Document:

EX-10.5.A

 

Exhibit 10.5(a)

EXECUTION COPY

REVOLVING CREDIT AGREEMENT

among

the FINANCIAL INSTITUTIONS party hereto,

as Lenders,

SIGNATURE BANK,

as Administrative Agent for the benefit of the Lenders,

and

CRYSTAL RIVER CAPITAL, INC.,

as Borrower

dated as of March 1, 2006

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	I.	 	DEFINITIONS	 	 	1	 
	 
	 	1.1	 	Accounting Terms	 	 	1	 
	 
	 	1.2	 	General Terms	 	 	1	 
	 
	 	1.3	 	Certain Matters of Construction	 	 	11	 
	II.	 	ADVANCES, PAYMENTS	 	 	11	 
	 
	 	2.1	 	Amount of Advances	 	 	11	 
	 
	 	2.2	 	Procedure for Advances Borrowing	 	 	12	 
	 
	 	2.3	 	Disbursement of Advance Proceeds	 	 	13	 
	 
	 	2.4	 	Maximum Advances	 	 	13	 
	 
	 	2.5	 	Manner of Borrowing and Repayment of Advances	 	 	14	 
	 
	 	2.6	 	Repayment of Excess Advances	 	 	16	 
	 
	 	2.7	 	Statement of Account	 	 	16	 
	 
	 	2.8	 	Additional Payments	 	 	16	 
	 
	 	2.9	 	Use of Proceeds	 	 	16	 
	 
	 	2.10	 	Defaulting Lender	 	 	16	 
	III.	 	INTEREST AND FEES	 	 	17	 
	 
	 	3.1	 	Interest	 	 	17	 
	 
	 	3.2	 	Upfront Fee	 	 	17	 
	 
	 	3.3	 	Agent Fees	 	 	18	 
	 
	 	3.4	 	Unused Facility Fee	 	 	18	 
	 
	 	3.5	 	Computation of Interest and Fees	 	 	18	 
	 
	 	3.6	 	Maximum Charges	 	 	18	 
	 
	 	3.7	 	Increased Costs	 	 	18	 
	 
	 	3.8	 	Basis For Determining Interest Rate Inadequate or Unfair	 	 	19	 
	 
	 	3.9	 	Capital Adequacy	 	 	19	 
	 
	 	3.10	 	Gross Up for Taxes	 	 	20	 
	 
	 	3.11	 	Withholding Tax Exemption	 	 	20	 
	IV.	 	REPRESENTATIONS AND WARRANTIES	 	 	21	 
	 
	 	4.1	 	Authority	 	 	21	 
	 
	 	4.2	 	Formation and Qualification	 	 	21	 
	 
	 	4.3	 	Survival of Representations and Warranties	 	 	22	 
	 
	 	4.4	 	Tax Returns	 	 	22	 
	 
	 	4.5	 	Financial Statements	 	 	22	 
	 
	 	4.6	 	Entity Name	 	 	22	 
	 
	 	4.7	 	O.S.H.A. and Environmental Compliance	 	 	22	 
	 
	 	4.8	 	Solvency; No Litigation, Violation, Indebtedness or Default	 	 	23	 
	 
	 	4.9	 	Licenses and Permits	 	 	24	 
	 
	 	4.10	 	Default of Indebtedness	 	 	24	 
	 
	 	4.11	 	No Default	 	 	24	 
	 
	 	4.12	 	No Burdensome Restrictions	 	 	24	 
	 
	 	4.13	 	Margin Regulations	 	 	24	 

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TABLE
OF CONTENTS

(continued)

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 
	 	4.14	 	Investment Company Act	 	 	25	 
	 
	 	4.15	 	Disclosure	 	 	25	 
	 
	 	4.16	 	Conflicting Agreements	 	 	25	 
	 
	 	4.17	 	Application of Certain Laws and Regulations	 	 	25	 
	 
	 	4.18	 	Business and Property of Borrower	 	 	25	 
	 
	 	4.19	 	Anti-Terrorism Laws	 	 	25	 
	 
	 	4.20	 	Trading with the Enemy	 	 	26	 
	V.	 	AFFIRMATIVE COVENANTS	 	 	26	 
	 
	 	5.1	 	Reserved	 	 	26	 
	 
	 	5.2	 	Conduct of Business and Maintenance of Existence and Assets	 	 	26	 
	 
	 	5.3	 	Violations	 	 	26	 
	 
	 	5.4	 	Financial Covenants	 	 	26	 
	 
	 	5.5	 	Execution of Supplemental Instruments	 	 	27	 
	 
	 	5.6	 	Payment of Indebtedness	 	 	27	 
	 
	 	5.7	 	Standards of Financial Statements	 	 	27	 
	VI.	 	NEGATIVE COVENANTS	 	 	27	 
	 
	 	6.1	 	Prohibition on Fundamental Changes	 	 	28	 
	 
	 	6.2	 	Reserved	 	 	28	 
	 
	 	6.3	 	Guarantees	 	 	28	 
	 
	 	6.4	 	Reserved	 	 	28	 
	 
	 	6.5	 	Dividends	 	 	28	 
	 
	 	6.6	 	Indebtedness	 	 	28	 
	 
	 	6.7	 	Nature of Business	 	 	28	 
	 
	 	6.8	 	Transactions with Affiliates	 	 	29	 
	 
	 	6.9	 	Fiscal Year and Accounting Changes	 	 	29	 
	 
	 	6.10	 	Amendment of Articles of Incorporation, By-Laws	 	 	29	 
	 
	 	6.11	 	Compliance with ERISA	 	 	29	 
	 
	 	6.12	 	Anti-Terrorism Laws	 	 	29	 
	 
	 	6.13	 	Trading with the Enemy Act	 	 	30	 
	VII.	 	CONDITIONS PRECEDENT	 	 	30	 
	 
	 	7.1	 	Conditions to Initial Advances	 	 	30	 
	 
	 	7.2	 	Conditions to Each Advance	 	 	32	 
	VIII.	 	INFORMATION AS TO BORROWER	 	 	32	 
	 
	 	8.1	 	Environmental Reports	 	 	32	 
	 
	 	8.2	 	Litigation	 	 	32	 
	 
	 	8.3	 	Material Occurrences	 	 	32	 
	 
	 	8.4	 	Annual Financial Statements	 	 	33	 
	 
	 	8.5	 	Quarterly Financial Statements	 	 	33	 
	 
	 	8.6	 	Other Reports	 	 	33	 
	 
	 	8.7	 	Additional Information	 	 	33	 
	 
	 	8.8	 	Notice of Suits, Adverse Events	 	 	33	 
	 
	 	8.9	 	ERISA Notices and Requests	 	 	34	 
	 
	 	8.10	 	Pay Down Amounts	 	 	34	 

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TABLE
OF CONTENTS

(continued)

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 
	 	8.11	 	Additional Documents	 	 	34	 
	IX.	 	EVENTS OF DEFAULT	 	 	34	 
	 
	 	9.1	 	Nonpayment	 	 	35	 
	 
	 	9.2	 	Breach of Representation	 	 	35	 
	 
	 	9.3	 	Financial Information	 	 	35	 
	 
	 	9.4	 	Judicial Actions	 	 	35	 
	 
	 	9.5	 	Noncompliance	 	 	35	 
	 
	 	9.6	 	Judgments	 	 	35	 
	 
	 	9.7	 	Bankruptcy of Borrower	 	 	35	 
	 
	 	9.8	 	Inability to Pay	 	 	36	 
	 
	 	9.9	 	Material Adverse Effect	 	 	36	 
	 
	 	9.10	 	Cross Default	 	 	36	 
	 
	 	9.11	 	Change of Control	 	 	36	 
	 
	 	9.12	 	Invalidity	 	 	36	 
	 
	 	9.13	 	Licenses	 	 	36	 
	 
	 	9.14	 	Pension Plans	 	 	36	 
	 
	 	9.15	 	Borrowing and Pay Down Amounts	 	 	36	 
	X.	 	LENDERS’ RIGHTS AND REMEDIES AFTER DEFAULT	 	 	36	 
	 
	 	10.1	 	Rights and Remedies	 	 	36	 
	 
	 	10.2	 	Agent’s Discretion	 	 	37	 
	 
	 	10.3	 	Rights and Remedies not Exclusive	 	 	37	 
	 
	 	10.4	 	Allocation of Payments After Event of Default	 	 	37	 
	XI.	 	WAIVERS AND JUDICIAL PROCEEDINGS	 	 	38	 
	 
	 	11.1	 	Waiver of Notice	 	 	38	 
	 
	 	11.2	 	Delay	 	 	38	 
	 
	 	11.3	 	Jury Waiver	 	 	38	 
	XII.	 	EFFECTIVE DATE AND TERMINATION	 	 	38	 
	 
	 	12.1	 	Term	 	 	38	 
	 
	 	12.2	 	Termination	 	 	38	 
	XIII.	 	REGARDING AGENT	 	 	39	 
	 
	 	13.1	 	Appointment	 	 	39	 
	 
	 	13.2	 	Nature of Duties	 	 	39	 
	 
	 	13.3	 	Lack of Reliance on Agent and Resignation	 	 	40	 
	 
	 	13.4	 	Certain Rights of Agent	 	 	40	 
	 
	 	13.5	 	Reliance	 	 	40	 
	 
	 	13.6	 	Notice of Default	 	 	41	 
	 
	 	13.7	 	Indemnification	 	 	41	 
	 
	 	13.8	 	Agent in its Individual Capacity	 	 	41	 
	 
	 	13.9	 	Delivery of Documents	 	 	41	 
	 
	 	13.10	 	Borrower’s Undertaking to Agent	 	 	41	 
	 
	 	13.11	 	No Reliance on Agent’s Customer Identification Program	 	 	41	 
	 
	 	13.12	 	Other Agreements	 	 	42	 
	XIV.	 	MISCELLANEOUS	 	 	42	 

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TABLE
OF CONTENTS

(continued)

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 
	 	14.1	 	Governing Law	 	 	42	 
	 
	 	14.2	 	Entire Understanding	 	 	43	 
	 
	 	14.3	 	Successors and Assigns; Participations; New Lenders	 	 	43	 
	 
	 	14.4	 	Application of Payments	 	 	45	 
	 
	 	14.5	 	Indemnity	 	 	45	 
	 
	 	14.6	 	Notice	 	 	46	 
	 
	 	14.7	 	Survival	 	 	47	 
	 
	 	14.8	 	Severability	 	 	47	 
	 
	 	14.9	 	Expenses	 	 	47	 
	 
	 	14.10	 	Injunctive Relief	 	 	48	 
	 
	 	14.11	 	Damages	 	 	48	 
	 
	 	14.12	 	Captions	 	 	48	 
	 
	 	14.13	 	Counterparts; Facsimile Signatures	 	 	48	 
	 
	 	14.14	 	Construction	 	 	48	 
	 
	 	14.15	 	Sharing Information	 	 	48	 
	 
	 	14.16	 	Publicity	 	 	49	 
	 
	 	14.17	 	Certifications From Banks and Participants; US PATRIOT Act	 	 	49	 

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List of Exhibits and Schedules

	 	 	 
	Exhibits
	 	 
	 
	 	 
	Exhibit 2.1

	 	Revolving Credit Note
	Exhibit 14.3

	 	Commitment Transfer Supplement
	 
	 	 
	Schedules
	 	 
	 
	 	 
	Schedule 1.2

	 	Permitted Encumbrances
	Schedule 4.1

	 	Consents
	Schedule 4.2(a)

	 	States of Qualification and Good Standing
	Schedule 4.2(b)

	 	Subsidiaries
	Schedule 4.4

	 	Federal Tax Identification Number
	Schedule 4.8(b)

	 	Litigation
	Schedule 4.8(d)

	 	Plans
	Schedule 4.9

	 	Licenses and Permits
	Schedule 6.3

	 	Guarantees
	Schedule 6.6

	 	Indebtedness

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REVOLVING CREDIT AGREEMENT

     Revolving Credit Agreement dated as of March 1, 2006, by and among CRYSTAL RIVER CAPITAL,
INC., a corporation organized under the laws of the State of Maryland (“Borrower”), the
financial institutions which are now or which hereafter become a party hereto (collectively, the
“Lenders” and individually a “Lender”) and SIGNATURE BANK (“Signature”), as
a Lender and as administrative agent for Lenders (Signature, in such capacity, the
“Agent”).

     IN CONSIDERATION of the mutual covenants and undertakings herein contained, Borrower, Lenders
and Agent hereby agree as follows:

I. DEFINITIONS.

     1.1 Accounting Terms. Where explicitly indicated, as used in this Agreement, the
Other Documents or any certificate, report or other document made or delivered pursuant to this
Agreement, accounting terms not defined in Section 1.2 or elsewhere in this Agreement and
accounting terms partly defined in Section 1.2 to the extent not defined, shall have the respective
meanings given to them under GAAP; provided, however, whenever such accounting terms are used for
the purposes of determining compliance with financial covenants in this Agreement, such accounting
terms shall be defined in accordance with GAAP as applied in preparation of the audited financial
statements of Borrower for the fiscal year ended December 31, 2005.

     1.2 General Terms. For purposes of this Agreement the following terms shall have the
following meanings:

          “Adjusted Net Portfolio Value” shall mean, at any time of determination, the fair
value, as set forth in Borrower’s balance sheet most recently delivered pursuant to Section 8.4 or
8.5 hereof, of Borrower’s portfolio of mortgage-backed securities, adjusted for a hypothetical 2.0%
per annum increase in interest rates.

          “Advances” shall mean the advances made pursuant to Section 2.1 hereof.

          “Affiliate” of any Person shall mean (a) any Person which, directly or indirectly, is
in control of, is controlled by, or is under common control with such Person, or (b) any Person who
is a director, managing member, general partner or officer (i) of such Person, (ii) of any
Subsidiary of such Person or (iii) of any Person described in clause (a) above. For purposes of
this definition, control of a Person shall mean the power, direct or indirect, (x) to vote more
than 25% of the Equity Interests having ordinary voting power for the election of directors of such
Person or other Persons performing similar functions for any such Person, or (y) to direct or cause
the direction of the management and policies of such Person whether by ownership of Equity
Interests, contract or otherwise.

          “Agency” shall mean any of FNMA, FHLMC or GNMA.

          “Agency Collateralized Mortgage Obligations” shall mean debt obligations issued by an
Agency that are backed by mortgage pass-through securities and are evidenced by a series of bonds
or certificates issued in multiple classes.

 

 

          “Agency Factor” shall mean, with respect to any RMBS, the information published by the
Agency that issued such RMBS from which the holders of beneficial interests in such RMBS are able
to determine the principal amount such holders shall receive from such Agency and the date of the
receipt of such amount.

          “Agency Mortgage Pass-through Certificates” shall mean securities issued or guaranteed
by an Agency.

          “Agent” shall have the meaning set forth in the preamble to this Agreement and shall
include its successors and assigns.

          “Agreement” shall mean this Revolving Credit Agreement, as the same may be amended,
restated, supplemented or otherwise modified from time to time.

          “Anti-Terrorism Laws” shall mean any Applicable Laws relating to terrorism or money
laundering, including Executive Order No. 13224, the USA PATRIOT Act, the Applicable Laws
comprising or implementing the Bank Secrecy Act, and the Applicable Laws administered by the United
States Treasury Department’s Office of Foreign Asset Control (as any of the foregoing Applicable
Laws may from time to time be amended, renewed, extended, or replaced).

          “Applicable Law” shall mean all laws, rules and regulations applicable to the Person,
conduct, transaction, covenant, Other Document or contract in question, including all applicable
common law and equitable principles; all provisions of all applicable state, Federal and foreign
constitutions, statutes, rules, regulations and orders of any Governmental Body, and all orders,
judgments and decrees of all courts and arbitrators.

          “Base Rate” shall mean the rate of interest per annum announced by Agent, from time to
time as its prime rate in effect at its principal office in New York City. (The prime rate is not
intended to be the lowest rate of interest charged by Agent to its borrowers).

          “Base Rate Loan” shall mean any Advance that bears interest based upon the Base Rate.

          “benefited Lender” shall have the meaning set forth in Section 2.5(f) hereof.

          “Blocked Person” shall have the meaning set forth in Section 4.19(b) hereof.

          “Borrower” shall have the meaning set forth in the preamble to this Agreement and
shall extend to all permitted successors and assigns of such Person.

          “Borrower’s Account” shall have the meaning set forth in Section 2.7 hereof.

          “Borrowing Date” shall have the meaning set forth in Section 2.2(a) hereof.

          “Business Day” shall mean any day other than Saturday or Sunday or a legal holiday on
which commercial banks are authorized or required by law to be closed for business in New York, New
York and, if the applicable Business Day relates to any Eurodollar Rate

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Loans, such day must also be a day on which dealings are carried on in the London interbank
market.

          “CERCLA” shall mean the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, 42 U.S.C. §§9601 et seq.

          “Change of Control” shall mean the occurrence of any event which results in Hyperion
Crystal River Capital Advisors, LLC, a wholly-owned subsidiary of Hyperion Capital Management,
Inc., or another wholly-owned subsidiary of Hyperion Capital Management, Inc. not acting as manager
and advisor of Borrower.

          “Closing Date” shall mean March 1, 2006.

          “Code” shall mean the Internal Revenue Code of 1986, as the same may be amended or
supplemented from time to time, and any successor statute of similar import, and the rules and
regulations thereunder, as from time to time in effect.

          “Commitment Percentage” of any Lender shall mean the percentage set forth below such
Lender’s name on the signature page hereof, as same may be adjusted in connection with an increase
in the Maximum Advance Amount pursuant to Section 2.4(b) hereof or upon any assignment by a Lender
pursuant to Section 14.3(c) hereof.

          “Commitment Transfer Supplement” shall mean a document in the form of Exhibit
14.3 attached hereto, properly completed and otherwise in form and substance satisfactory to
Agent and Borrower by which the Purchasing Lender purchases and assumes a portion of the obligation
of Lenders to make Advances under this Agreement.

          “Compliance Certificate” shall mean a compliance certificate to be signed by the Chief
Executive Officer, Chief Financial Officer, Chief Operating Officer, Controller or Treasurer of
Borrower, which shall state that, based on an examination sufficient to permit such officer to make
an informed statement, no Default or Event of Default exists, or if such is not the case,
specifying such Default or Event of Default, its nature, when it occurred, whether it is continuing
and the steps being taken by Borrower with respect to such default and, such certificate shall have
appended thereto calculations which set forth Borrower’s compliance with the requirements or
restrictions imposed by Sections 5.4, 6.5, 6.6 and 6.9.

          “Consents” shall mean all filings and all licenses, permits, consents, approvals,
authorizations, qualifications and orders of Governmental Bodies and other third parties, domestic
or foreign, necessary to carry on Borrower’s business or necessary (including to avoid a conflict
or breach under any agreement, instrument, other document, license, permit or other authorization)
for the execution, delivery or performance of this Agreement, the Other Documents, including any
Consents required under all applicable Federal, state or other Applicable Law.

          “Controlled Group” shall mean, at any time, Borrower and all members of a controlled
group of corporations and all trades or businesses (whether or not incorporated) under common
control and all other entities which, together with Borrower, are treated as a single employer
under Section 414 of the Code.

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          “Default” shall mean an event, circumstance or condition which, with the giving of
notice or passage of time or both, would constitute an Event of Default.

          “Default Rate” shall have the meaning set forth in Section 3.1 hereof.

          “Defaulting Lender” shall have the meaning set forth in Section 2.10(a) hereof.

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

          “Eligible Assignees” shall have the meaning set forth in Section 2.4(b) hereof.

