Document:

exv10w7

 

EXHIBIT 10.7

 

LOAN AGREEMENT

between

Mission Economic Development Corporation

and

Allied Waste North America, Inc.

 

Relating to

$56,800,000

Mission Economic Development Corporation

Solid Waste Disposal Revenue Bonds

(Allied Waste North America, Inc. Project)

Series 2007A

 

Dated as of April 1, 2007

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	ARTICLE I
	 	 	 	 
	 
	 	 	 	 
	DEFINITIONS
	 	 	 	 
	 
	 	 	 	 
	Section 1.1 Definition of Terms
	 	 	2	 
	Section 1.2 Number and Gender
	 	 	2	 
	Section 1.3 Articles, Sections. Etc.
	 	 	2	 
	 
	 	 	 	 
	ARTICLE II
	 	 	 	 
	 
	 	 	 	 
	REPRESENTATIONS AND WARRANTIES OF THE ISSUER AND THE BORROWER
	 	 	 	 
	 
	 	 	 	 
	Section 2.1 Representations of the Issuer
	 	 	3	 
	Section 2.2 Representations and Warranties of the Borrower
	 	 	5	 
	 
	 	 	 	 
	ARTICLE III
	 	 	 	 
	 
	 	 	 	 
	ISSUANCE OF THE BONDS; APPLICATION OF PROCEEDS
	 	 	 	 
	 
	 	 	 	 
	Section 3.1 Agreement to Issue Bonds; Application of Bond Proceeds
	 	 	7	 
	Section 3.2 Disbursements from the Project Fund; Disbursements from the Costs of Issuance Fund
	 	 	8	 
	Section 3.3 Establishment of Completion Date; Obligation of Borrower to Complete
	 	 	9	 
	Section 3.4 Investment of Moneys in Funds
	 	 	9	 
	Section 3.5 Limitation of Issuer’s Liability
	 	 	10	 
	 
	 	 	 	 
	ARTICLE IV
	 	 	 	 
	 
	 	 	 	 
	LOAN OF PROCEEDS; REPAYMENT PROVISION
	 	 	 	 
	 
	 	 	 	 
	Section 4.1 Loan of Bond Proceeds; Issuance of Bonds
	 	 	10	 
	Section 4.2 Loan Payments and Payment of Other Amounts
	 	 	10	 
	Section 4.3 Unconditional Obligation
	 	 	12	 
	Section 4.4 Assignment of Issuer’s Rights
	 	 	12	 
	Section 4.5 Amounts Remaining in Funds
	 	 	12	 
	 
	 	 	 	 
	ARTICLE V
	 	 	 	 
	 
	 	 	 	 
	SPECIAL COVENANTS AND AGREEMENTS
	 	 	 	 
	 
	 	 	 	 
	Section 5.1 Right of Access to the Project
	 	 	13	 
	Section 5.2 The Borrower’s Maintenance of Its Existence
	 	 	13	 
	Section 5.3 Records and Financial Statements of Borrower
	 	 	13	 

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	 	 	Page	 
	Section 5.4 Insurance
	 	 	14	 
	Section 5.5 Maintenance and Repairs; Taxes; Utility and Other Charges
	 	 	14	 
	Section 5.6 Qualification in Texas
	 	 	14	 
	Section 5.7 Tax Covenant
	 	 	14	 
	Section 5.8 [Reserved]
	 	 	19	 
	Section 5.9 Assignment by Borrower
	 	 	19	 
	Section 5.10 Cooperation in Filings and Other Matters
	 	 	19	 
	Section 5.11 Letter of Credit
	 	 	20	 
	Section 5.12 Maintenance of Guaranty; Remarketing Agreement
	 	 	20	 
	Section 5.13 Reserved
	 	 	21	 
	Section 5.14 Compliance with Indenture
	 	 	21	 
	 
	 	 	 	 
	ARTICLE VI
	 	 	 	 
	 
	 	 	 	 
	[RESERVED]
	 	 	 	 
	 
	 	 	 	 
	ARTICLE VII
	 	 	 	 
	 
	 	 	 	 
	LOAN DEFAULT EVENTS AND REMEDIES
	 	 	 	 
	 
	 	 	 	 
	Section 7.1 Loan Default Events
	 	 	21	 
	Section 7.2 Remedies on Default
	 	 	22	 
	Section 7.3 Agreement to Pay Attorneys’ Fees and Expenses
	 	 	23	 
	Section 7.4 No Remedy Exclusive
	 	 	24	 
	Section 7.5 No Additional Waiver Implied by One Waiver
	 	 	24	 
	 
	 	 	 	 
	ARTICLE VIII
	 	 	 	 
	 
	 	 	 	 
	PREPAYMENT
	 	 	 	 
	 
	 	 	 	 
	Section 8.1 Redemption of Bonds with Prepayment Moneys
	 	 	24	 
	Section 8.2 Options to Prepay Installments
	 	 	24	 
	Section 8.3 Mandatory Prepayment
	 	 	25	 
	Section 8.4 Amount of Prepayment
	 	 	25	 
	Section 8.5 Notice of Prepayment
	 	 	25	 
	 
	 	 	 	 
	ARTICLE IX
	 	 	 	 
	 
	 	 	 	 
	NON-LIABILITY OF ISSUER; EXPENSES; INDEMNIFICATION
	 	 	 	 
	 
	 	 	 	 
	Section 9.1 Non-liability of Issuer
	 	 	26	 
	Section 9.2 Expenses
	 	 	26	 
	Section 9.3 Indemnification
	 	 	26	 

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	 	 	Page	 
	ARTICLE X
	 	 	 	 
	 
	 	 	 	 
	MISCELLANEOUS
	 	 	 	 
	 
	 	 	 	 
	Section 10.1 Notices
	 	 	27	 
	Section 10.2 Severability
	 	 	29	 
	Section 10.3 Execution of Counterparts
	 	 	29	 
	Section 10.4 Amendments, Changes and Modifications
	 	 	29	 
	Section 10.5 Governing Law
	 	 	29	 
	Section 10.6 Authorized Representative
	 	 	29	 
	Section 10.7 Term of the Agreement
	 	 	29	 
	Section 10.8 Binding Effect
	 	 	29	 
	Section 10.9 Complete Agreement
	 	 	30	 
	Section 10.10 Business Days
	 	 	30	 
	Section 10.11 Waiver of Personal Liability
	 	 	30	 
	Section 10.12 Waivers
	 	 	30	 
	Section 10.13 Notice to the Division
	 	 	30	 
	 
	 	 	 	 
	Exhibit A  —  Description of the Project
	 	 	 	 
	Exhibit B  —  Promissory Note
	 	 	 	 

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LOAN AGREEMENT

     This Loan Agreement (the “Agreement”) dated as of April 1, 2007, between the MISSION ECONOMIC
DEVELOPMENT CORPORATION, a constituted authority and non-profit industrial development corporation
created and existing under the Development Corporation Act of 1979, as amended, Tex. Rev. Civ.
Stat. Ann. Art. 5190.6 (Vernon 1979) (the “Act”) (the “Issuer”), and ALLIED WASTE NORTH AMERICA,
INC., a corporation duly organized and existing under the laws of the State of Delaware (the
“Borrower”);

W I T N E S S E T H:

     WHEREAS, the Act, including Section 4B of the Act, authorizes and empowers the Issuer to issue
bonds on behalf of Mission, Texas (the “Unit”) to finance expenditures found by the Board of
Directors of the Issuer to be required or suitable for infrastructure necessary to promote or
develop new or expanded business enterprises, including solid waste disposal facilities; and

     WHEREAS, in furtherance of the purposes of the Act, the Issuer proposes to finance the cost of
the acquisition, construction, installation, improving, and/or equipping of certain solid waste
disposal facilities more particularly described in Exhibit A hereto (collectively, the “Project”);
and

     WHEREAS, the Issuer was created by a city wholly or partly located in a county that is
bordered by the Rio Grande, has a population of at least 500,000 and has wholly or partly within
its boundaries at least four cities that each have a population of at least 25,000; and

     WHEREAS, the Issuer does not support the Project with sales and use tax revenue collected
under Section 4A or 4B of the Act; and

     WHEREAS, the governing body of the counties and cities listed in Exhibit D to the Indenture
have requested the Issuer to exercise its powers to finance the portion of the Project located in
such counties and cities; and

     WHEREAS, in order to finance the cost of the Project, the Issuer is authorized by the Act to
issue bonds payable from the revenue derived from the repayment of loans made to users of the
Project; and

     WHEREAS, the Issuer has determined to issue its Solid Waste Disposal Revenue Bonds (Allied
Waste North America, Inc. Project) Series 2007A (the “Bonds”), pursuant to an Indenture (the
“Indenture”) of even date herewith between the Issuer and Deutsche Bank Trust Company Americas, as
trustee (the “Trustee”), in order to provide funds to finance the cost of acquiring, constructing,
improving and/or equipping the Project and to finance all or a portion of the cost of issuing the
Bonds; and

     WHEREAS, the Issuer has undertaken to finance the cost of the Project by loaning the proceeds
derived from the sale of the Bonds to the Borrower pursuant to this Agreement,
under

 

 

which the Borrower is required to make loan payments sufficient to pay when due the principal
of, premium, if any, and interest on the Bonds and related expenses; and

     WHEREAS, as further security for the Bonds, Allied Waste Industries, Inc., a Delaware
corporation which directly owns all of the outstanding stock of the Borrower (the “Guarantor”),
will execute a Guaranty Agreement (the “Guaranty”) dated as of April 1, 2007 in favor of the
Trustee, whereby the Guarantor will guarantee payments on the Bonds and the payment obligations of
the Borrower under this Agreement; and

     WHEREAS, the Division has approved the contents of this Agreement in accordance with the Act;
and

     WHEREAS, during the first Interest Rate Period the Bonds will bear interest at a Term Interest
Rate and will not be credit enhanced by a Letter of Credit, rather, the Guarantor shall guarantee
the payments of the Bonds; and

     WHEREAS, pursuant to the Indenture, the Bonds will be issued and the Issuer will assign to the
Trustee its right to receive payments (excluding Unassigned Issuer Rights), and certain other
rights (excluding Unassigned Issuer Rights), under this Agreement;

     NOW, THEREFORE, for and in consideration of the premises and the mutual covenants hereinafter
contained, the parties hereto hereby formally covenant, agree and bind themselves as follows:

ARTICLE I

DEFINITIONS

     Section 1.1 Definition of Terms.

     Unless the context otherwise requires, the terms used in this Agreement shall have the
meanings specified in Section 1.1 of the Indenture, as originally executed or as it may from time
to time be supplemented or amended as provided therein.

     Section 1.2 Number and Gender.

     The singular form of any word used herein, including the terms defined in Section 1.1 of the
Indenture, shall include the plural, and vice versa. The use herein of a word of any gender shall
include all genders.

     Section 1.3 Articles, Sections. Etc.

     Unless otherwise specified, references to Articles, Sections and other subdivisions of this
Agreement are to the designated Articles, Sections and other subdivisions of this Agreement as
amended from time to time. The words “hereof,” “herein,” “hereunder” and words of similar import
refer to this Agreement as a whole. The headings or titles of the several articles and sections,
and the table of contents appended to copies hereof, shall be solely for convenience of reference
and shall not affect the meaning, construction or effect of the provisions hereof.

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ARTICLE II

REPRESENTATIONS AND WARRANTIES OF

THE ISSUER AND THE BORROWER

     Section 2.1 Representations of the Issuer.

     The Issuer makes the following representations as the basis for its undertakings herein
contained:

     (a) The Issuer is a constituted authority and non-profit industrial development corporation
created and existing under the Act, having those powers enumerated under the Act. Based upon
representations of the Borrower, the Project constitutes a “project” within the meaning of the Act.
Under the provisions of the Act, the Issuer has the power to enter into the transactions
contemplated by this Agreement and the Indenture and to carry out its obligations hereunder. By
proper action, the Issuer has duly authorized the execution, delivery and performance of its
obligations under this Agreement and the Indenture.

     (b) The Bonds will be issued under and secured by the Indenture, pursuant to which the
Revenues derived by the Issuer hereunder and the Issuer’s rights under this Agreement (except the
Unassigned Issuer Rights) will be pledged to the Trustee as security for payment of the principal
of, premium, if any, and interest on the Bonds, and as security for the payment of the obligations
of the Borrower under the Reimbursement Agreement, if any. The Issuer has assigned the Note to the
Trustee as security for payment of the Bonds.

     (c) The Issuer has not pledged and will not pledge any interest in this Agreement or in the
Note for any purpose other than to secure the Bonds under the Indenture and the obligations of the
Borrower under the Reimbursement Agreement, if any. The Bonds constitute the only bonds or other
obligations of the Issuer in any manner payable from the Revenues to be derived from this
Agreement, and except for the Bonds, no bonds or other obligations have been or will be issued on
the basis of this Agreement.

     (d) All public hearings by, authorizations, consents, and approvals of, and registrations or
filings with, governmental bodies or agencies (other than approvals which might be required under
the securities laws of any jurisdiction) required for the delivery, issuance and sale by the Issuer
of the Bonds and the execution and delivery by the Issuer of this Agreement and the Indenture, or
in connection with the carrying out by the Issuer of the obligations hereunder and thereunder, have
been obtained or made and are in full force and effect.

     (e) The Issuer has found and determined and hereby finds and determines that all requirements
of the Act with respect to the issuance of the Bonds and the execution of this Agreement have been
complied with and that issuing the Bonds and entering into this Agreement will be in furtherance of
the purposes of the Act.

     (f) The Issuer makes no representation or warranty concerning the suitability of the Project
for the purpose for which they are being undertaken by the Borrower. The Issuer has not made any
independent investigation as to the feasibility of any Project or the creditworthiness of the
Borrower. Any bond purchaser, assignee of this Agreement, or any other party with any

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interest in this transaction shall make its own independent investigation as to the
creditworthiness and feasibility of the Project, independent of any representation or warranties of
the Issuer.

     (g) The execution and delivery of, and the performance of the obligations and agreements of
the Issuer set forth in this Agreement, the Indenture and the Bonds are within the power and
authority of the Issuer and have been duly authorized by the Issuer and will not contravene any
provision of any judgment, order or decree to which the Issuer is subject or contravene or
constitute a default under any contract, agreement or other instrument to which the Issuer is a
party.

     (h) The Issuer is not in violation of the Act or, to its knowledge, any existing law, rule or
regulation applicable to it which would affect its existence or the matters referred to in the
preceding subsections (a) through (g).

     (i) All actions of the Issuer with respect to the issuance of the Bonds occurred at meetings
held after notice given in accordance with the Issuer’s procedures and applicable law, which were
open to the public and at which quorums were present and acting throughout, and said actions appear
of public record in the minute books of the Issuer.

     (j) There is no default of the Issuer in the payment of the principal of or interest on any of
its indebtedness for borrowed money or under any instrument or instruments or agreements under and
subject to which any indebtedness for borrowed money has been incurred which does or could affect
the validity and enforceability of the Indenture, the Bonds or this Agreement or the ability of the
Issuer to perform its obligations thereunder or hereunder, and no event has occurred and is
continuing under the provisions of any such instrument or agreement which constitutes or, with the
lapse of time or the giving of notice, or both, would constitute such a default.

     (k) With respect to the Bonds, there are no other obligations of the Issuer that have been,
are being or will be (i) sold at substantially the same time (i.e., less than 15 days apart), (ii)
sold pursuant to the same plan of financing, and (iii) reasonably expected to be paid from
substantially the same source of funds.

     (l) To the best of its knowledge, no litigation, inquiry or investigation of any kind in or by
any judicial or administrative court or agency is pending or threatened against the Issuer with
respect to (1) the organization and existence of the Issuer, (2) its authority to execute or
deliver the Indenture, the Bonds or this Agreement or to perform its obligations thereunder or to
assign the Note, (3) the validity or enforceability of any of such instruments or the transactions
contemplated thereby, (4) the title of any officer of the Issuer who executed such instruments, or
(5) any authority or proceedings related to the execution and delivery of such instruments on
behalf of the Issuer. No such authority or proceedings have been repealed, revoked, rescinded or
amended and all are in full force and effect.

     (m) With respect to the Bonds, the Issuer will, upon the written direction of the Borrower,
take all steps specified in such directions as are required to be taken by the Issuer in connection
with the computation and payment of rebatable arbitrage in accordance with Section

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148(f) of the Code and Section 1.148-3 of the Treasury Regulations, including, but not limited
to, the execution by the Issuer for filing by the Borrower of Internal Revenue Service Form 8038-T
or any successor form required by such sections. The Issuer may conclusively rely on the
directions of the Borrower with regard to any actions to be taken by it pursuant to this Section
and shall have no liability for any consequences of any failure of the Borrower to supply accurate
or sufficient directions or for the Bonds becoming “arbitrage bonds” as a result of compliance with
such directions.

     Section 2.2 Representations and Warranties of the Borrower.

     The Borrower represents and warrants to the Issuer that, as of the date of execution of this
Agreement and as of the date of delivery of the Bonds to the initial purchasers thereof (such
representations and warranties to remain operative and in full force and effect regardless of the
issuance of the Bonds or any investigations by or on behalf of the Issuer or the results thereof):

     (a) The Borrower has full legal right, power and authority under the laws of the United States
and under the laws of the State (i) to enter into the Loan Documents, (ii) to agree to be bound by
the terms of the Indenture, (iii) to perform its obligations hereunder and under the Loan
Documents, and (iv) to consummate the transactions contemplated by the Loan Documents.

     (b) The Borrower is a corporation validly existing and in good standing under the laws of the
State of Delaware. The Borrower has by proper corporate action duly authorized the execution and
delivery of the Loan Documents and the performance of its obligations thereunder.

     (c) This Agreement has been duly executed and delivered by the Borrower and constitutes a
legal, valid and binding obligation of the Borrower, enforceable in accordance with its terms,
except as limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws or
judicial decisions affecting the rights of creditors generally and by judicial discretion in the
exercise of equitable remedies. Upon the execution and delivery hereof and thereof, each of the
Loan Documents will constitute a valid and binding obligation of the Borrower, enforceable in
accordance with their terms, except as limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws or judicial decisions affecting creditors’ rights generally and by
judicial discretion in the exercise of equitable remedies.

