issuer of any Letter of Credit to the assignment of the Proceeds
of such Letter of Credit to the Collateral Trustee and no Grantor has consented
to, and is otherwise aware of, any Person (other than the Collateral Trustee
pursuant hereto) having control (within the meaning of Section 9-104 of the UCC)
over, or any other interest in any of such Grantor’s rights in respect thereof.

SECTION 3.3. Ownership, No Liens, etc. Each Grantor owns its Collateral free and
clear of any Lien, except for (a) any security interest created by this Security
Agreement or that is a Permitted Lien or (b) where the failure to do so with
respect to any such Collateral could not reasonably be expected to interfere in
any material respect with the value or use of such Collateral in the Grantor’s
business as currently conducted. No effective UCC financing statement or other
filing similar in effect covering all or any part of the Collateral is on file
in

 

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any recording office, except those filed in favor of the Collateral Trustee
relating to this Security Agreement, Permitted Liens or as to which a duly
authorized termination statement relating to such UCC financing statement or
other instrument has been delivered to the Collateral Trustee on the Closing
Date.

SECTION 3.4. Possession of Inventory, Control; etc.

(a)               Each Grantor has, and agrees that it will maintain, exclusive
possession of its Documents, Instruments, Promissory Notes, Goods, Equipment and
Inventory, other than (i) Equipment and Inventory in transit in the ordinary
course of business, (ii) Equipment and Inventory that is in the possession or
control of a warehouseman, bailee agent or other Person (other than a Person
controlled by or under common control with the Grantor) that has been notified
of the security interest created in favor of the Secured Parties pursuant to
this Security Agreement, and with respect to which the Grantor will use its best
efforts to cause such warehouseman, bailee agent or other Person to authenticate
a record acknowledging that it holds possession of such Collateral for the
Secured Parties’ benefit and waive any Lien held by it against such Collateral,
except Liens for customary storage/handling charges, (iii) Documents that have
been delivered to the issuer of such Document to claim the Goods evidenced
therefore or to any Person in connection with sales of Equipment or Inventory as
permitted by the Credit Agreement, and (iv) Instruments, Documents or Promissory
Notes that have been delivered to the Collateral Trustee pursuant to Section 3.5
unless it shall have (a) notified the Collateral Trustee in writing, by
executing and delivering to the Collateral Trustee a supplement to this
Agreement together with all schedules thereto, at least 15 days prior to any
change in locations, identifying such new locations and providing such other
information in connection therewith as the Collateral Trustee may reasonably
request and (b) taken all actions necessary or advisable to maintain the
continuous validity, perfection and the same or better priority of the
Collateral Trustee's security interest in the Collateral intended to be granted
and agreed to hereby, or to enable the Collateral Trustee to exercise and
enforce its rights and remedies hereunder, with respect to such Collateral. In
the case of Equipment or Inventory described in clause (ii) above, to the
knowledge of the Borrower, no lessor or warehouseman of any premises or
warehouse upon or in which such Equipment or Inventory is located has (i) issued
any warehouse receipt or other receipt in the nature of a warehouse receipt in
respect of any such Equipment or Inventory, (ii) issued any Document for any
such Equipment or Inventory, (iii) received notification of any Secured Party’s
interest (other than the security interest granted hereunder) in any such
Equipment or Inventory or (iv) any Lien on any such Equipment or Inventory other
than Permitted Liens.

(b)               Each Grantor is the sole entitlement holder of its Accounts
and no other Person (other than the Collateral Trustee pursuant to this Security
Agreement or any other Person with respect to Permitted Liens) has control or
possession of, or any other interest in, any of its Accounts or any other
securities or property credited thereto.

SECTION 3.5. Negotiable Documents, Instruments and Chattel Paper. Each Grantor
has delivered to the Collateral Trustee possession of all originals of all
Documents, Instruments, Promissory Notes, and tangible Chattel Paper owned or
held by such Grantor on the Closing Date, which individually or in the aggregate
have either a book value or a fair market value in excess of $250,000.

 

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SECTION 3.6. Intellectual Property Collateral. Except as disclosed on Schedules
III through V, with respect to any Intellectual Property Collateral:

(a)               (i)  set forth in Item A of Schedule III hereto is a complete
and accurate list of all issued and applied-for patents owned by each Grantor,
including those that have been issued by or are on file with the U.S. Patent and
Trademark Office, and set forth in Item B of Schedule III hereto is a complete
and accurate list of each Grantor’s material patent licenses;

(ii)               set forth in Item A of Schedule IV hereto is a complete and
accurate list all registered and applied-for Trademarks owned by each Grantor,
including those that are registered, or for which an application for
registration has been made, with U.S. Patent and Trademark Office, and set forth
in Item B of Schedule IV hereto is a complete and accurate list of each
Grantor’s material Trademark licenses;

(iii)              set forth in Item A of Schedule V hereto is a complete and
accurate list of all registered and applied-for copyrights owned by each
Grantor, including those that are registered, or for which an application for
registration has been made, with the U.S. Copyright Office, and set forth in
Item B of Schedule V hereto is a complete and accurate list of each Grantor’s
material copyright licenses;

(b)               such Intellectual Property Collateral is subsisting, unexpired
and, to the knowledge of the Grantors, valid, enforceable, and has not been
abandoned or adjudged invalid or unenforceable, in whole or in part except as
could not be expected to have a Material Adverse Effect;

(c)               such Grantor is the sole and exclusive owner of the entire and
unencumbered right, title and interest in and to such material Intellectual
Property Collateral (other than any third party licensee’s interest in any
Intellectual Property Collateral licensed by such Grantor) and no claim has been
made that the use of such Intellectual Property Collateral does or may, conflict
with, infringe, misappropriate, dilute, misuse or otherwise violate any of the
rights of any third party, except as could not be reasonably expected to have a
Material Adverse Effect;

(d)               such Grantor has made all necessary filings and recordations
to protect its interest in material Intellectual Property Collateral, including
recordations of all of its interests in the Trademark Collateral in the U.S.
Patent and Trademark Office, and, to the extent necessary, has used proper forms
of statutory notice in connection with its use of any material patent, Trademark
and copyright in any of the Intellectual Property Collateral;

(e)               such Grantor has taken all reasonable steps to safeguard the
confidentiality of its material Trade Secrets and to its knowledge: (A) none of
such Trade Secrets has been used, divulged, disclosed or appropriated for the
benefit of any other Person other than such Grantor; (B) no employee,
independent contractor or agent of such Grantor has misappropriated any Trade
Secrets of any other Person in the course of the performance of his or her
duties as an employee, independent contractor or agent of such Grantor; and (C)
no employee, independent contractor or agent of such Grantor is in default or
breach of any term relating in any way to the

 

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protection, ownership, development, use or transfer of such Grantor’s
Intellectual Property Collateral in any employment agreement, non-disclosure
agreement, assignment of inventions agreement or similar agreement or contract;

(f)                to such Grantor’s knowledge, no third party is infringing
upon any material Intellectual Property Collateral;

(g)               no settlement or consents, covenants not to sue, nonassertion
assurances, or releases have been entered into by such Grantor or to which such
Grantor is bound that adversely affects its rights to own or use any
Intellectual Property except as would not have a Material Adverse Effect;

(h)               such Grantor has not made a previous assignment, sale,
transfer or agreement constituting a present or future assignment, sale or
transfer of any Intellectual Property Collateral for purposes of granting a
security interest therein or as Collateral that has not been terminated or
released, other than Permitted Liens;

(i)                such Grantor has executed and delivered to the Collateral
Trustee, Intellectual Property Collateral security agreements for all
copyrights, patents and Trademarks owned by such Grantor, including all
copyrights, patents and trademarks on Schedule III through V;

(j)                such Grantor uses adequate standards of quality in the
manufacture, distribution, and sale of all products sold and in the provision of
all services rendered under or in connection with all Trademarks in order to
maintain the enforceability of such Trademarks and has taken all commercially
reasonable action necessary to insure that all licensees of the Trademarks owned
by such Grantor use such adequate standards of quality;

(k)               the consummation of the transactions contemplated by the
Credit Agreement and this Security Agreement will not result in the termination
or material impairment of any of the material Intellectual Property Collateral;
and

(l)                such Grantor owns directly or is entitled to use by license
or otherwise, all patents, Trademarks, Trade Secrets, copyrights, mask works,
licenses, technology, know-how, processes and rights with respect to any of the
foregoing used in the conduct of such Grantor’s business as currently conducted.

SECTION 3.7. Validity, etc.

(a)               This Security Agreement creates a valid security interest in
the Collateral securing the payment of the Secured Obligations.

(b)               Each Grantor has filed or caused to be filed all UCC-1
financing statements in the filing office for each Grantor’s jurisdiction of
organization listed in Item A of Schedule II (collectively, the “Filing
Statements”) (or has authenticated and delivered to the Collateral Trustee the
Filing Statements suitable for filing in such offices) and has taken all other:

(i)                actions necessary to obtain control of the Collateral as
provided in Sections 9-104, 9-105, 9-106 and 9-107 of the UCC; and

 

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(ii)               actions necessary to perfect the Collateral Trustee’s
security interest with respect to any Collateral evidenced by a certificate of
ownership.

(c)               Upon the filing of the Filing Statements with the appropriate
agencies therefor the security interests created under this Security Agreement
shall constitute a perfected security interest in the Collateral described on
such Filing Statements in favor of the Collateral Trustee on behalf of the
Secured Parties to the extent that a security interest therein may be perfected
by filing pursuant to the relevant UCC, prior to all other Liens, except for
Permitted Liens (in which case such security interest shall be second in
priority of right only to the Permitted Liens until the obligations secured by
such Permitted Liens have been satisfied).

SECTION 3.8. Authorization, Approval, etc. Except as have been obtained or made
and are in full force and effect, no authorization, approval or other action by,
and no notice to or filing with, any Governmental Authority or any other third
party is required either

(a)               for the grant by the Grantors of the security interest granted
hereby or for the execution, delivery and performance of this Security Agreement
by the Grantors, subject, in the case of the performance of this Security
Agreement, to the filings and recordations referenced in Section 3.8(b);

(b)               for the perfection or maintenance of the security interests
hereunder including the first priority (subject to Permitted Liens) nature of
such security interest (except with respect to the Filing Statements as
contemplated in Section 3.7 or, with respect to Intellectual Property
Collateral, the recordation of intellectual property security agreements with
the U.S. Patent and Trademark Office or the U.S. Copyright Office) and the
taking of actions required by applicable foreign law, if any, with respect to
Intellectual Property Collateral created under a jurisdiction outside the United
States or the exercise by the Collateral Trustee of its rights and remedies
hereunder; or

(c)               for the exercise by the Collateral Trustee of the voting or
other rights provided for in this Security Agreement, or, except (i) with
respect to any securities issued by a Subsidiary of the Grantors, as may be
required in connection with a disposition of such securities by laws affecting
the offering and sale of securities generally, the remedies in respect of the
Collateral pursuant to this Security Agreement and (ii) any “change of control”
or similar filings required by state licensing agencies.

ARTICLE IV

COVENANTS

Each Grantor covenants and agrees that, until the Termination Date, such Grantor
will perform, comply with and be bound by the obligations set forth below.

SECTION 4.1. As to Investment Property, etc.

SECTION 4.1.1. Capital Securities of Subsidiaries. No Grantor will allow any of
its Subsidiaries:

 

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(a)               that is a corporation, business trust, joint stock company or
similar Person, to issue Uncertificated Securities (unless such Subsidiary is a
Foreign Subsidiary);

(b)               that is a partnership or limited liability company, to
(i) issue Capital Securities that are to be dealt in or traded on securities
exchanges or in securities markets, (ii) expressly provide in its Organic
Documents that its Capital Securities are securities governed by Article 8 of
the UCC, or (iii) place such Subsidiary’s Capital Securities in a Securities
Account; and

(c)               to issue Capital Securities in addition to or in substitution
for the Capital Securities pledged hereunder, except to such Grantor (and such
Capital Securities are immediately pledged and delivered to the Collateral
Trustee pursuant to the terms of this Security Agreement).

SECTION 4.1.2. Investment Property (other than Certificated Securities).

(a)               With respect to any Deposit Accounts, Securities Accounts,
Commodity Accounts, Commodity Contracts or Security Entitlements constituting
Investment Property owned or held by any Grantor, such Grantor will, upon the
Collateral Trustee’s request, cause the intermediary maintaining such Investment
Property to execute a Control Agreement relating to such Investment Property
pursuant to which such intermediary agrees, upon the occurrence and during the
continuance of a Specified Default, to comply with the Collateral Trustee’s
instructions with respect to such Investment Property without further consent by
such Grantor.

(b)               With respect to any Uncertificated Securities (other than
Uncertificated Securities credited to a Securities Account) constituting
Investment Property owned or held by any Grantor, such Grantor will cause the
issuer of such securities to either (i) register the Collateral Trustee as the
registered owner thereof on the books and records of the issuer or (ii) execute
a Control Agreement relating to such Investment Property pursuant to which the
issuer agrees, upon the occurrence and during the continuance of a Specified
Default, to comply with the Collateral Trustee’s instructions with respect to
such Uncertificated Securities without further consent by such Grantor.

SECTION 4.1.3. Certificated Securities (Stock Powers). Each Grantor agrees that
all Certificated Securities, including the Capital Securities delivered by such
Grantor pursuant to this Security Agreement, will be accompanied by duly
executed undated blank stock powers, or other equivalent instruments of transfer
reasonably acceptable to the Collateral Trustee.

SECTION 4.1.4. Continuous Pledge. Each Grantor will (subject to the terms of the
Credit Agreement) deliver to the Collateral Trustee and at all times keep
pledged to the Collateral Trustee pursuant hereto, on a first-priority,
perfected basis all Investment Property, all dividends and Distributions with
respect thereto, all Payment Intangibles to the extent they are evidenced by a
Document, Instrument, Promissory Note or Chattel Paper, and all interest and
principal with respect to such Payment Intangibles, and all Proceeds and rights
from time to time received by or distributable to such Grantor in respect of any
of the foregoing Collateral. Each Grantor agrees that it will, promptly

 

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following receipt thereof, deliver to the Collateral Trustee possession of all
originals of negotiable Documents, Instruments, Promissory Notes and Chattel
Paper that it acquires following the Closing Date.

SECTION 4.1.5. Voting Rights; Dividends, etc. Each Grantor agrees:

(a)               promptly upon receipt of notice of the occurrence and
continuance of a Specified Default from the Collateral Trustee and without any
request therefor by the Collateral Trustee, so long as such Specified Default
shall continue, to deliver (properly endorsed where required hereby or requested
by the Collateral Trustee) to the Collateral Trustee all dividends and
Distributions with respect to Investment Property, all interest, principal,
other cash payments on Payment Intangibles, and all Proceeds of the Collateral,
in each case thereafter received by such Grantor, all of which shall be held by
the Collateral Trustee as additional Collateral; and

(b)               with respect to Collateral consisting of general partner
interests or limited liability company interests, to promptly modify its Organic
Documents to admit the Collateral Trustee as a general partner or member, as
applicable, immediately upon the occurrence and continuance of a Specified
Default and so long as the Collateral Trustee has notified such Grantor of the
Collateral Trustee’s intention to exercise its voting power under this clause,

(i)                that the Collateral Trustee may exercise (to the exclusion of
such Grantor) the voting power and all other incidental rights of ownership with
respect to any Investment Property constituting Collateral and such Grantor
hereby grants the Collateral Trustee an irrevocable proxy, exercisable under
such circumstances, to vote such Investment Property; and

(ii)               to promptly deliver to the Collateral Trustee such additional
proxies and other documents as may be necessary to allow the Collateral Trustee
to exercise such voting power.

All dividends, Distributions, interest, principal, cash payments, Payment
Intangibles and Proceeds that may at any time and from time to time be held by
such Grantor, but which such Grantor is then obligated to deliver to the
Collateral Trustee, shall, until delivery to the Collateral Trustee, be held by
such Grantor separate and apart from its other property in trust for the
Collateral Trustee. The Collateral Trustee agrees that unless a Specified
Default shall have occurred and be continuing and the Collateral Trustee shall
have given the notice referred to in clause (b), such Grantor will (i) be
entitled to receive all dividends and Distributions with respect to Investment
Property, all interest, principal, other cash payments on Payment Intangibles,
and all Proceeds of the Collateral from time to time received, receivable or
otherwise

 

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distributed in respect of the Collateral and (ii) have the exclusive voting
power with respect to any Investment Property constituting Collateral and the
Collateral Trustee will, upon the written request of such Grantor, promptly
deliver such proxies and other documents, if any, as shall be reasonably
requested by such Grantor which are necessary to allow such Grantor to exercise
that voting power; provided that no vote shall be cast, or consent, waiver, or
ratification given, or action taken by such Grantor that would impair any such
Collateral or be inconsistent with or violate any provision of any Loan
Document.

SECTION 4.2. Change of Name, etc. No Grantor will change its name or place of
incorporation or organization or federal taxpayer identification number except
upon 30 days’ prior written notice to the Collateral Trustee.

SECTION 4.3. As to Accounts.

(a)               Each Grantor shall have the right to collect all Accounts so
long as no Specified Default shall have occurred and be continuing.

(b)               Upon (i) the occurrence and continuance of a Specified Default
and (ii) the delivery of notice by the Collateral Trustee to each Grantor, all
Proceeds of Collateral received by such Grantor shall be delivered in kind to
the Collateral Trustee for deposit in a Deposit Account of such Grantor
maintained with the Collateral Trustee in accordance with the provisions of
Section 3 of the Collateral Trust Agreement (together with any other Accounts
pursuant to which any portion of the Collateral is deposited with the Collateral
Trustee, the “Collateral Accounts”), and such Grantor shall not commingle any
such Proceeds, and shall hold separate and apart from all other property, all
such Proceeds in express trust for the benefit of the Collateral Trustee until
delivery thereof is made to the Collateral Trustee.

