Document:

Exhibit
10.1

 

Execution Copy

 

 

CREDIT AGREEMENT

 

 

Dated as of June 2, 2003

 

 

BEAZER HOMES USA, INC.,

 

The Lenders Party
Thereto,

 

BANK ONE, NA

 

As Agent,

 

and

 

BNP PARIBAS, GUARANTY
BANK, SUNTRUST BANK AND

WACHOVIA BANK, NATIONAL ASSOCIATION

 

as Syndication Agents

 

and

 

COMERICA BANK, PNC BANK,
N.A. and WASHINGTON MUTUAL BANK, FA, 

as Co-Agents

 

BANC ONE CAPITAL MARKETS,
INC.,

 

Lead Arranger and Sole
Bookrunner

 

$250,000,000 REVOLVING
CREDIT FACILITY

 

and

 

$200,000,000 TERM LOAN
FACILITY

 

 

 

 

Table of Contents

 

	
  ARTICLE
  I  DEFINITIONS AND ACCOUNTING TERMS

  
	
   

  
	
   

  	
  Section 1.01  Defined Terms

  
	
   

  	
  Section 1.02  Accounting Terms

  
	
   

  
	
  ARTICLE
  II  AMOUNTS AND TERMS OF THE
  FACILITIES

  
	
   

  
	
   

  	
  Section 2.01  The Facilities

  
	
   

  	
  Section 2.02  Reductions of and Increases in Aggregate Revolving Credit
  Commitment

  
	
   

  	
  Section 2.03  Notice and Manner of Borrowing

  
	
   

  	
  Section 2.04  Non-Receipt of Funds by Agent

  
	
   

  	
  Section 2.05  Determination of Applicable Margins and Applicable Commitment
  Rate

  
	
   

  	
  Section 2.06  Conversions and Renewals

  
	
   

  	
  Section 2.07  Interest

  
	
   

  	
  Section 2.08  Interest Rate Determination

  
	
   

  	
  Section 2.09  Fees

  
	
   

  	
  Section 2.10  Notes

  
	
   

  	
  Section 2.11  Prepayments

  
	
   

  	
  Section 2.12  Method of Payment

  
	
   

  	
  Section 2.13  Use of Proceeds

  
	
   

  	
  Section 2.14  Yield Protection

  
	
   

  	
  Section 2.15  Changes in Capital Adequacy Regulations

  
	
   

  	
  Section 2.16  Availability of LIBOR Loans

  
	
   

  	
  Section 2.17  Funding Indemnification

  
	
   

  	
  Section 2.18  Lender Statements; Survival of Indemnity

  
	
   

  	
  Section 2.19  Extension of Revolving Credit Termination Date

  
	
   

  	
  Section 2.20  Extension of Term Loan Maturity Date

  
	
   

  	
  Section 2.21  Replacement of Certain Lenders

  
	
   

  	
  Section 2.22  Swing Line

  
	
   

  	
  Section 2.23  Facility Letters of Credit

  
	
   

  
	
  ARTICLE III  CONDITIONS PRECEDENT

  
	
   

  
	
   

  	
  Section 3.01  Conditions Precedent to Initial Loans

  
	
   

  	
  Section 3.02  Conditions Precedent to All Loans

  
	
   

  
	
  ARTICLE
  IV  REPRESENTATIONS AND WARRANTIES

  
	
   

  
	
   

  	
  Section 4.01  Incorporation, Formation, Good Standing, and Due Qualification

  
	
   

  	
  Section 4.02  Power and Authority

  
	
   

  	
  Section 4.03  Legally Enforceable Agreement

  

 

i

 

	
   

  	
  Section 4.04  Financial Statements

  
	
   

  	
  Section 4.05  Labor Disputes and Acts of God

  
	
   

  	
  Section 4.06  Other Agreements

  
	
   

  	
  Section 4.07  Litigation

  
	
   

  	
  Section 4.08  No Defaults on Outstanding Judgments or Orders

  
	
   

  	
  Section 4.09  Ownership and Liens

  
	
   

  	
  Section 4.10  Subsidiaries and Ownership of Stock

  
	
   

  	
  Section 4.11  ERISA

  
	
   

  	
  Section 4.12  Operation of Business

  
	
   

  	
  Section 4.13  Taxes

  
	
   

  	
  Section 4.14  Laws; Environment

  
	
   

  	
  Section 4.15  Investment Company Act

  
	
   

  	
  Section 4.16  Public Utility Holding Company Act

  
	
   

  
	
  ARTICLE
  V  AFFIRMATIVE COVENANTS

  
	
   

  
	
   

  	
  Section 5.01  Maintenance of Existence

  
	
   

  	
  Section 5.02  Maintenance of Records

  
	
   

  	
  Section 5.03  Maintenance of Properties

  
	
   

  	
  Section 5.04  Conduct of Business

  
	
   

  	
  Section 5.05  Maintenance of Insurance

  
	
   

  	
  Section 5.06  Compliance with Laws

  
	
   

  	
  Section 5.07  Right of Inspection

  
	
   

  	
  Section 5.08  Reporting Requirements

  
	
   

  	
  Section 5.09  Subsidiary Reporting Requirements

  
	
   

  	
  Section 5.10  Environment

  
	
   

  	
  Section 5.11  Use of Proceeds

  
	
   

  	
  Section 5.12  Ranking of Obligations

  
	
   

  	
  Section 5.13  Taxes

  
	
   

  	
  Section 5.14  Wholly-Owned Status

  
	
   

  	
  Section 5.15  New Subsidiaries

  
	
   

  
	
  ARTICLE
  VI  NEGATIVE COVENANTS

  
	
   

  
	
   

  	
  Section 6.01  Liens

  
	
   

  	
  Section 6.02  Secured Debt

  
	
   

  	
  Section 6.03  Mergers, Etc

  
	
   

  	
  Section 6.04  Leases

  
	
   

  	
  Section 6.05  Sale and Leaseback

  
	
   

  	
  Section 6.06  Sale of Assets

  
	
   

  	
  Section 6.07  Investments

  
	
   

  	
  Section 6.08  Guaranties, Etc

  
	
   

  	
  Section 6.09  Transactions With Affiliates

  

 

ii

 

	
   

  	
  Section 6.10  Housing Inventory

  
	
   

  	
  Section 6.11  Senior Debt

  
	
   

  	
  Section 6.12  Amendment or Modification of Senior Indentures

  
	
   

  	
  Section 6.13  Non-Guarantors

  
	
   

  	
  Section 6.14  Negative Pledges

  
	
   

  
	
  ARTICLE VII  FINANCIAL COVENANTS

  
	
   

  
	
   

  	
  Section 7.01  Minimum Consolidated Tangible Net Worth

  
	
   

  	
  Section 7.02  Leverage Ratio

  
	
   

  	
  Section 7.03  Borrowing Base Debt

  
	
   

  	
  Section 7.04  Interest Coverage Ratio

  
	
   

  	
  Section 7.05  Land Inventory

  
	
   

  
	
  ARTICLE VIII  EVENTS OF DEFAULT

  
	
   

  
	
   

  	
  Section 8.01  Events of Default

  
	
   

  	
  Section 8.02  Set Off

  
	
   

  
	
  ARTICLE
  IX  INTENTIONALLY OMITTED

  
	
   

  
	
  ARTICLE
  X  AGENCY PROVISIONS

  
	
   

  
	
   

  	
  Section 10.01  Authorization and Action

  
	
   

  	
  Section 10.02  Liability of Agent

  
	
   

  	
  Section 10.03  Rights of Agent as a Lender

  
	
   

  	
  Section 10.04  Independent Credit Decisions

  
	
   

  	
  Section 10.05  Indemnification

  
	
   

  	
  Section 10.06  Successor Agent

  
	
   

  	
  Section 10.07  Sharing of Payments, Etc

  
	
   

  	
  Section 10.08  Withholding Tax Matters

  
	
   

  	
  Section 10.09  Documentation Agents or Co-Agents

  
	
   

  
	
  ARTICLE
  XI  MISCELLANEOUS

  
	
   

  
	
   

  	
  Section 11.01  Amendments, Etc

  
	
   

  	
  Section 11.02  Notices, Etc

  
	
   

  	
  Section 11.03  No Waiver

  
	
   

  	
  Section 11.04  Costs, Expenses, and Taxes

  
	
   

  	
  Section 11.05  Integration

  
	
   

  	
  Section 11.06  Indemnity

  
	
   

  	
  Section 11.07  Governing Law

  
	
   

  	
  Section 11.08  Severability of Provisions

  
	
   

  	
  Section 11.09  Counterparts

  

 

iii

 

	
   

  	
  Section 11.10  Headings

  
	
   

  	
  Section 11.11  Submission to Jurisdiction

  
	
   

  	
  Section 11.12  Jury Trial Waiver

  
	
   

  	
  Section 11.13  Governmental Regulation

  
	
   

  	
  Section 11.14  No Fiduciary Duty

  
	
   

  	
  Section 11.15  Confidentiality

  
	
   

  
	
  ARTICLE XII  BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS

  
	
   

  
	
   

  	
  Section 12.01  Successors and Assigns

  
	
   

  	
  Section 12.02  Participations

  
	
   

  	
  Section 12.03  Assignments

  
	
   

  	
  Section 12.04  Dissemination of Information

  
	
   

  	
  Section 12.05  Tax Treatment

  

 

iv

 

LIST OF SCHEDULES AND
EXHIBITS

 

	
  Schedule

  	
   

  	
  Description

  	
   

  	
  Reference

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Schedule
  I

  	
   

  	
  Commitments

  	
   

  	
  2.01

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Schedule II

  	
   

  	
  Existing Letters of Credit

  	
   

  	
  Definition

  

 

	
  Exhibit

  	
   

  	
  Description

  	
   

  	
  Reference

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit
  A

  	
   

  	
  Guarantors

  	
   

  	
  Definition

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit
  B

  	
   

  	
  Form
  of Guaranty

  	
   

  	
  Definition

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit C-1

  	
   

  	
  Form of Revolving Credit Note

  	
   

  	
  Definition

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit C-2

  	
   

  	
  Form of Term Loan Note

  	
   

  	
  Definition

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit
  D

  	
   

  	
  Commitment and Acceptance

  	
   

  	
  2.02.2(a)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit
  E

  	
   

  	
  Form
  of Certificate for Borrowings and Facility Letters of Credit

  	
   

  	
  2.23.3(iii),
  3.02

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit
  F

  	
   

  	
  Opinion
  of Borrower’s Delaware and Georgia Counsel

  	
   

  	
  3.01(5)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit
  G

  	
   

  	
  Opinion
  of Borrower’s Illinois Counsel

  	
   

  	
  3.01(5)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit
  H

  	
   

  	
  List of Subsidiaries of
  Borrower

  	
   

  	
  4.10

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit
  I

  	
   

  	
  Assignment Agreement

  	
   

  	
  12.03(b)

  

 

v

 

CREDIT AGREEMENT dated as of June 2, 2003 among BEAZER
HOMES USA, INC., a Delaware corporation (the “Borrower”), the Lenders that are
signatories hereto and BANK ONE, NA as Agent (the “Agent”) for the Lenders and
an Issuer (as hereinafter defined).

 

The parties hereto hereby agree as follows:

 

ARTICLE
I

DEFINITIONS AND ACCOUNTING TERMS

 

Section
1.01  Defined
Terms.  As used in this
Agreement, the following terms have the following meanings (terms defined in
the singular shall have the same meaning when used in the plural and vice
versa):

 

“ABR Loan” means any Loan when and to the extent that
the interest rate therefor is determined by reference to the Alternate Base
Rate.

 

“Acquisition” means any transaction, or any series of
related transactions, consummated on or after the date of this Agreement, by
which the Borrower or any of its Subsidiaries (i) acquires any going concern or
all or substantially all of the assets of any firm, corporation or division
thereof, whether through purchase of assets, merger or otherwise or (ii)
directly or indirectly acquires (in one transaction or as the most recent
transaction in a series of transactions) at least a majority (in number of
votes or by percentage of voting power) of the Common Equity of another Person.

 

“Adjusted Land Value” means, as of any date, (i) the
book value of all Land, less (ii) the sum of (a) the book value of Finished
Lots that are subject to bona fide contracts of sale with Persons that
are not Affiliates and (b) the lesser of (1) the product of (x) the number of
Housing Units with respect to which the Borrower and its Subsidiaries
(including any company or other entity acquired in an Acquisition by the
Borrower or a Subsidiary as of such date) entered into bona fide
contracts of sale with Persons that are not Affiliates during the six-month
period ending on such date and (y) the average book value of all Finished Lots
as of such date and (2) forty percent (40%) of Consolidated Tangible Net Worth
as of such date.

 

“Affected Lender” has the meaning assigned to such
term in Section 2.21(a).

 

“Affiliate” means any Person (1) which directly or
indirectly controls, or is controlled by, or is under common control with, the
Borrower or a Subsidiary; (2) which directly or indirectly beneficially owns or
holds five percent (5%) or more of any class of voting stock of the Borrower or
any Subsidiary; or (3) five percent (5%) or more of the voting stock of which
is directly or indirectly beneficially owned or held by the Borrower or a
Subsidiary.  The term “control” means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.

 

“Agent” means Bank One.

 

 

“Agent’s Fee Letter” means that certain fee letter
dated April 18, 2003 from the Agent and BOCM to the Borrower and accepted by
the Borrower on April 18, 2003.

 

“Aggregate Commitment” means, at any time, the sum of
the then applicable Aggregate Revolving Credit Commitment and the then
outstanding principal balance of the Term Loans.

 

“Aggregate Pro Rata Share” means, at any time for any
Lender, the ratio that (a) the sum of (i) such Lender’s Revolving Credit
Commitment and (ii) such Lender’s outstanding Term Loan bears to (b) the
Aggregate Commitment, provided, however, if the Revolving Credit
Commitments have terminated or been terminated in full, the Aggregate Pro Rata
Share shall be the ratio that (x) the sum of such Lender’s outstanding
Revolving Credit Loans, Facility Letter of Credit Obligations and Term Loan
bear to (y) the sum of all outstanding Revolving Credit Loans, Facility Letter
of Credit Obligations and Term Loans and provided, further, that
this definition is subject to the provisions of Section 2.02.2(c) (if and when
applicable).

 

“Aggregate Revolving Credit Commitment” means the
aggregate Revolving Credit Commitments of all the Revolving Credit Lenders
initially in the amount of $250,000,000 as the same may be reduced or increased
from time to time pursuant to the terms of this Agreement.

 

“Aggregate Term Loan Commitment” means the aggregate
Term Loan Commitments of all of the Term Loan Lenders in the amount of
$200,000,000.

 

“Agreement” means this Credit Agreement, as amended,
supplemented, or modified from time to time.

 

“Alternate Base Rate” means a fluctuating rate per
annum equal to the higher of (i) the Prime Rate, changing when and as said rate
changes (without notice), or (ii) the sum of 1/2 of 1% plus the Federal Funds
Rate then in effect.

 

“Applicable ABR Margin” means, as at any date of
determination, the margin indicated in Section 2.05 as then applicable to ABR
Loans and Swing Line Loans (under Section 2.07(a)(i)).

 

“Applicable Commitment Rate” means, as at any date of
determination, the rate per annum indicated in Section 2.05 as then applicable
in the determination of the commitment fee (under Section 2.09).  The Applicable Commitment Rate in the column
in the table in Section 2.05 with the heading “Usage>50%” shall apply
in respect of any calendar quarter (or, in any case in which the commitment fee
under Section 2.09 is payable with respect to a portion of a calendar quarter,
then for that portion of such calendar quarter) during which the average daily
unused portion of the Aggregate Revolving Credit Commitment equals or exceeds
fifty percent (50%) of the Aggregate Revolving Credit Commitment, and the
Applicable Commitment Rate in the column table in Section 2.05 with the
heading “Usage <50%” shall apply in respect of any calendar quarter (or, in
any case in which the commitment fee under Section 2.09 is payable with respect
to a portion of a calendar quarter, then for that portion of such calendar
quarter) during which the average daily unused portion of the Aggregate
Revolving Credit Commitment is less than fifty percent (50%) of the Aggregate
Revolving Credit Commitment.

 

2

 

“Applicable Letter of Credit Rate” means, as at any
date of determination, a rate per annum equal to the Applicable LIBOR Margin.

 

“Applicable LIBOR Margin” means, as at any date of
determination, the margin indicated in Section 2.05 as then applicable to LIBOR
Loans (under Section 2.07(a)(ii)).

 

“Applicable Margin(s)” means the Applicable ABR Margin
and/or the Applicable LIBOR Margin, as the case may be.

 

“Applicable Pro Rata Share” means, for any Lender,
such Lender’s Revolving Credit Pro Rata Share or Term Loan Pro Rata Share, as
applicable.

 

“Bank One” means Bank One, NA, having its principal
office in Chicago, Illinois.

 

“BOCM” means Banc One Capital Markets, Inc.

 

“Borrowing” means a borrowing consisting of Loans
(with respect to either the Revolving Credit Facility or the Term Loan
Facility) of the same type made, renewed or converted on the same day.

 

“Borrowing Base” means, with respect to an Inventory
Valuation Date for which it is to be determined, an amount equal to the sum of
the following unencumbered assets of the Borrower and the Guarantors: (i) the
lesser of (a) one hundred percent (100%) of the Unrestricted Cash and (b)
$20,000,000.00, (ii) one-hundred percent (100%) of the Receivables, (iii)
ninety percent (90%) of the book value of Housing Units Under Contract, (iv)
seventy-five percent (75%) of the book value of Speculative Housing Units, (v)
seventy percent (70%) of the book value of Finished Lots (subject to the
limitation set forth below), (vi) fifty percent (50%) of the book value of Lots
under Development (subject to the limitation set forth below), and (vii) the
lesser of (a) twenty-five percent (25%) of the book value of Entitled Land and
(b) $30,000,000.00 (subject to the limitation set forth below).  Notwithstanding the foregoing, the Borrowing
Base shall not include any amounts under clauses (v), (vi) and (vii) above to
the extent that the sum of such amounts exceeds forty percent (40%) of the
total Borrowing Base.  The term
“unencumbered” means that such asset is not subject to any Lien (except for
Liens permitted under Sections 6.01(1), (2) or (6)).

 

“Borrowing Base Certificate” means a written
certificate in a form acceptable to the Required Lenders setting forth the
amount of the Borrowing Base with respect to the calendar month most recently
completed, certified as true and correct by the Chief Financial Officer of the
Borrower.

 

“Borrowing Base Debt” means the sum of all Debt of the
Borrower and its Subsidiaries on a consolidated basis, excluding (i) Secured
Debt, (ii) Debt that is subordinated to the Obligations to the satisfaction of
the Required Lenders, (iii) Performance Letters of Credit, (iv) performance
bonds and (v) Debt of any Joint Venture.

 

“Business Day” means (i) with respect to any
Borrowing, payment or rate selection of LIBOR Loans, a day (other than a
Saturday or Sunday) on which banks generally are open in Chicago and New York
for the conduct of substantially all of their commercial lending

 

3

 

activities and on which dealings in United States dollars are carried on
in the London interbank market and (ii) for all other purposes, a day (other
than a Saturday or Sunday) on which banks generally are open in Chicago for the
conduct of substantially all of their commercial lending activities.

 

“Capital Lease” means all leases which have been or
should be capitalized on the books of the lessee in accordance with GAAP.

 

“Change of Control” means any of the following:  (i) the sale, lease, conveyance or other
disposition of all or substantially all of the assets of the Borrower or
(except for an Internal Reorganization) of a Significant Guarantor or
Significant Subsidiary, as an entirety or substantially as an entirety to any
Person or “group” (within the meaning of Section 13(d)(3) of the Exchange Act)
in one or a series of transactions; (ii) the acquisition by any Person or group
of fifty percent (50%) or more of the aggregate voting power of all classes of
Common Equity of the Borrower or (except for an Internal Reorganization) of a
Significant Guarantor or Significant Subsidiary in one transaction or a series
of related transactions; (iii) the liquidation or dissolution of the Borrower
or (except for an Internal Reorganization) of a Significant Guarantor or
Significant Subsidiary; (iv) any transaction or a series of related
transactions (as a result of a tender offer, merger, consolidation or otherwise
but excluding an Internal Reorganization) that results in, or that is in
connection with, (a) any Person or group acquiring “beneficial ownership” (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of fifty
percent (50%) or more of the aggregate voting power of all classes of Common
Equity of the Borrower, a Significant Guarantor or a Significant Subsidiary, or
of any Person or group that possesses “beneficial ownership” (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of fifty percent
(50%) or more of the aggregate voting power of all classes of Common Equity of
the Borrower, a Significant Guarantor or a Significant Subsidiary, or (b) less
than fifty percent (50%) (measured by the aggregate voting power of all
classes) of the Common Equity of the Borrower being registered under Section
12(b) or 12(g) of the Exchange Act; (v) a majority of the Board of Directors of
the Borrower, a Significant Guarantor or a Significant Subsidiary, not being
comprised of persons who (a) were members of the Board of Directors of such
Borrower, Significant Guarantor or Significant Subsidiary, as of the date of
this Agreement (“Original Directors”), or (b) were nominated for election or
elected to the Board of Directors of such Borrower, Significant Guarantor, or
Significant Subsidiary, with the affirmative vote of at least a majority of the
directors who themselves were Original Directors or who were similarly
nominated for election or elected; or (vi) with respect to any Significant
Guarantor or Significant Subsidiary which is not a corporation, any loss by the
Borrower of the right or power directly, or indirectly through one or more
intermediaries, to control the activities of any such Significant Guarantor or
Significant Subsidiary.  Nothing herein
contained shall modify or otherwise affect the provisions of Section 6.06.

 

“Closing Date” means the date on which the conditions
to the first advance of the Loans set forth in Article III are satisfied.

 

“Code” means the Internal Revenue Code of 1986, as
amended from time to time, and the regulations and published interpretations
thereof.

 

4

 

“Collateral Shortfall Amount” has the meaning assigned
to that term in Section 8.01.

 

“Commitment” means either a Revolving Credit
Commitment or a Term Loan Commitment.

 

“Commitment and Acceptance” has the meaning assigned
to that term in Section 2.02.2(a).

 

“Common Equity” of any Person means any and all
shares, rights to purchase, warrants or options (whether or not currently
exercisable), participations, or other equivalents of or interests in (however
designated) the equity (which includes, but is not limited to, common stock,
preferred stock and partnership and joint venture interests) of such Person
(excluding any debt securities convertible into, or exchangeable for, such
equity) to the extent that the foregoing is entitled to (i) vote in the
election of directors of such Person or (ii) if such Person is not a
corporation, vote or otherwise participate in the selection of the governing
body, partners, managers or other persons that will control the management and
policies of such Person.

 

“Commonly Controlled Entity” means an entity, whether
or not incorporated, which is under common control with the Borrower within the
meaning of Section 414(b) or 414(c) of the Code.

 

“Consolidated Debt” means the Debt of the Borrower and
its Subsidiaries determined on a consolidated basis (but shall not include Debt
of any Joint Venture or Debt of any Subsidiary which is not a Guarantor, except
to the extent that such Debt is guaranteed by the Borrower or a Guarantor).

 

“Consolidated Subordinated Debt” means, as of any
date, all Debt of the Borrower and the Guarantors (on a consolidated basis),
the payment of which is, either expressly by its terms or otherwise,
subordinated to payment of the Obligations to the satisfaction of the Required
Lenders.

 

“Consolidated Tangible Assets” of the Borrower means,
as of any date, the total amount of assets of the Borrower and its Subsidiaries
(less applicable reserves) on a consolidated basis at the end of the fiscal
quarter immediately preceding such date (or on such date if such date is the last
day of the fiscal quarter), as determined in accordance with GAAP, less (i)
Intangible Assets and (ii) appropriate adjustments on account of minority
interests of other Persons holding equity Investments in Subsidiaries, in the
case of each of clauses (i) and (ii) above, as would be reflected on a
consolidated balance sheet of the Borrower and its Subsidiaries as of the end
of the fiscal quarter immediately preceding such date (or on such date if such
date is the last day of the fiscal quarter), prepared in accordance with GAAP.

 

“Consolidated Tangible Net Worth” of the Borrower
means, at any date, the consolidated stockholders’ equity of the Borrower
determined in accordance with GAAP, less Intangible Assets, all determined as
of such date.

 

“Debt” means, without duplication, with respect to any
Person (1) indebtedness or liability for borrowed money, including, without
limitation, subordinated indebtedness (other

 

5

 

than trade accounts payable and accruals incurred in the ordinary
course of business); (2) obligations evidenced by bonds, debentures, notes, or
other similar instruments; (3) obligations for the deferred purchase price of
property (including, without limitation, seller financing of any Inventory) or
services, provided, however, that Debt shall not include
obligations with respect to options to purchase real property that have not
been exercised; (4) obligations as lessee under Capital Leases to the extent
that the same would, in accordance with GAAP, appear as liabilities in the
Borrower’s consolidated balance sheet; (5) current liabilities in respect of
unfunded vested benefits under Plans and incurred withdrawal liability under
any Multiemployer Plan; (6) reimbursement obligations under letters of credit
(including contingent obligations with respect to letters of credit not yet
drawn upon); (7) obligations under acceptance facilities; (8) all guaranties,
endorsements (other than for collection or deposit in the ordinary course of
business), and other contingent obligations to purchase, to provide funds for
payment, to supply funds to invest in any other Person or entity, or otherwise
to assure a creditor against loss, provided, however, that “Debt” shall not
include guaranties of performance obligations; (9) obligations secured by any
Liens on any property of such Person, whether or not the obligations have been
assumed; and (10) net liabilities under interest rate swap, exchange or cap
agreements (valued as the termination value thereof, computed in accordance
with a method approved by the International Swaps and Derivatives Association
and agreed to by such Person in the applicable agreement).

 

“Default” means any of the events specified in Section
8.01, whether or not any requirement for the giving of notice, the lapse of
time, or both, or any other condition, has been satisfied.

 

“Dollars” and the sign “$” mean lawful money of the
United States of America.

 

“EBITDA” means, for any period, on a consolidated
basis for the Borrower and its Subsidiaries, the sum of the amounts for such
period of (i) Net Income (but excluding from such Net Income for the applicable
period any income derived from any Investment in a Joint Venture referred to in
Section 6.07(10) to the extent that such income exceeds the cash distributions
thereof received by the Borrower or its Subsidiaries in such period), plus
(ii) charges against income for foreign, federal, state and local taxes, plus
(iii) Interest Expense, plus (iv) depreciation, plus (v)
amortization expense, including, without limitation, amortization of goodwill
and other intangible assets and amortization of deferred compensation expense, plus
(vi) extraordinary losses, minus (vii) interest income, minus
(viii) extraordinary gains (and any unusual gains arising in or outside of the
ordinary course of business not included in extraordinary gains that have been
included in the determination of Net Income).

 

“Entitled Land” means all Lots that are neither Lots
under Development nor Finished Lots.

 

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

 

“Eurocurrency Reserve Requirement” means, for any
Interest Period, the maximum aggregate reserve requirement (including all
basic, supplemental, marginal and other reserves) which is imposed under
Regulation D on “Eurocurrency liabilities” (as such term is

 

6

 

used in Regulation D) but without benefit or credit of proration,
exemptions, or offsets that might otherwise be available from time to time
under Regulation D.  Without limiting
the effect of the foregoing, the Eurocurrency Reserve Requirement shall reflect
any other reserves required to be maintained against (1) any category of
liabilities that includes deposits by reference to which the LIBOR Interest
Rate for LIBOR Loans is to be determined; or (2) any category of extension of
credit or other assets that include LIBOR Loans.

 

“Event of Default” means any of the events specified
in Section 8.01, provided that any requirement for the giving of notice, the
lapse of time, or both, or any other condition, has been satisfied.

 

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

 

“Existing Letters of Credit” means those Letters of
Credit issued for the account of the Borrower prior to the date hereof and
listed on Schedule II hereto.

 

“Facilities” means the Revolving Credit Facility and
the Term Loan Facility, and “Facility” means either of the Facilities.

 

“Facility Increase” has the meaning assigned to that
term in Section 2.02.2(a).

 

“Facility Letter of Credit” means (a) each Existing
Letter of Credit and (b) any Letter of Credit issued by an Issuer for the
account of the Borrower in accordance with Section 2.23.

 

“Facility Letter of Credit Collateral Account” has the
meaning assigned to that term in Section 2.23.13.

 

“Facility Letter of Credit Fee” means a fee, payable
with respect to each Facility Letter of Credit issued by an Issuer, in an
amount per annum equal to the product of (i) the Applicable Letter of Credit
Rate (determined as of the date on which the quarterly installment of such fee
is due) and (ii) the face amount of such Facility Letter of Credit, which fee
shall be calculated in the manner provided in Section 2.23.6.

 

“Facility Letter of Credit Obligations” means, at any
date, the sum of (i) the aggregate undrawn face amount of all outstanding
Facility Letters of Credit, and (ii) the aggregate amount paid by an Issuer on
any Facility Letters of Credit to the extent (if any) not reimbursed by the
Borrower or by the Revolving Credit Lenders under Section 2.23.4.

 

“Facility Letter of Credit Sublimit” means
$150,000,000.

 

“Federal Funds Rate” means, for each day, a
fluctuating interest 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, as published for such day (or, if
such day is not a Business Day, for the immediately preceding Business Day) by
the Federal Reserve Bank of New York, or, if such rate is not so published for
any day which is a Business Day, the average of the quotations at approximately
10:00 A.M. Chicago time on such day on

 

7

 

such transactions received by the Agent from three Federal Funds
brokers of recognized standing selected by the Agent in its sole discretion.

 

“Financial Letter of Credit” means any Letter of
Credit of the Borrower or a Guarantor that is not a Performance Letter of
Credit.

 

“Finished Lots” means Lots in respect of which a
building permit, from the applicable local governmental authority, has been or
could be obtained; provided, however, that the term “Finished
Lots” shall not include any Land upon which the construction of a Housing Unit
has commenced.

 

“Fitch” means Fitch, Inc.

 

“GAAP” means generally accepted accounting principles
in the United States in effect from time to time (subject to the provisions of
Section 1.02).

 

“Guarantor” means (a) the Subsidiaries of Borrower
identified on Exhibit A hereto and (b) any Person that, pursuant to a
Supplemental Guaranty, guarantees the Obligations.

 

“Guaranty” means (a) the guaranty of the Obligations
in the form attached hereto as Exhibit B or (b) a Supplemental Guaranty.

 

“Housing Unit” means a single-family dwelling,
including the Land on which such dwelling is located, whether such dwelling is
detached or attached (including condominiums but excluding mobile homes), which
dwelling is either under construction or completed and is (or, upon completion
of construction thereof, will be) available for sale; the term “Housing Unit”
includes a Speculative Housing Unit.

 

“Housing Unit Closing” means a closing of the sale of
a Housing Unit by the Borrower or a Subsidiary (including any company or other
entity acquired in an Acquisition by the Borrower or a Subsidiary) to a bona
fide purchaser for value that is not an Affiliate.

 

“Housing Unit Under Contract” means a Housing Unit
owned by the Borrower or a Subsidiary as to which the Borrower or such
Subsidiary has a bona  fide contract of sale, in a form
customarily employed by the Borrower or such Subsidiary and reasonably
satisfactory to the Agent, entered into not more than 15 months prior to the
date of determination with a Person who is not an Affiliate, under which
contract no defaults then exist and not less than $1,000.00 toward the purchase
price has been paid; provided, however, that in the case of any
Housing Unit the purchase of which is to be financed in whole or in part by a
loan insured by the Federal Housing Administration or guaranteed by the
Veterans Administration, the required minimum downpayment shall be the amount
(if any) required under the rules of the relevant agency.

 

“Incur” means to, directly or indirectly, create,
incur, assume, guarantee, extend the maturity of or otherwise become liable
with respect to any Debt; provided, however, that neither the accrual of
interest (whether such interest is payable in cash or kind) nor the accretion
of original issue discount shall be considered an Incurrence of Debt.

 

8

 

“Intangible Assets” means, at any time, the amount (to
the extent reflected in determining consolidated stockholders equity of the
Borrower and its Subsidiaries) of (i) Investments in any Subsidiaries that are
not Guarantors and (ii) all unamortized debt discount and expense, unamortized
deferred charges, good will, patents, trademarks, service marks, trade names,
copyrights and all other items which would be treated as intangibles on a
consolidated balance sheet of the Borrower and its Subsidiaries prepared in
accordance with GAAP.

 

“Interest Coverage Ratio” means, for any period, the
ratio of (a) EBITDA to (b) the sum (on a consolidated basis for the Borrower
and its Subsidiaries) of all interest incurred, including capitalized interest.

 

“Interest Deficit” has the meaning assigned to that
term in Section 2.08(b) hereof.

 

“Interest Expense” means, for any period, the total
interest expense of the Borrower and its Subsidiaries, whether paid directly or
amortized through cost of sales (including the interest component of Capital
Leases).  Notwithstanding that GAAP may
otherwise provide, the Borrower shall not be required to include in Interest
Expense the amount of any premium paid to prepay Debt.

 

“Interest Period” means, with respect to any LIBOR
Loan, the period commencing on the date such Loan is made, converted or
renewed, and ending, as the Borrower may select pursuant to Section 2.03, on
the numerically corresponding day in the first, second, third or sixth calendar
month thereafter, except that each such Interest Period that 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; provided that all of the foregoing provisions relating to Interest
Periods are subject to the following:

 

(a)                                  No
Interest Period with respect to any Revolving Credit Loan may extend beyond the
Revolving Credit Termination Date or, until a Rejecting Revolving Credit Lender
is replaced as provided in Section 2.21 or its Revolving Credit Loans are paid
in full, such Rejecting Revolving Credit Lender’s Termination Date; and

 

(b)                                 No
Interest Period with respect to any Term Loan may extend beyond the Term Loan
Maturity Date or, until a Rejecting Term Loan Lender is replaced as provided in
Section 2.21 or its Term Loans are paid in full, such Rejecting Term Loan
Lender’s Maturity Date.

 

(c)                                  If
an Interest Period would end on a day that is not a Business Day, such Interest
Period shall be extended to the next Business Day unless such Business Day
would fall in the next calendar month, in which event such Interest Period
shall end on the immediately preceding Business Day.

 

“Internal Reorganization” means any reorganization
between or among the Borrower and any Subsidiary or Subsidiaries or between or
among any Subsidiary and one or

 

9

 

more other Subsidiaries or any combination thereof by way of
liquidations, mergers, consolidations, conveyances, assignments, sales,
transfers and other dispositions of all or substantially all of the assets of a
Subsidiary (whether in one transaction or in a series of transactions); provided
that (a) the Borrower shall preserve and maintain its status as a
validly existing corporation and (b) all assets, liabilities, obligations and
guarantees of any Subsidiary party to such reorganization will continue to be
held by such Subsidiary or be assumed by the Borrower or a Wholly-Owned
Subsidiary of the Borrower.

 

“Inventory” means all Housing Units, Lots, goods,
merchandise and other personal property wherever located to be used for or
incorporated into any Housing Unit.

 

“Inventory Valuation Date” means the last day of the
most recent calendar month of the Borrower with respect to which the Borrower
is required to have delivered a Borrowing Base Certificate pursuant to Section
5.08(6) hereof.

 

“Investment” has the meaning provided therefor in
Section 6.07.  The amount of any
Investment shall include (a) in the case of any loan or advance, the
outstanding amount of such loan or advance and (b) in the case of any equity
Investment, the amount of the “net equity investment” as determined in
accordance with GAAP.

 

“Issuance Date” means the date on which a Facility
Letter of Credit is issued, amended or extended.

 

“Issuer” means, with respect to each Existing Letter
of Credit, the Issuer thereof identified in Schedule II, and with
respect to each Facility Letter of Credit issued on or after the Closing Date,
Bank One, PNC Bank, N.A., SunTrust Bank, Fifth Third Bank, Indiana or such
other Revolving Credit Lender selected by the Borrower with the approval of the
Agent, to issue such Facility Letter of Credit, provided such other
Revolving Credit Lender consents to act in such capacity.  For purposes of this Agreement and the other
Loan Documents, Facility Letters of Credit issued by Fifth Third Bank shall be
deemed issued by its Affiliate, Fifth Third Bank, Indiana (a Lender hereunder).

 

“Joint Venture” means any Person (other than a
Subsidiary) in which the Borrower or a Subsidiary holds any stock, partnership
interest, joint venture interest, limited liability company interest or other
equity interest.

 

“Land” means land owned by the Borrower or a
Subsidiary, which land is being developed or is held for future development or
sale.

 

“Lending Office” means, with respect to any Lender,
the Lending Office of such Lender (or of an affiliate of such Bank) heretofore
designated in writing by such Lender to the Agent or such other office or
branch of such Lender (or of an affiliate of such Lender) as that Lender may
from time to time specify to the Borrower and the Agent as the office or branch
at which its Loans (or Loans of a type designated in such notice) are to be
made and maintained.

 

“Letter of Credit” of a Person means a letter of
credit or similar instrument which is issued by a financial institution upon
the application of such Person or upon which such Person is an account party or
for which such Person is in any way liable.

 

10

 

“LIBOR Interest Rate” means, for each LIBOR Loan for
the relevant Interest Period, the rate per annum (rounded upward, if necessary,
to the nearest one-sixteenth of 1%) determined by the Agent to be equal to the
quotient of (a) the London Interbank Offered Rate for such LIBOR Loan for such
Interest Period divided by (b) one minus the Eurocurrency Reserve Requirement
for such Interest Period.

 

“LIBOR Loan” means any Loan when and to the extent
that the interest rate therefor is determined by reference to the LIBOR
Interest Rate.