     (d) The execution and delivery of the Loan Documents and the performance by the Borrower of
its obligations thereunder and the consummation of the transactions contemplated thereby do not and
will not conflict with, or constitute a breach or result in a violation of, the articles of
incorporation or bylaws of the Borrower, will not violate any law, regulation, rule or ordinance or
any material order, judgment or decree of any federal, state or local court and (with due notice or
the passage of time, or both), do not conflict with, or constitute a breach of, or a default under,
or result in the creation or imposition of any prohibited lien, charge or encumbrance whatsoever
upon any of the property or assets of the Borrower under the terms of any material document,
instrument or commitment to which the Borrower is a party or by which the Borrower or any of its
property is bound.

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     (e) Neither the Borrower nor any of its business or properties, nor any relationship between
the Borrower or any other person, nor any circumstances in connection with the execution, delivery
and performance by the Borrower of the Loan Documents or the offer, issue, sale or delivery by the
Issuer of the Bonds is such as to require the consent, approval or authorization of, or the filing,
registration or qualification with, any governmental authority on the part of the Borrower other
than those already obtained.

     (f) Except as disclosed in the public filings of the Guarantor under the 1934 Act, the
Borrower has not been served with and, to the knowledge of the Borrower, there is no action, suit,
proceeding, inquiry or investigation by or before any court, governmental agency or public board or
body pending or threatened directly against the Borrower which (i) affects or seeks to prohibit,
restrain or enjoin the issuance, sale or delivery of the Bonds or the lending of the proceeds of
the Bonds to the Borrower or the execution and delivery of the Loan Documents, (ii) affects or
questions the validity or enforceability of the Loan Documents, (iii) questions the power or
authority of the Borrower to carry out the transactions contemplated by, or to perform its
obligations under the Loan Documents or the powers of the Borrower to own, acquire, equip or
operate the Project, or (iv) which, if adversely determined, would materially impair its right to
carry on business substantially as now conducted or as now contemplated to be conducted, or would
materially adversely affect its financial condition.

     (g) To the best of its knowledge, the Borrower is not in default under any document,
instrument or commitment to which the Borrower is a party or to which it or any of its property is
subject which default would or could affect the ability of the Borrower to carry out its
obligations under the Loan Documents.

     (h) Any certificate signed by an Authorized Representative of the Borrower and delivered
pursuant to the Loan Documents or the Indenture shall be deemed a representation and warranty by
the Borrower to the Issuer and the Trustee of the statements made therein.

     (i) The information contained in the Official Statement which pertains to the Borrower and the
Project is true and correct and accurately summarizes the matters encompassed thereby to the extent
such matters are described therein.

     (j) The Costs of the Project are as set forth in the Tax Agreement and have been determined in
accordance with sound engineering/construction and accounting principles. All the information
provided and representations made by the Borrower in the Tax Agreement are true and correct as of
the date thereof.

     (k) The Borrower shall not make any changes to the Project or to the operation thereof which
would affect the qualification of the Project under the Act or impair the exemption from federal
income taxation of the interest on the Bonds. In particular, the Borrower shall comply with all
requirements set forth in the Tax Agreement.

     (l) The Project consists and will consist of those Facilities described in Exhibit A.

     (m) To the best of its knowledge, all certificates, approvals, permits and authorizations with
respect to the construction of the Project of applicable local governmental agencies, the

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State and the federal government have been obtained, or if not yet obtained, are expected to
be obtained in due course.

     (n) To the best of its knowledge, no event has occurred and no condition exists which would
constitute an Event of Default or Loan Default Event or which, with the passing of time or with the
giving of notice or both, would become an Event of Default or Loan Default Event.

     (o) The Project will be located wholly within the State.

     (p) The Borrower has no present intention of disposing of or abandoning any Facility nor of
directing any Facility to a use other than the purposes represented to the Division.

     (q) That, by virtue of the Project being financed under the Act, it has not and will not
maintain that it is entitled to an exemption from State sales or use taxes on personal property
acquired in connection with the Project.

ARTICLE III

ISSUANCE OF THE BONDS; APPLICATION OF PROCEEDS

     Section 3.1 Agreement to Issue Bonds; Application of Bond Proceeds.

     (a) To provide funds to finance Costs of the Project and Costs of Issuance, the Issuer agrees
that it will issue under the Indenture, sell and cause to be delivered to the purchasers thereof,
the Bonds. The Issuer will thereupon apply the proceeds received from the sale of the Bonds as
provided herein and in the Indenture.

     (b) The Borrower agrees that it will acquire, construct and install, or complete the
acquisition, construction and installation of, the Project, substantially in accordance with the
description of the Project prepared by the Borrower and submitted to the Issuer, including any and
all supplements, amendments and additions or deletions thereto or therefrom, it being understood
that the approval of the Issuer shall not be required for changes in such description which do not
substantially alter the purpose and description of the Project as set forth in Exhibit A
hereto. The Borrower further agrees to proceed with due diligence to complete the Project within 3
years from the Issuance Date. The Borrower shall not make any changes to the Project or to the
operation thereof which would affect the qualification of such Project as a “project” under the Act
or impair the exemption from federal income taxation of the interest on the Bonds. In particular,
the Borrower agrees to comply with all requirements set forth in the Tax Agreement.

     (c) In the event that the Borrower desires to alter or change the Project, and such alteration
or change substantially alters the purpose and description of the Project as described in
Exhibit A hereto, the Borrower shall be required to deliver to the Issuer:

     (i) a certificate of an Authorized Representative of the Borrower describing in detail
the proposed changes and stating that they will not have the effect of disqualifying the
Project as facilities that may be financed pursuant to the Act or Section 142(a)(6) of the
Code;

-7-

 

     (ii) a copy of the proposed form of amended or supplemented Exhibit A hereto;
and

     (iii) an Approving Opinion addressed to the Trustee relating to such proposed changes.

     Section 3.2 Disbursements from the Project Fund; Disbursements from the Costs of Issuance
Fund.

     (a) The Borrower will authorize and direct the Trustee, upon compliance with Section 3.3 of
the Indenture, to disburse the moneys in the Project Fund only for the following purposes (and not
for Costs of Issuance), subject to the provisions of Section 3.3 hereof:

     (i) Payment to the Borrower of such amounts, if any, as shall be necessary to reimburse
the Borrower in full for all advances and payments made by it:

     (1) On or after July 7, 2006, in connection with the acquisition, construction
and installation of the Project;

     (2) Prior to July 7, 2006 if such costs do not exceed $100,000; or

     (3) Prior to July 7, 2006 if such costs constitute preliminary expenditures
within the meaning of Section 1.150-2(f)(2) of the Treasury Regulations and such
costs do not exceed 20% of the aggregate issue price of the Bonds.

     (ii) Payment to any vendors, suppliers or contractors to acquire, construct and install
the Project, as provided in the plans, specifications and work orders therefor; and payment
of the miscellaneous expenses incidental thereto.

     (iii) Payment of the fees, if any, of architects, engineers, legal counsel and
supervisors expended in connection with the acquisition, construction and installation of
the Project.

     (iv) Payment of taxes including property taxes, assessments and other charges, if any,
that may become payable during the construction period with respect to the Project, or
reimbursement thereof, if paid by the Borrower.

     (v) Payment of any other Costs of the Project permitted by the Tax Agreement (but not
including any Costs of Issuance).

     Each of the payments referred to in this Section 3.2(a) shall be made upon receipt by the
Trustee of a written requisition in the form prescribed by Section 3.3 of the Indenture, signed by
an Authorized Representative of the Borrower.

     (b) The Borrower will authorize and direct the Trustee in writing, upon compliance with
Section 3.4 of the Indenture, to disburse the moneys in the Costs of Issuance Fund to or on behalf
of the Borrower only for Costs of Issuance. Each of the payments referred to in this

-8-

 

Section 3.2(b) shall be made upon receipt by the Trustee of a written requisition in the form
prescribed by Section 3.4 of the Indenture, signed by an Authorized Representative of the Borrower.

     (c) All disbursements from the Project Fund and the Costs of Issuance Fund must comply with
the requirements of the Tax Agreement.

     Section 3.3 Establishment of Completion Date; Obligation of Borrower to Complete.

     As soon as practicable after the acquisition and construction of all of the Project are
completed, an Authorized Representative of the Borrower, on behalf of the Borrower, shall evidence
the Completion Date by providing a certificate to the Trustee upon which the Trustee may
conclusively rely and to the Issuer (if so requested by the Issuer) stating that the construction
of the Project has been completed substantially in accordance with the plans, specifications and
work orders therefor, and all labor, services, materials and supplies used in the construction have
been paid or provided for. Notwithstanding the foregoing, such certificate may state that it is
given without prejudice to any rights of the Borrower against third parties for any claims or for
the payment of any amount not then due and payable which exists at the date of such certificate or
which may subsequently exist.

     All moneys remaining in the Project Fund after the Completion Date (other than moneys relating
to provisional payments) and after payment or provision for payment of all other Costs of the
Project have been provided for shall be transferred to the Surplus Account in accordance with
Section 3.3 of the Indenture and applied as provided therein.

     In the event the moneys in the Project Fund available for payment of the Costs of the Project
are or will be insufficient to pay the costs of acquisition, construction and installation of the
Project in full, the Borrower agrees to pay directly, or to deposit in the Project Fund moneys
sufficient to pay, any costs of completing the acquisition, construction and installation of the
Project in excess of the moneys available for such purpose in the Project Fund. The Issuer makes
no express or implied warranty that the moneys deposited in the Project Fund and available for
payment of the Costs of the Project, under the provisions of this Agreement, will be sufficient to
pay all the amounts which may be incurred for such costs. The Borrower agrees that if, after
exhaustion of the moneys in the Project Fund, the Borrower should pay, or deposit moneys in the
Project Fund for the payment of, any portion of the Costs of the Project pursuant to the provisions
of this Section, it shall not be entitled to any reimbursement therefor from the Issuer, from the
Trustee or from the Holders of any of the Bonds, nor shall it be entitled to any diminution of the
amounts payable under Section 4.2 hereof.

     Section 3.4 Investment of Moneys in Funds.

     Any moneys in any fund or account held by the Trustee shall, at the written request of an
Authorized Representative of the Borrower, be invested or reinvested by the Trustee as provided in
the Indenture. Such investments shall be held by the Trustee and shall be deemed at all times a
part of the fund or account from which such investments were made, and the interest accruing

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thereon, and any profit or loss realized therefrom, shall be credited or charged to such fund
or account.

     Section 3.5 Limitation of Issuer’s Liability.

     Anything contained in this Agreement to the contrary notwithstanding, any obligation the
Issuer may incur in connection with the undertaking of the Project or the payment of money shall
not be deemed to constitute a debt or general obligation of the Issuer, the State or any political
subdivision thereof, but shall be payable solely from the Revenues received by it as described in
this Agreement and the Indenture (or, in the case of payments of the Purchase Price of Bonds, from
amounts available for that purpose as described in this Agreement and the Indenture). No provision
in this Agreement or any obligation herein imposed upon the Issuer, or the breach thereof, shall
constitute or give rise to or impose upon the Issuer, the State or any political subdivision
thereof a pecuniary liability or a charge upon their general credit or taxing powers. No officer,
director, employee, member or agent of the Issuer shall be personally liable under this Agreement.

ARTICLE IV

LOAN OF PROCEEDS; REPAYMENT PROVISION

     Section 4.1 Loan of Bond Proceeds; Issuance of Bonds.

     The Issuer covenants and agrees, upon the terms and conditions in this Agreement, to make a
loan to the Borrower from the proceeds of the Bonds for the purpose of financing the Costs of the
Project and the Costs of Issuance. The Issuer further covenants and agrees that it shall take all
actions within its authority to keep this Agreement in effect in accordance with its terms.
Pursuant to said covenants and agreements, the Issuer will issue the Bonds upon the terms and
conditions contained in this Agreement and the Indenture and will cause the Bond proceeds to be
applied as provided in Article III of the Indenture.

     Section 4.2 Loan Payments and Payment of Other Amounts.

     (a) On or before 1:30 p.m. New York City time on each Bond Payment Date (as hereinafter
defined), until the principal of, premium, if any, and interest on, the Bonds shall have been fully
paid or provision for such payment shall have been made as provided in the Indenture, the Borrower
covenants and agrees to pay to the Trustee as a repayment on the loan made to the Borrower from
Bond proceeds pursuant to Section 4.1 hereof, a sum equal to the amount payable on such Bond
Payment Date as principal of, and premium, if any, and interest on, the Bonds as provided in the
Indenture. Such Loan Payments shall be made in federal funds or other funds immediately available
at the Corporate Trust Office of the Trustee. The term “Bond Payment Date” as used in this Section
4.2(a) shall mean any date upon which any such amounts payable with respect to the Bonds shall
become due, whether upon redemption, acceleration, maturity or otherwise.

     Each payment made pursuant to this Section 4.2(a) shall at all times be sufficient to pay the
total amount of interest and principal (whether at maturity or upon redemption or acceleration) and
premium, if any, becoming due and payable on the Bonds on each Bond

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Payment Date; provided that any amount held by the Trustee in the Bond Fund on any due date
for a Loan Payment hereunder shall be credited against the Loan Payment due on such date, to the
extent available for such purpose; and provided further that, subject to the provisions of this
paragraph, if at any time the amounts held by the Trustee in the Bond Fund (other than the Letter
of Credit Account) are sufficient to pay all of the principal of and interest and premium, if any,
on the Bonds as such payments become due, the Borrower shall be relieved of any obligation to make
any further payments under the provisions of this Section. Notwithstanding the foregoing, if on
any date the amount held by the Trustee in the Bond Fund is insufficient to make any required
payments of principal of (whether at maturity or upon redemption or acceleration) and interest and
premium, if any, on, the Bonds as such payments become due, the Borrower shall forthwith pay such
deficiency as a Loan Payment hereunder.

     The obligation of the Borrower to make any payment required by this Section 4.2(a) shall be
deemed to have been satisfied to the extent of any corresponding payment made to the Trustee (i) by
a Credit Provider pursuant to a Letter of Credit then in effect with respect to the Bonds or (ii)
by the Guarantor pursuant to the Guaranty.

     (b) The Borrower further covenants that it will make any payments required to be made pursuant
to Sections 2.4, 4.6 and 4.8 of the Indenture at the applicable Purchase Price thereof by 2:45 p.m.
New York City time on the Purchase Date in federal or other immediately available funds; provided,
however the obligation to make such payments shall have been deemed satisfied to the extent that
such Purchase Price shall have been paid from remarketing proceeds, from a draw under a Letter of
Credit pursuant to Section 4.7(D) of the Indenture or from payment by the Guarantor pursuant to the
Guaranty.

     (c) The Borrower also agrees to pay (i) the annual fee of the Trustee and the Tender Agent, if
any, for their ordinary services rendered as trustee or tender agent, respectively, and their
ordinary expenses incurred under the Indenture, as and when the same become due, (ii) the
reasonable fees, charges and expenses (including reasonable legal fees and expenses) of the
Trustee, as bond registrar and paying agent, the reasonable fees of any other Paying Agent as
provided in the Indenture, and (iii) the reasonable fees, charges and expenses of the Trustee for
the necessary extraordinary services rendered by it and extraordinary expenses incurred by it under
the Indenture, as and when the same become due. The Trustee’s compensation shall not be limited by
any provision of law regarding the compensation of a Trustee of an express trust.

     (d) The Borrower covenants and agrees to pay to or on behalf of the Issuer (i) the reasonable
fees and expenses of the Issuer in connection with this Agreement, the Project, the Bonds or the
Indenture, including, without limitation, any and all fees and expenses incurred in connection with
the authorization, issuance, sale and delivery of the Bonds and the administration of the Bonds,
(ii) the Issuer’s fee for the issuance of the Bonds, and (iii) all other amounts which the Borrower
agrees to pay under the terms of this Agreement; provided, that the aggregate of all such amounts
paid to the Issuer shall not equal or exceed an amount which would cause the “Yield” on the Note,
this Agreement or any other “acquired purpose obligation” to be “materially higher” than the
“Yield” on the Bonds, as such terms are used in the Code. Such fees and expenses shall be paid
directly to the Issuer for its own account as and when such fees and expenses become due and
payable.

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     (e) The Borrower also agrees to pay the reasonable fees, charges and expenses of the
Remarketing Agent. Such payments shall be made directly to the Remarketing Agent. The Issuer
shall have no obligation whatsoever with respect to the payment of fees, charges and expenses of
the Remarketing Agent.

     (f) The Borrower agrees to pay any amounts required to be deposited in the Rebate Fund to
comply with the provisions of the Tax Agreement and to pay the fees, charges and expenses of any
rebate analyst.

     Section 4.3 Unconditional Obligation.

     The obligations of the Borrower to make the Loan Payments and the other payments required by
Section 4.2 hereof and to perform and observe the other agreements on its part contained herein
shall be absolute and unconditional, irrespective of any defense or any rights of set-off,
recoupment or counterclaim it might otherwise have against the Issuer, and during the term of this
Agreement, the Borrower shall pay all payments required to be made on account of this Agreement as
prescribed in Section 4.2 and all other payments required hereunder, free of any deductions and
without abatement, diminution or set-off. Until such time as the principal of, premium, if any,
and interest on, the Bonds shall have been fully paid, or provision for the payment thereof shall
have been made as required by the Indenture, the Borrower (i) will not suspend or discontinue any
payments provided for in Section 4.2; (ii) will perform and observe all of its other covenants
contained in this Agreement; and (iii) except as provided in Article VIII hereof, will not
terminate this Agreement for any cause, including, without limitation, the occurrence of any act or
circumstances that may constitute failure of consideration, destruction of or damage to all or a
portion of those facilities or equipment comprising the Project, commercial frustration of purpose,
any change in the tax or other laws of the United States of America or of the State or any
political subdivision of either of these, or any failure of the Issuer or the Trustee to perform
and observe any covenant, whether express or implied, or any duty, liability or obligation arising
out of or connected with this Agreement or the Indenture, except to the extent permitted by this
Agreement.

