Document:

EXHIBIT
10.36

 

 

ADMINISTRATION
AGREEMENT

 

among

 

HARLEY-DAVIDSON
MOTORCYCLE TRUST 2004-2,

 

as
Issuer,

 

HARLEY-DAVIDSON
CREDIT CORP.,

 

as
Administrator,

 

HARLEY-DAVIDSON
CUSTOMER FUNDING CORP.,

 

as
Trust Depositor,

 

and

 

BNY
MIDWEST TRUST COMPANY,

 

as
Indenture Trustee

 

 

Dated
as of May 1, 2004

 

 

 

TABLE
OF CONTENTS

 

	
  SECTION 1.

  	
  DUTIES OF THE
  ADMINISTRATOR.

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 2.

  	
  RECORDS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 3.

  	
  COMPENSATION

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 4.

  	
  ADDITIONAL
  INFORMATION TO BE FURNISHED TO THE ISSUER

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 5.

  	
  INDEPENDENCE OF THE
  ADMINISTRATOR

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 6.

  	
  NO JOINT VENTURE

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 7.

  	
  OTHER ACTIVITIES OF
  ADMINISTRATOR

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 8.

  	
  TERM
  OF AGREEMENT; RESIGNATION AND REMOVAL OF ADMINISTRATOR

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 9.

  	
  ACTION
  UPON TERMINATION, RESIGNATION OR REMOVAL

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 10.

  	
  NOTICES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 11.

  	
  AMENDMENTS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 12.

  	
  SUCCESSORS AND ASSIGNS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 13.

  	
  GOVERNING LAW

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 14.

  	
  HEADINGS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 15.

  	
  COUNTERPARTS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 16.

  	
  SEVERABILITY

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 17.

  	
  NOT
  APPLICABLE TO HARLEY-DAVIDSON CREDIT IN OTHER CAPACITIES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 18.

  	
  LIMITATION
  OF LIABILITY OF OWNER TRUSTEE AND INDENTURE TRUSTEE

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 19.

  	
  THIRD-PARTY BENEFICIARY

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 20.

  	
  SURVIVABILITY

  	
   

  

 

 

This Administration Agreement, dated as of May 1, 2004,
among Harley-Davidson Motorcycle Trust 2004-2 (the “Issuer”), Harley-Davidson
Credit Corp. (together with its successors and assigns “Harley-Davidson Credit”) in
its capacity as administrator, the “Administrator”), Harley-Davidson Customer
Funding Corp. (the “Trust Depositor”) and BNY Midwest Trust
Company, not in its individual capacity but solely as Indenture Trustee
(together with its successors and assigns, the “Indenture Trustee”).

 

W
I T N E S S E T H:

 

WHEREAS,
the Issuer is issuing 2.18% Harley-Davidson Motorcycle Contract Backed Notes,
Class A-1 Notes, 3.56% Harley-Davidson Motorcycle Contract Backed Notes, Class
A-2 Notes and 2.96% Harley-Davidson Motorcycle Contract Backed Notes, Class B
Notes (collectively, the “Notes”) pursuant to the Indenture, dated
as of the date hereof (the “Indenture”), between the Issuer and the
Indenture Trustee (capitalized terms used herein that are not otherwise defined
shall have the meanings ascribed thereto in the Indenture);

 

WHEREAS,
the Issuer has entered into certain agreements in connection with the issuance
of the Notes including (i) a Sale and Servicing Agreement, dated as of the date
hereof (the “Sale
and Servicing Agreement”), among the Issuer, the Indenture Trustee,
the Trust Depositor and Harley-Davidson Credit, as servicer (in such capacity,
the “Servicer”),
and (ii) the Indenture (collectively referred to hereinafter as the “Transaction
Documents”);

 

WHEREAS,
pursuant to the Transaction Documents, the Issuer and the Owner Trustee are
required to perform certain duties in connection with (i) the Notes and the
collateral therefor pledged pursuant to the Indenture (the “Collateral”) and (ii) the
beneficial ownership interest in the Issuer (the registered holder of such
interest being referred to herein as the “Owner”);

 

WHEREAS,
the Issuer and the Owner Trustee desire to have the Administrator perform
certain of the duties of the Issuer and the Owner Trustee referred to in the
preceding clause and to provide such additional services consistent with the
terms of this Agreement and the Transaction Documents as the Issuer and the
Owner Trustee may from time to time request; and

 

WHEREAS,
the Administrator has the capacity to provide the services required hereby and
is willing to perform such services for the Issuer and the Owner Trustee on the
terms set forth herein;

 

NOW,
THEREAFTER, in consideration of the mutual covenants contained herein, and
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto agree as follows:

 

2

 

Section 1.                                          Duties
of the Administrator.

 

(a)                                  Duties with respect to
the Indenture.

 

(i)                                     The Administrator
agrees to perform all its duties as Administrator and the duties of the Issuer
and the Owner Trustee under the Transaction Documents.  In addition, the Administrator shall consult
with the Owner Trustee regarding the duties of the Issuer or the Owner Trustee
under the Indenture.  The Administrator
shall monitor the performance of the Issuer and shall advise the Owner Trustee
when action is necessary to comply with the respective duties of the Issuer and
the Owner Trustee under the Indenture. 
The Administrator shall prepare for execution by the Issuer or shall
cause the preparation by other appropriate persons of, all such documents,
reports, filings, instruments, certificates and opinions that it shall be the
duty of the Issuer or the Owner Trustee to prepare, file or deliver pursuant to
the Indenture.  In furtherance of the foregoing,
the Administrator shall take all appropriate action that the Issuer or the
Owner Trustee is required to take pursuant to the Indenture including, without
limitation, such of the foregoing as are required with respect to the following
matters under the Indenture (references are to Sections of the Indenture):

 

(A)                              the duty to cause the
Note Register to be kept and to give the Indenture Trustee notice of any
appointment of a new Note Registrar and the location, or change in location, of
the Note Register (Section 2.04);

 

(B)                                the notification of
Noteholders of the final principal payment on their Notes
(Section 2.07(b));

 

(C)                                the fixing or causing
to be fixed of any special record date and the notification of the Indenture
Trustee and Noteholders with respect to special payment dates, if any
(Section 2.07(c));

 

(D)                               the preparation of or
obtaining of the documents and instruments required for execution and
authentication of the Notes and delivery of the same to the Indenture Trustee
(Section 2.02);

 

(E)                                 the preparation,
obtaining or filing of the instruments, opinions and certificates and other
documents required for the release of Collateral (Section 2.12);

 

(F)                                 the maintenance of an
office in the City of Wilmington, Delaware, for registration of transfer or
exchange of Notes (Section 3.02);

 

(G)                                the duty to cause
newly appointed Paying Agents, if any, to deliver to the Indenture Trustee the
instrument specified in the Indenture regarding funds held in trust
(Section 3.03);

 

3

 

(H)                               the direction to the
Indenture Trustee to deposit monies with Paying Agents, if any, other than the
Indenture Trustee (Section 3.03);

 

(I)                                    the obtaining and
preservation of the Issuer’s qualification to do business in each jurisdiction
in which such qualification is or shall be necessary to protect the validity
and enforceability of the Indenture, the Notes, the Collateral and each other
instrument and agreement included in the Collateral (Section 3.04);

 

(J)                                   the preparation of all
supplements and amendments to the Indenture and all financing statements,
continuation statements, instruments of further assurance and other instruments
and the taking of such other action as is necessary or advisable to protect the
Collateral other than as prepared by the Servicer (Section 3.05);

 

(K)                               the delivery of the
Opinion of Counsel on the Closing Date and certain other statements as to
compliance with the Indenture (Sections 3.06 and 3.09);

 

(L)                                 the identification to
the Indenture Trustee in an Officer’s Certificate of a Person with whom the
Issuer has contracted to perform its duties under the Indenture
(Section 3.07(b));

 

(M)                            the notification of
the Indenture Trustee and each Rating Agency of an Event of Termination under
the Sale and Servicing Agreement;

 

(N)                               the duty to cause the
Servicer to comply with Article Five and Article Nine of the Sale and
Servicing Agreement (Section 3.14);

 

(O)                               the preparation and
obtaining of documents and instruments required for the release of the Issuer
from its obligations under the Indenture (Section 3.10(b) and
Section 3.11(b));

 

(P)                                 the delivery of
written notice to the Indenture Trustee and each Rating Agency of each Event of
Default under the Indenture and each Event of Termination by the Servicer under
the Sale and Servicing Agreement (Section 3.18);

 

(Q)                               the monitoring of the
Issuer’s obligations as to the satisfaction and discharge of the Indenture and
the preparation of an Officer’s Certificate and the obtaining of the Opinion of
Counsel and the Independent Certificate relating thereto (Section 4.01);

 

(R)                                the compliance with
any written directive of the Indenture Trustee with respect to the sale of the
Collateral in a commercially reasonable manner if an Event of Default shall
have occurred and be continuing (Section 5.04);

 

4

 

(S)                                 the preparation and
delivery of notice to Noteholders of the removal of the Indenture Trustee and
the appointment of a successor Indenture Trustee (Section 6.08);

 

(T)                                the preparation of any
written instruments required to confirm more fully the authority of any
co-trustee or separate trustee and any written instruments necessary in
connection with the resignation or removal of the Indenture Trustee or any
co-trustee or separate trustee (Sections 6.08 and 6.10);

 

(U)                               the furnishing of the
Indenture Trustee with the names and addresses of Noteholders during any period
when the Indenture Trustee is not the Note Registrar (Section 7.01);

 

(V)                                the opening of one or
more accounts in the Indenture Trustee’s name, the preparation and delivery of
Issuer Orders, Officer’s Certificates and Opinions of Counsel and all other
actions necessary with respect to investment and reinvestment of funds in the
Trust Accounts (Sections 8.02 and 8.03);

 

(W)                           the preparation of an
Issuer Request and Officer’s Certificate and the obtaining of an Opinion of
Counsel and Independent Certificates, if necessary, for the release of the
Collateral (Sections 8.04 and 8.05);

 

(X)                               the preparation of
Issuer Orders and the obtaining of Opinions of Counsel with respect to the
execution of supplemental indentures and the mailing to the Noteholders of
notices with respect to such supplemental indentures (Sections 9.01, 9.02 and
9.03);

 

(Y)                                the execution and
delivery of new Notes conforming to any supplemental indenture
(Section 9.06);

 

(Z)                                the duty to notify
Noteholders of redemption of the Notes or to cause the Indenture Trustee to
provide such notification (Section 10.02);

 

(AA)                    the preparation and delivery of all
Officer’s Certificates, Opinions of Counsel and Independent Certificates with
respect to any requests by the Issuer to the Indenture Trustee to take any
action under the Indenture (Section 11.01(a));

 

(BB)                        the preparation and
delivery of Officer’s Certificates and the obtaining of Independent
Certificates, if necessary, for the release of property from the lien of the
Indenture (Section 11.01(b));

 

(CC)                        the notification of
the Rating Agencies, upon the failure of the Issuer, the Owner Trustee or the
Indenture Trustee to provide notification;

 

5

 

(DD)                      the preparation and
delivery to Noteholders and the Indenture Trustee of any agreements with
respect to alternate payment and notice provisions (Section 11.06);

 

(EE)                          the recording of the
Indenture, if applicable (Section 11.14); and

 

(FF)                          the appointment of a
successor Indenture Trustee.

 

(ii)                                  The Administrator
will:

 

(A)                              except as otherwise
expressly provided in the Indenture, pay the Indenture Trustee’s fees and
reimburse the Indenture Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Indenture Trustee in
accordance with any provision of the Indenture (including the reasonable
compensation, expenses and disbursements of its agents and counsel), except any
such expense, disbursement or advance as may be attributable to its negligence
or bad faith;

 

(B)                                indemnify the
Indenture Trustee and its agents for, and hold them harmless against, any loss,
liability or expense incurred without negligence or bad faith on their part,
arising out of or in connection with the acceptance or administration of the
transactions contemplated by the Indenture, including the reasonable costs and
expenses of defending themselves against any claim or liability in connection
with the exercise or performance of any of their powers or duties under the
Indenture; and

 

(C)                                indemnify the Owner
Trustee and its agents for, and hold them harmless against, any loss, liability
or expense incurred without negligence or bad faith on their part, arising out
of or in connection with the acceptance or administration of the transactions
contemplated by the Trust Agreement, including the reasonable costs and
expenses of defending themselves against any claim or liability in connection
with the exercise or performance of any of their powers or duties under the
Trust Agreement.

 

(b)                                 Additional Duties.

 

(i)                                     In addition to the
duties set forth in Section 1(a)(i), the Administrator shall perform such
calculations and shall prepare or shall cause the preparation by other
appropriate persons of, and shall execute on behalf of the Issuer or the Owner
Trustee, all such documents, reports, filings, instruments, certificates and
opinions that the Issuer or the Owner Trustee are required to prepare, file or
deliver pursuant to the Transaction Documents or under Section 5.03 of the
Trust Agreement, and at the request of the Owner Trustee shall take all
appropriate action that the Issuer or the Owner Trustee are required to take
pursuant to the Transaction Documents. 
In furtherance thereof, the Owner Trustee shall, on behalf of the
Issuer, execute and deliver to the Administrator 

 

6

 

and to each successor Administrator appointed pursuant to
the terms hereof, one or more powers of attorney substantially in the form of Exhibit A
hereto, appointing the Administrator the attorney-in-fact of the Issuer for the
purpose of executing on behalf of the Owner Trustee and the Issuer all such
documents, reports, filings, instruments, certificates and opinions.  Subject to Section 5, and in accordance
with the directions of the Issuer, the Administrator shall administer, perform
or supervise the performance of such other activities in connection with the
Collateral (including the Transaction Documents) as are not covered by any of
the foregoing provisions and as are expressly requested by the Issuer and are
reasonably within the capability of the Administrator.

 

(ii)                                  Notwithstanding
anything in this Agreement or the Transaction Documents to the contrary, the
Administrator shall be responsible for promptly notifying the Owner Trustee in
the event that any withholding tax is imposed on the Trust’s payments (or
allocations of income) to the Owner as contemplated in Section 5.01(c) of
the Trust Agreement.  Any such notice
shall specify the amount of any withholding tax required to be withheld by the
Owner Trustee pursuant to such provision.

 

(iii)                               Notwithstanding
anything in this Agreement or the Transaction Documents to the contrary, the
Administrator shall be responsible for performance of the duties of the Owner
Trustee set forth in Section 5.03(a), (b), (c) and (d), the penultimate
sentence of Section 5.03 and Section 5.04(a) of the Trust Agreement
with respect to, among other things, accounting and reports to the Owner; provided,
however, that the Owner Trustee shall retain responsibility for the
distribution of information forms necessary to enable the Owner to prepare its
federal and state income tax returns.

 

(iv)                              The Administrator
shall satisfy its obligations with respect to clauses (ii) and (iii) above by
retaining, at the expense of the Trust payable by the Administrator, a firm of
independent public accountants (the “Accountants”) acceptable to the Owner
Trustee, which shall perform the obligations of the Administrator thereunder.

 

(v)                                 The Administrator
shall perform the duties of the Administrator specified in Section 10.02
of the Trust Agreement required to be performed in connection with the resignation
or removal of the Owner Trustee, and any other duties expressly required to be
performed by the Administrator under the Trust Agreement.

 

(vi)                              In carrying out the
foregoing duties or any of its other obligations under this Agreement, the
Administrator may enter into transactions or otherwise deal with any of its
Affiliates; provided,
however, that the terms of any such transactions or dealings shall
be in accordance with any directions received from the Issuer and shall be, in
the Administrator’s opinion, no less favorable to the Issuer than would be
available from unaffiliated parties.

 

7

 

(c)                                  Non-Ministerial Matters.

 

(i)                                     With respect to
matters that in the reasonable judgment of the Administrator are
non-ministerial, the Administrator shall not take any action unless within a
reasonable time before the taking of such action, the Administrator shall have
notified the Owner Trustee of the proposed action and the Owner Trustee shall
not have withheld consent or provided an alternative direction.  For the purpose of the preceding sentence, “non-ministerial
matters” shall include, without limitation:

 

(A)                              the amendment of or
any supplement to the Indenture;

 

(B)                                the initiation of any
claim or lawsuit by the Issuer and the compromise of any action, claim or
lawsuit brought by or against the Issuer (other than in connection with the
collection of the Contracts);

 

(C)                                the amendment, change
or modification of any other Transaction Documents;

 

(D)                               the appointment of
successor Note Registrars, successor Paying Agents and successor Indenture
Trustees pursuant to the Indenture or the appointment of successor
Administrators or a successor Servicer, or the consent to the assignment by the
Note Registrar, Paying Agent or Indenture Trustee of its obligations under the
Indenture; and

 

(E)                                 the removal of the
Indenture Trustee.

 

(ii)                                  Notwithstanding
anything to the contrary in this Agreement, the Administrator shall not be
obligated to, and shall not, (A) make any payments to the Noteholders under the
Transaction Documents, (B) sell the Collateral pursuant to clause (iv) of
Section 5.04 of the Indenture, (C) take any other action that the Issuer
directs the Administrator not to take on its behalf or (D) take any other action
which may be construed as having the effect of varying the investment of the
Holders.

 

Section 2.                                          Records. 
The Administrator shall maintain appropriate books of account and
records relating to services performed hereunder, which books of account and records
shall be accessible for inspection by the Issuer and the Owner Trustee at any
time during normal business hours.