(c)               The Collateral Trustee shall have the right to apply any
amount in the Collateral Account in accordance with the provisions of the
Collateral Trust Agreement.

(d)               With respect to each of the Collateral Accounts, it is hereby
confirmed and agreed that (i) deposits in such Collateral Account are subject to
a security interest as contemplated hereby, (ii) such Collateral Account shall
be under the control of the Collateral Trustee and (iii) the Collateral Trustee
shall have the sole right of withdrawal over such Collateral Account in
accordance with the provisions of the Collateral Trust Agreement.

SECTION 4.4. As to Grantors’ Use of Collateral.

(a)               Subject to clause (b), each Grantor (i) may in the ordinary
course of its business, at its own expense, sell, lease or furnish under the
contracts of service any of the Inventory normally held by such Grantor for such
purpose, and use and consume, in the ordinary course of its business, any raw
materials, work in process or materials normally held by such Grantor for

 

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such purpose, (ii) will, at its own expense, endeavor to collect, as and when
due, all amounts due with respect to any of the Collateral, including the taking
of such action with respect to such collection as the Collateral Trustee may
reasonably request following the occurrence of a Specified Default or, in the
absence of such request, as such Grantor may deem advisable, and (iii) may
grant, in the ordinary course of business, to any party obligated on any of the
Collateral, any rebate, refund or allowance to which such party may be lawfully
entitled, and may accept, in connection therewith, the return of Goods, the sale
or lease of which shall have given rise to such Collateral.

(b)               At any time following the occurrence and during the
continuance of a Specified Default, whether before or after the maturity of any
of the Secured Obligations, the Collateral Trustee may (i) revoke any or all of
the rights of each Grantor set forth in clause (a), (ii) notify any parties
obligated on any of the Collateral to make payment to the Collateral Trustee of
any amounts due or to become due thereunder and (iii) enforce collection of any
of the Collateral by suit or otherwise and surrender, release, or exchange all
or any part thereof, or compromise or extend or renew for any period (whether or
not longer than the original period) any indebtedness thereunder or evidenced
thereby.

(c)               Upon request of the Collateral Trustee following the
occurrence and during the continuance of a Specified Default, each Grantor will,
at its own expense, notify any parties obligated on any of the Collateral to
make payment to the Collateral Trustee of any amounts due or to become due
thereunder.

(d)               At any time following the occurrence and during the
continuation of a Specified Default, the Collateral Trustee may endorse, in the
name of such Grantor, any item, howsoever received by the Collateral Trustee,
representing any payment on or other Proceeds of any of the Collateral.

SECTION 4.5. As to Intellectual Property Collateral. Each Grantor covenants and
agrees to comply with the following provisions as such provisions relate to any
Intellectual Property Collateral material to the operations or business of such
Grantor:

(a)               such Grantor will not (i) do or fail to perform any act
whereby any of the Patent Collateral may lapse or become abandoned or dedicated
to the public or unenforceable, (ii) itself or permit any of its licensees to
(A) fail to continue to use any of the Trademark Collateral in order to maintain
the Trademark Collateral in full force free from any claim of abandonment for
non-use, (B) fail to maintain as in the past the quality of products and
services offered under the Trademark Collateral, (C) fail to employ the
Trademark Collateral registered with any federal or state or foreign authority
with an appropriate notice of such registration, (D) adopt or use any other
Trademark which is confusingly similar or a colorable imitation of any of the
Trademark Collateral, unless rights in such Trademark Collateral inure solely to
Grantor and do not infringe or weaken the validity or enforceability of any of
the Intellectual Property Collateral or (E) do or permit any act or knowingly
omit to do any act whereby any of the Trademark Collateral may lapse or become
invalid or unenforceable, or (iii) do or permit any act or knowingly omit to do
any act whereby any of the Copyright Collateral or any of the Trade Secrets
Collateral may lapse or become invalid or unenforceable or placed in the public
domain except upon expiration of the end of an unrenewable term of a
registration thereof, unless, in the case of any of the foregoing

 

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requirements in clauses (i), (ii) and (iii), either (x) such Grantor shall
reasonably and in good faith determine that any of such Intellectual Property
Collateral is of negligible economic value to such Grantor, or (y) the loss of
the Intellectual Property Collateral would not have a Material Adverse Effect on
the business;

(b)               such Grantor shall promptly notify the Collateral Trustee if
it knows, or has reason to know, that any application or registration relating
to any material item of the Intellectual Property Collateral may become
abandoned or dedicated to the public or placed in the public domain or invalid
or unenforceable, or of any material adverse determination or development
(including the institution of, or any such determination or development in, any
proceeding in the U.S. Patent and Trademark Office, the U.S. Copyright Office or
any foreign counterpart thereof or any court) regarding such Grantor’s ownership
of any material item of the Intellectual Property Collateral, its right to
register the same or to keep and maintain and enforce the same;

(c)               in no event will such Grantor or any of its agents, employees,
designees or licensees file an application for the registration of any
Intellectual Property Collateral with the U.S. Patent and Trademark Office, the
U.S. Copyright Office or any similar office or agency in any other country or
any political subdivision thereof, unless it promptly informs the Collateral
Trustee, and upon request of the Collateral Trustee (subject to the terms of the
Credit Agreement), executes and delivers an Intellectual Property Security
Agreement substantially in the form set forth as Exhibits A, B and C hereto and
other documents as the Collateral Trustee may request to evidence the Collateral
Trustee’s security interest in such Intellectual Property Collateral in
accordance with clause (e) below;

(d)               such Grantor will take all necessary steps, including in any
proceeding before the U.S. Patent and Trademark Office, the U.S. Copyright
Office or (subject to the terms of the Credit Agreement) any similar office or
agency in any other country or any political subdivision thereof, to maintain
and pursue any application (and to obtain the relevant registration) filed with
respect to, and to maintain any registration of, any material items of
Intellectual Property Collateral, including the filing of applications for
renewal, affidavits of use, affidavits of incontestability and opposition,
interference and cancellation proceedings against third parties (to the extent
commercially reasonable) and the payment of fees and taxes to maintain and
pursue such registrations and applications (except to the extent that
dedication, abandonment or invalidation is permitted under the foregoing clause
(a) or (b)); and

(e)               such Grantor will promptly (but no less than quarterly)
execute and deliver to the Collateral Trustee (as applicable) a Patent Security
Agreement, Trademark Security Agreement and/or Copyright Security Agreement, as
the case may be, in the forms of Exhibit A, Exhibit B and Exhibit C hereto
following its obtaining an ownership interest in any Intellectual Property
Collateral which is the subject of a registration or application, and shall
execute and deliver to the Collateral Trustee any other document required to
acknowledge or register or record or perfect the Collateral Trustee’s interest
in any part of such item of Intellectual Property Collateral.

 

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SECTION 4.6. As to Letter-of-Credit Rights.

(a)               Each Grantor, by granting a security interest in its
Letter-of-Credit Rights to the Collateral Trustee, intends to (and hereby does)
collaterally assign to the Collateral Trustee its rights (including its
contingent rights ) to the Proceeds of all Letter-of-Credit Rights of which it
is or hereafter becomes a beneficiary or assignee. Such Grantor will promptly
use its best efforts to cause the issuer of each Letter of Credit and each
nominated person (if any) with respect thereto to consent to such assignment of
the Proceeds thereof in a consent agreement in form and substance reasonably
satisfactory to the Collateral Trustee and deliver written evidence of such
consent to the Collateral Trustee.

(b)               Upon the occurrence of a Specified Default, such Grantor will,
promptly upon request by the Collateral Trustee, (i) notify (and such Grantor
hereby authorizes the Collateral Trustee to notify) the issuer and each
nominated person with respect to each of the Letters of Credit that the Proceeds
thereof have been assigned to the Collateral Trustee hereunder and any payments
due or to become due in respect thereof are to be made directly to the
Collateral Trustee and (ii) arrange for the Collateral Trustee to become the
transferee beneficiary Letter of Credit.

SECTION 4.7. As to Commercial Tort Claims. Each Grantor covenants and agrees
that, until the payment in full of the Secured Obligations and termination of
all Commitments, with respect to any Commercial Tort Claim hereafter arising, it
shall deliver to the Collateral Trustee a supplement in form and substance
reasonably satisfactory to the Collateral Trustee, together with all supplements
to schedules thereto identifying such new Commercial Tort Claims.

SECTION 4.8. Electronic Chattel Paper and Transferable Records. If any Grantor
at any time holds or acquires an interest in any electronic chattel paper or any
“transferable record,” as that term is defined in Section 201 of the U.S.
Federal Electronic Signatures in Global and National Commerce Act, or in Section
16 of the U.S. Uniform Electronic Transactions Act as in effect in any relevant
jurisdiction, with a value in excess of $1,000,000, such Grantor shall promptly
notify the Collateral Trustee thereof and, at the request of the Collateral
Trustee, shall take such action as the Collateral Trustee may reasonably request
to vest in the Collateral Trustee control under Section 9-105 of the UCC of such
electronic chattel paper or control under Section 201 of the Federal Electronic
Signatures in Global and National Commerce Act or, as the case may be, Section
16 of the Uniform Electronic Transactions Act, as so in effect in such
jurisdiction, of such transferable record. The Collateral Trustee agrees with
such Grantor that the Collateral Trustee will arrange, pursuant to procedures
satisfactory to the Collateral Trustee and so long as such procedures will not
result in the Collateral Trustee’s loss of control, for the Grantor to make
alterations to the electronic chattel paper or transferable record permitted
under Section 9-105 of the UCC or, as the case may be, Section 201 of the U.S.
Federal Electronic Signatures in Global and National Commerce Act or Section 16
of the U.S. Uniform Electronic Transactions Act for a party in control to allow
without loss of control, unless an Event of Default has occurred and is
continuing or would occur after taking into account any action by such Grantor
with respect to such electronic chattel paper or transferable record.

 

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SECTION 4.9. Further Assurances, etc. Each Grantor agrees that, from time to
time at its own expense, it will promptly execute and deliver all further
instruments and documents, and take all further action, that may be necessary or
that the Collateral Trustee may reasonably request, in order to perfect,
preserve and protect any security interest granted or purported to be granted
hereby or to enable the Collateral Trustee to exercise and enforce its rights
and remedies hereunder with respect to any Collateral. Without limiting the
generality of the foregoing, such Grantor will

(a)               from time to time upon the request of the Collateral Trustee,
promptly deliver to the Collateral Trustee such stock powers, instruments and
similar documents, reasonably satisfactory in form and substance to the
Collateral Trustee, with respect to such Collateral as the Collateral Trustee
may reasonably request and will, from time to time upon the request of the
Collateral Trustee, after the occurrence and during the continuance of any
Specified Default, promptly transfer any securities constituting Collateral into
the name of any nominee designated by the Collateral Trustee; if any Collateral
shall be evidenced by an Instrument, negotiable Document, Promissory Note or
tangible Chattel Paper, deliver and pledge to the Collateral Trustee hereunder
such Instrument, negotiable Document, Promissory Note or tangible Chattel Paper
duly endorsed and accompanied by duly executed instruments of transfer or
assignment, all in form and substance reasonably satisfactory to the Collateral
Trustee;

(b)               file (and hereby authorize the Collateral Trustee to file)
such Filing Statements or continuation statements, or amendments thereto, and
such other instruments or notices (including any assignment of claim form under
or pursuant to the federal assignment of claims statute, 31 U.S.C. § 3726, any
successor or amended version thereof or any regulation promulgated under or
pursuant to any version thereof), as may be necessary or that the Collateral
Trustee may reasonably request in order to perfect and preserve the security
interests and other rights granted or purported to be granted to the Collateral
Trustee hereby;

(c)               deliver to the Collateral Trustee in accordance with the terms
of this Security Agreement and at all times keep pledged to the Collateral
Trustee pursuant hereto, on a first-priority, perfected basis, at the request of
the Collateral Trustee, all Investment Property constituting Collateral, all
dividends and Distributions with respect thereto, and all interest and principal
with respect to Promissory Notes, and all Proceeds and rights from time to time
received by or distributable to such Grantor in respect of any of the foregoing
Collateral;

(d)               not take or omit to take any action the taking or the omission
of which would result in any impairment or alteration of any obligation of the
maker of any Payment Intangible or other Instrument constituting Collateral,
except as provided in Section 4.4;

(e)               not create any tangible Chattel Paper without placing a legend
on such tangible Chattel Paper acceptable to the Collateral Trustee indicating
that the Collateral Trustee has a security interest in such Chattel Paper;

(f)                furnish to the Collateral Trustee, from time to time at the
Collateral Trustee’s request, statements and schedules further identifying and
describing the Collateral and such other reports in connection with the
Collateral as the Collateral Trustee may reasonably request, all in reasonable
detail; and

 

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(g)               do all things reasonably requested by the Collateral Trustee
in accordance with this Security Agreement in order to enable the Collateral
Trustee to have and maintain control over the Collateral consisting of
Investment Property, Deposit Accounts, Letter-of-Credit-Rights and Electronic
Chattel Paper.

With respect to the foregoing and the grant of the security interest hereunder,
each Grantor hereby authorizes the Collateral Trustee to file one or more
financing or continuation statements, and amendments thereto, relative to all or
any part of the Collateral in a filing office and jurisdiction that it deems
necessary or advisable. Each Grantor agrees that a carbon, photographic or other
reproduction of this Security Agreement or any UCC financing statement covering
the Collateral or any part thereof shall be sufficient as a UCC financing
statement where permitted by law. Each Grantor hereby authorizes the Collateral
Trustee to file financing statements describing as the collateral covered
thereby “all of the debtor’s personal property or assets”, or words to that
effect, notwithstanding that such wording may be broader in scope than the
Collateral described in this Security Agreement.

SECTION 4.10. Deposit Accounts. Following the occurrence and during the
continuance of a Specified Default, at the request of the Collateral Trustee or
the Required Lenders, such Grantor will maintain all of its Deposit Accounts
only with the Collateral Trustee or with any depositary institution that has
entered into a Control Agreement in favor of the Collateral Trustee as required
by the Credit Agreement.

ARTICLE V

THE ADMINISTRATIVE AGENT AND THE TRUSTEE

SECTION 5.1. Collateral Trustee Appointed Attorney-in-Fact. Each Grantor hereby
irrevocably appoints the Collateral Trustee its attorney-in-fact, with full
authority in the place and stead of such Grantor and in the name of such Grantor
or otherwise, from time to time in the Collateral Trustee’s discretion,
following the occurrence and during the continuance of a Specified Default, to
take any action and to execute any instrument which the Collateral Trustee may
deem necessary or advisable to accomplish the purposes of this Security
Agreement, including:

(a)               to ask, demand, collect, sue for, recover, compromise, receive
and give acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral;

(b)               to receive, endorse, and collect any drafts or other
Instruments, Documents and Chattel Paper, in connection with clause (a) above;

 

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(c)               to file any claims or take any action or institute any
proceedings which the Collateral Trustee may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights of the
Collateral Trustee with respect to any of the Collateral; and

(d)

to perform the affirmative obligations of such Grantor hereunder.

Each Grantor hereby acknowledges, consents and agrees that the power of attorney
granted pursuant to this Section is irrevocable and coupled with an interest.

SECTION 5.2. Collateral Trustee May Perform. If any Grantor fails to perform any
agreement contained herein, the Collateral Trustee, after such notice to such
Grantor, may itself perform, or cause performance of, such agreement, and the
expenses of the Collateral Trustee incurred in connection therewith shall be
payable by such Grantor pursuant to Section 12.3 of the Credit Agreement.

SECTION 5.3. Administrative Agent and Collateral Trustee Have No Duty. The
powers conferred on the Collateral Trustee hereunder are solely to protect its
respective interest (on behalf of the Secured Parties) in the Collateral and
shall not impose any duty on it to exercise any such powers. Except for
reasonable care of any Collateral in its possession and the accounting for
moneys actually received by it hereunder, the Collateral Trustee shall have no
duty as to any Collateral or responsibility for

(a)               ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative to any
Investment Property, whether or not the Collateral Trustee has or is deemed to
have knowledge of such matters, or

(b)               taking any necessary steps to preserve rights against prior
parties or any other rights pertaining to any Collateral.

SECTION 5.4. Reasonable Care. The Collateral Trustee is required to exercise
reasonable care in the custody and preservation of any of the Collateral in its
possession; provided that the Collateral Trustee shall be deemed to have
exercised reasonable care in the custody and preservation of any of the
Collateral, if it takes such action for that purpose as each Grantor reasonably
requests in writing at times other than upon the occurrence and during the
continuance of any Specified Default, but failure of the Collateral Trustee to
comply with any such request at any time shall not in itself be deemed a failure
to exercise reasonable care.

ARTICLE VI

REMEDIES

SECTION 6.1. Certain Remedies. If any Specified Default shall have occurred and
be continuing:

(a)               The Collateral Trustee may exercise in respect of the
Collateral, in addition to other rights and remedies provided for herein or
otherwise available to it, all the rights and

 

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remedies of a Secured Party on default under the UCC (whether or not the UCC
applies to the affected Collateral) and also may

(i)                take possession of any Collateral not already in its
possession without demand and without legal process;

(ii)               require each Grantor to, and each Grantor hereby agrees that
it will, at its expense and upon request of the Collateral Trustee forthwith,
assemble all or part of the Collateral as directed by the Collateral Trustee and
make it available to the Collateral Trustee at a place to be designated by the
Collateral Trustee that is reasonably convenient to both parties,

(iii)              enter onto the property where any Collateral is located and
take possession thereof without demand and without legal process;

(iv)              without notice except as specified below, lease, license, sell
or otherwise dispose of the Collateral or any part thereof in one or more
parcels at public or private sale, at any of the Collateral Trustee’s offices or
elsewhere, for cash, on credit or for future delivery, and upon such other terms
as the Collateral Trustee may deem commercially reasonable. Each Grantor agrees
that, to the extent notice of sale shall be required by law, at least ten days’
prior notice to such Grantor of the time and place of any public sale or the
time after which any private sale is to be made shall constitute reasonable
notification. The Collateral Trustee shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. The Collateral
Trustee may adjourn any public or private sale from time to time by announcement
at the time and place fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned.

