Document:

Exhibit 10.1

 

 

CREDIT AGREEMENT

Dated as of April  17, 2003

among

WALTER INDUSTRIES, INC.,

as Borrower,

BANK OF AMERICA, N.A.,

as
Administrative Agent, Swing Line Lender

and

L/C Issuer,

SUNTRUST BANK,

as Syndication Agent and L/C Issuer,

BNP PARIBAS

and

CREDIT LYONNAIS NEW YORK BRANCH,

as
Co-Documentation Agents

 

and

The Lenders Party Hereto

BANC OF AMERICA SECURITIES LLC,

as

Joint
Lead Arranger

and

Sole Book Manager,

and

SUNTRUST ROBINSON HUMPHREY,

a division of SunTrust Capital Markets, Inc.

as

Joint
Lead Arranger

 

 

 

 

TABLE OF CONTENTS

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I.

  	
  DEFINITIONS
  AND ACCOUNTING TERMS

  	
  1

  
	
   

  	
   

  	
   

  
	
  1.01

  	
  Defined Terms

  	
  1

  
	
  1.02

  	
  Other Interpretive
  Provisions

  	
  30

  
	
  1.03

  	
  Accounting Terms

  	
  31

  
	
  1.04

  	
  Rounding

  	
  31

  
	
  1.05

  	
  References to
  Agreements and Laws

  	
  31

  
	
  1.06

  	
  Times of Day

  	
  32

  
	
  1.07

  	
  Letter
  of Credit Amounts

  	
  32

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  II.

  	
  THE
  COMMITMENTS AND CREDIT EXTENSIONS

  	
  32

  
	
   

  	
   

  	
   

  
	
  2.01

  	
  Term Loan B

  	
  32

  
	
  2.02

  	
  Revolving Loans

  	
  33

  
	
  2.03

  	
  Borrowings,
  Conversions and Continuations

  	
  33

  
	
  2.04

  	
  Letters of
  Credit and Bankers’ Acceptances

  	
  35

  
	
  2.05

  	
  Swing Line Loans

  	
  44

  
	
  2.06

  	
  Prepayments

  	
  47

  
	
  2.07

  	
  Termination or
  Reduction of Commitments

  	
  49

  
	
  2.08

  	
  Repayment of Loans

  	
  49

  
	
  2.09

  	
  Interest

  	
  50

  
	
  2.10

  	
  Fees

  	
  51

  
	
  2.11

  	
  Computation of
  Interest and Fees

  	
  51

  
	
  2.12

  	
  Evidence of Debt

  	
  51

  
	
  2.13

  	
  Payments
  Generally

  	
  52

  
	
  2.14

  	
  Sharing
  of Payments

  	
  54

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  III.

  	
  SECURITY

  	
  55

  
	
   

  	
   

  	
   

  
	
  3.01

  	
  Security

  	
  55

  
	
  3.02

  	
  Further
  Assurances

  	
  55

  
	
  3.03

  	
  Information Regarding
  Collateral

  	
  56

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  IV.

  	
  TAXES,
  YIELD PROTECTION AND ILLEGALITY

  	
  56

  
	
   

  	
   

  	
   

  
	
  4.01

  	
  Taxes

  	
  56

  
	
  4.02

  	
  Illegality

  	
  57

  
	
  4.03

  	
  Inability to Determine
  Rates

  	
  57

  
	
  4.04

  	
  Increased Cost and
  Reduced Return; Capital Adequacy; Reserves on Eurodollar Rate Loans

  	
  58

  
	
  4.05

  	
  Funding Losses

  	
  59

  
	
  4.06

  	
  Matters
  Applicable to all Requests for Compensation

  	
  59

  
	
  4.07

  	
  Replacement
  Lender

  	
  59

  
	
  4.08

  	
  Survival

  	
  60

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  V.

  	
  CONDITIONS
  PRECEDENT TO CREDIT EXTENSIONS

  	
  60

  
	
   

  	
   

  	
   

  
	
  5.01

  	
  Conditions of
  Initial Credit Extension

  	
  60

  

 

 

-i-

 

TABLE OF CONTENTS

(continued)

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  5.02

  	
  Conditions to all
  Credit Extensions

  	
  63

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI.

  	
  REPRESENTATIONS
  AND WARRANTIES

  	
  63

  
	
   

  	
   

  	
   

  
	
  6.01

  	
  Existence,
  Qualification and Power; Compliance with Laws

  	
  63

  
	
  6.02

  	
  Authorization; No
  Contravention

  	
  64

  
	
  6.03

  	
  Governmental
  Authorization; Other Consents

  	
  64

  
	
  6.04

  	
  Binding Effect

  	
  64

  
	
  6.05

  	
  Financial
  Statements; No Material Adverse Effect

  	
  64

  
	
  6.06

  	
  Litigation

  	
  65

  
	
  6.07

  	
  No Default

  	
  65

  
	
  6.08

  	
  Ownership of Property;
  Liens

  	
  65

  
	
  6.09

  	
  Environmental
  Compliance

  	
  65

  
	
  6.10

  	
  Insurance

  	
  65

  
	
  6.11

  	
  Taxes

  	
  66

  
	
  6.12

  	
  ERISA Compliance

  	
  66

  
	
  6.13

  	
  Subsidiaries

  	
  66

  
	
  6.14

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

  	
  67

  
	
  6.15

  	
  Disclosure

  	
  67

  
	
  6.16

  	
  Compliance
  with Laws

  	
  67

  
	
  6.17

  	
  Intellectual
  Property; Licenses, Etc

  	
  67

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII.

  	
  AFFIRMATIVE
  COVENANTS

  	
  68

  
	
   

  	
   

  	
   

  
	
  7.01

  	
  Financial
  Statements

  	
  68

  
	
  7.02

  	
  Certificates; Other
  Information

  	
  68

  
	
  7.03

  	
  Notices

  	
  70

  
	
  7.04

  	
  Payment
  of Obligations

  	
  70

  
	
  7.05

  	
  Preservation of
  Existence, Etc

  	
  71

  
	
  7.06

  	
  Maintenance of Properties

  	
  71

  
	
  7.07

  	
  Maintenance
  of Insurance

  	
  71

  
	
  7.08

  	
  Compliance
  with Laws

  	
  71

  
	
  7.09

  	
  Books and Records

  	
  71

  
	
  7.10

  	
  Inspection Rights

  	
  72

  
	
  7.11

  	
  Use of Proceeds

  	
  72

  
	
  7.12

  	
  New Subsidiaries and
  Pledgors

  	
  72

  
	
  7.13

  	
  Mortgage Warehouse Facility

  	
  74

  
	
  7.14

  	
  Compliance
  with ERISA

  	
  74

  
	
  7.15

  	
  Further
  Assurances

  	
  74

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII.

  	
  NEGATIVE COVENANTS

  	
  74

  
	
   

  	
   

  	
   

  
	
  8.01

  	
  Liens

  	
  74

  
	
  8.02

  	
  Investments

  	
  76

  
	
  8.03

  	
  Indebtedness

  	
  77

  

 

 

-ii-

 

TABLE OF CONTENTS

(continued)

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  8.04

  	
  Fundamental
  Changes

  	
  79

  
	
  8.05

  	
  Dispositions

  	
  79

  
	
  8.06

  	
  Restricted
  Payments

  	
  81

  
	
  8.07

  	
  Change in Nature of
  Business

  	
  81

  
	
  8.08

  	
  Transactions with
  Affiliates

  	
  81

  
	
  8.09

  	
  Burdensome
  Agreements

  	
  82

  
	
  8.10

  	
  Use of Proceeds

  	
  82

  
	
  8.11

  	
  Prepayment
  of Indebtedness

  	
  83

  
	
  8.12

  	
  Financial
  Covenants

  	
  83

  
	
  8.13

  	
  Acquisitions

  	
  83

  
	
  8.14

  	
  Creation of New
  Subsidiaries

  	
  84

  
	
  8.15

  	
  Mid-State
  Homes and Walter Mortgage Company; Residual Beneficial Interests

  	
  84

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX.

  	
  EVENTS OF
  DEFAULT AND REMEDIES

  	
  84

  
	
   

  	
   

  	
   

  
	
  9.01

  	
  Events of Default

  	
  84

  
	
  9.02

  	
  Remedies Upon Event of
  Default

  	
  86

  
	
  9.03

  	
  Application
  of Funds

  	
  87

  
	
   

  	
   

  	
   

  
	
  ARTICLE X.

  	
  ADMINISTRATIVE AGENT

  	
  88

  
	
   

  	
   

  	
   

  
	
  10.01

  	
  Appointment
  and Authorization of Administrative Agent

  	
  88

  
	
  10.02

  	
  Delegation
  of Duties

  	
  89

  
	
  10.03

  	
  Liability of Administrative
  Agent

  	
  89

  
	
  10.04

  	
  Reliance by
  Administrative Agent

  	
  89

  
	
  10.05

  	
  Notice of Default

  	
  90

  
	
  10.06

  	
  Credit
  Decision; Disclosure of Information by Administrative Agent

  	
  90

  
	
  10.07

  	
  Indemnification
  of Administrative Agent

  	
  91

  
	
  10.08

  	
  Administrative
  Agent in its Individual Capacity

  	
  91

  
	
  10.09

  	
  Successor Administrative
  Agent

  	
  91

  
	
  10.10

  	
  Administrative
  Agent May File Proofs of Claim

  	
  92

  
	
  10.11

  	
  Collateral and Guaranty
  Matters

  	
  93

  
	
  10.12

  	
  Other Agents;
  Arrangers and Managers

  	
  93

  
	
   

  	
   

  	
   

  
	
  ARTICLE XI.

  	
  MISCELLANEOUS

  	
  93

  
	
   

  	
   

  	
   

  
	
  11.01

  	
  Amendments, Etc

  	
  93

  
	
  11.02

  	
  Notices
  and Other Communications; Facsimile Copies

  	
  93

  
	
  11.03

  	
  No Waiver; Cumulative
  Remedies

  	
  95

  
	
  11.04

  	
  Attorney Costs,
  Expenses and Taxes

  	
  95

  
	
  11.05

  	
  Indemnification by the
  Borrower

  	
  95

  
	
  11.06

  	
  Payments Set Aside

  	
  96

  
	
  11.07

  	
  Successors
  and Assigns

  	
  96

  
	
  11.08

  	
  Confidentiality

  	
  100

  
	
  11.09

  	
  Set-off

  	
  101

  

 

 

-iii-

 

TABLE OF CONTENTS

(continued)

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  11.10

  	
  Interest
  Rate Limitation

  	
  101

  
	
  11.11

  	
  Counterparts

  	
  101

  
	
  11.12

  	
  Integration

  	
  101

  
	
  11.13

  	
  Survival of
  Representations and Warranties

  	
  102

  
	
  11.14

  	
  Severability

  	
  102

  
	
  11.15

  	
  Tax Forms

  	
  102

  
	
  11.16

  	
  Governing Law

  	
  105

  
	
  11.17

  	
  Waiver of Right to
  Trial by Jury

  	
  105

  
	
  11.18

  	
  ENTIRE AGREEMENT

  	
  106

  

 

 

-iv-

 

SCHEDULES

1.01(a)        Unrestricted
Subsidiaries

1.01(b)        Existing
Letters of Credit

2.01             Commitments
and Pro Rata Shares

3.03             Information
Regarding Collateral

5.01             Good
Standing and Foreign Qualification Jurisdictions

6.06             Litigation

6.09             Environmental
Matters

6.11             Proposed
Tax Assessments

6.13(a)        Subsidiaries

6.13(b)        Other
Equity Investments

8.01             Existing
Liens

8.03             Existing
Indebtedness

11.02           Administrative
Agent’s Office, Certain Addresses for Notices

 

 

 

EXHIBITS

                                Form of

A-1             Revolving
Loan Notice

A-2             Term
Loan Interest Rate Selection Notice

B                 Swing
Line Loan Notice

C-1              Term
Loan B Note

C-2              Revolving
Loan Note

C-3              Swing
Line Note

D                 Compliance
Certificate

E                  Assignment
and Assumption

F                  Guaranty
Agreement

G                 Opinion
Matters

H                 Guaranty
Agreement (Mid-State Homes)

I                   Security
Agreement

 

 

-v-

 

CREDIT AGREEMENT

This
CREDIT AGREEMENT (“Agreement”) is entered into as of April 17,  2003, among Walter Industries, Inc., a Delaware corporation (the “Borrower”),
each lender from time to time party hereto (collectively, the “Lenders”
and individually, a “Lender”), BANK OF AMERICA, N.A., as Administrative
Agent, Swing Line Lender and an L/C Issuer, and SUNTRUST BANK, as Syndication
Agent and an L/C Issuer.

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

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

ARTICLE I.

DEFINITIONS AND
ACCOUNTING TERMS

1.01        Defined Terms.  As used in this Agreement,
the following terms shall have the meanings set forth below:

“Acceptance
Credit” means a commercial Letter of Credit in which the applicable L/C
Issuer engages with the beneficiary of such Letter of Credit to accept a time
draft.

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

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

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

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

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

 

 

 

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

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

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

“Agent-Related
Persons” means the Administrative Agent, together with its Affiliates
(including, in the case of Bank of America in its capacity as the
Administrative Agent, BAS), and the officers, directors, employees, agents and
attorneys-in-fact of such Persons and Affiliates.

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

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

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

“Agreement”
means this Credit Agreement.

“Applicable Rate” means, from time to
time, (a) with respect to Segments of the Term Loan B that are Base Rate Loans,
3.25%, (b) with respect to Segments of the Term Loan B that are Eurodollar Rate
Loans, 4.25%, (c) with respect to the Commitment Fee, 0.50%, and (d) with
respect to Revolving Loans, Swing Line Loans and Letter of Credit - BA Fees,
the following percentages per annum, based upon the Adjusted Consolidated
Leverage Ratio as set forth below:

 

 

2

 

	
   

  	
   

  	
   

  	
   

  	
  Revolving
  Loans, Swing Line Loans and

  Letter of Credit — BA Fees

  	
   

  
	
  Pricing
  Level

  	
   

  	
  Adjusted
  Consolidated Leverage Ratio

  	
   

  	
  Eurodollar
  Rate

  Loans and Letter of

  Credit — BA Fees

  	
   

  	
  Base Rate
  Loans

  	
   

  
	
  1

  	
   

  	
  Greater
  than or equal to 2.25 to 1.00

  	
   

  	
  4.00

  	
  %

  	
  3.00

  	
  %

  
	
  2

  	
   

  	
  Less
  than 2.25 to 1.00 but greater than or equal to 1.75 to 1.00

  	
   

  	
  3.75

  	
  %

  	
  2.75

  	
  %

  
	
  3

  	
   

  	
  Less
  than 1.75 to 1.00 but greater than or equal to 1.25 to 1.00

  	
   

  	
  3.50

  	
  %

  	
  2.50

  	
  %

  
	
  4

  	
   

  	
  Less
  than 1.25 to 1.00 but greater than or equal to 0.75 to 1.00

  	
   

  	
  3.25

  	
  %

  	
  2.25

  	
  %

  
	
  5

  	
   

  	
  Less
  than 0.75 to 1.00

  	
   

  	
  3.00

  	
  %

  	
  2.00

  	
  %

  

The Applicable Rate with respect to Revolving Loans, Swing Line Loans
and Letter of Credit - BA Fees shall be established with reference to the
Adjusted Consolidated Leverage Ratio at the end of each fiscal quarter of the
Borrower (each, a “Determination Date”).  Any change in the Applicable Rate with respect to Revolving
Loans, Swing Line Loans and Letter of Credit - BA Fees following each
Determination Date shall be determined based upon the computation of the
Adjusted Consolidated Leverage Ratio set forth in each Compliance Certificate
furnished to the Administrative Agent pursuant to Section 7.02(b),
subject to review for correctness of such computation by the Administrative
Agent, and shall be effective commencing on the fifth Business Day following
the date such certificate is received until the fifth Business Day following
the date on which a new certificate is delivered or is required to be
delivered, whichever shall first occur. 
From the Closing Date to the fifth Business Day following the date the
certificate referred to in the preceding sentence for the fiscal period ended
as at the first Determination Date is delivered or is required to be delivered
(whichever shall first occur), the Applicable Rate with respect to Revolving
Loans, Swing Line Loans and Letter of Credit - BA Fees shall be Pricing Level
3.  Notwithstanding the provisions of
the two preceding sentences, if the Borrower shall fail to deliver any such
certificate within the time period required by Section 7.02(b), then the
Applicable Rate with respect to Revolving Loans, Swing Line Loans and Letter of
Credit - BA Fees shall be Pricing Level 1 from the date such certificate was
due until the fifth Business Day following the date the appropriate certificate
is so delivered.

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

“Arrangers”
means BAS and SunTrust Robinson Humphrey, a division of SunTrust Capital
Markets, Inc., each in its capacity as a joint lead arranger.

“Assignment and Assumption” means an Assignment
and Assumption substantially in the form of Exhibit E, and shall
include, in the case of the initial assignments of portions of Term

 

 

3

 

Loan B by Bank of America as one of the initial Term Loan B Lenders,
one or more master assignments and assumption agreements to effect assignments
to multiple assignees substantially on the terms of the form of Assignment and
Assumption set forth in Exhibit E.

“Attorney
Costs” means and includes all reasonable fees, expenses and disbursements
of any law firm or other external counsel and, without duplication, the
reasonable allocated cost of internal legal services and all reasonable
expenses and disbursements of internal counsel.

“Attributable
Indebtedness” means, on any date, (a) in respect of any capital lease of
any Person, the capitalized amount thereof that would appear on a balance sheet
of such Person prepared as of such date in accordance with GAAP, and (b) in
respect of any Synthetic Lease Obligation, the capitalized amount of the
remaining lease payments under the relevant lease that would appear on a
balance sheet of such Person prepared as of such date in accordance with GAAP
if such lease were accounted for as a capital lease.

“Audited
Financial Statements” means the audited consolidated balance sheet of the
Borrower and its Subsidiaries for the fiscal year ended December 31, 2002, and the related consolidated statements of
income or operations, retained earnings and cash flows for such fiscal year of
the Borrower and its Subsidiaries, including the notes thereto.

“Availability
Period” means the period from and including the Closing Date to the
earliest of (a) the Revolving Credit Maturity Date, (b) the date of termination
of the Aggregate Revolving Credit Commitments pursuant to Section 2.07,
and (c) the date of termination of the commitment of each Lender to make Loans
and of the obligation of the L/C Issuer to make L/C - BA Credit Extensions
pursuant to Section 9.02.

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

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

“BAS”
means Banc of America Securities LLC.

“Base
Rate” means for any day a fluctuating rate per annum equal to the higher of
(a) the Federal Funds Rate plus 1/2 of 1% and (b) the rate of interest in
effect for such day as publicly announced from time to time by Bank of America
as its “prime rate.”  The “prime rate”
is a rate set by Bank of America based upon various factors including Bank of
America’s costs and desired return, general economic conditions and other
factors, and is used as a reference point for pricing some loans, which may be
priced at, above, or below such announced rate.  Any change in such rate announced by Bank of America shall take
effect at the opening of business on the day specified in the public
announcement of such change.

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

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

 

 

4

 

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

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

“Borrower
Account Transfer Agreement” means (a) the Existing Borrower Account
Transfer Agreement, or (b) another similar agreement acceptable to the
Administrative Agent in its reasonable discretion and serving substantially the
same purpose on substantially the same terms as the Existing Borrower Account
Transfer Agreement with respect to the then-existing Mortgage Warehouse
Facility, but in no event on any terms less favorable in any material respect,
in the reasonable judgment of the Administrative Agent, to the Administrative Agent
and the Lenders than those terms in the Existing Borrower Account Transfer
Agreement on the Closing Date.

“Borrowing”
means any of (i) the advance of the Term Loan B pursuant to Section 2.01,
(ii) a Revolving Borrowing, or (iii) a Swing Line Borrowing, as the context may
require.

“Business
Day” means any day other than a Saturday, Sunday or other day on which
commercial banks are authorized to close under the Laws of, or are in fact
closed in, the state where the Administrative Agent’s Office is located and, if
such day relates to any Eurodollar Rate Loan, means any such day on which
dealings in Dollar deposits are conducted by and between banks in the London
interbank eurodollar market.

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

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

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

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

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

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

 

 

5

 

and at least A-2 (or the then equivalent
grade) by S&P, or (II) at least P-2 (or the then equivalent grade) by
Moody’s and at least A-1 (or the then equivalent grade) by S&P;

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

(e)           shares of investment
companies investing solely in the foregoing.

“Cash
Income Taxes” means, with respect to the Borrower and its Restricted
Subsidiaries on a consolidated basis, for any period the aggregate amount of
all payments in respect of income taxes made in cash by the Borrower and its
Restricted Subsidiaries to any applicable Governmental Authority during such
period, after giving effect, to the extent available, to the application of net
operating losses available to the Borrower and its Restricted Subsidiaries.

“Change
of Control” means, with respect to any Person, an event or series of events
by which:

(a)           any “person” or “group” (as such
terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, but excluding any employee benefit plan of such person or its
subsidiaries, and any person or entity acting in its capacity as trustee, agent
or other fiduciary or administrator of any such plan) becomes the “beneficial
owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act
of 1934, except that a person or group shall be deemed to have “beneficial
ownership” of all securities that such person or group has the right to acquire
(such right, an “option right”), whether such right is exercisable
immediately or only after the passage of time), directly or indirectly, of 33-1/3%
or more of the equity securities of such Person entitled to vote for members of
the board of directors or equivalent governing body of such Person on a
fully-diluted basis (and taking into account all such securities that such
person or group has the right to acquire pursuant to any option right), provided
that with respect to Kohlberg Kravis & Roberts and its Affiliates the “33-1/3”
in this subpart (a) shall be deemed to read “50%”; or

(b)           during
any period of 24 consecutive
months, a majority of the members of the board of directors or other equivalent
governing body of such Person cease to be composed of individuals (i) who were
members of that board or equivalent governing body on the first day of such
period, (ii) whose election or nomination to that board or equivalent governing
body was approved by individuals referred to in clause (i) above constituting
at the time of such election or nomination at least a majority of that board or
equivalent governing body or (iii) whose election or nomination to that board
or other equivalent governing body was approved by individuals referred to in
clauses (i) and (ii) above constituting at the time of such election or
nomination at least a majority of that

 

 

6

 

board or equivalent governing body (excluding, in the case of both
clause (ii) and clause (iii), any individual whose initial nomination for, or
assumption of office as, a member of that board or equivalent governing body
occurs as a result of an actual or threatened solicitation of proxies or
consents for the election or removal of one or more directors by any person or
group other than a solicitation for the election of one or more directors by or
on behalf of the board of directors).

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

“CMO
Financing Cash Proceeds” means, for any period, the net cash proceeds to
Mid-State Homes during such period from the issuance or incurrence of
Indebtedness by a MSH Trust under Section 8.03(g)(i) or (iii) or Section
8.03(i), after required principal and interest is paid on the Mortgage
Warehousing Facility and the net funding of any required reserve, collection,
holding and/or servicing account as required by the applicable Indenture and/or
Mortgage Warehousing Facility.

“Code”
means the Internal Revenue Code of 1986.

“Collateral”
means, collectively, all personal property of the Borrower, any Subsidiary or
any other Person in which the Administrative Agent or any Lender is granted a
Lien under any Security Instrument as security for all or any portion of the
Obligations or any other obligation arising under any Loan Document.

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

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

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

“Consolidated
Cash Interest Charges” means, for any period, for the Borrower and its
Restricted Subsidiaries on a
consolidated basis, that portion of Consolidated Interest Charges paid
or payable in cash during such period.

“Consolidated
EBITDA” means, for any period, the sum, in each case without
duplication, of:

 

 

7

 

(a)           with
respect to Mid-State Homes, the sum of (i) MSH Trust Cash Releases and (ii) CMO
Financing Cash Proceeds, plus

(b)           with
respect to the Borrower and its Restricted Subsidiaries (other than Mid-State
Homes), on a consolidated basis determined in accordance with GAAP (but
excluding consolidation with Mid-State Homes or duplication of any amounts
included in part (a) above), an amount equal to:

                                                (i)                                     Consolidated Net Income for such period,

plus                         (ii)                                  Consolidated
Interest Charges for such period, to the extent deducted in computing Consolidated Net
Income,

plus                         (iii)                               the provision for federal,
state, local and foreign income taxes payable for such period, to the extent deducted in computing
Consolidated Net Income,

plus                         (iv)                              depreciation and depletion expense, to
the extent deducted in computing Consolidated Net Income,

plus                         (v)                                 amortization expense, to the extent
deducted in computing Consolidated Net Income,

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

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

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

plus                         (ix)                                any non-cash restructuring charge to the
extent deducted in computing Consolidated Net Income,

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

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

plus                         (xii)                             up to $5,000,000 of non-cash write-downs of capital
assets made within six months of Closing as previously disclosed to the
Administrative Agent;

 

 

8

 

provided, however, Consolidated EBITDA
shall be decreased by the amount of any cash expenditures in such period
related to non-cash charges added back to Consolidated Net Income in computing
Consolidated EBITDA during any prior periods.

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

“Consolidated
Fixed Charges” means, with respect to the Borrower and its Restricted
Subsidiaries for any period ending on the date of computation thereof, the sum
of, without duplication, (i) Consolidated Cash Interest Charges, (ii)
Restricted Payments (but excluding those Restricted Payments made to
repurchase, redeem or acquire shares of the capital stock of the Borrower
permitted under Section 8.06), and (iii) Consolidated Principal
Payments, all determined on a consolidated basis in accordance with GAAP.

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

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

 

 

9

 

to the extent treated as interest in accordance with GAAP, (c) the
portion of rent expense of the Borrower and its Restricted  Subsidiaries with respect to such period
under capital leases that is treated as interest in accordance with GAAP, and
(d) the amount of payments in respect of Synthetic Lease Obligations that are
in the nature of interest.

“Consolidated Interest Coverage Ratio” means,
as of any date of determination, the ratio of (a) Consolidated EBITDA for the
Four-Quarter Period ending on such date to (b) Consolidated Cash Interest Charges
for such period.

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

“Consolidated Net Income” means, for any
period, for the Borrower and its Restricted Subsidiaries (other than Mid-State
Homes) on a consolidated basis, the net income after taxation of the Borrower
and its Restricted Subsidiaries (but excluding consolidation with Mid-State
Homes) for that period.

“Consolidated Principal Payments” means, at
any date of measurement thereof, the lesser of (a) payments of
Consolidated Funded Indebtedness that were scheduled to be made (including
adjustments for any mandatory prepayments previously made) during the
Four-Quarter Period ending on the date of measurement thereof (but excluding
Existing Credit Agreement Payments that were scheduled to be made during such
period), and (b) installments of Consolidated Funded Indebtedness that are
scheduled to be made during the Four-Quarter Period immediately following the
date of measurement thereof (including adjustments for any mandatory
prepayments previously made).

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

“Continuation”
and “Continue” mean, with respect to any Eurodollar Rate Loan, the
continuation of such Eurodollar Rate Loan as a Eurodollar Rate Loan on the last
day of the Interest Period for such Loan.

“Contractual
Obligation” means, as to any Person, any provision of any security issued
by such Person or of any agreement, instrument or other undertaking to which
such Person is a party or by which it or any of its property is bound.

“Control”
has the meaning specified in the definition of “Affiliate.”

“Conversion”
and “Convert” mean the conversion of a Loan from one Type to another
Type.

“Core Business” means, in connection
with the Borrower and its Subsidiaries, homebuilding, pipe manufacturing, home
financing and businesses reasonably and directly related thereto.

 

 

10

 

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

“Credit
Extension” means each of the following: (a) a Borrowing and (b) an L/C — BA
Credit Extension.

“Debt
Rating” means, as of any date of determination, the rating as determined by
either S&P or Moody’s (collectively, the “Debt Ratings”) of the
Senior Credit Facility.

“Debtor
Relief Laws” means the Bankruptcy Code of the United States, and all other
liquidation, conservatorship, bankruptcy, assignment for the benefit of
creditors, moratorium, rearrangement, receivership, insolvency, reorganization,
or similar debtor relief Laws of the United States or other applicable
jurisdictions from time to time in effect and affecting the rights of creditors
generally.

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

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

“Defaulting Lender” means any Lender
that (a) has failed to fund any portion of the Revolving Loans, participations
in L/C Obligations or participations in Swing Line Loans required to be funded
by it hereunder within one Business Day of the date required to be funded by it
hereunder, (b) has otherwise failed to pay over to the Administrative Agent or
any other

 

 

11

 

Lender any other amount required to be paid by it hereunder within one
Business Day of the date when due, unless the subject of a good faith dispute,
or (c) has been deemed insolvent or become the subject of a bankruptcy or
insolvency proceeding.

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

“Disposition”
or “Dispose” means the sale, transfer, license, lease or other
disposition (including any sale and leaseback transaction) of any property by
any Person, including any sale, assignment, transfer or other disposal, with or
without recourse, of any notes or accounts receivable or any rights and claims
associated therewith.

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

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

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

“Environmental
Laws” means any and all Federal, state, local, and foreign statutes, laws,
regulations, ordinances, rules, judgments, orders, decrees, permits,
concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment,
including those related to hazardous substances or wastes, air emissions and
discharges to waste or public systems.

“Environmental Liability” means any
liability, contingent or otherwise (including any liability for damages, costs
of environmental remediation, fines, penalties or indemnities), of the
Borrower, any other Loan Party or any of their respective Subsidiaries directly
or indirectly resulting from or based upon (a) violation of any Environmental
Law, (b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the release or threatened release of any Hazardous Materials into the
environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the foregoing.

“ERISA”
means the Employee Retirement Income Security Act of 1974.

“ERISA Affiliate” means any trade or
business (whether or not incorporated) under common control with the Borrower
within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m)
and (o) of the Code for purposes of provisions relating to Section 412 of the
Code).

 

 

12

 

“ERISA
Event” means (a) a Reportable Event with respect to a Pension Plan; (b) a
withdrawal by the Borrower or any ERISA Affiliate from a Pension Plan subject
to Section 4063 of ERISA during a plan year in which it was a substantial
employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of
operations that is treated as such a withdrawal under Section 4062(e) of ERISA;
(c) a complete or partial withdrawal by the Borrower or any ERISA Affiliate
from a Multiemployer Plan or notification that a Multiemployer Plan is in
reorganization; (d) the filing by the Borrower or any ERISA Affiliate or the
PBGC of a notice of intent to terminate, the treatment by the PBGC of a Pension
Plan amendment as a termination under Sections 4041 or 4041A of ERISA, or the
commencement of proceedings by the PBGC to terminate a Pension Plan or
Multiemployer Plan; (e) an event or condition which constitutes grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee
to administer, any Pension Plan or Multiemployer Plan; or (f) the imposition of
any liability under Title IV of ERISA, other than for PBGC premiums due but not
delinquent under Section 4007 of ERISA, upon the Borrower or any ERISA
Affiliate.

“Eurodollar
Rate”  means for any Interest Period
with respect to any Eurodollar Rate Loan:

(a)           the rate per annum
equal to the rate determined by the Administrative Agent to be the offered rate
that appears on the page of the Telerate screen (or any successor thereto) that
displays an average British Bankers Association Interest Settlement Rate for
deposits in Dollars (for delivery on the first day of such Interest Period)
with a term equivalent to such Interest Period, determined as of approximately
11:00 a.m. (London time) two Business Days prior to the first day of such
Interest Period, or

(b)           if the rate
referenced in the preceding clause (a) does not appear on such page or service
or such page or service shall not be available, the rate per annum equal to the
rate determined by the Administrative Agent to be the offered rate on such
other page or other service that displays an average British Bankers
Association Interest Settlement Rate for deposits in Dollars (for delivery on
the first day of such Interest Period) with a term equivalent to such Interest
Period, determined as of approximately 11:00 a.m. (London time) two Business
Days prior to the first day of such Interest Period, or

(c)           if the rates
referenced in the preceding clauses (a) and (b) are not available, the rate per
annum determined by the Administrative Agent as the rate of interest at which
deposits in Dollars for delivery on the first day of such Interest Period in
same day funds in the approximate amount of the Eurodollar Rate Loan being
made, Continued or Converted by Bank of America and with a term equivalent to
such Interest Period would be offered by Bank of America’s London Branch to
major banks in the London interbank eurodollar market at their request at
approximately 4:00 p.m. (London time) two Business Days prior to the first day
of such Interest Period.

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

 

 

13

 

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

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

“Existing
Borrower Account Transfer Agreement” means that certain Borrower Account
Transfer Agreement dated as of February 5, 2001 by and between Mid-State Homes
and Mid-State Homes Trust IX, as
amended through that certain Omnibus Amendment dated as of February 3, 2003,
and as further amended from time to time in accordance with the terms of this
Agreement.

“Existing Credit Agreement” means that
certain Credit Agreement dated as of October 15, 1997 among the Borrower, Bank
of America, as agent, and a syndicate of lenders, as amended.

“Existing Credit Agreement Payments” means,
for any period, all scheduled payments of principal under the Existing Credit
Agreement during such period.

“Existing Mortgage Warehouse Facility” means
that certain Variable Funding Loan Agreement dated as of February 5, 2001 by
and among Enterprise Funding Corporation, Mid-State Trust IX, Wachovia Bank,
National Association and Bank of America, N.A., as amended through the Omnibus
Amendment dated as of February 3, 2003, and as further amended from time to
time in accordance with the terms of this Agreement.

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

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

“Federal Funds Rate” means, for any
day, the rate per annum equal to the weighted average of the rates on overnight
Federal funds transactions with members of the Federal

 

 

14

 

Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank on the Business Day next succeeding such
day; provided that (a) if such day is not a Business Day, the Federal
Funds Rate for such day shall be such rate on such transactions on the next
preceding Business Day as so published on the next succeeding Business Day, and
(b) if no such rate is so published on such next succeeding Business Day, the
Federal Funds Rate for such day shall be the average rate charged to Bank of
America on such day on such transactions as determined by the Administrative
Agent.

“Foreign
Lender” has the meaning specified in Section 11.15(a)(i).

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

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

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

“GAAP”
means generally accepted accounting principles in the United States set forth
in the opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and statements and pronouncements
of the Financial Accounting Standards Board or such other principles as may be
approved by a significant segment of the accounting profession in the United
States, that are applicable to the circumstances as of the date of
determination, consistently applied.

“Governmental
Authority” means any nation or government, any state or other political
subdivision thereof, any agency, authority, instrumentality, regulatory body,
court, administrative tribunal, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative powers or functions
of or pertaining to government.

“Granting Lender” has the meaning specified
in Section 11.07(g).

“Guarantee” means, as to any Person,
any (a) any obligation, contingent or otherwise, of such Person guaranteeing or
having the economic effect of guaranteeing any Indebtedness or other obligation
payable or performable by another Person (the “primary obligor”) in any manner,
whether directly or indirectly, and including any obligation of such Person,
direct or indirect, (i) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Indebtedness or other obligation, (ii) to purchase
or lease property, securities or services for the purpose of assuring the obligee
in respect of such Indebtedness or other obligation of the payment or
performance of such Indebtedness or other obligation, (iii) to maintain working
capital, equity capital or any other financial statement condition or liquidity
or level of income or cash flow of the primary obligor so as to enable the
primary obligor to pay such Indebtedness or other obligation, or (iv) entered
into for the purpose of assuring in any other manner the obligee in respect of
such Indebtedness or other obligation of the payment or performance thereof or
to protect such obligee against loss in respect thereof (in whole or in part),
or (b) any Lien on any assets of such Person securing any Indebtedness or other
obligation of any other Person, whether

 

 

15

 

or not such Indebtedness or other obligation is assumed by such
Person.  The amount of any Guarantee
shall be deemed to be an amount equal to the stated or determinable amount of
the related primary obligation, or portion thereof, in respect of which such
Guarantee is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof as determined by the guaranteeing
Person in good faith.  The term
“Guarantee” as a verb has a corresponding meaning.

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

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

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

“Hazardous Materials” means all explosive or
radioactive substances or wastes and all hazardous or toxic substances, wastes
or other pollutants, including petroleum or petroleum distillates, asbestos or
asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious
or medical wastes and all other substances or wastes regulated pursuant to any Environmental
Law.

“Honor
Date” has the meaning set forth in Section 2.04(c).

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

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

(b)           all direct or contingent obligations
of such Person arising under letters of credit (including standby and
commercial), bankers’ acceptances, bank guaranties, surety bonds and similar
instruments;

(c)           net obligations of such Person under
any Swap Contract;

(d)           all obligations of such Person to pay
the deferred purchase price of property or services (other than trade accounts
payable in the ordinary course of business);

(e)           indebtedness
(excluding prepaid interest thereon) secured by a Lien on property owned or
being purchased by such Person (including indebtedness arising under
conditional sales or other title retention agreements), whether or not such
indebtedness shall have been assumed by such Person or is limited in recourse;

 

 

16

 

(f)            capital leases and Synthetic Lease
Obligations; and

(g)           all Guarantees of such Person in
respect of any of the foregoing.

For
all purposes hereof, the Indebtedness of any Person shall include the
Indebtedness of any partnership or joint venture (other than a joint venture
that is itself a corporation or limited liability company) in which such Person
is a general partner or a joint venturer, to the extent such Indebtedness is
recourse to such Person.  The amount of
any net obligation under any Swap Contract on any date shall be deemed to be
the Swap Termination Value thereof as of such date.  The amount of any capital lease or Synthetic Lease Obligation as
of any date shall be deemed to be the amount of Attributable Indebtedness in
respect thereof as of such date.

“Indemnified
Liabilities” has the meaning set forth in Section 11.05.

“Indemnitees”
has the meaning set forth in Section 11.05.

“Indenture”
means any Indenture or similar document pursuant to which any of the Mortgage
Backed Securities or any Indebtedness permitted by Section 8.03(g)(i) or
(iii) is issued.

