Document:

Exhibit 10.1

 

EXECUTION COPY

 

AMENDED AND RESTATED CREDIT AGREEMENT

dated as of September 29, 2005

 

by and among

 

SOURCECORP, INCORPORATED,

 

BANK OF AMERICA, N.A.,

as Administrative Agent,

 

BANC OF AMERICA SECURITIES LLC,

as Sole Lead Arranger and Sole Book Manager,

 

SUNTRUST BANK,

as Syndication Agent,

 

JPMORGAN CHASE BANK, N.A.,

as Documentation Agent

 

and

 

THE LENDERS NAMED HEREIN

 

 

$100,000,000 REVOLVING CREDIT LOAN FACILITY

 

 

TABLE
OF CONTENTS

 

	
  ARTICLE 1

  	
  DEFINITIONS

  	
   

  
	
  Section 1.1

  	
   

  	
  Definitions, etc.

  	
   

  
	
  Section 1.2

  	
   

  	
  Other
  Definitional Provisions

  	
   

  
	
  Section 1.3

  	
   

  	
  Accounting
  Terms and Determinations

  	
   

  
	
  Section 1.4

  	
   

  	
  Financial
  Covenants

  	
   

  
	
  Section 1.5

  	
   

  	
  Letter of
  Credit Amounts

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 2

  	
  LOANS

  	
   

  
	
  Section 2.1

  	
   

  	
  Commitments

  	
   

  
	
  Section 2.2

  	
   

  	
  Notes

  	
   

  
	
  Section 2.3

  	
   

  	
  Repayment of
  Loans

  	
   

  
	
  Section 2.4

  	
   

  	
  Interest

  	
   

  
	
  Section 2.5

  	
   

  	
  Borrowing
  Procedure

  	
   

  
	
  Section 2.6

  	
   

  	
  Optional
  Prepayments, Conversions and Continuations of Loans, Reduction of Commitments

  	
   

  
	
  Section 2.7

  	
   

  	
  Mandatory
  Prepayments

  	
   

  
	
  Section 2.8

  	
   

  	
  Minimum
  Amounts

  	
   

  
	
  Section 2.9

  	
   

  	
  Certain
  Notices

  	
   

  
	
  Section 2.10

  	
   

  	
  Use of
  Proceeds

  	
   

  
	
  Section 2.11

  	
   

  	
  Fees

  	
   

  
	
  Section 2.12

  	
   

  	
  Computations

  	
   

  
	
  Section 2.13

  	
   

  	
  Termination
  or Reduction of Commitments

  	
   

  
	
  Section 2.14

  	
   

  	
  Letters of
  Credit

  	
   

  
	
  Section 2.15

  	
   

  	
  Swingline
  Advances

  	
   

  
	
  Section 2.16

  	
   

  	
  Increase in
  Commitments

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 3

  	
  PAYMENTS

  	
   

  
	
  Section 3.1

  	
   

  	
  Method of
  Payment

  	
   

  
	
  Section 3.2

  	
   

  	
  Pro Rata
  Treatment

  	
   

  
	
  Section 3.3

  	
   

  	
  Sharing of
  Payments, Etc.

  	
   

  
	
  Section 3.4

  	
   

  	
  The
  Administrative Agent’s Clawback

  	
   

  
	
  Section 3.5

  	
   

  	
  Withholding
  Taxes

  	
   

  
	
  Section 3.6

  	
   

  	
  Withholding
  Tax Exemption

  	
   

  
	
  Section 3.7

  	
   

  	
  Reinstatement
  of Obligations

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 4

  	
  YIELD
  PROTECTION AND ILLEGALITY

  	
   

  
	
  Section 4.1

  	
   

  	
  Additional
  Costs

  	
   

  
	
  Section 4.2

  	
   

  	
  Limitation on
  Types of Loans

  	
   

  
	
  Section 4.3

  	
   

  	
  Illegality

  	
   

  
	
  Section 4.4

  	
   

  	
  Treatment of
  Affected Loans

  	
   

  
	
  Section 4.5

  	
   

  	
  Compensation

  	
   

  
	
  Section 4.6

  	
   

  	
  Capital
  Adequacy

  	
   

  
	
  Section 4.7

  	
   

  	
  Reserves on
  Eurodollar Loans

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 5

  	
  GUARANTIES AND
  SETOFF

  	
   

  
	
  Section 5.1

  	
   

  	
  Guaranties

  	
   

  
	
  Section 5.2

  	
   

  	
  New
  Subsidiaries

  	
   

  
						

 

i

 

	
  Section 5.3

  	
   

  	
  Setoff

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 6

  	
  CONDITIONS
  PRECEDENT

  	
   

  
	
  Section 6.1

  	
   

  	
  Initial Loans
  and Letter of Credit Conditions

  	
   

  
	
  Section 6.2

  	
   

  	
  All
  Extensions of Credit

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 7

  	
  REPRESENTATIONS
  AND WARRANTIES

  	
   

  
	
  Section 7.1

  	
   

  	
  Corporate
  Existence

  	
   

  
	
  Section 7.2

  	
   

  	
  Financial
  Statements

  	
   

  
	
  Section 7.3

  	
   

  	
  Corporate
  Action: No Breach

  	
   

  
	
  Section 7.4

  	
   

  	
  Operation of
  Business

  	
   

  
	
  Section 7.5

  	
   

  	
  Intellectual
  Property

  	
   

  
	
  Section 7.6

  	
   

  	
  Litigation
  and Judgments

  	
   

  
	
  Section 7.7

  	
   

  	
  Rights in
  Properties; Liens

  	
   

  
	
  Section 7.8

  	
   

  	
  Enforceability

  	
   

  
	
  Section 7.9

  	
   

  	
  Approvals

  	
   

  
	
  Section 7.10

  	
   

  	
  Debt

  	
   

  
	
  Section 7.11

  	
   

  	
  Taxes

  	
   

  
	
  Section 7.12

  	
   

  	
  Margin
  Securities

  	
   

  
	
  Section 7.13

  	
   

  	
  ERISA; Plans

  	
   

  
	
  Section 7.14

  	
   

  	
  Disclosure

  	
   

  
	
  Section 7.15

  	
   

  	
  Subsidiaries

  	
   

  
	
  Section 7.16

  	
   

  	
  Agreements

  	
   

  
	
  Section 7.17

  	
   

  	
  Compliance
  with Laws

  	
   

  
	
  Section 7.18

  	
   

  	
  Investment
  Company Act

  	
   

  
	
  Section 7.19

  	
   

  	
  Public
  Utility Holding Company Act

  	
   

  
	
  Section 7.20

  	
   

  	
  Environmental
  Matters

  	
   

  
	
  Section 7.21

  	
   

  	
  Labor
  Disputes and Acts of God

  	
   

  
	
  Section 7.22

  	
   

  	
  Material
  Contracts

  	
   

  
	
  Section 7.23

  	
   

  	
  Intentionally
  Omitted

  	
   

  
	
  Section 7.24

  	
   

  	
  Intentionally
  Omitted

  	
   

  
	
  Section 7.25

  	
   

  	
  Solvency

  	
   

  
	
  Section 7.26

  	
   

  	
  Employee
  Matters

  	
   

  
	
  Section 7.27

  	
   

  	
  Insurance

  	
   

  
	
  Section 7.28

  	
   

  	
  Common
  Enterprise

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 8

  	
  AFFIRMATIVE
  COVENANTS

  	
   

  
	
  Section 8.1

  	
   

  	
  Reporting
  Requirements

  	
   

  
	
  Section 8.2

  	
   

  	
  Maintenance
  of Existence, Conduct of Business

  	
   

  
	
  Section 8.3

  	
   

  	
  Maintenance
  of Properties

  	
   

  
	
  Section 8.4

  	
   

  	
  Taxes and
  Claims

  	
   

  
	
  Section 8.5

  	
   

  	
  Insurance

  	
   

  
	
  Section 8.6

  	
   

  	
  Inspection
  Rights

  	
   

  
	
  Section 8.7

  	
   

  	
  Keeping Books
  and Records

  	
   

  
	
  Section 8.8

  	
   

  	
  Compliance
  with Laws

  	
   

  
	
  Section 8.9

  	
   

  	
  Compliance
  with Agreements

  	
   

  
	
  Section 8.10

  	
   

  	
  Further
  Assurances

  	
   

  
	
  Section 8.11

  	
   

  	
  ERISA; Plans

  	
   

  
	
  Section 8.12

  	
   

  	
  Trade
  Accounts Payable

  	
   

  
	
  Section 8.13

  	
   

  	
  No
  Consolidation

  	
   

  
	
  Section 8.14

  	
   

  	
  Payment on
  Obligations

  	
   

  
					

 

ii

 

	
  ARTICLE 9

  	
  NEGATIVE COVENANTS

  	
   

  
	
  Section 9.1

  	
   

  	
  Debt

  	
   

  
	
  Section 9.2

  	
   

  	
  Limitation on
  Liens

  	
   

  
	
  Section 9.3

  	
   

  	
  Mergers, Etc.

  	
   

  
	
  Section 9.4

  	
   

  	
  Restricted
  Payments

  	
   

  
	
  Section 9.5

  	
   

  	
  Investments

  	
   

  
	
  Section 9.6

  	
   

  	
  Limitation on
  Issuance of Capital Stock

  	
   

  
	
  Section 9.7

  	
   

  	
  Transactions
  With Affiliates

  	
   

  
	
  Section 9.8

  	
   

  	
  Disposition
  of Property

  	
   

  
	
  Section 9.9

  	
   

  	
  Sale and
  Leaseback

  	
   

  
	
  Section 9.10

  	
   

  	
  Lines of
  Business

  	
   

  
	
  Section 9.11

  	
   

  	
  Environmental
  Protection

  	
   

  
	
  Section 9.12

  	
   

  	
  Intercompany
  Transactions

  	
   

  
	
  Section 9.13

  	
   

  	
  Management
  Fees

  	
   

  
	
  Section 9.14

  	
   

  	
  Modification
  of Other Agreements

  	
   

  
	
  Section 9.15

  	
   

  	
  ERISA Plans

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 10

  	
  FINANCIAL
  COVENANTS

  	
   

  
	
  Section 10.1

  	
   

  	
  Consolidated
  Net Worth

  	
   

  
	
  Section 10.2

  	
   

  	
  Ratio of
  Funded Debt to EBITDA

  	
   

  
	
  Section 10.3

  	
   

  	
  Consolidated
  Fixed Charge Coverage Ratio

  	
   

  
	
  Section 10.4

  	
   

  	
  Capital
  Expenditures

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 11

  	
  DEFAULT

  	
   

  
	
  Section 11.1

  	
   

  	
  Events of
  Default

  	
   

  
	
  Section 11.2

  	
   

  	
  Remedies

  	
   

  
	
  Section 11.3

  	
   

  	
  Cash
  Collateral

  	
   

  
	
  Section 11.4

  	
   

  	
  Performance
  by the Administrative Agent

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 12

  	
  THE
  ADMINISTRATIVE AGENT

  	
   

  
	
  Section 12.1

  	
   

  	
  Appointment
  and Authorization of the Administrative Agent

  	
   

  
	
  Section 12.2

  	
   

  	
  Rights as a
  Lender

  	
   

  
	
  Section 12.3

  	
   

  	
  Exculpatory
  Provisions

  	
   

  
	
  Section 12.4

  	
   

  	
  Reliance by
  the Administrative Agent

  	
   

  
	
  Section 12.5

  	
   

  	
  Delegation
  of Duties

  	
   

  
	
  Section 12.6

  	
   

  	
  Resignation
  of the Administrative Agent

  	
   

  
	
  Section 12.7

  	
   

  	
  Non-Reliance
  on the Administrative Agent and Other Lenders

  	
   

  
	
  Section 12.8

  	
   

  	
  Other Agents

  	
   

  
	
  Section 12.9

  	
   

  	
  The
  Administrative Agent May File Proofs of Claim

  	
   

  
	
  Section 12.10

  	
   

  	
  Guaranty
  Matters

  	
   

  
	
  Section 12.11

  	
   

  	
  Collateral
  Matters

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 13

  	
  MISCELLANEOUS

  	
   

  
	
  Section 13.1

  	
   

  	
  Expenses;
  Indemnity; Damage Waiver

  	
   

  
	
  Section 13.2

  	
   

  	
  Intentionally
  Omitted

  	
   

  
	
  Section 13.3

  	
   

  	
  Intentionally
  Omitted

  	
   

  
	
  Section 13.4

  	
   

  	
  No Duty

  	
   

  
	
  Section 13.5

  	
   

  	
  No Fiduciary
  Relationship

  	
   

  
	
  Section 13.6

  	
   

  	
  Equitable
  Relief

  	
   

  
	
  Section 13.7

  	
   

  	
  No Waiver;
  Cumulative Remedies

  	
   

  
	
  Section 13.8

  	
   

  	
  Successors
  and Assigns

  	
   

  
					

 

iii

 

	
  Section 13.9

  	
   

  	
  Survival

  	
   

  
	
  Section 13.10

  	
   

  	
  ENTIRE
  AGREEMENT

  	
   

  
	
  Section 13.11

  	
   

  	
  Amendments

  	
   

  
	
  Section 13.12

  	
   

  	
  Maximum
  Interest Rate

  	
   

  
	
  Section 13.13

  	
   

  	
  Notices;
  Effectiveness; Electronic Communications

  	
   

  
	
  Section 13.14

  	
   

  	
  GOVERNING
  LAW; JURISDICTION; ETC.

  	
   

  
	
  Section 13.15

  	
   

  	
  Counterparts

  	
   

  
	
  Section 13.16

  	
   

  	
  Severability

  	
   

  
	
  Section 13.17

  	
   

  	
  Headings

  	
   

  
	
  Section 13.18

  	
   

  	
  Construction

  	
   

  
	
  Section 13.19

  	
   

  	
  Independence
  of Covenants

  	
   

  
	
  Section 13.20

  	
   

  	
  Confidentiality

  	
   

  
	
  Section 13.21

  	
   

  	
  WAIVER OF
  JURY TRIAL

  	
   

  
	
  Section 13.22

  	
   

  	
  Approvals
  and Consent

  	
   

  
	
  Section 13.23

  	
   

  	
  Agent for
  Services of Process

  	
   

  
	
  Section 13.24

  	
   

  	
  USA PATRIOT
  Act Notice

  	
   

  
	
  Section 13.25

  	
   

  	
  Restatement
  of Existing Agreement

  	
   

  
	
  Section 13.26

  	
   

  	
  Release of
  Liens

  	
   

  

 

iv

 

INDEX TO EXHIBITS

 

	
  Exhibit

  	
   

  	
  Description
  of Exhibit

  
	
   

  	
   

  	
   

  
	
  A

  	
   

  	
  Form of Assignment and Assumption

  
	
  B

  	
   

  	
  Form of Revolving Note

  
	
  C

  	
   

  	
  Form of Subordination Agreement

  
	
  D

  	
   

  	
  Form of Swingline Note

  
	
  E

  	
   

  	
  Form of Notice of Borrowings, Conversions,

  
	
   

  	
   

  	
  Continuations or Prepayments

  
	
  F

  	
   

  	
  Form of Compliance Certificate

  
	
  G

  	
   

  	
  Form of Amended and Restated Master Guaranty

  
	
  H

  	
   

  	
  Form of Joinder Agreement

  
	
  I

  	
   

  	
  Form of Extension Agreement

  

 

INDEX TO SCHEDULES

 

	
  Schedule

  	
   

  	
  Description
  of Schedule

  
	
   

  	
   

  	
   

  
	
  1.1

  	
   

  	
  Permitted Liens

  
	
  2.14

  	
   

  	
  Existing Letters of Credit

  
	
  7.6

  	
   

  	
  Litigation and Judgments

  
	
  7.10

  	
   

  	
  Existing Debt

  
	
  7.11

  	
   

  	
  Taxes

  
	
  7.13

  	
   

  	
  Plans

  
	
  7.15

  	
   

  	
  Subsidiaries; Inactive Subsidiaries

  
	
  7.26

  	
   

  	
  Employee Matters

  
	
  9.5

  	
   

  	
  Investments

  
	
  9.15

  	
   

  	
  ERISA Plans

  
	
  13.13

  	
   

  	
  Notices

  

 

v

 

AMENDED AND RESTATED CREDIT AGREEMENT

 

THIS AMENDED AND RESTATED
CREDIT AGREEMENT, dated as of September 29, 2005, is by and among
SOURCECORP, INCORPORATED (“SOURCECORP”),
a Delaware corporation, each of the banks or other lending institutions which
is a party hereto (as evidenced by the signature pages of this Agreement) or
which may from time to time become a party hereto or any successor or assignee
thereof (individually, a “Lender”
and, collectively, the “Lenders”),
BANK OF AMERICA, N.A., a national banking association, as administrative agent
for itself and the other Lenders (in such capacity, together with its
successors in such capacity, the “Administrative
Agent”), SUNTRUST BANK, as syndication agent, and JPMORGAN CHASE
BANK, N.A., as documentation agent.

 

RECITALS:

 

A.            SOURCECORP,
certain of the Lenders, certain other financial institutions, Bank of America,
N.A., as administrative agent, and certain other agents, have heretofore
entered into that certain Credit Agreement dated as of April 3, 2001 (as
heretofore amended or modified, the “Existing Credit Agreement”).

 

B.            SOURCECORP has
requested that the Existing Credit Agreement be amended and restated in its
entirety to, among other things, reduce the aggregate amount of the commitments
of the Lenders to $100,000,000, add an accordion feature in an amount up to
$50,000,000, and provide that Obligations shall be unsecured, and the Lenders,
the Administrative Agent and the other agents party hereto are willing to so
amend and restate the Existing Credit Agreement.

 

C.            The amendment
and restatement of the Existing Credit Agreement hereunder is not intended by
the parties to constitute either a novation or a discharge or satisfaction of
the indebtedness and obligations under the Existing Credit Agreement, which
indebtedness and obligations under the Existing Credit Agreement shall remain
outstanding hereunder on the terms and conditions hereinafter provided.

 

NOW, THEREFORE, in
consideration of the foregoing and the mutual covenants contained herein,
SOURCECORP, Bank of America, N.A. (in its capacity as the Administrative Agent
under this Agreement and the Existing Credit Agreement), and the Lenders agree
that, effective upon the Effective Date, the Existing Credit Agreement is
amended and restated in its entirety as follows:

 

ARTICLE 1

DEFINITIONS

 

Section 1.1            Definitions, etc.  As used in this Agreement, the following
terms shall have the following meanings:

 

“Accounting
Changes” means as
specified in Section 1.3(a).

 

“Acquisition” means any
transaction or series of related transactions for the purpose of or resulting,
directly or indirectly, in (a) the acquisition of all or substantially all of
the assets of a Person or of any business or division of a Person, (b) the
acquisition by a Person of 50% or more of the Capital Stock of any Person or
otherwise causing any Person to become a Subsidiary of the acquiring Person, or
(c) a merger, consolidation, amalgamation or any other combination of a Person
with another Person.

 

“Additional Costs” means as
specified in Section 4.1(a).

 

1

 

“Administrative
Agent” means as
specified in the initial paragraph of this Agreement.

 

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

 

“Affiliate” means, as to
any Person, any other Person (a) that directly or indirectly, through one or
more intermediaries, controls or is controlled by, or is under common control
with, such Person; (b) that directly or indirectly beneficially owns or holds
fifty percent or more of any class of voting Capital Stock of such Person; or
(c) fifty percent or more of the voting Capital Stock of which is directly or
indirectly beneficially owned or held by the Person in question.  The term “control”
means the possession, directly or indirectly, of the power to direct or cause
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise; provided, however,
in no event shall the Administrative Agent, the Lead Arranger or any Lender be
deemed an Affiliate of SOURCECORP or any of its Subsidiaries.

 

“Agent Party” means as
specified in Section 13.13(c).

 

“Agreement” means this
Amended and Restated Credit Agreement and any and all amendments, modifications,
supplements, renewals, extensions or restatements hereof.

 

“Applicable
Lending Office” means for each
Lender and each Type of Loan, the office of such Lender (or an Affiliate of
such Lender) from time to time designated by such Lender to SOURCECORP and the
Administrative Agent as the lending office by which its Loans of such Type are
to be made and maintained.

 

“Applicable Margin” means, with
respect to any period and with respect to Base Rate Loans, Eurodollar Loans,
Letter of Credit Fees and Commitment Fees, the percentage set forth in the
table below that corresponds to the ratio of (a) Funded Debt as of the date of
the relevant financial statements referred to below to (b) EBITDA for the four
fiscal quarters of SOURCECORP then most recently ended as of the date of such
financial statements, calculated in accordance with Section 1.4:

 

	
   

  	
   

  	
  Applicable
  Margins For

  	
   

  
	
  Funded Debt to EBITDA Ratio

  	
   

  	
  Eurodollar

  Loans and

  Letters of

  Credit Fees

  	
   

  	
  Base
  Rate Loans

  	
   

  	
  Commitment
  Fee

  	
   

  
	
  Greater than 2.50 to 1.00

  	
   

  	
  1.000

  	
  %

  	
  0

  	
  %

  	
  0.200

  	
  %

  
	
  Greater than 2.00 to 1.00 but less than or equal to 2.50 to 1.00

  	
   

  	
  .875

  	
  %

  	
  0

  	
  %

  	
  0.175

  	
  %

  
	
  Less than or equal to 2.00 to 1.00

  	
   

  	
  .750

  	
  %

  	
  0

  	
  %

  	
  0.150

  	
  %

  

 

For purposes hereof and
notwithstanding the preceding sentence, the Applicable Margin for the period
from the Effective Date to the first Calculation Date thereafter shall be
deemed to be 0.750% for Eurodollar Loans and Letter of Credit Fees, 0% for Base
Rate Loans and 0.150% for Commitment Fees and shall thereafter be calculated on
each Calculation Date based upon the preceding table and the financial
statements delivered by SOURCECORP pursuant to Section 8.1(b) and the certificate
delivered by SOURCECORP pursuant to Section 8.1(c); provided, that if
SOURCECORP fails to deliver to the Administrative Agent such financial
statements or certificate on or before the relevant Calculation Date, the
Applicable Margin shall be deemed to be the percentage reflected in the
preceding table as if the ratio of Funded Debt to EBITDA were greater than 2.50
to 1.00 until the date such statements and certificate

 

2

 

are received by the
Administrative Agent, after which the Applicable Margin shall be determined as
otherwise provided herein.

 

“Asset Disposition” means the
disposition of any or all of the Property (other than the grant of a Lien as
security) of SOURCECORP or any of its Subsidiaries, whether by sale, lease,
transfer, assignment, condemnation or otherwise, but excluding any involuntary
disposition resulting from casualty damage to or condemnation of Property.

 

“Assignment and
Assumption” means an
assignment and assumption entered into by a Lender and its Eligible Assignee
(with the consent of any party whose consent is required by Section 13.8(b)),
and accepted by the Administrative Agent, in substantially the form of Exhibit A hereto or
any other form approved by the Administrative Agent.

 

“Auto-Extension Letter of Credit” means as
specified in Section 2.14(b).

 

“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 Loans” means Loans
that bear interest at rates based upon the Base Rate.

 

“Bank of America” means Bank of
America, N.A., a national banking association.

 

“Bankruptcy Code” means as
specified in Section 11.1(e).

 

“Basle Accord” means the
proposals for risk-based capital framework described by the Basle Committee on
Banking Regulations and Supervisory Practices in its paper entitled “International Convergence of Capital Measurement
and Capital Standards” dated July 1988, as amended,
supplemented and otherwise modified and in effect from time to time, or any
replacement thereof.

 

“Borrower Materials” means as
specified at the end of Section 8.1.

 

“Business Day” means (a) any
day on which commercial banks are not authorized or required to close in New
York, New York, Dallas, Texas or Charlotte, North Carolina, and (b) with
respect to all borrowings, payments, Conversions, Continuations, Interest
Periods and notices in connection with Eurodollar Loans, any day which is a
Business Day described in clause (a)
above and which is also a day on which dealings in Dollar deposits are carried
out in the London interbank market.

 

“Calculation Date” means the date
occurring each quarter during the term of this Agreement which is 15 days after
the date upon which quarterly financial statements of SOURCECORP and its
consolidated Subsidiaries are required by Section 8.1(b) to be delivered to the
Administrative Agent (or, if such date is not a Business Day, the next
succeeding Business Day).

 

“Capital
Expenditures” means, for any
period, expenditures (including the aggregate amount of Capital Lease
Obligations incurred during such period) made by SOURCECORP or any of its
consolidated Subsidiaries to acquire or construct fixed assets, plant or
equipment (including renewals,

 

3

 

improvements or
replacements, but excluding repairs) during such period and which, in
accordance with GAAP, are classified as capital expenditures, exclusive of any
expenditures for Acquisitions.

 

“Capital Lease
Obligations” means, as to
any Person, the obligations of such Person to pay rent or other amounts under a
lease of (or other agreement conveying the right to use) real and/or personal
Property, which obligations are classified as a capital lease on a balance
sheet of such Person under GAAP.  For
purposes of this Agreement, the amount of such Capital Lease Obligations shall
be the capitalized amount thereof, determined in accordance with GAAP.

 

“Capital Stock” means
corporate stock and any and all shares, partnership interests, limited
partnership interests, limited liability company interests, membership
interests, equity interests, participations, rights or other equivalents
(however designated) of corporate stock or any of the foregoing issued by any
entity (whether a corporation, a partnership or another entity).

 

“Change of Control” means the
existence or occurrence of any of the following after the Closing Date: (a) any
Person or two or more Persons acting as a group (as defined in
Section 13d-3 of the Securities Exchange Act of 1934) shall have acquired
beneficial ownership (within the meaning of Rule 13d-3 of the Securities
and Exchange Commission under the Securities Exchange Act of 1934) of 30% or
more of the outstanding shares of voting stock of SOURCECORP; (b) individuals
who, as of the Closing Date, constitute the Board of Directors of SOURCECORP
(the “SOURCECORP Incumbent Board”) cease
for any reason to constitute at least a majority of the Board of Directors of
SOURCECORP; provided, however, that any individual becoming a
director of SOURCECORP subsequent to the Closing Date whose election, or
nomination for election by SOURCECORP’s shareholders was approved by a vote of
at least a majority of the directors then comprising the SOURCECORP Incumbent
Board shall be considered as though such individual were a member of the
SOURCECORP Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of either an
actual or threatened election contest (as such terms are used in
Rule 14a-11 of Regulation 14A promulgated under the Securities Exchange
Act of 1934) or other actual or threatened solicitation of proxies or contest
by or on behalf of a Person other than the Board of Directors of SOURCECORP; or
(c) any individual(s) or entity(s) acting in concert shall have acquired
by contract or otherwise, the power to exercise, directly or indirectly,
control over the management or policies of SOURCECORP, or control over the
equity securities of SOURCECORP entitled to vote for members of the Board of
Directors of SOURCECORP on a fully-diluted basis (and taking into account all
such securities that such 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 September 29,
2005, the date of this Agreement.

 

“Code” means the
Internal Revenue Code of 1986, as amended, and the regulations promulgated and
rulings issued thereunder.

 

“Commitment” means, as to
any Lender, the obligation of such Lender to make or continue Revolving Loans
and incur or participate in Letter of Credit Liabilities and Swingline Advances
hereunder in an aggregate principal amount at any one time outstanding up to
but not exceeding the amount set forth opposite the name of such Lender on the
signature pages hereto under the heading “Commitment”
or, if such Lender is a party to an Assignment and Assumption, the amount set
forth in the most recent Assignment and Assumption of such Lender, as the same
may be increased pursuant to Section 2.16 or reduced or terminated pursuant to Section 2.13 or 11.2, and “Commitments” means such obligations
of all Lenders.  As of the Closing Date,
the aggregate principal amount of the Commitments is $100,000,000.

 

4

 

“Commitment Fees” means as
specified in Section 2.11.

 

“Commitment
Percentage” means, as to
any Lender, the percentage equivalent of a fraction, the numerator of which is
the amount of the Commitment of such Lender, and the denominator of which is
the aggregate amount of the Commitments of all of the Lenders, as adjusted from
time to time in accordance with Sections 2.16 or 13.8. 
If the Commitment of each Lender to make Loans and the obligation of the
Issuing Bank to issue Letters of Credit have been terminated pursuant to Section 11.2 or
if the Commitments of all the Lenders have expired, then the Commitment
Percentage of each Lender shall be determined based on the Commitment
Percentage of such Lender most recently in effect, giving effect to any
subsequent assignments.

 

“Consolidated
Fixed Charge Coverage Ratio” means, for any
period, the ratio of (a)(i) EBITDAR of SOURCECORP and its consolidated
Subsidiaries for such period, minus (ii) Maintenance Capital
Expenditures made by SOURCECORP and its consolidated Subsidiaries during such
period, minus (iii) taxes of SOURCECORP and its consolidated
Subsidiaries paid or payable in cash during such period, to (b) the Fixed
Charges of SOURCECORP and its consolidated Subsidiaries for such period.  In determining the Consolidated Fixed Charge
Coverage Ratio for SOURCECORP and its consolidated Subsidiaries, “EBITDAR” and “Fixed Charges”
shall be calculated after giving effect to Permitted Acquisitions and Asset
Dispositions made during such period and permitted by Sections 9.8.(d), 9.8(e)
and 9.8(g)
as if such transactions had occurred on the first day of such period,
regardless of whether the effect is positive or negative.

 

“Consolidated Net
Income” means, for any
period, the net income (or loss) of SOURCECORP and its Subsidiaries (or other
applicable Person) for such period, determined on a consolidated basis in
accordance with GAAP.

 

“Consolidated Net
Worth” means, at any
particular time, all amounts which, in conformity with GAAP, would be included
as stockholders’ equity on a consolidated balance sheet of SOURCECORP and its
Subsidiaries.

 

“Continue”, “Continuation” and “Continued” shall refer to the
continuation pursuant to Section 2.6
of a Eurodollar Loan as a Eurodollar Loan of the same Type from one Interest
Period to the next Interest Period.

 

“Continuing Lenders” means as
specified in Section 13.25.

 

“Contract Rate” means as
specified in Section 13.12(a).

 

“Convert”, “Conversion” and “Converted”
shall refer to a conversion pursuant to Section 2.6 or Article 4 of one
Type of Loan into the other Type of Loan.

 

“Currency Hedge
Agreement” means any
currency hedge or exchange agreement, option or futures contract or other
agreement intended to protect against or manage a Person’s exposure to
fluctuations in currency exchange rates.

 

“Current Date” means a date
occurring no more than 30 days prior to the Closing Date or such earlier date
which is reasonably acceptable to the Administrative Agent.

 

“Debt” means as to
any Person at any time (without duplication): (a) all indebtedness, liabilities
and obligations of such Person for borrowed money, (b) all indebtedness,
liabilities and obligations of such Person evidenced by bonds, notes,
debentures, or other similar instruments, (c) all indebtedness,

 

5

 

liabilities and obligations
of such Person to pay the deferred purchase price of Property or services,
except trade accounts payable of such Person arising in the ordinary course of
business that are not past due by more than 120 days, and excluding Seller Earn
Out which is contingent, (d) all Capital Lease Obligations of such Person, (e)
all asset securitizations programs and any other off balance sheet financings,
(f) all Debt of others Guaranteed by such Person, (g) all indebtedness,
liabilities and obligations secured by a Lien existing on Property owned by
such Person, whether or not the indebtedness, liabilities or obligations
secured thereby have been assumed by such Person or are non-recourse to such
Person, (h) all reimbursement obligations of such Person (whether contingent or
otherwise) in respect of letters of credit, bankers’ acceptances, surety or
other bonds and similar instruments, (i) all indebtedness, liabilities and
obligations of such Person to redeem or retire shares of Capital Stock of such
Person, and (j) all indebtedness, liabilities and obligations of such Person
under Interest Rate Protection Agreements or Currency Hedge Agreements.

 

“Default” means an Event
of Default or the occurrence of an event or condition which with notice or
lapse of time or both would become an Event of Default.

 

“Default Rate” means, (a) in
respect of any principal of any Loan or any Reimbursement Obligation at all
times during which an Event of Default has occurred and is continuing, and (b)
in respect of any principal of any Loan, any Reimbursement Obligation or any
other amount payable by SOURCECORP under this Agreement or any other Loan
Document which is not paid when due (whether at stated maturity, by
acceleration or otherwise), a rate per annum during the period of such Event of
Default or during the period commencing on the due date until such amount is
paid in full, respectively, equal to the lesser of (i) the sum of two percent
(2%) plus the Base Rate as in effect from time to time plus the
Applicable Margin for Base Rate Loans for the applicable period or (ii) the
Maximum Rate; provided, however, that with respect to a
Eurodollar Loan (for so long as it is a Eurodollar Loan), the “Default Rate” shall be the lesser of
(A) two percent (2%) plus the interest rate for such Eurodollar Loan for
such Interest Period as provided in Section 2.4(a)(ii) hereof or (B) the
Maximum Rate, and, thereafter, the rate provided for above in this
definition; provided, also, that with respect to Letter of Credit Fees,
the “Default Rate” shall be the lesser of
(A) two percent (2%) plus the Applicable Margin for Letter of Credit
Fees or (B) the Maximum Rate.

 

“Deposit Account” means a
deposit account maintained by SOURCECORP with a bank selected by SOURCECORP and
reasonably acceptable to the Administrative Agent.

 

“Documentation
Agent” means JPMorgan
Chase Bank, N.A., in its capacity as documentation agent.

 

“Dollars” and “$” mean lawful money of the U.S.

 

“Domestic
Subsidiary” means any
Subsidiary of SOURCECORP which is organized under the laws of the United States
or one of the States thereof.

 

“EBITDA” means, for any
period, without duplication, the sum of the following for SOURCECORP and its
Subsidiaries (or other applicable Person) for such period determined on a
consolidated basis in accordance with GAAP: (a) Consolidated Net Income, plus
(b) Interest Expense, plus (c) income and franchise taxes to the extent
deducted in determining Consolidated Net Income, plus (d) depreciation
and amortization expense and other non-cash, non-tax items to the extent
deducted in determining Consolidated Net Income, plus (e) the Subject
Seller Earn Outs paid in cash during such period to the extent deducted in
determining Consolidated Net Income, minus (f) non-cash income to the
extent included in determining Consolidated Net Income, minus (g) any
cash payments received as the result of any claim or cause of action arising
out of the payment of the Subject Seller Earn Outs, whether

 

6

 

under any insurance policy,
through litigation or negotiated settlement, or otherwise, to the extent
included in determining Consolidated Net Income; provided, however,
in determining the “Funded Debt to EBITDA Ratio”
for any period, “EBITDA” shall be calculated by
giving effect to Permitted Acquisitions and Asset Dispositions made during such
period and permitted by Sections 9.8(d),
9.8(e) and 9.8(g)
as if such transactions had occurred on the first day of such period,
regardless of whether the effect is positive or negative; provided, further,
the aggregate amount of EBITDA of all Persons or assets so acquired and
included for which the most recent fiscal year end cash flow has not been
audited by independent certified public accountants of recognized standing
acceptable to the Administrative Agent shall be limited to 15% of the EBITDA of
SOURCECORP and its consolidated Subsidiaries for such period.

 

“EBITDAR” means, for any
period, without duplication, the sum of the following for SOURCECORP and its
Subsidiaries (or other applicable Person) for such period determined on a
consolidated basis in accordance with GAAP: 
(a) EBITDA plus (b) Rental Expense.

 

“Effective Date” means the date
upon which all conditions precedent to the obligations of the Lenders to make
Loans and to issue Letters of Credit hereunder as specified in Article 6 hereof
have been satisfied.

 

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

 

“Environmental Law” means any
federal, state, local or foreign law, statute, code or ordinance, principle of
common law, rule or regulation, as well as any Permit, order, decree, judgment
or injunction issued, promulgated, approved or entered thereunder, relating to
pollution or the protection, cleanup or restoration of the environment or
natural resources, or to the public health or safety, or otherwise governing
the generation, use, handling, collection, treatment, storage, transportation,
recovery, recycling, discharge or disposal of Hazardous Materials, including,
without limitation as to U.S. laws, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. Section 9601 et seq.,
the Superfund Amendment and Reauthorization Act of 1986, 99-499, 100 Stat.
1613, the Resource Conservation and Recovery Act of 1976, 42 U. S. C.
Section 6901 et seq., the Occupational Safety and Health Act, 29 U
S.C. Section 651 et seq., the Clean Air Act, 42 U.S.C.
Section 7401 et seq., the Clean Water Act, 33 U. S. C.
Section 1251 et seq., the Emergency Planning and Community Right to
Know Act, 42 U. S. C. Section 11001 et seq., the Federal
Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. Section 136 et seq.,
and the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq.,
and any state or local counterparts.

 

“Environmental
Liabilities” means, as to
any Person, all liabilities, obligations, responsibilities, Remedial Actions,
losses, damages, punitive damages, consequential damages, treble damages, costs
and expenses (including, without limitation, all reasonable fees, disbursements
and expenses of counsel, expert and consulting fees and costs of investigation
and feasibility studies), fines, penalties, sanctions and interest incurred as
a result of any claim or demand, by any Person, whether based in contract,
tort, implied or express warranty, strict liability or criminal, penal or civil
statute, including, without limitation, any Environmental Law, Permit, order or
agreement with any Governmental Authority or other Person, arising from
environmental, health or safety conditions or the Release or threatened Release
of a Hazardous Material into the environment.

 

7

 

“Equity Issuance” means any
issuance by SOURCECORP or any Subsidiary of SOURCECORP of any Capital Stock of
SOURCECORP or such Subsidiary, respectively.

 

“ERISA” means the Employee
Retirement Income Security Act of 1974, as amended from time to time, and the
regulations and published interpretations thereunder.

 

“ERISA Affiliate” means any
corporation or trade or business which is a member of a group of entities,
organizations or employers of which a Loan Party is also a member and which is
treated as a single employer within the meaning of Sections 414(b), (c),
(m) or (o) of the Code.

 

“Eurocurrency
Liabilities” means as specified in Section 4.7.

 

“Eurodollar Daily
Floating Rate” means, for any
day, the fluctuating rate of interest equal to the Eurodollar Rate (for a one
month Interest Period) on the second preceding Business Day, as adjusted on a
daily basis for as long as the Swingline Advance to which such rate relates is
outstanding and as adjusted from time to time by the Administrative Agent in
good faith for then-applicable reserve requirements, deposits insurance
assessment rates and other regulatory costs.

 

“Eurodollar Loans” means Loans
that bear interest at rates based upon the Eurodollar Rate.

 

“Eurodollar Rate” means, for any
Interest Period with respect to a Eurodollar Loan, 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 the 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 Rate”
for such Interest Period shall be the rate per annum determined by the
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 Loan being made, continued or converted by Bank of
America and with a term equivalent to such Interest Period would be offered by
Bank of America’s London Branch to major banks in the London interbank
eurodollar market at their request at approximately 11:00 a.m. (London time)
two Business Days prior to the commencement of such Interest Period.

 

“Event of Default” means as
specified in Section 11.1.

 

“Existing Credit
Agreement” means as
specified in the Recitals hereof.

 

“Existing Letters
of Credit” means the
outstanding letters of credit identified on Schedule 2.14.

 

“Extension Agreement” means an agreement
in substantially the form of Exhibit I pursuant to which SOURCECORP, the
Administrative Agent, and one or more Lenders agree to extend the Maturity Date
in accordance with the terms of Section 2.1(d).

 

“Federal Funds
Rate” means, for any
day, the rate per annum equal to the weighted average of the rates on overnight
Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers on such day, as published by the Federal Reserve Bank
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,

 

8

 

if necessary, to a whole
multiple of 1/100 of 1%) charged to Bank of America on such day on such
transactions as determined by the Administrative Agent.

 

“Fee Letter” means the
letter dated as of August 18, 2005 among SOURCECORP, the Administrative
Agent and the Lead Arranger.

 

“Fixed Charges” means, for any
period, the sum of (a) cash Interest Expense of SOURCECORP and its Subsidiaries
during such period, plus (b) all scheduled payments (as such scheduled
payments are reduced by application of any prepayments) of principal with
respect to the Loans and other outstanding Debt during such period, plus
(c) Rental Expense of SOURCECORP and its Subsidiaries during such period.

 

“Foreign Debt and
Investment” means as
specified in Section 9.1(f).

 

“Foreign
Subsidiary” means any
Subsidiary of SOURCECORP that is organized under the laws of a country or
province other than the United States or a State thereof.

 

“Funded Debt” means, at any
particular time, the sum, without duplication, of (a) the aggregate principal
amount of all Debt for borrowed money of SOURCECORP and its Subsidiaries
outstanding, determined on a consolidated basis, plus (b) the aggregate
principal amount of all Debt of SOURCECORP and its Subsidiaries outstanding,
determined on a consolidated basis, secured by any Lien on any Property of
SOURCECORP or any of its Subsidiaries (including, without limitation, all
recourse and non-recourse Capital Lease Obligations), plus (c) the
aggregate principal amount of all Debt Guaranteed by SOURCECORP and its
Subsidiaries outstanding, determined on a consolidated basis.

 

“Funded Debt to
EBITDA Ratio” means as
specified in Section 10.2.

 

“GAAP” means
generally accepted accounting principles, applied on a consistent basis, as set
forth in Opinions of the Accounting Principles Board of the American Institute
of Certified Public Accountants and/or in statements of the Financial
Accounting Standards Board and/or their respective successors and which are
applicable in the circumstances as of the date in question.  Accounting principles are applied on a “consistent basis” when the
accounting principles applied in a current period are comparable in all
material respects to those accounting principles applied in a preceding period.

 

“Governmental
Authority” means any
nation or government, any state, provincial or political subdivision thereof
and any entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.

 

“Governmental
Requirement” means any law,
statute, code, ordinance, order, rule, regulation, judgment, decree,
injunction, franchise, Permit, certificate, license, authorization or other
directive or requirement of any federal, state, county, municipal, parish,
provincial or other Governmental Authority or any department, commission,
board, court, agency or any other instrumentality of any of them.

 

“Guarantee” by any Person
means any obligation, contingent or otherwise, of such Person directly or
indirectly guaranteeing any Debt or other obligation of any other Person and,
without limiting the generality of the foregoing, any obligation, direct or
indirect, contingent or otherwise, of such Person (a) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Debt or other
obligation (whether arising by virtue of partnership arrangements, by agreement
to keep-well, to purchase assets, goods, securities or services, to take-or-pay
or to maintain financial statement conditions or otherwise) or (b) entered into
for the purpose of assuring in any other manner the obligee of such Debt or
other obligation as to the payment thereof or to protect the obligee against
loss in respect thereof (in

 

9

 

whole or in part), provided
that the term Guarantee shall not include endorsements for collection or deposit
in the ordinary course of business.  The
term “Guarantee” used as a verb has a
corresponding meaning.  The amount of any
Guarantee shall be deemed to be an amount equal to the stated or determinable
amount of the primary obligation in respect of which such Guarantee is made or,
if not stated or determinable, the maximum anticipated liability in respect
thereof (assuming such Person is required to perform thereunder).

 

“Guarantor” means any
Domestic Subsidiary of SOURCECORP or any other Loan Party that has executed the
Master Guaranty or a Joinder Agreement thereto.

 

“Hazardous
Material” means any
substance, product, liquid, waste, pollutant, chemical, contaminant,
insecticide, pesticide, gaseous or solid matter, organic or inorganic matter,
fuel, micro-organisms, ray, odor, radiation, energy, vector, plasma,
constituent or material which (a) is or becomes listed, regulated or addressed
under any Environmental Law or (b) is, or is deemed to be, alone or in any
combination, hazardous, hazardous waste, toxic, a pollutant, a deleterious
substance, a contaminant or a source of pollution or contamination under any
Environmental Law, including, without limitation, asbestos, petroleum,
underground storage tanks (whether empty or containing any substance) and polychlorinated
biphenyls.

 

“Honor Date” means as
specified in Section 2.14(c)(i).

 

“Inactive Subsidiary” means any
Domestic Subsidiary of SOURCECORP that, if it was a Loan Party, would not be a
Material Loan Party and that, as of any date of determination, conducts no
material business operations and does not intend, within the next six-month
period, to conduct any material business operations.

 

“Increase Effective Date” means as
specified in Section 2.16.

 

“Indemnitee” means as
specified in Section 13.1.

 

“Information” means as
specified in Section 13.20.

 

“Intellectual
Property” means any U.S.
or foreign patents, patent applications, trademarks, trade names, service
marks, brand names, logos and other trade designations (including unregistered
names and marks), trademark and service mark registrations and applications,
copyrights and copyright registrations and applications, inventions, invention
disclosures, protected formulae, formulations, processes, methods, trade
secrets, computer software, computer programs and source codes, manufacturing
research and similar technical information, engineering know-how, customer and
supplier information, assembly and test data drawings or royalty rights.

 

“Intercompany Debt” means as
specified in Section 9.1(f).

 

“Interest Expense” means, for any
period and for any Person, the sum of (a) interest expense of such Person
calculated without duplication on a consolidated basis for such period in
accordance with GAAP, plus (b) expenses paid under Interest Rate
Protection Agreements and Currency Hedge Agreements during such period, minus
(c) payments received under Interest Rate Protection Agreements and Currency
Hedge Agreements during such period.

 

“Interest Period” means, with
respect to any Eurodollar Loan (other than a Swingline Advance), each period
commencing on the date such Loan is made or Converted from a Base Rate Loan or
(if Continued) the last day of the next preceding Interest Period with respect
to such Loan, and ending on the

 

10

 

numerically corresponding
day in the first, second, third or sixth calendar month thereafter, as
SOURCECORP may select as provided in Section 2.9 hereof, except that each
such Interest Period which commences on the last Business Day of a calendar
month (or on any day for which there is no numerically corresponding day in the
appropriate subsequent calendar month) shall end on the last Business Day of
the appropriate subsequent calendar month. 
Notwithstanding the foregoing: (a) each Interest Period which would
otherwise end on a day which is not a Business Day shall end on the next
succeeding Business Day (or, if such succeeding Business Day falls in the next
succeeding calendar month, on the next preceding Business Day); (b) any
Interest Period which would otherwise extend beyond the Maturity Date shall end
on the Maturity Date; (c) no more than seven (7) Interest Periods for
Eurodollar Loans (other than Swingline Advances) shall be in effect at the same
time; (d) no Interest Period shall have a duration of less than one month and,
if the Interest Period for any Eurodollar Loans would otherwise be a shorter
period, such Loans shall not be available hereunder; (e) no Interest Period
shall have a duration of more than six months; and (f) no Interest Period for a
Loan may commence before and end after any principal repayment date unless,
after giving effect thereto, the aggregate principal amount of the Eurodollar
Loans having Interest Periods that end after such principal payment date shall
be equal to or less than the amount of the Loans scheduled to be outstanding
hereunder after such principal payment date. 
The permitted length of Interest Periods will not limit the terms of any
Interest Rate Protection Agreement.

 

“Interest Rate
Protection Agreements” means, with
respect to SOURCECORP or any Subsidiary of SOURCECORP, an interest rate swap,
cap or collar agreement or similar arrangement between SOURCECORP or any
Subsidiary of SOURCECORP and one or more of the Lenders that are parties to
this Agreement, Affiliates of such Lenders or other entities that would qualify
as “Eligible Assignees” under this
Agreement, providing for the transfer or mitigation of interest rate risks
either generally or under specified contingencies.

 

“Inventory” means all inventory
now owned or hereafter acquired by SOURCECORP or any of its Subsidiaries
wherever located and whether or not in transit, which is or may at any time be
held for sale or lease, or furnished under any contract for service or held as
raw materials, work in process, or supplies or materials used or consumed in
the business of SOURCECORP or any of its Subsidiaries.

 

“Investments” means as
specified in Section 9.5.

 

“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).

 

“Issuing Bank” means Bank of
America.

 

“Joinder Agreement” means an
agreement executed by a Domestic Subsidiary of SOURCECORP adding it as a party
to the Master Guaranty, in substantially the form of Exhibit H, as the
same may be amended or otherwise modified with the consent of SOURCECORP.

 

“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.

 

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

 

“Lender” and “Lenders” means as specified in the
initial paragraph of this Agreement, and, as the context requires, includes the
Swingline Lender. 

 

11

 

“Letter of Credit” means any
standby letter of credit (including the Existing Letters of Credit) issued or
deemed issued by the Issuing Bank for the account of SOURCECORP (or any of its
Subsidiaries) pursuant to this Agreement (which letter of credit shall be
irrevocable unless otherwise agreed by the Issuing Bank and SOURCECORP).

 

“Letter of Credit
Application” means, with
respect to each Letter of Credit to be issued by the Issuing Bank therefor, the
letter of credit application and reimbursement agreement, which such Issuing
Bank requires to be executed by the account party or parties in connection with
the issuance of such Letter of Credit.

 

“Letter of Credit
Expiration Date” means the day
that is ten days prior to the Maturity Date then in effect.

 

“Letter of Credit Fee” means as
specified in Section 2.14(i).

 

“Letter of Credit Liabilities” 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.
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 1.5.  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.

 

“Lien” means any
lien, mortgage, security interest, tax lien, financing statement, pledge,
charge, hypothecation or other encumbrance of any kind or nature whatsoever
(including, without limitation, any conditional sale or title retention
agreement), whether arising by contract, operation of law or otherwise.

 

“Lien Releases” means as
specified in Section 13.26.

 

“Loan” means an
extension of credit by a Lender in the form of a Revolving Loan pursuant to Section 2.1(a)
or in the form of a Swingline Advance pursuant to Section 2.15.

 

“Loan Documents” means this
Agreement, the Notes, the Master Guaranty, the Fee Letter, the Letters of
Credit, the Letter of Credit Applications, any Interest Rate Protection
Agreement or Currency Hedge Agreement between SOURCECORP or any Subsidiary of
SOURCECORP and any Lender or any Affiliate of any Lender, any Subordination
Agreements, and all other agreements, documents and instruments now or
hereafter executed and/or delivered pursuant to or in connection with any of
the foregoing, and any and all amendments, modifications, supplements,
renewals, extensions or restatements thereof.

 

“Loan Party” means
SOURCECORP, each Guarantor and any other Person who is or becomes a party to
any agreement, document or instrument that Guarantees payment or performance of
the Obligations or any part thereof.

 

“Maintenance
Capital Expenditures” means, for any
period and for any Person and its Subsidiaries, the amount of depreciation
expense on the tangible assets of such Persons (not including any amortization
of goodwill or other non-tangible assets) determined on a consolidated basis in
accordance with GAAP.

 

“Master Guaranty” means the
amended and restated master guaranty of the Guarantors in favor of the
Administrative Agent, for the benefit of the Administrative Agent and the
Lenders, in substantially

 

12

 

the form of Exhibit G, as the
same may be modified pursuant to one or more Joinder Agreements and as the same
may be otherwise modified from time to time.

 

“Material Adverse
Effect” means any
material adverse effect, or the occurrence of any event or the existence of any
condition that could reasonably be expected to have a material adverse effect,
on (a) the business or financial condition or performance of SOURCECORP and its
Subsidiaries, taken as a whole, (b) the ability of SOURCECORP to pay and perform
the Obligations when due, or (c) the validity or enforceability of (i) the Loan
Documents, taken as a whole, or (ii) the rights and remedies of the
Administrative Agent or the Lenders under the Loan Documents, taken as a whole.

 

“Material
Contracts” means, as to
any Person, any supply, purchase, service, employment, tax, indemnity,
shareholder or other agreement or contract for which the aggregate amount or
value of services performed or to be performed for or by, or funds or other
Property transferred or to be transferred to or by, such Person or any of its
Subsidiaries party to such agreement or contract, or by which such Person or
any of its Subsidiaries or any of their respective Properties are otherwise
bound, during any fiscal year of the Person exceeds $5,000,000 as of the
Closing Date with respect to expenditures required by such Person, or
$10,000,000 as of the Closing Date with respect to revenues which the other
party to the contract is required to pay to such Person, and any and all
amendments, modifications, supplements, renewals or restatements thereof.

 

“Material Loan Party” means, as of
any date of determination, SOURCECORP and any Guarantor that, either alone or
together with its Subsidiaries on a consolidated basis, (a) has total tangible assets
of at least $15,000,000, (b) has a net worth of at least $15,000,000, or (c)
had revenues of at least $15,000,000 for the four fiscal quarter period most
recently ended.

 

“Maturity Date” means
September  29, 2008, as such date may be extended from time to time
pursuant to Section 2.1(d),
or if such date is not a Business Day, the next succeeding Business Day.

 

“Maximum Foreign
Amount” means as
specified in Section 9.1(f).

 

“Maximum Rate” means, with
respect to any Lender, the maximum non-usurious interest rate (or, if the
context so permits or requires, an amount of interest calculated at such rate),
if any, that at any time or from time to time may be contracted for, taken,
reserved, charged or received with respect to the particular Obligations as to
which such rate is to be determined, payable to such Lender pursuant to this
Agreement or any other Loan Document, under laws applicable to such Lender
which are presently in effect or, to the extent allowed by law, under such
applicable laws which may hereafter be in effect and which allow a higher
maximum non-usurious interest rate than applicable laws now allow.  The Maximum Rate shall be calculated in a
manner that takes into account any and all fees, payments and other charges in
respect of the Loan Documents that constitute interest under applicable
law.  Each change in any interest rate
provided for herein based upon the Maximum Rate resulting from a change in the
Maximum Rate shall take effect without notice to SOURCECORP at the time of such
change in the Maximum Rate.  For purposes
of determining the Maximum Rate under Texas law to the extent applicable, if at
all, the applicable rate ceiling shall be the indicated rate ceiling described
in, and computed in accordance with, the Texas Finance Code.

 

“Multiemployer
Plan” means a
multiemployer plan defined as such in Section 3(37) of ERISA to which
contributions have been made by or are required from any Loan Party or any
ERISA Affiliate since 1974 and which is covered by Title IV of ERISA.

 

“Net Proceeds” means, with
respect to any Equity Issuance, (a) the gross amount of cash or other
consideration received from such Equity Issuance, minus (b) the
reasonable out-of-pocket costs and

 

13

 

expenses incurred by the
issuer in connection with such Equity Issuance (including reasonable
underwriting fees paid to a Person other than an Affiliate of SOURCECORP),
excluding any fees or expenses paid to an Affiliate of SOURCECORP.

 

“Non-Continuing
Lender” means as specified
in Section 13.25.

 

“Non-Extension Notice Date” means as
specified in Section 2.14.

 

“Nonconsenting
Lender” means as
specified in Section 13.11.

 

“Notes” means the
promissory notes made by SOURCECORP evidencing the Revolving Loans in the form
of Exhibit B
or, as to the Swingline Advances, in the form of Exhibit D hereto.

 

“Obligations” means any and
all (a) indebtedness, liabilities and obligations of the Loan Parties, or any
of them, to the Administrative Agent, the Lead Arranger, the Issuing Bank and
the Lenders, or any of them, evidenced by and/or arising pursuant to any of the
Loan Documents, now existing or hereafter arising, whether direct, indirect,
related, unrelated, fixed, contingent, liquidated, unliquidated, joint, several
or joint and several, including, without limitation, (i) the obligations of the
Loan Parties to repay the Loans and the Reimbursement Obligations, to pay
interest on the Loans and the Reimbursement Obligations (including, without
limitation, interest, if any, accruing after any bankruptcy, insolvency,
reorganization or other similar filing) and to pay all fees, indemnities, costs
and expenses (including attorneys’ fees) provided for in the Loan
Documents and (ii) the indebtedness constituting the Loans, the Reimbursement
Obligations and such fees, indemnities, costs and expenses, and (b)
indebtedness, liabilities and obligations of SOURCECORP or any of its
Subsidiaries under any and all Interest Rate Protection Agreements and Currency
Hedge Agreements that it may enter into with any Lender or any Affiliate of a
Lender to the extent permitted by Section 9.1(g). 

 

“Other
Subordinated Debt” means any Debt
of SOURCECORP or any of its Subsidiaries which is subordinated to the
Obligations pursuant to a Subordination Agreement; provided, however,
that Other Subordinated Debt shall not include Seller Subordinated Debt.  

 

“Outstanding
Credit” means, at any
particular time, the sum of (a) the aggregate outstanding principal amount of
the Loans, plus (b) the Letter of Credit Liabilities.

 

“Participant” means as
specified in Section 13.8(d).

 

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

 

“Pension Plan” means an
employee pension benefit plan as defined in Section 3(2) of ERISA
(including a Multiemployer Plan) which is subject to the funding requirements
under Section 302 of ERISA or Section 412 of the Code, in whole or in
part, and which is maintained or contributed to currently or at any time within
the six years immediately preceding the Closing Date or, in the case of a
Multiemployer Plan, at any time since September 2, 1974, by SOURCECORP or
any Subsidiary of SOURCECORP or any ERISA Affiliate for employees of SOURCECORP
or any Subsidiary of SOURCECORP or any ERISA Affiliate.

 

“Permit” means any
permit, certificate, approval, order, license or other authorization.

 

“Permitted
Acquisition” means (i) any “Permitted
Acquisition,” as defined in the Existing Credit Agreement, consummated prior to
the Closing Date, and (ii) any Acquisition consummated after the

 

14

 

Closing Date which satisfies
each of the following requirements:  (a)
the acquiror (or surviving corporation if the acquisition is by means of a
merger) is SOURCECORP or any Subsidiary of SOURCECORP, (b) the assets to be
acquired in connection with such Acquisition are assets that are to be used in
the existing businesses of the acquiror as such business is presently
conducted, (c) such Acquisition has been approved by the Board of Directors of
the acquired entity, (d) any cash consideration payable and any Debt assumed or
guaranteed at the closing of such Acquisition shall not exceed $60,000,000 in
the aggregate without Required Lenders’ approval (such approval not to be
unreasonably withheld) (e) any cash consideration payable and any Debt assumed
or guaranteed at the closing of all such Acquisitions during any twelve-month
period shall not exceed $100,000,000 in the aggregate without Required Lenders’
approval (such approval not to be unreasonably withheld) (f) any Seller Earn
Out payable during any twelve-month period for all such Acquisitions shall not
exceed $25,000,000 in the aggregate without Required Lenders’ approval (such
approval not to be unreasonably withheld) (g) any Seller Earn Out at any time
remaining to be paid for all such Acquisitions shall not exceed $50,000,000 in
the aggregate without Required Lenders’ approval (such approval not to be
unreasonably withheld) (h) prior to such Acquisition, no Event of Default shall
exist and after giving effect to such Acquisition, no Default or Event of
Default shall exist, and (i) after giving effect to such Acquisition on a pro
forma basis, SOURCECORP will not violate any financial covenant contained herein
and SOURCECORP delivers to the Administrative Agent written evidence that no
such violation will exist after giving effect to such Acquisition.

 

“Permitted
Acquisition Documents” means any
acquisition agreement and each other material agreement, document or instrument
executed or delivered in connection with or pursuant to any Permitted
Acquisition.

 

“Permitted Capital
Expenditures” means as
specified in Section 10.4.

 

“Permitted Dispositions” means the
disposition by SOURCECORP or any Subsidiary of SOURCECORP of all or
substantially all of the Property or Capital Stock of certain Subsidiaries of
SOURCECORP on or before December 31, 2006; provided that (a) the EBITDA of
all such Subsidiaries shall not exceed $5,000,000 in the aggregate, (b) the
tangible net assets of all such Subsidiaries shall not exceed $10,000,000 in
the aggregate, and (c) no Default or Event of Default exists at the time of
such disposition or proposed disposition.

 

“Permitted Liens” means:

 

(a)           Liens
disclosed on Schedule 1.1
hereto as to SOURCECORP and its Subsidiaries (as applicable, as described on
such schedule);

 

(b)           Any
Liens securing the Obligations in favor of the Administrative Agent for the
benefit of the Administrative Agent and the Lenders (it being acknowledged and
agreed that there are no such Liens on the Closing Date and the Effective
Date);

 

(c)           Encumbrances
consisting of easements, zoning restrictions or other restrictions on the use
of real Property that could not reasonably be expected to have a Material
Adverse Effect;

 

(d)           Liens
for taxes, assessments or other governmental charges that are not delinquent or
which are being contested in good faith and for which adequate reserves have
been established;

 

15

 

(e)           Liens
of mechanics, materialmen, warehousemen, carriers, landlords or other similar
statutory Liens securing obligations that are not yet due and are incurred in
the ordinary course of business or which are being contested in good faith and
for which adequate reserves have been established;

 

(f)            Liens
resulting from good faith deposits to secure payment of workmen’s compensation
or other social security programs or to secure the performance of tenders,
statutory obligations, surety and appeal bonds, bids, contracts (other than for
payment of Debt) or leases, all in the ordinary course of business;

 

(g)           judgment
Liens that do not constitute an Event of Default under Section 11.1(f);

 

(h)           Purchase-money
Liens on any Property acquired after the Closing Date or the assumption after
the Closing Date of any Lien on Property existing at the time of such
acquisition (and not created in contemplation of such acquisition), or a Lien
incurred or assumed after the Closing Date in connection with any conditional
sale or other title retention agreement or Capital Lease Obligation; provided
that:

 

(i)            any
Property subject to the foregoing is acquired by SOURCECORP or any of its
Subsidiaries in the ordinary course of its business and the Lien on the
Property attaches concurrently or within 90 days after the acquisition thereof;

 

(ii)           the
Debt secured by any Lien so created, assumed or existing shall not exceed the
lesser of the cost or fair market value at the time of acquisition of the
Property covered thereby; and

 

(iii)          each
such Lien shall attach only to the Property so acquired and the proceeds
thereof; and

 

(i)            Any
extension, renewal or replacement of any of the foregoing, provided that
Liens permitted hereunder shall not be extended or spread to cover any
additional indebtedness or Property; 

 

provided, however, that none of the
Permitted Liens may attach or relate to the Capital Stock of or any other
ownership interest in SOURCECORP or any of its Subsidiaries.

 

“Permitted Share
Repurchases” means
repurchases by SOURCECORP of SOURCECORP Common Stock made after the Closing
Date, so long as no Event of Default exists before or after giving effect
thereto.

 

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

 

“Plan” means any
employee benefit plan as defined in Section 3(3) of ERISA, or any
comparable plan of a Governmental Authority, established or maintained or
contributed to by any Loan Party or any ERISA Affiliate, including any Pension
Plan.

 

“Platform” means as
specified at the end of Section 8.1.

 

“Principal Office” means the
principal office of the Administrative Agent in Dallas, Texas, presently
located at 901 Main Street, Dallas, Texas 75202.

 

16

 

“Prior Permitted Capital Expenditures” means as
specified in Section 10.4.

 

“Private Placement Debt” means as
specified in Section 9.1(e).

 

“Prohibited
Transaction” means any
transaction set forth in Section 406 of ERISA or Section 4975 of the
Code.

 

“Projections” means
SOURCECORP’s forecasted income statements most recently delivered to the
Lenders prior to the Closing Date.

 

“Property” means property
of all kinds, real, personal or mixed, tangible or intangible (including, without
limitation, all rights relating thereto), whether owned or acquired on or after
the Closing Date.

 

“Public Lender” means as
specified at the end of Section 8.1.

 

“Quarterly Date” means the last
day of each March, June, September and December of each year, the
first of which shall be the first such day after the Closing Date.

 

“Register” means as
specified in Section 13.8(c).

 

“Regulation D” means
Regulation D of the Board of Governors of the Federal Reserve System as the
same may be amended or supplemented from time to time.

 

“Regulatory Change” means, with
respect to any Lender, any change after the Closing Date in any U.S. federal or
state laws or foreign laws or regulations (including Regulation D) or the
adoption or making after such date of any interpretations, directives or
requests applying to a class of lenders including such Lender of or under any
U.S. federal or state laws or foreign laws or regulations (whether or not
having the force of law) by any Governmental Authority charged with the interpretation
or administration thereof.

 

“Reimbursable Taxes” means as
specified in Section 3.5.

 

“Reimbursement
Obligation” means the
obligation of SOURCECORP to reimburse the Issuing Bank for any drawing under a
Letter of Credit.

 

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

 

“Release” means, as to
any Person, any release, spill, emission, leaking, pumping, injection, deposit,
discharge, disposal, disbursement, leaching or migration of Hazardous Materials
into the indoor or outdoor environment or into or out of Property owned by such
Person, including, without limitation, the movement of Hazardous Materials through
or in the air, soil, surface water or ground water.

 

“Remedial Action” means a
actions required to (a) cleanup, remove, respond to, treat or otherwise address
Hazardous Materials in the indoor or outdoor environment, (b) prevent the
Release or threat of Release or minimize the further Release of Hazardous
Materials so that they do not migrate or endanger or threaten to endanger
public health or welfare or the indoor or outdoor environment, (c) perform
studies and investigations on the extent and nature of any actual or suspected
contamination, the remedy or remedies to be used or health effects or risks of
such contamination, or (d) perform post-remedial monitoring, care or remedy of
a contaminated site.

 

17

 

“Rental Expense” means, for any
period and for any Person, the rental or lease expense of such Person under
operating leases calculated without duplication on a consolidated basis for
such period as determined in accordance with GAAP.

 

“Reportable Event” means any of
the events set forth in Section 4043 of ERISA.

 

“Required Lenders”
means, (a) at any date of determination that there are four or more Lenders,
the Lenders having in the aggregate more than sixty-six and two-thirds percent
(66 2/3%) (in Dollar amount) of the aggregate amount of the Commitments of the
Lenders (or, if the Commitments of the Lenders to make Loans and the obligation
of the Issuing Bank to issue Letters of Credit have terminated or expired, then
the Lenders holding in the aggregate more than 66 2/3% of the Outstanding
Credit), and (b) at any date of determination that there are less than four
Lenders, all of the Lenders.

 

“Responsible
Officer” means, as to
any Loan Party, the chief financial officer, chief operating officer or chief
executive officer of such Person.

 

“Restricted
Payment” means (a) any
dividend or other distribution (whether in cash, Property or obligations),
direct or indirect, on account of (or the setting apart of money for a sinking
or other analogous fund for) any shares of any class of Capital Stock of
SOURCECORP or any of its Subsidiaries now or hereafter outstanding, except a
dividend payable solely in equity securities of SOURCECORP or any of its
Subsidiaries; (b) any redemption, conversion, exchange, retirement, sinking
fund or similar payment, purchase or other acquisition for value, direct or
indirect, of any shares of any class of Capital Stock of SOURCECORP or any of
its Subsidiaries now or hereafter outstanding; (c) any loan, advance or payment
(pursuant to a tax sharing agreement or otherwise) to SOURCECORP; and (d) any
payment made to retire, or to obtain the surrender of, any outstanding
warrants, options or other rights to acquire shares of any class of Capital
Stock of SOURCECORP or any of its Subsidiaries now or hereafter outstanding.

 

“Revolving Loan” means as
specified in Section 2.1(a).

 

“Sale and
Leaseback Transaction” means as
specified in Section 9.9.

 

“Seller Earn Out” means any
obligation incurred by SOURCECORP or a Subsidiary in connection with a
Permitted Acquisition which (i) is only payable by SOURCECORP for performance
by a seller, or a shareholder, officer or director of a seller, of obligations
over the passage of time (e.g., non-compete payments) or in the event certain
future performance goals are achieved with respect to the assets or business
acquired and (ii) provides that the maximum potential liability of SOURCECORP
or any Subsidiary with respect thereto is limited.  

 

“Seller
Subordinated Debt” means any Debt
of SOURCECORP (and not of any Subsidiary of SOURCECORP) which (a) is owed to a
seller as part of the purchase consideration for a Permitted Acquisition, (b)
is subordinated to the Obligations pursuant to a Subordination Agreement, (c)
does not, when aggregated with the principal balance of all other Seller
Subordinated Debt, exceed $10,000,000 in principal amount, (d) does not have an
interest rate in excess of twelve percent (12%) per annum, and (e) is
unsecured.  Seller Subordinated Debt may
be convertible into Capital Stock of SOURCECORP 

 

“Solvent” means, with
respect to any Person as of the date of any determination, that on such date
(a) the fair value of the Property of such Person (both at fair valuation and
at present fair saleable value) is greater than the total liabilities,
including, without limitation, contingent liabilities, of such Person, (b) the
present fair saleable value of the assets of such Person is not less than the
amount that will be required to pay the probable liability of such Person on
its debts as they become absolute and matured,

 

18

 

(c) such Person is able to
realize upon its assets and pay its debts and other liabilities, contingent
obligations and other commitments as they mature in the normal course of
business, (d) such Person does not intend to, and does not believe that it
will, incur debts or liabilities beyond such Person’s ability to pay as such
debts and liabilities mature, and (e) such Person is not engaged in business or
a transaction, and is not about to engage in business or a transaction, for
which such Person’s Property would constitute unreasonably small capital after
giving due consideration to current and anticipated future capital requirements
and current and anticipated future business conduct and the prevailing practice
in the industry in which such Person is engaged.  In computing the amount of contingent
liabilities at any time, such liabilities shall be computed at the amount
which, in light of the facts and circumstances existing at such time,
represents the amount (net of contribution rights) that can reasonably be
expected to become an actual or matured liability.

 

“SOURCECORP” means as
specified in the initial paragraph of this Agreement.

 

“SOURCECORP Common
Stock” means the
common stock of SOURCECORP, par value $.01 per share.

 

“SOURCECORP Equity
Documents” means
SOURCECORP’s Certificate of Incorporation and the SOURCECORP Common Stock.

 

“Subject Seller
Earn Outs” means the
Seller Earn Outs in an aggregate amount not exceeding $26,000,000 paid on or
before September 30, 2004 in connection with the Permitted Acquisition of
an operating Subsidiary in the Information Management Division of SOURCECORP’s
Information Management and Distribution reportable segment.

 

“Subordinated Debt” means any
Seller Subordinated Debt or any Other Subordinated Debt.

 

“Subordination
Agreement” means a
Subordination Agreement substantially similar to the form attached hereto as Exhibit C, relating
to Subordinated Debt.

 

“Subsidiary” means, with respect
to any Person, any corporation or other entity of which at least a majority of
the outstanding shares of stock or other ownership interests having by the
terms thereof ordinary voting power to elect a majority of the board of
directors (or Persons performing similar functions) of such corporation or
entity (irrespective of whether or not at the time, in the case of a
corporation, stock of any other class or classes of such corporation shall have
or might have voting power by reason of the happening of any contingency) is at
the time directly or indirectly owned or controlled by such Person or one or
more of its Subsidiaries or by such Person and one or more of its Subsidiaries.

 

“Swingline
Advances” means as
specified in Section 2.15(a).

 

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

 

“Swing Line” means the
revolving credit facility made available by Swingline Lender pursuant to Section 2.15.

 

“Syndication Agent” means SunTrust
Bank, in its capacity as syndication agent.

 

“Trade Date” means as
specified in Section 13.8.

 

“Type” means any type
of Loan (i.e., a Base Rate Loan or Eurodollar Loan).

 

19

 

“UCC” means the
Uniform Commercial Code as in effect in the State of Texas and/or any other
jurisdiction, the laws of which may be applicable to or in connection with the
creation, perfection or priority of any Lien on any Property.

 

“Unreimbursed Amount” means as
specified in Section 2.14(c)(i).

 

“U.S.” means the
United States of America.

 

“U.S.A. Patriot Act” means as
specified in Section 13.24.

 

“Wholly-Owned
Subsidiary” means, with
respect to any Person, a Subsidiary of such Person all of whose outstanding
Capital Stock (other than directors’ qualifying shares, if any) shall at the
time be owned by such Person and/or one or more of its Wholly-Owned
Subsidiaries.

 

Section
1.2            Other Definitional Provisions.  All definitions contained in this Agreement
are equally applicable to the singular and plural forms of the terms
defined.  The words “hereof”, “herein” and “hereunder” and words
of similar import referring to this Agreement refer to this Agreement as a
whole and not to any particular provision of this Agreement.  Unless otherwise specified, all
Article and Section references pertain to this Agreement.  Unless otherwise specified, all
Schedule references pertain to the Schedules attached to this Agreement,
as such Schedules may be amended or modified from time to time in accordance
with this Agreement.  Terms used herein
that are defined in the UCC, unless otherwise defined herein, shall have the
meanings specified in the UCC.

 

Section
1.3            Accounting Terms and Determinations.

 

(a)           All accounting terms
not specifically defined herein shall be construed in accordance with GAAP
consistent with such accounting principles applied in the preparation of the
audited financial statements referred to in Section 7.2(a). All financial
information delivered to the Administrative Agent pursuant to Section 8.1
shall be prepared in accordance with GAAP applied on a basis consistent with
such accounting principles applied in the preparation of the audited financial
statements referred to in Section 7.2(a)
or in accordance with Section 8.7.  In the event that any “Accounting Changes”
(as defined below) occur and such changes result in a change in the method of
calculation of financial covenants, standards or terms in this Agreement, then
SOURCECORP and the Administrative Agent agree to enter into negotiations in
order to amend such provisions of this Agreement so as to equitably reflect
such Accounting Changes with the desired result that the criteria for
evaluating SOURCECORP’s financial condition shall be the same after such
Accounting Changes as if such Accounting Changes had not been made.  Until such time as such an amendment shall
have been executed and delivered by SOURCECORP, the Administrative Agent and
the Required Lenders, all financial covenants, standards and terms in this
Agreement for purposes of this Agreement only shall continue to be calculated
or construed as if such Accounting Changes had not occurred.  “Accounting Changes”
means:  (i) changes in accounting
principles required by the promulgation of any rule, regulations, pronouncement
or opinion by the Financial Accounting Standards Board, the American Institute
of Certified Public Accountants or the Securities and Exchange Commission (or
successors thereto or agencies with similar functions) after the Closing Date;
and (ii) changes in accounting principles approved by SOURCECORP’s certified
public accountants and implemented after the Closing Date.

 

(b)           SOURCECORP shall
deliver to the Administrative Agent and the Lenders, at the same time as the
delivery of any annual or quarterly financial statement under Section 8.1, (i)
a description, in reasonable detail, of any material variation between the
application of GAAP employed in

 

20

 

the preparation of such annual
or quarterly financial statement and the preparation of the next preceding
annual or quarterly financial statement and (ii) reasonable estimates of the
difference between such statements arising as a consequence thereof.

 

(c)           To enable the ready and
consistent determination of compliance with the covenants set forth in this
Agreement (including Article 10
hereof), neither SOURCECORP nor any of its Subsidiaries will change the last
day of its fiscal year from December 31, or the last days of the first three
fiscal quarters of SOURCECORP and its Subsidiaries in each of its fiscal years
from that existing on the Closing Date. 
Any Subsidiary of SOURCECORP created or acquired after the Closing Date
shall, as soon as reasonably practicable, be put on a fiscal year ending
December 31.

 

Section
1.4            Financial Covenants.  The financial covenants contained in Article 10 shall
be calculated on a consolidated basis for SOURCECORP and its Subsidiaries.

 

Section
1.5            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 Loan Document related thereto, provides for one or more automatic increases
in the stated amount thereof, for purposes of determining the Outstanding
Credit applicable to Letter of Credit Liabilities (but not for purposes of
calculating the fees payable pursuant to Sections 2.14(i) and (j)), 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.

 

ARTICLE 2

LOANS

 

Section 2.1            Commitments.

 

(a)           Revolving Loans.
Subject to the terms and conditions of this Agreement, each Lender severally
agrees to make one or more revolving loans (each such loan, a “Revolving Loan”) to
SOURCECORP from time to time, from and including the Effective Date to but
excluding the Maturity Date, up to but not exceeding the amount of such Lender’s
Commitment as then in effect; provided, however, that after
giving effect to any Revolving Loan, (i) the Outstanding Credit applicable to
the Revolving Loans of any Lender, plus such Lender’s Commitment
Percentage of the Outstanding Credit applicable to Letter of Credit
Liabilities, plus such Lender’s
Commitment Percentage of the Outstanding Credit applicable to Swingline
Advances does not exceed such Lender’s Commitment and (ii) the Outstanding
Credit shall not at any time exceed the aggregate amount of the Commitments of
all Lenders then in effect.  Subject to
the foregoing limitations and the other terms and conditions of this Agreement,
SOURCECORP may, prior to the Maturity Date, borrow, repay and reborrow the
Revolving Loans hereunder.