 

Section 3.                                          Compensation. 
As compensation for the performance of the Administrator’s obligations
under this Agreement and as reimbursement for its expenses related thereto, the
Administrator shall be entitled to a monthly fee which shall be solely an
obligation of the Trust Depositor and shall be in an amount as shall be
agreeable to the Trust Depositor and the Administrator.

 

8

 

Section 4.                                          Additional
Information to be Furnished to the Issuer. 
The Administrator shall furnish to the Issuer from time to time such
additional information regarding the Collateral as the Issuer shall reasonably
request.

 

Section 5.                                          Independence
of the Administrator.  For all purposes of this Agreement, the
Administrator shall be an independent contractor and shall not be subject to
the supervision of the Issuer or the Owner Trustee with respect to the manner
in which it accomplishes the performance of its obligations hereunder.  Unless expressly authorized by the Issuer,
the Administrator shall have no authority to act for or represent the Issuer or
the Owner Trustee in any way and shall not otherwise be deemed an agent of the
Issuer or the Owner Trustee.

 

Section 6.                                          No Joint Venture. 
Nothing contained in this Agreement (i) shall constitute the
Administrator and either of the Issuer or the Owner Trustee as members of any
partnership, joint venture, association, syndicate, unincorporated business or
other separate entity, (ii) shall be construed to impose any liability as such
on any of them or (iii) shall be deemed to confer on any of them any express,
implied or apparent authority to incur any obligation or liability on behalf of
the others.

 

Section 7.                                          Other
Activities of Administrator.  Nothing herein
shall prevent the Administrator or its Affiliates from engaging in other
business or, in its sole discretion, from acting in a similar capacity as an
administrator for any other Person or entity even though such person or entity
may engage in business activities similar to those of the Issuer, the Owner
Trustee or the Indenture Trustee.

 

Section 8.                                          Term
of Agreement; Resignation and Removal of Administrator. 
This Agreement shall continue in force until the termination of the
Issuer, upon which event this Agreement shall automatically terminate.

 

(a)                                  Subject to
Section 8(d) and Section 8(e), the Administrator may resign its
duties hereunder by providing the Issuer with at least 60 days’ prior written
notice.

 

(b)                                 Subject to
Section 8(d) and Section 8(e), the Issuer may remove the
Administrator without cause by providing the Administrator with at least 60
days’ prior written notice.

 

(c)                                  Subject to
Section 8(d) and Section 8(e), at the sole option of the Issuer, the
Administrator may be removed immediately upon written notice of termination
from the Issuer to the Administrator if any of the following events shall
occur:

 

(i)                                     the Administrator
shall default in the performance of any of its duties under this Agreement and,
after notice of such default, shall not cure such default within ten days (or,
if 

 

9

 

such default cannot be cured in such time, shall not give
within ten days such assurance of cure as shall be reasonably satisfactory to
the Issuer);

 

(ii)                                  a court having
jurisdiction in the premises shall enter a decree or order for relief, and such
decree or order shall not have been vacated within 60 days, in respect of the
Administrator in any involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect or appoint a
receiver, liquidator, assignee, custodian, trustee, sequestrator or similar
official for the Administrator or any substantial part of its property or order
the winding-up or liquidation of its affairs; or

 

(iii)                               the Administrator
shall commence a voluntary case under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, shall consent to the entry of an
order for relief in an involuntary case under any such law, or shall consent to
the appointment of a receiver, liquidator, assignee, trustee, custodian,
sequestrator or similar official for the Administrator or any substantial part
of its property, shall consent to the taking of possession by any such official
of any substantial part of its property, shall make any general assignment for
the benefit of creditors or shall fail generally to pay its debts as they
become due.

 

The
Administrator agrees that if any of the events specified in clauses (ii) or
(iii) above shall occur, it shall give written notice thereof to the Issuer and
the Indenture Trustee within seven days after the occurrence of such event.

 

(d)                                 No resignation or
removal of the Administrator pursuant to this Section shall be effective
until (i) a successor Administrator shall have been appointed by the Issuer and
(ii) such successor Administrator shall have agreed in writing to be bound by
the terms of this Agreement in the same manner as the Administrator is bound
hereunder.

 

(e)                                  The appointment of any
successor Administrator shall be effective only after the satisfaction of the
Rating Agency Condition with respect to the proposed appointment.

 

(f)                                    Subject to
Section 8(d) and 8(e), the Administrator acknowledges that upon the
appointment of a Successor Servicer pursuant to the Sale and Servicing
Agreement, the Administrator shall immediately resign and such Successor
Servicer shall automatically become the Administrator under this Agreement.

 

Section 9.                                          Action
upon Termination, Resignation or Removal.  Promptly upon the
effective date of termination of this Agreement pursuant to Section 8 or
the resignation or removal of the Administrator pursuant to Section 8(a),
(b) or (c) respectively, the Administrator shall be entitled to be paid all
fees and reimbursable expenses accruing to it to the date of such termination,
resignation or removal.  The
Administrator shall forthwith upon such termination pursuant to Section 8
deliver to the Issuer all property and documents of or relating to the 

 

10

 

Collateral then in the custody of the Administrator.  In the event of the resignation or removal
of the Administrator pursuant to Section (a), (b) or (c), respectively,
the Administrator shall cooperate with the Issuer and take all reasonable steps
requested to assist the Issuer in making an orderly transfer of the duties of
the Administrator.

 

Section 10.                                   Notices. 
All notices, demands, certificates, requests and communications
hereunder (“notices”) shall be in writing and shall be effective (a) upon
receipt when sent through the U.S. mails, registered or certified mail, return
receipt requested, postage prepaid, with such receipt to be effective the date
of delivery indicated on the return receipt, or (b) one Business Day after
delivery to an overnight courier, or (c) on the date personally delivered to an
Authorized Officer of the party to which sent, or (d) on the date transmitted
by legible telecopier transmission with a confirmation of receipt, in all cases
addressed to the recipient at the address for such recipient set forth in the
Sale and Servicing Agreement.

 

Each
party hereto may, by notice given in accordance herewith to each of the other
parties hereto, designate any further or different address to which subsequent
notices shall be sent.

 

Section 11.                                   Amendments. 
This Agreement may be amended from time to time by a written amendment
duly executed and delivered by the parties hereto, with the written consent of
the Owner Trustee but without the consent of the Noteholders, for the purpose
of adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or of modifying in any manner the rights of the
Noteholders; provided that such amendment will not, in the Opinion of Counsel
satisfactory to the Indenture Trustee, materially and adversely affect the
interest of any Noteholder.  This
Agreement may also be amended by the parties hereto with the written consent of
the Owner Trustee and the Required Holders for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or of modifying in any manner the rights of Noteholders; provided,
however, that no such amendment may (i) increase or reduce in any
manner the amount of, or accelerate or delay the timing of, collections of
payments on the Contracts or distributions that are required to be made for the
benefit of the Noteholders or (ii) reduce the aforesaid percentage of the
holders of Notes which are required to consent to any such amendment, without
the consent of the holders of all outstanding Notes.  Notwithstanding the foregoing, the Administrator may not amend
this Agreement without the permission of the Trust Depositor, which permission
shall not be unreasonably withheld.

 

Section 12.                                    Successors
and Assigns.  This Agreement may not be assigned
by the Administrator unless such assignment is previously consented to in
writing by the Issuer, the Indenture Trustee and the Owner Trustee and subject
to the satisfaction of the Rating Agency Condition in respect thereof.  An assignment with such consent and
satisfaction, if accepted by the assignee, shall bind the assignee hereunder in
the same manner as the Administrator is bound hereunder.  Notwithstanding the foregoing, this
Agreement may be assigned by the 

 

11

 

Administrator without the consent of the Issuer or the
Owner Trustee to a corporation or other organization that is a successor (by
merger, consolidation or purchase of assets) to the Administrator; provided
that such successor organization executes and delivers to the Issuer, the Owner
Trustee and the Indenture Trustee an agreement, in form and substance
reasonably satisfactory to the Owner Trustee and the Indenture Trustee, in
which such corporation or other organization agrees to be bound hereunder by
the terms of said assignment in the same manner as the Administrator is bound
hereunder.  Subject to the foregoing,
this Agreement shall bind any successors or assigns of the parties hereto.

 

Section 13.                                   Governing Law. 
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF ILLINOIS, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED
IN ACCORDANCE WITH SUCH LAWS.

 

Section 14.                                   Headings. 
The section and subsection headings hereof have been inserted
for convenience of reference only and shall not be construed to affect the
meaning, construction or effect of this Agreement.

 

Section 15.                                   Counterparts. 
This Agreement may be executed in several counterparts, each of which
shall be an original and all of which shall constitute but one and the same
agreement.

 

Section 16.            Severability.  Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

 

Section 17.                                   Not
Applicable to Harley-Davidson Credit in Other Capacities. 
Nothing in this Agreement shall affect any obligation Harley-Davidson
Credit may have in any other capacity.

 

Section 18.                                   Limitation
of Liability of Owner Trustee and Indenture Trustee.

 

(a)                                  Notwithstanding
anything contained herein to the contrary, this instrument has been
countersigned by Wilmington Trust Company not in its individual capacity but
solely in its capacity as Owner Trustee of the Issuer and in no event shall
Wilmington Trust Company in its individual capacity or any beneficial owner of
the Issuer have any liability for the representations, warranties, covenants,
agreements or other obligations of the Issuer hereunder, as to all of which
recourse shall be had solely to the assets of the Issuer.  For all purposes of this Agreement, in the
performance of any duties or obligations of the Issuer hereunder, the Owner 

 

12

 

Trustee shall be subject to, and entitled to the benefits
of, the terms and provisions of Articles Six, Seven and Eight of the Trust
Agreement.

 

(b)                                 Notwithstanding
anything contained herein to the contrary, this Agreement has been
countersigned by BNY Midwest Trust Company not in its individual capacity but
solely as Indenture Trustee and in no event shall BNY Midwest Trust Company
have any liability for the representations, warranties, covenants, agreements
or other obligations of the Issuer hereunder or in any of the certificates,
notices or agreements delivered pursuant hereto, as to all of which recourse
shall be had solely to the assets of the Issuer.

 

Section 19.                                   Third-party
Beneficiary.  The Owner Trustee is a third-party
beneficiary to this Agreement and is entitled to the rights and benefits
hereunder and may enforce the provisions hereof as if it were a party hereto.

 

Section 20.                                   Survivability. 
The obligations of the Administrator described in Section 1(a)(ii)
hereof shall survive termination of this Agreement.

 

[signature page follows]

 

13

 

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

 

	
   

  	
  HARLEY-DAVIDSON MOTORCYCLE TRUST

  
	
   

  	
  2004-2

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  Wilmington Trust Company, not in its

  
	
   

  	
   

  	
  individual capacity but solely as Owner

  
	
   

  	
   

  	
  Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Janel R. Havrilla

  	
   

  
	
   

  	
   

  	
  Printed Name: Janel R. Havrilla

  
	
   

  	
   

  	
  Title: Financial Services Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  HARLEY-DAVIDSON CUSTOMER FUNDING

  
	
   

  	
  CORP., as Trust Depositor

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Perry A. Glassgow

  	
   

  
	
   

  	
   

  	
  Printed Name:  Perry A.
  Glassgow

  
	
   

  	
   

  	
  Title:  Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
  BNY MIDWEST TRUST COMPANY, not in

  
	
   

  	
  its individual capacity but solely as Indenture

  
	
   

  	
  Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Cynthia Davis

  	
   

  
	
   

  	
   

  	
  Printed Name: Cynthia Davis

  
	
   

  	
   

  	
  Title: Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
  HARLEY-DAVIDSON CREDIT CORP.,

  
	
   

  	
  as Administrator

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Perry A. Glassgow

  	
   

  
	
   

  	
   

  	
  Printed Name:  Perry A. Glassgow

  
	
   

  	
   

  	
  Title: Treasurer

  

 

Signature Page to
Administration Agreement

 

 

LIMITED
POWER OF ATTORNEY

 

	
  State of Illinois

  	
  )

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  )

  	
  SS.

  
	
   

  	
   

  	
   

  
	
  County of Cook

  	
  )

  	
   

  

 

KNOW
ALL PERSONS BY THESE PRESENTS, that Wilmington Trust Company, a Delaware
banking corporation (the “Owner Trustee”), whose principal
executive office is located at Wilmington Trust Company, Rodney Square North,
1100 North Market Street, Wilmington, Delaware Attention:  Trust Administration, by and through its
duly elected and authorized officer,
                                                 ,
a
                               ,  on behalf of itself and of Harley-Davidson
Motorcycle Trust 2004-2 (the “Trust”) as Issuer under the
Administration Agreement, dated as of May 1, 2004 (the “Administration Agreement”),
among the Trust, Harley-Davidson Customer Funding Corp., BNY Midwest Trust
Company, as Indenture Trustee, and Harley-Davidson Credit Corp., as
Administrator, does hereby nominate, constitute and appoint Harley-Davidson
Credit Corp., a Nevada corporation, each of its officers from time to time and
each of its employees authorized by it from time to time to act hereunder,
jointly and each of them severally, together or acting alone, its true and
lawful attorney-in-fact, for the Owner Trustee and the Issuer in their name,
place and stead, in the sole discretion of such attorney-in-fact, to perform
such calculations and prepare or cause the preparation by other appropriate
persons of, and to execute on behalf of the Issuer or the Owner Trustee, all
such documents, reports, filings, instruments, certificates and opinions that
the Issuer or the Owner Trustee is required to prepare, file or deliver
pursuant to the Administration Agreement, and to take any and all other action,
as such attorney-in-fact may deem necessary or desirable in accordance with the
directions of the Owner Trustee and in connection with its duties as
Administrator or successor Administrator under the Administration Agreement.  Capitalized terms used herein that are not
otherwise defined shall have the meanings ascribed thereto in the
Administration Agreement.

 

The
Owner Trustee hereby ratifies and confirms the execution, delivery and
performance (whether before or after the date hereof) of the above-mentioned
documents, reports, filings, instruments, certificates and opinions, by the
attorney-in-fact and all that the attorney-in-fact shall lawfully do or cause
to be done by virtue hereof.

 

 

The
Owner Trustee hereby agrees that no person or other entity dealing with the
attorney-in-fact shall be bound to inquire into such attorney-in-fact’s power
and authority hereunder and any such person or entity shall be fully protected
in relying on such power of authority.

 

This
Limited Power of Attorney may not be assigned without the prior written consent
of the Owner Trustee.  It is effective
immediately and will continue until it is revoked.

 

This
Limited Power of Attorney shall be governed and construed in accordance with
the laws of the State of Illinois without reference to principles of conflicts
of law.

 

Executed
as of this          day of May, 2004.

 

 

	
   

  	
  Wilmington Trust
  Company, not in its individual

  
	
   

  	
  capacity but solely as
  Owner Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Printed
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
							

 

 

CERTIFICATE
OF ACKNOWLEDGMENT OF

NOTARY
PUBLIC

 

	
  State of Delaware

  	
  )

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  )

  	
  SS.

  
	
   

  	
   

  	
   

  
	
  County of New Castle

  	
  )

  	
   

  

 

 

On May
       , 2004 before me, 

[Insert name and title of notary]

 

personally
appeared
                                                           .

 

o                                    personally known to
me, or

 

o                                    proved to me on the
basis of satisfactory evidence to be the person(s) whose name(s) is/are

 

subscribed
to the within instrument and acknowledged to me that he/she/they executed the
same in his/her/their authorized capacity(ties), and that by his/her/their
signature(s) on the instrument the person(s), or the entity upon behalf of
which person(s) acted, executed the instrument.

 

	
   

  	
  WITNESS my hand and
  official seal.

  
	
   

  	
   

  
	
   

  	
   

  
	
  Signature:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [SEAL]Exhibit 10.1

 

AMENDED AND RESTATED CREDIT AGREEMENT

 

 

Dated as of May 28, 2004

 

BEAZER
HOMES USA, INC.,

The Lenders Party Thereto,

BANK ONE, NA

As Agent,

and

BNP PARIBAS,

GUARANTY BANK

and

WACHOVIA BANK, NATIONAL ASSOCIATION,

as Syndication Agents

and

THE ROYAL BANK OF SCOTLAND PLC,

as Documentation Agent

and

PNC BANK, NATIONAL ASSOCIATION,

SUNTRUST BANK

and

WASHINGTON MUTUAL BANK, FA,

as Managing Agents

and

COMERICA BANK

and

KEYBANK NATIONAL ASSOCIATION,

as Co-Agents

BANC ONE CAPITAL MARKETS, INC.,

Lead Arranger and Sole Bookrunner

 

 

$550,000,000 REVOLVING CREDIT FACILITY

and

$200,000,000 TERM LOAN FACILITY

 

 

 

Table of Contents

 

	
  ARTICLE I

  	
  DEFINITIONS
  AND ACCOUNTING TERMS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 1.01

  	
  Defined Terms

  	
   

  
	
  Section 1.02

  	
  Accounting Terms

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  II

  	
  AMOUNTS
  AND TERMS OF THE FACILITIES

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 2.01 

  	
  The Facilities. 

  	
   

  
	
  Section 2.02

  	
  Reductions of and Increases in Aggregate
  Revolving Credit Commitment.