“Interest
Payment Date” means, (a) as to any Eurodollar Rate Loan, the last day of
the relevant Interest Period, any date that such Loan is prepaid or Converted,
in whole or in part, and the Revolving Credit Maturity Date or the Term Loan B
Maturity Date, as applicable; provided, however, that if any
Interest Period for a Eurodollar Rate Loan exceeds three months, the respective
dates that fall every three months after the beginning of such Interest Period
shall also be Interest Payment Dates; and (b) as to any Base Rate Loan
(including a Swing Line Loan), (i) the fifteenth (or the next Business Day
after the fifteenth, if the fifteenth is not a Business Day) of each January,
April, July and October with respect to interest accrued through the last day
of each fiscal quarter of the Borrower ending immediately prior to such date,
and (ii) the Revolving Credit Maturity Date or the Term Loan B Maturity Date,
as applicable, with respect to interest accrued through such date; provided,
further, that interest accruing at the Default Rate shall be payable
from time to time upon demand of the Administrative Agent.

“Interest
Period” means, as to each Eurodollar Rate Loan, the period commencing on
the date such Eurodollar Rate Loan is disbursed or on the date any Loan is
Continued as or Converted into a Eurodollar Rate Loan, and ending, in each
case, on the date which is one, two, three or six months thereafter, as
selected by the Borrower in its Revolving Loan Notice or Term Loan Interest
Rate Selection Notice; provided that:

(i)            any Interest Period that would
otherwise end on a day that is not a Business Day shall be extended to the next
succeeding Business Day unless such Business Day falls in another calendar
month, in which case such Interest Period shall end on the next preceding
Business Day;

(ii)           any
Interest Period that begins on the last Business Day of a calendar month (or on
a day for which there is no numerically corresponding day in the calendar month
at the end of such Interest Period) shall end on the last Business Day of the
calendar month at the end of such Interest Period;

 

 

17

 

(iii)          no Interest Period shall extend beyond
(a) with respect to Revolving Loans, the Revolving Credit Maturity Date, and
(b) with respect to the Term Loan B, the date set forth in part (a) of the
definition of the Term Loan B Maturity Date; and

(iv)          for a period of fourteen days after
the Closing Date, Interest Periods for Eurodollar Rate Segments of the Term
Loan B will be available for a period commencing on the date such Eurodollar
Rate Loan is advanced, Continued as or Converted into a Eurodollar Rate Segment
and ending on the date that is one week thereafter, as more fully described in Section
2.01(b).

“Investment”
means, as to any Person, any direct or indirect acquisition or investment by
such Person, whether by means of (a) the purchase or other acquisition of
capital stock or other securities of another Person, (b) a loan, advance or
capital contribution to, Guarantee or assumption of debt of, or purchase or
other acquisition of any other debt or equity participation or interest in,
another Person, including any partnership or joint venture interest in such
other Person, (c) the purchase or other acquisition (in one transaction or a
series of transactions) of assets of another Person that constitute a business
unit, or (d) the purchase of land and related infrastructure improvements.  For purposes of covenant compliance, the
amount of any Investment shall be the amount actually invested, without
adjustment for subsequent increases or decreases in the value of such
Investment.

“IP Rights” has the meaning set forth in Section
6.17.

“IRS”
means the United States Internal Revenue Service.

“Joinder
Agreements” means, collectively, Guaranty Joinder Agreements, the Pledge
Joinder Agreements and the Security Joinder Agreements.

“Laws”
means, collectively, all international, foreign, Federal, state and local
statutes, treaties, rules, regulations, ordinances, codes and administrative or
judicial precedents or authorities, including the interpretation or
administration thereof by any Governmental Authority charged with the
enforcement, interpretation or administration thereof, and all applicable
administrative orders, directed duties, requests, licenses, authorizations and
permits of, and agreements with, any Governmental Authority, in each case
whether or not having the force of law.

“L/C
— BA Advance” means, with respect to each Lender, such Lender’s funding of
its participation in any L/C — BA Borrowing in accordance with its Pro Rata
Revolving Share.

“L/C
— BA Borrowing” means an extension of credit resulting from (i) a drawing
under any Letter of Credit (other than an Acceptance Credit) or (ii) a payment
of a Bankers’ Acceptance upon presentation, in each case which has not been
reimbursed on the date when made or refinanced as a Revolving Borrowing.

“L/C — BA Credit Extension” means,
with respect to any Letter of Credit or Bankers’ Acceptance, the issuance
thereof or extension of the expiry date thereof, or the renewal or increase of
the amount thereof.

 

 

18

 

“L/C
Issuer” means each of Bank of America and SunTrust Bank, each in its
capacity as an issuer of Letters of Credit and Bankers’ Acceptances hereunder,
or any successor issuers of Letters of Credit and Bankers’ Acceptances
hereunder.

“L/C
— BA Obligations” means, as at any date of determination, the aggregate
undrawn amount of all outstanding Letters of Credit, plus the sum of the
maximum aggregate amount which is, or at any time thereafter may become,
payable by the L/C Issuers under all then outstanding Bankers’ Acceptances, plus
the aggregate of all Unreimbursed Amounts, including all L/C — BA Borrowings.

“Lender”
has the meaning specified in the introductory paragraph hereto and, as the
context requires, includes the applicable L/C Issuer and the Swing Line Lender.

“Lending
Office” means, as to any Lender, the office or offices of such Lender
described as such in such Lender’s Administrative Questionnaire, or such other
office or offices as a Lender may from time to time notify the Borrower and the
Administrative Agent.

“Letter
of Credit” means any letter of credit issued hereunder, and shall include the Existing Letters of
Credit.  A Letter of Credit may be a commercial letter of credit or a standby
letter of credit.

“Letter
of Credit Application” means an application and agreement for the issuance
or amendment of a Letter of Credit in the form from time to time in use by the
applicable L/C Issuer and, in the case of any Acceptance Credit, shall include
the related Acceptance Documents.

“Letter
of Credit — BA Expiration Date” means the day that is seven days prior to
the Revolving Credit Maturity Date then in effect (or, if such day is not a
Business Day, the next preceding Business Day).

“Letter
of Credit — BA Fees” means, collectively or individually as the context may
indicate, the fees with respect to Letters of Credit described in Sections
2.04(i)(i) and (ii).

“Letter
of Credit — BA Sublimit” means an amount equal to the lesser of (a)
$100,000,000 and (b) the Aggregate Revolving Credit Commitment.  The Letter of Credit — BA  Sublimit is part of, and not in addition to,
the Aggregate Commitments.

“Lien”
means any mortgage, pledge, hypothecation, assignment, deposit arrangement,
encumbrance, lien (statutory or other), charge, or preference, priority or
other security interest or preferential arrangement of any kind or nature
whatsoever (including any conditional sale or other title retention agreement,
and any financing lease having substantially the same economic effect as any of
the foregoing).

“Loan”
means an extension of credit by a Lender to the Borrower under Article II
in the form of a Revolving Loan, a Term Loan B or a Swing Line Loan, including
any Segment.

“Loan Documents” means this Agreement,
each Note, the Guaranty (including the Guaranty Joinder Agreements), each
Security Instrument, each Revolving Loan Notice, each

 

 

19

 

Term
Loan Interest Rate Selection Notice, each Letter of Credit Application and each
Compliance Certificate, and all other instruments and documents heretofore or
hereafter executed or delivered to or in favor of any Lender or the Administrative
Agent in connection with the Loans made and transactions contemplated by this
Agreement.

“Loan
Parties” means, collectively, the Borrower, each Guarantor and each other
Person providing Collateral pursuant to any Security Instrument.

“Material
Adverse Effect” means (a) a material adverse change in, or a material
adverse effect upon, the operations, business, assets, properties, liabilities
(actual or contingent), condition (financial or otherwise) or prospects of the
Borrower and its Subsidiaries taken as a whole; (b) a material impairment of
the ability of any Loan Party to perform its obligations under any Loan
Document to which it is a party; or (c) a material adverse effect upon the
legality, validity, binding effect or enforceability against any Loan Party of
any Loan Document to which it is a party.

“Material
Subsidiary” means, each direct or indirect Restricted Subsidiary of the
Borrower that (i) has total assets (including equity interests in other
Subsidiaries) of equal to or greater than 3% of Consolidated Total Assets
(calculated as of the most recent fiscal period with respect to which the
Administrative Agent shall have received financial statements required to be
delivered pursuant to Sections 7.01(a) or (b) (or if prior to delivery
of any financial statements pursuant to such Sections, then calculated based on
the Audited Financial Statements) (the “Required Financial Information”)),
or (ii) has revenues equal to or greater than 3% of the total revenues (on a
consolidated basis) of the Borrower and its Restricted Subsidiaries (calculated
for the most recent period for which the Administrative Agent has received the
Required Financial Information); provided, however, that
notwithstanding the foregoing, the term “Material Subsidiaries” shall mean
Restricted Subsidiaries of the Borrower that together have assets equal to not
less than 90% of Consolidated Total Assets (calculated as described above) and
revenues of not less than 90% of the total revenues of the Borrower and its
Restricted Subsidiaries (calculated as described above).

“Mid-State
Homes” means Mid-State Homes, Inc., a Florida corporation.

“Mid-State Homes Guaranty” means
that certain Guaranty Agreement (Mid-State Homes and Walter Mortgage) dated as
of the date hereof by each of Mid-State Homes and Walter Mortgage Company in
favor of the Administrative Agent (on behalf of the Secured Parties)
substantially in the form of Exhibit H.

“Mining
Assets” means and includes (i) the capital stock of Jim Walter Resources,
Inc., and (ii) the assets of Jim Walter Resources, Inc., including its direct
ownership interest in Black Warrior Methane Corp. and Black Warrior
Transmission Corp., its indirect ownership interest in International Coalbed
Methane Group, its mining asset investments and its De-Gas Division.

“Mining
Sale” means the Disposition of all or part of the Mining Assets, including
by split-up, spin-off or otherwise.

“Moody’s”
means Moody’s Investors Service, Inc. and any successor thereto.

 

 

20

 

“Mortgage
Accounts” means certain building and installment contracts and related
mortgages and instruments originated by Jim Walter Homes, Inc., Neatherlin
Homes, Inc., Dream Homes, Inc., Dream Homes USA, Inc., Crestline Homes, Inc.
and Walter Mortgage Company, each a Subsidiary of the Borrower.

“Mortgage-Backed
Securities” means, collectively, (i) the Asset Backed Notes issued by
Mid-State Trust IV, a Delaware business trust established by Mid-State Homes,
having an aggregate principal amount outstanding as of December 31, 2002 of
approximately $456,771,000, (iii) the Asset Backed Notes issued by Mid-State
Trust VI, a Delaware business trust established by Mid-State Homes, having an
aggregate principal amount outstanding as of December 31, 2002 of approximately
$257,107,000, (iv) the Asset Backed Notes issued by Mid-State Trust VII, a
Delaware business trust established by Mid-State Homes, having an aggregate
principal amount outstanding as of December 31, 2002 of approximately
$225,543,000, (v) the Asset Backed Notes issued by Mid-State Trust VIII, a
Delaware business trust established by Mid-State Homes, having an aggregate
principal amount outstanding as of December 31, 2002 of approximately
$295,537,000, and (vi)  the Asset Backed
Notes issued by Mid-State Trust X, a Delaware business trust established by
Mid-State Homes, having an aggregate principal amount outstanding as of
December 31, 2002 of approximately $364,048,000.

“Mortgage
Warehouse Facility” means, as in effect at any date of determination
thereof, either (a) the Existing Mortgage Warehouse Facility, or (b) another
credit facility (or facilities, on a combined basis, if more than one)
acceptable to the Administrative Agent in its reasonable discretion for the
warehousing of mortgages that provides financing to Mid-State Trust IX or
another MSH Trust established for such purpose, and that otherwise serves
substantially the same purpose on substantially the same terms as the Existing
Mortgage Warehouse Facility, but in no event on any terms less favorable in any
material respect, in the reasonable judgment of the Administrative Agent, to
the Administrative Agent and the Lenders than those terms in the Existing
Mortgage Warehouse Facility on the Closing Date.

“MSH
Trust Cash Releases” means, for any period, the permanent releases of
unencumbered (other than by Liens in connection with Indebtedness permitted by Section
8.03(m)) cash during such period to Mid-State Homes from any of the MSH
Trusts by the relevant Trustee pursuant to the related Indenture or Mortgage
Warehouse Facility, after  deduction of
all related servicing costs and related expenses, all as evidenced by the
Payment Date Statement or a similar statement providing substantially the same
information in substantially the same detail.

“MSH
Trusts” means, collectively, each of the Mid-State Trust II, Mid-State
Trust III, Mid-State Trust IV, Mid-State Trust VI, Mid-State Trust VII,
Mid-State Trust VIII and Mid-State Trust X entities referred to in the
definition of “Mortgaged-Backed Securities,” Mid-State Trust V and Mid-State
Trust IX, and any other special purpose entity in which Mid-State Homes and/or
Walter Mortgage Company shall own all of the equity or residual beneficial
interest created and operated solely for the purpose of issuing asset-backed
securities permitted by Section 8.03(g)(iii) or 8.03(i).

“Multiemployer Plan” means any
employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to
which the Borrower or any ERISA Affiliate makes or is obligated to

 

 

21

 

make contributions, or during the preceding five plan years, has made
or been obligated to make contributions.

“Net Cash Proceeds” means,

(a)           with respect to the sale of any asset
by the Borrower or any Subsidiary, the excess, if any, of (i) the sum of cash
and cash equivalents received in connection with such sale (including any cash
received by way of deferred payment pursuant to, or by monetization of, a note
receivable or otherwise, but only as and when so received) over (ii) the sum of
(A) the principal amount of any Indebtedness that is secured by such asset and
that is required to be repaid in connection with the sale thereof (other than
Indebtedness under the Loan Documents and Indebtedness owing to the Borrower or
any Subsidiary), (B) the out-of-pocket expenses incurred by the Borrower or any
Subsidiary in connection with such sale, including any brokerage commissions,
underwriting fees and discount, legal fees, finder’s fees and other similar
fees and commissions, (C) taxes paid or reasonably estimated to be payable by
the Borrower or any Subsidiary in connection with the relevant asset sale, and
(D) the amount of any reasonable reserve required to be established in
accordance with GAAP against liabilities (other than taxes deducted pursuant to
(D) above) to the extent such reserves are (I) associated with the assets that
are the object of such sale and (II) retained by the Borrower or any
Subsidiary; provided that the amount of any subsequent reduction of any
reserve provided for in clause (D) above (other than in connection with a
payment in respect of such liability) shall (X) be deemed to be Net Cash
Proceeds of such asset sale occurring on the date of such reduction, and (Y)
immediately be applied to the prepayment of Loans in accordance with Section
2.06(d); and

(b)           with respect to the public and
private issuance of any Indebtedness by the Borrower or any Subsidiary, the
excess of (i) the sum of the cash and cash equivalents received in connection with
such issuance over (ii) the sum of (A) the underwriting discounts and
commissions, and all legal, accounting, printing, rating agency, banking, title
and recording fees and expenses and other out-of-pocket expenses, incurred by
the Borrower or such Subsidiary in connection with such issuance, and (B) all
taxes required to be paid or accrued as a consequence of such issuance.

“Non-Core
Subsidiaries” means, individually or collectively as the context may
indicate, Applied Industrial Materials Corporation and its Subsidiaries,
Applied Industrial Materials Germany GmbH, Applied Industrial Materials
Luxembourg, S.A., JW Aluminum Company, Sloss Industries Corporation and its
Subsidiaries, Southern Precision Corporation, Vestal Manufacturing Corporation,
Best Insurors, Inc. and Cardem.

“Notes”
means, collectively, the Revolving Loan Notes and the Term Loan B Notes.

“Obligations” means all advances to,
and debts, liabilities, obligations, covenants and duties of, any Loan Party
arising under any Loan Document or otherwise with respect to any Loan, Letter
of Credit or Bankers’ Acceptance, or arising under any Related Swap Contract,
in each case whether direct or indirect (including those acquired by
assumption), absolute or contingent, due or to become due, now existing or
hereafter arising and including interest and

 

 

22

 

fees that accrue after the commencement by or against any Loan Party or
any Affiliate thereof of any proceeding under any Debtor Relief Laws naming
such Person as the debtor in such proceeding, regardless of whether such
interest and fees are allowed claims in such proceeding.

“Organization
Documents” means, (a) with respect to any corporation, the certificate or
articles of incorporation and the bylaws (or equivalent or comparable
constitutive documents with respect to any non-U.S. jurisdiction); (b) with
respect to any limited liability company, the certificate or articles of
formation or organization and operating agreement; and (c) with respect to any
partnership, joint venture, trust or other form of business entity, the
partnership, joint venture or other applicable agreement of formation or
organization and any agreement, instrument, filing or notice with respect
thereto filed in connection with its formation or organization with the
applicable Governmental Authority in the jurisdiction of its formation or
organization and, if applicable, any certificate or articles of formation or
organization of such entity.

“Other
Taxes” has the meaning therefor set forth in Section 4.01(b).

“Outstanding
Amount” means (i) with respect to the Term Loan B on any date, the
aggregate outstanding principal amount thereof after giving effect to the
Borrowing of the Term Loan B on the Closing Date, and any prepayments or
repayments of the Term Loan B (or any Segment) occurring on such date, (ii)
with respect to Revolving Loans on any date, the aggregate outstanding
principal amount thereof after giving effect to any Revolving Borrowings and
any prepayments or repayments of Revolving Loans occurring on such date; (iii)
with respect to Swing Line Loans on any date, the aggregate outstanding
principal amount thereof after giving effect to any borrowings and prepayments
or repayments of Swing Line Loans occurring on such date; and (iv) with respect
to any L/C — BA Obligations on any date, the amount of such L/C —BA Obligations
on such date after giving effect to any L/C - BA Credit Extension occurring on
such date and any other changes in the aggregate amount of the L/C - BA
Obligations as of such date, including as a result of any reimbursements of
amounts paid under Bankers’ Acceptances or outstanding unpaid drawings under
any Letters of Credit or any reductions in the maximum amount available for
drawing under Letters of Credit taking effect on such date.

“Participant”
has the meaning specified in Section 11.07(d).

“Payment
Date Statement” means the notification Mid-State Homes receives from the
relevant Trustee for each MSH Trust for any relevant period indicating, among other
items, MSH Trust collections and distributions during such period, or any such
similar statement serving the same purpose and providing substantially the same
information in substantially the same detail.

“PBGC”
means the Pension Benefit Guaranty Corporation.

“Pension Plan” means any “employee
pension benefit plan” (as such term is defined in Section 3(2) of ERISA), other
than a Multiemployer Plan, that is subject to Title IV of ERISA and is
sponsored or maintained by the Borrower or any ERISA Affiliate or to which the
Borrower or any ERISA Affiliate contributes or has an obligation to contribute,
or in the case of a multiple employer or other plan described in Section
4064(a) of ERISA, has made contributions at any time during the immediately
preceding five plan years.

 

 

23

 

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

“Plan”
means any “employee benefit plan” (as such term is defined in Section 3(3) of
ERISA) established by the Borrower or, with respect to any such plan that is
subject to Section 412 of the Code or Title IV of ERISA, any ERISA Affiliate.

“Pledge
Agreement” means that certain Securities Pledge Agreement dated as of the
date hereof among the Borrower, certain Guarantors and the Administrative
Agent, as supplemented from time to time by the execution and delivery of
Pledge Joinder Agreements pursuant to Sections 3.01 and 7.12, as the
same may be otherwise supplemented (including by Pledge Agreement Supplement).

“Pledge
Agreement Supplement” means the Pledge Agreement Supplement in the form
affixed as an exhibit to the Pledge Agreement.

“Pledged
Interests” means, in each case excluding the Voting Securities and
Subsidiary Securities of any Unrestricted Subsidiary, (i) the Subsidiary
Securities of each of the existing or hereafter organized or acquired Domestic
Subsidiaries of the Borrower and Direct Foreign Subsidiaries of the Borrower
that at any time are on Schedule I to the Pledge Agreement (or any
similar schedule serving the same purpose in the Pledge Agreement); (ii) all of
the Subsidiary Securities of each of the existing or hereafter organized or
acquired Domestic Subsidiaries of the Borrower that is a Material Subsidiary;
and (ii) 65% of the Voting Securities (or if the relevant Person shall own less than
65% of such Voting Securities, then 100% of the Voting Securities owned by such
Person) and 100% of the nonvoting Subsidiary Securities of
each of the existing or hereafter organized or acquired Direct Foreign
Subsidiaries of the Borrower that is a Material Subsidiary.

“Pledge
Joinder Agreement” means each Pledge Joinder Agreement, substantially in
the form thereof attached to the Pledge Agreement, executed and delivered by a
Guarantor to the Administrative Agent pursuant to Section 7.12.

“Post-Closing
Agreement” has the meaning set forth in Section 5.01(a).

“Pro
Rata Revolving Share” means, with respect to each Revolving Lender at any
time, a fraction (expressed as a percentage, carried out to the ninth decimal
place), the numerator of which is the amount of the Revolving Credit Commitment
of such Revolving Lender at such time and the denominator of which is the amount
of the Aggregate Revolving Credit Commitments at such time; provided
that if the Aggregate Revolving Credit Commitments have been terminated at such
time, then the Pro Rata Revolving Share of each Revolving Lender shall be the
Pro Rata Revolving Share of such Revolving Lender immediately prior to such
termination and after giving effect to any subsequent assignments made pursuant
to Section 11.07.  The initial
Pro Rata Revolving Share of each Revolving Lender is set forth opposite the
name of such Revolving Lender on Schedule 2.01 or in the Assignment and
Assumption pursuant to which such Revolving Lender becomes a party hereto.

“Pro Rata Term B Share” means, with
respect to each Term Loan B Lender, the percentage (carried out to the ninth
decimal place) of the principal amount of the Term Loan B

 

 

24

 

funded by such Term Loan B Lender. 
The initial Pro Rata Term B Share of each Term Loan B Lender is set
forth opposite the name of such Term Loan B Lender on Schedule 2.01 or
in the Assignment and Assumption pursuant to which such Term Loan B Lender
becomes a party hereto.

“Register”
has the meaning set forth in Section 11.07(c).

“Related
Swap Contract” means all Swap Contracts that are entered into or maintained
with a Lender or Affiliate of a Lender that are not prohibited by the express
terms of the Loan Documents.

“Reportable
Event” means any of the events set forth in Section 4043(c) of ERISA, other
than events for which the 30 day notice period has been waived.

“Request
for Credit Extension” means (a) with respect to a Borrowing, Conversion or
Continuation of Revolving Loans, a Revolving Loan Notice, (b) with respect to a
Conversion or Continuation of Segments, a Term Loan Interest Rate Selection
Notice, (c) with respect to an L/C - BA Credit Extension, a Letter of Credit
Application, and (d) with respect to a Swing Line Loan, a Swing Line Loan
Notice.

“Required
Lenders” means, as of any date of determination, Lenders having more than 50% of the Aggregate Commitments
or, if the commitment of each Lender to make Loans and the obligation of the
L/C Issuers to make L/C - BA Credit Extensions have been terminated pursuant to
Section 9.02, Lenders holding in the aggregate more than 50% of the Total Outstandings (with the aggregate amount
of each Lender’s risk participation and funded participation in L/C — BA
Obligations and Swing Line Loans being deemed “held” by such Lender for
purposes of this definition); provided that any Revolving Credit
Commitment of, and the portion of the Total Outstandings held or deemed held
by, any Defaulting Lender shall be excluded for purposes of making a
determination of Required Lenders.

“Required
Prepayment Amount” means, with respect to the Net Cash Proceeds (or portion
thereof, as the case may  be) of each
applicable Disposition, (a) one hundred percent (100%) of such Net Cash
Proceeds if (i) the Disposition constitutes a Mining Sale or (ii) immediately
before giving effect to such Disposition, the Consolidated Leverage Ratio is
greater than or equal to 2.00 to 1.00, or (b) fifty percent (50%) of such Net
Cash Proceeds in all other cases.

“Required
Revolving Lenders” means, as of any date of determination, Revolving
Lenders having more than 50% of the Aggregate Revolving Credit Commitments and
Outstanding Amount (including risk participations in Letters of Credit and
Swing Line Loans) under the Revolving Credit Facility; provided that the
Revolving Credit Commitment of, and the portion of the Outstanding Amount
(including risk participations in Letters of Credit and Swing Line Loans) under
the Revolving Credit Facility held or deemed held by, any Defaulting Lender
shall be excluded for purposes of making a determination of Required Revolving
Lenders.

“Required Term Loan B Lenders” means,
as of any date of determination, Term Loan 
B Lenders having more than 50% of the Outstanding Amount of the Term
Loan B; provided that

 

 

25

 

the Outstanding Amount of the Term Loan B held or deemed held by any
Defaulting Lender shall be excluded for purposes of making a determination of
Required Term Loan B Lenders.

“Responsible
Officer” means, with respect to each Loan Party, the chief executive
officer, president, chief financial officer, treasurer, controller or assistant
treasurer of such Loan Party.  Any
document delivered hereunder that is signed by a Responsible Officer of a Loan
Party shall be conclusively presumed to have been authorized by all necessary
corporate, partnership and/or other action on the part of such Loan Party and
such Responsible Officer shall be conclusively presumed to have acted on behalf
of such Loan Party.

“Restricted
Payment” means any dividend or other distribution (whether in cash,
securities or other property) with respect to any capital stock or other equity
interest of the Borrower or any Subsidiary, or any payment (whether in cash,
securities or other property), including any sinking fund or similar deposit,
on account of the purchase, redemption, retirement, acquisition, cancellation
or termination of any such capital stock or other equity interest or of any
option, warrant or other right to acquire any such capital stock or other
equity interest.

“Restricted
Subsidiaries” means all Subsidiaries of the Borrower other than the Unrestricted Subsidiaries.

“Revolving
Borrowing” means a borrowing consisting of simultaneous Revolving Loans of
the same Type and, in the case of Eurodollar Rate Loans, having the same
Interest Period, made by each of the Revolving Lenders pursuant to Section
2.02.

“Revolving
Credit Commitment” means, as to each Revolving Lender, its obligation to
(a) make Revolving Loans to the Borrower pursuant to Section 2.02, (b)
purchase participations in L/C - BA Obligations, and (c) purchase
participations in Swing Line Loans, in an aggregate principal amount at any one
time outstanding not to exceed the amount set forth opposite such Revolving
Lender’s name on Schedule 2.01 or in the Assignment and Assumption
pursuant to which such Lender becomes a party hereto, as applicable, as such
amount may be adjusted from time to time in accordance with this Agreement.

“Revolving
Credit Facility” means the facility described in Section 2.02
providing for Revolving Loans to the Borrower by the Revolving Lenders in the
maximum aggregate principal amount at any time outstanding of $245,000,000, as
adjusted from time to time pursuant to the terms of this Agreement.

“Revolving
Credit Maturity Date” means (a) April 17, 2008.

“Revolving
Lender” means each Lender that has a Revolving Credit Commitment or,
following termination of the Revolving Credit Commitments, has Revolving Loans
outstanding or participations in an outstanding Letter of Credit or Swing Line
Loan.

“Revolving Loan” means a Base Rate
Loan or a Eurodollar Rate Loan made to the Borrower by a Revolving Lender in
accordance with its Pro Rata Revolving Share pursuant to Section 2.02,
except as otherwise provided herein.

 

26

“Revolving
Loan Note” means a promissory note made by the Borrower in favor of a
Revolving Lender evidencing Revolving Loans made by such Revolving Lender,
substantially in the form of Exhibit C-2.

“Revolving
Loan Notice” means a notice of (a) a Revolving Borrowing, (b) a Conversion
of Revolving Loans, or (c) a Continuation of Revolving Loans as the same Type,
pursuant to Section 2.03(a), which, if in writing, shall be
substantially in the form of Exhibit A-1.

“S&P” means Standard & Poor’s Ratings
Services, a division of The McGraw-Hill Companies, Inc. and any successor
thereto.

“SEC”
means the Securities and Exchange Commission, or any Governmental Authority
succeeding to any of its principal functions.

“Secured
Parties” means, collectively, with respect to each of the Security
Instruments, the Administrative Agent, the Lenders and such other Persons for
whose benefit the Lien thereunder is conferred, as therein provided.

“Security
Agreement” means the Security Agreement dated as of the date hereof by the
Borrower and one or more of the Guarantors to the Administrative Agent for the
benefit of the Secured Parties, substantially in the form of Exhibit I,
as supplemented from time to time by the execution and delivery of Security
Joinder Agreements pursuant to Section 7.12.

“Security
Instruments” means, collectively or individually as the context may
indicate, the Security Agreement
(including the Security Joinder Agreements), the Pledge Agreement
(including the Pledge Joinder Agreements and the Pledge Agreement Supplements),
and all other agreements (including control agreements), instruments and other
documents, whether now existing or hereafter in effect, pursuant to which the
Borrower or any Restricted Subsidiary or other Person shall grant or convey to
the Administrative Agent or the Lenders a Lien in, or any other Person shall
acknowledge any such Lien in, property as security for all or any portion of
the Obligations or any other obligation under any Loan Document, as any of them may be reinstated from time
to time in accordance with the terms hereof and thereof.

“Security
Joinder Agreement” means each Security Joinder Agreement, substantially in
the form thereof attached to the Security Agreement, executed and delivered by
a Guarantor or any other Person to the Administrative Agent pursuant to Section
7.12.

“Segment”
means a portion of any Term Loan (or all thereof) with respect to which a
particular interest rate is (or is proposed to be) applicable.

“Senior
Credit Facility” means, collectively, the Term Loan B Facility and the
Revolving Credit Facility.

“SPC” has the meaning specified in Section
11.07(g).

“Subsidiary” of a Person means a
corporation, partnership, joint venture, limited liability company or other
business entity of which a majority of the shares of securities or other
interests having ordinary voting power for the election of directors or other
governing body (other than

 

 

27

 

securities or interests having such power only by reason of the happening
of a contingency) are at the time beneficially owned, or the management of
which is otherwise controlled, directly, or indirectly through one or more
intermediaries, or both, by such Person. 
Unless otherwise specified, all references herein to a “Subsidiary”
or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of the
Borrower and shall include, without limitation, the Unrestricted Subsidiaries.

“Subsidiary Guaranty” means that
certain Guaranty Agreement dated as of the date hereof among the Guarantors
(other than Mid-State Homes and Walter Mortgage Company) and the Administrative
Agent (on behalf of the Lenders) substantially in the form of Exhibit F,
as supplemented from time to time by the execution and delivery of Guaranty
Joinder Agreements pursuant to Section 7.12, as from time to time the
same may be otherwise supplemented or amended, modified, amended and restated
or replaced.

“Subsidiary
Securities” means the shares of capital stock or the other equity interests
issued by or equity participations in any Subsidiary, whether or not
constituting a “security” under Article 8 of the Uniform Commercial Code as in
effect in any jurisdiction.

“Swap
Contract” means (a) any and all rate swap transactions, basis swaps, credit
derivative transactions, forward rate transactions, commodity swaps, commodity
options, forward commodity contracts, equity or equity index swaps or options,
bond or bond price or bond index swaps or options or forward bond or forward
bond price or forward bond index transactions, interest rate options, forward
foreign exchange transactions, cap transactions, floor transactions, collar
transactions, currency swap transactions, cross-currency rate swap
transactions, currency options, spot contracts, or any other similar transactions
or any combination of any of the foregoing (including any options to enter into
any of the foregoing), whether or not any such transaction is governed by or
subject to any master agreement, and (b) any and all transactions of any kind,
and the related confirmations, which are subject to the terms and conditions
of, or governed by, any form of master agreement published by the International
Swaps and Derivatives Association, Inc., any International Foreign Exchange
Master Agreement, or any other master agreement (any such master agreement,
together with any related schedules, a “Master Agreement”), including
any such obligations or liabilities under any Master Agreement.

“Swap
Termination Value” means, in respect of any one or more Swap Contracts,
after taking into account the effect of any legally enforceable netting
agreement relating to such Swap Contracts, (a) for any date on or after the
date such Swap Contracts have been closed out and termination value(s)
determined in accordance therewith, such termination value(s), and (b) for any
date prior to the date referenced in clause (a), the amount(s) determined as
the mark-to-market value(s) for such Swap Contracts, as determined based upon
one or more mid-market or other readily available quotations provided by any
recognized dealer in such Swap Contracts (which may include a Lender or any
Affiliate of a Lender).

“Swing Line” means the revolving
credit facility made available by the Swing Line Lender pursuant to Section
2.05.

 

 

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“Swing
Line Borrowing” means a borrowing of a Swing Line Loan pursuant to Section
2.05.

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

“Swing
Line Loan” has the meaning specified in Section 2.05(a).

“Swing
Line Loan Notice” means a notice of a Swing Line Borrowing pursuant to Section
2.05(b), which, if in writing, shall be substantially in the form of Exhibit
B.

“Swing
Line Note” means a promissory note made by the Borrower in favor of the
Swing Line Lender evidencing Swing Line Loans made by such Swing Line Lender,
substantially in the form of Exhibit C-3.

“Swing
Line Sublimit” means an amount equal to the lesser of (a) $15,000,000 and (b) the Aggregate
Revolving Credit Commitments.  The Swing
Line Sublimit is part of, and not in addition to, the Aggregate Revolving
Credit Commitments.

“Syndication
Agent” means SunTrust Bank in its capacity as syndication agent under any
of the Loan Documents, or any successor syndication agent.

“Synthetic
Lease Obligation” means the monetary obligation of a Person under (a) a
so-called synthetic, off-balance sheet or tax retention lease, or (b) an
agreement for the use or possession of property creating obligations that do
not appear on the balance sheet of such Person but which, upon the insolvency
or bankruptcy of such Person, would be characterized as the indebtedness of
such Person (without regard to accounting treatment).

“Taxes”
has the meaning therefor set forth in Section 4.01(a).

“Term
Loan B” means the loans made pursuant to the Term Loan B Facility in
accordance with Section 2.01.

“Term
Loan B Facility” means the facility described in Section 2.01
providing for an advance of the Term Loan B to the Borrower by the Term Loan B
Lenders in the original principal amount of $255,000,000, subject to
adjustments as herein provided.

“Term
Loan B Lender” means each Lender that has a portion of the Term Loan B
outstanding under the Term Loan B Facility.

“Term
Loan B Maturity Date” means (a) April 15, 2010, or (b) such earlier date
upon which the Outstanding Amounts under the Term Loan B Facility, including
all accrued and unpaid interest, are paid in full in accordance with the terms
hereof.

“Term Loan B Note” means a promissory
note made by the Borrower in favor of a Term Loan B Lender evidencing the
portion of the Term Loan B made by such Term Loan B Lender, substantially in
the form of Exhibit C-1.

 

 

29

 

“Term
Loan Interest Rate Selection Notice” means the written notice delivered by
a Responsible Officer of the Borrower in connection with the election of a
subsequent Interest Period for any Eurodollar Rate Segment or the Conversion of
any Eurodollar Rate Segment into a Base Rate Segment or the Conversion of any
Base Rate Segment into a Eurodollar Rate Segment, which, if in writing, shall
be substantially in the form of Exhibit A–2.

“Third
Party Mortgage Accounts” means certain building and installment contracts
or loans and related mortgages and instruments that (a) are originated by
Persons other than the Borrower or a Subsidiary, (b) constitute first mortgages
on single-family residential real property (but excluding mobile homes), and
(c) are acquired by Walter Mortgage Company or Mid-State Homes, each a
Subsidiary of the Borrower.

“Total
Outstandings” means the aggregate Outstanding Amount of all Loans and all
L/C - BA Obligations.

“Total
Revolving Outstandings” means the aggregate Outstanding Amount of all
Revolving Loans, Swing Line Loans and L/C - BA Obligations.

“Type”
means with respect to (i) a Revolving Loan, its character as a Base Rate Loan
or a Eurodollar Rate Loan, and (ii) a Segment, its character as a Base Rate
Segment or a Eurodollar Rate Segment.

“Unfunded
Pension Liability” means the excess of a Pension Plan’s benefit liabilities
under Section 4001(a)(16) of ERISA, over the current value of that Pension
Plan’s assets, determined at the end of each immediately preceding plan year
that this Agreement is in effect in accordance with the assumptions used for
funding the Pension Plan pursuant to Section 412 of the Code.

“United
States” and “U.S.” mean the United States of America.

“Unreimbursed
Amount” has the meaning set forth in Section 2.04(c)(i).

“Unrestricted
Subsidiaries” means the entities identified on Schedule 1.01(a)
hereto and each MSH Trust created after the Closing Date.

“Voting
Securities” means shares of capital stock issued by a corporation, or
equivalent interests in any other Person, the holders of which are ordinarily,
in the absence of contingencies, entitled to vote for the election of directors
(or persons performing similar functions) of such Person, even if the right so
to vote has been suspended by the happening of such a contingency.

“Walter
Mortgage Company” means Walter Mortgage Company, a Delaware corporation.

1.02        Other
Interpretive Provisions. 
With reference to this Agreement and each other Loan Document, unless
otherwise specified herein or in such other Loan Document:

(a)           The meanings of defined terms are
equally applicable to the singular and plural forms of the defined terms.

 

 

30

 

(b)           (i)            The
words “herein,” “hereto,” “hereof” and “hereunder”
and words of similar import when used in any Loan Document shall refer to such
Loan Document as a whole and not to any particular provision thereof.

(ii)           Article,
Section, Exhibit and Schedule references are to the Loan Document in which such
reference appears.

(iii)          The
term “including” is by way of example and not limitation.

(iv)          The
term “documents” includes any and all instruments, documents,
agreements, certificates, notices, reports, financial statements and other
writings, however evidenced, whether in physical or electronic form.

(c)           In the computation
of periods of time from a specified date to a later specified date, the word “from”
means “from and including”; the words “to” and “until”
each mean “to but excluding”; and the word “through” means “to
and including.”

(d)           Section headings
herein and in the other Loan Documents are included for convenience of
reference only and shall not affect the interpretation of this Agreement or any
other Loan Document.

1.03        Accounting Terms.  (a)  All accounting terms not specifically or completely
defined herein shall be construed in conformity with, and all financial data
(including financial ratios and other financial calculations) required to be
submitted pursuant to this Agreement shall be prepared in conformity with, GAAP
applied on a consistent basis, as in effect from time to time, applied in a
manner consistent with that used in preparing the Audited Financial Statements,
except as otherwise specifically prescribed herein.

(b)           If at any time any
change in GAAP would affect the computation of any financial ratio or
requirement set forth in any Loan Document, and either the Borrower or the
Required Lenders shall so request, the Administrative Agent, the Lenders and
the Borrower shall negotiate in good faith to amend such ratio or requirement
to preserve the original intent thereof in light of such change in GAAP
(subject to the approval of the Required Lenders); provided  that,
until so amended, (i) such ratio or requirement shall continue to be computed
in accordance with GAAP prior to such change therein and (ii) the Borrower
shall provide to the Administrative Agent and the Lenders financial statements
and other documents required under this Agreement or as reasonably requested
hereunder setting forth a reconciliation between calculations of such ratio or
requirement made before and after giving effect to such change in GAAP.

