Document:

Exhibit
10.1

 

 

Published CUSIP Number:                 

 

 

CREDIT AGREEMENT

 

Dated as of April 1, 2005

 

among

 

SOUTHWEST WATER COMPANY,

as Borrower,

 

BANK OF AMERICA, N.A.,

as Administrative Agent, Swing Line Lender

and

L/C Issuer,

 

and

 

The Other Lenders Party Hereto

 

BANC OF AMERICA SECURITIES LLC

and

UNION BANK OF CALIFORNIA, N.A.,

as Co-Lead Arrangers and Co-Book Managers

 

UNION BANK OF CALIFORNIA, N.A.,

as Syndication Agent

 

 

 

TABLE OF CONTENTS

 

	
  ARTICLE I.
  DEFINITIONS AND ACCOUNTING TERMS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1.01.

  	
   

  	
  Defined Terms

  	
   

  
	
  1.02.

  	
   

  	
  Other Interpretive
  Provisions

  	
   

  
	
  1.03.

  	
   

  	
  Accounting Terms

  	
   

  
	
  1.04.

  	
   

  	
  Rounding

  	
   

  
	
  1.05.

  	
   

  	
  Times of Day

  	
   

  
	
  1.06.

  	
   

  	
  Letter of Credit Amounts

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II.
  THE COMMITMENTS AND CREDIT EXTENSIONS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2.01.

  	
   

  	
  Committed Loans

  	
   

  
	
  2.02.

  	
   

  	
  Borrowings, Conversions and
  Continuations of Committed Loans

  	
   

  
	
  2.03.

  	
   

  	
  Letters of Credit

  	
   

  
	
  2.04.

  	
   

  	
  Swing Line Loans

  	
   

  
	
  2.05.

  	
   

  	
  Prepayments

  	
   

  
	
  2.06.

  	
   

  	
  Termination
  or Reduction of Commitments

  	
   

  
	
  2.07.

  	
   

  	
  Optional
  Increase in Commitments

  	
   

  
	
  2.08.

  	
   

  	
  Repayment
  of Loans

  	
   

  
	
  2.09.

  	
   

  	
  Interest

  	
   

  
	
  2.10.

  	
   

  	
  Fees

  	
   

  
	
  2.11.

  	
   

  	
  Computation
  of Interest and Fees

  	
   

  
	
  2.12.

  	
   

  	
  Evidence of
  Debt

  	
   

  
	
  2.13.

  	
   

  	
  Payments
  Generally; Administrative Agent’s Clawback

  	
   

  
	
  2.14.

  	
   

  	
  Sharing of
  Payments

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III.
  TAXES, YIELD PROTECTION AND ILLEGALITY

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3.01.

  	
   

  	
  Taxes

  	
   

  
	
  3.02.

  	
   

  	
  Illegality

  	
   

  
	
  3.03.

  	
   

  	
  Inability
  to Determine Rates

  	
   

  
	
  3.04.

  	
   

  	
  Increased
  Costs

  	
   

  
	
  3.05.

  	
   

  	
  Compensation
  for Losses

  	
   

  
	
  3.06.

  	
   

  	
  Mitigation
  Obligations

  	
   

  
	
  3.07.

  	
   

  	
  Survival

  	
   

  
	
  3.08.

  	
   

  	
  Replacement
  Lenders

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV.
  CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  4.01.

  	
   

  	
  Conditions
  of Initial Credit Extension

  	
   

  
	
  4.02.

  	
   

  	
  Conditions
  to all Credit Extensions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V.
  REPRESENTATIONS AND WARRANTIES

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  5.01.

  	
   

  	
  Existence,
  Qualification and Power; Compliance with Laws

  	
   

  
	
  5.02.

  	
   

  	
  Authorization;
  No Contravention

  	
   

  
	
  5.03.

  	
   

  	
  Governmental
  Authorization; Other Consents

  	
   

  
	
  5.04.

  	
   

  	
  Binding
  Effect

  	
   

  

 

i

 

	
  5.05.

  	
   

  	
  Financial
  Statements; No Material Adverse Effect; No Internal Control Event

  	
   

  
	
  5.06.

  	
   

  	
  Litigation

  	
   

  
	
  5.07.

  	
   

  	
  No Default

  	
   

  
	
  5.08.

  	
   

  	
  Ownership
  of Property; Liens

  	
   

  
	
  5.09.

  	
   

  	
  Environmental
  Compliance

  	
   

  
	
  5.10.

  	
   

  	
  Insurance

  	
   

  
	
  5.11.

  	
   

  	
  Taxes

  	
   

  
	
  5.12.

  	
   

  	
  ERISA
  Compliance

  	
   

  
	
  5.13.

  	
   

  	
  Subsidiaries

  	
   

  
	
  5.14.

  	
   

  	
  Margin
  Regulations; Investment Company Act; Public Utility Holding Company Act

  	
   

  
	
  5.15.

  	
   

  	
  Disclosure

  	
   

  
	
  5.16.

  	
   

  	
  Compliance
  with Laws

  	
   

  
	
  5.17.

  	
   

  	
  Intellectual
  Property; Licenses, Etc.

  	
   

  
	
  5.18.

  	
   

  	
  Restrictions
  on Distributions and Loans

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI.
  AFFIRMATIVE COVENANTS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  6.01.

  	
   

  	
  Financial
  Statements

  	
   

  
	
  6.02.

  	
   

  	
  Certificates;
  Other Information

  	
   

  
	
  6.03.

  	
   

  	
  Notices

  	
   

  
	
  6.04.

  	
   

  	
  Payment of
  Obligations

  	
   

  
	
  6.05.

  	
   

  	
  Preservation
  of Existence, Etc.

  	
   

  
	
  6.06.

  	
   

  	
  Maintenance
  of Properties

  	
   

  
	
  6.07.

  	
   

  	
  Maintenance
  of Insurance

  	
   

  
	
  6.08.

  	
   

  	
  Compliance
  with Laws

  	
   

  
	
  6.09.

  	
   

  	
  Books and
  Records

  	
   

  
	
  6.10.

  	
   

  	
  Inspection
  Rights

  	
   

  
	
  6.11.

  	
   

  	
  Use of
  Proceeds

  	
   

  
	
  6.12.

  	
   

  	
  Financial
  Covenants

  	
   

  
	
  6.13.

  	
   

  	
  Additional
  Guarantors

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII.
  NEGATIVE COVENANTS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  7.01.

  	
   

  	
  Liens

  	
   

  
	
  7.02.

  	
   

  	
  Investments

  	
   

  
	
  7.03.

  	
   

  	
  Indebtedness

  	
   

  
	
  7.04.

  	
   

  	
  Fundamental
  Changes

  	
   

  
	
  7.05.

  	
   

  	
  Dispositions

  	
   

  
	
  7.06.

  	
   

  	
  Restricted
  Payments

  	
   

  
	
  7.07.

  	
   

  	
  Change in
  Nature of Business

  	
   

  
	
  7.08.

  	
   

  	
  Transactions
  with Affiliates

  	
   

  
	
  7.09.

  	
   

  	
  Burdensome
  Agreements

  	
   

  
	
  7.10.

  	
   

  	
  Use of
  Proceeds

  	
   

  
	
  7.11.

  	
   

  	
  Subordinated
  Indebtedness

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII.
  EVENTS OF DEFAULT AND REMEDIES

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  8.01.

  	
   

  	
  Events of
  Default

  	
   

  
	
  8.02.

  	
   

  	
  Remedies Upon
  Event of Default

  	
   

  

 

ii

 

	
  8.03.

  	
   

  	
  Application
  of Funds

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX.
  ADMINISTRATIVE AGENT

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  9.01.

  	
   

  	
  Appointment and Authorization of
  Administrative Agent

  	
   

  
	
  9.02.

  	
   

  	
  Rights as a Lender

  	
   

  
	
  9.03.

  	
   

  	
  Exculpatory Provisions

  	
   

  
	
  9.04.

  	
   

  	
  Reliance by
  Administrative Agent

  	
   

  
	
  9.05.

  	
   

  	
  Delegation of Duties

  	
   

  
	
  9.06.

  	
   

  	
  Resignation of
  Administrative Agent

  	
   

  
	
  9.07.

  	
   

  	
  Non-Reliance on
  Administrative Agent and Other Lenders

  	
   

  
	
  9.08.

  	
   

  	
  No Other Duties, Etc.

  	
   

  
	
  9.09.

  	
   

  	
  Administrative Agent May File
  Proofs of Claim

  	
   

  
	
  9.10.

  	
   

  	
  Guaranty Matters

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X.
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  10.01.

  	
   

  	
  Amendments, Etc.

  	
   

  
	
  10.02.

  	
   

  	
  Notices; Effectiveness;
  Electronic Communications

  	
   

  
	
  10.03.

  	
   

  	
  No Waiver; Cumulative
  Remedies

  	
   

  
	
  10.04.

  	
   

  	
  Expenses; Indemnity; Damage
  Waiver

  	
   

  
	
  10.05.

  	
   

  	
  Payments Set Aside

  	
   

  
	
  10.06.

  	
   

  	
  Successors and Assigns

  	
   

  
	
  10.07.

  	
   

  	
  Treatment of Certain
  Information; Confidentiality

  	
   

  
	
  10.08.

  	
   

  	
  Right of Setoff

  	
   

  
	
  10.09.

  	
   

  	
  Interest Rate
  Limitation

  	
   

  
	
  10.10.

  	
   

  	
  Counterparts;
  Integration; Effectiveness

  	
   

  
	
  10.11.

  	
   

  	
  Survival of
  Representations and Warranties

  	
   

  
	
  10.12.

  	
   

  	
  Severability

  	
   

  
	
  10.13.

  	
   

  	
  Governing Law; Jurisdiction; Etc.

  	
   

  
	
  10.14.

  	
   

  	
  Waiver of Right to Trial by
  Jury

  	
   

  
	
  10.15.

  	
   

  	
  USA PATRIOT Act Notice

  	
   

  
	
  10.16.

  	
   

  	
  Time of the Essence

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SCHEDULES

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1.01

  	
   

  	
  Regulated Subsidiaries

  	
   

  
	
  2.01

  	
   

  	
  Commitments and Applicable
  Percentages

  	
   

  
	
  5.09

  	
   

  	
  Environmental Matters

  	
   

  
	
  5.03

  	
   

  	
  Restrictions on Guarantees

  	
   

  
	
  5.13

  	
   

  	
  Subsidiaries and Other Equity
  Investments

  	
   

  
	
  7.01

  	
   

  	
  Existing Liens

  	
   

  
	
  7.03

  	
   

  	
  Existing Indebtedness

  	
   

  
	
  10.02

  	
   

  	
  Administrative Agent’s Office,
  Certain Addresses for Notices

  	
   

  

 

iii

 

	
  EXHIBITS

  	
   

  
	
   

  	
   

  
	
  Form of

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  A

  	
   

  	
  Committed Loan Notice

  	
   

  
	
  B

  	
   

  	
  Swing Line Loan Notice

  	
   

  
	
  C

  	
   

  	
  Note

  	
   

  
	
  D

  	
   

  	
  Compliance Certificate

  	
   

  
	
  E

  	
   

  	
  Assignment and Assumption

  	
   

  

 

iv

 

CREDIT AGREEMENT

 

THIS CREDIT AGREEMENT (this “Agreement”) is entered
into as of April 1, 2005, among SOUTHWEST
WATER COMPANY, a Delaware corporation (“Borrower”), each lender from
time to time party hereto (collectively, “Lenders” and individually, a “Lender”),
and BANK OF AMERICA, N.A., as Administrative Agent, Swing Line Lender and L/C
Issuer.  In consideration of the mutual
covenants and agreements herein contained, the parties hereto covenant and
agree as follows:

 

ARTICLE I.                             DEFINITIONS AND ACCOUNTING TERMS

 

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

 

“Acquisition”
means any transaction, or any series of related transactions, consummated after
the Closing Date, by which Borrower or any Subsidiary of Borrower directly or
indirectly (a) acquires any ongoing business or all or substantially all
of the assets of any Person engaged in any ongoing business, whether through
purchase of assets, merger or otherwise, (b) acquires control of securities
of a Person engaged in an ongoing business representing more than 50% of the
ordinary voting power for the election of directors or other governing position
if the business affairs of such Person are managed by a board of directors or
other governing body or (c) acquires control of more than 50% of the
ownership interest in any partnership, joint venture, limited liability
company, business trust or other Person engaged in an ongoing business that is
not managed by a board of directors or other governing body.

 

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

 

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

 

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

 

“Affiliate”
means, with respect to any Person, another Person that directly, or indirectly
through one or more intermediaries, Controls or is Controlled by or is under
common Control with the Person specified.

 

“Aggregate
Commitments” means the Commitments of all Lenders.  As of the Closing Date, the aggregate
principal amount of the Aggregate Commitments is $100,000,000.

 

“Agreement”
means this Credit Agreement.

 

“Applicable
Percentage” means, with respect to any Lender at any time, the percentage
(carried out to the ninth decimal place) of the Aggregate Commitments
represented by such 

 

1

 

Lender’s Commitment at such time.  If the commitment of each Lender to make
Loans and the obligation of the L/C Issuer to make L/C Credit Extensions have
been terminated pursuant to Section 8.02 or if the Aggregate Commitments
have expired, then the Applicable Percentage of each Lender shall be determined
based on the Applicable Percentage of such Lender most recently in effect,
giving effect to any subsequent assignments. 
The initial Applicable Percentage of each Lender is set forth opposite
the name of such Lender on Schedule 2.01 or in the Assignment and
Assumption pursuant to which such Lender becomes a party hereto, as applicable.

 

“Applicable
Rate” means, as of each date of determination (unless Borrower makes
a timely election to have the Applicable Rate determined based upon its S&P
Rating, as provided below), the following percentages (expressed in basis
points per annum), based upon the Total Capitalization Ratio as set forth in
the most recent Compliance Certificate received by Administrative Agent
pursuant to Section 6.02(b):

 

	
  Pricing Level

  	
   

  	
  Total Capitalization 

  Ratio

  	
   

  	
  Base Rate

  	
   

  	
  Non-Use Fee Rate

  	
   

  	
  Eurodollar Rate

  + Letters of

  Credit

  	
   

  
	
  I

  	
   

  	
  <47.5%

  	
   

  	
  - 25.0

  	
   

  	
  20.0

  	
   

  	
  87.5

  	
   

  
	
  II

  	
   

  	
  >47.5%
  but <52.5%

  	
   

  	
  - 25.0

  	
   

  	
  22.5

  	
   

  	
  100.0

  	
   

  
	
  III

  	
   

  	
  >52.5%
  but <55.0%

  	
   

  	
  - 25.0

  	
   

  	
  25.0

  	
   

  	
  112.5

  	
   

  
	
  IV

  	
   

  	
  >55.0%

  	
   

  	
  - 12.5

  	
   

  	
  27.5

  	
   

  	
  137.5

  	
   

  

 

At
such times as the Applicable Rate is determined based upon the matrix set forth
above, any increase or decrease in the Applicable Rate resulting from a change
in the Total Capitalization Ratio shall become effective on the first Business
Day of the first calendar month immediately following delivery of the related
Compliance Certificate pursuant to Section 6.02(b); provided, however,
that if a Compliance Certificate is not delivered when due in accordance with
such Section, then Pricing Level IV shall apply from the first Business Day of
the first calendar month following the date such Compliance Certificate was required
to have been delivered until the first Business Day of the first calendar month
following the date such Compliance Certificate is delivered.

 

2

 

On or
before April 1, 2006, Borrower may notify the Administrative Agent in
writing of its irrevocable election to have the Applicable Rate determined with
reference to its S&P Rating.  If
Borrower makes an such election on or before such date, then commencing on the
Business Day of such election, the Applicable Rate shall mean, from time to
time, the following percentages (expressed in basis points per annum), based
upon the S&P Rating in effect from time to time, provided that in
the event that Standard & Poor’s Rating Services does not provide such
a rating, then the applicable Pricing Level shall instead be based upon the
Total Capitalization Ratio as set forth above:

 

	
  Pricing Level

  	
   

  	
  S&P Rating

  	
   

  	
  Base Rate

  	
   

  	
  Non-Use Fee Rate

  	
   

  	
  Eurodollar Rate 

  + Letters of

  Credit

  	
   

  
	
  I

  	
   

  	
  >A

  	
   

  	
  -25.0

  	
   

  	
  17.5

  	
   

  	
  75.0

  	
   

  
	
  II

  	
   

  	
  A-

  	
   

  	
  -25.0

  	
   

  	
  20.0

  	
   

  	
  87.5

  	
   

  
	
  III

  	
   

  	
  BBB+

  	
   

  	
  -25.0

  	
   

  	
  22.5

  	
   

  	
  100.0

  	
   

  
	
  IV

  	
   

  	
  <BBB+

  	
   

  	
  -12.5

  	
   

  	
  27.5

  	
   

  	
  137.5

  	
   

  

 

“Assignment
and Assumption” means an assignment and assumption entered into by a Lender
and an Eligible Assignee (with the consent of any party whose consent is
required by Section 10.06(b), and accepted by Administrative Agent, in
substantially the form of Exhibit E or any other form approved by Administrative
Agent).

 

“Attributable
Indebtedness” means, on any date, (a) in respect of any capital lease
of any Person, the capitalized amount thereof that would appear on a balance
sheet of such Person prepared as of such date in accordance with GAAP, and (b) in
respect of any Synthetic Lease Obligation, the capitalized amount of the
remaining lease payments under the relevant lease that would appear on a
balance sheet of such Person prepared as of such date in accordance with GAAP
if such lease were accounted for as a capital lease.

 

“Audited
Financial Statements” means the audited consolidated balance sheet of
Borrower and its Subsidiaries for the fiscal year ended December 31, 2004,
and the related consolidated statements of income or operations, shareholders’
equity and cash flows for such fiscal year of Borrower and its Subsidiaries,
including the notes thereto.

 

“Auto-Extension
Letter of Credit” has the meaning provided in Section 2.03(b)(iv).

 

“Availability
Period” means the period from and including the Closing Date to the
earliest of (a) the Maturity Date, (b) the date of termination of the
Aggregate Commitments pursuant to Section 2.06, and (c) the date of
termination of the commitment of each Lender to make Loans and of the
obligation of the L/C Issuer to make L/C Credit Extensions pursuant to Section 8.02.

 

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

 

3

 

“Base
Rate” means, for any day, a fluctuating rate per annum equal to the higher
of (a) the Federal Funds Rate plus 1/2 of 1% and (b) the rate of
interest in effect for such day as publicly announced from time to time by Bank
of America as its “prime rate.”  The “prime
rate” is a rate set by Bank of America based upon various factors including
Bank of America’s costs and desired return, general economic conditions and
other factors, and is used as a reference point for pricing some loans, which
may be priced at, above, or below such announced rate.  Any change in such rate announced by Bank of
America shall take effect at the opening of business on the day specified in
the public announcement of such change.

 

“Base
Rate Committed Loan” means a Committed Loan that is a Base Rate Loan.

 

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

 

“Bondable
Capacity” means, as of any date of determination, 65% of the net book value
of utility plant, property and equipment of the Regulated Subsidiaries,
determined in accordance with GAAP.

 

“Borrower”
has the meaning specified in the first paragraph of this Agreement.

 

“Borrower
Materials” has the meaning specified in Section 6.02.

 

“Borrowing”
means a Committed Borrowing or a Swing Line Borrowing, as the context may
require.

 

“Business
Day” means any day other than a Saturday, Sunday or other day on which
commercial banks are authorized to close under the Laws of, or are in fact
closed in, Los Angeles, California or the city where Administrative Agent’s
Office is located and, if such day relates to any Eurodollar Rate Loan, means
any such day on which dealings in Dollar deposits are conducted by and between
banks in the London interbank eurodollar market.

 

“Capital
Expenditure” means any expenditure by Borrower or by any Subsidiary of
Borrower for or related to fixed assets or purchased intangibles that is
treated as a capital expenditure under GAAP, including any amount which
is required to be treated as an asset subject to a Capital Lease
Obligation.  The amount of Capital
Expenditures in respect of fixed assets purchased or constructed by Borrower or
by any Subsidiary of Borrower in any fiscal period shall be net of (a) any
Net Sales Proceeds received during such fiscal period by Borrower or such
Subsidiary for fixed assets sold by Borrower or such Subsidiary and (b) any
casualty insurance proceeds received during such fiscal period by Borrower or
such Subsidiary for casualties to fixed assets and applied to the repair or
replacement thereof.

 

“Capital
Lease Obligations” means all monetary obligations of a Person under any
leasing or similar arrangement which, in accordance with GAAP, is classified as
a capital lease.

 

“Cash”
means, when used in connection with any Person, all monetary and non-monetary
items owned by that Person that are treated as cash in accordance with GAAP,
consistently applied.

 

4

 

“Cash
Collateral” means cash or cash equivalents which Borrower has deposited
pursuant to an obligation to Cash Collateralize.

 

“Cash
Collateralize” has the meaning specified in Section 2.03(g).

 

“Change
in Law” means the occurrence, after the date of this Agreement, of any of
the following: (a) the adoption or taking effect of any law, rule,
regulation or treaty, (b) any change in any law, rule, regulation or
treaty or in the administration, interpretation or application thereof by any
Governmental Authority or (c) the making or issuance of any request,
guideline or directive (whether or not having the force of law) by any
Governmental Authority.

 

“Change
of Control” means, with respect to any Person, an event or series of events
by which:

 

(a)                                  any “person” or “group” (as such terms
are used in Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, but excluding any employee benefit plan of such person or its
subsidiaries, and any person or entity acting in its capacity as trustee, Administrative
Agent or other fiduciary or administrator of any such plan) becomes the “beneficial
owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange
Act of 1934, except that a person or group shall be deemed to have “beneficial
ownership” of all securities that such person or group has the right to acquire
(such right, an “option right”), whether such right is exercisable
immediately or only after the passage of time), directly or indirectly, of 30%
or more of the equity securities of such Person entitled to vote for members of
the board of directors or equivalent governing body of such Person on a
fully-diluted basis (and taking into account all such securities that such
person or group has the right to acquire pursuant to any option right);

 

(b)                                 during any period of twelve consecutive
months, a majority of the members of the board of directors or other equivalent
governing body of such Person cease to be composed of individuals (i) who
were members of that board or equivalent governing body on the first day of
such period, (ii) whose election or nomination to that board or equivalent
governing body was approved by individuals referred to in clause (i) above
constituting at the time of such election or nomination at least a majority of
that board or equivalent governing body or (iii) whose election or
nomination to that board or other equivalent governing body was approved by
individuals referred to in clauses (i) and (ii) above constituting at
the time of such election or nomination at least a majority of that board or
equivalent governing body (excluding, in the case of both clause (ii) and
clause (iii), any individual whose initial nomination for, or assumption of
office as, a member of that board or equivalent governing body occurs as a
result of an actual or threatened solicitation of proxies or consents for the
election or removal of one or more directors by any person or group other than
a solicitation for the election of one or more directors by or on behalf of the
board of directors); or

 

(c)                                  any individual(s) or entity(s) acting in
concert shall have acquired by contract or otherwise, or shall have entered
into a contract or arrangement that, upon consummation thereof, will result in
its or their acquisition of the power to exercise, directly or indirectly, a
controlling influence over the management or policies of such Person, or
control over the equity securities of such Person entitled to vote for members
of the board of directors or equivalent governing body of such Person on a
fully-diluted basis (and taking into account all such securities that such 

 

5

 

individual(s) or entity(s)  or group has the right to acquire pursuant to
any option right) representing 30% or more of the combined voting power of such
securities.

 

“Closing
Date” means the first date all the conditions precedent in Section 4.01
are satisfied or waived in accordance with Section 10.01.

 

“Code”
means the Internal Revenue Code of 1986.

 

“Commitment”
means, as to each Lender, its obligation to (a) make Committed Loans to
Borrower pursuant to Section 2.01, (b) purchase participations in L/C
Obligations, and (c) purchase participations in Swing Line Loans, in an
aggregate principal amount at any one time outstanding not to exceed the amount
set forth opposite such Lender’s name on Schedule 2.01 or in the
Assignment and Assumption pursuant to which such Lender becomes a party hereto,
as applicable, as such amount may be adjusted from time to time in accordance
with this Agreement.

 

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

 

“Committed
Loan” has the meaning specified in Section 2.01.

 

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

 

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

 

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

 

“Contributions
in Aid of Construction” means, as of each date of determination, the amount
of the liability which should be reflected on Borrower’s consolidated balance
sheet as the line item bearing that title and of that date in accordance with
GAAP, consistently applied.

 

“Control”
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of a Person, whether through the
ability to exercise voting power, by contract or otherwise.  “Controlling” and “Controlled”
have meanings correlative thereto.

 

“Credit
Extension” means each of the following: (a) a Borrowing and (b) an
L/C Credit Extension.

 

“Debtor
Relief Laws” means the Bankruptcy Code of the United States, and all other
liquidation, conservatorship, bankruptcy, assignment for the benefit of
creditors, moratorium, rearrangement, receivership, insolvency, reorganization,
or similar debtor relief Laws of the 

 

6

 

United States or other applicable jurisdictions from
time to time in effect and affecting the rights of creditors generally.

 

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

 

“Default
Rate” means (a) when used with respect to Obligations other than L/C
Fees an interest rate equal to (i) the Base Rate minus the Applicable Rate
plus (ii) 2% per annum; provided, however, that with
respect to a Eurodollar Rate Loan, the Default Rate shall be an interest rate
equal to the interest rate (including any Applicable Rate) otherwise applicable
to such Loan plus 2% per annum, and (b) when used with respect to L/C
Fees, a rate equal to the Applicable Rate plus 2% per annum.

 

“Defaulting
Lender” means any Lender that (a) has failed to fund any portion of
the Committed Loans, participations in L/C Obligations or participations in
Swing Line Loans required to be funded by it hereunder within one Business Day
of the date required to be funded by it hereunder, (b) has otherwise
failed to pay over to Administrative Agent or any other Lender any other amount
required to be paid by it hereunder within one Business Day of the date when
due, unless the subject of a good faith dispute, or (c) has been deemed
insolvent or become the subject of a bankruptcy or insolvency proceeding.

 

“Disposition”
means the sale, transfer, license, lease or other disposition (including any
sale and leaseback transaction) of any property by any Person, including any
sale, assignment, transfer or other disposal, with or without recourse, of any
notes or accounts receivable or any rights and claims associated therewith, in
an amount, for any transaction or series of related transactions, in excess of
$100,000.

 

“Disqualified
Stock” means any capital stock, warrants, options or other rights to
acquire capital stock (but excluding any debt security which is convertible, or
exchangeable, for capital stock), which, by its terms (or by the terms of any
security into which it is convertible or for which it is exchangeable), or upon
the happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or is redeemable at the option of the
holder thereof, in whole or in part, on or prior to the latest maturity date of
the Obligations.

 

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

 

“EBITDA”
means, for any period, Net Income for that period, plus Interest Expense, plus income
tax expense, plus depreciation and amortization, plus any non-recurring
or extraordinary losses, plus any non-cash losses (and minus any non-recurring
or extraordinary gains or any non-cash gains), in each case for the same period
and to the extent deducted in determining Net Income.

 

7

 

“EBITDA
Coverage Ratio” means, as of the last day of any Fiscal Quarter, the ratio
of :

 

(a) EBITDA
for the twelve month period ended on that date minus Maintenance Capital
Expenditures made by Borrower and its Subsidiaries during that period minus
income taxes paid in Cash by Borrower and its Subsidiaries with respect to that
period; to

 

(b) the
sum of (i) all Interest Expense paid or payable in cash during that
period, plus (ii) scheduled principal payments in respect of Total Indebtedness
during that period (other than any such payments due upon the final
maturity of any obligation which is Total Indebtedness), plus (iii) dividends
paid in Cash on Equity Interests of Borrower and its Subsidiaries to third
parties during that period, plus (iv) mandatory principal
prepayments in respect of Subordinated Indebtedness made pursuant to Section 7.11(b) during
that period.

 

provided that in the case of any Material Transaction, the
calculation of the foregoing ratio shall be adjusted on a pro forma basis to
give effect to the results of operations of each person or assets which are the
subject of such Material Transaction.

 

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

 

“Environmental
Laws” means any and all federal, state, local, and foreign statutes, laws,
regulations, ordinances, rules, judgments, orders, decrees, permits,
concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including those related to
hazardous substances or wastes, air emissions and discharges to waste or public
systems.

 

“Environmental
Liability” means any liability, contingent or otherwise (including any
liability for damages, costs of environmental remediation, fines, penalties or
indemnities), of Borrower, any other Loan Party or any of their respective
Subsidiaries directly or indirectly resulting from or based upon (a) violation
of any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure
to any Hazardous Materials, (d) the release or threatened release of any
Hazardous Materials into the environment or (e) any contract, agreement or
other consensual arrangement pursuant to which liability is assumed or imposed
with respect to any of the foregoing.

 

“Equity
Interests” means, with respect to any Person, all of the shares of capital
stock of (or other ownership or profit interests in) such Person, all of the
warrants, options or other rights for the purchase or acquisition from such
Person of shares of capital stock of (or other ownership or profit interests
in) such Person, all of the securities convertible into or exchangeable for
shares of capital stock of (or other ownership or profit interests in) such
Person or warrants, rights or options for the purchase or acquisition from such
Person of such shares (or such other interests), 

 

8

 

and all of the other ownership or profit interests in
such Person (including partnership, member or trust interests therein), whether
voting or nonvoting, and whether or not such shares, warrants, options, rights
or other interests are outstanding on any date of determination.

 

“ERISA”
means the Employee Retirement Income Security Act of 1974.

 

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

 

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

 

“Eurodollar
Base Rate” has the meaning specified in the definition of Eurodollar Rate.

 

“Eurodollar
Rate” means for any Interest Period with respect to a Eurodollar Rate Loan,
a rate per annum determined by Administrative Agent pursuant to the following
formula:

 

	
   

  	
   

  	
   

  	
   

  	
  Eurodollar Base Rate

  	
   

  
	
  Eurodollar Rate

  	
   

  	
  =

  	
   

  	
  1.00 – Eurodollar Reserve 

  Percentage

  

 

Where,

 

“Eurodollar Base Rate” means,
for such Interest Period (rounded upwards, as necessary, to the nearest 1/100
of 1%) the rate per annum equal to the British Bankers Association LIBOR Rate (“BBA
LIBOR”), as published by Reuters (or other commercially available source
providing quotations of BBA LIBOR as designated by Administrative Agent from
time to time) at approximately 11:00 a.m., London time, two Business Days
prior to the commencement of such Interest Period, for Dollar deposits (for
delivery on the first day of such Interest Period) with a term equivalent to
such Interest Period.  If such rate is
not available at such time for any reason, then the “Eurodollar Base Rate”
for such Interest Period (rounded upwards, as necessary, to the nearest 1/100
of 1%) shall be the rate per annum determined by Administrative Agent to be the
rate at which deposits in Dollars for delivery on the first day of such
Interest Period in same day funds in the approximate amount of the Eurodollar
Rate Loan being made, continued or converted by Bank of 

 

9

 

America and with a term equivalent to such Interest Period
would be offered by Bank of America’s London Branch to major banks in the
London interbank eurodollar market at their request at approximately 11:00 a.m.
(London time) two Business Days prior to the commencement of such Interest
Period.

