Document:

exv4w16

 

Exhibit 4.16

FORM OF DEPOSIT AGREEMENT

     This DEPOSIT AGREEMENT is made and entered into as of                    , 200   by
and among Capital Automotive REIT, a Maryland real estate investment trust (the
“Company”),                    , a                    , as Depositary, and all holders from
time to time of Receipts (as hereinafter defined) issued hereunder.

WITNESSETH:

     WHEREAS, it is desired to provide, as hereinafter set forth in this
Deposit Agreement, for the deposit of the Company’s Preferred Shares (as
hereinafter defined) with the Depositary for the purposes set forth in this
Deposit Agreement and for the issuance hereunder of the Receipts evidencing
Depositary Shares representing a fractional interest in the Preferred Shares
deposited; and

     WHEREAS, the Receipts are to be substantially in the form of Exhibit
A annexed to this Deposit Agreement, with appropriate insertions,
modifications and omissions, as hereinafter provided in this Deposit Agreement;

     NOW, THEREFORE, in consideration of the premises contained herein, it is
agreed by and among the parties hereto as follows:

ARTICLE I

DEFINITIONS

     The following definitions shall apply to the respective terms (in the
singular and plural forms of such terms) used in this Deposit Agreement and the
Receipts:

     SECTION 1.01. “Declaration of Trust” shall mean the Amended and Restated
Declaration of Trust, as amended and supplemented from time to time, of the
Company.

     SECTION 1.02. “Articles Supplementary” shall mean the Articles
Supplementary Classifying                     Preferred Shares as                    % Series
                                       Preferred Shares filed with the State Department of Assessments
and Taxation of the State of Maryland establishing the Preferred Shares as a
series of preferred shares of beneficial interest of the Company.

     SECTION 1.03. “Common Shares” shall mean the Company’s common shares of
beneficial interest, $.01 par value per share.

     SECTION 1.04. “Company” shall mean Capital Automotive REIT, a Maryland
real estate investment trust, and its successors.

     SECTION 1.05. “Corporate Office” shall mean the corporate office of the
Depositary at which at any particular time its business in respect of matters
governed by this

 

 

Deposit Agreement shall be administered, which at the date of this Deposit
Agreement is located at                    .

     SECTION 1.06. “Deposit Agreement” shall mean this agreement, as the same
may be amended, modified or supplemented from time to time.

     SECTION 1.07. “Depositary” shall mean                                       , a company or
corporation having its principal office in the United States, and any successor
as depositary hereunder.

     SECTION 1.08. “Depositary Share” shall mean a                                        fractional
interest of a Preferred Share deposited with the Depositary hereunder and the
same proportionate interest in any and all other property received by the
Depositary in respect of such Preferred Share and held under this Deposit
Agreement, all as evidenced by the Receipts issued hereunder. Subject to the
terms of this Deposit Agreement, each owner of a Depositary Share is entitled,
proportionately, to all the rights, preferences and privileges of the Preferred
Shares represented by such Depositary Share, including the dividend and
distribution, voting, redemption, conversion and liquidation rights contained
in the Articles Supplementary.

     SECTION 1.09. “Depositary’s Agent” shall mean one or more agents appointed
by the Depositary as provided, and for the purposes specified, in Section 7.05.

     SECTION 1.10. “Ownership Limit” shall have the meaning set forth in
Article V of the Company’s Declaration of Trust.

     SECTION 1.11. “Preferred Shares” shall mean the Company’s                    % Series
                                       preferred shares of beneficial interest, $.01 par value
per share, heretofore validly issued, fully paid and non-assessable.

     SECTION 1.12. “Receipt” shall mean a Depositary Receipt issued hereunder
to evidence one or more Depositary Shares, whether in definitive or temporary
form, substantially in the form set forth as Exhibit A hereto.

     SECTION 1.13. “record date” shall mean the date fixed pursuant to Section
4.04.

     SECTION 1.14. “record holder” or “holder” as applied to a Receipt shall
mean the person in whose name a Receipt is registered on the books maintained
by the Depositary for such purpose.

     SECTION 1.15. “Registrar” shall mean American Stock Transfer & Trust
Company, or any bank or trust company appointed to register ownership and
transfers of Receipts or the deposited Preferred Shares, as the case may be, as
herein provided.

     SECTION 1.16. “Securities Act” shall mean the Securities Act of 1933, as
amended.

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     SECTION 1.17. “Transfer Agent” shall mean American Stock Transfer & Trust
Company, or any bank or trust company appointed to transfer the Receipts or the
deposited Preferred Shares, as the case may be, as herein provided.

ARTICLE II

FORM OF RECEIPTS, DEPOSIT OF PREFERRED SHARES, EXECUTION

AND DELIVERY, TRANSFER, SURRENDER AND REDEMPTION OF RECEIPTS

     SECTION 2.01. Form and Transferability of Receipts. Definitive
Receipts shall be engraved or printed or lithographed with steel-engraved
borders and underlying tint and shall be substantially in the form set forth in
Exhibit A annexed to this Deposit Agreement, with appropriate
insertions, modifications and omissions, as hereinafter provided. Pending the
preparation of definitive Receipts, the Depositary, upon the written order of
the Company, delivered in compliance with Section 2.02, shall execute and
deliver temporary Receipts which may be printed, lithographed, typewritten,
mimeographed or otherwise substantially of the tenor of the definitive Receipts
in lieu of which they are issued and with such appropriate insertions,
omissions, substitutions and other variations as the persons executing such
Receipts may determine, as evidenced by their execution of such Receipts. If
temporary Receipts are issued, the Company and the Depositary will cause
definitive Receipts to be prepared without unreasonable delay. After the
preparation of definitive Receipts, the temporary Receipts shall be
exchangeable for definitive Receipts upon surrender of the temporary Receipts
at the Corporate Office or such other offices, if any, as the Depositary may
designate, without charge to the holder. Upon surrender for cancellation of
any one or more temporary Receipts, the Depositary shall execute and deliver in
exchange therefor definitive Receipts representing the same number of
Depositary Shares as represented by the surrendered temporary Receipt or
Receipts. Such exchange shall be made at the Company’s expense and without any
charge therefor. Until so exchanged, the temporary Receipts shall in all
respects be entitled to the same benefits under this Deposit Agreement, and
with respect to the Preferred Shares deposited, as definitive Receipts.

     Receipts shall be executed by the Depositary by the manual or facsimile
signature of a duly authorized signatory of the Depositary, provided that if a
Registrar (other than the Depositary) shall have been appointed then such
Receipts shall also be countersigned by manual signature of a duly authorized
signatory of the Registrar. No Receipt shall be entitled to any benefits under
this Deposit Agreement or be valid or obligatory for any purpose unless it
shall have been executed as provided in the preceding sentence. The Depositary
shall record on its books each Receipt executed as provided above and delivered
as hereinafter provided.

     Except as the Depositary may otherwise determine, Receipts shall be in
denominations of any number of whole Depositary Shares. All Receipts shall be
dated the date of their issuance.

     Receipts may be endorsed with or have incorporated in the text thereof
such legends or recitals or changes not inconsistent with the provisions of
this Deposit Agreement as may be required by the Company or required to comply
with any applicable law or regulation or with the rules and regulations of any
securities exchange or interdealer quotation system upon which the Preferred
Shares, the Depositary Shares or the Receipts may be listed or quoted or to

conform

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with any usage with respect thereto, or to indicate any special
limitations or restrictions to which any particular Receipts are subject, in
each case, as directed by the Company.

     Title to any Receipt (and to the Depositary Shares evidenced by such
Receipt) that is properly endorsed or accompanied by a properly executed
instrument of transfer or endorsement shall be transferable by delivery with
the same effect as in the case of a negotiable instrument; provided, however,
that until a Receipt shall be transferred on the books of the Depositary as
provided in Section 2.04, the Depositary may, notwithstanding any notice to the
contrary, treat the record holder thereof at such time as the absolute owner
thereof for the purpose of determining the person entitled to dividends or
other distributions, the exercise of any redemption or voting rights or to any
notice provided for in this Deposit Agreement and for all other purposes.

     SECTION 2.02. Deposit of Preferred Shares; Execution and Delivery of
Receipts in Respect Thereof. Concurrently with the execution of this
Deposit Agreement, the Company is delivering to the Depositary a certificate or
certificates, registered in the name of the Depositary and evidencing                    
Preferred Shares, properly endorsed or accompanied, if required by the
Depositary, by a duly executed instrument of transfer or endorsement, in form
satisfactory to the Depositary, together with (i) all such certifications as
may be required by the Depositary in accordance with the provisions of this
Deposit Agreement and (ii) a written letter of instruction of the Company
directing the Depositary to execute and deliver to, or upon the written order
of, the person or persons stated in such order a Receipt or Receipts for the
Depositary Shares representing such deposited Preferred Shares. The Depositary
acknowledges receipt of the deposited Preferred Shares and related
documentation and agrees to hold such deposited Preferred Shares in an account
to be established by the Depositary at the Corporate Office or at such other
office as the Depositary shall determine. The Company hereby appoints the
Depositary as the Registrar and Transfer Agent for the Preferred Shares
deposited hereunder and the Depositary hereby accepts such appointment and, as
such, will reflect changes in the number (including any fractional shares) of
deposited Preferred Shares held by it by notation, book-entry or other
appropriate method.

     If required by the Depositary, Preferred Shares presented for deposit by
the Company at any time, whether or not the register of shareholders of the
Company is closed, shall also be accompanied by an agreement or assignment, or
other instrument satisfactory to the Depositary, that will provide for the
prompt transfer to the Depositary or its nominee of any distribution or right
to subscribe for additional Preferred Shares or to receive other property that
any person in whose name the Preferred Shares are or have been registered may
thereafter receive upon or in respect of such deposited Preferred Shares, or in
lieu thereof such agreement of indemnity or other agreement as shall be
satisfactory to the Depositary.

     Upon receipt by the Depositary of a certificate or certificates for
Preferred Shares deposited hereunder, together with the other documents
specified above, and upon registering such Preferred Shares in the name of the
Depositary, the Depositary, subject to the terms and conditions of this Deposit
Agreement, shall execute and deliver to, or upon the order of, the person or
persons named in the written order delivered to the Depositary referred to in
the first paragraph of this Section 2.02 a Receipt or Receipts for the number
of whole Depositary Shares representing the Preferred Shares so deposited and
registered in such name or names as may be

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requested by such person or persons. The Depositary shall execute and
deliver such Receipt or Receipts at the Corporate Office, except that, at the
request, risk and expense of any person requesting such delivery, such delivery
may be made at such other place as may be designated by such person.

     Other than in the case of splits, combinations or other reclassifications
affecting the Preferred Shares, or in the case of distributions of Preferred
Shares, if any, there shall be deposited hereunder not more than the number of
shares constituting the Preferred Shares as set forth in the Articles
Supplementary, as such may be amended.

     The Company shall deliver to the Depositary from time to time such
quantities of Receipts as the Depositary may request to enable the Depositary
to perform its obligations under this Deposit Agreement.

     SECTION 2.03. Optional Redemption of Preferred Shares for Cash.
Whenever the Company shall elect to redeem deposited Preferred Shares for cash
in accordance with the provisions of the Articles Supplementary, it shall
(unless otherwise agreed in writing with the Depositary) give the Depositary
not less than 30 days’ prior written notice of the date of such proposed
redemption and of the number of such Preferred Shares held by the Depositary to
be redeemed and the applicable redemption price, as set forth in the Articles
Supplementary, including the amount, if any, of accrued and unpaid dividends
thereon to and including the date fixed for redemption. The Depositary shall
mail, first-class postage prepaid, notice of the redemption of Preferred Shares
and the proposed simultaneous redemption of the Depositary Shares representing
the Preferred Shares to be redeemed, not less than 30 nor more than 60 days
prior to the date fixed for redemption of such Preferred Shares and Depositary
Shares (the “redemption date”), to the record holders of the Receipts
evidencing the Depositary Shares to be so redeemed, at the addresses of such
holders as the same appear on the records of the Depositary. No failure to
give such notice or any defect thereto or in the mailing thereof shall affect
the sufficiency of notice or validity of the proceedings for redemption except
as to a holder to whom notice was defective or not given. A redemption notice
which has been mailed in the manner provided herein shall be conclusively
presumed to have been duly given on the date mailed whether or not the holder
received the redemption notice. The Company shall provide the Depositary with
such notice, and each such notice shall state: the redemption date; the
redemption price and accrued and unpaid dividends payable on the redemption
date; the number of deposited Preferred Shares and Depositary Shares to be
redeemed; if fewer than all the Depositary Shares held by any holder are to be
redeemed, the number of such Depositary Shares held by such holder to be so
redeemed; the place or places where Receipts evidencing the Depositary Shares
to be redeemed are to be surrendered for payment of the redemption price and
accrued and unpaid dividends payable on the redemption date; and that from and
after the redemption date dividends in respect of the Preferred Shares
represented by the Depositary Shares to be redeemed will cease to accrue. If
fewer than all of the outstanding Depositary Shares are to be redeemed, the
Depositary Shares to be redeemed shall be redeemed pro rata (as nearly as may
be practicable without creating fractional Depositary Shares) or by any other
equitable method determined by the Company that will not result in a violation
of the Ownership Limit.

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     In the event that notice of redemption has been made as described in the
immediately preceding paragraph and the Company shall then have paid or caused
to be paid in full to the Depositary the redemption price (determined pursuant
to the Articles Supplementary) of the Preferred Shares deposited with the
Depositary to be redeemed (including any accrued and unpaid dividends to and
including the redemption date), the Depositary shall redeem the number of
Depositary Shares representing such Preferred Shares so called for redemption
by the Company and from and after the redemption date (unless the Company shall
have failed to pay for the Preferred Shares to be redeemed by it as set forth
in the Company’s notice provided for in the preceding paragraph), all dividends
in respect of the Preferred Shares called for redemption shall cease to accrue,
the Depositary Shares called for redemption shall be deemed no longer to be
outstanding and all rights of the holders of Receipts evidencing such
Depositary Shares (except the right to receive the redemption price plus all
accrued and unpaid dividends to and including the redemption date) shall, to
the extent of such Depositary Shares, cease and terminate. Upon surrender in
accordance with said notice of the Receipts evidencing such Depositary Shares
(properly endorsed or assigned for transfer, if the Depositary or applicable
law shall so require), such Depositary Shares shall be redeemed at a redemption
price of $                     per Depositary Share plus all accrued and unpaid dividends
to and including the redemption date. The foregoing shall be further subject
to the terms and conditions of the Articles Supplementary. In the event of any
conflict between the provisions of this Deposit Agreement and the provisions of
the Articles Supplementary, the provisions of the Articles Supplementary will
govern and the Company will instruct the Depositary accordingly.

     If fewer than all of the Depositary Shares evidenced by a Receipt are
called for redemption, the Depositary will deliver to the holder of such
Receipt upon its surrender to the Depositary, together with payment of the
redemption price for and all other amounts payable in respect of the Depositary
Shares called for redemption, a new Receipt evidencing such holder’s Depositary
Shares evidenced by such prior Receipt that are not called for redemption.