(c)           All defined terms used in the
calculation of the financial covenants set forth in Section 8.12 hereof
shall be calculated on an historical pro forma basis giving effect (by
inclusion or exclusion, as applicable), during any period of measurement that
includes any Acquisition permitted by Section 8.13 or any Disposition
permitted by Section 8.05(h), to the actual historical results of the
Person so acquired or disposed.

(d)           For
the avoidance of doubt, the term “the Borrower and its Restricted Subsidiaries”
as used in the defined terms used in the calculation of the financial covenants
set forth in Section 8.12 hereof shall not include any consolidation of
the assets, liabilities or results

 

 

31

 

of operations of the Unrestricted Subsidiaries in the assets,
liabilities or results of the Borrower or any Restricted Subsidiary.

1.04        Rounding.  Any financial ratios required to be
maintained by the Borrower pursuant to this Agreement shall be calculated by
dividing the appropriate component by the other component, carrying the result
to one place more than the number of places by which such ratio is expressed
herein and rounding the result up or down to the nearest number (with a
rounding-up if there is no nearest number).

1.05        References
to Agreements and Laws. 
Unless otherwise expressly provided herein, (a) references to
Organization Documents, agreements (including the Loan Documents) and other
contractual instruments shall be deemed to include all subsequent amendments,
restatements, extensions, supplements and other modifications thereto, but only
to the extent that such amendments, restatements, extensions, supplements and
other modifications are not prohibited by any Loan Document; and (b) references
to any Law shall include all statutory and regulatory provisions consolidating,
amending, replacing, supplementing or interpreting such Law.

1.06        Times of Day.  Unless otherwise specified,
all references herein to times of day shall be references to Eastern time
(daylight or standard, as applicable).

1.07        Letter of
Credit Amounts. 
Unless otherwise specified, all references herein to the amount of a
Letter of Credit at any time shall be deemed to mean the maximum face amount of
such Letter of Credit after giving effect to all increases thereof contemplated
by such Letter of Credit or the Letter of Credit Application therefor, whether
or not such maximum face amount is in effect at such time.

ARTICLE II.

THE COMMITMENTS AND CREDIT EXTENSIONS

2.01        Term Loan B.

(a)           Subject to the terms
and conditions of this Agreement, each Term Loan B Lender severally agrees to
make an advance of its Pro Rata Term B Share of the Term Loan B to the Borrower
on the Closing Date, and from the Closing Date to the Term Loan B Maturity
Date, Convert and Continue Segments from time to time in accordance with the
terms hereof.  The principal amount of
each Segment of the Term Loan B outstanding hereunder from time to time shall
bear interest and the Term Loan B shall be repayable as herein provided.  No amount of the Term Loan B repaid or
prepaid by the Borrower may be reborrowed hereunder, and no subsequent advance
under the Term Loan B Facility shall be allowed after the initial such advance
of the Term Loan B on the Closing Date. 
Segments of the Term Loan B may be Base Rate Segments or Eurodollar Rate
Segments at the Borrower’s election, as provided herein.

(b)           Not later than 1:00 P.M. New York
time, on the Closing Date, each Term Loan B Lender shall, pursuant to the terms
and subject to the conditions of this Agreement, make the amount of its Pro
Rata Term B Share of the Term Loan B available by wire transfer to the
Administrative Agent.  Such wire transfer
shall be directed to the Administrative Agent at the Administrative Agent’s
Office and shall be in the form of same day funds in Dollars.  The

 

 

32

 

amount so received
by the Administrative Agent shall, subject to the terms and conditions of this
Agreement, including without limitation the satisfaction of all applicable
conditions in Sections 5.01 and 5.02, be made available to the Borrower
by delivery of the proceeds thereof as shall be directed by the Responsible
Officer of the Borrower and reasonably acceptable to the Administrative
Agent.  The initial Borrowing of the
Term Loan B may be a Eurodollar Rate Segment, a Base  Rate Segment, or both; provided that (i)
nothwithstanding anything to the contrary in Section 2.03 or otherwise,
any Eurodollar Rate Segment to be a portion of the initial Borrowing of the
Term Loan B, and each Conversion to or Continuation of a Eurodollar Rate
Segment made during the period of fourteen days after the Closing Date, may
only be for a period beginning on the date such Eurodollar Rate Segment is
initially advanced, or on the date any Segment is Continued as or Converted
into a Eurodollar Rate Segment, and ending on the date that is one week
thereafter, and (ii) if the Borrower desires that any portion of the initial
Borrowing of the Term Loan B is advanced as a Eurodollar Rate Segment, the
Administrative Agent shall make such Borrowing as a Eurodollar Rate Segment
only if, not later than three Business Days prior to the date that is then
anticipated to be the Closing Date, the Administrative Agent has received from
the Borrower a Term Loan Interest Rate Selection Notice with respect thereto,
together with the Borrower’s written acknowledgement in form and substance
satisfactory to the Administrative Agent that the provisions of Section 4.05
hereof shall apply to any failure by the Borrower to borrow on the date set
forth in such Term Loan Interest Rate Selection notice any or all of the
amounts specified in such Term Loan Interest Rate Selection Notice.

2.02        Revolving Loans.  Subject to the terms and
conditions set forth herein, each Revolving Lender severally agrees to make,
Convert and Continue Revolving Loans to the Borrower from time to time, on any
Business Day during the Availability Period, in an aggregate amount not to
exceed at any time outstanding the amount of such Revolving Lender’s Revolving
Credit Commitment; provided, however, that after giving effect to
any Revolving  Borrowing,
(i) the Total Revolving Outstandings shall not exceed the Aggregate Revolving
Credit Commitments, and (ii) the aggregate Outstanding Amount of the Revolving
Loans of any Revolving Lender, plus such Lender’s Pro Rata Revolving
Share of the Outstanding Amount of all L/C - BA Obligations, plus such
Lender’s Pro Rata Revolving Share of the Outstanding Amount of all Swing Line
Loans shall not exceed such Lender’s Revolving Credit Commitment.  Within the limits of each Revolving Lender’s
Revolving Credit Commitment, and subject to the other terms and conditions
hereof, the Borrower may borrow under this Section 2.02, prepay under Section
2.06, and reborrow under this Section 2.02.  Revolving Loans may be Base Rate Loans or
Eurodollar Rate Loans, as further provided herein.

2.03        Borrowings, Conversions and
Continuations.

(a)           Each Revolving Borrowing, each
Conversion of Revolving Loans or Segments of the Term Loan B, and each
Continuation of Revolving Loans or Segments of the Term Loan B shall be made
upon the Borrower’s irrevocable notice to the Administrative Agent, which may
be given by telephone.  Each such notice
must be received by the Administrative Agent not later than 11:00 a.m. (i)
three Business Days prior to the requested date of any Borrowing of, Conversion
to or Continuation of Eurodollar Rate Loans, and (ii) on the requested date of
any Borrowing of, or Conversion to, Base Rate Loans.  Each telephonic notice by the Borrower pursuant to this Section
2.03(a) must be confirmed promptly by delivery to the Administrative

 

 

33

 

Agent of a written
Revolving Loan Notice (as to Revolving Borrowings) or Term Loan Interest Rate
Selection Notice, appropriately completed and signed by a Responsible Officer
of the Borrower (unless such Revolving Loan Notice is being delivered by a
Swing Line Lender pursuant to Section 2.05(c) or by the Administrative
Agent on behalf of the L/C Issuer pursuant to Section 2.04(c)(i)); provided
that the lack of such prompt confirmation shall not affect the conclusiveness
or binding effect of such telephonic notice. 
Each Borrowing of, Conversion to or Continuation of Eurodollar Rate
Loans shall be in a principal amount of $5,000,000 or a whole multiple of
$1,000,000 in excess thereof.  Except as
provided in Sections 2.04(c) and 2.05(c), each Borrowing of or
Conversion to Base Rate Loans shall be in a principal amount of $5,000,000 or a
whole multiple of $1,000,000 in excess thereof.  Each Revolving Loan Notice and Term Loan Interest Rate Selection
Notice (whether telephonic or written) shall specify (i) whether the Borrower
is requesting a Revolving Borrowing (applicable to Revolving Loan Notices
only), a Conversion of Revolving Loans, or a Continuation of Eurodollar Rate
Loans, (ii) the requested date of the Borrowing, Conversion or Continuation, as
the case may be (which shall be a Business Day), (iii) the principal amount of
Revolving Loans to be borrowed, converted or continued, (iv) the Type of
Revolving Loans to be borrowed or to which existing Revolving Loans are to be converted,
and (v) if applicable, the duration of the Interest Period with respect
thereto.  Each written Revolving Loan
Notice shall be substantially in the form of Exhibit A-1 attached
hereto, and each written Term Loan Interest Rate Selection Notice shall be
substantially in the form of Exhibit A-2 attached hereto.  If the Borrower fails to specify a Type of
Revolving Loans in a Revolving Loan Notice or if the Borrower fails to give a
timely notice requesting a Conversion or Continuation of Loans, then the
applicable Loans shall, subject to the last sentence of this Section 2.03(a),
be made as, or Continued as, or Converted to, Base Rate Loans.  Any such automatic Conversion to Base Rate
Loans shall be effective as of the last day of the Interest Period then in
effect with respect to the applicable Eurodollar Rate Loans.  If the Borrower requests a Borrowing of,
Conversion to, or Continuation of Eurodollar Rate Loans in any such Revolving
Loan Notice or Term Loan Interest Rate Selection Notice, but fails to specify
an Interest Period, it will be deemed to have specified an Interest Period of
one month.

(b)           Following receipt of a Revolving Loan
Notice, the Administrative Agent shall promptly notify each applicable Lender
of its Pro Rata Revolving Share of the applicable Revolving Loans, and if no
timely notice of a Conversion or Continuation is provided by the Borrower, the
Administrative Agent shall notify each Lender of the details of any automatic
Conversion to Base Rate Loans described in the preceding subsection.  In the case of a Revolving Borrowing, each
applicable Lender shall make the amount of its Revolving Loan available to the
Administrative Agent in immediately available funds at the Administrative
Agent’s Office not later than 1:00 p.m. on the Business Day specified in the
applicable Revolving Loan Notice.  Upon
satisfaction of the applicable conditions set forth in Section 5.02
(and, if such Borrowing is the initial Credit Extension, Section 5.01),
the Administrative Agent shall make all funds so received available to the
Borrower in like funds as received by the Administrative Agent either by (i)
crediting the account of the Borrower on the books of Bank of America with the
amount of such funds or (ii) wire transfer of such funds, in each case in accordance
with instructions provided to (and reasonably acceptable to) the Administrative
Agent by the Borrower; provided, however, that if, on the date
the Revolving Loan Notice with respect to such Borrowing is given by the
Borrower, there are Swing Line Loans or L/C Borrowings outstanding, then the
proceeds of such Borrowing shall be applied, first, to the

 

 

34

 

payment in full of
any such L/C Borrowings, second, to the payment in full of any such
Swing Line Loans, and third, to the Borrower as provided above.

(c)           Except as otherwise
provided herein, a Eurodollar Rate Loan may be Continued or Converted only on
the last day of an Interest Period for such Eurodollar Rate Loan.  During the existence of a Default, no Loans
may be requested as, Converted to or Continued as Eurodollar Rate Loans without
the consent of the Required Revolving Lenders or the Required Term Loan B
Lenders, as applicable.

(d)           The Administrative
Agent shall promptly notify the Borrower and the applicable Lenders of the
interest rate applicable to any Interest Period for Eurodollar Rate Loans upon
determination of such interest rate. 
The determination of the Eurodollar Rate by the Administrative Agent
shall be conclusive in the absence of manifest error.  At any time that Base Rate Loans are outstanding, the
Administrative Agent shall notify the Borrower and the Lenders of any change in
Bank of America’s prime rate used in determining the Base Rate promptly
following the public announcement of such change.

(e)           After giving effect
to all Borrowings, all Conversions, and all Continuations of Loans as the same
Type, there shall not at any time be more than (a) five Interest Periods in
effect with respect to the Term Loan B and (b) ten Interest Periods in effect with respect to the Revolving Credit
Facility.

2.04        Letters of Credit and Bankers’
Acceptances.

(a)           The Letter of Credit — BA
Commitment.

(i)            Subject
to the terms and conditions set forth herein, (A) each L/C Issuer severally
agrees, in reliance upon the agreements of the other Revolving Lenders set forth in this Section 2.04, (1) from
time to time on any Business Day during the period from the Closing Date until
the earlier to occur of the Letter of Credit - BA Expiration Date or the termination
of the Availability Period, to issue Letters of Credit for the account of the
Borrower or the Borrower and a
Restricted Subsidiary, and to amend Letters of Credit previously issued
by it, in accordance with subsection (b) below, (2) to honor drafts under the
Letters of Credit; and (3) with respect to Acceptance Credits, to create
Bankers’ Acceptances in accordance with the terms thereof and hereof, and (B)
the Revolving Lenders severally
agree to participate in Letters of Credit and Bankers’ Acceptances issued for
the account of the Borrower or the
Borrower and a Restricted Subsidiary; provided that neither L/C
Issuer shall be obligated to make any L/C - BA Credit Extension with respect to
any Letter of Credit, and no Revolving Lender shall be obligated to participate
in any Letter of Credit if (A) as of the date of such L/C - BA Credit
Extension, (x) the Total Revolving Outstandings would exceed the Aggregate Revolving Credit Commitments,
(y) the aggregate Outstanding Amount of the Revolving Loans of any Revolving
Lender, plus such Revolving
Lender’s Pro Rata Revolving Share of the Outstanding Amount of all L/C -
BA Obligations, plus such Revolving Lender’s Pro Rata Revolving Share of the
Outstanding Amount of all Swing Line Loans would exceed such Revolving Lender’s
Revolving Credit Commitment, or (z) the Outstanding Amount of the L/C - BA
Obligations would exceed the Letter of Credit - BA Sublimit, or

 

 

35

 

(B) as to Acceptance Credits, the Bankers’ Acceptance created or to be
created thereunder shall not be an eligible bankers’ acceptance under Section
13 of the Federal Reserve Act (12 U.S.C. § 372).  Within the foregoing limits, and subject to the terms and conditions
hereof, the Borrower’s ability to obtain Letters of Credit shall be fully
revolving, and accordingly the Borrower may, during the foregoing period,
obtain Letters of Credit to replace Letters of Credit that have expired or that
have been drawn upon and reimbursed.  All Existing Letters of Credit shall be
deemed to have been issued pursuant hereto, and from and after the Closing Date
shall be subject to and governed by the terms and conditions hereof.

(ii)           Neither
L/C Issuer shall be under any obligation to issue any Letter of Credit if:

(A)          any
order, judgment or decree of any Governmental Authority or arbitrator shall by
its terms purport to enjoin or restrain such L/C Issuer from issuing such
Letter of Credit or any related Bankers’ Acceptance, or any Law applicable to
such L/C Issuer or any request or directive (whether or not having the force of
law) from any Governmental Authority with jurisdiction over such L/C Issuer
shall prohibit, or request that such L/C Issuer refrain from, the issuance of
letters of credit or related bankers’ acceptances generally or such Letter of
Credit or any related Bankers’ Acceptance in particular or shall impose upon
such L/C Issuer with respect to such Letter of Credit or related Bankers’
Acceptance any restriction, reserve or capital requirement (for which such L/C
Issuer is not otherwise compensated hereunder) not in effect on the Closing
Date, or shall impose upon such L/C Issuer any unreimbursed loss, cost or
expense which was not applicable on the Closing Date and which such L/C Issuer
in good faith deems material to it;

(B)           subject to Section 2.04(b)(iii),
the expiry date of such requested Letter of Credit would occur (i) as to
standby Letters of Credit, more than twelve months after the date of issuance or last renewal, and (ii) as to
commercial Letters of Credit, no later than the earlier of (1) 180 days after
the date of issuance thereof and (2) 60 days before the Letter of Credit - BA
Expiration Date, unless the Required Revolving Lenders have approved such
expiry date;

(C)           the
maturity date of any Bankers’ Acceptance issued under any such requested
Acceptance Credit would occur no earlier than 30 nor later than 120 days from
date of issuance and in any event not later than 60 days before the Letter of
Credit - BA Expiration Date, unless the Required Revolving Lenders have
approved such expiry date

(D)          the
expiry date of such requested Letter of Credit, or the maturity date of any
Bankers’ Acceptance issued  under such
requested Letter of Credit, would occur after the Letter of Credit - BA
Expiration Date, unless all the Revolving Lenders have approved such expiry
date;

 

 

36

 

(E)           the
issuance of such Letter of Credit or any related Bankers’ Acceptance would
violate one or more policies of the L/C Issuer, or the creation of any related
Bankers’ Acceptance would cause the applicable L/C Issuer to exceed the maximum
amount of outstanding bankers’ acceptances permitted by applicable Law; or

(F)           such
Letter of Credit or related Bankers’ Acceptance is in an initial amount less
than $100,000, in the case of a commercial Letter of Credit, or $500,000, in the case of a standby
Letter of Credit, or is to be denominated in a currency other than Dollars.

(iii)          Neither
L/C Issuer shall be under any obligation to amend any Letter of Credit if (A)
such L/C Issuer would have no obligation at such time to issue such Letter of
Credit in its amended form under the terms hereof, or (B) the beneficiary of
such Letter of Credit does not accept the proposed amendment to such Letter of
Credit.

(b)           Procedures for Issuance and
Amendment of Letters of Credit;  Auto-Renewal Letters of Credit.

(i)            Each
Letter of Credit shall be issued or amended, as the case may be, upon the
request of the Borrower delivered to either L/C Issuer, as it may elect (with a
copy to the Administrative Agent), in the form of a Letter of Credit
Application, appropriately completed and signed by a Responsible Officer of the
Borrower  and, if applicable, of
the applicable Restricted Subsidiary. 
Such Letter of Credit Application must be received by the L/C Issuer and
the Administrative Agent not later than 11:00 a.m. at least two Business Days
(or such later date and time as the L/C Issuer may agree in a particular
instance in its sole discretion) prior to the proposed issuance date or date of
amendment, as the case may be.  In the
case of a request for an initial issuance of a Letter of Credit, such Letter of
Credit Application shall specify in form and detail satisfactory to the L/C
Issuer: (A) the proposed issuance date of the requested Letter of Credit (which
shall be a Business Day); (B) the amount thereof; (C) the expiry date thereof;
(D) the name and address of the beneficiary thereof; (E) the documents to be
presented by such beneficiary in case of any drawing or presentation
thereunder; (F) the full text of any certificate to be presented by such
beneficiary in case of any drawing or presentation thereunder; and (G) such
other matters as the L/C Issuer may require. 
In the case of a request for an amendment of any outstanding Letter of
Credit, such Letter of Credit Application shall specify in form and detail
satisfactory to the L/C Issuer (A) the Letter of Credit to be amended; (B) the
proposed date of amendment thereof (which shall be a Business Day); (C) the
nature of the proposed amendment; and (D) such other matters as the L/C Issuer
may require.

(ii)           Promptly
after receipt of any Letter of Credit Application, the L/C Issuer will confirm
with the Administrative Agent (by telephone or in writing) that the Administrative
Agent has received a copy of such Letter of Credit Application from the
Borrower and, if not, the L/C Issuer will provide the Administrative Agent with
a copy thereof.  Upon receipt by the L/C
Issuer of confirmation from the Administrative Agent that the requested
issuance or amendment is permitted in accordance with the terms

 

 

37

 

hereof, then, subject to the terms and conditions hereof, such L/C
Issuer shall, on the requested date, issue a Letter of Credit for the account
of the Borrower or enter into the applicable amendment, as the case may be, in
each case in accordance with the L/C Issuer’s usual and customary business
practices.  Immediately upon the
issuance of each Letter of Credit, each Revolving Lender shall be deemed to,
and hereby irrevocably and unconditionally agrees to, purchase from the
applicable L/C Issuer a risk participation in such Letter of Credit in an
amount equal to the product of such Revolving Lender’s Pro Rata Revolving Share
times the amount of such Letter of Credit.  Immediately upon the creation of each Bankers’ Acceptance, each
Revolving Lender shall be deemed to, and hereby irrevocably and unconditionally
agrees to, purchase from the applicable L/C Issuer a risk participation in such
Bankers’ Acceptance in an amount equal to the product of such Revolving
Lender’s Pro Rata Revolving Share times the amount of such Bankers’
Acceptance.

(iii)          If
the Borrower so requests in any applicable Letter of Credit Application, the
applicable L/C Issuer may, in its sole and absolute discretion, agree to issue
a Letter of Credit other than a commercial Letter of Credit that has automatic
renewal provisions (each, an “Auto-Renewal Letter of Credit”); provided
that any such Auto-Renewal Letter of Credit must permit the L/C Issuer to
prevent any such renewal at least once in each twelve-month period (commencing
with the date of issuance of such Letter of Credit) by giving prior notice to
the beneficiary thereof not later than a day (the “Nonrenewal Notice Date”)
in each such twelve-month period to be agreed upon at the time such Letter of
Credit is issued.  Unless otherwise
directed by the L/C Issuer, the Borrower shall not be required to make a
specific request to the L/C Issuer for any such renewal.  Once an Auto-Renewal Letter of Credit has
been issued, the Revolving Lenders shall be deemed to have authorized (but may
not require) the L/C Issuer to permit the renewal of such Letter of Credit at
any time to an expiry date not later than the Letter of Credit - BA Expiration
Date; provided, however, that the L/C Issuer shall not permit any
such renewal if (A) the L/C Issuer has determined that it would have no
obligation at such time to issue such Letter of Credit in its renewed form under
the terms hereof (by reason of the provisions of Section 2.04(a)(ii) or
otherwise), or (B) it has received notice (which may be by telephone or in
writing) on or before the day that is two Business Days before the Nonrenewal
Notice Date (1) from the Administrative Agent that the Required Revolving
Lenders have elected not to permit such renewal or (2) from the Administrative
Agent, any Revolving Lender or the Borrower that one or more of the applicable
conditions specified in Section 5.02 is not then satisfied.

(iv)          Promptly
after its delivery of any Letter of Credit or any amendment to a Letter of
Credit to an advising bank with respect thereto or to the beneficiary thereof,
the applicable L/C Issuer will also deliver to the Borrower and the
Administrative Agent a true and complete copy of such Letter of Credit or
amendment.

(c)           Drawings and Reimbursements;
Funding of Participations.

(i)            Upon
receipt from the beneficiary of any Letter of Credit of any notice of a drawing
or, with respect to any Acceptance Credit, presentation of documents, under
such Letter of Credit, or any presentation for payment of a Bankers’
Acceptance, the

 

 

38

 

applicable L/C Issuer shall notify the Borrower and the Administrative
Agent thereof.  Not later than 11:00
a.m. on the date of any payment by the L/C Issuer under a Letter of Credit or
Bankers’ Acceptance (each such date, an “Honor Date”), the Borrower
shall reimburse such L/C Issuer through the Administrative Agent in an amount
equal to the amount of such drawing or Bankers’ Acceptance, as applicable.  If the Borrower fails to so reimburse the
L/C Issuer by such time, the Administrative Agent shall promptly notify each
Revolving Lender (including the L/C Issuer that did not issue such Letter of
Credit or Bankers’ Acceptance) of the Honor Date, the amount of the
unreimbursed drawing or payment (the “Unreimbursed Amount”), and the
amount of such Revolving Lender’s Pro Rata Revolving Share thereof.  In such event, the Borrower shall be deemed
to have requested a Revolving Borrowing of Base Rate Loans to be disbursed on
the Honor Date in an amount equal to the Unreimbursed Amount, without regard to
the minimum and multiples specified in Section 2.03 for the principal
amount of Base Rate Loans, but subject to the amount of the unutilized portion
of the Aggregate Revolving Credit Commitments and the conditions set forth in Section
5.02 (other than the delivery of a Revolving Loan Notice).  Any notice given by the L/C Issuer or the
Administrative Agent pursuant to this Section 2.04(c)(i) may be given by
telephone if immediately confirmed in writing; provided that the lack of
such an immediate confirmation shall not affect the conclusiveness or binding
effect of such notice.

(ii)           Each
Revolving Lender (including each Lender acting as an L/C Issuer, whether or not
it issued the applicable Letter of Credit or Bankers’ Acceptance) shall upon
any notice pursuant to Section 2.04(c)(i) make funds available to the
Administrative Agent for the account of the applicable L/C Issuer at the
Administrative Agent’s Office in an amount equal to its Pro Rata Revolving
Share of the Unreimbursed Amount not later than 1:00 p.m. on the Business Day
specified in such notice by the Administrative Agent, whereupon, subject to the
provisions of Section 2.04(c)(iii), each Revolving Lender that so makes
funds available shall be deemed to have made a Base Rate Revolving Loan to the
Borrower in such amount.  The
Administrative Agent shall remit the funds so received to the applicable L/C
Issuer.

(iii)          With
respect to any Unreimbursed Amount that is not fully refinanced by a Revolving
Borrowing of Base Rate Loans because the conditions set forth in Section
5.02 cannot be satisfied or for any other reason, the Borrower shall be
deemed to have incurred from the applicable L/C Issuer an L/C — BA Borrowing in
the amount of the Unreimbursed Amount that is not so refinanced, which L/C — BA
Borrowing shall be due and payable on demand (together with interest) and shall
bear interest at the Default Rate.  In
such event, each Revolving Lender’s payment to the Administrative Agent for the
account of the L/C Issuer pursuant to Section 2.04(c)(ii) shall be
deemed payment in respect of its risk participation in such L/C — BA Borrowing
and shall constitute an L/C - BA Advance from such Revolving Lender in
satisfaction of its risk participation obligation under this Section 2.04.

(iv)          Until
each Revolving Lender funds its Revolving Loan or L/C - BA Advance pursuant to
this Section 2.04(c) to reimburse the applicable L/C Issuer for any
amount drawn under any Letter of Credit or payments made on any Bankers’
Acceptance,

 

 

39

 

interest in respect of such Revolving Lender’s Pro Rata Revolving Share
of such amount shall be solely for the account of the applicable L/C Issuer.

(v)           Each
Revolving Lender’s obligation to make Revolving Loans or L/C - BA Advances to
reimburse the L/C Issuer for amounts drawn under Letters of Credit and payments
made on Bankers’ Acceptances, as contemplated by this Section 2.04(c),
shall be absolute and unconditional and shall not be affected by any
circumstance, including (A) any set-off, counterclaim, recoupment, defense or
other right which such Revolving Lender may have against the L/C Issuer, the
Borrower or any other Person for any reason whatsoever; (B) the occurrence or
continuance of a Default, or (C) any other occurrence, event or condition,
whether or not similar to any of the foregoing; provided, however,
that each Revolving Lender’s obligation to make Revolving Loans pursuant to
this Section 2.04(c) is subject to the conditions set forth in Section
5.02 (other than delivery by the Borrower of a Revolving Loan Notice).  No such making of an L/C - BA Advance shall
relieve or otherwise impair the obligation of the Borrower to reimburse the
applicable L/C Issuer for the amount of any payment made by the L/C Issuer
under any Letter of Credit or Bankers’ Acceptance, together with interest as
provided herein.

(vi)          If
any Revolving Lender fails to make available to the Administrative Agent for
the account of an L/C Issuer any amount required to be paid by such Revolving
Lender pursuant to the foregoing provisions of this Section 2.04(c) by
the time specified in Section 2.04(c)(ii), such L/C Issuer shall be
entitled to recover from such Revolving Lender (acting through the
Administrative Agent), on demand, such amount with interest thereon for the
period from the date such payment is required to the date on which such payment
is immediately available to the L/C Issuer at a rate per annum equal to the
Federal Funds Rate from time to time in effect.  A certificate of the L/C Issuer submitted to any Revolving Lender
(through the Administrative Agent) with respect to any amounts owing under this
clause (vi) shall be conclusive absent manifest error.

(d)           Repayment of Participations.

(i)            At
any time after an L/C Issuer has made a payment under any Letter of Credit or
Bankers’ Acceptance and has received from any Revolving Lender such Revolving
Lender’s L/C - BA Advance in respect of such payment in accordance with Section
2.04(c), if the Administrative Agent receives for the account of such L/C
Issuer any payment in respect of the related Unreimbursed Amount or interest
thereon (whether directly from the Borrower or otherwise, including proceeds of
Cash Collateral applied thereto by the Administrative Agent), the
Administrative Agent will distribute to such Revolving Lender its Pro Rata
Revolving Share thereof (appropriately adjusted, in the case of interest
payments, to reflect the period of time during which such Revolving Lender’s
L/C - BA Advance was outstanding) in the same funds as those received by the
Administrative Agent.

(ii)           If
any payment received by the Administrative Agent for the account of an L/C
Issuer pursuant to Section 2.04(c)(i) is required to be returned under
any of the circumstances described in Section 11.06 (including pursuant
to any settlement entered into by such L/C Issuer in its discretion), each
Revolving Lender shall pay to the

 

 

40

 

Administrative Agent for the account of such L/C Issuer its Pro Rata
Revolving Share thereof on demand of the Administrative Agent, plus interest
thereon from the date of such demand to the date such amount is returned by
such Revolving Lender, at a rate per annum equal to the Federal Funds Rate from
time to time in effect.

(e)           Obligations
Absolute.  The obligation of the
Borrower to reimburse each L/C Issuer for each drawing under each Letter of
Credit and each payment under any Bankers’ Acceptance, and to repay each L/C —
BA Borrowing shall be absolute, unconditional and irrevocable, and shall be
paid strictly in accordance with the terms of this Agreement under all
circumstances, including the following:

(i)            any
lack of validity or enforceability of such Letter of Credit or Bankers’
Acceptance, this Agreement, or any other agreement or instrument relating
thereto;

(ii)           the
existence of any claim, counterclaim, set-off, defense or other right that the
Borrower may have at any time against any beneficiary or any transferee of such
Letter of Credit or Bankers’ Acceptance (or any Person for whom any such
beneficiary or any such transferee may be acting), the L/C Issuer or any other Person,
whether in connection with this Agreement, the transactions contemplated hereby
or by such Letter of Credit or Bankers’ Acceptance or any agreement or
instrument relating thereto, or any unrelated transaction;

(iii)          any
draft, demand, certificate or other document or endorsement  presented under or in connection with such
Letter of Credit or Bankers’ Acceptance proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect; or any loss or delay in the transmission or
otherwise of any document required in order to make a drawing under such Letter
of Credit or obtain payment under any Bankers’ Acceptance ;

(iv)          any
payment by the L/C Issuer under such Letter of Credit or Bankers’ Acceptance
against presentation of a draft or certificate that does not strictly comply
with the terms of such Letter of Credit, or any payment made by the L/C Issuer
under such Letter of Credit or Bankers’ Acceptance to any Person purporting to
be a trustee in bankruptcy, debtor-in-possession, assignee for the benefit of
creditors, liquidator, receiver or other representative of or successor to any
beneficiary or any transferee of such Letter of Credit or Bankers’ Acceptance,
including any arising in connection with any proceeding under any Debtor Relief
Law; or

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

The Borrower shall promptly examine a copy of
each Letter of Credit and each amendment thereto, and each Bankers’
Acceptance,  that is delivered to it
and, in the event of any claim of noncompliance with the Borrower’s instructions
or other irregularity, the Borrower will immediately notify the L/C
Issuer.  The Borrower shall be
conclusively deemed to have

 

 

41

 

waived any such claim against the L/C Issuer and its correspondents unless
such notice is given as aforesaid.

(f)            Role of L/C
Issuer.  Each Lender and the
Borrower agree that, in paying any drawing under a Letter of Credit or making
any payment under a Bankers’ Acceptance, neither L/C Issuer shall have any
responsibility to obtain any document (other than any sight draft, certificates
and documents expressly required by the Letter of Credit) or to ascertain or
inquire as to the validity or accuracy of any such document or the authority of
the Person executing or delivering any such document.  None of either L/C Issuer, any Agent-Related Person nor any of
the respective correspondents, participants or assignees of either L/C Issuer
shall be liable to any Lender for (i) any action taken or omitted in connection
herewith at the request or with the approval of the Lenders, the Revolving
Lenders, the Required Lenders or the Required Revolving Lenders, as applicable;
(ii) any action taken or omitted in the absence of gross negligence or willful
misconduct; or (iii) the due execution, effectiveness, validity or
enforceability of any document or instrument related to any Letter of Credit,
Bankers’ Acceptance or Letter of Credit Application.  The Borrower hereby assumes all risks of the acts or omissions of
any beneficiary or transferee with respect to its use of any Letter of Credit
or Bankers’ Acceptance; provided, however, that this assumption
is not intended to, and shall not, preclude the Borrower’s pursuing such rights
and remedies as it may have against the beneficiary or transferee at law or
under any other agreement.  None of
either L/C Issuer, any Agent-Related Person, nor any of the respective
correspondents, participants or assignees of either L/C Issuer, shall be liable
or responsible for any of the matters described in clauses (i) through (v) of Section
2.04(e); provided, however, that anything in such clauses to
the contrary notwithstanding, the Borrower may have a claim against an L/C
Issuer, and an L/C Issuer may be liable to the Borrower, to the extent, but
only to the extent, of any direct, as opposed to consequential or exemplary,
damages suffered by the Borrower which the Borrower proves were caused by such
L/C Issuer’s willful misconduct or gross negligence or such L/C Issuer’s
willful failure to pay under any Letter of Credit after the presentation to it
by the beneficiary of a sight draft and certificate(s) strictly complying with
the terms and conditions of a Letter of Credit or to honor any Bankers’
Acceptance presented for payment in strict compliance with its terms and
conditions.  In furtherance and not in
limitation of the foregoing, each L/C Issuer may accept documents that appear
on their face to be in order, without responsibility for further investigation,
regardless of any notice or information to the contrary, and such L/C Issuer
shall not be responsible for the validity or sufficiency of any instrument
endorsing, transferring or assigning or purporting to endorse, transfer or
assign a Letter of Credit or Bankers’ Acceptance or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason.

(g)           Cash Collateral.  Upon the request of the Administrative
Agent, (i) if an L/C Issuer has honored any full or partial drawing request
under any Letter of Credit or made any payment under any Bankers’ Acceptance
and such drawing has resulted in an L/C — BA Borrowing, or (ii) if, as of the
Letter of Credit - BA Expiration Date, any Letter of Credit may for any reason
remain outstanding and partially or wholly undrawn or any Bankers’ Acceptance
may for any reason remain outstanding, the Borrower shall immediately Cash
Collateralize the then Outstanding Amount of all L/C - BA Obligations (in an
amount equal to such Outstanding Amount determined as of the date of such L/C
Borrowing or the Letter of Credit - BA Expiration Date, as the case may
be).  For purposes hereof, “Cash
Collateralize” means to pledge and

 

 

42

 

deposit with or
deliver to the Administrative Agent, for the benefit of the L/C Issuers, as
applicable, and the Lenders, as collateral for the L/C - BA Obligations, cash
or deposit account balances pursuant to documentation in form and substance
satisfactory to the Administrative Agent and the L/C Issuers (which documents
are hereby consented to by the Lenders). 
Derivatives of such term have corresponding meanings.  The Borrower hereby grants to the
Administrative Agent, for the benefit of the L/C Issuers and the Revolving  Lenders, a security interest in all such
cash, deposit accounts and all balances therein and all proceeds of the
foregoing.  Cash collateral shall be
maintained in blocked, non-interest bearing deposit accounts at Bank of
America.

(h)           Applicability of
ISP98 and UCP.  Unless otherwise
expressly agreed by the applicable L/C Issuer and the Borrower when a Letter of
Credit is issued (including any such
agreement applicable to an Existing Letter of Credit), (i) the rules of
the “International Standby Practices 1998” published by the Institute of
International Banking Law & Practice (or such later version thereof as may
be in effect at the time of issuance) shall apply to each standby Letter of
Credit, and (ii) the rules of the Uniform Customs and Practice for Documentary
Credits, as most recently published by the International Chamber of Commerce
(the “ICC”) at the time of issuance (including the ICC decision
published by the Commission on Banking Technique and Practice on April 6, 1998
regarding the European single currency (euro)) shall apply to each commercial
Letter of Credit.

(i)            Letter of Credit
— BA Fees.  Subject to the
provisions of the last sentence of this subsection (i), the Borrower shall pay
to the Administrative Agent for the account of each Revolving Lender in
accordance with its Pro Rata Revolving Share (i) a Letter of Credit — BA Fee for each commercial Letter of Credit and
each Bankers’ Acceptance equal to 50% of the Applicable Rate times the
daily maximum amount available to be drawn under such Letter of Credit (whether
or not such maximum amount is then in effect under such Letter of Credit) or
the maximum stated amount of such Bankers’ Acceptance, as the case may be, and
(ii) a Letter of Credit — BA Fee for each standby Letter of Credit equal to the Applicable Rate times
the daily maximum amount available to be drawn under such Letter of Credit
(whether or not such maximum amount is then in effect under such Letter of
Credit).  Such Letter of Credit — BA
Fees shall be computed on a quarterly basis in arrears.  Such Letter of Credit — BA Fees accrued
through the last day of each fiscal quarter of the Borrower and shall be due
and payable on the fifteenth (or the next Business Day after the fifteenth, if
the fifteenth is not a Business Day) of each January, April, July and October, commencing with the first such date to
occur after the issuance of such Letter of Credit or Bankers’ Acceptance (as
the case may be), on the Letter of Credit - BA Expiration Date and thereafter
on demand.  If there is any change in
the Applicable Rate during any quarter, the daily maximum amount of each Letter
of Credit and Bankers’ Acceptance shall be computed and multiplied by the
Applicable Rate separately for each period during such quarter that such
Applicable Rate was in effect.  At all
times that the Default Rate shall be applicable to any Loans pursuant to Section
2.09(b), the Letter of Credit — BA Fees payable under this subsection (i)
shall accrue and be payable at the Default Rate.