 

“Eurodollar Reserve Percentage” means, for any
day during any Interest Period, the reserve percentage (expressed as a decimal,
carried out to five decimal places) in effect on such day, if applicable to any
Lender, under regulations issued from time to time by the Board of Governors of
the Federal Reserve System of the United States for determining the maximum
reserve requirement (including any emergency, supplemental or other marginal
reserve requirement) with respect to Eurocurrency funding (currently referred
to as “Eurocurrency liabilities”).  The
Eurodollar Rate for each outstanding Eurodollar Rate Loan shall be adjusted
automatically as of the effective date of any change in the Eurodollar Reserve
Percentage.

 

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

 

“Event
of Default” has the meaning specified in Section 8.01.

 

“Excluded
Taxes” means, with respect to Administrative Agent, any Lender, the L/C
Issuer or any other recipient of any payment to be made by or on account of any
obligation of Borrower hereunder, (a) taxes imposed on or measured by its
overall net income (however denominated), and franchise taxes imposed on it (in
lieu of net income taxes), by the United States (or any political subdivision
thereof) or by the jurisdiction (or any political subdivision thereof) under
the laws of which such recipient is organized or in which its principal office
is located or, in the case of any Lender, in which its applicable Lending
Office is located, and (b) any branch profits taxes imposed by the United
States or any similar tax imposed by any other jurisdiction in which Borrower
is located.

 

“Existing
Bank of America Credit Agreement” means the Amended and Restated Credit Agreement,
dated as of July 7, 2004, by and between Borrower and Bank of America,
either as originally executed or as it may from time to time be supplemented,
modified, amended, restated or extended.

 

“Existing
Letters of Credit” means letters of credit issued under the Existing Bank
of America Credit Agreement which are outstanding on the Closing Date.

 

“Existing
Indentures” means, collectively, the NMUI Indenture and the Suburban
Indenture.

 

“Existing
Union Bank Agreement” means the Amended and Restated Credit Agreement,
dated as of July 7, 2004, by and between Borrower and Union Bank of
California, N.A., either as originally executed or as it may from time to time
be supplemented, modified, amended, restated or extended.

 

“Federal
Funds Rate”  means, for any day, the
rate per annum equal to the weighted average of the rates on overnight Federal
funds transactions with members of the Federal 

 

10

 

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

 

“Fee
Letter” has the meaning specified in Section 2.10(b).

 

“Fiscal
Quarter” means the fiscal quarter of Borrower ending on each March 31,
June 30, September 30, and December 31.

 

“Fiscal
Year” means the fiscal year of Borrower ending on each December 31.

 

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

 

“GAAP”
means generally accepted accounting principles in the United States set forth
in the opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or such other
principles as may be approved by a significant segment of the accounting
profession in the United States, that are applicable to the circumstances as of
the date of determination, consistently applied.

 

“Governmental
Authority” means the government of the United States or any other nation,
or of any political subdivision thereof, whether state or local, and any
agency, authority, instrumentality, regulatory body, court, central bank or
other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government (including
any supra-national bodies such as the European Union or the European Central
Bank).

 

“Guarantee”
means, as to any Person, (a) any obligation, contingent or otherwise, of
such Person guaranteeing or having the economic effect of guaranteeing any
Indebtedness or other obligation payable or performable by another Person (the “primary
obligor”) in any manner, whether directly or indirectly, and including any
obligation of such Person, direct or indirect, (i) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness or
other obligation, (ii) to purchase or lease property, securities or
services for the purpose of assuring the obligee in respect of such
Indebtedness or other obligation of the payment or performance of such
Indebtedness or other obligation, (iii) to maintain working capital,
equity capital or any other financial statement condition or liquidity or level
of income or cash flow of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation, or (iv) entered into
for the purpose of assuring in any other manner the obligee in respect of such
Indebtedness or other obligation of the payment or performance thereof or to
protect such obligee against loss in respect thereof (in whole or in part), or (b) any
Lien on any assets of such Person securing any Indebtedness or other obligation
of any other Person, whether 

 

11

 

or not such Indebtedness or other obligation is
assumed by such Person (or any right, contingent or otherwise, of any holder of
such Indebtedness to obtain any such Lien). 
The amount of any Guarantee shall be deemed to be an amount equal to the
stated or determinable amount of the related primary obligation, or portion
thereof, in respect of which such Guarantee is made or, if not stated or
determinable, the maximum reasonably anticipated liability in respect thereof
as determined by the guaranteeing Person in good faith.  The term “Guarantee” as a verb has a
corresponding meaning.

 

“Guarantors”
means, collectively, (a) the Persons which are party to the Guaranty as of
the Closing Date, and (b) each Person which hereafter becomes a Significant
Subsidiary other than any Significant Subsidiary that is not permitted to be a
party to the Guaranty based upon any Law applicable to such Subsidiary by
reason of its status as a regulated utility (provided that no such Subsidiary
shall be obligated to apply for any discretionary regulatory approvals which
would be required to permit its execution of the Guaranty) or any Contractual
Obligation of such Subsidiary existing on the Closing Date and disclosed to the
Administrative Agent on Schedule 5.03.

 

“Guaranty”
means the Guaranty made by the Guarantor in favor of Administrative Agent and for
the benefit of the Lenders, in form and substance reasonably satisfactory to Administrative
Agent.

 

“Hazardous
Materials” means all explosive or radioactive substances or wastes and all
hazardous or toxic substances, wastes or other pollutants, including petroleum
or petroleum distillates, asbestos or asbestos-containing materials,
polychlorinated biphenyls, radon gas, infectious or medical wastes and all
other substances or wastes of any nature regulated pursuant to any
Environmental Law.

 

“Honor
Date” has the meaning specified in Section 2.03(e)(i).

 

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

 

(a)                                  all obligations of such Person for
borrowed money and all obligations of such Person evidenced by bonds,
debentures, notes, loan agreements or other similar instruments, including
without limitation advances for construction (whether or not bearing interest);

 

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

 

(c)                                  all obligations of such Person to pay the
deferred purchase price of property or services (other than trade accounts incurred
and paid in the ordinary course of business);

 

(d)                                 indebtedness (excluding prepaid interest
thereon) secured by a Lien on property owned or being purchased by such Person
(including indebtedness arising under 

 

12

 

conditional sales or other title retention
agreements), whether or not such indebtedness shall have been assumed by such
Person or is limited in recourse;

 

(e)                                  capital leases and Synthetic Lease
Obligations;

 

(f)                                    all obligations of such Person to
purchase, redeem, retire, defease or otherwise make any payment in respect of
any Equity Interest in such Person or any other Person (except to the extent
such obligations are honored by the issuance of other Equity Interests),
valued, in the case of a redeemable preferred interest, at the greater of its
voluntary or involuntary liquidation preference plus accrued and unpaid
dividends; and

 

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

 

Notwithstanding
the foregoing provisions of this definition, “Indebtedness” shall not include (i) Contributions
in Aid of Construction, or (ii) public indebtedness for borrowed money to
the extent that such indebtedness (y) has been defeased pursuant to the terms
of the indenture or other instrument under which the same has been issued or (z)
has been called redemption and for which funds sufficient to redeem such indebtedness
have been irrevocably delivered to a trustee or other representative for such
indebtedness to assure the full repayment thereof.

 

The amount of any
capital lease or Synthetic Lease Obligation as of any date shall be deemed to
be the amount of Attributable Indebtedness in respect thereof as of such date.

 

“Indemnified
Taxes” means Taxes other than Excluded Taxes.

 

“Indemnitees”
has the meaning specified in Section 10.04(b).

 

“Information”
has the meaning specified in Section 10.07.

 

“Interest
Expense” means, for any period, the sum of all interest expense (net
of interest income) determined for Borrower and its Subsidiaries on a
consolidated basis in accordance with GAAP, consistently applied.

 

“Interest
Payment Date” means, (a) as to any Loan other than a Base Rate Loan,
the last day of each Interest Period applicable to such Loan and the Maturity
Date; provided, however, that if any Interest Period for a
Eurodollar Rate Loan exceeds three months, the respective dates that fall every
three months after the beginning of such Interest Period shall also be Interest
Payment Dates; and (b) as to any Base Rate Loan (including a Swing Line
Loan), each Quarterly Payment Date.

 

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

 

13

 

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

 

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

 

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

 

“Internal
Control Event” means any determination by Borrower or by its auditors that
Borrower has a material weakness in, or fraud that involves management or other
employees who have a significant role in, Borrower’s internal controls over
financial reporting, in each case as described in the Securities Laws.

 

“Investment”
means, as to any Person, any direct or indirect acquisition or investment by
such Person, whether by means of (a) the purchase or other acquisition of
capital stock or other securities of another Person, (b) a loan, advance
or capital contribution to, Guarantee or assumption of debt of, or purchase or
other acquisition of any other debt or equity participation or interest in,
another Person, including any partnership or joint venture interest in such
other Person and any arrangement pursuant to which the investor Guarantees
Indebtedness of such other Person, or (c) the purchase or other
acquisition (in one transaction or a series of transactions) of assets of
another Person that constitute a business unit. 
For purposes of covenant compliance, the amount of any Investment shall
be the amount actually invested, without adjustment for subsequent increases or
decreases in the value of such Investment.

 

“IRB”
means any industrial revenue bond or similar arrangement.

 

“IRS”
means the United States Internal Revenue Service.

 

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

 

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

 

“Laws”
means, collectively, all international, foreign, federal, state and local
statutes, treaties, rules, guidelines, regulations, ordinances, codes and
administrative or judicial precedents or authorities, including the
interpretation or administration thereof by any Governmental Authority charged
with the enforcement, interpretation or administration thereof, and all
applicable administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental Authority,
in each case whether or not having the force of law.

 

14

 

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

 

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

 

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

 

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

 

“L/C
Expiration Date” means the fifth Business Day prior to the Maturity Date
then in effect (or, if such day is not a Business Day, the next preceding
Business Day).

 

“L/C
Fee” has the meaning specified in Section 2.03(i).

 

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

 

“L/C
Obligations” means, as at any date of determination, the aggregate amount
available to be drawn under all outstanding Letters of Credit plus the
aggregate of all Unreimbursed Amounts, including all L/C Borrowings.  For purposes of computing the amount
available to be drawn under any Letter of Credit, the amount of such Letter of
Credit shall be determined in accordance with Section 1.06.  For all purposes of this Agreement, if on any
date of determination a Letter of Credit has expired by its terms but any
amount may still be drawn thereunder by reason of the operation of Rule 3.14
of the ISP, such Letter of Credit shall be deemed to be “outstanding” in the
amount so remaining available to be drawn.

 

“L/C
Sublimit” means an amount equal to $40,000,000.  The L/C Sublimit is part of, and not in
addition to, the Aggregate Commitments.

 

“Lender”
has the meaning specified in the introductory paragraph hereto and, as the
context requires, includes Swing Line Lender.

 

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

 

“Letter
of Credit” means each standby letter of credit issued hereunder and shall
include the Existing Letters of Credit.

 

“Lien”
means any mortgage, pledge, hypothecation, assignment, deposit arrangement,
encumbrance, lien (statutory or other), charge, or preference, priority or
other security interest or preferential arrangement in the nature of a security
interest of any kind or nature whatsoever (including any conditional sale or
other title retention agreement, any easement, right of way or 

 

15

 

other encumbrance on title to real property, and any
financing lease having substantially the same economic effect as any of the
foregoing).

 

“Loan”
means an extension of credit by a Lender to Borrower under Article II in
the form of a Committed Loan or a Swing Line Loan.

 

“Loan
Documents” means this Agreement, each Note, each Issuer Document, the Fee
Letter and the Guaranty.

 

“Loan
Parties” means, collectively, Borrower and each Person (other than Administrative
Agent, the L/C Issuer, Swing Line Lender, or any Lender) executing a Loan
Document including, without limitation, each Guarantor.

 

“Maintenance
Capital Expenditures” means a Capital Expenditure for the maintenance,
repair, restoration or refurbishment of fixed assets which are owned by
Borrower or any of its Subsidiaries on the Closing Date, but excluding any
Capital Expenditures which add to or significantly improve any such property.

 

“Material
Adverse Effect” means (a) a material adverse change in, or a material
adverse effect upon, the operations, business, properties, liabilities (actual
or contingent) or condition (financial or otherwise) of Borrower and its
Subsidiaries taken as a whole; (b) a material impairment of the ability of
any Loan Party to perform its obligations under any Loan Document to which it
is a party; or (c) a material adverse effect upon the legality, validity,
binding effect or enforceability against any Loan Party of any Loan Document to
which it is a party.

 

“Material
Transaction” means each Acquisition or Disposition involving an aggregate
consideration (including any assumption of Indebtedness) in an amount which is
in excess of $5,000,000.

 

“Maturity
Date” means April 1, 2010.

 

“Maximum
Increase Amount” has the meaning specified in Section 2.07(a).

 

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

 

“Negative
Pledge” means any covenant binding upon any Person that prohibits the granting
of liens on the property of that Person or any of its Affiliates.

 

“Net
Income” means, for any period, the consolidated net income of Borrower and
its Subsidiaries for that period, determined in accordance with GAAP,
consistently applied.

 

“Net
Sales Proceeds” means, in respect of any sale, transfer or other
disposition of assets by Borrower or any of its Subsidiaries, the gross cash
proceeds (including any cash received by way of deferred payment pursuant to a
promissory note, a receivable or otherwise, but only as received) received by
Borrower or such Subsidiary from such transaction, net of the reasonable

 

16

 

costs of such transaction (including fees and
commissions, payments of assumed liabilities relating to the assets conveyed in
such transaction and required payments of any Indebtedness (other than any
Indebtedness owed to Borrower or such Subsidiary) which is secured by the
respective assets which were conveyed in such transaction), and the taxes paid
or payable as a result of such transaction.

 

“NMUI”
means New Mexico Utilities, Inc., a New Mexico corporation.

 

“NMUI
Indenture” means the Indenture of Mortgage, dated February 14, 1992,
executed by NMUI in favor of Sunwest Bank of Albuquerque, National Association,
as amended and as in effect on the date hereof and, subject to Section 7.09,
as the same may from time to time be further amended.

 

“Non-Extension
Notice Date” has the meaning specified in Section 2.03(b)(iv).

 

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

 

“Obligations”
means all advances to, and debts, liabilities, obligations, covenants and
duties of, any Loan Party arising under any Loan Document or otherwise with
respect to any Loan or Letter of Credit, whether direct or indirect (including
those arising under any Swap Contract or acquired by assumption), absolute or
contingent, due or to become due, now existing or hereafter arising and
including interest and fees that accrue after the commencement by or against
any Loan Party or any Affiliate thereof of any proceeding under any Debtor
Relief Laws naming such Person as the debtor in such proceeding, regardless of
whether such interest and fees are allowed claims in such proceeding.

 

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

 

“Other
Taxes” means all present or future stamp, intangible or documentary taxes
or any other excise or property taxes, charges or similar levies arising from
any payment made hereunder or under any other Loan Document or from the
execution, delivery or enforcement of, or otherwise with respect to, this
Agreement or any other Loan Document.

 

“Outstanding
Amount” means (i) with respect to Committed Loans and Swing Line Loans
on any date, the aggregate outstanding principal amount thereof after giving
effect to any borrowings and prepayments or repayments of Committed Loans and
Swing Line Loans, as the case may be, occurring on such date; and (ii) with
respect to any L/C Obligations on any date, the amount of such L/C Obligations
on such date after giving effect to any L/C Credit Extension 

 

17

 

occurring on such date and any other changes in the
aggregate amount of the L/C Obligations as of such date, including as a result
of any reimbursements by Borrower of Unreimbursed Amounts.

 

“Participant”
has the meaning specified in Section 10.06(d).

 

“Participating
Lenders” has the meaning specified in Section 2.07(e).

 

“PBGC”
means the Pension Benefit Guaranty Corporation.

 

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

 

“Permitted
Acquisition” means each Acquisition by Borrower or any Subsidiary of
Borrower of another Person engaged in the United States in the same or a similar
line of business as Borrower and its Subsidiaries, or of assets comprising a
business segment of such a Person, and which has not been objected to by the
Board of Directors or other management body of the Person being acquired, provided
that:

 

(i)            after giving pro forma effect to
such Acquisition, Borrower will have the immediate ability to borrow additional
Loans of at least $10,000,000;

 

(ii)                                  prior to the consummation of such
Acquisition, Borrower shall provide the Administrative Agent with a certification
stating that, giving pro forma effect to the consummation thereof, (A) no
Default or Event of Default shall have occurred and remain continuing, and (B) where
the aggregate consideration paid by Borrower and its Subsidiaries is in excess
of $10,000,000 (including cash paid, Indebtedness of the acquired entity
assumed by Borrower and its Subsidiaries, and equity securities of the Borrower
issued to the seller), attaching pro-forma balance sheets and projections in
form and substance reasonably acceptable to the Administrative Agent demonstrating
on a pro forma basis that Borrower shall continue to be in compliance with the
financial covenants set forth in Section 6.12 and with all other
provisions of the Loan Documents and shall have the ability to borrow
additional Loans of at least $10,000,000 as of the immediately succeeding
Fiscal Quarter;

 

(iii)                               Borrower shall comply with Section 6.13
as to each Person which is the subject of a Permitted Acquisition; and

 

(iv)                              Any Permitted Acquisition made in respect
of an Unregulated Subsidiary which involves an aggregate consideration which is
in excess of $10,000,000 shall be subject to the prior written consent of the
Required Lenders.

 

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

 

18

 

“Plan”
means any “employee benefit plan” (as such term is defined in Section 3(3) of
ERISA) established by Borrower or, with respect to any such plan that is
subject to Section 412 of the Code or Title IV of ERISA, any ERISA
Affiliate.

 

“Platform”
has the meaning specified in Section 6.02.

 

“Public
Lender” has the meaning specified in Section 6.02.

 

“Quarterly
Payment Date” means the fifteenth calendar day of each March, June, September and
December and the Maturity Date.

 

“Register”
has the meaning specified in Section 10.06(c).

 

“Registered
Public Accounting Firm” has the meaning specified in the Securities Laws
and shall be independent of Borrower as prescribed by the Securities Laws.

 

“Regulated
Subsidiaries” means (a) as of the Closing Date, the regulated Subsidiaries
identified on Schedule 1.01 and (b) thereafter, any Subsidiary of
Borrower which is subject to regulation of water or waste water by a
Governmental Authority.

 

“Related
Parties” means, with respect to any Person, such Person’s Affiliates and
the partners, directors, officers, employees, Administrative Agents and
advisors of such Person and of such Person’s Affiliates.

 

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

 

“Request
for Credit Extension” means (a) with respect to a Borrowing, conversion
or continuation of Committed Loans, a Committed Loan Notice, (b) with
respect to an L/C Credit Extension, an L/C Application, and (c) with
respect to a Swing Line Loan, a Swing Line Loan Notice.

 

“Required
Lenders” means, as of any date of determination, Lenders having more than
50% of the Aggregate Commitments or, if the commitment of each Lender to make
Loans and the obligation of the L/C Issuer to make L/C Credit Extensions have
been terminated pursuant to Section 8.02, Lenders holding in the aggregate
more than 50% of the Total Outstandings (with the aggregate amount of each
Lender’s risk participation and funded participation in L/C Obligations and
Swing Line Loans being deemed “held” by such Lender for purposes of this
definition); provided that the Commitment of, and the portion of the
Total Outstandings held or deemed held by, any Defaulting Lender shall be
excluded for purposes of making a determination of Required Lenders.

 

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

 

19

 

“Restricted
Payment” means any dividend or other distribution (whether in cash,
securities or other property) with respect to any capital stock or other Equity
Interest of Borrower or any Subsidiary, or any payment (whether in cash, securities
or other property), including any sinking fund or similar deposit, on account
of the purchase, redemption, retirement, acquisition, cancellation or
termination of any such capital stock or other Equity Interest or on account of
any return of capital to Borrower’s stockholders, partners or members (or the
equivalent Person thereof).

 

“S&P
Rating” means, as of each date of determination, the credit rating then
assigned to Borrower’s most senior unsecured Indebtedness (without credit
enhancement) by Standard & Poor’s Rating Services. 

 

“Sarbanes-Oxley”
means the Sarbanes-Oxley Act of 2002.

 

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

 

“Securities
Laws” means the Securities Act of 1933, the Securities Exchange Act of
1934, Sarbanes-Oxley and the applicable accounting and auditing principles,
rules, standards and practices promulgated, approved or incorporated by the SEC
or the Public Company Accounting Oversight Board, as each of the foregoing may
be amended and in effect on any applicable date hereunder.

 

“Significant
Subsidiary” means, as of each date of determination, each Subsidiary of
Borrower that either (a) had revenues for the Fiscal Year then most
recently ended which is greater than or equal to 4% of consolidated revenues,
or (b) had assets greater than or equal to 4% of the consolidated total
assets of Borrower and its Subsidiaries as at the last day of that Fiscal Year,
in each determined in accordance with GAAP, consistently applied.

 

“Stockholders’
Equity” means, as of any date of determination and with respect to any
Person, the consolidated stockholders’ equity of the Person as of that date
determined in accordance with GAAP; provided that there shall be excluded
from Stockholders’ Equity any amount attributable to Disqualified Stock.

 

“Subordinated
Indebtedness” means Borrower’s 6.85% convertible subordinated debentures
due 2021 and any other Indebtedness of Borrower requiring no payments of
principal prior to the date which is one year following the Maturity Date and which
is subordinated to the Obligations in a manner approved by the Administrative
Agent in writing in the exercise of its reasonable discretion within five
Business Days after the distribution of draft documentation to the Lenders relating
to such Indebtedness.

 

“Subsidiary”
of a Person means a corporation, partnership, joint venture, limited liability
company or other business entity of which a majority of the shares of
securities or other interests having ordinary voting power for the election of
directors or other governing body (other than securities or interests having
such power only by reason of the happening of a contingency) are at the time
beneficially owned, or the management of which is otherwise controlled,
directly, or indirectly through one or more intermediaries, or both, by such
Person.  Unless otherwise 

 

20

 

specified, all references herein to a “Subsidiary” or
to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of Borrower.

 

“Suburban”
means Suburban Water Systems, a California corporation.

 

“Suburban
Indenture” means the Indenture of Mortgage and Deed of Trust, dated October 1,
1986, executed by Suburban in favor of Security Pacific National Bank, as
Trustee, as amended and as in effect on the date hereof and, subject to Section 7.09,
as the same may from time to time be further amended.

 

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

 

“Swing
Line” means the revolving credit facility made available by Swing Line
Lender pursuant to Section 2.04.

 

“Swing
Line Borrowing” means a borrowing of a Swing Line Loan pursuant to Section 2.04.

 

“Swing
Line Lender” means Bank of America in its capacity as provider of Swing
Line Loans, or any successor swing line lender hereunder.

 

“Swing
Line Loan” has the meaning specified in Section 2.04(a).

 

“Swing
Line Loan Notice” means a notice of a Swing Line Borrowing pursuant to Section 2.04(b),
which, if in writing, shall be substantially in the form of Exhibit B.

 

“Swing
Line Sublimit” means an amount equal to the lesser of (a) $10,000,000 and
(b) the Aggregate Commitments.  The
Swing Line Sublimit is part of (although uncommitted), and not in addition to,
the Aggregate Commitments.

 

“Synthetic
Lease Obligation” means the monetary obligation of a Person under (a) a
so-called synthetic, off-balance sheet or tax retention lease, or (b) an
agreement for the use or possession of property creating obligations that do
not appear on the balance sheet of such 

 

21

 

Person but which, upon the insolvency or bankruptcy of
such Person, would be characterized as the Indebtedness of such Person (without
regard to accounting treatment).

 

“Taxes”
means all present or future taxes, levies, imposts, duties, deductions,
withholdings, assessments, fees or other charges imposed by any Governmental
Authority, including any interest, additions to tax or penalties applicable
thereto.

 

“Tecon”
means Monarch Utility Inc. (formerly known as Tecon Water Companies
Incorporated).

 

“Tecon
Loan Agreement” means the Master Loan Agreement, dated as of May 1,
2002, between Tecon Water Company, L.P., a Texas limited partnership, and
CoBank, ACB, as amended and as in effect on the date hereof and, subject to Section 7.09,
as the same may from time to time be further amended.

 

“Total
Capitalization” means, as of any date of determination the sum  of
(a) Total Indebtedness and (b) Stockholders Equity, in each case as
of that date.

 

“Total
Capitalization Ratio” means, as of each date of determination, the ratio of
(a) Total Indebtedness as of that date, to (b) Total Capitalization
as of that date.

 

“Total
Indebtedness” means, as of any date of determination, the consolidated Indebtedness
of Borrower and its Subsidiaries outstanding on such date, other  than
(a) any obligations in respect of letters of credit (other than Letters of
Credit issued hereunder) which are not issued in support of Indebtedness for
borrowed money or any Guarantee of Indebtedness for borrowed money of a third
party, (b) any obligations in respect to performance bonds, completion
bonds, completion guarantees or similar arrangements to the extent that the
same are not required by GAAP to be reflected on the consolidated balance sheet
of Borrower as of that date, and (c) any obligations in respect of any
IRB, to the extent of any cash held in a project fund or other similar restricted
account pending disbursement for the construction of the applicable project in
accordance with the documentation governing the issuance of such IRB.  For the avoidance of doubt, (i) no item
of Indebtedness of the Borrower and its Subsidiaries which is supported by a
letter of credit or other credit assurance issued for the account of Borrower
or any its Subsidiaries shall be included in “Total Indebtedness” on a
duplicative basis with the underlying Indebtedness, and (ii) the
Subordinated Indebtedness is a part of “Total Indebtedness.”

 

“Total
Outstandings” means the aggregate Outstanding Amount of all Loans and all
L/C Obligations.

 

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

 

“Unfunded
Pension Liability” means the excess of a Pension Plan’s benefit liabilities
under Section 4001(a)(16) of ERISA, over the current value of that Pension
Plan’s assets, determined in accordance with the assumptions used for funding
the Pension Plan pursuant to Section 412 of the Code for the applicable
plan year.

 

22

 

“United
States” means the United States of America.

 

“Unmatured
Surviving Obligations” means as of the date of the termination of the
Aggregate Commitments and the repayment of all other Obligations any
Obligations that by their terms survive the termination of this Agreement or the
other Loan Documents but are not, as of the date of determination, due and
payable and for which no outstanding claim has been made.

 

“Unreimbursed
Amount” has the meaning specified in Section 2.03(c)(i).

 

“Unregulated
Subsidiaries” means, as of each date of determination, each Subsidiary of
the Borrower which is not a Regulated Subsidiary as of that date.  As of the Closing Date, the Unregulated Subsidiaries
are identified on Schedule 1.01.

 

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

 

(a)                                  The definitions of terms herein shall
apply equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms.  The words “include,” “includes”
and “including” shall be deemed to be followed by the phrase “without
limitation.”  The word “will” shall
be construed to have the same meaning and effect as the word “shall.”  Unless the context requires otherwise, (i) any
definition of or reference to any agreement, instrument or other document
(including any Organization Document) shall be construed as referring to such
agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein or in any other Loan
Document), (ii) any reference herein to any Person shall be construed to
include such Person’s successors and assigns, (iii) the words “herein,”
“hereof” and “hereunder,” and words of similar import when used
in any Loan Document, shall be construed to refer to such Loan Document in its
entirety and not to any particular provision thereof, (iv) all references
in a Loan Document to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
the Loan Document in which such references appear, (v) any reference to
any law shall include all statutory and regulatory provisions consolidating,
amending, replacing or interpreting such law and any reference to any law or
regulation shall, unless otherwise specified, refer to such law or regulation as
amended, modified or supplemented from time to time, and (vi) the words “asset”
and “property” shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights.

 

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

 

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

 

23

 

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

 

(b)                                 Changes in GAAP. 
If at any time any change in GAAP would affect the computation of any
financial ratio or requirement set forth in any Loan Document, and either
Borrower or the Required Lenders shall so request, Administrative Agent,
Lenders and Borrower shall negotiate in good faith to amend such ratio or
requirement to preserve the original intent thereof in light of such change in
GAAP (subject to the approval of the Required Lenders); provided  that,
until so amended, (i) such ratio or requirement shall continue to be
computed in accordance with GAAP prior to such change therein and (ii) Borrower
shall provide to Administrative Agent and Lenders financial statements and
other documents required under this Agreement or as reasonably requested
hereunder setting forth a reconciliation between calculations of such ratio or
requirement made before and after giving effect to such change in GAAP.

 

(c)                                  Consolidation of Variable Interest
Entities.  All references herein to consolidated
financial statements of Borrower and its Subsidiaries or to the determination
of any amount for Borrower and its Subsidiaries on a consolidated basis or any
similar reference shall, in each case, be deemed to include each variable
interest entity that the Borrower is required to consolidate pursuant to FASB
Interpretation No. 46 – Consolidation of Variable Interest Entities: an
interpretation of ARB No. 51 (January 2003) as if such variable
interest entity were a Subsidiary as defined herein.

 

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

 

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

 

1.06.                     Letter of Credit Amounts.  Unless
otherwise specified herein the amount of a Letter of Credit at any time shall
be deemed to be the stated amount of such Letter of Credit in effect at such
time; provided, however, that with respect to any Letter of
Credit that, by its terms or the terms of any Issuer Document related thereto,
provides for one or more automatic increases in the stated amount thereof, the
amount of such Letter of Credit shall be deemed to be the maximum stated amount
of such Letter of Credit after giving effect to all such increases, whether or
not such maximum stated amount is in effect at such time.