  	
   

  
	
  Section 2.03

  	
  Notice and Manner of Borrowing

  	
   

  
	
  Section 2.04

  	
  Non-Receipt of Funds by Agent

  	
   

  
	
  Section 2.05

  	
  Determination of Applicable Margins and
  Applicable Commitment Rate

  	
   

  
	
  Section 2.06

  	
  Conversions and Renewals

  	
   

  
	
  Section 2.07

  	
  Interest

  	
   

  
	
  Section 2.08

  	
  Interest Rate Determination

  	
   

  
	
  Section 2.09

  	
  Fees

  	
   

  
	
  Section 2.10

  	
  Notes

  	
   

  
	
  Section 2.11

  	
  Prepayments

  	
   

  
	
  Section 2.12

  	
  Method of Payment

  	
   

  
	
  Section 2.13

  	
  Use of Proceeds

  	
   

  
	
  Section 2.14

  	
  Yield Protection

  	
   

  
	
  Section 2.15

  	
  Changes in Capital Adequacy Regulations

  	
   

  
	
  Section 2.16

  	
  Availability of LIBOR Loans

  	
   

  
	
  Section 2.17

  	
  Funding Indemnification

  	
   

  
	
  Section 2.18

  	
  Lender Statements; Survival of Indemnity

  	
   

  
	
  Section 2.19

  	
  Extension of Revolving Credit Termination
  Date

  	
   

  
	
  Section 2.20

  	
  Extension of Term Loan Maturity Date

  	
   

  
	
  Section 2.21

  	
  Replacement of Certain Lenders

  	
   

  
	
  Section 2.22

  	
  Swing Line

  	
   

  
	
  Section 2.23

  	
  Facility Letters of Credit.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
  CONDITIONS PRECEDENT

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 3.01

  	
  Conditions Precedent to Initial Loans

  	
   

  
	
  Section 3.02

  	
  Conditions Precedent to All Loans

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
  REPRESENTATIONS
  AND WARRANTIES

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 4.01

  	
  Incorporation,
  Formation, Good Standing, and Due Qualification

  	
   

  
	
  Section 4.02

  	
  Power and Authority

  	
   

  
	
  Section 4.03

  	
  Legally Enforceable
  Agreement

  	
   

  
	
  Section 4.04

  	
  Financial Statements

  	
   

  
	
  Section 4.05

  	
  Labor Disputes and
  Acts of God

  	
   

  

 

i

 

	
  Section 4.06

  	
  Other Agreements

  	
   

  
	
  Section 4.07

  	
  Litigation

  	
   

  
	
  Section 4.08

  	
  No Defaults on
  Outstanding Judgments or Orders

  	
   

  
	
  Section 4.09

  	
  Ownership and Liens

  	
   

  
	
  Section 4.10

  	
  Subsidiaries and
  Ownership of Stock

  	
   

  
	
  Section 4.11

  	
  ERISA

  	
   

  
	
  Section 4.12

  	
  Operation of Business

  	
   

  
	
  Section 4.13

  	
  Taxes

  	
   

  
	
  Section 4.14

  	
  Laws; Environment

  	
   

  
	
  Section 4.15

  	
  Investment Company Act

  	
   

  
	
  Section 4.16

  	
  Public Utility Holding
  Company Act

  	
   

  
	
  Section 4.17

  	
  OFAC

  	
   

  
	
  Section 4.18

  	
  Accuracy of
  Information

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
  AFFIRMATIVE COVENANTS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 5.01

  	
  Maintenance of
  Existence

  	
   

  
	
  Section 5.02

  	
  Maintenance of Records

  	
   

  
	
  Section 5.03

  	
  Maintenance of
  Properties

  	
   

  
	
  Section 5.04

  	
  Conduct of Business

  	
   

  
	
  Section 5.05

  	
  Maintenance of
  Insurance

  	
   

  
	
  Section 5.06

  	
  Compliance with Laws

  	
   

  
	
  Section 5.07

  	
  Right of Inspection

  	
   

  
	
  Section 5.08

  	
  Reporting Requirements

  	
   

  
	
  Section 5.09

  	
  Subsidiary Reporting
  Requirements

  	
   

  
	
  Section 5.10

  	
  Environment

  	
   

  
	
  Section 5.11

  	
  Use of Proceeds

  	
   

  
	
  Section 5.12

  	
  Ranking of Obligations

  	
   

  
	
  Section 5.13

  	
  Taxes

  	
   

  
	
  Section 5.14

  	
  Wholly-Owned Status

  	
   

  
	
  Section 5.15

  	
  New Subsidiaries

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
  NEGATIVE COVENANTS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 6.01

  	
  Liens

  	
   

  
	
  Section 6.02

  	
  Secured Debt

  	
   

  
	
  Section 6.03

  	
  Mergers, Etc

  	
   

  
	
  Section 6.04

  	
  Leases

  	
   

  
	
  Section 6.05

  	
  Sale and Leaseback

  	
   

  
	
  Section 6.06

  	
  Sale of Assets

  	
   

  
	
  Section 6.07

  	
  Investments

  	
   

  
	
  Section 6.08

  	
  Guaranties, Etc

  	
   

  
	
  Section 6.09

  	
  Transactions With
  Affiliates

  	
   

  
	
  Section 6.10

  	
  Housing Inventory

  	
   

  

 

ii

 

	
  Section 6.11

  	
  Amendment or
  Modification of Senior Indentures

  	
   

  
	
  Section 6.12

  	
  Non-Guarantors

  	
   

  
	
  Section 6.13

  	
  Negative Pledges

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
  FINANCIAL COVENANTS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 7.01

  	
  Minimum Consolidated
  Tangible Net Worth

  	
   

  
	
  Section 7.02

  	
  Leverage Ratio

  	
   

  
	
  Section 7.03

  	
  Borrowing Base Debt

  	
   

  
	
  Section 7.04

  	
  Interest Coverage
  Ratio

  	
   

  
	
  Section 7.05

  	
  Land Inventory

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  	
  EVENTS OF DEFAULT

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 8.01

  	
  Events of Default

  	
   

  
	
  Section 8.02

  	
  Set Off

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX

  	
  INTENTIONALLY OMITTED

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE X

  	
  AGENCY PROVISIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 10.01

  	
  Authorization and
  Action

  	
   

  
	
  Section 10.02

  	
  Liability of Agent

  	
   

  
	
  Section 10.03

  	
  Rights of Agent as a
  Lender

  	
   

  
	
  Section 10.04

  	
  Independent Credit
  Decisions

  	
   

  
	
  Section 10.05

  	
  Indemnification

  	
   

  
	
  Section 10.06

  	
  Successor Agent

  	
   

  
	
  Section 10.07

  	
  Sharing of Payments,
  Etc

  	
   

  
	
  Section 10.08

  	
  Withholding Tax
  Matters

  	
   

  
	
  Section 10.09 

  	
  Syndication Agents,
  Documentation Agents, Managing Agents or Co-Agents

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  XI

  	
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 11.01

  	
  Amendments, Etc

  	
   

  
	
  Section 11.02

  	
  Notices, Etc

  	
   

  
	
  Section 11.03

  	
  No Waiver

  	
   

  
	
  Section 11.04

  	
  Costs, Expenses, and
  Taxes

  	
   

  
	
  Section 11.05

  	
  Integration

  	
   

  
	
  Section 11.06

  	
  Indemnity

  	
   

  
	
  Section 11.07

  	
  Governing Law

  	
   

  
	
  Section 11.08

  	
  Severability of
  Provisions

  	
   

  
	
  Section 11.09

  	
  Counterparts

  	
   

  
	
  Section 11.10

  	
  Headings

  	
   

  
	
  Section 11.11

  	
  Submission to
  Jurisdiction

  	
   

  
	
  Section 11.12

  	
  Jury Trial Waiver

  	
   

  

 

iii

 

	
  Section 11.13

  	
  Governmental
  Regulation

  	
   

  
	
  Section 11.14

  	
  No Fiduciary Duty

  	
   

  
	
  Section 11.15

  	
  Confidentiality

  	
   

  
	
  Section 11.16

  	
  USA Patriot Act
  Notification

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  XII

  	
  BENEFIT
  OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 12.01

  	
  Successors and
  Assigns

  	
   

  
	
  Section 12.02

  	
  Participations

  	
   

  
	
  Section 12.03

  	
  Assignments

  	
   

  
	
  Section 12.04

  	
  Dissemination of
  Information

  	
   

  

 

iv

 

LIST
OF SCHEDULES AND EXHIBITS

 

	
  Schedule

  	
   

  	
  Description

  	
   

  	
  Reference

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Schedule
  I

  	
   

  	
  Commitments

  	
   

  	
  2.01

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Schedule
  II

  	
   

  	
  Existing
  Letters of Credit

  	
   

  	
  Definition

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Schedule
  III

  	
   

  	
  Guarantors

  	
   

  	
  Definition

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Schedule
  4.07

  	
   

  	
  Claims

  	
   

  	
  4.07

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Schedule
  4.10

  	
   

  	
  Subsidiaries
  of Borrower

  	
   

  	
  4.10

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Schedule
  4.14

  	
   

  	
  Environmental
  Matters

  	
   

  	
  4.10,
  5.06, 5.10. 8.01(10)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Schedule

  	
   

  	
  Description

  	
   

  	
  Reference

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit
  A

  	
   

  	
  Form
  of Guaranty

  	
   

  	
  Definition

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit
  B-1

  	
   

  	
  Form
  of Revolving Credit Note

  	
   

  	
  Definition

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit
  B-2

  	
   

  	
  Form
  of Term Loan Note

  	
   

  	
  Definition

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit
  C

  	
   

  	
  Commitment
  and Acceptance

  	
   

  	
  2.02.2(a)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit
  D

  	
   

  	
  Form
  of Certificate for Borrowings and Facility Letters of Credit

  	
   

  	
  2.23.3(iii),
  3.02

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit
  E

  	
   

  	
  Opinion
  of Borrower’s Delaware and Georgia Counsel

  	
   

  	
  3.01(5)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit
  F

  	
   

  	
  Opinion
  of Borrower’s Illinois Counsel

  	
   

  	
  3.01(5)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit
  G

  	
   

  	
  Assignment
  Agreement

  	
   

  	
  12.03(b)

  

 

v

 

AMENDED
AND RESTATED CREDIT AGREEMENT dated as of May 28, 2004 among BEAZER HOMES USA,
INC., a Delaware corporation (the “Borrower”), the Lenders that are signatories
hereto and BANK ONE, NA as Agent (the “Agent”) for the Lenders and an Issuer
(as hereinafter defined).

 

RECITALS

 

A.                                   The Borrower, the Agent and certain other
lenders are party to a certain Credit Agreement dated as of June 2, 2003 (as
amended, the “Original Credit Agreement”).

 

B.                                     The parties hereto desire to amend and
restate the Original Credit Agreement to extend the Revolving Credit
Termination Date and Term Loan Maturity Date, to increase the Aggregate
Revolving Credit Commitment and as otherwise provided herein.

 

AGREEMENT

 

In
consideration of the foregoing recitals and the mutual covenants and agreements
hereinafter set forth, the parties hereto hereby agree, and amend and restate
the Original Credit Agreement, as follows:

 

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

 

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

 

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

 

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

 

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

 

1

 

period ending on such date and (y) the
average book value of all Finished Lots as of such date and (2) forty percent
(40%) of Consolidated Tangible Net Worth as of such date.

 

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

 

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

 

“Agent”
means Bank One.

 

“Agent’s
Fee Letter” means that certain fee letter dated April 23, 2004 from the Agent
and BOCM to the Borrower and accepted by the Borrower on April 23, 2004.

 

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

 

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

 

“Aggregate
Revolving Credit Commitment” means the aggregate Revolving Credit Commitments
of all the Revolving Credit Lenders initially in the amount of $550,000,000 as
the same may be reduced or increased from time to time pursuant to the terms of
this Agreement.

 

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

 

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

 

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

 

2

 

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

 

“Applicable
Commitment Rate” means, as at any date of determination, the rate per annum
indicated in Section 2.05 as then applicable in the determination of the
commitment fee (under Section 2.09).

 

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

 

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

 

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

 

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

 

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

 

“BOCM”
means Banc One Capital Markets, Inc.

 

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

 

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

 

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

 

3

 

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

 

“Business
Day” means (i) with respect to any Borrowing, payment or rate selection of
LIBOR Loans, a day (other than a Saturday or Sunday) on which banks generally
are open in Chicago and New York City for the conduct of substantially all of
their commercial lending activities and on which dealings in United States
dollars are carried on in the London interbank market and (ii) for all other
purposes, a day (other than a Saturday or Sunday) on which banks generally are
open in Chicago for the conduct of substantially all of their commercial
lending activities.

 

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

 

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

 

4

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

5

 

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

 

“Debt”
means, without duplication, with respect to any Person (1) indebtedness or liability
for borrowed money, including, without limitation, subordinated indebtedness
(other than trade accounts payable and accruals incurred in the ordinary course
of business); (2) obligations evidenced by bonds, debentures, notes, or other
similar instruments; (3) obligations for the deferred purchase price of
property (including, without limitation, seller financing of any Inventory) or
services, provided, however, that Debt shall not include
obligations with respect to options to purchase real property that have not
been exercised; (4) obligations as lessee under Capital Leases to the extent
that the same would, in accordance with GAAP, appear as liabilities in the
Borrower’s consolidated balance sheet; (5) current liabilities in respect of
unfunded vested benefits under Plans and incurred withdrawal liability under
any Multiemployer Plan; (6) reimbursement obligations under letters of credit
(including contingent obligations with respect to letters of credit not yet
drawn upon); (7) obligations under acceptance facilities; (8) all guaranties,
endorsements (other than for collection or deposit in the ordinary course of
business), and other contingent obligations to purchase, to provide funds for
payment, to supply funds to invest in any other Person or entity, or otherwise
to assure a creditor against loss, provided, however, that “Debt” shall not
include guaranties of performance obligations; (9) obligations secured by any
Liens on any property of such Person, whether or not the obligations have been
assumed; and (10) net liabilities under interest rate swap, exchange or cap
agreements (valued as the termination value thereof, computed in accordance
with a method approved by the International Swaps and Derivatives Association
and agreed to by such Person in the applicable agreement).

 

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

 

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

 

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

 

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

 

6

 

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

 

“Eurocurrency
Reserve Requirement” means, for any Interest Period, the maximum aggregate
reserve requirement (including all basic, supplemental, marginal and other
reserves) which is imposed under Regulation D on “Eurocurrency liabilities” (as
such term is used in Regulation D) but without benefit or credit of proration,
exemptions, or offsets that might otherwise be available from time to time
under Regulation D.  Without limiting
the effect of the foregoing, the Eurocurrency Reserve Requirement shall reflect
any other reserves required to be maintained against (1) any category of
liabilities that includes deposits by reference to which the LIBOR Interest
Rate for LIBOR Loans is to be determined; or (2) any category of extension of
credit or other assets that include LIBOR Loans.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Facility
Letter of Credit Sublimit” means $250,000,000.

 

7

 

“Federal
Funds Rate” means, for each day, a fluctuating interest rate per annum equal to
the weighted average of the rates on overnight Federal Funds transactions with
members of the Federal Reserve System arranged by Federal Funds brokers, as
published for such day (or, if such day is not a Business Day, for the
immediately preceding Business Day) by the Federal Reserve Bank of New York,
or, if such rate is not so published for any day which is a Business Day, the
average of the quotations at approximately 10:00 A.M. Chicago time on such day
on such transactions received by the Agent from three Federal Funds brokers of
recognized standing selected by the Agent in its sole discretion.

 

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

 

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

 

“Fitch”
means Fitch, Inc.

 

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

 

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

 

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

 

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

 

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

 

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

 

8

 

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

 

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

 

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

 

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

 

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

 

“Interest
Period” means, with respect to any LIBOR Loan, the period commencing on the
date such Loan is made, converted or renewed, and ending, as the Borrower may
select pursuant to Section 2.03, on the numerically corresponding day in the
first, second, third or sixth calendar month thereafter, except that each such
Interest Period that commences on the last Business Day of a calendar month (or
on any day for which there is no numerically corresponding day in the
appropriate subsequent calendar month) shall end on the last Business Day of the
appropriate subsequent calendar month; provided that all of the foregoing
provisions relating to Interest Periods are subject to the following:

 

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

 

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

 

(c)                                  If an Interest Period would end on a day that
is not a Business Day, such Interest Period shall be extended to the next
Business Day unless such

 

9

 

Business
Day would fall in the next calendar month, in which event such Interest Period
shall end on the immediately preceding Business Day.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Lending
Office” means, with respect to any Lender, the Lending Office of such Lender
(or of an affiliate of such Bank) heretofore designated in writing by such
Lender to the Agent or such other office or branch of such Lender (or of an
affiliate of such Lender) as that

 

10

 

Lender may from time to time specify to the
Borrower and the Agent as the office or branch at which its Loans (or Loans of
a type designated in such notice) are to be made and maintained.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

11

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Original
Credit Agreement” has the meaning assigned to that term in Recital A.

 

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

 

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

 

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

 

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

 

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

 

12

 

“Plan”
means any pension plan which is covered by Title IV of ERISA and in respect of
which (a) the Borrower or a Subsidiary or a Commonly Controlled Entity is an
“employer” as defined in Section 3(5) of ERISA and (b) the Borrower or a
Subsidiary has any material liability; provided, however, that
the term “Plan” shall not include any Multiemployer Plan.

 

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

 

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

 

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

 

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

 

“Quarterly
Payment Date” means July 1, 2004 and the first day of each July, October,
January and April, thereafter.

 

“Ratings”
is defined in Section 2.05(a).