(j)            Fronting Fee and Documentary and
Processing Charges Payable to L/C Issuer. 
The Borrower shall pay directly to the applicable L/C Issuer for its own
account a fronting fee with respect to each Letter of Credit and each Bankers’
Acceptance issued by such L/C Issuer in the amount of 0.125% times the
daily maximum amount available to be drawn under such Letter

 

 

43

 

of Credit (whether
or not such maximum amount is then in effect under such Letter of Credit) or the maximum stated amount of such Bankers’
Acceptance, as the case may be. 
Such fronting fees shall be computed on a quarterly basis in
arrears.  Such fronting fee shall accrue
through the last day of each fiscal quarter of the Borrower and shall be due
and payable on the fifteenth (or the next Business Day after the fifteenth, if
the fifteenth is not a Business Day) of each January, April, July and October, commencing with the first such date to
occur after the issuance of such Letter of Credit or Bankers’ Acceptance, as
applicable, on the Letter of Credit - BA Expiration Date and thereafter on
demand.  In addition, the Borrower shall
pay directly to the applicable L/C Issuer for its own account the customary
issuance, presentation, amendment and other processing fees, and other standard
costs and charges, of such L/C Issuer relating to letters of credit and
bankers’ acceptances issued by it as from time to time in effect.  Such customary fees and standard costs and
charges are due and payable on demand and are nonrefundable.

(k)           Conflict with
Letter of Credit Application.  In
the event of any conflict between the terms hereof and the terms of any Letter
of Credit Application, the terms hereof shall control.

(l)            Several
Obligations of L/C Issuers.  The
obligations of each L/C Issuer hereunder to issue, amend or renew Letters of
Credit and to issue Bankers’ Acceptances are several and not joint.  The failure of either L/C Issuer to issue
Letters of Credit or Bankers’ Acceptances or amend or renew Letters of Credit
issued by it shall neither relieve the other L/C Issuer of any obligation it
may have hereunder with respect to the issuance of Letters of Credit or
Bankers’ Acceptances or the renewal or amendment of Letters of Credit issued by
it, nor give rise to any additional obligation on the part of such other L/C Issuer.

2.05        Swing Line Loans.

(a)           The Swing Line.  Subject to the terms and conditions set
forth herein, the Swing Line Lender agrees to make loans (each such loan, a “Swing
Line Loan”) in Dollars to the Borrower from time to time on any Business
Day during the Availability Period in an aggregate amount not to exceed at any
time outstanding the amount of the Swing Line Sublimit, notwithstanding the
fact that such Swing Line Loans, when aggregated with the Pro Rata Revolving
Share of the Outstanding Amount of Revolving Loans and L/C - BA Obligations of
the Revolving Lender acting as Swing Line Lender, may exceed the amount of such
Revolving Lender’s Revolving Credit Commitment; provided, however,
that after giving effect to any Swing Line Loan, (i) the Total Revolving
Outstandings shall not exceed the Aggregate Revolving Credit Commitments, and
(ii) the aggregate Outstanding Amount of the Revolving Loans of any Revolving
Lender, plus such Revolving Lender’s Pro Rata Revolving Share of the
Outstanding Amount of all L/C - BA Obligations, plus such Revolving Lender’s
Pro Rata Revolving Share of the Outstanding Amount of all Swing Line Loans
shall not exceed such Revolving Lender’s Revolving Credit Commitment, and provided,
further, that the Borrower shall not use the proceeds of any Swing Line
Loan to refinance any outstanding Swing Line Loan.  Within the foregoing limits, and subject to the other terms and
conditions hereof, the Borrower may borrow under this Section 2.05,
prepay under Section 2.06, and reborrow under this Section 2.05.  Each Swing Line Loan shall be a Base Rate
Revolving Loan.  Immediately upon the
making of a Swing Line Loan, each Revolving Lender shall be deemed to, and
hereby irrevocably and unconditionally agrees to, purchase from the Swing Line
Lender a risk

 

 

44

 

participation in
such Swing Line Loan in an amount equal to the product of such Revolving
Lender’s Pro Rata Revolving Share times the amount of such Swing Line
Loan.

(b)           Borrowing Procedures.  Each Swing Line Borrowing shall be made upon
the Borrower’s irrevocable notice to the Swing Line Lender and the
Administrative Agent, which may be given by telephone. Each such notice must be
received by the Swing Line Lender and the Administrative Agent not later than
2:00 p.m. on the requested borrowing date, and shall specify (i) the amount to
be borrowed, which shall be a minimum of $500,000 and integral multiples of $100,000 in excess thereof, and
(ii) the requested borrowing date, which shall be a Business Day.  Each such telephonic notice must be
confirmed promptly by delivery to the Swing Line Lender and the Administrative
Agent of a written Swing Line Loan Notice, appropriately completed and signed by
a Responsible Officer of the Borrower. 
Promptly after receipt by the Swing Line Lender of any telephonic Swing
Line Loan Notice, the Swing Line Lender will confirm with the Administrative
Agent (by telephone or in writing) that the Administrative Agent has also
received such Swing Line Loan Notice and, if not, the Swing Line Lender will
notify the Administrative Agent (by telephone or in writing) of the contents
thereof.  Unless the Swing Line Lender
has received notice (by telephone or in writing) from the Administrative Agent
(including at the request of any Lender) prior to 3:00 p.m. on the date of the
proposed Swing Line Borrowing (A) directing the Swing Line Lender not to make
such Swing Line Loan as a result of the limitations set forth in the proviso to
the first sentence of Section 2.05(a), or (B) that one or more of the
applicable conditions specified in Article V is not then satisfied,
then, subject to the terms and conditions hereof, the Swing Line Lender will,
not later than 3:00 p.m. on the borrowing date specified in such Swing Line
Loan Notice, make the amount of its Swing Line Loan available to the Borrower at its office by crediting the account of the
Borrower on the books of the Swing Line Lender in immediately available funds.

(c)           Refinancing of Swing Line Loans.

(i)            The
Swing Line Lender at any time in its sole and absolute discretion may request,
on behalf of the Borrower (which hereby irrevocably authorizes the Swing Line
Lender to so request on its behalf), that each Revolving Lender make a Base
Rate Revolving Loan in an amount equal to such Revolving Lender’s Pro Rata
Revolving Share of the amount of Swing Line Loans then outstanding.  Such request shall be made in writing (which
written request shall be deemed to be a Revolving Loan Notice for purposes
hereof) and in accordance with the requirements of Section 2.03, without
regard to the minimum and multiples specified therein for the principal amount
of Base Rate Loans, but subject to the unutilized portion of the Aggregate
Revolving Credit Commitments and the conditions set forth in Section 5.02.  Each Revolving Lender shall make an amount
equal to its Pro Rata Revolving Share of the amount specified in such Revolving
Loan Notice available to the Administrative Agent in immediately available
funds for the account of the Swing Line Lender at the Administrative Agent’s
Office not later than 1:00 p.m. on the day specified in such Revolving Loan
Notice, whereupon, subject to Section 2.05(c)(ii), each Revolving Lender
that so makes funds available shall be deemed to have made a Base Rate
Revolving Loan to the Borrower in such amount. 
The Administrative Agent shall remit the funds so received to the Swing
Line Lender.

 

 

45

 

(ii)           If
for any reason any Swing Line Loan cannot be refinanced by such a Revolving
Borrowing in accordance with Section 2.05(c)(i), the request for Base
Rate Revolving Loans submitted by the Swing Line Lender as set forth herein
shall be deemed to be a request by the Swing Line Lender that each of the
Revolving Lenders fund its risk participation in the relevant Swing Line Loan
and each Revolving Lender’s payment to the Administrative Agent for the account
of the Swing Line Lender pursuant to Section 2.05(c)(i) shall be deemed
payment in respect of such participation.

(iii)          If
any Revolving Lender fails to make available to the Administrative Agent for
the account of the Swing Line Lender any amount required to be paid by such
Lender pursuant to the foregoing provisions of this Section 2.05(c) by
the time specified in Section 2.05(c)(i), the Swing Line Lender shall be
entitled to recover from such Revolving Lender (acting through the
Administrative Agent), on demand, such amount with interest thereon for the
period from the date such payment is required to the date on which such payment
is immediately available to the Swing Line Lender at a rate per annum equal to
the Federal Funds Rate from time to time in effect.  A certificate of the Swing Line Lender submitted to any Revolving
Lender (through the Administrative Agent) with respect to any amounts owing
under this clause (iii) shall be conclusive absent manifest error.

(iv)          Each
Revolving Lender’s obligation to make Revolving Loans or to purchase and fund
risk participations in Swing Line Loans pursuant to this Section 2.05(c)
shall be absolute and unconditional and shall not be affected by any
circumstance, including (A) any set-off, counterclaim, recoupment, defense or
other right which such Revolving Lender may have against the Swing Line Lender,
the Borrower or any other Person for any reason whatsoever, (B) the occurrence
or continuance of a Default, or (C) any other occurrence, event or condition,
whether or not similar to any of the foregoing; provided, however,
that each Revolving Lender’s obligation to make Revolving Loans pursuant to
this Section 2.05(c) is subject to the conditions set forth in Section
5.02.  No such funding of risk
participations shall relieve or otherwise impair the obligation of the Borrower
to repay Swing Line Loans, together with interest as provided herein.

(d)           Repayment of Participations.

(i)            At
any time after any Revolving Lender has purchased and funded a risk
participation in a Swing Line Loan, if the Swing Line Lender receives any
payment on account of such Swing Line Loan, the Swing Line Lender will
distribute to such Revolving Lender its Pro Rata Revolving Share of such
payment (appropriately adjusted, in the case of interest payments, to reflect
the period of time during which such Revolving Lender’s risk participation was
funded) in the same funds as those received by the Swing Line Lender.

(ii)           If
any payment received by the Swing Line Lender in respect of principal or
interest on any Swing Line Loan is required to be returned by the Swing Line
Lender under any of the circumstances described in Section 11.06
(including pursuant to any settlement entered into by the Swing Line Lender in
its discretion), each Revolving Lender shall pay to the Swing Line Lender its
Pro Rata Revolving Share thereof on

 

 

46

 

demand of the Administrative Agent, plus interest thereon from the date
of such demand to the date such amount is returned, at a rate per annum equal
to the Federal Funds Rate.  The
Administrative Agent will make such demand upon the request of the Swing Line
Lender.

(e)           Interest for
Account of Swing Line Lender.  The
Swing Line Lender shall be responsible for invoicing the Borrower for interest
on the Swing Line Loans.  Until each
Revolving Lender funds its Base Rate Revolving Loan or risk participation
pursuant to this Section 2.05 to refinance such Lender’s Pro Rata
Revolving Share of any Swing Line Loan, interest in respect of such Pro Rata
Revolving Share shall be solely for the account of the Swing Line Lender.

(f)            Payments Directly
to Swing Line Lender.  The Borrower
shall make all payments of principal and interest in respect of the Swing Line
Loans directly to the Swing Line Lender.

2.06        Prepayments.

(a)           The Borrower may,
upon notice to the Administrative Agent, at any time or from time to time
voluntarily prepay Loans under the Revolving Credit Facility or the Term Loan B
Facility in whole or in part without premium or penalty; provided that
(i) such notice must be received by the Administrative Agent not later than
11:00 a.m. (A) three Business Days prior to any date of prepayment of
Eurodollar Rate Loans and (B) on the date of prepayment of Base Rate Loans;
(ii) any prepayment of Eurodollar Rate Loans under any such credit facility
shall be in a principal amount of $5,000,000 or a whole multiple of $1,000,000
in excess thereof; (iii) any prepayment of Base Rate Loans under any such
credit facility shall be in a principal amount of $5,000,000 or a whole
multiple of $1,000,000 in excess thereof or, in each case, the entire principal
amount thereof then outstanding; and (iv) any prepayment of Loans under the
Term Loan B Facility made pursuant to this Section 2.06(a) at any time
prior to the first anniversary of the Closing Date shall include an additional
amount equal to one percent (1%) of the amount of principal to be prepaid.  Each such notice shall specify the date and
amount of such prepayment, the credit facility to which the prepayment is to be
applied, the Type(s) of Loans to be prepaid, and, if the Borrower is prepaying
all or a portion of the Term Loan B, the installments of the Term Loan B to
which such prepayments will be applied. 
Prepayments of the Term Loan B shall be applied to installments in such
order as the Borrower shall select in its notice.  The Administrative Agent will promptly notify each applicable
Lender of its receipt of each such notice, and of the amount of such Lender’s
ratable  share of such
prepayment.  If such notice is given by
the Borrower, the Borrower shall make such prepayment and the payment amount
specified in such notice shall be due and payable on the date specified
therein.  Any prepayment of a Eurodollar
Rate Loan shall be accompanied by all accrued interest thereon, together with
any additional amounts required pursuant to Section 4.05.  Each such prepayment shall be applied to the
Loans of the applicable Lenders in accordance with their Pro Rata Revolving
Shares and Pro Rata Term B Shares, as applicable.

(b)           The Borrower may, upon notice to the
Swing Line Lender (with a copy to the Administrative Agent), at any time or
from time to time, voluntarily prepay Swing Line Loans in whole or in part
without premium or penalty; provided that (i) such notice must be
received by the Swing Line Lender and the Administrative Agent not later than
1:00 p.m. on the date of the

 

 

47

 

prepayment, and
(ii) any such prepayment shall be in a minimum principal amount of $500,000 or
a whole multiple of $100,000 in excess thereof.  Each such notice shall specify the date and amount of such
prepayment.  If such notice is given by
the Borrower, the Borrower shall make such prepayment and the payment amount
specified in such notice shall be due and payable on the date specified therein.

(c)           If for any reason
the Total Revolving Outstandings at any time exceed the Aggregate Revolving
Credit Commitments then in effect, the Borrower shall immediately prepay
Revolving Loans and/or Swing Line Loans and/or Cash Collateralize the L/C - BA
Obligations in an aggregate amount equal to such excess; provided,
however, that the Borrower shall not be required to Cash Collateralize the
L/C - BA Obligations pursuant to this Section 2.06(c) unless after the
prepayment in full of the Revolving Loans and Swing Line Loans, the Total
Revolving Outstandings exceed the Aggregate Revolving Credit Commitments then
in effect.

(d)           In addition to any
required payments of principal of the Term Loan B and any optional payments of
principal of the Term Loan B and the Revolving Loans effected under subsection
(a) above, the Borrower shall make the following required prepayments, each
such payment to be made to the Administrative Agent for the benefit of the
applicable Lenders within the time period specified below:

(i)            The
Borrower shall make, or shall cause each applicable Restricted Subsidiary to
make, a prepayment in an amount equal to the Required Prepayment Amount with
respect to each Disposition other than Dispositions permitted under Sections
8.05(a) through (f) and Sections 8.05(h) through (i),
each such prepayment to be made within ten (10) Business Days of receipt of
such Net Cash Proceeds and upon not less than five (5) Business Days’ prior
written notice to the Administrative Agent, which notice shall include a
certificate of a Responsible Officer of the Borrower setting forth in
reasonable detail the calculations utilized in computing the Net Cash Proceeds
and the Required Prepayment Amount with respect to such Disposition.  Notwithstanding the application of this Section
2.06(d)(i) to any Disposition that is not otherwise permitted under this
Agreement, nothing in this Section 2.06(d)(i) shall be deemed to permit
any Disposition not expressly permitted under this Agreement or to constitute a
waiver or cure of any Default or Event of Default that arises as a result of a
Disposition that is not permitted under this Agreement.

(ii)           At
any time after the aggregate Net Cash Proceeds from all issuances of
Indebtedness permitted by Section 8.03(i) and all Dispositions permitted
by Section 8.05(f)(i) after the Closing Date has reached $100,000,000,
the Borrower shall make, or shall cause each applicable Restricted Subsidiary
to make, a prepayment in an amount equal to one hundred percent (100%) of any
further Net Cash Proceeds (including any portion of the Net Cash Proceeds
thereof that causes the aggregate Net Cash Proceeds to exceed the $100,000,000
threshold) of (A) each private or public issuance of Indebtedness of the
Borrower or any Restricted Subsidiary permitted by Section 8.03(i), and
(B) each Disposition permitted by Section 8.05(f)(i).  Each such prepayment will be made within ten
(10) Business Days of receipt of such Net Cash Proceeds and upon not less than
five (5) Business Days’ prior written notice to the Administrative Agent, which
notice shall include a certificate of a Responsible Officer of the Borrower
setting forth in

 

 

48

 

reasonable detail the calculations utilized in
computing the Net Cash Proceeds of such issuance or Disposition.

(iii)          The
Borrower shall make, or shall cause each applicable Restricted Subsidiary to
make, a prepayment (A) in an amount equal to one hundred percent (100%) of the
Net Cash Proceeds of each private or public issuance of Indebtedness of the
Borrower or any Restricted Subsidiary other than Indebtedness permitted under Section
8.03, and (B) in an amount equal to one hundred percent (100%) of the Net
Cash Proceeds of each private or public issuance of Indebtedness of the
Borrower or any Restricted Subsidiary permitted by Section 8.03(l), but
excluding any Net Cash Proceeds used or to be used, in the good faith judgment
of the Administrative Agent, for the purpose of financing one or more
Acquisitions or Restricted Payments, or both, permitted hereunder.  Each prepayment required to be made pursuant
to this Section 2.06(d)(iii) shall be made within ten (10) Business Days
of receipt of such Net Cash Proceeds and upon not less than five (5) Business
Days’ prior written notice to the Administrative Agent, which notice shall
include a certificate of a Responsible Officer of the Borrower setting forth in
reasonable detail the calculations utilized in computing the Net Cash Proceeds
of such issuance; provided that despite the application of this Section
2.06(d)(iii) to any issuance of Indebtedness that is not otherwise
permitted under this Agreement, nothing in this Section 2.06(d)(iii)
shall be deemed to permit any Indebtedness not expressly permitted under this
Agreement or to constitute a waiver or cure of any Default or Event of Default
that arises as a result of the incurrence of Indebtedness that is not permitted
under this Agreement.

Prepayments
made under this Section 2.06(d) shall be applied to repay, first,
the Outstanding Amount under the Term Loan B and then following the
repayment in full of the Term Loan B, the Outstanding Amount under the
Revolving Credit Facility.  Prepayments
of the Outstanding Amount under the Revolving Credit Facility made pursuant to
this Section 2.06(d) shall permanently reduce the Aggregate Revolving
Credit Commitments until such amount is equal to $200,000,000, and any further
prepayments of the Outstanding Amount under the Revolving Credit Facility under
this Section 2.06(d) shall not further reduce the Aggregate Revolving
Credit Commitments.  Each prepayment of
Term Loan B required under this Section 2.06(d) shall be applied pro
rata to installments of principal.  Any
prepayment of a Eurodollar Rate Loan shall be accompanied by all accrued
interest thereon, together with any additional amounts required pursuant to Section
4.05.  Each such prepayment shall be
applied to the Loans of the applicable Lenders in accordance with their Pro
Rata Revolving Shares and Pro Rata Term B Shares, as applicable.

2.07        Termination or Reduction of Commitments.

The Borrower may, upon notice to the Administrative
Agent, terminate the Aggregate Revolving Credit Commitments, or from time to
time permanently reduce the Aggregate Revolving Credit Commitments; provided
that (i) any such notice shall be received by the Administrative Agent not
later than 11:00 a.m. five Business Days prior to the date of termination or
reduction, (ii) any such partial reduction shall be in an aggregate amount of
$5,000,000 or any whole multiple of $1,000,000 in excess thereof, or the entire
remaining Aggregate Revolving Credit Commitments, (iii) the Borrower shall not
terminate or reduce the

 

 

49

 

Aggregate Revolving
Credit Commitments if, after giving effect thereto and to any concurrent
prepayments hereunder, the Total Revolving Outstandings would exceed the
Aggregate Revolving Credit Commitments, and (iv) if, after giving effect to any
reduction of the Aggregate Revolving Credit Commitments, the Letter of Credit -
BA Sublimit or the Swing Line Sublimit exceeds the amount of the Aggregate
Revolving Credit Commitments, such sublimit shall be automatically reduced by
the amount of such excess.  The
Administrative Agent will promptly notify the Lenders of any such notice of
termination or reduction of the Aggregate Revolving Credit Commitments.  Any reduction of the Aggregate Revolving
Credit Commitments shall be applied to the Revolving Credit Commitment of each
Revolving Lender according to its Pro Rata Revolving Share.  All commitment fees accrued until the
effective date of any termination of the Aggregate Revolving Credit Commitments
shall be paid on the effective date of such termination.

2.08        Repayment of
Loans.

(a)           The Borrower shall
repay to the Revolving Lenders on the Revolving Credit Maturity Date the
aggregate principal amount of Revolving Loans outstanding on such date.

(b)           The Borrower shall
repay each Swing Line Loan on the earlier to occur of (i) the date five
Business Days after such Loan is made and (ii) the Revolving Credit Maturity
Date.

(c)           The Borrower shall
repay the principal amount of the Term Loan B in twenty-eight (28) consecutive
quarterly installments on the last Business Day of each month set forth below
and in the amounts set forth below, subject to adjustments for prepayments made
pursuant to Sections 2.06 and 2.07:

	
  Date

  	
   

  	
  Amount

  	
   

  
	
  June 2003

  	
   

  	
  $

  	
  6,375,000

  	
   

  
	
  September 2003

  	
   

  	
  $

  	
  6,375,000

  	
   

  
	
  December 2003

  	
   

  	
  $

  	
  6,375,000

  	
   

  
	
  March 2004

  	
   

  	
  $

  	
  6,375,000

  	
   

  
	
  June 2004

  	
   

  	
  $

  	
  6,375,000

  	
   

  
	
  September 2004

  	
   

  	
  $

  	
  6,375,000

  	
   

  
	
  December 2004

  	
   

  	
  $

  	
  6,375,000

  	
   

  
	
  March 2005

  	
   

  	
  $

  	
  6,375,000

  	
   

  
	
  June 2005

  	
   

  	
  $

  	
  6,375,000

  	
   

  
	
  September 2005

  	
   

  	
  $

  	
  6,375,000

  	
   

  
	
  December 2005

  	
   

  	
  $

  	
  6,375,000

  	
   

  
	
  March 2006

  	
   

  	
  $

  	
  6,375,000

  	
   

  
	
  June 2006

  	
   

  	
  $

  	
  6,375,000

  	
   

  
	
  September 2006

  	
   

  	
  $

  	
  6,375,000

  	
   

  
	
  December 2006

  	
   

  	
  $

  	
  6,375,000

  	
   

  
	
  March 2007

  	
   

  	
  $

  	
  6,375,000

  	
   

  
	
  June 2007

  	
   

  	
  $

  	
  6,375,000

  	
   

  
	
  September 2007

  	
   

  	
  $

  	
  6,375,000

  	
   

  
	
  December 2007

  	
   

  	
  $

  	
  6,375,000

  	
   

  
	
  March 2008

  	
   

  	
  $

  	
  6,375,000

  	
   

  
	
  June 2008

  	
   

  	
  $

  	
  6,375,000

  	
   

  
	
  September 2008

  	
   

  	
  $

  	
  6,375,000

  	
   

  
	
  December 2008

  	
   

  	
  $

  	
  6,375,000

  	
   

  
	
  March 2009

  	
   

  	
  $

  	
  6,375,000

  	
   

  
	
  June 2009

  	
   

  	
  $

  	
  25,500,000

  	
   

  
	
  September 2009

  	
   

  	
  $

  	
  25,500,000

  	
   

  
	
  December 2009

  	
   

  	
  $

  	
  25,500,000

  	
   

  
	
  Term Loan B Maturity Date

  	
   

  	
  The
  Outstanding Amount of

  the Term Loan B

  	
   

  

 

 

50

 

2.09        Interest.

(a)           Subject to the
provisions of subsection (b) below, (i) each Eurodollar Rate Loan shall bear
interest on the outstanding principal amount thereof for each Interest Period
at a rate per annum equal to the Eurodollar Rate for such Interest Period plus
the Applicable Rate; (ii) each Base Rate Loan shall bear interest on the
outstanding principal amount thereof from the applicable borrowing date at a
rate per annum equal to the Base Rate plus the Applicable Rate; and (iii) each
Swing Line Loan shall bear interest on the outstanding principal amount thereof
from the applicable borrowing date at a rate per annum equal to the Base Rate
plus the Applicable Rate.

(b)           If any amount
payable by the Borrower under any Loan Document is not paid when due (without
regard to any applicable grace periods), whether at stated maturity, by
acceleration or otherwise, such amount shall thereafter bear interest at a
fluctuating interest rate per annum at all times equal to the Default Rate to
the fullest extent permitted by applicable Laws.  Furthermore, while any other Event of Default exists, the
Borrower shall pay interest on the principal amount of all outstanding
Obligations hereunder at a fluctuating interest rate per annum at all times
equal to the Default Rate to the fullest extent permitted by applicable Laws,
upon the affirmative vote of (i) if the
Total Revolving Outstandings or Revolving Credit Commitments shall be greater
than zero, the Required Revolving Lenders, and (ii) if the Outstanding Amount
under the Term Loan B shall be greater than zero, the Required Term Loan B
Lenders.  Accrued and unpaid
interest on past due amounts (including interest on past due interest) shall be
due and payable upon demand.

(c)           Interest on each
Loan shall be due and payable in arrears on each Interest Payment Date applicable
thereto and at such other times as may be specified herein.  Interest hereunder shall be due and payable
in accordance with the terms hereof before and after judgment, and before and
after the commencement of any proceeding under any Debtor Relief Law.

2.10        Fees.  In addition to certain fees described in
subsections (i) and (j) of Section 2.04:

(a)           Commitment Fee.  The Borrower shall pay to the Administrative
Agent for the account of each Revolving Lender in accordance with its Pro Rata
Revolving Share, a commitment fee (the “Commitment Fee”) equal to the
Applicable Rate times the actual daily

 

 

51

 

amount by which
the Aggregate Revolving Credit Commitments exceed the sum of (i) the
Outstanding Amount of Revolving Loans and (ii) the Outstanding Amount of L/C -
BA Obligations.  The Commitment Fee
shall accrue at all times during the Availability Period, including at any time
during which one or more of the conditions in Article V is not met, and
the amount accrued through the end of each fiscal quarter of the Borrower shall
be due and payable in arrears on the fifteenth (or the next Business Day after
the fifteenth, if the fifteenth is not a Business Day) of each January, April, July and October, commencing with
the first such date to occur after the Closing Date, and on the Revolving
Credit Maturity Date.  The Commitment
Fee shall be calculated quarterly in arrears, and if there is any change in the
Applicable Rate during any quarter, the actual daily amount shall be computed
and multiplied by the Applicable Rate separately for each period during such
quarter that such Applicable Rate was in effect.

(b)           Other Fees.  The Borrower shall pay to the Administrative
Agent and each of the Lenders, for their own respective accounts, such fees as
shall have been separately agreed upon in writing in the amounts and at the
times so specified, including an annual administrative fee payable to the
Administrative Agent.  Such fees shall
be fully earned when paid and shall not be refundable for any reason
whatsoever.

2.11        Computation
of Interest and Fees. 
All computations of interest for Base Rate Loans when the Base Rate is
determined by Bank of America’s “prime rate” shall be made on the basis of a
year of 365 or 366 days, as the case may be, and actual days elapsed.  All other computations of fees and interest
shall be made on the basis of a 360-day year and actual days elapsed (which
results in more fees or interest, as applicable, being paid than if computed on
the basis of a 365-day year).  Interest
shall accrue on each Loan for the day on which the Loan is made, and shall not
accrue on a Loan, or any portion thereof, for the day on which the Loan or such
portion is paid, provided that any Loan that is repaid on the same day
on which it is made shall, subject to Section 2.13(a), bear interest for
one day.

2.12        Evidence of Debt.

(a)           The Credit Extensions made by each
Lender shall be evidenced by one or more accounts or records maintained by such
Lender and by the Administrative Agent in the ordinary course of business.  The accounts or records maintained by the
Administrative Agent and each Lender shall be conclusive absent manifest error
of the amount of the Credit Extensions made by the Lenders to the Borrower and
the interest and payments thereon.  Any
failure to so record or any error in doing so shall not, however, limit or
otherwise affect the obligation of the Borrower hereunder to pay any amount
owing with respect to the Obligations. 
In the event of any conflict between the accounts and records maintained
by any Lender and the accounts and records of the Administrative Agent in
respect of such matters, the accounts and records of the Administrative Agent
shall control in the absence of manifest error.  Upon the request of any Lender made through the Administrative
Agent, the Borrower shall execute and deliver to such Lender (through the
Administrative Agent) a Note, which shall evidence such Lender’s Loans in
addition to such accounts or records. 
Each Lender may attach schedules to its Note and endorse thereon the
date, Type (if applicable), amount and maturity of its Loans and payments with
respect thereto.

 

52

(b)           In addition to the
accounts and records referred to in subsection (a), each Lender and the
Administrative Agent shall maintain in accordance with its usual practice
accounts or records evidencing the purchases and sales by such Lender of
participations in Letters of Credit and Swing Line Loans.  In the event of any conflict between the
accounts and records maintained by the Administrative Agent and the accounts
and records of any Lender in respect of such matters, the accounts and records
of the Administrative Agent shall control in the absence of manifest error.

(c)           Entries made in good
faith by the Administrative Agent in the Register pursuant to Section
2.12(b), and by each Lender in its account or accounts pursuant to Section
2.12(a), shall be prima facie
evidence of the amount of principal and interest due and payable or to become
due and payable from the Borrower to, in the case of the Register, each Lender
and, in the case of such account or accounts, such Lender, under this Agreement
and the other Loan Documents, absent manifest error; provided that the
failure of the Administrative Agent or any Lender to make an entry, or any
finding that any entry is incorrect, in the Register or such account or
accounts shall not limit or otherwise affect the Obligations.

2.13        Payments
Generally.

(a)           All payments to be
made by the Borrower shall be made without condition or deduction for any
counterclaim, defense, recoupment or setoff. 
Except as otherwise expressly provided herein, all payments by the
Borrower hereunder shall be made to the Administrative Agent, for the account
of the respective Lenders to which such payment is owed, at the Administrative
Agent’s Office in Dollars and in immediately available funds not later than
2:00 p.m. on the date specified herein. 
The Administrative Agent will promptly distribute to each such Lender
its ratable share (or other applicable share as provided herein) of such
payment in like funds as received by wire transfer to such Lender’s Lending
Office.  All payments received by the
Administrative Agent after 2:00 p.m. shall be deemed received on the next
succeeding Business Day and any applicable interest or fee shall continue to
accrue.

(b)           If any payment to be
made by the Borrower shall come due on a day other than a Business Day, payment
shall be made on the next following Business Day, and such extension of time
shall be reflected in computing interest or fees, as the case may be.

(c)           Unless the Borrower
or any Lender has notified the Administrative Agent, prior to the date any
payment is required to be made by it to the Administrative Agent hereunder,
that the Borrower or such Lender, as the case may be, will not make such
payment, the Administrative Agent may assume that the Borrower or such Lender,
as the case may be, has timely made such payment and may (but shall not be so
required to), in reliance thereon, make available a corresponding amount to the
Person entitled thereto.  If and to the
extent that such payment was not in fact made to the Administrative Agent in immediately
available funds, then:

(i)            if
the Borrower failed to make such payment, each Lender shall forthwith on demand
repay to the Administrative Agent the portion of such assumed payment that was
made available to such Lender in immediately available funds, together with
interest thereon in respect of each day from and including the date such amount
was made available by the Administrative Agent to such Lender to the date such
amount is repaid to

 

 

53

 

the Administrative Agent in immediately available funds at the Federal
Funds Rate from time to time in effect; and

(ii)           if
any Lender failed to make such payment, such Lender shall forthwith on demand
pay to the Administrative Agent the amount thereof in immediately available
funds, together with interest thereon for the period from the date such amount
was made available by the Administrative Agent to the Borrower to the date such
amount is recovered by the Administrative Agent (the “Compensation Period”)
at a rate per annum equal to the Federal Funds Rate from time to time in
effect. If such Lender pays such amount to the Administrative Agent, then such
amount shall constitute such Lender’s Loan included in the applicable
Borrowing.  If such Lender does not pay
such amount forthwith upon the Administrative Agent’s demand therefor, the
Administrative Agent may make a demand therefor upon the Borrower, and the
Borrower shall pay such amount to the Administrative Agent, together with
interest thereon for the Compensation Period at a rate per annum equal to the
rate of interest applicable to the applicable Borrowing.  Nothing herein shall be deemed to relieve
any Lender from its obligation to fulfill its Revolving Credit Commitment or
its obligation to fund its Pro Rata Term B Share of the Term Loan B, as the
case may be, or to prejudice any rights which the Administrative Agent or the
Borrower may have against any Lender as a result of any default by such Lender
hereunder.

A
notice of the Administrative Agent to any Lender or the Borrower with respect
to any amount owing under this subsection (c) shall be conclusive, absent
manifest error.

(d)           If any Lender makes
available to the Administrative Agent funds for any Loan to be made by such
Lender as provided in the foregoing provisions of this Article II, and
such funds are not made available to the Borrower by the Administrative Agent
because the conditions to the applicable Credit Extension set forth in Article
V are not satisfied or waived in accordance with the terms hereof, the
Administrative Agent shall return such funds (in like funds as received from
such Lender) to such Lender, without interest.

(e)           The obligations of
the Lenders hereunder to make Revolving Loans, to fund their respective Pro
Rata Term B Shares of the Term Loan B and to fund risk participations in
Letters of Credit and Swing Line Loans are several and not joint.  The failure of any Lender to make any
Revolving Loan, to fund its Pro Rata Term B Share of the Term Loan B or to fund
any risk participations in Letters of Credit and Swing Line Loans on any date
required hereunder shall not relieve any other Lender of its corresponding
obligation to do so on such date, and no Lender shall be responsible for the
failure of any other Lender to so make its Revolving Loan, to fund its Pro Rata
Term B Share of the Term Loan B or to purchase its risk participations in
Letters of Credit and Swing Line Loans.

(f)            Nothing herein
shall be deemed to obligate any Lender to obtain the funds for any Loan in any
particular place or manner or to constitute a representation by any Lender that
it has obtained or will obtain the funds for any Loan in any particular place
or manner.

(g)           Whenever any payment received by the
Administrative Agent under this Agreement or any of the other Loan Documents is
insufficient to pay in full all amounts due and

 

 

54

 

payable to the
Administrative Agent and the Lenders under or in respect of this Agreement and
the other Loan Documents on any date, such payment shall be distributed by the
Administrative Agent and applied by the Administrative Agent and the Lenders in
the order of priority set forth in Section 9.03.

2.14        Sharing of
Payments. 
If, other than as expressly provided elsewhere herein, any Lender shall
obtain on account of the Revolving Loans or portion of the Term Loan B made by
it, or the participations in L/C - BA Obligations or in Swing Line Loans held
by it, any payment (whether voluntary, involuntary, through the exercise of any
right of set-off, or otherwise) in excess of its ratable share (or other share
contemplated hereunder) thereof, such Lender shall immediately (a) notify the
Administrative Agent of such fact, and (b) purchase from the other applicable
Lenders such participations in the applicable Revolving Loans and/or portion of
the applicable Term Loan B made by them and/or such subparticipations in the
participations in L/C - BA Obligations or Swing Line Loans held by them, as the
case may be, as shall be necessary to cause such purchasing Lender to share the
excess payment in respect of such Revolving Loans, Term Loan B or such
participations, as the case may be, pro rata with each of them; provided,
however, that if all or any portion of such excess payment is thereafter
recovered from the purchasing Lender under any of the circumstances described
in Section 11.06 (including pursuant to any settlement entered into by
the purchasing Lender in its discretion), such purchase shall to that extent be
rescinded and each other applicable Lender shall repay to the purchasing Lender
the purchase price paid therefor, together with an amount equal to such paying
Lender’s ratable share (according to the proportion of (i) the amount of such
paying Lender’s required repayment to (ii) the total amount so recovered from
the purchasing Lender) of any interest or other amount paid or payable by the
purchasing Lender in respect of the total amount so recovered, without further
interest thereon.  The Borrower agrees
that any Lender so purchasing a participation from another Lender may, to the
fullest extent permitted by law, exercise all its rights of payment (including
the right of set-off, but subject to Section 11.09) with respect to such
participation as fully as if such Lender were the direct creditor of the
Borrower in the amount of such participation. 
The Administrative Agent will keep records (which shall be conclusive
and binding in the absence of manifest error) of participations purchased under
this Section and will in each case notify the applicable Lenders following any
such purchases or repayments.  Each
Lender that purchases a participation pursuant to this Section shall from and
after such purchase have the right to give all notices, requests, demands,
directions and other communications under this Agreement with respect to the
portion of the Obligations purchased to the same extent as though the
purchasing Lender were the original owner of the Obligations purchased.

ARTICLE III.

SECURITY

3.01        Security.  As security for the full and timely payment
and performance of all Obligations, the Borrower shall, and shall cause all
other Loan Parties to, on or before the Closing Date, do or cause to be done
all things necessary in the opinion of the Administrative Agent and its counsel
to grant to the Administrative Agent for the benefit of the Secured Parties a
duly perfected first priority security interest in all Collateral subject to no
prior Lien or other encumbrance or restriction on transfer, except as expressly
permitted hereunder.  Without limiting
the foregoing, on the Closing Date the Borrower shall deliver, and shall cause
each

 

 

55

 

Guarantor (other than, solely with respect to the Security Agreement,
Mid-State Homes and Walter Mortgage Company) to deliver, to the Administrative
Agent, in form and substance reasonably acceptable to the Administrative Agent,
(a) if such party has rights in any Pledged Interests (i) the Pledge Agreement
which shall pledge all of the Pledged Interests held by such party to the
Administrative Agent for the benefit of the Secured Parties, and (ii) if such
Pledged Interests are in the form of certificated securities, such certificated
securities, together with undated stock powers or other appropriate transfer
documents indorsed in blank pertaining thereto, (b) the Security Agreement,
which shall pledge to the Administrative Agent for the benefit of the Secured
Parties certain personal property of the Borrower and the Guarantors more
particularly described therein, (c) Uniform Commercial Code financing
statements in form, substance and number as requested by the Administrative
Agent, reflecting the Lien in favor of the Secured Parties on the Pledged
Interests and all other Collateral, and shall take such further action and
deliver or cause to be delivered such further documents as required by the
Security Instruments or otherwise as the Administrative Agent may request to
effect the transactions contemplated by this Article III.  The Borrower shall also, and shall cause
each Guarantor, to pledge to the Administrative Agent for the benefit of the
Secured Parties (and as appropriate to reaffirm its prior pledge of) all of the
Pledged Interests acquired or created after the Closing Date and held by such
party, or otherwise acquired by such party and not theretofore pledged to the
Administrative Agent for the benefit of the Secured Parties, and to deliver to
the Administrative Agent all of the documents and instruments in connection
therewith as are required pursuant to the terms of Section 7.12 and of
the Security Instruments.