 

24

 

ARTICLE II.                          THE COMMITMENTS AND CREDIT EXTENSIONS

 

2.01.                     Committed Loans. 
Subject to the terms and conditions set forth herein, each Lender
severally agrees to make loans (each such loan, a “Committed Loan”) to
Borrower from time to time, on any Business Day during the Availability Period,
in an aggregate amount not to exceed at any time outstanding the amount of such
Lender’s Commitment; provided, however, that after giving effect
to any Committed Borrowing, (i) the Total Outstandings shall not exceed
the Aggregate Commitments, and (ii) the aggregate Outstanding Amount of
the Committed Loans of any Lender, plus such Lender’s Applicable
Percentage of the Outstanding Amount of all L/C Obligations, plus such
Lender’s Applicable Percentage of the Outstanding Amount of all Swing Line
Loans shall not exceed such Lender’s Commitment.  Within the limits of each Lender’s
Commitment, and subject to the other terms and conditions hereof, Borrower may
borrow under this Section 2.01, prepay under Section 2.05, and
reborrow under this Section 2.01. 
Committed Loans may be Base Rate Loans or Eurodollar Rate Loans, as
further provided herein.

 

2.02.                     Borrowings, Conversions and
Continuations of Committed Loans.  (a)  Each
Committed Borrowing, each conversion of Committed Loans from one Type to the
other, and each continuation of Eurodollar Rate Loans shall be made upon
Borrower’s irrevocable notice to Administrative Agent, which may be given by
telephone.  Each such notice must be
received by Administrative Agent not later than 11:00 a.m. (i) three
Business Days prior to the requested date of any Committed Borrowing of,
conversion to or continuation of Eurodollar Rate Loans or of any conversion of
Eurodollar Rate Loans to Base Rate Committed Loans, and (ii) on the
requested date of any Committed Borrowing of Base Rate Committed Loans.  Each telephonic notice by Borrower pursuant
to this Section 2.02(a) must be confirmed promptly by delivery to Administrative
Agent of a written Committed Loan Notice, appropriately completed and signed by
a Responsible Officer of Borrower.  Each Committed
Borrowing of, conversion to or continuation of Eurodollar Rate Loans shall be
in a principal amount of $1,000,000 or a whole multiple of $500,000 in excess
thereof.  Except as provided in Sections 2.03(c) and
2.04(c), each Committed Borrowing of or conversion to Base Rate Committed Loans
shall be in a principal amount of $500,000 or a whole multiple of $100,000 in
excess thereof.  Each Committed Loan
Notice (whether telephonic or written) shall specify (i) whether Borrower
is requesting a Committed Borrowing, a conversion of Committed Loans from one
Type to the other, or a continuation of Eurodollar Rate Loans, (ii) the
requested date of the Committed Borrowing, conversion or continuation, as the
case may be (which shall be a Business Day), (iii) the principal amount of
Committed Loans to be borrowed, converted or continued, (iv) the Type of
Committed Loans to be borrowed or to which existing Committed Loans are to be
converted, and (v) if applicable, the duration of the Interest Period with
respect thereto.  If Borrower fails to
specify a Type of Committed Loan in a Committed Loan Notice or if Borrower
fails to give a timely notice requesting a conversion or continuation, then the
applicable Committed Loans shall be made as, or converted to, Eurodollar Rate
Loans with an Interest Period of one month. 
Any such automatic conversion to Eurodollar Rate Loans with an Interest
Period of one month shall be effective as of the last day of the Interest
Period then in effect with respect to the applicable Eurodollar Rate
Loans.  If Borrower requests a Committed Borrowing
of, conversion to, or continuation of Eurodollar Rate Loans in any such
Committed Loan Notice, but fails to specify an Interest Period, it will be
deemed to have specified an Interest Period of one month.

 

25

 

(b)                                 Following receipt of a Committed Loan
Notice, Administrative Agent shall promptly notify each Lender of the amount of
its Applicable Percentage of the applicable Committed Loans, and if no timely
notice of a conversion or continuation is provided by Borrower, Administrative
Agent shall notify each Lender of the details of any automatic conversion to
Base Rate Loans described in the preceding subsection.  In the case of a Committed Borrowing, each
Lender shall make the amount of its Committed Loan available to Administrative
Agent in immediately available funds at Administrative Agent’s Office not later
than 1:00 p.m. on the Business Day specified in the applicable Committed
Loan Notice.  Upon satisfaction of the
applicable conditions set forth in Section 4.02 (and, if such Committed Borrowing
is the initial Credit Extension, Section 4.01), Administrative Agent shall
make all funds so received available to Borrower in like funds as received by Administrative
Agent either by (i) crediting the account of Borrower on the books of Bank
of America with the amount of such funds or (ii) wire transfer of such
funds, in each case in accordance with instructions provided to (and reasonably
acceptable to) Administrative Agent by Borrower; provided, however,
that if, on the date the Committed Loan Notice with respect to such Committed Borrowing
is given by Borrower, there are L/C Borrowings outstanding, then the proceeds
of such Committed Borrowing first, shall be applied, to the payment in
full of any such L/C Borrowings, and second, shall be made available to
Borrower as provided above.

 

(c)                                  Except as otherwise provided herein, a
Eurodollar Rate Loan may be continued or converted only on the last day of an
Interest Period for such Eurodollar Rate Loan. 
During the existence of a Default, no Committed Loans may be requested
as, converted to or continued as Eurodollar Rate Loans without the consent of
the Required Lenders.

 

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

 

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

 

2.03.                     Letters of Credit.  (a) 
The Letter of Credit Commitment.

 

(i)                                     Subject to the
terms and conditions set forth herein, (a) the L/C Issuer agrees, in
reliance upon the agreements of the other Lenders set forth in this Section, (1) from
time to time on any Business Day during the period from the Closing Date until
the L/C Expiration Date, to issue standby Letters of Credit for the account of
Borrower or its Subsidiaries, and to amend or extend Letters of Credit
previously issued by it, in accordance with subsection (b) below, and
(2) to honor drawings under the Letters of Credit; and (b) the
Lenders severally agree to participate in Letters of Credit issued for the
account of Borrower or its Subsidiaries and any drawings thereunder; provided
that after giving effect to any L/C Credit Extension with respect to any Letter
of 

 

26

 

Credit, (x) the Total
Outstandings shall not exceed the Aggregate Commitments, (y) the aggregate
Outstanding Amount of the Committed Loans of any Lender, plus such
Lender’s Applicable Percentage of the Outstanding Amount of all L/C
Obligations, plus such Lender’s Applicable Percentage of the Outstanding
Amount of all Swing Line Loans shall not exceed such Lender’s Commitment, or
(z) the Outstanding Amount of the L/C Obligations shall not exceed the L/C
Sublimit.  Each request by Borrower for
the issuance or amendment of a Letter of Credit shall be deemed to be a
representation by Borrower that the L/C Credit Extension so requested complies
with the conditions set forth in the proviso to the preceding sentence.  Within the foregoing limits, and subject to
the terms and conditions hereof, Borrower’s ability to obtain Letters of Credit
shall be fully revolving,  and
accordingly Borrower may, during the foregoing period, obtain Letters of Credit
to replace Letters of Credit that have expired or that have been drawn upon and
reimbursed.  Each Existing Letter of
Credit shall be deemed to have been issued pursuant hereto, and from and after
the Closing Date shall be subject to and governed by the terms and conditions
hereof.

 

(ii)                                  The L/C Issuer
shall not issue any Letter of Credit, if:

 

(A)                              subject to Section 2.03(b)(iv), the
expiry date of such requested Letter of Credit would occur more than two years after
the date of issuance or last extension, unless the Required Lenders have
approved such expiry date; or

 

(B)                                the expiry date of such requested Letter
of Credit would occur after the L/C Expiration Date, unless all the Lenders
have approved such expiry date.

 

(iii)                               The L/C Issuer
shall be under no obligation to issue any Letter of Credit if:

 

(A)                              any order, judgment or decree of any
Governmental Authority or arbitrator shall by its terms purport to enjoin or
restrain the L/C Issuer from issuing such Letter of Credit, or any Law
applicable to the L/C Issuer or any request or directive (whether or not having
the force of law) from any Governmental Authority with jurisdiction over the
L/C Issuer shall prohibit, or request that the L/C Issuer refrain from, the
issuance of letters of credit generally or such Letter of Credit in particular
or shall impose upon the L/C Issuer with respect to such Letter of Credit any
restriction, reserve or capital requirement (for which the L/C Issuer is not
otherwise compensated hereunder) not in effect on the Closing Date, or shall
impose upon the L/C Issuer any unreimbursed loss, cost or expense which was not
applicable on the Closing Date and which the L/C Issuer in good faith deems
material to it;

 

(B)                                the issuance of such Letter of Credit
would violate one or more policies of the L/C Issuer;

 

27

 

(C)                                except as otherwise agreed by Administrative
Agent and the L/C Issuer, such Letter of Credit is in an initial stated amount
less than $25,000;

 

(D)                               such Letter of Credit is to be
denominated in a currency other than Dollars;

 

(E)                                 a default of any Lender’s obligations to
fund under Section 2.03(c) exists or any Lender is at such time a
Defaulting Lender hereunder, unless the L/C Issuer has entered into
satisfactory arrangements with Borrower or such Lender to eliminate the L/C
Issuer’s risk with respect to such Lender; or

 

(F)                                 unless specifically provided for in this
Agreement, such Letter of Credit contains any provisions for automatic
reinstatement of the stated amount after any drawing thereunder.

 

(iv)                              The L/C Issuer
shall not amend any Letter of Credit if the L/C Issuer would not be permitted
at such time to issue such Letter of Credit in its amended form under the terms
hereof.

 

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

 

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

 

(b)                                 Procedures for Issuance and Amendment of
Letters of Credit.

 

(i)                                     Each Letter of
Credit shall be issued or amended, as the case may be, upon the request of
Borrower delivered to the L/C Issuer (with a copy to Administrative Agent) in
the form of an L/C Application, appropriately completed and signed by a
Responsible Officer of Borrower.  Such
L/C Application must be received by the L/C Issuer and Administrative Agent not
later than 11:00 a.m. at least two Business Days (or such later date and
time as Administrative Agent and the L/C Issuer may agree in a particular
instance in their sole discretion) prior to the proposed issuance date or date
of amendment, as the case may be.  In the
case of a request for an initial issuance of a Letter of Credit, such L/C
Application shall specify in form and detail satisfactory to the L/C Issuer: (a) the
proposed issuance date of the requested Letter of Credit (which shall

 

28

 

be a Business
Day); (b) the amount thereof; (c) the expiry date thereof; (d) the
name and address of the beneficiary thereof; (e) the documents to be
presented by such beneficiary in case of any drawing thereunder; (f) the
full text of any certificate to be presented by such beneficiary in case of any
drawing thereunder; and (g) such other matters as the L/C Issuer may
require.  In the case of a request for an
amendment of any outstanding Letter of Credit, such L/C Application shall
specify in form and detail satisfactory to the L/C Issuer (a) the Letter
of Credit to be amended; (b) the proposed date of amendment thereof (which
shall be a Business Day); (c) the nature of the proposed amendment; and (d) such
other matters as the L/C Issuer may require. 
Additionally, Borrower shall furnish to the L/C Issuer and Administrative
Agent such other documents and information pertaining to such requested Letter
of Credit issuance or amendment, including any Issuer Documents, as the L/C
Issuer or Administrative Agent may require.

 

(ii)                                  Promptly after
receipt of any L/C Application at the address set forth in Section 10.02
for receiving L/C Applications and related correspondence, the L/C Issuer will
confirm with Administrative Agent (by telephone or in writing) that Administrative
Agent has received a copy of such L/C Application from Borrower and, if not,
the L/C Issuer will provide Administrative Agent with a copy thereof.  Unless the L/C Issuer has received written
notice from any Lender, Administrative Agent or any Loan Party, at least one
Business Day prior to the requested date of issuance or amendment of the
applicable Letter of Credit, that one or more applicable conditions in Article IV
shall not then be satisfied, then, subject to the terms and conditions hereof,
the L/C Issuer shall, on the requested date, issue a Letter of Credit for the
account of Borrower (or the applicable Subsidiary) or enter into the applicable
amendment, as the case may be, in each case in accordance with the L/C Issuer’s
usual and customary business practices. 
Immediately upon the issuance of each Letter of Credit, each Lender
shall be deemed to, and hereby irrevocably and unconditionally agrees to,
purchase from the L/C Issuer a risk participation in such Letter of Credit in
an amount equal to the product of such Lender’s Applicable Percentage times
the amount of such Letter of Credit.

 

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

 

(iv)                              If Borrower so
requests in any applicable L/C Application, the L/C Issuer may, in its sole and
absolute discretion, agree to issue a Letter of Credit that has automatic
extension provisions (each, an “Auto-Extension Letter of Credit”);
provided that any such Auto-Extension Letter of Credit must permit the L/C
Issuer to prevent any such extension at least once in each twelve-month period
(commencing with the date of issuance of such Letter of Credit) by giving prior
notice to the beneficiary thereof not later than a day (the “Non-Extension
Notice Date”) in each such twelve-month period to be agreed upon at the
time such Letter of Credit is issued. 
Unless otherwise directed by the L/C Issuer, Borrower shall not be
required to make a specific request to the L/C Issuer for any such
extension.  Once an Auto-Extension Letter
of Credit has been issued, the Lenders shall be deemed to have authorized (but
may not require) the L/C Issuer to 

 

29

 

permit the extension of such
Letter of Credit at any time to an expiry date not later than the L/C
Expiration Date; provided, however, that the L/C Issuer shall not
permit any such extension if (a) the L/C Issuer has determined that it
would not be permitted, or would have no obligation, at such time to issue such
Letter of Credit in its revised form (as extended) under the terms hereof (by
reason of the provisions of clause (ii) or (iii) of Section 2.03(a) or
otherwise), or (b) it has received notice (which may be by telephone or in
writing) on or before the day that is five Business Days before the
Non-Extension Notice Date (1) from Administrative Agent that the Required
Lenders have elected not to permit such extension or (2) from Administrative
Agent, any Lender or Borrower that one or more of the applicable conditions
specified in Section 4.02 is not then satisfied, and in each such case
directing the L/C Issuer not to permit such extension.

 

(c)                                  Drawings and Reimbursements; Funding of
Participations.

 

(i)                                     Upon receipt
from the beneficiary of any Letter of Credit of any notice of a drawing under
such Letter of Credit, the L/C Issuer shall notify Borrower and Administrative
Agent thereof.  Not later than 11:00 a.m.
on the first Business Day following the date of any payment by the L/C Issuer
under a Letter of Credit (each such payment date by the L/C Issuer, an “Honor
Date”), Borrower shall reimburse the L/C Issuer through Administrative
Agent in an amount equal to the amount of such drawing plus interest on the
amount drawn at the rate per annum equal to the Base Rate minus the Applicable
Margin from the Honor Date through such reimbursement date.  If Borrower fails to so reimburse the L/C
Issuer by such time, Administrative Agent shall promptly notify each Lender of
the Honor Date, the amount of the unreimbursed drawing (the “Unreimbursed
Amount”), and the amount of such Lender’s Applicable Percentage
thereof.  In such event, Borrower shall
be deemed to have requested a Committed Borrowing of Base Rate Loans to be
disbursed on the Honor Date in an amount equal to the Unreimbursed Amount,
without regard to the minimum and multiples specified in Section 2.02 for
the principal amount of Base Rate Loans, but subject to the amount of the
unutilized portion of the Aggregate Commitments and the conditions set forth in
Section 4.02 (other than the delivery of a Committed Loan Notice).  Any notice given by the L/C Issuer or Administrative
Agent pursuant to this Section 2.03(c)(i) may be given by telephone
if immediately confirmed in writing; provided that the lack of such an
immediate confirmation shall not affect the conclusiveness or binding effect of
such notice.

 

(ii)                                  Each Lender
shall upon any notice pursuant to Section 2.03(c)(i) make funds
available to Administrative Agent for the account of the L/C Issuer at the Administrative
Agent’s Office in an amount equal to its Applicable Percentage of the
Unreimbursed Amount not later than 1:00 p.m. on the Business Day specified
in such notice by Administrative Agent, whereupon, subject to the provisions of
Section 2.03(c)(iii), each Lender that so makes funds available shall be
deemed to have made a Base Rate Committed Loan to Borrower in such amount.  Administrative Agent shall remit the funds so
received to the L/C Issuer.

 

(iii)                               With respect to
any Unreimbursed Amount that is not fully refinanced by a Committed Borrowing
of Base Rate Loans because the conditions set 

 

30

 

forth in Section 4.02
cannot be satisfied or for any other reason, Borrower shall be deemed to have
incurred from the L/C Issuer an L/C Borrowing in the amount of the Unreimbursed
Amount that is not so refinanced, which L/C Borrowing shall be due and payable
on demand (together with interest) and shall bear interest at the Default
Rate.  In such event, each Lender’s
payment to Administrative Agent for the account of the L/C Issuer pursuant to Section 2.03(c)(ii) shall
be deemed payment in respect of its participation in such L/C Borrowing and
shall constitute an L/C Advance from such Lender in satisfaction of its
participation obligation under this Section 2.03.

 

(iv)                              Until each
Lender funds its Committed Loan or L/C Advance pursuant to this Section 2.03(c) to
reimburse the L/C Issuer for any amount drawn under any Letter of Credit,
interest in respect of such Lender’s Applicable Percentage of such amount shall
be solely for the account of the L/C Issuer.

 

(v)                                 Each Lender’s
obligation to make Committed Loans or L/C Advances to reimburse the L/C Issuer
for amounts drawn under Letters of Credit, as contemplated by this Section 2.03(c),
shall be absolute and unconditional and shall not be affected by any
circumstance, including (a) any setoff, counterclaim, recoupment, defense
or other right which such Lender may have against the L/C Issuer, Borrower or
any other Person for any reason whatsoever; (b) the occurrence or
continuance of a Default, or (c) any other occurrence, event or condition,
whether or not similar to any of the foregoing; provided, however,
that each Lender’s obligation to make Committed Loans pursuant to this Section 2.03(c) is
subject to the conditions set forth in Section 4.02 (other than delivery
by Borrower of a Committed Loan Notice). 
No such making of an L/C Advance shall relieve or otherwise impair the
obligation of Borrower to reimburse the L/C Issuer for the amount of any
payment made by the L/C Issuer under any Letter of Credit, together with interest
as provided herein.

 

(vi)                              If any Lender
fails to make available to Administrative Agent for the account of the L/C
Issuer any amount required to be paid by such Lender pursuant to the foregoing
provisions of this Section 2.03(c) by the time specified in Section 2.03(c)(ii),
the L/C Issuer shall be entitled to recover from such Lender (acting through Administrative
Agent), on demand, such amount with interest thereon for the period from the
date such payment is required to the date on which such payment is immediately
available to the L/C Issuer at a rate per annum equal to the greater of the
Federal Funds Rate and a rate determined by the L/C issuer in accordance with
banking industry rules on interbank compensation, plus any
administrative, processing or similar fees customarily charged by the LC/
Issuer in connection with the foregoing. 
A certificate of the L/C Issuer submitted to any Lender (through Administrative
Agent) with respect to any amounts owing under this clause (vi) shall be
conclusive absent manifest error.

 

(d)                                 Repayment of Participations.

 

(i)                                     At any time
after the L/C Issuer has made a payment under any Letter of Credit and has
received from any Lender such Lender’s L/C Advance in respect of such payment
in accordance with Section 2.03(c), if Administrative Agent receives for 

 

31

 

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

 

(ii)                                  If any payment
received by Administrative Agent for the account of the L/C Issuer pursuant to Section 2.03(c)(i) is
required to be returned under any of the circumstances described in Section 10.05
(including pursuant to any settlement entered into by the L/C Issuer in its
discretion), each Lender shall pay to Administrative Agent for the account of
the L/C Issuer its Applicable Percentage thereof on demand of Administrative
Agent, plus interest thereon from the date of such demand to the date such
amount is returned by such Lender, at a rate per annum equal to the Federal
Funds Rate from time to time in effect. 
The obligations of Lenders under this clause shall survive the payment
in full of the Obligations and the termination of this Agreement.

 

(e)                                  Obligations Absolute. 
The obligation of Borrower to reimburse the L/C Issuer for each drawing
under each Letter of Credit and to repay each L/C Borrowing shall be absolute,
unconditional and irrevocable, and shall be paid strictly in accordance with
the terms of this Agreement under all circumstances, including the following:

 

(i)                                     any lack of
validity or enforceability of such Letter of Credit, this Agreement, or any
other Loan Document;

 

(ii)                                  the existence
of any claim, counterclaim, setoff, defense or other right that Borrower or any
Subsidiary may have at any time against any beneficiary or any transferee of
such Letter of Credit (or any Person for whom any such beneficiary or any such
transferee may be acting), the L/C Issuer or any other Person, whether in
connection with this Agreement, the transactions contemplated hereby or by such
Letter of Credit or any agreement or instrument relating thereto, or any
unrelated transaction;

 

(iii)                               any draft,
demand, certificate or other document presented under such Letter of Credit
proving to be forged, fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect; or any loss or
delay in the transmission or otherwise of any document required in order to
make a drawing under such Letter of Credit;

 

(iv)                              any payment by
the L/C Issuer under such Letter of Credit against presentation of a draft or
certificate that does not strictly comply with the terms of such Letter of
Credit; or any payment made by the L/C Issuer under such Letter of Credit to
any Person purporting to be a trustee in bankruptcy, debtor-in-possession,
assignee for the benefit of creditors, liquidator, receiver or other
representative of or successor to any beneficiary or any transferee of such
Letter of Credit, including any arising in connection with any proceeding under
any Debtor Relief Law; or

 

32

 

(v)                                 any other
circumstance or happening whatsoever, whether or not similar to any of the
foregoing, including any other circumstance that might otherwise constitute a
defense available to, or a discharge of, Borrower or any Subsidiary.

 

Borrower
shall promptly examine a copy of each Letter of Credit and each amendment
thereto that is delivered to it and, in the event of any claim of noncompliance
with Borrower’s instructions or other irregularity, Borrower will promptly
notify the L/C Issuer.  Borrower shall be
conclusively deemed to have waived any such claim against the L/C Issuer and
its correspondents unless such notice is given as aforesaid.

 

(f)                                    Role of L/C Issuer. 
Each Lender and Borrower agree that, in paying any drawing under a
Letter of Credit, the L/C Issuer shall not have any responsibility to obtain
any document (other than any sight draft, certificates and documents expressly
required by the Letter of Credit) or to ascertain or inquire as to the validity
or accuracy of any such document or the authority of the Person executing or
delivering any such document.  None of
the L/C Issuer, Administrative Agent, any of their respective Related Parties
nor any correspondent, participant or assignee of the L/C Issuer shall be
liable to any Lender for (i) any action taken or omitted in connection
herewith at the request or with the approval of Lenders or the Required
Lenders, as applicable; (ii) any action taken or omitted in the absence of
gross negligence or willful misconduct; or (iii) the due execution,
effectiveness, validity or enforceability of any document or instrument related
to any Letter of Credit or Issuer Document. 
Borrower hereby assumes all risks of the acts or omissions of any
beneficiary or transferee with respect to its use of any Letter of Credit; provided,
however, that this assumption is not intended to, and shall not,
preclude Borrower’s pursuing such rights and remedies as it may have against
the beneficiary or transferee at law or under any other agreement.  None of the L/C Issuer, Administrative Agent,
any of their respective Related Parties nor any correspondent, participant or
assignee of the L/C Issuer, shall be liable or responsible for any of the
matters described in clauses (i) through (v) of Section 2.03(e);
provided, however, that anything in such clauses to the contrary
notwithstanding, Borrower may have a claim against the L/C Issuer, and the L/C
Issuer may be liable to Borrower, to the extent, but only to the extent, of any
direct, as opposed to consequential or exemplary, damages suffered by Borrower
which Borrower proves were caused by the L/C Issuer’s willful misconduct or
gross negligence or the L/C Issuer’s willful failure to pay under any Letter of
Credit after the presentation to it by the beneficiary of a sight draft and
certificate(s) strictly complying with the terms and conditions of a Letter of
Credit.  In furtherance and not in
limitation of the foregoing, the L/C Issuer may accept documents that appear on
their face to be in order, without responsibility for further investigation,
regardless of any notice or information to the contrary, and the L/C Issuer
shall not be responsible for the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign a Letter of
Credit or the rights or benefits thereunder or proceeds thereof, in whole or in
part, which may prove to be invalid or ineffective for any reason.

 

(g)                                 Cash Collateral. 
Upon the request of Administrative Agent, if, as of the L/C Expiration
Date, any L/C Obligation for any reason remains outstanding, Borrower shall, in
each case, immediately Cash Collateralize the then Outstanding Amount of all
L/C Obligations.  Sections 2.05 and
8.02(c) set forth certain additional requirements to deliver Cash
Collateral hereunder.  For purposes
hereof, “Cash Collateralize” means to pledge and deposit with or deliver
to Administrative Agent, for the benefit of the L/C Issuer and the Lenders, as
collateral 

 

33

 

for the L/C Obligations,
cash or deposit account balances pursuant to documentation in form and
substance reasonably satisfactory to Administrative Agent and the L/C Issuer
(which documents are hereby consented to by Lenders).  Derivatives of such term have corresponding
meanings.  Borrower hereby grants to Administrative
Agent, for the benefit of the L/C Issuer and Lenders, a security interest in
all such cash, deposit accounts and all balances therein and all proceeds of
the foregoing.  Cash collateral shall be
maintained in blocked, interest bearing deposit accounts at Bank of America.

 

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

 

(i)                                     L/C Fees.  Borrower
shall pay to Administrative Agent for the account of each Lender in accordance
with its Applicable Percentage an L/C fee (the “L/C Fee”) for each Letter of Credit equal to the Applicable Rate times the
daily amount available to be drawn under such Letter of Credit.  For purposes of computing the daily amount
available to be drawn under any Letter of Credit, the amount of such Letter of
Credit shall be determined in accordance with Section 1.06.  L/C Fees shall be (i) computed on a
quarterly basis in arrears and (ii) due and payable on each Quarterly
Payment Date commencing with the first such date to occur after the issuance of
such Letter of Credit, and on the L/C Expiration Date and thereafter on
demand.  If there is any change in the
Applicable Rate during any quarter, the daily amount available to be drawn
under each Letter of Credit shall be computed and multiplied by the Applicable
Rate separately for each period during such quarter that such Applicable Rate
was in effect.  Notwithstanding anything
to the contrary contained herein, upon the request of the Required Lenders,
while any Event of Default exists, all L/C Fees shall accrue at the Default
Rate.

 

(j)                                     Fronting Fee and Documentary and
Processing Charges Payable to L/C Issuer.  Borrower
shall pay directly to the L/C Issuer for its own account a fronting fee with
respect to each Letter of Credit, at the rate per annum specified in the Fee
Letter, computed on the daily amount available to be drawn under such Letter of
Credit and on a quarterly basis in arrears. 
Such fronting fee shall be due and payable on each Quarterly Payment
Date commencing with the first such date to occur after the issuance of such
Letter of Credit, and on the L/C Expiration Date.  For purposes of computing the daily amount
available to be drawn under any Letter of Credit, the amount of such Letter of
Credit shall be determined in accordance with Section 1.06.  In addition, Borrower shall pay directly to
the L/C Issuer for its own account the customary issuance, presentation,
amendment and other processing fees, and other standard costs and charges, of
the L/C Issuer relating to letters of credit as from time to time in effect.  Such individual customary fees and standard
costs and charges are due and payable on demand and are nonrefundable.

 

(k)                                  Conflict with Issuer Documents. 
In the event of any conflict between the terms hereof and the terms of
any Issuer Documents, the terms hereof shall control.

 

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

 

34

 

Letters of Credit for the
account of Subsidiaries inures to the benefit of Borrower, and that Borrower’s
business derives substantial benefits from the businesses of such Subsidiaries.

 

2.04.                     Swing Line Loans.  (a) 
The Swing Line.  Subject to the
terms and conditions set forth herein, Swing Line Lender agrees, in reliance
upon the agreements of the other Lenders set forth in this Section 2.04,
to make loans (each such loan, a “Swing Line Loan”) to Borrower from
time to time on any Business Day during the Availability Period in an aggregate
amount not to exceed at any time outstanding the amount of the Swing Line
Sublimit, notwithstanding the fact that such Swing Line Loans, when aggregated
with the Applicable Percentage of the Outstanding Amount of Committed Loans and
L/C Obligations of the Lender acting as Swing Line Lender, may exceed the
amount of such Lender’s Commitment; provided, however, that after
giving effect to any Swing Line Loan, (i) the Total Outstandings shall not
exceed the Aggregate Commitments, and (ii) the aggregate Outstanding
Amount of the Committed Loans of any Lender, plus such Lender’s Applicable
Percentage of the Outstanding Amount of all L/C Obligations, plus such
Lender’s Applicable Percentage of the Outstanding Amount of all Swing Line
Loans shall not exceed such Lender’s Commitment.  Each Swing Line Loan shall be a Base Rate
Loan.  Immediately upon the making of a
Swing Line Loan, each Lender shall be deemed to, and hereby irrevocably and
unconditionally agrees to, purchase from Swing Line Lender a risk participation
in such Swing Line Loan in an amount equal to the product of such Lender’s
Applicable Percentage times the amount of such Swing Line Loan.

 

(b)                                 Borrowing Procedures.  Each
Swing Line Borrowing shall be made upon Borrower’s irrevocable notice to Swing
Line Lender and Administrative Agent, which may be given by telephone.  Each such notice must be received by Swing
Line Lender and Administrative Agent not later than 1:00 p.m. on the
requested borrowing date, and shall specify (i) the amount to be borrowed,
which shall be a minimum of $100,000, and (ii) the requested borrowing
date, which shall be a Business Day. 
Each such telephonic notice must be confirmed promptly by delivery to
Swing Line Lender and Administrative Agent of a written Swing Line Loan Notice,
appropriately completed and signed by a Responsible Officer of Borrower.  Promptly after receipt by Swing Line Lender
of any telephonic Swing Line Loan Notice, Swing Line Lender will confirm with Administrative
Agent (by telephone or in writing) that Administrative Agent has also received
such Swing Line Loan Notice and, if not, Swing Line Lender will notify Administrative
Agent (by telephone or in writing) of the contents thereof.  Unless the Swing Line Lender has received
notice (by telephone or in writing) from Administrative Agent (including at the
request of any Lender) prior to 2:00 p.m. on the date of the proposed
Swing Line Borrowing (A) directing Swing Line Lender not to make such
Swing Line Loan as a result of the limitations set forth in the proviso to the
first sentence of Section 2.04(a), or (B) that one or more of the
applicable conditions specified in Article IV is not then satisfied, then,
subject to the terms and conditions hereof, Swing Line Lender will, not later
than 3:00 p.m. on the borrowing date specified in such Swing Line Loan
Notice, make the amount of its Swing Line Loan available to Borrower at its
office by crediting the account of Borrower on the books of Swing Line Lender
in immediately available funds.  Lenders agree
that Swing Line Lender may agree to modify the borrowing procedures used in
connection with the Swing Line in its discretion and without affecting any of
the obligations of Lenders hereunder other than notifying Administrative Agent
of a Swing Line Loan Notice.

