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EXHIBIT 10.1 AMENDMENT NO. 4
TO
LOAN AGREEMENT AMENDMENT NO. 4 dated and effective as of June 30, 2004, among NICHOLAS
FINANCIAL, INC. (Borrower), the financial institutions listed on the
signature pages hereof (the Lenders) and BANK OF AMERICA, N.A., as agent for
the Lenders (the Agent). WHEREAS, the Borrower, the Agent and the Lenders are parties to a certain
Amended and Restated Loan and Security Agreement, dated as of August 1, 2000
(the Loan Agreement), pursuant to which the Lenders have agreed, subject to
the terms and conditions therein set forth, to provide certain financial
accommodations to the Borrower; and WHEREAS, at the request of the Borrower, BoS (USA), Inc., a Bank of
Scotland Group Company, (BOS) has agreed to become a party to the Loan
Agreement and a Lender thereunder, with a Commitment of $10,000,000 and in
connection therewith to purchase an assignment of the interest of Bank of
America, N.A. in the amount of $5,000,000.00 pursuant to an Assignment and
Acceptance Agreement executed simultaneously herewith (the Assignment); WHEREAS, at the request of the Borrower BOS has agreed to become a party
to the Loan Agreement and a Lender thereunder, with a Commitment of
$10,000,000.00; WHEREAS, the Existing Lenders and the Agent are willing to accept the
addition of BOS as a party to and a Lender under the Loan Agreement with a
Commitment as aforesaid; WHEREAS, First Tennessee Bank National Association desires to increase its
Commitment from $15,000,000.00 to $20,000,000.00; WHEREAS, the Borrower desires that the Lenders amend certain provisions of
the Loan Agreement, and the Lenders are willing, subject to the terms and
conditions hereinafter set forth, to do so; NOW, THEREFORE, the parties hereto hereby agree as follows: SECTION 1. CAPITALIZED TERMS. Capitalized terms used but not defined
herein shall have the respective meanings set forth in the Loan Agreement. SECTION 2.AMENDMENTS. The Loan Agreement is hereby amended as
follows:




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Section 1.1 of the Loan Agreement is hereby amended as follows: (a) (i) BOS as Lender. From and after the effective date of this
Amendment, BOS shall become a party to, and a Lender under, the Loan Agreement,
with a Commitment on such effective date equal to $10,000,000.00. Accordingly,
from and after the effective date of this Amendment, (i) all references in the
Loan Agreement and the other Loan Documents to Lender or Lenders shall
include BOS, all references therein to Commitment or Commitments shall
include the commitment of BOS specified herein, all references therein to
Loan or Loans shall include any loan made by BOS under the Loan Agreement
pursuant to its Commitment provided for herein and all references therein to
Obligations shall include all present and future liabilities, obligations and
debts owing by any Obligor to BOS under the Loan Agreement or any other Loan
Document, as amended hereby and from time to time hereafter; and (ii) the
Maximum Revolver Amount under the Loan Agreement shall be increased by
$10,000,000 from $75,000,000 to $85,000,000. (ii) Increase In First Tennessee Commitment. From and after the effective
date of this Amendment the Commitment of First Tennessee Bank National
Association is hereby increased from $15,000,000.00 to $20,000,000.00. (b) The definition of Advance Rate is hereby amended to read as follows:
Advance Rate means (1) seventy percent (70%) of Net Eligible Contract
Payments with respect to any Contract(s) with respect to which more than
$20,000 has been paid or advanced by the Borrower to any Dealer for such
Contract(s) exclusive of amounts attributable to items in the Contract for
items other than the Vehicle which is the subject thereof, or Contracts, the
terms of which exceed the allowable term based on the age of the Vehicle as set
forth in this Agreement; and (2) eighty-five percent (85%) with respect to all
other Net Eligible Contract Payments of all other Contracts provided, however,
that the Advance Rate shall be (a) sixty-nine percent (69%) and eighty-four
percent (84%), as applicable, when the Collateral Adjustment Percent ending on
the date of determination is equal to or greater than sixteen percent (16%),
but less than seventeen percent (17%), (b) sixty-eight percent (68%) and
eighty-three percent (83%), as applicable, when the Collateral Adjustment
Percent ending on the date of determination is equal to or greater than
seventeen percent (17%), but less than eighteen percent (18%); (c) sixty-seven
percent (67%) and eighty-two percent (82%), as applicable, when the Collateral
Adjustment Percent is equal to or greater than eighteen percent (18%), but less
than nineteen percent (19%); and provided, further that the applicable Advance
Rate shall be reduced by the Repossessed Adjustment Percent. - 2 -