 

(b)           Continuation and
Conversion of Loans.  Subject to the
terms and conditions of this Agreement, SOURCECORP may borrow Revolving Loans
as Base Rate Loans or as Eurodollar Loans and, until the Maturity Date, may
Continue Eurodollar Loans or Convert Revolving Loans of one Type into Loans of
the other Type. 

 

(c)           Lending Offices.  Loans of each Type made by each Lender shall
be made and maintained at such Lender’s Applicable Lending Office for Loans of
such Type.

 

(d)           Extensions.  The Maturity Date may be extended on both the
first and second anniversaries of the Closing Date as set forth in this Section 2.1(d),
in each case for a period of 364 days

 

21

 

measured from the Maturity Date
then in effect.  If SOURCECORP wishes to
request an extension of the Maturity Date, it shall give notice to that effect
to the Administrative Agent not less than 45 days nor more than 60 days prior
to the first and/or second anniversary of the Closing Date.  The Administrative Agent shall promptly
notify each Lender of receipt of such request. 
Each Lender shall endeavor to respond to such request, whether
affirmatively or negatively (such determination in the sole discretion of such
Lender), by notice to SOURCECORP and the Administrative Agent within 30 days of
receipt of such request.  Subject to the
execution by SOURCECORP, the Administrative Agent and each Lender of a duly
completed Extension Agreement in substantially the form of Exhibit I, the
Maturity Date applicable to the Commitment of each Lender so affirmatively
notifying SOURCECORP and the Administrative Agent shall be extended for the
period specified above; provided that no Maturity Date of any Lender
shall be extended, unless the Lenders holding at least 51% of the aggregate
amount of the Commitments shall have elected so to extend their Commitments;
and provided, further, that if the Lenders holding at least 51%
of the aggregate amount of the Commitments elect to so extend their
Commitments, SOURCECORP shall have the right to replace any of the Lenders not
so electing pursuant to Section
13.11.  Any Lender that
does not give such notice to SOURCECORP and the Administrative Agent shall be
deemed to have elected not to extend as requested.

 

Section
2.2            Notes.  The Revolving Loans made by each Lender shall
be evidenced by a single promissory note of SOURCECORP in substantially the
form of Exhibit B
hereto, payable to the order of such Lender in a principal amount equal to its
Commitment (as originally in effect or thereafter increased) and otherwise duly
completed; provided, however, that the Swingline Advances made by
Swingline Lender shall be evidenced by a single promissory note of SOURCECORP
in the maximum original principal amount of $10,000,000 payable to the order of
Swingline Lender in substantially the form of Exhibit D hereto, dated the Closing
Date.  Each Lender is hereby authorized
by SOURCECORP to endorse on the schedule (or a continuation thereof) attached
to the Note of such Lender, to the extent applicable, the date, amount and Type
of and the Interest Period for each Loan made by such Lender to SOURCECORP and
the amount of each payment or prepayment of principal of such Loan received by
such Lender, provided that any failure by such Lender to make any such
endorsement shall not affect the obligations of SOURCECORP under such Note or
this Agreement in respect of such Loan.

 

Section
2.3            Repayment of Loans.  SOURCECORP shall pay to the Administrative
Agent for the account of each applicable Lender the outstanding principal of
the Revolving Loans existing on the Maturity Date.  More specifically, if any Letters of Credit
or Reimbursement Obligations are outstanding as of the Maturity Date, then, in
addition to the repayment of all outstanding Loans on the Maturity Date,
SOURCECORP shall deliver to the Administrative Agent cash or cash equivalents
in an amount equal to the aggregate undrawn face amount of all Letters of Credit
and the aggregate amount of all outstanding Reimbursement Obligations, such
cash or cash equivalents to be pledged to the Administrative Agent as security
for the Letter of Credit Liabilities pursuant to documentation satisfactory to
the Administrative Agent in form and substance.

 

Section
2.4            Interest.

 

(a)           Interest Rate.  SOURCECORP shall pay to the Administrative
Agent for the account of each Lender interest on the unpaid principal amount of
each Loan made by such Lender to SOURCECORP for the period commencing on the
date of such Loan to but excluding the date such Loan shall be paid in full, at
the following rates per annum:

 

(i)            during
the periods a Revolving Loan is a Base Rate Loan, the lesser of (A) the Base
Rate plus the Applicable Margin or (B) the Maximum Rate; 

 

22

 

(ii)           during
the periods a Revolving Loan is a Eurodollar Loan, the lesser of (A) the
Eurodollar Rate plus the Applicable Margin or (B) the Maximum Rate; and

 

(iii)          with
respect to Swingline Advances, the lesser of (A) Eurodollar Daily Floating Rate
plus the Applicable Margin (for Eurodollar Loans), or (B) the Maximum
Rate. 

 

(b)           Payment Dates.  Accrued interest on the Loans shall be due
and payable in arrears as follows:

 

(i)            in
the case of Base Rate Loans and Swingline Advances, on each Quarterly Date;

 

(ii)           in
the case of each Eurodollar Loan (other than Swingline Advances), on the last
day of the Interest Period with respect thereto and, in the case of a
Eurodollar Loan having an Interest Period of six (6) months, on the day in the
third succeeding calendar month numerically corresponding to the commencement
date of such Interest Period (or, if no numerically corresponding date exists,
on the last Business Day of such third succeeding calendar month);

 

(iii)          upon
the payment or prepayment of any Loan or the Conversion of any Loan to a Loan
of the other Type (but only on the principal amount so paid, prepaid or
Converted); and

 

(iv)          on
the Maturity Date.

 

(c)           Default Interest.  Notwithstanding the foregoing, SOURCECORP
shall pay to the Administrative Agent for the account of each Lender interest
at the applicable Default Rate on any principal of any Loan made by such
Lender, any Reimbursement Obligation owing to such Lender and (to the fullest
extent permitted by law) any other amount payable by SOURCECORP under this
Agreement or any other Loan Document to such Lender, which is not paid in full
when due (whether at stated maturity, by acceleration or otherwise) or which is
outstanding during the continuance of an Event of Default, for the period from
and including the due date thereof or the date of the occurrence of such Event
of Default (as applicable) to but excluding the date the same is paid in
full.  Interest payable at the Default Rate
shall be payable from time to time on demand by the Administrative Agent.  

 

Section
2.5            Borrowing Procedure.  SOURCECORP shall give the Administrative
Agent notice of each borrowing of a Revolving Loan hereunder in accordance with
Section 2.9.  Not later than 2:00 p.m. (Dallas, Texas time)
on the date specified for each borrowing of a Revolving Loan hereunder, each
Lender will make available the amount of the Revolving Loan to be made by it on
such date to the Administrative Agent, at the Principal Office, in immediately
available funds, for the account of SOURCECORP. 
The amount so received by the Administrative Agent shall, subject to the
terms and conditions of this Agreement, be made available to SOURCECORP by wire
transfer of immediately available funds to the applicable Deposit Account no
later than 3:00 p.m. (Dallas, Texas time).

 

Section
2.6            Optional Prepayments, Conversions and
Continuations of Loans, Reduction of Commitments.  Subject to Sections 2.7 and 2.8, SOURCECORP shall
have the right from time to time to prepay the Loans, to Convert all or part of
a Loan (other than a Swingline Advance) of one Type into a Loan of another Type
or to Continue Eurodollar Loans; provided that: 
(a) SOURCECORP shall give the Administrative Agent notice of each such
prepayment, Conversion or Continuation as provided in Section 2.9, (b)
Eurodollar Loans may only be Converted on the last day of the Interest Period,
unless SOURCECORP, concurrently with making any such prepayment, pays all
amounts owing to the

 

23

 

Administrative Agent and the
Lenders under Section 4.5,
(c) except for Conversions of Eurodollar Loans into Base Rate Loans, no
Conversions or Continuations shall be made while an Event of Default has
occurred and is continuing, and (d) optional prepayments of the Loans shall be
applied first to the Swingline Advances (until such advances are paid in full)
and then to the Loans other than the Swingline Advances.

 

Section
2.7            Mandatory Prepayments.  If at any time the Outstanding Credit exceeds
the Commitments, within three Business Day after the occurrence thereof
SOURCECORP shall pay to the Administrative Agent the amount of such excess as a
prepayment of the Loans (or, if the Loans have been paid in full, to reduce or
to provide cash collateral to secure the outstanding Letter of Credit
Liabilities relating to Letters of Credit issued pursuant to the
Commitments).  All prepayments pursuant
to this Section 2.7
shall be applied first to any Swingline Advances until such advances are paid
in full and then to the other Loans.

 

Section
2.8            Minimum Amounts.  Except for Conversions and prepayments
pursuant to Section 2.7
and Article 4,
each borrowing, each Conversion and each prepayment of principal of the
Revolving Loans shall be in an amount at least equal to $1,000,000 or an
integral multiple of $500,000 in excess thereof (borrowings, prepayments or
Conversions of or into Revolving Loans of different Types or, in the case of
Eurodollar Loans, having different Interest Periods at the same time hereunder
shall be deemed separate borrowings, prepayments and Conversions for purposes
of the foregoing, one for each Type or Interest Period).

 

Section
2.9            Certain Notices.  Notices by SOURCECORP to the Administrative
Agent of terminations or reductions of Commitments, of borrowings of Revolving
Loans, of Conversions, Continuations and prepayments of Revolving Loans and of
the duration of Interest Periods shall be irrevocable and shall be effective
only if received by the Administrative Agent not later than 12:00 p.m. (Dallas,
Texas time) on or prior to the applicable Business Day specified below:

 

	
  Notice

  	
   

  	
  Number
  of Business Days Prior Notice

  
	
  Terminations or Reductions of Commitments

  	
   

  	
  1

  
	
  Borrowing of Base Rate Loans

  	
   

  	
  same day

  
	
  Borrowing of Eurodollar Loans

  	
   

  	
  3

  
	
  Conversions or Continuations of Loans

  	
   

  	
  3

  
	
  Prepayment of Base Rate Loans

  	
   

  	
  same day

  
	
  Prepayments of Eurodollar Loans

  	
   

  	
  3

  

 

Each such notice of termination or reduction shall specify the amount
of the Commitments to be terminated or reduced. 
Each such notice of borrowing, Conversion, Continuation or prepayment
shall specify the Revolving Loans to be borrowed, Converted, Continued or
prepaid and the amount (subject to Section 2.8 hereof) and Type of the
Revolving Loans to be borrowed, Converted, Continued or prepaid (and, in the
case of a Conversion, the Type of Loans to result from such Conversion) and the
date of borrowing, Conversion, Continuation or prepayment (which shall be a
Business Day).  Notices of borrowings,
Conversions, Continuations or prepayments of Revolving Loans shall be in the
form of Exhibit E
hereto, appropriately completed as applicable. 
Each such notice of the duration of an Interest Period shall specify the
Revolving Loans to which such Interest Period is to relate.  The Administrative Agent shall promptly
notify the Lenders of the contents of each such notice.  In the event SOURCECORP fails to select the
Type of Revolving Loan, or the duration of any Interest Period for any
Eurodollar Loan (other than a Swingline Advance), within the time period and
otherwise as provided in this Section 2.9, such Revolving Loan (if outstanding as
a Eurodollar Loan) will be automatically Continued as a Eurodollar Loan with an
Interest Period of one month on the last day of preceding Interest Period for
such Revolving Loan or (if outstanding as a Base Rate Loan) will remain as, or
(if not then outstanding) will

 

24

 

be made as, a Base Rate Loan. 
SOURCECORP may not borrow any Revolving Loans that are Eurodollar Loans,
Convert any Revolving Loans into Eurodollar Loans or Continue any Revolving
Loans as Eurodollar Loans if the interest rate for such Eurodollar Loans would
exceed the Maximum Rate.

 

Section
2.10         Use of Proceeds.  

 

(a)           SOURCECORP represents
and warrants to and covenants with the Administrative Agent and the Lenders
that the proceeds of the Loans to be made on and after the Effective Date shall
be used to repay indebtedness owing under the Existing Credit Agreement, for
working capital and general corporate purposes of SOURCECORP and its
Subsidiaries in the ordinary course of business, to finance partially or wholly
future Permitted Acquisitions, including the transaction costs of SOURCECORP
and its Subsidiaries associated with such Permitted Acquisitions, and to
finance partially or wholly future Permitted Share Repurchases.

 

(b)           None of the proceeds of
any Loan have been or will be used to acquire any security in any transaction
that is subject to Section 13 or 14 of the Securities Exchange Act of
1934, as amended, or to purchase or carry any margin stock (within the meaning
of Regulations T, U or X of the Board of Governors of the Federal Reserve
System).

 

Section
2.11         Fees.  

 

(a)           SOURCECORP agrees to
pay to the Administrative Agent for the account of each Lender a commitment fee
(the “Commitment Fees”) on the daily
average unused or unfunded amount of such Lender’s Commitment, for the period
from and including the Closing Date to and including the Maturity Date, at the
rate equal to the Applicable Margin per annum based on a 360 day year and the
actual number of days elapsed, which accrued Commitment Fees shall be payable
in arrears on each Quarterly Date beginning on September 30, 2005 and on
the Maturity Date.  Notwithstanding
anything to the contrary contained in this Agreement, any and all Swingline
Advances outstanding from time to time shall be wholly excluded, and shall not
count as used or funded amounts, for purposes of determining the unused or
unfunded amount of each Lender’s Commitment in accordance with this Section 2.11(a).  

 

(b)           SOURCECORP agrees to
pay to the Administrative Agent (for the account of the Administrative Agent
and/or the Lenders, as may be specified in the Fee Letter) such additional fees
as are specified in the Fee Letter, which fees shall be payable in such amounts
and on such dates as are specified therein. 
Such additional fees shall include, without limitation, an upfront fee
payable by SOURCECORP to each Lender on the Effective Date in the amount agreed
upon among the Administrative Agent and/or the Lead Arranger and such Lender. 

 

Section
2.12         Computations.  Interest and fees payable by SOURCECORP
hereunder and under the other Loan Documents shall be computed on the basis of
a year of 360 days (except as stated in the proviso below) and the actual
number of days elapsed (including the first day but excluding the last day)
occurring in the period for which payable unless, in the case of interest, such
calculation would result in a usurious rate, in which case interest shall be
calculated on the basis of a year of 365 or 366 days, as the case may be; provided,
however, that 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.

 

Section
2.13         Termination or Reduction of Commitments.  SOURCECORP shall have the right to terminate
or reduce in part the unused portion of the Commitments at any time and from
time to time, provided that (i) SOURCECORP shall give notice of each
such termination or reduction as provided

 

25

 

in Section 2.9,
(ii) each partial reduction shall be in an aggregate amount of at least
$1,000,000 or an integral multiple of $500,000 in excess thereof, and (iii)
SOURCECORP shall not have the right to terminate or reduce in part any unused
portion of the Commitments that could or may be required to be advanced by the
Lenders to refinance Swingline Advances then outstanding.  The Commitments may not be reinstated or
increased after they have been terminated or reduced.

 

Section
2.14         Letters
of Credit.

 

(a)           The Letter of Credit
Commitment.

 

(i)            Subject
to the terms and conditions set forth herein, (A) the Issuing Bank agrees, in
reliance upon the agreements of the other Lenders set forth in this Section 2.14,
(1) from time to time on any Business Day during the period from the Closing
Date until the Letter of Credit Expiration Date, to issue Letters of Credit for
the account of SOURCECORP 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
SOURCECORP or its Subsidiaries and any drawings thereunder; provided that after
giving effect to any L/C Credit Extension, (x) the Outstanding Credit shall not
exceed the aggregate amount of the Commitments of the Lenders, (y) the
Outstanding Credit applicable to the Revolving Loans of any Lender, plus such
Lender’s Commitment Percentage of the Outstanding Credit applicable to all
Letter of Credit Liabilities, plus such Lender’s Commitment Percentage of the
Outstanding Credit applicable to all Swingline Advances shall not exceed such
Lender’s Commitment, and (z) the Outstanding Credit applicable to all Letter of
Credit Liabilities shall not exceed $35,000,000.  Each request by SOURCECORP for an L/C Credit
Extension shall be deemed to be a representation by SOURCECORP 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, SOURCECORP’s ability to obtain Letters of Credit shall be fully
revolving, and accordingly SOURCECORP 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.  All
Existing Letters 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
Issuing Bank shall not issue any Letter of Credit, if:

 

(A)          
subject to Section 2.14(b)(iv),
the expiry date of such requested Letter of Credit would occur more than twelve
months after the date of issuance or last extension, unless the Required
Lenders have approved such expiry date; or

 

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

 

(iii)          The
Issuing Bank 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 Issuing Bank from issuing such
Letter of Credit, or any Governmental Requirement applicable to the Issuing
Bank or any request or directive (whether or not having the force of law) from
any

 

26

 

Governmental Authority with jurisdiction over the Issuing Bank shall
prohibit, or request that the Issuing Bank refrain from, the issuance of
letters of credit generally or such Letter of Credit in particular or shall
impose upon the Issuing Bank with respect to such Letter of Credit any
restriction, reserve or capital requirement (for which the Issuing Bank is not
otherwise compensated hereunder) not in effect on the Closing Date, or shall
impose upon the Issuing Bank any unreimbursed loss, cost or expense which was
not applicable on the Closing Date and which the Issuing Bank in good faith
deems material to it;

 

(B)           the
issuance of such Letter of Credit would violate one or more standard policies
of the Issuing Bank; 

 

(C)           except
as otherwise agreed by the Administrative Agent and the Issuing Bank, such
Letter of Credit is in an initial stated amount less than $50,000;

 

(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 2.14(c) exists or any
Lender has defaulted in its obligation under this Agreement at such time,
unless the Issuing Bank has entered into reasonably satisfactory arrangements
with SOURCECORP or such Lender to eliminate the Issuing Bank’s risk with
respect to such Lender; or

 

(F)           such
Letter of Credit contains any provisions for automatic reinstatement of the
stated amount after any drawing thereunder.

 

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

 

(v)           The
Issuing Bank shall be under no obligation to amend any Letter of Credit if (A)
the Issuing Bank 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
Issuing Bank shall act on behalf of the Lenders with respect to any Letters of
Credit issued by it and the documents associated therewith, and the Issuing
Bank shall have all of the benefits and immunities (A) provided to the
Administrative Agent in Article 12
with respect to any acts taken or omissions suffered by the
Issuing Bank in connection with Letters of Credit issued by it or proposed to
be issued by it and the related Loan Documents pertaining to such Letters of
Credit as fully as if the term “Administrative Agent” or “Agent” as used in Article 12
included the Issuing Bank with respect to such acts or omissions, and (B) as
additionally provided herein with respect to the Issuing Bank.

 

(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 SOURCECORP delivered to the Issuing Bank (with a copy to the
Administrative Agent) in the form of a Letter of Credit Application,
appropriately completed and signed by a Responsible Officer of SOURCECORP.  Such Letter of Credit Application must be

 

27

 

received by the Issuing Bank and the Administrative Agent not later
than 11:00 a.m. at least two Business Days (or such later date and time as the
Administrative Agent and the Issuing Bank may agree in a particular instance in
their sole discretion) prior to the proposed issuance date or date of
amendment, as the case may be.  In the
case of a request for an initial issuance of a Letter of Credit, such Letter of
Credit Application shall specify in form and detail satisfactory to the Issuing
Bank: (A) the proposed issuance date of the requested Letter of Credit (which
shall be a Business Day); (B) the amount thereof; (C) the expiry date thereof;
(D) the name and address of the beneficiary thereof; (E) the documents to be
presented by such beneficiary in case of any drawing thereunder; (F) the full
text of any certificate to be presented by such beneficiary in case of any
drawing thereunder; and (G) such other matters as the Issuing Bank may
reasonably require.  In the case of a
request for an amendment of any outstanding Letter of Credit, such Letter of
Credit Application shall specify in form and detail satisfactory to the Issuing
Bank (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 Issuing Bank may reasonably
require.  Additionally, SOURCECORP shall
furnish to the Issuing Bank and the Administrative Agent such other documents
and information pertaining to such requested Letter of Credit issuance or
amendment, including any Loan Documents, as the Issuing Bank or the
Administrative Agent may reasonably require.

 

(ii)           Promptly
after receipt of any Letter of Credit Application at the address set forth in Section 13.13
for receiving Letter of Credit Applications and related correspondence, the
Issuing Bank will confirm with the Administrative Agent (by telephone or in
writing) that the Administrative Agent has received a copy of such Letter of
Credit Application from SOURCECORP and, if not, the Issuing Bank will provide
the Administrative Agent with a copy thereof. 
Unless the Issuing Bank has received written notice from any Lender, the
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 6 shall not then be satisfied,
then, subject to the terms and conditions hereof, the Issuing Bank shall, on
the requested date, issue a Letter of Credit for the account of SOURCECORP (or
the applicable Subsidiary) or enter into the applicable amendment, as the case
may be, in each case in accordance with the Issuing Bank’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 Issuing Bank a
risk participation in such Letter of Credit in an amount equal to the product
of such Lender’s Commitment 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 Issuing Bank will also deliver to SOURCECORP and the Administrative Agent a
true and complete copy of such Letter of Credit or amendment.

 

(iv)          If
SOURCECORP so requests in any applicable Letter of Credit Application, the
Issuing Bank 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 Issuing
Bank 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 Issuing Bank, SOURCECORP shall not be required to make a
specific request to the Issuing Bank for any such extension.  Once an Auto-Extension Letter of Credit has
been issued, the Lenders shall be

 

28

 

deemed to have authorized (but may not require) the Issuing Bank to
permit the extension of such Letter of Credit at any time to an expiry date not
later than the Letter of Credit Expiration Date; provided, however, that the
Issuing Bank shall not permit any such extension if (A) the Issuing Bank 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 2.14(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 the Administrative Agent that the Required
Lenders have elected not to permit such extension or (2) from the
Administrative Agent, any Lender or SOURCECORP that one or more of the
applicable conditions specified in Section 6.2 is not then satisfied, and
in each such case directing the Issuing Bank 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 demand for payment
or other drawing under such Letter of Credit, the Issuing Bank shall promptly
notify SOURCECORP and the Administrative Agent thereof.  Not later than 11:00 a.m. on the date of any
payment by the Issuing Bank under a Letter of Credit (each such date, an “Honor Date”),
SOURCECORP shall reimburse the Issuing Bank through the Administrative Agent in
an amount equal to the amount of such payment. 
If SOURCECORP fails to so reimburse the Issuing Bank by such time, the
Administrative Agent shall promptly notify each Lender of the Honor Date, the
amount of the unreimbursed drawing (the “Unreimbursed Amount”), and the amount of
such Lender’s Commitment Percentage thereof. 
In such event, SOURCECORP shall be deemed to have requested a Base Rate
Loan 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 2.8 for
the principal amount of Base Rate Loans, but subject to the amount of the
unutilized portion of the aggregate amount of the Commitments of the Lenders
and the conditions set forth in Section 6.2 (other than the delivery by SOURCECORP
of a request for a Revolving Loan).  Such
Base Rate Loan may be converted to a Eurodollar Loan pursuant and subject to Section 2.6.  Any notice given by the Issuing Bank or the
Administrative Agent pursuant to this Section 2.14(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 2.14(c)(i) make funds available
to the Administrative Agent for the account of the Issuing Bank at the
Principal Office in an amount equal to its Commitment Percentage of the
Unreimbursed Amount not later than 1:00 p.m. on the Business Day specified in
such notice by the Administrative Agent, whereupon, subject to the provisions
of Section 2.14(c)(iii),
each Lender that so makes funds available shall be deemed to have made a Base
Rate Loan to SOURCECORP in such amount. 
The Administrative Agent shall remit the funds so received to the
Issuing Bank.

 

(iii)          With
respect to any Unreimbursed Amount that is not fully refinanced by Base Rate
Loans because the conditions set forth in Section 6.2 cannot be satisfied or for
any other reason, SOURCECORP shall be deemed to have incurred from the Issuing
Bank an extension of credit in the amount of the Unreimbursed Amount that is
not so refinanced, which extension of credit shall be due and payable on demand
(together with interest) and shall bear interest at the Default Rate.  In such event, each Lender’s payment to the
Administrative Agent for the account of the Issuing Bank pursuant to Section 2.14(c)(ii)
shall be deemed payment in respect of its participation in such extension of
credit.

 

29

 

(iv)          Until
each Lender funds its Revolving Loan or participation pursuant to this Section 2.14(c)
to reimburse the Issuing Bank for any amount drawn under any Letter of Credit,
interest in respect of such Lender’s Commitment Percentage of such amount shall
be solely for the account of the Issuing Bank.

 

(v)           Each
Lender’s obligation to make Revolving Loans or fund participations to reimburse
the Issuing Bank for amounts drawn under Letters of Credit, as contemplated by
this Section 2.14(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 Issuing Bank, SOURCECORP 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 Revolving Loans pursuant to this Section 2.14(c)
is subject to the conditions set forth in Section 6.2 (other than delivery by
SOURCECORP of a request for a Revolving Loan). 
No Lender’s funding of a participation in any Letter of Credit shall
relieve or otherwise impair the obligation of SOURCECORP to reimburse the
Issuing Bank for the amount of any payment made by the Issuing Bank under any
Letter of Credit, together with interest as provided herein.

 

(vi)          If
any Lender fails to make available to the Administrative Agent for the account
of the Issuing Bank any amount required to be paid by such Lender pursuant to
the foregoing provisions of this Section 2.14(c) by the time specified in
Section 2.14(c)(ii),
the Issuing Bank shall be entitled to recover from such Lender (acting through
the Administrative Agent), on demand, such amount with interest thereon for the
period from the date such payment is required to the date on which such payment
is immediately available to the Issuing Bank at a rate per annum equal to the
greater of the Federal Funds Rate and a rate determined by the Issuing Bank in
accordance with banking industry rules on interbank compensation, plus any
administrative, processing or similar fees customarily charged by the Issuing
Bank in connection with the foregoing.  A
certificate of the Issuing Bank submitted to any Lender (through the
Administrative Agent) with respect to any amounts owing under this clause (vi)
shall be conclusive absent manifest error.

 

(d)           Repayment of
Participations.  

 

(i)            At
any time after the Issuing Bank has made a payment under any Letter of Credit
and has received from any Lender such Lender’s funding of its participation in
respect of such payment in accordance with Section 2.14(c), if the Administrative
Agent receives for the account of the Issuing Bank any payment in respect of
the related Unreimbursed Amount or interest thereon (whether directly from
SOURCECORP or otherwise, including proceeds of any cash collateral applied
thereto by the Administrative Agent), the Administrative Agent will distribute
to such Lender its Commitment Percentage thereof (appropriately adjusted, in
the case of interest payments, to reflect the period of time during which such
Lender’s participation was outstanding) in the same funds as those received by
the Administrative Agent.

 

(ii)           If
any payment received by the Administrative Agent for the account of the Issuing
Bank pursuant to Section 2.14(c)(i)
is required to be returned under any of the circumstances described in Section 3.7
(including pursuant to any settlement entered into by the Issuing Bank in its
discretion), each Lender shall pay to the Administrative Agent for the account
of the Issuing Bank its Commitment Percentage thereof on demand of the
Administrative Agent, plus interest thereon from the date of such demand to the
date such amount is returned by such Lender, at a rate per annum equal to the
Federal Funds Rate from time to time in effect. 
The

 

30

 

obligations of the Lenders under this clause shall survive the
payment in full of the Obligations and the termination of this Agreement.

 

(e)           Obligations
Absolute.  The Reimbursement
Obligations of SOURCECORP under this Agreement and the other Loan Documents
shall be absolute, unconditional and irrevocable, and shall be performed
strictly in accordance with the terms of this Agreement and the other Loan
Documents under all circumstances whatsoever, including, without limitation,
the following circumstances:

 

(i)            any
lack of validity or enforceability of any Letter of Credit, this Agreement or
any Letter of Credit Application;

 

(ii)           the
existence of any claim, counterclaim, setoff, defense or other right that
SOURCECORP 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 Administrative Agent,
the Issuing Bank, the Lenders 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 Issuing Bank 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 Issuing Bank 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 the Bankruptcy Code or any other Governmental Requirement;
or

 

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

 

SOURCECORP 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 SOURCECORP’s instructions or other irregularity,
SOURCECORP will immediately notify the Issuing Bank.  SOURCECORP shall be conclusively deemed to
have waived any such claim against the Issuing Bank and its correspondents
unless such notice is given as aforesaid.

 

(f)            Role of Issuing
Bank.  Each Lender and SOURCECORP
agree that, in paying any drawing under a Letter of Credit, the Issuing Bank
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 (unless
expressly required by the Letter of Credit). 
None of the Issuing Bank, the Administrative Agent, any of their
respective Related Parties nor any correspondent, participant or assignee of
the Issuing Bank 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

 

31

 

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
Loan Document.  SOURCECORP 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 SOURCECORP’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 Issuing Bank, the Administrative Agent, any of their
respective Related Parties nor any correspondent, participant or assignee of
the Issuing Bank, shall be liable or responsible for any of the matters
described in clauses (i) through (v) of Section 2.14(e); provided, however, that
anything in such clauses to the contrary notwithstanding, SOURCECORP may have a
claim against the Issuing Bank, and the Issuing Bank may be liable to
SOURCECORP, to the extent, but only to the extent, of any direct, as opposed to
consequential or exemplary, damages suffered by SOURCECORP which SOURCECORP
proves were caused by the Issuing Bank’s willful misconduct or gross negligence
or the Issuing Bank’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 Issuing Bank may accept documents that appear on their face to
be in order, without responsibility for further investigation (unless expressly
required by the Letter of Credit), regardless of any notice or information to
the contrary, and the Issuing Bank 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)           Intentionally
Omitted.  

 

(h)           Applicability of ISP.  Unless otherwise expressly agreed by the
Issuing Bank and SOURCECORP 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 Letter of Credit.

 

(i)            Letter of Credit
Fees.  SOURCECORP shall pay to the
Administrative Agent for the account of each Lender in accordance with its
Commitment Percentage a Letter of Credit Fee (the “Letter of Credit Fee”) for each Letter
of Credit equal to the Applicable Margin times the daily amount available to be
drawn under such Letter of Credit.  The
Letter of Credit fee shall be payable on each Quarterly Date, commencing with
the first such date to occur after the issuance of such Letter of Credit, on
the Letter of Credit Expiration Date and thereafter on demand.  If there is any change in the Applicable
Margin during any quarter, the daily amount available to be drawn under each
Letter of Credit shall be computed and multiplied by the Applicable Margin
separately for each period during such quarter that such Applicable Margin was
in effect.  While any Event of Default
exists, all Letter of Credit Fees shall accrue at the Default Rate.

 

(j)            Fronting Fee and
Documentary and Processing Charges Payable to Issuing Bank.  SOURCECORP shall pay directly to the Issuing
Bank 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 the tenth Business Day after the end of each March, June,
September and December, in respect of the most recently-ended quarterly
period (or portion thereof, in the case of the first payment), commencing with
the first such date to occur after the issuance of such Letter of Credit, on
the Letter of Credit Expiration Date and thereafter on demand.  In addition, SOURCECORP shall pay directly to
the Issuing Bank for its own account the customary issuance, presentation,
amendment and other processing fees, and other standard costs and charges, of
the Issuing Bank 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.

 

32

 

(k)           Conflict with Loan
Documents.  In the event of any
conflict between the terms hereof and the terms of any other Loan Documents,
the terms hereof shall control, unless the terms of such other Loan Document
expressly state that they control, in which case they 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,
SOURCECORP shall be obligated to reimburse the Issuing Bank hereunder for any
and all drawings under such Letter of Credit. 
SOURCECORP hereby acknowledges that the issuance of Letters of Credit for
the account of Subsidiaries inures to the benefit of SOURCECORP, and that
SOURCECORP’s business derives substantial benefits from the businesses of such
Subsidiaries.

 

Section
2.15         Swingline
Advances.

 

(a)           The Swing Line.  Subject to the terms and conditions set forth
herein, Swingline Lender agrees, in reliance upon the agreements of the other
Lenders set forth in this Section 2.15,
to consider in its sole and absolute discretion making loans (each such loan, a
“Swingline Advance”) to SOURCECORP
from time to time, on any Business Day from and including the Effective Date to
but excluding the Maturity Date, in an aggregate amount not to exceed  $10,000,000 at any time outstanding,
notwithstanding the fact that such Swingline Advances, when aggregated with the
Commitment Percentage of the Outstanding Credit applicable to the Revolving
Loans and Letter of Credit Liabilities of the Lender acting as Swingline
Lender, may exceed the amount of such Lender’s Commitment; provided, however,
that after giving effect to any Swingline Advance, (i) the aggregate
Outstanding Credit applicable to the Revolving Loans of any Lender, plus
such Lender’s Commitment Percentage of the Outstanding Credit applicable to
Letter of Credit Liabilities, plus such Lender’s Commitment Percentage
of the Outstanding Credit applicable to Swingline Advances does not exceed such
Lender’s Commitment and (ii) the Outstanding Credit shall not exceed the
aggregate amount of the Commitments of all Lenders. The Swing Line is a
discretionary, uncommitted facility and Swingline Lender may terminate or
suspend the Swing Line at any time in its sole discretion upon notice to
SOURCECORP which notice may be given by Swingline Lender before or after
SOURCECORP requests a Swingline Advance hereunder.   Each Swingline Advance shall bear interest
as set forth in Section 2.4(a)(iii).  Immediately upon the making of a Swingline
Advance, each Lender shall be deemed to, and hereby irrevocably and
unconditionally agrees to, purchase from Swingline Lender a risk participation
in such Swingline Advance in an amount equal to the product of such Lender’s
Commitment Percentage times the amount of such Swingline Advance.

 

(b)           Borrowing Procedures.  Unless the Swing Line has been terminated or
suspended by Swingline Lender as provided in subsection (a) above, each Swingline
Advance shall be made upon SOURCECORP’s irrevocable notice to Swingline Lender
and the Administrative Agent, which may be given by telephone.  Each such notice must be received by
Swingline Lender and the 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 Swingline Lender
and the Administrative Agent of a written Swingline Advance notice in the form
of Exhibit E hereto, appropriately completed and signed by a Responsible
Officer of SOURCECORP.  Promptly after
receipt by Swingline Lender of any telephonic Swingline Advance notices,
Swingline Lender will confirm with the Administrative Agent (by telephone or in
writing) that the Administrative Agent has also received such Swingline Advance
notice and, if not, Swingline Lender will notify (by telephone or in writing)
of the contents thereof.  Unless (x) the
Swing Line has been terminated or suspended by Swingline Lender as provided in subsection (a) above,
or (y) Swingline Lender has received notice (by telephone or in writing) from
the Administrative Agent (including at the request of any Lender) prior to 2:00
p.m. on the date of the proposed borrowing of a Swingline Advance (A) directing
Swingline Lender not to make such

 

33

 

Swingline Advance as a result
of the limitations set forth in the proviso to the first sentence of Section 2.15(a),
or (B) that one or more of the applicable conditions specified in Article 6 is not
then satisfied, then, subject to the terms and conditions hereof, Swingline
Lender will, not later than 3:00 p.m. on the requested borrowing date, make the
amount of its Swingline Advance available to SOURCECORP at its office by
crediting the account of SOURCECORP on the books of Swingline Lender in
immediately available funds.  The Lenders
agree that Swingline 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 the Lenders hereunder other than notifying the
Administrative Agent of a Swingline Advance notice.  

 

(c)           Refinancing of
Swingline Advances. 

 

(i)            Each
Swingline Advance shall be payable on the earlier of demand by Swingline Lender
or the Maturity Date.  In addition,
Swingline Lender at any time in its sole and absolute discretion may request,
on behalf of SOURCECORP (which hereby irrevocably authorizes Swingline Lender
to so request on its behalf), that each Lender make a Base Rate Loan in an
amount equal to such Lender’s Commitment Percentage of the amount of Swingline
Advances then outstanding.  Such request
shall be made in writing (which written request shall be deemed to be a notice
of borrowing for purposes hereof) and in accordance with the requirements of Sections 2.5 and
2.6,
without regard to the minimum and multiples specified in Section 2.8 for
the principal amount of Base Rate Loans, but subject to the unutilized portion
of the aggregate amount of the Commitments of the Lenders and the conditions
set forth in Section 6.2.  Swingline Lender shall furnish SOURCECORP
with a copy of the applicable notice of borrowing promptly after delivering
such notice to the Administrative Agent. 
Each Lender shall make an amount equal to its Commitment Percentage of
the amount specified in such notice of borrowing available to the Administrative
Agent in immediately available funds for the account of Swingline Lender at the
Principal Office not later than 1:00 p.m. on the day specified in such notice
of borrowing, whereupon, subject to Section 2.15(c)(ii), each Lender that so
makes funds available shall be deemed to have made a Base Rate Loan to
SOURCECORP in such amount.  The
Administrative Agent shall remit the funds so received to Swingline Lender.

 

(ii)           If
for any reason any Swingline Advance cannot be refinanced by a Revolving Loan in
accordance with Section 2.15(c)(i),
the request for Base Rate Loans submitted by Swingline Lender as set forth
herein shall be deemed to be a request by Swingline Lender that each of the
Lenders fund its risk participation in the relevant Swingline Advance and each
Lender’s payment to the Administrative Agent for the account of Swingline
Lender pursuant to Section 2.15(c)(i)
shall be deemed payment in respect of such participation.

 

(iii)          If
any Lender fails to make available to the Administrative Agent for the account
of Swingline Lender any amount required to be paid by such Lender pursuant to
the foregoing provisions of this Section 2.15(c) by the time specified in
Section 2.15(c)(i),
Swingline Lender shall be entitled to recover from such Lender (acting through
the Administrative Agent), on demand, such amount with interest thereon for the
period from the date such payment is required to the date on which such payment
is immediately available to Swingline Lender at a rate per annum equal to the
greater of the Federal Funds Rate and a rate determined by Swingline Lender in
accordance with banking industry rules on interbank compensation, plus
any administrative, processing or similar fees customarily charged by Swingline
Lender in connection with the foregoing. 
A certificate of Swingline Lender submitted to any Lender (through the
Administrative Agent) with respect to any amounts owing under this clause (iii)
shall be conclusive absent manifest error.

 

34

 

(iv)          Each
Lender’s obligation to make Revolving Loans or to purchase and fund risk
participations in Swingline Advances pursuant to this Section 2.15(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 Swingline Lender, SOURCECORP 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 Revolving Loans pursuant to this Section 2.15(c)
is subject to the conditions set forth in Section 6.2.  No such funding of risk participations shall
relieve or otherwise impair the obligation of SOURCECORP to repay Swingline
Advances, 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 Swingline
Advance, if Swingline Lender receives any payment on account of such Swingline
Advance, Swingline Lender will distribute to such Lender its Commitment
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 Swingline
Lender. 

 

(ii)           If
any payment received by Swingline Lender in respect of principal or interest on
any Swingline Advance is required to be returned by Swingline Lender under any
of the circumstances described in Section 3.7 (including pursuant to any
settlement entered into by Swingline Lender in its discretion), each Lender
shall pay to Swingline Lender its Commitment Percentage thereof on demand of
the 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.  The Administrative
Agent will make such demand upon the request of Swingline Lender.  The obligations of the Lenders under this
clause shall survive the payment in full of the Obligations and the
termination of this Agreement.

 

(e)           Interest for Account
of Swingline Lender.  Swingline
Lender shall be responsible for invoicing SOURCECORP for interest on the
Swingline Advances.  Until each Lender
funds its Base Rate Loan or risk participation pursuant to this Section 2.15 to
refinance such Lender’s Commitment Percentage of any Swingline Advance,
interest in respect of such Commitment Percentage shall be solely for the
account of Swingline Lender.

 

(f)            Payments Directly
to Swingline Lender.  SOURCECORP
shall make all payments of principal and interest in respect of the Swingline
Advances directly to Swingline Lender.

 

(g)           Conflicting
Provisions.  This Section 2.15 shall
supersede any provisions in Sections 2.5 and 2.9 that may be to the contrary to the
extent that such provisions relate to Swingline Advances.  SOURCECORP and Swingline Lender may enter
into a written agreement supplementing or modifying the provisions of this Section 2.15 and
as between SOURCECORP and Swingline Lender (but not as to any other Lender),
such written agreement shall supercede any provisions of this Section 2.15
that may be to the contrary.

 

Section
2.16         Increase in Commitments.  

 

(a)           Request for Increase.  Provided there exists no Event of Default,
upon notice to the Administrative Agent (which shall promptly notify the
Lenders), SOURCECORP may, from time to time, request an increase in the
aggregate amount of the Commitments by an amount (for all such

 

35

 

requests) not exceeding
$50,000,000; provided  that (i) any such request for an increase
shall be in a minimum amount of $10,000,000 and (ii) SOURCECORP may make a
maximum of three such requests.  At the
time of sending such notice, SOURCECORP (in consultation with the
Administrative Agent) shall specify the time period within which each Lender is
requested to respond (which shall in no event be less than ten Business Days
from the date of delivery of such notice to the Lenders).

 

(b)           Lender Elections to
Increase.  Each Lender shall notify
the Administrative Agent within such time period whether or not it agrees to
increase its Commitment and, if so, whether by an amount equal to, greater
than, or less than its Commitment Percentage of such requested increase.  Any Lender not responding within such time
period shall be deemed to have declined to increase its Commitment.  

 

(c)           Notification by the
Administrative Agent; Additional Lenders. 
The Administrative Agent shall notify SOURCECORP and each Lender of the
Lenders’ responses to each request made hereunder.  To achieve the full amount of a requested
increase and subject to the approval of the Administrative Agent and the
Issuing Bank (which approvals shall not be unreasonably withheld), SOURCECORP
may also invite additional Eligible Assignees to become Lenders pursuant to a
joinder agreement in form and substance reasonably satisfactory to the
Administrative Agent and its counsel.

 

(d)           Effective Date and
Allocations.  If the aggregate amount
of the Commitments of the Lenders is increased in accordance with this Section 2.16,
the Administrative Agent and SOURCECORP shall determine the effective date (the
“Increase Effective Date”) and the
final allocation of such increase.  The
Administrative Agent shall promptly notify SOURCECORP and the Lenders of the
final allocation of such increase and the Increase Effective Date.  

 

(e)           Conditions to
Effectiveness of Increase.  As a
condition precedent to such increase, SOURCECORP shall deliver to the
Administrative Agent a certificate of each Loan Party dated as of the Increase
Effective Date (in sufficient copies for each Lender) signed by a Responsible
Officer of such Loan Party (i) certifying and attaching the resolutions adopted
by such Loan Party approving or consenting to such increase, and (ii) in the
case of SOURCECORP, certifying that, before and after giving effect to such
increase, (A) the representations and warranties contained in Article 7 and
the other Loan Documents are true and correct on and as of the Increase
Effective Date, except to the extent that such representations and warranties
specifically refer to an earlier date, in which case they are true and correct
as of such earlier date, and except that for purposes of this Section 2.16,
the representations and warranties contained in Section 7.2 shall be deemed to
refer to the most recent statements furnished pursuant to clauses (a) and (b), respectively, of
Section 8.1,
and (B) no Default exists.  SOURCECORP
shall prepay any Loans outstanding on the Increase Effective Date (and pay any
additional amounts required pursuant to Section 4.1) to the extent necessary to
keep the outstanding Revolving Loans ratable with any revised Commitment
Percentages arising from any nonratable increase in the Commitments under this Section 2.16.

 

(f)            Conflicting
Provisions.  This Section 2.16
shall supersede any provisions in Sections 3.3 or 13.11 to the
contrary.

 

ARTICLE 3

PAYMENTS

 

Section
3.1            Method of Payment.  All payments of principal, interest, fees and
other amounts to be made by SOURCECORP under this Agreement and the other Loan
Documents shall be made to the Administrative Agent at the Principal Office for
the account of each Lender’s Applicable Lending Office in Dollars and in
immediately available funds, without setoff, deduction or counterclaim, not
later than

 

36

 

11:00 a.m. (Dallas, Texas time)
on the date on which such payment shall become due (each such payment made
after such time on such due date to be deemed to have been made on the next
succeeding Business Day).  SOURCECORP
shall, at the time of making any such payment, specify to the Administrative
Agent the sums payable by SOURCECORP under this Agreement and the other Loan
Documents to which such payment is to be applied (and in the event that
SOURCECORP fails to so specify, or if an Event of Default has occurred and is
continuing, the Administrative Agent may apply such payment to the Obligations
in such order and manner as the Administrative Agent may elect, subject to Section 3.2); provided,
however, that, unless Swingline Lender expressly agrees to the contrary,
such payment shall be applied first to any Swingline Advances until such
advances are paid in full.  Each payment
received by the Administrative Agent under this Agreement or any other Loan
Document for the account of a Lender shall be paid promptly to such Lender, in
immediately available funds, for the account of such Lender’s Applicable
Lending Office.  Whenever any payment
under this Agreement or any other Loan Document shall be stated to be due on a
day that is not a Business Day, such payment may be made on the next succeeding
Business Day, and such extension of time shall in such case be included in the
computation of the payment of interest and commitment fee, as the case may be.

 

Section
3.2            Pro Rata Treatment.  Except to the extent otherwise provided in
this Agreement:  (a) each Revolving Loan
shall be made by the Lenders under Section 2.1, each payment of commitment
fees under Section 2.11(a)
shall be made for the account of the Lenders, and each termination or reduction
of the Commitments under Section 2.13
shall be applied to the Commitments of the Lenders, pro rata according to the
respective unused Commitments; (b) the making, Conversion and Continuation of
Loans of a particular Type (other than Conversions provided for by Section 4.4)
shall be made pro rata among the Lenders holding Loans of such Type according
to the amounts of their respective Commitments; (c) each payment and prepayment
by SOURCECORP of principal of or interest on Loans of a particular Type shall
be made to the Administrative Agent for the account of the Lenders holding
Loans of such Type pro rata in accordance with the respective unpaid principal
amounts of such Loans held by such Lenders; (d) Interest Periods for Loans of a
particular Type shall be allocated among Lenders holding Loans of such Type pro
rata according to the respective principal amounts held by such Lenders; and
(e) the Lenders (other than the Issuing Bank) shall purchase participations in
the Letters of Credit and, if applicable, the Swingline Advances pro rata in
accordance with their Commitment Percentages.

 

Section
3.3            Sharing of Payments, Etc. 
If a Lender shall obtain payment of any principal of or interest on any
of the Obligations due to such Lender hereunder through the exercise of any
right of setoff, banker’s lien, counterclaim or similar right, or otherwise, it
shall promptly purchase from the other Lenders participations in the
Obligations held by the other Lenders in such amounts, and make such
adjustments from time to time as shall be equitable to the end that all the
Lenders shall share pro rata in accordance with the unpaid principal and
interest on the Obligations then due to each of them.  To such end, all of the Lenders shall make
appropriate adjustments among themselves (by the resale of participations sold
or otherwise) if all or any portion of such excess payment is thereafter
rescinded or must otherwise be restored. 
SOURCECORP agrees, to the fullest extent it may effectively do so under
applicable law, that any Lender, so purchasing a participation in the
Obligations by the other Lenders may exercise all rights of setoff, banker’s
lien, counterclaim or similar rights with respect to such participation as
fully as if such Lender were a direct holder of Obligations in the amount of
such participation.  Nothing contained
herein shall require any Lender to exercise any such right or shall affect the
right of any Lender to exercise, and retain the benefits of exercising, any
such right with respect to any other indebtedness, liability or obligation of
SOURCECORP or any of its Subsidiaries.

 

37

 

Section
3.4            The Administrative Agent’s Clawback.  

 

(a)           Funding by the
Lenders; Presumption by the Administrative Agent.  Unless the Administrative Agent shall have
received notice from a Lender prior to the proposed date of any Eurodollar Loan
that is a Revolving Loan (or, in the case of any Base Rate Loan, prior to 12:00
noon on the date of such Revolving Loan) that such Lender will not make
available to the Administrative Agent such Lender’s share of such Revolving
Loan, the Administrative Agent may assume that such Lender has made such share
available on such date in accordance with Section 2.5 (or, in the case of  Base Rate Loans, that such Lender has made
such share available in accordance with and at the time required by Section 2.5) and
may, in reliance upon such assumption, make available to SOURCECORP a
corresponding amount.  In such event, if
a Lender has not in fact made its share of the applicable Revolving Loan
available to the Administrative Agent, then the applicable Lender and
SOURCECORP severally agree to pay to the 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 SOURCECORP to but excluding the date of payment to the 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 the Administrative Agent in accordance
with banking industry rules on interbank compensation, plus any
administrative, processing or similar fees customarily charged by the
Administrative Agent in connection with the foregoing and (B) in the case of a
payment to be made by SOURCECORP, the interest rate applicable to Base Rate
Loans.  If SOURCECORP and such Lender
shall pay such interest to the Administrative Agent for the same or an
overlapping period, the Administrative Agent shall promptly remit to SOURCECORP
the amount of such interest paid by SOURCECORP for such period.  If such Lender pays its share of the
applicable Revolving Loan to the Administrative Agent, then the amount so paid
shall constitute such Lender’s Commitment Percentage of such Revolving
Loan.  Any payment by SOURCECORP shall be
without prejudice to any claim SOURCECORP may have against a Lender that shall
have failed to make such payment to the Administrative Agent.

 

(b)           Payments by
SOURCECORP; Presumptions by the Administrative Agent.  Unless the Administrative Agent shall have
received notice from SOURCECORP prior to the date on which any payment is due
to the Administrative Agent for the account of the Lenders or the Issuing Bank
hereunder that SOURCECORP will not make such payment, the Administrative Agent
may assume that SOURCECORP has made such payment on such date in accordance
herewith and may, in reliance upon such assumption, distribute to the Lenders
or the Issuing Bank, as the case may be, the amount due.  In such event, if SOURCECORP has not in fact
made such payment, then each of the Lenders or the Issuing Bank, as the case
may be, severally agrees to repay to the Administrative Agent forthwith on
demand the amount so distributed to such Lender or the Issuing Bank, 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 the Administrative Agent, at the greater of the Federal Funds
Rate and a rate determined by the Administrative Agent in accordance with banking
industry rules on interbank compensation. 
A notice of the Administrative Agent to any Lender or SOURCECORP 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 the Administrative Agent funds for any Loan to be made by
such Lender as provided in the foregoing provisions of this Article 3, and
such funds are not made available to SOURCECORP by the Administrative Agent
because the conditions to the applicable Loan funding or issuance of a Letter
of Credit set forth in Article 6
are not satisfied or waived in accordance with the terms hereof, the
Administrative Agent shall return such funds (in like funds as received from
such Lender) to such Lender, without interest.

 

38

 

(d)           Obligations of the
Lenders Several.  The obligations of
the Lenders hereunder to make Revolving Loans, to fund participations in
Letters of Credit and Swingline Advances and to make payments under Section 13.1(c)
are several and not joint.  The failure
of any Lender to make any Revolving Loan, to fund any such participation or to
make any payment under Section 13.1(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 Revolving Loan,
purchase its participation or to make its payment under Section 13.1(c).

 

Section
3.5            Withholding Taxes.  

 

(a)           All payments by
SOURCECORP of principal of and interest on the Loans and of all fees and other
amounts payable under the Loan Documents shall be made free and clear of, and
without deduction by reason of, any present or future taxes, levies, duties,
imposts, assessments or other charges levied or imposed by any Governmental
Authority (other than taxes on the overall net income of any Lender).  If any such taxes, duties, imposts, assessments
or other charges are so levied or imposed, SOURCECORP will (i) make additional
payments in such amounts so that every net payment of principal of and interest
on the Loans and of all other amounts payable by it under the Loan Documents,
after withholding or deduction for or on account of any such present or future
taxes, duties, imposts, assessments or other charges (including any tax imposed
on or measured by net income of a Lender attributable to payments made to or on
behalf of a Lender pursuant to this Section 3.5 and any penalties or
interest attributable to such payments), will not be less than the amount
provided for herein or therein absent such withholding or deduction (provided
that SOURCECORP shall not have any obligation to pay such additional amounts to
any Lender to the extent that such taxes, duties, imposts, assessments or other
charges are levied or imposed by reason of the failure of such Lender to comply
with the provisions of Section 3.6),
(ii) make such withholding or deduction, and (iii) remit the full amount deducted
or withheld to the relevant Governmental Authority in accordance with
applicable law.  Without limiting the
generality of the foregoing, SOURCECORP will, upon written request of any
Lender, reimburse each such Lender for the amount of (A) such taxes, duties,
imports, assessments or other charges so levied or imposed by any Governmental
Authority and paid by such Lender as a result of payments made by SOURCECORP
under or with respect to the Loans and Letter of Credit Liabilities other than
such taxes, duties, imports, assessments and other charges previously withheld
or deducted by SOURCECORP which have previously resulted in the payment of the
required additional amount to the Lender, and (B) such taxes, duties,
assessments and other charges so levied or imposed with respect to any Lender
reimbursement under the foregoing clause (A), so that the net amount
received by such Lender (net of payments made under or with respect to the
Loans and Letter of Credit Liabilities) after such reimbursement will not be
less than the net amount the Lender would have received if such taxes, duties,
assessments and other charges on such reimbursement had not been levied or
imposed.  SOURCECORP shall furnish
promptly to the Administrative Agent for distribution to each affected Lender,
as the case may be, upon request of such Lender, official receipts evidencing
any such payment, withholding or reduction.

 

(b)           SOURCECORP will
indemnify the Administrative Agent and each Lender (without duplication)
against, and reimburse the Administrative Agent and each Lender for, all
present and future taxes, levies, duties, imposts, assessments or other charges
(including interest and penalties) levied or collected (whether or not legally
or correctly imposed, assessed, levied or collected), excluding, however,
any taxes imposed on the overall net income of the Administrative Agent or such
Lender or any lending office of the Administrative Agent or such Lender by any
jurisdiction in which the Administrative Agent or such Lender or any such lending
office is located, on or in respect of this Agreement, any of the Loan
Documents or the Obligations or any portion thereof (the “reimbursable taxes”).  Any such indemnification shall be on an
after-tax basis, taking into account any such reimbursable taxes imposed on the
amounts paid as indemnity.

 

39

 

(c)           Without prejudice to
the survival of any other term or provision of this Agreement, the obligations
of SOURCECORP under this Section 3.5
shall survive the payment of the Loans and the other Obligations and
termination of the Commitments.

 

Section
3.6            Withholding Tax Exemption.  Each Lender that is not incorporated or
otherwise formed under the laws of the U.S. or a state thereof agrees that it
will, prior to or on or about the Closing Date or the date upon which it
becomes a party to this Agreement and if it is legally able to do so, deliver
to SOURCECORP, for and on behalf of SOURCECORP, and the Administrative Agent
two duly completed copies of U.S. Internal Revenue Service Form W-8ECI or
W-8BEN, as appropriate, certifying in any case that such Lender is entitled to
receive payments from SOURCECORP under any Loan Document without deduction or
withholding of any U.S. federal income taxes. 
Each Lender which so delivers a Form W-8ECI or W-8BEN further undertakes
to deliver to SOURCECORP, for and on behalf of SOURCECORP, and the
Administrative Agent two additional copies of such form (or a successor form)
on or before the date such form expires or becomes obsolete or after the
occurrence of any event requiring a change in the most recent form so delivered
by it, and such amendments thereto or extensions or renewals thereof as may be
reasonably requested by SOURCECORP or the Administrative Agent, in each case
certifying that such Lender is entitled to receive payments from SOURCECORP
under any Loan Document without deduction or withholding of any U.S. federal
income taxes, unless an event (including without limitation any change in
treaty, law or regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders all such forms inapplicable
or which would prevent such Lender from duly completing and delivering any such
form with respect to it and such Lender advises SOURCECORP, for and on behalf
of SOURCECORP, and the Administrative Agent that it is not capable of receiving
such payments without any deduction or withholding of U.S. federal income tax.

 

Section
3.7            Reinstatement of Obligations.  Notwithstanding anything to the contrary
contained in this Agreement or any other Loan Document, if the payment of any
amount of principal of or interest with respect to the Loans, the Reimbursement
Obligations or any other amount of the Obligations, or any portion thereof, is
rescinded, voided or must otherwise be refunded by the Administrative Agent,
any Lender or the Issuing Bank upon the insolvency, bankruptcy or
reorganization of SOURCECORP or any other Loan Party or otherwise for any
reason whatsoever, then each of (a) the Obligations, (b) the Loan Documents
(including, without limitation, this Agreement, the Notes and the Master
Guaranty), (c) the indebtedness, liabilities and obligations of SOURCECORP and
any other Loan Party under the Loan Documents, and (d) all Liens, if any, for
the benefit of the Administrative Agent and the Lenders created under or
evidenced by the Loan Documents, will be automatically reinstated and become
automatically effective and in full force and effect, all to the extent that
and as though such payment so rescinded, voided or otherwise refunded had never
been made.  Each Lender and the Issuing
Bank severally agrees to pay to the Administrative Agent upon demand its
applicable share (without duplication) of any amount so recovered from or
repaid by the Administrative Agent, plus interest thereon from the date
of such demand to the date such payment is made at a rate per annum equal to
the Federal Funds Rate from time to time in effect.  The obligations of the Lenders and the
Issuing Bank under the preceding sentence shall survive the payment in full of
the Obligations and the termination of this Agreement.

 

ARTICLE 4

YIELD PROTECTION AND ILLEGALITY

 

Section
4.1            Additional Costs.

 

(a)           SOURCECORP shall pay
directly to each Lender from time to time, promptly upon the request of such
Lender, the costs actually incurred by such Lender which such Lender determines
are directly attributable to its making or maintaining of any Eurodollar Loans
to

 

40

 

SOURCECORP or its obligation to
make or create any of such Loans hereunder to SOURCECORP, or any reduction in
any amount receivable by such Lender hereunder from SOURCECORP in respect of
any such Loans or obligations (such increases in costs and reductions in amounts
receivable being herein called “Additional Costs”),
resulting from any Regulatory Change (other than those covered by Section 3.5)
which:

 

(i)            changes
the basis of taxation of any amounts payable to such Lender under this
Agreement or its Notes in respect of any of such Loans (other than taxes
imposed on the overall net income of such Lender or its Applicable Lending
Office for any of such Loans by the jurisdiction in which such Lender has its
principal office or such Applicable Lending Office);

 

(ii)           imposes
or modifies any reserve, special deposit, minimum capital, capital ratio or
similar requirement relating to any extensions of credit or other assets of, or
any deposits with or other liabilities or commitments of, such Lender
(including any of such Loans or any deposits referred to in the definition of “Eurodollar Rate” in Section 1.1
hereof, but excluding any reserve requirement contemplated by Section 4.7); or

 

(iii)          imposes
any other condition affecting this Agreement or the Notes or any of such extensions
of credit or liabilities or commitments.

 

Each Lender will notify SOURCECORP (with a copy to the Administrative
Agent) of any event occurring after the Closing Date which will entitle such
Lender to compensation pursuant to this Section 4.1(a) as promptly as
practicable after it obtains knowledge thereof and determines to request such
compensation, and (if so requested by SOURCECORP) will designate a different
Applicable Lending Office for the Eurodollar Loans of such Lender if such
designation will avoid the need for, or reduce the amount of, such compensation
and will not, in the sole opinion of such Lender, violate any law, rule or
regulation or be in any way disadvantageous to such Lender, provided
that such Lender shall have no obligation to so designate an Applicable Lending
Office located in the U.S. Each Lender will furnish SOURCECORP with a
certificate setting forth the basis, amount and computation of each request of
such Lender for compensation under this Section 4.1(a).  If any Lender requests compensation from
SOURCECORP under this Section 4.1(a),
SOURCECORP may, by notice to such Lender (with a copy to the Administrative
Agent), suspend the obligation of such Lender to make or Continue making, or
Convert Base Rate Loans into, Eurodollar Loans until the Regulatory Change
giving rise to such request ceases to be in effect (in which case the
provisions of Section 4.4
hereof shall be applicable).

 

(b)           Without limiting the
effect of the foregoing provisions of this Section 4.1, in the event that, by
reason of any Regulatory Change, any Lender either (i) incurs Additional Costs
based on or measured by the excess above a specified level of the amount of a
category of deposits or other liabilities of such Lender which includes
deposits by reference to which the interest rate on Eurodollar Loans is
determined as provided in this Agreement or a category of extensions of credit
or other assets of such Lender which includes Eurodollar Loans or (ii) becomes
subject to restrictions on the amount of such a category of liabilities or
assets which it may hold, then, if such Lender so elects by notice to
SOURCECORP (with a copy to the Administrative Agent), the obligation of such
Lender to make or Continue making, or Convert Base Rate Loans into, Eurodollar
Loans hereunder shall be suspended until such Regulatory Change ceases to be in
effect (in which case the provisions of Section 4.4 hereof shall be applicable).

 

(c)           Determinations and
allocations by any Lender for purposes of this Section 4.1 of the effect of any
Regulatory Change on its costs of maintaining its obligation to make Loans or
of making or maintaining Loans or on amounts receivable by it in respect of
Loans and of the additional amounts

 

41

 

required to compensate such
Lender in respect of any Additional Costs, shall be conclusive in the absence
of manifest error, provided that such determinations and allocations are
made on a reasonable basis.

 

Section
4.2            Limitation on Types of Loans.  Anything herein to the contrary
notwithstanding, if with respect to any Eurodollar Loans for any Interest
Period therefor:

 

(a)           The Administrative
Agent reasonably determines (which determination shall be conclusive absent
manifest error) that quotations of interest rates for the relevant deposits
referred to in the definition of “Eurodollar Rate”
in Section 1.1
hereof are not being provided in the relative amounts or for the relative
maturities for purposes of determining the rate of interest for such Loans as
provided in this Agreement; or

 

(b)           Required Lenders
reasonably determine (which determination shall be conclusive absent manifest
error) and notify the Administrative Agent that the relevant rates of interest
referred to in the definition of “Eurodollar Rate”
in Section 1.1
hereof on the basis of which the rate of interest for such Loans for such
Interest Period is to be determined do not accurately reflect the cost to the
Lenders of making or maintaining such Loans for such Interest Period;

 

then the Administrative Agent shall give SOURCECORP prompt notice
thereof and, so long as such condition remains in effect, the Lenders shall be
under no obligation to make Eurodollar Loans or to Convert Base Rate Loans into
Eurodollar Loans and SOURCECORP shall, on the last day(s) of the then current
Interest Period(s) for the outstanding Eurodollar Loans, either prepay such
Loans or Convert such Loans into Base Rate Loans in accordance with the terms
of this Agreement.

 

Section
4.3            Illegality.  Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Lender or its
Applicable Lending Office to (a) honor its obligation to make Eurodollar Loans
hereunder or (b) maintain Eurodollar Loans hereunder, then such Lender shall
promptly notify SOURCECORP for and on behalf of SOURCECORP (with a copy to the
Administrative Agent) thereof and such Lender’s obligation to make or maintain
Eurodollar Loans and to Convert Base Rate Loans into Eurodollar Loans hereunder
shall be suspended until such time as such Lender may again make and maintain
Eurodollar Loans (in which case the provisions of Section 4.4 hereof shall be
applicable).

 

Section
4.4            Treatment of Affected Loans.  If the obligation of any Lender to make or
Continue, or to Convert Base Rate Loans into, Eurodollar Loans is suspended
pursuant to Section 4.1
or 4.3
hereof, such Lender’s Eurodollar Loans shall be automatically Converted into
Base Rate Loans on the last day(s) of the then current Interest Period(s) for
the Eurodollar Loans (or, in the case of a Conversion required by Section 4.1(b)
or 4.3
hereof, on such earlier date as such Lender may specify to SOURCECORP, with a
copy to the Administrative Agent) and, unless and until such Lender gives
notice as provided below that the circumstances specified in Section 4.1 or 4.3 hereof which gave
rise to such Conversion no longer exist:

 

(a)           To the extent that such
Lender’s Eurodollar Loans have been so Converted, all payments and prepayments
of principal which would otherwise be applied to such Lender’s Eurodollar Loans
shall be applied instead to its Base Rate Loans; and

 

(b)           All Loans which would
otherwise be made or Continued by such Lender as Eurodollar Loans shall be made
as or Converted into Base Rate Loans and all Loans of such Lender which would
otherwise be Converted into Eurodollar Loans shall be Converted instead into
(or shall remain as) Base Rate Loans.

 

42

 

If such Lender gives notice to SOURCECORP (with a copy to the
Administrative Agent) that the circumstances specified in Section 4.1 or 4.3 hereof which gave
rise to the Conversion of such Lender’s Eurodollar Loans pursuant to this Section 4.4 no
longer exist (which such Lender agrees to do promptly upon such circumstances
ceasing to exist) at a time when Eurodollar Loans are outstanding, such Lender’s
Base Rate Loans shall be automatically Converted, on the first day(s) of the
next succeeding Interest Period(s) for such outstanding Eurodollar Loans, to
the extent necessary so that, after giving effect thereto, all Loans held by
the Lenders holding Eurodollar Loans and by such Lender are held pro rata (as
to principal amounts, Types and Interest Periods) in accordance with their
respective Commitments.

 

Section
4.5            Compensation.  SOURCECORP shall pay to the Administrative
Agent for the account of each Lender, promptly upon the request of such Lender
through the Administrative Agent, such amount or amounts as shall be sufficient
(in the reasonable opinion of such Lender) to compensate it for any loss, cost
or expense incurred by it as a result of:

 

(a)           Any payment, prepayment
or Conversion of a Eurodollar Loan for any reason (including, without
limitation, the acceleration of the outstanding Loans pursuant to Section 11.2) on
a date other than the last day of an Interest Period for such Loan; or

 

(b)           Any failure by
SOURCECORP for any reason (including, without limitation, the failure of any
conditions precedent specified in Article 6 to be satisfied) to borrow,
Convert or prepay a Eurodollar Loan on the date for such borrowing, Conversion
or prepayment specified in the relevant notice of borrowing, prepayment or
Conversion under this Agreement.

 

Section
4.6            Capital Adequacy.  If, after the Closing Date, any Lender shall
have determined that the adoption or implementation of any applicable law, rule
or regulation regarding capital adequacy (including, without limitation, any
law, rule or regulation implementing the Basle Accord), or any change therein,
or any change in the interpretation or administration thereof by any central
bank or other Governmental Authority charged with the interpretation or
administration thereof, or compliance by such Lender (or its parent) with any
guideline, request or directive regarding capital adequacy (whether or not
having the force of law) of any central bank or other Governmental Authority
(including, without limitation, any guideline or other requirement implementing
the Basle Accord), has or would have the effect of reducing the rate of return
on such Lender’s (or its parent’s) capital as a consequence of its obligations
hereunder or the transactions contemplated hereby to a level below that which
such Lender (or its parent) could have achieved but for such adoption,
implementation, change or compliance (taking into consideration such Lender’s
policies with respect to capital adequacy) by an amount deemed by such Lender
to be material, then from time to time, within ten Business Days after demand
by such Lender (with a copy to the Administrative Agent), SOURCECORP shall pay
to such Lender such additional amount or amounts as will compensate such Lender
(or its parent) for such reduction.  A
certificate of such Lender claiming compensation under this Section 4.6 and
setting forth the additional amount or amounts to be paid to it hereunder shall
be conclusive absent manifest error, provided that the determination
thereof is made on a reasonable basis. 
In determining such amount or amounts, such Lender may use any
reasonable averaging and attribution methods.

 

Section
4.7            Reserves on Eurodollar Loans.  SOURCECORP shall pay to each Lender, as long
as such Lender shall be required to maintain reserves with respect to
liabilities or assets consisting of or including Eurocurrency funds or deposits
(currently known as “Eurocurrency Liabilities”),
additional interest on the unpaid principal amount of each Eurodollar Loan
equal to the actual costs of such reserves allocated to such Loan by such
Lender (as determined by such Lender in good faith), which shall be due and payable
on each date on which interest is payable on such Loan, provided SOURCECORP
shall have received at least 10 days’ prior notice (with a copy to the
Administrative Agent) of such additional

 

43

 

interest from such Lender.  If a Lender fails to give notice 10 days
prior to the relevant interest payment date pursuant to Section 2.4(b),
such additional interest shall be due and payable 10 days from receipt of such
notice.

 

ARTICLE 5

GUARANTIES AND SETOFF

 

Section
5.1            Guaranties.  Each Domestic Subsidiary of SOURCECORP in
existence on the Closing Date (other than the Inactive Subsidiaries) shall
guarantee the payment and performance of the Obligations pursuant to the Master
Guaranty.

 

Section
5.2            New Subsidiaries.  Not later than the earlier of the date
SOURCECORP is required to deliver or actually delivers its compliance
certificate in respect of each fiscal quarter pursuant to Section 8.1(c),
SOURCECORP shall cause each Domestic Subsidiary created after the Closing Date
and during such fiscal quarter and each Domestic Subsidiary that ceased to be
an Inactive Subsidiary during such fiscal quarter to (a) guarantee the payment
and performance of the Obligations by executing and delivering to the
Administrative Agent a Joinder Agreement pursuant to which such Domestic
Subsidiary becomes a party to the Master Guaranty, and which Joinder Agreement
also provides that such Subsidiary agrees to comply with all of the covenants
contained in this Agreement applicable to it, and (b) deliver to the
Administrative Agent documents of the types referred to in subsections (a), (b), (c) and (d) of Section 6.1 and,
if reasonably requested by the Administrative Agent with respect to a Material
Loan Party, favorable opinions of counsel to such Person (which shall cover,
among other things, the legality, validity, binding effect and enforceability
of the documentation referred to in clause (a) above), all in form, content,
and scope reasonably satisfactory to the Administrative Agent.

 

Section
5.3            Setoff.  If an Event of Default shall have occurred
and be continuing, each Lender is hereby authorized at any time and from time
to time, without prior notice to SOURCECORP, any other Loan Party or any other
Person (any such notice being hereby expressly waived by SOURCECORP), to set
off and apply any and all deposits (general, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by such Lender
to or for the credit or the account of SOURCECORP or any other Loan Party
against any and all of the Obligations now or hereafter existing under this
Agreement, such Lender’s Note or any other Loan Document, irrespective of
whether or not the Administrative Agent or such Lender shall have made any
demand under this Agreement, such Lender’s Note or any such other Loan Document
and although such Obligations may be unmatured. 
Each Lender agrees promptly to notify SOURCECORP (with a copy to the
Administrative Agent) after any such setoff and application, provided that
the failure to give such notice shall not affect the validity of such setoff
and application.  The rights and remedies
of each Lender hereunder are in addition to other rights and remedies
(including, without limitation, other rights of setoff) which such Lender may
have.

 

ARTICLE 6

CONDITIONS PRECEDENT

 

Section
6.1            Initial Loans and Letter of Credit Conditions.  The agreement of the Administrative Agent and
the Lenders to enter into this Agreement, and each of the obligations of each
Lender to make its initial Loan (inclusive of Swingline Advances) under this
Agreement and the obligation of the Issuing Bank to issue the initial Letter of
Credit (and to permit the Existing Letters of Credit to become Letters of
Credit hereunder) under this Agreement are subject to the conditions precedent
that the Administrative Agent shall have received, on or before the Effective
Date, all of the following in form and substance reasonably satisfactory to the
Administrative Agent and, in the case of

 

44

 

actions to be taken, evidence that the following required actions have
been taken to the satisfaction of the Administrative Agent:

 

(a)           Resolutions.  Resolutions of the Board of Directors of
SOURCECORP and each other Loan Party certified by its Secretary or an Assistant
Secretary which authorize the execution, delivery and performance by such Loan
Party of the Loan Documents to which it is or is to be a party;

 

(b)           Incumbency
Certificate.  A certificate of
incumbency certified by the Secretary or an Assistant Secretary of SOURCECORP
and each other Loan Party certifying the name of each officer or other
representative of such Loan Party (i) who is authorized to sign the Loan
Documents to which such Loan Party is or is to be a party (including any
certificates contemplated therein), together with specimen signatures of each
such officer or other representative, and (ii) who will, until replaced by
other officers or representatives duly authorized for that purpose, act as its
representative for the purposes of signing documents and giving notices and
other communications in connection with the Loan Documents and the transactions
contemplated thereby;

 

(c)           Articles
or Certificates of Incorporation, etc. 
The articles or certificates of incorporation, certificate of formation,
certificate of limited partnership, partnership agreement or other applicable
constitutional document of SOURCECORP and each other Loan Party certified by
the Secretary or Assistant Secretary of such Loan Party, or a certificate of
the Secretary or Assistant Secretary of such Loan Party that the articles or
certificate of incorporation, certificate of formation, certificate of limited
partnership, partnership agreement or other applicable constitutional document
delivered by it pursuant to the Existing Credit Agreement has not been amended
or modified and remain in full force and effect;

 

(d)           Bylaws.  The bylaws of SOURCECORP and each other Loan
Party certified by the Secretary or an Assistant Secretary of such Loan Party,
or a certificate of the Secretary or an Assistant Secretary of such Loan Party
that the Bylaws delivered by it pursuant to the Existing Credit Agreement have
not been amended or modified and remain in full force and effect;

 

(e)           Governmental
Certificates.  Certificates of appropriate
officials as to the existence and good standing, status or compliance, as
applicable, of SOURCECORP and each other Loan Party in their respective
jurisdictions of incorporation or organization, each such certificate to be
dated as of a Current Date;

 

(f)            Notes.  The Notes duly completed and executed by
SOURCECORP;

 

(g)           Master
Guaranty.  The Master Guaranty duly
completed and executed by each Domestic Subsidiary (other than the Inactive
Subsidiaries) of SOURCECORP;

 

(h)           Consents.  A certificate of a Responsible Officer of
SOURCECORP either (A) certifying that all consents, licenses and approvals
required in connection with the execution, delivery and performance by each of
the Loan Parties and the validity against such Loan Parties of the Loan Documents
to which each is a party are in full force and effect, or (B) stating that
no such consents, licenses or approvals are so required;

 

(i)            Payment
of Principal, Interest, Fees and Expenses. 
SOURCECORP shall have paid in full (i) all outstanding principal
and all accrued and unpaid interest, fees (including any fees owing with
respect to the Existing Letters of Credit) and breakage costs owing to all of
the Lenders under the Existing Credit Agreement, (ii) all fees due on or
before the Effective Date as specified in this Agreement

 

45

 

or in the Fee Letter, and (iii) all fees and expenses of or
incurred by the Administrative Agent and its counsel to the extent billed on or
before the Effective Date and payable pursuant to this Agreement;

 

(j)            Regulatory
Approvals. A certificate of a Responsible Officer of SOURCECORP either (A) certifying
that all filings, consents or approvals with or of Governmental Authorities
necessary to consummate the transactions contemplated by the Loan Documents are
in full force and effect, or (B) stating that no such filings, consents or
approvals are so required;

 

(k)           No
Material Adverse Change.  A
certificate signed by a Responsible Officer of SOURCECORP certifying that, as
of the Effective Date, (A) no material adverse change shall have occurred
with respect to the condition (financial or otherwise), results of operations,
business, operations, capitalization, assets or liabilities (actual or
contingent), or prospects of SOURCECORP and its Subsidiaries taken as a whole
since December 31, 2004 that has not been disclosed to the Lenders in
writing or in public filings made by SOURCECORP with the Securities and
Exchange Commission, and (B) that the conditions specified in Sections 6.1 and
6.2(a) and
(b) have
been satisfied;

 

(l)            Financial
Statements.  If and to the extent not
previously delivered to the Administrative Agent, copies of each of the
financial statements referred to in Section 7.2;

 

(m)          Opinions
of Counsel.  Favorable opinions (or
comfort letters with respect to clause (ii) succeeding) of (i) Locke
Liddell & Sapp LLP, counsel for the Loan Parties, and such other
counsel as may be acceptable to the Administrative Agent, in form and substance
satisfactory to the Administrative Agent with respect to SOURCECORP and its
Subsidiaries with respect to the Loan Documents and (ii) if reasonably
requested by the Administrative Agent, such other counsel as may be acceptable
to the Administrative Agent regarding the power and authority of each of the
Subsidiaries of SOURCECORP to execute and deliver the Master Guaranty under the
laws of its jurisdiction of incorporation or organization; and

 

(n)           No
Material Litigation.  A certificate
signed by a Responsible Officer of SOURCECORP certifying that, as of the
Effective Date, no action, suit, investigation, or proceeding shall be pending
or threatened before any Governmental Authority that purports to affect
SOURCECORP or any of its Subsidiaries that could reasonably be expected to
result in a Material Adverse Effect and that has not been disclosed to the
Lenders in writing or in public filings made by SOURCECORP with the Securities
and Exchange Commission.