     The Company acknowledges that the bank accounts maintained by the
Depositary in connection with the performance of the services described herein
will be in the name of the Depositary and that the Depositary may receive
investment earnings in connection with the investment at the Depositary’s risk
and for its benefit of funds held in those accounts from time to time.

     SECTION 2.04. Registration of Transfers of Receipts. The Company
hereby appoints the Depositary as the Registrar and Transfer Agent for the
Receipts and the Depositary hereby accepts such appointment and, as such, shall
register on its books from time to time transfers of Receipts upon any
surrender thereof by the holder in person or by a duly authorized attorney,
agent or representative, properly endorsed or accompanied by a properly
executed instrument of transfer or endorsement and including a guarantee of the
signature thereon by a participant in a signature guarantee medallion program
approved by the Securities Transfer Association (a “Signature Guarantee”),
together with evidence of the payment of any transfer taxes as may be required
by applicable law. Upon such surrender, the Depositary shall execute a new
Receipt or Receipts and deliver the same to or upon the order of the person
entitled thereto evidencing the same aggregate number of Depositary Shares
evidenced by the Receipt or Receipts surrendered.

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     SECTION 2.05. Combinations and Split-ups of Receipts. Upon
surrender of a Receipt or Receipts at the Corporate Office or such other office
as the Depositary may designate for the purpose of effecting a split-up or
combination of Receipts, subject to the terms and conditions of this Deposit
Agreement, the Depositary shall execute and deliver a new Receipt or Receipts
in the authorized denominations requested evidencing the same aggregate number
of Depositary Shares evidenced by the Receipt or Receipts surrendered.

     SECTION 2.06. Surrender of Receipts and Withdrawal of Preferred
Shares. Any holder of a Receipt or Receipts may withdraw any or all of the
deposited Preferred Shares represented by the Depositary Shares evidenced by
such Receipt or Receipts and all money and other property, if any, represented
by such Depositary Shares by surrendering such Receipt or Receipts at the
Corporate Office or at such other office as the Depositary may designate for
such withdrawals. After such surrender, without unreasonable delay, the
Depositary shall deliver to such holder, or to the person or persons designated
by such holder as hereinafter provided, the number of whole or fractional
Preferred Shares and all such money and other property, if any, represented by
the Depositary Shares evidenced by the Receipt or Receipts so surrendered for
withdrawal, but holders of such whole or fractional Preferred Shares will not
thereafter be entitled to deposit such Preferred Shares hereunder or to receive
Depositary Shares therefor. If the Receipt or Receipts delivered by the holder
to the Depositary in connection with such withdrawal shall evidence a number of
Depositary Shares in excess of the number of Depositary Shares representing the
number of whole or fractional deposited Preferred Shares to be withdrawn, the
Depositary shall at the same time, in addition to such number of whole or
fractional Preferred Shares and such money and other property, if any, to be
withdrawn, deliver to such holder, or (subject to Section 2.04) upon his order,
a new Receipt or Receipts evidencing such excess number of Depositary Shares.
Delivery of such Preferred Shares and such money and other property being
withdrawn may be made by the delivery of such certificates, documents of title
and other instruments as the Depositary may deem appropriate, which, if
required by the Depositary, shall be properly endorsed or accompanied by a
properly executed instrument of transfer or endorsement.

     If the deposited Preferred Shares and the money and other property being
withdrawn are to be delivered to a person or persons other than the record
holder of the Receipt or Receipts being surrendered for withdrawal of Preferred
Shares, such holder shall execute and deliver to the Depositary a written order
so directing the Depositary and the Depositary may require that the Receipt or
Receipts surrendered by such holder for withdrawal of such Preferred Shares be
properly endorsed in blank or accompanied by a properly executed instrument of
transfer or endorsement in blank with a Signature Guarantee.

     The Depositary shall deliver the deposited Preferred Shares and the money
and other property, if any, represented by the Depositary Shares evidenced by
Receipts surrendered for withdrawal at the Corporate Office, except that, at
the request, risk and expense of the holder surrendering such Receipt or
Receipts and for the account of the holder thereof, such delivery may be made
at such other place as may be designated by such holder.

     SECTION 2.07. Limitations on Execution and Delivery, Transfer,
Split-up, Combination. As a condition precedent to the execution and
delivery, transfer, split-up, combination, surrender or exchange of any
Receipt, the Depositary, any of the Depositary’s

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Agents or the Company may require any or all of the following: (i) payment
to it of a sum sufficient for the payment (or, in the event that the Depositary
or the Company shall have made such payment, the reimbursement to it) of any
tax or other governmental charge with respect thereto (including any such tax
or charge with respect to the Preferred Shares being deposited or withdrawn);
(ii) the production of proof satisfactory to it as to the identity and
genuineness of any signature (or the authority of any signature), including a
Signature Guarantee; and (iii) compliance with such regulations, if any, as the
Depositary or the Company may establish consistent with the provisions of this
Deposit Agreement as may be required by any securities exchange upon which the
deposited Preferred Shares, the Depositary Shares or the Receipts may be
included for quotation or listed.

     The deposit of Preferred Shares may be refused, the delivery of Receipts
against Preferred Shares may be suspended, the transfer of Receipts may be
refused, and the transfer, split-up, combination, surrender, exchange or
redemption of outstanding Receipts may be suspended (i) during any period when
the register of shareholders of the Company is closed or (ii) if any such
action is deemed reasonably necessary or advisable by the Depositary, any of
time Depositary’s Agents or the Company at any time or from time to time
because of any requirement of applicable law or of any government or
governmental body or commission, or under any provision of this Deposit
Agreement.

     SECTION 2.08. Lost Receipts, etc. In case any Receipt shall be
mutilated or destroyed or lost or stolen, the Depositary in its discretion may
execute and deliver a Receipt of like form and tenor in exchange and
substitution for such mutilated Receipt or in lieu of and in substitution for
such destroyed, lost or stolen Receipt, provided that the holder thereof
provides the Depositary with (i) evidence reasonably satisfactory to the
Depositary of such destruction, loss or theft of such Receipt, of the
authenticity thereof and of his ownership thereof and (ii) reasonable
indemnification and the provision of an open penalty surety bond, in each case,
satisfactory to the Depositary and the Company and holding the Depositary and
the Company harmless.

     SECTION 2.09. Cancellation and Destruction of Surrendered Receipts.
All Receipts surrendered to the Depositary or any Depositary’s Agent shall be
cancelled by the Depositary. Except as prohibited by applicable law or
regulation, the Depositary is authorized to destroy such Receipts so cancelled.

ARTICLE III

CERTAIN OBLIGATIONS OF HOLDERS OF RECEIPTS AND THE COMPANY

     SECTION 3.01. Filing Proofs, Certificates and Other Information.
Any person presenting Preferred Shares for deposit or any holder of a Receipt
may be required from time to time to file such proof of residence or other
information and to execute such certificates as the Depositary or the Company
may reasonably deem necessary or proper. The Depositary or the Company may
withhold or delay the delivery of any Receipt, the transfer, redemption or
exchange of any Receipt, the withdrawal of the deposited Preferred Shares
represented by the Depositary Shares evidenced by any Receipt, the distribution
of any distribution or the sale of

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any rights or of the proceeds thereof, until such proof or other
information is filed or such certificates are executed.

     SECTION 3.02. Payment of Fees and Expenses. Holders of Receipts
shall be obligated to make payments to the Depositary of certain fees and
expenses, as provided in Section 5.09, or provide evidence reasonably
satisfactory to the Depositary that such fees and expenses have been paid.
Until such payment is made, transfer of any Receipt or any withdrawal of the
Preferred Shares or money or other property, if any, represented by the
Depositary Shares evidenced by such Receipt may be refused, any distribution
may be withheld, and any part or all of the Preferred Shares or other property
represented by the Depositary Shares evidenced by such Receipt may be sold for
the account of the holder thereof (after attempting by reasonable means to
notify such holder a reasonable number of days prior to such sale). Any
distribution so withheld and the proceeds of any such sale may be applied to
any payment of such fees or expenses, the holder of such Receipt remaining
liable for any deficiency.

     SECTION 3.03. Representations and Warranties as to Preferred
Shares. In the case of the initial deposit of the Preferred Shares
hereunder, the Company and, in the case of subsequent deposits thereof, each
person so depositing Preferred Shares under this Deposit Agreement, shall be
deemed thereby to represent and warrant that such Preferred Shares and each
certificate therefor are valid and that the person making such deposit is duly
authorized to do so. The Company hereby further represents and warrants that
such Preferred Shares, when issued, will be validly issued, fully paid and
non-assessable. Such representations and warranties shall survive the deposit
of the Preferred Shares and the issuance of Receipts.

     SECTION 3.04. Representation and Warranty as to Receipts and Depositary
Shares. The Company hereby represents and warrants that the Receipts, when
issued, will evidence legal and valid interests in the Depositary Shares and
each Depositary Share will represent a legal and valid fractional interest in a
share of deposited Preferred Shares represented by such Depositary Share. Such
representation and warranty shall survive the deposit of the Preferred Shares
and the issuance of Receipts evidencing the Depositary Shares.

ARTICLE IV

PREFERRED SHARES; NOTICES

     SECTION 4.01. Dividends and Other Cash Distributions. Whenever the
Depositary shall receive any dividend or other cash distributions on the
deposited Preferred Shares, including any cash received upon redemption of any
Preferred Shares pursuant to Section 2.03, the Depositary shall, subject to
Section 3.02, distribute to record holders of Receipts on the record date fixed
pursuant to Section 4.04 such amounts of such sum as are, as nearly as
practicable, in proportion to the respective numbers of Depositary Shares
evidenced by the Receipts held by such holders; provided, however, that, in
case the Company or the Depositary shall be required by law to withhold and
shall withhold from any cash distribution in respect of the Preferred Shares an
amount on account of taxes or as otherwise required by law, regulation or court
process, the amount made available for distribution or distributed in respect
of Depositary Shares shall be reduced accordingly. The Depositary shall
distribute or make available for distribution, as the case may be, only such
amount, however, as can be distributed

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without attributing to any holder of Receipts a fraction of one cent, and
any balance not so distributable shall be held by the Depositary (without
liability for interest thereon) and shall be added to and be treated as part of
the next sum received by the Depositary for distribution to record holders of
Receipts then outstanding.

     SECTION 4.02. Distributions Other Than Cash. Whenever the
Depositary shall receive any distribution other than cash on the deposited
Preferred Shares, the Depositary shall, subject to Section 3.02, distribute to
record holders of Receipts on the record date fixed pursuant to Section 4.04
such amounts of the securities or property received by it as are, as nearly as
practicable, in proportion to the respective numbers of Depositary Shares
evidenced by the Receipts held by such holders, in any manner that the
Depositary and the Company may deem equitable and practicable for accomplishing
such distribution. If in the opinion of the Depositary after consultation with
the Company, such distribution cannot be made proportionately among such record
holders, or if for any other reason (including any requirement that the Company
or the Depositary withhold an amount on account of taxes), the Depositary
deems, after consultation with the Company, such distribution not to be
feasible, the Depositary may, with the approval of the Company, adopt such
method as it deems equitable and practicable for the purpose of effecting such
distribution, including the sale (at public or private sale) of the securities
or property thus received, or any part thereof at such place or places and upon
such terms as it may deem proper. The net proceeds of any such sale shall,
subject to Section 3.02, be distributed or made available for distribution, as
the case may be, by the Depositary to record holders of Receipts as provided by
Section 4.01 in the case of a distribution received in cash. The Company shall
not make any distribution of such securities or property to the holders of
Receipts unless the Company shall have provided to the Depositary an opinion of
counsel stating that such securities or property have been registered under the
Securities Act or do not need to be registered in order to be freely
transferable.

     SECTION 4.03. Subscription Rights, Preferences or Privileges. If
the Company shall at any time offer or cause to be offered to the persons in
whose names deposited Preferred Shares is registered on the books of the
Company any rights, preferences or privileges to subscribe for or to purchase
any securities or any rights, preferences or privileges of any other nature,
the offering of such rights, preferences or privileges shall in each such
instance be communicated to the Depositary and thereafter made available by the
Depositary to the record holders of Receipts in such manner as the Company
shall instruct (including by the issue to such record holders of warrants
representing such rights, preferences or privileges); provided, however, that
(a) if at the time of issue or offer of any such rights, preferences or
privileges the Company determines upon advice of its legal counsel that it is
not lawful or feasible to make such rights, preferences or privileges available
to the holders of Receipts (by the issue of warrants or otherwise) or (b) if
and to the extent instructed by holders of Receipts who do not desire to
exercise such rights, preferences or privileges, the Depositary shall then, if
so instructed by the Company, and if applicable laws or the terms of such
rights, preferences or privileges so permit, sell such rights, preferences or
privileges of such holders at public or private sale, at such place or places
and upon such terms as it may deem proper. The net proceeds of any such sale
shall, subject to Section 3.01 and Section 3.02, be distributed by the
Depositary to the record holders of Receipts entitled thereto as provided by
Section 4.01 in the case of a distribution received in cash. The Company shall
not make any distribution of such rights, preferences or privileges, unless the
Company shall have provided to the Depositary an opinion of counsel

10

 

stating that such rights, preferences or privileges have been registered
under the Securities Act or do not need to be registered in order to be freely
transferable.

     If registration under the Securities Act of the securities to which any
rights, preferences or privileges relate is required in order for holders of
Receipts to be offered or sold the securities to which such rights, preferences
or privileges relate, the Company agrees that it will promptly file a
registration statement pursuant to the Securities Act with respect to such
rights, preferences or privileges and securities and use its reasonable best
efforts and take all steps available to it to cause such registration statement
to become effective sufficiently in advance of the expiration of such rights,
preferences or privileges to enable such holders to exercise such rights,
preferences or privileges. In no event shall the Depositary make available to
the holders of Receipts any right, preference or privilege to subscribe for or
to purchase any securities unless and until such a registration statement shall
have become effective or unless the offering and sale of such securities to
such holders are exempt from registration under the provisions of the
Securities Act and the Company shall have provided to the Depositary an opinion
of counsel to such effect.

     If any other action under the law of any jurisdiction or any governmental
or administrative authorization, consent or permit is required in order for
such rights, preferences or privileges to be made available to holders of
Receipts, the Company agrees to use its reasonable best efforts to take such
action or obtain such authorization, consent or permit sufficiently in advance
of the expiration of such rights, preferences or privileges to enable such
holders to exercise such rights, preferences or privileges.