 

“Lien” means any mortgage, deed of trust, pledge,
security interest, hypothecation, assignment, deposit arrangement, encumbrance,
lien (statutory or other), or preference, priority, or other security agreement
or preferential arrangement, charge, or encumbrance of any kind or nature
whatsoever (including, without limitation, any conditional sale or other title
retention agreement, any financing lease having substantially the same economic
effect as any of the foregoing, and the filing of any financing statement under
the Uniform Commercial Code or comparable law of any jurisdiction to evidence
any of the foregoing).

 

“Loan(s)” means a (a) Revolving Credit Loan, including
(unless the context otherwise indicates) a Swing Line Loan or (b) a Term Loan.

 

“Loan Document(s)” means this Agreement, the Notes,
the Guaranties, the Reimbursement Agreements, and any and all documents
delivered hereunder or pursuant hereto.

 

“London Interbank Offered Rate” means, with respect to
a LIBOR Loan for the relevant Interest Period, the applicable British Banker’s
Association London interbank offered rate for deposits in U.S. dollars as
reported by any generally recognized financial information service as of 11:00
a.m. (London time) two Business Days prior to the first day of such Interest
Period, and having a maturity equal to such Interest Period.

 

“Lots” means all Land owned by the Borrower and/or a
Subsidiary which is zoned by the municipality in which such real property is
located for residential building and use, and with respect to which the
Borrower or such Subsidiary has obtained all necessary approvals for its
subdivision for Housing Units; provided, however, that the term
“Lots” shall not include any Land upon which the construction of a Housing Unit
has commenced.

 

“Lots under Development” means Lots with respect to
which construction of streets or other subdivision improvements has commenced
but which are not Finished Lots.

 

“Meridian” means Meridian Structural Insurance, Risk
Retention Group Inc., a Wholly-Owned Subsidiary of the Borrower.

 

“Minimum Consolidated Tangible Net Worth” has the
meaning assigned to that term in Section 7.01 hereof.

 

“Moody’s” means Moody’s Investors Service, Inc.

 

11

 

“Multiemployer Plan” means a plan described in Section
4001(a)(3) of ERISA in respect of which the Borrower, a Subsidiary or a
Commonly Controlled Entity is an “employer” as defined in Section 3(5) of
ERISA.

 

“Net Income” means, for any period, the net earnings
(or loss) after taxes of the Borrower and its Subsidiaries on a consolidated
basis for such period.

 

“New Revolving Credit Lender” means a Revolving Credit
Lender or other entity (in each case approved by the Agent, which approval
shall not be unreasonably withheld) that elects, upon request by Borrower, to
issue a Revolving Credit Commitment or, in the case of an existing Revolving
Credit Lender, to increase its existing Revolving Credit Commitment, pursuant
to Section 2.02.2.

 

“Notes” means the Revolving Credit Notes and the Term
Loan Notes.

 

“Notice of Assignment” has the meaning assigned to
that term in Section 12.03(b) hereof.

 

“Obligations” means (a) the due and punctual payment
of principal of and interest on the Loans and the Notes, (b) the due and
punctual payment of the Facility Letter of Credit Obligations, and (c) the due
and punctual payment of fees, expenses, reimbursements, indemnifications and
other present and future monetary obligations of the Borrower and each
Guarantor to the Lenders or to any Lender , the Agent, any Issuer or any
indemnified party under the Loan Documents.

 

“Participant” has the meaning assigned to that term in
Section 12.02(a) hereof.

 

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

 

“Performance Letter of Credit” means any Letter of
Credit of the Borrower or a Guarantor that is issued for the benefit of a
municipality, other governmental authority, utility, water or sewer authority,
or other similar entity for the purpose of assuring such beneficiary of the
Letter of Credit of the proper and timely completion of construction work.

 

“Permitted Acquisition” means any Acquisition (other
than by means of a hostile takeover, hostile tender offer or other similar
hostile transaction) of a business or entity engaged primarily in the business
of home building; provided that, immediately before and after giving effect to
such Acquisition, no Default or Event of Default has occurred and is
continuing.

 

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

 

“Plan” means any pension plan which is covered by
Title IV of ERISA and in respect of which (a) the Borrower or a Subsidiary or a
Commonly Controlled Entity is an “employer” as defined in Section 3(5) of ERISA
and (b) the Borrower or a Subsidiary has any

 

12

 

material liability; provided, however, that the term
“Plan” shall not include any Multiemployer Plan.

 

“Prime Rate” means a rate per annum equal to the prime
rate of interest announced from time to time by Bank One or its parent (which
is not necessarily the lowest rate charged to any customer), changing when and
as said prime rate changes.

 

“Principal Office” means, with respect to the Agent,
the Principal Office of the Agent designated as such on the signature pages
hereof or such other office of the Agent as the Agent may from time to time
specify to the Borrower and the Lenders as its Principal Office.

 

“Prior Credit Agreements” means that certain Credit
Agreement dated as of September 21, 2001 among Borrower, the Guarantors, Bank
One as agent and the other banks party thereto, as amended, and that certain
Term Loan Agreement dated as of December 19, 2000, among the Borrower, the
Guarantors and the other banks party thereto, as amended.

 

“Prohibited Transaction” means any transaction set
forth in Section 406 of ERISA or Section 4975 of the Code that could subject
the Borrower or any Subsidiary to any material liability.

 

“Purchaser” has the meaning assigned to that term in
Section 12.03(a) hereof.

 

“Quarterly Payment Date” means July 1, 2003 and the first
day of each July, October, January and April, thereafter.

 

“Receivables” means the net proceeds payable to, but
not yet received by, the Borrower or a Subsidiary following a Housing Unit
Closing.

 

“Refinancing Debt” means Debt that refunds, refinances
or extends any applicable Debt (“Refinanced Debt”) but only to the extent that
(i) the Refinancing Debt is subordinated to or pari passu with the
Obligations to the same extent as such Refinanced Debt, if at all, (ii) the
Refinancing Debt is scheduled to mature no earlier than the earlier of (A) the
current maturity date of such Refinanced Debt or (B) a date three (3) years
after the later of the Revolving Credit Termination Date or the Term Loan
Maturity Date (as determined at the time such Refinancing Debt is Incurred),
(iii) such Refinancing Debt is in an aggregate amount that is equal to or less
than the sum of (A) the aggregate amount then outstanding under the Refinanced
Debt, plus (B) accrued and unpaid interest on such Refinanced Debt, plus
(C) reasonable fees and expenses incurred in obtaining such Refinancing Debt,
it being understood that this clause (iii) shall not preclude the Refinancing
Debt from being a part of a Debt financing that includes other or additional
Debt otherwise permitted herein, (iv) such Refinancing Debt is Incurred by the
same Person that initially Incurred such Refinanced Debt or by another Person
of which the Person that initially Incurred such Refinanced Debt is a
Subsidiary, and (v) such Refinancing Debt is Incurred within 60 days after such
Refinanced Debt is so refunded, refinanced or extended.

 

“Regulation D” means Regulation D of the Board of
Governors of the Federal Reserve System as from time to time in effect and any
successor thereto or other regulation or

 

13

 

official interpretation of said Board of Governors relating to reserve
requirements applicable to member banks of the Federal Reserve System.

 

“Regulation U” means Regulation U of the Board of
Governors of the Federal Reserve System as from time to time in effect and any
successor or other regulation or official interpretation of said Board of
Governors relating to the extension of credit by banks for the purpose of
purchasing or carrying margin stocks applicable to member banks of the Federal
Reserve System.

 

“Regulation X” means Regulation X of the Board of
Governors of the Federal Reserve System as from time to time in effect and any
successor or other regulation or official interpretation of said Board of Governors
relating to the extension of credit by foreign lenders for the purpose of
purchasing or carrying margin stock (as defined therein).

 

“Reimbursement Agreement” means, with respect to a
Facility Letter of Credit, such form of application therefor and form of
reimbursement agreement therefor (whether in a single or several documents,
taken together) as the applicable Issuer may employ in the ordinary course of
business for its own account, with the modifications thereto as may be agreed
upon by such Issuer and the Borrower and as are not materially adverse (in the
reasonable judgment of such Issuer and the Agent) to the interests of the
Lenders; provided, however, in the event of any conflict between
the terms of any Reimbursement Agreement and this Agreement, the terms of this
Agreement shall control.

 

“Rejecting Lender” means a Rejecting Revolving Credit
Lender or a Rejecting Term Loan Lender.

 

“Rejecting Revolving Credit Lender” has the meaning
assigned to that term in Section 2.19(a).

 

“Rejecting Revolving Credit Lender’s Termination Date”
has the meaning assigned to that term in Section 2.19(a).

 

“Rejecting Term Loan Lender” has the meaning assigned
to that term in Section 2.20(a).

 

“Rejecting Term Loan Lender’s Maturity Date” has the
meaning assigned to that term in Section 2.20(a).

 

“Replacement Lender” has the meaning assigned to such
term in Section 2.21.

 

“Reportable Event” means any of the events set forth
in Section 4043 of ERISA with respect to a Plan (excluding any such event with
respect to which the PBGC has waived the 30-day notice requirement).

 

“Required Lenders” means Lenders whose Aggregate Pro
Rata Shares are greater than 66-2/3%.

 

14

 

“Required Revolving Credit Lenders” means Revolving Credit
Lenders whose Revolving Credit Pro Rata Shares are greater than 66-2/3%.

 

“Revolving Credit Commitment” means, for each of the
Revolving Credit Lenders, the obligation of such Revolving Credit Lender to
make Revolving Credit Loans and to purchase participations in Facility Letters
of Credit in the aggregate not exceeding the amount set forth in Schedule I
hereto as its “Revolving Credit Commitment,” as such amount may be decreased
from time to time pursuant to the terms hereof or increased pursuant to Section
2.02.2 hereof; provided, however, that the Revolving Credit
Commitment of a Lender may not be increased without its prior written approval.

 

“Revolving Credit Extension Request” has the meaning
assigned to such term in Section 2.19(a).

 

“Revolving Credit Facility” means the revolving credit
and letter of credit facilities described in Section 2.01.1, together with the
Swing Line Facility described in Section 2.22.

 

“Revolving Credit Lender” means each of the Lenders
holding an interest in the Revolving Credit Facility.

 

“Revolving Credit Loan” means, with respect to a
Revolving Credit Lender, a Loan made by such Revolving Credit Lender with
respect to the Revolving Credit Facility pursuant to Section 2.01.1 and any
conversion or continuation thereof and, unless the context otherwise indicates,
shall include Swing Loans made pursuant to Section 2.22.

 

“Revolving Credit Note” means a promissory note in
substantially the form of Exhibit C-1 hereto, executed and delivered by
the Borrower payable to the order of a Revolving Credit Lender in the amount of
its Revolving Credit Commitment, including any amendment, modification,
restatement, renewal or replacement of such promissory note.

 

“Revolving Credit Obligations” means all unpaid
principal of and accrued and unpaid interest on the Revolving Credit Loans and
Swing Line Loans, all accrued and unpaid fees with respect to the Revolving
Credit Facility, the Swing Line Loans and the Facility Letters of Credit, and
all expenses, reimbursements, indemnities and other obligations of the Borrower
and Guarantors to the Revolving Credit Lenders or to any Revolving Credit
Lender, the Swing Line Lender, any Issuer, the Administrative Agent or any
indemnified party with respect to the Revolving Credit Facility, the Swing Line
Loans and the Facility Letters of Credit arising under the Loan Documents.

 

“Revolving Credit Pro Rata Share” means, at any time
for any Revolving Credit Lender, the ratio that such Revolving Credit Lender’s
Revolving Credit Commitment bears to the Aggregate Revolving Credit Commitment.

 

“Revolving Credit Termination Date” means June 1,
2007, subject, however, to earlier termination in whole of the Aggregate
Revolving Credit Commitment pursuant to the terms of this Agreement and to
extension of such date as provided in Section 2.19.

 

15

 

“S&P” means Standard & Poor’s Rating Services.

 

“Secured Debt” means all Debt of the Borrower or any
of its Subsidiaries (excluding Debt owing to the Borrower or any of its
Subsidiaries) that is secured by a Lien on assets of the Borrower or any of its
Subsidiaries.

 

“Senior Debt” means the Senior Notes or, if the Senior
Notes are refinanced, the Refinancing Debt with respect thereto.

 

“Senior Debt Rating” means (i) at any time at which
Moody’s, S&P and Fitch all publicly announce ratings of the Borrower’s
unsecured long-term debt, the second highest of such three ratings; (ii) at any
time at which Moody’s and S&P publicly announce ratings of the Borrower’s
unsecured long-term debt but Fitch does not, the higher of such two ratings;
and (iii) at any time at which Moody’s or S&P (but not both) publicly
announces a rating of the Borrower’s unsecured long-term debt (and regardless
of whether Fitch publicly announces a rating), the rating so publicly announced
by Moody’s or S&P.  At any time at
which neither Moody’s nor S&P publicly announces ratings of the Borrower’s
unsecured long-term debt, no Senior Debt Rating shall be deemed to exist.  The Senior Debt Rating shall change if and
when such rating(s) change, and such change in the Senior Debt Rating shall
have the effect provided for in Section 2.05 and elsewhere in this Agreement.

 

“Senior Indentures” means either of the Indentures
identified in the definition of the term “Senior Notes” and any other Indenture
hereafter entered into by the Borrower pursuant to which the Borrower Incurs
any Refinancing Debt with respect to any of the Senior Notes.

 

“Senior Notes” means (i) the 8-3/8% Senior Notes due
2012 of the Borrower issued in the original principal amount of $350,000,000,
pursuant to the Indenture dated April 17, 2002 and First Supplemental Indenture
dated April 17, 2002, (ii) the 8-5/8% Senior Notes due 2011 of the Borrower
issued in the original principal amount of $200,000,000 pursuant to the
Indenture dated May 21, 2001 and (iii) the 8 7/8 percent Senior Notes due 2008
of the Borrower issued in the original principal amount of $100,000,000
pursuant to the Indenture dated March 25, 1998.

 

“Senior Notes due 2008” means the Senior Notes
described in clause (iii) of the definition of “Senior Notes.”

 

“Significant Guarantor” means, at any date of
determination thereof, any Guarantor that (together with its Subsidiaries)
accounts for five percent (5%) or more of the Consolidated Tangible Assets as
of the last day of the most recent fiscal quarter then ended and of the net
revenues for the twelve-month period ending on the last day of the most recent
fiscal quarter then ended, in each case of the Borrower and its Subsidiaries taken
as a whole.  Such percentage shall be
determined on the basis of financial reports that shall be available not later
than 25 days (or, in the case of the last fiscal quarter of the fiscal year, 35
days) following the end of such fiscal quarter.

 

“Significant Subsidiary” means, at any date of
determination thereof, any Subsidiary that (together with its Subsidiaries)
accounts for five percent (5%) or more of the Consolidated Tangible Assets as
of the last day of the most recent fiscal quarter then ended and

 

16

 

of the net revenues for the twelve-month period ending on the last day
of the most recent fiscal quarter then ended, in each case of the Borrower and
its Subsidiaries taken as a whole.  Such
percentage shall be determined on the basis of financial reports that shall be
available not later than 25 days (or, in the case of the last fiscal quarter of
the fiscal year, 35 days) following the end of such fiscal quarter.

 

“Speculative Housing Unit” means any Housing Unit
owned by the Borrower or a Subsidiary that is not a Housing Unit Under
Contract.

 

“STIC” means Security Title Insurance Company, Inc., a
Vermont corporation and Wholly-Owned Subsidiary of the Borrower.

 

“Subsidiary” means, as to the Borrower or a Guarantor,
in the case of a corporation, a corporation of which shares of stock having
ordinary voting power (other than stock having such power only by reason of the
happening of a contingency) to elect a majority of the board of directors or
other managers of such corporation are at the time owned, or the management of
which is otherwise controlled, directly, or indirectly through one or more
intermediaries, or both, by the Borrower or such Guarantor, as the case may be,
or in the case of an entity which is not a corporation, the activities of which
are controlled directly, or indirectly through one or more intermediaries, or
both, by the Borrower or such Guarantor, as the case may be.

 

“Supplemental Guaranty” means a Supplemental Guaranty
in the form provided for in, and attached to, the form of Guaranty attached
hereto as Exhibit A.

 

“Swing Line Commitment” means the commitment of the
Swing Line Lender to make Swing Line Loans pursuant to Section 2.22(a)
hereof.  The Swing Line Commitment is in
the amount of $50,000,000.

 

“Swing Line Lender” means Bank One or any Purchaser to
which Bank One assigns the Swing Line Commitment in accordance with Section
12.03 hereof.

 

“Swing Line Loan” has the meaning assigned to that
term in Section 2.22(a).

 

“Term Loan” means, with respect to a Term Loan Lender,
a Loan made by such Term Loan Lender with respect to the Term Loan Facility
pursuant to Section 2.01.2 and any conversion or continuation of any such Loan.

 

“Term Loan Commitment” means, for each of the Term Loan
Lenders, the obligation of such Term Loan Lender to make on the Closing Date a
Term Loan in the amount set forth in Schedule I hereto as its “Term Loan
Commitment.”

 

“Term Loan Extension Request” has the meaning assigned
to that term in Section 2.20(a).

 

“Term Loan Facility” means the term loan facility
described in Section 2.01.2.

 

17

 

“Term Loan Facility Advance” means the Advance of the
Term Loan Facility on the Closing Date.

 

“Term Loan Lender” means each of the Lenders holding
an interest in the Term Loan Facility.

 

“Term Loan Maturity Date” means June 1, 2007 or such
earlier date upon which the outstanding principal amount of the Term Loan
Notes, all accrued and unpaid interest thereon, and all other Term Loan
Obligations become due and payable, whether as a result of the occurrence of
the stated maturity date or the acceleration of maturity pursuant to the terms
of any of the Loan Documents, and also subject to extension of such date as
provided in Section 2.20.

 

“Term Loan Note” means a promissory note in
substantially the form of Exhibit C-2 hereto, executed and delivered by
the Borrower payable to the order of a Term Loan Lender in the amount of its
Term Loan Commitment, including any amendment, modification, restatement,
renewal or replacement of such promissory note.

 

“Term Loan Obligations” means all unpaid principal of
and accrued and unpaid interest on the Term Loans, all accrued and unpaid fees
with respect to the Term Loan Facility and all expenses, reimbursements,
indemnities and other obligations of the Borrower and Guarantors to the Term
Loan Lenders or to any Term Loan Lender, the Administrative Agent or any
indemnified party with respect to the Term Loan Facility arising under the Loan
Documents.

 

“Term Loan Pro Rata Share” means, at any time for any
Term Loan Lender, the ratio that the outstanding principal balance of such Term
Loan Lender’s Term Loans bears to the outstanding principal balance of all Term
Loans.

 

“Transferee” has the meaning assigned to that term in
Section 12.04.

 

“UHIC” means United Homes Insurance Corporation, a
Vermont corporation and Wholly-Owned Subsidiary of the Borrower.

 

“Unrestricted Cash” of a Person means the cash of such
Person that would not be identified as “restricted” on a balance sheet of such
Person prepared in accordance with GAAP.

 

“Wholly-Owned Subsidiary” of any Person means (i) a
Subsidiary, of which one hundred percent (100%) of the outstanding Common
Equity (except for directors’ qualifying shares or certain minority interests
owned by other Persons solely due to local law requirements that there be more
than one stockholder, but which interest is not in excess of what is required
for such purpose) is owned directly by such Person or through one or more other
Wholly-Owned Subsidiaries of such Person, or (ii) any entity other than a
corporation in which such Person, directly or indirectly, owns all of the
outstanding Common Equity of such entity.

 

Section
1.02  Accounting
Terms.  (a) All
accounting terms not specifically defined herein shall be construed in
accordance with GAAP consistent with those applied in the preparation of the
financial statements referred to in Section 4.04, and all financial data
submitted pursuant to this Agreement shall be prepared in accordance with such
principles.

 

18

 

(b)                                 Notwithstanding
anything to the contrary contained in this Agreement, in determining the
Borrower’s compliance with the provisions of Article VII hereof, GAAP shall not
include modifications of generally accepted accounting principles that become
effective after the date hereof.

 

ARTICLE
II

AMOUNTS AND TERMS OF THE FACILITIES

 

Section
2.01  The
Facilities.

 

Section 2.01.1  Revolving Credit Facility.  (a) On and after the Closing Date and prior
to the Revolving Credit Termination Date, upon the terms and conditions set
forth in this Agreement and in reliance upon the representations and warranties
of the Borrower herein set forth, each Revolving Credit Lender severally agrees
to make Revolving Credit Loans to the Borrower, provided that (i) in no
event may the aggregate principal amount of all outstanding Revolving Credit
Loans (including, in the case of the Swing Line Lender, outstanding Swing Line
Loans) and the Facility Letter of Credit Obligations of any Lender exceed its
Revolving Credit Commitment, and (ii) in no event may the sum of the aggregate
principal amount of all outstanding Revolving Credit Loans, (including all
outstanding Swing Line Loans) and the Facility Letter of Credit Obligations
exceed the Aggregate Revolving Credit Commitment.

 

(b)                                 On
and after the Closing Date and prior to the Revolving Credit Termination Date,
each Revolving Credit Lender severally agrees, on the terms and conditions set
forth in this Agreement and in reliance upon the representations and warranties
of Borrower herein set forth, to participate in Facility Letters of Credit
issued pursuant to Section 2.23 for the account of the Borrower, provided  that
(i) in no event may the aggregate principal amount of all outstanding Revolving
Credit Loans and Facility Letter of Credit Obligations of any Lender exceed its
Revolving Credit Commitment and (ii) in no event may the aggregate amount of
all Facility Letter of Credit Obligations exceed the lesser of (A) $150,000,000
and (B) an amount equal to the Aggregate Revolving Credit Commitment minus the
sum of all outstanding Revolving Credit Loans (including all outstanding Swing
Line Loans).

 

(c)                                  Revolving
Credit Loans hereunder (other than Swing Line Loans) shall be made ratably by
the several Revolving Credit Lenders in accordance with their respective
Revolving Credit Pro Rata Shares. 
Participations in Facility Letters of Credit hereunder shall be ratable
among the several Revolving Credit Lenders in accordance with their respective
Revolving Credit Pro Rata Shares.

 

(d)                                 All
Revolving Credit Obligations shall be due and payable by the Borrower on the
Revolving Credit Termination Date unless such Revolving Credit Obligations
shall sooner become due and payable pursuant to Section 8.01 or as otherwise
provided in this Agreement.

 

(e)                                  Each
Borrowing under the Revolving Credit Facility which shall not utilize the
Aggregate Revolving Credit Commitment in full shall be in an amount not less than
One Million Dollars ($1,000,000) in the case of a Borrowing consisting of LIBOR
Loans and

 

19

 

Five Hundred Thousand Dollars ($500,000) in the case of a Borrowing
consisting of ABR Loans and, in either case, if in excess of the specified
amount, in integral multiples of One Hundred Thousand Dollars ($100,000).  Each Borrowing under the Revolving Credit
Facility shall consist of a Revolving Credit Loan made by each Lender in the
proportion of its Revolving Credit Pro Rata Share.  Within the limits of the Aggregate Revolving Credit Commitments,
the Borrower may borrow, repay pursuant to Section 2.11, and reborrow Revolving
Credit Loans under this Section 2.01. On such terms and conditions, the
Revolving Credit Loans may be outstanding as ABR Loans or LIBOR Loans.  Each type of Revolving Credit Loan shall be
made and maintained at the applicable Lender’s Lending Office for such type of
Loan.  The failure of any Revolving
Credit Lender to make any requested Revolving Credit Loan to be made by it on
the date specified for such Revolving Credit Loan shall not relieve any other
Revolving Credit Lender of its obligation (if any) to make such Revolving
Credit Loan on such date, but no Revolving Credit Lender (or other Lender)
shall be responsible for the failure of any other Revolving Credit Lender to
make such Revolving Credit Loan to be made by such other Revolving Credit
Lender.  The provisions of this Section
2.01.1(e) shall not apply to Swing Line Loans.

 

Section 2.01.2  Term Loan Facility.  (a) On the Closing Date, upon the terms and
conditions set forth in this Agreement and in reliance upon the representations
and warranties of the Borrower herein set forth, each Term Loan Lender
severally agrees to make a Term Loan to the Borrower in the full amount of such
Term Loan Lender’s Term Loan Commitment. 
The Term Loan Commitments shall terminate upon the advance of the Term
Loans in the full amount of the Aggregate Term Loan Commitment, and Term Loans
that are repaid may not be reborrowed.

 

(b)                                 Term
Loans hereunder shall be made ratably by the several Term Loan Lenders in
accordance with their respective Term Loan Pro Rata Shares.

 

(c)                                  All
Term Loan Obligations shall be due and payable by the Borrower on the Term Loan
Maturity Date unless such Term Loan Obligations shall sooner become due and
payable pursuant to Section 8.01 or as otherwise provided in this Agreement.

 

(d)                                 Each
Borrowing under the Term Loan Facility shall be in an amount not less than One
Million Dollars ($1,000,000) for a Borrowing consisting of LIBOR Loans and Five
Hundred Thousand Dollars ($500,000) in the case of a Borrowing consisting of
ABR Loans and, in either case, if in excess of the specified amount, in
integral multiples of One Hundred Thousand Dollars ($100,000).  Each Borrowing under the Term Loan Facility
shall consist of a Term Loan made by each Term Loan Lender in the proportion of
its Term Loan Pro Rata Share.  On such
terms and conditions, Term Loans may be outstanding as ABR Loans or LIBOR
Loans.  Each type of Term Loan shall be
made and maintained at the applicable Term Loan Lender’s Lending Office for
such type of Loan.  The failure of any
Term Loan Lender to make any requested Term Loan to be made by it on the date
specified for such Term Loan shall not relieve any other Term Loan Lender of
its obligation (if any) to make such Term Loan on such date, but no Term Loan
Lender (or other Lender) shall be responsible for the failure of any other Term
Loan Lender to make such Term Loan to be made by such other Term Loan Lender.

 

20

 

Section 2.01.3  Borrowing Base.  At any time at which the Facilities do not
have a rating of BBB- or higher from S&P or Baa3 or higher from Moody’s,
(a) the aggregate amount of Borrowing Base Debt at any one time outstanding may
not exceed the Borrowing Base as of the most recent Inventory Valuation Date,
and (b) no Loan shall be made, and no Facility Letter of Credit shall be
issued, that would have the effect of increasing the then outstanding amount of
the Borrowing Base Debt to an amount exceeding such Borrowing Base, provided
that a Revolving Credit Loan shall not be deemed to have increased the amount
of the Borrowing Base Debt to the extent that the proceeds of such Revolving
Credit Loan are immediately used to repay a Swing Line Loan theretofore
included in the Borrowing Base Debt.

 

Section 2.01.4  Swing Line Loans.  No Revolving Credit Loan shall be made at
any time that any Swing Line Loan is outstanding, except for Revolving Credit
Loans that are used, on the day on which made, to repay in full the outstanding
principal balance of the Swing Line Loans.

 

Section
2.02  Reductions
of and Increases in Aggregate Revolving Credit Commitment.

 

Section 2.02.1  Reduction of Aggregate Revolving Credit
Commitment.  The
Borrower shall have the right, upon at least three (3) Business Days’ prior
notice to the Agent, to terminate in whole or reduce in part the unused portion
of the Aggregate Revolving Credit Commitment, provided that each partial
reduction shall be in the amount of at least Five Million Dollars ($5,000,000),
and provided  further that no reduction shall be permitted if,
after giving effect thereto, and to any prepayment made therewith, the sum of
(i) the outstanding and unpaid principal amount of the Revolving Credit Loans
and (ii) the Facility Letter of Credit Obligations shall exceed the Aggregate
Revolving Credit Commitment.  Each
reduction in part of the unused portion of each Revolving Credit Lender’s Revolving
Credit Commitment shall be made in the proportion that such Revolving Credit
Commitment bears to the total amount of the Aggregate Revolving Credit
Commitment.  Any Revolving Credit
Commitment, once reduced or terminated, may not be reinstated (except as
otherwise provided in Section 8.01(v)) and may not be increased (except in
accordance with Section 2.02.2).

 

Section 2.02.2  Increase in Aggregate Revolving Credit
Commitment.

 

(a)                                  Request
for Facility Increase. 
The Borrower may, at any time and from time to time, request, by notice
to the Agent, the Agent’s approval of an increase of the Aggregate Revolving
Credit Commitment (a “Facility Increase”) within the limitations hereafter
described, which request shall set forth the amount of each such requested
Facility Increase.  Within twenty (20)
days of such request, the Agent shall advise the Borrower of its approval or
disapproval of such request; failure to so advise the Borrower shall constitute
disapproval. If the Agent approves any such Facility Increase, then the
Aggregate Revolving Credit Commitment may be increased (up to the amount of
such approved Facility Increase, in the aggregate) by having one or more New
Revolving Credit Lenders increase the amount of their then existing Revolving
Credit Commitments or become Revolving Credit Lenders, subject to and in
accordance with this provisions of this Section 2.02.2.  Any Facility Increase shall be subject to
the following limitations and conditions: 
(i) any increase (in the aggregate) in the Aggregate

 

21

 

Revolving Credit
Commitment, any increase in any Revolving Credit Commitment and any new
Revolving Credit Commitment shall (unless otherwise agreed to by the Borrower
and the Agent) not be less than $5,000,000 (and (unless otherwise agreed to by
the Borrower and the Agent) shall be in integral multiples of $1,000,000 if in
excess thereof); (ii) no Facility Increase pursuant to this Section 2.02.2
shall increase the Aggregate Revolving Credit Commitment to an amount in excess
of $350,000,000; (iii) the Borrower and each New Revolving Credit Lender shall
have executed and delivered a commitment and acceptance (the “Commitment and
Acceptance”) substantially in the form of Exhibit D hereto, and the Agent
shall have accepted and executed the same; (iv) the Borrower shall have
executed and delivered to the Agent such Revolving Credit Note or Revolving
Credit Notes as the Agent shall require to reflect such Facility Increase; (v)
the Borrower shall have delivered to the Agent opinions of counsel
(substantially similar to the forms of opinions provided for in Section
3.01(6), modified to apply to the Facility Increase and each Revolving Credit
Note and Commitment and Acceptance executed and delivered in connection
therewith); (vi) the Guarantors shall have consented in writing to the Facility
Increase and shall have agreed that their Guaranties continue in full force and
effect; and (vii) the Borrower and each New Revolving Credit Lender shall
otherwise have executed and delivered such other instruments and documents as
the Agent shall have reasonably requested in connection with such Facility
Increase.  The form and substance of the
documents required under clauses (iii) through (vii) above shall be fully acceptable
to the Agent.  The Agent shall provide
written notice to all of the Lenders hereunder of any Facility Increase.

 

(b)                                 New
Revolving Credit Lenders’ Loans and Participation in Facility Letters of Credit.  Upon the effective date of any increase in
the Aggregate Revolving Credit Commitment pursuant to the provisions hereof
(the “Increase Date”), which Increase Date shall be mutually agreed upon by the
Borrower, each New Revolving Credit Lender and the Agent, (i) such New
Revolving Credit Lender shall be deemed to have irrevocably and unconditionally
purchased and received, without recourse or warranty from the Revolving Credit
Lenders, an undivided interest and participation in any Facility Letter of
Credit then outstanding, ratably, such that each Revolving Credit Lender
(including each New Revolving Credit Lender) holds a participation interest in
each such Facility Letter of Credit in the amount of its then Revolving Credit
Pro Rata Share thereof; (ii) on such Increase Date, the Borrower shall repay all
outstanding ABR Loans under the Revolving Credit Facility and reborrow an ABR
Loan in a like amount from the Revolving Credit Lenders (including the New
Revolving Credit Lender); (iii) such New Revolving Credit Lender shall not
participate in any then outstanding Revolving Credit Loan that is a LIBOR Loan;
(iv) if the Borrower shall at any time on or after such Increase Date convert
or continue any Revolving Credit Loan that is a LIBOR Loan that was outstanding
on such Increase Date, the Borrower shall be deemed to repay such Revolving
Credit Loan on the date of the conversion or continuation thereof and then to
reborrow as a Revolving Credit Loan a like amount on such date so that the New
Revolving Credit Lender shall make a Revolving Credit Loan on such date in the
amount of its Revolving Credit Pro Rata Share of such Borrowing; and (v) such
New Revolving Credit Lender shall make its Revolving Credit Pro Rata Share of
all Revolving Credit Loans made on or after such Increase Date (including those
referred to in clauses (ii) and (iv) above) and shall otherwise have all of the
rights and obligations of a Revolving Credit Lender hereunder on and after such
Increase Date.  Notwithstanding the
foregoing, upon the occurrence of a Default prior to the date on which such New
Revolving Credit Lender is holding its Revolving Credit Pro Rata Share of all
Revolving

 

22

 

Credit Loans
hereunder, such New Revolving Credit Lender shall, upon notice from the Agent
given on or after the date on which the Revolving Credit Obligations are
accelerated or become due following such Default, pay to the Agent (for the
account of the other Revolving Credit Lenders, to which the Agent shall pay
their ratable shares thereof upon receipt) a sum equal to such New Revolving
Credit Lender’s Revolving Credit Pro Rata Share of each Revolving Credit Loan
that is a LIBOR Loan then outstanding with respect to which such New Revolving
Credit Lender does not then hold an interest; such payment by such New
Revolving Credit Lender shall constitute an ABR Loan hereunder.

 

(c)                                  Required
Lenders.  Solely for
purposes of the calculation of Aggregate Pro Rata Shares as used in the
definition of “Required Lenders,” until such time as a New Revolving Credit Lender
holds its Revolving Credit Pro Rata Share of all outstanding Revolving Credit
Loans (if any), the amount of such New Revolving Credit Lender’s new Revolving
Credit Commitment or the increased amount of its Revolving Credit Commitment
shall be excluded from the amount of the Revolving Credit Commitments and
Aggregate Commitments and there shall be included in lieu thereof at any time
an amount equal to the sum of the outstanding Revolving Credit Loans and the
participation interests in Facility Letters of Credit held by such New
Revolving Credit Lender with respect to its new Revolving Credit Commitment or
the increased amount of its Revolving Credit Commitment.

 

(d)                                 No
Obligation to Increase Commitment.  Nothing contained herein shall constitute, or otherwise be deemed
to be, a commitment or agreement on the part of the Borrower or the Agent to
give or grant any Revolving Credit Lender the right to increase its Revolving
Credit Commitment hereunder at any time or a commitment or agreement on the
part of any Revolving Credit Lender to increase its Revolving Credit Commitment
hereunder at any time, and no Revolving Credit Commitment of a Revolving Credit
Lender shall be increased without its prior written approval.

 

Section 2.02.3  Section Not Applicable to Term Loan
Facility.  The
foregoing provisions of this Section 2.02 shall apply only to the Revolving
Credit Facility and shall not apply to the Term Loan Facility.

 

Section
2.03  Notice and
Manner of Borrowing.  The
Borrower shall give the Agent notice of any Loans under this Agreement, on the
Business Day of each ABR Loan, and at least three (3) Business Days before each
LIBOR Loan, specifying:  (1) the date of
such Loan; (2) the amount of such Loan; (3) the type of Loan (whether an ABR
Loan or a LIBOR Loan); and (4) in the case of a LIBOR Loan, the duration of the
Interest Period applicable thereto.  All
notices given by the Borrower under this Section 2.03 shall be irrevocable
and shall be given not later than 10:00 A.M. Chicago time on the day specified
above for such notice.  The Agent shall
notify each Revolving Credit Lender or Term Loan Lender (as applicable) of each
such notice not later than 11:00 A.M. Chicago time on the date it receives such
notice from the Borrower if such notice is received by the Agent at or before
10:00 A.M. Chicago time.  In the event
such notice from the Borrower is received after 10:00 A.M. Chicago time, it
shall be treated as if received on the next succeeding Business Day, and the
Agent shall notify each Revolving Credit Lender or Term Loan Lender (as
applicable) of such notice as soon as practicable but not later than 11:00 A.M.
Chicago time on the next succeeding Business Day.  Not later than 1:00 P.M.

 

23

 

Chicago time on
the date of such Loans, each Revolving Credit Lender or Term Loan Lender (as
applicable) will make available to the Agent in immediately available funds,
such Lender’s Applicable Pro Rata Share of such Loans.  After the Agent’s receipt of such funds, on the
date of such Loans and upon fulfillment of the applicable conditions set forth
in Article III, the Agent will make such Loans available to the Borrower in
immediately available funds by crediting the amount thereof to the Borrower’s
account with the Agent.  The provisions
of this Section 2.03 shall not apply to Swing Line Loans.

 

Section
2.04  Non-Receipt
of Funds by Agent. 
(a)  Unless the Agent shall have
received notice from a Lender prior to the date (in the case of a LIBOR Loan),
or by 12:00 noon Chicago time on the date (in the case of an ABR Loan), on
which such Lender is to provide funds to the Agent for a Loan to be made by
such Lender that such Lender will not make available to the Agent such funds,
the Agent may assume that such Lender has made such funds available to the
Agent on the date of such Loan in accordance with Section 2.03 and the Agent in
its sole discretion may, but shall not be obligated to, in reliance upon such
assumption, make available to the Borrower on such date a corresponding
amount.  If and to the extent such
Lender shall not have given the notice provided for above and shall not have
made such funds available to the Agent, such Lender agrees to repay to the
Agent forthwith on demand such corresponding amount together with interest
thereon, for each day from the date such amount is made available to the
Borrower until the date such amount is repaid to the Agent, at the Federal
Funds Rate for three Business Days and thereafter at the Alternate Base Rate.  If such Lender shall repay to the Agent such
corresponding amount, such amount so repaid shall constitute such Lender’s
applicable Loan for purposes of this Agreement.  If such Lender does not pay such corresponding amount forthwith upon
Agent’s demand therefor, the Agent shall promptly notify the Borrower, and the
Borrower shall immediately pay such corresponding amount to the Agent with
interest thereon, for each day from the date such amount is made available to
the Borrower until the date such amount is repaid to the Agent, at the rate of
interest applicable at the time to such proposed Loan.  Nothing set forth in this Section shall
affect the rights of the Borrower with respect to any Lender that defaults in
the performance of its obligation to make a Loan hereunder.