(b)               All cash Proceeds received by the Collateral Trustee in
respect of any sale of, collection from, or other realization upon, all or any
part of the Collateral shall be applied by the Collateral Trustee against all or
any part of the Secured Obligations as set forth in Section 3.4 of the
Collateral Trust Agreement.

(c)

The Collateral Trustee may

(i)                transfer all or any part of the Collateral into the name of
the Collateral Trustee or its nominee, with or without disclosing that such
Collateral is subject to the Lien hereunder,

(ii)               notify the parties obligated on any of the Collateral to make
payment to the Collateral Trustee of any amount due or to become due thereunder,

(iii)              withdraw, or cause or direct the withdrawal, of all funds
with respect to the Collateral Account;

(iv)              enforce collection of any of the Collateral by suit or
otherwise, and surrender, release or exchange all or any part thereof, or
compromise or extend or renew

 

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for any period (whether or not longer than the original period) any obligations
of any nature of any party with respect thereto,

(v)               endorse any checks, drafts, or other writings in any Grantor’s
name to allow collection of the Collateral,

(vi)

take control of any Proceeds of the Collateral, and

(vii)             execute (in the name, place and stead of any Grantor)
endorsements, assignments, stock powers and other instruments of conveyance or
transfer with respect to all or any of the Collateral.

SECTION 6.2. Securities Laws. If the Collateral Trustee shall determine to
exercise its right to sell all or any of the Collateral that are Capital
Securities pursuant to Section 6.1, each Grantor agrees that, upon request of
the Collateral Trustee, each Grantor will, at its own expense, either:

(a)               execute and deliver, and cause (or, with respect to any issuer
which is not a Subsidiary of such Grantor, use its best efforts to cause) each
issuer of the Collateral contemplated to be sold and the directors and officers
thereof to execute and deliver, all such instruments and documents, and do or
cause to be done all such other acts and things, as may be necessary or, in the
opinion of the Collateral Trustee, advisable to register such Collateral under
the provisions of the U.S. Securities Act of 1933, as amended (the “Securities
Act”), and cause the registration statement relating thereto to become effective
and to remain effective for such period as prospectuses are required by law to
be furnished, and to make all amendments and supplements thereto and to the
related prospectus which, in the opinion of the Collateral Trustee, are
necessary or advisable, all in conformity with the requirements of the
Securities Act and the rules and regulations of the U.S. Securities and Exchange
Commission applicable thereto;

(b)               use its best efforts to exempt the Collateral under the state
securities or “Blue Sky” laws and to obtain all necessary governmental approvals
for the sale of the Collateral, as requested by the Collateral Trustee;

(c)               cause (or, with respect to any issuer that is not a Subsidiary
of such Grantor, use its best efforts to cause) each such issuer to make
available to its security holders, as soon as practicable, an earnings statement
that will satisfy the provisions of Section 11(a) of the Securities Act; or

(d)               do or cause to be done all such other acts and things as may
be necessary to make such sale of the Collateral or any part thereof valid and
binding and in compliance with applicable law.

(e)               Each Grantor acknowledges the impossibility of ascertaining
the amount of damages that would be suffered by the Collateral Trustee or the
Secured Parties by reason of the failure by such Grantor to perform any of the
covenants contained in this Section and consequently agrees that, if such
Grantor shall fail to perform any of such covenants, it shall pay, as liquidated
damages and not as a penalty, an amount equal to the value (as determined by the

 

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

Collateral Trustee) of such Collateral on the date the Collateral Trustee shall
demand compliance with this Section.

SECTION 6.3. Compliance with Restrictions. Each Grantor agrees that in any sale
of any of the Collateral whenever a Specified Default shall have occurred and be
continuing, the Collateral Trustee is hereby authorized to comply with any
limitation or restriction in connection with such sale as it may be advised by
counsel is necessary in order to avoid any violation of applicable law
(including compliance with such procedures as may restrict the number of
prospective bidders and purchasers, require that such prospective bidders and
purchasers have certain qualifications, and restrict such prospective bidders
and purchasers to Persons who will represent and agree that they are purchasing
for their own account for investment and not with a view to the distribution or
resale of such Collateral), or in order to obtain any required approval of the
sale or of the purchaser by any Governmental Authority or official, and such
Grantor further agrees that such compliance shall not result in such sale being
considered or deemed not to have been made in a commercially reasonable manner,
nor shall the Collateral Trustee be liable nor accountable to such Grantor for
any discount allowed by the reason of the fact that such Collateral is sold in
compliance with any such limitation or restriction.

SECTION 6.4. Protection of Collateral. The Collateral Trustee may from time to
time, at its option, perform any act which any Grantor fails to perform after
receiving a reasonable request in writing so to perform (it being understood
that no such request need be given after the occurrence and during the
continuance of a Specified Default) and the Collateral Trustee may from time to
time take any other action which the Collateral Trustee deems necessary for the
maintenance, preservation or protection of any of the Collateral or of its
security interest therein.

ARTICLE VII

MISCELLANEOUS PROVISIONS

SECTION 7.1. Loan Document and Secured Instrument. This Security Agreement is
(i) a Secured Instrument for purposes of the Collateral Trust Agreement and
shall have (unless otherwise expressly indicated herein) been construed,
administered and applied in accordance with the terms and provisions thereof and
(ii) a Loan Document executed pursuant to the Credit Agreement and shall (unless
otherwise expressly indicated herein) be construed, administered and applied in
accordance with the terms and provisions thereof, including Article XII thereof.

SECTION 7.2. Binding on Successors, Transferees and Assigns; Assignment. This
Security Agreement shall remain in full force and effect until the Termination
Date has occurred, shall be binding upon the Grantors and their successors,
transferees and assigns and shall inure to the benefit of and be enforceable by
each Secured Party and its successors, transferees and assigns; provided that no
Grantor may (unless otherwise permitted under the terms of the Credit Agreement
or this Security Agreement) assign any of its obligations hereunder without the
prior written consent of all Lenders.

SECTION 7.3. Amendments, etc. No amendment to or waiver of any provision of this
Security Agreement, nor consent to any departure by any Grantor from its
obligations under this Security Agreement, shall in any event be effective
unless the same shall be in writing and

 

 

signed by the Collateral Trustee (on behalf of the Lenders or the Required
Lenders, as the case may be, pursuant to Section 12.1 of the Credit Agreement),
the Administrative Agent and the Grantors and then such waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given.

SECTION 7.4. Notices. All notices and other communications provided for
hereunder shall be in writing or by facsimile and addressed, delivered or
transmitted to the appropriate party at the address or facsimile number of such
party specified in the Credit Agreement, or provided pursuant to the Collateral
Trust Agreement, or at such other address or facsimile number as may be
designated by such party in a notice to the other party. Any notice or other
communication, if mailed and properly addressed with postage prepaid or if
properly addressed and sent by pre-paid courier service, shall be deemed given
when received; any such notice or other communication, if transmitted by
facsimile, shall be deemed given when transmitted and electronically confirmed.

SECTION 7.5. Release of Liens. Upon (a) the Disposition of Collateral in
accordance with the Credit Agreement or (b) the occurrence of the Termination
Date, the security interests granted herein shall automatically terminate with
respect to (i) such Collateral (in the case of clause (a)) or (ii) all
Collateral (in the case of clause (b)). Upon any such Disposition or
termination, the Collateral Trustee will, at the Grantors’ sole expense, deliver
to the Grantors, without any representations, warranties or recourse of any kind
whatsoever, all Collateral held by the Collateral Trustee hereunder, and execute
and deliver to the Grantors such documents as the Grantors shall reasonably
request to evidence such termination.

SECTION 7.6. Additional Grantors. Upon the execution and delivery by any other
Person of a supplement in the form of Annex I hereto, such Person shall become a
“Grantor” hereunder with the same force and effect as if it were originally a
party to this Security Agreement and named as a “Grantor” hereunder. The
execution and delivery of such supplement shall not require the consent of any
other Grantor hereunder, and the rights and obligations of each Grantor
hereunder shall remain in full force and effect notwithstanding the addition of
any new Grantor as a party to this Security Agreement.

SECTION 7.7. No Waiver; Remedies. In addition to, and not in limitation of
Section 2.4, no failure on the part of any Secured Party to exercise, and no
delay in exercising, any right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any right hereunder preclude any other
or further exercise thereof or the exercise of any other right. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law.

SECTION 7.8. Headings. The various headings of this Security Agreement are
inserted for convenience only and shall not affect the meaning or interpretation
of this Security Agreement or any provisions thereof.

SECTION 7.9. Severability. Any provision of this Security Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such provision and
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the

 

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

remaining provisions of this Security Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction.

SECTION 7.10. Governing Law, Entire Agreement, etc. THIS SECURITY AGREEMENT
SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF
THE STATE OF NEW YORK (INCLUDING FOR SUCH PURPOSE SECTIONS 5-1401 AND 5-1402 OF
THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), EXCEPT TO THE EXTENT THAT
THE PERFECTION, EFFECT OF PERFECTION OR NONPERFECTION, AND PRIORITY OF THE
SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR
COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF
NEW YORK. This Security Agreement and the other Loan Documents constitute the
entire understanding among the parties hereto with respect to the subject matter
hereof and thereof and supersede any prior agreements, written or oral, with
respect thereto.

SECTION 7.11. Counterparts. This Security Agreement may be executed by the
parties hereto in several counterparts, each of which shall be deemed to be an
original and all of which shall constitute together but one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Security Agreement by facsimile shall be effective as delivery of a manually
executed counterpart of this Security Agreement.

SECTION 7.12. Foreign Pledge Agreements. Without limiting any of the rights,
remedies, privileges or benefits provided hereunder to the Collateral Trustee
for its benefit and the ratable benefit of the other Secured Parties, each
Grantor, the Administrative Agent and the Collateral Trustee hereby agree that
the terms and provisions of this Security Agreement in respect of any Collateral
subject to the pledge or other Lien of a Foreign Pledge Agreement are, and shall
be deemed to be, supplemental and in addition to the rights, remedies,
privileges and benefits provided to the Collateral Trustee and the other Secured
Parties under such Foreign Pledge Agreement and under applicable law to the
extent consistent with applicable law; provided that, in the event that the
terms of this Security Agreement conflict or are inconsistent with the
applicable Foreign Pledge Agreement or applicable law governing such Foreign
Pledge Agreement, (i) to the extent that the provisions of such Foreign Pledge
Agreement or applicable foreign law are, under applicable foreign law, necessary
for the creation, perfection or priority of the security interests in the
Collateral subject to such Foreign Pledge Agreement, the terms of such Foreign
Pledge Agreement or such applicable law shall be controlling and (ii) otherwise,
the terms hereof shall be controlling.

SECTION 7.13. Collateral Trust Agreement. Notwithstanding anything herein to the
contrary, each Grantor hereby acknowledges that the lien and security interest
granted to the Collateral Trustee pursuant to this Security Agreement and the
exercise of any right or remedy by the Collateral Trustee hereunder are subject
to the provisions of the Collateral Trust Agreement. The Collateral Trustee
shall exercise all powers, discretions, rights and remedies hereunder solely in
accordance with the provisions of the Collateral Trust Agreement. In the event
of any conflict or inconsistency between or among the terms of the Collateral
Trust Agreement and this Security Agreement, the terms of the Collateral Trust
Agreement shall govern.

 

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

 

IN WITNESS WHEREOF, each of the parties hereto has caused this Security
Agreement to be duly executed and delivered by its Authorized Officer as of the
date first above written.

CHAMPION HOME BUILDERS CO.

By:

_________________________________

 

Name:

 

 

Title:

 

CHAMPION ENTERPRISES, INC.

By:

_________________________________

 

Name:

 

 

Title:

 

[NAME OF GRANTOR]

By:

_________________________________

 

Name:

 

 

Title:

 

[NAME OF GRANTOR]

By:

_________________________________

 

Name:

 

 

Title:

 

 

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

 

WELLS FARGO BANK, N.A., as Collateral Trustee

By:

_________________________________

 

Name:

 

 

Title:

 

 

 

 

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

 

SCHEDULE I

to Security Agreement

 

Name of Grantor:

 

 

 

 

 

 

 

 

 

 

Common Stock

Issuer (corporate)

 

Cert. #

# of Shares

Authorized

Shares

Outstanding

Shares

% of Shares Pledged

 

 

 

 

 

Limited Liability Company Interests

 

 

Issuer (limited liability company)

% of Limited Liability

Company Interests Pledged

Type of Limited Liability

Company Interests Pledged

 

 

 

 

 

 

 

Partnership Interests

 

 

 

Issuer (partnership)

% of Partnership

Interests Owned

% of Partnership

Interests Pledged

 

 

 

 

 

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

 

SCHEDULE II

to Security Agreement

Item A.

Location of each Grantor.

 

 

Name of Grantor:

Location for purposes of UCC:

 

[GRANTOR]

[LOCATION]

 

Item B.

Filing locations last five years.

 

 

Name of Grantor:

Filing locations last five years

 

[GRANTOR]

[LOCATION]

 

Item C.

Trade names.

 

 

Name of Grantor:

Trade Names:

 

[GRANTOR]

 

 

Item D.

Merger or other corporate reorganization.

 

 

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

 

 

 

Name of Grantor:

Merger or other corporate reorganization:

 

 

[GRANTOR]

 

 

Item E.

Taxpayer ID numbers.

 

 

Name of Grantor:

Taxpayer ID numbers:

 

[GRANTOR]

 

 

Item F.

Government Contracts.

 

Name of Grantor:

Description of Contract:

[GRANTOR]

 

 

Item G.

Deposit Accounts and Securities Accounts.

 

Name of Grantor:

Description of Deposit Accounts and Securities Accounts:

 

 

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

 

 

[GRANTOR]

 

 

Item H.

Letter of Credit Rights.

 

Name of Grantor:

Description of Letter of Credit Rights:

[GRANTOR]

 

 

Item I.

Commercial Tort Claims.

 

Name of Grantor:

Description of Commercial Tort Claims:

[GRANTOR]

 

 

 

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

 

SCHEDULE III

to Security Agreement

Item A. Patents

 

Issued Patents

 

 

Country

Patent No.

Issue Date

Inventor(s)

Title

Pending Patent Applications

Country

Serial No.

Filing Date

Inventor(s)

Title

 

 

 

 

 

 

 

 

 

 

Patent Applications In Preparation

 

 

Expected

 

 

Country

Docket No.

Filing Date

Inventor(s)

Title

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

Item B. Patent Licenses

Country or

 

 

Effective

Expiration

Subject

Territory

Licensor

Licensee

Date  

Date  

Matter

 

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

 

SCHEDULE IV

to Security Agreement

Item A. Trademarks

 

Registered Trademarks

Country

 

Trademark

Registration No.

Registration Date

 

Pending Trademark Applications

Country

 

Trademark

Serial No.

Filing Date

 

Trademark Applications In Preparation

 

 

 

Expected

Products/

Country

 

Trademark

Docket No.

Filing Date

Services

 

Item B. Trademark Licenses

Country or

 

 

 

Effective

Expiration

Territory  

 

Trademark

 

Licensor

 

Licensee

 

Date  

Date     

 

 

 

 

 

 

 

 

 

 

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

 

SCHEDULE V

to Security Agreement

Item A. Copyrights/Mask Works

REGISTERED COPYRIGHTS/MASK WORKS

COUNTRY       REGISTRATION NO.REGISTRATION DATEAUTHOR(S)TITLE

 

Copyright/Mask Work Pending Registration Applications

COUNTRY       SERIAL NO.FILING DATEAUTHOR(S)TITLE

 

 

Copyright/Mask Work Registration Applications In Preparation

                Expected

Country                Docket No.Filing DateAuthor(s)Title

 

 

Item B. Copyright/Mask Work Licenses

 

 

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

 

SCHEDULE VI

to Security Agreement

Trade Secret or Know-How Licenses

 

 

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

 

EXHIBIT A

to Security Agreement

PATENT SECURITY AGREEMENT

This PATENT SECURITY AGREEMENT, dated as of ________ __, 200_ (this
“Agreement”), is made by [NAME OF GRANTOR], a ________ _______ (the “Grantor”),
in favor of Wells Fargo Bank, N.A., having an address at 230 West Monroe Street,
Suite 2900, Chicago, Illinois 60606, as the Collateral Trustee for the Secured
Parties (as defined below) under the Collateral Trust Agreement referred to
below (together with its successors and assigns from time to time acting as
Collateral Trustee under such Collateral Trust Agreement, the “Collateral
Trustee”).

W I T N E S S E T H :

WHEREAS, pursuant to a Credit Agreement, dated as of October 31, 2005 (as
amended, supplemented, amended and restated or otherwise modified from time to
time, the “Credit Agreement”), among the Borrower, the Parent, the various
financial institutions and other Persons from time to time parties thereto (each
a “Lender”), and Credit Suisse, Cayman Islands Branch, as Administrative Agent
for the Lenders, the Lenders and the Issuers have extended Commitments to make
Credit Extensions to the Borrower;

WHEREAS, in connection with the Credit Agreement, the Grantor has executed and
delivered a Pledge and Security Agreement, dated as of October 31, 2005 (as
amended, supplemented, amended and restated or otherwise modified from time to
time, the “Security Agreement”);

WHEREAS, pursuant to the Credit Agreement and pursuant to clause (e) of Section
4.5 of the Security Agreement, the Grantor is required to execute and deliver
this Agreement and to grant to the Collateral Trustee a continuing security
interest in all of the Patent Collateral (as defined below) to secure all
Secured Obligations; and

WHEREAS, the Grantor has duly authorized the execution, delivery and performance
of this Agreement; and

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Grantor agrees, for the benefit of each
Secured Party, as follows:

SECTION 1. Definitions. Unless otherwise defined herein or the context otherwise
requires, terms used in this Agreement, including its preamble and recitals,
have the meanings provided in the Security Agreement.