          “Equity Interests” of any Person shall mean any and all shares, rights to purchase,
options, warrants, general, limited or limited liability partnership interests, member interests,
participation or other equivalents of or interest in (regardless of how designated) equity of such
Person, whether voting or nonvoting, including common stock, preferred stock, convertible
securities or any other “equity security” (as such term is defined in Rule 3a11-1 of the General
Rules and Regulations promulgated by the SEC under the Exchange Act).

          “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended
from time to time and the rules and regulations promulgated thereunder.

          “Eurodollar Rate” shall mean, for any Eurodollar Rate Loan for the then current
Interest Period relating thereto, the interest rate per annum determined by Agent by dividing (the
resulting quotient rounded upwards, if necessary, to the nearest 1/100th of 1% per annum) (i) the
rate of interest equal to the average of the London interbank offered rates for U.S. Dollars quoted
by the British Bankers’ Association as set forth on Moneyline Telerate (or appropriate successor
or, if British Banker’s Association or its successor ceases to provide such quotes, a comparable
replacement determined by Agent) display page 3750 as of 11:00 a.m. (London Time) (or such other
display page on the Moneyline Telerate system as may replace display page 3750) two (2) Business
Days prior to the first day of such Interest Period for an amount comparable to such Eurodollar
Rate Loan and having a borrowing date and a maturity comparable to such Interest Period divided by
(ii) a number equal to 1.00 minus the Reserve Percentage. The Eurodollar Rate shall be adjusted
with respect to any Eurodollar Rate Loan that is outstanding on the effective date of any change in
the Reserve Percentage as of such effective date. Agent shall give prompt notice to Borrower of
the Eurodollar Rate as determined or adjusted in accordance herewith, which determination shall be
conclusive absent manifest error.

          “Eurodollar Rate Loan” shall mean an Advance at any time that bears interest based on
the Eurodollar Rate.

          “Event of Default” shall have the meaning set forth in Article IX hereof.

          “Exchange Act” shall have the mean the Securities Exchange Act of 1934, as amended.

-4-

 

          “Executive Order No. 13224” shall mean the Executive Order No. 13224 on Terrorist
Financing, effective September 24, 2001, as the same has been, or shall hereafter be, renewed,
extended, amended or replaced.

          “FHLMC” shall mean the Federal Home Loan Mortgage Corporation.

          “Fixed Rate” shall mean, for any Fixed Rate Loan, the interest rate per annum
determined by Agent by dividing (the resulting quotient rounded upwards, if necessary, to the
nearest 1/100th of 1% per annum) (i) the rate of interest equal to the average of the London
interbank offered rates for U.S. Dollars quoted by the British Bankers’ Association as set forth on
Moneyline Telerate (or appropriate successor or, if British Banker’s Association or its successor
ceases to provide such quotes, a comparable replacement determined by Agent) display page 3750 as
of 11:00 a.m. (London Time) (or such other display page on the Moneyline Telerate system as may
replace display page 3750) two (2) Business Days prior to the date such Fixed Rate Loan is made for
an amount comparable to such Fixed Rate Loan for a period of 30 days divided by (ii) a number equal
to 1.00 minus the Reserve Percentage. The Fixed Rate shall be adjusted with respect to any Fixed
Rate Loan that is outstanding on the effective date of any change in the Reserve Percentage as of
such effective date. Agent shall give prompt notice to Borrower of the Fixed Rate as determined or
adjusted in accordance herewith, which determination shall be conclusive absent manifest error.

          “Fixed Rate Loan” shall mean any Advance that bears interest based upon the Fixed
Rate.

          “FNMA” shall mean Federal National Mortgage Association.

          “GAAP” shall mean generally accepted accounting principles in the United States of
America in effect from time to time.

          “GNMA” shall mean the Government National Mortgage Association.

          “Governmental Body” shall mean any nation or government, any state or other political
subdivision thereof or any entity, authority, agency, division or department exercising the
legislative, judicial, regulatory or administrative functions of or pertaining to a government.

          “Gross-Up Payment” shall have the meaning set forth in Section 3.10 hereof.

          “Hazardous Substance” shall mean, without limitation, any flammable explosives, radon,
radioactive materials, asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls,
petroleum and petroleum products, methane, hazardous materials, Hazardous Wastes, hazardous or
Toxic Substances or related materials as defined in CERCLA, the Hazardous Materials Transportation
Act, as amended (49 U.S.C. Sections 1801, et seq.), RCRA, Articles 15 and 27 of the New York State
Environmental Conservation Law or any other applicable environmental law and in the regulations
adopted pursuant thereto.

          “Hazardous Wastes” shall mean all waste materials subject to regulation under CERCLA,
RCRA or applicable state law, and any other applicable Federal and state laws now in force or
hereafter enacted relating to hazardous waste disposal.

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          “Indebtedness” of a Person at a particular date shall mean all obligations of such
Person which in accordance with GAAP would be classified upon a balance sheet as liabilities
(except capital stock and surplus earned or otherwise) and in any event, without limitation by
reason of enumeration, shall include all indebtedness, debt and other similar monetary obligations
of such Person whether direct or guaranteed, and all premiums, if any, due at the required
prepayment dates of such indebtedness, and all indebtedness secured by a Lien on assets owned by
such Person, whether or not such indebtedness actually shall have been created, assumed or incurred
by such Person. Any indebtedness of such Person resulting from the acquisition by such Person of
any assets subject to any Lien shall be deemed, for the purposes hereof, to be the equivalent of
the creation, assumption and incurring of the indebtedness secured thereby, whether or not actually
so created, assumed or incurred.

          “Interest Period” shall mean, with respect to a Eurodollar Rate Loan, the period
commencing on the Borrowing Date of such Eurodollar Rate Loan and ending on the Repayment Date for
such Eurodollar Rate Loan.

          “Lender” and “Lenders” shall have the meaning ascribed to such term in the
preamble to this Agreement and shall include each Person which becomes a transferee, successor or
assign of any Lender.

          “Lien” shall mean any mortgage, deed of trust, pledge, hypothecation, assignment,
security interest, lien (whether statutory or otherwise), charge, claim or encumbrance, or
preference, priority or other security agreement or preferential arrangement held or asserted in
respect of any asset of any kind or nature whatsoever including any conditional sale or other title
retention agreement, any lease having substantially the same economic effect as any of the
foregoing, and the filing of, or agreement to give, any financing statement under the Uniform
Commercial Code or comparable law of any jurisdiction.

          “Material Adverse Effect” shall mean a material adverse effect on (a) the condition
(financial or otherwise), results of operations, assets, business, properties or prospects of
Borrower, (b) Borrower’s ability to duly and punctually pay or perform the Obligations in
accordance with the terms thereof, or (c) the practical realization of the benefits of Agent’s and
each Lender’s rights and remedies under this Agreement and the Other Documents.

          “Maximum Advance Amount” shall mean $21,000,000, which such amount may be increased in
accordance with Section 2.4(b) hereof.

          “Maximum Advance Increase” shall have the meaning set forth in Section 2.4(b) hereof.

          “Maximum Advance Increase Date” shall have the meaning set forth in Section 2.4(b)
hereof.

          “Maximum Advance Increase Notice” shall have the meaning set forth in Section 2.4(b)
hereof.

          “Multiemployer Plan” shall mean a “multiemployer plan” as defined in Sections 3(37)
and 4001(a)(3) of ERISA.

-6-

 

          “Multiple Employer Plan” shall mean a Plan which has two or more contributing sponsors
(including Borrower or any member of the Controlled Group) at least two of whom are not under
common control, as such a plan is described in Section 4064 of ERISA.

          “Net Income” shall mean fiscal year-to-date after-tax net income from continuing
operations, including extraordinary losses and extraordinary gains, all as determined in accordance
with GAAP, provided, however, that there shall be specifically excluded therefrom
(i) unrealized gains (or losses) on derivatives; and (ii) realized and unrealized gains (or losses)
on securities available for sale.

          “Net Worth” at a particular date, shall mean (a) the aggregate amount of all assets of
Borrower as may properly be classified as such in accordance with GAAP consistently applied and
such other assets as are properly classified as “intangible assets”, less (b) the aggregate amount
of all Indebtedness of Borrower.

          “Non-Defaulting Lender” shall have the meaning set forth in Section 2.10(b) hereof.

          “Notice of Borrowing” shall have the meaning set forth in Section 2.2(a) hereof.

          “Obligations” shall mean and include any and all loans, advances, debts, liabilities,
obligations, covenants and duties owing by Borrower to Lenders or Agent of any kind or nature,
present or future (including any interest accruing thereon after maturity, or after the filing of
any petition in bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding relating to Borrower, whether or not a claim for post-filing or post-petition interest
is allowed in such proceeding), whether or not evidenced by any note, guaranty or other instrument,
arising under this Agreement and the Other Documents, including but not limited to reasonable
attorneys’ fees and expenses and all obligations of Borrower to Agent or Lenders to perform acts or
refrain from taking any action.

          “Ordinary Course of Business” shall mean, generally, the ordinary course of Borrower’s
business as conducted on the Closing Date.

          “Other Documents” shall mean the Revolving Credit Note and any and all other
agreements, instruments and documents, now or hereafter executed by Borrower and/or delivered to
Agent or any Lender in respect of the transactions contemplated by this Agreement.

          “Parent” of any Person shall mean a corporation or other entity owning, directly or
indirectly at least 50% of the shares of stock or other ownership interests having ordinary voting
power to elect a majority of the directors of the Person, or other Persons performing similar
functions for any such Person.

          “Participant” shall mean each Person who shall be granted the right by any Lender to
participate in any of the Advances and who shall have entered into a participation agreement in
form and substance satisfactory to such Lender.

          “Pay Down Amount” shall mean, with respect to a RMBS, an amount, determined by
Borrower based on the related Agency Factor, equal to the principal amount Borrower shall

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receive as the owner of a beneficial interest in such RMBS on the date set forth in such
Agency Factor.

          “Payee” shall have the meaning set forth in 3.10 hereof.

          “Payment Office” shall mean initially Agent’s office at 565 Fifth Avenue,
12th floor, New York, New York 10017; thereafter, such other office of Agent, if any,
which it may designate by notice to Borrower and to each Lender to be the Payment Office.

          “PBGC” shall mean the Pension Benefit Guaranty Corporation established pursuant to
Subtitle A of Title IV of ERISA or any successor.

          “Pension Benefit Plan” shall mean at any time any employee pension benefit plan
(including a Multiple Employer Plan, but not a Multiemployer Plan) which is covered by Title IV of
ERISA or is subject to the minimum funding standards under Section 412 of the Code and either (i)
is maintained by any member of the Controlled Group for employees of any member of the Controlled
Group; or (ii) has at any time within the preceding five years been maintained by any entity which
was at such time a member of the Controlled Group for employees of any entity which was at such
time a member of the Controlled Group.

          “Permitted Encumbrances” shall mean (a) Liens for taxes, assessments or other
governmental charges not delinquent or being Properly Contested; (b) Liens disclosed in the
financial statements referred to in Section 4.5, the existence of which Agent is deemed to have
consented to in writing; (c) deposits or pledges to secure obligations under worker’s compensation,
social security or similar laws, or under unemployment insurance; (d) deposits or pledges to secure
bids, tenders, contracts (other than contracts for the payment of money), leases, statutory
obligations, surety and appeal bonds and other obligations of like nature arising in the Ordinary
Course of Business; (e) Liens arising by virtue of the rendition, entry or issuance against
Borrower or any Subsidiary, or any property of Borrower or any Subsidiary, of any judgment, writ,
order, or decree which has either been stayed or bonded, or which does not constitute or result in
an Event of Default under Section 9.6; (f) common carriers’, mechanics’, workers’, materialmen’s or
other like Liens arising in the Ordinary Course of Business with respect to obligations which are
not due or which are being contested in good faith by Borrower; (g) Liens placed upon fixed assets
hereafter acquired to secure a portion of the purchase price thereof, provided that any such lien
shall not encumber any other property of Borrower; (h) Liens disclosed on Schedule 1.2; and (j)
Liens in favor of counterparties to repurchase agreements entered into in the Ordinary Course of
Business.

          “Person” shall mean any individual, sole proprietorship, partnership, corporation,
business trust, joint stock company, trust, unincorporated organization, association, limited
liability company, limited liability partnership, institution, public benefit corporation, joint
venture, entity or Governmental Body (whether Federal, state, county, city, municipal or otherwise,
including any instrumentality, division, agency, body or department thereof).

          “Plan” shall mean any employee benefit plan within the meaning of Section 3(3) of
ERISA (including a Pension Benefit Plan), maintained for employees of Borrower or any

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member of the Controlled Group or any such Plan to which Borrower or any member of the
Controlled Group is required to contribute on behalf of any of its employees.

          “Properly Contested” shall mean, in the case of any Indebtedness of any Person
(including any taxes) that is not paid as and when due or payable by reason of such Person’s bona
fide dispute concerning its liability to pay same or concerning the amount thereof, (i) such
Indebtedness is being properly contested in good faith by appropriate proceedings promptly
instituted and diligently conducted; (ii) such Person has established appropriate reserves as shall
be required in conformity with GAAP; (iii) the non-payment of such Indebtedness shall not have a
Material Adverse Effect and shall not result in the forfeiture of any assets of such Person; (iv)
no Lien is imposed upon any of such Person’s assets with respect to such Indebtedness (except only
with respect to property taxes that have priority as a matter of applicable state law) and
enforcement of such Lien is stayed during the period prior to the final resolution or disposition
of such dispute; (v) if such Indebtedness results from, or is determined by the entry, rendition or
issuance against a Person or any of its assets of a judgment, writ, order or decree, enforcement of
such judgment, writ, order or decree is stayed pending a timely appeal or other judicial review;
and (vi) if such contest is abandoned, settled or determined adversely (in whole or in part) to
such Person, such Person forthwith pays such Indebtedness and all penalties, interest and other
amounts due in connection therewith.

          “Purchasing Lender” shall have the meaning set forth in Section 14.3(c) hereof.

          “RCRA” shall mean the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901 et
seq., as same may be amended from time to time.

          “Register” shall have the meaning set forth in Section 14.3(d) hereof.

          “Regulations” shall have the meaning set forth in Section 3.11 hereof.

          “Repayment Date” shall have the meaning set forth in Section 2.2(a) hereof.

          “Reportable Event” shall mean a reportable event described in Section 4043(c) of ERISA
or the regulations promulgated thereunder.

          “Required Lenders” shall mean Lenders (other than a Defaulting Lender) holding at
least sixty-six and two-thirds percent (662/3%) of the Advances and, if no Advances are outstanding,
shall mean Lenders holding sixty-six and two-thirds percent (662/3%) of the Commitment Percentages.

          “Reserve Percentage” shall mean as of any day the maximum percentage in effect on such
day as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for
determining the reserve requirements (including supplemental, marginal and emergency reserve
requirements) with respect to eurocurrency funding (currently referred to as “Eurocurrency
Liabilities”).

          “Revolving Credit Note” shall mean the promissory notes referred to in Section 2.1
hereof.

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          “Revolving Interest Rate” shall mean an interest rate per annum equal to (a) the Base
Rate with respect to Base Rate Loans; (b) the Fixed Rate plus 1.75% per annum with respect to Fixed
Rate Loans; and (c) the sum of the Eurodollar Rate plus 1.75% per annum with respect to Eurodollar
Rate Loans.

          “RMBS” shall mean Agency Mortgage Pass-through Certificates and Agency Collateralized
Mortgage Obligations that represent interests in, are secured by, or payable from, pools of
mortgage loans secured by residential property.

          “SEC” shall mean the Securities and Exchange Commission or any successor thereto.

          “Subsidiary” of any Person shall mean a corporation or other entity of whose Equity
Interests having ordinary voting power (other than Equity Interests having such power only by
reason of the happening of a contingency) to elect a majority of the directors of such corporation,
or other Persons performing similar functions for such entity, are owned, directly or indirectly,
by such Person.

          “Term” shall have the meaning set forth in Section 12.1 hereof.

          “Termination Event” shall mean (i) a Reportable Event with respect to any Plan or
Multiemployer Plan; (ii) the withdrawal of Borrower or any member of the Controlled Group from a
Plan or Multiemployer Plan during a plan year in which such entity was a “substantial employer” as
defined in Section 4001(a)(2) of ERISA; (iii) the providing of notice of intent to terminate a Plan
in a distress termination described in Section 4041(c) of ERISA; (iv) the institution by the PBGC
of proceedings to terminate a Plan or Multiemployer Plan; (v) any event or condition (a) which
might constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of
a trustee to administer, any Plan or Multiemployer Plan, or (b) that may result in termination of a
Multiemployer Plan pursuant to Section 4041A of ERISA; or (vi) the partial or complete withdrawal
within the meaning of Sections 4203 and 4205 of ERISA, of Borrower or any member of the Controlled
Group from a Multiemployer Plan.

          “Toxic Substance” shall mean and include any material present on the real property or
the leasehold interests which has been shown to have significant adverse effect on human health or
which is subject to regulation under the Toxic Substances Control Act (TSCA), 15 U.S.C. §§ 2601 et
seq., applicable state law, or any other applicable Federal or state laws now in force or hereafter
enacted relating to toxic substances. “Toxic Substance” includes but is not limited to asbestos,
polychlorinated biphenyls (PCBs) and lead-based paints.

          “Trading with the Enemy Act” shall mean the foreign assets control regulations of the
United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any enabling
legislation or executive order relating thereto.

          “Transactions” shall mean the consummation of the transactions contemplated under this
Agreement and the Other Documents.

          “Transferee” shall have the meaning set forth in Section 14.3(c) hereof.

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          “USA Patriot Act” shall mean the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56, as
the same has been, or shall hereafter be, renewed, extended, amended or replaced.

     1.3 Certain Matters of Construction. The terms “herein”, “hereof” and “hereunder” and
other words of similar import refer to this Agreement as a whole and not to any particular section,
paragraph or subdivision. All references herein to Articles, Sections, Exhibits and Schedules
shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this
Agreement. Any pronoun used shall be deemed to cover all genders. Wherever appropriate in the
context, terms used herein in the singular also include the plural and vice versa. All references
to statutes and related regulations shall include any amendments of same and any successor statutes
and regulations. Unless otherwise provided, all references to any instruments or agreements to
which Agent is a party, including references to any of the Other Documents, shall include any and
all modifications or amendments thereto and any and all extensions or renewals thereof to the
extent such modifications, amendments, extensions or renewals are permitted by the terms hereof.
All references herein to the time of day shall mean the time in New York, New York. Whenever the
words “including” or “include” shall be used, such words shall be understood to mean “including,
without limitation” or “include, without limitation”. A Default or Event of Default shall be
deemed to exist at all times during the period commencing on the date that such Default or Event of
Default occurs to the date on which such Default or Event of Default is waived in writing pursuant
to this Agreement or, is cured within any period of cure expressly provided for in this Agreement;
and an Event of Default shall “continue” or be “continuing” until such Event of Default has been
waived in writing by the Required Lenders. Any agreement entered into by Agent pursuant to this
Agreement or any of the Other Documents, any payment made by or to or funds received by Agent
pursuant to or as contemplated by this Agreement or any of the Other Documents, or any act taken or
omitted to be taken by Agent, shall, unless otherwise expressly provided, be entered into, made or
received, or taken or omitted, for the benefit or account of Agent and Lenders. All covenants
hereunder shall be given independent effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be permitted by an exception to, or
otherwise within the limitations of, another covenant shall not avoid the occurrence of a default
if such action is taken or condition exists. In addition, all representations and warranties
hereunder shall be given independent effect so that if a particular representation or warranty
proves to be incorrect or is breached, the fact that another representation or warranty concerning
the same or similar subject matter is correct or is not breached shall not affect the incorrectness
of a breach of a representation or warranty hereunder.