 

SOURCECORP shall deliver, or cause to be delivered, to the
Administrative Agent sufficient counterparts of each agreement, document or
instrument to be received by the Administrative Agent under this Section 6.1 to
permit the Administrative Agent to distribute a copy of the same to each of the
Lenders.

 

Section 6.2            All Extensions of Credit.
 The obligation of each Lender to make
any Revolving Loan (including the initial Loan), any Swingline Advance
(including the initial Swingline Advance) and the obligation of the Issuing
Bank to issue any Letter of Credit (including the initial Letter of Credit)
under this Agreement are subject to the satisfaction of each of the conditions
precedent set forth in Section 6.1
(without repetition) and each of the following additional conditions precedent:

 

(a)           No
Default or Material Adverse Effect. 
No Default or Material Adverse Effect shall have occurred and be
continuing, or would result from such Revolving Loan, Swingline Advance or
Letter of Credit;

 

46

 

(b)           Representations
and Warranties.  All of the representations
and warranties of SOURCECORP and its Subsidiaries and the other Loan Parties
contained in Article 7
hereof and in the other Loan Documents shall be true and correct on and as of
the date of such Loan or Letter of Credit with the same force and effect as if
such representations and warranties had been made on and as of such date,
except to the extent that such representations and warranties are expressly by
their terms made only as of the Closing Date or another specified date, and
except that such representations and warranties shall be deemed to be updated
or supplemented by transactions, acts or omissions that are permitted or
required under this Agreement; and

 

(c)           Additional
Documentation.  The Administrative
Agent shall have received such additional approvals, opinions, agreement,
documents and instruments as the Administrative Agent may reasonably request.

 

Each notice of borrowing or request for the issuance of a Letter of
Credit by SOURCECORP hereunder shall constitute a representation and warranty
by SOURCECORP that the conditions precedent set forth in Sections 6.2(a) and
(b) have
been satisfied (both as of the date of such notice and, unless SOURCECORP
otherwise notifies the Administrative Agent prior to the date of such borrowing
or Letter of Credit, as of the date of such borrowing or Letter of Credit).

 

ARTICLE 7

REPRESENTATIONS AND WARRANTIES

 

SOURCECORP
represents and warrants to the Administrative Agent and the Lenders that the
following statements are and, after giving effect to the transactions
contemplated hereby, will be true, correct and complete:

 

Section 7.1            Existence.  Each Loan Party (a) is a corporation,
limited liability company or limited partnership duly organized, validly
existing and in good standing (except to the extent that the failure to be in
good standing could not reasonably be expected to have a Material Adverse
Effect) under the laws of the jurisdiction of its incorporation or
organization, (b) has all requisite power and authority to own its
Properties and carry on its business as now being or as proposed to be
conducted, and (c) is qualified to do business in all jurisdictions in
which the nature of its business makes such qualification necessary and where
failure to so qualify could reasonably be expected to have a Material Adverse
Effect.  Each Loan Party has the power
and authority and legal right to execute, deliver and perform its obligations
under the Loan Documents to which it is or may become a party.  SOURCECORP is a holding company and is not an
operating company and does not engage in any material business operations apart
from the ownership and management of its Subsidiaries.

 

Section 7.2            Financial Statements.

 

(a)           SOURCECORP
has delivered to the Administrative Agent and the Lenders consolidated financial
statements of SOURCECORP and its Subsidiaries as of and for the fiscal years
ended December 31, 2002, 2003 and 2004, and as of and for the fiscal
quarters ended March 31, 2005 and June 30, 2005, including, without
limitation, balance sheets and income and cash flow statements audited (in the
case of fiscal year-end financial statements) by independent certified public
accountants of recognized standing acceptable to the Administrative Agent.  To SOURCECORP’s knowledge, such financial
statements are true and correct, have been prepared in accordance with GAAP and
fairly and accurately present, on a consolidated basis, the financial condition
of SOURCECORP and its consolidated Subsidiaries, as of the respective dates
indicated therein and the results of operations for the respective periods
indicated therein.  There has not been,
as of the Closing Date or the Effective Date, any material adverse change in
the business, condition (financial or otherwise), operations or Properties of

 

47

 

SOURCECORP or its Subsidiaries or since the effective dates of the most
recent applicable financial statements referred to in this Section 7.2(a).

 

(b)           The
Projections represent, as of the date thereof, the good faith estimate of SOURCECORP
concerning the probable performance of SOURCECORP and its Subsidiaries based on
assumptions believed to be reasonable as of such date.

 

Section 7.3            Corporate Action: No Breach.  The execution, delivery and performance by
each Loan Party of the Loan Documents to which it is or may become a party and
compliance with the terms and provisions hereof and thereof have been duly
authorized by all requisite corporate or other entity action on the part of the
Loan Parties and do not and will not (a) violate or conflict with, or
result in a breach of, or require any consent under (i) the articles or
certificates of incorporation or bylaws of any Loan Party, (ii) any
Governmental Requirement applicable to a Loan Party or any of its Property or
any order, writ, injunction or decree of any Governmental Authority or
arbitrator applicable to a Loan Party or any of its Property, or (iii) any
material agreement, document or instrument to which any Loan Party is a party
or by which any Loan Party or any of its Property is bound or subject, or (b) constitute
a default under any such material agreement, document or instrument, or result
in the creation or imposition of any Lien upon any of the revenues or Property
of any Loan Party.

 

Section 7.4            Operation of Business.  The Loan Parties possess all material Permits,
franchises, licenses and authorizations necessary or appropriate to conduct
their respective businesses substantially as now conducted and where the
failure to do so could reasonably be expected to have a Material Adverse
Effect.  None of such Persons is in
material violation of any such Permits, franchises, licenses or authorizations
the result of which could reasonably be expected to have a Material Adverse
Effect.

 

Section 7.5            Intellectual Property.  The Loan Parties own or possess (or will be
licensed or have the full right to use) all Intellectual Property which is
necessary for the operation of their respective businesses as presently
conducted and as proposed to be conducted, without any known conflict with the
rights of others which could reasonably be expected to have a Material Adverse
Effect.  The consummation of the
transactions contemplated by this Agreement and the other Loan Documents will
not materially alter or impair, individually or in the aggregate, any of such
rights of such Persons.  No product of
the Loan Parties infringes upon any Intellectual Property owned by any other
Person, and, except for the matter involving Rust Consulting, Inc.
described on Schedule 7.6,
no claim or litigation is pending or, to the knowledge of SOURCECORP or any of
its Subsidiaries, threatened against any Loan Party or any such Person
contesting its right to use any product or material which could reasonably be
expected to have a Material Adverse Effect. 
There is no violation by any Loan Party of any right of such Loan Party
with respect to any material Intellectual Property owned or used by such Loan
Party which could reasonably be expected to have a Material Adverse Effect.

 

Section 7.6            Litigation and Judgments.
 There are no actions, suits,
proceedings, claims or disputes pending or, to the knowledge of SOURCECORP or
any of its Subsidiaries, threatened, at law, in equity, in arbitration or
before any Governmental Authority, against SOURCECORP or any of its Subsidiaries
or against any of their properties or revenues that (a) purport to affect
or pertain to the validity or enforceability of this Agreement or any other
Loan Documents, or (b) except as specifically disclosed on Schedule 7.6 or
in public filings made by SOURCECORP with the Securities and Exchange
Commission prior to the Closing Date, either individually or in the aggregate,
if determined adversely, could reasonably be expected to have a Material
Adverse Effect.

 

Section 7.7            Rights in Properties; Liens.
 Each of the Loan Parties has good and
indefeasible title to or valid leasehold interests in its material Properties
and assets, real and personal, including the

 

48

 

Properties, assets and leasehold interests reflected in the financial
statements described in Section 7.2,
and none of the Properties or leasehold interests of any of the Loan Parties is
subject to any Lien, except Permitted Liens.

 

Section 7.8            Enforceability.  The execution, delivery and performance of
the Loan Documents to which each of the Loan Parties is a party have been duly
authorized by resolutions of the board of directors of such Loan Party (or
other appropriate action authorizing such execution, delivery and performance
has been taken with respect to each Loan Party that is not a corporation).  The Loan Documents have been duly and validly
executed and delivered by each of the Loan Parties that is a party thereto and
constitute the legal, valid and binding obligations of the Loan Parties,
enforceable against the Loan Parties in accordance with their respective terms,
except as limited by bankruptcy, insolvency or other laws of general
application relating to the enforcement of creditors’ rights and general
principles of equity.

 

Section 7.9            Approvals.  No authorization, approval or consent of, and
no filing or registration with or notice to, any Governmental Authority or
third party is or will be necessary for the execution, delivery or performance
by any Loan Party of any of the Loan Documents to which it is a party or for
the validity or enforceability thereof, except for such consents, approvals and
filings as have been validly obtained or made and are in full force and
effect.  None of the Loan Parties has
failed to obtain any governmental consent, approval, license, Permit, franchise
or other governmental authorization necessary for the ownership of any of its
Properties or the conduct of its business the result of which could reasonably
be expected to have a Material Adverse Effect.

 

Section 7.10         Debt.  As of the Closing Date and the Effective
Date, the Loan Parties and their Subsidiaries have no Debt except for (a) the
Obligations and (b) the Debt disclosed on Schedule 7.10 hereto.

 

Section 7.11         Taxes.  The Loan Parties have filed all tax returns
(federal, state and local) required to be filed, including all income,
franchise, employment, Property and sales tax returns, and have paid all of
their respective liabilities (other than liabilities which do not, in the
aggregate, exceed $100,000 in amount) for taxes, assessments, governmental
charges and other levies that are due and payable, except such taxes, if any,
the payment of which is currently being contested in good faith by appropriate
proceedings diligently conducted by or on behalf of such Person and as to
which, if required by GAAP, such Person has established adequate reserves.  SOURCECORP is not aware of any pending
investigation of any Loan Party or any of their respective Subsidiaries, by any
taxing authority or of any pending but unassessed tax liability of any Loan
Party or any of their respective Subsidiaries, other than with respect to (a) ad
valorem or other real property taxes not in excess of $100,000 as to any such
Person and (b) other taxes in an aggregate amount as to any such Person
which could not, if an adverse determination is made with respect to such
taxes, materially and adversely affect such Person, which (as to each of clauses (a) and (b) preceding)
are currently being contested in good faith by appropriate proceedings
diligently conducted by or on behalf of such Person and as to which, if
required by GAAP, such Person has established adequate reserves.  No tax Liens have been filed and, except as
disclosed on Schedule 7.11,
to SOURCECORP’s knowledge, no claims are being asserted against any Loan Party
or any of their respective Subsidiaries, with respect to any taxes the result
of which could reasonably be expected to have a Material Adverse Effect.  Except as disclosed on Schedule 7.11
hereto, as of the Closing Date and the Effective Date, none of the U.S. income
tax returns of the Loan Parties or any of their respective Subsidiaries are
under audit.  The charges, accruals and
reserves on the books of the Loan Parties in respect of taxes or other
governmental charges are in accordance with GAAP.

 

Section 7.12         Margin Securities.  None of the Loan Parties or any of their
respective Subsidiaries is engaged principally, or as one of its important
activities, in the business of extending

 

49

 

credit for the purpose of purchasing or carrying margin stock (within
the meaning of Regulations T, U or X of the Board of Governors of the Federal
Reserve System), and no part of the proceeds of any Loan will be used to
purchase or carry any margin stock or to extend credit to others for the
purpose of purchasing or carrying margin stock. 
Following the application of the proceeds of each Loan or drawing under
each Letter of Credit, not more than 25% of the value of the assets (either of
SOURCECORP only or of SOURCECORP and its Subsidiaries on a consolidated basis)
subject to the provisions of Section 9.2 or Section 9.8 or subject to any
restriction contained in any agreement or instrument between SOURCECORP and any
Lender or any Affiliate of any Lender relating to Debt and within the scope of Section 11.1(i) will
be margin stock.

 

Section 7.13         ERISA; Plans.  As of the Closing Date, neither any Loan
Party nor any ERISA Affiliate maintains or contributes to, or has any
obligation under, any Pension Plan other than the Pension Plans identified on Schedule 7.13.  Except as specified on Schedule 7.13 or
except to the extent noncompliance could not reasonably be expected to have a
Material Adverse Effect, each Plan of each Loan Party is in compliance in all
material respects with all applicable provisions of ERISA and the Code.  Except as specified on Schedule 7.13 or
except to the extent noncompliance could not reasonably be expected to have a
Material Adverse Effect, neither a Reportable Event nor a Prohibited
Transaction has occurred within the last 60 months with respect to any
Plan.  No notice of intent to terminate a
Pension Plan has been filed, nor has any Pension Plan been terminated.  No circumstances exist which constitute
grounds entitling the PBGC to institute proceedings to terminate, or appoint a
trustee to administer, a Pension Plan, nor has the PBGC instituted any such
proceedings.  Neither any of the Loan
Parties nor any ERISA Affiliate has completely or partially withdrawn from a
Multiemployer Plan.  Each Loan Party and
each ERISA Affiliate have met their minimum funding requirements under ERISA
and the Code with respect to all of their Plans subject to such requirements,
and, as of the Closing Date and the Effective Date except as specified on Schedule 7.13,
the present value of all vested benefits under each funded Plan (exclusive of
any Multiemployer Plan) does not and will not exceed the fair market value of
all such Plan assets allocable to such benefits, as determined on the most
recent valuation date of such Plan and in accordance with ERISA.  Neither any of the Loan Parties nor any ERISA
Affiliate has incurred any liability to the PBGC under ERISA that could
reasonably be expected to have a Material Adverse Effect.  No litigation is pending or threatened
concerning or involving any Plan that could reasonably be expected to have a
Material Adverse Effect.  There are no
unfunded or unreserved liabilities (on either a going-concern basis or a
wind-up basis) relating to any Plan that could, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect if such
Loan Party were required to fund or reserve such liability in full.  As of the Closing Date and the Effective
Date, no funding waivers have been or will have been requested or granted under
Section 412 of the Code with respect to any Plan.

 

Section 7.14         Disclosure.  SOURCECORP has disclosed to the
Administrative Agent and the 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 and as of
the Closing Date, could reasonably be expected to have a Material Adverse
Effect.  No report, financial statement,
certificate or other information furnished (whether in writing or orally) by or
on behalf of any Loan Party to Agent or any Lender in connection with the
transactions contemplated hereby and the negotiation of this Agreement or
delivered hereunder or under any other Loan Document (in each case, 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 and on the date on which they were made, not misleading; provided
that, with respect to projected financial information, SOURCECORP represents
only that such information was prepared in good faith based upon assumptions
believed to be reasonable at the time.

 

Section 7.15         Subsidiaries; Inactive Subsidiaries.  On and as of the Closing Date and the
Effective Date, SOURCECORP has no Subsidiaries other than those specifically
disclosed on

 

50

 

Schedule 7.15(a).  On and as of the Closing Date and the
Effective Date, all of the Inactive Subsidiaries are disclosed on Schedule 7.15(b).

 

Section 7.16         Agreements.  None of the Loan Parties is a party to any
indenture, loan, credit agreement, stock purchase agreement or any lease or
other agreement, document or instrument, or subject to any charter or corporate
restriction, that could reasonably be expected to have a Material Adverse
Effect.  None of the Loan Parties is in
default in any respect in the performance, observance or fulfillment of any of
the obligations, covenants or conditions contained in any agreement, document
or instrument binding on it or its Properties, except for instances of
noncompliance that, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.

 

Section 7.17         Compliance with Laws.  Subject to the matters that are described in
the last items on Schedules
7.6 and 7.13,
none of the Loan Parties is in violation of any Governmental Requirement,
except for instances of non-compliance that, individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect.

 

Section 7.18         Investment Company Act.  None of the Loan Parties is an “investment company”
within the meaning of the Investment Company Act of 1940, as amended.

 

Section 7.19         Public Utility Holding Company Act.  None of the Loan Parties is a “holding company” or a “subsidiary company” of a “holding company” or an “affiliate” of a “holding company”
or a “public utility” within the meaning
of the Public Utility Holding Company Act of 1935, as amended.

 

Section 7.20         Environmental Matters.

 

(a)           Except
for instances of noncompliance with or exceptions to any of the following
representations and warranties that could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect:

 

(i)            The Loan Parties and all of their
respective Properties and operations are in full compliance with all
Environmental Laws in all material respects. 
Neither SOURCECORP nor any of its Subsidiaries is aware of, and neither
SOURCECORP nor any of its Subsidiaries has received written notice of, any
past, present or future conditions, events, activities, practices or incidents
which may interfere with or prevent the compliance or continued compliance by
any Loan Party with all Environmental Laws;

 

(ii)           The Loan Parties have obtained all
Permits that are required under applicable Environmental Laws, and all such
Permits are in good standing and all such Persons are in compliance with all of
the terms and conditions thereof;

 

(iii)          No Hazardous Materials exist on, about
or within or have been (to SOURCECORP’s or any of its Subsidiaries’ knowledge)
or are being used, generated, stored, transported, disposed of on or released
from any of the Properties of the Loan Parties except in compliance with
applicable Environmental Laws in all material respects.  The use which the Loan Parties make and
intend to make of their respective Properties will not result in the use,
generation, storage, transportation, accumulation, disposal or Release of any
Hazardous Material on, in or from any of their Properties except in compliance
with applicable Environmental Laws;

 

(iv)          Neither the Loan Parties nor any of
their respective currently or previously owned or leased Properties or
operations is subject to any outstanding or, to the best of SOURCECORP’s or any
of its Subsidiaries’ knowledge, threatened order from or agreement with

 

51

 

any Governmental Authority or other Person or
subject to any judicial or administrative proceeding with respect to (A) any
failure to comply with Environmental Laws, (B) any Remedial Action, or (C) any
Environmental Liabilities;

 

(v)           There are no conditions or
circumstances associated with the currently or previously owned or leased
Properties or operations of the Loan Parties that could reasonably be expected
to give rise to any Environmental Liabilities or claims resulting in any
Environmental Liabilities.  None of the
Loan Parties is subject to, or has received written notice of any claim from
any Person alleging that any of the Loan Parties is or will be subject to, any
Environmental Liabilities;

 

(vi)          None of the Properties of the Loan
Parties is a treatment facility (except for the recycling of Hazardous
Materials generated on-site and the treatment of liquid wastes subject to the
Clean Water Act or other applicable Environmental Law) for temporary storage of
Hazardous Materials generated on-site prior to their disposal off-site) or
disposal facility requiring a permit under the Resource Conservation and
Recovery Act, 42 U.S.C. ‘ 6901 et seq., regulations thereunder or any
comparable provision of state law.  The
Loan Parties and their Subsidiaries are in compliance with all applicable
financial responsibility requirements of all Environmental Laws; and

 

(vii)         None of the Loan Parties has failed to
file any notice required under applicable Environmental Law reporting a
Release.

 

(b)           No
Lien arising under any Environmental Law has attached to any Property or
revenues of any Loan Party that could reasonably be expected to have a Material
Adverse Effect.

 

Section 7.21         Labor Disputes and Acts of God.  Neither the business nor the Properties of
any Loan Party are affected by any fire, explosion, accident, strike, lockout
or other labor dispute, drought, storm, hail, earthquake, embargo, act of God
or of the public enemy or other casualty (whether or not covered by insurance)
that could reasonably be expected to have a Material Adverse Effect.

 

Section 7.22         Material Contracts.  All of the Material Contracts are in full
force and effect and none of the Loan Parties is in default under any Material
Contract in any manner that could reasonably be expected to have a Material
Adverse Effect and, to the best of SOURCECORP’s or any of its Subsidiaries’
knowledge after due inquiry, no other Person that is a party thereto is in
default under any of the Material Contracts in any manner that could reasonably
be expected to have a Material Adverse Effect. 
None of the Material Contracts prohibit the transactions contemplated
under the Loan Documents.  All of the
Material Contracts have been transferred or assigned to, or are currently in
the name of, a Loan Party, except to the extent that the failure to do so could
not reasonably be expected to have a Material Adverse Effect.

 

Section 7.23         Intentionally Omitted.

 

Section 7.24         Intentionally Omitted.

 

Section 7.25         Solvency.  SOURCECORP and, as of the Closing Date and
the Effective Date, each of its Subsidiaries, as a separate entity, is Solvent.

 

Section 7.26         Employee Matters.  Except as set forth on Schedule 7.26,
as of the Closing Date and the Effective Date (a) none of the Loan Parties
or any of its respective Subsidiaries, or any of its respective employees, is
subject to any collective bargaining agreement, and (b) no petition for

 

52

 

certification or union election is pending with respect to the
employees of any Loan Party or any of its respective Subsidiaries, and no union
or collective bargaining unit has sought such certification or recognition with
respect to the employees of any of the Loan Parties or any of its respective
Subsidiaries.  There are no strikes,
slowdowns, work stoppages or controversies pending or, to the best
knowledge of SOURCECORP or any of its Subsidiaries after due inquiry,
threatened against, any of the Loan Parties or any of its respective
Subsidiaries, and its respective employees, which could reasonably be expected
to have, either individually or in the aggregate, a Material Adverse
Effect.  Except as set forth on Schedule 7.26,
as of the Closing Date and the Effective Date, none of the Loan Parties or any
of its respective Subsidiaries is subject to an employment contract.

 

Section 7.27         Insurance.  The material properties of SOURCECORP and its
Subsidiaries are insured with financially sound and reputable insurance
companies not Affiliates of SOURCECORP, 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
SOURCECORP or the applicable Subsidiary operates.

 

Section 7.28         Consideration.  The expertise and efforts of SOURCECORP and
each of its Subsidiaries support and benefit the other members of their
affiliated corporate group.  SOURCECORP
and each Subsidiary expect to derive substantial benefit (and SOURCECORP and
each Subsidiary may reasonably be expected to derive substantial benefit),
directly and indirectly, from the Loans, Letters of Credit and the other
transactions contemplated by this Agreement, both in their separate capacities
and as a member of an affiliated and integrated corporate group.  SOURCECORP and each Subsidiary will receive
reasonably equivalent value in exchange for the guaranty being provided by it
pursuant to Article 5
as security for the payment and performance of the Obligations.

 

ARTICLE 8

AFFIRMATIVE COVENANTS

 

SOURCECORP
covenants and agrees that, as long as the Obligations or any part thereof are
outstanding or any Lender has any Commitment hereunder or any Letter of Credit
remains outstanding, it will perform and observe, or cause to be performed and
observed, the following covenants:

 

Section 8.1            Reporting Requirements.  SOURCECORP will furnish to the Administrative
Agent (and the Administrative Agent shall distribute a copy of the same to each
Lender in a reasonably prompt fashion after its receipt thereof):

 

(a)           Annual
Financial Statements.  As soon as
available, and in any event within 90 days after the end of each fiscal year of
SOURCECORP, beginning with the fiscal year ending December 31, 2005, (i) a
copy of the annual audit report of SOURCECORP and its consolidated Subsidiaries
as of the end of and for such fiscal year then ended containing, on a
consolidated and (if requested by the Administrative Agent) consolidating
basis, balance sheets and statements of income, retained earnings and cash
flow, in each case setting forth in comparative form the figures for the
preceding fiscal year, all in reasonable detail and audited and certified by
independent certified public accountants of recognized standing acceptable to
the Administrative Agent and containing no qualification thereto except as may
be reasonably acceptable to the Administrative Agent, to the effect that such
report has been prepared in accordance with GAAP, (ii) a certificate of
such independent certified public accountants to the Administrative Agent (A) stating
that to their knowledge no Default has occurred and is continuing or, if in
their opinion a Default has occurred and is continuing, stating the nature
thereof, and (B) confirming the calculations set forth in the officer’s
certificate delivered concurrently therewith, and (iii) if requested by
the Administrative Agent, unaudited consolidating

 

53

 

balance sheets and statements of income, retained earnings and cash
flow, in each case setting forth in comparative form the figures for the
preceding fiscal year;

 

(b)           Quarterly
Financial Statements.  As soon as
available, and in any event within 45 days after the end of each of the first
three quarters of each fiscal year of SOURCECORP, beginning with the fiscal
quarter ending September 30, 2005, a copy of (i) an unaudited
financial report of SOURCECORP and its consolidated Subsidiaries as of the end
of such fiscal quarter and for the portion of the fiscal year then ended
containing, on a consolidated basis, balance sheets and statements of income,
retained earnings and cash flow, in each case setting forth in comparative form
the figures for the corresponding period of the preceding fiscal year, all in reasonable
detail certified by a Responsible Officer of SOURCECORP to have been prepared
in accordance with GAAP and to fairly and accurately present (subject to
year-end audit adjustments) the financial condition and results of operations
of SOURCECORP and its consolidated Subsidiaries, on a consolidated basis, at
the date and for the periods indicated therein and (ii) management’s
financial reports comparing actual financial results for the period to the
current budget for the period;

 

(c)           Compliance
Certificate.  Concurrently with the
delivery of each of the financial statements referred to in Sections 8.1(a) and
8.1(b), a
certificate, substantially in the form of Exhibit F hereto, of a Responsible
Officer of SOURCECORP (i) stating that, to the best of such officer’s
knowledge, no Default has occurred and is continuing or, if a Default has
occurred and is continuing, stating the nature thereof and the action that has
been taken and is proposed to be taken with respect thereto, and (ii) showing
(with respect to each certificate delivered concurrently with the delivery of
each of the financial statements referred to in Section 8.1(a) and 8.1(b)) in reasonable
detail the calculations demonstrating compliance with the quantitative
covenants set forth in Article 9
and Article 10
(as set forth in the form of compliance certificate in Exhibit F), (iii) summarizing
all material information regarding each Acquisition made during the fiscal
quarter then most recently ended, which information shall include the names of
the acquiror and the entity whose Capital Stock or assets were acquired, the
nature of the assets owned by the acquired entity or acquired directly (as
applicable), the nature of the business of the acquired entity or in which the
assets acquired were and will be utilized (as applicable), the amount of the
purchase price and all other consideration paid and payable in connection with
such Acquisition and the form of such purchase price or other consideration,
the remaining amount (if any) in each “basket”
referred to in the definition of the term “Permitted
Acquisition” after giving effect to all of such Acquisitions and
such other information as the Administrative Agent may reasonably request, (iv) attaching
(unless the Administrative Agent has agreed that the same need not be attached)
the most recent financial statements of the entity whose Capital Stock or
assets were acquired that are available to SOURCECORP and (if the
Administrative Agent so requests) a copy of all Permitted Acquisition Documents
relating to such Acquisition referred to in clause (iii) preceding, and (v) certifying
that each Acquisition referred to in clause (iii) preceding is a
Permitted Acquisition (and including financial data supporting such
certification if requested by the Administrative Agent) and that no other
Acquisitions were consummated during the fiscal quarter then most recently
ended;

 

(d)           Budget.  Promptly upon any request therefor by the
Administrative Agent or any Lender through the Administrative Agent, a copy of
the budget of SOURCECORP and its Subsidiaries on a consolidated basis for each
fiscal year (segregated by entity with respect to each entity, if any, to be
acquired which is included in such budget and segregated by quarter or month
and setting forth all material assumptions);

 

(e)           Management
Letters.  Promptly upon any request
therefor by the Administrative Agent, a copy of any management letter or
written report submitted to any Loan Party by independent certified public
accountants with respect to the business, condition (financial or otherwise),
operations, prospects or Properties of any such Person;

 

54

 

(f)            Notice
of Litigation.  As soon as possible
and in any event within five Business Days after SOURCECORP becomes aware of
the commencement thereof, notice of all actions, suits and proceedings before
any Governmental Authority or arbitrator affecting any Loan Party which, if
determined adversely to any such Person could reasonably be expected to have a
Material Adverse Effect; provided that such notice need not be given to
the extent that such information is contained in public filings made by
SOURCECORP with the Securities and Exchange Commission;

 

(g)           Notice
of Default.  As soon as possible and
in any event within five Business Days after SOURCECORP becomes aware of the
occurrence of any Default, a written notice setting forth the details of such
Default and the action that SOURCECORP or such Subsidiary has taken and
proposes to take with respect thereto;

 

(h)           ERISA
Reports.  Promptly after the filing
or receipt thereof, copies of all reports, including annual reports, and
notices which any Loan Party or any of its ERISA Affiliates files with or
receives from the PBGC or the U.S. Department of Labor under ERISA; and as soon
as possible and in any event within five days after any such Person knows or
has reason to know that any Pension Plan is insolvent, or that any Reportable
Event or Prohibited Transaction has occurred with respect to any Plan or that
the PBGC, any Loan Party or any ERISA Affiliate has instituted or will
institute proceedings under ERISA to terminate or withdraw from or reorganize
any Pension Plan, a certificate of a Responsible Officer of such Loan Party
setting forth the details as to such insolvency, withdrawal, Reportable Event,
Prohibited Transaction, tax or penalty or termination and the action that such
Loan Party has taken and proposes to take with respect thereto;

 

(i)            Reports
to Other Creditors.  Promptly after
the furnishing thereof, a copy of any material statement or report furnished by
any Loan Party to any other party pursuant to the terms of any material
indenture, loan, stock purchase or credit or similar agreement and not
otherwise required to be furnished to the Administrative Agent and the Lenders
pursuant to any other subsection of this Section 8.1;

 

(j)            Notice
of Material Adverse Effect.  Within
five Business Days after SOURCECORP or any Subsidiary of SOURCECORP becomes
aware thereof, written notice of any matter that could reasonably be expected
to have a Material Adverse Effect;

 

(k)           Proxy
Statements, Etc.  Promptly upon any
request therefor by the Administrative Agent, one copy of each financial
statement, report, notice or proxy statement sent by any Loan Party to its
stockholders generally and one copy of each regular, periodic or special
report, registration statement or prospectus filed by any Loan Party with any
securities exchange or the Securities and Exchange Commission or any successor
agency, and of all press releases and other statements made by any of the Loan
Parties to the public containing material developments in its business;

 

(l)            Notice
of New Subsidiaries.  Concurrently
with the delivery of each of the financial statements referred to in Sections 8.1(a) and
8.1(b),
notice of the creation or acquisition of any direct or indirect Subsidiary of
SOURCECORP after the Closing Date and subsequent to the last delivery of such
information;

 

(m)          Insurance.  Within 30 days after any request therefor by
the Administrative Agent, a report in form and substance reasonably
satisfactory to the Administrative Agent summarizing all material insurance
coverage maintained by SOURCECORP and its Subsidiaries as of the date of such
report and all material insurance coverage planned to be maintained by such
Persons in the subsequent fiscal year;

 

55

 

(n)           Plan
Information.  From time to time, as
reasonably requested by the Administrative Agent or any Lender, such books,
records and other documents relating to any Pension Plan as the Administrative
Agent or any Lender shall specify; prior to any termination, partial
termination or merger of a Pension Plan covering employees of SOURCECORP or any
Subsidiary of SOURCECORP or any ERISA Affiliate, or a transfer of assets of a
Pension Plan covering employees of SOURCECORP or any Subsidiary of SOURCECORP
or any ERISA Affiliate, written notification thereof; promptly upon SOURCECORP’s
or any SOURCECORP Subsidiary’s receipt thereof, a copy of any determination
letter or advisory opinion regarding any Pension Plan received from any
Governmental Authority and any amendment or modification thereto as may be
necessary as a condition to obtaining a favorable determination letter or
advisory opinion; and promptly upon the occurrence thereof, written
notification of any action requested by any Governmental Authority to be taken
as a condition to any such determination letter or advisory opinion; and

 

(o)           General
Information.  Promptly, such other
information concerning the Loan Parties and their respective Subsidiaries as
the Administrative Agent or any Lender may from time to time reasonably
request.

 

SOURCECORP hereby acknowledges that (a) the Administrative Agent
will make available to the Lenders and the Issuing Bank materials and/or
information provided by or on behalf of SOURCECORP 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
SOURCECORP or its securities) (each, a “Public Lender”).  SOURCECORP hereby agrees that (w) all
Borrower Materials that are to be made available to Public Lenders shall be
clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that
the word “PUBLIC” shall appear prominently on the first page thereof; (x)
by marking Borrower Materials “PUBLIC,” SOURCECORP shall be deemed to have
authorized the Administrative Agent, the Issuing Bank and the Lenders to treat
such Borrower Materials as not containing any material non-public information
with respect to SOURCECORP 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 13.20);
(y) all Borrower Materials marked “PUBLIC” are permitted to be made available
through a portion of the Platform designated “Public Investor;” and (z) the
Administrative Agent 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.” Notwithstanding the foregoing,
SOURCECORP shall be under no obligation to mark any Borrower Materials “PUBLIC.”

 

Section 8.2            Maintenance of Existence, Conduct of Business.  SOURCECORP will, and will cause each of its
Subsidiaries to (except as may be otherwise permitted by Section 9.3),
preserve and maintain its corporate existence and all of its material leases,
privileges, licenses, Permits, franchises, qualifications, Intellectual
Property, intangible Property and rights that are necessary in the ordinary
conduct of its business, except to the extent the failure to do so could not
reasonably be expected to have a Material Adverse Effect.  SOURCECORP will, and will cause each of its
Subsidiaries to, conduct its business in an orderly and efficient manner in
accordance with good business practices, in each case in all material respects.

 

Section 8.3            Maintenance of Properties.  SOURCECORP will, and will in all material
respects cause each of its Subsidiaries to, maintain, keep and preserve all of
its Properties necessary or appropriate in the proper conduct of its business
in good repair, working order and condition (ordinary wear and tear excepted)
and make all necessary repairs, renewals, replacements, betterments and
improvements thereof.

 

56

 

Section 8.4            Taxes and Claims.  SOURCECORP will, and will cause each of its
Subsidiaries to, pay or discharge at or before maturity or before becoming
delinquent (a) all taxes, levies, assessments and governmental charges (other
than those which do not, in the aggregate, exceed $100,000 in amount) imposed
on it or its income or profits or any of its Property and (b) all lawful
claims for labor, material and supplies, which, if unpaid, might become a Lien
upon any of its Property (other than those which do not, in the aggregate,
exceed $100,000 in amount); provided, however, that neither
SOURCECORP nor any of its Subsidiaries shall be required to pay or discharge
any tax, levy, assessment or governmental charge or claim for labor, material
or supplies whose amount, applicability or validity is being contested in good
faith by appropriate proceedings being diligently pursued and for which
adequate reserves have been established under GAAP.

 

Section 8.5            Insurance.  SOURCECORP will, and will cause each of its
Subsidiaries to, keep insured by financially sound and reputable insurers all
material Property of a character usually insured by responsible corporations
engaged in the same or a similar business similarly situated against loss or
damage of the kinds and in the amounts customarily insured against by such
corporations or entities and carry such other insurance as is usually carried
by such corporations or entities.

 

Section 8.6            Inspection Rights.  SOURCECORP will, and will cause each of its
Subsidiaries to, permit representatives and agents of the Administrative Agent
and each Lender, during normal business hours and upon reasonable notice to
SOURCECORP, to examine, copy and make extracts from its books and records, to
visit and inspect its Properties and to discuss its business, operations and
financial condition with its officers and independent certified public
accountants.  Upon request of the
Administrative Agent, SOURCECORP will authorize its accountants in writing
(with a copy to the Administrative Agent) to comply with this Section 8.6.

 

Section 8.7            Keeping Books and Records.  SOURCECORP will, and will cause each of its
Subsidiaries to, maintain appropriate books of record and account in accordance
with GAAP consistently applied in which true, full and correct entries will be
made of all their respective dealings and business affairs.  If any Accounting Changes from the accounting
principles used in the preparation of the financial statements referenced in Section 8.1 are
hereafter required or permitted by GAAP and are adopted by any SOURCECORP or
any of its Subsidiaries, the provisions of Section 1.3(a) shall be applicable
thereto; provided that, until any necessary amendments have been made,
the certificate required to be delivered under Section 8.1(c) hereof
demonstrating compliance with Article 10 shall include calculations setting forth
the adjustments from the relevant items as shown in the current financial
statements based on the changes to GAAP to the corresponding items based on
GAAP as used in the financial statements referenced in Section 7.2(a),
in order to demonstrate how such financial covenant compliance was derived from
the current financial statements.

 

Section 8.8            Compliance with Laws.  SOURCECORP will, and will cause each of its
Subsidiaries to, comply with all applicable Governmental Requirements, except
for instances of noncompliance that could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.

 

Section 8.9            Compliance with Agreements.  SOURCECORP will, and will cause each of its
Subsidiaries to, comply with all agreements, contracts and instruments binding
on it or affecting its Properties or business, except for instances of
noncompliance that could not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect.

 

Section 8.10         Further Assurances.  SOURCECORP will, and will cause each of its
Subsidiaries to, execute and deliver such further agreements, documents and
instruments and take such

 

57

 

further action as may be reasonably requested by the Administrative
Agent to carry out the provisions and purposes of this Agreement and the other
Loan Documents and to evidence the Obligations.

 

Section 8.11         ERISA; Plans.  SOURCECORP will, and will cause each of its
ERISA Affiliates to, comply with all minimum funding requirements and all other
material requirements of ERISA or other comparable Governmental Requirement, if
applicable, so as not to give rise to any liability thereunder.

 

Section 8.12         Trade Accounts Payable.  SOURCECORP will, and will cause each of its
Subsidiaries to, pay all trade accounts payable before the same become more
than 90 days past due, except (a) trade accounts payable contested in good
faith or (b) trade accounts payable in an aggregate amount not to exceed
at any time outstanding $400,000 and with respect to which no proceeding to
enforce collection has been commenced or, to the knowledge of SOURCECORP or any
Subsidiary of SOURCECORP, threatened.

 

Section 8.13         No Consolidation.  SOURCECORP will, and (except with respect to clause (a) succeeding
which shall not be applicable to Subsidiaries of SOURCECORP) will cause each of
its Subsidiaries to:

 

(a)           with
respect to SOURCECORP only, provide that, at all times, at least one (1) member
of its board of directors or at least one (1) of its officers will be a
Person who is not an officer, director or employee of any Affiliate of
SOURCECORP or any other Subsidiary;

 

(b)           maintain
corporate records and books of account separate from those of any corporation
which is an Affiliate of SOURCECORP and separate from those of any Subsidiary
of SOURCECORP;

 

(c)           not
commingle its funds or assets with those of any corporation which is an
Affiliate of SOURCECORP or with those of any Subsidiary of SOURCECORP; and

 

(d)           provide
that its board of directors will hold all appropriate meetings (or, to the
extent allowed by applicable law, act by written consent) to authorize and
approve such Person’s corporate actions.

 

Section 8.14         Payment on Obligations.  SOURCECORP shall pay the Obligations in
accordance with the terms and provisions of the Loan Documents.  SOURCECORP shall, and cause each of its
Subsidiaries to promptly pay (or renew and extend) all of its material
obligations as the same become due (unless such obligations other than the
Obligations are being contested in good faith by appropriate proceedings).  No Loan Party shall make any payment on any
Subordinated Debt when it violates the subordination provisions thereof or
results in a Default or Event of Default hereunder.

 

ARTICLE 9

NEGATIVE COVENANTS

 

Each
of SOURCECORP and each of its Subsidiaries jointly and severally covenants and
agrees that, as long as the Obligations or any part thereof are outstanding or
any Lender has any Commitment hereunder or any Letter of Credit remains
outstanding, it will perform and observe, or cause to be performed and
observed, the following covenants:

 

Section 9.1            Debt.  SOURCECORP will not, and will not permit any
of its Subsidiaries to, incur, create, assume or permit to exist any Debt,
except:

 

58

 

(a)           Debt
of SOURCECORP and its Subsidiaries to the Lenders pursuant to the Loan
Documents;

 

(b)           Debt
existing on the Closing Date and described on Schedule 7.10 hereto and renewals,
replacements, and extensions of such Debt which do not increase the outstanding
principal amount of such Debt and the terms and conditions of which are not
materially more onerous, in light of then existing credit market conditions,
than the terms and conditions of such Debt on the Closing Date;

 

(c)           purchase
money Debt (including, without limitation, Capital Lease Obligations) secured
by purchase money Liens, which Debt and Liens are permitted under and meet all
of the requirements of clause (g) of
the definition of “Permitted Liens” contained in Section 1.1; provided,
however, that (i) the aggregate outstanding principal amount of
purchase money Debt (including, without limitation, Capital Lease Obligations)
permitted by this Section 9.1(c) plus
(ii) the aggregate, unamortized sales price paid to SOURCECORP and/or its
Subsidiaries with respect to sales of Property in connection with Sale and
Leaseback Transactions shall not at any time exceed $10,000,000;

 

(d)           Subordinated
Debt; provided, however, that (i) the aggregate outstanding
principal amount of Seller Subordinated Debt shall not at any time exceed
$10,000,000, (ii) the aggregate principal amount of Other Subordinated
Debt shall not at any time exceed $10,000,000, (iii) any Subordinated Debt
shall be unsecured and shall not mature until after the Maturity Date, and (iv) no
Subordinated Debt may be created or incurred during the continuance of any
Event of Default or if a Default or Event of Default would result from the
creation or incurrence of such Debt;

 

(e)           private
placement Debt having terms and conditions reasonably satisfactory to the
Administrative Agent (“Private Placement
Debt”); provided, however, that (i) the
aggregate principal amount of Private Placement Debt shall not at any time
exceed $100,000,000, (ii) any Private Placement Debt created or incurred
shall be unsecured and shall not mature earlier than twelve months after the
Maturity Date, (iii) the terms and conditions of the Private Placement
Debt are not more onerous or restrictive on SOURCECORP or its Subsidiaries than
the terms and conditions of this Agreement, (iv) the Administrative Agent
shall have received not less than five Business Days’ prior written notice of
the closing of such private placement, which notice shall set forth in
reasonable detail satisfactory to the Administrative Agent the amount of such
Private Placement Debt, the interest rate, the schedule of repayments and
maturity date with respect thereto and such other information as the
Administrative Agent may reasonably request with respect thereto, (v) the
Administrative Agent shall have received true, correct and complete copies of
all agreements, documents, and instruments evidencing or otherwise related to
such Private Placement Debt promptly after their execution and delivery, and (vi) no
Private Placement Debt may be created or incurred during the continuance of any
Event of Default or if a Default or Event of Default would result from the
creation or incurrence of such Debt;

 

(f)            Intercompany
Debt between or among SOURCECORP and any of its Wholly-Owned Subsidiaries
incurred in the ordinary course of business, subject to the requirement that
any and all of the Debt permitted pursuant to this Section 9.1(f) shall
be unsecured and shall be subordinated to the Obligations pursuant to the
Master Guaranty or otherwise (the foregoing being referred to as “Intercompany Debt”); provided
that the aggregate sum of (i) the outstanding principal amount of the
loans, advances and other extensions of credit made to Foreign Subsidiaries by
SOURCECORP and its Domestic Subsidiaries plus (ii) the Investments
by SOURCECORP in any Foreign Subsidiary (collectively, the “Foreign Debt and
Investment”) shall not at any time exceed an amount equal to the
product of the book value of the total assets of SOURCECORP and its
Subsidiaries, on a consolidated basis in accordance with GAAP, multiplied
by 5% (such product herein the “Maximum Foreign
Amount”); and

 

59

 

(g)           Obligations
under Interest Rate Protection Agreements and Currency Hedge Agreements, provided
that each counterparty shall be Bank of America, another Lender or another
counterparty rated in one of the three highest rating categories of Standard
and Poors Corporation or Moody’s Investors Service, Inc., and provided
that the maximum amount for which interest may be fixed or capped under all
such Interest Rate Protection Agreements may not exceed one hundred percent
(100%) of the Debt of SOURCECORP and its Subsidiaries, and provided  further,
however, that the maximum amount of currency for which risk may be
hedged under a Currency Hedge Agreement may not exceed one hundred percent
(100%) of the foreign currency at risk in the transactions in which SOURCECORP
and its Subsidiaries are engaged.

 

Section 9.2            Limitation on Liens.  SOURCECORP will not, and will not permit any
of its Subsidiaries to, incur, create, assume or permit to exist any Lien upon
any of its Property or revenues, whether now owned or hereafter acquired,
except Permitted Liens.

 

Section 9.3            Mergers, Etc.  SOURCECORP will not, and will not permit its
Subsidiaries to, (a) become a party to a merger or consolidation, (b) wind-up,
dissolve or liquidate itself, or (c) purchase or acquire all or a material
or substantial part of the business or Properties of any Person; provided,
however, that (i) Permitted Acquisitions (but no other
Acquisitions) shall be permitted, and (ii) any Subsidiary of SOURCECORP
that is not a Foreign Subsidiary may merge with and into SOURCECORP if
SOURCECORP is the entity surviving such merger and any Subsidiary of SOURCECORP
that is not a Foreign Subsidiary may merge with and into any Wholly-Owned
Subsidiary of SOURCECORP that is not a Foreign Subsidiary if such Wholly-Owned
Subsidiary is the entity surviving such merger and no consideration is given by
the surviving entity in such merger other than Capital Stock of the surviving
entity. The surviving entity in any such merger shall ratify the Master
Guaranty and other obligations of the non-surviving entity under the Loan
Documents.

 

Section 9.4            Restricted Payments.  SOURCECORP will not, and will not permit any
of its Subsidiaries to, make any Restricted Payments, except:

 

(a)           Subsidiaries
of SOURCECORP may declare and pay dividends to SOURCECORP or to Subsidiaries of
SOURCECORP;

 

(b)           The
Subsidiaries of SOURCECORP may make tax payments to SOURCECORP if and to the
extent that all such payments are promptly paid by SOURCECORP to the appropriate
Governmental Authority to whom such payments are owed; provided that in
no event shall such payments be greater than the amounts actually paid by
SOURCECORP in respect of such taxes;

 

(c)           SOURCECORP
may make Permitted Share Repurchases; and

 

(d)           To
the extent permitted under Sections 9.1(f),
9.5(g) and
9.5(h);

 

provided, however,
that no Restricted Payments may be made pursuant to clauses (a), (b), (c) or (d) preceding
if an Event of Default exists at the time of such Restricted Payment or if a Default
or Event of Default would result therefrom.

 

Section 9.5            Investments.  SOURCECORP will not, and will not permit any
of its Subsidiaries to, make or permit to remain outstanding any advance, loan,
extension of credit or capital contribution to or investment in any Person, or
purchase or own any stock, bonds, notes, debentures or other securities of any
Person, or be or become a joint venturer with or partner of any Person (all
such transactions being herein called “Investments”),
except:

 

60

 

(a)           Investments
in obligations or securities received in settlement of debts (created in the
ordinary course of business) owing to SOURCECORP or any of its Subsidiaries;

 

(b)           Investments
existing on the Closing Date and identified on Schedule 9.5 hereto;

 

(c)           Investments
in securities issued or guaranteed by the U.S. or any agency thereof with
maturities of one year or less from the date of acquisition;

 

(d)           Investments
in certificates of deposit and Eurodollar time deposits with maturities of six
months or less from the date of acquisition, bankers’ acceptances with
maturities not exceeding six months and overnight bank deposits, in each case
with any Lender or with any domestic commercial bank having capital and surplus
in excess of $500,000,000;

 

(e)           Investments
in repurchase obligations with a term of not more than seven days for
securities of the types described in clause (c) preceding with any
Lender or with any domestic commercial bank having capital and surplus in
excess of $500,000,000;

 

(f)            Investments
in commercial paper of a domestic issuer rated A-1 or better or P-1 or better
by Standard & Poor’s Corporation or Moody’s Investors Services, Inc.,
respectively, maturing not more than six months from the date of acquisition,
including, without limitation, the Dreyfus Cash Management Plus fund or similar
funds used to facilitate efficient short-term cash management;

 

(g)           (i) Investments
by SOURCECORP and its Subsidiaries in its Subsidiaries existing on the Closing Date,
(ii) any Investments of SOURCECORP in its Subsidiaries which represent
amounts invested in such Subsidiary to enable such Subsidiary (A) to pay
all or a portion of the purchase consideration for a Permitted Acquisition, (B) to
make Permitted Capital Expenditures, or (C) to retire any Debt assumed or
required to be repaid in connection with a Permitted Acquisition, and (iii) Investments
by SOURCECORP in Wholly-Owned Subsidiaries of SOURCECORP; provided, that
the Foreign Debt and Investments shall not at any time exceed an amount equal
to the Maximum Foreign Amount;

 

(h)           Intercompany
Debt permitted pursuant to Section 9.1(f);

 

(i)            Investments
which constitute Permitted Acquisitions; and

 

(j)            additional
Investments not otherwise described in clauses (a) through (i) preceding in
an aggregate principal amount not to exceed $10,000,000.

 

provided, however,
that no Investments may be made by SOURCECORP or any of its Subsidiaries
pursuant to this Section 9.5
preceding if an Event of Default exists at the time of such Investment or if a
Default or Event of Default would result therefrom.

 

Section 9.6            Limitation on Issuance of Capital Stock.  SOURCECORP will not permit any of its
Subsidiaries to, at any time issue, sell, assign or otherwise dispose of (a) any
of its Capital Stock, (b) any securities exchangeable for or convertible
into or carrying any rights to acquire any of its Capital Stock, or (c) any
option, warrant or other right to acquire any of its Capital Stock; except to
SOURCECORP or any of its Wholly-Owned Subsidiaries.

 

Section 9.7            Transactions With Affiliates.  Except for (a) the payment of salaries,
bonus and incentive compensation in the ordinary course of business consistent
with prudent business practices, and (b) the furnishing of employment benefits
in the ordinary course of business consistent with prudent

 

61

 

business practices, SOURCECORP will not, and will not permit any of its
Subsidiaries to, enter into any transaction, including, without limitation, the
purchase, sale or exchange of Property or the rendering of any service, with
any Affiliate, officer or director of SOURCECORP or such Subsidiary except in
the ordinary course of and pursuant to the reasonable requirements of
SOURCECORP’s or such Subsidiary’s business and upon fair and reasonable terms
no less favorable to SOURCECORP or such Subsidiary, respectively, than would be
obtained in a comparable arms-length transaction with a Person not an
Affiliate, officer or director of SOURCECORP or such Subsidiary, respectively.

 

Section 9.8            Disposition of Property.  SOURCECORP will not, and will not permit any
of its Subsidiaries to, make any Asset Disposition, except:

 

(a)           Asset
Dispositions of Inventory in the ordinary course of business,

 

(b)           Asset
Dispositions by SOURCECORP or any of its Subsidiaries to SOURCECORP or any of
its Wholly-Owned Subsidiaries; provided, that a Guarantor shall only
make Asset Dispositions to SOURCECORP or another Guarantor;

 

(c)           Asset
Dispositions of Property no longer used or useful in the ordinary course of
business or of Property exchanged for like Property;

 

(d)           Asset
Dispositions that were contemplated and disclosed to the Lenders at the time of
any Permitted Acquisition;

 

(e)           Asset
Dispositions consisting of a sale of all or substantially all of the issued and
outstanding Capital Stock of a Subsidiary of SOURCECORP or all or substantially
all of the assets of a Subsidiary of SOURCECORP; provided, that
the aggregate fair market value of the Property sold or otherwise transferred
in connection with such Asset Dispositions on or after the Closing Date does
not exceed ten percent of the net book value of the tangible assets of
SOURCECORP and its Subsidiaries as of the date of any such Asset Disposition;

 

(f)            to
the extent permitted by Section 9.9,
Sale and Leaseback Transactions;

 

(g)           Permitted
Dispositions; and

 

(h)           Asset
Dispositions not otherwise permitted by this Section 9.9 in an aggregate
amount not exceeding $10,000,000.

 

Section 9.9            Sale and Leaseback.  SOURCECORP will not, and will not permit any
of its Subsidiaries to, enter into any arrangement with any Person pursuant to
which it leases from such Person real or personal Property that has been or is
to be sold or transferred, directly or indirectly, by it to such Person (which
arrangement is hereinafter called a “Sale and Leaseback
Transaction”); provided, however, that SOURCECORP
and its Subsidiaries may enter into Sale and Leaseback Transactions with one
another; provided, further, however, that Sale and Leaseback
Transactions are permitted if and to the extent that, after giving effect
thereto, SOURCECORP and its Subsidiaries would be in compliance with the
proviso contained in Section 9.1(c).

 

Section 9.10         Lines of Business.  SOURCECORP will not, and will not permit any
of its Subsidiaries to, engage in any line or lines of business activity other
than the businesses in which they are engaged on the Closing Date and lines of
business reasonably related thereto. 
SOURCECORP will not, without the prior written consent of the Required
Lenders, become an operating company and will not

 

62

 

engage in any business activity except for business activities relating
to its ownership and management of its Subsidiaries substantially consistent
with its current business activities.

 

Section 9.11         Environmental Protection.  SOURCECORP will not, and will not permit any
of its Subsidiaries to, (a) use (or permit any tenant to use) any of its
Properties for the handling, processing, storage, transportation or disposal of
any Hazardous Material except in compliance with applicable Environmental Laws,
(b) generate any Hazardous Material except in compliance with applicable
Environmental Laws, (c) conduct any activity that is likely to cause a
Release or threatened Release of any Hazardous Material in violation of any
Environmental Law, or (d) otherwise conduct any activity or use any of its
Properties in any manner that violates or is likely to violate any
Environmental Law or create any Environmental Liabilities for which SOURCECORP
or any of its Subsidiaries would be responsible, except for circumstances or
events described in clauses
(a) through (d) preceding that could not reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect.

 

Section 9.12         Intercompany Transactions.  Except as may be expressly permitted or
required by the Loan Documents or in connection with the Private Placement
Debt, SOURCECORP will not, and will not permit any of its Subsidiaries to,
create or otherwise cause or permit to exist or become effective any consensual
encumbrance or restriction of any kind on the ability of any Subsidiary to (a) pay
dividends or make any other distribution to SOURCECORP or any of its
Subsidiaries in respect of such Subsidiary’s Capital Stock or with respect to
any other interest or participation in, or measured by, its profits, (b) pay
any indebtedness owed to SOURCECORP or any of its Subsidiaries, (c) make
any loan or advance to SOURCECORP or any of its Subsidiaries, (d) Guarantee
any indebtedness of SOURCECORP, or (e) sell, lease or transfer any of its
Property to SOURCECORP or any of its Subsidiaries.

 

Section 9.13         Management Fees.  SOURCECORP will not, and will not permit any
of its Subsidiaries to, pay any management, consulting or similar fees
(excluding directors’ fees) to any Affiliate of SOURCECORP or to any director,
officer or employee of SOURCECORP or any Affiliate of SOURCECORP; provided,
however, that any Subsidiary of SOURCECORP may pay management or similar
fees to SOURCECORP to the extent that the amount of such fees paid in any year
does not exceed fifteen percent of the gross revenues of the paying Subsidiary
for that year.

 

Section 9.14         Modification of Other Agreements.

 

(a)           SOURCECORP
will not, and will not permit any of its Subsidiaries to, consent to or
implement any termination, amendment, modification, supplement or waiver of (a) the
SOURCECORP Equity Documents, if the same could reasonably be expected to have a
Material Adverse Effect, (b) the certificate of incorporation or bylaws
(or analogous constitutional documents) of SOURCECORP or any of its
Subsidiaries if the same could reasonably be expected to have a Material
Adverse Effect, or (c) any other Material Contract to which it is a party
or any Permit which it possesses if the same could reasonably be expected to
have a Material Adverse Effect; provided, however, that
SOURCECORP and its Subsidiaries may amend or modify the agreements, documents
and instruments referred to in clause (c) preceding if and to the extent that
such amendment or modification is not substantive or material and could not
reasonably be expected to have a Material Adverse Effect.

 

(b)           SOURCECORP
will not, and will not permit any of its Subsidiaries to, directly or
indirectly, amend, modify, alter or change the terms of any Private Placement
Debt, or any agreement, document, or instrument related thereto if such
amendment, modification, alteration or change would cause the terms and
conditions of such Private Placement Debt to not satisfy the requirements of Section 9.1(e) hereof,
except, that, SOURCECORP and its Subsidiaries may, after prior written notice
to the Administrative Agent, amend, modify, alter or change the terms thereof
so as to extend the maturity

 

63

 

thereof, or defer the timing of payments in respect thereof, or to
forgive or cancel any portion of such Private Placement Debt (other than
pursuant to payments thereof), or to reduce the interest rate or any fees in
connection therewith, or to amend or waive any non-monetary covenant
compliance.

 

Section 9.15         ERISA Plans.  Except as specified on Schedule 9.15,
SOURCECORP will not, and will not permit any of its Subsidiaries to:

 

(a)           allow,
or take (or permit any ERISA Affiliate to take) any action which would cause,
any unfunded or unreserved liability for benefits under any Plan (exclusive of
any Multiemployer Plan) to exist or to be created that exceeds $25,000 with
respect to any such Plan or $50,000 with respect to all such Plans in the
aggregate on either a going concern or a wind-up basis; or

 

(b)           with
respect to any Multiemployer Plan, allow, or take (or permit any ERISA
Affiliate to take) any action which would cause, any unfunded or unreserved
liability for benefits under any Multiemployer Plan to exist or to be created,
either individually as to any such Plan or in the aggregate as to all such
Plans, that could, upon any partial or complete withdrawal from or termination
of any such Multiemployer Plan or Plans, reasonably be expected to have a
Material Adverse Effect.

 

ARTICLE 10

FINANCIAL COVENANTS

 

SOURCECORP
covenants and agrees that, as long as the Obligations or any part thereof are
outstanding or any Lender has any Commitment hereunder or any Letter of Credit
remains outstanding, it will perform and observe, or cause to be performed and
observed, the following covenants:

 

Section 10.1         Consolidated Net Worth.  SOURCECORP will at all times maintain
Consolidated Net Worth in an amount not less than the sum of (a) $245,000,000
plus (b) 75% of cumulative Consolidated Net Income, if positive,
for any fiscal quarter, i.e., exclusive of negative Consolidated Net Income for
any fiscal quarter ending after June 30, 2005, plus (c) all
Net Proceeds of each Equity Issuance after June 30, 2005.  For purposes of this Section 10.1,
Consolidated Net Worth and Consolidated Net Income shall be calculated in a
manner that excludes the effects of FAS 142 and FAS 133 occurring
after the Closing Date.

 

Section 10.2         Ratio of Funded Debt to EBITDA.  SOURCECORP will not permit the ratio,
calculated as of the end of each fiscal quarter of SOURCECORP commencing with
the fiscal quarter ended September 30, 2005, of (i) Funded Debt to (ii) EBITDA
(the “Funded Debt to EBITDA Ratio”) for
the four fiscal quarters then ended for SOURCECORP and its Subsidiaries to
exceed 2.50 to 1:00.

 

Section 10.3         Consolidated Fixed Charge Coverage Ratio.  SOURCECORP will not permit the Consolidated
Fixed Charge Coverage Ratio, calculated as of the end of each fiscal quarter of
SOURCECORP commencing with the fiscal quarter ended September 30, 2005,
for the four fiscal quarters of SOURCECORP then ended, to be less than 1.50 to
1.00.

 

Section 10.4         Capital Expenditures.  SOURCECORP will not permit the aggregate
Capital Expenditures of SOURCECORP and its Subsidiaries (a) during the
fiscal year of SOURCECORP ending December 31, 2005 to exceed $20,000,000,
and (b) for each subsequent fiscal year of SOURCECORP, an amount equal to
the aggregate Capital Expenditures permitted under this Section 10.4 for
the prior fiscal year of SOURCECORP (the “Prior Permitted Capital Expenditures”) plus
20% of the Prior Permitted Capital Expenditures (the “Permitted Capital Expenditures”).

 

64

 

ARTICLE 11

DEFAULT

 

Section 11.1         Events of Default.  Each of the following shall be deemed an “Event of Default”:

 

(a)           SOURCECORP
or any of its Subsidiaries shall fail to pay, repay or prepay when due any
amount of principal owing to the Administrative Agent or any Lender pursuant to
this Agreement or any other Loan Document, or shall fail to pay within two days
after the due date thereof any interest, fee or other amount or other
Obligation owing to the Administrative Agent or any Lender pursuant to this
Agreement or any other Loan Document; provided that SOURCECORP shall
have up to 30 days after the invoice date to pay outstanding fees and expenses
other than the Commitment Fees, Letter of Credit Fees and fees payable in
accordance with the terms of the Fee Letter.

 

(b)           Any
representation or warranty made or deemed made by SOURCECORP or any of its
Subsidiaries or by any Loan Party in any Loan Document or in any certificate,
report, notice or financial statement furnished at any time in connection with
this Agreement or any other Loan Document shall be false, misleading or
erroneous in any material respect when made or deemed to have been made.

 

(c)           SOURCECORP
or any of its Subsidiaries shall fail to perform, observe or comply with any covenant,
agreement or term contained in Sections 8.1(g), 8.1(j), 8.2 (as to SOURCECORP and other than the
last sentence of Section 8.2),
or 8.6, Article 9 (other
than Sections 9.7,
9.11 and 9.15) or Article 10 of
this Agreement; SOURCECORP or any of its Subsidiaries shall fail to perform,
observe or comply with any covenant, agreement or term contained in Section 8.1
(other than Sections 8.1(g),
or 8.1(j)),
8.4, 8.5, 8.7, 8.10, 8.12, 9.7 or 9.11) and such
failure is not remedied or waived within ten days after notice of such failure
is given to SOURCECORP by the Administrative Agent or any Lender; any Guarantor
shall fail to perform, observe or comply with any covenant, agreement or term
contained in the Master Guaranty, subject to any grace period applicable to
such covenant, agreement or term in this Agreement to the extent this Agreement
is incorporated therein by reference; or any Loan Party shall fail to perform,
observe or comply with any other covenant, agreement or term contained in this
Agreement or any other Loan Document (other than covenants to pay the
Obligations) and such failure is not remedied or waived within 30 days after
notice of such failure is given to SOURCECORP by the Administrative Agent or
any Lender or, if a different grace period is expressly made applicable in such
other Loan Documents, such applicable grace period.

 

(d)           SOURCECORP
ceases to be Solvent or any other Material Loan Party ceases to be Solvent for
a period exceeding 15 days from the earlier of the date notice of such failure
to remain Solvent is given by the Administrative Agent to SOURCECORP or the
date SOURCECORP is obligated to give notice of such Default to the
Administrative Agent under Section 8.1(g),
or any Material Loan Party shall admit in writing its inability to, or be
generally unable to, pay its debts as such debts become due; provided, however,
that if any Material Loan Party shall cease to be Solvent more than once in any
twelve-month period, such occurrence shall immediately become an Event of
Default.

 

(e)           Any
Material Loan Party shall (i) apply for or consent to the appointment of,
or the taking of possession by, a receiver, custodian, trustee, examiner,
liquidator or the like of itself or of all or any substantial part of its
Property, (ii) make a general assignment for the benefit of its creditors,
(iii) commence a voluntary case under the United States Bankruptcy Code as
now or hereafter in effect (the “Bankruptcy Code”),
(iv) institute any proceeding or file a petition seeking to take advantage
of any other law relating to bankruptcy, insolvency, reorganization,
liquidation, dissolution, winding-up or composition or readjustment of debts, (v) fail
to controvert in a timely and appropriate manner, or

 

65

 

acquiesce in writing to, any petition filed against it in an
involuntary case under the Bankruptcy Code, or (vi) take any corporate or
other action for the purpose of effecting any of the foregoing.

 

(f)            A
proceeding or case shall be commenced, without the application, approval or
consent of any of the Material Loan Parties in any court of competent
jurisdiction, seeking (i) its reorganization, liquidation, dissolution,
arrangement or winding-up, or the composition or readjustment of its debts, (ii) the
appointment of a receiver, custodian, trustee, examiner, liquidator or the like
of any of the Material Loan Parties or of all or any substantial part of its
Property, or (iii) similar relief in respect of any of the Material Loan
Parties under any law relating to bankruptcy, insolvency, reorganization,
winding-up or composition or adjustment of debts, and such proceeding or case
shall continue undismissed, or an order, judgment or decree approving or
ordering any of the foregoing shall be entered and continue unstayed and in
effect, for a period of 60 or more days; or an order for relief against any of
the Material Loan Parties shall be entered in an involuntary case under the
Bankruptcy Code.

 

(g)           Any
one or more of the Material Loan Parties shall fail to discharge within a
period of 60 days after the commencement thereof any attachment, sequestration,
forfeiture or similar proceeding or proceedings involving an aggregate amount
in excess of $5,000,000 against any of its or their Properties.

 

(h)           A
final judgment or judgments for the payment of money in excess of $5,000,000 in
the aggregate shall be rendered by a court or courts against the Material Loan
Parties or any of them on claims not covered by insurance or as to which the
insurance carrier has denied responsibility and the same shall not be paid or
discharged, or a stay of execution thereof shall not be procured, within 30
days from the date of entry thereof and the Material Loan Parties or any of
them shall not, within said period of 30 days, or such longer period during
which execution of the same shall have been stayed, appeal therefrom and cause
the execution thereof to be stayed during such appeal.

 

(i)            Any
of the Material Loan Parties shall fail to pay when due any principal of or
interest on any Debt (other than the Obligations) having (either individually
or in the aggregate) a principal amount of at least $5,000,000, or the maturity
of any such Debt shall have been accelerated, or any such Debt shall have been
required to be prepaid prior to the stated maturity thereof, or any event shall
have occurred (and shall not have been waived or otherwise cured) that permits
(or, with the giving of notice or lapse of time or both, would permit) any
holder or holders of such Debt or any Person acting on behalf of such holder or
holders to accelerate the maturity thereof or require any such prepayment.

 

(j)            This
Agreement or any other Loan Document shall cease to be in full force and effect
or shall be declared null and void or the validity or enforceability thereof
shall be contested or challenged by any Loan Party, or any of its Affiliates,
or any Loan Party shall deny that it has any further liability or obligation
under any of the Loan Documents.

 

(k)           Any
of the following events shall occur or exist with respect to any Material Loan
Party or any ERISA Affiliate: (i) any Prohibited Transaction involving any
Plan; (ii) any Reportable Event with respect to any Pension Plan; (iii) the
filing under Section 4041 of ERISA of a notice of intent to terminate any
Pension Plan or the termination of any Pension Plan; (iv) any event or
circumstance that might constitute grounds entitling the PBGC to institute
proceedings under Section 4042 of ERISA for the termination of, or for the
appointment of a trustee to administer, any Pension Plan, or the institution by
the PBGC of any such proceedings; (v) any “accumulated
funding deficiency” (as defined in Section 406 of ERISA or Section 412
of the Code), whether or not waived, shall exist with respect to any Plan; or (vi) complete
or partial withdrawal under Section 4201 or 4204 of ERISA from a Plan or
the reorganization, insolvency or termination (other than in connection with an
Acquisition and in compliance with ERISA and other applicable laws) of any
Pension Plan; and in each case above, such event or

 

66

 

condition, together with all other events or conditions, if any, have
subjected or could in the reasonable opinion of Required Lenders subject any
Material Loan Party or any ERISA Affiliate to any tax, penalty or other
liability to a Plan, a Multiemployer Plan, the PBGC or otherwise (or any
combination thereof) which in the aggregate exceed or could reasonably be
expected to exceed $2,000,000.

 

(l)            The
occurrence of a Change of Control.

 

(m)          If,
at any time, the subordination provisions of any of the Subordinated Debt shall
be invalidated or shall otherwise cease to be in full force and effect.

 

(n)           (i) The
payment directly or indirectly (including, without limitation, any payment in
respect of any fund, defeasance or redemption) by any Loan Party or any
Subsidiary thereof of any amount of any Subordinated Debt, in a manner or at a
time during which such payment is not permitted under the terms of the Loan
Documents, including, without limitation, any subordination provisions set
forth therein.

 

(o)           The
occurrence of any Material Adverse Effect; provided, however,
that, for purposes of this Section 11.1(o),
no Material Adverse Effect shall be deemed to have occurred under clause (a) of
the definition of Material Adverse Effect in Section 1.1 unless, based upon the
financial condition or financial performance of SOURCECORP, it is not
reasonable to expect that SOURCECORP will be able to comply with all its
financial covenants set forth in Article 10.

 

Section 11.2         Remedies.  If any Event of Default shall occur and be
continuing, the Administrative Agent may and, if directed by the Required
Lenders, the Administrative Agent shall do any one or more of the following:

 

(a)           Acceleration.  Declare all outstanding principal of and
accrued and unpaid interest on the Loans and all other amounts payable by
SOURCECORP or any of its Subsidiaries under the Loan Documents immediately due
and payable (provided that, with respect to any Interest Rate Protection
Agreement or Currency Hedge Agreement to which a Lender or an Affiliate of a
Lender is the counterparty, such Lender or Affiliate of Lender shall determine
whether or not to accelerate amounts payable thereunder and if such
counterparty fails to accelerate such obligations prior to the date of receipt
by the Administrative Agent of any payment on the Obligations, such obligations
shall not be included in any pro rata distributions of such payment), and the
same shall thereupon become immediately due and payable, without notice,
demand, presentment, notice of dishonor, notice of acceleration, notice of
intent to accelerate, protest or other formalities of any kind, all of which
are hereby expressly waived by SOURCECORP;

 

(b)           Termination
of Commitments.  Terminate the
Commitments (including, without limitation, the obligation of the Issuing Bank
to issue Letters of Credit) without notice to SOURCECORP;

 

(c)           Judgment.  Reduce any claim to judgment; or

 

(d)           Rights.  Exercise any and all rights and remedies
afforded by the laws of the State of Texas or any other jurisdiction, by any of
the Loan Documents, by equity or otherwise, including, without limitation, the
right of setoff provided by Section 5.3 of this Agreement;

 

provided, however,
that upon the occurrence of an Event of Default under Section 11.1(e) or
Section 11.1(f),
the Commitments of all of the Lenders (including, without limitation, the
obligation of the Issuing Bank to issue Letters of Credit) shall immediately
and automatically terminate, and the

 

67

 

outstanding principal of and accrued and unpaid interest on the Loans
and all other amounts payable by SOURCECORP under the Loan Documents shall
thereupon become immediately and automatically due and payable, all without
notice, demand, presentment, notice of dishonor, notice of acceleration, notice
of intent to accelerate, protest or other formalities of any kind, all of which
are hereby expressly waived by SOURCECORP.

 

Section 11.3         Cash Collateral.  If an Event of Default shall have occurred
and be continuing SOURCECORP shall, if requested by the Administrative Agent or
the Required Lenders, pledge to the Administrative Agent as security for the
Letter of Credit Liabilities an amount in immediately available funds equal to
the then outstanding Letter of Credit Liabilities, such funds to be held in a
cash collateral account satisfactory to the Administrative Agent without any
right of withdrawal by SOURCECORP or any of its Subsidiaries.

 

Section 11.4         Performance by the Administrative Agent.  If any Loan Party shall fail to perform any
covenant or agreement in accordance with the terms of the Loan Documents, the
Administrative Agent may, at the direction of the Required Lenders and after
reasonable notice to SOURCECORP, perform or attempt to perform such covenant or
agreement on behalf of such Loan Party. 
In such event, SOURCECORP or any of its Subsidiaries shall, at the
request of the Administrative Agent, promptly pay any amount expended by the
Administrative Agent or the Lenders in connection with such performance or
attempted performance to the Administrative Agent at the Principal Office,
together with interest thereon at the applicable Default Rate from and
including the date of such expenditure to but excluding the date such
expenditure is paid in full. 
Notwithstanding the foregoing, it is expressly agreed that neither the
Administrative Agent nor any Lender shall have any liability or responsibility
for the performance of any obligation of SOURCECORP or any of its Subsidiaries
or any other Loan Party under this Agreement or any of the other Loan
Documents.

 

ARTICLE 12

THE ADMINISTRATIVE AGENT

 

Section 12.1         Appointment and Authorization of the
Administrative Agent. 
Each of the Lenders and the Issuing Bank hereby irrevocably appoints
Bank of America to act on its behalf as the Administrative Agent hereunder and
under the other Loan Documents and authorizes the Administrative Agent to take
such actions on its behalf and to exercise such powers as are delegated to the
Administrative Agent by the terms hereof and thereof, together with such
actions and powers as are reasonably incidental thereto.  The provisions of this Article 12 are
solely for the benefit of the Administrative Agent, the Lenders and the Issuing
Bank, and neither SOURCECORP nor any other Loan Party shall have rights as a
third party beneficiary of any of such provisions.

 

Section 12.2         Rights as a Lender.  The Person serving as the 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 the
Administrative Agent and the term “Lender” or “Lenders” shall, unless otherwise
expressly indicated or unless the context otherwise requires, include the
Person serving as the 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
SOURCECORP or any Subsidiary or other Affiliate thereof as if such Person were
not the Administrative Agent hereunder and without any duty to account therefor
to the Lenders.

 

Section 12.3         Exculpatory Provisions.  The Administrative Agent shall not have any
duties or obligations except those expressly set forth herein and in the other
Loan Documents.  Without limiting the
generality of the foregoing, the Administrative Agent:

 

68

 

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

 

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

 

(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 SOURCECORP or any of its Affiliates that is
communicated to or obtained by the Person serving as the Administrative Agent
or any of its Affiliates in any capacity; and

 

(d)           the
Administrative Agent shall not be liable for any action taken or not taken by
it (i) with the consent or at the request of the Required Lenders (or such
other number or percentage of the Lenders as shall be necessary, or as the
Administrative Agent shall believe in good faith shall be necessary, under the
circumstances as provided in Sections 11.2 and 13.11) or (ii) in the absence of
its own gross negligence or willful misconduct. 
The Administrative Agent shall be deemed not to have knowledge of any
Default unless and until written notice describing such Default is given to the
Administrative Agent by SOURCECORP, a Lender or the Issuing Bank.  The Administrative Agent shall not be
responsible for or have any duty to ascertain or inquire into (i) any
statement, warranty or representation made in or in connection with this
Agreement or any other Loan Document, (ii) the contents of any
certificate, report or other document delivered hereunder or thereunder or in
connection herewith or therewith, (iii) the performance or observance of
any of the covenants, agreements or other terms or conditions set forth herein
or therein or the occurrence of any Default, (iv) the validity,
enforceability, effectiveness or genuineness of this Agreement, any other Loan
Document or any other agreement, instrument or document or (v) the
satisfaction of any condition set forth in Article 6 or elsewhere herein, other
than to confirm receipt of items expressly required to be delivered to the
Administrative Agent.

 

Section 12.4         Reliance by the Administrative Agent.  The 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.  The 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 Issuing Bank, the Administrative Agent may presume that such condition is
satisfactory to such Lender or the Issuing Bank unless the Administrative Agent
shall have received notice to the contrary from such Lender or the Issuing Bank
prior to the making of such Loan or the issuance of such Letter of Credit.  The Administrative Agent may consult with
legal counsel (who may be counsel for SOURCECORP), 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.

 

Section 12.5         Delegation of Duties.  The 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

 

69

 

one or more subagents appointed by the Administrative Agent.  The Administrative Agent and any such
subagent 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 12 shall
apply to any such subagent and to the Related Parties of the Administrative
Agent and any such subagent, and shall apply to their respective activities in
connection with the syndication of the credit facilities provided for herein as
well as activities as the Administrative Agent.

