Exhibit 10.3

AMENDMENT AGREEMENT NO. 6

AMENDMENT AGREEMENT NO. 6, dated as of May 8, 2009 (this “Agreement”), to the
Revolving Credit Agreement, dated as of October 24, 2006, as amended as of
March 16, 2008, as of April 24, 2008, as of March 16, 2009, as of April 14, 2009
and as of April 29, 2009 (as so amended, the “Credit Agreement”), among The PMI
Group, Inc., a Delaware corporation (the “Borrower”), the lenders referred to
therein (the “Lenders”) and Bank of America, N.A., as Administrative Agent (in
such capacity, together with any successor in such capacity, the “Administrative
Agent”).

INTRODUCTORY STATEMENTS

All capitalized terms not otherwise defined in this Agreement but used herein
and found in the Credit Agreement shall have the meaning given them in the
Credit Agreement. All capitalized terms not otherwise defined in this Agreement
or the Credit Agreement but used herein and found in the “Amended and Restated
Credit Agreement” (as defined in Section 5 of this Agreement) shall have the
meaning given them in the Amended and Restated Credit Agreement (even though the
same has not become effective as provided herein), and, accordingly, such
definitions from the Amended and Restated Credit Agreement are hereby
incorporated by reference herein (notwithstanding that the Restatement Effective
Date has not occurred) for the limited purpose of defining such capitalized
terms in this Agreement.

The Borrower has requested that the Lenders agree to amend certain provisions of
the Credit Agreement as hereinafter set forth.

Subject to the terms and conditions hereof, the Lenders signatory to this
Agreement are willing to agree to such amendments, but only upon the terms and
conditions set forth herein.

In consideration of the mutual agreements contained herein and other good and
valuable consideration the receipt of which is hereby acknowledged, the parties
hereto hereby agree as follows:

SECTION 1. Initial Modifications of the Credit Agreement.

(A) Section 7.06(a) of the Credit Agreement is hereby amended in its entirety to
read as follows:

(a) Adjusted Consolidated Net Worth. Permit Adjusted Consolidated Net Worth to
be less than (i) $1,200,000,000 at any time on or prior to May 29, 2009 and
(ii) $1,505,000,000 at any time thereafter.

(B) Section 7.06(b) of the Credit Agreement is hereby amended in its entirety to
read as follows:

(b) Maximum Risk to Statutory Capital Ratio. Permit the Risk to Capital Ratio of
PMI Insurance to be greater than (i) 24.0 to 1.0 at any time on or prior to
May 29, 2009 and (ii) 20:1 to 1.0 at any time thereafter.

(C) Section 8.01(o) of the Credit Agreement is hereby amended in its entirety to
read as follows:

(o) Maintenance of Ratings. PMI Insurance shall at any time after May 29, 2009
fail to maintain (i) a financial strength rating of at least Baa from Moody’s
and (ii) a financial strength rating of at least BBB from S&P. For the avoidance
of doubt, it shall not be an Event of Default if PMI Insurance maintains a
financial strength rating of at least Baa from Moody’s or a financial strength
rating of at least BBB from S&P.

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(D) Agreement with Respect to Extensions of Credit. Prior to the Restatement
Effective Date, without limiting or waiving the terms and provisions of the
Credit Agreement, the Borrower hereby agrees that it shall not at any time seek,
and shall not be entitled, to borrow any Loan or to have any Letter of Credit
issued, amended, renewed or extended (other than the renewal of a Letter of
Credit outstanding on May 8, 2009 so long as the face amount thereof is not
increased in connection therewith, or a Loan made pursuant to Section 2.13(c) of
the Credit Agreement to refinance an Unreimbursed Amount), unless at such time
and after giving effect to such borrowing, issuance, amendment, renewal or
extension (i) Adjusted Consolidated Net Worth is at least $1,505,000,000,
(ii) the Risk to Capital Ratio of PMI Insurance is not greater than 20.0 to 1.0
and (iii) PMI Insurance maintains a financial strength rating of at least
(x) Baa from Moody’s or (y) BBB from S&P.

(E) Agreement with Respect to Investments. Prior to the Restatement Effective
Date, without limiting or waiving the terms and provisions of the Credit
Agreement, the Borrower hereby agrees that it shall not at any time make
directly or indirectly any Investment in any Subsidiary or Affiliate of the
Borrower, unless at such time and after giving effect to such Investment
(i) Adjusted Consolidated Net Worth is at least $1,505,000,000, (ii) the Risk to
Capital Ratio of PMI Insurance is not greater than 20.0 to 1.0 and (iii) PMI
Insurance maintains a financial strength rating of at least (x) Baa from Moody’s
or (y) BBB from S&P.

SECTION 2. [Intentionally Omitted].

SECTION 3. Representations and Warranties.

(i) The Borrower represents and warrants, as of the date of this Agreement and
as of the Restatement Effective Date, to the Administrative Agent, the L/C
Issuer and the Lenders that:

(A) the execution and delivery of, and performance by the Borrower of its
obligations under, this Agreement and the Credit Agreement as modified by
Section 1 of this Agreement, (i) have been duly authorized by all requisite
corporate action on the part of the Borrower; and (ii) will not violate (x) any
provision of any statute, rule or regulation, or any Organization Document of
the Borrower, (y) any applicable order of any court or any rule, regulation or
order of any other agency of government, or (z) any indenture, agreement or
other instrument to which the Borrower is a party or by which the Borrower or
any of its property is bound, or be in conflict with, result in a breach of,
constitute (with notice or lapse of time or both) a default under, or create any
right to terminate, any such indenture, agreement, or other instrument;

(B) upon the occurrence of the Restatement Effective Date, this Agreement and
each other agreement to which either PMI Insurance or the Borrower is a party
and that is delivered pursuant to Section 5 hereof will constitute the legal,
valid and binding obligation of the Borrower, enforceable in accordance with its
terms, except as the enforceability thereof may be limited by applicable
bankruptcy, insolvency, reorganization or other similar laws affecting
creditors’ rights generally and by general equitable principles (regardless of
whether the issue of enforceability is considered in a proceeding in equity or
at law);

(C) no Default or Event of Default has occurred and is continuing under the
Credit Agreement prior to giving effect to this Agreement;

 

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(D) (i) no reduction to the principal balance of the QBE Note has occurred
pursuant to Section 7 of the QBE Note or otherwise, (ii) neither the Borrower
nor any of its Subsidiaries has agreed to a reduction to the principal balance
of the QBE Note pursuant to Section 7 of the QBE Note or otherwise,
(iii) neither the Borrower nor any of its Subsidiaries has received any notice
from any Person to the effect that an adjustment to the principal balance of the
QBE Note is required or has occurred pursuant to Section 7 of the QBE Note or
otherwise and (iv) to the best knowledge of the Borrower and its Subsidiaries,
there is no basis to believe that a reduction to the principal balance of the
QBE Note is currently required under Section 7 of the QBE Note or otherwise;

(E) the QBE Note Amount (exclusive of QBE Note Interest) as of the Restatement
Effective Date is not less than $186,505,850;

(F) PMI Insurance is not prohibited from writing new mortgage insurance by any
state or states of the United States (“States”), except for any such
prohibitions as may be applicable in States which in the aggregate represented
15% or less of the aggregate total risk in force of PMI Insurance for all States
as of the last day of the immediately preceding calendar year.

(G) On the date of this Agreement, after giving effect to this Agreement, all
representations and warranties set forth in the Credit Agreement (except for the
representations and warranties set forth in (i) Section 5.03 and Section 5.05(b)
of the Credit Agreement and (ii) Section 5.06 of the Credit Agreement to the
extent that such representations and warranties would not be required to be true
and correct under Section 4.02(b) thereof) and the other Loan Documents are
true, correct and complete in all material respects on and as of the date hereof
with the same effect as if such representations and warranties had been made on
and as of the date hereof, unless such representation is as of a specific date,
in which case, as of such date.

(ii) The Borrower represents and warrants, as of the date of this Agreement, to
the Administrative Agent, the L/C Issuer and the Lenders that the Borrower has
obtained all consents and waivers from any Persons necessary for the execution
and delivery of, and performance of its obligations under, this Agreement.

(iii) The Borrower represents and warrants, as of the Restatement Effective
Date, to the Administrative Agent, the L/C Issuer and the Lenders that the
Borrower has obtained all consents and waivers from any Persons necessary for
the execution, delivery and performance of this Agreement (including, without
limitation, the Amended and Restated Credit Agreement) and any other document or
transaction contemplated hereby.

(iv) The Borrower represents and warrants, as of the Restatement Effective Date,
to the Administrative Agent, the L/C Issuer and the Lenders that the execution
and delivery of, and performance by the Borrower of its obligations under, this
Agreement, the Amended and Restated Credit Agreement, and any other documents or
instruments delivered by the Borrower or PMI Insurance, as applicable, pursuant
to Section 5 of this Agreement will, when delivered, (i) have been duly
authorized by all requisite corporate action on the part of the Borrower or PMI
Insurance, as applicable; and (ii) not violate (x) any provision of any statute,
rule or regulation, or any Organization Document of the Borrower or PMI
Insurance, as applicable, (y) any applicable order of any court or any rule,
regulation or order of any other agency of government, or (z) any indenture,
agreement or other instrument to which the Borrower or PMI Insurance is a party
or by which the Borrower or PMI Insurance or any of their respective properties
is bound, or be in conflict with, result in a breach of, constitute (with notice
or lapse of time or both) a default under, or create any right to terminate, any
such indenture, agreement, or other instrument.

 

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SECTION 4. Amendment Fee. The Borrower hereby agrees to pay to the
Administrative Agent, for the ratable benefit of each Lender which shall have
executed and delivered a counterpart of this Agreement to the Administrative
Agent (each such Lender, a “Consenting Lender”), by wire transfer of immediately
available funds, an irrevocable and non-refundable fee (the “Amendment Fee”) in
an amount equal to 0.50% of each such Consenting Lender’s Commitment (after
giving effect to the Amended and Restated Credit Agreement), which Amendment Fee
shall be fully earned, due and payable on the Restatement Effective Date.

SECTION 5. Effective Date. This Agreement shall become effective upon receipt by
the Administrative Agent of fully executed counterparts of this Agreement
executed by (i) the Borrower, (ii) the Administrative Agent and (iii) each of
the Lenders. On the Restatement Effective Date, the Credit Agreement shall be,
and is hereby, amended and restated in its entirety as set forth in Annex I
hereto (as set forth in such Annex I, and as further amended, amended and
restated, supplemented or otherwise modified from time to time, the “Amended and
Restated Credit Agreement”), and as so amended and restated is hereby ratified,
approved and confirmed in each and every respect by all parties hereto;
provided, however, that, except as specifically set forth in this Agreement, the
rights and obligations of the parties to the Credit Agreement with respect to
the period prior to the Restatement Effective Date shall remain in effect until
the Restatement Effective Date. The date on which all of the following
conditions precedent shall have been satisfied, or waived in writing shall be
the “Restatement Effective Date”:

(A) [Intentionally Omitted]

(B) The Administrative Agent shall have received the Amendment Fee.

(C) Bank of America, N.A. and the Borrower shall have entered into a mutually
acceptable fee letter and the Administrative Agent shall have received, for the
sole account of Bank of America, N.A., payment of all fees payable thereunder.

(D) The Shared Collateral Pledge Agreement and the Collateral Agency Agreement
shall have been terminated on terms and conditions and pursuant to documentation
satisfactory to the Administrative Agent, the Required Lenders and the Borrower
in their sole discretion, and the Administrative Agent, the Required Lenders and
the Borrower shall be satisfied in their sole discretion that all Liens arising
under such agreements have been terminated immediately prior to consummation of
the sale of the “QBE Note” contemplated in paragraph (F) below.

(E) The Administrative Agent shall have received the consent of each Lender to
release the Liens granted by the Borrower in favor of the Collateral Agent under
the Shared Collateral Pledge Agreement.

(F) The QBE Note shall have been sold by PMI Insurance to the Borrower pursuant
to agreements, instruments and other documents (collectively referred to as the
“QBE Note Purchase Agreements”) the terms and conditions of which shall be
satisfactory in form and substance to the Administrative Agent and the Required
Lenders in their sole discretion, and such terms and conditions shall in any
event include but not be limited to (i) evidence of written approval of, or
statutorily effective and sufficient non-objection to, such sale from the
Department of Insurance of the State of Arizona, (ii) representations and
warranties from PMI Insurance to the Borrower that (A) no warranty claims have
been asserted, and to the best knowledge of PMI Insurance, there are no pending
or threatened warranty claims under either of the QBE Note Share Sale Agreements
and no basis for PMI Insurance to believe there currently exist any such claims
that have not yet been asserted and (B) the QBE Note Amount (exclusive of QBE
Note Interest) as of the closing of the sale of the QBE Note by PMI Insurance to
the

 

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Borrower is not less than $186,505,850; (iii) indemnification of the Borrower by
PMI Insurance against any loss arising directly or indirectly from any breach of
warranty or similar claim that results in an offset under the QBE Note or
reduction in the QBE Note Amount; and (iv) documents from PMI Insurance and the
issuer of the QBE Note and its affiliates that are parties to either of the QBE
Share Sale Agreements (the “QBE Entities”) that provide that the Borrower is
entitled to enforce the QBE Note together with related rights under the QBE Note
Purchase Agreements directly against the QBE Entities obligated thereunder. The
Borrower shall have delivered to the Administrative Agent an originally executed
QBE Note, and the Borrower and the Administrative Agent shall have entered into
one or more pledge agreements in form and substance satisfactory to the
Administrative Agent and the Required Lenders in their sole discretion pursuant
to which the Borrower shall have granted in favor of the Administrative Agent,
for the ratable benefit of the Agents and the Lenders, a first priority,
perfected security interest in and to the Borrower’s interest in the QBE Note
and the QBE Note Purchase Agreements; and the Administrative Agent shall have
received from the QBE Entities a written acknowledgment of and consent to such
pledge, together with such other documentation as shall be satisfactory in the
sole discretion of the Administrative Agent and the Required Lenders to enable
the Administrative Agent on behalf of the Agents and the Lenders to enforce the
rights of the Borrower under the QBE Note and the QBE Note Purchase Agreements
directly against the QBE Entities obligated thereunder upon and during the
continuance of an Event of Default under the Amended and Restated Credit
Agreement. The Borrower shall deliver such other documentation necessary or
desirable to perfect the pledge of the QBE Note to the Administrative Agent; and
all filings and recordings, all agreements instruments and other documents,
consents and acknowledgments, and all other actions, in each case deemed
necessary or desirable by the Administrative Agent or the Required Lenders to
evidence or perfect the first priority, perfected security interest of the
Administrative Agent in and to the Borrower’s interest in the QBE Note and the
QBE Note Purchase Agreements and the right of the Administrative Agent on behalf
of the Agents and the Lenders to enforce such rights directly against the QBE
Entities obligated thereunder upon and during the continuance of an Event of
Default under the Amended and Restated Credit Agreement shall have been made,
taken or delivered, as applicable. The Administrative Agent and the Required
Lenders shall be satisfied in their sole discretion that the right, title and
interest of the Borrower in, to and under the QBE Note and the QBE Note Purchase
Agreements is not subject to any Lien other than a first priority, perfected
security interest in favor of the Administrative Agent, for the ratable benefit
of the Lenders. The Borrower or its Subsidiaries shall have paid or caused to
have been paid all stamp duties and all filing or recording fees payable (x) in
connection with or as a result of its purchase of the QBE Note and the pledge to
the Administrative Agent of its interest in the QBE Note and (y) necessary to
permit enforcement of the contemplated pledge of the QBE Note to the
Administrative Agent.

(G) The Administrative Agent shall have received fully executed copies of each
of the QBE Note Purchase Agreements and each of the QBE Share Sale Agreements,
including all exhibits, schedules, amendments, supplements and modifications
thereto, in each case certified to be true and complete by a Responsible Officer
of the Borrower. The terms and conditions of QBE Note Purchase Agreements and
each of the QBE Share Sale Agreements shall be satisfactory in form and
substance to the Administrative Agent and the Required Lenders in their sole
discretion.

(H) The Administrative Agent and the Lenders shall have received a solvency
opinion with respect to PMI Insurance after giving effect to the sale of the QBE
Note pursuant to the QBE Note Purchase Agreements (i) prepared by Duff & Phelps
in form substantially identical to the form of opinion attached as Annex II
hereto or (ii) in such other form and substance satisfactory of the
Administrative Agent and the Required Lenders in their sole discretion.

(I) The Administrative Agent and the Lenders shall have received such legal
opinions from counsel to the Borrower as the Administrative Agent or the
Required Lenders may deem necessary or desirable in connection with this
Agreement and the transactions contemplated herein, including but

 

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not limited to matters relating to (i) the termination of the Shared Collateral
Agreement and the Collateral Agency Agreement and the effectiveness of the
release of any Liens that arose thereunder, (ii) Borrower’s purchase of the QBE
Note and (iii) the pledge to the Administrative Agent of the Borrower’s interest
in the QBE Note and the QBE Note Purchase Agreements (which opinions shall
include but not be limited to opinions concerning noncontravention of laws and
contract, enforceability of related documentation, and opinions concerning the
perfected nature of the Lien of the Administrative Agent on the right, title and
interest of the Borrower in, to and under the QBE Note and the QBE Note Purchase
Agreements).

(J) The Administrative Agent and its counsel shall have received such approvals,
information, materials and other documentation as the Administrative Agent or
its counsel may reasonably request, which approvals, information, materials and
documentation shall be reasonably satisfactory in form and substance to the
Administrative Agent and its counsel.

(K) All reasonable and documented fees and other charges presently due and
payable to the Administrative Agent or any Lender pursuant to any Loan Document
shall have been paid by the Borrower.

(L) All reasonable and documented out-of-pocket expenses incurred by the
Administrative Agent and each Lender in connection with the Credit Agreement,
this Agreement, any other Loan Document or the transactions contemplated by any
of the foregoing (including, without limitation, the reasonable fees and
disbursements of Kaye Scholer LLP and any other counsel to the Administrative
Agent or any Lender) shall have been paid by the Borrower to the extent that the
Borrower has received documentation of such expenses by 9:00 a.m. (California
time) at least two Business Days prior to the Restatement Effective Date.

(M) All representations and warranties contained in Section 3 of this Agreement
and in the Amended and Restated Credit Agreement shall be true.

SECTION 6. CONFIRMATION AND ACKNOWLEDGEMENT OF THE OBLIGATIONS; RELEASE. THE
BORROWER HEREBY (A) CONFIRMS AND ACKNOWLEDGES TO THE ADMINISTRATIVE AGENT, THE
L/C ISSUER AND THE LENDERS THAT IT IS VALIDLY AND JUSTLY INDEBTED TO THE
ADMINISTRATIVE AGENT, THE L/C ISSUER AND THE LENDERS FOR THE PAYMENT OF ALL
OBLIGATIONS (AS DEFINED IN THE CREDIT AGREEMENT) WITHOUT OFFSET, DEFENSE, CAUSE
OF ACTION OR COUNTERCLAIM OF ANY KIND OR NATURE WHATSOEVER AND (B) REAFFIRMS AND
ADMITS THE VALIDITY AND ENFORCEABILITY OF THE CREDIT AGREEMENT AND THE OTHER
LOAN DOCUMENTS. THE BORROWER, ON ITS OWN BEHALF AND ON BEHALF OF ITS SUCCESSORS
AND ASSIGNS, HEREBY WAIVES, RELEASES AND DISCHARGES THE ADMINISTRATIVE AGENT,
THE L/C ISSUER AND THE LENDERS AND ALL OF THE AFFILIATES OF THE ADMINISTRATIVE
AGENT, THE L/C ISSUER AND THE LENDERS, AND ALL OF THE DIRECTORS, OFFICERS,
EMPLOYEES, ATTORNEYS, AGENTS, SUCCESSORS AND ASSIGNS OF THE ADMINISTRATIVE
AGENT, THE L/C ISSUER AND THE LENDERS AND SUCH AFFILIATES, FROM ANY AND ALL
CLAIMS, DEMANDS, ACTIONS OR CAUSES OF ACTION (KNOWN AND UNKNOWN) ARISING OUT OF
OR IN ANY WAY RELATING TO ANY OF THE LOAN DOCUMENTS AND ANY DOCUMENTS,
AGREEMENTS, DEALINGS OR OTHER MATTERS CONNECTED WITH ANY OF THE LOAN DOCUMENTS,
IN EACH CASE TO THE EXTENT ARISING (X) ON OR PRIOR TO THE RESTATEMENT EFFECTIVE
DATE OR (Y) OUT OF, OR RELATING TO, ACTIONS, DEALINGS OR MATTERS OCCURRING ON OR
PRIOR TO THE RESTATEMENT EFFECTIVE DATE.

 

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SECTION 7. Costs and Expenses. The Borrower acknowledges and agrees that its
payment obligations set forth in Section 10.04 of the Credit Agreement include
the costs and expenses incurred by the Administrative Agent and each Lender in
connection with the preparation, execution and delivery of this Agreement
(including but not limited to Annexes I and II hereto), the Security Documents
and any other documentation contemplated hereby or thereby (whether or not this
Agreement, the Amended and Restated Credit Agreement or any Security Document
becomes effective or the transactions contemplated hereby or thereby are
consummated and whether or not a Default or Event of Default has occurred or is
continuing), including, but not limited to, (i) the reasonable fees and
disbursements of Kaye Scholer LLP, counsel to the Administrative Agent and
(ii) the reasonable fees and disbursements of any other counsel to the
Administrative Agent or any Lender.

SECTION 8. Limited Waiver or Modification; Ratification of Credit Agreement.

(a) Except to the extent hereby expressly waived or modified, the Credit
Agreement remains in full force and effect and is hereby ratified and confirmed.

(b) This Agreement shall be limited precisely as written and shall not be deemed
(i) to be a consent granted pursuant to, or a waiver or modification of, any
other term or condition of the Credit Agreement or any of the instruments or
agreements referred to therein or a waiver of any Default or Event of Default
under the Credit Agreement, whether or not known to the Administrative Agent,
the L/C Issuer or the Lenders or (ii) to prejudice any right or rights which the
Administrative Agent, the L/C Issuer or the Lenders may now have or have in the
future under or in connection with any Loan Document or any of the instruments
or agreements referred to in a Loan Document. The Administrative Agent, L/C
Issuer and the Lenders hereby expressly reserve all of the Administrative
Agent’s, the L/C Issuer’s or the Lenders’ (as applicable) respective rights and
remedies under the Credit Agreement and each of the other Loan Documents, as
well as under applicable law. No failure to exercise, delay in exercising or any
singular or partial exercise, by the Administrative Agent, the L/C Issuer or any
of the Lenders of any right, power or remedy hereunder or any of the other Loan
Documents shall operate as a waiver thereof or in the case of a singular or
partial exercise of a right, power or remedy, preclude any other or further
exercise thereof of any other right, power or remedy, nor shall any of the Loan
Documents be construed as a standstill or a forbearance by any of the
Administrative Agent, the L/C Issuer or the Lenders of their rights and remedies
thereunder. All remedies of the Administrative Agent, the L/C Issuer or the
Lenders are cumulative and are not exclusive of any other remedies under any
other Loan Document or provided by applicable law. Except to the extent hereby
modified, the Credit Agreement shall continue in full force and effect in
accordance with the provisions thereof on the date hereof and the Credit
Agreement as heretofore amended or modified and as modified by this Agreement
are hereby ratified and confirmed. As used in the Credit Agreement, the terms
“Credit Agreement,” “this Agreement,” “herein,” “hereafter,” “hereto,” “hereof,”
and words of similar import, shall, unless the context otherwise requires, mean
the Credit Agreement as modified by this Agreement. Reference to the terms
“Agreement” or “Credit Agreement” appearing in the Exhibits or Schedules to the
Credit Agreement or in the other Loan Documents shall, unless the context
otherwise requires, mean the Credit Agreement as modified by this Agreement.
This Agreement shall be deemed to have been jointly drafted, and no provision of
it shall be interpreted or construed for, or against, any party hereto because
such party purportedly prepared or requested such provision, any other
provision, or this Agreement as a whole.

SECTION 9. Amendment to Fee Letter. On the Amendment No. 6 Effective Date, the
third paragraph of that certain fee letter, dated as of March 16, 2008 (the “Fee
Letter”), among the Administrative Agent, Banc of America Securities LLC and the
Borrower, shall be deleted and the Borrower’s obligation to pay any of the
amounts referred to in such third paragraph of the Fee Letter shall terminate.