II. ADVANCES, PAYMENTS.

     2.1 Amount of Advances. Subject to the terms and conditions set forth in this
Agreement, each Lender, severally and not jointly, shall make Advances to Borrower, upon the
request of Borrower in accordance with the provisions of Section 2.2 hereof, in aggregate amounts
outstanding at any time equal to such Lender’s Commitment Percentage of the lesser of (i) the
Maximum Advance Amount and (ii) the aggregate Pay Down Amounts set forth in the Notices of
Borrowing. The Advances shall be evidenced by one or more secured promissory notes (collectively,
the “Revolving Credit Note”) substantially in the form attached hereto as

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Exhibit 2.1. Borrower hereby agrees that Borrower shall not request, Lenders shall
not be obligated to make, and there shall not be outstanding any Advances from and including the
28th day of any month to and including the 3rd day of the immediately
succeeding month.

     2.2 Procedure for Advances Borrowing.

          (a) Borrower shall provide to Agent a written request to incur an Advance hereunder (each, a
“Notice of Borrowing”) no later than 12:00 p.m., on any Business Day, which Notice of
Borrowing shall specify: (i) the date of the proposed borrowing (the “Borrowing Date”),
which shall be at least one (1) Business Day after Agent’s receipt of such Notice of Borrowing,
provided that the Borrowing Date shall not be prior to the 4th day of any month; (ii)
whether such Advance shall be a Base Rate Loan, Fixed Rate Loan or Eurodollar Rate Loan, as elected
by Borrower; (iii) the amount of such Advance, which amount shall equal Borrower’s reasonable
expectation of the aggregate Pay Down Amount of each RMBS identified in such Notice of Borrowing;
and (iv) the date such Advance shall be repaid (the “Repayment Date”), which shall be the
Business Day immediately following the date specified in the Agency Factor with respect to such
RMBS as the date the related Agency expects to pay principal with respect to such RMBS, but in any
event not later than the 27th day of the calendar month in which such Borrowing Date
occurs (it being understood that the RMBS identified in any Notice of Borrowing with respect to an
Advance shall have the same Repayment Date). Each Notice of Borrowing shall include a copy of the
related Agency Factor. Borrower shall repay each Advance with the Pay Down Amounts with respect to
the RMBS identified in the related Notice of Borrowing.

          (b) Eurodollar Rate Loans shall not be made available to Borrower during the continuance of a
Default or an Event of Default. After giving effect to each requested Eurodollar Rate Loan, there
shall not be outstanding more than five (5) Eurodollar Rate Loans, in the aggregate.

          (c) Borrower shall indemnify Agent and Lenders and hold Agent and Lenders harmless from and
against any and all losses or expenses that Agent and Lenders may sustain or incur as a consequence
of any default by Borrower in the payment of the principal of or interest on any Eurodollar Rate
Loan or failure by Borrower to complete a borrowing of a Eurodollar Rate Loan after notice thereof
has been given, including, but not limited to, any interest payable by Agent or Lenders to lenders
of funds obtained by it in order to make or maintain its Eurodollar Rate Loans hereunder. A
certificate as to any additional amounts payable pursuant to the foregoing sentence submitted by
Agent or any Lender to Borrower shall be conclusive absent manifest error.

          (d) Notwithstanding any other provision hereof, if any Applicable Law, treaty, regulation or
directive, or any change therein or in the interpretation or application thereof, shall make it
unlawful for any Lender (for purposes of this subsection (g), the term “Lender” shall
include any Lender and the office or branch where any Lender or any corporation or bank controlling
such Lender makes or maintains any Eurodollar Rate Loans) to make or maintain its Eurodollar Rate
Loans, the obligation of Lenders to make Eurodollar Rate Loans hereunder shall forthwith be
cancelled and Borrower shall, if any Eurodollar Rate Loans are then outstanding, promptly upon
request from Agent, either pay all such Eurodollar Rate Loans or convert such

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Eurodollar Rate Loans into Base Rate Loans or Fixed Rate Loans. If any such payment or
conversion of any Eurodollar Rate Loan is made on a day that is not the last day of the Interest
Period applicable to such Eurodollar Rate Loan, Borrower shall pay Agent, upon Agent’s request,
such amount or amounts as may be necessary to compensate Lenders for any loss or expense sustained
or incurred by Lenders in respect of such Eurodollar Rate Loan as a result of such payment or
conversion, including (but not limited to) any interest or other amounts payable by Lenders to
lenders of funds obtained by Lenders in order to make or maintain such Eurodollar Rate Loan. A
certificate as to any additional amounts payable pursuant to the foregoing sentence submitted by
Lenders to Borrower shall be conclusive absent manifest error.

     2.3 Disbursement of Advance Proceeds. All Advances shall be disbursed from whichever
office or other place Agent may designate from time to time and, together with any and all other
Obligations of Borrower to Agent or Lenders, shall be charged to Borrower’s Account on Agent’s
books. During the Term, Borrower may use the Advances by borrowing and reborrowing, all in
accordance with the terms and conditions hereof. The proceeds of each Advance requested by
Borrower under Section 2.2(a) hereof shall, with respect to requested Advances to the extent
Lenders make such Advances, be made available to Borrower on the applicable Borrowing Date by way
of credit to Borrower’s operating account at Signature, or such other bank as Borrower may
designate following notification to Agent, in immediately available Federal funds or other
immediately available funds or be disbursed to Agent to be applied to the outstanding Obligations
giving rise to such deemed request.

     2.4 Maximum Advances.

          (a) The aggregate balance of Advances outstanding at any time shall not exceed the Maximum
Advance Amount.

          (b) Provided that no Default or Event of Default has occurred and is continuing, Borrower
shall have the option at any time during the term hereof, to request an increase in the Maximum
Advance Amount by an amount not to exceed $59,000,000 (provided that any requested increase in an
amount less than $59,000,000 shall be in multiples of $10,000,000) so that the aggregate of the
Maximum Advance Amount is increased up to $80,000,000 by written notice to Agent. Upon receipt of
such notice, Agent shall notify Borrower of the amount of facility fees to be paid to Agent and any
Lenders who provide such increase in the Maximum Advance Amount (the “Maximum Advance
Increase”). If Borrower agrees to pay the facility fees so determined, then Agent shall send a
notice (the “Maximum Advance Increase Notice”) to all Lenders informing them of Borrower’s
request to increase the Maximum Advance Amount and of the facility fees to be paid with respect
thereto. Not later than seven (7) Business Days after Agent sends such notice to all Lenders, each
Lender who desires, in its sole discretion, to provide all or a portion of the Maximum Advance
Increase upon such terms shall provide Agent with a written commitment letter specifying the amount
of the Maximum Advance Increase it is willing to provide. If the requested increase is
oversubscribed, then Agent shall allocate the Maximum Advance Increase among the Lenders who in
their sole discretion provide such commitment letters on such basis as Agent shall determine in its
sole discretion. If the commitments so provided are not sufficient to provide the full amount of
the Maximum Advance Increase requested by Borrower, then Agent may, but shall not be obligated to,
invite one or more commercial banks or other financial institutions or investors (the “Eligible

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Assignees”) to become a Lender and provide all or a portion of the Maximum Advance
Increase. If Agent does invite one or more Eligible Assignees to become a Lender and if following
any such invitation, the amounts committed are still not sufficient to provide the full amount of
the Maximum Advance Increase requested by Borrower, then the Maximum Advance Increase shall be
reduced to the aggregate of the amounts committed. Agent shall provide all Lenders with a notice
setting forth the amount, if any, of the Maximum Advance Increase to be provided by each Lender and
the revised Commitment Percentage of each Lender which shall be applicable after the effective date
of the Maximum Advance Increase specified therein (the “Maximum Advance Increase Date”).
The Maximum Advance Increase shall be subject to the receipt by Agent of each agreement, document
and instrument reasonably requested by Agent or any Lender, each in form and substance satisfactory
to Agent.

          (c) On the Maximum Advance Increase Date, the outstanding principal balance of the Advances
shall be reallocated among the Lenders such that after the Maximum Advance Increase Date the
outstanding principal amount of Advances owed to each Lender shall be equal to such Lender’s
Commitment Percentage (as in effect after the Maximum Advance Increase Date) of the outstanding
principal amount of all Advances. On the Maximum Advance Increase Date, those Lenders whose
Commitment Percentage of the outstanding principal amount of all Advances is increasing shall
purchase from those Lenders whose Commitment Percentage of the outstanding principal amount of all
Advances is decreasing, such amount of outstanding Advances as is necessary to accomplish the
required reallocation of the outstanding Advances based on the Commitment Percentages of the
Lenders as in effect after the Maximum Advance Increase Date.

          (d) Upon the effective date of any Maximum Advance Increase pursuant to this Section 2.4, if
so requested by a Lender, Borrower shall execute and deliver to Agent new Notes for each Lender
whose Commitment Percentage has changed so that the maximum principal amount of such Lender’s Note
shall equal its Commitment Percentage. Agent shall promptly deliver such replacement Notes to the
respective Lenders in exchange for the Notes replaced thereby which shall be surrendered by such
Lenders. Such new Notes shall: (1) provide that they are replacements for the surrendered Notes
and that they do not constitute a novation, (2) be dated as of the Maximum Advance Increase Date,
and (3) otherwise be in substantially the form of the replaced Notes. On the date of issuance of
any new Notes pursuant to this subsection 2.4(d), Borrower shall deliver an opinion of counsel,
addressed to the Lenders and Agent, relating to the due authorization, execution and delivery of
such new Notes and the enforceability thereof. The surrendered Notes shall be canceled and
returned to Borrower.

     2.5 Manner of Borrowing and Repayment of Advances.

          (a) Each borrowing of Advances shall be advanced according to the applicable Commitment
Percentages of Lenders.

          (b) Each payment by Borrower on account of the principal of and interest on an Advance shall
be applied to such Advance pro rata according to the applicable Commitment Percentages of Lenders.

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          (c) Except as expressly provided herein, each payment by Borrower on account of principal and
interest on an Advance, and any other amounts payable hereunder, or under any of the Other
Documents, shall be made without any deduction whatsoever, including, but not limited to, any
deduction for any setoff or counterclaim, and shall be made to Agent at the Payment Office, not
later than 1:00 p.m., on the Repayment Date with respect to such Advance, in Dollars and in
immediately available funds.

          (d) Agent shall have the right to effectuate payment on any and all Obligations due and owing
hereunder by charging Borrower’s Account or by making Advances as provided in Section 2.2 hereof.

          (e) Each Lender shall be entitled to earn interest at the Revolving Interest Rate on
outstanding Advances which it has funded.

          (f) If any Lender or Participant (a “benefited Lender”) shall at any time receive any
payment of all or part of its Advances, or interest thereon (whether voluntarily or involuntarily
or by set-off) in a greater proportion than any such payment received by any other Lender, if any,
in respect of such other Lender’s Advances, or interest thereon, and such greater proportionate
payment is not expressly permitted hereunder, such benefited Lender shall purchase for cash from
the other Lenders a participation in such portion of each such other Lender’s Advances, as shall be
necessary to cause such benefited Lender to share the excess payment ratably with each of the other
Lenders; provided, however, that if all or any portion of such excess payment is thereafter
recovered from such benefited Lender, such purchase shall be rescinded, and the purchase price
returned, to the extent of such recovery, but without interest. Each Lender so purchasing a
portion of another Lender’s Advances may exercise all rights of payment (including rights of
set-off) with respect to such portion as fully as if such Lender were the direct holder of such
portion.

          (g) Unless Agent shall have been notified by telephone, confirmed in writing, by any Lender
that such Lender shall not make the amount which would constitute its applicable Commitment
Percentage of the Advances available to Agent, Agent may (but shall not be obligated to) assume
that such Lender shall make such amount available to Agent on the next Borrowing Date and, in
reliance upon such assumption, make available to Borrower a corresponding amount. Agent shall
promptly, and in any event no later than the following Business Day, notify Borrower of its receipt
of any such notice from a Lender. If such amount is made available to Agent on a date after such
next Borrowing Date, such Lender shall pay to Agent on demand an amount equal to the product of (i)
the Base Rate, multiplied by (ii) such amount, multiplied by (iii) the number of days from and
including such Borrowing Date to the date on which such amount becomes immediately available to
Agent. A certificate of Agent submitted to any Lender with respect to any amounts owing under this
paragraph (g) shall be conclusive, in the absence of manifest error. If such amount is not in fact
made available to Agent by such Lender within three (3) Business Days after such Borrowing Date,
Agent shall be entitled to recover such an amount, with interest thereon at the rate per annum then
applicable to such Advances hereunder, on demand from Borrower; provided, however, that Agent’s
right to such recovery shall not prejudice or otherwise adversely affect Borrower’s rights (if any)
against such Lender.

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     2.6 Repayment of Excess Advances. The aggregate balance of Advances outstanding at
any time in excess of the maximum amount of Advances permitted hereunder shall be immediately due
and payable without the necessity of any demand, at the Payment Office, whether or not a Default or
Event of Default has occurred.

     2.7 Statement of Account. Agent shall maintain, in accordance with its customary
procedures, a loan account (“Borrower’s Account”) in the name of Borrower in which shall be
recorded the date and amount of each Advance made by Agent and the date and amount of each payment
in respect thereof; provided, however, the failure by Agent to record the date and amount of any
Advance or payment shall not adversely affect Agent or any Lender or Borrower. Each month, Agent
shall send to Borrower a statement showing the accounting for the Advances made and payments made
or credited in respect thereof. The monthly statements shall be deemed correct and binding upon
Borrower in the absence of manifest error and shall constitute an account stated between Lenders
and Borrower unless Agent receives a statement in writing, by facsimile, or by email of Borrower’s
specific exceptions thereto within thirty (30) days after such statement is received by Borrower.
The records of Agent with respect to the loan account shall be conclusive evidence absent manifest
error of the amounts of Advances and other charges thereto and of payments applicable thereto.

     2.8 Additional Payments. Any sums expended by Agent or any Lender due to Borrower’s
failure to perform or comply with its obligations under this Agreement or any Other Document, may
be charged to Borrower’s Account as an Advance and added to the Obligations.

     2.9 Use of Proceeds.

          (a) Borrower shall use the proceeds of Advances for general working capital purposes.

          (b) Without limiting the generality of Section 2.9(a) above, neither Borrower nor any other
Person which may in the future become a party to this Agreement or the Other Documents as Borrower,
intends to use nor shall they use any portion of the proceeds of the Advances, directly or
indirectly, for any purpose in violation of the Trading with the Enemy Act.

     2.10 Defaulting Lender.

          (a) Notwithstanding anything to the contrary contained herein, in the event any Lender (x) has
refused (which refusal constitutes a breach by such Lender of its obligations under this Agreement)
to make available its portion of any Advance or (y) notifies either Agent or Borrower that it does
not intend to make available its portion of any Advance (if the actual refusal would constitute a
breach by such Lender of its obligations under this Agreement) (each, a “Lender Default”),
all rights and obligations hereunder of such Lender (a “Defaulting Lender”) as to which a
Lender Default is in effect and of the other parties hereto shall be modified to the extent of the
express provisions of this Section 2.10 while such Lender Default remains in effect.

          (b) Advances shall be incurred pro rata from Lenders (the “Non-Defaulting Lenders”)
which are not Defaulting Lenders based on their respective Commitment Percentages, and no
Commitment Percentage of any Lender or any pro rata share of any Advances required to be advanced
by any Lender shall be increased as a result of any Lender Default. Amounts

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received in respect of principal of any Advance shall be applied to reduce such Advance of
each Lender pro rata based on the aggregate of the outstanding Advances of all Lenders at the time
of such application; provided, that, such amount shall not be applied to any Advances of a
Defaulting Lender at any time when, and to the extent that, the aggregate amount of Advances of any
Non-Defaulting Lender exceeds such Non-Defaulting Lender’s Commitment Percentage of all Advances
then outstanding.

          (c) A Defaulting Lender shall not be entitled to give instructions to Agent or to approve,
disapprove, consent to or vote on any matters relating to this Agreement and the Other Documents.
All amendments, waivers and other modifications of this Agreement and the Other Documents may be
made without regard to a Defaulting Lender and, for purposes of the definition of “Required
Lenders”, a Defaulting Lender shall be deemed not to be a Lender and not to have Advances
outstanding.

          (d) Other than as expressly set forth in this Section 2.10, the rights and obligations of a
Defaulting Lender (including the obligation to indemnify Agent) and the other parties hereto shall
remain unchanged. Nothing in this Section 2.10 shall be deemed to release any Defaulting Lender
from its obligations under this Agreement and the Other Documents, shall alter such obligations,
shall operate as a waiver of any default by such Defaulting Lender hereunder, or shall prejudice
any rights which Borrower, Agent or any Lender may have against any Defaulting Lender as a result
of any default by such Defaulting Lender hereunder.

          (e) In the event a Defaulting Lender retroactively cures to the satisfaction of Agent the
breach which caused a Lender to become a Defaulting Lender, such Defaulting Lender shall no longer
be a Defaulting Lender and shall be treated as a Lender under this Agreement.

III. INTEREST AND FEES.

     3.1 Interest. Interest on each Advance shall be payable in arrears on the Repayment
Date with respect to such Advance. Interest charges shall be computed on the actual principal
amount of Advances outstanding at a rate per annum equal to the Revolving Interest Rate. Whenever,
subsequent to the date of this Agreement, the Base Rate is increased or decreased, the Revolving
Interest Rate for Base Rate Loans and Fixed Rate Loans shall be similarly changed without notice or
demand of any kind by an amount equal to the amount of such change in the Base Rate or Fixed Rate
during the time such change or changes remain in effect. The Eurodollar Rate shall be adjusted
with respect to Eurodollar Rate Loans without notice or demand of any kind on the effective date of
any change in the Reserve Percentage as of such effective date. Upon and after the occurrence of
an Event of Default, and during the continuation thereof, (i) at the option of Agent or at the
direction of Required Lenders, the Obligations other than Eurodollar Rate Loans shall bear interest
at the Revolving Interest Rate for Domestic Loans plus 2.0% per annum and (ii) Eurodollar Rate
Loans shall bear interest at the Revolving Interest Rate for Eurodollar Rate Loans plus 3.75% per
annum (as applicable, the “Default Rate”).

     3.2 Upfront Fee. On the Closing Date, Borrower shall pay to Agent, for the ratable
benefit of all Lenders, an upfront fee of $105,000, less that portion of the upfront fee heretofore
paid by Borrower to Agent.

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     3.3 Agent Fees. Borrower shall pay to Agent, for its own benefit, such fees as and
when set forth in the Agent Fee Letter.

     3.4 Unused Facility Fee. Borrower shall, on the first Business Day of each month and
on the last day of the Term, pay Agent, for the ratable benefit of all Lenders, a fee in an amount
equal to (i) (A) the Maximum Advance Amount during the most recently completed month (or partial
month in the case of a payment on the last day of the Term) minus (B) the average daily balance of
the sum of all Advances outstanding during such month or partial month, multiplied by (ii) .125%.

     3.5 Computation of Interest and Fees. Interest and fees hereunder shall be computed
on the basis of a year of 360 days and for the actual number of days elapsed. If any payment to be
made hereunder becomes due and payable on a day other than a Business Day, the due date thereof
shall be extended to the next succeeding Business Day and interest thereon shall be payable at the
Revolving Interest Rate for Base Rate Loans during such extension. Any fees payable to Agent for
its benefit or the benefit of Lenders, are nonrefundable and not creditable against any other fee
payable in connection with this Agreement or otherwise.