3.02        Further Assurances.  At the
request of the Administrative Agent, the Borrower will or will cause all other
Loan Parties, as the case may be, from time to time to execute, by its duly
authorized officers, alone or with the Administrative Agent, any certificate,
instrument, financing statement, control agreement, statement or document, or
to procure any such certificate, instrument, statement or document, or to take
such other action (and pay all connected costs) which the Administrative Agent
reasonably deems necessary from time to time to create, continue or preserve
the liens and security interests in Collateral (and the perfection and priority
thereof) of the Administrative Agent contemplated hereby and by the other Loan
Documents and specifically including all Collateral acquired by the Borrower or
other Loan Party after the Closing Date. 
The Administrative Agent is hereby irrevocably authorized to execute (if
necessary) and file or cause to be filed, with or if permitted by applicable
law without the signature of the Borrower or any Loan Party appearing thereon,
all Uniform Commercial Code financing statements reflecting the Borrower or any
other Loan Party as “debtor” and the Administrative Agent as “secured party”,
and continuations thereof and amendments thereto, as the Administrative Agent
reasonably deems necessary or advisable to give effect to the transactions
contemplated hereby and by the other Loan Documents.

3.03        Information
Regarding Collateral.  The Borrower represents,
warrants and covenants that (a) the chief executive office of the Borrower and
each other Person providing Collateral pursuant to a Security Instrument (each,
a “Grantor”) at the Closing Date is located at the address or addresses
specified on Schedule 3.03, and (b) Schedule 3.03 contains a true
and complete list of (i) the exact legal name, jurisdiction of formation, and
address within the United States of each Grantor and of each other Person that
has effected any merger or consolidation with a Grantor or contributed or
transferred to a Grantor any property constituting Collateral at any time since
January 1, 1998 (excluding Persons making sales in the ordinary course of their

 

 

56

 

businesses to a Grantor of property constituting inventory in the hands
of such seller), (ii) the exact legal name, jurisdiction of formation,
jurisdiction identification number, and each location of the chief executive
office of each Grantor at any time since January 1, 1998, (iii) each location
within the United States in which goods constituting Collateral are or have
been located since January 1, 2002 (together with the name of each owner of the
property located at such address if not the applicable Grantor, and a summary
description of the relationship between the applicable Grantor and such
Person), and (iv) each trade name, trademark or other trade style used by any
Grantor since January 1, 2002 and the purposes for which it was used.  The Borrower shall not change, and shall not
permit any other Grantor to change, its name, jurisdiction of formation
(whether by reincorporation, merger or otherwise), the location of its chief
executive office or any location specified in clause (b)(iii) of the
immediately preceding sentence, or use or permit any other Grantor to use, any
additional trade name, trademark or other trade style, except upon giving not
less than thirty (30) days’ prior written notice to the Agent and taking or causing
to be taken all such action at Borrower’s or such other Grantor’s expense as
may be reasonably requested by the Administrative Agent to perfect or maintain
the perfection of the Lien of the Administrative Agent in Collateral.  Each reference to Schedule 3.03 in
this Section 3.03 is subject to the completion of the matters in the
Post-Closing Agreement relating to Schedule 3.03.

ARTICLE IV.

TAXES, YIELD PROTECTION AND ILLEGALITY

4.01        Taxes.

(a)           Any and all payments
by the Borrower to or for the account of the Administrative Agent or any Lender
under any Loan Document shall be made free and clear of and without deduction
for any and all present or future taxes, duties, levies, imposts, deductions,
assessments, fees, withholdings or similar charges, and all liabilities with
respect thereto, excluding, in the case of the Administrative Agent and
each Lender, taxes imposed on or measured by its overall net income, and
franchise taxes imposed on it (in lieu of net income taxes), by the
jurisdiction (or any political subdivision thereof) under the Laws of which the
Administrative Agent or such Lender, as the case may be, is organized or
maintains a lending office (all such non-excluded taxes, duties, levies,
imposts, deductions, assessments, fees, withholdings or similar charges, and
liabilities being hereinafter referred to as “Taxes”).  If the Borrower shall be required by any
Laws to deduct any Taxes from or in respect of any sum payable under any Loan
Document to the Administrative Agent or any Lender, (i) the sum payable shall
be increased as necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this
Section), each of the Administrative Agent and such Lender receives an amount
equal to the sum it would have received had no such deductions been made, (ii)
the Borrower shall make such deductions, (iii) the Borrower shall pay the full
amount deducted to the relevant taxation authority or other authority in
accordance with applicable Laws, and (iv) within 30 days after the date of such
payment, the Borrower shall furnish to the Administrative Agent (which shall
forward the same to such Lender) the original or a certified copy of a receipt
evidencing payment thereof.

(b)           In addition, the Borrower agrees to
pay any and all present or future stamp, court or documentary taxes and any
other excise or property taxes or charges or similar levies which arise from
any payment made under any Loan Document or from the execution, delivery,

 

 

57

 

performance,
enforcement or registration of, or otherwise with respect to, any Loan Document
(hereinafter referred to as “Other Taxes”).

(c)           If the Borrower
shall be required to deduct or pay any Taxes or Other Taxes from or in respect
of any sum payable under any Loan Document to the Administrative Agent or any
Lender, the Borrower shall also pay to the Administrative Agent or to such
Lender, as the case may be, at the time interest is paid, such additional
amount that the Administrative Agent or such Lender specifies is necessary to
preserve the after-tax yield (after factoring in all taxes, including taxes
imposed on or measured by net income) that the Administrative Agent or such
Lender would have received if such Taxes or Other Taxes had not been imposed.

(d)           The Borrower agrees
to indemnify the Administrative Agent and each Lender for (i) the full amount
of Taxes and Other Taxes (including any Taxes or Other Taxes imposed or
asserted by any jurisdiction on amounts payable under this Section) paid by the
Administrative Agent and such Lender, (ii) amounts payable under Section
4.01(c) and (iii) any liability (including additions to tax, penalties,
interest and expenses) arising therefrom or with respect thereto, in each case
whether or not such Taxes or Other Taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority.  Payment under this subsection (d) shall be made within 30 days
after the date the Lender or the Administrative Agent makes a demand therefor.

4.02        Illegality.  If any Lender determines that
any Law has made it unlawful, or that any Governmental Authority has asserted
that it is unlawful, for such Lender or its applicable Lending Office to make,
maintain or fund Eurodollar Rate Loans, or to determine or charge interest
rates based upon the Eurodollar Rate, then, on notice thereof by such Lender to
the Borrower through the Administrative Agent, any obligation of such Lender to
make or Continue Eurodollar Rate Loans or to Convert Base Rate Loans to
Eurodollar Rate Loans shall be suspended until such Lender notifies the
Administrative Agent and the Borrower that the circumstances giving rise to
such determination no longer exist. 
Upon receipt of such notice, the Borrower shall, upon demand from such
Lender (with a copy to the Administrative Agent), prepay or, if applicable,
Convert all Eurodollar Rate Loans of such Lender to Base Rate Loans, either on
the last day of the Interest Period therefor, if such Lender may lawfully
continue to maintain such Eurodollar Rate Loans to such day, or immediately, if
such Lender may not lawfully continue to maintain such Eurodollar Rate
Loans.  Upon any such prepayment or
Conversion, the Borrower shall also pay accrued interest on the amount so
prepaid or Converted.  Each Lender
agrees to designate a different Lending Office if such designation will avoid
the need for such notice and will not, in the good faith judgment of such
Lender, otherwise be materially disadvantageous to such Lender.

4.03        Inability to Determine Rates.  If the
Administrative Agent determines that for any reason adequate and reasonable
means do not exist for determining the Eurodollar Rate for any requested
Interest Period with respect to a proposed Eurodollar Rate Loan, or that the
Eurodollar Rate for any requested Interest Period with respect to a proposed
Eurodollar Rate Loan does not adequately and fairly reflect the cost to such
Lenders of funding such Loan, the Administrative Agent will promptly so notify
the Borrower and each Lender. 
Thereafter, the obligation of the Lenders to make or maintain Eurodollar
Rate Loans shall be suspended until the Administrative Agent revokes such
notice.  Upon receipt of such notice,
the Borrower may

 

 

58

 

revoke any pending request for a Borrowing of, Conversion to or
Continuation of Eurodollar Rate Loans or, failing that, will be deemed to have
converted such request into a request for a Borrowing of Base Rate Loans in the
amount specified therein.

4.04        Increased Cost and
Reduced Return; Capital Adequacy;
Reserves on Eurodollar Rate Loans.

(a)           If any Lender
determines that as a result of the introduction of or any change in or in the
interpretation of any Law, or such Lender’s compliance therewith, there shall
be any increase in the cost to such Lender of agreeing to make or making,
funding or maintaining Eurodollar Rate Loans or (as the case may be) issuing or
participating in Letters of Credit or Bankers’ Acceptances, or a reduction in
the amount received or receivable by such Lender in connection with any of the
foregoing (excluding for purposes of this subsection (a) any such increased
costs or reduction in amount resulting from (i) Taxes or Other Taxes (as to
which Section 4.01 shall govern), (ii) changes in the basis of taxation
of overall net income or overall gross income by the United States or any
foreign jurisdiction or any political subdivision of either thereof under the
Laws of which such Lender is organized or has its Lending Office, and (iii)
reserve requirements), then from time to time upon demand of such Lender (with
a copy of such demand to the Administrative Agent), the Borrower shall pay to
such Lender such additional amounts as will compensate such Lender for such
increased cost or reduction.

(b)           If any Lender
determines that the introduction of any Law regarding capital adequacy or any
change therein or in the interpretation thereof, or compliance by such Lender
(or its Lending Office) therewith, has the effect of reducing the rate of
return on the capital of such Lender or any corporation controlling such Lender
as a consequence of such Lender’s obligations hereunder (taking into
consideration its policies with respect to capital adequacy and such Lender’s
desired return on capital), then from time to time upon demand of such Lender
(with a copy of such demand to the Administrative Agent), the Borrower shall
pay to such Lender such additional amounts as will compensate such Lender for
such reduction.

(c)           The Borrower shall
pay to each Lender, as long as such Lender shall be required to maintain
reserves with respect to liabilities or assets consisting of or including
Eurocurrency funds or deposits (currently known as “Eurocurrency liabilities”),
additional interest on the unpaid principal amount of each Eurodollar Rate Loan
equal to the actual costs of such reserves allocated to such Loan by such
Lender (as determined by such Lender in good faith, which determination shall
be conclusive), which shall be due and payable on each date on which interest
is payable on such Loan, provided the Borrower shall have received at least 15
days’ prior notice (with a copy to the Administrative Agent) of such additional
interest from such Lender.  If a Lender
fails to give notice 15 days prior to the relevant Interest Payment Date, such
additional interest shall be due and payable 15 days from receipt of such
notice.

4.05        Funding Losses.  Upon demand of any Lender (with a copy to
the Administrative Agent) from time to time, the Borrower shall promptly
compensate such Lender for and hold such Lender harmless from any loss, cost or
expense incurred by it as a result of:

 

 

59

 

(a)           any Continuation,
Conversion, payment or prepayment of any Loan other than a Base Rate Loan on a
day other than the last day of the Interest Period for such Loan (whether
voluntary, mandatory, automatic, by reason of acceleration, or otherwise); or

(b)           any failure by the Borrower (for a reason
other than the failure of such Lender to make a Loan) to prepay, borrow,
Continue or Convert any Loan other than a Base Rate Loan on the date or in the
amount notified by the Borrower;

including
any loss or expense arising from the liquidation or reemployment of funds
obtained by it to maintain such Loan or from fees payable to terminate the
deposits from which such funds were obtained. 
The Borrower shall also pay any customary administrative fees charged by
such Lender in connection with the foregoing.

For
purposes of calculating amounts payable by the Borrower to the Lenders under
this Section 4.05, each Lender shall be deemed to have funded each
Eurodollar Rate Loan made by it at the  Eurodollar Rate for such Loan by a matching deposit or other
borrowing in the London interbank eurodollar market for a comparable amount and
for a comparable period, whether or not such Eurodollar Rate Loan was in fact
so funded.

4.06        Matters Applicable to
all Requests for Compensation.  A certificate of the
Administrative Agent or any Lender claiming compensation under this Article
IV and setting forth the additional amount or amounts to be paid to it
hereunder shall be conclusive in the absence of manifest error; provided
that the determination of the Administrative Agent or such Lender, as the case
may be, in making such claim for compensation are made on a reasonable
basis.  The party requesting such
compensation shall promptly furnish to the Borrower and the Administrative
Agent calculations in reasonable detail setting forth such party’s
determination of the amount of such compensation.  In determining such amount, the Administrative Agent or such
Lender may use any reasonable averaging and attribution methods.

4.07        Replacement
Lender. 
In the event any Lender (a) seeks additional compensation pursuant to either
Section 4.01 or 4.04 or (b) is restricted from making any
Eurodollar Rate Loans or providing Eurodollar Rate Segments under this
Agreement, or (c) fails to approve any amendment, waiver or consent requested
by Borrower pursuant to Section 11.01 that has received the written
approval of not less than the Required Lenders but also requires the approval
of such Lender (any such Lender, a “Restricted Lender”), so long as no
Default or Event of Default shall have occurred and be continuing and the
Borrower has obtained a commitment (in an amount not less than the entire
amount of such Restricted Lender’s Revolving Credit Commitment and Pro Rata
Term B Share of the Outstanding Amount of the Term Loan B) from one or more
Lenders or Eligible Assignees, who does not suffer from the same impairment as
the Restricted Lender with respect to matters in (a) or (b) above, to become a
Lender for all purposes hereunder (such Lender referred to as the “Replacement
Lender”), the Borrower may cause such Restricted Lender to be replaced by,
and to assign all its rights and obligations under this Agreement (including
its Revolving Credit Commitment and its Loans) pursuant to Section 11.07
to, such Replacement Lender so long as such Replacement Lender is reasonably
acceptable to the Administrative Agent. 
Such Restricted Lender agrees to execute and to deliver to the
Administrative Agent an Assignment and Assumption Agreement with such
Replacement Lender as provided in Section 11.07 upon payment at par of
all principal, accrued interest,

 

 

60

 

accrued fees and other amounts accrued or owing under this Agreement to
such Restricted Lender, and such Replacement Lender shall pay to the
Administrative Agent the processing fee required by Section 11.07 in
connection with such assignment.  The
Restricted Lender making such assignment will be entitled to compensation for
any expenses or other amounts which would be owing to such Restricted Lender
pursuant to any indemnification provision hereof (including, if applicable, Section
4.05) as if the Borrower had prepaid the Loans of such Lender (and
terminated its Revolving Credit Commitment, if applicable) rather than such
Restricted Lender having assigned its interest hereunder.  Notwithstanding any foregoing provision of
this Section 4.07, the provisions hereof will not apply to any event or
occurrence that would otherwise give rise to its application if such event or
occurrence, in the reasonable judgment of the Administrative Agent, is one of
general application that affects all or a majority of the Revolving Lenders,
the Term Loan B Lenders, or both.

4.08        Survival.  All of the Borrower’s obligations under this
Article IV shall survive termination of the Aggregate Commitments and
repayment of all other Obligations hereunder.

ARTICLE V.

CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

5.01        Conditions of Initial Credit Extension.  The
obligation of each Lender to make its initial Credit Extension hereunder is
subject to satisfaction of the following conditions precedent:

(a)           Except to the extent
deferred to a reasonable later date after the Closing Date at the reasonable
discretion of the Administrative Agent pursuant to the post-closing agreement
(the “Post-Closing Agreement”) entered into between the Borrower and the
Administrative Agent as of the Closing Date, a copy of which will be delivered
to each of the Lenders, the Administrative Agent’s receipt of the following,
each of which shall be originals or facsimiles (followed promptly by originals)
unless otherwise specified, each properly executed by a Responsible Officer of
the signing Loan Party, each dated the Closing Date (or, in the case of
certificates of governmental officials, a recent date before the Closing Date)
and each in form and substance satisfactory to the Administrative Agent and its
legal counsel:

(i)            executed
counterparts of this Agreement, each of the Security Instruments, the
Subsidiary Guaranty and the Mid-State
Homes Guaranty, sufficient in number for distribution to the Administrative
Agent, each Lender and the Borrower;

(ii)           Revolving
Loan Notes executed by the Borrower in favor of each Revolving Lender
requesting such a Note;

(iii)          Term
Loan B Notes executed by the Borrower in favor of each Term Loan B Lender
requesting such a Note;

(iv)          a
Swing Line Note executed by the Borrower in favor of the Swing Line Lender (if
it requests such a Note);

(v)           such
certificates of resolutions or other action, incumbency certificates (including
specimen signatures), and/or other certificates of Responsible Officers of each

 

 

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Loan Party as the Administrative Agent may require evidencing the
identity, authority and capacity of each Responsible Officer thereof authorized
to act as a Responsible Officer in connection with this Agreement and the other
Loan Documents to which such Loan Party is a party;

(vi)          such
documents and certifications as the Administrative Agent may reasonably require
to evidence that each Loan Party is duly organized or formed, and that each of the Borrower and  each Guarantor  is validly existing, in good standing and
qualified to engage in business in each
jurisdiction where its ownership, lease or operation of properties or the
conduct of its business requires such qualification, except to the extent that
failure to do so could not reasonably be expected to have a Material Adverse
Effect, which jurisdictions are set forth as of the Closing Date on Schedule
5.01 hereto, including certified copies of each Loan Party’s Organization
Documents, shareholders’ agreements, certificates of good standing and/or
qualification to engage in business;

(vii)         a
favorable opinion or opinions of counsel to the Loan Parties, addressed to the
Administrative Agent and each Lender, as to the matters set forth in Exhibit
G and such other matters concerning the Loan Parties and the Loan Documents
as the Required Lenders may reasonably request;

(viii)        a
certificate of a Responsible Officer of the Borrower either (A) identifying all
consents, licenses and approvals required in connection with the execution,
delivery and performance by such Loan Party and the validity against such Loan
Party of the Loan Documents to which it is a party, and stating that such
consents, licenses and approvals shall be in full force and effect, and
attaching true and correct copies thereof or (B) stating that no such consents,
licenses or approvals are so required;

(ix)           a
certificate signed by a Responsible Officer of the Borrower certifying (A) that
the conditions specified in Sections 5.02(a) and (b) have been
satisfied, (B) that no event or circumstance has occurred, and no action, suit,
investigation or proceeding has been brought or, to the best of the Borrower’s
knowledge, threatened in any court or before any arbitrator or Governmental
Authority, since the date of the Audited Financial Statements that has had or
could be reasonably expected to have, either individually or in the aggregate,
a Material Adverse Effect; (C) that the Debt Rating as of the Closing Date is not
lower than Ba3 by Moody’s and BB- by S&P; (D) as to the matters described
in Section 5.01(d); (E) that the Existing Mortgage Warehouse Facility is
in full force and effect, no default or event of default thereunder has
occurred and is continuing, the stated maturity date thereof is not earlier
than January 31, 2004, the maximum principal amount thereof is not less than
$350,000,000, and unused availability thereunder (after giving effect to the
occurrence of the Closing Date and all transactions occurring simultaneously
therewith) is not less than $50,000,000; and (F) that there has been no
material adverse change in the facts and information regarding the Loan Parties
as represented to date;

(x)            a
Compliance Certificate calculated for the Four-Quarter Period ended December
31, 2002, pro forma for the occurrence of the Closing Date (including the
advance of the Term Loan B and any Revolving Borrowing made on the Closing
Date);

 

 

62

 

(xi)           evidence
that all insurance required to be maintained pursuant to the Loan Documents has
been obtained and is in effect;

(xii)          (A)
the Audited Financial Statements, and (B) projected balance sheets and related
projected statements of operations, retained earnings and cash flows of the
Borrower and its Subsidiaries for the five fiscal years ending after the
Closing Date;

(xiii)         an initial Revolving Loan Notice, if any;

(xiv)        an
initial Term Loan Interest Rate Selection Notice, if any;

(xv)         delivery
of Uniform Commercial Code financing statements suitable in form and substance
for filing in all places required by applicable law to perfect the Liens of the
Administrative Agent under the Security Instruments as a first priority Lien as
to items of Collateral in which a security interest may be perfected by the
filing of financing statements, and such other documents and/or evidence of
other actions as may be reasonably necessary under applicable law to perfect
the Liens of the Administrative Agent under such Security Instruments as a first
priority Lien in and to such other Collateral as the Administrative Agent may
require, including without limitation the delivery by the Borrower of all
certificates evidencing Pledged Interests, accompanied in each case by duly
executed stock powers (or other appropriate transfer documents) in blank
affixed thereto;

(xvi)        Uniform
Commercial Code search results showing only those Liens as are acceptable to
the Lenders;

(xvii)       evidence that the Existing Credit Agreement has been
or concurrently with the Closing Date is being terminated and all Liens
securing obligations under the Existing Credit Agreement have been or
concurrently with the Closing Date are being released; and

(xviii)      such
other assurances, certificates, documents, consents or opinions as the
Administrative Agent or the Required Lenders reasonably may require.

(b)           Any fees required to
be paid on or before the Closing Date shall have been paid.

(c)           Unless waived by the Administrative
Agent, the Borrower shall have paid all Attorney Costs of the Administrative
Agent to the extent invoiced prior to or on the Closing Date, plus such
additional amounts of Attorney Costs as shall constitute its reasonable
estimate of Attorney Costs incurred or to be incurred by it through the closing
proceedings (provided that such estimate shall not thereafter preclude a
final settling of accounts between the Borrower and the Administrative Agent).

(d)           The Administrative Agent shall be satisfied that after
giving effect to the initial Credit Extension hereunder, the remaining amount
available to be drawn under the Revolving Credit Facility shall not be less
than $50,000,000.

 

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5.02        Conditions
to all Credit Extensions. 
The obligation of each Lender to honor any Request for Credit Extension
(other than a Revolving Loan Notice or Term Loan Interest Rate Selection Notice
requesting only a Conversion of Revolving Loans or Segments, as applicable, or
a Continuation of Eurodollar Rate Loans or Eurodollar Rate Segments, as
applicable) is subject to the following conditions precedent:

(a)           The representations
and warranties of the Borrower and each
other Loan Party contained in Article VI or any other Loan
Document, or which are contained in any document furnished at any time under or
in connection herewith or therewith, shall be true and correct on and as of the
date of such Credit Extension, except to the extent that such representations
and warranties specifically refer to an earlier date, in which case they shall
be true and correct as of such earlier date, and except that for purposes of
this Section 5.02, the representations and warranties contained in
subsections (a) and (b) of Section 6.05 shall be deemed to refer to the
most recent statements furnished pursuant to clauses (a) and (b), respectively,
of Section 7.01.

(b)           No Default or Event
of Default shall have occurred and be continuing, or would result from such
proposed Credit Extension.

(c)           The Administrative
Agent and, if applicable, the L/C Issuer or the Swing Line Lender shall have
received a Request for Credit Extension in accordance with the requirements
hereof.

(d)           No limitation exists
on any Borrowing or Credit Extension contained in Article II.

Each
Request for Credit Extension (other than a Revolving Loan Notice or Term Loan
Interest Rate Selection Notice requesting only a Conversion of Revolving Loans
or Segments, as applicable, or a Continuation of Eurodollar Rate Loans or
Eurodollar Rate Segments, as applicable) submitted by the Borrower shall be
deemed to be a representation and warranty that the conditions specified in Sections
5.02(a) and (b) have been satisfied on and as of the date of the
applicable Credit Extension.

ARTICLE VI.

REPRESENTATIONS AND WARRANTIES

The Borrower represents and
warrants to the Administrative Agent and the Lenders that:

6.01        Existence, Qualification and Power;
Compliance with Laws. 
Each Loan Party (a) is a corporation,
partnership or limited liability company duly organized or formed,
validly existing and in good standing under the Laws of the jurisdiction of its
incorporation, organization or formation, (b) has all requisite power and
authority and all requisite governmental licenses, authorizations, consents and
approvals to (i) own its assets and carry on its business and (ii) execute,
deliver and perform its obligations under the Loan Documents to which it is a
party, (c) is duly qualified and is licensed and in good standing under the
Laws of each jurisdiction where its ownership, lease or operation of properties
or the conduct of its business requires such qualification or license, and (d)
is in compliance with all Laws; except in each case referred to in clause
(b)(i), (c) or (d), to the extent that failure to do so could not reasonably be
expected to have a Material Adverse Effect.

 

 

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6.02        Authorization;
No Contravention. 
The execution, delivery and performance by each Loan Party of each Loan
Document to which such Person is party, have been duly authorized by all necessary
corporate or other organizational action, and do not and will not (a)
contravene the terms of any of such Person’s Organization Documents; (b)
conflict with or result in any breach or contravention of, or the creation of
any Lien under, (i) any Contractual Obligation to which such Person is a party
or (ii) any order, injunction, writ or decree of any Governmental Authority or
any arbitral award to which such Person or its property is subject; or (c)
violate any Law.

6.03        Governmental Authorization; Other
Consents. 
No approval, consent, exemption, authorization, or other action by, or
notice to, or filing with, any Governmental Authority or any other Person is
necessary or required in connection with the execution, delivery or performance
by, or enforcement against, any Loan Party of this Agreement or any other Loan
Document.

6.04        Binding Effect.  This Agreement has been, and
each other Loan Document, when delivered hereunder, will have been, duly
executed and delivered by each Loan Party that is party thereto.  This Agreement constitutes, and each other
Loan Document when so delivered will constitute, a legal, valid and binding
obligation of such Loan Party, enforceable against each Loan Party that is
party thereto in accordance with its terms.

6.05        Financial Statements; No Material
Adverse Effect.

(a)           The Audited
Financial Statements (i) were prepared in accordance with GAAP consistently
applied throughout the period covered thereby, except as otherwise expressly
noted therein; (ii) fairly present the financial condition of the Borrower and
its Subsidiaries as of the date thereof and their results of operations for the
period covered thereby in accordance with GAAP consistently applied throughout
the period covered thereby, except as otherwise expressly noted therein; and
(iii) show all material indebtedness and other liabilities, direct or
contingent, of the Borrower and its Subsidiaries as of the date thereof,
including liabilities for taxes, material commitments and Indebtedness.

(b)           The unaudited consolidated
financial statements of the Borrower and its Subsidiaries most recently
delivered pursuant to Section 7.01(b) and the related consolidated
statements of income or operations, shareholders’ equity and cash flows for
such interim period (i) were prepared in accordance with GAAP consistently
applied throughout the period covered thereby, except as otherwise expressly
noted therein, and (ii) fairly present the financial condition of the Borrower
and its Subsidiaries as of the date thereof and their results of operations for
the period covered thereby, subject, in the case of clauses (i) and (ii), to
the absence of footnotes and to normal year-end audit adjustments.

(c)           Since the later of (i) the date of
the Audited Financial Statements and (ii) the date of the most recent audited
financial statements delivered pursuant to Section 7.01(a), there has
been no event or circumstance, either individually or in the aggregate, that
has had or could reasonably be expected to have a Material Adverse Effect.

 

 

65

 

(d)           The Borrower and its
Subsidiaries, on a consolidated basis, have no material indebtedness or other
liabilities, direct or contingent, including liabilities for taxes, material
commitments and Indebtedness, except to the extent (i) set forth in the
most recent of (A) the Audited Financial Statements and (B) the financial
statements most recently delivered pursuant to Section 7.01(a) or (b),
(ii) set forth on Schedule 8.03, or (iii) incurred since the date referred
to in subsection (i) hereof in accordance with the terms of this Agreement and
the other Loan Documents.

6.06        Litigation.  Except as specifically disclosed in Schedule 6.06, there are
no actions, suits, proceedings, claims or disputes pending or, to the knowledge
of the Borrower after due investigation, threatened or contemplated, at law, in
equity, in arbitration or before any Governmental Authority, by or against the
Borrower or any of its Subsidiaries or against any of their properties or
revenues that (a) purport to affect or pertain to this Agreement or any other
Loan Document, or any of the transactions contemplated hereby, or (b) either
individually or in the aggregate, if determined adversely, could reasonably be
expected to have a Material Adverse Effect.

6.07        No Default.  Neither the Borrower nor any Subsidiary is
in default under or with respect to any Contractual Obligation that could,
either individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.  No Default has
occurred and is continuing or would result from the consummation of the
transactions contemplated by this Agreement or any other Loan Document.

6.08        Ownership
of Property; Liens. 
Each of the Borrower and each Subsidiary has good record and marketable
title in fee simple to, or valid leasehold interests in, all real property
necessary or used in the ordinary conduct of its business, except for such
defects in title as could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. 
The property of the Borrower and its Subsidiaries is subject to no
Liens, other than Liens permitted by Section 8.01.

6.09        Environmental
Compliance. 
The Borrower and its Restricted Subsidiaries conduct in the ordinary
course of business a review of the effect of existing Environmental Laws and
claims alleging potential liability or responsibility for violation of any
Environmental Law on their respective businesses, operations and properties,
and as a result thereof the Borrower has reasonably concluded that, except as specifically disclosed in Schedule
6.09, such Environmental Laws and claims could not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect.

6.10        Insurance. 
The properties of the Borrower and its Subsidiaries are insured with
financially sound and reputable insurance companies in such amounts, with such
deductibles and covering such risks as are customarily carried by companies
engaged in similar businesses and owning similar properties in localities where
the Borrower or the applicable Subsidiary operates, none of which insurance
shall be provided by any Subsidiary or any other Affiliate of the Borrower
except to the extent that (a) the status of such Person as an Affiliate of the
Borrower does not result from any Loan Party’s ownership of equity interests in
such Affiliate, or (b) any such Affiliate has reinsured all exposure related
thereto with one or more financially sound and

 

 

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reputable insurance or reinsurance companies none of which is an
Affiliate (other than Affiliates described in clause (a)) of the Borrower.

6.11        Taxes.  The Borrower and its Subsidiaries have filed
all Federal, state and other material tax returns and reports required to be
filed, and have paid all Federal, state and other material taxes, assessments,
fees and other governmental charges levied or imposed upon them or their
properties, income or assets otherwise due and payable, except those which are
being contested in good faith by appropriate proceedings diligently conducted
and for which adequate reserves have been provided in accordance with
GAAP.  Except as specifically described
on Schedule 6.11 hereto, there is no proposed tax assessment against the
Borrower or any Subsidiary that would, if made, have a Material Adverse Effect.

6.12        ERISA Compliance.

(a)           Each Plan is in
compliance in all material respects with the applicable provisions of ERISA,
the Code and other Federal or state Laws. 
Each Plan that is intended to qualify under Section 401(a) of the Code
has received a favorable determination letter from the IRS or an application
for such a letter is currently being processed by the IRS with respect thereto
or an application for such a letter will be filed within twelve months of the
first Plan year for a newly adopted Plan and, to the best knowledge of the
Borrower, nothing has occurred which would reasonably be expected to prevent,
or cause the loss of, such qualification. 
The Borrower and each ERISA Affiliate have made all required
contributions to each Plan subject to Section 412 of the Code, and no
application for a funding waiver or an extension of any amortization period
pursuant to Section 412 of the Code has been made with respect to any Plan.

(b)           There are no pending
or, to the best knowledge of the Borrower, threatened claims, actions or
lawsuits, or action by any Governmental Authority, with respect to any Plan
that could be reasonably be expected to have a Material Adverse Effect.  Neither the Borrower nor any ERISA Affiliate
has engaged in a non-exempt prohibited transaction or violation of the
fiduciary responsibility rules described in Section 4975 of the Code or Section
4 of ERISA with respect to any Plan that has resulted or could reasonably be
expected to result in a Material Adverse Effect.

(c)           (i) 
No ERISA Event has occurred for which any liability remains unsatisfied
or is reasonably expected to occur; (ii) except to the extent it could
reasonably be expected to have  a
Material Adverse Effect, no Pension Plan has any Unfunded Pension Liability;
(iii) neither the Borrower nor any ERISA Affiliate has incurred, or reasonably
expects to incur, any material liability under Title IV of ERISA with respect
to any Pension Plan (other than premiums or contributions due and not
delinquent under Section 4007 of ERISA); (iv) neither the Borrower nor any
ERISA Affiliate has incurred, or reasonably expects to incur, any material
liability (and no event has occurred which, with the giving of notice under
Section 4219 of ERISA, would reasonably be expected to result in such
liability) under Sections 4201 or 4243 of ERISA with respect to a Multiemployer
Plan; and (v) to the knowledge of the Borrower, neither the Borrower nor any
ERISA Affiliate has engaged in a transaction that could be subject to Sections
4069 or 4212(c) of ERISA.

 

 

67

 

6.13        Subsidiaries.  The Borrower (a) has no Subsidiaries other than those specifically
disclosed in Schedule 6.13(a) or created or acquired in compliance with Section
7.12, and (b) has no equity investments in any other corporation or entity
other than those specifically disclosed in Schedule 6.13(b) or made
after the Closing Date in compliance with this Agreement and the other Loan
Documents.

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

(a)           The Borrower is not
engaged and will not engage, principally or as one of its important activities,
in the business of purchasing or carrying margin stock (within the meaning of
Regulation U issued by the FRB), or extending credit for the purpose of
purchasing or carrying margin stock.

(b)           None of the
Borrower, any Person Controlling the Borrower, or any Subsidiary (i) is a
“holding company,” or a “subsidiary company” of a “holding company,” or an
“affiliate” of a “holding company” or of a “subsidiary company” of a “holding
company,” within the meaning of the Public Utility Holding Company Act of 1935,
or (ii) is or is required to be registered as an “investment company” under the
Investment Company Act of 1940.

6.15        Disclosure.  The Borrower has disclosed to
the Administrative Agent and the Lenders all agreements, instruments and
corporate or other restrictions to which it or any of its Subsidiaries is
subject, and all other matters known to it, that, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse
Effect.  No report, financial statement,
certificate or other information furnished (whether in writing or orally) by or
on behalf of any Loan Party to the Administrative Agent or any Lender in
connection with the transactions contemplated hereby and the negotiation of
this Agreement or delivered hereunder (as modified or supplemented by other
information so furnished) contains any material misstatement of fact or omits
to state any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading; provided
that, with respect to projected financial information, the Borrower represents
only that such information was prepared in good faith based upon assumptions
believed to be reasonable at the time.

6.16        Compliance
with Laws. 
Each of the Borrower and each Subsidiary is in compliance in all material
respects with the requirements of all Laws and all orders, writs, injunctions
and decrees applicable to it or to its properties, except in such instances in
which (a) such requirement of Law or order, writ, injunction or decree is being
contested in good faith by appropriate proceedings diligently conducted or (b)
the failure to comply therewith, either individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect.

6.17        Intellectual
Property; Licenses, Etc.  The Borrower and its Subsidiaries own, or possess the
right to use, all of the trademarks, service marks, trade names, copyrights,
patents, patent rights, franchises, licenses and other intellectual property
rights (collectively, “IP Rights”) that are reasonably necessary for the
operation of their respective businesses, without known conflict with the IP
Rights of any other Person, except to the extent any failure so to own or

 

 

68

 

possess the right to use could not reasonably be expected to have a
Material Adverse Effect.  To the
knowledge of the Borrower, the operation by the Borrower and its Subsidiaries
of their respective businesses does not infringe upon any IP Rights held by any
other Person.

ARTICLE VII.

AFFIRMATIVE COVENANTS

So
long as any Lender shall have any Revolving Credit Commitment hereunder, any
Loan or other Obligation hereunder shall remain unpaid or unsatisfied, or any
Letter of Credit shall remain outstanding, the Borrower shall, and shall (except
in the case of the covenants set forth in Sections 7.01, 7.02, 7.03
and 7.11) cause each Subsidiary to:

7.01        Financial
Statements. 
Deliver to the Administrative Agent and each Lender:

(a)           as soon as
available, but in any event within 90 days after the end of each fiscal year of
the Borrower, a consolidated and consolidating balance sheet of the Borrower
and its Subsidiaries as at the end of such fiscal year, and the related
consolidated and consolidating statements of income or operations, shareholders’
equity and cash flows for such fiscal year, setting forth (except with respect
to the consolidating balance sheet and related consolidating statements) in
each case in comparative form the figures for the previous fiscal year, all in
reasonable detail and prepared in accordance with GAAP, and (except with
respect to the consolidating balance sheet and related consolidating
statements) audited and accompanied by a report and opinion of an independent
certified public accountant of nationally recognized standing reasonably
acceptable to the Administrative Agent, which report and opinion shall be
prepared in accordance with generally accepted auditing standards and shall not
be subject to any “going concern” or like qualification or exception or any
qualification or exception as to the scope of such audit; and

(b)           as soon as
available, but in any event within 45 days after the end of each of the first
three fiscal quarters of each fiscal year of the Borrower, a consolidated and
consolidating balance sheet of the Borrower and its Subsidiaries as at the end
of such fiscal quarter, and the related consolidated and consolidating
statements of income or operations, shareholders’ equity and cash flows for
such fiscal quarter and for the portion of the Borrower’s fiscal year then
ended, setting forth (except with respect to the consolidating balance sheet
and related consolidating statements) in each case in comparative form the
figures for the corresponding fiscal quarter of the previous fiscal year and
the corresponding portion of the previous fiscal year, all in reasonable detail
and certified by a Responsible Officer of the Borrower as fairly presenting the
financial condition, results of operations, shareholders’ equity and cash flows
of the Borrower and its Subsidiaries in accordance with GAAP, subject only to
normal year-end audit adjustments and the absence of footnotes.

As to any information contained in materials
furnished pursuant to Section 7.02(d), the Borrower
shall not be separately required to furnish such information under clause (a)
or (b) above, but the foregoing shall not be in derogation of the obligation of
the Borrower to furnish the information and materials described in subsections
(a) and (b) above at the times specified therein.