     SECTION 4.04. Notice of Distributions; Fixing of Record Date for
Holders of Receipts. Whenever any dividend or other cash distributions
shall become payable, any distribution other than cash shall be made, or any
rights, preferences or privileges shall at any time be offered, with respect to
the deposited Preferred Shares, or whenever the Depositary shall receive notice
of (i) any meeting at which holders of such Preferred Shares are entitled to
vote or of which holders of such Preferred Shares are entitled to notice or
(ii) any election on the part of the Company to redeem any such Preferred
Shares, the Depositary shall in each such instance fix a record date (which
shall be the same date as the record date, if any, fixed by the Company with
respect to the Preferred Shares) for the determination of the holders of
Receipts (a) who shall be entitled to receive such dividend, distribution,
rights, preferences or privileges or the net proceeds of the sale thereof, (b)
who shall be entitled to give instructions for the exercise of voting rights at
any such meeting or to receive notice of such meeting or (c) whose Depositary
Shares are to be so redeemed.

     SECTION 4.05. Voting Rights. Upon receipt of notice of any meeting
at which the holders of deposited Preferred Shares are entitled to vote, the
Depositary shall, as soon as practicable thereafter, mail to the record holders
of Receipts a notice, which shall be provided by the Company and which shall
contain (i) such information as is contained in such notice of meeting, (ii) a
statement that the holders of Receipts at the close of business on a specified
record date fixed pursuant to Section 4.04 will be entitled, subject to any
applicable provision of law, to instruct the Depositary as to the exercise of
the voting rights pertaining to the amount of Preferred Shares represented by
their respective Depositary Shares and (iii) a brief statement as to the manner
in which such instructions may be given. Upon the written request of a holder
of a Receipt on such record date, the Depositary shall vote or cause to be
voted the amount of

11

 

Preferred Shares represented by the Depositary Shares evidenced by such
Receipt in accordance with the instructions set forth in such request. To the
extent any such instructions request the voting of a fractional interest of a
deposited Preferred Share, the Depositary shall aggregate such interest with
all other fractional interests resulting from requests with the same voting
instructions and shall vote the number of whole votes resulting from such
aggregation in accordance with the instructions received in such requests.
Each Preferred Share is entitled to votes and, accordingly, each Depositary
Share is entitled to vote(s). The Company hereby agrees to take all reasonable
action that may be deemed necessary by the Depositary in order to enable the
Depositary to vote such Preferred Shares or cause such Preferred Shares to be
voted. In the absence of specific instructions from the holder of a Receipt,
the Depositary will abstain from voting to the extent of the Preferred Shares
represented by the Depositary Shares evidenced by such Receipt. The Depositary
shall not be required to exercise discretion in voting any Preferred Shares
represented by the Depositary Shares evidenced by such Receipt.

     SECTION 4.06. Changes Affecting Preferred Shares and Reclassifications,
Recapitalizations, etc. Upon any change in par or stated value, split-up,
combination or any other reclassification of Preferred Shares, or upon any
recapitalization, reorganization, merger, amalgamation or consolidation
affecting the Company or to which it is a party or sale of all or substantially
all of the Company’s assets, the Depositary shall, upon the instructions of the
Company, (i) make such adjustments in (a) the fraction of an interest
represented by one Depositary Share in one Preferred Share and (b) the ratio of
the redemption price per Depositary Share to the redemption price of a
Preferred Share, in each case as may be required by or as is consistent with
the provisions of the Articles Supplementary to fully reflect the effects of
such change in liquidation preference, split-up, combination or other
reclassification of Preferred Shares, or of such recapitalization,
reorganization, merger, amalgamation, consolidation or sale and (ii) treat any
shares of beneficial interest or other securities or property (including cash)
that shall be received by the Depositary in exchange for or upon conversion of
or in respect of the Preferred Shares as new deposited property under this
Deposit Agreement, and Receipts then outstanding shall thenceforth represent
the proportionate interests of holders thereof in the new deposited property so
received in exchange for or upon conversion of or in respect of such Preferred
Shares. In any such case the Depositary may, in its discretion, with the
approval of the Company, execute and deliver additional Receipts, or may call
for the surrender of all outstanding Receipts to be exchanged for new Receipts
specifically describing such new deposited property. Anything to the contrary
herein notwithstanding, holders of Receipts shall have the right from and after
the effective date of any such change in par or stated value, split-up,
combination or other reclassification of the Preferred Shares or any such
recapitalization, reorganization, merger, amalgamation or consolidation or sale
of substantially all the assets of the Company to surrender such Receipts to
the Depositary with instructions to convert, exchange or surrender the
Preferred Shares represented thereby only into or for, as the case may be, the
kind and amount of shares of beneficial interest and other securities and
property and cash into which the deposited Preferred Shares evidenced by such
Receipts might have been converted or for which such Preferred Shares might
have been exchanged or surrendered immediately prior to the effective date of
such transaction, subject to any subsequent change in par or stated value,
split-up, combination or other reclassification or any subsequent
recapitalization, reorganization, merger, amalgamation or consolidation or sale
of substantially all the assets. The Company shall cause effective provision
to be made in the charter of the resulting or surviving corporation (if other
than the Company) for protection of such rights as may be applicable upon
exchange of the

12

 

deposited Preferred Shares for securities or property or cash of the
surviving corporation in connection with the transactions set forth above. The
Company shall cause any such surviving corporation (if other than the Company)
expressly to assume the obligations of the Company hereunder.

     SECTION 4.07. Inspection of Reports. The Depositary shall make
available for inspection by holders of Receipts at the Corporate Office and at
such other places as it may from time to time deem advisable during normal
business hours any reports and communications received from the Company that
are both received by the Depositary as the holder of deposited Preferred Shares
and made generally available to the holders of the Preferred Shares. In
addition, the Depositary shall transmit certain notices and reports to the
holders of Receipts as provided in Section 5.05.

     SECTION 4.08. Lists of Receipt Holders. Promptly upon request from
time to time by the Company, the Depositary shall furnish to the Company a
list, as of a recent date specified by the Company, of the names, addresses and
holdings of Depositary Shares of all persons in whose names Receipts are
registered on the books of the Depositary.

     SECTION 4.09. Tax and Regulatory Compliance. The Depositary shall
be responsible for (i) preparing and mailing of Form 1099s for all open and
closed accounts, (ii) all applicable withholding related to payments made with
respect to the Receipts, including, without limitation, withholding required
pursuant to Sections 1441, 1442, 1445 and 3406 of the Internal Revenue Code of
1986, as amended, (iii) mailing Form W-9s to new holders of Receipts without a
certified taxpayer identification number, (iv) processing certified Form W-9s,
(v) preparing and filing of state information returns and (vi) providing
escheatment services.

     SECTION 4.10. Withholding. Notwithstanding any other provision of
this Deposit Agreement to the contrary, in the event that the Depositary
determines that any distribution in property is subject to any tax which the
Depositary is obligated by applicable law to withhold, the Depositary may
dispose of all or a portion of such property in such amounts and in such manner
as the Depositary deems necessary and practicable to pay such taxes, by public
or private sale, and the Depositary shall distribute the net proceeds of any
such sale or the balance of any such property after deduction of such taxes to
the holders of Receipts entitled thereto in proportion to the number of
Depositary Shares held by them, respectively; provided, however, that in the
event the Depositary determines that such distribution of property is subject
to withholding tax only with respect to some but not all holders of Receipts,
the Depositary will use its best efforts (i) to sell only that portion of such
property distributable to such holders that is required to generate sufficient
proceeds to pay such withholding tax and (ii) to effect any such sale in such a
manner so as to avoid affecting the rights of any other holders of Receipts to
receive such distribution in property.

ARTICLE V

THE DEPOSITARY AND THE COMPANY

     SECTION 5.01. Maintenance of Offices, Agencies and Transfer Books by
the Depositary and the Registrar. The Depositary shall maintain at the
Corporate Office facilities for

13

 

the execution and delivery, transfer, surrender and
exchange, split-up, combination and redemption of Receipts and deposit and
withdrawal of Preferred Shares and at the offices of the Depositary’s Agents,
if any, facilities for the delivery, transfer, surrender and exchange,
split-up, combination and redemption of Receipts and deposit and withdrawal of
Preferred Shares, all in accordance with the provisions of this Deposit
Agreement.

     The Depositary shall keep books at the Corporate Office for the
registration and transfer of Receipts, which books at all reasonable times
shall be open for inspection by the record holders of Receipts as provided by
applicable law. The Depositary may close such books, at any time or from time
to time, when deemed expedient by it in connection with the performance of its
duties hereunder. The Depositary may maintain such books in customary
electronic form.

     If the Receipts or the Depositary Shares evidenced thereby or the
Preferred Shares represented by such Depositary Shares shall be quoted on The
Nasdaq National Market or any stock exchange, or quoted on any other
interdealer quotation system, the Depositary may, with the approval of the
Company, appoint a Registrar (acceptable to the Company) for registration of
such Receipts or Depositary Shares in accordance with the requirements of such
quotation system or stock exchange. Such Registrar (which may be the
Depositary if so permitted by the requirements of such Exchange) may be removed
and a substitute registrar appointed by the Depositary upon the request or with
the approval of the Company. If the Receipts, such Depositary Shares or such
Preferred Shares are listed on one or more stock exchanges or other quotation
systems, the Depositary will, at the request and expense of the Company,
arrange such facilities for the delivery, transfer, surrender, redemption and
exchange of such Receipts, such Depositary Shares or such Preferred Shares as
maybe required by applicable law or applicable stock exchange or quotation
system regulations.

     SECTION 5.02. Prevention or Delay in Performance by the Depositary, the
Depositary’s Agents, the Registrar or the Company. None of the Depositary,
any Depositary’s Agent, any Registrar or the Company shall incur any liability
to any holder of any Receipt, if by reason of any provision of any present or
future law or regulation thereunder of the United States of America or of any
other governmental authority or, in the case of the Depositary, the
Depositary’s Agent or the Registrar, by reason of any provision, present or
future, of the Declaration of Trust or the Articles Supplementary or, in the
case of the Company, the Depositary, the Depositary’s Agent or the Registrar,
by reason of any act of God or war or other circumstance beyond the control of
the relevant party, the Depositary, any Depositary’s Agent, the Registrar or
the Company shall be prevented or forbidden from doing or performing any act or
thing that the terms of this Deposit Agreement provide shall be done or
performed; nor shall the Depositary, any Depositary’s Agent, any Registrar or
the Company incur any liability to any holder of a Receipt by reason of any
nonperformance or delay, caused as aforesaid, in the performance of any act or
thing that the terms of this Deposit Agreement provide shall or may be done or
performed, or by reason of any exercise of, or failure to exercise, any
discretion provided for in this Deposit Agreement.

     SECTION 5.03. Obligations of the Depositary, the Depositary’s Agents,
the Registrar and the Company. Each of the Depositary, any Depositary’s
Agent and any Registrar shall at all times act in good faith and shall use its
best efforts within reasonable time limits to insure the accuracy of all
services performed pursuant to this Agreement. None of the

14

 

Depositary, any Depositary’s Agent, any Registrar or the Company assumes
any obligation or shall be subject to any liability under this Deposit
Agreement or any Receipt to holders of Receipts other than from acts or
omissions arising out of conduct constituting bad faith, gross negligence or
willful misconduct in the performance of such duties as are specifically set
forth in this Deposit Agreement.

     None of the Depositary, any Depositary’s Agent, any Registrar or the
Company shall be under any obligation to appear in, prosecute or defend any
action, suit or other proceeding with respect to the deposited Preferred
Shares, Depositary Shares or Receipts that in its reasonable opinion may
involve it in expense or liability, unless indemnity reasonably satisfactory to
it against all expense and liability be furnished as often as may be required.

     None of the Depositary, any Depositary’s Agent, any Registrar or the
Company shall be liable for any action or any failure to act by it in reliance
upon the written advice of legal counsel or accountants, or information
provided by any person presenting Preferred Shares for deposit, any holder of a
Receipt or any other person believed by it in good faith to be competent to
give such advice or information. The Depositary, any Depositary’s Agent, any
Registrar and the Company may each rely and shall each be protected in acting
upon any written notice, request, direction or other document believed by it in
good faith to be genuine and to have been signed or presented by the proper
party or panics.

     In the event the Depositary shall receive conflicting claims, requests or
instructions from any holders of Receipts, on the one hand, and the Company, on
the other hand, the Depositary shall be entitled to act on such claims,
requests or instructions received from the Company, and shall be entitled to
the full indemnification set forth in Section 5.06 hereof in connection with
any action so taken.

     The Depositary shall not be responsible for any failure to carry out any
instruction to vote any of the deposited Preferred Shares or for the manner or
effect of any such vote made, as long as any such action or non-action is in
good faith and does not result from negligence or willful misconduct of the
Depositary. The Depositary undertakes, and any Registrar shall be required to
undertake, to perform such duties and only such duties as are specifically set
forth in this Deposit Agreement, and no implied covenants or obligations shall
be read into this Agreement against the Depositary or any Registrar.

     The Depositary, its parent, affiliate, or subsidiaries, any Depositary’s
Agent, and any Registrar may own, buy, sell or deal in any class of securities
of the Company and its affiliates and in Receipts or Depositary Shares or
become pecuniarily interested in any transaction in which the Company or its
affiliates may be interested or contract with or lend money to or otherwise act
as fully or as freely as if it were not the Depositary or the Depositary’s
Agent hereunder. The Depositary may also act as transfer agent or registrar of
any of the securities of the Company and its affiliates or act in any other
capacity for the Company or its affiliates.

     It is intended that neither the Depositary nor any Depositary’s Agent
shall be deemed to be an “issuer” of the securities under the federal
securities laws or applicable state securities laws, it being expressly
understood and agreed that the Depositary and any Depositary’s Agent are acting
only in a ministerial capacity as Depositary for the deposited Preferred
Shares;

15

 

provided, however, that the Depositary agrees to comply with all
information reporting and withholding requirements applicable to it under law
or this Deposit Agreement in its capacity as Depositary.

     Neither the Depositary (or its officers, directors, employees or agents)
nor any Depositary’s Agent makes any representation or has any responsibility
as to the validity of the registration statement pursuant to which the
Depositary Shares are registered under the Securities Act, the deposited
Preferred Shares, the Depositary Shares, the Receipts (except its
countersignature thereon) or any instruments referred to therein or herein, or
as to the correctness of any statement made therein or herein; provided,
however, that the Depositary is responsible for its representations in this
Deposit Agreement and for the validity of any action taken or required to be
taken by the Depositary in connection with this Deposit Agreement.

     The Company represents that it has registered the deposited Preferred
Shares and the Depositary Shares for sale in accordance with applicable
securities laws.

     SECTION 5.04. Resignation and Removal of the Depositary; Appointment of
Successor Depositary. The Depositary may at any time resign as Depositary
hereunder by notice of its election to do so delivered to the Company, such
resignation to take effect upon the appointment of a successor depositary and
its acceptance of such appointment as hereinafter provided.

     The Depositary may at any time be removed by the Company by notice of such
removal delivered to the Depositary, such removal to take effect upon the
appointment of a successor depositary and its acceptance of such appointment as
hereinafter provided.

