**Exhibit10.36**

 

 

 

** **

**CREDIT AGREEMENT**

 

**Dated as of August 13, 2003**

 

**among**

 

**BUILDING MATERIALS HOLDING CORPORATION,**

 

**BMC WEST CORPORATIONAND OTHER SUBSIDIARY GUARANTORS,**

 

**WELLS FARGO BANK, NATIONAL ASSOCIATION,as Administrative Agent, Co-Lead Arranger and L/C Issuer,**

 

**GENERAL ELECTRIC CAPITAL CORPORATION,**

 

**as Co-Lead Arranger,**

 

**U.S. BANK NATIONAL ASSOCIATION,**

 

**as Syndication Agent,**

 

**UNION BANK OF CALIFORNIA, N.A.,**

 

**as Documentation Agent**

 

**and**

 

**THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO**

 

 

 

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**TABLE OFCONTENTS**

 
| ARTICLE  I  | DEFINITIONS                             |                                                             |
|-------------|-----------------------------------------|------------------------------------------------------------------|
|        |                                    |                                                             |
|        | 1.01                                    | Certain Defined Terms                                            |   |
|        | 1.02                                    | Other Interpretive Provisions                                    |   |
|        | 1.03                                    | Accounting Principles                                            |   |
|        | 1.04                                    | Treatment of  Non-Wholly-Owned Subsidiaries                      |   |
|        |                                    |                                                             |   |
| ARTICLE II  | THE CREDITS                             |                                                             |
|        |                                    |                                                             |   |
|        | 2.01                                    | Amounts and Terms of  Commitments                                |   |
|        | 2.02                                    | Loan Accounts                                                    |   |
|        | 2.03                                    | Procedure for Borrowing                                          |   |
|        | 2.04                                    | Conversion and  Continuation Elections                           |   |
|        | 2.05                                    | Voluntary Termination or  Reduction of Commitments               |   |
|        | 2.06                                    | Swingline Loans                                                  |   |
|        | 2.07                                    | Optional Prepayments                                             |   |
|        | 2.08                                    | Mandatory Prepayments of  Loans; Mandatory Commitment Reductions |   |
|        | 2.09                                    | Repayment                                                        |   |
|        | 2.10                                    | Interest                                                         |   |
|        | 2.11                                    | Fees                                                             |   |
|        | 2.12                                    | Computation of Fees and  Interest                                |   |
|        | 2.13                                    | Payments by Holdings                                             |   |
|        | 2.14                                    | Payments by the Lenders  to the Administrative Agent             |   |
|        | 2.15                                    | Sharing of Payments, Etc                                         |   |
|        | 2.16                                    | Security and Guaranty                                            |   |
|        |                                    |                                                             |   |
| ARTICLE III | THE LETTERS OF CREDIT                   |                                                             |
|        |                                    |                                                             |
|        | 3.01                                    | The Letter of Credit  Subfacility                                |   |
|        | 3.02                                    | Issuance, Amendment and  Renewal of Letters of Credit            |   |
|        | 3.03                                    | Risk Participations, Drawings and Reimbursements                 |   |
|        | 3.04                                    | Repayment of  Participations                                     |   |
|        | 3.05                                    | Role of the L/C Issuer                                           |   |
|        | 3.06                                    | Obligations Absolute                                             |   |
|        | 3.07                                    | Cash Collateral Pledge                                           |   |
|        | 3.08                                    | Letter of  Credit Fees                                           |   |
|        | 3.09                                    | Applicability of  ISP98 and UCP                                  |   |
|        | 3.10                                    | Trade Bank as L/C Issuer                                         |   |
|        |                                    |                                                             |   |
| ARTICLE IV  | TAXES, YIELD PROTECTION  AND ILLEGALITY |                                                             |
|        |                                    |                                                             |   |
|        | 4.01                                    | Taxes                                                            |   |
|        | 4.02                                    | Illegality                                                       |   |
|        | 4.03                                    | Increased Costs and  Reduction of Return                         |   |
|        | 4.04                                    | Funding Losses                                                   |   |
|        | 4.05                                    | Inability to Determine  Rates                                    |   |
|        | 4.06                                    | Certificates of  Lenders                                         |   |
|        | 4.07                                    | Substitution of  Lenders                                         |   |
|        | 4.08                                    | Survival                                                         |   |

 

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| ARTICLE V   | CONDITIONS PRECEDENT            |                                               |
|-------------|---------------------------------|----------------------------------------------------|
|        |                            |                                               |   |
|        | 5.01                            | Conditions to Signing  Date                        |   |
|        | 5.02                            | Conditions to  Effective Date                      |   |
|        | 5.03                            | Conditions to  the Subsequent Effective Date       |   |
|        | 5.04                            | Conditions to  All Credit Extensions               |   |
|        |                            |                                               |   |
| ARTICLE VI  | REPRESENTATIONS AND  WARRANTIES |                                               |
|        |                            |                                               |   |
|        | 6.01                            | Corporate  Existence and Power                     |   |
|        | 6.02                            | Corporate  Authorization; No Contravention         |   |
|        | 6.03                            | Governmental  Authorization                        |   |
|        | 6.04                            | Binding Effect                                     |   |
|        | 6.05                            | Litigation                                         |   |
|        | 6.06                            | No Defaults                                        |   |
|        | 6.07                            | ERISA  Compliance                                  |   |
|        | 6.08                            | Use of Proceeds;  Margin Regulations               |   |
|        | 6.09                            | Title to Properties; Liens                         |   |
|        | 6.10                            | Taxes                                              |   |
|        | 6.11                            | Financial Condition                                |   |
|        | 6.12                            | Environmental  Matters                             |   |
|        | 6.13                            | Collateral  Documents                              |   |
|        | 6.14                            | Regulated  Entities                                |   |
|        | 6.15                            | No Burdensome  Restrictions                        |   |
|        | 6.16                            | Copyrights, Patents,  Trademarks and Licenses, Etc |   |
|        | 6.17                            | Subsidiaries                                       |   |
|        | 6.18                            | Insurance                                          |   |
|        | 6.19                            | Swap  Obligations                                  |   |
|        | 6.20                            | Real Property                                      |   |
|        | 6.21                            | Full Disclosure                                    |   |
|        | 6.22                            | Internal  Controls                                 |   |
|        |                            |                                               |   |
| ARTICLE VII | AFFIRMATIVE COVENANTS           |                                               |
|        |                            |                                               |   |
|        | 7.01                            | Financial  Statements                              |   |
|        | 7.02                            | Certificates; Other  Information                   |   |
|        | 7.03                            | Notices                                            |   |
|        | 7.04                            | Preservation of Corporate  Existence, Etc.         |   |
|        | 7.05                            | Maintenance of  Property                           |   |
|        | 7.06                            | Insurance                                          |   |
|        | 7.07                            | Payment  of Obligations                            |   |
|        | 7.08                            | Compliance  with Laws                              |   |
|        | 7.09                            | Compliance  with ERISA                             |   |
|        | 7.10                            | Inspection  of Property and Books and Records      |   |
|        | 7.11                            | Environmental  Laws                                |   |
|        | 7.12                            | Use of Proceeds                                    |   |
|        | 7.13                            | Additional Guarantors                              |   |
|        | 7.14                            | Additional  Subsidiaries                           |   |
|        | 7.15                            | Environmental  Review                              |   |

 

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|         | 7.16                     | Further  Assurances                                              |   |
|--------------|--------------------------|------------------------------------------------------------------|--------|
|         | 7.17                     | Appraisals/Title Insurance                                       |   |
|         | 7.18                     | Intercompany  Notes                                              |   |
|         |                     |                                                             |   |
| ARTICLE VIII | NEGATIVE COVENANTS       |                                                             |
|         |                     |                                                             |   |
|         | 8.01                     | Limitation on Liens                                              |   |
|         | 8.02                     | Disposition of  Assets                                           |   |
|         | 8.03                     | Consolidations  and Mergers                                      |   |
|         | 8.04                     | Loans and Investments                                            |   |
|         | 8.05                     | Limitation on Indebtedness                                       |   |
|         | 8.06                     | Transactions with Affiliates                                     |   |
|         | 8.07                     | Use of Proceeds                                                  |   |
|         | 8.08                     | Contingent  Obligations                                          |   |
|         | 8.09                     | Subsidiaries                                                     |   |
|         | 8.10                     | Lease  Obligations                                               |   |
|         | 8.11                     | Restricted  Payments                                             |   |
|         | 8.12                     | ERISA                                                            |   |
|         | 8.13                     | Capital  Expenditures                                            |   |
|         | 8.14                     | Sales  and Leasebacks                                            |   |
|         | 8.15                     | Certain  Payments                                                |   |
|         | 8.16                     | Modification of  Subordinated Debt Documents                     |   |
|         | 8.17                     | Change in  Business                                              |   |
|         | 8.18                     | Accounting  Changes                                              |   |
|         | 8.19                     | Financial  Covenants                                             |   |
|         | 8.20                     | No Restrictions  on Subsidiary Dividends                         |   |
|         |                     |                                                             |   |
| ARTICLE IX   | EVENTS OF DEFAULT        |                                                             |
|         |                     |                                                             |   |
|         | 9.01                     | Event of  Default                                                |   |
|         | 9.02                     | Remedies                                                         |   |
|         | 9.03                     | Specified  Swap Contract Remedies                                |   |
|         |                     |                                                             |   |
| ARTICLE X    | THE ADMINISTRATIVE AGENT |                                                             |
|         |                     |                                                             |   |
|         | 10.01                    | Appointment and  Authorization; “Administrative Agent” |   |
|         | 10.02                    | Delegation of  Duties                                            |   |
|         | 10.03                    | Liability of  Administrative Agent                               |   |
|         | 10.04                    | Reliance by Administrative  Agent                                |   |
|         | 10.05                    | Notice of Default                                                |   |
|         | 10.06                    | Credit Decision                                                  |   |
|         | 10.07                    | Indemnification  of Administrative Agent                         |   |
|         | 10.08                    | Administrative  Agent in Individual Capacity                     |   |
|         | 10.09                    | Successor Administrative  Agent                                  |   |
|         | 10.10                    | Withholding Tax                                                  |   |
|         | 10.11                    | Collateral  Matters                                              |   |
|         | 10.12                    | Syndication  Agent, Documentation Agent, Co-Lead Arranger        |   |
|         |                     |                                                             |   |
| ARTICLE XI   | MISCELLANEOUS            |                                                             |
|         |                     |                                                             |   |
|         | 11.01                    | Amendments  and Waivers                                          |   |
|         | 11.02                    | Notices                                                          |   |

 

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|   | 11.03 | No Waiver; Cumulative  Remedies                  |   |
|--------|-------|--------------------------------------------------|--------|
|   | 11.04 | Costs and Expenses                               |   |
|   | 11.05 | Indemnification                                  |   |
|   | 11.06 | Marshalling; Payments  Set Aside                 |   |
|   | 11.07 | Successors and Assigns                           |   |
|   | 11.08 | Assignments,  Participations, Etc                |   |
|   | 11.09 | Confidentiality                                  |   |
|   | 11.10 | Set-off                                          |   |
|   | 11.11 | [Intentionally  omitted.]                        |   |
|   | 11.12 | Guaranty                                         |   |
|   | 11.13 | Notification of Addresses,  Lending Offices, Etc |   |
|   | 11.14 | Counterparts                                     |   |
|   | 11.15 | Severability                                     |   |
|   | 11.16 | No Third  Parties Benefited                      |   |
|   | 11.17 | Governing  Law and Jurisdiction                  |   |
|   | 11.18 | Waiver of Jury  Trial                            |   |
|   | 11.19 | Entire  Agreement                                |   |
|   | 11.20 | Treatment  of Existing Credit Agreement          |   |

 

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| **ANNEXES**    |                                                                  |   |
|----------------|-----------------------------------------------------------------------|--------|
|           |                                                                  |   |   |
| Annex  I       | Pricing  Grid                                                         |   |
|           |                                                                  |   |
| **SCHEDULES**  |                                                                  |   |
|           |                                                                  |   |
| Schedule 2.01  | Commitments and Proportionate Shares                                  |   |
| Schedule 2.09  | Term B Loan Amortization Schedule                                     |   |
| Schedule 6.05  | Litigation                                                            |   |
| Schedule 6.07  | ERISA                                                                 |   |
| Schedule 6.11  | Permitted Liabilities                                                 |   |
| Schedule 6.12  | Environmental Matters                                                 |   |
| Schedule 6.15  | Burdensome Restrictions                                               |   |
| Schedule 6.17  | Subsidiaries and Minority Interests                                   |   |
| Schedule 6.18  | Insurance Matters                                                     |   |
| Schedule 6.20  | Owned Real Property                                                   |   |
| Schedule 8.01  | Permitted Liens                                                       |   |
| Schedule 8.05  | Permitted Indebtedness                                                |   |
| Schedule 8.08  | Contingent Obligations                                                |   |
| Schedule 11.02 | Payment Offices; Addresses for Notices;  Lending Offices              |   |
|           |                                                                  |
| **EXHIBITS**   |                                                                  |   |
|           |                                                                  |   |
| Exhibit A-1    | Form of Notice of Revolving Borrowing                                 |   |
| Exhibit A-2    | Form of Notice of Term B Loan Borrowing                               |   |
| Exhibit B-1    | Form of Notice of Revolving Loan  Conversion/Continuation             |   |
| Exhibit B-2    | Form of Notice of Term B Loan  Conversion/Continuation                |   |
| Exhibit C      | Form of Compliance Certificate                                        |   |
| Exhibit D      | Form of Legal Opinion of Counsel to Loan Parties                      |   |
| Exhibit E      | Form of Assignment and Acceptance                                     |   |
| Exhibit F-1    | Form of Revolving Note                                                |   |
| Exhibit F-2    | Form of Term B Note                                                   |   |
| Exhibit G      | Form of Additional Guarantor Assumption Agreement                     |   |
| Exhibit H      | Form of Legal Opinion of Additional Guarantor’s  Counsel         |   |
| Exhibit I      | Form of Borrowing Base Certificate                                    |   |
| Exhibit J-1    | Form of Security Agreement                                            |   |
| Exhibit J-2    | Form of Second Amendment to Intellectual Property  Security Agreement |   |
| Exhibit K      | Form of Update Certificate                                            |   |
| Exhibit L      | Form of Second Amendment to Deeds of Trust                            |   |
|           |                                                                  |   |
|                |                                                                       |        |  |  |

 

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**CREDITAGREEMENT**

 

This CREDIT AGREEMENT (this “Agreement”) isentered into as of August 13, 2003, by and among (i) BUILDING MATERIALS HOLDINGCORPORATION, a Delaware corporation (“Holdings”), as borrower, (ii) BMCWEST CORPORATION, a Delaware corporation (the “Company”), and certainother affiliates of Holdings, as guarantors, (iii) the several financialinstitutions from time to time party to this Agreement (individually, a “Lender”and, collectively, the “Lenders”), (iv) GENERAL ELECTRIC CAPITALCORPORATION, as Co-Lead Arranger, (v) U.S. BANK NATIONAL ASSOCIATION, asSyndication Agent, (vi) UNION BANK OF CALIFORNIA, N.A., as Documentation Agentand (vii) WELLS FARGO BANK, NATIONAL ASSOCIATION (“Wells Fargo”), as theL/C Issuer (as defined herein), the Swingline Lender (as defined herein), theadministrative agent for the Lenders (in such capacity, the “AdministrativeAgent”), and the Co- Lead Arranger of the credit facilities describedherein.

 

**RECITALS**

 

A.            WHEREAS,Holdings previously entered into that certain Credit Agreement, dated as of November 30,1999, which was subsequently amended and restated pursuant to that certainAmended and Restated Credit Agreement, dated as of August 30, 2001, by andamong (i) Holdings, as borrower, (ii) the Company and certain other affiliatesof Holdings, as guarantors, (iii) the several financial institutions partythereto, as lenders (each, an “Existing Lender” and, collectively, the “ExistingLenders”), (iv) First Union National Bank, as syndication agent, and (v)Wells Fargo, as letter of credit issuing bank, swingline bank, andadministrative agent for the Existing Lenders and as lead arranger of thecredit facilities provided therein (as amended and restated, and as furtheramended prior to the date hereof, the “Existing Credit Agreement”).

 

B.            WHEREAS,Holdings has requested that the Existing Credit Agreement be further amendedand restated in order to (i) decrease the Revolving Commitment initially to$175,000,000, which amount may be subsequently increased in accordance with theterms and conditions hereof, (ii) replace the Existing Term Commitment with anew Term B Commitment, initially in an aggregate amount of $125,000,000, whichamount may be subsequently increased in accordance with the terms andconditions hereof, (iii) replace certain of the Existing Lenders that do notdesire to be party to this Agreement (collectively, the “Departing Lenders”)with new financial institutions which desire to be party to this Agreement asLenders (collectively, the “New Lenders”), (iv) reallocate theoutstanding Obligations among those Existing Lenders that desire to be party tothis Agreement (collectively, the “Remaining Lenders”) and the NewLenders, and (v) make certain other changes.

 

C.            WHEREAS,the parties hereto are willing to so amend and restate the Existing CreditAgreement upon the terms and subject to the conditions set forth herein.

 

**AGREEMENT**

 

NOW, THEREFORE, in consideration of the above Recitalsand the mutual agreements, provisions and covenants contained herein, theparties hereto hereby agree as follows:

 

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**ARTICLE I**

 

**DEFINITIONS**

 

1.01         Certain DefinedTerms.  The following terms have thefollowing meanings when used herein (including in the Recitals hereof):

 

“Account” means for purposes of this Agreementand the Borrowing Base Certificate, any right of payment of Holdings or anyGuarantor for goods sold or leased or for services rendered in the ordinarycourse of business which is not evidenced by an instrument (except as part ofchattel paper), whether or not it has been earned by performance.

 

“Account Debtor” means the Person obligated onan Account.

 

“Acquisition” means any transaction or seriesof related transactions for the purpose of or resulting, directly orindirectly, in (i) the acquisition of all or substantially all of the assets ofa Person, or of any business or division of a Person, (ii) the acquisitionof in excess of 50% of the capital stock, partnership interests, membershipinterests or equity of any Person, or otherwise causing any Person to become aSubsidiary, or (iii) a merger or consolidation or any other combinationwith another Person (other than a Person that is a Subsidiary), providedthat Holdings or the Company, as the case may be (or the Subsidiary), is thesurviving Person.

 

“Additional Lenders” means the financial institutions(if any) which agree to provide Additional Term B Loans and/or make AdditionalRevolving Commitments to Holdings in accordance with the terms and conditionsset forth herein by becoming parties to this Agreement on the SubsequentEffective Date.

 

“Additional Guarantor Accession Date” has themeaning specified in Section 7.13.

 

“Additional Guarantor Assumption Agreement” hasthe meaning specified in Section 7.13.

 

“Additional Revolving Commitment” has themeaning specified in Section 2.01(d).

 

“Additional Term B Commitment” has the meaningspecified in Section 2.01(c).

 

“Additional Term B Loan” has the meaningspecified in Section 2.01(c).

 

“Administrative Agent” has the meaningspecified in the preamble, and any successor Administrative Agent arisingunder Section 10.09.

 

“Administrative Agent-Related Persons” meansWells Fargo and any successor Administrative Agent arising under Section10.09 and any L/C Issuer hereunder, together with their respectiveAffiliates (including, in the case of Wells Fargo, the Co-Lead Arranger), andthe officers, directors, employees, agents and attorneys-in-fact of suchPersons and Affiliates.

 

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“Administrative Agent’s Payment Office” meansthe address for payments set forth on Schedule 11.02 or such otheraddress as the Administrative Agent may from time to time specify.

 

“Affiliate” means, as to any Person, any otherPerson which, directly or indirectly, is in control of, is controlled by, or isunder common control with, such Person. A Person shall be deemed to control another Person if the controllingPerson possesses, directly or indirectly, the power to direct or cause thedirection of the management and policies of the other Person, whether throughthe ownership of voting securities, membership interests, by contract, orotherwise.

 

“Aggregate Commitment” means the combinedCommitments of the Lenders, which combined Commitments shall not exceed$300,000,000 as of the Effective Date and which amount may be increased, on theSubsequent Effective Date, by no more than $50,000,000 pursuant to Section2.01(c) and Section 2.01(d).

 

“Aggregate Revolving Commitment” means thecombined Revolving Commitments of the Revolving Lenders, which combinedRevolving Commitments shall not exceed $175,000,000 as of the Effective Date,which amount includes both the L/C Commitment and the Swingline Commitment andwhich amount may be increased on the Subsequent Effective Date pursuant to Section 2.01(d),by no more than an amount equal to the difference of (i) $50,000,000 minus(ii) the amount (if any) by which the Aggregate Term B Commitment is beingincreased on the Subsequent Effective Date pursuant to Section 2.01(c).

 

“Aggregate Term B Commitment” means thecombined Term B Commitments of the Term B Lenders, which Term B Commitmentsshall not exceed $125,000,000 as of the Effective Date and which amount may beincreased on the Subsequent Effective Date pursuant to Section 2.01(c),by no more than an amount equal to the difference of (i) $50,000,000 minus(ii) the amount (if any) by which the Aggregate Revolving Commitment is beingincreased on the Subsequent Effective Date pursuant to Section 2.01(d).

 

“Agreement” means this Credit Agreement.

 

“Applicable Fee Amount” means with respect tothe Commitment Fees and Standby Letter of Credit fees payable hereunder, theamount set forth opposite the indicated Level below the heading “CommitmentFee” or “Letter of Credit Fee,” as applicable, in the pricing grid set forth onAnnex I in accordance with the parameters for calculations of suchamount also set forth on Annex I.

 

“Applicable Margin” means (i) with respectto Base Rate Loans and Offshore Rate Loans which are Revolving Loans, theamount set forth opposite the indicated Level below the heading “Base RateSpread or “Offshore Rate Spread” in the pricing grid set forth on Annex Iin accordance with the parameters for calculations of such amounts also setforth on Annex I, and (ii) with respect to Term B Loans whichare Base Rate Loans, 2.50%, and with respect to Term B Loans which areOffshore Rate Loans, 3.25%.

 

“Assignee” has the meaning specified in Section11.08(a).

 

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“Attorney Costs” means and includes all feesand disbursements of any law firm or other external counsel, the allocated costof internal legal services and all disbursements of internal counsel.

 

“Available Commitment” has the meaningspecified in Section 2.11(b).

 

“Bankruptcy Code” means the Federal BankruptcyReform Act of 1978 (11 U.S.C. §101, etseq.).

 

“Base Rate” means, for any day, the higherof:  (i) 0.50% per annum above thelatest Federal Funds Rate, and (ii) the rate of interest in effect forsuch day as publicly announced from time to time by Wells Fargo at itsprincipal office in San Francisco as its prime rate.  (The prime rate is a rate set by Wells Fargo based upon variousfactors including Wells Fargo’s costs and desired return, general economicconditions and other factors, and is used as a reference point for pricing someloans, which may be priced at, above, or below such announced rate.)  Any change in the prime rate announced byWells Fargo shall take effect at the opening of business on the day specifiedin the public announcement of such change.

 

“Base Rate Loan” means a Loan that bearsinterest based on the Base Rate.

 

“Borrowing” means a borrowing hereunderconsisting of (i) Loans of the same Type made to Holdings on the same dayby the Lenders under Article II, and, in the case of Offshore Rate Loans,having the same Interest Period, (ii) a Swingline Loan (or SwinglineLoans) made to Holdings on the same day by the Swingline Lender, or(iii) an L/C Borrowing.

 

“Borrowing Base” means, at any time, an amountequal to the sum of: (i) 80% of the value of the Accounts measured at theend of the most recently completed month; plus (ii) 60% of thevalue of the Inventory measured at the end of the most recently completedmonth.  As used in this definition, “value”as applied to Inventory shall mean the lower of cost and market, or if there atany time exist any other matters, events, conditions or contingencies which theMajority Revolving Lenders reasonably believe may cause a material portion ofthe Accounts to be unpaid, the Majority Revolving Lenders, in their solediscretion, may exclude any of the Accounts or Inventory from the BorrowingBase if the Majority Revolving Lenders reasonably determine that the inclusionof such Account or Inventory in the Borrowing Base would have a MaterialAdverse Effect.

 

“Borrowing Base Certificate” means acertificate substantially in the form of Exhibit I.

 

“Borrowing Date” means any date on which aBorrowing occurs under Section 2.03.

 

“Business Day” means any day other than aSaturday, Sunday or other day on which commercial banks in New York City or SanFrancisco are authorized or required by law to close and, if the applicableBusiness Day relates to any Offshore Rate Loan, means such a day on whichdealings are carried on in the London or other applicable offshore Dollarinterbank market.

 

“Capital Adequacy Regulation” means anyguideline, request or directive of any central bank or other GovernmentalAuthority, or any other law, rule or regulation, whether or not

 

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having the force of law,in each case, regarding capital adequacy of any bank or of any corporationcontrolling a bank.

 

“Capital Expenditure Annual Limit” means, forany fiscal year, the sum of (i) $35,000,000 plus (ii) 3.0% of theaggregate sales reported by all Persons acquired by Holdings or itsSubsidiaries in such fiscal year pursuant to a Permitted Acquisition, asreported by each such acquired Person in its financial statements for suchPerson’s then most recent fiscal year-end, plus (iii) the amount ofproceeds of any Disposition or Event of Loss which are reinvested as CapitalExpenditures within six (6) months of Holdings’ or any Subsidiary’s receipt ofsuch proceeds.

 

“Capital Expenditures” means, for any period,the aggregate of all expenditures (including the current portion of CapitalLeases) which are required to be capitalized on the consolidated balance sheetof Holdings and its Subsidiaries during that period, in accordance with GAAP,excluding Acquisitions permitted by Section 8.04(e).

 

“Capital Lease” means, for any Person, anylease of property (whether real, personal or mixed) which, in accordance withGAAP, would, at the time a determination is made, be required to be recorded asa capital lease in respect of which such Person is liable as lessee.

 

“Cash Collateralize” means to pledge anddeposit with or deliver to the Administrative Agent, for the benefit of theAdministrative Agent, the L/C Issuer and the Revolving Lenders, as additionalcollateral for the L/C Obligations, cash or deposit account balances pursuantto the Security Agreement.  Derivativesof such term shall have corresponding meaning.

 

“Change of Control” means any person or groupof persons (within the meaning of section 13 or 14 of the Exchange Act)shall have acquired beneficial ownership (within the meaning of Rule 13d-3promulgated by the SEC under the Exchange Act) of 20% or more of theoutstanding shares of common stock of Holdings; or, the replacement of amajority of the board of directors of Holdings over a one year period from thedirectors who constituted the board of directors at the beginning of suchperiod, and the election or nomination for election of such replacements shallnot have been approved by a vote of at least a majority of the board ofdirectors then still in office who either were members of such board ofdirectors at the beginning of such period or whose election or nomination as amember of such board of directors was previously so approved.

 

“Co-Lead Arranger” means each of Wells FargoBank and General Electric Capital Corporation, each in their respectivecapacity as Co-Lead Arranger and Book Manager.

 

“Code” means the Internal Revenue Code of 1986.

 

“Collateral” means all tangible and intangibleproperty and interests in property and proceeds thereof now owned or hereafteracquired by Holdings and any Guarantor in or upon which a Lien (i) existed infavor of the administrative agent and the Existing Lenders party to theExisting Credit Agreement immediately prior to the Effective Date, or (ii) nowor hereafter exists in favor of the Lenders, or the Administrative Agent onbehalf of the Lenders on and after the Effective Date, whether under thisAgreement or under any other Collateral Documents.

 

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“Collateral Documents” mean, collectively,(i) the Security Agreement, the Intellectual Property Security Agreements,the Second Amendment to Intellectual Property Security Agreements, theMortgages and all other security agreements, mortgages, deeds of trust, patentand trademark assignments, lease assignments and other similar agreementsbetween Holdings or any Guarantor and the Lenders, or the Administrative Agentfor the benefit of the Lenders, now or hereafter delivered to the Lenders orthe Administrative Agent pursuant to or in connection with the transactionscontemplated hereby, and all financing statements (or comparable documents nowor hereafter filed in accordance with the Uniform Commercial Code or comparablelaw) against Holdings or any Guarantor as debtor in favor of the Lenders, orthe Administrative Agent for the benefit of the Lenders, as secured party, and(ii) any amendments, supplements, modifications, renewals, replacements,consolidations, substitutions and extensions of any of the foregoing.

 

“Commercial Letter of Credit” means acommercial Letter of Credit Issued for the account of Holdings in respect ofthe purchase of Inventory or other goods and services by Holdings or any of itsSubsidiaries in the ordinary course of business.

 

“Commitment,” as to each Lender, means the sumof its Revolving Commitment and Term B Commitment.

 

“Commitment Fees” has the meaning specified in Section2.11(b).

 

“Company” has the meaning specified in the preamble.

 

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

 

“Consolidated Net Worth” means, as of the dateof determination, the consolidated shareholders’ equity of Holdings and itsSubsidiaries, as determined in accordance with GAAP.

 

“Consolidated Net Income” means, as of the dateof determination, the consolidated net income of Holdings and its Subsidiaries,as determined in accordance with GAAP.

 

“Consolidated Total Assets” means, as of thedate of determination, the consolidated Total Assets of Holdings and its Subsidiaries,as determined in accordance with GAAP.

 

“Contingent Obligation” means (withoutduplication), as to any Person, any direct or indirect liability of thatPerson, whether or not contingent, with or without recourse, (i) withrespect to any Indebtedness, lease, dividend, letter of credit or otherobligation (the “primary obligations”) of another Person (the “primaryobligor”), including any obligation of that Person (a) to purchase,repurchase or otherwise acquire such primary obligations or any securitytherefor, (b) to advance or provide funds for the payment or discharge ofany such primary obligation, or to maintain working capital or equity capitalof the primary obligor or otherwise to maintain the net worth or solvency orany balance sheet item, level of income or financial condition of the primaryobligor, (c) to purchase property, securities or services primarily forthe purpose of assuring the owner of any such primary obligation of the abilityof the primary obligor to make payment of such primary obligation, (d) inconnection with any synthetic lease or other similar off balance sheet leasetransaction, or (e) otherwise to assure or hold harmless the holder of anysuch primary obligation against loss in respect thereof (each a “Guaranty

 

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Obligation”);(ii) with respect to any Surety Instrument issued for the account of thatPerson or as to which that Person is otherwise liable for reimbursement ofdrawings or payments; (iii) to purchase any materials, supplies or otherproperty from, or to obtain the services of, another Person if the relevantcontract or other related document or obligation requires that payment for suchmaterials, supplies or other property, or for such services, shall be maderegardless of whether delivery of such materials, supplies or other property isever made or tendered, or such services are ever performed or tendered;(iv) in respect of Earn-Out Obligations; (v) in respect of any SwapContract; and (vi) in respect of Stock Price Guaranties.  The amount of any Contingent Obligationshall, in the case of Guaranty Obligations, be deemed equal to the stated ordeterminable amount of the primary obligation in respect of which such GuarantyObligation is made or, if not stated or if indeterminable, the maximumreasonably anticipated liability in respect thereof, and in the case of otherContingent Obligations other than in respect of Swap Contracts, shall be equalto the maximum reasonably anticipated liability in respect thereof and, in thecase of Contingent Obligations in respect of Swap Contracts, shall be equal tothe Swap Termination Value.

 

“Contractual Obligation” means, as to anyPerson, any provision of any security issued by such Person or of anyagreement, undertaking, contract, indenture, mortgage, deed of trust or otherinstrument, document or agreement to which such Person is a party or by whichit or any of its property is bound.

 

“Conversion/Continuation Date” means any dateon which, under Section 2.04, Holdings (i) converts Loans ofone Type to another Type, or (ii) continues as Loans of the same Type, butwith a new Interest Period, Loans having Interest Periods expiring on suchdate.

 

“Credit Extension” means and includes(i) the making of any Revolving Loans, Term B Loans or Swingline Loanshereunder, and (ii) the Issuance of any Letters of Credit hereunder.

 

“Date of Acceleration” means the earlier of (i)the termination of the Revolving Loan Commitments and (ii) the declaration bythe Administrative Agent of all or a portion of the outstanding Revolving Loansand Term B Loans to be immediately due and payable, without presentment,demand, protest or any other notice of any kind.

 

“Default” means any event or circumstancewhich, with the giving of notice, the lapse of time, or both, would (if notcured or otherwise remedied during such time) constitute an Event of Default.

 

“Defaulting Lender” means a Lender that hasfailed to fund its portion of any Borrowing that it is required to fund underthis Agreement and has continued in such failure for three (3) Business Daysafter written notice from the Administrative Agent.

 

“Departing Lender” has the meaning specified inRecital B.

 

“Disposition” means the sale, lease, conveyanceor other disposition of property, other than sales or other dispositionsexpressly permitted under Sections 8.02(a) through 8.02(g).

 

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“Disposition Value” means the aggregate netbook value of all assets sold, transferred, leased or disposed of in anytransaction determined as of the date of such transfer or proposed transferthereof.

 

“Dollars,” “dollars” and “$” eachmean lawful money of the United States.

 

“Earn-out Obligations” means any obligations,whether contingent or matured, to pay additional consideration in connectionwith the Acquisition by Holdings or any Subsidiary of any capital stock orassets of any Person.

 

“EBITA” means, for any period, for Holdings andits Subsidiaries, the sum of consolidated net income of Holdings and itsSubsidiaries for such period (exclusive of extraordinary gains and losses andexclusive of earnings from Minority Investments but including earnings fromWholly-Owned Subsidiaries and Non-Wholly-Owned Subsidiaries (but in the case ofNon-Wholly-Owned Subsidiaries, only to the extent of the ratable portion ofownership by Holdings or any Wholly-Owned Subsidiaries of Holdings in suchNon-Wholly-Owned Subsidiaries)) plus (to the extent deducted indetermining consolidated net income) (i) Interest Expense for such period,(ii) income tax expense for such period, (iii) amortization expenseand other non-cash expenses for such period (other than depreciation expense)and (iv) cash distributions in respect of Minority Investments, in each case,measured in accordance with GAAP.

 

“EBITDA” means, for any period, for Holdingsand its Subsidiaries, the sum of consolidated net income of Holdings and itsSubsidiaries for such period (exclusive of extraordinary gains and losses andexclusive of earnings from Minority Investments but including earnings fromWholly-Owned Subsidiaries and Non-Wholly-Owned Subsidiaries (but in the case ofNon-Wholly-Owned Subsidiaries, only to the extent of the ratable portion ofownership by Holdings or any Wholly-Owned Subsidiaries of Holdings in suchNon-Wholly-Owned Subsidiaries)) plus (to the extent deducted indetermining consolidated net income) (i) Interest Expense for such period,(ii) income tax expense for such period, (iii) depreciation expense,amortization expense and other non-cash expenses for such period and(iv) cash distributions in respect of Minority Investments, in each case,measured in accordance with GAAP.  Forpurposes of determining the consolidated EBITDA of Holdings and itsSubsidiaries hereunder for purposes of calculating the EBITDA Ratio hereunder,EBITDA shall be adjusted upon the Permitted Acquisition of any acquiredSubsidiary (the “Acquiree”) (A) to include the historical financialresults of such Acquiree for  the fourfiscal quarter period (“Calculation Period”) for which Holdings’consolidated EBITDA is calculated hereunder, until such time as the first dayof any Calculation Period falls on or after the date on which the Acquisitionof such Acquiree is consummated; and (B) to exclude any specific, identifiableexpense items which are eliminated as a result of the Permitted Acquisition ofsuch Acquiree at the closing thereof, provided that, if available, auditedfinancial statements accompanied by an unqualified opinion of an IndependentAuditor are delivered to the Administrative Agent and the Lenders in respect ofsuch Acquiree for the then most recent fiscal year of such Acquiree, and providedfurther that Holdings shall have delivered a certificate of a ResponsibleOfficer clearly setting forth such pro forma additions to consolidated EBITDAresulting from the Permitted Acquisition of such Acquiree.

 

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“EBITDA Ratio” means, as of the end of anyfiscal quarter, measured on a consolidated basis for Holdings and itsSubsidiaries as of such date, the ratio of (i) Total Funded Debt existingon such date to (ii) EBITDA for the period of four fiscal quarters endingon such date.

 

“Effective Amount” means (i) with respectto any Revolving Loans, Term B Loans and Swingline Loans on any date, theaggregate outstanding principal amount thereof after giving effect to anyBorrowings and prepayments or repayments of Revolving Loans, Term B Loans andSwingline Loans occurring on such date; and (ii) with respect to anyoutstanding L/C Obligations on any date, the amount of such L/C Obligations onsuch date after giving effect to any Issuances of Letters of Credit occurringon such date and any other changes in the aggregate amount of the L/CObligations as of such date, including as a result of any reimbursements ofoutstanding unpaid drawings under any Letters of Credit or any reductions inthe maximum amount available for drawing under Letters of Credit taking effecton such date; provided that for purposes of Section 2.08, theEffective Amount shall be determined without giving effect to any mandatoryprepayments to be made under Section 2.08.

 

“Effective Date” means the date on which allconditions precedent set forth in Section 5.02 are satisfied orwaived by all of the Lenders (or, in the case of Section 5.02(c), waivedby the Person entitled to receive such payment) which date shall not be laterthan August 21, 2003.

 

“Eligible Assignee” means (i) a commercialbank or licensed lending institution organized under the laws of the UnitedStates, or any state thereof, and having a combined capital and surplus of atleast $100,000,000; (ii) a commercial bank organized under the laws of anyother country which is a member of the Organization for Economic Cooperationand Development (the “OECD”), or a political subdivision of any suchcountry, and having a combined capital and surplus of at least $100,000,000, providedthat such bank is acting through a branch or agency located in the UnitedStates; (iii) a Financial Institution, including, without limitation, a fund,that invests in and holds bank loans and (iv) a Person that is primarilyengaged in the business of commercial lending and that is (a) a Subsidiaryof a Lender, (b) a Subsidiary of a Person of which a Lender is aSubsidiary, or (c) a Person of which a Lender is a Subsidiary.

 

“Environmental Claims” means all claims,however asserted, by any Governmental Authority or other Person allegingpotential liability or responsibility for violation of any Environmental Law,or for release or injury to the environment or threat to public health,personal injury (including sickness, disease or death), property damage,natural resources damage, or otherwise alleging liability or responsibility fordamages (punitive or otherwise), cleanup, removal, remedial or response costs,restitution, civil or criminal penalties, injunctive relief, or other type ofrelief, resulting from or based upon the presence, placement, discharge,emission or release (including intentional and unintentional, negligent andnon-negligent, sudden or non-sudden, accidental or non-accidental, placement,spills, leaks, discharges, emissions or releases) of any Hazardous Material at,in, or from any property, whether or not owned by Holdings or any Subsidiary.

 

“Environmental Laws” means all federal, stateor local laws, statutes, common law duties, rules, regulations, ordinances andcodes, together with all administrative orders, directed duties, requests,licenses, authorizations and permits of, and agreements with, any Governmental

 

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Authorities, in each caserelating to environmental, health, safety and land use matters; including theComprehensive Environmental Response, Compensation and Liability Act of 1980 (“CERCLA”),the Clean Air Act, the Federal Water Pollution Control Act of 1972, the SolidWaste Disposal Act, the Federal Resource Conservation and Recovery Act, theToxic Substances Control Act, the Emergency Planning and CommunityRight-to-Know Act, the California Hazardous Waste Control Law, the CaliforniaSolid Waste Management, Resource, Recovery and Recycling Act, the CaliforniaWater Code and the California Health and Safety Code.

 

“ERISA” means the Employee Retirement IncomeSecurity Act of 1974.

 

“ERISA Affiliate” means any trade or business(whether or not incorporated) under common control with Holdings or the Companywithin the meaning of section 414(b) or (c) of the Code (and sections414(m) and (o) of the Code for purposes of provisions relating to section 412of the Code).

 

“ERISA Event” means (i) a Reportable Eventwith respect to a Pension Plan; (ii) a withdrawal by Holdings, the Companyor any ERISA Affiliate from a Pension Plan subject to section 4063 of ERISAduring a plan year in which it was a substantial employer (as defined insection 4001(a)(2) of ERISA) or a cessation of operations which is treated assuch a withdrawal under section 4062(e) of ERISA; (iii) a complete orpartial withdrawal by Holdings, the Company or any ERISA Affiliate from aMultiemployer Plan or notification that a Multiemployer Plan is inreorganization; (iv) the filing of a notice of intent to terminate, thetreatment of a Plan amendment as a termination under section 4041 or 4041A ofERISA, or the commencement of proceedings by the PBGC to terminate a PensionPlan or Multiemployer Plan; (v) an event or condition which mightreasonably be expected to constitute grounds under section 4042 of ERISA forthe termination of, or the appointment of a trustee to administer, any PensionPlan or Multiemployer Plan; or (vi) the imposition of any liability underTitle IV of ERISA, other than PBGC premiums due but not delinquent undersection 4007 of ERISA, upon Holdings, the Company or any ERISA Affiliate.

 

“Estimated Remediation Costs” means all costsassociated with performing work to remediate contamination of real property orgroundwater, including engineering and other professional fees and expenses,costs to remove, transport and dispose of contaminated soil, costs to “cap” orotherwise contain contaminated soil, and costs to pump and treat water andmonitor water quality.

 

“Eurodollar Reserve Percentage” has the meaningspecified in the definition of “Offshore Rate.”

 

“Event of Default” means any of the events orcircumstances specified in Section 9.01.

 

“Event of Loss” means, with respect to anyproperty, any of the following: (i) any loss, destruction or damage of such property; (ii) anypending or threatened institution of any proceedings for the condemnation orseizure of such property or for the exercise of any right of eminent domain; or(iii) any actual condemnation, seizure or taking, by exercise of the powerof eminent domain or otherwise, of such property, or confiscation of suchproperty or the requisition of the use of such property.

 

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“Exchange Act” means the Securities ExchangeAct of 1934.

 

“Existing Credit Agreement” has the meaningspecified in Recital A.

 

“Existing Lender” has the meaning specified in RecitalA.

 

“Existing Term Commitment” means the “TermCommitment” set forth in the Existing Credit Agreement.

 

“Federal Funds Rate” means, for any day, therate set forth in the weekly statistical release designated as H.15(519), orany successor publication, published by the Federal Reserve Bank of New Yorkwith respect to the preceding Business Day opposite the caption “Federal Funds(Effective)”; or, if for any relevant day such rate is not so published withrespect to any such preceding Business Day, the rate for such day will be thearithmetic mean as determined by the Administrative Agent of the rates for thelast transaction in overnight Federal funds arranged prior to 9:00 a.m. (NewYork City time) on that day by each of three leading brokers of Federal fundstransactions in New York City selected by the Administrative Agent.

 

“Fee Letter” has the meaning specified in Section2.11(a).

 

“Financial Institution” means a Person which,for purposes of Section 25118 of the Corporations Code of the State of California,has the capacity to protect its own interests in connection with thetransactions contemplated by this Agreement.

 

“FRB” means the Board of Governors of theFederal Reserve System, and any Governmental Authority succeeding to any of itsprincipal functions.

 

“Funded Debt” means, as of any date ofdetermination, all Indebtedness of Holdings and its Subsidiaries on such date,on a consolidated basis in accordance with GAAP, including all Revolving Loansand all Term B Loans, but excluding all L/C Obligations.

 

“Further Taxes” means any and all present orfuture taxes, levies, assessments, imposts, duties, deductions, fees,withholdings or similar charges (including net income taxes and franchisetaxes), and all liabilities with respect thereto, imposed by any jurisdictionon account of amounts payable or paid pursuant to Section 4.01.

 

“GAAP” means generally accepted accountingprinciples set forth from time to time in the opinions and pronouncements ofthe Accounting Principles Board and the American Institute of Certified PublicAccountants and statements and pronouncements of the Financial AccountingStandards Board (or agencies with similar functions of comparable stature andauthority within the U.S. accounting profession), which are applicable to thecircumstances as of the date of determination, subject to Section 1.03.

 

“Governmental Authority” means any nation orgovernment, any state or other political subdivision thereof, any central bank(or similar monetary or regulatory authority) thereof, any entity exercisingexecutive, legislative, judicial, regulatory or administrative functions of orpertaining to government, and any corporation or other entity owned orcontrolled, through stock or capital ownership or otherwise, by any of theforegoing.

 

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“Guarantor” means the Company and each otherdirect or indirect U.S. Wholly-Owned Subsidiary of Holdings that currentlyexists or is hereinafter acquired or created and which is a party to a Guarantyin its capacity as a guarantor hereunder; provided, however, thatin no event shall the definition of Guarantor include BMC Insurance, Inc.

 

“Guaranty” means the guaranty of each Guarantormade pursuant to Section 11.12 and any other guaranty under any separateagreement executed by any Guarantor pursuant to which it guarantees theObligations.

 

“Guaranty Obligation” has the meaning specifiedin the definition of “Contingent Obligation.”

 

“Hazardous Materials” means all thosesubstances that are regulated by, or which may form the basis of liabilityunder, any Environmental Law, including any substance identified under anyEnvironmental Law as a pollutant, contaminant, hazardous waste, hazardousconstituent, special waste, hazardous substance, hazardous material, or toxicsubstance, or petroleum or petroleum derived substance or waste.

 

“Holdings” has the meaning specified in the preamble.

 

“Honor Date” has the meaning specified in Section3.03(b).