 

(b)                                 Unless
the Agent shall have received notice from the Borrower prior to the date on
which any payment is due to the Lenders hereunder that the Borrower will not
make such payment in full, the Agent may assume that the Borrower has made such
payment in full to the Agent on such date and the Agent in its sole discretion
may, but shall not be obligated to, in reliance upon such assumption, cause to
be distributed to each applicable Lender on such due date an amount equal to
the amount then due such Lender.  If and
to the extent the Borrower shall not have so made such payment in full to the
Agent, each applicable Lender shall repay to the Agent forthwith on demand such
amount distributed to such Lender together with interest thereon, for each day
from the date such amount is distributed to such Lender until the date such
Lender repays such amount to the Agent, at the Federal Funds Rate for three
Business Days and thereafter at the Alternate Base Rate.

 

(c)                                  The
provisions of this Section 2.04 shall not apply to Swing Line Loans.

 

Section
2.05  Determination
of Applicable Margins and Applicable Commitment Rate.  (a) 
The Applicable Margins and the Applicable Commitment Rate shall be
determined by

 

24

 

reference to the
Senior Debt Rating in accordance with the following table and the provisions of
this Section 2.05:

 

	
  Senior Debt

  Rating 

  	
   

  	
  Applicable

  LIBOR

  Margin 

  	
   

  	
  Applicable

  ABR

  Margin 

  	
   

  	
  

  Applicable Commitment Rate

  	
   

  
	
  Usage>50%

  	
   

  	
  Usage
  <50%

  
	
  BBB-/Baa3

  	
   

  	
  1.25

  	
  %

  	
  -0-

  	
   

  	
  0.20

  	
  %

  	
  0.25

  	
  %

  
	
  BB+/Ba1

  	
   

  	
  1.50

  	
   

  	
  -0-

  	
   

  	
  0.275

  	
  %

  	
  0.30

  	
  %

  
	
  BB/Ba2

  	
   

  	
  1.625

  	
  %

  	
  -0-

  	
   

  	
  0.30

  	
  %

  	
  0.375

  	
  %

  
	
  BB-/Ba3

  	
   

  	
  1.75

  	
  %

  	
  0.25

  	
  %

  	
  0.375

  	
  %

  	
  0.45

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B+/B1 &
  Below or no Senior Debt Rating

  	
   

  	
  2.00

  	
  %

  	
  0.50

  	
  %

  	
  0.50

  	
  %

  	
  0.60

  	
  %

  

 

At any time at which (A) Fitch does not publicly announce a rating of
the Borrower’s unsecured long-term debt, and (B) Moody’s or S&P (but not
both) publicly announces a rating of the Borrower’s unsecured long-term debt,
the Applicable Margin and Applicable Commitment Rate shall be determined in accordance
with the foregoing table, except that (A) the Applicable LIBOR Margin set forth
in the Table above shall be increased by 0.075% and (B) the Applicable
Commitment Rate set forth in the Table shall be increased by 0.025%.

 

(b)                                 The
Applicable Margin and the Applicable Commitment Rate shall be adjusted, from
time to time, effective (as applicable) on the first Business Day after any
change in the Senior Debt Ratings that results in any change in the Applicable
Margins or Applicable Commitment Rate, provided, however, that
any change in the Applicable LIBOR Margin shall only apply to LIBOR Loans for
Interest Periods commencing after such change in the Applicable LIBOR Margin is
effective.

 

Section
2.06  Conversions
and Renewals.  The
Borrower may elect from time to time to convert all or a part of one type of
Loan into another type of Loan or to renew all or part of a Loan by giving the
Agent notice at least one (1) Business Day before conversion into an ABR Loan,
and at least three (3) Business Days before the conversion into or renewal of a
LIBOR Loan, specifying:  (1) the renewal
or conversion date; (2) the amount of the Loan to be converted or renewed; (3)
in the case of conversions, the type of Loan to be converted into; and (4) in
the case of renewals of or a conversion into a LIBOR Loan, the duration of the
Interest Period applicable thereto; provided that (a) the minimum
principal amount of each LIBOR Loan outstanding after a renewal or conversion
shall be One Million Dollars ($1,000,000) and the minimum amount of each ABR
Loan outstanding after a renewal or conversion shall be Two Hundred Fifty
Thousand Dollars ($250,000) and in each case in integral multiples of $100,000
if in excess of such minimum amounts, and (b) LIBOR Loans may be converted on a
Business Day that is not the last day of the Interest Period for such Loan only
if the Borrower pays on the date of conversion all amounts due pursuant to
Section 2.17 hereof; and (c) the Borrower may not renew a LIBOR Loan or convert
an ABR Loan into a LIBOR Loan at any time that a Default has occurred that is
continuing.  Each such notice shall be
accompanied by a Borrowing Base Certificate dated as at the date of such
notice.  All conversions and renewals
shall be made in the

 

25

 

proportion of the
Revolving Credit Lenders’ respective Revolving Credit Pro Rata Shares (in the
case of Revolving Credit Loans) or Term Loan Lenders’ respective Term Loan Pro
Rata Shares (in the case of Term Loans). 
All notices given by the Borrower under this Section 2.06 shall be
irrevocable and shall be given not later than 10:00 A.M. Chicago time on the
day which is not less than the number of Business Days specified above for such
notice.  The Agent shall notify each
Revolving Credit Lender or Term Loan Lender (as applicable) of each such notice
not later than 11:00 A.M. Chicago time on the date it receives such notice from
the Borrower if such notice is received by the Agent at or before 10:00 A.M.
Chicago time.  In the event such notice
from the Borrower is received after 10:00 A.M. Chicago time, it shall be
treated as if received on the next succeeding Business Day, and the Agent shall
notify each Revolving Credit Lender or Term Loan Lender (as applicable) of such
notice as soon as practicable but not later than 11:00 A.M. Chicago time on the
next succeeding Business Day. 
Notwithstanding the foregoing, if the Borrower shall fail to give the
Agent the notice as specified above for the renewal or conversion of a LIBOR
Loan prior to the end of the Interest Period with respect thereto, such LIBOR
Loan shall automatically be converted into an ABR Loan on the last day of the
Interest Period for such Loan.  The
provisions of this Section 2.06 shall not apply to Swing Line Loans.

 

Section
2.07  Interest.  (a) 
The Borrower shall pay interest to the Agent, for the account of the
applicable Lender or Lenders on the outstanding and unpaid principal amount of
the Loans at the following rates:

 

(i)                                     If
an ABR Loan or Swing Line Loan, then at a rate per annum equal to the sum of
(A) the Applicable ABR Margin in effect from time to time as interest accrues
and (B) the Alternate Base Rate in effect from time to time as interest
accrues; and

 

(ii)                                  if
a LIBOR Loan, then at a rate per annum for the Interest Period applicable to
such LIBOR Loan equal to the sum of (A) the Applicable LIBOR Margin in effect
on the first day of such Interest Period and (B) the LIBOR Interest Rate
determined for such Interest Period.

 

(b)                                 Any
change in the interest rate based on the Alternate Base Rate resulting from a
change in the Alternate Base Rate shall be effective (without notice) as of the
opening of business on the day on which such change in the Alternate Base Rate
becomes effective.  Interest on each
LIBOR Loan shall be calculated on the basis of a year of 360 days for the
actual number of days elapsed.  Interest
on each ABR Loan and Swing Line Loan shall be calculated on the basis of a year
of 365 days for the actual number of days elapsed.

 

(c)                                  Interest
on the Loans shall be paid (in an amount set forth in a statement delivered by
the Agent to the Borrower, provided, however, that the failure of
the Agent to deliver such statement shall not limit or otherwise affect the
obligations of the Borrower hereunder) in immediately available funds to the
Agent at its Principal Office for the account of the applicable Lending Office
of each applicable Lender as follows:

 

(1)                                  For
each ABR Loan and Swing Line Loan on the first day of each calendar month
commencing on the first such date after such Loan;

 

26

 

(2)                                  For
each LIBOR Loan, on the last day of the Interest Period with respect thereto,
except that, if such Interest Period is longer than three months, interest
shall also be paid on the last day of the third month of such Interest Period;
and

 

(3)                                  If
not sooner paid, then on the Revolving Credit Termination Date (in the case of
the Revolving Credit Loans) or the Term Loan Maturity Date (in the case of the
Term Loans) or such earlier date as the Loans may be due or declared due
hereunder.

 

(d)                                 Any
principal amount of any Loan not paid when due (at maturity, by acceleration,
or otherwise) shall bear interest thereafter until paid in full, payable on
demand, at a rate per annum equal to the Alternate Base Rate or the applicable
LIBOR Interest Rate, as the case may be, for such Loan in effect from time to
time as interest accrues, plus the Applicable Margin in effect from time to
time as interest accrues, plus two percent (2%) per annum.

 

Section
2.08  Interest
Rate Determination.  (a)
The Agent shall determine each London Interbank Offered Rate, as
applicable.  The Agent shall give prompt
notice to the Borrower and the applicable Lenders of the applicable interest
rate determined by the Agent pursuant to the terms of this Agreement.

 

(b)                                 If
the provisions of this Agreement or any Note would at any time require payment
by the Borrower to a Lender of any amount of interest in excess of the maximum
amount then permitted by the law applicable to any Loan, the interest payments
to such Lender shall be reduced to the extent necessary so that such Lender
shall not receive interest in excess of such maximum amount.  If, as a result of the foregoing a Lender
shall receive interest payments hereunder or under a Note in an amount less
than the amount otherwise provided hereunder, such deficit (hereinafter called
“Interest Deficit”) will cumulate and will be carried forward (without
interest) until the termination of this Agreement.  Interest otherwise payable to a Lender hereunder and under a Note
for any subsequent period shall be increased by the maximum amount of the
Interest Deficit that may be so added without causing such Lender to receive
interest in excess of the maximum amount then permitted by the law on the
applicable Loans.  The amount of the
Interest Deficit relating to the Loans shall be treated as a prepayment premium
(to the extent permitted by law) and paid in full at the time of any optional
prepayment by the Borrower to the applicable Lenders of all the applicable
Loans at that time outstanding pursuant to Section 2.11 hereof.  The amount of the Interest Deficit relating
to the applicable Loans at the time of any complete payment of the Loans at
that time outstanding (other than an optional prepayment thereof pursuant to
Section 2.11 hereof) shall be canceled and not paid.

 

Section
2.09  Fees.  (a) 
The Borrower shall pay to BOCM upon the execution of this Agreement a
one time, nonrefundable fee in the amount provided for in the Agent’s Fee
Letter.  The Agent shall deliver to each
Lender its applicable fee (as set forth in the invitation letter dated April
22, 2003 from BOCM to such Lenders) promptly upon the Agent’s receipt thereof.

 

(b)                                 The
Borrower agrees to pay to the Agent for the account of each Revolving Credit
Lender (subject to adjustment in the case of the Swing Line Lender as
hereinafter provided) a commitment fee on the average daily unused portion of
such Revolving Credit Lender’s Revolving Credit Commitment (in an amount set
forth in a statement delivered

 

27

 

by the Agent to the Borrower, provided, however, that the
failure of the Agent to deliver such statement shall not limit or otherwise
affect the obligations of the Borrower hereunder) from the date of this
Agreement until the Revolving Credit Termination Date at the Applicable
Commitment Rate, payable in arrears on each Quarterly Payment Date during the
term of such Revolving Credit Commitment, commencing July 1, 2003, and ending
on the Revolving Credit Termination Date or, in the case of Rejecting Revolving
Credit Lender, on such Rejecting Revolving Credit Lender’s Termination
Date.  The commitment fees shall be
calculated on the basis of a year of 365 days for the actual number of days
elapsed.  Upon receipt of any commitment
fees, the Agent will promptly thereafter cause to be distributed such payments
to the Revolving Credit Lenders in the proportion of their Revolving Credit Pro
Rata Shares (subject to adjustment in the case of the Swing Line Lender as
hereinafter provided).  For purposes of
determining the commitment fee payable to the Swing Line Lender, the unused
portion of the Swing Ling Lender’s Revolving Credit Commitment shall be reduced
dollar-for-dollar by the amount of any Swing Line Loans then outstanding.

 

(c)                                  The
Borrower shall pay to the Agent and BOCM such additional fees as are specified
in the Agent’s Fee Letter.

 

Section
2.10  Notes.  All Revolving Credit Loans made by each
Revolving Credit Lender under this Agreement shall be evidenced by, and repaid
with interest in accordance with, a single Revolving Credit Note of the
Borrower in substantially the form of Exhibit C-1 hereto, in each case
duly completed, dated the date of this Agreement, and payable to such Revolving
Credit Lender for the account of its applicable Lending Office, such Revolving
Credit Note to represent the obligation of the Borrower to repay the Revolving
Credit Loans made by such Revolving Credit Lender.  All Term Loans made by each Term Loan Lender under this Agreement
shall be evidenced by, and repaid with interest in accordance with, a single
Term Loan Note of the Borrower in substantially the form of Exhibit C-2
hereto, in each case duly completed, dated the date of this Agreement, and
payable to such Term Loan Lender for the account of its applicable Lending
Office, such Term Loan Note to represent the obligation of the Borrower to
repay the Term Loans made by such Term Loan Lender.  Each Lender is hereby authorized by the Borrower to endorse on
the schedule attached to the Note or Notes held by it the amount and type of
such applicable Loan and each renewal, conversion, and payment of principal
amount received by such applicable Lender for the account of its applicable Lending
Office on account of its applicable Loans, which endorsement shall, in the
absence of manifest error, be conclusive as to the outstanding balance of such
Loans made by such Lender; provided, however, that the failure to
make such notation with respect to any Loan or renewal, conversion, or payment
shall not limit or otherwise affect the obligations of the Borrower under this
Agreement or the Note or Notes held by such Lender.  All Revolving Credit Loans shall be repaid on the Revolving
Credit Termination Date, and all Term Loans shall be repaid on the Term Loan
Maturity Date.

 

Section
2.11  Prepayments.  (a) 
The Borrower may, upon notice to the Agent not later than 11:00 A.M.
(Chicago time) on the date of prepayment in the case of ABR Loans and at least
three (3) Business Days’ prior notice to the Agent in the case of LIBOR Loans,
prepay (including, without limitation, all amounts payable pursuant to the
terms of Section 2.17 hereof) the Revolving Credit Loans or the Term Loans (or
both) in whole or in part with accrued interest to the date of such prepayment
on the amount prepaid, provided that (1) each partial payment shall be
in a principal amount of not less than One Million Dollars ($1,000,000) in the
case of a

 

28

 

LIBOR Loan under
the applicable Facility and Two Hundred Fifty Thousand Dollars ($250,000) in
the case of an ABR Loan under the applicable Facility; and (2) LIBOR Loans may
be prepaid only on the last day of the Interest Period for such Loans; provided,
however, that such prepayment of LIBOR Loans may be made on any other
Business Day if the Borrower pays at the time of such prepayment all amounts
due pursuant to Section 2.17 hereof. 
Upon receipt of any such prepayments, the Agent will promptly thereafter
cause to be distributed the Applicable Pro Rata Share of such prepayment to
each Revolving Credit Lender or Term Loan Lender (as applicable) for the
account of its applicable Lending Office, except that prepayments of Swing Line
Loans shall be made solely to the Swing Line Lender.

 

(b)                                 The
Borrower shall immediately upon a Change in Control prepay the Notes in full
and all accrued interest to the date of such prepayment, and in the case of
LIBOR Loans all amounts due pursuant to Section 2.17 hereof.

 

Section
2.12  Method of
Payment.  The Borrower
shall make each payment under this Agreement and under any of the Notes not
later than 11:00 A.M. Chicago time on the date when due in lawful money of the
United States to the Agent for the account of the applicable Lending Office of
each applicable Lender (or, in the case of Swing Line Loans, for the account of
the Swing Line Lender) in immediately available funds.  The Agent will promptly thereafter cause to
be distributed (1) the Applicable Pro Rata Share of such payments of principal
and interest with respect to Loans (other than Swing Line Loans) in like funds
to each Revolving Credit Lender or Term Loan Lender (as applicable) for the
account of its applicable Lending Office, (2) such payments of principal and
interest with respect to Swing Line Loans solely to the Swing Line Lender and
(3) other fees payable to any Lender to be applied in accordance with the terms
of this Agreement.  If any such payment
is not received by the applicable Lender on the Business Day on which the Agent
received such payment (or the following Business Day if the Agent’s receipt
thereof occurs after 2:00 P.M. (Chicago time)), such Lender shall be entitled
to receive from the Agent interest on such payment at the Federal Funds Rate
for three Business Days and thereafter at the Alternate Base Rate (which
interest payment shall not be an obligation for the Borrower’s account,
including under Section 11.04 or Section 11.06).  The Borrower hereby authorizes each Lender, if and to the extent
payment is not made when due under this Agreement or under any of the Notes, to
charge from time to time against any account of the Borrower with such Lender
any amount as due.  Whenever any payment
to be made under this Agreement or under any of the Notes shall be stated to be
due on a day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall be included in the
computation of the payment of interest and the commitment fee, as the case may
be, except, in the case of a LIBOR Loan, if the result of such extension would
be to extend such payment into another calendar month, such payment shall be
made on the immediately preceding Business Day.

 

Section
2.13  Use of
Proceeds.  The proceeds
of the Loans hereunder shall be used by the Borrower (a) to repay amounts owing
under the Prior Credit Agreements, (b) for working capital and general
corporate purposes of the Borrower and the Guarantors to the extent permitted
in this Agreement and (c) in the case of Revolving Credit Loans, to repay Swing
Line Loans.  The Borrower will not,
directly or indirectly, use any part of such proceeds for the purpose of
repaying the Senior Notes (other than the Senior Notes due 2008) or for
purchasing or carrying any margin stock within the meaning of Regulation U of
the Board of Governors of the

 

29

 

Federal Reserve
System or to extend credit to any Person for the purpose of purchasing or
carrying any such margin stock, or for any purpose which violates, or is
inconsistent with, Regulation X of such Board of Governors.

 

Section
2.14  Yield
Protection.  If any law
or any governmental or quasi-governmental rule, regulation, policy, guideline
or directive (whether or not having the force of law), or any interpretation
thereof, or the compliance of any Lender or Issuer therewith,

 

(i)                                     subjects
any Lender or Issuer or any applicable Lending Office to any tax, duty, charge
or withholding on or from payments due from the Borrower (excluding federal
taxation of the overall net income of any Lender or Issuer or applicable
Lending Office), or changes the basis of taxation of payments to any Lender or
Issuer in respect of its Loans or Facility Letters of Credit or other amounts
due it hereunder, or

 

(ii)                                  imposes
or increases or deems applicable any reserve, assessment, insurance charge,
special deposit or similar requirement against assets of, deposits with or for
the account of, or credit extended by, any Lender or Issuer or any applicable
Lending Office (other than reserves and assessments taken into account in
determining the interest rate applicable to LIBOR Loans), or

 

(iii)                               imposes
any other condition the result of which is to increase the cost to any Lender
or Issuer or any applicable Lending Office of making, funding or maintaining
loans or issuing or participating in letters of credit or reduces any amount
receivable by any Lender or Issuer or any applicable Lending Office in
connection with loans, or requires any Lender or Issuer or any applicable
Lending Office to make any payment calculated by reference to the amount of
loans held, letters of credit issued or interest received by it, by an amount
deemed material by such Lender or Issuer,

 

then, within fifteen (15) days of demand by such Lender or Issuer, the
Borrower shall pay such Lender or Issuer that portion of such increased expense
incurred or reduction in an amount received which such Lender or Issuer
reasonably determines is attributable to making, funding and maintaining its
Loans and its Commitment and issuing or participating in Letters of Credit.

 

Section
2.15  Changes in
Capital Adequacy Regulations. 
If a Lender or Issuer determines the amount of capital required or
expected to be maintained by such Lender or Issuer, any Lending Office of such
Lender or Issuer or any corporation controlling such Lender or Issuer is
increased as a result of a Change, then, within 10 days of demand by such
Lender or Issuer, the Borrower shall pay such Lender or Issuer the amount
necessary to compensate for any shortfall in the rate of return on the portion
of such increased capital which such Lender or Issuer determines is
attributable to this Agreement, its Loans or its obligation to make Loans
hereunder (after taking into account such Lender’s or Issuer’s policies as to
capital adequacy); provided, however, that a Lender or Issuer
shall impose such cost upon the Borrower only if such Lender or Issuer is
generally imposing such cost on its other borrowers having similar credit
arrangements.  “Change” means (i) any
change after the date of this Agreement in the Risk-

 

30

 

Based Capital
Guidelines or (ii) any adoption of or change in any other law, governmental or
quasi-governmental rule, regulation, policy, guideline, interpretation, or
directive (whether or not having the force of law) after the date of this
Agreement which affects the amount of capital required or expected to be
maintained by any Lender or Issuer or any Lending Office or any corporation
controlling any Lender or Issuer. 
“Risk-Based Capital Guidelines” means (i) the risk-based capital
guidelines in effect in the United States on the date of this Agreement,
including transition rules, and (ii) the corresponding capital regulations
promulgated by regulatory authorities outside the United States implementing
the July 1988 report of the Basle Committee on Banking Regulation and
Supervisory Practices Entitled “International Convergence of Capital
Measurements and Capital Standards,” including transition rules, and any
amendments to such regulations adopted prior to the date of this Agreement.

 

Section
2.16  Availability
of LIBOR Loans.  If any
Lender determines that maintenance of its LIBOR Loans at the Lending Office
selected by the Lender would violate any applicable law, rule, regulation, or
directive, whether or not having the force of law (and it is not reasonably
possible for the Lender to designate an alternate Lending Office without being
adversely affected thereby), or if the Required Lenders determine that (i)
deposits of a type and maturity appropriate to match fund LIBOR Loans are not
available or (ii) the interest rate applicable to LIBOR Loans does not
accurately reflect the cost of making or maintaining such LIBOR Loans, then the
Agent shall suspend the availability of LIBOR Loans and require any LIBOR Loans
to be repaid.

 

Section
2.17  Funding
Indemnification.  If any
payment of a LIBOR Loan occurs on a date which is not the last day of the
applicable Interest Period, whether because of acceleration, prepayment or
otherwise, or a LIBOR Loan is not made on the date specified by the Borrower
for any reason other than default by the Lenders, the Borrower will indemnify
each Lender for any loss or cost incurred by it resulting therefrom, including,
without limitation, any loss or cost in liquidating or employing deposits
required to fund or maintain the LIBOR Loan.

 

Section
2.18  Lender
Statements; Survival of Indemnity.  To the extent reasonably possible, each Lender shall designate an
alternate Lending Office with respect to its LIBOR Loans to reduce any
liability of the Borrower to such Lender under Sections 2.14 and 2.15 or
to avoid the unavailability of LIBOR Loans. 
Each Lender shall deliver a written statement of such Lender as to the
amount due, if any, under Sections 2.14, 2.15 or 2.17.  Such written statement shall set forth in
reasonable detail the calculations upon which such Lender determined such
amount and shall be final, conclusive and binding on the Borrower in the
absence of manifest error. 
Determination of amounts payable under such Sections in connection with
a LIBOR Loan shall be calculated as though each Lender funded its LIBOR Loan
through the purchase of a deposit of the type and maturity corresponding to the
deposit used as a reference in determining the LIBOR Rate applicable to such
Loan, whether in fact that is the case or not. 
Unless otherwise provided herein, the amount specified in the written
statement shall be payable on demand after receipt by the Borrower of the
written statement.  The obligations of
the Borrower under Sections 2.14, 2.15 and 2.17 shall survive payment of the
Obligations and termination of this Agreement.

 

Section
2.19  Extension
of Revolving Credit Termination Date.  (a) 
Not more than once in any fiscal year of the Borrower, the Borrower may
request an extension of the Revolving Credit Termination Date to the first or
second anniversary of the then scheduled Revolving

 

31

 

Credit Termination
Date (but in no event later than the fourth anniversary of the date of such
request) by submitting a request for an extension to the Agent not less than
180 days prior to the then scheduled Revolving Credit Termination Date.  At the time of or prior to the delivery of
such request, the Borrower shall propose to the Agent the amount of the fees
that the Borrower would agree to pay with respect to such extension if approved
by the Revolving Credit Lenders. 
Promptly upon (but not later than five Business Days after) the Agent’s
receipt and approval of the extension request and fee proposal (as so approved,
the “Revolving Credit Extension Request”), the Agent shall deliver to each
Revolving Credit Lender a copy of, and shall request each Revolving Credit
Lender to approve, the Revolving Credit Extension Request.  Each Revolving Credit Lender approving the
Revolving Credit Extension Request shall deliver its written approval no later
than 60 days after such Revolving Credit Lender’s receipt of the Revolving
Credit Extension Request.  If the
written approval of the Revolving Credit Extension Request by the Revolving
Credit Lenders whose Revolving Credit Pro Rata Shares equal or exceed 66-2/3%
in the aggregate is received by the Agent within such 60-day period, the
Revolving Credit Termination Date shall be extended to the first or second
anniversary of the then scheduled Revolving Credit Termination Date (as
specified in the Revolving Credit Extension Request) but only with respect to
the Revolving Credit Lenders that have given such written approval.  Except to the extent that a Revolving Credit
Lender that did not give its written approval to such Revolving Credit
Extension Request (“Rejecting Revolving Credit Lender”) is replaced as provided
in Section 2.21, the Revolving Credit Loans and all interest thereon, fees and
other Revolving Credit Obligations owed to such Rejecting Revolving Credit
Lender shall be paid in full on the Revolving Credit Termination Date as
determined prior to such Revolving Credit Extension Request (the “Rejecting
Revolving Credit Lender’s Termination Date”).

 

(b)                                 Within
ten days of the Agent’s notice to the Borrower that the Revolving Credit
Lenders whose Revolving Credit Pro Rata Shares equal or exceed 66-2/3% in the
aggregate have approved a Revolving Credit Extension Request, the Borrower
shall pay to the Agent for the account of each Revolving Credit Lender that has
approved the Revolving Credit Extension Request the applicable extension fees
specified in the Revolving Credit Extension Request.

 

(c)                                  If
Revolving Credit Lenders whose Revolving Credit Pro Rata Shares equal or exceed
66-2/3% in the aggregate approve the Revolving Credit Extension Request, the
Borrower, upon notice to the Agent and any Rejecting Revolving Credit Lender,
(i) may, subject to the provisions of the last sentence of Section 2.19(d),
terminate the Revolving Credit Commitment of such Rejecting Revolving Credit
Lender (or such portion of such Revolving Credit Commitment as is not assigned
to a Replacement Lender in accordance with Section 2.21), and (ii) if such
Rejecting Revolving Credit Lender is also a Term Loan Lender, may (at
Borrower’s election, but only if Borrower simultaneously elects to terminate
such Rejecting Lender’s Revolving Credit Commitment under clause (i) above)
repay in full the Term Loan of such Lender (or such portion of such Term Loan
as is not assigned to a Replacement Lender in accordance with Section 2.21),
which termination (in the case of clause (i)) or repayment (in the case of
clause (ii)) shall occur as of a date set forth in such Borrower’s notice but
in no event more than thirty (30) days following such notice (subject to the
provisions of Section 2.21(b)).  The termination
of a Rejecting Revolving Credit Lender’s Revolving Credit Commitment shall

 

32

 

be effected in accordance with Section 2.19(d) and the repayment of its
Term Loans (if applicable) shall be effected in accordance with Section
2.20(d).

 

(d)                                 If
the Borrower elects to terminate a Revolving Credit Commitment of a Rejecting
Lender pursuant to Section 2.19(c) or 2.20(c), the Borrower shall pay to the
Rejecting Lender all Revolving Credit Obligations due and owing to it hereunder
or under any other Loan Document, including, without limitation, the aggregate
outstanding principal amount of the Revolving Credit Loans owed to such
Rejecting Lender, together with accrued interest thereon through the date of
such termination, amounts payable under Sections 2.14 and 2.15 with respect to
such Rejecting Lender’s Revolving Credit Loans and the fees payable to such
Rejecting Lender under Section 2.09(b). 
Upon request by the Borrower or the Agent, the Rejecting Lender will
deliver to the Borrower and the Agent a letter setting forth the amounts
payable to the Rejecting Lender as set forth above.  Upon the termination of such Rejecting Lender’s Revolving Credit
Commitment and payment of the amounts provided for in the immediately preceding
sentence, the Borrower shall have no further obligations to such Rejecting
Lender with respect to the Revolving Credit Facility under this Agreement and
such Rejecting Lender shall cease to be a Revolving Credit Lender, provided,
however, that (i) such Rejecting Lender shall continue to be entitled to
the benefits of Sections 2.14, 2.15, 2.17, 11.04 and 11.06, as well as to any
fees accrued for its account hereunder not yet paid, and shall continue to be
obligated under Section 10.05 with respect to obligations and liabilities accruing
prior to the termination of such Rejecting Lender’s Revolving Credit Commitment
and (ii) if such Rejecting Lender is also a Term Loan Lender, the termination
of its Revolving Credit Commitment shall not affect its rights or obligations
as a Term Loan Lender unless Borrower has also elected to repay such Rejecting
Lender’s Term Loans in accordance with Section 2.19(c) or 2.20(c).  If, as a result of the termination of the
Rejecting Lender’s Revolving Credit Commitment, any payment of a LIBOR Loan
occurs on a day which is not the last day of the applicable Interest Period,
the Borrower shall pay to the Agent for the benefit of the Revolving Credit
Lenders (including any Rejecting Lender) any loss or cost incurred by the
Revolving Credit Lenders (including any Rejecting Lender) resulting therefrom
in accordance with Section 2.17.  Upon
the effective date of the termination of the Rejecting Lender’s Revolving
Credit Commitment, the Aggregate Revolving Credit Commitment shall be reduced
by the amount of the terminated Revolving Credit Commitment of the Rejecting
Lender, and each other Revolving Credit Lender shall be deemed to have
irrevocably and unconditionally purchased and received (subject to the
provisions of the last sentence of this Section 2.19(d)), without recourse or
warranty, from the Rejecting Lender, an undivided interest and participation in
any Facility Letter of Credit then outstanding, ratably, such that each
Revolving Credit Lender (excluding the Rejecting Lender but including any
Replacement Lender that acquires an interest in the Revolving Credit Facility
hereunder from such Rejecting Lender) holds a participation interest in each
Facility Letter of Credit in proportion to the ratio that such Rejecting Credit
Lender’s Revolving Credit Commitment (upon the effective date of such
termination of the Rejecting Lender’s Revolving Credit Commitment) bears to the
Aggregate Revolving Credit Commitment (as reduced by the termination of such
Rejecting Lender’s Revolving Credit Commitment or a part thereof).  Notwithstanding the foregoing, if, upon the
termination of the Revolving Credit Commitment of such Rejecting Lender, the
sum of the outstanding principal balance of the Revolving Credit Loans and the
Facility Letter of Credit Obligations would exceed the Aggregate Revolving
Credit Commitment (as reduced), the Borrower may not terminate such Rejecting
Lender’s Revolving Credit Commitment (and, if applicable, may not repay such
Rejecting Lender’s Term

 

33

 

Loans) unless the Borrower, on or prior to the effective date of such
termination, prepays, in accordance with the provisions of this Agreement,
outstanding Revolving Credit Loans or causes to be canceled, released and
returned to the applicable Issuer outstanding Facility Letters of Credit in
sufficient amounts such that, on the effective date of such termination, the
sum of the outstanding principal balance of the Revolving Credit Loans and the
Facility Letter of Credit Obligations does not exceed the Aggregate Revolving
Credit Commitment (as reduced).

 

Section
2.20  Extension
of Term Loan Maturity Date. 
(a)  Not more than once in any
fiscal year of the Borrower, the Borrower may request an extension of the Term
Loan Maturity Date to the first or second anniversary of the then scheduled
Term Loan Maturity Date (but in no event later than the fourth anniversary of
the date of such request) by submitting a request for an extension to the Agent
not less than 180 days prior to the then scheduled Term Loan Maturity
Date.  At the time of or prior to the
delivery of such request, the Borrower shall propose to the Agent the amount of
the fees that the Borrower would agree to pay with respect to such extension if
approved by the Term Loan Lenders. 
Promptly upon (but not later than five Business Days after) the Agent’s
receipt and approval of the extension request and fee proposal (as so approved,
the “Term Loan Extension Request”), the Agent shall deliver to each Term Loan
Lender a copy of, and shall request each Term Loan Lender to approve, the Term
Loan Extension Request.  Each Term Loan
Lender approving the Term Loan Extension Request shall deliver its written
approval no later than 60 days after such Term Loan Lender’s receipt of the
Term Loan Extension Request.  If the
written approval of the Term Loan Extension Request by Term Loan Lenders whose
Term Loan Pro Rata Shares equal or exceed 66-2/3% in the aggregate is received
by the Agent within such 60-day period, the Term Loan Maturity Date shall be
extended to the first or second anniversary of the then scheduled Term Loan
Maturity Date (as specified in the Term Loan Extension Request) but only with
respect to the Term Loan Lenders that have given such written approval.  Except to the extent that a Term Loan Lender
that did not give its written approval to such Term Loan Extension Request
(“Rejecting Term Loan Lender”) is replaced as provided in Section 2.21, the
Term Loans and all interest thereon and other Term Loan Obligations owed to
such Rejecting Term Loan Lender shall be paid in full on the Term Loan Maturity
Date as determined prior to such Term Loan Extension Request (the “Rejecting
Term Loan Lender’s Maturity Date”).

 

(b)                                 Within
ten days of the Agent’s notice to the Borrower that the Term Loan Lenders whose
Term Loan Pro Rata Shares equal or exceed 66-2/3% in the aggregate have
approved a Term Loan Extension Request, the Borrower shall pay to the Agent for
the account of each Term Loan Lender that has approved the Term Loan Extension
Request the applicable extension fees specified in the Term Loan Extension
Request.

 

(c)                                  If
Term Loan Lenders whose Term Loan Pro Rata Shares equal or exceed 66-2/3% in
the aggregate approve the Term Loan Extension Request, the Borrower, upon
notice to the Agent and any Rejecting Term Loan Lender, (i) may repay the Term
Loan of such Rejecting Term Loan Lender (or such portion of such Term Loan as
is not assigned to a Replacement Lender in accordance with Section 2.21) and
(ii) if such Rejecting Term Loan Lender is also a Revolving Credit Lender, may
(at Borrower’s election, but only if Borrower simultaneously elects to repay
such Rejecting Lender’s Term Loan under clause (i) above) terminate the
Revolving Credit Commitment of such Rejecting Lender), which repayment (in the

 

34

 

case of clause (i)) or termination (in the case of clause (ii)), shall
occur as of a date set forth in such Borrower’s notice but in no event more
than thirty (30) days following such notice (subject to the provisions of
Section 2.21(b)).  The repayment of a
Rejecting Term Loan Lender’s Term Loan shall be effected in accordance with
Section 2.20(d) and the termination of its Revolving Credit Commitment (if
applicable) shall be effected in accordance with Section 2.19(d).

 

(d)                                 If
the Borrower elects to repay the Term Loan of a Rejecting Lender pursuant to
Section 2.20(a) or 2.19(a), the Borrower shall pay to the Rejecting Lender all
Term Loan Obligations due and owing to it hereunder or under any other Loan
Document, including, without limitation, the aggregate outstanding principal
amount of the Term Loan owed to such Rejecting Lender, together with accrued
interest thereon through the date of such repayment, and amounts payable under
Sections 2.14 and 2.15 with respect to such Rejecting Lender’s Term Loans.  Upon request by the Borrower or the Agent,
the Rejecting Lender will deliver to the Borrower and the Agent a letter
setting forth the amounts payable to the Rejecting Lender as set forth
above.  Upon the repayment of such
Rejecting Lender’s Term Loans and payment of the amounts provided for in the
immediately preceding sentence, the Borrower shall have no further obligations
to such Rejecting Lender with respect to the Term Loans under this Agreement and
such Rejecting Lender shall cease to be a Term Loan Lender, provided, however,
that (i) such Rejecting Lender shall continue to be entitled to the benefits of
Sections 2.14, 2.15, 2.17, 11.04 and 11.06 and shall continue to be obligated
under Section 10.05 with respect to obligations and liabilities accruing prior
to the repayment of such Rejecting Lender’s Term Loan and (ii) if such
Rejecting Lender is also a Revolving Credit Lender, the repayment of its Term
Loan shall not affect its rights or obligations as a Revolving Credit Lender
unless Borrower has also elected to terminate such Rejecting Lender’s Revolving
Credit Commitment in accordance with Section 2.19(c) or 2.20(c).  If, as a result of the repayment of the
Rejecting Lender’s Term Loan, any payment of a LIBOR Loan occurs on a day which
is not the last day of the applicable Interest Period, the Borrower shall pay
to the Agent for the benefit of the Term Loan Lenders (including any Rejecting
Lender) any loss or cost incurred by the Rejecting Term Loan Lenders (including
any Rejecting Lender) resulting therefrom in accordance with Section 2.17.