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(c) The definition of Applicable Margin is hereby amended to read as
follows: Applicable Margin means (i) with respect to Reference Rate Revolving
Loans, three-eighths of one percent (3/8%) and (ii) with respect to LIBOR Rate
Revolving Loans, two and one-eighth of one percent (2 1/8%). (d) The definition of Borrowing Base is hereby amended to read as follows: Borrowing Base means, at any time, an amount equal to (a) the lesser of
(i) the Maximum Revolver Amount or (ii) the amount determined by multiplying
the Advance Rate by the Net Contract Payments payable under all of the
Borrowers Eligible Contracts then outstanding; less (b) the sum of (i) the
Bank Product Reserves and (ii) all other reserves which the Agent deems
necessary in the exercise of its reasonable credit judgment to maintain with
respect to the Borrowers account, including reserves for any amounts which the
Agent or any Lender may be obligated to pay in the future for the account of
the Borrower; provided, however, (A) the Older Vehicle Contract Borrowing Base
included in calculating the Borrowing Base shall not, at any time, exceed
thirty percent (30%) of the Gross Contract Payments payable under all Eligible
Vehicle Contracts and the Oldest Vehicle Contract Borrowing Base included in
calculating the Borrowing Base shall not, at any time, exceed three percent
(3%) of the Gross Contract Payments payable under all Eligible Vehicle
Contracts; and provided, further, however that the Gross Contract Payments
payable under all Uninsured Contracts shall not constitute more than three
percent (3%) of the Gross Contract Payments payable under all Eligible Vehicle
Contracts and provided further however the Direct Loan Contract Borrowing Base
included in calculating the Borrowing Base shall not, at any time, exceed ten
percent (10%) of the Gross Contract payments payable under all Eligible
Contracts outstanding at any one time. (e) Direct Loan Contract Borrowing Base means, as of any date of
calculation, the amount of Gross Contract payments payable under Eligible
Direct Loan Contracts. (f) Subsection (l)(vi) of the definition of Eligible Contracts is hereby
deleted. (g) Subsection (m) of the definition of Eligible Contracts is hereby
amended to read as follows: (m) If the Contract is a Direct Loan Contract then: (i) the original term of the Contract does not exceed forty-eight (48)
months; - 3 -




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(ii) any cash advance made in connection with the Contract does not exceed
Ten Thousand Dollars ($10,000.00), the unpaid principal balance of the Contract
and the aggregate principal balance of all other Contracts owing by a Contract
Debtor does not exceed Ten Thousand Dollars ($10,000); (iii) if the Contract Debtor was or is a Contract Debtor under another
Contract previously originated or acquired by the Borrower, then the Contract
Debtors payment history under such prior or current Contract was satisfactory
(which, in the case of a prior Contract means that the Contract Debtor has paid
such Contract in full). (iv) if the Contract Debtor is not a Contract Debtor under a Contract
previously originated or acquired by the Borrower, then the Contract Debtors
credit history is satisfactory to the Lender, (v) repayment of the Contract is secured by a perfected security interest
on the Contract Debtors personal property or real property provided the real
property is taken as collateral out of an abundance of caution, and not as the
primary collateral for the Contract; (vi) no portion of the loan evidenced by the Contract was made by the
Borrower to the Contract Debtor for the purpose of financing the Contract
Debtors payment of a down payment on a Vehicle which is the subject of a motor
vehicle retail installment contract or make any payment(s) necessary to cure
any payment default or deficiency or otherwise to bring the payments due under
or with respect to any Contract current; (vii) no portion of the loan evidenced by the Contract was made by the
Borrower for the purpose of providing funds to the Contract Debtor to pay
amounts owing by the Contract Debtor on another Contract owing to the Borrower; (viii) the aggregate number of Direct Loan Contracts does not exceed 10%
of the total number of Contracts outstanding at any one time. (h) The definition of Eligible Contracts is further amended by the
addition of the following additional clauses: (o) The purchase price of the Contract has been fully paid for by the
Borrower to the seller of the Contract and the Borrower is the owner and holder
of the Contract. (p) The Vehicle (or other Goods) which secure the Contract do not
constitute part of the repossession inventory of Borrower or a returned Vehicle
or Goods. - 4 -