     Section 4.4 Assignment of Issuer’s Rights.

     As security for the payment of the Bonds, the Issuer will assign to the Trustee the Issuer’s
rights under this Agreement and the Note, including the right to receive Loan Payments hereunder
(except the Unassigned Issuer Rights). The Issuer hereby directs the Borrower to make the Loan
Payments required hereunder directly to the Trustee for deposit as contemplated by the Indenture.
The Issuer hereby directs the Borrower to make the Purchase Price Payments required hereunder
directly to the Trustee or the Tender Agent as contemplated by the Indenture. The Borrower hereby
consents to such assignment and agrees to make payments directly to the Trustee or the Tender
Agent, as the case may be, without defense or set-off by reason of any dispute between the Borrower
and the Issuer or the Trustee.

     Section 4.5 Amounts Remaining in Funds.

     It is agreed by the parties hereto that after payment in full of (i) the Bonds, or after
provision for such payment shall have been made as provided in the Indenture, (ii) the fees,

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charges and expenses of the Issuer and the Trustee, the Tender Agent and any Paying Agents in
accordance with the Indenture, (iii) all other amounts required to be paid under this Agreement and
the Indenture, and (iv) if applicable, payment to any Credit Provider of any amounts owed to the
Credit Provider under the Reimbursement Agreement with respect to a Letter of Credit, any amounts
remaining in any fund held by the Trustee under the Indenture (excepting the Rebate Fund) shall be
paid as provided in Section 10.1 of the Indenture. Notwithstanding any other provision of this
Agreement or the Indenture, under no circumstances shall proceeds of a draw on a Letter of Credit
or remarketing proceeds be paid to the Issuer, the Guarantor, the Borrower or an affiliate of
either the Guarantor or the Borrower.

ARTICLE V

SPECIAL COVENANTS AND AGREEMENTS

     Section 5.1 Right of Access to the Project.

     The Borrower agrees that during the term of this Agreement the Issuer, the Trustee, and the
duly authorized agents of either of them shall have the right at all reasonable times during normal
business hours to enter upon each site where any part of the Project is located and to examine and
inspect such Project; provided that reasonable notice shall be given to the Borrower at least 5
Business Days prior to such examination or inspection, and such inspection shall not disturb the
Borrower’s normal business operations.

     Section 5.2 The Borrower’s Maintenance of Its Existence.

     The Borrower covenants and agrees that during the term of this Agreement it will maintain its
existence as a corporation in good standing in the State of Delaware, and shall be authorized to do
business in the State either directly or indirectly through one of its subsidiaries or affiliates,
will not dissolve, sell or otherwise dispose of all or substantially all of its assets and will not
combine or consolidate with or merge into another entity so that the Borrower is not the resulting
or surviving entity (any such sale, disposition, combination or merger shall be referred to
hereafter as a “transaction”); provided that the Borrower may enter into such transaction, if (i)
the surviving or resulting transferee, person or entity, as the case may be, assumes and agrees in
writing to pay and perform all of the obligations of the Borrower hereunder, (ii) the surviving or
resulting transferee, person or entity, as the case may be, qualifies to do business in the State
and (iii) the Borrower shall deliver to the Trustee prior to the consummation of the transaction an
Approving Opinion.

     If a merger, consolidation, sale or other transfer is effected, as provided in this Section,
all provisions of this Section shall continue in full force and effect and no further merger,
consolidation, sale or transfer shall be effected except in accordance with the provisions of this
Section.

     Section 5.3 Records and Financial Statements of Borrower.

     The Borrower covenants and agrees at all times to keep, or cause to be kept, proper books of
record and account, prepared in accordance with generally accepted accounting principles, in which
complete and accurate entries shall be made of all transactions of or in relation to the

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business, properties and operations of the Borrower relating to the Project. Such books of
record and account shall be available for inspection by the Issuer or the Trustee during normal
business hours and under reasonable circumstances.

     Section 5.4 Insurance.

     The Borrower agrees to insure the Project during the term of this Agreement for such amounts
and for such occurrences as are customary for similar facilities of the Borrower within the State,
by means of policies issued by reputable insurance companies qualified to do business in the State
or through “self insurance” in accordance with the ordinary course of business of the Borrower and
the Guarantor.

     Section 5.5 Maintenance and Repairs; Taxes; Utility and Other Charges.

     The Borrower agrees to maintain the Project during the term of this Agreement (i) in as
reasonably safe condition as its operations shall permit and (ii) in good repair and in good
operating condition, ordinary wear and tear excepted, making from time to time all necessary
repairs thereto and renewals and replacements thereof.

     The Borrower agrees to pay or cause to be paid during the term of this Agreement all taxes,
governmental charges of any kind lawfully assessed or levied upon the Project or any part thereof,
including any taxes levied against any portion of any Project which, if not paid, will become a
charge on the receipts from the Project, all utility and other charges incurred in the operation,
maintenance, use, occupancy and upkeep of any portion of the Project and all assessments and
charges lawfully made by any governmental body for public improvements that may be secured by a
lien on the Project, provided that with respect to special assessments or other governmental
charges that may lawfully be paid in installments over a period of years, the Borrower shall be
obligated to pay only such installments as are required to be paid during the term of this
Agreement. The Borrower may, at the Borrower’s expense and in the Borrower’s name, in good faith,
contest any such taxes, assessments and other charges and, in the event of any such contest, may
permit the taxes, assessments or other charges so contested to remain unpaid during that period of
such contest and any appeal therefrom unless by such nonpayment the Project or any part thereof
will be subject to loss or forfeiture.

     Section 5.6 Qualification in Texas.

     The Borrower agrees that throughout the term of this Agreement it, or any successor or
assignee as permitted by Section 5.2, will be qualified to do business in the State, either
directly or indirectly through one of its subsidiaries or affiliates.

     Section 5.7 Tax Covenant.

     The Borrower covenants and agrees that it shall at all times do and perform all acts and
things permitted by law and this Agreement and the Indenture which are necessary in order to assure
that interest paid on the Bonds (or any of them) will be excluded from gross income of the owners
thereof for federal income tax purposes and shall take no action that would result in such interest
not being excluded from gross income for federal income tax purposes. Without limiting the
generality of the foregoing, the Borrower agrees to comply with the provisions of the Tax

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Agreement, which are hereby incorporated herein. This covenant shall survive payment in-full
or defeasance of the Bonds.

     (a) Qualifying Costs. The Borrower shall not cause any Proceeds of the Bonds to be
expended, except pursuant to the Indenture and this Agreement. The Issuer agrees to act in
accordance with its duties under the Indenture. The Borrower shall not (i) requisition or
otherwise allow payment out of the Proceeds of the Bonds (A) if such payment is to be used for the
acquisition (including reimbursement therefor in compliance with the Code) of any property (or an
interest therein) unless the first use of such property is pursuant to such acquisition, provided
that this clause (A) shall not apply (1) to any building (and the equipment purchased as a part
thereof, if any) if the “rehabilitation expenditures”, as defined in Section 147(d) of the Code,
with respect to the building equal or exceed 15% of the portion of the cost of acquiring the
building (including such equipment) financed with the Proceeds of the Bonds, or (2) to any other
property if the rehabilitation expenditures with respect thereto equal 100% of the cost of
acquiring such property financed with the Proceeds of the Bonds; (B) if as a result of such
payment, 25% or more of the Proceeds of the Bonds would be considered as having been used directly
or indirectly for the acquisition of land (or an interest therein); (C) if, as a result of such
payment, less than 95% of the Net Proceeds of the Bonds, expended at the time of such acquisition
would be considered as having been used for costs of the acquisition, construction, reconstruction
or improvement of land or property of a character subject to the allowance for depreciation
provided in Section 167 of the Code or costs that constitute (1) costs associated with facilities
that will be used solely for the collection, storage, treatment, utilization, processing or final
disposal of solid waste or (2) costs for land, buildings or other property that is functionally
related or subordinate to such property (“Qualifying Costs”), or (D) if such payment is used to pay
Costs of Issuance of the Bonds in excess of an amount equal to 2% of the Sale Proceeds of the
Bonds; (ii) take or omit, or permit to be taken or omitted, any other action with respect to the
use of such Proceeds the taking or omission of which has or would result in the loss of the
exclusion of interest on the Bonds from gross income of the owners thereof for federal income tax
purposes; or (iii) take or omit, or permit to be taken or omitted, any other action the taking or
omission of which has or would cause the loss of such exclusion.

     (b) Prohibited Uses. Without limiting the generality of the foregoing, the Borrower
will not use the Proceeds of the Bonds, or permit such Proceeds to be used directly or indirectly,
for the acquisition of land (or an interest therein) to be used for farming purposes, or to provide
(i) any facility the primary purpose of which is retail food and beverage services, automobile
sales or service or the provision of recreation or entertainment, (ii) any airplane, skybox or
other private luxury box, any health club facility, any facility primarily used for gambling, any
store the principal business of which is the sale of alcoholic beverages for consumption off
premises, any private or commercial golf course, country club, massage parlor, tennis club, skating
facility (including roller skating, skateboard and ice skating), racquet sports facility (including
any hand ball or racquetball court), hot tub facility, suntan facility, or race track, or (iii)
single or multi-family residences.

     (c) Land. No portion of the Proceeds of the Bonds will be used directly or indirectly
for the acquisition of land or any interest therein to be used for the purpose of farming and less
than 25% of the Proceeds of the Bonds are or will be used directly or indirectly for the
acquisition of land to be used for purposes other than farming.

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     (d) Commencement of Construction; First Users. The Borrower hereby represents that
the Borrower will not requisition any amounts from the Proceeds of the Bonds to pay costs incurred
before the date of issuance of the Bonds and paid more than 60 days prior to the date of “official
action” of the Issuer within the meaning of Section 142 of the Code, which took place on September
5, 2006. No person, firm or corporation who was a “substantial user” of the Project (as
defined in the Code) before the date of issuance of the Bonds and who was or will be a “substantial
user” of the Project following its being placed in service, has received or will receive, directly
or indirectly, any Proceeds from the issuance and sale of the Bonds.

     (e) Economic Life of Project. The Borrower hereby represents that the weighted
average maturity of the Bonds does not exceed 120% of the “average reasonably expected economic
life” of the components comprising the Project, determined pursuant to Section 147(b) of the Code.
For purposes of the preceding sentence, the reasonably expected economic life of each property
constituting the Project shall be determined as of the later of (i) the Issuance Date of the Bonds
or (ii) the date on which such property is placed in service (or expected to be placed in service).
In addition, land shall not be taken into account in determining the reasonably expected economic
life of property. The Borrower agrees that it will not make any changes in the Project which
would, at the time made, cause 120% of the “average reasonably expected economic life” of the
components of the Project, determined pursuant to Section 147(b) of the Code, to be less than the
“weighted average maturity” of the Bonds.

     (f) Certificate of Information; Internal Revenue Service Form 8038. The Borrower
hereby represents that the information contained herein and in the Tax Agreement) delivered in
connection with the issuance of the Bonds with respect to the compliance with the requirements of
Section 103 and Sections 141 through 150 of the Code, including the information in Internal Revenue
Service Form 8038 (excluding the issue number and the employer identification number of the Issuer)
filed by the Issuer with respect to the Bonds and the Project, is true and correct in all material
respects.

     (g) Use by United States of America or Its Agencies. The Borrower has not permitted
and shall not permit the Project to be used or occupied other than as a member of the general
public in any manner for compensation by the United States of America or an agency or
instrumentality thereof, including any entity with statutory authority to borrow from the United
States of America (in any case within the meaning of Section 149(b) of the Code) unless, with
respect to any future use of the Project, the Borrower shall deliver to the Trustee an Approving
Opinion addressed to the Trustee.

     (h) Other Bonds. The Borrower agrees that during the period commencing on the date of
the issuance of the Bonds and ending 15 days thereafter, there shall be issued no “private activity
bonds,” as defined in Section 141 of the Code, which are guaranteed or otherwise secured by
payments to be made by the Borrower or any “related person” (or group of “related persons”) unless
the Borrower shall deliver to the Trustee an Approving Opinion addressed to the Trustee in
connection with the issuance of such “private activity bonds”. The Borrower represents that except
for the Borrower or any “related person” (or group of “related persons”), no person has (i)
guaranteed, arranged, participated in, assisted with or paid any portion of the Cost of Issuance
of, the Bonds, and (ii) provided any property or any franchise, trademark or

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trade name (within the meaning of Section 1253 of the Code) which is to be used in connection
with the Project.

     (i) Solid Waste Disposal Facilities. Not less than 95% of the Net Proceeds of the
Bonds shall be used to provide (i) facilities that will be used solely for the collection, storage,
treatment, utilization, processing or final disposal of solid waste, or (ii) land, buildings or
other property that is functionally related or subordinate to such a property.

     (j) Change in Use. The Borrower shall not cause any change in use of the Project that
would not satisfy the requirements of Section 1.150-4 of the Treasury Regulations (or a successor
Treasury Regulation or similar) without an Approving Opinion.

     (k) Bonds Are Not Hedge Bonds. The Borrower covenants and agrees that not more than
50% of the Proceeds of the Bonds will be invested in nonpurpose investments (as described in
Section 1.148-1(b) of the Treasury Regulations) having a substantially guaranteed Yield for four
years or more within the meaning of Section 149(g)(3)(A)(ii) of the Code, and the Borrower
reasonably expects that at least 85% of the spendable proceeds of such Bonds will be used to carry
out the governmental purposes of the Bonds within the three-year period beginning on the Issuance
Date.

     (l) Yield on Investment of Gross Proceeds. The Borrower will restrict the cumulative,
blended Yield on the investment of the Gross Proceeds of the Bonds to the Yield of the Bonds, other
than amounts (i) not subject to yield restriction because of (A) the availability of any applicable
temporary period under Section 148(c) of the Code and Section 1.148-2(e) of the Treasury
Regulations, (B) deposit in a reasonably required reserve or replacement fund described in Section
148(d) of the Code and Section 1.148-2(f)(2) of the Treasury Regulations or a bona fide debt
service fund described in Section 1.148-1(b) of the Treasury Regulations (including the Bond Fund)
or (C) the minor portion exception described in Section 1.148-2(g) of the Treasury Regulations, or
(ii) invested at a restricted yield by virtue of being invested in obligations described in Section
103(a) of the Code that are not “specified private activity bonds” within the meaning of Section
57(a)(5)(C) of the Code to the extent required by the Code or the Treasury Regulations.

     (m) No Arbitrage. The Borrower will not use or invest the Proceeds of the Bonds such
that such Bonds become “arbitrage bonds” within the meaning of Section 148 of the Code.

     (n) Rebate. The Borrower agrees to take all steps necessary to compute and pay any
rebatable arbitrage in accordance with Section 148(f) of the Code and Section 1.148-3, of the
Treasury Regulations, including:

     (i) Delivery of Documents and Money on Computation Dates. The Borrower shall
deliver to the Trustee, within 45 days after each Computation Date for the Bonds,

     (A) a statement, signed by an Authorized Representative of the Borrower,
stating the Rebate Amount for the Bonds as of such Computation Date; and

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     (B) (1) if such Computation Date is not the Final Computation Date, an amount
which, together with any amount then held for the credit of the Rebate Fund, is
equal to at least 90% of the Rebate Amount in respect of the Bonds as of such
Computation Date, less the future value as of such date, of any prior payments made
to the United States pursuant to Section 148(f) of the Code in respect of the Bonds,
and (2) if such Computation Date is the Final Computation Date, an amount which,
together with any amount then held for the credit of the Rebate Fund in respect of
the Bonds, is equal to the Rebate Amount as of such Final Computation Date, less the
future value as of such date, of any prior payments made to the United States
pursuant to Section 148(f) of the Code in respect of such Bonds; and

     (C) to the extent any Rebate Amount is due, an Internal Revenue Service Form
8038-T completed as of such Computation Date.

     (ii) Correction of Underpayments. If the Trustee or the Borrower shall
discover or be notified as of any date that any payment paid to the United States Treasury
pursuant to Section 5.7 of the Indenture of an amount described in Section 5.7(n)(i) above
shall have failed to satisfy any requirement of Section 1.148-3(f) of the Treasury
Regulations (whether or not such failure shall be due to any default by the Borrower, the
Issuer, or the Trustee), the Borrower shall (A) deliver to the Trustee a brief written
explanation of such failure and any basis for concluding that such failure was innocent and
(B) pay to the Trustee (for deposit to the Rebate Fund) and cause the Trustee to pay to the
United States Treasury from the Rebate Fund the penalty in respect thereof and as specified
in Section 1.148-3(h) of the Treasury Regulations, within 45 days after any discovery or
notice.

     (iii) Records. The Borrower shall retain all of its accounting records
relating to the Bond Fund, the Project Fund, the Costs of Issuance Fund and the Rebate Fund
and all calculations made in preparing the statements described in this Section 5.7(n) for
at least 6 years after the date on which no Bonds are Outstanding.

     (iv) Borrower Authorized to Act on Behalf of Issuer. The Issuer hereby
authorizes the Borrower to exercise, on behalf of the Issuer, any election pursuant to
Section 1.148-3 of the Treasury Regulations and the Issuer will cooperate with the Borrower
and execute any form or statement required by the Treasury Regulations to perfect any such
election.

     (v) Fees and Expenses. The Borrower agrees to pay all of the reasonable fees
and expenses of Bond Counsel, an Accountant and any other necessary consultant employed by
the Borrower, the Trustee or the Issuer in connection with computing the Rebate Amount.

     (vi) No Diversion of Rebatable Arbitrage. The Borrower will not indirectly pay
any amount otherwise payable to the federal government pursuant to the foregoing
requirements to any person other than the federal government by entering into any investment
arrangement with respect to the Gross Proceeds of the Bonds which is not

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purchased at fair market value or includes terms that the Borrower would not have
included if the Bonds were not subject to Section 148(f) of the Code.

     (vii) Investment of Rebate Fund. In the event funds are deposited to the
Rebate Fund, the Borrower shall give the Trustee instructions as the investment of such
funds upon deposit of such funds in accordance with Section 5.6 of the Indenture.