 

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SECTION 10. Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed to be an original and
all of which taken together shall constitute but one and the same instrument.
Delivery of an executed signature page to this Agreement by facsimile shall be
as effective as delivery of a manually executed counterpart of this Agreement.
The Administrative Agent shall promptly notify the Borrower and the Lenders of
the occurrence of the Restatement Effective Date.

SECTION 11. Loan Document. This Agreement is a Loan Document pursuant to the
Credit Agreement and shall (unless expressly indicated herein or therein) be
construed, administered, and applied, in accordance with all of the terms and
provisions of the Credit Agreement.

SECTION 12. Severability. Any provision of this Agreement which is invalid,
illegal or unenforceable under the applicable law of any jurisdiction, shall, as
to such jurisdiction, be ineffective to the extent of such invalidity,
illegality or unenforceability without invalidating the remaining provisions
hereof, and any such invalidity, illegality or unenforceability in any
jurisdiction shall not invalidate such provision in any other jurisdiction.

SECTION 13. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WHICH ARE APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED WHOLLY WITHIN THE STATE OF NEW YORK.

SECTION 14. Successors and Assigns. The provisions of this Agreement shall be
binding upon, and inure to the benefit of, the parties hereto and their
respective successors and assigns.

SECTION 15. Headings. The headings of this Agreement are for the purposes of
reference only and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.

[The remainder of this page intentionally left blank]

 

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

 

BORROWER: THE PMI GROUP, INC. By:  

/s/ Donald P. Lofe, Jr.

  Name:   Donald P. Lofe, Jr.   Title:   Executive Vice President, Chief
Financial Officer and Chief Administrative Officer

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ADMINISTRATIVE AGENT AND LENDERS: BANK OF AMERICA, N.A., as Administrative
Agent, Lender and L/C Issuer By:   /s/ Tyler D. Levings Name:   Tyler D. Levings
Title:   Senior Vice President

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CITIBANK, N.A. By:  

/s/ Francisco Casal

Name:   Francisco Casal Title:   Vice President

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SUN TRUST BANK, N.A. By:  

/s/ Katherine Bass

Name:   Katherine Bass Title:   First Vice President

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WACHOVIA BANK, NATIONAL ASSOCIATION By:  

/s/ Michael Thomas

  Name:  Michael Thomas   Title:    Vice President

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GOLDMAN SACHS LENDING PARTNERS, LLC By:  

/s/ Andrew Caditz

Name:   Andrew Caditz Title:   Authorized Signatory

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JPMORGAN CHASE BANK, N.A. By:  

/s/ Mark M. Cisz

Name:   Mark M. Cisz Title:   Executive Director

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THE BANK OF NEW YORK By:  

/s/ Philip Falivene

Name:   Philip Falivene Title:   Managing Director

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Annex I

Form of Amended and Restated Credit Agreement

 

 

 

AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT

Dated as of May     , 2009

among

THE PMI GROUP, INC.,

as the Borrower,

BANK OF AMERICA, N.A.,

as the Administrative Agent and L/C Issuer,

and

The Lenders Party Hereto

 

 

BANC OF AMERICA SECURITIES LLC,

as

Sole Lead Arranger and Sole Book Manager

 

 

CITIBANK, N.A.,

SUN TRUST BANK N.A.

and

WACHOVIA BANK, NATIONAL ASSOCIATION

as

Co-Syndication Agents

 

 

 

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TABLE OF CONTENTS

 

Section

          Page

ARTICLE I. DEFINITIONS AND ACCOUNTING TERMS

   1

1.01

    

Defined Terms

   1

1.02

    

Other Interpretive Provisions

   22

1.03

    

Accounting Terms

   23

1.04

    

Rounding

   23

1.05

    

References to Agreements and Laws

   23

1.06

    

Times of Day

   23

ARTICLE II. THE COMMITMENTS AND CREDIT EXTENSIONS

   23

2.01

    

Loans

   23

2.02

    

Borrowing, Conversions and Continuations of Loans

   24

2.03

    

Prepayments

   25

2.04

    

Termination or Reduction of Commitments

   25

2.05

    

Repayment and Prepayment of Loans

   27

2.06

    

Interest

   27

2.07

    

Fees

   28

2.08

    

Computation of Interest and Fees

   28

2.09

    

Evidence of Debt

   29

2.10

    

Payments Generally

   29

2.11

    

Sharing of Payments

   30

2.12

    

[Intentionally Omitted]

   31

2.13

    

Letters of Credit

   31

ARTICLE III. TAXES, YIELD PROTECTION AND ILLEGALITY

   37

3.01

    

Taxes

   37

3.02

    

Illegality

   38

3.03

    

Inability to Determine Rates

   39

3.04

    

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

   39

3.05

    

Funding Losses

   40

3.06

    

Matters Applicable to all Requests for Compensation

   40

3.07

    

Survival

   41

ARTICLE IV. CONDITIONS PRECEDENT

   41

4.01

    

Conditions of Effectiveness

   41

4.02

    

Conditions of Each Borrowing

   41

ARTICLE V. REPRESENTATIONS AND WARRANTIES

   42

5.01

    

Existence, Qualification and Power; Compliance with Laws

   42

5.02

    

Authorization; No Contravention

   42

5.03

    

Governmental Authorization; Other Consents

   42

5.04

    

Binding Effect

   42

5.05

    

Financial Statements

   43

5.06

    

Litigation

   43

5.07

    

No Default

   43

5.08

    

Taxes

   43

5.09

    

ERISA Compliance

   44

5.10

    

Margin Regulations; Investment Company Act

   44

5.11

    

Disclosure

   44

5.12

    

Solvency

   44

 

i

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ARTICLE VI. AFFIRMATIVE COVENANTS

   44

6.01

    

Financial Statements

   44

6.02

    

Certificates; Other Information

   46

6.03

    

Notices

   48

6.04

    

Payment of Obligations

   49

6.05

    

Preservation of Existence, Etc.

   49

6.06

    

Maintenance of Insurance

   49

6.07

    

Compliance with Laws

   50

6.08

    

Books and Records

   50

6.09

    

Inspection Rights

   50

6.10

    

Use of Proceeds

   50

ARTICLE VII. NEGATIVE COVENANTS

   51

7.01

    

Liens

   51

7.02

    

Fundamental Changes

   52

7.03

    

Asset Dispositions

   52

7.04

    

Transactions with Affiliates

   53

7.05

    

Use of Proceeds

   53

7.06

    

Financial Covenants

   53

7.07

    

Investments, Loans, Advances, Guarantees and Acquisitions

   53

7.08

    

Restricted Payments

   55

7.09

    

Swap Contracts

   56

ARTICLE VIII. EVENTS OF DEFAULT AND REMEDIES

   56

8.01

    

Events of Default

   56

8.02

    

Remedies Upon Event of Default

   59

8.03

    

Application of Funds

   59

ARTICLE IX. ADMINISTRATIVE AGENT

   60

9.01

    

Appointment and Authorization of Administrative Agent

   60

9.02

    

Delegation of Duties

   60

9.03

    

Exculpatory Provisions

   60

9.04

    

Reliance by Administrative Agent

   61

9.05

    

Notice of Default

   61

9.06

    

Credit Decision; Disclosure of Information by Administrative Agent

   62

9.07

    

Indemnification of Administrative Agent

   62

9.08

    

Administrative Agent in its Individual Capacity

   62

9.09

    

Successor Administrative Agent

   63

9.10

    

Administrative Agent May File Proofs of Claim

   63

9.11

    

Other Agents; Arrangers and Managers

   64

ARTICLE X. MISCELLANEOUS

   64

10.01

    

Amendments, Etc.

   64

10.02

    

Notices and Other Communications; Facsimile Copies

   65

10.03

    

No Waiver; Cumulative Remedies

   66

10.04

    

Attorney Costs and Expenses

   66

10.05

    

Indemnification by the Borrower

   67

10.06

    

Payments Set Aside

   68

10.07

    

Successors and Assigns

   68

10.08

    

Confidentiality

   70

10.09

    

Set-off

   71

 

ii

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10.10

    

Interest Rate Limitation

   71

10.11

    

Counterparts

   71

10.12

    

Integration

   72

10.13

    

Survival of Representations and Warranties

   72

10.14

    

Severability

   72

10.15

    

Tax Forms

   72

10.16

    

Replacement of Lenders

   74

10.17

    

Governing Law

   74

10.18

    

Waiver of Right to Trial by Jury

   74

10.19

    

USA Patriot Act Notice

   75

10.20

    

No Advisory or Fiduciary Responsibility

   75

10.21

    

WAIVER WITH RESPECT TO DAMAGES

   75

10.22

    

Jointly Drafted

   76

10.23

    

[Intentionally Omitted]

   76

10.24

    

Effect of Amendment and Restatement of the Original Agreement

   76

EXHIBIT F

  

FORM OF MONITORING REPORT

  

[Exhibit intentionally omitted]

  

SIGNATURES

  

 

iii

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SCHEDULES

 

1.01A

  

Existing Letters of Credit

1.01B

  

Insurance Subsidiaries

2.01

  

Commitments and Pro Rata Shares

7.01

  

Existing Liens

7.07

  

Existing Investments

10.02

  

Administrative Agent’s Office; Certain Addresses for Notices

EXHIBITS

Form of

 

A

  

Loan Notice

B

  

Note

C

  

Compliance Certificate

D

  

Assignment and Assumption

E

  

[intentionally omitted]

F

  

Monitoring Report

G

  

Updating Report Certification

 

iv

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AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT

This AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT (this “Agreement”) is
entered into as of May __, 2009, among THE PMI GROUP, INC., a Delaware
corporation (the “Borrower”) , each lender from time to time party hereto
(collectively, the “Lenders” and individually, a “Lender”), and BANK OF AMERICA,
N.A., as Administrative Agent.

The parties to this Agreement are parties to a Revolving Credit Agreement dated
as of October 24, 2006 (as amended or otherwise modified prior to the
Restatement Effective Date, the “Original Agreement”).

Borrower has requested that the Lenders amend and restate the Original
Agreement, and the Lenders are willing to do so on the terms and conditions set
forth herein.

In consideration of the mutual covenants and agreements herein contained, the
parties hereto covenant and agree to amend and restate the Original Agreement in
its entirety as follows:

ARTICLE I.

DEFINITIONS AND ACCOUNTING TERMS

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

“ACH Transactions” means any cash management or related services including the
automatic clearing house transfer of funds by any Lender or any Affiliate of any
Lender for the account of the Borrower or any of its Affiliates pursuant to
agreement or overdrafts.

“Additional Collateral Delivery Date” means the date on which the Administrative
Agent has received a fully executed copy of (i) the Bank Facility Pledge
Agreement, together with the original certificates representing or evidencing
the Capital Stock of each of the Additional Pledged Entities owned by the
Borrower, accompanied by stock powers (in form and substance satisfactory to the
Administrative Agent and the Required Lenders in their sole and absolute
discretion) duly executed in blank and (ii) the written opinions of Sullivan &
Cromwell LLP, and internal and/or local counsel to the Borrower, as applicable,
in each case addressed to the Administrative Agent, the L/C Issuer and the
Lenders, which opinions shall be in form and substance satisfactory to the
Administrative Agent and the Required Lenders in their sole and absolute
discretion.

“Additional Pledged Entities” means, collectively, the following Subsidiaries of
the Borrower: (i) PMI Insurance Co., (ii) PMI Reinsurance Co., (iii) Residential
Insurance Co. and (iv) PMI Mortgage Guaranty Co.

“Adjusted Consolidated Net Worth” means Consolidated Net Worth, as adjusted
(A) to exclude (i) to the extent included in the calculation of Consolidated Net
Worth, the net mark-to-market unrealized losses and gains on all Swap Contracts
entered into by any of Ram Re Company, FGIC Company or PMI Europe, (ii) in
connection with the sale of PMI Australia, CMG Company or PMI Europe, in each
instance, the amount of the loss determined in accordance with GAAP realized in
connection with such sale, provided that the amount of such loss excluded in
determining Adjusted Consolidated Net Worth shall not exceed 20% of the book
value of the sold entity immediately prior to the recognition of such loss, and
(iii) accumulated other comprehensive income net of deferred taxes (whether such
accumulated other comprehensive income net of deferred taxes shall be a negative
or positive amount) and (B) to include, to the extent not included in the
calculation of Consolidated Net Worth, the QBE Note Amount in effect at the time
of such calculation.

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

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

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

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

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

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

“Aggregate Commitment” means the Commitment of all the Lenders. As of the
Restatement Effective Date, the Aggregate Commitment is $125,000,000, which
amount is subject to reduction in accordance with Section 2.04.

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

“Allowable Amount” means an amount equal to the sum of (i) Available Net Equity
Proceeds, (ii) Available Net Debt Proceeds, (iii) the net cash proceeds received
by the Borrower or a Material Subsidiary from the issuance of TARP Interests,
(iv) prior to the issuance by the Borrower or a Material Subsidiary of any TARP
Interests, an amount not to exceed $25,000,000, and (v) following the issuance
by the Borrower or a Material Subsidiary of any TARP Interests, an amount equal
to (A) $25,000,000 less (B) the net cash proceeds received by the Borrower or a
Material Subsidiary from the issuance of TARP Interests less (C) the amounts of
Investments made pursuant to clause (iv) of this definition prior to the
issuance of such TARP Interests.

“Amendment No. 1” means Amendment No. 1, dated as of March 16, 2008, to the
Original Agreement.

“Amendment No. 1 Effective Date” has the meaning specified in Section 5 of
Amendment No. 1.

“Amendment No. 6” means Amendment No. 6, dated as of May 8, 2009, to the
Original Agreement.

 

2

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

 

Pricing Level

  

Debt Rating - S&P/Moody’s

   Applicable
Facility Fee
Rate  

1

   A-/A3 or higher    0.25 %

2

   BBB+/Baa1 and BBB/Baa2    0.35 %

3

   Below BBB/Baa2    0.50 %

In the event that the Borrower receives Debt Ratings from S&P and Moody’s that
are not equivalent, the Applicable Facility Fee Rate shall be determined based
on the lower of the two Debt Ratings. On the Restatement Effective Date, the
Applicable Facility Fee Rate shall be based upon the Debt Rating corresponding
to Pricing Level 3. Thereafter, each change in the Applicable Facility Fee Rate
shall be effective on the effective date of a publicly announced change in the
Debt Rating.

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

 

Pricing Level

  

Debt Rating –S&P/Moody’s

   Applicable Margin
for Base Rate
Loans     Applicable Margin
for Eurodollar
Rate Loans  

1

   A-/A3 or higher    2.25 %   3.25 %

2

   BBB+/Baa1 and BBB/Baa2    2.65 %   3.65 %

3

   Below BBB/Baa2    3.00 %   4.00 %

In the event that the Borrower receives Debt Ratings from S&P and Moody’s that
are not equivalent, the Applicable Margin shall be determined based on the lower
of the two Debt Ratings. On the Restatement Effective Date, the Applicable
Margin shall be based upon the Debt Rating corresponding to Pricing Level 3.
Thereafter, each change in the Applicable Margin shall be effective on the
effective date of a publicly announced change in the Debt Rating.

“Applicable Utilization Fee Rate” means 0.05% per annum.

“Appointed Actuary” has the meaning specified in Section 6.01(h).

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

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

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

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

 

3

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

“Auto-Extension Letter of Credit” has the meaning specified in Subsection
2.13(b)(iii).

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

“Available Net Debt Proceeds” means an amount equal to Net Debt Proceeds that
are received by the Borrower or a Material Subsidiary after the Restatement
Effective Date less the aggregate amount of all prepayments of the Principal
Debt that are required to be made pursuant to Article II of this Agreement as a
result of such receipt of Net Debt Proceeds.

“Available Net Equity Proceeds” means an amount equal to Net Equity Proceeds
that are received by the Borrower or a Material Subsidiary after the Restatement
Effective Date less the aggregate amount of all prepayments of the Principal
Debt that are required to be made pursuant to Article II of this Agreement as a
result of such receipt of Net Equity Proceeds.

“Bank Facility Pledge Agreement” means the pledge agreement, dated as of
September 29, 2008, between the Borrower and the Administrative Agent, pursuant
to which the Borrower granted in favor of the Administrative Agent (for the
benefit of the Bank Facility Secured Parties) a first priority Lien in all of
its rights, title and interest in and to the Capital Stock of each of the
Additional Pledged Entities and related collateral described therein, as such
agreement may be amended, amended and restated, supplemented or otherwise
modified, renewed or replaced from time to time.

“Bank Facility Secured Parties” means, collectively, the Administrative Agent,
each of the Lenders and any Affiliate of a Lender that enters into or provides
Bank Products to the Borrower.

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

“Bank Products” means any one or more of the following types of services or
facilities extended to the Borrower or any of its Affiliates by any Lender or
any Affiliate of any Lender: (i) credit cards; (ii) ACH Transactions; and
(iii) cash management, including controlled disbursement services and any bank
account maintained by the Borrower or any of its Affiliates with any Lender.

“Base Rate” means, for any day, a fluctuating rate per annum equal to the higher
of (a) the Federal Funds Rate plus 0.5% and (b) the rate of interest in effect
for such day as publicly announced from time to time by Bank of America as its
“prime rate.” The “prime rate” is a rate set by Bank of America based upon
various factors including Bank of America’s costs and desired return, general
economic conditions and other factors, and is used as a reference point for
pricing some loans, which may be priced at, above or below such announced rate.
Any change in such rate announced by Bank of America shall take effect at the
opening of business on the day specified in the public announcement of such
change.

“Bankruptcy Code” means Title 11 of the United States Code entitled
“Bankruptcy,” as now and hereafter in effect, any successors to such statute and
any other applicable insolvency or other similar law of any jurisdiction.

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

 

4

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“Borrower” has the meaning specified in the introductory paragraph hereto.

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

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

“Capital Stock” means any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation, any and all
equivalent ownership interests in a Person (other than a corporation),
including, without limitation, partnership interests, limited liability company
interests or other equity interests, and any and all warrants, rights or options
to purchase or other arrangements or rights to acquire any of the foregoing.

“Cash Collateralize” has the meaning specified in Subsection 2.13(g)

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

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

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

“Collateral” means any and all “Collateral” as defined in any applicable
Security Document, and all other property of whatever kind and nature pledged as
collateral under any Security Document.

“Collateral Agency Agreement” means that certain Collateral Agency Agreement
dated as of April 24, 2008, among U.S. Bank National Association, as Collateral
Agent, the Administrative Agent and the Borrower, as such agreement may be
amended, amended and restated, supplemented or otherwise modified, renewed or
replaced from time to time.

 

5

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

“Commitment Letter” means the letter agreement dated August 31, 2006, among the
Borrower, Bank of America and the Arranger.

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

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

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

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

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

“Debt Rating” means, as of any date of determination, the rating as determined
by S&P or Moody’s of the Borrower non-credit-enhanced, long term senior
unsecured long-term debt (collectively, the “Agency Ratings”), subject to the
last sentence of this definition. In the case of split Agency Ratings where the
difference in the Agency Ratings is one notch, the higher of the two Agency
Ratings shall constitute the “Debt Rating” for purposes of this Agreement (with
the Agency Rating described in Pricing Level 1 being the highest and the Agency
Rating described in Pricing Level 3 being the lowest). In the case of split
Agency Ratings where the difference is more than one notch, the Pricing Level
that is one level lower than the higher of the two Agency Ratings will apply and
shall constitute the “Debt Rating” for purposes of this Agreement. In the event
that only one of S&P or Moody’s is then publishing Agency Ratings, the Agency
Rating that is then being published shall constitute the “Debt Rating” for
purposes of this Agreement.

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

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

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

 

6

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“Department” means the applicable Supervisory Authority.

“Derivatives Use Plan” means the Derivatives Use Plan as in effect on the
Amendment No. 1 Effective Date, as the same has been or may in the future be
amended from time to time with the approval of the board of directors of the
Borrower.

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

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

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

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

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

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

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

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

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

 

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

“European Subsidiary” means, with respect to any Person, any direct or indirect
Subsidiary of such Person formed or having its principal place of business in
any country in Europe.

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

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

“Existing Credit Agreement” means the Revolving Credit Agreement dated as of
December 15, 2004 among the Borrower, the lenders party thereto and Bank of
America, as administrative agent thereunder, as heretofore amended.

“Existing Letters of Credit” means the letters of credit issued by the L/C
Issuer before the date hereof and listed on Schedule 1.01A attached hereto.

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

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

“Financial Statements” has the meaning specified in Section 5.05(a).

‘Forecasts’ has the meaning given to such term in Section 6.01(e).

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

“Foreign Subsidiary” means, with respect to any Person, any direct or indirect
Subsidiary of such Person which is organized under the laws of a jurisdiction
other than the United States, any State thereof or the District of Columbia.

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

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

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

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

 

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“GSE Authorized” has the meaning specified in Section 4.02(d).

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

“Honor Date” has the meaning specified in Subsection 2.13(c).

“Hybrid Securities” means, at any time, trust preferred securities, deferrable
interest subordinated debt securities, perpetual debt securities, mandatory
convertible debt or other hybrid securities issued by the Borrower that (i) are
accorded equity treatment by S&P and (ii) by their terms (or by the terms of any
security into which they are convertible for or which they are exchangeable) or
upon the happening of any event or otherwise, do not mature or are not
mandatorily redeemable or are not subject to any mandatory repurchase
requirement, at any time on or prior to the date which is six months after the
Maturity Date, unless such repayment, repurchase or redemption may be satisfied
through the issuance or delivery of Capital Stock or other Hybrid Securities.

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

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

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

(c) net obligations of such Person under any Swap Contract;

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

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

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

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

 

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

“Indemnified Liabilities” means any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, charges, expenses and
disbursements (including Attorney Costs) of any kind or nature whatsoever which
may at any time (including at any time following repayment of the Loans and the
termination, resignation or replacement of the Administrative Agent) be imposed
on, incurred by or asserted against any Agent-Related Person in any way relating
to or arising out of the Shared Collateral Pledge Agreement, this Agreement, the
Collateral Agency Agreement or any other Loan Document or any document
contemplated by or referred to herein or therein, or the transactions
contemplated hereby or thereby, or any action taken or omitted by any
Agent-Related Person under or in connection with any of the foregoing, including
with respect to any investigation, litigation or proceeding (including any
insolvency proceeding or appellate proceeding) related to or arising out of the
Shared Collateral Pledge Agreement, this Agreement, the Collateral Agency
Agreement or any other Loan Document, or the Loans or the use of the proceeds
thereof, whether or not any Agent-Related Person is a party thereto.

“Indemnitees” has the meaning specified in Section 10.05.

“Initial Forecasts” has the meaning specified in Section 2(F) of Amendment
No. 1.

“Insurance Subsidiary” means any Subsidiary of the Borrower that is regulated as
an insurer or insurance company by any Governmental Authority.

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

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

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

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

 

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

“Investment” has the meaning specified in Section 7.07.

“IRS” means the United States Internal Revenue Service.

“ISP” means with respect to any Letter of Credit, the “International Standby
Practices 1998” published by the Institute of International Banking Law &
Practice, Inc. (or such later version thereof as may be in effect at the time of
issuance of such Letter of Credit).

“Issuer Documents” means with respect to any Letter of Credit, the Letter of
Credit Application, and any other document, agreement and instrument entered
into by the L/C Issuer and the Borrower (or any Subsidiary) or in favor of the
L/C Issuer and relating to any such Letter of Credit.

“Junior Notes” means the 8.309% Junior Subordinated Debentures due 2027 issued
by the Borrower under the Junior Notes Indenture.

“Junior Notes Indenture” means the Junior Subordinated Indenture, dated as of
February 4, 1997, between the Borrower and the Junior Notes Trustee, pursuant to
which the Junior Notes were issued, as such agreement may be amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof and hereof.

“Junior Notes Trustee” means The Bank of New York, as trustee under the Junior
Notes Indenture, together with any of its successors and assigns in such
capacity.

“L/C Advance” means, with respect to each Lender, such Lender’s funding of its
participation in any L/C Borrowing in accordance with its Pro Rata Share.

“L/C Borrowing” means an extension of credit resulting from a drawing under any
Letter of Credit that has not been reimbursed on the date when made or
refinanced as a Borrowing.