 

Section
2.21  Replacement
of Certain Lenders. 
(a)  In the event a Lender
(“Affected Lender”):  (i) shall have
requested compensation from the Borrower under Sections 2.14 or 2.15 to recover
additional costs incurred by such Lender that are not being incurred generally
by the other Lenders, (ii) shall have delivered a notice pursuant to Section
2.16 claiming that such Lender is unable to extend LIBOR Loans to the Borrower
for reasons not generally applicable to the other Lenders, (iii) shall have
invoked Section 11.13 or (iv) is a Rejecting Revolving Credit Lender
pursuant to Section 2.19 or a Rejecting Term Loan Lender pursuant to Section
2.20, then, in any such case, the Borrower or the Agent may effect the
replacement of such Affected Lender in accordance with the provisions of this
Section 2.21, provided, however, that if the replacement of such
Affected Lender is by reason of clause (iv) above, the replacement of such
Affected Lender shall be subject to the provisions of Section 2.21(b).  The Borrower or the Agent may elect to
replace an Affected Lender and make written demand on such Affected Lender
(with a copy to the Agent in the case of a demand by the Borrower and a copy to
the Borrower in the case of a demand by the Agent) for the Affected Lender to
assign, and, if a Replacement Lender (as hereinafter defined) notifies the
Affected Lender of its willingness to purchase the Affected Lender’s interests
in the Facilities and the Agent and the Borrower consent thereto in writing,
then such Affected Lender shall assign pursuant to one or more duly executed
assignment and

 

35

 

acceptance
agreements in substantially and in all material respects in the form and
substance of Exhibit I five (5) Business Days after the date of such
demand, to one or more financial institutions that comply with the provisions
of Section 12.03(a) that the Borrower or the Agent, as the case may be, shall
have engaged for such purpose (each a “Replacement Lender”), all (or, to the
extent required or permitted under Section 2.21(b), a part) of such Affected
Lender’s rights and obligations (from and after the date of such assignment)
under this Agreement and the other Loan Documents in accordance with Section
12.03.  The Agent agrees, upon the
occurrence of such events with respect to an Affected Lender and upon the
written request of the Borrower, to use its reasonable efforts to obtain commitments
from one or more financial institutions to act as a Replacement Lender.  As a condition to any such assignment, the
Affected Lender shall have concurrently received, in cash, all amounts (except
as otherwise provided in Section 2.21(b)) due and owing to the Affected Lender
hereunder or under any other Loan Document, including, without limitation, the
aggregate outstanding principal amount of the Loans owed to such Lender,
together with accrued interest thereon through the date of such assignment, amounts
payable under Sections 2.14 and 2.15 with respect to such Affected Lender and
the fees payable to such Affected Lender under Section 2.09(b); provided
that upon such Affected Lender’s replacement, such Affected Lender shall
(except as otherwise provided in Section 2.21(b)) cease to be a party hereto
but shall continue to be entitled to the benefits of Sections 2.14, 2.15, 2.17,
11.04 and 11.06, as well as to any fees accrued for its account hereunder and
not yet paid, and shall continue to be obligated under Section 10.05 with
respect to obligations and liabilities accruing prior to the replacement of
such Affected Lender.

 

(b)                                 In
the event that the Affected Lender is a Rejecting Lender, the Borrower may
elect to have a part of the Rejecting Lender’s rights and obligations under
this Agreement and the other Loan Documents (or, if applicable under the last
sentence of this Section 2.21(b), a portion of its rights and obligations with
respect to the applicable Facility) assigned pursuant to this Section 2.21, provided
that the Borrower also elects, (i) pursuant to Section 2.19(c) in the case of a
Rejecting Revolving Credit Lender, to terminate the entire amount of such
Rejecting Revolving Credit Lender’s Revolving Credit Commitment not so
assigned, which termination shall be effective on the date on which such
assignment of the Rejecting Revolving Credit Lender’s rights and obligations is
consummated under this Section 2.21 or (ii) pursuant to Section 2.20(c) in the
case of the Term Loan Lender, to prepay in full the entire amount of such
Rejecting Lender’s Term Loan not so assigned, which prepayment shall be made on
the date on which such assignment of the Rejecting Term Loan Lender’s rights
and obligations is consummated under this Section 2.21.  In the event that the Affected Lender is a
Rejecting Lender with respect to one, but not both, of the Facilities, the
replacement of such Affected Lender may be effected with respect to the
Facility as to which such Affected Lender is a Rejecting Lender and, if so effected,
may (at the Borrower’s election) also be effected with respect to the interest
of such Rejecting Lender in the other Facility.

 

Section
2.22  Swing Line.  (a) 
The Swing Line Lender agrees, on the terms and conditions hereinafter
set forth, to make loans (“Swing Line Loans”) to the Borrower from time to time
during the period from the date of this Agreement, up to but not including the
Revolving Credit Termination Date, in an aggregate principal amount not to
exceed at any time outstanding the lesser of (i) the Swing Line Commitment or
(ii) the amount by which the Swing Line Lender’s Revolving Credit Commitment
exceeds the sum of (A) the outstanding principal amount of the Revolving Credit
Loans made by the Swing Line Lender pursuant to Section

 

36

 

2.01.1 and (B) the
Swing Line Lender’s Revolving Credit Pro Rata Share of the outstanding Facility
Letter of Credit Obligations, subject in each case to the limitations set forth
in Section 2.01.3.

 

(b)                                 Each
Swing Line Loan which shall not utilize the Swing Line Commitment in full shall
be in an amount not less than One Million Dollars ($1,000,000) and, if in
excess thereof, in integral multiples of One Million Dollars ($1,000,000).  Within the limits of the Swing Line
Commitment, the Borrower may borrow, repay and reborrow under this Section
2.22.

 

(c)                                  The
Borrower shall give the Swing Line Lender notice of any request for a Swing
Line Loan not later than 2:00 p.m. Chicago time on the Business Day of such Swing
Line Loan, specifying the amount of such requested Swing Line Loan.  Each such notice shall be accompanied by a
Borrowing Base Certificate dated as of the date of such notice (and by the
notice provided for in Section 2.22(d)). 
All notices given by the Borrower under this Section 2.22(c) shall be
irrevocable.  Upon fulfillment of the
applicable conditions set forth in Article III, the Swing Line Lender will make
the Swing Line Loan available to the Borrower in immediately available funds by
crediting the amount thereof to the Borrower’s account with the Swing Line
Lender.

 

(d)                                 On
the first Business Day following the making of a Swing Line Loan, such Swing
Line Loan shall be paid in full from the proceeds of a Revolving Credit Loan
made pursuant to Section 2.01.1.  Each
notice given by the Borrower under Section 2.22(c) shall include, or, if it
does not include, shall be deemed to include, an irrevocable notice under
Section 2.03 requesting the Revolving Credit Lenders to make an ABR Loan on the
next succeeding Business Day in the full amount of such Swing Line Loan.

 

Section
2.23  Facility
Letters of Credit.

 

Section 2.23.1  Issuance of Facility Letters of Credit.  (a) 
Each Issuer agrees, on the terms and conditions set forth in this
Agreement, to issue from time to time for the account of the Borrower, through
such offices or branches as it and the Borrower may jointly agree, one or more
Facility Letters of Credit in accordance with this Section 2.23.1, during the
period commencing on the date hereof and ending on the thirtieth (30th) day
prior to the Revolving Credit Termination Date.

 

(b)                                 The
Borrower shall not request, and no Issuer shall issue, a Facility Letter of
Credit for any purpose other than for purposes for which Loan proceeds may by
used.

 

Section 2.23.2  Limitations.  An Issuer shall not issue, amend or extend,
at any time, any Facility Letter of Credit:

 

(i)                                     if
the aggregate maximum amount then available for drawing under Letters of Credit
issued by such Issuer, after giving effect to the Facility Letter of Credit or
amendment or extension thereof requested hereunder, shall exceed any limit
imposed by law or regulation upon such Issuer;

 

37

 

(ii)                                  if,
after giving effect to the issuance, amendment or extension of the Facility
Letter of Credit requested hereunder, the aggregate principal amount of the
Facility Letter of Credit Obligations would exceed the Facility Letter of
Credit Sublimit;

 

(iii)                               
if, after giving effect to the issuance, amendment or extension of the Facility
Letter of Credit requested hereunder, Borrowing Base Debt would exceed the
Borrowing Base as of the most recent Inventory Valuation Date;

 

(iv)                              if,
after giving effect to the issuance, amendment or extension of the Facility Letter
of Credit requested hereunder, the sum of (A) the outstanding and unpaid
principal amount of the Revolving Credit Loans and (B) the Facility Letter of
Credit Obligations would exceed the Aggregate Revolving Credit Commitment;

 

(v)                                 unless
such Issuer receives written notice from the Agent on or before the proposed
Issuance Date of such Facility Letter of Credit that the issuance, amendment or
extension of such Facility Letter of Credit is within the limitations specified
in clauses (ii), (iii) and (iv) of this Section 2.23.2;

 

(vi)                              that
has an expiration date (taking into account any automatic renewal provisions
thereof) later than thirty (30) days prior to the scheduled Termination Date;
or

 

(vii)                           that is
in a currency other than U.S. Dollars.

 

Section 2.23.3  Conditions.  The issuance, amendment or extension of any
Facility Letter of Credit is subject to the satisfaction in full of the
following conditions on the Issuance Date:

 

(i)                                     the
Borrower shall have delivered to the Issuer at such times and in such manner as
the Issuer may reasonably prescribe a Reimbursement Agreement and such other
documents and materials as may be reasonably required pursuant to the terms
thereof, and the proposed Facility Letter of Credit shall be reasonably
satisfactory to such Issuer in form and content;

 

(ii)                                  as
of the Issuance Date no order, judgment or decree of any court, arbitrator or
governmental authority shall enjoin or restrain such Issuer from issuing the
Facility Letter of Credit and no law, rule or regulation applicable to the
Issuer and no directive from any governmental authority with jurisdiction over
the Issuer shall prohibit such Issuer from issuing Letters of Credit generally
or from issuing that Facility Letter of Credit;

 

(iii)                               The
following statements shall be true, and the Agent and such Issuer shall have
received a certificate, substantially in the form of the certificate attached
hereto as Exhibit E, signed by a duly authorized officer of the Borrower
dated the Issuance Date stating that:

 

(a)                                  The
representations and warranties contained in Article IV of this Agreement are
correct on and as of such Issuance Date as though made on and as of such
Issuance Date except to the extent that any such

 

38

 

representation or
warranty is stated to relate solely to an earlier date, in which case such
representation or warranty is correct as of such earlier date;

 

(b)                                 No
Default or Event of Default has occurred and is continuing or would result from
the issuance, amendment or extension of such Facility Letter of Credit; and

 

(c)                                  Upon
the issuance, amendment or extension of the requested Facility Letter of Credit
on such Issuance Date, the aggregate outstanding amount of Borrowing Base Debt
shall not exceed the Borrowing Base as of the most recent Inventory Valuation
Date; and

 

(iv)                              The
Issuer and the Agent shall have received such other approvals, opinions, or
documents as either may reasonably request.

 

Section 2.23.4  Procedure for Issuance of Facility
Letters of Credit. 
(a) The Borrower shall give the applicable Issuer and the Agent not less
than two (2) Business Days’ prior written notice of any requested issuance of a
Facility Letter of Credit under this Agreement (except that, in lieu of such
written notice, the Borrower may give the Issuer and the Agent telephonic
notice of such request if confirmed in writing by delivery to such Issuer and
the Agent (i) immediately (A) of a telecopy of the written notice required
hereunder which has been signed by an authorized officer of the Borrower or (B)
of an e-mail containing all information required to be contained in such
written notice and (ii) promptly (but in no event later than the requested
Issuance Date) of the written notice required hereunder containing the original
signature of an authorized officer of the Borrower).  Such notice shall specify (i) the stated amount of the Facility
Letter of Credit requested, which amount shall be in compliance with the
requirements of Section 2.23.2, (ii) the requested Issuance Date, which shall
be a Business Day, (iii) the date on which such requested Facility Letter of
Credit is to expire, which date shall be in compliance with the requirements of
Section 2.23.2(vi), (iv) the purpose for which such Facility Letter of Credit
is to be issued, which purpose shall be in compliance with the requirements of
Section 2.23.1(b), and (v) the Person for whose benefit the requested Facility
Letter of Credit is to be issued.  At
the time such request is made, the Borrower shall also provide the Agent with a
copy of the form of the Facility Letter of Credit it is requesting be
issued.  Such notice, to be effective,
must be received by the Issuer and the Agent not later than 2:00 p.m. (Chicago
time) on the last Business Day on which notice can be given under this Section
2.23.4.  Promptly after receipt of such
notice, the Issuer shall confirm with the Agent (by telephone or in writing)
that the Agent has received a copy of such notice from the Borrower and, if
not, the Issuer shall promptly provide the Agent with a copy thereof.

 

(b)                                 Promptly
following receipt of a request for issuance of a Facility Letter of Credit in
accordance with Section 2.23.4(a), such Issuer shall approve or disapprove, in
its reasonable discretion, the issuance of such requested Facility Letter of
Credit, but the issuance of such approved Facility Letter of Credit shall
continue to be subject to the provisions of this Section 2.23.

 

39

 

(c)                                  Subject
to the terms and conditions of this Section 2.23 (including, without
limitation, Sections 2.23.2 and 2.23.3), the applicable Issuer shall, on the
Issuance Date, issue the requested Facility Letter of Credit in accordance with
such Issuer’s usual and customary business practices unless such Issuer has
actually received written or telephonic notice from the Borrower specifically
revoking the request to issue such Facility Letter of Credit.  The Issuer shall promptly give the Agent
written notice, or telephonic notice confirmed promptly thereafter in writing,
of the issuance, amendment, extension or cancellation of a Facility Letter of
Credit, and the Agent shall promptly thereafter so notify all Revolving Credit
Lenders.

 

(d)                                 No
Issuer shall extend or amend any Facility Letter of Credit unless the
requirements of this Section 2.23.4 are met as though a new Facility Letter of
Credit were being requested and issued.

 

(e)                                  Any
Lender may, but shall not be obligated to, issue to the Borrower or any of its
Subsidiaries Letters of Credit (that are not Facility Letters of Credit) for
its own account, and at its own risk. 
None of the provisions of this Section 2.23 shall apply to any Letter of
Credit that is not a Facility Letter of Credit.

 

Section 2.23.5  Duties of Issuer.  Any action taken or omitted to be taken by
an Issuer under or in connection with any Facility Letter of Credit, if taken
or omitted in the absence of willful misconduct or gross negligence, shall not
put such Issuer under any resulting liability to any Revolving Credit Lender or,
assuming that such Issuer has complied in all material respects with the
procedures specified in Section 2.23.4, relieve any Revolving Credit Lender of
its obligations hereunder to such Issuer. 
In determining whether to pay under any Facility Letter of Credit, such
Issuer shall have no obligation to the Revolving Credit Lenders other than to
confirm that any documents required to be delivered under such Facility Letter
of Credit appear to have been delivered in compliance and that they appear to
comply on their face with the requirements of such Facility Letter of Credit.

 

Section 2.23.6  Participation.  (a) 
Immediately upon the Closing Date (in the case of the Existing Letters
of Credit), and immediately upon issuance after the Closing Date by an Issuer of
any Facility Letter of Credit in accordance with Section 2.23.4, each
Revolving Credit Lender shall be deemed to have irrevocably and unconditionally
purchased and received from such Issuer, without recourse or warranty, an
undivided interest and participation ratably (in the proportion of such
Revolving Credit Lender’s Revolving Credit Pro Rata Share) in such Facility
Letter of Credit (including, without limitation, all obligations of the
Borrower with respect thereto other than amounts owing to such Issuer under
Section 2.15).

 

(b)                                 In
the event that an Issuer makes any payment under any Facility Letter of Credit
and the Borrower shall not have repaid such amount to such Issuer on or before
the date of such payment by such Issuer, such Issuer shall promptly so notify
the Agent, which shall promptly so notify each Revolving Credit Lender.  Upon receipt of such notice, each Revolving
Credit Lender shall promptly and unconditionally pay to the Agent for the
account of such Issuer the amount of such Revolving Credit Lender’s Revolving
Credit Pro Rata Share of such payment in same day funds, and the Agent shall
promptly pay such amount, and any other amounts received by the Agent for such
Issuer’s account pursuant to this Section 2.23.6, to such Issuer.  If the Agent so notifies such Revolving
Credit Lender prior to 11:00 A.M. (Chicago time) on any

 

40

 

Business Day, such Revolving Credit Lender shall make available to the
Agent for the account of such Issuer such Revolving Credit Lender’s ratable
share of the amount of such payment on such Business Day in same day
funds.  If and to the extent such
Revolving Credit Lender shall not have so made its ratable share of the amount
of such payment available to the Agent for the account of the Issuer, such
Revolving Credit Lender agrees to pay to the Agent for the account of the
Issuer forthwith on demand such amount, together with interest thereon, for
each day from the date such payment was first due until the date such amount is
paid to the Agent for the account of the Issuer, at the Federal Funds
Rate.  The failure of any Revolving
Credit Lender to make available to the Agent for the account of an Issuer such
Revolving Credit Lender’s ratable share of any such payment shall not relieve
any other Revolving Credit Lender of its obligation hereunder to make available
to the Agent for the account of such Issuer its ratable share of any payment on
the date such payment is to be made.

 

(c)                                  The
payments made by the Revolving Credit Lenders to an Issuer in reimbursement of
amounts paid by it under a Facility Letter of Credit (as well as the Issuer’s
ratable share, as Lender, of any amount that is drawn under a Facility Letter
of Credit and not reimbursed by the Borrower) shall constitute, and the
Borrower hereby expressly acknowledges and agrees that such payments shall
constitute, Revolving Credit Loans hereunder (notwithstanding that the amounts
thereof may not comply with the provisions of Section 2.01.1(e)).  Such Revolving Credit Loans shall be ABR
Loans, subject to the Borrower’s rights under this Article II.

 

(d)                                 Upon
the request of the Agent or any Revolving Credit Lender, each Issuer shall
furnish to the requesting Agent or Revolving Credit Lender copies of any
Facility Letter of Credit or Reimbursement Agreement to which such Issuer is
party.

 

(e)                                  The
obligations of the Revolving Credit Lenders to make payments to the Agent for
the account of an Issuer with respect to a Facility Letter of Credit shall be
irrevocable, not subject to any qualification or exception whatsoever and shall
be made in accordance with the terms and conditions of this Agreement under all
circumstances, including, without limitation, the following:

 

(i)                                     any
lack of validity or enforceability of this Agreement or any of the other Loan
Documents;

 

(ii)                                  the
existence of any claim, setoff, defense or other right which the Borrower may
have at any time against a beneficiary named in a Facility Letter of Credit or
any transferee of any Facility Letter of Credit (or any Person for whom any
such transferee may be acting), the Issuer, the Agent, any Lender, or any other
Person, whether in connection with this Agreement, any Facility Letter of
Credit, the transactions contemplated herein or any unrelated transactions
(including any underlying transactions between the Borrower or any Subsidiary
and the beneficiary named in any Facility Letter of Credit);

 

(iii)                               any
draft, certificate or any other document presented under the Facility 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;

 

41

 

(iv)                              the
surrender or impairment of any security for the performance or observance of
any of the terms of any of the Loan Documents;

 

(v)                                 any
failure by the Agent or an Issuer to make any reports required pursuant to
Section 2.23.8; or

 

(vi)                              the
occurrence of any Default or Event of Default.

 

(f)                                    For
purposes of determining the unused portion of the Aggregate Revolving Credit
Commitment and the unused portion of a Revolving Credit Lender’s Revolving
Credit Commitment under Sections 2.02.1 and 2.09(b), the Aggregate Revolving
Credit Commitment shall be deemed used to the extent of the aggregate undrawn
face amount of the outstanding Facility Letters of Credit and the Revolving
Credit Lender’s Revolving Credit Commitment shall be deemed used to the extent
of such Revolving Credit Lender’s Revolving Credit Pro Rata Share of the aggregate
undrawn face amount of the outstanding Facility Letters of Credit.

 

Section 2.23.7  Compensation for Facility Letters of
Credit.  (a)  The Borrower agrees to pay to the Agent, in
the case of each Facility Letter of Credit, the Facility Letter of Credit Fee
therefor, payable quarterly in arrears not later than five (5) Business Days
following Agent’s delivery to Borrower of the quarterly statement specifying
the amount of the Facility Letter of Credit Fees properly due and payable
hereunder with respect to the preceding calendar quarter (which payment shall
be a pro rata portion of the annual Facility Letter of Credit Fee for such
preceding calendar quarter) and on the Revolving Credit Termination Date (which
payment shall be in the amount of all accrued and unpaid Facility Letter of
Credit Fees).  Facility Letter of Credit
Fees shall be calculated, on a pro rata basis for the period to which such
payment applies, for actual days on which such Facility Letter of Credit was
outstanding during such period, on the basis of a 360-day year.  The Agent shall, with reasonable promptness
following receipt from all Issuers of the reports provided for in Section
2.23.8 for the months of March, June, September and December, respectively,
deliver to the Borrower a quarterly statement of the Facility Letter of Credit
Fees then due and payable.  The Agent
shall promptly remit such Facility Letter of Credit Fees, when received by the
Agent, as follows:  (i) to each Issuer,
solely for its own account, with respect to each Facility Letter of Credit
issued by such Issuer, an amount per annum equal to the product of (A) 0.125%
per annum and (B) the face amount of such Facility Letter of Credit and (ii) to
all Revolving Credit Lenders, ratably, the balance of such Facility Letter of
Credit Fees.  Facility Letters of Credit
Fees shall be payable hereunder with respect to the Existing Letters of Credit
from and after the Closing Date.

 

(b)                                 An
Issuer shall also have the right to receive, solely for its own account, its
out-of-pocket costs of issuing and servicing Facility Letters of Credit, as the
Borrower may agree in writing.

 

Section 2.23.8  Issuer Reporting Requirements.  Each Issuer shall, no later than the third
(3rd) Business Day following the last day of each month, provide to
the Agent a schedule of the Facility Letters of Credit issued by it showing the
Issuance Date, account party, original face amount, amount (if any) paid
thereunder, expiration date and the reference number of each Facility Letter of
Credit outstanding at any time during such month (and indicating, with respect
to each Facility Letter of Credit, whether it is a Financial Letter of Credit
or Performance

 

42

 

Letter of Credit)
and the aggregate amount (if any) payable by the Borrower to such Issuer during
the month pursuant to Section 2.15. Copies of such reports shall be provided
promptly to each Revolving Credit Lender by the Agent.  The reporting requirements hereunder are in
addition to those set forth in Section 2.23.4.

 

Section 2.23.9  Indemnification; Nature of Issuer’s
Duties.  (a)  In addition to amounts payable as elsewhere
provided in this Section 2.23, the Borrower hereby agrees to protect,
indemnify, pay and save the Agent, each Issuer and each Lender harmless from
and against any and all claims, demands, liabilities, damages, losses, costs,
charges and expenses (including reasonable attorneys’ fees) arising from the
claims of third parties against the Agent, any Issuer or any Lender as a
consequence, direct or indirect, of (i) the issuance of any Facility Letter of
Credit other than, in the case of an Issuer, as a result of its willful
misconduct or gross negligence, or (ii) the failure of an Issuer to honor a
drawing under a Facility Letter of Credit as a result of any act or omission,
whether rightful or wrongful, of any government, court or other governmental
agency or authority.

 

(b)                                 As
among the Borrower, the Lenders, the Agent and each Issuer, the Borrower
assumes all risks of the acts and omissions of, or misuse of Facility Letters
of Credit by, the respective beneficiaries of such Facility Letters of
Credit.  In furtherance and not in
limitation of the foregoing, neither an Issuer nor the Agent nor any Lender
shall be responsible: (i) for the form, validity, sufficiency, accuracy,
genuineness or legal effect of any document submitted by any party in
connection with the application for and issuance of the Facility Letters of
Credit, even if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (ii) for the validity or
sufficiency of any instrument transferring or assigning or purporting to
transfer or assign a Facility 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; (iii) for failure of the beneficiary of
a Facility Letter of Credit to comply fully with conditions required in order
to draw upon such Facility Letter of Credit; (iv) for errors, omissions,
interruptions or delays in transmission or delivery of any messages, by mail,
cable, telegraph, telex, facsimile transmission or otherwise; (v) for errors in
interpretation of technical terms; (vi) for any loss or delay in the transmission
or otherwise of any document required in order to make a drawing under any
Facility Letter of Credit or of the proceeds thereof; (vii) for the
misapplication by the beneficiary of a Facility Letter of Credit of the
proceeds of any drawing under such Facility Letter of Credit; or (viii) for any
consequences arising from causes beyond the control of the Agent, such Issuer
and the Lenders including, without limitation, any act or omission, whether
rightful or wrongful, of any government, court or other governmental agency or
authority.  None of the above shall
affect, impair, or prevent the vesting of any of such Issuer’s rights or powers
under this Section 2.23.9.

 

(c)                                  In
furtherance and extension and not in limitation of the specific provisions
hereinabove set forth, any action taken or omitted by an Issuer under or in
connection with the Facility Letters of Credit or any related certificates, if
taken or omitted in good faith, shall not put such Issuer, the Agent or any
Lender under any resulting liability to the Borrower or relieve the Borrower of
any of its obligations hereunder to any such Person, but the foregoing shall
not relieve such Issuer of its obligation to confirm that any documents
required to be delivered under a Facility Letter of Credit appear to have been
delivered in compliance and that they appear to comply on their face with the
requirements of such Facility Letter of Credit.

 

43

 

(d)                                 Notwithstanding
anything to the contrary contained in this Section 2.23.9, the Borrower shall
have no obligation to indemnify an Issuer under this Section 2.23.9 in respect
of any liability incurred by an Issuer arising primarily out of the willful
misconduct or gross negligence of such Issuer, as determined by a court of
competent jurisdiction, or out of the wrongful dishonor by such Issuer of a
proper demand for payment made under the Facility Letters of Credit issued by
such Issuer, unless such dishonor was made at the request of the Borrower.

 

Section 2.23.10  Designation or Resignation of Issuer.  (a) 
Upon request by the Borrower and approval by the Agent, a Revolving
Credit Lender may at any time agree to be designated as an Issuer hereunder,
which designation shall be set forth in a written instrument or instruments
delivered by the Borrower, the Agent and such Revolving Credit Lender.  The Agent shall promptly deliver to the
other Revolving Credit Lenders a copy of such instrument or instruments.  From and after such designation and unless
and until such Revolving Credit Lender resigns as an Issuer in accordance with
Section 2.23.10(b), such Revolving Credit Lender shall have all of the rights
and obligations of an Issuer hereunder.

 

(b)                                 An
Issuer shall continue to be the Issuer unless and until (i) it shall have given
the Borrower and the Agent notice that it has elected to resign as Issuer and
(ii) unless there is, at the time of such notice, at least one other Issuer,
another Revolving Credit Lender shall have agreed to be the replacement Issuer
and shall have been approved in writing by the Agent and the Borrower.  A resigning Issuer shall continue to have
the rights and obligations of the Issuer hereunder solely with respect to
Facility Letters of Credit theretofore issued by it notwithstanding the designation
of a replacement Issuer hereunder, but upon its notice of resignation (or, if
at the time of such notice, there is not at least one other Issuer, then upon
such designation of a replacement Issuer), the resigning Issuer shall not
thereafter issue any Facility Letters of Credit (unless it shall again
thereafter be designated as an Issuer in accordance with the provisions of this
Section 2.23.10).  The assignment of, or
grant of a participation interest in, all or any part of its Revolving Credit
Commitment or Revolving Credit Loans by a Revolving Credit Lender that is also
the Issuer shall not constitute an assignment or transfer of any of its rights
or obligations as an Issuer.

 

Section 2.23.11  Termination of Issuer’s Obligation.  In the event that the Revolving Credit
Lenders’ obligations to make Loans terminate or are terminated as provided in
Section 8.01, each Issuer’s obligation to issue Facility Letters of Credit
shall also terminate.

 

Section 2.23.12  Obligations of Issuer and Other Lenders.  Except to the extent that a Revolving Credit
Lender shall have agreed to be designated as an Issuer, no Lender shall have
any obligation to accept or approve any request for, or to issue, amend or
extend, any Letter of Credit, and the obligations of an Issuer to issue, amend
or extend any Facility Letter of Credit are expressly limited by and subject to
the provisions of this Section 2.23.

 

Section 2.23.13  Facility Letter of Credit Collateral
Account.  The
Borrower agrees that it will, upon the request of the Agent or the Required
Lenders and until the final expiration date of any Facility Letter of Credit
and thereafter as long as any amount is payable to the Issuer or the Lenders in
respect of any Facility Letter of Credit, maintain a special collateral account
pursuant to arrangements satisfactory to the Agent (the “Facility Letter of
Credit

 

44

 

Collateral
Account”) at the Agent’s office at the address specified pursuant to Section
11.02, in the name of the Borrower but under the sole dominion and control of
the Agent, for the benefit of the Lenders and in which such Borrower shall have
no interest other than as set forth in Section 8.01.  The Borrower hereby pledges, assigns and grants to the Agent, on
behalf of and for the ratable benefit of the Lenders and the Issuer, a security
interest in all of the Borrower’s right, title and interest in and to all funds
which may from time to time be on deposit in the Facility Letter of Credit
Collateral Account to secure the prompt and complete payment and performance of
(a) the obligations of the Borrower to reimburse the Issuer and (if applicable)
the Revolving Credit Lenders for amounts (if any) from time to time drawn on
Facility Letters of Credit and interest thereon and other sums from time to
time payable under Reimbursement Agreements, and (b) if and when all such
obligations of the Borrower have been paid in full and no Facility Letters of
Credit remain outstanding, all other Obligations.  The Agent will invest any funds on deposit from time to time in
the Facility Letter of Credit Collateral Account in certificates of deposit of
Bank One having a maturity not exceeding 30 days.  Nothing in this Section 2.23.13 shall either obligate the
Agent to require the Borrower to deposit any funds in the Facility Letter of
Credit Collateral Account or limit the right of the Agent to release any funds
held in the Facility Letter of Credit Collateral Account in each case other
than as required by Section 8.01.

 

Section 2.23.14  Issuer’s Rights.  All of the representations, warranties,
covenants and agreements of the Borrower to the Lenders under this Agreement
and of the Borrower under any other Loan Document shall inure to the benefit of
each Issuer (unless the context otherwise indicates).

 

ARTICLE
III

CONDITIONS PRECEDENT

 

Section
3.01  Conditions
Precedent to Initial Loans. 
The Revolving Credit Lenders shall not be required to make the initial
Revolving Credit Loans hereunder or to issue or participate in any Facility
Letters of Credit hereunder and the Term Loan Lenders shall not be required to
make the Term Loans hereunder, unless and until (a) the Borrower has paid to
the Agent the applicable fees referred to in Sections 2.09(a) and (c), (b) the
Prior Credit Agreements have been terminated and all principal, interest, fees
and other amounts payable thereunder have been paid in full (which payment may
be made in whole or in part from the proceeds of the initial Loans hereunder),
and (c) and the Agent shall have received each of the following, in form and
substance satisfactory to the Agent:

 

(1)                                  Notes.  A Revolving Credit Note payable to each
Revolving Credit Lender duly executed by the Borrower and a Term Loan Note
payable to each Term Loan Lender duly executed by the Borrower;

 

(2)                                  Guaranty.  The Guaranty duly executed by the
Guarantors;

 

(3)                                  Evidence of
all corporate action by the Borrower.  Certified copies of all corporate action taken by the Borrower,
including resolutions of its Board of Directors, authorizing the execution,
delivery and performance of the Loan Documents to which it is a party and each
other document to be delivered pursuant to this Agreement;

 

45

 

(4)                                  Incumbency
and signature certificate of Borrower.  A certificate of the Secretary or Assistant Secretary of the
Borrower certifying the names and true signatures of the officers of the
Borrower authorized to sign the Loan Documents to which it is a party and the
other documents to be delivered by the Borrower under this Agreement;

 

(5)                                  Articles
of Incorporation of Borrower. 
Copies of the articles of incorporation of the Borrower, together with
all amendments, and a certificate of good standing, all certified by the
appropriate governmental officer in its jurisdiction of incorporation;

 

(6)                                  Opinions of
counsel for Borrower.  A
favorable opinion of Paul, Hastings, Janofsky & Walker LLP, counsel for the
Borrower and for the Guarantors that are Delaware or Georgia Persons, in
substantially the form of Exhibit F and of the Borrower’s Illinois
counsel (as approved by the Agent), in substantially the form of Exhibit G;

 

(7)                                  Evidence of
all corporate, partnership or limited liability company action by Guarantors.  With respect to each corporate Guarantor,
certified (as of the date of this Agreement) copies of all corporate action
taken by such Guarantor, including resolutions of its Board of Directors,
authorizing the execution, delivery, and performance of the applicable
Guaranty, and with respect to each limited partnership Guarantor and limited
liability company Guarantor, partnership action or limited liability company
action (as applicable) taken by such Guarantor, including any and all necessary
partnership consents or limited liability company consents (as applicable)
authorizing the execution, delivery, and performance of the applicable
Guaranty;

 

(8)                                  Articles
of Incorporation of Guarantors. 
Copies of the articles of incorporation of each corporate Guarantor,
together with all amendments, and a certificate of good standing, all certified
by the appropriate governmental officer in its jurisdiction of incorporation; provided,
however, that, if a certificate of good standing is not currently
available, the Guarantor shall deliver other reasonably satisfactory evidence
of its good standing and, within thirty (30) days, shall deliver a certificate
of good standing;

 

(9)                                  Incumbency
and signature certificate of Guarantors.  A certificate (dated as of the date of this Agreement) of the
Secretary or Assistant Secretary of each corporate Guarantor or the general
partner of each partnership Guarantor or managing member of each limited
liability company certifying the names and true signatures of the officers of
each such corporate Guarantor and the representative or officer of each
partnership Guarantor or limited liability company Guarantor authorized to sign
the Guaranty;

 

(10)                            Opinion of
counsel for Certain Guarantors. 
With respect to such Guarantors (other than those formed or organized to
do business under the laws of Delaware of Georgia) as the Agent may require, a
favorable opinion of counsel to each such Guarantor in the state in which it is
formed or organized to do business (as approved by the Agent), in form similar
to that furnished with respect to the Guarantors formed or organized to do
business under the laws of Delaware or Georgia and satisfactory to the Agent;

 

46

 

(11)                            Partnership
agreement.  A true and
complete copy of the limited partnership agreement of each limited partnership
Guarantor, including without limitation any and all amendments and
modifications thereto, and any and all filed partnership certificates;

 

(12)                            Limited
Liability Company Documents. 
A true and complete copy of the limited liability company agreement or
operating agreement of each limited liability company Guarantor, including
without limitation any and all amendments and modifications thereto, and a
certified copy of such Guarantor’s certificate of formation, and

 

(13)                            Other
Documents.  Such other and further
documents as any Lender or its counsel may have reasonably requested.

 

Notwithstanding the foregoing, the parties hereto
acknowledge and agree that the Agent, at its election, may waive, with respect
to the Guarantors, the requirement for delivery of articles of incorporation
(under item (8) above) and the partnership agreement and partnership
certificates (under item (11) above) provided and to the extent that the
Borrower delivers or causes the applicable Guarantors to deliver to the Agent a
certificate that such documents, as most recently delivered to the Agent
pursuant to either or both of the Prior Credit Agreements, have not been
modified or amended and remain in full force and effect.

 

Section
3.02  Conditions
Precedent to All Loans. 
The obligation of each Lender to make each Loan (including, in the case
of the Swing Line Lender, any Swing Line Loan) shall be subject to the further
conditions precedent that (except as hereinafter provided) on the date of such
Loan:

 

(1)                                  The
following statements shall be true and the Agent shall have received a
certificate, substantially in the form of the certificate attached hereto as Exhibit
E, signed by a duly authorized officer of the Borrower dated the date of
such Loan, stating that:

 

(a)                                  The
representations and warranties contained in Article IV of this Agreement, are
correct on and as of the date of such Loan as though made on and as of such
date except to the extent that any such representation or warranty is stated to
relate solely to an earlier date, in which case such representation or warranty
is correct as of such earlier date;

 

(b)                                 No
Default or Event of Default has occurred and is continuing, or would result
from such Loan; and

 

(c)                                  Upon
the making of the requested Loans, the aggregate outstanding amount of
Borrowing Base Debt shall not exceed the Borrowing Base as of the most recent
Inventory Valuation Date; and

 

(2)                                  The
Agent shall have received such other approvals, opinions, or documents as any
Lender through the Agent may reasonably request; and

 

47

 

(3)                                  Such
further documents as any Lender or its counsel may have reasonably
requested.  All matters incident to the
making of such Loan shall be reasonably satisfactory to the Lenders and their
counsel.

 

Notwithstanding the foregoing, in the case of a Loan
(provided for in Section 2.21(d)) made to repay a Swing Line Loan, the
satisfaction of the foregoing conditions with respect to such Swing Line Loan
shall constitute satisfaction of such conditions with respect to the Revolving
Credit Loan made on the next succeeding Business Day to repay such Swing Line
Loan.

 

ARTICLE
IV

REPRESENTATIONS AND WARRANTIES

 

The Borrower represents and warrants that:

 

Section
4.01  Incorporation,
Formation, Good Standing, and Due Qualification.  The Borrower, each Subsidiary, and each of
the Guarantors is (in the case of a corporation) a corporation duly
incorporated or (in the case of a limited partnership) a limited partnership
duly formed or (in the case of a limited liability company) a limited liability
company duly formed, validly existing, and in good standing under the laws of
the jurisdiction of its incorporation or formation; has the power and authority
to own its assets and to transact the business in which it is now engaged or
proposed to be engaged in; and is duly qualified and in good standing under the
laws of each other jurisdiction in which such qualification is required.

 

Section
4.02  Power and
Authority.  The
execution, delivery and performance by the Borrower and the Guarantors of the
Loan Documents to which each is a party have been duly authorized by all
necessary corporate, partnership or limited liability company action, as the
case may be, and do not and will not (1) require any consent or approval of the
stockholders of such corporation, partners of such partnership or members of
such limited liability company (except such consents as have been obtained as
of the date hereof); (2) contravene such corporation’s charter or bylaws, such
partnership’s partnership agreement or such limited liability company’s
articles or certificate of formation or operating agreement; (3) violate, in
any material respect, any provision of any law, rule, regulation (including,
without limitation, Regulations U and X of the Board of Governors of the
Federal Reserve System), order, writ, judgment, injunction, decree,
determination, or award presently in effect having applicability to such
corporation, partnership or limited liability company; (4) result in a breach
of or constitute a default under any indenture or loan or credit agreement or
any other material agreement, lease, or instrument to which such corporation,
partnership or limited liability company is a party or by which it or its
properties may be bound or affected; (5) result in, or require, the creation or
imposition of any Lien, upon or with respect to any of the properties now owned
or hereafter acquired by such corporation, partnership or limited liability
company; and (6) cause such corporation, partnership or limited liability
company to be in default, in any material respect, under any such law, rule,
regulation, order, writ, judgment, injunction, decree, determination, or award
or any such indenture, agreement, lease or instrument.