 

“Indebtedness” of any Person means, withoutduplication, (i) all indebtedness for borrowed money; (ii) allobligations issued, undertaken or assumed as the deferred purchase price ofproperty or services (other than trade payables entered into in the ordinarycourse of business on ordinary terms but including all non-contingent Earn-OutObligations); (iii) all reimbursement or payment obligations with respectto Surety Instruments (contingent or otherwise); (iv) all obligationsevidenced by notes, bonds, debentures or similar instruments, including obligationsso evidenced incurred in connection with the acquisition of property, assets orbusinesses; (v) all indebtedness created or arising under any conditionalsale or other title retention agreement, or incurred as financing, in eithercase with respect to property acquired by the Person (even though the rightsand remedies of the seller or bank under such agreement in the event of defaultare limited to repossession or sale of such property); (vi) allobligations with respect to Capital Leases; (vii) all indebtednessreferred to in clauses (i) through (vi) above secured by (or for which theholder of such Indebtedness has an existing right, contingent or otherwise, tobe secured by) any Lien upon or in property (including accounts and contractsrights) owned by such Person, even though such Person has not assumed or becomeliable for the payment of such Indebtedness; (viii) all GuarantyObligations in respect of indebtedness or obligations of others of the kindsreferred to in clauses (i) through (vii) above; and (ix) all Stock PriceGuaranties having a tenor of six (6) months or more or exceeding $2,000,000 inthe aggregate for all Stock Price Guaranties then outstanding.  For all purposes of this Agreement, theIndebtedness of any Person shall include all recourse Indebtedness of anypartnership or joint venture or limited liability company in which such Personis a general partner or a joint venturer or a member.

 

“Indemnified Liabilities” has the meaningspecified in Section 11.05(a).

 

“Indemnified Person” has the meaning specifiedin Section 11.05(a).

 

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“Independent Auditor” has the meaning specifiedin Section 7.01(a).

 

“Insolvency Proceeding” means, with respect toany Person, (i) any case, action or proceeding with respect to such Personbefore any court or other Governmental Authority relating to bankruptcy,reorganization, insolvency, liquidation, receivership, dissolution, winding-upor relief of debtors, or (ii) any general assignment for the benefit ofcreditors, composition, marshalling of assets for creditors, or other, similararrangement in respect of its creditors generally or any substantial portion ofits creditors; in either case undertaken under U.S. Federal, state or foreignlaw, including the Bankruptcy Code.

 

“Intellectual Property Security Agreement” hasthe meaning specified in the Security Agreement.

 

“Interest Expense” means, for any period, forHoldings and its Subsidiaries in accordance with GAAP, all interest in respectof Indebtedness accrued or capitalized during such period (whether or notactually paid during such period).

 

“Interest Payment Date” means, (i) as to anyOffshore Rate Loan, the last day of each Interest Period applicable to suchLoan, (ii) as to any Base Rate Loan, the last Business Day of eachcalendar quarter and the Revolving Loan Maturity Date (in the case of RevolvingLoans) and the Term B Loan Maturity Date (in the case of Term B Loans) and(iii) as to any Swingline Loan, each of the last Business Day of each calendarquarter and the Revolving Loan Maturity Date; provided, however,that if any Interest Period for an Offshore Rate Loan exceeds three months, thedate that falls three months after the beginning of such Interest Period andafter each Interest Payment Date thereafter is also an Interest Payment Date.

 

“Interest Period” means, as to any OffshoreRate Loan, the period commencing on the Borrowing Date of such Loan or on theConversion/Continuation Date on which the Loan is converted into or continuedas an Offshore Rate Loan, and ending on the date one, two, three or six monthsthereafter, as selected by Holdings in its Notice of Borrowing or Notice ofConversion/Continuation; provided that:

 

(i)            ifany Interest Period would otherwise end on a day that is not a Business Day,that Interest Period shall be extended to the following Business Day unless, inthe case of an Offshore Rate Loan, the result of such extension would be tocarry such Interest Period into another calendar month, in which event suchInterest Period shall end on the preceding Business Day;

 

(ii)           anyInterest Period pertaining to an Offshore Rate Loan that begins on the lastBusiness Day of a calendar month (or on a day for which there is no numericallycorresponding 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 suchInterest Period; and

 

(iii)          noInterest Period for any Term B Loan shall extend beyond the Term B LoanMaturity Date and no Interest Period for any Revolving Loan shall extend beyondthe Revolving Loan Maturity Date; and

 

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(iv)          noInterest Period applicable to a Term B Loan or portion thereof shall extendbeyond any date upon which is due any scheduled principal payment in respect ofthe Term B Loans unless the aggregate principal amount of Term B Loansrepresented by Base Rate Loans or Offshore Rate Loans having Interest Periodsthat will expire on or before such date, equals or exceeds the amount of suchprincipal payment.

 

“Inventory” means for purposes of thisAgreement and the Borrowing Base Certificate, all goods of Holdings or anySubsidiary held for sale or lease in the ordinary course of business, work inprocess and any and all raw materials used in connection with the foregoing.

 

“Investment” has the meaning specified in Section8.04.

 

“IRS” means the Internal Revenue Service, andany Governmental Authority succeeding to any of its principal functions underthe Code.

 

“Issuance Date” has the meaning specified in Section3.01(a).

 

“Issue” means, with respect to any Letter ofCredit, to issue or to extend the expiry of, or to renew or increase the amountof or otherwise amend, such Letter of Credit; and the terms “Issued,” “Issuing”and “Issuance” have corresponding meanings.

 

“L/C Advance” means each Revolving Lender’sparticipation in any L/C Borrowing in accordance with its Proportionate Share.

 

“L/C Amendment Application” means anapplication form for amendment of outstanding Standby or Commercial Letters ofCredit as shall at any time be in use at the L/C Issuer, as the L/C Issuershall request.

 

“L/C Application” means an application form forissuances of Standby or Commercial Letters of Credit as shall at any time be inuse at the L/C Issuer, as the L/C Issuer shall request.

 

“L/C Borrowing” means an extension of creditresulting from a drawing under any Letter of Credit which shall not have beenreimbursed on the date when made nor converted into a Borrowing of RevolvingLoans under Section 3.03(c).

 

“L/C Commitment” means the commitment of theL/C Issuer to Issue, and the commitment of the Revolving Lenders severally toparticipate in, Letters of Credit from time to time Issued or outstanding underArticle III, in an aggregate amount not to exceed on any date the amountof $30,000,000, as the same shall be reduced as a result of a reduction in theL/C Commitment pursuant to Section 2.05 or Section 2.08; providedthat the L/C Commitment is a part of the combined Revolving Commitments of the RevolvingLenders rather than a separate, independent commitment; and providedfurtherthat if as a result of any Commitment reductions hereunder the L/C Commitmentshall exceed the combined Revolving Commitments of the Revolving Lenders, theL/C Commitment shall automatically reduce by the amount of such excess.

 

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“L/C Issuer” means Wells Fargo (or Trade Bank,as agent for Wells Fargo) in its capacity as issuer of one or more Letters ofCredit hereunder, together with any replacement letter of credit issuer arisingunder Section 10.01(b) or Section 10.09.

 

“L/C Obligations” means at any time the sum of(i) the aggregate undrawn amount of all Letters of Credit thenoutstanding, plus (ii) the amount of all unreimbursed drawingsunder all Letters of Credit, including all outstanding L/C Borrowings.

 

“L/C-Related Documents” means the Letters ofCredit, the L/C Applications, the L/C Amendment Applications and any otherdocument relating to any Letter of Credit, including any of the L/C Issuer’sstandard form documents for letter of credit issuances.

 

“Lender” has the meaning specified in the preamble,and includes both Revolving Lenders and Term B Lenders, provided, however,that after the Subsequent Effective Date, any Additional Lenders shall also bedeemed “Lenders” for all purposes hereunder.  References to the “Lenders” shall include Wells Fargo,including in its capacity as L/C Issuer and Swingline Lender; for purposes ofclarification only, to the extent that Wells Fargo may have any rights orobligations in addition to those of the Lenders due to its status as L/C Issueror Swingline Lender, its status as such will be specifically referenced.  Unless the context otherwise clearlyrequires, “Lender” includes any such institution in its capacity as SwapProvider.  Unless the context otherwiseclearly requires, references to any such institution as a “Lender” shallalso include any of such institution’s Affiliates that may at any time ofdetermination be Swap Providers.

 

“Lending Office” means, as to any Lender, theoffice or offices of such Lender specified as its “Lending Office” or “DomesticLending Office” or “Offshore Lending Office,” as the case may be, on Schedule11.02, or such other office or offices as such Lender may from time to timenotify to Holdings and the Administrative Agent.

 

“Letters of Credit” means any letters of creditIssued by the L/C Issuer pursuant to Article III (which may beCommercial Letters of Credit or Standby Letters of Credit).

 

“Lien” means any security interest, mortgage,deed of trust, pledge, hypothecation, assignment, charge or depositarrangement, encumbrance, lien (statutory or other) or preferential arrangementof any kind or nature whatsoever in respect of any property (including thosecreated by, arising under or evidenced by any conditional sale or other titleretention agreement, the interest of a lessor under a Capital Lease, anyfinancing lease having substantially the same economic effect as any of theforegoing, or the filing of any financing statement naming the owner of theasset to which such lien relates as debtor, under the Uniform Commercial Codeor any comparable law) and any contingent or other agreement to provide any ofthe foregoing, but not including the interest of a lessor under an OperatingLease.

 

“Loan” means an extension of credit by a Lenderto Holdings (i) under Article II, which may be a Base Rate Loan, anOffshore Rate Loan or a Swingline Loan (each a “Type” of Loan), andincludes a Revolving Loan or Term B Loan, or (ii) under Article III inthe form of an L/C Advance.

 

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“Loan Documents” means this Agreement, anyNotes, any Guaranty, the Collateral Documents, the Fee Letter, the L/C-RelatedDocuments, any documents evidencing or relating to Specified Swap Contracts andall other documents delivered to the Administrative Agent or any Lender inconnection herewith.

 

“Loan Party” means the Company, Holdings andeach other Guarantor.

 

“Majority Class Lenders” means, at any timewith respect to any action or vote, each of (i) the Majority Revolving Lendersand (ii) the Majority Term B Lenders.

 

“Majority Lenders” means (i) prior to the Dateof Acceleration, two or more Lenders whose Revolving Proportionate Shares ofthe Revolving Commitments and Term B Proportionate Shares of the outstandingamount of Term B Loans then exceed fifty percent (50.0%) of the sum of theRevolving Commitments at such time and the outstanding amount of Term B Loansat such time, and (ii) from and after the Date of Acceleration, two or moreLenders whose Revolving Proportionate Shares of the Revolving Commitments andTerm B Proportionate Shares of the outstanding amount of Term B Loans thenexceed fifty percent (50.0%) of the sum of the Revolving Commitments at suchtime and the outstanding amount of all Term B Loans at such time, except, ineach case, at any time any Lender is a Defaulting Lender; provided, however,that in each case, at any time any Lender is a Defaulting Lender, allDefaulting Lenders shall be excluded in determining “Majority Lenders” and suchDefaulting Lenders’ Proportionate Share shall be excluded in determining thesum of the Revolving Commitments at such time and the outstanding amount ofTerm B Loans at such time, and “Majority Lenders” means two or morenon-Defaulting Lenders otherwise meeting the criteria set forth in thisdefinition.

 

“Majority Revolving Lenders” means two or moreRevolving Lenders whose Revolving Proportionate Shares then exceed fiftypercent (50.0%) of the Revolving Commitments (or, if the Revolving Commitmentsare terminated, Revolving Lenders having in excess of 50.0% of the sum of theEffective Amount of all Revolving Loans, L/C Obligations and all SwinglineLoans at any time outstanding); provided, however, that at anytime any Revolving Lender is a Defaulting Lender, all Defaulting Lenders shallbe excluded in determining “Majority Revolving Lenders” and such DefaultingLenders’ Revolving Proportionate Share shall be excluded in determining theRevolving Commitments or sum of the Effective Amount of all Revolving Loans,L/C Obligations and all Swingline Loans at any time outstanding, as the casemay be, and “Majority Revolving Lenders” means two or more non-DefaultingLenders (or if there is only one non-Defaulting Lender, such Lender) havingtotal Revolving Commitments exceeding 50.0% of the total Revolving Commitmentsof all non-Defaulting Lenders (or, if the Revolving Commitments are terminated,non-Defaulting Lenders having in excess of 50.0% of the sum the EffectiveAmount of the total Revolving Loans, all L/C Obligations and all SwinglineLoans of all non-Defaulting Lenders at any time outstanding).

 

“Majority Term B Lenders” means two or moreTerm B Lenders whose Term B Proportionate Shares then exceed fifty percent(50.0%) of the Effective Amount of all Term B Loans, provided, however,that any time a Term B Lender is a Defaulting Lender, all Defaulting Lendersshall be excluded in determining “Majority Term B Lenders” and such DefaultingLenders’ Term B Proportionate Share shall be excluded in determining theEffective Amount of

 

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all Term B Loans, and“Majority Term B Lenders” shall thereupon mean non-Defaulting Term B Lendershaving Term B Loans exceeding 50.0% of the total Term B Loans of allnon-Defaulting Lenders.

 

“Margin Stock” means “margin stock” as suchterm is defined in Regulation T, U or X of the FRB.

 

“Material Adverse Effect” means (i) amaterial adverse change in, or a material adverse effect upon, the operations,business, properties, condition (financial or otherwise) or prospects ofHoldings or Holdings and its Subsidiaries taken as a whole; (ii) amaterial impairment of the ability of any Loan Party to perform under any LoanDocument and to avoid any Event of Default; or (iii) a material adverseeffect upon (a) the legality, validity, binding effect or enforceabilityagainst any Loan Party of any Loan Document or (b) the perfection or priorityof any Lien granted under the Collateral Documents.

 

“Minimum Amount” means (i) in respect ofany Borrowing, conversion or continuation of Loans, (a) in the case ofBase Rate Loans, an aggregate minimum amount of $5,000,000 or any integralmultiple of $1,000,000 in excess thereof, (b) in the case of Offshore RateLoans, an aggregate minimum amount of $5,000,000 or any integral multiple of$1,000,000 in excess thereof and (c) in the case of Swingline Loans, anaggregate minimum amount of $100,000 or any integral multiple of $100,000 inexcess thereof (or such other amount as shall be acceptable to the SwinglineLender), (ii) in the case of any reduction of the Commitments under Section2.05, $5,000,000 or any multiple of $1,000,000 in excess thereof, and(iii) in the case of any optional prepayment of Loans under Section2.07, $5,000,000 or any multiple of $1,000,000 in excess thereof.

 

“Minority Investment” means the direct orindirect Investment by Holdings in any Person, provided in each casethat such Person is not a Subsidiary at the time of such Investment and aftergiving effect thereto.

 

“Mortgage” means any deed of trust, mortgage,assignment of rents or other document creating a Lien on real property or anyinterest in real property owned by Holdings, the Company or any Wholly-OwnedSubsidiary.

 

“Mortgaged Property” means all real propertysubject to a Mortgage as set forth on Schedule 6.20 hereto.

 

“Multiemployer Plan” means a “multiemployerplan,” within the meaning of section 4001(a)(3) of ERISA, to which Holdings,the Company or any ERISA Affiliate makes, is making, or is obligated to makecontributions or, during the preceding three calendar years, has made, or beenobligated to make, contributions.

 

“Net Issuance Proceeds” means, as to anyissuance of debt or equity by any Person, cash proceeds received or receivableby such Person in connection therewith, net of out-of-pocket costs and expensespaid or incurred in connection therewith in favor of any Person not anAffiliate of such Person.

 

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“Net Proceeds” means, as to any Disposition bya Person, proceeds in cash, checks or other cash equivalent financialinstruments as and when received by such Person, net of: (i) the directcosts relating to such Disposition excluding amounts payable to such Person orany Affiliate of such Person, (ii) sale, use or other transaction taxesand capital gains taxes paid or payable by such Person as a direct resultthereof, and (iii) amounts required to be applied to repay principal,interest and prepayment premiums and penalties on Indebtedness secured by apurchase money security interest on any asset which is the subject of suchDisposition.  “Net Proceeds”shall also include proceeds paid on account of any Event of Loss, net of(a) all money actually applied to repair or reconstruct the damagedproperty or property affected by the condemnation or taking, (b) all ofthe costs and expenses incurred in connection with the collection of suchproceeds, award or other payments, and (c) any amounts retained by or paidto parties having superior rights to such proceeds, awards or otherpayments.  For purposes of determiningthe amount of Net Proceeds in respect of any Disposition or Event of Loss,however, the amount of proceeds calculated as provided above shall be reducedby the amount of such proceeds that such Person has used (or intends to usewithin 365 days of the date of receipt of such proceeds) to pay the purchaseprice in connection with any Permitted Acquisition, Minority Investment or anyCapital Expenditures (to the extent permitted hereunder), it being understoodthat any portion of such proceeds that has not been so used within such 365-dayperiod shall be deemed to be Net Proceeds received on the last day of such365-day period and that all such proceeds shall be deemed to be Net Proceeds atany time that an Event of Default exists hereunder; provided, however,that if such Person only uses a portion of such Net Proceeds for said PermittedAcquisition, Minority Investment or Capital Expenditure, then the amount ofproceeds calculated as provided above shall be reduced by the amount of suchproceeds so used.

 

“New Lenders” has the meaning specified in RecitalB.

 

“Non-Wholly-Owned Subsidiaries” means alldirect and indirect Subsidiaries of Holdings which are not Wholly-OwnedSubsidiaries.

 

“Notes” means, collectively, the RevolvingNotes and the Term B Notes.

 

“Notice of Borrowing” means a Notice ofRevolving Loan Borrowing or a Notice of Term B Loan Borrowing, as applicable.

 

“Notice of Conversion/Continuation” means aNotice of Revolving Loan Conversion/Continuation or a Notice of Term B LoanConversion/Continuation, as applicable.

 

“Notice of Revolving Loan Borrowing” means anotice in substantially the form of Exhibit A-1.

 

“Notice of Revolving Loan Conversion/Continuation”means a notice in substantially the form of Exhibit B-1.

 

“Notice of Term B Loan Borrowing” means anotice in substantially the form of Exhibit A-2.

 

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“Notice of Term B Loan Conversion/Continuation”means a notice in substantially the form of Exhibit B-2.

 

“Obligations” means the Revolving Loans, Term BLoans, Swingline Loans, L/C Obligations and other Indebtedness arising underany Loan Document owing by Holdings to any Lender, the Administrative Agent,the L/C Issuer, the Swingline Lender or any Indemnified Person, whether director indirect (including those acquired by assignment), absolute or contingent,due or to become due, now existing or hereafter arising.

 

“Offshore Rate” means, for any Interest Period,with respect to Offshore Rate Loans comprising part of the same Borrowing, therate of interest per annum (rounded upward to the next 1/16th of 1%) determinedby the Administrative Agent as follows:

 
| Offshore Rate = |   | LIBOR                                      |
|-----------------|--------|--------------------------------------------|
|            |   | 1.00 — Eurodollar  Reserve Percentage |

 

Where,

 

“Eurodollar ReservePercentage” means for any day for any Interest Period the maximum reservepercentage (expressed as a decimal, rounded upward to the next 1/100th of 1%)in effect on such day (whether or not applicable to any Lender) underregulations issued from time to time by the FRB for determining the maximumreserve requirement (including any emergency, supplemental or other marginalreserve requirement) with respect to Eurocurrency funding (currently referredto as “Eurocurrency liabilities”); and

 

“LIBOR”means:  (i) the rate of interestper annum determined by the Administrative Agent to be the rate of interest perannum (rounded upward to the nearest 1/100th of 1%) appearing on Dow Jones Page3750 (as defined below) for Dollar deposits having a maturity comparable tosuch Interest Period, at approximately 11:00 a.m. (London time) two (2)Business Days prior to the commencement of such Interest Period, subject toclause (ii) below; or (ii) if for any reason the rate is notavailable as provided in the preceding clause (i) of this definition,“LIBOR” instead means the rate of interest per annum determined by theAdministrative Agent to be the arithmetic mean (rounded upward to the nearest1/16th of 1%) of the rates of interest per annum notified to the AdministrativeAgent by Wells Fargo as the rate of interest at which Dollar deposits in theapproximate amount of the Offshore Rate Loan to be made, continued or convertedby Wells Fargo, and having a maturity comparable to such Interest Period, wouldbe offered to major banks in the London interbank market at their request atapproximately 11:00 a.m. (London time) two (2) Business Days prior to thecommencement of such Interest Period. As used in this definition, “Dow Jones Page 3750” means thedisplay designated as “3750” on the Dow Jones Market Service (formerly known asthe Telerate Service) or any replacement page thereof or successor thereto.

 

The Offshore Rate shallbe adjusted automatically as to all Offshore Rate Loans then outstanding as ofthe effective date of any change in the Eurodollar Reserve Percentage.

 

“Offshore Rate Loan” means a Loan that bearsinterest based on the Offshore Rate.

 

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“Operating Lease” means, for any Person, anylease of property (whether real, personal or mixed) which, in accordance withGAAP, would, at the time a determination is made, be required to be recorded asan operating lease in respect of which such Person is liable as lessee.

 

“Organization Documents” means, for any Person,the certificate or articles of incorporation, the bylaws, any certificate ofdetermination or instrument relating to the rights of preferred shareholders ofsuch corporation, any shareholder rights agreement, any other applicableorganizational or constitutional documents and all applicable resolutions ofthe board of directors (or any committee thereof) of such Person

 

“Other Taxes” means any present or future stamp,court or documentary taxes or any other excise or property taxes, charges orsimilar levies which arise from any payment made hereunder or from theexecution, delivery, performance, enforcement or registration of, or otherwisewith respect to, this Agreement or any other Loan Documents.

 

“Outstanding Existing Term Loan” has themeaning specified in Section 2.01(a).

 

“Participant” has the meaning specified in Section11.08(d).

 

“PBGC” means the Pension Benefit GuarantyCorporation, or any Governmental Authority succeeding to any of its principalfunctions under ERISA.

 

“Pension Plan” means a pension plan (as definedin section 3(2) of ERISA) subject to Title IV of ERISA which Holdings or theCompany sponsors, maintains, or to which it makes, is making, or is obligatedto make contributions, or in the case of a multiple employer plan (as describedin section 4064(a) of ERISA) has made contributions at any time during theimmediately preceding five (5) plan years.

 

“Permitted Acquisition” means any Acquisitionthat conforms to the following requirements: (i) the assets, Person, division or line of business to be acquiredis in a substantially similar or ancillary line of business as the Company orone of its Wholly-Owned Subsidiaries, (ii) the Administrative Agent andthe Lenders shall have received promptly, and in any event no less than ten(10) Business Days prior to the consummation of such Acquisition, (a) financialinformation regarding the assets, Person or business to be acquired, includingthe most recent audited financial statements, if available, but in any case themost recently prepared balance sheet, statement of income and statement of cashflows for the assets, Person or business to be acquired and pro forma projectedfinancial statements showing the effect of the Acquisition of the assets,Person or business on Holdings, including a balance sheet for Holdings and itsSubsidiaries as of the time of the Acquisition and projected statements ofincome and cash flows for Holdings and its Subsidiaries through at least theRevolving Loan Maturity Date, and (b) a completed worksheet in substantiallythe form of Schedule 1 to the Compliance Certificate demonstrating Holdings’pro forma compliance with the financial covenants set forth in Section 8.19,measured as of the last day of the fiscal quarter then most recently ended,after giving effect to such Acquisition, (iii) all transactions related tosuch Acquisition shall be consummated in accordance with applicableRequirements of Law, (iv) such Acquisition shall be non-hostile in nature,(v) the prior, effective written consent or approval to such Acquisitionof the board of directors or equivalent governing body of the acquiree isobtained, (vi) immediately

 

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after giving effect tosuch Acquisition: (a) no Default or Event of Default shall have occurredand be continuing or would result therefrom, (b) a majority of the capitalstock or similar equity interest of any acquired or newly formed corporation, partnership,limited liability company or other business entity is owned directly byHoldings or a U.S. Wholly-Owned Subsidiary of Holdings, and (c) allactions required to be taken with respect to such acquired or newly formedSubsidiary under Section 7.13 or as otherwise required under Section7.14 shall have been taken, and (viii) in the case of any SignificantAcquisition, the Majority Lenders shall have consented in writing to theconsummation of such Acquisition.

 

“Permitted Capital Expenditure Carry-Forward”means, for any fiscal year, the Dollar amount equal to (i) the maximumDollar amount of Capital Expenditures permitted to be incurred by Holdings andits Subsidiaries in such fiscal year under Section 8.13minus(ii) the Dollar amount of Capital Expenditures actually incurred byHoldings and its Subsidiaries in such fiscal year.

 

“Permitted Equity Offering” means an offeringby Holdings of preferred stock or other equity interests of Holdings, if therights, preferences, privileges and use of proceeds of such equity offeringhave been approved by the Majority Lenders in writing prior to issuance,provided that no such securities shall be issued if a Default or Event ofDefault exists prior to, or immediately after, such issuance.

 

“Permitted Liens” has the meaning specified in Section8.01.

 

“Permitted Subordinated Debt” has the meaningspecified in Section 8.05(j).

 

“Permitted Swap Obligations” means allobligations (contingent or otherwise) of Holdings or any Subsidiary existing orarising under Swap Contracts, provided that each of the followingcriteria is satisfied:  (i) suchobligations are (or were) entered into by such Person in the ordinary course ofbusiness for the purpose of directly mitigating risks associated withliabilities, commitments or assets held or reasonably anticipated by suchPerson, or changes in the value of securities issued by such Person inconjunction with a securities repurchase program not otherwise prohibitedhereunder, and not for purposes of speculation or taking a “market view;”(ii) such Swap Contracts do not contain (a) any provision(“walk-away” provision) exonerating the non-defaulting party from itsobligation to make payments on outstanding transactions to the defaultingparty, or (b) any provision creating or permitting the declaration of anevent of default, termination event or similar event upon the occurrence of anEvent of Default hereunder (other than an Event of Default under Section9.01(a)).

 

“Person” means an individual, partnership,corporation, limited liability company, business trust, joint stock company,trust, unincorporated association, joint venture, Governmental Authority or anyother entity of whatever nature.

 

“Plan” means an employee benefit plan (asdefined in section 3(3) of ERISA) which Holdings or the Company sponsors ormaintains or to which Holdings or the Company makes, is making, or is obligatedto make contributions and includes any Pension Plan.

 

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“Pledged Collateral” means the “PledgedCollateral” as defined in the Security Agreement and shall include all productsand Proceeds (as defined in the Security Agreement) of the Pledged Collateral.

 

“Proportionate Share” means, (i) with respectto each Revolving Lender, its Revolving Proportionate Share and (ii) withrespect to each Term B Lender, its Term B Proportionate Share.

 

“Put Obligations” mean obligations of Holdingseither directly or indirectly to repurchase from any Person such Person’sequity interest in Non-Wholly-Owned Subsidiaries or Minority Investments.

 

“Reimbursement Date” has the meaning specifiedin Section 3.03(b).

 

“Remaining Lender” has the meaning specified inRecital B.

 

“Replacement Lender” has the meaning specifiedin Section 4.07.

 

“Reportable Event” means, any of the events setforth in section 4043(c) of ERISA or the regulations thereunder, other than anysuch event for which the 30-day notice requirement under ERISA has been waivedin regulations issued by the PBGC.

 

“Requirement of Law” means, as to any Person,any law (statutory or common), treaty, rule or regulation or determination ofan arbitrator or of a Governmental Authority, in each case applicable to orbinding upon the Person or any of its property or to which the Person or any ofits property is subject.

 

“Responsible Officer” means as to any Person,the chief executive officer or the president of such Person, or any otherofficer having substantially the same authority and responsibility; or, withrespect to compliance with financial covenants, the chief financial officer orthe treasurer of such Person, or any other officer having substantially thesame authority and responsibility.

 

“Revolving Commitment,” as to each RevolvingLender, has the meaning specified in Section 2.01(b).

 

“Revolving Lender” means any Lender that has aRevolving Commitment as set forth on Schedule 2.01.

 

“Revolving Loan” has the meaning specified in Section 2.01(b).

 

“Revolving Loan Maturity Date” means theearlier to occur of:  (i) August21, 2008; and (ii) the date on which the Revolving Commitments terminatein accordance with the provisions of this Agreement.

 

“Revolving Note” means a promissory noteexecuted by Holdings in favor of a Revolving Lender pursuant to Section 2.02(b),in substantially the form of Exhibit F-1.

 

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“Revolving Proportionate Share” means, as toany Revolving Lender at any time, the percentage equivalent (expressed as adecimal, rounded to the ninth decimal place) at such time of, in the case ofthe Revolving Commitments or the Revolving Loans, such Revolving Lender’sRevolving Commitment divided by the aggregate Revolving Commitments of allRevolving Lenders (or, if all Revolving Commitments have been terminated, theaggregate principal amount of such Revolving Lender’s Revolving Loans dividedby the aggregate principal amount of the Revolving Loans then held by allRevolving Lenders).  The initialRevolving Proportionate Shares of each Revolving Lender are set forth oppositesuch Revolving Lender’s name in Schedule 2.01 under the heading“Proportionate Share (Revolving Commitments).”

 

“SEC” means the Securities and ExchangeCommission, or any Governmental Authority succeeding to any of its principalfunctions.

 

“Second Amendment to Deeds of Trust” means,collectively, those certain Second Amendments to Deeds of Trust, each dated asof the Effective Date, among Holdings, the Guarantors party thereto andAdministrative Agent in substantially the form of Exhibit L.

 

“Second Amendment to Intellectual Property SecurityAgreements” means, collectively, those certain Second Amendments toIntellectual Property Security Agreements, each dated as of the Effective Date,between Holdings, the Guarantors party thereto and the Administrative Agent forthe benefit of the Lenders in substantially the form of Exhibit J-2.

 

“Security Agreement” means that certain Amendedand Restated Security Agreement, dated as of the Effective Date, betweenHoldings, the Guarantors and the Administrative Agent for the benefit of the Lendersin substantially the form of Exhibit J-1.

 

“Significant Acquisition” means any Acquisitionby Holdings or any Subsidiary in respect of which the consideration thereforconstitutes cash or cash equivalents and/or assumption and/or incurrence ofIndebtedness which exceeds $25,000,000 exclusive of any Put Obligations, provided,however, that to the extent any Put Obligations are exercised, theamount so exercised shall be included in the definition of SignificantAcquisition during the year in which such Put Option was exercised; and provided,further, however, that to the extent an Acquisition that wouldotherwise have been a Significant Acquisition has been approved by the MajorityLenders, any Put Obligations related to such Acquisition which are subsequentlyexercised shall not constitute a Significant Acquisition.

 

“Signing Date” means the date on which allconditions precedent set forth in Section 5.01 are satisfied orwaived by all of the Lenders.

 

“Specified Swap Contract” means any SwapContract made or entered into at any time, or in effect at any time (whetherheretofore or hereafter), whether directly or indirectly, and whether as aresult of assignment or transfer or otherwise, between Holdings and any SwapProvider which Swap Contract is or was intended by Holdings to have beenentered into for purposes of mitigating interest rate or currency exchange riskrelating to any Loan (which intent shall conclusively be deemed to exist ifHoldings so represents to the Swap Provider in writing), and as to which thefinal scheduled payment by Holdings is not later than the Revolving LoanMaturity Date.

 

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“Standby Letter of Credit” means a standbyLetter of Credit Issued for the account of Holdings to support obligations ofHoldings or any Subsidiary, contingent or otherwise (and excluding allCommercial Letters of Credit).

 

“Stock Price Guaranty” means a guaranty that(i) is issued by Holdings or an Affiliate of Holdings in connection with theAcquisition of another Person, and (ii) is for the payment of cash or issuanceof Holdings’ common stock if the common stock issued by Holdings in connectionwith such an Acquisition is sold for less than the price provided for in theguaranty during its term, provided that for purposes of determining theamount of any Stock Price Guaranty, the amount of such guaranty shall be equalto (a) the guaranteed stock price multiplied by the number of shares covered bythe guaranty, minus (b) the current fair market value of one share ofHoldings’ common stock (which fair market value shall be equal to the five daytrailing average closing price for Holdings’ common stock as reported by theNasdaq National Stock Market) multiplied by the number of shares covered by theguaranty, providedfurther, that for purposes of determining theamount of any Stock Price Guaranty which is payable solely in common stock ofHoldings, the amount of such Stock Price Guaranty shall equal zero.

 

“Subordinated Debt Documents” means anydocuments and instruments evidencing any Permitted Subordinated Debt.

 

“Subsequent Effective Date” means the date onwhich all conditions precedent set forth in Section 5.03 are satisfiedor waived by all Additional Lenders which date (if it shall occur) shall occur onor prior to February 21, 2005 and shall occur one time only.

 

“Subsidiary” of a Person means any corporation,association, partnership, limited liability company, joint venture or otherbusiness entity of which more than 50% of the voting stock, membershipinterests or other equity interests (in the case of Persons other thancorporations), is owned or controlled directly or indirectly by the Person, orone or more of the Subsidiaries of the Person, or a combination thereof.  Unless the context otherwise clearlyrequires, references herein to a “Subsidiary” refer to a Subsidiary ofHoldings; provided, however, that Subsidiary shall only includeBMC Insurance, Inc. for purposes of Sections 6.01,6.05,6.06,6.10,6.11, 6.14,6.19,7.03(b),7.03(c),7.04,7.07,7.08,7.10,8.03,9.01(b)-(g),9.01(i)and 9.01(j).

 

“Surety Instruments” means all letters ofcredit (including standby and commercial), banker’s acceptances, bankguaranties, shipside bonds, surety bonds and similar instruments.

 

“Swap Contract” means any agreement, whether ornot in writing, relating to any transaction that is a rate swap, basis swap,forward rate transaction, commodity swap, commodity option, equity or equityindex swap or option, bond, note or bill option, interest rate option, forwardforeign exchange transaction, cap, collar or floor transaction, currency swap,cross-currency rate swap, swaption, currency option or any other, similartransaction (including any option to enter into any of the foregoing) or anycombination of the foregoing, and, unless the context otherwise clearlyrequires, any master agreement relating to or governing any or all of theforegoing.

 

“Swap Provider” means any Lender, or anyAffiliate of any Lender, that is at the time of determination party to a SwapContract with Holdings.

 

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“Swap Termination Value” means, in respect ofany one or more Swap Contracts, after taking into account the effect of anylegally enforceable netting agreement relating to such Swap Contracts,(i) for any date on or after the date such Swap Contracts have been closedout and termination value(s) determined in accordance therewith, suchtermination value(s), and (ii) for any date prior to the date referencedin clause (a) the amount(s) determined as the mark-to-market value(s) forsuch Swap Contracts, as determined by Holdings based upon one or moremid-market or other readily available quotations provided by any recognizeddealer in such Swap Contracts (which may include any Lender).

 

“Swingline Lender” means Wells Fargo, in itscapacity as maker of Swingline Loans hereunder.  Specific reference to the Swingline Lender shall exclude theSwingline Lender in its capacity as a Lender hereunder.

 

“Swingline Commitment” has the meaning specifiedin Section 2.06(a).

 

“Swingline Loan” has the meaning specified in Section2.06(a).

 

“Taxes” means any and all present or futuretaxes, levies, assessments, imposts, duties, deductions, fees, withholdings orsimilar charges, and all liabilities with respect thereto, excluding, in thecase of each Lender and the Administrative Agent, respectively, taxes imposedon or measured by its net income by the jurisdiction (or any politicalsubdivision thereof) under the laws of which such Lender or the AdministrativeAgent, as the case may be, is organized or maintains a Lending Office.

 

“Term B Commitment,” as to each Term B Lender,has the meaning specified in Section 2.01(a).

 

“Term B Lender” means any Lender that has aTerm B Commitment.

 

“Term B Loan” has the meaning specified in Section 2.01(a).

 

“Term B Loan Maturity Date” means August 21,2010.

 

“Term B Note” means a promissory note executedby Holdings in favor of a Lender pursuant to Section 2.02(b), insubstantially the form of Exhibit F-2.

 

“Term B Proportionate Share” means, as to anyTerm B Lender at any time, in the case of the Term B Commitments or the Term BLoans, the percentage equivalent (expressed as a decimal, rounded to the ninthdecimal place) of such Term B Lender’s Term B Commitment divided by theaggregate Term B Commitments of all Term B Lenders (or, if all Term BCommitments have been terminated, the aggregate principal amount of such Term BLender’s Term B Loans divided by the aggregate principal amount of Term B Loansthen held by all Term B Lenders).  Theinitial Term B Proportionate Shares of each Term B Lender are set forthopposite such Lender’s name on a schedule maintained with the AdministrativeAgent and countersigned by Holdings.

 

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“Total Assets” means for any date the net bookvalue of the consolidated assets of Holdings and its Subsidiaries as of the endof the fiscal quarter ended on or most recently prior to such date.

 

“Total Funded Debt” means, as of any date ofdetermination, all Funded Debt of Holdings and its Subsidiaries on such date,on a consolidated basis in accordance with GAAP.

 

“Trade Bank” means Wells Fargo HSBC Trade Bank,N.A.

 

“Type” has the meaning specified in thedefinition of “Loan.”

 

“UCC” means the Uniform Commercial Code as ineffect in the State of California.

 

“Unfunded Pension Liability” means the excessof a Plan’s benefit liabilities under section 4001(a)(16) of ERISA, over thecurrent value of that Plan’s assets, determined in accordance with theassumptions used for funding the Pension Plan pursuant to section 412 of theCode for the applicable plan year.

 

“United States” and “U.S.” each meansthe United States of America.

 

“Update Certificate” means a certificate insubstantially the form of Exhibit K.

 

“U.S. Subsidiary” and “U.S. Wholly-OwnedSubsidiary” means a Subsidiary or Wholly-Owned Subsidiary, as the case maybe, that is located in and a resident of the United States.

 

“Wells Fargo” has the meaning specified in the preamble,or any successor by merger thereto.

 

“Wholly-Owned Subsidiary” means any Person inwhich (other than directors’ qualifying shares required by law) 100% of thecapital stock or similar equity interest of each class having ordinary votingpower, and 100% of the capital stock or similar equity interest of every otherclass, in each case, at the time as of which any determination is being made,is owned, beneficially and of record, by Holdings, or by one or more of theother Wholly-Owned Subsidiaries, or both.

 

1.02         OtherInterpretive Provisions.

 

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

 

(b)           The words “hereof,” “herein,”“hereunder” and similar words refer to this Agreement as a whole and not to anyparticular provision of this Agreement; and subsection, Section, Schedule andExhibit references are to this Agreement unless otherwise specified.

 

(c)           The term “documents” includes any andall instruments, documents, agreements, certificates, indentures, notices andother writings, however evidenced.

 

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(d)           The term “including” is not limitingand means “including without limitation.”

 

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

 

(f)            Unless otherwise expressly providedherein, (i) references to agreements (including this Agreement) and othercontractual instruments shall be deemed to include all subsequent amendmentsand other modifications thereto, but only to the extent such amendments andother modifications are not prohibited by the terms of any Loan Document (unlessany such prohibitive term has been waived), and (ii) references to anystatute or regulation are to be construed as including all statutory andregulatory provisions consolidating, amending, replacing, supplementing orinterpreting the statute or regulation.

 

(g)           The captions and headings of thisAgreement are for convenience of reference only and shall not affect theinterpretation of this Agreement.

 

(h)           This Agreement and other LoanDocuments may use several different limitations, tests or measurements toregulate the same or similar matters. All such limitations, tests and measurements are cumulative and shalleach be performed in accordance with their terms.  Unless otherwise expressly provided, any reference to any actionof the Administrative Agent or the Lenders by way of consent, approval orwaiver shall be deemed modified by the phrase “in its/their sole discretion.”

 

(i)            This Agreement and the other LoanDocuments are the result of negotiations among the Administrative Agent,Holdings, the Company and the other parties, have been reviewed by counsel tothe Administrative Agent, Holdings, the Company and such other parties, and arethe products of all parties. Accordingly, they shall not be construed against the Lenders or theAdministrative Agent merely because of the Administrative Agent’s or Lenders’involvement in their preparation.

 

1.03         AccountingPrinciples.  (a)  Unless the context otherwise clearlyrequires, all accounting terms not expressly defined herein shall be construed,and all financial computations required under this Agreement shall be made, inaccordance with GAAP, consistently applied; provided, however,that if GAAP shall have been modified after the Effective Date and theapplication of such modified GAAP shall have a material effect on suchfinancial computations (including the computations required for the purpose ofdetermining compliance with the covenants set forth in Article VIII),then such computations shall be made and such financial statements,certificates and reports shall be prepared, and all accounting terms nototherwise defined herein shall be construed, in accordance with GAAP as ineffect prior to such modification, unless and until the Majority Lenders andHoldings shall have agreed upon the terms of the application of such modifiedGAAP*.*

 

(b)           References herein to “fiscal year”and “fiscal quarter” refer to such fiscal periods of Holdings.

 

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1.04         Treatmentof Non-Wholly-Owned Subsidiaries. To the extent not otherwise set forth in specific definitions orsections hereof, for purposes of determining compliance with any covenantscontained herein (i) to the extent that any covenant requires the consolidationof Holdings and its Subsidiaries, such covenant shall be calculated byconsolidating all Non-Wholly-Owned Subsidiaries of Holdings, regardless ofwhether such Non-Wholly-Owned Subsidiary would otherwise be consolidated withHoldings for such calculation pursuant to GAAP (as well as all other Subsidiariesof Holdings that would otherwise be consolidated pursuant to GAAP) and (ii)with respect to the financial performance of any Non-Wholly-Owned Subsidiaries,only the ratable portion based upon Holdings’ direct or indirect ownershipinterest in such Non-Wholly-Owned Subsidiary shall be included and all MinorityInvestments therein shall be excluded.

 

**ARTICLE II**

 

**THECREDITS**

 

2.01         Amountsand Terms of Commitments.

 

(a)           The Term B Credit.  Holdings hereby acknowledges and agrees thatpursuant to the Existing Credit Agreement, the Existing Lenders provided toHoldings term loans in the aggregate principal amount of $110,000,000, of which$93,500,000 is outstanding on the date hereof (the “Outstanding ExistingTerm Loan”).  On the terms andsubject to the conditions set forth herein, each Term B Lender severally agreesthat on the Effective Date it shall acquire from the Departing Lenders (and, tothe extent necessary, the Remaining Lenders) its Proportionate Share of theOutstanding Existing Term Loan, whereupon the Outstanding Existing Term Loanshall be deemed to be automatically converted into and become a part of a newsingle loan denominated in Dollars to be advanced to Holdings pursuant to this Section2.01(a) by the Term B Lenders and Holdings and the Guarantors shall have nofurther obligations with respect to the Outstanding Existing Term Loan (i) inan amount equal to each such Term B Lender’s Term B Commitment and (ii) in anaggregate amount equal to the Aggregate Term B Commitment.  The parties hereto further acknowledge andagree that on and after the Effective Date, each Remaining Lender and each NewLender shall be a Term B Lender under this Agreement and the other LoanDocuments holding Term B Loans, with Term B Commitments and Term BProportionate Shares as set forth on a schedule maintained by theAdministrative Agent (each Term B Proportionate Share of such loan, a “TermB Loan” and each Term B Proportionate Share of the Aggregate Term BCommitment, a “Term B Commitment”) in an aggregate amount not to exceedthe Aggregate Term B Commitment, with the rights, duties and obligations ofsuch a Term B Lender under this Agreement and the other Loan Documents.  To effect the foregoing, on the EffectiveDate the Administrative Agent shall calculate the Term B Proportionate Share ofeach Remaining Lender and each New Lender of the Aggregate Term BCommitment.  Based upon suchcalculation, each New Lender and any applicable Remaining Lender shall purchasefrom the Departing Lenders (and, to the extent necessary, the other RemainingLenders) such portion of the Outstanding Existing Term Loan as theAdministrative Agent determines is necessary (after taking into accountapplication of amounts advanced by each Term B Lender in connection with thenew Term B Loan) to cause each Remaining Lender and each New Lender which is aTerm B Lender to hold such Proportionate Share of the outstanding aggregateTerm B Loan in a principal amount equal to such Term B Lender’s ProportionateShare of such

 

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Aggregate Term BCommitment.  Amounts that have beenborrowed as Term B Loans which are repaid or prepaid by Holdings may not bereborrowed.

