Document:

Exhibit 10.(d)(xi)

 

LOAN AND SECURITY AGREEMENT

 

This LOAN
AND SECURITY AGREEMENT (this
“Agreement”) dated as of August 11, 2003, between  SILICON VALLEY BANK, a California chartered bank, with its
principal place of business at 3003 Tasman Drive, Santa Clara, California 95054 and with a loan
production office located at One Newton Executive Park, Suite 200, 2221 Washington Street, Newton, Massachusetts
02462, doing business under the name “Silicon Valley East” (“Bank”) and  AMERICAN SCIENCE AND
ENGINEERING, INC., a
Massachusetts corporation with offices at 829 Middlesex Turnpike, Billerica, Massachusetts 01821
(“Borrower”), provides the terms on which Bank shall lend to Borrower and  Borrower
shall repay Bank. The parties agree as follows: 

 

1                                         ACCOUNTING
AND OTHER TERMS

 

Accounting terms not defined
in this Agreement shall be construed following GAAP.  Calculations and  determinations must be made following GAAP.  The term “financial statements” includes the notes and schedules.
The  terms “including” and “includes” always mean “including (or includes)
without limitation,” in this or any Loan  Document. Capitalized
terms in this Agreement shall have the meanings set forth in Section 13.

 

2                                         LOAN AND TERMS OF PAYMENT

 

2.1                               Promise to Pay.  Borrower hereby
unconditionally promises to pay Bank the unpaid principal amount of all Credit Extensions and interest on the
unpaid principal amount of the Credit Extensions as and when due in accordance with this Agreement.

 

2.1.1                     Revolving Advances.

 

(a)                                  Availability.  Bank shall make Advances not
exceeding (i) the lesser of (A) the Revolving Line or (B) the Borrowing Base minus (ii) the amount of all outstanding
Letters of Credit (including drawn but unreimbursed Letters of Credit), minus (iii) the FX Reserve, and minus
(iv) the aggregate outstanding Advances hereunder (including any Cash Management Services). Amounts borrowed
under this Section may be repaid and reborrowed during the term of this Agreement.

 

(b)                                 Borrowing Procedure.  To
obtain an Advance, Borrower must notify Bank by facsimile or telephone by 3:00 p.m. Eastern time on the
Business Day the Advance is to be made. If such notification is by telephone,  Borrower
must promptly confirm the notification by delivering to Bank a completed
Payment/Advance Form in the form 
attached as Exhibit B. Bank shall credit Advances
to Borrower’s deposit account. Bank may make Advances under this  Agreement
based on instructions from a Responsible Officer or his or her designee or
without instructions if the  Advances are necessary to meet Obligations
which have become due. Bank may rely on any telephone notice given by a person whom Bank believes is a Responsible
Officer or designee. Borrower shall indemnify Bank for any loss Bank suffers due to such reliance.

 

(c)                                  Termination; Repayment.  The
Revolving Line terminates on the Revolving Maturity Date, when the principal amount of all Advances and
the unpaid interest thereon, shall be immediately due and payable.

 

2.1.2                     Letters of Credit Sublimit.

 

(a)                                  Bank shall issue or have issued Letters of
Credit for Borrower’s account not exceeding (i) the lesser of the Revolving Line or the Borrowing Base minus (ii) the
outstanding principal balance of any Advances (including any Cash Management Services), minus (iii) the amount of all
Letters of Credit (including drawn but unreimbursed Letters of Credit), plus an amount equal to any Letter of
Credit Reserves. The face amount of outstanding Letters of Credit (including drawn but unreimbursed Letters of Credit
and any Letter of Credit Reserve) may not exceed $5,000,000.00. Each Letter of Credit shall have an expiry date no later
than 180 days after the Revolving Maturity Date provided Borrower’s Letter of Credit reimbursement obligation shall be
secured by cash on terms acceptable to Bank on and after (i) the Revolving Maturity Date of the Revolving Line if
the Revolving Maturity Date of the Revolving Line is not extended by Bank, or (ii) the
occurrence of an Event of Default hereunder. All Letters of Credit shall be, in
form

 

 

and substance, acceptable to
Bank in its sole discretion and shall be subject to the terms and conditions of
Bank’s form  of standard
Application and Letter of Credit Agreement. Borrower agrees to execute any
further documentation in connection
with the Letters of Credit as Bank may reasonably request.

 

(b)                                 The obligation of Borrower to immediately
reimburse Bank for drawings made under Letters of Credit shall be absolute, unconditional and irrevocable, and shall be
performed strictly in accordance with the terms of this Agreement and such Letters of Credit, under all circumstances
whatsoever.  Borrower shall indemnify,
defend, protect, and hold Bank
harmless from any loss, cost, expense or liability, including, without
limitation, reasonable attorneys’
fees, arising out of or in connection with any Letters of Credit, except to the
extent resulting from Bank’s gross  negligence or willful
misconduct.

 

(c)                                  Borrower may request that Bank issue a Letter
of Credit payable in a currency other than United States Dollars. If a demand for payment is made under any such
Letter of Credit, Bank shall treat such demand as an Advance to Borrower of the equivalent of the amount thereof (plus
cable charges) in United States currency at the then prevailing rate of exchange in San Francisco, California, for sales
of that other currency for cable transfer to the country of which it is the currency.

 

(d)                                 Upon the issuance of any letter of credit
payable in a currency other than United States Dollars, Bank shall create a reserve (the “Letter of Credit Reserve”)
under the Revolving Line for letters of credit against fluctuations in currency exchange rates, in an
amount equal to ten percent (10%) of the face amount of such letter of credit. The amount of such reserve may be
amended by Bank from time to time to account for fluctuations in the exchange rate. The availability of funds under
the Revolving Line shall be reduced by the amount of such reserve for so long as such letter of credit remains
outstanding.

 

2.1.3                     Foreign Exchange Sublimit.  If
there is availability under the Revolving Line and the Borrowing Base, then Borrower may enter in foreign exchange
forward contracts with the Bank under which Borrower commits to purchase from or sell to Bank a set amount of
foreign currency more than one business day after the contract date (the“FX Forward Contract”). Bank shall
subtract 10% of each outstanding FX Forward Contract from the foreign exchangesublimit, which sublimit is a maximum of
$5,000,000.00 (the “FX Reserve”). The total FX Forward Contracts at any one time may not exceed 10 times the amount of
the FX Reserve. Bank may terminate the FX Forward Contracts if an Event of Default occurs.

 

2.1.4                     Cash Management Services
Sublimit.  Borrower may use up to $5,000,000.00 for the
Bank’s Cash Management Services,
which may include merchant services, direct deposit of payroll, business credit
card, and check cashing services
identified in the various cash management services agreements related to such
Cash Management Services (the
“Cash Management Services”). Such aggregate amounts utilized under the Cash
Management Services Sublimit
shall at all times reduce the amount otherwise available for Credit Extensions
under the Revolving Line. Any amounts
Bank pays on behalf of Borrower or any amounts that are not paid by Borrower
for any Cash Management Services
will be treated as Advances under the Revolving Line and will accrue interest
at the interest rate applicable to Advances.

 

2.1.5                     Undisbursed Credit Extensions.  The
Bank’s obligation to lend the undisbursed portion of the Obligations shall terminate if, in Bank’s
reasonable discretion, there has been a Material Adverse Change, or there hasbeen any material adverse deviation by
Borrower from the most recent business plan of Borrower presented to andaccepted by Bank prior to the execution
of this Agreement.

 

2.2                               Overadvances.  If Borrower’s
Obligations under Section 2.1.1, 2.1.2, 2.13 and 2.1.4 exceed the lesserof either (i) the Revolving Line or (ii)
the Borrowing Base, Borrower must immediately pay in cash to Bank the excess.

 

2.3                               Interest Rate; Payments.

 

(a)                                  Interest Rate.  The
principal amounts outstanding under hereunder shall accrue interest at aper annum rate equal to the Prime Rate.
After the occurrence and during the continuance of an Event of Default,

 

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Obligations shall bear
interest at three percent (3.0%) above the rate effective immediately before
the Event of Default.  The
applicable interest rate hereunder shall increase or decrease when the Prime
Rate changes. Interest is computed on the basis of a 360 day year for the actual number of days elapsed.

 

(b)                                 Payments.  Interest is payable on first
day of each month. Payments received after 12:00 noon Eastern time are considered received at the opening
of business on the next Business Day. When a payment is due on a day that is not a Business Day, the payment
is due the next Business Day and additional fees or interest, as applicable,  shall
continue to accrue.

 

(c)                                  Debit of Accounts.  Bank
may debit any of Borrower’s deposit accounts including Account Number               
for principal and interest payments or any amounts Borrower owes
Bank. Bank shall promptly notify
Borrower when it debits Borrower’s accounts. These debits are not a set-off.

 

2.4                               Fees.  Borrower shall
pay to Bank:

 

(a)                                  Facility Fee.  A fully earned, non-refundable facility fee of $25,000.00
has been earned by Bank as of the
date hereof and is due and payable on the Closing Date.

 

(b)                                 Unused Line Fee.  In the event, in any calendar
quarter, the average daily principal balance of the Credit Extensions outstanding during the quarter is less than
$5,000,000.00, Borrower shall pay Bank an unused  line
fee in an amount equal to 0.50% per annum on the difference between
$5,000,000.00 and the average daily principal  balance of the Credit
Extensions outstanding during the quarter, which unused line fee shall be
computed and paid quarterly, in
arrears, on the first day of the following quarter.

 

(c)                                  Letter of Credit Fee.  The
Borrower shall pay the Bank’s customary fees and expenses for the issuance of Letters of Credit, including,
without limitation, a Letter of Credit Fee of .85% per annum of the face  amount
of each Letter of Credit issued, upon the issuance or renewal of such Letter of
Credit by the Bank; and

 

(d)                                 Bank Expenses.  All
Bank Expenses (including reasonable attorneys’ fees and expenses incurred through and after the Closing Date)
when due.

 

3                                         CONDITIONS OF LOANS

 

3.1                               Conditions Precedent to
Initial Credit Extension. The Bank’s
obligation to make the initial Credit Extension is subject to the condition precedent that Bank shall have
received, in form and substance satisfactory to Bank, the following:

 

(a)                                  this Agreement;

 

(b)                                 the Exim Agreement, along all documents
referenced therein or related thereto;

 

(c)                                  a certificate of the Secretary of Borrower
with respect to articles, bylaws, incumbency and resolutions authorizing the execution and delivery of this Agreement;

 

(d)                                 an Intellectual Property Security Agreement;

 

(e)                                  subordination agreements by certain Persons;

 

(f)                                    Perfection Certificate(s) by Borrower and
Guarantor;

 

(g)                                 landlord’s waiver;

 

(h)                                 a legal opinion of Borrower’s counsel, in form
and substance acceptable to Bank;

 

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(i)                                     guaranties and security agreements by the
Guarantor(s);

 

(j)                                     financing statements (Forms UCC-1);

 

(k)                                  Account Control Agreement/ Investment Account
Control Agreement

 

(l)                                     insurance certificate;

 

(m)                               payment of the fees and Bank Expenses then due
specified in Section 2.4 hereof;

 

(n)                                 Certificate of Foreign Qualification (if
applicable);

 

(o)                                 Certificate of Good Standing/Legal Existence;
and

 

(p)                                 such other documents, and completion of such
other matters, as Bank may reasonably deem necessary or appropriate.

 

3.2                               Conditions Precedent to all
Credit Extensions.  Bank’s obligations to make each Credit
Extension, including the initial
Credit Extension, is subject to the following:  

 

(a)                                  timely receipt of any Payment/Advance Form;
and

 

(b)                                 the representations and warranties in Section
5 shall be materially true on the date of the Payment/Advance Form and on the effective date of each Credit Extension
and no Event of Default shall have occurred and be continuing, or result from the Credit Extension. Each Credit
Extension is Borrower’s representation and warranty on that date that the representations and
warranties in Section 5 remain true.

 

4                                         CREATION OF SECURITY INTEREST

 

4.1                               Grant of Security Interest.  Borrower hereby
grants Bank, to secure the payment and performance in full of all of the Obligations and the
performance of each of Borrower’s duties under the Loan Documents, a continuing security interest in, and pledges
and assigns to the Bank, the Collateral, wherever located, whether now ownedor hereafter acquired or arising, and
all proceeds and products thereof. Borrower warrants and represents that thesecurity interest granted herein shall
be a first priority security interest in the Collateral. The Collateral is also
subject to Permitted Liens. Upon the
occurrence and during the continuance of an Event of Default, Bank may place a
“hold” on any deposit account
pledged as Collateral.

 

Except as noted on the
Perfection Certificate, Borrower is not a party to, nor is bound by, any
material license or other  agreement
with respect to which the Borrower is the licensee that prohibits or otherwise
restricts Borrower from granting a
security interest in Borrower’s interest in such license or agreement or any
other property. Without prior consent from Bank, Borrower shall not enter into, or become bound by, any such
license or agreement which is reasonably likely to have a material impact on Borrower’s business
or financial condition. Borrower shall take such steps as Bank resaonably
requests to obtain the consent of, or waiver by, any person whose consent or
waiver is necessary for all such licenses or contract rights to be deemed “Collateral” and for Bank to have a
security interest in it that might otherwise be restricted or prohibited by law or by the terms of any
such license or agreement, whether now existing or entered into in the future.

 

Notwithstanding
the foregoing, it is expressly acknowledged and agreed that the security
interest created in this  Agreement
only with respect to Foreign Accounts, Foreign Inventory, Retainage Accounts
Receivable, any cash at Bank specifically
pledged to Bank to secure any Warranty Letters of Credit (as such terms are
defined in the Exim Agreement), and
Intellectual Property is subject to and subordinate to the security interest
granted to the Bank in the Exim Agreement with respect to such Foreign Accounts, Foreign Inventory, Retainage
Accounts Receivable, any cash at Bank specifically

 

4

 

pledged to Bank to secure any Warranty Letters of Credit (as such terms
are defined in the Exim Agreement), and  Intellectual Property.

 

If the Agreement is
terminated, Bank’s lien and security interest in the Collateral shall continue
until Borrower fully  satisfies
its Obligations. If Borrower shall at any time, acquire a commercial tort
claim, Borrower shall promptly notify Bank in a writing signed by Borrower of the brief details thereof and
grant to Bank in such writing a security interest therein and in the proceeds thereof, all upon
the terms of this Agreement, with such writing to be in form and substance  satisfactory
to Bank.

 

4.2                               Authorization to File
Financing Statements.  Borrower hereby authorizes Bank to file
financing statements, without
notice to Borrower, with all appropriate jurisdictions in order to perfect or
protect Bank’s interest  or rights hereunder, including a notice that
any disposition of the Collateral, by either the Borrower or any other Person,shall be deemed to violate the rights of
the Bank under the Code.

 

5                                         REPRESENTATIONS AND
WARRANTIES

 

Borrower represents and
warrants as follows:

 

5.1                               Due Organization and
Authorization.  Borrower and each Subsidiary is duly existing
and in good standing in its state
of formation and qualified and licensed to do business in, and in good standing
in, any state in which the
conduct of its business or its ownership of property requires that it be
qualified except where the failure to do so could not reasonably be expected to cause a Material
Adverse Change. In connection with this Agreement, the Borrower delivered to the Bank a certificate signed by
the Borrower and entitled “Perfection Certificate”. The Borrower represents  and
warrants to the Bank that: (a) the Borrower’s exact legal name is that
indicated on the Perfection Certificate and on the signature page hereof; and (b) the Borrower is an organization of
the type, and is organized in the jurisdiction, set forth in the Perfection Certificate; and (c)
the Perfection Certificate accurately sets forth the Borrower’s organizationalidentification number or accurately
states that the Borrower has none; and (d) the Perfection Certificate
accurately sets forth the
Borrower’s place of business, or, if more than one, its chief executive office
as well as the Borrower’s mailing 
address if different, and (e) all
other information set forth on the Perfection Certificate pertaining to the
Borrower is accurate and
complete. If the Borrower does not now have an organizational identification
number, but later obtains one, Borrower
shall forthwith notify the Bank of such organizational identification number.

 

The execution, delivery and
performance of the Loan Documents have been duly authorized, and do not
conflict  with Borrower’s
organizational documents, nor constitute an event of default under any material
agreement by which Borrower is
bound. Borrower is not in default under any agreement to which or by which it
is bound in which the default could
reasonably be expected to cause a Material Adverse Change.

 

5.2                               Collateral.  Borrower has good
title to the Collateral, free of Liens except Permitted Liens. Borrower has no deposit account, other than the deposit
accounts with Bank and deposit accounts described in the Perfection Certificate delivered to the Bank in
connection herewith. The Accounts are bona fide, existing obligations, and theservice or property has been performed
or delivered to the account debtor or its agent for immediate shipment to andunconditional acceptance by the account
debtor. The Collateral is not in the possession of any third party bailee (such
 as a warehouse). Except as hereafter disclosed to the Bank in writing by
Borrower, none of the components of the 
Collateral, in excess of Fifty
Thousand Dollars ($50,000.00) shall be maintained at locations other than as provided
in  the Perfection Certificate. In the event that Borrower, after the date
hereof, intends to store or otherwise deliver any  portion
of the Collateral, in excess of Fifty Thousand Dollars ($50,000.00) to a
bailee, then Borrower will first receive the written consent of Bank and such bailee must acknowledge in writing
that the bailee is holding such Collateral for the benefit of Bank. Borrower has no knowledge of any actual or imminent
Insolvency Proceeding of any account debtor whose accounts are an Eligible Account in any Borrowing Base
Certificate. All Inventory is in all material respects of good and marketable quality, free from
material defects. Borrower is the sole owner of the Intellectual Property,
except for non-exclusive licenses
granted to its customers in the ordinary course of business. Each Patent is
valid and enforceable and no part
of the Intellectual Property has been judged invalid or unenforceable, in whole
or in part, and

 

5

 

no claim has been made that
any part of the Intellectual Property violates the rights of any third party,
except to the extent  such
claim could not reasonably be expected to cause a Material Adverse Change.

 

5.3                               Litigation.  Except as shown
in the Perfection Certificate, there are no actions or proceedings pendingor, to the knowledge of Borrower’s
Responsible Officers or legal counsel, threatened by or against Borrower or anySubsidiary in which an adverse decision
could reasonably be expected to cause a Material Adverse Change.

 

5.4                               No Material Deviation in
Financial Statements.  All consolidated financial statements for
Borrower and any Subsidiary
delivered to Bank fairly present in all material respects Borrower’s
consolidated financial condition  and Borrower’s consolidated
results of operations. There has not been any material deterioration in
Borrower’s consolidated financial
condition since the date of the most recent financial statements submitted to
Bank.

 

5.5                               Solvency.  Borrower is
able to pay its debts (including trade debts) as they mature.

 

5.6                               Regulatory Compliance.  Borrower is not
an “investment company” or a company “controlled” by an “investment company” under the Investment
Company Act. Borrower is not engaged as one of its important activities in extending credit for margin stock (under
Regulations T and U of the Federal Reserve Board of Governors). Borrowerhas complied in all material respects
with the Federal Fair Labor Standards Act. Borrower has not violated any laws,ordinances or rules, the violation of
which could reasonably be expected to cause a Material Adverse Change. None of  Borrower’s
or any Subsidiary’s properties or assets has been used by Borrower or any
Subsidiary or, to the best of Borrower’s
knowledge, by previous Persons, in disposing, producing, storing, treating, or
transporting any hazardous substance
other than legally. Borrower and each Subsidiary has timely filed all required
tax returns and paid, or made adequate
provision to pay, all material taxes, except those being contested in good
faith with adequate reserves under 
GAAP. Borrower and each
Subsidiary has obtained all consents, approvals and authorizations of, made all
declarations or filings with, and
given all notices to, all government authorities that are necessary to continue
its business as currently conducted
except where the failure to make such declarations, notices or filings would
not reasonably be expected to  cause a Material Adverse Change.

 

5.7                               Subsidiaries.  Borrower does
not own any stock, partnership interest or other equity securities exceptfor Permitted Investments.

 

5.8                               Full Disclosure.  No written
representation, warranty or other statement of Borrower in any certificateor written statement given to Bank
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the
statements contained in the certificates or statements not misleading (it being
recognized by Bank that the
projections and forecasts provided by Borrower in good faith and based upon
reasonable assumptions are not viewed
as facts and that actual results during the period or periods covered by such
projections and forecasts may differ 
from the projected or forecasted
results).

 

6                                         AFFIRMATIVE COVENANTS

 

Borrower shall do all of the
following:

 

6.1                               Government
Compliance.  Borrower shall
maintain its and all Subsidiaries’ legal existence and good standing in its
jurisdiction of formation and maintain qualification in each jurisdiction in
which the failure to so qualify would reasonably be expected to have a material
adverse effect on Borrower’s business or operations. Borrower shall comply, and
have each Subsidiary comply, with all laws, ordinances and regulations to which
it is subject, noncompliance with which could have a material adverse effect on
Borrower’s business or operations or would reasonably be expected to cause a
Material Adverse Change.

 

6

 

6.2                               Financial Statements,
Reports, Certificates.

 

(a)                                  Borrower shall deliver to Bank: (i) as soon as
available, but no later than thirty (30) days after the last day of each month, a company prepared
consolidated balance sheet and income statement covering Borrower’s consolidated operations during the period
certified by a Responsible Officer and in a form acceptable to Bank; (ii) assoon as available, but no later than
ninety (90) days after the last day of Borrower’s fiscal year, audited
consolidated  financial statements prepared under GAAP,
consistently applied, together with an unqualified opinion on the financialstatements from an independent certified
public accounting firm reasonably acceptable to Bank; (iii) within five (5)
days of filing, copies of all
statements, reports and notices made available to Borrower’s security holders
or to any holders of Subordinated
Debt and all reports on Form 10-K, 10-Q and 8-K filed with the Securities and
Exchange Commission; (iv) a
prompt report of any legal actions pending or threatened against Borrower or
any Subsidiary that is reasonably likely
to result in damages or costs to Borrower or any Subsidiary of One Hundred
Thousand Dollars ($100,000.00) or more;
(v) prompt notice of any material change in the composition of the Intellectual
Property, or the registration of any copyright, including any subsequent ownership right of Borrower in or to
any Copyright, Patent or Trademark not shown in any intellectual property security agreement between Borrower and
Bank or knowledge of an event that materially  adversely affects the
value of the Intellectual Property; and (vi) budgets, sales projections,
operating plans or other financial
information reasonably requested by Bank.

 

(b)                                 Within thirty (30) days after the last day of
each month, Borrower shall deliver to Bank a Borrowing Base Certificate signed by a Responsible Officer in the form
of Exhibit C, with aged
listings of accounts receivable
(by invoice date).

 

(c)                                  Within thirty (30) days after the last day of
each month, Borrower shall deliver to Bank with the monthly financial statements a Compliance Certificate signed by a
Responsible Officer in the form of Exhibit
D.

 

(d)                                 Within thirty (30) days after the last day of
each month, Borrower shall deliver to Bank Deferred Revenue Schedules.

 

(e)                                  Allow Bank to audit Borrower’s Collateral at
Borrower’s expense. Such audits shall be conducted no more often than once every six (6) months unless an Event
of Default has occurred and is continuing. Notwithstanding the foregoing, no Credit Extensions shall be made prior
to the completion of the initial audit (the “Initial Audit”).

 

Notwithstanding the above
financial reporting requirements, in the event that Borrower has no Advances or
Credit Extensions in an amount
equal to or greater than Five Hundred Thousand Dollars ($500,000.00)
outstanding during any month, the
monthly financial reporting requirements set forth in subsections (a), (b), (c)
and (d) above shall be delivered
on a quarterly basis, within forty five (45) days after the end of each fiscal
quarter of Borrower.

 

6.3                               Inventory; Returns.  Borrower shall
keep all Inventory in good and marketable condition, free from material defects. Returns and allowances
between Borrower and its account debtors shall follow Borrower’s customarypractices as they exist at the Closing
Date. Borrower must promptly notify Bank of all returns, recoveries, disputes
and claims that involve more than
One Hundred Thousand Dollars ($100,000.00).

 

6.4                               Taxes.  Borrower shall
make, and cause each Subsidiary to make, timely payment of all material federal, state, and local taxes or assessments
(other than taxes and assessments which Borrower is contesting in good faith, with adequate reserves maintained in
accordance with GAAP) and will deliver to Bank, on demand, appropriate certificates attesting to such payments.

 

6.5                               Insurance.  Borrower shall
keep its business and the Collateral insured for risks and in amounts, andas Bank may reasonably request.
Insurance policies shall be in a form, with companies, and in amounts that arereasonably satisfactory to Bank. All
property policies shall have a lender’s loss payable endorsement showing Bank
as an additional loss payee and
all liability policies shall show the Bank as an additional insured and all
policies shall  provide that the insurer must give Bank at
least twenty (20) days notice before canceling its policy. At Bank’s request,

 

7

 

Borrower shall deliver
certified copies of policies and evidence of all premium payments. Proceeds
payable under any policy shall, at Bank’s option, be payable to Bank on account
of the Obligations. Notwithstanding the foregoing, so long as no Event of
Default has occurred and is continuing, Borrower shall have the option of
applying the proceeds of any casualty policy up to $100,000.00, in the
aggregate, toward the replacement or repair of destroyed or damaged property;
provided that (i) any such replaced or repaired property (a) shall be of equal
or like value as the replaced or repaired Collateral and (b) shall be deemed
Collateral in which Bank has been granted a first priority security interest
and (ii) after the occurrence and during the continuation of an Event of
Default all proceeds payable under such casualty policy shall, at the option of
the Bank, be payable to Bank on account of the Obligations. If Borrower fails
to obtain insurance as required under Section 6.5 or to pay any amount or
furnish any required proof of payment to third persons and the Bank, Bank may
make all or part of such payment or obtain such insurance policies required in
Section 6.5, and take any action under the policies Bank deems prudent.

 

6.6                               Accounts.  In order to
permit the Bank to monitor the Borrower’s financial performance and condition,Borrower, and all Borrower’s
Subsidiaries, shall maintain all of Borrower’s, and such Subsidiaries’,
depository, operating accounts
and securities accounts with Bank. Borrower may maintain up to Three Hundred
Thousand Dollars ($300,000.00) in
the aggregate, at any time, in a non-United States account with another
financial institution, for use in 
the ordinary course of Borrower’s
business. The Borrower may also maintain a payroll account at Fleet Bank for
the Borrower’s current payroll
requirements.

 

6.7                               Financial Covenants.

 

Borrower shall maintain at
all times, to be tested as of the last day of each month, unless otherwise
noted:

 

(a)  Adjusted Quick Ratio.  A ratio of Quick Assets to Current
Liabilities minus Deferred Revenue  and customer deposits of at least 2.0 to 1.0.

 

(b)  Minimum EBIT.  Borrower
shall have minimum quarterly EBIT of:

 

(i)                                     ($1,000,000) for the quarter ended June 30,
2003

(ii)                                  ($500,000) for the quarter ending September
30, 2003

(iii)                               ($500,000) for the quarter ending December 31,
2003

(iv)                              $1.00 for the quarter ending March 31, 2004
and each quarter thereafter

 

6.8                               Further Assurances.  Borrower shall
execute any further instruments and take further action as Bank reasonably requests to perfect or continue
Bank’s security interest in the Collateral or to effect the purposes of thisAgreement.

 

7                                         NEGATIVE COVENANTS

 

Borrower shall not do any of
the following without the Bank’s prior written consent:

 

7.1                               Dispositions.  Convey, sell,
lease, transfer or otherwise dispose of (collectively a “Transfer”), or permitany of its Subsidiaries to Transfer, all
or any part of its business or property, except for Transfers (i) of Inventory
in the ordinary course of
business; (ii) of non-exclusive licenses and similar arrangements for the use
of the property of Borrower or
its Subsidiaries in the ordinary course of business; (iii) of worn-out or
obsolete Equipment, or (iv) other assets
not exceeding One Hundred Thousand Dollars ($100,000.00), in the aggregate,
during any fiscal year.

 

7.2                               Changes in Business,
Ownership, Management or Business Locations.  Engage in or
permit any of its Subsidiaries to
engage in any business other than the businesses currently engaged in by
Borrower or reasonably  related thereto, or have a material change in
its ownership (other than by the sale of Borrower’s equity securities in apublic offering or to venture capital
investors so long as Borrower identifies to Bank the venture capital investors
prior to the closing of the
investment), or management. Borrower shall not, without at least thirty (30)
days prior written notice

 

8

 

to Bank: (i) relocate its chief
executive office, or add any new offices or business locations, including
warehouses (unless such new offices or business locations contain less than
Five Thousand Dollars ($5,000.00) in Borrower’s assets or property), or (ii)
change its jurisdiction of organization, or (iii) change its organizational
structure or type, or (iv) change its legal name, or (v) change any
organizational number (if any) assigned by its jurisdiction of organization.

 

7.3                               Mergers or Acquisitions.  Merge or
consolidate, or permit any of its Subsidiaries to merge or consolidate, with any other Person, or
acquire, or permit any of its Subsidiaries to acquire, all or substantially all
of the capital stock or property
of another Person. A Subsidiary may merge or consolidate into another
Subsidiary or into the Borrower.

 

7.4                               Indebtedness.  Create, incur,
assume, or be liable for any Indebtedness, or permit any Subsidiary to do so, other than Permitted Indebtedness.

 

7.5                               Encumbrance.  Create, incur,
or allow any Lien on any of its property, or assign or convey any right to receive income, including the sale of any
Accounts, or permit any of its Subsidiaries to do so, except for PermittedLiens, or permit any Collateral not to
be subject to the first priority security interest granted herein. The
Collateral may also be subject to
Permitted Liens.

 

7.6                               Distributions; Investments.  (i) Directly or
indirectly acquire or own any Person, or make any Investment in any Person, other than Permitted
Investments, or permit any of its Subsidiaries to do so; or (ii) pay anydividends or make any distribution or
payment or redeem, retire or purchase any capital stock, except for repurchasesof stock from former employees or
directors of Borrower under the terms of applicable repurchase agreements in anaggregate amount not to exceed One
Hundred Thousand Dollars ($100,000.00) in the aggregate in any fiscal year,provided that no Event of Default has
occurred, is continuing or would exist after giving effect to the repurchases.

 

7.7                               Transactions with Affiliates.  Directly or
indirectly enter into or permit to exist any material transaction with any Affiliate of Borrower,
except for transactions that are in the ordinary course of Borrower’s business,upon fair and reasonable terms that are
no less favorable to Borrower than would be obtained in an arm’s length transaction with a non-affiliated Person.

 

7.8                               Subordinated Debt.  Make or permit
any payment on any Subordinated Debt, except under the terms of the Subordinated Debt, or amend any
provision in any document relating to the Subordinated Debt, without Bank’sprior written consent.

 

7.9                               Compliance.  Become an
“investment company” or a company controlled by an “investment company”, under the Investment Company Act of
1940 or undertake as one of its important activities extending credit to purchase or carry margin stock, or use the
proceeds of any Credit Extension for that purpose; fail to meet the minimumfunding requirements of ERISA, permit a
Reportable Event or Prohibited Transaction, as defined in ERISA, to occur;fail to comply with the Federal Fair
Labor Standards Act or violate any other law or regulation, if the violation
could reasonably be expected to
have a material adverse effect on Borrower’s business or operations or would
reasonably be expected to cause a
Material Adverse Change, or permit any of its Subsidiaries to do so.

 

8                                         EVENTS OF DEFAULT

 

Any one of the following is
an Event of Default:

 

8.1                               Payment Default.  Borrower fails
to pay any of the Obligations within three (3) days after their due date. During such three (3) day period the
failure to cure the default shall not constitute an Event of Default (but noCredit Extension shall be made during
such period);

 

8.2                               Covenant Default. 
Borrower fails or neglects to perform any obligation in Section 6 or
violates any  covenant in Section 7 or fails or neglects to
perform, keep, or observe any other material term, provision, condition,covenant or agreement contained in this
Agreement, any Loan Documents, or in any present or future agreement between

 

9

 

Borrower and Bank and as to any
default under such other material term, provision, condition, covenant or
agreement that can be cured, has failed to cure the default within ten (10)
days after the occurrence thereof; provided, however, that if the default
cannot by its nature be cured within the ten (10) day period or cannot after
diligent attempts by Borrower be cured within such ten (10) day period, and such
default is likely to be cured within a reasonable time, then Borrower shall
have an additional period (which shall not in any case exceed thirty (30) days)
to attempt to cure such default, and within such reasonable time period the
failure to cure the default shall not be deemed an Event of Default (but no
Credit Extensions shall be made during such cure period). Grace periods
provided under this section shall not apply, to financial covenants or any
other covenants that are required to be satisfied, completed or tested by a
date certain.

 

8.3                               Material
Adverse Change.  A Material
Adverse Change occurs;

 

8.4                               Attachment.  (i) Any
material portion of Borrower’s assets is attached, seized, levied on, or comesinto possession of a trustee or receiver
and the attachment, seizure or levy is not removed in ten (10) days; (ii) the
service of process upon the
Borrower seeking to attach, by trustee or similar process, any funds of the
Borrower on deposit with the
Bank, or any entity under control of Bank (including a subsidiary); (iii)
Borrower is enjoined, restrained, or prevented by court order from conducting a material part of its business; (iv) a
judgment or other claim becomes a Lien on a material portion of Borrower’s assets; or (v) a notice of lien, levy, or
assessment is filed against any of Borrower’s assets by any government agency and not paid within
ten (10) days after Borrower receives notice. These are not Events of Default if stayed or if a bond is posted
pending contest by Borrower (but no Credit Extensions shall be made during the  cure
period);

 

8.5                               Insolvency.  (i) Borrower
becomes insolvent; (ii) Borrower begins an Insolvency Proceeding; or (iii)an Insolvency Proceeding is begun
against Borrower and not dismissed or stayed within thirty (30) days (but no
Credit Extensions shall be made
before any Insolvency Proceeding is dismissed);

 

8.6                               Other Agreements.  If there is a
default in any agreement to which Borrower is a party with a third party or parties resulting in a right by such
third party or parties, whether or not exercised, to accelerate the maturity ofany Indebtedness in an amount in excess
of One Hundred Thousand Dollars ($100,000) or that could result in a MaterialAdverse Change;

 

8.7                               Judgments.  If a
judgment or judgments for the payment of money in an amount, individually or inthe aggregate, of at least Two Hundred
Thousand Dollars ($200,000) shall be rendered against Borrower and shall  remain
unsatisfied and unstayed for a period of thirty (30) days (provided that no
Credit Extensions will be made prior to the satisfaction or stay of such judgment);

 

8.8                               Misrepresentations.  If Borrower or
any Person acting for Borrower makes any material misrepresentation or material misstatement now
or later in any warranty or representation in this Agreement or in any writing delivered to Bank or to induce Bank to
enter this Agreement or any Loan Document.

 

8.9                               Guaranty.  (i) Any
guaranty of any Obligations terminates or ceases for any reason to be in full
force; or (ii) any Guarantor does
not perform any obligation under any guaranty of the Obligations; or (iii) any
material misrepresentation or
material misstatement exists now or later in any warranty or representation in
any guaranty of the Obligations
or in any certificate delivered to Bank in connection with the guaranty; or
(iv) any circumstance described  in Section 7, or Sections 8.4, 8.5 or 8.7
occurs to any Guarantor, or (v) the liquidation, winding up, termination of  existence,
or insolvency of any Guarantor.

 

8.10                        Exim Agreement.  The occurrence
of any default or Event of Default under the Exim Agreement or any other agreement or instrument executed in
connection therewith.

 

9                                         BANK’S RIGHTS AND REMEDIES

 

9.1                               Rights and Remedies.  When
an Event of Default occurs and continues Bank may, without notice or demand, do any or all of the following:

 

10

 

(a)                                  Declare
all Obligations immediately due and payable (but if an Event of Default
described in Section 8.5 occurs all Obligations are immediately due and payable
without any action by Bank);

 

(b)                                 Stop advancing money or extending credit for
Borrower’s benefit under this Agreement or under any other agreement between Borrower and Bank;

 

(c)                                  Settle or adjust disputes and claims directly
with account debtors for amounts, on terms and in any order that Bank considers advisable and notify any Person owing
Borrower money of Bank’s security interest
in such funds and verify the amount of such account. Borrower shall collect all
payments in trust for Bank and, if
requested by Bank, immediately deliver the payments to Bank in the form
received from the account debtor,
with proper endorsements for deposit;

 

(d)                                 Make any payments and do any acts it considers
necessary or reasonable to protect its security interest in the Collateral. Borrower shall assemble the Collateral if
Bank requests and make it available as Bank designates. Bank may enter premises where the Collateral is located,
take and maintain possession of any part of the Collateral, and pay, purchase, contest, or compromise any Lien
which appears to be prior or superior to its security interest and pay all expenses incurred. Borrower grants
Bank a license to enter and occupy any of its premises, without charge, to exercise any of Bank’s rights or
remedies;

 

(e)                                  Apply to the Obligations any (i) balances and
deposits of Borrower it holds, or (ii) any amount held by Bank owing to or for the credit or the account of
Borrower;

 

(f)                                    Ship, reclaim, recover, store, finish,
maintain, repair, prepare for sale, advertise for sale, and sell the Collateral. Bank is hereby granted a
non-exclusive, royalty-free license or other right to use, without charge, Borrower’s labels, patents,
copyrights, mask works, rights of use of any name, trade secrets, trade names, trademarks, service marks, and
advertising matter, or any similar property as it pertains to the Collateral,  in
completing production of, advertising for sale, and selling any Collateral and,
in connection with Bank’s exercise
of its rights under this Section.  Borrower’s
rights under all licenses and all franchise agreements inure to Bank’s benefit;

 

(g)                                 Dispose of the Collateral according to the
Code; and

 

(h)                                 Provide a Notice of Exclusive Control, as set
forth in the Securities Account Control Agreement, of even date herewith.

 

9.2                               Power of Attorney.  Borrower hereby
irrevocably appoints Bank as its lawful attorney-in-fact, to be effective upon the occurrence and during the
continuance of an Event of Default, to: (i) endorse Borrower’s name on any checks or other forms of payment or
security; (ii) sign Borrower’s name on any invoice or bill of lading for anyAccount or drafts against account
debtors; (iii) settle and adjust disputes and claims about the Accounts
directly with account debtors,
for amounts and on terms Bank determines reasonable; (iv) make, settle, and
adjust all claims under Borrower’s
insurance policies; and (v) transfer the Collateral into the name of Bank or a
third party as the Code permits. Borrower
hereby appoints Bank as its lawful attorney-in-fact to sign Borrower’s name on
any documents necessary to perfect
or continue the perfection of any security interest regardless of whether an
Event of Default has occurred until 
all Obligations have been
satisfied in full and Bank is under no further obligation to make Credit
Extensions hereunder. Bank’s
foregoing appointment as Borrower’s attorney in fact, and all of Bank’s rights
and powers, coupled with an interest,
are irrevocable until all Obligations have been fully repaid and performed and
Bank’s obligation to provide Credit
Extensions terminates.

 

9.3                               Accounts
Notification/Collection.  In the event that an Event of Default occurs
and is continuing, Bank may
notify any Person owing Borrower money of Bank’s security interest in the funds
and verify and/or collect the amount
of the Account. After the occurrence and during the continuance of an Event of
Default, any amounts received

 

11

 

by Borrower shall be held in
trust by Borrower for Bank, and, if requested by Bank, Borrower shall
immediately deliver such receipts to Bank in the form received from the account
debtor, with proper endorsements for deposit.

 

9.4                               Bank Expenses.  Any amounts
paid by Bank as provided herein are Bank Expenses and are immediately due and payable, and shall bear
interest at the then applicable rate and be secured by the Collateral. Nopayments by Bank shall be deemed an
agreement to make similar payments in the future or Bank’s waiver of any Eventof Default.

 

9.5                               Bank’s Liability for
Collateral.  So long as the Bank complies with reasonable
banking practices regarding the
safekeeping of collateral, the Bank shall not be liable or responsible for: (a)
the safekeeping of the Collateral;
(b) any loss or damage to the Collateral; (c) any diminution in the value of
the Collateral; or (d) any act or default
of any carrier, warehouseman, bailee, or other Person. Borrower bears all risk
of loss, damage or destruction of the
Collateral.

 

9.6                               Remedies Cumulative. 
Bank’s rights and remedies under this Agreement, the Loan Documents, and  all
other agreements are cumulative. Bank has all rights and remedies provided
under the Code, by law, or in equity. 
Bank’s exercise of one right or
remedy is not an election, and Bank’s waiver of any Event of Default is not a
continuing waiver. Bank’s delay
is not a waiver, election, or acquiescence. No waiver hereunder shall be
effective unless signed by Bank
and then is only effective for the specific instance and purpose for which it
was given.

 

9.7                               Demand Waiver.  Borrower waives
demand, notice of default or dishonor, notice of payment and nonpayment, notice of any default, nonpayment
at maturity, release, compromise, settlement, extension, or renewal of accounts, documents, instruments, chattel
paper, and guarantees held by Bank on which Borrower is liable.

 

10                                  NOTICES

 

All notices or demands by any
party to this Agreement or any other related agreement must be in writing and
be personally delivered or sent
by an overnight delivery service, by certified mail, postage prepaid, return
receipt requested, or by
telefacsimile at the addresses listed below. Either Bank or Borrower may change
its notice address by giving the
other party written notice.

 

	
  If to Borrower:

  	
  American Science and
  Engineering, Inc.

  
	
   

  	
  829 Middlesex Turnpike

  Billerica, Massachusetts 01821

  
	
   

  	
  Attn: Chief Financial
  Officer

  
	
   

  	
  FAX: (978) 262-8804

  
	
   

  	
   

  
	
  If to Bank:

  	
  Silicon Valley Bank

  
	
   

  	
  One Newton Executive Park,
  Suite 200

  2221 Washington Street

  Newton, Massachusetts 02462

  
	
   

  	
  Attn: Mr. Mark Gallagher

  
	
   

  	
  Fax: (617) 969-4395

  
	
   

  	
   

  
	
  with a copy to:

  	
  Riemer & Braunstein LLP

  
	
   

  	
  Three Center Plaza

  Boston, Massachusetts 02108

  
	
   

  	
  Attn: David A. Ephraim,
  Esquire

  
	
   

  	
  FAX:
  (617) 880-3456

  

 

12

 

11                                  CHOICE OF LAW, VENUE AND JURY
TRIAL WAIVER

 

Massachusetts law governs the
Loan Documents without regard to principles of conflicts of law. Borrower and
Bank each submit to the exclusive
jurisdiction of the State and Federal courts in Massachusetts; provided,
however, that if for any reason
Bank cannot avail itself of such courts in the Commonwealth of Massachusetts,
Borrower accepts jurisdiction of
the courts and venue in Santa Clara County, California. NOTWITHSTANDING THE
FOREGOING, THE BANK SHALL HAVE
THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST THE BORROWER OR ITS PROPERTY IN THE COURTS OF ANY
OTHER JURISDICTION WHICH THE BANK DEEMS
NECESSARY OR APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR TO OTHERWISE ENFORCE THE BANK’S RIGHTS AGAINST
THE BORROWER OR ITS PROPERTY.  

 

BORROWER
AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY
CONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL
OTHER CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER
INTO THIS AGREEMENT. EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.

 

12                                  GENERAL PROVISIONS

 

12.1                        Successors and Assigns.  This Agreement
binds and is for the benefit of the successors and permitted assigns of each party. Borrower may not assign
this Agreement or any rights or Obligations under it without Bank’s priorwritten consent which may be granted or
withheld in Bank’s discretion. Bank has the right, without the consent of ornotice to Borrower, to sell, transfer,
negotiate, or grant participation in all or any part of, or any interest in,
Bank’s obligations, rights and
benefits under this Agreement, the Loan Documents or any related agreement.

 

12.2                        Indemnification.  Borrower hereby
indemnifies, defends and holds the Bank and its officers, employees and agents harmless against: (a) all
obligations, demands, claims, and liabilities asserted by any other partyin connection with the transactions
contemplated by the Loan Documents; and (b) all losses or Bank Expenses
incurred, or paid by Bank from,
following, or consequential to transactions between Bank and Borrower
(including reasonable attorneys’
fees and expenses), except for losses caused by Bank’s gross negligence or
willful misconduct.

 

12.3                        Right of Set-Off.  Borrower and
any guarantor hereby grant to Bank, a lien, security interest and right of setoff as security for all Obligations to
Bank, whether now existing or hereafter arising upon and against all deposits,credits, collateral and property, now or
hereafter in the possession, custody, safekeeping or control of Bank or any
entity under the control of the
Bank (including a Bank subsidiary) or in transit to any of them. At any time
after the occurrence and during
the continuance of an Event of Default, without demand or notice, Bank may set
off the same or any part thereof
and apply the same to any liability or obligation of Borrower and any guarantor
even though unmatured and regardless
of the adequacy of any other collateral securing the Obligations. ANY AND ALL
RIGHTS TO REQUIRE BANK TO
EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH  SECURES
THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCHDEPOSITS, CREDITS OR OTHER PROPERTY OF
THE BORROWER OR ANY GUARANTOR, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.

 

12.4                        Time of Essence.  Time is of the
essence for the performance of all Obligations in this Agreement.

 

12.5                        Severability of Provision.  Each provision
of this Agreement is severable from every other provision in determining the enforceability of any
provision.

 

12.6                        Amendments in Writing;
Integration.  All amendments to this Agreement must be in
writing signed by both Bank and
Borrower. This Agreement and the Loan Documents represent the entire agreement
about this subject matter, and
supersede prior negotiations or agreements. All prior agreements,
understandings, representations, warranties,
and negotiations between the parties about the subject matter of this Agreement
and the Loan Documents merge into
this Agreement and the Loan Documents.

 

13

 

12.7                        Counterparts.  This Agreement
may be executed in any number of counterparts and by different parties on separate counterparts, each of
which, when executed and delivered, are an original, and all taken together,constitute one Agreement.

 

12.8                        Survival.  All covenants,
representations and warranties made in this Agreement continue in full forcewhile any Obligations remain
outstanding. The obligation of Borrower in Section 12.2 to indemnify Bank shall
survive until the statute of
limitations with respect to such claim or cause of action shall have run.

 

12.9                        Confidentiality.  In handling any
confidential information, Bank shall exercise the same degree of care that it exercises for its own proprietary
information, but disclosure of information may be made: (i) to Bank’s
subsidiaries or affiliates in
connection with their business with Borrower; (ii) to prospective transferees
or purchasers of any interest in
the Credit Extensions (provided, however, Bank shall use commercially
reasonable efforts in obtaining such prospective transferee’s or purchaser’s agreement to the terms of this
provision); (iii) as required by law, regulation, subpoena, or other order, (iv) as required in
connection with Bank’s examination or audit; (v) as Bank considers appropriate in exercising remedies under this
Agreement; and (vi) consistent with federal securities laws as to any taxrelated matters. Confidential
information does not include information that either: (a) is in the public
domain or in Bank’s possession
when disclosed to Bank, or becomes part of the public domain after disclosure
to Bank; or (b) is disclosed to
Bank by a third party, if Bank does not know that the third party is prohibited
from disclosing the information.

 

13                                  DEFINITIONS

 

13.1                        Definitions.  In this
Agreement:

 

“Accounts” are all existing and later arising accounts,
contract rights, and other obligations owed Borrower in connection with its sale or lease of goods
(including licensing software and other technology) or provision of services,  all
credit insurance, guaranties, other security and all merchandise returned or
reclaimed by Borrower and Borrower’s 
Books relating to any of the
foregoing, as such definition may be amended from time to time according to the
Code.

 

“Advance”  or
“Advances” is a loan advance (or
advances) under the Revolving Line.

 

“Affiliate” is a Person that owns or controls directly or
indirectly the Person, any Person that controls or is controlled by or is under common control with
the Person, and each of that Person’s senior executive officers, directors,  partners
and, for any Person that is a limited liability company, that Person’s managers
and members.

 

“Bank
Expenses” are all
audit fees and expenses and reasonable costs or expenses (including reasonableattorneys’ fees and expenses) for
preparing, negotiating, administering, defending and enforcing the Loan
Documents (including appeals or Insolvency
Proceedings).

 

“Borrower’s
Books” are all
Borrower’s books and records including ledgers, records regarding Borrower’s  assets
or liabilities, the Collateral, business operations or financial condition and
all computer programs or discs or any equipment containing the information.

 

“Borrowing Base” is (i) 80.0% (the “Accounts Advance Rate”) of Eligible Accounts, which,
at Bank’s discretion and upon
written notice by Bank shall be net of any Deferred Revenue plus (ii) the
lesser of (A) 10.0% (the “Inventory
Advance Rate”) of the value of Borrower’s Eligible Inventory (valued at the
lower of cost or wholesale fair market
value) or (B) $750,000.00 (the “Inventory Cap”), all as determined by Bank from
Borrower’s most recent Borrowing
Base Certificate; provided, however, after performing an audit of Borrower’s
Collateral, Bank may, in its sole discretion,
(i) lower the Inventory Advance Rate, lower the Inventory Cap or lower the
Accounts Advance Rate if the results
are unsatisfactory to Bank or (ii) increase the Accounts Advance Rate to 85.0%
if the results are satisfactory to Bank.

 

14

 

“Business
Day” is any day that
is not a Saturday, Sunday or a day on which the Bank is closed.

 

“Closing
Date” is the date of
this Agreement.

 

“Code” is the Uniform Commercial Code as adopted in
Massachusetts, as amended and as may be amended and in effect from time to time.

 

“Collateral” is any and all properties, rights and assets
of the Borrower granted by the Borrower to Bank or arising under the Code, now, or in the future,
in which the Borrower obtains an interest, or the power to transfer rights,  including,
without limitation, the property described on Exhibit A.

 

“Contingent
Obligation” is, for
any Person, any direct or indirect liability, contingent or not, of that Person  for
(i) any indebtedness, lease, dividend, letter of credit or other obligation of
another such as an obligation directly or indirectly guaranteed, endorsed, co-made, discounted or sold with recourse
by that Person, or for which that Person is directly or indirectly liable; (ii) any obligations for undrawn letters
of credit for the account of that Person; and (iii) all obligations from any interest rate, currency
or commodity swap agreement, interest rate cap or collar agreement, or otheragreement or arrangement designated to
protect a Person against fluctuation in interest rates, currency exchange ratesor commodity prices; but “Contingent
Obligation” does not include endorsements in the ordinary course of business.  The
amount of a Contingent Obligation is the stated or determined amount of the
primary obligation for which the Contingent
Obligation is made or, if not determinable, the maximum reasonably anticipated
liability for it determined  by the Person in good faith; but the amount
may not exceed the maximum of the obligations under the guarantee or othersupport arrangement.

 

“Copyrights”
are all copyright
rights, applications or registrations and like protections in each work orauthorship or derivative work, whether
published or not (whether or not it is a trade secret) now or later existing,
created, acquired or held.

 

“Credit
Extension” is each
Advance, Letter of Credit, F/X Forward Contract, or any other extension of
credit  by Bank for Borrower’s benefit.

 

“Current
Liabilities” are the
aggregate amount of Borrower’s Total Liabilities which mature within one (1)year, which shall include, without
limitation, all obligations and liabilities of Borrower to Bank.

 

“Deferred
Revenue” is all amounts
received in advance of performance under contracts and not yet recognizedas revenue.