 

48

 

Section
4.03  Legally
Enforceable Agreement. 
This Agreement is, and each of the other Loan Documents when delivered
under this Agreement will be legal, valid, and binding obligations of the
Borrower or each Guarantor, as the case may be, enforceable against the
Borrower or each Guarantor, as the case may be, in accordance with their
respective terms, except to the extent that such enforcement may be limited by
applicable bankruptcy, insolvency, and other similar laws affecting creditors’
rights generally.

 

Section
4.04  Financial
Statements.  The
consolidated balance sheet of the Borrower and its Subsidiaries as at March 31,
2003, and the consolidated statements of operations, cash flow and changes to
stockholders’ equity of the Borrower and its Subsidiaries for the period of two
fiscal quarters ended March 31, 2003, are complete and correct and fairly
present as at such date the financial condition of the Borrower and its
Subsidiaries and the results of their operations for the periods covered by
such statements, all in accordance with GAAP consistently applied (subject to
year-end adjustments), and since March 31, 2003, there has been no material
adverse change in the condition (financial or otherwise), business, or
operations of the Borrower and its Subsidiaries.  There are no liabilities of the Borrower or any Subsidiary, fixed
or contingent, which are material but are not reflected in the financial
statements or in the notes thereto, other than liabilities arising in the
ordinary course of business since March 31, 2003.  No information, exhibit, or report furnished by the Borrower to
any Lender in connection with the negotiation of this Agreement taken together,
contained any material misstatement of fact or omitted to state a material fact
or any fact necessary to make the statements contained therein not materially
misleading.

 

Section
4.05  Labor
Disputes and Acts of God. 
Neither the business nor the properties of the Borrower or any
Subsidiary or any Guarantor 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), materially and adversely affecting such business or
properties or the operation of the Borrower or such Subsidiary or such
Guarantor.

 

Section
4.06  Other
Agreements.  Neither the
Borrower nor any Significant Subsidiary nor any Significant Guarantor is a
party to any indenture, loan, or credit agreement, or to any lease or other
agreement or instrument or subject to any charter, corporate or other
restriction which could have a material adverse effect on the business,
properties, assets, operations, or conditions, financial or otherwise, of the
Borrower or any Significant Subsidiary or any Significant Guarantor, or the
ability of the Borrower or any Significant Guarantor to carry out its
obligations under the Loan Documents to which it is a party.  Neither the Borrower nor any Significant
Subsidiary nor any Significant Guarantor is in default in any material respect
in the performance, observance, or fulfillment of any of the obligations,
covenants, or conditions contained in any agreement or instrument material to
its business to which it is a party.

 

Section
4.07  Litigation.  Except as reflected in or reserved for in
the financial statements referred to in Section 4.04, there is no pending or,
to the knowledge of the Borrower or any Guarantor, threatened action or
proceeding against or affecting the Borrower or any Significant Subsidiary or
any Significant Guarantor before any court, governmental agency, or arbitrator,
which may, in any one case or in the aggregate, materially adversely affect the

 

49

 

financial
condition, operations, properties, or business of the Borrower or any
Significant Subsidiary or any Significant Guarantor or the ability of the
Borrower or any Significant Guarantor to perform its obligation under the Loan
Documents to which it is a party.

 

Section
4.08  No
Defaults on Outstanding Judgments or Orders.  Except for judgments with respect to which
the liability of the Borrower, each Significant Subsidiary and each Significant
Guarantor does not exceed $10,000,000 in the aggregate for all such judgments,
(a) the Borrower, each Significant Subsidiary and each Significant Guarantor
have satisfied all judgments, and (b) neither the Borrower nor any Significant
Subsidiary nor any Significant Guarantor is in default with respect to any
judgment, writ, injunction, decree, rule, or regulation of any court,
arbitrator, or federal, state, municipal, or other governmental authority,
commission, board, bureau, agency, or instrumentality, domestic or foreign.

 

Section
4.09  Ownership
and Liens.  The Borrower
and each Subsidiary and each Guarantor have title to, or valid leasehold
interests in, all of their respective properties and assets, real and personal,
including the properties and assets and leasehold interests reflected in the financial
statements referred to in Section 4.04 (other than any properties or assets
disposed of in the ordinary course of business), and none of the properties and
assets owned by the Borrower or any Subsidiary or any Guarantor and none of
their leasehold interests is subject to any Lien, except such as may be
permitted pursuant to Section 6.01 of this Agreement.

 

Section
4.10  Subsidiaries
and Ownership of Stock. 
Set forth in Exhibit H hereto is a complete and accurate list of
the Subsidiaries of the Borrower, showing the jurisdiction of incorporation or
formation of each and showing the percentage of the Borrower’s ownership of the
outstanding stock or partnership interest of each Subsidiary.  All of the outstanding capital stock of each
such corporate Subsidiary has been validly issued, is fully paid and
nonassessable, and is owned by the Borrower free and clear of all Liens.  The limited partnership agreement of each
such limited partnership Subsidiary is in full force and effect and has not
been amended or modified, except for such amendments or modifications as are
delivered to the Agent under Section 3.01(11). 
Each of the Guarantors is a Wholly-Owned Subsidiary of the Borrower.

 

Section
4.11  ERISA.  The Borrower and each Subsidiary and each
Guarantor are in compliance in all material respects with all applicable
provisions of ERISA.  Neither a
Reportable Event nor a Prohibited Transaction has occurred and is continuing
with respect to any Plan; no notice of intent to terminate a Plan has been
filed, nor has any Plan been terminated; no circumstances exist which
constitute grounds entitling the PBGC to institute proceedings to terminate, or
appoint a trustee to administer, a Plan, nor has the PBGC instituted any such
proceedings; neither the Borrower nor any Commonly Controlled Entity has
completely or partially withdrawn from a Multiemployer Plan under circumstances
that could subject the Borrower or any Subsidiary to material withdrawal
liability; the Borrower and each Commonly Controlled Entity have met their
minimum funding requirements under ERISA with respect to all of their Plans and
the present value of all vested benefits under each Plan does not materially
exceed the fair market value of all Plan assets allocable to such benefits, as
determined on the most recent valuation date of the Plan and in accordance with
the provisions of ERISA; and neither the Borrower nor any Commonly Controlled
Entity has incurred any material liability to the PBGC under ERISA.

 

50

 

Section
4.12  Operation
of Business.  The
Borrower, each Subsidiary and each Guarantor possess all licenses, permits,
franchises, patents, copyrights, trademarks, and trade names, or rights
thereto, to conduct their respective businesses substantially as now conducted
and as presently proposed to be conducted and the Borrower and each of its
Subsidiaries and each Guarantor are not in violation of any valid rights of
others with respect to any of the foregoing where the failure to possess such licenses,
permits, franchises, patents, copyrights, trademarks, trade names or rights
thereto or the violation of the valid rights of others with respect thereto
may, in any one case or in the aggregate, adversely affect in any material
respect the financial condition, operations, properties, or business of the
Borrower or any Significant Subsidiary or any Significant Guarantor or the
ability of the Borrower or any Significant Guarantor to perform its obligation
under the Loan Documents to which it is a party.

 

Section
4.13  Taxes.  All income tax liabilities or income tax
obligations of the Borrower, each Subsidiary and each Guarantor have been paid
or have been accrued by or reserved for by the Borrower.  The Borrower constitutes the parent of an
affiliated group of corporations for purposes of filing a consolidated United
States federal income tax return.

 

Section
4.14  Laws;
Environment.  The
Borrower, each Subsidiary and each Guarantor have duly complied, and their
businesses, operations, assets, equipment, property, leaseholds, or other
facilities are in compliance, in all material respects, with the provisions of
all federal, state, and local statutes, laws, codes, and ordinances and all
rules and regulations promulgated thereunder (including without limitation
those relating to the environment, health and safety).  The Borrower, each Subsidiary and each
Guarantor have been issued and will maintain all required federal, state, and
local permits, licenses, certificates, and approvals relating to (1) air emissions;
(2) discharges to surface water or groundwater; (3) noise emissions; (4) solid
or liquid waste disposal; (5) the use, generation, storage, transportation, or
disposal of toxic or hazardous substances or hazardous wastes (intended hereby
and hereafter to include any and all such materials listed in any federal,
state, or local law, code, or ordinance and all rules and regulations
promulgated thereunder as hazardous); or (6) to the extent that failure to
maintain the same may, in any one case or in the aggregate, adversely affect in
any material respect the financial condition, operations, properties, or
business of the Borrower or any Significant Subsidiary or any Significant
Guarantor or the ability of the Borrower or any Significant Guarantor to perform
its obligations under the Loan Documents to which it is a party, other
environmental, health or safety matters. 
Neither the Borrower nor any Subsidiary nor any Guarantor has received
notice of, or has actual knowledge of any violations of any federal, state, or
local environmental, health, or safety laws, codes or ordinances or any rules
or regulations promulgated thereunder with respect to its businesses,
operations, assets, equipment, property, leaseholds, or other facilities, which
violation may, in any one case or in the aggregate, adversely affect in any
material respect the financial condition, operations, properties, or business
of the Borrower or any Significant Subsidiary or any Significant Guarantor or
the ability of the Borrower or any Significant Guarantor to perform its
obligations under the Loan Documents to which it is a party.  Except in accordance with a valid
governmental permit, license, certificate or approval, there has been no
material emission, spill, release, or discharge into or upon (1) the air; (2)
soils, or any improvements located thereon; (3) surface water or groundwater;
or (4) the sewer, septic system or waste treatment, storage or disposal system
servicing the premises, of any toxic or hazardous substances or hazardous wastes
at or from the premises; and accordingly the premises of the

 

51

 

Borrower, each
Subsidiary and each Guarantor have not been adversely affected, in any material
respect, by any toxic or hazardous substances or wastes.  There has been no complaint, order,
directive, claim, citation, or notice by any governmental authority or any
person or entity with respect to violations of law or damages by reason of
Borrower’s or any Subsidiary’s (1) air emissions; (2) spills, releases, or
discharges to soils or improvements located thereon, surface water, groundwater
or the sewer, septic system or waste treatment, storage or disposal systems
servicing the premises; (3) noise emissions; (4) solid or liquid waste disposal;
(5) use, generation, storage, transportation, or disposal of toxic or hazardous
substances or hazardous waste; or (6) other environmental, health or safety
matters affecting the Borrower, any Subsidiary or any Guarantor or its
business, operations, assets, equipment, property, leaseholds, or other
facilities.  Neither the Borrower nor
any Subsidiary nor any Guarantor has any material indebtedness, obligation, or
liability, absolute or contingent, matured or not matured, with respect to the
storage, treatment, cleanup, or disposal of any solid wastes, hazardous wastes,
or other toxic or hazardous substances (including without limitation any such
indebtedness, obligation, or liability with respect to any current regulation,
law, or statute regarding such storage, treatment, cleanup, or disposal).

 

Section 4.15 
Investment Company Act.  Neither the Borrower nor any Subsidiary thereof is an “investment
company” or a company “controlled” by an “investment company,” within the
meaning of the Investment Company Act of 1940, as amended.

 

Section
4.16  Public
Utility Holding Company Act. 
Neither the Borrower nor any Subsidiary 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, as amended.

 

Section
4.17  Reportable
Transaction.  The
Borrower does not intent to treat the Loans and related transactions as being a
“reportable transaction” (within the meaning of Treasury Regulation Section
1.6011-4).  In the event the Borrower
determines to take any action inconsistent with such intention, it will
promptly notify the Agent thereof.

 

ARTICLE
V

AFFIRMATIVE COVENANTS

 

So long as any Note shall remain unpaid or any
Revolving Credit Lender shall have any Revolving Credit Commitment under this
Agreement, the Borrower will (unless otherwise agreed to by the Required
Lenders in writing):

 

Section
5.01  Maintenance
of Existence.  Preserve
and maintain, and cause each Subsidiary to preserve and maintain (except for a
Subsidiary that ceases to maintain its existence solely as a result of an
Internal Reorganization), its corporate, limited partnership or limited
liability company existence and good standing in the jurisdiction of its
incorporation or formation and qualify and remain qualified to transact
business in each jurisdiction in which such qualification is required.

 

52

 

Section
5.02  Maintenance
of Records.  Keep and
cause each Subsidiary to keep, adequate records and books of account, in which
complete entries will be made in accordance with GAAP consistently applied,
reflecting all financial transactions of the Borrower and its Subsidiaries.

 

Section
5.03  Maintenance
of Properties.  Maintain,
keep, and preserve, and cause each Subsidiary to maintain, keep, and preserve,
all of its properties (tangible and intangible) necessary or useful in the
proper conduct of its business in good working order and condition, ordinary
wear and tear excepted.

 

Section
5.04  Conduct of
Business.  Continue, and
cause each Subsidiary to continue (except in the case of a Subsidiary that
ceases to engage in business solely as a result of an Internal Reorganization),
to engage in a business of the same general type and in the same manner as
conducted by it on the date of this Agreement.

 

Section
5.05  Maintenance
of Insurance.  Maintain,
and cause each Subsidiary to maintain, insurance with financially sound
reputable insurance companies or associations (or, in the case of insurance for
construction warranties and builder default protection for buyers of Housing
Units from the Borrower or any of its Subsidiaries, UHIC or Meridian) in such
amounts and covering such risks as are usually carried by companies engaged in
the same or a similar business and similarly situated, which insurance may
provide for reasonable deductibility from coverage thereof.

 

Section
5.06  Compliance
with Laws.  Comply, and
cause each Subsidiary to comply, in all material respects with all applicable
laws, rules, regulations, and orders, such compliance to include, without
limitation, paying before the same become delinquent all taxes, assessments and
governmental charges imposed upon it or upon its property, other than any such
taxes, assessments and charges being contested by the Borrower in good faith
which will not have a material adverse effect on the financial condition of the
Borrower.

 

Section
5.07  Right of
Inspection.  At any
reasonable time and from time to time, permit any Bank or any agent or
representative thereof to examine and make copies of and abstracts from the
records and books of account of, and visit the properties of, the Borrower and
any Subsidiary, and to discuss the affairs, finances, and accounts of the
Borrower and any Subsidiary with any of their respective officers and directors
and the Borrower’s independent accountants.

 

Section
5.08  Reporting
Requirements.  Furnish to
the Agent for delivery to each of the Lenders:

 

(1)                                  Quarterly
financial statements.  As
soon as available and in any event within fifty (50) days after the end of each
of the first three quarters of each fiscal year of the Borrower, an unaudited
condensed consolidated balance sheet of the Borrower and its Subsidiaries as of
the end of such quarter, unaudited condensed consolidated statements of
operations and cash flow of the Borrower and its Subsidiaries for the period
commencing at the end of the previous fiscal year and ending with the end of
such quarter, and unaudited condensed consolidated statements of changes in
stockholders’ equity of the Borrower and its Subsidiaries for the portion of
the fiscal year ended with the last day of such quarter, all in reasonable
detail

 

53

 

and stating in comparative form the respective figures for the
corresponding date and period in the previous fiscal year and all prepared in
accordance with GAAP consistently applied and certified by the chief financial
officer of the Borrower (subject to year-end adjustments); statements in the
form of the Borrower’s quarterly 10-Q report to the Securities and Exchange
Commission that are consistent with the foregoing requirements shall satisfy
such requirements.

 

(2)                                  Annual
financial statements.  As
soon as available and in any event within ninety-five (95) days after the end
of each fiscal year of the Borrower, a consolidated balance sheet of the
Borrower and its Subsidiaries as of the end of such fiscal year, consolidated
statements of operations and cash flow of the Borrower and its Subsidiaries for
such fiscal year, and consolidated statements of changes in stockholders’
equity of the Borrower and its Subsidiaries for such fiscal year, all in
reasonable detail and stating in comparative form the respective figures for
the corresponding date and period in the prior fiscal year and all prepared in
accordance with GAAP consistently applied and accompanied by an opinion thereon
acceptable to the Agent by Deloitte & Touche or other independent
accountants selected by the Borrower and acceptable to the Agent; statements in
the form of the Borrower’s annual 10-K report to the Securities and Exchange
Commission that are consistent with the foregoing requirements shall satisfy
such requirements.

 

(3)                                  Financial
projections.  On August 15,
2003 and each anniversary thereof, two-year financial projections (including a
consolidated income statement, balance sheet and statement of cash flows for
the Borrower and its Subsidiaries) broken down by quarters, and as soon as
available (but not later than June 15 of each year), a mid-year update of the
financial projections for the current year.

 

(4)                                  Variance
analysis.  (a)  Within fifty (50) days of the end of each of
the first three fiscal quarters of each fiscal year of the Borrower, a
quarterly variance analysis comparing actual quarterly results versus the most
recently projected quarterly results for the fiscal quarter most recently ended
(including consolidated income statements of the Borrower and its Subsidiaries,
an analysis of revenues, closings and operating profits of the Borrower and
each Subsidiary on a state by state basis, and such other items as are
requested by any of the Lenders), together with a written explanation of
material variances.

 

(b)                                 Within
ninety-five (95) days after the end of each fiscal year of the Borrower, a
quarterly variance analysis comparing actual quarterly results versus the most
recently projected quarterly results for the fiscal year most recently ended
(including consolidated income statements of the Borrower and its Subsidiaries
accompanied by an opinion thereon acceptable to the Agent by Deloitte &
Touche or other independent accountants selected by the Borrower and acceptable
to the Agent, an analysis of revenues, closings and operating profits of the
Borrower and each Subsidiary on a state by state basis, and such other items as
are requested by any of the Lenders), together with a written explanation of
material variances.

 

(5)                                  Management
letters.  Promptly upon
receipt thereof, copies of any reports submitted to the Borrower or any
Subsidiary by independent certified public accountants in connection with
examination of the financial statements of the Borrower or any Subsidiary made
by such accountants.

 

54

 

(6)                                  Borrowing
Base Certificate.  Within
thirty-five (35) days after the end of each calendar month (without regard to
whether the provisions of Sections 2.01.3 and 7.03 are then applicable), a
Borrowing Base Certificate, with respect to the Inventory Valuation Date
occurring on the last day of such calendar month.

 

(7)                                  Compliance
certificate.  Within fifty
(50) days after the end of each of the first three quarters, and within
ninety-five (95) days after the end of each fourth quarter, of each fiscal year
of the Borrower, a certificate of the President or chief financial officer of
the Borrower certifying (a) the Borrower’s compliance with all financial
covenants including, without limitation, those set forth in Sections 6.10 and
6.11 and Article VII hereof, which certificate shall set forth in reasonable
detail the computation thereof and (b) certifying that to the best of his
knowledge no Default or Event of Default has occurred and is continuing, or if
a Default or Event of Default has occurred and is continuing, a statement as to
the nature thereof and the action which is proposed to be taken with respect
thereto.

 

(8)                                  Land Bank
Inventory.  Within fifty (50)
days after the end of each of the first three quarters, and within ninety-five
(95) days after the end of each fourth quarter, of each fiscal year of the
Borrower, a certificate of the President or Chief Operating Officer of the
Borrower certifying the Land as at such date, which lists by state of location all
Land, delineating Finished Lots, Lots under Development, Entitled Land and
estimated undeveloped Lots.

 

(9)                                  Accountant’s
report.  Simultaneously with
the delivery of the annual financial statements referred to in Section 5.08(2),
a certificate of the independent public accountants who audited such statements
to the effect that, in making the examination necessary for the audit of such
statements, they have obtained no knowledge of any condition or event which
constitutes a Default or Event of Default, or if such accountants shall have
obtained knowledge of any such condition or event, specifying in such
certificate each such condition or event of which they have knowledge and the
nature and status thereof.

 

(10)                            Notice of
litigation.  Promptly after
the commencement thereof, notice of all actions, suits, and proceedings before
any court or governmental department, commission, board, bureau, agency, or
instrumentality, domestic or foreign, affecting the Borrower or any Subsidiary
which, if determined adversely to the Borrower or such Subsidiary, would
reasonably be expected to result in a judgment against the Borrower or such
Subsidiary in excess of $10,000,000 (to the extent not covered by insurance) or
would reasonably be expected to have a material adverse effect on the financial
condition, properties, or operations of the Borrower or such Subsidiary.

 

(11)                            Notice of
Defaults and Events of Default. 
As soon as possible and in any event within ten (10) days after the
occurrence of each Default or Event of Default, a written notice setting forth
the details of such Default or Event of Default and the action which is
proposed to be taken by the Borrower with respect thereto.

 

(12)                            ERISA
reports.  As soon as
possible, and in any event within thirty (30) days after the Borrower knows or
has reason to know that any circumstances exist that constitute grounds
entitling the PBGC to institute proceedings to terminate a Plan subject to
ERISA with respect to the Borrower or any Commonly Controlled Entity, and
promptly but in any event

 

55

 

within two (2) Business Days of receipt by the Borrower or any Commonly
Controlled Entity of notice that the PBGC intends to terminate a Plan or
appoint a trustee to administer the same, and promptly but in any event within
five (5) Business Days of the receipt of notice concerning the imposition of
withdrawal liability in excess of $50,000 with respect to the Borrower or any
Commonly Controlled Entity, the Borrower will deliver to each Lender a
certificate of the chief financial officer of the Borrower setting forth all
relevant details and the action which the Borrower proposes to take with
respect thereto.

 

(13)                            Reports to
other creditors.  Promptly
after the furnishing thereof, copies of any statement, report, document,
notice, certificate, and correspondence furnished to any other party pursuant
to the terms of any indenture, loan, credit, or similar agreement and not
otherwise required to be furnished to the Lenders pursuant to any other clause
of this Section 5.08.

 

(14)                            Proxy
statements, etc.  Promptly
after the sending or filing thereof, copies of all proxy statements, financial
statements, and reports which the Borrower or any Subsidiary sends to its
stockholders, and copies of all regular, periodic, and special reports, and all
registration statements which the Borrower or any Subsidiary files with the
Securities and Exchange Commission or any governmental authority which may be
substituted therefor, or with any national securities exchange.

 

(15)                            Borrowing
Base Certificate Prior to Acquisition.  Not less than ten (10) days prior to the consummation of any
Permitted Acquisition (without regard to whether the provisions of Sections
2.01.3 and 7.03 are then applicable), a Borrowing Base Certificate that
includes all assets that would have been included in the Borrowing Base had the
Permitted Acquisition been consummated as of the last day of the most recent
calendar month, provided, however, that such Borrowing Base Certificate shall expressly
state that it is delivered in anticipation of, and shall only be effective
hereunder (if then applicable) for purposes of Borrowings made at the time of
or after, the consummation of such Permitted Acquisition (it being understood
that, until the consummation of such Permitted Acquisition, the previously
delivered Borrowing Base Certificate shall remain in effect).

 

(16)                            General
information.  Such other
information respecting the condition or operations, financial or otherwise, of
the Borrower or any Subsidiary as any Lender may from time to time reasonably
request.

 

Section 5.09 
Subsidiary Reporting Requirements.  In the event any of the following statements
are prepared with respect to any Subsidiary, then upon written request from any
Lender, furnish to the Agent for delivery to each of the Lenders the following
with respect to any Subsidiary:

 

(1)                                  Quarterly
financial statements.  An
unaudited balance sheet of such Subsidiary as of the end of most recently
completed fiscal quarter, statements of operations and cash flow of such
Subsidiary for the period commencing at the end of the previous fiscal year and
ending with the end of such quarter, and statements of changes in stockholders’
equity of such Subsidiary for the portion of the fiscal year ended with the
last day of such quarter, all in reasonable detail and stating in comparative
form the respective figures for the corresponding date and period in the
previous fiscal year and all prepared in accordance with GAAP

 

56

 

consistently applied and certified by the chief financial officer of
such Subsidiary (subject to year-end adjustments).

 

(2)                                  Annual
financial statements.  A
balance sheet of such Subsidiary as of the end of such fiscal year, statements
of operations and cash flow of such Subsidiary for such fiscal year, and
statements of changes in stockholders’ equity of such Subsidiary for such
fiscal year, all in reasonable detail and stating in comparative form the
respective figures for the corresponding date and period in the prior fiscal
year and all prepared in accordance with GAAP consistently applied and as to
the consolidated statements accompanied by an opinion thereon acceptable to the
Agent by Deloitte & Touche or other independent accountants selected by the
Borrower and acceptable to the Agent.

 

Section
5.10  Environment.  Be and remain, and cause each Subsidiary to
be and remain, in compliance with the provisions of all federal, state, and
local environmental, health, and safety laws, codes and ordinances, and all
rules and regulations issued thereunder; notify the Agent promptly of any
notice of a hazardous discharge or environmental complaint received from any
governmental agency or any other party (and the Agent shall notify the Lenders
promptly following its receipt of any such notice from the Borrower); notify
the Agent promptly of any hazardous discharge from or affecting its premises
(and the Agent shall notify the Lenders promptly following its receipt of any
such notice from the Borrower); promptly contain and remove the same, in
compliance with all applicable laws; promptly pay any fine or penalty assessed
in connection therewith; permit any Lender to inspect the premises, to conduct
tests thereon, and to inspect all books, correspondence, and records pertaining
thereto; and at such Lender’s request, and at the Borrower’s expense, provide a
report of a qualified environmental engineer, satisfactory in scope, form, and
content to the Required Lenders, and such other and further assurances
reasonably satisfactory to the Required Lenders that the condition has been
corrected.

 

Section
5.11  Use of
Proceeds.  Use the
proceeds of the Loans solely as provided in Section 2.13 hereof.

 

Section
5.12  Ranking of
Obligations.  Ensure that
at all times its Obligations under the Loan Documents shall be and constitute
unconditional general obligations of the Borrower ranking at least pari  passu
with all its other unsecured Debt.

 

Section
5.13  Taxes.  Pay and cause each Subsidiary to pay when due
all taxes, assessments and governmental charges and levies upon it or its
income, profits or property, except those which are being contested in good
faith by appropriate proceedings and with respect to which adequate reserves
have been set aside.

 

Section
5.14  Wholly-Owned
Status.  Ensure that at
all times each of the Guarantors is a Wholly-Owned Subsidiary of the Borrower.

 

Section
5.15  New
Subsidiaries.  Within
fifty (50) days after the end of any fiscal quarter of the Borrower during
which any Person shall have become a Subsidiary, cause such Subsidiary to
execute and deliver to the Agent, for the benefit of the Lenders, a
Supplemental Guaranty and

 

57

 

an opinion of
counsel, certified copies of resolutions, articles of incorporation, incumbency
certificates and other documents with respect to such Subsidiary and its
Guaranty substantially similar to the documents delivered pursuant to Section
3.01 with respect to the Guarantors, all of which shall be reasonably
satisfactory to the Agent in form and substance.  Neither STIC nor UHIC nor Meridian shall be required to deliver a
Guaranty.

 

ARTICLE
VI

NEGATIVE COVENANTS

 

So long as any Note shall remain unpaid or any
Revolving Credit Lender shall have any Revolving Credit Commitment under this
Agreement, the Borrower and each Guarantor will not (unless otherwise agreed to
by the Required Lenders in writing):

 

Section
6.01  Liens.  Create, incur, assume, or suffer to exist,
or permit any Subsidiary to create, incur, assume, or suffer to exist, any
Lien, upon or with respect to any of its properties, now owned or hereafter
acquired, except the following:

 

(1)                                  Liens
for taxes or assessments or other government charges or levies if not yet due
and payable or, if due and payable, if they are being contested in good faith
by appropriate proceedings and for which appropriate reserves are maintained;

 

(2)                                  Liens
imposed by law, such as mechanics’, materialmen’s, landlords’, warehousemen’s,
and carriers’ Liens, and other similar Liens, securing obligations incurred in
the ordinary course of business which are not past due for more than ninety
(90) days or which are being contested in good faith by appropriate proceedings
and for which appropriate reserves have been established;

 

(3)                                  Liens
under workers’ compensation, unemployment insurance, Social Security, or
similar legislation;

 

(4)                                  Liens,
deposits, or pledges to secure the performance of bids, tenders, contracts
(other than contracts for the payment of money), Capital Leases (permitted
under the terms of this Agreement), public or statutory obligations, surety,
stay, appeal, indemnity, performance, or other similar bonds, or other similar
obligations arising in the ordinary course of business;

 

(5)                                  Judgment
and other similar Liens arising in connection with any court proceeding,
provided the execution or other enforcement of such Liens is effectively stayed
and the claims secured thereby are being actively contested in good faith and
by appropriate proceedings;

 

(6)                                  Easements,
rights-of-way, restrictions, and other similar encumbrances which, in the
aggregate, do not materially interfere with the occupation, use, and enjoyment
by the Borrower or any Subsidiary of the property or assets encumbered thereby
in the normal course of its business or materially impair the value of the
property subject thereto;

 

(7)                                  Liens
securing Secured Debt permitted under Section 6.02.

 

58

 

Section
6.02  Secured
Debt.  Create, incur,
assume or suffer to exist, or permit any Subsidiary to create, incur, assume or
suffer to exist, any Secured Debt, except for Secured Debt in an aggregate
amount outstanding at any one time not exceeding (a) $50,000,000 plus (b) the
amount (if any ) of any secured Debt of an entity acquired by Borrower after
the Closing Date, provided that (i) such secured Debt was in existence prior to
the date of such Acquisition and was not incurred in anticipation thereof and
(ii) the Liens securing such Debt do not extend to any other assets other than
those theretofore encumbered by such Liens.

 

Section
6.03  Mergers,
Etc.  Wind up, liquidate
or dissolve itself, reorganize, merge or consolidate with or into, or convey,
sell, assign, transfer, lease, or otherwise 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 any Person, or acquire all
or substantially all the assets or the business of any Person, or permit any
Subsidiary to do so, except (1) for any Permitted Acquisition, (2) that any
Guarantor may merge into or transfer assets to the Borrower as a result of an
Internal Reorganization or otherwise and (3) that any Guarantor may merge into
or consolidate with or transfer assets to any other Guarantor as a result of an
Internal Reorganization or otherwise.

 

Section
6.04  Leases.  Create, incur, assume, or suffer to exist,
or permit any Subsidiary to create, incur, assume, or suffer to exist, any
obligation as lessee for the rental or hire of any real or personal property,
except (1) Capital Leases not otherwise prohibited by the terms of this
Agreement; (2) leases existing on the date of this Agreement and any extension
or renewals thereof; (3) leases between the Borrower and any Subsidiary or
between any Subsidiaries; (4) operating leases entered into in the ordinary
course of business; and (5) any lease of property having a value of $500,000 or
less.

 

Section
6.05  Sale and
Leaseback.  Sell,
transfer or otherwise dispose of, or permit any Subsidiary to sell, transfer,
or otherwise dispose of, any real or personal property to any Person and
thereafter directly or indirectly lease back the same or similar property,
except for the sale and leaseback of model homes.

 

Section
6.06  Sale of
Assets.  Sell, lease,
assign, transfer, or otherwise dispose of, or permit any Subsidiary to sell,
lease, assign, transfer, or otherwise dispose of, any of its now owned or
hereafter acquired assets (including, without limitation, shares of stock and
indebtedness of subsidiaries, receivables, and leasehold interests),
except:  (1) Inventory disposed of in
the ordinary course of business; (2) the sale or other disposition of assets no
longer used or useful in the conduct of its business; (3) the sale and
leaseback of model homes, or (4) that any Guarantor may sell, lease, assign, or
otherwise transfer its assets to the Borrower or any other Guarantor in
connection with an Internal Reorganization or otherwise.

 

Section
6.07  Investments.  Make, or permit any Subsidiary to make, any
loan or advance to any Person, or purchase or otherwise acquire, or permit any
Subsidiary to purchase or otherwise acquire, any capital stock, assets (other
than assets acquired in the ordinary course of business), obligation, or other
securities of, make any capital contribution to, or otherwise invest in or
acquire any interest in any Person including, without limitation, any hostile
takeover, hostile tender offer or similar hostile transaction (collectively,
“Investments”), except:  (1) a

 

59

 

direct obligation
of the United States or any agency thereof with maturities of one year or less
from the date of acquisition; (2) commercial paper rated at least “A-1” by
Standard & Poor’s Corporation or “P-1” by Moody’s Investors Service, Inc.;
(3) certificates of deposit with maturities of one year or less from the date
of acquisition issued by any commercial bank or federal savings bank having
capital and surplus in excess of $250,000,000; (4) a direct obligation of any
state or municipality within the United States with maturities of one year or
less from the date of acquisition and which, at the time of such acquisition,
is accorded one of the two highest debt ratings for obligations of such type by
Standard & Poor’s or Moody’s; (5) mutual funds investing in assets of the
type described in items (1), (2), (3) or (4) above which in any case would be
classified as a current asset in accordance with GAAP which are managed by a
fund manager of recognized standing in the United States and having capital and
surplus of at least $100,000,000 or having at least $250,000,000 under
management; (6) stock, obligation, or securities received in settlement of
debts (created in the ordinary course of business) owing to the Borrower or any
Subsidiary provided such issuance is approved by the board of directors of the
issuer thereof; (7) a loan or advance from the Borrower to a Subsidiary, or
from a Subsidiary to a Subsidiary, or from a Subsidiary to the Borrower
(subject, however, to the limitations set forth below in the case of
Investments in Subsidiaries that are not Guarantors); (8) any Permitted
Acquisition; (9) an Investment in a Wholly-Owned Subsidiary, which Investment
is, or constitutes a part of, an Internal Reorganization (subject, however, to
the limitations set forth below in the case of Investments in Subsidiaries that
are not Guarantors); (10) Investments in Subsidiaries that are not Guarantors
and any Joint Venture (subject, however, to the limitations set forth below);
or (11) any other Investment of $20,000,000 or less (subject, however, to the
limitations set forth below); provided that the aggregate amount of all
Investments by the Borrower and its Subsidiaries permitted under clauses (10)
and (11) above does not at any time exceed twenty-five percent (25%) of
Consolidated Tangible Net Worth.

 

Section
6.08  Guaranties,
Etc.  Assume, guarantee,
endorse, or otherwise be or become directly or contingently responsible or
liable, or permit any Subsidiary to assume, guarantee, endorse, or otherwise be
or become directly or contingently responsible or liable (including, but not
limited to, an agreement to purchase any obligation, stock, assets, goods, or
services, or to supply or advance any funds, assets, goods, or services, or an
agreement to maintain or cause such Person to maintain a minimum working
capital or net worth or otherwise to assure the creditors of any Person against
loss), for obligations of any Person, except: 
(1) guaranties by endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business; (2)
guaranties of performance obligations in the ordinary course of business; (3)
guaranties of any obligation of $500,000 or less, provided, however,
that neither the Borrower nor any Subsidiary shall guarantee an obligation of
any Subsidiary that is not a Guarantor; and (4) that the Borrower or any
Subsidiary or any Guarantor may, whether as a result of an Internal
Reorganization or otherwise, guarantee the Debt of any other Subsidiary (other
than any Subsidiary that is not a Guarantor) or Guarantor or the Borrower
permitted under this Agreement.

 

Section
6.09  Transactions
With Affiliates.  Enter
into any transaction, including, without limitation, the purchase, sale, or
exchange of property or the rendering of any service, with any Affiliate, or
permit any Subsidiary to enter into any transaction, including, without
limitation, the purchase, sale, or exchange of property or the rendering of any
service, with any

 

60

 

Affiliate, except
in the ordinary course of and pursuant to the reasonable requirements of the
Borrower’s or such Guarantor’s or any Subsidiary’s business and upon fair and reasonable
terms no less favorable to the Borrower or such Guarantor or any Subsidiary
than would obtain in a comparable arm’s-length transaction with a Person not an
Affiliate (which exception shall include the payment of insurance premiums to
UHIC and Meridian for the purchase of construction warranties and builder
default protection for buyers of Housing Units from the Borrower or any of its
Subsidiaries and to STIC for title insurance); provided, however,
that the following transactions shall not be prohibited by this Section
6.09:  (i) transactions involving the
purchase, sale or exchange of property having a value of $500,000 or less; and
(ii) transactions otherwise permitted by this Agreement.

 

Section
6.10  Housing
Inventory.  Permit the
number of Speculative Housing Units, as at the end of any fiscal quarter, to
exceed the greater of (a) the number of Housing Unit Closings occurring during
the period of twelve (12) months ending on the last day of such fiscal quarter,
multiplied by thirty percent (30%) or (b) the number of Housing Unit Closings
occurring during the period of six (6) months ending on the last day of such
fiscal quarter, multiplied by seventy percent (70%).

 

Section
6.11  Senior
Debt.  Prepay, repurchase
or redeem in whole or in part the principal of the Senior Debt, except for (a)
refinancings thereof from the proceeds of Refinancing Debt with respect thereto
and (b) the prepayment in full of the Senior Notes due 2008.

 

Section
6.12  Amendment
or Modification of Senior Indentures.  Amend or modify, or permit any amendment or modification of, any
of the Senior Indentures (other than those provided for in clauses (i), (ii),
(iii), (v) or (vi) of Section 10.01(a) of such Senior Indentures).

 

Section
6.13  Non-Guarantors.  Permit UHIC or Meridian to engage in any
business other than the issuance of construction warranties and builder default
protection for buyers of Housing Units from the Borrower or any of its
Subsidiaries or permit STIC to engage in any business other than title
insurance.