 

(b)           The Revolving Credit.  Holdings hereby acknowledges and agrees thatpursuant to the Existing Credit Agreement, the Existing Lenders provided toHoldings revolving loans from time to time in an aggregate principal amount ofup to $190,000,000, of which[$             ]in aggregate principal amount is outstanding on the date hereof.  On the terms and subject to the conditionsset forth herein, the parties hereto hereby acknowledge and agree that on andafter the Effective Date, each Remaining Lender and each New Lender thatdesires to provide a portion of the revolving credit facility shall be aRevolving Lender under this Agreement and the other Loan Documents withRevolving Commitments and Revolving Proportionate Shares as set forth on Schedule2.01 attached hereto (each such commitment, a “Revolving Commitment”)in an aggregate amount not to exceed the Aggregate Revolving Commitment, withthe rights, duties and obligations of such a Lender under this Agreement andthe other Loan Documents.  To effect theforegoing, on the Effective Date, Administrative Agent shall calculate theRevolving Proportionate Share of each Remaining Lender and each New Lender ineach revolving loan then outstanding (each such loan, together with all otherloans advanced from time to time pursuant to this Section 2.01(b), a “RevolvingLoan”).  Based upon such calculation,each New Lender and any applicable Remaining Lender shall purchase from theDeparting Lenders (and, to the extent necessary, the other Remaining Lenders)such shares in the outstanding Revolving Loans (as well as any outstanding L/CObligations and Swingline Loans) as Administrative Agent determines isnecessary to cause each Remaining Lender and each New Lender to hold RevolvingLoans (as well as L/C Obligations and Swingline Loans) in each outstandingRevolving Loan Borrowing in a principal amount equal to such Remaining Lender’sand such New Lender’s Proportionate Share of such Revolving Loan Borrowings andHoldings, the Company and the Guarantors shall have no further obligations withrespect to the Existing Credit Facility. On and after the Effective Date, on the terms and subject to theconditions of this Agreement, each Revolving Lender severally agrees to advanceto Holdings from time to time during the period beginning on the Effective Dateand ending on the Revolving Loan Maturity Date such loans in Dollars asHoldings may request under this Section 2.01; provided, however,that (i) after giving effect to any Borrowing of Revolving Loans,(A) the Effective Amount of all outstanding Revolving Loans and SwinglineLoans and the Effective Amount of all L/C Obligations shall not exceed anamount equal to the lesser of (1) the combined Revolving Commitments ofthe Revolving Lenders and (2) the Borrowing Base; and (B) theEffective Amount of the Revolving Loans of any Revolving Lender plus theparticipation of such Revolving Lender in the Effective Amount of all L/CObligations and the Effective Amount of all Swingline Loans shall not at anytime exceed such Revolving Lender’s Revolving Commitment.  Within the limits of each Revolving Lender’sRevolving Commitment, and subject to the other terms and conditions hereof,Holdings may borrow under this Section 2.01, prepay under Section 2.07and reborrow under this Section 2.01.

 

(c)           AdditionalTerm B Loans.  Upon Holding’s writtennotice to the Administrative Agent, on the Subsequent Effective Date, one ormore Additional Lenders may become parties to this Agreement (unless already aparty to this Agreement) for the purpose of making additional Term B Loans inan aggregate amount not to exceed the difference of (A) $50,000,000 minus (B)the amount (if any) by which the Aggregate Revolving Commitment is beingincreased on the Subsequent Effective Date pursuant to Section 2.01(d) (eachAdditional

 

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Lender’s Term B Proportionate Share of such amount, an “Additional TermB Commitment”).  On the SubsequentEffective Date, each Additional Lender holding an Additional Term B Commitmentshall make a new single loan denominated in Dollars to Holdings in the amountof such Additional Lender’s Term B Proportionate Share of the Additional TermCommitment (the “Additional Term B Loan”) upon the terms and subject to theconditions contained herein, as such terms and conditions may be amendedpursuant to Section 11.01 hereof, and any Additional Lenders not already partyto this Agreement shall become parties to this Agreement by executing acounterpart signature page to this Agreement and shall be treated as a Term BLender for all purposes of this Agreement from and after the SubsequentEffective Date.  Once the AdditionalTerm B Loans shall have been made pursuant to this Agreement, (1) the scheduleof Term B Loans maintained by the Administrative Agent shall be deemed to havebeen amended to include all Additional Lenders holding an Additional Term BCommitment party to this Agreement together with such Additional Lenders’respective Term B Commitment and Term B Proportionate Share, (ii) the scheduleof Term B Loans maintained by the Administrative Agent shall be deemed to havebeen amended to adjust the Term B Proportionate Share of all other Term BLenders party hereto, (iii) Schedule 2.09 hereto shall be deemed to have beenamended to include the then applicable Term B Loan amortization schedule basedupon the percentages set forth therein, and (iv) the definitions of “AggregateTerm B Commitment” and “Aggregate Commitment” shall be deemed to have beenamended to include the Additional Term B Commitments made by such AdditionalLenders on the Subsequent Effective Date.  The Additional Term B Loans of the Additional Lenders shall bedeemed to be Term B Loans of such Term B Lenders under this Agreement and theother Loan Documents for all purposes.

 

(d)           AdditionalRevolving Commitments.  Upon Holding’swritten notice to the Administrative Agent, on the Subsequent Effective Dateone or more Additional Lenders may provide additional Revolving Commitments inan aggregate amount not to exceed the difference of (A) $50,000,000 minus (B)the amount (if any) by which the Aggregate Term B Commitment is being increasedon the Subsequent Effective Date pursuant to Section 2.01(c) (each suchadditional commitment, the “Additional Revolving Commitment”), which AdditionalRevolving Commitment may thereafter be made available to Holdings as RevolvingLoans.  Any Additional Lenders notalready party to this Agreement shall become parties to this Agreement byexecuting a counterpart signature page to this Agreement and shall be treatedas a Revolving Lenders for all purposes of this Agreement from and after theSubsequent Effective Date.  Once suchAdditional Revolving Commitments shall be deemed to have been made availablepursuant to this Agreement, (i) Schedule 2.01 hereto shall be deemed to have beenamended to include all Additional Lenders holding an Additional RevolvingCommitment as a party to this Agreement together with such Additional Lender’srespective Revolving Commitment and Revoling Proportionate Share, (ii) Schedule2.01 hereto shall be deemed to have been amended to adjust the RevolvingProportionate Share of all other Revolving Lenders party hereto, and (iii) thedefinitions of “Aggregate Revolving Commitment” and “Aggregate Commitment”shall be deemed to have been amended to include the Additional RevolvingCommitments provided by such Additional Lenders on the Subsequent EffectiveDate.  To effect the foregoing, on theSubsequent Effective Date, Administrative Agent shall calculate the RevolvingProportionate Share of each Revolving Lender and each Additional Lender holdingan Additional Revolving Commitment in each Revolving Loan, L/C Obligation andSwingline Loan then outstanding.  Basedupon such calculation, each Additional Lender holding an Additional RevolvingCommitment shall purchase from the other Revolving Lenders such portion of theAggregate

 

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Revolving Loans, L/CObligations and Swingline Loans outstanding immediately prior to the SubsequentEffective Date as Administrative Agent determines is necessary to cause eachRevolving Lender to hold Revolving Loans, L/C Obligations and Swingline Loansin a principal amount equal to such Revolving Lender’s Revolving ProportionateShare of such Revolving Loan Borrowings. On and after the Subsequent Effective Date, after giving effect to anyBorrowing of Revolving Loans, (i) the Effective Amount of all outstandingRevolving Loans and Swingline Loans and the Effective Amount of all L/CObligations shall not exceed an amount equal to the lesser of (1) thecombined Revolving Commitments of the Revolving Lenders and (2) theBorrowing Base; and (ii) the Effective Amount of the Revolving Loans ofany Revolving Lender plus the participation of such Revolving Lender inthe Effective Amount of all L/C Obligations and the Effective Amount of allSwingline Loans shall not at any time exceed such Revolving Lender’s RevolvingCommitment.  On and after the SubsequentEffective Date, each Additional Lender holding an Additional RevolvingCommitment shall be a Revolving Lender under this Agreement and the other LoanDocuments for all purposes with Revolving Commitments and RevolvingProportionate Shares as set forth on Schedule 2.01 attached hereto in anaggregate amount not to exceed the Aggregate Revolving Commitment, with therights, duties and obligations of such a Revolving Lender under this Agreementand the other Loan Documents.

 

2.02         LoanAccounts.  (a)  The Loans made by each Lender and theLetters of Credit Issued by the L/C Issuer shall be evidenced by one or moreaccounts or records maintained by such Lender or L/C Issuer, as the case maybe, in the ordinary course of business. The accounts or records maintained by the Administrative Agent, the L/CIssuer and each Lender shall be conclusive absent manifest error of the amountof the Loans made by the Lenders to Holdings and the Letters of Credit Issuedfor the account of Holdings, and the interest and payments thereon.  Any failure so to record or any error indoing so shall not, however, limit or otherwise affect the obligation of Holdingshereunder to pay any amount owing with respect to the Loans or any Letter ofCredit.

 

(b)           Upon the request of any Lender madethrough the Administrative Agent, the Loans made by such Lender may beevidenced by one or more Notes, instead of or in addition to loanaccounts.  Each such Lender shallendorse on the schedules annexed to its Note(s) the date, amount and maturityof each Loan made by it and the amount of each payment of principal made byHoldings with respect thereto.  Eachsuch Lender is irrevocably authorized by Holdings to endorse its Note(s) andeach Lender’s record shall be conclusive absent manifest error; provided,however, that the failure of a Lender to make, or an error in making, anotation thereon with respect to any Loan shall not limit or otherwise affectthe obligations of Holdings hereunder or under any such Note to such Lender.

 

2.03         Procedurefor Borrowing.  (a)  Each Borrowing of Loans shall be made uponHoldings’ irrevocable written notice delivered to the Administrative Agent inthe form of a Notice of Borrowing (which notice must be received by theAdministrative Agent (i) prior to 9:00 a.m. (San Francisco time) atleast three (3) Business Days prior to the requested Borrowing Date, in thecase of Offshore Rate Loans, except in the case of Swingline Loans, in whichcase such notice must be received by 9:00 a.m. (San Francisco time) on therequested Borrowing Date; and (ii) prior to 9:00 a.m. (San Franciscotime) on the requested Borrowing Date, in the case of Base Rate Loans,specifying:

 

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(i)            the amount of the Borrowing, whichshall be in a Minimum Amount, and whether such Borrowing shall be of Term BLoans or Revolving Loans;

 

(ii)           the requested Borrowing Date, whichshall be a Business Day;

 

(iii)          the Type of Loans comprising theBorrowing; and

 

(iv)          if applicable, the duration of theInterest Period applicable to such Loans included in such notice, subject tothe provisions of the definition of “Interest Period” herein.  If the Notice of Borrowing fails to specifythe duration of the Interest Period for any Borrowing comprised of OffshoreRate Loans, such Interest Period shall be one month;

 

provided, however, that withrespect to the Borrowing to be made on the Effective Date, the Notice ofBorrowing shall be delivered to the Administrative Agent not later than11:00 a.m. (San Francisco time) one (1) Business Day before the EffectiveDate and such Borrowing will consist of Base Rate Loans only.

 

(b)           The Administrative Agent willpromptly notify each Lender of its receipt of any Notice of Borrowing and ofthe amount of such Lender’s Proportionate Share of that Borrowing.

 

(c)           Each Lender will make the amount ofits Proportionate Share of each Borrowing available to the Administrative Agentfor the account of Holdings at the Administrative Agent’s Payment Office by11:00 a.m. (San Francisco time) on the Borrowing Date requested byHoldings in funds immediately available to the Administrative Agent.  The proceeds of each such Borrowing willthen be made available to Holdings by the Administrative Agent at such officeby crediting the account of Holdings on the books of Wells Fargo with theaggregate of the amounts made available to the Administrative Agent by theLenders and in like funds as received by the Administrative Agent, or ifrequested by Holdings, by wire transfer in accordance with written instructionsprovided to the Administrative Agent by Holdings of such funds as received bythe Administrative Agent, unless on the date of the Borrowing all or anyportion of the proceeds thereof shall then be required to be applied to therepayment of any outstanding Loans, in which case such proceeds or portionthereof shall be applied to the payment of such Loans.

 

(d)           After giving effect to any Borrowing,unless the Administrative Agent shall otherwise consent, there may not be morethan eight different Interest Periods in effect.

 

2.04         Conversionand Continuation Elections. (a)  Holdings may, uponirrevocable written notice to the Administrative Agent in accordance with Section2.04(b):

 

(i)            elect, as of any Business Day, inthe case of Base Rate Loans, or as of the last day of the applicable InterestPeriod, in the case of any Offshore Rate Loans, to convert any such Loans (or anypart thereof in a Minimum Amount) into Loans of any other Type; or

 

(ii)           elect, as of the last day of theapplicable Interest Period, to continue any Revolving Loans or Term B Loanshaving Interest Periods expiring on such day (or any part thereof in a MinimumAmount);

 

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provided that if at any time theaggregate amount of Offshore Rate Loans in respect of any Borrowing is reduced,by payment, prepayment, or conversion of part thereof to be less than $5,000,000,such Offshore Rate Loans shall automatically convert into Base Rate Loans, andon and after such date the right of Holdings to continue such Loans as, andconvert such Loans into, Offshore Rate Loans, shall terminate.

 

(b)           Holdings shall deliver a Notice ofConversion/Continuation to be received by the Administrative Agent (i) notlater than 9:00 a.m. (San Francisco time) at least three (3) Business Days inadvance of the Conversion/ Continuation Date, if the Loans are to be convertedinto or continued as Offshore Rate Loans; and (ii) prior to 9:00 a.m.(San Francisco time) on the Conversion/Continuation Date, if the Loans are tobe converted into Base Rate Loans, specifying:

 

(i)            the proposed Conversion/ContinuationDate;

 

(ii)           the aggregate amount of Loans to beconverted or continued;

 

(iii)          the Type of Loans resulting from theproposed conversion or continuation; and

 

(iv)          other than in the case of conversionsinto Base Rate Loans, the duration of the requested Interest Period, subject tothe provisions of the definition of “Interest Period” herein.

 

(c)           If upon the expiration of anyInterest Period applicable to Offshore Rate Loans, Holdings has failed toselect timely a new Interest Period to be applicable to such Offshore RateLoans, as the case may be, or if any Default or Event of Default then exists,Holdings shall be deemed to have elected to convert such Offshore Rate Loansinto Base Rate Loans effective as of the expiration date of such InterestPeriod.

 

(d)           The Administrative Agent willpromptly notify each Lender of its receipt of a Notice ofConversion/Continuation, or, if no timely notice is provided by Holdings, theAdministrative Agent will promptly notify each Lender of the details of anyautomatic conversion.  All conversionsand continuations shall be made ratably according to the respective outstandingprincipal amounts of the Loans with respect to which the notice was given heldby each Lender.

 

(e)           Unless the Majority Lenders otherwiseconsent, during the existence of a Default or Event of Default, Holdings maynot elect to have a Loan converted into or continued as an Offshore Rate Loan.

 

(f)            After giving effect to anyconversion or continuation of Loans, unless the Administrative Agent shallotherwise consent, there may not be more than eight (8) different InterestPeriods in effect.

 

2.05         VoluntaryTermination or Reduction of Commitments. (a)  Holdings may, upon not lessthan three (3) Business Days’ prior notice to the Administrative Agent,terminate the Revolving Commitments, or permanently reduce the RevolvingCommitments, provided that the

 

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aggregate amount of anypartial reduction is in a Minimum Amount; unless, after giving effect theretoand to any prepayments of any Loans made on the effective date thereof,(i) the Effective Amount of all Revolving Loans, Swingline Loans and L/CObligations together would exceed the amount of the combined RevolvingCommitments of the Revolving Lenders then in effect, or (ii) the EffectiveAmount of all L/C Obligations then outstanding would exceed the L/CCommitment.  Once reduced in accordancewith this Section 2.05, the Revolving Commitments may not beincreased.  Any reduction of theRevolving Commitments shall be applied to each Revolving Lender according toits Revolving Proportionate Share.  Ifand to the extent specified by Holdings in the notice to the AdministrativeAgent, some or all of the reduction in the Revolving Commitments shall beapplied to reduce the L/C Commitment.  Allaccrued commitment and letter of credit fees to, but not including, theeffective date of any reduction or termination of Revolving Commitments, shallbe paid on the effective date of such reduction or termination.

 

(b)           At no time shall the Swingline Commitmentexceed the combined Revolving Commitments of the Revolving Lenders, and anyreduction of the Revolving Commitments which reduces combined RevolvingCommitments of the Revolving Lenders below the then-current amount of theSwingline Commitment shall result in an automatic corresponding reduction ofthe Swingline Commitment to the amount of the combined Revolving Commitments ofthe Revolving Lenders, as so reduced, without any action on the part of theSwingline Lender.

 

2.06         SwinglineLoans.  (a)  On the terms and subject to the conditionsset forth herein, the Swingline Lender agrees to make a portion of theRevolving Commitment available to Holdings by making swingline loansdenominated in Dollars (individually, a “Swingline Loan”, and,collectively, the “Swingline Loans”) to Holdings on any Business Dayduring the period from the Effective Date to the Revolving Loan Maturity Datein accordance with the procedures set forth in this Section 2.06 inan aggregate principal amount at any one time outstanding not to exceed FifteenMillion Dollars ($15,000,000), notwithstanding the fact that such SwinglineLoans, when aggregated with any other Credit Extensions made by or participatedin by the Swingline Lender, may exceed the Swingline Lender’s RevolvingCommitment (the amount of such commitment of the Swingline Lender to makeSwingline Loans to Holdings pursuant to this Section 2.06(a), asthe same shall be reduced pursuant to Section 2.05 or Section2.08 or as a result of any assignment pursuant to Section 11.08,the Swingline Lender’s “Swingline Commitment”); provided that atno time shall (i) the sum of the Effective Amount of all Swingline Loans plusthe Effective Amount of all Revolving Loans plus the Effective Amount ofall L/C Obligations exceed the combined Revolving Commitments of the RevolvingLenders, or (ii) the Effective Amount of all Swingline Loans exceed theSwingline Commitment.  Additionally, nomore than three Swingline Loans may be outstanding at any one time, and allSwingline Loans shall at all times accrue interest at the Base Rate plusthe Applicable Margin (for Base Rate Loans) or at such other rate as may beagreed to by the Swingline Lender and Holdings.  Within the foregoing limits, and subject to the other terms andconditions hereof, Holdings may borrow under this Section 2.06(a),prepay pursuant to Section 2.07 and reborrow pursuant to this Section 2.06(a).

 

(b)           Holdings shall provide theAdministrative Agent irrevocable written notice (including notice via facsimileconfirmed immediately by a telephone call) in the form of a Notice of Borrowingof any Swingline Loan requested hereunder (which notice must be received

 

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by the AdministrativeAgent prior to 9:00 a.m. (San Francisco time) on the requested BorrowingDate) specifying (i) the amount to be borrowed, which shall be in aMinimum Amount, and (ii) the requested Borrowing Date, which shall be aBusiness Day.  Unless the SwinglineLender has received notice prior to 9:00 a.m. (San Francisco time) on suchBorrowing Date from the Administrative Agent (including at the request of anyRevolving Lender) (A) directing the Swingline Lender not to make therequested Swingline Loan as a result of the limitations set forth in the provisoset forth in the first sentence of Section 2.06(a); or(B) that one or more conditions specified in Article V are notthen satisfied; then, subject to the terms and conditions hereof, theSwingline Lender will, not later than 12:00 noon (San Francisco time) onthe Borrowing Date specified in such Notice of Borrowing, make the amount ofits Swingline Loan available to Holdings by crediting the account of Holdingson the books of Wells Fargo or if requested by Holdings, by wire transfer inaccordance with written instructions provided to the Administrative Agent byHoldings.  The Administrative Agent willnotify the Revolving Lenders on a quarterly basis if any Swingline LoanBorrowings occurred during such quarter.

 

(c)           Holdings shall repay to the SwinglineLender in full on the Revolving Loan Maturity Date the aggregate principalamount of the Swingline Loans outstanding on the Revolving Loan Maturity Date.

 

(d)           For one (1) Business Day during eachsuccessive ten (10) Business Day period, the aggregate principal amount ofSwingline Loans shall be $0 (a “Clean-Up Day”); provided, however,that such Clean-Up Day may occur on the tenth Business Day of any such period,whether or not Swingline Loans are outstanding at 9:00 a.m. on such day as setforth in clause (e) below.  Holdingsshall prepay the outstanding principal amount of the Swingline Loans in wholeto the extent required so that a Clean-Up Day may occur in each such ten (10)Business Day period as provided in this Section 2.06(d) (whichSwingline Loans may not be reborrowed until such Clean-Up Day has ended).

 

(e)           If:

 

(i)            any Swingline Loans shall remainoutstanding at 9:00 a.m. (San Francisco time) on any day required to be aClean-Up Day (by virtue of there being Swingline Loans outstanding for ten consecutiveBusiness Days) and by such time on such Business Day the Administrative Agentshall have received neither:  (A) aNotice of Borrowing delivered pursuant to Section 2.03 requestingthat Revolving Loans be made pursuant to Section 2.01 on the Clean-UpDay in an amount at least equal to the aggregate principal amount of suchSwingline Loans; nor (B) any other notice indicating Holdings’ intent torepay such Swingline Loans with funds obtained from other sources; or

 

(ii)           any Swingline Loans shall remainoutstanding during the existence of an Event of Default and the SwinglineLender shall in its sole discretion notify the Administrative Agent that theSwingline Lender desires that such Swingline Loans be converted into RevolvingLoans;

 

then the Administrative Agent shallbe deemed to have received a Notice of Borrowing from Holdings pursuant to Section 2.03requesting that Base Rate Loans be made pursuant to Section 2.01 onsuch Clean-Up Day (in the case of the circumstances described inclause (i)

 

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above) or on the first Business Day subsequent to thedate of such notice from the Swingline Lender (in the case of the circumstancesdescribed in clause (ii) above) in an amount equal to the aggregate amountof such Swingline Loans, and the procedures set forth in Section 2.03(b)and Section 2.03(c) shall be followed in making such Base Rate Loans; provided,that such Base Rate Loans shall be made notwithstanding Holdings’ failure tocomply with Section 5.03; and provided, further, thatif a Borrowing of Revolving Loans becomes legally impracticable and if sorequired by the Swingline Lender at the time such Revolving Loans are requiredto be made by the Revolving Lenders in accordance with this Section 2.06(e),each Revolving Lender agrees that in lieu of making Revolving Loans asdescribed in this Section 2.06(e), such Revolving Lender shallpurchase a participation from the Swingline Lender in the applicable SwinglineLoans in an amount equal to such Revolving Lender’s Revolving ProportionateShare of such Swingline Loans, and the procedures set forth in Section 2.03(b)and Section 2.03(c) shall be followed in connection with the purchasesof such participations.  Upon suchpurchases of participations the prepayment requirements of Section 2.06(d)shall be deemed waived with respect to such Swingline Loans.  If any Swingline Loan shall remainoutstanding in lieu of a Borrowing of Revolving Loans as provided above,interest on such Swingline Loan shall be due and payable on demand and shallaccrue at the rate then applicable to Base Rate Loans.  The proceeds of such Base Rate Loans shallbe applied to repay such Swingline Loans. A copy of each notice given by the Administrative Agent to the RevolvingLenders pursuant to this Section 2.06(e) with respect to the makingof Revolving Loans, or the purchases of participations, shall be promptlydelivered by the Administrative Agent to Holdings.  Each Revolving Lender’s obligation in accordance with this Agreementto make the Revolving Loans, or purchase the participations, as contemplated bythis Section 2.06(e), shall be absolute and unconditional and shallnot be affected by any circumstance, including (1) any set-off,counterclaim, recoupment, defense or other right which such Revolving Lendermay have against the Swingline Lender, Holdings or any other Person for anyreason whatsoever; (2) the occurrence or continuance of a Default, anEvent of Default or a Material Adverse Effect; or (3) any other circumstance,happening or event whatsoever, whether or not similar to any of the foregoing.

 

2.07         OptionalPrepayments.  Subject to Section4.04, Holdings may, at any time or from time to time, in the case ofOffshore Rate Loans, upon not less than three (3) Business Days’ irrevocablenotice to the Administrative Agent, and in the case of Base Rate Loans, uponirrevocable notice to the Administrative Agent provided prior to 9:00 a.m. onthe day of such prepayment (provided that in the case of Base Rate Loans, if suchprepayment is received by the Administrative Agent on or prior to11:00 a.m. (San Francisco time) on any day, such payment shall be appliedagainst the outstanding Loans on the same day), ratably prepay Loans in wholeor in part, in Minimum Amounts without penalty.  Such notice of prepayment shall specify the date and amount ofsuch prepayment, whether such prepayment of Loans is of Term B Loans,Revolving Loans or Swingline Loans (or a combination thereof) and the Type(s)of Loans to be prepaid.  The AdministrativeAgent will promptly notify the Term B Lenders, the Revolving Lenders or theSwingline Lender, as applicable, of its receipt of any such notice and of suchprepayment.  If such notice is given byHoldings, Holdings shall make such prepayment and the payment amount specifiedin such notice shall be due and payable on the date specified therein, togetherwith (other than in the case of Base Rate Loans) accrued interest to each suchdate on the amount prepaid and any amounts required pursuant to Section 4.04.  Optional prepayments of Term B Loans shallbe applied to reduce the Term B Loans with respect to each remaining

 

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installment of principal *pro rata* in accordance with the thenremaining installments payable under Section 2.09(a).

 

2.08         MandatoryPrepayments of Loans; Mandatory Commitment Reductions.

 

(a)           Mandatory Prepayments of Loans.

 

(i)            If at any time the Effective Amountof Revolving Loans and Swingline Loans then outstanding plus the EffectiveAmount of any L/C Obligations shall exceed the Borrowing Base, Holdings shall,within five (5) Business Days of the earlier of (i) the date a ResponsibleOfficer of Holdings became aware of such excess, and (ii) notice from theAdministrative Agent informing Holdings of the existence of such excess, prepaythe outstanding principal amount of the Revolving Loans and any L/C Advances,in an amount equal to such excess and, if necessary (after giving effect tosuch prepayment), shall also Cash Collateralize outstanding Letters of Creditin an amount equal to the excess of the maximum amount then available to bedrawn under the Letters of Credit over the Borrowing Base.

 

(ii)           If at any time the Effective Amountof L/C Obligations exceeds the L/C Commitment, Holdings shall CashCollateralize on such date the outstanding Letters of Credit in an amount equalto the excess of the maximum amount then available to be drawn under theLetters of Credit over the L/C Commitment.

 

(iii)          If at any time (after giving effect toany Cash Collateralization made on such date pursuant to Section 2.08(b)),the Effective Amount of all Revolving Loans and Swingline Loans thenoutstanding plus the Effective Amount of all L/C Obligations at suchtime exceeds the combined Revolving Commitments of the Revolving Lenders,Holdings shall immediately, and without notice or demand, prepay theoutstanding principal amount of the Revolving Loans, Swingline Loans and L/CAdvances by an amount equal to the applicable excess.

 

(iv)          If Holdings, the Company or any otherSubsidiary shall at any time or from time to time make or agree to make aDisposition, then (A) Holdings shall promptly notify the AdministrativeAgent in advance of such Disposition (including the amount of the estimated NetProceeds to be received by Holdings, the Company or such other Subsidiary inrespect thereof), and (B) if, after giving effect to such Disposition, theNet Proceeds of all Dispositions which have occurred in such fiscal year aregreater than $10,000,000 in the aggregate, then promptly upon, and in no eventlater than one (1) Business Day after, receipt by Holdings, the Company or theother Subsidiary of the Net Proceeds of such Disposition, Holdings shall prepaythe Term B Loans in an aggregate amount equal to 100% of the amount by whichthe Net Proceeds of such Disposition when added to the Net Proceeds received byHoldings, the Company or any other Subsidiary on account of all otherDispositions which have occurred in such fiscal year, less the amount, if any,of Net Proceeds already so applied in such fiscal year, exceeds $10,000,000; provided,however, that with respect to any Non-Wholly-Owned Subsidiary, suchNon-Wholly-Owned Subsidiary shall only prepay the ratable portion of the NetProceeds received by such Non-Wholly-Owned Subsidiary based on Holdings’ director indirect interest in such Non-Wholly-Owned Subsidiary.

 

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(v)           If Holdings, the Company or any otherSubsidiary shall at any time or from time to time issue any debt (other thanany Additional Revolving Commitment, Additional Term B Commitment or AdditionalTerm B Loan as permitted hereunder) or equity securities for cash considerationin excess of $5,000,000 in the aggregate, then (i) Holdings shall promptlynotify the Administrative Agent in advance of the estimated Net IssuanceProceeds of such issuance and (ii) promptly upon, and in no event laterthan one (1) Business Day after, receipt by Holdings, the Company or the otherSubsidiary of the Net Issuance Proceeds of such issuance, Holdings shall prepaythe Term B Loans in an aggregate amount equal to the amount of all Net IssuanceProceeds received by Holdings, the Company or any such other Subsidiary onaccount of such issuance unless such equity securities were issued pursuant toa Permitted Equity Offering and the Majority Class Lenders shall have approvedsuch other use of the Net Issuance Proceeds; provided, however,that with respect to any Non-Wholly-Owned Subsidiary, such Non-Wholly-OwnedSubsidiary shall only prepay the ratable portion of the Net Issuance Proceedsreceived by such Non-Wholly-Owned Subsidiary based on Holdings’ direct orindirect interest in such Non-Wholly-Owned Subsidiary.

 

(vi)          Any prepayments pursuant to this Section 2.08shall be subject to Section 4.04 and applied, first, to SwinglineLoans (only if such prepayment is pursuant to Section 2.08(a)(i)) thenoutstanding, second, to any Base Rate Loans then outstanding and then toOffshore Rate Loans with the shortest Interest Periods remaining; provided,however, that if the amount of Swingline Loans and Base Rate Loans thenoutstanding is not sufficient to satisfy the entire prepayment requirement,Holdings may, at its option, place any amounts which it would otherwise berequired to use to prepay Offshore Rate Loans on a day other than the last dayof the Interest Period therefor into an interest-bearing account pledged to theAdministrative Agent for the benefit of the Lenders until the end of suchInterest Period at which time such pledged amounts will be applied to prepaysuch Offshore Rate Loans.  Holdingsshall pay, together with each prepayment under this Section 2.08,accrued interest on the amount of any Offshore Rate Loans prepaid and anyamounts required pursuant to Section 4.04.  Prepayments of Term B Loans pursuant to thisSection 2.08 shall be applied to reduce the Term B Loans with respect toeach remaining installment of principal thereof pro rata in accordance with thethen remaining installments payable under Section 2.09(a).

 

(b)                           MandatoryCommitment Reductions.

 

(i)            The Aggregate Revolving Commitmentshall be automatically and permanently reduced to $0 on the Revolving LoanMaturity Date.

 

(ii)           If, on the Effective Date, theAggregate Term B Commitment shall exceed the outstanding principal amount ofthe Term B Loans made, such unused portion of the Aggregate Term B Commitmentshall automatically terminate on the Effective Date.

 

(c)                           Optional Waiver ofPrepayments.  Any Term B Lender mayelect, by notice to the Administrative Agent in writing (or by telephone ortelecopy promptly confirmed in writing) at least one Business Day prior to anyprepayment of the Term B Loans required to be made by Holdings for the accountof such Lender pursuant to this Section 2.08, to waive all or a portionof such prepayment.

 

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2.09         Repayment.  (a)  TheTerm B Loans.  Holdings shall repayto the Administrative Agent for the account of the Term B Lenders the aggregateprincipal amount of Term B Loans in quarterly installments on the last BusinessDay of each calendar quarter, commencing on September 30, 2003, in theapplicable amounts set forth on Schedule 2.09 hereto (or as suchSchedule may be amended pursuant to Section 2.01(c) hereof).

 

(b)           The Revolving Loans and SwinglineLoans.  Holdings shall repay to theAdministrative Agent for the account of the Revolving Lenders on the RevolvingLoan Maturity Date the aggregate principal amount of Revolving Loans andSwingline Loans outstanding on such date.

 

2.10         Interest.  (a) (i) Subject to Section 2.10(c) below, each Revolving Loanand Term B Loan shall bear interest on the outstanding principal amount thereoffrom the applicable Borrowing Date at a rate per annum equal to the OffshoreRate or the Base Rate, as the case may be (and subject to Holdings’ right toconvert to other Types of Loans under Section 2.04), plus theApplicable Margin; and (ii) each Swingline Loan shall bear interest on theoutstanding principal amount thereof from the applicable Borrowing Date at arate per annum equal to the Base Rate plus the Applicable Margin (forBase Rate Loans), or at such other rate as may be agreed to by the SwinglineLender.

 

(b)           Interest on each Revolving Loan, TermB Loan and Swingline Loan shall be paid in arrears on each Interest PaymentDate.  Interest shall also be paid onthe date of any prepayment of Loans (other than Base Rate Loans) under Section2.07 or Section 2.08 for the portion of such Loans so prepaid andupon payment (including prepayment) in full thereof, and on the Revolving LoanMaturity Date or Term B Loan Maturity Date, as applicable.  During the existence of any Event ofDefault, interest shall be paid on demand of the Administrative Agent at therequest or with the consent of the Majority Lenders.

 

(c)           Notwithstanding Section 2.10(a),while any Event of Default exists or after acceleration, Holdings shall payinterest (after as well as before entry of judgment thereon to the extentpermitted by law) on the principal amount of all outstanding Obligations, at arate per annum which is determined by adding 2% per annum to the ApplicableMargin then in effect for such Loans and, in the case of Obligations notsubject to an Applicable Margin, at a rate per annum equal to the Base Rate plusthe Applicable Margin then in effect for Base Rate Loans, plus 2% perannum; provided, however, that on and after the expiration of anyInterest Period applicable to any Offshore Rate Loan outstanding on the date ofoccurrence of such Event of Default or acceleration, the principal amount ofsuch Loan shall, during the continuation of such Event of Default or afteracceleration, bear interest at a rate per annum equal to the Base Rate, plusthe Applicable Margin then in effect for Base Rate Loans, plus 2% perannum.

 

(d)           Anything herein to the contrarynotwithstanding, the obligations of Holdings to any Lender hereunder shall besubject to the limitation that payments of interest shall not be required forany period for which interest is computed hereunder, to the extent (but only tothe extent) that contracting for or receiving such payment by such Lender wouldbe contrary to the provisions of any law applicable to such Lender limiting thehighest rate of interest that may be lawfully contracted for, charged orreceived by such Lender, and in such event Holdings shall pay such Lenderinterest at the highest rate permitted by applicable law.

 

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2.11         Fees.  In addition to certain fees described in Section3.08:

 

(a)           Arrangement and Agency Fees.  Holdings shall pay an arrangement fee to theCo-Lead Arrangers for the Co-Lead Arranger’s own account, and shall pay anagency fee to the Administrative Agent for the Administrative Agent’s own account,as required by the letter agreement (the “Fee Letter”) between Holdings,Wells Fargo Bank, as Co-Lead Arranger and Administrative Agent dated July 14,2003.

 

(b)           Commitment Fees.  Holdings shall pay to the AdministrativeAgent for the account of each Revolving Lender a commitment fee on the actualdaily unused portion of such Revolving Lender’s Revolving Commitment (the “AvailableCommitment”), computed on a quarterly basis in arrears on the last BusinessDay of each calendar quarter based upon the daily utilization for that quarteras calculated by the Administrative Agent at a rate per annum equal to theApplicable Fee Amount (such fees, the “Commitment Fees”).  For purposes of calculating the AvailableCommitment under this Section 2.11, the Revolving Commitments shall bedeemed used to the extent of the Effective Amount of Revolving Loans thenoutstanding plus the Effective Amount of L/C Obligations then outstanding(other than L/C Obligations consisting of the aggregate undrawn amount of allCommercial Letters of Credit then outstanding).  Swingline Loans shall not constitute utilization for purposes ofcalculating Available Commitment.  SuchCommitment Fees shall accrue from the Effective Date to the Revolving LoanMaturity Date and shall be due and payable quarterly in arrears on the lastBusiness Day of each calendar quarter commencing on September 30, 2003, to theRevolving Loan Maturity Date, with the final payment to be made on theRevolving Loan Maturity Date; provided that in connection with anytermination of Commitments hereunder, the accrued Commitment Fees calculatedfor the period ending on such date shall also be paid on the date oftermination.  The Commitment Feesprovided in this Section 2.11(b) shall accrue at all times after the EffectiveDate, including at any time during which one or more conditions in Article Vare not met.

 

2.12         Computationof Fees and Interest.  (a)  All computations of interest for Base RateLoans when the Base Rate is determined by Wells Fargo’s “prime rate” shall bemade on the basis of a year of 365 or 366 days, as the case may be, and actualdays elapsed.  All other computations offees and interest shall be made on the basis of a 360-day year and actual dayselapsed.  Interest and fees shall accrueduring each period during which interest or such fees are computed from thefirst day thereof to the last day thereof.

 

(b)           Each determination of an interestrate by the Administrative Agent shall be conclusive and binding on Holdingsand the Lenders in the absence of manifest error. The Administrative Agentwill, at the request of Holdings or any Lender, deliver to Holdings or theLender, as the case may be, a statement showing the quotations used by theAdministrative Agent in determining any interest rate and the resultinginterest rate.

 

2.13         Paymentsby Holdings.  (a)  All payments to be made by Holdings shall bemade without set-off, recoupment or counterclaim.  Except as otherwise expressly provided herein, all payments byHoldings shall be made to the Administrative Agent for the account of theLenders at the Administrative Agent’s Payment Office, and shall be made inDollars and in immediately available funds, no later than 11:00 a.m. (SanFrancisco time) on the date specified herein. The Administrative Agent will promptly distribute to each Lender itsProportionate Share (or other

 

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applicable share asexpressly provided herein) of such payment in like funds as received.  Any payment received by the AdministrativeAgent later than 11:00 a.m. (San Francisco time) shall be deemed to have beenreceived on the following Business Day and any applicable interest or fee shallcontinue to accrue.

 

(b)           Subject to the provisions set forthin the definition of “Interest Period” herein, whenever any payment is due on aday other than a Business Day, such payment shall be made on the followingBusiness Day, and such extension of time shall in such case be included in thecomputation of interest or fees, as the case may be.

 

(c)           Unless the Administrative Agentreceives notice from Holdings prior to the date on which any payment is due tothe Lenders that Holdings will not make such payment in full as and whenrequired, the Administrative Agent may assume that Holdings has made suchpayment in full to the Administrative Agent on such date in immediatelyavailable funds and the Administrative Agent may (but shall not be sorequired), in reliance upon such assumption, distribute to each Lender on suchdue date an amount equal to the amount then due such Lender.  If and to the extent Holdings has not madesuch payment in full to the Administrative Agent, each Lender shall repay tothe Administrative Agent on demand such amount distributed to such Lender,together with interest thereon at the Federal Funds Rate for each day from thedate such amount is distributed to such Lender until the date repaid.

 

2.14         Payments bythe Lenders to the Administrative Agent. (a)  Unless the AdministrativeAgent receives notice from a Lender on or prior to the Effective Date or, withrespect to any Borrowing after the Effective Date, at least one (1) BusinessDay prior to the date of such Borrowing, that such Lender will not makeavailable as and when required hereunder to the Administrative Agent for theaccount of Holdings the amount of that Lender’s Proportionate Share of theBorrowing, the Administrative Agent may assume that each Lender has made suchamount available to the Administrative Agent in immediately available funds onthe Borrowing Date and the Administrative Agent may (but shall not be sorequired), in reliance upon such assumption, make available to Holdings on suchdate a corresponding amount.  If and tothe extent any Lender shall not have made its full amount available to the AdministrativeAgent in immediately available funds and the Administrative Agent in suchcircumstances has made available to Holdings such amount, that Lender shall onthe Business Day following such Borrowing Date make such amount available tothe Administrative Agent, together with interest at the Federal Funds Rate foreach day during such period.  A noticeof the Administrative Agent submitted to any Lender with respect to amountsowing under this Section 2.14(a) shall be conclusive absentmanifest error.  If such amount is somade available, such payment to the Administrative Agent shall constitute suchLender’s Loan on the date of Borrowing for all purposes of this Agreement.  If such amount is not made available to theAdministrative Agent on the Business Day following the Borrowing Date, theAdministrative Agent will notify Holdings of such failure to fund and, upondemand by the Administrative Agent, Holdings shall pay such amount to theAdministrative Agent for the Administrative Agent’s account, together withinterest thereon for each day elapsed since the date of such Borrowing, at arate per annum equal to the interest rate applicable at the time to the Loanscomprising such Borrowing.

 

(b)           The failure of any Lender to make anyLoan on any Borrowing Date shall not relieve any other Lender of any obligationhereunder to make a Loan on such Borrowing Date,

 

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but no Lender shall beresponsible for the failure of any other Lender to make the Loan to be made bysuch other Lender on any Borrowing Date.

 

2.15         Sharingof Payments, Etc.

 

(a)           Except as otherwise provided herein:

 

(i)            Each Revolving Loan and reduction ofthe Aggregate Revolving Commitment shall be made or shared among the RevolvingLenders *prorata* according to their respective Revolving Proportionate Shares;

 

(ii)           Each Term B Loan shall be made orshared among the Term B Lenders *pro rata* according to their respectiveTerm B Proportionate Shares;

 

(iii)          Each payment of principal on Loans inany Borrowing shall be shared among the Lenders which made or funded the Loansin such Borrowing *pro rata* according to the respective unpaid principalamounts of such Loans then owed to such Lenders;

 

(iv)          Each payment of interest on Loans inany Borrowing shall be shared among the Lenders that made or funded the Loansin such Borrowing *pro rata* according to (A) the respective unpaidprincipal amounts of such Loans so made or funded by such Lenders and(B) the dates on which such Lenders so made or funded such Loans;

 

(v)           Each payment of Commitment Feespursuant to this Agreement shall be shared among the Revolving Lenders (exceptfor Defaulting Lenders) *pro rata* according to (A) theirrespective Revolving Proportionate Shares and (B) in the case of eachRevolving Lender which becomes a Revolving Lender hereunder after the datehereof, the date upon which such Revolving Lender so became a Revolving Lender;

 

(vi)          Each payment of any fees due inconnection with any amendment hereto or any waiver of or forbearance from anyEvent of Default existing hereunder shall be shared among those Lendersconsenting to such amendment, waiver or forbearance or as otherwise agreed toby such Lenders;

 

(vii)         Each payment of interest (other thaninterest on Loans) and fees (other than Commitment Fees) shall be shared amongthe Lenders and the Administrative Agent owed the amount upon which suchinterest accrues *pro rata* according to (A) the respective amounts soowed such Lenders and the Administrative Agent and (B) the dates on whichsuch amounts became owing to such Lenders and the Administrative Agent; and

 

(viii)        All other payments under this Agreementand the other Loan Documents shall be for the benefit of the Person or Personsspecified.

 

(b)           If, other than as expressly providedelsewhere herein, any Lender shall obtain on account of the Loans made by itany payment (whether voluntary, involuntary, through the exercise of any rightof set-off, or otherwise) in excess of its ratable share (or other sharecontemplated hereunder), such Lender shall immediately (i) notify theAdministrative Agent of such fact, and (ii) purchase from the otherLenders such participations in the Loans made by

 

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them as shall benecessary to cause such purchasing Lender to share the excess payment pro ratawith each of them; provided, however, that if all or any portionof such excess payment is thereafter recovered from the purchasing Lender, suchpurchase shall to that extent be rescinded and each other Lender shall repay tothe purchasing Lender the purchase price paid therefor, together with an amountequal to such paying Lender’s ratable share (according to the proportion of(A) the amount of such paying Lender’s required repayment to (B) thetotal amount so recovered from the purchasing Lender) of any interest or otheramount paid or payable by the purchasing Lender in respect of the total amountso recovered.  Holdings agrees that anyLender so purchasing a participation from another Lender may, to the fullestextent permitted by law, exercise all of its rights of payment (including theright of set-off, but subject to Section 11.10) with respect to suchparticipation as fully as if such Lender were the direct creditor of Holdingsin the amount of such participation. The Administrative Agent will keep records (which shall be conclusiveand binding in the absence of manifest error) of participations purchased underthis Section 2.15(b) and will in each case notify the Lenders followingany such purchases or repayments.

 

2.16         Security andGuaranty.  (a)  All obligations of Holdings under thisAgreement, the Notes and all other Loan Documents shall be secured inaccordance with the Collateral Documents.

 

(b)           All obligations of Holdings underthis Agreement, each of the Notes and all other Loan Documents to which it is aparty shall be unconditionally guaranteed by each Guarantor pursuant to itsGuaranty.

 

**ARTICLE III**

 

**THELETTERS OF CREDIT**

 

3.01         The Letterof Credit Subfacility.  (a)  On the terms and subject to the conditionsset forth herein (i) the L/C Issuer agrees, (A) from time to time onany Business Day during the period from the Effective Date to the RevolvingLoan Maturity Date to issue Letters of Credit for the account of Holdings, andto amend or renew Letters of Credit previously issued by it, in accordance withSection 3.02(c) and Section 3.02(d), and (B) to honor draftsunder the Letters of Credit; and (ii) the Revolving Lenders severallyagree to participate in Letters of Credit Issued for the account of Holdings; providedthat the L/C Issuer shall not be obligated to Issue, and no Revolving Lendershall be obligated to participate in, any Letter of Credit if such Letter ofCredit is not denominated in Dollars or if as of the date of Issuance of suchLetter of Credit (the “Issuance Date”) and after giving effect thereto(x) the Effective Amount of all L/C Obligations plus the EffectiveAmount of all Revolving Loans and Swingline Loans shall exceed an amount equalto the lesser of (1) the combined Revolving Commitments and (2) theBorrowing Base, (y) the participation of any Revolving Lender in theEffective Amount of all L/C Obligations and in the Effective Amount of allSwingline Loans plus the Effective Amount of the Revolving Loans of suchRevolving Lender shall exceed such Revolving Lender’s Revolving Commitment, or(z) the Effective Amount of L/C Obligations shall exceed the L/CCommitment.  Within the foregoinglimits, and subject to the other terms and conditions hereof, Holdings abilityto obtain Letters of Credit shall be fully revolving, and, accordingly,Holdings may, during the foregoing

 

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period, obtain Letters ofCredit to replace Letters of Credit which have expired or which have been drawnupon and reimbursed.