     In case at any time the Depositary acting hereunder shall resign or be
removed, the Company shall, within 60 days after the delivery of the notice of
resignation or removal, as the case may be, appoint a successor depositary,
which shall be a bank or trust company having its principal office in the
United States of America and having a combined capital and surplus of at least
$50,000,000. If a successor depositary shall not have been appointed in 60
days, the resigning Depositary may petition a court of competent jurisdiction
to appoint a successor depositary. Every successor depositary shall execute
and deliver to its predecessor and to the Company an instrument in writing
accepting its appointment hereunder, and thereupon such successor depositary,
without any further act or deed, shall become fully vested with all the rights,
powers, duties and obligations of its predecessor and for all purposes shall be
the Depositary under this Deposit Agreement, and such predecessor, upon payment
of all sums due it and on the written request of the Company, shall promptly
execute and deliver an instrument transferring to such successor all rights and
powers of such predecessor hereunder, shall duly assign, transfer and deliver
all rights, title and interest in the deposited Preferred Shares and any moneys
or property held hereunder to such successor and shall deliver to such
successor a list of the record holders of all outstanding Receipts. Any
successor depositary shall promptly mail notice of its appointment to the
record holders of Receipts.

     Any corporation into or with which the Depositary may be merged,
consolidated or converted shall be the successor of such Depositary without the
execution or filing of any

16

 

document or any further act. Such successor depositary may execute the
Receipts either in the name of the predecessor depositary or in the name of the
successor depositary.

     SECTION 5.05. Notices, Reports and Documents. The Company agrees
that it will deliver to the Depositary, and the Depositary will, promptly after
receipt thereof transmit to the record holders of Receipts, in each case at the
address recorded in the Depositary’s books, copies of all notices and reports
(including financial statements) required by law, by the rules of any national
securities exchange or interdealer quotation system upon which the Preferred
Shares, the Depositary Shares or the Receipts are listed or quoted or by the
Declaration of Trust and the Articles Supplementary to be furnished by the
Company to holders of the deposited Preferred Shares and, if requested by the
holder of any Receipt, a copy of this Deposit Agreement, the form of Receipt,
the Articles Supplementary and the form of Preferred Shares. Such transmission
will be at the Company’s expense and the Company will provide the Depositary
with such number of copies of such documents as the Depositary may reasonably
request. In addition, the Depositary will transmit to the record holders of
Receipts at the Company’s expense such other documents as may be requested by
the Company.

     SECTION 5.06. Indemnification by the Company. The Company agrees
to indemnify the Depositary, any Depositary’s Agent and any Registrar against,
and hold each of them harmless from, any liability, costs and expenses
(including reasonable attorneys’ fees) that may arise out of, or in connection
with, its acting as Depositary, Depositary’s Agent or Registrar, respectively,
under this Deposit Agreement and the Receipts, except for any liability arising
out of the willful misconduct, gross negligence, or bad faith on the part of
any such person or persons. The obligations of the Company set forth in this
Section 5.06 shall survive any succession of any Depositary, Registrar or
Depositary’s Agent or termination of this Deposit Agreement.

     SECTION 5.07. Indemnification by the Depositary. The Depositary
agrees to indemnify the Company against, and hold the Company harmless from,
any liability, costs and expenses (including reasonable attorneys’ fees) that
may arise out of, or in connection with, the refusal or failure of any of the
Depositary, any Depositary’s Agent or the Registrar to comply with the terms of
this Deposit Agreement, or which arise out of the willful misconduct, gross
negligence, or bad faith on the part of any such person or persons; provided,
however, that the Depositary’s aggregate liability hereunder with respect to,
arising from, or arising in connection with this Deposit Agreement, or from all
services provided or omitted to be provided under this Deposit Agreement,
whether in contract, or in tort, or otherwise, is limited to, and shall not
exceed, the amounts paid hereunder by the Company to the Depositary as fees and
charges under this Agreement or otherwise, but not including reimbursable
expenses, during the six (6) calendar months immediately preceding the event
for which recovery from the Depositary is being sought. The obligations of the
Depositary set forth in this Section 5.07 shall survive any succession of the
Company or termination of this Deposit Agreement.

     SECTION 5.08. Damages. The Depositary shall not be liable for any
incidental, indirect, special or consequential damages of any nature
whatsoever, including, but not limited to, loss of anticipated profits
(collectively, “Special Damages”), occasioned by breach of any provision of
this Agreement by the Depositary even if apprised of the possibility of such
damages. The Company shall not be liable to the Depositary for
Special Damages occasioned by

17

 

breach of any provision of this Agreement by the Company
even if apprised of the possibility of such damages.

     SECTION 5.09. Fees, Charges and Expenses. No charges and expenses
of the Depositary or any Depositary’s Agent hereunder shall be payable by any
person, except as provided in this Section 5.09. The Company shall pay all
transfer and other taxes and governmental charges arising solely from the
existence of this Deposit Agreement. The Company shall also pay all fees and
expenses of the Depositary in connection with the initial deposit of the
Preferred Shares and the initial issuance of the Depositary Shares evidenced by
the Receipts, any redemption of the Preferred Shares at the option of the
Company and all withdrawals of the Preferred Shares by holders of Receipts, in
each case, in the amount and manner set forth in that certain Transfer Agency
and Service Agreement, dated as of                    , 200  , by and between the
Company and the Depositary (as the same may be amended, modified, supplemented
or replaced from time to time by the parties, the “Transfer Agency and Service
Agreement”). If a holder of Receipts requests the Depositary to perform duties
not required under this Deposit Agreement, the Depositary shall notify the
holder of time cost of the performance of such duties prior to the performance
thereof. Upon approval of such cost by such holder, such holder will
thereafter be liable for the charges and expenses related to such performance.
All other fees and expenses of the Depositary and any Depositary’s Agent
hereunder and of any Registrar (including, in each case, fees and expenses of
counsel) incident to the performance of their respective obligations hereunder
will be promptly paid by the Company pursuant to the terms of Transfer Agency
and Service Agreement (or, if such agreement is no longer in effect, pursuant
to such terms as the Company and the Depositary shall agree in good faith,
which terms shall be at least as favorable to the Depositary as those contained
in such agreement as last in effect). The Depositary shall present its
statement for fees and expenses to the Company every month or at such other
intervals as the Company and the Depositary may agree.

ARTICLE VI

AMENDMENT AND TERMINATION

     SECTION 6.01. Amendment. The form of the Receipts and any
provision of this Deposit Agreement may at any time and from time to time be
amended by agreement between the Company and the Depositary in any respect that
they may deem necessary or desirable; provided, however, that no such amendment
(other than any change in the fees of any Depositary, Registrar or Transfer
Agent that are payable by the Company) which (i) shall materially and adversely
alter the rights of the holders of Receipts or (ii) would be materially and
adversely inconsistent with the rights granted to the holders of the Preferred
Shares pursuant to the Articles Supplementary shall be effective unless such
amendment shall have been approved by the holders of Receipts evidencing at
least 66 2/3 of the Depositary Shares then outstanding. In no event shall any
amendment impair the right, subject to the provisions of Section 2.06 and
Section 2.07 and Article III, of any holder of any Depositary Shares to
surrender the Receipt evidencing such Depositary Shares with instructions to
the Depositary to deliver to the holder the deposited Preferred Shares and all
money and other property if any, represented thereby, except in order to comply
with mandatory provisions of applicable law. Every holder of an outstanding
Receipt at the time any such amendment becomes effective shall be deemed, by
continuing to

18

 

hold such Receipt, to consent and agree to such amendment and to be bound
by this Deposit Agreement as amended thereby.

     SECTION 6.02. Termination. This Deposit Agreement may be
terminated by the Company upon not less than 30 days’ prior written notice to
the Depositary if (i) such termination is necessary to preserve the Company’s
status as a real estate investment trust under the Internal Revenue Code of
1986, as amended (or any successor provision), or (ii) the holders of Receipts
evidencing at least a majority of the Depositary Shares then outstanding
consent to such termination, whereupon the Depositary shall deliver or make
available to each holder of a Receipt, upon surrender of the Receipt held by
such holder, such number of whole or fractional deposited Preferred Shares as
are represented by the Depositary Shares evidenced by such Depositary Receipt,
together with any other property held by the Depositary in respect of such
Receipt. In the event that this Deposit Agreement is terminated pursuant to
clause (i) of the immediately preceding sentence, the Company hereby agrees to
use its reasonable best efforts to list or quote the Preferred Shares issued
upon surrender of the Receipt evidencing the Depositary Shares represented
thereby on a national securities exchange or interdealer quotation system.
This Deposit Agreement will automatically terminate if (i) all outstanding
Depositary Shares shall have been redeemed pursuant to Section 2.03 or (ii)
there shall have been made a final distribution in respect of the deposited
Preferred Shares in connection with any liquidation, dissolution or winding up
of the Company and such distribution shall have been distributed to the holders
of Receipts entitled thereto.

     Upon the termination of this Deposit Agreement, (i) the Company shall be
discharged from all obligations under this Deposit Agreement except for its
obligations to the Depositary, any Depositary’s Agent and any Registrar under
Section 5.06 and Section 5.09 and (ii) the Depositary shall be discharged from
all obligations under this Deposit Agreement except for its obligations to the
Company under Section 5.07.

ARTICLE VII

MISCELLANEOUS

     SECTION 7.01. Counterparts. This Deposit Agreement may be executed
in any number of counterparts, and by each of the parties hereto on separate
counterparts, each of which counterparts, when so executed and delivered, shall
be deemed an original, but all such counterparts taken together shall
constitute one and the same instrument. Delivery of an executed counterpart of
a signature page to this Deposit Agreement by telecopier shall be effective as
delivery of a manually executed counterpart of this Deposit Agreement. Copies
of this Deposit Agreement shall be filed with the Depositary and the
Depositary’s Agents and shall be open to inspection during business hours at
the Corporate Office and the respective offices of the Depositary’s Agents, if
any, by any holder of a Receipt.

     SECTION 7.02. Exclusive Benefits of Parties. This Deposit
Agreement is for the exclusive benefit of the parties hereto, and their
respective successors hereunder, and shall not be deemed to give any legal or
equitable right, remedy or claim to any other person whatsoever.

19

 

     SECTION 7.03. Invalidity of Provisions. In case any one or more of
the provisions contained in this Deposit Agreement or in the Receipts should be
or become invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein or
therein shall in no way be affected, prejudiced or disturbed thereby.

     SECTION 7.04. Notices. Any and all notices to be given to the
Company hereunder or under the Receipts shall be in writing and shall be deemed
to have been duly given if personally delivered or sent by mail, or by telegram
or facsimile transmission confirmed by letter, addressed to the Company at:

Capital Automotive REIT

8270 Greensboro Drive

Suite 950

McLean, Virginia 22102

Attention: Corporate Secretary

Telephone No.: (703) 288-3075

or at any other address of which the Company shall have notified the Depositary
in writing.

     Any notices to be given to the Depositary hereunder or under the Receipts
shall be in writing and shall be deemed to have been duly given if personally
delivered or sent by mail, or by telegram or telex or telecopier confirmed by
letter, addressed to the Depositary at the Corporate Office to the attention of
the General Counsel.

     Any notices given to any record holder of a Receipt hereunder or under the
Receipts shall be in writing and shall be deemed to have been duly given if
personally delivered or sent by mail, or by telegram or telex or telecopier
confirmed by letter, addressed to such record holder at the address of such
record holder as it appears on the books of the Depositary or, if such holder
shall have filed with the Depositary in a timely manner a written request that
notices intended for such holder be mailed to some other address, at the
address designated in such request.

     Delivery of a notice sent by mail, or by telegram or telex or telecopier
shall be deemed to be effected at the time when a duly addressed letter
containing the same (or a confirmation thereof in the case of a telegram or
telex or telecopier message) is deposited, postage prepaid, in a post office
letter box. The Depositary or the Company may, however, act upon any telegram
or telex or telecopier message received by it from the other or from any holder
of a Receipt, notwithstanding that such telegram or telex or telecopier message
shall not subsequently be confirmed by letter as aforesaid.

     SECTION 7.05. Depositary’s Agents. The Depositary may from time to
time appoint Depositary’s Agents to act in any respect for the Depositary for
the purposes of this Deposit Agreement and may at any time appoint additional
Depositary’s Agents and vary or terminate the appointment of such Depositary’s
Agents. The Depositary will notify the Company of any such action.

     SECTION 7.06. Holders of Receipts Are Parties. The holders of
Receipts from time to time shall be deemed to be parties to this Deposit
Agreement and shall be bound by all of the terms and conditions hereof and of
the Receipts by acceptance of delivery thereof.

20

 

     SECTION 7.07. Governing Law. This Deposit Agreement and the
Receipts and all rights hereunder and thereunder and provisions hereof and
thereof shall be governed by, and construed in accordance with, the law of the
State of Maryland applicable to agreements made and to be performed in said
State.

     SECTION 7.08. Inspection of Deposit Agreement and Articles
Supplementary. Copies of this Deposit Agreement and the Articles
Supplementary shall be filed with the Depositary and the Depositary’s Agents
and shall be open to inspection during business hours at the Corporate Office
and the respective offices of the Depositary’s Agents, if any, by any holder of
any Receipt.

     SECTION 7.09. Headings. The headings of articles and sections in
this Deposit Agreement and in the form of the Receipt set forth in Exhibit
A hereto have been inserted for convenience only and are not to be regarded
as a part of this Deposit Agreement or to have any bearing upon the meaning or
interpretation of any provision contained herein or in the Receipts.

[SIGNATURE PAGE FOLLOWS]

21

 

     IN WITNESS WHEREOF, Capital Automotive REIT and                     have caused
this Deposit Agreement to be duly executed on their behalf as of the day and
year first above set forth and all holders of Receipts shall become parties
hereto by and upon acceptance by them of delivery of Receipts issued in
accordance with the terms hereof.

	 	 	 	 	 
	 	CAPITAL AUTOMOTIVE REIT

 	 
	 	By:  	
	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	[NAME OF DEPOSITARY]

 	 
	 	By:  	
	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

22

 

	 	 	 	 	 

EXHIBIT A

Form of Receipt

DEPOSITARY RECEIPT FOR DEPOSITARY SHARES EACH REPRESENTING     

OF A

    % SERIES        PREFERRED SHARE

OF

CAPITAL AUTOMOTIVE REIT

FORMED UNDER THE LAWS OF THE STATE OF MARYLAND

DEPOSITARY SHARES

THIS DEPOSITARY RECEIPT IS TRANSFERABLE

IN NEW YORK, NY

SEE REVERSE FOR CERTAIN DEFINITIONS

CUSIP

                                      , as depositary (the “Depositary”), hereby certifies that
                    is the registered owner of depositary shares (“Depositary Shares”),
each Depositary Share representing                     of one Series                    
preferred share of beneficial interest, par value $.01 per share (the
“Shares”), of Capital Automotive REIT, a Maryland real estate investment trust
(the “Company”), on deposit with the Depositary, subject to the terms and
entitled to the benefits of the Deposit Agreement, dated as of                    , 200  
(the “Deposit Agreement”), among the Company, the Depositary and all holders
from time to time of Depositary Receipts. By accepting this Depositary
Receipt, the holder hereof becomes a party to and agrees to be bound by all the
terms and conditions of the Deposit Agreement. This Depositary Receipt shall
not be valid or obligatory for any purpose or be entitled to any benefits under
the Deposit Agreement unless it shall have been executed by the Depositary by
the manual and or facsimile signature of a duly authorized officer.