 

Section
6.14  Negative
Pledges.  Directly or
indirectly enter into any agreement (other than this Agreement, the Senior
Indentures and any other similar loan and credit agreements and indentures that
may hereafter be entered into by the Borrower and that evidence Borrowing Base
Debt) with any Person that prohibits or restricts or limits the ability of the
Borrower or any Guarantor to create, incur, pledge or suffer to exist any Lien
upon any assets of the Borrower or any Guarantor (except that agreements creating
or securing Secured Debt permitted under Section 6.02 may prohibit, restrict or
limit other Liens on those assets encumbered by the Liens securing such Secured
Debt).

 

61

 

ARTICLE
VII

FINANCIAL COVENANTS

 

So long as any Note shall remain unpaid or any
Revolving Credit Lender shall have any Revolving Credit Commitment under this
Agreement (unless otherwise agreed to by the Required Lenders in writing):

 

Section
7.01  Minimum
Consolidated Tangible Net Worth.  The Borrower will maintain at all times a Consolidated Tangible
Net Worth of not less than the sum (the “Minimum Consolidated Tangible Net
Worth”) of (i) $483,800,000, (ii) an amount equal to fifty percent (50%) of the
cumulative Net Income of the Borrower earned after March 31, 2003 (excluding
any quarter in which there is a loss), and (iii) fifty percent (50%) of the net
proceeds received after March 31, 2003 by the Borrower or any Subsidiary from
the sale or issuance of any of its Common Equity.  Notwithstanding the foregoing, in the event that the Borrower
shall at any time consummate an Acquisition for a purchase price or other
consideration equaling or exceeding $100,000,000, the Minimum Consolidated
Tangible Net Worth shall be increased to the sum of (i) 80% of the Borrower’s
Consolidated Tangible Net Worth immediately following the closing of such
Acquisition, (ii) an amount equal to 50% of the cumulative Net Income of the
Borrower earned after the closing of such Acquisition (excluding any quarter in
which there is a loss) and (iii) 50% of the net proceeds received after the
closing of such Acquisition by the Borrower or any Subsidiary for the sale or
issuance of its Common Equity.

 

Section
7.02  Leverage
Ratio.  The Borrower will
not permit the ratio of Consolidated Debt to Consolidated Tangible Net Worth to
exceed (a) 2.25 to 1.00 at any time that the Borrower maintains an Interest
Coverage Ratio of at least 2.5 to 1.0 or (b) 2.0 to 1.0 at any other time.  For purposes of this Section 7.02, Consolidated
Tangible Net Worth shall exclude the Borrower’s and Guarantors’ Investments in
Joint Ventures and in Subsidiaries that are not Guarantors.

 

Section
7.03  Borrowing
Base Debt.  At any time
at which the Facilities do not have a rating of BBB- or higher from S&P or
Baa3 or higher from Moody’s, the Borrower will not permit the outstanding
amount of the Borrowing Base Debt to exceed the Borrowing Base.

 

Section
7.04  Interest
Coverage Ratio.  The
Borrower shall maintain an Interest Coverage Ratio of not less than 2.0 to 1.0,
which ratio shall be determined as of the last day of each fiscal quarter for
the four-quarter period ending on such day.

 

Section
7.05  Land
Inventory.  The Borrower
shall not permit the ratio of (i) Adjusted Land Value to (ii) the sum of (a)
Consolidated Tangible Net Worth plus (b) fifty percent (50%) of Consolidated
Subordinated Debt to exceed 1.0 to 1.0.

 

ARTICLE
VIII

EVENTS OF DEFAULT

 

Section
8.01  Events of
Default.  If any of the
following events shall occur:

 

(1)                                  The
Borrower shall fail to pay (a) the principal of any Note, or any amount of a
commitment or other fee, as and when due and payable or (b) interest on any
Note or any

 

62

 

amount of any commitment fee or other fee within five (5) Business Days
after the same is due and payable;

 

(2)                                  Any
representation or warranty made or deemed made by the Borrower or by any
Guarantor in any Loan Document or which is contained in any certificate,
document, opinion, or financial or other statement furnished at any time under
or in connection with this Agreement shall prove to have been incorrect,
incomplete, or misleading in any material respect on or as of the date made or
deemed made;

 

(3)                                  The
Borrower or any Guarantor shall fail to perform or observe any term, covenant,
or agreement contained in Articles V, VI or VII hereof, and such failure shall
continue for a period of thirty (30) consecutive days;

 

(4)                                  The
Borrower or any Significant Subsidiary or any Significant Guarantor shall (a)
fail to pay (within the applicable cure period, if any) any amount in respect
of indebtedness for borrowed money equal to or in excess of $5,000,000 in the
aggregate (other than the Notes) of the Borrower or such Significant Subsidiary
or such Significant Guarantor, as the case may be, or any interest or premium
thereon, when due (whether by scheduled maturity, required prepayment,
acceleration, demand, or otherwise); or (b) fail to perform or observe any
term, covenant, or condition on its part to be performed or observed (within
the applicable cure period, if any) under any agreement or instrument relating
to any such indebtedness, when required to be performed or observed, if the
effect of such failure to perform or observe is to accelerate, or permit the
acceleration of after the giving of notice or passage of time, or both, the
maturity of such indebtedness, whether or not such failure to perform or
observe shall be waived by the holder of such indebtedness; or (c) any such
indebtedness shall be declared to be due and payable, or required to be prepaid
(other than by a regularly scheduled required prepayment), repurchased or
redeemed prior to the stated maturity thereof;

 

(5)                                  The
Borrower or any Significant Subsidiary or any Significant Guarantor (a) shall
generally not pay, or shall be unable to pay, or shall admit in writing its
inability to pay its debts as such debts become due; or (b) shall make an
assignment for the benefit of creditors, or petition or apply to any tribunal
for the appointment of a custodian, receiver, or trustee for it or a
substantial part of its assets; or (c) shall commence any proceeding under any
bankruptcy, reorganization, arrangement, readjustment of debt, dissolution, or
liquidation law or statute of any jurisdiction, whether now or hereafter in
effect; or (d) shall have had any such petition or application filed or any
such proceeding commenced against it in which an order for relief is entered or
an adjudication or appointment is made and which remains undismissed for a period
of forty (40) days or more; or (e) shall take any corporate action indicating
its consent to, approval of, or acquiescence in any such petition, application,
proceeding, or order for relief or the appointment of a custodian, receiver, or
trustee for all or any substantial part of its properties; or (f) shall suffer
any such custodianship, receivership, or trusteeship to continue undischarged
for a period of forty (40) days or more;

 

(6)                                  One
or more judgments, decrees, or orders for the payment of money in excess of
$10,000,000 in the aggregate shall be rendered against the Borrower and/or any
Subsidiary and/or any Guarantor, and such judgments, decrees, or orders shall
continue

 

63

 

unsatisfied and in effect for a period of twenty (20) consecutive days
without being vacated, discharged, satisfied, or stayed or bonded pending
appeal;

 

(7)                                  Any
Guaranty hereunder shall at any time after its execution and delivery and for
any reason cease to be in full force and effect or shall be declared null and
void, or the validity or enforceability thereof shall be contested by the
Guarantor or the Guarantor shall deny it has any further liability or
obligation under, or shall fail to perform its obligations under, the Guaranty
(except to the extent that the foregoing occurs solely by reason of the
liquidation or dissolution of a Guarantor as a result of an Internal
Reorganization);

 

(8)                                  Any
Change of Control of the Borrower or any Subsidiary or any Guarantor shall
occur;

 

(9)                                  Any
of the following events shall occur or exist with respect to the Borrower, any
Subsidiary or any Commonly Controlled Entity under ERISA: any Reportable Event
shall occur; complete or partial withdrawal from any Multiemployer Plan shall
take place; any Prohibited Transaction shall occur; a notice of intent to
terminate a Plan shall be filed, or a Plan shall be terminated; or
circumstances shall exist which constitute grounds entitling the PBGC to
institute proceedings to terminate a Plan, or the PBGC shall institute such
proceedings; and in each case above, such event or condition, together with all
other events or conditions described in this Section 8.01(9), if any, could
subject the Borrower or any Significant Guarantor or Significant Subsidiary to
any tax, penalty, or other liability which in the aggregate may exceed
$1,000,000;

 

(10)                            If
any federal, state, or local agency asserts a material claim against the
Borrower or any Significant Guarantor or Significant Subsidiary and/or its
assets, equipment, property, leaseholds, or other facilities for damages or
cleanup costs relating to a hazardous discharge or an environmental complaint; provided,
however, that such claim shall not constitute a default if, within
fifteen (15) days of the occurrence giving rise to the claim, (a) the Borrower
can prove to the reasonable satisfaction of the Required Lenders that the
Borrower has commenced and is diligently pursuing either: (i) a cure or
correction of the event which constitutes the basis for the claim, and
continues diligently to pursue such cure or correction or (ii) proceedings for
an injunction, a restraining order or other appropriate emergent relief
preventing such agency or agencies from asserting such claim, which relief is
granted within thirty (30) days of the occurrence giving rise to the claim and
the injunction, order, or emergent relief is not thereafter resolved or
reversed on appeal or (iii) the defense against the claim through action in a
court or agency exercising jurisdiction over the claim; and (b) in any of the
foregoing events, the Borrower has posted a bond, letter of credit, or other
security satisfactory in form, substance, and amount to the Required Lenders
and the agency or entity asserting the claim to secure the correction of the
event which constitutes the basis for the claim in accordance with applicable
laws;

 

then the following provisions shall apply:

 

(i)                                     if
any Event of Default described in Section 8.01(5) occurs with respect to the
Borrower, the obligations of the Lenders to make Loans hereunder and the
obligation and power of the Issuers to issue Facility Letters of Credit shall
automatically terminate

 

64

 

and the Obligations shall immediately become due and
payable without any election or action on the part of the Agent, any Issuer or
any Lender and the Borrower will be and become thereby unconditionally
obligated, without any further notice, act or demand, to pay to the Agent an
amount in immediately available funds, which funds shall be held in the
Facility Letter of Credit Collateral Account, equal to the difference of (x)
the amount of Facility Letter of Credit Obligations at such time, less (y) the
amount on deposit in the Facility Letter of Credit Collateral Account at such
time which is free and clear of all rights and claims of third parties and has
not been applied against the Obligations (such difference, the “Collateral
Shortfall Amount”).  If any other Event
of Default occurs, the Required Lenders (or the Agent with the consent of the
Required Lenders) may (a) terminate or suspend the obligations of the Lenders
to make Loans hereunder and the obligation and power of the Issuers to issue
Facility Letters of Credit, or declare the Obligations to be due and payable, or
both, whereupon the Obligations shall become immediately due and payable,
without presentment, demand, protest or notice of any kind, all of which the
Borrower hereby expressly waives, and (b) upon notice to the Borrower and in
addition to the continuing right to demand payment of all amounts payable under
this Agreement, make demand on the Borrower to pay, and the Borrower will,
forthwith upon such demand and without any further notice or act, pay to the
Agent the Collateral Shortfall Amount, which funds shall be deposited in the
Facility Letter of Credit Collateral Account.

 

(ii)                                  If
at any time while any Event of Default is continuing, the Agent determines that
the Collateral Shortfall Amount at such time is greater than zero, the Agent
may make demand on the Borrower to pay, and the Borrower will, forthwith upon
such demand and without any further notice or act, pay to the Agent the
Collateral Shortfall Amount, which funds shall be deposited in the Facility
Letter of Credit Collateral Account.

 

(iii)                               The Agent may, at any
time or from time to time after funds are deposited in the Facility Letter of
Credit Collateral Account, apply such funds to the payment of the Obligations
and any other amounts as shall from time to time have become due and payable by
the Borrower to the Lenders or the Issuer under the Loan Documents.

 

(iv)                              At
any time while any Event of Default is continuing, neither the Borrower nor any
Person claiming on behalf of or through the Borrower shall have any right to
withdraw any of the funds held in the Facility Letter of Credit Collateral
Account.  After all of the Obligations
have been indefeasibly paid in full and the Aggregate Revolving Credit
Commitment has been terminated, any funds remaining in the Facility Letter of
Credit Collateral Account shall be returned by the Agent to the Borrower or
paid to whomever may be legally entitled thereto at such time.

 

(v)                                 If,
within 30 days after acceleration of the maturity of the Obligations or
termination of the obligations of the Lenders to make Loans and the obligation
and power of the Issuer to issue Facility Letters of Credit hereunder as a
result of any Event of Default (other than any Event of Default as described in
Section 8.01(5) with respect to the Borrower) and before any judgment or decree
for the payment of the Obligations due shall have been obtained or entered, the
Required Lenders (in their sole discretion) shall

 

65

 

so direct, the Agent shall, by notice to the Borrower,
rescind and annul such acceleration and/or termination.

 

Section
8.02  Set Off.  Upon the occurrence and during the
continuance of any Event of Default, each Lender is hereby authorized at any
time and from time to time, without notice to the Borrower (any such notice
being expressly waived by the Borrower), to set off and apply any and all
deposits (general or special, 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 the Borrower against any and all of the obligations of
the Borrower now or hereafter existing under this Agreement or any Note or
Notes held by such Lender or any other Loan Document, irrespective of whether
or not the Agent or such Lender shall have made any demand under this Agreement
or any Note or Notes held by such Lender or such other Loan Document and
although such obligations may be unmatured. 
Each Lender agrees promptly to notify the Borrower (with a copy to the
Agent) after any such set-off and application, provided that the failure to
give such notice shall not affect the validity of such set-off and
application.  The rights of each Lender
under this Section 8.02 are in addition to other rights and remedies
(including, without limitation, other rights of set-off) which each Lender may
have.

 

ARTICLE
IX

INTENTIONALLY OMITTED

 

ARTICLE
X

AGENCY PROVISIONS

 

Section
10.01    Authorization
and Action.  Each Lender
hereby irrevocably appoints and authorizes the Agent to take such action as
agent on its behalf and to exercise such powers under this Agreement as are
delegated to the Agent by the terms hereof, together with such powers as are
reasonably incidental thereto.  The
duties of the Agent shall be mechanical and administrative in nature and the
Agent shall not by reason of this Agreement be a trustee or fiduciary for any
Lender.  The Agent shall have no duties
or responsibilities except those expressly set forth herein.  As to any matters not expressly provided for
by this Agreement (including, without limitation, enforcement or collection of
the Notes), the Agent shall not be required to act or to refrain from acting
except upon the instructions of the Required Lenders or, to the extent required
under Section 11.01, all Lenders (and shall be fully protected in so acting or
so refraining from acting), and such instructions shall be binding upon all
Lenders and all holders of Notes; provided, however, that the
Agent shall not be required to take any action which exposes the Agent to
personal liability or which is contrary to this Agreement or applicable
law.  The Agent shall administer the
Loan in the same manner that it would administer a comparable loan held 100%
for its own account.

 

Section
10.02    Liability
of Agent.  Neither the
Agent nor any of its directors, officers, agents, or employees shall be liable
for any action taken or omitted to be taken by it or them under or in
connection with this Agreement in the absence of its or their own gross
negligence or willful misconduct. 
Without limiting the generality of the foregoing, the Agent (1) may
treat the payee of any Note as the holder thereof until the Agent receives
written notice of the assignment or transfer thereof signed by such payee and
in form satisfactory to the Agent; (2) may consult

 

66

 

with legal counsel
(including counsel for the Borrower), independent public accountants and other
experts selected by it and shall not be liable for any action taken or omitted
to be taken in good faith by it in accordance with the advice of such counsel,
accountants, or experts; (3) makes no warranty or representation to any Lender
and shall not be responsible to any Lender for any statements, warranties, or
representations made in or in connection with this Agreement; (4) shall not
have any duty to ascertain or to inquire as to the performance or observance of
any terms, covenants, or conditions of this Agreement on the part of the
Borrower (other than the payment of principal, interest and fees due hereunder),
or to inspect the property (including the books and records) of the Borrower;
(5) shall not be responsible to any Lender for the due execution, legality,
validity, enforceability, genuineness, perfection, sufficiency or value of this
Agreement or any other instrument or document furnished pursuant hereto or the
value, sufficiency, creation, perfection or priority of any Lien in any
collateral security; and (6) shall incur no liability under or in respect of
this Agreement by acting upon any notice, consent, certificate or other
instrument or writing (which may be sent by telegram, telefax, or facsimile
transmission) reasonably believed by it to be genuine and signed or sent by the
proper party or parties.

 

Section
10.03   Rights of
Agent as a Lender.  With
respect to its Commitments, the Loans made by it and any Note issued to it, the
Agent shall have the same rights and powers under this Agreement as any other
Lender and may exercise the same as though it were not the Agent; and the term
“Lender” or “Lenders” shall, unless otherwise expressly indicated, include the
Agent in its individual capacity.  The
Agent, each Lender and each of their respective Affiliates may accept deposits
from, lend money to, act as trustee under indentures of, and generally engage
in any kind of business with, the Borrower, any of its Subsidiaries and any
Person who may do business with or own securities of the Borrower or any
Subsidiary, all as if the Agent were not the Agent and without any duty to
account therefor to the other Lenders.

 

Section
10.04   Independent
Credit Decisions.  Each
Lender acknowledges that it has, independently and without reliance upon the
Agent or any other Lender 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 also
acknowledges that it will, independently and without reliance upon the Agent or
any other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement. 
The Agent shall promptly provide the Lenders with copies of all notices
of default and other formal notices sent or received in accordance with Section
11.02 of this Agreement, any written notice relating to changes in the
Borrower’s debt ratings that affect the Senior Debt Rating received from the
Borrower or a ratings agency, any documents received by the Agent pursuant to
Section 5.08 (except to the extent that the Borrower has furnished the same
directly to the Lenders) and any other documents or notices received by the
Agent with respect to this Agreement and requested in writing by any
Lender.  Except for notices, reports and
other documents and information expressly required to be furnished to the
Lenders by the Agent hereunder, the Agent shall have no duty or responsibility
to provide any Lender with any credit or other information concerning the
affairs, financial condition or business of the Borrower or any of its
Subsidiaries (or any of their Affiliates) which may come into possession of the
Agent or any of its Affiliates.

 

67

 

Section
10.05    Indemnification.  The Lenders severally agree to indemnify the
Agent in its capacity as Agent and not as a Lender (to the extent not
reimbursed by the Borrower), in the proportion of their Aggregate Pro Rata
Shares, from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever which may be imposed on, incurred by, or asserted
against the Agent in any way relating to or arising out of this Agreement or
any action taken or omitted by the Agent under this Agreement, provided that no
Lender shall be liable for any portion of any of the foregoing (i) resulting
from the Agent’s gross negligence or willful misconduct, (ii) on account of a
strictly internal or regulatory matter relating to the Agent (such as relating
to legal lending limit violation by the Agent), or (iii) in connection with a
breach of an agreement made by the Agent to a Lender under this Agreement.  Without limitation of the foregoing, each
Lender severally agrees to reimburse the Agent (to the extent not reimbursed by
the Borrower) promptly upon demand for its Aggregate Pro Rata Share of any
reasonable out-of-pocket expenses (including counsel fees) incurred by the
Agent in connection with the preparation, administration, or enforcement of, or
legal advice in respect of rights or responsibilities under, this Agreement;
provided, however, that no Lender shall be required to reimburse the Agent for
any such expenses incurred (i) resulting from the Agent’s gross negligence or
willful misconduct, (ii) on account of a strictly internal or regulatory matter
relating to the Agent (such as relating to legal lending limit violation by the
Agent), or (iii) in connection with a breach of an agreement made by the Agent
to a Lender under this Agreement.

 

Section
10.06    Successor
Agent.  (a)  The Agent may resign at any time by giving
at least sixty (60) days’ prior written notice thereof to the Lenders and the
Borrower and may be removed at any time with or without cause by the Required
Lenders.  Upon any such resignation or
removal, the Required Lenders shall have the right to appoint a successor
Agent, subject to Section 10.06(b).  If
no successor Agent shall have been so appointed by the Required Lenders, and
shall have accepted such appointment, within thirty (30) days after the
retiring Agent’s giving of notice of resignation or the Required Lenders’
removal of the retiring Agent, then the retiring Agent may, on behalf of the
Lenders, appoint a successor Agent, which shall be a commercial bank or federal
savings bank organized under the laws of the United States of America or of any
State thereof, subject to Section 10.06(b). 
Upon the acceptance of any appointment as Agent hereunder by a successor
Agent, such successor Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and obligations under this
Agreement.  After any retiring Agent’s resignation
or removal hereunder as Agent, the provisions of this Article X shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Agent under this Agreement.

 

(b)                                 The
appointment of any successor Agent that is not a Lender shall, as long as no
Event of Default shall have occurred and be continuing, be subject to the prior
written approval of the Borrower, which approval shall not be unreasonably
withheld.

 

Section
10.07    Sharing of Payments, Etc.  If any Lender shall obtain any payments
(whether voluntary, involuntary, through the exercise of any right of set-off,
or otherwise) on account of any Note or Notes held by it in excess of its
Applicable Pro Rata Share of payments on account of the applicable Notes
obtained by all applicable Lenders, such Lender shall purchase from the other
Revolving Credit Lenders or Term Loan Lenders (as applicable) such

 

68

 

participations in
the Notes held by them as shall be necessary to cause such purchasing Lender to
share the excess payment ratably with each of the other Revolving Credit
Lenders or Term Loan Lenders (as applicable), provided, however,
that if all or any portion of such excess payment is thereafter recovered from
such purchasing Lender, such purchase from each Revolving Credit Lender or Term
Loan Lender (as applicable) shall be rescinded and each applicable Lender shall
repay to the purchasing Lender the purchase price to the extent of such
recovery together with an amount equal to such Lender’s ratable share (according
to the proportion of (1) the amount of such Lender’s required repayment to (2)
the total amount so recovered from the purchasing Lender) of any interest or
other amount paid or payable by the purchasing Lender in respect of the total
amount so recovered.  The Borrower
agrees that any Lender so purchasing a participation from another Lender
pursuant to this Section 10.07 may, to the fullest extent permitted by law,
exercise all its rights of payment (including the right of set-off) with
respect to such participation as fully as if such Lender were the direct
creditor of the Borrower in the amount of such participation.

 

Section
10.08    Withholding
Tax Matters.  Each Lender
which is a Non-United States Person agrees to execute and deliver to the Agent
for delivery to the Borrower, before the first scheduled payment date in each
year, two duly completed copies of United States Internal Revenue Service Forms
W-8BEN or W-8ECI, or any successor forms, as appropriate, properly completed
and certifying that such Lender is entitled to receive payments under this
Agreement without withholding or deduction of United States federal taxes.  Each Lender which is a Non-United States
Person represents and warrants to the Borrower and to the Agent that, at the
date of this Agreement, (i) its Lending Offices are entitled to receive
payments of principal, interest, and fees hereunder without deduction or
withholding for or on account of any taxes imposed by the United States or any
political subdivision thereof and (ii) it is permitted to take the actions
described in the preceding sentence under the laws and any applicable double
taxation treaties of the jurisdictions specified in the preceding
sentence.  Each Lender which is a Non-United
States Person further agrees that, to the extent any form claiming complete or
partial exemption from withholding and deduction of United States federal taxes
delivered under this Section 10.08 is found to be incomplete or incorrect in
any material respect, such Lender shall execute and deliver to the Agent a
complete and correct replacement form.

 

Section
10.09    Documentation Agents or Co-Agents.  None of the Lenders identified in this
Agreement as a “Documentation Agent” or “Co-Agent” shall have any right, power,
obligation, liability, responsibility or duty under this Agreement other than
those applicable to all Lenders as such. 
Without limiting the foregoing, none of such Lenders shall have or be
deemed to have a fiduciary relationship with any Lender.  Each Lender hereby makes the same
acknowledgements with respect to such Lenders as it makes with respect to the
Agent in Section 10.04.

 

ARTICLE
XI

MISCELLANEOUS

 

Section
11.01    Amendments, Etc.  No amendment, modification, termination, or
waiver of any provision of any Loan Document to which the Borrower is a party,
nor consent to any departure by the Borrower from any Loan Document to which it
is a party, shall in any event

 

69

 

be effective
unless the same shall be in writing and signed by the Required Lenders (or
Required Revolving Credit Lenders in the case of an amendment, modification,
waiver or consent described in clauses (d) and (e) below) and the Borrower, and
then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given; provided, however,
that no amendment, waiver or consent shall (a) unless in writing and signed by
the Borrower and all of the Lenders holding an interest in the applicable
Facility, do, or have the effect of doing, any of the following:  (1) increase the Commitments of the Lenders
under such Facility (except for increases in the Aggregate Revolving Credit
Commitment in accordance with Section 2.02.2) or subject the Lenders under such
Facility to any additional obligations; (2) reduce the principal of, or
interest on, the Notes or any fees (other than the Agent’s fees) hereunder with
respect to such Facility; or (3) postpone any date fixed for any payment of
principal of, or interest on, the Notes or any fees (other than the Agent’s
fees) hereunder with respect to such Facility; (b) unless in writing and signed
by the Borrower and all Lenders, do, or have the effect of doing, any of the
following:  (1) change the percentage of
the Commitments or of the aggregate unpaid principal amount of the Notes or the
number of Lenders which shall be required for the Lenders or any of them to
take action hereunder (including, without limitation, any change in the
percentage of Revolving Credit Lenders required to extend the Revolving Credit
Termination Date under the provisions of Section 2.19 or the percentage of Term
Loan Lenders required to extend the Term Loan Maturity Date under the
provisions of Section 2.20); (2) release any Significant Guarantor; or (3) amend,
modify or waive any provision of the Guaranty, this Section 11.01 or clause (i)
of Section 12.01; (c) unless in writing and signed by the Agent in addition to
the Lenders required herein to take such action, affect the rights or duties of
the Agent under any of the Loan Documents; (d) unless in writing and signed by
the Swing Line Lender and the Required Revolving Credit Lenders, affect any
provisions of this Agreement that relate to the Swing Line Loans or otherwise
affect the rights or duties of the Swing Line Lender; or (e) unless in writing
and signed by the Issuers and the Required Revolving Credit Lenders, affect any
of the provisions of this Agreement that relate to the Facility Letters of
Credit or otherwise affect the rights or duties of any Issuer.

 

Section
11.02    Notices, Etc.  All notices and other communications provided for under this
Agreement and under the other Loan Documents to which the Borrower is a party
shall be in writing (including telegraphic, telex, and facsimile transmissions)
and mailed or transmitted or hand delivered, if to the Borrower, a Lender or
the Agent at its respective address set forth on the signature pages hereof;
or, as to each party, at such other address as shall be designated by such
party in a written notice to all other parties complying as to delivery with
the terms of this Section 11.02. Except as is otherwise provided in this
Agreement, all such notices and communications shall be effective when
deposited in the mails or delivered to the telegraph company, or transmitted,
answerback received, or hand delivered, respectively, addressed as aforesaid,
except that notices to the Agent pursuant to the provisions of Article II
shall not be effective until received by the Agent or, in the case of Section
2.22, the Swing Line Lender.

 

Section
11.03    No
Waiver.  No failure or
delay on the part of any Lender or the Agent or the Issuer in exercising any
right, power, or remedy hereunder shall operate as a waiver thereof; nor shall
any single or partial exercise of any such right, power, or remedy preclude any
other or further exercise thereof or the exercise of any other right, power, or
remedy hereunder. The making of a Loan or issuance, amendment or extension of a
Facility Letter of Credit

 

70

 

notwithstanding
the existence of a Default or Event of Default shall not constitute any waiver
or acquiescence of such Default or Event of Default, and the making of any Loan
or issuance, amendment or extension of a Facility Letter of Credit
notwithstanding any failure or inability to satisfy the conditions precedent to
such Loan or issuance, amendment or extension of a Facility Letter of Credit
shall not constitute any waiver or acquiescence with respect to such conditions
precedent with respect to any subsequent Loans or subsequent issuance,
amendment or extension of a Facility Letter of Credit.  The rights and remedies provided herein are
cumulative, and are not exclusive of any other rights, powers, privileges, or
remedies, now or hereafter existing, at law, in equity or otherwise.

 

Section
11.04    Costs,
Expenses, and Taxes.  The
Borrower agrees to reimburse the Agent for any reasonable costs, internal
charges and out-of-pocket expenses (including reasonable fees and time charges
of attorneys for the Agent, which attorneys may be employees of the Agent) paid
or incurred by the Agent in connection with the preparation, negotiation,
execution, delivery, review, amendment, modification and administration of the
Loan Documents and the collection of the Loans and enforcement of the Loan
Documents.  In addition, the Borrower
shall pay any and all stamp and other taxes and fees payable or determined to
be payable in connection with the execution, delivery, filing, and recording of
any of the Loan Documents and the other documents to be delivered under any
such Loan Documents, and agrees to hold the Agent and each of the Lenders
harmless from and against any and all liabilities with respect to or resulting
from any delay in paying or failing to pay such taxes and fees.  This provision shall survive termination of
this Agreement.

 

Section
11.05    Integration.  This Agreement (including the Borrower’s
obligation to pay the fees as provided in Section 2.09(c) and the Fee
Letter referred to therein) and the Loan Documents contain the entire agreement
between the parties relating to the subject matter hereof and supersede all
oral statements and prior writings with respect thereto.

 

Section
11.06    Indemnity.  The Borrower hereby agrees to defend,
indemnify, and hold each Lender harmless from and against all claims, damages,
judgments, penalties, costs, and expenses (including attorney fees and court
costs now or hereafter arising from the aforesaid enforcement of this clause)
arising directly or indirectly from the activities of the Borrower and its
Subsidiaries, its predecessors in interest, or third parties with whom it has a
contractual relationship, or arising directly or indirectly from the violation
of any environmental protection, health, or safety law, whether such claims are
asserted by any governmental agency or any other person.  This indemnity shall survive termination of
this Agreement.

 

Section
11.07    Governing
Law.  This Agreement and
the Notes shall be governed by, and construed in accordance with, the internal
laws (including §735ILCS 105/5-1 et  seq., but otherwise without
regard to principles of conflict of law) of the State of Illinois but giving
effect to federal laws applicable to national banks.

 

Section
11.08    Severability
of Provisions.  Any
provision of any Loan Document which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the

 

71

 

remaining
provisions of such Loan Document or affecting the validity or enforceability of
such provision in any other jurisdiction.

 

Section
11.09    Counterparts.  This Agreement may be executed in any number
of counterparts and by the different parties to this Agreement in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same Agreement.

 

Section
11.10    Headings.  Article and Section headings in the Loan
Documents are included in such Loan Documents for the convenience of reference
only and shall not constitute a part of the applicable Loan Documents for any
other purpose.

 

Section
11.11    Submission
to Jurisdiction.  The
Borrower, for itself and for each Subsidiary and Guarantor, hereby submits to
the nonexclusive jurisdiction of the United States District Court for the
Northern District of Illinois and of any Illinois State court sitting in The
City of Chicago for purposes of all legal proceedings which may arise hereunder
or under the Notes.  The Borrower, for
itself and for each Subsidiary and Guarantor, irrevocably waives to the fullest
extent permitted by law, any objection which it may have or hereafter have to
the laying of the venue of any such proceeding brought in such a court, and any
claim that any such proceeding brought in such a court has been brought in an
inconvenient forum.  The Borrower, for
itself and for each Subsidiary and Guarantor, hereby consents to process being
served in any such proceeding by the mailing of a copy thereof by registered or
certified mail, postage prepaid, to its address specified in Section 11.02
hereof or in any other manner permitted by law.

 

Section
11.12    Jury
Trial Waiver.  THE
BORROWER, FOR ITSELF AND FOR EACH SUBSIDIARY AND GUARANTOR, THE AGENT, EACH
ISSUER AND EACH LENDER HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW,
TRIAL BY JURY IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM, WHETHER IN
CONTRACT OR TORT, AT LAW OR IN EQUITY, ARISING OUT OF OR IN ANY WAY RELATED TO
THIS AGREEMENT OR THE LOAN DOCUMENTS. 
NO OFFICER OF ANY LENDER OR OF THE AGENT OR ANY ISSUER HAS AUTHORITY TO
WAIVE, CONDITION, OR MODIFY THIS PROVISION.

 

Section
11.13    Governmental
Regulation.  Anything
contained in this Agreement to the contrary notwithstanding, no Lender shall be
obligated to extend credit to the Borrower in violation of any limitation or
prohibition provided by any applicable statute or regulation.

 

Section
11.14    No
Fiduciary Duty.  The
relationship between the Borrower and the Lenders and the Agent shall be solely
that of borrower and lender.  Neither
the Agent nor any Lender shall have any fiduciary responsibilities to the
Borrower.  Neither the Agent nor any
Lender undertakes any responsibility to the Borrower to review or inform the
Borrower of any matter in connection with any phase of the Borrower’s business
or operations.

 

Section
11.15    Confidentiality.  Each Lender agrees to hold any confidential
information which it may receive from the Borrower pursuant to this Agreement
in confidence, except for disclosure (i) to other Lenders and their respective
affiliates, (ii) to legal counsel,

 

72

 

accountants, and
other professional advisors to that Lender or to a Transferee, (iii) to
regulatory officials, (iv) to any Person as requested pursuant to or as
required by law, regulation, or legal process, (v) to any Person in connection
with any legal proceeding to which that Lender is a party, and (vi) permitted
by Section 12.04.  Notwithstanding
anything herein to the contrary, confidential information shall not include,
and each Lender (and each employee, representative or other agent of any
Lender) may disclose to any and all Persons, without limitation of any kind,
the “tax treatment” and “tax structure” (in each case, within the meaning of
Treasury Regulation Section 1.6011-4) of the transactions contemplated hereby
and all materials of any kind (including opinions or other tax analyses) that
are or have been provided to such Lender relating to such tax treatment or tax
structure; provided
that with respect to any document or similar item that in either case contains
information concerning such tax treatment or tax structure of the transactions
contemplated hereby as well as other information, this sentence shall only
apply to such portions of the document or similar item that relate to such tax
treatment or tax structure.

 

ARTICLE
XII

BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS

 

Section
12.01    Successors
and Assigns.  The terms
and provisions of the Loan Documents shall be binding upon and inure to the
benefit of the Borrower and the Agent and the Lenders and their respective
successors and assigns, except that (i) the Borrower shall not have the right
to assign its rights or obligations under the Loan Documents without the
consent of all Lenders and (ii) any assignment by any Lender must be made in
compliance with Section 12.03.  Notwithstanding
clause (ii) of this Section, any Lender may at any time, without the consent of
the Borrower or the Agent, pledge all or any portion of its rights under this
Agreement and its Notes to a Federal Reserve Bank as security for an obligation
of such pledgor or of an affiliated entity to such Federal Reserve Bank; provided,
however, that no such pledge shall release the pledgor Lender from its
obligations hereunder.  The Agent may
treat the payee of any Note as the owner thereof for all purposes hereof unless
and until such payee complies with Section 12.03 in the case of an assignment
thereof.  Any assignee or transferee of
a Note agrees by acceptance thereof to be bound by all the terms and provisions
of the Loan Documents.  Any request,
authority or consent of any Person, who at the time of making such request or
giving such authority or consent is the holder of any Note, shall be conclusive
and binding on any subsequent holder, transferee or assignee of such Note or of
any Note or Notes issued in exchange thereof.

 

Section
12.02    Participations.  (a)  Permitted
Participants; Effect.  Any
Lender may, in the ordinary course of its business and in accordance with
applicable law, at any time sell to one or more banks or other entities
(“Participants”) participating interests in any Loan owing to such Lender, any
Note held by such Lender, any Commitment of such Lender (which may include, in
the case of the Swing Line Lender, the Swing Line Commitment) or any other
interest of such Lender under the Loan Documents.  In the event of any such sale by a Lender of participating
interests to a Participant, such Lender’s obligations under the Loan Documents
shall remain unchanged, such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations, such Lender shall
remain the holder of any such Note for all purposes under the Loan Documents,
all amounts payable by the Borrower under this Agreement shall be determined as
if such Lender had not sold participating interests, and the

 

73

 

Borrower and the
Agent shall continue to deal solely and directly with such Lender in connection
with such Lender’s rights and obligations under the Loan Documents.

 

(b)                                  Voting
rights.  Each Lender shall with
respect to its Participants, if any, retain the sole right to approve, without
the consent of any Participant, any amendment, modification or waiver of any
provision of the Loan Documents other than any amendment, modification or
waiver with respect to any Loan or Commitment (or Swing Line Commitment, if
applicable) in which such Participant has an interest which forgives principal,
interest or fees (other than Agent’s fees) or reduces the interest rate or fees
(other than Agent’s fees) payable with respect to any such Loan or Commitment
(or Swing Line Commitment, if applicable), postpones any date fixed for any
regularly scheduled payment of principal of, or interest or fees (other than
Agent’s fees) on, any such Loan or Commitment (or Swing Line Commitment, if
applicable) or releases any Significant Guarantor.

 

(c)                                  Benefit
of set-off.  The Borrower agrees
that each Participant shall be deemed to have the rights of set-off provided in
Sections 2.12 and 8.02 in respect of its participating interest in amounts
owing under the Loan Documents to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under the Loan
Documents, provided that each Lender shall retain the right of set-off provided
in Sections 2.12 and 8.02 with respect to the amount of participating interests
sold to each Participant.  The Lenders
agree to share with each Participant, and each Participant, by exercising the
right of set-off provided in Section 2.12 or 8.02, agrees to share with each
Lender, any amount received pursuant to the exercise of its right of set-off,
such amounts to be shared in accordance with Section 10.07 as if each
Participant were a Lender.

 

Section
12.03    Assignments.  (a)  Permitted
assignments.  Any Lender may,
in the ordinary course of its business and in accordance with applicable law,
at any time assign to one or more banks or other entities (“Purchasers”) all or
any part of any Commitment of such Lender and Loans held by such Lender, which
may include, in the case of a Purchaser of an interest from the Swing Line
Lender, the Swing Line Commitment and Swing Line Loans), and of its rights and
obligations under the Loan Documents, provided, however, that,
based upon facts and circumstances existing at the time of any such assignment,
such assignment does not result in an event described in Sections 2.14, 2.15,
or 2.16 hereof.  Such assignment shall
be substantially in the form of Exhibit I hereto or in such other form
as may be agreed to by the parties thereto. 
The consent of the Borrower and the Agent (which consents shall not be
unreasonably withheld) shall be required prior to an assignment becoming
effective with respect to a Purchaser which is not a Lender or an Affiliate
thereof; provided, however, that if an Event of Default has
occurred and is continuing or if the assignment is in connection with the
physical settlement of credit derivative transactions, the consent of the
Borrower shall not be required.