 

 

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7.02        Certificates;
Other Information. 
Deliver to the Administrative Agent and each Lender, in form and detail
satisfactory to the Administrative Agent and the Required Lenders:

(a)           concurrently with
the delivery of the financial statements referred to in Section 7.01(a),
a certificate of its independent certified public accountants certifying such
financial statements and stating that in making the examination necessary
therefor no knowledge was obtained of any Default or, if any such Default shall
exist, stating the nature and status of such event;

(b)           concurrently with
the delivery of the financial statements referred to in Sections 7.01(a)
and (b), a duly completed Compliance Certificate signed by a Responsible
Officer of the Borrower;

(c)           promptly after any
request by the Administrative Agent, copies of any detailed audit reports,
management letters or recommendations submitted to the board of directors (or
the audit committee of the board of directors) of the Borrower by independent
accountants in connection with the accounts or books of the Borrower or any
Subsidiary, or any audit of any of them;

(d)           promptly after any
request by the Administrative Agent, documents and other information supporting
the calculation of any defined term used in the computation in any Compliance
Certificate of the financial covenants set forth in Section 8.12;

(e)           promptly after the
same are available, copies of each annual report, proxy or financial statement
sent to the stockholders of the Borrower, and copies of all annual, regular,
periodic and special reports and registration statements which the Borrower may
file or be required to file with the SEC under Section 13 or 15(d) of the
Securities Exchange Act of 1934, and not otherwise required to be delivered to
the Administrative Agent pursuant hereto;

(f)            as soon as
available and in any event no later than 60 days after the beginning of each
fiscal year of the Borrower, a consolidated business plan for the Borrower and
its Subsidiaries prepared by management of the Borrower, substantially similar
in form and detail to the business plans prepared prior to the Closing Date and
furnished to the Administrative Agent and including balance sheets, and related
statements of operations, retained earnings and cash flow (to include separate
forecasts for Consolidated Capital Expenditures and Consolidated EBITDA), on a
quarterly basis for such Fiscal Year, and a reasonably detailed explanation of
any underlying assumptions with respect thereto; and

(g)           promptly, such
additional information regarding the business, financial or corporate affairs
of the Borrower or any Subsidiary, or compliance with the terms of the Loan
Documents, as the Administrative Agent or any Lender may from time to time
reasonably request.

Documents required to be delivered pursuant
to Section 7.01(a) or (b) or Section 7.02(d) (to the
extent any such documents are included in materials otherwise filed with the
SEC) may be delivered electronically and if so delivered, shall be deemed to
have been delivered on the date (i) on which the Borrower posts such documents,
or provides a link thereto on the Borrower’s website on the Internet at the
website address listed on Schedule 11.02; or (ii) on

 

 

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which such documents are posted on the Borrower’s behalf on
IntraLinks/IntraAgency or another relevant website, if any, to which each
Lender and the Administrative Agent have access (whether a commercial,
third-party website or whether sponsored by the Administrative Agent); provided
that: (i) the Borrower shall deliver paper copies of such documents to the
Administrative Agent or any Lender that requests the Borrower to deliver such
paper copies until a written request to cease delivering paper copies is given
by the Administrative Agent or such Lender and (ii) the Borrower shall notify
(which may be by facsimile or electronic mail) the Administrative Agent and
each Lender of the posting of any such documents and provide to the Administrative
Agent by electronic mail electronic versions (i.e., soft copies) of such
documents.  Notwithstanding anything
contained herein, in every instance the Borrower shall be required to provide
paper copies of the Compliance Certificates required by Section 7.02(b)
to the Administrative Agent and each of the Lenders.  Except for such Compliance Certificates, the Administrative Agent
shall have no obligation to request the delivery or to maintain copies of the
documents referred to above, and in any event shall have no responsibility to
monitor compliance by the Borrower with any such request for delivery, and each
Lender shall be solely responsible for requesting delivery to it or maintaining
its copies of such documents.

7.03        Notices.  Promptly notify the Administrative Agent and
each Lender:

(a)           of the occurrence of
any Default;

(b)           of any matter that
has resulted or could reasonably be expected to result in a Material Adverse
Effect, including (i) breach or non-performance of, or any default under, a
Contractual Obligation of the Borrower or any Subsidiary; (ii) any dispute,
litigation, investigation, proceeding or suspension between the Borrower or any
Subsidiary and any Governmental Authority; or (iii) the commencement of, or any
material development in, any litigation or proceeding affecting the Borrower or
any Subsidiary, including pursuant to any applicable Environmental Laws;

(c)           of the occurrence of
any ERISA Event;

(d)           of any material
change in accounting policies or financial reporting practices by the Borrower
or any Subsidiary;

(e)           of any announcement by Moody’s or S&P
of any change or possible change in the Debt Rating or in the rating of any
other Indebtedness of the Borrower; and

(f)            of any default
under, termination or suspension of, or election not to renew the Mortgage
Warehouse Facility.

Each
notice pursuant to this Section 7.03 shall be accompanied by a statement
of a Responsible Officer of the Borrower setting forth details of the
occurrence referred to therein and stating what action the Borrower has taken
and proposes to take with respect thereto. 
Each notice pursuant to Section 7.03(a) shall describe with
particularity any and all provisions of this Agreement and any other Loan
Document that have been breached.

7.04        Payment of Obligations.  Pay and
discharge as the same shall become due and payable, all its obligations and
liabilities, including (a) all tax liabilities, assessments and

 

 

71

 

governmental charges or levies upon it or its properties or assets,
unless the same are being contested in good faith by appropriate proceedings
diligently conducted and adequate reserves in accordance with GAAP are being
maintained by the Borrower or such Subsidiary; (b) all lawful claims which, if
unpaid, would by law become a Lien upon its property, except to the extent that
any such Lien would otherwise be permitted by Section 8.01; and (c) all
Indebtedness having an aggregate principal amount (including undrawn committed
or available amounts and including amounts owing to all creditors under any
combined or syndicated credit arrangement) of more than $5,000,000, as and when
due and payable, but subject to any subordination provisions contained in any
instrument or agreement evidencing such Indebtedness.

7.05        Preservation
of Existence, Etc. 
(a) Preserve, renew and maintain in full force and effect its legal
existence and good standing under the Laws of the jurisdiction of its
organization or formation except in a transaction permitted by Section 8.04
or 8.05; (b) take all reasonable action to maintain all rights,
privileges, permits, licenses and franchises necessary or desirable in the
normal conduct of its business, except to the extent that failure to do so
could not reasonably be expected to have a Material Adverse Effect; and (c)
preserve or renew all of its registered patents, trademarks, trade names and
service marks, the non-preservation of which could reasonably be expected to
have a Material Adverse Effect.

7.06        Maintenance
of Properties. 
(a) Maintain, preserve and protect all of its material properties and
equipment necessary in the operation of its business in good working order and
condition, ordinary wear and tear excepted; (b) make all necessary repairs
thereto and renewals and replacements thereof except where the failure to do so
could not reasonably be expected to have a Material Adverse Effect; and (c) use the standard of care typical in
the industry in the operation and maintenance of its facilities.

7.07        Maintenance
of Insurance. 
In the event compliance with the insurance requirements set forth in the
Security Instruments does not satisfy the following requirements, and not in
limitation of such insurance requirements in the Security Instruments,
maintain, with financially sound and reputable insurance companies, insurance
with respect to its properties and business against loss or damage of the kinds
customarily insured against by Persons engaged in the same or similar business,
of such types and in such amounts as are customarily carried under similar
circumstances by such other Persons and
providing for not less than 15 days’ prior notice to the Administrative Agent
of termination, lapse or cancellation of such insurance, none of which
insurance (other than worker’s compensation insurance, disability insurance and
other similar types of insurance that do not constitute the insurance of its
properties or of interruptions to its business operations) shall be provided by
any Subsidiary or any other Affiliate of the Borrower except to the extent that
(a) the status of such Person as an Affiliate of the Borrower does not result
from any Loan Party’s ownership of equity interests in such Affiliate, or (b)
any such Affiliate has reinsured all exposure related thereto with one or more
financially sound and reputable insurance or reinsurance companies none of
which is an Affiliate (other than Affiliates described in clause (a)) of the
Borrower.

7.08        Compliance with Laws.  Comply in
all material respects with the requirements of all Laws (including without
limitation all applicable Environmental Laws) and all orders, writs,
injunctions and decrees applicable to it or to its business or property, except
in such instances in which (a) such requirement of Law or order, writ,
injunction or decree is being

 

 

72

 

contested in good faith by appropriate proceedings diligently
conducted; or (b) the failure to comply therewith could not reasonably be
expected to have a Material Adverse Effect.

7.09        Books and Records.  (a) 
Maintain proper books of record and account, in which full, true and
correct entries in conformity with GAAP consistently applied shall be made of
all financial transactions and matters involving the assets and business of the
Borrower or such Subsidiary, as the case may be; and (b) maintain such books of record and account in material
conformity with all applicable requirements of any Governmental Authority
having regulatory jurisdiction over the Borrower or such Subsidiary, as the
case may be.

7.10        Inspection
Rights. 
Permit representatives and independent contractors of the Administrative
Agent and each Lender to visit and inspect any of its properties, to examine
its corporate, financial and operating records, and make copies thereof or
abstracts therefrom, and to discuss its affairs, finances and accounts with its
officers, and independent public accountants, all at such reasonable times
during normal business hours and as often as may be reasonably desired, upon
reasonable advance notice to the Borrower; provided, however,
that when an Event of Default exists the Administrative Agent or any Lender (or
any of their respective representatives or independent contractors) may do any
of the foregoing at the expense of the Borrower at any time during normal
business hours and without advance notice.

7.11        Use of Proceeds.  Use the proceeds of the
Credit Extensions (i) to refinance existing indebtedness, including all
indebtedness outstanding under the Existing Credit Agreement and the payment of
all fees and expenses in connection therewith, and (ii) for working capital,
capital expenditures, and other general corporate purposes not in contravention
of any Law or of any Loan Document.

7.12        New Subsidiaries and Pledgors.

(a)           As soon as practicable but in any
event within 30 Business Days following the acquisition or creation of any
Subsidiary that is a Restricted Subsidiary, or the time any existing Subsidiary
becomes a Material Subsidiary, cause to be delivered to the Administrative
Agent each of the following:

(i)     if such
Subsidiary is both a Domestic Subsidiary and a Material Subsidiary, a Guaranty
Joinder Agreement duly executed by such Material Subsidiary;

(ii)    if such
Subsidiary is both a Domestic Subsidiary and a Material Subsidiary, a Security
Joinder Agreement duly executed by such Material Subsidiary (with all schedules
thereto appropriately completed);

(iii)   if such
Subsidiary is both a Material Subsidiary and either a Domestic Subsidiary or a
Direct Foreign Subsidiary, and if any of the Subsidiary Securities issued by
such Material Subsidiary are owned by a Material Subsidiary who has not then
executed and delivered to the Administrative Agent the Pledge Agreement or a
Pledge Joinder Agreement granting a Lien to the Administrative Agent, for the
benefit of the Secured Parties, in such Pledged Interests, a Pledge

 

 

73

 

Joinder Agreement (with all schedules thereto appropriately completed)
duly executed by the Material Subsidiary that directly owns such Pledged
Interests;

(iv)   if such
Subsidiary is both a Material Subsidiary and either a Domestic Subsidiary or a
Direct Foreign Subsidiary, and if any of the Subsidiary Securities issued by
such Material Subsidiary are owned by the Borrower or a Material Subsidiary who
has previously executed a Pledge Agreement or a Pledge Joinder Agreement, a
Pledge Agreement Supplement by the Borrower (if applicable) and each Material
Subsidiary that owns any of such Pledged Interests with respect to such Pledged
Interests in the form required by the Pledge Agreement;

(v)    if such
Subsidiary is a Material Subsidiary and owns any Domestic Subsidiary or Direct
Foreign Subsidiary that is also a Material Subsidiary, a Pledge Joinder
Agreement (with all schedules thereto appropriately completed) duly executed by
such Material Subsidiary;

(vi)   if the
Pledged Interests issued or owned by such Subsidiary constitute securities
under Article 8 of the Uniform Commercial Code (A) the certificates
representing 100% of such Pledged Interests and (B) duly executed, undated
stock powers or other appropriate powers of assignment in blank affixed
thereto;

(vii)  with
respect to any Person that has executed a Pledge Joinder Agreement, a Pledge
Agreement Supplement, or a Security Joinder Agreement, Uniform Commercial Code
financing statements naming such Person as “Debtor” and naming the
Administrative Agent for the benefit of the Secured Parties as “Secured Party,”
in form, substance and number sufficient in the reasonable opinion of the Administrative
Agent and its special counsel to be filed in all Uniform Commercial Code filing
offices and in all jurisdictions in which filing is necessary to perfect in
favor of the Administrative Agent for the benefit of the Secured Parties the
Lien on the Collateral conferred under such Security Instrument to the extent
such Lien may be perfected by Uniform Commercial Code filing;

(viii) an opinion
of counsel to each Subsidiary executing any Joinder Agreement or Pledge
Supplement, and the Borrower if it executes a Pledge Agreement Supplement,
pursuant to this Section 7.12 dated as of the date of delivery of such
applicable Joinder Agreements (and other Loan Documents) provided for in this Section
7.12 and addressed to the Administrative Agent and the Lenders, in form and
substance reasonably acceptable to the Administrative Agent, each of which
opinions may be in form and substance, including assumptions and qualifications
contained therein, substantially similar to those opinions of counsel delivered
pursuant to Section 5.01(a); and

(ix)    with
respect to each Subsidiary executing any Joinder Agreement or Pledge
Supplement, and the Borrower if it executes a Pledge Agreement

 

 

74

 

Supplement, pursuant to this Section 7.12, current copies of the
Organization Documents of each such Person, minutes of duly called and
conducted meetings (or duly effected consent actions) of the Board of
Directors, partners, or appropriate committees thereof (and, if required by
such Organization Documents or applicable law, of the shareholders, members or
partners) of such Person authorizing the actions and the execution and delivery
of documents described in this Section 7.12, all certified by the
applicable Governmental Authority or appropriate officer as the Administrative
Agent may elect.

(b)           As soon as practicable but in any
event within 30 Business Days following the acquisition of any Pledged
Interests by any Material Subsidiary who has not theretofore executed the
Pledge Agreement or a Pledge Joinder Agreement and who is not otherwise
required to deliver a Pledge Joinder Agreement pursuant to Section 7.12(a),
cause to be delivered to the Administrative Agent a Pledge Joinder Agreement
(with all schedules thereto appropriately completed) duly executed by such
Material Subsidiary, and the documents, stock certificates, stock powers,
financing statements, opinions, Organization Documents and organizational
action relating thereto and to the pledge contained therein and described in Section
7.12(a)(vi), (viii), (ix) and (x).

7.13        Mortgage Warehouse Facility.  Maintain at
all times a Mortgage Warehouse Facility containing a revolving line of credit
with a maximum principal amount of not less than $350,000,000, and comply at
all times with the terms of such Mortgage Warehouse Facility.

7.14        Compliance with ERISA.  Do, and
cause each of its ERISA Affiliates to do, each of the following: (a) maintain
each Plan in compliance in all material respects with the applicable provisions
of ERISA, the Code and other Federal or state law; (b) cause each Plan which is
qualified under Section 401(a) of the Code to maintain such qualification; and
(c) make all required contributions to any Plan subject to Section 412 of the
Code.

7.15        Further Assurances.  At the
Borrower’s cost and expense, upon request of the Administrative Agent, duly
execute and deliver or cause to be duly executed and delivered, to the
Administrative Agent such further instruments, documents, certificates,
financing and continuation statements, and do and cause to be done such further
acts that may be reasonably necessary or advisable in the reasonable opinion of
the Administrative Agent to carry out more effectively the provisions and
purposes of this Agreement, the Guaranty, the Security Instruments and the
other Loan Documents.

ARTICLE VIII.

NEGATIVE COVENANTS

So
long as any Lender shall have any Revolving Credit Commitment hereunder, any
Loan or other Obligation hereunder shall remain unpaid or unsatisfied, or any
Letter of Credit shall remain outstanding, the Borrower shall not, nor shall it
permit any Subsidiary to, directly or indirectly:

8.01        Liens. 
Create, incur, assume or suffer to exist any Lien upon any of its
property, assets or revenues, whether now owned or hereafter acquired, other
than the following:

 

 

75

 

(a)           Liens pursuant to
any Loan Document;

(b)           Liens existing on
the date hereof and listed on Schedule 8.01 and any renewals or
extensions thereof, provided that the property covered thereby consists
only of the property covered by the Liens being renewed or extended and any
renewal or extension of the obligations secured or benefited thereby is
permitted by Section 8.03(b);

(c)           Liens for taxes not
yet due or which are being contested in good faith and by appropriate
proceedings diligently conducted, if adequate reserves with respect thereto are
maintained on the books of the applicable Person in accordance with GAAP;

(d)           carriers’,
warehousemen’s, mechanics’, materialmen’s, repairmen’s, landlord’s or other
like Liens imposed by Law or arising in the ordinary course of business which
are not overdue for a period of more than 30 days or which are being contested
in good faith and by appropriate proceedings diligently conducted, if adequate
reserves with respect thereto are maintained on the books of the applicable
Person;

(e)           Liens, pledges or
deposits in the ordinary course of business in connection with workers’
compensation, unemployment insurance and other social security legislation,
other than any Lien imposed by ERISA;

(f)            Liens or deposits
to secure the performance of bids, trade contracts and leases (other than
Indebtedness), statutory obligations, surety bonds (other than bonds related to
judgments or litigation), performance bonds and other obligations of a like
nature incurred in the ordinary course of business, and including deposits (but
not Liens) related to the acquisition of property;

(g)           easements,
rights-of-way, covenants, consents, reservations, encroachments, variations and
zoning and other similar restrictions, charges or encumbrances affecting real
property which, in the aggregate, are not substantial in amount, and which do
not in any case materially detract from the value of the property subject
thereto or materially interfere with the ordinary conduct of the business of
the applicable Person;

(h)           any interest or
title of a lessor or sublessor and any restriction or encumbrance to which the
interest or title of such lessor or sublessor may be subject that is incurred
in the ordinary course of business and, either individually or when aggregated
with all other Liens described in clauses (a) through (g) in effect on any date
of determination, could not be reasonably expected to have a Material Adverse
Effect;

(i)            Liens securing
judgments for the payment of money not constituting an Event of Default under Section
9.01 or securing appeal or other surety bonds related to such judgments;

(j)            Liens securing Indebtedness
permitted under Section 8.03(e); provided that (i) such Liens do
not at any time encumber any property other than the property financed by such
Indebtedness and (ii) the Indebtedness secured thereby does not exceed the cost
or fair market value, whichever is lower, of the property being acquired on the
date of acquisition;

 

 

76

 

(k)           Liens on Mortgage
Accounts and Third Party Mortgage Accounts securing Indebtedness permitted
under Section 8.03(g);

(l)            Liens on residual
beneficial interests in any MSH Trust securing Indebtedness permitted under Section
8.03(g)(iii), 8.03(i) or 8.03(m);

(m)          Liens securing
Indebtedness the amount of which Indebtedness shall not exceed in the aggregate
at any time $10,000,000 and the book value of the property securing such Indebtedness
shall not exceed $12,500,000.

8.02        Investments.  Make any Investments, except:

(a)           Investments held by
the Borrower or such Subsidiary in the form of Cash Equivalents;

(b)           loans and advances
to officers, directors and employees of the Borrower and Subsidiaries in the
ordinary course of the business of the Borrower and its Subsidiaries as
conducted on the Closing Date to the extent permitted by applicable Law;

(c)           Investments
consisting of extensions of credit in the nature of accounts receivable or
notes receivable arising from the grant of trade credit in the ordinary course
of business, and Investments received in satisfaction or partial satisfaction
thereof from financially troubled account debtors to the extent reasonably
necessary in order to prevent or limit loss;

(d)           Guarantees permitted
by Section 8.03;

(e)           Investments existing
as of the date hereof and as set forth in Schedule 6.13;

(f)            Investments by Loan
Parties in Mortgage Accounts and Third Party Mortgage Accounts, including
Investments in MSH Trusts in connection with the issuance of asset-backed
securities that are not Investments in residual beneficial interests in MSH
Trusts otherwise permitted by Section 8.02(h), provided that the
aggregate book value (but without adjustment for any write-down of the book
value thereof) of all such Investments permitted by this Section 8.02(f)
owned by Loan Parties does not at any time exceed $50,000,000;

(g)           Investments by MSH
Trusts in Mortgage Accounts and Third Party Mortgage Accounts in connection
with Indebtedness under the Mortgage Warehouse Facility and the issuance of
asset-backed securities permitted by Section 8.03(g);

(h)           Investments by
Mid-State Homes and Walter Mortgage Company in MSH Trusts in connection with
the issuance of asset-backed securities permitted under Section 8.03(g)(iii)
or Section 8.03(i), provided that such Investments shall consist
solely of residual beneficial interests in MSH Trusts, including the associated
residual interest in Mortgage Accounts and Third Party Mortgage Accounts, and
assets related thereto;

(i)            Investments by Cardem and each of
the MSH Trusts in the ordinary course of business and in conformity with their
respective investment policies in effect from time to time;

 

 

77

 

(j)            Investments in
securities of any Person acquired in an Acquisition permitted hereunder;

(k)           Investments in (i)
land held by the Borrower and its Subsidiaries on the Closing Date and
replacements thereof made in accordance with Section 8.05(b), (ii) land
consisting of single lots acquired or held in the ordinary course of the
homebuilding Core Business for the construction of single-family homes, and
(iii) tracts of land held by the Borrower or a Restricted Subsidiary for the
purposes of development the book value of which does not at any time exceed
$15,000,000 (without giving effect to any write-downs thereof);

(l)            other Investments
of (i) the Borrower in any Guarantor, (ii) any Subsidiary in the Borrower or in
a Guarantor, and (iii) of the Borrower or any Guarantor in any Subsidiary that
is not a Guarantor provided that such Investments in non-Guarantor Subsidiaries
do not exceed $15,000,000 in the aggregate at any time outstanding;

(m)          Investments in Swap
Contracts permitted to be maintained under Section 8.03(d);

(n)           other Investments
not exceeding $15,000,000 in the
aggregate in any fiscal year of the Borrower.

8.03        Indebtedness.  Create, incur, assume or
suffer to exist any Indebtedness, except:

(a)           Indebtedness under
the Loan Documents;

(b)           Indebtedness
outstanding on the date hereof and listed on Schedule 8.03 and any
refinancings, refundings, renewals or extensions thereof; provided that
the amount of such Indebtedness is not increased at the time of such
refinancing, refunding, renewal or extension except by an amount equal to a
reasonable premium or other reasonable amount paid, and fees and expenses
reasonably incurred, in connection with such refinancing and by an amount equal
to any existing commitments unutilized thereunder; provided  further
that any refinancing, refunding, renewal or extension of Indebtedness
subordinated to the Obligations shall be on terms no less favorable to the
Administrative Agent and the Lenders, and no more restrictive to the Borrower,
than the subordinated Indebtedness being refinanced, refunded, renewed or
extended and in an amount not less than the amount outstanding at the time
thereof;

(c)           Guarantees of the
Borrower or any Guarantor in
respect of Indebtedness otherwise permitted hereunder of the Borrower or any Guarantor;

(d)           obligations (contingent or otherwise)
of the Borrower or any Subsidiary existing or arising under any Swap Contract, provided
that (i) such obligations are (or were) entered into by such Person in the
ordinary course of business for the purpose of directly mitigating risks
associated with liabilities, commitments, investments, assets, cash flows or
property held or reasonably anticipated by such Person, or changes in the value
of securities issued by such Person, and not for purposes of speculation or
taking a “market view;” and (ii) such Swap Contract does not contain any
provision exonerating the non-defaulting party from its obligation to make
payments on outstanding transactions to the defaulting party;

 

 

78

 

(e)           Indebtedness in
respect of capital leases, Synthetic Lease Obligations and purchase money
obligations for real property and fixed or capital assets within the
limitations set forth in Section 8.01(j), which Indebtedness may include
Indebtedness existing on any property so acquired at the time of such
acquisition (other than any such Indebtedness created in contemplation of such
acquisition that does not secure the purchase price of such property), and
including any refinancings, refundings, renewals or extensions thereof so long
as the amount of such Indebtedness is not increased at the time of such
refinancing, refunding, renewal or extension except by an amount equal to a
reasonable premium or other reasonable amount paid, and fees and expenses
reasonably incurred, in connection with such refinancing; provided,
however, that the aggregate amount of all such Indebtedness at any one time
outstanding shall not exceed $25,000,000;

(f)            the endorsement of
negotiable instruments for deposit or collection or similar transactions in the
ordinary course of business;

(g)           in the case of
Mid-State Homes, Walter Mortgage Company and each MSH Trust, where applicable

(i)            Indebtedness evidenced by the
Mortgage-Backed Securities,

 

(ii)           Indebtedness created under the
Mortgage Warehouse Facility, and

 

(iii)          Indebtedness resulting from the
issuance of additional securities by one or more MSH Trusts that is secured or
otherwise supported by Mortgage Accounts, Third Party Mortgage Accounts and/or
residual beneficial interests in MSH Trusts, which securities shall not
restrict the actions or businesses of the Borrower or any of its Subsidiaries
(other than Mid-State Homes and Walter Mortgage Company) in any manner and
shall not include terms requiring any guarantee or other credit support from or
recourse to the Borrower or any of its Restricted Subsidiaries that are less
favorable to the Borrower and its Restricted Subsidiaries than those contained
in the Mortgage-Backed Securities;

 

(h)           in the case of Mid-State Homes and
Walter Mortgage Company, Indebtedness resulting from the contingent obligations
of Mid-State Homes or Walter Mortgage Company (i) to repurchase Mortgage
Accounts pursuant to Section 3(b) of the Existing Borrower Account Transfer Agreement
(or an equivalent contingent obligation contained in any successor Borrower
Account Transfer Agreement so long as such contingent obligation is no greater
than that contained in Section 3(b) of the Existing Borrower Account Transfer
Agreement), (ii) to repurchase Foreclosure Accounts (as defined in the Existing
Borrower Account Transfer Agreement) pursuant to the terms of Section 4 of the
Existing Borrower Account Transfer Agreement (or an equivalent contingent
obligation contained in any successor Borrower Account Transfer Agreement so
long as such contingent obligation is no greater than that contained in Section
4 of the Existing Borrower Account Transfer Agreement), and (iii) to indemnify
certain Indemnitees referred to in the Existing Borrower Account Transfer
Agreement for expenses incurred thereby on the terms set forth in Section 7 of
the Existing Borrower Account Transfer Agreement (or an equivalent contingent
obligation with respect to indemnification contained in any successor Borrower
Account Transfer Agreement so long as such indemnification obligation

 

 

79

 

is no greater than
that contained in Section 7 of the Existing Borrower Account Transfer
Agreement); provided that the aggregate amount of Indebtedness existing
under subclauses (h)(i) and (h)(iii) shall not exceed $10,000,000 at any time;

(i)            Indebtedness
secured solely by residual beneficial interests in MSH Trusts (other than any
MSH Trust that is a borrower under the Mortgage Warehouse Facility), including
the issuance of securities by one or more MSH Trusts that are secured or
otherwise supported thereby; provided that no such Indebtedness
(including any securities) shall restrict the actions or businesses of the
Borrower or any of its Subsidiaries in any manner and shall not include terms
requiring any guarantee or other credit support from or recourse to the
Borrower or any of its Restricted Subsidiaries that are less favorable to the
Borrower and its Restricted Subsidiaries than those contained in the
Mortgage-Backed Securities;

(j)            Indebtedness (i) of
the Borrower or any Guarantor owing to the Borrower or any Guarantor, (ii) of
any Subsidiary that is not a Guarantor owing to any other Subsidiary that is
not a Guarantor, and (iii) of any Subsidiary that is not a Guarantor owing to
the Borrower or any Guarantor in an aggregate amount at any time outstanding
not to exceed $15,000,000.

(k)           surety bonds
permitted under Section 8.01;

(l)            Indebtedness
subordinated in payment to the Obligations hereunder in an aggregate principal
amount not to exceed $100,000,000, the terms of which Indebtedness are
acceptable to the Administrative Agent ; and

(m)          additional
Indebtedness that is either unsecured or secured solely by a Lien on one or
more residual beneficial interest in MSH Trusts, provided that the
aggregate principal amount of all such Indebtedness shall not to exceed
$50,000,000 at any time outstanding.

8.04        Fundamental
Changes. 
Merge, dissolve, liquidate, consolidate with or into another Person, or
Dispose of (whether in one transaction or in a series of transactions) all or
substantially all of its assets (whether now owned or hereafter acquired) to or
in favor of any Person, except that, so long as no Default exists or would
result therefrom, and in each case subject to Section 8.15:

(a)           any Subsidiary may
merge with any one or more other Subsidiaries, provided that when any Guarantor is merging with another
Subsidiary, the Guarantor shall
be the continuing or surviving Person;

(b)           any Subsidiary may
Dispose of all or substantially all of its assets (upon voluntary liquidation
or otherwise) to another Subsidiary, provided that if the transferor in
such a transaction is a Guarantor,
then the transferee must also be a Guarantor;
and

(c)           a merger or
consolidation necessary to consummate an Acquisition permitted by and in
compliance with Section 8.13.

8.05        Dispositions.  Make any Disposition or enter into any
agreement to make any Disposition, except:

 

 

80

 

(a)           Dispositions of
inventory in the ordinary course of business;

(b)           Dispositions for
fair market value of equipment or real property to the extent that (i) such
property is exchanged for credit against the purchase price of similar
replacement equipment or real property or (ii) the proceeds of such Disposition
are reasonably promptly applied to the purchase price of such replacement
equipment or real property;

(c)           subject to Section
8.15, Dispositions of property by the Borrower or any Subsidiary to a
wholly-owned Subsidiary or, solely with respect to Dispositions of the stock of
a Subsidiary of the Borrower, the Borrower; provided that if the
transferor of such property is the Borrower or a Guarantor, the transferee
thereof must either be a Guarantor or, subject to the limitation above, the
Borrower;

(d)           Dispositions for
fair market value permitted by Section 8.02 or 8.04;

(e)           transfers for fair
market value by Loan Parties to one or more MSH Trusts of Mortgage Accounts or
Third Party Mortgage Accounts in connection with, and to the extent required
for, (i) the incurrence of Indebtedness permitted under Section 8.03(g)(ii),
and (ii) the issuance of asset-backed securities permitted under Section
8.03(g)(iii);

(f)            transfers for fair
market value by Mid-State Homes of any interest in an MSH Trust (other than any
MSH Trust that is a borrower under the Mortgage Warehouse Facility) to (i)
third parties, or (ii) an MSH Trust in connection with the issuance of
asset-backed securities permitted under Section 8.03(g)(iii) or 8.03(i);

(g)           any Mining Sale and
any Disposition of assets or stock of the Non-Core Subsidiaries, so long as
(with respect to each such Disposition) such Disposition is for fair market
value and:

(i)            at
least 75% of the consideration for such Disposition  is cash, or in the case of any Mining Sale, a combination of
cash and assumed liabilities;

(ii)           the
Net Cash Proceeds are applied in accordance with Section 2.06(d);

(iii)          no
Default exists or would exist immediately prior to or after giving pro forma
effect to the Disposition;

(iv)          after
giving effect to the Disposition and all associated mandatory prepayments
required in connection with such Disposition by Section 2.06(d):

(1)           with respect to any
Disposition relating to the stock or assets of 
any of the Non-Core Subsidiaries, the Consolidated Leverage Ratio is not
greater than the greater of (A) 1.50 to 1.00 and (B) the Consolidated Leverage
Ratio at the later of (x) the end of the immediately preceding fiscal quarter
of the Borrower and (y) the date of the most recent preceding Disposition made
pursuant to this Section 8.05(g), if any; and

 

 

81

 

(2)           with respect to any
Mining Sale, the Consolidated Leverage Ratio is not greater than the greater of
(i) 1.50 to 1.00 and (ii) an amount equal to 0.50 plus the Consolidated
Leverage Ratio at the later of (x) the end of the immediately preceding fiscal
quarter of the Borrower and (y) the date of the most recent preceding
Disposition made pursuant to this Section 8.05(g), if any; and

(v)           to the extent not
otherwise granted therein, the Borrower agrees that it will, and will cause
each of its Restricted Subsidiaries to, grant to the Administrative Agent a
security interest in any non-cash consideration received in connection with a
Disposition provided for in this Section 8.05(g) that is evidenced by a
promissory note or other written instrument;

(h)           Disposition for fair
market value by the Borrower of real property consisting of its former headquarters
located at 1500 North Dale Mabry Boulevard, Tampa, Florida; and

(i)            Dispositions for
fair market value not otherwise permitted under this Section 8.05; provided
that (i) at the time of such Disposition, no Default shall exist or would
result from such Disposition and (ii) the aggregate book value of all property
Disposed of in reliance on this clause (i) in any fiscal year shall not exceed
$30,000,000.

8.06        Restricted
Payments. 
Declare or make, directly or indirectly, any Restricted Payment, or
incur any obligation (contingent or otherwise) to do so, except that, in each
case (except Section 8.06(a)) so long as no Default or Event of Default
shall have occurred and be continuing (both before and after the making of such
Restricted Payment):

(a)           each Subsidiary may
make Restricted Payments to the Borrower and to wholly-owned Subsidiaries (and,
in the case of a Restricted Payment by a non-wholly-owned Subsidiary, to the
Borrower and any Subsidiary and to each other owner of capital stock or other
equity interests of such Subsidiary on a pro rata basis based on their relative
ownership interests);

(b)           the Borrower and
each Subsidiary may declare and make dividend payments or other distributions
payable solely in the common stock or other common equity interests of such
Person;

(c)           the Borrower and
each Subsidiary may purchase, redeem or otherwise acquire shares of its common
stock or other common equity interests or warrants or options to acquire any
such shares with the proceeds received from the substantially concurrent issue
of new shares of its common stock or other common equity interests;

(d)           the Borrower may
make a single repurchase of its own capital stock from not more than two
holders of such capital stock, each of which is identified to and approved by
the Administrative Agent, in an aggregate amount not to exceed $40,000,000, so
long as after giving effect to such Restricted Payment the remaining amount
available to be drawn under the Revolving Credit Facility shall not be less
than $50,000,000; and

(e)           without duplication of Section
8.06(d), the Borrower may, up to an aggregate amount not to exceed
$25,000,000 in any fiscal year, (i) so long as after giving effect to any such
Restricted Payment the remaining amount available to be drawn under the Revolving
Credit

 

 

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Facility shall not be less than $50,000,000, repurchase shares of its
own capital stock for cash, and (ii) declare and pay cash dividends to its
stockholders.

8.07        Change
in Nature of Business. 
Engage in any material line of business substantially different from
those lines of business conducted by the Borrower and its Subsidiaries on the
date hereof or any business substantially related or incidental thereto.

8.08        Transactions
with Affiliates. 
Enter into any transaction of any kind with any Affiliate of the
Borrower, whether or not in the ordinary course of business, other than (a)
transactions on fair and reasonable terms substantially as favorable to the
Borrower or such Subsidiary as would be obtainable by the Borrower or such
Subsidiary at the time in a comparable arm’s length transaction with a Person
other than an Affiliate, (b) the consummation by the Borrower and its
Subsidiaries of the transactions effected by the Loan Documents, (c) any
employment arrangement entered into by the Borrower or any of its Subsidiaries
in the ordinary course of business and consistent with the past practices of
the Borrower or such Subsidiary, (d) transactions between or among the Borrower
and its Subsidiaries or between or among Subsidiaries of the Borrower, in each
case to the extent permitted under the terms of the Loan Documents, and (e) the
declaration and payment of dividends and the making of distributions to all
holders of any class of capital stock of the Borrower or any of its
Subsidiaries to the extent otherwise permitted under Section 8.06.

8.09        Burdensome
Agreements. 
Enter into any Contractual Obligation (other than this Agreement or any
other Loan Document) that:

(a)           requires the grant of a Lien to
secure an obligation of such Person if a Lien is granted to secure another
obligation of such Person; or

(b)           limits the ability (i) of any
Subsidiary to make Restricted Payments to the Borrower or any Guarantor or to
otherwise transfer property to the Borrower or any Guarantor, other than
customary restrictions required in connection with financings permitted by this
Agreement, the limitations of which are no more restrictive than the
corresponding limitations applicable to the Borrower hereunder, (ii) of any
Restricted Subsidiary to Guarantee the Indebtedness of the Borrower, or (iii)
of the Borrower or any Subsidiary to create, incur, assume or suffer to exist
Liens on property of such Person; provided, however, that this
clause (iii) shall not prohibit:

(A)          a negative pledge
contained in either (x) Indebtedness of any Subsidiary as of the date it
becomes a Subsidiary of the Borrower in any transaction otherwise permitted
hereunder or (y) Indebtedness outstanding on the date hereof and listed on Schedule
8.03, in each case so long as such provision does not impair or conflict
with any Security Instrument or with Section 7.12 hereof;

(B)           provisions limiting
Liens on property of the MSH Trusts as may be contained in the terms of any
Indebtedness permitted under Section 8.03(g) or 8.03(i);

(C)           provisions limiting
Liens on property as may be contained in the terms of any Indebtedness
permitted under Section 8.03(e), (l) and (m) solely to the extent any
such limitations relates to the property financed by or the subject of such
Indebtedness;

 

 

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(D)          provisions limiting
Liens on property, and only on such property, subject to a prior Lien permitted
under Section 8.01(c), (d), (e), (f), (h), (j) and (l); and

(E)           such provisions as
may be contained in any refinancing or replacing Indebtedness permitted under Section
8.03, provided that the terms of such provisions shall be no less favorable
to the Administrative Agent and the Lenders as were contained in the
Indebtedness being refinanced or replaced.

8.10        Use of Proceeds.  Use the
proceeds of any Credit Extension, whether directly or indirectly, and whether
immediately, incidentally or ultimately in any manner that might cause the
Credit Extension or the application of such proceeds to violate Regulations T,
U or X of the FRB, in each case as in effect on the date or dates of such
Credit Extension and such use of proceeds.