 

Section 12.6         Resignation of the Administrative Agent.  The Administrative Agent may at any time give
notice of its resignation to the Lenders, the Issuing Bank and SOURCECORP.  Upon receipt of any such notice of
resignation, the Required Lenders shall have the right, with the consent of
SOURCECORP (such consent not to be unreasonably withheld), 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.  If no such successor shall have been so
appointed by the Required Lenders and shall have accepted such appointment
within 30 days after the retiring Administrative Agent gives notice of its
resignation, then the retiring Administrative Agent may on behalf of the
Lenders and the Issuing Bank, appoint a successor Administrative Agent meeting
the qualifications set forth above; provided that if the Administrative Agent
shall notify SOURCECORP 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 the
Administrative Agent on behalf of the Lenders or the Issuing Bank 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 the Administrative Agent shall instead be
made by or to each Lender and the Issuing Bank directly, until such time as the
Required Lenders appoint a successor Administrative Agent as provided for above
in this Section 12.6.  Upon the acceptance of a successor’s
appointment as the 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 12.6).  The fees payable by SOURCECORP to a successor
Administrative Agent shall be the same as those payable to its predecessor
unless otherwise agreed between SOURCECORP and such successor.  After the retiring Administrative Agent’s
resignation hereunder and under the other Loan Documents, the provisions of
this Article 12
and Section 13.1
shall continue in effect for the benefit of such retiring Administrative Agent,
its subagents 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 the Administrative Agent.

 

Any resignation by Bank of America as the Administrative Agent pursuant
to this Section 12.6
shall also constitute its resignation as Issuing Bank and Swingline
Lender.  Upon the acceptance of a
successor’s appointment as the Administrative Agent hereunder, (a) such
successor shall succeed to and become vested with all of the rights, powers,
privileges and duties of the retiring Issuing Bank and Swingline Lender, (b) the
retiring Issuing Bank and Swingline Lender shall be discharged from all of
their respective duties and obligations hereunder or under the other Loan
Documents, and (c) the successor Issuing Bank 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
Issuing Bank to effectively assume the obligations of the retiring Issuing Bank
with respect to such Letters of Credit.

 

Section 12.7         Non-Reliance on the Administrative Agent and
Other Lenders. 
Each Lender and the Issuing Bank acknowledges that it has, independently
and without reliance upon the Administrative Agent or any other Lender or any
of their Related Parties and based on such documents

 

70

 

and information, as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement.  Each Lender and the Issuing Bank also
acknowledges that it will, independently and without reliance upon the
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.

 

Section 12.8         Other Agents.  Anything herein to the contrary
notwithstanding, no Lender 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 Issuing Bank hereunder.

 

Section 12.9         The 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, the Administrative Agent (irrespective
of whether the principal of any Loan or Letter of Credit Liabilities shall then
be due and payable as herein expressed or by declaration or otherwise and
irrespective of whether the Administrative Agent shall have made any demand on
SOURCECORP) 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, Letter of Credit Liabilities and all other
Obligations that are owing and unpaid and to file such other documents as may
be necessary or advisable in order to have the claims of the Lenders, the
Issuing Bank and the Administrative Agent (including any claim for the
reasonable compensation, expenses, disbursements and advances of the Lenders,
the Issuing Bank and the Administrative Agent and their respective agents and
counsel and all other amounts due the Lenders, the Issuing Bank and the
Administrative Agent under Sections 2.11,
2.14, and
13.1)
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 Issuing Bank to make such payments to
the Administrative Agent and, in the event that the Administrative Agent shall
consent to the making of such payments directly to the Lenders and the Issuing
Bank, to pay to the Administrative Agent any amount due for the reasonable
compensation, expenses, disbursements and advances of the Administrative Agent
and its agents and counsel, and any other amounts due the Administrative Agent
under Sections 2.11
and 13.1.  Nothing contained herein shall be deemed to
authorize the Administrative Agent to authorize or consent to or accept or
adopt on behalf of any Lender or the Issuing Bank any plan of reorganization,
arrangement, adjustment or composition affecting the Obligations or the rights
of any Lender or to authorize the Administrative Agent to vote in respect of
the claim of any Lender in any such proceeding.

 

Section 12.10       Guaranty Matters.  Each Lender and the Issuing Bank hereby
irrevocably authorizes the Administrative Agent, at its option and in its
discretion, to release any Guarantor from its obligations under the Master
Guaranty if such Person ceases to be a Subsidiary as a result of a transaction
permitted hereunder.  Upon request by the
Administrative Agent at any time, each Lender and the Issuing Bank will confirm
in writing the Administrative Agent’s authority to release any Guarantor from
its obligations under the Master Guaranty pursuant to this Section 12.10.

 

71

 

Section 12.11       Collateral Matters.  After the Effective Date, the Administrative
Agent shall (and is hereby irrevocably authorized by each Lender and the
Issuing Bank, to) execute such documents as may be necessary to evidence the
release of the Liens upon the Collateral (as defined in the Existing Credit
Agreement) granted to or held by the Administrative Agent for the benefit of
the Administrative Agent and the Lenders and the Issuing Bank pursuant to the
Existing Credit Agreement; provided that (i) the Administrative
Agent shall not be required to execute any such document on terms which, in the
Administrative Agent’s opinion, would expose the Administrative Agent to or
create any liability or entail any consequence other than the release of such
Liens without recourse or warranty and (ii) such release shall not in any
manner discharge, affect or impair the Obligations.  Upon request by the Administrative Agent at
any time, each Lender and the Issuing Bank will confirm in writing the
Administrative Agent’s authority to release its interest in particular types or
items of Collateral pursuant to this Section 12.11.

 

ARTICLE 13

MISCELLANEOUS

 

Section 13.1         Expenses; Indemnity; Damage Waiver.

 

(a)           Costs
and Expenses.  SOURCECORP shall pay (i) all
reasonable out-of-pocket expenses incurred by the Administrative Agent and its
Affiliates (including the reasonable fees, charges and disbursements of counsel
for the 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
Issuing Bank in connection with the issuance, amendment, renewal or extension
of any Letter of Credit or any demand for payment thereunder, and (iii) all
out-of-pocket expenses incurred by the Administrative Agent, any Lender or the
Issuing Bank (including the fees, charges and disbursements of any counsel for
the Administrative Agent, any Lender or the Issuing Bank), and shall pay all
fees and time charges for attorneys who may be employees of the Administrative
Agent, any Lender or the Issuing Bank, 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 13.1, 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 SOURCECORP.  SOURCECORP SHALL
INDEMNIFY THE ADMINISTRATIVE AGENT (AND ANY SUBAGENT THEREOF), EACH LENDER AND
THE ISSUING BANK, 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
SOURCECORP 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 THE ADMINISTRATIVE AGENT (AND ANY SUB-AGENT

 

72

 

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
ISSUING BANK 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 SOURCECORP
OR ANY OF ITS SUBSIDIARIES, OR ANY ENVIRONMENTAL LIABILITY RELATED IN ANY WAY
TO SOURCECORP 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 SOURCECORP OR ANY OTHER LOAN PARTY, AND REGARDLESS OF
WHETHER 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) RESULTED FROM THE GROSS NEGLIGENCE
OR WILLFUL MISCONDUCT OF SUCH INDEMNITEE OR (Y) RESULT FROM A CLAIM BROUGHT BY
SOURCECORP 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.

 

(c)           Reimbursement
by the Lenders.  To the extent that
SOURCECORP for any reason fails to indefeasibly pay any amount required under subsection (a) or
(b) of
this Section 13.1
to be paid by it to the Administrative Agent (or any subagent thereof), the
Issuing Bank or any Related Party of any of the foregoing, each Lender
severally agrees to pay to the Administrative Agent (or any such sub-agent),
the Issuing Bank or such Related Party, as the case may be, ratably in
accordance with its respective Commitment 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 the Administrative Agent (or any such
sub-agent) or the Issuing Bank in its capacity as such, or against any Related
Party of any of the foregoing acting for the Administrative Agent (or any such
sub-agent) or Issuing Bank in connection with such capacity.  The obligations of the Lenders under this subsection (c) are
subject to the provisions of Section 3.4(c).

 

(d)           Waiver
of Consequential Damages, Etc.  To
the fullest extent permitted by applicable law, SOURCECORP 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 13.1
shall be payable not later than ten Business Days after demand therefor.

 

73

 

(f)            Survival.  The agreements in this Section 13.1
shall survive the resignation of the Administrative Agent and the Issuing Bank,
the replacement of any Lender, the termination of the Commitments and the
repayment, satisfaction or discharge of all the other Obligations for a period
of two years.

 

Section 13.2         Intentionally Omitted.

 

Section 13.3         Intentionally Omitted.

 

Section 13.4         No Duty.  All attorneys, accountants, appraisers and
other professional Persons and consultants retained by the Administrative Agent
and the Lenders shall have the right to act exclusively in the interest of the
Administrative Agent and the Lenders and shall have no duty of disclosure, duty
of loyalty, duty of care or other duty or obligation of any type or nature
whatsoever to SOURCECORP or any of its Subsidiaries or any of their
shareholders or any other Person.

 

Section 13.5         No Fiduciary Relationship.  The relationship between SOURCECORP and each
Lender is solely that of debtor and creditor, and neither the Administrative
Agent nor any Lender has any fiduciary or other special relationship with
SOURCECORP or any other Loan Party, and no term or condition of any of the Loan
Documents shall be construed so as to deem the relationship between SOURCECORP
and any Lender, or any other Loan Party and any Lender, to be other than that
of debtor and creditor.  No joint venture
or partnership is created by this Agreement among the Lenders or among
SOURCECORP or any other Loan Party and the Lenders.

 

Section 13.6         Equitable Relief.  SOURCECORP recognizes that, in the event it
fails to pay, perform, observe or discharge any or all of the Obligations, any
remedy at law may prove to be inadequate relief to the Administrative Agent and
the Lenders. SOURCECORP therefore agrees that the Administrative Agent and the
Lenders, if the Administrative Agent or the Lenders so request, shall be
entitled to temporary and permanent injunctive relief in any such case without
the necessity of proving actual damages.

 

Section 13.7         No Waiver; Cumulative Remedies.  No failure on the part of the Administrative
Agent or any Lender to exercise and no delay in exercising, and no course of
dealing with respect to, any right, power or privilege under this Agreement or
any other Loan Document shall operate as a waiver thereof, nor shall any single
or partial exercise of any right, power or privilege under this Agreement or
any other Loan Document preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.  The rights and remedies provided for in this
Agreement and the other Loan Documents are cumulative and not exclusive of any
rights and remedies provided by law.

 

Section 13.8         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 SOURCECORP nor any other Loan Party may assign or
otherwise transfer any of its rights or obligations hereunder without the prior
written consent of the Administrative Agent, the Issuing Bank 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 13.8,
(ii) by way of participation in accordance with the provisions of subsection (d) of
this Section 13.8,
or (iii) by way of pledge or assignment of a security interest subject to
the restrictions of subsection (f) of
this Section 13.8
(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

 

74

 

permitted hereby, Participants to the extent provided in subsection (d) of
this Section 13.8
and, to the extent expressly contemplated hereby, the Related Parties of each
of the Administrative Agent, the Issuing Bank and the Lenders) any legal or
equitable right, remedy or claim under or by reason of this Agreement.

 

(b)           Assignments
by the 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 Letter of Credit Liabilities and in Swingline Advances) 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 the 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 the Administrative Agent and, so long as
no Event of Default has occurred and is continuing, SOURCECORP 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 Swingline Advances; (iii) any assignment
of a Commitment must be approved by the Administrative Agent, the Issuing Bank,
Swingline Lender and SOURCECORP (each such consent not to be unreasonably
withheld or delayed) 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 the Administrative Agent an Assignment and Assumption, together
with a processing and recordation fee of $3,500 and the Eligible Assignee, if
it shall not be a Lender, shall deliver to the Administrative Agent an
Administrative Questionnaire.  Subject to
acceptance and recording thereof by the Administrative Agent pursuant to subsection (c) of
this Section 13.8,
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 Section 3.5,
Article 4,
Section 13.1
and Section 13.2
with respect to facts and circumstances occurring prior to the effective date
of such assignment.  Upon request,
SOURCECORP (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 Section 13.8(b) shall
be treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with Section 13.8(d).

 

(c)           Register.  The Administrative Agent, acting solely for
this purpose as an agent of SOURCECORP, shall maintain at the Principal 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 Letter of Credit Liabilities owing to,
each Lender pursuant to the terms hereof from time to time (the “Register”).  The entries in the Register shall be
conclusive, and SOURCECORP, the Administrative Agent and the Lenders may treat
each Person whose name is recorded in the Register pursuant to the terms hereof
as a Lender hereunder for all purposes of this Agreement, notwithstanding
notice to the contrary.  The Register
shall be available for inspection by each of SOURCECORP and the Issuing Bank,
at any reasonable time and from time to time

 

75

 

upon reasonable prior notice.  In
addition, at any time that a request for consent for a material or substantive
change to the Loan Documents is pending, any Lender may request and receive
from the Administrative Agent a copy of the Register.

 

(d)           Participations.  Any Lender may at any time, without the
consent of, or notice to, SOURCECORP or the Administrative Agent, sell
participations to any Person (other than a natural person or SOURCECORP or any
of SOURCECORP’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 Letter of Credit Liabilities and/or Swingline
Advances) 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) SOURCECORP, the Administrative Agent, the Issuing
Bank 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 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 13.11 that affects such
Participant.  Subject to subsection (e) of
this Section 13.8,
SOURCECORP agrees that each Participant shall be entitled to the benefits of Section 3.5, Article 4, Section 13.1 and
Section 13.2
to the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to subsection (b) of
this Section 13.8.  To the extent permitted by law, each
Participant also shall be entitled to the benefits of Section 5.3 as
though it were a Lender, provided such Participant agrees to be subject
to Section 3.3
as though it were a Lender.

 

(e)           Limitations
upon Participant Rights.  A
Participant shall not be entitled to receive any greater payment under Section 3.5,  Article 4, Section 13.1
or Section 13.2
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 SOURCECORP’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)           Intentionally
Omitted.

 

(i)            Resignation
as Issuing Bank or Swingline 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 SOURCECORP and the
Lenders, resign as Issuing Bank and/or (ii) upon 30 days’ notice to
SOURCECORP, resign as

 

76

 

Swingline Lender.  In the event
of any such resignation as Issuing Bank or Swingline Lender, SOURCECORP shall
be entitled to appoint from among the Lenders a successor Issuing Bank or
Swingline Lender hereunder; provided, however, that no failure by
SOURCECORP to appoint any such successor shall affect the resignation of Bank
of America as Issuing Bank or Swingline Lender, as the case may be.  If Bank of America resigns as Issuing Bank,
it shall retain all the rights, powers, privileges and duties of the Issuing
Bank hereunder with respect to all Letters of Credit outstanding as of the
effective date of its resignation as Issuing Bank and all Letter of Credit
Liabilities with respect thereto (including the right to require the Lenders to
make Base Rate Loans or fund risk participations in Unreimbursed Amounts
pursuant to Section 2.14(c)).  If Bank of America resigns as Swingline
Lender, it shall retain all the rights of Swingline Lender provided for
hereunder with respect to Swingline Advances made by it and outstanding as of
the effective date of such resignation, including the right to require the
Lenders to make Base Rate Loans or fund risk participations in outstanding
Swingline Advances pursuant to Section 2.15. 
Upon the appointment of a successor Issuing Bank and/or Swingline
Lender, (a) such successor shall succeed to and become vested with all of
the rights, powers, privileges and duties of the retiring Issuing Bank or
Swingline Lender, as the case may be, and (b) the successor Issuing Bank
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.

 

(j)            Disclosure
of Information.  Any Lender may, in
connection with any assignment or participation or proposed assignment or
participation pursuant to this Section 13.8, disclose to the Eligible Assignee or
Participant or proposed assignee or participant any information relating to
SOURCECORP or any of its Subsidiaries or any other Loan Party furnished to such
Lender by or on behalf of SOURCECORP or any of its Subsidiaries or any other
Loan Party provided that SOURCECORP shall have no liability for the
accuracy of any such information except (i) to the Administrative Agent
and the Lenders to the extent expressly provided herein or (ii) as
of the date it was furnished by SOURCECORP; provided that each such
actual or proposed assignee or participant shall agree to be bound by the
provisions of Section 13.20.

 

Section 13.9         Survival.  All representations and warranties made or
deemed made in this Agreement or any other Loan Document or in any document,
statement or certificate furnished in connection with this Agreement shall
survive the execution and delivery of this Agreement and the other Loan
Documents and the making of the Loans, and no investigation by the
Administrative Agent or any Lender or any closing shall affect the
representations and warranties or the right of the Administrative Agent or any
Lender to rely upon them.  Without
prejudice to the survival of any other obligation of SOURCECORP hereunder, the
obligations of SOURCECORP under Article 4 and Sections 13.1 and 13.2 shall survive
repayment of the Loans and the Letter of Credit Liabilities for a period of two
years, but shall not survive the expiration of any applicable statute of
limitations.

 

Section 13.10       ENTIRE AGREEMENT.  THIS AGREEMENT, THE NOTES AND THE OTHER LOAN
DOCUMENTS REFERRED TO HEREIN EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE
PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, TERM SHEETS,
AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL,
RELATING TO THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED OR
VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR
DISCUSSIONS OF THE PARTIES HERETO.  THERE
ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES HERETO.

 

Section 13.11       Amendments.  No amendment or waiver of any provision of
this Agreement, the Notes or any other Loan Document (except for any Interest
Rate Protection Agreements or Currency

 

77

 

Hedge Agreements that are Loan Documents) to which SOURCECORP is a
party, nor any consent to any departure by SOURCECORP therefrom, shall in any
event be effective unless the same shall be agreed or consented to by the
Required Lenders and SOURCECORP in writing, and each such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given; provided, that no amendment, waiver or consent shall,
unless in writing and signed by all of the Lenders and SOURCECORP, do any of
the following: (a) increase the Commitments of the Lenders or subject the
Lenders to any additional obligations, except pursuant to Section 2.16; (b) reduce
the principal of, or interest on, the Loans, Letter of Credit Liabilities or
any fees or other amounts payable hereunder; (c) postpone any date fixed
for any payment (including, without limitation, any mandatory prepayment) of
principal of, or interest on, the Loans, Letter of Credit Liabilities or any
fees or other amounts payable hereunder; (d) change the Commitment
Percentages or the aggregate unpaid principal amount of the Loans, Letter of
Credit Liabilities or the number or interests of the Lenders which shall be
required for the Lenders or any of them to take any action under this
Agreement; (e) change any provision contained in this Section 13.11 or
modify the definition of “Required
Lenders” contained in Section 1.1; or (f) release all or
substantially all guaranties of all or any portion of the Obligations.  The Administrative Agent shall not terminate
a Payment Blockage Period under and as defined in any Subordination Agreement
without the consent of the Required Lenders. 
Notwithstanding anything to the contrary contained in this Section 13.11,
no amendment, waiver or consent shall be made with respect to Article 12
hereof without the prior written consent of the Administrative Agent.  If at any time a Lender becomes a
Nonconsenting Lender (as identified in this Section 13.11), SOURCECORP shall
have the right to replace such Lender with another Person; provided that
(i) such new Person shall be an Eligible Assignee acceptable to the
Administrative Agent and such new Person shall execute an Assignment and
Assumption, (ii) SOURCECORP shall have no right to replace Bank of
America, (iii) neither the Administrative Agent nor any Lender shall have
any obligation to SOURCECORP to find such other Person, and (iv) in the
event of a replacement of a Nonconsenting Lender, in order for SOURCECORP to be
entitled to replace such a Lender, such replacement must take place no later
than 180 days after the date the Nonconsenting Lender shall notify SOURCECORP
and the Administrative Agent of its failure to agree to any requested consent,
waiver, extension or other modification. 
Each Lender (other than Bank of America) agrees to its replacement at
the option of SOURCECORP pursuant to this Section 13.11 and in accordance with Section 13.8; provided
that the successor Lender shall purchase without recourse such Lender’s interest
in the Obligations of SOURCECORP to such Lender for cash in an aggregate amount
equal to the aggregate unpaid principal thereof, all unpaid interest accrued
thereon, all unpaid commitment fees accrued for the account of such Lender, any
breakage costs incurred by the selling Lender because of the prepayment of any
Eurodollar Loans, all other fees (if any) applicable thereto and all other
amounts (including any amounts under Article 4) then owing to such Lender
hereunder or under any other Loan Document and the Loan Parties shall execute a
release addressed to such Lender releasing such Lender from all claims arising
in connection with the Loan Documents. 
In the event that (x) SOURCECORP or the Administrative Agent has
requested the Lenders to consent to a departure or waiver of any provisions of
the Loan Documents or to agree to any other modification thereto, (y) the
consent, waiver or other modification in question requires the agreement of all
the Lenders in accordance with the terms of this Section 13.11 and (z) Required
Lenders have agreed to such consent, waiver or other modification, then any
Lender who does not agree to such consent, waiver, extension or other
modification shall be deemed a “Nonconsenting Lender”. 
Any Lender (x) that requests compensation pursuant to Section 3.5, 4.1
or 4.6 of
a type or in an amount that is not consistent with that requested by all of the
Lenders or (y) that elects not to extend its Commitment pursuant to Section 2.1(d) (if
the Lenders holding at least 51% of the aggregate amount of the Commitments
have elected to extend their Commitments) shall also be deemed to be a “Nonconsenting Lender”
for purposes of this Section 13.11.

 

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Section 13.12       Maximum Interest Rate.

 

(a)           No
interest rate specified in this Agreement or any other Loan Document shall at
any time exceed the Maximum Rate.  If at
any time the interest rate (the “Contract Rate”) for any Obligation shall exceed the
Maximum Rate, thereby causing the interest accruing on such Obligation to be
limited to the Maximum Rate, then any subsequent reduction in the Contract Rate
for such Obligation shall not reduce the rate of interest on such Obligation
below the Maximum Rate until the aggregate amount of interest accrued on such
Obligation equals the aggregate amount of interest which would have accrued on
such Obligation if the Contract Rate for such Obligation had at all times been
in effect.

 

(b)           Notwithstanding
anything to the contrary contained in this Agreement or the other Loan
Documents, none of the terms and provisions of this Agreement or the other Loan
Documents shall ever be construed to create a contract or obligation to pay
interest at a rate in excess of the Maximum Rate; and neither the Administrative
Agent nor any Lender shall ever charge, receive, take, collect, reserve or
apply, as interest on the Obligations, any amount in excess of the Maximum
Rate.  The parties hereto agree that any
interest, charge, fee, expense or other obligation provided for in this
Agreement or in the other Loan Documents which constitutes interest under
applicable law shall be, ipso facto and under any and all circumstances,
limited or reduced to an amount equal to the lesser of (i) the amount of
such interest, charge, fee, expense or other obligation that would be payable
in the absence of this Section 13.12(b) or
(ii) an amount, which when added to all other interest payable under this
Agreement and the other Loan Documents, equals the Maximum Rate.  If, notwithstanding the foregoing, the
Administrative Agent or any Lender ever contracts for, charges, receives,
takes, collects, reserves or applies as interest any amount in excess of the
Maximum Rate, such amount which would be deemed excessive interest shall be
deemed a partial payment or prepayment of principal of the Obligations and
treated hereunder as such; and if the Obligations, or applicable portions
thereof, are paid in full, any remaining excess shall promptly be paid to
SOURCECORP (as appropriate).  In
determining whether the interest paid or payable, under any specific
contingency, exceeds the Maximum Rate, SOURCECORP, the Administrative Agent and
the Lenders shall, to the maximum extent permitted by applicable law, (i) characterize
any nonprincipal payment as an expense, fee or premium rather than as interest,
(ii) exclude voluntary prepayments and the effects thereof, and (iii) amortize,
prorate, allocate and spread in equal or unequal parts the total amount of
interest throughout the entire contemplated term of the Obligations, or
applicable portions thereof, so that the interest rate does not exceed the
Maximum Rate at any time during the term of the Obligations; provided that,
if the unpaid principal balance is paid and performed in full prior to the end
of the full contemplated term thereof, and if the interest received for the
actual period of existence thereof exceeds the Maximum Rate, the Administrative
Agent and/or the Lenders, as appropriate, shall refund to SOURCECORP the amount
of such excess and, in such event, the Administrative Agent and the Lenders
shall not be subject to any penalties provided by any laws for
contracting for, charging, receiving, taking, collecting, reserving or applying
interest in excess of the Maximum Rate.

 

Section 13.13       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:

 

79

 

(i)            if to SOURCECORP, the Administrative
Agent, the Issuing Bank or Swingline Lender, to the address, telecopier number,
electronic mail address or telephone number specified for such Person on Schedule 13.13;
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 the Lenders and the Issuing Bank hereunder may be delivered
or furnished by electronic communication (including e-mail and Internet or
intranet websites) pursuant to procedures approved by the Administrative Agent,
provided that the foregoing shall not apply to notices to any Lender or
the Issuing Bank pursuant to Article 2 if such Lender or the Issuing Bank, as
applicable has notified the Administrative Agent that it is incapable of
receiving notices under such Article 2 by electronic communication.  The Administrative Agent or SOURCECORP 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 the
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.

 

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

 

80

 

(d)           Change
of Address, Etc.  Each of SOURCECORP,
the Administrative Agent, the Issuing Bank and Swingline 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 SOURCECORP, the Administrative Agent, the Issuing Bank and Swingline
Lender.  In addition, each Lender agrees
to notify the Administrative Agent from time to time to ensure that the
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 the Administrative Agent. Issuing Bank and the Lenders.  The Administrative Agent, the Issuing Bank
and the Lenders shall be entitled to rely and act upon any notices (including
telephonic notices delivered pursuant to Article 2) purportedly given by or on
behalf of SOURCECORP 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.  SOURCECORP shall indemnify Agent, the Issuing
Bank, 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 purportedly given by or on behalf of SOURCECORP.  All telephonic notices to and other
telephonic communications with Agent may be recorded by Agent, and each of the
parties hereto hereby consents to such recording.

 

Section 13.14       GOVERNING LAW; JURISDICTION; ETC.

 

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

 

(b)           SUBMISSION
TO JURISDICTION.  SOURCECORP 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 TEXAS
SITTING IN DALLAS COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE
NORTHERN DISTRICT OF TEXAS, 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 TEXAS 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 ISSUING BANK MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST SOURCECORP OR ANY
OTHER LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

 

(c)           WAIVER
OF VENUE.  SOURCECORP 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

 

81

 

PARAGRAPH (B) OF
THIS SECTION 13.14.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES, 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.

 

Section 13.15       Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

 

Section 13.16       Severability.  Any provision of this Agreement held by a
court of competent jurisdiction to be invalid or unenforceable shall not impair
or invalidate the remainder of this Agreement and the effect thereof shall be
confined to the provision held to be invalid or illegal.

 

Section 13.17       Headings.  The headings, captions and arrangements used
in this Agreement are for convenience only and shall not affect the
interpretation of this Agreement.

 

Section 13.18       Construction.  Each of SOURCECORP and each of its
Subsidiaries, the Administrative Agent and each Lender acknowledges that it has
had the benefit of legal counsel of its own choice and has been afforded an
opportunity to review this Agreement and the other Loan Documents with its
legal counsel and that this Agreement and the other Loan Documents shall be
construed as if jointly drafted by the parties hereto.

 

Section 13.19       Independence of Covenants.  All covenants hereunder shall be given
independent effect so that if a particular action or condition is not permitted
by any of such covenants, the fact that it would be permitted by an exception
to, or be otherwise within the limitations of, another covenant shall not avoid
the occurrence of a Default if such action is taken or such condition exists.

 

Section 13.20       Treatment of Certain Information;
Confidentiality. 
Each of the Administrative Agent, the Lenders and the Issuing Bank 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, 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 instructed and agree 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 13.20,
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 (it
being understood that the Persons to whom such disclosure is made will be
informed of the confidential nature of such Information and instructed and
agree to keep such Information confidential) or (ii) any actual or
prospective counterparty (or its advisors) to any swap or derivative
transaction relating to SOURCECORP and its obligations (it being understood
that the Persons to whom such disclosure is made will be informed of the
confidential nature of such Information and instructed and agree to keep such
Information confidential), (g) with the consent of SOURCECORP or (h) to
the extent such Information (x) becomes publicly available other than as a
result of a breach of this Section 13.20
or (y) becomes available to the Administrative Agent, any Lender, the Issuing
Bank or any of their respective Affiliates on a nonconfidential basis from a
source other than SOURCECORP.  For
purposes of this Section 13.20,
“Information”
means all information received from SOURCECORP or any Subsidiary relating to

 

82

 

SOURCECORP or any Subsidiary or any of their respective businesses,
other than any such information that is available to the Administrative Agent,
any Lender or the Issuing Bank on a nonconfidential basis prior to disclosure
by SOURCECORP or any Subsidiary.  Any
Person required to maintain the confidentiality of Information as provided in
this Section 13.20
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 the Administrative
Agent, the Lenders and the Issuing Bank acknowledges that (a) the
Information may include material non-public information concerning the
SOURCECORP 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
Governmental Requirement.

 

Section 13.21       WAIVER OF JURY TRIAL.  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, 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.

 

Section 13.22       Approvals and Consent.  Except as may be expressly provided to the
contrary in this Agreement or in the other Loan Documents (as applicable), in
any instance under this Agreement or the other Loan Documents where the
approval, consent or exercise of judgment of the Administrative Agent or any
Lender is requested or required, (a) the granting or denial of such
approval or consent and the exercise of such judgment shall be within the sole
discretion of the Administrative Agent and such Lender, and the Administrative
Agent and such Lender shall not, for any reason or to any extent, be required
to grant such approval or consent or to exercise such judgment in any
particular manner, regardless of the reasonableness of the request or the
action or judgment of the Administrative Agent or such Lender, and (b) no
approval or consent of the Administrative Agent or any Lender shall in any
event be effective unless the same shall be in writing and the same shall be
effective only in the specific instance and for the specific purpose for which
given.

 

Section 13.23       Agent for Services of Process.  Each of SOURCECORP and each of its Subsidiaries
hereby irrevocably designates any officer of SOURCECORP, at the offices of
SOURCECORP at 3232 McKinney Avenue, Suite 1000 Dallas, Texas 75204, to
receive, for and on behalf of such Person, service of process in the State of
Texas, such service being hereby acknowledged by such Person to be effective
and binding service in every respect. 
Each of SOURCECORP and each of its Subsidiaries agrees that the failure
of its agent for service of process to give any notice of any such service of
process to such Person shall not impair or affect the validity of such service
or of any judgment based thereon.  If,
despite the foregoing, there is for any reason no agent for service of process
of such Person available to be served, then such Person further irrevocably
consents to the service of process by the mailing thereof by the Administrative
Agent or the Required Lenders by registered or certified mail, postage prepaid,
to such Person at its address listed on Schedule 13.13 hereof.  Nothing in this Section 13.23 shall affect the
right of the Administrative Agent or the Lenders to serve legal process in any
other manner permitted by law or affect the right of the Administrative Agent
or any Lender to bring

 

83

 

any action or proceeding against SOURCECORP or any of its Subsidiaries
or its Property in the court of any jurisdiction.

 

Section 13.24       USA PATRIOT Act Notice.  Each Lender that is subject to the Act (as
hereinafter defined) and the Administrative Agent (for itself and not on behalf
of any Lender) hereby notifies SOURCECORP 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
SOURCECORP, which information includes the name and address of SOURCECORP and
other information that will allow such Lender or the Administrative Agent, as
applicable, to identify SOURCECORP in accordance with the Act.

 

Section 13.25       Restatement of Existing Agreement.  The parties hereto agree that, on the
Effective Date, after all conditions precedent set forth in Section 6.1 have
been satisfied or waived: (a) the Obligations (as defined in this
Agreement) represent, among other things, the restatement, renewal, amendment,
extension, and modification of the “Obligations” (as defined in the Existing
Credit Agreement); (b) this Agreement is intended to, and does hereby,
restate, renew, extend, amend, modify, supersede, and replace the Existing Credit
Agreement in its entirety; (c) the Notes, if any, executed pursuant to
this Agreement amend, renew, extend, modify, replace, restate, substitute for,
and supersede in their entirety (but do not extinguish, the Debt arising under)
the promissory notes issued pursuant to the Existing Credit Agreement, which
existing promissory notes (including those of the Non-Continuing Lenders) shall
be returned to the Administrative Agent promptly after the Effective Date,
marked “canceled or replaced,” and, thereafter, promptly delivered by the
Administrative Agent or each such Lender to SOURCECORP; (d) the Master
Guaranty executed pursuant to this Agreement ratifies and confirms (but does
not extinguish or impair the “Guaranteed Obligations” guaranteed by) the “Master
Guaranty” executed and delivered pursuant to the Existing Agreement; and (e) the
entering into and performance of their respective obligations under the Loan
Documents and the transactions evidenced hereby do not constitute a novation
nor shall they be deemed to have terminated, extinguished, or discharged the
indebtedness under the Existing Credit Agreement, all of which indebtedness
shall continue under and be governed by this Agreement and the other Loan
Documents, except as expressly provided otherwise herein.  On the Effective Date, (i) all
outstanding Debt under the Existing Credit Agreement owed to any “Lender” that
is not continuing as a Lender under this Agreement (each a “Non-Continuing Lender”)
shall be repaid in full by SOURCECORP and such Non-Continuing Lender’s
commitment under the Existing Credit Agreement shall be terminated; (ii) with
respect to the “Lenders” under the Existing Credit Agreement that are
continuing as Lenders under this Agreement (the “Continuing Lenders”), all outstanding
Debt owed to the Continuing Lenders shall be renewed, extended and refinanced
pursuant to this Agreement and the Continuing Lenders’ respective Commitments
and Commitment Percentages shall be modified to reflect those set forth in this
Agreement; and (iii) with respect to “Eurodollar Loans” under the Existing
Credit Agreement, (x) all Interest Periods applicable thereto shall be deemed
to end on the Effective Date and (y) each Continuing Lender hereby waives,
effective as of the Effective Date, any loss, cost, or expense incurred as a
result of the amendment and restatement of such Existing Credit Agreement.

 

Section 13.26       Release of Liens.

 

(a)           On
the Effective Date, the Administrative Agent and the Lenders hereby RELEASE,
DISCHARGE and FOREVER ACQUIT the Liens on the Collateral (as defined in the
Existing Credit Agreement).

 

(b)           Promptly
after the Effective Date, the Administrative Agent and the Lenders agree to
promptly execute and deliver to SOURCECORP or its designee, at SOURCECORP’s
expense, any and all instruments and documents reasonably necessary to evidence
and document the releases and

 

84

 

terminations of the Collateral (as defined in the Existing Credit
Agreement), including but not limited to, (i) all UCC termination
statements, (ii) releases of mortgages or deeds of trust, if any (such UCC
termination statements and mortgage releases are herein collectively referred
to as the “Lien Releases”),
(iii) releases of intellectual property security, if any, (iv) original
stock certificates and stock powers in the possession of the Administrative
Agent, or its designee, (v) original notes and other instruments and
endorsements with respect thereto, if any, and (vi) such other releases,
documents and instruments as may be reasonably requested by SOURCECORP from
time to time, in form and substance reasonably acceptable to SOURCECORP and the
Administrative Agent.

 

(c)           After
the Effective Date, the Administrative Agent and the Lenders authorize
SOURCECORP to file of record (i) UCC termination statements with respect
to financing statements which name SOURCECORP as debtor and the Administrative
Agent as secured party; and (ii) the Lien Releases in the appropriate
recording offices.

 

(d)           SOURCECORP
and its Subsidiaries acknowledge that the Administrative Agent’s execution of
and/or delivery of any documents releasing any security interest or claim in
any Property of SOURCECORP or any of its Subsidiaries as set forth herein is
made without recourse, representation, warranty or other assurance of any kind
by the Administrative Agent as to the condition or value of any Collateral (as
defined in the Existing Credit Agreement).

 

[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK;

SIGNATURE
PAGE FOLLOWS.]

 

85

 

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

 

	
   

  	
  SOURCECORP, INCORPORATED

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Barry L. Edwards

  
	
   

  	
   

  	
  Barry L. Edwards

  
	
   

  	
   

  	
  Executive Vice President and Chief
  Financial

  
	
   

  	
   

  	
  Officer

  

 

 

Signature Page to Amended and Restated Credit Agreement

 

 

	
   

  	
  BANK OF AMERICA, N.A., as Administrative
  Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Suzanne M. Paul

  
	
   

  	
   

  	
  Suzanne M. Paul

  
	
   

  	
   

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BANK OF AMERICA, N.A., as a Lender, as Swingline

  
	
   

  	
  Lender and as Issuing Bank

  
	
   

  	
   

  
	
   

  	
   

  
	
  Commitment:

  	
  By:

  	
  /s/ Steven A. Mackenzie

  
	
  $45,000,000

  	
   

  	
  Steven A. Mackenzie

  
	
   

  	
   

  	
  Senior Vice President

  

 

 

Signature Page to Amended and Restated Credit Agreement

 

 

	
   

  	
  SUNTRUST BANK, as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
  Commitment:

  	
  By:

  	
  /s/ Daniel S. Komitor

  
	
  $27,500,000

  	
  Name:

  	
  Daniel S. Komitor

  
	
   

  	
  Title:

  	
  Director

  

 

 

Signature Page to Amended and Restated Credit Agreement

 

 

	
   

  	
  JPMORGAN CHASE BANK, N.A., as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
  Commitment:

  	
  By:

  	
  /s/ Brian McDougal

  
	
  $27,500,000

  	
  Name:

  	
  Brian McDougal

  
	
   

  	
  Title:

  	
  Vice Presdent

  

 

 

Signature Page to Amended and Restated Credit Agreement

 

 

EXHIBIT G

 

FORM OF AMENDED AND
RESTATED MASTER GUARANTY

 

1

 

AMENDED AND
RESTATED MASTER GUARANTY AGREEMENT

 

This AMENDED AND RESTATED MASTER GUARANTY
AGREEMENT (this “Guaranty”),
dated as of September 29, 2005, is executed and delivered by each of the
undersigned parties and any party hereafter added as a “Guarantor” pursuant to a
Joinder Agreement (each a “Guarantor”
and collectively the “Guarantors”),
to and in favor of BANK OF AMERICA, N.A., a national banking association, as
administrative agent for the equal and ratable benefit of itself and the other
financial institutions now or hereafter party to the hereinafter described
Credit Agreement (the “Administrative
Agent”).

 

W I
T  N  E  S  S  E  T  H:

 

WHEREAS, SOURCECORP, Incorporated (“Borrower”) entered
into that certain Amended and Restated Credit Agreement dated as of September 29,
2005, with the financial institutions parties thereto (each individually a “Lender” and
collectively, the “Lenders”)
and the Administrative Agent (such agreement, as it may be amended, renewed,
extended, restated, replaced, substituted, supplemented, or otherwise modified
from time to time, is referred to herein as the “Credit Agreement”) and, in connection
therewith, inter  alia, (a) Borrower has executed and
delivered those certain Promissory Notes (Revolving Loans) payable to the order
of the Lenders evidencing certain revolving commitments and related Revolving
Loans (collectively, the “Revolving
Notes”), and (b) Borrower has executed and delivered that
certain Promissory Note (Swingline Advances), payable to the order of the
Swingline Lender evidencing Swingline Advances (the “Swingline Note”; the
Revolving Notes and the Swingline Note, as they may be amended, renewed,
extended, restated, replaced, substituted, supplemented, or otherwise modified
from time to time, are each individually referred to as a “Note” and
collectively referred to as the “Notes”);

 

WHEREAS, each Guarantor has directly and
indirectly benefitted and will directly and indirectly benefit from the loans
and other credit accommodations evidenced and governed by the Credit Agreement
and the Notes (the “Loans”)
and the other transactions evidenced by and contemplated in the Loan Documents;
and

 

WHEREAS, the
execution by the Guarantors of this Guaranty is required by the Credit
Agreement as a condition to making extensions of credit thereunder from and
after the Effective Date.

 

NOW,
THEREFORE, for good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, each Guarantor hereby jointly and severally
agrees as follows:

 

1.             Definitions.           Unless otherwise defined in this
Guaranty, all terms beginning with a capital letter as used in this Guaranty
shall have the meanings ascribed to such terms in the Credit Agreement. As used
herein, the terms “Borrower” and “Guarantor” shall also include (a) any
successor individual or individuals, association, partnership, corporation or
other Person to which all or a substantial part of the business or assets of
Borrower or any Guarantor, as applicable, shall have been transferred,
including, without limitation, a debtor-in-possession under the Bankruptcy
Code, and (b) in the case of Borrower or a corporate Guarantor, any other
corporation into or with which any Guarantor or Borrower shall have been
merged, consolidated, reorganized, or absorbed; provided however, such
definitions are

 

1

 

not intended to indicate
that Borrower or any Guarantor is authorized to transfer its business or assets
or to merge, consolidate or reorganize into or with another corporation in
violation of any provision contained in any of the Loan Documents.

 

2.             Guaranty of
Indebtedness, Liabilities and Obligations.  Each
Guarantor, jointly and severally, hereby irrevocably and unconditionally
guarantees (a) payment to the Administrative Agent and the Lenders of any
and all Obligations, including, without limitation, any and all (i) interest,
penalties, fees, and expenses (specifically including, but not limited to,
attorneys’ fees and expenses) which Borrower may now or at any time hereafter
owe to the Administrative Agent or any Lender (whether or not such interest,
penalties, fees, and expenses are enforceable against Borrower) pursuant to the
Credit Agreement, any Note, or any other Loan Document plus (ii) the
principal amount of any and all indebtedness, liabilities, and other
obligations, whether direct, indirect, fixed, contingent, liquidated,
unliquidated, joint, several, or joint and several, due or to become due and
whether arising by agreement, note, discount, acceptance, overdraft, or
otherwise, which Borrower may now or at any time hereafter owe to the
Administrative Agent or any Lender (whether or not such indebtedness, liabilities,
and obligations are enforceable against Borrower) pursuant to the Credit
Agreement, any Note, or any other Loan Document and (b) the faithful,
prompt and complete compliance by Borrower with all terms, conditions,
covenants, agreements, and undertakings of Borrower under the Credit Agreement,
any Note, or any other Loan Documents (the Obligations and the interest,
penalties, fees, expenses, indebtedness, liabilities, and obligations referred
to in clauses (a) and
(b) preceding
as to which payment and performance is guaranteed pursuant to this Guaranty are
hereinafter individually and collectively called the “Guaranteed Obligations”).

 

Notwithstanding that Borrower may not be
liable or obligated to the Administrative Agent or any Lender for interest and/or
attorneys’ fees and expenses on, or in connection with, the Guaranteed
Obligations from and after the Petition Date (as hereinafter defined) as a
result of the provisions of the federal bankruptcy laws or otherwise, the
Guaranteed Obligations for which each Guarantor shall be liable and obligated
under this Guaranty shall include interest accruing on the Guaranteed
Obligations at the highest rate provided for in the Credit Agreement from and
after the date on which Borrower files for protection under the federal
bankruptcy laws or from and after the date on which an involuntary proceeding
is filed against Borrower under the federal bankruptcy laws (herein
collectively referred to as the “Petition Date”) and all attorneys’ fees and expenses
incurred by the Administrative Agent or any Lender from and after the Petition
Date in connection with the Guaranteed Obligations.

 

Notwithstanding anything to the contrary
contained in this Guaranty, however, the Guaranteed Obligations guaranteed by
each Guarantor hereunder shall not exceed an aggregate amount equal to the
greatest amount that would not render such Guarantor’s obligations under this
Guaranty subject to avoidance under Sections 544, 548 or 550 of the Bankruptcy
Code or subject to being set aside or annulled under any applicable state law
relating to fraud on creditors; provided, however, that for
purposes of this sentence it shall be presumed that the Guaranteed Obligations
guaranteed by any Guarantor under this Guaranty do not equal or exceed any
aggregate amount which would render such Guarantor’s obligations under this
Guaranty subject to being so avoided, set aside or annulled, and the burden of
proof to the contrary shall be on the party asserting to the contrary.  Subject to, but without limiting the
generality of the foregoing, the provisions of this Guaranty are severable and,
in any action or proceeding involving any state corporate law or any
bankruptcy, insolvency, fraudulent conveyance, fraudulent transfer or similar
law affecting the rights of creditors generally, if the obligations of

 

2

 

any Guarantor under this Guaranty would otherwise be held or determined
to be void, invalid or unenforceable on account of the amount of such
obligations under this Guaranty, then, notwithstanding any other provision of
this Guaranty to the contrary, the amount of such obligations shall, without
any further action by any Guarantor, the Administrative Agent, any Lender or
any other Person, be automatically limited and reduced to the greatest amount
which is valid and enforceable as determined in such action or proceeding.

 

3.             Continuing Guaranty of
Payment.  This Guaranty is and shall be an absolute,
irrevocable and continuing guaranty of payment, and not merely of collection,
and from time to time or at any time the Guaranteed Obligations may be
increased, reduced or paid in full without affecting the liability or
obligation of any Guarantor with respect to indebtedness, liabilities and
obligations of Borrower to the Administrative Agent or any Lender thereafter
incurred.  Each Guarantor further agrees
that this Guaranty shall continue to be effective or be reinstated (if a
release or discharge has occurred), as the case may be, if at any time any
payment (or any part thereof) to the Administrative Agent or any Lender in
respect of the Guaranteed Obligations is rescinded or must otherwise be
restored by the Administrative Agent or such Lender pursuant to any bankruptcy,
insolvency, reorganization, receivership or other debtor relief granted to
Borrower or its successors or assigns. 
In the event that the Administrative Agent or any Lender must rescind or
restore any payment received by the Administrative Agent or any Lender, respectively,
in satisfaction of the Guaranteed Obligations, as set forth herein, any prior
release or discharge from the terms of this Guaranty given to any Guarantor by
the Administrative Agent or such Lender, respectively, shall be without effect,
and this Guaranty shall remain in full force and effect.  It is the intention of the Administrative
Agent, the Lenders and each Guarantor that no Guarantor’s liabilities and
obligations hereunder shall be discharged except by such Guarantor’s full and
complete payment and performance of its liabilities and obligations and then
only to the extent of such payment and performance.

 

4.             Absolute Guaranty. 
No Guarantor’s liabilities and obligations under this Guaranty shall be
released, impaired, limited, reduced, conditioned upon or otherwise affected
by, and such liabilities and obligations shall continue in full force and
effect notwithstanding, the occurrence of any event (other than an event
consisting of payment and performance of such liabilities and obligations as
provided in Paragraph 3
hereof) at any time or from time to time, including, without limitation, any
one or more of the following events specified in clauses (a) through (r) of this Paragraph 4 below,
and neither the Administrative Agent nor any Lender shall be obligated or
required to take or to refrain from taking any of such actions or inactions
specified below and shall have no liability, obligation or duty whatsoever with
respect to such actions or inactions, it being acknowledged and agreed by each
Guarantor that all of such liabilities, obligations and duties (if any) of the
Administrative Agent and the Lender otherwise existing and all rights and
remedies (if any) of each Guarantor with respect thereto (whether such
liabilities, obligations, duties, rights or remedies exist by virtue of agreement,
common law, equity, statute or otherwise), and each and every defense which,
under principles of guaranty or suretyship law, would otherwise operate to
eliminate, impair, condition or restrict the liabilities and obligations of any
Guarantor for the Guaranteed Obligations, are hereby expressly waived by each
Guarantor:

 

(a)           The taking or accepting of any security
or other guaranty for any or all of the Guaranteed Obligations, whether
heretofore, concurrently herewith or hereafter;

 

(b)           Any failure to create or perfect or
properly create or perfect any lien, security interest or assignment intended
as security, or any release, surrender, exchange, substitution, subordination
or loss of any security or guaranty at any time existing in connection with any
or all of the Guaranteed Obligations for any reason;

 

3

 

(c)           Any partial or full release of the
liability or obligation of any other Guarantor under this Guaranty or any other
guaranty whether or not similar to this Guaranty, or any partial or full
release of the liability or obligation of any other guarantor of the Guaranteed
Obligations;

 

(d)           The entering into, delivery of,
modification of, amendment to or waiver of compliance with the Credit
Agreement, any Note, any Letter of Credit or any other Loan Document, or any
agreement, document or instrument evidencing, securing or otherwise affecting
all or part of the Guaranteed Obligations, without the notification of any
Guarantor, the right of such notification being hereby specifically waived by
each Guarantor;

 

(e)           The bankruptcy, insolvency, arrangement,
adjustment, composition, liquidation, disability, dissolution or lack of
authority (whether corporate, partnership or trust) of Borrower, any Guarantor or
any other Person at any time liable or obligated for the payment of any or all
of the Guaranteed Obligations, whether now existing or hereafter arising, or
any limitation on the right to attorney’s fees resulting from any proceeding
under the Bankruptcy Code;

 

(f)            Any renewal, extension, modification,
refunding and/or rearrangement of the payment of any or all of the Guaranteed
Obligations at any time and from time to time, whether on one or more
occasions, either with or without notice to or consent of any Guarantor, or any
adjustment, indulgence, forbearance or compromise that might be granted or
given by the Administrative Agent or any Lender to Borrower or any Guarantor;

 

(g)           Any neglect, delay, omission, failure or
refusal of the Administrative Agent or any Lender to (i) exercise or
properly or diligently exercise any right or remedy with respect to any or all
of the Guaranteed Obligations or the collection thereof or any collateral
security or guaranty therefor, whether under the Credit Agreement, any Note,
any Letter of Credit or any other Loan Document or otherwise, (ii) take or
prosecute or properly or diligently take or prosecute any action for the
collection of any or all of the Guaranteed Obligations against Borrower, any
Guarantor or any other guarantor of any or all of the Guaranteed Obligations
and/or any other Person, (iii) foreclose or prosecute or properly or
diligently foreclose or prosecute any action in connection with any agreement,
document or instrument or arrangement evidencing, securing or otherwise
affecting all or any part of the Guaranteed Obligations, or (iv) mitigate
damages or take any other action to reduce, collect or enforce the Guaranteed
Obligations;

 

(h)           Any failure of the Administrative Agent
or any Lender to give notice to Borrower and/or any Guarantor of, or obtain the
consent of Borrower or any Guarantor with respect to, (i) demand,
presentment, protest, nonpayment, intention to accelerate, acceleration, lack
of diligence or delay in collection of all or any part of the Guaranteed
Obligations or any other matter, or the absence thereof, (ii) any renewal,
extension or assignment of the Guaranteed Obligations or any part thereof, (iii) the
disposition or release of all or any part of any security for the Guaranteed
Obligations (whether or not such disposition is commercially reasonable) or (iv) any
other action taken or refrained from being taken by the Administrative Agent or
any Lender against Borrower, it being agreed that (except as may be expressly
provided in the other Loan Documents) that neither the Administrative Agent nor
any Lender shall be required to give Borrower or any Guarantor any notice of
any kind or to obtain Borrower’s or any Guarantor’s consent under any
circumstances whatsoever with respect to or in connection with the Guaranteed
Obligations;

 

4

 

(i)            The unenforceability, illegality or
uncollectibility of all or any part of the Guaranteed Obligations against
Borrower by reason of the fact that the interest contracted for, charged,
collected or received in respect of the Guaranteed Obligations exceeds the
amount permitted by law, the act of creating the Guaranteed Obligations or any
part thereof is ultra  vires, the officers, directors, partners,
trustees or representatives creating the Guaranteed Obligations acted in excess
of their authority, the Credit Agreement, any Note, any Letter of Credit or any
other Loan Document evidencing the Guaranteed Obligations has been forged or
otherwise is irregular or is not genuine or authentic, expiration of the
applicable statute of limitations (except as to the Guarantor) or for any other
reason;

 

(j)            Any payment by Borrower to the
Administrative Agent or any Lender is held to constitute a preferential
transfer or a fraudulent conveyance or transfer under any applicable law, or
for any reason the Administrative Agent or such Lender is required to refund
such payment or pay such amount to Borrower or any other Person;

 

(k)           Any merger, reorganization, consolidation
or dissolution of Borrower, any sale, lease or transfer of any or all of the
assets of Borrower, or any change in name, business, location, composition,
structure or any change in the shareholders, partners or members (whether by
accession, secession, death, dissolution, transfer of assets or otherwise) of
Borrower;

 

(l)            Any failure of the Administrative Agent
or any Lender to notify any Guarantor of the acceptance of this Guaranty or of
the making of loans by any Administrative Agent or such Lender in reliance on
this Guaranty or of the failure of Borrower to make any payment due by Borrower
to the Administrative Agent or any Lender;

 

(m)          Any existing or future offset, claim or
defense of Borrower against the Administrative Agent or any Lender or against
payment of all or any part of the Guaranteed Obligations, whether such offset,
claim or defense arises in connection with the Guaranteed Obligations (or the
transactions creating the Guaranteed Obligations) or otherwise;

 

(n)           Any full or partial release of the liability
of Borrower, any guarantor of all or any part of the Guaranteed Obligations or
any other Person for all or any part of the Guaranteed Obligations, it being
acknowledged and agreed by each Guarantor that it may be required to pay the
Guaranteed Obligations in full without assistance or support, whether from
Borrower, any other guarantor or any other Person;

 

(o)           Any other action taken or omitted to be
taken with respect to any of the Credit Agreement, any Note, any Letter of
Credit or any other Loan Document, the Guaranteed Obligations or any security
and collateral therefor, whether or not such action or omission prejudices any
Guarantor or increases the likelihood that any Guarantor will be required to
pay all or any part of the Guaranteed Obligations pursuant to the terms hereof;

 

(p)           Any refusal or failure of any Lender or
any other Person prior to the date hereof or hereafter to grant any additional
loan or other credit accommodation to Borrower, or any Lender’s or any other
party’s receipt of notice of such refusal or failure;

 

(q)           Any refusal or failure of any Lender or
any other Person to provide to any Guarantor any information relating to
Borrower, any other guarantor, indorser, or any Person who has given any
collateral as security for the payment of the Guaranteed Obligations or any
information relating to Borrower’s or such Guarantor’s, indorser’s or Person’s
financial

 

5

 

condition,
business or assets, or if such information is provided, to provide such
information completely and accurately; or

 

(r)            The expiration of the period of any
statute of limitations with respect to any lawsuit or other legal proceeding
against Borrower or any Person in any way related to the Guaranteed Obligations
or a part thereof or any collateral therefor.

 

Without limiting the foregoing or any Guarantor’s liability under this
Guaranty, to the extent that the Lenders (or any Lender) have advanced funds or
extended credit to Borrower and do not receive payments or benefits thereon in
the amounts and at the times required or provided by the Credit Agreement, any
Notes or any other Loan Document, each Guarantor, jointly and severally, is
absolutely liable to make such payments and to confer such benefits on the
Lenders on a timely basis.

 

5.             Representations and
Warranties.  In connection with this Guaranty, each
Guarantor hereby represents and warrants to the Administrative Agent and the
Lenders that:

 

(a)           Such Guarantor has received and will
receive a direct and indirect material benefit from the transactions evidenced
by and contemplated in the Credit Agreement, the Notes, the Letters of Credit
and the other Loan Documents; this Guaranty is given by Guarantor in
furtherance of the direct and indirect business interests and corporate
purposes of Guarantor, and is necessary to the conduct, promotion and
attainment of the businesses of Borrower and such Guarantor; and the value of
the consideration received and to be received by such Guarantor is reasonably
worth at least as much as the liability and obligation of such Guarantor
hereunder;

 

(b)           The execution and delivery of this
Guaranty and the performance of and compliance with the terms hereof will not
constitute a default (or an event which with notice or lapse of time or both
would constitute a default) under, or result in the breach of, any material
contract, agreement or instrument to which such Guarantor is a party or which
may be applicable to such Guarantor or any of its assets;

 

(c)           This Guaranty, when executed and delivered
by such Guarantor, will constitute the legal, valid and binding obligation of
such Guarantor enforceable in accordance with its terms;

 

(d)           As of the date of this Guaranty, and
after giving effect to this Guaranty and the contingent obligation evidenced by
this Guaranty, such Guarantor is not, on either an unconsolidated basis or a
consolidated basis with Borrower and such Guarantor’s subsidiaries, insolvent,
as such term is used or defined in any applicable bankruptcy, fraudulent
conveyance, fraudulent transfer or similar law, and such Guarantor has and will
have assets which, fairly valued, exceed its indebtedness, liabilities and
obligations; such Guarantor is not executing this Guaranty with any intention
to hinder, delay or defraud any present or future creditor or creditors of
Guarantor; such Guarantor is not engaged in any business or transaction
(including, without limitation, the execution of this Guaranty) which will
leave it with unreasonably small capital or assets which are unreasonably small
in relation to the business or transactions engaged in by it, and such
Guarantor does not intend to engage in any such business or transaction; such
Guarantor does not intend to incur, nor does it believe that it will incur,
debts beyond its ability to repay such debts as they mature;

 

6

 

(e)           All acts and conditions required to be
performed and satisfied prior to the creation and issuance of this Guaranty,
and to constitute this Guaranty as the legal, valid and binding obligation of
such Guarantor in accordance with its terms, have been performed and satisfied
in due and strict compliance with all applicable laws;

 

(f)            Such Guarantor is familiar with, and has
independently reviewed books and records regarding, the financial condition of
Borrower and is familiar with the value of any and all collateral (if any)
intended to secure the Guaranteed Obligations; however, such Guarantor is not
relying on such financial condition or any such collateral (if any) as an
inducement to enter into this Guaranty;

 

(g)           Such Guarantor has not been induced to
enter into this Guaranty on the basis of a contemplation, belief, understanding
or agreement that any Person other than such Guarantor will be liable to pay
the Guaranteed Obligations;

 

(h)           Except for the execution of the Credit
Agreement, neither the Administrative Agent, any Lender nor any other Person
has made any representation, warranty, or statement to, or promise, covenant,
or agreement with, such Guarantor in order to induce it to execute this
Guaranty; and

 

(i)            Such Guarantor is a wholly-owned direct
or indirect Subsidiary of Borrower.

 

6.             Default. 
Upon the occurrence and during the continuation of an Event of Default,
each Guarantor shall, jointly and severally, on demand by the Administrative
Agent and without further notice of dishonor and without notice of any kind
(including, without limitation, notice of acceptance by the Administrative
Agent or any Lender of this Guaranty) having been given to Borrower, any Guarantor,
or any other Person previous to such demand, promptly (i.e., not later than
2:00 p.m., Dallas, Texas time, on the date of such demand or, if such
demand is made after 1:00 p.m., on the next succeeding Business Day) pay,
in immediately available funds, the full unpaid amount of the Guaranteed
Obligations, or such lesser amount, if any, as may be specifically demanded by
the Administrative Agent from time to time, to the Administrative Agent at the
Principal Office, or at such other place as the Administrative Agent may
specify in writing.  If acceleration of
the time for payment of any amount payable by Borrower under or with respect to
any of the Guaranteed Obligations is stayed or otherwise delayed upon the
insolvency, bankruptcy or reorganization of Borrower, all such amounts
otherwise subject to acceleration under the terms of the Guaranteed Obligations
shall nonetheless be payable by the Guarantors, jointly and severally,
hereunder promptly on demand by the Administrative Agent or any Lender.

 

7.             Cumulative Remedies; No
Election.  If any one or more of the Guarantors is or
becomes liable or obligated for the Guaranteed Obligations, by endorsement or
otherwise, other than under this Guaranty, such liability or obligation shall
not be in any manner impaired or affected hereby, and the rights and remedies
of the Administrative Agent and the Lenders hereunder shall be cumulative of
any and all other rights and remedies that the Administrative Agent or any
Lender may ever have against such Guarantors. 
The exercise by the Administrative Agent or any Lender of any right or
remedy hereunder or under any other agreement, document or instrument, or at
law or in equity, shall not preclude the concurrent or subsequent exercise of
any other right or remedy.  This Guaranty
may be enforced from time to time as often as occasion therefor may arise, and
it is agreed and understood that it shall not be necessary for the
Administrative Agent or any Lender, in order to enforce payment by any
Guarantor, first to exercise any rights or remedies against Borrower or any
other Person or institute suit or exhaust any available remedies against any
security in the Administrative Agent’s or such Lender’s possession or under the
Administrative Agent’s or such Lender’s control, or to resort to any other
sources or means of

 

7

 

obtaining payment of the
Guaranteed Obligations.  The
Administrative Agent or any Lender may remedy any default by Borrower under any
of the Loan Documents or with respect to the Guaranteed Obligations in any
reasonable manner without waiving the default remedied and without waiving any
other prior or subsequent default by Borrower. 
After Borrower’s failure to pay the Guaranteed Obligations in full, or
any part thereof, the Administrative Agent or any Lender may exercise against
each Guarantor, individually, each right and remedy of a creditor against a
principal debtor upon a past due liquidated obligation.

 

8.             Joint and Several
Obligation.  Each Guarantor agrees that the Administrative
Agent, in its sole discretion, may (a) bring suit against all Guarantors,
other guarantors or any other Persons liable or obligated to the Administrative
Agent or any Lender or against any one or more of them, for interest, penalties,
expenses, fees, indebtedness, liabilities, and obligations owed to the
Administrative Agent or any Lender and apply any amounts obtained by the
Administrative Agent or such Lender in such a manner as the Administrative
Agent may elect, whether or not applied to the Guaranteed Obligations, (b) bring
suit against all Guarantors and other guarantors of the Guaranteed Obligations
jointly and severally or against any one or more of them, (c) settle fully
or in part with any one or more of such Guarantors or other guarantors for such
consideration as the Administrative Agent may deem proper, and (d) partially
or fully release one or more of such Guarantors or other guarantors from
liability under any guaranty agreement, and that no such action shall impair
the rights of the Administrative Agent or any Lender to collect the Guaranteed
Obligations (or the unpaid balance thereof) from other Guarantors or
guarantors, or any of them, not so sued, settled with, or released.

 

9.             Release of Collateral,
etc.  If all or any part of the Guaranteed
Obligations is at any time secured, each Guarantor agrees that the
Administrative Agent or any Lender may, at any time and from time to time in
its discretion and with or without valuable consideration, allow substitution or
withdrawal of collateral or other security and release collateral or other
security without impairing or diminishing the liabilities or obligations of any
Guarantor hereunder.  Each Guarantor
further agrees that, if Borrower or any other Person executes in favor of the
Administrative Agent or any Lender any collateral agreement, mortgage, deed of
trust, collateral assignment, security agreement, or other security instrument,
the exercise by the Administrative Agent or such Lender of any right or remedy
thereby conferred on the Administrative Agent or such Lender shall be wholly
discretionary with the Administrative Agent or such Lender and that the
exercise or failure to exercise any such right or remedy shall in no way impair
or diminish the obligation of any Guarantor hereunder.  Each Guarantor further agrees that neither
the Administrative Agent nor any Lender shall be liable for its failure to use
diligence or care in the collection of the Guaranteed Obligations, in the
creation or perfection of any lien, security interest, or assignment intended
as security or in preserving the liability of any Person liable or obligated on
the Guaranteed Obligations, and each Guarantor hereby waives presentment for
payment, notice of nonpayment, protest and notice thereof, and diligence in
bringing suit against any Person liable on the Guaranteed Obligations or any
part thereof.

 

10.           Binding Effect. 
This Guaranty is for the benefit of the Administrative Agent and the
Lenders and their successors and assigns, and in the event of an assignment by
the Administrative Agent or any Lender or its successors or assigns of the
Guaranteed Obligations, or any part thereof, the rights and benefits hereunder,
to the extent applicable to the indebtedness, liabilities, and obligations so
assigned, may be transferred with such indebtedness, liabilities, and
obligations.  This Guaranty is binding,
not only upon each Guarantor, but also upon their successors and assigns.

 

11.           Subordination and
Temporary Waiver of Subrogation, Contribution and Other Rights.  UPON PAYMENT BY A GUARANTOR OF ANY SUMS IN RESPECT OF THE GUARANTEED
OBLIGATIONS HEREUNDER (INCLUDING, WITHOUT LIMITATION, ANY

 

8

 

AMOUNTS ADVANCED TO BORROWER BY A
GUARANTOR), ALL RIGHTS OF SUCH GUARANTOR AGAINST BORROWER OR ANY OTHER
GUARANTOR OF THE GUARANTEED OBLIGATIONS ARISING AS A RESULT THEREFROM BY WAY OF
A RIGHT OF SUBROGATION, REIMBURSEMENT, EXONERATION, CONTRIBUTION,
INDEMNIFICATION, AND/OR OTHERWISE SHALL IN ALL RESPECTS BE SUBORDINATE AND
JUNIOR IN RIGHT OF PAYMENT AND ENFORCEMENT TO THE PRIOR INDEFEASIBLE PAYMENT
AND ENFORCEMENT IN FULL OF THE GUARANTEED OBLIGATIONS.  NO GUARANTOR SHALL HAVE, AND EACH GUARANTOR
HEREBY WAIVES, ANY RIGHTS OF SUBROGATION, REIMBURSEMENT, EXONERATION,
CONTRIBUTION, INDEMNIFICATION, AND/OR OTHERWISE AGAINST OR FROM BORROWER UNLESS
AND UNTIL ALL OF THE GUARANTEED OBLIGATIONS HAVE BEEN PAID AND PERFORMED IN
FULL.  IN ADDITION TO THE FOREGOING, EACH
GUARANTOR HEREBY IRREVOCABLY WAIVES ANY AND ALL CLAIMS OR OTHER RIGHTS IT MAY NOW
HAVE OR HEREAFTER ACQUIRE AGAINST THE ADMINISTRATIVE AGENT, ANY LENDER,
BORROWER, OR ANY OTHER PERSON UNDER CHAPTER 34 OF THE TEXAS BUSINESS AND
COMMERCE CODE, UNDER RULES 31 AND 163 OF THE TEXAS RULES OF CIVIL PROCEDURE,
UNDER SECTION 17.001 OF THE TEXAS CIVIL PRACTICE AND REMEDIES CODE AND
UNDER ANY OTHER STATUTE OF ANY STATE OR OTHER JURISDICTION REQUIRING RECOURSE
AGAINST THE PRIMARY OBLIGOR OR IMPOSING OTHER REQUIREMENTS AS A CONDITION TO
RECOURSE AGAINST A GUARANTOR IF AND TO THE EXTENT THAT THE SAME MAY BE
APPLICABLE TO THIS GUARANTY.  Except as
expressly otherwise provided in this Paragraph 11, each Guarantor shall have all
rights of subrogation, reimbursement, exoneration, contribution, and
indemnification that may exist under currently applicable law.

 

12.           Subordination of
Indebtedness and Liens.  The payment
of any and all principal of and interest on all indebtedness of Borrower,
whether direct, indirect, fixed, contingent, liquidated, unliquidated, joint,
several, or joint and several, now or hereafter existing, due or to become due
to any Guarantor (such amount, collectively, the “Subordinated Debt”), shall in all
respects be subordinate and junior in right of payment and enforcement to the
prior payment and enforcement in full of the Guaranteed Obligations as provided
in this Paragraph 12.  Except in the ordinary course of business of
Borrower and the Guarantors, no payment shall be made on or with respect to the
Subordinated Debt (whether owed to any Guarantor or any Affiliate of a
Guarantor) unless and until the Guaranteed Obligations shall have been paid and
performed in full.  In the event that any
Guarantor or any Affiliate of a Guarantor shall receive any payment on account
of the Subordinated Debt in violation of this Paragraph 12, such Guarantor will hold,
or cause to be held (as the case may be), any amount so received in trust for
the benefit of the Administrative Agent and the Lenders and will forthwith
deliver, or cause to be delivered (as the case may be), such payment to the
Administrative Agent and the Lenders, in the form received, to be applied to
the Guaranteed Obligations.  All Liens
(if any) securing payment of all or any part of the Subordinated Debt (the “Subordinated Liens”)
shall be and remain inferior and subordinate to the Liens (if any) securing
payment of all or any part of the Guaranteed Obligations, regardless of whether
such Subordinated Liens presently exist or are hereafter created or when such
Subordinated Liens were created, perfected, filed, or recorded.  No Guarantor shall exercise or enforce any
creditors’ rights or remedies that it may have against Borrower or foreclose,
repossess, sequester, or otherwise institute any action or proceeding (whether
judicial or otherwise, including, without limitation, the commencement of, or
joinder in, any bankruptcy, insolvency, reorganization, liquidation,
receivership, or other debtor relief law) to enforce any Subordinated Lien on
any assets of Borrower or any other Person unless and until the Guaranteed
Obligations shall have been paid and performed in full.  The terms and provisions of this Paragraph 12 are
given by each Guarantor as additional rights and benefits to any and all other
subordination agreements heretofore, concurrently herewith or hereafter
executed by any Guarantor to or in favor of the Administrative Agent and the
Lenders, and nothing in this Guaranty shall ever be deemed

 

9

 

to in any way negate or
replace any other such previous, concurrent, or subsequent subordination
agreements.  All promissory notes,
accounts receivable ledgers, and other evidences of the Subordinated Debt, and
all mortgages, deed of trusts, security agreements, assignments, and other
security documents evidencing the Subordinated Liens, shall contain a specific
written notice that the indebtedness and Liens evidenced thereby are
subordinated as provided in this Paragraph 12.

 

13.           Right of Setoff.  
Each Guarantor hereby grants to the Administrative Agent and the Lenders
a right of setoff, exercisable after the occurrence and during the continuance
of an Event of Default, upon any and all of its monies, securities, or other
property, and the proceeds therefrom, now or hereafter held or received by or
in transit to the Administrative Agent or any Lender from or for its account,
whether for safekeeping, custody, pledge, transmission, collection, or
otherwise, and also upon any and all of its deposits (general or special, time
or demand, provisional or final) and credits, and any and all of its claims
against the Administrative Agent or any Lender at any time existing.  The right of setoff granted pursuant to this Paragraph 13 shall be
cumulative of and in addition to the Administrative Agent’s and the Lenders’
common law right of setoff.

 

14.           Further Assurances. 
Upon the request of the Administrative Agent or any Lender, each
Guarantor will, at any time and from time to time, duly execute and deliver to
the Administrative Agent or any Lender any and all such further agreements,
documents, and instruments, and supply such additional information, as may be
necessary or advisable, in the reasonable opinion of the Administrative Agent,
to obtain the full benefits of this Guaranty.

 

15.           Invalid Provisions. 
If any provision of this Guaranty is held to be illegal, invalid, or
unenforceable under present or future laws effective during the term hereof,
such provision shall be fully severable, this Guaranty shall be construed and
enforced as if such illegal, invalid, or unenforceable provision had never
comprised a part hereof, and the remaining provisions hereof shall remain in
full force and effect and shall not be affected by the illegal, invalid, or
unenforceable provision or by its severance herefrom.  Furthermore, in lieu of such illegal,
invalid, or unenforceable provision there shall be added automatically as a
part of this Guaranty a provision as similar in terms to such illegal, invalid,
or unenforceable provision as may be possible and be legal, valid, and
enforceable.  No provision herein or in
any other Loan Document evidencing the Guaranteed Obligations shall require the
payment or permit the collection of interest in excess of the maximum permitted
by applicable law.

 

16.           Modification in Writing. 
No modification, consent, amendment, or waiver of any provision of this
Guaranty, and no consent to any departure by any Guarantor herefrom, shall be
effective unless the same shall be in writing and signed by a duly authorized
officer of the Administrative Agent and then shall be effective only in the
specific instance and for the specific purpose for which given.

 

17.           No Waiver, Etc. 
No notice to or demand on any Guarantor in any case shall, of itself,
entitle any Guarantor to any other or further notice or demand in similar or
other circumstances.  No delay or
omission by the Administrative Agent or any Lender in exercising any right or
remedy hereunder shall impair any such right or remedy or be construed as a
waiver thereof or any acquiescence therein, and no single or partial exercise
of any such right or remedy shall preclude any other or further exercise
thereof or the exercise of any other right or remedy hereunder.

 

18.           Statutes of Limitation
Matters.  As of the date any payment made by any
Guarantor hereunder is returned pursuant to Paragraph 4(j) or otherwise, the statute
of limitations shall start anew with respect to any action or proceeding by the
Administrative Agent or any Lender against such Guarantor under this
Guaranty.  Any payment or other act which
results in the extension or renewal of the statute of limitations in connection
with any action or proceeding against Borrower relating to the

 

10

 

Guaranteed Obligations
shall extend or renew the statute of limitations in connection with any action
or any proceeding against a Guarantor in connection with this Guaranty whether
or not any Guarantor had notice of, or consented to, such payment or act.  Each Guarantor shall defend and indemnify the
Administrative Agent and each Lender against and from any claim or loss under
this Paragraph 18,
including actual attorneys’ fees and expenses, in the defense of any such
action or suit.

 

19.           Cumulative Rights. 
All rights and remedies of the Administrative Agent and the Lenders
hereunder are cumulative of each other and of every other right or remedy which
the Administrative Agent and the Lenders may otherwise have at law or in equity
or under any other contract or document, and the exercise of one or more rights
or remedies shall not prejudice or impair the concurrent or subsequent exercise
of other rights or remedies.

 

20.           Expenses. 
Each Guarantor, jointly and severally, agrees to pay on demand by the
Administrative Agent all costs and expenses incurred by the Administrative Agent
or any Lender in connection with the negotiation, preparation, execution, and
performance of the terms and provisions of this Guaranty and any and all
amendments, modifications, renewals, restatements, and/or supplements hereto
from time to time, including, without limitation, the fees and expenses of
legal counsel to the Administrative Agent. 
If any Guarantor should breach or fail to perform any provision of this
Guaranty, each Guarantor, jointly and severally, agrees to pay to the
Administrative Agent all costs and expenses incurred by the Administrative
Agent or any Lender in the enforcement of this Guaranty from time to time,
including, without limitation, the fees and expenses of all legal counsel to
the Administrative Agent and the Lenders.

 

21.          Applicable Law.  THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF TEXAS (WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES).

 

22.           No Oral Agreements. 
THIS GUARANTY REPRESENTS THE FINAL AGREEMENT BETWEEN EACH GUARANTOR AND
THE ADMINISTRATIVE AGENT RELATING TO THE SUBJECT MATTER OF THIS GUARANTY AND MAY NOT
BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF SUCH PARTIES.  THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN ANY GUARANTOR AND THE ADMINISTRATIVE
AGENT.  THIS GUARANTY SUPERSEDES ALL
PRIOR (IF ANY) ORAL AGREEMENTS, ARRANGEMENTS, OR UNDERSTANDINGS RELATING TO THE
SUBJECT MATTER OF THIS GUARANTY.

 

23.           Notices. 
Unless otherwise specifically provided in this Guaranty, all notices or
other communications required or permitted to be given under this Guaranty
shall be in writing and may be personally served, telecopied, telefaxed, or
sent by courier service or first class prepaid mail (airmail if to an address
in a foreign country from the party writing) and shall be deemed to have been
given when delivered in person or by courier service, upon transmission of a
telecopy or telefax or on the third Business Day after deposit in the mail
(certified or registered, return receipt requested, with postage prepaid and
properly addressed).  For the purposes of
this Guaranty, the address of each Guarantor shall be as specified on the
signature page hereto and the address of the Administrative Agent shall be
as specified in the Credit Agreement.

 

24.           Choice of Forum; Consent
to Service of Process and Jurisdiction. Any suit, action or proceeding against any Guarantor
with respect to this Guaranty, or any judgment entered by any court with
respect to this Guaranty, may be brought in (a) any U.S. District Court of
Texas, (b) the U.S. District Court for the Northern District of Texas, and
(c) any Texas state court sitting in Dallas County, Texas, as

 

11

 

the Administrative Agent
in its sole discretion may elect, and each Guarantor hereby submits to the non-exclusive
jurisdiction of such courts for the purpose of any such suit, action, or
proceeding.  Each Guarantor hereby
irrevocably consents to the service of process in any suit, action, or
proceeding in any such court by the mailing thereof by the Administrative Agent
by certified or registered mail, postage prepaid, to such Guarantor’s address
referred to in Paragraph 23
hereof or by any other means allowed by applicable law.  Each Guarantor hereby irrevocably waives any
objections which it may now or hereafter have to the laying of venue of any
suit, action, or proceeding arising out of or relating to this Guaranty brought
in any such state or federal court and hereby further irrevocably waives any claim
that any such suit, action, or proceeding brought in any such court has been
brought in any inconvenient forum.

 

25.           Survival. 
All representations, warranties, covenants, and agreements of any
Guarantor in this Guaranty shall survive the execution of this Guaranty.