 

35

 

(c)                                  Refinancing of Swing Line Loans.

 

(i)                                     Swing Line
Lender at any time in its sole and absolute discretion may request, on behalf
of Borrower (which hereby irrevocably authorizes Swing Line Lender to so
request on its behalf), that each Lender make a Base Rate Committed Loan in an
amount equal to such Lender’s Applicable Percentage of the amount of Swing Line
Loans then outstanding.  Such request
shall be made in writing (which written request shall be deemed to be a
Committed Loan Notice for purposes hereof) and in accordance with the
requirements of Section 2.02, without regard to the minimum and multiples
specified therein for the principal amount of Base Rate Loans, but subject to
the unutilized portion of the Aggregate Commitments and the conditions set
forth in Section 4.02.  Swing Line
Lender shall furnish Borrower with a copy of the applicable Committed Loan
Notice promptly after delivering such notice to Administrative Agent.  Each Lender shall make an amount equal to its
Applicable Percentage of the amount specified in such Committed Loan Notice
available to Administrative Agent in immediately available funds for the
account of Swing Line Lender at the Administrative Agent’s Office not later
than 1:00 p.m. on the day specified in such Committed Loan Notice,
whereupon, subject to Section 2.04(c)(ii), each Lender that so makes funds
available shall be deemed to have made a Base Rate Committed Loan to Borrower
in such amount.  Administrative Agent
shall remit the funds so received to Swing Line Lender.

 

(ii)                                  If for any
reason any Swing Line Loan cannot be refinanced by such a Committed Borrowing
in accordance with Section 2.04(c)(i), the request for Base Rate Committed
Loans submitted by Swing Line Lender as set forth herein shall be deemed to be
a request by Swing Line Lender that each of the Lenders fund its risk
participation in the relevant Swing Line Loan and each Lender’s payment to Administrative
Agent for the account of Swing Line Lender pursuant to Section 2.04(c)(i) shall
be deemed payment in respect of such participation.

 

(iii)                               If any Lender
fails to make available to Administrative Agent for the account of Swing Line
Lender any amount required to be paid by such Lender pursuant to the foregoing
provisions of this Section 2.04(c) by the time specified in Section 2.04(c)(i),
Swing Line Lender shall be entitled to recover from such Lender (acting through
Administrative Agent), on demand, such amount with interest thereon for the
period from the date such payment is required to the date on which such payment
is immediately available to Swing Line Lender at a rate per annum equal to the
greater of the Federal Funds Rate and a rate determined by Swing Line Lender in
accordance with banking industry rules on interbank compensation, plus
any administrative, processing or similar fees customarily charged by swing
Line Lender in connection with the foregoing. 
A certificate of Swing Line Lender submitted to any Lender (through Administrative
Agent) with respect to any amounts owing under this clause (iii) shall be
conclusive absent manifest error.

 

(iv)                              Each Lender’s
obligation to make Committed Loans or to purchase and fund risk participations
in Swing Line Loans pursuant to this Section 2.04(c) shall be
absolute and unconditional and shall not be affected by any circumstance,
including (a) any setoff, counterclaim, recoupment, defense or other right
which such Lender may have against Swing Line Lender, Borrower or any other
Person for any reason 

 

36

 

whatsoever,
(b) the occurrence or continuance of a Default, or (c) any other
occurrence, event or condition, whether or not similar to any of the foregoing;
provided, however, that each Lender’s obligation to make
Committed Loans pursuant to this Section 2.04(c) is subject to the
conditions set forth in Section 4.02. 
No such funding of risk participations shall relieve or otherwise impair
the obligation of Borrower to repay Swing Line Loans, together with interest as
provided herein.

 

(d)                                 Repayment of Participations.

 

(i)                                     At any time
after any Lender has purchased and funded a risk participation in a Swing Line
Loan, if Swing Line Lender receives any payment on account of such Swing Line
Loan, Swing Line Lender will distribute to such Lender its Applicable Percentage
of such payment (appropriately adjusted, in the case of interest payments, to
reflect the period of time during which such Lender’s risk participation was
funded) in the same funds as those received by Swing Line Lender.

 

(ii)                                  If any payment
received by Swing Line Lender in respect of principal or interest on any Swing
Line Loan is required to be returned by Swing Line Lender under any of the
circumstances described in Section 10.05 (including pursuant to any
settlement entered into by Swing Line Lender in its discretion), each Lender
shall pay to Swing Line Lender its Applicable Percentage thereof on demand of Administrative
Agent, plus interest thereon from the date of such demand to the date such
amount is returned, at a rate per annum equal to the Federal Funds Rate.  Administrative Agent will make such demand
upon the request of Swing Line Lender. 
The obligations of Lenders under this clause shall survive the payment
in full of the Obligations and the termination of this Agreement.

 

(e)                                  Interest for Account of Swing Line Lender. 
Swing Line Lender shall be responsible for invoicing Borrower for
interest on the Swing Line Loans.  Until
each Lender funds its Base Rate Committed Loan or risk participation pursuant
to this Section 2.04 to refinance such Lender’s Applicable Percentage of
any Swing Line Loan, interest in respect of such Applicable Percentage shall be
solely for the account of Swing Line Lender.

 

(f)                                    Payments Directly to Swing Line Lender. 
Borrower shall make all payments of principal and interest in respect of
the Swing Line Loans directly to Swing Line Lender.

 

2.05.                     Prepayments.  (a) 
Borrower may, upon notice to Administrative Agent, at any time or from time to
time voluntarily prepay Committed Loans in whole or in part without premium or
penalty; provided that (i) such notice must be received by Administrative
Agent not later than 11:00 a.m. (a) three Business Days prior to any
date of prepayment of Eurodollar Rate Loans and (b) on the date of
prepayment of Base Rate Committed Loans; (ii) any prepayment of Eurodollar
Rate Loans shall be in a principal amount of $1,000,000 or a whole multiple of
$200,000 in excess thereof; and (iii) any prepayment of Base Rate
Committed Loans shall be in a principal amount of $500,000 or a whole multiple
of $100,000 in excess thereof or, in each case, if less, the entire principal
amount thereof then outstanding.  Each
such notice shall specify the date and amount of such prepayment and the
Type(s) of Committed Loans to be prepaid.

 

37

 

Administrative Agent will promptly notify each Lender
of its receipt of each such notice, and of the amount of such Lender’s
Applicable Percentage of such prepayment. 
If such notice is given by Borrower, Borrower shall make such prepayment
and the payment amount specified in such notice shall be due and payable on the
date specified therein; provided, however, that, in the case of
any such notice of an optional prepayment made in connection with a proposed
refinancing in full of the Obligations, Borrower shall be permitted to make
such prepayment contingent upon the consummation of such refinancing.  Any prepayment of a
Eurodollar Rate Loan shall be accompanied by all accrued interest on the amount
prepaid, together with any additional amounts required pursuant to Section 3.05.  Each such prepayment shall be applied to the
Committed Loans of Lenders in accordance with their respective Applicable
Percentages.

 

(b)                                 Borrower may, upon notice to Swing Line Lender (with a
copy to Administrative Agent), at any time or from time to time, voluntarily
prepay Swing Line Loans in whole or in part without premium or penalty; provided
that (i) such notice must be received by Swing Line Lender and Administrative
Agent not later than 1:00 p.m. on the date of the prepayment, and (ii) any
such prepayment shall be in a minimum principal amount of $100,000.  Each such notice shall specify the date and
amount of such prepayment.  If such
notice is given by Borrower, Borrower shall make such prepayment and the
payment amount specified in such notice shall be due and payable on the date
specified therein.

 

(c)                                  If for any reason the Total Outstandings at any time
exceed the Aggregate Commitments then in effect, Borrower shall immediately
prepay Loans and/or Cash Collateralize the L/C Obligations in an aggregate
amount equal to such excess; provided, however, that Borrower
shall not be required to Cash Collateralize the L/C Obligations pursuant to
this Section 2.05(c) unless after the prepayment in full of the Loans
the Total Outstandings exceed the Aggregate Commitments then in effect.

 

2.06.                     Termination or Reduction of
Commitments.  (a)  Borrower may, upon notice to Administrative
Agent, terminate the Aggregate Commitments, or from time to time permanently
reduce the Aggregate Commitments; provided that (i) any such notice
shall be received by Administrative Agent not later than 11:00 a.m. three
Business Days prior to the date of termination or reduction, (ii) any such
partial reduction shall be in an aggregate amount of $5,000,000 or any whole
multiple of $1,000,000 in excess thereof, (iii) Borrower shall not
terminate or reduce the Aggregate Commitments if, after giving effect thereto
and to any concurrent prepayments hereunder, the Total Outstandings would
exceed the Aggregate Commitments, and (iv) if, after giving effect to any
reduction of the Aggregate Commitments, the L/C Sublimit or the Swing Line
Sublimit exceeds the amount of the Aggregate Commitments, such L/C Sublimit or
Swing Line Sublimit shall be automatically reduced by the amount of such
excess.  In the case of any such notice
to terminate the Aggregate Commitments which is made in connection with a
proposed refinancing in full of the Obligations, Borrower shall be permitted to
make such termination contingent upon the consummation of such
refinancing.  Administrative Agent will
promptly notify the Lenders of any such notice of termination or reduction of
the Aggregate Commitments.  Any reduction
of the Aggregate Commitments pursuant to this Section 2.06(a) shall
be applied to the Commitment of each Lender according to its Applicable
Percentage.  All fees accrued until the
effective date of any termination of the Aggregate Commitments shall be paid on
the effective date of such termination.

 

38

 

(b)                                 Borrower shall immediately pay to the Administrative Agent
for ratable application to the Total Outstandings, 100% of the Net Cash Proceeds
received by Borrower or any of its Subsidiaries from any Disposition of the
type contemplated by Section 7.05(i), provided that no such
prepayment shall be required to the extent that the terms of any Indebtedness
which is secured by the Property which is the subject of the Disposition
requires the prepayment of such Indebtedness.

 

(c)                                  Each prepayment pursuant to Section 2.06(b) shall
result in a concurrent, automatic and irrevocable reduction in the Aggregate
Commitments, provided that if (i) Borrower provides the
Administrative Agent, prior to or concurrently with such Disposition, with a
certificate stating that the proceeds thereof are specifically dedicated for
reinvestment in other real property, equipment or other fixed assets for use in
the business of the Borrower and its Subsidiaries within a twelve month period
following the date of such Disposition, and (ii)  a Subsidiary of the
Borrower thereafter reinvests such proceeds in real property, equipment or
other fixed assets which are identified in writing to the Administrative Agent
within six months of the date of such certificate, then the Aggregate
Commitments shall not be so reduced unless such reinvestment is not made within
twelve months of the date of such certificate.

 

2.07.                     Optional Increase in Commitments.  (a) 
Borrower may by written notice to the Administrative Agent, elect to increase
the Aggregate Commitments pursuant to this Section 2.07 by an amount not
in excess of $25,000,000 during the term of this Agreement (the “Maximum
Increase Amount”) and not less than $5,000,000 or, if less, the remaining
available portion of the Maximum Increase Amount.

 

(b)                                 Each such notice shall specify the date (each, an “Increased
Amount Date”) on which Borrower proposes that the increase shall be
effective, which shall be a date not less than 10 Business Days after the date
on which such notice is delivered to the Administrative Agent; provided
that Borrower shall first offer one or more of the Lenders the opportunity to
provide all of the increase prior to approaching any other Person that is an
Eligible Assignee; provided, further, that any Lender offered or
approached to provide all or a portion of the increase may elect or decline, in
its sole discretion, to provide any portion of the increase, and no Lender
shall, as a result of such rejection, be deemed to be in default in any respect
hereunder.

 

(c)                                  Subject to the foregoing, any such increase in the
Aggregate Commitments shall become effective as of such Increased Amount Date
of such later date as may be mutually agreeable to Borrower, Administrative
Agent and the Lenders or Eligible Assignees providing the increased Aggregate
Commitments (the “Participating Lenders”).  Upon the effectiveness of any such increase,
Borrower shall issue replacement Notes to each Participating Lender, and the
Applicable Percentage of each Lender and each Participating Lender will be
adjusted to give effect to the increase in the Aggregate Commitments and set
forth in a new Schedule 2.01 issued by Administrative Agent.  In addition, each Participating Lender shall
execute and deliver to Borrower and Administrative Agent an agreement whereby
such Participating Lender agrees to provide the portion of the Aggregate
Commitments identified to such Participating Lender in the revised Schedule 2.01
referred to in the preceding sentence and each Participating Lender that is not
already a Lender agrees to become a Lender and be bound by the terms and
conditions of this Agreement.

 

39

 

2.08.                     Repayment of Loans.  (a) 
Borrower shall repay to Lenders on the Maturity Date the aggregate principal
amount of Committed Loans outstanding on such date.

 

(b)                                 Borrower shall repay to Swing Line Lender each Swing
Line Loan on the Maturity Date.

 

2.09.                     Interest.  (a) 
Subject to the provisions of subsection (b) below, (i) each
Eurodollar Rate Loan shall bear interest on the outstanding principal amount
thereof for each Interest Period at a rate per annum equal to the Eurodollar
Rate for such Interest Period plus the Applicable Rate; (ii) each
Base Rate Committed Loan shall bear interest on the outstanding principal
amount thereof from the applicable borrowing date at a rate per annum equal to
the Base Rate minus the Applicable Rate; and (iii) each Swing Line
Loan shall bear interest on the outstanding principal amount thereof from the
applicable borrowing date at a rate per annum equal to the Base Rate minus
the Applicable Rate.

 

(b)                                 (i)                                     If any amount of principal of any Loan is
not paid when due (without regard to any applicable grace periods), whether at
stated maturity, by acceleration or otherwise, such amount shall thereafter
bear interest at a fluctuating interest rate per annum at all times equal to
the Default Rate to the fullest extent permitted by applicable Laws.

 

(ii)                                  If any amount
(other than principal of any Loan) payable by Borrower under any Loan Document
is not paid when due (without regard to any applicable grace periods), whether
at stated maturity, by acceleration or otherwise, then upon the request of the
Required Lenders, such amount shall thereafter bear interest at a fluctuating
interest rate per annum at all times equal to the Default Rate to the fullest
extent permitted by applicable Laws.

 

(iii)                               Upon the
request of the Required Lenders, while any Event of Default exists, Borrower
shall pay interest on the principal amount of all outstanding Obligations
hereunder at a fluctuating interest rate per annum at all times equal to the
Default Rate to the fullest extent permitted by applicable Laws.

 

(iv)                              Accrued and
unpaid interest on past due amounts (including interest on past due interest)
shall be due and payable upon demand.

 

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

 

2.10.                     Fees. 
In addition to the fees described in subsections (i) and (j) of Section 2.03:

 

(a)                                  Non-Use Fee.  Borrower
shall pay to Administrative Agent for the account of each Lender in accordance
with its Applicable Percentage, a non-use fee equal to the Applicable Rate times
the actual daily amount by which the Aggregate Commitments exceed the sum of (i) the
Outstanding Amount of Committed Loans and (ii) the Outstanding Amount of
L/C Obligations.  The non-use fee shall
accrue at all times during the Availability Period, including at 

 

40

 

any time during
which one or more of the conditions in Article IV is not met, and shall be
due and payable quarterly in arrears on each Quarterly Payment Date to occur
after the Closing Date, and on the Maturity Date.  The non-use fee shall be calculated quarterly
in arrears, and if there is any change in the Applicable Rate during any
quarter, the actual daily amount shall be computed and multiplied by the
Applicable Rate separately for each period during such quarter that such
Applicable Rate was in effect.  For
purposes of computing the non-use fee, Swing Line Loans shall not be counted
towards or considered usage of the Aggregate Commitments.

 

(b)                                 Administrative Agent’s Fees. 
Borrower shall pay to Administrative Agent for Administrative Agent’s
own account, fees in the amounts and at the times specified in the letter
agreement, dated as of even date herewith (the “Fee Letter”), between
Borrower and Administrative Agent.  Such
fees shall be fully earned when paid and shall be nonrefundable for any reason
whatsoever.

 

(c)                                  Lenders’ Upfront Fee.  On the
Closing Date, Borrower shall pay to Administrative Agent, for the account of
each Lender in accordance with its Applicable Percentage, an upfront fee in an
amount equal to 0.01% multiplied  by each increment of $1,000,000
of such Lender’s Commitment.  Such
upfront fees are for the credit facilities committed by Lenders under this
Agreement and are fully earned on the date paid.  The upfront fee paid to each Lender is solely
for its own account and is nonrefundable for any reason whatsoever.

 

2.11.                     Computation of Interest and Fees. 
All computations of interest for Base Rate Loans when the Base Rate is
determined by Bank of America’s “prime rate” shall be made on the basis of a
year of 365 or 366 days, as the case may be, and actual days elapsed.  All other computations of fees and interest
shall be made on the basis of a 360-day year and actual days elapsed
(which results in more fees or interest, as applicable, being paid than if
computed on the basis of a 365-day year). 
Interest shall accrue on each Loan for the day on which the Loan is
made, and shall not accrue on a Loan, or any portion thereof, for the day on
which the Loan or such portion is paid, provided that any Loan that is
repaid on the same day on which it is made shall, subject to Section 2.13(a),
bear interest for one day.  Each
determination by Administrative Agent of an interest rate or fee hereunder
shall be conclusive and binding for all purposes, absent manifest error.

 

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

 

41

 

such accounts or records.  Each Lender may attach schedules to its Note
and endorse thereon the date, Type (if applicable), amount and maturity of its
Loans and payments with respect thereto.

 

(b)                                 In addition to the accounts and records referred to in
subsection (a), each Lender and Administrative Agent shall maintain in
accordance with its usual practice accounts or records evidencing the purchases
and sales by such Lender of participations in Letters of Credit and Swing Line
Loans.  In the event of any conflict
between the accounts and records maintained by Administrative Agent and the
accounts and records of any Lender in respect of such matters, the accounts and
records of Administrative Agent shall control in the absence of manifest error.

 

2.13.                     Payments Generally; Administrative
Agent’s Clawback.  (a) General.  All payments to be made by Borrower shall be
made without condition or deduction for any counterclaim, defense, recoupment
or setoff.  Except as otherwise expressly
provided herein, all payments by Borrower hereunder shall be made to Administrative
Agent, for the account of the respective Lenders to which such payment is owed,
at the Administrative Agent’s Office in Dollars and in immediately available
funds not later than 12:00 noon on the date specified herein.  Administrative Agent will promptly distribute
to each Lender its Applicable Percentage(or other applicable share as provided
herein) of such payment in like funds as received by wire transfer to such
Lender’s Lending Office.  All payments
received by Administrative Agent after 12:00 noon shall be deemed received on
the next succeeding Business Day and any applicable interest or fee shall
continue to accrue.  If any payment to be
made by Borrower shall come due on a day other than a Business Day, payment
shall be made on the next following Business Day, and such extension of time
shall be reflected in computing interest or fees, as the case may be.

 

(b)                                 (i)  Funding by Lenders; Presumption by Administrative
Agent.  Unless Administrative Agent
shall have received notice from a Lender prior to the proposed date of any
Committed Borrowing of Eurodollar Rate Loans (or, in the case of any Committed
Borrowing of Base Rate Loans, prior to 12:00 noon on the date of such Committed
Borrowing) that such Lender will not make available to Administrative Agent
such Lender’s share of such Committed Borrowing, Administrative Agent may
assume that such Lender has made such share available on such date in
accordance with Section 2.02 (or, in the case of a Committed Borrowing of
Base Rate Loans, that such Lender has made such share available in accordance
with and at the time required by Section 2.02) and may, in reliance upon
such assumption, make available to Borrower a corresponding amount.  In such event, if a Lender has not in fact
made its share of the applicable Committed Borrowing available to Administrative
Agent, then the applicable Lender and Borrower severally agree to pay to Administrative
Agent forthwith on demand such corresponding amount in immediately available
funds with interest thereon, for each day from and including the date such
amount is made available to Borrower to but excluding the date of payment to Administrative
Agent, at (a) in the case of a payment to be made by such Lender, the
greater of the Federal Funds Rate and a rate determined by Administrative Agent
in accordance with banking industry rules on interbank compensation, plus
any administrative, processing or similar fees customarily charged by Administrative
Agent in connection with the foregoing and (b) in the case of a payment to
be made by Borrower, the interest rate applicable to Base Rate Loans.  If Borrower and such Lender shall pay such
interest to Administrative Agent for the same or an overlapping period, Administrative
Agent shall promptly remit to Borrower the amount of such interest paid by
Borrower for such period.  If such Lender
pays its share of the 

 

42

 

applicable
Committed Borrowing to Administrative Agent, then the amount so paid shall
constitute such Lender’s Committed Loan included in such Committed
Borrowing.  Any payment by Borrower shall
be without prejudice to any claim Borrower may have against a Lender that shall
have failed to make such payment to Administrative Agent.

 

(ii)                                  Payments by Borrower; Presumptions by Administrative
Agent.  Unless Administrative Agent shall have
received notice from Borrower prior to the date on which any payment is due to Administrative
Agent for the account of the Lenders or the L/C Issuer hereunder that Borrower
will not make such payment, Administrative Agent may assume that Borrower has
made such payment on such date in accordance herewith and may, in reliance upon
such assumption, distribute to Lenders or the L/C Issuer, as the case may be,
the amount due.  In such event, if
Borrower has not in fact made such payment, then each of Lenders or the L/C Issuer,
as the case may be, severally agrees to repay to Administrative Agent forthwith
on demand the amount so distributed to such Lender or the L/C Issuer, in
immediately available funds with interest thereon, for each day from and
including the date such amount is distributed to it to but excluding the date
of payment to Administrative Agent, at the greater of the Federal Funds Rate
and a rate determined by Administrative Agent in accordance with banking
industry rules on interbank compensation. 
A notice of Administrative Agent to any Lender or Borrower with respect
to any amount owing under this subsection (b) shall be conclusive,
absent manifest error.

 

(c)                                  Failure to Satisfy Conditions Precedent. 
If any Lender makes available to Administrative Agent funds for any Loan
to be made by such Lender as provided in the foregoing provisions of this Article II,
and such funds are not made available to Borrower by Administrative Agent
because the conditions to the applicable Credit Extension set forth in Article IV
are not satisfied or waived in accordance with the terms hereof, Administrative
Agent shall return such funds (in like funds as received from such Lender) to
such Lender, without interest.

 

(d)                                 Obligations of Lenders Several. 
The obligations of Lenders hereunder to make Committed Loans, to fund
participations in Letters of Credit and Swing Line Loans and to make payments
under Section 10.04(c) are several and not joint.  The failure of any Lender to make any
Committed Loan, to fund any such participation or to make any payment under Section 10.04(c) on
any date required hereunder shall not relieve any other Lender of its
corresponding obligation to do so on such date, and no Lender shall be
responsible for the failure of any other Lender to so make its Committed Loan,
purchase its participation or to make its payment under Section 10.04(c):

 

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

 

2.14.                     Sharing of Payments. 
If any Lender shall, by exercising any right of setoff or counterclaim
or otherwise, obtain payment in respect of any principal of or interest on any
of the Committed Loans made by it, or the participations in L/C Obligations or
in Swing Line Loans held by it resulting in such Lender’s receiving payment of
a proportion of the aggregate amount 

 

43

 

of such Committed Loans or participations and accrued
interest thereon greater than its pro  rata share thereof as
provided herein, then the Lender receiving such greater proportion shall (a) notify
Administrative Agent of such fact, and (b) purchase (for cash at face
value) participations in the Committed Loans and subparticipations in L/C
Obligations and Swing Line Loans of the other Lenders, or make such other
adjustments as shall be equitable, so that the benefit of all such payments
shall be shared by the Lenders ratably in accordance with the aggregate amount
of principal of and accrued interest on their respective Committed Loans and
other amounts owing them, provided that:

 

(i)                                     if any such
participations or subparticipations are purchased and all or any portion of the
payment giving rise thereto is recovered, such participations or
subparticipations shall be rescinded and the purchase price restored to the
extent of such recovery, without interest; and

 

(ii)                                  the provisions
of this Section shall not be construed to apply to (x) any payment made by
Borrower pursuant to and in accordance with the express terms of this Agreement
or (y) any payment obtained by a Lender as consideration for the assignment of
or sale of a participation in any of its Committed Loans or subparticipations
in L/C Obligations or Swing Line Loans to any assignee or participant, other
than to Borrower or any Subsidiary thereof (as to which the provisions of this Section shall
apply).

 

Each Loan Party consents to the foregoing and agrees,
to the extent it may effectively do so under applicable law, that any Lender
acquiring a participation pursuant to the foregoing arrangements may exercise
against such Loan Party rights of setoff and counterclaim with respect to such
participation as fully as if such Lender were a direct creditor of such Loan
Party in the amount of such participation.

 

ARTICLE III.                      TAXES, YIELD PROTECTION AND ILLEGALITY

 

3.01.                     Taxes.  (a) 
Payments Free of Taxes.  Subject
to Section 3.01(e), any and all payments by Borrower to or on account of
any obligation of Borrower hereunder or under any other Loan Document shall be
made free and clear of and without reduction or withholding for any Indemnified
Taxes or Other Taxes, provided that if Borrower shall be required by any
applicable law to deduct any Indemnified Taxes (including any Other Taxes) from
such payments, then, subject to Section 3.01(e), (i) the sum payable
shall be increased as necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this
Section), Administrative Agent, Lender or L/C Issuer, as the case may be,
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) Borrower shall make such deductions, and (iii) Borrower
shall timely pay the full amount deducted to the relevant Governmental
Authority in accordance with applicable law.

 

(b)                                 Payment of Other Taxes by Borrower. 
Without limiting the provisions of subsection (a) above,
Borrower shall timely pay any Other Taxes to the relevant Governmental
Authority in accordance with applicable law.

 

44

 

(c)                                  Indemnification by Borrower.  Subject
to Section 3.01(e), Borrower shall indemnify Administrative Agent, each
Lender and the L/C Issuer, within 10 days after demand therefor, for the full
amount of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or
Other Taxes imposed or asserted on or attributable to amounts payable under
this Section) paid by Administrative Agent, such Lender or the L/C Issuer, as
the case may be, and any penalties, interest and reasonable expenses arising
therefrom or with respect thereto, whether or not such Indemnified Taxes or
Other Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority.  A certificate as
to the amount of such payment or liability delivered to Borrower by a Lender or
the L/C Issuer (with a copy to Administrative Agent), or by Administrative
Agent on its own behalf or on behalf of a Lender or the L/C Issuer, shall be
conclusive absent manifest error.

 

(d)                                 Evidence of Payments.  As soon as
practicable after any payment of Indemnified Taxes or Other Taxes by the
Borrower to a Governmental Authority, Borrower shall deliver to Administrative
Agent the original or a certified copy of a receipt issued by such Governmental
Authority evidencing such payment, a copy of the return reporting such payment
or other evidence of such payment reasonably satisfactory to Administrative
Agent.

 

(e)                                  If Administrative Agent, the L/C Issuer or any Lender
is not a United States Person (each a “Foreign Lender”), it shall, on or
prior to the date of its execution and delivery of this Agreement in the case
of each Foreign Lender party hereto on the Closing Date and on the date of the
Assignment and Acceptance pursuant to which it becomes a party hereto in the
case of each other Foreign Lender, and from time to time thereafter as
reasonably requested in writing by Borrower (but only so long thereafter as
such Foreign Lender remains lawfully able to do so), provide each of
Administrative Agent and Borrower with two original Internal Revenue Service
Forms W-8BEN and/or Form W-8IMY, as applicable (in each
case, certifying that it is entitled to benefits under an income tax treaty to
which the United States is a party) or W-8ECI, or in the case of a
Foreign Lender that has certified in writing to the Administrative Agent that
it is not (i) a “bank” as defined in Section 881(c)(3)(A) of the
Internal Revenue Code, (ii) a 10-percent shareholder (within the
meaning of Section 871(h)(3)(B) of the Code) of Borrower or any
Subsidiary of Borrower or (iii) a controlled foreign corporation related
to Borrower (within the meaning of Section 864(d)(4) of the Code),
Internal Revenue Service Form W-8BENI or Form W-8IMY, as
appropriate, or any successor or other form prescribed by the Internal Revenue
Service, certifying that such Foreign Lender is exempt from or entitled to a
reduced rate of United States withholding tax on payments pursuant to this
Agreement.  If the forms provided by a
Foreign Lender at the time such Foreign Lender first becomes a party to this
Agreement indicate a United States interest withholding tax rate in excess of
zero, withholding tax at such rate shall be considered excluded from
Indemnified Taxes; provided,
however, that if, at the
effective date of the Assignment and Acceptance pursuant to which a Foreign
Lender becomes a party to this Agreement, the Foreign Lender assignor was
entitled to payments under subsection (a) of this Section 3.01
in respect of United States withholding tax with respect to interest paid at
such date, then, to such extent, the term Indemnified Taxes shall include (in
addition to withholding taxes that may be imposed in the future or other
amounts otherwise includable in Indemnified Taxes) United States withholding
tax, if any, applicable with respect to the Foreign Lender assignee on such
date.  To the extent required by
applicable law, each Foreign Lender that is a United States person shall, on
the date of its execution and delivery of this Agreement in the case of each
Foreign Lender party to the Closing Date and on the date of 

 

45

 

the Assignment and
Acceptance pursuant to which it becomes a Foreign Lender in the case of each
other Foreign Lender, upon expiration or obsolescence of any form previously
submitted under this Section 3.01(e), and from time to time thereafter as
reasonably requested in writing by Borrower or Administrative Agent (but only
so long thereafter as such Foreign Lender remains lawfully able to do so),
provide each of Administrative Agent and Borrower with two original Internal
Revenue Service Forms W-9 (or successor forms) establishing that such
Foreign Lender is not subject to U.S. backup withholding tax.  If any form or document referred to in this
subsection (e) requires the disclosure of information, other than
information necessary to compute the tax payable and information required on
the date hereof by Internal Revenue Service Form W-8BEN or W-8EC1
or the related certificate described above, that the applicable Foreign Lender
reasonably considers to be confidential, such Foreign Lender shall give notice
thereof to Borrower and shall not be obligated to include in such form or
document such confidential information.