 

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

 

“Refinancing
Debt” means Debt that refunds, refinances or extends any applicable Debt
(“Refinanced Debt”) but only to the extent that (i) the Refinancing Debt is
subordinated to or pari passu with the Obligations to the same extent as
such Refinanced Debt, if at all, (ii) such Refinancing Debt is in an aggregate
amount that is equal to or less than the sum of (A) the aggregate amount then
outstanding under the Refinanced Debt, plus (B) accrued and unpaid
interest on such Refinanced Debt, plus (C) reasonable fees and expenses
incurred in obtaining such Refinancing Debt, it being understood that this
clause (ii) shall not preclude the Refinancing Debt from being a part of a Debt
financing that includes other or additional Debt otherwise permitted herein,
(iii) such Refinancing Debt is Incurred by the same Person that initially
Incurred such Refinanced Debt or by another Person of which the Person that
initially Incurred such Refinanced Debt is a Subsidiary, and (iv) such
Refinancing Debt is Incurred within 60 days after such Refinanced Debt is so
refunded, refinanced or extended.

 

“Regulation
D” means Regulation D of the Board of Governors of the Federal Reserve System
as from time to time in effect and any successor thereto or other regulation or
official interpretation of said Board of Governors relating to reserve
requirements applicable to member banks of the Federal Reserve System.

 

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

 

13

 

interpretation of said Board of Governors
relating to the extension of credit by banks for the purpose of purchasing or
carrying margin stocks applicable to member banks of the Federal Reserve
System.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Revolving
Credit Commitment” means, for each of the Revolving Credit Lenders, the
obligation of such Revolving Credit Lender to make Revolving Credit Loans and
to purchase participations in Facility Letters of Credit in the aggregate not
exceeding the amount set

 

14

 

forth in Schedule I hereto as its “Revolving
Credit Commitment,” as such amount may be decreased from time to time pursuant
to the terms hereof or increased pursuant to Section 2.02.2 hereof; provided,
however, that the Revolving Credit Commitment of a Lender may not be
increased without its prior written approval.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Revolving
Credit Termination Date” means June 1, 2008, subject, however, to earlier
termination in whole of the Aggregate Revolving Credit Commitment pursuant to
the terms of this Agreement and to extension of such date as provided in
Section 2.19.

 

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

 

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

 

15

 

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

 

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

 

“Senior
Notes” means (i) the 8-3/8% Senior Notes due 2012 of the Borrower issued in the
original principal amount of $350,000,000, pursuant to the Indenture dated
April 17, 2002 and First Supplemental Indenture dated April 17, 2002, (ii) the
8-5/8% Senior Notes due 2011 of the Borrower issued in the original principal
amount of $200,000,000 pursuant to the Indenture dated May 21, 2001 and (iii)
the 61⁄2% Senior Notes due 2013 of the Borrower issued in the original principal
amount of $200,000,000 pursuant to the Indenture dated April 17, 2002 and
Second Supplemental Indenture dated November 13, 2003.

 

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

 

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

 

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

 

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

 

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

 

16

 

through one or more intermediaries, or both,
by the Borrower or such Guarantor, as the case may be.

 

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

 

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

 

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

 

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

 

“Taxes”
means any and all present or future taxes, duties, levies, imposts, deductions,
charges or withholdings, and any and all liabilities with respect to the
foregoing, imposed by the United States. but excluding, in the case of each
Lender or applicable Lending Office, the Issuer and the Agent, (a) taxes
imposed on or measured by its overall net income, and franchise taxes imposed
on it, by (i) the jurisdiction under the laws of which such Lender, the Issuer
or the Agent is incorporated or organized or (ii) the jurisdiction in which the
Agent’s, Issuer’s or such Lender’s principal executive office or such Lender’s
applicable Lending Office is located and (b) taxes that are in effect and would
apply at the time such Person becomes a Lender, Issuer or Agent hereunder.

 

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

 

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

 

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

 

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

 

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

 

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

 

“Term
Loan Maturity Date” means June 1, 2008 or such earlier date upon which the
outstanding principal amount of the Term Loan Notes, all accrued and unpaid
interest thereon, and all other Term Loan Obligations become due and payable,
whether as a result of the

 

17

 

occurrence of the stated maturity date or the
acceleration of maturity pursuant to the terms of any of the Loan Documents,
and also subject to extension of such date as provided in Section 2.20.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

18

 

ARTICLE II

AMOUNTS AND TERMS OF THE FACILITIES

 

Section 2.01  The
Facilities.

 

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

 

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

 

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

 

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

 

(e)                                  Each Borrowing under the Revolving Credit
Facility which shall not utilize the Aggregate Revolving Credit Commitment in
full shall be in an amount not less than One Million Dollars ($1,000,000) in
the case of a Borrowing consisting of LIBOR Loans and Five Hundred Thousand
Dollars ($500,000) in the case of a Borrowing consisting of ABR Loans and, in either
case, if in excess of the specified amount, in integral multiples of One
Hundred Thousand Dollars ($100,000). 
Each Borrowing under the Revolving Credit Facility shall consist of a
Revolving Credit Loan made by each Lender in the proportion of its Revolving
Credit Pro Rata Share.  Within the
limits of the Aggregate Revolving Credit Commitments, the Borrower may borrow,
repay pursuant to Section 2.11, and reborrow Revolving Credit Loans under this
Section 2.01. On such terms and conditions, the Revolving Credit Loans may be
outstanding as ABR Loans or LIBOR Loans. 
Each type of Revolving Credit Loan shall be made and maintained at the
applicable Lender’s Lending Office for such type of Loan.  The failure of any

 

19

 

Revolving Credit Lender to make any requested
Revolving Credit Loan to be made by it on the date specified for such Revolving
Credit Loan shall not relieve any other Revolving Credit Lender of its
obligation (if any) to make such Revolving Credit Loan on such date, but no
Revolving Credit Lender (or other Lender) shall be responsible for the failure
of any other Revolving Credit Lender to make such Revolving Credit Loan to be
made by such other Revolving Credit Lender. 
The provisions of this Section 2.01.1(e) shall not apply to Swing Line
Loans.

 

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

 

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

 

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

 

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

 

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

 

20

 

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

 

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

 

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

 

Section 2.02.2  Increase
in Aggregate Revolving Credit Commitment.

 

(a)                                  Request for Facility
Increase.  The Borrower may, at any time and from time
to time, request, by notice to the Agent, the Agent’s approval of an increase
of the Aggregate Revolving Credit Commitment (a “Facility Increase”) within the
limitations hereafter described, which request shall set forth the amount of
each such requested Facility Increase. 
Within twenty (20) days of such request, the Agent shall advise the
Borrower of its approval or disapproval of such request; failure to so advise
the Borrower shall constitute disapproval. If the Agent approves any such
Facility Increase, then the Aggregate Revolving Credit Commitment may be
increased (up to the amount of such approved Facility Increase, in the
aggregate) by having one or more New Revolving Credit Lenders increase the
amount of their then existing Revolving Credit Commitments or become Revolving
Credit Lenders, subject to and in accordance with this provisions of this
Section 2.02.2.  Any Facility Increase
shall be subject to the following limitations and conditions:  (i) any increase (in the aggregate) in the
Aggregate Revolving Credit Commitment, any increase in any Revolving Credit
Commitment and any new Revolving Credit Commitment shall (unless otherwise
agreed to by the Borrower and the Agent) not be less than $5,000,000 (and
(unless otherwise agreed to by the Borrower and the Agent) shall be in integral
multiples of $1,000,000 if in excess thereof); (ii) no Facility Increase
pursuant to this Section 2.02.2 shall increase the Aggregate Revolving Credit
Commitment to an amount in excess of $800,000,000; (iii) the Borrower and each
New Revolving Credit Lender shall have executed and delivered a commitment and
acceptance (the “Commitment and Acceptance”) substantially in the form of Exhibit
C hereto, and the Agent shall have accepted and executed the same; (iv) the
Borrower shall have executed and delivered to the Agent such Revolving Credit
Note or Revolving Credit Notes as the Agent shall require to reflect such
Facility Increase; (v)

 

21

 

the Borrower shall have delivered to the Agent
opinions of counsel (substantially similar to the forms of opinions provided
for in Section 3.01(6), modified to apply to the Facility Increase and each
Revolving Credit Note and Commitment and Acceptance executed and delivered in
connection therewith); (vi) the Guarantors shall have consented in writing to
the Facility Increase and shall have agreed that their Guaranties continue in
full force and effect; and (vii) the Borrower and each New Revolving Credit
Lender shall otherwise have executed and delivered such other instruments and
documents as the Agent shall have reasonably requested in connection with such
Facility Increase.  The form and
substance of the documents required under clauses (iii) through (vii) above
shall be fully acceptable to the Agent. 
The Agent shall provide written notice to all of the Lenders hereunder
of any Facility Increase.

 

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

 

22

 

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

 

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

 

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

 

Section 2.03  Notice and
Manner of Borrowing.  The Borrower shall give the Agent notice of
any Loans under this Agreement, on the Business Day of each ABR Loan, and at
least three (3) Business Days before each LIBOR Loan, specifying:  (1) the date of such Loan; (2) the amount of
such Loan; (3) the type of Loan (whether an ABR Loan or a LIBOR Loan); and (4)
in the case of a LIBOR Loan, the duration of the Interest Period applicable
thereto.  All notices given by the
Borrower under this Section 2.03 shall be irrevocable and shall be given not
later than 10:00 A.M. Chicago time on the day specified above for such
notice.  The Agent shall notify each
Revolving Credit Lender or Term Loan Lender (as applicable) of each such notice
not later than 11:00 A.M. Chicago time on the date it receives such notice from
the Borrower if such notice is received by the Agent at or before 10:00 A.M.
Chicago time.  In the event such notice
from the Borrower is received after 10:00 A.M. Chicago time, it shall be
treated as if received on the next succeeding Business Day, and the Agent shall
notify each Revolving Credit Lender or Term Loan Lender (as applicable) of such
notice as soon as practicable but not later than 11:00 A.M. Chicago time on the
next succeeding Business Day.  Not later
than 1:00 P.M. Chicago time on the date of such Loans, each Revolving Credit
Lender or Term Loan Lender (as applicable) will make available to the Agent in
immediately available funds, such Lender’s Applicable Pro Rata Share of such
Loans.  After the Agent’s receipt of
such funds, on the date of such Loans and upon fulfillment of the applicable
conditions set forth in Article III, the Agent will make such Loans available
to the Borrower in immediately available funds by crediting the amount thereof
to the Borrower’s account with the Agent. 
The provisions of this Section 2.03 shall not apply to Swing Line Loans.

 

Section 2.04  Non-Receipt
of Funds by Agent.  (a) 
Unless the Agent shall have received notice from a Lender prior to the
date (in the case of a LIBOR Loan), or by 12:00 noon

 

23

 

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

 

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

 

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

 

Section 2.05  Determination
of Applicable Margins and Applicable Commitment Rate. 
(a)  The Applicable Margins and
the Applicable Commitment Rate shall be determined by reference to the Leverage
Ratio and the Ratings in accordance with the following pricing grid and the
provisions of this Section 2.05:

 

	
   

  	
   

  	
  LEVEL I

  	
   

  	
  LEVEL II

  	
   

  	
  LEVEL III

  	
   

  	
  LEVEL IV

  	
   

  
	
  Ratings

  	
   

  	
  BBB/Baa2 or higher

  	
   

  	
  BBB-/Baa3

  	
   

  	
  BB+/Ba1

  	
   

  	
  BB/Ba2 or lower or one or no rating

  	
   

  
	
  Leverage Ratio

  	
   

  	
  < 1.00

  	
   

  	
  > 1.00 < 1.25

  	
   

  	
  > 1.25x < 1.75

  	
   

  	
  > 1.75

  	
   

  
	
  Applicable LIBOR Margin

  	
   

  	
  1.00%

  	
   

  	
  1.25%

  	
   

  	
  1.50%

  	
   

  	
  1.75%

  	
   

  
	
  Applicable ABR Margin

  	
   

  	
  -0-

  	
   

  	
  -0-

  	
   

  	
  -0-

  	
   

  	
  0.25%

  	
   

  
	
  Applicable Commitment Fee

  	
   

  	
  0.20%

  	
   

  	
  0.225%

  	
   

  	
  0.25%

  	
   

  	
  0.275%

  	
   

  

 

24

 

“Ratings”
means (i) at any time at which Moody’s, S&P and Fitch all publicly announce
ratings of the Borrower’s senior unsecured long-term debt, the second highest
of such three ratings and (ii) at any time at which Moody’s and S&P publicly
announce ratings of the Borrower’s senior unsecured long-term debt but Fitch
does not, the higher of such two ratings (i.e., lower pricing); provided,
however, that (in the case of either clause (i) or clause (ii)) the Ratings
shall not be at Level I or II unless the Borrower has ratings from both S&P
and Moody’s of BBB- and Baa3 or better.

 

In
the event of a difference of one level between the Ratings and Leverage Ratio
pricing levels, the lower pricing shall apply; if the difference is more than one
level, the level one level lower than the higher pricing shall apply.

 

(b)                                 The Applicable Margins and Applicable
Commitment Rate under the foregoing pricing grid shall be determined (i) with
reference to the Leverage Ratio as of the last day of each fiscal quarter and
(ii) with reference to the Ratings at the time of each change in such
Ratings.  In the case of the Leverage
Ratio such determination shall be made from the then most recent annual or
quarterly financial statements of the Borrower delivered by the Borrower
pursuant to Sections 5.08(1) and 5.08(2), and the adjustment, if any, to the
Applicable Margins and the Applicable Commitment Rate shall take place on, and
be effective from and after, the fifth Business Day after the date on which the
Agent has received such financial statements. 
In the case of the Ratings, any change in such Ratings shall result in a
change in (x) the Applicable LIBOR Margin as of the beginning of the next
succeeding applicable Interest Period for LIBOR Loans, and (y) the Applicable
ABR Margin and the Applicable Commitment Rate as of the date of such change in
the Ratings.

 

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

 

25

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

26

 

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

 

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

 

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

 

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

 

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

 

Section 2.09  Fees. 
(a)  The Borrower shall pay to
BOCM upon the execution of this Agreement a one time, nonrefundable fee in the
amount provided for in the Agent’s Fee Letter. 
The Agent shall deliver to each Lender its applicable fee (as set forth
in the invitation letter dated April 23, 2004 from BOCM to such Lenders)
promptly upon the Agent’s receipt thereof.

 

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

 

27

 

by the Agent to the Borrower, provided,
however, that the failure of the Agent to deliver such statement shall
not limit or otherwise affect the obligations of the Borrower hereunder) from
the date of this Agreement until the Revolving Credit Termination Date at the
Applicable Commitment Rate, payable in arrears on each Quarterly Payment Date
during the term of such Revolving Credit Commitment, commencing July 1, 2004,
and ending on the Revolving Credit Termination Date or, in the case of Rejecting
Revolving Credit Lender, on such Rejecting Revolving Credit Lender’s
Termination Date.  The commitment fees
shall be calculated on the basis of a year of 365 days for the actual number of
days elapsed.  Upon receipt of any
commitment fees, the Agent will promptly thereafter cause to be distributed
such payments to the Revolving Credit Lenders in the proportion of their
Revolving Credit Pro Rata Shares (subject to adjustment in the case of the
Swing Line Lender as hereinafter provided). 
For purposes of determining the commitment fee payable to the Swing Line
Lender, the unused portion of the Swing Ling Lender’s Revolving Credit
Commitment shall be reduced dollar-for-dollar by the amount of any Swing Line
Loans then outstanding.

 

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

 

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

 

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

 

28

 

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

 

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

 

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

 

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

 

29

 

carrying any such margin stock, or for any purpose
which violates, or is inconsistent with, Regulation X.

 

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

 

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

 

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

 

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

 

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

 

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

 

30

 

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

 

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

 

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

 

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

 

Section 2.19  Extension
of Revolving Credit Termination Date.  (a) 
Not more than once in any fiscal year of the Borrower, the Borrower may
request an extension of the Revolving Credit Termination Date to the first or
second anniversary of the then scheduled Revolving Credit Termination Date (but
in no event later than the fourth anniversary of the date of such

 

31

 

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

 

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

 

(c)                                  If Revolving Credit Lenders whose Revolving
Credit Pro Rata Shares equal or exceed 66-2/3% in the aggregate approve the
Revolving Credit Extension Request, the Borrower, upon notice to the Agent and
any Rejecting Revolving Credit Lender, (i) may, subject to the provisions of
the last sentence of Section 2.19(d), terminate the Revolving Credit Commitment
of such Rejecting Revolving Credit Lender (or such portion of such Revolving
Credit Commitment as is not assigned to a Replacement Lender in accordance with
Section 2.21), and (ii) if such Rejecting Revolving Credit Lender is also a
Term Loan Lender, may (at Borrower’s election, but only if Borrower
simultaneously elects to terminate such Rejecting Lender’s Revolving Credit
Commitment under clause (i) above) repay in full the Term Loan of such Lender
(or such portion of such Term Loan as is not assigned to a Replacement Lender
in accordance with Section 2.21), which termination (in the case of clause (i))
or repayment (in the case of clause (ii)) shall occur as of a date set forth in
such Borrower’s notice but in no event more than thirty (30) days following
such notice (subject to the provisions of Section 2.21(b)).  The termination of a Rejecting Revolving
Credit Lender’s Revolving Credit Commitment shall be effected in accordance
with Section 2.19(d) and the repayment of its Term Loans (if applicable) shall
be effected in accordance with Section 2.20(d).

 

32

 

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

 

33

 

Credit in sufficient amounts such that, on
the effective date of such termination, the sum of the outstanding principal
balance of the Revolving Credit Loans and the Facility Letter of Credit
Obligations does not exceed the Aggregate Revolving Credit Commitment (as
reduced).

 

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

 

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

 

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

 

34

 

Loan shall be effected in accordance with
Section 2.20(d) and the termination of its Revolving Credit Commitment (if applicable)
shall be effected in accordance with Section 2.19(d).