     3.6 Maximum Charges. In no event whatsoever shall interest and other charges charged
hereunder exceed the highest rate permissible under law. In the event interest and other charges as
computed hereunder would otherwise exceed the highest rate permitted under law, such excess amount
shall be first applied to any unpaid principal balance owed by Borrower, and if the then remaining
excess amount is greater than the previously unpaid principal balance, Lenders shall promptly
refund such excess amount to Borrower and the provisions hereof shall be deemed amended to provide
for such permissible rate.

     3.7 Increased Costs. In the event that any Applicable Law, treaty or governmental
regulation, or any change therein or in the interpretation or application thereof, or compliance by
any Lender (for purposes of this Section 3.7, the term “Lender” shall include Agent or any Lender
and any corporation or bank controlling Agent or any Lender) and the office or branch where Agent
or any Lender (as so defined) makes or maintains any Eurodollar Rate Loans with any request or
directive (whether or not having the force of law) from any central bank or other financial,
monetary or other authority, shall:

          (a) subject Agent or any Lender to any tax of any kind whatsoever with respect to this
Agreement or any Other Document or change the basis of taxation of payments to Agent or any Lender
of principal, fees, interest or any other amount payable hereunder or under any Other Documents
(except for changes in the rate of tax on the overall net income of Agent or any Lender by the
jurisdiction in which it maintains its principal office);

          (b) impose, modify or hold applicable any reserve, special deposit, assessment or similar
requirement against assets held by, or deposits in or for the account of, advances or loans by, or
other credit extended by, any office of Agent or any Lender, including pursuant to Regulation D of
the Board of Governors of the Federal Reserve System; or

          (c) impose on Agent or any Lender or the London interbank Eurodollar market any other
condition with respect to this Agreement or any Other Document;

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and the result of any of the foregoing is to increase the cost to Agent or any Lender of making,
renewing or maintaining its Advances hereunder by an amount that Agent or such Lender deems to be
material or to reduce the amount of any payment (whether of principal, interest or otherwise) in
respect of any of the Advances by an amount that Agent or such Lender deems to be material, then,
in any case Borrower shall promptly pay Agent or such Lender, upon its demand, such additional
amount as shall compensate Agent or such Lender for such additional cost or such reduction, as the
case may be, provided that the foregoing shall not apply to increased costs which are reflected in
the Eurodollar Rate. Agent or such Lender shall certify the amount of such additional cost or
reduced amount to Borrower, and such certification shall be conclusive absent manifest error.

     3.8 Basis For Determining Interest Rate Inadequate or Unfair. In the event that Agent
or any Lender shall have determined that:

          (a) reasonable means do not exist for ascertaining the Eurodollar Rate applicable pursuant to
Section 2.2 hereof for any Advance; or

          (b) Dollar deposits in the relevant amount and for the relevant maturity are not available in
the London interbank Eurodollar market, with respect to an outstanding Eurodollar Rate Loan or a
proposed Eurodollar Rate Loan,

then Agent shall give Borrower prompt written, telephonic or telegraphic notice of such
determination either on the date Agent receives the Notice of Borrowing or on the date of the
proposed borrowing. If such notice is given, (i) any such requested Eurodollar Rate Loan shall be
made as a Base Rate Loan or Fixed Rate Loan, at Borrower’s election, and (ii) any outstanding
affected Eurodollar Rate Loans shall be converted into a Base Rate Loan or Fixed Rate Loan, at
Borrower’s election. Until such notice has been withdrawn, Lenders shall have no obligation to
make Eurodollar Rate Loans or maintain outstanding Eurodollar Rate Loans.

     3.9 Capital Adequacy.

          (a) In the event that Agent or any Lender shall have determined that any Applicable Law, rule,
regulation or guideline regarding capital adequacy, or any change therein, or any change in the
interpretation or administration thereof by any Governmental Body, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance by Agent or any
Lender (for purposes of this Section 3.9, the term “Lender” shall include Agent or any Lender and
any corporation or bank controlling Agent or any Lender) and the office or branch where Agent or
any Lender (as so defined) makes or maintains any Eurodollar Rate Loans with any request or
directive regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has or would have the effect of reducing the rate of
return on Agent or any Lender’s capital as a consequence of its obligations hereunder to a level
below that which Agent or such Lender could have achieved but for such adoption, change or
compliance (taking into consideration Agent’s and each Lender’s policies with respect to capital
adequacy) by an amount deemed by Agent or any Lender to be material, then, from time to time,
Borrower shall pay upon demand to Agent or such Lender such additional amount or amounts as shall
compensate Agent or such Lender for such reduction. In determining such amount or amounts, Agent
or such Lender may use any

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reasonable averaging or attribution methods. The protection of this Section 3.9 shall be
available to Agent and each Lender regardless of any possible contention of invalidity or
inapplicability with respect to the Applicable Law, regulation or condition.

          (b) A certificate of Agent or such Lender setting forth such amount or amounts as shall be
necessary to compensate Agent or such Lender with respect to Section 3.9(a) hereof when delivered
to Borrower shall be conclusive absent manifest error.

     3.10 Gross Up for Taxes. If Borrower shall be required by Applicable Law to withhold
or deduct any taxes from or in respect of any sum payable under this Agreement or any of the Other
Documents to Agent, or any Lender, assignee of any Lender, or Participant (each, individually, a
“Payee” and collectively, the “Payees”), (a) the sum payable to such Payee or
Payees, as the case may be, shall be increased as may be necessary so that, after making all
required withholding or deductions, the applicable Payee or Payees receives an amount equal to the
sum it would have received had no such withholding or deductions been made (the “Gross-Up
Payment”), (b) Borrower shall make such withholding or deductions, and (c) Borrower shall pay
the full amount withheld or deducted to the relevant taxation authority or other authority in
accordance with Applicable Law. Notwithstanding the foregoing, Borrower shall not be obligated to
make any portion of the Gross-Up Payment that is attributable to any withholding or deductions that
would not have been paid or claimed had the applicable Payee or Payees properly claimed a complete
exemption with respect thereto pursuant to Section 3.11 hereof.

     3.11 Withholding Tax Exemption.

          (a) Each Payee that is not incorporated under the Laws of the United States of America or a
state thereof (and, upon the written request of Agent, each other Payee) shall deliver to Borrower
and Agent two (2) duly completed appropriate valid Withholding Certificates (as defined under
§1.1441-1(c)(16) of the Income Tax Regulations (“Regulations”)) certifying its status
(i.e., U.S. or foreign person) and, if appropriate, making a claim of reduced, or exemption from,
U.S. withholding tax on the basis of an income tax treaty or an exemption provided by the Code.
The term “Withholding Certificate” means a Form W-9; a Form W-8BEN; a Form W-8ECI; a Form W-8IMY
and the related statements and certifications as required under §1.1441-1(e)(2) and/or (3) of the
Regulations; a statement described in §1.871-14(c)(2)(v) of the Regulations; or any other
certificates under the Code or Regulations that certify or establish the status of a payee or
beneficial owner as a U.S. or foreign person.

          (b) Each Payee required to deliver to Borrower and Agent a valid Withholding Certificate
pursuant to Section 3.11(a) hereof shall deliver such valid Withholding Certificate as follows:
(A) each Payee which is a party hereto on the Closing Date shall deliver such valid Withholding
Certificate at least five (5) Business Days prior to the first date on which any interest or fees
are payable by Borrower hereunder for the account of such Payee; (B) each Payee shall deliver such
valid Withholding Certificate at least five (5) Business Days before the effective date of such
assignment or participation. Each Payee which so delivers a valid Withholding Certificate further
undertakes to deliver to Borrower and Agent two (2) additional copies of such Withholding
Certificate (or a successor form) on or before the date that such Withholding Certificate expires
or becomes obsolete or after the occurrence of any event requiring a change in the most recent
Withholding Certificate so delivered by it, and such

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amendments thereto or extensions or renewals thereof as may be reasonably requested by
Borrower or Agent.

          (c) Notwithstanding the submission of a Withholding Certificate claiming a reduced rate of or
exemption from U.S. withholding tax required under Section 3.11(b) hereof, Agent shall be entitled
to withhold United States Federal income taxes at the full 30% withholding rate under Section 871
or 881 of the Code, as applicable (or any other rate set forth in any successor provision thereto
which may apply to such payment), if in its reasonable judgment it is required to do so under the
due diligence requirements imposed upon a withholding agent under §1.1441-7(b) of the Regulations.
Further, Agent is indemnified under §1.1461-1(e) of the Regulations against any claims and demands
of any Payee for the amount of any tax it deducts and withholds in accordance with regulations
under §1441 of the Code.

IV. REPRESENTATIONS AND WARRANTIES.

     Borrower represents and warrants as follows:

     4.1 Authority. Borrower has full power, authority and legal right to enter into this
Agreement and the Other Documents and to perform all its respective Obligations hereunder and
thereunder. This Agreement and the Other Documents have been duly executed and delivered by
Borrower, and this Agreement and the Other Documents constitute the legal, valid and binding
obligation of Borrower enforceable in accordance with their terms, except as such enforceability
may be limited by any applicable bankruptcy, insolvency, moratorium or similar laws affecting
creditors’ rights generally. The execution, delivery and performance of this Agreement and of the
Other Documents (a) are within Borrower’s corporate powers, have been duly authorized by all
necessary corporate action, are not in contravention of law or the terms of Borrower’s by-laws,
certificate of incorporation or other applicable documents relating to Borrower’s formation or to
the conduct of Borrower’s business or of any material agreement or undertaking to which Borrower is
a party or by which Borrower is bound, (b) shall not conflict with or violate any law or
regulation, or any judgment, order or decree of any Governmental Body applicable to Borrower or any
agreement by which it is bound, (c) shall not require the Consent of any Governmental Body or any
other Person, except those Consents set forth on Schedule 4.1 hereto, all of which shall have been
duly obtained, made or compiled prior to the Closing Date and which are in full force and effect
and (d) shall not conflict with, nor result in any breach in any of the provisions of or constitute
a default under or result in the creation of any Lien except Permitted Encumbrances upon any asset
of Borrower under the provisions of any agreement, charter document, instrument, by-law or other
instrument to which Borrower is a party or by which it or its property is a party or by which it
may be bound.

     4.2 Formation and Qualification.

          (a) Borrower is duly incorporated and in good standing under the laws of the state listed on
Schedule 4.2(a) and is qualified to do business and is in good standing in the states listed on
Schedule 4.2(a) which constitute all states in which qualification and good standing are necessary
for Borrower to conduct its business and own its property and where the failure to so qualify could
reasonably be expected to have a Material Adverse Effect. Borrower has delivered

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to Agent true and complete copies of its certificate of incorporation and by-laws and shall
promptly notify Agent of any amendment or material changes thereto.

          (b) The only Subsidiaries of Borrower are listed on Schedule 4.2(b).

     4.3 Survival of Representations and Warranties. All representations and warranties of
Borrower contained in this Agreement and the Other Documents shall be true at the time of
Borrower’s execution of this Agreement and the Other Documents, and shall survive the execution,
delivery and acceptance thereof by the parties thereto and the closing of the transactions
described therein or related thereto.

     4.4 Tax Returns. Borrower’s Federal tax identification number is set forth on
Schedule 4.4. Borrower has filed all Federal, state and local tax returns and other reports it is
required by law to file and has paid all taxes, assessments, fees and other governmental charges
that are due and payable except those that are being contested by Borrower in good faith and with
respect to which reserves in accordance with GAAP have been provided on the books of Borrower.
Federal, state and local income tax returns of Borrower have been examined and reported upon by the
appropriate taxing authority or closed by applicable statute and satisfied for all fiscal years
prior to and including the fiscal year ending December 31, 2004. The provision for taxes on the
books of Borrower is adequate for all years not closed by applicable statutes, and for its current
fiscal year, and Borrower has no knowledge of any deficiency or additional assessment in connection
therewith not provided for on its books.

     4.5 Financial Statements. The consolidated and consolidating balance sheets of
Borrower, its Subsidiaries and such other Persons described therein (including the accounts of all
Subsidiaries for the respective periods during which a subsidiary relationship existed) as of
September 30, 2005, and the related statements of income, changes in stockholder’s equity, and
changes in cash flow for the period ended on such date, copies of which have been delivered to
Agent, have been prepared in accordance with GAAP, consistently applied (subject to normal year-end
adjustments and the absence of footnote disclosures) and present fairly the financial position of
Borrower and its Subsidiaries at such date and the results of their operations for such period.
Since September 30, 2005 there has been no change in the condition, financial or otherwise, of
Borrower or its Subsidiaries as shown on the consolidated balance sheet as of such date, except
changes in the Ordinary Course of Business, none of which individually or in the aggregate has been
materially adverse.

     4.6 Entity Name. Borrower has not been known by any other corporate name in the past
five years nor has Borrower been the surviving corporation of a merger or consolidation or acquired
all or substantially all of the assets of any Person during the preceding five (5) years.

     4.7 O.S.H.A. and Environmental Compliance.

          (a) To the extent applicable to Borrower, Borrower has duly complied with, and its facilities,
business, assets, property, leaseholds, real property and equipment are in compliance in all
material respects with, the provisions of the Federal Occupational Safety and Health Act, the
Environmental Protection Act, RCRA and all other Environmental Laws; there have been no outstanding
citations, notices or orders of non-compliance issued to Borrower or

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          relating to its business, assets, property, leaseholds or equipment under any such laws, rules
or regulations.

          (b) Borrower has been issued all required Federal, state and local licenses, certificates or
permits relating to all applicable environmental laws necessary to the operations of the business
of Borrower.

     4.8 Solvency; No Litigation, Violation, Indebtedness or Default.

          (a) After giving effect to the Transactions, Borrower shall be solvent, able to pay its debts
as they mature, shall have capital sufficient to carry on its business and all businesses in which
it is about to engage, and (i) as of the Closing Date, the fair present saleable value of its
assets, calculated on a going concern basis, is in excess of the amount of its liabilities and (ii)
subsequent to the Closing Date, the fair saleable value of its assets (calculated on a going
concern basis) shall be in excess of the amount of its liabilities.

          (b) Except as disclosed in Schedule 4.8(b), Borrower has no (i) pending or threatened
litigation, arbitration, actions or proceedings which could reasonably be expected to have a
Material Adverse Effect, and (ii) liabilities or indebtedness for borrowed money other than the
Obligations.

          (c) Borrower is not in violation of any applicable statute, law, rule, regulation or ordinance
in any respect which could reasonably be expected to have a Material Adverse Effect, nor is
Borrower in violation of any order applicable to Borrower, of any court, Governmental Body or
arbitration board or tribunal.

          (d) Neither Borrower nor any member of the Controlled Group maintains or contributes to any
Plan other than those listed on Schedule 4.8(d) hereto. (i) No Plan has incurred any “accumulated
funding deficiency,” as defined in Section 302(a)(2) of ERISA and Section 412(a) of the Code,
whether or not waived, and Borrower and each member of the Controlled Group has met all applicable
minimum funding requirements under Section 302 of ERISA in respect of each Plan; (ii) each Plan
which is intended to be a qualified plan under Section 401(a) of the Code as currently in effect
has been determined by the Internal Revenue Service to be qualified under Section 401(a) of the
Code and the trust related thereto is exempt from Federal income tax under Section 501(a) of the
Code; (iii) neither Borrower nor any member of the Controlled Group has incurred any liability to
the PBGC other than for the payment of premiums, and there are no premium payments which have
become due which are unpaid; (iv) no Plan has been terminated by the plan administrator thereof nor
by the PBGC, and there is no occurrence which would cause the PBGC to institute proceedings under
Title IV of ERISA to terminate any Plan; (v) at this time, the current value of the assets of each
Plan exceeds the present value of the accrued benefits and other liabilities of such Plan and
neither Borrower nor any member of the Controlled Group knows of any facts or circumstances which
would materially change the value of such assets and accrued benefits and other liabilities; (vi)
neither Borrower nor any member of the Controlled Group has breached any of the responsibilities,
obligations or duties imposed on it by ERISA with respect to any Plan; (vii) neither Borrower nor
any member of a Controlled Group has incurred any liability for any excise tax arising under
Section 4972 or 4980B of the Code, and no fact exists which could give rise to

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any such liability; (viii) neither Borrower nor any member of the Controlled Group nor any
fiduciary of, nor any trustee to, any Plan, has engaged in a “prohibited transaction” described in
Section 406 of the ERISA or Section 4975 of the Code nor taken any action which would constitute or
result in a Termination Event with respect to any such Plan which is subject to ERISA; (ix)
Borrower and each member of the Controlled Group has made all contributions due and payable with
respect to each Plan; (x) there exists no event described in Section 4043(b) of ERISA, for which
the thirty (30) day notice period has not been waived; (xi) neither Borrower nor any member of the
Controlled Group has any fiduciary responsibility for investments with respect to any plan existing
for the benefit of persons other than employees or former employees of Borrower and any member of
the Controlled Group; (xii) neither Borrower nor any member of the Controlled Group maintains or
contributes to any Plan which provides health, accident or life insurance benefits to former
employees, their spouses or dependents, other than in accordance with Section 4980B of the Code;
(xiii) neither Borrower nor any member of the Controlled Group has withdrawn, completely or
partially, from any Multiemployer Plan so as to incur liability under the Multiemployer Pension
Plan Amendments Act of 1980 and there exists no fact which would reasonably be expected to result
in any such liability; and (xiv) no Plan fiduciary (as defined in Section 3(21) of ERISA) has any
liability for breach of fiduciary duty or for any failure in connection with the administration or
investment of the assets of a Plan.

     4.9 Licenses and Permits. Except as set forth in Schedule 4.9, Borrower (a) is in
compliance with and (b) has procured and is now in possession of, all material licenses or permits
required by any applicable Federal, state or local law, rule or regulation for the operation of its
business in each jurisdiction wherein it is now conducting or proposes to conduct business and
where the failure to procure such licenses or permits could reasonably be expected to have a
Material Adverse Effect.

     4.10 Default of Indebtedness. Borrower is not in default in the payment of the
principal of or interest on any Indebtedness or under any instrument or agreement under or subject
to which any Indebtedness has been issued and no event has occurred under the provisions of any
such instrument or agreement which with or without the lapse of time or the giving of notice, or
both, constitutes or would constitute an event of default thereunder.

     4.11 No Default. Borrower is not in default in the payment or performance of any of
its contractual obligations and no Default has occurred that could reasonably be expected to have a
Material Adverse Effect.

     4.12 No Burdensome Restrictions. Borrower is not party to any contract or agreement
the performance of which could have a Material Adverse Effect. Borrower has heretofore delivered
to Agent true and complete copies of all material contracts requested by Agent to which it is a
party or to which it or any of its properties is subject. Borrower has not agreed or consented to
cause or permit in the future (upon the happening of a contingency or otherwise) any of its
property, whether now owned or hereafter acquired, to be subject to a Lien which is not a Permitted
Encumbrance and which could reasonably be expected to have a Material Adverse Effect.

     4.13 Margin Regulations. Borrower is not engaged, nor shall it engage, principally or
as one of its important activities, in the business of extending credit for the purpose of

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“purchasing” or “carrying” any “margin stock” within the respective meanings of each of the
quoted terms under Regulation U of the Board of Governors of the Federal Reserve System as now and
from time to time hereafter in effect. No part of the proceeds of any Advance shall be used for
“purchasing” or “carrying” “margin stock” as defined in Regulation U of such Board of Governors.

     4.14 Investment Company Act. Borrower is not an “investment company” registered or
required to be registered under the Investment Company Act of 1940, as amended, nor is it
controlled by such a company.