“L/C Credit Extension” means, with respect to any Letter of Credit, the issuance
thereof or extension of the expiry date thereof, or the increase of the amount
thereof.

“L/C Issuer” means Bank of America in its capacity as issuer of Letters of
Credit hereunder, or any successor issuer of Letters of Credit hereunder.

“L/C Obligations” means, at any date of determination, the aggregate amount
available to be drawn under all outstanding Letters of Credit plus the aggregate
of all Unreimbursed Amounts, including all L/C Borrowings. For purposes of
computing the amount available to be drawn under any Letter of Credit, the
amount of such Letter of Credit shall be determined in accordance with
Subsection 2.13(k). For all purposes of this Agreement, if on any date of
determination a Letter of Credit has expired by its terms but any amount may
still be drawn thereunder by reason of the operation of Rule 3.14 of the ISP,
such Letter of Credit shall be deemed to be “outstanding” in the amount so
remaining available to be drawn.

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

 

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

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

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

“Letter of Credit” means any letter of credit issued hereunder, including each
Existing Letter of Credit.

“Letter of Credit Application” means an application and agreement for the
issuance or amendment of a Letter of Credit in the form from time to time in use
by the L/C Issuer.

“Letter of Credit Expiration Date” means the day that is seven days prior to the
Maturity Date (or, if such day is not a Business Day, the next preceding
Business Day).

“Letter of Credit Fee” has the meaning specified in Subsection 2.13(i).

“Letter of Credit Sublimit” means an amount equal to $50,000,000 (or, if less,
the Aggregate Commitment then in effect). The Letter of Credit Sublimit is part
of, and not in addition to, the Aggregate Commitment.

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

“Loan” has the meaning specified in Section 2.01.

“Loan Documents” means this Agreement and each Note and each Issuer Document and
each Security Document.

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

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

 

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

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

“Maturity Date” means, October 24, 2011 (or, if such day is not a Business Day,
the immediately preceding Business Day).

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

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

“Milliman Report” means that certain report, dated March 27, 2009, prepared by
Milliman, Inc. entitled “Unpaid Claim Estimate Analysis for PMI Mortgage
Insurance Ltd Subject to the Provisions of a Share Sale Agreement with QBE
Insurance Group Limited as of June 30, 2008”.

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

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

“Net Asset Disposition Proceeds” means, with respect to any Asset Disposition,
the gross cash proceeds received by the Borrower or such Subsidiary from such
Asset Disposition, minus (i) attorneys’ fees, accountants’ fees, investment
banking fees, and other bona fide fees, costs and expenses actually incurred in
connection therewith and minus (ii) taxes paid and the Borrower’s reasonable and
good faith estimate of income, franchise, sales, and other applicable taxes
required to be paid by the Borrower or any Subsidiary in connection with such
Asset Disposition.

“Net Debt Proceeds” means, with respect to any incurrence, sale or issuance
after the Amendment No. 1 Effective Date by the Borrower or any of its
Subsidiaries (excluding any Insurance Subsidiary) of any Indebtedness (other
than any TARP Interests) of the type described in clause (a) of the definition
of Indebtedness, (a) the gross cash proceeds actually received by the Borrower
or such Subsidiary from such incurrence, sale or issuance, minus (b) all
reasonable and customary commissions, fees, costs and other expenses actually
incurred in connection with such incurrence, sale or issuance which have not
been paid to Affiliates of the Borrower in connection therewith, and minus
(c) the amount of such proceeds received by the Borrower from a Subsidiary, or
received by a Subsidiary from another Subsidiary or the Borrower.

“Net Equity Proceeds” means, with respect to any sale or issuance after the
Amendment No. 1 Effective Date by the Borrower or any of its Subsidiaries
(excluding any Insurance Subsidiary) to any Person of any of its Capital Stock
or the exercise by any Person of any warrants or options in respect of Capital
Stock of the Borrower or any of its Subsidiaries (excluding any Insurance
Subsidiaries), (a) the gross cash proceeds received by the Borrower or such
Subsidiary from such sale, exercise or issuance, minus (b) all reasonable and
customary commissions, fees, costs and other expenses actually incurred in
connection with such sale, exercise or issuance which have not been paid to
Affiliates of the Borrower in connection therewith, and minus (c) the amount of
such proceeds received by the Borrower from a Subsidiary, or received by a
Subsidiary from another Subsidiary or the Borrower; provided, however, that the
proceeds of the following shall be excluded from this definition: (i) options
and equity grants made pursuant to the Borrower’s Employee Stock Purchase Plan
and any other comparable employee benefit

 

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plan, (ii) options and equity grants made to employees, officers and directors,
(iii) TARP Interests and (iv) any Capital Stock of the Borrower or any of its
Subsidiaries issued in exchange for the cancellation of debt of the Borrower or
any of its Subsidiaries.

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

“Non-Extension Notice” has the meaning specified in Subsection 2.13(b)(iii).

“Non-Extension Notice Date” has the meaning specified in Subsection
2.13(b)(iii).

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

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

“Operating Income” means, with respect to the Borrower and its consolidated
Subsidiaries for any fiscal quarter, the difference between (i) the sum of
(A) Premiums Earned during such fiscal quarter, plus (B) Net Investment Income
during such fiscal quarter, minus (ii) the sum of (A) Losses & Loss Adjustment
Expenses during such fiscal quarter, plus (B) Amortization of Deferred Policy
Acquisition Costs during such fiscal quarter, plus (C) Other Underwriting and
Operating Expenses during such fiscal quarter, plus (D) Interest Expense during
such fiscal quarter. For purposes of this definition, with respect to each
fiscal quarter of the Borrower and its Subsidiaries, “Premiums Earned”, “Net
Investment Income”, “Losses & Loss Adjustment Expenses”, “Amortization of
Deferred Policy Acquisition Costs”, “Other Underwriting and Operating Expenses”
and “Interest Expense” shall be the amount of such items reflected on a
consolidated income statement of the Borrower and its Subsidiaries as of the
last day of such fiscal quarter prepared in accordance with GAAP.

“Original Agreement” has the meaning specified in the preamble to this
Agreement.

“Original Closing Date” means October 24, 2006.

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

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

 

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

“PBGC” means the Pension Benefit Guaranty Corporation.

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

“Permitted Acquisitions” means an acquisition by the Borrower or any Material
Subsidiary, whether by purchase, merger or otherwise, of all of the Capital
Stock of, or all or substantially all of the assets of, or a business line,
unit, office or division of, any Person, provided that no such acquisition shall
constitute a Permitted Acquisition unless it satisfies each of the following
conditions:

(a) immediately prior to such acquisition, and after giving effect thereto, no
Default or Event of Default shall have occurred and be continuing or would
result therefrom; and

(b) the sum of all amounts paid in connection with such acquisition, together
with all amounts paid in connection with all other Permitted Acquisitions
consummated during the same fiscal year of the Borrower in which such
acquisition is being consummated, shall not exceed $1,000,000 in the aggregate.

“Permitted Investments” means without duplication:

(a) marketable direct obligations issued by, or unconditionally guaranteed by,
the United States Government or any member state of the European Union (as it
exists on the date hereof) or issued by any agency or instrumentality thereof
and backed by the full faith and credit of the United States or such member
state of the European Union, in each case maturing within one year from the date
of acquisition thereof;

(b) marketable direct obligations issued by any State of the United States or
any political subdivision of any such State or any public instrumentality
thereof maturing within one year from the date of acquisition thereof and, at
the time of acquisition, having a rating of equal to at least the second highest
rating from S&P or Moody’s;

(c) commercial paper maturing no more than one year from the date of creation
thereof and, at the time of acquisition, having a rating of equal to at least
the second highest rating from S&P or Moody’s;

(d) demand deposit accounts, time deposits, demand deposits, domestic or
Eurodollar certificates of deposit, Eurodollar time deposits, time deposit
accounts, term deposit accounts or bankers’ acceptances maturing within one year
from the date of acquisition thereof or overnight bank deposits, in each case,
issued by any bank organized under the laws of any member state of the European
Union (as it exists on the date hereof), the United States or any State of the
United States or the District of Columbia or any foreign branch of any such bank
or any branch of a foreign bank located in the United States or any member state
of the European Union (as it exists on the date hereof) having at the date of
acquisition thereof combined capital and surplus of not less than
$500.0 million;

 

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(e) repurchase obligations with a term of not more than 90 days for underlying
securities of the types described in clause (a) above entered into with any bank
meeting the qualifications specified in clause (d) above;

(f) Investments in money market or mutual funds which invest substantially all
their assets in either (x) securities of the types described in clauses (a)
through (e) above or (y) Securities which constitute “Eligible Securities” (as
defined in Rule 2a-7(a) promulgated under the Investment Company Act of 1940, as
such rule is in effect on the date hereof); and

(g) in the case of any Foreign Subsidiary of the Borrower or Foreign Subsidiary
of PMI Mortgage Investment Co., (x) marketable direct obligations issued by, or
unconditionally guaranteed by, the sovereign nation in which such Foreign
Subsidiary is organized and is conducting business, or issued by any agency
thereof and backed by the full faith and credit of such sovereign nation, and in
each case maturing within one year from the date of acquisition thereof; and
(y) demand deposit accounts, time deposits, demand deposits, domestic or
Eurodollar certificates of deposit, Eurodollar time deposits, time deposit
accounts, term deposit accounts or bankers’ acceptances maturing within one year
from the date of acquisition thereof issued by any bank organized under the laws
of the sovereign nation in which such Foreign Subsidiary is organized and is
conducting business, and having at the date of acquisition thereof combined
capital and surplus of not less than U.S.$1,000,000,000.

“Permitted Liens” shall have the meaning assigned to such term in Section 7.01.

“Permitted Prepayments” has the meaning assigned to such term in Section 7.07.

“Permitted TARP Payments” means Restricted Payments that are required to be paid
by the original terms of any TARP Interests or any documentation governing or
evidencing any TARP Interests.

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

“Platform” has the meaning specified in Section 6.02.

“PMI Australia” means, PMI Mortgage Insurance Ltd.

“PMI Europe” means PMI Europe Holdings Limited and any of its subsidiaries.

“PMI Insurance” means PMI Mortgage Insurance Co.

“Prepayments” has the meaning assigned to such term in Section 7.07.

“Primary Regulator” shall have the meaning assigned to such term in
Section 6.03(e).

“Principal Debt” means, on any date, the sum of (i) the aggregate outstanding
principal amount of the Loans and (ii) the L/C Obligations, in each case on such
date after giving effect to any Borrowing, any prepayments or repayments and any
issuance, cancellation or expiration of Letters of Credit, in each case
occurring on such date.

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

 

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

“QBE Actual Insurance Loss Percentage” means, at any time of determination, the
“Actual Insurance Loss Percentage” as defined in and finally determined pursuant
to Schedule 6 to the QBE Australia Share Sale Agreement as in effect on the
Restatement Effective Date.

“QBE Adjustment Amount” means, at any time of determination, the sum of (i) the
amount (if any) by which the QBE Applicable Measuring Amount at such time
exceeds $237,599,575, plus (ii) the amount (if any) by which the QBE Note Amount
would be reduced pursuant to Section 7(a)(ii) or Section 7(a)(iii) thereof,
applying the criteria and standards set forth in Section 16.16 of the QBE
Australia Share Sale Agreement and Section 14.16 of the QBE Hong Kong Share Sale
Agreement for reduction with respect to a “Claim” for breach of “Warranty,” as
such terms are defined in the respective QBE Share Sale Agreements; provided,
however, that if such time of determination is prior to April 1, 2010, then, for
purposes of determining the QBE Adjustment Amount, references in
Section 16.16(a) of the QBE Australia Share Sale Agreement and Section 14.16(a)
of the QBE Hong Kong Share Sale Agreement to April 1, 2010 shall be deemed, for
purposes of such determination under this Agreement, to be to the date of such
time of determination.

“QBE Adjustment Period” means, with respect to each occurrence of the Principal
Debt exceeding 80% of the QBE Note Amount in effect at such time, the fourteen
day period following (i) the reduction in the QBE Note Amount that caused such
excess (in the case where such excess resulted from an adjustment provided for
pursuant to clause (ii) of the definition of “QBE Adjustment Amount”) or
(ii) the date on which an Updating Report is delivered by the Borrower to the
Administrative Agent (in the case where the excess resulted from an adjustment
of the QBE Note Amount based on a forecast or determination by an Appointed
Actuary in an Updating Report).

“QBE Applicable Measuring Amount” means, at any time of determination, the
product of (i) $475,199,150 multiplied by (ii) the QBE Actual Insurance Loss
Percentage, if finally determined at such time; provided, that if the QBE Actual
Insurance Loss Percentage at such time has not yet been finally determined under
Schedule 6 to the QBE Australia Share Sale Agreement as in effect on the
Restatement Effective Date, “QBE Applicable Measuring Amount” at such time shall
mean the product of (x) $475,199,150 multiplied by (y) the then applicable QBE
Forecast Actual Insurance Loss Percentage.

“QBE Australia Share Sale Agreement” means that certain Share Sale Agreement
dated August 14, 2008 among PMI Insurance, QBE Holdings (AAP) Pty Limited and
QBE Insurance Group Limited, as amended August 29, 2008, October 23, 2008, and
December 17, 2008, and as further amended, supplemented or otherwise modified to
the extent permitted under this Agreement.

“QBE Forecast Actual Insurance Loss Percentage” means, at any time of
determination prior to final determination of the QBE Actual Insurance Loss
Percentage pursuant to Schedule 6 of the QBE Australia Share Sale Agreement, the
QBE Actual Insurance Loss Percentage as forecast or determined by the Appointed
Actuary in the Milliman Report or, if an Updating Report has been delivered by
the Borrower to the Administrative Agent, in the Updating Report then most
recently delivered by the Borrower to the Administrative Agent.

“QBE Hong Kong Share Sale Agreement” means that certain Share Sale Deed dated
December 17, 2008 among Borrower, QBE Lenders’ Mortgage Insurance Limited and
QBE Insurance Group Limited, as heretofore amended and as further amended,
supplemented or otherwise modified to the extent permitted under this Agreement.

 

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“QBE Note” means the Note Deed issued by QBE Insurance Group Limited to PMI
Insurance in connection with the QBE Share Sale Agreement, dated October 23,
2008, as amended by the Amending Deed, dated December 17, 2008, and as further
amended, supplemented or otherwise modified to the extent permitted under this
Agreement.

“QBE Note Amount” means, at any time of determination, the difference of (x) the
aggregate total amount of accrued QBE Note Interest and QBE Note Principal then
unpaid and owed under the QBE Note minus (y) the QBE Adjustment Amount then in
effect (to the extent the effect of such QBE Adjustment Amount is not reflected
in clause (x) above).

“QBE Note Interest” means “Interest” as defined in the QBE Note as in effect on
the Restatement Effective Date.

“QBE Note Principal” means “Principal” as defined in the QBE Note as in effect
on the Restatement Effective Date.

“QBE Note Purchase Agreements” has the meaning specified in Section 5 of
Amendment No. 6.

“QBE Pledge Agreement” means that certain Pledge Agreement dated as of the
Restatement Effective Date, between the Borrower and the Administrative Agent
(for the benefit of the Agents and the Lenders) pursuant to which the Borrower
pledges all of its right, title and interest in and to the QBE Note and the QBE
Note Purchase Agreements, as such agreement may be amended, amended and
restated, supplemented or otherwise modified, renewed or replaced from time to
time.

“QBE Share Sale Agreements” means, collectively, (i) the QBE Australia Share
Sale Agreement and (ii) the QBE Hong Kong Share Sale Agreement.

“Quarterly Period” means a three month period ending
March 31, June 30, September 30 or December 31 in any calendar year.

“Ram Re Company” means RAM Holdings Ltd. and any of its Subsidiaries.

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

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

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

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

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

 

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“Restatement Effective Date” means the date this Agreement becomes effective
pursuant to Section 5 of Amendment No. 6.

“Restricted Payment” means with respect to any Person (a) any direct or indirect
dividend or other distribution on account of any Capital Stock of the Borrower
or any of its Subsidiaries, except a dividend or distribution payable solely in
shares of that class of Capital Stock or any junior class of stock to the
holders of that class of Capital Stock and (b) redemption, retirement or sinking
fund or similar payment, purchase or other acquisition, cancellation or
termination of any Capital Stock of the Borrower or any of its Subsidiaries.

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

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

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

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

“Securities” has the meaning ascribed to such term in the UCC.

“Security Documents” means, as of any date, collectively, the Bank Facility
Pledge Agreement, the QBE Pledge Agreement and any other agreement then in
effect pursuant to which the Administrative Agent has been granted a Lien to
secure any or all of the Obligations.

“Senior Notes” means, collectively, (i) the 6% Senior Notes due 2016 of the
Borrower issued under the Senior Notes Indenture, (ii) the 6.625% Senior Notes
due 2036 of the Borrower issued under the Senior Notes Indenture, (iii) the
5.568% Senior Notes due 2008 of the Borrower issued under the Senior Notes
Indenture, and (iv) any other series of notes issued by the Borrower under the
Senior Notes Indenture.

“Senior Notes Indenture” means the Indenture, dated as of November 3, 2003,
between the Borrower and the Senior Notes Trustee, pursuant to which the Senior
Notes were issued, as such agreement may be amended, supplemented or otherwise
modified from time to time in accordance with the terms thereof and hereof.

“Senior Notes Trustee” means The Bank of New York, as trustee under the Senior
Notes Indenture, together with any of its successors and assigns in such
capacity.

“Senior Officer” means, with respect to any Person, the chief executive officer,
president, chief financial officer or other senior financial officer of such
Person.

“Shared Collateral Pledge Agreement” has the meaning specified in the Original
Agreement.

“Significant Eligibility Limitations” has the meaning specified in
Section 4.02(d).

 

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“Solvent” means, at any time and with respect to:

(a) any Person other than PMI Insurance:

(i) the fair value of the property of such Person is greater than the total
amount of liabilities (including contingent liabilities) of such Person;

(ii) 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 liabilities of such
Person on its debts as they become absolute and mature;

(iii) such Person does not intend to, and does not believe that it will, incur
debts or liabilities beyond such Person’s ability to pay as such debts and
liabilities mature, and (iv) such Person is not engaged in business or a
transaction, and is not about to engage in business or a transaction, for which
such Person’s assets would constitute unreasonably small capital, within the
meaning of the Bankruptcy Code and any other applicable insolvency laws,
including the Uniform Fraudulent Conveyance Act and the Uniform Fraudulent
Transfer Act as in effect in any applicable jurisdiction; for such purposes, any
contingent liability (including pending litigation, contingent obligations,
pension plan liabilities and claims for federal, state, local and foreign taxes,
if any) is valued at the amount that, in light of all the facts and
circumstances existing at such time, represents the amount that can reasonably
be expected to become an actual or matured liability; and

(b) PMI Insurance:

(i) the present fair saleable value of such Person’s assets exceeds the amount
that will be required to pay its probable liabilities on its existing debts as
they become absolute and matured;

(ii) the sum of all of such Person’s liabilities, required reserves and total
outstanding capital stock is not greater than all of its assets at a fair
valuation;

(iii) such Person will be able to pay its debts as they become due in the usual
course of its business; and

(iv) such Person’s total assets exceed the sum of its total liabilities, plus
the amount that would be needed if the corporation were to be dissolved at such
time to satisfy the preferential rights on dissolution of shareholders whose
preferential rights are superior to creditors of such Person.

For purposes of clause (b) of this definition, the determinations and the terms
referred to therein are to be interpreted in accordance with all laws and
regulations applicable to the subject Person, including applicable state
insurance laws and regulations, in each case as in effect at the time of
determination (but not including any laws or regulations of any political
subdivision below the state level).

“Specified Investment” means an Investment made by the Borrower in an Additional
Pledged Entity utilizing the proceeds of a substantially contemporaneous
dividend or distribution paid to the Borrower by PMI Insurance, which dividend
or distribution is paid by PMI Insurance at a time when it is Solvent and is
otherwise permitted under all applicable Laws to make such dividend or
distribution to the Borrower.

 

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“Specified Payment” means any dividend, distribution or similar payment received
by the Borrower from PMI Insurance which payment is identified by the Borrower
in a writing furnished to the Administrative Agent prior to the time that such
payment is made as necessary to fund a specific payment or other expenditure
(including Permitted TARP Payments) to be made by the Borrower (and permitted to
be made by the Borrower under this Agreement), which writing reasonably
describes such payment or other expenditure in reasonable detail.

“States” has the meaning specified in Section 4.02(h).

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

“Statutory Surplus” means with respect to an Insurance Subsidiary as of the date
of an Annual Statement, the total amount shown on line 35, page 3, column 1 of
the 2005 Annual Statement of such Insurance Subsidiary, or an amount determined
in a consistent manner in accordance with SAP for any date other than one as of
which an Annual Statement is prepared. Notwithstanding the foregoing, if the
format of the Annual Statement is changed in future years so that different
information is contained in such line or such line no longer exists, it is
understood that the foregoing shall refer to information consistent with that
reported in the referenced line in the 2005 Annual Statement of such Insurance
Subsidiary.

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

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

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

“TARP Interests” means any debt, equity interests, trust preferred securities,
convertible securities, deferrable interest subordinated debt securities,
perpetual debt securities, mandatory convertible debt securities, or hybrid
securities issued or incurred by the Borrower or one or more of its

 

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Subsidiaries to any of (a) the United States or any authority, agency or
instrumentality thereof, (b) the states or territories of the United States, or
any of their respective political subdivisions, authorities, agencies or
instrumentalities, (c) the Federal National Mortgage Association or Federal Home
Mortgage Loan Corporation or Subsidiaries thereof or successors thereto or
(d) the Federal Reserve System, any Federal Reserve Bank or any of their
respective instrumentalities, Subsidiaries or successors pursuant to any of the
Troubled Assets Relief Program of the Emergency Economic Stabilization Act of
2008 (Public Law No. 110-343) or other act or program with similar purpose or
intent of or instituted by any of (i) the United States or any authority, agency
or instrumentality thereof, (ii) the states or territories of the United States,
or any of their respective political subdivisions, authorities, agencies or
instrumentalities, (iii) the Federal National Mortgage Association or Federal
Home Mortgage Loan Corporation or Subsidiaries thereof or successors thereto or
(iv) the Federal Reserve System, any Federal Reserve Bank or any of their
respective instrumentalities, Subsidiaries or successors.

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

“Threshold Amount” means $45,000,000.

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

“UCC” means the Uniform Commercial Code as in effect in the applicable state or
jurisdiction.

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

“Unreimbursed Amounts” has the meaning specified in Subsection 2.13(c)(i).

“Updating Report” has the meaning specified in Section 6.01(h).

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

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

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

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

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

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

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

 

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

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

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

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

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

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

ARTICLE II.

THE COMMITMENTS AND CREDIT EXTENSIONS

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

 

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2.02 Borrowing, Conversions and Continuations of Loans.

(a) Each Borrowing, each conversion of Loans from one Type to the other, and
each continuation of Eurodollar Rate Loans shall be made upon the Borrower’s
irrevocable delivery to the Administrative Agent of a written Loan Notice,
completed and signed by a Senior Officer of the Borrower. Each such notice must
be received by the Administrative Agent not later than 12:00 Noon (i) three
Business Days prior to the requested date of the Borrowing of, conversion to or
continuation of Eurodollar Rate Loans or of any conversion of Eurodollar Rate
Loans to Base Rate Loans and (ii) on the requested date of a Borrowing of Base
Rate Loans. A Borrowing of, conversion to or continuation of Eurodollar Rate
Loans shall be in a principal amount of $5,000,000 or a whole multiple of
$1,000,000 in excess thereof (or, in the case of a continuation, such lesser
amount of the related Borrowing as may remain outstanding). A Borrowing of or
conversion to Base Rate Loans shall be in a principal amount of $500,000 or a
whole multiple of $100,000 in excess thereof, except as provided in clause
(i) of Subsection 2.13(c). Each Loan Notice shall specify (i) whether the
Borrower is requesting a Borrowing, a conversion of Loans from one Type to the
other or a continuation of Eurodollar Rate Loans, (ii) the requested date of the
Borrowing, conversion or continuation, as the case may be (which shall be a
Business Day), (iii) the principal amount of Loans to be borrowed, converted or
continued, (iv) if applicable, the Type of Loans to be borrowed or to which
existing Loans are to be converted and (v) if applicable, the duration of the
Interest Period with respect thereto. If the Borrower fails to specify a Type of
Loan in a Loan Notice or if the Borrower fails to give a timely notice
requesting a conversion or continuation, then the applicable Loans shall be made
as or converted to (as the case may be) Base Rate Loans. Any such automatic
conversion to Base Rate Loans shall be effective as of the last day of the
Interest Period then in effect with respect to the applicable Eurodollar Rate
Loans. If the Borrower requests a Borrowing of, conversion to or continuation of
Eurodollar Rate Loans in any such Loan Notice, but fails to specify an Interest
Period, it will be deemed to have specified an Interest Period of one month.