 

(b)                                  Effect;
Effective date.  Upon (i) delivery
to the Agent of a notice of assignment, substantially in the form attached as
Exhibit 1 to Exhibit I hereto (a “Notice of Assignment”), together with
any consents required by Section 12.03; and (ii) payment (by either the
assignor or the assignee) of a $4,000.00 fee (or, in the case of an assignment
to the assignor’s Affiliate or by reason of the provisions of Section 2.19 or
Section 2.20, a $2,000 fee) to the Agent for processing such assignment, such
assignment shall become effective on the effective date specified in such
Notice of Assignment.  The Notice of
Assignment shall contain a

 

74

 

representation by the Purchaser to the effect that none of the
consideration used to make the purchase of the Commitment and Loans under the
applicable assignment agreement are “plan assets” as defined under ERISA and
that the rights and interests of the Purchaser in and under the Loan Documents
will not be “plan assets” under ERISA. 
On and after the effective date of such assignment, such Purchaser shall
for all purposes be a Revolving Credit Lender (in the case of an assignment
with respect to the Revolving Credit Facility) or Term Loan Lender (in the case
of an assignment with respect to the Term Loan Facility) party to this
Agreement and shall have all the rights and obligations of a Revolving Credit
Lender or Term Loan Lender (as applicable) under the Loan Documents, to the
same extent as if it were an original party hereto, and no further consent or
action by the Borrower, the Lenders or the Agent shall be required to release
the transferor Lender with respect to the percentage of the applicable
Commitments and Loans (and, if applicable, Swing Line Commitments and Swing
Line Loans) assigned to such Purchaser. 
Upon the consummation of any assignment to a Purchaser pursuant to this
Section 12.03(b), the transferor Lender, the Agent and the Borrower shall make
appropriate arrangements so that replacement Notes are issued to such
transferor Lender and new Notes or, as appropriate, replacement Notes, are issued
to such Purchaser, in each case in principal amounts reflecting their Revolving
Credit Commitments (in the case of the Revolving Credit Facility) or Term Loans
(in the case of the Term Loan Facility), as adjusted pursuant to such
assignment.

 

Section
12.04    Dissemination
of Information.  The
Borrower authorizes each Lender to disclose to any Participant or Purchaser or
any other Person acquiring an interest in the Loan Documents by operation of
law (each a “Transferee”) and any prospective Transferee any and all
information in such Lender’s possession concerning the creditworthiness of the
Borrower, each Subsidiary, or each Guarantor, provided that such Transferee or
prospective Transferee agrees to be subject to Section 11.15 to the same effect
as if it were a Lender.

 

Section
12.05    Tax
Treatment.  If any
interest in any Loan Document is transferred to any Transferee which is
organized under the laws of any jurisdiction other than the United States or
any State thereof, the transferor Lender shall cause such Transferee,
concurrently with the effectiveness of such transfer to comply with the
provisions of Section 10.08.

 

IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed by their respective officers thereunto duly
authorized, as of the date first written.

 

75

 

	
   

  	
  BEAZER HOMES USA, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David S. Weiss

  	
   

  
	
   

  	
   

  	
  David S. Weiss

  
	
   

  	
   

  	
  Executive Vice President and

  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
  Address for Notices

  
	
   

  	
   

  
	
   

  	
  5775 Peachtree Dunwoody Road

  
	
   

  	
  Suite B-200

  
	
   

  	
  Atlanta, Georgia 30342

  
	
   

  	
  Attention: 
  President

  
	
   

  	
  Tel: (404) 250-3420

  
	
   

  	
  Fax:    (404) 250-3428

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BANK ONE, NA

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Allison Crayne

  	
   

  
	
   

  	
  Name: Allison Crayne

  
	
   

  	
  Title: Associate Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Addresses for Notices

  
	
   

  	
   

  
	
   

  	
  Bank One, NA

  
	
   

  	
  1 Bank One Plaza

  
	
   

  	
  Mail Suite IL1-0135

  
	
   

  	
  Chicago, Illinois 60670

  
	
   

  	
  Attn:  Mr. F.
  Patt Schiewitz

  
	
   

  	
  Telephone: 
  (312) 732-1148

  
	
   

  	
  Telecopy: 
  (312) 732-5939

  
						

 

76

 

SIGNATURE PAGE TO BEAZER HOMES USA, INC. CREDIT AGREEMENT

 

 

	
   

  	
  COMERICA BANK

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Scott M. Helmer

  	
   

  
	
   

  	
  Name:  Scott
  M. Helmer

  
	
   

  	
  Title:  Vice
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address for Notices

  
	
   

  	
   

  
	
   

  	
  Comerica Bank

  
	
   

  	
  500 Woodward Avenue, MC: 3256

  
	
   

  	
  Detroit, MI 48226

  
	
   

  	
  Attn:  Mr.
  Scott M. Helmer

  
	
   

  	
  Telephone: 
  (313) 222-5717

  
	
   

  	
  Telecopy: 
  (313) 222-9295

  

 

77

 

SIGNATURE PAGE TO BEAZER HOMES USA, INC. CREDIT AGREEMENT

 

 

	
   

  	
  GUARANTY BANK

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Randall S. Reid

  	
   

  
	
   

  	
  Name: Randall S. Reid

  
	
   

  	
  Title: Senior Vice President

  
	
   

  	
   

  
	
   

  	
  Address for Notices

  
	
   

  	
   

  
	
   

  	
  Guaranty Bank

  
	
   

  	
  8333 Douglas Avenue

  
	
   

  	
  Dallas, TX 75225

  
	
   

  	
  Attn:  Mr.
  Randy Reid

  
	
   

  	
  Telephone: 
  (214) 360-2733

  
	
   

  	
  Telecopy: 
  (214) 360-1661

  

 

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  SUNTRUST BANK

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ W. John Wendler

  	
   

  
	
   

  	
  Name:  W.
  John Wendler

  
	
   

  	
  Title: 
  Director

  
	
   

  	
   

  
	
   

  	
  Address for Notices

  
	
   

  	
   

  
	
   

  	
  SunTrust Bank

  
	
   

  	
  8245 Boone Boulevard

  
	
   

  	
  Suite 820

  
	
   

  	
  Vienna, VA 22182

  
	
   

  	
  Attn:  W.
  John Wendler

  
	
   

  	
  Telephone: (703) 902-9041

  
	
   

  	
  Telecopy: 
  (703) 902-9245

  

 

79

 

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  WACHOVIA BANK, NATIONAL

  ASSOCIATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jeffrey S. Hoza

  	
   

  
	
   

  	
  Name: /s/ Jeffrey S. Hoza

  
	
   

  	
  Title: Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address for Notices

  
	
   

  	
   

  
	
   

  	
  Wachovia Bank, N.A.

  
	
   

  	
  106 West Maple Street

  
	
   

  	
  Cumming, GA 30040

  
	
   

  	
  Attn:  Mr.
  Jeffrey S. Hoza

  
	
   

  	
  Telephone:

  	
  (770) 781-6430

  
	
   

  	
  Telecopy:

  	
  (770) 781-6461

  
					

 

80

 

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  AMSOUTH BANK

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ronny Hudspeth

  	
   

  
	
   

  	
  Name: Ronny Hudspeth

  
	
   

  	
  Title: Senior Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address for Notices

  
	
   

  	
   

  
	
   

  	
  AmSouth Bank

  
	
   

  	
  AmSouth/Sonat Tower

  
	
   

  	
  AST-15th Floor

  
	
   

  	
  1900 5th Avenue North

  
	
   

  	
  Birmingham, AL 35203

  
	
   

  	
  Attn:  Mr.
  Ronny Hudspeth

  
	
   

  	
  Telephone:

  	
  (205) 307-4227

  
	
   

  	
  Telecopy:

  	
  (205) 801-0138

  
					

 

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  PNC BANK, N.A.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Douglas G. Paul

  	
   

  
	
   

  	
  Name: 
  Douglas G. Paul

  
	
   

  	
  Title: 
  Senior Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address for Notices

  
	
   

  	
   

  
	
   

  	
  PNC Bank, N.A.

  
	
   

  	
  Two Tower Center

  
	
   

  	
  Real Estate Banking Group-18th Fl.

  
	
   

  	
  Suite J3-JTTC-18-6

  
	
   

  	
  East Brunswick, New Jersey 08816

  
	
   

  	
  Attn:  Mr.
  Douglas G. Paul

  
	
   

  	
  Telephone: 
  (732) 220-3566

  
	
   

  	
  Telecopy: 
  (732) 220-3744

  

 

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  WASHINGTON MUTUAL BANK, FA

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Thomas S. Griffin

  	
   

  
	
   

  	
  Name: Thomas S. Griffin

  
	
   

  	
  Title: Senior Vice President

  
	
   

  	
   

  
	
   

  	
  Address for Notices

  
	
   

  	
   

  
	
   

  	
  Washington Mutual Bank, FA

  
	
   

  	
  5950 LaPlace Court

  
	
   

  	
  Suite 250

  
	
   

  	
  Carlsbad, CA 92008

  
	
   

  	
  Attn:  Mr.
  Thomas Griffin

  
	
   

  	
  Telephone: 
  (760) 804-8595

  
	
   

  	
  Telecopy: 
  (760) 804-8590

  

 

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  COMPASS BANK

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Philip R. Webb

  	
   

  
	
   

  	
  Name: Philip R. Webb

  
	
   

  	
  Title: Vice President

  
	
   

  	
   

  
	
   

  	
  Address for Notices

  
	
   

  	
   

  
	
   

  	
  Compass Bank

  
	
   

  	
  10060 Skinner Lake Drive

  
	
   

  	
  Jacksonville, FL 32246

  
	
   

  	
  Attn:  Mr.
  Philip Webb

  
	
   

  	
  Telephone: 
  (904) 564-8812

  
	
   

  	
  Telecopy: 
  (904) 564-8827

  

 

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  KEYBANK NATIONAL ASSOCIATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael P. Szuba

  	
   

  
	
   

  	
  Name: Michael P. Szuba

  
	
   

  	
  Title: Assistant Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address for Notices

  
	
   

  	
   

  
	
   

  	
  KeyBank National Association

  
	
   

  	
  1146 19th Street, NW – 4th
  Floor

  
	
   

  	
  Washington, DC 20036

  
	
   

  	
  Attn:  Dan
  Heberle

  
	
   

  	
  Telephone: 
  (202) 452-4943

  
	
   

  	
  Telecopy: 
  (202) 452-4925

  
	
   

  	
   

  
	
   

  	
  KeyBank National Association

  
	
   

  	
  1146 19th Street, NW-4th Floor

  
	
   

  	
  Washington, DC 20036

  
	
   

  	
  Attn: Mike Szuba

  
	
   

  	
  Telephone: (202) 452-4942

  
	
   

  	
  Telecopy: (202) 452-4925

  

 

85

 

SIGNATURE PAGE TO BEAZER HOMES USA, INC. CREDIT AGREEMENT

 

 

	
   

  	
  BANKUNITED, FSB

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Clay F. Wilson

  	
   

  
	
   

  	
  Name: Clay F. Wilson

  
	
   

  	
  Title: Executive Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address for Notices

  
	
   

  	
   

  
	
   

  	
  BankUnited, FSB

  
	
   

  	
  255 Alhambra Circle, 2nd Fl.

  
	
   

  	
  Coral Gables, FL 33134

  
	
   

  	
  Attn:  Mr.
  Clay Wilson

  
	
   

  	
  Telephone:

  	
  (305) 569-4250

  
	
   

  	
  Telecopy:

  	
  (305) 569-3456

  
					

 

86

 

SIGNATURE PAGE TO BEAZER HOMES USA, INC. CREDIT AGREEMENT

 

 

	
   

  	
  BNP PARIBAS

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Duane Helkowski

  	
   

  
	
   

  	
  Name: Duane Helkowski

  
	
   

  	
  Title: Managing Director

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Sharyn March

  	
   

  
	
   

  	
  Name: Sharyn March

  
	
   

  	
  Title: Vice President

  
	
   

  	
   

  
	
   

  	
  Address for Notices

  
	
   

  	
   

  
	
   

  	
  BNP Paribas

  
	
   

  	
  787 Seventh Avenue

  
	
   

  	
  New York, NY 10019

  
	
   

  	
  Attn:  Mr.
  Duane Helkowski

  
	
   

  	
  Telephone: 
  (212) 841-2940

  
	
   

  	
  Telecopy:   
  (212) 841-3830

  
					

 

87

 

SIGNATURE PAGE TO BEAZER HOMES USA, INC. CREDIT AGREEMENT

 

 

	
   

  	
  FIFTH THIRD BANK, INDIANA

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jeffrey K. Lockhart

  	
   

  
	
   

  	
  Name: Jeffrey K. Lockhart

  
	
   

  	
  Title: Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address for Notices

  
	
   

  	
   

  
	
   

  	
  Fifth Third Bank, Indiana

  
	
   

  	
  151 North Illinois Street

  
	
   

  	
  Suite 100

  
	
   

  	
  Indianapolis, IN 46204

  
	
   

  	
  Attn: 
  Jeffrey K. Lockhart

  
	
   

  	
  Telephone: 
  (317) 383-2287

  
	
   

  	
  Telecopy: 
  (317)                    

  

 

88

 

Schedule
I

 

COMMITMENT SCHEDULE

 

	
  Lender

  	
   

  	
  Revolving Credit

  Commitment

  	
   

  	
  Term Loan

  Commitment

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bank One, NA

  	
   

  	
  $

  	
  27,777,777.78

  	
   

  	
  $

  	
  22,222,222.22

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BNP Paribas

  	
   

  	
  $

  	
  27,777,777.78

  	
   

  	
  $

  	
  22,222,222.22

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Guaranty Bank

  	
   

  	
  $

  	
  27,777,777.78

  	
   

  	
  $

  	
  22,222,222.22

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SunTrust Bank

  	
   

  	
  $

  	
  27,777,777.78

  	
   

  	
  $

  	
  22,222,222.22

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Wachovia Bank,
  N.A.

  	
   

  	
  $

  	
  27,777,777.78

  	
   

  	
  $

  	
  22,222,222.22

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Comerica Bank

  	
   

  	
  $

  	
  18,333,333.33

  	
   

  	
  $

  	
  14,666,666.67

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PNC Bank, N.A.

  	
   

  	
  $

  	
  18,333,333.33

  	
   

  	
  $

  	
  14,666,666.67

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Washington
  Mutual Bank, FA

  	
   

  	
  $

  	
  18,333,333.33

  	
   

  	
  $

  	
  14,666,666.67

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  AmSouth Bank

  	
   

  	
  $

  	
  12,777,777.78

  	
   

  	
  $

  	
  10,222,222.22

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BankUnited, FSB

  	
   

  	
  $

  	
  12,777,777.78

  	
   

  	
  $

  	
  10,222,222.22

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Fifth Third
  Bank, Indiana

  	
   

  	
  $

  	
  11,111,111.11

  	
   

  	
  $

  	
  8,888,888.89

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  KeyBank National
  Association

  	
   

  	
  $

  	
  11,111,111.11

  	
   

  	
  $

  	
  8,888,888.89

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Compass Bank

  	
   

  	
  $

  	
  8,333,333.33

  	
   

  	
  $

  	
  6,666,666.67

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
  $

  	
  250,000,000.00

  	
   

  	
  $

  	
  200,000,000.00

  	
   

  

 

 

Schedule II

 

EXISTING LETTERS OF CREDIT

 

Schedule
II consists of the twelve pages that follow this page.  Pages numbered 1 through 11 identify
Existing Letters of Credit issued by Bank One, NA, PNC Bank, N.A., and SunTrust
Bank.  The 12th (and last)
page, which is not numbered, identifies Existing Letters of Credit issued by
Fifth Third Bank.

 

 

Exhibit
A

 

GUARANTORS

 

The
Guarantors are all of the Borrower’s Subsidiaries listed on Exhibit H, except
the following:

 

•                                          Meridian
Structural Insurance, Risk Retention Group Inc.

 

•                                          Security
Title Insurance Company, Inc.

 

•                                          United Homes
Insurance Corporation

 

 

Exhibit
B

 

5/20/03

 

GUARANTY

 

THIS GUARANTY (this “Guaranty”) is made as of
June    , 2003 by the undersigned parties hereto (collectively,
the “Guarantors”) in favor of the Agent, for the benefit of the Lenders under
the Credit Agreement referred to below.

 

WITNESSETH:

 

WHEREAS,
Beazer Homes USA, Inc., a Delaware corporation (the “Borrower”) and Bank One,
NA, having its principal office in Chicago, Illinois, as Agent (the “Agent”),
and certain other Lenders from time to time party thereto have entered into a
certain Second Amended and Restated Credit Agreement dated as of June
   , 2003 (as same may be amended or modified from time to time,
the “Credit Agreement”), providing, subject to the terms and conditions
thereof, for extensions of credit to be made by the Lenders to the Borrower;

 

WHEREAS,
it is a condition precedent to the execution of the Credit Agreement by the
Agent and the Lenders that each of the Guarantors execute and deliver this
Guaranty whereby each of the Guarantors shall guarantee the payment when due,
subject to Section 9 hereof, of all Guaranteed Obligations, as defined below;
and

 

WHEREAS,
in consideration of the financial and other support that the Borrower has
provided, and in consideration of such financial and other support as the
Borrower may in the future provide, to the Guarantors, and in order to induce
the Lenders and the Agent to enter into the Credit Agreement, and because each
Guarantor has determined that executing this Guaranty is in its interest and to
its financial benefit, each of the Guarantors is willing to guarantee the
obligations of the Borrower under the Credit Agreement, any Note and any other
Loan Documents;

 

NOW,
THEREFORE, in consideration of the premises and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

 

SECTION 1.  Defined
Terms. “Guaranteed Obligations” is defined in Section 3 below.  Other capitalized terms used herein but not
defined herein shall have the meaning set forth in the Credit Agreement.

 

SECTION 2.  Representations
and Warranties.  Each of the
Guarantors represents and warrants (which representations and warranties shall
be deemed to have been renewed upon each advance of a Loan and on each Issuance
Date under the Credit Agreement) that:

 

 

(a)                                  It
is (in the case of a corporation) a corporation duly incorporated or (in the
case of a limited partnership) a limited partnership duly formed or (in the
case of a limited liability company) a limited liability company duly formed,
validly existing, and in good standing under the laws of the jurisdiction of
its incorporation or formation; has the power and authority to own its assets
and to transact the business in which it is now engaged or proposed to be
engaged in; and is duly qualified and in good standing under the laws of each
other jurisdiction in which such qualification is required.

 

(b)                                 The
execution, delivery and performance by it of this Guaranty have been duly
authorized by all necessary corporate, partnership or limited liability company
action, as the case may be, and do not and will not (1) require any consent or
approval of its stockholders, partners or members (as applicable) (except such
consents as have been obtained as of the date hereof); (2) contravene its
charter or bylaws, partnership agreement or articles or certificate of
formation or operating agreement (as applicable); (3) violate, in any material
respect, any provision of any law, rule, regulation (including, without
limitation, Regulations U and X of the Board of Governors of the Federal
Reserve System), order, writ, judgment, injunction, decree, determination, or
award presently in effect having applicability to it; (4) result in a breach of
or constitute a default under any indenture or loan or credit agreement or any
other material agreement, lease, or instrument to which it is a party or by
which it or its properties may be bound or affected; (5) result in, or require,
the creation or imposition of any Lien, upon or with respect to any of the
properties now owned or hereafter acquired by it; and (6) cause it to be in
default, in any material respect, under any such law, rule, regulation, order,
writ, judgment, injunction, decree, determination, or award or any such
indenture, agreement, lease or instrument.

 

(c)                                  This
Guaranty is its legal, valid, and binding obligation, enforceable against it,
in accordance with its respective terms, except to the extent that such
enforcement may be limited by applicable bankruptcy, insolvency, and other
similar laws affecting creditors’ rights generally.

 

SECTION 3.  The
Guaranty.  Subject to Section 9
hereof, each of the Guarantors hereby absolutely and unconditionally
guarantees, as primary obligor and not as surety, the full and punctual payment
(whether at stated maturity, upon acceleration or early termination or
otherwise, and at all times thereafter) and performance of the Obligations,
including without limitation any such Obligations incurred or accrued during
the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, whether or not allowed or allowable in such proceeding
(collectively, subject to the provisions of Section 9 hereof, being referred to
collectively as the “Guaranteed Obligations”). 
Upon failure by the Borrower to pay punctually any such amount, each of
the Guarantors agrees that it shall forthwith on demand pay to the Agent for
the benefit of the Lenders, the amount not so paid at the place and in the
manner specified in the Credit Agreement, any Note or any other Loan Document,
as the case may be.  This Guaranty is a
guaranty of payment and not of collection. 
Each of the Guarantors waives any right to require the Lender to sue the
Borrower, any other guarantor, or any other Person obligated for all or any
part of the Guaranteed Obligations, or otherwise to enforce its payment against
any collateral securing all or any part of the Guaranteed Obligations.

 

 

SECTION 4.  Guaranty
Unconditional.  Subject to Section 9
hereof, the obligations of each of the Guarantors hereunder shall be
unconditional and absolute and, without limiting the generality of the
foregoing, shall not be released, discharged or otherwise affected by:

 

(i)                                     
any extension, renewal, settlement, compromise, waiver or release in respect of
any of the Guaranteed Obligations, by operation of law or otherwise, or any
obligation of any other guarantor of any of the Guaranteed Obligations, or any
default, failure or delay, willful or otherwise, in the payment or performance
of the Guaranteed Obligations;

 

(ii)                                  any
modification or amendment of or supplement to the Credit Agreement, any Note or
any other Loan Document;

 

(iii)                               any release,
nonperfection or invalidity of any direct or indirect security for any
obligation of the Borrower under the Credit Agreement, any Note, any other Loan
Document or any obligations of any other guarantor of any of the Guaranteed
Obligations, or any action or failure to act by the Agent, any Lender or any
Affiliate of any Lender with respect to any collateral securing all or any part
of the Guaranteed Obligations;

 

(iv)                              any
change in the corporate existence, structure or ownership of the Borrower or
any other guarantor of any of the Guaranteed Obligations, or any insolvency,
bankruptcy, reorganization or other similar proceeding affecting the Borrower,
or any other guarantor of the Guaranteed Obligations, or its assets or any
resulting release or discharge of any obligation of the Borrower or any other
guarantor of any of the Guaranteed Obligations;

 

(v)                                 the
existence of any claim, setoff or other rights which the Guarantors may have at
any time against the Borrower, any other guarantor of any of the Guaranteed
Obligations, the Agent, any Lender or any other Person, whether in connection
herewith or any unrelated transactions;

 

(vi)                              any
invalidity or unenforceability relating to or against the Borrower, or any
other guarantor of any of the Guaranteed Obligations, for any reason related to
the Credit Agreement, any Note, any other Loan Document or any provision of
applicable law or regulation purporting to prohibit the payment by the
Borrower, or any other guarantor of the Guaranteed Obligations, of the Borrower
of or interest on any Note or any other amount payable by the Borrower under
the Credit Agreement, any Note or any other Loan Document;

 

 

(vii)                           any other act or omission to
act or delay of any kind by the Borrower, any other guarantor of the Guaranteed
Obligations, the Agent, any Lender or any other Person or any other
circumstance whatsoever which might, but for the provisions of this paragraph,
constitute a legal or equitable discharge of any Guarantor’s obligations
hereunder.

 

SECTION 5.  Discharge
Only Upon Payment In Full: Reinstatement In Certain Circumstances.  Each of the Guarantor’s obligations
hereunder shall remain in full force and effect until all Guaranteed
Obligations shall have been indefeasibly paid in full and the Commitments under
the Credit Agreement shall have terminated or expired.  If at any time any payment of the Borrower
of or interest on any Note or any other amount payable by the Borrower or any
other party under the Credit Agreement, any Note or any other Loan Document is
rescinded or must be otherwise restored or returned upon the insolvency,
bankruptcy or reorganization of the Borrower or otherwise, each of the
Guarantor’s obligations hereunder with respect to such payment shall be
reinstated as though such payment had been due but not made at such time.

 

SECTION 6.  Waivers.  Each of the Guarantors irrevocably waives
acceptance hereof, presentment, demand, protest and, to the fullest extent
permitted by law, any notice not provided for herein, as well as any
requirement that at any time any action be taken by any Person against the
Borrower, any other guarantor of any of the Guaranteed Obligations, or any
other Person.

 

SECTION 7.  Subordination;
Subrogation.  Each of the Guarantors
hereby subordinates to the Guaranteed Obligations all indebtedness or other
liabilities of the Borrower or to any other Guarantor to such Guarantor.  Each of the Guarantors hereby further agrees
not to assert any right, claim or cause of action, including, without
limitation, a claim for subrogation, reimbursement, indemnification or
otherwise, against the Borrower arising out of or by reason of this Guaranty or
the obligations hereunder, including, without limitation, the payment or
securing or purchasing of any of the Guaranteed Obligations by any of the
Guarantors unless and until the Guaranteed Obligations are indefeasibly paid in
full and all Commitments have terminated or expired.

 

SECTION 8.  Stay
of Acceleration.  If acceleration of
the time for payment of any of the Guaranteed Obligations is stayed upon the
insolvency, bankruptcy or reorganization of the Borrower, all such amounts
otherwise subject to acceleration under the terms of the Credit Agreement, any
Note or any other Loan Document shall nonetheless be payable by each of the
Guarantors hereunder forthwith on demand by the Agent made at the request of
the Required Lenders.

 

SECTION 9.  Limitation
on Obligations. (a) The provisions of this Guaranty are severable, and in
any action or proceeding involving any state corporate law, or any state,
federal or foreign bankruptcy, insolvency, reorganization or other law
affecting the rights of creditors generally, if the obligations of any
Guarantor under this Guaranty would otherwise be held or determined to be
avoidable, invalid or unenforceable on account of the amount of such
Guarantor’s liability under this Guaranty, then, notwithstanding any other
provision of this Guaranty to the contrary, the amount of such liability shall,
without any further action by the

 

 

Guarantors, the Agent or any Lender, be automatically limited and
reduced to the highest amount that is valid and enforceable as determined in
such action or proceeding (such highest amount determined hereunder being the
relevant Guarantor’s “Maximum Liability”). 
This Section 9(a) with respect to the Maximum Liability of the
Guarantors is intended solely to preserve the rights of the Agent hereunder to
the maximum extent not subject to avoidance under applicable law, and neither
the Guarantor nor any other person or entity shall have any right or claim under
this Section 9(a) with respect to the Maximum Liability, except to the extent
necessary so that the obligations of the Guarantors hereunder shall not be
rendered voidable under applicable law.

 

(b)                                 Each
of the Guarantors agrees that the Guaranteed Obligations may at any time and
from time to time exceed the Maximum Liability of each Guarantor, and may
exceed the aggregate Maximum Liability of all other Guarantors, without
impairing this Guaranty or affecting the rights and remedies of the Agent hereunder.  Nothing in this Section 9(b) shall be
construed to increase any Guarantor’s obligations hereunder beyond its Maximum
Liability.

 

(c)                                  In
the event any Guarantor (a “Paying Guarantor”) shall make any payment or
payments under this Guaranty or shall suffer any loss as a result of any
realization upon any collateral granted by it to secure its obligations under
this Guaranty, each other Guarantor (each a “Non-Paying Guarantor”) shall
contribute to such Paying Guarantor an amount equal to such Non-Paying Guarantor’s
“Pro Rata Share” of such payment or payments made, or losses suffered, by such
Paying Guarantor.  For the purposes
hereof, each Non-Paying Guarantor’s “Pro Rata Share” with respect to any such
payment or loss by a Paying Guarantor shall be determined as of the date on
which such payment or loss was made by reference to the ratio of (i) such
Non-Paying Guarantor’s Maximum Liability as of such date (without giving effect
to any right to receive, or obligation to make, any contribution hereunder) or,
if such Non-Paying Guarantor’s Maximum Liability has not been determined, the
aggregate amount of all monies received by such Non-Paying Guarantor from the
Borrower after the date hereof (whether by loan, capital infusion or by other
means) to (ii) the aggregate Maximum Liability of all Guarantors hereunder
(including such Paying Guarantor) as of such date (without giving effect to any
right to receive, or obligation to make, any contribution hereunder), or to the
extent that a Maximum Liability has not been determined for any Guarantors, the
aggregate amount of all monies received by such Guarantors from the Borrower
after the date hereof (whether by loan, capital infusion or by other
means).  Nothing in this Section 9(c)
shall affect any Guarantor’s several liability for the entire amount of the
Guaranteed Obligations (up to such Guarantor’s Maximum Liability).  Each of the Guarantors covenants and agrees
that its right to receive any contribution under this Guaranty from a
Non-Paying Guarantor shall be subordinate and junior in right of payment to all
the Guaranteed Obligations.  The
provisions of this Section 9(c) are for the benefit of both the Agent and the
Guarantors and may be enforced by any one, or more, or all of them in
accordance with the terms hereof.

 

SECTION 10.  Notices.  All notices, requests and other
communications to any party hereunder shall be given or made by telecopier or
other writing and telecopied, or mailed or delivered to the intended recipient
at its address or telecopier number set forth on the signature pages hereof or
such other address or telecopy number as such party may hereafter specify for
such purpose by notice to the Agent in accordance with the provisions of
Section 11.02 of the Credit Agreement. 
Except as otherwise provided in this Guaranty, all such communications
shall be deemed to have been duly given when transmitted by telecopier, or
personally delivered

 

 

or, in the case of a mailed notice sent by certified mail
return-receipt requested, on the date set forth on the receipt (provided, that
any refusal to accept any such notice shall be deemed to be notice thereof as
of the time of any such refusal), in each case given or addressed as aforesaid.

 

SECTION 11.  No
Waivers.  No failure or delay by the
Agent or any Lenders in exercising any right, power or privilege hereunder
shall operate as a waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any
other right, power or privilege.  The rights
and remedies provided in this Guaranty, the Credit Agreement, any Note or the
other Loan Documents shall be cumulative and not exclusive of any rights or
remedies provided by law.

 

SECTION 12.  No
Duty to Advise.  Each of the
Guarantors assumes all responsibility for being and keeping itself informed of
the Borrower’s financial condition and assets, and of all other circumstances
bearing upon the risk of nonpayment of the Guaranteed Obligations and the
nature, scope and extent of the risks that each of the Guarantors assumes and
incurs under this Guaranty, and agrees that neither the Agent nor any Lender
has any duty to advise any of the Guarantors of information known to it
regarding those circumstances or risks.

 

SECTION 13.  Successors
and Assigns.  This Guaranty is for
the benefit of the Agent and the Lenders and their respective successors and
permitted assigns and in the event of an assignment of any amounts payable
under the Credit Agreement, any Note or any other Loan Documents, the rights
hereunder, to the extent applicable to the indebtedness so assigned, shall be
transferred with such indebtedness. 
This Guaranty shall be binding upon each of the Guarantors and their
respective successors and permitted assigns.

 

SECTION 14.  Changes
in Writing.  Neither this Guaranty
nor any provision hereof may be changed, waived, discharged or terminated
orally, but only in writing signed by each of the Guarantors and the Agent with
the consent of the Required Lenders.

 

SECTION 15.  Costs
of Enforcement.  Each of the
Guarantors agrees to pay all costs and expenses including, without limitation,
all court costs and attorneys’ fees and expenses paid or incurred by the Agent
or any Lender or any Affiliate of any Lender in endeavoring to collect all or
any part of the Guaranteed Obligations from, or in prosecuting any action
against, the Borrower, the Guarantors or any other guarantor of all or any part
of the Guaranteed Obligations.

 

SECTION 16.  GOVERNING
LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.  THIS GUARANTY SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF ILLINOIS.  EACH OF THE GUARANTORS HEREBY SUBMITS TO THE
NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT, AND ANY ILLINOIS
STATE COURT, SITTING IN CHICAGO, ILLINOIS AND FOR PURPOSES OF ALL LEGAL
PROCEEDINGS ARISING OUT OF OR RELATING TO THIS GUARANTY (INCLUDING, WITHOUT
LIMITATION, ANY OF THE OTHER LOAN DOCUMENTS) OR THE TRANSACTIONS CONTEMPLATED
HEREBY.  EACH OF THE GUARANTORS
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH
ANY OF THEM MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH
PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY

 

 

SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM.  EACH OF THE GUARANTORS, AND THE
AGENT AND THE LENDERS ACCEPTING THIS GUARANTY, HEREBY IRREVOCABLY WAIVES ANY
AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO THIS GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

SECTION 17.  Taxes,
etc.  All payments required to be
made by any of the Guarantors hereunder shall be made without setoff or
counterclaim and free and clear of and without deduction or withholding for or
on account of, any present or future taxes, levies, imposts, duties or other
charges of whatsoever nature imposed by any government or any political or
taxing authority thereof (excluding federal taxation of the overall income of
any Lender), provided, however, that if any of the Guarantors is required by
law to make such deduction or withholding, such Guarantor shall forthwith (i)
pay to the Agent or any Lender, as applicable, such additional amount as
results in the net amount received by the Agent or any Lender, as applicable,
equaling the full amount which would have been received by the Agent or any
Lender, as applicable, had no such deduction or withholding been made, (ii) pay
the full amount deducted to the relevant authority in accordance with
applicable law, and (iii) furnish to the Agent or any Lender, as applicable,
certified copies of official receipts evidencing payment of such withholding
taxes within 30 days after such payment is made.

 

SECTION 18.  Supplemental
Guarantors.  Pursuant to Section
5.15 of the Credit Agreement, additional Subsidiaries shall become obligated as
Guarantors hereunder (each as fully as though an original signatory hereto) by
executing and delivering to the Agent a supplemental guaranty in the form of
Exhibit A attached hereto (with blanks appropriately filled in), together with
such additional supporting documentation required pursuant to Section 5.15 of
the Credit Agreement.

 

IN WITNESS WHEREOF, each of the Guarantors has caused
this Guaranty to be duly executed, under seal, by its authorized officer as of the
day and year first above written.

 

 

	
   

  	
  [Add Guarantor Signatures]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address for Notices to all Guarantors

  
	
   

  	
   

  
	
   

  	
  c/o Beazer Homes USA, Inc.

  
	
   

  	
  5775 Peachtree Dunwoody Road

  
	
   

  	
  Suite B-200

  
	
   

  	
  Atlanta, Georgia 30342

  
	
   

  	
  Attention: 
  President

  
	
   

  	
  Tel:

  	
  (404) 250-3420

  
	
   

  	
  Fax:

  	
  (404) 250-3428

  

 

 

EXHIBIT
A

 

SUPPLEMENTAL
GUARANTY

 

[Date]

 

Bank One, NA, as Agent

for the Lenders

 

Ladies and Gentlemen:

 

Reference is hereby made to (i) that certain Second
Amended and Restated Credit Agreement, dated as of June    ,
2003, as amended, among Beazer Homes USA, Inc., the lenders from time to time
parties thereto (the “Lenders”), and Bank One, NA, as a Lender and as Agent
(the “Agent”) on behalf of itself and the other Lenders (as amended, restated,
supplemented or otherwise modified from time to time, the “Credit Agreement”)
and (ii) that certain Guaranty, dated as of June    , 2003,
executed and delivered by the Guarantors parties thereto in favor of the Agent,
for the benefit of the Lenders (as amended, restated, supplemented or otherwise
modified from time to time, the “Guaranty”). 
Terms not defined herein which are defined in the Credit Agreement shall
have for the purposes hereof the respective meanings provided therein.

 

In accordance with Section 5.15 of the Credit Agreement
and Section 18 of the Guaranty, the undersigned,
[GUARANTOR]                         ,
a corporation [limited partnership/limited liability company] organized under
the laws of
                 ,
hereby elects to be a “Guarantor” for all purposes of the Credit Agreement and
the Guaranty, respectively, effective from the date hereof.

 

Without limiting the generality of the foregoing, the
undersigned hereby agrees to perform all the obligations of a Guarantor under,
and to be bound in all respects by the terms of, the Guaranty, to the same
extent and with the same force and effect as if the undersigned were a direct
signatory thereto.

 

This Supplemental Guaranty shall be construed in
accordance with and governed by the internal laws of the State of Illinois (but
otherwise without regard to the conflict of laws provisions).

 

IN WITNESS WHEREOF, this Supplemental Guaranty has
been duly executed by the undersigned as of the     day of
      , 200 .

 

	
   

  	
  [GUARANTOR]

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 

Exhibit C-1

 

REVOLVING CREDIT NOTE

 

	
  $                                                 

  	
                                       ,
          

  

 

FOR
VALUE RECEIVED, the undersigned, BEAZER HOMES USA, INC., a Delaware corporation
(the “Borrower”) HEREBY PROMISES TO PAY to the order of
                                                
(the “Lender”) to BANK ONE, NA, as Agent, at the Agent’s Office located at 1
Bank One Plaza, Chicago, IL, for the account of the applicable Lending Office
of the Lender, in lawful money of the United States and in immediately
available funds, the principal amount of
                          
Dollars ($            )
or the aggregate unpaid principal amount of all Revolving Credit Loans made to
the Borrower by the Lender pursuant to the Credit Agreement and outstanding on
the Revolving Credit Termination Date, whichever is less, and to pay interest
from the date of this Note, in like money, at said office for the account of
the applicable Lending Office, at the time and at a rate per annum as provided
in the Credit Agreement.  The Lender is
hereby authorized by the Borrower to endorse on the schedule attached to this
Note held by it the amount and type of each Revolving Credit Loan and each
renewal, conversion, and payment of principal amount received by the Lender for
the account of the applicable Lending Office on account of its Revolving Credit
Loans, which endorsement shall, in the absence of manifest error, be conclusive
as to the outstanding balance of the Revolving Credit Loans made by the Lender;
provided, however, that the failure to make such notation with
respect to any Revolving Credit Loan or renewal, conversion, or payment shall
not limit or otherwise affect the obligations of the Borrower hereunder.