     (o) Covenant to Maintain Tax Exemption. The Borrower hereby covenants and agrees that
it shall not take any action, cause any action to be taken, omit to taken any action or cause any
omission to occur which would cause the interest on the Bonds to become includable in the gross
income of the recipients thereof for purposes of federal income taxation. To the extent that
published rulings of the Internal Revenue Service, or amendments to the Code or the Treasury
Regulations modify the covenants of the Borrower which are set forth in this Section 5.7 or which
are necessary to preserve the excludability from gross income of interest on the Bonds for federal
income tax purposes, the Borrower will comply with such modifications.

     Section 5.8 [Reserved].

     Section 5.9 Assignment by Borrower.

     The rights and obligations of the Borrower under this Agreement may be assigned by the
Borrower to any person in whole or in part, subject, however, to each of the following conditions:

     (a) No assignment other than pursuant to Section 5.2 hereof shall relieve the Borrower from
primary liability for any of its obligations hereunder, and in the event of any assignment not
pursuant to Section 5.2 hereof the Borrower shall continue to remain primarily liable for the
payments specified in Section 4.2 hereof and for performance and observance of the other agreements
on its parts herein provided to be performed and observed by it.

     (b) Any assignment from the Borrower other than pursuant to Section 5.2 hereof shall retain
for the Borrower such rights and interests as will permit it to perform its obligations under this
Agreement, and any assignee from the Borrower shall assume in writing the obligations of the
Borrower hereunder to the extent of the interest assigned.

     (c) Within 30 days after delivery thereof, the Borrower shall furnish or cause to be furnished
to the Issuer, the Credit Provider, if any, and the Trustee a true and complete copy of each such
assignment together with an instrument of assumption.

     (d) The Borrower shall furnish to the Issuer, the Credit Provider, if any, and the Trustee an
Approving Opinion addressed to the Issuer and the Trustee.

     Section 5.10 Cooperation in Filings and Other Matters.

     The Issuer and the Borrower agree to cooperate, upon the request of either party, at the
expense of the Borrower in the filing and renewal of UCC-1 financing statements, if any.

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     Section 5.11 Letter of Credit.

     (a) At any time the Borrower may, at its option, provide for the delivery to the Trustee of a
Letter of Credit, and the Borrower shall, in any event, cause to be delivered an Alternate Letter
of Credit at least 20 days before the expiration date of any existing Letter of Credit, unless
otherwise permitted by the Indenture. A Letter of Credit shall be an irrevocable letter of credit
or other irrevocable credit facility (including, if applicable, a confirming letter of credit),
issued by a Credit Provider, the terms of which shall be acceptable to the Trustee and shall
otherwise comply with the requirements of the Indenture; provided, that the expiration date of such
Letter of Credit shall be a date not earlier than one year from its date of issuance, subject to
earlier termination upon payment of the Bonds in full or provision for such payment in accordance
with Article X of the Indenture. On or prior to the date of the delivery of a Letter of Credit to
the Trustee, the Borrower shall cause to be furnished to the Trustee (i) an opinion of Bond Counsel
addressed to the Trustee stating to the effect that the delivery of such Letter of Credit to the
Trustee is authorized under the Indenture and complies with the terms hereof and will not in and of
itself adversely affect the Tax-exempt status of interest on the Bonds, (ii) an opinion of counsel
to the Credit Provider issuing such Letter of Credit stating to the effect that such Letter of
Credit is enforceable in accordance with its terms (except to the extent that the enforceability
thereof may be limited by bankruptcy, reorganization or similar laws limiting the enforceability of
creditors’ rights generally and except that no opinion need be expressed as to the availability of
any discretionary equitable remedies), (iii) written evidence from each Rating Agency that the
Bonds shall have a long-term rating of “A” (or equivalent) or higher or, if the Bonds only have a
short-term rating, such short-term rating shall be in the highest short-term rating category
(without regard to “+“s or “-“s) and (iv) if no Rating Agency is then rating the Bonds, an opinion
of Bond Counsel addressed to the Trustee or an opinion of counsel to the Credit Provider addressed
to the Trustee to the effect that payments under such Letter of Credit will not constitute a
voidable preference under Section 547 of the United States Bankruptcy Code as then in effect if a
petition in bankruptcy is filed by or against the Borrower, the Guarantor or the Issuer or an
affiliate or a subsidiary of any of them.

     (b) The Borrower shall provide to the Trustee (with a copy to the Issuer) a notice at least 15
days prior to the effective date of any Alternate Letter of Credit (and in no event later than 35
days prior to the expiration of any existing Letter of Credit) identifying the Alternate Letter of
Credit, if any, and the rating which will apply to the Bonds after the effective date.

     (c) Prior to the commencement of the first Interest Rate Period after the termination of a
Letter of Credit, the Borrower shall furnish an Approving Opinion addressed to the Issuer and to
the Trustee.

     Section 5.12 Maintenance of Guaranty; Remarketing Agreement.

     Throughout the term of this Agreement, the Borrower will cause the Guarantor to maintain in
effect the Guaranty. So long as the Bonds are subject to remarketing under the Indenture, in the
event a Remarketing Agreement is entered with the Guarantor and without the Borrower as a party
thereto, any applicable provision of the Indenture bestowing any duty upon, creating any right or
privilege of, or requiring notice to or consent or approval of the Borrower may be satisfied by the
Guarantor in lieu of the Borrower.

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     Section 5.13 Reserved.

     Section 5.14 Compliance with Indenture.

     The Borrower recognizes that the Indenture contains provisions that, among other things,
relate to matters affecting the payment of Costs of the Project and the administration and
investment of certain funds. The Borrower has reviewed the Indenture and hereby assents to all
provisions of the Indenture. The Borrower shall take such action as may be reasonably necessary in
order to enable the Issuer and the Trustee to comply with all requirements and to fulfill all
covenants of the Indenture to the extent that compliance with such requirements and fulfillment of
such covenants are dependent upon any observance or performance required of the Borrower by the
Indenture or this Agreement.

ARTICLE VI

[RESERVED]

ARTICLE VII

LOAN DEFAULT EVENTS AND REMEDIES

     Section 7.1 Loan Default Events.

     Any one of the following which occurs and continues shall constitute a Loan Default Event:

     (a) Failure of the Borrower to make any Loan Payment required by Section 4.2(a) hereof or
under the Note when due; or

     (b) Failure of the Borrower to make any Purchase Price Payment required by Section 4.2(b)
hereof or under the Note when due; or

     (c) Failure of the Borrower to observe and perform any covenant, condition or agreement on its
part required to be observed or performed by this Agreement or under the Note (other than (i)
agreements contained in Section 5.13 hereof, or (ii) as provided in clause (a) or (b) above), which
continues for a period of 30 days after written notice delivered by the Issuer or the Trustee to
the Borrower and the Credit Provider, if any, which notice shall specify such failure and request
that it be remedied, unless the Issuer and the Trustee shall agree in writing to an extension of
such time; provided, however, that if the failure stated in the notice cannot be corrected within
such period, the Issuer and the Trustee will not unreasonably withhold their consent to an
extension of such time if corrective action is instituted within such period and diligently pursued
in good faith until the default is corrected; or

     (d) The dissolution or liquidation of the Borrower or the filing by the Borrower of a
voluntary petition in bankruptcy, or failure by the Borrower promptly to cause to be lifted any
execution, garnishment or attachment of such consequence as will impair the Borrower’s ability to
carry on its obligations hereunder, or the entry of any order or decree granting relief in any
involuntary case commenced against the Borrower under any present or future federal

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bankruptcy act or any similar federal or state law, or a petition for such an order or decree
shall be filed in any court and such petition shall not be discharged or denied within ninety days
after the filing thereof, or if the Borrower shall admit in writing its inability to pay its debts
generally as they become due, or a receiver, trustee or liquidator of the Borrower shall be
appointed in any proceeding brought against the Borrower and shall not be discharged within ninety
days after such appointment or if the Borrower shall consent to or acquiesce in such appointment,
or assignment by the Borrower for the benefit of its creditors, or the entry by the Borrower into
an agreement of composition with its creditors, or a bankruptcy, insolvency or similar proceeding
shall be otherwise initiated by or against the Borrower under any applicable bankruptcy,
reorganization or analogous law as now or hereafter in effect and if initiated against the Borrower
shall remain undismissed (subject to no further appeal) for a period of ninety days; provided, the
term “dissolution or liquidation of the Borrower,” as used in this subsection, shall not be
construed to include the cessation of the existence of the Borrower resulting either from a merger
or consolidation of the Borrower into or with another entity or a dissolution or liquidation of the
Borrower following a transfer of all or substantially all of its assets as an entirety or under the
conditions permitting such actions contained in Section 5.2 hereof; or

     (e) The existence of an “Event of Default” (as respectively defined therein) under the
Indenture or the Guaranty.

     Section 7.2 Remedies on Default.

     Subject to Section 7.1 hereof, whenever any Loan Default Event shall have occurred and shall
be continuing,

     (a) The Trustee, by written notice to the Issuer, the Borrower and the Credit Provider, if
any, shall declare the unpaid balance of the loan payable under Section 4.2(a) of this Agreement or
the Note to be due and payable immediately, provided that concurrently with or prior to such notice
the unpaid principal amount of the Bonds shall have been declared to be due and payable under the
Indenture. Upon any such declaration such amount shall become and shall be immediately due and
payable as determined in accordance with Section 7.1 of the Indenture.

     (b) The Trustee may have access to and may inspect, examine and make copies of the books and
records and any and all accounts, data and federal income tax and other tax returns of the
Borrower.

     (c) The Issuer or the Trustee may take whatever action at law or in equity as may be necessary
or desirable to collect the payments and other amounts then due and thereafter to become due or to
enforce performance and observance of any obligation, agreement or covenant of the Borrower under
this Agreement.

     (d) If applicable, the Trustee shall immediately draw upon any Letter of Credit, if permitted
by its terms and required by the terms of the Indenture, and apply the amount so drawn in
accordance with the Indenture and may exercise any remedy available to it thereunder.

     In case the Trustee, the Credit Provider, if any, or the Issuer shall have proceeded to
enforce its rights under this Agreement and such proceedings shall have been discontinued or
abandoned for any reason or shall have been determined adversely to the Trustee, the Credit

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Provider, if any, or the Issuer, then, and in every such case, the Borrower, the Trustee, the
Credit Provider, if any, and the Issuer shall be restored respectively to their several positions
and rights hereunder, and all rights, remedies and powers of the Borrower, the Trustee, the Credit
Provider, if any, and the Issuer shall continue as though no such action had been taken.

     The Borrower covenants that, in case a Loan Default Event shall occur with respect to the
payment of any Loan Payment payable under Section 4.2(a) hereof, then, upon demand of the Trustee,
the Borrower will pay to the Trustee the whole amount that then shall have become due and payable
under said Section, with interest on the amount then overdue at the rate then borne by the Bonds on
the day prior to the occurrence of such default.

     In the case the Borrower shall fail forthwith to pay such amounts upon such demand, the
Trustee shall be entitled and empowered to institute any action or proceeding at law or in equity
for the collection of the sums so due and unpaid, and may prosecute any such action or proceeding
to judgment or final decree, and may enforce any such judgment or final decree against the Borrower
and collect in the manner provided by law the moneys adjudged or decreed to be payable.

     In case proceedings shall be pending for the bankruptcy or for the reorganization of the
Borrower under the federal bankruptcy laws or any other applicable law, or in case a receiver or
trustee shall have been appointed for the property of the Borrower or in the case of any other
similar judicial proceedings relative to the Borrower, or the creditors or property of the
Borrower, then the Trustee shall be entitled and empowered, by intervention in such proceedings or
otherwise, to file and prove a claim or claims for the whole amount owing and unpaid pursuant to
this Agreement and, in case of any judicial proceedings, to file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the claims of the Trustee
allowed in such judicial proceedings relative to the Borrower, its creditors or its property, and
to collect and receive any moneys or other property payable or deliverable on any such claims, and
to distribute such amounts as provided in the Indenture after the deduction of its reasonable
charges and expenses to the extent permitted by the Indenture. Any receiver, assignee or trustee
in bankruptcy or reorganization is hereby authorized to make such payments to the Trustee, and to
pay to the Trustee and the Issuer any amount due each of them for their respective reasonable
compensation and expenses, including reasonable expenses and fees of counsel incurred by each of
them up to the date of such distribution.

     In the event the Trustee incurs expenses or renders services in any proceedings which result
from a Loan Default Event under Section 7.1(d) hereof, or from any default which, with the passage
of time, would become such Loan Default Event, the expenses so incurred and compensation for
services so rendered are intended to constitute expenses of administration under the United States
Bankruptcy Code or equivalent law.

     Section 7.3 Agreement to Pay Attorneys’ Fees and Expenses.

     In the event the Borrower should default under any of the provisions of this Agreement and the
Issuer or the Trustee should employ attorneys or incur other expenses for the collection of the
payments due under this Agreement or the enforcement of performance or observance of any obligation
or agreement on the part of the Borrower herein contained, the Borrower agrees to

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pay promptly to the Issuer or the Trustee the reasonable fees and expenses of such attorneys
and such other reasonable out-of-pocket expenses so incurred by the Issuer or the Trustee, whether
incurred at trial, on appeal, in bankruptcy proceedings, or otherwise.

     Section 7.4 No Remedy Exclusive.

     No remedy herein conferred upon or reserved to the Issuer or the Trustee is intended to be
exclusive of any other available remedy or remedies, but each and every such remedy shall be
cumulative and shall be in addition to every other remedy given under this Agreement or now or
hereafter existing at law or in equity or by statute. No delay or omission to exercise any right
or power accruing upon any default hereunder shall impair any such right or power or shall be
construed to be a waiver thereof, but any such right and power may be exercised from time to time
and as often as may be deemed expedient. In order to entitle the Issuer or the Trustee to exercise
any remedy reserved to it in this Article, it shall not be necessary to give any notice, other than
such notice as may be expressly required herein or by applicable law. Such rights and remedies as
are given the Issuer hereunder shall also extend to the Trustee as the assignee of the Issuer.
Notwithstanding any other provision hereunder, the Trustee may proceed first against either the
Guarantor or the Borrower in accordance with the terms of the Guaranty or this Agreement,
respectively, as the Trustee may deem appropriate.

     Section 7.5 No Additional Waiver Implied by One Waiver.

     In the event any agreement or covenant contained in this Agreement should be breached by the
Borrower and thereafter waived by the Issuer, the Credit Provider, if any, or the Trustee, such
waiver shall be limited to the particular breach so waived and shall not be deemed to waive any
other breach hereunder.

ARTICLE VIII

PREPAYMENT

     Section 8.1 Redemption of Bonds with Prepayment Moneys.

     By virtue of the assignment of the rights of the Issuer under this Agreement to the Trustee as
is provided in Section 4.4 hereof, the Borrower agrees to and shall pay directly to the Trustee any
amount permitted or required to be paid by it under this Article VIII. The Indenture provides that
the Trustee shall use the moneys so paid to it by the Borrower to redeem the Bonds on the date set
for such redemption pursuant to Section 8.5 hereof or to reimburse any Credit Provider for any draw
under the Letter of Credit therefor. The Issuer shall call Bonds for redemption as required by
Article IV of the Indenture or as requested by the Borrower pursuant to the Indenture or this
Agreement.

     Section 8.2 Options to Prepay Installments.

     The Borrower shall have the option to prepay the Loan Payments payable under Section 4.2(a)
hereof by paying to the Trustee, for deposit in the Bond Fund, the amount set forth in Section 8.4
hereof and to cause all or any part of the Bonds to be redeemed at the times and at the prices set
forth in Section 4.1(B) of the Indenture if the conditions under said Section 4.1(B)

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are met and at the times and at the prices set forth in Sections 4.1(C) or 4.1(D) of the
Indenture, as the case may be.

     Section 8.3 Mandatory Prepayment.

     If a mandatory redemption of the Bonds is required by Section 4.1(A) of the Indenture, the
Borrower shall have and hereby accepts the obligation to prepay the Loan Payments by paying to the
Trustee, for deposit in the Bond Fund, the amount set forth in Section 8.4 hereof, to be used to
redeem all or a part of the Outstanding Bonds.

     Section 8.4 Amount of Prepayment.

     In the case of a redemption of the Outstanding Bonds in full, the amount to be paid shall be a
sum sufficient, together with other funds and the yield on any securities deposited with the
Trustee and available for such purpose, to pay (1) the principal of all Bonds Outstanding on the
redemption date specified in the notice of redemption, plus interest accrued and to accrue to the
payment or redemption date of the Bonds, plus premium, if any, pursuant to the Indenture, (2) all
reasonable and necessary fees and expenses of the Issuer (including without limitation, reasonable
legal fees and expenses), the Trustee and any Paying Agent accrued and to accrue through final
payment of the Bonds and (3) all other liabilities of the Borrower accrued and to accrue under this
Agreement. In the case of redemption of the Outstanding Bonds in part, the amount payable shall be
a sum sufficient, together with other funds deposited with the Trustee and available for such
purpose, to pay the principal amount of and premium, if any, and accrued interest on the Bonds to
be redeemed, as provided in the Indenture, and to pay expenses of redemption of such Bonds.

     Section 8.5 Notice of Prepayment.

     To exercise an option granted in or to perform an obligation required by this Article VIII,
the Borrower shall give written notice at least 15 days prior to the last day by which the Trustee
is permitted to give notice of redemption pursuant to Section 4.3 of the Indenture, to the Issuer,
the Credit Provider, if any, and the Trustee specifying the amount to be prepaid and the date upon
which any prepayment will be made. If the Borrower fails to give such notice of a prepayment in
connection with a mandatory redemption under this Agreement, such notice may be given by the
Issuer, by the Trustee or by any Holder or Holders of 10% or more in aggregate principal amount of
the Bonds Outstanding. The Issuer and the Trustee, at the written request of the Borrower or any
such Holder, shall forthwith take all steps necessary under the applicable provisions of the
Indenture (except that the Issuer shall not be required to make payment of any money required for
such redemption) to effect redemption of all or part of the Bonds then Outstanding, as the case may
be, on the earliest practicable date thereafter on which such redemption may be made under
applicable provisions of the Indenture. The Issuer hereby appoints the Borrower to give all
notices and make all requests to the Trustee with respect to the application of funds paid by the
Borrower as prepayments, including notices of optional redemption of the Bonds in conformity with
Article IV of the Indenture.