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

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

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

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

 

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2.03 Prepayments. The Borrower may, upon notice to the Administrative Agent, at
any time or from time to time voluntarily prepay Loans in whole or in part
without premium or penalty; provided that (a) such notice must be received by
the Administrative Agent not later than 12:00 Noon (i) three Business Days prior
to any date of prepayment of Eurodollar Rate Loans and (ii) on the date of
prepayment of Base Rate Loans, (b) any prepayment of Eurodollar Rate Loans shall
be in a principal amount of (1) $5,000,000 or a whole multiple of $1,000,000 in
excess thereof or (2) equal to the entire principal amount thereof then
outstanding and (c) any prepayment of Base Rate Loans shall be in a principal
amount of (1) $500,000 or a whole multiple of $100,000 in excess thereof or
(2) equal to the entire principal amount thereof then outstanding. Each such
notice shall specify the date and amount of such prepayment and the Type(s) of
Loans to be prepaid. The Administrative Agent will promptly notify each Lender
of its receipt of each such notice, and of the amount of such Lender’s Pro Rata
Share of such prepayment. If such notice is given by the Borrower, the Borrower
shall make such prepayment and the payment amount specified in such notice shall
be due and payable on the date specified therein. Any prepayment of a Eurodollar
Rate Loan shall be accompanied by all accrued interest thereon, together with
any additional amounts required pursuant to Section 3.05. Each such prepayment
shall be applied to the Loans of the Lenders in accordance with their respective
Pro Rata Shares.

2.04 Termination or Reduction of Commitments.

(a) The Borrower may, upon notice to the Administrative Agent, terminate the
Aggregate Commitment, or from time to time permanently reduce the Aggregate
Commitment; provided that (a) any such notice shall be received by the
Administrative Agent not later than 12:00 Noon three Business Days prior to the
date of termination or reduction, (b) any such partial reduction shall be in an
aggregate amount of $5,000,000 or any whole multiple of $1,000,000 in excess
thereof or a lesser amount equal to the amount by which the Aggregate Commitment
exceeds the Principal Debt and (c) the Borrower shall not terminate or reduce
the Aggregate Commitment if, after giving effect thereto and to any concurrent
prepayments hereunder, the Principal Debt would exceed the Aggregate Commitment.
The Administrative Agent will promptly notify the Lenders of any such notice of
termination or reduction of the Aggregate Commitment. Any reduction of the
Aggregate Commitment shall be applied to the Commitment of each Lender according
to its Pro Rata Share. In the case of a termination of the Aggregate Commitment,
all facility fees accrued to the effective date of any termination of the
Aggregate Commitment shall be paid on the effective date of such termination. On
the date of effectiveness of any reduction of the Aggregate Commitment, all
facility fees accrued on the portion of the Aggregate Commitment reduced
pursuant to such reduction shall be paid.

(b) Upon the receipt by the Borrower or any Subsidiary thereof of any payment on
or in respect of the QBE Note, the Aggregate Commitment shall be permanently and
irrevocably reduced by the amount of such payment (such reduction to be applied
to the Commitments of the Lenders in accordance with their Pro Rata Shares). If,
after giving effect to any such reduction, the Principal Debt would exceed the
Aggregate Commitment, the Borrower shall, on the date of such reduction, prepay
from the proceeds received in respect of the QBE Note the Principal Debt in an
amount equal to such excess.

(c) Subject to Section 2.04(i), upon the receipt by the Borrower of any dividend
or distribution of cash or cash equivalents, in each case paid by PMI Insurance
(other than a Specified Payment), the Aggregate Commitment shall be permanently
and irrevocably reduced by the amount of such payment (such reduction to be
applied to the Commitments of the Lenders in accordance with their Pro Rata
Shares). If, after giving effect to any such reduction, the Principal Debt would
exceed the Aggregate Commitment, the Borrower shall, on the date of such
reduction, prepay the Principal Debt in an amount equal to such excess.

 

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(d) Subject to Section 2.04(i), within fourteen (14) days of the receipt by the
Borrower of any dividend or distribution paid by PMI Insurance (other than a
Specified Payment) of any asset constituting a Permitted Investment or any other
marketable security issued by any Person, which asset has a fair market value
that is readily ascertainable, the Aggregate Commitment shall be permanently and
irrevocably reduced by the fair market value of such asset on the day that is
fourteen (14) days following such receipt (such reduction to be applied to the
Commitments of the Lenders in accordance with their Pro Rata Shares). If, after
giving effect to any such reduction, the Principal Debt would exceed the
Aggregate Commitment, the Borrower shall, on the date of such reduction, prepay
the Principal Debt in an amount equal to such excess.

(e) Subject to Section 2.04(i), in the event that the Borrower receives any
dividend or distribution paid by PMI Insurance (other than a Specified Payment)
of any asset that constitutes a Permitted Investment or any other marketable
security issued by any Person, which asset does not at the time of such dividend
or distribution have a fair market value that is readily ascertainable, then the
Aggregate Commitment shall be permanently and irrevocably reduced upon the
earlier to occur of (i) the disposition of such asset, in which case the amount
of such reduction shall be equal to the Net Asset Disposition Proceeds received
pursuant to such disposition, and (ii) the tenth (10th) Business Day following
the first date that a fair market value of such asset is readily ascertainable,
in which case the amount of such reduction shall be equal to the average fair
market value of such asset for the eight (8) Business Day period following the
first date that a fair market value of such asset is readily ascertainable. Any
reduction of the Aggregate Commitment pursuant to this Section 2.04(e) shall be
applied to the Commitments of the Lenders in accordance with their Pro Rata
Shares. If, after giving effect to any such reduction, the Principal Debt would
exceed the Aggregate Commitment, the Borrower shall, on the date of such
reduction, prepay the Principal Debt in an amount equal to such excess.

(f) Subject to Section 2.04(i), upon the closing of the sale or other
disposition (in one or more transactions) of all of the Capital Stock of CMG
Company or PMI Europe or any of the Additional Pledged Entities, in each case,
the Aggregate Commitment shall be permanently and irrevocably reduced in
connection with the sale of each such entity by an amount equal to the lesser of
(i) the Net Asset Disposition Proceeds resulting from such sale that are paid to
the Borrower as a dividend, distribution or otherwise and (ii) $25,000,000 (each
such reduction to be applied to the Commitments of the Lenders in accordance
with their Pro Rata Shares). If, after giving effect to such reduction, the
Principal Debt would exceed the Aggregate Commitment, the Borrower shall, on the
date of such reduction, prepay the Principal Debt in an amount equal to such
excess. Any such prepayment due on account of a sale of an Additional Pledged
Entity shall be made directly at the relevant closing from the Net Asset
Disposition Proceeds received in respect of such sale.

(g) Subject to Section 2.04(i), upon the receipt of any Net Debt Proceeds or Net
Equity Proceeds (without duplication), the Aggregate Commitment shall be
permanently and irrevocably reduced by 33% of the amount of such Net Debt
Proceeds or Net Equity Proceeds, as applicable; provided, that, in each case,
each reduction of the Aggregate Commitment shall be applied to the Commitments
of the Lenders in accordance with their Pro Rata Shares. If, after giving effect
to such reduction, the Principal Debt would exceed the Aggregate Commitment, the
Borrower shall, on the date of such reduction, prepay the Principal Debt in an
amount equal to such excess.

(h) In the event that the QBE Note Amount is less than 125% of the Aggregate
Commitment as at the last day of three consecutive Quarterly Periods, the
Aggregate Commitment shall on the last day of the third of such Quarterly
Periods be permanently and irrevocably reduced by the amount necessary to cause
the Aggregate Commitment (immediately after giving effect to such reduction) to
equal 80% of the QBE Note Amount in effect at the end of the day on which such
reduction occurs (such reduction to be applied to the Commitments of the Lenders
in accordance with their Pro Rata Shares).

 

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(i) Notwithstanding anything to the contrary contained elsewhere in this
Section 2.04:

(i) the Aggregate Commitment shall not be reduced pursuant to Section 2.04(c),
Section 2.04(d), Section 2.04(e) or Section 2.04(f) if at the time that such
reduction would otherwise occur the Aggregate Commitment is less than or equal
to $100,000,000;

(ii) the Aggregate Commitment shall not be reduced below $100,000,000 by virtue
of a reduction required under Section 2.04(c), Section 2.04(d), Section 2.04(e)
or Section 2.04(f);

(iii) the Aggregate Commitment shall not be reduced pursuant to Section 2.04(g)
if at the time that such reduction would otherwise occur the Aggregate
Commitment is less than or equal to $50,000,000; and

(iv) the Aggregate Commitment shall not be reduced below $50,000,000 by virtue
of a reduction required under Section 2.04(g).

2.05 Repayment and Prepayment of Loans.

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

(b) In the event that the Principal Debt outstanding at any time exceeds 80% of
the QBE Note Amount in effect at such time, the Borrower shall within the
applicable QBE Adjustment Period prepay the Principal Debt in an amount at least
sufficient to eliminate such excess.

(c) The Borrower shall prepay the Principal Debt as and to the extent required
under Section 2.04.

2.06 Interest.

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

(b) If any amount payable by the Borrower under any Loan Document is not paid
when due (without regard to any applicable grace periods), whether at stated
maturity, by acceleration or otherwise, such amount shall thereafter bear
interest at a fluctuating interest rate per annum at all times equal to the
Default Rate to the fullest extent permitted by applicable Laws. Accrued and
unpaid interest on past due amounts (including interest on past due interest)
shall be due and payable upon demand. In addition, if any Event of Default
(other than an Event of Default resulting solely from the failure of the
Borrower to pay any amount when due under any Loan Document) has occurred and is
continuing and the Required Lenders in their sole discretion so elect, then,
while any such Event of Default is continuing, all Obligations shall bear
interest at a fluctuating interest rate per annum equal to the Default Rate to
the fullest extent permitted by applicable Laws.

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

 

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2.07 Fees.

(a) Facility Fee. In addition to the fees set forth in Subsection 2.13(i), the
Borrower shall pay to the Administrative Agent for the account of each Lender in
accordance with such Lender’s Pro Rata Share, a facility fee equal to the
Applicable Facility Fee Rate times the actual daily amount of the Aggregate
Commitment, regardless of usage (or, from and after the Original Closing Date,
the Principal Debt). The facility fee shall accrue from and after the date of
the Original Agreement, including at any time during which one or more of the
conditions in Section 4.02 is not met, and shall be due and payable quarterly in
arrears on the last Business Day of each March, June, September and December,
commencing with the first such date to occur after the Original Closing Date,
and on the Maturity Date.

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

(c) In the event that PMI Insurance fails to maintain the minimum policyholder
position that it is required to maintain under Section 20-1550 of the Arizona
Revised Statutes as at the end of any Quarterly Period, beginning with the
Quarterly Period ending December 31, 2009, the Borrower shall pay to the
Administrative Agent, for the ratable benefit of the Lenders a fee that is,
subject to the proviso to this sentence, irrevocable and non-refundable in an
amount equal to one and one-half percent (1.50%) of the Aggregate Commitment
outstanding as of the end of the last day of the first Quarterly Period that
such failure has occurred (such date referred to herein as the “MPP Fee Trigger
Date”), which fee (i) shall, subject to the proviso of this sentence, be fully
earned as at the MPP Fee Trigger Date and (ii) shall be payable as follows:
(A) in the case where the MPP Fee Trigger Date is less than six months prior to
the Maturity Date, on the Maturity Date and (B) in the case where the MPP Fee
Trigger Date is six months or more prior to the Maturity Date, in two
installments, with 50% of such fee payable no later than sixty (60) days after
the last day of the second Quarterly Period following the MPP Fee Trigger Date
(the last day of the second Quarterly Period following the MPP Fee Trigger Date
being referred to herein as the “MPP Fee Determination Date”) and the remaining
50% of such fee payable on the Maturity Date; provided, that such fee shall be
waived and not be due and payable if PMI Insurance is in compliance with the
minimum policyholder position that it is required to maintain under
Section 20-1550 of the Arizona Revised Statutes (x) on the Maturity Date (in the
case where the fee is payable under clause (ii)(A) above) or (y) the sixtieth
(60th) day following the MPP Fee Determination Date (in the case where the fee
is payable under clause (ii)(B) above).

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

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

 

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2.09 Evidence of Debt. The Loans made by each Lender shall be evidenced by one
or more accounts or records maintained by such Lender and by the Administrative
Agent in the ordinary course of business. The accounts or records maintained by
the Administrative Agent and each Lender shall be conclusive absent manifest
error of the amount of the Loans made by the Lenders to the Borrower and the
interest and payments thereon. Any failure to so record or any error in doing so
shall not, however, limit or otherwise affect the obligation of the Borrower
hereunder to pay any amount owing by it with respect to the Obligations. In the
event of any conflict between the accounts and records maintained by any Lender
and the accounts and records of the Administrative Agent in respect of such
matters, the accounts and records of the Administrative Agent shall control in
the absence of manifest error. Upon the request of any Lender made through the
Administrative Agent, the Borrower shall execute and deliver to such Lender
(through the Administrative Agent) a Note, which shall evidence such Lender’s
Loans to such Borrower in addition to such accounts or records. Each Lender may
attach schedules to its Note and endorse thereon the date, Type (if applicable),
amount and maturity of its Loans and payments with respect thereto.

2.10 Payments Generally.

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

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

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

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

(ii) if any Lender failed to make such payment, such Lender shall forthwith on
demand pay to the Administrative Agent the amount thereof in immediately
available funds, together with interest thereon for the period from the date
such amount was made available by the Administrative Agent to the Borrower to
the date such amount is recovered by the Administrative

 

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Agent (the “Compensation Period”) at a rate per annum equal to the Federal Funds
Rate from time to time in effect. If such Lender pays such amount to the
Administrative Agent, then such amount shall constitute such Lender’s Loan
included in the applicable Borrowing. If such Lender does not pay such amount
forthwith upon the Administrative Agent’s demand therefor, the Administrative
Agent may make a demand therefor upon the Borrower, and the Borrower shall pay
such amount to the Administrative Agent, together with interest thereon for the
Compensation Period at a rate per annum equal to the rate of interest applicable
to such Borrowing. Nothing herein shall be deemed to relieve any Lender from its
obligation to fulfill its Commitment or to prejudice any rights which the
Administrative Agent or the Borrower may have against any Lender as a result of
any default by such Lender hereunder.

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

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

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

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

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

 

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repayments. Each Lender that purchases a participation pursuant to this
Section shall from and after such purchase have the right to give all notices,
requests, demands, directions and other communications under this Agreement with
respect to the portion of the Obligations purchased to the same extent as though
the purchasing Lender were the original owner of the Obligations purchased.

2.12 [Intentionally Omitted] .

2.13 Letters of Credit.

(a) The Letter of Credit Commitment. (i) On the Original Closing Date, without
further action by any party hereto, the LC Issuer shall be deemed to have
granted to each Lender, and each Lender shall be deemed to have acquired from
the L/C Issuer, a participation in each Existing Letter of Credit equal to such
Lender’s Pro Rata Share of the related L/C Obligations. Such participations
shall be on all the same terms and conditions as participations granted under
this Section 2.13 in all the other Letters of Credit issued or to be issued
hereunder, (ii) Subject to the terms and conditions set forth herein, (A) the
L/C Issuer agrees, in reliance upon the agreements of the Lenders set forth in
this Subsection 2.13, (1) from time to time on any Business Day during the
period from the Original Closing Date until the Letter of Credit Expiration
Date, to issue Letters of Credit for the account of the Borrower or its
Subsidiaries, and to amend or extend Letters of Credit previously issued by it,
in accordance with subsection (b) below, and (2) to honor drawings under the
Letters of Credit, and (B) the Lenders severally agree to participate in Letters
of Credit issued for the account of the Borrower or its Subsidiaries and any
drawings thereunder; provided that after giving effect to any L/C Credit
Extension with respect to any Letter of Credit, (x) the Principal Debt shall not
exceed the Aggregate Commitment, and (y) the L/C Obligations shall not exceed
the Letter of Credit Sublimit. Each L/C Credit Extension shall be deemed to be a
representation by the Borrower that such L/C Credit Extension complies with the
conditions set forth in the proviso to the preceding sentence. Within the
foregoing limits, and subject to the terms and conditions hereof, the Borrower’s
ability to obtain Letters of Credit shall be fully revolving, and accordingly
the Borrower may, during the foregoing period, obtain Letters of Credit to
replace Letters of Credit that have expired or that have been drawn upon and
reimbursed.

(iii) The L/C Issuer shall not issue any Letter of Credit if (i) subject to
Section 2.13(b)(iii), the expiry date of such requested Letter of Credit would
occur more than twelve months after the date of issuance or last extension,
unless the Required Lenders have approved such expiry date, or (ii) the expiry
date of such requested Letter of Credit would occur after the Letter of Credit
Expiration Date, unless all the Lenders have approved such expiry date.

(iv) The L/C Issuer shall not be under any obligation to issue any Letter of
Credit if: (A) any order, judgment or decree of any Governmental Authority of
competent jurisdiction shall by its terms purport to enjoin or restrain the L/C
Issuer from issuing such Letter of Credit, or any Law applicable to the L/C
Issuer or any request or directive (whether or not having the force of law) from
any Governmental Authority with jurisdiction over the L/C Issuer shall prohibit,
or request that the L/C Issuer refrain from, the issuance of letters of credit
generally or such Letter of Credit in particular or shall impose upon the L/C
Issuer with respect to such Letter of Credit any restriction, reserve or capital
requirement (for which the L/C Issuer is not otherwise compensated hereunder)
not in effect on the Original Closing Date, or shall impose upon the L/C Issuer
any unreimbursed loss, cost or expense which was not applicable on the Original
Closing Date and which the L/C Issuer in good faith deems material to it,
(B) except as otherwise agreed by the Administrative Agent and the L/C Issuer,
such Letter of Credit is in an initial stated amount less than $100,000,
(C) such Letter of Credit is to be denominated in a currency other than Dollars,
(D) such Letter of Credit contains any provisions for the automatic
reinstatement of the stated amount after any drawing thereunder, (E) the
issuance of such Letter of Credit would violate one or more policies of the L/C
Issuer, (F) such Letter of Credit is not a standby letter of credit, or (G) a
default of any Lender’s obligations to fund under Subsection 2.13(c) exists,
unless the L/C Issuer has entered into satisfactory arrangements with the
Borrower or such Lender to eliminate the L/C Issuer’s risk with respect to such
Lender.

 

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(v) The L/C Issuer shall not amend any Letter of Credit if the L/C Issuer would
not be permitted at such time to issue such Letter of Credit in its amended form
under the terms hereof and shall not amend any Letter of Credit without the
consent of the Borrower.

(vi) The L/C Issuer shall be under no obligation to amend any Letter of Credit
if (A) the L/C Issuer would have no obligation at such time to issue such Letter
of Credit in its amended form under the terms hereof, or (B) the beneficiary of
such Letter of Credit does not accept the proposed amendment to such Letter of
Credit.

(vii) The L/C Issuer shall act on behalf of the Lenders with respect to any
Letters of Credit issued by it and the documents associated therewith, and the
L/C Issuer shall have all of the benefits and immunities provided to the
Administrative Agent in Article IX with respect to any acts taken or omissions
suffered by the L/C Issuer in connection with Letters of Credit issued by it or
proposed to be issued by it and Issuer Documents pertaining to such Letters of
Credit as fully as if the term “Administrative Agent” as used in Article IX
included the L/C Issuer with respect to such acts or omissions, and as
additionally provided herein with respect to the L/C Issuer.

(b) Procedures for Issuance and Amendment of Letters of Credit; Auto-Extension
Letters of Credit. (i) Each Letter of Credit shall be issued or amended, as the
case may be, upon the request of the Borrower delivered to the L/C Issuer (with
a copy to the Administrative Agent) in the form of a Letter of Credit
Application, appropriately completed and signed by a Responsible Officer of the
Borrower. Such Letter of Credit Application must be received by the L/C Issuer
and the Administrative Agent not later than 11:00 a.m. at least two Business
Days (or such later date and time as the Administrative Agent and the L/C Issuer
may agree in a particular instance in their sole discretion) prior to the
proposed issuance date or date of amendment, as the case may be. In the case of
a request for an initial issuance of a Letter of Credit, such Letter of Credit
Application shall specify in form and detail reasonably satisfactory to the L/C
Issuer: (A) the proposed issuance date of the requested Letter of Credit (which
shall be a Business Day), (B) the amount thereof, (C) the expiry date thereof,
(D) the name and address of the beneficiary thereof, (E) the documents to be
presented by such beneficiary in case of any drawing thereunder, (F) the full
text of any certificate to be presented by such beneficiary in case of any
drawing thereunder, and (G) such other matters as the L/C Issuer may reasonably
require. In the case of a request for an amendment of any outstanding Letter of
Credit, such Letter of Credit Application shall specify in form and detail
reasonably satisfactory to the L/C Issuer (A) the Letter of Credit to be
amended, (B) the proposed date of amendment thereof (which shall be a Business
Day), (C) the nature of the proposed amendment, and (D) such other matters as
the L/C Issuer may require. Additionally, the Borrower shall furnish to the L/C
Issuer and the Administrative Agent such other documents and information
pertaining to such requested Letter of Credit issuance or amendment, including
any Issuer Documents, as the L/C Issuer or the Administrative Agent may require
in order to enable the L/C Issuer to issue or amend the relevant Letter of
Credit.

(ii) Promptly after receipt of any Letter of Credit Application, the L/C Issuer
will confirm with the Administrative Agent (by telephone or in writing) that the
Administrative Agent has received a copy of such Letter of Credit Application
from the Borrower and, if not, the L/C Issuer will provide the Administrative
Agent with a copy thereof. Unless the L/C Issuer has received written notice
from any Lender, the Administrative Agent or the Borrower, at least one Business
Day prior to the requested date of issuance or amendment of the applicable
Letter of Credit, that one or more applicable conditions contained in Subsection
4.02 shall not then be satisfied, then, subject to the terms and conditions
hereof,

 

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the L/C Issuer shall, on the requested date, issue a Letter of Credit for the
account of the Borrower (or the applicable Subsidiary) or enter into the
applicable amendment, as the case may be, in each case in accordance with the
L/C Issuer’s usual and customary business practices. Immediately upon the
issuance of each Letter of Credit, each Lender shall be deemed to, and hereby
irrevocably and unconditionally agrees to, purchase from the L/C Issuer a risk
participation in such Letter of Credit in an amount equal to the product of such
Lender’s Pro Rata Share times the amount of such Letter of Credit.

(iii) If the Borrower so requests in any applicable Letter of Credit
Application, the L/C Issuer may, in its sole and absolute discretion, agree to
issue a Letter of Credit that has automatic extension provisions (each, an
“Auto-Extension Letter of Credit”); provided that any such Auto-Extension Letter
of Credit must permit the L/C Issuer to prevent any such extension at least once
in each twelve-month period (commencing with the date of issuance of such Letter
of Credit) by giving prior notice (a “Non-Extension Notice”) to the Borrower and
to the beneficiary thereof not later than a day (the “Non-Extension Notice
Date”) in each such twelve-month period to be agreed upon at the time such
Letter of Credit is issued (which day to be agreed shall be at least 90 days
prior to the date on which such Auto-Extension Letter of Credit would expire if
a Non-Extension Notice with respect to such Auto-Extension Letter of Credit were
to be delivered, or such other day as shall be mutually agreed upon between the
Borrower and the L/C Issuer.) Unless otherwise directed by the L/C Issuer, the
Borrower shall not be required to make a specific request to the L/C Issuer for
any such extension. Once an Auto-Extension Letter of Credit has been issued, the
Lenders shall be deemed to have authorized (but may not require) the L/C Issuer
to permit the extension of such Letter of Credit at any time to an expiry date
not later than the Letter of Credit Expiration Date; provided, however, that the
L/C Issuer shall not deliver a Non-Extension Notice for such Auto-Extension
Letter of Credit on or prior to the applicable Non-Extension Notice Date if
(A) the L/C Issuer has determined that it would not be permitted, or would have
no obligation, at such time to issue such Letter of Credit in its revised form
(as extended) under the terms hereof (by reason of the provisions of clause
(ii) or (iii) of Subsection 2.13(a) or otherwise), or (B) it has received notice
(which may be by telephone or in writing) on or before the day that is five
Business Days before such Non-Extension Notice Date (1) from the Administrative
Agent that the Required Lenders have elected not to permit such extension or
(2) from the Administrative Agent, any Lender or the Borrower that one or more
of the applicable conditions specified in Subsection 4.02 is not then satisfied,
and in each such case directing the L/C Issuer not to permit such extension.