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(i) The definition of Maximum Revolver Amount is hereby amended to read
as follows: Maximum Revolver Amount means $85,000,000.00. (j) The definition of Older Vehicle Contract Borrowing Base is hereby
amended in its entirety to read as follows: Older Vehicle Contract Borrowing Base means, as of any date of
calculation, the amount of the Gross Contract Payments under Eligible Vehicle
Contracts which are secured by a lien on a Vehicle which is eight or nine model
years old at the time such Contract was originated (excluding the model year in
effect at the time the Contract was originated). (k) The definition of Stated Termination Date is hereby amended to read
as follows:  Stated Termination Date means November 30, 2006. (l) Section 2.2(i) of the Loan Agreement is hereby amended in its entirety
to read as follows:  (i) Agent Advances. (i) Subject to the limitations set forth in the
provisos contained in this Section 2.2(i)(i), the Agent is hereby authorized by
the Borrower and the Lenders, from time to time in the Agents sole discretion,
(A) after the occurrence of Default or an Event of Default, or (B) at any time
that any of the other applicable conditions precedent set forth in Article 10
have not been satisfied, to make Base Rate Revolving Loans to the Borrower on
behalf of the Lenders which the Agent, in its reasonable business judgment,
deems necessary or desirable, (1) to preserve or protect the Collateral, or any
portion thereof, (2) to enhance the likelihood of, or maximize the amount of,
repayment of the Loans and other Obligations, or (3) to pay any other amount
chargeable to the Borrower pursuant to the terms of this Agreement, including
costs, fees and expenses as described in Section 15.7 (any of the advances
described in this Section 2.2(i) being hereinafter referred to as Agent
Advances); provided, that any two (2) Lenders may at any time revoke the
Agents authorization contained in this Section 2.2(i) to make Agent Advances,
any such revocation to be in writing and to became effective prospectively upon
the Agents receipt thereof; provided further that (i) if the Pro Rata Share of
the Lenders revoking such authorization does not exceed 50%, such revocation
shall become effective 90-days after Agents receipt thereof or (ii) if the
Default or Event of Default would require consent of all Lenders to waive or
amend, such authorization may be revoked by any Lender effective 90-days after
Agents receipt thereof. Any Agent Advances made by Agent pursuant to this
Section 2.2(i) shall not exceed an aggregate principal amount at any one time
outstanding of $4,000,000.00 and further shall not exceed the applicable
Borrowing Base and Maximum Revolver
Amount - 5 -




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(m) Section 3.1(a) of the Loan Agreement Interest Rates is hereby amended
to provide that interest of all Loans will be payable in arrears on the first
(1st) day of each month commencing on the first (1st) day of the first (1st)
month after the date of this Amendment No. 4 and continuing on the same day of
each month thereafter, and on the Termination Date. Borrower hereby authorizes
Agent, without further order or authorization of Borrower to charge all
interest payable hereunder directly against the Loans and any such change shall
constitute a Loan hereunder with interest to accrue thereon at the Interest
Rate described in Section 3.1(a)(ii). (n) Section 3.8 of the Loan Agreement Audit Fees is hereby amended in its
entirety to read as follows: 3.8. Audit Fees. The Borrower shall pay the Agent all costs incurred by
the Agent in connection with verifications, examinations, audits, and
inspections of the Borrower and the Collateral. Such verifications,
examinations, audits and inspects shall be conducted by the Agent at least two
(2) times during each calendar year. Borrower hereby authorizes Agent, without
further order or authorization of Borrower to charge all audit fees payable
hereunder directly against the Loans and any such change shall constitute a
Loan hereunder with interest to accrue therewith at the Interest Rate described
in Section 3.1(a)(ii). Notwithstanding the foregoing, upon the occurrence of
any Event of Default, Borrower shall pay all of the Agents costs incurred in
connection with the verifications, audits and inspections of the Borrower and
the Collateral without regard to the foregoing limitations as to the number of
audits which may be conducted during any calendar year. (o) Section 4.2 of the Loan Agreement Termination of Facility is hereby
amended in its entirety to read as follows: 4.2 Termination of Facility. The Borrower may terminate this Agreement
upon at least thirty (30) Business Days notice to the Agent and the Lenders,
upon (a) the payment in full of all outstanding Revolving Loans, together with
accrued interest thereon, (b)the payment of the early termination fee set
forth in the next sentence, (c) the payment in full in cash of all other
Obligations together with accrued and unpaid interest thereon, and (d) with
respect to any LIBOR Rate Loans prepaid in connection with such termination
prior to the expiration date of the Interest Period applicable thereto, the
payment of the amounts described in Section 5.4. If this Agreement is
terminated at any time prior to the Stated Termination Date, whether pursuant
to this Section or pursuant to Section 11.2, the Borrower shall pay to the
Agent, for the account of the Lenders, an early termination fee determined in
accordance with the following table: - 6 -