     4.15 Disclosure. No representation or warranty made by Borrower in this Agreement or
in any financial statement, report, certificate or any other document furnished in connection
herewith or therewith contains any untrue statement of fact or omits to state any fact necessary to
make the statements herein or therein, in light of the circumstances under which they were made,
not misleading. There is no fact known to Borrower or which reasonably should be known to Borrower
which Borrower has not disclosed to Agent in writing with respect to the transactions contemplated
by this Agreement which could reasonably be expected to have a Material Adverse Effect.

     4.16 Conflicting Agreements. No provision of any mortgage, indenture, contract,
agreement, judgment, decree or order binding on Borrower conflicts with, or requires any Consent
which has not already been obtained to, or would in any way prevent the execution, delivery or
performance of, the terms of this Agreement or the Other Documents.

     4.17 Application of Certain Laws and Regulations. There is no law, statute, rule or
regulation applicable to Borrower, which regulates the incurrence of any Indebtedness.

     4.18 Business and Property of Borrower. Borrower does not propose to engage in any
business other than the business engaged in on the Closing Date.

     4.19 Anti-Terrorism Laws.

          (a) General. Neither Borrower nor any Affiliate of Borrower is in violation of any
Anti-Terrorism Law or engages in or conspires to engage in any transaction that evades or avoids,
or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set
forth in any Anti-Terrorism Law.

          (b) Executive Order No. 13224. Neither Borrower nor any Affiliate of Borrower or
their respective agents acting or benefiting in any capacity in connection with the Advances or
other transactions hereunder, is any of the following (each a “Blocked Person”):

               (i) a Person that is listed in the annex to, or is otherwise subject to the provisions of, the
Executive Order No. 13224;

               (ii) a Person owned or controlled by, or acting for or on behalf of, any Person that is
listed in the annex to, or is otherwise subject to the provisions of, the Executive Order No.
13224;

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               (iii) a Person or entity with which any Lender is prohibited from dealing or otherwise
engaging in any transaction by any Anti-Terrorism Law;

               (iv) a Person or entity that commits, threatens or conspires to commit or supports “terrorism”
as defined in the Executive Order No. 13224;

               (v) a Person or entity that is named as a “specially designated national” on the most current
list published by the U.S. Treasury Department Office of Foreign Asset Control at its official
website or any replacement website or other replacement official publication of such list, or

               (vi) a Person or entity who is affiliated or associated with a Person or entity listed above.

          (c) Neither Borrower or, to the knowledge of Borrower, any of its agents acting in any
capacity in connection with the Advances or other transactions hereunder (i) conducts any business
or engages in making or receiving any contribution of funds, goods or services to or for the
benefit of any Blocked Person, or (ii) deals in, or otherwise engages in any transaction relating
to, any property or interests in property blocked pursuant to the Executive Order No. 13224.

     4.20 Trading with the Enemy. Borrower has not engaged, nor does it intend to engage,
in any business or activity prohibited by the Trading with the Enemy Act.

V. AFFIRMATIVE COVENANTS.

     Borrower shall, until payment in full of the Obligations and termination of this Agreement:

     5.1 Reserved.

     5.2 Conduct of Business and Maintenance of Existence and Assets. (a) Conduct
continuously and operate actively its business according to good business practices and maintain
all of its properties useful or necessary in its business in good working order and condition
(reasonable wear and tear excepted and except as may be disposed of in accordance with the terms of
this Agreement); (b) keep in full force and effect its existence and comply in all material
respects with the laws and regulations governing the conduct of its business where the failure to
do so could reasonably be expected to have a Material Adverse Effect; and (c) make all such reports
and pay all such franchise and other taxes and license fees and do all such other acts and things
as may be lawfully required to maintain its rights, licenses, leases, powers and franchises under
the laws of the United States or any political subdivision thereof.

     5.3 Violations. Promptly notify Agent in writing of any violation of any law,
statute, regulation or ordinance of any Governmental Body, or of any agency thereof, applicable to
Borrower which could reasonably be expected to have a Material Adverse Effect.

     5.4 Financial Covenants.

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          (a) Net Worth. Maintain at all times Net Worth in an amount equal to not less than
(i) prior to the issuance of any equity securities after the Closing Date, $335,000, and (ii) upon
and following the issuance of any equity securities after the Closing Date, seventy-five percent
(75%) of the Borrower’s Net Worth after giving effect to such issuance.

          (b) Quarterly Net Income. For each fiscal quarter of Borrower, earn Net Income of not
less than $4,000,000.

          (c) Rolling Four Quarter Income. For the most recently ended fiscal quarter of
Borrower and the three preceding fiscal quarters of Borrower, earn Net Income of not less than
$20,000,000 provided, however, that with respect to Net Income set forth in the
financial statements for the fiscal quarter ending on December 31, 2005, for purposes of
calculating Borrower’s compliance with this covenant, such Net Income shall be annualized by
multiplying it by 1.33.

          (d) Maximum Post Shock Test. Cause at all times the result of the fair value, as set
forth in the Borrower’s balance sheet most recently delivered pursuant to Section 8.4 or 8.5
hereof, of Borrower’s portfolio of mortgage-backed securities minus Adjusted Net Portfolio Value of
such mortgage-backed securities to be less than twenty-five percent (25%) of Net Worth as set forth
in such balance sheet.

          (e) Maximum Indebtedness to Total Net Worth Ratio. Maintain as of the end of each
fiscal quarter of Borrower, a ratio of Indebtedness to Net Worth of not more than 9.0 to 1.0.

     5.5 Execution of Supplemental Instruments. Execute and deliver to Agent from time to
time, upon demand, and such other instruments as Agent may reasonably request, in order that the
full intent of this Agreement may be carried into effect.

     5.6 Payment of Indebtedness. Pay, discharge or otherwise satisfy at or before
maturity (subject, where applicable, to specified grace periods and, in the case of the trade
payables, to normal payment practices) all its obligations and liabilities of whatever nature,
except when the failure to do so could not reasonably be expected to have a Material Adverse Effect
or when the amount or validity thereof is currently being contested in good faith by appropriate
proceedings and Borrower shall have provided for such reserves as Agent may reasonably deem proper
and necessary.

     5.7 Standards of Financial Statements. Cause all financial statements referred to in
Sections 8.4, 8.5, 8.6, 8.7 and 8.8 as to which GAAP is applicable to be complete and correct in
all material respects (subject, in the case of interim financial statements, to normal year-end
audit adjustments) and to be prepared in reasonable detail and in accordance with GAAP applied
consistently throughout the periods reflected therein (except as concurred in by such reporting
accountants or officer, as the case may be, and disclosed therein).

VI. NEGATIVE COVENANTS.

     Borrower shall not, until satisfaction in full of the Obligations and termination of this
Agreement:

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     6.1 Prohibition on Fundamental Changes. (i) enter into any transaction of merger or
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation,
winding up or dissolution) or sell all or substantially all of its assets or acquire or form any
Subsidiaries or (ii) without the prior written consent of Agent, take any action that will cause
the issuance and delivery of any stock, securities or other interests in Borrower, however
denominated, to be registered under the Securities Act of 1933, as amended; provided,
however, that Borrower may merge or consolidate with (x) any wholly owned Subsidiary, or
(y) any other Person if Borrower is the surviving corporation; and provided,
further, that, if after giving effect thereto, no Event of Default would exist hereunder.
Borrower shall not change its fiscal year or method of accounting without the consent of Agent, and
Borrower shall give Agent at least fifteen (15) days prior written notice of any such requested
change, which notice shall include a detailed explanation of the changes intended to be made and
pro forma financial statements demonstrating the impact thereof.

     6.2 Reserved.

     6.3 Guarantees. Become liable upon the obligations or liabilities of any Person by
assumption, endorsement or guaranty thereof or otherwise (other than to Lenders) except (a) as
disclosed on Schedule 6.3; and (b) the endorsement of checks in the Ordinary Course of Business.

     6.4 Reserved.

     6.5 Dividends. Declare, pay or make any dividend or distribution on or in respect of
any Equity Interests of Borrower (other than dividends or distributions payable in its stock, or
split-ups or reclassifications of its stock) or apply any of its funds, property or assets to the
purchase, redemption or other retirement of any Equity Interests of Borrower if a Default or Event
of Default shall have occurred and be continuing, provided, however, that after the
occurrence and during the continuation of a Default or Event of Default, Borrower shall be
permitted to make such declaration or payment necessary to maintain its status as a real estate
investment trust under Sections 856-860 of the Code.

     6.6 Indebtedness. Create, incur, assume or suffer to exist any Indebtedness
(exclusive of trade debt) except in respect of (i) Indebtedness to Lenders; (ii) Indebtedness
disclosed on Schedule 6.6; (iii) Indebtedness incurred to extend, renew or refinance any
Indebtedness described in clause (ii) above, provided that such Indebtedness is in an
aggregate principal amount not greater than the aggregate principal amount of the Indebtedness
being extended, renewed or refinanced; and (iv) Indebtedness under repurchase agreements entered
into in the Ordinary Course of Business.

     6.7 Nature of Business. Substantially change the nature of the business in which it
is presently engaged, nor except as specifically permitted hereby purchase or invest, directly or
indirectly, in any assets or property other than in the Ordinary Course of Business for assets or
property which are useful in, necessary for and are to be used in its business as presently
conducted.

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     6.8 Transactions with Affiliates. Directly or indirectly, purchase, acquire or lease
any property from, or sell, transfer or lease any property to, or otherwise enter into any
transaction or deal with, any Affiliate which are in the Ordinary Course of Business, on an
arm’s-length basis on terms and conditions no less favorable than terms and conditions which would
have been obtainable from a Person other than an Affiliate.

     6.9 Fiscal Year and Accounting Changes. Change its fiscal year from a year ending on
December 31, or make any change (i) in accounting treatment and reporting practices except as
required by GAAP or by law, or, with Agent’s prior written consent, as permitted by GAAP or (ii) in
tax reporting treatment except as required by law, or, with Agent’s prior written consent, as
permitted by law.

     6.10 Amendment of Articles of Incorporation, By-Laws. Amend, modify or waive in any
manner that would be reasonably likely to adversely affect the Lenders any material term or
material provision of its Articles of Incorporation, by-laws or any other organizational document,
unless required by law.

     6.11 Compliance with ERISA. (i) (x) Maintain, or permit any member of the Controlled
Group to maintain, or (y) become obligated to contribute, or permit any member of the Controlled
Group to become obligated to contribute, to any Plan, other than those Plans disclosed on Schedule
4.8(d), (ii) engage, or permit any member of the Controlled Group to engage, in any non-exempt
“prohibited transaction”, as that term is defined in section 406 of ERISA and Section 4975 of the
Code, (iii) incur, or permit any member of the Controlled Group to incur, any “accumulated funding
deficiency”, as that term is defined in Section 302 of ERISA or Section 412 of the Code, (iv)
terminate, or permit any member of the Controlled Group to terminate, any Plan where such event
could result in any liability of Borrower or any member of the Controlled Group or the imposition
of a lien on the property of Borrower or any member of the Controlled Group pursuant to Section
4068 of ERISA, (v) assume, or permit any member of the Controlled Group to assume, any obligation
to contribute to any Multiemployer Plan not disclosed on Schedule 4.8(d), (vi) incur, or permit any
member of the Controlled Group to incur, any withdrawal liability to any Multiemployer Plan; (vii)
fail promptly to notify Agent of the occurrence of any Termination Event, (viii) fail to comply, or
permit a member of the Controlled Group to fail to comply, with the requirements of ERISA or the
Code or other Applicable Laws in respect of any Plan, (ix) fail to meet, or permit any member of
the Controlled Group to fail to meet, all minimum funding requirements under ERISA or the Code or
postpone or delay or allow any member of the Controlled Group to postpone or delay any funding
requirement with respect of any Plan.

     6.12 Anti-Terrorism Laws. For itself and any Affiliate or agent:

          (a) Conduct any business or engage in any transaction or dealing with any Blocked Person,
including the making or receiving any contribution of funds, goods or services to or for the
benefit of any Blocked Person.

          (b) Deal in, or otherwise engage in any transaction relating to, any property or interests in
property blocked pursuant to the Executive Order No. 13224.

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          (c) Engage in or conspire to engage in any transaction that evades or avoids, or has the
purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in the
Executive Order No. 13224, the USA PATRIOT Act or any other Anti-Terrorism Law. Borrower shall
deliver to Lenders any certification or other evidence requested from time to time by any Lender in
its sole discretion, confirming Borrower’s compliance with this Section.

     6.13 Trading with the Enemy Act. Engage in any business or activity in violation of
the Trading with the Enemy Act.

VII. CONDITIONS PRECEDENT.

     7.1 Conditions to Initial Advances. The agreement of Lenders to make the initial
Advances requested to be made on the Closing Date is subject to the satisfaction, or waiver by
Agent, immediately prior to or concurrently with the making of such Advances, of the following
conditions precedent:

          (a) Execution and Delivery of Closing Documents. Agent shall have received each of
this Agreement, the Revolving Credit Note, and each Other Document to which Borrower is a party,
duly executed and delivered by an authorized officer of Borrower;

          (b) Corporate Proceedings of Borrower. Agent shall have received a copy of the
resolutions in form and substance reasonably satisfactory to Agent, of the Board of Directors of
Borrower authorizing (i) the execution, delivery and performance of this Agreement, the Revolving
Credit Note and any related agreements, certified by the Secretary or an Assistant Secretary of
Borrower as of the Closing Date; and, such certificate shall state that the resolutions thereby
certified have not been amended, modified, revoked or rescinded as of the date of such certificate;

          (c) Incumbency Certificates of Borrower. Agent shall have received a certificate of
the Secretary or an Assistant Secretary of Borrower, dated the Closing Date, as to the incumbency
and signature of the officers of Borrower executing this Agreement, the Other Documents, any
certificate or other documents to be delivered by it pursuant hereto, together with evidence of the
incumbency of such Secretary or Assistant Secretary;

          (d) Certificates. Agent shall have received a copy of the Articles or Certificate of
Incorporation of Borrower and all amendments thereto, certified by the Secretary of State or other
appropriate official of its jurisdiction of incorporation, together with copies of the by-Laws of
Borrower and all agreements of Borrower’s shareholders, certified as accurate and complete by the
Secretary of Borrower;

          (e) Good Standing Certificates. Agent shall have received good standing certificates
for Borrower dated not more than twenty (20) days prior to the Closing Date, issued by the
Secretary of State or other appropriate official of Borrower’s jurisdiction of incorporation and
each jurisdiction where the conduct of Borrower’s business activities or the ownership of its
properties necessitates qualification;

          (f) Legal Opinion. Agent shall have received the executed legal opinion of counsel to
Borrower in form and substance satisfactory to Agent which shall cover such matters

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as Agent may reasonably require and Borrower hereby authorizes and directs such counsel to
deliver such opinions to Agent and Lenders;

          (g) No Litigation. (i) No litigation, investigation or proceeding before or by any
arbitrator or Governmental Body shall be continuing or threatened against Borrower or against the
officers or directors of Borrower (A) in connection with this Agreement, the Revolving Credit Note,
the Other Documents or any of the transactions contemplated thereby and which, in the reasonable
opinion of Agent, is deemed material or (B) which could, in the reasonable opinion of Agent, have a
Material Adverse Effect; and (ii) no injunction, writ, restraining order or other order of any
nature materially adverse to Borrower or the conduct of its business or inconsistent with the due
consummation of the Transactions shall have been issued by any Governmental Body;

          (h) Fees. Agent shall have received all fees payable to Agent and Lenders on or prior
to the Closing Date hereunder, including pursuant to Article III hereof;

          (i) Payment Instructions. Agent shall have received written instructions from
Borrower directing the application of proceeds of the initial Advances made pursuant to this
Agreement;

          (j) Consents. Agent shall have received any and all Consents necessary to permit the
effectuation of the transactions contemplated by this Agreement and the Other Documents;

          (k) No Adverse Material Change. (i) Since September 30, 2005, there shall not have
occurred any event, condition or state of facts which could reasonably be expected to have a
Material Adverse Effect and (ii) no representations made or information supplied to Agent or
Lenders shall have been proven to be inaccurate or misleading in any material respect;

          (l) Other Documents. Agent shall have received the executed Other Documents, all in
form and substance satisfactory to Agent;

          (m) Closing Certificate. Agent shall have received a closing certificate signed by
the Chief Financial Officer of Borrower dated as of the date hereof, stating that (i) all
representations and warranties set forth in this Agreement and the Other Documents are true and
correct on and as of such date, (ii) Borrower is on such date in compliance with all the terms and
provisions set forth in this Agreement and the Other Documents and (iii) on such date no Default or
Event of Default has occurred or is continuing;

          (n) Compliance with Applicable Laws. Agent shall be reasonably satisfied that
Borrower is in compliance with all pertinent Federal, state, local or territorial regulations
applicable to Borrower, including those with respect to the Federal Occupational Safety and Health
Act, the Environmental Protection Act, ERISA and the Trading with the Enemy Act; and

          (o) Other. All corporate and other proceedings, and all documents, instruments and
other legal matters in connection with the Transactions shall be satisfactory in form and substance
to Agent and its counsel.

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     7.2 Conditions to Each Advance. The agreement of Lenders to make any Advance
requested to be made on any Borrowing Date, is subject to the satisfaction of the following
conditions precedent as of the date such Advance is made:

          (a) Representations and Warranties. Each of the representations and warranties made
by Borrower in or pursuant to this Agreement, the Other Documents and any related agreements to
which it is a party, and each of the representations and warranties contained in any certificate,
document or financial or other statement furnished at any time under or in connection with this
Agreement, the Other Documents or any related agreement shall be true and correct in all material
respects on and as of such date as if made on and as of such date;

          (b) No Default. No Event of Default or Default shall have occurred and be continuing
on such date, or would exist after giving effect to the Advance requested to be made, on such date;
provided, however that Agent, in its sole discretion, may continue to make Advances notwithstanding
the existence of an Event of Default or Default and that any Advance so made shall not be deemed a
waiver of any such Event of Default or Default; and

          (c) Maximum Advances. In the case of any Advance requested to be made, after giving
effect thereto, the aggregate amount of such Advance shall not exceed the Maximum Advance Amount.

     Each request for an Advance by Borrower hereunder shall constitute a representation and
warranty by Borrower as of the date of such Advance that the conditions contained in this
subsection shall have been satisfied.

VIII. INFORMATION AS TO BORROWER.

     Borrower shall, until satisfaction in full of the Obligations and the termination of this
Agreement:

     8.1 Environmental Reports. Upon the written request of Agent, furnish Agent with a
certificate signed by the President of Borrower stating, to the best of his knowledge, that
Borrower is in compliance in all material respects with all Federal, state and local Environmental
Laws. To the extent Borrower is not in compliance with the foregoing laws, the certificate shall
set forth with specificity all areas of non-compliance and the proposed action Borrower shall
implement in order to achieve full compliance.

     8.2 Litigation. Promptly notify Agent in writing, by facsimile, or by email of any
claim, litigation, suit or administrative proceeding affecting Borrower, whether or not the claim
is covered by insurance, and of any litigation, suit or administrative proceeding, which could
reasonably be expected to have a Material Adverse Effect.

     8.3 Material Occurrences. Promptly notify Agent in writing upon the occurrence of (a)
any Event of Default or Default; (b) any event, development or circumstance whereby any financial
statements or other reports furnished to Agent fail in any material respect to present fairly, in
accordance with GAAP consistently applied, the financial condition or operating results of Borrower
as of the date of such statements; (c) any accumulated retirement plan funding deficiency which, if
such deficiency continued for two plan years and was not corrected as

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provided in Section 4971 of the Code, could subject Borrower to a tax imposed by Section 4971
of the Code; (d) each and every default by Borrower which permits the holders of any Indebtedness
of Borrower the outstanding principal amount of which exceeds $500,000, to accelerate maturity of
such Indebtedness, including the names and addresses of the holders of such Indebtedness, and the
amount of such Indebtedness; and (e) any other development in the business or affairs of Borrower,
which could reasonably be expected to have a Material Adverse Effect; in each case describing the
nature thereof and the action Borrower proposes to take with respect thereto.