 

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

 

Section 2.21  Replacement
of Certain Lenders.  (a) 
In the event a Lender (“Affected Lender”):  (i) shall have requested compensation from the Borrower under
Sections 2.14 or 2.15 to recover additional costs incurred by such Lender that
are not being incurred generally by the other Lenders, (ii) shall have
delivered a notice pursuant to Section 2.16 claiming that such Lender is unable
to extend LIBOR Loans to the Borrower for reasons not generally applicable to
the other Lenders, (iii) shall have invoked Section 11.13 or (iv) is a
Rejecting Revolving Credit Lender pursuant to Section 2.19 or a Rejecting Term
Loan Lender pursuant to Section 2.20, then, in any such case, the Borrower or
the Agent may effect the replacement of such Affected Lender in accordance with
the provisions of this Section 2.21, provided, however, that if
the replacement of such Affected Lender is by reason of clause (iv) above, the
replacement of such Affected Lender shall be subject to the provisions of
Section 2.21(b).  The Borrower or the
Agent may elect to replace an Affected Lender and make written demand on such
Affected Lender (with a copy to the Agent in the case of a demand by the
Borrower and a copy to the Borrower in the case of a demand by the Agent) for
the Affected Lender to assign, and, if a Replacement Lender (as hereinafter
defined) notifies the Affected Lender of its willingness to purchase the
Affected Lender’s interests in the Facilities and the Agent and the Borrower
consent thereto in writing, then such Affected Lender shall assign pursuant to
one or more duly executed assignment and acceptance agreements in substantially
and in all material respects in the form and substance of Exhibit G five
(5) Business Days after the date of such demand, to one or more financial
institutions that comply with the provisions of Section 12.03(a) that the
Borrower or the Agent,

 

35

 

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

 

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

 

Section 2.22  Swing Line. 
(a)  The Swing Line Lender
agrees, on the terms and conditions hereinafter set forth, to make loans
(“Swing Line Loans”) to the Borrower from time to time during the period from
the date of this Agreement, up to but not including the Revolving Credit
Termination Date, in an aggregate principal amount not to exceed at any time
outstanding the lesser of (i) the Swing Line Commitment or (ii) the amount by
which the Swing Line Lender’s Revolving Credit Commitment exceeds the sum of
(A) the outstanding principal amount of the Revolving Credit Loans made by the
Swing Line Lender pursuant to Section 2.01.1 and (B) the Swing Line Lender’s
Revolving Credit Pro Rata Share of the outstanding Facility Letter of Credit
Obligations, subject in each case to the limitations set forth in Section
2.01.3.

 

36

 

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

 

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

 

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

 

Section 2.23  Facility
Letters of Credit.

 

Section 2.23.1  Issuance
of Facility Letters of Credit.  (a)  Each Issuer agrees, on the terms and conditions set forth in this
Agreement, to issue from time to time for the account of the Borrower, through
such offices or branches as it and the Borrower may jointly agree, one or more
Facility Letters of Credit in accordance with this Section 2.23, during the
period commencing on the date hereof and ending on the thirtieth (30th) day
prior to the Revolving Credit Termination Date.

 

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

 

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

 

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

 

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

 

37

 

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

 

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

 

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

 

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

 

(vii)                           that is in a currency other than U.S. Dollars or that provides for
drawings other than by sight draft.

 

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

 

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

 

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

 

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

 

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

 

38

 

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

 

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

 

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

 

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

 

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

 

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

 

39

 

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

 

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

 

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

 

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

 

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

 

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

 

40

 

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

 

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

 

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

 

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

 

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

 

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

 

(iii)                               any draft, certificate or any other document presented under the Facility
Letter of Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any respect;

 

41

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

42

 

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

 

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

 

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

 

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

 

43

 

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

 

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

 

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

 

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

 

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

 

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

 

44

 

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

 

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

 

ARTICLE III

CONDITIONS PRECEDENT

 

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

 

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

 

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

 

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

 

45

 

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

 

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

 

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

 

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

 

(8)                                  Articles of Incorporation of
Guarantors.  Copies of the articles of incorporation of
each corporate Guarantor, together with all amendments, all certified by the
appropriate governmental officer in its jurisdiction of incorporation;

 

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

 

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

 

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

 

(12)                            Limited Liability Company
Documents.  A true and complete copy of the limited
liability company agreement or operating agreement of each limited liability

 

46

 

company Guarantor, including without
limitation any and all amendments and modifications thereto, and a certified
copy of such Guarantor’s certificate of formation;

 

(13)                            Good Standing Certificates.  For
each Guarantor a certificate of good standing from the appropriate governmental
officer in its jurisdiction of incorporation or formation; and

 

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

 

Notwithstanding
the foregoing, the parties hereto acknowledge and agree that the Agent, at its
election, may waive, with respect to the Guarantors, the requirement for
delivery of the documents identified in items (8), (11) and (12) above,
provided and to the extent that the Borrower delivers or causes the applicable
Guarantors to deliver to the Agent a certificate that such documents, as most
recently delivered to the Agent pursuant to the Original Credit Agreements,
have not been modified or amended and remain in full force and effect.

 

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

 

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

 

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

 

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

 

(c)                                  If applicable under Section 7.03 of the
Agreement, upon the making of the requested Loans, the aggregate outstanding
amount of Borrowing Base Debt shall not exceed the Borrowing Base as of the
most recent Inventory Valuation Date; and

 

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

 

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

 

47

 

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

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

 

The
Borrower represents and warrants that:

 

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

 

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

 

Section 4.03  Legally
Enforceable Agreement.  This Agreement is, and each of the other
Loan Documents when delivered under this Agreement will be legal, valid, and
binding obligations of the Borrower or each Guarantor, as the case may be,
enforceable against the Borrower or each Guarantor, as the case may be, in
accordance with their respective terms,

 

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except to the extent that such enforcement may be
limited by applicable bankruptcy, insolvency, and other similar laws affecting
creditors’ rights generally.

 

Section 4.04  Financial
Statements.  The consolidated balance sheet of the
Borrower and its Subsidiaries as at March 31, 2004, and the consolidated
statements of operations, cash flow and changes to stockholders’ equity of the
Borrower and its Subsidiaries for the period of two fiscal quarters ended March
31, 2004, are complete and correct and fairly present as at such date the
financial condition of the Borrower and its Subsidiaries and the results of
their operations for the periods covered by such statements, all in accordance
with GAAP consistently applied (subject to year-end adjustments), and since
March 31, 2004, there has been no material adverse change in the condition
(financial or otherwise), business, or operations of the Borrower and its
Subsidiaries.  There are no liabilities
of the Borrower or any Subsidiary, fixed or contingent, which are material but
are not reflected in the financial statements or in the notes thereto, other
than liabilities arising in the ordinary course of business since March 31,
2004.  No information, exhibit, or
report furnished by the Borrower to any Lender in connection with the
negotiation of this Agreement taken together, contained any material
misstatement of fact or omitted to state a material fact or any fact necessary
to make the statements contained therein not materially misleading.

 

Section 4.05  Labor Disputes and Acts of God. 
Neither the business nor the properties of the Borrower or any
Subsidiary or any Guarantor are affected by any fire, explosion, accident,
strike, lockout, or other labor dispute, drought, storm, hail, earthquake,
embargo, act of God or of the public enemy, or other casualty (whether or not
covered by insurance), materially and adversely affecting such business or
properties or the operation of the Borrower or such Subsidiary or such
Guarantor.

 

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

 

Section 4.07  Litigation.  Except as disclosed in Schedules 4.07
or 4.14 hereto or reflected in or reserved for in the financial
statements referred to in Section 4.04, there is no pending or, to the
knowledge of the Borrower or any Guarantor, threatened action or proceeding
against or affecting the Borrower or any Significant Subsidiary or any
Significant Guarantor before any court, governmental agency, or arbitrator,
which may, in any one case or in the aggregate, materially adversely affect the
financial condition, operations, properties, or business of the Borrower or any
Significant Subsidiary or any Significant Guarantor or the ability of the
Borrower or any Significant Guarantor to perform its obligation under the Loan
Documents to which it is a party.

 

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

 

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

 

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

 

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

 

Section 4.12  Operation of Business.  The Borrower, each Subsidiary
and each Guarantor possess all licenses, permits, franchises, patents,
copyrights, trademarks, and trade names, or rights thereto, to conduct their
respective businesses substantially as now conducted

 

50

 

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

 

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

 

Section 4.14  Laws; Environment.  Except as disclosed in Schedule
4.14 hereto, (a) the Borrower, each Subsidiary and each Guarantor have duly
complied, and their businesses, operations, assets, equipment, property,
leaseholds, or other facilities are in compliance, in all material respects,
with the provisions of all federal, state, and local statutes, laws, codes, and
ordinances and all rules and regulations promulgated thereunder (including
without limitation those relating to the environment, health and safety); (b)
the Borrower, each Subsidiary and each Guarantor have been issued and will
maintain all required federal, state, and local permits, licenses,
certificates, and approvals relating to (1) air emissions; (2) discharges to
surface water or groundwater; (3) noise emissions; (4) solid or liquid waste
disposal; (5) the use, generation, storage, transportation, or disposal of
toxic or hazardous substances or hazardous wastes (intended hereby and
hereafter to include any and all such materials listed in any federal, state,
or local law, code, or ordinance and all rules and regulations promulgated
thereunder as hazardous); or (6) to the extent that failure to maintain the
same may, in any one case or in the aggregate, adversely affect in any material
respect the financial condition, operations, properties, or business of the
Borrower or any Significant Subsidiary or any Significant Guarantor or the
ability of the Borrower or any Significant Guarantor to perform its obligations
under the Loan Documents to which it is a party, other environmental, health or
safety matters; (c) neither the Borrower nor any Subsidiary nor any Guarantor
has received notice of, or has actual knowledge of any violations of any
federal, state, or local environmental, health, or safety laws, codes or
ordinances or any rules or regulations promulgated thereunder with respect to
its businesses, operations, assets, equipment, property, leaseholds, or other
facilities, which violation may, in any one case or in the aggregate, adversely
affect in any material respect the financial condition, operations, properties,
or business of the Borrower or any Significant Subsidiary or any Significant
Guarantor or the ability of the Borrower or any Significant Guarantor to
perform its obligations under the Loan Documents to which it is a party; (d)
except in accordance with a valid governmental permit, license, certificate or
approval, there has been no material emission, spill, release, or discharge
into or upon (1) the air; (2) soils, or any improvements located thereon; (3)
surface water or groundwater; or (4) the sewer, septic system or waste
treatment, storage or disposal system servicing the premises, of any toxic or
hazardous substances or hazardous wastes at or from the premises; and
accordingly the premises of the Borrower, each Subsidiary and each Guarantor
have not been adversely affected, in any material respect, by any toxic or
hazardous substances or wastes; (e) there has been no complaint, order,
directive, claim,

 

51

 

citation, or notice by any governmental authority or
any person or entity with respect to violations of law or damages by reason of
Borrower’s or any Subsidiary’s (1) air emissions; (2) spills, releases, or
discharges to soils or improvements located thereon, surface water, groundwater
or the sewer, septic system or waste treatment, storage or disposal systems
servicing the premises; (3) noise emissions; (4) solid or liquid waste
disposal; (5) use, generation, storage, transportation, or disposal of toxic or
hazardous substances or hazardous waste; or (6) other environmental, health or
safety matters affecting the Borrower, any Subsidiary or any Guarantor or its
business, operations, assets, equipment, property, leaseholds, or other
facilities; and (f) neither the Borrower nor any Subsidiary nor any Guarantor
has any material indebtedness, obligation, or liability, absolute or
contingent, matured or not matured, with respect to the storage, treatment,
cleanup, or disposal of any solid wastes, hazardous wastes, or other toxic or
hazardous substances (including without limitation any such indebtedness,
obligation, or liability with respect to any current regulation, law, or
statute regarding such storage, treatment, cleanup, or disposal).

 

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

 

Section 4.16  Public Utility Holding Company Act. 
Neither the Borrower nor any Subsidiary is a “holding company” or a
“subsidiary company” of a “holding company,” or an “affiliate” of a “holding
company” or of a “subsidiary company” of a “holding company,” within the
meaning of the Public Utility Holding Company Act of 1935, as amended.

 

Section 4.17  OFAC.  Neither Borrower nor any Guarantor is (or
will be) a person with whom any Lender is restricted from doing business under
regulations of the Office of Foreign Asset Control (“OFAC”) of the Department
of the Treasury of the United States of America (including, those Persons named
on OFAC’s Specially Designated and Blocked Persons list) or under any statute,
executive order (including, the September 24, 2001 Executive Order Blocking
Property and Prohibiting Transactions With Persons Who Commit, Threaten to
Commit, or Support Terrorism), or other governmental action and is not and
shall not engage in any dealings or transactions or otherwise be associated
with such persons.  In addition,
Borrower hereby agrees to provide to any Lender with any additional information
that such Lender deems necessary from time to time in order to ensure
compliance with all applicable Laws concerning money laundering and similar
activities.

 

Section 4.18  Accuracy of Information.  The representations and
warranties by the Borrower or any Guarantor contained herein or in any other
Loan Document or made hereunder or in any other Loan Document and the
certificates, schedules, exhibits, reports or other documents provided or to be
provided by the Borrower or any Guarantor in connection with the transactions
contemplated hereby or thereby (including, without limitation, the negotiation
of and compliance with the Loan Documents), when taken together as a whole, do
not contain and will not contain a misstatement of a material fact or omit to
state a material fact required to be stated therein in order to make the
statements contained therein, in the light of the circumstances under which
made, not misleading.

 

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ARTICLE V

AFFIRMATIVE COVENANTS

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 5.06  Compliance
with Laws.  Comply, and cause each Subsidiary to comply,
in all material respects with all applicable laws, rules, regulations, and
orders, such compliance to include, without limitation, paying before the same
become delinquent all taxes, assessments and governmental charges imposed upon
it or upon its property, other than any such taxes, assessments and charges
being contested by the Borrower in good faith which will not have a material
adverse effect on the financial condition of the Borrower; and with respect to
the matters disclosed in Schedule 4.14, implement prudent measures to
achieve compliance with all

 

53

 

relevant laws and regulations within a reasonable
time and in accordance with requirements negotiated with applicable regulatory
agencies.

 

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

 

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

 

(1)                                  Quarterly financial
statements.  As soon as available and in any event within
fifty (50) days after the end of each of the first three quarters of each
fiscal year of the Borrower, an unaudited condensed consolidated balance sheet
of the Borrower and its Subsidiaries as of the end of such quarter, unaudited
condensed consolidated statements of operations and cash flow of the Borrower and
its Subsidiaries for the period commencing at the end of the previous fiscal
year and ending with the end of such quarter, and unaudited condensed
consolidated statements of changes in stockholders’ equity of the Borrower and
its Subsidiaries for the portion of the fiscal year ended with the last day of
such quarter, all in reasonable detail and stating in comparative form the
respective figures for the corresponding date and period in the previous fiscal
year and all prepared in accordance with GAAP consistently applied and
certified by the chief financial officer of the Borrower (subject to year-end
adjustments); statements in the form of the Borrower’s quarterly 10-Q report to
the Securities and Exchange Commission that are consistent with the foregoing
requirements shall satisfy such requirements.

 

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

 

(3)                                  Financial projections.  On
August 15, 2004 and each anniversary thereof, two-year financial projections
(including a consolidated income statement, balance sheet and statement of cash
flows for the Borrower and its Subsidiaries) broken down by quarters, and as
soon as available (but not later than June 15 of each year), a mid-year update
of the financial projections for the current year.

 

(4)                                  Variance analysis. 
(a)  Within fifty (50) days of
the end of each of the first three fiscal quarters of each fiscal year of the
Borrower, a quarterly variance analysis

 

54

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

55

 

knowledge of any such condition or event,
specifying in such certificate each such condition or event of which they have
knowledge and the nature and status thereof.

 

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

 

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

 

(12)                            ERISA reports.  As
soon as possible, and in any event within thirty (30) days after the Borrower
knows or has reason to know that any circumstances exist that constitute
grounds entitling the PBGC to institute proceedings to terminate a Plan subject
to ERISA with respect to the Borrower or any Commonly Controlled Entity, and
promptly but in any event within two (2) Business Days of receipt by the
Borrower or any Commonly Controlled Entity of notice that the PBGC intends to terminate
a Plan or appoint a trustee to administer the same, and promptly but in any
event within five (5) Business Days of the receipt of notice concerning the
imposition of withdrawal liability in excess of $50,000 with respect to the
Borrower or any Commonly Controlled Entity, the Borrower will deliver to each
Lender a certificate of the chief financial officer of the Borrower setting
forth all relevant details and the action which the Borrower proposes to take
with respect thereto.

 

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

 

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

 

(15)                            Borrowing Base Certificate
Prior to Acquisition.  Not less than ten (10) days prior to the
consummation of any Permitted Acquisition (without regard to whether the
provisions of Sections 2.01.3 and 7.03 are then applicable), a Borrowing Base
Certificate that includes all assets that would have been included in the
Borrowing Base had the Permitted Acquisition been consummated as of the last
day of the most recent calendar month, provided, however, that such Borrowing
Base Certificate shall expressly state that it is delivered in

 

56

 

anticipation of, and shall only be effective
hereunder (if then applicable) for purposes of Borrowings made at the time of
or after, the consummation of such Permitted Acquisition (it being understood
that, until the consummation of such Permitted Acquisition, the previously
delivered Borrowing Base Certificate shall remain in effect).