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ARTICLE IX

NON-LIABILITY OF ISSUER; EXPENSES; INDEMNIFICATION

     Section 9.1 Non-liability of Issuer.

     The Issuer shall not be obligated to pay the principal of, or premium, if any, or interest on,
the Bonds, except from Revenues and shall not be obligated to pay the Purchase Price of the Bonds
except from amounts available for such payments under the Indenture, this Agreement, the Guaranty
and any Letter of Credit. The Borrower hereby acknowledges that the Issuer’s sole source of moneys
to repay the Bonds will be provided by the payments made by the Borrower pursuant to this
Agreement, together with amounts received by the Trustee under the Guaranty or the Letter of
Credit, if any, investment income on certain funds and accounts held by the Trustee under the
Indenture, and other Revenues with respect to the Bonds, and hereby agrees that if the payments to
be made hereunder shall ever prove insufficient to pay all principal and Purchase Price of, and
premium, if any, and interest on the Bonds as the same shall become due (whether by maturity,
redemption, acceleration or otherwise), then upon notice from the Trustee, the Borrower shall pay
such amounts as are required from time to time to prevent any deficiency or default in the payment
of such principal, Purchase Price, premium or interest, including, but not limited to, any
deficiency caused by acts, omissions, nonfeasance or malfeasance on the part of the Trustee, the
Borrower, the Issuer, the Credit Provider, if any, or any third party.

     Section 9.2 Expenses.

     The Borrower covenants and agrees to pay or reimburse the Issuer, the Trustee, the Tender
Agent and the Paying Agent against and to reimburse them promptly for all reasonable costs and
charges, including, without limitation, the Issuer’s administrative fees, the Trustee’s
compensation provided for in the Indenture and including fees and disbursements of attorneys,
accountants, consultants and other experts, incurred in good faith in connection with this
Agreement, the Bonds or the Indenture.

     Section 9.3 Indemnification.

     The Borrower releases the Issuer, the Unit and the Division from, and covenants and agrees
that neither the Issuer, the Unit nor the Division, or their officers, directors, employees and
agents, shall be liable for, and covenants and agrees, to the extent permitted by law, to indemnify
and hold harmless the Issuer, the Unit, the Division, the Trustee, the Tender Agent and the Paying
Agent and their directors, officers, employees and agents for, from, and against, any and all
losses, costs, claims, damages, liabilities or expenses, of every conceivable kind, character and
nature whatsoever (including but not limited to, attorney’s fees, litigation and court costs,
amounts paid in settlement, and amounts paid to discharge judgments) directly or indirectly arising
out of, resulting from or in any way connected with (1) the Project, or the conditions, occupancy,
use, operation, maintenance, ownership, possession, conduct or management of, or work done in or
about, or from the planning, design, acquisition, installation or construction of the Project or
any part thereof; (2) the issuance, offering, sale, delivery or payment of the Bonds and interest
thereon or any certifications, covenants or representations made by the Borrower in connection
therewith and the carrying out of any of the transactions

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contemplated by the Bonds and this Agreement; (3) the Trustee’s acceptance or administration
of the trusts under the Indenture, or the exercise or performance of any of its rights,
obligations, powers or duties under the Indenture; or (4) any untrue statement or alleged untrue
statement of any material fact or omission or alleged omission to state a material fact necessary
to make the statements made, in light of the circumstances under which they were made, not
misleading, in any official statement or offering circular utilized by the Issuer or any
underwriter or placement agent in connection with the sale of the Bonds, provided that the Borrower
shall have no liability under this clause (4) in any such case to the extent that any such loss,
claim, damage, liability or expense arises out of or is based solely upon any untrue statement or
omission pertaining only to the Issuer made in any official statement or offering circular with
respect to the Bonds under the headings “The Issuer” or “Litigation”; provided further that the
foregoing release and indemnity in this Section 9.3 shall not be required for damages that result
from breach of trust, negligence or willful misconduct on the part of the party seeking such
release or indemnity. The indemnity required by this Section shall be only to the extent that any
loss sustained by the Issuer, or the Trustee exceeds the net proceeds the Issuer or the Trustee
receives from any insurance carried with respect to the loss sustained. The Borrower further
covenants and agrees, to the extent permitted by law, to pay or to reimburse the Issuer, the Unit,
the Division, the Trustee, the Tender Agent and the Paying Agent and their officers, employees and
agents for any and all costs, reasonable attorneys fees and expenses, liabilities or expenses
incurred in connection with investigating, defending against or otherwise in connection with any
such losses, claims (whether asserted by the Issuer, the Unit, the Division, the Borrower, a
Holder, or any other person), damages, liabilities, expenses or actions, except to the extent that
the same arise out of the breach of trust, negligence or willful misconduct of the party claiming
such payment or reimbursement or relate to provisions of this indemnity that by their terms the
Borrower shall have no liability therefor. The provisions of this Section shall survive the
discharge of the Indenture and the retirement of the Bonds.

ARTICLE X

MISCELLANEOUS

     Section 10.1 Notices.

     All notices, certificates or other communications shall be deemed sufficiently given if sent
by facsimile (receipt confirmed) or if mailed by first-class mail, postage prepaid, addressed to
the Issuer, the Borrower, the Trustee, Moody’s or S&P (while it is a Rating Agency), as the case
may be, as follows:

     To the Issuer:

Mission Economic Development Corporation

c/o Mission Economic Development Authority

901 Business Park Drive, Suite 200

Mission, Texas 78572

Attention:      Chief Executive Officer

Telephone:    (956) 585-0040

Facsimile:      (956) 581-0470

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     To the Borrower:

Allied Waste North America, Inc.

18500 North Allied Way

Phoenix, Arizona 85054

Attention:       Treasurer

Telephone:     (480) 627-2700

Facsimile:       (480) 627-2706

     To the Trustee:

Deutsche Bank Trust Company Americas

60 Wall Street, 27th Floor

New York, New York 10005

Attention:      Municipal Group

Telephone:    (212) 250-7848

Facsimile:      (212) 797-8618

     To S&P:

Standard & Poor’s Ratings Group

55 Water Street, 40th Floor

New York, New York 10041

Attn: Structured Finance Group

Telephone:       (212) 438-2000

Facsimile:    (212)438-7322

     To Moody’s:

Moody’s Investors Services, Inc.

99 Church Street, 3rd Floor

New York, New York 10007

Attention:       Costas Chrysostomou

                        Corporate Finance Group

Telephone:      (212) 553-3696

Facsimile:       (212) 298-6519

     A duplicate copy of each notice, certificate or other communication given hereunder by either
the Issuer or the Borrower to the other shall also be given to the Trustee and any Credit Provider,
if applicable. Notices to the Trustee are effective only when actually received by the Trustee.
The Issuer, the Borrower, the Trustee and any Credit Provider, if applicable, may, by notice given
hereunder, designate any different addresses to which subsequent notices, certificates or other
communications shall be sent.

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     Section 10.2 Severability.

     If any provision of this Agreement shall be held or deemed to be, or shall in fact be,
illegal, inoperative or unenforceable, the same shall not affect any other provision or provisions
herein contained or render the same invalid, inoperative, or unenforceable to any extent whatever.

     Section 10.3 Execution of Counterparts.

     This Agreement may be simultaneously executed in several counterparts, each of which shall be
an original and all of which shall constitute but one and the same instrument.

     Section 10.4 Amendments, Changes and Modifications.

     Except as otherwise provided in this Agreement or the Indenture, this Agreement may not be
effectively amended, changed, modified, altered or terminated except by the written agreement of
the Issuer and the Borrower and with the written consent of the Credit Provider, if applicable, and
of the Trustee, if required, in accordance with Section 9.5 of the Indenture.

     Section 10.5 Governing Law.

     This Agreement shall be construed in accordance with and governed by the Constitution and laws
of the State applicable to contracts made and performed in the State.

     Section 10.6 Authorized Representative.

     Whenever under the provisions of this Agreement the approval of the Borrower is required or
the Borrower is required to take some action at the request of the Issuer, such approval or such
request shall be given on behalf of the Borrower by its Authorized Representative, and the Issuer
and the Trustee shall be authorized to act on any such approval or request and neither party hereto
shall have any complaint against the other or against the Trustee as a result of any such action
taken.

     Section 10.7 Term of the Agreement.

     This Agreement shall be in full force and effect from the date hereof and shall continue in
effect as long as any of the Bonds are Outstanding or the Trustee holds any moneys under the
Indenture, whichever is later.

     Section 10.8 Binding Effect.

     This Agreement shall inure to the benefit of and shall be binding upon the Issuer, the
Borrower and their respective successors and assigns; subject, however, to the limitations
contained in Sections 5.2 and 5.9 hereof.

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     Section 10.9 Complete Agreement.

     The parties agree that the terms and conditions of this Agreement supersede those of all
previous agreements between the parties, and that this Agreement, together with the documents
referred to in this Agreement, contains the entire agreement between the parties hereto.

     Section 10.10 Business Days.

     If any payment is to be made hereunder or any action is to be taken hereunder on any date that
is not a Business Day, such payment or action otherwise required to be made or taken on such date
shall be made or taken on the immediately succeeding Business Day with the same force and effect as
if made or taken on such scheduled date.

     Section 10.11 Waiver of Personal Liability.

     No officer, agent, board member or employee of the Issuer or any director, officer, agent or
employee of the Borrower or the Guarantor or any subsidiary thereof shall be individually or
personally liable for the payment of any principal of and interest on the Bonds or any other sum
hereunder or be subject to any personal liability or accountability by reason of the execution and
delivery of this Agreement; but nothing herein contained shall relieve any such member, director,
officer, agent or employee from the performance of any official duty provided by law or by this
Agreement; provided, however, that no covenant, agreement or obligation contained herein shall be
deemed to be a covenant, agreement or obligation of any past, present or future council member,
officer, employee or agent of the Issuer in his individual capacity so long as he acts in good
faith, and no such council member, officer, employee or agent shall be subject to any liability
under this Agreement or the Note or with respect to any other action taken by him provided that he
does not act in bad faith.

     Section 10.12 Waivers.

     Each of the Borrower and the Issuer hereby (i) irrevocably and unconditionally waive, to the
fullest extent permitted by law, trial by jury in any legal action or proceeding relating to this
Agreement or the Project and for any counterclaim therein and (ii) irrevocably waive, to the
maximum extent not prohibited by law, any right it may have to claim or recover in any such
litigation any special, exemplary, punitive or consequential damages, or damages other than, or in
addition to, actual damages.

     Section 10.13 Notice to the Division.

     The Borrower will provide written notification to the Division in the event of a default in
the timely payment of monies due in payment of the Bonds or upon notification of the Trustee by the
Internal Revenue Service that the interest on the Bonds is, or may be, subject to federal income
taxation.

[Signature Page Follows]

-30-

 

     IN WITNESS WHEREOF, the Mission Economic Development Corporation has caused this Agreement to
be executed in its name, and Allied Waste North America, Inc. has caused this Agreement to be
executed in its name, each by its duly authorized officer, all as of the date first above written.

	 	 	 	 	 	 	 
	 	 	MISSION ECONOMIC DEVELOPMENT

CORPORATION
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	     President	 	 

ATTEST:

	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

     Treasurer
	 	 

Loan Agreement

 

 

	 	 	 	 	 	 	 
	 	 	ALLIED WASTE NORTH AMERICA, INC.
	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	 	 	Michael S. Burnett

Vice President and Treasurer	 	 

Loan Agreement

 

 

EXHIBIT A

DESCRIPTION OF THE PROJECTS

     The Project will be financed as part of an ongoing plan of financing and will be owned
and/or operated by the Borrower. The Project consists of, but is not limited to, financing the
following Facilities: (a) improvements to existing landfill facilities, including (i) construction
of new disposal cells and liners within currently permitted acreage, (ii) additions and
improvements to the leachate collection and treatment system, including leachate trenching, (iii)
additions and improvements to the methane gas systems, (iv) installation of new liners for
intermittent and final closure of completed sections of the landfill facilities, (v) site
improvements, (vi) acquisition of equipment to be used at the landfill facilities, and (vii)
acquisition of other equipment and assets necessary to support the foregoing improvements and to
place them into service, and (b) existing collection (hauling) and transfer station facilities,
including (i) acquisition of solid waste disposal trucks and support vehicles, (ii) acquisition of
solid waste disposal containers and related equipment, (iii) acquisition of solid waste sorting and
processing equipment, (iv) site improvements, and (v) acquisition of other equipment and assets
necessary to support the foregoing improvements and place them into service at the following
project sites:

	•	 	7790 Tessman Road, San Antonio, Bexar County, 78219
	 
	•	 	2101 Commerce Street, Marble Falls, Burnet County, 78654
	 
	•	 	440 Heath Lane, Jacksonville, Cherokee County, 75766 (Landfill)
	 
	•	 	440 Heath Lane, Jacksonville, Cherokee County, 75766 (Collection)
	 
	•	 	1450 East Cleveland Street, Hutchins, Dallas County, 75141
	 
	•	 	16300 South Highway 156, Justin, Denton County, 76234
	 
	•	 	801 East College Street, Lewisville, Denton County, 75057
	 
	•	 	3935 Avenue A, Alta Loma, Galveston County, 77510
	 
	•	 	1102 Landfill Road, Longview, Gregg County, 75603
	 
	•	 	2611 North State Highway 42,Kilgore, Gregg County, 75662
	 
	•	 	403 Jensen Drive, Houston, Harris County, 77020
	 
	•	 	8101 Little York Road, Houston, Harris County, 77016 (Collection)
	 
	•	 	13630 Fondren Road, Houston, Harris County, 77085
	 
	•	 	5757 Oates Road, Suite A, Houston, Harris County, 77078 (Collection)
	 
	•	 	5301 Brookglen Drive, Houston, Harris County, 77017
	 
	•	 	5757 Oates Road, Suite A, Houston, Harris County, 77078 (Landfill)
	 
	•	 	8101 Little York Road, Houston, Harris County, 77016 (Landfill)
	 
	•	 	5226 US Highway 175 East, Athens, Henderson County, 75752
	 
	•	 	FM 493 Mile 12 Road East, Donna, Hidalgo County, 78537
	 
	•	 	2559 FM 66, Itasca, Hill County, 76055 (Collection)
	 
	•	 	2559 FM 66, Itasca, Hill County, 76055 (Landfill)
	 
	•	 	6425 Highway 347, Beaumont, Jefferson County, 77705
	 
	•	 	6433 La Belle Road, Beaumont, Jefferson County, 77705
	 
	•	 	Highway 277 North / 83 and FM 3034, Abilene, Jones County, 79601
	 
	•	 	3315 Loop 534, Kerrville, Kerr County, 78028 (Landfill)
	 
	•	 	3315 Loop 534, Kerrville, Kerr County, 78028 (Collection)
	 
	•	 	3048 County Road, 460, Mexia, Limestone County, 76667
	 
	•	 	1812 Keuka Street, Lubbock, Lubbock County, 79403
	 
	•	 	2501 South Business 45, Corsicana, Navarro County, 75110
	 
	•	 	4414 Agnes Street, Corpus Christi, Nueces County, 78405
	 
	•	 	4831 East 25th Avenue, Amarillo, Potter County, 79103
	 
	•	 	20700 Helium Road, Canyon, Randall County, 79015
	 
	•	 	12920 FM 2767, Tyler, Smith County, 75708 (Landfill)

A-1

 

	•	 	12920 FM 2767, Tyler, Smith County, 75708 (Collection)
	 
	•	 	6100 Elliott Reeder Road, Fort Worth, Tarrant County, 76117
	 
	•	 	5001 Pine Street, Abilene, Taylor County, 79601
	 
	•	 	3301 Farm Road 3417, Mount Pleasant, Titus County, 75455 (Collection)

Loan Agreement

 

 

EXHIBIT B

PROMISSORY NOTE

	 	 	 
	$56,800,000

	 	April ___, 2007

     ALLIED WASTE NORTH AMERICA, INC., a Delaware corporation (the “Borrower”), for value received,
hereby promises to pay to the Mission Economic Development Corporation (the “Issuer”), or assigns,
the principal sum of $56,800,000, subject to prior payment, with interest on the unpaid principal
sum, from the date hereof, until said principal sum shall be paid or until the maturity of the
Bonds (as hereinafter defined) shall be accelerated pursuant to the Indenture (as hereinafter
defined), and to the extent permitted by law, interest on overdue installments of such interest, at
the then interest rate provided in the Bonds. Interest shall be payable at the interest rates
payable on the Bonds, and the principal of, premium, if any, and interest on this Note shall be
payable at the times as set forth in more detail in the Agreement (as hereinafter defined) and the
Indenture.

     Payments shall be made in lawful money of the United States of America in immediately
available funds on the date payment is due, at the designated corporate trust office of Deutsche
Bank Trust Company, as trustee (the “Trustee”) in New York, New York, or at such other place as the
Trustee may direct in writing, in accordance with the terms of the Loan Agreement, dated as of
April 1, 2007 (the “Agreement”), between the Issuer and the Borrower

     The Issuer, by the execution of the Indenture, as hereinafter defined, and the assignment form
at the foot of this Note, is assigning this Note and the payments thereon to the Trustee acting
pursuant to the Indenture, dated as of April 1, 2007 (the “Indenture”), between the Issuer and the
Trustee as security for the Issuer’s $56,800,000 in aggregate principal amount of Solid Waste
Disposal Revenue Bonds (Allied Waste North America, Inc. Project) Series 2007A (the “Bonds”), as
issued pursuant to the Indenture. Payments of principal of and interest on this Note shall be made
directly to the Trustee for the account of the Issuer pursuant to such assignment and applied only
to the principal of and interest on the Bonds. All obligations of the Borrower hereunder shall
terminate when all sums due and to become due pursuant to the Indenture, this Note, the Agreement,
as hereinafter defined, and the Bonds have been paid.