 

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

 

SECTION 2. Grant of Security Interest. The Grantor hereby grants to the
Collateral Trustee, for its benefit and the ratable benefit of each other
Secured Party, a continuing security interest in all of the following property,
whether now or hereafter existing or acquired by the Grantor (the “Patent
Collateral”):

(a)             all of its inventions and discoveries, whether patentable or
not, and all of its letters patent and applications for letters patent
throughout the world, including all patent applications in preparation for
filing, and each patent and patent application referred to in Item A of Schedule
I attached hereto;

(b)             all reissues, divisions, continuations, continuations-in-part,
extensions, renewals and reexaminations of any of the items described in clause
(a);

(c)             all of its patent licenses, and other agreements providing the
Grantor with the right to use any items of the type referred to in clauses (a)
and (b) above, including each patent license referred to in Item B of Schedule I
attached hereto; and

(d)             all Proceeds of the foregoing (including (whether or not within
the definition of “Proceeds” pursuant to Section 1.3 of the Security Agreement)
license royalties and Proceeds of infringement suits), the right to sue third
parties for past, present or future infringements of any patent or patent
application, and for breach or enforcement of any patent license.

Notwithstanding the foregoing, the term “Patent Collateral” shall not include
the items set forth in clauses (i) through (v) of Section 2.1 of the Security
Agreement.

SECTION 3. Security Agreement. This Agreement has been executed and delivered by
the Grantor for the purpose of recording the security interest of the Collateral
Trustee in the Patent Collateral with the U.S. Patent and Trademark Office and
corresponding offices in other countries of the world. The security interest
granted hereby has been granted as a supplement to, and not in limitation of,
the security interest granted to the Collateral Trustee for its benefit and the
ratable benefit of each other Secured Party under the Security Agreement. The
Security Agreement (and all rights and remedies of the Collateral Trustee and
each Secured Party thereunder) shall remain in full force and effect in
accordance with its terms. In the event of an irreconcilable conflict, the
Security Agreement shall control.

SECTION 4. Release of Liens. Upon (i) the Disposition of Patent Collateral in
accordance with the Credit Agreement or (ii) the occurrence of the Termination
Date, the security interests granted herein shall automatically terminate with
respect to (A) such Patent Collateral (in the case of clause (i)) or (B) all
Patent Collateral (in the case of clause (ii)). Upon any such Disposition or
termination, the Collateral Trustee will, at the Grantor’s sole expense, deliver
to the Grantor, without any representations, warranties or recourse of any kind
whatsoever, all Patent Collateral held by the Collateral Trustee hereunder, and
execute and deliver to the Grantor such Documents as the Grantor shall
reasonably request to evidence such termination.

SECTION 5. Acknowledgment. The Grantor does hereby further acknowledge and
affirm that the rights and remedies of each of the Administrative Agent and the
Collateral Trustee with respect to the security interest in the Patent
Collateral granted hereby are more fully

 

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

set forth in the Security Agreement, the terms and provisions of which
(including the remedies provided for therein and the Governing Law provision set
forth in Section 7.10 thereof) are incorporated by reference herein as if fully
set forth herein.

SECTION 6. Loan Document and Secured Instrument. This Agreement is (i) a Secured
Instrument for purposes of the Collateral Trust Agreement and shall have (unless
otherwise expressly indicated herein) been construed, administered and applied
in accordance with the terms and provisions thereof and (ii) a Loan Document
executed pursuant to the Credit Agreement and shall (unless otherwise expressly
indicated herein) be construed, administered and applied in accordance with the
terms and provisions thereof, including Article XII thereof.

SECTION 7. Counterparts. This Agreement may be executed by the parties hereto in
several counterparts, each of which shall be deemed to be an original and all of
which shall constitute together but one and the same agreement. Delivery of an
executed counterpart of a signature page to this Agreement by facsimile shall be
effective as delivery of a manually executed counterpart of this Agreement.

* * * * *

 

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

 

IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
duly executed and delivered by its Authorized Officer as of the date first above
written.

[NAME OF GRANTOR]

By:

_________________________________

 

Name:

 

 

Title:

 

WELLS FARGO BANK, N.A., as Collateral Trustee

 

 

By:

_________________________________

 

Name:

 

 

Title:

 

 

 

 

 

 

On this _____ day of October 2005, before me appeared ________________________,
the person who signed this instrument, who acknowledged that he/she signed it as
a free act on behalf of the Grantor with authority to do so.

 

 

State of _______________

)

 

)

ss.

 

County of

)

 

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

 

SCHEDULE I

to Patent Security Agreement

Item A. Patents

Issued Patents

Country                Patent No.Issue DateInventor(s)Title

 

Pending Patent Applications

Country                Serial No.Filing DateInventor(s)Title

 

 

Patent Applications in Preparation

Expected

Country                Docket No.Filing DateInventor(s)Title

 

 

 

Item B. Patent Licenses

Country or          EffectiveExpirationSubject

  Territory                     LicensorLicensee    Date         Date    Matter

 

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

 

EXHIBIT B

to Security Agreement

TRADEMARK SECURITY AGREEMENT

This TRADEMARK SECURITY AGREEMENT, dated as of ________ __, 200_ (this
“Agreement”), is made by [NAME OF GRANTOR], a ________ _______ (the “Grantor”),
in favor of Wells Fargo Bank, N.A., having an address at 230 West Monroe Street,
Suite 2900, Chicago, Illinois 60606, as the Collateral Trustee for the Secured
Parties (as defined below) under the Collateral Trust Agreement referred to
below (together with its successors and assigns from time to time acting as
Collateral Trustee under such Collateral Trust Agreement, the “Collateral
Trustee”).

W I T N E S S E T H :

WHEREAS, pursuant to a Credit Agreement, dated as of October 31, 2005 (as
amended, supplemented, amended and restated or otherwise modified from time to
time, the “Credit Agreement”), among the Borrower, the Parent, the various
financial institutions and other Persons from time to time parties thereto (each
a “Lender”), and Credit Suisse, Cayman Islands Branch, as Administrative Agent
for the Lenders, the Lenders and the Issuers have extended Commitments to make
Credit Extensions to the Borrower;

WHEREAS, in connection with the Credit Agreement, the Grantor has executed and
delivered a Pledge and Security Agreement, dated as of October 31, 2005 (as
amended, supplemented, amended and restated or otherwise modified from time to
time, the “Security Agreement”);

WHEREAS, pursuant to the Credit Agreement and pursuant to clause (e) of Section
4.5 of the Security Agreement, the Grantor is required to execute and deliver
this Agreement and to grant to the Collateral Trustee a continuing security
interest in all of the Trademark Collateral (as defined below) to secure all
Secured Obligations; and

WHEREAS, the Grantor has duly authorized the execution, delivery and performance
of this Agreement; and

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Grantor agrees, for the benefit of each
Secured Party, as follows:

SECTION 1. Definitions. Unless otherwise defined herein or the context otherwise
requires, terms used in this Agreement, including its preamble and recitals,
have the meanings provided in the Security Agreement.

SECTION 2. Grant of Security Interest. The Grantor hereby grants to the
Collateral Trustee, for its benefit and the ratable benefit of each other
Secured Party, a continuing security interest in all of the following property,
whether now or hereafter existing or acquired by the Grantor (the “Trademark
Collateral”):

 

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

 

(a)             (i) all Trademarks, trade names, corporate names, company names,
business names, fictitious business names, trade styles, service marks,
certification marks, collective marks, logos and other source or business
identifiers, now existing or hereafter adopted or acquired including those which
are the subject of a registration or application referred to in Item A of
Schedule I hereto, whether currently in use or not, all registrations and
recordings thereof and all applications in connection therewith, whether pending
or in preparation for filing, including registrations, recordings and
applications in the U.S. Patent and Trademark Office or in any office or agency
of the United States of America or any State thereof or any other country or
political subdivision thereof or otherwise, and all common-law rights relating
to the foregoing, and (ii) the right to obtain all renewals of the foregoing
(collectively referred to as the “Trademark”);

(b)             all Trademark licenses for the grant by or to the Grantor of any
right to use any Trademark, including each Trademark license referred to in Item
B of Schedule I hereto;

(c)             all of the goodwill of the business connected with the use of,
and symbolized by the items described in, clause (a), and to the extent
applicable clause (b);

(d)             the right to sue third parties for past, present and future
infringements of any Trademark Collateral described in clause (a), and, to the
extent applicable, clause (b); and

(e)             all Proceeds of, and rights associated with, the foregoing,
including (whether or not within the definition of “Proceeds” pursuant to
Section 1.3 of the Security Agreement) any claim by the Grantor against third
parties for past, present or future infringement or dilution of the foregoing,
or for any injury to the goodwill connected with the use of or symbolized by any
Trademarks or for breach or enforcement of any Trademark license and all rights
corresponding thereto throughout the world.

Notwithstanding the foregoing, the term “Trademark Collateral” shall not include
the items set forth in clauses (i) through (v) of Section 2.1 of the Security
Agreement.

SECTION 3. Security Agreement. This Agreement has been executed and delivered by
the Grantor for the purpose of recording the security interest of the Collateral
Trustee in the Trademark Collateral with the U.S. Patent and Trademark Office
and corresponding offices in other countries of the world. The security interest
granted hereby has been granted as a supplement to, and not in limitation of,
the security interest granted to the Collateral Trustee for its benefit and the
ratable benefit of each other Secured Party under the Security Agreement. The
Security Agreement (and all rights and remedies of the Collateral Trustee and
each Secured Party thereunder) shall remain in full force and effect in
accordance with its terms. In the event of an irreconcilable conflict, the
Security Agreement shall control.

SECTION 4. Release of Liens. Upon (i) the Disposition of Trademark Collateral in
accordance with the Credit Agreement or (ii) the occurrence of the Termination
Date, the security interests granted herein shall automatically terminate with
respect to (A) such Trademark Collateral (in the case of clause (i)) or (B) all
Trademark Collateral (in the case of clause (ii)). Upon any such Disposition or
termination, the Collateral Trustee will, at the Grantor’s sole expense, deliver
to the Grantor, without any representations, warranties or recourse of any kind
whatsoever, all Trademark Collateral held by the Collateral Trustee

 

 

hereunder, and execute and deliver to the Grantor such Documents as the Grantor
shall reasonably request to evidence such termination.

SECTION 5. Acknowledgment. The Grantor does hereby further acknowledge and
affirm that the rights and remedies of the Collateral Trustee with respect to
the security interest in the Trademark Collateral granted hereby are more fully
set forth in the Security Agreement, the terms and provisions of which
(including the remedies provided for therein and the Governing Law provisions
set forth in Section 7.10 thereof) are incorporated by reference herein as if
fully set forth herein.

SECTION 6. Loan Document and Secured Instrument. This Agreement is (i) a Secured
Instrument for purposes of the Collateral Trust Agreement and shall have (unless
otherwise expressly indicated herein) been construed, administered and applied
in accordance with the terms and provisions thereof and (ii) a Loan Document
executed pursuant to the Credit Agreement and shall (unless otherwise expressly
indicated herein) be construed, administered and applied in accordance with the
terms and provisions thereof, including Article XII thereof.

SECTION 7. Counterparts. This Agreement may be executed by the parties hereto in
several counterparts, each of which shall be deemed to be an original and all of
which shall constitute together but one and the same agreement. Delivery of an
executed counterpart of a signature page to this Agreement by facsimile shall be
effective as delivery of a manually executed counterpart of this Agreement.

* * * * *

 

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

 

IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
duly executed and delivered by Authorized Officer as of the date first above
written.

[NAME OF GRANTOR]

By:

_________________________________

 

Name:

 

 

Title:

 

WELLS FARGO BANK, N.A., as Collateral Trustee

 

 

By:

_________________________________

 

Name:

 

 

Title:

 

 

 

 

On this _____ day of October 2005, before me appeared ________________________,
the person who signed this instrument, who acknowledged that he/she signed it as
a free act on behalf of the Grantor with authority to do so.

 

 

State of _______________

)

 

)

ss.

 

County of

)

 

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SCHEDULE I

to Trademark Security Agreement

Item A. Trademarks

Registered Trademarks

Country

Trademark

Registration No.

Registration Date

 

 

 

Pending Trademark Applications

Country

Trademark

Serial No.

Filing Date

 

 

 

Trademark Applications in Preparation

 

Expected

Products/

Country

Trademark

Docket No.

Filing Date

Services  

 

 

 

 

Item B. Trademark Licenses

Country or

Effective

Expiration

Territory

Trademark

Licensor

Licensee

Date  

Date  

 

 

 

 

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EXHIBIT C

to Security Agreement

COPYRIGHT SECURITY AGREEMENT

This COPYRIGHT SECURITY AGREEMENT, dated as of ________ __, 200_ (this
“Agreement”), is made by [NAME OF GRANTOR], a ________ _______ (the “Grantor”),
in favor of Wells Fargo Bank, N.A., having an address at 230 West Monroe Street,
Suite 2900, Chicago, Illinois 60606, as the Collateral Trustee for the Secured
Parties (as defined below) under the Collateral Trust Agreement referred to
below (together with its successors and assigns from time to time acting as
Collateral Trustee under such Collateral Trust Agreement, the “Collateral
Trustee”).

W I T N E S S E T H :

WHEREAS, pursuant to a Credit Agreement, dated as of October 31, 2005 (as
amended, supplemented, amended and restated or otherwise modified from time to
time, the “Credit Agreement”), among the Borrower, the Parent, the various
financial institutions and other Persons from time to time parties thereto (each
a “Lender”), and Credit Suisse, Cayman Islands Branch, as Administrative Agent
for the Lenders, the Lenders and the Issuers have extended Commitments to make
Credit Extensions to the Borrower;

WHEREAS, in connection with the Credit Agreement, the Grantor has executed and
delivered a Pledge and Security Agreement, dated as of October 31, 2005 (as
amended, supplemented, amended and restated or otherwise modified from time to
time, the “Security Agreement”);

WHEREAS, pursuant to the Credit Agreement and pursuant to clause (e) of Section
4.5 of the Security Agreement, the Grantor is required to execute and deliver
this Agreement and to grant to the Collateral Trustee a continuing security
interest in all of the Copyright Collateral (as defined below) to secure all
Secured Obligations; and

WHEREAS, the Grantor has duly authorized the execution, delivery and performance
of this Agreement; and

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Grantor agrees, for the benefit of each
Secured Party, as follows:

SECTION 8. Definitions. Unless otherwise defined herein or the context otherwise
requires, terms used in this Agreement, including its preamble and recitals,
have the meanings provided in the Security Agreement.

SECTION 9. Grant of Security Interest. The Grantor hereby grants to the
Collateral Trustee, for its benefit and the ratable benefit of each other
Secured Party, a continuing security interest in all of the following (the
“Copyright Collateral”), whether now or hereafter existing or acquired by the
Grantor: all of the Grantor’s right, title and interest in and to all
copyrights,

 

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registered or unregistered and whether published or unpublished, now or
hereafter in force throughout the world including copyrights registered in the
U.S. Copyright Office or anywhere else in the world, including the copyrights
which are the subject of a registration or application referred to in Item A of
Schedule I, and registrations and recordings thereof and all applications for
registration thereof, whether pending or in preparation, all copyright licenses,
including each copyright license referred to in Item B of Schedule I, the right
to sue for past, present and future infringements of any of the copyrights, and
for breach or enforcement of any of the copyright licenses, all rights
corresponding thereto, all extensions and renewals of any thereof and all
Proceeds of the foregoing, including (whether or not within the definition of
“Proceeds” pursuant to Section 1.3 of the Security Agreement) licenses,
royalties, income, payments, claims, damages and Proceeds of infringement suits.
Notwithstanding the foregoing, the term “Copyright Collateral” shall not include
the items set forth in clauses (i) through (v) of Section 2.1 of the Security
Agreement.

SECTION 10. Security Agreement. This Agreement has been executed and delivered
by the Grantor for the purpose of recording the security interest of the
Collateral Trustee in the Copyright Collateral with the U.S. Copyright Office
and corresponding offices in other countries of the world. The security interest
granted hereby has been granted as a supplement to, and not in limitation of,
the security interest granted to the Collateral Trustee for its benefit and the
ratable benefit of each other Secured Party under the Security Agreement. The
Security Agreement (and all rights and remedies of the Collateral Trustee and
each Secured Party thereunder) shall remain in full force and effect in
accordance with its terms. In the event of an irreconcilable conflict, the
Security Agreement shall control.

SECTION 11. Release of Liens. Upon (i) the Disposition of Copyright Collateral
in accordance with the Credit Agreement or (ii) the occurrence of the
Termination Date, the security interests granted herein shall automatically
terminate with respect to (A) such Copyright Collateral (in the case of clause
(i)) or (B) all Copyright Collateral (in the case of clause (ii)). Upon any such
Disposition or termination, the Collateral Trustee will, at the Grantor’s sole
expense, deliver to the Grantor, without any representations, warranties or
recourse of any kind whatsoever, all Copyright Collateral held by the Collateral
Trustee hereunder, and execute and deliver to the Grantor such Documents as the
Grantor shall reasonably request to evidence such termination.

SECTION 12. Acknowledgment. The Grantor does hereby further acknowledge and
affirm that the rights and remedies of the Collateral Trustee with respect to
the security interest in the Copyright Collateral granted hereby are more fully
set forth in the Security Agreement, the terms and provisions of which
(including the remedies provided for therein and the Governing Law provision set
forth in Section 7.10 thereof) are incorporated by reference herein as if fully
set forth herein.