8.11        Prepayment of Indebtedness; Amendment to Material Agreements.

(a)           Prepay, redeem, purchase, repurchase,
defease or otherwise satisfy prior to the scheduled maturity thereof in any
manner, or make any payment in violation of any subordination terms of,
Indebtedness that is subordinated to the Indebtedness hereunder, including
pursuant to any change of control, sale of assets, issuance of any equity or
otherwise as may be set forth in the terms thereof or available to the Borrower
at its option, except in connection with a refinancing thereof otherwise
permitted by Section 8.03(b); or

(b)           Amend, modify or change in any manner
any term or condition of (i) the Mortgage-Backed Securities, or (ii) the
Mortgage Warehousing Facility (including the Borrower Account Transfer
Agreement), or (iii) any material lease, so that the terms and conditions
thereof are less favorable in any material respect to the Administrative Agent
and the Lenders than the terms of such Indebtedness as of the Closing Date, but
in no event shall terms of recourse, guarantees or credit support be any less
favorable than the terms of such Indebtedness as of the Closing Date.

8.12        Financial Covenants.

(a)           Consolidated
Leverage Ratio.  Permit the
Consolidated Leverage Ratio at any time to be greater than 2.75 to 1.00.

(b)           Consolidated
Interest Coverage Ratio.  Permit the
Consolidated Interest Coverage Ratio as of the end of any Four-Quarter Period  to be less than 3.50 to 1.00.

(c)           Fixed Charge
Coverage Ratio.  Permit the
Consolidated Fixed Charge Coverage Ratio as of the end of any Four-Quarter
Period  to be less than 1.25 to 1.00.

8.13        Acquisitions.  Enter into any agreement,
contract, binding commitment or other arrangement providing for any
Acquisition, or take any action to solicit the tender of securities or proxies
in respect thereof in order to effect any Acquisition, unless (i) the Person to
be (or whose assets are to be) acquired does not oppose such Acquisition and
the line or lines of business of the Person to be acquired constitute Core
Businesses, (ii) no Default or Event of Default shall have occurred and be
continuing either immediately prior to or immediately after giving effect to

 

 

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such Acquisition and, if the Cost of
Acquisition is in excess of $25,000,000, the Borrower shall have furnished to
the Administrative Agent (A) pro forma historical financial statements as of
the end of the most recently completed fiscal year of the Borrower and most
recent interim fiscal quarter, if applicable, giving effect to such
Acquisition, and (B) a Compliance Certificate prepared on a historical pro
forma basis as of the date of the Audited Financial Statements or, if later, as
of the most recent date for which financial statements have been furnished
pursuant to Section 7.01(a) or (b), giving effect to such
Acquisition, which Compliance Certificate shall demonstrate that no Default or
Event of Default would exist immediately after giving effect thereto, (iii) the
Person acquired shall be a wholly-owned Restricted Subsidiary, or be merged
with or into a Restricted Subsidiary, immediately upon consummation of the
Acquisition (or if assets are being acquired, the acquiror shall be a
Restricted Subsidiary), (iv) upon consummation of the Acquisition each
Subsidiary shall have complied with the provisions of Section 7.12,
including with respect to any new assets acquired, (v) if the Cost of
Acquisition shall exceed $50,000,000, the Required Lenders shall consent to
such Acquisition in their discretion, and (vi) after giving effect to such
Acquisition, the aggregate Costs of Acquisition incurred since the Closing Date
shall not exceed the sum of (x) $100,000,000 and (y) up to $100,000,000 of Net
Cash Proceeds from Dispositions permitted under Section 8.05(g) that
were not required to have been used to make a mandatory prepayment pursuant to Section
2.06(d); provided that an agreement, contract, binding commitment or other
arrangement providing for an Acquisition that would not otherwise satisfy the
provisions of this Section 8.13 at such time may be entered into so long
as an express condition to the consummation thereof is the full compliance with
this Agreement and the other Loan Documents.

8.14        Creation of New Subsidiaries. 
Create or acquire any new Subsidiary after the Closing Date other than
MSH Trusts and Restricted Subsidiaries created or acquired in accordance with Section
7.12, provided that any Unrestricted Subsidiary may create a
Subsidiary that is an Unrestricted Subsidiary.

8.15        Mid-State Homes and Walter Mortgage
Company; Residual Beneficial Interests. 
Notwithstanding anything to the contrary herein:

(a)           permit Mid-State Homes, Walter
Mortgage Company or any Subsidiary of either of them (other than an MSH Trust)
to (i) own any material assets other than Mortgage Accounts, Third Party
Mortgage Accounts, mortgage servicing rights, residual beneficial interests in
any MSH Trust, and stock of, or other ownership interests in, Subsidiaries
(other than MSH Trusts) that are in full compliance with this Section
8.15(a), or (ii) conduct any operations other than those associated with
the ownership, servicing, warehousing and securitizing of Mortgage Accounts,
Third Party Mortgage Accounts and interests in any MSH Trust; or

(b)           permit
the ownership of any residual beneficial interests in any MSH Trust by any
Person other than (i) Mid-State Homes, (ii) Walter Mortgage Company, and (iii)
another Person in connection with and as a result of the transfer of any such
residual beneficial in accordance with Section 8.05(f).

 

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ARTICLE IX.

EVENTS OF DEFAULT AND REMEDIES

9.01        Events of
Default. 
Any of the following shall constitute an Event of Default:

(a)           Non-Payment.  The Borrower or any other Loan Party fails
to pay (i) when and as required to be paid herein, any amount of principal of
any Loan or any L/C Obligation, or (ii) within three days after the same
becomes due, any interest on any Loan or on any L/C Obligation, or any
commitment or other fee due hereunder, or (iii) within five days after the same
becomes due, any other amount payable hereunder or under any other Loan
Document; or

(b)           Specific
Covenants.  The Borrower fails to
perform or observe any term, covenant or agreement contained (i) in any of Section
7.03(a), (b) or (f), 7.05 (other than with respect to the maintenance
of good standing), 7.10, 7.11 or 7.12 or Article VIII,
or (ii) in either Section 7.01 or 7.02 and such failure
continues for 15 days; or

(c)           Other Defaults.  Any Loan Party fails to perform or observe
any other covenant or agreement (not specified in subsection (a) or (b) above)
contained in any Loan Document on its part to be performed or observed and such
failure continues for 30 days after the earlier of (i) receipt of notice of
such default by a Responsible Officer of the Borrower from the Administrative
Agent, or (ii) any Responsible Officer of the Borrower becomes aware of such
default; or

(d)           Representations
and Warranties.  Any representation,
warranty, certification or statement of fact made or deemed made by or on
behalf of the Borrower or any other Loan Party herein, in any other Loan
Document, or in any document delivered in connection herewith or therewith
shall be incorrect or misleading when made or deemed made; or

(e)           Cross-Default.  (i) The Borrower or any Subsidiary (A) fails
to make any payment when due (whether by scheduled maturity, required
prepayment, acceleration, demand, or otherwise, and after passage of any grace
period) in respect of any Indebtedness or Guarantee (other than Indebtedness
hereunder and Indebtedness under Swap Contracts) having an aggregate principal
amount (including undrawn committed or available amounts and including amounts
owing to all creditors under any combined or syndicated credit arrangement) of
more than $20,000,000, or (B) fails to observe or perform any other agreement
or condition relating to any such Indebtedness or Guarantee or contained in any
instrument or agreement evidencing, securing or relating thereto, or any other
event occurs, and such default continues for more than the period of grace, if
any, therein specified, the effect of which default or other event is to cause,
or to permit the holder or holders of such Indebtedness or the beneficiary or
beneficiaries of such Guarantee (or a trustee or agent on behalf of such holder
or holders or beneficiary or beneficiaries) to cause, with the giving of notice
if required, such Indebtedness to be demanded or to become due or to be
repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an
offer to repurchase, prepay, defease or redeem such Indebtedness to be made,
prior to its stated maturity, or such Guarantee to become payable or cash
collateral in respect thereof to be demanded; or (ii) there occurs under any
Swap Contract an Early Termination Date (as defined in such Swap Contract)
resulting from (A) any event of default under such Swap Contract as to which
the Borrower or any Subsidiary is the Defaulting Party (as defined in such 

 

86

 

Swap Contract) or
(B) any Termination Event (as so defined) under such Swap Contract as to which
the Borrower or any Subsidiary is an Affected Party (as so defined) and, in
either event, the Swap Termination Value owed by the Borrower or such
Subsidiary as a result thereof is greater than $20,000,000; or

(f)            Insolvency
Proceedings, Etc.  Any Loan Party or
any of its Subsidiaries institutes or consents to the institution of any
proceeding under any Debtor Relief Law, or makes an assignment for the benefit
of creditors; or applies for or consents to the appointment of any receiver,
trustee, custodian, conservator, liquidator, rehabilitator or similar officer
for it or for all or any material part of its property; or any receiver,
trustee, custodian, conservator, liquidator, rehabilitator or similar officer
is appointed without the application or consent of such Person and the
appointment continues undischarged or unstayed for 60 calendar days; or any
proceeding under any Debtor Relief Law relating to any such Person or to all or
any material part of its property is instituted without the consent of such
Person and continues undismissed or unstayed for 60 calendar days, or an order
for relief is entered in any such proceeding; or

(g)           Inability to Pay
Debts; Attachment.  (i) The Borrower
or any Subsidiary becomes unable or admits in writing its inability or fails
generally to pay its debts as they become due, or (ii) any writ or warrant of
attachment or execution or similar process is issued or levied against all or
any material part of the property of any such Person and is not released,
vacated or fully bonded within 30 days after its issue or levy; or

(h)           Judgments.  There is entered against the Borrower or any
Subsidiary (i) a final judgment or order for the payment of money in an
aggregate amount exceeding $15,000,000 (to the extent not covered by insurance
provided by a Person described in Section 7.07 as to which the insurer
does not dispute coverage), or (ii) any one or more non-monetary final
judgments that have, or would reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect and, in either case, (A)
enforcement proceedings are commenced by any creditor upon such judgment or
order and remain unstayed, or (B) there is a period of 30 consecutive days during which a stay of enforcement of such
judgment, by reason of a pending appeal or otherwise, is not in effect; or

(i)            ERISA.  (i) An ERISA Event occurs with respect to a
Pension Plan or Multiemployer Plan which has resulted or would reasonably be
expected to result in liability of the Borrower under Title IV of ERISA to the
Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess
of $15,000,000, or (ii) the Borrower or any ERISA Affiliate fails to pay when
due, after the expiration of any applicable grace period, any installment
payment with respect to its withdrawal liability under Section 4201 of ERISA
under a Multiemployer Plan in an aggregate amount in excess of $15,000,000; or

(j)            Invalidity of
Loan Documents.  Any Loan Document,
at any time after its execution and delivery and for any reason other than as
expressly permitted hereunder or satisfaction in full of all the Obligations,
ceases to be in full force and effect; or any Loan Party or any other Person
contests in any manner the validity or enforceability of any Loan Document or
any Lien granted to the Administrative Agent pursuant to the Security
Instruments; or any Loan Party denies that it has any or further liability or
obligation under any Loan Document, or purports to revoke, terminate or rescind
any Loan Document;

 

87

 

(k)           Change of Control.  There occurs any Change of Control with
respect to the Borrower; or

(l)            Mortgage
Servicer.  Mid-State Homes, Walter
Mortgage Company or Jim Walter Homes ceases to be the “servicer” or Jim Walter
Homes, Mid-State Homes or Walter Mortgage Company ceases to be the
“subservicer” on any mortgages securing any of the financings contemplated
under Section 8.03(g).

9.02        Remedies
Upon Event of Default.  If any Event of Default occurs and is continuing, the
Administrative Agent shall, at the request of, or may, with the consent of, the
Required Lenders, take any or all of the following actions:

(a)           declare the
commitment of each Lender to make Loans and any obligation of the L/C Issuer to
make L/C - BA Credit Extensions to be terminated, whereupon such commitments
and obligation shall be terminated;

(b)           declare the unpaid
principal amount of all outstanding Loans, all interest accrued and unpaid
thereon, and all other amounts owing or payable hereunder or under any other
Loan Document to be immediately due and payable, without presentment, demand,
protest or other notice of any kind, all of which are hereby expressly waived
by the Borrower;

(c)           require that the
Borrower Cash Collateralize the L/C - BA Obligations (in an amount equal to the
then Outstanding Amount thereof);
and

(d)           exercise on behalf
of itself and the Lenders all rights and remedies available to it and the
Lenders under the Loan Documents or applicable Law;

provided, however,
that upon the occurrence of an actual or deemed entry of an order for relief
with respect to the Borrower under the Bankruptcy Code of the United States,
the obligation of each Lender to make Loans and any obligation of the L/C
Issuer to make L/C - BA Credit Extensions shall automatically terminate, the
unpaid principal amount of all outstanding Loans and all interest and other
amounts as aforesaid shall automatically become due and payable, and the
obligation of the Borrower to Cash Collateralize the L/C - BA Obligations as
aforesaid shall automatically become effective, in each case without further
act of the Administrative Agent or any Lender.

9.03        Application
of Funds. 
After the exercise of remedies provided for in Section 9.02 (or
after the Loans have automatically become immediately due and payable and the
L/C - BA Obligations have automatically been required to be Cash Collateralized
as set forth in the proviso to Section 9.02), any amounts received on
account of the Obligations shall be applied by the Administrative Agent in the
following order:

First, to payment of
that portion of the Obligations constituting fees, indemnities, expenses and
other amounts (including Attorney Costs and amounts payable under Article IV)
payable to the Administrative Agent in its capacity as such;

Second, to payment of
that portion of the Obligations constituting fees, indemnities and other
amounts (other than principal and interest) payable to the Lenders (including
Attorney 

 

88

 

Costs and amounts payable under Article IV), ratably among them
in proportion to the amounts described in this clause Second payable to
them;

Third, to payment of
that portion of the Obligations constituting accrued and unpaid interest on the
Loans and L/C — BA Borrowings, ratably among the Lenders in proportion to the
respective amounts described in this clause Third payable to them;

Fourth, (ratably
among the Lenders in proportion to the respective amounts described in this
clause Fourth held by them) to (i) the payment of that portion of the
Obligations constituting unpaid principal of the Loans and L/C Borrowings, (ii)
the payment of the maximum amount of all Bankers’ Acceptances then outstanding,
such payment to be for the account of the applicable L/C Issuer (or to the
extent Revolving Lenders have theretofore funded their participations in any
such Bankers’ Acceptance, ratably among such Revolving Lenders in accordance
with their Pro Rata Revolving Shares) and (iii) to Cash Collateralize that
portion of L/C — BA Obligations comprised of the aggregate undrawn amount of
Letters of Credit, to the Administrative Agent for the account of the L/C
Issuer; provided that if the amounts available are insufficient to make
all payments provided for in this clause Fourth, that portion allocable
to clause (iii) shall be applied first to pay Outstanding Amounts of Revolving
Loans and L/C Borrowings before being utilized to Cash Collateralize L/C — BA
Obligations;

Fifth, to payment of
Swap Termination Values owing to any Lender or any Affiliate of any Lender
arising under Related Swap Contracts that shall have been terminated and as to
which the Administrative Agent shall have received notice of such termination
and the Swap Termination Value thereof from the applicable Lender or Affiliate
of a Lender;

Sixth, to the
payment of all other Obligations of the Loan Parties owing under or in respect
of the Loan Document that are due and payable to the Administrative Agent and
the other Secured Parties, or any of them, on such date, ratably based on the
respective aggregate amounts of all such Obligations owing to the
Administrative Agent and the other Secured Parties on such date; and

Last, the balance,
if any, after all of the Obligations have been indefeasibly paid in full, to
the Borrower or as otherwise required by Law.

Subject
to Section 2.04(c), amounts used to Cash Collateralize the aggregate
undrawn amount of Letters of Credit pursuant to clause Fourth above
shall be applied to satisfy drawings under such Letters of Credit as they
occur.  If any amount remains on deposit
as Cash Collateral after all Letters of Credit have either been fully drawn or
expired, such remaining amount shall be applied to the other Obligations, if
any, in the order set forth above.

ARTICLE X.

ADMINISTRATIVE AGENT

10.01      Appointment and Authorization of
Administrative Agent.

(a)           Each Lender hereby
irrevocably appoints, designates and authorizes the Administrative Agent to
take such action on its behalf under the provisions of this Agreement and each
other Loan Document and to exercise such powers and perform such duties as are 

 

89

 

expressly
delegated to it by the terms of this Agreement or any other Loan Document,
together with such powers as are reasonably incidental thereto.  Notwithstanding any provision to the
contrary contained elsewhere herein or in any other Loan Document, the
Administrative Agent shall not have any duties or responsibilities, except those
expressly set forth herein, nor shall the Administrative Agent have or be
deemed to have any fiduciary relationship with any Lender or participant, and
no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Administrative Agent.  Without limiting the generality of the foregoing sentence, the
use of the term “agent” herein and in the other Loan Documents with reference
to the Administrative Agent is not intended to connote any fiduciary or other
implied (or express) obligations arising under agency doctrine of any
applicable Law.  Instead, such term is
used merely as a matter of market custom, and is intended to create or reflect
only an administrative relationship between independent contracting parties.

(b)           Each L/C Issuer
shall act on behalf of the Lenders with respect to any Letters of Credit and
Bankers’ Acceptances issued by it and the documents associated therewith, and
each L/C Issuer shall have all of the benefits and immunities (i) provided to
the Administrative Agent in this Article X with respect to any acts
taken or omissions suffered by such L/C Issuer in connection with Letters of
Credit and Bankers’ Acceptances issued by it or proposed to be issued by it and
the applications and agreements for letters of credit and Acceptance Documents
pertaining to such Letters of Credit and Bankers’ Acceptances as fully as if
the term “Administrative Agent” as used in this Article X and in the
definition of “Agent-Related Person” included such L/C Issuer with respect to
such acts or omissions, and (ii) as additionally provided herein with respect
to such L/C Issuer.

10.02      Delegation of
Duties. 
The Administrative Agent may execute any of its duties under this
Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel and other
consultants or experts concerning all matters pertaining to such duties.  The Administrative Agent shall not be
responsible for the negligence or misconduct of any agent or attorney-in-fact
that it selects in the absence of gross negligence or willful misconduct.

10.03      Liability
of Administrative Agent. 
No Agent-Related Person shall (a) be liable for any action taken or
omitted to be taken by any of them under or in connection with this Agreement
or any other Loan Document or the transactions contemplated hereby (except for
its own gross negligence or willful misconduct in connection with its duties
expressly set forth herein), or (b) be responsible in any manner to any Lender
or participant for any recital, statement, representation or warranty made by
any Loan Party or any officer thereof, contained herein or in any other Loan
Document, or in any certificate, report, statement or other document referred
to or provided for in, or received by the Administrative Agent under or in
connection with, this Agreement or any other Loan Document, or the validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Loan Document, or for any failure of any Loan Party or any other
party to any Loan Document to perform its obligations hereunder or
thereunder.  No Agent-Related Person
shall be under any obligation to any Lender or participant to ascertain or to
inquire as to the observance or performance of any of the agreements contained
in, or conditions of, this Agreement or any other Loan Document, or to inspect
the properties, books or records of any Loan Party or any Affiliate thereof.

 

90

 

10.04      Reliance
by Administrative Agent.

(a)           The Administrative
Agent shall be entitled to rely, and shall be fully protected in relying, upon
any writing, communication, signature, resolution, representation, notice,
consent, certificate, affidavit, letter, telegram, facsimile, telex or
telephone message, electronic mail message, statement or other document or
conversation believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons, and upon advice and statements of
legal counsel (including counsel to any Loan Party), independent accountants
and other experts selected by the Administrative Agent.  The Administrative Agent shall be fully
justified in failing or refusing to take any action under any Loan Document
unless it shall first receive such advice or concurrence of the Required
Lenders as it deems appropriate and, if it so requests, it shall first be
indemnified to its satisfaction by the Lenders against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action.  The
Administrative Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement or any other Loan Document in
accordance with a request or consent of the Required Lenders (or such greater
number of Lenders as may be expressly required hereby in any instance) and such
request and any action taken or failure to act pursuant thereto shall be
binding upon all the Lenders.

(b)           For purposes of
determining compliance with the conditions specified in Section 5.01,
each Lender that has signed this Agreement shall be deemed to have consented
to, approved or accepted or to be satisfied with, each document or other matter
required thereunder to be consented to or approved by or acceptable or
satisfactory to a Lender unless the Administrative Agent shall have received
notice from such Lender prior to the proposed Closing Date specifying its
objection thereto.

10.05      Notice of Default.  The
Administrative Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default, except with respect to defaults in the payment of
principal, interest and fees required to be paid to the Administrative Agent
for the account of the Lenders, unless the Administrative Agent shall have
received written notice from a Lender or the Borrower referring to this
Agreement, describing such Default and stating that such notice is a “notice of
default.”  The Administrative Agent will
notify the Lenders of its receipt of any such notice.  The Administrative Agent shall take such action with respect to
such Default as may be directed by the Required Lenders in accordance with Article
IX; provided, however, that unless and until the
Administrative Agent has received any such direction, the Administrative Agent
may (but shall not be obligated to) take such action, or refrain from taking
such action, with respect to such Default as it shall deem advisable or in the
best interest of the Lenders.

10.06      Credit Decision; Disclosure of
Information by Administrative Agent.  Each Lender
acknowledges that no Agent-Related Person has made any representation or
warranty to it, and that no act by the Administrative Agent hereafter taken,
including any consent to and acceptance of any assignment or review of the
affairs of any Loan Party or any Affiliate thereof, shall be deemed to
constitute any representation or warranty by any Agent-Related Person to any
Lender as to any matter, including whether Agent-Related Persons have disclosed
material information in their possession. 
Each Lender represents to the Administrative Agent that it has,
independently and without reliance upon any Agent-Related Person and based on
such 

 

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documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, prospects, operations, property, financial and
other condition and creditworthiness of the Loan Parties and their respective
Subsidiaries, and all applicable bank or other regulatory Laws relating to the
transactions contemplated hereby, and made its own decision to enter into this
Agreement and to extend credit to the Borrower hereunder.  Each Lender also represents that it will,
independently and without reliance upon any Agent-Related Person and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Loan Documents, and to
make such investigations as it deems necessary to inform itself as to the
business, prospects, operations, property, financial and other condition and creditworthiness
of the Borrower and the other Loan
Parties.  Except for notices,
reports and other documents expressly required to be furnished to the Lenders
by the Administrative Agent herein, the Administrative Agent shall not have any
duty or responsibility to provide any Lender with any credit or other
information concerning the business, prospects, operations, property, financial
and other condition or creditworthiness of any of the Loan Parties or any of
their respective Affiliates which may come into the possession of any
Agent-Related Person.

10.07      Indemnification of Administrative
Agent. 
The Lenders shall indemnify upon demand each Agent-Related Person (to
the extent not reimbursed by or on behalf of any Loan Party and without
limiting the obligation of any Loan Party to do so), pro rata, and hold
harmless each Agent-Related Person from and against any and all Indemnified
Liabilities incurred by it; provided, however, that no Lender
shall be liable for the payment to any Agent-Related Person of any portion of
such Indemnified Liabilities to the extent determined in a final, nonappealable
judgment by a court of competent jurisdiction to have resulted from such
Agent-Related Person’s own gross negligence or willful misconduct; provided,
however, that no action taken in accordance with the directions of the
Required Lenders shall be deemed to constitute gross negligence or willful
misconduct for purposes of this Section. 
Without limitation of the foregoing, each Lender shall reimburse the
Administrative Agent upon demand for its ratable share of any costs or
out-of-pocket expenses (including Attorney Costs) incurred by the
Administrative Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement, any other Loan Document, or
any document contemplated by or referred to herein, to the extent that the Administrative
Agent is not reimbursed for such expenses by or on behalf of the Borrower.  The undertaking in this Section shall
survive termination of the Aggregate Commitments, the payment of all other
Obligations and the resignation of the Administrative Agent.

10.08      Administrative Agent in its Individual
Capacity. 
Bank of America and its Affiliates may make loans to, issue letters of
credit for the account of, accept deposits from, acquire equity interests in
and generally engage in any kind of banking, trust, financial advisory,
underwriting or other business with each of the Loan Parties and their
respective Affiliates as though Bank of America were not the Administrative
Agent or the L/C Issuer hereunder and without notice to or consent of the
Lenders.  The Lenders acknowledge that,
pursuant to such activities, Bank of America or its Affiliates may receive
information regarding any Loan Party or its Affiliates (including information
that may be subject to confidentiality obligations in favor of such Loan Party
or such Affiliate) and acknowledge that the Administrative Agent shall be under

 

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no obligation to
provide such information to them.  With
respect to its Loans, Bank of America shall have the same rights and powers
under this Agreement as any other Lender and may exercise such rights and
powers as though it were not the Administrative Agent or the L/C Issuer, and
the terms “Lender” and “Lenders” include Bank of America in its individual
capacity.

10.09      Successor
Administrative Agent. 
The Administrative Agent may resign as Administrative Agent upon 30
days’ notice to the Lenders and the Borrower; provided that any such resignation by Bank of America shall also
constitute its resignation as an L/C Issuer and as the Swing Line Lender.  If the Administrative Agent resigns under
this Agreement, the Required Lenders shall appoint (which appointment may be
from among the Lenders) a successor administrative agent for the Lenders, which
successor administrative agent shall be consented to by the Borrower at all
times other than during the existence of an Event of Default (which consent of
the Borrower shall not be unreasonably withheld or delayed).  If no successor administrative agent is
appointed prior to the effective date of the resignation of the Administrative
Agent, the Administrative Agent may appoint, after consulting with the Lenders
and the Borrower, a successor administrative agent from among the Lenders.  Upon the acceptance of its appointment as successor
administrative agent hereunder, the Person acting as such successor
administrative agent shall succeed to all the rights, powers and duties of the
retiring Administrative Agent, L/C
Issuer and Swing Line Lender, the respective terms “Administrative
Agent”  and “Swing Line Lender” shall mean such successor in its capacity
as administrative agent and swing line
lender, the term “L/C Issuer”
shall include such person as a Letter of Credit issuer in addition to any other
Person holding such position at that time, and the retiring
Administrative Agent’s appointment, powers and duties as Administrative Agent
shall be terminated and the retiring
L/C Issuer’s and Swing Line Lender’s rights, powers and duties as such shall be
terminated, without any other or further act or deed on the part of such  retiring  L/C  Issuer or Swing Line
Lender or any other Lender, other than the obligation of the remaining L/C
Issuers (including the successor L/C Issuer) to issue letters of credit in
substitution for the Letters of Credit, if any, outstanding at the time of such
succession or to make other arrangements satisfactory to the retiring L/C
Issuer to effectively assume the obligations of the retiring L/C Issuer with  respect to such Letters of Credit.  After any retiring Administrative Agent’s
resignation hereunder as Administrative Agent, the provisions of this Article
X and Sections 11.04 and 11.05 shall inure to its benefit as
to any actions taken or omitted to be taken by it while it was Administrative
Agent under this Agreement.  If no
successor administrative agent has accepted appointment as Administrative Agent
by the date which is 30 days following a retiring Administrative Agent’s notice
of resignation, the retiring Administrative Agent’s resignation shall
nevertheless thereupon become effective and the Lenders shall perform all of
the duties of the Administrative Agent hereunder until such time, if any, as
the Required Lenders appoint a successor agent as provided for above.

10.10      Administrative Agent May File Proofs of
Claim. 
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to any Loan Party, the Administrative Agent
(irrespective of whether the principal of any Loan or L/C — BA Obligation shall
then be due and payable as herein expressed or by declaration or otherwise and
irrespective of whether the Administrative Agent shall have made any demand on
the Borrower) shall be entitled and empowered, by intervention in such
proceeding or otherwise

 

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(a)           to file and prove a claim for the
whole amount of the principal and interest owing and unpaid in respect of the
Loans, L/C — BA Obligations and all other Obligations that are owing and unpaid
and to file such other documents as may be necessary or advisable in order to
have the claims of the Lenders and the Administrative Agent (including any
claim for the reasonable compensation, expenses, disbursements and advances of
the Lenders and the Administrative Agent and their respective agents and
counsel and all other amounts due the Lenders and the Administrative Agent
under Sections 2.04(i) and (j), 2.10 and 11.04) allowed in
such judicial proceeding; and

(b)           to collect and receive any monies or
other property payable or deliverable on any such claims and to distribute the
same;

and
any custodian, receiver, assignee, trustee, liquidator, sequestrator or other
similar official in any such judicial proceeding is hereby authorized by each
Lender to make such payments to the Administrative Agent and, in the event that
the Administrative Agent shall consent to the making of such payments directly
to the Lenders, to pay to the Administrative Agent any amount due for the
reasonable compensation, expenses, disbursements and advances of the
Administrative Agent and its agents and counsel, and any other amounts due the
Administrative Agent under Sections 2.10 and 11.04.

Nothing
contained herein shall be deemed to authorize the Administrative Agent to
authorize or consent to or accept or adopt on behalf of any Lender any plan of
reorganization, arrangement, adjustment or composition affecting the
Obligations or the rights of any Lender or to authorize the Administrative
Agent to vote in respect of the claim of any Lender in any such proceeding.

10.11      Collateral
and Guaranty Matters. 
The Lenders irrevocably authorize the Administrative Agent, at its
option and in its discretion,

(a)           to release any
Pledged Interest and any Lien on any property granted to or held by the
Administrative Agent under any Loan Document (i) upon the occurrence of the
Facility Termination Date, (ii) that is sold or to be sold or otherwise
disposed of as part of or in connection with any sale or disposition permitted
hereunder or under any other Loan Document, or (iii) subject to Section
11.01, if approved, authorized or ratified in writing by the Required
Lenders;

(b)           to subordinate any Lien on any property
granted to or held by the Administrative Agent under any Loan Document to the
holder of any Lien on such property that is permitted by Section 8.01(j);
and

(c)           to release any
Guarantor from its obligations under the applicable Guaranty if such Person
ceases to be a Subsidiary as a result of a transaction permitted hereunder.

Upon
request by the Administrative Agent at any time, the Required Lenders will
confirm in writing the Administrative Agent’s authority to release or subordinate its interest in
particular types or items of property, or to  release any Guarantor from
its obligations under the applicable Guaranty pursuant to this Section 10.11.

 

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10.12      Other Agents; Arrangers and Managers.  None of the
Lenders or other Persons identified on the facing page or signature pages of
this Agreement as a “syndication agent,” “documentation agent,” “co-agent,”
“book manager,” “lead manager,” “arranger,” “lead arranger” “co-lead arranger,”
“co-arranger,” “book manager” or “co-book manager” shall have any right, power,
obligation, liability, responsibility or duty under this Agreement other than,
in the case of such Lenders, those applicable to all Lenders as such.  Without limiting the foregoing, none of the
Lenders or other Persons so identified shall have or be deemed to have any
fiduciary relationship with any Lender. 
Each Lender acknowledges that it has not relied, and will not rely, on
any of the Lenders or other Persons so identified in deciding to enter into this
Agreement or in taking or not taking action hereunder.

ARTICLE XI.

MISCELLANEOUS

11.01      Amendments, Etc.  Except as otherwise provided
in Section 8.05, no amendment or waiver of any provision of this
Agreement or any other Loan Document, and no consent to any departure by the
Borrower or any other Loan Party therefrom, shall be effective unless in
writing signed by the Required Lenders and the Borrower or the applicable Loan
Party, as the case may be, and acknowledged by the Administrative Agent, and
each such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given; provided, however,
that no such amendment, waiver or consent shall:

(a)           waive any condition
set forth in Section 5.01(a) without the written consent of each Lender
except to the extent otherwise provided for in Section 5.01(a);

(b)           extend or increase
(i) the Revolving Credit Commitment of any Revolving Lender (or reinstate any
Revolving Credit Commitment terminated pursuant to Section 9.02) without
the written consent of such Revolving Lender, (ii) the obligation of any Term
Loan B Lender to make any portion of the Term Loan B without the written
consent of such Term Loan B Lender;

(c)           postpone any date
fixed by this Agreement or any other Loan Document for any payment of principal,
interest, fees or other amounts due to the Lenders (or any of them), including
the Term Loan Maturity Date and the Revolving Credit Maturity Date, or any scheduled reduction of the Aggregate
Revolving Credit Commitments hereunder or under any other Loan Document,
in each case without the written consent of each Lender directly affected
thereby;

(d)           reduce the principal
of, or the rate of interest specified herein on, any Loan or L/C Borrowing, or
any fees or other amounts payable hereunder or under any other Loan Document,
without the written consent of each Lender directly affected thereby; provided,
however, that only the consent of the Required Lenders shall be necessary (i) to amend the definition of
“Default Rate” (so long as such amendment does not result in the Default Rate
being lower than the interest rate then applicable to Base Rate Loans or
Eurodollar Rate Loans, as applicable) or
(ii) to amend any financial covenant hereunder (or any defined term used
therein) even if the effect of such amendment would be to change the Applicable
Rate;

 

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(e)           change Section
2.13 or Section 9.03 in a manner that would alter the pro rata
sharing of payments required thereby without the written consent of each Lender
directly affected thereby;

(f)            change any
provision of this Section or the definition of “Required Lenders” or any other
provision hereof specifying the number or percentage of Lenders required to
amend, waive or otherwise modify any rights hereunder or make any determination
or grant any consent hereunder, without the written consent of each Lender;

(g)           change any provision
of this Section 11.01 or the definition of “Required Revolving Lenders”
or any other provision hereof specifying the number or percentage of Revolving
Lenders required to amend, waive or otherwise modify any rights hereunder or
make any determination or grant any consent hereunder, without the written
consent of each Revolving Lender;

(h)           change any provision
of this Section or the definition of “Required Term Loan B Lenders” or any
other provision hereof specifying the number or percentage of Term Loan B
Lenders required to amend, waive or otherwise modify any rights hereunder or
make any determination or grant any consent hereunder, without the written
consent of each Term Loan B Lender;

(i)            impose any greater
restriction on the ability of any Lender to assign any of its rights or
obligations hereunder without the written consent of Lenders having more than
50% of the Aggregate Credit Exposures then in effect within each of the
following classes of commitments:  (i)
the class consisting of the Revolving Lenders, and (ii) the class consisting of
the Term Loan B Lenders.  For purposes
of this clause, the aggregate amount of each Lender’s risk participation and
funded participation in L/C Obligations and Swing Line Loans shall be deemed to
be held by such Lender;

(j)            release any
Guarantor from the applicable Guaranty without the written consent of each
Lender except to the extent such Guarantor is the subject of a Disposition
permitted by Section 8.05 (in which case such release may be made by the
Administrative Agent acting alone);

(k)           release all or a
material part of the Collateral without the written consent of each Lender
except with respect to Dispositions and releases of Collateral permitted or
required hereunder (including pursuant to Section 8.05) or as provided
in the other Loan Documents (in which case such release may be made by the
Administrative Agent acting alone); or

(l)            reduce the number
or type of events that give rise to a mandatory prepayment pursuant to Section
2.06(d) or change the order or manner of application of the Net Proceeds
provided therein, in each case without the written consent of each Lender
directly affected thereby;

and,
provided  further, that (i) no amendment, waiver or consent shall,
unless in writing and signed by the L/C Issuers in addition to the Lenders
required above, affect the rights or duties of the L/C Issuers under this
Agreement or any Letter of Credit Application relating to any Letter of Credit
or Bankers’ Acceptance issued or to be issued by it; (ii) no amendment, waiver
or consent 

 

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shall,
unless in writing and signed by the Swing Line Lender in addition to the
Lenders required above, affect the rights or duties of the Swing Line Lender
under this Agreement; (iii) no amendment, waiver or consent shall, unless in
writing and signed by the Administrative Agent in addition to the Lenders required
above, affect the rights or duties of the Administrative Agent under this
Agreement or any other Loan Document; (iv) Section
11.07(g) may not be amended,
waived or otherwise modified without the consent of each Granting Lender all or
any part of whose Loans are being funded by an SPC at the time of such
amendment, waiver or other modification; and (v) no amendment, waiver or
consent  which has the effect of  enabling the Borrower to satisfy any
condition to a Borrowing contained in Section 5.02 hereof which, but for
such amendment, waiver or consent would not be satisfied, shall be effective to
require the Revolving Lenders, the Swing Line Lenders or the L/C Issuers to
make any additional Revolving Loan or Swing Line Loan, or to issue any
additional or renew any existing Letter of Credit or issue any Bankers’
Acceptance, unless and until the Required Revolving Lenders shall consent
thereto.  Notwithstanding anything to
the contrary herein, no Defaulting Lender shall have any right to approve or
disapprove any amendment, waiver or consent hereunder, except that the
Revolving Credit Commitment of such Lender may not be increased or extended
without the consent of such Lender.

11.02      Notices and Other Communications;
Facsimile Copies.

(a)           General.  Unless otherwise expressly provided herein,
all notices and other communications provided for hereunder shall be in writing
(including by facsimile transmission). 
All such written notices shall be mailed, faxed or delivered to the
applicable address, facsimile number or (subject to subsection (c) below)
electronic mail address, and all notices and other communications expressly
permitted hereunder to be given by telephone shall be made to the applicable
telephone number, as follows:

(i)            if
to the Borrower, the Administrative Agent, either L/C Issuer or the Swing Line
Lender, to the address, facsimile number, electronic mail address or telephone
number specified for such Person on Schedule 11.02 or to such other
address, facsimile number, electronic mail address or telephone number as shall
be designated by such party in a notice to the other parties; and

(ii)           if
to any other Lender, to the address, facsimile number, electronic mail address
or telephone number specified in its Administrative Questionnaire or to such other
address, facsimile number, electronic mail address or telephone number as shall
be designated by such party in a notice to the Borrower, the Administrative
Agent, the L/C Issuer and the Swing Line Lender.

All
such notices and other communications shall be deemed to be given or made upon
the earlier to occur of (i) actual receipt by the relevant party hereto and
(ii) (A) if delivered by hand or by courier, when signed for by or on behalf of
the relevant party hereto; (B) if delivered by mail, four Business Days after
deposit in the mails, postage prepaid; (C) if delivered by facsimile, when sent
and receipt has been confirmed by telephone; and (D) if delivered by electronic
mail (which form of delivery is subject to the provisions of subsection (c) below),
when delivered; provided, however, that notices and other
communications to the Administrative Agent, the L/C Issuer and the Swing Line
Lender pursuant to Article II shall not be effective until actually 

 

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received
by such Person.  In no event shall a
voicemail message be effective as a notice, communication or confirmation
hereunder.