     The Company is authorized to issue common shares of beneficial interest
and one or more series or classes of preferred shares of beneficial interest.
The Company will furnish without charge to each receipt holder, who so requests
in writing, a statement of the rights, preferences, privileges and restrictions
granted to or imposed upon the respective classes of shares and upon the
holders thereof, a copy of the Company’s declaration of trust and bylaws, and a
copy of the Deposit Agreement. Any such request shall be made to the Company
at the principal office of the Company at 8270 Greensboro Drive, Suite 950,
McLean, Virginia 22102, Attention: Secretary.

A-1

 

Dated:

	 	 	 
	

	 	Countersigned
	 
	 	 
	

	 	                                                                            ,
	

	 	Depositary, Transfer Agent and Registrar
	

	 	By:
	

	 	                                                                            
	

	 	AUTHORIZED OFFICER

A-2

 

CAPITAL AUTOMOTIVE REIT

     THE COMMON SHARES OR PREFERRED SHARES OR OTHER SHARES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON TRANSFER FOR THE PURPOSE OF THE
TRUST’S MAINTENANCE OF ITS STATUS AS A REAL ESTATE INVESTMENT TRUST UNDER THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”). SUBJECT TO CERTAIN
FURTHER RESTRICTIONS AND EXCEPT AS PROVIDED IN THE DECLARATION OF TRUST OF THE
TRUST, NO PERSON MAY (I) BENEFICIALLY OR CONSTRUCTIVELY OWN COMMON SHARES IN
EXCESS OF 9.9% OF THE NUMBER OF OUTSTANDING COMMON SHARES, (II) BENEFICIALLY OR
CONSTRUCTIVELY OWN SHARES OF ANY OTHER CLASS OR SERIES OF PREFERRED SHARES IN
EXCESS OF 9.9% OF THE NUMBER OF OUTSTANDING PREFERRED SHARES OF SUCH CLASS OR
SERIES, (III) BENEFICIALLY OWN SHARES THAT WOULD RESULT IN THE SHARES BEING
BENEFICIALLY OWNED BY FEWER THAN 100 PERSONS (DETERMINED WITHOUT REFERENCE TO
ANY RULES OF ATTRIBUTION), (IV) BENEFICIALLY OWN SHARES THAT WOULD RESULT IN
THE TRUST BEING “CLOSELY HELD” UNDER SECTION 856(H) OF THE CODE, OR (V)
CONSTRUCTIVELY OWN SHARES THAT WOULD CAUSE THE TRUST TO CONSTRUCTIVELY OWN 10%
OR MORE OF THE OWNERSHIP INTERESTS IN A TENANT OF THE TRUST’S REAL PROPERTY,
WITHIN THE MEANING OF SECTION 856(D)(2)(B) OF THE CODE. ANY PERSON WHO
ATTEMPTS TO BENEFICIALLY OR CONSTRUCTIVELY OWN SHARES IN EXCESS OF THE ABOVE
LIMITATIONS MUST IMMEDIATELY NOTIFY THE TRUST IN WRITING. IF ANY RESTRICTIONS
ABOVE ARE VIOLATED, THE SHARES REPRESENTED HEREBY WILL BE TRANSFERRED
AUTOMATICALLY TO A SHARE TRUST AND SHALL BE DESIGNATED SHARES-IN-TRUST TO A
TRUSTEE OF A TRUST FOR THE BENEFIT OF ONE OR MORE CHARITABLE BENEFICIARIES. IN
ADDITION, UPON THE OCCURRENCE OF CERTAIN EVENTS, ATTEMPTED TRANSFERS IN
VIOLATION OF THE RESTRICTIONS DESCRIBED ABOVE MAY BE VOID AB INITIO. ALL
CAPITALIZED TERMS IN THIS LEGEND HAVE THE MEANINGS DEFINED IN THE TRUST’S
AMENDED AND RESTATED DECLARATION OF TRUST, AS THE SAME MAY BE FURTHER AMENDED
FROM TIME TO TIME, A COPY OF WHICH, INCLUDING THE RESTRICTIONS ON TRANSFER,
WILL BE SENT WITHOUT CHARGE TO EACH SHAREHOLDER WHO SO REQUESTS. SUCH REQUESTS
MUST BE MADE TO THE SECRETARY OF THE TRUST AT ITS PRINCIPAL OFFICE OR TO THE
TRANSFER AGENT.

     THE TRUST WILL FURNISH TO ANY SHAREHOLDER UPON REQUEST AND WITHOUT CHARGE
A FULL STATEMENT OF THE DESIGNATIONS, PREFERENCES, CONVERSION AND OTHER RIGHTS,
VOTING POWERS, RESTRICTIONS, LIMITATIONS AS TO DIVIDENDS, QUALIFICATIONS AND
TERMS AND CONDITIONS OF REDEMPTION OF SHARES OF EACH CLASS AUTHORIZED TO BE
ISSUED AND, WITH RESPECT TO CLASSES OF SHARES OF BENEFICIAL INTEREST THAT MAY
BE ISSUED IN SERIES, THE DIFFERENCE IN RELATIVE RIGHTS AND PREFERENCES BETWEEN
THE SHARES OF BENEFICIAL INTEREST OF EACH SERIES, TO THE EXTENT THAT THEY HAVE
BEEN SET, AND THE AUTHORITY OF THE BOARD OF

A-3

 

TRUSTEES TO FIX AND DETERMINE THE RELATIVE RIGHTS AND PREFERENCES OF
SUBSEQUENT SERIES. SUCH REQUEST MAY BE MADE TO THE SECRETARY OF THE TRUST AT
ITS PRINCIPAL OFFICE OR THE TRANSFER AGENT.

     The following abbreviations, when used in the inscription on the face of
this Depositary Receipt shall be construed as though they were written out in
full according to applicable laws or regulations:

TEN COM as tenants in common

TEN ENT as tenants by the entireties

JT TEN as joint tenants with right of survivorship and not as tenants in common

	 	 	 	 	 	 	 
	UNIF GIFT MIN ACT—
	 	                                      
	 	Custodian
	 	                                      
	
	 	(Cust)
	 	 	 	(Minor)
	 	 	 	 	 	 	 
	
	 	UNDER Uniform Gifts to Minors Act	 	 	 	 
	 	 	 	 	 	 	 
	
	 	                                      	 	 	 	 
	
	 	(State)	 	 	 	 
	 	 	 	 	 	 	 
	UNIF GIFT MIN ACT—
	 	                                      
	 	Custodian (until age                                       )
	
	 	(Cust)	 	 	 	 
	 	 	 	 	 	 	 
	
	 	                                      
	 	under Uniform Transfers	 	 
	
	 	(Minor)	 	 	 	 
	 	 	 	 	 	 	 
	to Minors Act
	 	                                      	 	 	 	 
	
	 	(State)	 	 	 	 

Additional abbreviations
may also be used though not in the above list.                 

For Value Received,                                        hereby sell, assign and transfer unto

 

PLEASE INSERT SOCIAL SECURITY OR OTHER

    IDENTIFYING NUMBER OF ASSIGNEE

(Please print or typewrite name and address including postal zip code of assignee)

A-4

 

Depositary Shares represented by the within Depositary Receipt, and do hereby irrevocably constitute and appoint

Attorney to transfer the said Depositary Shares on the books of the within named Depositary with full power of substitution

	 	 	 	 	 	 	 
	Dated

	 	                                              
	 	Signed
	 	                                              

NOTICE: THE SIGNATURE ON THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THIS DEPOSITARY RECEIPT IN EVERY PARTICULAR, WITHOUT
ALTERNATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.

Signature(s) Guaranteed:

THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO
S.E.C. RULE 17Ad-16.

A-5<PAGE>

                      AMENDED AND RESTATED CREDIT AGREEMENT

      THIS AMENDED AND RESTATED AGREEMENT (this "Agreement") is entered into as
of June 3, 2004, by and between INTERVOICE, INC., a Texas Corporation
("Borrower"), and WELLS FARGO BANK, NATIONAL ASSOCIATION ("Bank").

                                     RECITAL

      WHEREAS, Borrower and Bank have previously entered into that certain
Credit Agreement dated January 26, 2004 (the "Original Credit Agreement").

      WHEREAS, in connection with the Original Credit Agreement, Borrower
executed (a) that certain Security Agreement: Equipment dated January 26, 2004
in favor of Bank (the "Equipment Security Agreement"), (b) that certain Security
Agreement: Securities Account, including the Addendum to Security Agreement:
Securities Account, dated January 26, 2004 in favor of Bank (the "Securities
Account Security Agreement"), (c) that certain Continuing Security Agreement:
Rights to Payment and Inventory dated January 26, 2004 in favor of Bank (the
"Payment and Inventory Security Agreement") and (d) that certain Securities
Account Control Agreement dated January 26, 2004 in favor of Bank (the
"Securities Account Control Agreement") (the Equipment Security Agreement, the
Securities Account Security Agreement, the Payment and Inventory Security
Agreement and the Securities Account Control Agreement, collectively, the
"Existing Security Documents").

      WHEREAS, Borrower has requested that Bank continue and extend additional
credit to Borrower as described below, and Bank has agreed to provide such
credit to Borrower on the terms and conditions contained herein.

      NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Bank and Borrower hereby agree as follows:

                                   ARTICLE I
                                  CREDIT TERMS

      SECTION 1.1. LINE OF CREDIT.

            (a) Line of Credit. Subject to the terms and conditions of this
Agreement, Bank hereby agrees to make advances to Borrower from time to time up
to and including January 31, 2007, not to exceed at any time the aggregate
principal amount of Five Million Five Hundred Thousand Dollars ($5,500,000.00)
("Line of Credit"), the proceeds of which shall be used for working capital.
Borrower's obligation to repay advances under the Line of Credit shall be
evidenced by a promissory note (as amended, restated or modified from time to
time, the "Line of Credit Note"), all terms of which are incorporated herein by
this reference.

            (b) Limitation on Borrowings. Outstanding borrowings under the Line
of Credit, to a maximum of the principal amount set forth above, shall not at
any time exceed an aggregate of seventy percent (70%) of Borrower's eligible
accounts receivable plus $2,750,000.00 of cash collateral (the "Borrowing
Base"). All of the foregoing shall be determined by Bank upon receipt and review
of all collateral reports required hereunder and such
<PAGE>
other documents and collateral information as Bank may from time to time
require. Borrower acknowledges that said borrowing base was established by Bank
with the understanding that, among other items, the aggregate of all returns,
rebates, discounts, credits and allowances for the immediately preceding three
(3) months at all times shall be less than five percent (5%) of Borrower's gross
sales for said period. If such dilution of Borrower's accounts for the
immediately preceding three (3) months at any time exceeds five percent (5%) of
Borrower's gross sales for said period, or if there at any time exists any other
matters, events, conditions or contingencies which Bank reasonably believes may
affect payment of any portion of Borrower's accounts, Bank, in its sole
discretion, may reduce the foregoing advance rate against eligible accounts
receivable to a percentage appropriate to reflect such additional dilution
and/or establish additional reserves against Borrower's eligible accounts
receivable.

      As used herein, "eligible accounts receivable" shall consist solely of
trade accounts created in the ordinary course of Borrower's business, upon which
Borrower's right to receive payment is absolute and not contingent upon the
fulfillment of any condition whatsoever, and in which Bank has a perfected
security interest of first priority, and shall not include:

                  (i) any account which is more than ninety (90) days past due;

                  (ii) that portion of any account for which there exists any
            right of setoff, defense or discount (except regular discounts
            allowed in the ordinary course of business to promote prompt
            payment) or for which any defense or counterclaim has been asserted;

                  (iii) any account which represents an obligation of any state
            or municipal government or of the United States government or any
            political subdivision thereof (except accounts which represent
            obligations of the United States government and for which the
            assignment provisions of the Federal Assignment of Claims Act, as
            amended or recodified from time to time, have been complied with to
            Bank's satisfaction);

                  (iv) any account which represents an obligation of an account
            debtor located in a country other than the United States or any of
            the following Canadian provinces: Alberta, British Columbia,
            Manitoba, Ontario, Saskatchewan and the Yukon Territory, except to
            the extent any such account, in Bank's determination, is supported
            by a letter of credit or insured under a policy of foreign credit
            insurance, in each case in form, substance and issued by a party
            acceptable to Bank;

                  (v) any account which arises from the sale or lease to or
            performance of services for, or represents an obligation of, an
            employee, affiliate, partner, member, parent or subsidiary of
            Borrower;

                  (vi) that portion of any account which represents interim or
            progress billings or retention rights on the part of the account
            debtor;

                                      -2-
<PAGE>
                  (vii) any account which represents an obligation of any
            account debtor when twenty percent (20%) or more of Borrower's
            accounts from such account debtor are not eligible pursuant to (i)
            above;

                  (viii) that portion of any account from an account debtor
            which represents the amount by which Borrower's total accounts from
            said account debtor exceeds twenty-five percent (25%) of Borrower's
            total accounts;

                  (ix) any account deemed ineligible by Bank when Bank, in its
            sole discretion, deems the creditworthiness or financial condition
            of the account debtor, or the industry in which the account debtor
            is engaged, to be unsatisfactory.

            (c) Letter of Credit Subfeature. As a subfeature under the Line of
Credit, Bank agrees from time to time during the term thereof to issue or cause
an affiliate to issue Commercial/Standby letters of credit for the account of
Borrower (each, a "Letter of Credit" and collectively, "Letters of Credit");
provided however, that the aggregate undrawn amount of all outstanding Letters
of Credit shall not at any time exceed Two Million Dollars ($2,000,000.00). The
form and substance of each Letter of Credit shall be subject to approval by
Bank, in its sole discretion. No Letter of Credit shall have an expiration date
subsequent to the maturity date of the Line of Credit. The undrawn amount of all
Letters of Credit shall be reserved under the Line of Credit and shall not be
available for borrowings thereunder. Each Letter of Credit shall be subject to
the additional terms and conditions of the Letter of Credit agreement,
applications and any related documents required by Bank in connection with the
issuance thereof. Each drawing paid under a Letter of Credit shall be deemed an
advance under the Line of Credit and shall be repaid by Borrower in accordance
with the terms and conditions of this Agreement applicable to such advances;
provided however, that if advances under the Line of Credit are not available,
for any reason, at the time any draft is paid, then Borrower shall immediately
pay to Bank the full amount drawn, together with interest thereon from the date
such drawing is paid to the date such amount is fully repaid by Borrower, at the
rate of interest applicable to advances under the Line of Credit. In such event
Borrower agrees that Bank, in its sole discretion, may debit any account
maintained by Borrower with Bank for the amount of any such drawing.