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Period during whichearly termination
    
    Early Terminationoccurs
    
    FeeOn or prior to November 30, 2004
    
    One percent (1%) of the
Maximum Revolver Amount.After November 30, 2004 but on or prior to
November 30, 2005
    
    One half of one percent
(1⁄2%) of the Maximum
Revolver Amount.After November 30, 2005 but prior to
November 30, 2006
    
    One quarter of one percent
(1⁄4%) of the Maximum
Revolver Amount.
 (p) Section 9.18 Minimum Interest Coverage of the Loan Agreement is hereby
amended in its entirety to read as follows: Minimum Interest Coverage. The Borrower shall not permit the ratio,
calculated as of the last day of each month on a cumulative Fiscal Year basis,
of (a) the sum of Adjusted Net Earnings from Operations for the applicable
period, plus interest expense and any provision for income taxes for such
period (numerator) to (b) aggregate interest expense for such period
(denominator), to be less than 1.75:1. (q) Section 9.21 Borrowing Base Ratio of the Loan Agreement is hereby
amended in its entirety to read as follows: Borrowing Base Ratio. The Borrower shall not permit the ratio of (a) the
remainder of (i) all liabilities, obligations, and indebtedness of the Borrower
minus (ii) all Subordinated Debt (numerator) to (b) Borrowing Base Amount
(denominator) to be, at any time, more than: 4.25:1 to 1. (r) Section 9.22 Collateral Adjustment Percent of the Loan Agreement is
hereby amended in its entirety to read as follows: 9.22 Collateral Adjustment Percent. The Borrower shall not permit the
Collateral Adjustment as of the last day of any month to be greater than
nineteen (19%) percent. (s) Section 9.27 Reporting Methodology of the Loan Agreement is hereby
amended in its entirety to read as follows: Reporting Methodology. The Borrower shall not amend or modify the
methodology employed by the Borrower in preparing its accounting and financial
reports relating to the presentation of (i) the delinquency of Vehicle
Contracts, (ii) the repossession of Vehicles, (iii) the charge-off of
delinquent Vehicle Contracts (iv) the unearned insurance commissions and - 7 -