 

(b)           The L/C Issuer is under no obligationto Issue any Letter of Credit if:

 

(i)            any order, judgment or decree of anyGovernmental Authority or arbitrator shall by its terms purport to enjoin orrestrain the L/C Issuer from Issuing such Letter of Credit, or any Requirementof Law applicable to the L/C Issuer or any request or directive (whether or nothaving the force of law) from any Governmental Authority with jurisdiction overthe L/C Issuer shall prohibit, or request that the L/C Issuer refrain from, theIssuance of letters of credit generally or such Letter of Credit in particularor shall impose upon the L/C Issuer with respect to such Letter of Credit anyrestriction, reserve or capital requirement (for which the L/C Issuer is nototherwise compensated hereunder) not in effect on the Effective Date, or shallimpose upon the L/C Issuer any unreimbursed loss, cost or expense which was notapplicable on the Effective Date and which the L/C Issuer in good faith deemsmaterial to it;

 

(ii)           the L/C Issuer has received writtennotice from any Revolving Lender, the Administrative Agent or Holdings, on orprior to the Business Day prior to the requested date of Issuance of suchLetter of Credit, that one or more of the applicable conditions contained in ArticleV is not then satisfied;

 

(iii)          the expiry date of any requestedLetter of Credit is (A) more than 365 days after the date of Issuance, unlessthe Majority Revolving Lenders have approved such expiry date in writing, or (B)after the Revolving Loan Maturity Date, unless all of the Revolving Lendershave approved such expiry date in writing;

 

(iv)          the expiry date of any requestedLetter of Credit is prior to the maturity date of any financial obligation tobe supported by the requested Letter of Credit;

 

(v)           any requested Letter of Credit doesnot provide for drafts, or is not otherwise in form and substance acceptable tothe L/C Issuer, or the Issuance of a Letter of Credit shall violate anyapplicable policies of the L/C Issuer;

 

(vi)          any Standby Letter of Credit is forthe purpose of supporting the issuance of any letter of credit by any otherPerson;

 

(vii)         any Standby Letter of Credit is in aface amount less than $1,000,000; or

 

(viii)        any requested Letter of Credit is to bedenominated in a currency other than Dollars.

 

(c)           Letters of Credit issued under this Article IIIshall be either Commercial Letters of Credit or Standby Letters of Credit.

 

3.02         Issuance,Amendment and Renewal of Letters of Credit.  (a)  Each Letter of Creditshall be issued upon the irrevocable written request of Holdings received bythe L/C Issuer (with a copy sent by Holdings to the Administrative Agent) atleast four (4) Business Days (or such shorter time as the L/C Issuer may agreein a particular instance in its sole discretion)

 

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prior to the proposeddate of issuance.  Each such request forissuance of a Letter of Credit shall be by facsimile, confirmed immediately inan original writing, in the form of an L/C Application, and shall specify inform and detail satisfactory to the L/C Issuer: (i) the proposed date ofissuance of the Letter of Credit (which shall be a Business Day); (ii) theface amount of the Letter of Credit; (iii) the expiry date of the Letterof Credit; (iv) the name and address of the beneficiary thereof;(v) the documents to be presented by the beneficiary of the Letter ofCredit in case of any drawing thereunder; (vi) the full text of anycertificate to be presented by the beneficiary in case of any drawingthereunder; and (vii) such other matters as the L/C Issuer may require.

 

(b)           At least two (2) Business Days priorto the Issuance of any Letter of Credit, the L/C Issuer will confirm with theAdministrative Agent (by telephone or in writing) that the Administrative Agenthas received a copy of the L/C Application or L/C Amendment Application fromHoldings and, if not, the L/C Issuer will provide the Administrative Agent witha copy thereof.  Unless the L/C Issuerhas received notice on or before the Business Day immediately preceding thedate the L/C Issuer is to issue a requested Letter of Credit from theAdministrative Agent (A) directing the L/C Issuer not to issue such Letterof Credit because such issuance is not then permitted under Section 3.01(a) asa result of the limitations set forth in clauses (x) through(z) thereof or Section 3.01(b)(ii); or (B) that one or moreconditions specified in Article V are not then satisfied; then, subjectto the terms and conditions hereof, the L/C Issuer shall, on the requesteddate, issue a Letter of Credit for the account of Holdings in accordance withthe L/C Issuer’s usual and customary business practices.

 

(c)           From time to time while a Letter ofCredit is outstanding and prior to the Revolving Loan Maturity Date, the L/CIssuer will, upon the written request of Holdings received by the L/C Issuer(with a copy sent by Holdings to the Administrative Agent) at least four (4)Business Days (or such shorter time as the L/C Issuer may agree in a particularinstance in its sole discretion) prior to the proposed date of amendment(including a renewal or extension thereof), amend any Letter of Credit issuedby it.  Each such request for amendmentof a Letter of Credit shall be made by facsimile, confirmed immediately in anoriginal writing, made in the form of an L/C Amendment Application and shallspecify in form and detail satisfactory to the L/C Issuer:  (i) the Letter of Credit to be amended;(ii) the proposed date of amendment of the Letter of Credit (which shallbe a Business Day); (iii) the nature of the proposed amendment; and(iv) such other matters as the L/C Issuer may require.  The L/C Issuer shall be under no obligationto amend any Letter of Credit if: (A) the L/C Issuer would have no obligation at such time to issuesuch Letter of Credit in its amended form under the terms of this Agreement; or(B) the beneficiary of any such Letter of Credit does not accept theproposed amendment to the Letter of Credit. The Administrative Agent will promptly notify the Revolving Lenders ofthe Issuance of any Standby Letter of Credit notified to it by the L/CIssuer.  The Revolving Lendersacknowledge and agree that the Administrative Agent will not notify them of thereceipt by the Administrative Agent of any L/C Application or L/C AmendmentApplication or of the Issuance of any Commercial Letter of Credit.  From time to time the Administrative Agentwill notify the Revolving Lenders of the amount of all outstanding Letters ofCredit hereunder.

 

(d)           The L/C Issuer and the RevolvingLenders agree that, while a Letter of Credit is outstanding and prior to theRevolving Loan Maturity Date, the L/C Issuer shall be entitled to authorize therenewal of any Letter of Credit issued by it. The L/C Issuer shall be under no

 

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obligation to so renewany Letter of Credit if: (A) the L/C Issuer would have no obligation atsuch time to issue or amend such Letter of Credit in its renewed form under theterms of this Agreement; or (B) the beneficiary of any such Letter ofCredit does not accept the proposed renewal of the Letter of Credit.  If any outstanding Letter of Credit shallprovide that it shall be automatically renewed unless the beneficiary thereofreceives notice from the L/C Issuer that such Letter of Credit shall not berenewed, and if at the time of renewal, the L/C Issuer would be entitled toauthorize the renewal of such Letter of Credit in accordance with this Section3.02(d) upon the request of Holdings, but the L/C Issuer shall not havereceived any written direction by Holdings with respect thereto, the L/C Issuershall nonetheless be permitted to allow such Letter of Credit to renew, andHoldings and the Revolving Lenders hereby authorize such renewal, and,accordingly, the L/C Issuer shall be deemed to have received an L/C AmendmentApplication from Holdings requesting such renewal.

 

(e)           The L/C Issuer may, at its election(or as required by the Administrative Agent at the direction of the MajorityRevolving Lenders), deliver any notices of termination or other communicationsto any Letter of Credit beneficiary or transferee, and take any other action asnecessary or appropriate, at any time and from time to time, in order to causethe expiry date of such Letter of Credit to be a date not later than theRevolving Loan Maturity Date.

 

(f)            This Agreement shall control in theevent of any conflict with any L/C-Related Document (other than any Letter ofCredit).

 

(g)           The L/C Issuer will also deliver tothe Administrative Agent, concurrently or promptly following its delivery of aLetter of Credit, or amendment to or renewal of a Letter of Credit, to anadvising bank or a beneficiary, a true and complete copy of each such Letter ofCredit or amendment to or renewal of a Letter of Credit.

 

3.03         RiskParticipations, Drawings and Reimbursements.  (a)  Immediately upon theIssuance of each Letter of Credit, each Revolving Lender shall be deemed to,and hereby irrevocably and unconditionally agrees to, purchase from the L/CIssuer a participation in such Letter of Credit and each drawing thereunder inan amount equal to the product of (i) the Revolving Proportionate Share ofsuch Revolving Lender, times (ii) the maximum amount available to be drawnunder such Letter of Credit and the amount of such drawing, respectively.  Each Issuance of a Letter of Credit shall bedeemed to utilize the Revolving Commitment of each Revolving Lender by anamount equal to the amount of such participation.

 

(b)           In the event of any request for adrawing under a Letter of Credit by the beneficiary or transferee thereof, theL/C Issuer will promptly notify Holdings and specify in such notice the datesuch drawing will be honored by the L/C Issuer (the “Honor Date”).  If the L/C Issuer so notifies Holdings priorto 9:00 a.m. (San Francisco time) on the Honor Date, Holdings, as account partyunder such Letter of Credit, shall reimburse the L/C Issuer no later than 11:00a.m. (San Francisco time) on the Honor Date for the amount paid by the L/CIssuer under such Letter of Credit or, if the L/C Issuer shall so notifyHoldings after 9:00 a.m. (San Francisco time) on the Honor Date, Holdings, asaccount party under such Letter of Credit, shall reimburse the L/C Issuer nolater than 11:00 a.m. (San Francisco time) on the next succeeding Business Dayfor the amount paid by the L/C Issuer under such Letter of Credit on the HonorDate (each such date, a “Reimbursement Date”), in each case, in anamount equal to the amount

 

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so paid by the L/C Issuer.  Inthe event Holdings fails to reimburse the L/C Issuer for the full amount of anydrawing under any Letter of Credit by the required time as provided above onthe Reimbursement Date, the L/C Issuer will promptly notify the AdministrativeAgent, and the Administrative Agent will promptly notify each Revolving Lenderthereof (including the amount thereof and such Revolving Lender’s RevolvingProportionate Share thereof), and Holdings shall be deemed to have requestedthat Base Rate Loans be made by the Revolving Lenders to Holdings to bedisbursed on the Reimbursement Date for such Letter of Credit, subject to theamount of the unutilized portion of the Aggregate Commitment and subject to theconditions set forth in Section 5.03. Holdings hereby directs that the proceeds of any such Loans deemed to bemade by it shall be used to pay its reimbursement obligations in respect of anysuch drawing.  Solely for the purposesof making such Loans, the Minimum Amount limitations set forth in Section 2.03shall not be applicable.  Any noticegiven by the L/C Issuer or the Administrative Agent pursuant to this Section3.03(b) may be oral if immediately confirmed in writing (including byfacsimile); provided that the lack of such an immediate confirmationshall not affect the conclusiveness or binding effect of such notice.  In the event that any amount of any drawingunder any Letter of Credit is not reimbursed by Holdings on the Honor Date,such unreimbursed amount shall bear interest until it is either deemed to be anL/C Borrowing as provided in Section 3.03(d) or deemed to be convertedto a Base Rate Loan as provided in this Section 3.03(b), at a rate perannum equal to the Base Rate plus the Applicable Margin then in effectfor Base Rate Loans.

 

(c)           Each Revolving Lender shall, uponreceipt of any notice pursuant to Section 3.03(b), make availableto the Administrative Agent for the account of the L/C Issuer an amount inDollars and in immediately available funds equal to its Revolving ProportionateShare of the amount of the drawing, whereupon such Revolving Lender shall(subject to Section 3.03(f)) be deemed to have made a RevolvingLoan consisting of a Base Rate Loan to Holdings in that amount. TheAdministrative Agent will promptly give notice of the occurrence of theReimbursement Date, but failure of the Administrative Agent to give any suchnotice on the Reimbursement Date or in sufficient time to enable any RevolvingLender to effect such payment on such date shall not relieve such RevolvingLender from its obligations under this Section 3.03.

 

(d)           With respect to any unreimburseddrawing that is not converted into Revolving Loans in whole or in part, becauseof Holdings’ failure to satisfy the conditions set forth in Section 5.03or for any other reason, Holdings shall be deemed to have incurred from the L/CIssuer an L/C Borrowing in the amount of such drawing, which L/C Borrowingshall be due and payable on demand (together with interest) and shall bearinterest at a rate per annum equal to the Base Rate, plus the ApplicableMargin then in effect for Base Rate Loans, plus 2% per annum.  In such event, each Revolving Lender shallupon receipt of any notice pursuant to Section 3.03(b) make available tothe Administrative Agent for the account of the L/C Issuer an amount in Dollarsand in immediately available funds equal to its Revolving Proportionate Shareof the amount of the drawing.  EachRevolving Lender’s payment to the L/C Issuer pursuant to this Section3.03(d) shall be deemed payment in respect of its participation in such L/CBorrowing and shall constitute an L/C Advance from such Revolving Lender insatisfaction of its participation obligation under this Section 3.03.

 

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(e)           If any Revolving Lender fails to makeavailable to the Administrative Agent for the account of the L/C Issuer theamount of such Revolving Lender’s Revolving Proportionate Share of the amountof any drawing by no later than 12:00 noon (San Francisco time) on theReimbursement Date, then interest shall accrue on such Revolving Lender’sobligation to make such payment, from the Reimbursement Date to the date suchRevolving Lender makes such payment, at (i) the Federal Funds Rate ineffect from time to time during the period commencing on the Reimbursement Dateand ending on the date three (3) Business Days thereafter, and(ii) thereafter at the Base Rate as in effect from time to time, payableon demand of the Administrative Agent.

 

(f)            Each Revolving Lender’s obligationin accordance with this Agreement to make or participate in the Revolving Loansor L/C Advances, as contemplated by this Section 3.03, as a resultof a drawing under a Letter of Credit, shall be absolute and unconditional andwithout recourse to the L/C Issuer and shall not be affected by any circumstance,including (i) any set-off, counterclaim, recoupment, defense or otherright which such Revolving Lender may have against the L/C Issuer, Holdings orany other Person for any reason whatsoever; (ii) the occurrence orcontinuance of a Default, an Event of Default or a Material Adverse Effect; or(iii) any other circumstance, happening or event whatsoever, whether ornot similar to any of the foregoing; provided, however, that eachRevolving Lender’s obligation to make Revolving Loans under this Section3.03 is subject to the conditions set forth in Section 5.03; and provided,further, however, that a Revolving Lender may have recourseagainst the L/C Issuer, and the L/C Issuer may be liable to a Revolving Lender,to the extent, but only to the extent, of any direct, as opposed toconsequential or exemplary, damages suffered by such Revolving Lender whichsuch Revolving Lender proves were caused by the L/C Issuer’s willful misconductor gross negligence or the L/C Issuer’s willful failure to pay under any Letterof Credit after the presentation to it by the beneficiary of a sight draft andcertificate(s) strictly complying with the terms and conditions of a Letter ofCredit.

 

3.04         Repayment ofParticipations.  (a)  Upon (and only upon) receipt by the AdministrativeAgent for the account of the L/C Issuer of immediately available funds fromHoldings (i) in reimbursement of any payment made by the L/C Issuer underthe Letter of Credit with respect to which any Revolving Lender has paid theAdministrative Agent for the account of the L/C Issuer for such RevolvingLender’s participation in the Letter of Credit pursuant to Section 3.03or (ii) in payment of interest thereon, the Administrative Agent will payto each Revolving Lender, in the same funds as those received by theAdministrative Agent for the account of the L/C Issuer, the amount of suchRevolving Lender’s Revolving Proportionate Share of such funds, and the L/CIssuer shall receive the amount of the Revolving Proportionate Share of suchfunds of any Revolving Lender that did not so pay the Administrative Agent forthe account of the L/C Issuer.

 

(b)           If the Administrative Agent or theL/C Issuer is required at any time to return to Holdings, or to a trustee,receiver, liquidator, custodian, or any official in any Insolvency Proceeding,any portion of the payments made by Holdings to the Administrative Agent forthe account of the L/C Issuer pursuant to Section 3.04(a) inreimbursement of a payment made under the Letter of Credit or interest or feethereon, each Revolving Lender shall, on demand of the Administrative Agent,forthwith return to the Administrative Agent or the L/C Issuer the amount ofits Revolving Proportionate Share of any amounts so returned by theAdministrative Agent or

 

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the L/C Issuer plus interest thereon from the date such demandis made to the date such amounts are returned by such Revolving Lender to theAdministrative Agent or the L/C Issuer, at a rate per annum equal to the FederalFunds Rate in effect from time to time.

 

3.05         Role of theL/C Issuer.  (a)  Each Revolving Lender and Holdings agreethat, in paying any drawing under a Letter of Credit, the L/C Issuer shall nothave any responsibility to obtain any document (other than any sight draft andcertificates expressly required by the Letter of Credit) or to ascertain orinquire as to the validity or accuracy of any such document or the authority ofthe Person executing or delivering any such document.

 

(b)           No Administrative Agent-RelatedPerson nor any of the respective correspondents, participants or assignees ofthe L/C Issuer shall be liable to any Revolving Lender for: (i) any actiontaken or omitted in connection herewith at the request or with the approval ofthe Revolving Lender (including the Majority Revolving Lenders, as applicable);(ii) any action taken or omitted in the absence of gross negligence orwillful misconduct; or (iii) the due execution, effectiveness, validity orenforceability of any L/C-Related Document.

 

(c)           Holdings hereby assumes all risks ofthe acts or omissions of any beneficiary or transferee with respect to its useof any Letter of Credit; provided, however, that this assumptionis not intended to, and shall not, preclude Holdings pursuing such rights andremedies as it may have against the beneficiary or transferee at law or underany other agreement.  No AdministrativeAgent-Related Person, nor any of the respective correspondents, participants orassignees of the L/C Issuer, shall be liable or responsible for any of thematters described in clauses (i) through (vii) of Section 3.06;provided, however, anything in such clauses to the contrarynotwithstanding, that Holdings may have a claim against the L/C Issuer, and theL/C Issuer may be liable to Holdings, to the extent, but only to the extent, ofany direct, as opposed to consequential or exemplary, damages suffered byHoldings which Holdings proves were caused by the L/C Issuer’s willfulmisconduct or gross negligence or the L/C Issuer’s willful failure to pay underany Letter of Credit after the presentation to it by the beneficiary of a sightdraft and certificate(s) strictly complying with the terms and conditions of aLetter of Credit.  In furtherance andnot in limitation of the foregoing: (i) the L/C Issuer may acceptdocuments that appear on their face to be in order, without responsibility forfurther investigation, regardless of any notice or information to the contrary;and (ii) the L/C Issuer shall not be responsible for the validity orsufficiency of any instrument transferring or assigning or purporting totransfer or assign a Letter of Credit or the rights or benefits thereunder orproceeds thereof, in whole or in part, which may prove to be invalid orineffective for any reason.

 

3.06         ObligationsAbsolute.  The obligations ofHoldings under this Agreement and any L/C-Related Document to reimburse the L/CIssuer for a drawing under a Letter of Credit, and to repay any L/C Borrowingand any drawing under a Letter of Credit converted into Revolving Loans, shallbe unconditional and irrevocable, and shall be paid strictly in accordance withthe terms of this Agreement and each such other L/C-Related Document under allcircumstances, including the following:

 

(i)            any lack of validity orenforceability of this Agreement or any L/C-Related Document;

 

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(ii)           any change in the time, manner orplace of payment of, or in any other term of, all or any of the obligations ofHoldings in respect of any Letter of Credit or any other amendment or waiver ofor any consent to departure from all or any of the L/C-Related Documents;

 

(iii)          the existence of any claim, set-off,defense or other right that Holdings may have at any time against any beneficiaryor any transferee of any Letter of Credit (or any Person for whom any suchbeneficiary or any such transferee may be acting), the L/C Issuer or any otherPerson, whether in connection with this Agreement, the transactionscontemplated hereby or by the L/C-Related Documents or any unrelatedtransaction;

 

(iv)          any draft, demand, certificate orother document presented under any Letter of Credit proving to be forged,fraudulent, invalid or insufficient in any respect or any statement thereinbeing untrue or inaccurate in any respect; or any loss or delay in thetransmission or otherwise of any document required in order to make a drawingunder any Letter of Credit;

 

(v)           any payment by the L/C Issuer underany Letter of Credit against presentation of a draft or certificate that doesnot strictly comply with the terms of any Letter of Credit; or any payment madeby the L/C Issuer under any Letter of Credit to any Person purporting to be atrustee in bankruptcy, debtor-in-possession, assignee for the benefit ofcreditors, liquidator, receiver or other representative of or successor to anybeneficiary or any transferee of any Letter of Credit, including any arising inconnection with any Insolvency Proceeding;

 

(vi)          any exchange, release ornon-perfection of any collateral, or any release or amendment or waiver of orconsent to departure from any other guarantee, for all or any of theobligations of Holdings in respect of any Letter of Credit; or

 

(vii)         any other circumstance or happeningwhatsoever, whether or not similar to any of the foregoing, including any othercircumstance that might otherwise constitute a defense available to, or adischarge of, Holdings or a Guarantor.

 

3.07         CashCollateral Pledge.  (a) Uponthe request of the Administrative Agent, if the L/C Issuer has honored any fullor partial drawing request on any Letter of Credit and such drawing hasresulted in an L/C Borrowing hereunder, or (b) if, as of the RevolvingLoan Maturity Date, any Letters of Credit may for any reason remain outstandingand partially or wholly undrawn, or (c) the occurrence of thecircumstances described in Section 2.08(a)(i) or Section 2.08(a)(ii)requiring Holdings to Cash Collateralize Letters of Credit, then, Holdingsshall immediately Cash Collateralize the L/C Obligations in an amount equal tosuch L/C Obligations.  Holdings shall,to the extent necessary, make such additional pledges from time to time asshall be necessary to ensure that all L/C Obligations remain at all times fullyCash Collateralized.  Cash collateralheld under this Section 3.07 or Section 9.02 shall be maintainedin blocked, non-interest bearing deposit accounts at Wells Fargo pursuant tothe Security Agreement.

 

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3.08         Letter ofCredit Fees.  (a)  Holdings shall pay to the AdministrativeAgent for the account of each of the Revolving Lenders in accordance with itsrespective Revolving Proportionate Share a letter of credit fee with respect tothe Standby Letters of Credit equal to the rate per annum equal to theApplicable Fee Amount of the actual daily maximum amount available to be drawnof the outstanding Standby Letters of Credit, computed on a quarterly basis inarrears on the last Business Day of each calendar quarter based upon Standby Lettersof Credit outstanding for that quarter as calculated by the AdministrativeAgent.  Such letter of credit fees shallbe due and payable quarterly in arrears on the last Business Day of eachcalendar quarter during which Standby Letters of Credit are outstanding,commencing on the first such quarterly date to occur after the Effective Date,to the Revolving Loan Maturity Date (or such later date upon which theoutstanding Letters of Credit shall expire), with the final payment to be madeon the Revolving Loan Maturity Date (or such later expiration date).  Such fees are fully earned when due and,once paid, are non-refundable.

 

(b)           Holdings shall pay to the L/C Issuer,for the L/C Issuer’s sole account, a letter of credit fee with respect to theamount from time to time available to be drawn under Commercial Letters ofCredit in such amount and on such dates as shall separately be agreed uponbetween the L/C Issuer and Holdings. Such fees are fully earned when due and, once paid, are non-refundable.

 

(c)           Holdings shall pay to the L/C Issuer,for the L/C Issuer’s sole account, a letter of credit fronting fee for eachStandby Letter of Credit Issued by the L/C Issuer equal to 0.125% per annum ofthe actual daily maximum amount available to be drawn of the outstandingStandby Letters of Credit, computed on a quarterly basis in arrears on the lastBusiness Day of each calendar quarter based upon Standby Letters of Creditoutstanding for that quarter as calculated by the L/C Issuer.  Such letter of credit fronting fees shall bedue and payable quarterly in arrears on the last Business Day of each calendarquarter during which Standby Letters of Credit are outstanding, commencing onthe first such quarterly date to occur after the Effective Date, to the RevolvingLoan Maturity Date (or such later date upon which the outstanding Letters ofCredit shall expire), with the final payment to be made on the Revolving LoanMaturity Date (or such later expiration date). Such fees are fully earned when due and, once paid, are non-refundable.

 

(d)           Holdings shall pay to the L/C Issuerfrom time to time on demand the normal issuance, presentation, transfer,amendment and other processing fees, and other standard costs and charges, ofthe L/C Issuer relating to letters of credit as from time to time in effect.

 

(e)           Notwithstanding subsection(a) of this Section 3.08, while any Event of Default exists orafter acceleration, Holdings shall pay a letter of credit fee (after as well asbefore entry of judgment thereon to the extent permitted by law) on the actualdaily maximum amount available to be drawn of the outstanding Letters ofCredit, at a rate per annum which is determined by adding 2% per annum to therate otherwise then in effect hereunder for such Letters of Credit.

 

3.09         Applicabilityof ISP98 and UCP.  Unless otherwiseexpressly agreed by the L/C Issuer and Holdings when a Letter of Credit isissued, (i) the rules of the “International Standby Practices 1998”published by the Institute of International Banking Law & Practice (or suchlater

 

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version thereof as may be in effect at the time of issuance) shallapply to each Standby Letter of Credit, and (ii) the rules of the UniformCustoms and Practice for Documentary Credits (the “UCP”), as mostrecently published by the International Chamber of Commerce (the “ICC”)at the time of issuance (including the ICC decision published by the Commissionon Banking Technique and Practice on April 6, 1998 regarding the Europeansingle currency (euro)) shall apply to each Commercial Letter of Credit.

 

3.10         Trade Bankas L/C Issuer.  The parties heretoacknowledge and agree that, at its option, Wells Fargo, as L/C Issuer, mayarrange for Letters of Credit to be issued by Trade Bank as agent for WellsFargo.  All parties hereto understandand agree that to the extent any Letters of Credit are issued by Trade Bank asagent for Wells Fargo, (i) Trade Bank is agent only to Wells Fargo and not toHoldings and has no obligations to Holdings, (ii) the Letters of Credit issuedby Trade Bank will be deemed Letters of Credit issued by the L/C Issuer for allpurposes hereunder and (iii) any of the obligations performed or rightsexercised pursuant to or in connection with the issuance of any Letter ofCredit by Trade Bank shall be deemed obligations performed or rights exercisedby Wells Fargo as L/C Issuer.  To theextent that the L/C Issuer is required to provide any notices to, or take anyother actions for the benefit of, the Administrative Agent hereunder, withrespect to any Letter of Credit issued by Trade Bank, no such notice or actionshall be required.

 

**ARTICLE IV**

 

**TAXES,YIELD PROTECTION AND ILLEGALITY**

 

4.01         Taxes.  (a) Any and all payments by Holdings to each Lender or the Administrative Agentunder this Agreement and any other Loan Document shall be made free and clearof, and without deduction or withholding for, any Taxes.  In addition, Holdings shall pay all OtherTaxes.

 

(b)           If Holdings shall be required by lawto deduct or withhold any Taxes, Other Taxes or Further Taxes from or inrespect of any sum payable hereunder to any Lender or the Administrative Agent,then:

 

(i)            the sum payable shall be increasedas necessary so that, after making all required deductions and withholdings(including deductions and withholdings applicable to additional sums payableunder this section), such Lender or the Administrative Agent, as the case maybe, receives and retains an amount equal to the sum it would have received andretained had no such deductions or withholdings been made;

 

(ii)           Holdings shall make such deductionsand withholdings;

 

(iii)          Holdings shall pay the full amountdeducted or withheld to the relevant taxing authority or other authority inaccordance with applicable law; and

 

(iv)          Holdings shall also pay to each Lenderor the Administrative Agent for the account of such Lender, at the timeinterest is paid, Further Taxes in the amount that the respective Lenderspecifies as necessary to preserve the after-tax yield such Lender would havereceived if such Taxes, Other Taxes or Further Taxes had not been imposed.

 

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(c)           Holdings agrees to indemnify and holdharmless each Lender and the Administrative Agent for the full amount of(i) Taxes, (ii) Other Taxes, and (iii) Further Taxes in theamount that the respective Lender specifies as necessary to preserve theafter-tax yield such Lender would have received if such Taxes, Other Taxes orFurther Taxes had not been imposed, and any liability (including penalties,interest, additions to tax and expenses) arising therefrom or with respectthereto, whether or not such Taxes, Other Taxes or Further Taxes were correctlyor legally asserted.  Payment under thisindemnification shall be made within thirty (30) days after the date suchLender or the Administrative Agent makes written demand therefor.

 

(d)           Within thirty (30) days after thedate of any payment by Holdings of Taxes, Other Taxes or Further Taxes,Holdings shall furnish to each Lender or the Administrative Agent the originalor a certified copy of a receipt evidencing payment thereof, or other evidenceof payment satisfactory to such Lender or the Administrative Agent.

 

(e)           If Holdings is required to pay anyamount to any Lender or the Administrative Agent pursuant to subsection (b) or(c) of this Section, then such Lender shall use reasonable efforts (consistentwith legal and regulatory restrictions) to change the jurisdiction of itsLending Office so as to eliminate any such additional payment by Holdings whichmay thereafter accrue, if such change in the sole judgment of such Lender isnot otherwise disadvantageous to such Lender.

 

(f)            Nothing contained in this Section 4.01shall override any term or provision of any Specified Swap Contract regardingwithholding taxes relating to Swap Contracts.

 

4.02         Illegality.  (a) If any Lender determines that the introduction of any Requirement ofLaw, or any change in any Requirement of Law, or in the interpretation oradministration of any Requirement of Law, has made it unlawful, or that anycentral bank or other Governmental Authority has asserted that it is unlawful,for any Lender or its applicable Lending Office to make Offshore Rate Loans,then, on notice thereof by such Lender to Holdings through the AdministrativeAgent, any obligation of that Lender to make Offshore Rate Loans shall besuspended until such Lender notifies the Administrative Agent and Holdings thatthe circumstances giving rise to such determination no longer exist.

 

(b)           If a Lender determines that it isunlawful to maintain any Offshore Rate Loan, Holdings shall, upon its receiptof notice of such fact and demand from such Lender (with a copy to theAdministrative Agent), prepay in full such Offshore Rate Loans of that Lender thenoutstanding, together with interest accrued thereon and amounts required under Section4.04, either on the last day of the Interest Period thereof, if such Lendermay lawfully continue to maintain such Offshore Rate Loans to such day, orimmediately, if such Lender may not lawfully continue to maintain such OffshoreRate Loan.  If Holdings is required toso prepay any Offshore Rate Loan, then concurrently with such prepayment,Holdings shall borrow from the affected Lender, in the amount of such repayment,a Base Rate Loan.

 

(c)           If the obligation of any Lender tomake or maintain Offshore Rate Loans has been so terminated or suspended,Holdings may elect, by giving notice to such Lender through the AdministrativeAgent that all Loans which would otherwise be made by such Lender as OffshoreRate Loans shall be instead Base Rate Loans.

 

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(d)           Before giving any notice to theAdministrative Agent under this Section 4.02, the affected Lender shalldesignate a different Lending Office with respect to its Offshore Rate Loans ifsuch designation will avoid the need for giving such notice or making suchdemand and will not, in the judgment of such Lender, be illegal or otherwisedisadvantageous to such Lender.

 

4.03         IncreasedCosts and Reduction of Return. (a)  If any Lender determinesthat, due to either (i) the introduction of, or any change (other than anychange by way of imposition of or increase in reserve requirements included inthe calculation of the Offshore Rate) in, or in the interpretation of any lawor regulation or (ii) the compliance by that Lender with any guideline orrequest from any central bank or other Governmental Authority (whether or nothaving the force of law), there shall be any increase in the cost to suchLender of agreeing to make or making, funding or maintaining any Offshore RateLoans or participating in Letters of Credit, or, in the case of the L/C Issuer,any increase in the cost to the L/C Issuer of agreeing to issue, issuing or maintainingany Letter of Credit or of agreeing to make or making, funding or maintainingany unpaid drawing under any Letter of Credit, then Holdings shall be liablefor, and shall from time to time, upon demand (with a copy of such demand to besent to the Administrative Agent), pay to the Administrative Agent for theaccount of such Lender, additional amounts as are sufficient to compensate suchLender for such increased costs.

 

(b)           If any Lender shall have determinedthat (i) the introduction of any Capital Adequacy Regulation,(ii) any change in any Capital Adequacy Regulation, (iii) any changein the interpretation or administration of any Capital Adequacy Regulation byany central bank or other Governmental Authority charged with the interpretationor administration thereof, or (iv) compliance by such Lender (or itsLending Office) or any corporation controlling such Lender with any CapitalAdequacy Regulation, affects or would affect the amount of capital required orexpected to be maintained by such Lender or any corporation controlling suchLender and (taking into consideration such Lender’s or such corporation’spolicies with respect to capital adequacy and such Lender’s desired return oncapital) determines that the amount of such capital is increased as aconsequence of its Commitment, loans, credits or obligations under thisAgreement, then, upon demand of such Lender to Holdings through theAdministrative Agent, Holdings shall pay to such Lender, from time to time asspecified by such Lender, additional amounts sufficient to compensate suchLender for such increase.

 

4.04         FundingLosses.  As a consequence of:

 

(a)           the failure of Holdings to make on atimely basis any payment of principal of any Offshore Rate Loan;

 

(b)           the failure of Holdings to borrow,continue or convert a Loan after Holdings has given (or is deemed to havegiven) a Notice of Borrowing or a Notice of Conversion/ Continuation;

 

(c)           the failure of Holdings to make anyprepayment in accordance with any notice delivered under Section 2.05, Section2.07 or Section 2.08;

 

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(d)           the prepayment (including pursuant toSection 2.05, Section 2.07, Section 2.08 or Section4.02(b)) or other payment (including after acceleration thereof) of an OffshoreRate Loan on a day that is not the last day of the relevant Interest Period;and

 

(e)           the conversion under Section 2.04of any Offshore Rate Loan to a Base Rate Loan on a day that is not the last dayof the relevant Interest Period;

 

Holdings shall pay to the appropriate Lender withinfive (5) Business Days after demand, a prepayment fee, failure to borrow fee orfailure to convert fee, as the case may be (determined as though 100% of theOffshore Rate Loan had been funded in the London interbank eurodollar currencymarket) equal to the sum of:

 

(i)            the amount, if any, by which (A) theadditional interest would have accrued on the amount prepaid or not borrowed atthe Offshore Rate plus the Applicable Margin for Offshore Rate Loans ifthat amount had remained or been outstanding through the last day of theapplicable Interest Period exceeds (B) the interest that such Lender couldrecover by placing such amount on deposit in the London interbank eurodollarcurrency market for a period beginning on the date of the prepayment or failureto borrow and ending on the last day of the applicable Interest Period (or, ifno deposit rate quotation is available for such period, for the most comparableperiod for which a deposit rate quotation may be obtained); plus

 

(ii)           all out-of-pocket expenses incurredby such Lender reasonably attributable to such payment, prepayment or failureto borrow.

 

Each Lender’s determinationof the amount of any prepayment fee payable under this Section 4.04shall be conclusive in the absence of manifest error.  The obligations of Holdings under this Section4.04 shall survive the payment and performance of the Obligations and thetermination of this Agreement.

 

4.05         Inabilityto Determine Rates.  If theAdministrative Agent or the Majority Lenders determine that for any reasonadequate and reasonable means do not exist for determining the Offshore Ratefor any requested Interest Period with respect to a proposed Borrowing ofOffshore Rate Loans or conversion or continuation of Offshore Rate Loans, orthat the Offshore Rate applicable pursuant to Section 2.10(a) for anyrequested Interest Period with respect to a proposed Borrowing of Offshore RateLoans, or a conversion into or continuation of Offshore Rate Loans does notadequately and fairly reflect the cost to such Lenders of funding such Loans,the Administrative Agent will promptly so notify Holdings and each Lender.  Thereafter, the obligation of the Lenders tomake or maintain Offshore Rate Loans, as the case may be, hereunder shall besuspended until the Administrative Agent upon the instruction of the MajorityLenders revokes such notice in writing. Upon receipt of such notice, Holdings may revoke any Notice of Borrowingor Notice of Conversion/Continuation then submitted by it.  If Holdings does not revoke such Notice, theLenders shall make, convert or continue the Loans, as proposed by Holdings, inthe amount specified in the applicable notice submitted by Holdings, but suchLoans shall be made, converted or continued as Base Rate Loans instead ofOffshore Rate Loans, as the case may be.

 

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4.06         Certificatesof Lenders.  Any Lender claimingreimbursement or compensation under this Article IV shall deliver toHoldings (with a copy to the Administrative Agent) a certificate setting forthin reasonable detail the amount payable to such Lender hereunder, and the basisfor calculation of such amount, and such certificate shall be conclusive andbinding on Holdings in the absence of manifest error.

 

4.07         Substitutionof Lenders.  Upon the receipt byHoldings from any Lender (an “Affected Lender”) of a claim forcompensation under Section 4.03, Holdings may:  (i) request one or more of the other Lenders to acquire andassume all of such Affected Lender’s Loans and Commitment; or(ii) designate a replacement lending institution (which shall be anEligible Assignee) to acquire and assume all of such Affected Lender’s Loansand Commitment (a “Replacement Lender”); provided, however,that Holdings shall be liable for the payment upon demand of all costs andother amounts arising under Section 4.04 that result from theacquisition of any Affected Lender’s Loan and/or Commitment (or any portionthereof) by a Lender or Replacement Lender, as the case may be, on a date otherthan the last day of the applicable Interest Period with respect to anyOffshore Rate Loan then outstanding. Any such designation of a Replacement Lender under clause(ii) shall be effected in accordance with, and subject to the terms andconditions of, the assignment provisions contained in Section 11.08, andshall in any event be subject to the prior written consent of theAdministrative Agent, the L/C Issuer and the Swingline Lender (which consentshall not be unreasonably withheld).

 

4.08         Survival.  The agreements and obligations of Holdingsin this Article IV shall survive the termination of the Commitments, thetermination or expiration of all Letters of Credit and the payment of all otherObligations.

 

**ARTICLE V**

 

**CONDITIONSPRECEDENT**

 

5.01         Conditionsto Signing Date.  The effectivenessof this Agreement and the obligations of each Lender to become a party heretoshall be subject to the condition that the Administrative Agent shall havereceived on or before the Signing Date all of the following, in form andsubstance reasonably satisfactory to the Administrative Agent and each Lender,and in sufficient copies for each Lender:

 

(a)           Credit Agreement.  This Agreement executed by each partyhereto;

 

(b)           Resolutions; Incumbency.

 

(i)            Copies of the resolutions of theboard of directors of each Loan Party authorizing the transactions contemplatedhereby, certified as of the Signing Date by the Secretary or an AssistantSecretary of such Person; and

 

(ii)           a certificate of the Secretary orAssistant Secretary of each Loan Party, dated as of the Signing Date,certifying the names, titles and true signatures of the officers of such Personauthorized to execute, deliver and perform, as applicable, this Agreement andall other Loan Documents to be delivered by it hereunder; and

 

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(c)           Financial Statements.

 

(i)            The audited consolidated balancesheet of Holdings and its Subsidiaries as at December 31, 2001 and December 31,2002, and the related consolidated statements of income or operations,shareholders’ equity and cash flows for the fiscal year then ended, certifiedby a Responsible Officer of the Company;

 

(ii)           the unaudited consolidated balancesheet of Holdings and its Subsidiaries as at June 30, 2003, and the relatedconsolidated statements of income or operations, shareholders’ equity and cashflows for the fiscal quarter then ended, certified by a Responsible Officer ofthe Company; and

 

(iii)          such other financial information as theAdministrative Agent or any Lender may reasonably request.

 

5.02         Conditions toEffective Date.  The obligations ofeach Lender to advance its Proportionate Share of any Loan hereunder (includingthe obligations of any New Lender to advance its Proportionate Share of anyLoans currently outstanding under the Existing Credit Agreement pursuant to Section2.01 hereof and of the Term B Lenders to make the Term B Loans) shall besubject to the condition that the Administrative Agent shall have received onor before the Effective Date all of the following, in form and substancereasonably satisfactory to the Administrative Agent and each Lender, and insufficient copies for each Lender:

 

(a)           Organization Documents; GoodStanding.  Each of the followingdocuments:

 

(i)            the articles or certificate ofincorporation and the bylaws of each Loan Party as in effect on the EffectiveDate, certified by the Secretary or Assistant Secretary of such Person as ofthe Effective Date; and

 

(ii)           a good standing certificate, as of arecent date, for each Loan Party from the Secretary of State (or similar,applicable Governmental Authority) of its state of incorporation and each statewhere its ownership, lease or operation of property or the conduct of itsbusiness requires such Loan Party be qualified or otherwise licensed to dobusiness;

 

(b)           Legal Opinion.  An opinion of Gibson, Dunn &Crutcher LLP, counsel to the Loan Parties and addressed to the AdministrativeAgent and the Lenders, dated the Effective Date, substantially in the form of ExhibitD;

 

(c)           Payment of Fees.  Evidence of payment by Holdings of allaccrued and unpaid fees, costs and expenses to the extent then due and payableon the Effective Date, together with reasonable Attorney Costs of Wells Fargoto the extent invoiced prior to or on the Effective Date, plus suchadditional amounts of reasonable Attorney Costs as shall constitute WellsFargo’s reasonable estimate of Attorney Costs incurred or to be incurred by itthrough the closing proceedings (provided that such estimate shall notthereafter preclude final settling of accounts between Holdings and WellsFargo); including any such costs, fees and expenses arising under or referencedin Section 2.11 and Section 11.04;

 

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(d)           Officer’s Certificate.  A certificate signed by a ResponsibleOfficer of each of Holdings and the Company, dated as of the Effective Date,stating that:

 

(i)            the representations and warrantiescontained in Article VI are true and correct on and as of such date, asthough made on and as of such date;

 

(ii)           no Default or Event of Default existsor would result from the initial Credit Extension; and

 

(iii)          there has occurred since December 31,2002, no event or circumstance that has resulted or could reasonably beexpected to result in a Material Adverse Effect;

 

(e)           Borrowing Base Certificate.  A completed Borrowing Base Certificate,certifying the Borrowing Base as of the month ended June 30, 2003, signed by aResponsible Officer of Holdings, and dated the Effective Date;

 

(f)            Collateral Documents.  The Collateral Documents, executed by eachLoan Party, in appropriate form for recording, where necessary, together with:

 

(i)            copies of all UCC-l, UCC-2 and UCC-3financing statements to be filed to perfect or amend the security interests ofthe Administrative Agent for the benefit of the Lenders, or other evidencesatisfactory to the Administrative Agent that there have been filed, registeredor recorded all financing statements and other filings, registrations andrecordings necessary and advisable to perfect or amend the perfection of theLiens of the Administrative Agent for the benefit of the Lenders in accordancewith applicable law, or, with respect to the Mortgaged Property, evidencesatisfactory to the Administrative Agent that the executed Mortgages withrespect to the Mortgaged Property shall have been delivered to Chicago TitleInsurance Company in recordable form on or prior to the Effective Date forrecording (or, in the case of Mortgaged Properties for which Mortgages have notpreviously been delivered under the Existing Credit Agreement, within 60 daysthereafter);

 

(ii)           written advice relating to such Lienand judgment searches as the Administrative Agent shall have requested, andsuch termination statements or other documents as may be necessary to confirmthat the Collateral is subject to no other Liens in favor of any Persons (otherthan Permitted Liens);

 

(iii)          to the extent not previously deliveredpursuant to the Existing Credit Agreement, receipt by the Administrative Agentof all certificates and instruments representing the Pledged Collateral,together with stock transfer powers executed in blank with signaturesguaranteed as the Administrative Agent may specify;

 

(iv)          funds sufficient to pay any filing orrecording tax or fee in connection with any and all UCC-1 financing statementsand the Mortgages;

 

(v)           to the extent not previouslydelivered pursuant to the Existing Credit Agreement, surveys and surveyor’scertification as to all real property and all land covered by a lease inrespect of which there is delivered a Mortgage, or as may be reasonablyrequired by the

 

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Administrative Agent, each in form and substance satisfactory to theAdministrative Agent and the Lenders;

 

(vi)          proof of payment of all titleinsurance premiums, documentary stamp or intangible taxes, recording fees andmortgage taxes payable in connection with the recording of any Mortgage or theissuance of the title insurance policies (whether due on the Effective Date orin the future) including sums due in connection with any future advances;

 

(vii)         to the extent not previously deliveredpursuant to the Existing Credit Agreement, such consents, estoppels, subordinationagreements and other documents and instruments executed by landlords, tenantsand other Persons party to material contracts relating to any Collateral as towhich the Administrative Agent shall be granted a Lien for the benefit of theLenders, as requested by the Administrative Agent or any Lender; and

 

(viii)        evidence that all other actionsnecessary or, in the reasonable opinion of the Administrative Agent or theLenders, desirable to perfect and protect the first priority Lien created bythe Collateral Documents, and to enhance the Administrative Agent’s ability topreserve and protect its and the Lenders’ interests in and access to theCollateral;

 

(g)           Insurance Policies.  Evidence that the Administrative Agent hasbeen named as loss payee under all policies of casualty insurance under a Form438BFU or other standard lender’s loss payable endorsement, and as additionalinsured under all policies of liability insurance, required in accordance with Section 7.06and the Collateral Documents, together with a certificate of insurance as toall insurance coverage on the properties of Holdings and its Subsidiaries;

 

(h)           Compliance Certificate.  A completed Compliance Certificate, as ofJune 30, 2003, signed by a Responsible Officer of Holdings, and dated theEffective Date;

 

(i)            Second Amendment to Deeds ofTrust.  The Second Amendment toDeeds of Trust executed by each party thereto pursuant to which theAdministrative Agent shall be appointed substitute named beneficiary under allMortgages and the Mortgages shall be amended as provided therein;

 

(j)            Control Agreements.  Any control agreements for the perfection ofdeposit accounts of Holdings and the Guarantors party hereto which have beenrequested by the Administrative Agent prior to the Effective Date shall havebeen executed by Holdings or such Guarantor, as applicable, and any applicablefinancial institutions;

 

(k)           Assignments of Trademarks.  Such actions shall have been taken as theAdministrative Agent deems necessary to ensure the Administrative Agent’s andthe Lenders’ rights as secured party with respect to any trademarks of Holdingsor any Guarantor party hereto;

 

(l)            Notes.  Notes executed by Holdings for the Lendersrequesting Notes; and

 

(m)          Other Documents.  Such other approvals, opinions, documents ormaterials as the Administrative Agent or any Lender may reasonably request.