 

26.           Counterparts. 
This Guaranty may be executed in any number of counterparts, each of
which shall constitute an original, but all of which when taken together shall
constitute one and the same Guaranty.

 

27.           Limitation on Interest. 
Notwithstanding anything to the contrary contained or referred to in
this Guaranty, none of the terms and provisions of this Guaranty, the Credit
Agreement, the Notes or any other Loan Document shall ever be construed to
create a contract or obligation to pay interest at a rate in excess of the
Maximum Rate, and neither the Administrative Agent nor any Lender shall ever
charge, receive, take, collect, reserve, or apply, as interest on the
Obligations or the Guaranteed Obligations, any amount in excess of the Maximum
Rate.  The parties hereto agree that any
interest, charge, fee, expense or other indebtedness, liability, or obligation
provided for in this Guaranty, the Credit Agreement, the Notes, or any other
Loan Document which constitutes interest under applicable law shall be, ipso
facto and under any and all circumstances, limited or reduced to an
amount equal to the lesser of (a) the amount of such interest, charge,
fee, expense or other indebtedness, liability, or obligation that would be
payable in the absence of this Paragraph 27 or (b) an amount, which when added to
all other interest payable under this Guaranty, the Credit Agreement, the
Notes, and any other Loan Document, equals the Maximum Rate.  If, notwithstanding the foregoing, the
Administrative Agent or any Lender ever contracts for, charges, receives,
takes, collects, reserves, or applies as interest any amount in excess of the
Maximum Rate, such amount which would be deemed excessive interest shall be
deemed a partial payment or prepayment of principal of the Obligations and the
Guaranteed Obligations and treated hereunder as such, and if the Obligations
and the Guaranteed Obligations, or applicable portions thereof, are paid in
full, any remaining excess shall promptly be paid to Borrower or such other
Person (as appropriate).  In determining
whether the interest paid or payable, under any specific contingency, exceeds
the Maximum Rate, each Guarantor, Borrower, the Administrative Agent and the
Lenders shall, to the maximum extent permitted by applicable law, (i) characterize
any nonprincipal payment as an expense, fee, or premium rather than as
interest, (ii) exclude voluntary prepayments and the effects thereof, and (iii) amortize,
prorate, allocate, and spread in equal or unequal parts the total amount of
interest throughout the entire contemplated term of the Obligations and the
Guaranteed Obligations, or applicable portions thereof, so that the interest
rate does not exceed the Maximum Rate at any time during the term of the
Obligations and the Guaranteed Obligations; provided  that, if the
unpaid principal balance is paid and performed in full prior to the end of the
full contemplated term thereof, and if the interest received for the actual
period of existence thereof exceeds the Maximum Rate, the Administrative Agent
and/or the Lenders, as appropriate, shall refund to Borrower or such other
Person (as appropriate) the amount of such excess and, in such event, the
Administrative Agent and the Lenders shall not be subject to any penalties
provided by any laws for contracting for, charging, receiving, taking,
collecting, servicing, or applying interest in excess of the Maximum Rate.

 

12

 

28.           Irrevocable Nature of
Guaranty.  This Guaranty may not be revoked by any
Guarantor; provided, however, in the event it shall be determined
that a Guarantor shall have the right, in accordance with applicable law and
notwithstanding its express agreement herein to the contrary, to revoke this
Guaranty, such Guarantor may deliver to the Administrative Agent written notice
of Guarantor’s intention not to be liable hereunder for any Guaranteed
Obligations arising, created, or incurred after the Administrative Agent’s
receipt of such notice, whereupon such notice shall be effective to the extent
(but only to the extent) provided hereinbelow as to such Guarantor from and
after (but not before) the time when such notice is actually delivered to and
received by and receipted for in writing by the Administrative Agent (the “Effective Revocation Time”);
provided, further, however, that such notice shall not be
effective as to, and shall not in any way restrict, limit, impair, release, or
otherwise affect the indebtedness, liabilities, or obligations of such
Guarantor or any other Guarantor under this Guaranty with respect to (a) any
Guaranteed Obligations consisting of indebtedness, liabilities, or obligations
under the Credit Agreement, the Notes, or any other Loan Document, whether
incurred before or after the Effective Revocation Time (including, without
limitation, any loans, advances, or extensions of credit at any time made or
created under the Credit Agreement, whether or not agreed, committed, or
contemplated to be made by the Administrative Agent or any Lender and whether
or not discretionary with the Administrative Agent or any lender), (b) any
Guaranteed Obligations arising, created, or incurred prior to the Effective
Revocation Time, (c) any renewals, extensions, or modifications of the
indebtedness, liabilities, or obligations referred to in clauses (a) and (b) preceding,
whether occurring before or after the Effective Revocation Time, or (d) any
interest or costs of collection with respect to any of the indebtedness,
liabilities, or obligations referred to in clauses (a), (b), or (c) preceding.

 

29.           WAIVER OF JURY TRIAL. 
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES
HERETO HEREBY IRREVOCABLY AND EXPRESSLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN
ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT OR
OTHERWISE) ARISING OUT OF OR RELATING TO THIS GUARANTY OR ANY OF THE OTHER LOAN
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY OR THE ACTIONS OF ANY LOAN
PARTY, THE ADMINISTRATIVE AGENT OR ANY LENDER IN THE NEGOTIATION, ADMINISTRATION
OR ENFORCEMENT THEREOF.

 

30.           Amendment and Restatement of Master Guaranty.  The parties hereto agree that this Guaranty
is executed pursuant to the Credit Agreement in amendment, restatement,
ratification and confirmation (but not in novation, discharge or
extinguishment) of the “Master Guaranty” executed and delivered pursuant to the
Existing Credit Agreement.

 

Remainder of Page Intentionally Left
Blank.

Signature Page(s) to Follow.

 

13

 

IN WITNESS WHEREOF,
each of the undersigned has executed this Amended and Restated Master Guaranty
as of the date first written above.

 

GUARANTORS:

 

AMERICAN
ECONOMICS GROUP, INC.

APS SERVICES
ACQUISITION CORP.

ASSOCIATE
RECORD TECHNICIAN SERVICES ACQUISITION CORP.

CALIFORNIA
MEDICAL RECORD SERVICE ACQUISITION CORP.

COPY RIGHT,
INC.

DELIVEREX
ACQUISITION CORP.

ECONOMIC
RESEARCH SERVICES, INC.

FASTRIEVE,
INC. (f/k/a FYIDOCS.COM INC.)

IMAGE ENTRY
ACQUISITION CORP.

IMAGE ENTRY OF
ALABAMA INC.

IMAGE ENTRY OF
ARKANSAS INC.

IMAGE ENTRY
FEDERAL SYSTEMS INC.

IMAGE ENTRY
INC.

IMAGE ENTRY OF
OWSLEY COUNTY INC.

INFORMATION
MANAGEMENT SERVICES, INC.

INPUT
MANAGEMENT, INC.

KEYPOINT I
ACQUISITION CORP.

KEYPOINT
CONSULTING LLC

KINSELLA
COMMUNICATIONS, LIMITED

LEXICODE
CORPORATION

LIFO
MANAGEMENT, INC.

MANAGED CARE
PROFESSIONALS, INC.

NEWPORT BEACH
DATA ENTRY, LLC

PERMANENT
RECORDS MANAGEMENT, INC.

QUALITY COPY
ACQUISITION CORP.

RECORDEX
ACQUISITION CORP.

RTI LASER
PRINT SERVICES ACQUISITION CORP.

RUST
CONSULTING, INC

SOURCECORP BPS
INC. (f/k/a IMAGENT ACQUISITION CORP.)

SOURCECORP BPS
MARYLAND LLC (f/k/a B&B (BALTIMORE-WASHINGTON) ACQUISITION CORP.)

SOURCECORP BPS
NORTHERN CALIFORNIA INC. (f/k/a DPAS ACQUISITION CORP.)

 

14

 

SOURCECORP BPS
SOUTHERN CALIFORNIA INC. (f/k/a MICRO PUBLICATION SYSTEMS, INC.)

SOURCECORP DMS
INC.

SOURCECORP
HEALTHSERVE RADIOLOGY, INC. (f/k/a F.Y.I. RADIOLOGY, Inc.)

SOURCECORP HS
INC. (f/k/a F.Y.I. HEALTHSERVE INC.)

SOURCECORP
LEGAL INC.

SRCP
INVESTMENTS HOLDING, INC.

SRCP LICENSING
CORP.

SRCP
MANAGEMENT, INC. (f/k/a F.Y.I. MANAGEMENT, INC.)

STAT
HEALTHCARE CONSULTANTS, INC.

UNITED
INFORMATION SERVICES, INC.

 

 

	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Barry L. Edwards,
  Authorized Officer for each of the Original Guarantors

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SRCP INVESTMENTS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Ronald Zazworsky

  
	
   

  	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SOURCECORP
  MANAGEMENT, L.P. (f/k/a

  F.Y.I. MANAGEMENT, L.P.)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  SRCP Management, Inc. (f/k/a F.Y.I.

  Management, Inc.), its general partner

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name: Barry L. Edwards

  
	
   

  	
   

  	
  Title: Vice President

  
							

 

15

 

	
   

  	
  SOURCECORP
  BPS TEXAS L.P. (f/k/a INPUT

  OF TEXAS, L.P.)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:Input Management, Inc., its general
  partner

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Barry L. Edwards

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SOURCECORP
  TBG, L.P. (f/k/a LIFO SYSTEMS,

  L.P.)

  
	
   

  	
   

  
	
   

  	
  By:LIFO Management, Inc., its general
  partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Barry L. Edwards

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  PERMANENT RECORDS, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Permanent Records Management, Inc., its

  general partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Barry L. Edwards

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
								

 

16

 

Address for Notices to each of the Guarantors:

3232 McKinney Avenue, Suite 1000

Dallas, Texas 75204

Attn:    Barry L. Edwards

 

17

 

	
  ADMINISTRATIVE AGENT:

  
	
   

  
	
  BANK OF AMERICA, N.A., as Administrative

  Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  
	
  Name: Suzanne M. Paul

  
	
  Title: Vice President

  

 

18EXHIBIT 10.1

 

Execution
Version

 

 

	
  Published
  Deal CUSIP Number:

  	
   

  	
  93317LAD8

  
	
  Published
  Revolver CUSIP Number:

  	
   

  	
  93317LAE6

  
	
  Published
  Term CUSIP Number:

  	
   

  	
  93317LAF3

  

 

CREDIT
AGREEMENT

 

Dated as of October 3,
2005

 

among

 

WALTER
INDUSTRIES, INC.

as the Borrower,

 

BANK OF
AMERICA, N.A.,

as Administrative Agent, Swing
Line Lender,

L/C Issuer and a Lender,

 

MORGAN
STANLEY SENIOR FUNDING, INC.,

as Syndication Agent and as a
Lender,

 

SUNTRUST
BANK,

BNP
PARIBAS

and

CALYON
NEW YORK BRANCH,

as Co-Documentation Agents

 

and

 

The Other Lenders Party Hereto

 

 

BANC OF
AMERICA SECURITIES LLC,

and

MORGAN
STANLEY SENIOR FUNDING, INC.

as

Joint Lead Arrangers and Joint
Book Managers

 

 

 

TABLE OF
CONTENTS

 

	
   

  	
  Section

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  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

  	
  Term Loan

  	
   

  
	
   

  	
   

  	
   

  
	
  2.02

  	
  Revolving
  Loans

  	
   

  
	
   

  	
   

  	
   

  
	
  2.03

  	
  Borrowings,
  Conversions and Continuations of Committed Loans

  	
   

  
	
   

  	
   

  	
   

  
	
  2.04

  	
  Letters of
  Credit and Bankers’ Acceptances

  	
   

  
	
   

  	
   

  	
   

  
	
  2.05

  	
  Swing Line Loans

  	
   

  
	
   

  	
   

  	
   

  
	
  2.06

  	
  Prepayments

  	
   

  
	
   

  	
   

  	
   

  
	
  2.07

  	
  Termination
  or Reduction of 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 by Lenders

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE III.

  	
   

  
	
   

  	
   

  	
   

  
	
  3.01

  	
  Security

  	
   

  
	
   

  	
   

  	
   

  
	
  3.02

  	
  Further Assurances

  	
   

  
	
   

  	
   

  	
   

  
	
  3.03

  	
  Information
  Regarding Collateral

  	
   

  

 

i

 

	
   

  	
  ARTICLE IV.

  TAXES, YIELD PROTECTION AND ILLEGALITY

  	
   

  
	
   

  	
   

  	
   

  
	
  4.01

  	
  Taxes

  	
   

  
	
   

  	
   

  	
   

  
	
  4.02

  	
  Illegality

  	
   

  
	
   

  	
   

  	
   

  
	
  4.03

  	
  Inability
  to Determine Rates

  	
   

  
	
   

  	
   

  	
   

  
	
  4.04

  	
  Increased
  Costs; Reserves on Eurodollar Rate Loans

  	
   

  
	
   

  	
   

  	
   

  
	
  4.05

  	
  Compensation
  for Losses

  	
   

  
	
   

  	
   

  	
   

  
	
  4.06

  	
  Mitigation
  Obligations; Replacement of Lenders

  	
   

  
	
   

  	
   

  	
   

  
	
  4.07

  	
  Survival

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE V.

  CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  5.01

  	
  Conditions
  of Initial Credit Extension

  	
   

  
	
   

  	
   

  	
   

  
	
  5.02

  	
  Conditions
  to all Credit Extensions

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE VI.

  REPRESENTATIONS AND WARRANTIES

  	
   

  
	
   

  	
   

  	
   

  
	
  6.01

  	
  Existence,
  Qualification and Power; Compliance with Laws

  	
   

  
	
   

  	
   

  	
   

  
	
  6.02

  	
  Authorization;
  No Contravention

  	
   

  
	
   

  	
   

  	
   

  
	
  6.03

  	
  Governmental
  Authorization; Other Consents

  	
   

  
	
   

  	
   

  	
   

  
	
  6.04

  	
  Binding
  Effect

  	
   

  
	
   

  	
   

  	
   

  
	
  6.05

  	
  Financial
  Statements; No Material Adverse Effect

  	
   

  
	
   

  	
   

  	
   

  
	
  6.06

  	
  Litigation

  	
   

  
	
   

  	
   

  	
   

  
	
  6.07

  	
  No Default

  	
   

  
	
   

  	
   

  	
   

  
	
  6.08

  	
  Ownership of
  Property; Liens

  	
   

  
	
   

  	
   

  	
   

  
	
  6.09

  	
  Environmental
  Compliance

  	
   

  
	
   

  	
   

  	
   

  
	
  6.10

  	
  Insurance

  	
   

  
	
   

  	
   

  	
   

  
	
  6.11

  	
  Taxes

  	
   

  
	
   

  	
   

  	
   

  
	
  6.12

  	
  ERISA Compliance

  	
   

  
	
   

  	
   

  	
   

  
	
  6.13

  	
  Subsidiaries;
  Equity Interests

  	
   

  
	
   

  	
   

  	
   

  
	
  6.14

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

  	
   

  
	
   

  	
   

  	
   

  
	
  6.15

  	
  Disclosure

  	
   

  
	
   

  	
   

  	
   

  
	
  6.16

  	
  Compliance
  with Laws

  	
   

  
	
   

  	
   

  	
   

  
	
  6.17

  	
  Intellectual
  Property; Licenses, Etc

  	
   

  

 

ii

 

	
   

  	
  ARTICLE VII.

  AFFIRMATIVE COVENANTS

  	
   

  
	
   

  	
   

  	
   

  
	
  7.01

  	
  Financial
  Statements

  	
   

  
	
   

  	
   

  	
   

  
	
  7.02

  	
  Certificates;
  Other Information

  	
   

  
	
   

  	
   

  	
   

  
	
  7.03

  	
  Notices

  	
   

  
	
   

  	
   

  	
   

  
	
  7.04

  	
  Payment of
  Obligations

  	
   

  
	
   

  	
   

  	
   

  
	
  7.05

  	
  Preservation
  of Existence, Etc

  	
   

  
	
   

  	
   

  	
   

  
	
  7.06

  	
  Maintenance of
  Properties

  	
   

  
	
   

  	
   

  	
   

  
	
  7.07

  	
  Maintenance
  of Insurance

  	
   

  
	
   

  	
   

  	
   

  
	
  7.08

  	
  Compliance
  with Laws

  	
   

  
	
   

  	
   

  	
   

  
	
  7.09

  	
  Books and
  Records

  	
   

  
	
   

  	
   

  	
   

  
	
  7.10

  	
  Inspection
  Rights

  	
   

  
	
   

  	
   

  	
   

  
	
  7.11

  	
  Use of
  Proceeds

  	
   

  
	
   

  	
   

  	
   

  
	
  7.12

  	
  New
  Subsidiaries, Pledgors and Real Property

  	
   

  
	
   

  	
   

  	
   

  
	
  7.13

  	
  Mortgage
  Warehouse Facility

  	
   

  
	
   

  	
   

  	
   

  
	
  7.14

  	
  Compliance
  with ERISA

  	
   

  
	
   

  	
   

  	
   

  
	
  7.15

  	
  Further
  Assurances

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE VIII.

  NEGATIVE COVENANTS

  	
   

  
	
   

  	
   

  	
   

  
	
  8.01

  	
  Liens

  	
   

  
	
   

  	
   

  	
   

  
	
  8.02

  	
  Investments

  	
   

  
	
   

  	
   

  	
   

  
	
  8.03

  	
  Indebtedness

  	
   

  
	
   

  	
   

  	
   

  
	
  8.04

  	
  Fundamental
  Changes

  	
   

  
	
   

  	
   

  	
   

  
	
  8.05

  	
  Dispositions

  	
   

  
	
   

  	
   

  	
   

  
	
  8.06

  	
  Restricted
  Payments

  	
   

  
	
   

  	
   

  	
   

  
	
  8.07

  	
  Change in
  Nature of Business

  	
   

  
	
   

  	
   

  	
   

  
	
  8.08

  	
  Transactions
  with Affiliates

  	
   

  
	
   

  	
   

  	
   

  
	
  8.09

  	
  Burdensome
  Agreements

  	
   

  
	
   

  	
   

  	
   

  
	
  8.10

  	
  Use of
  Proceeds

  	
   

  
	
   

  	
   

  	
   

  
	
  8.11

  	
  Prepayment
  of Indebtedness; Amendment to Material Agreements

  	
   

  
	
   

  	
   

  	
   

  
	
  8.12

  	
  Financial Covenants

  	
   

  
	
   

  	
   

  	
   

  
	
  8.13

  	
  Acquisitions

  	
   

  
	
   

  	
   

  	
   

  
	
  8.14

  	
  Creation of
  New Subsidiaries

  	
   

  

 

iii

 

	
  8.15

  	
  Mid-State
  Homes, Walter Mortgage Company, Mid-State Capital, Non-Core Subsidiaries, New
  Holdco and Mueller Water Products; Residual Beneficial Interests

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE IX.

  EVENTS OF DEFAULT AND REMEDIES

  	
   

  
	
   

  	
   

  	
   

  
	
  9.01

  	
  Events of
  Default

  	
   

  
	
   

  	
   

  	
   

  
	
  9.02

  	
  Remedies
  Upon Event of Default

  	
   

  
	
   

  	
   

  	
   

  
	
  9.03

  	
  Application
  of Funds

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE X.

  ADMINISTRATIVE AGENT

  	
   

  
	
   

  	
   

  	
   

  
	
  10.01

  	
  Appointment
  and Authority

  	
   

  
	
   

  	
   

  	
   

  
	
  10.02

  	
  Rights as a
  Lender

  	
   

  
	
   

  	
   

  	
   

  
	
  10.03

  	
  Exculpatory
  Provisions

  	
   

  
	
   

  	
   

  	
   

  
	
  10.04

  	
  Reliance by
  Administrative Agent

  	
   

  
	
   

  	
   

  	
   

  
	
  10.05

  	
  Delegation
  of Duties

  	
   

  
	
   

  	
   

  	
   

  
	
  10.06

  	
  Resignation
  of Administrative Agent

  	
   

  
	
   

  	
   

  	
   

  
	
  10.07

  	
  Non-Reliance
  on Administrative Agent and Other Lenders

  	
   

  
	
   

  	
   

  	
   

  
	
  10.08

  	
  No Other
  Duties, Etc

  	
   

  
	
   

  	
   

  	
   

  
	
  10.09

  	
  Administrative
  Agent May File Proofs of Claim

  	
   

  
	
   

  	
   

  	
   

  
	
  10.10

  	
  Collateral
  and Guaranty Matters

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE XI.

  MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  
	
  11.01

  	
  Amendments,
  Etc

  	
   

  
	
   

  	
   

  	
   

  
	
  11.02

  	
  Notices;
  Effectiveness; Electronic Communication

  	
   

  
	
   

  	
   

  	
   

  
	
  11.03

  	
  No Waiver;
  Cumulative Remedies

  	
   

  
	
   

  	
   

  	
   

  
	
  11.04

  	
  Expenses;
  Indemnity; Damage Waiver

  	
   

  
	
   

  	
   

  	
   

  
	
  11.05

  	
  Payments
  Set Aside

  	
   

  
	
   

  	
   

  	
   

  
	
  11.06

  	
  Successors and
  Assigns

  	
   

  
	
   

  	
   

  	
   

  
	
  11.07

  	
  Treatment
  of Certain Information; Confidentiality

  	
   

  
	
   

  	
   

  	
   

  
	
  11.08

  	
  Right of
  Setoff

  	
   

  
	
   

  	
   

  	
   

  
	
  11.09

  	
  Interest
  Rate Limitation

  	
   

  
	
   

  	
   

  	
   

  
	
  11.10

  	
  Counterparts;
  Integration; Effectiveness

  	
   

  
	
   

  	
   

  	
   

  
	
  11.11

  	
  Survival of
  Representations and Warranties

  	
   

  

 

iv

 

	
  11.12

  	
  Severability

  	
   

  
	
   

  	
   

  	
   

  
	
  11.13

  	
  Replacement
  of Lenders

  	
   

  
	
   

  	
   

  	
   

  
	
  11.14

  	
  Governing
  Law; Jurisdiction; Etc

  	
   

  
	
   

  	
   

  	
   

  
	
  11.15

  	
  Waiver of
  Jury Trial

  	
   

  
	
   

  	
   

  	
   

  
	
  11.16

  	
  USA PATRIOT
  Act Notice

  	
   

  
	
   

  	
   

  	
   

  
	
  11.17

  	
  No
  Fiduciary Relationship

  	
   

  
	
   

  	
   

  	
   

  
	
  SIGNATURES

  	
   

  

 

v

 

SCHEDULES

 

	
   

  	
   

  	
  1.01(a)

  	
   

  	
  Unrestricted
  Subsidiaries

  
	
   

  	
   

  	
  1.01(b)

  	
   

  	
  Existing
  Letters of Credit

  
	
   

  	
   

  	
  2.01

  	
   

  	
  Commitments
  and Pro Rata Shares

  
	
   

  	
   

  	
  3.01

  	
   

  	
  Mortgaged
  Real Property

  
	
   

  	
   

  	
  3.03

  	
   

  	
  Information
  Regarding Collateral

  
	
   

  	
   

  	
  5.01

  	
   

  	
  Good
  Standing and Foreign Qualification Jurisdictions

  
	
   

  	
   

  	
  6.06

  	
   

  	
  Litigation

  
	
   

  	
   

  	
  6.09

  	
   

  	
  Environmental Matters

  
	
   

  	
   

  	
  6.11

  	
   

  	
  Proposed Tax
  Assessments

  
	
   

  	
   

  	
  6.13(a)

  	
   

  	
  Subsidiaries

  
	
   

  	
   

  	
  6.13(b)

  	
   

  	
  Other Equity
  Investments

  
	
   

  	
   

  	
  8.01

  	
   

  	
  Existing
  Liens

  
	
   

  	
   

  	
  8.03

  	
   

  	
  Existing
  Indebtedness

  
	
   

  	
   

  	
  11.02

  	
   

  	
  Administrative
  Agent’s Office; Certain Addresses for Notices

  
	
   

  	
   

  	
  11.06

  	
   

  	
  Processing
  and Recordation Fees

  

 

EXHIBITS

 

	
   

  	
   

  	
   

  	
   

  	
  Form of

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  A-1

  	
   

  	
  Revolving
  Loan Notice

  
	
   

  	
   

  	
  A-2

  	
   

  	
  Term Loan
  Interest Rate Selection Notice

  
	
   

  	
   

  	
  B

  	
   

  	
  Swing Line
  Loan Notice

  
	
   

  	
   

  	
  C-1

  	
   

  	
  Term Loan
  Note

  
	
   

  	
   

  	
  C-2

  	
   

  	
  Revolving
  Loan Note

  
	
   

  	
   

  	
  D

  	
   

  	
  Compliance
  Certificate

  
	
   

  	
   

  	
  E

  	
   

  	
  Assignment
  and Assumption

  
	
   

  	
   

  	
  F

  	
   

  	
  Guaranty Agreement

  
	
   

  	
   

  	
  G

  	
   

  	
  Opinion
  Matters

  
	
   

  	
   

  	
  H

  	
   

  	
  Guaranty Agreement (Mid-State Homes)

  
	
   

  	
   

  	
  I

  	
   

  	
  Security
  Agreement

  
	
   

  	
   

  	
  J

  	
   

  	
  Mortgage

  

 

vi

 

CREDIT
AGREEMENT

 

This CREDIT AGREEMENT (“Agreement”) is
entered into as of October 3,
2005 among WALTER INDUSTRIES, INC., a Delaware corporation (the “Borrower”), each
lender from time to time party hereto (collectively, the “Lenders” and
individually, a “Lender”),
and BANK OF AMERICA, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer.

 

The Borrower has requested that the Lenders provide a revolving credit
facility and a term loan facility, and the Lenders are willing to do so on the
terms and conditions set forth herein.

 

In consideration of the mutual covenants and agreements herein
contained, the parties hereto covenant and agree 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:

 

“Acceptance
Credit” means a commercial Letter of Credit in which the L/C
Issuer engages with the beneficiary of such Letter of Credit to accept a time
draft, and shall include those Existing Letters of Credit identified as “Acceptance
Credits” on Schedule 1.01(b).

 

“Acceptance
Documents” means such general acceptance agreements,
applications, certificates and other documents as the L/C Issuer may require in
connection with the creation of Bankers’ Acceptances.

 

“Acquisition”
means the acquisition of (i) a controlling equity or other ownership
interest in another Person (including the purchase of an option, warrant or
convertible or similar type security to acquire such a controlling interest at
the time it becomes exercisable by the holder thereof), whether by purchase of
such equity or other ownership interest or upon exercise of an option or
warrant for, or conversion of securities into, such equity or other ownership
interest, or (ii) assets of another Person which constitute all or
substantially all of the assets of such Person or of a line or lines of
business conducted by such Person; provided, however, that an
acquisition of Third Party Mortgage Accounts by a Loan Party shall not be
considered an “Acquisition” for purposes of this Agreement.

 

“Adjusted
Consolidated Leverage Ratio” means, as of any date of
determination, the ratio of (a) Consolidated Funded Indebtedness as of
such date less the Adjusted Cash Balance as of such date to (b) Consolidated
EBITDA for the Four-Quarter Period most recently ended for which the Borrower
has delivered financial statements pursuant to Section 7.01(a) or
(b).

 

“Adjusted Cash
Balance” means, as of any date of measurement thereof, the
amount by which the cash on the balance sheet of the Borrower and its
Restricted Subsidiaries on such date day exceeds $50,000,000.

 

1

 

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

 

“Administrative
Agent’s Office” means the Administrative Agent’s address and, as
appropriate, account as set forth on Schedule 11.02, or such other
address or account as the Administrative Agent may from time to time notify to
the Borrower and the Lenders.

 

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

 

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

 

“Agency Fee
Letter” means the letter agreement, dated as of June 17,
2005, executed by and between the Borrower and the Administrative Agent.

 

“Aggregate
Acquisition Amount” has the meaning specified in Section 8.13.

 

“Aggregate
Commitments” means, as at any date of determination thereof, the
sum of (a) the Aggregate Revolving Credit Commitments at such date, plus (b) the
Outstanding Amount with respect to the Term Loan Facility at such date.

 

“Aggregate
Credit Exposures” means, as at any date of determination
thereof, the sum of (i) the unused portion of the Aggregate Revolving
Credit Commitments then in effect, plus (ii) the Total Outstandings at such
time.

 

“Aggregate
Revolving Credit Commitments” means, as at any date of
determination thereof, the sum of all Revolving Credit Commitments of all
Lenders at such date.

 

“Agreement”
means this Credit Agreement.

 

“Applicable Rate”
means, from time to time,

 

(a)           with respect to
Segments of the Term Loan that are Eurodollar Rate Loans, 2.00%, provided
that if the Adjusted Consolidated Leverage Ratio as set forth in the most
recent Compliance Certificate received by the Administrative Agent pursuant to Section 7.02(b) is
less than 3.00 to 1.00, then the “2.00%” in this clause (a) shall be
deemed to read “1.75%” as of the date set forth in the paragraph of this
definition following clause (c);

 

(b)           with respect to
Segments of the Term Loan that are Base Rate Loans, 1.00%, provided that
if the Adjusted Consolidated Leverage Ratio as set forth in the most recent
Compliance Certificate received by the Administrative Agent pursuant to Section 7.02(b) is
less than 3.00 to 1.00, then the “1.00%” in this clause (b) shall be
deemed to read “0.75%” as of the date set forth in the paragraph of this
definition following clause (c); and

 

(c)           with respect to the
Commitment Fee, Revolving Loans, Swing Line Loans and Letter of Credit - BA
Fees, the following percentages per annum, based upon the Adjusted

 

2

 

Consolidated
Leverage Ratio as set forth in the most recent Compliance Certificate received
by the Administrative Agent pursuant to Section 7.02(b):

 

	
   

  	
   

  	
   

  	
   

  	
  Revolving Loans, Swing Line Loans

  and Letter of Credit – BA Fees

  	
   

  	
   

  	
   

  
	
  Pricing

  Level

  	
   

  	
  Adjusted

  Consolidated Leverage Ratio

  	
   

  	
  Base Rate

  Loans

  	
   

  	
  Eurodollar Rate

  Loans and Letter

  of Credit - BA

  Fees

  	
   

  	
  Commitment Fee

  	
   

  
	
  1

  	
   

  	
  Greater than or equal to 4.00 to 1.00

  	
   

  	
  1.50

  	
  %

  	
  2.50

  	
  %

  	
  0.500

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2

  	
   

  	
  Less than 4.00 to 1.00 but greater than or equal to 3.00 to 1.00

  	
   

  	
  1.25

  	
  %

  	
  2.25

  	
  %

  	
  0.500

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3

  	
   

  	
  Less than 3.00 to 1.00 but greater than or equal to 2.00 to 1.00

  	
   

  	
  1.00

  	
  %

  	
  2.00

  	
  %

  	
  0.500

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4

  	
   

  	
  Less than 2.00 to 1.00

  	
   

  	
  0.50

  	
  %

  	
  1.50

  	
  %

  	
  0.375

  	
  %

  

 

Any increase or decrease in the Applicable Rate with respect to
Revolving Loans, Swing Line Loans, Term Loans (including Segments thereof) and
Letter of Credit - BA Fees resulting from a change in the Adjusted Consolidated
Leverage Ratio shall become effective as of the first Business Day immediately
following the date a Compliance Certificate is delivered pursuant to Section 7.02(b);
provided, however, that if a Compliance Certificate is not
delivered when due in accordance with such Section, then Pricing Level 1 (or
with respect to the Term Loan (including Segments thereof), the higher of the
rates set forth in clauses (a) and (b) above) shall apply thereto as
of the first Business Day after the date on which such Compliance Certificate
was required to have been delivered until the Business Day following the date
the appropriate certificate is so delivered. 
Subject to the proviso in the preceding sentence, from the Closing Date
to the Business Day following the date the Compliance Certificate for the
fiscal period ending December 31, 2005 is delivered or is required to be
delivered (whichever shall first occur), the Applicable Rate with respect to
the Commitment Fee, Revolving Loans, Swing Line Loans and Letter of Credit - BA
Fees shall be Pricing Level 2 and the Applicable Rate with respect to the Term
Loan (including Segments thereof) shall be the higher of the rates set forth in
clauses (a) and (b) above.

 

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

 

“Arrangers”
means BAS and Morgan Stanley, each in its capacity as a joint lead arranger and
joint book manager.

 

“Assignee Group”
means two or more Eligible Assignees that are Affiliates of one another or two
or more Approved Funds managed by the same investment advisor.

 

3

 

“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 11.06(b)), and accepted by the Administrative
Agent, in substantially the form of Exhibit E or any other form
approved by the Administrative Agent, and shall include, in the case of the
initial assignments of portions of Term Loan by Bank of America and/or Morgan
Stanley as the initial Term Loan Lenders, one or more master assignments and
assumption agreements to effect assignments to multiple assignees substantially
on the terms of the form of Assignment and Assumption set forth in Exhibit E.

 

“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 the Borrower and its Non-Mueller Subsidiaries (but including US Pipe)
for the fiscal year ended December 31, 2004, and the related consolidated
statements of income or operations, retained earnings and cash flows for such
fiscal year of the Borrower and its Non-Mueller Subsidiaries (but including US
Pipe), including the notes thereto.

 

“Auditor”
has the meaning specified in Section 7.01(a).

 

“Availability
Period” means the period from and including the Closing Date to
the earliest of (a) the Revolving Credit Maturity Date, (b) the date
of termination of the Aggregate Revolving Credit Commitments pursuant to Section 2.07,
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 - BA Credit
Extensions pursuant to Section 9.02.

 

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

 

“Bankers’
Acceptance” or “BA” means a time draft, drawn by the beneficiary under
an Acceptance Credit and accepted by the L/C Issuer upon presentation of
documents by the beneficiary of an Acceptance Credit pursuant to Section 2.04
hereof, in the standard form for bankers’ acceptances of the L/C Issuer, and
shall include the Existing Bankers’ Acceptances.

 

“BAS”
means Banc of America Securities LLC.

 

“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.

 

4

 

“Base Rate Loan”
means a Loan (including a Segment) that bears interest based on the Base Rate.

 

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

 

“Base Rate
Segment” means a Segment bearing interest or to bear interest at
the Base Rate.

 

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

 

“Borrower
Account Transfer Agreement” means, individually or collectively
as the context may indicate and as in effect at any date of determination
thereof, (a) either of the Existing Borrower Account Transfer Agreements,
or (b) one or more other similar agreements acceptable to the
Administrative Agent in its reasonable discretion and serving substantially the
same purpose on substantially the same terms as the Existing Borrower Account
Transfer Agreements with respect to a then-existing Mortgage Warehouse
Facility, but in no event on any terms less favorable in any material respect,
in the reasonable judgment of the Administrative Agent, to the Administrative
Agent and the Lenders than those terms in the Existing Borrower Account
Transfer Agreements on the Closing Date.

 

“Borrower
Materials” has the meaning specified in Section 7.02.

 

“Borrowing”
means any of (i) the advance of the Term Loan pursuant to Section 2.01,
(ii) a Revolving Borrowing, or (iii) 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, the
state where the 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.

 

“Cardem”
means Cardem Insurance Co., Ltd., a Bermuda corporation and a wholly owned Subsidiary
of the Borrower.

 

“Cash
Collateralize” has the meaning specified in Section 2.04(g).

 

“Cash
Equivalents” means any of the following types of property, to
the extent owned by the Borrower or any of its Non-Mueller Subsidiaries free
and clear of all Liens (other than Liens created under the Security
Instruments):

 

(a)           cash,
denominated in U.S. Dollars or in a currency other than U.S. Dollars that is
freely transferable or convertible into U.S. Dollars;

 

(b)           readily
marketable direct obligations of the government of the United States or any
agency or instrumentality thereof, or obligations the timely payment of
principal and interest on which are fully and unconditionally guaranteed by the
government of the United States or any state or municipality thereof, in each
case so long as such obligation has an investment grade rating by S&P and
Moody’s;

 

5

 

(c)           commercial
paper rated at least P-1 (or the then equivalent grade) by Moody’s and A-1 (or
the then equivalent grade) by S&P, or carrying an equivalent rating by a
nationally recognized rating agency if at any time neither Moody’s and S&P
shall be rating such obligations, provided that up to 25% of the
aggregate amount of Investments in Cash Equivalents pursuant to this subpart (c) of
the definition thereof may be in commercial paper that is rated (I) at least P-1
(or the then equivalent grade) by Moody’s and at least A-2 (or the then
equivalent grade) by S&P, or (II) at least P-2 (or the then equivalent grade)
by Moody’s and at least A-1 (or the then equivalent grade) by S&P;

 

(d)           insured
certificates of deposit or bankers’ acceptances of, or time deposits with any
Lender or with any commercial bank that (i) is a member of the Federal
Reserve System, (ii) issues (or the parent of which issues) commercial
paper rated as described in the first portion of clause (c) above (without
regard to the proviso), (iii) is organized under the laws of the United
States or of any state thereof and (iv) has combined capital and surplus
of at least $250,000,000, provided that no more than 25% of the
aggregate amount of Investments in Cash Equivalents pursuant to this subpart (d) of
the definition thereof may be in such items with a maturity longer than one
year;

 

(e)           readily
marketable general obligations of any corporation organized under the laws of
any state of the United States of America, payable in the United States of
America, expressed to mature not later than twelve months following the date of
issuance thereof and rated A or better by S&P or A2 or better by Moody’s;
and

 

(f)            readily
marketable shares of investment companies or money market funds that, in each
case, invest solely in the foregoing Investments described in clauses (a) through
(e) above.

 

“Cash Income
Taxes” means, with respect to the Borrower and its Restricted
Subsidiaries on a consolidated basis, for any period the aggregate amount of
all payments in respect of income taxes made in cash by the Borrower and its
Restricted Subsidiaries to any applicable Governmental Authority during such
period, after giving effect, to the extent available, to the application of net
operating losses available to the Borrower and its Restricted Subsidiaries, but
excluding in each case any payment of taxes imposed on New Holdco and its
Subsidiaries and their properties, income or assets and paid by the Borrower or
any Non-Mueller Subsidiary pursuant to the Tax Sharing Agreement.

 

“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 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 Exchange Act, but excluding any employee benefit plan of such person or its
subsidiaries, and any person or entity acting in its capacity as trustee, agent
or other

 

6

 

fiduciary or administrator of any such plan) becomes the “beneficial
owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, 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 33-1/3% or more of the equity securities of the Borrower entitled to
vote for members of the board of directors or equivalent governing body of the
Borrower 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); or

 

(b)           during
any period of 24 consecutive
months, a majority of the members of the board of directors or other equivalent
governing body of the Borrower 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).

 

“Closing Date”
means the first date all the conditions precedent in Section 5.01
are satisfied or waived in accordance with Section 11.01 (or, in
the case of Section 5.01(b), waived by the Person entitled to
receive the applicable payment).

 

“Coal”
means all of the coal owned, leased or subject to mineral rights owned or leased
by any Coal Mining Entity and (i) located on, under, or within, or (ii) produced
and severed from, the properties owned or leased by any such Coal Mining
Entity.

 

“Coal Mining
Entities” means individually or collectively as the context may
indicate, Jim Walter Resources, Inc. and its Subsidiaries, along with any
successor entity that at any time after the Closing Date operates any of the
mines operated by Jim Walter Resources, Inc. or any of its Subsidiaries as
of the Closing Date.

 

“Code”
means the Internal Revenue Code of 1986.

 

“Collateral”
means, collectively, all personal and real property (including mineral rights)
of the Borrower, any Non-Mueller Subsidiary or any other Person in which the
Administrative Agent or any Lender is granted a Lien under any Security
Instrument as security for all or any portion of the Obligations or any other
obligation arising under any Loan Document.

 

“Commitment Fee”
has the meaning specified in Section 2.10(a).

 

7

 

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

 

“Consolidated
Capital Expenditures” means, with respect to the Borrower and
its Restricted Subsidiaries on a consolidated basis, for any period the sum of
(without duplication) (i) all expenditures (whether paid in cash or
accrued as liabilities) by the Borrower or any Restricted Subsidiary during
such period for items that would be classified as “property, plant or equipment”
or comparable items on the consolidated balance sheet of the Borrower and its
Restricted Subsidiaries, including without limitation all transactional costs
incurred in connection with such expenditures provided the same have been
capitalized (but excluding the amount of any Consolidated Capital Expenditures
paid for with proceeds of property insurance or casualty insurance as evidenced
in writing and submitted to the Administrative Agent together with any
Compliance Certificate delivered pursuant to Section 7.02(b)), and (ii) any
portion of the purchase price of an Acquisition which is accounted for as a
capital expenditure.

 

“Consolidated
Cash Interest Charges” means, for any period, for the Borrower
and its Restricted Subsidiaries on a consolidated basis, that portion of
Consolidated Interest Charges paid or payable in cash during such period, but
excluding prepayments or similar premiums paid in cash in connection with any
prepayment, repurchase or redemption of Consolidated Funded Indebtedness.

 

“Consolidated
Current Assets” means, with respect to the Borrower and its
Non-Mueller Subsidiaries on a consolidated basis, all assets (other than cash,
restricted cash and cash equivalents) that are expected to be realized in cash,
sold in the ordinary course of business, or consumed within one year or which
would be classified as a current asset.

 

“Consolidated
Current Liabilities” means, with respect to the Borrower and its
Non-Mueller Subsidiaries on a consolidated basis, all liabilities that by their
terms are payable within one year, but excluding in all cases Indebtedness of
the Borrower and its Non-Mueller Subsidiaries and accrued interest related to
MSH Trusts.

 

“Consolidated
EBITDA” means, for any period and in each case without
duplication, with respect to the
Borrower and its Non-Mueller Subsidiaries, on a consolidated basis determined
in accordance with GAAP, an amount equal to:

 

	
   

  	
   

  	
  (a)

  	
   

  	
  Consolidated
  Net Income for such period,

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  plus

  	
   

  	
  (b)

  	
   

  	
  Consolidated Interest Charges for such period,
  to the extent deducted in computing Consolidated Net Income,

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  plus

  	
   

  	
  (c)

  	
   

  	
  the provision for federal, state, local and
  foreign income taxes payable for such period, to the extent deducted
  in computing Consolidated Net Income (but excluding therefrom any provision
  for taxes imposed on New Holdco and its Subsidiaries or their properties,
  income or assets and paid or payable by the Borrower or any Non-Mueller
  Subsidiary pursuant to the Tax Sharing Agreement),

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  plus

  	
   

  	
  (d)

  	
   

  	
  depreciation
  and depletion expense and all other non-cash charges and expenses, to the
  extent deducted in computing Consolidated Net Income,

  

 

8

 

	
  plus

  	
   

  	
  (e)

  	
   

  	
  amortization
  expense, to the extent deducted in computing Consolidated Net Income,

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  minus

  	
   

  	
  (f)

  	
   

  	
  the
  gain (or plus the loss or any associated write-down of assets) (net of
  any tax effect) resulting from the sale of any capital assets other than in
  the ordinary course of business to the extent added (deducted) in computing
  Consolidated Net Income,

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  minus

  	
   

  	
  (g)

  	
   

  	
  extraordinary
  nonrecurring after-tax gains (or plus extraordinary nonrecurring
  non-cash after-tax losses) to the extent added (deducted) in computing
  Consolidated Net Income,

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  minus

  	
   

  	
  (h)

  	
   

  	
  any
  gain resulting from any write-up of assets to the extent added in computing
  Consolidated Net Income,

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  plus

  	
   

  	
  (i)

  	
   

  	
  cash
  restructuring charges not to exceed $10,000,000 in the aggregate from the
  Closing Date, to the extent deducted in computing Consolidated Net Income

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  plus

  	
   

  	
  (j)

  	
   

  	
  any
  non-cash expense arising from other postemployment benefits to the extent
  deducted in computing Consolidated Net Income,

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  plus

  	
   

  	
  (k)

  	
   

  	
  non-cash
  charges resulting from the application of Statement of Financial Accounting
  Standards No. 142, to the extent deducted in computing Consolidated Net
  Income,

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  minus

  	
   

  	
  (l)

  	
   

  	
  any
  cash expenditure made in connection with other postemployment benefits to the
  extent such expenditures are not deducted in computing Consolidated Net
  Income,

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  plus

  	
   

  	
  (m)

  	
   

  	
  expenses
  incurred in connection with the Transaction to the extent deducted in
  computing Net Income, not more than $10,000,000 of which shall be in cash,

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  plus

  	
   

  	
  (n)

  	
   

  	
  up
  to $20,000,000 of expenses incurred in connection with events related to
  Hurricane Katrina and Hurricane Rita, and

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  plus

  	
   

  	
  (o)

  	
   

  	
  any
  amounts representing mark-to-market losses (or minus mark-to-market
  gains) that must be recognized currently in Consolidated Net Income under
  Financial Accounting Standards Board Statement 133;

  

 

provided,
however, (i) Consolidated EBITDA shall be decreased by the amount
of any cash expenditures in such period related to non-cash charges added back
to Consolidated Net Income in computing Consolidated EBITDA during any prior
periods and (ii) notwithstanding anything to the contrary in this
definition, Consolidated EBITDA shall not be increased by adding to
Consolidated Net Income any amount representing the minority interest of a
Person other than the Borrower or a Non-Mueller Subsidiary in any joint venture
whose results of operations are consolidated with the Borrower’s in accordance
with GAAP.

 

9

 

“Consolidated
Fixed Charge Coverage Ratio” means, as of any date of
determination, the ratio of (i) Consolidated EBITDA for the Four-Quarter
Period ending on such date minus (without duplication) Cash Income Taxes
for such period to (ii) Consolidated Fixed Charges for such period.

 

“Consolidated
Fixed Charges” means, with respect to the Borrower and its
Restricted Subsidiaries for any period ending on the date of computation
thereof, the sum of, without duplication, (i) Consolidated Cash Interest
Charges, (ii) Restricted Payments (but excluding those Restricted Payments
made to repurchase, redeem or acquire shares of the capital stock of the
Borrower permitted under Section 8.06), and (iii) Consolidated
Principal Payments, all determined on a consolidated basis in accordance with
GAAP (except Consolidated Principal Payments with respect to Attributable
Indebtedness shall be included in any event); provided that for the fiscal
quarters of the Borrower ending December 31, 2005, March 31, 2006 and
June 30, 2006, the calculation of Consolidated Cash Interest Charges used
in this definition of Consolidated Fixed Charges shall be, respectively (x)
Consolidated Interest Charges for the one-quarter period ending December 31,
2005 times 4, (y) Consolidated Interest Charges for the two-quarter
period ending March 31, 2006 times 2 and (z) Consolidated Interest
Charges for the three-quarter period ending June 30, 2006 times  4/3.

 

“Consolidated
Funded Indebtedness” means, as of any date of determination, for
the Borrower and its Restricted Subsidiaries on a consolidated basis, the sum
of (a) the outstanding principal amount of all obligations, whether
current or long-term, for borrowed money (including Obligations hereunder) and
all obligations evidenced by bonds, debentures, notes, loan agreements or other
similar instruments (but excluding Indebtedness permitted by Section 8.03(g),
(h) or (i)), (b) all purchase money Indebtedness, (c) all
direct obligations arising under standby and commercial letters of credit
(excluding the undrawn amount thereof), bankers’ acceptances (including all BAs
hereunder), bank guaranties (excluding the amounts available thereunder as to
which demand for payment has not yet been made), surety bonds (excluding the
amounts available thereunder as to which demand for payment has not yet been
made) and similar instruments, (d) all obligations in respect of the
deferred purchase price of property or services (other than trade accounts
payable in the ordinary course of business), (e) Attributable Indebtedness
in respect of capital leases and Synthetic Lease Obligations, (f) without
duplication, all Guarantees with respect to outstanding Indebtedness of the
types specified in clauses (a) through (e) above of Persons other
than the Borrower or any Restricted Subsidiary, and (g) all Indebtedness
of the types referred to in clauses (a) through (f) above of any
partnership or joint venture (other than a joint venture that is itself a
corporation or limited liability company) in which the Borrower or a Restricted
Subsidiary is a general partner or joint venturer, to the extent such
Indebtedness is recourse to the Borrower or such Restricted Subsidiary.

 

“Consolidated
Interest Charges” means, for any period, for the Borrower and
its Restricted Subsidiaries on a consolidated basis, the sum of the following
(without duplication), in each case net of interest income earned (without
duplication) on cash balances or under Swap Contracts hedging against, or
otherwise entered into to manage risks relating to, fluctuations in interest
rates to the extent such interest income is included in the calculation of
Consolidated Net Income: (a) all interest, (b) the current amortized
portion of premium payments, debt discount, fees (including fees payable in
respect of Swap Contracts hedging against, or otherwise entered into to manage
risks relating to, fluctuations in interest rates), charges and related
expenses of the

 

10

 

Borrower and
its Restricted Subsidiaries in connection with borrowed money (including
capitalized interest) or in connection with the deferred purchase price of
assets, in each case to the extent treated as interest in accordance with GAAP,
(c) the portion of rent expense of the Borrower and its Restricted
Subsidiaries with respect to such period under capital leases that is treated
as interest in accordance with GAAP, and (d) the amount of payments in
respect of Synthetic Lease Obligations that are in the nature of interest.

 

“Consolidated
Leverage Ratio” means, as of any date of determination, the
ratio of (a) Consolidated Funded Indebtedness as of such date to (b) Consolidated
EBITDA for the Four-Quarter Period most recently ended for which the Borrower
has delivered financial statements pursuant to Section 7.01(a) or
(b).

 

“Consolidated Net Income” means, for any period, for the Borrower and
its Non-Mueller Subsidiaries on a consolidated basis, the net income after
taxation of the Borrower and its Non-Mueller Subsidiaries for that period.

 

“Consolidated Principal Payments” means, at any date of measurement thereof,
payments of Consolidated Funded Indebtedness that were scheduled to be made
(including adjustments for any mandatory prepayments previously made) during
the Four-Quarter Period ending on the date of measurement thereof.

 

“Consolidated Senior Secured Indebtedness” means, as of any date of determination, all
Consolidated Funded Indebtedness that, as of such date, is secured by any Lien
on any asset or property of the Borrower or any of its Non-Mueller
Subsidiaries.

 

“Consolidated Senior Secured Leverage Ratio” means, as of any date of determination, the
ratio of (a) Consolidated Senior Secured Indebtedness as of such date to (b) Consolidated
EBITDA for the Four-Quarter Period most recently ended for which the Borrower
has delivered financial statements pursuant to Section 7.01(a) or
(b).

 

“Consolidated Total Assets” means, as of any date on which the amount
thereof is to be determined, the net book value of all assets of the Borrower
and its Restricted Subsidiaries as determined on a consolidated basis.

 

“Consolidated
Working Capital” means, as of any date on which the amount
thereof is to be determined, the excess of Consolidated Current Assets over
Consolidated Current Liabilities.

 

“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.

 

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

 

11

 

“Convertible
Notes” means Indebtedness of the Borrower in the form of notes
issued by the Borrower on or about April 13, 2004 that (i) is
subordinated in payment to the Obligations hereunder and (ii) is
convertible into common equity of the Borrower.

 

“Core Business”
means any material line of business conducted by the Borrower and its
Non-Mueller Subsidiaries as of the Closing Date and any business substantially
related or incidental thereto.

 

“Cost of
Acquisition” means, with respect to any Acquisition, as at the
date of entering into any agreement therefor, the sum of the following (without
duplication):  (i) the amount of any
cash and fair market value of other property (excluding the value of any
capital stock, warrants or options to acquire capital stock of the Borrower or
any Non-Mueller Subsidiary and the unpaid principal amount of any debt
instrument) given as consideration, (ii) the amount (determined by using
the face amount or the amount payable at maturity, whichever is greater) of any
Indebtedness incurred, assumed or acquired by the Borrower or any Non-Mueller
Subsidiary in connection with such Acquisition, and (iii) all additional
purchase price amounts in the form of earnouts and other contingent obligations
that are to be paid in cash and that should be recorded on the financial
statements of the Borrower and its Non-Mueller Subsidiaries in accordance with
GAAP, (iv) all amounts paid in cash in respect of covenants not to
compete, and consulting agreements that should be recorded on financial
statements of the Borrower and its Non-Mueller Subsidiaries in accordance with
GAAP, (v) the aggregate fair market value of all other consideration given
by the Borrower or any Non-Mueller Subsidiary in connection with such
Acquisition (but excluding the value of any capital stock, warrants or options
to acquire capital stock of the Borrower or any Non-Mueller Subsidiary), and (vi) out-of-pocket
transaction costs for the services and expenses of attorneys, accountants and
other consultants incurred in effecting such transaction, and other similar
transaction costs so incurred and capitalized in accordance with GAAP.

 

“Credit
Extension” means each of the following: (a) a Borrowing and
(b) an L/C – BA 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 United States or other applicable
jurisdictions from time to time in effect and affecting the rights of creditors
generally.

 

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

 

“Default Rate”
means an interest rate equal to (a) the Base Rate plus (b) the
Applicable Rate with respect to Base Rate Loans plus (c) 2% per annum;
provided, however, that (i) with respect to a Eurodollar Rate Loan, until
the end of the Interest Period during which the Default Rate is first applicable,
the Default Rate shall be an interest rate equal to the interest rate
(including any Applicable Rate) otherwise applicable to such Eurodollar Rate
Loan plus 2% per annum, and thereafter as set forth in the portion of this
sentence preceding this proviso, and (ii) with respect to Letter of Credit
– BA Fees, the Default Rate shall equal the Letter of Credit – BA

 

12

 

Fee, then in
effect plus 2% per annum, in each case to the fullest extent permitted by
applicable Laws.

 

“Defaulting
Lender” means any Lender that (a) has failed to fund any
portion of the Revolving 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 the 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.

 

“Direct Foreign
Subsidiary” means a Non-Mueller Subsidiary other than a Domestic
Subsidiary a majority of whose Voting Securities, or a majority of whose
Subsidiary Securities, are owned by the Borrower or a Domestic Subsidiary.

 

“Disposition”
or “Dispose”
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.

 

“Dividend
Distribution” means the distribution by Mueller Group to Mueller
Water Products, and the further distribution by Mueller Water Products to New
Holdco of a dividend on or prior to the Closing Date of not less than
$400,000,000.

 

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

 

“Domestic
Subsidiary” means any Non-Mueller Subsidiary that is organized
under the laws of any political subdivision of the United States (but excluding
any territory or possession thereof).

 

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

 

“Entity
Conversion” means, individually or collectively as the context
may indicate, the conversion under the general corporate law of the state of
Delaware or Alabama, as applicable, of (a) United States Pipe and Foundry
Company, Inc., an Alabama corporation, into United States Pipe and
Foundry, LLC, an Alabama limited liability company, (b) Mueller Water
Products, Inc, a Delaware corporation, into Mueller Water Products, LLC, a
Delaware limited liability company, and (c) Mueller Group, Inc., a
Delaware corporation, into Mueller Group, LLC, a Delaware limited liability
company.

 

“Environmental
Laws” means any and all Federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants,

 

13

 

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 the Borrower, any other Loan Party or any
of their respective Non-Mueller 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), 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 the 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 the Borrower or any ERISA Affiliate from a Pension Plan subject
to Section 4063 of ERISA during a plan year in which it was a substantial
employer (as defined in Section 4001(a)(2) of ERISA) or a cessation
of operations that is treated as such a withdrawal under Section 4062(e) of
ERISA; (c) a complete or partial withdrawal by the Borrower or any ERISA
Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan
is in reorganization; (d) the filing by the Borrower or any ERISA
Affiliate or the PBGC of a notice of intent to terminate, the treatment by the
PBGC of a Pension 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
the Borrower or any ERISA Affiliate.

 

14

 

“Eurodollar Rate”
means, for any Interest Period with respect to a Eurodollar Rate Loan, 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 the 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 Rate” for such Interest Period
shall be the rate per annum determined by the 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 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 Rate
Loan” means a Loan (including a Segment) that bears interest at
a rate based on the Eurodollar Rate.

 

“Eurodollar Rate
Segment” means a Segment bearing interest or to bear interest at
the Eurodollar Rate.

 

“Event of
Default” has the meaning specified in Section 9.01.

 

“Excess Cash
Flow” means, with respect to the Borrower and its Non-Mueller
Subsidiaries on a consolidated basis for any fiscal year, the following:

 

(a)           Consolidated
EBITDA for such period (but adjusted to include the effect of cash losses or gains
added or deducted pursuant to part (f) or part (g) of the definition
of Consolidated EBITDA),

 

minus

 

(b)           the
sum of (i) the change in Consolidated Working Capital as at the end
of such fiscal year; plus (ii) Consolidated Capital Expenditures
paid in cash during such period; plus (iii) Consolidated Cash
Interest Charges for such period; plus (iv) taxes paid in cash for
such period and added in the calculation of Consolidated EBITDA pursuant to
part (c) of the definition thereof; plus
(v) the aggregate amount of all scheduled payments of Consolidated Funded
Indebtedness made during such period; plus (vi) the aggregate
amount of any optional prepayments of the Term Loan made by the Borrower
pursuant to Section 2.06(a) hereof during such period; plus
(vii) the aggregate amount of any required prepayments of the Term Loan
made by the Borrower pursuant to Section 2.06(d) hereof during
such period; plus (viii) Restricted Payments in the nature of
ordinary quarterly dividends made in cash during such period; plus (ix) Transaction
expenses paid in cash during such period and added in the calculation of
Consolidated EBITDA pursuant to part (m) of the definition thereof; and plus
(x) expenses related to Hurricane Katrina or Hurricane Rita paid in cash for
such period and added in the calculation of Consolidated EBITDA pursuant to
part (n) of the definition thereof.

 

15

 

“Exchange Act”
means the Securities Exchange Act of 1934 and the regulations promulgated
thereunder.

 

“Excluded Taxes”
means, with respect to the 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 the 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 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, (b) any branch profits taxes
imposed by the United States or any similar tax imposed by any other
jurisdiction in which the Borrower is located and (c) in the case of a
Foreign Lender (other than an assignee pursuant to a request by the Borrower
under Section 11.13), any withholding tax that is imposed on
amounts payable to such Foreign Lender at the time such Foreign Lender becomes
a party hereto (or designates a new Lending Office) or is attributable to such
Foreign Lender’s failure or inability (other than as a result of a Change in
Law) to comply with Section 4.01(e), except to the extent that such
Foreign Lender (or its assignor, if any) was entitled, at the time of
designation of a new Lending Office (or assignment), to receive additional
amounts from the Borrower with respect to such withholding tax pursuant to Section 4.01(a).

 

“Existing
Bankers Acceptances” means those time drafts that satisfy the
definition of “Bankers’ Acceptance” and are set forth on Schedule 1.01(b).

 

“Existing
Borrower Account Transfer Agreement” means, individually or
collectively as the context may indicate, each of (a) that certain
Borrower Account Transfer Agreement dated as of November 19, 2004 by and
between Mid-State Homes and Mid-State Homes Trust IX, and (b) that certain
Borrower Account Transfer Agreement dated as of February 4, 2005 by and
between Mid-State Homes and Mid-State Trust XIV.

 

“Existing Credit
Agreement” means that certain Credit Agreement dated as of April 17,
2003 among the Borrower, Bank of America, as agent, and a syndicate of lenders,
as amended through the Closing Date.

 

“Existing
Letters of Credit” means those letters of credit identified on Schedule 1.01(b).

 

“Existing Mortgage
Warehouse Facility” means, individually or collectively as the
context may indicate, each of (a) that certain Amended and Restated
Variable Funding Loan Agreement dated as of November 19, 2004 by and among
YC Susi Trust (successor by assignment from Enterprise Funding Corporation),
Atlantic Asset Securitization Corp., Mid-State Trust IX, Wachovia Bank,
National Association, Bank of America, N.A. and Calyon New York Branch, and (b) that
certain Variable Funding Loan Agreement dated as of February 4, 2005 by an
among Three Pillars Funding LLC, Mid-State Trust XIV, Wachovia Bank, National
Association and SunTrust Capital Markets, Inc.

 

“Existing
Mueller Credit Agreement” means that certain Second Amended and
Restated Credit Agreement dated as of April 23, 2004 among Mueller Group,
Credit Suisse First Boston,

 

16

 

acting through
its Cayman Islands Branch, as administrative agent, and a syndicate of lenders,
as amended through the Closing Date.

 

“Facility
Termination Date” means the date as of which all of the
following shall have occurred:  (a) the
Borrower shall have permanently terminated the Revolving Credit Facility and
the Term Loan Facility by final payment in full of all Outstanding Amounts,
together with all accrued and unpaid interest and fees thereon, other than (i) the
undrawn portion of Letters of Credit, (ii) the aggregate face amount of
all outstanding Bankers’ Acceptances and (iii) all fees relating to any
Letters of Credit accruing after such date (which fees shall be payable solely
for the account of the L/C Issuer and shall be computed (based on interest
rates and the Applicable Rate then in effect) on such undrawn amounts to the
respective expiry dates of the Letters of Credit), in each case as have been
fully Cash Collateralized or as to which other arrangements with respect
thereto satisfactory to the Administrative Agent and the L/C Issuer shall have
been made, (b) the Aggregate Revolving Credit Commitments, if any, shall
have terminated or expired, (c) the obligations and liabilities of the
Borrower and each other Loan Party under all Related Credit Arrangements shall
have been fully, finally and irrevocably paid and satisfied in full and the
Related Credit Arrangements shall have expired or been terminated, or other
arrangements satisfactory to the counterparties shall have been made with
respect thereto, and (d) each Guarantor shall have fully, finally and
irrevocably paid and satisfied in full its respective obligations and
liabilities arising under the Loan Documents, (except for future obligations
consisting of continuing indemnities and other contingent Obligations of the
Borrower or any Loan Party that may be owing to the Administrative Agent or any
of its Related Parties or any Lender pursuant to the Loan Documents and
expressly survive termination of this Agreement).

 

“Federal Funds
Rate” means, for any day, the rate per annum equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank 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
the Administrative Agent.

 

“Foreign Lender”
means any Lender that is organized under the laws of a jurisdiction other than
that in which the Borrower is resident for tax purposes.  For purposes of this definition, the United
States, each State thereof and the District of Columbia shall be deemed to
constitute a single jurisdiction.

 

“Four-Quarter
Period” means a period of four full consecutive fiscal quarters
of the Borrower and its Non-Mueller Subsidiaries, taken together as one
accounting period.

 

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

 

17

 

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

 

“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).

 

“Granting Lender”
has the meaning specified in Section 11.06(h).

 

“Guarantee”
means, as to any Person, any (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 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, all Restricted Subsidiaries of the Borrower executing a
Guaranty on the Closing Date and all other Subsidiaries that are at any time
after the Closing Date required to enter into a Guaranty Joinder Agreement
pursuant to Section 7.12.

 

18

 

“Guaranty” means, collectively, the Subsidiary Guaranty and the Mid-State Homes
Guaranty.

 

“Guaranty Joinder Agreement” means each Guaranty Joinder Agreement,
substantially in the form thereof attached to the Subsidiary Guaranty, executed
and delivered by a Guarantor to the Administrative Agent pursuant to Section 7.12,
as amended, modified, supplemented or amended and restated.

 

“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 set forth in Section 2.04(c).

 

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

 

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

 

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

 

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

 

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

 

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

 

(f)            capital
leases and Synthetic Lease Obligations; and

 

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

 

For all purposes hereof, the Indebtedness of any Person shall include
the Indebtedness of any partnership or joint venture (other than a joint
venture that is itself a corporation or limited liability company) in which
such Person is a general partner or a joint venturer, to the extent such
Indebtedness is recourse to such Person. 
The amount of any net obligation under any Swap Contract on any date
shall be deemed to be the Swap Termination Value thereof as of such date.

 

19

 

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 11.04(b).

 

“Indenture”
means any Indenture or similar document pursuant to which any of the Mortgage
Backed Securities or any Indebtedness permitted by Section 8.03(g)(i) or
(iii) is issued.

 

“Information”
has the meaning specified in Section 11.07.

 

“Interest
Payment Date” means, (a) as to any Eurodollar Rate Loan,
the last day of the relevant Interest Period, any date that such Loan is
prepaid or converted, in whole or in part, and the Revolving Credit Maturity
Date or the Term Loan Maturity Date, as applicable; 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), (i) the fifteenth (or the
next Business Day after the fifteenth, if the fifteenth is not a Business Day)
of each January, April, July and October with respect to interest
accrued through the last day of each fiscal quarter of the Borrower ending
immediately prior to such date, and (ii) the Revolving Credit Maturity
Date or the Term Loan Maturity Date, as applicable, with respect to interest
accrued through such date; provided, further, that interest
accruing at the Default Rate shall be payable from time to time upon demand of
the Administrative Agent.

 

“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, in each case, on the date one, two, three or six months
thereafter, as selected by the Borrower in its Revolving Loan Notice or Term
Loan Interest Rate Selection Notice; provided that:

 

(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 (a) with respect to Revolving Loans,
the Revolving Credit Maturity Date, and (b) with respect to the Term Loan,
the date set forth in part (a) of the definition of the Term Loan Maturity
Date.

 

“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

 

20

 

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, (c) the
purchase or other acquisition (in one transaction or a series of transactions)
of assets of another Person that constitute a business unit, or (d) the
purchase of land and related infrastructure improvements.  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.

 

“IP Rights”
has the meaning set forth in Section 6.17.

 

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

 

“Joinder
Agreements” means, collectively, Guaranty Joinder Agreements,
the Pledge Joinder Agreements and the Security Joinder Agreements.

 

“Joint Fee
Letter” means the letter agreement, dated as of June 17,
2005, among the Borrower, the Administrative Agent and the Arrangers.

 

“Laws”
means, collectively, all international, foreign, Federal, state and local
statutes, treaties, rules, 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.

 

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

 

“L/C – BA
Borrowing” means an extension of credit resulting from (i) a
drawing under any Letter of Credit (other than an Acceptance Credit) or (ii) a
payment of a Bankers’ Acceptance upon presentation, in each case which has not
been reimbursed on the date when made or refinanced as a Revolving Borrowing.

 

21

 

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

 

“L/C – BA
Obligations” means, as at any date of determination, the
aggregate undrawn amount of all outstanding Letters of Credit, plus the
sum of the maximum aggregate amount which is, or at any time thereafter may
become, payable by the L/C Issuers under all then outstanding Bankers’
Acceptances, plus the aggregate of all Unreimbursed Amounts, including all L/C
– BA 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 Issuer”
means each of Bank of America and SunTrust Bank, each in its capacity as an
issuer of Letters of Credit and Bankers’ Acceptances hereunder, or any successor issuer of Letters of Credit and
Bankers’ Acceptances hereunder.  At any time there is more than one L/C
Issuer, all singular references to the L/C Issuer shall mean any L/C Issuer,
either L/C Issuer, each L/C Issuer, the L/C Issuer that has issued the
applicable Letter of Credit, or both L/C Issuers, as the context may require.

 

“Lender”
has the meaning specified in the introductory paragraph hereto and, as the
context requires, includes the L/C Issuer and the 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 the Borrower and the Administrative
Agent.

 

“Letter of
Credit” means any letter of credit issued hereunder, and shall
include the Existing Letters of Credit. 
A Letter of Credit may be a commercial letter of credit (including an
Acceptance Credit) or a standby letter of credit.

 

“Letter of
Credit Application” means an application and agreement for the
issuance or amendment of a Letter of Credit in the form from time to time in
use by the L/C Issuer and, in the case of any Acceptance Credit, shall include
the related Acceptance Documents.

 

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

 

“Letter of
Credit – BA Fees” means, collectively or individually as the
context may indicate, the fees with respect to Letters of Credit described in Sections
2.04(i)(i) and (ii).

 

“Letter of
Credit – BA Sublimit” means an amount equal to the lesser of (a) $100,000,000
and (b) the Aggregate Revolving Credit Commitments.  The Letter of Credit – BA Sublimit is part
of, and not in addition to, the Aggregate Revolving Credit Commitments.

 

22

 

“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 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 the Borrower under Article II
in the form of a Revolving Loan, a Term Loan or a Swing Line Loan, including
any Segment.

 

“Loan Documents”
means this Agreement, each Note, each Guaranty (including each Guaranty Joinder
Agreement), each Security Instrument, each Revolving Loan Notice, each Term
Loan Interest Rate Selection Notice, each Issuer Document and each Compliance
Certificate, and all other instruments and documents heretofore or hereafter
executed or delivered to or in favor of any Lender or the Administrative Agent
in connection with the Loans made and transactions contemplated by this
Agreement.

 

“Loan Parties”
means, collectively, the Borrower, each Guarantor and each other Person
providing Collateral pursuant to any Security Instrument.

 

“Material
Adverse Effect” means (a) a material adverse change in, or
a material adverse effect upon, the operations, business, assets, properties,
liabilities (actual or contingent), condition (financial or otherwise) or
prospects of the Borrower and its Non-Mueller 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
Subsidiary” means, as of any date of determination thereof (and,
as of the Closing Date, giving effect to the US Pipe Contribution), each direct
or indirect Restricted Subsidiary of the Borrower that (i) has total
assets (including Equity Interests in other Subsidiaries) of equal to or
greater than 3% of Consolidated Total Assets (calculated as of the most recent
fiscal period with respect to which the Administrative Agent shall have
received financial statements required to be delivered pursuant to Sections
7.01(a) or (b) (or if prior to delivery of any financial
statements pursuant to such Sections, then calculated with respect to the
financial statements dated as of June 30, 2005, but pro forma for the US
Pipe Contribution) (the “Required
Financial Information”)), or (ii) has revenues equal to or
greater than 3% of the total revenues (on a consolidated basis) of the Borrower
and its Restricted Subsidiaries (calculated for the most recent period for
which the Administrative Agent has received the Required Financial
Information); provided, however, that notwithstanding the
foregoing, the term “Material Subsidiaries” shall mean Restricted Subsidiaries
of the Borrower that together have assets equal to not less than 90% of
Consolidated Total Assets (calculated as described above) and revenues of not
less than 90% of the total revenues of the Borrower and its Restricted
Subsidiaries (calculated as described above).

 

“Maximum
Restricted Payment Amount” means, (a) with respect to the
period from the Closing Date to December 31, 2005, $5,000,000, (b) with
respect to the fiscal year of the

 

23

 

Borrower
ending December 31, 2006, $20,000,000, and (c) with respect to any
fiscal year of the Borrower thereafter, $25,000,000 plus 50% of Consolidated
Net Income for the immediately preceding fiscal year (without carrying forward
any amount from a prior fiscal year).

 

“Merger”
means the acquisition by the Borrower of all of the issued and outstanding
capital stock of Mueller Water Products by means of the merger of Mueller Water
Products with and into JW MergerCo, Inc., a Delaware corporation and a
direct Subsidiary of New Holdco prior to giving effect to the Merger, with
Mueller Water Products being the surviving entity of such merger.

 

“Merger
Agreement” means that certain Agreement and Plan of Merger dated
as of June 17, 2005 by and among Mueller Water Products, the Borrower, JW
MergerCo, Inc. and DLJ Merchant Banking II, Inc., as the Stockholders’
Representative (including all schedules and exhibits thereto and the Disclosure
Letter (as defined therein)).

 

“Merger
Documents” means, individually or collectively as the context
may indicate, (a) the Merger Agreement, (b) the Escrow Agreement (as
defined in the Merger Agreement), (c) the Voting Agreement (as defined in
the Merger Agreement) and (d) each other material agreement, instrument
and document relating to the Merger.

 

“Mid-State
Capital” means Mid-State Capital Corporation, a Delaware
corporation.

 

“Mid-State
Holdings” means Mid-State Holdings Corporation, a Delaware
corporation.

 

“Mid-State Homes”
means Mid-State Homes, Inc., a Florida corporation.

 

“Mid-State Homes
Guaranty” means that certain Guaranty Agreement (Mid-State Homes
and Walter Mortgage) dated as of the date hereof by each of Mid-State Homes and
Walter Mortgage Company in favor of the Administrative Agent (on behalf of the
Secured Parties) substantially in the form of Exhibit H.

 

“Mine”
means any excavation or opening into the earth now and hereafter made from
which Coal is or can be extracted on or from any of the properties owned or
leased by any Loan Party, together with all appurtenances, fixtures,
structures, improvements, and all tangible property of whatsoever kind or
nature in connection therewith.

 

“Mineral Rights
Mortgage” means, individually or collectively as the context may
indicate, those mortgages, leasehold mortgages, deeds of trust, leasehold deeds
of trust, deeds to secure debt, leasehold deeds to secure debt and comparable
real estate Lien documents delivered on or after the Closing Date to the
Administrative Agent with respect to any Mortgaged Coal Property.

 

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

 

“Morgan Stanley”
means Morgan Stanley Senior Funding, Inc. and its successors.

 

“Mortgage”
means, individually or collectively as the context may indicate, those
mortgages, deeds of trust, deeds to secure debt and comparable real estate Lien
documents

 

24

 

delivered on
or after the Closing Date to the Administrative Agent with respect to any
Mortgaged Fee Property, substantially in the form attached hereto as Exhibit J.

 

“Mortgage
Accounts” means certain building and installment contracts and
related mortgages and instruments originated by Jim Walter Homes, Inc.,
Neatherlin Homes, Inc., Dream Homes, Inc., Dream Homes USA, Inc.,
Crestline Homes, Inc. and Walter Mortgage Company, each a Non-Mueller
Subsidiary of the Borrower.

 

“Mortgage-Backed
Securities” means, collectively, (i) the Asset Backed Notes
issued by Mid-State Trust IV, a Delaware business trust established by
Mid-State Homes, having an aggregate principal amount outstanding as of December 31,
2004 of approximately $322,357,000, (iii) the Asset Backed Notes issued by
Mid-State Trust VI, a Delaware business trust established by Mid-State Homes,
having an aggregate principal amount outstanding as of December 31, 2004
of approximately $148,366,000, (iv) the Asset Backed Notes issued by
Mid-State Trust VII, a Delaware business trust established by Mid-State Homes,
having an aggregate principal amount outstanding as of December 31, 2004
of approximately $167,525,000, (v) the Asset Backed Notes issued by
Mid-State Trust VIII, a Delaware business trust established by Mid-State Homes,
having an aggregate principal amount outstanding as of December 31, 2004
of approximately $214,994,000, (vi) the Asset Backed Notes issued by
Mid-State Trust X, a Delaware business trust established by Mid-State Homes,
having an aggregate principal amount outstanding as of December 31, 2004
of approximately $292,178,000, (vii) the Asset Backed Notes issued by
Mid-State Trust XI, a Delaware business trust established by Mid-State Homes,
having an aggregate principal amount outstanding as of December 31, 2004
of approximately $257,086,000, and (viii) the Asset Backed Notes issued by
Mid-State Capital Corporation 2004-1 Trust, a Delaware business trust
established by Mid-State Capital, having an aggregate principal amount
outstanding as of December 31, 2004 of approximately $374,347,000.

 

“Mortgage
Warehouse Facility” means, individually or collectively as the
context may indicate and as in effect at any date of determination thereof, (a) either
of the Existing Mortgage Warehouse Facilities and/or (b) another credit
facility (or facilities, on a combined basis, if more than one) acceptable to
the Administrative Agent in its reasonable discretion for the warehousing of
mortgages that provides financing to Mid-State Trust IX, Mid-State Trust XIV or
another MSH Trust established for such purpose, and that otherwise serves
substantially the same purpose on substantially the same terms as the Existing
Mortgage Warehouse Facilities, but in no event on any terms less favorable in
any material respect, in the reasonable judgment of the Administrative Agent,
to the Administrative Agent and the Lenders than those terms in the Existing
Mortgage Warehouse Facilities on the Closing Date.

 

“Mortgaged Coal
Property” means, collectively, the leasehold or other rights of
the Borrower or any Guarantor or any other Person, as applicable, to mine or
otherwise extract coal on certain real property as may be granted to the
Administrative Agent on the Closing Date or from time to time thereafter in
accordance with the terms of this Agreement pursuant to a Mineral Rights
Mortgage, it being understood that some parcels of real property may constitute
both Mortgaged Coal Property and Mortgaged Fee Property.