(iv) Promptly after its delivery of any Letter of Credit or any amendment to a
Letter of Credit to an advising bank with respect thereto or to the beneficiary
thereof, the L/C Issuer will also deliver to the Borrower and the Administrative
Agent a true and complete copy of such Letter of Credit or amendment.

(c) Drawings and Reimbursements; Funding of Participations. (i) Upon receipt
from the beneficiary of any Letter of Credit of any notice of a drawing under
such Letter of Credit, the L/C Issuer shall notify the Borrower and the
Administrative Agent thereof. Not later than 5:00 p.m. on the date of any
payment by the L/C Issuer under a Letter of Credit (each such date, an “Honor
Date”), the Borrower shall reimburse the L/C Issuer through the Administrative
Agent in an amount equal to the amount of such drawing. If the Borrower fails to
so reimburse the L/C Issuer by such time, the Administrative Agent shall
promptly notify each Lender of the Honor Date, the amount of the unreimbursed
drawing (the “Unreimbursed Amount”), and the amount of such Lender’s Pro Rata
Share thereof. In such event, the Borrower shall be deemed to have requested to
refinance such Unreimbursed Amount with the proceeds of a Borrowing of Base Rate
Loans to be disbursed on the Honor Date in an amount equal to the Unreimbursed
Amount, without regard to the minimum and multiples specified in Subsection 2.02
for the principal amount of Base Rate Loans, but subject to the amount of the
unutilized portion of the Aggregate Commitments and the conditions set forth in
Subsection 4.02 (other than the delivery of a Loan Notice).

 

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Any notice given by the L/C Issuer or the Administrative Agent pursuant to this
Subsection 2.13(c)(i) may be given by telephone if immediately confirmed in
writing; provided that the lack of such an immediate confirmation shall not
affect the conclusiveness or binding effect of such notice.

(ii) Each Lender shall upon any notice pursuant to Subsection 2.13(c)(i) make
funds available to the Administrative Agent for the account of the L/C Issuer at
the Administrative Agent’s Office in an amount equal to its Pro Rata Share of
the Unreimbursed Amount not later than 1:00 p.m. on the Business Day specified
in such notice by the Administrative Agent, whereupon, subject to the provisions
of Subsection 2.13(c)(iii), each Lender that so makes funds available shall be
deemed to have made a Base Rate Loan to the Borrower in such amount. The
Administrative Agent shall remit the funds so received to the L/C Issuer.

(iii) With respect to any Unreimbursed Amount that is not fully refinanced by a
Borrowing of Base Rate Loans because the conditions set forth in Subsection 4.02
cannot be satisfied or for any other reason, the Borrower shall be deemed to
have incurred from the L/C Issuer an L/C Borrowing in the amount of the
Unreimbursed Amount that is not so refinanced, which L/C Borrowing shall be due
and payable on demand (together with interest) and shall bear interest at the
Default Rate. In such event, each Lender’s payment to the Administrative Agent
for the account of the L/C Issuer pursuant to Subsection 2.13(c)(ii) shall be
deemed payment in respect of its participation in such L/C Borrowing and shall
constitute an L/C Advance from such Lender in satisfaction of its participation
obligation under this Subsection 2.13.

(iv) Until each Lender funds its Loan or L/C Advance pursuant to this Subsection
2.13(c) to reimburse the L/C Issuer for any amount drawn under any Letter of
Credit, interest in respect of such Lender’s Pro Rata Share of such amount shall
be solely for the account of the L/C Issuer.

(v) Each Lender’s obligation to make Loans or L/C Advances to reimburse the L/C
Issuer for amounts drawn under Letters of Credit, as contemplated by this
Subsection 2.13(c), shall be absolute and unconditional and shall not be
affected by any circumstance, including (A) any setoff, counterclaim,
recoupment, defense or other right which such Lender may have against the L/C
Issuer, the Borrower or any other Person for any reason whatsoever; (B) the
occurrence or continuance of a Default, or (C) any other occurrence, event or
condition, whether or not similar to any of the foregoing; provided, however,
that each Lender’s obligation to make Loans pursuant to this Subsection 2.13(c)
is subject to the conditions set forth in Subsection 4.02 (other than delivery
by the Borrower of a Loan Notice). No such making of an L/C Advance shall
relieve or otherwise impair the obligation of the Borrower to reimburse the L/C
Issuer for the amount of any payment made by the L/C Issuer under any Letter of
Credit, together with interest as provided herein.

(vi) If any Lender fails to make available to the Administrative Agent for the
account of the L/C Issuer any amount required to be paid by such Lender pursuant
to the foregoing provisions of this Subsection 2.13(c) by the time specified in
Subsection 2.13(c)(ii), the L/C Issuer shall be entitled to recover from such
Lender (acting through the Administrative Agent), on demand, such amount with
interest thereon for the period from the date such payment is required to the
date on which such payment is immediately available to the L/C Issuer at a rate
per annum equal to the greater of the Federal Funds Rate and a rate determined
by the L/C Issuer in accordance with banking industry rules on interbank
compensation. A certificate of the L/C Issuer submitted to any Lender (through
the Administrative Agent) with respect to any amounts owing under this clause
(vi) shall be conclusive absent manifest error.

(d) Repayment of Participations. (i) At any time after the L/C Issuer has made a
payment under any Letter of Credit and has received from any Lender such
Lender’s L/C Advance in respect of such payment in accordance with Subsection
2.13(c), if the Administrative Agent receives for the account

 

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of the L/C Issuer any payment in respect of the related Unreimbursed Amount or
interest thereon (whether directly from the Borrower or otherwise, including
proceeds of Cash Collateral applied thereto by the Administrative Agent), the
Administrative Agent will distribute to such Lender its Pro Rata Share thereof
(appropriately adjusted, in the case of interest payments, to reflect the period
of time during which such Lender’s L/C Advance was outstanding) in the same
funds as those received by the Administrative Agent.

(ii) If any payment received by the Administrative Agent for the account of the
L/C Issuer pursuant to Subsection 2.13(c)(i) is required to be returned under
any of the circumstances described in Subsection 10.06 (including pursuant to
any settlement entered into by the L/C Issuer in its discretion), each Lender
shall pay to the Administrative Agent for the account of the L/C Issuer its Pro
Rata Share thereof on demand of the Administrative Agent, plus interest thereon
from the date of such demand to the date such amount is returned by such Lender,
at a rate per annum equal to the Federal Funds Rate from time to time in effect.
The obligations of the Lenders under this clause shall survive the payment in
full of the Obligations and the termination of this Agreement.

(e) Obligations Absolute. The obligation of the Borrower to reimburse the L/C
Issuer for each drawing under each Letter of Credit and to repay each L/C
Borrowing shall be absolute, unconditional and irrevocable, and shall be paid
strictly in accordance with the terms of this Agreement under all circumstances,
including the following: (i) any lack of validity or enforceability of such
Letter of Credit, this Agreement, or any other Loan Document; (ii) the existence
of any claim, counterclaim, setoff, defense or other right that the Borrower or
any Subsidiary may have at any time against any beneficiary or any transferee of
such Letter of Credit (or any Person for whom any such beneficiary or any such
transferee may be acting), the L/C Issuer or any other Person, whether in
connection with this Agreement, the transactions contemplated hereby or by such
Letter of Credit or any agreement or instrument relating thereto, or any
unrelated transaction; (iii) any draft, demand, certificate or other document
presented under such Letter of Credit proving to be forged, fraudulent, invalid
or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect; or any loss or delay in the transmission or otherwise
of any document required in order to make a drawing under such Letter of Credit;
(iv) any payment by the L/C Issuer under such Letter of Credit against
presentation of a draft or certificate that does not strictly comply with the
terms of such Letter of Credit; or any payment made by the L/C Issuer under such
Letter of Credit to any Person purporting to be a trustee in bankruptcy,
debtor-in-possession, assignee for the benefit of creditors, liquidator,
receiver or other representative of or successor to any beneficiary or any
transferee of such Letter of Credit, including any arising in connection with
any proceeding under any Debtor Relief Law; or (v) any other circumstance or
happening whatsoever, whether or not similar to any of the foregoing, including
any other circumstance that might otherwise constitute a defense available to,
or a discharge of, the Borrower or any Subsidiary.

(f) Role of L/C Issuer. Each Lender and the Borrower agree that, in paying any
drawing under a Letter of Credit, the L/C Issuer shall not have any
responsibility to obtain any document (other than any sight draft, certificates
and documents expressly required by the Letter of Credit) or to ascertain or
inquire as to the validity or accuracy of any such document or the authority of
the Person executing or delivering any such document. None of the L/C Issuer,
the Administrative Agent, any of their respective Related Parties nor any
correspondent, participant or assignee of the L/C Issuer shall be liable to any
Lender for (i) any action taken or omitted in connection herewith at the request
or with the approval of the Lenders or the Required Lenders, as applicable;
(ii) any action taken or omitted in the absence of gross negligence or willful
misconduct; or (iii) the due execution, effectiveness, validity or
enforceability of any document or instrument related to any Letter of Credit or
Issuer Document. The Borrower hereby assumes all risks of the acts or omissions
of any beneficiary or transferee with respect to its use of any Letter of
Credit; provided, however, that this assumption is not intended to, and shall
not, preclude the

 

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Borrower’s pursuing such rights and remedies as it may have against the
beneficiary or transferee at law or under any other agreement. None of the L/C
Issuer, the Administrative Agent, any of their respective Related Parties nor
any correspondent, participant or assignee of the L/C Issuer shall be liable or
responsible for any of the matters described in clauses (i) through (v) of
Subsection 2.13(e); provided, however, that anything in such clauses to the
contrary notwithstanding, the Borrower may have a claim against the L/C Issuer,
and the L/C Issuer may be liable to the Borrower, to the extent, but only to the
extent, of any direct, as opposed to consequential or exemplary, damages
suffered by the Borrower which the Borrower proves were caused by the L/C
Issuer’s willful misconduct or gross negligence or the L/C Issuer’s willful
failure to pay under any Letter of Credit after the presentation to it by the
beneficiary of a sight draft and certificate(s) strictly complying with the
terms and conditions of a Letter of Credit. In furtherance and not in limitation
of the foregoing, the L/C Issuer may accept documents that appear on their face
to be in order, without responsibility for further investigation, regardless of
any notice or information to the contrary, and the L/C Issuer shall not be
responsible for the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign a Letter of Credit or the rights
or benefits thereunder or proceeds thereof, in whole or in part, which may prove
to be invalid or ineffective for any reason.

(g) Cash Collateral. Upon the request of the Administrative Agent, (i) if the
L/C Issuer has honored any full or partial drawing request under any Letter of
Credit and such drawing has resulted in an L/C Borrowing, the Borrower shall
immediately Cash Collateralize the aggregate amount of such L/C Obligation, or
(ii) if, as of the Letter of Credit Expiration Date, any L/C Obligation for any
reason remains outstanding, the Borrower shall immediately Cash Collateralize
the aggregate amount of all L/C Obligations then outstanding. Subsection 8.02
sets forth certain additional requirements to deliver Cash Collateral hereunder.
For purposes of this Subsection 2.13, and Subsection 8.02(c), “Cash
Collateralize” means to pledge and deposit with or deliver to the Administrative
Agent, for the benefit of the L/C Issuer and the Lenders, as collateral for the
L/C Obligations, cash or deposit account balances pursuant to documentation in
form and substance satisfactory to the Administrative Agent and the L/C Issuer
(which documents are hereby consented to by the Lenders). Derivatives of such
term have corresponding meanings. The Borrower hereby grants to the
Administrative Agent, for the benefit of the L/C Issuer and the Lenders, a
security interest in all such cash, deposit accounts and all balances therein
and all proceeds of the foregoing. Cash Collateral shall be maintained in
blocked deposit accounts at Bank of America. Amounts on deposit in any such
accounts shall be invested in short-term investments selected by the
Administrative Agent in consultation with the Borrower.

(h) Applicability of ISP. Unless otherwise expressly agreed by the L/C Issuer
and the Borrower when a Letter of Credit is issued, the rules of the ISP shall
apply to each standby Letter of Credit.

(i) Letter of Credit Fees. The Borrower shall pay to the Administrative Agent
for the account of each Lender in accordance with its Pro Rata Share a Letter of
Credit fee (the “Letter of Credit Fee”) for each Letter of Credit equal to the
Applicable Margin for Eurodollar Rate Loans times the daily amount available to
be drawn under such Letter of Credit. For purposes of computing the daily amount
available to be drawn under any Letter of Credit, the amount of such Letter of
Credit shall be determined in accordance with Subsection 2.13(k). Letter of
Credit Fees shall be (i) computed on a quarterly basis in arrears and (ii) due
and payable on the last Business Day of each March, June, September and
December, commencing with the first such date to occur after the issuance of
such Letter of Credit, on the Letter of Credit Expiration Date and thereafter on
demand. If there is any change in the Applicable Margin for Eurodollar Rate
Loans during any quarter, the daily amount available to be drawn under each
Letter of Credit shall be computed and multiplied by the Applicable Margin for
Eurodollar Rate Loans separately for each period during such quarter that such
Applicable Margin for Eurodollar Rate Loans was in effect. Notwithstanding
anything to the contrary contained herein, upon the request of the Required
Lenders, while any Event of Default exists, all Letter of Credit Fees shall
accrue at the Default Rate.

 

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(j) Fronting Fee and Documentary and Processing Charges Payable to L/C Issuer.
The Borrower shall pay directly to the L/C Issuer for its own account a fronting
fee at a rate equal to 0.125% per annum, computed on the daily amount available
to be drawn under each Letter of Credit on a quarterly basis in arrears. Such
fronting fee shall be due and payable on the last Business Day of each March,
June, September and December in respect of the most recently-ended quarterly
period (or portion thereof, in the case of the first payment), commencing with
the first such date to occur after the issuance of such Letter of Credit, on the
Letter of Credit Expiration Date and thereafter on demand. For purposes of
computing the daily amount available to be drawn under any Letter of Credit, the
amount of such Letter of Credit shall be determined in accordance with
Subsection 2.13(k). In addition, the Borrower shall pay directly to the L/C
Issuer for its own account such fees of the L/C Issuer relating to letters of
credit and such other costs and charges as are separately agreed between the
Borrower and the L/C Issuer. Such fees and other costs and charges are due and
payable on demand and are nonrefundable.

(k) Letter of Credit Amount, Conflict with Issuer Documents. Unless otherwise
specified herein, the amount of a Letter of Credit at any time shall be deemed
to be the stated amount of such Letter of Credit in effect at such time;
provided, however, that with respect to any Letter of Credit that, by its terms
or the terms of any Issuer Document related thereto, provides for one or more
automatic increases in the stated amount thereof, the amount of such Letter of
Credit shall be deemed to be the maximum stated amount of such Letter of Credit
after giving effect to all such increases, whether or not such maximum stated
amount is in effect at such time. In the event of any conflict between the terms
hereof and the terms of any Issuer Document, the terms hereof shall control.

(l) Letters of Credit Issued for Subsidiaries. Notwithstanding that a Letter of
Credit issued or outstanding hereunder is in support of any obligations of, or
is for the account of, a Subsidiary, the Borrower shall be obligated to
reimburse the L/C Issuer hereunder for any and all drawings under such Letter of
Credit. The Borrower hereby acknowledges that the issuance of Letters of Credit
for the account of Subsidiaries inures to the benefit of the Borrower, and that
the Borrower’s business derives substantial benefits from the businesses of such
Subsidiaries.

ARTICLE III.

TAXES, YIELD PROTECTION AND ILLEGALITY

3.01 Taxes.

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

 

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

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

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

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

3.02 Illegality. If any Lender determines that any applicable Law has made it
unlawful, or that any Governmental Authority of competent jurisdiction has
asserted that it is unlawful, for any Lender or its applicable Lending Office to
make, maintain or fund Eurodollar Rate Loans, or to determine or charge interest
rates based upon the Eurodollar Rate, then, on notice thereof by such Lender to
the

 

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

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

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

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

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

 

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

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

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

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

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

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

3.06 Matters Applicable to all Requests for Compensation.

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

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

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

 

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

ARTICLE IV.

CONDITIONS PRECEDENT

4.01 Conditions of Effectiveness. The effectiveness of this Agreement is subject
to the satisfaction (or waiver) of the conditions precedent set forth in
Section 5 of Amendment No. 6.

4.02 Conditions of Each Borrowing. The obligation of each Lender to make its Pro
Rata Share of each Borrowing hereunder and the obligation of the Issuing Bank to
issue or extend any Letter of Credit are each subject to the satisfaction of the
following conditions precedent:

(a) The Administrative Agent shall have received a Loan Notice from the Borrower
appropriately completed and signed by a Senior Officer of the Borrower.

(b) The representations and warranties of the Borrower contained in this
Agreement and in each of the other Loan Documents in effect as of such
Borrowing, issuance or extension shall be true and correct in all material
respects on and as of the date of such Borrowing, issuance or extension, except
to the extent that such representations and warranties specifically refer to an
earlier date, in which case they shall be true and correct in all material
respects as of such earlier date.

(c) No Default shall exist immediately prior to, or would occur immediately
upon, such Borrowing or such issuance or extension (as the case may be).

(d) PMI Insurance shall, on and as of the date of such Borrowing, issuance or
extension, be a GSE Authorized mortgage insurer. “GSE Authorized,” as of any
date of determination, shall mean that on such date (i) PMI Insurance remains an
eligible mortgage insurer as determined by each of Fannie Mae and Freddie Mac
and (ii) PMI is not subject to any Significant Eligibility Limitations.
“Significant Eligibility Limitations” means limitations that were not in effect
on the Amendment No. 1 Effective Date with respect to the eligibility of
mortgages insured by PMI Insurance for purchase by Fannie Mae and Freddie Mac
that, if they had been in effect continuously during the calendar year
immediately preceding such date of determination, would have reduced new
insurance written by PMI Insurance for such calendar year by more than 15% of
the new insurance that was actually written during such immediately preceding
calendar year.

(e) No QBE Adjustment Period shall then be in effect.

(f) The Borrower shall have delivered to the Administrative Agent for
distribution to each Lender true and correct written calculations signed by a
Senior Officer of the Borrower demonstrating in reasonable detail that after
giving effect to such Borrowing, issuance or extension the Principal Debt
outstanding will not exceed 80% of the QBE Note Amount in effect at such time.

(g) The Borrower shall have delivered to the Administrative Agent for
distribution to each Lender true and correct written calculations setting forth
in reasonable detail compliance with each of the financial covenants set forth
in Section 7.06 of this Agreement as of the close of the most recently completed
fiscal quarter of the Borrower for which financial statements are required to
have been delivered on or prior to such date in accordance with Section 6.01 of
this Agreement. Nothing in this Section 4.02(g) or in the calculations of such
financial covenants, including the calculations required to be made in the Loan
Notice, shall be construed to modify or limit the condition required to be
satisfied as set forth in any other subparagraph of this Section 4.02 or the
representation required to be made in the Loan Notice, in each case that,
without qualification, no Default exists.

 

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(h) PMI Insurance shall, on and as of the date of such Borrowing, issuance or
extension, not be prohibited from writing new mortgage insurance by any state or
states of the United States (“States”), except for any such prohibitions as may
be applicable in States that in the aggregate represented 15% or less of the
aggregate total risk in force of PMI Insurance for all States as of the last day
of the immediately preceding calendar year.

ARTICLE V.

REPRESENTATIONS AND WARRANTIES

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

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

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

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

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

 

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5.05 Financial Statements.

(a) The Borrower has delivered to the Administrative Agent for delivery to the
Lenders true and complete copies of (i) the audited consolidated balance sheets
of the Borrower for the fiscal years ended December 31, 2003, 2004 and 2005 and
the related audited consolidated statements of income for the fiscal years then
ended and (B) the unaudited consolidated balance sheets of the Borrower as of
March 31 and June 30, 2006, and the related unaudited consolidated statements of
income for the three and six month periods then ended, together with all
accompanying notes and schedules thereto, if any (collectively, the “Financial
Statements”). The balance sheets and statements of income included in the
Financial Statements have been prepared in accordance with GAAP consistently
applied during the periods involved and fairly present in accordance with GAAP,
in all material respects, the consolidated financial position and the results of
operations of the Borrower as of the dates and for the periods presented therein
(subject, in the case of interim period financial statements, to normal year-end
adjustments, none of which, on the date hereof, are expected to be material, and
subject, in the case of unaudited financial statements, to the absence of
footnotes).

(b) [intentionally omitted]

5.06 Litigation. Except as set forth in the Borrower’s Annual Report on Form 10K
for the fiscal year ended December 31, 2005, there are no actions, suits,
proceedings, claims or disputes pending or, to the knowledge of the Borrower,
threatened or contemplated, before any Governmental Authority of competent
jurisdiction, by or against the Borrower or any Material Subsidiary or against
any of their properties or revenues that (a) purport to affect or pertain to
this Agreement or any other Loan Document, or any of the transactions
contemplated hereby or (b) are reasonably likely to be adversely determined and,
if so adversely determined, would reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect except to the extent such
representation and warranty would not be true and correct solely as result of
any action, suit, proceeding, claim or dispute (A) brought by a shareholder of
the Borrower (either in its capacity as a shareholder or as part of a class or
derivative action) against the Borrower, (B) brought against the Borrower with
respect to its 401(k) plan or (C) brought against one or more FGIC Companies,
the Borrower in its capacity as a shareholder of, or related to its
shareholdings in, FGIC Corporation or any of the officers and directors of one
or more FGIC Companies, so long as, in the case of each of clauses (A), (B) and
(C), there are no judgments or settlements against the Borrower or any of its
Subsidiaries that, individually or in the aggregate, exceed or would exceed the
Threshold Amount under Section 8.01(g) of this Agreement or would constitute an
Event of Default under Section 8.01(h) of this Agreement.

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

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

 

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

5.10 Margin Regulations; Investment Company Act.

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

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

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

5.12 Solvency. PMI Insurance is Solvent.

5.13 Compliance with Insurance Law Requirements. PMI Insurance is not prohibited
from writing new mortgage insurance by any of the States, except for any such
prohibitions as may be applicable in States that in the aggregate represented
15% or less of the aggregate total risk in force of PMI Insurance for all States
as of the last day of the immediately preceding calendar year.

ARTICLE VI.