 

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5.03         Conditionsto the Subsequent Effective Date.  The obligations of each Additional Lender to become a party heretoand of each Additional Lender to make the Additional Term B Loans and/or toprovide the Additional Revolving Commitment shall be subject to the conditionthat the Administrative Agent shall have received on or before the SubsequentEffective Date all of the following, in form and substance reasonablysatisfactory to the Administrative Agent and each Additional Lender, and insufficient copies for each Additional Lender:

 

(a)           Credit Agreement and Notes.  This Agreement executed by each AdditionalLender and Notes executed by Holdings for each Additional Lender requestingNotes;

 

(b)           Secretary’s Certificate.  A certificate of the Secretary or AssistantSecretary of each Loan Party, dated as of the Subsequent Effective Date,certifying:

 

(i)            that the resolutions of the board ofdirectors of each Loan Party authorizing the transactions contemplated hereby,as delivered on the Effective Date, are in full force and effect and have notbeen amended, supplemented or modified; and

 

(ii)           the names, titles and true signaturesof the officers of such Person authorized to execute, deliver and perform, asapplicable, this Agreement and all other Loan Documents to be delivered by ithereunder;

 

(c)           Organization Documents; GoodStanding.  Each of the followingdocuments:

 

(i)            the articles or certificate ofincorporation and the bylaws of each Loan Party as in effect on the SubsequentEffective Date, certified by the Secretary or Assistant Secretary of suchPerson as of the Subsequent Effective Date; and

 

(ii)           a good standing certificate, as of adate reasonably prior to the Subsequent Effective Date as is determined by theAdministrative Agent in good faith, for each Loan Party from the Secretary ofState (or similar, applicable Governmental Authority) of its state of incorporationand each state where its ownership, lease or operation of property or theconduct of its business requires such Loan Party be qualified or otherwiselicensed to do business;

 

(d)           Payment of Fees.  Evidence of payment by Holdings of allaccrued and unpaid fees, costs and expenses to the extent then due and payableon the Subsequent Effective Date, together with reasonable Attorney Costs ofWells Fargo to the extent invoiced prior to or on the Subsequent EffectiveDate, plus such additional amounts of reasonable Attorney Costs as shallconstitute Wells Fargo’s reasonable estimate of Attorney Costs incurred or tobe incurred by it through the closing proceedings (provided that suchestimate shall not thereafter preclude final settling of accounts betweenHoldings and Wells Fargo); including any such costs, fees and expenses arisingunder or referenced in Section 2.11 and Section 11.04;

 

(e)           Officer’s Certificate.  A certificate signed by a ResponsibleOfficer of each of Holdings and the Company, dated as of the SubsequentEffective Date, stating that:

 

(i)            the representations and warrantiescontained in Article VI are true and correct on and as of such date, asthough made on and as of such date (except to the extent such

 

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representations and warranties expressly refer to an earlier date, inwhich case they shall be true and correct as of such earlier date);

 

(ii)           no Default or Event of Default existsor would result from the Credit Extensions to be made as of the SubsequentEffective Date; and, on a pro forma basis, if the revised Aggregate Commitmentas of the Subsequent Effective Date had been available, and the outstandingamount of Loans on the Subsequent Effective Date were outstanding at the time themost recently completed Compliance Certificate was delivered to theAdministrative Agent, Holdings would have been in compliance with the financialcovenants contained in Article VIII for the time period specified insuch Compliance Certificate; and

 

(iii)          there has occurred since the EffectiveDate, no event or circumstance that has resulted or could reasonably beexpected to result in a Material Adverse Effect; and

 

(f)            Other Documents.  Such other approvals, opinions, documents ormaterials as the Administrative Agent or any Additional Lender may reasonablyrequest.

 

5.04         Conditionsto All Credit Extensions. The obligation of each Lender (including the Swingline Lender) to makeany Credit Extension (including its initial Credit Extension) and the obligationof the L/C Issuer to Issue any Letter of Credit (including the initial Letterof Credit) shall be subject to the satisfaction of the following conditionsprecedent on the relevant Borrowing Date or Issuance Date:

 

(a)           Notice, Application.  The Administrative Agent shall have receiveda Notice of Borrowing or in the case of any Issuance of any Letter of Credit,the L/C Issuer and the Administrative Agent shall have received an L/CApplication or L/C Amendment Application, as required under Section 3.02;

 

(b)           Continuation of Representationsand Warranties.  The representationsand warranties in Article VI shall be true and correct on and as of suchBorrowing Date or Issuance Date with the same effect as if made on and as ofsuch Borrowing Date or Issuance Date (except to the extent such representationsand warranties expressly refer to an earlier date, in which case they shall betrue and correct as of such earlier date and except that thisSection 5.04(b) shall be deemed instead to refer to the last day of themost recent quarter and year for which financial statements have then beendelivered in respect of the representation and warranty made in Section 6.11(a));

 

(c)           No Existing Default.  No Default or Event of Default shall existor shall result from such Borrowing or Issuance;

 

(d)           No Material Adverse Effect.  There has occurred since December 31, 2002,no event or circumstance that has resulted or could reasonably be expected toresult in a Material Adverse Effect; and

 

(e)           Borrowing Base.  On any such Borrowing Date or Issuance Date,the Administrative Agent shall be in receipt of the completed Borrowing BaseCertificate then required to be delivered by Holdings hereunder, and theEffective Amount of all outstanding Revolving Loans and Swingline Loans and theEffective Amount of all L/C Obligations shall not

 

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exceed an amount equal to the lesser of (i) the Aggregate RevolvingCommitment and (ii) the Borrowing Base.

 

(f)            No Future Advance Notice.  Neither the Administrative Agent nor anyLender shall have received from Holdings or any other Person any notice thatany Collateral Document will no longer secure on a first priority basis futureadvances or future Loans to be made or extended under this Agreement.

 

Each Notice of Borrowing and L/C Application or L/CAmendment Application submitted by Holdings hereunder shall constitute arepresentation and warranty by Holdings hereunder, as of the date of each suchnotice and as of each Borrowing Date or Issuance Date, as applicable, that(i) the conditions in this Section 5.04 are satisfied, and(ii) the statements contained in the most recent Borrowing BaseCertificate, if any, delivered by Holdings hereunder shall be true, correct andcomplete on and as of the date of such Borrowing Date or Issuance Date, asapplicable, as though made on and as of such date, except for changes in theinformation set forth in such Borrowing Base Certificate in the ordinary courseof business.

 

**ARTICLE VI**

 

**REPRESENTATIONSAND WARRANTIES**

 

Each of Holdings and the Company represents andwarrants to the Administrative Agent and each Lender that:

 

6.01         CorporateExistence and Power. Holdings and each of its Subsidiaries:

 

(a)           is a corporation, limited liabilitycompany or partnership duly organized or formed, as the case may be, validlyexisting and in good standing under the laws of the jurisdiction of itsincorporation or formation;

 

(b)           has the power and authority and allgovernmental licenses, authorizations, consents and approvals (i) to ownits assets and carry on its business and (ii) in the case of any LoanParty, to execute, deliver, and perform its obligations under the LoanDocuments;

 

(c)           is duly qualified, licensed and ingood standing under the laws of each jurisdiction where its ownership, lease oroperation of property or the conduct of its business requires suchqualification, license or good standing; and

 

(d)           is in compliance with allRequirements of Law;

 

except, in each case referred to in clauses (b)(i),(c) or (d) of this Section 6.01, to the extent that the failure to do sowould not reasonably be expected to have a Material Adverse Effect.

 

6.02         Corporate Authorization; NoContravention.  The execution,delivery and performance by each Loan Party of this Agreement and each otherLoan Document to which such Loan Party is party, have been duly authorized byall necessary organizational action, and do not and will not:

 

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(a)           contravene the terms of any of that Person’sOrganization Documents;

 

(b)           conflict with or result in any breachor contravention of, or the creation of any Lien under, any document evidencingany Contractual Obligation to which such Person is a party or any order,injunction, writ or decree of any Governmental Authority to which such Personor its property is subject; or

 

(c)           violate any Requirement of Law.

 

6.03         GovernmentalAuthorization.  No approval,consent, exemption, authorization, or other action by, or notice to, or filingwith, any Governmental Authority (except for recordings or filings inconnection with the Liens granted to the Administrative Agent under theCollateral Documents) is necessary or required in connection with theexecution, delivery or performance by, or enforcement against, any  Loan Party of this Agreement or any otherLoan Document.

 

6.04         Binding Effect.  This Agreement and each other Loan Documentto which any Loan Party is a party constitute the legal, valid and bindingobligations of such Loan Party, enforceable against any Loan Party inaccordance with their respective terms, except as enforceability may be limitedby applicable bankruptcy, insolvency, or similar laws affecting the enforcementof creditors’ rights generally or by equitable principles relating toenforceability.

 

6.05         Litigation.  Except as specifically disclosed in Schedule6.05, there are no actions, suits, proceedings, claims or disputes pending,or to the best knowledge of Holdings and the Company, threatened orcontemplated, at law, in equity, in arbitration or before any GovernmentalAuthority, against Holdings, or its Subsidiaries or any of their respectiveproperties which:

 

(a)           purport to affect or pertain to thisAgreement or any other Loan Document, or any of the transactions contemplatedhereby or thereby; or

 

(b)           are reasonably likely to result in anadverse result for Holdings or its Subsidiaries, which adverse result wouldreasonably be expected to have a Material Adverse Effect.  No injunction, writ, temporary restrainingorder or any order of any nature has been issued by any court or otherGovernmental Authority purporting to enjoin or restrain the execution, deliveryor performance of this Agreement or any other Loan Document, or directing thatthe transactions provided for herein or therein not be consummated as herein ortherein provided.

 

6.06         No Defaults.  No Default or Event of Default exists orwould result from the incurring of any Obligations by any Loan Party or fromthe grant or perfection of the Liens of the Administrative Agent and theLenders on the Collateral.  NeitherHoldings nor any Subsidiary is in default under or with respect to anyContractual Obligation in any respect which, individually or together with allsuch defaults, could reasonably be expected to have a Material Adverse Effect,or that would create an Event of Default under Section 9.01(e).

 

6.07         ERISACompliance.  Except asspecifically disclosed in Schedule 6.07:

 

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(a)           Each Plan is in compliance in allmaterial respects with the applicable provisions of ERISA, the Code and otherfederal or state law.  Each Plan whichis intended to qualify under section 401(a) of the Code has received afavorable determination letter from the IRS and to the best knowledge ofHoldings and the Company, nothing has occurred which would cause the loss ofsuch qualification.  Holdings, theCompany and each ERISA Affiliate have made all required contributions to anyPlan subject to section 412 of the Code, and no application for a fundingwaiver or an extension of any amortization period pursuant to section 412of the Code has been made with respect to any Plan.

 

(b)           There are no pending or, to the bestknowledge of Company, threatened claims, actions or lawsuits, or action by anyGovernmental Authority, with respect to any Plan which has resulted or couldreasonably be expected to result in a Material Adverse Effect.  There has been no prohibited transaction orviolation of the fiduciary responsibility rules with respect to any Plan whichhas resulted or could reasonably be expected to result in a Material AdverseEffect.

 

(c)           (i) No ERISA Event has occurredor is reasonably expected to occur; (ii) no Pension Plan has any UnfundedPension Liability; (iii) neither Holdings nor any ERISA Affiliate hasincurred, or reasonably expects to incur, any liability under Title IV of ERISAwith respect to any Pension Plan (other than premiums due and not delinquentunder section 4007 of ERISA);  (iv) neitherHoldings nor any ERISA Affiliate has incurred, or reasonably expects to incur,any liability (and no event has occurred which, with the giving of notice undersection 4219 of ERISA, would result in such liability) under section 4201 or4243 of ERISA with respect to a Multiemployer Plan; and (v) neitherHoldings nor any ERISA Affiliate has engaged in a transaction that could besubject to section 4069 or 4212(c) of ERISA.

 

6.08         Use ofProceeds; Margin Regulations. The proceeds of the Loans and the Letters of Credit are to be usedsolely for the purposes set forth in and permitted by Section 7.12 and Section8.07.  No Loan Party is generallyengaged in the business of purchasing or selling Margin Stock or extendingcredit for the purpose of purchasing or carrying Margin Stock.

 

6.09         Title to Properties;Liens.  Holdings and each Subsidiaryhave good record and marketable title in fee simple to, or valid leaseholdinterests in, all real property necessary or used in the ordinary conduct oftheir respective businesses, except for such defects in title as could not,individually or in the aggregate, have a Material Adverse Effect.  The property of Holdings and itsSubsidiaries is subject to no Liens, other than Permitted Liens.

 

6.10         Taxes.  Holdings and its Subsidiaries have filed allFederal and other material tax returns and reports required to be filed, andhave paid all Federal and other material taxes, assessments, fees and othergovernmental charges levied or imposed upon them or their properties, income orassets otherwise due and payable, except those which are being contested ingood faith by appropriate proceedings and for which adequate reserves have beenprovided in accordance with GAAP. There is no proposed tax assessment againstHoldings or any Subsidiary that would, if made, have a Material Adverse Effect.

 

6.11         FinancialCondition.  (a)  The audited consolidated balance sheet ofHoldings and its Subsidiaries dated December 31, 2002, the unauditedbalance sheet of Holdings and its

 

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Subsidiaries for the fiscal quarter ended June 30, 2003 and the relatedconsolidated statements of income or operations and cash flows for the fiscalperiod ended on that date:

 

(i)            were prepared in accordance withGAAP consistently applied throughout the period covered thereby, except asotherwise expressly noted therein, subject to ordinary, good faith year endaudit adjustments in the case of quarterly financial statements;

 

(ii)           are complete and accurate in allmaterial respects and fairly present the financial condition of Holdings andits Subsidiaries as of the date thereof and results of operations and cashflows for the period covered thereby; and

 

(iii)          except as specifically disclosed in Schedule6.11, show all material Indebtedness and other liabilities, direct orcontingent, of Holdings and its consolidated Subsidiaries as of the datethereof, including liabilities for taxes, material commitments and ContingentObligations.

 

(b)           Since December 31, 2002, there hasnot been, nor is it reasonably likely that there will be, any Material AdverseEffect.

 

(c)           Any pro forma financial statements ofHoldings and its Subsidiaries furnished by Holdings to the Lenders hereunderwere prepared in accordance with GAAP, are complete and accurate in allmaterial respects and fairly present the pro forma financial condition ofHoldings and its Subsidiaries as of the date thereof, and any financialprojections furnished to the Lenders hereunder represent Holdings’ bestestimates and assumptions as to future performance, which Holdings believes tobe fair and reasonable as of the time made in the light of current andreasonably foreseeable business conditions.

 

6.12         EnvironmentalMatters.  Holdingsconducts in the ordinary course of business a review of the effect of existingEnvironmental Laws and existing Environmental Claims on its business,operations and properties, and as a result thereof Holdings has reasonablyconcluded that, except as specifically disclosed in Schedule 6.12, suchEnvironmental Laws and Environmental Claims could not, individually or in theaggregate, reasonably be expected to have a Material Adverse Effect.

 

(a)           To the best knowledge of Holdings,except as specifically disclosed in Schedule 6.12, the ongoingoperations of Holdings and each of its Subsidiaries comply in all respects withall Environmental Laws, except such non-compliance which would not (if enforcedin accordance with applicable law) result in liability in excess of $1,000,000in the aggregate.

 

(b)           Except as specifically disclosed in Schedule 6.12,Holdings and each of its Subsidiaries have obtained all licenses, permits,authorizations and registrations required under any Environmental Law (“EnvironmentalPermits”) and necessary for their respective ordinary course operations, allsuch Environmental Permits are in good standing, and Holdings and each of itsSubsidiaries are in compliance with all material terms and conditions of suchEnvironmental Permits.

 

(c)           Except as specifically disclosed in Schedule 6.12,none of Holdings, any of its Subsidiaries or any of their respective presentproperty or operations, is subject to any

 

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outstanding written order from or agreement with any GovernmentalAuthority, nor subject to any judicial or docketed administrative proceeding,respecting any Environmental Law, Environmental Claim or Hazardous Material.

 

(d)           Except as specifically disclosed in Schedule 6.12,there are no Hazardous Materials or other conditions or circumstances existingwith respect to any property of Holdings or any Subsidiary, or arising fromoperations prior to the Effective Date, of Holdings or any of its Subsidiariesthat would reasonably be expected to give rise to Environmental Claims with apotential liability of Holdings and its Subsidiaries in excess of $1,000,000 inthe aggregate for any such condition, circumstance or property.  In addition, (i) neither Holdings norany Subsidiary has any underground storage tanks (A) that are not properlyregistered or permitted under applicable Environmental Laws, or (B) thatare leaking or disposing of Hazardous Materials off-site, and(ii) Holdings and its Subsidiaries have notified all of their employees ofthe existence, if any, of any health hazard arising from the conditions oftheir employment and have met all notification requirements under Title III ofCERCLA and all other Environmental Laws.

 

6.13         CollateralDocuments.

 

(a)           (i) The provisions of each of theCollateral Documents were, as of the closing of the Existing Credit Agreement,and as amended, remain, effective to create in favor of the AdministrativeAgent for the benefit of the Lenders, a legal, valid and enforceable firstpriority Lien in all right, title and interest of Holdings, or the applicableWholly-Owned Subsidiary (as the case may be), in the Collateral describedtherein, (ii) all filings and other actions necessary or desirable to perfectand maintain the perfection and first priority status of such Liens have beenduly made or taken and remain in full force and effect and (iii) eachIntellectual Property Security Agreement has been filed in the U.S. Patent andTrademark Office and the U.S. Copyright Office.

 

(b)           Each Mortgage when delivered was, andas amended, remains, as of the Effective Date, effective to grant to theAdministrative Agent for the benefit of the Lenders a legal, valid andenforceable deed of trust/mortgage Lien on all the right, title and interest ofthe mortgagor under such Mortgage in the Mortgaged Property described therein.  Each such Mortgage was duly recorded in theoffices listed on the schedule to such Mortgage and the mortgage recording feesand taxes in respect thereof were paid and compliance was otherwise had withthe formal requirements of state law applicable to the recording of real estatemortgages generally.  Each suchMortgaged Property, subject to the encumbrances and exceptions to title setforth therein and except as noted in the title policies delivered to theAdministrative Agent pursuant to Section 5.01, is subject to alegal, valid, enforceable and perfected first priority Lien.  In addition, financing statements have beenfiled in the offices specified in such Mortgage thereby creating a legal,valid, enforceable and perfected first Lien on all right, title and interest ofHoldings or such Subsidiary under such Mortgage in all personal property andfixtures which is covered by such Mortgage, subject to no other Liens, exceptthe encumbrances and exceptions to title set forth therein and except as notedin the title policies delivered to the Administrative Agent pursuant to Section 5.01,and Permitted Liens.

 

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(c)           All representations and warranties ofHoldings and any of its Subsidiaries party thereto contained in the CollateralDocuments are true and correct.

 

6.14         RegulatedEntities.  None of Holdings, anyPerson controlling Holdings, or any Subsidiary, is an “Investment Company”within the meaning of the Investment Company Act of 1940.  No Loan Party is subject to regulation underthe Public Utility Holding Company Act of 1935, the Federal Power Act, theInterstate Commerce Act, any state public utilities code, or any other Federalor state statute or regulation limiting its ability to incur Indebtedness.

 

6.15         No Burdensome Restrictions.  Neither Holdings nor any Subsidiary is aparty to or bound by any Contractual Obligation, or subject to any restrictionin any Organization Document, or any Requirement of Law, which could reasonablybe expected to have a Material Adverse Effect. Except as set forth on Schedule 6.15, neither Holdings nor anySubsidiary is a party to or bound by any Contractual Obligation whichrestricts, limits or prohibits the payment of dividends by any Subsidiary orthe making of any other distribution in respect of such Subsidiary’s capitalstock.

 

6.16         Copyrights,Patents, Trademarks and Licenses, Etc. Holdings or its Subsidiaries own or are licensed or otherwise have theright to use all of the patents, trademarks, service marks, trade names,copyrights, contractual franchises, authorizations and other rights that arereasonably necessary for the operation of their respective businesses, withoutconflict with the rights of any other Person. To the best knowledge of Holdings and the Company, no slogan or otheradvertising device, product, process, method, substance, part or other materialnow employed, or now contemplated to be employed, by Holdings or any Subsidiaryinfringes upon any rights held by any other Person.  Except as specifically disclosed in Schedule 6.05, noclaim or litigation regarding any of the foregoing is pending or, to the bestknowledge of Holdings and the Company, threatened, and no patent, invention,device, application, principle or any statute, law, rule, regulation, standardor code is pending or, to the best knowledge of Holdings and the Company,proposed, which, in either case, could reasonably be expected to have aMaterial Adverse Effect.

 

6.17         Subsidiaries.  As of the Effective Date, Holdings has noSubsidiaries other than those specifically disclosed in part (a) of Schedule6.17 and has no equity investments in any other Person other than thosespecifically disclosed in part (b) of Schedule 6.17.  All U.S. Subsidiaries of Holdings as of theEffective Date are identified as such on part (a) of Schedule 6.17,as well as a denotation as to whether such Subsidiary is a Wholly-OwnedSubsidiary or Non-Wholly-Owned Subsidiary.

 

6.18         Insurance.  Except as specifically disclosed in Schedule6.18, the properties of Holdings and its Subsidiaries are insured withfinancially sound and reputable insurance companies not Affiliates of Holdings,in such amounts, with such deductibles and covering such risks as are deemed tobe appropriate by Holdings in the exercise of its reasonable business judgment.

 

6.19         SwapObligations.  (a)  Neither Holdings nor any of its Subsidiarieshas incurred any outstanding obligations under any Swap Contracts, other thanPermitted Swap Obligations.  In theordinary course of managing its business, Holdings undertakes its ownindependent

 

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assessment of its consolidated assets, liabilities and commitments andconsiders appropriate means of mitigating and managing risks associated withsuch matters, and Holdings has not relied on any swap counterparty or anyAffiliate of any swap counterparty in determining whether to enter into anySwap Contract.

 

(b)           Neither Holdings nor any of itsSubsidiaries has entered into any master agreement relating to Swap Contractsand under which termination values resulting from Swap contracts that areSpecified Swap Contracts are nettable against termination values resulting fromSwap Contracts that are not Specified Swap Contracts, unless only SpecifiedSwap Contracts are outstanding under such master agreement.

 

6.20         Real Property.  Schedule 6.20 contains a completelisting of all real property owned by Holdings or any of its Subsidiaries as ofthe Effective Date, and identifies which of such properties constitute MortgagedProperty as of the Effective Date.

 

6.21         FullDisclosure.  None of therepresentations or warranties made by any Loan Party in the Loan Documents asof the date such representations and warranties are made or deemed made, andnone of the statements contained in any exhibit, report, statement orcertificate furnished by or on behalf of any Loan Party in connection with theLoan Documents (including the offering and disclosure materials delivered by oron behalf of any Loan Party to the Lenders prior to the Effective Date),contains any untrue statement of a material fact or omits any material factrequired to be stated therein or necessary to make the statements made therein,in light of the circumstances under which they are made, not misleading as of thetime when made or delivered; provided that to the extent any suchinformation, report, financial statement, exhibit or schedule was based upon orconstitutes a forecast or projection, such Loan Party represents only that itacted in good faith and utilized reasonable assumptions and due care in thepreparation of such information, report, financial statement, exhibit orschedule (it being understood that forecasts and projections by their natureinvolve approximations and uncertainties).

 

6.22         InternalControls.  To the extent thatHoldings is a public corporation:

 

(a)           Except as set forth in the reports ofHoldings filed with the SEC under the Exchange Act, Holdings has establishedand maintains disclosure controls and procedures (as such term is defined inRule 13a-14 under the Exchange Act), which (i) are designed to ensure thatmaterial information relating to Holdings, including its consolidatedsubsidiaries, is made known to Holdings’ principal executive officer and itsprincipal financial officer or persons performing similar functions by otherswithin those entities, particularly during the periods in which the periodicreports required under the Exchange Act are being prepared; (ii) have beenevaluated for effectiveness as of a date within ninety (90) days prior to thefiling of Holdings’ most recent annual or quarterly report filed with the SEC;and (iii) are effective in all material respects to perform the functions forwhich they were established;

 

(b)           Except as set forth in the reports ofHoldings filed with the SEC under the Exchange Act, based on the evaluation ofits disclosure controls and procedures, Holdings is not aware of (i) anysignificant deficiency in the design or operation of internal controls overfinancial reporting which are reasonably likely to adversely affect Holdings’ability to record,

 

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process, summarize and report financial information or (ii) any fraud,whether or not material, that involves management or other employees who have asignificant role in Holdings’ internal controls over financial reporting; and

 

(c)           Since the date of the most recentevaluation of such disclosure controls and procedures, except as set forth inthe reports of Holdings filed with the SEC under the Exchange Act, there havebeen no significant changes in internal controls over financial reporting or inother factors that could materially affect internal controls over financialreporting, including any corrective actions with regard to significant deficienciesand material weaknesses.

 

**ARTICLE VII**

 

**AFFIRMATIVECOVENANTS**

 

So long as any Lender shall have any Commitmenthereunder, or any Loan or other Obligation shall remain unpaid or unsatisfied,or any Letter of Credit shall remain outstanding, unless the Majority Lenderswaive compliance in writing:

 

7.01         FinancialStatements.  Holdings shalldeliver to the Administrative Agent and each Lender, in form and detailsatisfactory to the Administrative Agent and the Majority Lenders:

 

(a)           as soon as available, but not laterthan ninety (90) days after the end of each fiscal year, a copy of the auditedconsolidated balance sheet of Holdings and its Subsidiaries as at the end ofsuch year and the related consolidated statements of income or operations, shareholders’equity, retained earnings and cash flows for such year, setting forth in eachcase in comparative form the figures for the previous fiscal year, andaccompanied by the unqualified opinion of PricewaterhouseCoopers LLP or anothernationally-recognized independent public accounting firm (the “IndependentAuditor”) which report shall state that such consolidated financialstatements present fairly the financial position for the periods indicated inconformity with GAAP applied on a basis consistent with prior years.  Such opinion shall not be qualified as to(i) going concern or (ii) any limitation in the scope of the audit;

 

(b)           as soon as available, but not laterthan forty-five (45) days after the end of each of the first three fiscalquarters of each fiscal year, a copy of the unaudited consolidated balancesheet of Holdings and its Subsidiaries as of the end of such quarter and therelated consolidated statements of income, shareholders’ equity and cash flowsfor the period commencing on the first day and ending on the last day of suchquarter, and certified by a Responsible Officer of Holdings as being completeand accurate in all material respects and fairly presenting, in accordance withGAAP (subject to ordinary, good faith year-end audit adjustments), thefinancial position and the results of operations and cash flows of Holdings andthe Subsidiaries; and

 

(c)           promptly, such other financialstatements and information (including financial information regarding MinorityInvestments) as the Administrative Agent, at the request of any Lender, mayfrom time to time request.

 

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As to any information contained in materials furnishedpursuant to Section 7.02(e), Holdings shall not be separately required tofurnish such information under Section 7.01(a) or Section 7.01(b)above, but the foregoing shall not be in derogation of the obligation ofHoldings to furnish the information and materials described in Section7.01(a) and Section 7.01(b) above at the times specified therein.

 

7.02         Certificates;Other Information.  Holdingsshall furnish to the Administrative Agent and each Lender:

 

(a)           concurrently with the delivery of thefinancial statements referred to in Section 7.01(a), a certificate ofthe Independent Auditor stating that in the course of the regular examinationof the business of Holdings and its Subsidiaries, which examination wasconducted by such accounting firm in accordance with GAAP, nothing has come tothe attention of the Independent Auditor which would cause it to believe that aDefault or Event of Default has occurred and is continuing, or if, in theopinion of the Independent Auditor, a Default or an Event of Default hasoccurred and is continuing, a statement as to the nature thereof.

 

(b)           within ninety (90) days after theclose of each fiscal year, an update of the projections delivered to theLenders prior to the Effective Date (the “Effective Date Projections”)for the then-current and next succeeding four fiscal years, certified by a ResponsibleOfficer of Holdings, together with a statement of such Responsible Officerexplaining in reasonable detail any significant variances from the EffectiveDate Projections;

 

(c)           concurrently with the delivery of thefinancial statements referred to in Section 7.01(a) and Section7.01(b), a Compliance Certificate executed by a Responsible Officer ofHoldings;

 

(d)           within thirty (30) days after the endof each calendar month, a Borrowing Base Certificate appropriately completed bya Responsible Officer of Holdings;

 

(e)           promptly, copies of all financialstatements and reports that Holdings sends to its shareholders, and copies ofall financial statements and regular, periodical or special reports (includingForms 10K, 10Q and 8K) that Holdings or any Subsidiary may make to, or filewith, the SEC;

 

(f)            promptly upon sending or receipt,copies of any and all management letters and correspondence relating tomanagement letters, sent or received by Holdings or any of its Subsidiaries toor from the Independent Auditor;

 

(g)           at the same time it is provided tothe holders of any Permitted Subordinated Debt, any notices and otherinformation provided to such holders pursuant to the reporting and noticesprovisions of the Subordinated Debt Documents (without duplication of anynotices, financial statements and other information required hereunder);

 

(h)           within twenty (20) days of theAdministrative Agent’s or any Lender’s request therefor, (i) a currentlist of the names, addresses and outstanding debts of all Account Debtors, and(ii) a current list of the names, addresses and outstanding amounts dueall creditors of Holdings or any Subsidiary;

 

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(i)            concurrently with the delivery ofthe financial statements referred to in Section 7.01(a) and Section7.01(b), an Update Certificate, executed by a Responsible Officer ofHoldings;

 

(j)            promptly, such additionalinformation regarding the business, financial or corporate affairs of Holdingsor any Subsidiary as the Administrative Agent, at the request of any Lender,may from time to time request.

 

7.03         Notices.  Holdings shall promptly notify theAdministrative Agent:

 

(a)           of the occurrence of any Default orEvent of Default, and of the occurrence or existence of any event orcircumstance that foreseeably will become a Default or Event of Default;

 

(b)           of any matter that has resulted orcould result in a Material Adverse Effect, including (i) any breach ornon-performance of, or any default under, any Contractual Obligation ofHoldings or any of its Subsidiaries which has resulted or could result in aMaterial Adverse Effect; and (ii) any dispute, litigation, investigation,proceeding or suspension which may exist at any time between Holdings or any ofits Subsidiaries and any Governmental Authority (including under or pursuant toany Environmental Laws) which has resulted or could result in a MaterialAdverse Effect;

 

(c)           of the commencement of, or anymaterial development in, any litigation or proceeding affecting Holdings or anySubsidiary (i) which, if adversely determined, would reasonably beexpected to have a Material Adverse Effect, or (ii) in which the reliefsought is an injunction or other stay of the performance of this Agreement orany Loan Document;

 

(d)           upon, but in no event later than ten(10) days after, becoming aware of (i) any and all enforcement, cleanup,removal or other governmental or regulatory actions instituted, completed orthreatened against Holdings or any Subsidiary or any of their respectiveproperties pursuant to any applicable Environmental Laws, (ii) all otherEnvironmental Claims, and (iii) any environmental or similar condition onany real property adjoining or in the vicinity of the property of Holdings orany Subsidiary that could reasonably be anticipated to cause such property orany part thereof to be subject to any restrictions on the ownership, occupancy,transferability or use of such property under any Environmental Laws;

 

(e)           of any other litigation or proceedingaffecting Holdings or any of its Subsidiaries which Holdings would be requiredto report to the SEC pursuant to the Exchange Act, within four (4) days afterreporting the same to the SEC;

 

(f)            of the occurrence of any of thefollowing events affecting Holdings or any ERISA Affiliate (but in no eventmore than ten (10) days after such event), and deliver to the AdministrativeAgent and each Lender a copy of any notice with respect to such event that isfiled with a Governmental Authority and any notice delivered by a GovernmentalAuthority to Holdings or any ERISA Affiliate with respect to such event:

 

(i)            an ERISA Event;

 

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(ii)           a material increase in the UnfundedPension Liability of any Pension Plan;

 

(iii)          the adoption of, or the commencementof contributions to, any Plan subject to section 412 of the Code by Holdings orany ERISA Affiliate; or

 

(iv)          the adoption of any amendment to aPlan subject to section 412 of the Code, if such amendment results in amaterial increase in contributions or Unfunded Pension Liability;

 

(g)           of any material change in accountingpolicies or financial reporting practices by Holdings or any of itsconsolidated Subsidiaries;

 

(h)           upon the request from time to time ofthe Administrative Agent or any Lender, the Swap Termination Values, togetherwith a description of the method by which such amounts were determined,relating to any then-outstanding Swap Contracts to which Holdings or any of itsSubsidiaries is party;

 

(i)            the occurrence of any Event of Lossexceeding $5,000,000;

 

(j)            of the entry by Holdings into anySpecified Swap Contract, together with the details thereof; and

 

(k)           of the occurrence of any default,event of default, termination event or other event under any Specified Swap Contractthat after the giving of notice, passage of time or both, would permit eithercounterparty to such Specified Swap Contract to terminate early any or alltrades relating to such contract.

 

Each notice under this Section 7.03 shall beaccompanied by a written statement by a Responsible Officer of Holdings settingforth details of the occurrence referred to therein, and stating what actionHoldings or any affected Subsidiary proposes to take with respect thereto andat what time.  Each notice under Section7.03(a) shall describe with particularity any and all clauses or provisionsof this Agreement or other Loan Document that have been (or foreseeably willbe) breached or violated.

 

7.04         Preservationof Corporate Existence, Etc. Holdings shall, and shall cause each Subsidiary to, except in connectionwith transactions permitted by Section 8.03 and sales of assetspermitted by Section 8.02:

 

(a)           preserve and maintain in full forceand effect its (i) legal existence and (ii) good standing under thelaws of its state or jurisdiction of incorporation or formation;

 

(b)           preserve and maintain in full forceand effect all governmental rights, privileges, qualifications, permits,licenses and franchises necessary or desirable in the normal conduct of itsbusiness;

 

(c)           use reasonable efforts, in theordinary course of business, to preserve its business organization andgoodwill; and

 

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(d)           preserve or renew all of itsregistered patents, trademarks, trade names and service marks, thenon-preservation of which could reasonably be expected to have a MaterialAdverse Effect.

 

7.05         Maintenance ofProperty.  Holdings shall, and shallcause each Subsidiary to, maintain, and preserve all its property which is usedor useful in its business in good repair and condition, and from time to timemake necessary repairs, renewals and replacements thereto so that its propertyshall be fully and efficiently preserved and maintained consistent withHoldings’ or such Subsidiary’s past practice.

 

7.06         Insurance.  In addition to insurance requirements setforth in the Collateral Documents, Holdings shall maintain, and shall causeeach Subsidiary to maintain, with financially sound and reputable independentinsurers, insurance with respect to its properties and business against loss ordamage of the kinds customarily insured against by Persons engaged in the sameor similar business, of such types and in such amounts as are customarilycarried under similar circumstances by such other Persons, including workers’compensation insurance, public liability and property and casualtyinsurance.  All such insurance shallname the Administrative Agent as loss payee/mortgagee and as additionalinsured, for the benefit of the Lenders, as their interests may appear.  All casualty and key man insurancemaintained by Holdings shall name the Administrative Agent as loss payee andall liability insurance shall name the Administrative Agent as additionalinsured for the benefit of the Lenders, as their interests may appear.  Upon the request of the Administrative Agentor any Lender, Holdings shall furnish the Administrative Agent, with sufficientcopies for each Lender, at reasonable intervals (but not more than once percalendar year) a certificate of a Responsible Officer of Holdings (and, ifrequested by the Administrative Agent, any insurance broker of Holdings)setting forth the nature and extent of all insurance maintained by Holdings andits Subsidiaries in accordance with this Section 7.06 or any CollateralDocuments (and which, in the case of a certificate of a broker, were placedthrough such broker).

 

7.07         Paymentof Obligations.  Holdings shall,and shall cause each of its Subsidiaries to, pay and discharge as the sameshall become due and payable, all their respective obligations and liabilities,including:

 

(a)           all tax liabilities, assessments andgovernmental charges or levies upon it or its properties or assets, unless thesame are being contested in good faith by appropriate proceedings and adequatereserves in accordance with GAAP are being maintained by Holdings or suchSubsidiary;

 

(b)           all lawful claims which, if unpaid,would by law become a Lien upon its property not constituting a Permitted Lien;and

 

(c)           all Indebtedness, as and when due andpayable, but subject to any subordination provisions contained in anyinstrument or agreement evidencing such Indebtedness (except where failure todo so would not otherwise constitute a Default or Event of Default hereunder).

 

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7.08         Compliancewith Laws.  Holdings shallcomply, and shall cause each Subsidiary to comply, in all material respectswith all Requirements of Law of any Governmental Authority having jurisdictionover it or its business (including the Federal Fair Labor Standards Act),except such as may be contested in good faith or as to which a bona fidedispute may exist.

 

7.09         Compliancewith ERISA.  Holdings shall, andshall cause each of its ERISA Affiliates to: (a) maintain each Plan in compliance in all material respects withthe applicable provisions of ERISA, the Code and other federal or state law;(b) cause each Plan which is qualified under section 401(a) of the Code tomaintain such qualification; and (c) make all required contributions toany Plan subject to section 412 of the Code.

 

7.10         Inspectionof Property and Books and Records.  (a)  Holdings shall, andshall cause each Subsidiary to, maintain proper books of record and account, inwhich full, true and correct entries in conformity with GAAP consistentlyapplied shall be made of all financial transactions and matters involving theassets and business of Holdings and such Subsidiary.  Holdings shall permit, and shall cause each Subsidiary to permit,representatives and independent contractors of the Administrative Agent or anyLender to visit and inspect any of their respective properties, to examinetheir respective corporate, financial, operating and other records, and makecopies thereof or abstracts therefrom, and to discuss their respective affairs,finances and accounts with their respective directors, officers, andindependent public accountants, all at the expense of Holdings and the Companyand at such reasonable times during normal business hours and as often as maybe reasonably desired, upon reasonable advance notice to Holdings; provided,however, when an Event of Default exists the Administrative Agent or anyLender may do any of the foregoing at any time during normal business hours andwithout advance notice.

 

(b)           Without limiting the generality of Section 7.10(a),as frequently as the Majority Lenders may deem appropriate, each of Holdingsand the Company will provide Administrative Agent or its designee access toHoldings’ and the Company’s records and premises and allow such auditors orappraisers to conduct audits of Holdings’ and its Subsidiaries’ accounts,including Accounts and Inventory. Holdings shall pay all reasonable fees and expenses of one such audit inany 12—month period; provided, however, that during the existenceof any Event of Default, Holdings shall pay all reasonable fees and expenses ofeach such audit.

 

7.11         EnvironmentalLaws.  (a)  Holdings shall, and shall cause eachSubsidiary to, conduct its operations and keep and maintain its property incompliance with all Environmental Laws.

 

(b)           Upon the written request of theAdministrative Agent or any Lender, Holdings shall submit and cause each of itsSubsidiaries to submit, to the Administrative Agent with sufficient copies foreach Lender, at Holdings’ sole cost and expense, at reasonable intervals, areport providing an update of the status of any environmental, health or safetycompliance, hazard or liability issue identified in any notice or reportrequired pursuant to Section 7.03(d), that could, individually orin the aggregate, result in liability in excess of $1,000,000.

 

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7.12         Use ofProceeds.  Holdings shall, directlyor indirectly, use the proceeds of the Loans (i) for Permitted Acquisitions,(ii) for making Investments permitted under Section 8.04,(iii) to refinance existing Indebtedness and (iv) for working capitaland other general corporate purposes not in contravention of any Requirement ofLaw or of any Loan Document.

 

7.13         Additional Guarantors.  (a) If a Minority Investment or Subsidiary shall at any time after theEffective Date become a  U.S.Wholly-Owned Subsidiary, or if Holdings, or any U.S. Wholly-Owned Subsidiary ofHoldings, otherwise shall incorporate, create or acquire any U.S. Wholly-OwnedSubsidiary, Holdings shall cause such U.S. Wholly-Owned Subsidiary to furnishpromptly, but in no event more than thirty (30) days thereafter, each of thefollowing to the Administrative Agent, in sufficient quantities for each Lender:

 

(i)            a duly executed notice and agreementin substantially the form of Exhibit G (an “Additional GuarantorAssumption Agreement”);

 

(ii)           (A) copies of the resolutions of theboard of directors (or equivalent governing body) of such Subsidiary approvingand authorizing the execution, delivery and performance by such Subsidiary ofits Additional Guarantor Assumption Agreement and this Agreement, certified asof the date of such Additional Guarantor Assumption Agreement (the “AdditionalGuarantor Accession Date”) by the Secretary or an Assistant Secretary (orother appropriate officer) of such Subsidiary; (B) a certificate of theSecretary or Assistant Secretary (or other appropriate officer) of suchSubsidiary certifying the names and true signatures of the officers of suchSubsidiary authorized to execute and deliver and perform, as applicable, itsAdditional Guarantor Assumption Agreement, this Agreement and all other LoanDocuments to be delivered hereunder; (C) copies of the articles or certificate ofincorporation and bylaws (or other applicable Organization Documents) of suchSubsidiary as in effect on the Additional Guarantor Accession Date, certifiedby the Secretary or Assistant Secretary (or other appropriate officer) of suchSubsidiary as of the Additional Guarantor Accession Date; and (D) an opinion ofcounsel to such Subsidiary and addressed to the Administrative Agent and theLenders, substantially in the form of Exhibit H; and

 

(iii)          (A) such amendments to the schedulesto the Security Agreement as shall be required in connection with the accessionof such Subsidiary thereto; (B) executed UCC-1 financing statements furnishedby the Administrative Agent in each jurisdiction in which such filing isnecessary to perfect the security interest of the Administrative Agent onbehalf of the Lenders in the Collateral of such Subsidiary and in which theAdministrative Agent requests that such filing be made, and (C) if requested bythe Administrative Agent, such Mortgages and other documents as may be requiredto create and perfect a Lien in the interests of such Subsidiary in any realproperty and such title insurance policies and other documents as theAdministrative Agent or the Majority Lenders may reasonably request inconnection therewith.

 

(b)           Additionally, Holdings and suchSubsidiary shall have executed and delivered to the Administrative Agent (insufficient quantities for each Lender) such other items as reasonably requestedby the Administrative Agent in connection with the foregoing, includingofficers’ certificates, search reports and other certificates and documents.

 

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7.14         AdditionalSubsidiaries.  If Holdings,directly or indirectly, incorporates, creates or acquires any additional Subsidiary,or if any Minority Investment shall become a Subsidiary, then within ten (10)days thereafter, Holdings shall (i) (A) pledge the capital stock of suchadditional Subsidiary to the Administrative Agent pursuant to the SecurityAgreement, if such stock is directly owned by Holdings, or (B) if such stock isowned by a Wholly-Owned Subsidiary, cause such Wholly-Owned Subsidiary topledge the capital stock of such additional Subsidiary to the AdministrativeAgent pursuant to the Security Agreement, and (ii) execute and deliver, orcause such Wholly-Owned Subsidiary to have executed and delivered, to theAdministrative Agent stock transfer powers executed in blank with signaturesguaranteed as the Administrative Agent shall request, such UCC-1 financing statements(as furnished by the Administrative Agent) in each jurisdiction in which suchfiling is necessary to perfect the security interest of the AdministrativeAgent in the Collateral with respect to Holdings or such Wholly-OwnedSubsidiary, and (iii) deliver such other items as reasonably requested bythe Administrative Agent in connection with the foregoing, includingresolutions, incumbency and officers’ certificates, opinions of counsel, searchreports and other certificates and documents; provided, however,that if any such additional Subsidiary is not a U.S. Subsidiary, in no eventshall more than 65% of the voting capital stock (and 100% of the non-votingstock) of any such Subsidiary be required to be so pledged.

 

7.15         EnvironmentalReview.  Holdings shall deliverto the Administrative Agent, promptly upon the granting of any Lien in favor ofthe Administrative Agent for the benefit of the Lenders from and after theEffective Date, with respect to any real property, an environmental siteassessment or other environmental analysis, report or review with respect toany such real property in form and substance reasonably satisfactory to theAdministrative Agent.  If any suchenvironmental site assessment or other environmental analysis, report or reviewwith respect to any Mortgaged Property shall indicate the presence of anyHazardous Materials on or in the vicinity of such Mortgaged Property orotherwise shall indicate any environmental problem with respect to suchMortgaged Property (including any environmental problem which may give rise toany Environmental Claim) which, in the reasonable determination of theAdministrative Agent, adversely affects the value of such Mortgaged Property orcauses the Administrative Agent to desire to exclude such Mortgaged Propertyfrom the Collateral, then Holdings shall, and shall cause its Subsidiaries to,enter into and deliver to the Administrative Agent one or more Mortgages inrespect of additional or replacement real property Collateral, in form andsubstance reasonably satisfactory to the Administrative Agent, together withsuch title insurance policies, insurance endorsements, surveys, appraisals,consents, estoppels, subordination agreements and other documents and otherinstruments as the Administrative Agent shall reasonably request.