 

“Mortgaged Coal
Property Support Documents” shall mean, for each Mortgaged Coal
Property, (i) the Title Policy pertaining thereto, if determined to be
necessary by the

 

25

 

Administrative
Agent, (ii) such lessor’s estoppel, waiver and consent certificates as the
Administrative Agent may reasonably require and the Borrower can deliver using
its best efforts (which shall not require the expenditure of cash or the making
of any material concessions under the relevant lease unless the Administrative
Agent reasonably determines that such Mortgaged Coal Property constitutes a
material part of the overall Coal Collateral for the Obligations and the
obtaining of such consent is necessary for the effective grant of a
first-priority, perfected mortgage on such Mortgaged Coal Property) and
subordination, nondisturbance and attornment agreements as the Administrative
Agent may reasonably require and the Borrower can deliver using its best
efforts (which shall not require the expenditure of cash or the making of any
material concessions under the relevant lease), (iii) such opinions of
local counsel with respect to the Mineral Rights Mortgages, as applicable, as
the Administrative Agent may reasonably require, and (iv) such other
documentation as the Administrative Agent may reasonably require, in each case
as shall be in form and substance reasonably acceptable to the Administrative
Agent.

 

“Mortgaged Fee
Property” means, collectively, the fee interests of the Borrower
or any Guarantor, as applicable, in such real property, improvements, fixtures
and other items of real and personal property related thereto (and the products
and proceeds thereof) as may be granted to the Administrative Agent on the
Closing Date or from time to time thereafter in accordance with the terms of
this Agreement pursuant to a Mortgage.

 

“Mortgaged
Property Support Documents” shall mean, for each Mortgaged Fee
Property, (i) the Title Policy pertaining thereto, (ii) such surveys
and flood hazard certifications thereof as the Administrative Agent may require
prepared by recognized experts in their respective fields selected by the
Borrower and reasonably satisfactory to the Administrative Agent provided
that if the Title Policy for any Mortgaged Fee Property does not contain a
blanket survey exception and contains survey coverage and survey related
endorsements which are reasonably acceptable to the Administrative Agent, then
no survey shall be required for such Mortgaged Fee Property, (iii) as to
the Mortgaged Properties located in a flood hazard area, such flood hazard
insurance as the Administrative Agent may require, (iv) such lessee’s
affidavits as the Administrative Agent may reasonably require with respect to
any such property leased to a third party, (v) such opinions of local
counsel with respect to the Mortgages, as applicable, as the Administrative
Agent may reasonably require, and (vi) such other documentation as the
Administrative Agent may reasonably require, in each case as shall be in form
and substance reasonably acceptable to the Administrative Agent.

 

“MSH Trusts”
means, collectively, each of the Mid-State Trust II, Mid-State Trust III,
Mid-State Trust IV, Mid-State Trust VI, Mid-State Trust VII, Mid-State Trust
VIII, Mid-State Trust X, Mid-State Trust XI and Mid-State Capital Corporation
2004-1 Trust entities referred to in the definition of “Mortgaged-Backed
Securities,” Mid-State Trust V, Mid-State Trust IX and Mid-State Trust XIV, and
any other special purpose entity in which Mid-State Homes and/or Walter
Mortgage Company and/or Mid-State Capital shall own all of the equity or
residual beneficial interest created and operated solely for the purpose of
issuing asset-backed securities permitted by Section 8.03(g)(iii) or
8.03(i).

 

“Mueller Group”
means Mueller Group, LLC, a Delaware limited liability company, as successor to
Mueller Group, Inc., a Delaware corporation, as a result of the Entity
Conversion.

 

26

 

“Mueller Group
Notes” means those 10% senior subordinated notes due 2012 issued
by Mueller Group pursuant to that certain Indenture dated as of April 23,
2004 by and among Mueller Group, as issuer, certain subsidiaries of Mueller
Group as guarantors thereunder, and Law Debenture Trust Company of New York, as
trustee.

 

“Mueller Group
Second Lien Notes” means those second priority senior secured
floating rate notes due 2011 issued by Mueller Group pursuant to that certain
Indenture dated as of April 23, 2004 by and among Mueller Group, as
issuer, certain subsidiaries of Mueller Group as guarantors thereunder, and Law
Debenture Trust Company of New York, as trustee.

 

“Mueller Water
Products” means Mueller Water Products, LLC, a Delaware limited
liability company, as successor to Mueller Water Products, Inc., a
Delaware corporation, as a result of the Entity Conversion.

 

“Mueller Water
Products Notes” means those 14.75% senior discount notes due
2014 issued by Mueller Water Products pursuant to that certain Indenture dated
as of April 29, 2004 by and between Mueller Water Products (f/k/a Mueller
Holdings (N.A.), Inc.), as issuer, and Law Debenture Trust Company of New
York, as trustee.

 

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

 

“Net Cash
Proceeds” means:

 

(a)           with respect to the sale of any asset
by the Borrower or any Restricted Subsidiary, the excess, if any, of (i) the
sum of cash and cash equivalents received in connection with such sale
(including any cash received by way of deferred payment pursuant to, or by
monetization of, a note receivable or otherwise, but only as and when so
received) over (ii) the sum of (A) the principal amount of any
Indebtedness that is secured by such asset and that is required to be repaid in
connection with the sale thereof (other than Indebtedness under the Loan
Documents and Indebtedness owing to the Borrower or any Restricted Subsidiary),
(B) the out-of-pocket expenses incurred by the Borrower or any Restricted
Subsidiary in connection with such sale, including any brokerage commissions,
underwriting fees and discount, legal fees, finder’s fees and other similar
fees and commissions, (C) taxes paid or reasonably estimated to be payable
by the Borrower or any Restricted Subsidiary in connection with the relevant asset
sale, and (D) the amount of any reasonable reserve required to be
established in accordance with GAAP against liabilities (other than taxes
deducted pursuant to (C) above) to the extent such reserves are (I)
associated with the assets that are the object of such sale and (II) retained
by the Borrower or any Restricted Subsidiary; provided that the amount
of any subsequent reduction of any reserve provided for in clause (D) above
(other than in connection with a payment in respect of such liability) shall
(X) be deemed to be Net Cash Proceeds of such asset sale occurring on the date
of such reduction, and (Y) immediately be applied to the prepayment of Loans in
accordance with Section 2.06(d);

 

27

 

(b)           with respect to the public and
private issuance of any Indebtedness by the Borrower or any Restricted
Subsidiary, the excess of (i) the sum of the cash and cash equivalents
received in connection with such issuance over (ii) the sum of (A) the
underwriting discounts and commissions, and all legal, accounting, printing,
rating agency, banking, title and recording fees and expenses and other
out-of-pocket expenses, incurred by the Borrower or such Restricted Subsidiary
in connection with such issuance, and (B) all taxes required to be paid or
accrued as a consequence of such issuance; and

 

(c)           with respect to the sale or issuance
of any Equity Interest by the Borrower or any Restricted Subsidiary or any
Permitted Securities Transaction described in part (b), (c) or (d) of
the definition thereof, the excess of (i) the sum of the cash and cash
equivalents received in connection with such sale or issuance over (ii) the
sum of (A) the underwriting discounts and commissions, and all legal,
accounting, printing, banking and other out-of-pocket expenses, incurred by the
Borrower, such Restricted Subsidiary or New Holdco in connection with such
issuance or sale, and (B) all taxes required to be paid or accrued as a
consequence of such issuance or sale.

 

“New Holdco”
means Mueller Holding Company, Inc., a Delaware corporation.

 

“Non-Core
Subsidiaries” means, individually or collectively as the context
may indicate, (a) Best Insurors, Inc., (b) Cardem and (c) Sloss
Industries Corporation and its Subsidiaries.

 

“Non-Mueller Subsidiaries”
means those Subsidiaries of the Borrower other than New Holdco and its
Subsidiaries (after giving effect to the Transactions).

 

“Notes”
means, collectively, the Revolving Loan Notes and the Term Loan Notes.

 

“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, Letter of Credit or Bankers’ Acceptance, or arising under
any Related Credit Arrangement, in each case whether direct or indirect
(including those 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-U.S. jurisdiction); (b) with
respect to any limited liability company, the certificate or articles of
formation or organization and operating agreement; and (c) with respect to
any partnership, joint venture, trust or other form of business entity, the
partnership, joint venture or other applicable agreement of formation or
organization and any agreement, instrument, filing or notice with respect
thereto filed in connection with its formation or organization with the
applicable Governmental Authority in the jurisdiction of its formation or
organization and, if applicable, any certificate or articles of formation or organization
of such entity.

 

28

 

“Other Taxes”
means all present or future stamp 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 the Term Loan on any
date, the aggregate outstanding principal amount thereof after giving effect to
the Borrowing of the Term Loan on the Closing Date, and any prepayments or
repayments of the Term Loan (or any Segment) occurring on such date, (ii) with
respect to Revolving Loans on any date, the aggregate outstanding principal
amount thereof after giving effect to any Revolving Borrowings and any
prepayments or repayments of Revolving Loans occurring on such date; (iii) with
respect to Swing Line Loans on any date, the aggregate outstanding principal
amount thereof after giving effect to any borrowings and prepayments or
repayments of Swing Line Loans occurring on such date; and (iv) with
respect to any L/C – BA Obligations on any date, the amount of such L/C – BA
Obligations on such date after giving effect to any L/C – BA Credit Extension
occurring on such date and any other changes in the aggregate amount of the L/C
– BA Obligations as of such date, including as a result of any reimbursements
of amounts paid under Bankers’ Acceptances or outstanding unpaid drawings under
any Letters of Credit or any reductions in the maximum amount available for
drawing under Letters of Credit taking effect on such date.

 

“Participant”
has the meaning specified in Section 11.06(d).

 

“Payment Date
Statement” means the notification Mid-State Homes and/or
Mid-State Capital receives from the relevant Trustee for each MSH Trust for any
relevant period indicating, among other items, MSH Trust collections and
distributions during such period, or any such similar statement serving the
same purpose and providing substantially the same information in substantially
the same detail.

 

“PBGC”
means the Pension Benefit Guaranty Corporation.

 

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

 

“Permitted
Securities Transaction” means any of (a) a Restricted
Payment by the Borrower to its shareholders of all or any portion of the Equity
Interests of New Holdco owned by the Borrower and made in compliance with Section 8.06(e),
(b) an initial public offering of Equity Interests of New Holdco, (c) a
secondary public offering of Equity Interests of New Holdco, (d)  the
Disposition for fair market value by the Borrower of any of its Equity
Interests of New Holdco (other than pursuant to a Restricted Payment described
in subpart (a) of this definition), so long as in the case of any transaction
or combination of transactions permitted by subparts (b), (c) and/or (d) of
this definition, the prepayment of the Term Loan required by Section 2.06(d)(vi) is
made within the time provided after the occurrence of such Permitted Securities
Transaction.

 

29

 

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

 

“Plan”
means any “employee benefit plan” (as such term is defined in Section 3(3) of
ERISA) established by the 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 7.02.

 

“Pledge
Agreement” means that certain Securities Pledge Agreement dated
as of the date hereof among the Borrower, certain Guarantors and the
Administrative Agent, as supplemented from time to time by the execution and
delivery of Pledge Joinder Agreements pursuant to Sections 3.01 and 7.12,
as the same may be otherwise supplemented (including by Pledge Agreement
Supplement).

 

“Pledge
Agreement Supplement” means the Pledge Agreement Supplement in
the form affixed as an exhibit to the Pledge Agreement.

 

“Pledged
Interests” means, in each case excluding the Voting Securities
and Subsidiary Securities of any Unrestricted Subsidiary (other than Mid-State
Capital and New Holdco), (i) the Subsidiary Securities of each of the
existing or hereafter organized or acquired Domestic Subsidiaries of the
Borrower and Direct Foreign Subsidiaries of the Borrower that at any time are
on Schedule I to the Pledge Agreement (or any similar schedule serving
the same purpose in the Pledge Agreement); (ii) all of the Subsidiary
Securities of each of the existing or hereafter organized or acquired Domestic
Subsidiaries of the Borrower that is a Material Subsidiary; (iii) all of
the Subsidiary Securities of New Holdco; and (iv) 65% of the Voting
Securities (or if the relevant Person shall own less than 65% of such Voting
Securities, then 100% of the Voting Securities owned by such Person) and 100%
of the nonvoting Subsidiary Securities of each of the existing or hereafter
organized or acquired Direct Foreign Subsidiaries of the Borrower that is a
Material Subsidiary.

 

“Pledge Joinder
Agreement” means each Pledge Joinder Agreement, substantially in
the form thereof attached to the Pledge Agreement, executed and delivered by a
Guarantor to the Administrative Agent pursuant to Section 7.12.

 

“Pro Rata
Revolving Share” means, with respect to each Revolving Lender at
any time, a fraction (expressed as a percentage, carried out to the ninth
decimal place), the numerator of which is the amount of the Revolving Credit
Commitment of such Revolving Lender at such time and the denominator of which
is the amount of the Aggregate Revolving Credit Commitments at such time; provided
that if the Aggregate Revolving Credit Commitments have been terminated at such
time, then the Pro Rata Revolving Share of each Revolving Lender shall be the
Pro Rata Revolving Share of such Revolving Lender immediately prior to such
termination and after giving effect to any subsequent assignments made pursuant
to Section 11.06.  The
initial Pro Rata Revolving Share of each Revolving Lender is set forth opposite
the name of such Revolving Lender on Schedule 2.01 or in the
Assignment and Assumption pursuant to which such Revolving Lender becomes a
party hereto, as applicable.

 

30

 

“Pro Rata Term
Share” means, with respect to each Term Loan Lender, the
percentage (carried out to the ninth decimal place) of the principal amount of
the Term Loan funded by such Term Loan Lender. 
The initial Pro Rata Term Share of each Term Loan Lender is set forth
opposite the name of such Term Loan Lender on Schedule 2.01 or in
the Assignment and Assumption pursuant to which such Term Loan Lender becomes a
party hereto, as applicable.

 

“Put Backstop
Commitment Letter” means that certain commitment letter dated as
of June 17, 2005 by and among the Borrower, Banc of America Bridge LLC,
Banc of America Securities LLC and Morgan Stanley Senior Funding, Inc.
regarding the commitments for the Put Backstop Facilities.

 

“Put Backstop
Commitment Letter Amendment” means that certain Letter Amendment
to the Commitment Letter dated as of the Closing Date by and among the
Borrower, Banc of America Bridge LLC, Banc of America Securities LLC and Morgan
Stanley Senior Funding, Inc. extending one element of the termination of
the commitments under the Put Backstop Commitment Letter for the Put Backstop
Facilities to a date that is not earlier than the date that is 60 days after
the Closing Date.

 

“Put Backstop
Facilities” means, individually or collectively as the context
may indicate, each of (a) a senior subordinated bridge facility of Mueller
Group entered into, if at all, within 60 days after the Closing Date in an
aggregate principal amount of not less than $320,000,000 for the purpose of
providing liquidity in the event that more than $25,000,000 of the existing
Mueller Group Notes are tendered in response to an offer to repurchase such
notes as a result of the consummation of the Merger, and (b) a senior
bridge facility of Mueller Water Products entered into, if at all, within 60
days after the Closing Date in an aggregate principal amount of not less than
$145,000,000 for the purpose of providing liquidity in the event that more than
$25,000,000 of the Mueller Water Products Notes are tendered in response to an
offer to repurchase such notes as a result of the consummation of the Merger.

 

“Register”
has the meaning specified in Section 11.06(c).

 

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

 

“Related Credit
Arrangements” means, collectively, Related Swap Contracts and
Related Treasury Management Arrangements.

 

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

 

“Related Swap
Contract” means all Swap Contracts that are entered into or
maintained with a Lender or Affiliate of a Lender that are not prohibited by
the express terms of the Loan Documents.

 

“Related
Treasury Management Arrangements” means all arrangements for the
delivery of treasury management services to or for the benefit of any Loan
Party which are entered into or

 

31

 

maintained
with a Lender or Affiliate of a Lender and which are not prohibited by the
express terms of the Loan Documents.

 

“Replacement
Mueller Facilities” means the senior, secured credit facilities
of Mueller Group pursuant to that certain Credit Agreement dated as of the
Closing Date by and among Mueller Group, Bank of America, as administrative
agent, Morgan Stanley, as syndication agent, and the lenders from time to time
party thereto, which such facilities refinance the Existing Mueller Credit
Agreement, and any other senior credit facility that may from time to time
replace or refinance the facilities provided by such Credit Agreement.

 

“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 Revolving Loans, a Revolving Loan Notice, (b) with
respect to a conversion or continuation of Segments, a Term Loan Interest Rate
Selection Notice, (c) with respect to an L/C - BA Credit Extension, a
Letter of Credit Application, and (d) with respect to a Swing Line Loan, a
Swing Line Loan Notice.

 

“Required ECF
Prepayment Percentage” has the meaning specified in Section 2.06(d)(iv).

 

“Required Equity
Prepayment Percentage” has the meaning specified in Section 2.06(d)(iii).

 

“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 Issuers to make L/C – BA Credit
Extensions have been terminated pursuant to Section 9.02, 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 – BA Obligations and Swing Line Loans being deemed “held” by such Lender
for purposes of this definition); provided that any Revolving Credit
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.

 

“Required
Revolving Lenders” means, as of any date of determination,
Revolving Lenders having more than 50% of the Aggregate Revolving Credit
Commitments and Outstanding Amount (including risk participations in Letters of
Credit and Swing Line Loans) under the Revolving Credit Facility; provided
that the Revolving Credit Commitment of, and the portion of the Outstanding
Amount (including risk participations in Letters of Credit and Swing Line
Loans) under the Revolving Credit Facility held or deemed held by, any
Defaulting Lender shall be excluded for purposes of making a determination of
Required Revolving Lenders.

 

“Required Term
Loan Lenders” means, as of any date of determination, Term Loan
Lenders having more than 50% of the Outstanding Amount of the Term Loan; provided
that the Outstanding Amount of the Term Loan held or deemed held by any Defaulting
Lender shall be excluded for purposes of making a determination of Required
Term Loan Lenders.

 

32

 

“Responsible
Officer” means, with respect to each Loan Party, the chief
executive officer, president, chief financial officer, treasurer, controller or
assistant treasurer of such Loan Party. 
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.

 

“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 the Borrower or any Non-Mueller 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 the Borrower’s
stockholders, partners or members (or the equivalent Person thereof).

 

“Restricted
Subsidiaries” means all Subsidiaries of the Borrower other than
the Unrestricted Subsidiaries.

 

“Revolving
Borrowing” means a borrowing consisting of simultaneous
Revolving Loans of the same Type and, in the case of Eurodollar Rate Loans,
having the same Interest Period, made by each of the Revolving Lenders pursuant
to Section 2.02.

 

“Revolving
Credit Commitment” means, as to each Revolving Lender, its
obligation to (a) make Revolving Loans to the Borrower pursuant to Section 2.02,
(b) purchase participations in L/C - BA 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 Revolving
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.

 

“Revolving
Credit Facility” means the facility described in Sections 2.02,
2.04 and 2.05 providing for Revolving Loans, Swing Line Loans,
Letters of Credit and BAs to or for the benefit of the Borrower by the
Revolving Lenders, Swing Line Lender and L/C Issuer, as the case may be, in the
maximum aggregate principal amount at any time outstanding of $225,000,000, as
adjusted from time to time pursuant to the terms of this Agreement.

 

“Revolving
Credit Maturity Date” means October 4, 2010.

 

“Revolving
Lender” means each Lender that has a Revolving Credit Commitment
or, following termination of the Revolving Credit Commitments, has Revolving
Loans outstanding or participations in an outstanding Letter of Credit, Bankers’
Acceptance or Swing Line Loan.

 

“Revolving Loan”
means a Base Rate Loan or a Eurodollar Rate Loan made to the Borrower by a
Revolving Lender in accordance with its Pro Rata Revolving Share pursuant to Section 2.02,
except as otherwise provided herein.

 

33

 

“Revolving Loan
Note” means a promissory note made by the Borrower in favor of a
Revolving Lender evidencing Revolving Loans made by such Revolving Lender,
substantially in the form of Exhibit C-2.

 

“Revolving Loan
Notice” means a notice of (a) a Revolving Borrowing, (b) a
conversion of Revolving Loans from one Type to the other, or (c) a
continuation of Eurodollar Rate Loans, pursuant to Section 2.03(a),
which, if in writing, shall be substantially in the form of Exhibit A-1.

 

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

 

“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.

 

“Secured Parties”
means, collectively, with respect to each of the Security Instruments, the
Administrative Agent, the Lenders and such other Persons for whose benefit the
Lien thereunder is conferred, as therein provided.

 

“Securities Laws”
means the Securities Act of 1933, the Exchange Act, 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.

 

“Security
Agreement” means the Security Agreement dated as of the date
hereof by the Borrower and one or more of the Guarantors to the Administrative
Agent for the benefit of the Secured Parties, substantially in the form of Exhibit I,
as supplemented from time to time by the execution and delivery of Security
Joinder Agreements pursuant to Section 7.12.

 

“Security
Instruments” means, collectively or individually as the context
may indicate, the Security Agreement (including the Security Joinder
Agreements), the Pledge Agreement (including the Pledge Joinder Agreements and
the Pledge Agreement Supplements), each Mortgage, each Mineral Rights Mortgage,
each Title Policy and each other Mortgaged Property Support Document and all other
agreements (including control agreements), instruments and other documents,
whether now existing or hereafter in effect, pursuant to which the Borrower or
any Restricted Subsidiary or other Person shall grant or convey to the
Administrative Agent or the Lenders a Lien in, or any other Person shall
acknowledge any such Lien in, property as security for all or any portion of
the Obligations or any other obligation under any Loan Document, as any of them
may be reinstated from time to time in accordance with the terms hereof and
thereof.

 

“Security
Joinder Agreement” means each Security Joinder Agreement,
substantially in the form thereof attached to the Security Agreement, executed
and delivered by a Guarantor or any other Person to the Administrative Agent
pursuant to Section 7.12.

 

34

 

“Segment”
means a portion of any Term Loan (or all thereof) with respect to which a
particular interest rate is (or is proposed to be) applicable.

 

“Senior Credit
Facility” means, collectively, the Term Loan Facility and the
Revolving Credit Facility.

 

“Serviced
Mortgage Accounts” means mortgage loans that are originated and
serviced by Persons other than the Borrower or a Subsidiary and with respect to
which Walter Mortgage Company, Walter Mortgage Servicing and/or Mid-State
Homes, each a Subsidiary of the Borrower, is providing property monitoring,
inspection, default mitigation and/or “Real Estate Owned” management services.

 

“Solvent”
means, when used with respect to any Person, that at the time of determination:

 

(a)           the fair value of its assets (both at
fair valuation and at present fair saleable value on an orderly basis) is in
excess of the total amount of its liabilities, including contingent
obligations; and

 

(b)           it is then able and expects to be
able to pay its debts as they mature; and

 

(c)           it has capital sufficient to carry on
its business as conducted and as proposed to be conducted.

 

“SPC”
has the meaning specified in Section 11.06(h).

 

“Subordinated
New Holdco Note” means that certain 9% Subordinated Note due
2013 by New Holdco in favor of Mueller Group representing a subordinated loan
from Mueller Group to New Holdco in an initial principal amount of $20,000,000,
and including a subordinated guarantee by the Borrower of the obligations of
New Holdco thereunder.

 

“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 specified, all
references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a
Subsidiary or Subsidiaries of the Borrower and shall include, without
limitation, the Unrestricted Subsidiaries.

 

“Subsidiary
Guaranty” means that certain Guaranty Agreement dated as of the
date hereof among the Guarantors (other than Mid-State Homes and Walter
Mortgage Company) and the Administrative Agent (on behalf of the Lenders)
substantially in the form of Exhibit F, as supplemented from time
to time by the execution and delivery of Guaranty Joinder Agreements pursuant
to Section 7.12, as from time to time the same may be otherwise
supplemented or amended, modified, amended and restated or replaced.

 

35

 

“Subsidiary
Securities” means the Equity Interests issued by or in any
Subsidiary, whether or not constituting a “security” under Article 8 of
the Uniform Commercial Code as in effect in any jurisdiction.

 

“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.

 

“Swap
Termination Value” means, in respect of any one or more Swap
Contracts, after taking into account the effect of any legally enforceable
netting agreement relating to such Swap Contracts, (a) for any date on or
after the date such Swap Contracts have been closed out and termination
value(s) determined in accordance therewith, such termination value(s), and (b) for
any date prior to the date referenced in clause (a), the amount(s) determined
as the mark-to-market value(s) for such Swap Contracts, as determined based
upon one or more mid-market or other readily available quotations provided by
any recognized dealer in such Swap Contracts (which may include a Lender or any
Affiliate of a Lender).

 

“Swing Line”
means the revolving credit facility made available by the Swing Line Lender
pursuant to Section 2.05.

 

“Swing Line
Borrowing” means a borrowing of a Swing Line Loan pursuant to Section 2.05.

 

“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 2.05(a).

 

“Swing Line Loan
Notice” means a notice of a Swing Line Borrowing pursuant to Section 2.05(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) $15,000,000
and (b) the Aggregate Revolving Credit Commitments.  The Swing Line Sublimit is part of, and not
in addition to, the Aggregate Revolving Credit Commitments.

 

36

 

“Syndication
Agent” means Morgan Stanley in its capacity as syndication agent
under any of the Loan Documents, or any successor syndication agent.

 

“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 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).

 

“Tax Sharing
Agreement” means that certain Tax Sharing Agreement dated as of the
Closing Date by and between New Holdco and the Borrower relating to the
Borrower’s payment of taxes imposed on New Holdco and its Subsidiaries and
their properties, income or assets.

 

“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.

 

“Term Loan”
means the loans made pursuant to the Term Loan Facility in accordance with Section 2.01.

 

“Term Loan
Facility” means the facility described in Section 2.01
providing for an advance of the Term Loan to the Borrower by the Term Loan
Lenders in the original principal amount of $450,000,000, subject to
adjustments as herein provided.

 

“Term Loan
Interest Rate Selection Notice” means the written notice
delivered by a Responsible Officer of the Borrower in connection with the
election of a subsequent Interest Period for any Eurodollar Rate Segment or the
conversion of any Eurodollar Rate Segment into a Base Rate Segment or the
conversion of any Base Rate Segment into a Eurodollar Rate Segment, which, if
in writing, shall be substantially in the form of Exhibit A-2.

 

“Term Loan
Lender” means each Lender that has a portion of the Term Loan
outstanding under the Term Loan Facility.

 

“Term Loan
Maturity Date” means (a) October 3, 2012, or (b) such
earlier date upon which the Outstanding Amounts under the Term Loan Facility,
including all accrued and unpaid interest, are paid in full in accordance with
the terms hereof.

 

“Term Loan Note”
means a promissory note made by the Borrower in favor of a Term Loan Lender
evidencing the portion of the Term Loan made by such Term Loan Lender,
substantially in the form of Exhibit C-1.

 

“Third Party Mortgage
Accounts” means certain building and installment contracts or
loans and related mortgages and instruments that (a) are originated by
Persons other than the Borrower or a Non-Mueller Subsidiary, (b) constitute
first mortgages on single-family residential real property, and (c) are
acquired by Walter Mortgage Company, Mid-State Homes or Mid-State Capital, each
a Non-Mueller Subsidiary of the Borrower.

 

37

 

“Title Policy”
means an ALTA mortgagee title policy insuring the first lien priority of a
Mortgage or Mineral Rights Mortgage, and in each case reflecting only such
Liens as are permitted under Section 8.01(a), (c), (d),
(g) or (i) or which are otherwise acceptable to the
Administrative Agent, together in each case with all endorsements reasonably
requested by the Administrative Agent.

 

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

 

“Total Revolving
Outstandings” means the aggregate Outstanding Amount of all
Revolving Loans, Swing Line Loans and L/C - BA Obligations.

 

“Transactions”
means, individually or collectively as the context may indicate, (a) the
creation of New Holdco and the transfer of the Equity Interests of US Pipe and
of JW MergerCo, Inc. thereto, (b) the Merger, (c) the US Pipe
Contribution, (d) the receipt by New Holdco of the Dividend Distribution, (e) the
entering into by New Holdco and the Borrower (as guarantor) of, and the receipt
by New Holdco of the proceeds from, the Subordinated New Holdco Note, (f) the
entering into and funding of the Replacement Mueller Facilities and the related
repayment and retirement of the Existing Mueller Credit Agreement, (g) the
consummation of each of the Entity Conversions, and (h) the entering into
of the Put Backstop Commitment Letter Amendment.

 

“Type”
means with respect to (i) a Revolving Loan, its character as a Base Rate
Loan or a Eurodollar Rate Loan, and (ii) a Segment, its character as a
Base Rate Segment or a Eurodollar Rate Segment.

 

“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 at the end of each immediately preceding
plan year that this Agreement is in effect in accordance with the assumptions
used for funding the Pension Plan pursuant to Section 412 of the Code for
the applicable plan year.

 

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

 

“Unreimbursed
Amount” has the meaning specified in Section 2.04(c)(i).

 

“Unrestricted
Subsidiaries” means (a) the entities identified on Schedule 1.01(a) hereto,
(b) each MSH Trust created after the Closing Date, (c) New Holdco and
each of its Subsidiaries, (d) Mid-State Capital, but only so long as it is
a special purpose entity that is prohibited by its Organization Documents
and/or applicable Laws from being a Guarantor, and 100% of its Equity Interests
are owned by Mid-State Holdings and constitute Pledged Interests pledged by
Mid-State Holdings to the Administrative Agent for the benefit of the Lenders,
and (e) any other Subsidiary that is a special purpose entity serving
substantially the same function as Mid-State Capital with respect to the MSH
Trusts.

 

“US Pipe”
means United States Pipe and Foundry Company, LLC, an Alabama limited liability
company, as successor to United States Pipe and Foundry Company, Inc., an
Alabama corporation, as a result of the Entity Conversion.

 

38

 

“US Pipe
Contribution” means the contribution by the Borrower of 100% of
the Equity Interests of US Pipe to New Holdco, for further distribution to
Mueller Water Products and for further contribution to Mueller Group, such that
after giving effect to all such contributions, US Pipe is a wholly-owned direct
Subsidiary of Mueller Group.

 

“Voting
Securities” means shares of capital stock issued by a
corporation, or equivalent interests in any other Person, the holders of which
are ordinarily, in the absence of contingencies, entitled to vote for the
election of directors (or persons performing similar functions) of such Person,
even if the right so to vote has been suspended by the happening of such a
contingency.

 

“Walter Mortgage
Company” means Walter Mortgage Company, a Delaware corporation.

 

“Walter Mortgage
Servicing” means Walter Mortgage Servicing, Inc., a Florida
corporation.

 

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) other than the Merger Agreement 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.”

 

39

 

(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.

 

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 the Borrower or the Required Lenders shall so
request, the Administrative Agent, the Lenders and the Borrower shall negotiate
in good faith to amend such ratio or requirement to preserve the original
intent thereof in light of such change in GAAP (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) the Borrower shall provide to the
Administrative Agent and the 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)           All defined terms
used in the calculation of the financial covenants set forth in Section 8.12
hereof (including Consolidated Capital Expenditures in the case of any
Disposition, but excluding Consolidated Capital Expenditures in the case of any
Acquisition) shall be calculated on an historical pro forma basis giving effect
(by inclusion or exclusion, as applicable), during any period of measurement
that includes the Merger or any Acquisition permitted by Section 8.13
or the US Pipe Contribution or any Disposition permitted by Section 8.05(g),
to the actual historical results of the Person so acquired or disposed.  In addition, for the fiscal year ending December 31,
2005 Excess Cash Flow, and the defined terms used therein, shall be calculated
on an historical pro forma basis giving effect to the US Pipe Contribution.

 

(d)           For the avoidance of
doubt, the term “the Borrower and its Restricted Subsidiaries” as used in the
defined terms used in the calculation of the financial covenants set forth in Section 8.12
hereof shall not include any consolidation of the assets, liabilities or
results of operations of the Unrestricted Subsidiaries in the assets,
liabilities or results of the Borrower or any Restricted Subsidiary.

 

(e)           Consolidation of
Variable Interest Entities.  Except
as expressly provided otherwise herein, all references herein to consolidated
financial statements of the Borrower and its Subsidiaries or to the
determination of any amount for the 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.

 

40

 

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

 

1.05        Times of Day.  Unless otherwise specified, all references
herein to times of day shall be references to Eastern 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.

 

ARTICLE II.

THE COMMITMENTS AND CREDIT EXTENSIONS

 

2.01        Term Loan.

 

(a)           Subject to the terms
and conditions of this Agreement, each Term Loan Lender severally agrees to
make an advance of its Pro Rata Term Share of the Term Loan to the Borrower on
the Closing Date, and from the Closing Date to the Term Loan Maturity Date,
convert and continue Segments from time to time in accordance with the terms
hereof.  The principal amount of each
Segment of the Term Loan outstanding hereunder from time to time shall bear
interest and the Term Loan shall be repayable as herein provided.  No amount of the Term Loan repaid or prepaid
by the Borrower may be reborrowed hereunder, and no subsequent advance under
the Term Loan Facility shall be allowed after the initial such advance of the
Term Loan on the Closing Date.  Segments
of the Term Loan may be Base Rate Segments or Eurodollar Rate Segments at the
Borrower’s election, as provided herein.

 

(b)           Not later than 1:00 P.M.
New York time, on the Closing Date, each Term Loan Lender shall, pursuant to
the terms and subject to the conditions of this Agreement, make the amount of
its Pro Rata Term Share of the Term Loan available by wire transfer to the
Administrative Agent.  Such wire transfer
shall be directed to the Administrative Agent at the Administrative Agent’s
Office and shall be in the form of same day funds in Dollars.  The amount so received by the Administrative
Agent shall, subject to the terms and conditions of this Agreement, including
without limitation the satisfaction of all applicable conditions in Sections
5.01 and 5.02, be made available to the Borrower by delivery of the
proceeds thereof as shall be directed by the Responsible Officer of the
Borrower and reasonably acceptable to the Administrative Agent.  The initial Borrowing of the Term Loan may be
a Eurodollar Rate Segment, a Base Rate Segment, or both; provided that
if the Borrower desires that any portion of the initial Borrowing of the Term
Loan is advanced as a Eurodollar Rate Segment, the Administrative Agent shall
make such Borrowing as a Eurodollar Rate Segment only if, not later than three
Business Days prior to the date that is then anticipated to be the Closing
Date, the

 

41

 

Administrative Agent has received from the Borrower a
Term Loan Interest Rate Selection Notice with respect thereto, together with
the Borrower’s written acknowledgement in form and substance satisfactory to
the Administrative Agent that the provisions of Section 4.05 hereof
shall apply to any failure by the Borrower to borrow on the date set forth in
such Term Loan Interest Rate Selection notice any or all of the amounts
specified in such Term Loan Interest Rate Selection Notice.

 

2.02        Revolving Loans.  Subject to the terms and conditions set forth
herein, each Revolving Lender severally agrees to make, convert and continue
Revolving Loans to the 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 Revolving Lender’s Revolving Credit Commitment; provided,
however, that after giving effect to any Revolving Borrowing, (i) the
Total Revolving Outstandings shall not exceed the Aggregate Revolving Credit
Commitments, and (ii) the aggregate Outstanding Amount of the Revolving
Loans of any Revolving Lender, plus such Lender’s Pro Rata Revolving
Share of the Outstanding Amount of all L/C - BA Obligations, plus such
Lender’s Pro Rata Revolving Share of the Outstanding Amount of all Swing Line
Loans shall not exceed such Lender’s Revolving Credit Commitment.  Within the limits of each Revolving Lender’s
Revolving Credit Commitment, and subject to the other terms and conditions
hereof, the Borrower may borrow under this Section 2.02, prepay
under Section 2.06, and reborrow under this Section 2.02.  Revolving Loans may be Base Rate Loans or
Eurodollar Rate Loans, as further provided herein.

 

2.03        Borrowings, Conversions and
Continuations of Committed Loans.

 

(a)           Each Revolving
Borrowing, each conversion of Revolving Loans or Segments of the Term Loan from
one Type to the other, and each continuation of Eurodollar Rate Loans shall be
made upon the Borrower’s irrevocable notice to the Administrative Agent, which
may be given by telephone.  Each such
notice must be received by the Administrative Agent not later than 11:00 a.m.
(i) three Business Days prior to the requested date of any Borrowing of,
conversion to or continuation of Eurodollar Rate Loans or of any conversion of
Eurodollar Rate Loans to Base Rate Loans, and (ii) on the requested date
of any Borrowing of Base Rate Loans. 
Each telephonic notice by the Borrower pursuant to this Section 2.03(a) must
be confirmed promptly by delivery to the Administrative Agent of a written
Revolving Loan Notice (as to Revolving Borrowings) or Term Loan Interest Rate
Selection Notice, appropriately completed and signed by a Responsible Officer
of the Borrower (unless such Revolving Loan Notice is being delivered by a
Swing Line Lender pursuant to Section 2.05(c) or by the
Administrative Agent on behalf of the L/C Issuer pursuant to Section 2.04(c)(i));
provided that the lack of such prompt confirmation shall not affect the
conclusiveness or binding effect of such telephonic notice.  Each Borrowing of, conversion to or
continuation of Eurodollar Rate Loans shall be in a principal amount of
$5,000,000 or a whole multiple of $1,000,000 in excess thereof.  Except as provided in Sections 2.04(c) and
2.05(c), each Borrowing of or conversion to Base Rate Loans shall be in
a principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess
thereof.  Each Revolving Loan Notice and
Term Loan Interest Rate Selection Notice (whether telephonic or written) shall
specify (i) whether the Borrower is requesting a Revolving Borrowing
(applicable to Revolving Loan Notices only), a conversion of Revolving Loans
from one Type to the other, or a continuation of Eurodollar Rate Loans, (ii) the
requested date of the Borrowing, conversion or continuation, as the case may be
(which shall be a Business Day), (iii) the

 

42

 

principal amount of Revolving Loans to be borrowed,
converted or continued, (iv) the Type of Revolving Loans to be borrowed or
to which existing Revolving Loans are to be converted, and (v) if
applicable, the duration of the Interest Period with respect thereto.  Each written Revolving Loan Notice shall be
substantially in the form of Exhibit A-1 attached hereto, and each
written Term Loan Interest Rate Selection Notice shall be substantially in the
form of Exhibit A-2 attached hereto.  If the Borrower fails to specify a Type of
Revolving Loans in a Revolving Loan Notice or if the Borrower fails to give a
timely notice requesting a conversion or continuation of Loans, then the
applicable Loans shall, subject to the last sentence of this Section 2.03(a),
be made as, or continued as, or converted to, Base Rate Loans.  Any such automatic conversion to Base Rate
Loans shall be effective as of the last day of the Interest Period then in
effect with respect to the applicable Eurodollar Rate Loans.  If the Borrower requests a Borrowing of,
conversion to, or continuation of Eurodollar Rate Loans in any such Revolving
Loan Notice or Term Loan Interest Rate Selection Notice, but fails to specify an
Interest Period, it will be deemed to have specified an Interest Period of one
month.

 

(b)           Following receipt of
a Revolving Loan Notice, the Administrative Agent shall promptly notify each
applicable Lender of its Pro Rata Revolving Share of the applicable Revolving
Loans, and if no timely notice of a conversion or continuation is provided by
the Borrower, the Administrative Agent shall notify each applicable Lender of
the details of any automatic conversion to Base Rate Loans described in the
preceding subsection.  In the case of a
Revolving Borrowing, each applicable Lender shall make the amount of its
Revolving Loan available to the Administrative Agent in immediately available
funds at the Administrative Agent’s Office not later than 1:00 p.m. on the
Business Day specified in the applicable Revolving Loan Notice.  Upon satisfaction of the applicable
conditions set forth in Section 5.02 (and, if such Borrowing is the
initial Credit Extension, Section 5.01), the Administrative Agent
shall make all funds so received available to the Borrower in like funds as
received by the Administrative Agent either by (i) crediting the account
of the Borrower on the books of Bank of America with the amount of such funds
or (ii) wire transfer of such funds, in each case in accordance with
instructions provided to (and reasonably acceptable to) the Administrative
Agent by the Borrower; provided, however, that if, on the date the Revolving
Loan Notice with respect to such Borrowing is given by the Borrower, there are
Swing Line Loans or L/C Borrowings outstanding, then the proceeds of such
Borrowing shall be applied, first, to the payment in full of any such
L/C Borrowings, second, to the payment in full of any such Swing Line
Loans, and third, to the 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 Loans
may be requested as, converted to or continued as Eurodollar Rate Loans without
the consent of the Required Revolving Lenders or the Required Term Loan
Lenders, as applicable.

 

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

 

43

 

of any change in Bank of America’s prime rate used in
determining the Base Rate promptly following the public announcement of such
change.

 

(e)           After giving effect
to all Borrowings, all conversions of Loans from one Type to the other, and all
continuations of Loans as the same Type, there shall not at any time be more
than (a) five Interest Periods in effect with respect to the Term Loan and
(b) ten Interest Periods in effect with respect to the Revolving Credit
Facility.

 

2.04        Letters of Credit and Bankers’
Acceptances.

 

(a)           The Letter of
Credit – BA Commitment.

 

(i)            Subject to the terms and conditions
set forth herein, (A) the L/C Issuer agrees, in reliance upon the
agreements of the Revolving Lenders set
forth in this Section 2.04, (1) from time to time on any
Business Day during the period from the Closing Date until the earlier to occur
of the Letter of Credit - BA Expiration Date or the termination of the Availability
Period, to issue Letters of Credit for the account of the Borrower or the Borrower and a Restricted Subsidiary,
and to amend Letters of Credit previously issued by it, in accordance with subsection (b) below,
(2) to honor drafts under the Letters of Credit; and (3) with respect
to Acceptance Credits, to create Bankers’ Acceptances in accordance with the
terms thereof and hereof, and (B) the Revolving Lenders severally agree to participate in Letters of
Credit and Bankers’ Acceptances issued for the account of the Borrower or the Borrower and a Restricted Subsidiary
and any drawings thereunder; provided that the L/C Issuer shall
not be obligated to make any L/C – BA Credit Extension with respect to any
Letter of Credit, and no Revolving Lender shall be obligated to participate in
any Letter of Credit if (A) as of the date of such L/C - BA Credit
Extension, (x) the Total Revolving Outstandings would exceed the Aggregate Revolving Credit Commitments,
(y) the aggregate Outstanding Amount of the Revolving Loans of any Revolving
Lender, plus such Revolving
Lender’s Pro Rata Revolving Share of the Outstanding Amount of all L/C -
BA Obligations, plus such Revolving Lender’s Pro Rata Revolving Share of
the Outstanding Amount of all Swing Line Loans would exceed such Revolving
Lender’s Revolving Credit Commitment, or (z) the Outstanding Amount of the L/C
- BA Obligations would exceed the Letter of Credit - BA Sublimit, or (B) as
to Acceptance Credits, the Bankers’ Acceptance created or to be created
thereunder shall not be an eligible bankers’ acceptance under Section 13
of the Federal Reserve Act (12 U.S.C. § 372).  Each request by the Borrower for the issuance
or amendment of a Letter of Credit shall be deemed to be a representation by
the Borrower that the L/C – BA 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, the Borrower’s ability to obtain Letters of
Credit shall be fully revolving, and accordingly the Borrower may, during the
foregoing period, obtain Letters of Credit to replace Letters of Credit that
have expired or that have been drawn upon and reimbursed.  All
Existing Letters of Credit and Existing Bankers’ Acceptances 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.

 

44

 

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

 

(A)          subject to Section 2.04(b)(iii),
the expiry date of such requested Letter of Credit would occur (i) as to
standby Letters of Credit, more than twelve months after the date of issuance
or last renewal, and (ii) as to commercial Letters of Credit, later than
the earlier of (1) 180 days after the date of issuance thereof and (2) 60
days before the Letter of Credit - BA Expiration Date, unless in each case the
Required Revolving Lenders have approved such expiry date;

 

(B)           the maturity date of any Bankers’
Acceptance issued under any such requested Acceptance Credit would occur
earlier than 30 or later than 120 days from date of issuance and in any event
later than 60 days before the Letter of Credit - BA Expiration Date, unless the
Required Revolving Lenders have approved such expiry date;

 

(C)           the expiry date of such requested
Letter of Credit, or the maturity date of any Bankers’ Acceptance issued under
such requested Letter of Credit, would occur after the Letter of Credit - BA Expiration
Date, unless all the Revolving Lenders have approved such expiry date;

 

(iii)          The L/C Issuer shall not be under any
obligation to issue any Letter of Credit if:

 

(A)          any order, judgment or decree of any
Governmental Authority or arbitrator shall by its terms purport to enjoin or
restrain the L/C Issuer from issuing such Letter of Credit or any related
Bankers’ Acceptance, 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 or related
bankers’ acceptances generally or such Letter of Credit or any related Bankers’
Acceptance in particular or shall impose upon the L/C Issuer with respect to
such Letter of Credit or related Bankers’ Acceptance 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
or any related Bankers’ Acceptance would violate one or more policies of the
L/C Issuer, or the creation of any related Bankers’ Acceptance would cause the
L/C Issuer to exceed the maximum amount of outstanding bankers’ acceptances
permitted by applicable Law;

 

(C)           except as otherwise agreed by the
Administrative Agent and the L/C Issuer, such Letter of Credit or related
Bankers’ Acceptance is in an initial amount less than $100,000, in the case of
a commercial Letter of Credit, or

 

45

 

$500,000, in the
case of a standby Letter of Credit, or is to be denominated in a currency other
than Dollars; or

 

(D)          a default of any Revolving Lender’s
obligations to fund under Section 2.04(c) exists or any
Revolving Lender is at such time a Defaulting Lender hereunder, unless the L/C
Issuer has entered into satisfactory arrangements with the Borrower or such
Revolving Lender to eliminate the L/C Issuer’s risk with respect to such
Revolving Lender.

 

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

 

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

 

(vi)          The L/C Issuer shall act on behalf of
the Revolving Lenders with respect to any Letters of Credit or Bankers’
Acceptance issued by it and the documents associated therewith, and the L/C
Issuer shall have all of the benefits and immunities (A) provided to the
Administrative Agent in Article X with respect to any acts taken or
omissions suffered by the L/C Issuer in connection with Letters of Credit and
Bankers’ Acceptances issued by it or proposed to be issued by it and Issuer
Documents pertaining to such Letters of Credit and Bankers’ Acceptances as
fully as if the term “Administrative Agent” as used in Article X
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; Auto-Extension Letters of Credit.

 

(i)            Each Letter of Credit shall be
issued or amended, as the case may be, upon the request of the Borrower
delivered to the L/C Issuer (with a copy to the Administrative Agent) in the
form of a Letter of Credit Application, appropriately completed and signed by a
Responsible Officer of the Borrower and,
if applicable, of the applicable Restricted Subsidiary.  Such Letter of Credit Application must be
received by the L/C Issuer and the Administrative Agent not later than 11:00 a.m.
at least two Business Days (or such later date and time as the Administrative
Agent and the L/C Issuer may agree in a particular instance in its sole
discretion) prior to the proposed issuance date or date of amendment, as the
case may be.  In the case of a request
for an initial issuance of a Letter of Credit, such Letter of Credit
Application shall specify in form and detail satisfactory to the L/C Issuer: (A) the
proposed issuance date of the requested Letter of Credit (which shall be a
Business Day); (B) the amount thereof; (C) the expiry date thereof; (D) the
name and address of the beneficiary thereof; (E) the documents to be
presented by such beneficiary in case of any drawing or presentation
thereunder; (F) the full text of any certificate to be presented by such
beneficiary in case of any drawing or presentation thereunder; and (G)

 

46

 

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
Letter of Credit 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, the Borrower shall
furnish to the L/C Issuer and the Administrative Agent such other documents and
information pertaining to such requested Letter of Credit issuance or
amendment, including any Issuer Documents, as the L/C Issuer or the
Administrative Agent may require.

 

(ii)           Promptly after receipt of any Letter
of Credit Application, the L/C Issuer will confirm with the Administrative
Agent (by telephone or in writing) that the Administrative Agent has received a
copy of such Letter of Credit Application from the Borrower and, if not, the
L/C Issuer will provide the Administrative Agent with a copy thereof.  Unless the L/C Issuer has received written
notice from any Lender, the Administrative Agent or 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 contained
in Article V 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 the Borrower or the Borrower and the
applicable Restricted 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 Revolving 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 Revolving Lender’s Pro Rata Revolving Share times
the amount of such Letter of Credit. 
Immediately upon the creation of each Bankers’ Acceptance, each
Revolving Lender shall be deemed to, and hereby irrevocably and unconditionally
agrees to, purchase from the L/C Issuer a risk participation in such Bankers’
Acceptance in an amount equal to the product of such Revolving Lender’s Pro
Rata Revolving Share times the amount of such Bankers’ Acceptance.

 

(iii)          If the Borrower so requests in any
applicable Letter of Credit Application, the L/C Issuer may, in its sole and
absolute discretion, agree to issue a Letter of Credit other than a commercial
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, the Borrower shall not be required to make a specific
request to the L/C Issuer for any such extension.  Once an Auto-Extension Letter of Credit has
been issued, the Revolving Lenders shall be deemed to have authorized (but may
not require) the L/C Issuer to permit the extension of such Letter of Credit at
any time to an expiry date not later than the Letter of Credit - BA 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

 

47

 

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 clause (ii) or
(iii) of Section 2.04(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
the Administrative Agent that the Required Revolving Lenders have elected not
to permit such extension or (2) from the Administrative Agent, any
Revolving Lender or the Borrower that one or more of the applicable conditions
specified in Section 5.02 is not then satisfied, and in each such
case directing the L/C Issuer not to permit such extension.

 

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

 

(c)           Drawings and
Reimbursements; Funding of Participations.

 

(i)            Upon receipt from the beneficiary of
any Letter of Credit of any notice of a drawing or, with respect to any
Acceptance Credit, presentation of documents under such Letter of Credit, or
any presentation for payment of a Bankers’ Acceptance, the L/C Issuer shall
notify the Borrower and the Administrative Agent thereof.  Not later than 11:00 a.m. on the date of
any payment by the L/C Issuer under a Letter of Credit or Bankers’ Acceptance
(each such date, an “Honor
Date”), the Borrower shall reimburse the L/C Issuer through the
Administrative Agent in an amount equal to the amount of such drawing or
Bankers’ Acceptance, as applicable.  If
the Borrower fails so to reimburse the L/C Issuer by such time, the
Administrative Agent shall promptly notify each Revolving Lender of the Honor
Date, the amount of the unreimbursed drawing or payment (the “Unreimbursed
Amount”), and the amount of such Revolving Lender’s Pro Rata Revolving
Share thereof.  In such event, the
Borrower shall be deemed to have requested a Revolving 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 2.03
for the principal amount of Base Rate Loans, but subject to the amount of the
unutilized portion of the Aggregate Revolving Credit Commitments and the
conditions set forth in Section 5.02 (other than the delivery of a
Revolving Loan Notice).  Any notice given
by the L/C Issuer or the Administrative Agent pursuant to this Section 2.04(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 Revolving Lender shall upon any
notice pursuant to Section 2.04(c)(i) make funds available to
the Administrative Agent for the account of the L/C Issuer at the
Administrative Agent’s Office in an amount equal to its Pro Rata Revolving
Share of the Unreimbursed Amount not later than 1:00 p.m. on the Business
Day specified in such notice by the Administrative Agent, whereupon, subject to
the provisions of Section 2.04(c)(iii), each Revolving Lender that
so makes funds available shall be deemed to have made a Base Rate Revolving
Loan to the Borrower in such amount.  The
Administrative Agent shall remit the funds so received to the L/C Issuer.

 

48

 

(iii)          With respect to any Unreimbursed
Amount that is not fully refinanced by a Revolving Borrowing of Base Rate Loans
because the conditions set forth in Section 5.02 cannot be
satisfied or for any other reason, the Borrower shall be deemed to have incurred
from the L/C Issuer an L/C – BA Borrowing in the amount of the Unreimbursed
Amount that is not so refinanced, which L/C – BA Borrowing shall be due and
payable on demand (together with interest) and shall bear interest at the
Default Rate.  In such event, each
Revolving Lender’s payment to the Administrative Agent for the account of the
L/C Issuer pursuant to Section 2.04(c)(ii) shall be deemed
payment in respect of its participation in such L/C – BA Borrowing and shall
constitute an L/C - BA Advance from such Revolving Lender in satisfaction of
its participation obligation under this Section 2.04.

 

(iv)          Until each Revolving Lender funds its
Revolving Loan or L/C - BA Advance pursuant to this Section 2.04(c) to
reimburse the L/C Issuer for any amount drawn under any Letter of Credit or
payments made on any Bankers’ Acceptance, interest in respect of such Revolving
Lender’s Pro Rata Revolving Share of such amount shall be solely for the
account of the L/C Issuer.

 

(v)           Each Revolving Lender’s obligation to
make Revolving Loans or L/C - BA Advances to reimburse the L/C Issuer for
amounts drawn under Letters of Credit and payments made on Bankers’
Acceptances, as contemplated by this Section 2.04(c), shall be
absolute and unconditional and shall not be affected by any circumstance,
including (A) any set-off, counterclaim, recoupment, defense or other
right which such Revolving Lender may have against the L/C Issuer, the Borrower
or any other Person for any reason whatsoever; (B) the occurrence or
continuance of a Default, or (C) any other occurrence, event or condition,
whether or not similar to any of the foregoing; provided, however,
that each Revolving Lender’s obligation to make Revolving Loans pursuant to
this Section 2.04(c) is subject to the conditions set forth in
Section 5.02 (other than delivery by the Borrower of a Revolving
Loan Notice).  No such making of an L/C -
BA Advance shall relieve or otherwise impair the obligation of the Borrower to
reimburse the L/C Issuer for the amount of any payment made by the L/C Issuer
under any Letter of Credit or Bankers’ Acceptance, together with interest as
provided herein.

 

(vi)          If any Revolving Lender fails to make
available to the Administrative Agent for the account of the L/C Issuer any
amount required to be paid by such Revolving Lender pursuant to the foregoing
provisions of this Section 2.04(c) by the time specified in Section 2.04(c)(ii),
the L/C Issuer shall be entitled to recover from such Revolving Lender (acting
through the Administrative Agent), on demand, such amount with interest thereon
for the period from the date such payment is required to the date on which such
payment is immediately available to the L/C Issuer at a rate per annum equal to
the greater of the Federal Funds Rate and a rate determined by the L/C Issuer
in accordance with banking industry rules on interbank compensation.  A certificate of the L/C Issuer submitted to
any Revolving Lender (through the Administrative Agent) with respect to any
amounts owing under this clause (vi) shall be conclusive absent manifest
error.

 

49

 

(d)           Repayment of
Participations.

 

(i)            At any time after the L/C Issuer has
made a payment under any Letter of Credit or Bankers’ Acceptance and has
received from any Revolving Lender such Revolving Lender’s L/C - BA Advance in
respect of such payment in accordance with Section 2.04(c), if the
Administrative Agent receives for the account of the L/C Issuer any payment in
respect of the related Unreimbursed Amount or interest thereon (whether
directly from the Borrower or otherwise, including proceeds of Cash Collateral
applied thereto by the Administrative Agent), the Administrative Agent will
distribute to such Revolving Lender its Pro Rata Revolving Share thereof (appropriately
adjusted, in the case of interest payments, to reflect the period of time
during which such Revolving Lender’s L/C - BA Advance was outstanding) in the
same funds as those received by the Administrative Agent.

 

(ii)           If any payment received by the Administrative
Agent for the account of the L/C Issuer pursuant to Section 2.04(c)(i) is
required to be returned under any of the circumstances described in Section 11.05
(including pursuant to any settlement entered into by the L/C Issuer in its
discretion), each Revolving Lender shall pay to the Administrative Agent for
the account of the L/C Issuer its Pro Rata Revolving Share thereof on demand of
the Administrative Agent, plus interest thereon from the date of such demand to
the date such amount is returned by such Revolving Lender, at a rate per annum
equal to the Federal Funds Rate from time to time in effect.  The obligations of the Revolving Lenders
under this clause shall survive the payment in full of the Obligations and the
termination of this Agreement.

 

(e)           Obligations
Absolute.  The obligation of the
Borrower to reimburse the L/C Issuer for each drawing under each Letter of
Credit and each payment under any Bankers’ Acceptance, and to repay each L/C –
BA 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 or Bankers’ Acceptance, this Agreement,
or any other agreement or instrument relating thereto;

 

(ii)           the existence of any claim,
counterclaim, set-off, defense or other right that the Borrower or any
Subsidiary may have at any time against any beneficiary or any transferee of
such Letter of Credit or Bankers’ Acceptance (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 Bankers’ Acceptance or any
agreement or instrument relating thereto, or any unrelated transaction;

 

(iii)          any draft, demand, certificate or
other document or endorsement presented under or in connection with such Letter
of Credit or Bankers’ Acceptance 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

 

50

 

or otherwise of
any document required in order to make a drawing under such Letter of Credit or
obtain payment under any Bankers’ Acceptance ;

 

(iv)          any payment by the L/C Issuer under
such Letter of Credit or Bankers’ Acceptance 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 or
Bankers’ Acceptance 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 or Bankers’ Acceptance, including any
arising in connection with any proceeding under any Debtor Relief Law; or

 

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

 

The Borrower shall promptly examine a copy of each Letter of Credit and
each amendment thereto, and each Bankers’ Acceptance,  that is delivered to it and, in the event of
any claim of noncompliance with the Borrower’s instructions or other
irregularity, the Borrower will immediately notify the L/C Issuer.  The 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 the Borrower agree that, in
paying any drawing under a Letter of Credit or making any payment under a
Bankers’ Acceptance, the L/C Issuer shall not have any responsibility to obtain
any document (other than any sight draft, certificates and documents expressly
required by the Letter of Credit) or to ascertain or inquire as to the validity
or accuracy of any such document or the authority of the Person executing or
delivering any such document.  None of
the L/C Issuer, the Administrative Agent, any of their respective Related Parties
nor any correspondent, participant or assignee of the L/C Issuer shall be
liable to any Lender for (i) any action taken or omitted in connection
herewith at the request or with the approval of the Lenders, the Revolving
Lenders, the Required Lenders or the Required Revolving 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,
Bankers’ Acceptance or Issuer Document. 
The Borrower hereby assumes all risks of the acts or omissions of any
beneficiary or transferee with respect to its use of any Letter of Credit or
Bankers’ Acceptance; provided, however, that this assumption is
not intended to, and shall not, preclude the Borrower’s pursuing such rights
and remedies as it may have against the beneficiary or transferee at law or
under any other agreement.  None of the
L/C Issuer, the Administrative Agent, any of their respective Related Parties,
nor any correspondent, participant or assignee of the L/C Issuer, shall be
liable or responsible for any of the matters described in clauses (i) through
(v) of Section 2.04(e); provided, however,
that anything in such clauses to the contrary notwithstanding, the Borrower may
have a claim against the L/C Issuer, and the L/C Issuer may be liable to the
Borrower, to the extent, but only to the extent, of any direct, as opposed to
consequential or exemplary, damages suffered by the Borrower which the Borrower
proves were caused by the L/C Issuer’s willful misconduct or gross negligence
or the L/C Issuer’s willful

 

51

 

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 or to honor any Bankers’ Acceptance presented for payment in
strict compliance with its terms and conditions.  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 endorsing, transferring or
assigning or purporting to endorse, transfer or assign a Letter of Credit or
Bankers’ Acceptance or the rights or benefits thereunder or proceeds thereof,
in whole or in part, which may prove to be invalid or ineffective for any
reason.

 

(g)           Cash Collateral.  Upon the request of the Administrative Agent,
(i) if the L/C Issuer has honored any full or partial drawing request
under any Letter of Credit or made any payment under any Bankers’ Acceptance
and such drawing has resulted in an L/C – BA Borrowing, or (ii) if, as of
the Letter of Credit - BA Expiration Date, any Letter of Credit for any reason
remains outstanding and partially or wholly undrawn, any Bankers’ Acceptance
for any reason remains outstanding, or any L/C – BA Obligation for any reason
remains outstanding, then in each such case the Borrower shall immediately Cash
Collateralize the then Outstanding Amount of all L/C - BA Obligations (in an
amount equal to such Outstanding Amount determined as of the date of such L/C
Borrowing or the Letter of Credit - BA Expiration Date, as the case may
be).  Sections 2.06 and 9.02(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 the Administrative Agent, for
the benefit of the L/C Issuer and the Revolving Lenders, as collateral for the
L/C - BA Obligations, cash or deposit account balances pursuant to documentation
in form and substance satisfactory to the Administrative Agent and the L/C
Issuer (which documents are hereby consented to by the Revolving Lenders).  Derivatives of such term have corresponding
meanings.  The Borrower hereby grants to
the Administrative Agent, for the benefit of the L/C Issuer and the Revolving 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, non-interest bearing deposit accounts at Bank of
America.

 

(h)           Applicability of
ISP and UCP.  Unless otherwise
expressly agreed by the L/C Issuer and the Borrower when a Letter of Credit is
issued (including any such agreement applicable to an Existing Letter of Credit),
(i) the rules of the ISP shall apply to each standby Letter of
Credit, and (ii) the rules of the Uniform Customs and Practice for
Documentary Credits, as most recently published by the International Chamber of
Commerce at the time of issuance shall apply to each commercial Letter of
Credit.

 

(i)            Letter of Credit
– BA Fees.  Subject to the provisions
of the last sentence of this subsection (i), the Borrower shall pay to the
Administrative Agent for the account of each Revolving Lender in accordance
with its Pro Rata Revolving Share (i) a
Letter of Credit – BA Fee for each commercial Letter of Credit and each Bankers’
Acceptance equal to 50% of the Applicable Rate times the daily maximum
amount available to be drawn under such Letter of Credit (whether or not such
maximum amount is then in effect under such Letter of Credit) or the maximum
stated amount of such Bankers’ Acceptance, as the case may be, and (ii) a
Letter of Credit – BA Fee for each standby
Letter of Credit equal to the Applicable Rate times the daily

 

52

 

maximum amount available to be drawn under such Letter
of Credit (whether or not such maximum amount is then in effect 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.  Such Letter of Credit – BA Fees shall be
computed on a quarterly basis in arrears. 
Such Letter of Credit – BA Fees accrued through the last day of each
fiscal quarter of the Borrower and shall be due and payable on the fifteenth
(or the next Business Day after the fifteenth, if the fifteenth is not a
Business Day) of each January, April, July and
October, commencing with the first such date to occur after the issuance
of such Letter of Credit or Bankers’ Acceptance (as the case may be), on the
Letter of Credit - BA Expiration Date and thereafter on demand.  If there is any change in the Applicable Rate
during any quarter, the daily maximum amount of each Letter of Credit and
Bankers’ Acceptance shall be computed and multiplied by the Applicable Rate
separately for each period during such quarter that such Applicable Rate was in
effect.  At all times that the Default
Rate shall be applicable to any Loans pursuant to Section 2.09(b),
the Letter of Credit – BA Fees payable under this subsection (i) shall
accrue and be payable at the Default Rate.

 

(j)            Fronting Fee and
Documentary and Processing Charges Payable to L/C Issuer.  The Borrower shall pay directly to the L/C
Issuer for its own account a fronting fee with respect to each Letter of Credit
and each Bankers’ Acceptance issued by the L/C Issuer in the amount of 0.125%
times the daily maximum amount available to be drawn under such Letter of
Credit (whether or not such maximum amount is then in effect under such Letter
of Credit) or the maximum stated amount of such Bankers’ Acceptance, as the
case may be.  Such fronting fees shall be
computed on a quarterly basis in arrears. 
Such fronting fee shall accrue through the last day of each fiscal
quarter of the Borrower and shall be due and payable on the fifteenth (or the
next Business Day after the fifteenth, if the fifteenth is not a Business Day)
of each January, April, July and October, commencing with the first such
date to occur after the issuance of such Letter of Credit or Bankers’
Acceptance, as applicable, on the Letter of Credit - BA Expiration Date and
thereafter on demand.  For purposes of
computing the daily amount available to be drawn under any Letter of Credit,
the amount of such Letter of Credit shall be determined in accordance with Section 1.06.  In addition, the 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 and bankers’ acceptances issued by
it as from time to time in effect.  Such
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 Document, the
terms hereof shall control.

 

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

 

53

 

2.05        Swing
Line Loans.

 

(a)           The Swing Line.  Subject to the terms and conditions set forth
herein, the Swing Line Lender agrees, in reliance upon the agreements of the
other Lenders set forth in this Section 2.05, to make loans (each
such loan, a “Swing Line Loan”) in Dollars to the 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
Pro Rata Revolving Share of the Outstanding Amount of Revolving Loans and L/C -
BA Obligations of the Revolving Lender acting as Swing Line Lender, may exceed
the amount of such Revolving Lender’s Revolving Credit Commitment; provided,
however, that after giving effect to any Swing Line Loan, (i) the
Total Revolving Outstandings shall not exceed the Aggregate Revolving Credit
Commitments, and (ii) the aggregate Outstanding Amount of the Revolving
Loans of any Revolving Lender, plus such Revolving Lender’s Pro Rata
Revolving Share of the Outstanding Amount of all L/C - BA Obligations, plus
such Revolving Lender’s Pro Rata Revolving Share of the Outstanding Amount of
all Swing Line Loans shall not exceed such Revolving Lender’s Revolving Credit
Commitment, and provided, further, that the Borrower shall not
use the proceeds of any Swing Line Loan to refinance any outstanding Swing Line
Loan.  Within the foregoing limits, and
subject to the other terms and conditions hereof, the Borrower may borrow under
this Section 2.05, prepay under Section 2.06, and
reborrow under this Section 2.05. 
Each Swing Line Loan shall be a Base Rate Revolving Loan.  Immediately upon the making of a Swing Line
Loan, each Revolving Lender shall be deemed to, and hereby irrevocably and
unconditionally agrees to, purchase from the Swing Line Lender a risk
participation in such Swing Line Loan in an amount equal to the product of such
Revolving Lender’s Pro Rata Revolving Share times the amount of such
Swing Line Loan.

 

(b)           Borrowing Procedures.  Each Swing Line Borrowing shall be made upon
the Borrower’s irrevocable notice to the Swing Line Lender and the
Administrative Agent, which may be given by telephone. Each such notice must be
received by the Swing Line Lender and the Administrative Agent not later than
2:00 p.m. on the requested borrowing date, and shall specify (i) the
amount to be borrowed, which shall be a minimum of $500,000 and integral multiples of $100,000 in excess thereof, and
(ii) the requested borrowing date, which shall be a Business Day.  Each such telephonic notice must be confirmed
promptly by delivery to the Swing Line Lender and the Administrative Agent of a
written Swing Line Loan Notice, appropriately completed and signed by a
Responsible Officer of the Borrower. 
Promptly after receipt by the Swing Line Lender of any telephonic Swing
Line Loan Notice, the Swing Line Lender will confirm with the Administrative
Agent (by telephone or in writing) that the Administrative Agent has also received
such Swing Line Loan Notice and, if not, the Swing Line Lender will notify the
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 the Administrative Agent (including at
the request of any Lender) prior to 3:00 p.m. on the date of the proposed
Swing Line Borrowing (A) directing the 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 2.05(a), or (B) that one or more of
the applicable conditions specified in Article V is not then
satisfied, then, subject to the terms and conditions hereof, the 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

 

54

 

Loan available to the Borrower at its office by crediting the account of the Borrower on the books of
the Swing Line Lender in immediately available funds.

 

(c)           Refinancing of Swing
Line Loans.

 

(i)            The
Swing Line Lender at any time in its sole and absolute discretion may request,
on behalf of the Borrower (which hereby irrevocably authorizes the Swing Line
Lender to so request on its behalf), that each Revolving Lender make a Base
Rate Revolving Loan in an amount equal to such Revolving Lender’s Pro Rata
Revolving Share 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 Revolving Loan Notice for purposes
hereof) and in accordance with the requirements of Section 2.03,
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 Revolving Credit Commitments and the conditions set forth in Section 5.02.  The Swing Line Lender shall furnish the
Borrower with a copy of the applicable Revolving Loan Notice promptly after
delivering such notice to the Administrative Agent.  Each Revolving Lender shall make an amount
equal to its Pro Rata Revolving Share of the amount specified in such Revolving
Loan Notice available to the Administrative Agent in immediately available
funds for the account of the Swing Line Lender at the Administrative Agent’s
Office not later than 1:00 p.m. on the day specified in such Revolving
Loan Notice, whereupon, subject to Section 2.05(c)(ii), each
Revolving Lender that so makes funds available shall be deemed to have made a
Base Rate Revolving Loan to the Borrower in such amount.  The Administrative Agent shall remit the
funds so received to the Swing Line Lender.

 

(ii)           If
for any reason any Swing Line Loan cannot be refinanced by such a Revolving
Borrowing in accordance with Section 2.05(c)(i), the request for
Base Rate Revolving Loans submitted by the Swing Line Lender as set forth
herein shall be deemed to be a request by the Swing Line Lender that each of
the Revolving Lenders fund its risk participation in the relevant Swing Line
Loan and each Revolving Lender’s payment to the Administrative Agent for the
account of the Swing Line Lender pursuant to Section 2.05(c)(i) shall
be deemed payment in respect of such participation.

 

(iii)          If
any Revolving Lender fails to make available to the Administrative Agent for
the account of the Swing Line Lender any amount required to be paid by such
Revolving Lender pursuant to the foregoing provisions of this Section 2.05(c) by
the time specified in Section 2.05(c)(i), the Swing Line Lender
shall be entitled to recover from such Revolving Lender (acting through the
Administrative Agent), on demand, such amount with interest thereon for the
period from the date such payment is required to the date on which such payment
is immediately available to the Swing Line Lender at a rate per annum equal to
the greater of the Federal Funds Rate and a rate determined by the Swing Line
Lender in accordance with banking industry rules on interbank
compensation.  A certificate of the Swing
Line Lender submitted to any Revolving Lender (through the Administrative
Agent) with respect to any amounts owing under this clause (iii) shall be
conclusive absent manifest error.

 

55

 

(iv)          Each
Revolving Lender’s obligation to make Revolving Loans or to purchase and fund
risk participations in Swing Line Loans pursuant to this Section 2.05(c) shall
be absolute and unconditional and shall not be affected by any circumstance,
including (A) any set-off, counterclaim, recoupment, defense or other
right which such Revolving Lender may have against the Swing Line Lender, the
Borrower or any other Person for any reason whatsoever, (B) the occurrence
or continuance of a Default, or (C) any other occurrence, event or
condition, whether or not similar to any of the foregoing; provided, however,
that each Revolving Lender’s obligation to make Revolving Loans pursuant to
this Section 2.05(c) is subject to the conditions set forth in
Section 5.02.  No such
funding of risk participations shall relieve or otherwise impair the obligation
of the Borrower to repay Swing Line Loans, together with interest as provided
herein.

 

(d)           Repayment of
Participations.

 

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

 

(ii)           If
any payment received by the Swing Line Lender in respect of principal or
interest on any Swing Line Loan is required to be returned by the Swing Line
Lender under any of the circumstances described in Section 11.05
(including pursuant to any settlement entered into by the Swing Line Lender in
its discretion), each Revolving Lender shall pay to the Swing Line Lender its
Pro Rata Revolving Share thereof on demand of the 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.  The Administrative Agent will make such
demand upon the request of the Swing Line Lender.  The obligations of the 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.  The Swing Line
Lender shall be responsible for invoicing the Borrower for interest on the
Swing Line Loans.  Until each Revolving
Lender funds its Base Rate Revolving Loan or risk participation pursuant to
this Section 2.05 to refinance such Lender’s Pro Rata Revolving
Share of any Swing Line Loan, interest in respect of such Pro Rata Revolving
Share shall be solely for the account of the Swing Line Lender.

 

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

 

2.06        Prepayments.

 

(a)           The Borrower may, upon
notice to the Administrative Agent, at any time or from time to time
voluntarily prepay Loans under the Revolving Credit Facility or the Term Loan

 

56

 

Facility in whole or in part without premium or
penalty; provided that (i) such notice must be received by the
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 Loans; (ii) any prepayment of
Eurodollar Rate Loans under any such credit facility shall be in a principal
amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof; and (iii) any
prepayment of Base Rate Loans under any such credit facility shall be in a
principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess
thereof or, in each case, the entire principal amount thereof then
outstanding.  Each such notice shall
specify the date and amount of such prepayment, the credit facility to which
the prepayment is to be applied, and the Type(s) of Loans to be prepaid.  Prepayments of the Term Loan shall be applied
pro rata to remaining installments of the scheduled amortization of the Term
Loan Facility.  The Administrative Agent
will promptly notify each applicable Lender of its receipt of each such notice,
and of the amount of such Lender’s ratable share of such prepayment.  If such notice is given by the Borrower, the
Borrower shall make such prepayment and the payment amount specified in such
notice shall be due and payable on the date specified therein.  Any prepayment of a Eurodollar Rate Loan
shall be accompanied by all accrued interest on the amount prepaid, together
with any additional amounts required pursuant to Section 4.05.  Each such prepayment shall be applied to the
Loans of the applicable Lenders in accordance with their Pro Rata Revolving
Shares and Pro Rata Term Shares, as applicable.

 

(b)           The Borrower may, upon
notice to the Swing Line Lender (with a copy to the 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 the Swing Line Lender and the 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 $500,000 or a whole multiple
of $100,000 in excess thereof.  Each such
notice shall specify the date and amount of such prepayment.  If such notice is given by the Borrower, the
Borrower shall make such prepayment and the payment amount specified in such
notice shall be due and payable on the date specified therein.

 

(c)           If for any reason the
Total Revolving Outstandings at any time exceed the Aggregate Revolving Credit
Commitments then in effect, the Borrower shall immediately prepay Revolving
Loans and/or Swing Line Loans and/or Cash Collateralize the L/C - BA
Obligations in an aggregate amount equal to such excess; provided, however,
that the Borrower shall not be required to Cash Collateralize the L/C - BA
Obligations pursuant to this Section 2.06(c) unless after the
prepayment in full of the Revolving Loans and Swing Line Loans, the Total
Revolving Outstandings exceed the Aggregate Revolving Credit Commitments then
in effect.

 

(d)           In addition to any
required payments of principal of the Term Loan and any optional payments of
principal of the Term Loan and the Revolving Loans effected under subsection (a) above,
the Borrower shall make the following required prepayments, each such payment
to be made to the Administrative Agent for the benefit of the applicable
Lenders within the time period specified below:

 

(i)            At
any time after the aggregate Net Cash Proceeds from all issuances of
Indebtedness permitted by Section 8.03(i) and all Dispositions
permitted by Section 8.05(f)(i) after the Closing Date has
reached $75,000,000, the Borrower shall make, or

 

57

 

shall cause each
applicable Restricted Subsidiary to make, a prepayment of the Outstanding
Amount of the Term Loan in an amount equal to one hundred percent (100%) of any
further Net Cash Proceeds (including any portion of the Net Cash Proceeds
thereof that causes the aggregate Net Cash Proceeds to exceed the $75,000,000
threshold) of (A) each private or public issuance of Indebtedness of the
Borrower or any Restricted Subsidiary permitted by Section 8.03(i),
and (B) each Disposition permitted by Section 8.05(f)(i).  Each such prepayment will be made within ten (10) Business
Days of receipt of such Net Cash Proceeds and upon not less than five (5) Business
Days’ prior written notice to the Administrative Agent, which notice shall
include a certificate of a Responsible Officer of the Borrower setting forth in
reasonable detail the calculations utilized in computing the Net Cash Proceeds
of such issuance or Disposition.