     8.4 Annual Financial Statements. Furnish Agent within ninety (90) days after the end
of each fiscal year of Borrower, financial statements of Borrower, including, but not limited to,
statements of income and stockholders’ equity and cash flow from the beginning of the current
fiscal year to the end of such fiscal year and the balance sheet as at the end of such fiscal year,
all prepared in accordance with GAAP applied on a basis consistent with prior practices, and in
reasonable detail and reported upon without qualification by an independent certified public
accounting firm selected by Borrower and satisfactory to Agent. In addition, the reports shall be
accompanied by a Compliance Certificate.

     8.5 Quarterly Financial Statements. Furnish Agent within forty-five (45) days after
the end of each fiscal quarter, an unaudited balance sheet of Borrower and unaudited statements of
income and stockholders’ equity and cash flow of Borrower reflecting results of operations from the
beginning of the fiscal year to the end of such quarter and for such quarter, prepared on a basis
consistent with prior practices and complete and correct in all material respects, subject to
normal and recurring year end adjustments that individually and in the aggregate are not material
to Borrower’s business. The reports shall be accompanied by a Compliance Certificate.

     8.6 Other Reports. Furnish Agent as soon as available, but in any event within ten
(10) days after the issuance thereof, with copies of such financial statements, reports and returns
as Borrower shall send to its stockholders or file with the SEC.

     8.7 Additional Information. Furnish Agent with such additional information as Agent
shall reasonably request in order to enable Agent to determine whether the terms, covenants,
provisions and conditions of this Agreement and the Revolving Credit Note have been complied with
by Borrower including, without the necessity of any request by Agent, (a) copies of all
environmental audits and reviews, (b) at least thirty (30) days prior thereto, notice of Borrower’s
opening of any new office or place of business or Borrower’s closing of any existing office or
place of business, and (c) promptly upon Borrower’s learning thereof, notice of any labor dispute
to which Borrower may become a party, any strikes or walkouts relating to any of its plants or
other facilities, and the expiration of any labor contract to which Borrower is a party or by which
Borrower is bound.

     8.8 Notice of Suits, Adverse Events. Furnish Agent with prompt written notice of (i)
any lapse or other termination of any Consent issued to Borrower by any Governmental Body or any
other Person that is material to the operation of Borrower’s business, (ii) any refusal by any
Governmental Body or any other Person to renew or extend any such Consent; and (iii) copies of any
periodic or special reports filed by Borrower with any Governmental Body or Person, if such reports
indicate any material change in the business, operations, affairs or condition of Borrower,

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or if copies thereof are requested by Lender, and (iv) copies of any material notices and
other communications from any Governmental Body or Person which specifically relate to Borrower.

     8.9 ERISA Notices and Requests. Furnish Agent with prompt written notice in the event
that (i) Borrower or any member of the Controlled Group knows or has reason to know that a
Termination Event has occurred, together with a written statement describing such Termination Event
and the action, if any, which Borrower or any member of the Controlled Group has taken, is taking,
or proposes to take with respect thereto and, when known, any action taken or threatened by the
Internal Revenue Service, Department of Labor or PBGC with respect thereto, (ii) Borrower or any
member of the Controlled Group knows or has reason to know that a prohibited transaction (as
defined in Sections 406 of ERISA and 4975 of the Code) has occurred together with a written
statement describing such transaction and the action which Borrower or any member of the Controlled
Group has taken, is taking or proposes to take with respect thereto, (iii) a funding waiver request
has been filed with respect to any Plan together with all communications received by Borrower or
any member of the Controlled Group with respect to such request, (iv) any increase in the benefits
of any existing Plan or the establishment of any new Plan or the commencement of contributions to
any Plan to which Borrower or any member of the Controlled Group was not previously contributing
shall occur, (v) Borrower or any member of the Controlled Group shall receive from the PBGC a
notice of intention to terminate a Plan or to have a trustee appointed to administer a Plan,
together with copies of each such notice, (vi) Borrower or any member of the Controlled Group shall
receive any favorable or unfavorable determination letter from the Internal Revenue Service
regarding the qualification of a Plan under Section 401(a) of the Code, together with copies of
each such letter; (vii) Borrower or any member of the Controlled Group shall receive a notice
regarding the imposition of withdrawal liability, together with copies of each such notice; (viii)
Borrower or any member of the Controlled Group shall fail to make a required installment or any
other required payment under Section 412 of the Code on or before the due date for such installment
or payment; (ix) Borrower or any member of the Controlled Group knows that (a) a Multiemployer Plan
has been terminated, (b) the administrator or plan sponsor of a Multiemployer Plan intends to
terminate a Multiemployer Plan, or (c) the PBGC has instituted or shall institute proceedings under
Section 4042 of ERISA to terminate a Multiemployer Plan.

     8.10 Pay Down Amounts. Furnish to Agent, on or prior to each Repayment Date, a
certificate signed by the Chief Financial Officer of Borrower, setting forth the calculation (and
attaching appropriate supporting documentation) of the Pay Down Amount with respect to the RMBS
identified in each Notice of Borrowing with respect to Advances required to be repaid on such
Repayment Date.

     8.11 Additional Documents. Execute and deliver to Agent, upon request, such documents
and agreements as Agent may, from time to time, reasonably request in writing to carry out the
purposes, terms or conditions of this Agreement.

IX. EVENTS OF DEFAULT.

     The occurrence of any one or more of the following events shall constitute an “Event of
Default”:

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     9.1 Nonpayment. Failure by Borrower to pay any principal or interest on the
Obligations when due, whether at maturity or by reason of acceleration pursuant to the terms of
this Agreement or by notice of intention to prepay, or by required prepayment or failure to pay any
other liabilities or make any other payment, fee or charge provided for herein when due or in any
Other Document in accordance with its terms;

     9.2 Breach of Representation. Any representation or warranty made or deemed made by
Borrower in this Agreement, any Other Document or any related agreement or in any certificate,
document or financial or other statement furnished at any time in connection herewith or therewith
shall prove to have been misleading in any material respect on the date when made or deemed to have
been made;

     9.3 Financial Information. Failure by Borrower to (i) furnish financial information
when due or when requested in accordance herewith, or (ii) permit the inspection of its books or
records to the extent required hereunder;

     9.4 Judicial Actions. Except with respect to Permitted Encumbrances, the issuance of
a notice of Lien, levy, assessment, injunction or attachment against a material portion of
Borrower’s property which is not stayed or lifted within thirty (30) days;

     9.5 Noncompliance. Failure or neglect of Borrower to (i) perform, keep or observe any
term, provision, condition, covenant herein contained, or contained in this Agreement or any Other
Document (ii) perform, keep or observe any term, provision, condition or covenant, contained in
Sections 5.3 or 8.2 hereof, in each case, which failure or neglect is not cured within ten (10)
days from the earlier of (x) Borrower’s knowledge of such failure or neglect; and (y) receipt by
Borrower of written notice thereof from Agent or a Lender; provided, however, that
Borrower’s failure to comply with Section 5.4(b) shall not constitute an Event of Default unless
such failure shall have occurred for two consecutive fiscal quarters of Borrower.

     9.6 Judgments. Any judgment or judgments are rendered or judgment liens filed against
Borrower, singly, or in an aggregate amount, in excess of $500,000, except to the extent that
either (i) within thirty (30) days of such rendering or filing, each such judgment is either
satisfied, stayed, bonded or discharged of record or (ii) Borrower is contesting each such judgment
in good faith and establishes reserves satisfactory to Agent and enforcement of each such judgment
or liens are continuously stayed;

     9.7 Bankruptcy of Borrower. Borrower shall (i) apply for, consent to or suffer the
appointment of, or the taking of possession by, a receiver, custodian, trustee, liquidator or
similar fiduciary of itself or of all or a substantial part of its property, (ii) make a general
assignment for the benefit of creditors, (iii) commence a voluntary case under any state or Federal
bankruptcy laws (as now or hereafter in effect), (iv) be adjudicated a bankrupt or insolvent, (v)
file a petition seeking to take advantage of any other law providing for the relief of debtors,
(vi) acquiesce to, or fail to have dismissed, within thirty (30) days, any petition filed against
it in any involuntary case under such bankruptcy laws, or (vii) take any action for the purpose of
effecting any of the foregoing;

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     9.8 Inability to Pay. Borrower shall admit in writing its inability, or be generally
unable, to pay its debts as they become due or cease operations of its present business;

     9.9 Material Adverse Effect. Any change in Borrower’s results of operations or
condition (financial or otherwise) which in Agent’s reasonable judgment has Material Adverse
Effect;

     9.10 Cross Default. A default of the obligations of Borrower under any other
agreement to which it is a party shall occur and such default is not cured within any applicable
grace period and could reasonably be expected to have a Material Adverse Effect;

     9.11 Change of Control. Any Change of Control shall occur;

     9.12 Invalidity. Any material provision of this Agreement or any Other Document
shall, for any reason, cease to be valid and binding on Borrower, or Borrower shall so claim in
writing to Agent or any Lender;

     9.13 Licenses. (i) Any Governmental Body shall (A) revoke, terminate, suspend or
adversely modify any license or permit of Borrower, the continuation of which is material to the
continuation of Borrower’s business, or (B) commence proceedings to suspend, revoke, terminate or
adversely modify any such license or permit and such proceedings shall not be dismissed or
discharged within sixty (60) days, or (c) schedule or conduct a hearing on the renewal of any
license or permit necessary for the continuation of Borrower’s business and the staff of such
Governmental Body issues a report recommending the termination, revocation, suspension or material,
adverse modification of such license or permit; (ii) any agreement which is necessary or material
to the operation of Borrower’s business shall be revoked or terminated and not replaced by a
substitute acceptable to Agent within thirty (30) days after the date of such revocation or
termination, and such revocation or termination and non-replacement would reasonably be expected to
have a Material Adverse Effect;

     9.14 Pension Plans. An event or condition specified in Sections 6.11 or 8.9 hereof
shall occur or exist with respect to any Plan and, as a result of such event or condition, together
with all other such events or conditions, Borrower or any member of the Controlled Group shall
incur, or in the opinion of Agent be reasonably likely to incur, a liability to a Plan or the PBGC
(or both) which, in the reasonable judgment of Agent, would have a Material Adverse Effect; or

     9.15 Borrowing and Pay Down Amounts. The aggregate Pay Down Amount, as reported
pursuant to Section 8.10 hereof, of each RMBS identified in a Notice of Borrowing shall be $250,000
less than the aggregate Advance made by Lenders based on such Notice of Borrowing.

X. LENDERS’ RIGHTS AND REMEDIES AFTER DEFAULT.

     10.1 Rights and Remedies. Upon the occurrence of (i) an Event of Default pursuant to
Section 9.7 all Obligations shall be immediately due and payable and this Agreement and the
obligation of Lenders to make Advances shall be deemed terminated (other than as may be required by
an appropriate order of the bankruptcy court having jurisdiction over Borrower); and (ii) any of
the other Events of Default and at any time thereafter (such default not having

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previously been cured), at the option of Required Lenders all Obligations shall be immediately
due and payable and Lenders shall have the right to terminate this Agreement and to terminate the
obligation of Lenders to make Advances. Upon the occurrence of any Event of Default, Agent shall
have the right to exercise any and all rights and remedies provided for herein, under the Other
Documents and at law or equity generally.

     10.2 Agent’s Discretion. Agent shall have the right in its sole discretion to
determine which rights or remedies Agent may at any time pursue, relinquish, subordinate, or modify
or to take any other action with respect thereto and such determination shall not in any way modify
or affect any of Agent’s or Lenders’ rights hereunder.

     10.3 Rights and Remedies not Exclusive. The foregoing rights and remedies are not
intended to be exhaustive and the exercise of any rights or remedy shall not preclude the exercise
of any other right or remedies provided for herein or otherwise provided by law, all of which shall
be cumulative and not alternative.

     10.4 Allocation of Payments After Event of Default. Notwithstanding any other
provisions of this Agreement to the contrary, after the occurrence and during the continuance of an
Event of Default, all amounts collected or received by Agent on account of the Obligations or any
other amounts outstanding under any of the Other Documents may, at Agent’s discretion, be paid over
or delivered as follows:

     FIRST, to the payment of all reasonable out-of-pocket costs and expenses (including reasonable
attorneys’ fees) of Agent in connection with enforcing its rights and the rights of the Lenders
under this Agreement and the Other Documents;

     SECOND, to the payment of any fees owed to Agent under this Agreement or any Other Document;

     THIRD, to the payment of all reasonable out-of-pocket costs and expenses (including reasonable
attorneys’ fees) of each of the Lenders in connection with enforcing its rights under this
Agreement and the Other Documents or otherwise with respect to the Obligations owing to such
Lender;

     FOURTH, to the payment of all of the Obligations consisting of accrued fees and interest;

     FIFTH, to the payment of the outstanding principal amount of the Obligations;

     SIXTH, to all other Obligations and other obligations which shall have become due and payable
under the Other Documents or otherwise and not repaid pursuant to clauses “FIRST” through “FIFTH”
above; and

     SEVENTH, to the payment of the surplus, if any, to whoever may be lawfully entitled to receive
such surplus.

     In carrying out the foregoing, (i) amounts received shall be applied in the numerical order
provided until exhausted prior to application to the next succeeding category; (ii) each of the

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Lenders shall receive (so long as it is not a Defaulting Lender) an amount equal to its pro
rata share (based on the proportion that the then outstanding Advances held by such Lender bears to
the aggregate then outstanding Advances) of amounts available to be applied pursuant to clauses
“FOURTH”, “FIFTH” and “SIXTH”.

XI. WAIVERS AND JUDICIAL PROCEEDINGS.

     11.1 Waiver of Notice. Borrower hereby waives notice of demand, presentment, protest
and notice thereof with respect to any and all instruments, notice of acceptance hereof, notice of
loans or advances made, credit extended, or any other action taken in reliance hereon, and all
other demands and notices of any description, except such as are expressly provided for herein.

     11.2 Delay. No delay or omission on Agent’s or any Lender’s part in exercising any
right, remedy or option shall operate as a waiver of such or any other right, remedy or option or
of any Default or Event of Default.

     11.3 Jury Waiver. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO
TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING UNDER THIS AGREEMENT OR
ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (B) IN
ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF
THEM WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE
WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE
AND EACH PARTY HEREBY CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE
DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENTS OF THE
PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

XII. EFFECTIVE DATE AND TERMINATION.

     12.1 Term. This Agreement, which shall inure to the benefit of and shall be binding
upon the respective successors and permitted assigns of Borrower, Agent and each Lender, shall
become effective on the date hereof and shall continue in full force and effect until March 1, 2009
(the “Term”) unless sooner terminated as herein provided. Borrower may terminate this
Agreement at any time upon ninety (90) days’ prior written notice upon payment in full of the
Obligations.

     12.2 Termination. The termination of the Agreement shall not affect Borrower’s,
Agent’s or any Lender’s rights, or any of the Obligations having their inception prior to the
effective date of such termination, and the provisions hereof shall continue to be fully operative
until all transactions entered into, rights or interests created or Obligations have been fully and

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indefeasibly paid, disposed of, concluded or liquidated. The rights granted to Agent and
Lenders hereunder shall continue in full force and effect, notwithstanding the termination of this
Agreement or the fact that Borrower’s Account may from time to time be temporarily in a zero or
credit position, until all of the Obligations of Borrower have been indefeasibly paid and performed
in full after the termination of this Agreement or Borrower has furnished Agent and Lenders with an
indemnification satisfactory to Agent and Lenders with respect thereto. All representations,
warranties, covenants, waivers and agreements contained herein shall survive termination hereof
until all Obligations are indefeasibly paid and performed in full.

XIII. REGARDING AGENT.

     13.1 Appointment. Each Lender hereby designates Signature to act as Agent for such
Lender under this Agreement and the Other Documents. Each Lender hereby irrevocably authorizes
Agent to take such action on its behalf under the provisions of this Agreement and the Other
Documents and to exercise such powers and to perform such duties hereunder and thereunder as are
specifically delegated to or required of Agent by the terms hereof and thereof and such other
powers as are reasonably incidental thereto and Agent shall hold all payments of principal and
interest, fees (except the fees set forth in Section 3.2(a), charges and collections (without
giving effect to any collection days) received pursuant to this Agreement, for the ratable benefit
of Lenders. Agent may perform any of its duties hereunder by or through its agents or employees.
As to any matters not expressly provided for by this Agreement (including collection of the
Revolving Credit Note) Agent shall not be required to exercise any discretion or take any action,
but shall be required to act or to refrain from acting (and shall be fully protected in so acting
or refraining from acting) upon the instructions of the Required Lenders, and such instructions
shall be binding; provided, however, that Agent shall not be required to take any action which
exposes Agent to liability or which is contrary to this Agreement or the Other Documents or
Applicable Law unless Agent is furnished with an indemnification reasonably satisfactory to Agent
with respect thereto.

     13.2 Nature of Duties. Agent shall have no duties or responsibilities except those
expressly set forth in this Agreement and the Other Documents. Neither Agent nor any of its
officers, directors, employees or agents shall be (i) liable for any action taken or omitted by
them as such hereunder or in connection herewith, unless caused by their gross (not mere)
negligence or willful misconduct (as determined by a court of competent jurisdiction in a final
non-appealable judgment), or (ii) responsible in any manner for any recitals, statements,
representations or warranties made by Borrower or any officer thereof contained in this Agreement,
or in any of the Other Documents or in any certificate, report, statement or other document
referred to or provided for in, or received by Agent under or in connection with, this Agreement or
any of the Other Documents or for the value, validity, effectiveness, genuineness, due execution,
enforceability or sufficiency of this Agreement, or any of the Other Documents or for any failure
of Borrower to perform its obligations hereunder. Agent shall not be under any obligation to any
Lender to ascertain or to inquire as to the observance or performance of any of the agreements
contained in, or conditions of, this Agreement or any of the Other Documents, or to inspect the
properties, books or records of Borrower. The duties of Agent as respects the Advances to Borrower
shall be mechanical and administrative in nature; Agent shall not have by reason of this Agreement
a fiduciary relationship in respect of any Lender; and nothing in this

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Agreement, expressed or implied, is intended to or shall be so construed as to impose upon
Agent any obligations in respect of this Agreement except as expressly set forth herein.

     13.3 Lack of Reliance on Agent and Resignation. Independently and without reliance
upon Agent or any other Lender, each Lender has made and shall continue to make (i) its own
independent investigation of the financial condition and affairs of Borrower in connection with the
making and the continuance of the Advances hereunder and the taking or not taking of any action in
connection herewith, and (ii) its own appraisal of the creditworthiness of Borrower. Agent shall
have no duty or responsibility, either initially or on a continuing basis, to provide any Lender
with any credit or other information with respect thereto, whether coming into its possession
before making of the Advances or at any time or times thereafter except as shall be provided by
Borrower pursuant to the terms hereof. Agent shall not be responsible to any Lender for any
recitals, statements, information, representations or warranties herein or in any agreement,
document, certificate or a statement delivered in connection with or for the execution,
effectiveness, genuineness, validity, enforceability, collectibility or sufficiency of this
Agreement or any Other Document, or of the financial condition of Borrower, or be required to make
any inquiry concerning either the performance or observance of any of the terms, provisions or
conditions of this Agreement, the Revolving Credit Note, the Other Documents or the financial
condition of Borrower, or the existence of any Event of Default or any Default.