 

This Note is one of the Revolving Credit Notes
referred to in, and is entitled to the benefits of, the Credit Agreement, dated
as of June    , 2003, between the Borrower, the Lender and
certain other lenders party thereto (which, as it may be amended, modified,
renewed or extended from time to time, is herein called the “Credit
Agreement”).  Terms used herein which
are defined in the Credit Agreement shall have their defined meanings when used
herein.  The Credit Agreement, among
other things, contains provisions for acceleration of the maturity of this Note
upon the happening of certain stated events and also for prepayments on account
of principal hereof prior to the maturity of this Note upon the terms and
conditions specified in the Credit Agreement.

 

The Borrower hereby agrees to pay all reasonable costs
and expenses (including reasonable attorney’s fees and expenses) paid or
incurred by the holder of this Note in the collection of any principal or
interest payable under this Note or the enforcement of this Note or any other
Loan Documents.

 

This Note shall be governed by the laws of the State
of Illinois.

 

	
   

  	
  BEAZER HOMES USA, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
							

 

 

SCHEDULE TO REVOLVING
CREDIT NOTE

 

	
  Date Made

  or Paid

  	
   

  	
  Type of

  Loan

  	
   

  	
  Amount of

  Principal

  Paid

  	
   

  	
  Unpaid

  Principal

  Balance of

  Note

  	
   

  	
  Name of

  Person

  Making

  Notation

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

Exhibit C-2

 

TERM LOAN NOTE

 

	
  $                                                 

  	
                                       ,
          

  

 

FOR
VALUE RECEIVED, the undersigned, BEAZER HOMES USA, INC., a
Delaware corporation (the “Borrower”) HEREBY PROMISES TO PAY to the order of
                                                
(the “Lender”) to BANK ONE, NA, as Agent, at the Agent’s Office located at 1
Bank One Plaza, Chicago, IL, for the account of the applicable Lending Office
of the Lender, in lawful money of the United States and in immediately
available funds, the principal amount of
                                  
Dollars
($            ),
and to pay interest from the date of this Note, in like money, at said office
for the account of the applicable Lending Office, at the time and at a rate per
annum as provided in the Credit Agreement. 
The Lender is hereby authorized by the Borrower to endorse on the
schedule attached to this Note held by it the amount and type of each Term Loan
and each renewal, conversion, and payment of principal amount received by the
Lender for the account of the applicable Lending Office on account of its Term
Loans, which endorsement shall, in the absence of manifest error, be conclusive
as to the outstanding balance of the Term Loans made by the Lender; provided,
however, that the failure to make such notation with respect to any Term
Loan or renewal, conversion, or payment shall not limit or otherwise affect the
obligations of the Borrower hereunder.

 

This Note is one of the Term Loan Notes referred to
in, and is entitled to the benefits of, the Credit Agreement, dated as of June
   , 2003, between the Borrower, the Lender and certain other
lenders party thereto (which, as it may be amended, modified, renewed or
extended from time to time, is herein called the “Credit Agreement”).  Terms used herein which are defined in the
Credit Agreement shall have their defined meanings when used herein.  The Credit Agreement, among other things,
contains provisions for acceleration of the maturity of this Note upon the
happening of certain stated events and also for prepayments on account of
principal hereof prior to the maturity of this Note upon the terms and
conditions specified in the Credit Agreement.

 

The Borrower hereby agrees to pay all reasonable costs
and expenses (including reasonable attorney’s fees and expenses) paid or
incurred by the holder of this Note in the collection of any principal or
interest payable under this Note or the enforcement of this Note or any other
Loan Documents.

 

This Note shall be governed by the laws of the State
of Illinois.

 

	
   

  	
  BEAZER HOMES USA, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
							

 

 

SCHEDULE TO TERM LOAN
NOTE

 

	
  Date Made

  or Paid

  	
   

  	
  Type of

  Loan

  	
   

  	
  Amount of

  Principal

  Paid

  	
   

  	
  Unpaid

  Principal

  Balance of

  Note

  	
   

  	
  Name of

  Person

  Making

  Notation

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

Exhibit D

 

COMMITMENT AND ACCEPTANCE

 

This Commitment and Acceptance (this “Commitment and
Acceptance”) dated as of                  ,
200  , is entered into among the parties listed on the signature
pages hereof.  Capitalized terms used
herein and not otherwise defined herein shall have the meanings attributed to
them in the Credit Agreement (as defined below).

 

PRELIMINARY STATEMENTS

 

Reference is made to that certain Credit Agreement
dated as of June    , 2003, by and among Beazer Homes USA, Inc.,
a Delaware corporation (the “Company”), Bank One, NA, as Agent, and the Lenders
that are parties thereto (as the same may from time to time be amended,
modified, supplemented or restated, in whole or in part and without limitation
as to amount, terms, conditions or covenants, the “Credit Agreement”).

 

Pursuant to Section 2.02.2 of the Credit Agreement,
the Company has requested an increase in the Aggregate Revolving Credit
Commitment from
$                        
to $                                      .  Such increase in the Aggregate Revolving
Credit Commitment is to become effective on
                                  
   ,         (the “Increase
Date”) [THIS DATE IS TO BE MUTUALLY AGREED UPON BY THE BORROWER, THE ACCEPTING
LENDER AND AGENT IN ACCORDANCE WITH THE PROVISIONS OF SECTION 2.02.2) OF THE
CREDIT AGREEMENT].  In connection with
such requested increase in the Aggregate Revolving Credit Commitment, the
Borrower, Agent and
                                  
(“Accepting Lender”) hereby agree as follows:

 

1.  ACCEPTING
BANK’S COMMITMENT.  Effective as of
the Increase Date, [Accepting Lender shall become a party to the Credit
Agreement as a Revolving Credit Lender, shall have all of the rights and
obligations of a Revolving Credit Lender thereunder, shall agree to be bound by
the terms and provisions thereof and shall thereupon have a Revolving Credit
Commitment under and for purposes of the Credit Agreement in an amount equal to
the] [the Revolving Credit Commitment of Accepting Lender under the Credit
Agreement shall be increased from
$                               
to the] amount set forth opposite Accepting Lender’s name on the signature
pages hereof.

 

[2.  REPRESENTATIONS
AND AGREEMENTS OF ACCEPTING BANK. 
Accepting Lender (i) confirms that it has received a copy of the Credit
Agreement, together with copies of the financial statements requested by
Accepting Lender and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Commitment and Acceptance, (ii) agrees that it will, independently and without
reliance upon Administrative Agent or any Lender and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under the Loan Documents,
(iii) appoints and authorizes Administrative Agent to take such actions as
Administrative Agent on its behalf and to exercise such powers under the Loan
Documents as are delegated to Administrative Agent by the terms thereof,
together with such powers as are reasonably incidental thereto, (iv) agrees
that it will perform in accordance with their terms all of the obligations
which by the terms of the Loan Documents are required to

 

 

be performed by it as a Revolving Credit Lender, (v) agrees that its
payment instructions and notice instructions are as set forth in the attachment
to Schedule 1, (vi) confirms that none of the funds, monies, assets or other
consideration being used to make the commitment and acceptance hereunder are
“plan assets” as defined under ERISA and that its rights, benefits and
interests in and under the Loan Documents will not be “plan assets” under
ERISA, and (vii) if applicable attaches the forms prescribed by the Internal
Revenue Service of the United States certifying that Accepting Lender is
entitled to receive payments under the Loan Documents without deduction or
withholding of any United States federal income taxes.*

 

*Paragraph 2 is to be inserted only if Accepting Lender is not already
a party to the Credit Agreement prior to the Increase Date.

 

3.  REPRESENTATION
OF THE BORROWER.  The Borrower
hereby represents and warrants that, as of the date hereof and as of the
Increase Date, no event or condition shall have occurred and then be continuing
which constitutes a Default or Event of Default.

 

4.  GOVERNING
LAW.  This Commitment and Acceptance
shall be governed by the internal law, and not the law of conflicts, of the
State of Illinois.

 

5.  NOTICES.  For the purpose of notices to be given under
the Credit Agreement, the address of Accepting Lender (until notice of a change
is delivered) shall be the address set forth in Schedule 1.

 

 

IN WITNESS WHEREOF, the parties hereto have executed
this Assignment Agreement by their duly authorized officers as of the date
first above written.

 

	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  BEAZER HOMES USA, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  AGENT:

  
	
   

  	
   

  
	
   

  	
  BANK ONE, NA,

  as AGENT

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
						

 

 

	
  REVOLVING CREDIT

  COMMITMENT:

  	
  ACCEPTING LENDER:

  
	
   

  	
   

  
	
  $

  	
   

  	
   

  	
  [NAME OF ACCEPTING LENDER]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
								

 

 

SCHEDULE 1

to Commitment and
Acceptance

 

1.                                       Attach
Accepting Lender’s Administrative Information Sheet, which must include its
payment instructions and notice address.

 

 

Exhibit
E

 

LEGAL OPINION OF
BORROWER’S GEORGIA AND DELAWARE COUNSEL

 

(See attached)

 

 

Exhibit
F

 

LEGAL OPINION OF
BORROWER’S COUNSEL

 

(See attached)

 

 

Exhibit
G

 

CERTIFICATE

 

This Certificate is delivered pursuant to the Credit
Agreement dated as of June    , 2003 among Beazer Homes USA,
Inc., Bank One, NA as Agent, and the Lender party thereto (the “Credit
Agreement”).  Capitalized terms used
herein and not defined herein shall have the meanings provided therefor in the
Credit Agreement.  This Certification is
delivered in connection with [a notice requesting a Borrowing under
Section 2.03 OR a notice requesting issuance, amendment or extension of a
Facility Letter of Credit under Section 2.23.4]*.

 

The undersigned hereby certifies as follows:

 

1.                                       The
representations and warranties contained in Article IV of the Credit Agreement
are correct on and as of the [date of such Borrowing OR Issuance Date]* as
though made on and as of such date except to the extent that any such
representation or warranty is stated to relate solely to an earlier date, in
which case such representation or warranty is correct as of such earlier date.

 

2.                                       No
Default or Event of Default has occurred and is continuing and would result
from [such
Borrowing OR the issuance, amendment or extension of such Facility Letter of
Credit]*.

 

3.                                       Upon
[such
Borrowing OR the issuance, amendment or extension of such Facility Letter of
Credit]*,
the Borrowing Base Debt shall not exceed the Borrowing Base as set forth in the
Borrowing Base Certificate delivered by the Borrower to the Agent as of the
most recent Inventory Valuation Date, which Borrowing Base Certificate is true
and correct as of such Inventory Valuation Date.

 

	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  David S. Weiss

  
	
   

  	
   

  
	
   

  	
  Executive Vice President and

  Chief Financial Officer

  
	
   

  	
  Beazer Homes USA, Inc.

  

 

*Include appropriate portion of bracketed provision

 

 

Exhibit
H

 

SUBSIDIARIES OF BORROWER

 

	
  Subsidiary

  	
   

  	
  State of

  Incorporation/Formation

  	
   

  	
  Borrower’s

  % Ownership

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Beazer Mortgage Corporation

  	
   

  	
  Delaware

  	
   

  	
  100% by Borrower

  
	
  Beazer Homes Corp. (“BHC”)

  	
   

  	
  Tennessee

  	
   

  	
  100% by BHHC

  
	
  Beazer Home Sales Arizona, Inc.

  	
   

  	
  Delaware

  	
   

  	
  100% by BHHC

  
	
  Beazer Realty Corp.

  	
   

  	
  Georgia

  	
   

  	
  100% by BHC

  
	
  Beazer/Squires Realty, Inc.

  	
   

  	
  North Carolina

  	
   

  	
  100% by BHC

  
	
  Beazer Homes Holdings Corp. (“BHHC”)

  	
   

  	
  Delaware

  	
   

  	
  100% by Borrower

  
	
  Beazer Homes Texas Holdings, Inc. (“BHTH”)

  	
   

  	
  Delaware

  	
   

  	
  100% by BHHC

  
	
  Beazer Homes Texas, L.P.

  	
   

  	
  Delaware

  	
   

  	
  99% by Beazer

  Homes Corp.

  
	
   

  	
   

  	
   

  	
   

  	
  1% by Beazer Homes

  Texas

  
	
   

  	
   

  	
   

  	
   

  	
  Holdings, Inc.

  
	
  Beazer Realty, Inc.

  	
   

  	
  New Jersey

  	
   

  	
  100% by BHC

  
	
  Homebuilders Title Services, Inc.

  	
   

  	
  Delaware

  	
   

  	
  100% by Borrower

  
	
  Texas Lone Star Title, L.P.

  	
   

  	
  Texas

  	
   

  	
  99% by Beazer

  Homes Sales

  Arizona, Inc.

  
	
   

  	
   

  	
   

  	
   

  	
  1% by Beazer Homes

  Texas

  
	
   

  	
   

  	
   

  	
   

  	
  Holdings, Inc.

  
	
  Homebuilders Title Services of Virginia, Inc.

  	
   

  	
  Virginia

  	
   

  	
  100% by Borrower

  
	
  Security Title Insurance Company, Inc.

  	
   

  	
  Vermont

  	
   

  	
  100% by Borrower

  
	
  United Home Insurance Corporation

  	
   

  	
  Vermont

  	
   

  	
  331/3% each by BHC,

  BHHC and BHTH

  
	
  April Corporation

  	
   

  	
  Colorado

  	
   

  	
  100% by BHHC

  
	
  Beazer SPE, LLC

  	
   

  	
  Georgia

  	
   

  	
  100% by Beazer

  
	
   

  	
   

  	
   

  	
   

  	
  Homes Holding Corp.

  
	
  Beazer Homes Investment Corp. (“BHIC”)

  	
   

  	
  Delaware

  	
   

  	
  100% by Borrower

  
	
  Beazer Clarksburg, LLC

  	
   

  	
  Maryland

  	
   

  	
  100% by Beazer

  
	
   

  	
   

  	
   

  	
   

  	
  Homes Corp.

  
	
  Crossmann Communities of North Carolina, Inc.

  	
   

  	
  North Carolina

  	
   

  	
  100% by BHIC

  
	
  Crossmann Communities of Ohio, Inc.

  	
   

  	
  Ohio

  	
   

  	
  100% by BHIC

  
	
  Crossmann Communities of Tennessee, LLC

  	
   

  	
  Tennessee

  	
   

  	
  99% by Deluxe

  Homes of Ohio, Inc.

  
	
   

  	
   

  	
   

  	
   

  	
  1% by Crossmann

  Communities of

  North Carolina, Inc.

  
	
  Crossmann Investments, Inc.

  	
   

  	
  Indiana

  	
   

  	
  100% BHIC

  

 

 

	
  Crossmann Management, Inc.

  	
   

  	
  Indiana

  	
   

  	
  100% by BHIC

  
	
  Crossmann Mortgage Corp.

  	
   

  	
  Ohio

  	
   

  	
  100% by BHIC

  
	
  Crossmann Communities Partnership

  	
   

  	
  Indiana

  	
   

  	
  82.5% by BHIC

  
	
   

  	
   

  	
   

  	
   

  	
  17.5% by Deluxe

  Homes of Lafayette,

  Inc.

  
	
  Cutter Homes, Ltd.

  	
   

  	
  Kentucky

  	
   

  	
  100% by BHIC

  
	
  Deluxe Homes of Lafayette, Inc.

  	
   

  	
  Indiana

  	
   

  	
  100% by BHIC

  
	
  Deluxe Homes of Ohio, Inc.

  	
   

  	
  Ohio

  	
   

  	
  100% by Crossmann

  Communities of Ohio,

  Inc.

  
	
  Beazer Realty, Inc. (formerly Merit Realty, Inc.)

  	
   

  	
  Indiana

  	
   

  	
  100% by BHIC

  
	
  Paragon Title, LLC

  	
   

  	
  Indiana

  	
   

  	
  100% by BHIC

  
	
  Pinehurst Builders, LLC

  	
   

  	
  South Carolina

  	
   

  	
  100% by Crossmann

  Communities of

  North Carolina, Inc.

  
	
  Trinity Homes, LLC

  	
   

  	
  Indiana

  	
   

  	
  50% by BHIC

  
	
   

  	
   

  	
   

  	
   

  	
  50% by Crossmann

  
	
   

  	
   

  	
   

  	
   

  	
  Communities

  Partnership

  
	
  Meridian Structural Insurance, Risk Retention Group
  Inc.

  	
   

  	
  Hawaii

  	
   

  	
  94% by BHIC

  
	
   

  	
   

  	
   

  	
   

  	
  1% each by

  Crossmann

  Communities of

  North Carolina, Inc.,

  Crossmann

  Communities of

  Ohio, Inc.,

  Crossmann

  Communities of

  Tennessee, LLC,

  Crossmann

  Communities

  Partnership,

  Cutter Homes Ltd.,

  and

  Trinity Homes LLC

  

 

 

Exhibit I

 

ASSIGNMENT AGREEMENT

 

This Assignment Agreement (this “Assignment
Agreement”) between
                          
(the “Assignor”) and                                
(the “Assignee”) is dated as of
                       ,
200  .  The parties hereto
agree as follows:

 

1.  PRELIMINARY
STATEMENT.  The Assignor is a party
to a Credit Agreement (which, as it may be amended, modified, renewed or
extended from time to time, is herein called the “Credit Agreement”) described
in Item 1 of Schedule 1 attached hereto (“Schedule 1”).  Capitalized terms used herein and not
otherwise defined herein shall have the meanings attributed to them in the
Credit Agreement.

 

2.  ASSIGNMENT
AND ASSUMPTION.  The Assignor hereby
sells and assigns to the Assignee, and the Assignee hereby purchases and
assumes from the Assignor, an interest in and to the Assignor’s rights and
obligations under the Credit Agreement such that after giving effect to such
assignment the Assignee shall have purchased pursuant to this Assignment
Agreement the percentage interest specified in Item 3 of Schedule 1 of all
outstanding rights and obligations under the Credit Agreement relating to the
facilities listed in Item 3 of Schedule 1 and the other Loan Documents.  The Revolving Credit Commitment (or
Revolving Credit Loans, if the Commitment has been terminated) and/or the Term
Loans purchased by the Assignee hereunder are set forth in Item 3 of Schedule
1.

 

3.  EFFECTIVE
DATE.  The effective date of this
Assignment Agreement (the “Effective Date”) shall be the later of the date
specified in Item 3 of Schedule 1 or two Business Days (or such shorter period
agreed to by the Agent) after a Notice of Assignment substantially in the form
of Exhibit 1 attached hereto has been delivered to the Agent.  Such Notice of Assignment must include any
consents required to be delivered to the Agent by Section 12.03 of the Credit
Agreement (including the consent of the Agent).  In no event will the Effective Date occur if the payments
required to be made by the Assignee to the Assignor on the Effective Date under
Sections 4 and 5 hereof are not made on the proposed Effective Date.  The Assignor will notify the Assignee of the
proposed Effective Date no later than the Business Day prior to the proposed
Effective Date.  As of the Effective
Date, (i) the Assignee shall have the rights and obligations of a Bank under
the Loan Documents with respect to the rights and obligations assigned to the
Assignee hereunder and (ii) the Assignor shall relinquish its rights and be
released from its corresponding obligations under the Loan Documents with
respect to the rights and obligations assigned to the Assignee hereunder.

 

4.  PAYMENTS,
OBLIGATIONS.  On and after the
Effective Date, the Assignee shall be entitled to receive from the Agent all
payments of principal, interest and fees with respect to the interest assigned
hereby.  The Assignee shall advance
funds directly to the Agent with respect to all Loans and reimbursement
payments made on or after the Effective Date with respect to the interest
assigned hereby.  [In consideration for
the sale and assignment of Loans hereunder, (i) the Assignee shall pay the
Assignor on the Effective Date, an amount equal to the principal amount of the
portion of all ABR Loans assigned to the Assignee hereunder and 

 

1

 

(ii) with respect to each LIBOR Loan made by the Assignor and assigned
to the Assignee hereunder which is outstanding on the Effective Date, (a) on
the last day of the Interest Period therefor or (b) on such earlier date agreed
to by the Assignor and the Assignee or (c) on the date on which any such LIBOR
Loan either becomes due (by acceleration or otherwise) or is prepaid (the date
as described in the foregoing clauses (a), (b) or (c) being hereinafter
referred to as the “Payment Date”), the Assignee shall pay the Assignor an
amount equal to the principal amounts of the portion of such LIBOR Loan
assigned to the Assignee which is outstanding on the Payment Date.  If the Assignor and the Assignee agree that
the Payment Date for such LIBOR Loan shall be the Effective Date, they shall
agree to the interest rate applicable to the portion of such Loan assigned
hereunder for the period from the Effective Date to the end of the existing
Interest Period applicable to such LIBOR Loan (the “Agreed Interest Rate”) and
any interest received by the Assignee in excess of the Agreed Interest Rate
shall be remitted to the Assignor.  In
the event interest for the period from the Effective Date to but not including
the Payment Date is not paid by the Borrower with respect to any LIBOR Loan
sold by the Assignor to the Assignee hereunder, the Assignee shall pay to the
Assignor interest for such period on the portion of such LIBOR Loan sold by the
Assignor to the Assignee hereunder at the applicable rate provided by the
Credit Agreement.  In the event a
prepayment of any LIBOR Loan which is existing on the Payment Date and assigned
by the Assignor to the Assignee hereunder occurs after the Payment Date but
before the end of the Interest Period applicable to such LIBOR Loan, the
Assignee shall remit to the Assignor the excess of the prepayment penalty paid
with respect to the portion of such LIBOR Loan assigned to the Assignee
hereunder over the amount which would have been paid if such prepayment penalty
was calculated based on the Agreed Interest Rate.  The Assignee will also promptly remit to the Assignor (i) any
principal payments received from the Agent with respect to LIBOR Loans prior to
the Payment Date and (ii) any amounts of interest on Loans and fees received
from the Agent which relate to the portion of the Loans assigned to the
Assignee hereunder for periods prior to the Effective Date, in the case of ABR
Loans, or the Payment Date, in the case of LIBOR Loans, and not previously paid
by the Assignee to the Assignor.]* In the event that either party hereto
receives any payment to which the other party hereto is entitled under this
Assignment Agreement, then the party receiving such amount shall promptly remit
it to the other party hereto.

 

*The
parties may insert alternative payment provisions in lieu of the payment terms
included in this Exhibit.

 

5.  FEES
PAYABLE BY THE ASSIGNEE.  [To the
extent applicable, the Assignee shall pay to the Assignor a fee on each day on
which a payment of interest or commitment fee is made under the Credit
Agreement with respect to the amounts assigned to the Assignee hereunder (other
than a payment of interest or commitment fee for the period prior to the
Effective Date or, in the case of LIBOR Loans, the Payment Date, which the
Assignee is obligated to deliver to the Assignor pursuant to Section 4
hereof).  The amount of such fee shall
be the difference between (i) the interest or fee, as applicable, paid with
respect to the amounts assigned to the Assignee hereunder and (ii) the interest
or fee, as applicable, which would have been paid with respect to the amounts
assigned to the Assignee hereunder if each interest rate was
      of 1% less than the interest rate paid by the
Borrower or if the commitment fee was        of
1% less than the commitment fee paid by the Borrower, as applicable.  In addition, the Assignee agrees to pay
       % of the recordation fee required to
be paid to the Agent pursuant to the Credit Agreement in connection with this
Assignment Agreement.]*

 

*The
parties may insert alternative payment provisions in lieu of the payment terms
included in this Exhibit.

 

 

2

 

6.  REPRESENTATIONS
OF THE ASSIGNOR:  LIMITATIONS ON THE ASSIGNOR’S LIABILITY.  The Assignor represents and warrants that it
is the legal and beneficial owner of the interest being assigned by it
hereunder and that such interest is free and clear of any adverse claim created
by the Assignor.  It is understood and
agreed that the assignment and assumption hereunder are made without recourse
to the Assignor and that the Assignor makes no other representation or warranty
of any kind to the Assignee.  Neither
the Assignor nor any of its officers, directors, employees, agents or attorneys
shall be responsible for (i) the due execution, legality, validity,
enforceability, genuineness, sufficiency or collectibility of any Loan
Documents, including without limitation, documents granting the Assignor and
the other Banks a security interest in assets of the Borrower, any Subsidiary,
or any Guarantor, (ii) any representation, warranty or statement made in or in
connection with any of the Loan Documents, (iii) the financial condition or
creditworthiness of the Borrower, any Subsidiary, or any Guarantor, (iv) the
performance of or compliance with any of the terms or provisions of any of the
Loan Documents, (v) inspecting any of the property, books or records of the
Borrower, any Subsidiary, or any Guarantor, (vi) the validity, enforceability,
perfection, priority, condition, value or sufficiency of any collateral
securing or purporting to secure the Loans or (vii) any mistake, error of
judgment, or action taken or omitted to be taken in connection with the Loans
or the Loan Documents.

 

7.  REPRESENTATIONS
OF THE ASSIGNEE.  The Assignee (i)
confirms that it has received a copy of the Credit Agreement, together with
copies of such financial statements requested by the Assignee and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment Agreement, (ii) agrees that
it will, independently and without reliance upon the Agent, the Assignor or any
other Bank and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Loan Documents, (iii) appoints and authorizes the
Agent to take such action as agent on its behalf and to exercise such powers
under the Loan Documents as are delegated to the Agent by the terms thereof,
together with such powers as are reasonably incidental thereto, (iv) agrees
that it will perform in accordance with their terms all of the obligations
which by the terms of the Loan Documents are required to be performed by it as
a Bank, (v) agrees that its payment instructions and notice instructions are as
set forth in the attachment to Schedule 1, (vi) confirms that none of the
funds, monies, assets or other consideration being used to make the purchase
and assumption hereunder are “plan assets” as defined under ERISA and that its
rights, benefits and interests in and under the Loan Documents will not be
“plan assets” under ERISA, [and (vii) attaches the forms prescribed by the
Internal Revenue Service of the United States certifying that the Assignee is
entitled to receive payments under the Loan Documents without deduction or
withholding of any United States federal income taxes]* and (viii) represents
and warrants that the assignment hereunder does not and will not, as of the
effective date of such assignment, result in any increased costs or expenses,
including without limitation pursuant to Section 2.14 or 2.15 of the Credit
Agreement, payable by the Borrower or any Guarantor.

 

*to be
inserted if the Assignee is not incorporated under the laws of the United
States, or a state thereof.

 

3

 

8.  INDEMNITY.  The Assignee agrees to indemnify and hold
the Assignor harmless against any and all losses, costs and expenses
(including, without limitation, reasonable attorneys’ fees) and liabilities
incurred by the Assignor in connection with or arising in any manner from the
Assignee’s non-performance of the obligations assumed under this Assignment
Agreement.

 

9.  SUBSEQUENT
ASSIGNMENTS.  After the Effective
Date, the Assignee shall have the right pursuant to Section 12.03 of the Credit
Agreement to assign the rights which are assigned to the Assignee hereunder to
any entity or person, provided that (i) any such subsequent assignment does not
violate any of the terms or conditions of the Loan Documents or any law, rule,
regulation, order, writ, judgment, injunction or decree and that all consents
required under the terms of the Loan Documents have been obtained and (ii)
unless the prior written consent of the Assignor is obtained, the Assignee is
not thereby released from its obligations to the Assignor hereunder, if any remain
unsatisfied, including, without limitation, its obligations under Sections 4, 5
and 8 hereof.

 

10.  REDUCTIONS
OF AGGREGATE REVOLVING CREDIT COMMITMENT. 
If this Assignment assigns all or any portion of the Assignor’s interest
in its Revolving Credit Commitment and any reduction in the Aggregate Revolving
Credit Commitment (other than pursuant to Section 2.19(c) of the Credit
Agreement) occurs between the date of this Assignment Agreement and the
Effective Date, the percentage interest specified in Item 3 of Schedule 1 shall
remain the same, but the dollar amount purchased shall be recalculated based on
the reduced Commitment of the Assignor.

 

11.  ENTIRE
AGREEMENT.  This Assignment
Agreement and the attached Notice of Assignment embody the entire agreement and
understanding between the parties hereto and supersede all prior agreements and
understandings between the parties hereto relating to the subject matter
hereof.

 

12.  GOVERNING
LAW.  This Assignment Agreement
shall be governed by and construed in accordance with, the laws of the State of
Illinois without regard to principles of conflict of laws.

 

13.  NOTICES.  Notices shall be given under this Assignment
Agreement in the manner set forth in the Credit Agreement.  For the purpose hereof the addresses of the
parties hereto (until notice of a change is delivered) shall be the addresses
set forth in the attachment to Schedule 1.

 

4

 

IN WITNESS WHEREOF, the parties hereto have executed
this Assignment Agreement by their duly authorized officers as of the date
first above written.

 

	
   

  	
  [NAME OF ASSIGNOR]

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [NAME OF ASSIGNEE]

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

5

 

SCHEDULE
1

 

to Assignment Agreement

 

1.  Description and Date of
Credit Agreement:

 

2.  Date of Assignment
Agreement:
                                  ,
200  

 

3.  Amounts (As of Date of Item
2 above):

 

	
   

  	
   

  	
  Revolving
  Credit

  Facility

  	
   

  	
  Term Loan
  Facility

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  a. Total of
  Commitments (Loans)* under Credit Agreement

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  b. Assignee’s
  Percentage of each Facility purchased under the Assignment Agreement**

  	
   

  	
   

  	
  %

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  c. Amount of
  Assigned Share in each Facility purchased under the Assignment Agreement

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  d. Assignee’s
  aggregate Commitment Amount (Loan Amount)* Purchased Hereunder:

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  e. Proposed
  Effective Date:

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Accepted and Agreed:

 

	
  [NAME OF ASSIGNOR]

  	
  [NAME OF ASSIGNEE]

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
										

 

*If a Commitment has been terminated, insert outstanding Loans in place
of Commitment

**Percentage taken to 10 decimal places

 

 

Attachment to SCHEDULE 1
to ASSIGNMENT AGREEMENT

 

Attach Assignor’s Administrative Information Sheet,
which must include notice address for the Assignor and the Assignee and the ABR
Loan Lending Office address and the LIBOR Loan Lending Office address for the
Assignee.

 

 

EXHIBIT 1

 

to Assignment Agreement

 

NOTICE

 

OF ASSIGNMENT

 

                                ,
200    

 

 

	
  To:

  	
  [NAME OF BORROWER]*

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [NAME OF AGENT]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

	
  From:

  	
  [NAME OF ASSIGNOR] (the “Assignor”)

  
	
   

  	
   

  
	
   

  	
  [NAME OF ASSIGNEE] (the “Assignee”)

  

 

1.  We refer to
that certain Credit Agreement (the “Credit Agreement”) described in Item I of
Schedule 1 attached hereto (“Schedule 1”).  Capitalized terms used herein and not otherwise defined herein
shall have the meanings attributed to them in the Credit Agreement.

 

2.  This Notice
of Assignment (this “Notice”) is given and delivered to [the Borrower and]* the
Agent pursuant to Section 12.03 of the Credit Agreement.

 

3.  The
Assignor and the Assignee have entered into an Assignment Agreement, dated as
of
                       ,
200     (the “Assignment”), pursuant to which, among other
things, the Assignor has sold, assigned, delegated and transferred to the
Assignee, and the Assignee has purchased, accepted and assumed from the
Assignor the percentage interest specified in Item 3 of Schedule 1 of all
outstanding rights and obligations under the Credit Agreement relating to the
facilities listed in Item 3 of Schedule 1. 
The Effective Date of the Assignment shall be the later of the date
specified in Item 5 of Schedule 1 or two Business Days (or such shorter period
as agreed to by the Agent) after this Notice of Assignment and any consents and
fees required by Section 12.03 of the Credit Agreement have been delivered to
the Agent, provided that the Effective Date shall not occur if any condition
precedent agreed to by the Assignor and the Assignee has not been satisfied.

 

*To be
included only if consent must be obtained from the Borrower pursuant to Section
12.03 of the Credit Agreement.

 

1

 

4.  The
Assignor and the Assignee hereby give to the Borrower and the Agent notice of
the assignment and delegation referred to herein.  The Assignor will confer with the Agent before the date specified
in Item 5 of Schedule 1 to determine if the Assignment Agreement will become
effective on such date pursuant to Section 3 hereof, and will confer with the
Agent to determine the Effective Date pursuant to Section 3 hereof if it occurs
thereafter.  The Assignor shall notify
the Agent if the Assignment Agreement does not become effective on any proposed
Effective Date as a result of the failure to satisfy the conditions precedent
agreed to by the Assignor and the Assignee. 
At the request of the Agent, the Assignor will give the Agent written
confirmation of the satisfaction of the conditions precedent.

 

5.  The
Assignor or the Assignee shall pay to the Agent on or before the Effective Date
the processing fee of $4,000.00 required by Section 12.03 of the Credit
Agreement.

 

6.  If any
Notes are outstanding on the Effective Date, the Assignor and the Assignee
request and direct that the Agent prepare and cause the Borrower to execute and
deliver new Notes or, as appropriate, replacement Notes, to the Assignor and
the Assignee.  The Assignor and, if
applicable, the Assignee each agree to deliver to the Agent the original Note
received by it from the Borrower upon its receipt of a new Note (or replacement
Note) in the appropriate amount, whereupon such original Note shall be marked
“canceled” and returned to the Borrower.

 

7.  The
Assignee advises the Agent that notice and payment instructions are set forth
in the attachment to Schedule 1.

 

8.  The
Assignee hereby represents and warrants that none of the funds, monies, assets
or other consideration being used to make the purchase pursuant to the
Assignment Agreement are “plan assets” as defined under ERISA and that its
rights, benefits, and interests in and under the Loan Documents will not be
“plan assets” under ERISA.

 

9.  The
Assignee authorizes the Agent to act as its agent under the Loan Documents in
accordance with the terms thereof.  The
Assignee acknowledges that the Agent has no duty to supply information with
respect to the Borrower or the Loan Documents to the Assignee until the
Assignee becomes a party to the Credit Agreement.*

 

*May be
eliminated if Assignee is a party to the Credit Agreement prior to the
Effective Date.

 

	
  NAME OF ASSIGNOR

  	
  NAME OF ASSIGNEE

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
											

 

2

 

	
  ACKNOWLEDGED [AND CONSENTED

  TO] BY (NAME OF AGENT]

  	
  ACKNOWLEDGED [AND CONSENTED

  TO] BY (NAME OF BORROWER]

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
										

 

[Attach photocopy of
Schedule 1 to Assignment)

 

3Exhibit
10.1

 

AMENDMENT
NO. 1

TO THE

MINUTEMAN INTERNATIONAL, INC.

2000 RESTRICTED STOCK PLAN

 

 

This AMENDMENT NO. 1 TO THE MINUTEMAN INTERNATIONAL, INC.
2000 RESTRICTED STOCK PLAN (this “Amendment”) is effective as
of May 1, 2003 by Minuteman International, Inc. (the “Company”).

 

Section
1.  Background.

 

(a)           Effective
as of January 1, 2000, the Company established the Minuteman
International, Inc. 2000 Restricted Stock Plan (the “Plan”).  Pursuant to the Plan, a committee of the
Board of Directors of the Company may grant awards (each, an “Award”) of
common stock, no par value, of the Company (the “Common Stock”), upon
the terms and subject to the conditions contained in the Plan.

 

(b)           The
Board of Directors and the stockholders of the Company have each approved this
Amendment whereby the vesting period for any Award granted after the date
hereof shall not exceed two years.

 

Section
2.  Amendment of Plan.

 

(a)           Effective
as of the date hereof, Section 8 of the Plan is hereby amended and restated to
read in its entirety as follows:

 

“8.  Vesting.

 

(a)  Awards granted on or before May 1, 2003
shall vest in accordance with the following schedule:

 

	
  One year of service

  	
   

  	
  33-1/3

  	
  % 

  
	
  Two
  years of service

  	
   

  	
  66-2/3

  	
  %

  
	
  Three
  years of service

  	
   

  	
  100

  	
  %

  

 

(b)  Awards granted after May 1, 2003 may be
immediately vested or vested over a period of time not to exceed the two years,
in each case as established by the Committee and set forth in the Award
Agreement.

 

(c)  Notwithstanding any provision in the Award
Agreement to the contrary with respect to the vesting period for an Award, upon
a Participant’s Retirement, death or Total Disability, coincident with
termination of employment with the Company, or upon a Change in Control while
the Participant is an employee of the Company, an Award shall become 100%
vested.”

 

 

(b)           Section
9 of the Plan is hereby amended and restated to read in its entirety as
follows:

 

“9.  Forfeitures.

 

If a
Participant terminates employment with the Company, except due to the
Participant’s Retirement, death or Total Disability, prior to the end of the
vesting period for the Participant’s Award, such Participant shall forfeit the
non-vested portion of the Award.”

 

Section
3.  Miscellaneous.  Capitalized terms used
herein and not otherwise defined shall have the meanings ascribed to such terms
in the Plan.  Except as amended by this
Amendment, the terms and provisions of the Plan shall remain in full force and
effect and are hereby affirmed, confirmed and ratified in all respects.

 

IN WITNESS WHEREOF, the Company
has caused this Amendment to be executed by a duly authorized officer as of the
date and year set forth below.

 

	
  Dated as of May 1,
  2003

  	
   

  	
   

  	
  MINUTEMAN
  INTERNATIONAL, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Gregory J. Rau

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Gregory J. Rau

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Its: President and CEO

  

 

2

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