 

(f)                                    For any period with respect to which a Foreign Lender
has failed to provide Borrower with the appropriate form, certificate or other
document described in subsection (e) above (other than if such failure is due to a change in law, or in
the interpretation or application thereof, occurring after the date on which a
form, certificate or other document originally was required to be provided or
if such form, certificate or other document otherwise is not required under subsection (e) above),
such Foreign Lender shall not be entitled to payments of additional amounts or
indemnification under subsection (a) or (c) of this Section 3.01
with respect to Taxes imposed by the United States by reason of such failure; provided, however,
that should a Foreign Lender become subject to Taxes because of its failure to
deliver a form, certificate or other document required hereunder, Borrower
shall take such steps as such Foreign Lender shall reasonably request to assist
such Foreign Lender to recover such Taxes.

 

(g)                                 Treatment of Certain Refunds. 
If Administrative Agent, any Lender or the L/C Issuer determines, in its
sole discretion, that it has received a refund of any Taxes or Other Taxes as
to which it has been indemnified by Borrower or with respect to which Borrower
has paid additional amounts pursuant to this Section, it shall pay to Borrower
an amount equal to such refund (but only to the extent of indemnity payments
made, or additional amounts paid, by Borrower under this Section with
respect to the Taxes or Other Taxes giving rise to such refund), net of all
out-of-pocket expenses of Administrative Agent, such Lender or the L/C Issuer,
as the case may be, and without interest (other than any interest paid by the
relevant Governmental Authority with respect to such refund), provided
that Borrower, upon the request of Administrative Agent, such Lender or the L/C
Issuer, agrees to repay the amount paid over to the Borrower (plus any
penalties, interest or other charges imposed by the relevant Governmental
Authority) to Administrative Agent, such Lender or the L/C Issuer in the event Administrative
Agent, such Lender or the L/C Issuer is required to repay such refund to such
Governmental Authority.  This subsection shall
not be construed to require Administrative Agent, any Lender or the L/C Issuer
to make available its tax returns (or any other information relating to its
taxes that it deems confidential) to the Borrower or any other Person.

 

3.02.                     Illegality. 
If any Lender determines that any Law has made it unlawful, or that any
Governmental Authority has asserted that it is unlawful, for any Lender or its
applicable Lending Office to make, maintain or fund Eurodollar Rate Loans, or
to determine or charge interest rates based upon the Eurodollar Rate, or any
Governmental Authority has imposed 

 

46

 

material restrictions on the authority of such Lender
to purchase or sell, or to take deposits of, Dollars in the London interbank
market, then, on notice thereof by such Lender to Borrower through Administrative
Agent, any obligation of such Lender to make or continue Eurodollar Rate Loans
or to convert Base Rate Committed Loans to Eurodollar Rate Loans shall be
suspended until such Lender notifies Administrative Agent and Borrower that the
circumstances giving rise to such determination no longer exist.  Upon receipt of such notice, Borrower shall,
upon demand from such Lender (with a copy to Administrative Agent), prepay or,
if applicable, convert all Eurodollar Rate Loans of such Lender to Base Rate
Loans, either on the last day of the Interest Period therefor, if such Lender
may lawfully continue to maintain such Eurodollar Rate Loans to such day, or
immediately, if such Lender may not lawfully continue to maintain such
Eurodollar Rate Loans.  Upon any such
prepayment or conversion, Borrower shall also pay accrued interest on the
amount so prepaid or converted and all amounts due under Section 3.05 in
accordance with the terms thereof due to such prepayment or conversion.

 

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

 

3.04.                     Increased Costs.  (a)  Increased Costs Generally. 
If any Change in Law shall:

 

(i)                                     impose, modify
or deem applicable any reserve, special deposit, compulsory loan, insurance
charge or similar requirement against assets of, deposits with or for the
account of, or credit extended or participated in by, any Lender (except any
reserve requirement reflected in the Eurodollar Rate) or the L/C Issuer;

 

(ii)                                  subject any
Lender or the L/C Issuer to any tax of any kind whatsoever with respect to this
Agreement, any Letter of Credit, any participation in a Letter of Credit or any
Eurodollar Rate Loan made by it, or change the basis of taxation of
payments to such Lender or the L/C Issuer in respect thereof (except for
Indemnified Taxes or Other Taxes covered by Section 3.01 and the
imposition of, or any change in the rate of, any Excluded Tax payable by such
Lender or the L/C Issuer); or

 

(iii)                               impose on any
Lender or the L/C Issuer or the London interbank market any other condition,
cost or expense affecting this Agreement or Eurodollar Rate Loans made by such
Lender or any Letter of Credit or participation therein;

 

47

 

and the result of any of the foregoing shall be to
increase the cost to such Lender of making or maintaining any Eurodollar Rate
Loan (or of maintaining its obligation to make any such Loan), or to increase
the cost to such Lender or the L/C Issuer of participating in, issuing or
maintaining any Letter of Credit (or of maintaining its obligation to
participate in or to issue any Letter of Credit), or to reduce the amount of
any sum received or receivable by such Lender or the L/C Issuer hereunder
(whether of principal, interest or any other amount) then, upon request of such
Lender or the L/C Issuer, Borrower will pay to such Lender or the L/C Issuer,
as the case may be, such additional amount or amounts as will compensate such
Lender or the L/C Issuer, as the case may be, for such additional costs
incurred or reduction suffered.

 

(b)                                 Capital Requirements.  If any Lender
or the L/C Issuer determines that any Change in Law affecting such Lender or
the L/C Issuer or any Lending Office of such Lender or such Lender’s or the L/C
Issuer’s holding company, if any, regarding capital requirements has or would
have the effect of reducing the rate of return on such Lender’s or the L/C
Issuer’s capital or on the capital of such Lender’s or the L/C Issuer’s holding
company, if any, as a consequence of this Agreement, the Commitments of such
Lender or the Loans made by, or participations in Letters of Credit held by,
such Lender, or the Letters of Credit issued by the L/C Issuer, to a level
below that which such Lender or the L/C Issuer or such Lender’s or the L/C
Issuer’s holding company could have achieved but for such Change in Law (taking
into consideration such Lender’s or the L/C Issuer’s policies and the policies
of such Lender’s or the L/C Issuer’s holding company with respect to capital
adequacy), then from time to time Borrower will pay to such Lender or the L/C
Issuer, as the case may be, such additional amount or amounts as will
compensate such Lender or the L/C Issuer or such Lender’s or the L/C Issuer’s
holding company for any such reduction suffered.

 

(c)                                  Certificates for Reimbursement. 
A certificate of a Lender or the L/C Issuer setting forth the amount or
amounts necessary to compensate such Lender or the L/C Issuer or its holding
company, as the case may be, as specified in subsection (a) or (b) of
this Section and delivered to Borrower shall be conclusive absent manifest
error.  Borrower shall pay such Lender or
the L/C Issuer, as the case may be, the amount shown as due on any such
certificate within 10 days after receipt thereof.

 

(d)                                 Delay in Requests.  Failure or
delay on the part of any Lender or the L/C Issuer to demand compensation
pursuant to the foregoing provisions of this Section shall not constitute
a waiver of such Lender’s or the L/C Issuer’s right to demand such
compensation, provided that Borrower shall not be required to compensate a
Lender or the L/C Issuer pursuant to the foregoing provisions of this Section for
any increased costs incurred or reductions suffered more than 180 days prior to
the date that such Lender or the L/C Issuer, as the case may be, notifies
Borrower of the Change in Law giving rise to such increased costs or reductions
and of such Lender’s or the L/C Issuer’s intention to claim compensation
therefor (except that, if the Change in Law giving rise to such increased costs
or reductions is retroactive, then the 180—day period referred to above shall
be extended to include the period of retroactive effect thereof).

 

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

 

48

 

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

 

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

 

including any loss of anticipated profits and any loss
or expense arising from the liquidation or reemployment of funds obtained by it
to maintain such Loan or from fees payable to terminate the deposits from which
such funds were obtained.  Borrower shall
also pay any customary administrative fees charged by such Lender in connection
with the foregoing.  For purposes of
calculating amounts payable by Borrower to Lenders under this Section 3.05,
each Lender shall be deemed to have funded each Eurodollar Rate Loan made by it
at the Eurodollar Base Rate used in determining the Eurodollar Rate for such
Loan by a matching deposit or other borrowing in the London interbank
eurodollar market for a comparable amount and for a comparable period, whether
or not such Eurodollar Rate Loan was in fact so funded.

 

3.06.                     Mitigation Obligations.  If
any Lender requests compensation under Section 3.04, or Borrower is
required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 3.01, or if
any Lender gives a notice pursuant to Section 3.02, then such Lender shall
use reasonable efforts to designate a different Lending Office for funding or
booking its Loans hereunder or to assign its rights and obligations hereunder
to another of its offices, branches or affiliates, if, in the judgment of such
Lender, such designation or assignment (i) would eliminate or reduce
amounts payable pursuant to Section 3.01 or 3.04, as the case may be, in
the future, or eliminate the need for the notice pursuant to Section 3.02,
as applicable, and (ii) in each case, would not subject such Lender to any
unreimbursed cost or expense and would not otherwise be disadvantageous to such
Lender.  Borrower hereby agrees to pay
all reasonable costs and expenses incurred by any Lender in connection with any
such designation or assignment.

 

3.07.                     Survival. 
All of Borrower’s obligations under this Article III shall survive
termination of the Aggregate Commitments and repayment of all other Obligations
hereunder.

 

3.08.                     Replacement Lenders. 
If (i) any Lender requests compensation under Section 3.01 or
3.04, (ii) any Lender is not obligated to fund or maintain Eurodollar Rate
Loans pursuant to Section 3.02, (iii) the Company is required to pay
any additional amount to any Lender or any Governmental Authority for the
account of any Lender pursuant to Section 3.01, (iv) any Lender has
failed to fund any portion of its Loans hereunder required to be funded by it
within one Business Day of the date required to be funded by it or (v) any
Lender has not consented to a proposed amendment, modification or waiver under
this Agreement that requires the consent of all Lenders and which has been
approved by Requisite Lenders, then Borrower may, at its sole expense and
effort, upon notice to such Lender and the Administrative Agent, require such
Lender to assign and delegate, without recourse (in accordance with and subject
to the restrictions contained in, and consents required by, Section 10.06),
all of its interests, rights and obligations under this Agreement and the
related Loan Documents to an assignee that shall 

 

49

 

assume such obligations (which assignee may be another
Lender, if a Lender accepts such assignment), provided that:

 

(a)                                  either Borrower or the new Lender shall have paid to
the Administrative Agent the assignment fee specified in Section 10.06(b);
and

 

(b)                                 such Lender shall have received payment of an amount
equal to the outstanding principal of its Loans, accrued interest thereon,
accrued fees and all other amounts payable to it hereunder and under the other
Loan Documents from the assignee (to the extent of such outstanding principal
and accrued interest and fees) or Borrower (in the case of all other amounts).

 

A Lender shall not be required to make any such
assignment or delegation if, prior thereto, as a result of a waiver by such
Lender or otherwise, the circumstances entitling Borrower to require such
assignment and delegation cease to apply.

 

ARTICLE IV.                     CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

 

4.01.                     Conditions of Initial Credit
Extension.  The obligation of the L/C Issuer and each
Lender to make its initial Credit Extension hereunder is subject to
satisfaction of the following conditions precedent:

 

(a)                                  Administrative Agent’s receipt of the
following, each of which shall be originals or telecopies (followed promptly by
originals) unless otherwise specified, each properly executed by a Responsible
Officer of the signing Loan Party, each dated the Closing Date (or, in the case
of certificates of governmental officials, a recent date before the Closing
Date) and each in form and substance satisfactory to Administrative Agent and
each of the Lenders:

 

(i)                                     executed
counterparts of this Agreement and the Guaranty, sufficient in number for
distribution to Administrative Agent, each Lender and Borrower;

 

(ii)                                  a Note executed
by Borrower in favor of each Lender requesting a Note;

 

(iii)                               such certified resolutions
or other action, incumbency certificates and/or other certificates of
Responsible Officers of each Loan Party as Administrative Agent may require
evidencing the identity, authority and capacity of each Responsible Officer
thereof authorized to act as a Responsible Officer in connection with this
Agreement and the other Loan Documents to which such Loan Party is a party;

 

(iv)                              such documents
and certifications as Administrative Agent may reasonably require to evidence
that each Loan Party is duly organized or formed, and that each Loan Party is
validly existing, in good standing and qualified to engage in business in each
jurisdiction where such Loan Party is qualified to do business.

 

(v)                                 favorable
opinions of Latham & Watkins LLP and local counsel reasonably
satisfactory to Administrative Agent, addressed to Administrative Agent and 

 

50

 

each
Lender, as to the matters set forth concerning the Loan Parties and the Loan
Documents in form and substance reasonably satisfactory to Administrative Agent;

 

(vi)                              a certificate
of a Responsible Officer of each Loan Party either (a) attaching copies of
all consents, licenses and approvals required in connection with the execution,
delivery and performance by such Loan Party and the validity against such Loan
Party of the Loan Documents to which it is a party, and such consents, licenses
and approvals shall be in full force and effect, or (b) stating that no
such consents, licenses or approvals are so required;

 

(vii)                           a certificate
signed by a Responsible Officer of Borrower certifying (a) that the
conditions specified in Sections 4.02(a) and (b) have been satisfied,
(b) that there has been no event or circumstance since December 31,
2004 that has had or could be reasonably expected to have, either individually
or in the aggregate, a Material Adverse Effect, and (c) stating the Total
Capitalization Ratio as of December 31, 2004 (or, in the alternative,
stating the Borrower has elected to have the Applicable Rate determined on the
basis of the S&P Rating and stating the then current S&P Rating);

 

(viii)                        evidence that
all insurance required to be maintained pursuant to the Loan Documents has been
obtained and is in effect;

 

(ix)                                a Certificate dated
as of the Closing Date, signed by a Responsible Officer of Borrower, stating
that no Internal Control Event has occurred since December 31, 2004 which
involves (A) an impact upon EBITDA in an amount which is in excess of
$1,000,000, or (B) fraud, error or irregularity on the part of any
Responsible Official of the Borrower or its Significant Subsidiaries or any
other management staff of Borrower and its Significant Subsidiaries having
responsibility for the design or supervision of internal controls or the
preparation of financial statements of Borrower and its Subsidiaries;

 

(x)                                   evidence that
all commitments under the Existing Bank of America Credit Agreement and the
Existing Union Bank Agreement have been or concurrently with the Closing Date
are being terminated, and all outstanding amounts thereunder paid in full and
all Liens securing obligations under the Existing Bank of America Credit
Agreement and the Existing Union Bank Agreement have been or concurrently with
the Closing Date are being released;

 

(xi)                                A certificate
signed by a Responsible Officer of Borrower certifying that, as of the Closing
Date, there is no action, suit, investigation or proceeding pending or, to the
knowledge of Borrower, threatened against Borrower or any of its Subsidiaries
in any court or before any arbitrator or governmental authority that could
reasonably be expected to have a Material Adverse Effect;

 

(xii)                             A copy of the
Borrower’s annual report on form 10-K for the year ended December 31,
2004; and

 

51

 

(xiii)                          such other
assurances, certificates, documents, consents or opinions as Administrative
Agent, the L/C Issuer, Swing Line Lender or the Required Lenders reasonably may
require.

 

(b)                                 Any fees required to be paid on or before the Closing
Date shall have been paid.

 

(c)                                  Unless waived by Administrative Agent, Borrower shall
have paid all fees, charges and disbursements of counsel to Administrative
Agent to the extent invoiced prior to or on the Closing Date, plus such
additional amounts of such fees, charges and disbursements as shall constitute
its reasonable estimate of such fees, charges and disbursements incurred or to
be incurred by it through the closing proceedings (provided that such estimate
shall not thereafter preclude a final settling of accounts between Borrower and
Administrative Agent).

 

Without limiting the generality of the provisions of Section 9.04,
for purposes of determining compliance with the conditions specified in this Section 4.01,
each Lender that has signed this Agreement shall be deemed to have consented
to, approved or accepted or to be satisfied with, each document or other matter
required thereunder to be consented to or approved by or acceptable or
satisfactory to a Lender unless Administrative Agent shall have received notice
from such Lender prior to the proposed Closing Date specifying its objection
thereto.

 

4.02.                     Conditions to all Credit
Extensions.  The obligation of each Lender to honor any
Request for Credit Extension is subject to the following conditions precedent:

 

(a)                                  The representations and warranties of Borrower and
each other Loan Party contained in Article V or any other Loan Document,
or which are contained in any document furnished at any time under or in
connection herewith or therewith, shall be true and correct on and as of the
date of such Credit Extension, except to the extent that such representations
and warranties specifically refer to an earlier date, in which case they shall
be true and correct as of such earlier date, and except that for purposes of
this Section 4.02, the representations and warranties contained in
subsections (a) and (b) of Section 5.05 shall be deemed to refer
to the most recent statements furnished pursuant to clauses (a) and (b),
respectively, of Section 6.01.

 

(b)                                 No Default shall exist, or would result from such
proposed Credit Extension or from the application of the proceeds thereof.

 

(c)                                  Administrative Agent and, if applicable, the L/C
Issuer or Swing Line Lender shall have received a Request for Credit Extension
in accordance with the requirements hereof.

 

(d)                                 Administrative Agent shall have received, in form and
substance reasonably satisfactory to it, such other assurances, certificates,
documents or consents related to the foregoing as Administrative Agent or the
Required Lenders reasonably may require.

 

Each Request for Credit Extension submitted by
Borrower shall be deemed to be a representation and warranty that the
conditions specified in Sections 4.02(a) and (b) have been satisfied
on and as of the date of the applicable Credit Extension.

 

52

 

ARTICLE V.                         REPRESENTATIONS AND WARRANTIES

 

Borrower represents and warrants to Administrative
Agent and the Lenders, on the Closing Date, and on each other date that the
Borrower makes or is deemed to have made such representations, that:

 

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

 

5.02.                     Authorization; No Contravention. 
The execution, delivery and performance by each Loan Party of each Loan
Document to which such Person is party, have been duly authorized by all
necessary corporate or other organizational action, and do not and will not (a) contravene
the terms of any of such Person’s Organization Documents; (b) conflict
with or result in any breach or contravention of, or the creation of any Lien
under, or require any payment to be made under (i) any Contractual
Obligation to which Borrower or any of its Subsidiaries is a party or affecting
the properties of Borrower or any of its Subsidiaries or (ii) any order,
injunction, writ or decree of any Governmental Authority or any arbitral award
to which Borrower or any of its Subsidiaries or their property is subject; or (c) violate
any Law in any material respect (or, in any event, in any manner known to Borrower).  Borrower and each Subsidiary thereof is in
compliance with all Contractual Obligations referred to in clause (b)(i),
except to the extent that failure to do so could not reasonably be expected to
have a Material Adverse Effect.

 

5.03.                     Governmental Authorization; Other
Consents.  No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority or any other Person is necessary or required in
connection with the execution, delivery or performance by, or enforcement
against, any Loan Party of this Agreement or any other Loan Document.  No Subsidiary of the Borrower is not a party
to the Guaranty as of the Closing Date except to the extent that (a) such
Subsidiary is not a Significant Subsidiary, or (b) such Subsidiary is not
permitted to be a party to the Guaranty based upon a Law applicable to such
Subsidiary by reason of its status as a regulated utility (provided that no
such Subsidiary shall be obligated to apply for any discretionary regulatory
approvals which would be required to permit its execution of the Guaranty).

 

5.04.                     Binding Effect. 
This Agreement has been, and each other Loan Document, when delivered
hereunder, will have been, duly executed and delivered by each Loan Party that
is 

 

53

 

party thereto. 
This Agreement constitutes, and each other Loan Document when so
delivered will constitute, a legal, valid and binding obligation of such Loan
Party, enforceable against each Loan Party that is party thereto in accordance
with its terms subject to applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws now or hereafter in effect relating to creditors’ rights
generally, and general principles of equity.

 

5.05.                     Financial Statements; No Material
Adverse Effect.  (a)  The Audited Financial Statements (i) were
prepared in accordance with GAAP consistently applied throughout the period
covered thereby, except as otherwise expressly noted therein; (ii) fairly
present the financial condition of Borrower and its Subsidiaries as of the date
thereof and their results of operations for the period covered thereby in
accordance with GAAP consistently applied throughout the period covered
thereby, except as otherwise expressly noted therein; and (iii) show all
material indebtedness and other liabilities, direct or contingent, of Borrower
and its Subsidiaries as of the date thereof, including liabilities for taxes,
material commitments and Indebtedness.

 

(b)                                 The unaudited consolidated balance sheets of Borrower
and its Subsidiaries dated December 31, 2004, and the related consolidated
statements of income or operations, shareholders’ equity and cash flows for the
fiscal quarter ended on that date (i) were prepared in accordance with
GAAP consistently applied throughout the period covered thereby, except as
otherwise expressly noted therein, and (ii) fairly present the financial
condition of Borrower and its Subsidiaries as of the date thereof and their
results of operations for the period covered thereby, subject, in the case of
clauses (i) and (ii), to the absence of footnotes and to normal year-end
adjustments.

 

(c)                                  Since the date of the Audited Financial Statements,
there has been no event or circumstance, either individually or in the
aggregate, that has had or could reasonably be expected to have a Material
Adverse Effect.

 

(d)                                 The consolidated forecasted balance sheet and
statements of income and cash flows of Borrower and its Subsidiaries delivered
pursuant to Section 6.01(c) were prepared in good faith on the basis
of the assumptions stated therein, which assumptions were fair in light of the
conditions existing at the time of delivery of such forecasts, and represented,
at the time of delivery, the Borrower’s best estimate of its future financial
performance.

 

5.06.                     Litigation. 
There are no actions, suits, proceedings, claims or disputes pending or,
to the knowledge of Borrower after due and diligent investigation, threatened
or contemplated, at law, in equity, in arbitration or before any Governmental
Authority, by or against Borrower or any of its Subsidiaries or against any of
their properties or revenues that (a) purport to affect or pertain to this
Agreement or any other Loan Document, or any of the transactions contemplated
hereby, or (b) either individually or in the aggregate could reasonably be
expected to have a Material Adverse Effect.

 

5.07.                     No Default. 
Neither Borrower nor any Subsidiary is in default under or with respect
to any Contractual Obligation that could, either individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.  No Default has occurred and is 

 

54

 

continuing or would result from the consummation of
the transactions contemplated by this Agreement or any other Loan Document.

 

5.08.                     Ownership of Property; Liens. 
Each of Borrower and each Subsidiary has good record and marketable
title in fee simple to, or valid leasehold interests in, all real property
necessary or used in the ordinary conduct of its business, except for such
defects in title as could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. 
The property of Borrower and its Subsidiaries is subject to no Liens,
other than Liens permitted by Section 7.01.

 

5.09.                     Environmental Compliance. 
Borrower and its Subsidiaries conduct in the ordinary course of business
a review of the effect of existing Environmental Laws and claims alleging
potential liability or responsibility for violation of any Environmental Law on
their respective businesses, operations and properties, and as a result thereof
Borrower has reasonably concluded that, except as specifically disclosed in Schedule 5.09,
such Environmental Laws and claims could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

 

5.10.                     Insurance. 
The properties of Borrower and its Subsidiaries are insured with
financially sound and reputable insurance companies not Affiliates of Borrower,
in such amounts (after giving effect to any self-insurance compatible with the
following standards), with such deductibles and covering such risks as are
customarily carried by companies engaged in similar businesses and owning
similar properties in localities where Borrower or the applicable Subsidiary
operates.

 

5.11.                     Taxes. 
Borrower and its Subsidiaries have filed all federal, state and other
material tax returns and reports required to be filed, and have paid all federal,
state and other material taxes, assessments, fees and other governmental
charges levied or imposed upon them or their properties, income or assets
otherwise due and payable, except those which are being contested in good faith
by appropriate proceedings diligently conducted and for which adequate reserves
have been provided in accordance with GAAP and except immaterial taxes and tax
returns.  To the best knowledge of Borrower,
there is no proposed tax assessment against Borrower or any Subsidiary that
would, if made, have a Material Adverse Effect.

 

5.12.                     ERISA Compliance.  (a) 
Each Plan is in compliance in all material respects with the applicable
provisions of ERISA, the Code and other federal or state Laws.  Each Plan that is intended to qualify under Section 401(a) of
the Code has received a favorable determination letter from the IRS or an
application for such a letter is currently being processed by the IRS with
respect thereto and, to the best knowledge of Borrower, nothing has occurred
which would prevent, or cause the loss of, such qualification.  Borrower and each ERISA Affiliate have made
all required contributions to each Plan subject to Section 412 of the
Code, and no application for a funding waiver or an extension of any
amortization period pursuant to Section 412 of the Code has been made with
respect to any Plan.

 

(b)                                 There are no pending or, to the best knowledge of
Borrower, threatened claims, actions or lawsuits, or action by any Governmental
Authority, with respect to any Plan that could be reasonably be expected to
have a Material Adverse Effect.  There
has been no 

 

55

 

prohibited
transaction or violation of the fiduciary responsibility rules with
respect to any Plan that has resulted or could reasonably be expected to result
in a Material Adverse Effect.

 

(c)                                  (i)  No ERISA Event has occurred or is reasonably
expected to occur; (ii) no Pension Plan has any Unfunded Pension
Liability; (iii) neither Borrower nor any ERISA Affiliate has incurred, or
reasonably expects to incur, any liability under Title IV of ERISA with respect
to any Pension Plan (other than premiums due and not delinquent under Section 4007
of ERISA); (iv) neither Borrower nor any ERISA Affiliate has incurred, or
reasonably expects to incur, any liability (and no event has occurred which,
with the giving of notice under Section 4219 of ERISA, would result in
such liability) under Sections 4201 or 4243 of ERISA with respect to a
Multiemployer Plan; and (v) neither Borrower nor any ERISA Affiliate has
engaged in a transaction that could be subject to Sections 4069 or 4212(c) of
ERISA.

 

5.13.                     Subsidiaries. 
As of the Closing Date, Borrower has no Subsidiaries other than those
specifically disclosed in Part (a) of Schedule 5.13, and all of
the outstanding Equity Interests in such Subsidiaries have been validly issued,
are fully paid and nonassessable and are owned by a Loan Party in the amounts
specified on Part (a) of Schedule 5.13 free and clear of all
Liens (other than any such Equity Interests not owned by Borrower or one of its
Subsidiaries).  Borrower has no equity
investments in any other corporation or entity other than those specifically
disclosed in Part (b) of Schedule 5.13.  All of the outstanding Equity Interests in
Borrower have been validly issued and are fully paid and nonassessable.

 

5.14.                     Margin Regulations; Investment
Company Act; Public Utility Holding Company Act.  (a) 
Borrower is not engaged and will not engage, principally or as one of its
important activities, in the business of purchasing or carrying margin stock
(within the meaning of Regulation U issued by the FRB), or extending credit for
the purpose of purchasing or carrying margin stock.

 

(b)                                 None of Borrower, any Person Controlling Borrower, or
any Subsidiary is or is required to be registered as an “investment company”
under the Investment Company Act of 1940, or is otherwise subject thereto in
any manner which would prohibit the credit facilities described herein.

 

5.15.                     Disclosure. 
Borrower has disclosed to Administrative Agent and Lenders all
agreements, instruments and corporate or other restrictions to which it or any
of its Subsidiaries is subject, and all other matters known to it, that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect.  No report,
financial statement, certificate or other written information furnished by or
on behalf of any Loan Party to Administrative Agent or any Lender in connection
with the transactions contemplated hereby and the negotiation of this Agreement
or delivered hereunder as modified or supplemented by other information so
furnished) contains any material misstatement of fact or omits to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that,
with respect to projected financial information, Borrower represents only that
such information was prepared in good faith based upon assumptions believed to
be reasonable at the time.

 

56

 

5.16.                     Compliance with Laws. 
Each of Borrower and each Subsidiary is in compliance in all material
respects with the requirements of all Laws and all orders, writs, injunctions
and decrees applicable to it or to its properties, except in such instances in
which (a) such requirement of Law or order, writ, injunction or decree is
being contested in good faith by appropriate proceedings diligently conducted
or (b) the failure to comply therewith, either individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.

 

5.17.                     Intellectual Property; Licenses,
Etc.  Borrower and its Subsidiaries own, or possess
the right to use, all of the trademarks, service marks, trade names,
copyrights, patents, patent rights, franchises, licenses and other intellectual
property rights that are reasonably necessary for the operation of their
respective businesses, without conflict with the rights of any other Person,
except to the extent that such conflicts may not reasonably be expected to have
a Material Adverse Effect.  To the best
knowledge of Borrower, no slogan or other advertising device, product, process,
method, substance, part or other material now employed, or now contemplated to
be employed, by Borrower or any Subsidiary infringes upon any rights held by
any other Person, except to the extent that such conflicts may not reasonably
be expected to have a Material Adverse Effect. 
No claim or litigation regarding any of the foregoing is pending or, to
the best knowledge of Borrower, threatened, which, either individually or in
the aggregate, could reasonably be expected to have a Material Adverse Effect.

 

5.18.                     Restrictions on Restricted Payments
and Loans.  No Subsidiary of the Borrower is subject to
any restriction upon its ability to make Restricted Payments or to make loans to
or investments in the Borrower except:

 

(a)                                  the restrictions set forth in the Existing Indentures and
the Tecon Loan Agreement as of the date hereof;

 

(b)                                 restrictions set forth in future instruments,
documents and agreements which have been entered into in compliance with Section 7.09;
and

 

(c)                                  restrictions imposed by Law.