SECTION 13. Loan Document and Secured Instrument. This Agreement is (i) a
Secured Instrument for purposes of the Collateral Trust Agreement and shall have
(unless otherwise expressly indicated herein) been construed, administered and
applied in accordance with the terms and provisions thereof and (ii) a Loan
Document executed pursuant to the Credit Agreement and shall (unless otherwise
expressly indicated herein) be construed, administered and applied in accordance
with the terms and provisions thereof, including Article XII thereof.

 

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SECTION 14. Counterparts. This Agreement may be executed by the parties hereto
in several counterparts, each of which shall be deemed to be an original and all
of which shall constitute together but one and the same agreement. Delivery of
an executed counterpart of a signature page to this Agreement by facsimile shall
be effective as delivery of a manually executed counterpart of this Agreement.

* * * * *

 

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

 

IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
duly executed and delivered by its Authorized Officer as of the date first above
written.

[NAME OF GRANTOR]

By:

_________________________________

 

Name:

 

 

Title:

 

WELLS FARGO BANK, N.A., as Collateral Trustee

 

 

By:

_________________________________

 

Name:

 

 

Title:

 

 

 

On this _____ day of October 2005, before me appeared ________________________,
the person who signed this instrument, who acknowledged that he/she signed it as
a free act on behalf of the Grantor with authority to do so.

 

State of _______________

)

 

)

ss.

 

County of            )

 

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

 

SCHEDULE I

to Copyright Security Agreement

Item A. Copyrights/Mask Works

Registered Copyrights/Mask Works

Country

Registration No.

Registration Date

Author(s)

Title

 

 

 

Copyright/Mask Work Pending Registration Applications

Country

Serial No.

Filing Date

Author(s)

Title

 

 

 

Copyright/Mask Work Registration Applications in Preparation

 

Expected

 

Country

Docket No.

Filing Date

Author(s)

Title

 

 

 

Item B. Copyright/Mask Work Licenses

Country or

Effective

Expiration

 

Territory

Licensor

Licensee

Date  

Date  

 

 

 

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ANNEX I

to Security Agreement

SUPPLEMENT TO

PLEDGE AND SECURITY AGREEMENT

This SUPPLEMENT, dated as of ____________ ___, _____ (this “Supplement”), is to
the Pledge and Security Agreement, dated as of October 31, 2005 (as amended,
supplemented, amended and restated or otherwise modified from time to time, the
“Security Agreement”), among the Grantors (such term, and other terms used in
this Supplement, to have the meanings set forth in Article I of the Security
Agreement) from time to time party thereto, in favor of [____________], having
an address at [____________], as the Collateral Trustee for the Secured Parties
(as defined below) under the Collateral Trust Agreement referred to below
(together with its successors and assigns from time to time acting as Collateral
Trustee under such Collateral Trust Agreement, the “Collateral Trustee”).

W I T N E S S E T H :

WHEREAS, pursuant to a Credit Agreement, dated as of October 31, 2005 (as
amended, supplemented, amended and restated or otherwise modified from time to
time, the “Credit Agreement”), among the Borrower, the Parent, the various
financial institutions and other Persons from time to time parties thereto (each
a “Lender”), and Credit Suisse, Cayman Islands Branch, as Administrative Agent
for the Lenders, the Lenders and the Issuers have extended Commitments to make
Credit Extensions to the Borrower;

WHEREAS, pursuant to the provisions of Section 7.6 of the Security Agreement,
each of the undersigned is becoming a Grantor under the Security Agreement; and

WHEREAS, each of the undersigned desires to become a “Grantor” under the
Security Agreement in order to induce the Secured Parties to continue to extend
Loans and issue Letters of Credit under the Credit Agreement;

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, each of the undersigned agrees, for the benefit
of each Secured Party, as follows.

SECTION 15. Party to Security Agreement, etc. In accordance with the terms of
the Security Agreement, by its signature below each of the undersigned hereby
irrevocably agrees to become a Grantor under the Security Agreement with the
same force and effect as if it were an original signatory thereto and each of
the undersigned hereby (a) agrees to be bound by and comply with all of the
terms and provisions of the Security Agreement applicable to it as a Grantor and
(b) represents and warrants that the representations and warranties made by it
as a Grantor thereunder are true and correct as of the date hereof, unless
stated to relate solely to an earlier date, in which case such representations
and warranties shall be true and correct in all material respects as of such
earlier date. In furtherance of the foregoing, each reference to a

 

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“Grantor” and/or “Grantors” in the Security Agreement shall be deemed to include
each of the undersigned.

SECTION 16. Representations. Each of the undersigned Grantor hereby represents
and warrants that this Supplement has been duly authorized, executed and
delivered by it and that this Supplement and the Security Agreement constitute
the legal, valid and binding obligation of each of the undersigned, enforceable
against it in accordance with its terms.

SECTION 17. Full Force of Security Agreement. Except as expressly supplemented
hereby, the Security Agreement shall remain in full force and effect in
accordance with its terms.

SECTION 18. Severability. Wherever possible each provision of this Supplement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Supplement shall be prohibited by
or invalid under such law, such provision shall be ineffective to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Supplement or the Security
Agreement.

SECTION 19. Governing Law, Entire Agreement, etc. THIS SUPPLEMENT SHALL BE
DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE
STATE OF NEW YORK (INCLUDING FOR SUCH PURPOSE SECTIONS 5-1401 AND 5-1402 OF THE
GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK). This Supplement and the other
Loan Documents constitute the entire understanding among the parties hereto with
respect to the subject matter thereof and supersede any prior agreements,
written or oral, with respect thereto.

SECTION 20. Counterparts. This Supplement may be executed by the parties hereto
in several counterparts, each of which shall be deemed to be an original and all
of which shall constitute together but one and the same agreement. Delivery of
an executed counterpart of a signature page to this Agreement by facsimile shall
be effective as delivery of a manually executed counterpart of this Agreement.

* * * * *

 

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

 

IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
duly executed and delivered by its Authorized Officer as of the date first above
written.

[NAME OF ADDITIONAL SUBSIDIARY]

 

 

By:

_________________________________

 

Name:

 

 

Title:

 

 

 

 

[NAME OF ADDITIONAL SUBSIDIARY]

 

 

By:

_________________________________

 

Name:

 

 

Title:

 

 

 

ACCEPTED AND AGREED FOR ITSELF

AND ON BEHALF OF THE SECURED PARTIES:

 

WELLS FARGO BANK, N.A., as Collateral Trustee

 

By:         _________________________________

        Name:

        Title:

 

 

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[COPY SCHEDULES FROM SECURITY AGREEMENT]

 

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EXHIBIT H

FORM OF COLLATERAL TRUST AGREEMENT

COLLATERAL TRUST AGREEMENT, dated as of October 31, 2005, by and among CHAMPION
HOME BUILDERS CO., a Michigan corporation (the “Borrower”), CHAMPION
ENTERPRISES, INC., a Michigan corporation (the “Parent”), the Subsidiaries of
the Parent listed on the signature pages hereof (together with the Borrower, the
Parent and each other Subsidiary of the Parent which becomes a party hereto
pursuant to Section 6.11, the “Obligors”), and WELLS FARGO BANK, N.A., a
national banking association, as collateral trustee (the “Trustee”).

W I T N E S S E T H

WHEREAS, in order to induce the Lenders to enter into the Credit Agreement,
dated as of October 31, 2005 (as amended, supplemented, amended and restated or
otherwise modified from time to time, the “Credit Agreement”), among the
Borrower, the Parent, the various financial institutions and other Persons from
time to time parties thereto (each a “Lender”), and Credit Suisse, Cayman
Islands Branch, as Administrative Agent for the Lenders, the Obligors granted
the Secured Parties (as defined in the Credit Agreement) a Lien on substantially
all of their assets to secure the Credit Agreement Obligations;

WHEREAS, pursuant to an Indenture, dated as of May 3, 1999 (the “2009 Notes
Indenture”), between the Parent, the subsidiary guarantors named therein, and
The First National Bank of Chicago, as trustee (in such capacity, together with
any successor in such capacity, the “Indenture Trustee”), the Parent issued and
sold its 7.625% Senior Notes due 2009 (together with all other Securities as
defined in the 2009 Notes Indenture, the “2009 Notes”);

WHEREAS, subject to certain exceptions, the 2009 Notes Indenture requires that
the 2009 Notes be secured equally and ratably with the Credit Agreement
Obligations so secured for so long as the Credit Agreement Obligations are so
secured; and

WHEREAS, the Trustee has been appointed by the Lenders and the Indenture Trustee
to act as collateral trustee with respect to the Collateral and the Loan
Documents and is entering into this Agreement to, among other things, define the
rights, duties, authority and responsibilities of the Trustee and the
relationships among the Secured Parties regarding their interests in the
Collateral;

NOW, THEREFORE, in consideration of the premises and other good and valuable
consideration, the sufficiency and receipt of which are hereby acknowledged, the
parties hereto agree as follows:

DECLARATION OF TRUST:

NOW, THEREFORE, in order to secure the payment of the Secured Obligations and in
consideration of the premises and the mutual agreements set forth herein, the
Trustee does hereby declare that it holds and will hold as trustee in trust
under this Agreement all of its right, title and interest in, to and under the
Security Documents and the collateral granted to the Trustee

 

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thereunder whether now existing or hereafter arising (and each Obligor does
hereby consent thereto).

TO HAVE AND TO HOLD the Security Documents and the entire Collateral (the right,
title and interest of the Trustee in the Security Documents and the Collateral
being hereinafter referred to as the “Trust Estate”) unto the Trustee and its
successors in trust under this Agreement and its assigns and assigns forever.

IN TRUST NEVERTHELESS, under and subject to the conditions herein set forth and
for the benefit of the Secured Parties, and for the enforcement of the payment
of all Secured Obligations, and as security for the performance of and
compliance with the covenants and conditions of this Agreement, each of the
Secured Instruments and each of the Security Documents.

PROVIDED, HOWEVER, that these presents are upon the condition that if the
conditions set forth in Section 6.10 shall be satisfied, then this Agreement,
and the estates and rights hereby assigned, shall cease, determine and be void;
otherwise they shall remain and be in full force and effect.

IT IS HEREBY FURTHER COVENANTED AND DECLARED, that the Trust Estate is to be
held and applied by the Trustee, subject to the further covenants, conditions
and trusts hereinafter set forth.

SECTION 1.

DEFINITIONS

(a)

The capitalized terms used herein which are defined in, or by reference in,
Schedule I hereto shall have the meanings specified therein.

(b)

The words “hereof”, “herein” and “hereunder” and words of similar import when
used in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement, and section, clause, schedule and
exhibit references are to this Agreement unless otherwise specified.

(c)

The term “including” is not limiting and means “including without limitation.”

SECTION 2.

ACTIONS BY THE TRUSTEE

2.1. General Authority of the Trustee over the Collateral. Each Obligor hereby
irrevocably constitutes and appoints the Trustee, with full power of
substitution, as its true and lawful attorney-in-fact with full power and
authority in the name of such Obligor or in its own name, to take any and all
appropriate action and to execute any and all documents and instruments which
may be necessary or desirable to carry out the terms of this Agreement and the
Security Documents and accomplish the purposes hereof and thereof and, without
limiting the generality of the foregoing, each Obligor hereby

 

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acknowledges that the Trustee shall have all powers and remedies set forth in
the Security Documents; provided that the Trustee shall take such actions and
exercise such remedies solely in accordance with Requisite Instructions
delivered to the Trustee.

2.2. Right to Initiate Judicial Proceedings. Without limiting any provision
contained in Section 2.1, the Trustee, subject to the provisions of clause (b)
of Section 2.4, (i) shall have the right and power to institute and maintain
such suits and proceedings as it may deem appropriate to protect and enforce the
rights vested in it by this Agreement and each Security Document and (ii) may
proceed by suit or suits at law or in equity to enforce such rights and to
foreclose upon the Collateral and to sell all or, from time to time, any of the
Collateral under the judgment or decree of a court of competent jurisdiction, in
the case of each of clauses (i) and (ii), solely in accordance with Requisite
Instructions delivered to the Trustee.

2.3. Exercise of Powers; Requisite Instructions. (a) All of the powers, rights
and remedies of the Trustee set forth in this Agreement may be exercised by the
Trustee in respect of any Security Document as though set forth in full therein,
and all of the powers, rights and remedies of the Trustee and the Administrative
Agent as set forth in any Security Document may be exercised from time to time
as set forth herein and therein; provided that the Trustee shall exercise all
such powers, rights and remedies solely in accordance with Requisite
Instructions delivered to the Trustee, and shall not exercise any such powers,
rights or remedies unless it shall have received Requisite Instructions
requiring such exercise.

(b)

The Administrative Agent shall have the right, by delivery of Requisite
Instructions to the Trustee, to direct the time, method and place of conducting
any proceeding for any right or remedy available to the Trustee, or of
exercising any trust or power conferred on the Trustee, or for the appointment
of a receiver, or to direct the taking or the refraining from taking of any
action authorized by this Agreement or any Security Document; provided that (i)
such Requisite Instructions shall not conflict with any provision of law or of
this Agreement or of any Security Document and (b) the Trustee shall be
adequately secured and indemnified as provided in clause (d) of Section 5.4.

2.4. Remedies Not Exclusive. (a) No remedy conferred upon or reserved to the
Trustee herein or in the Security Documents is intended to be exclusive of any
other remedy or remedies, but every such remedy shall be cumulative and shall be
in addition to every other remedy conferred herein or in any Security Document
or now or hereafter existing at law or in equity or by statute; provided that
the Trustee shall exercise any and all remedies solely in accordance with
Requisite Instructions delivered to the Trustee.

(b)

No delay or omission by the Trustee to exercise any right, remedy or power
hereunder or under any Security Document shall impair any such right,

 

 

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remedy or power or shall be construed to be a waiver thereof, and every right,
power and remedy given by this Agreement or any Security Document to the Trustee
may be exercised from time to time and as often as may be deemed expedient by
the Trustee; provided that the Trustee shall exercise all such powers, rights
and remedies solely in accordance with Requisite Instructions delivered to the
Trustee.

(c)

If the Trustee shall have proceeded to enforce any right, remedy or power under
this Agreement or any Security Document and the proceeding for the enforcement
thereof shall have been discontinued or abandoned for any reason or shall have
been determined adversely to the Trustee, then the Obligors, the Trustee and the
Secured Parties shall, subject to any determination in such proceeding,
severally and respectively be restored to their former positions and rights
hereunder or thereunder with respect to the Trust Estate and in all other
respects, and thereafter all rights, remedies and powers of the Trustee shall
continue as though no such proceeding had been taken.

(d)

All rights of action and of asserting claims upon or under this Agreement and
the Security Documents may be enforced by the Trustee without the possession of
any Secured Instrument or instrument evidencing any Secured Obligation or the
production thereof at any trial or other proceeding relative thereto, and any
suit or proceeding instituted by the Trustee shall be, subject to clause (d) of
Section 5.3 and clause (b)(ii) of Section 5.9, brought in its name as Trustee
and any recovery of judgment shall be held as part of the Trust Estate.

2.5. Waiver and Estoppel. (a) Each Obligor agrees, to the extent it may lawfully
do so, that it will not at any time in any manner whatsoever claim, or take the
benefit or advantage of, any appraisal, valuation, stay, extension, moratorium,
turnover or redemption law, or any law permitting it to direct the order in
which the Collateral shall be sold, now or at any time hereafter in force, which
may delay, prevent or otherwise affect the performance or enforcement of this
Agreement or any other Security Document and hereby waives all benefit or
advantage of all such laws and covenants that it will not hinder, delay or
impede the execution of any power granted to the Trustee in this Agreement or
any other Security Document but will suffer and permit the execution of every
such power as though no such law were in force; provided that nothing contained
in this clause (a) shall be construed as a waiver of any rights of such Obligor
under any applicable federal bankruptcy law.

(b)

Each Obligor waives, to the extent permitted by applicable law, presentment,
demand, protest and any notice of any kind (except notices explicitly required
hereunder or under any Security Document) in connection with this Agreement and
the Security Documents and any action taken by the Trustee with respect to the
Collateral.

 

 

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2.6. Limitation on Trustee’s Duty in Respect of Collateral. Beyond its duties as
to the custody thereof expressly provided herein or in any Security Document and
to account to the Secured Parties and each Obligor for moneys and other property
received by it hereunder or under any Security Document, the Trustee shall not
have any duty to any Obligor or to the Secured Parties as to any Collateral in
its possession or control or in the possession or control of any of its agents
or nominees, or any income thereon or as to the preservation of rights against
prior parties or any other rights pertaining thereto.

2.7. Limitation by Law. All rights, remedies and powers provided herein may be
exercised only to the extent that the exercise thereof does not violate any
applicable provision of law, and all the provisions hereof are intended to be
subject to all applicable mandatory provisions of law which may be controlling
and to be limited to the extent necessary so that they will not render this
Agreement invalid, unenforceable in whole or in part or not entitled to be
recorded, registered or filed under the provisions of any applicable law.

2.8. Rights of Secured Parties under Secured Instruments. Notwithstanding any
other provision of this Agreement or any Security Document, the right of each
Secured Party to receive payment of the Secured Obligations held by such Secured
Party when due (whether at the stated maturity thereof, by acceleration or
otherwise) as expressed in the related Secured Instrument or other instrument
evidencing or agreement governing a Secured Obligation or to institute suit for
the enforcement of such payment on or after such due date, and the obligation of
the Obligors to pay such Secured Obligation when due, shall not be impaired or
affected without the consent of such Secured Party given in the manner
prescribed by the Secured Instrument pursuant to which such Secured Obligation
is outstanding.

SECTION 3.