 

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

 

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

 

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

 

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

 

Section 5.10  Environment.  Be
and remain, and cause each Subsidiary to be and remain, in compliance with the
provisions of all federal, state, and local environmental, health, and safety
laws, codes and ordinances, and all rules and regulations issued thereunder;
with respect to matters disclosed in Schedule 4.14, implement prudent
measures to achieve compliance with all relevant laws and regulations within a
reasonable time and in accordance with requirements negotiated with applicable
regulatory agencies; notify the Agent promptly of any notice of a hazardous
discharge or environmental complaint received from any governmental agency or
any other party (and the Agent shall notify the Lenders promptly following its
receipt of any such notice from the Borrower); notify the Agent promptly of any
hazardous discharge from or affecting its premises (and the Agent shall notify
the Lenders promptly following its receipt of any such notice from the
Borrower); promptly contain and remove the same, in compliance with all
applicable laws; promptly pay any fine or penalty assessed in connection
therewith; permit any Lender to inspect the premises, to conduct tests thereon,
and to inspect all books, correspondence, and records pertaining thereto; and
at such Lender’s request, and at the

 

57

 

Borrower’s expense, provide a report of a qualified
environmental engineer, satisfactory in scope, form, and content to the
Required Lenders, and such other and further assurances reasonably satisfactory
to the Required Lenders that the condition has been corrected.

 

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

 

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

 

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

 

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

 

Section 5.15  New Subsidiaries.  Within fifty (50) days after
the end of any fiscal quarter of the Borrower during which any Person shall
have become a Subsidiary, cause such Subsidiary to execute and deliver to the
Agent, for the benefit of the Lenders, a Supplemental Guaranty and an opinion
of counsel, certified copies of resolutions, articles of incorporation,
incumbency certificates and other documents with respect to such Subsidiary and
its Guaranty substantially similar to the documents delivered pursuant to
Section 3.01 with respect to the Guarantors, all of which shall be reasonably
satisfactory to the Agent in form and substance.  Neither STIC nor UHIC shall be required to deliver a Guaranty.

 

ARTICLE VI

NEGATIVE COVENANTS

 

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

 

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

 

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

 

(2)                                  Liens imposed by law, such as mechanics’,
materialmen’s, landlords’, warehousemen’s, and carriers’ Liens, and other
similar Liens, securing obligations incurred in

 

58

 

the ordinary course of business which are not
past due for more than ninety (90) days or which are being contested in good
faith by appropriate proceedings and for which appropriate reserves have been
established;

 

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

 

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

 

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

 

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

 

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

 

Section 6.02  Secured
Debt.  Create, incur, assume or suffer to exist, or
permit any Subsidiary to create, incur, assume or suffer to exist, any Secured
Debt, except for Secured Debt in an aggregate amount outstanding at any one
time not exceeding (a) $100,000,000 plus (b) the amount (if any ) of any
secured Debt of an entity acquired by Borrower after the Closing Date, provided
that (i) such secured Debt was in existence prior to the date of such Acquisition
and was not incurred in anticipation thereof and (ii) the Liens securing such
Debt do not extend to any other assets other than those theretofore encumbered
by such Liens.

 

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

 

Section 6.04  Leases. 
Create, incur, assume, or suffer to exist, or permit any Subsidiary to
create, incur, assume, or suffer to exist, any obligation as lessee for the
rental or hire of any real or personal property, except (1) Capital Leases not
otherwise prohibited by the terms of this Agreement; (2) leases existing on the
date of this Agreement and any extension or renewals

 

59

 

thereof; (3) leases between the Borrower and any
Subsidiary or between any Subsidiaries; (4) operating leases entered into in
the ordinary course of business; and (5) any lease of property having a value
of $500,000 or less.

 

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

 

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

 

Section 6.07  Investments. 
Make, or permit any Subsidiary to make, any loan or advance to any
Person, or purchase or otherwise acquire, or permit any Subsidiary to purchase
or otherwise acquire, any capital stock, assets (other than assets acquired in
the ordinary course of business), obligation, or other securities of, make any
capital contribution to, or otherwise invest in or acquire any interest in any
Person including, without limitation, any hostile takeover, hostile tender
offer or similar hostile transaction (collectively, “Investments”),
except:  (1) a direct obligation of the
United States or any agency thereof with maturities of one year or less from
the date of acquisition; (2) commercial paper rated at least “A-1” by Standard
& Poor’s Corporation or “P-1” by Moody’s Investors Service, Inc.; (3)
certificates of deposit with maturities of one year or less from the date of
acquisition issued by any commercial bank or federal savings bank having
capital and surplus in excess of $250,000,000; (4) a direct obligation of any
state or municipality within the United States with maturities of one year or
less from the date of acquisition and which, at the time of such acquisition,
is accorded one of the two highest debt ratings for obligations of such type by
Standard & Poor’s or Moody’s; (5) mutual funds investing in assets of the
type described in items (1), (2), (3) or (4) above which in any case would be
classified as a current asset in accordance with GAAP which are managed by a
fund manager of recognized standing in the United States and having capital and
surplus of at least $100,000,000 or having at least $250,000,000 under management;
(6) stock, obligation, or securities received in settlement of debts (created
in the ordinary course of business) owing to the Borrower or any Subsidiary
provided such issuance is approved by the board of directors of the issuer
thereof; (7) a loan or advance from the Borrower to a Subsidiary, or from a
Subsidiary to a Subsidiary, or from a Subsidiary to the Borrower (subject,
however, to the limitations set forth below in the case of Investments in
Subsidiaries that are not Guarantors); (8) any Permitted Acquisition; (9) an
Investment in a Wholly-Owned Subsidiary, which Investment is, or constitutes a
part of, an Internal Reorganization (subject, however, to the limitations set
forth below in the case of Investments in Subsidiaries that are not Guarantors);
(10) Investments in Subsidiaries that are not Guarantors and any Joint Venture
(subject, however, to the limitations set forth below); or (11) any other
Investment of $20,000,000 or less (subject, however, to the

 

60

 

limitations set forth below); provided that
the aggregate amount of all Investments by the Borrower and its Subsidiaries
permitted under clauses (10) and (11) above and the contingent obligations
under guaranties permitted under clause (3) of Section 6.08 below does not at
any time exceed twenty-five percent (25%) of Consolidated Tangible Net Worth.

 

Section 6.08  Guaranties,
Etc.  Assume, guarantee, endorse, or otherwise be
or become directly or contingently responsible or liable, or permit any
Subsidiary to assume, guarantee, endorse, or otherwise be or become directly or
contingently responsible or liable (including, but not limited to, an agreement
to purchase any obligation, stock, assets, goods, or services, or to supply or
advance any funds, assets, goods, or services, or an agreement to maintain or
cause such Person to maintain a minimum working capital or net worth or
otherwise to assure the creditors of any Person against loss), for obligations
of any Person, except:  (1) guaranties
by endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business; (2) guaranties of performance
obligations in the ordinary course of business; (3) of the Debt or other
obligations of any Joint Venture or any Subsidiary that is not a Guarantor,
subject to the limitations set forth in clauses (10) and (11) of Section 6.07
above and (4) that the Borrower or any Subsidiary or any Guarantor may, whether
as a result of an Internal Reorganization or otherwise, guarantee the Debt of
any other Subsidiary (other than any Subsidiary that is not a Guarantor) or
Guarantor or the Borrower permitted under this Agreement.

 

Section 6.09  Transactions
With Affiliates.  Enter into any transaction, including, without
limitation, the purchase, sale, or exchange of property or the rendering of any
service, with any Affiliate, or permit any Subsidiary to enter into any
transaction, including, without limitation, the purchase, sale, or exchange of
property or the rendering of any service, with any Affiliate, except in the
ordinary course of and pursuant to the reasonable requirements of the
Borrower’s or such Guarantor’s or any Subsidiary’s business and upon fair and
reasonable terms no less favorable to the Borrower or such Guarantor or any
Subsidiary than would obtain in a comparable arm’s-length transaction with a
Person not an Affiliate (which exception shall include the payment of insurance
premiums to UHIC for the purchase of construction warranties and builder default
protection for buyers of Housing Units from the Borrower or any of its
Subsidiaries and to STIC for title insurance); provided, however,
that the following transactions shall not be prohibited by this Section
6.09:  (i) transactions involving the
purchase, sale or exchange of property having a value of $500,000 or less; and
(ii) transactions otherwise permitted by this Agreement.

 

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

 

Section 6.11  Amendment
or Modification of Senior Indentures.  Amend or modify, or permit
any amendment or modification of, any of the Senior Indentures (other than
those provided for in clauses (i), (ii), (iii), (v) or (vi) of Section 10.01(a)
of such Senior Indentures).

 

61

 

Section 6.12  Non-Guarantors. 
Permit UHIC to engage in any business other than the issuance of
construction warranties and builder default protection for buyers of Housing
Units from the Borrower or any of its Subsidiaries or permit STIC to engage in
any business other than title insurance.

 

Section 6.13  Negative
Pledges.  Directly or indirectly enter into any
agreement (other than this Agreement, the Senior Indentures and any other
similar loan and credit agreements and indentures that may hereafter be entered
into by the Borrower and that evidence Borrowing Base Debt) with any Person
that prohibits or restricts or limits the ability of the Borrower or any
Guarantor to create, incur, pledge or suffer to exist any Lien upon any assets
of the Borrower or any Guarantor (except that agreements creating or securing
Secured Debt permitted under Section 6.02 may prohibit, restrict or limit other
Liens on those assets encumbered by the Liens securing such Secured Debt).

 

ARTICLE VII

FINANCIAL COVENANTS

 

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

 

Section 7.01  Minimum Consolidated Tangible Net Worth.  The
Borrower will maintain at all times a Consolidated Tangible Net Worth of not
less than the sum (the “Minimum Consolidated Tangible Net Worth”) of (i)
$662,000,000, (ii) an amount equal to fifty percent (50%) of the cumulative Net
Income of the Borrower earned after March 31, 2004 (excluding any quarter in
which there is a loss), and (iii) fifty percent (50%) of the net proceeds
received after March 31, 2004 by the Borrower or any Subsidiary from the sale
or issuance of any of its Common Equity. 
Notwithstanding the foregoing, in the event that the Borrower shall at
any time consummate an Acquisition for a purchase price or other consideration
equaling or exceeding $100,000,000, the Minimum Consolidated Tangible Net Worth
shall be increased to the sum of (i) 80% of the Borrower’s Consolidated
Tangible Net Worth immediately following the closing of such Acquisition, (ii)
an amount equal to 50% of the cumulative Net Income of the Borrower earned
after the closing of such Acquisition (excluding any quarter in which there is
a loss) and (iii) 50% of the net proceeds received after the closing of such
Acquisition by the Borrower or any Subsidiary for the sale or issuance of its
Common Equity.

 

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

 

Section 7.03  Borrowing Base Debt.  At any time at which the
senior unsecured public debt of the Borrower does not have a rating of BBB- or
higher from S&P or Baa3 or higher from

 

62

 

Moody’s, the Borrower will not permit the
outstanding amount of the Borrowing Base Debt to exceed the Borrowing Base.

 

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

 

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

 

ARTICLE
VIII

EVENTS OF DEFAULT

 

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

 

(1)                                  The Borrower shall fail to pay (a) the
principal of any Note, or any amount of a commitment or other fee, as and when
due and payable or (b) interest on any Note or any amount of any commitment fee
or other fee within five (5) Business Days after the same is due and payable;

 

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

 

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

 

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

 

63

 

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

 

(6)                                  One or more judgments, decrees, or orders for
the payment of money in excess of $10,000,000 in the aggregate shall be
rendered against the Borrower and/or any Subsidiary and/or any Guarantor, and
such judgments, decrees, or orders shall continue unsatisfied and in effect for
a period of twenty (20) consecutive days without being vacated, discharged,
satisfied, or stayed or bonded pending appeal;

 

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

 

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

 

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

 

(10)                            If any federal, state, or local agency
asserts a material claim against the Borrower or any Significant Guarantor or
Significant Subsidiary and/or its assets, equipment, property, leaseholds, or
other facilities for damages or cleanup costs relating to a hazardous discharge
or an environmental complaint; provided, however, that such claim
shall not constitute

 

64

 

a default if, within fifteen (15) days of the
occurrence giving rise to the claim, (a) the Borrower can prove to the
reasonable satisfaction of the Required Lenders that the Borrower has commenced
and is diligently pursuing either: (i) a cure or correction of the event which
constitutes the basis for the claim, and continues diligently to pursue such
cure or correction, it being hereby acknowledged by the Lenders that (with
respect to the matters disclosed in Schedule 4.14) the Borrower’s
compliance with the covenants contained in Sections 5.06 and 5.10 shall satisfy
the requirements of this clause (i), or (ii) proceedings for an injunction, a
restraining order or other appropriate emergent relief preventing such agency
or agencies from asserting such claim, which relief is granted within thirty
(30) days of the occurrence giving rise to the claim and the injunction, order,
or emergent relief is not thereafter resolved or reversed on appeal or (iii)
the defense against the claim through action in a court or agency exercising
jurisdiction over the claim; and (b) in any of the foregoing events (except for
the matters disclosed in Schedule 4.14, as to which no security is
required), the Borrower has posted a bond, letter of credit, or other security
satisfactory in form, substance, and amount to the Required Lenders and the
agency or entity asserting the claim to secure the correction of the event
which constitutes the basis for the claim in accordance with applicable laws;

 

then
the following provisions shall apply:

 

(i)                                     if any Event of Default described in Section
8.01(5) occurs with respect to the Borrower, the obligations of the Lenders to
make Loans hereunder and the obligation and power of the Issuers to issue
Facility Letters of Credit shall automatically terminate and the Obligations
shall immediately become due and payable without any election or action on the
part of the Agent, any Issuer or any Lender and the Borrower will be and become
thereby unconditionally obligated, without any further notice, act or demand,
to pay to the Agent an amount in immediately available funds, which funds shall
be held in the Facility Letter of Credit Collateral Account, equal to the
difference of (x) the amount of Facility Letter of Credit Obligations at such
time, less (y) the amount on deposit in the Facility Letter of Credit
Collateral Account at such time which is free and clear of all rights and
claims of third parties and has not been applied against the Obligations (such
difference, the “Collateral Shortfall Amount”).  If any other Event of Default occurs, the Required Lenders (or the
Agent with the consent of the Required Lenders) may (a) terminate or suspend
the obligations of the Lenders to make Loans hereunder and the obligation and
power of the Issuers to issue Facility Letters of Credit, or declare the
Obligations to be due and payable, or both, whereupon the Obligations shall
become immediately due and payable, without presentment, demand, protest or
notice of any kind, all of which the Borrower hereby expressly waives, and (b)
upon notice to the Borrower and in addition to the continuing right to demand
payment of all amounts payable under this Agreement, make demand on the
Borrower to pay, and the Borrower will, forthwith upon such demand and without
any further notice or act, pay to the Agent the Collateral Shortfall Amount,
which funds shall be deposited in the Facility Letter of Credit Collateral
Account.

 

(ii)                                  If at any time while any Event of Default is
continuing, the Agent determines that the Collateral Shortfall Amount at such
time is greater than zero, the Agent may make demand on the Borrower to pay,
and the Borrower will, forthwith upon such demand and without any further
notice or act, pay to the Agent the Collateral

 

65

 

Shortfall
Amount, which funds shall be deposited in the Facility Letter of Credit
Collateral Account.

 

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

 

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

 

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

 

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

 

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ARTICLE IX

INTENTIONALLY OMITTED

 

ARTICLE X

AGENCY PROVISIONS

 

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

 

Section 10.02  Liability of Agent.  Neither the Agent nor any of
its directors, officers, agents, or employees shall be liable for any action
taken or omitted to be taken by it or them under or in connection with this
Agreement in the absence of its or their own gross negligence or willful
misconduct.  Without limiting the
generality of the foregoing, the Agent (1) may treat the payee of any Note as
the holder thereof until the Agent receives written notice of the assignment or
transfer thereof signed by such payee and in form satisfactory to the Agent;
(2) may consult with legal counsel (including counsel for the Borrower),
independent public accountants and other experts selected by it and shall not
be liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants, or experts; (3) makes
no warranty or representation to any Lender and shall not be responsible to any
Lender for any statements, warranties, or representations made in or in
connection with this Agreement; (4) shall not have any duty to ascertain or to
inquire as to the performance or observance of any terms, covenants, or
conditions of this Agreement on the part of the Borrower (other than the
payment of principal, interest and fees due hereunder), or to inspect the
property (including the books and records) of the Borrower; (5) shall not be
responsible to any Lender for the due execution, legality, validity,
enforceability, genuineness, perfection, sufficiency or value of this Agreement
or any other instrument or document furnished pursuant hereto or the value,
sufficiency, creation, perfection or priority of any Lien in any collateral
security; and (6) shall incur no liability under or in respect of this
Agreement by acting upon any notice, consent, certificate or other instrument
or writing (which may be sent by telegram, telefax, or facsimile transmission)
reasonably believed by it to be genuine and signed or sent by the proper party
or parties.

 

Section 10.03  Rights of Agent as a Lender. 
With respect to its Commitments, the Loans made by it and any Note
issued to it, the Agent shall have the same rights and powers under this
Agreement as any other Lender and may exercise the same as though it were not
the Agent; and the term “Lender” or “Lenders” shall, unless otherwise expressly
indicated, include the Agent in its individual capacity.  The Agent, each Lender and each of their respective
Affiliates may accept deposits from, lend money to, act as trustee under
indentures of, and generally engage in any kind of business with, the Borrower,
any of its Subsidiaries and any

 

67

 

Person who may do business with or own securities of
the Borrower or any Subsidiary, all as if the Agent were not the Agent and
without any duty to account therefor to the other Lenders.