            (d) Borrowing and Repayment. Borrower may from time to time during
the term of the Line of Credit borrow, partially or wholly repay its outstanding
borrowings without penalty or premium (other than costs incurred in terminating
any LIBOR tranche prior to the end of the applicable LIBOR period), and
reborrow, subject to all of the limitations, terms and conditions contained
herein or in the Line of Credit Note; provided however, that the total
outstanding borrowings under the Line of Credit shall not at any time exceed the
maximum principal amount available thereunder, as set forth above.

      SECTION 1.2. TERM LOAN.

            (a) Term Loan. Subject to the terms and conditions of this
Agreement, Bank hereby agrees to make a loan to Borrower in the principal amount
of Eight Million Dollars ($8,00,000.00) ("Term Loan"), the proceeds of which
shall be used for the long-term financing of certain real property located at
the headquarters of the Borrower. Borrower's obligation to

                                      -3-
<PAGE>
repay the Term Loan shall be evidenced by a promissory note (as amended,
restated or modified from time to time, the "Term Note"), all terms of which are
incorporated herein by this reference. Bank's commitment to grant the Term Loan
shall terminate on June 3, 2004.

            (b) Voluntary Prepayment. Borrower may prepay principal on the Term
Loan solely in accordance with the provisions of the Term Note.

      SECTION 1.3. INTEREST/FEES.

            (a) Interest. The outstanding principal balance of each credit
subject hereto shall bear interest, and the amount of each drawing paid under
any Letter of Credit shall bear interest from the date such drawing is paid to
the date such amount is fully repaid by Borrower, at the rate of interest set
forth in each promissory note or other instrument or document executed in
connection therewith.

            (b) Computation and Payment. Interest shall be computed on the basis
of a 360-day year, actual days elapsed, unless such calculation would result in
a usurious rate, in which case interest shall be computed on the basis of a
365/366-day year, as the case may be, actual days elapsed. Interest shall be
payable at the times and place set forth in each promissory note or other
instrument or document required hereby.

            (c) Commitment Fee. Borrower shall pay to Bank a non-refundable
commitment fee ("Commitment Fee") for the Term Loan equal to $40,000.00, which
fee shall be due and payable in full on the date of this Agreement.

            (d) Unused Commitment Fee. Borrower shall pay to Bank a fee equal to
one quarter percent (0.25%) per annum (computed on the basis of a 360-day year,
actual days elapsed) on the average daily unused amount of the Line of Credit,
which fee shall be calculated on a quarterly basis by Bank and shall be due and
payable by Borrower in arrears within ten (10) days after each billing is sent
by Bank.

            (e) Letter of Credit Fees. Borrower shall pay to Bank (i) fees upon
the issuance of each Letter of Credit equal to one percent (1.00%) per annum
(computed on the basis of a 360-day year, actual days elapsed) of the face
amount thereof, and (ii) fees upon the payment or negotiation of each drawing
under any Letter of Credit and fees upon the occurrence of any other activity
with respect to any Letter of Credit (including without limitation, the
transfer, amendment or cancellation of any Letter of Credit) determined in
accordance with Bank's standard fees and charges then in effect for such
activity.

      SECTION 1.4. COLLECTION OF PAYMENTS. Borrower authorizes Bank to collect
all principal, interest and fees due under each credit subject hereto by
charging Borrower's deposit account number 4000064972 with Bank, or any other
deposit account maintained by Borrower with Bank, for the full amount thereof.
Should there be insufficient funds in any such deposit account to pay all such
sums when due, the full amount of such deficiency shall be immediately due and
payable by Borrower.

                                      -4-
<PAGE>
      SECTION 1.5. COLLATERAL.

      As security for all indebtedness of Borrower to Bank subject hereto,
Borrower (i) is granting to Bank security interests of first priority in real
property located in Collin County, Texas (the "Real Property"), pursuant to and
as more particularly described in that certain Deed of Trust executed by
Borrower in favor of Bank dated the date of this Agreement (the "Deed of
Trust"), and (ii) hereby reaffirms its previous grant of security interests of
first priority in all Borrower's accounts receivable and other rights to
payment, general intangibles, inventory, equipment, and a Securities Account
held at Wells Fargo Brokerage Services, LLC., Account # 12718300 pursuant to the
applicable Existing Security Documents (the "Existing Security Interests") (the
Real Property and the Existing Security Interests, collectively, the
"Collateral").

      All of the foregoing shall be evidenced by and subject to the terms of the
Deed of Trust, the Existing Security Documents and such other security
agreements, financing statements, deeds of trust and other documents as Bank
shall reasonably require, all in form and substance satisfactory to Bank
(collectively, the "Security Documents"). Borrower shall reimburse Bank
immediately upon demand for all costs and expenses incurred by Bank in
connection with any of the foregoing security, including without limitation,
filing and recording fees and costs of appraisals, audits and title insurance.

      As provided in the Deed of Trust, Bank is agreeing that it will, provided
no Event of Default has occurred and is continuing at the time, upon written
request of Grantor made at any time after or contemporaneously with the payment
in full of all principal of the Term Note, all accrued, unpaid interest thereon,
and satisfaction of any other obligations of Borrower to Bank in connection with
the Term Note, release this Deed of Trust by delivery of a proper written
release executed and acknowledged in recordable form. Also, Bank agrees that it
will release the Existing Security Interests and the security interests granted
pursuant to Section 7.12 below by delivery of one or more proper written
releases and terminations of financing statements, as applicable, subject to the
conditions that (i) no Event of Default has occurred and is continuing at the
time the release or termination is requested by Borrower, (ii) any remaining
obligations of Bank to make further advances under the Line of Credit Note shall
have been terminated or expired, and (iii) the release is requested by Borrower
after or contemporaneously with the payment in full of any outstanding principal
of the Line of Credit Note, all accrued, unpaid interest thereon, and
satisfaction of any other obligations of Borrower to Bank in connection
therewith.

                                   ARTICLE II
                         REPRESENTATIONS AND WARRANTIES

      Borrower makes the following representations and warranties to Bank, which
representations and warranties shall survive the execution of this Agreement and
shall continue in full force and effect until the full and final payment, and
satisfaction and discharge, of all obligations of Borrower to Bank subject to
this Agreement.

      SECTION 2.1. LEGAL STATUS. Borrower is a corporation, duly organized and
existing and in good standing under the laws of the State of Texas, and is
qualified or licensed to do business (and is in good standing as a foreign
corporation, if applicable) in all jurisdictions in

                                      -5-
<PAGE>
which such qualification or licensing is required or in which the failure to so
qualify or to be so licensed could have a material adverse effect on Borrower.

      SECTION 2.2. AUTHORIZATION AND VALIDITY. This Agreement, the Line of
Credit Note, the Term Note, the Security Documents and each other promissory
note, deed of trust, contract, instrument, and other document required hereby or
at any time hereafter delivered to Bank in connection herewith (collectively,
the "Loan Documents") have been duly authorized, and upon their execution and
delivery in accordance with the provisions hereof will constitute legal, valid
and binding agreements and obligations of Borrower or the party which executes
the same, enforceable in accordance with their respective terms, except as
enforcement may be limited by equitable principles or by bankruptcy, insolvency,
reorganization, moratorium, or similar laws relating to or limiting creditors'
rights generally.

      SECTION 2.3. NO VIOLATION. The execution, delivery and performance by
Borrower of each of the Loan Documents do not violate any provision of any law
or regulation, or contravene any provision of the Articles of Incorporation or
By-Laws of Borrower, or result in any breach of or default under any material
contract, obligation, indenture or other instrument to which Borrower is a party
or by which Borrower may be bound.

      SECTION 2.4. LITIGATION. There are no pending, or to the best of
Borrower's knowledge threatened, actions, claims, investigations, suits or
proceedings by or before any governmental authority, arbitrator, court or
administrative agency which could have a material adverse effect on the
financial condition or operation of Borrower other than those described on a
schedule attached hereto, at any time and as from time to time updated or
modified by Borrower.

      SECTION 2.5. CORRECTNESS OF FINANCIAL STATEMENT. The financial statement
of Borrower most recently delivered to Bank on behalf of Borrower, which as of
the date of this Agreement, is the financial statement of Borrower as of
February 29, 2004, (a) is complete and correct and presents fairly the financial
condition of Borrower, (b) discloses all liabilities of Borrower that are
required to be reflected or reserved against under generally accepted accounting
principles, whether liquidated or unliquidated, fixed or contingent, and (c) has
been prepared in accordance with generally accepted accounting principles
consistently applied. Since the date of such financial statement there has been
no material adverse change in the financial condition of Borrower, nor has
Borrower mortgaged, pledged, granted a security interest in or otherwise
encumbered any of its assets or properties except for Permitted Liens (as
defined in Section 5.9).

      SECTION 2.6. INCOME TAX RETURNS. Borrower has timely filed all federal and
state income tax returns and is not aware of any material assessments or
adjustments of its income tax payable with respect to any year.

      SECTION 2.7. NO SUBORDINATION. There is no agreement, indenture, contract
or instrument to which Borrower is a party or by which Borrower may be bound
that requires the subordination in right of payment of any of Borrower's
obligations subject to this Agreement to any other obligation of Borrower.

                                      -6-
<PAGE>
      SECTION 2.8. PERMITS, FRANCHISES. Borrower possesses, and will hereafter
possess, all permits, consents, approvals, franchises and licenses required and
rights to all trademarks, trade names, patents, and fictitious names, if any,
necessary to enable it to conduct the business in which it is now engaged in
compliance in all material respects with applicable law.

      SECTION 2.9. ERISA. Borrower is in compliance in all material respects
with all applicable provisions of the Employee Retirement Income Security Act of
1974, as amended or recodified from time to time ("ERISA"); Borrower has not
violated any provision of any defined employee pension benefit plan (as defined
in ERISA) maintained or contributed to by Borrower (each, a "Plan"); no
Reportable Event as defined in ERISA has occurred and is continuing with respect
to any Plan initiated by Borrower; Borrower has met its minimum funding
requirements under ERISA with respect to each Plan; and each Plan will be able
to fulfill its benefit obligations as they come due in accordance with the Plan
documents and under generally accepted accounting principles.

      SECTION 2.10. OTHER OBLIGATIONS. Except for such matters that Borrower is
in good faith contesting or as to which a bona fide dispute exists, Borrower is
not in default on any material obligation for borrowed money, any material
purchase money obligation or any other material lease, commitment, contract,
instrument or obligation.

      SECTION 2.11. ENVIRONMENTAL MATTERS. Except as disclosed by Borrower to
Bank in writing prior to the date hereof, Borrower is in compliance in all
material respects with all applicable federal or state environmental, hazardous
waste, health and safety statutes, and any rules or regulations adopted pursuant
thereto, which govern or affect any of Borrower's operations and/or properties,
including without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, the Superfund Amendments and
Reauthorization Act of 1986, the Federal Resource Conservation and Recovery Act
of 1976, and the Federal Toxic Substances Control Act, as any of the same may be
amended, modified or supplemented from time to time. None of the operations of
Borrower is the subject of any federal or state investigation evaluating whether
any remedial action involving a material expenditure is needed to respond to a
release of any toxic or hazardous waste or substance into the environment.
Borrower has no material contingent liability in connection with any release of
any toxic or hazardous waste or substance into the environment.

                                  ARTICLE III
                                   CONDITIONS

      SECTION 3.1. CONDITIONS OF INITIAL EXTENSION OF CREDIT. The obligation of
Bank to extend any credit contemplated by this Agreement is subject to the
fulfillment to Bank's satisfaction of all of the following conditions:

            (a) Approval of Bank Counsel. All legal matters incidental to the
extension of credit by Bank shall be satisfactory to Bank's counsel.

            (b) Documentation. Bank shall have received, in form and substance
satisfactory to Bank, each of the following, duly executed:

                                      -7-
<PAGE>
                  (i)   This Agreement, the Deed of Trust, the Term Note and
                        each other instrument or document required hereby;

                  (ii)  Payoff Letter from Beal Bank, S.S.B. in form
                        satisfactory to Borrower and Bank and a Release of Lien
                        in connection therewith; and

                  (iii) Such other documents as Bank may require under any other
                        Section of this Agreement.

            (c) Financial Condition. There shall have been no material adverse
change, as determined by Bank, in the financial condition or business of
Borrower, nor any material decline, as determined by Bank, in the market value
of any collateral required hereunder or a substantial or material portion of the
assets of Borrower.

            (d) Insurance. Borrower shall have delivered to Bank evidence of
insurance coverage on all Borrower's property, in form, substance, amounts,
covering risks and issued by companies satisfactory to Bank, and where required
by Bank, with loss payable endorsements in favor of Bank.

            (e) Commitment Fee. Bank shall have received the Commitment Fee.

      SECTION 3.2. CONDITIONS OF EACH EXTENSION OF CREDIT. The obligation of
Bank to make each extension of credit requested by Borrower hereunder shall be
subject to the fulfillment to Bank's satisfaction of each of the following
conditions:

            (a) Compliance. The representations and warranties contained herein
and in each of the other Loan Documents shall be true on and as of the date of
the signing of this Agreement and on the date of each extension of credit by
Bank pursuant hereto, with the same effect as though such representations and
warranties had been made on and as of each such date (except to the extent that
such representations and warranties relate solely to an earlier date), and on
each such date, no Event of Default as defined herein, and no condition, event
or act which with the giving of notice or the passage of time or both would
constitute such an Event of Default, shall have occurred and be continuing or
shall exist.

            (b) Documentation. Bank shall have received all additional documents
which may be required in connection with such extension of credit.

                                   ARTICLE IV
                              AFFIRMATIVE COVENANTS

      Borrower covenants that so long as Bank remains committed to extend credit
to Borrower pursuant hereto, or any liabilities (whether direct or contingent,
liquidated or unliquidated) of Borrower to Bank under any of the Loan Documents
remain outstanding, and until payment in full of all obligations of Borrower
subject hereto, Borrower shall, unless Bank otherwise consents in writing:

      SECTION 4.1. PUNCTUAL PAYMENTS. Punctually pay all principal, interest,
fees or other liabilities due under any of the Loan Documents at the times and
place and in the manner

                                      -8-
<PAGE>
specified therein, and immediately upon demand by Bank, the amount by which the
outstanding principal balance of any credit subject hereto at any time exceeds
any limitation on borrowings applicable thereto.

      SECTION 4.2. ACCOUNTING RECORDS. Maintain adequate books and records in
accordance with generally accepted accounting principles consistently applied,
and permit any representative of Bank, at any reasonable time, to inspect, audit
and examine such books and records, to make copies of the same, and to inspect
the properties of Borrower.