COLLATERAL ACCOUNT; DISTRIBUTIONS

3.1. The Collateral Account. On the date hereof there shall be established and,
at all times thereafter until the trusts created by this Agreement shall have
terminated, there shall be maintained with the Trustee at the office of the
Trustee’s corporate trust division an account which shall be entitled the
“Champion Home Builders Collateral Account” (the “Collateral Account”). All
moneys which are required by this Agreement or any Security Document to be
delivered to the Trustee or which are received by the Trustee or any agent or
nominee of the Trustee in respect of the Collateral, whether in connection with
the exercise of the remedies provided in this Agreement or any Security Document
or otherwise, shall be deposited in the Collateral Account and held by the
Trustee as part of the Trust Estate and applied in accordance with the terms of
this Agreement (including Section 3.4). Notwithstanding the foregoing, all
moneys received by the Trustee when no

 

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Event of Default exists shall promptly be paid over to the Obligors in
accordance with their respective interests.

3.2. Control of Collateral Account. All right, title and interest in and to the
Collateral Account shall vest in the Trustee, and funds on deposit in the
Collateral Account shall constitute part of the Trust Estate. The Collateral
Account shall be subject to the exclusive dominion and control of the Trustee.

3.3. Investment of Funds Deposited in Collateral Account. The Trustee shall, in
accordance with Requisite Instructions delivered to the Trustee, invest and
reinvest moneys on deposit in the Collateral Account at any time in Cash
Equivalent Investments. All such investments and the interest and income
received thereon and the net proceeds realized on the sale or redemption thereof
shall be held in the Collateral Account as part of the Trust Estate. The Trustee
shall not be responsible for any diminution in funds resulting from such
investments. In the absence of any Requisite Instructions, the Trustee shall
have no obligation to invest or reinvest moneys.

3.4. Application of Moneys. (a) The Trustee shall have the right (pursuant to
Section 4.7) at any time to apply moneys held by it in the Collateral Account to
the payment of due and unpaid Trustee Fees. Notwithstanding anything to the
contrary contained herein, the Trustee shall have the right at any time to
transfer money held by it in the Collateral Account to any depository bank of
any Obligor in accordance with any control agreement entered into with such
depository bank pursuant to the Credit Agreement, solely to reimburse such
depository bank for checks, ACH transfers and other items which are recalled,
dishonored, reversed or returned to such depository bank in respect of any
deposit account subject to any such control agreement.

(b)

All remaining moneys held by the Trustee in the Collateral Account or received
by the Trustee while an Event of Default exists shall, to the extent available
for distribution (it being understood that the Trustee may liquidate investments
prior to maturity in order to make a distribution pursuant to this Section 3.4),
be promptly distributed (subject to the provisions of Section 3.5) by the
Trustee in the following order of priority:

First: to the Trustee for any unpaid Trustee Fees and then to any Secured Party
which has theretofore advanced or paid any Trustee Fees constituting
administrative expenses allowable under Section 503(b) of the Bankruptcy Code,
an amount equal to the amount thereof so advanced or paid by such Secured Party
and for which such Secured Party has not been previously reimbursed;

Second: to any Secured Party which has theretofore advanced or paid any Trustee
Fees other than such administrative expenses, an amount equal to the amount
thereof so advanced or paid by such Secured Party and for which such Secured
Party has not been previously reimbursed;

 

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Third: to the holders of the Credit Agreement Obligations in an aggregate amount
(for all distributions pursuant to this subclause third) equal to (i) 15% of
Consolidated Net Tangible Assets (measured as of the date hereof) minus (ii) the
aggregate outstanding principal amount of Indebtedness (as defined in the 2009
Notes Indenture) (other than the Credit Agreement Obligations) and the aggregate
outstanding Attributable Debt (as defined in the 2009 Notes Indenture) in
respect of Sale/Leaseback Transactions (as defined in the 2009 Notes Indenture),
in each case, (x) to which clause (a) or (b) of Section 4.05 of the 2009 Notes
Indenture applies and (y) measured in accordance with such Section 4.05;
provided that the Administrative Agent shall certify the calculation of the
foregoing amounts to the Trustee in good faith, upon which certification the
Trustee shall be entitled to conclusively rely;

Fourth: to the Secured Parties in an amount equal to (i) in the case of holders
of the Credit Agreement Obligations (other than with respect to Rate Protection
Agreements) and the 2009 Notes, the unpaid principal of, unpaid interest on and
other unpaid charges, if any, in respect of such Secured Obligations then
outstanding whether or not then due and payable, and (ii) in the case of holders
of Credit Agreement Obligations with respect to Rate Protection Agreements, the
amount of credit exposure of such holders under such Rate Protection Agreements;
and, in any case, if such moneys shall be insufficient to pay such amounts in
full, then ratably (without priority of any one over any other) to the Secured
Parties in proportion to such amounts; provided that, for purposes hereof, the
“credit exposure” at any time of any Secured Party with respect to a Rate
Protection Agreement to which such Secured Party is a party shall be determined
(a) in accordance with any applicable schedule between the applicable Obligor
and such Secured Party, if any, or (b) otherwise at such time in accordance with
the customary methods of calculating credit exposure under similar arrangements
by the counterparty to such arrangements, taking into account potential interest
rate movements and the respective termination provisions and notional principal
amount and term of such Rate Protection Agreement, so long as such Rate
Protection Agreement has been terminated by the applicable counterparty;

Fifth: to the Secured Parties, amounts equal to all other sums which constitute
Secured Obligations, including the reasonable costs and expenses of the Secured
Parties and their representatives which are due and payable under the relevant
Secured Instruments and which constitute Secured Obligations as of the date of
distribution, and, if such moneys shall be insufficient to pay such sums in
full, then ratably to the Secured Parties in proportion to such sums; and

Sixth: any surplus then remaining shall be paid to the Obligors or their
successors or assigns or to whomsoever may be lawfully entitled to receive the
same or as a court of competent jurisdiction may direct.

(c)

The term “unpaid” as used in clause (b) of this Section 3.4 refers:

 

(i)

in the absence of a bankruptcy proceeding with respect to the applicable
Obligor, to all the outstanding Secured Obligations, and

 

 

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(ii)

during the pendency of a bankruptcy proceeding with respect to the applicable
Obligor, to all amounts allowed by the bankruptcy court in respect of Secured
Obligations as a basis for distribution (including estimated amounts, if any,
allowed in respect of contingent claims),

to the extent that prior distributions (whether actually distributed or set
aside pursuant to Section 3.5) have not been made in respect thereof.

(d)

The Trustee shall make all payments and distributions under this Section 3.4:
(i) on account of Credit Agreement Obligations, to the Administrative Agent for
re-distribution among the holders of the Credit Agreement Obligations in
accordance with the provisions of the Credit Agreement, (ii) on account of the
2009 Notes (subject to Section 3.5), to the Indenture Trustee for
re-distribution among the holders of the 2009 Notes in accordance with the
provisions of the 2009 Notes Indenture and (iii) to the Obligors pursuant to
sub-clause sixth of clause (b) of Section 3.4, as directed in writing by the
Parent.

3.5. Application of Moneys Distributable to Indenture Trustee. If at any time
any moneys collected or received by the Trustee pursuant to this Agreement are
distributable pursuant to Section 3.4 to the Indenture Trustee, and if the
Indenture Trustee shall notify the Trustee in writing that no provision is made
under the 2009 Notes Indenture for the application by such Indenture Trustee of
such moneys (whether because the Secured Obligations issued under the 2009 Notes
Indenture have not become due and payable or otherwise) and that the 2009 Notes
Indenture does not effectively provide for the receipt and the holding by the
Indenture Trustee of such moneys pending the application thereof, then the
Trustee, after receipt of such notification, shall, at the direction of the
Indenture Trustee, invest such amounts in Cash Equivalents maturing within 90
days after they are acquired by the Trustee and shall hold all such amounts so
distributable and all such investments and the net proceeds thereof in trust
solely for the Indenture Trustee (in its capacity as trustee) and for no other
purpose until such time as the Indenture Trustee shall request in writing the
delivery thereof by the Trustee for application pursuant to the 2009 Notes
Indenture. The Trustee shall not be responsible for any diminution in funds
resulting from investments made at the direction of the Indenture Trustee or
from holding such monies uninvested.

3.6. Trustee’s Calculations. In making the determinations and allocations
required by Section 3.4, the Trustee may conclusively rely upon information
supplied by the Administrative Agent as to the amounts payable with respect to
Credit Agreement Obligations and upon information supplied by the Indenture
Trustee as to the amounts of unpaid principal and interest outstanding with
respect to the 2009 Notes, and the Trustee shall have no liability to any of the
Secured Parties for actions taken in reliance on such information. If, in the
sole discretion of the Trustee, the distribution of any amount received by the
Trustee in such capacity hereunder or under the

 

 

Security Documents might involve the Trustee in liability, or might be
prohibited hereby, or might be contrary to any law, rule or regulation, the
Trustee may refrain from making distribution until the Trustee’s right to make
such distribution has been adjudicated by a court of competent jurisdiction. All
distributions made by the Trustee pursuant to Section 3.4 shall be (subject to
any decree of any court of competent jurisdiction) final (absent manifest
error), and the Trustee shall have no duty to inquire as to the application by
the Administrative Agent or the Indenture Trustee of any amounts distributed to
them by the Trustee hereunder.

3.7. Pro Rata Sharing. If, through the operation of any bankruptcy,
reorganization, insolvency or other laws or otherwise, the Trustee’s security
interest hereunder and under the Security Documents is enforced with respect to
some, but not all, of the Secured Obligations then outstanding, the Trustee
shall nonetheless apply the Proceeds of the Collateral for the benefit of the
holders of all Secured Obligations in the proportions and subject to the
priorities specified in Section 3.4. To the extent that the Trustee distributes
Proceeds collected with respect to Secured Obligations held by one holder to or
on behalf of Secured Obligations held by a second holder, the first holder shall
be deemed to have purchased a participation in the Secured Obligations held by
the second holder, or shall be subrogated to the rights of the second holder to
receive any subsequent payments and distributions made with respect to the
portion thereof paid or to be paid by the application of such Proceeds.

SECTION 4.

AGREEMENTS WITH TRUSTEE

4.1. Delivery of Secured Instruments. On the date hereof, the Borrower shall
deliver to the Trustee true and complete copies of all Secured Instruments as in
effect on the date hereof. The Borrower shall deliver to the Trustee, promptly
upon the execution thereof, a true and complete copy of all Secured Instruments
entered into after the date hereof and of all amendments, modifications or
supplements to any Secured Instrument entered into after the date hereof.

4.2. Information as to Secured Parties, Administrative Agent and Indenture
Trustee. The Borrower shall deliver to the Trustee on the date hereof and from
time to time thereafter upon written request of the Trustee, a list setting
forth as of a date not more than 30 days prior to the date of such delivery, (i)
the aggregate unpaid principal amount of Credit Agreement Obligations
outstanding and the name and address of the Administrative Agent, and (ii) the
aggregate unpaid principal amount of 2009 Notes outstanding under the Indenture
and the name and address of the Indenture Trustee thereunder. In addition, the
Borrower will promptly notify the Trustee of each change in the identity of the
Administrative Agent or the Indenture Trustee. On or prior to the date hereof,
the Borrower will request the Administrative Agent to deliver

 

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to the Trustee the names of its officers that are authorized to give directions
hereunder on behalf of the Administrative Agent. The Borrower will request that
the Administrative Agent notify the Trustee of any change in such officers prior
to the date of any such change. If the Trustee does not receive the names of
such officers, the Trustee may rely on any person purporting to be authorized to
give directions hereunder on behalf of the Administrative Agent. If the Trustee
is not informed of changes in the officers of the Administrative Agent, the
Trustee may rely on the information previously provided to the Trustee.

4.3. Compensation and Expenses. The Borrower agrees to pay to the Trustee, from
time to time within 10 Business Days following receipt of an invoice therefor,
(i) reasonable compensation (which shall not be limited by any provision of law
in regard to compensation of fiduciaries or of a trustee of an express trust)
for its services hereunder and under the Security Documents and for
administering the Trust Estate in accordance with one or more fee letters
executed by the Trustee and the Borrower and (ii) all of the fees, costs and
expenses of the Trustee (including the reasonable fees and disbursements of its
counsel, advisors and agents) (A) arising in connection with the preparation,
execution, delivery, modification, and termination of this Agreement and each
Security Document or the enforcement of any of the provisions hereof or thereof,
(B) incurred or required to be advanced in connection with the administration of
the Trust Estate, the sale or other disposition of Collateral pursuant to any
Security Document and the preservation, protection or defense of the Trustee’s
rights under this Agreement and the Security Documents and in and to the
Collateral and the Trust Estate or (C) incurred by the Trustee in connection
with the removal of the Trustee pursuant to clause (a) of Section 5.6. Such
fees, costs and expenses are intended to constitute expenses of administration
under any bankruptcy law relating to creditors rights generally. The obligations
of the Borrower under this Section 4.3 shall survive the termination of the
other provisions of this Agreement and the resignation or removal of the
Trustee.

4.4. Stamp and Other Similar Taxes. The Borrower agrees to indemnify and hold
harmless the Trustee, the Administrative Agent, the Indenture Trustee and each
Secured Party from any present or future claim for liability for any stamp or
any other similar tax, and any penalties or interest with respect thereto, which
may be assessed, levied or collected by any jurisdiction in connection with this
Agreement, any Security Document, the Trust Estate or any Collateral. The
obligations of the Borrower under this Section 4.4 shall survive the termination
of the other provisions of this Agreement and the resignation or removal of the
Trustee.

4.5. Filing Fees, Excise Taxes, Etc. The Borrower agrees to pay or to reimburse
the Trustee for any and all payments made by the Trustee in respect of all
search, filing, recording and registration fees, taxes, excise taxes and other
similar imposts which may be payable or determined to be payable in respect

 

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of the execution and delivery of this Agreement and each Security Document. The
obligations of the Borrower under this Section 4.5 shall survive the termination
of the other provisions of this Agreement and the resignation or removal of the
Trustee.

4.6. Indemnification. The Borrower agrees to pay, indemnify, and hold the
Trustee, the Administrative Agent and each Indenture Trustee harmless from and
against any and all Indemnified Liabilities with respect to the execution,
delivery, enforcement, performance and administration of this Agreement and the
Security Documents, except for Indemnified Liabilities determined in the final
judgment of a court of competent jurisdiction to have arisen for the account of
a particular indemnified party by reason of such indemnified party’s gross
negligence or willful misconduct. In any suit, proceeding or action brought by
the Trustee under or with respect to any contract, agreement, interest or
obligation constituting part of the Collateral for any sum owing thereunder, or
to enforce any provisions thereof, the Borrower will save, indemnify and keep
the Trustee, the Administrative Agent, the Indenture Trustee and the Secured
Parties harmless from and against all expense, loss or damage suffered by reason
of any defense, setoff, counterclaim, recoupment or reduction of liability
whatsoever of the obligor thereunder, arising out of a breach by any Obligor of
any obligation thereunder or arising out of any other agreement, indebtedness or
liability at any time owing to or in favor of the obligor thereunder or its
successors by any Obligor, and all such obligations of the Borrower shall be and
remain enforceable against and only against the Borrower and shall not be
enforceable against the Trustee, the Administrative Agent, the Indenture Trustee
or any Secured Party. The agreements in this Section 4.6 shall survive the
termination of the other provisions of this Agreement and the resignation or
removal of the Trustee.

4.7. Trustee’s Lien. Notwithstanding anything to the contrary in this Agreement,
as security for the payment of Trustee Fees, (i) the Trustee is hereby granted a
Lien upon all Collateral and (ii) the Trustee shall have the right (in
accordance with clause (a) of Section 3.4) to use and apply any of the funds
held by the Trustee in the Collateral Account to cover such Trustee Fees. In
addition to the foregoing application right, the Trustee shall have all of the
rights and remedies of a secured creditor set forth in the UCC. The provisions
of this Section 4.7 will survive the termination of the other provisions of this
Agreement and the Collateral Documents and the resignation or removal of the
Trustee and shall continue until all of the Trustee Fees are paid in full in
cash.

4.8. Further Assurances. At any time and from time to time, upon the written
request of the Administrative Agent or Trustee, and at the expense of each
Obligor, the Borrower will promptly execute and deliver any and all such further
instruments and documents and take such further action as is reasonably
necessary or reasonably requested to obtain the full benefits of this Agreement
and the Security Documents and the rights and powers herein and

 

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therein granted, and to perfect, or to protect the perfection of, the Liens
granted under the Security Documents, including the filing of any financing or
continuation statement under the UCC. Each Obligor also hereby authorizes the
Trustee to sign and the Administrative Agent or the Trustee to file any such
financing or continuation statement without the signature of such Obligor to the
extent permitted by applicable law. Notwithstanding the foregoing, in no event
shall the Trustee have any obligation to monitor the perfection or continuation
of perfection or the sufficiency or validity of any Lien on any Collateral or to
protect the perfection of the Liens granted under the Security Documents,
including the filing of any such financing or continuation statement.

SECTION 5.

THE TRUSTEE

5.1. Acceptance of Trust. The Trustee, for itself and its successors, hereby
accepts the trusts created by this Agreement upon the terms and conditions
hereof. The Trustee also hereby acknowledges and accepts its appointment to act
as collateral trustee for the Lenders and the Indenture Trustee.

5.2. Exculpatory Provisions. (a) The Trustee shall not be responsible in any
manner whatsoever for the correctness of any recitals, statements,
representations or warranties herein or in any Security Document, all of which
are made solely by the Obligors. The Trustee makes no representations as to the
value or condition of the Trust Estate or any part thereof, or as to the title
of any Obligor thereto or as to the security afforded by this Agreement or any
Security Document, or as to the validity, execution (except its own execution),
enforceability, legality or sufficiency of this Agreement, the Security
Documents, the Secured Obligations or any Lien purported to be granted under any
Security Document, and the Trustee shall incur no liability or responsibility in
respect of any such matters to any other Secured Party, any Obligor or any other
Person.