 

“Eligible
Accounts” are billed
Accounts in the ordinary course of Borrower’s business that meet all Borrower’s  representations
and warranties in Section 5.2; but Bank may change eligibility standards
by giving Borrower notice. Unless
Bank agrees otherwise in writing, Eligible Accounts shall not include:

 

(a)                                  Accounts that the account debtor has not paid
within one hundred twenty (120) days of invoice date;

 

(b)                                 Accounts for an account debtor, fifty percent
(50%) or more of whose Accounts have not been paid within one hundred twenty (120) days of invoice date;

 

(c)                                  Credit balances over one hundred twenty (120)
days from invoice date;

 

(d)                                 Accounts for an account debtor, including
Affiliates, whose total obligations to Borrower exceed thirty-five (35%) of all Accounts, for the amounts that exceed
that percentage, unless Bank approves in writing;

 

15

 

(e)                                  Accounts for which the account debtor does not
have its principal place of business in the United States;

 

(f)                                    Accounts for which the account debtor is a
federal, state or local government entity or any department, agency, or instrumentality thereof except for Accounts of
the United States if the payee has assigned
its payment rights to Bank and the assignment has been acknowledged under the
Assignment of Claims Act of 1940
(31 U.S.C. 3727);

 

(g)                                 Accounts for which Borrower owes the account
debtor, but only up to the amount owed (sometimes called “contra” accounts, accounts payable, customer deposits
or credit accounts);

 

(h)                                 Accounts for demonstration or promotional
equipment, or in which goods are consigned, sales guaranteed, sale or return, sale on approval,
bill and hold, or other terms if account debtor’s payment may be conditional;

 

(i)                                     Accounts for which the account debtor is
Borrower’s Affiliate, officer, employee, or agent;

 

(j)                                     Accounts in which the account debtor disputes
liability or makes any claim and Bank believes there may be a basis for dispute (but only up to the disputed or claimed
amount), or if the account debtor is subject to an Insolvency Proceeding, or becomes insolvent, or goes out
of business;

 

(k)                                  Accounts for which Bank reasonably determines
collection to be doubtful.

 

“EBIT” is Borrower’s earnings before interest expense
and taxes for the period, excluding any expenses or income related to the market effect of
Borrower’s issued and outstanding warrants.

 

“Eligible
Inventory” is
Borrower’s Inventory, including raw materials, located at its principal place
of business (or any location
permitted under Section 7.2) that complies with representations and warranties
in Section 5.2, but does  not include used, returned, obsolete,
consigned, work in progress, demonstrative or custom inventory, supplies,
packing or shipping materials.

 

“Equipment” is all present and future machinery,
equipment, tenant improvements, furniture, fixtures, vehicles, tools, parts and attachments in which Borrower
has any interest.

 

“ERISA” is the Employment Retirement Income Security
Act of 1974, and its regulations.

 

“Exim
Agreement” is that
certain Export-Import Bank Loan and Security Agreement of even date herewith  by
and between Borrower and Bank and all documents, instruments and agreements
executed in conjunction therewith, 
each as may be amended from time
to time.

 

“GAAP” is generally accepted accounting principles.

 

“Guarantor” is any present or future guarantor of the
Obligations, including AS&E Global, Inc., a  Massachusetts
corporation.

 

“Indebtedness” is (a) indebtedness for borrowed money or the
deferred price of property or services, such as  reimbursement
and other obligations for surety bonds and letters of credit, (b) obligations
evidenced by notes, bonds,  debentures or similar instruments, (c) capital
lease obligations and (d) Contingent Obligations.

 

“Initial Audit” is defined in Section 6.2(d).

 

16

 

“Insolvency Proceeding”
is any proceeding by or against any Person under the United States Bankruptcy
Code, or any other bankruptcy or insolvency law, including assignments for the
benefit of creditors, compositions, extensions generally with its creditors, or
proceedings seeking reorganization, arrangement, or other relief.

 

“Intellectual
Property” is

 

(a)                                  Copyrights, Trademarks, Patents, and Mask
Works including amendments, renewals, extensions and all licenses or other rights to use and all license fees
and royalties from the use;

 

(b)                                 Any trade secrets and any Intellectual
Property rights in computer software and computer software products now or later existing,
created, acquired or held;

 

(c)                                  All design rights which may be available to
Borrower now or later created, acquired or held;

 

(d)                                 Any claims for damages (past, present or
future) for infringement of any of the rights above, with the right, but not the obligation, to sue
and collect damages for use or infringement of the intellectual property rights above.

 

All proceeds and products of
the foregoing, including all insurance, indemnity or warranty payments.

 

“Inventory” is
present and future inventory in which Borrower has any interest, including
merchandise, raw materials, parts, supplies, packing and shipping materials,
work in process and finished products intended for sale or lease or to be
furnished under a contract of service, of every kind and description now or
later owned by or in the custody or possession, actual or constructive, of
Borrower, including inventory temporarily out of its custody or possession or
in transit and including returns on any accounts or other proceeds (including
insurance proceeds) from the sale or disposition of any of the foregoing and
any documents of title.

 

“Investment” is any beneficial ownership of (including
stock, partnership interest or other securities) any Person, or any loan, advance or capital
contribution to any Person.

 

“IP
Agreement” is a
certain Intellectual Property Security Agreement executed and delivered by
Borrower to Bank.

 

“Letter of
Credit” means a letter
of credit or similar undertaking issued by Bank pursuant to Section 2.1.2.

 

“Letter of
Credit Reserve” has
the meaning set forth in Section 2.1.2.

 

“Lien” is a mortgage, lien, deed of trust, charge,
pledge, security interest or other encumbrance.

 

“Loan Documents” are, collectively, this Agreement, the Exim
Agreement, the IP Agreement, any note, or notes or guaranties executed by Borrower or Guarantor, and any other
present or future agreement between Borrower and/or for the benefit of Bank in connection with this Agreement, all as
amended, extended or restated

 

“Mask Works”
are all mask works or
similar rights available for the protection of semiconductor chips, now

owned or later acquired.

 

“Material Adverse Change “ is: (i) A material impairment in the perfection
or priority of Bank’s security interest
in the Collateral or in the value of such Collateral; (ii) a material adverse
change in the business, operations, or condition (financial or otherwise) of the Borrower; or (iii) a material
impairment of the prospect of repayment of any  portion of the
Obligations; or (iv) Bank determines, based upon information available to it
and in its reasonable  judgment, that there is a substanital
likelihood that Borrower shall fail to comply with one or more of the financial  covenants
in Section 6 during the next succeeding financial reporting period.

 

17

 

“Obligations” are debts, principal, interest, Bank
Expenses and other amounts Borrower owes Bank now or later, under this Agreement, under the Exim
Agreement, or under any other documents, instruments and agreements between Borrower and Bank, including letters
of credit, cash management services, and foreign exchange contracts, if any, and including interest accruing after
Insolvency Proceedings begin and debts, liabilities, or obligations of Borrower  assigned
to Bank.

 

“Patents” are patents, patent applications and like
protections, including improvements, divisions, continuations, renewals, reissues, extensions and continuations-in-part
of the same.

 

“Permitted
Indebtedness” is:

 

(a)                                  Borrower’s indebtedness to Bank under this
Agreement or the Loan Documents;

 

(b)                                 Indebtedness existing on the Closing Date and
shown on the Perfection Certificate;

 

(c)                                  Subordinated Debt;

 

(d)                                 Indebtedness to trade creditors and with
respect to surety bonds and similar obligations incurred in the ordinary course of business; and

 

(e)                                  Indebtedness secured by Permitted Liens;

 

(f)                                    Extensions, refinancings, modifications,
amendments and restatements of any items of Permitted Indebtedness (a) through (e) above, provided that the
principal amount thereof is not increased or the terms thereof are not modified to impose more burdensome terms upon
Borrower or its Subsidiary, as the case
may be.

 

“Permitted
Investments” are:

 

(a)                                  Investments shown on the Perfection
Certificate and existing on the Closing Date; and

 

(b)                                 (i) marketable direct obligations issued or
unconditionally guaranteed by the United States or its agency or any state maturing within 1 year from its acquisition,
(ii) commercial paper maturing no more than 1 year after its creation and having the highest or second highest
rating from either Standard & Poor’s  Corporation or Moody’s
Investors Service, Inc., (iii) Bank’s certificates of deposit issued maturing
no more than 1 year after issue,
(iv) any other investments administered through the Bank, and (v) any
Investments permitted  by Borrower’s investment policy, as amended
from time to time, provided that such investment policy (and any such amendment thereto) has been approved by
Bank.

 

“Permitted
Liens” are:

 

(a)                                  Liens existing on the Closing Date and shown
on the Perfection Certificate or arising under this Agreement or other Loan Documents;

 

(b)                                 Liens for taxes, fees, assessments or other
government charges or levies, either not delinquent or being contested in good faith and for which
Borrower maintains adequate reserves on its Books, if they have no priority over any of Bank’s security
interests;

 

(c)                                  Leases or subleases and non-exclusive licenses
or sublicenses granted in the ordinary course of Borrower’s business, if the leases, subleases, licenses and
sublicenses permit granting Bank a security interest;

 

18

 

(d)                                 Purchase money Liens or capital leases in an
amount not to exceed Five Hundred Thousand Dollars ($500,000.00), in the aggregate, during any fiscal year: (i) on
Equipment acquired or held by Borrower incurred for financing the acquisition of the Equipment, or (ii)
existing on equipment when acquired, if 
the Lien  is confined to the property and improvements
and the proceeds of the equipment; and

 

(d)                                 Liens incurred in the extension, renewal or
refinancing of the indebtedness secured by Liens described in (a) through (d), but any extension, renewal or
replacement Lien must be limited to the property encumbered by the existing Lien and the principal amount of the
indebtedness may not increase.

 

“Person” is any individual, sole proprietorship,
partnership, limited liability company, joint venture, company, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, firm, joint
stock company, estate, entity or
government agency.

 

“Prime Rate” is the greater of (i) 4.00% or (ii) Bank’s
most recently announced “prime rate,” even if it is not Bank’s lowest rate.

 

“Quick
Assets” is, on any
date, the Borrower’s consolidated, unrestricted cash (less customer deposits),
cash equivalents, net billed
accounts receivable and investments with maturities of fewer than 12 months
determined according to GAAP.

 

“Responsible
Officer” is each of
the Chief Executive Officer, President, Chief Financial Officer and Controller  of
Borrower.

 

“Revolving
Line” is an Advance or
Advances of up to Five Million Dollars ($5,000,000.00).

 

“Revolving
Maturity Date” is
November 30, 2004.

 

“Subordinated
Debt” is debt incurred
by Borrower subordinated to Borrower’s debt to Bank (pursuant to a subordination agreement entered into between
the Bank, the Borrower and the subordinated creditor), on terms acceptable to Bank.

 

“Subsidiary” is any Person, corporation, partnership,
limited liability company, joint venture, or any other business entity of which more than 50% of the
voting stock or other equity interests is owned or controlled, directly or  indirectly,
by the Person or one or more Affiliates of the Person.

 

“Total
Liabilities” is on any
day, obligations that should, under GAAP, be classified as liabilities on
Borrower’s consolidated balance
sheet, including all Indebtedness, and current portion of Subordinated Debt
permitted by Bank to be paid by
Borrower, but excluding all other Subordinated Debt.

 

“Trademarks” are trademark and service mark rights, registered or not, applications
to register and registrations and
like protections, and the entire goodwill of the business of Assignor connected
with the trademarks.

 

19

 

IN WITNESS
WHEREOF, the parties hereto have caused this Agreement to be executed as a
sealed instrument under the laws of the Commonwealth of Massachusetts as of the
date first above written. 

 

	
  BORROWER:

  
	
   

  
	
  AMERICAN SCIENCE AND
  ENGINEERING, INC.

  
	
   

  	
   

  
	
  By

  	
   

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  BANK:

  	
   

  
	
   

  	
   

  
	
  SILICON VALLEY BANK, d/b/a

  	
   

  
	
  SILICON VALLEY EAST

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By

  	
   

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  SILICON VALLEY BANK

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By

  	
   

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
  (Signed
  in Santa Clara County, California)

  
	
   

  	
   

  
	
   

  	
   

  
							

20

 

EXHIBIT A

 

The Collateral consists of
all of Borrower’s right, title and interest in and to the following:

 

All goods, equipment,
inventory, contract rights or rights to payment of money, leases, license
agreements,  franchise
agreements, general intangibles (including payment intangibles), accounts
(including health-care receivables), documents, instruments (including any promissory notes), chattel paper
(whether tangible or electronic), cash, deposit accounts, fixtures, letters of credit rights (whether or not the letter
of credit is evidenced by a writing), commercial tort claims, securities, and all other investment
property, supporting obligations, and financial assets, whether now owned  or
hereafter acquired, wherever located; and

 

Any copyright rights,
copyright applications, copyright registrations and like protections in each
work of  authorship and
derivative work, whether published or unpublished, now owned or later acquired;
any patents, trademarks, service
marks and applications therefor; trade styles, trade names, any trade secret
rights, including any rights to unpatented
inventions, know-how, operating manuals, license rights and agreements and
confidential information, now owned
or hereafter acquired; or any claims for damages by way of any past, present
and future infringement of any of the
foregoing; and

 

All Borrower’s books relating
to the foregoing and any and all claims, rights and interests in any of the
above  and all
substitutions for, additions, attachments, accessories, accessions and
improvements to and replacements, products, proceeds and insurance proceeds of any or all of the foregoing.

 

21

 

EXHIBIT B

 

Loan Payment/Advance Request Form

DEADLINE FOR SAME DAY PROCESSING IS 3:00 E.S.T.

	
  Fax To: (617) 969-5965 

  	
  Date:                                    

  

 

	
  LOAN
  PAYMENT:

  
	
  Sample
  documents Client Name (Borrower)

  
	
   

  
	
  From Account #
                                                    

  	
  To Account #
                                                       

  
	
  (Deposit Account #)

  	
  (Loan Account #)

  
	
   

  
	
  Principal
  $                                                               and/or
  Interest
  $                                                            

  
	
   

  
	
  All Borrower’s
  representation and warranties in the Loan and Security Agreement are true,
  correct and complete in all  material respects on the date of the telephone transfer request for an
  advance, but those representations and warranties expressly referring to another date shall be
  true, correct and complete in all material respects as of such date:

  
	
   

  
	
  Authorized
  Signature:

  	
   

  	
   

  	
  Phone Number:

  	
   

  	
   

  
	
   

  
	
  LOAN
  ADVANCE:

  
	
  Complete Outgoing Wire Request section below if
  all or a portion of the funds from this loan advance are for
  an outgoing wire.

  
	
   

  
	
  From Account #
                                                    

  	
  To Account #
                                                       

  
	
  (Loan
  Account #) 

  	
  (Deposit
  Account #)

  
	
   

  
	
  Amount of Advance
  $                                          

  
	
   

  
	
  All Borrower’s
  representation and warranties in the Loan and Security Agreement are true,
  correct and complete in all  material respects on the date of the telephone transfer request for an
  advance, but those representations and warranties expressly referring to another date shall be
  true, correct and complete in all material respects as of such date:

  
	
   

  
	
  Authorized
  Signature: 

  	
   

  	
   

  	
  Phone Number:

  	
   

  	
   

  
	
   

  
	
  OUTGOING
  WIRE REQUEST

  
	
  Complete
  only if all or a portion of funds from the loan
  advance above are to be wired.

  
	
  Deadline for same day
  processing is 3:00pm, E.S.T.

  
	
   

  
	
  Beneficiary
  Name:                                             

  	
  Amount of Wire:
  $                                             

  
	
   

  	
   

  
	
  Beneficiary
  Bank:                                               

  	
  Account
  Number:                                               

  
	
   

  
	
  City and
  Sate:                                                 

  
	
   

  
	
  Beneficiary Bank Transit
  (ABA)
  #:                                         

  	
  Beneficiary Bank Code
  (Swift, Sort, Chip, etc.):

  
	
   

  	
   

  
	
   

  	
  (For
  International Wire Only)

  
	
   

  
	
  Intermediary
  Bank:                                                   

  	
  Transit (ABA)
  #:                                                  

  
	
   

  
	
  For Further Credit
  to:                                                                                                                                                                  

  
	
   

  
	
  Special
  Instruction:                                                                                                                                                                      

  
	
   

  
	
  By
  signing below, I (we) acknowledge and agree that my (our) funds transfer
  request shall be processed in  accordance with and subject to the terms and
  conditions set forth in the agreements(s) covering funds transfer  service(s), which
  agreements(s) were previously received and executed by me (us).

  
	
   

  
	
  Authorized Signature: 

  	
   

  	
   

  	
  2nd Signature (If
  Required):

  	
   

  
	
   

  
	
  Print
  Name/Title: 

  	
   

  	
   

  	
  Print
  Name/Title:

  	
   

  
																				

 

	
  Telephone
  # 

  	
   

  	
   

  	
  Telephone
  #

  	
   

  

 

22

 

EXHIBIT C

BORROWING BASE CERTIFICATE

 

 

	
  Borrower:

  	
  Lender:

  	
  Silicon Valley Bank

  
	
   

  	
   

  	
   

  
	
  Commitment Amount:    $5,000,000

  	
   

  	
   

  
					

 

 

	
  ACCOUNTS RECEIVABLE

  	
   

  
	
  1.

  	
   

  	
  Accounts Receivable Book Value as of
                                    

  	
  $

  	
   

  
	
  2.

  	
   

  	
  Additions (please explain on reverse)

  	
  $

  	
   

  
	
  3.

  	
   

  	
  TOTAL ACCOUNTS RECEIVABLE

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)

  	
   

  
	
  4.

  	
   

  	
  Amounts over 120 days due

  	
  $

  	
   

  
	
  5.

  	
   

  	
  Balance of 50% over 120 day accounts

  	
  $

  	
   

  
	
  6.

  	
   

  	
  Credit balances over 120 days

  	
  $

  	
   

  
	
  7.

  	
   

  	
  Concentration Limits

  	
  $

  	
   

  
	
  8.

  	
   

  	
  Foreign Accounts

  	
  $

  	
   

  
	
  9.

  	
   

  	
  Governmental Accounts

  	
  $

  	
   

  
	
  10.

  	
   

  	
  Contra Accounts

  	
  $

  	
   

  
	
  11.

  	
   

  	
  Promotion or Demo Accounts

  	
  $

  	
   

  
	
  12.

  	
   

  	
  Intercompany/Employee Accounts

  	
  $

  	
   

  
	
  13.

  	
   

  	
  Other (please explain on reverse)

  	
  $

  	
   

  
	
  14.

  	
   

  	
  TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS

  	
  $

  	
   

  
	
  15.

  	
   

  	
  Eligible Accounts (#3 minus #14)

  	
  $

  	
   

  
	
  16.

  	
   

  	
  LOAN VALUE OF ACCOUNTS (80% of #15)

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  INVENTORY

  	
   

  
	
  17.

  	
   

  	
  Inventory Value as of

  	
  $

  	
   

  
	
  18.

  	
   

  	
  LOAN VALUE OF INVENTORY (lesser of 10.0% of #17 or $750,000)

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  BALANCES

  	
   

  
	
  19.

  	
   

  	
  Maximum Loan Amount

  	
  $

  	
   

  
	
  20.

  	
   

  	
  Total Funds Available [Lesser of #19 or (#16 plus #18)]

  	
  $

  	
   

  
	
  21.

  	
   

  	
  Present balance owing on Line of Credit

  	
  $

  	
   

  
	
  22.

  	
   

  	
  Outstanding under Sublimits (letters of credit, FX contracts)

  	
  $

  	
   

  
	
  23.

  	
   

  	
  RESERVE POSITION (#20 minus #21 and #22)

  	
  $

  	
   

  
						

 

	
  The undersigned represents and warrants that this is
  true, complete and correct, and that the information in this Borrowing Base
  Certificate complies with the representations and warranties in the Loan and
  Security Agreement between the undersigned and Silicon Valley Bank.

  	
   

  	
   

  
	
   

  	
  BANK USE
  ONLY

  
	
   

  	
   

  
	
   

  	
  Received by:

  	
   

  	
   

  
	
   

  	
   

  	
  AUTHORIZED SIGNER

  
	
   

  	
   

  	
   

  
	
  COMMENTS:

  	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
  Verified:

  	
   

  	
   

  
	
  Authorized Signer

  	
   

  	
   

  	
  AUTHORIZED SIGNER

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date:

  	
   

  	
   

  
												

 

23

 

EXHIBIT D

COMPLIANCE
CERTIFICATE

 

	
  TO:

  	
  SILICON VALLEY BANK

  
	
  FROM:

  	
  AMERICAN SCIENCE AND ENGINEERING, INC.

  

 

The undersigned authorized
officer of AMERICAN SCIENCE AND ENGINEERING, INC. certifies that under the
terms and conditions of the Loan and Security Agreement between Borrower and
Bank (the “Agreement”), (i) Borrower is in complete compliance for the period
ending                           
with all required covenants except as noted below and (ii) all representations
and warranties in the Agreement are true and correct in all material respects
on this date.  Attached are the required
documents supporting the certification. 
The Officer certifies that these are prepared in accordance with
Generally Accepted Accounting Principles (GAAP) consistently applied from one
period to the next except as explained in an accompanying letter or
footnotes.  The Officer acknowledges
that no borrowings may be requested at any time or date of determination that
Borrower is not in compliance with any of the terms of the Agreement, and that
compliance is determined not just at the date this certificate is delivered.

 

	
  Please indicate compliance status by circling Yes/No
  under “Complies” column.

  
	
   

  
	
  Reporting Covenant

  	
   

  	
  Required

  	
   

  	
  Complies

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Monthly financial statements with CC

  	
   

  	
  Monthly within 30 days*

  	
   

  	
  Yes  No

  
	
  Annual (CPA Audited)

  	
   

  	
  FYE within 90 days

  	
   

  	
  Yes  No

  
	
  10-Q , 10-K and 8-K

  	
   

  	
  Within 5 days after filing with SEC

  	
   

  	
  Yes  No

  
	
  BBC A/R Agings

  	
   

  	
  Monthly within 30 days*

  	
   

  	
  Yes  No

  
	
  Deferred Revenue Schedule

  	
   

  	
  Monthly within 30 days*

  	
   

  	
  Yes  No

  
	
  Audit

  	
   

  	
  Semi-Annual

  	
   

  	
  Yes  No

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Notification of registration of Intellectual Property

  
	
  The following Intellectual Property was registered after the Closing
  Date (if blank, read “None”)

  

 

	
  Financial Covenant

  	
   

  	
  Required

  	
   

  	
  Actual

  	
   

  	
  Complies

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Maintain on a Monthly Basis:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Minimum Adjusted Quick
  Ratio

  	
   

  	
  2.0:1.0

  	
   

  	
  :1.0

  	
   

  	
  Yes  No

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Maintain on a Quarterly Basis:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Minimum EBIT

  	
   

  	
  **

  	
   

  	
  $

  	
   

  	
   

  	
  Yes  No

  
								

 

* See Section 6.2 of Agreement (may be quarterly if Advances/Credit
Extensions less than $500,000.00 )

** See Section 6.7 of Agreement

 

	
  Comments Regarding Exceptions:  See
  Attached.

  	
   

  
	
  Sincerely,

  	
  BANK USE
  ONLY

  
	
   

  	
  Received by: 

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  AUTHORIZED SIGNER

  
	
  SIGNATURE

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  Verified:

  	
   

  	
   

  
	
  TITLE

  	
   

  	
  AUTHORIZED SIGNER

  
	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  DATE

  	
  Compliance Status:

  	
  Yes

  	
  No

  
													

 

24Exhibit
10.1

 

AMENDED
AND RESTATED

CREDIT
AGREEMENT

 

 

 

Dated
as of November 12,
2003

 

 

 

among

 

LA
QUINTA PROPERTIES, INC.

as Borrower,

 

LA
QUINTA CORPORATION,

as a Guarantor,

 

THE
LENDERS LISTED HEREIN,

as
Lenders,

 

CANADIAN
IMPERIAL BANK OF COMMERCE,

as
Administrative Agent,

 

FLEET
SECURITIES INC.,

as
Syndication Agent,

 

and

 

CREDIT
LYONNAIS NEW YORK BRANCH,

as
Documentation Agent

 

CIBC
WORLD MARKETS CORP.

and FLEET SECURITIES INC.,

as Co-Lead Arrangers

 

 

	
   

  

 

 

	
  SECTION 1.

  	
  DEFINITIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  1.1

  	
  Certain Defined Terms

  	
   

  
	
   

  	
   

  	
   

  
	
  1.2

  	
  Accounting
  Terms; Utilization of GAAP for Purposes of Calculations Under Agreement

  	
   

  
	
   

  	
   

  	
   

  
	
  1.3

  	
  Other
  Definitional Provisions and Rules of Construction

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 2.

  	
  AMOUNTS AND
  TERMS OF COMMITMENTS AND LOANS

  	
   

  
	
   

  	
   

  	
   

  
	
  2.1

  	
  Commitments;
  Making of Loans; Optional Notes

  	
   

  
	
   

  	
   

  	
   

  
	
  2.2

  	
  Interest on the Loans

  	
   

  
	
   

  	
   

  	
   

  
	
  2.3

  	
  Fees

  	
   

  
	
   

  	
   

  	
   

  
	
  2.4

  	
  Repayments
  and Prepayments; General Provisions Regarding Payments; Application of
  Proceeds of Collateral and Payments Under Subsidiary Guaranty

  	
   

  
	
   

  	
   

  	
   

  
	
  2.5

  	
  Use of
  Proceeds

  	
   

  
	
   

  	
   

  	
   

  
	
  2.6

  	
  Special
  Provisions Governing LIBOR Loans

  	
   

  
	
   

  	
   

  	
   

  
	
  2.7

  	
  Increased
  Costs; Taxes; Capital Adequacy

  	
   

  
	
   

  	
   

  	
   

  
	
  2.8

  	
  Obligation
  of Lenders and Issuing Lenders to Mitigate

  	
   

  
	
   

  	
   

  	
   

  
	
  2.9

  	
  Replacement of a Lender

  	
   

  
	
   

  	
   

  	
   

  
	
  2.10

  	
  Limitation on Interest

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 3.

  	
  LETTERS OF CREDIT

  	
   

  
	
   

  	
   

  	
   

  
	
  3.1

  	
  Issuance
  of Letters of Credit and Lenders’ Purchase of Participations Therein

  	
   

  
	
   

  	
   

  	
   

  
	
  3.2

  	
  Letter of Credit Fees

  	
   

  
	
   

  	
   

  	
   

  
	
  3.3

  	
  Drawings
  and Reimbursement of Amounts Paid Under Letters of Credit

  	
   

  
	
   

  	
   

  	
   

  
	
  3.4

  	
  Obligations Absolute

  	
   

  
	
   

  	
   

  	
   

  
	
  3.5

  	
  Indemnification;
  Nature of Issuing Lenders’ Duties

  	
   

  
	
   

  	
   

  	
   

  
	
  3.6

  	
  Increased
  Costs and Taxes Relating to Letters of Credit

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 4.

  	
  CONDITIONS TO
  LOANS AND LETTERS OF CREDIT

  	
   

  
	
   

  	
   

  	
   

  
	
  4.1

  	
  Conditions to Effective
  Date

  	
   

  
	
   

  	
   

  	
   

  
	
  4.2

  	
  Conditions to All Loans

  	
   

  
	
   

  	
   

  	
   

  
	
  4.3

  	
  Conditions to Letters
  of Credit

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  5.

  	
  BORROWER’S
  AND HOLDINGS’ REPRESENTATIONS AND WARRANTIES

  	
   

  

 

i

 

	
  5.1

  	
  Organization,
  Powers, Qualification, Good Standing, Business and Subsidiaries

  	
   

  
	
   

  	
   

  	
   

  
	
  5.2

  	
  Authorization of
  Borrowing, etc

  	
   

  
	
   

  	
   

  	
   

  
	
  5.3

  	
  Financial Condition

  	
   

  
	
   

  	
   

  	
   

  
	
  5.4

  	
  No Material Adverse Change

  	
   

  
	
   

  	
   

  	
   

  
	
  5.5

  	
  Title to
  Properties; Liens; Real Property

  	
   

  
	
   

  	
   

  	
   

  
	
  5.6

  	
  Litigation; Adverse Facts

  	
   

  
	
   

  	
   

  	
   

  
	
  5.7

  	
  Payment
  of Taxes

  	
   

  
	
   

  	
   

  	
   

  
	
  5.8

  	
  Performance
  of Agreements; Materially Adverse Agreements; Material Contracts

  	
   

  
	
   

  	
   

  	
   

  
	
  5.9

  	
  Governmental Regulation

  	
   

  
	
   

  	
   

  	
   

  
	
  5.10

  	
  Securities Activities

  	
   

  
	
   

  	
   

  	
   

  
	
  5.11

  	
  Employee
  Benefit Plans

  	
   

  
	
   

  	
   

  	
   

  
	
  5.12

  	
  No
  Broker’s Fees

  	
   

  
	
   

  	
   

  	
   

  
	
  5.13

  	
  Environmental Protection

  	
   

  
	
   

  	
   

  	
   

  
	
  5.14

  	
  Employee
  Matters

  	
   

  
	
   

  	
   

  	
   

  
	
  5.15

  	
  Solvency

  	
   

  
	
   

  	
   

  	
   

  
	
  5.16

  	
  Matters Relating to
  Collateral

  	
   

  
	
   

  	
   

  	
   

  
	
  5.17

  	
  Disclosure

  	
   

  
	
   

  	
   

  	
   

  
	
  5.18

  	
  REIT Status

  	
   

  
	
   

  	
   

  	
   

  
	
  5.19

  	
  Insurance

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  6.

  	
  BORROWER’S
  AND HOLDINGS’ AFFIRMATIVE COVENANTS

  	
   

  
	
   

  	
   

  	
   

  
	
  6.1

  	
  Financial
  Statements and Other Reports

  	
   

  
	
   

  	
   

  	
   

  
	
  6.2

  	
  Corporate Existence, etc

  	
   

  
	
   

  	
   

  	
   

  
	
  6.3

  	
  Payment
  of Taxes and Claims; Tax Consolidation

  	
   

  
	
   

  	
   

  	
   

  
	
  6.4

  	
  Maintenance of
  Properties; Insurance

  	
   

  
	
   

  	
   

  	
   

  
	
  6.5

  	
  Inspection Rights
  Lender Meeting

  	
   

  
	
   

  	
   

  	
   

  
	
  6.6

  	
  Compliance with Laws, etc

  	
   

  
	
   

  	
   

  	
   

  
	
  6.7

  	
  Environmental
  Review and Investigation, Disclosure, Etc.; Borrower’s Actions Regarding
  Hazardous Materials Activities, Environmental Claims and Violations of
  Environmental Laws

  	
   

  
	
   

  	
   

  	
   

  
	
  6.8

  	
  Execution of
  Subsidiary Guaranty and Personal Property Collateral Documents by Certain
  Subsidiaries and Future Subsidiaries

  	
   

  

 

ii

 

	
  SECTION 7.

  	
  BORROWER’S AND
  HOLDINGS’ NEGATIVE COVENANTS

  	
   

  
	
   

  	
   

  	
   

  
	
  7.1

  	
  Indebtedness

  	
   

  
	
   

  	
   

  	
   

  
	
  7.2

  	
  Liens and Related Matters

  	
   

  
	
   

  	
   

  	
   

  
	
  7.3

  	
  Investments; Joint Ventures

  	
   

  
	
   

  	
   

  	
   

  
	
  7.4

  	
  Contingent Obligations

  	
   

  
	
   

  	
   

  	
   

  
	
  7.5

  	
  Restricted Payments

  	
   

  
	
   

  	
   

  	
   

  
	
  7.6

  	
  Financial Covenants

  	
   

  
	
   

  	
   

  	
   

  
	
  7.7

  	
  Restriction
  on Fundamental Changes; Asset Sales and Acquisitions

  	
   

  
	
   

  	
   

  	
   

  
	
  7.8

  	
  Capital Expenditures

  	
   

  
	
   

  	
   

  	
   

  
	
  7.9

  	
  Disposal of Subsidiary
  Stock

  	
   

  
	
   

  	
   

  	
   

  
	
  7.10

  	
  Conduct
  of Business

  	
   

  
	
   

  	
   

  	
   

  
	
  7.11

  	
  Amendments
  or Waivers of Related Agreements

  	
   

  
	
   

  	
   

  	
   

  
	
  7.12

  	
  Fiscal Year

  	
   

  
	
   

  	
   

  	
   

  
	
  7.13

  	
  Public
  Company

  	
   

  
	
   

  	
   

  	
   

  
	
  7.14

  	
  Transactions with
  Affiliates

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 8.

  	
  EVENTS OF DEFAULT

  	
   

  
	
   

  	
   

  	
   

  
	
  8.1

  	
  Failure to Make
  Payments When Due

  	
   

  
	
   

  	
   

  	
   

  
	
  8.2

  	
  Default in Other Agreements

  	
   

  
	
   

  	
   

  	
   

  
	
  8.3

  	
  Breach of Certain Covenants

  	
   

  
	
   

  	
   

  	
   

  
	
  8.4

  	
  Breach
  of Warranty

  	
   

  
	
   

  	
   

  	
   

  
	
  8.5

  	
  Other Defaults
  Under Loan Documents

  	
   

  
	
   

  	
   

  	
   

  
	
  8.6

  	
  Involuntary
  Bankruptcy; Appointment of Receiver, etc

  	
   

  
	
   

  	
   

  	
   

  
	
  8.7

  	
  Voluntary
  Bankruptcy; Appointment of Receiver, etc

  	
   

  
	
   

  	
   

  	
   

  
	
  8.8

  	
  Judgments and Attachments

  	
   

  
	
   

  	
   

  	
   

  
	
  8.9

  	
  Dissolution

  	
   

  
	
   

  	
   

  	
   

  
	
  8.10

  	
  Employee Benefit Plans

  	
   

  
	
   

  	
   

  	
   

  
	
  8.11

  	
  Change
  in Control

  	
   

  
	
   

  	
   

  	
   

  
	
  8.12

  	
  Invalidity
  of Subsidiary Guaranty; Failure of Security; Repudiation of Obligations

  	
   

  
	
   

  	
   

  	
   

  
	
  8.13

  	
  Material Adverse Effect

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 9.

  	
  HOLDINGS GUARANTY

  	
   

  
	
   

  	
   

  	
   

  
	
  9.1

  	
  Guaranty

  	
   

  

 

iii

 

	
  9.2

  	
  Guaranty
  Absolute; Continuing Guaranty

  	
   

  
	
   

  	
   

  	
   

  
	
  9.3

  	
  Actions by Beneficiaries

  	
   

  
	
   

  	
   

  	
   

  
	
  9.4

  	
  No
  Discharge

  	
   

  
	
   

  	
   

  	
   

  
	
  9.5

  	
  Waivers

  	
   

  
	
   

  	
   

  	
   

  
	
  9.6

  	
  Holdings’ Rights of
  Subrogation, Contribution, Etc.; Subordination of Other Obligations

  	
   

  
	
   

  	
   

  	
   

  
	
  9.7

  	
  Financial Condition of
  Borrower

  	
   

  
	
   

  	
   

  	
   

  
	
  9.8

  	
  Set Off

  	
   

  
	
   

  	
   

  	
   

  
	
  9.9

  	
  Notice of Lender
  Hedge Agreements

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 10.

  	
  ADMINISTRATIVE AGENT

  	
   

  
	
   

  	
   

  	
   

  
	
  10.1

  	
  Appointment

  	
   

  
	
   

  	
   

  	
   

  
	
  10.2

  	
  Powers and Duties;
  General Immunity

  	
   

  
	
   

  	
   

  	
   

  
	
  10.3

  	
  Representations and
  Warranties; No Responsibility For Appraisal of Creditworthiness

  	
   

  
	
   

  	
   

  	
   

  
	
  10.4

  	
  Right
  to Indemnity

  	
   

  
	
   

  	
   

  	
   

  
	
  10.5

  	
  Successor Administrative
  Agent

  	
   

  
	
   

  	
   

  	
   

  
	
  10.6

  	
  Collateral
  Documents and Guaranties

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 11.

  	
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  
	
  11.1

  	
  Assignments and
  Participations in Loans

  	
   

  
	
   

  	
   

  	
   

  
	
  11.2

  	
  Expenses

  	
   

  
	
   

  	
   

  	
   

  
	
  11.3

  	
  Indemnity

  	
   

  
	
   

  	
   

  	
   

  
	
  11.4

  	
  Set-Off

  	
   

  
	
   

  	
   

  	
   

  
	
  11.5

  	
  Ratable
  Sharing

  	
   

  
	
   

  	
   

  	
   

  
	
  11.6

  	
  Amendments and Waivers

  	
   

  
	
   

  	
   

  	
   

  
	
  11.7

  	
  Independence of Covenants

  	
   

  
	
   

  	
   

  	
   

  
	
  11.8

  	
  Notices

  	
   

  
	
   

  	
   

  	
   

  
	
  11.9

  	
  Survival of
  Representations, Warranties and Agreements

  	
   

  
	
   

  	
   

  	
   

  
	
  11.10

  	
  Failure or Indulgence
  Not Waiver; Remedies Cumulative

  	
   

  
	
   

  	
   

  	
   

  
	
  11.11

  	
  Marshalling; Payments
  Set Aside

  	
   

  
	
   

  	
   

  	
   

  
	
  11.12

  	
  Severability

  	
   

  
	
   

  	
   

  	
   

  
	
  11.13

  	
  Obligations
  Several; Independent Nature of Lenders’ Rights

  	
   

  
	
   

  	
   

  	
   

  
	
  11.14

  	
  Headings

  	
   

  

 

iv

 

	
  11.15

  	
  Applicable
  Law

  	
   

  
	
   

  	
   

  	
   

  
	
  11.16

  	
  Successors and Assigns

  	
   

  
	
   

  	
   

  	
   

  
	
  11.17

  	
  Consent
  to Jurisdiction and Service of Process

  	
   

  
	
   

  	
   

  	
   

  
	
  11.18

  	
  Waiver of Jury Trial

  	
   

  
	
   

  	
   

  	
   

  
	
  11.19

  	
  Confidentiality

  	
   

  
	
   

  	
   

  	
   

  
	
  11.20

  	
  Co-Lead
  Arrangers; Syndication Agent; Documentation Agent

  	
   

  
	
   

  	
   

  	
   

  
	
  11.21

  	
  Counterparts; Effectiveness

  	
   

  
	
   

  	
   

  	
   

  

 

v

 

LA
QUINTA PROPERTIES, INC.

 

AMENDED AND RESTATED

CREDIT AGREEMENT

 

This AMENDED AND RESTATED CREDIT AGREEMENT (this “Agreement”) is dated as of November 12,
2003 and entered into by and among LA QUINTA
PROPERTIES, INC. (formerly
known as Meditrust Corporation), a Delaware corporation, as borrower (“Borrower”), LA QUINTA CORPORATION
(formerly known as Meditrust Operating Company), a Delaware corporation,
as a guarantor (“Holdings”), THE
FINANCIAL INSTITUTIONS LISTED ON THE SIGNATURE PAGES HEREOF (each
individually referred to herein as a “Lender” and collectively as “Lenders”),
CANADIAN
IMPERIAL BANK OF COMMERCE, acting through one or more of its
agencies, branches or affiliates (“CIBC”), as administrative agent for Lenders
(in such capacity, “Administrative Agent”), Fleet Securities
Inc., acting through one or more of its branches or affiliates (“Fleet”), as syndication agent (in such
capacity, “Syndication Agent”),
and Credit Lyonnais New York Branch, as documentation agent (in such capacity,
“Documentation
Agent”).

 

R E C I
T A L S

 

WHEREAS,
Borrower, Holdings, Administrative Agent, Syndication Agent, Documentation
Agent and certain of the Lenders are party to that certain Credit Agreement
dated as of June 6, 2001 (as amended through the date hereof, the “Existing Credit Agreement”);

 

WHEREAS,
Borrower, Holdings, Administrative Agent, Syndication Agent, Documentation
Agent and Lenders desire to amend and restate the Existing Credit Agreement to
provide for Holdings becoming a guarantor of the Obligations of Borrower
hereunder, to extend the maturity date of the Existing Credit Agreement, to
modify certain of the covenants contained in the Existing Credit Agreement and
to make certain other modifications to the Existing Credit Agreement, all as
more specifically set forth herein;

 

WHEREAS, Borrower desires to continue to
secure all of the Obligations hereunder and under the other Loan Documents with
a First Priority Lien on certain personal property consisting of a pledge of
all of the capital stock of each of its Subsidiaries (except to the extent
excluded by the terms of the Collateral Documents), certain intercompany notes
and certain mortgage loans; and

 

WHEREAS, Holdings and certain of the Subsidiaries of Holdings have agreed
to guarantee or continue to guarantee the Obligations hereunder and under the
other Loan Documents and to continue to secure their guaranties by granting to
Administrative Agent, for the benefit of Lenders, a First Priority Lien on
certain personal property consisting of a pledge of all of the capital stock of
each of their respective Subsidiaries (except to the extent excluded by the
terms of the Collateral Documents), certain intercompany notes and certain
mortgage loans;

 

 

NOW, THEREFORE, in consideration of the
premises and the agreements, provisions and covenants herein contained,
Borrower, Holdings, Lenders, Administrative Agent, Syndication Agent and
Documentation Agent agree as follows:

 

Section
1.              DEFINITIONS

 

1.1                               Certain Defined Terms.

 

The
following terms used in this Agreement shall have the following meanings:

 

“Adjusted
LIBOR” means, for any Interest Rate Determination Date with respect
to an Interest Period for a LIBOR Loan, the rate per annum obtained by dividing
(x) the rate of interest equal to (a) the rate per annum determined on the
basis of the rate for deposits in Dollars for a period equal to such Interest
Period commencing on the first day of such Interest Period and appearing on
Telerate Screen 3750 at or about 11:00 A.M., London time, two Business Days
prior to the commencement of such Interest Period, or (b) if such a rate does
not appear on Telerate Screen 3750, the average of the rates per annum at which
Dollar deposits in immediately available funds are offered to CIBC in the
interbank LIBOR market as at or about 11:00 A.M. (New York City time) two
Business Days prior to the beginning of such Interest Period for delivery on
the first day of such Interest Period, and for a period approximately equal to
such Interest Period, by (y) a percentage equal to 100% minus the
stated maximum rate (expressed as a percentage) of all reserve requirements
(including any marginal, emergency, supplemental, special or other reserves)
applicable on such Interest Rate Determination Date to any member bank of the
Federal Reserve System in respect of “Eurocurrency liabilities” as defined in
Regulation D (or any successor category of liabilities under Regulation D), it
being acknowledged that, as of the date hereof, such reserve requirement is
equal to zero (0).

 

“Administrative
Agent” has the meaning assigned to that term in the introduction to
this Agreement and also means and includes any successor Administrative Agent
appointed pursuant to subsection 10.5.

 

“Administrative
Agent’s Office” means (i) the office of Administrative Agent located
at 425 Lexington Avenue, New York, NY 10017, or (ii) such other office of
Administrative Agent as may from time to time hereafter be designated as such
in a written notice delivered by Administrative Agent to Borrower and each
Lender.

 

“Affected Lender” has the
meaning assigned to that term in subsection 2.6C.

 

“Affected Loans” has the meaning assigned to
that term in subsection 2.6C.

 

“Affiliate”,
as applied to any Person, means any other Person that, (i) directly or
indirectly through one or more intermediaries, controls, or is controlled by,
or is under common control with, such given Person, (ii) directly or indirectly
beneficially owns or holds 10% or, in the case of a Franchisee, 25% or more of
any class of voting stock or partnership or membership or other voting interest
of such Person or any Subsidiary of such Person, or (iii) 10% or, in the case
of a Franchisee, 25% or more of the voting stock or partnership or membership
or other voting interest of which is directly or indirectly beneficially owned
or 

 

2

 

held by
such Person or a Subsidiary of such Person. 
For the purposes of this definition, “control” (including, with
correlative meanings, the terms “controlling”, “controlled by” and “under
common control with”), as applied to any Person, means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of that Person, whether through the ownership of voting Securities
or by contract or otherwise.

 

“Agreement”
means this Amended and Restated Credit Agreement dated as of November 12 ,
2003.

 

“Allocation Letter” means a letter from
Administrative Agent to each Lender and Borrower setting forth such Lender’s
Commitment and Pro Rata Share, as the same may be modified from time to time
thereafter pursuant to this Agreement.

 

“Annual CapEx Amount” is defined in
subsection 7.8A.

 

“Applicable
Base Rate Margin” means, as at any date of determination, with
respect to Revolving Loans that are Base Rate Loans, a percentage per annum as
set forth below opposite the applicable Total Leverage Ratio:

 

	
  Total Leverage Ratio

  	
   

  	
  Applicable Base Rate Margin

  	
   

  
	
  greater than or equal to 4.00:1.00

  	
   

  	
  1.50

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  less than 4.00:1.00 
  but greater than or equal to 3.50:1.00

  	
   

  	
  1.25

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  less
  than 3.50:1.00

  	
   

  	
  1.00

  	
  %

  

 

; provided
that from and after the Effective Date until the date that is three Business
Days after the date on which Borrower delivers the Margin Determination
Certificate required to be delivered to Administrative Agent pursuant to subsection
6.1(xi) for the Fiscal Quarter ending September 30, 2003, the Applicable
Base Rate Margin for Revolving Loans that are Base Rate Loans shall be 1.50%
per annum.

 

3

 

“Applicable
LIBOR Margin” means, with respect to Revolving Loans that are LIBOR
Loans, a percentage per annum as set forth below opposite the applicable Total
Leverage Ratio:

 

	
  Total Leverage Ratio

  	
   

  	
  Applicable LIBOR Margin

  	
   

  
	
  greater than or equal to 4.00:1.00

  	
   

  	
  3.00

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  less than 4.00:1.00 
  but greater than or equal to 3.50:1.00

  	
   

  	
  2.75

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  less
  than 3.50:1.00

  	
   

  	
  2.50

  	
  %

  

 

 

; provided from and after the Effective Date until the date that
is three Business Days after the date on which Borrower delivers the Margin
Determination Certificate required to be delivered to Administrative Agent
pursuant to subsection 6.1(xi) for the Fiscal Quarter ending September 30,
2003, the Applicable LIBOR Margin for Revolving Loans that are LIBOR Loans
shall be 3.00% per annum.

 

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

 

“Asset Sale”
means (x) the securitization including, without limitation, the securitization
of Lodging Assets in connection with any transaction permitted pursuant to
subsection 7.1(iv) or (y) the sale (in any single transaction or related series
of transactions) by Holdings or any of its Subsidiaries to any Person other
than Holdings, Borrower or any Subsidiary Guarantor of (i) any of the
capital stock or other equity or ownership interests of any Subsidiary of
Holdings, (ii) substantially all of the assets of any division or line of
business of Holdings or any of its Subsidiaries, or (iii) any other assets
(whether tangible or intangible) of Holdings or any of its Subsidiaries (other
than (a) dispositions of worn-out and obsolete equipment no longer useful
in Holdings’ or any Subsidiary’s business, consistent with past practices of
Holdings or such Subsidiary), (b) dispositions of Lodging Assets (other
than Lodging Assets subject to securitization under subsection 7.1(iv)) and
(c) sales of other assets to the extent that the aggregate value of such
assets does not exceed $5,000,000 in any Fiscal Year).

 

“Assignment
Agreement” means an Assignment Agreement in substantially the form
of Exhibit VIII annexed hereto.

 

“Available Basket Amount” means as at any
date of determination, an amount equal to $36,000,000 minus the
aggregate amount of all Permitted Reinvestment Capital Expenditures made with
respect to one or more Real Property Assets to the extent such Permitted
Reinvestment Capital Expenditures exceed the amount of casualty loss insurance 

 

4

 

proceeds or eminent domain proceeds (or proceeds from
a sale in lieu thereof) actually received with respect thereto.

 

“Bankruptcy
Code” means Title 11 of the United States Code entitled
“Bankruptcy”, as now and hereafter in effect, or any successor statute.

 

“Base Rate”
means, at any time, the higher of (x) the Reference Rate or (y) the rate which
is one half of 1% in excess of the Federal Funds Effective Rate.

 

“Base Rate
Loans” means Loans bearing interest at rates determined by reference
to the Base Rate as provided in subsection 2.2A.

 

“Borrower” has the meaning assigned to that
term in the introduction to this Agreement.

 

“Business Day”
means (i) any day excluding Saturday, Sunday and any day which is a legal
holiday under the laws of the State of New York or is a day on which banking
institutions located in such state are authorized or required by law or other
governmental action to close, and (ii) with respect to all notices,
determinations, fundings and payments in connection with the Adjusted LIBOR or
any LIBOR Loan, any day that (a) is a Business Day described in clause (i)
above, and (b) is a day for trading by and between banks in Dollar deposits in
the London interbank market.

 

“Capital
Expenditures” means, for any period, the sum of (i) the
aggregate of all expenditures (paid in Cash or other consideration and
including that portion of Capital Leases which is capitalized on the
consolidated balance sheet of Holdings and its Subsidiaries) by Holdings and
its Subsidiaries during that period that, in conformity with GAAP, are included
in “additions to property, plant or equipment” or comparable items reflected in
the consolidated statement of cash flows of Holdings and its Subsidiaries plus
(ii) to the extent not covered by clause (i) of this definition, the aggregate
of all expenditures by Holdings and its Subsidiaries during that period to
acquire (by purchase or otherwise) the business, property or fixed assets of
any Person, or the capital stock or other evidence of beneficial ownership of
any Person that, as a result of such acquisition, becomes or remains a
Subsidiary of Holdings; provided, however, that Capital Expenditures
shall not include any expenditures for Investments permitted under subsection
7.3(i).

 

“Capital Expenditure Reserve” means, for any
period, as at any date of determination, an amount equal to 5.00% of net room
revenues generated by Lodging Assets for such period, as determined on a Pro
Forma Basis.

 

“Capital
Lease”, as applied to any Person, means any lease of any property
(whether real, personal or mixed) by that Person as lessee that, in conformity
with GAAP, is accounted for as a capital lease on the balance sheet of that
Person.

 

“Cap Rate” means 12% initially as such rate
may be adjusted from time to time upon the mutual agreement of Borrower and
Administrative Agent.

 

“Cash”
means money, currency or a credit balance in a Deposit Account.

 

5

 

“Cash Equivalents”
means, as at any date of determination, (i) securities issued or directly and
fully guaranteed or insured by the United States government or any agency or
instrumentality thereof or any state having maturities of not more than one
year after the date of acquisition; (ii) certificates of deposit and Eurodollar
time deposits with maturities of one year or less from the date of acquisition,
bankers’ acceptances with maturities not exceeding one year and overnight bank
deposits, in each case with any Lender or any domestic commercial bank or U.S.
branch of a foreign commercial bank having capital and surplus in excess of
$250,000,000 and a Thompson Bank Watch Rating of “B” or better;
(iii) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (i) and (ii) above entered
into with any financial institution meeting the qualifications specified in
said clause (ii); (iv) commercial paper having at least a rating of A by
S&P and/or A2 by Moody’s and in each case maturing within 270 days after
the date of acquisition; (v) real estate loan pool participations,
guaranteed by an entity with an A rating given by S&P or an A2 rating given
by Moody’s, or better rated credit; (vi) shares of any mutual fund or any
money market fund, in each case that has its assets primarily invested in the
types of investments referred to in clauses (i) through (iv); and (vii) for
purposes of financial covenant calculations only, any 7.114% Securities to the
extent shown as an asset on the consolidated balance sheet of Holdings and its
Subsidiaries.

 

“Change of Control” means any of the
following:  (i) any Person or any Person
acting in concert with one or more other Persons, shall have acquired
beneficial ownership, directly or indirectly, of Securities of Borrower or
Holdings (or other Securities convertible into such Securities) representing
30% or more of the combined voting power of all Securities of Borrower or
Holdings entitled to vote in the election of members of the Governing Body of
Borrower or Holdings, as the case may be, other than Securities having such
power only by reason of the happening of a contingency; (ii) the occurrence of
a change in the composition of the Governing Body of Borrower or Holdings such
that a majority of the members of any such Governing Body are not Continuing
Members; and (iii) the occurrence of any “Change in Control” or similar
provision as defined in any Senior Note Document, Subordinated Indebtedness or
Refinancing Indebtedness.  As used
herein, the term “beneficially own” or “beneficial ownership” shall have the
meanings set forth therefor in the Exchange Act and the rules and regulations
promulgated thereunder.

 

“CIBC”
has the meaning assigned to that term in the introduction to this Agreement.

 

“Closing Date”
means June 6, 2001, the date of the closing of the Existing Credit
Agreement.

 

“Collateral”
means, collectively, all of the property in which Liens are purported to be
granted pursuant to the Collateral Documents as security for the Obligations.