 

ARTICLE VI.                     AFFIRMATIVE COVENANTS

 

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

 

6.01.                     Financial Statements. 
Deliver to Administrative Agent a sufficient number of copies for
delivery by Administrative Agent to each Lender, in form and detail reasonably satisfactory
to Administrative Agent and the Required Lenders:

 

(a)                                  as soon as available, but in any event within 90 days
after the end of each fiscal year of Borrower, a consolidated balance sheet of
Borrower and its Subsidiaries as at the 

 

57

 

end of such fiscal
year, and the related consolidated statements of income or operations,
shareholders’ equity and cash flows for such fiscal year, setting forth in each
case in comparative form the figures for the previous fiscal year, all in
reasonable detail and prepared in accordance with GAAP, such statements to be
audited and accompanied by a report and opinion of KMPG, LLP or another
independent certified public accountant of nationally recognized standing
reasonably acceptable to the Required Lenders, which report and opinion shall
be prepared in accordance with generally accepted auditing standards and
applicable Securities Laws and shall not be subject to any “going concern” or
like qualification or exception or any qualification or exception as to the
scope of such audit;

 

(b)                                 as soon as available, but in any event within 45 days
after the end of each of the first three fiscal quarters of each fiscal year of
Borrower, a consolidated balance sheet of Borrower and its Subsidiaries as at
the end of such fiscal quarter, and the related consolidated statements of
income or operations, shareholders’ equity and cash flows for such fiscal
quarter and for the portion of Borrower’s fiscal year then ended, setting forth
in each case in comparative form the figures for the corresponding fiscal
quarter of the previous fiscal year and the corresponding portion of the
previous fiscal year, all in reasonable detail, such statements to be certified
by a Responsible Officer of Borrower as fairly presenting the financial
condition, results of operations, shareholders’ equity and cash flows of
Borrower and its Subsidiaries in accordance with GAAP, subject only to normal
year-end adjustments and the absence of footnotes; and

 

(c)                                  concurrently with the financial
statements set forth in (a), forecasts prepared by management of Borrower, in a
form similar to the projections heretofore presented to the Administrative
Agent and in any event reasonably satisfactory to Administrative Agent, of
consolidated balance sheets and statements of income or operations and cash
flows of Borrower and its Subsidiaries on an annual basis for a period, not
less than three years, including the Maturity Date.

 

Documents required to be delivered pursuant to Section 6.01(a) or
(b) or Section 6.02(d) (to the extent any such documents are
included in materials otherwise filed with the SEC) may be delivered
electronically and if so delivered, shall be deemed to have been delivered on
the date (i) on which Borrower posts such documents, or provides a link
thereto on Borrower’s website on the Internet at the website address listed on Schedule 10.02;
or (ii) on which such documents are posted on Borrower’s behalf on an
Internet or intranet website, if any, to which each Lender and Administrative
Agent have access (whether a commercial, third-party website or whether
sponsored by Administrative Agent); provided that: (i) Borrower
shall deliver paper copies of such documents to Administrative Agent upon request
of Administrative Agent or any Lender until a written request to cease
delivering paper copies is given by Administrative Agent or such Lender and (ii) Borrower
shall provide to Administrative Agent by electronic mail electronic versions
(i.e., soft copies) of such documents and Administrative Agent shall post such
documents and notify (which may be by facsimile or electronic mail) each Lender
of the posting of any such documents.

 

6.02.                     Certificates; Other Information. 
Deliver to Administrative Agent a sufficient number of copies for
delivery by Administrative Agent to each Lender, in form and detail
satisfactory to Administrative Agent and the Required Lenders:

 

58

 

(a)                                  concurrently with the delivery of the financial
statements referred to in Section 6.01(a), a certificate of its
independent certified public accountants certifying such financial statements
and stating that in making the examination necessary therefor no knowledge was
obtained of any Default or, if any such Default shall exist, stating the nature
and status of such event;

 

(b)                                 concurrently with the delivery of the financial
statements referred to in Sections 6.01(a) and (b), a duly completed
Compliance Certificate signed by a Responsible Officer of Borrower;

 

(c)                                  promptly after the same are available, copies of each
annual report, proxy or financial statement or other report or communication
sent to the stockholders of Borrower, and copies of all annual, regular,
periodic and special reports and registration statements which Borrower may
file or be required to file with the SEC under Section 13 or 15(d) of
the Securities Exchange Act of 1934, and not otherwise required to be delivered
to Administrative Agent pursuant hereto;

 

(d)                                 promptly after the furnishing thereof, copies of any material
statement or report furnished to any holder of debt securities of any Loan
Party or any Subsidiary thereof pursuant to the terms of any indenture, loan or
credit or similar agreement governing Indebtedness in a principal amount which
exceeds $5,000,000 and not otherwise required to be furnished to the Lenders
pursuant to Section 6.01 or any other clause of this Section 6.02;

 

(e)                                  promptly, and in any event within five Business Days
after receipt thereof by any Loan Party or any Subsidiary thereof, copies of
each notice or other correspondence received from the SEC (or comparable agency
in any applicable non-United States jurisdiction) concerning any investigation
or possible investigation or other inquiry by such agency regarding financial
or other operational results of any Loan Party or any Subsidiary thereof;

 

(f)                                    promptly, and in any event within five Business Days
following the execution thereof, copies of (i) each amendment to the
Existing Indentures, the Tecon Loan Agreement, and (ii) each instrument,
document or agreement governing Indebtedness of the Borrower or any of its
Subsidiaries;

 

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

 

(h)                                 provide the notices required by Section 6.13.

 

Borrower hereby acknowledges that (a) Administrative
Agent will make available to Lenders and the L/C Issuer materials and/or
information provided by or on behalf of Borrower hereunder (collectively, “Borrower
Materials”) by posting Borrower Materials on IntraLinks or another similar
electronic system (the “Platform”) and (b) certain of the Lenders
may be “public-side” Lenders (i.e., Lenders that do not wish to receive
material non-public information with respect to Borrower or its securities)
(each, a “Public Lender”). 
Borrower hereby agrees that (w) all Borrower Materials that are to be
made available to Public Lenders shall be clearly and 

 

59

 

conspicuously marked “PUBLIC” which, at a minimum,
shall mean that the word “PUBLIC” shall appear prominently on the first page thereof;
(x) by marking Borrower Materials “PUBLIC,” Borrower shall be deemed to have
authorized Administrative Agent, the L/C Issuer and the Lenders to treat such
Borrower Materials as either publicly available information or not containing any
material non-public information (although it may be sensitive and proprietary)
with respect to Borrower or its securities for purposes of United States federal
and state securities laws (provided, however, that to the extent such
Borrower Materials constitute Information, they shall be treated as set forth
in Section 10.07); (y) all Borrower Materials marked “PUBLIC” are
permitted to be made available through a portion of the Platform designated “Public
Investor;” and (z) Administrative Agent shall be entitled to treat any Borrower
Materials that are not marked “PUBLIC” as being suitable only for posting on a
portion of the Platform not designated “Public Investor.

 

The Administrative Agent will promptly distribute to
the Lenders any information supplied to the Administrative Agent by the
Borrower which the Borrower requests that they distribute to the Lenders.

 

6.03.                     Notices. 
Promptly notify Administrative Agent and each Lender:

 

(a)                                  of the occurrence of any Default;

 

(b)                                 of any matter that has resulted or could reasonably be
expected to result in a Material Adverse Effect, including (i) breach or
non-performance of, or any default under, a Contractual Obligation of Borrower
or any Subsidiary; (ii) any dispute, litigation, investigation, proceeding
or suspension between Borrower or any Subsidiary and any Governmental
Authority; or (iii) the commencement of, or any material development in,
any litigation or proceeding affecting Borrower or any Subsidiary, including
pursuant to any applicable Environmental Laws;

 

(c)                                  of the occurrence of any ERISA Event;

 

(d)                                 of any material change in accounting policies or
financial reporting practices by Borrower or any Subsidiary, and

 

(e)                                  of the occurrence of any Internal Control Event.

 

Each notice pursuant to this Section shall be
accompanied by a statement of a Responsible Officer of Borrower setting forth
details of the occurrence referred to therein and stating what action Borrower
has taken and proposes to take with respect thereto.  Each notice pursuant to Section 6.03(a) shall
describe with particularity any and all provisions of this Agreement and any
other Loan Document that have been breached.

 

6.04.                     Payment of Obligations. 
Pay and discharge as the same shall become due and payable, all its
obligations and liabilities, including (a) all tax liabilities,
assessments and governmental charges or levies upon it or its properties or
assets, unless the same are being contested in good faith by appropriate
proceedings diligently conducted and adequate reserves in accordance with GAAP
are being maintained by Borrower or such Subsidiary; (b) all lawful claims
which, if unpaid, would by law become a Lien upon its property, unless the same
are being contested in good faith by appropriate proceedings diligently conducted
and adequate

 

60

 

reserves in accordance with GAAP are being maintained
by Borrower or such Subsidiary; and (c) all material Indebtedness, as and
when due and payable, (including any applicable grace periods) but subject to
any subordination provisions contained in any instrument or agreement
evidencing such Indebtedness.

 

6.05.                     Preservation of Existence, Etc.  (a) Preserve,
renew and maintain in full force and effect its legal existence and good
standing under the Laws of the jurisdiction of its organization except in a
transaction permitted by Section 7.04 or 7.05; (b) take all
reasonable action to maintain all rights, privileges, permits, licenses and
franchises necessary or desirable in the normal conduct of its business, except
to the extent that failure to do so could not reasonably be expected to have a
Material Adverse Effect; and (c) preserve or renew all of its registered
patents, trademarks, trade names and service marks, the non-preservation of
which could reasonably be expected to have a Material Adverse Effect.

 

6.06.                     Maintenance of Properties.  (a) Maintain,
preserve and protect all of its material properties and equipment necessary in
the operation of its business in good working order and condition, ordinary
wear and tear excepted; (b) make all necessary repairs thereto and
renewals and replacements thereof except where the failure to do so could not
reasonably be expected to have a Material Adverse Effect; and (c) use the
standard of care typical in the industry in the operation and maintenance of
its facilities.

 

6.07.                     Maintenance of Insurance. 
Maintain with financially sound and reputable insurance companies not
Affiliates of Borrower, insurance with respect to its properties and business
against loss or damage of the kinds customarily insured against by Persons
engaged in the same or similar business, of such types and in such amounts
(after giving effect to any self-insurance compatible with the following
standards) as are customarily carried under similar circumstances by such other
Persons and providing for not less than 30 days’ prior notice to Administrative
Agent of termination, lapse or cancellation of such insurance, provided
that 10 days’ prior notice shall be given to Administrative Agent when such
termination, lapse or cancellation is due to Borrower’s failure to pay
insurance premiums.

 

6.08.                     Compliance with Laws. 
Comply in all material respects with the requirements of all Laws and
all orders, writs, injunctions and decrees applicable to it or to its business
or property, except in such instances in which (a) such requirement of Law
or order, write, injunction or decree is being contested in good faith by
appropriate proceedings diligently conducted; or (b) the failure to comply
therewith could not reasonably be expected to have a Material Adverse Effect.

 

6.09.                     Books and Records.  (a) 
Maintain proper books of record and account, in which full, true and correct
entries in conformity with GAAP consistently applied shall be made of all financial
transactions and matters involving the assets and business of Borrower or such
Subsidiary, as the case may be; and (b) maintain such books of record and
account in material conformity with all applicable requirements of any
Governmental Authority having regulatory jurisdiction over Borrower or such
Subsidiary, as the case may be.

 

6.10.                     Inspection Rights.  Permit
representatives and independent contractors of Administrative Agent and each
Lender to visit and inspect any of its properties, to examine its 

 

61

 

corporate, financial and operating records, and make
copies thereof or abstracts therefrom, and to discuss its affairs, finances and
accounts with its officers, and independent public accountants, all at the reasonable
expense of Borrower and at such reasonable times during normal business hours
and as often as may be reasonably desired, upon reasonable advance notice to
Borrower, provided that, unless a Default or Event of Default has
occurred and remains continuing:

 

(a)           Administrative
Agent shall provide Borrower with five Business Days prior notice of any visit
or inspection under this Section 6.10; and

 

(b)           Borrower
shall not be required to pay expenses for more than one visit in any calendar
year.

 

6.11.                     Use of Proceeds. 
Use the proceeds of the Credit Extensions for general corporate purposes
not in contravention of any Law or of any Loan Document.

 

6.12.                     Financial Covenants.

 

(a)                                  Total Capitalization Ratio. 
Maintain, as of the last day of each Fiscal Quarter, Total
Capitalization Ratio which is not greater than (A) 60% as of the last day
of each Fiscal Quarter during the period between the Closing Date and December 31,
2006, and (B) 55% as of the last day of each subsequent Fiscal Quarter.

 

(b)                                 EBITDA Coverage Ratio.  Maintain, as
of the last day of each Fiscal Quarter, an EBITDA Coverage Ratio, of not less
than (i) 1.20 to 1.00 as of the last day of each Fiscal Quarter ending
during the period commencing on the Closing Date and ending on December 31,
2006, or (ii) 1.25 to 1.00 as the last day of each Fiscal Quarter ending
after December 31, 2006.

 

(c)                                  Bondable Capacity Ratio.  Maintain, as
of the last day of each Fiscal Quarter, a ratio of (i) aggregate Bondable
Capacity as of that date minus the aggregate principal amount of the Total
Indebtedness of Borrower’s Subsidiaries (but not Borrower) as of that date to
(ii) the Total Indebtedness of Borrower (but not its Subsidiaries) minus
Subordinated Indebtedness, of not less than 1.20 to 1.00.

 

(d)                                 Operating Income.  Maintain, as
of the last day of each Fiscal Quarter, a ratio of (i) aggregate segment
operating income of the Regulated Subsidiaries, to (ii) consolidated total
segment operating income (excluding corporate and other) in each case determined
consistently with GAAP and consistently with the past practices of Borrower for
the twelve month period then ended, of not less than 0.65 to 1.00.

 

6.13.                     Additional Guarantors.  Notify Administrative Agent at the time that any
Person becomes a Significant Subsidiary, and promptly thereafter (and in any
event within 10 days), cause such Person to:

 

(a)                                  become a Guarantor by executing and
delivering to Administrative Agent a counterpart of the Guaranty or such other
document as Administrative Agent shall deem appropriate for such purpose, except
to the extent that such Subsidiary is not permitted to be a party to the
Guaranty based upon a Law applicable to such Subsidiary by reason of its status
as a 

 

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regulated utility
(provided that no such Subsidiary shall be obligated to apply for any
discretionary regulatory approvals which would be required to permit its
execution of the Guaranty) or a Contractual Obligation of such Subsidiary
existing on the date of the Acquisition thereof (and not created in
contemplation of such Acquisition); and

 

(b)                                 deliver to Administrative Agent documents
of the types referred to in clauses (iii) and (iv) of Section 4.01(a) and,
to the extent such Person is a Guarantor, favorable opinions of counsel to such
Person, all in form, content and scope reasonably satisfactory to Administrative
Agent;

 

ARTICLE VII.                 NEGATIVE COVENANTS

 

So long as any Lender shall have any Commitment
hereunder, any Loan or other Obligation hereunder (other than an Unmatured
Surviving Obligation) shall remain unpaid or unsatisfied, or any Letter of
Credit shall remain outstanding, Borrower shall not, nor shall it permit any
Subsidiary to, directly or indirectly:

 

7.01.                     Liens. 
Create, incur, assume or suffer to exist any Lien upon any of its
property, assets or revenues, whether now owned or hereafter acquired, other
than the following:

 

(a)                                  Liens pursuant to any Loan Document;

 

(b)                                 Liens existing on the date hereof and listed on Schedule 7.01;

 

(c)                                  Liens on property of any Regulated Subsidiary securing
Indebtedness of that Subsidiary incurred pursuant to Section 7.03(e), but
not securing any other obligations or Indebtedness;

 

(d)                                 Liens on property of any Unregulated Subsidiary
securing Indebtedness of that Subsidiary incurred pursuant to Section 7.03(f),
but not securing any other obligations or Indebtedness;

 

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

 

(f)                                    carriers’, warehousemen’s, mechanics’, materialmen’s,
repairmen’s or other like Liens arising in the ordinary course of business
which are not overdue for a period of more than 30 days or which are being
contested in good faith and by appropriate proceedings diligently conducted, if
adequate reserves with respect thereto are maintained on the books of the
applicable Person;

 

(g)                                 pledges or deposits in the ordinary course of business
in connection with workers’ compensation, unemployment insurance and other
social security legislation, other than any Lien imposed by ERISA;

 

63

 

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

 

(i)                                     easements, rights-of-way, restrictions and other
similar encumbrances affecting real property which, in the aggregate, are not
substantial in amount, and which do not in any case materially detract from the
value of the property subject thereto or materially interfere with the ordinary
conduct of the business of the applicable Person; and

 

(j)                                     Liens securing judgments for the payment of money not
constituting an Event of Default under Section 8.01(h) or securing
appeal or other surety bonds related to such judgments.

 

(k)                                  Liens on Property of Tecon securing the Indebtedness
under the Tecon Loan Agreement;

 

(l)                                     Liens, deposits and/or pledges made in the ordinary
course of business to secure the performance of operating leases;

 

(m)                               Liens on restricted cash held by Borrower or any of
its Subsidiaries which is the proceeds of Indebtedness issued in accordance
with the terms of Section 7.03 in favor of or otherwise contractually
benefiting the holders of such Indebtedness, pending application thereof to the
specific purpose for which such restricted cash was delivered to Borrower or the
respective Subsidiary;

 

(n)                                 Liens benefiting customers of Borrower and its
Subsidiaries on cash collected by Borrower and its Subsidiaries on behalf of such
customers, or provided to Borrower and its Subsidiaries by such customers, and
held by Borrower or any of its Subsidiaries pending distribution thereof to
such customers; and

 

(o)                                 Liens on property of Borrower securing Indebtedness of
Borrower incurred pursuant to Section 7.03(e)(v).

 

7.02.                     Investments. 
Make any Investments, except:

 

(a)                                  Investments held by Borrower or such Subsidiary in the
form of cash equivalents or short-term marketable debt securities;

 

(b)                                 Investments made in a Person that is the subject of a
Permitted Acquisition;

 

(c)                                  advances to officers, directors and employees of
Borrower and its Subsidiaries in the ordinary course of business;

 

64

 

(d)                                 Investments of Borrower in any Subsidiary and Investments
of any Subsidiary in Borrower or in another Subsidiary;

 

(e)                                  endorse negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business;

 

(f)                                    Investments consisting of extensions of credit in the
nature of accounts receivable or notes receivable arising from the grant of
trade credit in the ordinary course of business, and Investments received in
satisfaction or partial satisfaction thereof from account debtors to the extent
reasonably necessary in order to prevent or limit loss;

 

(g)                                 Investments of restricted cash described in Section 7.01(m)
in accordance with the documents governing such restricted cash; and

 

(h)                                 Other Investments made on a date when no Default or
Event of Default has occurred and remains continuing in an aggregate amount not
to exceed $10,000,000.

 

7.03.                     Indebtedness. 
Create, incur, assume or suffer to exist any Indebtedness, except:

 

(a)                                  Indebtedness under the Loan Documents;

 

(b)                                 Indebtedness under the Tecon Loan Agreement which is outstanding
on the Closing Date;

 

(c)                                  Indebtedness under the Existing Indentures which is
outstanding on the Closing Date, and refinancings thereof which do not increase
the principal amount outstanding thereunder;

 

(d)                                 Other Indebtedness outstanding on the date hereof and
listed on Schedule 7.03 and, subject to Section 7.09, renewals,
extensions or refinancings thereof, provided that (i) the obligations
of Borrower’s Subsidiaries owing to Bank of the West will be repaid in full
within ninety days following the Closing Date, and (ii) all such
Indebtedness of Operations Tech, Inc shall be repaid within ninety days
following the Closing Date;

 

(e)                                  Indebtedness of Borrower and the Regulated
Subsidiaries (including any increase of the amount outstanding under the
Existing Indentures which would not be permitted by clause (c)); provided
that such Indebtedness, (i) shall not be secured by, or contain a Negative
Pledge binding upon the properties of Borrower, (ii) shall not be secured
by, or contain a Negative Pledge binding upon any Person other than the Person
which is the primary obligor in respect of such Indebtedness, (iii) shall
not be supported by any guarantees of any other Subsidiary, (iv) shall not
be in an aggregate principal amount which is in excess of $60,000,000 at any
time, and (v) except to the extent of Indebtedness in an aggregate amount
not to exceed $5,000,000 at any time, such Indebtedness is governed by
instruments, documents and agreements which comply with the provisions of Section 7.09;

 

(f)                                    Indebtedness of Unregulated Subsidiaries in an
aggregate principal amount not to exceed $10,000,000; and

 

65

 

(g)                                 Subordinated Indebtedness of Borrower.

 

7.04.                     Fundamental Changes. 
Merge, dissolve, liquidate, consolidate with or into another Person, or make
any Disposition of (whether in one transaction or in a series of transactions)
all or substantially all of its assets (whether now owned or hereafter
acquired) to or in favor of any Person, except that, so long as no Default
exists or would result therefrom:

 

(a)                                  any Subsidiary may merge or consolidate with or
liquidate or dissolve into (i) Borrower, provided that Borrower
shall be the continuing or surviving Person and that Borrower does not assume
any substantial Indebtedness (other than Indebtedness permitted to be incurred
by Borrower pursuant to this Agreement) by reason of such merger, or (ii) any
one or more other Subsidiaries, provided that (x) when any wholly-owned
Subsidiary is merging with another Subsidiary, the wholly-owned Subsidiary
shall be the continuing or surviving Person, and (y) when a Guarantor is
merging with another Subsidiary, the Guarantor shall be the surviving Person;

 

(b)                                 any Person may merge or consolidate with or into a
Subsidiary of Borrower in connection with a Permitted Acquisition;

 

(c)                                  any Subsidiary may make a Disposition of all or
substantially all of its assets (upon voluntary liquidation or otherwise) to
Borrower or to another Subsidiary; provided that if the transferor in
such a transaction is a Subsidiary, then the transferee must either be Borrower
or a Subsidiary and, provided further that if the transferor of such assets is
a Guarantor, the transferee must either be Borrower or a Guarantor;

 

(d)                                 Dispositions permitted by Section 7.05.

 

7.05.                     Dispositions. 
Make any Disposition or enter into any agreement to make any
Disposition, except:

 

(a)                                  Dispositions of obsolete or worn out property, whether
now owned or hereafter acquired, in the ordinary course of business;

 

(b)                                 Dispositions of inventory in the ordinary course of
business;

 

(c)                                  Dispositions of property by any Subsidiary to Borrower
or to a wholly-owned Subsidiary; provided that if the transferor of such
property is a Guarantor, the transferee thereof must either be Borrower or a
Guarantor;

 

(d)                                 Dispositions of cash equivalents or short-term
marketable debt securities;

 

(e)                                  Dispositions of delinquent accounts receivable in the
ordinary course of business;

 

(f)                                    Leases, subleases and licenses in ordinary course of
business;

 

(g)                                 Dispositions in connection with transactions that are
permitted pursuant to Section 7.02 or Section 7.04 (other than clause
(d) thereof);

 

66

 

(h)                                 Dispositions for fair market value made when no Default
or Event of Default has occurred and remains continuing or would result
therefrom, provided that the Borrower concurrently makes the prepayments of the
Obligations hereunder required by Section 2.05(b); and

 

(i)                                     Dispositions for fair market value made when no
Default or Event of Default has occurred and remains continuing or would result
therefrom, for an aggregate consideration not to exceed $25,000,000 during the
term of this Agreement.

 

7.06.                     Restricted Payments(a)                 .  Declare or
make, directly or indirectly, any Restricted Payment, or incur any obligation
(contingent or otherwise) to do so, or issue or sell any Equity Interests, if a
Default or Event of Default shall have occurred and remains continuing.

 

7.07.                     Change in Nature of Business. 
Engage in any material line of business substantially different from
those lines of business conducted by Borrower and its Subsidiaries on the date
hereof or any business substantially related or incidental thereto or
reasonable extensions thereof.

 

7.08.                     Transactions with Affiliates. 
Enter into any transaction of any kind with any Affiliate of Borrower,
whether or not in the ordinary course of business, other than on fair and
reasonable terms substantially as favorable to Borrower or such Subsidiary as
would be obtainable by Borrower or such Subsidiary at the time in a comparable
arm’s length transaction with a Person other than an Affiliate, provided that
the foregoing restriction shall not apply to transactions between or among
Borrower and it Subsidiaries or between and among Subsidiaries.

 

7.09.                     Burdensome Agreements.  Amend
or modify any Contractual Obligation in effect as of the Closing Date
(including without limitation any amendments to the Existing Indentures or the
Tecon Loan Agreement), or enter into or assume any Contractual Obligation which:

 

(a) limits the ability of any Subsidiary to make loans,
distributions or other Restricted Payments to Borrower or any Guarantor or to
otherwise transfer property to Borrower or any Guarantor, in each case in a manner
which either (i) is more restrictive than the provisions of the Existing
Indentures, as in effect in the Closing Date (as determined by the
Administrative Agent in the reasonable exercise of its discretion) or (ii) has
not been approved by the Administrative Agent in writing in the exercise of its
reasonable discretion within five Business Days after the distribution of draft
documentation to the Lenders relating to such proposed amendment or
modification;

 

(b)  limits the ability of any Subsidiary to Guarantee the
Indebtedness of Borrower in a manner which either (i) is more restrictive
than the provisions of the Existing Indentures as of the Closing Date (as
determined by the Administrative Agent in the reasonable exercise of its
discretion), or (ii) has not been approved by the Administrative Agent in
the exercise of its reasonable discretion within five Business Days after distribution
of draft documentation to the Lenders relating to such proposed amendment or
modification; or

 

67

 

(c)  limits the ability of any Subsidiary (other than the Subsidiary
which is the nominal obligor with respect to such Contractual Obligation) to
create, incur, assume or suffer to exist Liens on its property.

 

(d)  limits the ability of the Borrower to create, incur, assume
or suffer to exist Liens on its property, except (i) in respect of, and to
the extent of, any property which is financed with Indebtedness incurred
pursuant to such Contractual Obligation, or (b) such limitations as do not
restrict the granting of Liens to the Administrative Agent.

 

7.10.                     Use of Proceeds. 
Use the proceeds of any Credit Extension, whether directly or
indirectly, and whether immediately, incidentally or ultimately, to purchase or
carry margin stock (within the meaning of Regulation U of the FRB) or to extend
credit to others for the purpose of purchasing or carrying margin stock or to
refund indebtedness originally incurred for such purpose.

 

7.11.                     Subordinated Indebtedness. 
Make any prepayments of principal, interest or other amounts due in
respect of any Subordinated Indebtedness, provided that the Borrower may
make prepayments of any Subordinated Indebtedness (a) to the extent using
the proceeds of new Subordinated Indebtedness which has no payments due within
one year following the Maturity Date and an average life to maturity which is
longer than the Subordinated Indebtedness being prepaid, and (b) to the
extent required by the estate redemption provisions of the Borrower’s 6.85%
convertible subordinated debentures due 2021 (as in effect on the Closing Date)
or the similar provisions of any future Subordinated Indebtedness.

 

ARTICLE VIII.               EVENTS OF DEFAULT AND REMEDIES

 

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

 

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

 

(b)                                 Specific Covenants.  Borrower
fails to perform or observe any term, covenant or agreement contained in any of
Section 6.05 (as to the preservation of the existence of Borrower and its
Significant Subsidiaries), 6.10, 6.11, 6.12, 7.04, 7.05, 7.06, 7.09, 7.10 or
7.11, or any Guarantor fails to perform or observe any term, covenant or
agreement contained in the Guaranty; or

 

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

 

(d)                                 Representations and Warranties. 
Any representation, warranty, certification or statement of fact made or
deemed made by or on behalf of Borrower or any other 

 

68

 

Loan Party herein,
in any other Loan Document, or in any document delivered in connection herewith
or therewith shall be incorrect or misleading in any material respect when made
or deemed made; or

 

(e)                                  Cross-Default.  Borrower or
any Subsidiary (a) fails to make any payment when due after giving effect
to any applicable notice and cure periods (whether by scheduled maturity,
required prepayment, acceleration, demand, or otherwise) in respect of any
Indebtedness or Guarantee (other than Indebtedness hereunder Contracts) having
an aggregate principal amount (including undrawn committed or available amounts
and including amounts owing to all creditors under any combined or syndicated
credit arrangement) of more than the $5,000,000 (including any such
Indebtedness or Guarantee which is in default as a result of being
cross-defaulted to any Indebtedness or Guarantee of a smaller amount), or (b) fails
to observe or perform any other agreement or condition relating to any such
Indebtedness or Guarantee or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event occurs in each
case after giving effect to any applicable notice and cure periods, the effect
of which default or other event is to cause, or to permit the holder or holders
of such Indebtedness or the beneficiary or beneficiaries of such Guarantee (or
a trustee or Administrative Agent on behalf of such holder or holders or
beneficiary or beneficiaries) to cause, with the giving of notice if required,
such Indebtedness to be demanded or to become due or to be repurchased,
prepaid, defeased or redeemed (automatically or otherwise), or an offer to
repurchase, prepay, defease or redeem such Indebtedness to be made, prior to
its stated maturity, or such Guarantee to become payable or cash collateral in
respect thereof to be demanded; or

 

(f)                                    Insolvency Proceedings, Etc. 
Any Loan Party or any of its Significant Subsidiaries institutes or
consents to the institution of any proceeding under any Debtor Relief Law, or
makes an assignment for the benefit of creditors; or applies for or consents to
the appointment of any receiver, trustee, custodian, conservator, liquidator,
rehabilitator or similar officer for it or for all or any material part of its
property; or any receiver, trustee, custodian, conservator, liquidator,
rehabilitator or similar officer is appointed without the application or
consent of such Person and the appointment continues undischarged or unstayed
for 60 calendar days; or any proceeding under any Debtor Relief Law relating to
any such Person or to all or any material part of its property is instituted
without the consent of such Person and continues undismissed or unstayed for 60
calendar days, or an order for relief is entered in any such proceeding; or

 

(g)                                 Inability to Pay Debts; Attachment.  (i) Borrower
or any Significant Subsidiary becomes unable or admits in writing its inability
or fails generally to pay its debts as they become due, or (ii) any writ
or warrant of attachment or execution or similar process is issued or levied
against all or any material part of the property of any such Person and is not
released, vacated or fully bonded within 30 days after its issue or levy; or

 

(h)                                 Judgments.  There is
entered against Borrower or any Subsidiary a final judgment or order for the
payment of money in an aggregate amount exceeding $5,000,000 (to the extent not covered by independent third-party
insurance as to which the insurer does not dispute coverage), and (a) enforcement
proceedings are commenced by any creditor upon such judgment or order, or (b) there
is a period of 20 consecutive days during which a stay of enforcement of such
judgment, by reason of a pending appeal or otherwise, is not in effect; or

 

69

 

(i)                                     ERISA.  (i) An
ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan which
has resulted or could reasonably be expected to result in liability of Borrower
under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in
an aggregate amount in excess of $5,000,000, or (ii) Borrower or any ERISA
Affiliate fails to pay when due, after the expiration of any applicable grace
period, any installment payment with respect to its withdrawal liability under Section 4201
of ERISA under a Multiemployer Plan in an aggregate amount in excess of $5,000,000;
or

 

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

 

(k)                                  Change of Control.  There occurs
any Change of Control with respect to Borrower; or

 

(l)                                     Material Adverse Effect.  There occurs
any event or circumstance that has a Material Adverse Effect.