     In addition to the payments of principal and interest specified in the first paragraph hereof,
the Borrower shall also pay such additional amounts, if any, which, together with other moneys
available therefor pursuant to the Indenture, may be necessary to provide for payment when due
(whether at maturity, by acceleration or call for redemption, mandatory purchase, purchase upon
optional tenders, sinking fund redemption or otherwise) of principal and purchase price of, and
premium, if any, and interest on, the Bonds.

     The Borrower shall have the option or may be required to prepay this Note in whole or in part
upon the terms and conditions and in the manner specified in the Agreement.

     This Note is issued pursuant to the Agreement as evidence of the Borrower’s payment obligation
in Sections 4.2(a) and 4.2(b) thereof and is entitled to the benefits and subject to the conditions
thereof, including the provisions of Section 4.3 thereof that the Borrower’s

B-1

 

obligations thereunder and hereunder shall be unconditional. All the terms, conditions and
provisions of the Agreement and the applicable provisions of the Bonds and the Indenture are, by
this reference thereto, incorporated herein as a part of this Note.

     In case a Loan Default Event, as defined in the Agreement, shall occur, the principal of and
interest on this Note may be declared immediately due and payable as provided in the Agreement.
This Note shall be governed by, and construed in accordance with, the laws of the State of Texas.

     IN WITNESS WHEREOF, the Borrower has caused this Note to be executed in its corporate name by
its duly authorized officer, all as of the date first above written.

	 	 	 	 	 
	 	 	ALLIED WASTE NORTH AMERICA, INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Michael S. Burnett
	 

	 	 	 	Vice President and Treasurer

B-2

 

ASSIGNMENT

     Pay to the order of Deutsche Bank Trust Company Americas, as Trustee, without recourse or
warranty, except warranty of good title, warranty that the Issuer has not assigned this Note to a
Person other than the Trustee and warranty that the original principal amount hereof remains
unpaid.

	 	 	 	 	 
	 	 	MISSION ECONOMIC DEVELOPMENT

CORPORATION
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	     President

B-3exv10w65

 

EXHIBIT 10.65

EXECUTION

TERM LOAN AGREEMENT

THE CIT GROUP/COMMERCIAL SERVICES, INC.

(as Lender)

and

SYNTAX-BRILLIAN CORPORATION

SYNTAX GROUPS CORPORATION

And

SYNTAX CORPORATION

(as Borrowers)

Dated: April 26, 2007

 

 

     THE CIT GROUP/COMMERCIAL SERVICES, INC., a New York corporation, with an office located at
300 South Grand Avenue, Los Angeles, California 90071 (“CIT”), is pleased to confirm the
terms and conditions under which CIT shall make a term loan to SYNTAX-BRILLIAN CORPORATION, a
Delaware corporation, SYNTAX GROUPS CORPORATION, a California corporation, and SYNTAX
CORPORATION, a Nevada corporation (each a “Company”, and collectively and jointly and
severally, the “Companies”), with a principal place of business at 20480 E. Business
Parkway, City of Industry, CA 91789.

SECTION 1. Definitions

     1.1 Defined Terms. As used in this Agreement:

     Business Day shall mean any day on which CIT is open for business.

     Capital Expenditures shall mean, for any period, the aggregate expenditures of the
Companies during such period on account of property, plant, equipment or similar fixed assets that,
in conformity with GAAP, are required to be reflected on the balance sheet of the Companies.

     Capital Lease shall mean any lease of property (whether real, personal or mixed) that,
in conformity with GAAP, is accounted for as a capital lease or a Capital Expenditure on the
balance sheet of the Companies.

     Closing Date shall mean the date on which this Agreement is executed by the parties
hereto and delivered to CIT.

     Chase Bank Rate shall mean the rate of interest announced by JPMorgan Chase Bank (or
its successor) from time to time as its “prime rate” in effect at its principal office in New York,
New York. The prime rate is not intended to be the lowest rate of interest charged by JPMorgan
Chase Bank to its borrowers.

     Collateral shall mean, collectively, all present and future assets of the Companies or
any other person, firm or entity, including, without limitation, all accounts, inventory and other
goods, documents of title, general intangibles, investment property and deposit accounts, which now
or hereafter secure, by pledge, lien upon or security interest in, the Obligations pursuant to the
other Financing Documents, including, without limitation, the Factoring Agreement and the Inventory
Security Agreement.

     Default shall mean any event specified in Section 6.1 hereof, regardless of
whether any requirement for the giving of notice, the lapse of time, or both, or any other
condition, event or act, has occurred or been satisfied.

     Default Rate of Interest shall mean a rate of interest equal to three percent (3%)
per annum greater than the interest rate accruing on the Obligations pursuant to
Section 5.1 hereof, which CIT shall be entitled to charge the Companies in the manner set
forth in Section 5.2 of this Agreement.

-1-

 

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

     Event(s) of Default shall have the meaning given to such term in Section 6.1
of this Agreement.

     Factoring Agreement shall mean the Amended and Restated Factoring Agreement between
Syntax and CIT dated as of November 22, 2006, together with the letter agreement dated as of
November 22, 2006 among Syntax, Syntax Groups, Syntax-Brillian and CIT, which amended and restated
the Factoring Agreement between Syntax Groups and CIT dated as of July 27, 2004, as the same may be
renewed, amended, restated or supplemented from time to time.

     Financing Documents shall mean this Agreement, the Promissory Note, the Factoring
Agreement, the Inventory Security Agreement, the Guaranties, the Securities Control Agreements, the
Stock Pledge Agreements and any other ancillary loan and security agreements executed by the
Companies or the Guarantors from time to time in connection with any of the foregoing, all as may
be renewed, amended, restated or supplemented from time to time.

     GAAP shall mean generally accepted accounting principles in the United States of
America as in effect from time to time and for the period as to which such accounting principles
are to apply.

     Guaranties shall mean the guaranty agreements executed and delivered to CIT by
Guarantors.

     Guarantors shall mean James Li, Thomas Chow, The 1999 Chow Family Trust, Roger Kao and
any other future guarantor of all or any part of the Obligations.

     Indebtedness shall mean, without duplication, all liabilities, contingent or
otherwise, which are either (a) obligations in respect of borrowed money or for the deferred
purchase price of property, services or assets, or (b) obligations with respect to Capital Leases.

     Indemnified Party shall have the meaning given to such term in Section 6.3 of
this Agreement.

     Inventory Security Agreement shall mean the Inventory Security Agreement between
Syntax and CIT dated as of November 22, 2006, as renewed, amended, restated or supplemented from
time to time.

     Material Adverse Effect shall mean a material adverse effect on either (a) the
business, condition (financial or otherwise), operations, performance, properties or prospects of
the Companies, taken as a whole, (b) the ability of the Companies to perform their obligations
under this Agreement or any other Financing Document, or to enforce their rights against account
debtors of the Companies, (c) the value of
the Collateral or (d) the ability of CIT to enforce the Obligations or its rights and remedies
under this Agreement or any of the other Financing Documents.

-2-

 

     Obligations shall mean: (a) all loans, advances and other extensions of credit made by
CIT to the Companies or to others for the Companies’ account (including, without limitation, the
Term Loan); (b) any and all other indebtedness, obligations and liabilities which may be owed by
the Companies to CIT and arising out of, or incurred in connection with, this Agreement or any of
the other Financing Documents (including “Obligations” as defined in the Factoring Agreement and
all Out-of-Pocket Expenses), whether (i) now in existence or incurred by the Companies from time to
time hereafter, (ii) secured by pledge, lien upon or security interest in any of the Companies’
assets or property or the assets or property of any other person, firm, entity or corporation,
(iii) such indebtedness is absolute or contingent, joint or several, matured or unmatured, direct
or indirect, or (iv) the Companies are liable to CIT for such indebtedness as principal, surety,
endorser, guarantor or otherwise; (c) all indebtedness, obligations and liabilities owed by the
Companies to CIT under any other agreement or arrangement now or hereafter entered into between the
Companies, on the one hand, and CIT, on the other hand, whether or not such agreement or
arrangement relates to the transactions contemplated by this Agreement; (d) indebtedness,
obligations and liabilities incurred by, or imposed on, CIT as a result of environmental claims
relating to the Companies’ operations, premises or waste disposal practices or disposal sites; (e)
the Companies’ liabilities to CIT as maker or endorser on any promissory note or other instrument
for the payment of money; and (f) the Companies’ liabilities to CIT under any instrument of
guaranty or indemnity, or arising under any guaranty, endorsement or undertaking which CIT may make
or issue to others for the Companies’ account, including any accommodations extended by CIT with
respect to applications for letters of credit, CIT’s acceptance of drafts or CIT’s endorsement of
notes or other instruments for the Companies’ account and benefit.

     Out-of-Pocket Expenses shall mean all of CIT’s present and future costs, fees and
expenses incurred in connection with this Agreement, including, without limitation, (a) all
reasonable costs, fees, expenses and disbursements of outside counsel hired by CIT to advise CIT as
to matters relating to the transactions contemplated hereby and CIT’s standard fees for the use of
CIT’s in-house legal department relating to any and all modifications, waivers, releases, legal
file reviews or additional collateral with respect to this Agreement, the Collateral and/or the
Obligations, and (b) without duplication, all costs, fees and expenses incurred by CIT in
connection with the collection, liquidation, enforcement, protection and defense of the
Obligations, the Collateral and CIT’s rights under this Agreement, including, without limitation,
all reasonable fees and disbursements of in-house and outside counsel to CIT incurred as a result
of a workout, restructuring, reorganization, liquidation, insolvency proceeding and in any appeals
arising therefrom, whether incurred before, during or after the commencement of any case with
respect to any Company, any Guarantor or any subsidiary of any Company (other than the Vivitar
Subsidiaries), as the case may be, under the United States Bankruptcy Code or any similar statute.

     Permitted Encumbrances shall mean: (a) all liens existing on the Closing Date on
specific items of Equipment; (b) Purchase Money Liens; (c) statutory liens of landlords and liens
of carriers, warehousemen, bailees, mechanics, materialmen and other like liens imposed by law,
created in the ordinary course of business and securing amounts not yet due (or which are being
contested in good faith, by appropriate
proceedings or other appropriate actions which are sufficient to prevent imminent foreclosure
of such liens), and with respect to which adequate reserves or other

-3-

 

appropriate provisions are
being maintained by the Companies in accordance with GAAP; (d) deposits made (and the liens
thereon) in the ordinary course of business of the Companies (including, without limitation,
security deposits for leases, indemnity bonds, surety bonds and appeal bonds) in connection with
workers’ compensation, unemployment insurance and other types of social security benefits or to
secure the performance of tenders, bids, contracts (other than for the repayment or guarantee of
borrowed money or purchase money obligations), statutory obligations and other similar obligations
arising as a result of progress payments under government contracts; (e) liens granted to CIT by
the Companies; (f) liens of judgment creditors, provided that such liens do not exceed
$100,000 in the aggregate at any time (other than liens bonded or insured to the reasonable
satisfaction of CIT); (g) Permitted Tax Liens; and (h) liens granted to Preferred Bank so long as
the Second Amended and Restated Assignment and Intercreditor Agreement dated as of November 22,
2006, among Syntax, Preferred Bank and CIT remains in full force and effect.

     Permitted Indebtedness shall mean: (a) current Indebtedness maturing in less than one
year and incurred in the ordinary course of business for raw materials, supplies, equipment,
services, Taxes or labor; (b) Indebtedness secured by Purchase Money Liens; (c) deferred Taxes and
other expenses incurred in the ordinary course of business; (d) other Indebtedness existing on the
Closing Date and listed on Schedule 1.1(a) attached hereto.

     Permitted Tax Liens shall mean liens for Taxes not due and payable and liens for Taxes
that the Companies are contesting in good faith, by appropriate proceedings which are sufficient to
prevent imminent foreclosure of such liens, and with respect to which adequate reserves are being
maintained by the Companies in accordance with GAAP; provided that in either case, such
liens (a) are not filed of record in any public office, (b) are not senior in priority to the liens
granted by the Companies to CIT, or (c) do not secure taxes owed to the United States of America
(or any department or agency thereof) or any State or State authority, if applicable State law
provides for the priority of tax liens in a manner similar to the laws of the United States of
America.

     Promissory Note shall mean the note in the form of Exhibit A.

     Purchase Money Liens shall mean liens on any item of equipment acquired by the
Companies after the date of this Agreement, provided that each such lien shall attach only
to the equipment acquired.

     Regulatory Change shall mean any change after the Closing Date in United States
federal, state or foreign law or regulation (including, without limitation, Regulation D of the
Board of Governors of the Federal Reserve System), or the adoption or making after the Closing Date
of any interpretation, directive or request applying to a class of lenders including CIT of or
under any United States federal, state or foreign law or regulation, in each case whether or not
having the force of law and whether or not failure to comply therewith would be unlawful.

     Securities Control Agreements shall mean the Securities Control Agreements of even
date herewith, executed by (a) James Li, Citigroup Global Markets, Inc. and CIT and (b) Thomas
Chow, The 1999 Chow Family Trust, Charles Schwab & Co., Inc. and CIT.

-4-

 

     Stated Maturity Date shall mean September 30, 2007.

     Stock Pledge Agreements shall mean the Stock Pledge Agreements of even date herewith,
executed by (a) James Li and (b) Thomas Chow and The 1999 Chow Family Trust in favor of CIT.

     Subordinated Debt shall mean all indebtedness of the Companies (and the note(s)
evidencing such indebtedness) that is subordinated to the prior payment and satisfaction of the
Obligations pursuant to a Subordination Agreement.

     Subordination Agreement[s] shall mean (a) an agreement (in form and substance
satisfactory to CIT) among the Companies, a subordinating creditor and CIT, pursuant to which
Subordinated Debt is subordinated to the prior payment and satisfaction of the Obligations, and (b)
any note, indenture, note purchase agreement or similar instrument or agreement, pursuant to which
the indebtedness evidenced thereby or issued thereunder is subordinated to the Obligations by the
express terms of such note, indenture, note purchase agreement or similar instrument or agreement.

     Syntax means Syntax Corporation, a Nevada corporation.

     Syntax-Brillian means Syntax-Brillian Corporation, a Delaware corporation.

     Syntax Groups means Syntax Groups Corporation, a California corporation.

     Taxes shall mean all federal, state, municipal and other governmental taxes, levies,
charges, claims and assessments which are or may be owed or collected by the Companies with respect
to their business, operations, Collateral or otherwise.

     Term Loan shall have the meaning set forth in Section 2.2 of this Agreement.

     Vivitar Subsidiaries means Vivitar Corporation, a wholly-owned subsidiary of
Syntax-Brillian, and its subsidiaries.

SECTION 2. Term Loan

     2.1 Promissory Notes Evidencing Term Loan. The Companies agree to execute and
deliver to CIT a Promissory Note to evidence the Term Loan to be extended to the Companies by CIT.

     2.2 Term Loan.

     (a) Funding of Term Loan. CIT agrees to make a term loan in the original principal
amount of $20,000,000 to the Companies, on a joint and several basis, subject to the terms and
conditions of this Agreement (the “Term Loan”).

     (b) Repayment of the Term Loan. The principal amount of the Term Loan shall be due
and payable in full on the earliest to occur of (i) the Stated Maturity Date, (b) the date upon

-5-

 

which the Companies and CIT close a revolving credit facility for the Companies as described in the
proposal letter dated April 13, 2007, (c) the date upon which the Companies close a financing from
a source other than CIT in lieu of the financing described in clause (b) above, and (d) the date
upon which the Companies receive any new equity financing as described in Section 2.3(c)(i).

     2.3 Other Provisions Regarding Term Loan.

     (a) Repayment Upon Termination of Factoring Agreement. In the event the Factoring
Agreement is terminated by either CIT or the Companies for any reason whatsoever, the Term Loan,
together with all accrued interest thereon shall be due and payable in full on the effective date
of such termination, notwithstanding any other provision of this Agreement or the Note to the
contrary.

     (b) Optional Prepayments. The Companies, at their option, may prepay the Term Loan at
any time, in whole or in part, provided that on the date of such prepayment, there shall be
due and payable accrued interest on the principal so prepaid to the date of such prepayment.

     (c) Mandatory Prepayments. The Companies shall make the following mandatory
prepayments of principal on the Term Loan:

     (i) Upon the sale or issuance of additional equity or the incurrence of
additional Indebtedness (other than Permitted Indebtedness) by any of the Companies,
the Companies shall make a mandatory prepayment of principal equal to 100% of the
net proceeds received by the Companies from such sale, issuance or incurrence of
equity or Indebtedness.

     (ii) Immediately upon any acceleration of the Stated Maturity Date of the Term
Loan pursuant to Section 6.2 of this Agreement, the Companies shall make a
prepayment of the entire outstanding principal balance of the Term Loan together
with all accrued interest thereon.

     (d) No Reborrowing. To the extent repaid, the principal amount of the Term Loan may
not be reborrowed under this Section 2.

     (e) Authority to Charge Companies’ Account. The Companies hereby authorize CIT,
without notice to the Companies, to charge the Companies’ account under the Factoring Agreement
with all payments due under this Agreement as such amounts become due. The Companies confirm that
any charges which CIT may make to the Companies’ account under the Factoring Agreement as provided
herein will be made as an accommodation to the Companies and solely at CIT’s discretion.

     (f) Acknowledgment of Obligations. The Companies hereby acknowledge that the Term
Loan and any other obligations incurred by the Companies hereunder constitute “Obligations” as such
term is defined in the Factoring Agreement.

SECTION 3. Collateral. The Obligations, including, without limitation, the Term Loan and
all other obligations owing under this Agreement, are secured by a continuing general lien upon,

-6-

 

and security interest in, all of the Collateral. The Companies hereby ratify and confirm the
security interests granted to CIT under the Factoring Agreement and the Inventory Security
Agreement.