 

“Collateral
Documents” means the Pledge Agreement and all other instruments or
documents delivered by any Loan Party pursuant to this Agreement or any of the
other Loan Documents in order to grant to Administrative Agent, on behalf of
Lenders and the Senior Notes and any senior Refinancing Indebtedness required
to be equally and ratably secured thereby, a Lien on any Collateral of that
Loan Party as security for the Obligations and such other Indebtedness.

 

6

 

“Commitments” means the
commitments of Lenders to make Loans as set forth in subsection 2.1A.

 

“Compliance
Certificate” means a certificate substantially in the form of Exhibit VI
annexed hereto delivered to Administrative Agent by Borrower pursuant to
subsection 6.1(iii).

 

“Consolidated
EBITDA” means, for any period, without duplication the sum of the
amounts for such period of (i) Consolidated Net Income,
(ii) Consolidated Net Interest Expense, (iii) provisions for taxes
based on income, (iv) total depreciation expense, (v) total
amortization expense (including amortization of restricted stock), (vi) other
non-recurring and non-cash items reducing Consolidated Net Income,
(vii) deferred financing amounts, (viii) FASB 133 adjustments,
(ix) non-cash expense related to stock options, (x) the call premium
associated with the redemption of Borrower’s outstanding 7.114% Notes to the
extent reflected in Consolidated Net Income, and (xi) losses arising out
of early extinguishment of debt, less any non-recurring and non-cash
items increasing Consolidated Net Income, all of the foregoing as determined on
a consolidated basis for Holdings and its Subsidiaries (including without
limitation discontinued operations) in conformity with GAAP and to be
calculated on a Pro Forma Basis.

 

“Consolidated
Net Income” means, for any period, the net income (or loss) (before
payments of preferred dividends, regardless of how such preferred dividends are
classified on the income statement) of Holdings and its Subsidiaries on a
consolidated basis for such period taken as a single accounting period
determined in conformity with GAAP; provided that there shall be
excluded (i) the income (or loss) of any Person (other than a Subsidiary
of Holdings) in which any other Person (other than Holdings or any of its
Subsidiaries) has a joint interest, except to the extent of the amount of
dividends or other distributions actually paid to Holdings or any of its
Subsidiaries by such Person during such period, (ii) the income of any
Subsidiary of Holdings to the extent that the declaration or payment of
dividends or similar distributions by that Subsidiary of that income is not at
the time permitted by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Subsidiary, (iii) any after-tax gains or losses
attributable to sales of assets and (iv) (to the extent not included in
clauses (i) through (iii) above) any net extraordinary gains or net
extraordinary losses as determined in conformity with GAAP.

 

“Consolidated Net Interest Expense” means,
for any period, total interest expense (including that portion attributable to
Capital Leases in accordance with GAAP and interest expense on 7.114% Notes
owned by Holdings or any of its Subsidiaries), net of interest income
(including interest income on 7.114% Securities owned by Holdings or any of its
Subsidiaries), on a consolidated basis in accordance with GAAP (excluding the
treatment of derivatives and any marking-to-market required in connection
therewith under FASB 133) for Holdings and its Subsidiaries with respect to all
outstanding Indebtedness, including all commissions, discounts and other fees
and charges owed with respect to letters of credit and bankers’ acceptance
financing and net costs under Interest Rate Agreements, but excluding, however,
any deferred financing expenses, such as amounts referred to in subsection 2.3B
and payable to Administrative Agent and/or Lenders.  Consolidated Net Interest Expense shall be calculated on a Pro
Forma Basis.

 

7

 

“Consolidated Net Tangible Assets” means, as
at any date of determination, the aggregate amount of total assets (less
applicable reserves and other properly deductible items) less (i) all
current liabilities and (ii) all goodwill, trade names, trademarks, patents,
unamortized debt discount, and expenses and other like intangibles of Holdings
and its Subsidiaries, all as set forth on the most recent balance sheet of
Holdings and its Subsidiaries prepared in accordance with GAAP.

 

 “Consolidated Tangible Net Worth” means, as
at any date of determination, and without duplication, total shareholders
equity of Holdings and its Subsidiaries on a consolidated basis determined in
conformity with GAAP, minus the Intangible Assets of Holdings and its
Subsidiaries on a consolidated basis determined in conformity with GAAP.  For purposes of this definition, “Intangible
Assets” means with respect to any such intangible assets, the amount (to the
extent reflected in determining such combined consolidated equity) of goodwill,
patents, trademarks, service marks, trade names, copyrights, organization or
developmental expenses, deferred financing fees and other intangible assets.

 

“Contingent
Obligation”, as applied to any Person, means without duplication any
direct or indirect liability, contingent or otherwise, of that Person
(i) with respect to any Indebtedness, lease, dividend or other obligation
of another if the primary purpose or intent thereof by the Person incurring the
Contingent Obligation is to provide assurance to the obligee of such obligation
of another that such obligation of another will be paid or discharged, or that
any agreements relating thereto will be complied with, or that the holders of
such obligation will be protected (in whole or in part) against loss in respect
thereof, (ii) with respect to any letter of credit issued for the account
of that Person or as to which that Person is otherwise liable for reimbursement
of drawings, or (iii) under Hedge Agreements.  Contingent Obligations shall include without duplication (a) the
direct or indirect guaranty, endorsement (otherwise than for collection or
deposit in the ordinary course of business), co-making, discounting with
recourse or sale with recourse by such Person of the obligation of another, (b)
the obligation to make take-or-pay or similar payments if required regardless
of non-performance by any other party or parties to an agreement, and (c) any
liability of such Person for the obligation of another through any agreement
(contingent or otherwise) (X) to purchase, repurchase or otherwise acquire
such obligation or any security therefor, or to provide funds for the payment
or discharge of such obligation (whether in the form of loans, advances, stock
purchases, capital contributions or otherwise) or (Y) to maintain the
solvency or any balance sheet item, level of income or financial condition of
another if, in the case of any agreement described under subclauses (X) or (Y)
of this sentence, the primary purpose or intent thereof is as described in the
preceding sentence.  The amount of any
Contingent Obligation shall be equal to the amount of the obligation so
guaranteed or otherwise supported at any time of determination or, if less, the
amount to which such Contingent Obligation is specifically limited.  Contingent Obligations in respect of loan
obligations shall be determined based on the amount of outstanding loans and
not on the basis of available but unused commitments.

 

“Continuing Member” means, as of any date of
determination, any member of the Governing Body of Borrower or Holdings who (i)
was a member of such Governing Body on the Effective Date or (ii) was nominated
for election or elected to such Governing Body with the affirmative vote of a
majority of the members who were either members of such 

 

8

 

Governing
Body on the Effective Date or whose nomination or election was previously so
approved.

 

“Contractual
Obligation”, as applied to any Person, means any provision of any
Security issued by that Person or of any material indenture, mortgage, deed of
trust, contract, undertaking, agreement or other instrument to which that
Person is a party or by which it or any of its properties is bound or to which
it or any of its properties is subject.

 

“Conversion Costs” means those Capital
Expenditures made within two years of the consummation of any Permitted
Acquisition to convert any such acquired property to a La Quinta Inn or a La
Quinta Inn & Suites.

 

“Currency
Agreement” means any foreign exchange contract, currency swap
agreement, futures contract, option contract, synthetic cap or other similar
agreement or arrangement to which Holdings or any of its Subsidiaries is a
party.

 

“Deposit Account” means a demand, time,
savings, passbook or like account with a bank, savings and loan association,
credit union or like organization, other than an account evidenced by a
negotiable certificate of deposit.

 

“Documentation Agent” has the meaning assigned to that term in the
recitals.

 

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

 

“Effective Date” means the date on or before
December 1, 2003, on which the conditions set forth in subsection 4.1 are
satisfied.

 

“Eligible
Assignee” means (A)(i) a commercial bank organized under the laws of
the United States or any state thereof; (ii) a savings and loan association or
savings bank organized under the laws of the United States or any state
thereof; (iii) a commercial bank organized under the laws of any other country
or a political subdivision thereof (provided that (x) such bank is acting
through a branch or agency located in the United States or (y) such bank
is organized under the laws of a country that is a member of the Organization
for Economic Cooperation and Development or a political subdivision of such
country); (iv) any other entity which is an “accredited investor” (as
defined in Regulation D under the Securities Act) which extends credit or buys
loans as one of its businesses including insurance companies, mutual funds,
lease financing companies and investment funds and any Approved Funds; (B) a
Lender, an Affiliate of a Lender, or an Approved Fund; and (C) any other
Person (other than a natural Person) approved by (1) Administrative Agent,
(2) in the case of any assignment of a Revolving Loan, Issuing Lender, and
(3) unless (x) such Person is taking delivery of an assignment in
connection with physical settlement of a credit derivatives transaction, or (y)
an Event of Default or Potential Event of Default has occurred and is
continuing, Borrower (each such approval not to be unreasonably withheld or
delayed).  If the consent of Borrower to
an assignment to an Eligible Assignee is required hereunder (including a
consent to an assignment which does not meet the minimum assignment thresholds
specified in subsection 11.1B(i)), Borrower shall be deemed to have given its
consent ten Business Days after the date notice thereof has been delivered by
the assigning Lender (through 

 

9

 

Administrative
Agent) unless such consent is expressly refused by Borrower prior to such tenth
Business Day.

 

“Employee
Benefit Plan” means any “employee benefit plan” as defined in
Section 3(3) of ERISA which is or was maintained or contributed to by Holdings,
Borrower, any of their Subsidiaries or any of their respective ERISA
Affiliates.

 

“Environmental
Claim” means any investigation, notice, notice of violation, claim,
action, suit, proceeding, demand, abatement order or other order or directive
(conditional or otherwise), by any governmental authority or any other Person,
arising (i) pursuant to or in connection with any actual or alleged violation
of any Environmental Law, (ii) in connection with any Hazardous Materials or
any actual or alleged Hazardous Materials Activity, or (iii) in connection
with any actual or alleged damage, injury, threat or harm to health, safety,
natural resources or the environment.

 

“Environmental
Laws” means any and all current or future statutes, ordinances,
orders, rules, regulations, guidance documents, judgments, Governmental
Authorizations, or any other requirements of governmental authorities relating
to (i) environmental matters, including those relating to any Hazardous Materials
Activity, or (ii) the generation, use, storage, transportation or disposal
of Hazardous Materials, in any manner applicable to Holdings or any of its
Subsidiaries or any Real Property Asset, including the Comprehensive
Environmental Response, Compensation, and Liability Act (42 U.S.C. § 9601 et
seq.), the Hazardous Materials Transportation Act (49 U.S.C. § 1801
et  seq.), the Resource Conservation and Recovery Act (42 U.S.C.
§ 6901 et  seq.), the Federal Water Pollution Control Act (33
U.S.C. § 1251 et  seq.), the Clean Air Act (42 U.S.C.
§ 7401 et  seq.), the Toxic Substances Control Act (15 U.S.C.
§ 2601 et  seq.), the Federal Insecticide, Fungicide and
Rodenticide Act (7 U.S.C. §136 et  seq.), the Occupational Safety
and Health Act (29 U.S.C. § 651 et  seq.), the Oil Pollution
Act (33 U.S.C. § 2701 et seq.) and the Emergency Planning and
Community Right-to-Know Act (42 U.S.C. § 11001 et  seq.),
each as amended or supplemented, any analogous present or future state or local
statutes or laws, and any regulations promulgated pursuant to any of the
foregoing.

 

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

 

“ERISA
Affiliate” means, as applied to any Person, (i) any corporation
that is a member of a controlled group of corporations within the meaning of
Section 414(b) of the Internal Revenue Code of which that Person is a member;
(ii) any trade or business (whether or not incorporated) that is a member of a
group of trades or businesses under common control within the meaning of
Section 414(c) of the Internal Revenue Code of which that Person is a member;
and (iii) any member of an affiliated service group within the meaning of
Section 414(m) or (o) of the Internal Revenue Code of which that Person, any
corporation described in clause (i) above or any trade or business described in
clause (ii) above is a member.  Any
former ERISA Affiliate of Holdings or any of its Subsidiaries shall continue to
be considered an ERISA Affiliate of Holdings or such Subsidiary within the
meaning of this definition with respect to the period such entity was an ERISA
Affiliate of Holdings or such Subsidiary and with respect to liabilities
arising after such period for which Holdings or such Subsidiary could be liable
under the Internal Revenue Code or ERISA.

 

10

 

“ERISA Event”
means (i) a “reportable event” within the meaning of Section 4043 of ERISA and
the regulations issued thereunder with respect to any Pension Plan (excluding
those for which the provision for 30-day notice to the PBGC has been waived by
regulation); (ii) the failure to meet the minimum funding standard of Section
412 of the Internal Revenue Code with respect to any Pension Plan (whether or
not waived in accordance with Section 412(d) of the Internal Revenue Code) or
the failure to make by its due date a required installment under Section 412(m)
of the Internal Revenue Code with respect to any Pension Plan or the failure to
make any required contribution to a Multiemployer Plan; (iii) the provision by
the administrator of any Pension Plan pursuant to Section 4041(a)(2) of ERISA
of a notice of intent to terminate such plan in a distress termination
described in Section 4041(c) of ERISA; (iv) the withdrawal by Holdings,
Borrower, any of their Subsidiaries or any of their respective ERISA Affiliates
from any Pension Plan with two or more contributing sponsors or the termination
of any such Pension Plan resulting in liability pursuant to Section 4063 or
4064 of ERISA; (v) the institution by the PBGC of proceedings to terminate any
Pension Plan, or the occurrence of any event or condition which might
constitute grounds under ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan; (vi) the imposition of liability on
Holdings, Borrower, any of their Subsidiaries or any of their respective ERISA
Affiliates pursuant to Section 4062(e) or 4069 of ERISA or by reason of the
application of Section 4212(c) of ERISA; (vii) the withdrawal of Holdings,
Borrower, any of their Subsidiaries or any of their respective ERISA Affiliates
in a complete or partial withdrawal (within the meaning of Sections 4203 and
4205 of ERISA) from any Multiemployer Plan if there is any potential liability
therefor, or the receipt by Borrower, Holdings, any of their Subsidiaries or
any of their respective ERISA Affiliates of notice from any Multiemployer Plan
that it is in reorganization or insolvency pursuant to Section 4241 or 4245 of
ERISA, or that it intends to terminate or has terminated under Section 4041A or
4042 of ERISA; (viii) the occurrence of an act or omission which could give
rise to the imposition on Holdings, Borrower, any of their Subsidiaries or any
of their respective ERISA Affiliates of material fines, penalties, taxes or
related charges under Chapter 43 of the Internal Revenue Code or under Section
409, Section 502(c), (i) or (l), or Section 4071 of ERISA in respect of any
Employee Benefit Plan; (ix) the assertion of a material claim (other than
routine claims for benefits) against any Employee Benefit Plan other than a
Multiemployer Plan or the assets thereof, or against Holdings, Borrower, any of
their Subsidiaries or any of their respective ERISA Affiliates in connection
with any Employee Benefit Plan; (x) receipt from the Internal Revenue Service
of notice of the failure of any Pension Plan (or any other Employee Benefit
Plan intended to be qualified under Section 401(a) of the Internal Revenue
Code) to qualify under Section 401(a) of the Internal Revenue Code, or the
failure of any trust forming part of any Pension Plan to qualify for exemption
from taxation under Section 501(a) of the Internal Revenue Code; or (xi) the
imposition of a Lien pursuant to Section 401(a)(29) or 412(n) of the Internal
Revenue Code or pursuant to ERISA with respect to any Pension Plan.

 

“Event of Default” means each
of the events set forth in Section 8.

 

“Excess
Senior Note Proceeds” means net cash proceeds from the
issuance of Borrower’s 8.875% Senior Notes due March 15, 2011 minus
the amount of all such net cash proceeds applied to the repayment, repurchase
or redemption of Senior Notes.  As of
September 30, 2003, the aggregate amount of Excess Senior Note Proceeds
equals $99,000,000.

 

11

 

“Exchange Act”
means the Securities Exchange Act of 1934.

 

“Executive Officer”
means with respect to any Person, the president, chief executive officer, chief
operating officer, chief financial officer, general counsel or other officer of
such Person, however designated, with responsibilities similar to the foregoing
officers.

 

“Existing
Credit Agreement” has the meaning assigned to that term in
the recitals.

 

“Existing Preferred Stock”  means all preferred stock of Holdings and
its Subsidiaries which is described on Schedule 7.5.

 

“Fair Market Value” means, as it relates to
certain Lodging Assets, the quotient of (a) Property Level Cash Flow
divided by (b) the Cap Rate.

 

“Federal
Funds Effective Rate” means, for any period, a fluctuating interest
rate equal for each day during such period to the weighted average of the rates
on overnight Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers, as published for such day (or, if
such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by Administrative Agent from three Federal funds brokers
of recognized standing selected by Administrative Agent.

 

“First
Priority” means, with respect to any Lien purported to be created in
any Collateral pursuant to any Collateral Document, that (i) such Lien is
perfected and has priority over any other Lien on such Collateral (other than
Liens permitted pursuant to subsection 7.2), and (ii) such Lien is the only
Lien (other than Liens permitted pursuant to subsection 7.2) to which such
Collateral is subject.

 

“Fiscal Quarter” means a
fiscal quarter of any Fiscal Year.

 

“Fiscal Year”
means the fiscal year of Holdings and its Subsidiaries ending on December 31 of
each calendar year.

 

“Fixed
Charges” means, for any period, the sum (without duplication) of the
amounts for such period of (i) Consolidated Net Interest Expense,
(ii) all regularly scheduled principal payments to be made by Holdings and
its Subsidiaries (whether or not such payments are actually made) on all
Indebtedness of Holdings and its Subsidiaries (including the principal
component of all Capital Leases but excluding balloon payments due on
Indebtedness at maturity or earlier acceleration) and (iii) quarterly dividends
paid in cash on the preferred Securities of Holdings or any of its Subsidiaries
during such period, which dividend payments shall be normalized to not exceed
four such quarterly dividend payments in any one Fiscal Year.

 

“Franchise Arrangements” means contracts,
agreements and other arrangements between Holdings or its Subsidiaries and
Franchisees pursuant to which Holdings or its Subsidiaries receive royalty,
service, marketing, reservation and other fees and compensation in the ordinary
course of Holdings’ or its Subsidiaries’ business.

 

12

 

“Franchisees” means the Persons who are
franchise owners or operators of Lodging Assets.

 

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

 

“Funding Date” means the date
of the funding of a Loan.

 

“GAAP”
means, subject to the limitations on the application thereof set forth in
subsection 1.2, generally accepted accounting principles set forth in opinions
and pronouncements of the Accounting Principles Board of the American Institute
of Certified Public Accountants and interpretations, statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession in the United States of America, in each case as the
same are applicable to the circumstances as of the date of determination.

 

“Governing Body” means the board of
directors or other body having the power to direct or cause the direction of
the management and policies of a Person that is a corporation, partnership,
trust or limited liability company.

 

“Governmental
Authorization” means any permit, license, authorization, plan,
directive, consent order or consent decree of or from any federal, state or
local governmental authority, agency or court.

 

“Guaranty” or “Guaranties” means any or all of the Holdings Guaranty and the
Subsidiary Guaranty.

 

“Hazardous
Materials” means (i) any chemical, material or substance at any
time defined as or included in the definition of “hazardous substances”,
“hazardous wastes”, “hazardous materials”, “extremely hazardous waste”, acutely
hazardous waste”, “radioactive waste”, “biohazardous waste”, “pollutant”,
“toxic pollutant”, “contaminant”, “restricted hazardous waste”, “infectious
waste”, “toxic substances”, or any other term or expression intended to define,
list or classify substances by reason of properties harmful to health, safety
or the indoor or outdoor environment (including harmful properties such as
ignitability, corrosivity, reactivity, carcinogenicity, toxicity, reproductive
toxicity, “TCLP toxicity” or “EP toxicity” or words of similar import under any
applicable Environmental Laws); (ii) any oil, petroleum, petroleum
fraction or petroleum derived substance; (iii) any drilling fluids,
produced waters and other wastes associated with the exploration, development
or production of crude oil, natural gas or geothermal resources; (iv) any
flammable substances or explosives; (v) any radioactive materials;
(vi) any asbestos-containing materials; (vii) urea formaldehyde foam
insulation; (viii) electrical equipment which contains any oil or
dielectric fluid containing polychlorinated biphenyls; (ix) pesticides;
and (x) any other chemical, material or substance, exposure to which is
prohibited, limited or regulated by any governmental authority or which may or
could pose a hazard to the health and safety of the owners, occupants or any
Persons in the vicinity of any Real Property Asset or to the indoor or outdoor
environment.

 

13

 

“Hazardous
Materials Activity” means any past, current, proposed or threatened
activity, event or occurrence involving any Hazardous Materials, including the
use, manufacture, possession, storage, holding, presence, existence, location,
Release, threatened Release, discharge, placement, generation, transportation,
processing, construction, treatment, abatement, removal, remediation, disposal,
disposition or handling of any Hazardous Materials, and any corrective action
or response action with respect to any of the foregoing.

 

“Hedge
Agreement” means an Interest Rate Agreement or a Currency Agreement
designed to hedge against fluctuations in or reduce interest rates or to fix or
hedge against currency values, respectively, or in either case to reduce
fluctuations in net cash flow.

 

“Holdings” has the meaning assigned to that
term in the introduction to this Agreement.

 

“Holdings Guaranty” means the guaranty of
Holdings as set forth in Section 9 of this Agreement.

 

“Immaterial Subsidiaries” means Subsidiaries
of Holdings which in the aggregate for all such Subsidiaries (a) do not own
assets with an aggregate value in excess of $15,000,000 and (b) do not generate
aggregate revenues in excess of $15,000,000 in any Fiscal Year.

 

“Indebtedness”,
as applied to any Person, means without duplication (i) all indebtedness
for borrowed money including obligations evidenced by bonds, debentures or
similar instruments, plus (ii) that portion of obligations with
respect to Capital Leases that is properly classified as a liability on a
balance sheet in conformity with GAAP, plus (iii) notes payable and
drafts accepted representing extensions of credit whether or not representing
obligations for borrowed money, plus (iv) any obligation owed for
all or any part of the deferred purchase price of property or services
(excluding any such obligations incurred under ERISA), which purchase price is
(a) due more than six months from the date of incurrence of the obligation
in respect thereof or (b) evidenced by a note or similar written instrument, plus
(v) all indebtedness secured by any Lien on any property or asset owned or
held by that Person regardless of whether the indebtedness secured thereby
shall have been assumed by that Person or is nonrecourse to the credit of that
Person.  Obligations under Interest Rate
Agreements and Currency Agreements constitute (X) in the case of Hedge
Agreements, Contingent Obligations, and (Y) in all other cases, Investments,
and in neither case constitute Indebtedness.

 

“Indemnitee” has the meaning
assigned to that term in subsection 11.3.

 

“Intellectual
Property” means all patents, patent rights, patent applications,
licenses, inventions, trade secrets, trademarks, tradenames, service marks,
copyrights, technology, know-how and proprietary techniques (including
processes and substances) used in or necessary for the conduct of the business
of Holdings and its Subsidiaries as currently conducted that are material to
the condition (financial or otherwise), business or operations of Holdings and
its Subsidiaries, taken as a whole.

 

“Interest
Payment Date” means (i) with respect to any Base Rate Loan, the
last Business Day of each March, June, September and December of each year,
commencing on 

 

14

 

the
first such date to occur after the Effective Date, and (ii) with respect
to any LIBOR Loan, the last day of each Interest Period applicable to such
Loan; provided that in the case of each Interest Period of six months
“Interest Payment Date” shall also include the date that is three months after
the commencement of such Interest Period.

 

“Interest Period” has the
meaning assigned to that term in subsection 2.2B.

 

“Interest
Rate Agreement” means any interest rate swap agreement, interest
rate cap agreement, interest rate collar agreement or other similar agreement
or arrangement to which Holdings or any of its Subsidiaries is a party.

 

“Interest
Rate Determination Date” means, with respect to any Interest Period,
the second Business Day prior to the first day of such Interest Period.

 

“Internal
Revenue Code” means the Internal Revenue Code of 1986, as amended to
the date hereof and from time to time hereafter, and any successor statute.

 

“Investment”
means (i) any direct or indirect purchase or other acquisition by Holdings
or any of its Subsidiaries of, or of a beneficial interest in, any Securities
of any other Person (including any Subsidiary of Holdings), (ii) any
direct or indirect redemption, retirement, purchase or other acquisition for
value, by any Subsidiary of Holdings from any Person other than Holdings,
Borrower or any of the Subsidiary Guarantors, of any equity Securities of such
Subsidiary, (iii) any direct or indirect loan, advance (other than
advances to employees for moving, entertainment and travel expenses, drawing
accounts and similar expenditures in the ordinary course of business for
business expenses) or capital contribution by Holdings or any of its
Subsidiaries to any other Person (other than Holdings, Borrower or any
Subsidiary Guarantor), including all indebtedness and accounts receivable from
that other Person that are not current assets or did not arise from sales to
that other Person in the ordinary course of business, or (iv) Interest Rate
Agreements or Currency Agreements not constituting Hedge Agreements.  The amount of any Investment shall be the
original cost of such Investment plus the cost of all additions thereto,
without any adjustments for increases or decreases in value, or write-ups,
write-downs or write-offs with respect to such Investment.  Any direct or indirect redemption,
retirement, purchase or other acquisition for value by Borrower or Holdings of
any of its equity Securities shall be a Restricted Payment and not an
Investment.

 

“Issuing
Lender” means, with respect to any Letter of Credit, the Lender
which agrees or is otherwise obligated to issue such Letter of Credit,
determined as provided in subsection 3.1B(ii).

 

“Joint
Venture” means a joint venture, partnership or other similar
arrangement, whether in corporate, partnership or other legal form; provided
that in no event shall any Subsidiary of any Person be considered to be a Joint
Venture to which such Person is a party, nor shall any Person in which Holdings
or any of its Subsidiaries otherwise has a controlling interest be considered
to be a Joint Venture of Holdings or its Subsidiaries.

 

“Lender”
and “Lenders”
means the Persons identified as “Lenders” and listed on the signature pages of
this Agreement, together with their successors and permitted assigns 

 

15

 

pursuant
to subsection 11.1; provided that the term “Lenders”, when used in
the context of a particular Commitment, shall mean Lenders having that
Commitment.

 

“Lender Hedge Agreements” means one or more
Hedge Agreements entered into by and between Borrower and one or more Lenders
or Affiliates of Lenders.

 

“Letter of
Credit” or “Letters of Credit” means any letter of
credit or similar instrument issued for the purpose of supporting
(i) Indebtedness of Holdings or any of its Subsidiaries or of such other
Persons as are identified on Schedule 7.4 in respect of industrial
revenue or development bonds or financings, (ii) workers’ compensation
liabilities of Holdings or any of its Subsidiaries, (iii) the obligations
of third party insurers of Holdings or any of its Subsidiaries arising by
virtue of the laws of any jurisdiction requiring third party insurers,
(iv) obligations with respect to Capital Leases or Operating Leases of
Holdings or any of its Subsidiaries, (v) performance, payment, deposit or
surety obligations of Holdings or any of its Subsidiaries, in any case if
required by law or governmental rule or regulation or in accordance with custom
and practice in the industry, (vi) obligations of Holdings or any of its
Subsidiaries in the nature of security deposits under asset purchase
agreements, deposits provided to utility providers and other ordinary course obligations
for which letters of credit are customarily provided, and (vii) Contingent
Obligations permitted under subsection 7.4; provided that Letters of
Credit may not be issued for the purpose of supporting (a) trade payables or
(b) any Indebtedness constituting “antecedent debt” (as that term is used in
Section 547 of the Bankruptcy Code).

 

“Letter of
Credit Usage” means, as at any date of determination, the sum of (i)
the maximum aggregate amount which is or at any time thereafter may become
available for drawing under all Letters of Credit then outstanding plus
(ii) the aggregate amount of all drawings under Letters of Credit honored by
Issuing Lenders and not theretofore reimbursed by Borrower (including any such
reimbursement out of the proceeds of Revolving Loans pursuant to subsection
3.3B).

 

“LIBOR Loans”
means Loans bearing interest at rates determined by reference to the Adjusted
LIBOR as provided in subsection 2.2A.

 

“Lien”
means any lien, mortgage, pledge, assignment, security interest, charge or
encumbrance of any kind (including any conditional sale or other title
retention agreement, any lease in the nature thereof, and any agreement to give
any security interest) and any option, trust or other preferential arrangement
having the practical effect of any of the foregoing.

 

“Loan”
or “Loans”
means one or more of the Revolving Loans.

 

“Loan
Documents” means this Agreement, the Notes, the Letters of Credit
(and any applications for, or reimbursement agreements or other documents or
certificates executed in favor of an Issuing Lender relating to, the Letters of
Credit), the Guaranty and the Collateral Documents.

 

16

 

“Loan Party”
means Borrower, Holdings, and any of Holdings’ Subsidiaries from time to time
executing a Loan Document, and “Loan Parties” means all such Persons,
collectively.

 

“Lodging Assets” means hotels, motels, inns,
lodges, conference centers, resorts and similar businesses, all buildings,
fixtures or other improvements related thereto and all personal property,
whether tangible or intangible, located at or related to the foregoing
properties and owned, leased or managed by Holdings, its Subsidiaries or Joint
Ventures or which are subject to any Franchise Arrangements.

 

“Margin
Determination Certificate”  means an Officers’ Certificate of Borrower
delivered (a) with respect to each Fiscal Quarter (other than each fourth
Fiscal Quarter), with the financial statements required pursuant to subsection
6.1(i), and (b) with respect to each fourth Fiscal Quarter, with the financial
statements required pursuant to subsection 6.1(ii), setting forth in reasonable
detail the Total Leverage Ratio that is applicable as of the last day of the
fiscal period for which such financial statements and Officers’ Certificate are
being delivered.

 

“Margin Stock”
has the meaning assigned to that term in Regulation U of the Board of Governors
of the Federal Reserve System as in effect from time to time.

 

“Material Adverse Effect” means any act,
omission, situation, circumstance, event or undertaking which could reasonably
be expected to have, singly or in any combination with one or more other acts,
omissions, situations, circumstances, events or undertakings, a materially
adverse effect upon (a) the business, assets, properties, liabilities,
financial condition, results of operations or business prospects of Holdings
and its Subsidiaries taken as a whole, (b) the ability of the Loan Parties,
taken as a whole, to perform the obligations of the Loan Parties, taken as a
whole, under this Agreement or any other Loan Document, or (c) the legality,
validity, binding effect, priority, enforceability or admissibility into
evidence of any Loan Documents or the material rights or remedies of
Administrative Agent or Lenders under or in connection with any Loan Documents.

 

“Material
Contract” means any contract or other arrangement to which Holdings
or any of its Subsidiaries is a party (other than the Loan Documents) for which
breach, nonperformance, cancellation or failure to renew could reasonably be
expected to have a Material Adverse Effect.

 

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

 

“Multiemployer
Plan” means any Employee Benefit Plan that is a “multiemployer plan”
as defined in Section 3(37) of ERISA.

 

“Net Asset
Sale Proceeds” means, with respect to any Asset Sales, Cash payments
(including any Cash received by way of deferred payment pursuant to, or by
monetization of, a note receivable or otherwise, including principal payments
thereon, but only as and when so received) received by Holdings or any of its
Subsidiaries from such Asset Sales, net of any direct costs incurred in
connection with such Asset Sales, including without limitation (i) taxes
reasonably estimated to be actually payable by Holdings or any of its Subsidiaries
within two 

 

17

 

years
of the date of such Asset Sales as a result of such Asset Sales and
(ii) payment of the outstanding principal amount of, premium or penalty,
if any, and interest on any Indebtedness of Holdings or any of its Subsidiaries
(other than the Loans or any Indebtedness secured equally and ratably with the
Loans) that is secured by a Lien on the stock or assets in question and that is
required to be repaid under the terms thereof as a result of such Asset
Sales.  It is understood and agreed that
with respect to Asset Sales by or of a non-wholly-owned Subsidiary, Net Asset
Sale Proceeds for purposes of this Agreement shall only include that portion of
such Net Asset Sale Proceeds which is payable or distributable to Holdings and
its direct or indirect wholly-owned Subsidiaries.

 

“Net Securities Proceeds”  means amounts equal to (i) 50% of the
Cash proceeds (net of underwriting discounts and commissions and other
reasonable costs and expenses associated therewith, including reasonable legal
fees and expenses) from the issuance (other than to Holdings or any of its
wholly owned Subsidiaries) of equity Securities of Holdings or any of its
Subsidiaries (including Indebtedness convertible into equity Securities) or
(ii) 100% of the Cash proceeds (net of underwriting discounts and
commissions and other reasonable costs and expenses associated therewith,
including reasonable legal fees and expenses) from the incurrence or issuance
of Indebtedness by Holdings or any of its Subsidiaries (excluding the proceeds
of any Indebtedness permitted under subsections 7.1(i), 7.1(ii), 7.1(iii),
7.1(iv), 7.1(v) and 7.1(ix), and to the extent that the proceeds of such
Indebtedness are used to refinance other Indebtedness, Indebtedness permitted
under subsections 7.1(vii) and 7.1(viii)). 
It is understood and agreed that with respect to the issuance of equity
Securities or Indebtedness by a non-wholly-owned Subsidiary, Net Securities
Proceeds for purposes of this Agreement shall only include that portion of such
Net Securities Proceeds which is payable or distributable to Holdings or its
direct or indirect wholly-owned Subsidiaries.

 

“Notes”
means one or more of the Revolving Notes.

 

“Notice of
Borrowing” means a notice substantially in the form of Exhibit I
annexed hereto delivered by Borrower to Administrative Agent pursuant to
subsection 2.1B with respect to a proposed borrowing.

 

“Notice of
Conversion/Continuation” means a notice substantially in the form of
Exhibit II annexed hereto delivered by Borrower to Administrative
Agent pursuant to subsection 2.2D with respect to a proposed conversion or
continuation of the applicable basis for determining the interest rate with
respect to the Loans specified therein.

 

“Notice of
Issuance of Letter of Credit” means a notice substantially in the
form of Exhibit III annexed hereto delivered by Borrower to
Administrative Agent pursuant to subsection 3.1B(i) with respect to the
proposed issuance of a Letter of Credit.

 

“Obligations”
means all obligations of every nature of each Loan Party from time to time owed
to Administrative Agent, Lenders or any of them under the Loan Documents,
whether for principal, interest, reimbursement of amounts drawn under Letters
of Credit, fees, expenses, indemnification or otherwise.

 

18

 

“Officer” means the president, chief executive
officer, a vice president, chief financial officer, treasurer, general partner
(if an individual), managing member (if an individual) or other individual
appointed by the governing body or the organizational documents of a
corporation, partnership, trust or limited liability company to serve in a
similar capacity as the foregoing.

 

“Officers’
Certificate,” as
applied to any Person that is a corporation, partnership, trust or limited
liability company, means a certificate executed on behalf of such Person by one
or more Officers, or other designated person approved by Administrative Agent,
such approval not to be unreasonably withheld, of such Person or one or more
Officers, or other designated person approved by Administrative Agent, such
approval not to be unreasonably withheld, of a general partner or a managing
member if such general partner or managing member is a corporation,
partnership, trust or limited liability company; provided that every
Officers’ Certificate with respect to the compliance with a condition precedent
to the making of any Loans hereunder shall include (i) a statement that
the Officer or Officers or other approved designated person making or giving
such Officers’ Certificate have read such condition and any definitions or
other provisions contained in this Agreement relating thereto, (ii) a
statement that, in the opinion of the signers, they have made or have caused to
be made such examination or investigation as is reasonably necessary to enable
them to express an informed opinion as to whether or not such condition has
been complied with, and (iii) a statement as to whether, in the opinion of
the signers, such condition has been complied with; provided that any
Officer or other approved designated person executing an Officers’ Certificate
shall not have any personal liability in connection therewith.

 

“Operating
Lease” means, as applied to any Person, any lease (including leases
that may be terminated by the lessee at any time) of any property (whether
real, personal or mixed) that is not a Capital Lease other than any such lease
under which that Person is the lessor.

 

“PBGC” means the Pension Benefit
Guaranty Corporation or any successor thereto.

 

“Pension Plan”
means any Employee Benefit Plan, other than a Multiemployer Plan, which is
subject to Section 412 of the Internal Revenue Code or Section 302 of ERISA.

 

“Permitted Acquisition” means an acquisition
of an entity engaged in the lodging or similar business provided that
(i) after giving effect to the consummation of such acquisition, Borrower and
Holdings are in compliance, on a Pro Forma Basis, with the financial covenants
set forth in subsection 7.6 hereof, (ii) no Event of Default or Potential
Event of Default shall have occurred and be continuing or would occur as a
result of such acquisition, (iii) the sum of (A) the amount by which
the Revolving Loan Commitments exceeds the Total Utilization of Revolving Loan
Commitments and (B) Borrower’s and Holdings’ Cash and/or Cash Equivalents
is not less than $50,000,000 and (iv) Borrower and Holdings comply with the
requirements of subsection 6.8 with respect to such acquisition.

 

“Permitted
Encumbrances” means the following types of Liens (excluding any such
Lien imposed pursuant to Section 401(a)(29) or 412(n) of the Internal Revenue
Code or by ERISA, any such Lien relating to or imposed in connection with any
Environmental Claim, 

 

19

 

and any
such Lien expressly prohibited by any applicable terms of any of the Collateral
Documents):

 

(i)            Liens for taxes, assessments or
governmental charges or claims the payment of which is not, at the time,
required by subsection 6.3;

 

(ii)           statutory Liens of landlords,
statutory Liens of banks and rights of set-off, statutory Liens of carriers,
warehousemen, mechanics, repairmen, workmen and materialmen, and other Liens
imposed by law, in each case incurred in the ordinary course of business (a)
for amounts not yet overdue or (b) for amounts that are overdue and that (in
the case of any such amounts overdue for a period in excess of 5 days) are
being contested in good faith by appropriate proceedings, so long as (1) such
reserves or other appropriate provisions, if any, as shall be required by GAAP
shall have been made for any such contested amounts, and (2) in the case of a
Lien with respect to any portion of the Collateral, such contested proceedings
conclusively operate to stay the sale of any portion of the Collateral on
account of such Lien;

 

(iii)          Liens incurred or deposits made in the
ordinary course of business in connection with workers’ compensation,
unemployment insurance and other types of social security, or to secure the
performance of tenders, statutory obligations, surety and appeal bonds, bids,
leases, government contracts, trade contracts, performance and return-of-money
bonds and other similar obligations (exclusive of obligations for the payment of
borrowed money), so long as no foreclosure, sale or similar proceedings have
been commenced with respect to any portion of the Collateral on account
thereof;

 

(iv)          any attachment or judgment Lien not
constituting an Event of Default under subsection 8.8;

 

(v)           leases or subleases granted to third
parties including without limitation to restaurant operators and Franchisees
that do not interfere in any material respect with the ordinary conduct of the
business of Holdings or any of its Subsidiaries or result in a material
diminution in the value of any Collateral as security for the Obligations;

 

(vi)          easements, rights-of-way,
restrictions, covenants, encroachments, and other minor defects or
irregularities in title, in each case which do not and will not interfere in
any material respect with the ordinary conduct of the business of Holdings or
any of its Subsidiaries or result in a material diminution in the value of any
Collateral as security for the Obligations;

 

(vii)         any (a) restriction or encumbrance
that the interest or title of such lessor or sublessor may be subject to, or
(b) subordination of the interest of the lessee or sublessee under such
lease to any restriction or encumbrance referred to in the preceding clause
(a), so long as the holder of such restriction 

 

20

 

or encumbrance agrees to
recognize the rights of such lessee or sublessee under such lease;

 

(viii)        purchase options granted at a price not
less than the fair market value of such property;

 

(ix)           Liens arising from filing UCC
financing statements relating solely to leases permitted by this Agreement;

 

(x)            Liens in favor of Holdings and its
Subsidiaries granted by third parties on the properties and assets of such
third parties; and

 

(xi)           Liens in favor of trustees under the
Senior Note Documents on Cash and Securities deposited in connection with a
defeasance of Senior Notes, to the extent such defeasance is permitted under
this Agreement.

 

“Permitted Reinvestment Capital Expenditures”
means, with respect to each Real Property Asset of Holdings or its Subsidiaries
which is subject to a casualty loss or eminent domain proceeding, the sum of
(i) Capital Expenditures representing the reinvestment of casualty insurance
proceeds or eminent domain proceeds (or proceeds from a sale in lieu thereof),
as the case may be, actually received by Holdings or its Subsidiaries as a
result of their respective casualty loss or eminent domain proceeding (or sale
in lieu thereof) plus (ii) with respect to each such Real Property
Asset, the lesser of $6,000,000 or the then Available Basket Amount plus (iii) Capital Expenditures representing the reinvestment of net
proceeds from the sale of Lodging Assets, the cumulative amount of which under
this clause (iii) shall not exceed the lesser of (a) the cumulative amount of
net sale proceeds from the sale of Lodging Assets actually received since the
Closing Date or (b) $50,000,000 per Fiscal Year.

 

“Person”
means and includes natural persons, corporations, limited partnerships, general
partnerships, limited liability companies, limited liability partnerships,
joint stock companies, Joint Ventures, associations, companies, trusts, banks,
trust companies, land trusts, business trusts or other organizations, whether
or not legal entities, and governments (whether federal, state or local,
domestic or foreign, and including political subdivisions thereof) and agencies
or other administrative or regulatory bodies thereof.

 

“Pledge
Agreement” means the Amended and Restated Pledge and Security
Agreement executed and delivered by Holdings, Borrower and their Subsidiaries
that own Pledged Collateral on the Effective Date and to be executed and
delivered by additional subsidiaries of Borrower and Holdings from time to time
thereafter pursuant to subsection 6.8, substantially in the form of Exhibit
X annexed hereto, as such Amended and Restated Pledge Agreement may
hereafter be amended, supplemented or otherwise modified from time to time.

 

“Pledged
Collateral” means, collectively, the “Pledged Collateral” as defined
in the Pledge Agreement.

 

“Potential
Event of Default” means a condition or event that, after notice or
lapse of time or both, would constitute an Event of Default.

 

21

 

“Pro Forma Basis” means, as of any date of
determination, to the extent so provided for herein, that the compliance of
Borrower and Holdings with the financial covenants set forth in subsection 7.6
as of the last day of the four Fiscal Quarter period most recently ended prior
to such date of determination for which the relevant financial information is
available (the “Compliance Period”),
will be determined after giving effect on a pro forma basis to any permitted
acquisitions made during such Compliance Period and any permitted dispositions
made during such Compliance Period, other than sales of inventory in the
ordinary course of business and dispositions of obsolete equipment, on the
following basis:

 

(i)            any Indebtedness incurred or assumed
by Holdings or any of its Subsidiaries and any Indebtedness repaid, each only
in connection with such permitted acquisitions or dispositions, shall be deemed
to have been incurred or repaid, respectively, as of the first day of the
Compliance Period; for purposes of this clause (i), the aggregate amount of any
such Indebtedness shall be net of Cash and Cash Equivalents in excess of
$5,000,000 held by Holdings and its Subsidiaries;

 

(ii)           if such Indebtedness incurred or
assumed by Holdings or any of its Subsidiaries has a floating or formula rate,
then the rate of interest for such Indebtedness in connection with any such
permitted acquisition or disposition for the applicable period shall be
computed as if the rate in effect for such Indebtedness on the relevant
measurement date had been the applicable rate for the entire applicable period;

 

(iii)          income statement items (whether
positive or negative) attributable to the property or business acquired or
disposed of in such permitted acquisitions or dispositions shall be included or
excluded, as applicable, as if such acquisitions or dispositions took place on
the first day of such Compliance Period on a pro forma basis; and

 

(iv)          any historical extraordinary
non-recurring costs or expenses or other verifiable costs or expenses that will
not continue after the acquisition or disposition date may be eliminated and
other expenses and cost reductions may be reflected on a basis consistent with
Regulation S-X promulgated by the Securities and Exchange Commission or as
approved by Administrative Agent.

 

“Property Level Cash Flow” means, for a
period of four consecutive fiscal quarters preceding the date of such
determination as it relates to certain Lodging Assets, the sum of (i) the total
revenue generated by or solely attributable to such Lodging Assets, minus
(ii) direct expenses, which shall include expenses such as salaries,
payroll taxes and benefits, supplies, repair and maintenance, utilities,
advertising, security, purchased services, vehicle expenses, travel agency
commissions, bad debt, credit card discounts, collection costs and other inn
expenses, minus (iii) other direct expenses, which shall include
expenses such as restaurant & club expenses (net), property taxes and
insurance, minus (iv) total fees, which shall include fees such as
reservation fees, marketing fees and information technology support fees, minus
(v) royalty fees (calculated at 4% of net room revenues), minus (vi) the
related Capital Expenditure Reserve.

 

22

 

“Pro Rata
Share” means with respect to all payments, computations and
other matters relating to the Revolving Loan Commitment or the Revolving Loans
of any Lender or any Letters of Credit issued or participations therein
purchased by any Lender, the percentage obtained by dividing
(i) the Revolving Loan Exposure of that Lender by (ii) the
aggregate Revolving Loan Exposure of all Lenders.

 

“Real
Property Asset” means, at any time of determination, any interest
then owned by any Loan Party in any real property.

 

“Reference
Rate” means the rate that CIBC announces from time to time as its
prime lending rate, as in effect from time to time. The Reference Rate is a
reference rate and does not necessarily represent the lowest or best rate
actually charged to any customer.  CIBC
or any other Lender may make commercial loans or other loans at rates of
interest at, above or below the Reference Rate.

 

“Refinancing Indebtedness” has the meaning
assigned to that term in subsection 7.1(v).

 

“Regulation D”
means Regulation D of the Board of Governors of the Federal Reserve System, as
in effect from time to time.

 

“Reimbursement Date” has the
meaning assigned to that term in subsection 3.3B.

 

“REIT” means a real estate investment trust
as defined under the Internal Revenue Code.

 

“Release”
means any release, spill, emission, leaking, pumping, pouring, injection,
escaping, deposit, disposal, discharge, dispersal, dumping, leaching or
migration of Hazardous Materials into the indoor or outdoor environment
(including the abandonment or disposal of any barrels, containers or other
closed receptacles containing any Hazardous Materials), including the movement
of any Hazardous Materials through the air, soil, surface water or groundwater.

 

“Requisite
Lenders” means Lenders having or holding more than 50% of the
aggregate Revolving Loan Exposure of all Lenders.

 

“Restricted
Payment” means (i) any dividend or other distribution, direct
or indirect, on account of any shares of Borrower’s or Holdings’ common stock,
Borrower’s or Holdings’ preferred stock, or any other class of stock of
Borrower or Holdings now or hereafter outstanding, except a dividend payable
solely in shares of that class of stock to the holders of that class,
(ii) any redemption, retirement, sinking fund or similar payment, purchase
or other acquisition for value, direct or indirect, of any shares of Borrower’s
or Holdings’ common stock, Borrower’s or Holdings’ preferred stock, or any
other class of stock of Borrower or Holdings now or hereafter outstanding,
(iii) any payment made to retire, or to obtain the surrender of, any
outstanding warrants, options or other rights to acquire shares of Borrower’s
or Holdings’ common stock, Borrower’s or Holdings’ preferred stock, or any
other class of stock of Borrower or Holdings now or hereafter outstanding, and
(iv) any payment or prepayment of principal of, premium, if any, or
interest on, or redemption, purchase, 

 

23

 

retirement,
defeasance (including in-substance or legal defeasance), sinking fund or
similar payment with respect to any Subordinated Indebtedness.

 

“Revolving
Loan Commitment” means the commitment of a Lender to make Revolving
Loans to Borrower pursuant to subsection 2.1A(i), and “Revolving Loan Commitments”
means such commitments of all Lenders in the aggregate.

 

“Revolving Loan Commitment Termination
Date” means April 30, 2007.

 

“Revolving
Loan Exposure” means, with respect to any Lender, as of any date of
determination (i) prior to the termination of the Revolving Loan
Commitments, that Lender’s Revolving Loan Commitment, and (ii) after the
termination of the Revolving Loan Commitments, the sum of (a) the
aggregate outstanding principal amount of the Revolving Loans of that Lender plus
(b) in the event that Lender is an Issuing Lender, the aggregate Letter of
Credit Usage in respect of all Letters of Credit issued by that Lender (in each
case, net of any participations purchased by other Lenders in such Letters of
Credit or in any unreimbursed drawings thereunder) plus (c) the
aggregate amount of all participations purchased by that Lender in any
outstanding Letters of Credit or any unreimbursed drawings under any Letters of
Credit.

 

“Revolving Loans” means the
Loans made by Lenders to Borrower pursuant to subsection 2.1A(i).

 

“Revolving Notes” means
(i) any promissory notes of Borrower issued pursuant to
subsection 2.1D on the Effective Date, and (ii) any promissory notes
issued by Borrower pursuant to subsection 2.1A(ii) in connection with increases
in the Revolving Loan Commitments or the last sentence of subsection 11.1B(i)
in connection with permitted assignments of the Revolving Loan Commitments and
Revolving Loans of any Lenders, in each case substantially in the form of Exhibit V
annexed hereto, as they may be amended, supplemented or otherwise modified from
time to time.

 

“S&P” means Standard & Poor’s
Ratings Group.

 

“Securities”
means any stock, shares, partnership interests, voting trust certificates,
certificates of interest or participation in any profit-sharing agreement or
arrangement, options, warrants, bonds, debentures, notes, or other evidences of
Indebtedness, secured or unsecured, convertible, subordinated or otherwise, or
in general any instruments commonly known as “securities” or any certificates of
interest, shares or participations in temporary or interim certificates for the
purchase or acquisition of, or any right to subscribe to, purchase or acquire,
any of the foregoing.

 

“Securities
Act” means the Securities Act of 1933, as amended from time to time,
and any successor statute.

 

“Senior Notes” means those notes issued
pursuant to (i) the Indenture, dated as of July 26, 1995, by and between
Borrower and Fleet National Bank, (ii) the Third Supplemental Indenture, dated
as of August 10, 1995, by and between Borrower and Fleet National Bank, to
the Indenture dated as of July 26, 1995, (iii) the Fourth Supplemental
Indenture, dated as of 

 

24

 

September 10,
1996, by and between Borrower and Fleet National Bank, to the Indenture dated
as of July 26, 1995, (iv) the Fifth Supplemental Indenture, dated as of
August 12, 1997, by and between Borrower and Fleet National Bank, to the
Indenture dated as of July 26, 1995, (v) the Sixth Supplemental Indenture,
dated as of August 12, 1997, by and between Borrower and State Street Bank
and Trust Company (as Successor Trustee to Fleet National Bank), to the
Indenture dated as of July 26, 1995, (vi) the Eighth Supplemental
Indenture, dated as of November 5, 1997, by and between Borrower and State
Street Bank and Trust Company (as Successor Trustee to Fleet National Bank), to
the Indenture dated as of July 26, 1995, (vii) the Indenture, dated as of
September 15, 1995, by and between La Quinta Inns, Inc. (predecessor-in-interest
to Borrower) and U.S. Trust Company of Texas, N.A., and (viii) the Indenture
dated as of March 19, 2003, by and between Borrower, Holdings and U.S.
Bank Trust National Association, as trustee.

 

“Senior Note Documents” means the Senior
Notes, the Indentures referenced in clauses (i), (vii) and (viii) of the
definition of Senior Notes and all supplements to such Indentures.

 

“7.114% Notes”
means Borrower’s 7.114% Notes due August 15, 2011 held by the Meditrust
Exercisable Put Option Securities Trust.

 

“7.114%
Securities” means the Exercisable Put Option Securities due
August 15, 2004 issued by the Meditrust Exercisable Put Option Securities
Trust.