 

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

 

(a)                                  declare the commitment of each Lender to make Loans
and any obligation of the L/C Issuer to make L/C Credit Extensions to be
terminated, whereupon such commitments and obligation shall be terminated;

 

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

 

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

 

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

 

provided, however, that upon the occurrence of an
actual or deemed entry of an order for relief with respect to Borrower under
the Bankruptcy Code of the United States, the obligation of each Lender to make
Loans and any obligation of the L/C Issuer to make L/C Credit Extensions shall
automatically terminate, the unpaid principal amount of all outstanding Loans
and all interest and other amounts as aforesaid shall automatically become due
and payable, and the obligation of Borrower to Cash Collateralize the L/C
Obligations as aforesaid shall automatically become effective, in each case
without further act of Administrative Agent or any Lender.

 

70

 

8.03.                     Application of Funds. 
After the exercise of remedies provided for in Section 8.02 (or
after the Loans have automatically become immediately due and payable and the
L/C Obligations have automatically been required to be Cash Collateralized as
set forth in the proviso to Section 8.02), any amounts received on account
of the Obligations shall be applied by Administrative Agent in the following
order:

 

First, to payment of that portion of the Obligations
constituting fees, indemnities, expenses and other amounts (including fees,
charges and disbursements of counsel to Administrative Agent (including fees
and time charges for attorneys who may be employees of Administrative Agent) and
amounts payable under Article III) payable to Administrative Agent in its
capacity as such;

 

Second, to payment of that portion of the Obligations
constituting fees, indemnities and other amounts (other than principal and
interest and L/C fees) payable to Lenders and the L/C Issuer (including
fees, charges and disbursements of counsel to the respective Lenders and the
L/C Issuer (including fees and time charges for attorneys who may be employees
of any Lender or the L/C Issuer) and amounts payable under Article III),
ratably among them in proportion to the respective amounts described in
this clause Second payable to them;

 

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

 

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

 

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

 

Sixth, to payment of that portion of the Obligations
arising under any Swap Contract between Borrower and any Lender or any
Affiliate of a Lender; and

 

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

 

Subject to Section 2.03(c), amounts used to Cash
Collateralize the aggregate undrawn amount of Letters of Credit pursuant to
clause Fifth above shall be applied to satisfy drawings under such
Letters of Credit as they occur.  If any
amount remains on deposit as Cash Collateral after all Letters of Credit have
either been fully drawn or expired, such remaining amount shall be applied to
the other Obligations, if any, in the order set forth above.

 

71

 

ARTICLE IX.                    ADMINISTRATIVE AGENT.

 

9.01.                     Appointment
and Authorization of Administrative Agent.  Each of the Lenders and the L/C issuer hereby
irrevocably appoints Bank of America to act on its behalf as Administrative
Agent hereunder and under the other Loan Documents and authorizes Administrative
Agent to take such actions on its behalf and to exercise such powers as are
delegated to Administrative Agent by the terms hereof and thereof, together
with such actions and powers as are reasonably incidental thereto.  The provisions of this Article are
solely for the benefit of Administrative Agent, the Lenders and the L/C Issuer,
and neither the Borrower nor any other Loan Party shall have rights as a third
party beneficiary of any of such provisions.

 

9.02.                     Rights
as a Lender.  The Person
serving as Administrative Agent hereunder shall have the same rights and powers
in its capacity as a Lender as any other Lender and may exercise the same as
though it were not Administrative Agent and the term “Lender” or “Lenders”
shall, unless otherwise expressly indicated or unless the context otherwise
requires, include the Person serving as Administrative Agent hereunder in its
individual capacity.  Such Person and its
Affiliates may accept deposits from, lend money to, act as the financial
advisor or in any other advisory capacity for and generally engage in any kind
of business with the Borrower or any Subsidiary or other Affiliate thereof as
if such Person were not Administrative Agent hereunder and without any duty to account
therefor to Lenders.

 

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

 

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

 

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

 

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

 

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

 

72

 

be deemed not to
have knowledge of any Default unless and until written notice describing such
Default is given to Administrative Agent by Borrower, a Lender or the L/C
Issuer.  Administrative Agent shall not
be responsible for or have any duty to ascertain or inquire into (i) any
statement, warranty or representation made in or in connection with this
Agreement or any other Loan Document, (ii) the contents of any
certificate, report or other document delivered hereunder or thereunder or in
connection herewith or therewith, (iii) the performance or observance of
any of the covenants, agreements or other terms or conditions set forth herein
or therein or the occurrence of any Default, (iv) the validity,
enforceability, effectiveness or genuineness of this Agreement, any other Loan
Document or any other agreement, instrument or document or (v) the
satisfaction of any condition set forth in Article IV or elsewhere herein,
other than to confirm receipt of items expressly required to be delivered to Administrative
Agent.

 

9.04.                     Reliance
by Administrative Agent.  Administrative Agent shall be entitled to
rely upon, and shall not incur any liability for relying upon, any notice,
request, certificate, consent, statement, instrument, document or other writing
(including any electronic message, Internet or intranet website posting or
other distribution) believed by it to be genuine and to have been signed, sent
or otherwise authenticated by the proper Person.  Administrative Agent also may rely upon any
statement made to it orally or by telephone and believed by it to have been
made by the proper Person, and shall not incur any liability for relying
thereon.  In determining compliance with
any condition hereunder to the making of a Loan, or the issuance of a Letter of
Credit, that by its terms must be fulfilled to the satisfaction of a Lender or
the L/C Issuer, Administrative Agent may presume that such condition is
satisfactory to such Lender or the L/C Issuer unless Administrative Agent shall
have received notice to the contrary from such Lender or the L/C Issuer prior
to the making of such Loan or the issuance of such Letter of Credit.  Administrative Agent may consult with legal
counsel (who may be counsel for Borrower), independent accountants and other
experts selected by it, and shall not be liable for any action taken or not
taken by it in accordance with the advice of any such counsel, accountants or
experts.

 

9.05.                     Delegation
of Duties.  Administrative Agent may perform any and all
of its duties and exercise its rights and powers hereunder or under any other
Loan Document by or through any one or more sub Administrative Agents appointed
by Administrative Agent.  Administrative
Agent and any such sub Administrative Agent may perform any and all of its
duties and exercise its rights and powers by or through their respective
Related Parties.  The exculpatory
provisions of this Article shall apply to any such sub Administrative
Agent and to the Related Parties of Administrative Agent and any such sub Administrative
Agent, and shall apply to their respective activities in connection with the
syndication of the credit facilities provided for herein as well as activities
as Administrative Agent.

 

9.06.                     Resignation
of Administrative Agent.  Administrative Agent may at any time give
notice of its resignation to Lenders, the L/C Issuer and Borrower.  Upon receipt of any such notice of resignation,
the Required Lenders shall have the right, in consultation with Borrower, to
appoint a successor, which shall be a bank with an office in the United States,
or an Affiliate of any such bank with an office in the United States, provided
that the Borrower will have the right to approve the successor unless it is one
of the original Lenders party to this Agreement.  If no such successor shall have been so appointed
and shall have accepted such appointment within 30 days after the retiring Administrative
Agent gives notice of its resignation, then the retiring

 

73

 

Administrative Agent may on behalf of Lenders and the L/C Issuer,
appoint a successor Administrative Agent (without consultation or approval of
any other party) meeting the qualifications set forth above; provided that if Administrative
Agent shall notify the Borrower and the Lenders that no qualifying Person has
accepted such appointment, then such resignation shall nonetheless become
effective in accordance with such notice and (1) the retiring Administrative
Agent shall be discharged from its duties and obligations hereunder and under
the other Loan Documents (except that in the case of any collateral security
held by Administrative Agent on behalf of the Lenders or the L/C Issuer under
any of the Loan Documents, the retiring Administrative Agent shall continue to
hold such collateral security until such time as a successor Administrative
Agent is appointed) and (2) all payments, communications and determinations
provided to be made by, to or through Administrative Agent shall instead be
made by or to each Lender and the L/C Issuer directly, until such time as the
Required Lenders appoint a successor Administrative Agent as provided for above
in this Section.  Upon the acceptance of
a successor’s appointment as Administrative Agent hereunder, such successor
shall succeed to and become vested with all of the rights, powers, privileges
and duties of the retiring (or retired) Administrative Agent, and the retiring Administrative
Agent shall be discharged from all of its duties and obligations hereunder or
under the other Loan Documents (if not already discharged therefrom as provided
above in this Section).  The fees payable
by Borrower to a successor Administrative Agent shall be the same as those
payable to its predecessor unless otherwise agreed between Borrower and such
successor.  After the retiring Administrative
Agent’s resignation hereunder and under the other Loan Documents, the
provisions of this Article and Section 10.04 shall continue in effect
for the benefit of such retiring Administrative Agent, its sub Administrative
Agents and their respective Related Parties in respect of any actions taken or
omitted to be taken by any of them while the retiring Administrative Agent was
acting as Administrative Agent.

 

Any resignation by Bank of
America as Administrative Agent pursuant to this Section shall also
constitute its resignation as L/C Issuer and Swing Line Lender.  Upon the acceptance of a successor’s
appointment as Administrative Agent hereunder, (a) such successor shall
succeed to and become vested with all of the rights, powers, privileges and
duties of the retiring L/C Issuer and Swing Line Lender, (b) the retiring
L/C Issuer and Swing Line Lender shall be discharged from all of their
respective duties and obligations hereunder or under the other Loan Documents,
and (c) the successor L/C Issuer shall issue letters of credit in
substitution for the Letters of Credit, if any, outstanding at the time of such
succession or make other arrangements satisfactory to the retiring L/C Issuer
to effectively assume the obligations of the retiring L/C Issuer with respect
to such Letters of Credit.

 

9.07.                     Non-Reliance
on Administrative Agent and Other Lenders.  Each Lender and the L/C Issuer acknowledges
that it has, independently and without reliance upon Administrative Agent or
any other Lender or any of their Related Parties and based on such documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. 
Each Lender and the L/C Issuer also acknowledges that it will,
independently and without reliance upon Administrative Agent or any other
Lender or any of their Related Parties and based on such documents and
information as it shall from time to time deem appropriate, continue to make
its own decisions in taking or not taking action under or based upon this
Agreement, any other Loan Document or any related agreement or any document
furnished hereunder or thereunder.

 

74

 

9.08.                     No
Other Duties, Etc.  Anything
herein to the contrary notwithstanding, no Person holding a title listed on the
cover page hereof shall have any powers, duties or responsibilities under this
Agreement or any of the other Loan Documents, except in its capacity, as
applicable, as the Administrative Agent, a Lender or the L/C Issuer hereunder.

 

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

 

(a)                                  to file and
prove a claim for the whole amount of the principal and interest owing and
unpaid in respect of the Loans, L/C Obligations and all other Obligations that
are owing and unpaid and to file such other documents as may be necessary or
advisable in order to have the claims of Lenders, the L/C Issuer and Administrative
Agent (including any claim for the reasonable compensation, expenses,
disbursements and advances of Lenders, the L/C Issuer and Administrative Agent
and their respective Administrative Agents and counsel and all other amounts
due Lenders, the L/C Issuer and Administrative Agent under Sections 2.03(i) and
(j), 2.09 and 10.04) allowed in such judicial proceeding; and

 

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

 

and any custodian, receiver,
assignee, trustee, liquidator, sequestrator or other similar official in any
such judicial proceeding is hereby authorized by each Lender and the L/C Issuer
to make such payments to Administrative Agent and, in the event that Administrative
Agent shall consent to the making of such payments directly to Lenders and the
L/C Issuer, to pay to Administrative Agent any amount due for the reasonable
compensation, expenses, disbursements and advances of Administrative Agent and
its Administrative Agents and counsel, and any other amounts due Administrative
Agent under Sections 2.09 and 10.04. 
Nothing contained herein shall be deemed to authorize Administrative
Agent to authorize or consent to or accept or adopt on behalf of any Lender or
the L/C Issuer any plan of reorganization, arrangement, adjustment or
composition affecting the Obligations or the rights of any Lender or to
authorize Administrative Agent to vote in respect of the claim of any Lender in
any such proceeding.

 

9.10.                     Guaranty
Matters.   Each Lender and the
L/C Issuer hereby irrevocably authorizes Administrative Agent, at its option
and in its discretion, to release any Guarantor from its obligations under the
Guaranty if such Person ceases to be a Significant Subsidiary.  Upon request by Administrative Agent at any
time, each Lender and the L/C Issuer will confirm in writing Administrative
Agent’s authority to release any Guarantor from its obligations under the
Guaranty pursuant to this Section 9.10.

 

75

 

ARTICLE X.                        MISCELLANEOUS

 

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

 

(a)                                  extend or increase
the Commitment of any Lender (or reinstate any Commitment terminated pursuant
to Section 8.02) without the written consent of such Lender;

 

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

 

(c)                                  reduce the
principal of, or the rate of interest specified herein on, any Loan or L/C
Borrowing, or (subject to clause (iv) of the second proviso to this Section 10.01)
any fees or other amounts payable hereunder or under any other Loan Document,
without the written consent of each Lender directly affected thereby; provided,
however, that only the consent of the Required Lenders shall be
necessary (i) to amend the definition of “Default Rate” or to waive any
obligation of Borrower to pay interest or L/C Fees at the Default Rate or (ii) to
amend any financial covenant hereunder (or any defined term used therein) even
if the effect of such amendment would be to reduce the rate of interest on any
Loan or L/C Borrowing or to reduce any fee payable hereunder;

 

(d)                                 change Section 2.14
or Section 8.03 in a manner that would alter the pro rata sharing of
payments required thereby without the written consent of each Lender;

 

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

 

(g)                                 release any Guarantor
from the Guaranty except in accordance with the terms of any Loan Document
without the written consent of each Lender;

 

and, provided  further, that (i) no amendment, waiver
or consent shall, unless in writing and signed by the L/C Issuer in addition to
the Lenders required above, affect the rights or duties of the L/C Issuer under
this Agreement or any Issuer Document relating to any Letter of Credit issued
or to be issued by it; (ii) no amendment, waiver or consent shall, unless
in writing and signed by Swing Line Lender in addition to the Lenders required
above, affect the rights or duties of Swing Line Lender under this Agreement; (iii) no
amendment, waiver or consent shall, unless in writing and signed by Administrative
Agent in addition to the Lenders required above, affect the rights or duties of
Administrative Agent under this Agreement or any other Loan Document; and (iv) the
Fee Letter may be amended, or rights or privileges thereunder waived, in

 

76

 

a writing
executed only by the parties thereto. 
Notwithstanding anything to the contrary herein, no Defaulting Lender
shall have any right to approve or disapprove any amendment, waiver or consent
hereunder, except that the Commitment of such Lender may not be increased or
extended without the consent of such Lender.

 

10.02.              Notices;
Effectiveness; Electronic
Communications.  (a)  Notices Generally.  Except in the case of notices and other
communications expressly permitted to be given by telephone (and except as
provided in subsection (b) below), all notices and other
communications provided for herein shall be in writing and shall be delivered
by hand or overnight courier service, mailed by certified or registered mail or
sent by telecopier as follows, and all notices and other communications
expressly permitted hereunder to be given by telephone shall be made to the
applicable telephone number, as follows:

 

(i)                  if to Borrower, Administrative
Agent, the L/C Issuer or Swing Line Lender, to the address, telecopier number,
electronic mail address or telephone number specified for such Person on Schedule 10.02;
and

 

(ii)               if to any other
Lender, to the address, telecopier number, electronic mail address or telephone
number specified in its Administrative Questionnaire.

 

Notices sent by hand or
overnight courier service, or mailed by certified or registered mail, shall be
deemed to have been given when received; notices sent by telecopier shall be
deemed to have been given when sent (except that, if not given during normal
business hours for the recipient, shall be deemed to have been given at the
opening of business on the next business day for the recipient).  Notices delivered through electronic
communications to the extent provided in subsection (b) below, shall
be effective as provided in such subsection (b).

 

(b)                                 Electronic
Communications.  Notices and
other communications to Lenders and the L/C Issuer hereunder may be delivered
or furnished by electronic communication (including e-mail and Internet or
intranet websites) pursuant to procedures approved by Administrative Agent,
provided that the foregoing shall not apply to notices to any Lender or the L/C
Issuer pursuant to Article II if such Lender or the L/C Issuer, as
applicable has notified the Administrative Agent that it is incapable of
receiving notices under such Article by electronic communication.  Administrative Agent or Borrower may, in its
discretion, agree to accept notices and other communications to it hereunder by
electronic communications pursuant to procedures approved by it, provided that
approval of such procedures may be limited to particular notices or communications.  Unless Administrative Agent otherwise
prescribes, (i) notices and other communications sent to an e-mail address
shall be deemed received upon the sender’s receipt of an acknowledgement from
the intended recipient (such as by the “return receipt requested” function, as
available, return e-mail or other written acknowledgement), provided
that if such notice or other communication is not sent during the normal
business hours of the recipient, such notice or communication shall be deemed
to have been sent at the opening of business on the next business day for the
recipient, and (ii) notices or communications posted to an Internet or
intranet website shall be deemed received upon the deemed receipt by the
intended recipient at its e-mail address as described in the foregoing clause
(i) of notification that such notice or communication is available and
identifying the website address therefor.

 

77

 

(c)                                  The Platform.  THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.”  THE ADMINISTRATIVE AGENT PARTIES (AS DEFINED
BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR
THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR
OMISSIONS FROM THE BORROWER MATERIALS. 
NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY
WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT
OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY
ANY ADMINISTRATIVE AGENT PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE
PLATFORM.  In no event shall Administrative
Agent or any of its Related Parties (collectively, the “Administrative Agent
Parties”) have any liability to Borrower, any Lender, the L/C Issuer or any other
Person for losses, claims, damages, liabilities or expenses of any kind
(whether in tort, contract or otherwise) arising out of Borrower’s or Administrative
Agent’s transmission of Borrower Materials through the Internet, except to the
extent that such losses, claims, damages, liabilities or expenses are
determined by a court of competent jurisdiction by a final and nonappealable
judgment to have resulted from the gross negligence or willful misconduct of
such Administrative Agent Party; provided, however, that in no event shall any Administrative
Agent Party have any liability to Borrower, any Lender, the L/C Issuer or any
other Person for indirect, special, incidental, consequential or punitive
damages (as opposed to direct or actual damages).

 

(d)                                 Change of
Address, Etc.  Each of the
Borrower, Administrative Agent, the L/C Issuer and Swing Line Lender may change
its address, telecopier or telephone number for
notices and other communications hereunder by notice to the other parties
hereto.  Each other Lender may change its
address, telecopier or telephone number for notices
and other communications hereunder by notice to Borrower, Administrative Agent,
the L/C Issuer and Swing Line Lender.  In
addition, each Lender agrees to notify Administrative Agent from time to time
to ensure that Administrative Agent has on record (i) an effective
address, contact name, telephone number, telecopier
number and electronic mail address to which notices and other communications
may be sent and (ii) accurate wire instructions for such Lender.

 

(e)                                  Reliance by Administrative
Agent. L/C Issuer and Lenders.  Administrative Agent, the L/C Issuer and
Lenders shall be entitled to rely and act upon any notices (including
telephonic Committed Loan Notices and Swing Line Loan Notices) believed in good
faith to have been given by or on behalf of Borrower even if (i) such
notices were not made in a manner specified herein, were incomplete or were not
preceded or followed by any other form of notice specified herein, or (ii) the
terms thereof, as understood by the recipient, varied from any confirmation
thereof.  Borrower shall indemnify Administrative
Agent, the L/C Issuer, each Lender and the Related Parties of each of them from
all losses, costs, expenses and liabilities resulting from the reliance by such
Person on each notice believed by it in good faith to be given by or on behalf
of Borrower.  All telephonic notices to
and other telephonic communications with Administrative Agent may be recorded
by Administrative Agent, and each of the parties hereto hereby consents to such
recording.

 

10.03.              No
Waiver; Cumulative Remedies.  No failure by any Lender, the L/C Issuer or Administrative
Agent to exercise, and no delay by any such Person in exercising, any right,
remedy, power or privilege hereunder shall operate as a waiver thereof; nor
shall any single or

 

78

 

partial exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege.  The
rights, remedies, powers and privileges herein provided are cumulative and not
exclusive of any rights, remedies, powers and privileges provided by law.

 

10.04.              Expenses;
Indemnity; Damage Waiver.  (a)  Costs
and Expenses.  Borrower shall pay (i) all
reasonable out of pocket expenses incurred by Administrative Agent and its
Affiliates (including the reasonable fees, charges and disbursements of counsel
for Administrative Agent), in connection with the syndication of the credit
facilities provided for herein, the preparation, negotiation, execution,
delivery and administration of this Agreement and the other Loan Documents or
any amendments, modifications or waivers of the provisions hereof or thereof (whether
or not the transactions contemplated hereby or thereby shall be consummated), (ii) all
reasonable out of pocket expenses incurred by the L/C Issuer in connection with
the issuance, amendment, renewal or extension of any Letter of Credit or any
demand for payment thereunder and (iii) all reasonable out of pocket
expenses incurred by Administrative Agent, any Lender or the L/C Issuer
(including the fees, charges and disbursements of any counsel for Administrative
Agent, any Lender or the L/C Issuer), and shall pay all reasonable fees and
time charges for attorneys who may be employees of Administrative Agent, any
Lender or the L/C Issuer, in connection with the enforcement or protection of
its rights (a) in connection with this Agreement and the other Loan
Documents, including its rights under this Section, or (b) in connection
with the Loans made or Letters of Credit issued hereunder, including all such
out of pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans or Letters of Credit.

 

(b)                                 Indemnification
by the Borrower.  Borrower
shall indemnify Administrative Agent (and any sub-Administrative Agent
thereof), each Lender and the L/C Issuer, and each Related Party of any of the
foregoing Persons (each such Person being called an “Indemnitee”) against, and
hold each Indemnitee harmless from, any and all losses, claims, damages,
liabilities and related expenses (including the fees, charges and disbursements
of any counsel for any Indemnitee), and shall indemnify and hold harmless each
Indemnitee from all fees and time charges and disbursements for attorneys who
may be employees of any Indemnitee, incurred by any Indemnitee or asserted
against any Indemnitee by any third party or by Borrower or any other Loan Party
arising out of, in connection with, or as a result of (i) the execution or
delivery of this Agreement, any other Loan Document or any agreement or
instrument contemplated hereby or thereby, the performance by the parties
hereto of their respective obligations hereunder or thereunder, or the
consummation of the transactions contemplated hereby or thereby, or, in the
case of Administrative Agent (and any sub-Administrative Agent thereof) and its
Related Parties only, the administration of this Agreement and the other Loan
Documents, (ii) any Loan or Letter of Credit or the use or proposed use of
the proceeds therefrom (including any refusal by the L/C Issuer to honor a
demand for payment under a Letter of Credit if the documents presented in
connection with such demand do not strictly comply with the terms of such
Letter of Credit), (iii) any actual or alleged presence or release of
Hazardous Materials on or from any property owned or operated by the Borrower
or any of its Subsidiaries, or any Environmental Liability related in any way
to the Borrower or any of its Subsidiaries, or (iv) any actual or
prospective claim, litigation, investigation or proceeding relating to any of
the foregoing, whether based on contract, tort or any other theory, whether
brought by a third party or by the Borrower or any other Loan Party, and
regardless of whether

 

79

 

any Indemnitee is a party
thereto, in all cases, whether or not caused by or arising, in whole or in
part, out of the comparative, contributory or sole negligence of the
Indemnitee; provided that such indemnity shall not, as to any
Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses (x) are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the
gross negligence or willful misconduct of such Indemnitee or (y) result from a
claim brought by Borrower or any other Loan Party against an Indemnitee for
breach in bad faith of such Indemnitee’s obligations hereunder or under any
other Loan Document, if Borrower or such Loan Party has obtained a final and
nonappealable judgment in its favor on such claim as determined by a court of
competent jurisdiction.

 

(c)                                  Reimbursement by
Lenders.  To the extent that Borrower
for any reason fails to indefeasibly pay any amount required under subsection (a) or
(b) of this Section to be paid by it to Administrative Agent (or any
sub-Administrative Agent thereof), the L/C Issuer or any Related Party of any
of the foregoing, each Lender severally agrees to pay to Administrative Agent
(or any such sub-Administrative Agent), the L/C Issuer or such Related Party,
as the case may be, such Lender’s Applicable Percentage (determined as of the
time that the applicable unreimbursed expense or indemnity payment is sought)
of such unpaid amount, provided that the unreimbursed expense or
indemnified loss, claim, damage, liability or related expense, as the case may
be, was incurred by or asserted against Administrative Agent (or any such sub-Administrative
Agent) or the L/C Issuer in its capacity as such, or against any Related Party
of any of the foregoing acting for Administrative Agent (or any such sub-Administrative
Agent) or L/C Issuer in connection with such capacity.  The obligations of the Lenders under this subsection (c) are
subject to the provisions of Section 2.13(d).

 

(d)                                 Waiver of
Consequential Damages, Etc.  To the fullest extent permitted by applicable
law, Borrower shall not assert, and hereby waives, any claim against any
Indemnitee, on any theory of liability, for special, indirect, consequential or
punitive damages (as opposed to direct or actual damages) arising out of, in
connection with, or as a result of, this Agreement, any other Loan Document or
any agreement or instrument contemplated hereby, the transactions contemplated
hereby or thereby, any Loan or Letter of Credit or the use of the proceeds
thereof.  No Indemnitee referred to in
subsection (b) above shall be liable for any damages arising from the
use by unintended recipients of any information or other materials distributed
by it through telecommunications, electronic or other information transmission
systems in connection with this Agreement or the other Loan Documents or the
transactions contemplated hereby or thereby.

 

(e)                                  Payments.  All amounts due under this Section shall
be payable not later than ten Business Days after demand therefor.

 

(f)                                    Survival.  The agreements in this Section shall
survive the resignation of Administrative Agent and the L/C Issuer, the
replacement of any Lender, the termination of the Aggregate Commitments and the
repayment, satisfaction or discharge of all the other Obligations.

 

10.05.              Payments
Set Aside.  To the extent that
any payment by or on behalf of Borrower is made to Administrative Agent, the
L/C Issuer or any Lender, or Administrative Agent, the L/C Issuer or any Lender
exercises its right of setoff, and such payment or the

 

80

 

proceeds of such setoff or any part thereof is subsequently
invalidated, declared to be fraudulent or preferential, set aside or required
(including pursuant to any settlement entered into by Administrative Agent, the
L/C Issuer or such Lender in its discretion) to be repaid to a trustee,
receiver or any other party, in connection with any proceeding under any Debtor
Relief Law or otherwise, then (a) to the extent of such recovery, the
obligation or part thereof originally intended to be satisfied shall be revived
and continued in full force and effect as if such payment had not been made or
such setoff had not occurred, and (b) each Lender and the L/C
Issuer severally agrees to pay to Administrative Agent upon demand its
applicable share (without duplication) of any amount so recovered from or
repaid by Administrative Agent, plus interest thereon from the date of such
demand to the date such payment is made at a rate per annum equal to the
Federal Funds Rate from time to time in effect. 
The obligations of the Lenders and the L/C Issuer under clause (b) of
the preceding sentence shall survive the payment in full of the Obligations and
the termination of this Agreement.

 

10.06.              Successors
and Assigns.  (a)  Successors and Assigns Generally.  The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby, except that neither
Borrower nor any other Loan Party may assign or otherwise transfer any of its
rights or obligations hereunder without the prior written consent of Administrative
Agent, the L/C Issuer and each Lender and no Lender may assign or otherwise
transfer any of its rights or obligations hereunder except (i) to an
Eligible Assignee in accordance with the provisions of subsection (b) of
this Section, (ii) by way of participation in accordance with the
provisions of subsection (d) of this Section, or (iii) by way of
pledge or assignment of a security interest subject to the restrictions of subsection (f) 
of this Section (and any other attempted assignment or transfer by any
party hereto shall be null and void). 
Nothing in this Agreement, expressed or implied, shall be construed to
confer upon any Person (other than the parties hereto, their respective
successors and assigns permitted hereby, Participants to the extent provided in
subsection (d) of this Section and, to the extent expressly
contemplated hereby, the Related Parties of each of Administrative Agent, the
L/C Issuer and the Lenders) any legal or equitable right, remedy or claim under
or by reason of this Agreement.

 

(b)                                 Assignments by
Lenders.  Any Lender may at any time
assign to one or more Eligible Assignees all or a portion of its rights and
obligations under this Agreement (including all or a portion of its Commitment
and the Loans (including for purposes of this subsection (b),
participations in L/C Obligations and in Swing Line Loans) at the time owing to
it); provided that (i) except in the case of an assignment of the
entire remaining amount of the assigning Lender’s Commitment and the Loans at
the time owing to it or in the case of an assignment to a Lender or an
Affiliate of a Lender, the aggregate amount of the Commitment (which for this
purpose includes Loans outstanding thereunder) or, if the Commitment is not
then in effect, the principal outstanding balance of the Loans of the assigning
Lender subject to each such assignment, determined as of the date the
Assignment and Assumption with respect to such assignment is delivered to Administrative
Agent or, if “Trade Date” is specified in the Assignment and Assumption, as of
the Trade Date, shall not be less than $5,000,000 unless each of Administrative
Agent and, so long as no Event of Default has occurred and is continuing,
Borrower otherwise consents (each such consent not to be unreasonably withheld
or delayed); (ii) each partial assignment shall be made as an assignment
of a proportionate part of all the assigning Lender’s rights and obligations
under this Agreement with respect to the Loans or the Commitment assigned,
except that this clause (ii) shall not apply to rights in respect of Swing

 

81

 

Line Loans; (iii) any
assignment of a Commitment must be approved by Administrative Agent, the L/C
Issuer and Swing Line Lender unless the Person that is the proposed assignee is
itself a Lender (whether or not the proposed assignee would otherwise qualify
as an Eligible Assignee); and (iv) the parties to each assignment shall
execute and deliver to Administrative Agent an Assignment and Assumption,
together with a processing and recordation fee of $2,500 and the Eligible
Assignee, if it shall not be a Lender, shall deliver to Administrative Agent an
Administrative Questionnaire.  Subject to
acceptance and recording thereof by Administrative Agent pursuant to subsection (c) of
this Section, from and after the effective date specified in each Assignment
and Assumption, the Eligible Assignee thereunder shall be a party to this
Agreement and, to the extent of the interest assigned by such Assignment and
Assumption, have the rights and obligations of a Lender under this Agreement,
and the assigning Lender thereunder shall, to the extent of the interest
assigned by such Assignment and Assumption, be released from its obligations
under this Agreement (and, in the case of an Assignment and Assumption covering
all of the assigning Lender’s rights and obligations under this Agreement, such
Lender shall cease to be a party hereto) but shall continue to be entitled to
the benefits of Sections 3.01, 3.04, 3.05, and 10.04 with respect to facts and
circumstances occurring prior to the effective date of such assignment.  Upon request, Borrower (at its expense) shall
execute and deliver a Note to the assignee Lender.  Any assignment or transfer by a Lender of
rights or obligations under this Agreement that does not comply with this subsection shall
be treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with subsection (d) of
this Section.