 

7.16         FurtherAssurances.  (a)  Holdings shall ensure that all writteninformation, exhibits and reports furnished to the Administrative Agent or theLenders do not and will not contain any untrue statement of a material fact anddo not and will not omit to state any material fact or any fact necessary tomake the statements contained therein not misleading in light of thecircumstances in which made, and will promptly disclose to the AdministrativeAgent and the Lenders and correct any defect or error that may be discoveredtherein or in any Loan Document or in the execution, acknowledgement orrecordation thereof.

 

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(b)           If at any time, Holdings, the Companyor any other Guarantor shall become the owner of any real property that islocated in the United States, then Holdings and the Company shall (and shallcause any of the other Guarantors to) promptly, and in any event within sixty(60) days following acquisition of such real property, enter into and deliverto the Administrative Agent a Mortgage in respect to such property, in form andsubstance reasonably satisfactory to the Administrative Agent, together withsuch title insurance policies, insurance endorsements, surveys, appraisals,consents, estoppels, subordination agreements and other documents and otherinstruments as the Administrative Agent or the Majority Lenders shallreasonably request; provided, however, that Holdings, the Company and theGuarantors shall only be required to provide title insurance and/or insuranceendorsements in the case of real property with an appraised value in excess of$500,000.

 

(c)           Promptly upon request by theAdministrative Agent or the Majority Lenders, Holdings shall (and shall causeany Guarantor to) do, execute, acknowledge, deliver, record, re-record, file,re-file, register and re-register, any and all such further acts, deeds,conveyances, security agreements, mortgages, assignments, estoppelcertificates, financing statements and continuations thereof, terminationstatements, notices of assignment, transfers, certificates, assurances andother instruments the Administrative Agent or such Lenders, as the case may be,may reasonably require from time to time in order (i) to carry out moreeffectively the purposes of this Agreement or any other Loan Document,(ii) to subject to the Liens created by any of the Collateral Documentsany of the properties, rights or interests covered by any of the CollateralDocuments, (iii) to perfect and maintain the validity, effectiveness andpriority of any of the Collateral Documents and the Liens intended to becreated thereby, and (iv) to better assure, convey, grant, assign,transfer, preserve, protect and confirm to the Administrative Agent and Lendersthe rights granted or now or hereafter intended to be granted to the Lendersunder any Loan Document or under any other document executed in connectiontherewith.

 

7.17         Appraisals/TitleInsurance.

 

(a)           Holdings and its Subsidiaries shalldeliver, not later than three (3) years after the Effective Date, appraisals,in form and substance satisfactory to the Administrative Agent and the MajorityLenders, of each of the Mortgaged Properties.

 

(b)           With respect to each MortgagedProperty for which an appraisal has been completed in accordance with clause(a) above, if such Mortgaged Property has an appraised value in excess of$500,000, Holdings and its Subsidiaries shall deliver to the AdministrativeAgent and the Lenders an A.L.T.A. Form B (or other form acceptable to theAdministrative Agent and the Lenders) mortgagee policy of title insurance or abinder issued by a title insurance company satisfactory to the AdministrativeAgent and the Lenders insuring (or undertaking to insure, in the case of abinder) that the Mortgage on such Mortgaged Property creates and constitutes avalid first Lien against such Mortgaged Property in favor of the AdministrativeAgent, subject only to exceptions acceptable to the Administrative Agent andthe Lenders, with such endorsements and affirmative insurance as theAdministrative Agent or any Lenders may reasonably request.

 

7.18         IntercompanyNotes.  Holdings shall usecommercially reasonable efforts (i) to deliver to the Administrative Agent,within sixty (60) days after the Effective Date, as Collateral

 

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for the Obligations, promissory notes in form and substancesatisfactory to the Administrative Agent evidencing all extensions of credit byHoldings to any of its Non-Wholly-Owned Subsidiaries, which extensions ofcredit shall be secured by a first priority Lien on all of the tangible andintangible property of such Non-Wholly-Owned Subsidiary, and which Lien shallhave been assigned to the Administrative Agent as Collateral for theObligations and (ii) to ensure that any such promissory notes are demand notes(including by way of converting any notes that are not demand notes as of theEffective Date into demand notes by the sixtieth day thereafter).  In the event that Holdings is unable tocomply with either clause of the preceding sentence, Holdings shall not renewor amend (including to increase the maximum available borrowings under) thenotes with respect to extensions of credit referred to in the precedingsentence.

 

**ARTICLE VIII**

 

**NEGATIVECOVENANTS**

 

So long as any Lender shall have any Commitmenthereunder, or any Loan or other Obligation shall remain unpaid or unsatisfied,or any Letter of Credit shall remain outstanding, unless the Majority Lenderswaive compliance in writing:

 

8.01         Limitation on Liens.  (a) Holdings shall not, and shall not suffer or permit any Subsidiary to,directly or indirectly, make, create, incur, assume or suffer to exist any Lienupon or with respect to any part of its property, whether now owned orhereafter acquired, other than the following (“Permitted Liens”):

 

(i)            any Lien existing on the EffectiveDate and set forth in Schedule 8.01 securing Indebtedness outstanding onsuch date;

 

(ii)           any Lien created under any LoanDocument;

 

(iii)          Liens for taxes, fees, assessments orother governmental charges which are not delinquent or remain payable withoutpenalty, or to the extent that non-payment thereof is permitted by Section7.07(a), provided that no notice of Lien has been filed or recordedunder the Code;

 

(iv)          carriers’, warehousemen’s, mechanics’,landlords’, materialmen’s, repairmen’s or other similar Liens arising in theordinary course of business which are not delinquent or remain payable withoutpenalty or which are being contested in good faith and by appropriateproceedings, which proceedings have the effect of preventing the forfeiture orsale of the property subject thereto;

 

(v)           Liens (other than any Lien imposed byERISA and other than on the Collateral) consisting of pledges or depositsrequired in the ordinary course of business in connection with workers’compensation, unemployment insurance and other social security legislation;

 

(vi)          Liens securing (A) thenon-delinquent performance of bids, trade contracts (other than for borrowedmoney), leases (other than Capital Leases), statutory obligations,

 

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(B) contingent obligations on surety and appeal bonds, and(C) other non-delinquent obligations of a like nature; in each case, incurredin the ordinary course of business, provided all such Liens in theaggregate would not (even if enforced) cause a Material Adverse Effect;

 

(vii)         Liens (other than Liens on theCollateral) consisting of judgment or judicial attachment liens, providedthat the enforcement of such Liens is effectively stayed and all such Liens inthe aggregate at any time outstanding for Holdings and its Subsidiaries do notexceed $1,000,000;

 

(viii)        easements, rights-of-way, restrictionsand other similar encumbrances incurred in the ordinary course of businesswhich, in the aggregate, are not substantial in amount, and which do not in anycase materially detract from the value of the property subject thereto orinterfere with the ordinary conduct of the businesses of Holdings and itsSubsidiaries;

 

(ix)           Liens on specific tangible assetsof  Persons which become Subsidiariesafter the date of this Agreement; provided, however, that(A) such Liens existed at the time the respective Persons becameSubsidiaries and were not created in anticipation thereof, (B) any suchLien does not by its terms cover any assets after the time such Person becomesa Subsidiary which were not covered immediately prior thereto, (C) anysuch Lien does not by its terms secure any Indebtedness other than Indebtednessexisting immediately prior to the time such Person becomes a Subsidiary, and(D) such Indebtedness is permitted by Section 8.05(d);

 

(x)            purchase money Liens on any propertyacquired or held by Holdings or its Subsidiaries in the ordinary course ofbusiness, securing Indebtedness incurred or assumed for the purpose offinancing all or any part of the cost of acquiring such property; providedthat (i) any such Lien attaches to such property concurrently with orwithin twenty (20) days after the acquisition thereof, (ii) such Lienattaches solely to the property so acquired in such transaction, (iii) theprincipal amount of the Indebtedness secured thereby does not exceed 100% ofthe cost of such property, and (iv) such Indebtedness is permitted under Section8.05(d);

 

(xi)           Liens securing obligations in respectof Capital Leases on assets subject to such leases, provided that suchCapital Leases are otherwise permitted hereunder;

 

(xii)          Liens arising solely by virtue of anystatutory or common law provision relating to banker’s liens, rights of set-offor similar rights and remedies as to deposit accounts or other funds maintainedwith a creditor depository institution; provided that (A) suchdeposit account is not a dedicated cash collateral account and is not subjectto restrictions against access by Holdings in excess of those set forth byregulations promulgated by the FRB, and (B) such deposit account is notintended by Holdings or any Subsidiary to provide collateral to the depositoryinstitution;

 

(xiii)         Liens consisting of pledges of cashcollateral or government securities to secure on a mark-to-market basisPermitted Swap Obligations only, provided that (A) the counterpartyto any Swap Contract relating to such Permitted Swap Obligation is under asimilar requirement to deliver similar collateral from time to time to Holdingsor the Subsidiary party thereto on a mark-to-market basis; and (B) theaggregate value of such collateral so pledged by

 

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Holdings and the Subsidiaries together in favor of any counterpartydoes not at any time exceed $3,000,000;

 

(xiv)        Liens not otherwise permitted hereundersecuring Indebtedness in principal amount not exceeding $5,000,000 in theaggregate at any time outstanding; provided that (A) no such Lienshall attach to any Collateral and (B) such Indebtedness is otherwisepermitted hereunder; and

 

(xv)         Liens on the property of direct andindirect Non-Wholly-Owned Subsidiaries of Holdings in favor of Holdings createdin connection with extensions of credit provided by Holdings toNon-Wholly-Owned Subsidiaries as permitted pursuant to Section 8.04(d),which Liens have been assigned to the Administrative Agent for the benefit ofthe Lenders pursuant to Section 8.04(d).

 

(b)           Holdings shall not, and shall notpermit any of its Subsidiaries to, enter into or suffer to exist any agreement(other than this Agreement) prohibiting or conditioning the creation orassumption of any Lien upon any of its properties, revenues or assets, whethernow owned or hereafter acquired.

 

Notwithstanding the foregoing, no other Liens mayexist at any time on or with respect to the Pledged Collateral.

 

8.02         Disposition ofAssets.  Holdings shallnot, and shall not suffer or permit any Subsidiary to, directly or indirectly,sell, assign, lease, convey, transfer or otherwise dispose of (whether in oneor a series of transactions) any property (including accounts and notesreceivable, with or without recourse) or enter into any agreement to do any ofthe foregoing, except:

 

(a)           dispositions of inventory orequipment, all in the ordinary course of business;

 

(b)           the sale of equipment to the extentthat such equipment is exchanged for credit against the purchase price ofsimilar replacement equipment, or the proceeds of such sale are reasonablypromptly applied to the purchase price of such replacement equipment;

 

(c)           dispositions of inventory andequipment by the Company or any Subsidiary to the Company or any Subsidiarypursuant to reasonable business requirements and in the ordinary course ofbusiness*;*

 

(d)           the lease or sublease of realproperty by Holdings or any Subsidiary to other Persons in the ordinary courseof business;

 

(e)           the sale of cash equivalents andother short term money market investments in the ordinary course of businesspursuant to Holdings’ usual and customary cash management policies andprocedures;

 

(f)            dispositions of inventory andequipment (other than dispositions permitted under subsection (a)) by Holdingsor any Subsidiary to any Person in which Holdings has a Minority Investment, providedthat the aggregate amount of such dispositions in any calendar

 

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year, plus the aggregate amount of Minority Investments under Section8.04(e) in such year, does not exceed the sublimit of the Annual Limitspecified in Section 8.04(e);

 

(g)           dispositions pursuant to sales andleaseback transactions permitted under Section 8.14; and

 

(h)           dispositions not otherwise permittedhereunder which are made for fair market value (as determined in good faith byHoldings or the Company); provided that (i) at the time of anydisposition, no Event of Default shall exist or shall result from suchdisposition, (ii) the aggregate sales price from such disposition shall bepaid in cash, (iii) immediately after giving effect to such disposition,the Disposition Value of all assets disposed of as permitted by this Section 8.02(h)(but excluding the Disposition Value of any real property so disposed of,provided that the proceeds of any such disposition are reinvested within 365days of such disposition in similar replacement property) during the period of365 days ending on the date of such proposed sale shall not exceed 15% ofConsolidated Total Assets determined as of the last day of the prior fiscalyear, (iv) no disposition by Holdings of any of its equity interest in theCompany shall be permitted hereunder, and (v) no dispositions of accountsor notes receivable shall be permitted hereunder unless in connection with thesale of all or substantially all of a business unit, division or Subsidiary ofHoldings and such sale is otherwise permitted hereunder.

 

8.03         Consolidationsand Mergers.  Holdingsshall not, and shall not suffer or permit any Subsidiary to, merge, consolidatewith or into, or convey, transfer, lease or otherwise dispose of (whether inone transaction or in a series of transactions) all or substantially all of itsassets (whether now owned or hereafter acquired) to or in favor of any Person,except:

 

(a)           any Subsidiary may merge withHoldings, provided that Holdings shall be the continuing or survivingPerson, or with any one or more Subsidiaries, provided  that if any transaction shall be between aSubsidiary and a Wholly-Owned Subsidiary, the Wholly-Owned Subsidiary shall bethe continuing or surviving Person;

 

(b)           as permitted by Section 8.02;

 

(c)           any Subsidiary may sell all orsubstantially all of its assets (upon voluntary liquidation or otherwise), toHoldings or to a Wholly-Owned Subsidiary; and

 

(d)           Holdings or any Subsidiary thereofmay merge with or consolidate into any other Person, provided that(i) (in the case of Holdings) Holdings shall be the continuing orsurviving Person, (ii) such merger or consolidation is in connection witha Permitted Acquisition, and (iii) no such merger or consolidation shallbe made while there exists a Default or if a Default would occur as a resultthereof.

 

8.04         Loans and Investments.  Holdings shall not purchase or acquire, orsuffer or permit any Subsidiary to purchase or acquire, or make any commitmenttherefor, any capital stock, equity interest, or any obligations or othersecurities of, or any interest in, any Person, or make or commit to make anyAcquisitions, or make or commit to make any advance, loan, extension of creditor capital contribution to or any other investment in, any Person including anyAffiliate of Holdings (together, “Investments”) except for:

 

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(a)           Investments held by Holdings orSubsidiary in the form of cash equivalents and short term money marketinvestments in the ordinary course of business pursuant to Holdings’ usual andcustomary cash management policies and procedures;

 

(b)           extensions of credit in the nature ofaccounts receivable or notes receivable arising from the sale or lease of goodsor services in the ordinary course of business;

 

(c)           Investments in the equity securitiesof Subsidiaries, provided that such equity securities are pledged to theAdministrative Agent and the Lenders as Collateral for the Obligations;

 

(d)           Extension of credit by Holdings toany of its Subsidiaries in the ordinary course of business; provided that withrespect to extensions of credit by Holdings to any of its Non-Wholly-Owned Subsidiaries(i) such extensions of credit are evidenced by one or more demand promissorynotes in form and substance satisfactory to the Administrative Agent, theoriginals of which have been delivered to the Administrative Agent asCollateral for the Obligations, and (ii) such extensions of credit are securedby a first priority Lien on all of the tangible and intangible property of suchNon-Wholly-Owned Subsidiary, which Lien has been assigned to the AdministrativeAgent as Collateral for the Obligations;

 

(e)           Investments constituting MinorityInvestments and Investments incurred in order to consummate PermittedAcquisitions, provided that (i) all such Investments in theaggregate, plus the aggregate amount of dispositions under Section8.02(f), shall not exceed $60,000,000 in any calendar year (the “AnnualLimit”), (ii) all such Investments constituting Minority Investments, plusthe aggregate amount of dispositions under Section 8.02(f), do notexceed a sublimit of $25,000,000 in any calendar year exclusive of any PutObligations, provided, however, that to the extent any PutObligations are exercised, the amount so exercised shall be included in theAnnual Limit for the year in which such Put Obligation was exercised,(iii) no such Investment shall be made if the Subsidiary or the Person inwhich Holdings has a Minority Investment, as the case may be, that is thesubject of such Investment shall not be a U.S. Subsidiary or is located outsidethe United States, and (iv) on and after the effectiveness of any Investment,Holdings shall not be in violation of any of the financial covenants containedin Section 8.19 hereof;

 

(f)            Investments constituting PermittedSwap Obligations or payments or advances under Swap Contracts relating toPermitted Swap Obligations;

 

(g)           Officer, shareholder, director andemployee loans and guarantees in accordance with Holdings’ and itsSubsidiaries’ usual and customary practices with respect thereto in aggregateamount not exceeding $1,000,000 at any time; and

 

(h)           Investments by Holdings in BMCInsurance, Inc. in an amount not to exceed the amount needed to satisfyactuarial requirements as determined by the Insurance Commissioner of the Stateof Hawaii and in any event which do not exceed $5,000,000 in the aggregateafter the Effective Date (and in addition to any premiums paid in accordancewith Section 8.06).

 

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8.05         Limitationon Indebtedness.  Holdings shallnot, and shall not suffer or permit any Subsidiary to, create, incur, assume,suffer to exist, or otherwise become or remain directly or indirectly liablewith respect to, any Indebtedness, except:

 

(a)           Indebtedness incurred pursuant tothis Agreement;

 

(b)           Indebtedness consisting of ContingentObligations permitted pursuant to Section 8.08;

 

(c)           Indebtedness existing on theEffective Date and set forth in Schedule 8.05;

 

(d)           Indebtedness secured by Lienspermitted by clauses (ix), (x) and (xiv) of Section 8.01(a) in anaggregate amount outstanding not to exceed $25,000,000;

 

(e)           Indebtedness of Holdings orWholly-Owned Subsidiaries of Holdings to Holdings or other Wholly-OwnedSubsidiaries of Holdings;

 

(f)            Indebtedness of the Non-Wholly OwnedSubsidiaries of Holdings to Holdings to the extent permitted pursuant to Section8.04(d) or Indebtedness of Holdings to the Non-Wholly-Owned Subsidiaries ofHoldings;

 

(g)           Indebtedness incurred pursuant tosales and leaseback transactions permitted under Section 8.14;

 

(h)           Indebtedness of BMC Insurance, Inc.to Holdings or any Subsidiary of Holdings;

 

(i)            additional unsecured Indebtednessincurred after the Effective Date in an aggregate amount not to exceed$25,000,000, provided that (i) no such Indebtedness shall beincurred while there exists a Default or if a Default would occur as a resultthereof, and (ii) without limiting the generality of the foregoing, as ofthe end of the most recent quarter for which Holdings has delivered financialstatements under Section 7.01(a) or Section 7.01(b) andimmediately after giving effect to such incurrence, Holdings shall be in fullcompliance with Section 8.19(a), Section 8.19(b) and Section8.19(c); and

 

(j)            additional Indebtedness which by itsterms is expressly subordinated to the Obligations, provided that(i) the terms of such subordination shall be satisfactory to the MajorityLenders, (ii) the terms of such Indebtedness and the indenture or otheragreement evidencing such Indebtedness otherwise shall be satisfactory in allmaterial respects to the Majority Lenders (including terms and conditionsrelating to the interest rate, fees, amortization, maturity, covenants, eventsof default and remedies), (iii) no such Indebtedness shall be incurredwhile there exists a Default or if a Default would occur as a result thereof,and (iv) without limiting the generality of the foregoing, as of the endof the most recent quarter for which Holdings has delivered financialstatements under Section 7.01(a) or Section 7.01(b) andimmediately after giving effect to such incurrence, Holdings shall be in fullcompliance with Section 8.19(a) and, if then applicable, Section8.19(b) and Section 8.19(c) (any such Indebtedness issued incompliance with this Section 8.05(j) hereinafter “PermittedSubordinated Debt”).

 

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Notwithstanding anything to the contrary in this Section 8.05,the Indebtedness of all Subsidiaries that are not Guarantors which is otherwisepermitted under this Section 8.05 shall not exceed $5,000,000 in theaggregate at any time outstanding.

 

8.06         Transactionswith Affiliates.  Holdings shallnot, and shall not suffer or permit any Subsidiary to, enter into anytransaction with any Affiliate of Holdings, except upon fair and reasonableterms no less favorable to Holdings or such Subsidiary than would obtain in acomparable arm’s-length transaction with a Person not an Affiliate of Holdingsor such Subsidiary.

 

8.07         Use of Proceeds.  Holdings shall not, and shall not suffer orpermit any Subsidiary to, use any portion of the Loan proceeds or any Letter ofCredit, directly or indirectly, (i) to purchase or carry Margin Stock,(ii) to repay or otherwise refinance indebtedness of Holdings or othersincurred to purchase or carry Margin Stock, or (iii) to extend credit forthe purpose of purchasing or carrying any Margin Stock.

 

8.08         ContingentObligations.  Holdingsshall not, and shall not suffer or permit any Subsidiary to, create, incur,assume or suffer to exist any Contingent Obligations, except:

 

(a)           endorsements for collection ordeposit in the ordinary course of business;

 

(b)           Permitted Swap Obligations;

 

(c)           Contingent Obligations of Holdings inrespect of Indebtedness of any of its Wholly-Owned Subsidiaries, or ContingentObligations of any of its Wholly-Owned Subsidiaries in respect of Indebtedness ofanother of its Wholly-Owned Subsidiaries or of Holdings, in each case to theextent such Indebtedness is permitted hereunder;

 

(d)           Contingent Obligations of Holdingsand its Subsidiaries existing as of the Effective Date and listed in Schedule8.08;

 

(e)           Contingent Obligations with respectto Surety Instruments incurred in the ordinary course of business and notexceeding at any time $5,000,000 in the aggregate in respect of Holdings andits Subsidiaries together;

 

(f)            Contingent Obligations of Holdings withrespect to Stock Price Guaranties incurred in the ordinary course of businessand not exceeding at any time $5,000,000 in the aggregate; and

 

(g)           Contingent Obligations of Holdingsand its Subsidiaries in connection with any Put Obligations to the extentotherwise permitted under this Agreement.

 

Notwithstanding anything to the contrary in this Section 8.08,the Contingent Obligations of all Subsidiaries that are not Guarantors whichare otherwise permitted under this Section 8.08 shall not exceed$5,000,000 in the aggregate at any time outstanding.

 

8.09         Subsidiaries.  Holdings shall not, and shall not suffer orpermit any Subsidiary to, incorporate, create or acquire any Subsidiary whichis not a U.S. Subsidiary.

 

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8.10         LeaseObligations.  Holdings shallnot, and shall not suffer or permit any Subsidiary to, create or suffer toexist any obligations for the payment of rent for any property under anyOperating Lease, which exceed an aggregate amount of $20,000,000 for allOperating Leases in any fiscal year.

 

8.11         RestrictedPayments.  Holdings shall not,and shall not suffer or permit any Subsidiary to, declare or make any dividendpayment or other distribution of assets, properties, cash, rights, obligationsor securities on account of any shares of any class of its capital stock (otherthan dividends or other distributions by a Subsidiary to Holdings), orpurchase, redeem or otherwise acquire for value any shares of its capital stockor any warrants, rights or options to acquire such shares, now or hereafteroutstanding; except that Holdings may:

 

(a)           declare and make dividend payments orother distributions payable solely in its common stock;

 

(b)           declare and make dividend payments orother distributions payable in cash so long as no Default has occurred and iscontinuing on the date of, or will result after giving effect to, any suchpayment, assuming the financial covenants set forth in Section 8.19 areapplied on a pro forma basis as of the date of any such distribution;

 

(c)           declare dividends required to bedeclared or paid pursuant to the terms of any securities issued in a PermittedEquity Offering so long as the dividend provisions of such securities wereapproved by the Majority Lenders in writing prior to the issuance of suchsecurities;

 

(d)           purchase, redeem or otherwise acquireshares of its common stock or warrants or options to acquire any such shareswith the proceeds received from the substantially concurrent issue of newshares of its common stock;

 

(e)           allow any Non-Wholly-Owned Subsidiaryto make distributions to its owners (on a pro rata basis); and

 

(f)            purchase shares of Holdings’ commonstock either (1) for deposit into the 401(k) trust fund on behalf of Holdings’employees by using funds obtained through employee payroll deductions of suchemployees, or (2) to the extent necessary to provide discounts to employees inconnection with Holdings’ Employee Stock Purchase Plan.

 

8.12         ERISA.  Holdings shall not, and shall not suffer orpermit any of its ERISA Affiliates to: (a) engage in a prohibited transaction or violation of thefiduciary responsibility rules with respect to any Plan which has resulted orcould reasonably expected to result in liability of Holdings in an aggregateamount in excess of $500,000; or (b) engage in a transaction that could besubject to section 4069 or 4212(c) of ERISA.

 

8.13         CapitalExpenditures.  Holdings shallnot, and shall not permit any of its Subsidiaries to, make any CapitalExpenditures in excess of, on a consolidated basis, in any fiscal year, the sumof (a) the Capital Expenditure Annual Limit plus (b) so longas no Event of Default has occurred and is continuing, the Permitted CapitalExpenditure Carry-Forward for all

 

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prior fiscal years (beginning with fiscal year 2003) to the extent thatany such Permitted Capital Expenditure Carry-Forward has not been previouslyused.

 

8.14         Sales andLeasebacks.  Holdings shall not,and shall not permit any of its Subsidiaries to, become liable, directly orindirectly, with respect to any lease, whether an Operating Lease or a CapitalLease, of any property (whether real, personal or mixed), whether now owned orhereafter acquired, (i) which Holdings or such Subsidiary has sold ortransferred or is to sell or transfer to any other Person or (ii) whichHoldings or such Subsidiary intends to use for substantially the same purposesas any other property which has been or is to be sold or transferred by Holdingsor such Subsidiary to any other Person in connection with such lease; providedthat Holdings and any of its Subsidiaries may enter into any such lease if (A)no Default shall then exist or would occur as a result thereof, (B) as of theend of the most recent quarter for which Holdings has delivered financialstatements under Section 7.01(a) or Section 7.01(b) andimmediately after giving effect to any such lease, Holdings shall be in fullcompliance with Section 8.19(a), Section 8.19(b) and Section8.19(c) and (C) the aggregate amount of Indebtedness incurred in connectionwith all such leases shall not exceed $25,000,000 at any time outstanding.

 

8.15         CertainPayments.  Holdings shall not,and shall not permit any of its Subsidiaries to, (i) prepay, redeem, repurchaseor otherwise acquire for value any of the Permitted Subordinated Debt; or(ii) make any principal, interest or other payments on any PermittedSubordinated Debt if not permitted by the respective subordination provisionsof the Subordinated Debt Documents.

 

8.16         Modificationof Subordinated Debt Documents. Holdings shall not, and shall not permit any of its Subsidiaries to,agree to or permit any amendment, modification or waiver of any provision ofany Subordinated Debt Document (including any amendment, modification or waiverpursuant to an exchange of other securities or instruments for outstandingPermitted Subordinated Debt) if the effect of such amendment, modification orwaiver is to (i) increase the interest rate on such Permitted SubordinatedDebt or change (to earlier dates) the dates upon which principal and interestare due thereon; (ii) alter the redemption, prepayment or subordinationprovisions thereof; (iii) alter the covenants and events of default in amanner which would make such provisions more onerous or restrictive to Holdingsor such Subsidiary; or (iv) otherwise increase the obligations of Holdingsor such Subsidiary in respect of such Permitted Subordinated Debt or conferadditional rights upon the holders thereof which individually or in theaggregate would be adverse to Holdings, its Subsidiaries or the Lenders.

 

8.17         Change inBusiness.  Holdings shall not,and shall not suffer or permit any Subsidiary to, engage in any material lineof business substantially different from those lines of business carried on byHoldings and its Subsidiaries on the date hereof and lines of businessancillary thereto.

 

8.18         AccountingChanges.  Holdings shall not,and shall not suffer or permit any Subsidiary to, make any significant changein accounting treatment or reporting practices, except as required by GAAP, orchange the fiscal year of Holdings or of any Subsidiary, except to change thefiscal year of a Subsidiary to conform its fiscal year to that of Holdings.

 

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8.19         FinancialCovenants.  (a)  Holdings shall not permit its ConsolidatedNet Worth as of the last day of any fiscal quarter to be less than (a) 85% ofits Consolidated Net Worth on and as of the Effective Date, plus (b) 50%of Consolidated Net Income for each fiscal quarter (without giving effect toany net loss for any such period) ending after the Effective Date, plus(c) 50% of all Net Issuance Proceeds completed in any fiscal quarter from andafter the Effective Date.

 

(b)           Holdings shall not permit as at theend of any fiscal quarter, measured on a consolidated basis for Holdings andits Subsidiaries for the period of four fiscal quarters ended on such date inaccordance with GAAP, the ratio of (i) EBITA to (ii) the sum of (A)cash Interest Expense, plus (B) cash taxes, plus (C) scheduledprincipal payments in respect of Indebtedness from and after July 1, 2003, plus(D) cash dividend payments made (the “EBITA Ratio”) to be less thanthe following amounts for the respective periods set forth below:

 

| **Period**                                                                                                              |   | **EBITA Ratio** |
|-------------------------------------------------------------------------------------------------------------------------|--------|-----------------|
| Effective  Date through and including September 30, 2004                                                           |   | 1.20:1.00       |
| October  1, 2004 through and including September 30, 2005                                                               |   | 1.25:1.00       |
| October  1, 2005 through and including September 30, 2006                                                               |   | 1.35:1.00       |
| October  1, 2006 through and including September 30, 2007                                                               |   | 1.40:1.00       |
| October  1, 2007 through and including the later of the Revolving Loan Maturity Date  and the Term B Loan Maturity Date |   | 1.45:1.00       |

 

(c)           Holdings shall not permit the EBITDARatio at any time to be greater than the following amounts for the respectiveperiods set forth below:

 

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| **Period**                                                                                                              |   | **EBITA Ratio** |
|-------------------------------------------------------------------------------------------------------------------------|--------|-----------------|
| Effective  Date through and including September 30, 2005                                                           |   | 3.50:1.00       |
| October  1, 2005 through and including September 30, 2007                                                               |   | 3.25:1.00       |
| October  1, 2007 through and including the later of the Revolving Loan Maturity Date  and the Term B Loan Maturity Date |   | 3.00:1.00       |

 

8.20         No Restrictions on SubsidiaryDividends.  Holdings shall not,and shall not suffer or permit any Subsidiary to, enter into or be bound by anyContractual Obligation which restricts, limits or prohibits the payment ofdividends by any Subsidiary or the making of any other distribution in respectof such Subsidiary’s capital stock.

 

**ARTICLE IX**

 

**EVENTSOF DEFAULT**

 

9.01         Event ofDefault.  Any of the followingshall constitute an “Event of Default”:

 

(a)           Non-Payment.  Holdings fails to make, (i) when and asrequired to be made herein, payments of any amount of principal of any Loan orof any L/C Obligation, (ii) when and as required to be paid under anySpecified Swap Contract, any payment or transfer under such Specified SwapContract, or (iii) within three (3) Business Days after the same becomesdue, payment of any interest, fee or any other amount payable hereunder orunder any other Loan Document (other than a Specified Swap Contract); or

 

(b)           Representation or Warranty.  Any representation or warranty by any LoanParty made or deemed made herein, in any other Loan Document (other than a SpecifiedSwap Contract), or which is contained in any certificate, document or financialor other statement by any Loan Party, or any Responsible Officer, furnished atany time under this Agreement, or in or under any other Loan Document (otherthan a Specified Swap Contract), is incorrect in any material respect on or asof the date made or deemed made; or

 

(c)           Specific Defaults.  Holdings or the Company fails to perform orobserve any term, covenant or agreement contained in any of Section7.04(a)(i), or Section 7.12 or in Article VIII; or

 

(d)           Other Defaults.  Any Loan Party fails to perform or observeany other term or covenant contained in this Agreement or any other LoanDocument (other than a Specified Swap Contract), and such default shallcontinue unremedied for a period of twenty (20) days after the earlier of(i) the date upon which a Responsible Officer of Holdings or the Companyobtained

 

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actual knowledge of such failure and (ii) the date upon whichwritten notice thereof is given to Holdings by the Administrative Agent or anyLender; or

 

(e)           Cross-Default.  (i) Holdings or any Subsidiary(A) fails to make any payment in respect of any Indebtedness or ContingentObligation (other than in respect of Swap Contracts), having an aggregateprincipal amount (including undrawn committed or available amounts andincluding amounts owing to all creditors under any combined or syndicatedcredit arrangement) of more than $5,000,000 when due (whether by scheduledmaturity, required prepayment, acceleration, demand, or otherwise) and suchfailure continues after the applicable grace or notice period, if any,specified in the relevant document on the date of such failure; or(B) fails to perform or observe any other condition or covenant, or anyother event shall occur or condition exist, under any agreement or instrumentrelating to any such Indebtedness or Contingent Obligation, and such failurecontinues after the applicable grace or notice period, if any, specified in therelevant document on the date of such failure if the effect of such failure,event or condition is to cause, or to permit the holder or holders of suchIndebtedness or beneficiary or beneficiaries of such Indebtedness (or a trusteeor Administrative Agent on behalf of such holder or holders or beneficiary orbeneficiaries) to cause such Indebtedness to be declared to be due and payableprior to its stated maturity, or such Contingent Obligation to become payableor cash collateral in respect thereof to be demanded; or (ii) there occursunder any Swap Contract an Early Termination Date (as defined in such SwapContract) resulting from (1) any event of default under such Swap Contractas to which Holdings or any Subsidiary is the Defaulting Party (as defined insuch Swap Contract) or (2) any Termination Event (as so defined) as towhich Holdings or any Subsidiary is an Affected Party (as so defined), and, ineither event, the Swap Termination Value owed by Holdings or such Subsidiary asa result thereof is greater than $5,000,000; or

 

(f)            Insolvency; Voluntary Proceedings.  Holdings or any Subsidiary (i) ceasesor fails to be solvent, or generally fails to pay, or admits in writing itsinability to pay, its debts as they become due, subject to applicable graceperiods, if any, whether at stated maturity or otherwise; (ii) voluntarilyceases to conduct its business in the ordinary course; (iii) commences anyInsolvency Proceeding with respect to itself; or (iv) takes any action toeffectuate or authorize any of the foregoing; or

 

(g)           Involuntary Proceedings.  (i) Any involuntary InsolvencyProceeding is commenced or filed against Holdings or any Subsidiary, or anywrit, judgment, warrant of attachment, execution or similar process, is issuedor levied against a substantial part of Holdings’ or any Subsidiary’sproperties, and any such proceeding or petition shall not be dismissed, or suchwrit, judgment, warrant of attachment, execution or similar process shall notbe released, vacated or fully bonded within sixty (60) days after commencement,filing or levy; (ii) Holdings or any Subsidiary admits the materialallegations of a petition against it in any Insolvency Proceeding, or an orderfor relief (or similar order under non-U.S. law) is ordered in any InsolvencyProceeding; or (iii) Holdings or any Subsidiary acquiesces in theappointment of a receiver, trustee, custodian, conservator, liquidator,mortgagee in possession (or Administrative Agent therefor), or other similarPerson for itself or a substantial portion of its property or business; or

 

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(h)           ERISA.  (i) An ERISA Event shall occur withrespect to a Pension Plan or Multiemployer Plan which has resulted or couldreasonably be expected to result in liability of Holdings under Title IV ofERISA to the Pension Plan, Multiemployer Plan or the PBGC in an aggregateamount in excess of $500,000; the aggregate amount of Unfunded PensionLiability among all Pension Plans at any time exceeds $500,000; or(iii) Holdings or any ERISA Affiliate shall fail to pay when due, afterthe expiration of any applicable grace period, any installment payment withrespect to its withdrawal liability under section 4201 of ERISA under aMultiemployer Plan in an aggregate amount in excess of $500,000; or

 

(i)            Monetary Judgments.  One or more non-interlocutory judgments,non-interlocutory orders, decrees or arbitration awards is entered againstHoldings or any Subsidiary involving in the aggregate a liability (to theextent not covered by independent third-party insurance as to which the insurerdoes not dispute coverage) as to any single or related or unrelated series oftransactions, incidents or conditions, of $5,000,000 or more, and the sameshall remain unsatisfied, unvacated and unstayed pending appeal for a period ofthirty (30) days after the entry thereof; or

 

(j)            Non-Monetary Judgments.  Any non-monetary judgment, order or decreeis entered against Holdings or any Subsidiary which does or would reasonably beexpected to have a Material Adverse Effect, and there shall be any period ofthirty (30) consecutive days during which a stay of enforcement of suchjudgment or order, by reason of a pending appeal or otherwise, shall not be ineffect; or

 

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

 

(l)            Guarantor Defaults.  Any Guarantor fails in any material respectto perform or observe any term, covenant or agreement in its Guaranty; or anyGuaranty is for any reason partially (including with respect to futureadvances) or wholly revoked or invalidated, or otherwise ceases to be in fullforce and effect, or such Guarantor or any other Person contests in any mannerthe validity or enforceability thereof or denies that it has any furtherliability or obligation thereunder; or any event described at subsections (f)or (g) of this Section 9.01 occurs with respect to the Guarantor; or

 

(m)          Invalidity of SubordinationProvisions.  The subordinationprovisions applicable to the Permitted Subordinated Debt shall be for anyreason revoked or invalidated, or otherwise cease to be in full force andeffect, or the holders thereof or any other Person shall contest in any mannerthe validity or enforceability thereof or denies that it has any furtherliability or obligation thereunder, or the Indebtedness hereunder is for anyreason subordinated or does not have the priority contemplated by thisAgreement or such subordination provisions.

 

(n)           Collateral.  (i) Any provision of any Collateral Documentshall for any reason cease to be valid and binding on or enforceable againstHoldings or any Subsidiary party thereto or Holdings or any Subsidiary shall sostate in writing or bring an action to limit its obligations or liabilitiesthereunder; or (ii) any Collateral Document shall for any reason (otherthan pursuant to the terms thereof) cease to create a valid security interestin the Collateral purported to be covered thereby or such security interestshall for any reason cease to be a perfected and first priority security interestsubject only to Permitted Liens.

 

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9.02         Remedies.  At any time after the occurrence and duringthe continuance of any Event of Default (other than an Event of Defaultreferred to in Section 9.01(f) or Section  9.01(g)):

 

(a)           the Administrative Agent may orshall, upon instructions from the Majority Revolving Lenders, by written noticeto Holdings (i) terminate the Revolving Commitments, any obligation of theL/C Issuer to make L/C Credit Extensions and the obligations of the RevolvingLenders to make Loans, (ii) require that Holdings Cash Collateralize theL/C Obligations in an amount equal to the then Effective Amount of the L/CObligations; and/or (iii) declare all or a portion of the outstandingObligations owed to the Revolving Lenders and payable by Holdings to beimmediately due and payable without presentment, demand, protest or any othernotice of any kind, all of which are hereby expressly waived, anythingcontained herein or in the Notes to the contrary notwithstanding; and

 

(b)           the Administrative Agent may orshall, upon instructions from the Majority Term B Lenders, declare all or aportion of the outstanding Obligations owed to the Term Lenders and payable byHoldings to be immediately due and payable without presentment, demand, protestor any other notice of any kind, all of which are hereby expressly waived,anything contained herein or in the Notes to the contrary notwithstanding.

 

Upon the occurrence or existence of any Event ofDefault described in Section 9.01(f) or 9.01(g), immediately andwithout notice, (1) the Revolving Commitments, any obligation of the L/CIssuer to make L/C Credit Extensions and the obligations of the Lenders to makeLoans shall automatically terminate, (2) the obligation of Holdings toCash Collateralize the L/C Obligations in an amount equal to the then EffectiveAmount of the L/C Obligations shall automatically become effective and(3) all outstanding Obligations payable by Holdings hereunder shallautomatically become immediately due and payable, without presentment, demand,protest or any other notice of any kind, all of which are hereby expresslywaived, anything contained herein or in the Notes to the contrarynotwithstanding.  In addition to theforegoing remedies, upon the occurrence or existence of any Event of Default,the Administrative Agent may exercise any other right, power or remedyavailable to it under any of the Loan Documents or otherwise by law, either bysuit in equity or by action at law, or both.

 

9.03         SpecifiedSwap Contract Remedies. Notwithstanding any other provision of this Article IX, eachSwap Provider shall have the right, with prior notice to the AdministrativeAgent, but without the approval or consent of the Administrative Agent or theother Lenders, with respect to any Specified Swap Contract of such SwapProvider, (a) to declare an event of default, termination event or othersimilar event thereunder and to create an Early Termination Date (as defined insuch Specified Swap Contract), (b) to determine net termination amounts inaccordance with the terms of such Specified Swap Contracts and to set-offamounts between such Specified Swap Contracts, and (c) to prosecute anylegal action against Holdings to enforce net amounts owing to such SwapProvider.

 

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**ARTICLE X**

 

**THEADMINISTRATIVE AGENT**

 

10.01       Appointment andAuthorization; “Administrative Agent”.  (a)  Each Lender herebyirrevocably (subject to Section 10.09) appoints, designates andauthorizes the Administrative Agent to take such action on its behalf under theprovisions of this Agreement and each other Loan Document and to exercise suchpowers and perform such duties as are expressly delegated to it by the terms ofthis Agreement or any other Loan Document, together with such powers as arereasonably incidental thereto. Notwithstanding any provision to the contrary contained elsewhere inthis Agreement or in any other Loan Document, the Administrative Agent shallnot have any duties or responsibilities, except those expressly set forthherein, nor shall the Administrative Agent have or be deemed to have anyfiduciary relationship with any Lender, and no implied covenants, functions,responsibilities, duties, obligations or liabilities shall be read into thisAgreement or any other Loan Document or otherwise exist against theAdministrative Agent.  Without limitingthe generality of the foregoing sentence, the use of the term “AdministrativeAgent” in this Agreement with reference to the Administrative Agent is notintended to connote any fiduciary or other implied (or express) obligationsarising 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 relationshipbetween independent contracting parties.

 

(b)           The L/C Issuer shall act on behalf ofthe Lenders with respect to any Letters of Credit Issued by it and thedocuments associated therewith until such time and except for so long as theAdministrative Agent may agree at the request of the Majority Lenders to actfor the L/C Issuer with respect thereto; provided, however, thatthe L/C Issuer shall have all of the benefits and immunities (i) providedto the Administrative Agent in this Article X with respect to anyacts taken or omissions suffered by the L/C Issuer in connection with Lettersof Credit Issued by it or proposed to be Issued by it and the application andagreements for letters of credit pertaining to the Letters of Credit as fullyas if the term “Administrative Agent,” as used in this Article X,included the L/C Issuer with respect to such acts or omissions, and(ii) as additionally provided in this Agreement with respect to the L/CIssuer.

 

10.02       Delegation of Duties.  The Administrative Agent may execute any ofits duties under this Agreement or any other Loan Document by or throughAdministrative Agents, employees or attorneys-in-fact and shall be entitled toadvice of counsel concerning all matters pertaining to such duties.  The Administrative Agent shall not beresponsible for the negligence or misconduct of any Administrative Agent orattorney-in-fact that it selects with reasonable care.

 

10.03       Liability of AdministrativeAgent.  None of the AdministrativeAgent-Related Persons shall (i) be liable for any action taken or omittedto be taken by any of them under or in connection with this Agreement or anyother Loan Document or the transactions contemplated hereby (except for its owngross negligence or willful misconduct), or (ii) be responsible in anymanner to any of the Lenders for any recital, statement, representation orwarranty made by Holdings or any Subsidiary or Affiliate of Holdings, or anyofficer thereof, contained in this Agreement or in any other Loan Document, orin any certificate, report, statement or other

 

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document referred to or provided for in, or received by theAdministrative Agent under or in connection with, this Agreement or any otherLoan Document, or for the value of or title to any Collateral, or the validity,effectiveness, genuineness, enforceability or sufficiency of this Agreement orany other Loan Document, or for any failure of any Loan Party or any otherparty to any Loan Document to perform its obligations hereunder orthereunder.  No AdministrativeAgent-Related Person shall be under any obligation to any Lender to ascertainor to inquire as to the observance or performance of any of the agreementscontained in, or conditions of, this Agreement or any other Loan Document, orto inspect the properties, books or records of Holdings or any of itsSubsidiaries or Affiliates.

 

10.04       Relianceby Administrative Agent. (a)  The Administrative Agentshall be entitled to rely, and shall be fully protected in relying, upon anywriting, resolution, notice, consent, certificate, affidavit, letter, telegram,facsimile, telex or telephone message, statement or other document orconversation 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 oflegal counsel (including counsel to any Loan Party), independent accountantsand other experts selected by the Administrative Agent. The AdministrativeAgent shall be fully justified in failing or refusing to take any action underthis Agreement or any other Loan Document unless it shall first receive suchadvice or concurrence of the Majority Lenders as it deems appropriate and, ifit so requests, it shall first be indemnified to its satisfaction by theLenders against any and all liability and expense which may be incurred by itby reason of taking or continuing to take any such action.  The Administrative Agent shall in all casesbe fully protected in acting, or in refraining from acting, under thisAgreement or any other Loan Document in accordance with a request or consent ofthe Majority Lenders and such request and any action taken or failure to actpursuant thereto shall be binding upon all of the Lenders.