      SECTION 4.3. FINANCIAL STATEMENTS. Provide to Bank all of the following,
in form and detail satisfactory to Bank:

            (a) not later than 90 days after and as of the end of each fiscal
year, a 10K report of Borrower, filed with the Securities Exchange Commission,
prepared by Borrower and to include auditor's report;

            (b) not later than 45 days after the close of each of the first
three quarterly periods of each fiscal year, a 10Q report of Borrower filed with
Securities Exchange Commission, prepared by Borrower for such quarter;

            (c) not later than 20 days after and as of the end of each month, a
borrowing base certificate, an aged listing of accounts receivable, and a
listing of accounts payable, and not later than 45 days after and as of the end
of each semi-annual period, a list of the names and addresses of all Borrower's
account debtors;

            (d) contemporaneously with each annual and quarterly financial
statement of the Borrower required hereby, a certificate of the president or
chief financial officer of Borrower that said financial statements are accurate
and that there exists no Event of Default nor any condition, act or event which
with the giving of notice or the passage of time or both would constitute an
Event of Default;

            (e) from time to time such other information as Bank may reasonably
request.

      SECTION 4.4. COMPLIANCE. Preserve and maintain all licenses, permits,
governmental approvals, rights, privileges and franchises necessary for the
conduct of its business; and comply with the provisions of all documents
pursuant to which Borrower is organized and/or which govern Borrower's continued
existence and with the requirements of all laws, rules, regulations and orders
of any governmental authority applicable to Borrower and/or its business, the
failure to comply with would have a material adverse effect on the business,
operations or financial condition of Borrower.

      SECTION 4.5. INSURANCE. Maintain and keep in force insurance of the types
and in amounts customarily carried in lines of business similar to that of
Borrower, including but not limited to fire, extended coverage, public
liability, flood, property damage and workers' compensation, with all such
insurance carried with companies and in amounts satisfactory to Bank, and
deliver to Bank from time to time at Bank's request schedules setting forth all
insurance then in effect.

                                      -9-
<PAGE>
      SECTION 4.6. FACILITIES. Keep all properties useful or necessary to
Borrower's business in good repair and condition, and from time to time make
necessary repairs, renewals and replacements thereto so that such properties
shall be fully and efficiently preserved and maintained.

      SECTION 4.7. TAXES AND OTHER LIABILITIES. Pay and discharge when due any
and all indebtedness, obligations, assessments and taxes, both real or personal,
including without limitation federal and state income taxes and state and local
property taxes and assessments, except such (a) as Borrower may in good faith
contest or as to which a bona fide dispute may arise, and (b) for which Borrower
has made provision, to Bank's satisfaction, for eventual payment thereof in the
event Borrower is obligated to make such payment.

      SECTION 4.8. LITIGATION. Promptly give notice in writing to Bank of any
litigation pending or threatened against Borrower, an adverse decision of which
could reasonably be expected to have a material adverse effect on the business,
operations or financial condition of Borrower.

      SECTION 4.9. FINANCIAL CONDITION. Maintain Borrower's financial condition
as follows using generally accepted accounting principles consistently applied
and used consistently with prior practices (except to the extent modified by the
definitions herein):

            (a) Net income after taxes shall not be less than $1.00 on an annual
basis, determined as of each fiscal year end.

            (b) Net income after taxes shall not be less than $1.00 for any two
consecutive fiscal quarters, measured on a current quarter basis.

            (c) Fixed Charge Coverage Ratio: As of any day, measured as of the
last day of any fiscal quarter, not less than 1.50 to 1.00 determined for the
four quarter period ending on such day, defined as EBITDA divided by the Fixed
Charges. As used herein, the term "EBITDA" means at any time, measured as of the
last day of any fiscal quarter, Borrower's net profit for the previous twelve
months ending on such day before taxes, plus interest expense (net of
capitalized interest), depreciation and amortization expense for such four
consecutive fiscal quarter period. The term "Fixed Charges" means at any time,
measured as of the last day of any fiscal quarter, Borrower's total interest
expense, plus the scheduled principal payments of long-term debt for the prior
twelve months and the scheduled principal payments of subordinated debt for the
prior twelve months, plus all dividends, distributions and stock repurchases
plus capital expenditures, in each case for the period of four consecutive
fiscal quarters ending on such day.

            (d) Total Funded Debt to EBITDA not greater than 1.50 to 1.0 as of
each fiscal year end, with "Funded Debt" defined as the sum of all obligations
for borrowed money (including subordinated debt) plus all obligations with
respect to the principal component of capital leases, and with "EBITDA" as
defined above.

      SECTION 4.10. NOTICE TO BANK. Promptly (but in no event more than five (5)
days after the occurrence of each such event or matter) give written notice to
Bank in reasonable detail of: (a) the occurrence of any Event of Default, or any
condition, event or act which with the giving of notice or the passage of time
or both would constitute an Event of Default; (b) any

                                      -10-
<PAGE>
change in the name or the organizational structure of Borrower; (c) the
occurrence and nature of any Reportable Event or Prohibited Transaction, each as
defined in ERISA, or any funding deficiency with respect to any Plan; or (d) any
termination or cancellation of any insurance policy which Borrower is required
to maintain, or any uninsured or partially uninsured loss through liability or
property damage, or through fire, theft or any other cause affecting Borrower's
property.

                                   ARTICLE V
                               NEGATIVE COVENANTS

      Borrower further covenants that so long as Bank remains committed to
extend credit to Borrower pursuant hereto, or any liabilities (whether direct or
contingent, liquidated or unliquidated) of Borrower to Bank under any of the
Loan Documents remain outstanding, and until payment in full of all obligations
of Borrower subject hereto, Borrower will not without Bank's prior written
consent:

      SECTION 5.1. USE OF FUNDS. Use any of the proceeds of any credit extended
hereunder except for the purposes stated in Article I hereof.

      SECTION 5.2. CAPITAL EXPENDITURES. Make any additional investment in fixed
assets in any fiscal year in excess of an aggregate of $8,000,000.00.

      SECTION 5.3. LEASE EXPENDITURES. Incur operating lease expense (other than
expenses incurred for building rents) in any fiscal year in excess of an
aggregate of $3,000,000.00 except with Bank's prior written consent.

      SECTION 5.4. OTHER INDEBTEDNESS. Create, incur, assume or permit to exist
any indebtedness or liabilities resulting from borrowings, loans or advances,
whether secured or unsecured, matured or unmatured, liquidated or unliquidated,
joint or several, except (a) the liabilities of Borrower to Bank, (b) any other
liabilities of Borrower existing as of, and disclosed to Bank, (c) capital
leases, purchase money indebtedness incurred for the acquisition of fixed assets
and other indebtedness in an aggregate amount at any one time outstanding not to
exceed $3,000,000, (d) guaranties of indebtedness permitted by this Section 5.4,
(e) refinancings, renewals or extensions of indebtedness permitted by clauses
(b) and (c) of this Section 5.4 (and continuance or renewal of the liens
securing such indebtedness), and (f) trade debt incurred in the ordinary course
of business and repayable in accordance with customary trade practices.

      SECTION 5.5. MERGER, CONSOLIDATION, TRANSFER OF ASSETS. Merge into or
consolidate with any other entity; make any substantial change in the nature of
Borrower's business as conducted as of the date hereof; acquire all or
substantially all of the assets of any other entity; nor sell, lease, transfer
or otherwise dispose of all or a substantial or material portion of Borrower's
assets except in the ordinary course of its business.

      SECTION 5.6. GUARANTIES. Guarantee or become liable in any way as surety,
endorser (other than as endorser of negotiable instruments for deposit or
collection in the ordinary course of business), accommodation endorser or
otherwise for, nor pledge or hypothecate any assets of Borrower as security for,
any liabilities or obligations of any other person or entity, except as
permitted under Section 5.4.

                                      -11-
<PAGE>
      SECTION 5.7. LOANS, ADVANCES, INVESTMENTS. Make any loans or advances to
or investments in any person or entity, except (a) investment in cash and cash
equivalents, (b) advances made in connection with the purchases of goods or
services in the ordinary course of business, and (c) loans and investments in
consolidated subsidiaries of Borrower set forth in Borrower's financial
statements to be delivered to Bank pursuant to Section 4.3.

      SECTION 5.8. DIVIDENDS, DISTRIBUTIONS. Declare or pay any dividend or
distribution either in cash, stock or any other property on Borrower's stock now
or hereafter outstanding, nor redeem, retire, repurchase or otherwise acquire
any shares of any class of Borrower's stock now or hereafter outstanding;
provided however, that Borrower may declare or pay any such dividends, or
acquire any such shares of stock, in a maximum aggregate amount of $6,000,000.00
in any fiscal year.

      SECTION 5.9. PLEDGE OF ASSETS. Mortgage, pledge, grant or permit to exist
a security interest in, or lien upon, all or any portion of Borrower's assets
now owned or hereafter acquired, except (a) security interests and liens held by
Bank, (b) statutory mechanics and materialmens liens incurred in the ordinary
course of business, and other similar statutory liens incurred in the ordinary
course of business, provided such liens secure indebtedness which either is not
delinquent or is the subject of a good faith contest by Borrower, (c) security
interests and liens securing the indebtedness permitted under Section 5.4(c),
and renewals and extensions thereof, (d) liens arising from deposits made in
connection with obtaining worker's compensation of other unemployment insurance,
and (e) liens or deposits to secure performance of bids, tenders, leases or
statutory obligations incurred in the ordinary course of business and not in
connection with the borrowing of money (all of the foregoing, herein called the
"Permitted Liens").

                                   ARTICLE VI
                                EVENTS OF DEFAULT

      SECTION 6.1. The occurrence of any of the following shall constitute an
"Event of Default" under this Agreement:

            (a) Borrower shall fail to pay when due any principal, interest,
fees or other amounts payable under any of the Loan Documents.

            (b) Any financial statement or certificate furnished to Bank in
connection with, or any representation or warranty made by Borrower or any other
party under this Agreement or any other Loan Document shall prove to be
incorrect, false or misleading in any material respect when furnished or made.

            (c) Any default in the performance of or compliance with any
obligation, agreement or other provision contained herein or in any other Loan
Document (other than those referred to in subsections (a) and (b) above), and
with respect to any such default which by its nature can be cured, such default
shall continue for a period of twenty (20) days after the earlier to occur of
(i) Bank notifies Borrower of such default or (ii) Borrower first has knowledge
of such default.

                                      -12-
<PAGE>
            (d) Any default in the payment or performance of any material
obligation, except such obligations that Borrower is in good faith contesting or
as to which a bona fide dispute exists, or any defined event of default, under
the terms of any material contract or instrument (other than any of the Loan
Documents) pursuant to which Borrower or any guarantor hereunder in Borrower has
incurred any debt or other liability to any person or entity, including Bank.

            (e) For any amounts in excess of $100,000, (a) the filing of a
notice of judgment lien against Borrower or any guarantor hereunder; or (b) the
recording of any abstract of judgment against Borrower or any guarantor
hereunder in any county in which Borrower or such guarantor has an interest in
real property; or (c) the service of a notice of levy and/or of a writ of
attachment or execution, or other like process, against the assets of Borrower
or any guarantor hereunder; or (d) the entry of a judgment against Borrower or
any guarantor hereunder.

            (f) Borrower or any guarantor hereunder shall become insolvent, or
shall suffer or consent to or apply for the appointment of a receiver, trustee,
custodian or liquidator of itself or any of its property, or shall generally
fail to pay its debts as they become due, or shall make a general assignment for
the benefit of creditors; Borrower or any such guarantor shall file a voluntary
petition in bankruptcy, or seeking reorganization, in order to effect a plan or
other arrangement with creditors or any other relief under the Bankruptcy Reform
Act, Title 11 of the United States Code, as amended or recodified from time to
time ("Bankruptcy Code"), or under any state or federal law granting relief to
debtors, whether now or hereafter in effect; or any involuntary petition or
proceeding pursuant to the Bankruptcy Code or any other applicable state or
federal law relating to bankruptcy, reorganization or other relief for debtors
is filed or commenced against Borrower or any guarantor hereunder, or Borrower
or any such guarantor shall file an answer admitting the jurisdiction of the
court and the material allegations of any involuntary petition; or Borrower or
any such guarantor shall be adjudicated a bankrupt, or an order for relief shall
be entered against Borrower or any such guarantor by any court of competent
jurisdiction under the Bankruptcy Code or any other applicable state or federal
law relating to bankruptcy, reorganization or other relief for debtors.

            (g) There shall exist or occur any event or condition which Bank
reasonably believes impairs, or is substantially likely to impair in any
material respect, the prospect of payment or performance by Borrower of its
obligations under any of the Loan Documents.

            (h) The dissolution or liquidation of Borrower or any guarantor
hereunder which is a corporation; or Borrower or any guarantor hereunder, or any
of its directors, stockholders or members, shall take action seeking to effect
the dissolution or liquidation of Borrower or any such guarantor.

            (i) Any "person" or "group" (within the meaning of Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, as in effect from time to
time) becomes the beneficial owner (as defined in rule 13d-3 under the
Securities Exchange Act of 1934, as in effect from time to time), directly or
indirectly, of 25%, or more, of the stock of Borrower having the right to vote
for the election of members of the Board of Directors.

                                      -13-
<PAGE>
      SECTION 6.2. REMEDIES. Upon the occurrence of any Event of Default: (a)
all principal and accrued and unpaid interest outstanding under each of the Loan
Documents, any term thereof to the contrary notwithstanding, shall at Bank's
option and without notice become immediately due and payable without
presentment, demand, or any notices of any kind, including without limitation
notice of nonperformance, notice of protest, protest, notice of dishonor, notice
of intention to accelerate or notice of acceleration, all of which are hereby
expressly waived by each Borrower; (b) the obligation, if any, of Bank to extend
any further credit under any of the Loan Documents shall immediately cease and
terminate; and (c) Bank shall have all rights, powers and remedies available
under each of the Loan Documents, or accorded by law, including without
limitation the right to resort to any or all security for any credit subject
hereto and to exercise any or all of the rights of a beneficiary or secured
party pursuant to applicable law. All rights, powers and remedies of Bank may be
exercised at any time by Bank and from time to time after the occurrence of an
Event of Default, are cumulative and not exclusive, and shall be in addition to
any other rights, powers or remedies provided by law or equity.

                                   ARTICLE VII
                                  MISCELLANEOUS

      SECTION 7.1. NO WAIVER. No delay, failure or discontinuance of Bank in
exercising any right, power or remedy under any of the Loan Documents shall
affect or operate as a waiver of such right, power or remedy; nor shall any
single or partial exercise of any such right, power or remedy preclude, waive or
otherwise affect any other or further exercise thereof or the exercise of any
other right, power or remedy. Any waiver, permit, consent or approval of any
kind by Bank of any breach of or default under any of the Loan Documents must be
in writing and shall be effective only to the extent set forth in such writing.

      SECTION 7.2. NOTICES. All notices, requests and demands which any party is
required or may desire to give to any other party under any provision of this
Agreement must be in writing delivered to each party at the following address:

            BORROWER:         INTERVOICE, INC.
                              17811 Waterview Parkway
                              Dallas, Texas  75252

            BANK:             WELLS FARGO BANK, NATIONAL ASSOCIATION
                              4975 Preston Park Blvd. Suite 280
                              Plano, Texas 75093

or to such other address as any party may designate by written notice to all
other parties. Each such notice, request and demand shall be deemed given or
made as follows: (a) if sent by hand delivery, upon delivery; (b) if sent by
mail, upon the earlier of the date of receipt or three (3) days after deposit in
the U.S. mail, first class and postage prepaid; and (c) if sent by telecopy,
upon receipt.