 

(c)                                  Register.  Administrative Agent, acting solely for this
purpose as an Administrative Agent of Borrower, shall maintain at Administrative
Agent’s Office a copy of each Assignment and Assumption delivered to it and a
register for the recordation of the names and addresses of the Lenders, and the
Commitments of, and principal amounts of the Loans and L/C Obligations owing
to, each Lender pursuant to the terms hereof from time to time (the “Register”).  The entries in the Register shall be
conclusive, and Borrower, Administrative Agent and the Lenders may treat each
Person whose name is recorded in the Register pursuant to the terms hereof as a
Lender hereunder for all purposes of this Agreement, notwithstanding notice to
the contrary.  The Register shall be
available for inspection by each of Borrower and the L/C Issuer, at any
reasonable time and from time to time upon reasonable prior notice.  In addition, at any time that a request for a consent for a material or substantive change to the Loan
Documents is pending, any Lender wishing to consult with other Lenders in
connection therewith may request and receive from Administrative Agent a copy
of the Register.

 

(d)                                 Participations.  Any Lender may at any time, without the consent
of, or notice to, Borrower or Administrative Agent, sell participations to any
Person (other than a natural person or Borrower or any of Borrower’s Affiliates
or Subsidiaries) (each, a “Participant”) in all or a portion of such
Lender’s rights and/or obligations under this Agreement (including all or a
portion of its Commitment and/or the Loans (including such Lender’s
participations in L/C Obligations and/or Swing Line Loans) owing to it); provided
that (i) such Lender’s obligations under this Agreement shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations and (iii) Borrower,
Administrative Agent, the L/C Issuer and the Lenders shall continue to deal
solely and directly with such Lender in connection with such Lender’s rights
and obligations under this Agreement. 
Any agreement or instrument pursuant to which a Lender sells such a participation

 

82

 

shall provide that such
Lender shall retain the sole right to enforce this Agreement and to approve any
amendment, modification or waiver of any provision of this Agreement; provided
that such agreement or instrument may provide that such Lender will not,
without the consent of the Participant, agree to any amendment, waiver or other
modification described in the first proviso to Section 10.01 that affects
such Participant.  Subject to subsection (e) of
this Section, Borrower agrees that each Participant shall be entitled to the
benefits of Sections 3.01, 3.04 and 3.05 to the same extent as if it were
a Lender and had acquired its interest by assignment pursuant to subsection (b) of
this Section.  To the extent permitted by
law, each Participant also shall be entitled to the benefits of Section 10.08
as though it were a Lender, provided such Participant agrees to be subject to Section 2.14
as though it were a Lender.

 

(e)                                  Limitations
upon Participant Rights.  A
Participant shall not be entitled to receive any greater payment under Section 3.01
or 3.04 than the applicable Lender would have been entitled to receive with
respect to the participation sold to such Participant, unless the sale of the
participation to such Participant is made with Borrower’s prior written
consent.

 

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

 

(g)                                 Electronic
Execution of Assignments.  The
words “execution,” “signed,” “signature,” and words of like import in any
Assignment and Assumption shall be deemed to include electronic signatures or
the keeping of records in electronic form, each of which shall be of the same
legal effect, validity or enforceability as a manually executed signature or
the use of a paper-based recordkeeping system, as the case may be, to the
extent and as provided for in any applicable law, including the Federal
Electronic Signatures in Global and National Commerce Act, the New York State
Electronic Signatures and Records Act, or any other similar state laws based on
the Uniform Electronic Transactions Act.

 

(h)                                 Resignation as
L/C Issuer or Swing Line Lender.  Notwithstanding anything to the contrary
contained herein, if at any time Bank of America assigns all of its Commitment
and Loans pursuant to subsection (b) above, Bank of America may, (i) upon
30 days’ notice to Borrower and the Lenders, resign as L/C Issuer and/or (ii) upon
30 days’ notice to Borrower, resign as Swing Line Lender.  In the event of any such resignation as L/C
Issuer or Swing Line Lender, Borrower shall be entitled to appoint from among
Lenders a successor L/C Issuer or Swing Line Lender hereunder; provided,
however, that no failure by Borrower to appoint any such successor shall
affect the resignation of Bank of America as L/C Issuer or Swing Line Lender,
as the case may be.  If Bank of America
resigns as L/C Issuer, it shall retain all the rights, powers, privileges
and obligations duties of the L/C Issuer hereunder with respect to all
Letters of Credit outstanding as of the effective date of its resignation as
L/C Issuer and all L/C Obligations with respect thereto (including the right to
require the Lenders to make Base Rate Committed Loans or fund risk
participations in Unreimbursed Amounts pursuant to Section 2.03(c)).  If Bank of America resigns as Swing Line
Lender, it shall retain all the rights of Swing Line Lender provided for
hereunder with respect to Swing Line Loans made by it and

 

83

 

outstanding as of the
effective date of such resignation, including the right to require the Lenders
to make Base Rate Committed Loans or fund risk participations in outstanding
Swing Line Loans pursuant to Section 2.04(c).  Upon the appointment of a successor L/C
Issuer and/or Swing Line Lender, (a) such successor shall succeed to and
become vested with all of the rights, powers, privileges and duties of the
retiring L/C Issuer or Swing Line Lender, as the case may be, and (b) the
successor L/C Issuer shall issue letters of credit in substitution for the
Letters of Credit, if any, outstanding at the time of such succession or make
other arrangements satisfactory to Bank of America to effectively assume the
obligations of Bank of America with respect to such Letters of Credit.

 

10.07.              Treatment of Certain
Information; Confidentiality.  Each of Administrative Agent, Lenders and the
L/C Issuer agrees to maintain the confidentiality of the Information (as
defined below), except that Information may be disclosed (a) to its
Affiliates and to its and its Affiliates’ respective partners, directors,
officers, employees, Administrative Agents, advisors and representatives (it
being understood that the Persons to whom such disclosure is made will be
informed of the confidential nature of such Information and agreed to, or shall
have a legal obligation to, keep such Information confidential), (b) to
the extent requested by any regulatory authority, purporting to have
jurisdiction over it  (including any
self-regulatory authority, such as the National Association of Insurance
Commissioners), (c) to the extent required by applicable laws or
regulations or by any subpoena or similar legal process, (d) to any other
party hereto, (e) in connection with the exercise of any remedies
hereunder or under any other Loan Document or any action or proceeding relating
to this Agreement or any other Loan Document or the enforcement of rights
hereunder or thereunder, (f) subject to an agreement containing provisions
substantially the same as those of this Section, to (i) any assignee of or
Participant in, or any prospective assignee of or Participant in, any of its
rights or obligations under this Agreement or (ii) any actual or prospective
counterparty (or its advisors) to any swap or derivative transaction relating
to Borrower and its obligations, (g) with the consent of Borrower or (h)
to the extent such Information (x) becomes publicly available other than as a
result of a breach of this Section or (y) becomes available to Administrative
Agent, any Lender, the L/C Issuer or any of their respective Affiliates on a
nonconfidential basis from a source other than Borrower.  For purposes of this Section, “Information”
means all information received from Borrower or any Subsidiary relating to
Borrower or any Subsidiary or any of their respective businesses, other than
any such information that is available to Administrative Agent, any Lender or
the L/C Issuer on a nonconfidential basis prior to disclosure by Borrower or
any Subsidiary.  Any Person required to maintain the confidentiality of Information as provided
in this Section shall be considered to have complied with its obligation
to do so if such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own
confidential information.  Each of Administrative
Agent, the Lenders and the L/C Issuer acknowledges that (a) the
Information may include material non-public information concerning the Borrower
or a Subsidiary, as the case may be, (b) it has developed compliance
procedures regarding the use of material non-public information and (c) it
will handle such material non-public information in accordance with applicable
Law, including Federal and state securities Laws.

 

10.08.              Right
of Setoff.   If an Event of
Default shall have occurred and be continuing, each Lender, the L/C Issuer and
each of their respective Affiliates is hereby authorized at any time and from
time to time, to the fullest extent permitted by applicable law, to set off and
apply

 

84

 

any and all deposits (general or special, time or demand, provisional
or final, in whatever currency) at any time held and other obligations (in
whatever currency) at any time owing by such Lender, the L/C Issuer or any such
Affiliate to or for the credit or the account of Borrower or any other Loan
Party against any and all of the obligations of Borrower or such Loan Party now
or hereafter existing under this Agreement or any other Loan Document to such
Lender or the L/C Issuer or any such Affiliate, irrespective of whether or not
such Lender or the L/C Issuer shall have made any demand under this Agreement
or any other Loan Document and although such obligations of Borrower or such
Loan Party may be contingent or unmatured or are owed to a branch or office of
such Lender or the L/C Issuer different from the branch or office holding such
deposit or obligated on such indebtedness. 
The rights of each Lender, the L/C Issuer and their respective
Affiliates under this Section are in addition to other rights and remedies
(including other rights of setoff) that such Lender, the L/C Issuer or their
respective Affiliates may have.  Each
Lender and the L/C Issuer agrees to notify Borrower and Administrative Agent
promptly after any such setoff and application, provided that the
failure to give such notice shall not affect the validity of such setoff and
application.

 

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

 

10.10.              Counterparts ; Integration;
Effectiveness.  This Agreement
may be executed in counterparts (and by different parties hereto in different
counterparts), each of which shall constitute an original, but all of which
when taken together shall constitute a single contract.  This Agreement and the other Loan Documents
constitute the entire contract among the parties relating to the subject matter
hereof and supersede any and all previous agreements and understandings, oral
or written, relating to the subject matter hereof.  Except as provided in Section 4.01, this
Agreement shall become effective when it shall have been executed by Administrative
Agent and when Administrative Agent shall have received counterparts hereof
that, when taken together, bear the signatures of each of the other parties
hereto.  Delivery of an executed
counterpart of a signature page of this Agreement by telecopy shall be
effective as delivery of a manually executed counterpart of this Agreement.

 

10.11.              Survival of
Representations and Warranties.  All representations and warranties made
hereunder and in any other Loan Document or other document delivered pursuant
hereto or thereto or in connection herewith or therewith shall survive the
execution and delivery hereof and thereof. 
Such representations and warranties have been or will be relied upon by Administrative
Agent and each Lender, regardless of any investigation made by Administrative Agent
or any Lender or on their behalf and notwithstanding that Administrative

 

85

 

Agent or any Lender may have had notice or knowledge of any Default at
the time of any Credit Extension, and shall continue in full force and effect
as long as any Loan or any other Obligation hereunder shall remain unpaid or
unsatisfied or any Letter of Credit shall remain outstanding.

 

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

 

10.13.              Governing Law; Jurisdiction; Etc.  (a)                                     GOVERNING
LAW.  THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
CALIFORNIA.

 

(b)                                 SUBMISSION TO
JURISDICTION.  THE
BORROWER AND EACH OTHER LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR
ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE
STATE OF CALIFORNIA SITTING IN LOS ANGELES COUNTY AND OF THE UNITED STATES
DISTRICT COURT OF THE CENTRAL DISTRICT OF CALIFORNIA, AND ANY APPELLATE COURT
FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF
ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY
AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD
AND DETERMINED IN SUCH CALIFORNIA STATE COURT OR, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT.  EACH OF THE PARTIES HERETO AGREES THAT A
FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE
ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER
PROVIDED BY LAW.  NOTHING IN THIS
AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT ADMINISTRATIVE
AGENT, ANY LENDER OR THE L/C ISSUER MAY OTHERWISE HAVE TO BRING ANY ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST THE
BORROWER OR ANY OTHER LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF ANY
JURISDICTION.

 

(c)                                  WAIVER OF VENUE.  THE BORROWER AND EACH OTHER LOAN PARTY
IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (b) OF
THIS SECTION.  EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY WAIVES,

 

86

 

TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE
MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

 

(d)                                 SERVICE OF
PROCESS.  EACH PARTY HERETO IRREVOCABLY
CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.02.  NOTHING IN THIS AGREEMENT WILL AFFECT THE
RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY
APPLICABLE LAW.

 

10.14.              Waiver
of Right to Trial by Jury.  EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY).  EACH PARTY HERETO (a) CERTIFIES
THAT NO REPRESENTATIVE, ADMINISTRATIVE AGENT OR ATTORNEY OF ANY OTHER PERSON
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (b) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

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

 

10.16.              Time
of the Essence.  Time is of
the essence of the Loan Documents.

 

[Remainder
of this page intentionally left blank; signature pages follows]

 

87

 

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

 

	
   

  	
  SOUTHWEST
  WATER COMPANY

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Peter J. Moerbeek

  	
   

  
	
   

  	
  Name:

  	
  Peter
  J. Moerbeek

  	
   

  
	
   

  	
  Title:

  	
  President

  	
   

  

 

 

[Southwest Water Company Credit
Agreement

Signature Page]

 

S-1

 

	
   

  	
  BANK
  OF AMERICA, N.A., as

  
	
   

  	
  Administrative
  Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Ken Puro

  	
  :

  
	
   

  	
  Name:

  	
  Ken
  Puro

  	
   

  
	
   

  	
  Title:

  	
  Vice
  President

  	
   

  

 

S-2

 

	
   

  	
  BANK
  OF AMERICA, N.A., as a Lender, L/C

  
	
   

  	
  Issuer and Swing Line Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Robert Lagace

  	
   

  
	
   

  	
  Name:

  	
  Robert
  Lagace

  	
   

  
	
   

  	
  Title:

  	
  Senior
  Vice President

  	
   

  

 

S-3

 

	
   

  	
  UNION
  BANK OF CALIFORNIA,

  
	
   

  	
  as a Lender and Syndication Administrative
  Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Richard A. Madsen

  	
   

  
	
   

  	
  Name:

  	
  Richard
  A. Madsen

  	
   

  
	
   

  	
  Title:

  	
  Regional
  Vice President

  	
   

  

 

S-4

 

	
   

  	
  CITBANK
  (WEST), FSB

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Jean Frammolino

  	
   

  
	
   

  	
  Name:

  	
  Jean
  Frammolino

  	
   

  
	
   

  	
  Title:

  	
  Vice
  President

  	
   

  

 

S-5

 

	
   

  	
  COBANK.
  ACB

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Teresa L. Fountain

  	
   

  
	
   

  	
  Name:

  	
  Teresa
  L. Fountain

  	
   

  
	
   

  	
  Title:

  	
  Assistant
  Corporate Secretary

  	
   

  

 

S-6

 

	
   

  	
  BANK
  OF THE WEST

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Bruce Young

  	
   

  
	
   

  	
  Name:

  	
  Bruce
  Young

  	
   

  
	
   

  	
  Title:

  	
  Vice
  President

  	
   

  

 

S-7

 

SCHEDULE 2.01

 

COMMITMENTS

AND APPLICABLE PERCENTAGES

 

	
  Lender

  	
   

  	
  Commitment

  	
   

  	
  Applicable

  Percentage

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bank of
  America, N.A.

  	
   

  	
  $

  	
  25,000,000

  	
   

  	
  25

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Union Bank
  of California

  	
   

  	
  $

  	
  25,000,000

  	
   

  	
  25

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Citibank
  (West), FSB

  	
   

  	
  $

  	
  20,000,000

  	
   

  	
  20

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  CoBank, ACB

  	
   

  	
  $

  	
  15,000,000

  	
   

  	
  15

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bank of the
  West

  	
   

  	
  $

  	
  15,000,000

  	
   

  	
  15

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
  $

  	
  100,000,000

  	
   

  	
  100

  	
  %

  

 

 

SCHEDULE 5.06

 

LITIGATION

 

SCHEDULE 5.09

 

ENVIRONMENTAL
MATTERS

 

SCHEDULE 5.13

 

SUBSIDIARIES

AND OTHER EQUITY INVESTMENTS

 

Part (a).  Subsidiaries.

 

Part (b).  Other Equity Investments.

 

SCHEDULE 7.01

 

EXISTING
LIENS

 

SCHEDULE 7.03

 

EXISTING
INDEBTEDNESS

 

 

SCHEDULE 10.02

 

ADMINISTRATIVE
AGENT’S OFFICE,

CERTAIN ADDRESSES FOR NOTICES

 

BORROWER:

 

Southwest
Water Company

One
Wilshire Building

624
South Grand Avenue, Suite 2900

Los
Angeles, California 90017

Attention:  O’Donnell Iselin II, Treasurer

Telephone:

Telecopier:

Electronic
Mail:        @     

Website
Address: www.                      

 

ADMINISTRATIVE
AGENT’S OFFICE

 

Notices
(other than Requests for Extensions of Credit):

BANK OF AMERICA, N.A.

800
Fifth Avenue, Floor 37

Seattle,
WA 98104

Mail
Code:  WA1-501-37-20

Att:  Ken Puro

Tel:  206-358-0138

Facsimile:  206-358-0971

Electronic
Mail:  Ken.Puro@Bankofamerica.com

 

For
Payments and Requests for Extensions of Credit:

BANK OF AMERICA, N.A.

2001
Clayton Road, 2nd Floor

Concord,
CA 94520

Mail
Code:  CA4-702-02-25

Att:  Rachel Warford

Tel:  925-675-8361

Facsimile:
888-969-9236

Electronic
Mail:  Rachel.warford@bankofamerica.com

 

Payments:

BANK
OF AMERICA

Dallas,
TX

ABA
No. 111000012

Account
No: 3750836479

Account
Name:  Corporate FTA

Attn:  Credit Services

Reference:  Southwest Water Company

 

Letters
of Credit:

BANK OF AMERICA, N.A.

Trade
Operations – Los Angeles #226521

333
S. Beaudry Avenue, 19th Floor

Mail Code:  CA9-703-19-23

Los Angeles, CA 90017-1466

Attn:  Tai Lu

 

1

 

EXHIBIT A

 

FORM OF
COMMITTED LOAN NOTICE

 

Date:             ,
     

 

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

 

Ladies and Gentlemen:

 

Reference is made to the
Credit Agreement, dated as of April 1, 2005 (as amended, restated,
extended, supplemented or otherwise modified in writing from time to time, the “Agreement;”
the terms defined therein being used herein as therein defined), among Southwest
Water Company, a Delaware Company (the “Borrower”), the Lenders from time to
time party thereto, and Bank of America, N.A., as Administrative Agent, L/C
Issuer and Swing Line Lender.

 

The undersigned hereby
requests (select one):

 

o  A Borrowing of Committed Loans    o  A conversion or continuation of Committed
Loans

 

1.                                       On                                                                                                 
(a Business Day).

 

2.                                       In the amount
of $                                                                       .

 

3.                                       Comprised
of                                                                               .

[Type of Committed Loan
requested]

 

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

 

The Committed Borrowing, if
any, requested herein complies with the provisos to the first sentence of Section 2.01
of the Agreement.

 

	
   

  	
  SOUTHWEST
  WATER COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  

 

A-1

 

EXHIBIT B

 

FORM OF SWING LINE LOAN NOTICE

 

Date:             ,
200    

 

To:                              Bank of
America, N.A., as Swing Line Lender

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

 

Ladies
and Gentlemen:

 

Reference is made to the
Credit Agreement, dated as of April 1, 2005 (as amended, restated,
extended, supplemented or otherwise modified in writing from time to time, the “Agreement;”
the terms defined therein being used herein as therein defined), among
Southwest Water Company, a Delaware corporation (the “Borrower”), the Lenders
from time to time party thereto, and Bank of America, N.A., as Administrative
Agent, L/C Issuer and Swing Line Lender.

 

The undersigned hereby
requests a Swing Line Loan:

 

1.                                       On                                   
(a Business Day).

 

2.                                       In the amount
of $                                      .

 

The Swing Line Borrowing
requested herein complies with the requirements of the provisos to the first
sentence of Section 2.04(a) of the Agreement.

 

	
   

  	
  SOUTHWEST
  WATER COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

B-1

 

EXHIBIT C

 

FORM OF NOTE

 

	
  $

  	
                       ,200  

  

 

FOR VALUE RECEIVED, the
undersigned (“Borrower”), hereby promises to pay to                      
or registered assigns (“Lender”), in accordance with the provisions of the
Agreement (as hereinafter defined), the principal amount of each Loan from time
to time made by the Lender to Borrower under the Credit Agreement, dated as of April 1,
2005 (as amended, restated, extended, supplemented or otherwise modified in
writing from time to time, the “Agreement;” the terms defined therein
being used herein as therein defined), among Borrower, the Lenders from time to
time party thereto, and Bank of America, N.A., as Administrative Agent, L/C
Issuer and Swing Line Lender.

 

Borrower promises to pay
interest on the unpaid principal amount of each Loan from the date of such Loan
until such principal amount is paid in full, at such interest rates and at such
times as provided in the Agreement. 
Except as otherwise provided in Section 2.04(f) of the
Agreement with respect to Swing Line Loans, all payments of principal and
interest shall be made to Administrative Agent for the account of the Lender in
Dollars in immediately available funds at the Administrative Agent’s
Office.  If any amount is not paid in
full when due hereunder, such unpaid amount shall bear interest, to be paid
upon demand, from the due date thereof until the date of actual payment (and
before as well as after judgment) computed at the per annum rate set forth in
the Agreement.

 

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

 

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

 

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

 

	
   

  	
  SOUTHWEST
  WATER COMPANY

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  

 

1

 

LOANS AND PAYMENTS WITH RESPECT THERETO

 

	
  Date

  	
   

  	
  Type of Loan

  Made

  	
   

  	
  Amount of

  Loan Made

  	
   

  	
  End of

  Interest

  Period

  	
   

  	
  Amount of

  Principal or

  Interest Paid

  This Date

  	
   

  	
  Outstanding

  Principal

  Balance This

  Date

  	
   

  	
  Notation

  Made By

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

2

 

EXHIBIT E

 

FORM

OF

ASSIGNMENT AND ASSUMPTION

 

This Assignment and
Assumption (this “Assignment and Assumption”) is dated as of the
Effective Date set forth below and is entered into by and between [Insert name
of Assignor] (the “Assignor”) and [Insert name of Assignee] (the “Assignee”).  Capitalized terms used but not defined herein
shall have the meanings given to them in the Credit Agreement identified below
(the “Credit Agreement”), receipt of a copy of which is hereby
acknowledged by the Assignee.  The
Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby
agreed to and incorporated herein by reference and made a part of this
Assignment and Assumption as if set forth herein in full.

 

For an agreed consideration,
the Assignor hereby irrevocably sells and assigns to the Assignee, and the
Assignee hereby irrevocably purchases and assumes from the Assignor, subject to
and in accordance with the Standard Terms and Conditions and the Credit
Agreement, as of the Effective Date inserted by Administrative Agent as
contemplated below (i) all of the Assignor’s rights and obligations as a
Lender under the Credit Agreement and any other documents or instruments
delivered pursuant thereto to the extent related to the amount and percentage
interest identified below of all of such outstanding rights and obligations of
the Assignor under the respective facilities identified below (including,
without limitation, the Letters of Credit and Swing Line Loans included in such
facilities) and (ii) to the extent permitted to be assigned under
applicable law, all claims, suits, causes of action and any other right of the
Assignor (in its capacity as a Lender) against any Person, whether known or
unknown, arising under or in connection with the Credit Agreement, any other
documents or instruments delivered pursuant thereto or the loan transactions
governed thereby or in any way based on or related to any of the foregoing,
including, but not limited to, contract claims, tort claims, malpractice
claims, statutory claims and all other claims at law or in equity related to
the rights and obligations sold and assigned pursuant to clause (i) above (the
rights and obligations sold and assigned pursuant to clauses (i) and (ii) above
being referred to herein collectively as, the “Assigned Interest”).  Such sale and assignment is without recourse
to the Assignor and, except as expressly provided in this Assignment and
Assumption, without representation or warranty by the Assignor.

 

1.                                       Assignor:                                 

 

2.                                       Assignee:                                
[and is an Affiliate of [identify Lender]]

 

3.                                       Borrower(s):                                

 

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

 

5.                                       Credit Agreement:
Credit Agreement, dated as of April 1, 2005, among Southwest Water Company,
the Lenders from time to time party thereto, Bank of America, N.A., as Administrative Agent, L/C Issuer and Swing Line
Lender

 

E-1

 

6.                                       Assigned
Interest:

 

	
  Facility Assigned

  	
   

  	
  Aggregate

  Amount of

  Commitment/Loans

  for all Lenders*

  	
   

  	
  Amount of

  Commitment/Loans

  Assigned*

  	
   

  	
  Percentage

  Assigned of

  Commitment/Loans

  	
   

  	
  CUSIP No.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

[7.                                   Trade Date:                      ]

 

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

 

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

 

	
   

  	
  ASSIGNOR

  
	
   

  	
  [NAME
  OF ASSIGNOR]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  ASSIGNEE

  
	
   

  	
  [NAME
  OF ASSIGNEE]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  
					

 

[Consented
to and] Accepted:

 

	
  Bank of America, N. A., as

  Administrative Agent

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
  [Consented
  to:]

  
	
   

  	
   

  
	
  Southwest
  Water Company

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Title:

  

 

E-2

 

ANNEX 1 TO ASSIGNMENT AND
ASSUMPTION

 

STANDARD TERMS AND CONDITIONS FOR

 

ASSIGNMENT AND ASSUMPTION

 

1.                                       Representations
and Warranties.

 

1.1.                              Assignor.  The Assignor (a) represents and warrants
that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the
Assigned Interest is free and clear of any lien, encumbrance or other adverse
claim and (iii) it has full power and authority, and has taken all action
necessary, to execute and deliver this Assignment and Assumption and to
consummate the transactions contemplated hereby; and (b) assumes no
responsibility with respect to (i) any statements, warranties or
representations made in or in connection with the Credit Agreement or any other
Loan Document, (ii) the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Loan Documents or any collateral
thereunder, (iii) the financial condition of Borrower, any of its
Subsidiaries or Affiliates or any other Person obligated in respect of any Loan
Document or (iv) the performance or observance by Borrower, any of its
Subsidiaries or Affiliates or any other Person of any of their respective
obligations under any Loan Document.

 

1.2.                              Assignee.  The Assignee (a) represents and warrants
that (i) it has full power and authority, and has taken all action
necessary, to execute and deliver this Assignment and Assumption and to
consummate the transactions contemplated hereby and to become a Lender under
the Credit Agreement, (ii) it meets all requirements of an Eligible
Assignee under the Credit Agreement (subject to receipt of such consents as may
be required under the Credit Agreement), (iii) from and after the
Effective Date, it shall be bound by the provisions of the Credit Agreement as
a Lender thereunder and, to the extent of the Assigned Interest, shall have the
obligations of a Lender thereunder, and (iv) it has received a copy of the
Credit Agreement, together with copies of the most recent financial statements
delivered pursuant to Section 6.01 thereof, as applicable, and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment and Assumption and to
purchase the Assigned Interest on the basis of which it has made such analysis
and decision independently and without reliance on Administrative Agent or any
other Lender; and (b) agrees that (i) it will, independently and
without reliance on Administrative Agent, the Assignor or any other Lender, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under the Loan Documents, and (ii) it will perform in accordance with
their terms all of the obligations which by the terms of the Loan Documents are
required to be performed by it as a Lender.

 

2.                                       Payments.  From and after the Effective Date, Administrative
Agent shall make all payments in respect of the Assigned Interest (including
payments of principal, interest, fees and other amounts) to the Assignor for
amounts which have accrued to but excluding the Effective Date and to the
Assignee for amounts which have accrued from and after the Effective Date.

 

3.                                       General
Provisions.  This
Assignment and Assumption shall be binding upon, and inure to the benefit of,
the parties hereto and their respective successors and assigns.  This Assignment and Assumption may be
executed in any number of counterparts, which together shall constitute one
instrument.  Delivery of an executed
counterpart of a signature page of this Assignment and Assumption by telecopy
shall be effective as delivery of a manually executed counterpart of this
Assignment and Assumption.  This
Assignment and Assumption shall be governed by, and construed in accordance
with, the law of the State of California.

 

E-3EXHIBIT
10.1

 

SUMMARY DESCRIPTION OF 2004 MICP

 

On April 5, 2005, the Board
of Directors of Stewart & Stevenson Services, Inc. (the “Company”),
approved the 2004 Management Incentive Compensation Plan (“MICP”) payments, and
the 2005 base salary for each executive officer of the Company who is expected
to be a named executive officer in the Company’s proxy statement for the Annual
Meeting of Shareholders to be held on June 7, 2005 (excluding the President and
Chief Executive Officer, Mr. Max Lukens, the expected named executive officers
are referred to herein as the “Expected Named Executives”).  For Fiscal 2004, the target incentive for
annual incentive compensation for the Expected Named Executives was fifty
percent (50%) of their respective base salary, with an over-achievement
opportunity up to a maximum of one hundred percent (100%) of their respective
base salary.  In approving the MICP
payments, the Board of Directors considered a financial measurement, the
Company’s return on net capital employed, along with several subjective factors.  The 2004 MICP payments and the 2005 base
salaries for the Expected Named Executive Officers are set forth below.

 

	
  Expected Named Executive
  Officer

  	
   

  	
  2004 MICP Payment

  Approved

  	
   

  	
  2005 Base Salary

  	
   

  
	
  Max Lukens

  	
   

  	
  $

  	
  0

  	
  *

  	
  $

  	
  750,000

  	
  *

  
	
  Carl B. King

  	
   

  	
  $

  	
  305,000

  	
   

  	
  $

  	
  325,000

  	
   

  
	
  Dennis M. Dellinger

  	
   

  	
  $

  	
  270,000

  	
   

  	
  $

  	
  290,000

  	
   

  
	
  John B. Simmons

  	
   

  	
  $

  	
  260,000

  	
   

  	
  $

  	
  300,000

  	
   

  
	
  Don K. Kyle

  	
   

  	
  $

  	
  240,000

  	
   

  	
  $

  	
  270,000

  	
   

  

 

*
The base salary and the bonus for Max Lukens, President and Chief Executive
Officer, are described in his employment agreement filed with the Commission as
Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly
period ended May 1, 2004.

 

1

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