 

“Solvent”
means, with respect to any Person, that as of the date of determination both
(A) (i) the then fair saleable value of the property and assets of such
Person is (y) greater than the total amount of liabilities (including
contingent liabilities) of such Person and (z) not less than the amount
that will be required to pay the probable liabilities on such Person’s then
existing debts as they become absolute and matured considering all financing
alternatives and potential asset sales reasonably available to such Person;
(ii) such Person’s capital is not unreasonably small in relation to its
business or any contemplated or undertaken transaction; and (iii) such
Person does not intend to incur, or believe (nor should it reasonably believe)
that it will incur, debts beyond its ability to pay such debts as they become
due; and (B) such Person is “solvent” within the meaning given that term and
similar terms under applicable laws relating to fraudulent transfers and
conveyances.  For purposes of this
definition, the amount of any contingent liability at any time shall be computed
as the amount that, in light of all of the facts and circumstances existing at
such time, represents the amount that can reasonably be expected to become an
actual or matured liability.

 

“Subordinated
Indebtedness” means any unsecured Indebtedness of Holdings and its
Subsidiaries subordinated in right of payment to the Obligations which
Indebtedness shall not mature or be mandatorily redeemable (other than pursuant
to customary asset sale offer or change of control offer provisions) earlier
than six months after the Revolving Loan Commitment Termination Date, shall not
provide for any amortization or sinking fund payments and which shall be issued
pursuant to documentation containing covenants, defaults, remedies and
subordination provisions reasonably satisfactory to Administrative Agent.

 

25

 

“Subsidiary”
means, with respect to any Person, any corporation, partnership, limited
liability company, association, joint venture or other business entity of which
more than 50% of the total voting power of shares of stock or other ownership
interests entitled (without regard to the occurrence of any contingency) to
vote in the election of the Person or Persons (whether directors, managers,
trustees or other Persons performing similar functions) having the power to
direct or cause the direction of the management and policies thereof is at the
time owned or controlled, directly or indirectly, by that Person or one or more
of the other Subsidiaries of that Person or a combination thereof.

 

“Subsidiary
Guarantor” means any Subsidiary of Borrower or Holdings that
executes and delivers a counterpart of the Subsidiary Guaranty on the Effective
Date or from time to time thereafter pursuant to subsection 6.8, unless and
until released therefrom pursuant to the terms hereof or thereof.

 

“Subsidiary
Guaranty” means the Amended and Restated Subsidiary Guaranty
executed and delivered by existing Subsidiaries of Borrower and Holdings on the
Effective Date and to be executed and delivered by additional Subsidiaries of
Borrower and Holdings from time to time thereafter in accordance with
subsection 6.8, substantially in the form of Exhibit VII annexed hereto,
as such Amended and Restated Subsidiary Guaranty may hereafter be amended,
supplemented or otherwise modified from time to time.

 

“Supplemental Collateral Agent”
has the meaning assigned to that term in subsection 10.1B.

 

“Syndication Agent” has the meaning assigned
to that term in the recitals.

 

“Tax”
or “Taxes”
means any present or future tax, levy, impost, duty, charge, fee, deduction or
withholding of any nature and whatever called, by whomsoever, on whomsoever and
wherever imposed, levied, collected, withheld or assessed, including interest,
penalties, additions to tax and any similar liabilities with respect thereto;
except that, in the case of a Lender, there shall be excluded (1) taxes that
are imposed on the overall net income or net profits (including franchise taxes
imposed in lieu thereof) (i) by the United States, (ii) by any other government
authority under the laws of which the Lender is organized or has its principal
office or maintains its applicable lending office, or (iii) by any jurisdiction
solely as a result of a present or former connection between the Lender (other
than any such connection arising solely from the Lender having executed,
delivered or performed its obligations or received a payment under, or enforced
any of the Loan Documents), and (2) any branch profits taxes imposed by the
United States or any similar tax imposed by any other jurisdiction in which the
Lender is located.

 

 “Total Debt”
means, as at any date of determination and without duplication, the sum of (a)
the aggregate amount of all Indebtedness (including the 7.114% Notes for
purposes of financial covenant calculations) of Holdings and its Subsidiaries minus
(b) the amount of Holdings’ and its Subsidiaries’ Cash and Cash Equivalents in
excess of $5,000,000.

 

26

 

“Total
Leverage Ratio” means, as at the last day of any Fiscal Quarter, the
ratio of (a) Total Debt as of the last day of such Fiscal Quarter to (b)
Consolidated EBITDA for the four Fiscal Quarter period then ended.

 

“Total
Utilization of Revolving Loan Commitments” means, as at any date of
determination, the sum of (i) the aggregate principal amount of all
outstanding Revolving Loans (other than Revolving Loans made for the purpose of
reimbursing the applicable Issuing Lender for any amount drawn under any Letter
of Credit but not yet so applied) plus (ii) the Letter of Credit
Usage.

 

“Type” means, with respect to any Loan, a
Revolving Loan.

 

“UCC” means the Uniform Commercial Code (or
any similar or equivalent legislation) as in effect in any applicable
jurisdiction.

 

1.2                               Accounting Terms; Utilization of
GAAP for Purposes of Calculations Under Agreement.

 

Except as
otherwise expressly provided in this Agreement, all accounting terms not
otherwise defined herein shall have the meanings assigned to them in conformity
with GAAP.  Financial statements and
other information required to be delivered by Borrower to Administrative Agent
pursuant to clauses (i), (ii) and (xi) of subsection 6.1 shall be prepared in
accordance with GAAP as in effect at the time of such preparation (and
delivered together with the reconciliation statements provided for in
subsection 6.1(iv)).  Calculations in
connection with the definitions, covenants and other provisions of this
Agreement shall utilize GAAP as in effect on the date of determination, applied
in a manner consistent with that used in preparing the financial statements
referred to in subsection 5.3.  If at any time any change in GAAP would
affect the computation of any financial ratio or requirement set forth in any
Loan Document, and Borrower, Administrative Agent or Requisite Lenders shall so
request, Administrative Agent, Lenders and Borrower shall negotiate in good
faith to amend such ratio or requirement to preserve the original intent
thereof in light of such change 
(subject to the approval of Requisite Lenders), provided that,
until so amended, such ratio or requirement shall continue to be computed in
accordance with GAAP prior to such change therein and Holdings or Borrower
shall provide to Administrative Agent reconciliation statements provided for in
subsection 6.1(iv).  Notwithstanding the
foregoing, all financial ratios and requirements shall be calculated in a
manner to adjust for the effects of changes in GAAP after the Closing Date but
prior to the Effective Date.

 

1.3                               Other Definitional Provisions and
Rules of Construction.

 

A.            Any
of the terms defined herein may, unless the context otherwise requires, be used
in the singular or the plural, depending on the reference.

 

B.            References  to
“Sections” and “subsections” shall be to Sections and subsections,
respectively, of this Agreement unless otherwise specifically provided.

 

C.            The
use in any of the Loan Documents of the word
“include” or “including”, when following any general statement, term or matter,
shall not be construed to limit such 

 

27

 

statement, term or matter to the specific items or
matters set forth immediately following such word or to similar items or
matters, whether or not nonlimiting language (such as “without limitation” or
“but not limited to” or words of similar import) is used with reference
thereto, but rather shall be deemed to refer to all other items or matters that
fall within the broadest possible scope of such general statement, term or
matter.

 

D.            Each
of the parties hereto acknowledges that (i) it has been represented by counsel
in the negotiation and documentation of the terms of this Agreement, (ii) it
has had full and fair opportunity to review and revise the terms of this
Agreement, (iii) this Agreement has been drafted jointly by all of the parties
hereto, and (iv) neither Administrative Agent nor any Lender has any fiduciary
relationship with or duty to Holdings or Borrower arising out of or in
connection with this Agreement or any of the other Loan Documents, and the
relationship between Administrative Agent and Lenders, on one hand, and
Borrower and Holdings, on the other hand, in connection herewith or therewith
is solely that of debtor and creditor. 
Accordingly, each of the parties hereto acknowledges and agrees that the
terms of this Agreement shall not be construed against or in favor of another
party.

 

E.             (i)
Any reference in this Agreement or any other Loan Document to any agreement
means such agreement as it may be amended, supplemented or otherwise modified
from time to time; (ii) any reference in this Agreement or any other Loan
Document to any law, statute, regulation, rule or other legislative action
shall mean such law, statute, regulation, rule or other legislative action as
amended, supplemented or otherwise modified from time to time, and shall
include any rule or regulation promulgated thereunder; and (iii) any reference
in this Agreement or any other Loan Document to a Person shall include the
successor or assignee of such Person.

 

F.             Any
reference in this Agreement to “Holdings and its Subsidiaries” or to the
Subsidiaries of Holdings means and includes Borrower and its Subsidiaries, each
of which is a Subsidiary of Holdings.

 

Section 2.              AMOUNTS AND
TERMS OF COMMITMENTS AND LOANS

 

2.1                               Commitments; Making of Loans;
Optional Notes.

 

A.            Commitments.  Subject to the terms and conditions of this
Agreement and in reliance upon the representations and warranties of Borrower
and Holdings herein set forth, each Lender hereby severally agrees to make the
Loans described in subsection 2.1A(i):

 

(i)            Revolving
Loans.  Each Lender severally
agrees, subject to the limitations set forth below with respect to the maximum
amount of Revolving Loans permitted to be outstanding from time to time, to
lend to Borrower from time to time during the period from the Effective Date to
but excluding the Revolving Loan Commitment Termination Date an aggregate
amount not exceeding its Pro Rata Share of the aggregate amount of the
Revolving Loan Commitments to be used for the purposes identified in subsection
2.5A.  The amount of each Lender’s
Revolving Loan Commitment as of the Effective Date is set forth in its
Allocation Letter and the aggregate amount of the Revolving Loan Commitments as
of the Effective Date is 

 

28

 

$150,000,000; provided that the Revolving Loan Commitments of
Lenders shall be adjusted to give effect to any permitted assignments of the
Revolving Loan Commitments pursuant to subsection 11.1B; provided, that
the Revolving Loan Commitments of Lenders shall be adjusted to give effect to
any increase of the Revolving Loan Commitment pursuant to subsection 2.1A(ii);
and provided, further, that the amount of the Revolving Loan
Commitments shall be reduced from time to time by the amount of any reductions
thereto made pursuant to subsection 2.4. 
Each Lender’s Revolving Loan Commitment shall expire on the Revolving
Loan Commitment Termination Date and all Revolving Loans and all other amounts
owed hereunder with respect to the Revolving Loans and the Revolving Loan
Commitments shall be paid in full no later than that date.  Amounts borrowed under this subsection
2.1A(i) may be repaid and reborrowed to but excluding the Revolving Loan
Commitment Termination Date.

 

In no event shall the
Total Utilization of Revolving Loan Commitments at any time (i) exceed the
Revolving Loan Commitments then in effect or (ii) result in, at the time of
such borrowing, the sum of Cash and Cash Equivalents of Holdings and its
Subsidiaries being in excess of $25,000,000 (unless Borrower has certified to
Administrative Agent at the time of such borrowing that the proceeds of such
Loans will be used for an identified purpose which will result in, within five
Business Days, Cash and Cash Equivalents of Holdings and its Subsidiaries being
equal to or less than $25,000,000, and such certification is true on such fifth
Business Day); provided that for purposes of making the determinations provided
for in this clause (ii), Cash and Cash Equivalents which constitute Excess
Senior Note Proceeds which are being held by Borrower pending the application
of such proceeds to the repayment, repurchase or redemption of Senior Notes
shall be excluded from such determinations.

 

(ii)           Increases
of the Revolving Loan Commitments; Addition of a Term Loan Facility.  Within ninety days after the Effective Date,
with the consent of Administrative Agent, Borrower may increase the then
effective aggregate principal amount of the Revolving Loan Commitments one time
in an aggregate principal amount of up to $75,000,000 from
oversubscription.  In addition to any
increase pursuant to the preceding sentence, with the consent of the
Administrative Agent, Borrower may, at any time on or after the Effective Date,
(x) increase the then effective aggregate principal amount of Revolving
Loan Commitments and/or (y) add a term loan facility to this Agreement;
provided that the aggregate principal amount of any increase in the Revolving
Loan Commitments pursuant to this sentence plus the aggregate principal amount
of any term loan facility pursuant to this subsection 2.1A(ii) shall not exceed
$150,000,000.  In connection with any
increase in the Revolving Loan Commitments under this subsection 2.1A(ii) or
the addition of any such term loan facility, (1) Borrower and Holdings shall
execute and deliver such documents and instruments and take such other actions
as may be reasonably requested by Administrative Agent in connection with such
increase or addition, (2) at the time of any such proposed increase or
addition no Potential Event of Default or Event of Default shall have occurred
and be continuing or would occur after giving effect to such increase or
addition, and (3) with respect to the addition of a term loan facility, (a)
such term loan facility shall rank pari passu with the Revolving Loans and have
a 

 

29

 

maturity date no earlier than the Revolving Loan Commitment Termination
Date, (b) such term loan facility shall be subject to mandatory prepayment with
50% of the net cash proceeds of equity issuances, to the extent such proceeds
are used to reduce funded debt, and 100% of the net cash proceeds of all debt
issuances (excluding debt issuances that refinance existing Indebtedness that
matures or is redeemable at the holder’s option prior to the term loan maturity
date) and (c) Borrower shall execute and deliver an amendment to this Agreement
providing for such term loan facility and containing other general terms and
conditions substantially similar to those relating to term loans in the
Existing Credit Agreement or as are otherwise acceptable to Administrative
Agent and Borrower.  Any request under
this subsection 2.1A(ii) shall be submitted by Borrower to Administrative
Agent.  Borrower may also specify any
fees offered to those Lenders (the “Increasing
Lenders”) which agree to increase the principal amount of their
Revolving Loan Commitments or provide a term loan, as the case may be, which
fees may be variable based upon the amount by which any such Lender is willing
to increase the principal amount of its Revolving Loan Commitment or the amount
of the term loan such Lender is willing to provide, as the case may be.  No Lender shall have any obligation, express
or implied, to offer to increase the aggregate principal amount of its
Revolving Loan Commitment or to provide a term loan, as the case may be.  Only the consent of each Increasing Lender
shall be required for an increase in the aggregate principal amount of the
applicable Revolving Loan Commitments or for the provision of a term loan, as
the case may be, pursuant to this 2.1A(ii). 
No Lender which declines to increase the principal amount of its
Revolving Loan Commitment or to provide a term loan, as the case may be, may be
replaced in respect to its existing Revolving Loan Commitment as a result
thereof without such Lender’s consent.

 

Each Increasing Lender
shall as soon as practicable specify the amount of the proposed increase that
it is willing to assume or the term loan that it is willing to make.  Borrower may accept some or all of the
offered amounts or designate new lenders that qualify as Eligible Assignees and
that are reasonably acceptable to Administrative Agent as additional Lenders
hereunder in accordance with this subsection 2.1A(ii) (each such new lender
being a “New
Lender”), which New Lenders may assume all or a portion of the
increase in the aggregate principal amount of the Revolving Loan Commitments or
may make all or a portion of the term loans, as the case may be.  Borrower and Administrative Agent shall have
discretion jointly to adjust the allocation of the increased aggregate
principal amount of the Revolving Loan Commitments or the principal amount of
the term loans, as the case may be, among Increasing Lenders and New Lenders.

 

Subject to the foregoing,
any increase requested by Borrower shall be effective upon delivery to
Administrative Agent of each of the following documents:  (i) an originally executed copy of an
instrument of joinder substantially in the form attached hereto as Exhibit
IV signed by a duly authorized officer of each New Lender, in form and
substance reasonably satisfactory to Administrative Agent; (ii) a notice
to the Increasing Lenders and New Lenders, in form and substance reasonably
satisfactory to Administrative Agent, signed by a duly authorized officer of
Borrower; (iii) to the extent requested by any New Lender or Increasing
Lender, executed Notes issued by 

 

30

 

Borrower
in accordance with subsection 2.1D hereof; and (iv) any other certificates
or documents that Administrative Agent shall reasonably request, in form and
substance reasonably satisfactory to Administrative Agent, including an
amendment with respect to the term loan facility as provided in the first paragraph
of this subsection.  Any such increase
shall be in principal amount equal to (A) the principal amount that
Increasing Lenders are willing to assume as increases to the principal amount
of their Revolving Loan Commitments or the principal amount of the term loans
that Increasing Lenders are willing to make, as the case may be, plus
(B) the principal amount offered by New Lenders with respect to the
applicable term loan or Revolving Loan Commitments, as the case may be, in
either case as adjusted by Borrower and Administrative Agent pursuant to this
subsection 2.1A(ii).  Upon effectiveness
of any such increase, the Commitments and Pro Rata Share of each Lender will be
adjusted to give effect to the increase in the Revolving Loan Commitments or
the principal amount of the term loan, as the case may be.  To the extent that the adjustment of Pro
Rata Shares results in losses or expenses to any Lender as a result of the
prepayment of any LIBOR Loan on a date other than the scheduled last day of the
applicable Interest Period, Borrower shall be responsible for such losses or
expenses pursuant to subsection 2.6D.

 

B.            Borrowing
Mechanics.  Except for
Revolving Loans made on the Effective Date, Revolving Loans made on any Funding
Date shall be in an aggregate minimum amount of $1,000,000 and integral
multiples of $100,000 in excess of that amount.  Whenever Borrower desires that Lenders make Revolving Loans, it
shall deliver a Notice of Borrowing to Administrative Agent no later than 1:00
P.M. (New York City time) at least three Business Days in advance of the
proposed Funding Date (in the case of a LIBOR Loan) or at least one Business
Day in advance of the proposed Funding Date (in the case of a Base Rate
Loan).  The Notice of Borrowing shall
specify (i) the proposed Funding Date (which shall be a Business Day),
(ii) the amount and Type of Loans requested, (iii) in the case of
Revolving Loans not made on the Effective Date, whether such Loans shall be
Base Rate Loans or LIBOR Loans, (iv) in the case of any Loans requested to
be made as LIBOR Loans, the initial Interest Period requested therefore, and
(v) information about the account of Borrower to be credited.  Revolving Loans may be continued as or
converted into Base Rate Loans and LIBOR Loans in the manner provided in
subsection 2.2D.  In lieu of delivering
the above-described Notice of Borrowing, Borrower may give Administrative Agent
telephonic notice by the required time of any proposed borrowing under this
subsection 2.1B; provided that such notice shall be promptly confirmed
in writing by delivery of a Notice of Borrowing to Administrative Agent on the
date such notice was given.

 

Neither
Administrative Agent nor any Lender shall incur any liability to Borrower in
acting upon any telephonic notice referred to above that Administrative Agent
believes in good faith to have been given by a duly authorized officer or other
person authorized to borrow on behalf of Borrower or for otherwise acting in
good faith under this subsection 2.1B, and upon funding of Revolving Loans by
Lenders in accordance with this Agreement pursuant to any such telephonic
notice Borrower shall have effected Revolving Loans hereunder.

 

Borrower shall
notify Administrative Agent prior to the funding of any Revolving Loans in the
event that any of the matters to which Borrower is required to certify in the
applicable Notice of Borrowing is no longer true and correct as of the
applicable Funding 

 

31

 

Date,
and the acceptance by Borrower of the proceeds of any Revolving Loans shall
constitute a re-certification by Borrower, as of the applicable Funding Date,
as to the matters to which Borrower is required to certify in the applicable
Notice of Borrowing.

 

Except as
otherwise provided in subsections 2.6B, 2.6C and 2.6G, a Notice of Borrowing
for a LIBOR Loan (or telephonic notice in lieu thereof) shall be irrevocable
once Administrative Agent receives such notice, and Borrower shall be bound to
make a borrowing in accordance therewith.

 

C.            Disbursement
of Funds.  All
Revolving Loans under this Agreement shall be made by Lenders simultaneously
and proportionately to their respective Pro Rata Shares, it being understood
that neither Administrative Agent nor any Lender shall be responsible for any
default by any other Lender in that other Lender’s obligation to make a Loan
requested hereunder nor shall the Commitment of any Lender to make the
particular Type of Loan requested be increased or decreased as a result of a
default by any other Lender in that other Lender’s obligation to make a Loan
requested hereunder.  Promptly after
receipt by Administrative Agent of a Notice of Borrowing pursuant to subsection
2.1B (or telephonic notice in lieu thereof) but not later than three Business
Days prior to the Funding Date of a LIBOR Loan and one Business Day prior to
the Funding Date of a Base Rate Loan, Administrative Agent shall notify each
Lender of the proposed borrowing.  Each
Lender shall make the amount of its Loan available to Administrative Agent not
later than 12:00 Noon (New York City time) on the applicable Funding Date in
same day funds in Dollars, at the Administrative Agent’s Office.  Except as provided in subsection 3.3B with
respect to Revolving Loans used to reimburse any Issuing Lender for the amount
of a drawing under a Letter of Credit issued by it, upon satisfaction or waiver
of the conditions precedent specified in subsections 4.1 (in the case of any
Loans made on the Effective Date) and 4.2 (in the case of all Loans),
Administrative Agent shall make the proceeds of such Loans available to
Borrower on the applicable Funding Date by causing an amount of same day funds
in Dollars equal to the proceeds of all such Loans received by Administrative
Agent from Lenders to be credited to an account of Borrower as specified in the
applicable Notice of Borrowing.

 

Unless
Administrative Agent shall have been notified by any Lender prior to the
Funding Date for any Loans that such Lender does not intend to make available
to Administrative Agent the amount of such Lender’s Loan requested on such
Funding Date, Administrative Agent may assume that such Lender has made such
amount available to Administrative Agent on such Funding Date and
Administrative Agent may, in its sole discretion, but shall not be obligated to,
make available to Borrower a corresponding amount on such Funding Date.  If such corresponding amount is not in fact
made available to Administrative Agent by such Lender, Administrative Agent
shall be entitled to recover such corresponding amount on demand from such
Lender together with interest thereon, for each day from such Funding Date
until the date such amount is paid to Administrative Agent, at the customary
rate set by Administrative Agent for the correction of errors among banks for
three Business Days and thereafter at the Base Rate.  If such Lender does not pay such corresponding amount forthwith
upon Administrative Agent’s demand therefor, Administrative Agent shall
promptly notify Borrower and Borrower shall immediately pay such corresponding
amount to Administrative Agent together with interest thereon, for each day
from such Funding Date until the date such amount is paid to Administrative
Agent, at the 

 

32

 

rate
payable under this Agreement for Base Rate Loans.  Nothing in this subsection 2.1C shall be deemed to relieve any
Lender from its obligation to fulfill its Commitments hereunder or to prejudice
any rights that Borrower may have against any Lender as a result of any default
by such Lender hereunder.

 

D.            Optional
Notes.  If so
requested by any Lender by written notice to Borrower (with a copy to
Administrative Agent) at least two Business Days prior to the Effective Date or
at any time thereafter, Borrower shall execute and deliver on the Effective
Date or within three Business Days after receipt of written request therefor to
the requesting Lender, a Revolving Note substantially in the form of Exhibit V
annexed hereto to evidence that Lender’s Revolving Loans, in the principal
amount of that Lender’s Revolving Loan Commitment and with other appropriate
insertions.

 

Administrative
Agent may deem and treat the payee of any Note as the owner thereof for all
purposes hereof unless and until an Assignment Agreement effecting the
assignment or transfer thereof shall have been accepted by Administrative Agent
as provided in subsection 11.1B(ii). 
Any request, authorization or consent of any Person who, at the time of
making such request or giving such authority or consent, is the holder of any Note
shall be conclusive and binding on any subsequent holder, assignee or
transferee of that Note or of any Note or Notes issued in exchange therefor.

 

E.             The Register.

 

(i)            Administrative
Agent shall maintain, at its address referred to in subsection 11.8, a copy of
each Assignment Agreement delivered to it from time to time in accordance with
the provisions of subsection 11.1B and a register for the recordation of the
names and addresses of Lenders and the Commitments and Loans of each Lender
from time to time (the “Register”).  The Register shall be available for inspection by Borrower at any
reasonable time and from time to time upon reasonable prior notice.

 

(ii)           Administrative
Agent shall record in the Register the Revolving Loan Commitment and the Revolving
Loans from time to time of each Lender and each repayment or prepayment in
respect of the principal amount of the Revolving Loans of each Lender.  Any such recordation shall be conclusive and
binding on Borrower and each Lender, absent manifest error; provided
that failure to make any such recordation, or any error in such recordation,
shall not affect any Lender’s Commitments or Borrower’s Obligations in respect
of any applicable Loans.

 

(iii)          Each
Lender shall record on its internal records (including the Notes held by such
Lender) the amount of each Revolving Loan made by it and each payment in
respect thereof.  Any such recordation
shall be conclusive and binding on Borrower, absent manifest error; provided
that failure to make any such recordation, or any error in such recordation,
shall not affect any Lender’s Commitments or Borrower’s Obligations in respect
of any applicable Loans; and provided  further that in the event
of any inconsistency between the Register and any Lender’s records, the recordations
in the Register shall govern.

 

33

 

(iv)          Borrower,
Administrative Agent and Lenders shall deem and treat the Persons listed as
Lenders in the Register as the holders and owners of the corresponding Commitments
and Loans listed therein for all purposes hereof, and no assignment or transfer
of any such Commitment or Loan shall be effective, in each case unless and
until an Assignment Agreement effecting the assignment or transfer thereof
shall have been accepted by Administrative Agent and recorded in the Register
as provided in subsection 11.1B(ii). 
Prior to such recordation, all amounts owed with respect to the
applicable Commitment or Loan shall be owed to the Lender listed in the
Register as the owner thereof, and any request, authority or consent of any
Person who, at the time of making such request or giving such authority or
consent, is listed in the Register as a Lender shall be conclusive and binding
on any subsequent holder, assignee or transferee of the corresponding
Commitments or Loans.

 

(v)           Borrower
hereby designates CIBC to serve as Borrower’s agent solely for purposes of
maintaining the Register as provided in this subsection 2.1E, and Borrower
hereby agrees that, to the extent CIBC serves in such capacity, CIBC and its
officers, directors, employees, agents and Affiliates shall constitute
Indemnitees for all purposes under subsection 11.3.

 

2.2                               Interest on the Loans.

 

A.            Rate of
Interest.  Subject to
the provisions of subsections 2.2F, 2.6 and 2.7, each Revolving Loan shall bear
interest on the unpaid principal amount thereof from the date made through
maturity (whether by acceleration or otherwise) or earlier repayment at a rate
determined by reference to the Base Rate or the Adjusted LIBOR.  The applicable basis for determining the
rate of interest with respect to any Revolving Loan shall be selected by
Borrower initially at the time a Notice of Borrowing is given with respect to
such Loan pursuant to subsection 2.1B. 
The basis for determining the interest rate with respect to any
Revolving Loan may be changed from time to time pursuant to subsection
2.2D.  If on any day a Revolving Loan is
outstanding with respect to which notice has not been delivered to
Administrative Agent in accordance with the terms of this Agreement specifying
the applicable basis for determining the rate of interest, then for that day
that Loan shall bear interest determined by reference to the Base Rate.

 

Subject
to the provisions of subsections 2.2E, 2.2F, 2.7 and 2.10 the Revolving Loans
shall bear interest through maturity or earlier repayment as follows:

 

(i)            if
a Base Rate Loan, then at the sum of the Base Rate plus the Applicable
Base Rate Margin, but in no event in excess of the maximum nonusurious interest
rate permitted by applicable law; or

 

(ii)           if
a LIBOR Loan, then at the sum of the Adjusted LIBOR plus the Applicable
LIBOR Margin, but in no event in excess of the maximum nonusurious interest
rate permitted by applicable law.

 

Upon delivery of
the Margin Determination Certificate by Borrower to Administrative Agent
pursuant to subsection 6.1(xi), the Applicable Base Rate Margin and Applicable
LIBOR 

 

34

 

Margin
shall automatically be adjusted in accordance with such Margin Determination
Certificate, such adjustment to become effective on the third Business Day
after such Margin Determination Certificate is delivered to Administrative
Agent; provided that (1) at any time a Margin Determination Certificate
is not delivered at the time required pursuant to subsection 6.1(xi), from the
time such Margin Determination Certificate was required to be delivered until
delivery of such Margin Determination Certificate, the Applicable Base Rate
Margin shall be 1.50% for the Revolving Loans, and the Applicable LIBOR Margin
shall be 3.00% for the Revolving Loans, and (2) if a Margin Determination
Certificate erroneously indicates an applicable margin more favorable to
Borrower than should be afforded by the actual calculation of the Total
Leverage Ratio, Borrower shall promptly pay additional interest and letter of
credit fees to correct for such error.

 

B.            Interest
Periods.  In
connection with each LIBOR Loan, Borrower may, pursuant to the applicable
Notice of Borrowing or Notice of Conversion/Continuation, as the case may be,
select an interest period (each an “Interest Period”) to be applicable to such
Loan, which Interest Period shall be, at Borrower’s option, either a one, two,
three or six month period; provided that:

 

(i)            the
initial Interest Period for any LIBOR Loan shall commence on the Funding Date
in respect of such Loan, in the case of a Loan initially made as a LIBOR Loan,
or on the date specified in the applicable Notice of Conversion/Continuation,
in the case of a Loan converted to a LIBOR Loan;

 

(ii)           in
the case of immediately successive Interest Periods applicable to a LIBOR Loan
continued as such pursuant to a Notice of Conversion/Continuation, each
successive Interest Period shall commence on the day on which the next
preceding Interest Period expires;

 

(iii)          if
an Interest Period would otherwise expire on a day that is not a Business Day,
such Interest Period shall expire on the next succeeding Business Day; provided
that, if any Interest Period would otherwise expire on a day that is not a
Business Day but is a day of the month after which no further Business Day
occurs in such month, such Interest Period shall expire on the next preceding
Business Day;

 

(iv)          any
Interest Period that begins on the last Business Day of a calendar month (or on
a day for which there is no numerically corresponding day in the calendar month
at the end of such Interest Period) shall, subject to clause (v) of this
subsection 2.2B, end on the last Business Day of a calendar month;

 

(v)           no
Interest Period with respect to any portion of the Revolving Loans shall extend
beyond the then effective Revolving Loan Commitment Termination Date;

 

(vi)          there
shall be no more than fifteen Interest Periods outstanding at any time; and

 

35

 

(vii)         in
the event Borrower fails to specify an Interest Period for any LIBOR Loan in
the applicable Notice of Borrowing or Notice of Conversion/Continuation,
Borrower shall be deemed to have selected an Interest Period of one month.

 

C.            Interest
Payments.  Subject to
the provisions of subsection 2.2E and 2.2F, interest on each Loan shall be
payable in arrears on and to each Interest Payment Date applicable to that
Loan, upon any prepayment of that Loan (to the extent accrued on the amount
being prepaid) and at maturity (including final maturity); provided that in the
event any Loans that are Base Rate Loans are prepaid pursuant to subsection
2.4A(i), interest accrued on such Loans through the date of such prepayment
shall be payable on the next succeeding Interest Payment Date applicable to
Base Rate Loans (or, if earlier, at final maturity).

 

D.            Conversion
or Continuation. 
Subject to the provisions of subsection 2.6, Borrower shall have the
option (i) to convert at any time all or any part of its outstanding
Revolving Loans equal to $1,000,000 and integral multiples of $100,000 in
excess of that amount from Loans bearing interest at a rate determined by
reference to one basis to Loans bearing interest at a rate determined by
reference to an alternative basis or (ii) upon the expiration of any
Interest Period applicable to a LIBOR Loan, to continue all or any portion of
such Loan equal to $1,000,000 and integral multiples of $100,000 in excess of
that amount as a LIBOR Loan; provided,  however, that if a LIBOR
Loan is converted into a Base Rate Loan on a date other than the expiration
date of the Interest Period applicable thereto, subsection 2.6D shall apply.

 

Borrower shall
deliver a Notice of Conversion/Continuation to Administrative Agent no later
than 1:00 P.M. (New York City time) at least three Business Days in advance of
the proposed conversion date (in the case of a conversion to a Base Rate Loan)
and at least three Business Days in advance of the proposed conversion/continuation
date (in the case of a conversion to, or a continuation of, a LIBOR Loan).  With respect to any Base Rate or LIBOR Loan,
if Borrower fails to deliver a Notice of Conversion/Continuation as described
above or if any proposed conversion/continuation under this subsection 2.2D is
not permitted hereunder, Borrower shall be deemed to have elected to convert
such LIBOR Loan to a Base Rate Loan on the last day of the then-expiring
Interest Period and to continue any such Base Rate Loan as a Base Rate Loan, as
applicable.

 

A Notice of
Conversion/Continuation shall specify (i) the proposed
conversion/continuation date (which shall be a Business Day), (ii) the
amount and Type of the Loan to be converted/continued, (iii) the nature of
the proposed conversion/continuation, (iv) in the case of a conversion to,
or a continuation of, a LIBOR Loan, the requested Interest Period, and
(v) in the case of a conversion to, or a continuation of, a LIBOR Loan,
that no Event of Default has occurred and is continuing.  In lieu of delivering the above-described
Notice of Conversion/Continuation, Borrower may give Administrative Agent
telephonic notice by the required time of any proposed conversion/continuation
under this subsection 2.2D, provided that Administrative Agent shall receive a
Notice of Conversion/Continuation to confirm such telephonic notice no later
than 1:00 P.M. (New York City time) on the day on which such telephonic notice
is given.  Upon receipt of written or
telephonic notice of any proposed conversion/continuation under this subsection
2.2D, Administrative Agent shall 

 

36

 

promptly
transmit such notice by telefacsimile or telephone to each Lender but not later
than two Business Days prior to the Funding Date of a LIBOR Loan and one
Business Day prior to the Funding Date of a Base Rate Loan.

 

Neither
Administrative Agent nor any Lender shall incur any liability to Borrower in
acting upon any telephonic notice referred to above that Administrative Agent
believes in good faith to have been given by a duly authorized officer or other
person authorized to act on behalf of Borrower or for otherwise acting in good
faith under this subsection 2.2D, and upon conversion or continuation of the
applicable basis for determining the interest rate with respect to any Loans in
accordance with this Agreement pursuant to any such telephonic notice Borrower
shall have effected a conversion or continuation, as the case may be,
hereunder.

 

Except as
otherwise provided in subsections 2.6B, 2.6C and 2.6G, a notice of a proposed
conversion to, or continuation of, a LIBOR Loan (whether by delivery of a
Notice of Conversion/Continuation or telephonic notice) shall be irrevocable
once Administrative Agent receives such notice, and Borrower shall be bound to
effect a conversion or continuation in accordance therewith.

 

E.             Default
Rate.  Upon the
occurrence and during the continuation of any Event of Default, the outstanding
principal amount of all Loans and, to the extent permitted by applicable law,
any interest payments thereon not paid when due and any fees and other amounts
then due and payable hereunder, shall thereafter bear interest (including
post-petition interest in any proceeding under the Bankruptcy Code or other
applicable bankruptcy laws) payable upon demand at a rate that is 2.00% per
annum in excess of the interest rate otherwise payable under this Agreement
with respect to the applicable Loans (or, in the case of any such fees and
other amounts, at a rate which is 2.00% per annum in excess of the interest
rate otherwise payable under this Agreement for Base Rate Loans), but in no
event in excess of the maximum nonusurious interest rate permitted by
applicable law; provided that, in the case of LIBOR Loans, upon the expiration
of the Interest Period in effect at the time any such increase in interest rate
is effective such LIBOR Loans shall thereupon become Base Rate Loans and shall
thereafter bear interest payable upon demand at a rate which is 2.00% per annum
in excess of the interest rate otherwise payable under this Agreement for Base
Rate Loans, but in no event in excess of the maximum nonusurious interest rate
permitted by applicable law.  Payment or
acceptance of the increased rates of interest provided for in this
subsection 2.2E is not a permitted alternative to timely payment and shall
not constitute a waiver of any Event of Default or otherwise prejudice or limit
any rights or remedies of Administrative Agent or any Lender.

 

F.             Computation
of Interest.  Interest
on the Loans shall be computed (i) in the case of Base Rate Loans, on the
basis of a 365-day year (or 366-day year, in the case of a leap year), and
(ii) in the case of LIBOR Loans, on the basis of a 360-day year, in each
case for the actual number of days elapsed in the period during which it
accrues.  In computing interest on any
Loan, the date of the making of such Loan or the first day of an Interest
Period applicable to such Loan or, with respect to a Base Rate Loan being
converted from a LIBOR Loan, the date of conversion of such LIBOR Loan to such
Base Rate Loan, as the case may be, shall be included, and the date of payment
or repayment of such Loan or the expiration date of an Interest Period
applicable to such Loan or, with respect to a Base Rate Loan being converted 

 

37

 

to a LIBOR Loan, the date of conversion of such Base
Rate Loan to such LIBOR Loan, as the case may be, shall be excluded; provided
that if a Loan is repaid on the same day on which it is made, one day’s
interest shall be paid on that Loan.

 

2.3                               Fees.

 

A.            Commitment
Fee.  Borrower agrees
to pay to Administrative Agent, for distribution to each Lender in proportion
to that Lender’s Pro Rata Share of the Revolving Loan Commitments, commitment
fees for the period from and including the Effective Date to and excluding the
Revolving Loan Commitment Termination Date equal to the average of the daily
excess of the Revolving Loan Commitments over the Total Utilization of
Revolving Loan Commitments multiplied by (i)  0.625% per annum, if
the Total Utilization of Revolving Loan Commitments is equal to or less than
33% of the Revolving Loan Commitments, (ii) 0.50% per annum, if the Total
Utilization of Revolving Loan Commitments is greater than 33% but less than or
equal to 67% of the Revolving Loan Commitments or (iii) 0.375% per annum,
if the Total Utilization of Revolving Loan Commitments is greater than 67% of
the Revolving Loan Commitments; such commitment fees to be calculated on the
basis of a 360-day year and the actual number of days elapsed and to be payable
quarterly in arrears on the last Business Day of each March, June, September
and December of each Fiscal Year commencing on the first such date to occur
after the Effective Date, and on the Revolving Loan Commitment Termination
Date.

 

B.            Other
Fees.  Borrower agrees
to pay to Administrative Agent such fees in the amounts and at the times
separately agreed upon in writing between Borrower and Administrative Agent.

 

2.4                               Repayments and Prepayments; General Provisions
Regarding Payments; Application of Proceeds of Collateral and Payments Under
Subsidiary Guaranty.

 

A.            Prepayments and Unscheduled Reductions in
Revolving Loan Commitments.

 

(i)            Voluntary
Prepayments.  Borrower may, upon not
less than one Business Day’s prior written notice, given to Administrative
Agent by 12:00 Noon (New York City time) on the date required (which written
notice Administrative Agent will promptly transmit by telefacsimile or
telephone to each Lender), at any time and from time to time prepay any
Revolving Loans on any Business Day in whole or in part in an aggregate minimum
amount of $1,000,000 and integral multiples of $100,000 in excess of that
amount; provided, however, that any LIBOR Loan may be prepaid on
a day other than the expiration of the Interest Period applicable thereto, only
if Borrower pays the amounts due pursuant to subsection 2.6D caused by such
prepayment.  Notice of prepayment having
been given as aforesaid, the principal amount of the Loans specified in such
notice shall become due and payable on the prepayment date specified
therein.  Any such voluntary prepayment
shall be applied as specified in subsection 2.4A(iv).

 

38

 

(ii)           Voluntary
Reductions of Revolving Loan Commitments. 
Borrower may, upon not less than three Business Days’ prior written
notice to Administrative Agent (which written notice Administrative Agent will
promptly transmit by telefacsimile or telephone to each Lender), at any time
and from time to time terminate in whole or permanently reduce in part, without
premium or penalty, the Revolving Loan Commitments in an amount up to the
amount by which the Revolving Loan Commitments exceed the Total Utilization of
Revolving Loan Commitments at the time of such proposed termination or
reduction; provided that any such partial reduction of the Revolving
Loan Commitments shall be in an aggregate minimum amount of $1,000,000 and
integral multiples of $100,000 in excess of that amount.  Borrower’s notice to Administrative Agent
shall designate the date (which shall be a Business Day) of such termination or
reduction and the amount of any partial reduction, and such termination or
reduction of the Revolving Loan Commitments shall be effective on the date
specified in Borrower’s notice and shall reduce the Revolving Loan Commitment
of each Lender proportionately to its Pro Rata Share.  The amount of the Revolving Loan Commitments terminated or reduced
hereunder shall not be reinstated.

 

(iii)          Mandatory
Prepayments.  The Loans shall be
prepaid under the circumstances set forth below, all such prepayments to be
applied as set forth below or as more specifically provided in
subsection 2.4A(iv):

 

(a)           Prepayments From Net Asset Sale
Proceeds.  No later than one
Business Day after the date of receipt by Holdings or any of its Subsidiaries
of any Net Asset Sale Proceeds, Borrower shall prepay the Revolving Loans
(without any reduction of the Revolving Loan Commitments) by an amount equal to
such Net Asset Sale Proceeds.

 

(b)           Prepayments and Revolving Loan
Commitment Reductions Due to Issuance of Debt or Equity Securities.  On the first Business Day after the date of
receipt by Holdings or any of its Subsidiaries of Net Securities Proceeds, Borrower shall prepay the Revolving Loans
by an amount equal to such Net Securities Proceeds (without any reduction of
the Revolving Loan Commitments).

 

(c)           Calculations of Net Proceeds
Amounts and Additional Prepayments on Subsequent Calculations.  Concurrently with any prepayment of the
Loans pursuant to subsections 2.4A(iii)(a) or (b), Borrower shall deliver to
Administrative Agent an Officers’ Certificate demonstrating the calculation of
the amount (the “Net Proceeds Amount”) of the applicable Net Asset Sale Proceeds
or the Net Securities Proceeds that gave rise to such prepayment and in the
case of Net Asset Sale Proceeds arising as a result of the sale of any
Collateral securing the Secured Obligations (as defined in the Collateral
Documents), certifying that no event of default then exists with respect to
such Secured Obligations.  In the event
that no event of default then exists, such Net Asset Sale Proceeds shall be
applied in accordance with the terms of this Agreement.  In the event that an event of default then
exists with respect to any 

 

39

 

of the Secured
Obligations, such Net Asset Sale Proceeds shall be held by Administrative Agent
in a collateral account for the benefit of all of the holders of the Secured
Obligations until such time as either no event of default exists with respect
to such Secured Obligations (in which case such Net Asset Sale Proceeds shall
be applied in accordance with the terms of this Agreement) or until otherwise
applied as required under subsection 2.4C(i). 
In the event that Borrower shall subsequently determine that the actual
Net Proceeds Amount was greater than the amount set forth in such Officers’
Certificate (including if any actual taxes to be paid as a result of an Asset Sale
are less than the estimated taxes to be paid as a result of such Asset Sale),
Borrower shall promptly make an additional prepayment of the Loans in an amount
equal to the amount of such excess, and Borrower shall concurrently therewith
deliver to Administrative Agent an Officers’ Certificate demonstrating the
derivation of the additional Net Proceeds Amount resulting in such excess.

 

(d)           Prepayments Due to Restrictions on
Revolving Loan Commitments. 
Borrower shall from time to time prepay the Revolving Loans to the
extent necessary so that the Total Utilization of Revolving Loan Commitments
shall (1) not exceed the Revolving Loan Commitments then in effect or (2)
result in the sum of Cash and Cash Equivalents being equal to or less than
$25,000,000 on the fifth Business Day after a borrowing of Revolving Loans;
provided that for purposes of making the determinations provided for in this
clause (2), Cash and Cash Equivalents which constitute Excess Senior Note
Proceeds which are being held by Borrower pending the application of such
proceeds to the repayment, repurchase or redemption of Senior Notes shall be
excluded from such determinations.

 

(iv)          Application of Prepayments.

 

(a)           Application of Voluntary
Prepayments.  Subject to the
provisions of subsection 2.4C, any voluntary prepayments pursuant to subsection
2.4A(i) shall be applied as specified by Borrower in the applicable notice of
prepayment.

 

(b)           Application of Prepayments
to Base Rate Loans and LIBOR Loans. 
Unless the application of such prepayment is otherwise designated by
Borrower, any prepayment of Loans shall be applied first to Base Rate Loans to
the full extent thereof before application to LIBOR Loans, in each case in a
manner which minimizes the amount of any payments required to be made by
Borrower pursuant to subsection 2.6D.

 

B.            General Provisions Regarding Payments.

 

(i)            Manner
and Time of Payment.  All payments
by Borrower of principal, interest, fees and other Obligations hereunder and
under the Notes shall be made in Dollars in same day funds, without defense,
setoff or counterclaim, free of any restriction or condition, and delivered to
Administrative Agent not later than 3:00 P.M. 

 

40

 

(New York City time) on the date due at the Administrative Agent’s
Office for the account of Lenders; funds received by Administrative Agent after
that time on such due date shall be deemed to have been paid by Borrower on the
next succeeding Business Day.  Borrower
hereby authorizes Administrative Agent to charge its account with
Administrative Agent in order to cause timely payment to be made to
Administrative Agent of all principal, interest, fees and expenses due
hereunder (subject to sufficient funds being available in their accounts for
that purpose).

 

(ii)           Application
of Payments.  Prior to any payments
being applied to principal or interest under this Agreement, such payments
shall first be applied to any outstanding and payable fees, costs, expenses,
indemnities or other amounts (aside from principal or interest due under the
Loan Documents), as determined in the reasonable opinion of Administrative
Agent.

 

(iii)          Application
of Payments to Principal and Interest. 
Except as provided in subsection 2.2C, all payments in respect of the
principal amount of any Loan shall include payment of accrued interest on the
principal amount being repaid or prepaid, and all such payments (and, in any
event, any payments in respect of any Loan on a date when interest is due and
payable with respect to such Loan) shall be applied to the payment of interest
before application to principal.

 

(iv)          Apportionment
of Payments.  Aggregate principal
and interest payments in respect of Revolving Loans shall be apportioned among
all outstanding Loans to which such payments relate, in each case
proportionately to Lenders’ respective Pro Rata Shares.  Administrative Agent shall promptly
distribute to each Lender, at its primary address set forth below its name on
the appropriate signature page hereof or at such other address as such Lender
may request, its Pro Rata Share of all such payments received by Administrative
Agent and the commitment fees of such Lender when received by Administrative
Agent pursuant to subsection 2.3. 
Notwithstanding the foregoing provisions of this subsection 2.4B(iv),
if, pursuant to the provisions of subsection 2.6C, any Notice of
Conversion/Continuation is withdrawn as to any Affected Lender or if any
Affected Lender makes Base Rate Loans in lieu of its Pro Rata Share of any
LIBOR Loans, Administrative Agent shall give effect thereto in apportioning
payments received thereafter.

 

(v)           Payments
on Business Days.  Subject to
subsection 2.2B(iii), whenever any payment to be made hereunder shall be stated
to be due on a day that is not a Business Day, such payment shall be made on
the next succeeding Business Day and such extension of time shall be included
in the computation of the payment of interest hereunder or of the commitment
fees hereunder, as the case may be.

 

(vi)          Notation
of Payment.  Each Lender agrees that
before disposing of any Note held by it, or any part thereof (other than by
granting participations therein), that Lender will make a notation thereon of
all Loans evidenced by that Note and all principal payments previously made
thereon and of the date to which interest thereon has been paid; provided
that the failure to make (or any error in the making of) a notation of any Loan
made under such Note shall not limit or otherwise affect the 

 

41

 

obligations of Borrower hereunder or under such Note with respect to
any Loan or any payments of principal or interest on such Note.

 

C.            Application of Proceeds of Collateral and
Payments Under Guaranties.

 

(i)            Application
of Certain Payments; Application of Proceeds of Collateral.  Except as provided in subsection
2.4A(iii)(c) with respect to prepayments from Net Asset Sale Proceeds, all
proceeds received by Administrative Agent in respect of any sale of, collection
from, or other realization upon all or any part of the Collateral under any
Collateral Document after the occurrence of an event of default with respect to
any of the Secured Obligations may, in the discretion of Administrative Agent,
be held by Administrative Agent as Collateral for, and/or (then or at any time
thereafter) applied in full or in part by Administrative Agent against, the
applicable Loan Obligations (as defined in such Collateral Document) in the
following order of priority:

 

(a)           To the payment of all costs and
expenses of such sale, collection or other realization, including reasonable
out-of-pocket costs and expenses to Administrative Agent and its agents and
counsel, and all other expenses, liabilities and advances made or incurred by
Administrative Agent in connection therewith, and all amounts for which
Administrative Agent is entitled to indemnification under such Collateral
Document and all advances made by Administrative Agent thereunder for the
account of the applicable Loan Party, and to the payment of all costs and expenses
paid or incurred by Administrative Agent in connection with the exercise of any
right or remedy under such Collateral Document, all in accordance with the
terms of this Agreement and such Collateral Document;

 

(b)           thereafter, to the extent of any
excess such proceeds, to the payment of all other Loan Obligations (as defined
in such Collateral Document) for the equal and ratable benefit of the holders
thereof; and

 

(c)           thereafter, to the extent of any
excess such proceeds, to the payment to or upon the order of such Loan Party or
to whosoever may be lawfully entitled to receive the same or as a court of
competent jurisdiction may direct.

 

(ii)           Application
of Payments Under Guaranties.  All
payments received by Administrative Agent under the Guaranties after the
occurrence of an Event of Default shall be applied promptly from time to time
by Administrative Agent in the following order of priority:

 

(a)           To the payment of the costs and
expenses of any collection or other realization under the Guaranty, including
reasonable out-of-pocket costs and expenses to Administrative Agent and its
counsel, and all expenses, liabilities and advances made or incurred by
Administrative Agent in connection therewith, all in accordance with the terms
of this Agreement and the Guaranty;

 

42

 

(b)           thereafter, to the extent of any
excess such payments, to the payment of all other Guarantied Obligations (as
defined in such Guaranty) for the ratable benefit of the holders thereof; and

 

(c)           thereafter, to the extent of any
excess such payments, to the payment to the applicable guarantor or to
whosoever may be lawfully entitled to receive the same or as a court of
competent jurisdiction may direct.

 

2.5                               Use of Proceeds.

 

A.            Revolving
Loans.  The proceeds
of the Revolving Loans shall be applied for general corporate purposes,
including working capital, capital expenditures, acquisitions and investments.

 

B.            Margin
Regulations.  No
portion of the proceeds of any borrowing under this Agreement shall be used in
any manner that might cause the borrowing or the application of such proceeds
to violate Regulation T, Regulation U or Regulation X of the Board of
Governors of the Federal Reserve System or any other regulation of such Board
or to violate the Exchange Act, in each case as in effect on the date or dates
of such borrowing and such use of proceeds.

 

2.6                               Special Provisions Governing LIBOR
Loans.

 

Notwithstanding
any other provision of this Agreement to the contrary, the following provisions
shall govern with respect to LIBOR Loans as to the matters covered:

 

A.            Determination
of Applicable Interest Rate. 
As soon as practicable after 12:00 Noon (New York City time) on each
Interest Rate Determination Date, Administrative Agent shall determine (which
determination shall, absent manifest error, be final, conclusive and binding
upon all parties) the interest rate that shall apply to the LIBOR Loans for
which an interest rate is then being determined for the applicable Interest
Period and shall promptly give notice thereof (in writing or by telephone
confirmed in writing) to Borrower and each Lender.

 

B.            Inability
to Determine Applicable Interest Rate.  In the event that Administrative Agent shall
have determined (which determination shall be final and conclusive and binding
upon all parties hereto), on any Interest Rate Determination Date with respect
to any LIBOR Loans, that by reason of circumstances affecting the interbank
Eurodollar market adequate and fair means do not exist for ascertaining the
interest rate applicable to such Loans on the basis provided for in the
definition of Adjusted LIBOR, Administrative Agent shall on such date give
notice (by telefacsimile or by telephone confirmed in writing) to Borrower and
each Lender of such determination, whereupon (i) no Loans may be made as,
or converted to, LIBOR Loans until such time as Administrative Agent notifies
Borrower and Lenders that the circumstances giving rise to such notice no
longer exist and (ii) any Notice of Borrowing or Notice of
Conversion/Continuation given by Borrower with respect to the Loans in respect
of which such determination was made shall be deemed to be rescinded by
Borrower.