AFFIRMATIVE COVENANTS

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

6.01 Financial Statements. Deliver to the Administrative Agent for distribution
to each Lender:

(a) as soon as available, but in any event within 105 days after the end of each
fiscal year of the Borrower, a consolidated balance sheet of the Borrower and
its consolidated Subsidiaries as at the end of such fiscal year, and the related
consolidated statements of income or operations, shareholders’ equity and cash
flows for such fiscal year, setting forth in each case in comparative form the
figures for the previous fiscal year, all in reasonable detail and prepared in
accordance with GAAP (each such set of financial statements, “Annual Financial
Statements”), audited and accompanied by (i) a report of Ernst & Young LLP or of
other independent certified public accountants of nationally recognized standing
reasonably acceptable to the Administrative Agent (each such report, an “Audit
Report”), which Audit Report shall be prepared in accordance with generally
accepted auditing standards; provided that the

 

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foregoing requirement shall be deemed to be satisfied for any fiscal year for
which the Borrower shall have filed a Form 10-K under the Exchange Act for such
year within 105 days of the end thereof, so long as such Form 10-K contains
Annual Financial Statements for such fiscal year and an Audit Report that in
each case satisfy the requirements set forth in this subsection (a); and (ii) an
opinion of such accounting firm independently assessing the Borrower’s internal
controls over financial reporting in accordance with Item 308 of SEC Regulation
S-K, PCAOB Auditing Standard No. 2 and Section 404 of Sarbanes-Oxley, expressing
a conclusion that does not contain a statement that there is a material weakness
in such internal controls, except for such material weaknesses as to which the
Required Lenders do not object;

(b) as soon as available, but in any event within 60 days after the end of each
of the first three fiscal quarters of each fiscal year of the Borrower, a
consolidated balance sheet of the Borrower and its consolidated Subsidiaries as
at the end of such fiscal quarter, and the related consolidated statements of
income or operations, shareholders’ equity and cash flows for such fiscal
quarter and for the portion of the Borrower’s fiscal year then ended, setting
forth in each case in comparative form the figures for the corresponding fiscal
quarter of the previous fiscal year and the corresponding portion of the
previous fiscal year, all in reasonable detail and certified by a Responsible
Officer of the Borrower as fairly presenting in all material respects the
financial condition, results of operations, shareholders’ equity and cash flows
of the Borrower and its Subsidiaries in accordance with GAAP, subject only to
normal year-end audit adjustments and the absence of footnotes; provided that
the foregoing requirement, solely with respect to the delivery of financial
statements and not with respect to the delivery of the certification of a
Responsible Officer, shall be deemed to be satisfied for any fiscal quarter for
which the Borrower shall have filed a Form 10-Q under the Exchange Act for such
year within 60 days of the end thereof, so long as such Form 10-Q contains
financial statements for such fiscal quarter that satisfy the requirements set
forth in this subsection (b);

(c) as soon as available, but in any event within 170 days after the end of each
fiscal year of each Material Insurance Subsidiary that is organized under the
laws of, and regulated by, the United States or any State thereof, a copy of the
annual statutory statement of such Material Insurance Subsidiary prepared in
accordance with SAP and as filed with the Department (if any), audited and
accompanied by a report of an independent certified public accountant of
nationally recognized standing reasonably acceptable to the Administrative
Agent, which report shall be prepared in accordance with statutory accounting
standards;

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

(e) not more than fifteen (15) days following the filing of each 10-Q and 10-K
by the Borrower with the SEC, deliver to the Administrative Agent for
distribution to each Lender consolidated balance sheet projections and
consolidated income statement projections for the Borrower and its consolidated
Subsidiaries (each set of projections, together with the Initial Forecasts,
being collectively referred to as the “Forecasts”) (i) as of the end of and for
such fiscal quarter and for each fiscal quarter ending thereafter through the
end of each such fiscal year of the Borrower and (ii) on an annual basis for the
next fiscal year of the Borrower (including in reasonable detail, the rationale
and assumptions used in determining such projected consolidated financial
statements), certified by a Senior Officer of the Borrower as having been
prepared in accordance with GAAP consistently applied and in good faith based on
assumptions that the Borrower believes to be reasonable as of the date of such
projected consolidated

 

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financial statements; provided, that upon the occurrence and during the
continuance of an Event of Default, such projected consolidated financial
statements shall be required to be delivered at such more frequent intervals as
requested by the Administrative Agent (but in no event more frequently than
monthly);

(f) not more than fifteen (15) days following the filing of each 10-Q and 10-K
by the Borrower with the SEC, deliver to the Administrative Agent for
distribution to each Lender a monitoring report for the most recently completed
fiscal quarter of the Borrower in the form attached as Exhibit F hereto;

(g) in the case of (i) the Forecasts delivered pursuant to Section 6.01(e)(i)
for each of the 2008 and 2009 fiscal years of the Borrower, such Forecasts shall
include, in comparative form, the figures derived from the most recent audited
annual financial statements delivered pursuant to Section 6.01(a) and (ii) the
Forecasts delivered pursuant to Section 6.01(e)(ii) for each fiscal quarter
ending during the 2008 and 2009 fiscal years of the Borrower, such Forecasts
shall include, in comparative form, the figures derived from the most recent
quarterly financial statements delivered pursuant to Section 6.01(b), in each
case certified by a Senior Officer of the Borrower;

(h) Within 120 days after the end of each Quarterly Period, beginning with the
Quarterly Period ending June 30, 2009, through and including the Quarterly
Period ending June 30, 2011, the Borrower shall deliver to the Administrative
Agent an updated actuarial report prepared by Milliman, Inc. or another
nationally recognized actuarial organization reasonably satisfactory to the
Administrative Agent (Milliman, Inc. and any such other actuarial organization
referred to herein as an “Appointed Actuary”) and upon which the Administrative
Agent and the Lenders are entitled to rely, which report shall update the
Milliman Report in all respects affecting the determination of the QBE Note
Amount (each such report referred to herein as an “Updating Report”);

(i) On or prior to May 31, 2009, the Borrower shall deliver to the
Administrative Agent an Updating Report for the six month period ended
December 31, 2008 prepared by an Appointed Actuary; and

(j) The Borrower shall use commercially reasonable efforts (i) to cause the
Updating Report for any given Quarterly Period to be delivered by the Borrower
to the Administrative Agent within 60 days after receipt by the Borrower of the
information from QBE Holdings (APP) PTY Limited required for the Appointed
Actuary to update the Milliman Report for the Quarterly Period covered by such
Updating Report and (ii) to cause the Updating Report for any given Quarterly
Period to be delivered by the Borrower to the Administrative Agent within 90
days of the end of such Quarterly Period.

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

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

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

 

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(c) the following certificates and other information:

(i) to the extent permitted by law, rule or regulations, not later than 15 days
after received, a copy of any material financial examination reports or material
market conduct examination reports by any Supervisory Authority with respect to
any Material Insurance Subsidiary of the Borrower, or the Borrower should it at
any time engage or become involved in the business of insurance, relating to the
insurance business of such Material Insurance Subsidiary or, if applicable, the
Borrower (when, and if, prepared);

(ii) within two Business Days of the receipt of official written notice, a copy
of any notice from any Supervisory Authority notifying the Borrower or any of
its Material Insurance Subsidiaries of (i) an “impairment” (as defined in
Section 20-611 of the Arizona Revised Statutes) or an order to cease and desist
or (ii) the actual suspension, termination or revocation of any material license
of the Borrower or any of its Material Insurance Subsidiaries by any Supervisory
Authority or (iii) a hearing relating to such a suspension, termination or
revocation, including any request by any such Supervisory Authority which
commits the Borrower or any of its Material Insurance Subsidiaries to take, or
refrain from taking, any action which materially and adversely affects the
authority of the Borrower and any of its Material Subsidiaries to conduct their
business, taken as a whole; and

(iii) to the extent permitted by law, rule or regulations, within two Business
Days of the receipt of official written notice, notice of any material pending
or threatened investigation or regulatory proceeding (other than routine
periodic investigations or reviews) by any Supervisory Authority concerning the
business, practices or operations of the Borrower or any of its Material
Insurance Subsidiaries that would reasonably be expected to have a Material
Adverse Effect;

(d) promptly after the same are available, copies of the following reports and
filings submitted by the Borrower or any of its Material Insurance Subsidiaries
or any Additional Pledged Entity to the Arizona Department of Insurance (and
copies of any comparable reports or filings submitted by the Borrower or any of
its Material Insurance Subsidiaries or any Additional Pledged Entity to any
other applicable Supervisory Authority): (i) quarterly statement filings,
(ii) reports of minimum policyholders position and risk-to-capital ratio,
(iii) Form A - Statement Regarding the Acquisition of Control of, or Merger
with, a Domestic Insurer, (iv) Form B - Insurance Holding Company System, Annual
Registration Statement, (v) Form C - Summary of Registration Statement and
(vi) Form D - Prior Notice of a Transaction;

(e) concurrently with the delivery of each Updating Report pursuant to
Section 6.01(h), a certificate in substantially the form of Exhibit G and signed
by a Senior Officer of the Borrower showing in reasonable detail the QBE Note
Amount as of the last day of the Quarterly Period with respect to which such
Updating Report was delivered; and

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

Documents required to be delivered by the Borrower pursuant to this Agreement
may be delivered electronically and if so delivered, shall be deemed to have
been delivered on the date (i) on which the Borrower posts such documents, or
provides a link thereto on the Borrower’s website on the Internet at
www.pmigroup.com; or (ii) on which such documents are posted on the Borrower’s
behalf on an Internet or intranet website, if any, to which each Lender and the
Administrative Agent have access (whether a commercial, third-party website or
whether sponsored by the Administrative Agent); provided that (i) the Borrower
shall deliver electronic copies of such documents to the Administrative Agent or
any Lender

 

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that requests the Borrower to deliver such electronic copies until a written
request to cease delivering electronic copies is given by the Administrative
Agent or such Lender and (ii) the Borrower shall notify the Administrative Agent
and each Lender (by telecopier or electronic mail) of the posting of any such
documents. Notwithstanding anything contained herein, in every instance the
Borrower shall be required to provide paper copies of the Compliance
Certificates required by Subsection 6.02(a) to the Administrative Agent. Except
for such Compliance Certificates, the Administrative Agent shall have no
obligation to request the delivery or to maintain copies of the documents
referred to above, and in any event shall have no responsibility to monitor
compliance by the Borrower with any such request for delivery, and each Lender
shall be solely responsible for requesting delivery to it or maintaining its
copies of such documents.

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

6.03 Notices. Promptly (but in any event no later than 3 days after the
occurrence of any of the following) notify the Administrative Agent:

(a) of the occurrence of any Default;

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

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

(d) of any change to the Derivatives Use Plan;

(e) of the occurrence of any Material Insurance Subsidiary becoming subject to
any directive or agreement with the state regulator having primary jurisdiction
over such Material Insurance Subsidiary (the “Primary Regulator”) requiring such
Material Insurance

 

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Subsidiary to (i) provide more extensive reporting than that required as of the
Amendment No. 1 Effective Date, (ii) make its books and records, premises and
employees generally available to an observer or similar representative appointed
by such Material Insurance Subsidiary’s Primary Regulator (in each case other
than in connection with routine examinations and routine requests for
information) or (iii) restrict the manner in which such Material Insurance
Subsidiary conducts its business as of the Amendment No. 1 Effective Date, in
each case other than routine directives applicable to such Material Insurance
Subsidiary and similarly regulated entities;

(f) of (i) any reduction to the QBE Note Interest (other than by virtue of the
capitalization of any such portion thereof in accordance with the terms of the
QBE Note as in effect on the Restatement Effective Date) or to the QBE Note
Principal, in each case that has occurred pursuant to Section 7 of the QBE Note
or otherwise, and (ii) the receipt by the Borrower or any of its Subsidiaries of
any written notice from any Person to the effect that a reduction to the QBE
Note Interest (other than by virtue of the capitalization of any such portion
thereof in accordance with the terms of the QBE Note as in effect on the
Restatement Effective Date) or to the QBE Note Principal is required or has
occurred pursuant to Section 7 of the QBE Note or otherwise; and

(g) if the Borrower has not received within 30 calendar days of the end of a
given Quarterly Period the material information that the Borrower in good faith
believes is necessary for an Appointed Actuary to prepare the Updating Report
for such Quarterly Period.

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

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

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

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

 

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

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

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

6.10 Use of Proceeds.

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

6.11 PMI Insurance Dividend. Upon the closing of the sale or other disposition
(in one or more transactions) of all of the Capital Stock of CMG Company or PMI
Europe, the Borrower shall (i) use commercially reasonable efforts to cause PMI
Insurance to obtain all consents and approvals from Governmental Authorities
that are necessary to permit PMI Insurance to declare and pay a dividend to the
Borrower in an amount at least equal to the lesser of (x) the Net Asset
Disposition Proceeds resulting from such sale that are paid to PMI Insurance as
a dividend, distribution or otherwise and (y) $25,000,000 and (ii) upon receipt
of all such consents and approvals shall cause PMI Insurance to pay such
dividend.

6.12 Enforcement of Various Agreements. So long as any Event of Default has
occurred and is continuing, exercise, and cause each of its Subsidiaries to
exercise, all of the rights, powers and remedies of each such Person in respect
of the QBE Note, either of the QBE Share Sale Agreements or any of the QBE Note
Purchase Agreements, or any rights or remedies of the Borrower or any of its
Subsidiaries under any of the foregoing as, in the manner and at the times
directed by the Administrative Agent or the Required Lenders.

 

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ARTICLE VII.

NEGATIVE COVENANTS

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

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

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

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

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

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

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

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

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

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

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

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

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

 

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

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

(n) any other Liens; provided that the aggregate principal amount of
Indebtedness or other obligations outstanding at any time secured by such other
Liens does not exceed $5,000,000; and

(o) Liens securing the Obligations.

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

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

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

7.03 Asset Dispositions. Except as otherwise permitted by Section 7.02, sell,
transfer, lease, contribute or otherwise convey, or grant options, warrants or
other rights with respect to any of its assets (including accounts receivable
and capital stock of any of its Material Subsidiaries), or enter into a
reinsurance contract that has the effect of selling, transferring or
contributing all or substantially all of the rights or benefits under its
insurance policies, to any Person who is not a wholly-owned Subsidiary (any of
the foregoing, an “Asset Disposition”); provided, that the Borrower and its
Material Subsidiaries may consummate Asset Dispositions (other than Assets
Dispositions of Collateral) (a) in the ordinary course of their business in an
aggregate amount not to exceed $10,000,000 over the term of this Agreement,
(b) of FGIC Company and Ram Re Company, (c) of Investments permitted pursuant to
Section 7.07 in the ordinary course of their business or (d) other than with
respect to a disposition of FGIC Company or Ram Re Company, to the extent such
Asset Disposition satisfies each of the following conditions: (A) the purchase
price shall be payable by the purchaser at the time of consummation of such
Asset

 

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Disposition and such purchase price shall not be less than the fair market value
(as determined in good faith by the Board of Directors of the Borrower) of the
assets subject to such Asset Disposition, (B) at least 80% of the aggregate
consideration payable by the purchaser in respect such Asset Disposition shall
be in cash and (C) the terms of such Asset Disposition shall otherwise be
arms-length in all respects. For the avoidance of doubt, this Section 7.03 shall
not be applicable to an ISDA credit support annex (or similar document) entered
into as credit support for any Swap Contract permitted under the terms of this
Agreement.

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

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

7.06 Financial Covenants. (a) Adjusted Consolidated Net Worth. Permit Adjusted
Consolidated Net Worth to be less than (i) $1,200,000,000 at any time during the
period from (and including) the Restatement Effective Date through (and
including) June 30, 2009, (ii) $700 million during the period from (and
including) July 1, 2009 through (and including) December 31, 2009, and
(iii) $500 million during the period from (and including) January 1, 2010
through (and including) the Maturity Date.

(b) [Intentionally omitted]

(c) [Intentionally omitted]

7.07 Investments, Loans, Advances, Guarantees and Acquisitions. Purchase, hold
or acquire any Capital Stock in or evidences of Indebtedness or other securities
(including any option, warrant or other right to acquire any of the foregoing)
of, make or permit to exist any loans or advances to, Guarantee any obligations
of, or make or permit to exist any investment in, any other Person, or provide
other credit support for any Person or purchase or otherwise acquire (in one
transaction or a series of transactions) all or a substantial part of the assets
of any Person or all or substantially all of the assets of any Person comprising
a division or business unit of such Person (each of the foregoing, an
“Investment” and collectively, “Investments”), except:

(a) Permitted Investments;

(b) Investments existing on the Amendment No. 1 Effective Date (the “Existing
Investments”), Investments consisting of equity securities of FGIC Company or
RAM Re Company that were owned by the Borrower or any of its Subsidiaries on the
Amendment No. 1 Effective Date (“FGIC/RAM Investments”) and any Investments
received in connection with any recapitalization, merger, dividend or other
similar transaction with respect to any Existing Investment or FGIC/RAM
Investment;

 

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(c) Investments (i) by the Borrower, or any Material Subsidiary in (A) PMI
Insurance or any of its Subsidiaries, provided that the aggregate amount of
Investments made during the term of this Agreement in reliance on this clause
(A) shall not exceed the Allowable Amount, (B) any Additional Pledged Entity,
(C) any of the Borrower’s Subsidiaries not referred to in Section 7.07(c)(i)(A)
in an aggregate amount not to exceed, without duplication, $5 million in any
fiscal year, and (D) any of FGIC Company and Ram Re Company in an aggregate
amount not to exceed, without duplication, $2.5 million over the remaining term
of this Agreement and (ii) by any Material Subsidiary in the Borrower;

(d) Investments received in connection with the bankruptcy or reorganization of,
or settlement of delinquent accounts and other disputes with, customers and
suppliers, in each case in the ordinary course of business;

(e) Investments in prepaid expenses, negotiable instruments held for collection
and lease, utility and workers compensation, performance and similar deposits
entered into as a result of the operations of the business, in each case in the
ordinary course of business;

(f) Investments and reinvestments in portfolio securities in the ordinary course
of business;

(g) sales or other transfers of portfolio assets among the Borrower and its
Subsidiaries in the ordinary course of business;

(h) Investments consisting of non-cash consideration received in connection with
an Asset Disposition permitted under Section 7.03;

(i) other Investments by the Borrower or any of its Material Subsidiaries not
otherwise permitted herein in an aggregate amount for the Borrower and its
Material Subsidiaries not to exceed $5,000,000 in the aggregate on any date;

(j) Investments under Swap Contracts permitted pursuant to Section 7.09;

(k) receivables owing to the Borrower or any of its Material Subsidiaries in
connection with deferred premium obligations or endorsements for collection or
deposit, in each case created or acquired in the ordinary course of business and
payable or dischargeable in accordance with customary terms;

(l) [intentionally omitted];

(m) (i) Investments consisting of, or made pursuant to, capital support or other
similar keep-well agreements, or Guarantees thereof, Guarantees by the Borrower
or any Material Subsidiary that constitute insurance contracts, or Guarantees of
insurance products written by, or the performance of, any Insurance Subsidiary
of the Borrower, in each case in the ordinary course of business consistent with
business practices in effect on the Amendment No. 1 Effective Date of the
Borrower and its Material Subsidiaries taken as a whole, and (ii) Investments
consisting of Guarantees furnished by (A) PMI Insurance or any of PMI
Insurance’s Subsidiaries of obligations of PMI Insurance or any of PMI
Insurance’s Subsidiaries, (B) the Borrower of obligations of any of the
Borrower’s Subsidiaries or (C) a Material Subsidiary of obligations of the
Borrower or any of the Borrower’s Subsidiaries; provided, that
(x) notwithstanding the foregoing, no Additional Pledged Entity shall be
entitled to provide a Guaranty in reliance on clause (ii) above, (y) with
respect to Guarantees furnished in reliance on clause (ii)(B) above, the
aggregate amount of underlying obligations that may be covered by all such
Guarantees may not at any time exceed $5,000,000 and (z) with respect to
Guarantees furnished in reliance on clause (ii)(C)

 

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above, the aggregate amount of underlying obligations that may be covered by all
such Guarantees may not at any time exceed $5,000,000 unless and until each such
Person that has furnished a Guaranty in reliance on such clause provides a
Guaranty of the Obligations in form and substance reasonably satisfactory to the
Administrative Agent.;

(n) Investments by a Material Insurance Subsidiary in all cases of the types and
in the amounts (i) that constitute “Admitted Assets” (or the substantive
equivalent thereof under the laws of the relevant jurisdiction) as determined by
such Material Insurance Subsidiary’s Primary Regulator, (ii) in the case of
jurisdictions outside the United States, assets that are permissible investments
for such Material Insurance Subsidiary pursuant to the regulatory regime
administered by the Primary Regulator and (iii) that at the time such investment
was made constituted “Admitted Assets” (or the substantive equivalent thereof
under the laws of the relevant jurisdiction) as determined by such Material
Insurance Subsidiary’s Primary Regulator at such time, but no longer constitute
“Admitted Assets” (or the substantive equivalent thereof under the laws of the
relevant jurisdiction), provided that the aggregate value of Investments
permitted to be outstanding at any one time in reliance on this clause (n)(iii)
shall not exceed an amount equal to ten percent (10%) of the aggregate total
fair market value of all “Admitted Assets” (or the substantive equivalent
thereof under the laws of the relevant jurisdiction) as determined by such
Material Insurance Subsidiary’s Primary Regulator, in each case measured as of
the most recently completed fiscal quarter for which financial statements
prepared in accordance with statutory accounting standards are available; and

(o) Investments constituting Permitted Acquisitions.

Notwithstanding anything to the contrary contained in this Section 7.07 or
elsewhere, the Borrower shall not (i) make any Investment in any Subsidiary of
the Borrower unless (A) the Borrower is Solvent immediately prior, and after
giving effect, to such Investment, or (B) each Subsidiary into which such
Investment is made is Solvent immediately prior to such Investment or such
Investment is a Specified Investment, or (ii) make any Prepayments except
Permitted Prepayments. For the avoidance of doubt, the sale of the QBE Note by
PMI Insurance to the Borrower pursuant to the QBE Note Purchase Agreements or
any amounts paid pursuant thereto shall not be deemed to be an “Investment” for
any purpose of this Agreement. “Prepayments” means payments of principal or
interest, redemptions, defeasance, acquisition or retirement for value of, on or
with respect to the Senior Notes, the Junior Notes, or any other Indebtedness of
Borrower or of any Subsidiary prior to the date required thereunder in
accordance with the contractual terms governing such obligations as in effect
(x) on the Restatement Effective Date (in the case of obligations existing on
the Restatement Effective Date) or (y) on the date such obligations are incurred
(in the case of obligations incurred after the Restatement Effective Date).
“Permitted Prepayments” means Prepayments (1) on account of the Obligations,
(2) on account of any Indebtedness of a Subsidiary of Borrower that is owed to
and held by the Borrower, or (3) are, but for this clause (3), otherwise
prohibited by this Agreement but that do not in the aggregate after the
Restatement Effective Date exceed $1.5 million.

7.08 Restricted Payments. Declare or make, or agree to pay or make, directly or
indirectly, any Restricted Payment, or incur any obligation (contingent or
otherwise) to do so, except (a) any Material Subsidiary of the Borrower may
declare and pay dividends or otherwise make any Restricted Payment to the
Borrower and ratably to any other holders of such Material Subsidiary’s Capital
Stock, (b) so long as no Default or Event of Default has occurred and is
continuing, the Borrower may declare and pay dividends to the holders of its
common Capital Stock in an amount not to exceed $0.01 per share of such common
Capital Stock in each fiscal year of the Borrower, excluding dividends declared
and paid prior to the Restatement Effective Date; provided, that the aggregate
amount of dividends paid with respect to such common Capital Stock shall not
exceed $5,000,000 in any fiscal year of the Borrower, (c) the Borrower may
declare and pay dividends to the holders of its Hybrid Securities and of any
preferred

 

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stock, whether or not classified as a Hybrid Security if, at the time of and
after giving effect to such dividend, no Event of Default under Section 8.01(a)
or (f) shall have occurred and be continuing, (d) so long as no Default or Event
of Default has occurred and is continuing, the Borrower and any of its Material
Subsidiaries may (i) repurchase Capital Stock from officers, directors,
managers, or employees of, or consultants to, the Borrower or any of its
Subsidiaries upon the termination of employment of such officers, directors,
managers, employees or consultants in an aggregate amount not to exceed $500,000
in any fiscal year of the Borrower and (ii) make cash payments in lieu of
fractional shares in connection with the exercise of warrants, options or other
securities convertible into Capital Stock, in an aggregate amount not to exceed
$200,000 in any fiscal year of the Borrower, (e) the Borrower may make non-cash
repurchases, redemptions or exchanges of Capital Stock of the Borrower
(i) deemed to occur upon the exercise of stock options or warrants or
(ii) consisting of the issuance of Capital Stock, and/or options or warrants to
purchase Capital Stock, in exchange for outstanding Capital Stock and/or
outstanding options or warrants to purchase Capital Stock and (f) Permitted TARP
Payments.

Notwithstanding anything to the contrary contained in this Section 7.08 or
elsewhere, the Borrower shall not be entitled to and shall not declare any
dividend at any time that PMI Insurance is prohibited from writing new mortgage
insurance by any of the States.

7.09 Swap Contracts. Enter into or become liable under any Swap Contracts, other
than those entered into in the ordinary course of business, not for speculative
purposes and consistent with past practice and the Derivatives Use Plan.