 

(ii)           The
Borrower shall make, or shall cause each applicable Restricted Subsidiary to
make, a prepayment of the Outstanding Amount of the Term Loan (A) in an
amount equal to one hundred percent (100%) of the Net Cash Proceeds of each
private or public issuance of Indebtedness of the Borrower or any Restricted
Subsidiary other than Indebtedness permitted under Section 8.03,
and (B) in an amount equal to one hundred percent (100%) of the Net Cash
Proceeds of each private or public issuance of Indebtedness of the Borrower or
any Restricted Subsidiary permitted by Section 8.03(l), but
excluding any Net Cash Proceeds used or to be used, in the good faith judgment
of the Administrative Agent, for the purpose of financing one or more
Acquisitions or Restricted Payments permitted hereunder.  Each prepayment required to be made pursuant
to this Section 2.06(d)(ii) shall be made within ten (10) Business
Days of receipt of such Net Cash Proceeds and upon not less than five (5) Business
Days’ prior written notice to the Administrative Agent, which notice shall
include a certificate of a Responsible Officer of the Borrower setting forth in
reasonable detail the calculations utilized in computing the Net Cash Proceeds
of such issuance; provided that despite the application of this Section 2.06(d)(ii) to
any issuance of Indebtedness that is not otherwise permitted under this
Agreement, nothing in this Section 2.06(d)(ii) shall be deemed
to permit any Indebtedness not expressly permitted under this Agreement or to
constitute a waiver or cure of any Default or Event of Default that arises as a
result of the incurrence of Indebtedness that is not permitted under this
Agreement.

 

(iii)          The
Borrower shall make, or shall cause each applicable Restricted Subsidiary to
make, a prepayment of the Outstanding Amount of the Term Loan in an amount
equal to the Required Equity Prepayment Percentage (defined below) of the Net
Cash Proceeds of each private or public issuance of Equity Interests of the
Borrower or any Restricted Subsidiary. 
Each such prepayment will be made within ten (10) Business Days of
receipt of such Net Cash Proceeds and upon not less than five (5) Business
Days’ prior written notice to the Administrative Agent, which notice shall
include a certificate of a Responsible Officer of the Borrower setting forth in
reasonable detail the calculations utilized in computing the Net Cash Proceeds
of such issuance.  Notwithstanding the
application of this Section 2.06(d)(iii) to any issuance of
Equity Interests that is not otherwise permitted under this Agreement, nothing
in this Section 2.06(d)(iii) shall be deemed to permit any
issuance of Equity Interests of the Borrower or any Restricted Subsidiary not
expressly permitted under this Agreement or to constitute a waiver or cure of
any Default or Event of Default that arises as a result of the issuance of

 

58

 

any such Equity
Interest that is not permitted under this Agreement.  For purposes of this Section 2.06(d)(iii),
the term “Required
Equity Prepayment Percentage” means 50%, provided that
such prepayment shall only be required to be made at the 50% level to the
extent that the amount of Consolidated Senior Secured Indebtedness, as reduced
by giving effect to such prepayment at the 50% level, would result in a
Consolidated Senior Secured Leverage Ratio greater than or equal to 2.00 to
1.00, and shall thereafter be made by substituting “25%” for “50%”, provided
further that if the Required Equity Prepayment Percentage is 25%
(including as applied to a portion of a prepayment for which the 50% rate
applied to the first portion) then such prepayment shall only be required to be
made at the 25% level to the extent that the amount of Consolidated Senior
Secured Indebtedness, as reduced by giving effect to such prepayment at the 25%
level, would result in a Consolidated Senior Secured Leverage Ratio greater
than or equal to 1.00 to 1.00, and shall thereafter be made by substituting “0%”
for “25%”.

 

(iv)          Within
ten Business Days after financial statements have been delivered pursuant to Section 7.01(a) and
the related Compliance Certificate has been delivered pursuant to Section 7.02(b),
the Borrower shall make a prepayment of the Outstanding Amount of the Term Loan
in an amount equal to the Required ECF Prepayment Percentage (defined below) of
Excess Cash Flow for the fiscal year covered by such financial statements; provided
that for the fiscal year of the Borrower ending December 31, 2005, the
prepayment required by this Section 2.06(d)(iv) will be equal
to the Required Prepayment Percentage of the ratable portion of Excess Cash
Flow for such fiscal year from the Closing Date to December 31, 2005, with
Excess Cash Flow (and the elements thereof) being calculated pro forma for the
US Pipe Contribution in accordance with Section 1.03(c).  For purposes of this Section 2.06(d)(iv),
the term “Required ECF
Prepayment Percentage” means 75%, provided that such
prepayment shall only be required to be made at the 75% level to the extent
that the amount of Consolidated Senior Secured Indebtedness, as reduced by
giving effect to such prepayment at the 75% level, would result in a
Consolidated Senior Secured Leverage Ratio greater than or equal to 2.00 to
1.00, and shall thereafter be made by substituting “50%” for “75%”, provided
further that if the Required ECF Prepayment Percentage is 50% then such
prepayment shall only be required to be made at the 50% level to the extent
that the amount of Consolidated Senior Secured Indebtedness, as reduced by
giving effect to such prepayment at the 50% level, would result in a
Consolidated Senior Secured Leverage Ratio greater than or equal to 1.00 to
1.00, and shall thereafter be made by substituting “0%” for “50%”.

 

(v)           In
the event that the aggregate Net Cash Proceeds from a Disposition of any single
Non-Core Subsidiary, whether in one or a series of related transactions,
permitted by Section 8.05(g)(ii)(A) exceeds $25,000,000, the
Borrower shall make, or shall cause each applicable Restricted Subsidiary to
make, a prepayment in an amount equal to one hundred percent (100%) of any
further Net Cash Proceeds (including any portion of the Net Cash Proceeds
thereof that causes the aggregate Net Cash Proceeds to exceed the $25,000,000
threshold) from each such Disposition. 
Each such prepayment will be made within ten (10) Business Days of
receipt of such Net Cash Proceeds and upon not less than five (5) Business
Days’ prior written notice to the Administrative Agent, which notice shall
include a certificate of a Responsible Officer of the Borrower

 

59

 

setting forth in
reasonable detail the calculations utilized in computing the Net Cash Proceeds
of such Disposition.

 

(vi)          In
the event that there shall occur any Permitted Securities Transaction described
in parts (b), (c) and/or (d) of the definition thereof, the Borrower
shall make, or shall cause each applicable Restricted Subsidiary to make, a
prepayment in an amount equal to one hundred percent (100%) of the Net Cash
Proceeds from each such Permitted Securities Transaction (or combination
thereof occurring substantially simultaneously) received by the Borrower, but
in any event in an amount not less than fifty percent (50%) of the aggregate
Net Cash Proceeds from such Permitted Securities Transaction(s).  Each such prepayment will be made within ten (10) Business
Days of receipt of such Net Cash Proceeds and upon not less than five (5) Business
Days’ prior written notice to the Administrative Agent, which notice shall
include a certificate of a Responsible Officer of the Borrower setting forth in
reasonable detail the calculations utilized in computing the Net Cash Proceeds
of such Permitted Securities Transaction(s).

 

Each
prepayment of the Term Loan required under this Section 2.06(d) shall
be applied pro rata to remaining installments of the scheduled amortization of
the Term Loan Facility (including the scheduled payment of all remaining
Outstanding Amounts of the Term Loan on the Term Loan Maturity Date).

 

(e)           Any prepayment of a
Eurodollar Rate Loan under this Section 2.06 shall be accompanied
by all accrued interest thereon, together with any additional amounts required
pursuant to Section 4.05. 
Each prepayment under this Section 2.06 shall be applied to
the Loans of the applicable Lenders in accordance with their Pro Rata Term
Shares or Pro Rata Revolving Shares, as applicable.

 

2.07        Termination
or Reduction of Commitments.  The
Borrower may, upon notice to the Administrative Agent, terminate the Aggregate
Revolving Credit Commitments, or from time to time permanently reduce the
Aggregate Revolving Credit Commitments; provided that (i) any such
notice shall be received by the Administrative Agent not later than 11:00 a.m.
five 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, or the entire remaining
Aggregate Revolving Credit Commitments, (iii) the Borrower shall not
terminate or reduce the Aggregate Revolving Credit Commitments if, after giving
effect thereto and to any concurrent prepayments hereunder, the Total Revolving
Outstandings would exceed the Aggregate Revolving Credit Commitments, and (iv) if,
after giving effect to any reduction of the Aggregate Revolving Credit
Commitments, the Letter of Credit - BA Sublimit or the Swing Line Sublimit
exceeds the amount of the Aggregate Revolving Credit Commitments, such sublimit
shall be automatically reduced by the amount of such excess.  The Administrative Agent will promptly notify
the Lenders of any such notice of termination or reduction of the Aggregate
Revolving Credit Commitments.  Any
reduction of the Aggregate Revolving Credit Commitments shall be applied to the
Revolving Credit Commitment of each Revolving Lender according to its Pro Rata
Revolving Share.  All commitment fees
accrued until the effective date of any termination of the Aggregate Revolving
Credit Commitments shall be paid on the effective date of such termination.

 

60

 

2.08        Repayment
of Loans.

 

(a)           The Borrower shall
repay to the Revolving Lenders on the Revolving Credit Maturity Date the
aggregate principal amount of Revolving Loans outstanding on such date.

 

(b)           The Borrower shall
repay each Swing Line Loan on the earlier to occur of (i) the date ten
Business Days after such Loan is made and (ii) the Revolving Credit
Maturity Date.

 

(c)           The Borrower shall
repay the principal amount of the Term Loan in twenty-seven (27) consecutive quarterly
installments equal to $1,125,000 on the last Business Day of each March, June, September and
December, commencing on December 31, 2005, and in a final installment
equal to the aggregate Outstanding Amount of the Term Loan on the Term Loan
Maturity Date, in each case subject to adjustments for prepayments made
pursuant to Section 2.06.

 

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 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 plus
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 plus the Applicable Rate.

 

(b)           If any amount payable
by the Borrower under any Loan Document is not paid when due (without regard to
any applicable grace periods), whether at stated maturity, by acceleration or
otherwise, such amount shall thereafter bear interest at a fluctuating interest
rate per annum at all times equal to the Default Rate to the fullest extent
permitted by applicable Laws. 
Furthermore, while any Event of Default exists, the Borrower shall pay
interest, at a fluctuating interest rate per annum at all times equal to the
Default Rate to the fullest extent permitted by applicable Laws, on the
principal amount of all (a) outstanding Obligations under the Revolving
Credit Facility upon the affirmative vote of the Required Revolving Lenders, (b) outstanding Obligations under the Term Loan Facility upon the
affirmative vote of the Required Term Loan Lenders and (c) other
Obligations hereunder upon the affirmative vote of the Required Lenders.  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.

 

61

 

2.10        Fees.  In addition to certain fees described in
subsections (i) and (j) of Section 2.04:

 

(a)           Commitment Fee.  The Borrower shall pay to the Administrative
Agent for the account of each Revolving Lender in accordance with its Pro Rata
Revolving Share, a commitment fee (the “Commitment Fee”) equal to the Applicable Rate
times the actual daily amount by which the Aggregate Revolving Credit
Commitments exceed the sum of (i) the Outstanding Amount of Revolving
Loans and (ii) the Outstanding Amount of L/C - BA Obligations.  The Commitment Fee shall accrue at all times
during the Availability Period, including at any time during which one or more
of the conditions in Article V is not met, and the amount accrued
through the end of each fiscal quarter of the Borrower shall be due and payable
in arrears on the fifteenth (or the next Business Day after the fifteenth, if
the fifteenth is not a Business Day) of each January, April, July and
October, commencing with the first such date to occur after the Closing Date,
and on the Revolving Credit Maturity Date. 
The Commitment 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.

 

(b)           Other Fees.  The Borrower shall pay to the Arrangers, the
Administrative Agent and each of the Lenders, for their own respective
accounts, such fees as shall have been separately agreed upon in writing (including
in the Joint Fee Letter and in the Agency Fee Letter, as applicable) in the
amounts and at the times so specified, including an annual administrative fee
payable to the Administrative Agent. 
Such fees shall be fully earned when paid and shall not be refundable
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 the
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 the Administrative Agent in the ordinary
course of business.  The accounts or
records maintained by the Administrative Agent and each Lender shall be
conclusive absent manifest error of the amount of the Credit Extensions made by
the Lenders to the Borrower and the interest and payments thereon.  Any failure to so record or any error in
doing so shall not, however, limit or otherwise affect the obligation of the
Borrower hereunder to pay any amount owing with respect to the
Obligations.  In the event of any
conflict between the accounts and records maintained by any Lender and the
accounts and records of the

 

62

 

Administrative Agent in respect of such matters, the
accounts and records of the Administrative Agent shall control in the absence
of manifest error.  Upon the request of
any Lender made through the Administrative Agent, the Borrower shall execute
and deliver to such Lender (through the Administrative Agent) a Note, which
shall evidence such Lender’s Loans in addition to such accounts or
records.  Each Lender may attach
schedules to its Note and endorse thereon the date, Type (if applicable),
amount and maturity of its Loans and payments with respect thereto.

 

(b)           In addition to the
accounts and records referred to in subsection (a), each Lender and the
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 the Administrative Agent and the accounts
and records of any Lender in respect of such matters, the accounts and records
of the Administrative Agent shall control in the absence of manifest error.

 

(c)           Entries made in good
faith by the Administrative Agent in the Register pursuant to Section 2.12(b),
and by each Lender in its account or accounts pursuant to Section 2.12(a),
shall be prima facie evidence of the amount of principal and interest due and
payable or to become due and payable from the Borrower to, in the case of the
Register, each Lender and, in the case of such account or accounts, such
Lender, under this Agreement and the other Loan Documents, absent manifest
error; provided that the failure of the Administrative Agent or any
Lender to make an entry, or any finding that any entry is incorrect, in the
Register or such account or accounts shall not limit or otherwise affect the
Obligations.

 

2.13        Payments
Generally; Administrative Agent’s Clawback.

 

(a)           General.  All payments to be made by the Borrower shall
be made without condition or deduction for any counterclaim, defense,
recoupment or setoff.  Except as
otherwise expressly provided herein, all payments by the Borrower hereunder
shall be made to the Administrative Agent, for the account of the respective
Lenders to which such payment is owed, at the Administrative Agent’s Office in
Dollars and in immediately available funds not later than 2:00 p.m. on the
date specified herein.  The
Administrative Agent will promptly distribute to such Lender its ratable share
(or other applicable share as provided herein) of such payment in like funds as
received by wire transfer to such Lender’s Lending Office.  All payments received by the Administrative
Agent after 2:00 p.m. 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 the 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 the Administrative Agent shall have
received notice from a Lender prior to the proposed date of any Borrowing of
Eurodollar Rate Loans (or, in the case of any Borrowing of Base Rate Loans,
prior to 12:00 noon on the date of such Borrowing) that such Lender will not
make available to the Administrative Agent such Lender’s share of such
Borrowing, the Administrative Agent may assume that such Lender has made such
share available on

 

63

 

such date in
accordance with Section 2.03 (or, in the case of a Borrowing of
Base Rate Loans, that such Lender has made such share available in accordance
with and at the time required by Section 2.03) and may, in reliance
upon such assumption, make available to the Borrower a corresponding
amount.  In such event, if a Lender has
not in fact made its share of the applicable Borrowing available to the
Administrative Agent, then the applicable Lender and the Borrower severally
agree to pay to the 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 the Borrower to but
excluding the date of payment to the 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 the Administrative Agent in accordance with
banking industry rules on interbank compensation and (B) in the case
of a payment to be made by the Borrower, the interest rate applicable to Base
Rate Loans; provided that the Administrative Agent agrees that it shall
first make a request (which request may be telephonic) for payment from such
applicable Lender before making a request with respect thereto to the
Borrower.  If the Borrower and such
Lender shall pay such interest to the Administrative Agent for the same or an
overlapping period, the Administrative Agent shall promptly remit to the
Borrower the amount of such interest paid by the Borrower for such period.  If such Lender pays its share of the
applicable Borrowing to the Administrative Agent, then the amount so paid shall
constitute such Lender’s Revolving Loan or Pro Rata Term Share of the Term
Loan, as applicable, included in such Borrowing.  Any payment by the Borrower shall be without
prejudice to any claim the Borrower may have against a Lender that shall have
failed to make such payment to the Administrative Agent.

 

(ii)           Payments
by Borrower; Presumptions by Administrative Agent.  Unless the Administrative Agent shall have
received notice from the Borrower prior to the date on which any payment is due
to the Administrative Agent for the account of the Lenders or the L/C Issuer
hereunder that the Borrower will not make such payment, the Administrative
Agent may assume that the Borrower has made such payment on such date in
accordance herewith and may, in reliance upon such assumption, distribute to
the Lenders or the L/C Issuer, as the case may be, the amount due.  In such event, if the Borrower has not in
fact made such payment, then each of the Lenders or the L/C Issuer, as the case
may be, severally agrees to repay to the 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 the Administrative Agent, at the greater of the Federal Funds
Rate and a rate determined by the Administrative Agent in accordance with
banking industry rules on interbank compensation.

 

A notice of the Administrative Agent to any Lender or the 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 the Administrative Agent funds for any Loan to be made by
such Lender as provided in the foregoing provisions of this Article II,
and such funds are not made available to the Borrower by

 

64

 

the Administrative Agent because the conditions to the
applicable Credit Extension set forth in Article V are not
satisfied or waived in accordance with the terms hereof, the Administrative
Agent shall return such funds (in like funds as received from such Lender) to
such Lender, without interest.

 

(d)           Obligations of
Lenders Several.  The obligations of
the Lenders hereunder to make Revolving Loans, to fund their respective Pro
Rata Term Shares of the Term Loan, to fund participations in Letters of Credit
and Swing Line Loans and to make payments pursuant to Section 11.04(c) are
several and not joint.  The failure of
any Lender to make any Revolving Loan, to fund its Pro Rata Term Share of the
Term Loan B, to fund any participation in Letters of Credit and Swing Line
Loans or to make any payment under Section 11.04(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 Revolving Loan, to fund its Pro Rata
Term Share of the Term Loan, to purchase its participations in Letters of
Credit and Swing Line Loans or to make its payment under Section 11.04(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 by Lenders.  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
Revolving Loans or the portion of the Term Loan made by it, or the
participations in L/C – BA Obligations or in Swing Line Loans held by it
resulting in such Lender’s receiving payment of a proportion of the aggregate
amount of such Loans or participations and accrued interest thereon greater
than its ratable share thereof as provided herein, then the Lender receiving
such greater proportion shall (a) notify the Administrative Agent of such
fact, and (b) purchase (for cash at face value) participations in the
applicable Revolving Loans and/or portion of the Term Loan made by it and/or
subparticipations in the participations in L/C – BA Obligations or Swing Line
Loans of the other Lenders, as the case may be, or make such other adjustments
as shall be equitable, so that the benefit of all such payments shall be shared
by the applicable Lenders ratably in accordance with the aggregate amount of
principal of and accrued interest on their respective Revolving Loans, portion
of the Term Loan and/or 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 the 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
Revolving Loans, portion of the Term Loan or subparticipations in L/C – BA Obligations
or Swing Line Loans to any

 

65

 

assignee or
participant, other than to the Borrower or any Subsidiary thereof (as to which
the provisions of this Section shall apply).

 

The Borrower 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 the Borrower rights of setoff and
counterclaim with respect to such participation as fully as if such Lender were
a direct creditor of the Borrower in the amount of such participation.

 

ARTICLE III.

SECURITY

 

3.01        Security.  As security for the full and timely payment
and performance of all Obligations, the Borrower shall, and shall cause all
other Loan Parties to, on or before the Closing Date, do or cause to be done
all things necessary in the opinion of the Administrative Agent and its counsel
to grant to the Administrative Agent for the benefit of the Secured Parties a duly
perfected first priority security interest in all Collateral subject to no
prior Lien or other encumbrance or restriction on transfer, except as expressly
permitted hereunder.  Without limiting
the foregoing, on the Closing Date the Borrower shall deliver, and shall cause
each Guarantor (other than, solely with respect to the Security Agreement,
Mid-State Homes and Walter Mortgage Company) to deliver, to the Administrative
Agent, in form and substance reasonably acceptable to the Administrative Agent,
(a) if such party has rights in any Pledged Interests (i) the Pledge
Agreement which shall pledge all of the Pledged Interests held by such party to
the Administrative Agent for the benefit of the Secured Parties, and (ii) if
such Pledged Interests are in the form of certificated securities, such
certificated securities, together with undated stock powers or other
appropriate transfer documents indorsed in blank pertaining thereto, (b) the
Security Agreement, which shall pledge to the Administrative Agent for the
benefit of the Secured Parties certain personal property of the Borrower and
the Guarantors more particularly described therein, (c) if such party has
a fee interest in any of the real property set forth on Schedule 3.01,
a Mortgage with respect thereto and such Mortgaged Property Support Documents
as the Administrative Agent may request, (d) if such party has any
leasehold interest in, or other grant of, mineral rights relating to the Coal
mining or natural gas operations of any Coal Mining Entity, a Mineral Rights
Mortgage with respect thereto and such Mortgaged Coal Property Support
Documents as the Administrative Agent may request, (e) Uniform Commercial
Code financing statements in form, substance and number as requested by the
Administrative Agent, reflecting the Lien in favor of the Secured Parties on
the Pledged Interests and all other Collateral, and shall take such further
action and deliver or cause to be delivered such further documents as required
by the Security Instruments or otherwise as the Administrative Agent may
request to effect the transactions contemplated by this Article III.  The Borrower shall also, and shall cause each
Guarantor, to pledge to the Administrative Agent for the benefit of the Secured
Parties (and as appropriate to reaffirm its prior pledge of) all of the Pledged
Interests acquired or created after the Closing Date and held by such party, or
otherwise acquired by such party and not theretofore pledged to the
Administrative Agent for the benefit of the Secured Parties, and to deliver to
the Administrative Agent all of the documents and instruments in connection
therewith as are required pursuant to the terms of Section 7.12 and
of the Security Instruments.

 

66

 

3.02        Further Assurances.

 

(a)           At the request of the
Administrative Agent, the Borrower will or will cause all other Loan Parties,
as the case may be, from time to time to execute, by its duly authorized
officers, alone or with the Administrative Agent, any certificate, instrument,
financing statement, control agreement, statement or document, or to procure
any such certificate, instrument, statement or document, or to take such other
action (and pay all connected costs) which the Administrative Agent reasonably
deems necessary from time to time to create, continue or preserve the liens and
security interests in Collateral (and the perfection and priority thereof) of
the Administrative Agent contemplated hereby and by the other Loan Documents
and specifically including all Collateral acquired by the Borrower or other
Loan Party after the Closing Date.

 

(b)           Without limiting the
generality of the foregoing subsection (a), in the event that the Borrower
or any Loan Party (or any Domestic Subsidiary that is required to be a Loan
Party pursuant to the terms of this Agreement) shall acquire (including as a
result of the creation or acquisition of a Restricted Subsidiary or an existing
Subsidiary becoming a Restricted Subsidiary, in each case in accordance with
the terms of this Agreement) any fee interest in real property having a fair
market value as determined in good faith by the Administrative Agent or the
Borrower in excess of $10,000,000 in the aggregate, the Borrower or the
applicable Domestic Subsidiary shall, promptly after such acquisition, execute
and deliver to the Administrative Agent a Mortgage in favor of the
Administrative Agent, as mortgagee for the ratable benefit of the Lenders, and
provide the Administrative Agent with evidence of the completion (or reasonably
satisfactory arrangements for the completion) of all recordings and filings of
such Mortgage as may be necessary or, in the reasonable opinion of the
Administrative Agent, desirable to effectively create a valid, perfected, first
priority Lien, subject to Liens permitted by Section 8.01(a), (c),
(d), (g), (h) or (i), against the properties
purported to be covered thereby, including evidence of the payment of any
filing or recordation fees or taxes, and deliver to the Administrative Agent
such Mortgaged Property Support Documents as the Administrative Agent may
request with respect to the property purported to be covered by such Mortgage;

 

(c)           Without limiting the
generality of the foregoing subsection (a), in the event that the Borrower
or any other Loan Party (or any Domestic Subsidiary that is required to be a
Loan Party pursuant to the terms of this Agreement) shall acquire (including as
a result of the creation or acquisition of a Restricted Subsidiary or an
existing Subsidiary becoming a Restricted Subsidiary, in each case in
accordance with the terms of this Agreement) any fee, leasehold or grantee
interest in any mineral rights relating or adjacent to the Coal or natural gas
operations of any Coal Mining Entity or otherwise acquired for the commercial
value of such mineral rights, the Borrower shall or shall cause the applicable
Domestic Subsidiary to, promptly after such acquisition, (i) notify the
Administrative Agent of such acquisition and provide to the Administrative
Agent the location, acreage, facility size and use of such real property or
mineral rights interest, (ii) if requested by the Administrative Agent,
execute and deliver to the Administrative Agent a Mineral Rights Mortgage in
favor of the Administrative Agent, as mortgagee for the ratable benefit of the
Lenders, and provide the Administrative Agent with evidence of the completion
(or reasonably satisfactory arrangements for the completion) of all recordings
and filings of such Mineral Rights Mortgage as may be necessary or, in the reasonable
opinion of the Administrative Agent, desirable to effectively create a valid,
perfected, first priority Lien, subject to Liens permitted by Section 8.01(a),
(c), (d), (g), (h) or (i), against the
properties and interests purported to be covered thereby, including evidence of
the payment

 

67

 

of any filing or recordation fees or taxes, and
deliver to the Administrative Agent such Mortgaged Coal Property Support
Documents as the Administrative Agent may request with respect to the property
purported to be covered by such Mineral Rights Mortgage;

 

(d)           Without limiting the
generality of the foregoing subsection (a), prior to entering into any new
lease of real property or renewing any existing lease of real property
following the Closing Date, the Borrower shall, and shall cause each of its
Domestic Subsidiaries that are or are required to be Loan Parties to, use its
(and their) best efforts (which shall not require the expenditure of cash or
the making of any material concessions under the relevant lease) to deliver to
the Administrative Agent a waiver, in form and substance reasonably
satisfactory to the Administrative Agent, executed by the lessor of any real
property that is to be leased by the Borrower or such Domestic Subsidiary for a
term in excess of one year in any state which by statute grants such lessor a “landlord’s”
(or similar) Lien which is superior to the Administrative Agent’s, to the
extent the value of any personal property of the Borrower and its Domestic
Subsidiaries that are Restricted Subsidiaries held or to be held at such leased
property exceeds (or it is anticipated that the value of such personal property
will, at any point in time during the term of such leasehold term, exceed) $12,000,000.

 

(e)           The Administrative
Agent is hereby irrevocably authorized to execute (if necessary) and file or
cause to be filed, with or if permitted by applicable law without the signature
of the Borrower or any Loan Party appearing thereon, all Uniform Commercial
Code financing statements reflecting the Borrower or any other Loan Party as “debtor”
and the Administrative Agent as “secured party”, and continuations thereof and
amendments thereto, as the Administrative Agent reasonably deems necessary or
advisable to give effect to the transactions contemplated hereby and by the
other Loan Documents.

 

3.03        Information Regarding Collateral.  The Borrower represents, warrants and
covenants that (a) the chief executive office of the Borrower and each
other Person providing Collateral pursuant to a Security Instrument (each, a “Grantor”) at the
Closing Date is located at the address or addresses specified on Schedule 3.03,
and (b) Schedule 3.03 contains a true and complete list of (i) the
exact legal name, jurisdiction of formation, and address within the United
States of each Grantor and of each other Person that has effected any merger or
consolidation with a Grantor or contributed or transferred to a Grantor any
property constituting Collateral at any time since January 1, 2000
(excluding Persons making sales in the ordinary course of their businesses to a
Grantor of property constituting inventory in the hands of such seller), (ii) the
exact legal name, jurisdiction of formation, jurisdiction identification number,
and each location of the chief executive office of each Grantor at any time
since January 1, 2000, (iii) each location within the United States
in which material goods constituting Collateral are or have been located since April 17,
2003 (together with the name of each owner of the property located at such
address if not the applicable Grantor, and a summary description of the
relationship between the applicable Grantor and such Person), and (iv) each
trade name, trademark or other trade style used by any Grantor since April 17,
2003 and the purposes for which it was used. 
The Borrower shall not change, and shall not permit any other Grantor to
change, its name, jurisdiction of formation (whether by reincorporation, merger
or otherwise), the location of its chief executive office or any location
specified in clause (b)(iii) of the immediately preceding sentence, or use
or permit any other Grantor to use, any additional trade name, trademark or
other trade style, except upon giving not less than thirty (30) days’ prior
written notice to the Agent and taking or causing

 

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to be taken all such action at Borrower’s or such
other Grantor’s expense as may be reasonably requested by the Administrative
Agent to perfect or maintain the perfection of the Lien of the Administrative
Agent in Collateral.

 

ARTICLE IV.

TAXES, YIELD PROTECTION AND ILLEGALITY

 

4.01        Taxes.

 

(a)           Payments Free of
Taxes.  Any and all payments by or on
account of any obligation of the 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 the Borrower
shall be required by applicable law to deduct any Indemnified Taxes (including
any Other Taxes) from such payments, then (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) the
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) the Borrower shall make such deductions and (iii) the
Borrower shall timely pay the full amount deducted to the relevant Governmental
Authority in accordance with applicable law.

 

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

 

(c)           Indemnification by
the Borrower.  The Borrower shall
indemnify the Administrative Agent, each Lender and the L/C Issuer, within 30
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 the
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 the Borrower by a Lender or
the L/C Issuer (with a copy to the Administrative Agent), or by the
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,
the Borrower shall deliver to the Administrative Agent the original or a
certified copy of a receipt issued by such Governmental Authority evidencing
such payment or other evidence of such payment reasonably satisfactory to the
Administrative Agent.

 

(e)           Status of Lenders.  Any Foreign Lender that is entitled to an
exemption from or reduction of withholding tax under the law of the
jurisdiction in which the Borrower is resident for tax purposes, or any treaty
to which such jurisdiction is a party, with respect to payments hereunder or
under any other Loan Document shall deliver to the Borrower (with a copy to the

 

69

 

Administrative Agent), at the time or times prescribed
by applicable law or reasonably requested by the Borrower or the Administrative
Agent, such properly completed and executed documentation prescribed by
applicable law as will permit such payments to be made without withholding or
at a reduced rate of withholding.  In
addition, any Lender, if requested by the Borrower or the Administrative Agent,
shall deliver such other documentation prescribed by applicable law or
reasonably requested by the Borrower or the Administrative Agent as will enable
the Borrower or the Administrative Agent to determine whether or not such
Lender is subject to backup withholding or information reporting requirements.

 

Without limiting the generality of the foregoing, in the event that the
Borrower is resident for tax purposes in the United States, any Foreign Lender
shall deliver to the Borrower and the Administrative Agent (in such number of
copies as shall be requested by the recipient) on or prior to the date on which
such Foreign Lender becomes a Lender under this Agreement (and from time to
time thereafter upon the request of the Borrower or the Administrative Agent,
but only if such Foreign Lender is legally entitled to do so), whichever of the
following is applicable:

 

(i)            duly
completed copies of Internal Revenue Service Form W-8BEN claiming
eligibility for benefits of an income tax treaty to which the United States is
a party,

 

(ii)           duly
completed copies of Internal Revenue Service Form W-8ECI,

 

(iii)          in
the case of a Foreign Lender claiming the benefits of the exemption for
portfolio interest under section 881(c) of the Code, (x) a
certificate to the effect that such Foreign Lender is not (A) a “bank”
within the meaning of section 881(c)(3)(A) of the Code, (B) a “10
percent shareholder” of the Borrower within the meaning of section 881(c)(3)(B) of
the Code, or (C) a “controlled foreign corporation” described in section 881(c)(3)(C) of
the Code and (y) duly completed copies of Internal Revenue Service Form W-8BEN,
or

 

(iv)          any
other form prescribed by applicable law as a basis for claiming exemption from
or a reduction in United States Federal withholding tax duly completed together
with such supplementary documentation as may be prescribed by applicable law to
permit the Borrower to determine the withholding or deduction required to be
made.

 

(f)            Treatment of
Certain Refunds.  If the
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 the Borrower or with respect to which the
Borrower has paid additional amounts pursuant to this Section, it shall pay to
the Borrower an amount equal to such refund (but only to the extent of indemnity
payments made, or additional amounts paid, by the 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 the 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 the Borrower, upon the request of the 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 the Administrative Agent, such Lender or the L/C Issuer in

 

70

 

the event the 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 the 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.

 

4.02        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 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 the Borrower through the Administrative Agent, any obligation of
such Lender to make or continue Eurodollar Rate Loans or to convert Base Rate
Loans to Eurodollar Rate Loans shall be suspended until such Lender notifies
the Administrative Agent and the Borrower that the circumstances giving rise to
such determination no longer exist.  Upon
receipt of such notice, the Borrower shall, upon demand from such Lender (with
a copy to the 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, the Borrower
shall also pay accrued interest on the amount so prepaid or converted.

 

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

 

4.04        Increased
Costs; Reserves on Eurodollar Rate
Loans.

 

(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 contemplated by
Section 4.04(e)) or the L/C Issuer;

 

71

 

(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 Bankers’ Acceptance, any
participation in a Letter of Credit or a Bankers’ Acceptance, 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 4.01 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;

 

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 Bankers’ Acceptance (or of maintaining its obligation to
participate in or to issue any Letter of Credit or Bankers’ Acceptance), 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, the 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 Revolving Credit Commitments of such Lender
or the Loans made by, or participations in Letters of Credit or Bankers’
Acceptances held by, such Lender, or the Letters of Credit or Bankers’
Acceptances 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 pursuant to subsection (c) below the 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 the Borrower shall be conclusive absent manifest error.  The 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 Business Days after receipt thereof.

 

72

 

(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 the 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 six months prior to the date that such Lender or
the L/C Issuer, as the case may be, notifies the 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 six-month period referred to above shall be extended to include the
period of retroactive effect thereof).

 

(e)           Reserves
on Eurodollar Rate Loans.  The Borrower shall pay to each Lender, as
long as such Lender shall be required to maintain reserves with respect to
liabilities or assets consisting of or including Eurocurrency funds or deposits
(currently known as “Eurocurrency
liabilities”), additional
interest on the unpaid principal amount of each Eurodollar Rate Loan equal to
the actual costs of such reserves allocated to such Loan by such Lender (as
determined by such Lender in good faith, which determination shall be
conclusive), which shall be due and payable on each date on which interest is
payable on such Loan, provided the Borrower shall have received at least
10 days’ prior notice (with a copy to the Administrative Agent) of such
additional interest from such Lender.  If
a Lender fails to give notice 10 days prior to the relevant Interest Payment
Date, such additional interest shall be due and payable 10 days from receipt of
such notice.

 

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

 

(a)           any continuation,
conversion, payment or prepayment 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);

 

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

 

(c)           any assignment of a
Eurodollar Rate Loan on a day other than the last day of the Interest Period
therefor as a result of a request by the Borrower pursuant to Section 11.13;

 

including any loss or expense arising from the liquidation or
reemployment of funds obtained by it to maintain such Loan or from fees payable
to terminate the deposits from which such funds were obtained.  The Borrower shall also pay any customary
administrative fees charged by such Lender in connection with the foregoing.

 

For purposes of calculating amounts payable by the Borrower to the
Lenders under this Section 4.05, each Lender shall be deemed to
have funded each Eurodollar Rate Loan made by it at the Eurodollar Rate for
such Loan by a matching deposit or other borrowing in the London

 

73

 

interbank
eurodollar market for a comparable amount and for a comparable period, whether
or not such Eurodollar Rate Loan was in fact so funded.

 

4.06        Mitigation
Obligations; Replacement of Lenders.

 

(a)           Designation of a
Different Lending Office.  If any
Lender requests compensation under Section 4.04, or the Borrower is
required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 4.01,
or if any Lender gives a notice pursuant to Section 4.02, 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 4.01 or 4.04,
as the case may be, in the future, or eliminate the need for the notice
pursuant to Section 4.02, 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.  The Borrower hereby agrees to pay all
reasonable costs and expenses incurred by any Lender in connection with any
such designation or assignment.

 

(b)           Replacement of
Lenders.  If any Lender requests
compensation under Section 4.04, or if the Borrower is required to
pay any additional amount to any Lender or any Governmental Authority for the
account of any Lender pursuant to Section 4.01, the Borrower may
replace such Lender in accordance with Section 11.13.

 

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

 

ARTICLE V.

CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

 

5.01        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)           The Administrative
Agent’s receipt of the following, each of which shall be originals or
facsimiles (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 the Administrative Agent and its legal counsel:

 

(i)            executed
counterparts of this Agreement, each of the Security Instruments, the Subsidiary
Guaranty and the Mid-State Homes Guaranty, sufficient in number for
distribution to the Administrative Agent, each Lender and the Borrower;

 

(ii)           Revolving
Loan Notes executed by the Borrower in favor of each Revolving Lender
requesting such a Note;

 

74

 

(iii)          Term
Loan Notes executed by the Borrower in favor of each Term Loan Lender
requesting such a Note;

 

(iv)          such
certificates of resolutions or other action, incumbency certificates (including
specimen signatures), and/or other certificates of Responsible Officers of each
Loan Party as the 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;

 

(v)           such
documents and certifications as the Administrative Agent may reasonably require
to evidence that each Loan Party is duly organized or formed, and that each of
the Borrower and each Guarantor is validly existing, in good standing and
qualified to engage in business in (A) its jurisdiction of formation and (B) in
Alabama if the Borrower or such Loan Party is formed in a jurisdiction other
than Alabama but has assets or operations in Alabama, including in each such
case certified copies of each Loan Party’s Organization Documents, shareholders’
agreements, certificates of good standing and/or qualification to engage in
business;

 

(vi)          a
favorable opinion of Simpson Thacher & Bartlett LLP, counsel to the
Loan Parties, and appropriate local counsel to the Loan Parties, each addressed
to the Administrative Agent and each Lender, as to the matters set forth in Exhibit G
and such other matters concerning the Loan Parties and the Loan Documents as
the Required Lenders may reasonably request;

 

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

 

(viii)        a
certificate signed by a Responsible Officer of the Borrower certifying:

 

(A)          that
the conditions specified in Sections 5.02(a) and (b) have
been satisfied,

 

(B)           as
to the matters described in Section 5.01(d);

 

(C)           that
none of the Merger Documents (including any condition to consummation of the
Merger) has been altered, amended, waived or otherwise changed or supplemented
since their execution on June 17, 2005, in any respect materially adverse
to the Lenders, except to the extent agreed to by prior written consent of the
Arrangers, which consent shall not be unreasonably withheld;

 

(D)          that
the Merger has been consummated prior to, or is being consummated substantially
simultaneously with, the Closing Date, in accordance

 

75

 

with the terms of
the Merger Documents (only as amended, altered, waived or otherwise changed in
compliance with subpart (D) above);

 

(E)           that
there has been no material adverse change in the facts and information
regarding the Loan Parties as represented to date;

 

(ix)           evidence
satisfactory to the Arrangers of the consummation, prior to or substantially
simultaneously with the occurrence of the Closing Date, of each of the
following, in each case in compliance with all applicable laws and regulations,
with the receipt of all necessary material governmental, shareholder and third
party consents (including Hart-Scott-Rodino clearance) and approvals:  (A) the creation of New Holdco and the
transfer of the Equity Interests of US Pipe and of JW Mergerco thereto, such
that after giving effect thereto (but prior to giving effect to the Merger and
to the US Pipe Contribution) New Holdco is a direct subsidiary of the Borrower
and JW MergerCo, Inc. and US Pipe are direct Subsidiaries of New Holdco, (B) the
Entity Conversions, including the filing of any certificates of conversion
required or requested by the Administrative Agent, (C) the US Pipe
Contribution in accordance with the terms of, and such that after giving effect
thereto US Pipe is a “Restricted Subsidiary” under, the Indentures for both the
Mueller Water Products Notes and the Mueller Group Notes, and otherwise on
terms and conditions reasonably satisfactory to the Arrangers,  (D) the receipt by New Holdco of not
less than $400,000,000 of net proceeds from the Dividend Distribution and of
not less than $20,000,000 of net proceeds from the Subordinated New Holdco
Note, and the application of all such proceeds as consideration for the Merger,
(E) the refinancing (in an amount sufficient, inter alia, to support the
tender, defeasance or satisfaction and discharge of the Mueller Group Second
Lien Notes), termination and payment in full of all obligations outstanding
under the Existing Mueller Credit Agreement with the Replacement Mueller
Facilities, and (F) the Put Backstop Commitment Letter Amendment;

 

(x)            a
certificate signed by the Chief Financial Officer of the Borrower certifying
that after giving effect to the entering into of the Loan Documents, the
termination of the Existing Credit Agreement, and the consummation of all of
the Transactions, the Borrower and its Subsidiaries, measured on a consolidated
basis, are Solvent;

 

(xi)           evidence
satisfactory to the Arrangers that
the Existing Credit Agreement has been or concurrently with the Closing Date is
being terminated and all Liens securing obligations under the Existing Credit
Agreement have been or concurrently with the Closing Date are being released;

 

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

 

(xiii)         an
initial Revolving Loan Notice, if any;

 

(xiv)        an
initial Term Loan Interest Rate Selection Notice, if any;

 

76

 

(xv)         delivery
of Uniform Commercial Code financing statements suitable in form and substance
for filing in all places required by applicable law to perfect the Liens of the
Administrative Agent under the Security Instruments as a first priority Lien as
to items of Collateral in which a security interest may be perfected by the
filing of financing statements, and such other documents and/or evidence of
other actions as may be reasonably necessary under applicable law to perfect
the Liens of the Administrative Agent under such Security Instruments as a
first priority Lien in and to such other Collateral as the Administrative Agent
may require, including without limitation the delivery by the Borrower of all
certificates evidencing Pledged Interests, accompanied in each case by duly
executed stock powers (or other appropriate transfer documents) in blank
affixed thereto;

 

(xvi)        Mineral
Rights Mortgages and such Mortgaged Coal Property Support Documents as the
Administrative Agent may request with respect to each lease or other grant of
mineral rights as to which the Borrower or a Guarantor is a lessee or grantee,
with such exceptions as are agreed by the Arrangers;

 

(xvii)       with
respect to those parcels of real property set forth on Schedule 3.01,
a Mortgage and such Mortgaged Property Support Documents as the Administrative
Agent may request;

 

(xviii)      Uniform
Commercial Code search results showing only those Liens as are acceptable to
the Lenders;

 

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

 

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

 

(c)           Unless waived by the
Administrative Agent, the Borrower shall have paid all reasonable fees, charges
and disbursements of counsel to the Administrative Agent to the extent invoiced
prior to or on the Closing Date, plus such additional amounts of such reasonable
fees, charges and disbursements as shall constitute its reasonable estimate of
such reasonable 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 the Borrower and the
Administrative Agent).

 

(d)           The
Administrative Agent shall be satisfied that after giving effect to the initial
Credit Extension hereunder, the remaining amount available to be drawn under
the Revolving Credit Facility shall not be less than $112,500,000.

 

Without limiting the generality of the provisions of Section 10.04,
for purposes of determining compliance with the conditions specified in this Section 5.01,
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 the Administrative Agent shall have received
notice from such Lender prior to the proposed Closing Date specifying its
objection thereto.

 

77

 

5.02        Conditions
to all Credit Extensions.  The
obligation of each Lender to honor any Request for Credit Extension (other than
a Revolving Loan Notice or Term Loan Interest Rate Selection Notice requesting
only a conversion of Revolving Loans or Segments, as applicable, to the other
Type or a continuation of Eurodollar Rate Loans or Eurodollar Rate Segments, as
applicable) is subject to the following conditions precedent:

 

(a)           The representations and
warranties of the Borrower and each other Loan Party contained in Article VI
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 5.02, the representations
and warranties contained in subsections (a) and (b) of Section 6.05
shall be deemed to refer to the most recent statements furnished pursuant to
clauses (a) and (b), respectively, of Section 7.01.

 

(b)           No Default or Event of
Default shall have occurred and be continuing, or would result from such
proposed Credit Extension or from the application of the proceeds thereof.

 

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

 

(d)           No limitation exists on
any Borrowing or Credit Extension contained in Article II.

 

Each Request for Credit Extension (other than a Revolving Loan Notice
or Term Loan Interest Rate Selection Notice requesting only a conversion of
Revolving Loans or Segments, as applicable, to the other Type or a continuation
of Eurodollar Rate Loans or Eurodollar Rate Segments, as applicable) submitted
by the Borrower shall be deemed to be a representation and warranty that the
conditions specified in Sections 5.02(a) and (b) have
been satisfied on and as of the date of the applicable Credit Extension.

 

ARTICLE VI.

REPRESENTATIONS AND WARRANTIES

 

The Borrower represents and warrants to the Administrative Agent and
the Lenders that:

 

6.01        Existence,
Qualification and Power; Compliance with Laws.  Each Loan Party (a) is a corporation,
partnership or limited liability company duly organized or formed, validly
existing and in good standing under the Laws of the jurisdiction of its
incorporation, organization or formation, (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 and to consummate the Transactions, (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.

 

78

 

6.02        Authorization;
No Contravention.  The execution,
delivery and performance by each Loan Party of each Loan Document to which such
Person is party, and the consummation of the Transactions, have been duly
authorized by all necessary corporate or other organizational action, and do
not and will not (a) contravene the terms of the Organization Documents of
any such Person or of any Person whose Equity Interests are being pledged; (b) conflict
with or result in any breach or contravention of, or the creation of any Lien
under (i) any Contractual Obligation to which such Person or any Person
whose Equity Interests are being pledged is a party or (ii) any order,
injunction, writ or decree of any Governmental Authority or any arbitral award
to which such Person or its property is subject; or (c) violate any Law.

 

6.03        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 or the consummation of the Transactions.

 

6.04        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 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.

 

6.05        Financial
Statements; No Material Adverse Effect.

 

(a)           The Audited Financial
Statements and the related consolidating balance sheets and financial
statements of the Borrower and its Subsidiaries (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 the Borrower and its Subsidiaries (or, with respect
to the consolidating financial statements, of the Borrower or the applicable
Subsidiary) as of the date thereof and its or 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 the Borrower and its Subsidiaries (or, with respect to
the consolidating financial statements, of the Borrower or the applicable
Subsidiary) as of the date thereof, including liabilities for taxes, material
commitments and Indebtedness.

 

(b)           The unaudited
consolidated balance sheet of the Borrower and its Subsidiaries dated as of June 30,
2005, the related consolidated statements of income or operations, shareholders’
equity and cash flows for the fiscal quarter ended on that date, and the
related consolidating balance sheets and financial statements of the Borrower
and its Subsidiaries (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 the Borrower and its Subsidiaries (or, with respect to the consolidating
financial statements, of the Borrower or the applicable Subsidiary) as of the
date thereof and its or 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 audit adjustments.

 

79

 

(c)           Since the later of (i) the
date of the Audited Financial Statements and (ii) the date of the most
recent audited financial statements delivered pursuant to Section 7.01(a),
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 Borrower and its
Non-Mueller Subsidiaries, on a
consolidated basis, have no material indebtedness or other liabilities, direct
or contingent, including liabilities for taxes, material commitments and
Indebtedness, except to the extent (i) set forth in the most recent of (A) the
June 30, 2005 financial statements of the Borrower and its Subsidiaries
and (B) the financial statements most recently delivered pursuant to Section 7.01(a) or
(b), (ii) set forth on Schedule 8.03, or (iii) incurred
since the date referred to in subsection (i) hereof in accordance
with the terms of this Agreement and the other Loan Documents.

 

6.06        Litigation.  Except as specifically disclosed in Schedule 6.06,
there are no actions, suits, proceedings, claims or disputes pending or, to the
knowledge of the Borrower after due investigation, threatened or contemplated,
at law, in equity, in arbitration or before any Governmental Authority, by or
against the Borrower or any of its Non-Mueller 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, if determined adversely, could reasonably be expected to have a
Material Adverse Effect.

 

6.07        No
Default.  Neither the Borrower nor
any Non-Mueller 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 continuing or
would result from the consummation of the transactions contemplated by this
Agreement or any other Loan Document.

 

6.08        Ownership
of Property; Liens.  Each of the
Borrower and each Non-Mueller Subsidiary has good record and marketable title
in fee simple to, or valid leasehold interests in, all real property (including
mineral rights and interests) 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 the Borrower and its
Non-Mueller Subsidiaries is
subject to no Liens, other than Liens permitted by Section 8.01.

 

6.09        Environmental
Compliance.  The Borrower and its
Restricted 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 the Borrower has
reasonably concluded that, except as
specifically disclosed in Schedule 6.09, such Environmental
Laws and claims could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.

 

6.10        Insurance.  The properties of the Borrower and its Non-Mueller Subsidiaries are insured with financially
sound and reputable insurance companies in such amounts, with such deductibles
and covering such risks as are customarily carried by companies engaged in
similar

 

80

 

businesses and owning similar properties in localities
where the Borrower or the applicable Non-Mueller Subsidiary operates, none of which insurance shall be
provided by any Subsidiary or any other Affiliate of the Borrower.

 

6.11        Taxes.  The Borrower and its Non-Mueller Subsidiaries have filed all Federal, state
and other material tax returns and reports required to be filed (including any
such requirement arising under the Tax Sharing Agreement), 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 (or on New Holdco and its Subsidiaries or their properties, income or
assets to the extent required to be paid by the Borrower or any Non-Mueller
Subsidiary pursuant to the Tax Sharing Agreement) 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.  Except as specifically
described on Schedule 6.11 hereto, there is no proposed tax
assessment against the Borrower or any Non-Mueller Subsidiary that would, if made, have a Material Adverse
Effect.  Neither any Loan Party nor any
Non-Mueller Subsidiary thereof is
party to any tax sharing agreement other than the Tax Sharing Agreement.

 

6.12        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 or an application for such a letter will be filed within twelve
months of the first Plan year for a newly adopted Plan and, to the best
knowledge of the Borrower, nothing has occurred which would reasonably be
expected to prevent, or cause the loss of, such qualification.  The 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 the Borrower, threatened claims, actions or
lawsuits, or action by any Governmental Authority, with respect to any Plan
that could reasonably be expected to have a Material Adverse Effect.  Neither the Borrower nor any ERISA Affiliate
has engaged in a non-exempt prohibited transaction or violation of the
fiduciary responsibility rules described in section 4975 of the Code
or Part 4 of Title I of ERISA 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 for which any liability remains unsatisfied or is reasonably
expected to occur; (ii) except to the extent it could reasonably be expected
to have a Material Adverse Effect, no Pension Plan has any Unfunded Pension
Liability; (iii) neither the Borrower nor any ERISA Affiliate has
incurred, or reasonably expects to incur, any material liability under Title IV
of ERISA with respect to any Pension Plan (other than premiums or contributions
due and not delinquent under Section 4007 of ERISA); (iv) neither the
Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur,
any material liability (and no event has occurred which, with the giving of
notice under Section 4219 of ERISA, would

 

81

 

reasonably be expected to result in such liability)
under Sections 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and (v) to
the knowledge of the Borrower, neither the Borrower nor any ERISA Affiliate has
engaged in a transaction that could be subject to Sections 4069 or 4212(c) of
ERISA.

 

6.13        Subsidiaries;
Equity Interests.  The Borrower (a) has no
Subsidiaries other than those specifically disclosed in Schedule 6.13(a) or
created or acquired in compliance with Section 7.12, (b) has
no equity investments in any other corporation or entity other than those
specifically disclosed Schedule 6.13(b) or made after the
Closing Date in compliance with this Agreement and the other Loan Documents.

 

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

 

(a)           The 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 the Borrower,
any Person Controlling the Borrower, or any Subsidiary (i) is a “holding
company,” or a “subsidiary company” of a “holding company,” or an “affiliate”
of a “holding company” or of a “subsidiary company” of a “holding company,”
within the meaning of the Public Utility Holding Company Act of 1935, or (ii) is
or is required to be registered as an “investment company” under the Investment
Company Act of 1940.

 

6.15        Disclosure.  The Borrower has disclosed to the
Administrative Agent and the Lenders all agreements, instruments and corporate
or other restrictions to which it or any of its Non-Mueller 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 information furnished (whether in writing or orally) by or on behalf of
any Loan Party to the Administrative Agent or any Lender in connection with the
transactions contemplated hereby and the negotiation of this Agreement or
delivered hereunder or under any other Loan Document (in each case, 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, the Borrower represents only that such information was prepared in
good faith based upon assumptions believed to be reasonable at the time.

 

6.16        Compliance
with Laws.  Each of the Borrower and
each Non-Mueller 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.

 

82

 

6.17        Intellectual Property;
Licenses, Etc.  The Borrower and its Non-Mueller 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 (collectively, “IP Rights”) that are reasonably necessary for the operation of their respective
businesses, without known conflict with the IP Rights of any other Person,
except to the extent any failure so to own or possess the right to use could
not reasonably be expected to have a Material Adverse Effect.  To the knowledge of the Borrower, the
operation by the Borrower and its Non-Mueller Subsidiaries of their respective
businesses does not infringe upon any IP Rights held by any other Person.

 

ARTICLE VII.

AFFIRMATIVE COVENANTS

 

So long as any Lender shall have any Revolving Credit Commitment
hereunder, any Loan or other Obligation hereunder shall remain unpaid or
unsatisfied, or any Letter of Credit or Bankers’ Acceptance shall remain
outstanding, the Borrower shall, and shall (except in the case of the covenants
set forth in Sections 7.01, 7.02, 7.03 and 7.11)
cause each Non-Mueller Subsidiary to:

 

7.01        Financial
Statements.  Deliver to the
Administrative Agent and each Lender:

 

(a)           as soon as available,
but in any event within 90 days after the end of each fiscal year of the
Borrower (or if earlier, 15 days after the date required to be filed with the
SEC (without giving effect to any extension permitted by the SEC)), a
consolidated and consolidating
balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal
year, and the related consolidated and
consolidating statements of income or operations, shareholders’ equity
and cash flows for such fiscal year, setting forth (except with respect to the
consolidating balance sheet and related consolidating statements) in each case
in comparative form the figures for the previous fiscal year, all in reasonable
detail and prepared in accordance with GAAP, and (except with respect to the
consolidating balance sheet and related consolidating statements) audited and
accompanied by (i) a report and opinion of a Registered Public Accounting
Firm of nationally recognized standing reasonably acceptable to the
Administrative Agent (the “Auditor”),
which report and opinion shall be prepared in accordance with audit standards of the Public Company
Accounting Oversight Board 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 or with respect to the absence of material
misstatement and (ii) so long as required by applicable Securities
Laws, the report(s) of management on the Borrower’s internal control over
financial reporting pursuant to Items 308(a) and 308(c) of Regulation
S-K promulgated under the Exchange Act, the Auditor’s attestation report on
management’s assessment of the Borrower’s internal control over financial
reporting as filed with the SEC on Form 10-K for the Borrower, and an
independent assessment by the Auditor as to the effectiveness of the Borrower’s
internal control over financial reporting as required by Auditing Standard No. 2
of the Public Company Accounting Oversight Board, and such consolidating statements to be certified by a Responsible
Officer of the Borrower to the effect that such statements are fairly stated in
all material respects when considered in relation to the consolidated financial
statements of the Borrower and its Subsidiaries;

 

83

 

(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 the Borrower (or if earlier, five Business Days after the date required to be filed
with the SEC (without giving effect to any extension permitted by the SEC)),
commencing with the fiscal quarter ended September 30, 2005, a
consolidated and consolidating
balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal
quarter, and the related consolidated and
consolidating statements of income or operations, shareholders’ equity
and cash flows for such fiscal quarter and for the portion of the Borrower’s
fiscal year then ended, setting forth (except with respect to the consolidating
balance sheet and related consolidating statements) in each case in comparative
form the figures for the corresponding fiscal quarter of the previous fiscal
year and the corresponding portion of the previous fiscal year, all in
reasonable detail and certified by a Responsible Officer of the Borrower as
fairly presenting the financial condition, results of operations, shareholders’
equity and cash flows of the Borrower and its Subsidiaries in accordance with
GAAP, subject only to normal year-end audit adjustments and the absence of
footnotes;

 

As to any information contained in materials furnished pursuant to Section 7.02(e),
the Borrower shall not be separately required to furnish such information under
clause (a) or (b) above, but the foregoing shall not be in derogation
of the obligation of the Borrower to furnish the information and materials
described in subsections (a) and (b) above at the times specified
therein.

 

7.02        Certificates;
Other Information.  Deliver to the
Administrative Agent and each Lender, in form and detail satisfactory to the
Administrative Agent and the Required Lenders:

 

(a)           concurrently with the
delivery of the financial statements referred to in Section 7.01(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 7.01(a) and
(b) (other than the financial statements for the fiscal quarter of
the Borrower ended September 30, 2005), a duly completed Compliance
Certificate signed by a Responsible Officer of the Borrower;

 

(c)           promptly after any request
by the Administrative Agent, copies of any detailed audit reports, management
letters or recommendations submitted to the board of directors (or the audit
committee of the board of directors) of the Borrower by independent accountants
in connection with the accounts or books of the Borrower or any Subsidiary, or
any audit of any of them;

 

(d)           promptly after any
request by the Administrative Agent, documents and other information supporting
the calculation of any defined term used in the computation in any Compliance
Certificate of the financial covenants set forth in Section 8.12;

 

(e)           promptly after the same
are available, copies of each annual report, proxy or financial statement sent
to the stockholders of the Borrower, and copies of all annual, regular,

 

84

 

periodic and special reports and registration
statements which the Borrower may file or be required to file with the SEC
under Section 13 or 15(d) of the Exchange Act, and not otherwise
required to be delivered to the Administrative Agent pursuant hereto;

 

(f)            as
soon as available and in any event no later than 60 days after the beginning of
each fiscal year of the Borrower, a consolidated business plan for the Borrower
and its Non-Mueller Subsidiaries prepared by management of the
Borrower, substantially similar in form and detail to the business plans
prepared prior to the Closing Date and furnished under the Existing Credit
Agreement, but taking into account the US Pipe Contribution, to the Administrative
Agent and including balance sheets, and related statements of operations,
retained earnings and cash flow (to include separate forecasts for Consolidated
Capital Expenditures and Consolidated EBITDA), on a quarterly basis for such
fiscal year, and a reasonably detailed explanation of any underlying
assumptions with respect thereto; and

 

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

 

Documents required to be delivered pursuant to Section 7.01(a) or
(b) or Section 7.02(e) (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 the Borrower posts such documents, or
provides a link thereto on the Borrower’s website on the Internet at the
website address listed on Schedule 11.02; or (ii) on which
such documents are posted on the Borrower’s behalf on an Internet or intranet
website, if any, to which each Lender and the Administrative Agent have access
(whether a commercial, third-party website or whether sponsored by the
Administrative Agent); provided that: (i) the Borrower shall
deliver paper copies of such documents to the Administrative Agent or any
Lender that requests the Borrower to deliver such paper copies until a written
request to cease delivering paper copies is given by the Administrative Agent
or such Lender and (ii) the Borrower shall notify (which may be by
facsimile or electronic mail) the Administrative Agent and each Lender of the
posting of any such documents and provide to the Administrative Agent by
electronic mail electronic versions (i.e., soft copies) of such
documents.  Notwithstanding anything
contained herein, in every instance the Borrower shall be required to provide
paper copies of the Compliance Certificates required by Section 7.02(b) to
the Administrative Agent.  Except for
such Compliance Certificates, the Administrative Agent shall have no obligation
to request the delivery or to maintain copies of the documents referred to
above, and in any event shall have no responsibility to monitor compliance by
the Borrower with any such request for delivery, and each Lender shall be
solely responsible for requesting delivery to it or maintaining its copies of
such documents.

 

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

 

85

 

(each, a “Public Lender”).  The Borrower hereby agrees that, so long as the Borrower is the issuer of any
outstanding debt or equity securities that are registered or issued pursuant to
a private offering or is actively contemplating issuing any such securities,
(w) all Borrower Materials that are to be made available to Public Lenders
shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall
mean that the word “PUBLIC” shall appear prominently on the first page thereof;
(x) by marking Borrower Materials “PUBLIC”, the Borrower shall be deemed to
have authorized the Administrative Agent, the Arrangers, the L/C Issuer and the
Lenders to treat such Borrower Materials as not containing any material
non-public information with respect to the 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 11.07); (y) all Borrower
Materials marked “PUBLIC” are permitted to be made available through a portion
of the Platform designated “Public Investor”; and (z) the Administrative Agent
and the Arrangers 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”. 
Notwithstanding the foregoing,
the Borrower shall be under no obligation to mark any Borrower Materials “PUBLIC.”

 

7.03        Notices.  Promptly notify the 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 the Borrower or any Subsidiary; (ii) any
dispute, litigation, investigation, proceeding or suspension between the
Borrower or any Subsidiary and any Governmental Authority; or (iii) the
commencement of, or any material development in, any litigation or proceeding
affecting the 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 the Borrower or any
Non-Mueller Subsidiary; and

 

(e)           of
any default under, termination or suspension of, or election not to renew the
Mortgage Warehouse Facility.

 

Each notice pursuant to this Section 7.03 shall be
accompanied by a statement of a Responsible Officer of the Borrower setting
forth details of the occurrence referred to therein and stating what action the
Borrower has taken and proposes to take with respect thereto.  Each notice pursuant to Section 7.03(a) shall
describe with particularity any and all provisions of this Agreement and any
other Loan Document that have been breached.

 

7.04        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 (or on New Holdco and its
Subsidiaries and their properties or assets to the extent required to be paid
by the Borrower or

 

86

 

any Non-Mueller Subsidiary pursuant to the Tax Sharing
Agreement), 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 the Borrower or such Subsidiary; (b) all lawful
claims which, if unpaid, would by law become a Lien upon its property, except
to the extent that any such Lien would otherwise be permitted by Section 8.01;
and (c) all Indebtedness 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
$5,000,000, as and when due and payable, but subject to any subordination
provisions contained in any instrument or agreement evidencing such
Indebtedness.

 

7.05        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 or formation
except in a transaction permitted by Section 8.04 or 8.05; (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.

 

7.06        Maintenance
of Properties.

 

(a)           Maintain, preserve and
protect all of its properties and equipment necessary in the operation of its
business in good working order and condition, ordinary wear and tear excepted,
except where the failure to do so could not reasonably be expected to have a
Material Adverse Effect.

 

(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.

 

(c)           Use the standard of care typical in the industry in the operation and
maintenance of its facilities.

 

(d)           Keep in full force and
effect all of its leases and other contract rights, and all rights of way, easements
and privileges necessary or appropriate for the proper operation of the Mines
being operated by the Borrower or a Non-Mueller Subsidiary except where the
failure to do so could not reasonably be expected to have a Material Adverse
Effect.

 

(e)           Obtain and comply with
each permit, license, authorization and other governmental approval necessary
to recover Coal from any Mine being operated by the Borrower or a Non-Mueller
Subsidiary and observe the requirements thereof in all material respects,
except where the failure to do so could not reasonably be expected to have a
Material Adverse Effect.

 

(f)            Cause each Mine being
operated by the Borrower or a Non-Mueller Subsidiary to be operated,
maintained, developed and mined and cause the associated processing plants and
other fixed and operating assets to be operated and maintained, in a
workmanlike manner, as would a prudent coal mine operator, and in accordance
with generally accepted mining practices and all applicable requirements of
Law, including but not limited to applicable Environmental

 

87

 

Laws, except where the failure to do so could not
reasonably be expected to have a Material Adverse Effect.

 

7.07        Maintenance
of Insurance.  In the event
compliance with the insurance requirements set forth in the Security
Instruments does not satisfy the following requirements, and not in limitation
of such insurance requirements in the Security Instruments, maintain, with
financially sound and reputable insurance companies, insurance with respect to
its properties and business against loss or damage of the kinds customarily
insured against by Persons engaged in the same or similar business, of such
types and in such amounts as are customarily carried under similar circumstances
by such other Persons and providing for not less than 15 days’
prior notice to the Administrative Agent of termination, lapse or cancellation
of such insurance, none of which insurance (other than worker’s compensation
insurance, disability insurance and other similar types of insurance that do
not constitute the insurance of its properties or of interruptions to its
business operations) shall be provided by any Subsidiary or any other Affiliate
of the Borrower.

 

7.08        Compliance
with Laws.  Comply in all material
respects with the requirements of all Laws (including without limitation all
applicable Environmental 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, writ, 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.

 

7.09        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 the Borrower or such Non-Mueller 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 the Borrower or such
Non-Mueller Subsidiary, as the
case may be.

 

7.10        Inspection
Rights.  Permit representatives and
independent contractors of the Administrative Agent and each Lender to visit
and inspect any of its properties, to examine its 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 such reasonable times during normal business hours
and as often as may be reasonably desired, upon reasonable advance notice to
the Borrower; provided, however, that when an Event of Default
exists the Administrative Agent or any Lender (or any of their respective
representatives or independent contractors) may do any of the foregoing at the
expense of the Borrower at any time during normal business hours and without
advance notice.

 

7.11        Use
of Proceeds.  Use the proceeds of the
Credit Extensions (i) to refinance existing indebtedness, including all
indebtedness outstanding under the Existing Credit Agreement and the payment of
all fees and expenses in connection therewith, (ii) to pay a portion of
the cost of acquiring Mueller Water Products and its Subsidiaries in connection
with the Merger, (iii) pay fees and expenses in connection with the
Transactions, and (iv) for working capital, capital expenditures, and
other general corporate purposes not in contravention of any Law or of any Loan
Document.

 

88

 

7.12        New
Subsidiaries, Pledgors and Real Property.

 

(a)           As soon as practicable
but in any event within 30 Business Days following the acquisition or creation
of any Subsidiary that is a Restricted Subsidiary, or the time any existing
Subsidiary becomes a Material Subsidiary, cause to be delivered to the
Administrative Agent each of the following:

 

(i)            if
such Subsidiary is both a Domestic Subsidiary and a Material Subsidiary, a
Guaranty Joinder Agreement duly executed by such Material Subsidiary;

 

(ii)           if
such Subsidiary is both a Domestic Subsidiary and a Material Subsidiary, (A) a
Security Joinder Agreement duly executed by such Material Subsidiary (with all
schedules thereto appropriately completed) and (B) if such Material
Subsidiary owns a fee interest in any real property having a fair market value
in excess of $10,000,000, or has a fee, leasehold or grantee interest in any
mineral rights relating or adjacent to the Coal or natural gas operations of
any Coal Mining Entity or otherwise acquired for the commercial value of such
mineral rights, those documents required by Section 3.02(b) and/or
(c), as applicable;

 

(iii)          if
such Subsidiary is both a Material Subsidiary and either a Domestic Subsidiary
or a Direct Foreign Subsidiary, and if any of the Subsidiary Securities issued
by such Material Subsidiary are owned by a Material Subsidiary who has not then
executed and delivered to the Administrative Agent the Pledge Agreement or a
Pledge Joinder Agreement granting a Lien to the Administrative Agent, for the
benefit of the Secured Parties, in such Pledged Interests, a Pledge Joinder
Agreement (with all schedules thereto appropriately completed) duly executed by
the Material Subsidiary that directly owns such Pledged Interests;

 

(iv)          if
such Subsidiary is both a Material Subsidiary and either a Domestic Subsidiary
or a Direct Foreign Subsidiary, and if any of the Subsidiary Securities issued
by such Material Subsidiary are owned by the Borrower or a Material Subsidiary
who has previously executed a Pledge Agreement or a Pledge Joinder Agreement, a
Pledge Agreement Supplement by the Borrower (if applicable) and each Material
Subsidiary that owns any of such Pledged Interests with respect to such Pledged
Interests in the form required by the Pledge Agreement;

 

(v)           if
such Subsidiary is a Material Subsidiary and owns any Domestic Subsidiary or
Direct Foreign Subsidiary that is also a Material Subsidiary, a Pledge Joinder
Agreement (with all schedules thereto appropriately completed) duly executed by
such Material Subsidiary;

 

(vi)          if
the Pledged Interests issued or owned by such Subsidiary constitute securities
under Article 8 of the Uniform Commercial Code (A) the certificates
representing 100% of such Pledged Interests and (B) duly executed, undated
stock powers or other appropriate powers of assignment in blank affixed
thereto;

 

(vii)         with
respect to any Person that has executed a Pledge Joinder Agreement, a Pledge
Agreement Supplement, or a Security Joinder Agreement, Uniform Commercial

 

89

 

Code financing
statements naming such Person as “Debtor” and naming the Administrative Agent
for the benefit of the Secured Parties as “Secured Party,” in form, substance
and number sufficient in the reasonable opinion of the Administrative Agent and
its special counsel to be filed in all Uniform Commercial Code filing offices
and in all jurisdictions in which filing is necessary to perfect in favor of
the Administrative Agent for the benefit of the Secured Parties the Lien on the
Collateral conferred under such Security Instrument to the extent such Lien may
be perfected by Uniform Commercial Code filing;

 

(viii)        upon
the reasonable request of the Administrative Agent, an opinion of counsel to
each Subsidiary executing any Joinder Agreement or Pledge Supplement, and the
Borrower if it executes a Pledge Agreement Supplement, pursuant to this Section 7.12,
dated as of the date of delivery of such applicable Joinder Agreements (and
other Loan Documents) provided for in this Section 7.12 and
addressed to the Administrative Agent and the Lenders, in form and substance
reasonably acceptable to the Administrative Agent, each of which opinions may
be in form and substance, including assumptions and qualifications contained
therein, substantially similar to those opinions of counsel delivered pursuant
to Section 5.01(a); and

 

(ix)           with
respect to each Subsidiary executing any Joinder Agreement or Pledge
Supplement, and the Borrower if it executes a Pledge Agreement Supplement,
pursuant to this Section 7.12, current copies of the Organization
Documents of each such Person, minutes of duly called and conducted meetings
(or duly effected consent actions) of the Board of Directors, partners, or
appropriate committees thereof (and, if required by such Organization Documents
or applicable law, of the shareholders, members or partners) of such Person
authorizing the actions and the execution and delivery of documents described
in this Section 7.12, all certified by the applicable Governmental
Authority or appropriate officer as the Administrative Agent may elect;

 

provided
that in the event the Borrower or any Domestic Subsidiary forms a joint venture
permitted hereunder and otherwise satisfactory to the Administrative Agent that
is a Domestic Subsidiary and a Restricted Subsidiary but whose Organization
Documents prohibit such Subsidiary from Guaranteeing Indebtedness of the
Borrower, such Subsidiary shall not be required to become a Loan Party, but
unless otherwise agreed to by the Administrative Agent the Equity Interests of
such Person owned by the Borrower or any Loan Party shall be pledged to the
Administrative Agent for the benefit of the Secured Parties in accordance with
the provisions of this Section 7.12(a).

 

(b)           As soon as practicable
but in any event within 30 Business Days following the acquisition of any
Pledged Interests by any Material Subsidiary who has not theretofore executed
the Pledge Agreement or a Pledge Joinder Agreement and who is not otherwise
required to deliver a Pledge Joinder Agreement pursuant to Section 7.12(a),
cause to be delivered to the Administrative Agent a Pledge Joinder Agreement
(with all schedules thereto appropriately completed) duly executed by such
Material Subsidiary, and the documents, stock certificates, stock powers,
financing statements, opinions, Organization Documents and organizational
action relating thereto and to the pledge contained therein and described in Section 7.12(a)(vi),
(vii), (viii) and (ix).

 

90

 

7.13        Mortgage Warehouse Facility.  Maintain at all times one or more Mortgage
Warehouse Facilities containing revolving lines of credit with a maximum
aggregate principal amount of not less than $350,000,000, and comply at all
times with the terms of each such Mortgage Warehouse Facility.

 

7.14        Compliance with ERISA.  Do, and cause each of its ERISA
Affiliates to do, each of the following: (a) maintain each Plan in
compliance in all material respects with the applicable provisions of ERISA,
the Code and other Federal or state law; (b) cause each Plan which is
qualified under Section 401(a) of the Code to maintain such
qualification; and (c) make all required contributions to any Plan subject
to Section 412 of the Code.

 

7.15        Further Assurances.  At the Borrower’s cost and
expense, upon request of the Administrative Agent, duly execute and deliver or
cause to be duly executed and delivered, to the Administrative Agent such
further instruments, documents, certificates, financing and continuation
statements, and do and cause to be done such further acts that may be
reasonably necessary or advisable in the reasonable opinion of the
Administrative Agent to carry out more effectively the provisions and purposes
of this Agreement, the Guaranty, the Security Instruments and the other Loan
Documents.

 

ARTICLE VIII.

NEGATIVE COVENANTS

 

So long as any Lender shall have any Revolving Credit Commitment
hereunder, any Loan or other Obligation hereunder shall remain unpaid or
unsatisfied, or any Letter of Credit or Bankers’ Acceptance shall remain
outstanding, the Borrower shall not, nor shall it permit any Non-Mueller Subsidiary to, directly or indirectly:

 

8.01        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 8.01 and any renewals or
extensions thereof, provided that the property covered thereby consists
only of the property covered by the Liens being renewed or extended and any
renewal or extension of the obligations secured or benefited thereby is
permitted by Section 8.03(b);

 

(c)           Liens for taxes,
assessments or other governmental charges 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;

 

(d)           carriers’, warehousemen’s,
mechanics’, materialmen’s, repairmen’s, landlord’s or other like Liens imposed
by Law or 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;

 

91

 

(e)           Liens, 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;

 

(f)            Liens or deposits to
secure the performance of bids, trade contracts and leases (other than
Indebtedness), statutory obligations, surety 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, and including deposits (but
not Liens) related to the acquisition of property;

 

(g)           easements,
rights-of-way, covenants, consents, reservations, encroachments, variations and
zoning and other similar restrictions, charges, encumbrances or title defects
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;

 

(h)           with respect to any
Mortgaged Fee Property or Mortgaged Coal Property, Liens which appear as
exceptions to the Title Policy delivered to the Administrative Agent with
respect to such Mortgaged Fee Property or Mortgaged Coal Property that are not
otherwise permitted by Section 8.01(a), (c), (d), (g) or
(i) and are acceptable to the Administrative Agent, it being understood
that the Liens appearing on the Title Policies delivered to the Administrative
Agent on the Closing Date are acceptable to the Administrative Agent;

 

(i)            any interest or title
of a lessor or sublessor and any restriction or encumbrance to which the
interest or title of such lessor or sublessor may be subject that is incurred
in the ordinary course of business and, either individually or when aggregated
with all other Liens described in clauses (a) through (h) in effect
on any date of determination, could not be reasonably expected to have a
Material Adverse Effect;

 

(j)            Liens securing
judgments for the payment of money not constituting an Event of Default under Section 9.01
or securing appeal or other surety bonds related to such judgments;

 

(k)           Liens securing
Indebtedness permitted under Section 8.03(e); provided that (i) such
Liens do not at any time encumber any property other than the property financed
by such Indebtedness and (ii) the Indebtedness secured thereby does not
exceed the cost or fair market value, whichever is lower, of the property being
acquired on the date of acquisition; and

 

(l)            Liens
on Mortgage Accounts and Third Party Mortgage Accounts securing Indebtedness
permitted under Section 8.03(g);

 

(m)          Liens
on residual beneficial interests in any MSH Trust securing Indebtedness
permitted under Section 8.03(g)(iii), 8.03(i) or 8.03(n); and

 

(n)           Liens
on assets (other than Equity Interests of New Holdco or of any Non-Mueller
Subsidiary constituting Collateral, and other than real estate interests
(including mineral rights relating to Coal) constituting Collateral) securing
Indebtedness the amount of which Indebtedness shall not exceed in the aggregate
at any time $20,000,000 and the book value of the property securing such
Indebtedness shall not exceed $25,000,000.