SECTION 4. Representations, Warranties and Covenants

     4.1 Initial Disclosure Representations and Warranties. The Companies represent and
warrant to CIT that as of the date hereof:

     (a) Financial Condition. (i) The amount of the Companies’ assets, at fair valuation,
exceeds the book value of the Companies’ liabilities, (ii) the Companies are generally able to pay
their debts as they become due and payable, and (iii) the Companies do not have unreasonably small
capital to carry on their business as currently conducted absent extraordinary and unforeseen
circumstances. All financial statements of the Companies previously furnished to CIT present
fairly, in all material respects, the financial condition of the Companies as of the date of such
financial statements.

     (b) Organization Matters. Schedule 4.1(b) attached hereto correctly and
completely sets forth (w) the Companies’ exact names, as currently reflected by the records of the
Companies’ State of incorporation or formation, (x) the Companies’ State of incorporation or
formation, (y) the Companies’ federal employer identification numbers and State organization
identification numbers (if any), and (z) the address of each Company’s chief executive office. The
Companies shall promptly notify CIT from time to time in writing of any new locations of Collateral
and shall deliver any documents reasonably requested by CIT with respect to such new location to
protect CIT’s first priority security interest in and right to access the Collateral.

     (c) Power and Authority; Conflicts; Enforceability.

     (i) The Companies have full power and authority to execute and deliver this Agreement and the
other Financing Documents to which they are a party, and to perform all of the Companies’
obligations thereunder.

     (ii) The execution and delivery by the Companies of this Agreement and the other Financing
Documents to which it is a party, and the performance of the Companies’ obligations thereunder,
have been duly authorized by all necessary corporate or other relevant action, and do not (w)
require any consent or approval of any director, shareholder, partner or member of the Companies
that has not been obtained, (x) violate any term, provision or covenant contained in the
organizational documents of the Companies (such as the certificate or articles of incorporation,
certificate of origin, partnership agreement, by-laws or operating agreement), (y) violate, or
cause the Companies to be in default under, any law, rule, regulation, order, judgment or award
applicable to the Companies or their assets, or (z) violate any term, provision, covenant or
representation contained in, or constitute a default under, or result in the creation of any lien
under, any loan agreement, lease, indenture, mortgage, deed of trust, note, security agreement or
pledge agreement to which the Companies are signatories or by which the Companies or any of the
Companies’ assets are bound or affected.

-7-

 

     (iii) This Agreement and the other Financing Documents to which the Companies are a party
constitute legal valid and binding obligations of the Companies, enforceable in accordance with
their respective terms, subject to applicable bankruptcy, insolvency, moratorium, fraudulent
transfer and other laws affecting creditors’ rights generally, and subject to general principals of
equity, regardless of whether considered in a proceeding at law or in equity.

     (d) Schedules. Each of the Schedules attached to this Agreement set forth a true,
correct and complete (in all material respects) description of the matter or matters covered
thereby.

     (e) Compliance with Laws. The Companies and the Companies’ properties are in material
compliance with all federal, state and local acts, rules and regulations, and all orders of any
federal, state or local legislative, administrative or judicial body or official. The Companies
have obtained and maintain all permits, approvals, authorizations and licenses necessary to conduct
their business as presently conducted.

     (f) Environmental Matters.

     (i) To the Companies’ knowledge, none of the operations of the Companies are the subject of
any federal, state or local investigation to determine whether any remedial action is needed to
address the presence or disposal of any environmental pollution, hazardous material or
environmental clean-up of the real estate or any of the Companies’ leased real property. No
enforcement proceeding, complaint, summons, citation, notice, order, claim, litigation,
investigation, letter or other communication from a federal, state or local authority has been
filed against or delivered to the Companies, regarding or involving any release of any
environmental pollution or hazardous material on any real property now or previously owned or
operated by the Companies.

     (ii) The Companies have no known contingent liability with respect to any release of any
environmental pollution or hazardous material on any real property now or previously owned or
operated by the Companies.

     (iii) The Companies are in compliance with all environmental statutes, acts, rules,
regulations and orders applicable to the operation of the Companies’ business, except to the extent
that the failure to so comply would not have a Material Adverse Effect.

     (g) Pending Litigation. Except as disclosed on Schedule 4.1(g), there exist no
actions, suits or proceedings of any kind by or against the Companies pending in any court or
before any arbitrator or governmental body, that, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.

     (h) SEC Filings. Since November 30, 2005, Syntax-Brillian has made all filings with
the United States Securities and Exchange Commission that are required under the Securities Act of
1934 on a timely basis (other than Form 8-K reports).

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     4.2 Affirmative Covenants. Until the termination of this Agreement and the full and
final payment and satisfaction of the Obligations:

     (a) Maintenance of Financial Records; Inspections. The Companies agree to maintain
books and records pertaining to the Companies’ financial matters in such detail, form and scope as
CIT reasonably shall require. The Companies agree that CIT or its agents may enter upon the
Companies’ premises at any time during normal business hours, and from time to time, in order to
(i) examine and inspect the books and records of the Companies, and make copies thereof and take
extracts therefrom, and (ii) verify, inspect and perform physical counts and other valuations of
the Collateral and any and all records pertaining thereto. The Companies irrevocably authorize all
accountants and third parties to disclose and deliver directly to CIT, at the Companies’ expense,
all financial statements and information, books, records, work papers and management reports
generated by them or in their possession regarding the Companies or the Collateral. All costs,
fees and expenses incurred by CIT in connection with such examinations, inspections, physical
counts and other valuations shall constitute Out-of-Pocket Expenses for purposes of this Agreement.

     (b) Insurance. The Companies shall maintain insurance with responsible companies, in
such forms and against such risks and in such sums as may be required by the other Financing
Documents and as may be reasonably satisfactory to CIT, on all real and personal property,
including inventory.

     (c) Payment of Taxes. The Companies agree to pay when due all Taxes lawfully levied,
assessed or imposed upon the Companies or the Collateral (including all sales taxes collected by
the Companies on behalf of the Companies’ customers in connection with sales of inventory and all
payroll taxes collected by the Companies on behalf of the Companies’ employees), unless the
Companies are contesting such Taxes in good faith, by appropriate proceedings, and are maintaining
adequate reserves for such Taxes in accordance with GAAP. Notwithstanding the foregoing, if a lien
securing any Taxes is filed in any public office and such lien is not a Permitted Tax Lien, then
the Companies shall pay all taxes secured by such lien immediately and remove such lien of record
promptly. Pending the payment of such taxes and removal of
such lien, CIT may, at its election and without curing or waiving any Event of Default which
may have occurred as a result thereof, pay such taxes on behalf of the Companies, and the amount
paid by CIT shall become an Obligation which is due and payable on demand by CIT.

     (d) Compliance With Laws.

     (i) The Companies agree to comply with all federal, state and local acts, rules and
regulations, and all orders of any federal, state or local legislative, administrative or judicial
body or official, provided that the Companies may contest any acts, rules, regulations,
orders and directions of such bodies or officials in any reasonable manner which CIT determines, in
the exercise of its reasonable business judgment, will not materially and adversely affect CIT’s
rights or priorities in the Collateral.

     (ii) Without limiting the generality of the foregoing, the Companies agree to comply with all
environmental statutes, acts, rules, regulations or orders, as presently existing or as adopted or

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amended in the future, applicable to the ownership and/or use of their real property and operation
of their business, if the failure to so comply would have a Material Adverse Effect. The Companies
shall not be deemed to have breached any provision of this Section 4.2(d)(ii) if (x) the
failure to comply with the requirements of this Section 4.2(d)(ii) resulted from good faith
error or innocent omission, (y) the Companies promptly commence and diligently pursue a cure of
such breach and (z) such failure is cured within thirty (30) days following the Companies’ receipt
of notice from CIT of such failure, or if such breach cannot in good faith be cured within thirty
(30) days following the Companies’ receipt of such notice, then such breach is cured within a
reasonable time frame based on the extent and nature of the breach and the necessary remediation,
and in conformity with any applicable consent order, consensual agreement and applicable law.

     (e) Notices Concerning Environmental, Employee Benefit and Pension Matters. The
Companies agree to notify CIT in writing of:

     (i) any expenditure (actual or anticipated) in excess of $100,000 for environmental clean-up,
environmental compliance or environmental testing and the impact of said expenses on the affected
Company’s working capital;

     (ii) the Companies’ receipt of notice from any local, state or federal authority advising the
Companies of any environmental liability (real or potential) arising from the Companies’
operations, its premises, its waste disposal practices, or waste disposal sites used by the
Companies; and

     (iii) the Companies’ receipt of notice from any governmental agency or any sponsor of any
“multiemployer plan” (as that term is defined in ERISA) to which the Companies have contributed,
relating to any of the events described in Section 6.1(f) hereof.

The Companies agree to provide CIT promptly with copies of all such notices and other information
pertaining to any matter set forth above if CIT so requests.

     (f) SEC Filings. Syntax-Brillian shall make all filings with the United States
Securities and Exchange Commission that are required under the Securities Act of 1934 on a timely
basis (other than Form 8-K reports).

     (g) Business Qualification. The Companies agree to qualify to do business, and to
remain qualified to do business and in good standing, in each jurisdiction where the failure to so
qualify or to remain qualified or in good standing, would have a Material Adverse Effect.

     (h) Anti-Money Laundering and Terrorism Regulations. The Companies agree to comply
with all applicable anti-money laundering and terrorism laws, regulations and executive orders in
effect from time to time (including, without limitation, the USA Patriot Act (Pub. L. No. 107-56)).
The Companies also agree to ensure that no person who owns a controlling interest in or otherwise
controls the Companies is a person designated under Section 1(b), (c) or (d) of Executive Order No.
13224 (issued September 23, 2001) or any other similar Executive Order. The Companies acknowledge
that CIT’s performance hereunder is subject to compliance with all such laws, regulations and
executive orders, and in furtherance of the foregoing, the Companies agree to

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provide to CIT all
information about the Companies’ ownership, officers, directors, customers and business structure
as CIT reasonably may require to comply with, such laws, regulations and executive orders.

     (i) General Intangibles. The Companies represent and warrant to CIT that as of the
date hereof, the Companies possess all general intangibles necessary to conduct the Companies’
business as presently conducted. The Companies agree to maintain the Companies’ rights in, and the
value of, all such general intangibles, and to pay when due all payments required to maintain in
effect any licensed rights necessary to conduct the Companies’ business substantially as presently
conducted.

     (j) Commercial Tort Claims. The Companies represent and warrant to CIT that as of
the date hereof, the Companies hold no interest in any commercial tort claim. If the Companies at
any time hold or acquire a commercial tort claim, the Companies agree to promptly notify CIT in
writing of the details thereof, and in such writing the Companies shall grant to CIT a security
interest in such commercial tort claim and in the proceeds thereof, all upon the terms of this
Agreement.

     (k) Letter of Credit Rights. The Companies represent and warrant to CIT that as of
the date hereof, no Company is the beneficiary of any letter of credit. If any Company becomes a
beneficiary under any letter of credit, the Companies agrees to promptly notify CIT, and upon
request by CIT, the Companies agree to either (a) cause the issuer of such letter of credit to
consent to the assignment of the proceeds of such letter of credit to CIT pursuant to an agreement
in form and substance satisfactory to CIT, or (b) cause the issuer of such letter of credit to name
CIT as the transferee beneficiary of such letter of credit. All proceeds of letters of credit
received by the Companies shall be held by the Companies in trust for the benefit of CIT and shall
be delivered immediately by the Companies to CIT to be applied to the Obligations.

     4.3 [Intentionally Omitted].

     4.4 Negative Covenants. Until termination of this Agreement and full and final
payment and satisfaction of all Obligations, the Companies agree not to, and will cause each
Guarantor not to:

     (a) Liens and Encumbrances. Mortgage, assign, pledge, transfer or otherwise permit
any lien, charge, security interest, encumbrance or judgment (whether as a result of a purchase
money or title retention transaction, or other security interest, or otherwise) to exist on any of
the Companies’ assets, whether now owned or hereafter acquired, except for the Permitted
Encumbrances.

     (b) Indebtedness. Incur or create any Indebtedness other than the Permitted
Indebtedness.

     (c) Sale of Assets. Sell, lease, assign, transfer or otherwise dispose of any of the
Companies’ assets, except for (a) the sale of inventory in the ordinary course of the Companies’

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business consistent with the Companies’ past practices and (b) disposition of used, worn out,
obsolete or surplus property of the Companies.

     (d) Corporate Change. (i) Merge or consolidate with any other entity, (ii) change its
name or principal place of business, (iii) change its form of incorporation or organization, or
reincorporate or reorganize in a new jurisdiction, (iv) enter into or engage in any operation or
activity materially different from their existing business as of the date hereof; provided
that the Companies may change their names or their principal places of business so long as the
Companies provide CIT with thirty (30) days prior written notice thereof and the Companies execute
and deliver to CIT, prior to making such change, all documents and agreements required by CIT in
order to ensure that the liens and security interests granted to CIT under the Financing Documents
continue in effect without any break or lapse in perfection.

     (e) Guaranty Obligations. Assume, guarantee, endorse, or otherwise become liable upon
the obligations of any person, firm, entity or corporation, except pursuant to the Guaranties and
by the endorsement of negotiable instruments for deposit or collection or similar transactions in
the ordinary course of business.

     (f) Dividends and Distributions. Declare or pay any dividend or distribution of any
kind on, or purchase, acquire, redeem or retire, any of its equity interests (of any class or type
whatsoever), whether now or hereafter issued and outstanding, except dividends or distributions (i)
by any Company to any other Company and (ii) as set forth on Schedule 4.4(f).

     (g) Investments. (i) Create any new subsidiary, or (ii) make any advance or loan to,
or any investment in, any firm, entity, person or corporation, except for advances, loans or
investments by any Company in or to any other Company, or (iii) acquire all or substantially all of
the assets of, or any capital
stock or any equity interests in, any firm, entity or corporation, other than current
investments of the Companies in existing subsidiaries of such entities.

     (h) Related Party Transactions. Enter into any transaction, including, without
limitation, any purchase, sale, lease, loan or exchange of property, with any shareholder, officer,
director, parent (direct or indirect), subsidiary (direct or indirect) or other person or entity
otherwise affiliated with the Companies, unless (i) such transaction otherwise complies with the
provisions of this Agreement, (ii) such transaction is for the sale of goods or services rendered
in the ordinary course of business and pursuant to the reasonable requirements of the Companies and
upon standard terms and conditions and fair and reasonable terms, no less favorable to such entity
than such entity could obtain in a comparable arms length transaction with an unrelated third
party, and (iii) no Event of Default shall have occurred and remain outstanding at the time such
transaction occurs, or would occur after giving effect to such transaction.

     (i) Restricted Payments. (i) Make any payment of the principal of, or interest on,
any Subordinated Debt, or purchase, acquire or redeem any of the Subordinated Debt, unless (x) such
payment, purchase, acquisition or redemption is expressly permitted by the terms of the applicable
Subordination Agreement and (y) no Default or Event of Default shall have occurred and remain
outstanding on the date on which such payment or transaction occurs, or would occur as a result

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thereof; (ii) pay any management, consulting or other similar fees to any shareholder, director,
parent (direct or indirect), subsidiary (direct or indirect) or other person or entity otherwise
affiliated with any Company or any Guarantor, unless such fees are paid in the ordinary course of
business and pursuant to the reasonable requirements of the Companies and upon standard terms and
conditions and fair and reasonable terms, no less favorable to such entity than such entity could
obtain in a comparable arms length transaction with an unrelated third party.

SECTION 5. Interest, Fees and Expenses

     5.1 Interest. Interest on the principal balance of the Term Loan shall be due and
payable on the first Business Day of each month commencing on May 1, 2007 and shall accrue at a
rate per annum equal to 0.5% plus the Chase Bank Rate on the outstanding principal balance
of the Term Loan. In the event of any change in the Chase Bank Rate, the interest rate shall
change, effective as of the first day of the month following the date of such change. All interest
rates shall be calculated based on a 360-day year and actual days elapsed.

     5.2 Default Interest Rate. Upon the occurrence of an Event of Default, (a)
provided that CIT has given the Companies written notice of such Event of Default (other
than an Event of Default described in Section 6.1(c) of this Agreement, for which no
written notice shall be required), all Obligations shall bear interest at the Default Rate of
Interest until such Event of Default is waived.

     5.3 Out-of Pocket Expenses;. The Companies agree to reimburse CIT for all
Out-of-Pocket Expenses when charged to or paid by CIT.

     5.4 [Intentionally Omitted].

     5.5 [Intentionally Omitted].

     5.6 [Intentionally Omitted].

     5.7 [Intentionally Omitted].

     5.8 Capital Adequacy. In the event that CIT (or any financial institution that
purchases from CIT a participation in the loans made by CIT to the Companies hereunder), subsequent
to the Closing Date, determines in the exercise of its reasonable business judgment that (x) any
change in applicable law, rule, regulation or guideline regarding capital adequacy, or (y) any
change in the interpretation or administration thereof, or (z) compliance by CIT or such financial
institution with any new request or directive regarding capital adequacy (whether or not having the
force of law) of any central bank or other governmental or regulatory authority, has or would have
the effect of reducing the rate of return on CIT’s or such financial institution’s capital as a
consequence of its obligations hereunder to a level below that which CIT or such financial
institution could have achieved but for such change or compliance (taking into consideration CIT’s
or such financial institution’s policies with respect to capital adequacy) by an amount deemed
material by CIT or such financial institution in the exercise of their reasonable business
judgment, the Companies agree to

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pay to CIT, no later than five (5) days following demand by CIT,
such additional amount or amounts as will compensate CIT or such financial institution for such
reduction in rate of return. In determining such amount or amounts, CIT and such financial
institution may use any reasonable averaging or attribution methods. The protection of this
Section 5.8 shall be available to CIT and such financial institution regardless of any
possible contention of invalidity or inapplicability with respect to the applicable law, regulation
or condition. A certificate of CIT or such financial institution setting forth such amount or
amounts as shall be necessary to compensate CIT or such financial institution with respect to this
Section 5.8 and the calculation thereof, when delivered to the Companies, shall be
conclusive and binding on the Companies absent manifest error. In the event CIT or such financial
institution exercises its rights pursuant to this Section 5.8, and subsequent thereto
determines that the amounts paid by the Companies exceeded the amount which CIT or such financial
institution actually required to compensate CIT or such financial institution for any reduction in
rate of return on its capital, such excess shall be returned to the Companies by CIT or such
financial institution, as the case may be.