      SECTION 7.3. COSTS, EXPENSES AND ATTORNEYS' FEES. Borrower shall pay to
Bank immediately upon demand the full amount of all payments, advances, charges,
costs and

                                      -14-
<PAGE>
expenses, including reasonable attorneys' fees (to include outside counsel fees
and all allocated costs of Bank's in-house counsel to the extent permissible),
expended or incurred by Bank in connection with (a) the negotiation and
preparation of this Agreement and the other Loan Documents, Bank's continued
administration hereof and thereof, and the preparation of any amendments and
waivers hereto and thereto, (b) the enforcement of Bank's rights and/or the
collection of any amounts which become due to Bank under any of the Loan
Documents, (c) costs and expenses incurred in connection with appraisals of the
Collateral or the issuance of title insurance for any of the Collateral,
applicable and (d) the prosecution or defense of any action in any way related
to any of the Loan Documents, including without limitation, any action for
declaratory relief, whether incurred at the trial or appellate level, in an
arbitration proceeding or otherwise, and including any of the foregoing incurred
in connection with any bankruptcy proceeding (including without limitation, any
adversary proceeding, contested matter or motion brought by Bank or any other
person) relating to any Borrower or any other person or entity; provided that
Borrower shall have no obligation to pay any costs and expenses of Bank incurred
with respect to any action or proceeding in which a court of competent
jurisdiction or arbitrator determines in favor of Borrower.

      SECTION 7.4. SUCCESSORS, ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of the heirs, executors, administrators, legal
representatives, successors and assigns of the parties; provided however, that
Borrower may not assign or transfer its interest hereunder without Bank's prior
written consent. Bank reserves the right to sell, assign, transfer, negotiate or
grant participations in all or any part of, or any interest in, Bank's rights
and benefits under each of the Loan Documents. In connection therewith, Bank may
disclose all documents and information which Bank now has or may hereafter
acquire relating to any credit subject hereto, Borrower or its business, any
guarantor hereunder or the business of any such guarantor, or any collateral
required hereunder.

      SECTION 7.5. AMENDMENT. This Agreement may be amended or modified only in
writing signed by each party hereto.

      SECTION 7.6. NO THIRD PARTY BENEFICIARIES. This Agreement is made and
entered into for the sole protection and benefit of the parties hereto and their
respective permitted successors and assigns, and no other person or entity shall
be a third party beneficiary of, or have any direct or indirect cause of action
or claim in connection with, this Agreement or any other of the Loan Documents
to which it is not a party.

      SECTION 7.7. TIME. Time is of the essence of each and every provision of
this Agreement and each other of the Loan Documents.

      SECTION 7.8. SEVERABILITY OF PROVISIONS. If any provision of this
Agreement shall be prohibited by or invalid under applicable law, such provision
shall be ineffective only to the extent of such prohibition or invalidity
without invalidating the remainder of such provision or any remaining provisions
of this Agreement.

      SECTION 7.9. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when executed and delivered shall be deemed to be an
original, and all of which when taken together shall constitute one and the same
Agreement.

                                      -15-
<PAGE>
      SECTION 7.10. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas.

      SECTION 7.11. SAVINGS CLAUSE. It is the intention of the parties to comply
strictly with applicable usury laws. Accordingly, notwithstanding any provision
to the contrary in the Loan Documents, in no event shall any Loan Documents
require the payment or permit the payment, taking, reserving, receiving,
collection or charging of any sums constituting interest under applicable laws
that exceed the maximum amount permitted by such laws, as the same may be
amended or modified from time to time (the "Maximum Rate"). If any such excess
interest is called for, contracted for, charged, taken, reserved or received in
connection with any Loan Documents, or in any communication by Bank or any other
person to Borrower or any other person, or in the event that all or part of the
principal or interest hereof or thereof shall be prepaid or accelerated, so that
under any of such circumstances or under any other circumstance whatsoever the
amount of interest contracted for, charged, taken, reserved or received on the
amount of principal actually outstanding from time to time under the Loan
Documents shall exceed the Maximum Rate, then in such event it is agreed that:
(a) the provisions of this paragraph shall govern and control; (b) neither
Borrower nor any other person or entity now or hereafter liable for the payment
of any Loan Documents shall be obligated to pay the amount of such interest to
the extent it is in excess of the Maximum Rate; (c) any such excess interest
which is or has been received by Bank, notwithstanding this paragraph, shall be
credited against the then unpaid principal balance hereof or thereof, or if any
of the Loan Documents has been or would be paid in full by such credit, refunded
to Borrower; and (d) the provisions of each of the Loan Documents, and any other
communication to Borrower, shall immediately be deemed reformed and such excess
interest reduced, without the necessity of executing any other document, to the
Maximum Rate. The right to accelerate the maturity of the Loan Documents does
not include the right to accelerate, collect or charge unearned interest, but
only such interest that has otherwise accrued as of the date of acceleration.
Without limiting the foregoing, all calculations of the rate of interest
contracted for, charged, taken, reserved or received in connection with any of
the Loan Documents which are made for the purpose of determining whether such
rate exceeds the Maximum Rate shall be made to the extent permitted by
applicable laws by amortizing, prorating, allocating and spreading during the
period of the full term of such Loan Documents, including all prior and
subsequent renewals and extensions hereof or thereof, all interest at any time
contracted for, charged, taken, reserved or received by Bank. The terms of this
paragraph shall be deemed to be incorporated into each of the other Loan
Documents.

      To the extent that either Chapter 303 or 306, or both of the Texas Finance
Code apply in determining the Maximum Rate, Bank hereby elects to determine the
applicable rate ceiling by using the weekly ceiling from time to time in effect,
subject to Bank's right subsequently to change such method in accordance with
applicable law, as the same may be amended or modified from time to time.

      SECTION 7.12. RIGHT OF SETOFF; DEPOSIT ACCOUNTS. Upon and after the
occurrence of an Event of Default, (a) Borrower hereby authorizes Bank, at any
time and from time to time, without notice, which is hereby expressly waived by
each Borrower, and whether or not Bank shall have declared any credit subject
hereto to be due and payable in accordance with the terms hereof, to set off
against, and to appropriate and apply to the payment of, Borrower's

                                      -16-
<PAGE>
obligations and liabilities under the Loan Documents (whether matured or
unmatured, fixed or contingent, liquidated or unliquidated), any and all amounts
owing by Bank to Borrower (whether payable in U.S. dollars or any other
currency, whether matured or unmatured, and in the case of deposits, whether
general or special (except trust and escrow accounts), time or demand and
however evidenced), and (b) pending any such action, to the extent necessary, to
hold such amounts as collateral to secure such obligations and liabilities and
to return as unpaid for insufficient funds any and all checks and other items
drawn against any deposits so held as Bank, in its sole discretion, may elect.
Borrower hereby grants to Bank a security interest in all deposits and accounts
maintained with Bank and with any other financial institution to secure the
payment of all obligations and liabilities of Borrower to Bank under the Loan
Documents.

      SECTION 7.13. BUSINESS PURPOSE. Borrower represents and warrants that each
credit subject hereto is for a business, commercial, investment, agricultural or
other similar purpose and not primarily for a personal, family or household use.

      SECTION 7.14. ARBITRATION.

            (a) Arbitration. The parties hereto agree, upon demand by any party,
to submit to binding arbitration all claims, disputes and controversies between
or among them (and their respective employees, officers, directors, attorneys,
and other agents), whether in tort, contract or otherwise arising out of or
relating to in any way (i) the loan and related Loan Documents which are the
subject of this Agreement and its negotiation, execution, collateralization,
administration, repayment, modification, extension, substitution, formation,
inducement, enforcement, default or termination; or (ii) requests for additional
credit.

            (b) Governing Rules. Any arbitration proceeding will (i) proceed in
a location in Texas selected by the American Arbitration Association ("AAA");
(ii) be governed by the Federal Arbitration Act (Title 9 of the United States
Code), notwithstanding any conflicting choice of law provision in any of the
documents between the parties; and (iii) be conducted by the AAA, or such other
administrator as the parties shall mutually agree upon, in accordance with the
AAA's commercial dispute resolution procedures, unless the claim or counterclaim
is at least $1,000,000.00 exclusive of claimed interest, arbitration fees and
costs in which case the arbitration shall be conducted in accordance with the
AAA's optional procedures for large, complex commercial disputes (the commercial
dispute resolution procedures or the optional procedures for large, complex
commercial disputes to be referred to, as applicable, as the "Rules"). If there
is any inconsistency between the terms hereof and the Rules, the terms and
procedures set forth herein shall control. Any party who fails or refuses to
submit to arbitration following a demand by any other party shall bear all costs
and expenses incurred by such other party in compelling arbitration of any
dispute. Nothing contained herein shall be deemed to be a waiver by any party
that is a bank of the protections afforded to it under 12 U.S.C. Section 91 or
any similar applicable state law.

            (c) No Waiver of Provisional Remedies, Self-Help and Foreclosure.
The arbitration requirement does not limit the right of any party to (i)
foreclose against real or personal property collateral; (ii) exercise self-help
remedies relating to collateral or proceeds of collateral such as setoff or
repossession; or (iii) obtain provisional or ancillary remedies such as
replevin, injunctive relief, attachment or the appointment of a receiver, before
during or after the

                                      -17-
<PAGE>
pendency or any arbitration proceeding. This exclusion does not constitute a
waiver of the right or obligation of any party to submit any dispute to
arbitration or reference hereunder, including those arising from the exercise of
the actions detailed in sections (i), (ii) and (iii) of this paragraph.

            (d) Arbitrator Qualifications and Powers. Any arbitration proceeding
in which the amount in controversy is $5,000,000.00 or less will be decided by a
single arbitrator selected according to the Rules, and who shall not render an
award of greater than $5,000,000.00. Any dispute in which the amount in
controversy exceeds $5,000,000.00 shall be decided by majority vote of a panel
of three arbitrators; provided however, that all three arbitrators must actively
participate in all hearings and deliberations. The arbitrator will be a neutral
attorney licensed in the State of Texas with a minimum of ten years experience
in the substantive law applicable to the subject matter of the dispute to be
arbitrated. The arbitrator will determine whether or not an issue is arbitrable
and will give effect to the statutes of limitation in determining any claim. In
any arbitration proceeding the arbitrator will decide (by documents only or with
a hearing at the arbitrator's discretion) any pre-hearing motions which are
similar to motions to dismiss for failure to state a claim or motions for
summary adjudication. The arbitrator shall resolve all disputes in accordance
with the substantive law of Texas and may grant any remedy or relief that a
court of such state could order or grant within the scope hereof and such
ancillary relief as is necessary to make effective any award. The arbitrator
shall also have the power to award recovery of all costs and fees, to impose
sanctions and to take such other action as the arbitrator deems necessary to the
same extent a judge could pursuant to the Federal Rules of Civil Procedure, the
Texas Rules of Civil Procedure or other applicable law. Judgment upon the award
rendered by the arbitrator may be entered in any court having jurisdiction. The
institution and maintenance of an action for judicial relief or pursuit of a
provisional or ancillary remedy shall not constitute a waiver of the right of
any party, including the plaintiff, to submit the controversy or claim to
arbitration if any other party contests such action for judicial relief.

            (e) Discovery. In any arbitration proceeding discovery will be
permitted in accordance with the Rules. All discovery shall be expressly limited
to matters directly relevant to the dispute being arbitrated and must be
completed no later than 20 days before the hearing date and within 180 days of
the filing of the dispute with the AAA. Any requests for an extension of the
discovery periods, or any discovery disputes, will be subject to final
determination by the arbitrator upon a showing that the request for discovery is
essential for the party's presentation and that no alternative means for
obtaining information is available.

            (f) Class Proceedings and Consolidations. The resolution of any
dispute arising pursuant to the terms of this Agreement shall be determined by a
separate arbitration proceeding and such dispute shall not be consolidated with
other disputes or included in any class proceeding.

            (g) Payment of Arbitration Costs and Fees. The arbitrator shall
award all costs and expenses of the arbitration proceeding.

            (h) Miscellaneous. To the maximum extent practicable, the AAA, the
arbitrators and the parties shall take all action required to conclude any
arbitration proceeding

                                      -18-
<PAGE>
within 180 days of the filing of the dispute with the AAA. No arbitrator or
other party to an arbitration proceeding may disclose the existence, content or
results thereof, except for disclosures of information by a party required in
the ordinary course of its business, by applicable law or regulation. If more
than one agreement for arbitration by or between the parties potentially applies
to a dispute, the arbitration provision most directly related to the Loan
Documents or the subject matter of the dispute shall control. This arbitration
provision shall survive termination, amendment or expiration of any of the Loan
Documents or any relationship between the parties.

      SECTION 7.15. RATIFICATION. Borrower hereby acknowledges and agrees that
the terms and provisions of the Existing Security Documents are ratified and
confirmed and shall continue in full force and effect and shall secure the
indebtedness and obligations owed by Borrower to Bank pursuant to this
Agreement. Borrower and Bank further agree that the Existing Security Documents
shall continue to be legal, valid, binding and enforceable in accordance with
their respective terms. All references to the Credit Agreement therein shall
mean references to this Agreement.

      SECTION 7.16. NOTICE OF TERMINATION. As provided in Section 1.5, in its
sole and absolute discretion, Borrower may, at anytime that no outstanding
indebtedness exists under the Line of Credit or Term Loan or no other
obligations are otherwise owed by Borrower to Bank, in a written notice
delivered to Bank, elect to terminate this Agreement. Within 10 days of receipt
by Bank of such notice, if no obligations are then owing to Bank, this
Agreement, the Deed of Trust and all Existing Security Documents and other
agreements executed in connection herewith (the "Loan Documents') shall
thereupon be terminated and the parties thereto released from all prospective
obligations thereunder. At the request and expense of Borrower, Bank shall
prepare and execute all necessary instruments in form satisfactory to Bank to
reflect and effect such termination of the Loan Documents. Bank agrees that
there is no termination fee.

NOTICE: THIS DOCUMENT AND ALL OTHER DOCUMENTS RELATING TO THE INDEBTEDNESS
CONSTITUTE A WRITTEN LOAN AGREEMENT WHICH REPRESENTS THE FINAL AGREEMENT BETWEEN
THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES RELATING TO THE INDEBTEDNESS.

                   [REST OF PAGE IS INTENTIONALLY LEFT BLANK]

                                      -19-
<PAGE>
      IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first written above.

<TABLE>
<S>                                         <C>
INTERVOICE, INC.                            WELLS FARGO BANK,
                                            NATIONAL ASSOCIATION

By:                                         By:
    ---------------------------------          ---------------------------------
    Craig E. Holmes, Executive Vice            Robert Clouse, Vice President
    President and Chief Financial Officer
</TABLE>

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