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dealer discounts and (v) the calculation of loss or dealer reserves (including non-refundable
dealer reserves) from the methodology employed by the Borrower as of the date
of this Agreement, as amended by Amendment No. 4, so as to change the
consistency of the information with respect to such items, from time to time,
provided to Lender. In the event that Borrower elects at any time, to amend or
modify the methodology employed by Borrower in effect as of the date of the
Amendment No. 4 to the Loan Agreement, in preparing its financial reports
relating to the calculation of loss or dealer reserves (including
non-refundable dealer reserves), Agent reserves the right, upon written notice
to Borrower to change, or modify the definition of Eligible Accounts of the
Borrower and the financial covenants contained in this Agreement to the extent
Agent deems necessary to maintain and preserve the consistency of information,
eligibility standards and financial covenant limitations prescribed by and
contained in this Agreement and in effect as of the date of Amendment No. 4,
and as otherwise may be deemed necessary by Agent in the exercise of its
reasonable financial judgment, under the circumstances, resulting from any such
change. The provisions of the foregoing shall not apply to any change in
accounting mythology required in the reasonable financial opinion of Borrowers
certified public accountants to comply with the AICPA Statement of Position
Concerning Accounting for Discounts Related to Credit Policy, effective April
1, 2004, as amended. (t) Paragraphs (q) and (r) of Section 11.1 are hereby amended to read as
follows: (q) Peter L. Vosotas at any time fails to own at least ten percent (10%)
of the voting stock of Nicholas Financial, Inc. (Parent) or that Parent at
any time fails to own all of the issued and outstanding stock of Borrower, or
that Peter L. Vosotas at any time fails to control the Borrower; or (r) the Borrowers Collateral Adjustment Percent is at any time greater
than nineteen percent (19%). SECTION 3. EFFECTIVENESS. The amendment made herein shall become
effective when (i) Lenders shall have duly executed and delivered this
Agreement and counterparts hereof shall have been duly executed and delivered
to the Agent by the Borrower; (ii) BOS has executed and delivered to Agent a
duly completed Assignment and Acceptance Agreement that has been accepted by
the Agent; and (iii) payment of the purchase price of the Assignment has been
made from BOS by wire transfer of same day available funds. SECTION 4. COUNTERPARTS AND GOVERNING LAW. This Agreement may be executed
in counterparts, each of which shall be an original, and all of which, taken
together, shall constitute a single instrument. This Agreement shall be
governed by, and construed in accordance with the law of the State of - 8 -




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New York. SECTION 5. REFERENCES TO LOAN AGREEMENT. From and after the
effectiveness of this Agreement and the waivers and agreements contemplated
hereby, all references in the Loan Agreement to this Agreement, hereof,
herein, and similar terms shall mean and refer to the Loan Agreement as
certain provisions thereof are amended or supplemented by this Agreement, and
all references in other documents to the Loan Agreement shall mean such
agreement as certain provisions thereof are amended or supplemented by this
Agreement. SECTION 6. INVALIDITY. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under all applicable laws and regulations. If, however, any provision of this
Agreement shall be prohibited by or invalid under any such law or regulation,
it shall be deemed modified to conform to the minimum requirements of such law
or regulation, or if for any reason it is not deemed so modified, it shall be
ineffective and valid only to the extent of such prohibition or invalidity
without the remainder thereof or any of the remaining provisions of this
Agreement being prohibited or invalid. SECTION 7. RATIFICATION AND CONFIRMATION. The Loan Agreement is hereby
ratified and confirmed and, except as herein otherwise agreed, remains
unmodified and in full force and effect. SECTION 8. ADJUSTED PRO RATA PAYMENTS. Within ten (10) days from the date
of execution of this Amendment (Closing Settlement Date), Agent shall conduct
a Settlement with Lenders. At such Settlement, each Lender shall pay to the
Agent in immediately available funds, an amount equal to each Lenders pro rata
share of the aggregate outstanding principal amount of the Loans. For purposes
of the calculation of the pro rata share of each Lender, the Commitment of each
Lender, shall be in the amount set forth in the signature section of this
Amendment. SECTION 9. ACKNOWLEDGEMENTS BY LENDERS. (a) The execution and delivery of this Agreement effectuates a
reallocation of the Maximum Revolving Amount and Commitments among Bank of
America, N.A., Hibernia National Bank and First Tennessee Bank National
Association (Original Lenders) and BoS (USA), Inc. (New Lender). (b) Any interest, fees and other payments accrued prior to the Closing
Settlement Date with respect to the Commitments and the outstanding Loans shall
be for the account of the Original Lenders. Any interest, fees, and other
payments accrued on and after the Closing Settlement Date shall be for the
account of all Lenders and including the New Lender. Each Original Lender - 9 -