 

43

 

C.            Illegality
or Impracticability of LIBOR Loans.  In the event that on any date any Lender shall have determined
(which determination shall be final and conclusive and binding upon all parties
hereto but shall be made only after consultation with Borrower and Administrative
Agent) that the making, maintaining or continuation of its LIBOR Loans
(i) has become unlawful as a result of compliance by such Lender in good
faith with any law, treaty, governmental rule, regulation, guideline or order
(or would conflict with any such treaty, governmental rule, regulation,
guideline or order not having the force of law even though the failure to
comply therewith would not be unlawful) or (ii) has become impracticable,
or would cause such Lender material hardship, as a result of contingencies
occurring after the date of this Agreement which materially and adversely
affect the interbank Eurodollar market or the position of such Lender in that
market, then, and in any such event, such Lender shall be an “Affected
Lender” and it shall on that day give notice (by telefacsimile or by
telephone confirmed in writing) to Borrower and Administrative Agent of such
determination (which notice Administrative Agent shall promptly transmit to
each other Lender).  Thereafter
(a) the obligation of Affected Lender to make Loans as, or to convert
Loans to, LIBOR Loans shall be suspended until such notice shall be withdrawn
by Affected Lender, (b) to the extent such determination by Affected
Lender relates to a LIBOR Loan then being requested by Borrower pursuant to a
Notice of Borrowing or a Notice of Conversion/Continuation, Affected Lender
shall make such Loan as (or convert such Loan to, as the case may be) a Base
Rate Loan, (c) Affected Lender’s obligation to maintain its outstanding
LIBOR Loans (the “Affected Loans”) shall be terminated at the
earlier to occur of the expiration of the Interest Period then in effect with
respect to the Affected Loans or when required by law, and (d) the
Affected Loans shall automatically convert into Base Rate Loans on the date of
such termination.  Notwithstanding the
foregoing, to the extent a determination by an Affected Lender as described
above relates to a LIBOR Loan then being requested by Borrower pursuant to a
Notice of Borrowing or a Notice of Conversion/Continuation, Borrower shall have
the option, subject to the provisions of subsection 2.6D, to rescind such
Notice of Borrowing or Notice of Conversion/Continuation as to all Lenders by
giving notice (by telefacsimile or by telephone confirmed in writing) to
Administrative Agent of such rescission on the date on which Affected Lender
gives notice of its determination as described above (which notice of
rescission Administrative Agent shall promptly transmit to each other
Lender).  Except as provided in the
immediately preceding sentence, nothing in this subsection 2.6C shall affect
the obligation of any Lender other than an Affected Lender to make or maintain
Loans as, or to convert Loans to, LIBOR Loans in accordance with the terms of
this Agreement.

 

D.            Compensation
For Breakage or Non-Commencement of Interest Periods.  Borrower shall compensate each Lender, upon
written request by that Lender made within six months after the occurrence of
the circumstances giving rise to such compensation (which request shall set
forth the basis for requesting such amounts), for all reasonable losses,
expenses and liabilities (including any interest paid by that Lender to lenders
of funds borrowed by it to make or carry its LIBOR Loans and any loss, expense
or liability sustained by that Lender in connection with the liquidation or
re-employment of such funds) which that Lender may sustain: (i) if for any
reason (other than a default by that Lender) a borrowing of any LIBOR Loan does
not occur on a date specified therefor in a Notice of Borrowing or a telephonic
request for borrowing, or a conversion to or continuation of any LIBOR Loan
does not occur on a date specified therefor in a Notice of
Conversion/Continuation or a telephonic 

 

44

 

request for conversion or continuation, (ii) if
any prepayment (including any prepayment pursuant to subsection 2.4A(i)) or
other principal payment or any conversion of any of its LIBOR Loans occurs on a
date prior to the last day of an Interest Period applicable to that Loan,
(iii) if any prepayment of any of its LIBOR Loans is not made on any date
specified in a notice of prepayment given by Borrower, or (iv) as a
consequence of any other default by Borrower in the repayment of its LIBOR
Loans when required by the terms of this Agreement.

 

E.             Booking
of LIBOR Loans.  Any
Lender may make, carry or transfer LIBOR Loans at, to, or for the account of
any of its branch offices or the office of an Affiliate of that Lender.

 

F.             Assumptions
Concerning Funding of LIBOR Loans.  Calculation of all amounts payable to a Lender under this
subsection 2.6 and under subsection 2.7A shall be made as though that Lender
had actually funded each of its relevant LIBOR Loans through the purchase of a
Eurodollar deposit bearing interest at the rate obtained pursuant to clause (x)
of the definition of Adjusted LIBOR in an amount equal to the amount of such
LIBOR Loan and having a maturity comparable to the relevant Interest Period and
through the transfer of such Eurodollar deposit from an offshore office of that
Lender to a domestic office of that Lender in the United States of America; provided,
however, that each Lender may fund each of its LIBOR Loans in any manner
it sees fit and the foregoing assumptions shall be utilized only for the
purposes of calculating amounts payable under this subsection 2.6 and under
subsection 2.7A.

 

G.            LIBOR
Loans After Default. 
After the occurrence of and during the continuation of an Event of
Default, (i) Borrower may not elect to have a Loan be made or continued as,
or converted to, a LIBOR Loan after the expiration of any Interest Period then
in effect for that Loan and (ii) subject to the provisions of subsection
2.6D, any Notice of Borrowing or Notice of Conversion/ Continuation given by
Borrower with respect to a requested borrowing or conversion/ continuation that
has not yet occurred shall be deemed to be rescinded by Borrower.

 

2.7                               Increased Costs; Taxes; Capital
Adequacy.

 

A.            Compensation
for Increased Costs and Taxes.  Subject to the provisions of subsection 2.7B (which shall be
controlling with respect to the matters covered thereby), in the event that any
Lender shall determine (which determination shall, absent manifest error, be
final and conclusive and binding upon all parties hereto) that any law, treaty
or governmental rule, regulation or order, or any change therein or in the
interpretation, administration or application thereof (including the
implementation of any new law, treaty or governmental rule, regulation or
order), or any determination of a court or governmental authority, in each case
that becomes effective after the date hereof, or compliance by such Lender with
any guideline, request or directive issued or made after the date hereof by any
central bank or other governmental or quasi-governmental authority (whether or
not having the force of law):

 

(i)            subjects
such Lender (or its applicable lending office) to any additional Tax with
respect to this Agreement or any of its obligations hereunder or any payments 

 

45

 

to such Lender (or its applicable lending office) of principal,
interest, fees or any other amount payable hereunder;

 

(ii)           imposes,
modifies or holds applicable any reserve (including any marginal, emergency,
supplemental, special or other reserve), special deposit, compulsory loan, FDIC
insurance or similar requirement against assets held by, or deposits or other
liabilities in or for the account of, or advances or loans by, or other credit
extended by, or any other acquisition of funds by, any office of such Lender
(other than any such reserve or other requirements with respect to LIBOR Loans
that are reflected in the definition of Adjusted LIBOR); or

 

(iii)          imposes
any other condition (other than with respect to a Tax matter) on or affecting
such Lender (or its applicable lending office) or its obligations hereunder or
the interbank Eurodollar market;

 

and
the result of any of the foregoing is to increase the cost to such Lender of
agreeing to make, making or maintaining Loans hereunder or to reduce any amount
received or receivable by such Lender (or its applicable lending office) with
respect thereto; then, in any such case, Borrower shall promptly pay to such
Lender, upon receipt of the statement referred to in the next sentence, such
additional amount or amounts (in the form of an increased rate of, or a
different method of calculating, interest or otherwise as such Lender in its
sole discretion shall determine) as may be necessary to compensate such Lender
for any such increased cost or reduction in amounts received or receivable
hereunder.  Such Lender shall deliver to
Borrower (with a copy to Administrative Agent) a written statement within six
months after the occurrence of the circumstances giving rise to such additional
amounts, setting forth in reasonable detail the basis for calculating the
additional amounts owed to such Lender under this subsection 2.7A, which
statement shall be conclusive and binding upon all parties hereto absent
manifest error.

 

B.            Withholding of Taxes.

 

(i)            Payments
to Be Free and Clear.  Unless
otherwise required by applicable law, all sums payable by Borrower under this
Agreement and the other Loan Documents shall be paid free and clear of, and
without any deduction or withholding on account of, any Tax imposed, levied,
collected, withheld or assessed by or within the United States of America or
any political subdivision in or of the United States of America or any other
jurisdiction from or to which a payment is made by or on behalf of Borrower.

 

(ii)           Grossing-up
of Payments.  If Borrower or any
other Person is required by law to make any deduction or withholding on account
of any such Tax from any sum paid or payable by Borrower to Administrative
Agent or any Lender under any of the Loan Documents:

 

(a)           Borrower shall notify Administrative
Agent of any such requirement or any change in any such requirement as soon as
Borrower becomes aware of it;

 

46

 

(b)           Borrower shall pay any such Tax when
such Tax is due, regardless of whether the liability for payment of such Tax
(i) is imposed on Borrower itself, Administrative Agent or any Lender or (ii)
relates to any portion of any sums paid or payable to any Lender under any of
the Loan Documents with respect to which such Lender does not act for its own
account;

 

(c)           the sum payable by Borrower in
respect of which the relevant deduction, withholding or payment is required
shall be increased to the extent necessary to ensure that, after the making of
that deduction, withholding or payment, Administrative Agent or such Lender, as
the case may be, receives on the due date a net sum equal to what it would have
received had no such deduction, withholding or payment been required or made;
and

 

(d)           within 30 days after paying any sum
from which it is required by law to make any deduction or withholding, and
within 30 days after the due date of payment of any Tax which it is required by
clause (b) above to pay, Borrower shall deliver to Administrative Agent
evidence satisfactory to the other affected parties of such deduction,
withholding or payment and of the remittance thereof to the relevant taxing or
other authority;

 

provided
that no such additional amount shall be required to be paid to any Lender under
clause (c) above (i) to the extent such additional amount relates to a portion
of any sums paid or payable to such Lender under any of the Loan Documents with
respect to which such Lender does not act for its own account, or (ii) except
to the extent that any change after the date such Lender became a Lender in any
such requirement for a deduction, withholding or payment as is mentioned
therein shall result in an increase in the rate of such deduction, withholding
or payment from that in effect at the date on which such Lender became a
Lender, in respect of payments to such Lender.

 

(iii)          Evidence of Exemption from U.S.
Withholding Tax.

 

(a)           Each Lender that is organized under
the laws of any jurisdiction other than the United States or any state or other
political subdivision thereof (for purposes of this subsection 2.7B(iii), a “Non-US
Lender”) shall deliver to Administrative Agent and to Borrower, on
or prior to the Effective Date (in the case of each Lender party hereto on the
Effective Date) or on or prior to the date of the Assignment Agreement pursuant
to which it becomes a Lender (in the case of each other Lender), and at such
other times as may be necessary in the determination of Borrower or
Administrative Agent (each in the reasonable exercise of its discretion), two
original copies of Internal Revenue Service Form W-8BEN or W-8ECI (or any
successor forms) properly completed and duly executed by such Lender, or, in
the case of a Non-US Lender claiming exemption from United States federal
withholding tax under Section 871(h) or 881(c) of the Internal Revenue Code
with respect to payments of “portfolio interest”, a form W-8BEN, and, in the
case of a Lender that has certified in writing to Administrative Agent that it
is not a “bank” (as defined in Section 

 

47

 

881(c)(3)(A) of
the Internal Revenue Code), a certificate of such Lender certifying that such
Lender is not (i) a “bank” for purposes of Section 881(c) of the Internal
Revenue Code, (ii) a ten-percent shareholder (within the meaning of Section
871(h)(3)(B) of the Internal Revenue Code) of Borrower or Holdings, or
(iii) a controlled foreign corporation related to Borrower or Holdings
(within the meaning of Section 864(d)(4) of the Internal Revenue Code) in each
case together with any other certificate or statement of exemption required
under the Internal Revenue Code or the regulations issued thereunder to
establish that such Lender is not subject to United States withholding tax with
respect to any payments to such Lender of interest payable under any of the
Loan Documents.

 

(b)           Each Non-US Lender, to the extent it
does not act or ceases to act for its own account with respect to any portion
of any sums paid or payable to such Lender under any of the Loan Documents (for
example, in the case of a typical participation by such Lender), shall deliver
to Administrative Agent and to Borrower, on or prior to the Effective Date (in
the case of each Lender party hereto on the Effective Date), on or prior to the
date of the Assignment Agreement pursuant to which it becomes a Lender (in the
case of each other Lender), or on such later date when such Lender ceases to
act for its own account with respect to any portion of any such sums paid or
payable, and at such other times as may be necessary in the determination of
Borrower or Administrative Agent (each in the reasonable exercise of its
discretion), (1) two original copies of the forms or statements required to be
provided by such Lender under subsection 2.7B(iii)(a), properly completed and
duly executed by such Lender, to establish the portion of any such sums paid or
payable with respect to which such Lender acts for its own account that is not
subject to United States withholding tax, and (2) two original copies of
Internal Revenue Service Form W-8IMY (or any successor forms) properly
completed and duly executed by such Lender, together with any information, if
any, such Lender chooses to transmit with such form, and any other certificate
or statement of exemption required under the Internal Revenue Code or the
regulations issued thereunder, to establish that such Lender is not acting for
its own account with respect to a portion of any such sums payable to such
Lender.

 

(c)           Each Non-US Lender hereby agrees,
from time to time after the initial delivery by such Lender of such forms,
whenever a lapse in time or change in circumstances renders such forms,
certificates or other evidence so delivered obsolete or inaccurate in any
material respect or in the event that, by virtue of a change in law or
regulations, such forms are no longer valid evidence of a person’s exemption
from withholding tax which is reasonably satisfactory to the Borrower, that
such Lender shall promptly (1) deliver to Administrative Agent and to
Borrower two original copies of renewals, amendments or additional or successor
forms, properly completed and duly executed by such Lender, together with any
other certificate or statement of exemption required in order to confirm or
establish that such Lender is not subject to United States withholding tax with
respect to payments to such 

 

48

 

Lender under the
Loan Documents and, as the case may be, that such Lender does not act for its
own account with respect to any portion of any such payments, or
(2) notify Administrative Agent and Borrower of its inability to deliver
any such forms, certificates or other evidence.

 

(d)           Borrower shall not be required to pay
any additional amount to any Non-US Lender under clause (c) of subsection
2.7B(ii) if such Lender shall have failed to satisfy the requirements of clause
(a), (b) or (c)(1) of this subsection 2.7B(iii); provided that if such
Lender shall have satisfied the requirements of subsection 2.7B(iii)(a) on the
date such Lender became a Lender, nothing in this subsection 2.7B(iii)(d) shall
relieve Borrower of its obligation to pay any amounts pursuant to subsection
2.7B(ii)(c) in the event that, as a result of any change in any applicable law,
treaty or governmental rule, regulation or order, or any change in the
interpretation, administration or application thereof, such Lender is no longer
properly entitled to deliver forms, certificates or other evidence at a
subsequent date establishing the fact that such Lender is not subject to
withholding as described in subsection 2.7B(iii)(a).

 

C.            Capital
Adequacy Adjustment. 
If any Lender shall have determined that the adoption, effectiveness,
phase-in or applicability after the date hereof of any law, rule or regulation
(or any provision thereof) regarding capital adequacy, or any change therein or
in the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender (or its applicable lending
office) with any guideline, request or directive regarding capital adequacy
(whether or not having the force of law) of any such governmental authority,
central bank or comparable agency, has or would have the effect of reducing the
rate of return on the capital of such Lender or any corporation controlling
such Lender as a consequence of, or with reference to, such Lender’s Loans or
Commitments or Letters of Credit or participations therein or other obligations
hereunder with respect to the Loans or the Letters of Credit to a level below
that which such Lender or such controlling corporation could have achieved but
for such adoption, effectiveness, phase-in, applicability, change or compliance
(taking into consideration the policies of such Lender or such controlling
corporation with regard to capital adequacy), then from time to time, within
five Business Days after receipt by Borrower from such Lender of the statement
referred to in the next sentence, Borrower shall pay to such Lender such
additional amount or amounts as will compensate such Lender or such controlling
corporation on an after-tax basis for such reduction. Such Lender shall deliver
to Borrower (with a copy to Administrative Agent) a written statement within
six months after the occurrence of the circumstances giving rise to such
additional amounts, setting forth in reasonable detail the basis of the
calculation of such additional amounts, which statement shall be conclusive and
binding upon all parties hereto absent manifest error.

 

2.8                               Obligation of Lenders and Issuing
Lenders to Mitigate.

 

Each Lender and
Issuing Lender agrees that, as promptly as practicable after the officer of
such Lender or Issuing Lender responsible for administering the Loans or Letters
of Credit of such Lender or Issuing Lender, as the case may be, becomes aware
of the occurrence of an event or the existence of a condition that would cause
such Lender to become an Affected 

 

49

 

Lender
or that would entitle such Lender or Issuing Lender to receive payments under
subsection 2.7 or subsection 3.6, it will, to the extent not inconsistent with
the internal policies of such Lender or Issuing Lender and any applicable legal
or regulatory restrictions, use reasonable efforts (i) to make, issue,
fund or maintain the Commitments of such Lender or the affected Loans or
Letters of Credit of such Lender or Issuing Lender through another lending or
letter of credit office of such Lender or Issuing Lender, or (ii) take
such other measures as such Lender or Issuing Lender may deem reasonable, if as
a result thereof the circumstances which would cause such Lender to be an
Affected Lender would cease to exist or the additional amounts which would otherwise
be required to be paid to such Lender or Issuing Lender pursuant to subsection
2.7 or subsection 3.6 would be materially reduced and if, as determined by such
Lender or Issuing Lender in its sole discretion, the making, issuing, funding
or maintaining of such Commitments or Loans or Letters of Credit through such
other lending or letter of credit office or in accordance with such other
measures, as the case may be, would not otherwise materially adversely affect
such Commitments or Loans or Letters of Credit or the interests of such Lender
or Issuing Lender; provided that such Lender or Issuing Lender will not
be obligated to utilize such other lending or letter of credit office pursuant
to this subsection 2.8 unless Borrower agrees to pay all incremental expenses
incurred by such Lender or Issuing Lender as a result of utilizing such other
lending or letter of credit office as described in clause (i) above.  A certificate as to the amount of any such
expenses payable by Borrower pursuant to this subsection 2.8 (setting forth in
reasonable detail the basis for requesting such amount) submitted by such
Lender or Issuing Lender to Borrower (with a copy to Administrative Agent)
shall be conclusive absent manifest error.

 

2.9                               Replacement of a Lender.

 

If Borrower
receives a statement of amounts due pursuant to subsection 2.7A or 2.7C from a
Lender or a Lender of Revolving Loans defaults in its obligations to fund a
Revolving Loan pursuant to this Agreement, or a Lender becomes an Affected
Lender (any such Lender, a “Subject Lender”),
so long as (i) no Potential Event of Default or Event of Default shall have
occurred and be continuing and Borrower has obtained a commitment from another
Lender or an Eligible Assignee to purchase at par the Subject Lender’s Loans and
assume the Subject Lender’s Commitments and all other obligations of the
Subject Lender hereunder, (ii) such Lender is not an Issuing Lender with
respect to any Letters of Credit outstanding (unless all such Letters of Credit
are terminated or arrangements reasonably acceptable to such Issuing Lender
(such as a “back-to-back” letter of credit) are made) and (iii) if applicable,
the Subject Lender is unwilling to withdraw the statement delivered to Borrower
pursuant to subsection 2.7 and/or is unwilling to remedy its default upon 10
days prior written notice to the Subject Lender and Administrative Agent,
Borrower may require the Subject Lender to assign all of its Loans and
Commitments to such other Lender, Lenders, Eligible Assignee or Eligible
Assignees pursuant to the provisions of subsection 11.1B; provided that, prior
to or concurrently with such replacement, (1) the Subject Lender shall have
received payment in full of all principal, interest, fees and other amounts
(including all amounts under subsections 2.6D and/or 2.7 (if applicable))
through such date of replacement and a release from its obligations under the
Loan Documents, (2) any processing fee required to be paid by subsection
11.1B(i) shall have been paid to Administrative Agent, and (3) all of the
requirements for such assignment contained in subsection 11.1B, including,
without limitation, 

 

50

 

the
consent of Administrative Agent (if required) and the receipt by Administrative
Agent of an executed Assignment Agreement and other supporting documents, have
been fulfilled.

 

2.10                        Limitation on Interest.

 

Each Lender,
Borrower and any other parties to the Loan Documents intend to contract in
strict compliance with applicable usury law from time to time in effect.  In furtherance thereof, such Persons
stipulate and agree that none of the terms and provisions contained in the Loan
Documents shall ever be construed to create a contract to pay, for the use, forbearance
or detention of money, interest in excess of the maximum amount of interest
permitted to be charged by applicable law from time to time in effect.  Neither Borrower nor any present or future
guarantors, endorsers or other Persons hereafter becoming liable for payment of
any Obligation shall ever be liable for unearned interest thereon or shall ever
be required to pay interest thereon in excess of the maximum amount that may be
lawfully contracted for, charged, or received under applicable law from time to
time in effect, and the provisions of this section shall control over all other
provisions of the Loan Documents which may be in conflict or apparent conflict
herewith.  Each Lender expressly
disavows any intention to contract for, charge, or collect excessive unearned
interest or finance charges in the event the maturity of any Obligation is
accelerated.  If (a) the maturity of any
Obligation is accelerated for any reason, (b) any Obligation is prepaid and as
a result any amounts held to constitute interest are determined to be in excess
of the legal maximum, or (c) any Lender or any other holder of any or all of
the Obligations shall otherwise collect moneys which are determined to
constitute interest which would otherwise increase the interest on any or all
of the Obligations to an amount in excess of that permitted to be charged by
applicable law then in effect (the “Maximum Rate”), then all sums determined to
constitute interest in excess of such legal limits shall, without penalty, be
promptly applied to reduce the then outstanding principal of the related
Obligations or, at each Lender’s or holder’s option promptly returned to
Borrower or the other payor thereof upon such determination.  In determining whether or not the interest
paid or payable, under any specific circumstance, exceeds the maximum amount
permitted under applicable law, each Lender and Borrower (and any other payors
thereof) shall, to the greatest extent permitted under applicable law, (i)
characterize any non-principal payment as an expense, fee or premium rather than
as interest, (ii) exclude voluntary prepayments and the effects thereof, and
(iii) amortize, prorate, allocate, and spread the total amount of interest
throughout the entire contemplated term of the instruments evidencing the
Obligations in accordance with the amounts outstanding from time to time
thereunder and the maximum legal rate of interest from time to time in effect
under applicable law in order to lawfully contract for, charge, or receive the
maximum amount of interest permitted under applicable law.  Notwithstanding the foregoing, if for any
period of time interest on any Obligations is calculated at the Maximum Rate
rather than the applicable rate under this Agreement, and thereafter such
applicable rate becomes less than the Maximum Rate, the rate of interest
payable on such Obligations shall remain at the Maximum Rate until each Lender
shall have received the amount of interest which such Lender would have
received during such period on such Obligations had the rate of interest not
been limited to the Maximum Rate during such period.

 

51

 

Section 3.              LETTERS OF CREDIT

 

3.1                               Issuance of Letters of Credit and
Lenders’ Purchase of Participations Therein.

 

A.            Letters of
Credit.  In addition
to Borrower requesting that Lenders make Revolving Loans pursuant to subsection
2.1A(i), Borrower may request, in accordance with the provisions of this
subsection 3.1, from time to time during the period from the Closing Date to
but excluding the Revolving Loan Commitment Termination Date, that one or more
Lenders issue Letters of Credit for the account of Borrower for the purposes
specified in the definition of Letters of Credit.  Subject to the terms and conditions of this Agreement and in
reliance upon the representations and warranties of Borrower herein set forth,
any one or more Lenders may, but (except as provided in subsection 3.1B(ii))
shall not be obligated to, issue such Letters of Credit in accordance with the
provisions of this subsection 3.1; provided that Borrower shall not
request that any Lender issue (and no Lender shall issue):

 

(i)            any
Letter of Credit if, after giving effect to such issuance, the Total
Utilization of Revolving Loan Commitments would exceed the Revolving Loan
Commitments of all Lenders;

 

(ii)           any
Letter of Credit if, after giving effect to such issuance, the Letter of Credit
Usage would exceed $50,000,000;

 

(iii)          any
Letter of Credit having an expiration date later than the earlier of
(a) ten days prior to the Revolving Loan Commitment Termination Date, and
(b) the date which is one year from the date of issuance of such Letter of
Credit; provided that the immediately preceding clause (b) shall not
prevent any Issuing Lender from agreeing that a Letter of Credit will
automatically be extended for one or more successive periods not to exceed one
year each unless such Issuing Lender elects not to extend for any such
additional period; and provided  further that such Issuing Lender
shall elect not to extend such Letter of Credit if it has knowledge that an
Event of Default has occurred and is continuing (and has not been waived in
accordance with subsection 11.6) at the time such Issuing Lender must elect
whether or not to allow such extension;

 

(iv)          any
Letter of Credit denominated in a currency other than Dollars; or

 

(v)           any
Letter of Credit that is otherwise unacceptable to the applicable Issuing
Lender in its reasonable discretion.

 

B.            Mechanics of Issuance.

 

(i)            Notice
of Issuance.  Whenever Borrower
desires the issuance of a Letter of Credit, it shall deliver to Administrative
Agent a Notice of Issuance of Letter of Credit substantially in the form of Exhibit
III annexed hereto no later than 1:00 P.M. (New York City time) at least
three Business Days, or in each case such shorter period as may be agreed to by
the Issuing Lender in any particular instance, in advance of the proposed date
of issuance.  The Notice of Issuance of
Letter of Credit shall specify (a) the proposed date of issuance (which
shall be a Business Day), (b) the face amount 

 

52

 

of the Letter of Credit, (c) the expiration date of the Letter of
Credit, (d) the name and address of the beneficiary, and (e) either
the verbatim text of the proposed Letter of Credit or the proposed terms and
conditions thereof, including a precise description of any documents to be
presented by the beneficiary which, if presented by the beneficiary prior to
the expiration date of the Letter of Credit, would require the Issuing Lender
to make payment under the Letter of Credit; provided that the Issuing
Lender, in its reasonable discretion, may require changes in the text of the
proposed Letter of Credit or any such documents; and provided, further
that no Letter of Credit shall require payment against a conforming draft to be
made thereunder on the same Business Day (under the laws of the jurisdiction in
which the office of the Issuing Lender to which such draft is required to be
presented is located) that such draft is presented if such presentation is made
after 12:00 Noon (in the time zone of such office of the Issuing Lender) on
such Business Day.

 

Borrower
shall notify the applicable Issuing Lender (and Administrative Agent, if
Administrative Agent is not such Issuing Lender) prior to the issuance of any
Letter of Credit in the event that any of the matters to which Borrower is
required to certify in the applicable Notice of Issuance of Letter of Credit is
no longer true and correct as of the proposed date of issuance of such Letter
of Credit, and upon the issuance of any Letter of Credit Borrower shall be
deemed to have re-certified, as of the date of such issuance, as to the matters
to which Borrower is required to certify in the applicable Notice of Issuance
of Letter of Credit.

 

(ii)           Determination
of Issuing Lender.  Upon receipt by
Administrative Agent of a Notice of Issuance of Letter of Credit pursuant to
subsection 3.1B(i) requesting the issuance of a Letter of Credit, in the event
Administrative Agent elects to issue such Letter of Credit, Administrative
Agent shall promptly so notify Borrower, and Administrative Agent shall be the
Issuing Lender with respect thereto.  In
the event that Administrative Agent, in its sole discretion, elects not to issue
such Letter of Credit, Administrative Agent shall promptly so notify Borrower,
whereupon Borrower may request any other Lender to issue such Letter of Credit
by delivering to such Lender a copy of the applicable Notice of Issuance of
Letter of Credit.  Any Lender so
requested to issue such Letter of Credit shall promptly notify Borrower and
Administrative Agent whether or not, in its sole discretion, it has elected to
issue such Letter of Credit, and any such Lender which so elects to issue such
Letter of Credit shall be the Issuing Lender with respect thereto.  If all other Lenders have declined to issue
such Letter of Credit, notwithstanding the prior election of Administrative
Agent not to issue such Letter of Credit, Administrative Agent shall issue such
Letter of Credit and shall be the Issuing Lender with respect thereto,
notwithstanding the fact that the Letter of Credit Usage with respect to such
Letter of Credit and with respect to all other Letters of Credit issued by
Administrative Agent when aggregated with Administrative Agent’s outstanding
Revolving Loans may exceed Administrative Agent’s Revolving Loan Commitment
then in effect.

 

(iii)          Issuance
of Letter of Credit.  Upon
satisfaction or waiver (in accordance with subsection 11.6) of the conditions
set forth in subsection 4.3, the Issuing Lender 

 

53

 

shall issue the requested Letter of Credit in accordance with the
Issuing Lender’s standard operating procedures.

 

(iv)          Notification
to Lenders.  Upon the issuance of
any Letter of Credit the applicable Issuing Lender shall promptly notify
Administrative Agent and each other Lender of such issuance.  Promptly after receipt of such notice (or,
if Administrative Agent is the Issuing Lender, together with such notice),
Administrative Agent shall notify each Lender of the amount of such Lender’s
respective participation in such Letter of Credit, determined in accordance
with subsection 3.1C.

 

C.            Lenders’
Purchase of Participations in Letters of Credit.  Immediately upon the issuance of each Letter
of Credit, each Lender with a Revolving Loan Commitment shall be deemed to, and
hereby agrees to, have irrevocably purchased from the Issuing Lender a
participation in such Letter of Credit and any drawings honored thereunder in
an amount equal to such Lender’s Pro Rata Share of the maximum amount which is
or at any time may become available to be drawn thereunder.

 

3.2                               Letter of Credit Fees.

 

Borrower agrees to
pay the following amounts with respect to Letters of Credit issued hereunder:

 

(i)            with
respect to each Letter of Credit, (a) a fronting fee, payable directly to
the applicable Issuing Lender for its own account, equal to 0.25% per annum of
the daily amount available to be drawn under such Letter of Credit, and
(b) a letter of credit fee, payable to Administrative Agent for the
account of those Lenders with a Revolving Loan Commitment, equal to the
Applicable LIBOR Margin multiplied by the daily amount available to be drawn
under such Letter of Credit (without duplication of any amounts required to be
paid under subsection 3.3D(i)), each such fronting fee or letter of credit fee
to be payable in arrears on the last Business Day of each March, June,
September and December of each Fiscal Year commencing on the first such date to
occur after the Effective Date, and on the Revolving Loan Commitment
Termination Date, and computed on the basis of a 360-day year for the actual
number of days elapsed; and

 

(ii)           with
respect to the issuance, amendment or transfer of each Letter of Credit and
each payment of a drawing made thereunder (without duplication of the fees
payable under clauses (i) and (ii) above), documentary and processing charges
payable directly to the applicable Issuing Lender for its own account in
accordance with such Issuing Lender’s standard schedule for such charges in
effect at the time of such issuance, amendment, transfer or payment, as the
case may be.

 

For purposes of calculating any fees payable under
clauses (i) and (ii) of this subsection 3.2, the daily amount available to be
drawn under any Letter of Credit shall be determined as of the close of
business on any date of determination. 
Promptly upon receipt by Administrative Agent of any amount described in
clause (i) or (ii) of this subsection 3.2, Administrative 

 

54

 

Agent shall distribute to each Lender with a Revolving
Loan Commitment its Pro Rata Share of such amount.

 

3.3                               Drawings and Reimbursement of
Amounts Paid Under Letters of Credit.

 

A.            Responsibility
of Issuing Lender With Respect to Drawings.  In determining whether to honor any drawing
under any Letter of Credit by the beneficiary thereof, the Issuing Lender shall
be responsible only to examine the documents delivered under such Letter of
Credit with reasonable care so as to ascertain whether they appear on their
face to be in accordance with the terms and conditions of such Letter of
Credit.

 

B.            Reimbursement
by Borrower of Amounts Paid Under Letters of Credit.  In the event an Issuing Lender has
determined to honor a drawing under a Letter of Credit issued by it, such
Issuing Lender shall immediately notify Borrower and Administrative Agent, and
Borrower shall reimburse such Issuing Lender on or before the Business Day
immediately following the date on which such drawing is honored (the “Reimbursement
Date”) in an amount in Dollars and in same day funds equal to the
amount of such honored drawing; provided that, anything contained in
this Agreement to the contrary notwithstanding, (i) unless Borrower shall have
notified Administrative Agent and such Issuing Lender prior to 1:00 P.M. (New
York City time) on the date such drawing is honored that Borrower intends to
reimburse such Issuing Lender for the amount of such honored drawing with funds
other than the proceeds of Revolving Loans, Borrower shall be deemed to have
given a timely Notice of Borrowing to Administrative Agent requesting Lenders
to make Revolving Loans that are Base Rate Loans on the Reimbursement Date in
an amount in Dollars equal to the amount of such honored drawing and (ii)
Lenders shall, on the Reimbursement Date, make Revolving Loans that are Base
Rate Loans in the amount of such honored drawing (it being understood that such
funding of Revolving Loans by Lenders is not a failure by Borrower to make
payments when due under subsection 8.1), the proceeds of which shall be applied
directly by Administrative Agent to reimburse such Issuing Lender for the
amount of such honored drawing; and provided, further that if for
any reason proceeds of Revolving Loans are not received by such Issuing Lender
on the Reimbursement Date in an amount equal to the amount of such honored
drawing, Borrower shall reimburse such Issuing Lender, on demand, in an amount
in same day funds equal to the excess of the amount of such honored drawing
over the aggregate amount of such Revolving Loans, if any, which are so
received.  Nothing in this subsection
3.3B shall be deemed to relieve any Lender from its obligation to make
Revolving Loans on the terms and conditions set forth in this Agreement, and
Borrower shall retain any and all rights it may have against any Lender
resulting from the failure of such Lender to make such Revolving Loans under
this subsection 3.3B.

 

C.            Payment by Lenders of Unreimbursed Amounts
Paid Under Letters of Credit.

 

(i)            Payment
by Lenders.  In the event that
Borrower shall fail for any reason to reimburse any Issuing Lender as provided
in subsection 3.3B in an amount equal to the amount of any drawing honored by
such Issuing Lender under a Letter of Credit issued by it, such Issuing Lender
shall promptly notify each other Lender with a Revolving Loan Commitment of the
unreimbursed amount of such honored drawing 

 

55

 

and of such other Lender’s respective participation therein based on
such Lender’s Pro Rata Share of the Revolving Loan Commitment.  Each Lender with a Revolving Loan Commitment
shall make available to such Issuing Lender an amount equal to its respective
participation, in Dollars and in same day funds, at the office of such Issuing
Lender specified in such notice, not later than 12:00 Noon (New York City time)
on the first Business Day (under the laws of the jurisdiction in which such
office of such Issuing Lender is located) after the date notified by such
Issuing Lender.  In the event that any
Lender with a Revolving Loan Commitment fails to make available to such Issuing
Lender on such Business Day the amount of such Lender’s participation in such
Letter of Credit as provided in this subsection 3.3C, such Issuing Lender shall
be entitled to recover such amount on demand from such Lender together with
interest thereon at the rate customarily used by such Issuing Lender for the
correction of errors among banks for three Business Days and thereafter at the Base
Rate.  Nothing in this subsection 3.3C
shall be deemed to prejudice the right of any Lender to recover from any
Issuing Lender any amounts made available by such Lender to such Issuing Lender
pursuant to this subsection 3.3C in the event that it is determined by the
final judgment of a court of competent jurisdiction that the payment with
respect to a Letter of Credit by such Issuing Lender in respect of which
payment was made by such Lender constituted gross negligence or willful
misconduct on the part of such Issuing Lender.

 

(ii)           Distribution
to Lenders of Reimbursements Received From Borrower.  In the event any Issuing Lender shall have
been reimbursed by other Lenders pursuant to subsection 3.3C(i) for all or any
portion of any drawing honored by such Issuing Lender under a Letter of Credit
issued by it, such Issuing Lender shall distribute to each other Lender with a
Revolving Loan Commitment which has paid all amounts payable by it under
subsection 3.3C(i) with respect to such honored drawing such other Lender’s Pro
Rata Share of the Revolving Loan Commitment of all payments subsequently
received by such Issuing Lender from Borrower in reimbursement of such honored
drawing when such payments are received. 
Any such distribution shall be made to a Lender at its primary address
set forth below its name on the appropriate signature page hereof or at such
other address as such Lender may request.

 

D.            Interest on Amounts Paid Under Letters of
Credit.

 

(i)            Payment
of Interest by Borrower.  Borrower
agrees to pay to each Issuing Lender, with respect to drawings honored under
any Letters of Credit issued by it, interest on the amount paid by such Issuing
Lender in respect of each such honored drawing from the date such drawing is
honored to but excluding the date such amount is reimbursed by Borrower
(without duplication of any amounts required to be paid under subsection
3.2(i)) (including any such reimbursement out of the proceeds of Revolving
Loans pursuant to subsection 3.3B) at a rate equal to (a) for the period from
the date such drawing is honored to but excluding the Reimbursement Date, the
rate then in effect under this Agreement with respect to Revolving Loans that
are Base Rate Loans and (b) thereafter, a rate which is 2.00% per annum in
excess of the rate of interest otherwise payable under this Agreement with
respect to Revolving Loans that are Base Rate Loans, but in no event in excess
of the maximum nonusurious interest 

 

56

 

rate permitted by applicable law. 
Interest payable pursuant to this subsection 3.3D(i) shall be computed
on the basis of a 365-day or 366-day year, as the case may be, for the actual
number of days elapsed in the period during which it accrues and shall be
payable on demand or, if no demand is made, on the date on which the related
drawing under a Letter of Credit is reimbursed in full.

 

(ii)           Distribution
of Interest Payments by Issuing Lender. 
Promptly upon receipt by any Issuing Lender of any payment of interest
pursuant to subsection 3.3D(i) with respect to a drawing honored under a Letter
of Credit issued by it, (a) such Issuing Lender shall distribute to each
other Lender with a Revolving Loan Commitment, out of the interest received by
such Issuing Lender in respect of the period from the date such drawing is
honored to but excluding the date on which such Issuing Lender is reimbursed
for the amount of such drawing (including any such reimbursement out of the
proceeds of Revolving Loans pursuant to subsection 3.3B), the amount that such
other Lender would have been entitled to receive in respect of the letter of
credit fee that would have been payable in respect of such Letter of Credit for
such period pursuant to subsection 3.2 if no drawing had been honored under
such Letter of Credit, and (b) in the event such Issuing Lender shall have
been reimbursed by other Lenders pursuant to subsection 3.3C(i) for all or any
portion of such honored drawing, such Issuing Lender shall distribute to each
other Lender with a Revolving Loan Commitment which has paid all amounts
payable by it under subsection 3.3C(i) with respect to such honored drawing
such other Lender’s Pro Rata Share of the Revolving Loan Commitment of any
interest received by such Issuing Lender in respect of that portion of such
honored drawing so reimbursed by other Lenders for the period from the date on
which such Issuing Lender was so reimbursed by other Lenders to but excluding
the date on which such portion of such honored drawing is reimbursed by
Borrower.  Any such distribution shall
be made to a Lender at its primary address set forth below its name on the
appropriate signature page hereof or at such other address as such Lender may
request.

 

3.4                               Obligations Absolute.

 

The obligation of
Borrower to reimburse each Issuing Lender for drawings honored under the
Letters of Credit issued by it and to repay any Revolving Loans made by Lenders
pursuant to subsection 3.3B and the obligations of Lenders under subsection
3.3C(i) shall be unconditional and irrevocable and shall be paid strictly in
accordance with the terms of this Agreement under all circumstances including
any of the following circumstances:

 

(i)            any
lack of validity or enforceability of any Letter of Credit;

 

(ii)           the
existence of any claim, set-off, defense or other right which Borrower or any
Lender may have at any time against a beneficiary or any transferee of any
Letter of Credit (or any Persons for whom any such transferee may be acting),
any Issuing Lender or other Lender or any other Person or, in the case of a
Lender, against Borrower, whether in connection with this Agreement, the
transactions contemplated herein or any unrelated transaction (including any
underlying transaction 

 

57

 

between Borrower, Holdings or one of their Subsidiaries and the
beneficiary for which any Letter of Credit was procured);

 

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

 

(iv)          payment
by the applicable Issuing Lender under any Letter of Credit against
presentation of a draft or other document which does not substantially comply
with the terms of such Letter of Credit;

 

(v)           any
adverse change in the business, operations, properties, assets, condition
(financial or otherwise) or prospects of Borrower, Holdings or any of their
Subsidiaries;

 

(vi)          any
breach of this Agreement or any other Loan Document by any party thereto;

 

(vii)         any
other circumstance or happening whatsoever, whether or not similar to any of
the foregoing; or

 

(viii)        the
fact that an Event of Default or a Potential Event of Default shall have
occurred and be continuing;

 

provided,
in each case, that payment by the applicable Issuing Lender under the
applicable Letter of Credit shall not have constituted gross negligence or
willful misconduct of such Issuing Lender under the circumstances in question
(as determined by a final judgment of a court of competent jurisdiction).

 

3.5                               Indemnification; Nature of Issuing
Lenders’ Duties.

 

A.            Indemnification.  In addition to amounts payable as provided
in subsection 3.6 and in accordance with the indemnification provided
for in subsection 11.3, Borrower hereby agrees to protect,
indemnify, pay and save harmless each Issuing Lender from and against any and
all claims, demands, liabilities, damages, losses, costs, charges and expenses
(including reasonable fees, expenses and disbursements of counsel) which such Issuing
Lender may incur or be subject to as a consequence, direct or indirect, of
(i) the issuance of any Letter of Credit by such Issuing Lender, other
than as a result of (a) the gross negligence or willful misconduct of such
Issuing Lender as determined by a final judgment of a court of competent
jurisdiction or (b) subject to the following clause (ii), the wrongful dishonor
by such Issuing Lender of a proper demand for payment made under any Letter of
Credit issued by it or (ii) the failure of such Issuing Lender to honor a
drawing under any such Letter of Credit as a result of any act or omission,
whether rightful or wrongful, of any present or future de jure or de facto
government or governmental authority (all such acts or omissions herein called
“Governmental
Acts”).

 

B.            Nature of
Issuing Lenders’ Duties. 
As between Borrower and any Issuing Lender, Borrower assumes all risks
of the acts and omissions of, or misuse of the Letters of 

 

58

 

Credit issued by such Issuing Lender by, the
respective beneficiaries of such Letters of Credit.  In furtherance and not in limitation of the foregoing, such
Issuing Lender shall not be responsible for: 
(i) the form, validity, sufficiency, accuracy, genuineness or legal
effect of any document submitted by any party in connection with the
application for and issuance of any such Letter of Credit, even if it should in
fact prove to be in any or all respects invalid, insufficient, inaccurate,
fraudulent or forged; (ii) the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign any such Letter
of Credit or the rights or benefits thereunder or proceeds thereof, in whole or
in part, which may prove to be invalid or ineffective for any reason;
(iii) failure of the beneficiary of any such Letter of Credit to comply
fully with any conditions required in order to draw upon such Letter of Credit;
(iv) errors, omissions, interruptions or delays in transmission or
delivery of any messages, by mail, cable, telegraph, telex or otherwise,
whether or not they be in cipher; (v) errors in interpretation of
technical terms; (vi) any loss or delay in the transmission or otherwise of any
document required in order to make a drawing under any such Letter of Credit or
of the proceeds thereof; (vii) the misapplication by the beneficiary of any
such Letter of Credit of the proceeds of any drawing under such Letter of
Credit; or (viii) any consequences arising from causes beyond the control of
such Issuing Lender, including any Governmental Acts, and none of the above
shall affect or impair, or prevent the vesting of, any of such Issuing Lender’s
rights or powers hereunder.

 

In furtherance and
extension and not in limitation of the specific provisions set forth in the
first paragraph of this subsection 3.5B, any action taken or omitted by any
Issuing Lender under or in connection with the Letters of Credit issued by it
or any documents and certificates delivered thereunder, if taken or omitted in
good faith, shall not put such Issuing Lender under any resulting liability to
Borrower.

 

Notwithstanding
anything to the contrary contained in this subsection 3.5, Borrower shall
retain any and all rights it may have against any Issuing Lender for any
liability arising solely out of the gross negligence or willful misconduct of
such Issuing Lender, as determined by a final judgment of a court of competent
jurisdiction.

 

3.6                               Increased Costs and Taxes Relating
to Letters of Credit.

 

Subject to the
provisions of subsection 2.7B (which shall be controlling with respect to the
matters covered thereby), in the event that any Issuing Lender or Lender shall
determine (which determination shall, absent manifest error, be final and
conclusive and binding upon all parties hereto) that any law, treaty or
governmental rule, regulation or order, or any change therein or in the
interpretation, administration or application thereof (including the
implementation of any new law, treaty or governmental rule, regulation or
order), or any determination of a court or governmental authority, in each case
that becomes effective after the date hereof, or compliance by any Issuing
Lender or Lender with any guideline, request or directive issued or made after
the date hereof by any central bank or other governmental or quasi-governmental
authority (whether or not having the force of law):

 

(i)            subjects
such Issuing Lender or Lender (or its applicable lending or letter of credit
office) to any additional Tax (other than any Tax on the overall net income of
such Issuing Lender or Lender) with respect to the issuing or maintaining of 

 

59

 

any Letters of Credit or the purchasing or maintaining of any
participations therein or any other obligations under this Section 3,
whether directly or by such being imposed on or suffered by any particular
Issuing Lender;

 

(ii)           imposes,
modifies or holds applicable any reserve (including any marginal, emergency,
supplemental, special or other reserve), special deposit, compulsory loan, FDIC
insurance or similar requirement in respect of any Letters of Credit issued by
any Issuing Lender or participations therein purchased by any Lender; or

 

(iii)          imposes
any other condition (other than with respect to a Tax matter) on or affecting
such Issuing Lender or Lender (or its applicable lending or letter of credit
office) regarding this Section 3 or any Letter of Credit or any participation
therein;

 

and the result of
any of the foregoing is to increase the cost to such Issuing Lender or Lender
of agreeing to issue, issuing or maintaining any Letter of Credit or agreeing
to purchase, purchasing or maintaining any participation therein or to reduce
any amount received or receivable by such Issuing Lender or Lender (or its applicable
lending or letter of credit office) with respect thereto; then, in any case,
Borrower shall promptly pay to such Issuing Lender or Lender, upon receipt of
the statement referred to in the next sentence, such additional amount or
amounts as may be necessary to compensate such Issuing Lender or Lender for any
such increased cost or reduction in amounts received or receivable
hereunder.  Such Issuing Lender or
Lender shall deliver to Borrower a written statement within six months after
the occurrence of the circumstances giving rise to such additional amounts,
setting forth in reasonable detail the basis for calculating the additional
amounts owed to such Issuing Lender or Lender under this subsection 3.6, which
statement shall be conclusive and binding upon all parties hereto absent
manifest error.

 

Section 4.              CONDITIONS
TO LOANS AND LETTERS OF CREDIT

 

The obligations of
Lenders to make Loans and the issuance of Letters of Credit hereunder are
subject to the satisfaction of the following conditions.

 

4.1                               Conditions to Effective Date.

 

The effectiveness
of this Agreement is subject to prior or concurrent satisfaction of the
following conditions:

 

A.            Loan Party
Documents.  On or
before the Effective Date, Borrower shall, and shall cause Holdings and each wholly-owned
Subsidiary of Holdings to, deliver to Lenders (or to Administrative Agent for
Lenders with sufficient originally executed copies, where appropriate, for each
Lender and its counsel) the following with respect to Borrower or such Loan
Party, as the case may be, each, unless otherwise noted, dated the Effective
Date:

 

(i)            Certified
copies of the Certificate or Articles of Incorporation or similar formation
documents of such Person, together with a good standing certificate from the
Secretary of State of its jurisdiction of incorporation and each other state in
which such Person is qualified as a foreign corporation to do business and, to
the extent generally 

 

60

 

available, a certificate or other evidence of good standing as to
payment of any applicable franchise or similar taxes from the appropriate
taxing authority of each of such jurisdictions, each dated a recent date prior
to the Effective Date;

 

(ii)           Copies
of the Bylaws or other similar organizational documents of such Person,
certified as of the Effective Date by such Person’s corporate secretary or an
assistant secretary;

 

(iii)          Resolutions
of the Board of Directors or other similar governing body of such Person
approving and authorizing the execution, delivery and performance of the Loan
Documents to which it is a party, certified as of the Effective Date by the
corporate secretary or an assistant secretary of such Person as being in full
force and effect without modification or amendment;

 

(iv)          Signature
and incumbency certificates of the officers of such Person executing the Loan
Documents to which it is a party;

 

(v)           Executed
originals of the Loan Documents to which such Person is a party; and

 

(vi)          Such
other documents as Administrative Agent may reasonably request.

 

B.            No
Material Adverse Effect. 
Since December 31, 2002, no event has occurred which in the
reasonable opinion of Administrative Agent and Syndication Agent is likely to
cause a Material Adverse Effect.

 

C.            Corporate and Capital Structure,
Ownership.

 

(i)            Corporate
Structure.  The corporate
organizational structure of Holdings and its Subsidiaries shall be as
previously approved by Administrative Agent and set forth on Schedule 4.1C
annexed hereto or as otherwise reasonably satisfactory to Administrative Agent.

 

(ii)           Capital
Structure and Ownership.  The
capital structure and ownership of Borrower and Holdings shall be as previously
approved by Administrative Agent and set forth on Schedule 4.1C or as
otherwise reasonably satisfactory to Administrative Agent.

 

D.            Necessary
Governmental Authorizations and Consents; Expiration of Waiting Periods, Etc.  Borrower shall have obtained all
Governmental Authorizations and all consents of other Persons, in each case
that are necessary in connection with the transactions contemplated by the Loan
Documents, and the continued operation of the business conducted by Holdings
and its Subsidiaries in substantially the same manner as currently conducted,
and each of the foregoing shall be in full force and effect, in each case other
than those the failure to obtain or maintain which, either individually or in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect.  All applicable waiting periods
shall have expired without any action being taken or threatened by any
competent authority which would restrain, prevent or otherwise impose adverse
conditions on the financing.  No action,
request for stay, 

 

61

 

petition for review or rehearing, reconsideration, or
appeal with respect to any of the foregoing shall be pending, and the time for
any applicable agency to take action to set aside its consent on its own motion
shall have expired.

 

E.             Security
Interests in Personal and Mixed Property.  To the extent not otherwise satisfied prior
to the Effective Date, Administrative Agent shall have received evidence
satisfactory to it that the Loan Parties shall have taken or caused to be taken
all such actions, executed and delivered or caused to be executed and delivered
all such agreements, documents and instruments, and made or caused to be made
all such filings and recordings (other than the filing or recording of items
described in clauses (iii) and (iv) below) that may be necessary or, in the
reasonable opinion of Administrative Agent, desirable in order to create in
favor of Administrative Agent, for the benefit of Lenders and the holders of
the Senior Notes required to be equally and ratably secured with the Lenders, a
valid and (upon such filing and recording) perfected First Priority security
interest in the Collateral.  Such
actions shall include the following:

 

(i)            Schedules
to the Collateral Documents. 
Delivery to Administrative Agent of accurate and complete schedules to
all of the applicable Collateral Documents;

 

(ii)           Stock
Certificates; Instruments; and Promissory Notes.  Delivery to Administrative Agent of (a) certificates (which
certificates shall be accompanied by irrevocable undated stock powers, duly
endorsed in blank and otherwise satisfactory in form and substance to
Administrative Agent) representing all capital stock pledged pursuant to the
Pledge Agreement, (b) all promissory notes or other instruments (duly endorsed,
where appropriate, in a manner satisfactory to Administrative Agent) evidencing
any Collateral; and (c) all notes, endorsements in blank and other
documentation required to pledge the Mortgage Loans (as such term is defined in
the Pledge Agreement) pursuant to the Pledge Agreement;

 

(iii)          Lien
Searches and UCC Termination Statements. 
Delivery to Administrative Agent of (a) the results of a recent
search, by a Person reasonably satisfactory to Administrative Agent, of all
effective UCC financing statements which may have been made with respect to the
jurisdiction of formation or organization of any Loan Party and the
headquarters of any Loan Party, together with copies of all such filings
disclosed by such search, and (b) UCC termination statements duly executed
by all applicable Persons for filing in all applicable jurisdictions as may be
necessary to terminate any effective UCC financing statements or fixture
filings disclosed in such search (other than any such financing statements or
fixture filings in respect of Liens permitted to remain outstanding pursuant to
the terms of this Agreement); and

 

(iv)          UCC
Financing Statements.  Delivery to
Administrative Agent of UCC financing statements, duly executed by each
applicable Loan Party with respect to all Collateral of such Loan Party, for
filing in all jurisdictions as may be necessary or, in the reasonable opinion
of Administrative Agent, desirable to perfect the security interests created in
such Collateral pursuant to the Collateral Documents.