7.10 No Modification of Certain Documents.

(a) Agree, or suffer or permit any of its Subsidiaries to agree, to any
amendment, restatement, supplement or other modification to, or waiver of, any
provision of the QBE Note, either of the QBE Share Sale Agreements or any of the
QBE Note Purchase Agreements, or any rights or remedies of the Borrower or any
of its Subsidiaries under any of the foregoing (i) without providing at least 5
Business Days prior written notice to the Administrative Agent of same,
including a reasonably detailed description of each such proposed amendment,
restatement, supplement, modification or waiver or (ii) to the extent that such
amendment, restatement, supplement, modification or waiver could reasonably be
expected to have an adverse effect on the value of the QBE Note or any rights or
remedies in respect of the QBE Note of the Borrower or any of its Subsidiaries
under any of the foregoing documents or agreements.

(b) So long as an Event of Default is continuing, exercise, or suffer or permit
any of its Subsidiaries to exercise, any of such Person’s rights, powers and
remedies in respect of the QBE Note, either of the QBE Share Sale Agreements or
any of the QBE Note Purchase Agreements, or any rights or remedies of the
Borrower or any of its Subsidiaries under any of the foregoing, except as
directed in writing by the Administrative Agent or the Required Lenders.

ARTICLE VIII.

EVENTS OF DEFAULT AND REMEDIES

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

(a) Non-Payment. The Borrower fails to pay (i) when and as required to be paid
herein, any amount of principal of any Loan or any L/C Obligation, or
(ii) within three Business Days after the same becomes due, any interest on any
Loan, or any facility, utilization, Letter of Credit Fee or other fee due
hereunder, or (iii) within three Business Days after the same becomes due, any
other amount payable hereunder or under any other Loan Document; or

 

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(b) Specific Covenants. (i) The Borrower fails to perform or observe any term,
covenant or agreement contained in any of Section 6.01(h), Section 6.01(i),
Section 6.02(c)(i), Section 6.02(e), Section 6.05 (with respect to the
Borrower), Section 6.10, Section 6.12, Section 7.06 or Section 7.10; (ii) the
Borrower fails to perform or observe any term, covenant or agreement contained
in any of Section 6.02(c)(ii) or Section 6.02(c)(iii) and such failure continues
for 3 days, (iii) the Borrower fails to perform or observe any term, covenant or
agreement contained in any of Section 7.07 or Section 7.08 and such failure
continues for 3 Business Days, (iv) the Borrower fails to perform or observe any
term, covenant or agreement contained in Section 6.03(f) or Section 6.03(g) and
such failure continues for 5 Business Days or (v) the Borrower fails to perform
or observe any term, covenant or agreement contained in any of Section 6.03
(other than Section 6.03(f) or Section 6.03(g)) or any of Section 7.01, 7.02,
7.03 or 7.04, and such failure continues for 15 days; or

(c) Other Defaults. The Borrower fails to perform or observe any other covenant
or agreement (not specified in subsections (a) or (b) above) contained in any
Loan Document on its part to be performed or observed and such failure continues
for 20 days after written notice of such failure shall have been given to the
Borrower by the Administrative Agent or any Lender; or

(d) Representations and Warranties. Any representation or warranty made by the
Borrower in this Agreement, including in Section 4.02(b), any Compliance
Certificate or any other written certification delivered pursuant hereto shall
be incorrect in any material respect when made and, if susceptible of a cure,
remains uncured for 15 days after made; or

(e) Cross-Default. (A) The Borrower or any Material Subsidiary fails to make any
payment when due (following the expiration of any applicable grace with regards
to such payment) (whether by scheduled maturity, required prepayment,
acceleration, demand, or otherwise) in respect of any Indebtedness (other than
Indebtedness hereunder but including Indebtedness under Swap Contracts) having
an aggregate principal amount of more than the Threshold Amount or (B) any other
event of default, however characterized, has occurred and is continuing with
respect to any other agreement or condition or covenant relating to any such
Indebtedness or contained in any instrument or agreement evidencing, securing or
relating to any such Indebtedness having an aggregate principal amount of more
than the Threshold Amount, if the effect of such event of default is to cause,
or to permit the holder or holders of such Indebtedness or beneficiary or
beneficiaries of such Indebtedness (or a trustee or agent on behalf of such
holder or holders or beneficiary or beneficiaries) to cause, such Indebtedness
having an aggregate principal amount of more than the Threshold Amount to be
accelerated prior to its stated maturity; or

(f) Insolvency Proceedings, Etc. The Borrower or any Material Subsidiary (i) is
dissolved, (ii) becomes insolvent or is unable to pay its debts or fails or
admits in writing its inability generally to pay its debts as they become due,
(iii) makes a general assignment, arrangement or composition with or for the
benefit of its creditors, (iv) institutes or has instituted against it a
proceeding seeking a judgment of insolvency or bankruptcy or any other relief
under any Debtor Relief Law, or a petition is presented for its winding-up or
liquidation (including, without limitation, in the case of a Material Insurance
Subsidiary, any application by its Primary Regulator for an order directing its
rehabilitation, liquidation, dissolution of its corporate existence or similar
action), and, in the case of any such proceeding or petition instituted or
presented against it, such proceeding or petition (A) results in the judgment of
insolvency or bankruptcy or the entry of an order for relief or the making of an
order for its winding-up or dissolution or (B) is not dismissed, discharged,
stayed or restrained in each case within 60 days of the institution or
presentation thereof; (v) has a resolution passed for its winding-up, official
management or liquidation,

 

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(vi) seeks or becomes subject to the appointment of an administrator,
provisional liquidator, conservator, receiver, trustee, custodian or similar
official for it or for all or substantially all its assets, (vii) has a secured
party take possession of all or substantially all its assets or has a distress,
execution, attachment, sequestration or other legal process levied or enforced
against all or substantially all its assets and such secured party maintains
possession, or any such process is not dismissed, discharged, stayed or
restrained, in each case within 60 days thereafter, or (viii) causes or is
subject to any event with respect to which, under the applicable laws of any
jurisdiction, has an analogous effect to any of the events specified in
clauses (i) through (vii) (inclusive); or

(g) Judgments. Enforcement proceedings are commenced by any creditor (including,
without limitation, (i) any shareholder of the Borrower, (ii) any Person who has
brought any action, suit, proceeding, claim or dispute against the Borrower with
respect to its 401(k) plan or (iii) any Person who has brought any action, suit,
proceeding, claim or dispute against one or more FGIC Companies, the Borrower in
its capacity as a shareholder of, or related to its shareholdings in, FGIC
Corporation or any of the officers and directors of one or more FGIC Companies)
upon any final judgment or order that has been entered against the Borrower or
any Material Subsidiary for the payment of money in an aggregate amount
exceeding the Threshold Amount (to the extent the payment of money with respect
thereto is not covered by independent third-party insurance or reinsurance as to
which the insurer or reinsurer does not then dispute coverage or liability) or
(B) there is a period of 30 consecutive days during which a stay of enforcement
of such judgment or order, by reason of a pending appeal or otherwise, is not in
effect; or

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

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

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

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

(l) Collateral. Any Lien purported to be created under any Security Document
shall fail or cease to be, or shall be asserted by the Borrower or any of its
Subsidiaries not to be, a valid and perfected Lien on any portion of Collateral,
with the priority required by the applicable Security Document.

 

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

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

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

(c) require that the Borrower Cash Collateralize the L/C Obligations (in an
amount equal to the then outstanding amount thereof); and

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

provided, however, that upon the occurrence of an Event of Default under
Subsection 8.01(f), the obligation of each Lender to make Loans shall
automatically terminate, the unpaid principal amount of all outstanding Loans
and all interest and other amounts as aforesaid shall automatically become due
and payable, in each case without further act of the Administrative Agent or any
Lender. The provisions of this Section 8.02 are in addition to, and shall not
supersede or diminish, the rights and remedies of the Administrative Agent
and/or the Required Lenders with respect to the Collateral. All such rights and
remedies with respect to the Collateral shall be set forth in the applicable
Security Documents, and shall be exercisable by or at the direction of the
Administrative Agent, in its sole discretion, or at the request of the Required
Lenders, as provided in such Security Documents.

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

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

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

Third, to payment of that portion of the Obligations constituting accrued and
unpaid Letter of Credit Fees and interest on the Loans and L/C Borrowings,
ratably among the Lenders and the L/C Issuer in proportion to the respective
amounts described in this clause Third payable to them;

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

Fifth, to the Administrative Agent for the account of the L/C Issuer, to Cash
Collateralize that portion of L/C Obligations comprised of the aggregate undrawn
amount of Letters of Credit;

Sixth, to the payment of any fees, indemnities or expense reimbursements then
due to any Lender or any Affiliate of any Lender relating to Bank Products; and

 

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

Subject to Subsection 2.13(c), amounts used to Cash Collateralize the aggregate
undrawn amount of Letters of Credit pursuant to clause Fifth above shall be
applied to satisfy drawings under such Letters of Credit as they occur. If any
amount remains on deposit as Cash Collateral after all Letters of Credit have
either been fully drawn or expired, such remaining amount shall be applied to
the other Obligations, if any, in the order set forth above.

ARTICLE IX.

ADMINISTRATIVE AGENT

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

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

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

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

(b) shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated hereby or by the other Loan Documents that the Administrative Agent
is required to exercise as directed in writing by the Required Lenders (or such
other number or percentage of the Lenders as shall be expressly provided for
herein or in the other Loan Documents), provided that the Administrative Agent
shall not be required to take any action that, in its opinion or the opinion of
its counsel, may expose the Administrative Agent to liability or that is
contrary to any Loan Document or applicable law; and

 

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

The Administrative Agent shall not be liable for any action taken or not taken
by it (i) with the consent or at the request of the Required Lenders (or such
other number or percentage of the Lenders as shall be necessary, or as the
Administrative Agent shall believe in good faith shall be necessary, under the
circumstances as provided in Sections 10.01 and 8.02) or (ii) in the absence of
its own gross negligence or willful misconduct.

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

9.04 Reliance by Administrative Agent.

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

(b) [intentionally omitted]

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

 

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

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

9.08 Administrative Agent in its Individual Capacity. Bank of America and its
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in and generally engage in any kind of
banking, trust, financial advisory, underwriting or other business with the
Borrower and its Affiliates as though Bank of America were not the
Administrative Agent hereunder and without notice to or consent of the Lenders.
The Lenders acknowledge that, pursuant to such activities, Bank of America or
its Affiliates may receive information regarding the Borrower or its

 

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Affiliates (including information that may be subject to confidentiality
obligations in favor of such Borrower or such Affiliate) and acknowledge that
the Administrative Agent shall be under no obligation to provide such
information to them. With respect to its Loans, Bank of America shall have the
same rights and powers under this Agreement as any other Lender and may exercise
such rights and powers as though it were not the Administrative Agent, and the
terms “Lender” and “Lenders” include Bank of America in its individual capacity.

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

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

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

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

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

 

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

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

ARTICLE X.

MISCELLANEOUS

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

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

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

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

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

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

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

 

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(g) release all or substantially all of the Collateral without the written
consent of all of the Lenders, except as expressly provided in this Agreement or
the other Loan Documents;

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

10.02 Notices and Other Communications; Facsimile Copies.

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

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

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

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

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

(b) Effectiveness of Facsimile Documents and Signatures. Loan Documents may be
transmitted and/or signed by facsimile. The effectiveness of any such documents
and signatures shall, subject to applicable Law, have the same force and effect
as manually-signed originals and shall be binding on the Borrower, the
Administrative Agent and the Lenders. The Administrative Agent may also require
that any such documents and signatures be confirmed by a manually-signed
original thereof; provided, however, that the failure to request or deliver the
same shall not limit the effectiveness of any facsimile document or signature.

 

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(c) Electronic Communications. Notices and other communications to the Lenders
and the L/C Issuer hereunder may be delivered or furnished by electronic
communication (including e-mail and Internet or intranet websites) pursuant to
procedures approved by the Administrative Agent, provided that the foregoing
shall not apply to notices to any Lender or the L/C Issuer pursuant to Article
II if such Lender or the L/C Issuer, as applicable, has notified the
Administrative Agent that it is incapable of receiving notices under such
Article by electronic communication. The Administrative Agent or the Borrower
may, in its discretion, agree to accept notices and other communications to it
hereunder by electronic communications pursuant to procedures approved by it,
provided that approval of such procedures may be limited to particular notices
or communications.

(d) The Platform. THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.” THE AGENT
PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE
BORROWER MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM
LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS. 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 ANY AGENT
PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM. In no event
shall the Administrative Agent or any of its Related Parties (collectively, the
“Agent Parties”) have any liability to the Borrower, any Lender, the L/C Issuer
or any other Person for losses, claims, damages, liabilities or expenses of any
kind (whether in tort, contract or otherwise) arising out of the Borrower’s or
the Administrative Agent’s transmission of Borrower Materials through the
Internet, except to the extent that such losses, claims, damages, liabilities or
expenses are determined by a court of competent jurisdiction by a final and
nonappealable judgment to have resulted from the gross negligence or willful
misconduct of such Agent Party; provided, however, that in no event shall any
Agent Party have any liability to the Borrower, any Lender, the L/C Issuer or
any other Person for indirect, special, incidental, consequential or punitive
damages (as opposed to direct or actual damages). In no event shall the
Borrower’s failure to timely deliver any document under this Agreement
constitute a Default or Event of Default if such failure is due solely to a
defect or failure in the Platform and the Borrower, after learning of such
defect or failure, diligently attempts to redeliver such document.

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

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

10.04 Attorney Costs and Expenses. The Borrower agrees (a) to pay the
Administrative Agent for all reasonable and documented out-of-pocket costs and
expenses associated with the preparation, due diligence, syndication,
administration and closing of all loan documentation, including,

 

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without limitation, the reasonable legal fees of counsel to the Administrative
Agent, and (b) to pay the L/C Issuer for all reasonable out-of-pocket expenses
incurred by the L/C Issuer in connection with the issuance, amendment, renewal
or extension of any Letter of Credit or any demand for payment thereunder. The
Borrower also agrees to pay all reasonable out-of-pocket expenses incurred by
the Administrative Agent, any Lender or the L/C Issuer (including without
limitation the fees, charges and disbursements of any counsel for the
Administrative Agent, any Lender or the L/C Issuer, and fees, charges and
disbursements of any financial advisory, appraisal or accounting firm retained
by or on behalf of the Administrative Agent or the Lenders or the L/C Issuer in
respect of the Obligations (provided that prior to the occurrence of an Event of
Default the aggregate of fees, charges and disbursements of any such financial
advisory, appraisal or accounting firm for which the Borrower shall be
responsible for in each calendar year shall not exceed $100,000), and shall pay
all fees and time charges for attorneys who may be employees of the
Administrative Agent, any Lender or the L/C Issuer, in connection with (i) any
amendment, modification, waiver, consent, workout, restructuring or negotiations
related to, the Loan Documents, the Loans made or the Letters of Credit issued
hereunder and (ii) the enforcement or protection of its rights (A) in connection
with this Agreement and the other Loan Documents, including its rights under
this Section, or (B) in connection with the Loans made or Letters of Credit
issued hereunder, in the case of each of clauses (i) and (ii), whether or not a
Default or Event of Default has occurred or is continuing. All amounts due under
this Section 10.04 shall be payable within ten Business Days after demand
therefor. The agreements in this Section shall survive the termination of the
Aggregate Commitment and repayment of all other Obligations.

10.05 Indemnification by the Borrower. Except with respect to the costs and
expenses which are covered by Section 10.04 and Taxes and Other Taxes, which are
covered by Section 3.01, the Borrower shall indemnify and hold harmless each
Agent-Related Person, each Lender and their respective Affiliates, directors,
officers, employees, counsel, agents and attorneys-in-fact (collectively the
“Indemnitees”) from and against any and all claims, damages, losses, liabilities
and expenses (including without limitation, the reasonable fees, disbursements
and other charges of counsel) that may be incurred by or asserted or awarded
against any such Indemnitee in each case arising out of or in connection with or
by reason of (including, without limitation, in connection with any
investigation, litigation or proceeding or preparation of a defense in
connection therewith) any matters contemplated by this Agreement, except to the
extent such claim, damage, loss, liability or expense is found by a court of
competent jurisdiction to have resulted from such Indemnitee’s gross negligence
or willful misconduct. In the case of an investigation, litigation or proceeding
to which the indemnity in this section applies, such indemnity shall be
effective whether or not such investigation, litigation or proceeding is brought
by the Borrower, the Borrower’s equity holders or creditors or an Indemnitee,
whether or not an Indemnitee is otherwise a party thereto and whether or not the
transactions contemplated hereby are consummated. No Indemnitee shall be liable
for any damages arising from the use by others of any information or other
materials obtained through IntraLinks or other similar information transmission
systems in connection with this Agreement that has been accurately reproduced
and posted thereon, nor shall any Indemnitee have any liability for any indirect
or consequential damages relating to this Agreement or any other Loan Document
or arising out of its activities in connection herewith or therewith (whether
before or after the Original Closing Date). The Borrower shall not be required
to reimburse the Attorney Costs of more than one outside counsel (in addition to
up to one local counsel in each applicable local jurisdiction) for all
Indemnitees under this Section 10.05 unless on advice of outside counsel,
representation of all such Indemnitees would be inappropriate due to the
existence of an actual or potential conflict of interest. All amounts due under
this Section 10.05 shall be payable within ten Business Days after demand
therefor. The agreements in this Section shall survive the resignation of the
Administrative Agent, the replacement of any Lender, the termination of the
Aggregate Commitment and the repayment, satisfaction or discharge of all the
other Obligations.

 

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

10.07 Successors and Assigns.

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

(b) At any time any Lender may, and, within five Business Days after demand by
the Borrower at a time that any Lender shall cease to have the Required Lender
Rating and no Event of Default has occurred and is continuing, such Lender will,
assign to one or more Eligible Assignees all or a portion of its rights and
obligations under this Agreement (including all or a portion of its Commitment
and the Loans); provided that (i) except in the case of an assignment of the
entire remaining amount of the assigning Lender’s Commitment and the Loans at
the time owing to it or in the case of an assignment to a Lender or an Affiliate
of a Lender or an Approved Fund (as defined in Subsection 10.07(g) below) with
respect to a Lender, the aggregate amount of the Commitment or Loans subject to
each such assignment, determined as of the date the Assignment and Assumption
with respect to such assignment is delivered to the Administrative Agent and the
L/C Issuer or, if “Trade Date” is specified in the Assignment and Assumption, as
of the Trade Date, shall not be less than $5,000,000, unless each of the
Administrative Agent and the L/C Issuer and, so long as no Event of Default has
occurred and is continuing, the Borrower otherwise consent, (ii) each partial
assignment shall be made as an assignment of a proportionate part of all the
assigning Lender’s rights and obligations under this Agreement with respect to
the Loans or the Commitment assigned, (iii) any assignment of a Commitment must
be consented to by the Administrative Agent and the L/C Issuer (which consent
shall not be unreasonably withheld or delayed) unless the Person that is the
proposed assignee is itself a Lender or an Affiliate of a Lender and (iv) the
parties to each assignment shall execute and deliver to the Administrative Agent
and the L/C Issuer an Assignment and Assumption, together with a processing and
recordation fee of $3,500. Subject to acceptance and recording thereof by the
Administrative Agent and L/C Issuer pursuant to Subsection 10.07(c) below, from
and after the effective date specified in each Assignment and Assumption, the
Eligible Assignee thereunder shall be a party to this Agreement and, to the
extent of the

 

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interest assigned by such Assignment and Assumption, have the rights and
obligations of a Lender under this Agreement, and the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment and
Assumption, be released from its obligations under this Agreement (and, in the
case of an Assignment and Assumption covering all of the assigning Lender’s
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto but shall continue to be entitled to the benefits of Sections 3.01,
3.04, 3.05, 10.04 and 10.05 with respect to facts and circumstances occurring
prior to the effective date of such assignment). Upon request, the Borrower (at
its expense) shall execute and deliver a Note to the assignee Lender. Any
assignment or transfer by a Lender of rights or obligations under this Agreement
that does not comply with this subsection shall be treated for purposes of this
Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with Subsection 10.07(d) below.

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

(d) Any Lender may at any time, without the consent of, or notice to, the
Borrower or the Administrative Agent, sell participations to any Person (other
than a natural person or the Borrower or any of the Borrower’s Affiliates or
Subsidiaries) (each, a “Participant”) in all or a portion of such Lender’s
rights and/or obligations under this Agreement (including all or a portion of
its Commitment and/or the Loans owing to it); provided that (i) such Lender’s
obligations under this Agreement shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations and (iii) the Borrower, the Administrative Agent and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender’s rights and obligations under this Agreement. Any
agreement or instrument pursuant to which a Lender sells such a participation
shall provide that such Lender shall retain the sole right to enforce this
Agreement and to approve any amendment, modification or waiver of any provision
of this Agreement; provided that such agreement or instrument may provide that
such Lender will not, without the consent of the Participant, agree to any
amendment, waiver or other modification described in the first proviso to
Section 10.01 that directly affects such Participant. Subject to
Subsection 10.07(e) below, the Borrower agrees that each Participant shall be
entitled to the benefits of Sections 3.01, 3.04 and 3.05 to the same extent as
if it were a Lender and had acquired its interest by assignment pursuant to
Subsection 10.07(b) above. To the extent permitted by law, each Participant also
shall be entitled to the benefits of Section 10.09 as though it were a Lender,
provided that (i) such Participant agrees to be subject to Section 2.11 as
though it were a Lender and (ii) no payment to such Participant shall duplicate
an amount payable to the related Lender.

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

 

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

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

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

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

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

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

(i) Resignation as L/C Issuer after Assignment. Notwithstanding anything to the
contrary contained herein, if at any time Bank of America assigns all of its
Commitment and Loans pursuant to subsection (b) above, Bank of America may, upon
30 days’ notice to the Borrower and the Lenders, resign as L/C Issuer. In the
event of any such resignation as L/C Issuer, the Borrower shall be entitled to
appoint a successor L/C Issuer hereunder; provided, however, that no failure by
the Borrower to appoint any such successor shall affect the resignation of Bank
of America as L/C Issuer. If Bank of America resigns as L/C Issuer, it shall
retain all the rights, powers, privileges and duties of the L/C Issuer hereunder
with respect to all Letters of Credit outstanding as of the effective date of
its resignation as L/C Issuer and all L/C Obligations with respect thereto
(including the right to require the Lenders to make Base Rate Loans or fund risk
participations in Unreimbursed Amounts pursuant to Section 2.13(c)). Upon the
appointment of a successor L/C Issuer, (a) such successor shall succeed to and
become vested with all of the rights, powers, privileges and duties of the
retiring L/C Issuer and (b) the successor L/C Issuer shall issue letters of
credit in substitution for the Letters of Credit, if any, outstanding at the
time of such succession or make other arrangements satisfactory to Bank of
America to effectively assume the obligations of Bank of America with respect to
such Letters of Credit.

10.08 Confidentiality. The Administrative Agent and each Lender agrees to
maintain the confidentiality of the Information (as defined below), except that
Information may be disclosed (a) to its and its Affiliates’ directors, officers,
employees and agents, including accountants, legal counsel and other advisors
(it being understood that the Persons to whom such disclosure is made will be
informed of the confidential nature of such Information and instructed to keep
such Information confidential and the Administrative Agent or such Lender, as
the case may be, shall have received assurances reasonably satisfactory to it
that such Persons shall keep such Information confidential), (b) to the extent
requested

 

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

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

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

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

 

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10.12 Integration. This Agreement, together with the other Loan Documents,
comprises the complete and integrated agreement of the parties on the subject
matter hereof and thereof and supersedes all prior agreements, written or oral,
on such subject matter. In the event of any conflict between the provisions of
this Agreement and those of any other Loan Document, the provisions of this
Agreement shall control; provided that the inclusion of supplemental rights or
remedies in favor of the Administrative Agent or the Lenders in any other Loan
Document shall not be deemed a conflict with this Agreement. Each Loan Document
was drafted with the joint participation of the respective parties thereto and
shall be construed neither against nor in favor of any party, but rather in
accordance with the fair meaning thereof.

10.13 Survival of Representations and Warranties. All representations and
warranties made hereunder and in any other Loan Document shall survive the
execution and delivery hereof and thereof. Such representations and warranties
have been or will be relied upon by the Administrative Agent and each Lender,
regardless of any investigation made by the Administrative Agent or any Lender
or on their behalf and notwithstanding that the Administrative Agent or any
Lender may have had notice or knowledge of any Default at the time of any
Borrowing, and shall continue in full force and effect as long as any Loan or
any other Obligation hereunder shall remain unpaid or unsatisfied or any Letter
of Credit shall remain outstanding. For the avoidance of doubt, no
representation or warranty shall be deemed to have been made as of any date
solely by virtue of this Section 10.13.