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and
the New Lender agree that they will hold in trust for the other parties any
interest, fees, and other amounts which they receive to which another party is
entitled pursuant to the preceding sentence and will pay to such other party
any such amounts which they may receive promptly upon receipt. (c) The New Lender (i) acknowledges that it has received a copy of this
Agreement, and the Schedules and Exhibits thereto, together with copies of the
most recent financial statements of the Borrower, and such other documents and
information as it has deemed appropriate to make its own credit and legal
analysis and decision to enter into this Agreement; and (ii) agrees that it
will, independently and without reliance upon any Original Lender or the
Administrative Agent and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit and legal
decisions in taking or not taking action under this Agreement. (d) The New Lender (i) represents and warrants to the Original Lenders,
the Administrative Agent and the Borrower that under applicable law and
treaties no tax will be required to be withheld by the Original Lenders with
respect to any payments to be made to the New Lender hereunder, (ii) agrees to
furnish (if it is organized under the laws of any jurisdiction other than the
United States or any State thereof) to the Administrative Agent and the
Borrower prior to the time that the Administrative Agent or Borrower is
required to make any payment of principal, interest or fees hereunder,
duplicate executed originals of either U.S. Internal Revenue Service Form 4224
or U.S. Internal Revenue Service Form 1001 (wherein the New Lender claims
entitlement to the benefits of a tax treaty that provides for a complete
exemption from U.S. federal income withholding tax on all payments hereunder)
and agrees to provide new Forms 4224 or 1001 upon the expiration of any
previously delivered form or comparable statements in accordance with
applicable U.S. law and regulations and amendments thereto, duly executed and
completed by the New Lender, and (iii) agrees to comply with all applicable
U.S. laws and regulations with regard to such withholding tax exemption. (e) None of the Original Lenders makes any representation or warranty or
assumes any responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement or the execution,
legality, validity, enforceability, genuineness, sufficiency or value of this
Agreement or any other instrument or document furnished pursuant thereto. None
of the Original Lenders makes any representation or warranty in connection
with, or assumes any responsibility with respect to, the solvency, financial
condition or statements of the Borrower, or the performance or observance by
the Borrower, of any of its respective obligations with this Agreement or any
other instrument or document furnished in connection therewith. (f) The New Lender represents and warrants that (i) it is duly - 10 -




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organized
and existing and it has full power and authority to take, and has taken, all
action necessary to execute and deliver this Agreement and any other documents
required or permitted to be executed or delivered by it in
connection with this Agreement, and to fulfill its obligations hereunder; (ii)
no notices to, or consents, authorizations or approvals of, any Person are
required (other than any already given or obtained) for its due execution,
delivery and performance of this Agreement; and apart from any agreements or
undertakings or filings required by this Agreement, no further action by, or
notice to, or filing with, any Person is required of it for such execution,
delivery or performance; (iii) this Agreement has been duly executed and
delivered by it and constitutes the legal, valid and binding obligation of the
New Lender, enforceable against the New Lender in accordance with the terms
hereof, subject, as to enforcement, to bankruptcy, insolvency, moratorium,
reorganization and other laws of general application relating to or affecting
creditors rights and to general equitable principles; (g) The Original Lenders and the New Lender each hereby agree to execute
and deliver such other instruments, and take such other action, as either party
may reasonably request in connection with the transactions contemplated by this
Agreement including the delivery of any notices or other documents or
instruments to the Borrower or the Administrative Agent, which may be required
in connection with the assignments and assumptions contemplated hereby. - 11 -




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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written. Borrower:NICHOLAS FINANCIAL, INC.By:
    
    /s/ Peter L. VosotasPeter L. Vosotas, PresidentAgent:BANK OF AMERICA, N.A.,as AgentBy:
    
    /s/ James C. SmithJames C. Smith, Vice PresidentLenders:Commitment Amount:
    
    BANK OF AMERICA, N.A.$40,000,000.00 (47.06%)By:
    
    /s/ James C. SmithJames C. Smith, Vice President
 - 12 -




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Commitment Amount:
    
    HIBERNIA NATIONAL BANK$15,000,000.00 (17.65%)By:
    
    /s/ Anita G. KennedyAnita G. Kennedy, Vice President
 - 13 -




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Commitment Amount:
    
    FIRST TENNESSEE BANK NATIONALASSOCIATION$20,000,000.00 (23.53%)By:
    
    /s/ David PerryDavid Perry, Senior Vice President
 - 14 -




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Commitment Amount:
    
    BoS (USA), INC.$10,000,000.00 (11.76%)By:
    
    /s/ Karen WorkmanKaren Workman, Assistant Vice President
 - 15 -