 

62

 

F.             Evidence
of Insurance. 
Administrative Agent shall have received a certificate from Borrower’s
insurance broker or other evidence reasonably satisfactory to it that all
insurance required to be maintained pursuant to subsection 6.4 is in full force
and effect.

 

G.            Opinions
of Counsel to Loan Parties. 
Lenders and their respective counsel shall have received originally
executed copies of a favorable written opinion of Akin Gump Strauss Hauer &
Feld LLP, counsel for Loan Parties, in form and substance reasonably satisfactory
to Administrative Agent and its counsel, dated as of the Effective Date, and
evidence satisfactory to Administrative Agent that Borrower has requested such
counsel to deliver such opinion to Lenders.

 

H.            Interest
and Fees under Existing Credit Agreement; Other Fees.

 

(i)            Borrower
shall have paid to Administrative Agent for distribution to Lenders, all
accrued interest and fees payable under the Existing Credit Agreement as of the
Effective Date; and

 

(ii)           Borrower
shall have paid to Administrative Agent, for distribution (as appropriate) to
Administrative Agent and Lenders, the fees payable on the Effective Date
referred to in subsection 2.3 and the reasonable fees, costs and expenses of
counsel to Administrative Agent.

 

I.              Representations
and Warranties; Performance of Agreements.  Borrower and Holdings shall have delivered
to Administrative Agent an Officers’ Certificate, in form and substance
satisfactory to Administrative Agent, to the effect that the representations
and warranties in Section 5 hereof are true, correct and complete in all
material respects on and as of the Effective Date to the same extent as though
made on and as of that date (or, to the extent such representations and
warranties specifically relate to an earlier date, that such representations
and warranties were true, correct and complete in all material respects on and
as of such earlier date) and that Borrower and Holdings shall have performed in
all material respects all agreements and satisfied all conditions which this Agreement
provides shall be performed or satisfied by them on or before the Effective
Date except as otherwise disclosed to and agreed to in writing by
Administrative Agent and Requisite Lenders.

 

J.             Completion
of Proceedings.  All
corporate and other proceedings taken or to be taken in connection with the
transactions contemplated hereby and all documents incidental thereto not
previously found acceptable by Administrative Agent, acting on behalf of
Lenders, and its counsel shall be reasonably satisfactory in form and substance
to Administrative Agent and such counsel, and Administrative Agent and such
counsel shall have received all such counterpart originals or certified copies
of such documents as Administrative Agent may reasonably request.

 

K.            No Disruption
of Financial Markets. 
There shall have not occurred any material adverse change in the
financial markets after October 6, 2003, as determined by Administrative
Agent and Syndication Agent in their sole discretion.

 

L.            Solvency
Assurances.  On the Effective
Date, Administrative Agent and Lenders shall have received an Officers’
Certificate executed by the treasurer or chief 

 

63

 

financial officer of Holdings, dated the Effective
Date, substantially in the form of Exhibit IX and with appropriate
attachments, demonstrating that, after giving effect to the consummation of the
transactions contemplated by this Agreement, Holdings and its Subsidiaries,
taken as a whole, will be Solvent.

 

M.           Financial Covenants.  On or before the Effective Date,
Administrative Agent shall have received an Officers’ Certificate executed by
the chief financial officer of Holdings, dated as of the end of the last Fiscal
Quarter ending before the Effective Date, with appropriate attachments,
demonstrating that Borrower and Holdings are in compliance with (i) the
financial covenants set forth in subsection 7.6, and (ii) the restrictions in
the Senior Note Documents with respect to the amount of Indebtedness and
secured Indebtedness permitted to be outstanding by Borrower as of such date,
with such detail and supporting calculations therefor as reasonably required by
Administrative Agent.

 

4.2                               Conditions to All Loans.

 

The obligations of
Lenders to make Loans on each Funding Date are subject to the following
conditions precedent:

 

A.            Administrative
Agent shall have received before that Funding Date, in accordance with the
provisions of subsection 2.1B, an originally executed Notice of Borrowing, in
each case signed by the chief executive officer, the chief financial officer or
the treasurer of Borrower or any other person designated in writing by any of
the above described officers by or on behalf of Borrower in a writing delivered
to Administrative Agent.

 

B.            As
of that Funding Date:

 

(i)            The
representations and warranties contained herein and in the other Loan Documents
shall be true, correct and complete in all material respects on and as of that
Funding Date to the same extent as though made on and as of that date, except
to the extent such representations and warranties specifically relate to an
earlier date, in which case such representations and warranties shall have been
true, correct and complete in all material respects on and as of such earlier
date; provided, that where a representation and warranty is already
qualified as to materiality, such materiality qualifier shall be disregarded
for purposes of this provision;

 

(ii)           No
event shall have occurred and be continuing or would result from the
consummation of the borrowing contemplated by such Notice of Borrowing that
would constitute an Event of Default or a Potential Event of Default;

 

(iii)          Each
Loan Party shall have performed in all material respects all agreements and
satisfied all conditions which this Agreement provides shall be performed or
satisfied by it on or before that Funding Date;

 

(iv)          No
order, judgment or decree of any court, arbitrator or governmental authority
shall purport to enjoin or restrain any Lender from making the Loans to be made
by it on that Funding Date;

 

64

 

(v)           The
making of the Loans requested on such Funding Date shall not violate any law
including Regulation T, Regulation U or Regulation X of the
Board of Governors of the Federal Reserve System; and

 

(vi)          There
shall not be pending or, to the knowledge of Holdings or Borrower, threatened,
any action, suit, proceeding, governmental investigation or arbitration against
or affecting Holdings or any of its Subsidiaries or any property of Holdings or
any of its Subsidiaries that has not been disclosed by Borrower in writing
pursuant to subsection 5.6 or 6.1(vi) prior to the making of the last preceding
Loans (or, in the case of the initial Loans, prior to the execution of this
Agreement), and there shall have occurred no development not so disclosed in
any such action, suit, proceeding, governmental investigation or arbitration so
disclosed, that, in either event, in the opinion of Administrative Agent or of
Requisite Lenders, could reasonably be expected to have a Material Adverse
Effect; and no injunction or other restraining order shall have been issued and
no hearing to cause an injunction or other restraining order to be issued shall
be pending or noticed with respect to any action, suit or proceeding seeking to
enjoin or otherwise prevent the consummation of, or to recover any damages or
obtain relief as a result of, the transactions contemplated by this Agreement
or the making of Loans hereunder.

 

4.3                               Conditions to Letters of Credit.

 

The issuance of
any Letter of Credit hereunder (whether or not the applicable Issuing Lender is
obligated to issue such Letter of Credit) is subject to the following
conditions precedent:

 

A.            On
or before the date of issuance of the initial Letter of Credit pursuant to this
Agreement, the initial Loans shall have been made.

 

B.            On
or before the date of issuance of such Letter of Credit, Administrative Agent
shall have received, in accordance with the provisions of subsection 3.1B(i), a
Notice of Issuance of Letter of Credit, in each case signed by the chief
executive officer, the chief financial officer or the treasurer of Borrower or
by any executive officer of Borrower designated by any of the above-described
officers on behalf of Borrower in a writing delivered to Administrative Agent,
together with all other information specified in subsection 3.1B(i) and such
other documents or information as the applicable Issuing Lender may reasonably
require in connection with the issuance of such Letter of Credit.

 

On the date of issuance
of such Letter of Credit, all conditions precedent described in subsection 4.2B
shall be satisfied to the same extent as if the issuance of such Letter of
Credit were the making of a Loan and the date of issuance of such Letter of
Credit were a Funding Date.

 

Section 5.                                          BORROWER’S AND HOLDINGS’
REPRESENTATIONS AND WARRANTIES

 

In order to induce
Lenders to enter into this Agreement and to make the Loans, to induce Issuing
Lenders to issue Letters of Credit and to induce other Lenders to purchase 

 

65

 

participations
therein, Borrower and Holdings represent and warrant to each Lender, on the
date of this Agreement, on each Funding Date and on the date of issuance of
each Letter of Credit, that the following statements are true, correct and
complete:

 

5.1                               Organization, Powers, Qualification,
Good Standing, Business and Subsidiaries.

 

A.            Organization
and Powers.  Each Loan
Party is duly organized, validly existing and in good standing under the laws
of its jurisdiction of formation or organization as specified in Schedule
5.1 annexed hereto except where the failure to be so organized, existing
and in good standing could not reasonably be expected to have a Material
Adverse Effect.  Each Loan Party has all
requisite corporate, partnership or limited liability company power and
authority, as applicable, to own and operate its properties, to carry on its
business as now conducted and as proposed to be conducted, to enter into the
Loan Documents to which it is a party and to carry out the transactions
contemplated thereby except where the failure to have such power and authority
could not reasonably be expected to have a Material Adverse Effect.

 

B.            Qualification
and Good Standing. 
Each Loan Party is qualified to do business and in good standing in
every jurisdiction where its assets are located and wherever necessary to carry
out its business and operations, except in jurisdictions where the failure to
be so qualified or in good standing has not had and could not reasonably be
expected to have a Material Adverse Effect.

 

C.            Conduct of
Business.  Holdings
and its Subsidiaries are engaged only in the businesses permitted to be engaged
in pursuant to subsection 7.10.

 

D.            Subsidiaries.  All of the Subsidiaries of Holdings are
identified in Schedule 5.1 annexed hereto, as said Schedule 5.1
may be supplemented from time to time pursuant to the provisions of subsection
6.1(x).  The capital stock of each of
the Subsidiaries of Holdings identified in Schedule 5.1 annexed hereto
(as so supplemented) is duly authorized, validly issued, fully paid and
nonassessable and none of such capital stock constitutes Margin Stock except
where any failure of the same could not be reasonably expected to have a
Material Adverse Effect.  Each of the
Subsidiaries of Holdings identified in Schedule 5.1 annexed hereto
(as so supplemented) is a corporation, partnership or limited liability company
duly organized or formed, validly existing and in good standing under the laws
of its respective jurisdiction of incorporation set forth therein, has all
requisite corporate power, partnership or limited liability company and
authority to own and operate its properties and to carry on its business as now
conducted and as proposed to be conducted, and is qualified to do business and
in good standing in every jurisdiction where its assets are located and
wherever necessary to carry out its business and operations; in each case
except where failure to be so qualified or in good standing or a lack of such corporate
power, partnership or limited liability company and authority has not had and
could not reasonably be expected to have a Material Adverse Effect.  Schedule 5.1 annexed hereto (as
so supplemented) correctly sets forth in all material respects the ownership
interest of Holdings and each of its Subsidiaries in each of the Subsidiaries
of Holdings identified therein.

 

66

 

5.2                               Authorization of Borrowing, etc.

 

A.            Authorization
of Borrowing.  The
execution, delivery and performance of the Loan Documents have been duly
authorized by all necessary corporate action on the part of each Loan Party
that is a party thereto.

 

B.            No
Conflict.  The
execution, delivery and performance by Loan Parties of the Loan Documents to
which they are parties and the consummation of the transactions contemplated by
the Loan Documents do not and will not (i) violate any provision of any
law or any governmental rule or regulation applicable to Holdings or any of its
Subsidiaries, the Certificate or Articles of Incorporation or Bylaws of
Holdings or any of its Subsidiaries or any order, judgment or decree of any
court or other agency of government binding on Holdings or any of its
Subsidiaries, (ii) conflict with, result in a breach of or constitute
(with due notice or lapse of time or both) a default under any Contractual
Obligation of Holdings or any of its Subsidiaries, (iii) result in or
require the creation or imposition of any Lien upon any of the properties or
assets of Holdings or any of its Subsidiaries (other than any Liens created
under any of the Loan Documents in favor of Administrative Agent on behalf of
Lenders and the Senior Notes), or (iv) require any approval of
stockholders or any approval or consent of any Person under any Contractual
Obligation of Holdings or any of its Subsidiaries, except for such approvals or
consents which will be obtained on or before the Effective Date and disclosed
in writing to Lenders and except where the failure to obtain such approvals or
consent, individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect.

 

C.            Governmental
Consents.  The
execution, delivery and performance by Loan Parties of the Loan Documents to
which they are parties and the consummation of the transactions contemplated by
the Loan Documents do not and will not require any registration with, consent
or approval of, or notice to, or other action (“Filings”) to, with or by, any
federal, state or other governmental authority or regulatory body, except (1)
Filings with the Securities and Exchange Commission, (2) Filings with stock
exchanges, (3) Filings of the types described in subsections 5.16A and 5.16B,
(4) routine Filings in the ordinary course of business with respect to tax, ERISA,
environmental and Intellectual Property matters, and (5) Filings that,
individually or in the aggregate, if not made could not reasonably be expected
to have a Material Adverse Effect.

 

D.            Binding
Obligation.  Each of
the Loan Documents has been duly executed and delivered by each Loan Party that
is a party thereto and is the legally valid and binding obligation of such Loan
Party, enforceable against such Loan Party in accordance with its respective
terms, except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or limiting creditors’ rights generally
or by equitable principles relating to enforceability.

 

5.3                               Financial Condition.

 

Borrower has
heretofore delivered, or caused to be delivered, to Lenders, at Lenders’
request, the following financial statements and information:  (i) the audited consolidated balance
sheet of Holdings and its Subsidiaries as at December 31, 2002 and the
related 

 

67

 

consolidated
statements of income, stockholders’ equity and cash flows of Holdings and its
Subsidiaries for the Fiscal Years then ended, and (ii) the unaudited
consolidated balance sheet of Holdings and its Subsidiaries as at
September 30, 2003 and the related unaudited consolidated statements of
income and cash flows of Holdings and its Subsidiaries for the nine months then
ended.  All such statements were
prepared in conformity with GAAP and fairly present, in all material respects,
the financial position (on a consolidated basis) of the entities described in
such financial statements as at the respective dates thereof and the results of
operations and cash flows (on a consolidated basis) of the entities described
therein for each of the periods then ended, subject, in the case of any such
unaudited financial statements, to the absence of footnotes and to changes
resulting from audit and normal year-end adjustments.  Borrower and Holdings do not (and will not following the funding
of the initial Loans) have any Contingent Obligation, contingent liability or
liability for taxes, long-term lease or unusual forward or long-term commitment
that is not reflected in the foregoing financial statements or the notes
thereto or which has not otherwise been disclosed to Administrative Agent and
approved by Administrative Agent, such approval not to be unreasonably
withheld, and which in any such case (but excluding, in all events, any and all
such Contingent Obligations and other liabilities between and among Borrower,
Holdings and the Subsidiary Guarantors) is material in relation to the
business, operations, properties, assets, financial condition or prospects of
Holdings or any of its Subsidiaries, taken as a whole.

 

5.4                               No Material Adverse Change.

 

Since
December 31, 2002, no event or change has occurred that has caused or
evidences, either in any case or in the aggregate, a Material Adverse Effect.

 

5.5                               Title to Properties; Liens; Real
Property.

 

A.            Title to
Properties; Liens. 
Holdings and its Subsidiaries have (i) good, sufficient and legal title
to (in the case of fee interests in real property), (ii) valid leasehold
interests in (in the case of leasehold interests in real or personal property),
or (iii) good title to (in the case of all other personal property), all of
their respective properties and assets reflected in the financial statements
referred to in subsection 5.3 or in the most recent financial statements
delivered pursuant to subsection 6.1, in each case except for assets disposed
of since the date of such financial statements in the ordinary course of
business or as otherwise permitted under subsections 7.2 and 7.7 except in
cases, individually or in the aggregate, where any such title defects could not
reasonably be expected to have a Material Adverse Effect.

 

B.            Real
Property.  As of the
Effective Date, Schedule 5.5B annexed hereto contains a true, accurate
and complete list of all fee interests in any Real Property Assets.  Except as specified in Schedule 5.5B
annexed hereto, all of the leases, subleases or assignments of leases affecting
any such Real Property Assets are in full force and effect and Borrower and
Holdings do not have knowledge of any default that has occurred and is
continuing thereunder, and each such agreement constitutes the legally valid
and binding obligation of each applicable Loan Party, enforceable against such
Loan Party in accordance with its terms, except as enforcement may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar laws relating
to or limiting creditors’ rights generally or 

 

68

 

by equitable principles and except for such defaults
as could not reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect.

 

C.            Intellectual Property.  As of the Effective Date, Holdings and its
Subsidiaries own or have the right to use, all Intellectual Property used in
the conduct of their business, except where the failure to own or have such
right to use in the aggregate could not reasonably be expected to result in a
Material Adverse Effect.  Except as set
forth in Schedule 5.6 annexed hereto, no claim has been asserted and is
pending by any Person challenging or questioning the use of any such
Intellectual Property or the validity or effectiveness of any such Intellectual
Property, nor does Holdings or Borrower know of any valid basis for any such
claim except for such claims that in the aggregate could not reasonably be
expected to result in a Material Adverse Effect.  The use of such Intellectual Property by Holdings and its
Subsidiaries does not infringe on the rights of any Person, except for such
claims and infringements that, in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.

 

5.6                               Litigation; Adverse Facts.

 

Except as set
forth in Schedule 5.6 annexed hereto, there are no actions, suits,
proceedings, arbitrations or governmental investigations (whether or not
purportedly on behalf of Holdings or any of its Subsidiaries) at law or in
equity, or before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign (including any Environmental Claims) that are pending or, to the
knowledge of Holdings or Borrower, threatened against or affecting Holdings or
any of its Subsidiaries or any property of Holdings or any of its Subsidiaries
and that, individually or in the aggregate, could reasonably be expected to
result in a Material Adverse Effect. 
Neither Holdings nor any of its Subsidiaries (i) is in violation of
any applicable laws (including Environmental Laws) that, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect,
or (ii) is subject to or in default with respect to any final judgments,
writs, injunctions, decrees, rules or regulations of any court or any federal,
state, municipal or other governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, that, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect.

 

5.7                               Payment of Taxes.

 

Except to the
extent permitted by subsection 6.3, all tax returns and reports of Holdings and
its Subsidiaries required to be filed by any of them have been timely filed,
and all taxes shown on such tax returns to be due and payable and all
assessments, fees and other governmental charges upon Holdings and its
Subsidiaries and upon their respective properties, assets, income, businesses
and franchises which are due and payable have been paid when due and payable
except where, individually or in the aggregate, the failure to so file and/or
pay could not reasonably be expected to have a Material Adverse Effect.  Borrower and Holdings know of no proposed
material tax assessment against Holdings or any of its Subsidiaries, the
imposition of which could reasonably be expected to have a Material Adverse
Effect, that is not being actively contested by Holdings, Borrower or such
Subsidiary in good faith and by 

 

69

 

appropriate
proceedings; provided that such reserves or other appropriate
provisions, if any, as shall be required in conformity with GAAP shall have
been made or provided therefor.

 

5.8                               Performance of Agreements;
Materially Adverse Agreements; Material Contracts.

 

A.            Neither
Holdings nor any of its Subsidiaries is in default in the performance,
observance or fulfillment of any of the obligations, covenants or conditions
contained in any of its Contractual Obligations, and no condition exists that,
with the giving of notice or the lapse of time or both, would constitute such a
default, except where the consequences, direct or indirect, of such default or
defaults, if any, would not have a Material Adverse Effect.

 

B.            Neither
Holdings nor any of its Subsidiaries is a party to or is otherwise subject to
any agreements or instruments or any charter or other internal restrictions
which, individually or in the aggregate, could reasonably be expected to result
in a Material Adverse Effect.

 

C.            Except
as set forth on Schedule 5.8C, all Material Contracts are in full force
and effect and no defaults currently exist thereunder, except for defaults
which, individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect.

 

5.9                               Governmental Regulation.

 

Neither Holdings
nor any of its Subsidiaries is subject to regulation under the Public Utility
Holding Company Act of 1935, the Federal Power Act, the Interstate Commerce Act
or the Investment Company Act of 1940 or under any other federal or state
statute or regulation which may limit its ability to incur Indebtedness or
which may otherwise render all or any portion of the Obligations unenforceable.

 

5.10                        Securities Activities.

 

Neither Holdings nor
any of its Subsidiaries is engaged principally, or as one of their important
activities, in the business of extending credit for the purpose of purchasing
or carrying any Margin Stock.  No part
of the proceeds of any Loan will be used to purchase or carry any Margin Stock
or to extend credit to others for the purpose of purchasing or carrying any
Margin Stock.  Neither the making of any
Loan nor the use of the proceeds thereof will violate or be inconsistent with the
provisions of Regulations T, U or X of the Federal Reserve Board.

 

5.11                        Employee Benefit Plans.

 

A.            Holdings,
each of its Subsidiaries and each of their respective ERISA Affiliates are in
compliance in all material respects with all applicable provisions and
requirements of ERISA and the regulations and published interpretations
thereunder with respect to each Employee Benefit Plan (if any), and have
performed all their obligations under each Employee Benefit Plan in all
material respects.  Any proposed
termination of an Employee Benefit Plan shall be conducted in accordance with
all applicable ERISA requirements.  Each
Employee 

 

70

 

Benefit Plan (if any) that is intended to qualify
under Section 401(a) of the Internal Revenue Code is so qualified;

 

B.            No
ERISA Event has occurred or is reasonably expected to occur;

 

C.            Except
to the extent required under Section 4980B of the Internal Revenue Code or
except as set forth in Schedule 5.11 annexed hereto, no Employee Benefit
Plan (if any) provides health or welfare benefits (through the purchase of
insurance or otherwise) for any retired or former employee of Holdings, any of
its Subsidiaries or any of their respective ERISA Affiliates;

 

D.            As
of the most recent valuation date for any Pension Plan, the amount of unfunded
benefit liabilities (as defined in Section 4001(a)(18) of ERISA), individually
or in the aggregate for all Pension Plans (excluding for purposes of such
computation any Pension Plans with respect to which assets exceed benefit
liabilities) does not exceed $7,000,000; and

 

E.             As
of the most recent valuation date for each Multiemployer Plan (if any) for
which the actuarial report is available, Holdings and its Subsidiaries and
their respective ERISA Affiliates have no potential liability for a complete
withdrawal from such Multiemployer Plans (within the meaning of Section 4203 of
ERISA).

 

5.12                        No Broker’s Fees.

 

No broker’s or
finder’s fee or commission will be payable with respect to this Agreement or
any of the transactions contemplated hereby arising out of any agreement
entered into by Holdings or any of its Subsidiaries, and Borrower hereby
indemnifies Lenders against, and agrees that it will hold Lenders harmless
from, any claim, demand or liability for any such broker’s or finder’s fees
alleged to have been incurred in connection herewith or therewith and any
expenses (including reasonable fees, expenses and disbursements of counsel)
arising in connection with any such claim, demand or liability to the extent
arising out of any agreement entered into by Holdings or any of its
Subsidiaries.

 

5.13                        Environmental Protection.

 

Except
as set forth in Schedule 5.13 annexed hereto:

 

(i)            Neither
Holdings nor any of its Subsidiaries nor any of their respective Real Property
Assets or operations is subject to any outstanding written order, consent
decree or settlement agreement with any Person relating to (a) any
Environmental Law, (b) any Environmental Claim, or (c) any Hazardous
Materials Activity that, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect;

 

(ii)           Neither
Holdings nor any of its Subsidiaries has received any letter or request for
information under Section 104 of the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. § 9604) or any comparable state
law that, individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect;

 

71

 

(iii)          there
are and, to Holdings’ and Borrower’s knowledge, have been no conditions,
occurrences, or Hazardous Materials Activities which could reasonably be
expected to form the basis of an Environmental Claim against Holdings or any of
its Subsidiaries that, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect; and

 

(iv)          compliance
with all current or reasonably foreseeable future requirements pursuant to or
under Environmental Laws could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

 

Notwithstanding
anything in this subsection 5.13 to the contrary, no event or condition has
occurred or is occurring with respect to Holdings or any of its Subsidiaries
relating to any Environmental Law, any Release of Hazardous Materials, or any
Hazardous Materials Activity, including any matter disclosed on Schedule
5.13 annexed hereto, which individually or in the aggregate, has had or
could reasonably be expected to have a Material Adverse Effect.

 

5.14                        Employee Matters.

 

There is no strike
or work stoppage in existence or threatened involving Holdings or any of its
Subsidiaries that could reasonably be expected to have a Material Adverse
Effect, and there are no strikes or walkouts in progress, pending or to
Holdings’ or Borrower’s knowledge contemplated relating to any labor contracts
to which Holdings or any of its Subsidiaries are a party, relating to any labor
contracts being negotiated, or otherwise that, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.

 

5.15                        Solvency.

 

The Loan Parties,
taken as a whole, are and, upon the incurrence of any Obligations by the Loan
Parties on any date on which this representation is made, will be, Solvent.

 

5.16                        Matters Relating to Collateral.

 

A.            Creation,
Perfection and Priority of Liens.  The execution and delivery of the Collateral Documents by Loan
Parties, together with (i) the actions taken on or prior to the Effective Date
and to be taken after the Effective Date pursuant to subsection 6.8 and (ii)
the delivery to Administrative Agent of any Pledged Collateral not delivered to
Administrative Agent at the time of execution and delivery of the applicable
Collateral Document, in accordance with subsection 6.8 are (or will be with
respect to Collateral required to be delivered after the Effective Date, in
accordance with subsection 6.8) effective to create in favor of Administrative
Agent for the benefit of Lenders, as security for the respective Secured
Obligations (as defined in the applicable Collateral Document in respect of any
Collateral), a valid and perfected First Priority Lien on all of the Collateral
(except to the extent disclosed in the applicable Collateral Document), and all
filings and other actions necessary or desirable to perfect and maintain the
perfection and First Priority status of such Liens have been duly made or taken
and remain in full force and effect, other than the filing of any UCC financing
statements delivered to Administrative Agent for filing (but not yet filed) 

 

72

 

and the periodic filing of UCC continuation statements
in respect of UCC financing statements filed by or on behalf of Administrative
Agent.

 

B.            Governmental
Authorizations. 
Except as described in subsection 5.2C, no authorization, approval or
other action by, and no notice to or filing with, any governmental authority or
regulatory body is required for either (i) the pledge or grant by any Loan
Party of the Liens purported to be created in favor of Administrative Agent
pursuant to any of the Collateral Documents or (ii) the exercise by
Administrative Agent of any rights or remedies in respect of any Collateral
(whether specifically granted or created pursuant to any of the Collateral
Documents or created or provided for by applicable law), except for filings or
recordings contemplated by subsection 5.16A and except as may be required, in
connection with the disposition of any Pledged Collateral, by laws generally
affecting the offering and sale of Securities, including the Hart-Scott-Rodino
Act.

 

C.            Absence of
Third-Party Filings. 
Except such as may have been filed in favor of Administrative Agent as
contemplated by subsection 5.16A or as permitted under subsection 7.2, no
effective UCC financing statement, fixture filing or other instrument similar
in effect covering all or any part of the Collateral is on file in any filing
or recording office, except as may affect Collateral with a value not in excess
of $5,000,000.

 

D.            Margin
Regulations.  The
pledge of the Pledged Collateral pursuant to the Collateral Documents does not
violate Regulation T, U or X of the Board of Governors of the Federal Reserve
System.

 

E.             Information
Regarding Collateral. 
All information supplied to Administrative Agent by or on behalf of any
Loan Party with respect to any of the Collateral (in each case taken as a whole
with respect to any particular Collateral) is accurate and complete in all
material respects.

 

5.17                        Disclosure.

 

No representation
or warranty of any Loan Party or any of their Subsidiaries contained in any
Loan Document or in any other document, certificate or written statement
furnished to Lenders by or on behalf of any Loan Party or any of their
Subsidiaries for use in connection with the transactions contemplated by this
Agreement contains any untrue statement of a material fact or omits to state a
material fact (known to Holdings or Borrower, in the case of any document not
furnished by it) necessary in order to make the statements contained herein or
therein not misleading in any material manner in light of the circumstances in
which the same were made.  Any
projections and pro forma financial information contained in such materials are
based upon good faith estimates and assumptions believed by Holdings or Borrower
to be reasonable at the time made, it being recognized by Lenders that such
projections as to future events are not to be viewed as facts and that actual
results during the period or periods covered by any such projections may differ
from the projected results.  There are
no facts known (or which should upon the reasonable exercise of diligence be
known) to Holdings or Borrower (other than matters of a general economic
nature) that, individually or in the aggregate, could reasonably be expected to
result in a Material Adverse Effect and that 

 

73

 

have
not been disclosed herein or in such other documents, certificates and
statements furnished to Lenders for use in connection with the transactions
contemplated hereby.

 

5.18                        REIT Status.

 

For the fiscal year ended December 31, 2002, Borrower qualified as
a REIT under the Internal Revenue Code.

 

5.19                        Insurance.

 

Holdings and its
Subsidiaries currently maintain or require their operators/lessees to maintain
replacement cost insurance coverage in respect of each of the Real Property
Assets, as well as comprehensive general liability insurance (including
“builders’ risk”) against claims for personal, and bodily injury and/or death,
to one or more persons, or property damage, as well as workers’ compensation
insurance, in each case with respect to the Real Property Assets in amounts
that prudent owner of assets such as the Real Property Assets would maintain
and pursuant to the insurances certificates, binders and policies provided to
Administrative Agent on or prior to the Effective Date.

 

Section 6.              BORROWER’S
AND HOLDINGS’ AFFIRMATIVE COVENANTS

 

Borrower and
Holdings covenant and agree that, so long as any of the Commitments hereunder
shall remain in effect and until payment in full of all of the Loans and other
Obligations, unless Requisite Lenders shall otherwise give written consent,
Borrower and Holdings shall perform, and shall cause each of their Subsidiaries
to perform, all covenants in this Section 6.

 

6.1                               Financial Statements and Other
Reports.

 

Borrower and
Holdings will maintain, and cause each of their Subsidiaries to maintain, a
system of accounting established and administered in accordance with sound
business practices to permit preparation of financial statements in conformity
with GAAP.  Borrower will deliver to
Administrative Agent:

 

(i)            Quarterly
Financials:  as soon as available
and in any event within five Business Days after filing with the Securities and
Exchange Commission, copies of  Holdings’
Quarterly Report on Form 10-Q prepared in compliance with the requirements
therefor and filed with the Securities and Exchange Commission;

 

(ii)           Year-End
Financials:  as soon as available
and in any event within five Business Days after filing with the Securities and
Exchange Commission, copies of Holdings’ Annual Report on Form 10-K for such
fiscal year (together with the Holdings’ annual report to shareholders, if any,
prepared pursuant to Rule 14a-3 under the Exchange Act) prepared in accordance
with the requirements therefor and filed with the Securities and Exchange
Commission;

 

(iii)          Officers’
and Compliance Certificates: 
together with each delivery of financial statements of Holdings and its
Subsidiaries pursuant to subdivisions (i) and 

 

74

 

(ii) above, (a) an Officers’ Certificate of Borrower stating that the
signers have reviewed the terms of this Agreement and have made, or caused to
be made under their supervision, a review in reasonable detail of the
transactions and condition of Holdings and its Subsidiaries during the
accounting period covered by such financial statements and that such review has
not disclosed the existence during or at the end of such accounting period, and
that the signers do not have knowledge of the existence as at the date of such
Officers’ Certificate, of any condition or event that constitutes an Event of
Default or Potential Event of Default, or, if any such condition or event
existed or exists, specifying the nature and period of existence thereof and
what action Holdings or Borrower has taken, is taking and proposes to take with
respect thereto; and (b) a Compliance Certificate demonstrating in reasonable
detail compliance during and at the end of the applicable accounting periods
with the restrictions contained in Section 7 to the extent compliance with
such restrictions is required to be tested at the end of the applicable
accounting period;

 

(iv)          Reconciliation
Statements:  if, as a result of any
change in accounting principles and policies from those used in the preparation
of the audited financial statements referred to in subsection 5.3 (other than
an immaterial change in GAAP), the combined consolidated financial statements
of Holdings and its Subsidiaries delivered pursuant to subdivisions (i) or (ii)
of this subsection 6.1 will differ in any material respect from the combined
consolidated financial statements that would have been delivered pursuant to
such subdivisions had no such change in accounting principles and policies been
made, then (a) together with the first delivery of financial statements
pursuant to subdivision (i) or (ii) of this subsection 6.1 following such
change, combined consolidated financial statements of Holdings and its
Subsidiaries for (y) the current Fiscal Year to the effective date of such
change and (z) the full Fiscal Year immediately preceding the Fiscal Year
in which such change is made, in each case prepared on a pro forma basis as if
such change had been in effect during such periods, and (b) together with
each delivery of financial statements pursuant to subdivision (i) or (ii) of
this subsection 6.1 following such change, if required pursuant to subsection
1.2, a written statement of the chief accounting officer or chief financial officer
of Borrower or other person designated in writing by such officers or Borrower
and approved by Administrative Agent, such approval not to be unreasonably
withheld, setting forth the differences (including any differences that would
affect any calculations relating to the financial covenants set forth in
subsection 7.6) which would have resulted if such financial statements had been
prepared without giving effect to such change;

 

(v)           Events
of Default, etc.:  promptly upon any
Executive Officer of Holdings or Borrower obtaining knowledge (a) of any
condition or event that constitutes an Event of Default or Potential Event of
Default, or becoming aware that any Lender has given any notice (other than to
Administrative Agent) or taken any other action with respect to a claimed Event
of Default or Potential Event of Default, (b) that any Person has given
any notice to Holdings or any of its Subsidiaries or taken any other action
with respect to a claimed default or event or condition of the type referred to
in subsection 8.2 that could reasonably be expected to have a Material Adverse
Effect, (c) of any resignation or dismissal of Holdings’ independent 

 

75

 

accountant, (d) of any Change of Control or other event requiring
a prepayment of principal on the Senior Notes or any Subordinated Indebtedness
or causing an event of default thereunder, or (e) of the occurrence of any
event or change that has caused or evidences, either in any case or in the
aggregate, a Material Adverse Effect, an Officers’ Certificate specifying the
nature and period of existence of such condition, event or change, or
specifying the notice given or action taken by any such Person and the nature
of such claimed Event of Default, Potential Event of Default, default, event or
condition, and what action Borrower has taken, is taking and proposes to take
with respect thereto;

 

(vi)          Litigation
or Other Proceedings:  promptly upon
any Executive Officer of Borrower obtaining knowledge of (X) the institution
of, or (in the good faith judgment of Borrower) non-frivolous threat of, any
action, suit, proceeding (whether administrative, judicial or otherwise),
governmental investigation or arbitration against or affecting Holdings or any
of its Subsidiaries or any property of Holdings or any of its Subsidiaries
(collectively, “Proceedings”) not previously disclosed in writing by Borrower
to Lenders or (Y) any material development in any Proceeding that, in any
case:

 

(1)           if adversely determined, has a reasonable probability of
giving rise to a Material Adverse Effect; or

 

(2)           seeks to enjoin or otherwise prevent the consummation of,
or to recover any damages or obtain relief as a result of, the transactions
contemplated hereby;

 

written notice thereof together
with such other information as may be reasonably available to Borrower to
enable Lenders and their counsel to evaluate such matters;

 

(vii)         ERISA
Events:  to the extent applicable,
promptly upon becoming aware of the occurrence of or forthcoming occurrence of
any ERISA Event, a written notice specifying the nature thereof, what action
Holdings, any of its Subsidiaries or any of their respective ERISA Affiliates
has taken, is taking or proposes to take with respect thereto and, when known,
any action taken or threatened by the Internal Revenue Service, the Department
of Labor or the PBGC with respect thereto;

 

(viii)        ERISA
Notices:  after the occurrence of an
Event of Default, with reasonable promptness, copies of (a) each Schedule B
(Actuarial Information) to the annual report (Form 5500 Series) filed by
Holdings, any of its Subsidiaries or any of their respective ERISA Affiliates
with the Internal Revenue Service with respect to each Pension Plan; (b) all
notices received by Holdings, any of its Subsidiaries or any of their
respective ERISA Affiliates from a Multiemployer Plan sponsor concerning an
ERISA Event; and (c) copies of such other documents or governmental reports or
filings relating to any Employee Benefit Plan as Administrative Agent shall reasonably
request;

 

76

 

(ix)           Insurance:  upon the prior written request of
Administrative Agent, as soon as practicable and in any event by the last day
of any Fiscal Year and no more frequently than once in any Fiscal Year, a
report in form and substance reasonably satisfactory to Administrative Agent
outlining all material insurance coverage maintained as of the date of such
report by Holdings and its Subsidiaries and all material insurance coverage
planned to be maintained by Holdings and its Subsidiaries in the immediately
succeeding Fiscal Year;

 

(x)            New
Subsidiaries:  promptly upon any
Person becoming a Subsidiary of Holdings, a written notice setting forth with
respect to such Person (a) the date on which such Person became a Subsidiary of
Holdings and (b) all of the data required to be set forth in Schedule 5.1
annexed hereto with respect to all Subsidiaries of Holdings (it being
understood that such written notice shall be deemed to supplement Schedule 5.1
annexed hereto for all purposes of this Agreement);

 

(xi)           Margin
Determination Certificate: 
commencing with the Fiscal Quarter ended September 2003, together with
each delivery of financial statements pursuant to subdivisions (i) and (ii)
above, a Margin Determination Certificate demonstrating in reasonable detail
the calculation of the Total Leverage Ratio for the four consecutive Fiscal
Quarters ending on the last day of the accounting period covered by such
financial statements;

 

(xii)          Revisions
or Updates to Schedules:  should any
of the information or disclosures provided on Schedule 5.1 or on any of
the Schedules originally attached to any of the Collateral Documents become
outdated or incorrect in any material respect, such revisions or updates to
such Schedules as may be necessary or appropriate to update or correct such
Schedules; in addition to the foregoing, such revisions or updates to the
Schedules attached to the Loan Documents as Administrative Agent may reasonably
request, any such request to be made no more frequently than once per quarter; provided
that except for additions of new Subsidiaries to Schedule 5.1 in
accordance with subsection 6.1(x) above, in each case no such revisions or
updates to any Schedules shall be deemed to have amended, modified or
superseded such Schedules immediately prior to the submission of such revised
or updated Schedules, or to have cured any breach of warranty or representation
resulting from the inaccuracy or incompleteness of any such Schedules, unless and
until the Requisite Lenders in their sole and absolute discretion, shall have
accepted in writing such revisions or updates to such Schedules; and

 

(xiii)         Other
Information: with reasonable promptness, such other information and data
with respect to Holdings, Borrower or any of their Subsidiaries as from time to
time may be reasonably requested by any Lender.

 

6.2                               Corporate Existence, etc.

 

Except as
permitted under subsection 7.7, Borrower and Holdings will, and will cause each
of their Subsidiaries to, at all times preserve and keep in full force and
effect its corporate existence and all rights and franchises material to its
business; provided, however that neither 

 

77

 

Holdings,
Borrower nor any of their Subsidiaries shall be required to preserve any such
right or franchise or such existence in the case of Subsidiaries if the Board
of Directors of Holdings, Borrower or such Subsidiary shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
Holdings, Borrower or such Subsidiary, as the case may be, and that the loss
thereof is not disadvantageous in any material respect to the Loan Parties
taken as a whole or Lenders.

 

6.3                               Payment of Taxes and Claims; Tax Consolidation.

 

A.            Borrower
and Holdings will, and will cause each of their Subsidiaries to, pay all
material taxes, assessments and other governmental charges imposed upon them or
any of their properties or assets or in respect of any of their income, businesses
or franchises before any material penalty accrues thereon, and all material
claims (including claims for labor, services, materials and supplies) for sums
that have become due and payable and that by law have or may become a Lien upon
any of its properties or assets, prior to the time when any penalty or fine
shall be incurred with respect thereto; provided that no such charge or
claim need be paid if it is being contested in good faith by appropriate
proceedings promptly instituted and diligently conducted, so long as (1) such
reserve or other appropriate provision, if any, as shall be required in
conformity with GAAP shall have been made therefor and (2) in the case of a
charge or claim which has or may become a Lien against any of the Collateral, such
contest proceedings conclusively operate to stay the sale of any portion of the
Collateral to satisfy such charge or claim.

 

B.            Borrower
and Holdings will not, nor will it permit any of their Subsidiaries to, file or
consent to the filing of any consolidated income tax return with any Person
(other than Holdings or any of its Subsidiaries).

 

6.4                               Maintenance of Properties;
Insurance.

 

A.            Maintenance
of Properties. 
Borrower and Holdings will, and will cause each of their Subsidiaries
to, maintain or cause to be maintained in good repair, working order and
condition, ordinary wear and tear excepted, all material properties used or
useful in the business of Borrower and Holdings and their Subsidiaries
(including all Intellectual Property) and from time to time will make or cause
to be made all appropriate repairs, renewals and replacements thereof, except
where, individually or in the aggregate, the failure to do so could not
reasonably be expected to have a Material Adverse Effect.

 

B.            Insurance.  Borrower and Holdings will maintain or cause
to be maintained, with financially sound and reputable insurers, such public
liability insurance, third party property damage insurance, business
interruption insurance and casualty insurance with respect to liabilities, losses
or damage in respect of the assets, properties and businesses of Holdings and
its Subsidiaries as may customarily be carried or maintained under similar
circumstances by corporations of established reputation engaged in similar
businesses, in each case in such amounts (giving effect to self-insurance),
with such deductibles, covering such risks and otherwise on such terms and
conditions as shall be customary for corporations similarly situated in the
industry.  Holdings or Borrower shall provide Administrative Agent
from time to time, upon request (i) copies of the policies under which such
insurance is issued, 

 

78

 

certificates of insurance and such other information relating to such
insurance as the Administrative Agent may request, (ii) with respect to any
policy providing for coverage in excess of $25,000,000, within five days of
receipt of notice from any insurer, a copy of any notice of cancellation or
material change in coverage and (iii) with respect to any policy providing for
coverage in excess of $25,000,000, on the day of issuance, notice of any
cancellation or nonrenewal of coverage by Holdings or its Subsidiaries.

 

6.5                               Inspection Rights Lender Meeting.

 

A.            Inspection
Rights.  Borrower and Holdings shall, and shall cause each of their Subsidiaries to,
permit any authorized representatives designated by any Lender to visit and
inspect, subject to the rights of any tenants or lessees of Holdings and its
Subsidiaries, any of the properties of Holdings or of any of its Subsidiaries,
to inspect, copy and take extracts from its and their financial and accounting
records, and to discuss its and their affairs, finances and accounts with its
and their officers and independent public accountants, all upon reasonable
notice and at such reasonable times during normal business hours and as often
as may reasonably be requested.  Lenders
shall coordinate their visits and inspections with those of Administrative
Agent so as to minimize the number of separate visits to Borrower’s and
Holdings’ premises.

 

B.            Lender
Meeting.  Borrower
will, upon the request of Administrative Agent, participate in a meeting of
Administrative Agent and Lenders once during each Fiscal Year to be held at
Borrower’s corporate offices (or at such other location as may be agreed to by
Borrower and Administrative Agent) at such time as may be agreed to by Borrower
and Administrative Agent.

 

6.6                               Compliance with Laws, etc.

 

Borrower and
Holdings shall comply, and shall cause each of their Subsidiaries and all other
Persons on or occupying any Real Property Assets to comply, with the
requirements of all applicable laws, rules, regulations and orders of any
governmental authority (including all Environmental Laws), noncompliance with
which could reasonably be expected to cause, individually or in the aggregate,
a Material Adverse Effect.

 

6.7                               Environmental Review and
Investigation, Disclosure, Etc.; Borrower’s Actions Regarding
Hazardous Materials Activities, Environmental Claims and Violations of
Environmental Laws.

 

A.            Environmental
Review and Investigation. 
Borrower and Holdings agree that Administrative Agent may, from time to
time and in its reasonable discretion, if a Potential Event of Default relating
to environmental matters or an Event of Default has occurred and is continuing,
retain, at Borrower’s expense, an independent professional consultant to review
any environmental audits, investigations, analyses and reports relating to
Hazardous Materials prepared by or for Holdings or Borrower or conduct its own
investigation of any Real Property Asset. 
For purposes of conducting such a review and/or investigation, Borrower
and Holdings hereby grant to Administrative Agent and its agents, employees, consultants
and contractors the right to enter into or onto any Real Property Assets
currently owned, leased, operated or

 

79

 

used by Holdings or Borrower or any of their
Subsidiaries, subject to the rights of any tenants or lessees of Holdings and
its Subsidiaries, and to perform so-called “Phase I” environmental assessment
tests on such property.  Any such
investigation of any Real Property Asset shall be conducted, unless otherwise
agreed to by Holdings or Borrower and Administrative Agent, during normal
business hours and shall be conducted so as not to interfere with the ongoing
operations at such Real Property Asset or to cause any damage or loss to any
property at such Real Property Asset. 
Holdings, Borrower and Administrative Agent hereby acknowledge and agree
that any report of any investigation conducted at the request of Administrative
Agent pursuant to this subsection 6.7A will be obtained and shall be used by
Administrative Agent and Lenders solely for the purposes of Lenders’ internal
credit decisions, to monitor and police the Loans and to protect Lenders’
security interests, if any, created by the Loan Documents.  Administrative Agent agrees to deliver a
copy of any such report to Holdings or Borrower with the understanding that Borrower
acknowledges and agrees that (x) it will indemnify and hold harmless
Administrative Agent and each Lender from any costs, losses or liabilities
relating to Borrower’s use of or reliance on such report, (y) neither
Administrative Agent nor any Lender makes any representation or warranty with
respect to such report, and (z) by delivering such report to Borrower,
neither Administrative Agent nor any Lender is requiring or recommending the
implementation of any suggestions or recommendations contained in such report.

 

B.            Environmental
Disclosure.  If
reasonably required by Administrative Agent, Borrower will deliver to
Administrative Agent:

 

(i)            Environmental
Audits and Reports.  As soon as
practicable following receipt thereof, copies of all material environmental
audits, investigations, analyses and reports of any kind or character, whether
prepared by personnel of Holdings, Borrower or any of their Subsidiaries or by
independent consultants, governmental authorities or any other Persons, with
respect to significant environmental matters at any Real Property Asset which,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect or with respect to any Environmental Claims which,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect; and

 

(ii)           Other
Information.  With reasonable
promptness, such other documents and information as from time to time may be
reasonably requested by Administrative Agent in relation to any matters
disclosed pursuant to this subsection 6.7.

 

C.            Holdings’ and Borrower’s Actions Regarding
Hazardous Materials Activities, Environmental Claims and Violations of
Environmental Laws.  Borrower
and Holdings shall promptly take, and shall cause each of their Subsidiaries
promptly to take, any and all actions necessary to (i) cure any violation of
applicable Environmental Laws by Holdings, Borrower or their Subsidiaries that
could reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect and (ii) make an appropriate response to any Environmental Claim
against Holdings, Borrower or any of their Subsidiaries and discharge any
obligations it may have to any Person thereunder where failure to do so could
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.

 

80

 

6.8                               Execution of Subsidiary Guaranty
and Personal Property Collateral Documents by Certain Subsidiaries and Future
Subsidiaries.

 

A.            Execution
of Subsidiary Guaranty and Personal Property Collateral Documents.  If any Person is or becomes a wholly-owned
Subsidiary of Holdings after the date hereof, Borrower will promptly notify
Administrative Agent of that fact and cause such Subsidiary to execute and
deliver to Administrative Agent a counterpart of the Subsidiary Guaranty and
the Pledge Agreement and to take all such further actions and execute all such
further documents and instruments (including actions, documents and instruments
comparable to those described in subsection 4.1E) as may be necessary or, in
the opinion of Administrative Agent, desirable to create in favor of
Administrative Agent, for the benefit of Lenders, a valid First Priority Lien
on all of the Collateral of or relating to such Subsidiary and owned by
Holdings or its Subsidiaries as described in the applicable forms of the
Collateral Documents; provided that with respect to Subsidiaries
organized in jurisdictions outside the United States, such guaranties, pledges and
other documentation shall be required only to the extent they are not
reasonably likely to result in material increased tax liabilities for the Loan
Parties, as determined in Administrative Agent’s reasonable discretion.

 

B.            Subsidiary
Charter Documents, Legal Opinions, Etc.  To the extent reasonably requested by
Administrative Agent, Borrower shall deliver to Administrative Agent, together
with such Loan Documents, (i) certified copies of such Subsidiary’s
Certificate or Articles of Incorporation, together with a good standing
certificate from the Secretary of State of the jurisdiction of its
incorporation and each other state in which such Person is qualified as a
foreign corporation to do business and, to the extent generally available, a
certificate or other evidence of good standing as to payment of any applicable
franchise or similar taxes from the appropriate taxing authority of each of
such jurisdictions, each to be dated a recent date prior to their delivery to
Administrative Agent, (ii) a copy of such Subsidiary’s Bylaws, certified
by its corporate secretary or an assistant secretary as of a recent date prior
to their delivery to Administrative Agent, (iii) a certificate executed by
the secretary or an assistant secretary of such Subsidiary as to (a) the
fact that the attached resolutions of the Board of Directors of such Subsidiary
approving and authorizing the execution, delivery and performance of such Loan
Documents are in full force and effect and have not been modified or amended
and (b) the incumbency and signatures of the officers of such Subsidiary
executing such Loan Documents, and (iv) a favorable opinion of counsel to
such Subsidiary, in form and substance reasonably satisfactory to
Administrative Agent and its counsel, as to (a) the due organization and
good standing of such Subsidiary, (b) the due authorization, execution and
delivery by such Subsidiary of such Loan Documents, (c) the enforceability
of such Loan Documents against such Subsidiary, (d) such other matters
(including matters relating to the creation and perfection of Liens in any
Collateral pursuant to such Loan Documents) as Administrative Agent may
reasonably request, all of the foregoing to be reasonably satisfactory in form
and substance to Administrative Agent and its counsel.

 

Section 7.              BORROWER’S AND
HOLDINGS’ NEGATIVE COVENANTS

 

Borrower and
Holdings covenant and agree that, so long as any of the Commitments hereunder
shall remain in effect and until payment in full of all of the Loans and other
Obligations and the cancellation or expiration of all Letters of Credit, unless
Requisite Lenders

 

81

 

shall
otherwise give written consent, Borrower and Holdings shall perform, and shall
cause each of their Subsidiaries to perform, all covenants in this
Section 7.