     5.9 Taxes, Reserves and Other Conditions. In the event that any applicable law,
treaty or governmental regulation, or any change therein or in the interpretation or application
thereof, or compliance by CIT (or by any financial institution that purchases from CIT a
participation in the loans made by CIT to the Companies hereunder) with any new request or
directive (whether or not having the force of law) of any central bank or other governmental or
regulatory authority, shall:

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

     (b) impose, modify or hold applicable any reserve, special deposit, assessment or similar
requirement against assets held by, or deposits in or for the account of, advances or loans by, or
other credit extended by CIT or such financial institution by reason of or in respect to this
Agreement and the Financing Documents, including (without limitation) pursuant to Regulation D of
the Board of Governors of the Federal Reserve System; or

     (c) impose on CIT or such financial institution any other condition with respect to this
Agreement or any other document;

and the result of any of the foregoing is to (i) increase the cost to CIT of making, renewing or
maintaining CIT’s loans hereunder (or the cost to such financial institution in participating in
such loans) by an amount deemed material by CIT or such financial institution in the exercise of
their reasonable business judgment, or (ii) reduce the amount of any payment (whether of principal,
interest or otherwise) in respect of any of the loans made hereunder by an amount that CIT or such
financial institution deems to be material in the exercise of its reasonable business judgment, the
Companies agree to pay to CIT, no later than five (5) days following demand by CIT, such additional
amount or amounts as will compensate CIT or such financial institution for such increase

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in cost or
reduction in payment, as the case may be. A certificate of CIT or such financial institution
setting forth such amount or amounts as shall be necessary to compensate CIT or such financial
institution with respect to this Section 5.9 and the calculation thereof, when delivered to
the Companies, shall be conclusive and binding on the Companies absent manifest error. In the
event CIT or such financial institution exercises its rights pursuant to this Section 5.9,
and subsequent thereto determines that the amounts paid by the Companies in whole or in part
exceeded the amount which CIT or such financial institution actually required to compensate CIT or
such financial institution for any increase in cost or reduction in payment, such excess shall be
returned to the Companies by CIT or such financial institution, as the case may be.

SECTION 6. Events of Default and Remedies

     6.1 Events of Default. Each of the following events shall constitute an “Event of
Default” under this Agreement:

     (a) the cessation of the business of any Company, any Guarantor or any subsidiary of any
Company (other than the Vivitar Subsidiaries), or the calling of a meeting of the creditors of any
Company, any Guarantor or any subsidiary of any Company (other than the Vivitar Subsidiaries) for
purposes of compromising its debts and obligations;

     (b) the failure of any Company, any Guarantor or any subsidiary of any Company (other than the
Vivitar Subsidiaries) to generally meet its debts as those debts mature;

     (c) (i) the commencement by any Company, any Guarantor or any subsidiary of any Company (other
than the Vivitar Subsidiaries) of any bankruptcy, insolvency, arrangement, reorganization,
receivership or similar proceedings under any federal or state law; or (ii) the commencement
against any Company, any Guarantor or any subsidiary of any Company (other than the Vivitar
Subsidiaries) of any bankruptcy, insolvency, arrangement, reorganization, receivership or similar
proceeding under any federal or state law by creditors of any of them, but only if such proceeding
is not contested by any Company, any Guarantor or any subsidiary of any Company (other than the
Vivitar Subsidiaries), as applicable, within twenty (20) days and not dismissed or vacated within
forty-five (45) days of commencement, or any of the actions or relief sought in any such proceeding
shall occur or be authorized by any Company, any Guarantor or any subsidiary of any Company (other
than the Vivitar Subsidiaries);

     (d) the breach or violation by the Companies or the Guarantors of any warranty, representation
or covenant contained in this Agreement or any of the other Financing Documents;

     (e) the failure of the Companies to pay any of the Obligations on the due date thereof,
provided that nothing contained herein shall prohibit CIT from charging such amounts to the
Companies’ account under the Factoring Agreement on the due date thereof;

     (f) the Companies shall (i) engage in any “prohibited transaction” as defined in ERISA, (ii)
incur any “accumulated funding deficiency” as defined in ERISA, (iii) incur any “reportable

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event”
as defined in ERISA, (iv) terminate any “plan”, as defined in ERISA or (v) become involved in any
proceeding in which the Pension Benefit Guaranty Corporation shall seek appointment, or is
appointed, as trustee or administrator of any “plan”, as defined in ERISA;

     (g) the occurrence of any default or event of default (after giving effect to any applicable
grace or cure period) under any of the other Financing Documents, or any of the other Financing
Documents ceases to be valid, binding and enforceable in accordance with its terms;

     (h) the occurrence of any default or event of default (after giving effect to any applicable
grace or cure period) under any instrument or agreement evidencing or governing (i) the
Subordinated Debt or (ii) other Indebtedness of any Company having a principal amount in excess of
$500,000;

     (i) the Companies shall modify the terms or provisions of any agreement, instrument or other
document relating to any Subordinated Debt without CIT’s prior written consent, unless such
modification is permitted by the applicable Subordination Agreement;

     (j) any judgment is rendered or judgment liens filed against any Company in excess of
$500,000 individually, or $1,000,000 in the aggregate which within thirty (30) days of such
rendering or filing is not either satisfied, stayed or discharged of record;

     (k) the operations of the Companies’ manufacturing facility are interrupted at any
time for more than fifteen (15) consecutive days, unless (i) the Companies shall be
entitled to receive for such period of interruption, proceeds of business interruption
insurance sufficient to cover lost profits during the period of interruption and all costs
incurred by the Companies as a result of the business interruption; and (ii) CIT shall be
entitled to receive such proceeds in the amount described in clause (i) above by virtue of
CIT being named an additional insured or loss payee with respect to the business
interruption insurance; or

     (l) any Guarantor who is a natural person shall die, or any Guarantor shall attempt to
terminate its Guaranty or deny that such Guarantor has any liability thereunder, or any Guaranty,
Stock Pledge Agreement or Securities Control Agreement shall be declared null and void and of no
further force and effect.

     6.2 Remedies With Respect to the Term Loan. Upon the occurrence of an Event of
Default, CIT may, at its option (a) declare the entire sum remaining unpaid under the Term Loan and
all other Obligations immediately due and payable, (b) charge the Companies the Default Rate of
Interest on all the principal amount of the Term Loan outstanding in lieu of the interest provided
for in Section 5.1 of this Agreement, provided that CIT has given the Companies
written notice of such Event of Default if required by Section 5.2 and (c) exercise
remedies provided under the other Financing Documents. Notwithstanding the foregoing, the entire
sum remaining unpaid under the Term Loan and all other Obligations shall become due and payable
immediately without any declaration, notice or demand by CIT, upon the commencement of any
proceeding described in clause (i) of Section 6.1(c) or the occurrence of an Event of
Default described in clause (ii) of

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Section 6.1(c). The exercise of any option is not
exclusive of any other option that may be exercised at any time by CIT.

     6.3 Remedies With Respect to Stock Pledge Agreements. Upon the occurrence of an
Event of Default, Syntax-Brillian shall take any action requested by CIT to facilitate the sale and
transfer of the stock of Syntax-Brillian that is pledged to CIT pursuant to the Stock Pledge
Agreements.

     6.4 General Indemnity. In addition to the Companies’ agreement to reimburse CIT for
Out-of-Pocket Expenses, but without duplication, the Companies hereby agree to indemnify CIT and
its officers, directors, employees, attorneys and agents (each, an “Indemnified Party”)
from, and to defend and hold each Indemnified Party harmless against, any and all losses,
liabilities,
obligations, claims, actions, judgments, suits, damages, penalties, costs, fees, expenses
(including reasonable attorney’s fees) of any kind or nature which at any time may be imposed on,
incurred by, or asserted against, any Indemnified Party:

     (a) as a result of CIT’s exercise of (or failure to exercise) any of CIT’s rights and remedies
hereunder, including, without limitation, (i) any sale or transfer of the Collateral, (ii) the
preservation, repair, maintenance, preparation for sale or securing of any Collateral, and (iii)
the defense of CIT’s interests in the Collateral (including the defense of claims brought by the
Companies, as debtor-in-possession or otherwise, any secured or unsecured creditors of the
Companies, or any trustee or receiver in bankruptcy);

     (b) as a result of any environmental pollution, hazardous material or environmental clean-up
relating to the Real Estate, the Companies’ operation and use of their real property, and the
Companies’ off-site disposal practices;

     (c) in connection with any regulatory investigation or proceeding by any regulatory authority
or agency having jurisdiction over the Companies; and

     (d) otherwise relating to or arising out of the transactions contemplated by this Agreement
and the other Financing Documents, or any action taken (or failure to act) by any Indemnified Party
with respect thereto;

provided that an Indemnified Party’s conduct in connection with the any of the foregoing
matters does not constitute gross negligence or willful misconduct, as finally determined by a
court of competent jurisdiction. This indemnification shall survive the termination of this
Agreement and the payment and satisfaction of the Obligations.

SECTION 7. Miscellaneous 

     7.1 Waivers. The Companies hereby waive diligence, demand, presentment, protest and
any notices thereof as well as notices of nonpayment, intent to accelerate and acceleration. No
waiver of an Event of Default by CIT shall be effective unless such waiver is in writing and signed
by CIT. No delay or failure of CIT to exercise any right or remedy hereunder, whether before or

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after the happening of any Event of Default, shall impair any such right or remedy, or shall
operate as a waiver of such right or remedy, or as a waiver of such Event of Default. A waiver on
any one occasion shall not be construed as a bar to or waiver of any right or remedy on any future
occasion. No single or partial exercise by CIT of any right or remedy precludes any other or
further exercise thereof, or precludes any other right or remedy.

     7.2 Entire Agreement; Amendments. This Agreement and the other Financing Documents:
(a) constitute the entire agreement between the Companies and CIT; (b) supersede any prior
agreements; (c) may be amended only by a writing signed by the Companies and CIT; and (d) shall
bind and benefit the Companies and CIT and their respective
successors and assigns. To the extent of any conflict between the provisions of this
Agreement and the Promissory Note, the provisions of this Agreement shall apply and govern.

     7.3 Usury Limit. In no event shall the Companies, upon demand by CIT for payment of
any indebtedness relating hereto, by acceleration of the maturity thereof, or otherwise, be
obligated to pay interest and fees in excess of the amount permitted by law. Regardless of any
provision herein or in any agreement made in connection herewith, CIT shall never be entitled to
receive, charge or apply, as interest on any indebtedness relating hereto, any amount in excess of
the maximum amount of interest permissible under applicable law. If CIT ever receives, collects or
applies any such excess, it shall be deemed a partial repayment of principal and treated as such.
If as a result, the entire principal amount of the Obligations is paid in full, any remaining
excess shall be refunded to the Companies. This Section 7.3 shall control every other
provision of the Agreement, the other Financing Documents and any other agreement made in
connection herewith.

     7.4 Severability. If any provision hereof is held to be illegal or unenforceable,
such provision shall be fully severable, and the remaining provisions of the applicable agreement
shall remain in full force and effect and shall not be affected by such provision’s severance.
Furthermore, in lieu of any such provision, there shall be added automatically as a part of the
applicable agreement a legal and enforceable provision as similar in terms to the severed provision
as may be possible.

7.5 WAIVER OF JURY TRIAL; SERVICE OF PROCESS; JUDICIAL REFERENCE .

TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY HERETO HEREBY WAIVES ANY RIGHT TO A
TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING DIRECTLY OR INDIRECTLY OUT OF THIS AGREEMENT, OR
ANY OTHER AGREEMENT OR TRANSACTION BETWEEN THE PARTIES HERETO. THE COMPANIES HEREBY IRREVOCABLY
WAIVE PERSONAL SERVICE OF PROCESS AND CONSENT TO SERVICE OF PROCESS BY CERTIFIED OR REGISTERED
MAIL, RETURN RECEIPT REQUESTED. IN NO EVENT WILL CIT BE LIABLE FOR LOST PROFITS OR OTHER SPECIAL
OR CONSEQUENTIAL DAMAGES.

THE PARTIES TO THIS AGREEMENT PREFER THAT ANY DISPUTE BETWEEN OR AMONG THEM BE RESOLVED IN
LITIGATION SUBJECT TO THE ABOVE JURY

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TRIAL WAIVER. IF, AND ONLY IF, A PRE-DISPUTE JURY
TRIAL WAIVER OF THE TYPE PROVIDED FOR HEREIN IS UNENFORCEABLE IN LITIGATION TO RESOLVE ANY DISPUTE,
CLAIM, CAUSE OF ACTION OR CONTROVERSY UNDER THIS AGREEMENT OR ANY OTHER DOCUMENT (EACH, A “CLAIM”)
IN THE VENUE WHERE THE CLAIM IS BEING BROUGHT PURSUANT TO THE TERMS OF THIS AGREEMENT, THEN, UPON
THE WRITTEN REQUEST OF ANY PARTY, SUCH CLAIM, INCLUDING ANY AND ALL QUESTIONS OF LAW OR FACT
RELATING THERETO, SHALL BE DETERMINED EXCLUSIVELY BY A JUDICIAL REFERENCE PROCEEDING. EXCEPT AS
OTHERWISE
PROVIDED HEREIN, VENUE FOR ANY SUCH REFERENCE PROCEEDING SHALL BE IN THE STATE OR FEDERAL COURT IN
THE COUNTY OR DISTRICT WHERE VENUE IS APPROPRIATE UNDER APPLICABLE LAW (THE “COURT”). THE PARTIES
SHALL SELECT A SINGLE NEUTRAL REFEREE, WHO SHALL BE A RETIRED STATE OR FEDERAL JUDGE. IF THE
PARTIES CANNOT AGREE UPON A REFEREE WITHIN 30 DAYS, THE COURT SHALL APPOINT THE REFEREE. THE
REFEREE SHALL REPORT A STATEMENT OF DECISION TO THE COURT. NOTWITHSTANDING THE FOREGOING, NOTHING
IN THIS PARAGRAPH SHALL LIMIT THE RIGHT OF ANY PARTY AT ANY TIME TO EXERCISE SELF-HELP REMEDIES,
FORECLOSE AGAINST COLLATERAL OR OBTAIN PROVISIONAL REMEDIES (INCLUDING WITHOUT LIMITATION, REQUESTS
FOR TEMPORARY RESTRAINING ORDERS, PRELIMINARY INJUNCTIONS, WRITS OF POSSESSION, WRITS OF
ATTACHMENT, APPOINTMENT OF A RECEIVER, OR ANY ORDERS THAT A COURT MAY ISSUE TO PRESERVE THE STATUS
QUO, TO PREVENT IRREPARABLE INJURY OR TO ALLOW A PARTY TO ENFORCE ITS LIENS AND SECURITY
INTERESTS). THE PARTIES SHALL BEAR THE FEES AND EXPENSES OF THE REFEREE EQUALLY UNLESS THE REFEREE
ORDERS OTHERWISE. THE REFEREE ALSO SHALL DETERMINE ALL ISSUES RELATING TO THE APPLICABILITY,
INTERPRETATION, AND ENFORCEABILITY OF THIS SECTION. THE PARTIES ACKNOWLEDGE THAT ANY CLAIM
DETERMINED BY REFERENCE PURSUANT TO THIS SECTION SHALL NOT BE ADJUDICATED BY A JURY.

     7.6 Notices. Except as otherwise herein provided, any notice or other communication
required hereunder shall be in writing (messages sent by e-mail or other electronic transmission
(other than by telecopier) shall not constitute a writing, however any signature on a document or
other writing that is transmitted by e-mail or telecopier shall constitute a valid signature for
purposes hereof), and shall be deemed to have been validly served, given or delivered when received
by the recipient if hand delivered, sent by commercial overnight courier or sent by facsimile, or
three (3) Business Days after deposit in the United States mail, with proper first class postage
prepaid and addressed to the party to be notified as follows:

	 	(a)	 	if to CIT, at:
	 
	 	 	 	The CIT Group/Commercial Services, Inc.

300 South Grand Avenue

Los Angeles, California 90071

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	 	 	 	Attn: Client Credit Manager

Telecopier No.: (213) 613-2415;
	 
	 	(b)	 	if to the Companies at:
	 
	 	 	 	Syntax-Brillian Corporation

Syntax Groups Corporation

Syntax Corporation

1600 North Desert Drive

Tempe, Arizona 85281-1230

Attn: Chief Financial Officer with a copy to

“Office of General Counsel”

Telecopier No.: (602) 389-8869; or
	 
	 	(c)	 	to such other address as any party may designate for itself by like notice.

     7.7 CHOICE OF LAW. THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS AGREEMENT
SHALL BE GOVERNED BY THE LAWS OF THE STATE OF CALIFORNIA, EXCEPT TO THE EXTENT THAT ANY OTHER
FINANCING DOCUMENT INCLUDES AN EXPRESS ELECTION TO BE GOVERNED BY THE LAWS OF ANOTHER JURISDICTION.

[Signatures set forth on following page]

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     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed, accepted and
delivered at Los Angeles, California by their proper and duly authorized officers as of the date
set forth above.

	 	 	 	 	 	 	 	 	 	 	 
	THE COMPANIES:	 	 	 	CIT:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	SYNTAX-BRILLIAN CORPORATION	 	 	 	THE CIT GROUP/COMMERCIAL SERVICES, INC.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Wayne A. Pratt
	 	 	 	By:
	 	/s/ Robert K. Lewin	 	 
	Title:

	 	 

EVP — C.F.O.
	 	 	 	Title:
	 	 

Senior Vice President and
	 	 
	 

	 	 	 	 	 	 	 	Regional Marketing Manager	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	SYNTAX GROUPS CORPORATION	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Wayne A. Pratt	 	 	 	 	 	 	 	 
	Title:

	 	 

EVP — C.F.O.
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	SYNTAX CORPORATION	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Wayne A. Pratt	 	 	 	 	 	 	 	 
	Title:

	 	 

EVP — C.F.O.
	 	 	 	 	 	 	 	 

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