 

(b)           For purposes of determiningcompliance with the conditions specified in Section 5.01, each Lenderthat has executed this Agreement shall be deemed to have consented to, approvedor accepted or to be satisfied with, each document or other matter either sent(or made available) by the Administrative Agent to such Lender for consent,approval, acceptance or satisfaction, or required thereunder to be consented toor approved by or acceptable or satisfactory to such Lender.

 

10.05       Notice of Default.  The Administrative Agent shall not be deemedto have knowledge or notice of the occurrence of any Default or Event ofDefault, except with respect to defaults in the payment of principal, interestand fees required to be paid to the Administrative Agent for the account of theLenders, unless the Administrative Agent shall have received written noticefrom a Lender or any Loan Party referring to this Agreement, describing suchDefault or Event of Default and stating that such notice is a “notice of default.”  The Administrative Agent will notify theLenders of its receipt of any such notice. The Administrative Agent shall take such action with respect to suchDefault or Event of Default as may be requested by the Majority Lenders inaccordance with Article IX; provided, however, that unlessand until the Administrative Agent has received any such request, theAdministrative Agent may (but shall not be obligated to) take such action, orrefrain from taking such action, with respect to such Default or Event ofDefault as it shall deem advisable or in the best interest of the Lenders.

 

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10.06       Credit Decision.  Each Lender acknowledges that none of theAdministrative Agent-Related Persons has made any representation or warranty toit, and that no act by the Administrative Agent hereinafter taken, includingany review of the affairs of Holdings and its Subsidiaries, shall be deemed toconstitute any representation or warranty by any Administrative Agent-RelatedPerson to any Lender.  Each Lenderrepresents to the Administrative Agent that it has, independently and withoutreliance upon any Administrative Agent-Related Person and based on suchdocuments and information as it has deemed appropriate, made its own appraisalof and investigation into the business, prospects, operations, property,financial and other condition and creditworthiness of Holdings and itsSubsidiaries, the value of and title to any Collateral, and all applicable bankregulatory laws relating to the transactions contemplated hereby, and made itsown decision to enter into this Agreement and to extend credit to any LoanParty hereunder.  Each Lender alsorepresents that it will, independently and without reliance upon anyAdministrative Agent-Related Person and based on such documents and informationas it shall deem appropriate at the time, continue to make its own creditanalysis, appraisals and decisions in taking or not taking action under thisAgreement and the other Loan Documents, and to make such investigations as itdeems necessary to inform itself as to the business, prospects, operations,property, financial and other condition and creditworthiness of any LoanParty.  Except for notices, reports andother documents expressly herein required to be furnished to the Lenders by theAdministrative Agent, the Administrative Agent shall not have any duty orresponsibility to provide any Lender with any credit or other informationconcerning the business, prospects, operations, property, financial and othercondition or creditworthiness of Holdings or any Subsidiary which may come intothe possession of any of the Administrative Agent-Related Persons.

 

10.07       Indemnificationof Administrative Agent. Whether or not the transactions contemplated hereby are consummated, theLenders shall indemnify upon demand the Administrative Agent-Related Persons(to the extent not reimbursed by or on behalf of the Company or Holdings andwithout limiting the obligation of the Company and Holdings to do so), in accordancewith the Lenders’ Proportionate Shares, from and against any and allIndemnified Liabilities; provided, however, that no Lender shallbe liable for the payment to the Administrative Agent-Related Persons of anyportion of such Indemnified Liabilities to the extent they are found by a finaldecision of a court of competent jurisdiction to have resulted solely from suchPerson’s gross negligence or willful misconduct.  Without limitation of the foregoing, each Lender shall reimbursethe Administrative Agent upon demand for its ratable share of any costs orout-of-pocket expenses (including Attorney Costs) incurred by theAdministrative Agent in connection with the preparation, execution, delivery,administration, modification, amendment or enforcement (whether throughnegotiations, legal proceedings or otherwise) of, or legal advice in respect ofrights or responsibilities under, this Agreement, any other Loan Document, orany document contemplated by or referred to herein, to the extent that the AdministrativeAgent is not reimbursed for such expenses by or on behalf of Holdings and theCompany.  The undertaking in this Section10.07 shall survive the termination of the Commitments, the termination orexpiration of all Letters of Credit, the payment of all other Obligationshereunder and the resignation or replacement of the Administrative Agent.

 

10.08       AdministrativeAgent in Individual Capacity. Wells Fargo and its Affiliates may make loans to, issue letters ofcredit for the account of, accept deposits from, acquire equity interests inand generally engage in any kind of banking, trust, financial advisory,underwriting

 

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or other business with Holdings and its Subsidiaries and Affiliates asthough Wells Fargo were not the Administrative Agent or the L/C Issuerhereunder and without notice to or consent of the Lenders.  The Lenders acknowledge that, pursuant tosuch activities, Wells Fargo or its Affiliates may receive informationregarding Holdings or its Subsidiaries or Affiliates (including informationthat may be subject to confidentiality obligations in favor of Holdings or suchSubsidiary or Affiliate) and acknowledge that the Administrative Agent shall beunder no obligation to provide such information to them.  With respect to its Loans, Wells Fargo shallhave the same rights and powers under this Agreement as any other Lender andmay exercise the same as though it were not the Administrative Agent or the L/CIssuer.

 

10.09       SuccessorAdministrative Agent. The Administrative Agent may, and at the request of the Majority Lendersshall, resign as Administrative Agent upon thirty (30) days’ notice to theLenders.  If the Administrative Agentresigns under this Agreement, the Majority Lenders shall appoint from among theLenders a successor Administrative Agent for the Lenders.  If no successor Administrative Agent isappointed prior to the effective date of the resignation of the AdministrativeAgent, the Administrative Agent may appoint, after consulting with the Lendersand Holdings, a successor Administrative Agent from among the Lenders.  Upon the acceptance of its appointment assuccessor Administrative Agent hereunder, such successor Administrative Agentshall succeed to all the rights, powers and duties of the retiringAdministrative Agent and the term “Administrative Agent” shall mean suchsuccessor Administrative Agent and the retiring Administrative Agent’s appointment,powers and duties as Administrative Agent shall be terminated. After anyretiring Administrative Agent’s resignation hereunder as Administrative Agent,the provisions of this Article X and Section 11.04 and Section11.05 shall inure to its benefit as to any actions taken or omitted to betaken by it while it was Administrative Agent under this Agreement.  If no successor Administrative Agent hasaccepted appointment as Administrative Agent by the date which is thirty (30)days following a retiring Administrative Agent’s notice of resignation, theretiring Administrative Agent’s resignation shall nevertheless thereupon becomeeffective and the Lenders shall perform all of the duties of the AdministrativeAgent hereunder until such time, if any, as the Majority Lenders appoint asuccessor Administrative Agent as provided for above.  Notwithstanding the foregoing, however, Wells Fargo may not beremoved as the Administrative Agent at the request of the Majority Lendersunless Wells Fargo shall also simultaneously be replaced as “L/C Issuer” and“Swingline Lender” hereunder pursuant to documentation in form and substancereasonably satisfactory to Wells Fargo.

 

10.10       Withholding Tax.  (a) If any Lender is a “foreign corporation, partnership or trust” withinthe meaning of the Code and such Lender claims exemption from, or a reductionof, U.S. withholding tax under sections 1441 or 1442 of the Code, such Lenderagrees with and in favor of the Administrative Agent, to deliver to theAdministrative Agent:

 

(i)            if such Lender claims an exemptionfrom, or a reduction of, withholding tax under a United States tax treaty, twoproperly completed and executed copies of IRS Form W-8BEN before the payment ofany interest or fees in the first calendar year and before the payment of anyinterest or fees in each third succeeding calendar year during which interestor fees may be paid under this Agreement;

 

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(ii)           if such Lender claims that interestor fees paid under this Agreement is exempt from United States withholding taxbecause it is effectively connected with a United States trade or business ofsuch Lender, two properly completed and executed copies of IRS Form W-8ECIbefore the payment of any interest or fees is due in the first taxable year ofsuch Lender and in each succeeding taxable year of such Lender during whichinterest or fees may be paid under this Agreement; and

 

(iii)          such other form or forms as may berequired under the Code or other laws of the United States as a condition toexemption from, or reduction of, United States withholding tax.

 

Such Lender agrees to promptly notify theAdministrative Agent of any change in circumstances which would modify orrender invalid any claimed exemption or reduction.

 

(b)           If any Lender claims exemption from,or reduction of, withholding tax under a United States tax treaty by providingIRS Form W-8BEN and such Lender sells, assigns, grants a participation in, orotherwise transfers all or part of the Obligations of Holdings owing to suchLender, such Lender agrees to notify the Administrative Agent of the percentageamount in which it is no longer the beneficial owner of Obligations of Holdingsowing to such Lender.  To the extent ofsuch percentage amount, the Administrative Agent will treat such Lender’s IRSForm W-8BEN as no longer valid.

 

(c)           If any Lender claiming exemption fromUnited States withholding tax by filing IRS Form W-8ECI with the AdministrativeAgent sells, assigns, grants a participation in, or otherwise transfers all orpart of the Obligations of Holdings owing to such Lender, such Lender agrees toundertake sole responsibility for complying with the withholding taxrequirements imposed by sections 1441 and 1442 of the Code.

 

(d)           If any Lender is entitled to areduction in the applicable withholding tax, the Administrative Agent maywithhold from any interest payment to such Lender an amount equivalent to theapplicable withholding tax after taking into account such reduction.  However, if the forms or other documentationrequired by subsection (a) of this section are not delivered to theAdministrative Agent, then the Administrative Agent may withhold from anyinterest payment to such Lender not providing such forms or other documentationan amount equivalent to the applicable withholding tax imposed by sections 1441and 1442 of the Code, without reduction.

 

(e)           If the IRS or any other GovernmentalAuthority of the United States or other jurisdiction asserts a claim that theAdministrative Agent did not properly withhold tax from amounts paid to or forthe account of any Lender (because the appropriate form was not delivered orwas not properly executed, or because such Lender failed to notify theAdministrative Agent of a change in circumstances which rendered the exemptionfrom, or reduction of, withholding tax ineffective, or for any other reason)such Lender shall indemnify the Administrative Agent fully for all amountspaid, directly or indirectly, by the Administrative Agent as tax or otherwise,including penalties and interest, and including any taxes imposed by anyjurisdiction on the amounts payable to the Administrative Agent under thissection, together with all costs and expenses (including reasonable AttorneyCosts).  The obligation of the Lenders

 

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under this subsection shall survive the termination of the Commitments,the termination or expiration of all Letters of Credit, the payment of allother Obligations hereunder and the resignation or replacement of theAdministrative Agent.

 

(f)            (i) Each Lender party to thisAgreement as of the Effective Date represents and warrants to theAdministrative Agent and Holdings as of the Effective Date and (ii) eachAdditional Lender party to this Agreement as of the Subsequent Effective Daterepresents and warrants to the Administrative Agent and Holdings as of theSubsequent Effective Date, that under applicable law and treaties no tax isrequired to be withheld by Holdings or the Administrative Agent with respect toany payments to be made to such Lender hereunder.

 

10.11       CollateralMatters.

 

(a)           The Administrative Agent isauthorized on behalf of all the Lenders, without the necessity of any notice toor further consent from the Lender, from time to time to take any action withrespect to any Collateral or the Collateral Documents which may be necessary toperfect and maintain perfected the security interest in and Liens upon theCollateral granted pursuant to the Collateral Documents.

 

(b)           The Lenders irrevocably authorize theAdministrative Agent, at its option and in its discretion, to release any Liengranted to or held by the Administrative Agent upon any Collateral(i) upon termination of the Commitments and payment in full of all Loansand all other Obligations known to the Administrative Agent and payable underthis Agreement or any other Loan Document; (ii) constituting property soldor to be sold or disposed of as part of or in connection with any dispositionpermitted hereunder; (iii) constituting property in which Holdings or anySubsidiary owned no interest at the time the Lien was granted or at any timethereafter; (iv) constituting property leased to Holdings or any Subsidiary ina transaction permitted under this Agreement; (v) consisting of an instrumentevidencing Indebtedness or other debt instrument, if the indebtedness evidencedthereby has been paid in full; (vi) constituting real property to beexcluded from the Collateral pursuant to matters arising under Section 7.15;or (vii) if approved, authorized or ratified in writing by the MajorityLenders or all the Lenders, as the case may be, as provided in Section11.01(k).  Upon request by theAdministrative Agent at any time, the Lenders will confirm in writing theAdministrative Agent’s authority to release particular types or items ofCollateral pursuant to this Section 10.11(b), provided thatthe absence of any such confirmation for whatever reason shall not affect theAdministrative Agent’s rights under this Section 10.11.

 

(c)           Each Lender agrees with and in favorof each other (which agreement shall not be for the benefit of Holdings or anySubsidiary) that the Obligations to such Lender under this Agreement and theother Loan Documents shall not be secured by any real property collateral nowor hereafter acquired by such Lender other than the Mortgaged Propertiesdescribed in the Mortgages.

 

10.12       SyndicationAgent, Documentation Agent, Co-Lead Arranger.  None of the Lenders identified on the facingpage or signature pages of this Agreement as a “Syndication Agent”,“Documentation Agent” or “Co-Lead Arranger” shall have any right, power,obligation, liability, responsibility or duty under this Agreement in suchcapacity.  Without limiting the

 

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foregoing, none of the Lenders so identified as a “Syndication Agent”,“Documentation Agent” or “Co-Lead Arranger” shall have or be deemed to have anyfiduciary relationship with any Lenders. Each Lender acknowledges that it has not relied, and will not rely, onany of the Lenders so identified in deciding to enter into this Agreement or intaking or not taking action hereunder.

 

**ARTICLE XI**

 

**MISCELLANEOUS**

 

11.01       Amendmentsand Waivers.  Any term,covenant, agreement or condition of this Agreement or any other Loan Documentmay be amended or waived, and any consent under this Agreement or any otherLoan Document may be given, if such amendment, waiver or consent is in writingand is signed by Holdings and the Majority Lenders (or the Administrative Agenton behalf of the Majority Lenders with the written approval of the MajorityLenders); provided, however, that:

 

(a)           Any amendment, waiver or consentwhich would (i) amend the definition of “Majority Class Lenders”, “MajorityLenders”, “Majority Revolving Lenders” or “Majority Term Lenders”, or modify inany other manner the number or percentage of the Lenders required to make anydeterminations or to waive any rights under, or to modify any provision of,this Agreement, (ii) amend this Section 11.01 or Section 2.15, or(iii) release any Guarantor, must be in writing and signed or approved inwriting by all of the Lenders;

 

(b)           Any amendment, waiver or consentwhich would (i) increase the Aggregate Revolving Commitment, (ii) extend theRevolving Loan Maturity Date, (iii) reduce the principal of, or interest rateapplicable to, any Revolving Loan or L/C Borrowing or any fees or other amountspayable for the account of the Revolving Lenders hereunder, or (iii) extend anydate fixed for any payment of the principal of, or interest rate applicable to,any Revolving Loans or any fees or other amounts payable for the account of theRevolving Lenders must be in writing and signed or approved in writing by allRevolving Lenders;

 

(c)           Any amendment, waiver or consentwhich would (i) increase the Aggregate Term B Commitment, (ii) extend the TermB Loan Maturity Date, (iii) reduce the principal of or interest rate applicableto any Term B Loan or (iv) extend any date fixed for any payment of theprincipal of or interest rate applicable to any Term B Loans, must be inwriting and signed or approved in writing by all Term B Lenders;

 

(d)           Any amendment, waiver or consentwhich would (i) accelerate the Term B Loan Maturity Date, (ii) increase theinterest rate applicable to any Term B Loan, (iii) accelerate any date fixedfor any payment of the principal of or interest rate applicable to any Term BLoans, or (iv) increase the interest rate applicable to any Revolving Loan orL/C Obligation must be in writing and signed or approved in writing by theMajority Class Lenders;

 

(e)           Any amendment, modification,termination or waiver of any provision of Section 2.05(a) must be inwriting and signed by the Majority Revolving Lenders;

 

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(f)            Any amendment, modification,termination or waiver of any provision of Section 2.07 or Section2.08 must be in writing and signed by the Majority Class Lenders;

 

(g)           Any amendment, waiver or consentwhich increases or decreases the Proportionate Share of any Lender or adverselyaffects the rights of such Lender under Section 11.08 hereof mustbe in writing and signed by such Lender;

 

(h)           Any amendment, waiver or consentwhich affects the rights or duties of the Swingline Lender under this Agreementmust be in writing and signed by the Swingline Lender;

 

(i)            Any amendment, waiver or consentwhich affects the rights or duties of the L/C Issuer under this Agreement orany L/C Application relating to any Letter of Credit issued or to be issued byit must be in writing and signed by the L/C Issuer;

 

(j)            Any amendment, waiver or consentwhich affects the rights or obligations of the Administrative Agent must be inwriting and signed by the Administrative Agent; and

 

(k)           Any amendment, waiver or consent whichreleases any material portion of the Collateral must be in writing and signedor approved in writing by all Lenders, except that (i) any release inconnection with a sale or other disposition of Collateral authorized by Section8.02 shall not require the approval of any Lenders, and (ii) any amendment,waiver or consent which modifies the terms of Section 8.02 (includingany modification relating to the prepayment of proceeds from any such sale orother disposition) shall require the consent of the Majority Lenders.

 

No failure or delay by the Administrative Agent or anyLender in exercising any right under this Agreement or any other Loan Documentshall operate as a waiver thereof or of any other right hereunder or thereundernor shall any single or partial exercise of any such right preclude any otherfurther exercise thereof or of any other right hereunder or thereunder.  Unless otherwise specified in such waiver orconsent, a waiver or consent given hereunder shall be effective only in thespecific instance and for the specific purpose for which given.  The Lenders may condition the giving ormaking of any amendment, waiver or consent of any term, covenant, agreement orcondition of this Agreement or any other Loan Document on payment of a fee byHoldings.

 

11.02       Notices.  (a) All notices, requests, consents, approvals, waivers and othercommunications shall be in writing (including, unless the context expresslyotherwise provides, by facsimile transmission, but excluding by electronic mailunless accompanied by notice delivered via one of the other methods specifiedherein), and mailed, faxed or delivered, to the address or facsimile numberspecified for notices on Schedule 11.02; or, as directed to Holdings,the Company or the Administrative Agent, to such other address as shall bedesignated by such party in a written notice to the other parties, and asdirected to any other party, at such other address as shall be designated bysuch party in a written notice to Holdings, the Company and the AdministrativeAgent.

 

(b)           All such notices, requests andcommunications shall, when transmitted by overnight delivery, or faxed, beeffective when delivered for overnight (next-day) delivery, or transmitted inlegible form by facsimile machine, respectively, or if mailed, upon the thirdBusiness Day after the date deposited into the mails, or if delivered, upondelivery; except that

 

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notices pursuant to Article II, III or X to theAdministrative Agent shall not be effective until actually received by theAdministrative Agent, notices pursuant to Article III to the L/C Issuershall not be effective until actually received by the L/C Issuer at the addressspecified for the “L/C Issuer” on Schedule 11.02 and notices pursuant toArticle II to the Swingline Lender shall not be effective untilactually received by the Swingline Lender, at the address specified for suchPerson on Schedule 11.02.

 

(c)           Any agreement of the AdministrativeAgent and the Lenders herein to receive certain notices by telephone orfacsimile is solely for the convenience and at the request of Holdings.  The Administrative Agent and the Lendersshall be entitled to rely on the authority of any Person purporting to be aPerson authorized by Holdings to give such notice and the Administrative Agentand the Lenders shall not have any liability to Holdings or other Person onaccount of any action taken or not taken by the Administrative Agent or theLenders in reliance upon such telephonic or facsimile notice.  The obligation of Holdings to repay theLoans and L/C Obligations shall not be affected in any way or to any extent byany failure by the Administrative Agent and the Lender to receive writtenconfirmation of any telephonic or facsimile notice or the receipt by theAdministrative Agent and the Lenders of a confirmation which is at variancewith the terms understood by the Administrative Agent and the Lenders to becontained in the telephonic or facsimile notice.

 

11.03       No Waiver;Cumulative Remedies.  No failure toexercise and no delay in exercising, on the part of the Administrative Agent orany Lender, any right, remedy, power or privilege hereunder, shall operate as awaiver thereof;  nor shall any single orpartial exercise of any right, remedy, power or privilege hereunder precludeany other or further exercise thereof or the exercise of any other right,remedy, power or privilege.  The rightsprovided for in this Agreement and the other Loan Documents are cumulative andare not exclusive of any other rights, powers, privileges or remedies providedby law or in equity, or under any other instrument, document or agreement nowexisting or hereafter arising.

 

11.04       Costs and Expenses.  Holdings shall:

 

(a)           whether or not the transactionscontemplated hereby are consummated, pay or reimburse Wells Fargo (including inits capacity as Administrative Agent and L/C Issuer) within five (5) BusinessDays after demand (subject to Section 5.02(c)) for all reasonable costsand expenses incurred by Wells Fargo (including in its capacity asAdministrative Agent and L/C Issuer) in connection with (i) thedevelopment, due diligence, preparation, delivery, administration and executionor enforcement of, and any amendment, supplement, waiver or modification to (ineach case, whether or not consummated), this Agreement, any Loan Document andany other documents prepared in connection herewith or therewith, (ii) theconsummation of the transactions contemplated hereby and thereby, and(iii) the syndication and assignment following the Effective Date of allor any part of Wells Fargo’s interest as Lender hereunder, including reasonableAttorney Costs incurred by Wells Fargo (including in its capacity asAdministrative Agent and L/C Issuer) with respect thereto;

 

(b)           pay or reimburse the AdministrativeAgent, the Co-Lead Arrangers and each Lender within five (5) Business Daysafter demand (subject to Section 5.02(c)) for all invoiced (or otherwisedocumented) costs and expenses (including reasonable Attorney Costs) incurredby

 

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them in connection with the enforcement, attempted enforcement, orpreservation of any rights or remedies under this Agreement or any other LoanDocument during the existence of an Event of Default or after acceleration ofthe Loans (including in connection with any “workout” or restructuringregarding the Loans, and including in any Insolvency Proceeding or appellateproceeding); and

 

(c)           pay or reimburse Wells Fargo(including in its capacity as Administrative Agent) within five (5) BusinessDays after demand (subject to Section 5.02(c)) for all appraisal(including the allocated cost of internal appraisal services), audit,environmental inspection and review (including the allocated cost of such internalservices), search and filing costs, fees and expenses, incurred or sustained byWells Fargo (including in its capacity as Administrative Agent) in connectionwith the matters referred to under subsections (a) and (b) of thissection.

 

11.05       Indemnification.

 

(a)           Whether or not the transactionscontemplated hereby are consummated, each of Holdings and the Company shallindemnify, defend and hold the Administrative Agent-Related Persons, and eachLender and each of its respective officers, directors, trustees, employees,counsel, Administrative Agents and attorneys-in-fact (each, an “IndemnifiedPerson”) harmless from and against any and all liabilities, claims,obligations, losses, damages, penalties, actions, judgments, suits, costs,settlement costs, charges, expenses and disbursements (including reasonableAttorney Costs) of any kind or nature whatsoever which may at any time(including at any time following repayment of the Loans, the termination of allSpecified Swap Contracts, the termination of the Letters of Credit and thetermination, resignation or replacement of the Administrative Agent orreplacement of any Lender)  be imposedon, incurred by or asserted against any such Person in any way relating to orarising out of this Agreement, the other Loan Documents or any documentcontemplated by or referred to therein, or the transactions contemplated herebyor the use of proceeds of the Loans provided hereunder, or any action taken oromitted by any such 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 orarising out of this Agreement, the Specified Swap Contracts, the Loans orLetters of Credit or the use of the proceeds thereof, whether or not anyIndemnified Person is a party thereto (all the foregoing, collectively, the “IndemnifiedLiabilities”); provided that neither Holdings nor the Company shall haveany obligation hereunder to any Indemnified Person with respect to IndemnifiedLiabilities to the extent they are found by a final decision of a court ofcompetent jurisdiction to have resulted primarily from the gross negligence orwillful misconduct of such Indemnified Person. The agreements in this section and in Section 11.04 shall survivethe termination of the Commitments, the termination or expiration of allLetters of Credit and the payment of all other Obligations.

 

(b)           (i) Each of Holdings and the Company shall indemnify, defend and holdharmless each Indemnified Person, from and against any and all liabilities,obligations, losses, damages, penalties, actions, judgments, suits, costs,charges, expenses or disbursements (including reasonable Attorney Costs and theallocated cost of internal environmental audit or review services), which maybe incurred by or asserted against such Indemnified Person in connection withor arising out of any pending or threatened investigation, litigation orproceeding, or any action taken by any Person, with respect to anyEnvironmental Claim arising

 

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out of or related to any property subject to a Mortgage in favor of theAdministrative Agent or any Lender.  Noaction taken by legal counsel chosen by the Administrative Agent or any Lenderin defending against any such investigation, litigation or proceeding orrequested remedial, removal or response action shall vitiate or any way impairHoldings’ and the Company’s obligation and duty hereunder to indemnify and holdharmless the Administrative Agent and each Lender.

 

(ii)           In no event shall any site visit,observation, or testing by the Administrative Agent or any Lender (or anycontractee of the Administrative Agent or any Lender) be deemed arepresentation or warranty that Hazardous Materials are or are not present in,on, or under, the site, or that there has been or shall be compliance with anyEnvironmental Law.  Neither Holdings norany other Person is entitled to rely on any site visit, observation, or testingby the Administrative Agent or any Lender. Neither the Administrative Agent nor any Lender owes any duty of care toprotect Holdings or any other Person against, or to inform Holdings or anyother Person of, any Hazardous Materials or any other adverse conditionaffecting any site or property.  Neitherthe Administrative Agent nor any Lender shall be obligated to disclose toHoldings or any other Person any report or findings made as a result of, or inconnection with, any site visit, observation, or testing by the AdministrativeAgent or any Lender.

 

(c)           The obligations in thissection shall survive payment of all other Obligations.  At the election of any Indemnified Person,Holdings shall defend such Indemnified Person using legal counsel satisfactoryto such Indemnified Person in such Person’s sole discretion, at the sole costand expense of Holdings.  All amountsowing under this Section 11.05(c) shall be paid within thirty (30)days after demand.

 

11.06       Marshalling;Payments Set Aside.  Neither theAdministrative Agent nor the Lenders shall be under any obligation to marshalany assets in favor of Holdings or any other Person or against or in payment ofany or all of the Obligations.  To theextent that any Loan Party makes a payment to the Administrative Agent or theLenders, or the Administrative Agent or the Lenders exercise their right ofset-off, and such payment or the proceeds of such set-off or any part thereofare subsequently invalidated, declared to be fraudulent or preferential, set asideor required (including pursuant to any settlement entered into by theAdministrative Agent or such Lender in its discretion) to be repaid to atrustee, receiver or any other party, in connection with any InsolvencyProceeding or otherwise, then (a) to the extent of such recovery theobligation or part thereof originally intended to be satisfied shall be revivedand continued in full force and effect as if such payment had not been made orsuch set-off had not occurred, and (b) each Lender severally agrees to payto the Administrative Agent upon demand its Proportionate Share of any amountso recovered from or repaid by the Administrative Agent.

 

11.07       Successors andAssigns.  The provisions of thisAgreement shall be binding upon and inure to the benefit of the parties heretoand their respective successors and assigns, except that a Loan Party may notassign or transfer any of its rights or obligations under this Agreementwithout the prior written consent of the Administrative Agent and each Lender.

 

11.08       Assignments,Participations, Etc.  (a)  Any Lender may, with the written consent ofthe Administrative Agent, the L/C Issuer and the Swingline Lender, and in thecase of an

 

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assignment of Revolving Loans, Holdings (which in each case shall notbe unreasonably withheld), at any time assign and delegate to one or moreEligible Assignees (each an “Assignee”) all, or any ratable part of all,of the Loans, the Commitment, the L/C Obligations and the other rights andobligations of such Lender hereunder; provided, however, that(i) no written consent of Holdings shall be required during the existenceof a Default or an Event of Default; (ii) no written consent of Holdingsor the Administrative Agent, the L/C Issuer or the Swingline Lender shall berequired in connection with any assignment and delegation by a Lender to anEligible Assignee that is another Lender or an Affiliate of such assigningLender, provided that if the proposed Assignee is another Lender, theLender seeking to assign its interests hereunder shall consult with Holdingsand the Administrative Agent before entering into such assignment;(iii) except in connection with an assignment of all of a Lender’s rightsand obligations with respect to its Commitment, Loans and L/C Obligations, anysuch assignment to an Eligible Assignee that is not a Lender hereunder shall beequal to or greater than $1,000,000; and (iv) each such partial assignmentshall be of a ratable part of the Loans, the Commitment and the otherinterests, rights and obligations hereunder of such assigning Lender; and providedfurther, however, that Holdings and the Administrative Agent maycontinue to deal solely and directly with such Lender in connection with theinterest so assigned to an Assignee until (A) such Lender and its Assigneeshall have delivered to Holdings and the Administrative Agent an Assignment andAcceptance Agreement substantially in the form of Exhibit E (“Assignmentand Acceptance”), together with any Note or Notes subject to suchassignment; (B) a written notice of such assignment, together with paymentinstructions, addresses and related information with respect to the Assignee,in substantially the form of the Notice of Assignment and Acceptance attached asSchedule 1 to the Assignment and Acceptance, shall have been given to Holdingsand the Administrative Agent by such Lender and the Assignee; (C) theassignor Lender or Assignee shall have paid to the Administrative Agent aprocessing fee in the amount of $3,500 (it being understood that with respectto an assignment to more than one Eligible Assignee within the same “family offunds” or by more than one Lender within the same “family of funds” to a singleEligible Assignee, only one such processing fee is payable for the series ofsimultaneous assignments) and (D) the Administrative Agent, Holdings, theL/C Issuer and the Swingline Lender each shall have provided any requiredconsent to such assignment in accordance with this Section 11.08(a).  In connection with any assignment by WellsFargo, its Swingline Commitment may be assigned in whole (and not part) andonly in connection with an assignment transaction involving an assignment ofall of its Commitment and Loans, and the Assignment and Acceptance may beappropriately modified to include an assignment and delegation of its SwinglineCommitment and any outstanding Swingline Loans.

 

(b)           From and after the date that theAdministrative Agent notifies the assignor Lender that the Administrative Agenthas received (and, if required, provided its consent with respect thereto andreceived any other consents required under this Section 11.08) anexecuted Assignment and Acceptance and payment of the above-referencedprocessing fee, (i) the Assignee thereunder shall be a party hereto and,to the extent that rights and obligations hereunder have been assigned to itpursuant to such Assignment and Acceptance, shall have the rights andobligations of a Lender under the Loan Documents, (ii) this Agreementshall be deemed to be amended to the extent, but only to the extent, necessaryto reflect the addition of the Assignee and the resulting adjustment of theCommitments arising therefrom, and (iii) the assignor Lender shall, to theextent that rights and obligations hereunder and under the other Loan Documentshave been assigned by it pursuant to such Assignment and Acceptance,

 

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relinquish its rights and be released from its obligations under theLoan Documents; provided, however, that the assignor Lender shallnot relinquish its rights under Article IV or under Section 11.04and Section 11.05 to the extent such rights relate to the time prior tothe effective date of the Assignment and Acceptance.  The Commitment allocated to each Assignee shall reduce theCommitment of the assigning Lender pro tanto.

 

(c)           Within five (5) Business Days afterHolding’s receipt of notice by the Administrative Agent that it has received(and, if necessary, consented to) an executed Assignment and Acceptance andpayment of the processing fee (and provided that the L/C Issuer, theSwingline Lender and Holdings each consent to such assignment in accordancewith Section 11.08(a)), Holdings shall execute and deliver to theAdministrative Agent any new Note requested by such Assignee evidencing suchAssignee’s assigned Loans and Commitment and, if the assignor Lender hasretained a portion of its Loans and its Commitment, replacement Notes asrequested by the assignor Lender evidencing the Loans and Commitment retainedby the assignor Lender (such Note to be in exchange for, but not in payment of,the Note held by such Lender, if any).

 

(d)           Any Lender may at any time sell toone or more commercial banks or other Persons not Affiliates of Holdings (a “Participant”)participating interests in any Loans, the Commitment of that Lender and theother interests of that Lender (the “originating Lender”) hereunder andunder the other Loan Documents; provided, however, that(i) the originating Lender’s obligations under this Agreement shall remainunchanged, (ii) the originating Lender shall remain solely responsible forthe performance of such obligations, (iii) Holdings, the L/C Issuer andthe Administrative Agent shall continue to deal solely and directly with theoriginating Lender in connection with the originating Lender’s rights andobligations under this Agreement and the other Loan Documents, and (iv) noLender shall transfer or grant any participating interest under which theParticipant has rights to approve any amendment to, or any consent or waiverwith respect to, this Agreement or any other Loan Document, except to theextent such amendment, consent or waiver would require unanimous consent of theLenders as described in the first proviso to Section 11.01. In thecase of any such participation, the Participant shall be entitled to thebenefit of Sections 4.01, 4.03 and 11.05 as though it werealso a Lender hereunder, and except that, if amounts outstanding under thisAgreement are due and unpaid, or shall have been declared or shall have becomedue and payable upon the occurrence of an Event of Default, each Participantshall be deemed to have the right of set-off in respect of its participatinginterest in amounts owing under this Agreement to the same extent as if theamount of its participating interest were owing directly to it as a Lenderunder this Agreement.

 

(e)           Notwithstandingany other provision in this Agreement, any Lender may at any time create asecurity interest in, or pledge, all or any portion of its rights under andinterest in this Agreement and any Note held by it (other than in respect ofSwingline Loans) in favor of (i) any Federal Reserve Bank in accordance withRegulation A of the FRB or U.S. Treasury Regulation 31 C.F.R. §203.14, and suchFederal Reserve Bank may enforce such pledge or security interest in any mannerpermitted under applicable law or (ii) a trustee or other representative forthe benefit of security holders of a Lender to secure obligations of suchLender.

 

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(f)            Notwithstanding any provision inthis Section 11.08 to the contrary, no registration or processing feeshall be payable in connection with any such Assignment by Wells Fargo.

 

11.09       Confidentiality.  Each Lender agrees to take and to cause itsAffiliates to take normal and reasonable precautions and exercise due care tomaintain the confidentiality of all information identified as “confidential” or“secret” by Holdings or the Company and provided to it by Holdings, the Companyor any Subsidiary, or by the Administrative Agent on Holdings’, the Company’sor such Subsidiary’s behalf, under this Agreement or any other Loan Document,and neither it nor any of its Affiliates shall use any such information otherthan in connection with or in enforcement of this Agreement and the other LoanDocuments or in connection with other business now or hereafter existing orcontemplated with Holdings, the Company or any Subsidiary; except to the extentsuch information (i) was or becomes generally available to the publicother than as a result of disclosure by such Lender, or (ii) was orbecomes available on a non-confidential basis from a source other than Holdingsor the Company, provided that such source is not bound by aconfidentiality agreement with Holdings or the Company known to such Lender; provided,however, that any Lender may disclose such information (A) at therequest or pursuant to any requirement of any Governmental Authority to whichsuch Lender is subject or in connection with an examination of such Lender byany such authority; (B) pursuant to subpoena or other court process;(C) when required to do so in accordance with the provisions of anyapplicable Requirement of Law; (D) to the extent reasonably required inconnection with any litigation or proceeding to which the Administrative Agent,any Lender or their respective Affiliates may be party; (E) to the extentreasonably required in connection with the exercise of any remedy hereunder orunder any other Loan Document; (F) to such Lender’s independent auditors,legal counsel and other professional advisors; (G) to any Participant orAssignee, actual or potential, or any actual or proposed contractualcounterparty (or its advisors) to any securitization, hedge, or otherderivative transaction relating to the parties’ obligations hereunder, providedthat such Person agrees in writing to keep such information confidential to thesame extent required of the Lenders hereunder; (H) as to any Lender or itsAffiliate, as expressly permitted under the terms of any other document oragreement regarding confidentiality to which Holdings, the Company or anySubsidiary is party or is deemed party with such Lender or such Affiliate; and(I) to its Affiliates and provided, further, however,that the parties hereto (and each employee, representative or other agentthereof) may disclose to any and all persons, without limitation of any kind,the “structure” and “tax aspects” (in each case, within the meaning of TreasuryRegulation section 1.6011-4T) of the transactions contemplated hereby andall materials of any kind (including opinions or other tax analyses) that areor have been provided to such Person relating to such structure and taxaspects, except that, with respect to any document or similar item that ineither case contains information concerning such tax structure or tax aspectsof the transactions contemplated hereby as well as other information, thisproviso shall only apply to such portions of the document or similar item thatrelate to such  tax structure or tax aspects of the transactionscontemplated hereby.

 

11.10       Set-off.  In addition to any rights and remedies ofthe Lenders provided by law, if an Event of Default exists or the Loans havebeen accelerated, each Lender is authorized at any time and from time to time,without prior notice to any Loan Party, any such notice being waived by suchLoan Party to the fullest extent permitted by law, to set off and apply any andall deposits (general or special, time or demand, provisional or final) at anytime held by, and other

 

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indebtedness at any time owing by, such Lender to or for the credit orthe account of such Loan Party against any and all Obligations owing to suchLender, now or hereafter existing, irrespective of whether or not theAdministrative Agent or such Lender shall have made demand under this Agreementor any Loan Document and although such Obligations may be contingent orunmatured.  Each Lender agrees promptlyto notify such Loan Party and the Administrative Agent after any such set-offand application made by such Lender; provided, however, that thefailure to give such notice shall not affect the validity of such set-off andapplication.  NOTWITHSTANDING THEFOREGOING, NO LENDER SHALL EXERCISE, OR ATTEMPT TO EXERCISE, ANY RIGHT OFSET-OFF, BANKER’S LIEN, OR THE LIKE, AGAINST ANY DEPOSIT ACCOUNT OR PROPERTY OFHOLDINGS OR ANY SUBSIDIARY OF HOLDINGS HELD OR MAINTAINED BY THE LENDER WITHOUTTHE UNANIMOUS PRIOR WRITTEN CONSENT OF THE LENDERS.

 

11.11       [Intentionallyomitted.]

 

11.12       Guaranty.  (a)  Guaranty.  Each of the Guarantors unconditionally andirrevocably, jointly and severally guarantees to the Administrative Agent, theCo-Lead Arrangers and the Lenders, and their respective successors, endorsers,transferees and assigns (the “Guaranteed Persons”), the full and promptpayment when due (whether at stated maturity, by required prepayment,declaration, acceleration, demand or otherwise) and performance of allindebtedness, liabilities and other obligations of Holdings to any GuaranteedPerson, whether arising out of or in connection with this Agreement, any otherLoan Document or otherwise, including all unpaid principal of the Loans, allL/C Obligations, all interest accrued thereon, all fees due under thisAgreement and all other amounts payable by Holdings to any Guaranteed Personthereunder or in connection therewith. The terms “indebtedness,” “liabilities” and “obligations” are usedherein in their most comprehensive sense and include any and all advances,debts, obligations and liabilities, now existing or hereafter arising, whethervoluntary or involuntary and whether due or not due, absolute or contingent,liquidated or unliquidated, determined or undetermined, and whether recoveryupon such indebtedness, liabilities and obligations may be or hereafter becomeunenforceable or shall be an allowed or disallowed claim under the BankruptcyCode or other applicable law.  Theforegoing indebtedness, liabilities and other obligations of Holdings shallhereinafter be collectively referred to as the “Guaranteed Obligations.”  The Guaranteed Obligations include interestwhich, but for an Insolvency Proceeding, would have accrued on such GuaranteedObligations, whether or not a claim is allowed against Holdings for suchinterest in any such Insolvency Proceeding.

 

(b)           Separate Obligation.  Each Guarantor acknowledges and agrees(i) that the Guaranteed Obligations are separate and distinct from anyindebtedness, obligations or liabilities arising under or in connection withany other agreement, instrument or guaranty, including under any provision ofthis Agreement other than this Section 11.12, executed at any time bysuch Guarantor in favor of any Guaranteed Person, and (ii) such Guarantorshall pay and perform all of the Guaranteed Obligations as required under this Section11.12, and each Guaranteed Person may enforce any and all of its rights andremedies hereunder, without regard to any other agreement, instrument orguaranty, including any provision of this Agreement other than this Section11.12, at any time executed by such Guarantor in favor of any GuaranteedPerson, regardless of whether or not any such other agreement, instrument orguaranty, or any provision thereof or hereof, shall for any reason becomeunenforceable or any of the indebtedness,

 

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obligations or liabilities thereunder shall have been discharged,whether by performance, avoidance or otherwise.  Each Guarantor acknowledges that in providing benefits toHoldings and such Guarantor, the Guaranteed Persons are relying upon theenforceability of this Section 11.12 and the Guaranteed Obligationsas separate and distinct indebtedness, obligations and liabilities of suchGuarantor, and each Guarantor agrees that each Guaranteed Person would bedenied the full benefit of their bargain if at any time this Section 11.12or the Guaranteed Obligations were treated any differently.  The fact that the Guaranty of each Guarantoris set forth in this Agreement rather than in a separate guaranty document isfor the convenience of Holdings and the Guarantors and shall in no way impairor adversely affect the rights or benefits of any Guaranteed Person under this Section11.12.  Each Guarantor agrees toexecute and deliver a separate agreement, immediately upon request at any timeof any Guaranteed Person, evidencing such Guarantor’s obligations under this Section11.12.  Upon the occurrence of any Eventof Default, a separate action or actions may be brought against each Guarantor,whether or not Holdings or any other Guarantor or Person is joined therein or aseparate action or actions are brought against Holdings or any other Guarantoror Person.

 

(c)           Limitation of Guaranty.  To the extent that any court of competentjurisdiction shall impose by final judgment under applicable law (including theCalifornia Uniform Fraudulent Transfer Act and §§544 and 548 of the BankruptcyCode) any limitations on the amount of any Guarantor’s liability with respectto the Guaranteed Obligations which any Guaranteed Person can enforce underthis Section 11.12, each Guaranteed Person by its acceptance hereofaccepts such limitation on the amount of such Guarantor’s liability hereunderto the extent needed to make this Section 11.12 fully enforceable andnonavoidable.

 

(d)           Liability of Guarantor.  The liability of each Guarantor under this Section 11.12shall be irrevocable, absolute, independent and unconditional, and shall not beaffected by any circumstance which might constitute a discharge of a surety orguarantor other than the indefeasible payment and performance in full of allGuaranteed Obligations.  In furtheranceof the foregoing and without limiting the generality thereof, each Guarantoragrees as follows:

 

(i)            such Guarantor’s liability hereundershall be the immediate, direct, and primary obligation of such Guarantor andshall not be contingent upon any Guaranteed Person’s exercise or enforcement ofany remedy it may have against Holdings or any other Person, or against anycollateral or other security for any Guaranteed Obligations;

 

(ii)           this Guaranty is a guaranty ofpayment when due and not merely of collectibility;

 

(iii)          such Guarantor’s payment of a portion,but not all, of the Guaranteed Obligations shall in no way limit, affect,modify or abridge such Guarantor’s liability for any portion of the GuaranteedObligations remaining unsatisfied; and

 

(iv)          such Guarantor’s liability withrespect to the Guaranteed Obligations shall remain in full force and effectwithout regard to, and shall not be impaired or affected by, nor shall suchGuarantor be exonerated or discharged by, any of the following events:

 

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(A)          any Insolvency Proceeding;

 

(B)           any limitation, discharge, orcessation of the liability of Holdings or any other guarantor or Person for anyGuaranteed Obligations due to any statute, regulation or rule of law, or anyinvalidity or unenforceability in whole or in part of any of the GuaranteedObligations or the Loan Documents;

 

(C)           any merger, acquisition,consolidation or change in structure of Holdings or any other Guarantor orPerson, or any sale, lease, transfer or other disposition of any or all of theassets or shares of Holdings or any other Guarantor or other Person;

 

(D)          any assignment or other transfer, inwhole or in part, of any Guaranteed Person’s interests in and rights under thisGuaranty or the other Loan Documents;

 

(E)           any claim, defense, counterclaim orset-off, other than that of prior performance, that Holdings, such Guarantor,any other guarantor or other Person may have or assert, including any defenseof incapacity or lack of corporate or other authority to execute any of the LoanDocuments;

 

(F)           any Guaranteed Person’s amendment,modification, renewal, extension, cancellation or surrender of any LoanDocument or any Guaranteed Obligations;

 

(G)           any Guaranteed Person’s exercise ornonexercise of any power, right or remedy with respect to any GuaranteedObligations or any collateral;

 

(H)          any Guaranteed Person’s vote, claim,distribution, election, acceptance, action or inaction in any InsolvencyProceeding; or

 

(I)            any other guaranty, whether by anyGuarantor or any other Person, of all or any part of the Guaranteed Obligationsor any other indebtedness, obligations or liabilities of any Guaranteed Person.