(b)           Effectiveness of
Facsimile Documents and Signatures. 
Loan Documents may be transmitted and/or signed by facsimile.  The effectiveness of any such documents and
signatures shall, subject to applicable Law, have the same force and effect as
manually-signed originals and shall be binding on all Loan Parties, the
Administrative Agent and the Lenders. 
The Administrative Agent may also require that any such documents and
signatures be confirmed by a manually-signed original thereof; provided,
however, that the failure to request or deliver the same shall not limit
the effectiveness of any facsimile document or signature.

(c)           Limited Use of
Electronic Mail.  Electronic mail
and Internet and intranet websites may be used only to distribute routine
communications, such as financial statements and other information as provided
in Section 7.02, and to distribute Loan Documents for execution by the
parties thereto, and may not be used for any other purpose.

(d)           Reliance by
Administrative Agent and Lenders. 
The Administrative Agent and the Lenders shall be entitled to rely and
act upon any notices (including telephonic Revolving Loan Notices and Swing
Line Loan Notices) purportedly given by or on behalf of the Borrower even if
(i) such notices were not made in a manner specified herein, were incomplete or
were not preceded or followed by any other form of notice specified herein, or
(ii) the terms thereof, as understood by the recipient, varied from any
confirmation thereof.  The Borrower
shall indemnify each Agent-Related Person and each Lender from all losses,
costs, expenses and liabilities resulting from the reliance by such Person on
each notice purportedly given by or on behalf of the Borrower.  All telephonic notices to and other
communications with the Administrative Agent may be recorded by the
Administrative Agent, and each of the parties hereto hereby consents to such
recording.

11.03      No
Waiver; Cumulative Remedies.  No failure by any Lender or the
Administrative Agent to exercise, and no delay by any such Person in
exercising, any right, remedy, power or privilege hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege.  The rights, remedies, powers and privileges
herein provided are cumulative and not exclusive of any rights, remedies,
powers and privileges provided by law.

11.04      Attorney
Costs, Expenses and Taxes.  The Borrower agrees (a) to pay or reimburse the Administrative
Agent, the Syndication Agent, and the Arrangers for all reasonable costs and
expenses incurred in connection with the development, preparation, negotiation
and execution of this Agreement and the other Loan Documents and any amendment,
waiver, consent or other modification of the provisions hereof and thereof (whether
or not the transactions contemplated hereby or thereby are consummated), and
the consummation and administration of the transactions contemplated hereby and
thereby, including all Attorney Costs, and (b) to pay or reimburse the
Administrative Agent and each Lender for all costs and expenses incurred in
connection with the enforcement, attempted enforcement, or preservation of any
rights or remedies under this Agreement or the other Loan Documents (including
all such costs and expenses incurred during any “workout” or restructuring in
respect of the Obligations and 

 

98

 

during any legal proceeding, including any proceeding under any Debtor
Relief Law), including all Attorney Costs. 
The foregoing costs
and expenses shall include all search, filing, recording, title insurance and
appraisal charges and fees and taxes related thereto, and other out-of-pocket
expenses incurred by the Administrative Agent and the cost of independent
public accountants and other outside experts retained by the Administrative
Agent or any Lender.  All amounts due
under this Section 11.04 shall be payable within ten Business Days after
demand therefor.  The agreements in this
Section shall survive the termination of the Aggregate Commitments and
repayment, satisfaction or discharge of all other Obligations.

11.05      Indemnification by the
Borrower.  Whether or not the
transactions contemplated hereby are consummated, the Borrower shall indemnify
and hold harmless each Agent-Related Person, the Syndication Agent, each
Arranger, each Lender and their respective Affiliates, directors, officers,
employees, counsel, agents, trustees, investment advisors and attorneys-in-fact
(collectively the “Indemnitees”) from and against any and all liabilities,
obligations, losses, damages, penalties, claims, demands, actions, judgments,
suits, costs, expenses and disbursements (including Attorney Costs) of any kind
or nature whatsoever which may at any time be imposed on, incurred by or
asserted against any such Indemnitee in any way relating to or arising out of
or in connection with (a) the execution, delivery, enforcement, performance or
administration of any Loan Document or any other agreement, letter or
instrument delivered in connection with the transactions contemplated thereby
or the consummation of the transactions contemplated thereby, (b) any Revolving
Credit Commitment, Loan, Letter of Credit or Bankers’ Acceptance or the use or
proposed use of the proceeds therefrom (including any refusal by an L/C Issuer
to honor a demand for payment under a Letter of Credit or a Bankers’ Acceptance
if the documents presented in connection with such demand do not strictly
comply with the terms of such Letter of Credit), (c) any actual or alleged
presence or release of Hazardous Materials on or from any property currently or
formerly owned or operated by the Borrower, any Subsidiary or any other Loan
Party, or any Environmental Liability related in any way to the Borrower, any
Subsidiary or any other Loan Party, or (d) any actual or prospective claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory (including any
investigation of, preparation for, or defense of any pending or threatened
claim, investigation, litigation or proceeding) and regardless of whether any
Indemnitee is a party thereto (all the foregoing, collectively, the “Indemnified
Liabilities”); provided that such indemnity shall not, as to any
Indemnitee, be available to the extent that such liabilities, obligations,
losses, damages, penalties, claims, demands, actions, judgments, suits, costs,
expenses or disbursements are determined by a court of competent jurisdiction
by final and nonappealable judgment to have resulted from the gross negligence
or willful misconduct of such Indemnitee. 
No Indemnitee shall be liable for any damages arising from the use by
others of any information or other materials obtained through IntraLinks or other
similar information transmission systems in connection with this Agreement, nor
shall any Indemnitee have any liability for any indirect or consequential
damages relating to this Agreement or any other Loan Document or arising out of
its activities in connection herewith or therewith (whether before or after the
Closing Date).  All amounts due under
this Section 11.05 shall be payable within ten Business Days after
demand therefor.  The agreements in this
Section shall survive the resignation of the Administrative Agent, the
replacement of any Lender, the termination of the Aggregate Commitments and the
repayment, satisfaction or discharge of all the other Obligations.

 

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11.06      Payments Set
Aside. 
To the extent that any payment by or on behalf of the Borrower is made
to the Administrative Agent or any Lender, or the Administrative Agent or any
Lender exercises its right of set-off, and such payment or the proceeds of such
set-off or any part thereof is subsequently invalidated, declared to be fraudulent
or preferential, set aside or required (including pursuant to any settlement
entered into by the Administrative Agent or such Lender in its discretion) to
be repaid to a trustee, receiver or any other party, in connection with any
proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of
such recovery, the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such set-off had not occurred, and (b) each Lender
severally agrees to pay to the Administrative Agent upon demand its applicable
share of any amount so recovered from or repaid by the Administrative Agent,
plus interest thereon from the date of such demand to the date such payment is
made at a rate per annum equal to the Federal Funds Rate from time to time in
effect.

11.07      Successors
and Assigns.

(a)           The provisions of
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns permitted hereby, except
that the Borrower may not assign or otherwise transfer any of its rights or
obligations hereunder without the prior written consent of each Lender and no
Lender may assign or otherwise transfer any of its rights or obligations
hereunder except (i) to an Eligible Assignee in accordance with the provisions
of subsection (b) of this Section, (ii) by way of participation in accordance
with the provisions of subsection (d) of this Section, (iii) by way of pledge
or assignment of a security interest subject to the restrictions of subsection
(f) or (h) of this Section
11.07,  or (iv) to an SPC in accordance with the provisions of subsection (g) of
this Section 11.07 (and any other attempted assignment or
transfer by any party hereto shall be null and void).  Nothing in this Agreement, expressed or implied, shall be
construed to confer upon any Person (other than the parties hereto, their
respective successors and assigns permitted hereby, Participants to the extent
provided in subsection (d) of this Section and, to the extent expressly
contemplated hereby, the Indemnitees) any legal or equitable right, remedy or
claim under or by reason of this Agreement.

(b)           Any Lender may at
any time assign to one or more Eligible Assignees all or a portion of its
rights and obligations under this Agreement (including all or a portion of its
Revolving Credit Commitment and the Revolving Loans (including for purposes of
this subsection (b), participations in L/C — BA Obligations and in Swing Line
Loans) at the time owing to it), or its Term Loan B (such Lender’s portion of
Loans, commitments and risk participations with respect to each of the
Revolving Credit Facility and the Term Loan B Facility (each, an “Applicable
Facility”) being referred to in this Section 11.07 as its “Applicable
Share”); provided that (i) except in the case of an assignment of
the entire remaining amount of the assigning Lender’s Applicable Share of the
Applicable Facility or in the case of an assignment to a Lender or an Affiliate
of a Lender or an Approved Fund with respect to a Lender, the aggregate amount
of the Applicable Share with respect to each Applicable Facility of the
assigning Lender subject to each such assignment (determined as of the date the
Assignment and Assumption with respect to such assignment is delivered to the
Administrative Agent or, if a “Trade Date” is specified in the Assignment and
Assumption, as of the Trade Date) shall not be less than (A) $5,000,000 in the
case of an assignment by a Lender of all or a portion of its Revolving Credit
Commitment and the Revolving Loans at the time owing to it, or (B) 

 

100

 

$1,000,000 in the
case of an assignment by a Lender of all or a portion of its Term Loan B, in
each case unless each of the Administrative Agent and, so long as no Default or
Event of Default has occurred and is continuing, the Borrower otherwise
consents (each such consent not to be unreasonably withheld or delayed), (ii)
each partial assignment shall be made as an assignment of a proportionate part
of all the assigning Lender’s rights and obligations under this Agreement with
respect to the Applicable Facility, except that this clause (ii) shall not (x)
apply to rights in respect of Swing Line Loans or (y) prohibit any Lender from
assigning all or a portion of its rights and obligations among the Applicable
Facilities on a non-pro rata basis, (iii) any assignment of a Revolving Credit
Commitment must be approved by the Administrative Agent, the L/C Issuers and
the Swing Line Lender unless the Person that is the proposed assignee is itself
a Revolving Lender (whether or not the proposed assignee would otherwise
qualify as an Eligible Assignee), and (iv) the parties to each assignment shall
execute and deliver to the Administrative Agent an Assignment and Assumption,
together with a processing and recordation fee of $3,500.  Subject to acceptance and recording thereof
by the Administrative Agent pursuant to subsection (c) of this Section, from
and after the effective date specified in each Assignment and Assumption, the
Eligible Assignee thereunder shall be a party to this Agreement and, to the
extent of the interest assigned by such Assignment and Assumption, have the
rights and obligations of a Lender under this Agreement, and the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Assumption, be released from its obligations under this
Agreement (and, in the case of an Assignment and Assumption covering all of the
assigning Lender’s rights and obligations under this Agreement, such Lender
shall cease to be a party hereto but shall continue to be entitled to the
benefits of Sections 4.01, 4.04, 4.05, 11.04 and 11.05
with respect to facts and circumstances occurring prior to the effective date
of such assignment).  Upon request, the
Borrower (at its expense) shall execute and deliver new or replacement Notes to
the assigning Lender and the assignee Lender. 
Any assignment or transfer by a Lender of rights or obligations under
this Agreement that does not comply with this subsection shall be treated for
purposes of this Agreement as a sale by such Lender of a participation in such
rights and obligations in accordance with subsection (d) of this Section.

(c)           The Administrative
Agent, acting solely for this purpose as an agent of the Borrower, shall
maintain at the Administrative Agent’s Office a copy of each Assignment and
Assumption delivered to it and a register for the recordation of the names and addresses
of the Lenders, and the Revolving Credit Commitments of, and principal amounts
of the Loans and L/C Obligations owing to, each Lender pursuant to the terms
hereof from time to time (the “Register”).  The entries in the Register shall be conclusive, and the
Borrower, the Administrative Agent and the Lenders may treat each Person whose
name is recorded in the Register pursuant to the terms hereof as a Lender
hereunder for all purposes of this Agreement, notwithstanding notice to the
contrary.  The Register shall be
available for inspection by the Borrower and any Lender, at any reasonable time
and from time to time upon reasonable prior notice.

(d)           Any Lender may at
any time, without the consent of, or notice to, the Borrower or the
Administrative Agent, sell participations to any Person (other than a natural
person or the Borrower or any of the Borrower’s Affiliates or Subsidiaries)
(each, a “Participant”) in all or a portion of such Lender’s rights
and/or obligations under this Agreement (including all or a portion of its
Revolving Credit Commitment and/or the Loans (including such Lender’s 

 

101

 

participations in
L/C — BA Obligations and/or Swing Line Loans) owing to it); provided
that (i) such Lender’s obligations under this Agreement shall remain unchanged,
(ii) such Lender shall remain solely responsible to the other parties hereto
for the performance of such obligations and (iii) the Borrower, the
Administrative Agent and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement.  Any
agreement or instrument pursuant to which a Lender sells such a participation shall
provide that such Lender shall retain the sole right to enforce this Agreement
and to approve any amendment, modification or waiver of any  provision of this Agreement; provided
that such agreement or instrument may provide that such Lender will not,
without the consent of the Participant, agree to any amendment, waiver or other
modification described in the first proviso to Section 11.01 that
directly affects such Participant. 
Subject to subsection (e) of this Section, the Borrower agrees that each
Participant shall be entitled to the benefits of Sections 4.01, 4.04
and 4.05 to the same extent as if it were a Lender and had acquired its
interest by assignment pursuant to subsection (b) of this Section.  To the extent permitted by law, each
Participant also shall be entitled to the benefits of Section 11.09 as
though it were a Lender, provided such Participant agrees to be subject
to Section 2.13 as though it were a Lender.

(e)           A Participant shall
not be entitled to receive any greater payment under Section 4.01 or 4.04
than the applicable Lender would have been entitled to receive with respect to
the participation sold to such Participant, unless the sale of the
participation to such Participant is made with the Borrower’s prior written
consent.  A Participant that would be a
Foreign Lender if it were a Lender shall not be entitled to the benefits of Section
4.01 unless the Borrower is notified of the participation sold to such
Participant and such Participant agrees, for the benefit of the Borrower, to
comply with Section 11.15 as though it were a Lender.

(f)            Any Lender may at
any time pledge or assign a security interest in all or any portion of its
rights under this Agreement (including under its Notes, if any) to secure
obligations of such Lender, including any pledge or assignment to secure
obligations to a Federal Reserve Bank; provided that no such pledge or
assignment shall release such Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for such Lender as a party hereto.

(g)           Notwithstanding anything to the contrary
contained herein, any Lender (a “Granting Lender”) may grant to a
special purpose funding vehicle identified as such in writing from time to time
by the Granting Lender to the Administrative Agent and the Borrower (an “SPC”)
the option to provide all or any part of any Loan that such Granting Lender
would otherwise be obligated to make pursuant to this Agreement; provided
that (i) nothing herein shall constitute a commitment by any SPC to fund any
Loan, and (ii) if an SPC elects not to exercise such option or otherwise fails
to make all or any part of such Loan, the Granting Lender shall be obligated to
make such Loan pursuant to the terms hereof. 
Each party hereto hereby agrees that (i) neither the grant to any SPC
nor the exercise by any SPC of such option shall increase the costs or expenses
or otherwise increase or change the obligations of the Borrower under this
Agreement (including its obligations under Section 4.04), (ii) no SPC
shall be liable for any indemnity or similar payment obligation under this
Agreement for which a Lender would be liable, and (iii) the Granting Lender
shall for all purposes, including the approval of any amendment, waiver or
other modification of any provision of any Loan Document, remain the lender of
record hereunder.  The making of a Loan
by an SPC hereunder shall utilize the 

 

102

 

Revolving Credit
Commitment of the Granting Lender to the same extent, and as if, such Loan were
made by such Granting Lender.  In furtherance
of the foregoing, each party hereto hereby agrees (which agreement shall
survive the termination of this Agreement) that, prior to the date that is one
year and one day after the payment in full of all outstanding commercial paper
or other senior debt of any SPC, it will not institute against, or join any
other Person in instituting against, such SPC any bankruptcy, reorganization,
arrangement, insolvency, or liquidation proceeding under the laws of the United
States or any State thereof.  Notwithstanding
anything to the contrary contained herein, any SPC may (i) with notice to, but
without prior consent of the Borrower and the Administrative Agent and with the
payment of a processing fee of $1,000, assign all or any portion of its right
to receive payment with respect to any Loan to the Granting Lender and (ii)
disclose on a confidential basis any non-public information relating to its
funding of Loans to any rating agency, commercial paper dealer or provider of
any surety or Guarantee or credit or liquidity enhancement to such SPC.

(h)           Notwithstanding
anything to the contrary contained herein, any Lender that is a Fund may create
a security interest in all or any portion of the Loans owing to it and the Note
or Notes, if any, held by it to the trustee for holders of obligations owed, or
securities issued, by such Fund as security for such obligations or securities,
provided that unless and until such trustee actually becomes a Lender in
compliance with the other provisions of this Section 11.07, (i) no such
pledge shall release the pledging Lender from any of its obligations under the
Loan Documents and (ii) such trustee shall not be entitled to exercise any of
the rights of a Lender under the Loan Documents even though such trustee may
have acquired ownership rights with respect to the pledged interest through
foreclosure or otherwise.

(i)            Notwithstanding
anything to the contrary contained herein, if at any time Bank of America
assigns all of its Revolving Credit Commitment and Loans (including its Pro
Rata Term B Share of the Term Loan B and Swing Line Loans) and its
participations in the L/C Obligations or any L/C Borrowing pursuant to
subsection (b) above, Bank of America may, (i) upon 30 days’ notice to the Borrower and the Lenders, resign as the L/C
Issuer and/or (ii) upon 30 days’
notice to the Borrower, resign as Swing Line Lender.  In the event of any such resignation as the L/C Issuer or Swing
Line Lender, the Borrower shall be entitled to appoint from among the Lenders a
successor L/C Issuer or Swing Line Lender hereunder; provided,
however, that no failure by the Borrower to appoint any such successor
shall affect the resignation of Bank of America as the L/C Issuer or Swing Line
Lender, as the case may be.  If Bank of
America resigns as the L/C Issuer, it shall retain all the rights and
obligations of the L/C Issuer hereunder with respect to all Letters of Credit
and Bankers’ Acceptances outstanding, and all Bankers’ Acceptances issuable
under any Acceptance Credits outstanding, as of the effective date of its
resignation as the L/C Issuer and all L/C — BA Obligations with respect thereto
(including the right to require the Lenders to make Base Rate Revolving Loans
or fund risk participations in Unreimbursed Amounts pursuant to Section
2.04(c)).  If Bank of America
resigns as Swing Line Lender, it shall retain all the rights of the Swing Line
Lender provided for hereunder with respect to Swing Line Loans made by it and
outstanding as of the effective date of such resignation, including the right
to require the Lenders to make Base Rate Revolving Loans or fund risk
participations in outstanding Swing Line Loans pursuant to Section 2.05(c).

11.08      Confidentiality.  Each of the
Administrative Agent and the Lenders agrees to maintain the confidentiality of
the Information (as defined below), except that Information may 

 

103

 

be disclosed (a)
to its and its Affiliates’ directors, officers, employees and agents, including
accountants, legal counsel and other advisors (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential
nature of such Information and instructed to keep such Information
confidential), (b) to the extent requested by any regulatory authority
(including any self-regulatory authority, such as the National Association of
Insurance Commissioners), (c) to the extent 
required by applicable laws or regulations or by any subpoena or similar
legal process, (d) to any other party to this Agreement, (e) in connection with
the exercise of any remedies hereunder or under any Loan Document or any action
or proceeding relating to this Agreement or any other Loan Document or the
enforcement of rights hereunder or thereunder, (f) subject to an agreement containing
provisions substantially the same as those of this Section, to (i) any assignee
of or Participant in, or any prospective assignee of or Participant in, any of
its rights or obligations under this Agreement or (ii) any actual or
prospective counterparty (or its advisors) to any swap or derivative
transaction relating to the Borrower and its obligations, (g) with the consent
of the Borrower, or (h) to the extent such Information (x) becomes publicly
available other than as a result of a breach of this Section or (y) becomes
available to the Administrative Agent or any Lender on a nonconfidential basis
from a source other than the Borrower. 
For the purposes of this Section, “Information” means all
information received from any Loan Party relating to any Loan Party or any of
their respective businesses, other than any such information that is available
to the Administrative Agent or any Lender on a nonconfidential basis prior to
disclosure by any Loan Party, provided that, in the case of information
received from a Loan Party after the date hereof, such information is clearly
identified at the time of delivery as confidential.  Any Person required to maintain the confidentiality of
Information as provided in this Section shall be considered to have complied
with its obligation to do so if such Person has exercised the same degree of
care to maintain the confidentiality of such Information as such Person would
accord to its own confidential information.

Notwithstanding
anything to the contrary contained herein, from the commencement of discussions
with respect to the credit facilities established by this Agreement (the “Facilities”),
the Borrower, the Lenders and the Administrative Agent (and each of their
respective employees, representatives or agents) are permitted to disclose to
any and all Persons, without limitations of any kind, the tax treatment and tax
structure of the Facilities and all materials of any kind (including opinions
or other tax analyses) that are or have been provided to the Borrower, such
Lender or the Administrative Agent related to such tax treatment and tax
structure.

11.09      Set-off.  In addition to any rights and remedies of
the Lenders provided by law, each Lender is authorized at any time and from
time to time, without prior notice to the Borrower or any other Loan Party, any
such notice being waived by the Borrower (on its own behalf and on behalf of
each Loan Party) to the fullest extent permitted by law, to set off and apply
any and all deposits (general or special, time or demand, provisional or final)
at any time held by, and other indebtedness at any time owing by, such Lender
to or for the credit or the account of the respective Loan Parties against any
and all Obligations owing to such Lender that are then past due and owing
hereunder or under any other Loan Document, now or hereafter existing,
irrespective of whether or not the Administrative Agent or such Lender shall
have made demand under this Agreement or any other Loan Document and although
such Obligations may be denominated in a currency different from that of the
applicable deposit or indebtedness. 
Each Lender agrees promptly to notify the Borrower and the
Administrative Agent after any such set-

 

104

 

off and application
made by such Lender; provided, however, that the failure to give
such notice shall not affect the validity of such set-off and application.

11.10      Interest
Rate Limitation. 
Notwithstanding anything to the contrary contained in any Loan Document,
the interest paid or agreed to be paid under the Loan Documents shall not
exceed the maximum rate of non-usurious interest permitted by applicable Law
(the “Maximum Rate”).  If the
Administrative Agent or any Lender shall receive interest in an amount that
exceeds the Maximum Rate, the excess interest shall be applied to the principal
of the Loans or, if it exceeds such unpaid principal, refunded to the
Borrower.  In determining whether the
interest contracted for, charged, or received by the Administrative Agent or a
Lender exceeds the Maximum Rate, such Person may, to the extent permitted by
applicable Law, (a) characterize any payment that is not principal as an
expense, fee, or premium rather than interest, (b) exclude voluntary
prepayments and the effects thereof, and (c) amortize, prorate, allocate, and
spread in equal or unequal parts the total amount of interest throughout the
contemplated term of the Obligations hereunder.

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

11.12      Integration.  This Agreement, together with
the other Loan Documents, comprises the complete and integrated agreement of
the parties on the subject matter hereof and thereof and supersedes all prior
agreements, written or oral, on such subject matter.  In the event of any conflict between the provisions of this
Agreement and those of any other Loan Document, the provisions of this
Agreement shall control; provided that the inclusion of supplemental
rights or remedies in favor of the Administrative Agent or the Lenders in any
other Loan Document shall not be deemed a conflict with this Agreement.  Each Loan Document was drafted with the
joint participation of the respective parties thereto and shall be construed
neither against nor in favor of any party, but rather in accordance with the
fair meaning thereof.

11.13      Survival of Representations and
Warranties. 
All representations and warranties made hereunder and in any other Loan
Document or other document delivered pursuant hereto or thereto or in
connection herewith or therewith shall survive the execution and delivery
hereof and thereof.  Such representations
and warranties have been or will be relied upon by the Administrative Agent and
each Lender, regardless of any investigation made by the Administrative Agent
or any Lender or on their behalf and notwithstanding that the Administrative
Agent or any Lender may have had notice or knowledge of any Default at the time
of any Credit Extension, and shall continue in full force and effect as long as
any Loan or any other Obligation hereunder shall remain unpaid or unsatisfied
or any Letter of Credit shall remain outstanding.

11.14      Severability.  If any provision of this
Agreement or the other Loan Documents is held to be illegal, invalid or
unenforceable, (a) the legality, validity and enforceability of the remaining
provisions of this Agreement and the other Loan Documents shall not be affected
or impaired thereby and (b) the parties shall endeavor in good faith
negotiations to replace the illegal, invalid or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to
that of the illegal, invalid or unenforceable provisions.  The 

 

105

 

invalidity of a
provision in a particular jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

11.15      Tax Forms.

(a)           (i)            Each
Lender that is not a “United States person” within the meaning of Section
7701(a)(30) of the Code (a “Foreign Lender”) shall deliver to the
Administrative Agent, prior to receipt of any payment subject to withholding
under the Code (or upon accepting an assignment of an interest herein), two
duly signed completed copies of either IRS Form W-8BEN or any successor thereto
(relating to such Foreign Lender and entitling it to an exemption from, or
reduction of, withholding tax on all payments to be made to such Foreign Lender
by the Borrower pursuant to this Agreement) or IRS Form W-8ECI or any successor
thereto (relating to all payments to be made to such Foreign Lender by the
Borrower pursuant to this Agreement) or such other evidence satisfactory to the
Borrower and the Administrative Agent that such Foreign Lender is entitled to
an exemption from, or reduction of, U.S. withholding tax, including any
exemption pursuant to Section 881(c) of the Code.  Thereafter and from time to time, each such Foreign Lender shall
(A) promptly submit to the Administrative Agent such additional duly completed
and signed copies of one of such forms (or such successor forms as shall be
adopted from time to time by the relevant United States taxing authorities) as
may then be available under then current United States laws and regulations to
avoid, or such evidence as is satisfactory to the Borrower and the
Administrative Agent of any available exemption from or reduction of, United
States withholding taxes in respect of all payments to be made to such Foreign
Lender by the Borrower pursuant to this Agreement, (B) promptly notify the
Administrative Agent of any change in circumstances which would modify or
render invalid any claimed exemption or reduction, and (C) take such steps as
shall not be materially disadvantageous to it, in the reasonable judgment of
such Lender, and as may be reasonably necessary (including the re-designation
of its Lending Office) to avoid any requirement of applicable Laws that the
Borrower make any deduction or withholding for taxes from amounts payable to
such Foreign Lender.

(ii)           Each
Foreign Lender, to the extent it does not act or ceases to act for its own
account with respect to any portion of any sums paid or payable to such Lender
under any of the Loan Documents (for example, in the case of a typical
participation by such Lender), shall deliver to the Administrative Agent on the
date when such Foreign Lender ceases to act for its own account with respect to
any portion of any such sums paid or payable, and at such other times as may be
necessary in the determination of the Administrative Agent (in the reasonable
exercise of its discretion), (A) two duly signed completed copies of the forms
or statements required to be provided by such Lender as set forth above, to
establish the portion of any such sums paid or payable with respect to which
such Lender acts for its own account that is not subject to U.S. withholding
tax, and (B) two duly signed completed copies of IRS Form W-8IMY (or any
successor thereto), together with any information such Lender chooses to
transmit with such form, and any other certificate or statement of exemption
required under the Code, to establish that such Lender is not acting for its
own account with respect to a portion of any such sums payable to such Lender.

 

106

 

(iii)          The
Borrower shall not be required to pay any additional amount to any Foreign
Lender under Section 4.01 (A) with respect to any Taxes required to be
deducted or withheld on the basis of the information, certificates or
statements of exemption such Lender transmits with an IRS Form W-8IMY pursuant
to this Section 11.15(a) or (B) if such Lender shall have failed to
satisfy the foregoing provisions of this Section 11.15(a); provided
that if such Lender shall have satisfied the requirement of this Section
11.15(a) on the date such Lender became a Lender or ceased to act for its
own account with respect to any payment under any of the Loan Documents,
nothing in this Section 11.15(a) shall relieve the Borrower of its
obligation to pay any amounts pursuant to Section 4.01 in the event
that, as a result of any change in any applicable law, treaty or governmental
rule, regulation or order, or any change in the interpretation, administration
or application thereof, such Lender is no longer properly entitled to deliver
forms, certificates or other evidence at a subsequent date establishing the
fact that such Lender or other Person for the account of which such Lender
receives any sums payable under any of the Loan Documents is not subject to
withholding or is subject to withholding at a reduced rate.

(iv)          The
Administrative Agent may, without reduction, withhold any Taxes required to be
deducted and withheld from any payment under any of the Loan Documents with
respect to which the Borrower is not required to pay additional amounts under
this Section 11.15(a).

(b)           Upon the request of
the Administrative Agent, each Lender that is a “United States person” within
the meaning of Section 7701(a)(30) of the Code shall deliver to the
Administrative Agent two duly signed completed copies of IRS Form W-9.  If such Lender fails to deliver such forms,
then the Administrative Agent may withhold from any interest payment to such
Lender an amount equivalent to the applicable back-up withholding tax imposed
by the Code, without reduction.

(c)           If any Governmental
Authority asserts that the Administrative Agent did not properly withhold or
backup withhold, as the case may be, any tax or other amount from payments made
to or for the account of any Lender, such Lender shall indemnify the
Administrative Agent therefor, including all penalties and interest, any taxes
imposed by any jurisdiction on the amounts payable to the Administrative Agent
under this Section, and costs and expenses (including Attorney Costs) of the
Administrative Agent.  The obligation of
the Lenders under this Section shall survive the termination of the Aggregate
Commitments, the repayment, satisfaction or discharge of all other Obligations
hereunder, and the resignation of the Administrative Agent.

11.16      Governing Law.

(a)           THIS AGREEMENT SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED WITHIN SUCH STATE; PROVIDED
THAT THE ADMINISTRATIVE AGENT AND EACH LENDER SHALL RETAIN ALL RIGHTS ARISING
UNDER FEDERAL LAW.

 

107

 

(b)           ANY LEGAL ACTION OR
PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK SITTING IN THE COUNTY OF NEW
YORK OR OF THE UNITED STATES FOR THE SOUTHERN
DISTRICT OF SUCH STATE, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE
BORROWER, THE ADMINISTRATIVE AGENT AND EACH LENDER CONSENTS, FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE
COURTS.  THE BORROWER, THE
ADMINISTRATIVE AGENT AND EACH LENDER IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING
ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION
IN RESPECT OF ANY LOAN DOCUMENT OR OTHER DOCUMENT RELATED THERETO.  THE BORROWER, THE ADMINISTRATIVE AGENT AND
EACH LENDER WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS,
WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY THE LAW OF SUCH STATE.

11.17      Waiver
of Right to Trial by Jury. 
EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL
BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY LOAN
DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS
OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY LOAN DOCUMENT, OR THE
TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY
HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO
THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH
ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE
WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

11.18      ENTIRE AGREEMENT.  THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG 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 AMONG THE PARTIES.

[Signature
Pages Follow.]

 

108

 

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

 

	
   

  	
  WALTER
  INDUSTRIES, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name: 

  	
  Miles C. Dearden III

  
	
   

  	
  Title:

  	
  Vice President

  
				

 

 

S-1<Page>

                                                                    EXHIBIT 10.1

                           LOAN MODIFICATION AGREEMENT

     This Loan Modification Agreement (this "Loan Modification Agreement') is
entered into as of May 8, 2003, by and between SILICON VALLEY BANK, a
California-chartered bank, with its principal place of business at 3003 Tasman
Drive, Santa Clare, California 95054 and with a lose production office located
at one Newton Executive Park, Suite 200, 2221 Washington Street, Newton,
Massachusetts 02462, doing business under the name "Silicon Valley East"
("Bank") and CAMBRIDGE HEART, INC., a Delaware corporation with offices at One
Oak Park Drive, Bedford, Massachusetts 01730 ("Borrower").

1.   DESCRIPTION OF EXISTING INDEBTEDNESS AND OBLIGATIONS. Among other
indebtedness and obligations which may be owing by Borrower to Bank, Borrower is
indebted to Bank pursuant to a loan arrangement dated as of September 26, 2002,
evidenced by, among other documents, (i) a certain Loan and Security Agreement
dated as of September 26, 2002, between Borrower and Bank (as amended from time
to time, the "Loan Agreement"), and (ii) a certain Negative Pledge Agreement
dated as of September 26, 2002 (the "Negative Pledge Agreement"). Capitalized
terms used but not otherwise defined herein shall have the same meaning as in
the Loan Agreement.

2.   DESCRIPTION OF COLLATERAL. Repayment of the Obligations is secured by the
Collateral as described in the Loan Agreement (together with any other
collateral security granted to Bank, the "Security Documents")

Hereinafter, the Security Documents, together with all other documents
evidencing or securing the Obligations shall be referred to as the "Existing
Loan Documents".

3.   DESCRIPTION OF CHANGE IN TERMS.

          A.   MODIFICATIONS TO LOAN AGREEMENT.

          1.   Section 5 (a) of the Schedule to the Loan Agreement is hereby
               deleted in its entirety and replaced with the following:

               "a.  Minimum Tangible Net Worth:

               Borrower shall maintain a Tangible Net Worth of not less than the
               sum  of (i) plus (ii) below:

               (i)  $4,500,000.00, at September 30, 2002;
                    $3,000,000.00, at October 31, 2002 through and including
                    December 31, 2002;
                    $2,500,000.00, at January 31, 2003 through and including
                    April 30, 2003;
                    $3,500,000.00, at May 31, 2003 and thereafter;

<Page>

               (ii) 80% of all consideration received after the date hereof from
                    proceeds from the issuance of any equity securities of the
                    Borrower and/or subordinated debt incurred by the Borrower
                    (other than in connection with the Capitalization Event).

                    In no event shall the amount of this Minimum Tangible Net
                    Worth covenant be decreased."

          2.   Section 5 of the Schedule to the Loan Agreement is hereby amended
               by adding the following new financial covenant therein:

               "c. Capitalization Event. Borrower shall receive on or before May
               31, 2003 at least $3,000,000 in gross cash proceeds from the
               issuance of new (issued after May 1, 2003) equity securities of
               borrower (the "Capitalization Event")."

          B.   WAIVER. Borrower acknowledges that it is currently in default
     under the Loan Agreement (as Borrower was notified in the Bank's default
     letter to Borrower dated April 4, 2003) due to its failure to deliver an
     unqualified opinion to its fiscal year 2002 annual audited financial
     statements. This being the only default of which Bank is aware, Bank hereby
     agrees to waive such default arising from Borrower's failure to deliver
     said unqualified opinion provided that the Capitalization Event occurs an
     or before May 31, 2003. In the event that the Capitalization Event does not
     occur on or before May 31.2003, then Bank's waiver set forth herein shall
     be null and void, AB INITIO.

4.   FEES. Borrower shall reimburse Bank for all legal fees and expenses
incurred in connection with this amendment to the Existing Loan Documents.

5.   RATIFICATION OF NEGATIVE PLEDGE AGREEMENT. Borrower hereby ratifies,
confirms and reaffirms, all and singular, the terms and conditions of the
Negative Pledge Agreement and acknowledges, confirms and agrees that the
Negative Pledge Agreement remains in full force and effect.

6.   RATIFICATION OF PERFECTION CERTIFICATE. borrower hereby ratifies, confirms
and reaffirms, all and singular, the terms and disclosures contained in a
certain Perfection Certificate dated as of September 26, 2002 between Borrower
and Bank, and acknowledges, confirms and agrees the disclosures and information
above Borrower provided to Bank in the Perfection Certificate has not changed as
of the date hereof, except as previously disclosed to the Bank in writing.

7.   CONSISTENT CHANGES. The Existing Loan Documents arc hereby amended wherever
necessary to reflect the changes described above.

8.   RATIFICATION OF LOAN DOCUMENTS. Borrower hereby ratifies, confirms, and
reaffirms all terms and conditions of all security or other collateral granted
to the Bank, and confirms that the indebtedness secured thereby includes,
without limitation, the Obligations.

                                       -2-
<Page>

9.   NO DEFENSES OF BORROWER. Borrower hereby acknowledges and agrees that
Borrower has no offsets, defenses, claims, or counterclaims against Bank with
respect to the Obligations, or otherwise, and that if Borrower now has, or ever
did have, any offsets, defenses claims, or counterclaims against Bank, whether
known or unknown, at law or in equity. all of them arc hereby expressly WAIVED
and Borrower hereby RELEASES Bank from any liability thereunder.

10.  CONTINUING VALIDITY. Borrower understands and agrees that in modifying the
existing Obligations, Bank is relying upon Borrower's representations,
warranties, and agreements, as set forth in the Existing Loan Documents. Except
as expressly modified pursuant to this Loan Modification Agreement, the terms or
the Existing Loan Documents remain unchanged and in full force and effect.
Bank's agreement to modifications to the existing Obligations pursuant to this
Loan Modification Agreement in no way shall obligate Bank to make any future
modifications to the Obligations. Nothing in this Loan Modification Agreement
shall constitute a satisfaction of the Obligations. It is the intention of Bank
and Borrower to retain as liable parties all makers of Existing Loan Documents,
unless the party is expressly released by Bank in writing. No maker will be
released by virtue of this Loan Modification Agreement.

11.  JURISDICTION/VENUE. Borrower accepts for itself and in connection with its
properties, unconditionally, the non-exclusive jurisdiction of any state or
federal court of competent jurisdiction in the Commonwealth of Massachusetts in
any action, suit, or proceeding of any kind against it which arises out of or by
reason of this Loan Modification Agreement; provided, however, that if for any
reason Bank cannot avail itself of the courts of the Commonwealth of
Massachusetts, then venue shall lie in Santa Clara County, California.

12.  COUNTERSIGNATURE/EFFECTIVENESS. This Loan Modification Agreement shall
become effective only when it shall have been executed by Borrower and Bank.

                                       -3-
<Page>

     This Loan Modification Agreement is executed as a sealed instrument under
the laws of the Commonwealth of Massachusetts as of the date first written
above.

                                          BORROWER:

                                          CAMBRIDGE HEART, INC.

                                          By:   /s/ Robert B. Palardy
                                             ---------------------------
                                          Name: Robert B. Palardy
                                          Title: CFO

                                          BANK:

                                          SILICON VALLEY BANK, d/b/a
                                          SILICON VALLEY EAST

                                          By: /s/ John V. Atanasoff
                                          Name: John V. Atanasoff
                                          Title: Vice President

                                       -4-

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