 

7.1                               Indebtedness.

 

Borrower and
Holdings shall not, and shall not permit any of their Subsidiaries to, directly
or indirectly, create, incur, assume or guaranty, or otherwise become or remain
directly or indirectly liable with respect to, any Indebtedness, except:

 

(i)            Borrower
may become and remain liable with respect to the Obligations;

 

(ii)           Holdings
and its Subsidiaries may become and remain liable with respect to Contingent
Obligations permitted by subsection 7.4 and, upon any matured obligations
actually arising pursuant thereto, the Indebtedness corresponding to the
Contingent Obligations so extinguished;

 

(iii)          Borrower
and Holdings may become and remain liable with respect to Indebtedness to any
Subsidiary of Holdings; any Subsidiary Guarantor may become and remain liable
with respect to Indebtedness to Holdings, Borrower or any of their
Subsidiaries; any Subsidiary which is not a Subsidiary Guarantor may become and
remain liable with respect to Indebtedness to other Subsidiaries which are not
Subsidiary Guarantors; and any Subsidiary which is not a Subsidiary Guarantor
may become and remain liable with respect to Indebtedness to Borrower, Holdings
or any Subsidiary Guarantor in an aggregate amount which, together with the
other Investments made by Holdings, Borrower and Subsidiary Guarantors after
the date hereof in Subsidiaries which are not Subsidiary Guarantors under
subsection 7.3(vii)(d), does not exceed $15,000,000 at any time outstanding for
all such Subsidiaries which are not Subsidiary Guarantors; provided that
(a) all such intercompany Indebtedness shall be evidenced by promissory
notes except to the extent the issuance of such promissory notes may impair
Borrower’s qualification as a REIT, (b) all such intercompany Indebtedness
owed by Borrower and by Holdings or any Subsidiary Guarantors shall be
subordinated in right of payment to the payment in full of the Obligations
pursuant to the terms of the applicable promissory notes or an intercompany
subordination agreement, and (c) any payment by Holdings or any Subsidiary
of Holdings under any guaranty of the Obligations shall result in a pro  tanto
reduction of the amount of any intercompany Indebtedness owed by Holdings or
such Subsidiary to Borrower or to any Subsidiary for whose benefit such payment
is made; and provided that intercompany obligations of Holdings and its
Subsidiaries constituting rental, lease, license or royalty payments, including
such payments deferred in the ordinary course of business and consistent with
past practices, do not constitute Indebtedness hereunder;

 

(iv)          Holdings,
Borrower and their Subsidiaries may enter into a securitization financing
transaction with respect to any of their Lodging Assets in an aggregate
principal amount not to exceed $150,000,000 which securitization transaction
shall not terminate or have a maturity prior to six months after the

 

82

 

Revolving Loan Commitment Termination Date; provided that the
aggregate Indebtedness incurred in connection with such securitization shall
not be less than an amount equal to 40% of the Fair Market Value of the assets
encumbered by or otherwise subject to such securitization and such assets shall
not account for or generate more than 20% of Consolidated EBITDA for the most
recently ended four consecutive Fiscal Quarter period as of the date of such
securitization;

 

(v)           Borrower
and Holdings may remain liable with respect to the Senior Notes and may incur
unsubordinated Indebtedness secured on the same basis as the Indebtedness so
refinanced and Subordinated Indebtedness to refinance all or any of the Senior
Notes; provided that (1) the obligor on such refinancing Indebtedness is
the same as the obligor on the Indebtedness so refinanced, (2) all of the
proceeds thereof (net of reasonable and customary fees, costs and expenses)
shall be applied to the repayment, repurchase, defeasance or redemption of such
Senior Notes, (3) the covenants of such refinancing Indebtedness are not more
restrictive in any material respect than the covenants contained in the
Indenture dated as of March 19, 2003, by and between Borrower, Holdings
and U.S. Bank Trust National Association, as trustee, with respect to
Borrower’s 8-7/8% Senior Notes due 2011, (4) such covenants shall be on
generally prevailing market terms available to Borrower and Holdings for such
refinancing Indebtedness, (5) the maturity date thereof or any scheduled date
on which such refinancing Indebtedness may be required to be repurchased at the
option of the holder thereof shall not be earlier than April 30, 2007 and
(6) notwithstanding anything to the contrary in the preceding clause (1),
Holdings may guarantee any such refinancing Indebtedness whether or not
Holdings may have previously been an obligor with respect to the Indebtedness
being refinanced (collectively, the “Refinancing
Indebtedness”);

 

(vi)          In
addition to any Subordinated Indebtedness incurred or existing pursuant to
subsection 7.1(v), Borrower and Holdings may become and remain liable with
respect to Subordinated Indebtedness in an aggregate principal amount not to
exceed $200,000,000 at any one time outstanding;

 

(vii)         Holdings,
Borrower and their Subsidiaries may become and remain liable with respect to
any secured Indebtedness and other secured obligations; provided, that,
at the time of any such incurrence, the amount of such secured Indebtedness and
other secured obligations then outstanding (including Indebtedness under
subsection 7.1(iv), this subsection 7.1(vii) and subsection 7.1(viii), but
excluding the Obligations and all Indebtedness required to be secured equally
and ratably in the same collateral as the Obligations) shall not, individually
or in the aggregate, exceed an amount equal to 10% of Consolidated Net Tangible
Assets;

 

(viii)        Holdings,
Borrower and their Subsidiaries may remain liable with respect to the
Indebtedness of Holdings, Borrower and their Subsidiaries existing as of the
Effective Date and not otherwise permitted under this subsection 7.1 (and any
refinancings, replacements or substitutions thereof which do not increase the
amount thereof or increase any collateral therefor) and described in Schedule
7.1 annexed hereto; and

 

83

 

(ix)           Holdings,
Borrower and their Subsidiaries may incur other unsecured Indebtedness not
expressly permitted under clauses (i) through (viii), inclusive, of subsection
7.1 in an aggregate principal amount not to exceed $40,000,000 at any time
outstanding.

 

7.2                               Liens and Related Matters.

 

A.            Prohibition
on Liens.  Borrower
and Holdings shall not, and shall not permit any of their Subsidiaries to,
directly or indirectly, create, incur, assume or permit to exist any Lien on or
with respect to any property or asset of any kind (including any document or
instrument in respect of goods or accounts receivable) of Borrower and Holdings
or any of their Subsidiaries, whether now owned or hereafter acquired, or any
income or profits therefrom, or file or permit the filing of, or permit to
remain in effect, any financing statement or other similar notice of any Lien
with respect to any such property, asset, income or profits under the UCC of
any State or under any similar recording or notice statute, except:

 

(i)            Permitted
Encumbrances;

 

(ii)           Liens
granted pursuant to the Collateral Documents, including without limitation,
Liens which equally and ratably secure to the extent required by the Senior
Note Documents, the aggregate principal amount of the Senior Notes outstanding
on the Effective Date;

 

(iii)          Liens
described in Schedule 7.2 annexed hereto (and any refinancings,
replacements or substitutions thereof which do not increase the amount thereof
or increase any collateral therefor);

 

(iv)          Liens
securing Indebtedness permitted pursuant to subsection 7.1(iv);

 

(v)           Liens
securing Indebtedness and any other obligations permitted pursuant to
subsection 7.1(vii); and

 

(vi)          Liens
in favor of vendors of goods and services in the ordinary course of business
securing Indebtedness permitted under subsection 7.1 incurred in connection
with the purchase of such goods and services, provided that such Liens shall
only encumber such goods so purchased.

 

B.            Equitable
Lien in Favor of Lenders. 
If Holdings or any of its Subsidiaries shall create or assume any Lien
upon any of its properties or assets, whether now owned or hereafter acquired,
other than Liens excepted by the provisions of subsection 7.2A, Borrower shall
make or cause to be made effective provision whereby the Obligations will be
secured by such Lien equally and ratably with any and all other Indebtedness
secured thereby as long as any such Indebtedness shall be so secured; provided
that, notwithstanding the foregoing, this covenant shall not be construed as a
consent by Requisite Lenders to the creation or assumption of any such Lien not
permitted by the provisions of subsection 7.2A; and provided  further
that notwithstanding the foregoing, if Holdings or any of its Subsidiaries
shall create or assume any Lien in favor of any Indebtedness permitted pursuant
to subsection 7.1(v), it shall make or cause to be made effective provision
whereby the Obligations will be secured by such

 

84

 

Lien equally and ratably with any and all other
Indebtedness secured thereby as long as any such Indebtedness shall be so
secured.

 

C.            No Further
Negative Pledges. 
Except with respect to (1) 
specific property encumbered to secure payment of particular
Indebtedness, to be sold pursuant to an executed agreement with respect to an
asset sale or subject to a customary lease or license, and (2) agreements set
forth in documentation governing Indebtedness permitted to be incurred under
subsections 7.1(i) and 7.1(iv) – (vii) and Contingent Obligations permitted
under subsection 7.4 with respect to such Indebtedness, neither Holdings nor
any of its Subsidiaries shall enter into any agreement prohibiting the creation
or assumption of any Lien upon any of its properties or assets, whether now
owned or hereafter acquired.

 

D.            No
Restrictions on Subsidiary Distributions to Holdings, Borrower or Other
Subsidiaries.  Except
as provided herein, Borrower and Holdings will not, and will not permit any of
their Subsidiaries to, create or otherwise cause or suffer to exist or become
effective any consensual encumbrance or restriction of any kind on the ability
of any such Subsidiary to (i) pay dividends or make any other
distributions on any of such Subsidiary’s capital stock owned by Holdings,
Borrower or any other Subsidiary of Holdings, (ii) repay or prepay any
Indebtedness owed by such Subsidiary to Holdings, Borrower or any other
Subsidiary of Holdings, (iii) make loans or advances to Holdings, Borrower
or any other Subsidiary of Holdings, or (iv) transfer any of its property
or assets to Holdings, Borrower or any other Subsidiary of Holdings; provided
that the foregoing shall not apply to (a) restrictions and conditions existing
on the date hereof and identified on Schedule 7.2 (or to any
extension, renewal or modification of such restriction or condition which is
not materially more disadvantageous to the Lenders), (b) customary restrictions
and conditions contained in agreements relating to asset sales permitted by
this Agreement with respect to the assets being sold, (c) customary
restrictions or conditions imposed by any agreement evidencing Indebtedness
permitted under subsections 7.1(i) and 7.1(iv) - (vii) with respect to the
assets subject to such securitization transaction or Indebtedness, and (d)
customary provisions in leases and other contracts restricting the assignment
thereof.

 

7.3                               Investments; Joint Ventures.

 

Borrower and
Holdings shall not, and shall not permit any of their Subsidiaries to, directly
or indirectly, make or own any Investment in any Person, except:

 

(i)            Holdings
and its Subsidiaries may make and own Investments in Franchisees, Joint
Ventures and Franchise Arrangements in Holdings’ and its Subsidiaries’ ordinary
course of business; provided that the amount of additional  Investments shall not exceed $20,000,000 in
the aggregate per Fiscal Year (the “Annual
Investment Amount”); provided that the Annual Investment
Amount for any Fiscal Year shall be increased by an amount equal to the excess,
if any, of the Annual Investment Amount for the previous Fiscal Year (without
giving effect to any adjustment in accordance with this proviso) over the
actual amount of such Investments for such Fiscal Year; provided, further
that in no event shall the amount of any such increase exceed 50% of the Annual
Investment Amount for such previous Fiscal Year (prior to adjustment in
accordance with this proviso);

 

85

 

(ii)           Holdings
and its Subsidiaries may make and own Investments in Cash and Cash Equivalents;

 

(iii)          Holdings
and its Subsidiaries may make Capital Expenditures permitted by subsection 7.8;

 

(iv)          Holdings
and its Subsidiaries may continue to own the Investments owned by them and
described in Schedule 7.3 annexed hereto;

 

(v)           Holdings
and its Subsidiaries may make and own Investments with respect to any
obligation to indemnify their respective officers and directors to the fullest
extent permitted by the law of the jurisdiction of such Person’s organization;

 

(vi)          Holdings
and its Subsidiaries may make and own Investments which do not require the
payment of any Cash or non-cash consideration;

 

(vii)         (a)
Holdings and its Subsidiaries may continue to own the Investments owned by them
in any Subsidiaries of Holdings; (b) Holdings, Borrower and the Subsidiary
Guarantors may make and own additional equity Investments in Holdings, Borrower
and in Subsidiary Guarantors; (c) Subsidiaries which are not Subsidiary
Guarantors may make Investments in other Subsidiaries; and (d) Holdings,
Borrower and Subsidiary Guarantors may make and own Investments after the date
hereof in other Subsidiaries which are not Subsidiary Guarantors which
Investments, including intercompany loans made by Holdings, Borrower and
Subsidiary Guarantors to Subsidiaries which are not Subsidiary Guarantors pursuant
to subsection 7.1(iii), do not exceed $15,000,000 at any time outstanding;

 

(viii)        Holdings
and its Subsidiaries may make intercompany loans to the extent permitted under
subsection 7.1(iii);

 

(ix)           Holdings
and its Subsidiaries may receive and hold promissory notes and other non-cash
consideration received in connection with any Asset Sale permitted by
subsection 7.7; and

 

(x)            Holdings
and its Subsidiaries may make and own Investments in securities issued by the
Meditrust Exercisable Put Option Securities Trust to the extent owned as of the
Effective Date or as permitted by subsection 7.5B.

 

7.4                               Contingent Obligations.

 

Borrower and
Holdings shall not, and shall not permit any of their Subsidiaries to, directly
or indirectly, create or become or remain liable with respect to any Contingent
Obligation, except:

 

(i)            Borrower
and Holdings may become and remain liable with respect to Contingent
Obligations in respect of Letters of Credit issued under this Agreement, and
Subsidiaries of Borrower and Holdings may become and remain liable with respect
to Contingent Obligations in respect of a Guaranty;

 

86

 

(ii)           Holdings
and its Subsidiaries may become and remain liable with respect to Contingent
Obligations in respect of customary indemnification and purchase price
adjustment obligations incurred in connection with (x) Asset Sales or other
sales of assets, and (y) Investments permitted under this Agreement;

 

(iii)          Holdings
and its Subsidiaries may become and remain liable with respect to Contingent
Obligations in respect of any Indebtedness of Holdings, Borrower or any
Subsidiaries permitted by subsection 7.1; provided that Holdings and
Subsidiaries of Holdings other than Borrower may not become liable in respect of
Indebtedness of Borrower under subsections 7.1(v) and 7.1(vi); provided
further that notwithstanding the foregoing, Holdings may become and remain
liable with respect to Contingent Obligations to the extent permitted by clause
(6) of subsection 7.1(v);

 

(iv)          Holdings
and its Subsidiaries, as applicable, may remain liable with respect to
Contingent Obligations described in Schedule 7.4 annexed hereto;

 

(v)           Holdings
and its Subsidiaries may become and remain liable with respect to Contingent
Obligations incurred in the ordinary course of business with respect to surety
and appeal bonds, performance bonds and other similar obligations; and Holdings
and its Subsidiaries may become and remain liable with respect to Contingent
Obligations in respect of letters of credit provided that the aggregate
amount of such Contingent Obligations shall not exceed $10,000,000; and

 

(vi)          Borrower
and Holdings may become and remain liable with respect to Contingent
Obligations under Hedge Agreements provided that the aggregate amount of
such Contingent Obligations shall not exceed $200,000,000.

 

7.5                               Restricted Payments.

 

A.            Borrower
and Holdings shall not, and shall not permit any of their Subsidiaries to,
directly or indirectly, declare, order, pay, make or set apart any sum for any
Restricted Payment; provided, however, that:

 

(i)            Borrower
may declare and pay dividends and distributions payable in respect of Existing
Preferred Stock; provided, that such dividends or distributions are
regularly scheduled and paid quarterly in accordance with Borrower’s ordinary
course of business;

 

(ii)           Borrower
may declare and pay dividends in respect of its Class B Common Stock in an
amount not to exceed $0.10 per share per Fiscal Year; and Borrower may redeem
its Class B Common Stock for $.01 per share of such Class B Common Stock;

 

(iii)          Borrower
may declare and pay quarterly dividends and distributions in an amount required
for Borrower to maintain its REIT status; provided that all existing and
future net operating loss carry forwards must first be applied to reduce REIT
taxable income and to otherwise offset any income tax liability and provided,
further

 

87

 

that the Borrower shall have first declared and paid all required
dividends and distributions described under clauses (i) and (ii) above;

 

(iv)          in
addition to the payments under clauses (i), (ii) and (iii) above, Holdings and
Borrower may declare and pay cash dividends and make distributions on account
of or repurchase any of their capital stock; provided that the aggregate
amount thereof shall not exceed (a) $20,000,000 in any Fiscal Year or (b) in
the event that at the time of and after giving pro forma balance sheet effect
to any Revolving Loans made in connection with such payments, (1) the Total
Leverage Ratio is less than 4.50:1.00, (2) the Revolving Loan Commitments
exceed the Total Utilization of Revolving Loan Commitments by not less than
$50,000,000 and (3) no Potential Event of Default or Event of Default then
exists, $40,000,000 in any Fiscal Year; provided further that the
maximum aggregate annual amount of such dividends, distributions and
repurchases which is permitted pursuant to the foregoing proviso (the “Maximum Share Payment Amount”) shall be
increased by an amount equal to the excess, if any, of such Maximum Share
Payment Amount for any Fiscal Year (without giving effect to any adjustment in
accordance with this proviso) over the amount of such dividends, distributions
and repurchases which are actually made in such immediately preceding Fiscal
Year;

 

(v)           Borrower
and Holdings may make Restricted Payments to redeem shares of their capital
stock or warrants or options to acquire any such shares from employees of
Borrower and Holdings and their Subsidiaries (a) upon the death or other
termination of employment of such employees, as authorized by the terms of
Holdings’ and its Subsidiaries’ stock option plans or (b) to the extent
required to permit any non-executive employees to meet their tax obligations; provided
that no Event of Default shall have occurred and be continuing or would arise
as a result of any such Restricted Payments;

 

(vi)          Holdings and Borrower may, within two
years after issuance of common stock (other than any issuance of common stock
to employees or directors of Holdings and its Subsidiaries), repurchase common
stock or preferred stock of Holdings or Borrower ; provided that (a) the
amount of common stock and preferred stock so repurchased shall not exceed the
lesser of (x) the net cash proceeds of such common stock issuance, after giving
effect to all other applications of such net cash proceeds by Holdings and its
Subsidiaries and (y) $100,000,000, and (b) at the time of any such repurchase
and after giving pro forma effect thereto, (x) there are no outstanding
Revolving Loans and (y) the amount of Cash and Cash Equivalents of Holdings and
its Subsidiaries is not less than the aggregate amount required to redeem,
repurchase or repay Borrower’s Senior Notes maturing or scheduled to be
redeemable at the option of the holders thereof in 2003 and 2004;

 

(vii)         Borrower
and Holdings may make regularly scheduled payments of interest on Subordinated
Indebtedness permitted pursuant to subsections 7.1(v) and (vi), in accordance
with the terms of and to the extent required by, the provisions of the
indentures governing such Subordinated Indebtedness; provided that no Potential

 

88

 

Event of Default under subsection 8.1 or Event of Default shall have
occurred and be continuing or would arise as a result of such Restricted
Payment; and

 

(viii)        Borrower
and Holdings may redeem, repurchase, retire or otherwise acquire, all or part
of Borrower’s outstanding Series B Preferred Stock as part or all of the
purchase consideration for the sale of Telematrix Equipment, Inc. and
Telematrix Equipment, LLC, and Borrower or Holdings may issue preferred stock
having substantially the same terms and conditions as Borrower’s outstanding
Series B Preferred Stock in exchange for Borrower’s outstanding Series B
Preferred Stock..

 

B.            Borrower
and Holdings shall not, and shall not permit any of their Subsidiaries to,
directly or indirectly, prepay, redeem, repurchase, retire, defease or make any
similar payment with respect to any Indebtedness (other than Indebtedness under
this Agreement); provided that if (A) no Potential Event of Default or
Event of Default shall have occurred and be continuing or would arise as a
result of the proposed payments (including all fees, call premiums or other
tender costs associated therewith), and (B) with respect to the following
clause (1), such prepayment or repurchase is completed on a basis that is
economically advantageous to Borrower and Holdings on a net present value
basis, (1) Borrower and Holdings may prepay, redeem, repurchase, retire,
defease or make similar payments with respect to Indebtedness maturing, or
redeemable at the option of the holder thereof to the extent the holder
exercises such option, prior to the Revolving Loan Commitment Termination Date,
including without limitation (i) Borrower’s 7.82% Senior Notes due
September 2026, (ii) Borrower’s 7.25% Senior Notes due March 2004, (iii)
the 7.114% Securities, which securities will not be thereafter sold or
transferred by Borrower, (iv) Borrower’s 7.40% Notes due September 2005, and
(v) Borrower’s Medium Term Notes maturing in September 2005, January 2006 and
February 2007; and (2) Holdings and its Subsidiaries may prepay, redeem,
repurchase, retire, defease or make similar payments with respect to (A)
intercompany Indebtedness permitted under this Agreement, (B) secured
Indebtedness permitted under this Agreement upon the sale or other disposition
of the collateral securing such secured Indebtedness and (C) Borrower’s Senior
Notes due August 2007 to the extent such redemption, repurchase or repayment is
made out of the proceeds of Refinancing Indebtedness permitted by subsection
7.1(v) and at the time of and after giving effect to such redemption,
repurchase or repayment there are no outstanding Revolving Loans and the amount
of Cash and Cash Equivalents of Holdings and its Subsidiaries is not less than
the aggregate amount required to redeem, repurchase or repay all of the
Borrower’s Senior Notes maturing or scheduled to be redeemable at the option of
the holders thereof prior to the Revolving Loan Commitment Termination
Date.  In addition, notwithstanding the
foregoing, Borrower and Holdings shall be permitted to exercise their
repurchase option with respect to the 7.114% Notes.

 

89

 

7.6                               Financial Covenants.

 

A.            Maximum
Total Leverage Ratio. 
Borrower and Holdings shall not permit the Total Leverage Ratio on the
last day of any Fiscal Quarter set forth below to exceed the correlative ratio
indicated below:

 

	
  Period

  	
   

  	
  Maximum Total Leverage

  Ratio

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3rd
  Fiscal Quarter, Fiscal Year 2003  

  	
   

  	
  5.35:1.00

  	
   

  
	
  4th
  Fiscal Quarter, Fiscal Year 2003

  	
   

  	
  5.35:1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1st
  Fiscal Quarter, Fiscal Year 2004

  	
   

  	
  5.30:1.00

  	
   

  
	
  2nd
  Fiscal Quarter, Fiscal Year 2004

  	
   

  	
  5.30:1.00

  	
   

  
	
  3rd
  Fiscal Quarter, Fiscal Year 2004

  	
   

  	
  5.30:1.00

  	
   

  
	
  4th
  Fiscal Quarter, Fiscal Year 2004

  	
   

  	
  5.30:1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1st
  Fiscal Quarter, Fiscal Year 2005

  	
   

  	
  5.20:1.00

  	
   

  
	
  2nd
  Fiscal Quarter, Fiscal Year 2005

  	
   

  	
  5.10:1.00

  	
   

  
	
  3rd
  Fiscal Quarter, Fiscal Year 2005

  	
   

  	
  5.00:1.00

  	
   

  
	
  4th
  Fiscal Quarter, Fiscal Year 2005

  	
   

  	
  5.00:1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1st
  Fiscal Quarter, Fiscal Year 2006

  	
   

  	
  4.75:1.00

  	
   

  
	
  2nd
  Fiscal Quarter, Fiscal Year 2006

  	
   

  	
  4.75:1.00

  	
   

  
	
  3rd
  Fiscal Quarter, Fiscal Year 2006

  	
   

  	
  4.75:1.00

  	
   

  
	
  4th
  Fiscal Quarter, Fiscal Year 2006

  	
   

  	
  4.75:1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1st
  Fiscal Quarter, Fiscal Year 2007

  	
   

  	
  4.50:1.00

  	
   

  

 

B.            Minimum
Interest Coverage Ratio. 
Borrower and Holdings shall not permit the ratio of
(i) Consolidated EBITDA to (ii) Consolidated Net Interest Expense for any
four consecutive Fiscal Quarter period ending on the last day of any Fiscal
Quarter to be less than the correlative ratio indicated below: 

 

	
  Period

  	
   

  	
  Minimum Interest Coverage

  Ratio

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3rd Fiscal Quarter, Fiscal Year 2003

  	
   

  	
  2.10:1.00

  	
   

  
	
  4th Fiscal Quarter, Fiscal Year 2003

  	
   

  	
  2.10:1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1st Fiscal Quarter, Fiscal Year 2004

  	
   

  	
  2.10:1.00

  	
   

  
	
  2nd Fiscal Quarter, Fiscal Year 2004

  	
   

  	
  2.10:1.00

  	
   

  
	
  3rd Fiscal Quarter, Fiscal Year 2004

  	
   

  	
  2.10:1.00

  	
   

  
	
  4th Fiscal Quarter, Fiscal Year 2004

  	
   

  	
  2.10:1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1st
  Fiscal Quarter, Fiscal Year 2005

  	
   

  	
  2.20:1.00

  	
   

  
	
  2nd
  Fiscal Quarter, Fiscal Year 2005

  	
   

  	
  2.20:1.00

  	
   

  
	
  3rd
  Fiscal Quarter, Fiscal Year 2005

  	
   

  	
  2.20:1.00

  	
   

  
	
  4th
  Fiscal Quarter, Fiscal Year 2005

  	
   

  	
  2.20:1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1st
  Fiscal Quarter, Fiscal Year 2006

  	
   

  	
  2.30:1.00

  	
   

  
	
  2nd
  Fiscal Quarter, Fiscal Year 2006

  	
   

  	
  2.30:1.00

  	
   

  
	
  3rd
  Fiscal Quarter, Fiscal Year 2006

  	
   

  	
  2.30:1.00

  	
   

  
	
  4th
  Fiscal Quarter, Fiscal Year 2006

  	
   

  	
  2.30:1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1st
  Fiscal Quarter, Fiscal Year 2007

  	
   

  	
  2.40:1.00

  	
   

  

 

90

 

C.            Minimum
Fixed Charge Coverage Ratio. 
Borrower and Holdings shall not permit the ratio of
(i) Consolidated EBITDA minus the Capital Expenditure Reserve to
(ii) Fixed Charges for any four consecutive Fiscal Quarter period ending
on the last day of any Fiscal Quarter to be less than the correlative ratio
indicated below:

 

	
  Period

  	
   

  	
  Minimum Fixed Charge

  Coverage Ratio

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3rd Fiscal Quarter, Fiscal Year 2003

  	
   

  	
  1.35:1.00

  	
   

  
	
  4th Fiscal Quarter, Fiscal Year 2003

  	
   

  	
  1.35:1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1st Fiscal Quarter, Fiscal Year 2004

  	
   

  	
  1.35:1.00

  	
   

  
	
  2nd Fiscal Quarter, Fiscal Year 2004

  	
   

  	
  1.35:1.00

  	
   

  
	
  3rd Fiscal Quarter, Fiscal Year 2004

  	
   

  	
  1.35:1.00

  	
   

  
	
  4th
  Fiscal Quarter, Fiscal Year 2004

  	
   

  	
  1.35:1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1st
  Fiscal Quarter, Fiscal Year 2005

  	
   

  	
  1.45:1.00

  	
   

  
	
  2nd
  Fiscal Quarter, Fiscal Year 2005

  	
   

  	
  1.45:1.00

  	
   

  
	
  3rd
  Fiscal Quarter, Fiscal Year 2005

  	
   

  	
  1.45:1.00

  	
   

  
	
  4th
  Fiscal Quarter, Fiscal Year 2005

  	
   

  	
  1.45:1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1st
  Fiscal Quarter, Fiscal Year 2006

  	
   

  	
  1.55:1.00

  	
   

  
	
  2nd
  Fiscal Quarter, Fiscal Year 2006

  	
   

  	
  1.55:1.00

  	
   

  
	
  3rd
  Fiscal Quarter, Fiscal Year 2006

  	
   

  	
  1.55:1.00

  	
   

  
	
  4th
  Fiscal Quarter, Fiscal Year 2006

  	
   

  	
  1.55:1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1st
  Fiscal Quarter, Fiscal Year 2007

  	
   

  	
  1.55:1.00

  	
   

  

 

91

 

D.            Minimum
Consolidated Tangible Net Worth.  Borrower and Holdings shall not permit Consolidated Tangible Net
Worth as of the last day of any given Fiscal Quarter in any given Fiscal Year
to be less than $700,000,000.

 

7.7                               Restriction on Fundamental Changes;
Asset Sales and Acquisitions.

 

Borrower and
Holdings shall not, and shall not permit any of their Subsidiaries to, alter
the corporate, capital or legal structure of Borrower and Holdings or any of
their Subsidiaries (including issuing any preferred stock unless permitted
hereunder), or enter into any transaction of merger or consolidation, or
liquidate, wind-up or dissolve itself (or suffer any liquidation or
dissolution), or convey, sell, lease or sub-lease (as lessor or sublessor),
transfer or otherwise dispose of, in one transaction or a series of
transactions, all or any part of its business, property or assets, whether now
owned or hereafter acquired, or acquire by purchase or otherwise all or
substantially all the business, property or fixed assets of, or stock or other
evidence of beneficial ownership of, any Person or any division or line of
business of any Person (other than purchases or other acquisitions of
inventory, materials and equipment in the ordinary course of Holdings’,
Borrower’s, or any of their Subsidiaries’, business), except:

 

(i)            any
Subsidiary of Borrower or Holdings may be merged with or into Holdings,
Borrower or any Subsidiary Guarantor, or be liquidated, wound up or dissolved,
or all or any part of any Subsidiary’s business, property or assets may be
conveyed, sold, leased, transferred or otherwise disposed of, in one
transaction or a series of transactions, to Holdings, Borrower or any
Subsidiary Guarantor; provided that, in the case of any merger,
Holdings, Borrower or such Subsidiary Guarantor shall be the continuing or
surviving corporation;

 

(ii)           Holdings
and its Subsidiaries may make Capital Expenditures permitted (including
Permitted Acquisitions) under subsection 7.8 and Investments permitted under
subsection 7.3;

 

(iii)          Holdings and its Subsidiaries may sell or otherwise
dispose of assets in transactions that do not constitute Asset Sales; provided
that the consideration received for such assets shall be in an amount at least
equal to the fair market value thereof;

 

(iv)          Holdings
and its Subsidiaries may make (a) Asset Sales and (b) sales in any calendar
year of Lodging Assets which sales under this clause (b) do not, individually
or in the aggregate generate more than 15% of Consolidated EBITDA for the most
recently ended four consecutive Fiscal Quarter period;

 

(v)           Holdings
and its Subsidiaries may grant leases and subleases to other Persons in the
ordinary course of business not materially interfering with the conduct of the
business of Holdings or any of its Subsidiaries; and

 

(vi)          Holdings
and its Subsidiaries may enter into and consummate the sale of Telematrix
Equipment, Inc. and Telematrix Equipment, LLC, which companies provide
telecommunications products and services.

 

92

 

7.8                               Capital Expenditures.

 

A.            Borrower
and Holdings shall not, and shall not permit their Subsidiaries to, make or
incur Capital Expenditures in excess of $80,000,000 from January 1, 2003
to December 31, 2003, and in excess of $95,000,000 per Fiscal Year for
each Fiscal Year thereafter (the “Annual CapEx Amount”); provided that
(i) the Annual CapEx Amount for any Fiscal Year shall be increased by an amount
equal to the excess, if any, but in no event more than $30,000,000, of the
Annual CapEx Amount for the previous Fiscal Year (without giving effect to any
adjustment in accordance with this proviso) over the actual amount of such
Capital Expenditures for such previous Fiscal Year, (ii) Permitted Reinvestment
Capital Expenditures and Investments shall not be included in Capital
Expenditures for purposes of determining the Annual CapEx Amount, and (iii)
Holdings and its Subsidiaries may make up to an additional $300,000,000 in the
aggregate of Capital Expenditures (which shall not be included for purposes of
determining the Annual CapEx Amount) after the Effective Date in connection
with one or more Permitted Acquisitions and related Conversion Costs if, in the
case of this clause (iii), both at the time of and immediately after giving
effect to any such Capital Expenditures and any related Revolving Loans made in
connection therewith, the Total Leverage Ratio is less than or equal to the
lower of (x) the then-required Total Leverage Ratio under subsection 7.6A
less 0.25 or (y) 5.00:1.00, and the Revolving Loan Commitments exceed the
Total Utilization of Revolving Loan Commitments by not less than $50,000,000.

 

B.            In
addition to Capital Expenditures permitted to be made pursuant to subsection
7.8A, Holdings and its Subsidiaries may make Permitted Reinvestment Capital
Expenditures.

 

7.9                               Disposal of Subsidiary Stock.

 

Except for any
sale of 100% of the capital stock or other equity Securities of any of their
Subsidiaries in compliance with the provisions of subsection 7.7 and any pledge
permitted under subsection 7.2, Borrower and Holdings shall not:

 

(i)            directly
or indirectly sell, assign, pledge or otherwise encumber or dispose of any
shares of capital stock or other equity Securities of any of their
Subsidiaries, except to qualify directors if required by applicable law; or

 

(ii)           permit
any of their Subsidiaries directly or indirectly to sell, assign, pledge or
otherwise encumber or dispose of any shares of capital stock or other equity
Securities of any of their Subsidiaries (including such Subsidiary), except to
Holdings or Borrower, another Subsidiary of Holdings or Borrower, or to qualify
directors if required by applicable law.

 

7.10                        Conduct of Business.

 

Borrower and
Holdings shall not, and shall not permit any of their Subsidiaries to, engage
in any business other than (i) the businesses engaged in by Holdings,
Borrower and their Subsidiaries on the Closing Date and similar or related
businesses and any business related to the lodging industry, and (ii) such
other lines of business as may be consented to by Requisite Lenders.

 

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7.11                        Amendments or Waivers of Related Agreements.

 

Unless the prior written
consent of Requisite Lenders is obtained, neither Borrower nor Holdings nor any
of their Subsidiaries will agree to any amendment to any Senior Note Documents,
Subordinated Indebtedness or Refinancing Indebtedness if the effect of such
amendment, together with all other amendments made, is to increase the
obligations of the obligor thereunder in a manner which is materially adverse
to Lenders or to confer any material additional rights on the holders of such
Indebtedness (or a trustee or other representative on their behalf) in a manner
which is materially adverse to Lenders or which would otherwise be adverse in
any material respect to the obligor thereunder or Lenders.

 

7.12                        Fiscal Year.

 

Borrower and
Holdings shall not change their Fiscal Year-end from December 31, provided
that Borrower and Holdings may change their Fiscal Year-end date to a date
which is the last Saturday prior to or after December 31.

 

7.13                        Public Company.

 

Borrower or
Holdings shall not cease to have its Common Stock listed on the NYSE, the
American Stock Exchange, or the Nasdaq Stock Exchange.

 

7.14                        Transactions with Affiliates.

 

Borrowing and
Holdings shall not enter into any transaction with any Affiliate of Holdings or
Borrower (other than a Subsidiary), except (a) as permitted by this Agreement,
(b) in the ordinary course of business and pursuant to the reasonable
requirements of the business of Holdings or Borrower, and in each case of (a)
and (b), upon fair and reasonable terms no less favorable to such Person than
would be obtainable in a comparable arm’s length transaction with a Person not
such an Affiliate, (c) transactions between or among Holdings or Borrower and
any of their Subsidiaries, (d) employment, compensation and indemnification arrangements
with officers and directors of Holdings, Borrower and their Subsidiaries,
(e) fees payable in connection with directors’ fees and services rendered
to the Board of Directors of Holdings, Borrower and their Subsidiaries, or (f)
loans and advances to officers and directors of Holdings, Borrower and their
Subsidiaries.

 

Section 8.              EVENTS OF DEFAULT

 

If any of the
following conditions or events (“Events of
Default”) shall occur:

 

8.1                               Failure to Make Payments When Due.

 

Failure by
Borrower to pay any installment of principal of any Loan when due, whether at
stated maturity, by acceleration, by notice of voluntary prepayment, by
mandatory prepayment or otherwise; failure by Borrower to pay when due any
amount payable to an Issuing Lender in reimbursement of any drawing under a
Letter of Credit; failure by Borrower to pay any interest on any Loan within
five days of the due date; or failure by Borrower to pay

 

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any fee
or any other amount due under this Agreement or the other Loan Documents within
ten days after the date due; or

 

8.2                               Default in Other Agreements.

 

(i)            Failure of Holdings or any of its
Subsidiaries to pay when due or purchase, redeem or otherwise acquire or offer
to purchase, redeem or otherwise acquire any principal of or interest on or any
other amount payable in respect of one or more items of Indebtedness (other
than Indebtedness referred to in subsection 8.1) or Contingent Obligations
having an aggregate principal amount (including undrawn committed or available
amounts and including amounts owing to all creditors under any combined or
syndicated credit agreement) of more than $15,000,000 in the aggregate, in each
case beyond the end of any grace period provided therefor; or (ii) breach or
default by Holdings or any of its Subsidiaries with respect to any other
material term of (a) one or more items of Indebtedness or Contingent
Obligations in the aggregate principal amounts referred to in clause (i) above
or (b) any loan agreement, mortgage, indenture or other agreement relating
to such item(s) of Indebtedness or Contingent Obligation(s) in such amounts, if
the effect of such breach or default is to cause, or to permit the holder or
holders of that Indebtedness or Contingent Obligation(s) (or a trustee on
behalf of such holder or holders) to cause, that Indebtedness or Contingent
Obligation(s) to become or be declared due and payable prior to its stated
maturity or the stated maturity of any underlying obligation (upon the giving
or receiving of notice, lapse of time, both, or otherwise) or (iii) any event
shall occur under the terms of any Senior Note Documents, any Subordinated
Indebtedness or any Refinancing Indebtedness, the aggregate principal amount of
which Senior Notes, Subordinated Indebtedness or Refinancing Indebtedness
exceeds $15,000,000, which shall require Holdings or Borrower or any of their
Subsidiaries to purchase, redeem or otherwise acquire or offer to purchase,
redeem or otherwise acquire all or any portion of such Indebtedness of Holdings
or Borrower except to the extent permitted by subsection 7.5; or

 

8.3                               Breach of Certain Covenants.

 

Failure of
Holdings or Borrower to perform or comply with any term or condition contained
in subsection 2.5 or 6.2 or Section 7 of this Agreement; or

 

8.4                               Breach of Warranty.

 

Any
representation, warranty, certification or other statement made by Holdings or
any of its Subsidiaries in any Loan Document or in any statement or certificate
at any time given by Holdings or any of its Subsidiaries in writing pursuant
hereto or thereto or in connection herewith or therewith shall be false in any
material respect on the date as of which made; or

 

8.5                               Other Defaults Under Loan Documents.

 

Any Loan Party
shall default in the performance of or compliance with any material term
contained in this Agreement or any of the other Loan Documents, other than any
such term referred to in any other subsection of this Section 8, and such
default shall not have been remedied or waived within 30 days after the earlier
of (i) an Executive Officer of Borrower or

 

95

 

such
Loan Party becoming aware of such default or (ii) receipt by Borrower and such
Loan Party of notice from Administrative Agent or any Lender of such default;
or

 

8.6                               Involuntary Bankruptcy; Appointment
of Receiver, etc.

 

(i)            A court having jurisdiction in the
premises shall enter a decree or order for relief in respect of Holdings or any
of its Subsidiaries (other than Immaterial Subsidiaries) in an involuntary case
under the Bankruptcy Code or under any other applicable bankruptcy, insolvency
or similar law now or hereafter in effect, which decree or order is not stayed;
or any other similar relief shall be granted under any applicable federal or
state law; or (ii) an involuntary case shall be commenced against Holdings
or any of its Subsidiaries (other than Immaterial Subsidiaries) under the
Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar
law now or hereafter in effect; or a decree or order of a court having
jurisdiction in the premises for the appointment of a receiver, liquidator,
sequestrator, trustee, custodian or other officer having similar powers over
Holdings or any of its Subsidiaries (other than Immaterial Subsidiaries), or
over all or a substantial part of its property, shall have been entered; or
there shall have occurred the involuntary appointment of an interim receiver,
trustee or other custodian of Holdings or any of its Subsidiaries (other than
Immaterial Subsidiaries) for all or a substantial part of its property; or a
warrant of attachment, execution or similar process shall have been issued
against any substantial part of the property of Holdings or any of its
Subsidiaries (other than Immaterial Subsidiaries), and any such event described
in this clause (ii) shall continue for 60 days unless dismissed, bonded or
discharged; or

 

8.7                               Voluntary Bankruptcy; Appointment
of Receiver, etc.

 

(i)            Holdings or any of its Subsidiaries
(other than Immaterial Subsidiaries) shall have an order for relief entered
with respect to it or commence a voluntary case under the Bankruptcy Code or
under any other applicable bankruptcy, insolvency or similar law now or
hereafter in effect, or shall consent to the entry of an order for relief in an
involuntary case, or to the conversion of an involuntary case to a voluntary
case, under any such law, or shall consent to the appointment of or taking
possession by a receiver, trustee or other custodian for all or a substantial
part of its property; or Holdings or any of its Subsidiaries (other than
Immaterial Subsidiaries) shall make any assignment for the benefit of
creditors; or (ii) Holdings or any of its Subsidiaries (other than
Immaterial Subsidiaries) shall be unable, or shall fail generally, or shall
admit in writing its inability, to pay its debts as such debts become due; or
the Board of Directors of Holdings or any of its Subsidiaries (other than
Immaterial Subsidiaries) (or any committee thereof) shall adopt any resolution
or otherwise authorize any action to approve any of the actions referred to in
clause (i) above or this clause (ii); or

 

8.8                               Judgments and Attachments.

 

Any money
judgment, writ or warrant of attachment or similar process involving in the
aggregate at any time an amount in excess of $15,000,000 (in either case not
adequately covered by insurance as to which a Solvent and unaffiliated
insurance company has acknowledged coverage) shall be entered or filed against
Holdings or any of its Subsidiaries or any of their respective assets and shall
remain undischarged, unvacated, unbonded or unstayed

 

96

 

for a
period of 30 days (or in any event later than five days prior to the date of
any proposed sale thereunder); or

 

8.9                               Dissolution.

 

Any order,
judgment or decree shall be entered against Holdings or any of its Subsidiaries
(other than Immaterial Subsidiaries) decreeing the dissolution or split up of
Holdings or that Subsidiary and such order shall remain undischarged or
unstayed for a period in excess of 60 days; or

 

8.10                        Employee Benefit Plans.

 

There shall occur
one or more ERISA Events which individually or in the aggregate results in or
would reasonably be expected to result in liability of Holdings or any of its
Subsidiaries or any of their respective ERISA Affiliates in excess of
$10,000,000 during the term of this Agreement; or there shall exist an amount
of unfunded benefit liabilities (as defined in Section 4001(a)(18) of ERISA),
individually or in the aggregate for all Pension Plans (if any) (excluding for
purposes of such computation any Pension Plans (if any) with respect to which
assets exceed benefit liabilities), which exceeds $10,000,000; or.

 

8.11                        Change in Control.

 

A Change in
Control shall occur; or

 

8.12                        Invalidity of Subsidiary Guaranty;
Failure of Security; Repudiation of Obligations.

 

At any time after
the execution and delivery thereof, (i) any Guaranty for any reason other than
the satisfaction in full of all Obligations, shall cease to be in full force
and effect (other than in accordance with their terms) or shall be declared to
be null and void, (ii) any Collateral Document shall cease to be in full force
and effect (other than by reason of a release of Collateral thereunder in
accordance with the terms hereof or thereof, the satisfaction in full of the
Obligations or any other termination of such Collateral Document in accordance
with the terms hereof or thereof) or shall be declared null and void, or
Administrative Agent shall not have or shall cease to have a valid and First
Priority Lien in any Collateral with a value in excess of $5,000,000 purported
to be covered thereby, in each case for any reason other than the failure of
Administrative Agent or any Lender to take any action within its control, or
(iii) any Loan Party shall contest the validity or enforceability of any Loan
Document in writing or deny in writing that it has any further liability,
including with respect to future advances by Lenders, under any Loan Document
to which it is a party; or

 

8.13                        Material Adverse Effect.

 

Any event or change shall
occur that has caused or evidences, either in any case or in the aggregate, a
Material Adverse Effect;

 

THEN (i) upon the occurrence of any Event
of Default described in subsection 8.6 or 8.7, each of (a) the unpaid principal
amount of and accrued interest on the Loans, (b) an amount

 

97

 

equal
to the maximum amount that may at any time be drawn under all Letters of Credit
then outstanding (whether or not any beneficiary under any such Letter of
Credit shall have presented, or shall be entitled at such time to present, the
drafts or other documents or certificates required to draw under such Letter of
Credit), and (c) all other Obligations shall automatically become immediately
due and payable, without presentment, demand, protest, notice of acceleration,
notice of intent to accelerate or other requirements of any kind, all of which
are hereby expressly waived by Borrower, and the obligation of each Lender to
make any Loan, the obligation of any Issuing Lender to issue any Letter of
Credit and the right of any Issuing Lender to issue any Letter of Credit
hereunder shall thereupon terminate, and (ii) upon the occurrence and during
the continuation of any other Event of Default, Administrative Agent shall,
upon the written request or with the written consent of Requisite Lenders, by
written notice to Borrower, declare all or any portion of the amounts described
in clauses (a) through (c) above to be, and the same shall forthwith become,
immediately due and payable, and the obligation of each Lender to make any
Loan, the obligation of any Issuing Lender to issue any Letter of Credit and
the right of any Issuing Lender to issue any Letter of Credit hereunder shall
thereupon terminate; provided that the foregoing shall not affect in any
way the obligations of Revolving Lenders under subsection 3.3C(i).

 

Section 9.              HOLDINGS GUARANTY

 

9.1                               Guaranty.

 

A.            In
order to induce Lenders to extend credit to Borrower pursuant to this
Agreement, Holdings irrevocably and unconditionally guaranties, as primary
obligor and not merely as surety, the due and punctual payment in full of all
Guarantied Obligations (as hereinafter defined) when the same shall become due,
whether at stated maturity, by acceleration, demand or otherwise (including
amounts that would become due but for the operation of the automatic stay under
Section 362(a) of the Bankruptcy Code, 11 U.S.C. § 362(a)).  The term “Guarantied
Obligations” is used herein in its most comprehensive sense and
includes any and all Obligations of Borrower and all obligations of Borrower
under Lender Hedge Agreements, now or hereafter made, incurred or created,
whether absolute or contingent, liquidated or unliquidated, whether due or not
due, and however arising under or in connection with this Agreement, the Lender
Hedge Agreements, and the other Loan Documents, including those arising under
successive borrowing transactions under this Agreement which shall either continue
such obligations of Borrower or from time to time renew them after they have
been satisfied.

 

Any interest on
any portion of the Guarantied Obligations that accrues after the commencement
of any proceeding, voluntary or involuntary, involving the bankruptcy,
insolvency, receivership, reorganization, liquidation or arrangement of
Borrower (or, if interest on any portion of the Guarantied Obligations ceases
to accrue by operation of law by reason of the commencement of said proceeding,
such interest as would have accrued on such portion of the Guarantied
Obligations if said proceeding had not been commenced) shall be included in the
Guarantied Obligations because it is the intention of Holdings and
Administrative Agent, as agent for and representative of Lenders (in such
capacity, “Guarantied Party”) that
the Guarantied Obligations should be determined without regard to

 

98

 

any
rule of law or order that may relieve Borrower of any portion of such
Guarantied Obligations.

 

In the event that
all or any portion of the Guarantied Obligations is paid by Borrower, the
obligations of Holdings hereunder shall continue and remain in full force and
effect or be reinstated, as the case may be, in the event that all or any part
of such payment(s) is rescinded or recovered directly or indirectly from
Guarantied Party or Lenders (Guarantied Party and Lenders each being a “Beneficiary” and collectively referred to
herein as “Beneficiaries”) as a
preference, fraudulent transfer or otherwise, and any such payments that are so
rescinded or recovered shall constitute Guarantied Obligations.

 

Subject to the
other provisions of this subsection 9.1, upon the failure of Borrower to pay
any of the Guarantied Obligations when and as the same shall become due,
Holdings will upon demand pay, or cause to be paid, in cash, to Guarantied
Party for the ratable benefit of Beneficiaries, an amount equal to the
aggregate of the unpaid Guarantied Obligations.

 

B.            Holdings,
and each guarantor under other guaranties, if any, relating to this Agreement
(the “Related Guaranties”) that
contain a contribution provision similar to that set forth in this subsection
9.1B, together desire to allocate among themselves (collectively, the “Contributing Guarantors”), in a fair and
equitable manner, their obligations arising under this Section 9 and the
Related Guaranties.  Accordingly, in the
event any payment or distribution is made on any date by Holdings under this
Section 9 or a guarantor under a Related Guaranty, Holdings or such other
guarantor shall be entitled to a contribution from each of the other
Contributing Guarantors in the maximum amount permitted by law so as to
maximize the aggregate amount of the Guarantied Obligations paid to
Beneficiaries.

 

9.2                               Guaranty Absolute; Continuing Guaranty.

 

The obligations of
Holdings hereunder are irrevocable, absolute, independent and unconditional and
shall not be affected by any circumstance which constitutes a legal or
equitable discharge of a guarantor or surety other than payment in full of the
Guarantied Obligations.  In furtherance
of the foregoing and without limiting the generality thereof, Holdings agrees
that:  (a) this is a guaranty of payment
when due and not of collectibility; (b) Guarantied Party may enforce this
Section 9 upon the occurrence and during the continuance of an Event of Default
under this Agreement or the occurrence of an early termination date or similar
event under any Lender Hedge Agreements notwithstanding the existence of any
dispute between Borrower and any Beneficiary with respect to the existence of
such event; (c) the obligations of Holdings hereunder are independent of the
obligations of Borrower under the Loan Documents and the obligations of any
other guarantor of the obligations of Borrower and a separate action or actions
may be brought and prosecuted against Holdings whether or not any action is
brought against Borrower or any of such other guarantors and whether or not
Borrower is joined in any such action or actions; and (d) Holdings’
payment of a portion, but not all, of the Guarantied Obligations shall in no
way limit, affect, modify or abridge Holdings’ liability for any portion of the
Guarantied Obligations that has not been paid. 
This is a continuing guaranty and shall be binding upon Holdings and its
successors and assigns, and Holdings irrevocably waives any right (including
without limitation any such right arising

 

99

 

under California Civil Code Section 2815) to revoke this Section 9 as
to future transactions giving rise to any Guarantied Obligations.

 

9.3                               Actions
by Beneficiaries.

 

Any Beneficiary
may from time to time, without notice or demand and without affecting the
validity or enforceability of this Section 9 or giving rise to any limitation,
impairment or discharge of Holdings’ liability hereunder, (a) renew, extend,
accelerate or otherwise change the time, place, manner or terms of payment of
the Guarantied Obligations, (b) settle, compromise, release or discharge, or
accept or refuse any offer of performance with respect to, or substitutions
for, the Guarantied Obligations or any agreement relating thereto and/or
subordinate the payment of the same to the payment of any other obligations,
(c) request and accept other guaranties of the Guarantied Obligations and take
and hold security for the payment of this Guaranty or the Guarantied
Obligations, (d) release, exchange, compromise, subordinate or modify,
with or without consideration, any security for payment of the Guarantied
Obligations, any other guaranties of the Guarantied Obligations, or any other
obligation of any Person with respect to the Guarantied Obligations, (e)
enforce and apply any security now or hereafter held by or for the benefit of
any Beneficiary in respect of this Section 9 or the Guarantied Obligations and
direct the order or manner of sale thereof, or exercise any other right or
remedy that Guarantied Party or the other Beneficiaries, or any of them, may
have against any such security, as Guarantied Party in its discretion may
determine consistent with this Agreement, the Lender Hedge Agreements and any
applicable security agreement, including foreclosure on any such security
pursuant to one or more judicial or nonjudicial sales, whether or not every
aspect of any such sale is commercially reasonable, and (f) exercise any other
rights available to Guarantied Party or the other Beneficiaries, or any of
them, under the Loan Documents or the Lender Hedge Agreements.

 

9.4                               No Discharge.

 

This Section 9 and
the obligations of Holdings hereunder shall be valid and enforceable and shall
not be subject to any limitation, impairment or discharge for any reason (other
than payment in full of the Guarantied Obligations), including without
limitation the occurrence of any of the following, whether or not Holdings
shall have had notice or knowledge of any of them:  (a) any failure to assert or enforce or agreement not to assert
or enforce, or the stay or enjoining, by order of court, by operation of law or
otherwise, of the exercise or enforcement of, any claim or demand or any right,
power or remedy with respect to the Guarantied Obligations or any agreement
relating thereto, or with respect to any other guaranty of or security for the
payment of the Guarantied Obligations, (b) any waiver or modification of,
or any consent to departure from, any of the terms or provisions of this
Agreement, any of the other Loan Documents, the Lender Hedge Agreements or any
agreement or instrument executed pursuant thereto, or of any other guaranty or
security for the Guarantied Obligations, (c) the Guarantied Obligations, or any
agreement relating thereto, at any time being found to be illegal, invalid or
unenforceable in any respect, (d) the application of payments received from any
source to the payment of indebtedness other than the Guarantied Obligations,
even though Guarantied Party or the other Beneficiaries, or any of them, might
have elected to apply such payment to any part or all of the Guarantied
Obligations, (e) any failure to perfect or continue perfection of a security
interest in any

 

100

 

collateral which any of the Guarantied Obligations, (f) any defenses,
set-offs or counterclaims which Borrower may assert against Guarantied Party or
any Beneficiary in respect of the Guarantied Obligations, including but not
limited to failure of consideration, breach of warranty, payment, statute of
frauds, statute of limitations, accord and satisfaction and usury, and (g) any
other act or thing or omission, or delay to do any other act or thing, which
may or might in any manner or to any extent vary the risk of Holdings as an
obligor in respect of the Guarantied Obligations.