 

(e)           Consents of Guarantor.  Each Guarantor hereby unconditionallyconsents and agrees that, without notice to or further assent from suchGuarantor:

 

(i)            the principal amount of theGuaranteed Obligations may be increased or decreased and additionalindebtedness or obligations of Holdings under the Loan Documents may beincurred and the time, manner, place or terms of any payment under any LoanDocument be extended or changed, by one or more amendments, modifications,renewals or extensions of any Loan Document or otherwise;

 

(ii)           the time for Holdings’ (or any otherPerson’s) performance of or compliance with any term, covenant or agreement onits part to be performed or observed under any Loan Document may be extended,or such performance or compliance waived, or failure in or departure from suchperformance or compliance consented to, all in such manner and upon such termsas any Guaranteed Person (or the Majority Lenders, as the case may be) may deemproper;

 

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(iii)          each Guaranteed Person may request andaccept other guarantees and may take and hold other security as collateral forthe Guaranteed Obligations, and may, from time to time, in whole or in part,exchange, sell, surrender, release, subordinate, modify, waive, rescind,compromise or extend such other guaranties or security and may permit orconsent to any such action or the result of any such action, and may apply suchsecurity and direct the order or manner of sale thereof;

 

(iv)          each Guaranteed Person may exercise,or waive or otherwise refrain from exercising, any other right, remedy, poweror privilege even if the exercise thereof affects or eliminates any right ofsubrogation or any other right of such Guarantor against Holdings.

 

(f)            Guarantor’s Waivers.  Each Guarantor waives and agrees not toassert:

 

(i)            any right to require theAdministrative Agent, the L/C Issuer or any Lender to marshal assets in favorof Holdings, the Guarantors, any other guarantor or any other Person, toproceed against Holdings, any other guarantor or any other Person, to proceedagainst or exhaust any of the Collateral, to give notice of the terms, time andplace of any public or private sale of personal property security constitutingthe Collateral or other collateral for the Guaranteed Obligations or complywith any other provisions of Chapter 6 of Division 9 of the UCC (or any equivalentprovision of any other applicable law) or to pursue any other right, remedy,power or privilege of the Administrative Agent, the L/C Issuer or any Lenderwhatsoever;

 

(ii)           the defense of the statute oflimitations in any action hereunder or for the collection or performance of theGuaranteed Obligations;

 

(iii)          any defense arising by reason of anylack of corporate or other authority or any other defense of Holdings, suchGuarantor or any other Person;

 

(iv)          any defense based upon any GuaranteedPerson’s errors or omissions in the administration of the GuaranteedObligations;

 

(v)           any rights to set-offs andcounterclaims;

 

(vi)          without limiting the generality of theforegoing, to the fullest extent permitted by law, any defenses or benefitsthat may be derived from or afforded by applicable law limiting the liabilityof or exonerating guarantors or sureties, or which may conflict with the termsof this Section 11.12;

 

(vii)         any defense based upon an election ofremedies (including, if available, an election to proceed by nonjudicialforeclosure) which destroys or impairs the subrogation rights of such Guarantoror the right of such Guarantor to proceed against Holdings or any other obligorof the Guaranteed Obligations for reimbursement;

 

(viii)        without limiting the generality of theforegoing, to the fullest extent permitted by law, any defenses or benefitsthat may be derived from or afforded by applicable law limiting the liabilityof or exonerating guarantors or sureties, or which may conflict with the termsof this Section 11.12, including any and all benefits that otherwisemight be available to

 

109

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such Guarantor under California Civil Code §§1432, 2809, 2810, 2815,2819, 2839, 2845, 2848, 2849, 2850, 2899 and 3433 and California Code of CivilProcedure §§580a, 580b, 580d and 726 or Texas Property Code §§51.003 —51.005.  Accordingly, each Guarantorwaives all rights and defenses that such Guarantor may have because Holdings’debt is secured by real property.  Thismeans, among other things:  (A) theAdministrative Agent, the L/C Issuer and the Lenders may collect from suchGuarantor without first foreclosing on any real or personal property Collateralpledged by Holdings or such Guarantor; and (B) if the Administrative Agentforecloses on any real property Collateral pledged by Holdings or suchGuarantor:  (1) the amount of thedebt may be reduced only by the price for which that Collateral is sold at theforeclosure sale, even if the Collateral is worth more than the sale price, and(2) the Administrative Agent, the L/C Issuer and the Lenders may collectfrom such Guarantor even if the Administrative Agent, by foreclosing on thereal property Collateral, has destroyed any right such Guarantor may have tocollect from Holdings.  This is anunconditional and irrevocable waiver of any rights and defenses such Guarantormay have because Holdings’ debt is secured by real property.  These rights and defenses include, but arenot limited to, any rights of defenses based upon section 580a, 580b, 580dor 726 of the California Code of Civil Procedure or sections 51.003 — 51.005 ofthe Texas Property Code; and

 

(ix)           any and all notice of the acceptanceof this Guaranty, and any and all notice of the creation, renewal,modification, extension or accrual of the Guaranteed Obligations, or thereliance by any Guaranteed Person upon this Guaranty, or the exercise of anyright, power or privilege hereunder. The Guaranteed Obligations shall conclusively be deemed to have beencreated, contracted, incurred and permitted to exist in reliance upon thisGuaranty.  Each Guarantor waivespromptness, diligence, presentment, protest, demand for payment, notice ofdefault, dishonor or nonpayment and all other notices to or upon Holdings, suchGuarantor or any other Person with respect to the Guaranteed Obligations.

 

(g)           Financial Condition of Holdings.  No Guarantor shall have any right to requireany Guaranteed Person to obtain or disclose any information with respectto:  the financial condition orcharacter of Holdings or the ability of Holdings to pay and perform theGuaranteed Obligations; the Guaranteed Obligations; any collateral or othersecurity for any or all of the Guaranteed Obligations; the existence ornonexistence of any other guarantees of all or any part of the GuaranteedObligations; any action or inaction on the part of any Guaranteed Person or anyother Person; or any other matter, fact or occurrence whatsoever.  Each Guarantor hereby acknowledges that ithas undertaken its own independent investigation of the financial condition ofHoldings and the other Loan Parties and all other matters pertaining to thisGuaranty and further acknowledges that it is not relying in any manner upon anyrepresentation or statement of any Guaranteed Person with respect thereto.

 

(h)           Subrogation.  Until the Guaranteed Obligations shall besatisfied in full and the Commitments shall be terminated, each Guarantor shallnot have, and shall not directly or indirectly exercise (i) any rightsthat it may acquire by way of subrogation under this Section 11.12,by any payment hereunder or otherwise, (ii) any rights of contribution,indemnification, reimbursement or similar suretyship claims arising out of thisSection 11.12 or (iii) any other right which it might otherwisehave or acquire (in any way whatsoever) which could entitle it at any time toshare or participate in any right, remedy or security of any Guaranteed Personas against Holdings or other guarantors, whether in connection with this

 

110

----

 

Section 11.12, any of the other LoanDocuments or otherwise.  If any amountshall be paid to any Guarantor on account of the foregoing rights at any timewhen all the Guaranteed Obligations shall not have been paid in full, suchamount shall be held in trust for the benefit of each Guaranteed Person andshall forthwith be paid to the Administrative Agent to be credited and appliedto the Guaranteed Obligations, whether matured or unmatured, in accordance withthe terms of the Loan Documents.

 

(i)            Continuing Guaranty.  This Guaranty is a continuing guaranty andagreement of subordination and shall continue in effect and be binding uponeach Guarantor until termination of the Commitments and payment and performancein full of all Guaranteed Obligations, including Guaranteed Obligations whichmay exist continuously or which may arise from time to time under successivetransactions, and each Guarantor expressly acknowledges that this Guarantyshall remain in full force and effect notwithstanding that there may be periodsin which no Guaranteed Obligations exist.

 

(j)            Reinstatement.  This Guaranty shall continue to be effectiveor shall be reinstated and revived, as the case may be, if, for any reason, anypayment of the Guaranteed Obligations by or on behalf of Holdings (or receiptof any proceeds of collateral) shall be rescinded, invalidated, declared to befraudulent or preferential, set aside, voided or otherwise required to berepaid to Holdings, its estate, trustee, receiver or any other Person(including under the Bankruptcy Code or other state or federal law), or mustotherwise be restored by any Guaranteed Person, whether as a result ofInsolvency Proceedings or otherwise. All losses, damages, costs and expenses that any Guaranteed Person maysuffer or incur as a result of any voided or otherwise set aside payments shallbe specifically covered by the indemnity in favor of the Lenders and theAdministrative Agent contained in Section 11.05.

 

(k)           Substantial Benefits.  The funds that have been borrowed from theLenders by Holdings have been and are to be contemporaneously used for thedirect or indirect benefit of Holdings and each Guarantor.  It is the position, intent and expectationof the parties that Holdings and each Guarantor have derived and will derivesignificant and substantial direct or indirect benefits from the accommodationsthat have been made by the Lenders under the Loan Documents.

 

(l)            Knowing and Explicit Waivers.  EACH GUARANTOR ACKNOWLEDGES THAT IT EITHERHAS OBTAINED THE ADVICE OF LEGAL COUNSEL OR HAS HAD THE OPPORTUNITY TO OBTAINSUCH ADVICE IN CONNECTION WITH THE TERMS AND PROVISIONS OF THIS SECTION11.12.  EACH GUARANTOR ACKNOWLEDGESAND AGREES THAT EACH OF THE WAIVERS AND CONSENTS SET FORTH HEREIN ARE MADE WITHFULL KNOWLEDGE OF THEIR SIGNIFICANCE AND CONSEQUENCES, AND THAT ALL SUCHWAIVERS AND CONSENTS HEREIN ARE EXPLICIT AND KNOWING AND WHICH EACH GUARANTOREXPECTS TO BE FULLY ENFORCEABLE.

 

(m)          Release of Subsidiary Guarantors.  Holdings may at any time deliver to theAdministrative Agent a certificate from a Responsible Officer of Holdingscertifying as of the date of the certificate that, after the consummation ofthe transaction or series of transactions described in such certificate (whichcertification shall also state that such transactions,

 

111

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individually or in the aggregate, will be in compliance with the termsand conditions of this Agreement, including to the extent applicable Section8.02 and Section 8.03, and that no Event of Default existed, existsor will exist, as the case may be, immediately before, as a result of orimmediately after giving effect to such transaction or transactions andtermination), the Guarantor identified in such certification will no longer bea Subsidiary of Holdings.  Effectiveupon the consummation of the transaction or series of transactions described insuch certificate, the Subsidiary identified in such certification shallthereupon automatically cease to be a Guarantor hereunder and shall cease to bea party hereto and shall thereupon automatically be released from itsobligations under this Section 11.12 and under the Security Agreement,and all Liens in favor of the Administrative Agent and the Lenders under theCollateral Documents in respect of the property of such Subsidiary shallthereupon terminate.  Holdings shallpromptly notify the Administrative Agent of the consummation of any such transactionor series of transactions.  TheAdministrative Agent, on behalf of the Lenders, shall, at Holdings’ expense,execute and deliver such instruments as Holdings may reasonably request toevidence such release and Lien termination.

 

11.13       Notificationof Addresses, Lending Offices, Etc.  Each Lender shall notify the Administrative Agent in writing ofany changes in the address to which notices to such Lender should be directed,of addresses of any Lending Office, of payment instructions in respect of allpayments to be made to it hereunder and of such other administrativeinformation as the Administrative Agent shall reasonably request.

 

11.14       Counterparts.  This Agreement may be executed in any numberof separate counterparts, each of which, when so executed, shall be deemed anoriginal, and all of said counterparts taken together shall be deemed toconstitute but one and the same instrument.

 

11.15       Severability.  The illegality or unenforceability of anyprovision of this Agreement or any instrument or agreement required hereundershall not in any way affect or impair the legality or enforceability of theremaining provisions of this Agreement or any instrument or agreement requiredhereunder.

 

11.16       No ThirdParties Benefited.  ThisAgreement is made and entered into for the sole protection and legal benefit ofHoldings, the Company, the Lenders, the Administrative Agent and theAdministrative Agent-Related Persons, the Indemnified Persons and theirpermitted successors and assigns, and no other Person shall be a direct orindirect legal beneficiary of, or have any direct or indirect cause of actionor claim in connection with, this Agreement or any of the other Loan Documents.

 

11.17       Governing Lawand Jurisdiction. (a)  THIS AGREEMENT AND ANY NOTESSHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OFCALIFORNIA; PROVIDED THAT THE ADMINISTRATIVE AGENT AND THE LENDERS SHALL RETAINALL RIGHTS ARISING UNDER FEDERAL LAW.

 

(b)           ANY LEGAL ACTION OR PROCEEDING WITHRESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THECOURTS OF THE STATE OF CALIFORNIA OR OF THE UNITED STATES SITTING IN THE STATEOF CALIFORNIA, AND BY EXECUTION AND DELIVERY OF THIS

 

112

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AGREEMENT, EACH OF THE LOAN PARTIES, THE ADMINISTRATIVE AGENT AND THELENDERS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THENON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE LOAN PARTIES, THE ADMINISTRATIVE AGENT AND THE LENDERSIRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OFVENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW ORHEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTIONIN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO.  THE LOAN PARTIES, THE ADMINISTRATIVE AGENTAND THE LENDERS EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHERPROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY CALIFORNIA LAW.

 

(c)           Nothing contained in this sectionshall override any contrary provision contained in any Specified Swap Contract.

 

11.18       Waiver of JuryTrial.  THE LOAN PARTIES, THELENDERS AND THE ADMINISTRATIVE AGENT EACH WAIVE THEIR RESPECTIVE RIGHTS TO ATRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ORRELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONSCONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATIONOF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANYADMINISTRATIVE AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER WITHRESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE.  THE LOAN PARTIES, THE LENDERS AND THEADMINISTRATIVE AGENT EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BETRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIRRESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION ASTO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR INPART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THEOTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF.  THIS WAIVER SHALL APPLY TO ANY SUBSEQUENTAMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THEOTHER LOAN DOCUMENTS.

 

11.19       EntireAgreement.  This Agreement,together with the other Loan Documents, embodies the entire agreement andunderstanding among the Loan Parties, the L/C Issuer, the Swingline Lender, theLenders and the Administrative Agent, and supersedes all prior orcontemporaneous agreements and understandings of such Persons, verbal orwritten, relating to the subject matter hereof and thereof.

 

11.20       Treatmentof Existing Credit Agreement. Immediately prior to the Effective Date, all loans outstanding under theExisting Credit Agreement shall be purchased by the Lenders in accordance with Section2.01 and Section 2.02, and all outstanding letters of credit issuedunder the Existing Credit Agreement shall be deemed to be Letters of Creditissued and outstanding under this Agreement (and all accrued unpaid feesthereon shall begin to accrue at

 

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the rates set forth in this Agreement).  On and after the Effective Date, this Agreement and the otherLoan Documents shall amend, restate and supercede in their entirety and replacethe Existing Credit Agreement and the other documents related thereto (otherthan the Mortgages, any UCC filings and any filings made with the U.S. Patentand Trademark Office evidencing the Administrative Agent’s and Lenders’continuing Lien on, and security interest in, any of the Collateral, which Lienand security interest shall be deemed to continue from the date such Mortgageor filing was recorded or filed, as applicable and maintain their priorityaccordingly); provided, however, that the execution and deliveryof this Agreement and the other Loan Documents shall not (a) operate as awaiver of any right, power or remedy of the Existing Lenders under the ExistingCredit Agreement and the other related documents, except to the extentexpressly waived in this Agreement and the other Loan Documents, (b)extinguish, impair or constitute a novation of any obligations of Holdings orthe Guarantors under the Existing Credit Agreement or the related documentsexcept to the extent any such obligation is actually satisfied by Holdings or aGuarantor thereunder or (c) extinguish or impair any indemnification or similarrights under the Existing Credit Agreement which by their terms would survivethe termination of the Existing Credit Agreement.  Promptly upon the closing of this Agreement and the receipt bythe Lenders of their respective Notes, such Lenders that were also ExistingLenders under the Existing Credit Agreement shall return to Holdings any Notesdelivered to such Existing Lender in connection with the Existing CreditAgreement marked “cancelled”.

 

*(remainder of page intentionally left blank)*

 

114

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IN WITNESS WHEREOF, theparties hereto have caused this Agreement to be duly executed and delivered inSan Francisco, California, by their proper and duly authorized officers as ofthe day and year first above written.

 
|   | BUILDING MATERIALS  HOLDING CORPORATION |
|--------|-----------------------------------------|
|   |                                    |
|   | By:                                     |   |
|   |                                    |
|   | Title:                                  |   |
|   |                                    |
|   | BMC WEST CORPORATION                    |
|   |                                    |
|   | By:                                     |   |
|   |                                    |
|   | Title:                                  |   |
|   |                                    |
|   | BMC WEST CORPORATION  SOUTHCENTRAL      |
|   |                                    |
|   | By:                                     |   |
|   |                                    |
|   | Title:                                  |   |
|   |                                    |
|   | BMCW SOUTHCENTRAL, L.P.                 |
|   |                                    |
|   | By:                                     | BMC WEST CORPORATION |
|   |                                    | SOUTHCENTRAL, its  General Partner |
|   |                                    |
|   | By:                                     |   |
|   |                                    |
|   | Title:                                  |   |
|        |                                         |  |  |  |  |  |  |  |  |

 

----

 
|   | BMCW, LLC                                                        |
|--------|------------------------------------------------------------------|
|   |                                                             |
|   | By: BMC WEST  CORPORATION, its Managing Member                   |
|   |                                                             |
|   | By:                                                              |   |
|   |                                                             |
|   | Title:                                                           |   |
|   |                                                             |
|   | BMC CONSTRUCTION, INC.                                           |
|   |                                                             |
|   | By:                                                              |   |
|   |                                                             |
|   | Title:                                                           |   |
|   |                                                             |
|   | KNIPP BROTHERS  INDUSTRIES, LLC                                  |
|   |                                                             |
|   | By: BMC Framing, Inc.,  its Managing Member                      |
|   |                                                             |
|   | By:                                                              |   |
|   |                                                             |
|   | Title:                                                           |   |
|   |                                                             |
|   | KB INDUSTRIES LIMITED  PARTNERSHIP                               |
|   |                                                             |
|   | By: BUILDING MATERIALS  HOLDING CORPORATION, its General Partner |
|   |                                                             |
|   | By:                                                              |   |
|   |                                                             |
|   | Title:                                                           |   |
|   |                                                             |
|   | VAUGHN ROAD, LLC                                                 |
|   |                                                             |
|   | By: BMC CONSTRUCTION,  INC., its Managing Member                 |
|   |                                                             |
|   | By:                                                              |   |
|   |                                                             |
|   | Title:                                                           |   |
|        |                                                                  |  |  |

 

----

 
|   | KBI CONCRETE, LLC                                |
|--------|--------------------------------------------------|
|   |                                             |
|   | By: BMC CONSTRUCTION,  INC., its Managing Member |
|   |                                             |
|   | By:                                              |   |
|   |                                             |
|   | Title:                                           |   |
|   |                                             |
|   | TOTAL CONCRETE, LLC                              |
|   |                                             |
|   | By: KBI CONCRETE, INC.,  its Managing Member     |
|   |                                             |
|   | By:                                              |   |
|   |                                             |
|   | Title:                                           |   |
|        |                                                  |  |  |

 

----

 
|   | WELLS FARGO BANK,  NATIONAL ASSOCIATION,                                                                      |
|--------|---------------------------------------------------------------------------------------------------------------|
|   | as Administrative  Agent, Co-Lead Arranger, L/C Issuer, Swingline Lender, Revolving Lender and  Term B Lender |
|   |                                                                                                          |
|   | By:                                                                                                           |   |
|   |                                                                                                          |
|   | Title:                                                                                                        |   |
|        |                                                                                                               |  |  |

 

----

 
|   | GENERAL ELECTRIC  CAPITAL CORPORATION,                             |
|--------|--------------------------------------------------------------------|
|   | as Co-Lead Arranger, as  a Revolving Lender and as a Term B Lender |
|   |                                                               |
|   | By:                                                                |   |
|   |                                                               |
|   | Title:                                                             |   |
|        |                                                                    |  |  |

 

----

 
|   | U.S. BANK NATIONAL  ASSOCIATION,                                    |
|--------|---------------------------------------------------------------------|
|   | as Syndication Agent,  as a Revolving Lender and as a Term B Lender |
|   |                                                                |
|   | By:                                                                 |   |
|   |                                                                |
|   | Title:                                                              |   |
|        |                                                                     |  |  |

 

----

 
|   | UNION BANK OF  CALIFORNIA, N.A.,                                      |
|--------|-----------------------------------------------------------------------|
|   | as Documentation Agent,  as a Revolving Lender and as a Term B Lender |
|   |                                                                  |
|   | By:                                                                   |   |
|   |                                                                  |
|   | Title:                                                                |   |
|        |                                                                       |  |  |

 

----

 
|   | LASALLE BUSINESS  CREDIT, LLC,                |
|--------|-----------------------------------------------|
|   | as a Revolving Lender  and as a Term B Lender |
|   |                                          |
|   | By:                                           |   |
|   |                                          |
|   | Title:                                        |   |
|        |                                               |  |  |

 

----

 
|   | HARRIS NESBITT,       |
|--------|-----------------------|
|   | as a Revolving Lender |
|   |                  |
|   | By:                   |   |
|   |                  |
|   | Title:                |   |
|        |                       |  |  |

 

----

 
|   | WASHINGTON MUTUAL BANK, |
|--------|-------------------------|
|   | as a Revolving Lender   |
|   |                    |
|   | By:                     |   |
|   |                    |
|   | Title:                  |   |
|        |                         |  |  |

 

----

 
|   | BNP PARIBAS,                                  |
|--------|-----------------------------------------------|
|   | as a Revolving Lender  and as a Term B Lender |
|   |                                          |
|   | By:                                           |   |
|   |                                          |
|   | Title:                                        |   |
|        |                                               |  |  |

 

----

 
|   | WEST COAST BANK,                              |
|--------|-----------------------------------------------|
|   | as a Revolving Lender  and as a Term B Lender |
|   |                                          |
|   | By:                                           |   |
|   |                                          |
|   | Title:                                        |   |
|        |                                               |  |  |

 

----

 
|   | GUARANTY BANK,                                |
|--------|-----------------------------------------------|
|   | as a Revolving Lender  and as a Term B Lender |
|   |                                          |
|   | By:                                           |   |
|   |                                          |
|   | Title:                                        |   |
|        |                                               |  |  |

 

----

 
|   | COMERICA WEST  INCORPORATED, |
|--------|------------------------------|
|   | as a Revolving Lender        |
|   |                         |
|   | By:                          |   |
|   |                         |
|   | Title:                       |   |
|        |                              |  |  |

 

----

 
|   | WHITNEY NATIONAL BANK,                        |
|--------|-----------------------------------------------|
|   | as a Revolving Lender  and as a Term B Lender |
|   |                                          |
|   | By:                                           |   |
|   |                                          |
|   | Title:                                        |   |
|        |                                               |  |  |

 

----

 
|   | BANK LEUMI USA,                               |
|--------|-----------------------------------------------|
|   | as a Revolving Lender  and as a Term B Lender |
|   |                                          |
|   | By:                                           |   |
|   |                                          |
|   | Title:                                        |   |
|        |                                               |  |  |

 

----

 
|   | IDB BANK,                                     |
|--------|-----------------------------------------------|
|   | as a Revolving Lender  and as a Term B Lender |
|   |                                          |
|   | By:                                           |   |
|   |                                          |
|   | Title:                                        |   |
|        |                                               |  |  |

 

----

 

**SCHEDULE 2.01**

 

**COMMITMENTSAND PROPORTIONATE SHARES**

 
| **Banks**                              |   | **Revolving  Commitment** |        | **Proportionate  Share  (Revolving  Commitment)** |          |
|----------------------------------------|--------|---------------------------|-------------|---------------------------------------------------|---------------|
| Wells Fargo Bank, National Association |   | $                         | 28,000,000  |                                              | 16.000000000  | % |
| General Electric Capital Corporation   |   | $                         | 25,000,000  |                                              | 14.285714286  | % |
| U.S. Bank National Association         |   | $                         | 22,000,000  |                                              | 12.571428571  | % |
| Union Bank of California, N.A.         |   | $                         | 20,000,000  |                                              | 11.428571429  | % |
| LaSalle Business Credit, LLC           |   | $                         | 10,000,000  |                                              | 5.714285714   | % |
| Harris Nesbitt                         |   | $                         | 15,000,000  |                                              | 8.571428571   | % |
| Washington Mutual Bank                 |   | $                         | 15,000,000  |                                              | 8.571428571   | % |
| BNP Paribas                            |   | $                         | 5,000,000   |                                              | 2.857142857   | % |
| West Coast Bank                        |   | $                         | 5,000,000   |                                              | 2.857142857   | % |
| Guaranty Bank                          |   | $                         | 5,000,000   |                                              | 2.857142857   | % |
| Comerica West Incorporated             |   | $                         | 10,000,000  |                                              | 5.714285714   | % |
| Whitney National Bank                  |   | $                         | 8,000,000   |                                              | 4.571428571   | % |
| Bank Leumi USA                         |   | $                         | 3,500,000   |                                              | 2.000000000   | % |
| IDB Bank                               |   | $                         | 3,500,000   |                                              | 2.000000000   | % |
| TOTAL                                  |   | $                         | 175,000,000 |                                              | 100.000000000 | % |

 

1

----

 

**SCHEDULE 2.09**

 

**TERM B LOANAMORTIZATION SCHEDULE**

 
| **Date** |   | **% of Total Due** |    | **Payment Due Based on  Aggregate Term B  Commitment as of  Effective Date** |       | **Payment Due Assuming  Advancement of  Maximum Allowable  Additional Term B  Loans as of Subsequent  Effective Date** |   |
|----------|--------|--------------------|---------|------------------------------------------------------------------------------|------------|------------------------------------------------------------------------------------------------------------------------|--------|
|     |   |               |    |                                                                         |       |                                                                                                                   |   |
| 9/30/03  |   | 0.25               | %       | $                                                                            | 312,500    |                                                                                                                   | $      | 437,500 |   |
| 12/31/03 |   | 0.25               | %       | $                                                                            | 312,500    |                                                                                                                   | $      | 437,500 |   |
|     |   |               |    |                                                                         |       |                                                                                                                   |   |
| 3/31/04  |   | 0.25               | %       | $                                                                            | 312,500    |                                                                                                                   | $      | 437,500 |   |
| 6/30/04  |   | 0.25               | %       | $                                                                            | 312,500    |                                                                                                                   | $      | 437,500 |   |
| 9/30/04  |   | 0.25               | %       | $                                                                            | 312,500    |                                                                                                                   | $      | 437,500 |   |
| 12/31/04 |   | 0.25               | %       | $                                                                            | 312,500    |                                                                                                                   | $      | 437,500 |   |
|     |   |               |    |                                                                         |       |                                                                                                                   |   |
| 3/31/05  |   | 0.25               | %       | $                                                                            | 312,500    |                                                                                                                   | $      | 437,500 |   |
| 6/30/05  |   | 0.25               | %       | $                                                                            | 312,500    |                                                                                                                   | $      | 437,500 |   |
| 9/30/05  |   | 0.25               | %       | $                                                                            | 312,500    |                                                                                                                   | $      | 437,500 |   |
| 12/31/05 |   | 0.25               | %       | $                                                                            | 312,500    |                                                                                                                   | $      | 437,500 |   |
|     |   |               |    |                                                                         |       |                                                                                                                   |   |
| 3/31/06  |   | 0.25               | %       | $                                                                            | 312,500    |                                                                                                                   | $      | 437,500 |   |
| 6/30/06  |   | 0.25               | %       | $                                                                            | 312,500    |                                                                                                                   | $      | 437,500 |   |
| 9/30/06  |   | 0.25               | %       | $                                                                            | 312,500    |                                                                                                                   | $      | 437,500 |   |
| 12/1/06  |   | 0.25               | %       | $                                                                            | 312,500    |                                                                                                                   | $      | 437,500 |   |
|     |   |               |    |                                                                         |       |                                                                                                                   |   |
| 3/31/07  |   | 0.25               | %       | $                                                                            | 312,500    |                                                                                                                   | $      | 437,500 |   |
| 6/30/07  |   | 0.25               | %       | $                                                                            | 312,500    |                                                                                                                   | $      | 437,500 |   |
| 9/30/07  |   | 0.25               | %       | $                                                                            | 312,500    |                                                                                                                   | $      | 437,500 |   |
| 12/1/07  |   | 0.25               | %       | $                                                                            | 312,500    |                                                                                                                   | $      | 437,500 |   |
|     |   |               |    |                                                                         |       |                                                                                                                   |   |
| 3/31/08  |   | 0.25               | %       | $                                                                            | 312,500    |                                                                                                                   | $      | 437,500 |   |
| 6/30/08  |   | 0.25               | %       | $                                                                            | 312,500    |                                                                                                                   | $      | 437,500 |   |
| 9/30/08  |   | 0.25               | %       | $                                                                            | 312,500    |                                                                                                                   | $      | 437,500 |   |
| 12/1/08  |   | 0.25               | %       | $                                                                            | 312,500    |                                                                                                                   | $      | 437,500 |   |
|     |   |               |    |                                                                         |       |                                                                                                                   |   |
| 3/31/09  |   | 0.25               | %       | $                                                                            | 312,500    |                                                                                                                   | $      | 437,500 |   |
| 6/30/09  |   | 0.25               | %       | $                                                                            | 312,500    |                                                                                                                   | $      | 437,500 |   |
| 9/30/09  |   | 23.5               | %       | $                                                                            | 29,375,000 |                                                                                                                   | $      | 41,125,000 |   |
| 12/1/09  |   | 23.5               | %       | $                                                                            | 29,375,000 |                                                                                                                   | $      | 41,125,000 |   |
|     |   |               |    |                                                                         |       |                                                                                                                   |   |
| 3/31/10  |   | 23.5               | %       | $                                                                            | 29,375,000 |                                                                                                                   | $      | 41,125,000 |   |
| 6/30/10  |   | 23.5               | %       | $                                                                            | 29,375,000 |                                                                                                                   | $      | 41,125,000 |   |
|     |   |               |    |                                                                         |       |                                                                                                                   |   |
|     |   |               | 100.00% |                                                                         | $          | 125,000,000                                                                                                            |   | $ | 175,000,000 |   |
|          |        |                    |         |                                                                              |            |                                                                                                                        |        |  |  |  |

 

1

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SCHEDULE 11.02

 

PAYMENT OFFICES; ADDRESSES FOR NOTICES;LENDING OFFICES

 

BUILDING MATERIALS HOLDING CORPORATION

 

Address for Notices:

 

Building Materials Holding CorporationFour Embarcadero Center, Suite 3250San Francisco, CA  94111Attention:  Ellis C. Goebel, Senior VicePresident of Finance Telephone:  (415) 627-9100Facsimile:  (415) 627-9119Email: goebel@bmhc.com

 

With a copy to:

 

Paul S. Street, Esq.Senior Vice President, Chief Aministrative Officer, General Counsel &Corporate SecretaryBuilding Materials Holding Corporation720 Park Boulevard, Suite 200P.O. Box 70006Boise, ID 83707Telephone: (208) 331-4381Facsimile: (208) 331-4477Email: street@bmhc.com

 

Mark R. Kailer

Vice President and Treasurer

Building Materials Holding Corporation

Four Embarcadero Center, Suite 3250

San Francisco, CA  94111

Telephone:  (415) 627-9195

Facsimile:  (415) 627-9119

Email:  kailer@bmhc.com

 

1

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GUARANTORS

 

Address for Notices:

 

c/o Building Materials Holding CorporationFour Embarcadero Center, Suite 3250San Francisco, CA  94111Attention:  Ellis C. Goebel, Senior VicePresident of Finance Telephone:  (415) 627-9100Facsimile:  (415) 627-9119Email:  goebel@bmhc.com

 

With a copy to:

 

Paul S. Street, Esq.Senior Vice President, Chief Aministrative Officer, General Counsel &Corporate SecretaryBuilding Materials Holding Corporation720 Park Boulevard, Suite 200P.O. Box 70006Boise, ID 83707Telephone: (208) 331-4381Facsimile: (208) 331-4477Email: street@bmhc.com

 

Mark R. Kailer

Vice President and Treasurer

Building Materials Holding Corporation

Four Embarcadero Center, Suite 3250

San Francisco, CA  94111

Telephone:  (415) 627-9195

Facsimile:  (415) 627-9119

Email:  kailer@bmhc.com

 

WELLS FARGO BANK, NATIONAL ASSOCIATION, asAdministrative Agent

 

Notices for Borrowing, Conversions/Continuations, and Payments:

 

Wells Fargo Bank, National Association

201 Third Street, 8th Floor

MAC A0187-081

San Francisco, CA 94103

Attention:  Thomas Priftis

Telephone:  (415) 477-5443

Facsimile:  (415) 546-6353

Email:  priftist@wellsfargo.com

 

2

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Other Notices:

 

Wells Fargo Bank, National Association

420 Montgomery Street

MAC A0101-096

San Francisco, CA 94104

Attention:  Thomas (Max) Gloger

Telephone:  (415) 396-5939

Facsimile:  (415) 421-1352

Email:  glogert@wellsfargo.com

 

Administrative Agent’s Payment Office:

 

Wells Fargo Bank, National Association

201 Third Street, 8th Floor

MAC A0187-081

San Francisco, CA 94103

Attention:  Thomas Priftis

Reference:  Building MaterialsHolding

For credit to Acct. No. 41219-02167

ABA No.  121000248

 

WELLS FARGO BANK, NATIONAL ASSOCIATION, as L/C Issuer

 

Address for Notices:

Wells Fargo Bank, National Association

420 Montgomery Street

MAC A0101-096

San Francisco, CA 94104

Attention:  Thomas Gloger

Telephone: (415) 396-5939

Facsimile:  (415) 421-1352

Email:  glogert@wellsfargo.com

 

WELLS FARGO BANK, NATIONAL ASSOCIATION, as SwinglineBank

 

Domestic and Offshore Lending Office:

 

Wells Fargo Bank, National Association

201 Third Street, 8th Floor

MAC A0187-081

San Francisco, CA 94103

Attention:  Thomas Priftis

Telephone:  (415) 477-5339

 

3

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Facsimile:  (415) 546-6353

Email:  priftist@wellsfargo.com

 

WELLS FARGO BANK, NATIONAL ASSOCIATION, 

as a Revolving Lender and a Term B Lender

 

Domestic and Offshore Lending Office:

 

Wells Fargo Bank, National Association

201 Third Street, 8th Floor

MAC A0187-081

San Francisco, CA 94103

Attention:  Thomas Priftis

Telephone:  (415) 477-5339

Facsimile:  (415) 546-6353

Email:  priftist@wellsfargo.com

 

Notices (other than Borrowing Notices and Notices ofConversion/Continuation):

 

Wells Fargo Bank, National Association

420 Montgomery Street

MAC A0101-096

San Francisco, CA 94104

Attention:  Thomas Gloger

Telephone: (415) 396-5939

Facsimile:  (415) 421-1352

Email:  glogert@wellsfargo.com

 

4

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GENERAL ELECTRIC CAPITAL CORPORATION

 

Domestic and Offshore Lending Office:

 

GE Capital Corporation

500 W. Monroe

Chicago, IL 60661

Attention:  Lisa Labon

Telephone: (312) 441-7000

Facsimile:  (312) 463-3842

Email: lisa.labon@ge.com

 

Notices (other than Borrowing Notices and Notices ofConversion/Continuation):

 

GE Capital Corporation

6130 Stoneridge Mall Rd. #300

Pleasanton, CA 94588

Attention:  Carlos Elizondo

Telephone: (925) 730-6435

Facsimile:  (925) 730-6496

Email: Carlos.elizondo@ge.com

 

U.S. BANK NATIONAL ASSOCIATION

 

Domestic and Offshore Lending Office:

101 S. Capitol Blvd., Suite 807

Boise, ID 83702

Attention:  James W. Henken

Telephone: (208) 383-7823

Facsimile:  (208) 383-7574

Email: james.henken@usbank.com

 

Notices (other than Borrowing Notices and Notices ofConversion/Continuation):

 

U.S. Bank National Association

101 S. Capitol Blvd., Suite 807

Boise, ID 83702

Attention:  James W. Henken

Telephone: (208) 383-7823

Facsimile:  (208) 383-7574

Email: james.henken@usbank.com

 

5

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UNION BANK OF CALIFORNIA, N.A.

 

Domestic and Offshore Lending Office:

 

Union Bank of California, N.A.

1980 Saturn Street

Monterey Park, CA 91755

Attention:  Shirley Davis

Telephone: (323) 720-2870

Facsimile:  (323) 724-6198

 

Notices (other than Borrowing Notices and Notices ofConversion/Continuation):

 

Union Bank of California, N.A.

350 California Street, 10th Floor

San Francisco, CA 94104

Attention:  Alan J. LeClair

Telephone: (415) 705-7185

Facsimile:  (415) 705-7111

 

6

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LASALLE BUSINESS CREDIT, LLC

 

Domestic and Offshore Lending Office:

LaSalle Business Credit, LLC

135 S. LaSalle, Suite 425

Chicago, IL 60603

Attention:  Susan Hamilton

Telephone: (312) 904-0742

Facsimile:  (312) 904-6450

Email: susan.hamilton@abnamro.com

 

Notices (other than Borrowing Notices and Notices ofConversion/Continuation):

 

LaSalle Business Credit, LLC

135 S. LaSalle, Suite 425

Chicago, IL 60603

Attention:  Susan Hamilton

Telephone: (312) 904-0742

Facsimile:  (312) 904-6450

Email: susan.hamilton@abnamro.com

 

7

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HARRIS NESBITT

 

Domestic and Offshore Lending Office:

 

Harris Bank

111 W. Monroe Street

Chicago, IL 60603

Attention:  Isabella Battista

Telephone: (312) 293-8458

Facsimile:  (312) 293-5852

Email: isabella.battista@harrisnesbitt.com

 

Notices (other than Borrowing Notices and Notices ofConversion/Continuation):

 

Harris Bank

111 W. Monroe Street

Chicago, IL 60603

Attention:  Isabella Battista

Telephone: (312) 293-8458

Facsimile:  (312) 293-5852

Email: isabella.battista@harrisnesbitt.com

 

8

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WASHINGTON MUTUAL BANK

 

Domestic and Offshore Lending Office:

 

Washington Mutual Bank

350 S. Grand Avenue, Suite 3400

Los Angeles, CA 90071

Attention:  Adriana Campos

Telephone: (213) 217-4055

Facsimile:  (213) 217-4160

 

Notices (other than Borrowing Notices and Notices ofConversion/Continuation):

 

Washington Mutual Bank

350 S. Grand Avenue, Suite 3400

Los Angeles, CA 90071

Attention:  Stephen Mras

Telephone: (213) 217-4043

Facsimile:  (213) 217-4160

Email: Stephen.mras@wamu.net

 

9

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BNP PARIBAS

 

Domestic and Offshore Lending Office:

 

BNP Paribas

San Francisco Branch

One Front Street, 23rd Floor

San Francisco, CA 94111

Attention:  Patricia Boussaroque

Telephone: (415) 772-1343

Facsimile:  (415) 398-8462

Email: patricia.boussaroque@americas.bnpparibas.com

 

Notices (other than Borrowing Notices and Notices ofConversion/Continuation):

 

BNP Paribas

San Francisco Branch

One Front Street, 23rd Floor

San Francisco, CA 94111

Attention:  Patricia Boussaroque

Telephone: (415) 772-1343

Facsimile:  (415) 398-8462

Email: patricia.boussaroque@americas.bnpparibas.com

 

10

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WEST COAST BANK

 

Domestic and Offshore Lending Office:

 

West Coast Bank

301 Church Street NE 

P.O. Box 428

Salem, OR 97308

Attention:  Tim Johnson

Telephone: (503) 399-2951

Facsimile:  (503) 399-3937

Email: johnsont@wcb.com

 

Notices (other than Borrowing Notices and Notices ofConversion/Continuation):

 

West Coast Bank

301 Church Street NE

P.O. Box 428

Salem, OR 97308

Attention:  Tim Johnson

Telephone: (503) 399-2951

Facsimile:  (503) 399-3937

Email: johnsont@wcb.com

 

11

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GUARANTY BANK

 

Domestic and Offshore Lending Office:

 

Guaranty Bank

333 Clay, Suite 4400

Houston, TX 77002

Attention:  Scott Brewer

Telephone: (713) 890-8859

Facsimile:  (713) 759-0765

Email: Scott.brewer@guarantygroup.com

 

Notices (other than Borrowing Notices and Notices ofConversion/Continuation):

 

Guaranty Bank

333 Clay, Suite 4400

Houston, TX 77002

Attention:  Scott Brewer

Telephone: (713) 890-8859

Facsimile:  (713) 759-0765

Email: Scott.brewer@guarantygroup.com

 

12

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COMERICA WEST INCORPORATED

 

Domestic and Offshore Lending Office:

 

Comerica West Incorporated

3980 Howard Hughes Pkwy, Suite 350

Las Vegas, NV 89109

Attention:  regina McGuire

Telephone: (702) 791-4804

Facsimile:  (702) 791-2371

Email: rmcguire@comerica.com

 

Notices (other than Borrowing Notices and Notices ofConversion/Continuation):

 

Comerica West Incorporated

1920 Main Street, Suite 1150

Irvine, CA 92614

Attention:  John D. Bonifacio

Telephone: (949) 798-7243

Facsimile:  (949) 476-1222

Email: jdbonifacio@comerica.com

 

13

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WHITNEY NATIONAL BANK

 

Domestic and Offshore Lending Office:

 

Whitney National Bank

228 St. Charles Avenue

New Orleans, LA 70130

Attention:  Edgar Santa Cruz

Telephone: (504) 552-4760

Facsimile:  (504) 552-4622

Email: esantacruz@whitneybank.com

 

Notices (other than Borrowing Notices and Notices ofConversion/Continuation):

 

Whitney National Bank

228 St. Charles Avenue

New Orleans, LA 70130

Attention:  Edgar Santa Cruz

Telephone: (504) 552-4760

Facsimile:  (504) 552-4622

Email: esantacruz@whitneybank.com

 

14

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BANK LEUMI USA

 

Domestic and Offshore Lending Office:

 

Bank Leumi USA

420 Lexington Avenue, 10th Floor

New York, NY 10170

 

Notices (other than Borrowing Notices and Notices ofConversion/Continuation):

 

Bank Leumi USA

2247 S. Beverly Drive

Beverly Hills, CA 90211

Attention:  Jacques Delvoye

Telephone: (323) 966-4727

Facsimile:  (323) 966-4248

Email: delvoyej@bankleumiusa.com

 

15

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IDB BANK

 

Domestic and Offshore Lending Office:

 

IDB Bank

9401 Wilshire Blvd., Suite 600

Beverly Hills, CA 90212

Attention:  Don McCrink, VP

Telephone: (310) 860-8330

Facsimile:  (310) 859-1190

Email: dmccrink@idbny.com

 

Notices (other than Borrowing Notices and Notices ofConversion/Continuation):

 

IDB Bank

9401 Wilshire Blvd., Suite 600

Beverly Hills, CA 90212

Attention:  Don McCrink, VP

Telephone: (310) 860-8330

Facsimile:  (310) 859-1190

Email: dmccrink@idbny.com

 

16

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ANNEX I

 

PRICING GRID

 

From the Effective Date until the last day of thesecond complete fiscal quarter after the Effective Date (the “Initial Period”),the Applicable Margin for Revolving Loans and the Applicable Fee Amount shallbe at Level 4.  Thereafter, theApplicable Margin for Revolving Loans and the Applicable Fee Amount for any dayshall be the amount per annum set forth below based on the EBITDA Ratio setforth in the most recently delivered Compliance Certificate delivered byHoldings pursuant to Section 7.02(c) of the Credit Agreement.  Changes in the Applicable Margin forRevolving Loans and the Applicable Fee Amount resulting from a change in theEBITDA Ratio shall become effective on the date of delivery by Holdings to theAdministrative Agent of a new Compliance Certificate pursuant to Section 7.02(c),except that no such change shall take effect until the end of the InitialPeriod.  If Holdings shall fail todeliver a Compliance Certificate and accompanying financial statements withinthe number of days after the end of any fiscal quarter or fiscal year asrequired pursuant to Section 7.02(c), the parties agree that theApplicable Margin and the Applicable Fee Amount shall be fixed at Level 4 untilsuch time as Holdings delivers such new Compliance Certificate and accompanyingfinancial statements pursuant to Section 7.02(c).

 
| **Level** |   | **EBITDA  Ratio**                                           |   | **Offshore  Rate Spread** |   | **Base Rate  Spread** |   | **Letter of  Credit Fee** |   | **Commitment  Fee** |   |
|-----------|--------|-------------------------------------------------------------|--------|---------------------------|--------|-----------------------|--------|---------------------------|--------|---------------------|--------|
| Level 5   |   | greater than or equal to  3.00:1.00                         |   | 3.000                     | %      | 1.750                 | %      | 3.000                     | %      | 0.625               | %      |
| Level 4   |   | greater than or equal to 2.50:1.00 but less than  3.00:1.00 |   | 2.500                     | %      | 1.250                 | %      | 2.500                     | %      | 0.500               | %      |
| Level 3   |   | greater than or equal to 2.00:1.00 but less than  2.50:1.00 |   | 2.000                     | %      | 0.750                 | %      | 2.000                     | %      | 0.375               | %      |
| Level 2   |   | greater than or equal to 1.50:1.00 but less than  2.00:1.00 |   | 1.625                     | %      | 0.375                 | %      | 1.625                     | %      | 0.375               | %      |
| Level 1   |   | less than 1.50:1.00                                         |   | 1.250                     | %      | 0.000                 | %      | 1.250                     | %      | 0.375               | %      |

 

1

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