     Agent may resign on sixty (60) days’ written notice to each of Lenders and Borrower and upon
such resignation, the Required Lenders shall promptly designate a successor Agent reasonably
satisfactory to Borrower.

     Any such successor Agent shall succeed to the rights, powers and duties of Agent, and the term
“Agent” shall mean such successor agent effective upon its appointment, and the former Agent’s
rights, powers and duties as Agent shall be terminated, without any other or further act or deed on
the part of such former Agent. After any Agent’s resignation as Agent, the provisions of this
Article XIII shall inure to its benefit as to any actions taken or omitted to be taken by it while
it was Agent under this Agreement.

     13.4 Certain Rights of Agent. If Agent shall request instructions from Lenders with
respect to any act or action (including failure to act) in connection with this Agreement or any
Other Document, Agent shall be entitled to refrain from such act or taking such action unless and
until Agent shall have received instructions from the Required Lenders; and Agent shall not incur
liability to any Person by reason of so refraining. Without limiting the foregoing, Lenders shall
not have any right of action whatsoever against Agent as a result of its acting or refraining from
acting hereunder in accordance with the instructions of the Required Lenders.

     13.5 Reliance. Agent shall be entitled to rely, and shall be fully protected in
relying, upon any note, writing, resolution, notice, statement, certificate, telex, teletype or
telecopier message, cablegram, order or other document or telephone message believed by it to be
genuine and correct and to have been signed, sent or made by the proper person or entity, and, with
respect to all legal matters pertaining to this Agreement and the Other Documents and its duties
hereunder, upon advice of counsel selected by it. Agent may employ agents and attorneys-in-fact
and shall not be liable for the default or misconduct of any such agents or attorneys-in-fact
selected by Agent with reasonable care.

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     13.6 Notice of Default. Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default hereunder or under the Other Documents, unless Agent
has received notice from a Lender or Borrower referring to this Agreement or the Other Documents,
describing such Default or Event of Default and stating that such notice is a “notice of default”.
In the event that Agent receives such a notice, Agent shall give notice thereof to Lenders. Agent
shall take such action with respect to such Default or Event of Default as shall be reasonably
directed by the Required Lenders; provided, that, unless and until Agent shall have received such
directions, Agent may (but shall not be obligated to) take such action, or refrain from taking such
action, with respect to such Default or Event of Default as it shall deem advisable in the best
interests of Lenders.

     13.7 Indemnification. To the extent Agent is not reimbursed and indemnified by
Borrower, each Lender shall reimburse and indemnify Agent in proportion to its respective portion
of the Advances (or, if no Advances are outstanding, according to its Commitment Percentage), 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 Agent in performing its duties hereunder, or in any way relating to
or arising out of this Agreement or any Other Document; provided that, Lenders shall not be liable
for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from Agent’s gross (not mere) negligence or
willful misconduct (as determined by a court of competent jurisdiction in a final non-appealable
judgment).

     13.8 Agent in its Individual Capacity. With respect to the obligation of Agent to
lend under this Agreement, the Advances made by it shall have the same rights and powers hereunder
as any other Lender and as if it were not performing the duties as Agent specified herein; and the
term “Lender” or any similar term shall, unless the context clearly otherwise indicates, include
Agent in its individual capacity as a Lender. Agent may engage in business with Borrower as if it
were not performing the duties specified herein, and may accept fees and other consideration from
Borrower for services in connection with this Agreement or otherwise without having to account for
the same to Lenders.

     13.9 Delivery of Documents. To the extent Agent receives financial statements
required under Sections 8.4 and 8.5, which Borrower is not obligated to deliver to each Lender,
Agent shall promptly furnish such documents and information to Lenders.

     13.10 Borrower’s Undertaking to Agent. Without prejudice to its obligations to
Lenders under the other provisions of this Agreement, Borrower hereby undertakes with Agent to pay
to Agent from time to time on demand all amounts from time to time due and payable by it for the
account of Agent or Lenders or any of them pursuant to this Agreement to the extent not already
paid. Any payment made pursuant to any such demand shall pro tanto satisfy the relevant Borrower’s
obligations to make payments for the account of Lenders or the relevant one or more of them
pursuant to this Agreement.

     13.11 No Reliance on Agent’s Customer Identification Program. Each Lender
acknowledges and agrees that neither such Lender, nor any of its Affiliates, participants or
assignees, may rely on Agent to carry out such Lender’s, Affiliate’s, participant’s or assignee’s

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customer identification program, or other obligations required or imposed under or pursuant to
the USA PATRIOT Act or the regulations thereunder, including the regulations contained in 31 CFR
103.121 (as hereafter amended or replaced, the “CIP Regulations”), or any other Anti-Terrorism Law,
including any programs involving any of the following items relating to or in connection with
Borrower, its Affiliates or its agents, this Agreement, the Other Documents or the transactions
hereunder or contemplated hereby: (1) any identity verification procedures, (2) any record-keeping,
(3) comparisons with government lists, (4) customer notices or (5) other procedures required under
the CIP Regulations or such other laws.

     13.12 Other Agreements. Each of the Lenders agrees that it shall not, without the
express consent of Agent, and that it shall, to the extent it is lawfully entitled to do so, upon
the request of Agent, set off against the Obligations, any amounts owing by such Lender to Borrower
or any deposit accounts of Borrower now or hereafter maintained with such Lender. Anything in this
Agreement to the contrary notwithstanding, each of the Lenders further agrees that it shall not,
unless specifically requested to do so by Agent, take any action to protect or enforce its rights
arising out of this Agreement or the Other Documents, it being the intent of Lenders that any such
action to protect or enforce rights under this Agreement and the Other Documents shall be taken in
concert and at the direction or with the consent of Agent or Required Lenders.

XIV. MISCELLANEOUS.

     14.1 Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York applied to contracts to be performed wholly within the State
of New York. Any judicial proceeding brought by or against Borrower, Agent or any Lender with
respect to any of the Obligations, this Agreement, the Other Documents or any related agreement may
be brought in any court of competent jurisdiction in the State of New York, United States of
America, and, by execution and delivery of this Agreement, Borrower, Agent and the Lender accepts
for itself and in connection with its properties, generally and unconditionally, the non-exclusive
jurisdiction of the aforesaid courts, and irrevocably agrees to be bound by any judgment rendered
thereby in connection with this Agreement. Each of Borrower, Agent and the Lender hereby waives
personal service of any and all process upon it and consents that all such service of process may
be made by registered mail (return receipt requested) directed to Borrower, Agent, or such Lender,
as applicable, at its address set forth in Section 14.6 and service so made shall be deemed
completed five (5) days after the same shall have been so deposited in the mails of the United
States of America. Nothing herein shall affect the right to serve process in any manner permitted
by law or shall limit the right of Borrower, Agent or any Lender to bring proceedings against any
other party hereto in the courts of any other jurisdiction. Each of Borrower, Agent and each
Lender waives any objection to jurisdiction and venue of any action instituted hereunder and shall
not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens.
Any judicial proceeding by Borrower against Agent or any Lender involving, directly or indirectly,
any matter or claim in any way arising out of, related to or connected with this Agreement or any
related agreement, shall be brought only in a Federal or state court located in the County of New
York, State of New York.

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     14.2 Entire Understanding. (a) This Agreement and the documents executed
concurrently herewith contain the entire understanding between Borrower, Agent and each Lender and
supersedes all prior agreements and understandings, if any, relating to the subject matter hereof.
Any promises, representations, warranties or guarantees not herein contained and hereinafter made
shall have no force and effect unless in writing, signed by Borrower’s, Agent’s and each Lender’s
respective officers. Neither this Agreement nor any portion or provisions hereof may be changed,
modified, amended, waived, supplemented, discharged, cancelled or terminated orally or by any
course of dealing, or in any manner other than by an agreement in writing, signed by the party to
be charged. Borrower acknowledges that it has been advised by counsel in connection with the
execution of this Agreement and Other Documents and is not relying upon oral representations or
statements inconsistent with the terms and provisions of this Agreement.

          (b) The Required Lenders, Agent with the consent in writing of the Required Lenders, and
Borrower may, subject to the provisions of this Section 14.2 (b), from time to time enter into
written supplemental agreements to this Agreement or the Other Documents executed by Borrower, for
the purpose of adding or deleting any provisions or otherwise changing, varying or waiving in any
manner the rights of Lenders, Agent or Borrower thereunder or the conditions, provisions or terms
thereof of waiving any Event of Default thereunder, but only to the extent specified in such
written agreements; provided, however, that no such supplemental agreement shall, without the
consent of all Lenders:

               (i) increase the Commitment Percentage, the maximum dollar commitment of any Lender or the
Maximum Advance Amount;

               (ii) extend the maturity of the Revolving Credit Note or the due date for any amount payable
hereunder, or decrease the rate of interest or reduce any fee payable by Borrower to Lenders
pursuant to this Agreement;

               (iii) alter the definition of the term Required Lenders or alter, amend or modify this Section
14.2(b); or

               (iv) change the rights and duties of Agent.

          (c) Any such supplemental agreement shall apply equally to each Lender and shall be binding
upon Borrower, Lenders and Agent and all future holders of the Obligations. In the case of any
waiver, Borrower, Agent and Lenders shall be restored to their former positions and rights, and any
Event of Default waived shall be deemed to be cured and not continuing, but no waiver of a specific
Event of Default shall extend to any subsequent Event of Default (whether or not the subsequent
Event of Default is the same as the Event of Default which was waived), or impair any right
consequent thereon.

     14.3 Successors and Assigns; Participations; New Lenders.

          (a) This Agreement shall be binding upon and inure to the benefit of Borrower, Agent, each
Lender, all future holders of the Obligations and their respective successors and assigns, except
that Borrower may not assign or transfer any of its rights or obligations under this Agreement
without the prior written consent of Agent and each Lender.

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          (b) Borrower acknowledges that in the regular course of commercial banking business one or
more Lenders may at any time and from time to time sell participating interests in the Advances to
a Participant. Each Participant may exercise all rights of payment (including rights of set-off)
with respect to the portion of such Advances held by it or other Obligations payable hereunder as
fully as if such Participant were the direct holder thereof provided that Borrower shall not be
required to pay to any Participant more than the amount which it would have been required to pay to
Lender which granted an interest in its Advances or other Obligations payable hereunder to such
Participant had such Lender retained such interest in the Advances hereunder or other Obligations
payable hereunder and in no event shall Borrower be required to pay any such amount arising from
the same circumstances and with respect to the same Advances or other Obligations payable hereunder
to both such Lender and such Participant. Borrower hereby grants to any Participant a continuing
security interest in any deposits, moneys or other property actually or constructively held by such
Participant as security for the Participant’s interest in the Advances.

          (c) Any Lender may with the consent of Agent which shall not be unreasonably withheld or
delayed sell, assign or transfer all or any part of its rights under this Agreement and the Other
Documents to one or more additional banks or financial institutions and one or more additional
banks or financial institutions may commit to make Advances hereunder (each a “Purchasing
Lender”, and together with each Participant, each a “Transferee” and collectively the
“Transferees”), in minimum amounts of not less than $5,000,000, pursuant to a Commitment
Transfer Supplement, executed by a Purchasing Lender, the transferor Lender, and Agent and
delivered to Agent for recording. Upon such execution, delivery, acceptance and recording, from
and after the transfer effective date determined pursuant to such Commitment Transfer Supplement,
(i) Purchasing Lender thereunder shall be a party hereto and, to the extent provided in such
Commitment Transfer Supplement, have the rights and obligations of a Lender thereunder with a
Commitment Percentage as set forth therein, and (ii) the transferor Lender thereunder shall, to the
extent provided in such Commitment Transfer Supplement, be released from its obligations under this
Agreement, the Commitment Transfer Supplement creating a novation for that purpose. Such
Commitment Transfer Supplement shall be deemed to amend this Agreement to the extent, and only to
the extent, necessary to reflect the addition of such Purchasing Lender and the resulting
adjustment of the Commitment Percentages arising from the purchase by such Purchasing Lender of all
or a portion of the rights and obligations of such transferor Lender under this Agreement and the
Other Documents. Borrower hereby consents to the addition of such Purchasing Lender and the
resulting adjustment of the Commitment Percentages arising from the purchase by such Purchasing
Lender of all or a portion of the rights and obligations of such transferor Lender under this
Agreement and the Other Documents. Borrower shall execute and deliver such further documents and
do such further acts and things reasonably requested in writing by Agent in order to effectuate the
foregoing.

          (d) Agent shall maintain at its address a copy of each Commitment Transfer Supplement
delivered to it and a register (the “Register”) for the recordation of the names and
addresses of each Lender and the outstanding principal, accrued and unpaid interest and other fees
due hereunder. The entries in the Register shall be conclusive, in the absence of manifest error,
and Borrower, Agent and Lenders may treat each Person whose name is recorded in the Register as the
owner of the Advance recorded therein for the purposes of this Agreement. The Register shall be
available for inspection by Borrower or any Lender at any reasonable time and

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from time to time upon reasonable prior notice. Agent shall receive a fee in the amount of
$3,500 payable by the applicable Purchasing Lender upon the effective date of each transfer or
assignment to such Purchasing Lender.

          (e) Borrower authorizes each Lender to disclose to any Transferee and any prospective
Transferee any and all financial information in such Lender’s possession concerning Borrower which
has been delivered to such Lender by or on behalf of Borrower pursuant to this Agreement or in
connection with such Lender’s credit evaluation of Borrower.

     14.4 Application of Payments. Agent shall have the continuing and exclusive right to
apply or reverse and re-apply any payment to any portion of the Obligations. To the extent that
Borrower makes a payment or Agent or any Lender receives any payment for Borrower’s benefit, which
are subsequently invalidated, declared to be fraudulent or preferential, set aside or required to
be repaid to a trustee, debtor in possession, receiver, custodian or any other party under any
bankruptcy law, common law or equitable cause, then, to such extent, the Obligations or part
thereof intended to be satisfied shall be revived and continue as if such payment or proceeds had
not been received by Agent or such Lender.

     14.5 Indemnity. Borrower shall indemnify Agent, each Lender and each of their
respective officers, directors, Affiliates, attorneys, employees and agents from and against any
and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses and disbursements of any kind or nature whatsoever (including fees and disbursements of
counsel) which may be imposed on, incurred by, or asserted against Agent or any Lender in any
claim, litigation, proceeding or investigation instituted or conducted by any Governmental Body or
instrumentality or any other Person with respect to any aspect of, or any transaction contemplated
by, or referred to in, or any matter related to, this Agreement or the Other Documents, whether or
not Agent or any Lender is a party thereto, except to the extent that any of the foregoing arises
out of the willful misconduct or gross negligence of the party being indemnified (as determined by
a court of competent jurisdiction in a final and non-appealable judgment). Without limiting the
generality of the foregoing, this indemnity shall extend to any liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses and disbursements of any kind or
nature whatsoever (including fees and disbursements of counsel) asserted against or incurred by any
of the indemnitees described above in this Section 14.5 by any Person under any Environmental Laws
or similar laws by reason of Borrower’s or any other Person’s failure to comply with laws
applicable to solid or hazardous waste materials, including Hazardous Substances and Hazardous
Waste, or other Toxic Substances. Additionally, if any taxes (excluding taxes imposed upon or
measured solely by the net income of Agent and Lenders, but including any intangibles taxes, stamp
tax, recording tax or franchise tax) shall be payable by Agent or Lenders on account of the
execution or delivery of this Agreement, or the execution, delivery, issuance or recording of any
of the Other Documents, or the creation or repayment of any of the Obligations hereunder, by reason
of any Applicable Law now or hereafter in effect, Borrower shall pay (or shall promptly reimburse
Agent and Lenders for payment of) to the extent not otherwise required to be paid pursuant to the
terms of this Agreement, all such taxes, including interest and penalties thereon, and shall
indemnify and hold the indemnitees described above in this Section 14.5 harmless from and against
all liability in connection therewith.

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     14.6 Notice. Any notice or request hereunder may be given to Borrower or to Agent or
any Lender at their respective addresses set forth below or at such other address as may hereafter
be specified in a notice designated as a notice of change of address under this Section. Any
notice, request, demand, direction or other communication (for purposes of this Section 14.6 only,
a “Notice”) to be given to or made upon any party hereto under any provision of this
Agreement shall be given or made by telephone or in writing (which includes by means of electronic
transmission (i.e., “e-mail”) or facsimile transmission in accordance with this Section 14.6. Any
such Notice must be delivered to the applicable parties hereto at the addresses and numbers set
forth under their respective names on Section 14.6 hereof or in accordance with any subsequent
unrevoked Notice from any such party that is given in accordance with this Section 14.6. Any
Notice shall be effective:

          (a) In the case of hand-delivery, when delivered;

          (b) If given by mail, four days after such Notice is deposited with the United States Postal
Service, with first-class postage prepaid, return receipt requested;

          (c) In the case of a telephonic Notice, when a party is contacted by telephone, if delivery of
such telephonic Notice is confirmed no later than the next Business Day by hand delivery, a
facsimile or electronic transmission, a Website Posting or an overnight courier delivery of a
confirmatory Notice (received at or before noon on such next Business Day);

          (d) In the case of a facsimile transmission, when sent to the applicable party’s facsimile
machine’s telephone number, if the party sending such Notice receives confirmation of the delivery
thereof from its own facsimile machine;

          (e) In the case of electronic transmission, when actually received; and

          (f) If given by any other means (including by overnight courier), when actually received.

     Any Lender giving a Notice to Borrower shall concurrently send a copy thereof to Agent, and
Agent shall promptly notify the other Lenders of its receipt of such Notice.

If to Agent at:

Signature Bank

565 Fifth Avenue, 12th Floor

New York, New York 10016

Attention: Thomas Kasulka

Telephone: (646) 822-1826

Facsimile: (646) 822-1833

with a copy to:

Blank Rome LLP

The Chrysler Building

405 Lexington Avenue

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New York, New York 10174

Attention: Michael S. Mullman

Telephone: (212) 885-5517

Facsimile: (212) 885-5001

If to Borrower:

Crystal River Capital, Inc.

c/o Hyperion Capital Management, Inc.

One Liberty Plaza

165 Broadway, Floor 36

New York, New York 10006-1404

Attention: Daniel S. Kim

Telephone: (212) 549-8465

Facsimile: (212) 549-8310

If to Lenders:

Signature Bank

565 Fifth Avenue, 12th Floor

New York, New York 10016

Attention: Thomas Kasulka

Telephone: (646) 822-1826

Facsimile: (646) 822-1833

     14.7 Survival. The obligations of Borrower under Sections 2.2(c), 3.7, 3.8, 3.9 and
14.5 and the obligations of Lenders under Section 14.7, shall survive termination of this Agreement
and the Other Documents and payment in full of the Obligations.

     14.8 Severability. If any part of this Agreement is contrary to, prohibited by, or
deemed invalid under Applicable Laws or regulations, such provision shall be inapplicable and
deemed omitted to the extent so contrary, prohibited or invalid, but the remainder hereof shall not
be invalidated thereby and shall be given effect so far as possible.

     14.9 Expenses. All costs and expenses including reasonable attorneys’ fees (including
the allocated costs of in house counsel) and disbursements incurred by Agent on its behalf or on
behalf of Lenders (a) in connection with the preparation, negotiation and execution and delivery of
this Agreement and the Other Documents, or (b) in all efforts made to enforce payment of any
Obligation, or (c) in connection with the entering into, modification, amendment, administration
and enforcement of this Agreement or any consents or waivers hereunder or thereunder and all
related agreements, documents and instruments, or (d) maintaining, preserving or enforcing any of
Agent’s or any Lender’s rights hereunder and under all related agreements, documents and
instruments, whether through judicial proceedings or otherwise, or (e) in defending or prosecuting
any actions or proceedings arising out of or relating to Agent’s or any Lender’s transactions with
Borrower, or (f) in connection with any advice given to Agent or any Lender with respect to its
rights and obligations under this Agreement and the Other Documents, may be charged to Borrower’s
Account and shall be part of the Obligations.