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

10.15 Tax Forms.

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

 

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and (D) take such steps as shall not be materially disadvantageous to it, in the
reasonable judgment of such Lender, and as may be reasonably necessary
(including the re-designation of its Lending Office) to avoid any requirement of
applicable Laws that the Borrower make any deduction or withholding for taxes
from amounts payable to such Foreign Lender.

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

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

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

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

 

73

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

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

10.17 Governing Law.

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

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

10.18 Waiver of Right to Trial by Jury. EACH PARTY TO THIS AGREEMENT HEREBY
EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR THE TRANSACTIONS RELATED
THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND
CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED
BY COURT TRIAL WITHOUT A JURY. EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.

 

74

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

10.20 No Advisory or Fiduciary Responsibility. In connection with all aspects of
each transaction contemplated hereby, the Borrower acknowledges and agrees that:
(i) the credit facility provided for hereunder and any related arranging or
other services in connection therewith (including in connection with any
amendment, waiver or other modification hereof or of any other Loan Document)
are arm’s-length commercial transactions between the Borrower and its
Affiliates, on the one hand, and the Administrative Agent and the Arranger, on
the other hand, and the Borrower is capable of evaluating and understanding and
understands and accepts the terms, risks and conditions of the transactions
contemplated hereby and by the other Loan Documents (including any amendment,
waiver or other modification hereof or thereof); (ii) in connection with the
process leading to such transaction, the Administrative Agent and the Arranger
each is and has been acting solely as a principal and is not the financial
advisor, agent or fiduciary for the Borrower or any of its Affiliates,
stockholders, creditors or employees or any other Person; (iii) neither the
Administrative Agent nor the Arranger has assumed or will assume an advisory or
fiduciary responsibility in favor of the Borrower with respect to any of the
transactions contemplated hereby or the process leading thereto, including with
respect to any amendment, waiver or other modification hereof or of any other
Loan Document (irrespective of whether the Administrative Agent or the Arranger
has advised or is currently advising the Borrower or any of its Affiliates on
other matters) and neither the Administrative Agent nor the Arranger has any
obligation to the Borrower or any of its Affiliates with respect to the
transactions contemplated hereby except those obligations expressly set forth
herein and in the other Loan Documents; (iv) the Administrative Agent and the
Arranger and their respective Affiliates may be engaged in a broad range of
transactions that involve interests that differ from those of the Borrower and
its Affiliates, and neither the Administrative Agent nor the Arranger has any
obligation to disclose any of such interests by virtue of any advisory, agency
or fiduciary relationship; and (v) the Administrative Agent and the Arranger
have not provided and will not provide any legal, accounting, regulatory or tax
advice with respect to any of the transactions contemplated hereby (including
any amendment, waiver or other modification hereof or of any other Loan
Document) and the Borrower has consulted its own legal, accounting, regulatory
and tax advisors to the extent it has deemed appropriate.

10.21 WAIVER WITH RESPECT TO DAMAGES. THE BORROWER ACKNOWLEDGES THAT NONE OF THE
ADMINISTRATIVE AGENT, THE L/C ISSUER, THE LENDERS OR ANY AFFILIATE OF ANY LENDER
HAS ANY FIDUCIARY RELATIONSHIP WITH, OR FIDUCIARY DUTY TO, THE BORROWER ARISING
OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND THE
RELATIONSHIP BETWEEN THE ADMINISTRATIVE AGENT, THE L/C ISSUER, THE LENDERS AND
ANY AFFILIATE OF ANY LENDER, ON THE ONE HAND, AND THE BORROWER, ON THE OTHER
HAND, IN CONNECTION THEREWITH IS SOLELY THAT OF CREDITOR AND DEBTOR. TO THE
EXTENT PERMITTED BY APPLICABLE LAW, THE BORROWER SHALL NOT ASSERT, AND THE
BORROWER HEREBY WAIVES, ANY CLAIMS AGAINST THE ADMINISTRATIVE AGENT, THE L/C
ISSUER, ANY LENDER, ANY AFFILIATE OF ANY LENDER OR ANY OTHER INDEMNITEE ON ANY
THEORY OF LIABILITY, FOR SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES
(AS

 

75

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OPPOSED TO DIRECT OR ACTUAL DAMAGES) ARISING OUT OF, IN CONNECTION WITH, OR AS A
RESULT OF, THIS AGREEMENT, ANY LOAN DOCUMENT, ANY AGREEMENT OR INSTRUMENT
CONTEMPLATED HEREBY OR THEREBY, THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY,
ANY LOAN OR LETTER OF CREDIT OR THE USE OF THE PROCEEDS THEREOF.

10.22 Jointly Drafted. This Agreement and each of the other Loan Documents shall
be deemed to have been jointly drafted, and no provisions of it shall be
interpreted or construed for or against any party hereto because such party
purportedly prepared or requested such provision, any other provision, or this
Agreement or Loan Document as a whole.

10.23 [Intentionally Omitted].

10.24 Effect of Amendment and Restatement of the Original Agreement.

This Agreement constitutes a modification of the Original Agreement made in
accordance with the provisions of Section 10.01 thereof with the written consent
of the Lenders (as defined in the Original Agreement), as evidenced by their
execution and delivery of Amendment No. 6. On the Restatement Effective Date,
the Original Agreement was amended, restated and superseded in its entirety. The
parties hereto acknowledge and agree that (a) this Agreement and the other Loan
Documents, whether executed and delivered in connection herewith or otherwise,
do not constitute a novation, payment and reborrowing, or termination of the
“Obligations” (as defined in the Original Agreement) under the Original
Agreement as in effect prior to the Effective Date and (b) such “Obligations”
are in all respects continuing (as amended and restated hereby) with only the
terms thereof being modified as provided in this Agreement.

[REMAINDER OF PAGE INTENTIONALLY BLANK.]

 

76

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Schedule 1.01A

EXISTING LETTERS OF CREDIT

$250,000.00 Standby Letter of Credit No. 7411791 issued by Bank of America, N.A.
for the benefit of Federal Insurance Company a maturity date (subject to
extension) of April, 18, 2010.

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

Schedule 2.01

COMMITMENTS AND PRO RATA SHARES

 

Lender

   Allocation    Pro Rata Share  

Bank of America, N.A.

   $ 25,000,000    20.00 %

Citibank, N.A.

   $ 20,312,500    16.25 %

Sun Trust Bank, N.A.

   $ 20,312,500    16.25 %

Wachovia Bank, National Association

   $ 20,312,500    16.25 %

Goldman Sachs Lending Partners, LLC

   $ 15,625,000    12.50 %

JPMorgan Chase Bank, N.A.

   $ 15,625,000    12.50 %

The Bank of New York

   $ 7,812,500    6.25 %              

Total

   $ 125,000,000    100.00 %

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

Schedule 10.02

ADMINISTRATIVE AGENT’S OFFICE;

CERTAIN ADDRESSES FOR NOTICES

BORROWER:

The PMI Group, Inc.

3003 Oak Road

Walnut Creek, CA 94597-2098

Attention: Chief Financial Officer

Telephone: 925-658-6530

Telecopier: 925-658-6519

with copies to:

Corporate Treasurer

Telephone: 925-658-6204

Telecopier: 925-658-6519

and

General Counsel

Telephone: 925-658-6212

Telecopier: 925-658-6175

ADMINISTRATIVE AGENT:

Administrative Agent’s Office

(for payments and Requests for Credit Extensions):

Bank of America, N.A.

1850 Gateway Boulevard

Concord, California 94520

Attention: Tina Obcena

Telephone: 925 675 8768

Telecopier: 888 969 9246

Electronic Mail: tina.obcena@bankofamerica.com

Payment Instruction:

Bank of Americas, N.A.

ABA #111 000 012

Account No.: 375 083 6479

Account Name: Credit Services - West

Ref: The PMI Group Inc.

Attn: Tina Obcena

Other Notices as Administrative Agent:

Bank of America, N.A.

Agency Management

1455 Market Street, 5th Floor

Mail Code: CA5-701-05-19

San Francisco, CA 94103

Attention: Aamir Saleem

Telephone: 415 436 2769

Telecopier: 415 503 5089

Electronic Mail: aamir.saleem@bankofamerica.com

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

L/C ISSUER:

Bank of America, N.A.

Trade Operations, Los Angeles

1000 W. Temple Street

Mail Code: CA9-705-07-05

Los Angeles, CA 90012-1514

Attention: Stella Rosales

Telephone: 213-481-7828

Telecopier: 213-580-8441

Electronic Mail: stella.rosales@bankofamerica.com

1455 Market Street, 5th Floor

San Francisco, CA 94103

CA5-701-05-19

Tel: 415.436.2769

Fax: 415.503.5089

aamir.saleem@bankofamerica.com

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

EXHIBIT A

FORM OF LOAN NOTICE

Date:                    , 20__

 

To: Bank of America, N.A., as Administrative Agent

Ladies and Gentlemen:

Reference is made to that certain Revolving Credit Agreement, dated as of
October 24, 2006 (as amended, restated, extended, supplemented or otherwise
modified in writing from time to time, the “Credit Agreement;” the terms defined
therein being used herein as therein defined), among The PMI Group, Inc., the
Lenders from time to time party thereto and Bank of America, N.A., as
Administrative Agent.

The undersigned Borrower hereby requests (select one):

¨        A Borrowing        ¨    A conversion or continuation of Loans

 

1. On                          (a Business Day).

 

2. In the amount of $                                .

 

3. Comprised of [Base Rate Loan or Eurodollar Rate Loan].

 

4. For Eurodollar Rate Loans: with an Interest Period of      months.

If a Borrowing is requested herein, the undersigned Senior Officer hereby
certifies that the following statements are true and correct on the date hereof,
and will be true and correct on the date of receipt of the proceeds of the
applicable Borrowing requested herein (both before and after giving effect to
the applicable Borrowing):

 

  (a) The representations and warranties of the Borrower contained in this
Agreement and in each of the other Loan Documents are true and correct in all
material respects, except to the extent that such representations and warranties
specifically refer to an earlier date, in which case they shall be true and
correct in all material respects as of such earlier date;

 

  (b) No Default exists immediately prior to, or will occur immediately upon,
the proposed Borrowing, issuance or extension (as the case may be);

 

  (c) PMI Insurance is a GSE Authorized mortgage insurer and is not subject to
any Significant Eligibility Limitations;

 

  (d) No QBE Adjustment Period is in effect;

 

  (e) PMI Insurance is not prohibited from writing new mortgage insurance by any
of the States, except for any such prohibitions as may be applicable in States
that in the aggregate represented 15% or less of the aggregate total risk in
force of PMI Insurance for all States as of the last day of the immediately
preceding calendar year; and

 

A-1

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(f) attached hereto as Annex 1 are written calculations setting forth in
reasonable detail (i) compliance with the financial covenant set forth in
Section 7.06 of the Credit Agreement as of the close of the most recently
completed fiscal quarter of the Borrower and (ii) that after giving effect to
such Borrowing, issuance or extension the Principal Debt outstanding will not
exceed 80% of the QBE Note Amount in effect at such time.

 

THE PMI GROUP, INC. By:       Name:   Title:

 

A-2

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Annex 1 to Form of Loan Notice

FINANCIAL COVENANT CALCULATIONS

 

I.

   Section 7.06(a) – Adjusted Consolidated Net Worth      

Adjusted Consolidated Net Worth at Statement Date:

   $ ______________   

Minimum Permitted:

     

From (and including) the Amendment No. 6 Effective Date through (and including)
June 30, 2009:

   $ 1,200,000,000   

From (and including) July 1, 2009 through (and including) December 31, 2009:

   $ 700,000,000   

From (and including) January 1, 2010 through (and including) the Maturity Date:

   $ 500,000,000

 

A-3

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EXHIBIT B

FORM OF NOTE

                , 200    

FOR VALUE RECEIVED, the undersigned (the “Borrower”), hereby promises to pay to
                     or registered assigns (the “Lender”), in accordance with
the provisions of the Agreement (as hereinafter defined), the principal amount
of each Loan made by the Lender to the Borrower under that certain Revolving
Credit Agreement, dated as of October 24, 2006 (as amended, restated, extended,
supplemented or otherwise modified in writing from time to time, the
“Agreement;” the terms defined therein being used herein as therein defined),
among The PMI Group, Inc., the Lenders from time to time party thereto, and Bank
of America, N.A., as Administrative Agent.

The Borrower promises to pay interest on the unpaid principal amount of each
Loan from the date of such Loan until such principal amount is paid in full, at
such interest rates and at such times as are provided in the Agreement. All
payments of principal and interest shall be made to the Administrative Agent for
the account of the Lender in Dollars in immediately available funds at the
Administrative Agent’s Office. If any amount is not paid in full when due
hereunder, such unpaid amount shall bear interest, to be paid upon demand, from
the due date thereof until the date of actual payment (and before as well as
after judgment) computed at the per annum rate set forth in the Agreement.

This Note is one of the Notes referred to in the Agreement, is entitled to the
benefits thereof and shall and may be prepaid in whole or in part upon the terms
and conditions provided therein. Upon the occurrence and continuation of one or
more of the Events of Default specified in the Agreement, all amounts then
remaining unpaid on this Note shall become, or may be declared to be,
immediately due and payable, all as provided in the Agreement in the manner and
as set forth in the Agreement. Loans made by the Lender shall be evidenced by
one or more loan accounts or records maintained by the Lender and by the
Administrative Agent in the ordinary course of business. The Lender may also
attach schedules to this Note and endorse thereon the date, Type (if
applicable), amount and maturity of its Loans and payments with respect thereto.

The Borrower, for itself, its successors and assigns, hereby waives diligence,
presentment, protest and demand and notice of protest, demand, dishonor and
non-payment of this Note.

THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.

 

THE PMI GROUP, INC. By:       Name:   Title:

 

B-1

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LOANS AND PAYMENTS WITH RESPECT THERETO

 

Date

   Type of
Loan
Made    Amount of
Loan
Made    End of
Interest
Period    Amount of
Principal
or Interest
Paid This
Date    Outstanding
Principal
Balance
This Date    Notation
Made By                                                                        
                 

 

B-2

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EXHIBIT C

FORM OF COMPLIANCE CERTIFICATE

Financial Statement Date:             

 

To: Bank of America, N.A., as Administrative Agent

Ladies and Gentlemen:

Reference is made to that certain Revolving Credit Agreement, dated as of
October 24, 2006 (as amended, restated, extended, supplemented or otherwise
modified in writing from time to time, the “Agreement;” the terms defined
therein being used herein as therein defined), among The PMI Group, Inc., the
Lenders from time to time party thereto, and Bank of America, N.A., as
Administrative Agent.

The undersigned Responsible Officer hereby certifies as of the date hereof that
he/she is the                          of the Borrower, and that, as such,
he/she is authorized to execute and deliver this Certificate to the
Administrative Agent on the behalf of the Borrower, and that:

Use following paragraph 1 for fiscal year-end financial statements]

1. Attached hereto as Schedule 1 are the year-end audited financial statements
required by Section 6.01(a) of the Agreement for the fiscal year of the Borrower
ended as of the above Financial Statement Date, together with the report of an
independent certified public accountant required by such section.] [The Borrower
has filed a Form 10-K under the Exchange Act for the fiscal year of the Borrower
ended as of the above Financial Statement Date, and such Form 10-K contains the
year-end audited Financial Statements required by Section 6.01(a) of the
Agreement for the fiscal year of the Borrower ended as of the above Financial
Statement Date.]

[Use following paragraph I for fiscal quarter-end financial statements]

1. [Attached 1. [Attached hereto as Schedule 1 are the unaudited financial
statements required by Section 6.01(b) of the Agreement for the fiscal quarter
of the Borrower ended as of the above Financial Statement Date. Such financial
statements fairly present in all material respects the financial condition,
results of operations, shareholders’ equity and cash flows of the Borrower and
its Subsidiaries in accordance with GAAP as at such date and for such period,
subject only to normal year-end audit adjustments and the absence of footnotes.]
[The Borrower has filed a Form 10-Q under the Exchange Act for the fiscal
quarter of the Borrower ended as of the above Financial Statement Date required
by Section 6.01(b) of the Agreement for the fiscal quarter of the Borrower ended
as of the above Financial Statement Date.]

2. The undersigned has made, or has caused to be made under his/her supervision,
a detailed review of the transactions and condition (financial or otherwise) of
the Borrower during the accounting period covered by the attached financial
statements.

3. A review of the activities of the Borrower during such fiscal period has been
made under the supervision of the undersigned with a view to determining whether
during such fiscal period the Borrower performed and observed all of its
Obligations under the Loan Documents, and [select one:]

 

C-1

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

[during such fiscal period, the Borrower performed and observed each covenant
and condition of the Loan Documents applicable to it.]

or-

[the following covenants or conditions have not been performed or observed and
the following is a list of each such Default and its nature and status:]

4. The financial covenant analyses and information set forth on Schedule 2
attached hereto are true and accurate on and as of the above Financial Statement
Date.

IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
                , 20__.

 

THE PMI GROUP, INC. By:       Name:   Title:

 

C-2

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SCHEDULE 2

to the Compliance Certificate

For the Quarter/Year ended                      (“Statement Date”)

            ($ in 000’s)

 

I.

   Section 7.06(a) – Adjusted Consolidated Net Worth       Adjusted Consolidated
Net Worth at Statement Date:    $ ______________    Minimum Permitted:      
From (and including) the Amendment No. 6 Effective Date through (and including)
June 30, 2009:    $ 1,200,000,000    From (and including) July 1, 2009 through
(and including) December 31, 2009:    $ 700,000,000    From (and including)
January 1, 2010 through (and including) the Maturity Date:    $ 500,000,000

 

C-3

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

Annex 1 to Schedule 2

to the Compliance Certificate

 

C-4

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

Annex 2 to Schedule 2

to the Compliance Certificate

 

C-5

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EXHIBIT D

FORM OF

ASSIGNMENT AND ASSUMPTION

This Assignment and Assumption (this “Assignment and Assumption”) 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 (the “Credit
Agreement”), receipt of a copy of which is hereby acknowledged by the Assignee.
The Standard Terms and Conditions set forth in Annex 1 attached hereto are
hereby agreed to and incorporated herein by reference and made a part of this
Assignment and Assumption as if set forth herein in full.

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 Effective Date inserted by the
Administrative Agent as contemplated below (i) all of the Assignor’s rights and
obligations as a Lender under the Credit Agreement and any other documents or
instruments delivered pursuant thereto 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 facility identified below 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, any other documents or instruments delivered pursuant
thereto or the loan transactions governed thereby 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 Assumption,
without representation or warranty by the Assignor.

 

1. Assignor:                             

 

2. Assignee:                             , which is an Eligible Assignee

 

3. Borrower: The PMI Group, Inc.

 

4. Administrative Agent: Bank of America, N.A., as the administrative agent
under the Credit Agreement

 

5. Credit Agreement: The Revolving Credit Agreement, dated as of October 24,
2006, among The PMI Group, Inc., the Lenders parties thereto, and Bank of
America, N.A., as Administrative Agent

 

D-1

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

6. Assigned Interest:

 

Amount of

Commitment/Loans

Assigned*

   Percentage Assigned of
Aggregate
Commitment/Loans1  

$            

   _______________________ %

$            

   _______________________ %

$            

   _______________________ %

 

7.

Trade Date:             2

Effective Date:                     , 20.     [TO BE INSERTED BY ADMINISTRATIVE
AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE
REGISTER THEREFOR.]

 

* Amount to be adjusted by the counterparties to take into account any payments
or prepayments made between the Trade Date and the Effective Date.

 

1

Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of
all Lenders thereunder.

 

2

To be completed if the Assignor and the Assignee intend that the minimum
assignment amount is to be determined as of the Trade Date.

 

D-2

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

The terms set forth in this Assignment and Assumption are hereby agreed to:

 

ASSIGNOR

NAME OF ASSIGNOR]

By:     Title:  

ASSIGNEE

[NAME OF ASSIGNEE]

By:     Title:  

 

Consented to and3 Accepted:

BANK OF AMERICA, N.A., as

Administrative Agent

By:     Title:  

[Consented to:4

 

THE PMI GROUP, INC. By:     Title: ]  

 

3

To be added only if the consent of the Administrative Agent is required by the
terms of the Credit Agreement.

 

4

To be added only if the consent of the Borrower is required by the terms of the
Credit Agreement.

 

D-3

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ANNEX 1 TO ASSIGNMENT AND ASSUMPTION

STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION

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 Assumption and to consummate the transactions
contemplated hereby; and (b) 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
Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in
respect of any Loan Document or (iv) the performance or observance by the
Borrower, any of its 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 Assumption 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 6.01 thereof, (if
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 Assumption 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, and (v) if it is a Foreign
Lender, attached hereto 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 (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 Assignee whether such
amounts have accrued prior to or on or after the Effective Date. The Assignor
and the Assignee shall make all appropriate adjustments in payments by the
Administrative Agent for periods prior to the Effective Date or with respect to
the making of this assignment directly between themselves.

3. General Provisions. This Assignment and Assumption shall be binding upon, and
inure to the benefit of, the parties hereto and their respective successors and
assigns. This Assignment and Assumption 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 Assumption by
telecopy shall be effective as delivery of a manually executed counterpart of
this Assignment and Assumption. This Assignment and Assumption shall be governed
by, and construed in accordance with, the law of the State of New York.

 

D-4

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EXHIBIT E

[intentionally omitted]

 

E-1

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EXHIBIT F

FORM OF MONITORING REPORT

[Exhibit intentionally omitted]

 

F-1

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EXHIBIT G

FORM OF UPDATING REPORT CERTIFICATE

Quarterly Period Ended:                 

 

To: Bank of America, N.A., as Administrative Agent

Ladies and Gentlemen:

Reference is made to that certain Amended and Restated Revolving Credit
Agreement, dated as of May [—], 2009 (as amended, restated, extended,
supplemented or otherwise modified in writing from time to time, the
“Agreement”), among The PMI Group, Inc., the Lenders from time to time party
thereto, and Bank of America, N.A., as Administrative Agent. Capitalized terms
used herein and not otherwise defined shall have the meanings set forth in the
Credit Agreement.

The undersigned Senior Officer hereby certifies as of the date hereof that
he/she is the                      of the Borrower, and that, as such, he/she is
authorized to execute and deliver this Certificate to the Administrative Agent
on the behalf of the Borrower, and that:

1. Attached hereto as Schedule 1 is a copy of the Updating Report, delivered
pursuant to Section 6.01(h) of the Credit Agreement for the Quarterly Period
ended as of the above date.

2. Attached hereto as Schedule 2 are written calculations setting forth in
reasonable detail the QBE Note Amount as of the last day of such Quarterly
Period.

3. The undersigned has made, or has caused to be made under his/her supervision,
a review of the Updating Report and the facts and circumstances identified in
the Updating Report as being taken into consideration in connection with the
preparation of the Updating Report.

4. The written calculations set forth on Schedule 2 attached hereto are true and
accurate on and as of the date hereof.

IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
            , 20__.

 

G-1

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THE PMI GROUP, INC. By:       Name:   Title:

 

G-2

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

Schedule 1 to Exhibit G

 

G-3

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

Schedule 2 to Exhibit G

QBE NOTE AMOUNT CALCULATIONS

 

1. QBE Applicable Measuring Amount

(a) If the QBE Actual Insurance Loss Percentage is finally determined:

 

   $ 475,199,150

MULTIPLIED BY:

  

QBE Actual Insurance Loss Percentage:

      

Total QBE Applicable Measuring Amount:

      

(b) If the QBE Actual Insurance Loss Percentage is not finally determined:

 

   $ 475,199,150

MULTIPLIED BY:

  

QBE Forecast Actual Insurance Loss Percentage:

      

Total QBE Applicable Measuring Amount:

      

 

2. QBE Adjustment Amount

 

QBE Applicable Measuring Amount

      

LESS:

   $ 237,599,575

PLUS:

  

(Reductions for claims and breaches Warranties):

      

Total QBE Adjustment Amount

      

 

G-4

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3. QBE Note Amount

 

QBE Note Interest

    

QBE Note Principal

    

LESS:

  

QBE Adjustment Amount

    

Total QBE Note Amount

    

 

G-5

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Annex II

Form of Solvency Opinion