 

92

 

8.02        Investments.  Make any Investments, except:

 

(a)           Investments held by the
Borrower or such Non-Mueller Subsidiary in the form of Cash Equivalents;

 

(b)           loans and advances to
officers, directors and employees of the Borrower and Non-Mueller Subsidiaries
the ordinary course of the business of the Borrower and its Non-Mueller
Subsidiaries as conducted on the Closing Date to the extent permitted by
applicable Law;

 

(c)           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 financially troubled account debtors to the extent reasonably
necessary in order to prevent or limit loss;

 

(d)           Guarantees permitted by
Section 8.03;

 

(e)           Investments existing as
of the date hereof and as set forth in Schedule 6.13;

 

(f)            Investments by Loan
Parties in Mortgage Accounts and Third Party Mortgage Accounts, including
Investments in MSH Trusts in connection with the issuance of asset-backed
securities that are not Investments in residual beneficial interests in MSH
Trusts otherwise permitted by Section 8.02(h), provided that the
aggregate book value (but without adjustment for any write-down of the book
value thereof) of all such Investments permitted by this Section 8.02(f) owned
by Loan Parties does not at any time exceed $50,000,000;

 

(g)           Investments by MSH
Trusts in Mortgage Accounts and Third Party Mortgage Accounts in connection
with Indebtedness under the Mortgage Warehouse Facility and the issuance of
asset-backed securities permitted by Section 8.03(g);

 

(h)           Investments by
Mid-State Homes, Walter Mortgage Company and Mid-State Capital in MSH Trusts in
connection with the issuance of asset-backed securities permitted under Section 8.03(g)(iii) or
Section 8.03(i), provided that such Investments shall
consist solely of residual beneficial interests in MSH Trusts, including the
associated residual interest in Mortgage Accounts and Third Party Mortgage
Accounts, and assets related thereto;

 

(i)            Investments by Cardem
and each of the MSH Trusts in the ordinary course of business and in conformity
with their respective investment policies in effect from time to time;

 

(j)            Investments in
securities or assets of any Person acquired in an Acquisition permitted
hereunder;

 

(k)           Investments in (i) land
held by the Borrower and its Non-Mueller Subsidiaries on the Closing Date and
replacements thereof made in accordance with Section 8.05(b), (ii) land
consisting of single lots acquired or held in the ordinary course of the
homebuilding Core Business for the construction of single-family homes, and (iii) tracts
of land held by the Borrower or a Restricted Subsidiary for the purposes of
development the book value of which does not at any time exceed $15,000,000
(without giving effect to any write-downs thereof);

 

93

 

(l)            other Investments of (i) the
Borrower in any Guarantor, (ii) any Non-Mueller Subsidiary in the Borrower
or in a Guarantor, and (iii) of the Borrower or any Guarantor in any
Non-Mueller Subsidiary that is not
a Guarantor provided that such Investments in non-Guarantor Non-Mueller Subsidiaries do not exceed $15,000,000 in
the aggregate at any time outstanding;

 

(m)          Investments in Swap
Contracts permitted to be maintained under Section 8.03(d);

 

(n)           other Investments not
exceeding $25,000,000 in any fiscal year of the Borrower, provided that (i) the
aggregate of all Investments made under this clause (n) at any time outstanding
shall not exceed $75,000,000 and (ii) the aggregate amount of all
Investments in New Holdco or any of its Subsidiaries made under this clause (n)
at any time outstanding shall not exceed $15,000,000 (without increasing the
aggregate limit in the preceding clause (n)(ii)); provided further that (A) the
aggregate amount of Investments at any time outstanding under clause (i) of
the immediately preceding proviso shall be increased on any date of measurement
thereof by an amount equal to the sum of fifty percent (50%) of the
portion of Excess Cash Flow each year not required to be paid to reduce the
Term Loan pursuant to Section 2.06(d)(iv) plus fifty
percent (50%) of the portion of the Net Cash Proceeds from the public or
private issuance of Equity Interests of the Borrower or any Restricted
Subsidiary not required to be paid to reduce the Term Loan pursuant to Section 2.06(d)(iii) plus
fifty percent (50%) of the portion of the Net Cash Proceeds from a Permitted
Securities Transaction actually received the Borrower and paid to reduce the
Term Loan pursuant to Section 2.06(d)(vi), in each case net of any
such amounts utilized in Section 8.06(c) and/or in Section 8.13
on or prior to such date, and (B) the annual limit of $25,000,000 provided
in this Section 8.02(n) shall be increased on any date of
measurement thereof by an amount equal to 1/3 of the amount by which the
$75,000,000 limit is increased pursuant to the immediately preceding proviso (A) as
of such date;

 

(o)           Investments in Cardem
made in the ordinary course of its insurance business as conducted on the
Closing Date;

 

(p)           an Investment in a
joint venture of the Borrower in which the Borrower owns more than 50% of the
voting interest and is approved by the Administrative Agent, not to exceed
$20,000,000 in the aggregate at any time outstanding;

 

(q)           Investments by the
Borrower in New Holdco and/or one or more of its Subsidiaries in the form of
Equity Interests of the Borrower; and

 

(r)            Investments by the
Borrower in New Holdco on the Closing Date of those amounts necessary to
consummate the Merger and the other Transactions in accordance with the sources
and uses of funds provided to the Lenders prior to the Closing Date.

 

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

 

(a)           Indebtedness under the
Loan Documents;

 

(b)           Indebtedness
outstanding on the date hereof and listed on Schedule 8.03 and any
refinancings, refundings, renewals or extensions thereof; provided that
the amount of such Indebtedness is not increased at the time of such
refinancing, refunding, renewal or extension except by an amount equal to a
reasonable premium or other reasonable amount paid, and fees

 

94

 

and expenses reasonably
incurred, in connection with such refinancing and by an amount equal to any
existing commitments unutilized thereunder; provided further that any
refinancing, refunding, renewal or extension of Indebtedness subordinated to
the Obligations shall be on terms no less favorable to the Administrative Agent
and the Lenders, and no more restrictive to the Borrower, than the subordinated
Indebtedness being refinanced, refunded, renewed or extended and in an amount
not less than the amount outstanding at the time thereof;

 

(c)           Guarantees of the
Borrower or any Guarantor in
respect of Indebtedness otherwise permitted hereunder of the Borrower or any other Guarantor;

 

(d)           obligations (contingent
or otherwise) of the Borrower or any Non-Mueller Subsidiary existing or arising
under any Swap Contract, provided that (i) such obligations are (or
were) entered into by such Person in the ordinary course of business for the
purpose of directly mitigating risks associated with liabilities, commitments,
investments, assets, cash flows or property held or reasonably anticipated by
such Person, or changes in the value of securities issued by such Person, and
not for purposes of speculation or taking a “market view;” and (ii) such
Swap Contract does not contain any provision exonerating the non-defaulting
party from its obligation to make payments on outstanding transactions to the
defaulting party;

 

(e)           Indebtedness in respect
of capital leases, Synthetic Lease Obligations and purchase money obligations
for real property (other than purchase money obligations for real property
including mineral rights utilized or to be utilized in the Coal operations of
any Coal Mining Entity) and fixed or capital assets within the limitations set
forth in Section 8.01(j), which Indebtedness may include
Indebtedness existing on any property so acquired at the time of such
acquisition (other than any such Indebtedness created in contemplation of such
acquisition that does not secure the purchase price of such property), and
including any refinancings, refundings, renewals or extensions thereof so long
as the amount of such Indebtedness is not increased at the time of such
refinancing, refunding, renewal or extension except by an amount equal to a
reasonable premium or other reasonable amount paid, and fees and expenses
reasonably incurred, in connection with such refinancing; provided, however,
that the aggregate amount of all such Indebtedness at any one time outstanding
shall not exceed $50,000,000;

 

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

 

(g)           in the case of
Mid-State Homes, Mid-State Capital, Walter Mortgage Company and each MSH Trust,
where applicable:

 

(i)            Indebtedness
evidenced by the Mortgage-Backed Securities,

 

(ii)           Indebtedness
created under the Mortgage Warehouse Facility, and

 

(iii)          Indebtedness
resulting from the issuance of additional securities by one or more MSH Trusts
that is secured or otherwise supported by Mortgage Accounts, Third Party
Mortgage Accounts and/or residual beneficial interests in MSH Trusts, which
securities shall not restrict the actions or businesses of the Borrower or any
of its Subsidiaries (other than Mid-State Homes, Mid-State Capital and Walter
Mortgage Company) in any manner and shall not include terms requiring any
guarantee or other

 

95

 

credit support from or
recourse to the Borrower or any of its Restricted Subsidiaries that are less
favorable to the Borrower and its Restricted Subsidiaries than those contained
in the Mortgage-Backed Securities;

 

(h)           in the case of
Mid-State Homes and Walter Mortgage Company, Indebtedness resulting from the
contingent obligations of Mid-State Homes or Walter Mortgage Company (i) to
repurchase Mortgage Accounts pursuant to Section 3(b) of either of
the Existing Borrower Account Transfer Agreements (or an equivalent contingent
obligation contained in any successor Borrower Account Transfer Agreement so
long as such contingent obligation is no greater than that contained in Section 3(b) of
the Existing Borrower Account Transfer Agreement), (ii) to repurchase
Foreclosure Accounts (as defined
in the Existing Borrower Account Transfer Agreement) pursuant to the terms of Section 4 of each of the Existing Borrower Account
Transfer Agreements (or an
equivalent contingent obligation contained in any successor Borrower Account
Transfer Agreement so long as such contingent obligation is no greater than
that contained in Section 4 of the Existing Borrower Account Transfer
Agreement), and (iii) to indemnify certain Indemnitees referred to in the
Existing Borrower Account Transfer Agreement for expenses incurred thereby on
the terms set forth in Section 6 of
each of the Existing Borrower Account Transfer Agreements (or an equivalent
contingent obligation with respect to indemnification contained in any
successor Borrower Account Transfer Agreement so long as such indemnification
obligation is no greater than that contained in Section 6 of the Existing
Borrower Account Transfer Agreement); provided that the aggregate amount
of Indebtedness existing under subclauses (h)(i) and (h)(iii) shall
not exceed $10,000,000 at any time;

 

(i)            Indebtedness secured
solely by residual beneficial interests in MSH Trusts (other than any MSH Trust
that is a borrower under a Mortgage Warehouse Facility), including the issuance
of securities by one or more MSH Trusts that are secured or otherwise supported
thereby; provided that no such Indebtedness (including any securities)
shall restrict the actions or businesses of the Borrower or any of its
Non-Mueller Subsidiaries in any manner and shall not include terms requiring
any guarantee or other credit support from or recourse to the Borrower or any
of its Restricted Subsidiaries that are less favorable to the Borrower and its
Restricted Subsidiaries than those contained in the Mortgage-Backed Securities;

 

(j)            Indebtedness (i) of
the Borrower or any Guarantor owing to the Borrower or any Guarantor, (ii) of
any Non-Mueller Subsidiary that is not a Guarantor owing to any other
Non-Mueller Subsidiary that is not a Guarantor, (iii) of any Non-Mueller Subsidiary that is not a Guarantor owing
to the Borrower or any Guarantor in an aggregate amount at any time outstanding
not to exceed $15,000,000; and (iv) of the Borrower owing to Mueller Group
pursuant to the Borrower’s guarantee of the obligations of New Holdco under the
Subordinated New Holdco Note, so long as the Borrower’s obligations owing under
such Subordinated New Holdco Note are unsecured and subordinated in payment to
the Obligations in a manner satisfactory to the Administrative Agent and no
payment of principal or cash interest thereunder is scheduled to occur prior to
the date that is six months after the Term Loan Maturity Date;

 

(k)           surety bonds permitted
under Section 8.01;

 

(l)            Indebtedness
subordinated in payment to the Obligations hereunder in an aggregate principal
amount not to exceed $200,000,000 at any time outstanding so long as (i) the

 

96

 

terms of such Indebtedness are acceptable to the
Administrative Agent, (ii) none of the maturity date, any scheduled
payment of principal or any obligation to repurchase or prepay such
Indebtedness (whether absolute or at the option of the holder (other than as a
result of the occurrence of a specified event that would constitute an Event of
Default)) occurs before the Revolving Credit Maturity Date, and (iii) on
or prior to the date of incurrence thereof, the Borrower has delivered to the
Administrative Agent a Compliance Certificate demonstrating pro forma
compliance, giving effect to the incurrence of such Indebtedness, with the
financial covenants set forth in Sections 8.12(a), (b) and (c);

 

(m)          additional Indebtedness
secured solely by a Lien on one or more residual beneficial interest in MSH
Trusts, provided that the aggregate principal amount of all such Indebtedness
shall not to exceed $50,000,000 at any time outstanding; and

 

(n)           additional unsecured
Indebtedness in an aggregate principal amount at any time outstanding not to
exceed $50,000,000.

 

8.04        Fundamental
Changes.  Merge, dissolve, liquidate,
consolidate with or into another Person, or Dispose 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, and in
each case subject to Section 8.15:

 

(a)           except as limited by Section 8.15(c),
any Non-Mueller Subsidiary may merge with any one or more other Non-Mueller
Subsidiaries, provided that when any Guarantor is merging with another Non-Mueller Subsidiary, the Guarantor shall be the continuing or
surviving Person; and

 

(b)           any Non-Mueller
Subsidiary may Dispose of all or substantially all of its assets (upon
voluntary liquidation or otherwise) to another Non-Mueller Subsidiary or to the
Borrower, provided that if the transferor in such a transaction is a
Guarantor, then the transferee must also be a Guarantor or the Borrower; and

 

(c)           a merger or
consolidation necessary to consummate (i) an Acquisition permitted by and
in compliance with Section 8.13 or (ii) a Disposition
permitted by and in compliance with Section 8.05.

 

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

 

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

 

(b)           Dispositions for fair
market value of equipment or real property to the extent that (i) such
equipment or real property is exchanged for credit against the purchase price
of similar replacement property or (ii) the proceeds of such Disposition
are reasonably promptly applied to the purchase price of such replacement
equipment or real property, and in each case if the disposed property
constituted Collateral then the relevant Loan Party shall grant a Lien to the
Administrative Agent (including the delivery of any necessary Mortgage, Mineral
Rights

 

97

 

Mortgage, Mortgaged Property Support Documents and
Mortgaged Coal Property Support Documents) on such new or replacement property;

 

(c)           subject to Section 8.15,
Dispositions of property by the Borrower or any Non-Mueller Subsidiary to a wholly-owned Non-Mueller Subsidiary or, solely with respect to
Dispositions of the stock of a Non-Mueller Subsidiary of the Borrower, the
Borrower; provided that if the transferor of such property is the
Borrower or a Guarantor, the transferee thereof must be a Guarantor or, subject
to the limitation above, the Borrower;

 

(d)           Dispositions for fair
market value permitted by Section 8.02 or 8.04(a) or (b);

 

(e)           transfers for fair
market value by Loan Parties or Mid-State Capital to one or more MSH Trusts of
Mortgage Accounts or Third Party Mortgage Accounts in connection with, and to
the extent required for, (i) the incurrence of Indebtedness permitted
under Section 8.03(g)(ii), and (ii) the issuance of asset-backed
securities permitted under Section 8.03(g)(iii);

 

(f)            transfers for fair
market value by Mid-State Homes or Mid-State Capital of any interest in an MSH
Trust (other than any MSH Trust that is a borrower under a Mortgage Warehouse
Facility) to (i) third parties, or (ii) an MSH Trust in connection
with the issuance of asset-backed securities permitted under Section 8.03(g)(iii) or
8.03(i);

 

(g)           Dispositions
for fair market value not otherwise permitted under this Section 8.05,
provided that (i) at the time of such Disposition, no Default shall
exist or would result from such Disposition and (ii) each such Disposition
is either (A) a Disposition of Non-Core Subsidiaries so long as such
Non-Core Subsidiary has not been the transferee of any material additional
assets or operations (whether by transfer of assets or equity or by merger or
consolidation with any other Person) since the Closing Date and any prepayment
required by Section 2.06(d)(v) is made, (B) a Disposition
of mining equipment, including longwall shields, with an aggregate book value
not in excess of $30,000,000, or (C) a Disposition of property that, when
combined with all other Dispositions made in reliance on this clause (g)(ii)(C) during
such fiscal year, has an aggregate book value of not in excess of $40,000,000;
and

 

(h)           Dispositions
of all or any portion of the Equity Interests in New Holdco owned by the
Borrower in a Permitted Securities Transaction conducted in compliance with Section 8.06(e) and/or
8.15(c) and with respect to which any mandatory prepayment of the
Term Loan required by Section 2.06(d)(vi) has been made, provided
that any such Disposition other than pursuant to a Restricted Payment permitted
by Section 8.06(e) shall be for fair market value.

 

8.06        Restricted
Payments.  Declare or make, directly
or indirectly, any Restricted Payment, or incur any obligation (contingent or
otherwise) to do so, except that, in each case (except Section 8.06(a))
so long as no Default or Event of Default shall have occurred and be continuing
(both before and after the making of such Restricted Payment):

 

(a)           each Non-Mueller
Subsidiary may make Restricted Payments to the Borrower and to wholly-owned
Non-Mueller Subsidiaries (and, in the case of a Restricted Payment by a
non-wholly-owned Non-Mueller Subsidiary, to the Borrower and any Non-Mueller
Subsidiary and to each other owner of capital stock or other Equity Interests
of such Non-Mueller Subsidiary on a pro rata basis based on their relative
ownership interests);

 

98

 

(b)           the Borrower and each
Non-Mueller Subsidiary may declare and make dividend payments or other
distributions payable solely in the common stock or other common Equity
Interests of such Person;

 

(c)           to the extent available
after making any prepayment required by Section 2.06(d), and
subject to the making of each such prepayment, the Borrower and each
Non-Mueller Subsidiary may purchase, redeem or otherwise acquire shares of, or
pay dividends or make distributions with respect to, its common stock or other
common Equity Interests or warrants or options to acquire any such shares with
the Net Cash Proceeds received from the issue of new shares of its common stock
or other common Equity Interests, provided that any amount so utilized
under this Section 8.06(c) shall reduce the applicable amount
of the Net Cash Proceeds from any such issuance available to be utilized
pursuant to Section 8.02(n) and/or Section 8.13, and
any amount of such Net Cash Proceeds utilized under Section 8.02(n)
and/or Section 8.13 shall reduce the amount permitted to be
utilized pursuant to this Section 8.06(c);

 

(d)           the
Borrower may, up to an aggregate amount in any fiscal year not to exceed the
Maximum Restricted Payment Amount in effect for such fiscal year, (i) so
long as after giving effect to any such Restricted Payment the remaining amount
available to be drawn under the Revolving Credit Facility shall not be less
than $50,000,000, repurchase shares of its own capital stock for cash, and (ii) declare
and pay cash dividends to its stockholders; and

 

(e)           the
Borrower may make a Restricted Payment to its shareholders of all or any
portion of the Equity Interests in New Holdco owned by the Borrower in a
Permitted Securities Transaction so long as prior to the making of any such
Restricted Payment the Borrower has made prepayments (whether optional
prepayments pursuant to Section 2.06(a) or mandatory
prepayments pursuant to Section 2.06(d), or any combination
thereof) of the Term Loans in an aggregate amount of not less than $100,000,000
from the proceeds of one or more of the following:  (i) Permitted Securities Transactions permitted
by subparts (b), (c) and/or (d) of such definition, (ii) Indebtedness permitted pursuant
to Section 8.03(l), (iii) private or public issuances of
Equity Interests of the Borrower permitted hereunder, and/or (iv) dividends
received by the Borrower from New Holdco derived solely from the proceeds of
indebtedness issued by New Holdco.

 

8.07        Change
in Nature of Business.  Engage in any
material line of business that is not a Core Business.

 

8.08        Transactions
with Affiliates.  Enter into any
transaction of any kind with any Affiliate of the Borrower, whether or not in
the ordinary course of business, other than (a) transactions on fair and
reasonable terms substantially as favorable to the Borrower or such Non-Mueller
Subsidiary as would be obtainable by the Borrower or such Non-Mueller
Subsidiary at the time in a comparable arm’s length transaction with a Person
other than an Affiliate, (b) the consummation by the Borrower and its
Non-Mueller Subsidiaries of the transactions effected by the Loan Documents, (c) any
employment arrangement entered into by the Borrower or any of its Non-Mueller
Subsidiaries in the ordinary course of business and consistent with the past
practices of the Borrower or such Non-Mueller Subsidiary, (d) transactions
between or among the Borrower and its Non-Mueller Subsidiaries or between or
among Non-Mueller Subsidiaries of the Borrower, in each case to the extent permitted
under the terms of the Loan Documents,

 

99

 

(e) the declaration and payment of dividends and
the making of distributions to all holders of any class of capital stock of the
Borrower or any of its Non-Mueller Subsidiaries to the extent otherwise
permitted under Section 8.06, (f) the Tax Sharing Agreement,
and (g) shared service arrangements entered into in the ordinary course of
business and allocating expenses and fees reasonably in accordance with the
services provided.

 

8.09        Burdensome
Agreements.  Enter into any
Contractual Obligation (other than this Agreement or any other Loan Document)
that:

 

(a)           requires the grant of a
Lien to secure an obligation of such Person if a Lien is granted to secure another
obligation of such Person; or

 

(b)           limits the ability (i) of
any Non-Mueller Subsidiary to make
Restricted Payments to the Borrower or any Guarantor or to otherwise transfer
property to the Borrower or any Guarantor other than customary restrictions
required in connection with (x) financings permitted by this Agreement, the
limitations of which are no more restrictive than the corresponding limitations
applicable to the Borrower hereunder, and (y) Dispositions permitted by this
Agreement and which limitations cover only such assets or Person(s) which are
the subject matter of such Dispositions and, prior to such Disposition, permit
the Liens granted under the Loan Documents therein, (ii) of any Restricted
Subsidiary to Guarantee the Indebtedness of the Borrower, or (iii) of the
Borrower or any Non-Mueller Subsidiary to create, incur, assume or suffer to
exist Liens on property of such Person; provided, however, that
this clause (iii) shall not prohibit:

 

(A)          a
negative pledge contained in either (x) Indebtedness of any Non-Mueller
Subsidiary as of the date it becomes a Non-Mueller Subsidiary of the Borrower
in any transaction otherwise permitted hereunder or (y) Indebtedness
outstanding on the date hereof and listed on Schedule 8.03, in each
case so long as such provision does not impair or conflict with any Security
Instrument or with Section 7.12 hereof;

 

(B)           provisions
limiting Liens on property of the MSH Trusts as may be contained in the terms
of any Indebtedness permitted under Section 8.03(g) or 8.03(i);

 

(C)           provisions
limiting Liens on property as may be contained in the terms of any Indebtedness
permitted under Section 8.03(e) and (n) solely to the
extent any such limitations relates to the property financed by or the subject
of such Indebtedness;

 

(D)          provisions
limiting Liens on property, and only on such property, subject to a prior Lien
permitted under Section 8.01(d), (e), (f), (h),
(j), (k) and (l); and

 

(E)           such
provisions as may be contained in any refinancing or replacing Indebtedness permitted
under Section 8.03, provided that the terms of such provisions
shall be no less favorable to the Administrative Agent and the Lenders as were
contained in the Indebtedness being refinanced or replaced.

 

8.10        Use
of Proceeds.  Use the proceeds of any
Credit Extension, whether directly or indirectly, and whether immediately,
incidentally or ultimately, in any manner that might cause the Credit Extension
or the application of such proceeds to violate Regulations T, U or X of the

 

100

 

FRB, in each case as in effect on the date or dates of
such Credit Extension and such use of proceeds.

 

8.11        Prepayment of Indebtedness; Amendment to
Material Agreements.

 

(a)           Prepay, redeem,
purchase, repurchase, defease or otherwise satisfy prior to the scheduled
maturity thereof in any manner, or make any payment in violation of any
subordination terms of, Indebtedness that is subordinated to the Indebtedness
hereunder (including the Borrower’s guaranty obligations under the Subordinated
New Holdco Note), including pursuant to any change of control, sale of assets,
issuance of any equity or otherwise as may be set forth in the terms thereof or
available to the Borrower at its option, except those prepayments that (i) are
made in connection with a refinancing thereof otherwise permitted by Section 8.03(b) or
(ii) after giving effect to which, as demonstrated by the Borrower in a
certificate signed by a Responsible Officer and delivered to the Administrative
Agent, no Default exists or will have occurred, the Consolidated Senior Secured
Leverage Ratio is not greater than 1.50 to 1.00 and the remaining amount
available to be drawn under the Revolving Credit Facility is not less than
$50,000,000; provided that the Borrower may use an amount not greater
than the portion of Excess Cash Flow
each year not required to be paid to reduce the Term Loan pursuant to Section 2.06(d)(iv) to
prepay amounts outstanding under the Subordinated New Holdco Note; or

 

(b)           Amend, modify or change
in any manner any term or condition of (i) the Mortgage-Backed Securities,
or (ii) any Mortgage Warehousing Facility (including any Borrower Account
Transfer Agreement), (iii) any material lease, (iv) the Subordinated
New Holdco Note, (v) the Convertible Notes or (vi) the Tax Sharing
Agreement, so that the terms and conditions thereof are less favorable in any
material respect to the Administrative Agent and the Lenders than the terms of
such Indebtedness as of the Closing Date, but in no event shall terms of recourse,
guarantees or credit support or, with respect to the Subordinated New Holdco
Note, any requirement to pay interest or principal in cash, be any less
favorable to the Administrative Agent and the Lenders than the terms of such
Indebtedness as of the Closing Date.

 

8.12        Financial
Covenants.

 

(a)           Consolidated
Leverage Ratio.  Permit the Consolidated Leverage Ratio at any
time during any period of four fiscal quarters of the Borrower set forth below
to be greater than the ratio set forth below opposite such period:

 

	
  Four
  Fiscal Quarters Ending

  	
   

  	
  Maximum

  Consolidated

  Leverage Ratio

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Closing Date through December 30, 2005

  	
   

  	
  4.50 to 1.00

  	
   

  
	
  December 31, 2005 through December 30, 2006

  	
   

  	
  4.00 to 1.00

  	
   

  
	
  December 31, 2006 through December 30, 2007

  	
   

  	
  3.00 to 1.00

  	
   

  
	
  December 31, 2007 and each fiscal quarter thereafter

  	
   

  	
  2.50 to 1.00

  	
   

  

 

101

 

(b)           Consolidated
Senior Secured Leverage Ratio.  Permit the Consolidated Senior Secured
Leverage Ratio at any time during any period of four fiscal quarters of the
Borrower set forth below to be greater than the ratio set forth below opposite
such period:

 

	
  Four
  Fiscal Quarters Ending

  	
   

  	
  Maximum

  Consolidated Senior

  Secured Leverage Ratio

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Closing Date through December 30, 2006

  	
   

  	
  3.00 to 1.00

  	
   

  
	
  December 31, 2006 and each fiscal quarter thereafter

  	
   

  	
  2.00 to 1.00

  	
   

  

 

(c)           Consolidated
Fixed Charge Coverage Ratio.  Permit the Consolidated Fixed Charge Coverage
Ratio as of the end of any Four-Quarter Period of the Borrower to be less than
the ratio set forth below opposite such fiscal quarter:

 

	
  Four-Quarter
  Period Ending

  	
   

  	
  Minimum

  Consolidated

  Fixed Charge

  Coverage Ratio

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  December 31, 2005 through September 30, 2006

  	
   

  	
  2.00 to 1.00

  	
   

  
	
  December 31, 2006 through September 30, 2007

  	
   

  	
  2.25 to 1.00

  	
   

  
	
  December 31, 2007 and each fiscal quarter thereafter

  	
   

  	
  2.50 to 1.00

  	
   

  

 

(d)           Capital Expenditures.  Make or become legally obligated
to make Consolidated Capital Expenditures in the aggregate for the Borrower and
its Non-Mueller Subsidiaries during each fiscal year set forth below
(calculated for the entire fiscal year ending December 31, 2005, including
the period prior to the Closing Date, but excluding Consolidated Capital
Expenditures made by US Pipe prior to the Closing Date without regard to the
provisions of Section 1.03(c)), in an amount in excess of the
amount set forth opposite such fiscal year:

 

	
  Fiscal Year

  	
   

  	
  Amount

  	
   

  
	
  2005

  	
   

  	
  $

  	
  125,000,000

  	
   

  
	
  2006

  	
   

  	
  $

  	
  160,000,000

  	
   

  
	
  2007

  	
   

  	
  $

  	
  100,000,000

  	
   

  
	
  2008

  	
   

  	
  $

  	
  55,000,000

  	
   

  
	
  2010

  	
   

  	
  $

  	
  55,000,000

  	
   

  
	
  2011

  	
   

  	
  $

  	
  55,000,000

  	
   

  
	
  2012

  	
   

  	
  $

  	
  55,000,000

  	
   

  

 

provided, however, that so long as no Default has occurred and is continuing or
would result from such expenditure, up to $15,000,000 of any amount set forth
above, if not expended in the fiscal year for which it is permitted above, may
be carried over for expenditure in the next following fiscal year.

 

102

 

8.13        Acquisitions.  Enter
into any agreement, contract, binding commitment or other arrangement providing
for any Acquisition, or take any action to solicit the tender of securities or
proxies in respect thereof in order to effect any Acquisition, unless (i) the
Person to be (or whose assets are to be) acquired does not oppose such
Acquisition and the line or lines of business of the Person to be acquired
constitute Core Businesses, (ii) no Default or Event of Default shall have
occurred and be continuing either immediately prior to or immediately after
giving effect to such Acquisition and, if the Cost of Acquisition is in excess
of $25,000,000, the Borrower shall have furnished to the Administrative Agent (A) pro
forma historical financial statements as of the end of the most recently
completed fiscal year of the Borrower and most recent interim fiscal quarter,
if applicable, giving effect to such Acquisition, and (B) a Compliance
Certificate prepared on a historical pro forma basis as of the date of the June 30,
2005 interim financial statements or, if later, as of the most recent date for
which financial statements have been furnished pursuant to Section 7.01(a) or
(b), giving effect to such Acquisition, which Compliance Certificate
shall demonstrate that no Default or Event of Default would exist immediately
after giving effect thereto, (iii) the Person acquired shall be a
wholly-owned Restricted Subsidiary, or be merged with or into a Restricted
Subsidiary, immediately upon consummation of the Acquisition (or if assets are
being acquired, the acquiror shall be a Restricted Subsidiary), (iv) upon
consummation of the Acquisition each Non-Mueller Subsidiary shall have complied
with the provisions of Section 7.12, including with respect to any
new assets (including real property or mineral rights) acquired, (v) if
the Cost of Acquisition shall exceed an amount equal to fifty percent (50%) of
the Aggregate Acquisition Limit (defined below) in effect as of the date of
such Acquisition, the Required Lenders shall consent to such Acquisition in
their discretion, and (vi) after giving effect to such Acquisition, the
aggregate Costs of Acquisition incurred since the Closing Date shall not exceed
the Aggregate Acquisition Limit then in effect; provided that an
agreement, contract, binding commitment or other arrangement providing for an
Acquisition that would not otherwise satisfy the provisions of this Section 8.13
at such time may be entered into so long as an express condition to the
consummation thereof is the full compliance with this Agreement and the other
Loan Documents.

 

For purposes of this Section 8.13,
the term “Aggregate
Acquisition Limit” means
(a) if as of the end of the most recently ended fiscal quarter of the
Borrower the Consolidated Leverage Ratio is greater than or equal to 3.00 to
1.00, $80,000,000, (b) if as of the end of the most recently ended fiscal
quarter of the Borrower the Consolidated Leverage Ratio is less than 3.00 to
1.00 but greater than or equal to 2.50 to 1.00, $150,000,000, and (c) if
as of the end of the most recently ended fiscal quarter of the Borrower the
Consolidated Leverage Ratio is less than 2.50 to 1.00, $200,000,000; provided
that as of any date of measurement the amount set forth in (a), (b) or (c) of
this definition, as applicable, shall be increased by an amount equal to the sum
of fifty percent (50%) of the portion of Excess Cash Flow each year not
required to be paid to reduce the Term Loan pursuant to Section 2.06(d)(iv) plus
fifty percent (50%) of the portion of the Net Cash Proceeds from the public or
private issuance of Equity Interests of the Borrower or any Restricted Subsidiary
not required to be paid to reduce the Term Loan pursuant to Section 2.06(d)(iii) plus
fifty percent (50%) of the portion of the Net Cash Proceeds from a Permitted
Securities Transaction actually received the Borrower and paid to reduce the
Term Loan pursuant to Section 2.06(d)(vi), in each case net of any such amounts utilized in Section 8.06(c) and/or
in Section 8.02(n) on or prior to such date.

 

103

 

8.14        Creation
of New Subsidiaries.  Create or acquire any new Non-Mueller
Subsidiary after the Closing Date other than MSH Trusts and Restricted
Subsidiaries created or acquired in accordance with Section 7.12,
provided that any Unrestricted Subsidiary may create a Subsidiary that is an
Unrestricted Subsidiary and the Borrower or any Non-Mueller Subsidiary may
create a Subsidiary that is an Unrestricted Subsidiary described in part (e) of
the definition of “Unrestricted Subsidiary”.

 

8.15        Mid-State Homes, Walter
Mortgage Company, Mid-State Capital, Non-Core Subsidiaries, New Holdco and
Mueller Water Products; Residual Beneficial Interests.  Notwithstanding anything to the contrary herein:

 

(a)           permit Mid-State Homes,
Walter Mortgage Company, Mid-State Capital or any Subsidiary of either of them
(other than an MSH Trust) to (i) own any material assets other than
Mortgage Accounts, Third Party Mortgage Accounts, mortgage servicing rights,
residual beneficial interests in any MSH Trust, and Equity Interests of
Non-Mueller Subsidiaries (other than MSH Trusts) that are in full compliance
with this Section 8.15(a), or (ii) conduct any operations
other than those associated with the ownership, servicing, warehousing and
securitizing of Mortgage Accounts, Third Party Mortgage Accounts, Serviced
Mortgage Accounts and interests in any MSH Trust;

 

(b)           permit the ownership of
any residual beneficial interests in any MSH Trust by any Person other than (i) Mid-State
Homes, (ii) Walter Mortgage Company, (iii) Mid-State Capital, (iv) any
other Non-Mueller Subsidiary formed solely to securitize Mortgage Accounts
and/or Third Party Mortgage Accounts, and (v) another Person in connection
with and as a result of the transfer of any such residual beneficial in
accordance with Section 8.05(f);

 

(c)           permit the Borrower to
own less than 100% of the Equity Interests of New Holdco, as reduced by any
Permitted Securities Transaction so long as not less than 50% of the Net Cash
Proceeds from the consummation of any one or more Permitted Securities
Transactions described in parts (b), (c) and (d) of the definition
thereof are received by the Borrower (whether directly as a result of a
Disposition of the Borrower’s Equity Interests in New Holdco or indirectly as a
result of a distribution from New Holdco) and the prepayment required by Section 2.06(d)(vi) is
made;

 

(d)           until such time as the
Borrower’s ownership of the Equity Interests of New Holdco is reduced pursuant
to transactions permitted hereunder to an amount not in excess of 50%, permit (i) New
Holdco to own any material assets other than the Equity Interests of Mueller
Water Products or to conduct any operations other than those associated with
the ownership of such Equity Interests or (ii) Mueller Water Products to
own any material assets other than the Equity Interests stock of Mueller Group
or to conduct any operations other than those associated with the ownership of
such Equity Interests.

 

104

 

ARTICLE IX.

EVENTS OF DEFAULT AND REMEDIES

 

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

 

(a)           Non-Payment.  The
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 days after the same becomes due, any interest on any Loan or on any L/C
Obligation, or any commitment or other fee due hereunder, or (iii) within
five days after the same becomes due, any other amount payable hereunder or
under any other Loan Document; or

 

(b)           Specific Covenants.  The
Borrower fails to perform or observe any term, covenant or agreement contained (i) in
any of Section 7.03(a), (b) or (g), 7.05
(other than with respect to the maintenance of good standing), 7.10, 7.11
or 7.12 or Article VIII, or (ii) in either Section 7.01
or 7.02 and such failure continues for 15 days;  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 the earlier of (i) receipt of notice
of such default by a Responsible Officer of the Borrower from the
Administrative Agent, or (ii) any Responsible Officer of the Borrower
becomes aware of such default; or

 

(d)           Representations and
Warranties.  Any representation,
warranty, certification or statement of fact made or deemed made by or on
behalf of the Borrower or any other Loan Party herein, in any other Loan
Document, or in any document delivered in connection herewith or therewith
shall be incorrect or misleading when made or deemed made; or

 

(e)           Cross-Default.  (i) The Borrower or any Non-Mueller
Subsidiary (A) fails to make any payment when due (whether by scheduled
maturity, required prepayment, acceleration, demand, or otherwise, and after
passage of any grace period) in respect of any Indebtedness or Guarantee (other
than Indebtedness hereunder and Indebtedness under Swap 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 $20,000,000, 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, and such default continues for
more than the period of grace, if any, therein specified, 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 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 (ii) there occurs under any Swap Contract an
Early Termination Date (as defined in such Swap Contract) resulting from (A) any
event of default under such Swap Contract as to which the Borrower or any
Non-Mueller Subsidiary is

 

105

 

the Defaulting Party (as defined in such Swap
Contract) or (B) any Termination Event (as so defined) under such Swap
Contract as to which the Borrower or any Non-Mueller Subsidiary is an Affected
Party (as so defined) and, in either event, the Swap Termination Value owed by
the Borrower or such Non-Mueller Subsidiary as a result thereof is greater than
$20,000,000; or

 

(f)            Insolvency
Proceedings, Etc.  Any Loan Party or
any of its Non-Mueller 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) The
Borrower or any Non-Mueller 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 the Borrower or any
Non-Mueller Subsidiary (i) a final judgment or order for the payment of
money in an aggregate amount exceeding $15,000,000 (to the extent not covered
by insurance provided by a Person described in Section 7.07 as to
which the insurer does not dispute coverage), or (ii) any one or more
non-monetary final judgments that have, or would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect and, in either
case, (A) enforcement proceedings are commenced by any creditor upon such
judgment or order and remain unstayed, or (B) there is a period of 30
consecutive days during which a stay of enforcement of such judgment, by reason
of a pending appeal or otherwise, is not in effect; or

 

(i)            ERISA.  (i) An ERISA Event occurs with respect
to a Pension Plan or Multiemployer Plan which has resulted or would reasonably
be expected to result in liability of the Borrower under Title IV of ERISA to
the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in
excess of $15,000,000, or (ii) the Borrower or any ERISA Affiliate fails
to pay when due, after the expiration of any applicable grace period, any
installment payment with respect to its withdrawal liability under Section 4201
of ERISA under a Multiemployer Plan in an aggregate amount in excess of
$15,000,000; or

 

(j)            Invalidity of Loan
Documents.  Any Loan Document, at any
time after its execution and delivery and for any reason other than as
expressly permitted hereunder or satisfaction in full of all the Obligations,
ceases to be in full force and effect; or any Loan Party or any other Person
contests in any manner the validity or enforceability of any Loan Document or
any Lien granted to the Administrative Agent pursuant to the Security
Instruments; or any

 

106

 

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

 

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

 

(l)            Mortgage Servicer.  Mid-State Homes, Walter Mortgage Company,
Walter Mortgage Servicing or Jim Walter Homes ceases to be the “servicer” or
Jim Walter Homes, Mid-State Homes or Walter Mortgage Company ceases to be the “subservicer”
on any mortgages securing any of the financings contemplated under Section 8.03(g).

 

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

 

(a)           declare the commitment
of each Lender to make Loans and any obligation of the L/C Issuer to make L/C –
BA 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 the Borrower;

 

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

 

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

 

provided, however,
that upon the occurrence of an actual or deemed entry of an order for relief
with respect to the 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 – BA 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 the Borrower to Cash Collateralize the L/C – BA Obligations as
aforesaid shall automatically become effective, in each case without further
act of the Administrative Agent or any Lender.

 

9.03        Application
of Funds.  After the exercise of
remedies provided for in Section 9.02 (or after the Loans have
automatically become immediately due and payable and the L/C – BA Obligations
have automatically been required to be Cash Collateralized as set forth in the
proviso to Section 9.02), any amounts received on account of the
Obligations shall be applied by the Administrative Agent in the following
order:

 

First, to payment of that portion of the
Obligations constituting fees, indemnities, expenses and other amounts
(including reasonable fees, charges and disbursements of counsel to the
Administrative Agent and amounts payable under Article IV) payable
to the Administrative Agent in its capacity as such;

 

107

 

Second, to payment of that portion of the
Obligations constituting fees, indemnities and other amounts (other than
principal, interest and Letter of Credit – BA Fees) payable to the Lenders and
the L/C Issuer (including reasonable fees, charges and disbursements of counsel
to the respective Lenders and the L/C Issuer and amounts payable under Article IV),
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 Letter of Credit – BA Fees and
interest on the Loans, L/C – BA Borrowings and other Obligations, ratably among
the Lenders and the L/C Issuer in proportion to the respective amounts
described in this clause Third payable to them;

 

Fourth, (ratably among the Lenders and the L/C
Issuer in proportion to the respective amounts described in this clause Fourth
held by them) to (i) the payment of that portion of the Obligations
constituting unpaid principal of the Loans and L/C – BA Borrowings, (ii) the
payment of the maximum amount of all Bankers’ Acceptances then outstanding,
such payment to be for the account of the L/C Issuer (or to the extent
Revolving Lenders have theretofore funded their participations in any such
Bankers’ Acceptance, ratably among such Revolving Lenders in accordance with
their Pro Rata Revolving Shares) and (iii) to Cash Collateralize that
portion of L/C – BA Obligations comprising the aggregate undrawn amount of
Letters of Credit, to the Administrative Agent for the account of the L/C
Issuer; provided that if the amounts available are insufficient to make
all payments provided for in this clause Fourth, that portion allocable
to clause (iii) shall be applied first to pay Outstanding Amounts of
Revolving Loans and L/C – BA Borrowings before being utilized to Cash
Collateralize L/C – BA Obligations;

 

Fifth, to payment of Swap Termination Values
and amounts owing under Related Treasury Management Arrangements, in each case
to the extent owing to any Lender or any Affiliate of any Lender arising under
Related Credit Arrangements that shall have been terminated and as to which the
Administrative Agent shall have received notice of such termination and the
Swap Termination Value thereof or the amount owing under the applicable Related
Treasury Management Arrangement from the applicable Lender or Affiliate of a
Lender;

 

Sixth, to the payment of all other Obligations
of the Loan Parties owing under or in respect of the Loan Document that are due
and payable to the Administrative Agent and the other Secured Parties, or any of
them, on such date, ratably based on the respective aggregate amounts of all
such Obligations owing to the Administrative Agent and the other Secured
Parties on such date; and

 

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

 

Subject to Section 2.04(c), amounts used to Cash
Collateralize the aggregate undrawn amount of Letters of Credit pursuant to
clause Fourth 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.

 

108

 

ARTICLE X.

ADMINISTRATIVE AGENT

 

10.01      Appointment
and Authority.  Each of the Lenders
and the L/C Issuer hereby irrevocably appoints Bank of America to act on its
behalf as the Administrative Agent hereunder and under the other Loan Documents
and authorizes the Administrative Agent to take such actions on its behalf and
to exercise such powers as are delegated to the Administrative Agent by the
terms hereof or thereof, together with such actions and powers as are
reasonably incidental thereto.  The
provisions of this Article are solely for the benefit of the
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.

 

10.02      Rights
as a Lender.  The Person serving as
the 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 the Administrative Agent and the term “Lender” or “Lenders” shall,
unless otherwise expressly indicated or unless the context otherwise requires,
include the Person serving as the 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 the Administrative Agent hereunder and without any duty
to account therefor to the Lenders.

 

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

 

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

 

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

 

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

 

The Administrative Agent shall not be liable for any action taken or
not taken by it (i) with the consent or at the request of the Required
Lenders (or such other number or percentage of the Lenders as shall be
necessary, or as the Administrative Agent shall believe in good faith shall be
necessary, under the circumstances as provided in Sections 11.01 and 9.02)
or (ii) in the

 

109

 

absence of its
own gross negligence or willful misconduct. 
The Administrative Agent shall be deemed not to have knowledge of any
Default unless and until notice describing such Default is given to the
Administrative Agent by the Borrower, a Lender or the L/C Issuer.

 

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

 

10.04      Reliance
by Administrative Agent.  The
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.  The 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 or Bankers’ Acceptance, that by its terms
must be fulfilled to the satisfaction of a Lender or the L/C Issuer, the
Administrative Agent may presume that such condition is satisfactory to such
Lender or the L/C Issuer unless the 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 or Bankers’
Acceptance.  The Administrative Agent may
consult with legal counsel (who may be counsel for the 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.

 

10.05      Delegation
of Duties.  The 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-agents appointed by the Administrative Agent.  The Administrative Agent and any such
sub-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-agent and to the Related Parties of the Administrative
Agent and any such sub-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.

 

10.06      Resignation
of Administrative Agent.  The
Administrative Agent may at any time give notice of its resignation to the
Lenders, the L/C Issuer and the Borrower. 
Upon receipt of any such notice of resignation, the Required Lenders
shall have the right, in consultation with the 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.  If no such successor shall have been so
appointed by the Required Lenders and shall have accepted such appointment

 

110

 

within 30 days after the retiring Administrative Agent
gives notice of its resignation, then the retiring Administrative Agent may on
behalf of the Lenders and the L/C Issuer, appoint a successor Administrative
Agent meeting the qualifications set forth above; provided that if the
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
held by the 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 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 the 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 the Borrower to a
successor Administrative Agent shall be the same as those payable to its
predecessor unless otherwise agreed between the 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 11.04
shall continue in effect for the benefit of such retiring Administrative Agent,
its sub-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 and/or Bankers’ Acceptances, 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 and/or
Bankers’ Acceptances.

 

10.07      Non-Reliance
on Administrative Agent and Other Lenders. 
Each Lender and the L/C Issuer acknowledges that it has, independently
and without reliance upon the 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
the 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

 

111

 

based upon this Agreement, any other Loan Document or
any related agreement or any document furnished hereunder or thereunder.

 

10.08      No
Other Duties, Etc.  Anything herein
to the contrary notwithstanding, none of the Bookrunners, Arrangers,
Syndication Agents or Documentation Agents 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.

 

10.09      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, the Administrative
Agent (irrespective of whether the principal of any Loan or L/C – BA Obligation
shall then be due and payable as herein expressed or by declaration or
otherwise and irrespective of whether the Administrative Agent shall have made
any demand on the Borrower) shall be entitled and empowered, by intervention in
such proceeding or otherwise

 

(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 – BA 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 the Lenders, the L/C
Issuer and the Administrative Agent (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Lenders, the L/C
Issuer and the Administrative Agent and their respective agents and counsel and
all other amounts due the Lenders, the L/C Issuer and the Administrative Agent
under Sections 2.04(i) and (j), 2.10 and 11.04)
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 the Administrative Agent and, in the event that the
Administrative Agent shall consent to the making of such payments directly to
the Lenders and the L/C Issuer, to pay to the Administrative Agent any amount
due for the reasonable compensation, expenses, disbursements and advances of
the Administrative Agent and its agents and counsel, and any other amounts due
the Administrative Agent under Sections 2.10 and 11.04.

 

Nothing contained herein shall be deemed to
authorize the Administrative Agent to authorize or consent to or accept or
adopt on behalf of any Lender 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 the Administrative Agent to vote in respect of
the claim of any Lender in any such proceeding.

 

10.10      Collateral and Guaranty
Matters.  The
Lenders and the L/C Issuer irrevocably authorize the Administrative Agent, at
its option and in its discretion,

 

(a)           to
release any Pledged Interest and any Lien on any property granted to or held by
the Administrative Agent under any Loan Document (i) subject to Section 11.01,
if approved,

 

112

 

authorized or ratified in
writing by the Required Lenders, or (ii) without the approval of any of
the Lenders (A) upon the occurrence of the Facility Termination Date or (B) to
the extent such property is Disposed or to be Disposed as part of or in
connection with any Disposition permitted hereunder or under any other Loan
Document (including a Disposition of Equity Interests in New Holdco as a result
of a Permitted Securities Transaction permitted hereunder);

 

(b)           to
subordinate any Lien on any property granted to or held by the Administrative
Agent under any Loan Document to the holder of any Lien on such property that
is permitted by Section 8.01(j); and

 

(c)           to
release any Guarantor from its obligations under the applicable Guaranty if
such Person ceases to be a Subsidiary as a result of a transaction permitted
hereunder.

 

Upon request by the Administrative Agent at
any time, the Required Lenders will confirm in writing the Administrative Agent’s
authority to release or subordinate its interest in particular types or items
of property, or to release any Guarantor from its obligations under the
applicable Guaranty pursuant to this Section 10.10.

 

ARTICLE XI.

MISCELLANEOUS

 

11.01      Amendments, Etc.  No amendment
or waiver of any provision of this Agreement or any other Loan Document, and no
consent to any departure by the Borrower or any other Loan Party therefrom,
shall be effective unless in writing signed by the Required Lenders and the
Borrower or the applicable Loan Party, as the case may be, and acknowledged by
the 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)           waive any condition set
forth in Section 5.01(a) without the written consent of each
Lender except to the extent otherwise provided for in Section 5.01(a);

 

(b)           extend or increase (i) the
Revolving Credit Commitment of any Revolving Lender (or reinstate any Revolving
Credit Commitment terminated pursuant to Section 9.02) without the
written consent of such Revolving Lender, or (ii) the obligation of any
Term Loan Lender to make any portion of the Term Loan without the written
consent of such Term Loan Lender;

 

(c)           postpone any date fixed
by this Agreement or any other Loan Document for any payment (but excluding
mandatory prepayments) of principal, interest, fees or other amounts due to the
Lenders (or any of them), including the Term Loan Maturity Date and the
Revolving Credit Maturity Date, or any
scheduled reduction of the Aggregate Revolving Credit Commitments
hereunder or under any other Loan Document, in each case without the written
consent of each Lender directly affected thereby;

 

(d)           reduce the principal
of, or the rate of interest specified herein on, any Loan or L/C Borrowing, or
(subject to clause (v) of the second proviso to this Section 11.01)
any fees or other amounts payable hereunder or under any other Loan Document,
without the written consent of

 

113

 

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” (so long as such
amendment does not result in the Default Rate being lower than the interest
rate then applicable to Base Rate Loans or Eurodollar Rate Loans, as
applicable) or to waive any obligation of the Borrower to pay interest or
Letter of Credit – BA 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 change the
Applicable Rate, the Required Equity Prepayment Percentage or the Required ECF
Prepayment Percentage;

 

(e)           change Section 2.14
or Section 9.03 in a manner that would alter the pro rata sharing
of payments required thereby without the written consent of each Lender
directly affected thereby;

 

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

 

(g)           change
any provision of this Section or the definition of “Required Revolving
Lenders” or any other provision hereof specifying the number or percentage of
Revolving 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 Revolving Lender;

 

(h)           change
any provision of this Section or the definition of “Required Term Loan
Lenders” or any other provision hereof specifying the number or percentage of
Term Loan 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 Term Loan Lender;

 

(i)            impose
any greater restriction on the ability of any Lender to assign any of its
rights or obligations hereunder without the written consent of Lenders having
more than 50% of the Aggregate Credit Exposures then in effect within each of
the following classes of commitments:  (i) the
class consisting of the Revolving Lenders, and (ii) the class consisting
of the Term Loan Lenders; provided that for purposes of this clause, the
aggregate amount of each Lender’s risk participation and funded participation
in L/C Obligations and Swing Line Loans shall be deemed to be held by such
Lender;

 

(j)            release any Guarantor from the applicable
Guaranty without the written consent of each Lender, except to the extent such
Guarantor is the subject of a Disposition permitted by Section 8.05
(in which case such release may be made by the Administrative Agent acting
alone);

 

(k)           release
all or a material part of the Collateral without the written consent of each
Lender except with respect to Dispositions and releases of Collateral permitted
or required hereunder (including pursuant to Section 8.05) or as
provided in the other Loan Documents (in which case such release may be made by
the Administrative Agent acting alone); or

 

114

 

(l)            reduce
the number or type of events that give rise to a mandatory prepayment pursuant
to Section 2.06(d) or change the order or manner of
application of the Net Cash Proceeds provided therein, in each case without the
written consent of each Lender directly affected thereby;

 

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 or
Bankers’ Acceptance issued or to be issued by it; (ii) no amendment,
waiver or consent shall, unless in writing and signed by the Swing Line Lender
in addition to the Lenders required above, affect the rights or duties of the
Swing Line Lender under this Agreement; (iii) no amendment, waiver or
consent shall, unless in writing and signed by the Administrative Agent in
addition to the Lenders required above, affect the rights or duties of the
Administrative Agent under this Agreement or any other Loan Document; (iv) Section 11.06(h) may not be amended, waived or otherwise
modified without the consent of each Granting Lender all or any part of whose
Loans are being funded by an SPC at the time of such amendment, waiver or other
modification; (v) each of the Joint Fee Letter and the Agency Fee
Letter may be amended, or rights or privileges thereunder waived, in a writing
executed only by the respective parties thereto; and (vi) no amendment,
waiver or consent which has the effect of enabling the Borrower to satisfy any
condition to a Borrowing contained in Section 5.02 hereof which,
but for such amendment, waiver or consent would not be satisfied, shall be
effective to require the Revolving Lenders, the Swing Line Lender or the L/C
Issuer to make any additional Revolving Loan or Swing Line Loan, or to issue
any additional or renew any existing Letter of Credit or issue any Bankers’
Acceptance, unless and until the Required Revolving Lenders (or, if applicable,
all Revolving Lenders) shall have approved such amendment, waiver or
consent.  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
Revolving Credit Commitment of such Lender may not be increased or extended
without the consent of such Lender.

 

11.02      Notices; Effectiveness; Electronic
Communication.

 

(a)           Notices Generally.  Except in the case of notices and other
communications expressly permitted to be given by telephone or in the case of
notices otherwise expressly provided herein (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 the Borrower, the
Administrative Agent, the L/C Issuer or the Swing Line Lender, to the address,
telecopier number, electronic mail address or telephone number specified for
such Person on Schedule 11.02, as changed pursuant to subsection (d) below;
and

 

(ii)           if to any other Lender, to the
address, telecopier number, electronic mail address or telephone number
specified in its Administrative Questionnaire, as changed pursuant to subsection (d) below.

 

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

 

Unless the 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.

 

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

 

116

 

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, the
Administrative Agent, the L/C Issuer and the 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 the Borrower, the Administrative Agent, the L/C Issuer and the
Swing Line Lender.  In addition, each
Lender agrees to notify the Administrative Agent from time to time to ensure
that the 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.  The Administrative Agent, the L/C
Issuer and the Lenders shall be entitled to rely and act upon any notices
(including telephonic Revolving Loan Notices, Swing Line Loan Notices and Term
Loan Interest Rate Selection Notices) purportedly given by or on behalf of the
Borrower even if (i) such notices were not made in a manner specified
herein, were incomplete or were not preceded or followed by any other form of
notice specified herein, or (ii) the terms thereof, as understood by the
recipient, varied from any confirmation thereof.  The Borrower shall indemnify the
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 purportedly given by or on behalf of
the Borrower.  All telephonic notices to
and other telephonic communications with the Administrative Agent may be
recorded by the Administrative Agent, and each of the parties hereto hereby
consents to such recording.

 

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

 

11.04      Expenses; Indemnity; Damage Waiver.

 

(a)           Costs and
Expenses.  The Borrower shall pay (i) all
reasonable out-of-pocket expenses incurred by the Administrative Agent and its
Affiliates and the Arrangers (including the reasonable fees, charges and
disbursements of counsel for the Administrative Agent and the Arrangers), 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 out-of-pocket expenses incurred by
the Administrative Agent, the L/C Issuer, the Swing Line Lender or the
Arrangers (including the fees, charges and disbursements of

 

117

 

any counsel for the Administrative Agent, the Swing
Line Lender, the L/C Issuer or the Arrangers), 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.  The Borrower shall
indemnify the Administrative Agent (and any sub-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 reasonable fees, charges and disbursements of any counsel for
any Indemnitee), incurred by any Indemnitee or asserted against any Indemnitee
by any third party or by the 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, the consummation of the
transactions contemplated hereby or thereby or, in the case of the
Administrative agent (and any sub-agent thereof) and its Related Parties only,
the administration of this Agreement and the other Loan Documents, (ii) any
Loan, Letter of Credit or Bankers’ Acceptance 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 or Bankers’ Acceptance if the documents
presented in connection with such demand do not strictly comply with the terms
of such Letter of Credit or Bankers’ Acceptance), (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 Non-Mueller Subsidiaries, or any Environmental
Liability related in any way to the Borrower or any of its Non-Mueller 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 any Indemnitee is a party thereto; 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 the 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 the 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 the
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 the Administrative Agent (or
any sub-agent thereof), the L/C Issuer or any Related Party of any of the
foregoing, each Lender severally agrees to pay to the Administrative Agent (or
any such sub-agent), the L/C Issuer or such Related Party, as the case may be,
such Lender’s pro rata share (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought based on such Lender’s
portion of Loans, commitments and risk participations with respect to the
Revolving Credit Facility and the Term Loan Facility) of such unpaid amount, provided
that the unreimbursed expense or indemnified loss, claim, damage, liability or
related

 

118

 

expense, as the case may be, was incurred by or
asserted against the Administrative Agent (or any such sub-agent) or the L/C
Issuer in its capacity as such, or against any Related Party of any of the
foregoing acting for the Administrative Agent (or any such sub-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); provided  further
that any amount due exclusively to the L/C Issuer in its capacity as such shall
be borne pursuant to this Section 11.04(c) pro rata by the
Revolving Lenders, and not by any Term Lender.

 

(d)           Waiver of
Consequential Damages, Etc.  To the
fullest extent permitted by applicable law, the 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, Letter of
Credit or Bankers’ Acceptance 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 the Administrative Agent, the L/C Issuer and the
Swing Line Lender, the replacement of any Lender and the occurrence of the
Facility Termination Date.

 

11.05      Payments Set Aside.  To the extent that any
payment by or on behalf of the Borrower is made to the Administrative Agent,
the L/C Issuer or any Lender, or the Administrative Agent, the L/C Issuer or
any Lender exercises its right of setoff, and such payment or the 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 the 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 the Administrative Agent upon demand its applicable share (without
duplication) of any amount so recovered from or repaid by the Administrative
Agent, plus interest thereon from the date of such demand to the date such
payment is made at a rate per annum equal to the Federal Funds Rate from time
to time in effect.  The obligations of
the Lenders and the L/C Issuer under clause (b) of the preceding sentence
shall survive the occurrence of the Facility Termination Date.

 

119

 

11.06      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 the Borrower may not assign
or otherwise transfer any of its rights or obligations hereunder without the
prior written consent of the Administrative Agent 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, (iii) by
way of pledge or assignment of a security interest subject to the restrictions
of subsection (f) of this Section, or (iv) to an SPC in accordance with the provisions of subsection (h) 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 the 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 Revolving
Credit Commitment and its Revolving Loans (including for purposes of this subsection (b),
participations in L/C – BA Obligations and in Swing Line Loans) or of its Pro
Rata Term Share of the Term Loan at the time owing to it (such Lender’s portion
of Loans, commitments and risk participations with respect to each of the
Revolving Credit Facility and the Term Loan Facility (each, an “Applicable Facility”)
being referred to in this Section 11.06 as its “Applicable Share”))
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 Applicable Share of
the Applicable Facility at the time owing to it or in the case of an assignment
to a Lender or an Affiliate of a Lender or an Approved Fund with respect to a
Lender, the aggregate amount of the Applicable Share (which for this purpose
includes Loans outstanding thereunder) with respect to each Applicable
Facility, determined as of the date the Assignment and Assumption with respect
to such assignment is delivered to the Administrative Agent or, if “Trade Date”
is specified in the Assignment and Assumption, as of the Trade Date, shall not
be less than (A) $5,000,000 with respect to the Revolving Credit Facility
and (B) $1,000,000 with respect to the Term Loan Facility, unless in
either case each of the Administrative Agent and, so long as no Event of Default
has occurred and is continuing, the Borrower otherwise consents (each such
consent not to be unreasonably withheld or delayed), provided, however,
that concurrent assignments to members of an Assignee Group and concurrent
assignments from members of an Assignee Group to a single Eligible Assignee (or
to an Eligible Assignee and members of its Assignee Group) will be treated as a
single assignment for purposes of determining whether such minimum amount has
been met;

 

(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

 

120

 

respect to the
Applicable Facility, except that this clause (ii) shall not (A) prohibit
any Lender from assigning all or a portion of its rights and obligations among
the Applicable Facilities on a non-pro rata basis or (B) apply to rights
in respect of Swing Line Loans;

 

(iii)          any assignment of a Revolving Credit
Commitment must be approved by the Administrative Agent, the L/C Issuer and the
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 the Administrative Agent an Assignment and Assumption,
together with a processing and recordation fee in the amount, if any, required
as set forth in Schedule 11.06, and the Eligible Assignee, if it
shall not be a Lender, shall deliver to the Administrative Agent an
Administrative Questionnaire.

 

Subject to acceptance and recording thereof by the 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 Revolving Lender or a Term Lender, as applicable, 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 4.01, 4.04, 4.05,
and 11.04 with respect to facts and circumstances occurring prior to the
effective date of such assignment.  Upon
request, the Borrower (at its expense) shall execute and deliver applicable
Notes 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.  The Administrative Agent, acting solely for
this purpose as an agent of the Borrower (in such capacity, subject to Section 11.17),
shall maintain at the Administrative Agent’s Office a copy of each Assignment
and Assumption delivered to it and a register for the recordation of the names
and addresses of the Lenders, and the Revolving Credit Commitments of, and
principal amounts of the Loans and L/C – BA 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 the Borrower, the Administrative Agent and the Lenders may
treat each Person whose name is recorded in the Register pursuant to the terms
hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. 
The Register shall be available for inspection by each of the 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 may request and receive from the
Administrative Agent a copy of the Register.

 

(d)           Participations.  Any Lender may at any time, without the
consent of, or notice to, the Borrower or the Administrative Agent, sell
participations to any Person (other than a natural

 

121

 

person or the Borrower or any of the Borrower’s
Affiliates or Subsidiaries) (each, a “Participant”) in all or a portion of such
Lender’s rights and/or obligations under this Agreement (including all or a
portion of its Revolving Credit Commitment and/or the Loans (including such
Lender’s participations in L/C – BA 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) the Borrower, the Administrative Agent, the Lenders and the L/C
Issuer shall continue to deal solely and directly with such Lender in
connection with such Lender’s rights and obligations under this Agreement.

 

Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and to approve any amendment, modification or waiver of
any provision of this Agreement; provided that such agreement or
instrument may provide that such Lender will not, without the consent of the
Participant, agree to any amendment, waiver or other modification described in
the first proviso to Section 11.01 that affects such
Participant.  Subject to subsection (e) of
this Section, the Borrower agrees that each Participant shall be entitled to the
benefits of Sections 4.01, 4.04 and 4.05 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 11.08
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 4.01
or 4.04 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 the Borrower’s prior written
consent.  A Participant that would be a
Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 4.01
unless the Borrower is notified of the participation sold to such Participant
and such Participant agrees, for the benefit of the Borrower, to comply with Section 4.01(e) as
though it were a Lender.

 

(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.

 

122

 

(h)           Special
Purpose Funding Vehicles. 
Notwithstanding anything to the contrary contained herein, any Lender (a
“Granting Lender”) may grant to a special purpose funding
vehicle identified as such in writing from time to time by the Granting Lender
to the Administrative Agent and the Borrower (an “SPC”)
the option to provide all or any part of any Loan that such Granting Lender
would otherwise be obligated to make pursuant to this Agreement; provided
that (i) nothing herein shall constitute a commitment by any SPC to fund
any Loan, and (ii) if an SPC elects not to exercise such option or
otherwise fails to make all or any part of such Loan, the Granting Lender shall
be obligated to make such Loan pursuant to the terms hereof or, if it fails to
do so, to make such payment to the Administrative Agent as is required under Section 2.13(b)(ii).  Each party hereto hereby agrees that (i) neither
the grant to any SPC nor the exercise by any SPC of such option shall increase
the costs or expenses or otherwise increase or change the obligations of the
Borrower under this Agreement (including its obligations under Section 4.04),
(ii) no SPC shall be liable for any indemnity or similar payment
obligation under this Agreement for which a Lender would be liable, and (iii) the
Granting Lender shall for all purposes, including the approval of any
amendment, waiver or other modification of any provision of any Loan Document,
remain the lender of record hereunder. 
The making of a Loan by an SPC hereunder shall utilize the Revolving
Credit Commitment or commitment to make a Term Loan of the Granting Lender to
the same extent, and as if, such Loan were made by such Granting Lender.  In furtherance of the foregoing, each party
hereto hereby agrees (which agreement shall survive the occurrence of the
Facility Termination Date) that, prior to the date that is one year and one day
after the payment in full of all outstanding commercial paper or other senior
debt of any SPC, it will not institute against, or join any other Person in
instituting against, such SPC any bankruptcy, reorganization, arrangement,
insolvency, or liquidation proceeding under the laws of the United States or
any State thereof.  Notwithstanding
anything to the contrary contained herein, any SPC may (i) with notice to,
but without prior consent of the Borrower and the Administrative Agent and with
the payment of a processing fee in the amount of $2,500, assign all or any
portion of its right to receive payment with respect to any Loan to the Granting
Lender and (ii) disclose on a confidential basis any non-public
information relating to its funding of Loans to any rating agency, commercial
paper dealer or provider of any surety or Guarantee or credit or liquidity
enhancement to such SPC.

 

(i)            Resignation as
L/C Issuer or Swing Line Lender after Assignment.  Notwithstanding anything to the contrary
contained herein, if at any time Bank of America assigns all of its Revolving Credit Commitment, Revolving
Loans and any Pro Rata Term Share of the Term Loan pursuant to subsection (b) above,
Bank of America may, (i) upon 30 days’ notice to the Borrower and the
Lenders, resign as L/C Issuer and/or (ii) upon 30 days’ notice to the
Borrower, resign as Swing Line Lender. 
In the event of any such resignation as L/C Issuer or Swing Line Lender,
the Borrower shall be entitled to appoint from among the Lenders willing to
serve in such capacity a successor L/C Issuer or Swing Line Lender hereunder; provided,
however, that no failure by the Borrower to appoint any such successor
shall affect the resignation of Bank of America as L/C Issuer 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 duties of the L/C Issuer hereunder with respect to all Letters
of Credit and Bankers’ Acceptances outstanding as of the effective date of its
resignation as L/C Issuer and all L/C – BA Obligations with respect thereto
(including the right to require the Lenders to make Base Rate Loans or fund risk
participations in Unreimbursed Amounts pursuant to Section 2.04(c)).  If Bank of America resigns as Swing Line
Lender, it shall retain all the rights of the Swing Line Lender provided for

 

123

 

hereunder with respect to Swing Line Loans made by it
and outstanding as of the effective date of such resignation, including the
right to require the Lenders to make Base Rate Loans or fund risk
participations in outstanding Swing Line Loans pursuant to Section 2.05(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 and/or Bankers’ Acceptances,
if any, outstanding at the time of such successor 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 and/or Bankers’ Acceptances.

 

11.07      Treatment of Certain Information;
Confidentiality.  Each
of the Administrative Agent, the 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, trustees, officers, employees,
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 instructed 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 the Borrower and its
obligations, (g) with the consent of the Borrower or (h) to the
extent such Information (x) becomes publicly available other than as a result
of a breach of this Section or (y) becomes available to the Administrative
Agent, any Lender, the L/C Issuer or any of their respective Affiliates on a
nonconfidential basis from a source other than the Borrower.

 

For purposes of this Section, “Information” means all information received
from the Borrower or any Non-Mueller Subsidiary
relating to the Borrower or any Non-Mueller Subsidiary
or any of their respective businesses, other than any such information that is
available to the Administrative Agent, any Lender or the L/C Issuer on a
nonconfidential basis prior to disclosure by the Borrower or any Non-Mueller Subsidiary, provided that, in the
case of information received from the Borrower or any Non-Mueller Subsidiary after the date hereof, any
information not marked “PUBLIC” at the time of delivery will be deemed to be
confidential; provided that any information marked “PUBLIC” may also be
marked “Confidential”.  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 the 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

 

124

 

Non-Mueller 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.

 

11.08      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, after obtaining the prior written consent of
the Administrative Agent, to the fullest extent permitted by applicable
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final, 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 the
Borrower against any and all of the obligations of the Borrower now or
hereafter existing under this Agreement or any other Loan Document to such
Lender or the L/C Issuer, 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 the Borrower 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 the Borrower and the 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.

 

11.09      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 the Administrative Agent or any Lender
shall receive interest in an amount that exceeds the Maximum Rate, the excess
interest shall be applied to the principal of the Loans or, if it exceeds such
unpaid principal, refunded to the Borrower. 
In determining whether the interest contracted for, charged, or received
by the Administrative Agent or a Lender exceeds the Maximum Rate, such Person
may, to the extent permitted by applicable Law, (a) characterize any
payment that is not principal as an expense, fee, or premium rather than
interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize,
prorate, allocate, and spread in equal or unequal parts the total amount of
interest throughout the contemplated term of the Obligations hereunder.

 

11.10      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 5.01, this Agreement shall become effective
when it shall have been executed by the Administrative Agent and when the
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.

 

125

 

11.11      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 the Administrative Agent and each Lender, regardless
of any investigation made by the Administrative Agent or any Lender or on their
behalf and notwithstanding that the Administrative Agent or any Lender may have
had notice or knowledge of any Default at the time of any 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.

 

11.12      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.

 

11.13      Replacement of Lenders.  If any Lender requests compensation under Section 4.04,
if the Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 4.01,
if any Lender is a Defaulting Lender, or if any Lender fails to approve any
amendment, waiver or consent requested by Borrower pursuant to Section 11.01
that has received the written approval of not less than the Required Lenders
but also requires the approval of such Lender, then in each such case the
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 11.06), all of its interests, rights
and obligations under this Agreement and the related Loan Documents to an
assignee that shall assume such obligations (which assignee may be another
Lender, if a Lender accepts such assignment), provided that:

 

(a)           the Borrower shall
have paid to the Administrative Agent the assignment fee specified in Section 11.06(b);

 

(b)           such Lender shall
have received payment of an amount equal to the outstanding principal of its
Loans and L/C – BA Advances, accrued interest thereon, accrued fees and all
other amounts payable to it hereunder and under the other Loan Documents
(including any amounts under Section 4.05) from the assignee (to
the extent of such outstanding principal and accrued interest and fees) or the
Borrower (in the case of all other amounts);

 

(c)           in the case of any
such assignment resulting from a claim for compensation under Section 4.04
or payments required to be made pursuant to Section 4.01, such
assignment will result in a reduction in such compensation or payments
thereafter;

 

126

 

(d)           in the case of any
such assignment resulting from the refusal of a Lender to approve a requested
amendment, waiver or consent, the Person to whom such assignment is being made
has agreed to approve such requested amendment, waiver or consent; and

 

(e)           such assignment does
not conflict with applicable Laws.

 

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 the Borrower to require such assignment
and delegation cease to apply.

 

11.14      Governing Law; Jurisdiction; Etc.

 

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

 

(b)           SUBMISSION TO
JURISDICTION.  THE BORROWER
IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE
NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW
YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF
NEW YORK, 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 NEW YORK 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 THE
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 ITS PROPERTIES IN THE COURTS OF ANY
JURISDICTION.

 

(c)           WAIVER OF VENUE.  THE BORROWER 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, 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.

 

127

 

(d)           SERVICE OF
PROCESS.  EACH PARTY HERETO
IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES
IN SECTION 11.02.  NOTHING IN
THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN
ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.

 

11.15      Waiver of Jury Trial.  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, 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.

 

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

 

11.17      No Fiduciary Relationship.  The Borrower acknowledges and agrees that in
connection with all aspects of each transaction contemplated by this Agreement,
the Borrower, on the one hand, and each of Bank of America, Morgan Stanley, the
Arrangers and any affiliate through which any of them may be acting (each, a “Transaction Affiliate”),
on the other hand, have an arms-length business relationship that creates no
fiduciary duty on the part of any of Bank of America, Morgan Stanley, either
Arranger or any of their respective Transaction Affiliates and each of them
expressly disclaims any fiduciary relationship.

 

128

 

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

 

	
   

  	
  WALTER
  INDUSTRIES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Miles C.
  Dearden, III

  
	
   

  	
  Name:

  	
  Miles C. Dearden, III

  
	
   

  	
  Title:

  	
  Senior Vice
  President

  
				

 

 

Walter Industries, Inc.

Credit Agreement

Signature Pages

 

 

	
   

  	
  BANK OF
  AMERICA, N.A., as

  
	
   

  	
  Administrative
  Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ W.
  Thomas Barnett

  
	
   

  	
  Name:

  	
  W. Thomas
  Barnett

  
	
   

  	
  Title:

  	
  Senior Vice
  President

  
				

 

 

	
   

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

  and Swing Line Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ W.
  Thomas Barnett

  
	
   

  	
  Name:

  	
  W. Thomas
  Barnett

  
	
   

  	
  Title:

  	
  Senior Vice
  President

  
				

 

 

	
   

  	
  MORGAN
  STANLEY SENIOR FUNDING, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Eugene
  F. Martin

  
	
   

  	
  Name:

  	
  Eugene F.
  Martin

  
	
   

  	
  Title:

  	
  Vice
  President

  
				

 

 

	
   

  	
  BNP PARIBAS

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Duane
  Helkowski

  
	
   

  	
  Name:

  	
  Duane
  Helkowski

  
	
   

  	
  Title:

  	
  Managing
  Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Shayn
  March

  
	
   

  	
  Name:

  	
  Shayn March

  
	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  	
   

  

 

	
   

  	
  CALYON NEW YORK BRANCH

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Samuel
  L. Hill

  
	
   

  	
  Name:

  	
  Samuel L.
  Hill

  
	
   

  	
  Title:

  	
  Managing
  Director & Regional Manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David P.
  Cagle

  
	
   

  	
  Name:

  	
  David P.
  Cagle

  
	
   

  	
  Title:

  	
  Managing
  Director

  
	
   

  	
   

  	
   

  

 

	
   

  	
  COMERICA BANK

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gerald
  R. Finney, Jr.

  
	
   

  	
  Name:

  	
  Gerald R.
  Finney, Jr.

  
	
   

  	
  Title:

  	
  Vice
  President

  
	
   

  	
   

  	
   

  

 

	
   

  	
  SUNTRUST BANK

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Bradley
  J. Staples

  
	
   

  	
  Name:

  	
  Bradley J.
  Staples

  
	
   

  	
  Title:

  	
  Managing
  Director

  

 

 

	
   

  	
  FIFTH THIRD BANK

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Marisol
  Lugo

  
	
   

  	
  Name:

  	
  Marisol Lugo

  
	
   

  	
  Title:

  	
  Vice
  President

  

 

 

	
   

  	
  THE BANK OF NEW YORK

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David C.
  Siegel

  
	
   

  	
  Name:

  	
  David C.
  Siegel

  
	
   

  	
  Title:

  	
  Vice
  President

  

 

 

	
   

  	
  RAYMOND JAMES BANK, FSB

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Thomas
  F. Macina

  
	
   

  	
  Name:

  	
  Thomas F.
  Macina

  
	
   

  	
  Title:

  	
  Senior Vice
  President

  

 

 

	
   

  	
  REGIONS BANK

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Anthony
  D. Nigro

  
	
   

  	
  Name:

  	
  Anthony D.
  Nigro

  
	
   

  	
  Title:

  	
  Senior Vice
  President

  

 

 

	
   

  	
  BRANCH BANKING AND TRUST COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Brigitta
  A. Lawton

  
	
   

  	
  Name:

  	
  Brigitta A.
  Lawton

  
	
   

  	
  Title:

  	
  Senior Vice
  President

  

 

 

	
   

  	
  AMSOUTH BANK

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jonathan
  A. Browy

  
	
   

  	
  Name:

  	
  Jonathan A.
  Browy

  
	
   

  	
  Title:

  	
  Vice
  President

  

 

 

	
   

  	
  FIRST COMMERCIAL BANK

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James W.
  Brunstad

  
	
   

  	
  Name:

  	
  James W. Brunstad

  
	
   

  	
  Title:

  	
  Senior Vice
  President

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