-47-

 

     14.10 Injunctive Relief. Borrower recognizes that, in the event Borrower fails to
perform, observe or discharge any of its obligations or liabilities under this Agreement, or
threatens to fail to perform, observe or discharge such obligations or liabilities, any remedy at
law may prove to be inadequate relief to Lenders; therefore, Agent, if Agent so requests, shall be
entitled to temporary and permanent injunctive relief in any such case without the necessity of
proving that actual damages are not an adequate remedy.

     14.11 Damages. Neither Borrower, Agent nor any Lender, nor any agent or attorney for
any of them, shall be liable to the other parties hereto (or any Affiliate of any such Person) for
indirect, punitive, exemplary or consequential damages arising from any breach of contract, tort or
other wrong relating to the establishment, administration or collection of the Obligations or as a
result of any transaction contemplated under this Agreement or any Other Document.

     14.12 Captions. The captions at various places in this Agreement are intended for
convenience only and do not constitute and shall not be interpreted as part of this Agreement.

     14.13 Counterparts; Facsimile Signatures. This Agreement may be executed in any
number of and by different parties hereto on separate counterparts, all of which, when so executed,
shall be deemed an original, but all such counterparts shall constitute one and the same agreement.
Any signature delivered by a party by facsimile transmission shall be deemed to be an original
signature hereto.

     14.14 Construction. Each party and its respective counsel have reviewed this
Agreement and the normal rule of construction to the effect that any ambiguities are to be resolved
against the drafting party shall not be employed in the interpretation of this Agreement or any
amendments, schedules or exhibits thereto.

     14.15 Sharing Information.

          (a) From time to time financial advisory, investment banking and other services may be offered
or provided to Borrower or one or more of its Affiliates (in connection with this Agreement or
otherwise) by any Lender or by one or more Subsidiaries or Affiliates of such Lender. Borrower
hereby authorizes each Lender to share any information delivered to such Lender by Borrower and its
Subsidiaries pursuant to this Agreement, or in connection with the decision of such Lender to enter
into this Agreement, to any such Subsidiary or Affiliate of such Lender, it being understood that
any such Subsidiary or Affiliate of any Lender receiving such information shall be bound by the
provisions of this Section 14.15 as if it were a Lender hereunder.

          (b) Notwithstanding anything herein to the contrary, the information subject to this Section
14.15 shall not include, and Agent and each Lender may disclose without limitation of any kind, any
information with respect to 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 provided to Agent or such
Lender relating to such tax treatment and tax structure; provided that with respect to any document
or similar item that in either case contains information concerning the tax treatment or tax
structure of the transaction as well as other information, this

-48-

 

sentence shall only apply to such portions of the document or similar item that relate to the
tax treatment or tax structure of the Advances and transactions contemplated hereby.

     14.16 Publicity. Agent is hereby authorized to make appropriate announcements of the
financial arrangement entered into among Borrower, Agent and Lenders, including announcements which
are commonly known as tombstones, in such publications and to such selected parties as Agent shall
in its sole and absolute discretion deem appropriate.

     14.17 Certifications From Banks and Participants; US PATRIOT Act. Each Lender or
assignee or participant of a Lender that is not incorporated under the Laws of the United States of
America or a state thereof (and is not excepted from the certification requirement contained in
Section 313 of the USA PATRIOT Act and the applicable regulations because it is both (i) an
affiliate of a depository institution or foreign bank that maintains a physical presence in the
United States or foreign country, and (ii) subject to supervision by a banking authority regulating
such affiliated depository institution or foreign bank) shall deliver to Agent the certification,
or, if applicable, recertification, certifying that such Lender is not a “shell” and certifying to
other matters as required by Section 313 of the USA PATRIOT Act and the applicable regulations: (1)
within 10 days after the Closing Date, and (2) as such other times as are required under the USA
PATRIOT Act.

-49-

 

     Each of the parties has signed this Agreement as of the day and year first above written.

	 	 	 	 	 
	 	 	CRYSTAL RIVER CAPITAL, INC.
	 
	 	 	 	 
	 

	 	By:	 	/s/ Daniel S. Kim
	 

	 	 	 	 
	 

	 	Name:	 	Daniel S. Kim
	 

	 	 	 	 
	 

	 	Title:	 	Assistant Secretary
	 

	 	 	 	 
	 
	 	 	 	 
	 	 	SIGNATURE BANK,

as Lender and as Administrative
	 
	 	 	 	 
	 

	 	By:	 	/s/ Thomas Kasulka
	 

	 	 	 	 
	 

	 	Name:	 	Thomas Kasulka
	 

	 	 	 	 
	 

	 	Title:	 	Group Director & Senior Vice
President
	 

	 	 	 	 
	 
	 	 	 	 
	 	 	Commitment Percentage: 100%EX-10.5.B

 

Exhibit 10.5(b)

EXECUTION COPY

FIRST AMENDMENT

     FIRST AMENDMENT (this “Amendment”), dated as of April 10, 2006, by and among CRYSTAL
RIVER CAPITAL, INC., a corporation organized under the laws of the State of Maryland
(“Borrower”), BANK HAPOALIM B.M. (“New Lender”) and SIGNATURE BANK
(“Signature”), as a lender (in such capacity, a “Lender” and, together with the New Lender,
the “Lenders”) and as administrative agent for Lenders (in such capacity, the “Agent”).
Terms which are capitalized in this Amendment and not otherwise defined herein shall have the
meanings ascribed to such terms in the Credit Agreement (as defined below).

     WHEREAS, Borrower, Agent and Lender are parties to that certain Revolving Credit Agreement,
dated as of March 1, 2006 (as amended, modified or supplemented from time to time, the “Credit
Agreement”); and

     WHEREAS, Borrower has requested a Maximum Advance Increase of $10,000,000; and

     WHEREAS, New Lender desires to become an additional Lender under the Credit Agreement and
provide such Maximum Advance Increase; and

     WHEREAS, subject to the terms and conditions contained in this Amendment, the Credit Agreement
shall be amended as set forth herein;

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

     Section 1. Amendment to Credit Agreement. Upon the satisfaction of the
conditions precedent set forth in Section 3 hereof, the Credit Agreement is hereby amended as
follows:

          (a) Section 1.2 of the Credit Agreement is amended by deleting the definition of the terms
“Change of Control” and “Maximum Advance Amount” in their entirety, and substituting the following
in lieu thereof:

     “Change of Control” shall mean the occurrence of any event which
results in Hyperion Crystal River Capital Advisors, LLC, a wholly-owned subsidiary
of Hyperion Brookfield Asset Management, Inc., or another wholly-owned subsidiary of
Hyperion Brookfield Asset Management, Inc. not acting as manager and advisor of
Borrower.

     “Maximum Revolving Advance Amount” shall mean $31,000,000,
which such amount may be increased in accordance with Section 2.4(b) hereof.

          (b) Section 2.1 of the Credit Agreement is amended by deleting the last sentence in its
entirety and substituting the following in lieu thereof:

 

 

Borrower hereby agrees that Borrower shall not request, Lenders shall not be
obligated to make, and there shall not be outstanding any Advances from and
including the 29th day of any month to and including the 3rd
day of the immediately succeeding month.

              (c) Section 2.2(a) of the Credit Agreement is amended by deleting clause (iv) in its entirety
and substituting the following in lieu thereof:

(iv) the date such Advance shall be repaid (the “Repayment Date”), which
shall be the Business Day immediately following the date specified in the Agency
Factor with respect to such RMBS as the date the related Agency expects to pay
principal with respect to such RMBS, but in any event not later than the
28th day of the calendar month in which such Borrowing Date occurs (it
being understood that the RMBS identified in any Notice of Borrowing with respect to
an Advance shall have the same Repayment Date).

              (d) Section 14.6(f) of the Credit Agreement is amended by deleting the address information of
Borrower in its entirety and substituting the following in lieu thereof:

If to Borrower:

Crystal River Capital, Inc.

c/o Hyperion Brookfield Asset Management, Inc.

Three World Financial Center

200 Vesey Street, Floor 10

New York, New York 10281-1010

Attention: Daniel S. Kim

Telephone: (212) 549-8465

Facsimile: (212) 549-8310

     Section 2. Additional Lender.

          (a) Upon the Effective Date (as defined in Section 3), New Lender shall become a Lender under
the Credit Agreement.

          (b) Notwithstanding the terms and provisions of Section 2.4(b) of the Credit Agreement, after
giving effect to the increase in the Maximum Advance Amount as described therein, the Commitment
Percentage of the Lenders shall be reallocated as follows:

	 	 	 	 	 
	New Lender
	 	 	32.26	%
	Signature
	 	 	67.74	%

          Each of Borrower, Agent and Lenders expressly consents to the reallocation set forth above and
hereby waives compliance with all notice requirements set forth in Section 2.4(b) of the Credit
Agreement. The parties hereto further agree that any noncompliance with the provisions of the
Credit Agreement by virtue of the reallocation set forth above shall not constitute a Default or
Event of Default by Borrower and that such reallocation shall be deemed to be permissible and
effective in all respects and for all purposes under the Credit Agreement.

 

 

          (c) Notwithstanding Section 2.4(c) of the Credit Agreement to the contrary, New Lender shall
not be required to purchase on the Effective Date from Lender an amount of the outstanding Advances
as is necessary to cause the outstanding Advances to be reallocated among the Lenders in accordance
with each Lender’s Commitment Percentage (as is in effect after the Effective Date) if (i) on the
Effective Date, New Lender makes or agrees to make on the next Business Day an Advance to Borrower
in an amount equal to the Maximum Advance Increase; and (ii) the amount of outstanding Advances on
the date New Lender makes such Advances (prior to giving effect thereto) equals $21,000,000.

          (d) Notwithstanding Section 2.1 of the Credit Agreement to the contrary, each of Borrower,
Agent and Lenders hereby agree that any Advance to be made to Borrower on the Effective Date or the
next Business Day thereafter shall be fully funded by New Lender unless on the date such Advance is
made (but prior to giving effect to such Advance) the outstanding Advances are less than
$21,000,000.

          (e) By executing this Amendment, New Lender confirms to and agrees with Borrower, each other
Lender and Agent as follows: (i) Agent makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations made in or in
connection with the Credit Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Credit Agreement, the Revolving Credit Note or any other
instrument or document furnished pursuant thereto; (ii) Agent makes no representation or warranty
and assumes no responsibility with respect to the financial condition of Borrower or the
performance or observance by Borrower of any of its Obligations under the Credit Agreement, the
Revolving Credit Note or any other instrument or document furnished pursuant hereto; (iii) New
Lender confirms that it has received a copy of the Credit Agreement, together with copies of such
financial statements and such other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into this Amendment; (iv) New Lender will,
independently and without reliance upon Agent, or any other Lenders 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 Credit Agreement; (v) New Lender appoints and authorizes
Agent on its behalf to take such action as agent and to exercise such powers under the Credit
Agreement and Other Documents as are delegated to Agent by the terms thereof; (vi) New Lender
agrees that it will comply with and perform all of its respective obligations as set forth in the
Credit Agreement and Other Documents to be performed by it as a Lender; and (vii) New Lender
represents and warrants to Agent, Lenders and Borrower that it is either (x) entitled to the
benefits of an income tax treaty with the United States of America that provides for an exemption
from the United States withholding tax on interest and other payments made by Borrower under the
Credit Agreement and Other Documents or (y) is engaged in trade or business within the United
States of America.

     Section 3. Conditions Precedent. This Amendment shall be effective upon the
date on which the following conditions precedent are satisfied (such date, the “Effective Date”):

          (a) Agent and Lenders shall have received a duly executed counterpart of this Amendment from
Borrower;

 

 

          (b) Borrower shall have executed and delivered to New Lender a Revolving Credit Note in the
amount of $10,000,000;

          (c) Agent shall have received a Certificate of the Secretary or an Assistant Secretary of
Borrower certifying that since February 28, 2006, there have been no modifications, amendments or
any other changes with respect to Borrower’s (i) Certificate of Incorporation; (ii) By-Laws; (iii)
Resolutions by its Board of Directors; and (iv) incumbency of officers authorized to sign this
Amendment, and all other documents and instruments executed or delivered in connection therewith
and the names and validity of signatures of such officers;

          (d) Agent shall have received a closing certificate signed by the Chief Financial Officer of
Borrower dated as of the date hereof, stating that (i) all representations and warranties set forth
in this Amendment, the Credit Agreement, as amended by this Amendment (except for such
representations and warranties that were only required to be true and correct as of a specified
prior date) and the Other Documents are true and correct on and as of such date, (ii) Borrower is
on such date in compliance with all the terms and provisions set forth in this Amendment, the
Credit Agreement and the Other Documents and (iii) on such date no Default or Event of Default has
occurred or is continuing;

          (e) Agent shall have received an opinion of Borrower’s legal counsel, addressed to Agent, in
form and substance satisfactory to Agent which shall cover the matters contemplated herein;

          (f) Agent shall have received good standing certificates for Borrower, issued by the Secretary
of State or other appropriate official of Borrower’s jurisdiction of incorporation and each
jurisdiction where the conduct of Borrower’s business activities or the ownership of its properties
necessitates qualification;

          (g) All representations and warranties set forth in the Credit Agreement, as amended by this
Amendment (except for such representations and warranties that were only required to be true and
correct as of a specified prior date) shall be true and correct in all material respects on and as
of the Effective Date;

          (h) No Default or Event of Default shall have occurred and be continuing on the date hereof;

          (i) No event, condition or state of facts shall have occurred since the Closing Date, which
such event, condition or state of facts has had or is reasonably likely to have a Material Adverse
Effect;

          (j) Agent shall be reasonably satisfied that Borrower is in compliance with all pertinent
Federal, state, local or territorial regulations applicable to Borrower, including those with
respect to the Federal Occupational Safety and Health Act, the Environmental Protection Act, ERISA
and the Trading with the Enemy Act;

          (k) Agent shall have received and reviewed to its satisfaction full, complete final and signed
copies of all further agreements, consents, instruments and documents as may be

 

 

necessary or proper, in its reasonable opinion, and in the reasonable opinion of its counsel,
to carry out the provisions and purposes of this Amendment;

          (l) Borrower shall have paid to New Lender an upfront fee in the amount of $50,000; and

          (m) Borrower shall have paid any and all fees and expenses incurred by Agent, Lenders and New
Lender in connection with the preparation and execution of this Amendment.

     Section 4. Representations and Warranties. Borrower represents and warrants
to Agent and Lenders that:

          (a) Borrower has the corporate power, authority and legal right to execute, deliver and
perform this Amendment and the other instruments, agreements, documents and transactions
contemplated hereby to which it is a party, and has taken all actions necessary to authorize the
execution, delivery and performance of this Amendment and the other instruments, agreements, and
documents to which it is a party and the transactions contemplated hereby and thereby;

          (b) No consent of any Person (including, without limitation, stockholders or creditors of
Borrower) other than Agent and Lenders, and no consent, permit, approval or authorization of,
exemption by, notice or report to, or registration, filing or declaration with, any governmental
authority is required in connection with the execution, delivery and performance by Borrower, or
the validity or enforceability against Borrower, of this Amendment and the other instruments,
agreements, documents and transactions contemplated hereby to which it is a party;

          (c) This Amendment has been duly executed and delivered on behalf of Borrower by its duly
authorized officer, and constitutes the legal, valid and binding obligation of Borrower,
enforceable in accordance with its terms, except to the extent that such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
the rights of creditors generally or equitable remedies (whether arising in a proceeding at law or
in equity);

          (d) No Default or Event of Default has occurred and is continuing on the date hereof;

          (e) Borrower is duly incorporated and in good standing under the laws of its state of
incorporation and each other state in which qualification and good standing are necessary for
Borrower to conduct its business and own its property and where the failure to so qualify could
reasonably be expected to have a Material Adverse Effect; and

          (f) Upon the Effective Date, Borrower is not in default under any indenture, mortgage, deed of
trust, agreement or other instrument to which it is a party or by which it may be bound. Neither
the execution and delivery of this Amendment, nor the consummation of the transactions herein
contemplated, nor compliance with the provisions hereof will (i) violate any law or regulation, or
(ii) result in or cause a violation by Borrower of any order or decree of any court or government
instrumentality, or (iii) conflict with, or result in the breach of, or constitute a default under,
any indenture, mortgage, deed of trust, material agreement or other material

 

 

instrument to which Borrower is a party or by which it may be bound, or (iv) result in the
creation or imposition of any lien, charge, or encumbrance upon any of the property of Borrower,
except in favor of Agent, for the benefit of Lenders, to secure the Obligations, or (v) violate any
provision of the Certificate of Incorporation, By-Laws or any capital stock or similar equity
instrument of Borrower.

     Section 5. General Provisions.

          (a) Except as herein expressly amended, the Credit Agreement and all other agreements,
documents, instruments and certificates executed in connection therewith, are ratified and
confirmed in all respects and shall remain in full force and effect in accordance with their
respective terms.

          (b) Borrower hereby acknowledges and confirms that effective as of March 13, 2006, the legal
name of Hyperion Capital Management, Inc. was changed to Hyperion Brookfield Asset Management, Inc.
and that except for such change in name, no change or modification in its corporate structure has
occurred since the Closing Date.

          (c) This Amendment may be executed by the parties hereto individually or in combination, in
one or more counterparts, each of which shall be an original and all which shall constitute one and
the same agreement. Signatures by facsimile shall bind the parties hereto.

          (d) All references in the Other Documents to the Credit Agreement shall mean the Credit
Agreement as amended hereby and as hereafter amended, supplemented or modified from time to time.
From and after the date hereof, all references in the Credit Agreement to “this Agreement,”
“hereof,” “herein,” or similar terms, shall mean and refer to the Credit Agreement as amended by
this Amendment.

          (e) This Amendment shall be governed by and construed in accordance with the laws of the State
of New York applied to contracts to be performed wholly within the State of New York.

[Remainder of page intentionally left blank]

 

 

     IN WITNESS WHEREOF, each of Agent, New Lender and Borrower have caused this Amendment to be
duly executed and delivered by their respective proper and duly authorized officers as of the day
and year first above written.

	 	 	 	 	 	 	 	 	 
	 	 	CRYSTAL RIVER CAPITAL, INC.,
	 	 	as Borrower
	 
	 	 	 	 
	 
	 	By:	 	/s/ Daniel S. Kim
	 

	 	 	 	 
	 

	 	Name:	 	Daniel S. Kim
	 

	 	 	 	 
	 

	 	Title:	 	Assistant Secretary
	 

	 	 	 	 
	 
	 	 	 	 
	 	 	SIGNATURE BANK,
	 	 	as Lender and as Administrative Agent
	 
	 	 	 	 
	 

	 	By:	 	/s/ Thomas Kasulka
	 

	 	 	 	 
	 

	 	Name:	 	Thomas Kasulka
	 

	 	 	 	 
	 

	 	Title:	 	Group Director & Senior Vice
President
	 

	 	 	 	 
	 
	 	 	 	 
	 	 	BANK HAPOALIM B.M.,
	 	 	as Lender
	 
	 	 	 	 
	 

	 	By:	 	/s/ Frederic S. Becker	 	By:	 	/s/
	 
	 	 	 	 	 	 	 	 
	 
	 	Name:	 	Frederic S. Becker	 	Name:	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Title:	 	Senior Vice President	 	Title:	 	Senior Vice President
	 
	 	 	 	 	 	 	 	 

Signature page to First Amendment

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