(b)

The Trustee shall not be required to ascertain or inquire as to the performance
by any Obligor of any of the covenants or agreements contained herein or in any
Security Document or Secured Instrument. Whenever it is necessary, or in the
opinion of the Trustee advisable, for the Trustee to ascertain the amount of
Secured Obligations then held by Secured Parties, the Trustee may rely on a
certificate of the Indenture Trustee, in the case of the 2009 Notes, or a
certificate of the Administrative Agent, in the case of Credit Agreement
Obligations, and, if the Indenture Trustee or the Administrative Agent shall not
give such information to the Trustee, it shall not be entitled to receive
distributions hereunder (in which case distributions to those Persons who have
supplied such information to the Trustee shall be calculated by the Trustee
using, for those Persons who have not supplied such information, the list then
most recently delivered by the Borrower pursuant to Section 4.2), and the amount
so calculated to be distributed to the Person who fails to give such

 

 

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information shall be held in trust for such Person until such Person does supply
such information to the Trustee, whereupon the amount distributable to such
Person shall be recalculated using such information and distributed to it.

(c)

The Trustee shall be under no obligation or duty to take any action under this
Agreement or any Security Document if taking such action (i) would subject the
Trustee to a tax in any jurisdiction where it is not then subject to a tax or
(ii) would require the Trustee to qualify to do business in any jurisdiction
where it is not then so qualified, unless the Trustee receives security or
indemnity satisfactory to it against such tax (or equivalent liability), or any
liability resulting from such qualification, in each case as results from the
taking of such action under this Agreement or any Security Document.

(d)

The Trustee shall have the same rights with respect to any Secured Obligation
held by it as any other Secured Party and may exercise such rights as though it
were not the Trustee hereunder, and may accept deposits from, lend money to, and
generally engage in any kind of banking or trust business with any of the
Obligors as if it were not the Trustee.

(e)

Subject to the provisions of the Security Documents concerning the Trustee’s
duty of care with respect to the Collateral, the Trustee shall not be liable for
any action taken or omitted to be taken in accordance with this Agreement or any
Security Document except to the extent any such liability is determined in the
final judgment of a court of competent jurisdiction to have been primarily
caused by the Trustee’s gross negligence or willful misconduct. Notwithstanding
anything set forth herein to the contrary, the Trustee shall have a duty of
reasonable care with respect to any Collateral delivered to the Trustee or its
designated representatives that is in the Trustee’s or its designated
representatives’ possession and control.

(f)

Delegation of Duties. The Trustee may execute any of the trusts or powers hereof
and perform any duty hereunder either directly or by or through agents or
attorneys-in-fact. The Trustee shall be entitled to advice of counsel concerning
all matters pertaining to such trusts, powers and duties. The Trustee shall not
be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it without gross negligence or willful misconduct.

5.3. Reliance by Trustee. (a) Whenever in the administration of this Agreement
or the Security Documents the Trustee shall deem it necessary that a factual
matter be proved or established by any Obligor, any other Secured Party or any
other Person in connection with the Trustee taking, suffering or omitting any
action hereunder or thereunder, such matter (unless other evidence in respect
thereof is herein specifically prescribed) may be deemed to be conclusively
proved or established by a certificate of an Authorized Officer, such other
Secured Party or such other Person delivered to the Trustee, and such
certificate shall be full warrant to the Trustee for any action taken,

 

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suffered or omitted in reliance thereon, subject, however, to the provisions of
Section 5.4.

(b)

The Trustee may consult with counsel, and any Opinion of Counsel shall be full
and complete authorization and protection in respect of any action taken or
suffered by it hereunder or under any Security Document in accordance therewith.
The Trustee shall have the right at any time to seek instructions concerning the
administration of this Agreement and the Security Documents from any court of
competent jurisdiction.

(c)

The Trustee may rely, and shall be fully protected in acting, upon any
resolution, statement, certificate, instrument, opinion, report, notice,
request, consent, order, bond or other paper or document which it in good faith
believes to be genuine and to have been signed or presented by the proper party
or parties or, in the case of cables, telecopies and telexes, to have been sent
by the proper party or parties. In the absence of its own gross negligence or
willful misconduct, the Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Trustee and conforming to the
requirements of this Agreement.

(d)

The Trustee shall not be under any obligation to exercise any of the rights or
powers vested in the Trustee by this Agreement and the Security Documents, at
the request or direction of the Administrative Agent by delivery of Requisite
Instructions, pursuant to this Agreement or otherwise, unless the Trustee shall
have been provided adequate security and indemnity against the costs, expenses
and liabilities which may be incurred by the Trustee in compliance with such
request or direction, including such reasonable advances as may be requested by
the Trustee.

(e)

Upon any application or demand by any Obligor (except any such application or
demand which is expressly permitted to be made orally) to the Trustee to take or
permit any action under any of the provisions of this Agreement or any Security
Document, the Borrower shall furnish to the Trustee a certificate of an
Authorized Officer stating that all conditions precedent, if any, provided for
in this Agreement, in any relevant Security Document or in the Credit Agreement
relating to the proposed action have been complied with, and in the case of any
such application or demand as to which the furnishing of any document is
specifically required by any provision of this Agreement or a Security Document
relating to such particular application or demand, such additional document
shall also be furnished.

(f)

Any Opinion of Counsel may be based, insofar as it relates to factual matters,
upon a certificate of an Authorized Officer or representations made by an
Authorized Officer in a writing filed with the Trustee.

 

 

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5.4. Limitations on Duties of Trustee. (a) The Trustee shall be obligated to
perform such duties and only such duties as are specifically set forth in this
Agreement and the Security Documents, and no implied covenants or obligations
shall be read into this Agreement or any Security Document against the Trustee.
The Trustee may, subject to the provisions of clause (b) of Section 2.4,
exercise the rights and powers vested in the Trustee by this Agreement and the
Security Documents, and shall not be liable with respect to any action taken, or
omitted to be taken, in accordance with Requisite Instructions delivered to the
Trustee.

(b)

Except as herein otherwise expressly provided, the Trustee shall not be under
any obligation to take any action which is discretionary with the Trustee under
the provisions hereof or of any Security Document in accordance with Requisite
Instructions delivered to the Trustee. The Trustee shall make available for
inspection and copying by the Administrative Agent and the Indenture Trustee
each certificate or other paper furnished to the Trustee by any of the Obligors
under or in respect of this Agreement or any Security Document or any of the
Collateral.

(c)

No provision of this Agreement or of any Security Document shall be deemed to
impose any duty or obligation on the Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it, in any
jurisdiction in which it shall be illegal, or in which the Trustee shall be
unqualified or incompetent to perform any such act or acts or to exercise any
such right, power, duty or obligation or if such performance or exercise would
constitute doing business by the Trustee in such jurisdiction or impose a tax on
the Trustee by reason thereof or would require the Trustee to risk its own funds
or otherwise incur any financial liability in the performance of its duties
hereunder.

(d)

Neither the Trustee nor any of its directors, officers, agents or employees
shall be responsible for or have any duty to ascertain, inquire into or verify
(i) any statement, warranty or representation made by any Obligor in connection
with this Agreement or any Security Document, (ii) the performance or observance
of any of the covenants or agreements of any Obligor under this Agreement or any
Security Document or the satisfaction of any condition specified in any such
document, (iii) the existence or possible existence of any Event of Default, or
(iv) the validity, effectiveness or genuineness of this Agreement, any Security
Document or any other instrument or writing furnished in connection herewith or
therewith. The Trustee shall not be responsible to any Secured Party for the
perfection or priority of any Lien on any of the Collateral, for the execution,
effectiveness, genuineness, validity, legality, enforceability, collectability
or sufficiency of any of the Security Documents or the transactions contemplated
thereby, or for the financial condition of any Obligor.

 

 

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5.5. Moneys to be Held in Trust. All moneys received by the Trustee under or
pursuant to any provision of this Agreement or any Security Document (except
Trustee Fees) shall be held in trust for the purposes for which they were paid
or are held.

5.6. Resignation and Removal of the Trustee. (a) The Trustee may at any time, by
giving at least 90 days’ prior written notice to the Borrower and the
Administrative Agent, resign and be discharged of the responsibilities hereby
created, such resignation to become effective upon (i) the appointment of a
successor Trustee, (ii) the acceptance of such appointment by such successor
Trustee and (iii) the approval of such successor Trustee evidenced by one or
more instruments signed by the Administrative Agent and, unless an Event of
Default shall have occurred and be continuing, the Parent and the Borrower
(which approval of the Parent and the Borrower shall not be unreasonably
withheld or delayed). If no successor Trustee shall be appointed and shall have
accepted such appointment within 90 days after the Trustee gives the aforesaid
notice of resignation, the Trustee or the Administrative Agent may apply to any
court of competent jurisdiction to appoint a successor Trustee to act until such
time, if any, as a successor Trustee shall have been appointed as provided in
this Section 5.6. Any successor so appointed by such court shall immediately and
without further act be superseded by any successor Trustee appointed by the
Administrative Agent as provided in clause (b) of this Section 5.6. The
Administrative Agent may, at any time upon giving at least 30 days’ prior
written notice thereof to the Trustee, remove the Trustee and appoint a
successor Trustee, such removal to be effective upon the appointment of a
successor Trustee as provided by clause (b) of this Section 5.6 and acceptance
of such appointment by the successor. The Trustee shall be entitled to Trustee
Fees to the extent incurred or arising, or relating to events occurring, before
such resignation or removal.

(b)

If at any time the Trustee shall resign or be removed or otherwise become
incapable of acting, or if at any time a vacancy shall occur in the office of
the Trustee for any other cause, a successor Trustee may be appointed by the
Administrative Agent with (unless an Event of Default shall have occurred and be
continuing) the consent of the Parent and the Borrower (which consent shall not
be unreasonably withheld or delayed). The powers, duties, authority and title of
the predecessor Trustee shall be terminated and cancelled without procuring the
resignation of such predecessor and without any other formality (except as may
be required by applicable law) than appointment and designation of a successor
in writing duly acknowledged and delivered to the predecessor, the Parent and
the Borrower. Such appointment and designation shall be full evidence of the
right and authority to make the same and of all the facts therein recited, and
this Agreement and the Security Documents shall vest in such successor, without
any further act, deed or conveyance, all the estates, properties, rights,
powers, trusts, duties, authority and title of its predecessor; but such
predecessor shall, nevertheless, on the written request of the Administrative
Agent, the Parent, the Borrower, or the successor, execute

 

 

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and deliver an instrument transferring to such successor all the estates,
properties, rights, powers, trusts, duties, authority and title of such
predecessor hereunder and under the Security Documents and shall deliver all
Collateral held by it or its agents to such successor. Should any deed,
conveyance or other instrument in writing from any Obligor be required by any
successor Trustee for more fully and certainly vesting in such successor the
estates, properties, rights, powers, trusts, duties, authority and title vested
or intended to be vested in the predecessor Trustee, any and all such deeds,
conveyances and other instruments in writing shall, on reasonable request of
such successor, be executed, acknowledged and delivered by such Obligor. If such
Obligor shall not have executed and delivered any such deed, conveyance or other
instrument within 10 days after it shall have received a written request from
the successor Trustee to do so, or if an Event of Default shall have occurred
and be continuing, the predecessor Trustee may execute the same on behalf of
such Obligor. Each Obligor hereby appoints any predecessor Trustee as its agent
and attorney to act for it as provided in the immediately preceding sentence.

5.7. Status of Successor Trustee. Every successor Trustee appointed pursuant to
Section 5.6 shall be a bank or trust company in good standing and having power
to act as Trustee hereunder, incorporated under the laws of the United States of
America or any State thereof or the District of Columbia and having its
principal corporate trust office within the 48 contiguous States and shall also
have capital, surplus and undivided profits of not less than $500,000,000.

5.8. Merger of the Trustee. Any corporation into which the Trustee may be
merged, or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Trustee shall be a party, or any entity
to which the Trustee shall sell or otherwise transfer its corporate trust
business, shall be Trustee under this Agreement and the Security Documents
without the execution or filing of any paper or any further act on the part of
the parties hereto.

5.9. Co-Trustee; Separate Trustee. (a) If at any time (i) it shall be necessary
in order to conform to any law of any jurisdiction in which any of the
Collateral shall be located to avoid any violation of law or imposition on the
Trustee of taxes by such jurisdiction not otherwise imposed on the Trustee,
(ii) the Trustee shall be advised by counsel, reasonably satisfactory to it,
that it is necessary in the interest of the Secured Parties, (iii) the
Administrative Agent shall in writing so request the Trustee and the Obligors,
or (iv) the Trustee shall deem it necessary for its own protection in the
performance of its duties hereunder or under any Security Document, the Trustee
and the Obligors shall execute and deliver all instruments and agreements
necessary or proper to constitute another bank or trust company, or one or more
persons approved by the Trustee and the Obligors, either to act as co-trustee or
co-trustees of all or any of the Collateral under this Agreement or under any of
the Security Documents, jointly with the Trustee originally named herein or
therein or any

 

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successor Trustee, or to act as separate trustee or trustees of any of the
Collateral. If any Obligor shall not have joined in the execution of such
instruments and agreements within 10 days after it receives a written request
from the Trustee to do so, or if an Event of Default shall have occurred and be
continuing, the Trustee may act under the foregoing provisions of this clause
(a) without the concurrence of the Obligors and execute and deliver such
instruments and agreements on behalf of such Obligor. Each Obligor hereby
appoints the Trustee as its agent and attorney to act for it under the foregoing
provisions of this clause (a) in either of such contingencies.

(b)

Every separate trustee and every co-trustee, other than any successor Trustee
appointed pursuant to Section 5.6, shall, to the extent permitted by law, be
appointed and act and be such, subject to the following provisions and
conditions:

(i)

all rights, powers, duties and obligations conferred upon the Trustee in respect
of the custody, control and management of moneys, papers or securities shall be
exercised solely by the Trustee or any agent appointed by the Trustee;

(ii)

all rights, powers, duties and obligations conferred or imposed upon the Trustee
hereunder and under the relevant Security Document or Documents shall be
conferred or imposed and exercised or performed by the Trustee and such separate
trustee or separate trustees or co-trustee or co-trustees, jointly, as shall be
provided in the instrument appointing such separate trustee or separate trustees
or co-trustee or co-trustees, except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed the Trustee
shall be incompetent or unqualified to perform such act or acts, or unless the
performance of such act or acts would result in the imposition of any tax on the
Trustee which would not be imposed absent such joint act or acts, in which event
such rights, powers, duties and obligations shall be exercised and performed by
such separate trustee or separate trustees or co-trustee or co-trustees; no
power given hereby or by the relevant Security Documents to, or which it is
provided herein or therein may be exercised by, any such co-trustee or
co-trustees or separate trustee or separate trustees shall be exercised
hereunder or thereunder by such co-trustee or co-trustees or separate trustee or
separate trustees except jointly with, or with the consent in writing of, the
Trustee, anything contained herein to the contrary notwithstanding;

(iii)

no trustee hereunder shall be personally liable by reason of any act or omission
of any other trustee hereunder; and

(iv)

the Parent, the Borrower and the Trustee, at any time by an instrument in
writing executed by them jointly, may accept the resignation of or remove any
such separate trustee or co-trustee and, in that case by an instrument in
writing executed by them jointly, may appoint a successor to such separate
trustee or co-trustee, as the case may be, anything contained herein to the
contrary

 

 

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notwithstanding. If the Borrower and the Parent shall not have joined in the
execution of any such instrument within 10 days after it receives a written
request from the Trustee to do so, or if an Event of Default has occurred and is
continuing, the Trustee shall have the power to accept the resignation of or
remove any such separate trustee or co-trustee and to appoint a successor
without the concurrence of the Parent or the Borrower, the Parent and the
Borrower hereby appointing the Trustee its agent and attorney to act for it in
such connection in such contingency. If the Trustee shall have appointed a
separate trustee or separate trustees or co-trustee or co-trustees as above
provided, the Trustee may at any time, by an instrument in writing, accept the
resignation of or remove any such separate trustee or co-trustee and the
successor to any such separate trustee or co-trustee shall be appointed by the
Parent, the Borrower and the Trustee, or by the Trustee alone pursuant to this
clause (b).

5.10. Treatment of Payee or Indorsee by Trustee; Representatives of Secured
Parties. (a) The Trustee may treat the registered holder or, if none, the payee
or indorsee of any promissory note or debenture evidencing a Secured Obligation
as the absolute owner thereof for all purposes and shall not be affected by any
notice to the contrary, whether such promissory note or debenture shall be past
due or not.

(b)

Any Person (other than the Administrative Agent and the Indenture Trustee) which
shall be designated as the duly authorized representative of one or more Secured
Parties to act as such in connection with any matters pertaining to this
Agreement or the Collateral shall present to the Trustee such documents,
including Opinions of Counsel, as the Trustee may reasonably require, in order
to demonstrate to the Trustee the authority of such Person to act as the
representative of such Secured Parties (it being understood that the holders of
Credit Agreement Obligations are represented hereunder by the Administrative
Agent and shall have no other rights pursuant to this clause (b)). The authority
of the Administrative Agent and the Indenture Trustee shall be demonstrated by
their inclusion as such in the lists from time to time delivered pursuant to
Section 4.2.

SECTION 6.

MISCELLANEOUS

6.1. Notices. Unless otherwise specified herein, all notices, requests, demands
or other communications given to the Borrower, the Trustee, the Administrative
Agent or the Indenture Trustee shall be given in writing or by facsimile
transmission and shall be deemed to have been duly given when personally
delivered or when duly deposited in the mails, registered or certified mail
postage prepaid, or when transmitted by facsimile transmission, addressed (i) if
to the Parent, the Borrower or the Trustee, to such party at its address
specified on the signature pages hereof or any other address which such party
shall have specified as its address for the purpose of communications

 

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hereunder, by notice given in accordance with this Section 6.1 to the party
sending such communication or (ii) if to the Administrative Agent or the
Indenture Trustee, to it at its address specified from time to time in the list
provided by the Borrower to the Trustee pursuant to Section 4.2; provided that
any notice, request or demand to the Trustee shall not be effective until
received by the Trustee in the corporate trust division at the office designated
by it pursuant to this Section 6.1.