 

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

 

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

 

Section 10.06  Successor Agent.  (a)  The Agent may resign at any time by giving at least sixty (60)
days’ prior written notice thereof to the Lenders and the Borrower and may be
removed at any time with or without cause by the Required Lenders.  Upon any such resignation

 

68

 

or removal, the Required Lenders shall have the
right to appoint a successor Agent, subject to Section 10.06(b).  If no successor Agent shall have been so
appointed by the Required Lenders, and shall have accepted such appointment,
within thirty (30) days after the retiring Agent’s giving of notice of
resignation or the Required Lenders’ removal of the retiring Agent, then the
retiring Agent may, on behalf of the Lenders, appoint a successor Agent, which
shall be a commercial bank or federal savings bank organized under the laws of
the United States of America or of any State thereof, subject to Section
10.06(b).  Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Agent, and the retiring Agent shall be discharged from
its duties and obligations under this Agreement.  After any retiring Agent’s resignation or removal hereunder as
Agent, the provisions of this Article X shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement.

 

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

 

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

 

Section 10.08  Withholding Tax Matters.  Each Lender which is a Non-United
States Person agrees to execute and deliver to the Agent for delivery to the
Borrower, before the first scheduled payment date in each year (and, in the
case of a Lender that becomes a Lender hereunder by assignment, before the
first scheduled payment date following such assignment), two duly completed
copies of United States Internal Revenue Service Forms W-8BEN or W-8ECI, or any
successor forms, as appropriate, properly completed and certifying that such
Lender is entitled to receive payments under this Agreement without withholding
or deduction of United States federal taxes. 
Each Lender which is a Non-United States Person represents and warrants
to the Borrower and to the Agent that, at the date of this Agreement, (i) its
Lending Offices are

 

69

 

entitled to receive payments of principal, interest,
and fees hereunder without deduction or withholding for or on account of any
taxes imposed by the United States or any political subdivision thereof and (ii)
it is permitted to take the actions described in the preceding sentence under
the laws and any applicable double taxation treaties of the jurisdictions
specified in the preceding sentence. 
Each Lender which is a Non-United States Person further agrees that, to
the extent any form claiming complete or partial exemption from withholding and
deduction of United States federal taxes delivered under this Section 10.08 is
found to be incomplete or incorrect in any material respect, such Lender shall
execute and deliver to the Agent a complete and correct replacement form.

 

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

 

ARTICLE XI

MISCELLANEOUS

 

Section 11.01  Amendments, Etc.  No amendment, modification,
termination, or waiver of any provision of any Loan Document to which the
Borrower is a party, nor consent to any departure by the Borrower from any Loan
Document to which it is a party, shall in any event be effective unless the
same shall be in writing and signed by the Required Lenders (or Required
Revolving Credit Lenders in the case of an amendment, modification, waiver or
consent described in clauses (d) and (e) below) and the Borrower, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given; provided, however, that no
amendment, waiver or consent shall (a) unless in writing and signed by the
Borrower and all of the Lenders holding an interest in the applicable Facility,
do, or have the effect of doing, any of the following:  (1) increase the Commitments of the Lenders
under such Facility (except for increases in the Aggregate Revolving Credit
Commitment in accordance with Section 2.02.2) or subject the Lenders under such
Facility to any additional obligations; (2) reduce the principal of, or
interest on, the Notes or any fees (other than the Agent’s fees) hereunder with
respect to such Facility; or (3) postpone any date fixed for any payment of
principal of, or interest on, the Notes or any fees (other than the Agent’s
fees) hereunder with respect to such Facility; (b) unless in writing and signed
by the Borrower and all Lenders, do, or have the effect of doing, any of the
following:  (1) change the percentage of
the Commitments or of the aggregate unpaid principal amount of the Notes or the
number of Lenders which shall be required for the Lenders or any of them to
take action hereunder (including, without limitation, any change in the
percentage of Revolving Credit Lenders required to extend the Revolving Credit
Termination Date under the provisions of Section 2.19 or the percentage of Term
Loan Lenders required to extend the Term Loan Maturity Date under the
provisions of Section 2.20); (2) release any Significant Guarantor or (except
as otherwise provided in Section 8.01) release any sums held in the Facility
Letter of Credit Collateral Account; or (3) amend, modify or waive

 

70

 

any provision of the Guaranty, this Section 11.01 or
clause (i) of Section 12.01; (c) unless in writing and signed by the Agent in
addition to the Lenders required herein to take such action, affect the rights
or duties of the Agent under any of the Loan Documents; (d) unless in writing
and signed by the Swing Line Lender and the Required Revolving Credit Lenders,
affect any provisions of this Agreement that relate to the Swing Line Loans or
otherwise affect the rights or duties of the Swing Line Lender; or (e) unless
in writing and signed by the Issuers and the Required Revolving Credit Lenders,
affect any of the provisions of this Agreement that relate to the Facility
Letters of Credit or otherwise affect the rights or duties of any Issuer.

 

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

 

Section 11.03  No Waiver.  No failure or delay on the part of any
Lender or the Agent or the Issuer in exercising any right, power, or remedy
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right, power, or remedy preclude any other or further exercise
thereof or the exercise of any other right, power, or remedy hereunder. The
making of a Loan or issuance, amendment or extension of a Facility Letter of
Credit notwithstanding the existence of a Default or Event of Default shall not
constitute any waiver or acquiescence of such Default or Event of Default, and
the making of any Loan or issuance, amendment or extension of a Facility Letter
of Credit notwithstanding any failure or inability to satisfy the conditions
precedent to such Loan or issuance, amendment or extension of a Facility Letter
of Credit shall not constitute any waiver or acquiescence with respect to such
conditions precedent with respect to any subsequent Loans or subsequent
issuance, amendment or extension of a Facility Letter of Credit.  The rights and remedies provided herein are
cumulative, and are not exclusive of any other rights, powers, privileges, or
remedies, now or hereafter existing, at law, in equity or otherwise.

 

Section 11.04  Costs, Expenses, and Taxes.  (a)
The Borrower agrees to reimburse the Agent for any reasonable costs, internal
charges and out-of-pocket expenses (including reasonable fees and time charges
of attorneys for the Agent, which attorneys may be employees of the Agent) paid
or incurred by the Agent in connection with the preparation, negotiation,
execution, delivery, review, amendment, modification and administration of the
Loan Documents.  The Borrower also
agrees to reimburse the Agent, the Lenders and the Issuers for any reasonable
costs, internal charges and out-of-pocket expenses (including attorneys’ fees
and time charges of attorneys for the Agent, the Lenders and the Issuers which
attorneys may be employees of the Agent, the Lenders and the Issuers) paid or
incurred by the Agent, the

 

71

 

Arranger, any Lender or Issuer in connection with
the collection of the Obligations and enforcement of the Loan Documents.

 

(b)                                 The Borrower shall pay any and all stamp and
other taxes and fees payable or determined to be payable in connection with the
execution, delivery, filing, and recording of any of the Loan Documents and the
other documents to be delivered under any such Loan Documents, and agrees to
hold the Agent and each of the Lenders harmless from and against any and all
liabilities with respect to or resulting from any delay in paying or failing to
pay such taxes and fees.

 

(c)                                  All payments by the Borrower to or for the
account of any Lender, Issuer or the Agent hereunder or under any Note or
Reimbursement Agreement shall be made free and clear of and without deduction
for any and all Taxes.  If the Borrower
shall be required by law to deduct any Taxes from or in respect of any such
payable hereunder to any Lender, Issuer or the Agent, upon notice from the Agent
to the Borrower (i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this paragraph) such Lender, Issuer or the Agent
(as the case may be) receives an amount equal to the sum it would have received
had no such deductions been made, (ii) the Borrower shall make such deductions,
(iii) the Borrower shall pay the full amount deducted to the relevant authority
in accordance with applicable law and (iv) the Borrower shall furnish to the
Agent the original copy of a receipt evidencing payment thereof within 30 days
after such payment is made.

 

(d)                                 This Section 11.04 shall survive termination
of this Agreement.

 

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

 

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

 

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

 

Section 11.08  Severability of Provisions.  Any
provision of any Loan Document which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be

 

72

 

ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of such Loan
Document or affecting the validity or enforceability of such provision in any
other jurisdiction.

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 11.15  Confidentiality.  Each Lender agrees to hold
any confidential information which it may receive from the Borrower pursuant to
this Agreement in confidence,

 

73

 

except for disclosure (i) to other Lenders and their
respective affiliates, (ii) to legal counsel, accountants, and other
professional advisors to that Lender or to a Transferee, (iii) to regulatory
officials, (iv) to any Person as requested pursuant to or as required by law,
regulation, or legal process, (v) to any Person in connection with any legal
proceeding to which that Lender is a party, and (vi) permitted by Section
12.04.

 

Section 11.16  USA Patriot Act Notification.  The
following notification is provided to the Borrower pursuant to Section 326 of
the USA Patriot Act of 2001, 31 U.S.C. Section 5318:

 

IMPORTANT
INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT.  To help the government fight the funding of
terrorism and money laundering activities, Federal law requires all financial
institutions to obtain, verify, and record information that identifies each
person or entity that opens an account, including any deposit account, treasury
management account, loan, other extension of credit, or other financial services
product. What this means for the Borrower: 
When the Borrower opens an account, the Agent and the Lenders will ask
for the Borrower’s name, tax identification number, business address and other
information that will allow the Agent and the Lenders to identify the Borrower.

 

ARTICLE XII

BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS

 

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

 

Section 12.02  Participations.  (a)  Permitted Participants;
Effect.  Any Lender may, in
the ordinary course of its business and in accordance with applicable law, at
any time sell to one or more banks or other entities (“Participants”)
participating interests in any Loan owing to such Lender, any Note held by such
Lender, any Commitment of such Lender (which may include, in the case of the
Swing Line Lender, the Swing Line Commitment) or any other interest of such
Lender under the Loan Documents.  In the
event of any such sale by a Lender of participating interests to a Participant,
such Lender’s obligations under the Loan Documents

 

74

 

shall remain unchanged, such Lender shall remain
solely responsible to the other parties hereto for the performance of such
obligations, such Lender shall remain the holder of any such Note for all
purposes under the Loan Documents, all amounts payable by the Borrower under
this Agreement shall be determined as if such Lender had not sold participating
interests, and the Borrower and the Agent shall continue to deal solely and
directly with such Lender in connection with such Lender’s rights and
obligations under the Loan Documents.

 

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

 

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

 

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

 

(b)                                  Effect; Effective date. 
Upon (i) delivery to the Agent of a notice of assignment, substantially
in the form attached as Exhibit 1 to Exhibit G hereto (a “Notice of
Assignment”), together with any consents required by Section 12.03; and (ii)
payment (by either

 

75

 

the assignor or the assignee) of a $4,000.00
fee (or, in the case of an assignment to the assignor’s Affiliate or by reason
of the provisions of Section 2.19 or Section 2.20, a $2,000 fee) to the Agent
for processing such assignment, such assignment shall become effective on the
effective date specified in such Notice of Assignment.  The Notice of Assignment shall contain a
representation by the Purchaser to the effect that none of the consideration
used to make the purchase of the Commitment and Loans under the applicable
assignment agreement are “plan assets” as defined under ERISA and that the
rights and interests of the Purchaser in and under the Loan Documents will not
be “plan assets” under ERISA.  On and
after the effective date of such assignment, such Purchaser shall for all
purposes be a Revolving Credit Lender (in the case of an assignment with
respect to the Revolving Credit Facility) or Term Loan Lender (in the case of
an assignment with respect to the Term Loan Facility) party to this Agreement
and shall have all the rights and obligations of a Revolving Credit Lender or
Term Loan Lender (as applicable) under the Loan Documents, to the same extent
as if it were an original party hereto, and no further consent or action by the
Borrower, the Lenders or the Agent shall be required to release the transferor
Lender with respect to the percentage of the applicable Commitments and Loans
(and, if applicable, Swing Line Commitments and Swing Line Loans) assigned to
such Purchaser.  Upon the consummation
of any assignment to a Purchaser pursuant to this Section 12.03(b), the
transferor Lender, the Agent and the Borrower shall make appropriate
arrangements so that replacement Notes are issued to such transferor Lender and
new Notes or, as appropriate, replacement Notes, are issued to such Purchaser,
in each case in principal amounts reflecting their Revolving Credit Commitments
(in the case of the Revolving Credit Facility) or Term Loans (in the case of
the Term Loan Facility), as adjusted pursuant to such assignment.

 

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

 

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

 

76

 

 

	
   

  	
  BEAZER
  HOMES USA, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Cory
  J. Boydston, Vice President & Treasurer

  
	
   

  	
   

  
	
   

  	
  Address
  for Notices

  
	
   

  	
   

  
	
   

  	
  1000
  Abernathy Road

  
	
   

  	
  Suite
  1200

  
	
   

  	
  Atlanta,
  Georgia  30328

  
	
   

  	
  Attention:  President

  
	
   

  	
  Tel:
  (770) 829-3700

  
	
   

  	
  Fax:   (770)
  481-0431

  
	
   

  	
   

  
	
   

  	
  BANK
  ONE, NA

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Addresses
  for Notices

  
	
   

  	
   

  
	
   

  	
  Bank
  One, NA

  
	
   

  	
  131
  South Dearborn Street

  
	
   

  	
  Mail
  Suite IL1 0135

  
	
   

  	
  Chicago,
  Illinois  60670

  
	
   

  	
  Attn:  Mr. F. Patt Schiewitz

  
	
   

  	
  Telephone:
   (312) 325-3132

  
	
   

  	
  Telecopy:  (312) 325-3122

  
							

 

77

 

Schedule I

 

COMMITMENT SCHEDULE

 

	
  Lender

  	
   

  	
  Revolving
  Credit

  Commitment

  	
   

  	
  Term Loan

  Commitment

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bank One, NA

  	
   

  	
  $

  	
  46,933,333.33

  	
   

  	
  $

  	
  17,066,666.67

  	
   

  
	
  BNP Paribas

  	
   

  	
  46,933,333.34

  	
   

  	
  17,066,666.66

  	
   

  
	
  Guaranty Bank

  	
   

  	
  46,933,333.34

  	
   

  	
  17,066,666.66

  	
   

  
	
  Wachovia Bank, National Association

  	
   

  	
  46,933,333.34

  	
   

  	
  17,066,666.66

  	
   

  
	
  The Royal Bank of Scotland plc

  	
   

  	
  46,933,333.33

  	
   

  	
  17,066,666.67

  	
   

  
	
  PNC Bank, National Association

  	
   

  	
  36,666,666.67

  	
   

  	
  13,333,333.33

  	
   

  
	
  SunTrust Bank

  	
   

  	
  36,666,666.67

  	
   

  	
  13,333,333.33

  	
   

  
	
  Washington Mutual Bank, FA

  	
   

  	
  36,666,666.67

  	
   

  	
  13,333,333.33

  	
   

  
	
  Comerica Bank

  	
   

  	
  29,333,333.33

  	
   

  	
  10,666,666.67

  	
   

  
	
  KeyBank National Association

  	
   

  	
  25,666,666.67

  	
   

  	
  9,333,333.33

  	
   

  
	
  BankUnited, FSB

  	
   

  	
  22,000,000.00

  	
   

  	
  8,000,000.00

  	
   

  
	
  AmSouth Bank

  	
   

  	
  18,333,333.33

  	
   

  	
  6,666,666.67

  	
   

  
	
  Citicorp North America, Inc.

  	
   

  	
  18,333,333.33

  	
   

  	
  6,666,666.67

  	
   

  
	
  Compass Bank

  	
   

  	
  18,333,333.33

  	
   

  	
  6,666,666.67

  	
   

  
	
  Deutsche Bank Trust Company

  	
   

  	
  18,333,333.33

  	
   

  	
  6,666,666.67

  	
   

  
	
  Americas

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Fifth Third Bank (Central Indiana)

  	
   

  	
  18,333,333.33

  	
   

  	
  6,666,666.67

  	
   

  
	
  UBS Loan Finance LLC

  	
   

  	
  18,333,333.33

  	
   

  	
  6,666,666.67

  	
   

  
	
  Union Planters Bank N.A.

  	
   

  	
  18,333,333.33

  	
   

  	
  6,666,666.67

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
  $

  	
  550,000,000.00

  	
   

  	
  $

  	
  200,000,000.00

  	
   

  

 

1

 

Schedule II

 

EXISTING LETTERS OF CREDIT

 

 

Schedule III

 

GUARANTORS

 

The
Guarantors are all of the Borrower’s Subsidiaries listed on Schedule 4.10,
except the following:

 

•                                          Security Title Insurance Company

 

•                                          United Homes Insurance Corporation

 

 

Schedule 4.07

 

CLAIMS

 

The
following matters have been disclosed by the Borrower in its Quarterly Report
on Form 10Q for the quarter ended March 31, 2004 as filed with the Securities
and Exchange Commission:

 

Midwest
Water Intrusion Claims

 

As
of March 31, 2004, our subsidiary, Trinity Homes LLC, had received 759
construction defect and warranty complaints related to moisture intrusion and
mold.  As of March 31, 2004, there were
seven pending lawsuits related to these complaints.  One of these suits, Gary Harmon and Sheri Harmon v. Trinity
Homes LLC and Beazer Homes Investment Corp. is a putative class action suit
that was filed in Hamilton County Superior Court in the State of Indiana on
August 19, 2003 against Trinity and Beazer Homes Investment Corp., another one
of our subsidiaries and Trinity’s parent. 
As part of that case, the plaintiffs are asserting that Trinity and
Beazer Homes Investment Corp. violated applicable building codes.  The complaint attempts to define the
purported class to include all owners of a residential structure in Indiana
constructed and marketed by Trinity and Beazer Homes Investment Corp. in which
a one-inch gap with a vapor barrier does not exist between an exterior brick
veneer wall and the surface of the underlying exterior wall.  Excluded from the class are any residents
who suffer personal injuries caused by mold infestation.  No monetary amount was stated in the
claim.  No hearing on class
certification has been held at this time and no hearing for such certification
is currently scheduled.