6.2. No Waivers. No failure on the part of the Trustee, any co-trustee, any
separate trustee, the Administrative Agent, the Indenture Trustee or any Secured
Party to exercise, no course of dealing with respect to, and no delay in
exercising, any right, power or privilege under this Agreement or any Security
Document shall operate as a waiver thereof nor shall any single or partial
exercise of any such right, power or privilege preclude any other or further
exercise thereof or the exercise of any other right, power or privilege.

6.3. Amendments, Supplements and Waivers. (a) With the prior written consent of
the Administrative Agent, the Trustee and the Obligors may, from time to time,
enter into written agreements supplemental hereto or to any Security Document
for the purpose of adding to, or waiving any provisions of, this Agreement or
any Security Document or changing in any manner the rights of the Trustee, the
Secured Parties or the Obligors hereunder or thereunder. Any such supplemental
agreement shall be binding upon the Obligors, the Administrative Agent, the
Indenture Trustee, the Secured Parties and the Trustee and their respective
successors. The Trustee shall not enter into any such supplemental agreement
unless the Trustee shall have received an Opinion of Counsel to the effect that
such supplemental agreement will not result in a breach of any provision or
covenant contained in the 2009 Notes Indenture which requires that the 2009
Notes be secured equally and ratably with the Credit Agreement Obligations.

(b)

Without the consent of the Administrative Agent, the Indenture Trustee or any
Secured Party, the Trustee and any of the Obligors, at any time and from time to
time, may enter into one or more agreements supplemental hereto or to any
Security Document, in form reasonably satisfactory to the Trustee, (i) to add to
the covenants of such Obligor for the benefit of the Secured Parties or to
surrender any right or power herein conferred upon such Obligor herein or in any
Security Document; (ii) to mortgage or pledge to the Trustee, or grant a
security interest in favor of the Trustee in, any property or assets as
additional security for the Secured Obligations; or (iii) to cure any ambiguity,
to correct or supplement any provision herein or in any Security Document which
may be defective or inconsistent with any other provision herein or therein, or
to make any other provision with respect to matters or questions arising
hereunder which shall not be inconsistent with any provision hereof; provided
that any such action contemplated by this clause (iii) shall not adversely
affect the interests of the Secured Parties.

 

 

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6.4. Headings. The table of contents and the headings of Sections and
subsections have been included herein and in the Security Documents for
convenience only and should not be considered in interpreting this Agreement or
the Security Documents.

6.5. Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall not invalidate the remaining provisions
hereof, and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other jurisdiction.

6.6. Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of each of the parties hereto and shall inure to the benefit of each
of the parties hereto and their respective successors and assigns, and nothing
herein is intended or shall be construed to give any other Person any right,
remedy or claim under, to or in respect of this Agreement or any Collateral.

6.7. Currency Conversions. In calculating the amount of Secured Obligations for
any purpose hereunder, including voting or distribution purposes, the amount of
any Secured Obligation which is denominated in a currency other than Dollars
shall be converted into Dollars at the spot rate for purchasing Dollars with
such currency as set forth in The Wall Street Journal (or any successor or
substitute publication reasonably selected by the Administrative Agent) on the
business day prior to the date on which such calculation is to be made.

6.8. Governing Law. This Agreement shall be governed by, and construed and
interpreted in accordance with, the laws of the State of New York.

6.9. Counterparts. This Agreement may be signed (including by way of facsimile
or electronic transmission) in any number of counterparts with the same effect
as if the signatures thereto and hereto were upon the same instrument.

6.10. Termination. (a) Upon (i) receipt by the Trustee from the Administrative
Agent of (A) a written direction to cause the Liens created by Section 4.7 and
by the Security Documents to be released and discharged or (B) a written notice
stating that the Termination Date has occurred, and (ii) payment in full of all
Trustee Fees, the security interests created by Section 4.7 and by the Security
Documents shall terminate forthwith and all right, title and interest of the
Trustee in and to the Collateral shall revert to the Obligors, their successors
and assigns. Notwithstanding anything to the contrary contained herein or in any
Secured Instrument, the Lien of the holders of the 2009 Notes created by clause
(b) of Section 6.3 and by the Security Documents shall be automatically and
unconditionally released and discharged upon the release and discharge of the
Liens created by clause (b) of Section 6.3 and by the Security Documents.

(b)

Upon the termination of the Trustee’s security interest and the release of the
Collateral in accordance with clause (a) of Section 6.10, the Trustee will

 

 

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promptly, at the Borrower’s written request and expense, (i) execute and deliver
to the Borrower such documents as the Borrower shall reasonably request to
evidence the termination of such security interest or the release of the
Collateral and (ii) deliver or cause to be delivered to the Obligors all
property of any Obligor then held by the Trustee or any agent thereof.

(c)

This Agreement shall terminate when the security interest granted under the
Security Documents has terminated and the Collateral has been released; provided
that the provisions of Sections 4.3, 4.4, 4.5 and 4.6 shall not be affected by
any such termination.

6.11. New Obligors. During the term of this Agreement, each Subsidiary of the
Parent that, pursuant to Section 7.8 of the Credit Agreement, is required to
become a party to this Agreement, may become such a party by executing an
assumption agreement, substantially in the form of Exhibit A, a copy of which
shall be delivered to the Trustee in accordance with Section 6.1, whereupon such
Subsidiary shall become an Obligor for all purposes and to the same extent as if
originally a party hereto and shall be bound by and entitled to the benefits of
this Agreement.

6.12. Inconsistent Provisions. If any provision of this Agreement shall be
inconsistent with, or contrary to, any provision in any of the Security
Documents or any document entered into in connection therewith, the provisions
of this Agreement shall be controlling and shall supersede such inconsistent
provision to the extent necessary to give full effect to all provisions
contained in this Agreement.

6.13. Confidentiality. The Trustee agrees to keep confidential any written
information (a) provided to it by or on behalf of the Parent or any of its
Subsidiaries pursuant to or in connection with this Agreement or any Security
Document or (b) obtained by the Trustee based on a review of the books and
records of the Parent or any of its Subsidiaries; provided that nothing herein
shall prevent the Trustee from disclosing any such information (i) to the
Administrative Agent, any Lender or the Indenture Trustee, (ii) to its
employees, directors, agents, attorneys, accountants and other professional
advisors, (iii) upon the request or demand of any Governmental Authority having
jurisdiction over the Trustee or as shall be required pursuant to any
requirement of law, (iv) in response to any order of any court or other
Governmental Authority or as may otherwise be required pursuant to any
requirement of law, (v) in connection with any litigation to which the Trustee
is a party, (vi) which has been publicly disclosed other than in breach of this
Agreement or (vii) to the extent reasonably necessary in connection with the
exercise of any remedy hereunder.

6.14. SUBMISSION TO JURISDICTION; WAIVERS. EACH OBLIGOR HEREBY IRREVOCABLY AND
UNCONDITIONALLY:

 

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(a)

SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT OR ANY SECURITY DOCUMENT TO WHICH IT IS A PARTY, OR FOR
RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE EXCLUSIVE
GENERAL JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK OR IN THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE
COURTS FROM ANY THEREOF;

(b)

TO THE EXTENT PERMITTED BY APPLICABLE LAW, CONSENTS THAT ANY SUCH ACTION OR
PROCEEDING SHALL BE BROUGHT IN SUCH COURTS AND WAIVES ANY OBJECTION THAT IT
MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY
SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT
COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME;

(c)

AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE EFFECTED
BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY
SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO SUCH OBLIGOR AT ITS ADDRESS SPECIFIED
IN SUBSECTION 6.1 OR AT SUCH OTHER ADDRESS OF WHICH THE TRUSTEE SHALL HAVE BEEN
NOTIFIED PURSUANT THERETO;

(d)

AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT SERVICE OF PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO SUE IN ANY
OTHER JURISDICTION; AND

(e)

WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO
CLAIM OR RECOVER IN ANY LEGAL ACTION OR PROCEEDING REFERRED TO IN THIS
SUBSECTION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES.

6.15. WAIVER OF JURY TRIAL. THE TRUSTEE AND EACH OF THE OBLIGORS HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY SECURITY DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN.

6.16. PATRIOT ACT. The Trustee hereby notifies each Obligor that, pursuant to
the requirements of the PATRIOT Act, it is required to obtain, verify and record
information that identifies each Obligor, which information includes the name
and address of such Obligor and other information that will allow the Trustee to
identify such Obligor in accordance with the PATRIOT Act.

 

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Upon the request of the Trustee, the Parent and the Borrower will provide any
information the Trustee believes is reasonably necessary to be delivered to
comply with the PATRIOT Act.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
written above.

 

CHAMPION HOME BUILDERS CO.

 

By:  
Name:Title:

 

Address:

Telephone Number:
Fax Number:

 

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

 

 

 

CHAMPION ENTERPRISES, INC.

 

By:  
Name:Title:

 

Address:

Telephone Number:
Fax Number:

 

 

 

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

 

CHAMPION ENTERPRISES MANAGEMENT CO.

 

By:___________________________________

Name:

Title:

 

CHAMPION RETAIL, INC.

 

By:___________________________________

Name:

Title:

 

DUTCH HOUSING, INC.

 

By:___________________________________

Name:

Title:

 

HOMES OF MERIT, INC.

 

By:___________________________________

Name:

Title:

 

 

 

MODULINE INTERNATIONAL, INC.

 

By:___________________________________

Name:

Title:

 

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NEW ERA BUILDING SYSTEMS, INC.

 

By:___________________________________

Name:

Title:

 

REDMAN HOMES, INC.

 

By:___________________________________

Name:

Title:

 

REDMAN INDUSTRIES, INC.

 

By:___________________________________

Name:

Title:

 

SAN JOSE ADVANTAGE HOMES, INC.

 

By:___________________________________

Name:

Title:

 

 

 

STAR FLEET, INC.

 

By:___________________________________

Name:

Title:

 

 

WESTERN HOMES CORPORATION

 

By:___________________________________

Name:

Title:

 

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WELLS FARGO BANK, N.A., as Trustee

 

By:  
Name:Title:

 

Address:

Telephone Number:
Fax Number:

 

 

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ACKNOWLEDGED AND ACCEPTED:

 

CREDIT SUISSE, CAYMAN ISLANDS BRANCH, as Administrative Agent

 

By: 
       Name:
       Title:

 

 

 

 

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SCHEDULE I

to Agreement

CERTAIN DEFINITIONS

Unless otherwise defined herein, all capitalized terms used in this Agreement
(including this Schedule I) shall have meanings given to them in the Credit
Agreement.

The following terms shall have the respective meanings set forth below:

“2009 Notes” – as defined in the second recital.

“2009 Notes Indenture” – as defined in the second recital.

“Agreement” shall mean, on any date, this Collateral Trust Agreement as
originally in effect on October 31, 2005 and as thereafter from time to time
amended, supplemented, amended and restated or otherwise modified from time to
time in accordance with its terms and in effect on such date.

“Borrower” – as defined in the preamble.

“Collateral” shall mean all property in which the Trustee is granted a Lien from
time to time under this Agreement or any other Security Document.

“Collateral Account” – as defined in Section 3.1.

“Consolidated Net Tangible Assets” – as defined in the 2009 Notes Indenture.

“Credit Agreement” – as defined in the first recital.

“Credit Agreement Obligations” shall mean the Obligations (as defined in the
Credit Agreement).

“Indenture Trustee” – as defined in the second recital.

“Lender” – as defined in the first recital.

“Obligors” – as defined in the preamble.

“Opinion of Counsel” shall mean an opinion in writing signed by legal counsel
(other than an employee of the Parent or any Affiliate thereof) satisfactory to
the Trustee, who may be counsel regularly retained by the Trustee.

“Parent” – as defined in the preamble.

“PATRIOT Act” means the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed
into law October 26, 2001)), as amended or otherwise modified from time to time.

“PATRIOT Act Disclosures” means all documentation and other information which
the Collateral Trustee reasonably requests in order to comply with its ongoing
obligations under

 

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applicable “know your customer” and anti-money laundering rules and regulations,
including the PATRIOT Act.

“Proceeds” shall mean all proceeds within the meaning of the UCC.

“Requisite Instructions” shall mean written instructions of the Administrative
Agent; provided that such instructions shall include a certification from the
Administrative Agent that the action contemplated by such instructions is
permitted under the applicable Security Documents (including, if, pursuant to
such Security Documents, such action is permitted to be taken only during the
existence of a Default or Event of Default, a certification that such Default or
Event of Default exists).

“Secured Instruments” shall mean the Credit Agreement, the other Loan Documents,
the 2009 Notes Indenture and the 2009 Notes.

“Secured Obligations” shall mean, without duplication, (i) the Credit Agreement
Obligations, (ii) the 2009 Notes, and (iii) all sums payable by the Borrower
under this Agreement or any Security Document (including Trustee Fees).

“Secured Parties” shall mean at any time the holders of the Secured Obligations.

“Security Documents” shall mean this Agreement and each other agreement pursuant
to which the Trustee is granted a Lien to secure the Secured Obligations
(including each agreement entered into pursuant to clause (b)(ii) of Section 6.3
of this Agreement).

“Trust Estate” shall have the meaning assigned in the Declaration of Trust in
this Agreement.

“Trustee” shall mean Wells Fargo Bank, N.A., in its capacity as trustee under
this Agreement, and any successor trustee appointed thereunder.

“Trustee Fees” shall mean all fees, costs and expenses of the Trustee of the
types described in Sections 4.3, 4.4, 4.5 and 4.6 of this Agreement.

 

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EXHIBIT A

to Collateral Trust Agreement

FORM OF ASSUMPTION AGREEMENT

ASSUMPTION AGREEMENT dated as of ____________, 200__ made by _____________, a
_____________ [corporation] (the “New Obligor”) in favor of Wells Fargo Bank,
N.A., as Trustee under the Agreement referred to below (in such capacity, the
“Trustee”). All capitalized terms not defined herein shall have the meanings
ascribed to them in the Agreement.

WITNESSETH:

WHEREAS, Champion Home Builders Co., a Michigan corporation (the “Borrower”),
Champion Enterprises, Inc., a Michigan corporation (the “Parent”), certain
subsidiaries of the Parent (together with the Borrower and the Parent, the
“Obligors”), and Wells Fargo Bank, N.A., a national banking association, as
trustee (the “Trustee”) have entered into a Collateral Trust Agreement dated as
of October 31, 2005 (as amended, supplemented, amended and restated or otherwise
modified from time to time, the “Agreement”); and

WHEREAS, the New Obligor desires to become a party to the Agreement in
accordance with Section 6.11 of the Agreement;

NOW, THEREFORE, IT IS AGREED:

1.                                                          Agreement. By
executing and delivering this Assumption Agreement, the New Obligor hereby
becomes a party to the Agreement as an “Obligor” thereunder and, without
limiting the foregoing, hereby expressly assumes all obligations and liabilities
of an “Obligor” thereunder.

2.                                                          GOVERNING LAW. THIS
ASSUMPTION AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

IN WITNESS WHEREOF, the undersigned has caused this Assumption Agreement to be
duly executed and delivered as of the date first above written.

[NEW OBLIGOR]

By: _____________________________

Name: ___________________________

Title: ____________________________

Address for Notices:

Fax:

 

 

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EXHIBIT I

FORM OF CLOSING DATE CERTIFICATE

Pursuant to Section 5.1.2 of the Credit Agreement, dated as of October 31, 2005
(as amended, supplemented, amended and restated or otherwise modified from time
to time, the “Credit Agreement”), among Champion Home Builders Co. (the
“Borrower”), Champion Enterprises, Inc., as Parent, the various financial
institutions and other Persons from time to time parties thereto (each a
“Lender”), and Credit Suisse, Cayman Islands Branch, as Administrative Agent for
the Lenders, the undersigned [INSERT TITLE OF AUTHORIZED OFFICER] of the
Borrower hereby certifies as follows:

A.         Terms defined in the Credit Agreement and not otherwise defined
herein are used herein with the meanings so defined.

A.            The representations and warranties of the Borrower set forth in
each of the Loan Documents to which it is a party or which are contained in any
certificate furnished by or on behalf of the Borrower pursuant to any of the
Loan Documents to which it is a party are true and correct to the extent set
forth in clause (a) of Section 5.2.1 of the Credit Agreement on and as of the
date hereof with the same effect as if made on the date hereof.

B.             No authorization or approval or other action by, and no notice to
or filing with, any Governmental Authority or other Person (each as defined in
the Credit Agreement) (other than those which have been, or on the Closing Date
will be, duly obtained or made and which are, or on the Closing Date will be, in
full force and effect) is required for the consummation of the Transaction or
the due execution, delivery or performance by any Obligor of any Loan Document
to which it is a party.

C.            John J. Collins, Jr is the duly elected and qualified Vice
President of the Borrower and the signature set forth for such officer below is
such officer’s true and genuine signature.

D.            No Default or Event of Default has occurred and is continuing as
of the date hereof or after giving effect to the Credit Extensions to be made on
the date hereof.

E.             The conditions precedent set forth in Section 5.1 of the Credit
Agreement were satisfied or waived as of the Closing Date.

F.             Item 1.1(a) of the Disclosure Schedule to the Credit Agreement
sets forth each Immaterial Subsidiary as of the date hereof.

G.            No event, change or condition has occurred since December 31, 2004
that, individually or in the aggregate, has had, or could reasonably be expected
to have, a Material Adverse Effect.

H.         The Administration Agent has received evidence as to the consummation
of the Transaction as set forth in Section 5.1.4 of the Credit Agreement.

 

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IN WITNESS WHEREOF, the undersigned has hereunto set [his][her] name as of the
date set forth below.

 

 

Name:
Title:

 

 

 

 

 

 

Date: October 31, 2005