 

Additional
information on reserves maintained by the Borrower for this issue is included
in the Quarterly Report on Form 10Q in Footnote 7 (Contingencies) to our
consolidated financial statement.

 

 

Schedule 4.10

 

SUBSIDIARIES OF BORROWER

 

	
  Subsidiary

  	
   

  	
  State of

  Incorporation/Formation

  	
   

  	
  Borrower’s

  % Ownership

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Beazer
  Mortgage Corporation

  	
   

  	
  Delaware

  	
   

  	
  100%
  by Borrower

  	
   

  
	
  Beazer
  Homes Corp. (“BHC”)

  	
   

  	
  Tennessee

  	
   

  	
  100%
  by BHHC

  	
   

  
	
  Beazer
  Home Sales Arizona, Inc.

  	
   

  	
  Delaware

  	
   

  	
  100%
  by BHHC

  	
   

  
	
  Beazer
  Realty Corp.

  	
   

  	
  Georgia

  	
   

  	
  100%
  by BHC

  	
   

  
	
  Beazer/Squires
  Realty, Inc.

  	
   

  	
  North
  Carolina

  	
   

  	
  100%
  by BHC

  	
   

  
	
  Beazer
  Homes Holdings Corp. (“BHHC”)

  	
   

  	
  Delaware

  	
   

  	
  100%
  by Borrower

  	
   

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

  	
   

  	
  Delaware

  	
   

  	
  100%
  by BHHC

  	
   

  
	
  Beazer
  Homes Texas, L.P.

  	
   

  	
  Delaware

  	
   

  	
  99%
  by Beazer Homes Corp.

  1% by Beazer Homes Texas Holdings, Inc.

  	
   

  
	
  Beazer
  Realty, Inc.

  	
   

  	
  New
  Jersey

  	
   

  	
  100%
  by BHC

  	
   

  
	
  Homebuilders
  Title Services, Inc.

  	
   

  	
  Delaware

  	
   

  	
  100%
  by Borrower

  	
   

  
	
  Texas
  Lone Star Title, L.P.

  	
   

  	
  Texas

  	
   

  	
  99%
  by Beazer Homes Sales Arizona, Inc.

  1% by Beazer Homes Texas Holdings, Inc.

  	
   

  
	
  Homebuilders
  Title Services of Virginia, Inc.

  	
   

  	
  Virginia

  	
   

  	
  100%
  by Borrower

  	
   

  
	
  Security
  Title Insurance Company

  	
   

  	
  Vermont

  	
   

  	
  100%
  by Borrower

  	
   

  
	
  United
  Home Insurance Corporation

  	
   

  	
  Vermont

  	
   

  	
  26.50
  by BHHC,

  27.28% by BHTH,

  26.48% by BHC and

  3.29% each by CCO,

  Cutter, CCTN, CCNC and Trinity

  	
   

  
	
  April
  Corporation

  	
   

  	
  Colorado

  	
   

  	
  100%
  by BHHC

  	
   

  
	
  Beazer
  Allied Companies Holdings, Inc.

  	
   

  	
  Delaware

  	
   

  	
  100%
  by BHHC

  	
   

  
	
  Beazer
  SPE, LLC

  	
   

  	
  Georgia

  	
   

  	
  100%
  by Beazer Homes Holding Corp.

  	
   

  
	
  Beazer
  Homes Investment Corp. (“BHIC”)

  	
   

  	
  Delaware

  	
   

  	
  100%
  by Borrower

  	
   

  
	
  Beazer
  Clarksburg, LLC

  	
   

  	
  Maryland

  	
   

  	
  100%
  by Beazer Homes Corp.

  	
   

  
	
  Crossmann
  Communities of North Carolina,  Inc.
  (“CCNC”)

  	
   

  	
  North
  Carolina

  	
   

  	
  100%
  by BHIC

  	
   

  
	
  Crossmann
  Communities of Ohio, Inc. (“CCO”)

  	
   

  	
  Ohio

  	
   

  	
  100%
  by BHIC

  	
   

  

 

 

	
  Crossmann
  Communities of Tennessee, LLC (“CCTN”)

  	
   

  	
  Tennessee

  	
   

  	
  99%
  by Deluxe Homes of Ohio, Inc.

  1% by Crossmann Communities of North Carolina, Inc.

  	
   

  
	
  Crossmann
  Investments, Inc.

  	
   

  	
  Indiana

  	
   

  	
  100%
  BHIC

  	
   

  
	
  Crossmann
  Management, Inc.

  	
   

  	
  Indiana

  	
   

  	
  100%
  by BHIC

  	
   

  
	
  Crossmann
  Mortgage Corp.

  	
   

  	
  Indiana

  	
   

  	
  100%
  by BHIC

  	
   

  
	
  Crossmann
  Communities Partnership (“CCP”)

  	
   

  	
  Indiana

  	
   

  	
  82.5%
  by BHIC

  17.5% by Deluxe Homes of Lafayette, Inc.

  	
   

  
	
  Cutter
  Homes, Ltd. (“Cutter”)

  	
   

  	
  Kentucky

  	
   

  	
  100%
  by BHIC

  	
   

  
	
  Deluxe
  Homes of Lafayette, Inc.

  	
   

  	
  Indiana

  	
   

  	
  100%
  by BHIC

  	
   

  
	
  Deluxe
  Homes of Ohio, Inc.

  	
   

  	
  Ohio

  	
   

  	
  100%
  by Crossmann Communities of Ohio, Inc.

  	
   

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

  	
   

  	
  Indiana

  	
   

  	
  100%
  by BHIC

  	
   

  
	
  Paragon
  Title, LLC

  	
   

  	
  Indiana

  	
   

  	
  100%
  by BHIC

  	
   

  
	
  Pinehurst
  Builders, LLC

  	
   

  	
  South
  Carolina

  	
   

  	
  100%
  by Crossmann Communities of North Carolina, Inc.

  	
   

  
	
  Trinity
  Homes, LLC (“Trinity”)

  	
   

  	
  Indiana

  	
   

  	
  50%
  by BHIC

  50% by Crossmann Communities Partnership

  	
   

  

 

 

Schedule 4.14

 

ENVIRONMENTAL MATTERS

 

The
following matters have been disclosed by the Borrower in its Quarterly Report
on Form 10Q for the quarter ended March 31, 2004 as filed with the Securities
and Exchange Commission:

 

EPA
Inquiry Concerning Storm Water Management Practices

 

In
November 2003, Beazer Homes received a request for information from the United
States Environmental Protection Agency (the “EPA”) pursuant to Section 308 of
the Clean Water Act seeking information concerning the nature and extent of
storm water discharge practices relating to certain projects undertaken since
December 1998.  Beazer Homes identified
381 projects within this category and the EPA sought specific information
concerning 71 of them.  As of May 6,
2004, the EPA or an equivalent state agency had issued Administrative Orders
identifying alleged instances of noncompliance for 15 of the sites.  The Administrative Orders provide mandatory
compliance schedules to address the alleged deficiencies in storm water
management practices, but do not impose any monetary penalties.  The EPA has reserved the right to impose
monetary penalties at a later date, the amount of which, if any, cannot
currently be estimated.  Beazer Homes is
working to comply with the requirements of the Administrative Orders and to
otherwise maintain compliance with the requirements of the Clean Water Act.

 

 

Exhibit A

 

GUARANTY

 

THIS GUARANTY (this “Guaranty”) is made as of May
    , 2004 by the undersigned parties hereto (collectively,
the “Guarantors”) in favor of the Agent, for the benefit of the Lenders under
the Credit Agreement referred to below.

 

WITNESSETH:

 

WHEREAS, Beazer Homes USA, Inc., a Delaware corporation (the “Borrower”) and
Bank One, NA, having its principal office in Chicago, Illinois, as Agent (the
“Agent”), and certain other Lenders from time to time party thereto have
entered into a certain Amended and Restated Credit Agreement dated as of May
    , 2004 (as same may be amended or modified from time to
time, the “Credit Agreement”), providing, subject to the terms and conditions
thereof, for extensions of credit to be made by the Lenders to the Borrower;

 

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

 

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

 

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

 

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

 

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

 

(a)                                  It is (in the case of a corporation) a
corporation duly incorporated or (in the case of a limited partnership) a
limited partnership duly formed or (in the case of a limited liability company)
a limited liability company duly formed, validly existing, and in good standing
under the laws of the jurisdiction of its incorporation or formation; has the
power and authority to own

 

 

its assets and to transact the business in
which it is now engaged or proposed to be engaged in; and is duly qualified and
in good standing under the laws of each other jurisdiction in which such
qualification is required.

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

(vii)                           any law, regulation or order of any
jurisdiction, or any other event, affecting any term of any Guaranteed
Obligation or any Lender’s rights with respect thereto; or

 

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

	
   

  	
  [Add
  Guarantor Signatures]

  
	
   

  	
   

  
	
   

  	
  Address
  for Notices to all Guarantors

  
	
   

  	
   

  
	
   

  	
  c/o
  Beazer Homes USA, Inc.

  
	
   

  	
  1000
  Abernathy Road

  
	
   

  	
  Suite
  1200

  
	
   

  	
  Atlanta,
  Georgia  30328

  
	
   

  	
  Attention:  President

  
	
   

  	
  Tel:  (770) 829-3700

  
	
   

  	
  Fax:
  (770) 481-0431

  

 

 

EXHIBIT A

 

SUPPLEMENTAL GUARANTY

 

[Date]

 

Bank
One, NA, as Agent

for the Lenders

 

Ladies
and Gentlemen:

 

Reference
is hereby made to (i) that certain Amended and Restated Credit Agreement, dated
as of May     , 2004, as amended, among Beazer Homes USA,
Inc., the lenders from time to time parties thereto (the “Lenders”), and Bank
One, NA, as a Lender and as Agent (the “Agent”) on behalf of itself and the
other Lenders (as amended, restated, supplemented or otherwise modified from
time to time, the “Credit Agreement”) and (ii) that certain Guaranty, dated as
of May     , 2004, executed and delivered by the Guarantors
parties thereto in favor of the Agent, for the benefit of the Lenders (as
amended, restated, supplemented or otherwise modified from time to time, the
“Guaranty”).  Terms not defined herein
which are defined in the Credit Agreement shall have for the purposes hereof
the respective meanings provided therein.

 

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

 

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

 

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

 

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

 

	
   

  	
  [GUARANTOR]

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 

Exhibit B-1

 

REVOLVING CREDIT NOTE

 

	
  $

  	
  ,         

  

 

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

 

This
Note is one of the Revolving Credit Notes referred to in, and is entitled to
the benefits of, the Amended and Restated Credit Agreement, dated as of May
    , 2004, between the Borrower, the Lender and certain
other lenders party thereto (which, as it may be amended, modified, renewed or
extended from time to time, is herein called the “Credit Agreement”).  Terms used herein which are defined in the
Credit Agreement shall have their defined meanings when used herein.  The Credit Agreement, among other things,
contains provisions for acceleration of the maturity of this Note upon the
happening of certain stated events and also for prepayments on account of
principal hereof prior to the maturity of this Note upon the terms and
conditions specified in the Credit Agreement.

 

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

 

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

 

	
   

  	
  BEAZER
  HOMES USA, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

 

SCHEDULE TO REVOLVING CREDIT NOTE

 

	
  Date Made

  or Paid

  	
   

  	
  Type of

  Loan

  	
   

  	
  Amount of

  Principal

  Paid

  	
   

  	
  Unpaid

  Principal

  Balance of

  Note

  	
   

  	
  Name of

  Person

  Making

  Notation

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

                                                Exhibit B-2

 

TERM LOAN NOTE

 

	
  $

  	
  ,         

  

 

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

 

This
Note is one of the Term Loan Notes referred to in, and is entitled to the
benefits of, the Amended and Restated Credit Agreement, dated as of May
    , 2004, between the Borrower, the Lender and certain
other lenders party thereto (which, as it may be amended, modified, renewed or
extended from time to time, is herein called the “Credit Agreement”).  Terms used herein which are defined in the
Credit Agreement shall have their defined meanings when used herein.  The Credit Agreement, among other things,
contains provisions for acceleration of the maturity of this Note upon the
happening of certain stated events and also for prepayments on account of
principal hereof prior to the maturity of this Note upon the terms and
conditions specified in the Credit Agreement.

 

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

 

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

 

	
   

  	
  BEAZER
  HOMES USA, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

 

SCHEDULE TO TERM LOAN NOTE

 

	
  Date Made

  or Paid

  	
   

  	
  Type of

  Loan

  	
   

  	
  Amount of

  Principal

  Paid

  	
   

  	
  Unpaid

  Principal

  Balance of

  Note

  	
   

  	
  Name of

  Person

  Making

  Notation

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

Exhibit C

 

COMMITMENT AND ACCEPTANCE

 

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

 

PRELIMINARY STATEMENTS

 

Reference
is made to that certain Amended and Restated Credit Agreement dated as of May
    , 2004, by and among Beazer Homes USA, Inc., a Delaware
corporation (the “Company”), Bank One, NA, as Agent, and the Lenders that are
parties thereto (as the same may from time to time be amended, modified,
supplemented or restated, in whole or in part and without limitation as to
amount, terms, conditions or covenants, the “Credit Agreement”).

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

 

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

 

	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  BEAZER
  HOMES USA, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  AGENT:

  
	
   

  	
   

  
	
   

  	
  BANK ONE, NA,

  as AGENT

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
  REVOLVING
  CREDIT COMMITMENT:

  	
  ACCEPTING
  LENDER:

  
	
   

  	
   

  
	
  $

  	
  [NAME
  OF ACCEPTING LENDER]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

 

SCHEDULE 1

 

to Commitment and Acceptance

 

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

 

 

Exhibit D

 

CERTIFICATE

 

This
Certificate is delivered pursuant to the Amended and Restated Credit Agreement
dated as of May     , 2004 among Beazer Homes USA, Inc.,
Bank One, NA as Agent, and the Lender party thereto (the “Credit Agreement”).  Capitalized terms used herein and not
defined herein shall have the meanings provided therefor in the Credit
Agreement.  This Certification is
delivered in connection with [a
notice requesting a Borrowing under Section 2.03 OR a notice requesting
issuance, amendment or extension of a Facility Letter of Credit under Section
2.23.4]*.

 

The
undersigned hereby certifies as follows:

 

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

 

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

 

3.                                       If applicable under Section 7.03 of the
Agreement, upon [such Borrowing OR
the issuance, amendment or extension of such Facility Letter of Credit]*, the Borrowing Base Debt shall not
exceed the Borrowing Base as set forth in the Borrowing Base Certificate
delivered by the Borrower to the Agent as of the most recent Inventory
Valuation Date, which Borrowing Base Certificate is true and correct as of such
Inventory Valuation Date.

 

	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

*Include
appropriate portion of bracketed provision

 

 

Exhibit E

 

LEGAL OPINION OF BORROWER’S GEORGIA AND DELAWARE COUNSEL

 

(See attached)

 

 

Exhibit F

 

LEGAL OPINION OF BORROWER’S ILLINOIS COUNSEL

 

(See attached)

 

 

Exhibit G

 

ASSIGNMENT AGREEMENT

 

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

 

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

 

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

 

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

 

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

 

1

 

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

 

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

 

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

 

2

 

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

 

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

 

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

 

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

 

3

 

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

 

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

 

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

 

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

 

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

 

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

 

4

 

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

 

	
  [NAME
  OF ASSIGNOR]

  
	
  By:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
   

  
	
  [NAME
  OF ASSIGNEE]

  
	
  By:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
				

 

5

 

SCHEDULE 1

 

to Assignment Agreement

 

1.  Description and Date of Credit Agreement:

 

2.  Date of Assignment Agreement:
                                  ,
200  

 

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

 

	
   

  	
   

  	
  Revolving
  Credit

  Facility

  	
   

  	
  Term Loan
  Facility

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

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

  	
   

  	
   

  	
  %

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  e. Proposed Effective Date:

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Accepted
and Agreed:

 

	
  [NAME
  OF ASSIGNOR]

  	
  [NAME
  OF ASSIGNEE]

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
								

 

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

**Percentage
taken to 10 decimal places

 

 

Attachment to SCHEDULE 1 to ASSIGNMENT AGREEMENT

 

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

 

 

EXHIBIT 1

 

to Assignment Agreement

 

NOTICE

 

OF ASSIGNMENT

 

                  ,
200      

 

To:                                                                              [NAME OF BORROWER]*

 

 

[NAME
OF AGENT]

 

 

From:
               [NAME OF ASSIGNOR] (the “Assignor”)

 

[NAME
OF ASSIGNEE] (the “Assignee”)

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

	
  [NAME
  OF ASSIGNOR]

  	
  [NAME
  OF ASSIGNEE]

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
								

 

 

	
  ACKNOWLEDGED
  [AND CONSENTED TO] BY (NAME OF AGENT]

  	
  ACKNOWLEDGED
  [AND CONSENTED TO] BY (NAME OF BORROWER]

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
								

 

[Attach photocopy of Schedule 1 to Assignment)

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