 

9.5                               Waivers.

 

Holdings waives,
for the benefit of Beneficiaries:  (a)
any right to require Guarantied Party or the other Beneficiaries, as a
condition of payment or performance by Holdings, to (i) proceed against
Borrower, any other guarantor of the Guarantied Obligations or any other
Person, (ii) proceed against or exhaust any security held from Borrower, any
other guarantor of the Guarantied Obligations or any other Person,
(iii) proceed against or have resort to any balance of any deposit account
or credit on the books of any Beneficiary in favor of Borrower or any other
Person, or (iv) pursue any other remedy in the power of any Beneficiary; (b)
any defense arising by reason of the incapacity, lack of authority or any
disability or other defense of Borrower including, without limitation, any
defense based on or arising out of the lack of validity or the unenforceability
of the Guarantied Obligations or any agreement or instrument relating thereto
or by reason of the cessation of the liability of Borrower from any cause other
than payment in full of the Guarantied Obligations; (c) any defense based upon
any statute or rule of law which provides that the obligation of a surety must
be neither larger in amount nor in other respects more burdensome than that of
the principal; (d) any defense based upon Guarantied Party’s or any other
Beneficiary’s errors or omissions in the administration of the Guarantied
Obligations, except behavior that amounts to bad faith; (e) (i) any principles
or provisions of law, statutory or otherwise, that are or might be in conflict
with the terms of this Guaranty and any legal or equitable discharge of
Holdings’ obligations hereunder, (ii) the benefit of any statute of limitations
affecting Holdings’ liability hereunder or the enforcement hereof, (iii) any
rights to set-offs, recoupments and counterclaims, and (iv) promptness,
diligence and any requirement that any Beneficiary protect, secure, perfect or
insure any Lien or any property subject thereto; (f) notices, demands,
presentments, protests, notices of protest, notices of dishonor and notices of
any action or inaction, including acceptance of this Agreement, notices of
default under this Agreement, notices of default or early termination under any
Lender Hedge Agreement or any agreement or instrument related thereto, notices
of acceleration and intent to accelerate, notices of any renewal, extension or
modification of the Guarantied Obligations or any agreement related thereto,
notices of any extension of credit to Borrower and notices of any of the
matters referred to in subsections 9.3 and 9.4 hereof and any right to consent
to any thereof; and (g) to the fullest extent permitted by law, any defenses or
benefits that may be derived from or afforded by law which limit the liability
of or exonerate guarantors or sureties, or which may conflict with the terms of
this Agreement.

 

101

 

9.6                               Holdings’
Rights of Subrogation,
Contribution, Etc.; Subordination of Other Obligations.

 

Until payment in
full of the Guarantied Obligations, Holdings waives (a) any claim, right or
remedy, direct or indirect, that Holdings now has or may hereafter have against
Borrower or any of its assets in connection with this Agreement or the
performance by Holdings of its obligations hereunder, in each case whether such
claim, right or remedy arises in equity, under contract, by statute, under
common law or otherwise and including without limitation (i) any right of
subrogation, reimbursement or indemnification that Holdings now has or may
hereafter have against Borrower, (ii) any right to enforce, or to participate
in, any claim, right or remedy that any Beneficiary now has or may hereafter
have against Borrower, and (iii) any benefit of, and any right to participate
in, any collateral or security now or hereafter held by any Beneficiary and (b)
any right of contribution Holdings may have against any other guarantor of any
of the Guarantied Obligations.  Holdings
further agrees that, to the extent the waiver of its rights of subrogation,
reimbursement, indemnification and contribution as set forth herein is found by
a court of competent jurisdiction to be void or voidable for any reason, any
rights of subrogation, reimbursement or indemnification Holdings may have
against Borrower or against any collateral or security, and any rights of
contribution Holdings may have against any such other guarantor, shall be
junior and subordinate to any rights Guarantied Party or the other
Beneficiaries may have against Borrower, to all right, title and interest
Guarantied Party or the other Beneficiaries may have in any such collateral or
security, and to any right Guarantied Party or the other Beneficiaries may have
against such other guarantor.

 

Any indebtedness
of Borrower now or hereafter held by Holdings is subordinated in right of
payment to the Guarantied Obligations, and any such indebtedness of Borrower to
Holdings collected or received by Holdings after an Event of Default has
occurred and is continuing, and any amount paid to Holdings on account of any
subrogation, reimbursement, indemnification or contribution rights referred to
in the preceding paragraph when all Guarantied Obligations have not been paid
in full, shall be held in trust for Guarantied Party on behalf of Beneficiaries
and shall forthwith be paid over to Guarantied Party for the benefit of
Beneficiaries to be credited and applied against the Guarantied Obligations.

 

9.7                               Financial
Condition of Borrower.

 

No Beneficiary
shall have any obligation, and Holdings waives any duty on the part of any
Beneficiary, to disclose or discuss with Holdings its assessment, or Holdings’
assessment, of the financial condition of Borrower or any matter or fact
relating to the business, operations or condition of Borrower.  Holdings has adequate means to obtain
information from Borrower on a continuing basis concerning the financial
condition of Borrower and its ability to perform its obligations under the Loan
Documents and the Lender Hedge Agreements, and Holdings assumes the
responsibility for being and keeping informed of the financial condition of
Borrower and of all circumstances bearing upon the risk of nonpayment of the
Guarantied Obligations.

 

102

 

9.8                               Set Off.

 

In addition to any
rights now or hereafter granted under applicable law and not by way of
limitation of any such rights, upon the occurrence of any Event of Default each
Beneficiary is hereby authorized by Holdings at any time or from time to time,
without notice to Holdings or to any other Person, any such notice being hereby
expressly waived, to set off and to appropriate and to apply any and all
deposits or other amounts held by any Beneficiary for the credit or account of
Holdings (general or special, including indebtedness evidenced by certificates
of deposit, whether matured or unmatured, but not including trust accounts) and
any other indebtedness at any time held or owing by that Beneficiary to or for
the credit or the account of Holdings against and on account of the Guarantied
Obligations and liabilities of Holdings to any Beneficiary under this
Agreement, including all claims of any nature or description arising out of or
connected with this Agreement, irrespective of whether or not (i) that
Beneficiary shall have made any demand hereunder or (ii) the principal of or
the interest on the Loans or any amounts in respect of the Letters of Credit or
any other amounts due hereunder or under any of the other Loan Documents shall
have become due and payable pursuant to Section 8 and although said
Guarantied Obligations and liabilities, or any of them, may be contingent or
unmatured.  Holdings hereby further
grants to each Beneficiary a security interest in all deposits and accounts
maintained with such Beneficiary as security for the Guarantied Obligations.

 

9.9                               Notice
of Lender Hedge Agreements.

 

Guarantied Party shall
not be deemed to have any duty whatsoever with respect to any Person who is a
counterparty to a Lender Hedge Agreement until it shall have received written
notice in form and substance satisfactory to Guarantied Party from Borrower,
Holdings or such counterparty as to the existence and terms of the applicable
Lender Hedge Agreement.

 

Section 10.            ADMINISTRATIVE AGENT

 

10.1                        Appointment.

 

A.            Appointment
of Administrative Agent. 
CIBC is hereby appointed Administrative Agent hereunder and under the
other Loan Documents and each Lender hereby authorizes Administrative Agent to
act as its Administrative Agent in accordance with the terms of this Agreement
and the other Loan Documents. 
Administrative Agent agrees to act upon the express conditions contained
in this Agreement and the other Loan Documents, as applicable.  The provisions of this Section 10 are solely
for the benefit of Administrative Agent and Lenders and Borrower and Holdings
shall have no rights as third party beneficiaries of any of the provisions
thereof (other than pursuant to subsections 10.5 and 10.6).  In performing its functions and duties under
this Agreement, Administrative Agent shall act solely as an Administrative
Agent of Lenders and does not assume and shall not be deemed to have assumed
any obligation towards or relationship of agency or trust with or for Holdings
or any of its Subsidiaries.

 

B.            Appointment
of Supplemental Collateral Agents.  It is the purpose of this Agreement and the other Loan Documents
that there shall be no violation of any law of any

 

103

 

jurisdiction denying or restricting the right of
banking corporations or associations to transact business as Administrative
Agent or trustee in such jurisdiction. 
It is recognized that in case of litigation under this Agreement or any
of the other Loan Documents, and in particular in case of the enforcement of
any of the Loan Documents, or in case Administrative Agent deems that by reason
of any present or future law of any jurisdiction it may not exercise any of the
rights, powers or remedies granted herein or in any of the other Loan Documents
or take any other action which may be desirable or necessary in connection
therewith, it may be necessary that Administrative Agent appoint an additional
individual or institution as a separate trustee, co-trustee, Collateral Agent
or collateral co-Administrative Agent (any such additional individual or
institution being referred to herein individually as a “Supplemental Collateral Agent”
and collectively as “Supplemental Collateral Agents”).

 

In the event that
Administrative Agent appoints a Supplemental Collateral Agent with respect to
any Collateral, (i) each and every right, power, privilege or duty expressed or
intended by this Agreement or any of the other Loan Documents to be exercised
by or vested in or conveyed to Administrative Agent with respect to such
Collateral shall be exercisable by and vest in such Supplemental Collateral Agent
to the extent, and only to the extent, necessary to enable such Supplemental
Collateral Agent to exercise such rights, powers and privileges with respect to
such Collateral and to perform such duties with respect to such Collateral, and
every covenant and obligation contained in the Loan Documents and necessary to
the exercise or performance thereof by such Supplemental Collateral Agent shall
run to and be enforceable by either Administrative Agent or such Supplemental
Collateral Agent, and (ii) the provisions of this Section 10 and of subsections
11.2 and 11.3 that refer to Administrative Agent shall inure to the benefit of
such Supplemental Collateral Agent and all references therein to Administrative
Agent shall be deemed to be references to Administrative Agent and/or such
Supplemental Collateral Agent, as the context may require.

 

Should any
instrument in writing from Borrower or any other Loan Party be required by any
Supplemental Collateral Agent so appointed by Administrative Agent for more
fully and certainly vesting in and confirming to him or it such rights, powers,
privileges and duties, Borrower shall, or shall cause such Loan Party to,
execute, acknowledge and deliver any and all such instruments promptly upon
request by Administrative Agent.  In
case any Supplemental Collateral Agent, or a successor thereto, shall die,
become incapable of acting, resign or be removed, all the rights, powers,
privileges and duties of such Supplemental Collateral Agent, to the extent
permitted by law, shall vest in and be exercised by Administrative Agent until
the appointment of a new Supplemental Collateral Agent.

 

10.2                        Powers and Duties; General Immunity.

 

A.            Powers;
Duties Specified. 
Each Lender irrevocably authorizes Administrative Agent to take such
action on such Lender’s behalf and to exercise such powers, rights and remedies
hereunder and under the other Loan Documents as are specifically delegated or
granted to Administrative Agent by the terms hereof and thereof, together with
such powers, rights and remedies as are reasonably incidental thereto.  Administrative Agent shall have only those
duties and responsibilities that are expressly specified in this Agreement and
the other Loan Documents. 
Administrative Agent may exercise such powers, rights and remedies and
perform such duties by or through its Administrative Agents or employees.  Administrative

 

104

 

Agent shall not have, by reason of this Agreement or
any of the other Loan Documents, a fiduciary relationship in respect of any
Lender; and nothing in this Agreement or any of the other Loan Documents,
expressed or implied, is intended to or shall be so construed as to impose upon
Administrative Agent any obligations in respect of this Agreement or any of the
other Loan Documents except as expressly set forth herein or therein.

 

B.            No
Responsibility for Certain Matters.  Administrative Agent shall not be responsible to any Lender for
the execution, effectiveness, genuineness, validity, enforceability, collectibility
or sufficiency of this Agreement or any other Loan Document or for any
representations, warranties, recitals or statements made herein or therein or
made in any written or oral statements or in any financial or other statements,
instruments, reports or certificates or any other documents furnished or made
by Administrative Agent to Lenders or by or on behalf of Holdings or Borrower
to Administrative Agent or any Lender in connection with the Loan Documents and
the transactions contemplated thereby or for the financial condition or
business affairs of Holdings or Borrower or any other Person liable for the
payment of any Obligations, nor shall Administrative Agent be required to
ascertain or inquire as to the performance or observance of any of the terms,
conditions, provisions, covenants or agreements contained in any of the Loan
Documents or as to the use of the proceeds of the Loans the use of the Letters
of Credit or as to the existence or possible existence of any Event of Default
or Potential Event of Default.  Anything
contained in this Agreement to the contrary notwithstanding, Administrative
Agent shall not have any liability arising from confirmations of the amount of
outstanding Loans or the Letter of Credit Usage or the component amounts thereof.

 

C.            Exculpatory
Provisions.  Neither
Administrative Agent nor any of its officers, directors, employees or
Administrative Agents shall be liable to Lenders for any action taken or
omitted by Administrative Agent under or in connection with any of the Loan
Documents except to the extent caused by Administrative Agent’s gross
negligence or willful misconduct. 
Administrative Agent shall be entitled to refrain from any act or the
taking of any action (including the failure to take an action) in connection
with this Agreement or any of the other Loan Documents or from the exercise of
any power, discretion or authority vested in it hereunder or thereunder unless
and until Administrative Agent shall have received instructions in respect
thereof from Requisite Lenders (or such other Lenders as may be required to
give such instructions under subsection 11.6) and, upon receipt of such
instructions from Requisite Lenders (or such other Lenders, as the case may
be), Administrative Agent shall be entitled to act or (where so instructed)
refrain from acting, or to exercise such power, discretion or authority, in
accordance with such instructions. 
Without prejudice to the generality of the foregoing,
(i) Administrative Agent shall be entitled to rely, and shall be fully
protected in relying, upon any communication, instrument or document believed
by it to be genuine and correct and to have been signed or sent by the proper
Person or Persons, and shall be entitled to rely and shall be protected in
relying on opinions and judgments of attorneys (who may be attorneys for the
Loan Parties), accountants, experts and other professional advisors selected by
it; and (ii) no Lender shall have any right of action whatsoever against
Administrative Agent as a result of Administrative Agent acting or (where so
instructed) refraining from acting under this Agreement or any of the other
Loan Documents in accordance with the instructions of Requisite Lenders (or
such other Lenders as may be required to give such instructions under subsection
11.6).

 

105

 

D.            Administrative
Agent Entitled to Act as Lender.  The agency hereby created shall in no way impair or affect any of
the rights and powers of, or impose any duties or obligations upon,
Administrative Agent in its individual capacity as a Lender hereunder.  With respect to its participation in the
Loans and the Letters of Credit, Administrative Agent shall have the same
rights and powers hereunder as any other Lender and may exercise the same as
though it were not performing the duties and functions delegated to it
hereunder, and the term “Lender” or “Lenders” or any similar term shall, unless
the context clearly otherwise indicates, include Administrative Agent in its
individual capacity.  Administrative
Agent and its Affiliates may accept deposits from, lend money to and generally
engage in any kind of banking, trust, financial advisory or other business with
Holdings, Borrower or any of their Affiliates as if it were not performing the
duties specified herein, and may accept fees and other consideration from
Borrower for services in connection with this Agreement and otherwise without
having to account for the same to Lenders.

 

10.3                        Representations and Warranties;
No Responsibility For Appraisal of Creditworthiness.

 

Each Lender
represents and warrants that it has made its own independent investigation of
the financial condition and affairs of Holdings, Borrower and their
Subsidiaries in connection with the making of the Loans hereunder and that it
has made and shall continue to make its own appraisal of the creditworthiness
of Holdings, Borrower and their Subsidiaries. 
Administrative Agent shall not have any duty or responsibility, either
initially or on a continuing basis, to make any such investigation or any such
appraisal on behalf of Lenders or to provide any Lender with any credit or
other information with respect thereto, whether coming into its possession
before the making of the Loans or at any time or times thereafter, and Administrative
Agent shall not have any responsibility with respect to the accuracy of or the
completeness of any information provided to Lenders.

 

10.4                        Right to Indemnity.

 

Each Lender, in
proportion to its Pro Rata Share, severally agrees to indemnify Administrative
Agent, to the extent that Administrative Agent shall not have been reimbursed
by Holdings or Borrower, for and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses
(including counsel fees and disbursements) or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by or asserted against
Administrative Agent in exercising its powers, rights and remedies or
performing its duties hereunder or under the other Loan Documents or otherwise
in its capacity as Administrative Agent in any way relating to or arising out
of this Agreement or the other Loan Documents; provided that no Lender
shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from Administrative Agent’s gross negligence or willful
misconduct.  If any indemnity furnished
to Administrative Agent for any purpose shall, in the opinion of Administrative
Agent, be insufficient or become impaired, Administrative Agent may call for
additional indemnity and cease, or not commence, to do the acts indemnified
against until such additional indemnity is furnished.

 

106

 

10.5                        Successor Administrative Agent.

 

Administrative Agent may
resign at any time by giving 30 days’ prior written notice thereof to Lenders
and Borrower, and Administrative Agent may be removed at any time with or
without cause by an instrument or concurrent instruments in writing delivered
to Borrower and Administrative Agent and signed by Requisite Lenders.  Upon any such notice of resignation or any
such removal, Requisite Lenders shall have the right, upon five Business Days’
notice to Borrower, to appoint a successor Administrative Agent with the
consent of Borrower which shall not be unreasonably withheld and shall not be
required after the occurrence of a Potential Event of Default or an Event of
Default.  Upon the acceptance of any
appointment as Administrative Agent hereunder by a successor Administrative
Agent, that successor Administrative Agent shall thereupon succeed to and
become vested with all the rights, powers, privileges and duties of the
retiring or removed Administrative Agent and the retiring or removed
Administrative Agent shall be discharged from its duties and obligations under
this Agreement.  After any retiring or
removed Administrative Agent’s resignation or removal hereunder as Administrative
Agent, the provisions of this Section 10 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Administrative Agent
under this Agreement.

 

10.6                        Collateral Documents and Guaranties.

 

Each Lender hereby
further authorizes Administrative Agent, on behalf of and for the benefit of
Lenders, to enter into each Collateral Document as secured party and to be
Administrative Agent for and representative of Lenders under the Guaranties,
and each Lender agrees to be bound by the terms of each Collateral Document and
the Guaranties; provided that Administrative Agent shall not (i) enter
into or consent to any material amendment, modification, termination or waiver
of any provision contained in any Collateral Document or the Guaranties or (ii)
release any Collateral (except as otherwise expressly permitted or required
pursuant to the terms of this Agreement or the applicable Collateral Document),
in each case without the prior consent of Requisite Lenders (or, if required
pursuant to subsection 11.6, all Lenders); provided  further, however,
that, without further written consent or authorization from Lenders,
Administrative Agent may execute any documents or instruments necessary to
(a) release any Lien encumbering any item of Collateral that is the
subject of a sale or other disposition of assets permitted by this Agreement or
to which Requisite Lenders have otherwise consented or (b) release any
Subsidiary Guarantor from the Subsidiary Guaranty if all of the capital stock
of such Subsidiary Guarantor is sold to any Person (other than an Affiliate of
Holdings or Borrower) pursuant to a sale or other disposition permitted
hereunder or to which Requisite Lenders have otherwise consented.  Anything contained in any of the Loan Documents
to the contrary notwithstanding, Holdings, Borrower, Administrative Agent and
each Lender hereby agree that (X) no Lender shall have any right individually
to realize upon any of the Collateral under any Collateral Document or to
enforce any Guaranty, it being understood and agreed that all powers, rights
and remedies under the Collateral Documents and the Guaranties may be exercised
solely by Administrative Agent for the benefit of Lenders in accordance with
the terms thereof, and (Y) in the event of a foreclosure by Administrative
Agent on any of the Collateral pursuant to a public or private sale,
Administrative Agent or any Lender may be the purchaser of any or all of such
Collateral at any such sale and Administrative Agent, as Administrative Agent
for and representative of

 

107

 

Lenders
(but not any Lender or Lenders in its or their respective individual capacities
unless Requisite Lenders shall otherwise agree in writing) shall be entitled,
for the purpose of bidding and making settlement or payment of the purchase
price for all or any portion of the Collateral sold at any such public sale, to
use and apply any of the Obligations as a credit on account of the purchase
price for any Collateral payable by Administrative Agent at such sale.

 

Section 11.            MISCELLANEOUS

 

11.1                        Assignments and Participations in
Loans.

 

A.            General.  Subject to subsections 11.1B and 11.1C, each
Lender shall have the right at any time to (i) sell, assign or transfer to
any Eligible Assignee, or (ii) sell participations to any Person in, all
or any part of its Commitments or any Loan or Loans made by it or its Letters
of Credit or participations therein or any other interest herein or in any
other Obligations owed to it; provided that no such sale, assignment,
transfer or participation shall, without the consent of Borrower, require
Borrower to file a registration statement with the Securities and Exchange
Commission or apply to qualify such sale, assignment, transfer or participation
under the securities laws of any state; provided, further, that
no such sale, assignment or transfer described in clause (i) above shall be
effective unless and until an Assignment Agreement effecting such sale,
assignment or transfer shall have been accepted by Administrative Agent and recorded
in the Register as provided in subsection 11.1B(ii); provided, further,
that no such sale, assignment, transfer or participation of any Letter of
Credit or any participation therein may be made separately from a sale,
assignment, transfer or participation of a corresponding interest in the
Revolving Loan Commitment and the Revolving Loans of the Lender effecting such
sale, assignment, transfer or participation. 
Except as otherwise provided in this subsection 11.1, no Lender shall,
as between Borrower and such Lender, be relieved of any of its obligations
hereunder as a result of any sale, assignment or transfer of, or any granting
of participations in, all or any part of its Commitments or the Loans, or
participations therein, or the other Obligations owed to such Lender, and such
Lender shall remain solely responsible for the performance of such Obligations,
and Borrower shall continue to deal solely and directly with such Lender in
connection with such Lender’s rights and obligations under this Agreement.

 

B.            Assignments.

 

(i)            Amounts
and Terms of Assignments.  Each
Commitment, Loan, Letter of Credit or participation therein, or other
Obligation may (a) be assigned in any amount to another Lender, or to an
Affiliate or Approved Fund of the assigning Lender or another Lender, with the
giving of notice to Borrower and Administrative Agent or (b) be assigned
in an aggregate amount of not less than $1,000,000, in the case of any
assignment of a Revolving Loan or Revolving Loan Commitment, or $1,000,000, in
the case of any assignment of a Letter of Credit (or such lesser amount as
shall constitute the aggregate amount of the Commitments, Loans, Letters of
Credit and participations therein, and other Obligations of the assigning
Lender) to any other Eligible Assignee (treating any two or more Approved Funds
with the same investment advisor as a single Eligible Assignee) with the giving
of notice to Borrower and with the consent of Borrower (unless a Potential
Event of Default or an Event of Default has

 

108

 

occurred and is continuing) and Administrative Agent (which consent of
Borrower and Administrative Agent shall not be unreasonably withheld or
delayed).  To the extent of any such
assignment in accordance with either clause (a) or (b) above, the assigning
Lender shall be relieved of its obligations with respect to its Commitments,
Loans, Letters of Credit or participations therein, or other Obligations or the
portion thereof so assigned.  The
parties to each such assignment shall execute and deliver to Administrative
Agent, for its acceptance and recording in the Register, an Assignment
Agreement, together with a processing and recordation fee of $3,500 (except
that no such registration and processing fee shall be payable in the case of an
Assignee which is an Affiliate of the Assignor or a Person under common
management with the Assignor), and such forms (including an administrative
questionnaire if the Eligible Assignee is not a Lender), certificates or other evidence,
if any, with respect to United States federal income tax withholding matters as
the assignee under such Assignment Agreement may be required to deliver to
Administrative Agent pursuant to subsection 2.7B(iii)(a).  Upon such execution, delivery, acceptance
and recordation, from and after the effective date specified in such Assignment
Agreement, (y) the assignee thereunder shall be a party hereto and, to the
extent that rights and obligations hereunder have been assigned to it pursuant
to such Assignment Agreement, shall have the rights and obligations of a Lender
hereunder, and (z) the assigning Lender thereunder shall, to the extent
that rights and obligations hereunder have been assigned by it pursuant to such
Assignment Agreement, relinquish its rights (other than any rights which
survive the termination of this Agreement under subsection 11.9B) and be
released from its obligations under this Agreement (and, in the case of an
Assignment Agreement covering all or the remaining portion of an assigning
Lender’s rights and obligations under this Agreement, such Lender shall cease
to be a party hereto; provided that, anything contained in any of the
Loan Documents to the contrary notwithstanding, if such Lender is the Issuing
Lender with respect to any outstanding Letters of Credit such Lender shall
continue to have all rights and obligations of an Issuing Lender with respect
to such Letters of Credit until the cancellation or expiration of such Letters
of Credit and the reimbursement of any amounts drawn thereunder).  The Commitments hereunder shall be modified
to reflect the Commitment of such assignee and any remaining Commitment of such
assigning Lender and, if any such assignment occurs after the issuance of any
Notes hereunder, the assigning Lender shall, upon the effectiveness of such
assignment or as promptly thereafter as practicable, surrender its applicable
Notes, if any, to Administrative Agent for cancellation, and thereupon new
Notes shall, if so requested by the assignee and/or the assigning Lender in
accordance with subsection 2.1D, be issued to the assignee and/or to the
assigning Lender, substantially in the form of Exhibit V annexed hereto
with appropriate insertions, to reflect the new Commitments, of the assignee
and/or the assigning Lender.  Any
assignment or transfer by a Lender of rights or obligations under this
Agreement that does not comply with this subsection 11.1B shall be treated for
purposes of this Agreement as a sale by such Lender of a participation in such
rights and obligations in accordance with subsection 11.1C.

 

(ii)           Acceptance
by Administrative Agent; Recordation in Register.  Upon its receipt of an Assignment Agreement executed by an
assigning Lender and an assignee representing that it is an Eligible Assignee,
together with the processing and

 

109

 

recordation fee referred to in subsection 11.1B(i) and any forms,
certificates or other evidence with respect to United States federal income tax
withholding matters that such assignee may be required to deliver to
Administrative Agent pursuant to subsection 2.7B(iii)(a), Administrative Agent
shall, if Administrative Agent (and if necessary, Borrower) has consented to
the assignment evidenced thereby (in each case to the extent such consent is
required pursuant to subsection 11.1B(i)), (a) accept such Assignment
Agreement by executing a counterpart thereof as provided therein (which
acceptance shall evidence any required consent of Administrative Agent to such
assignment), (b) record the information contained therein in the Register, and
(c) give prompt notice thereof to Borrower.  Administrative Agent shall maintain a copy of each Assignment
Agreement delivered to and accepted by it as provided in this subsection
11.1B(ii).

 

C.            Participations.  Any Lender may, without the consent of, or
notice to, Borrower or Administrative Agent, sell participations to one or more
banks or other entities (a “Participant”)
in all or a portion of such Lender’s rights and/or obligations under this
Agreement (including all or a portion of its Commitment and/or the Loans owing
to it); provided that (i) such Lender’s obligations under this
Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such
obligations, and (iii) Borrower, Administrative Agent and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender’s rights and obligations under this Agreement.  Any agreement or instrument pursuant to
which a Lender sells such a participation shall provide that such Lender shall
retain the sole right to enforce the Loan Documents and to approve any
amendment, modification or waiver of any provision of the Loan Documents; provided
that such agreement or instrument may provide that such Lender will not,
without the consent of such Participant, agree to any amendment, modification
or waiver that affects such Participant if such amendment, modification or
waiver requires the unanimous written consent of all Lenders pursuant to
subsection 11.6.  Subject to subsection
11.1D, Borrower agrees that each Participant shall be entitled to the benefits
of subsections 2.6D, 2.7, and 3.6 to the same extent as if it were a Lender and
had acquired its interest by assignment pursuant to this subsection 11.1C; provided,
however, that in no event shall Borrower be obligated to make any
payment with respect to such subsections which is greater than the amount that
Borrower would have paid to the Lender had no such participation been
sold.  To the extent permitted by law,
in the event that any amounts outstanding under this Agreement are due and
unpaid, or shall have been declared or shall have become due and payable upon
the occurrence of an Event of Default, each Participant shall be deemed to have
the right of set-off in respect of its participating interest in amounts owing
under this Agreement to the same extent as if the amount of its participating
interest were owing directly to it as a Lender under this Agreement.

 

D.            A
Participant shall not be entitled to receive any greater payment under
subsections 2.6D, 2.7, and 3.6 than the applicable Lender would have been
entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with
Borrower’s prior written consent.  A
Participant that would be a Non-US Lender if it were a Lender shall not be
entitled to the benefits of subsection 2.7  unless Borrower is notified
of the participation sold to such Participant and such Participant agrees, for
the benefit of Borrower, to comply with subsection 2.7B(iii) as though it were
a Lender.

 

110

 

E.             Assignments
to Secured Parties and Trustees.  In addition to the assignments and participations permitted under
the foregoing provisions of this subsection 11.1, (a) any Lender may assign and
pledge all or any portion of its Loans, the other Obligations owed to such
Lender, and its Notes to any creditor, including Federal Reserve Bank, as
collateral security pursuant to Regulation A of the Board of Governors of
the Federal Reserve System and any operating circular issued by such Federal
Reserve Bank; provided that (i) no Lender shall, as between
Borrower and such Lender, be relieved of any of its obligations hereunder as a
result of any such assignment and pledge and (ii) in no event shall such
creditor be considered to be a “Lender” or be entitled to require the assigning
Lender to take or omit to take any action hereunder, and (b) any Lender which
is a Fund may pledge its Notes to its trustee for the benefit of the Fund’s
investors.

 

F.             Information.  Each Lender may furnish any information
concerning Holdings and its Subsidiaries in the possession of that Lender from
time to time to assignees and participants (including prospective assignees and
participants), subject to subsection 11.19.

 

G.            Representations
of Lenders.  Each
Lender which is the recipient of an Allocation Letter and a party to this
Agreement hereby represents and warrants (i) that it is an Eligible Assignee;
(ii) that it has experience and expertise in the making of loans such as the
Loans; and (iii) that it will make its Loans for its own account in the
ordinary course of its business and without a view to distribution of such
Loans within the meaning of the Securities Act or the Exchange Act or other
federal securities laws (it being understood that, subject to the provisions of
this subsection 11.1, the disposition of such Loans or any interests therein
shall at all times remain within its exclusive control).  Each Lender that becomes a party hereto
pursuant to an Assignment Agreement shall be deemed to agree that the
representations and warranties of such Lender contained in Section 2(c) of such
Assignment Agreement are incorporated herein by this reference.

 

11.2                        Expenses.

 

Whether or not the
transactions contemplated hereby shall be consummated, Borrower agrees to pay
promptly (i) all the actual and reasonable costs and expenses of
preparation of the Loan Documents and any consents, amendments, waivers or
other modifications thereto; (ii) all the costs of furnishing all opinions
by counsel for the Loan Parties (including any opinions requested by Lenders as
to any legal matters arising hereunder) and of Holdings’ and Borrower’s
performance of and compliance with all agreements and conditions on their part
to be performed or complied with under this Agreement and the other Loan
Documents including with respect to confirming compliance with environmental,
insurance and solvency requirements; (iii) the reasonable fees, expenses
and disbursements of counsel to Administrative Agent in connection with the
negotiation, preparation, execution and administration of the Loan Documents
and any consents, amendments, waivers or other modifications thereto and any
other documents or matters requested by Borrower; (iv) all the actual and
reasonable costs and expenses of creating and perfecting Liens in favor of
Administrative Agent on behalf of Lenders pursuant to any Collateral Document
prior to and after the Effective Date, including filing fees, search fees, and
reasonable fees, expenses and disbursements of counsel to Administrative Agent
and of counsel providing any opinions that Administrative Agent or Requisite
Lenders may reasonably request in respect of the Collateral

 

111

 

Documents
or the Liens created pursuant thereto; (v) the custody or preservation of
any of the Collateral; (vi) all other actual and reasonable costs and
expenses incurred by Administrative Agent in connection with the syndication of
the Commitments and the negotiation, preparation and execution of the Loan
Documents and any consents, amendments, waivers or other modifications thereto
and the transactions contemplated thereby; and (vii) after the occurrence
of an Event of Default, all costs and expenses, including reasonable attorneys’
fees (including allocated costs of internal counsel) and costs of settlement,
incurred by Administrative Agent and Lenders in enforcing any Obligations of or
in collecting any payments due from any Loan Party hereunder or under the other
Loan Documents by reason of such Event of Default (including in connection with
the sale of, collection from, or other realization upon any of the Collateral
or the enforcement of any Guaranty) or in connection with any refinancing or
restructuring of the credit arrangements provided under this Agreement in the
nature of a “work-out” or pursuant to any insolvency or bankruptcy proceedings.

 

11.3                        Indemnity.

 

In
addition to the payment of expenses pursuant to subsection 11.2, whether or not
the transactions contemplated hereby shall be consummated, Borrower agrees to
defend (subject to Indemnitees’ selection of counsel), indemnify, pay and hold
harmless Administrative Agent, Lenders and each Issuing Lender in accordance
with subsection 3.5, and the officers, directors, employees, counsel, agents,
representatives, advisors and affiliates of Administrative Agent, Lenders and
Issuing Lenders (collectively called the “Indemnitees”), from and against any
and all Indemnified Liabilities (as hereinafter defined).

 

The
foregoing indemnification shall apply whether or not such Indemnified
Liabilities are in any way or to any extent owed, in whole or in part, under
any claim or theory of strict liability, or are caused, in whole or in part, by
any negligent act or omission of any kind by any Indemnitee; provided
that Borrower shall not have any obligation to any Indemnitee hereunder with
respect to (i) any Indemnified Liabilities to the extent such Indemnified
Liabilities arise solely from the gross negligence or willful misconduct of
that Indemnitee as determined by a final judgment of a court of competent
jurisdiction and (ii) disputes solely between Indemnitees which do not arise
out of or as a result of any such Indemnified Liabilities.

 

As used
herein, “Indemnified Liabilities” means, collectively, any and all liabilities,
obligations, losses, damages (including natural resource damages), penalties,
actions, judgments, suits, claims (including Environmental Claims), costs
(including the costs of any investigation, study, sampling, testing, abatement,
cleanup, removal, remediation or other response action necessary to remove,
remediate, clean up or abate any Hazardous Materials Activity), expenses and
disbursements of any kind or nature whatsoever (including the reasonable fees
and disbursements of counsel for Indemnitees in connection with any
investigative, administrative or judicial proceeding commenced or threatened by
any Person, whether or not any such Indemnitee shall be designated as a party
or a potential party thereto, and any fees or expenses incurred by Indemnitees
in enforcing this indemnity), whether direct and whether based on any federal,
state or

 

112

 

foreign laws, statutes, rules or
regulations (including securities and commercial laws, statutes, rules or
regulations and Environmental Laws), on common law or equitable cause or on
contract or otherwise, that may be imposed on, incurred by, or asserted against
any such Indemnitee, in any manner relating to or arising out of (i) this
Agreement or the other Loan Documents or the transactions contemplated hereby
or thereby (including Lenders’ agreement to make the Loans hereunder or the use
or intended use of the proceeds thereof or the issuance of Letters of Credit
hereunder or the use or intended use of any thereof, or any enforcement of any
of the Loan Documents (including any sale of, collection from, or other
realization upon any of the Collateral or the enforcement of any Guaranty),
(ii) the statements contained in the commitment letter delivered by any Lender
to Borrower and Holdings with respect thereto, or (iii) any Environmental Claim
or any Hazardous Materials Activity relating to or arising from, directly or
indirectly, any past or present activity, operation, land ownership, or
practice of Holdings or any of its Subsidiaries.

 

To the extent that the undertakings
to defend, indemnify, pay and hold harmless set forth in this subsection 11.3
may be unenforceable in whole or in part because they are violative of any law
or public policy, Borrower shall contribute the maximum portion that it is
permitted to pay and satisfy under applicable law to the payment and
satisfaction of all Indemnified Liabilities incurred by Indemnitees or any of
them.

 

11.4                        Set-Off.

 

In addition to any
rights now or hereafter granted under applicable law and not by way of
limitation of any such rights, upon the occurrence of any Event of Default each
Lender is hereby authorized by Borrower at any time or from time to time,
without notice to Borrower or to any other Person, any such notice being hereby
expressly waived, to set off and to appropriate and to apply any and all
deposits or other amounts held by any Lender for the credit or account of
Borrower (general or special, including Indebtedness evidenced by certificates
of deposit, whether matured or unmatured, but not including trust accounts) and
any other Indebtedness at any time held or owing by that Lender to or for the
credit or the account of Borrower against and on account of the obligations and
liabilities of Borrower to that Lender under this Agreement, the Letters of
Credit and participations therein and the other Loan Documents, including all
claims of any nature or description arising out of or connected with this
Agreement, the Letters of Credit and participations therein or any other Loan
Document, irrespective of whether or not (i) that Lender shall have made any
demand hereunder or (ii) the principal of or the interest on the Loans or any
amounts in respect of the Letters of Credit or any other amounts due hereunder
or under any of the other Loan Documents shall have become due and payable
pursuant to Section 8 and although said obligations and liabilities, or
any of them, may be contingent or unmatured. 
Borrower hereby further grants to Administrative Agent and each Lender a
security interest in all deposits and accounts maintained with Administrative
Agent or such Lender as security for the Obligations.

 

11.5                        Ratable Sharing.

 

Lenders hereby
agree among themselves that if any of them shall, whether by voluntary payment
(other than a voluntary prepayment of Loans made and applied in

 

113

 

accordance
with the terms of this Agreement), by realization upon security, through the
exercise of any right of set-off or banker’s lien, by counterclaim or cross
action or by the enforcement of any right under the Loan Documents or
otherwise, or as adequate protection of a deposit treated as cash collateral
under the Bankruptcy Code, receive payment or reduction of a proportion of the
aggregate amount of principal, interest, amounts payable in respect of Letters
of Credit, fees and other amounts then due and owing to that Lender hereunder
or under the other Loan Documents (collectively, the “Aggregate Amounts Due” to
such Lender) that is greater than the proportion received by any other Lender
in respect of the Aggregate Amounts Due to such other Lender, then the Lender
receiving such proportionately greater payment shall (i) notify
Administrative Agent and each other Lender of the receipt of such payment and
(ii) apply a portion of such payment to purchase participations (which it
shall be deemed to have purchased from each seller of a participation
simultaneously upon the receipt by such seller of its portion of such payment)
in the Aggregate Amounts Due to the other Lenders so that all such recoveries
of Aggregate Amounts Due shall be shared by all Lenders in proportion to the
Aggregate Amounts Due to them; provided that if all or part of such
proportionately greater payment received by such purchasing Lender is
thereafter recovered from such Lender upon the bankruptcy or reorganization of
Borrower or otherwise (and whether by litigation, demand, settlement or
otherwise), those purchases shall be rescinded and the purchase prices paid for
such participations shall be returned to such purchasing Lender ratably to the
extent of such recovery, but without interest. 
Borrower expressly consents to the foregoing arrangement and agrees that
any holder of a participation so purchased may exercise any and all rights of
banker’s lien, set-off or counterclaim with respect to any and all monies owing
by Borrower to that holder with respect thereto as fully as if that holder were
owed the amount of the participation held by that holder.

 

11.6                        Amendments and Waivers.

 

No amendment,
modification, termination or waiver of any provision of this Agreement or of
the Notes or of any of the other Loan Documents, and no consent to any
departure by any Loan Party herefrom or therefrom, shall in any event be
effective without the written concurrence of Requisite Lenders; provided
that in addition,

 

(a)           any such amendment, modification,
termination, waiver or consent which:

 

(i)            postpones
the date or reduces the amount of any scheduled payment (but not prepayment) of
principal of any of the Loans;

 

(ii)           postpones
the date on which any interest or any fees are payable or reduces the amount of
any fees payable hereunder;

 

(iii)          amends,
modifies, terminates or waives any provision of subsection 2.2 which decreases
the interest rate borne by Loans (other than any waiver of any increase in the
interest rate applicable to such Loans pursuant to subsection 2.2E) or the
percentages set forth in the definitions of “Applicable Base Rate Margin” and
“Applicable LIBOR Margin”;

 

114

 

(iv)          changes
in any manner the definition of “Pro Rata Share” or the definition of
“Requisite Lenders”;

 

(v)           changes
in any manner any provision of this Agreement which, by its terms, expressly
requires the approval or concurrence of all Lenders;

 

(vi)          releases
any Lien granted in favor of Administrative Agent with respect to all or
substantially all of the Collateral;

 

(vii)         releases
from their obligations under the Subsidiary Guaranty, Subsidiary Guarantors
which individually or in the aggregate own assets with an aggregate value for
such Subsidiary Guarantors on such release dates, as reasonably determined by
Administrative Agent, in excess of 50% of the total value of the assets owned
by Holdings and its Subsidiaries on September 30, 2003, in each case other
than those releases not requiring a vote of the Lenders in accordance with the
terms of the Loan Documents (each released Subsidiary Guarantor shall be
referred to as a “Released Guarantor” if the release of such Person’s
obligations under a Subsidiary Guaranty is not evidenced by the written
concurrence of all Lenders);

 

(viii)        releases
Holdings from its obligations under Section 9 of this Agreement other than in
accordance with the terms of this Agreement;

 

(ix)           waives
or changes in any manner the provisions contained in subsection 8.1 or this
subsection 11.6,

 

shall be effective only if evidenced by the written concurrence of all
Lenders affected thereby; provided, however, that with respect to clause (vii)
above only the written concurrence of all Lenders minus one shall be required
(if such one Lender by itself constitutes Requisite Lenders, then its
concurrence shall also be required); provided, further, however, with respect
to any such Released Guarantor, (i) stock of such Released Guarantor may be subjected
to Liens only as and to the extent such Liens would have been permitted under
subsection 7.2 with respect to a Subsidiary Guarantor (or other provisions or
schedule incorporated in such subsection and as applied in such subsection) as
in effect on the Effective Date and (ii) such Released Guarantor shall be
permitted to enter into Contingent Obligations only as and to the extent any
such Contingent Obligations would have been permitted under subsection 7.4 with
respect to a Subsidiary Guarantor (or other provisions or schedule incorporated
in such subsection and as applied in such subsection) as in effect on the
Effective Date; provided, further, however, that any amendment, modification,
termination or waiver to subsection 7.2 or subsection 7.4 (or other provisions
or schedule incorporated in either of such subsections and as applied therein)
which has the effect of increasing (x) the Liens to which stock of a Released
Guarantor could be subject or (y) the amount or nature of Contingent Obligations
permitted to be entered into by a Released Guarantor, as applicable, shall only
apply to such Released Guarantors if such amendment, modification, termination
or waiver is approved with the written concurrence of all Lenders minus one (if
such one Lender by itself constitutes Requisite Lenders, then its concurrence
shall also be required)(any Released Guarantor which executes a counterpart
Subsidiary Guaranty shall no longer constitute a Released Guarantor).

 

115

 

In addition,

 

(a)           no amendment, modification,
termination or waiver of any provision of any Note shall be effective without
the written concurrence of the Lender which is the holder of that Note;

 

(b)           no amendment, modification,
termination or waiver of any provision of subsection 2.1A(i) or of any other
provision of this Agreement relating to the Revolving Loan Commitments shall
increase the Commitments of any Lender over the amount thereof then in effect
without the consent of such Lender (it being understood that amendments,
modifications or waivers of conditions precedent, representations and
warranties, covenants or Events of Default or of a mandatory reduction in the
Commitments shall not constitute an increase of the Commitment of any Lender, and
that an increase in the available portion of any Commitment of any Lender shall
not constitute an increase in the Commitment of such Lender); and

 

(c)           no amendment, modification,
termination or waiver of any provision of Section 11 or of any other provision
of this Agreement which, by its terms, expressly requires the approval or
concurrence of Administrative Agent shall be effective without the written
concurrence of Administrative Agent.

 

Administrative
Agent may, but shall have no obligation to, with the concurrence of any Lender,
execute amendments, modifications, waivers or consents on behalf of that
Lender.  Any waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
it was given.  No notice to or demand on
Borrower in any case shall entitle Borrower to any other or further notice or
demand in similar or other circumstances. 
Any amendment, modification, termination, waiver or consent effected in
accordance with this subsection 11.6 shall be binding upon each Lender at the
time outstanding, each future Lender and, if signed by Borrower, on Borrower.

 

Notwithstanding
the provisions of this Section 11.6, any amendment pursuant to subsection
2.1A(ii) to increase or add Revolving Loan Commitments or add a term loan
facility to this Agreement, if adopted in accordance with the terms and
conditions set forth in subsection 2.1A(ii), shall be effective upon execution
by Borrower, Holdings and Administrative Agent and shall not require
concurrence of any Lenders.

 

11.7                        Independence of Covenants.

 

All covenants
hereunder shall be given independent effect so that if a particular action or
condition is not permitted by any of such covenants, the fact that it would be
permitted by an exception to, or would otherwise be within the limitations of,
another covenant shall not avoid the occurrence of an Event of Default or
Potential Event of Default if such action is taken or condition exists.

 

11.8                        Notices.

 

Unless otherwise
specifically provided herein, any notice or other communication herein required
or permitted to be given shall be in writing and may be personally served,

 

116

 

telexed
or sent by telefacsimile or United States mail or courier service and shall be
deemed to have been given when delivered in person or by courier service, upon
receipt of telefacsimile or telex, or three Business Days after depositing it
in the United States mail with postage prepaid and properly addressed; provided
that notices to Administrative Agent shall not be effective until
received.  For the purposes hereof, the
address of each party hereto shall be as set forth under such party’s name on
the signature pages hereof or (i) as to Holdings, Borrower and
Administrative Agent, such other address as shall be designated by such Person
in a written notice delivered to the other parties hereto and (ii) as to
each other party, such other address as shall be designated by such party in a
written notice delivered to Administrative Agent.

 

11.9                        Survival of Representations,
Warranties and Agreements.

 

A.            All
representations, warranties and agreements made herein shall survive the
execution and delivery of this Agreement and the making of the Loans and the
issuance of the Letters of Credit hereunder.

 

B.            Notwithstanding
anything in this Agreement or implied by law to the contrary, the agreements of
Borrower and Holdings set forth in subsections 2.6D, 2.7, 3.5A, 3.6, 11.2, 11.3
and 11.4 and the agreements of Lenders set forth in subsections 10.2C, 10.4,
11.5 and 11.19 shall survive the payment of the Loans, the cancellation or
expiration of the Letters of Credit and the reimbursement of any amounts drawn
thereunder, and the termination of this Agreement.

 

11.10                 Failure or Indulgence Not Waiver;
Remedies Cumulative.

 

No failure or
delay on the part of Administrative Agent or any Lender in the exercise of any
power, right or privilege hereunder or under any other Loan Document shall
impair such power, right or privilege or be construed to be a waiver of any
default or acquiescence therein, nor shall any single or partial exercise of
any such power, right or privilege preclude other or further exercise thereof
or of any other power, right or privilege. 
All rights and remedies existing under this Agreement and the other Loan
Documents are cumulative to, and not exclusive of, any rights or remedies
otherwise available.

 

11.11                 Marshalling; Payments Set Aside.

 

Neither
Administrative Agent nor any Lender shall be under any obligation to marshal
any assets in favor of Borrower or any other party or against or in payment of
any or all of the Obligations.  To the
extent that Borrower makes a payment or payments to Administrative Agent or
Lenders (or to Administrative Agent for the benefit of Lenders), or
Administrative Agent or Lenders enforce any security interests or exercise
their rights of setoff, and such payment or payments or the proceeds of such
enforcement or setoff or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to be
repaid to a trustee, receiver or any other party under any bankruptcy law, any
other state or federal law, common law or any equitable cause (whether by
litigation, demand, settlement or otherwise), then, to the extent of such
recovery, the obligation or part thereof originally intended to be satisfied,
and all Liens, rights and remedies therefor or related thereto, shall be

 

117

 

revived
and continued in full force and effect as if such payment or payments had not
been made or such enforcement or setoff had not occurred.

 

11.12                 Severability.

 

In case any
provision in or obligation under this Agreement or the Notes shall be invalid,
illegal or unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations, or of such provision
or obligation in any other jurisdiction, shall not in any way be affected or
impaired thereby.

 

11.13                 Obligations Several; Independent
Nature of Lenders’ Rights.

 

The obligations of
Lenders hereunder are several and no Lender shall be responsible for the
obligations or Commitments of any other Lender hereunder.  Nothing contained herein or in any other
Loan Document, and no action taken by Lenders pursuant hereto or thereto, shall
be deemed to constitute Lenders, or Lenders and Holdings or Borrower, as a
partnership, an association, a joint venture or any other kind of entity. The
amounts payable at any time hereunder to each Lender shall be a separate and
independent debt, and each Lender shall be entitled to protect and enforce its
rights arising out of this Agreement and it shall not be necessary for any
other Lender to be joined as an additional party in any proceeding for such
purpose.

 

11.14                 Headings.

 

Section and
subsection headings in this Agreement are included herein for convenience of
reference only and shall not constitute a part of this Agreement for any other
purpose or be given any substantive effect.

 

11.15                 Applicable Law.

 

THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
NEW YORK (INCLUDING SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE
OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.

 

11.16                 Successors and Assigns.

 

The provisions of
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective permitted successors and permitted assigns, except
that Borrower may not assign or otherwise transfer any of its rights or
obligations hereunder without the prior written consent of each Lender (and any
attempted assignment or transfer by Borrower without such consent shall be null
and void).  Nothing in this Agreement,
expressed or implied, shall be construed to confer upon any Person (other than
the parties hereto, their respective successors and assigns permitted hereby
and, to the extent expressly contemplated hereby, Affiliates of Administrative
Agent and Affiliates of Lenders) any legal or equitable right, remedy or claim
under or by reason of this Agreement.

 

118

 

11.17                 Consent to Jurisdiction and Service
of Process.

 

ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST
HOLDINGS OR BORROWER ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT, OR ANY OBLIGATIONS THEREUNDER, MAY BE BROUGHT IN ANY STATE OR
FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW
YORK.  BY EXECUTING AND DELIVERING THIS
AGREEMENT, BORROWER AND HOLDINGS, FOR THEMSELVES AND IN CONNECTION WITH THEIR
PROPERTIES, IRREVOCABLY

 

(I)            ACCEPT GENERALLY AND UNCONDITIONALLY
THE NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS;

 

(II)           WAIVE ANY DEFENSE OF FORUM NON
CONVENIENS;

 

(III)         AGREE THAT SERVICE OF ALL PROCESS IN
ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED
MAIL, RETURN RECEIPT REQUESTED, TO BORROWER AND HOLDINGS AT THEIR ADDRESSES
PROVIDED IN ACCORDANCE WITH SUBSECTION 11.8;

 

(IV)         AGREE THAT SERVICE AS PROVIDED IN
CLAUSE (III) ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER BORROWER OR HOLDINGS IN ANY SUCH PROCEEDING IN ANY
SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY
RESPECT;

 

(V)          AGREE THAT LENDERS RETAIN THE RIGHT TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS
AGAINST HOLDINGS OR BORROWER IN THE COURTS OF ANY OTHER JURISDICTION; AND

 

(VI)         AGREE
THAT THE PROVISIONS OF THIS SUBSECTION 11.17 RELATING TO JURISDICTION AND VENUE SHALL BE
BINDING AND ENFORCEABLE TO THE FULLEST EXTENT PERMISSIBLE UNDER NEW YORK
GENERAL OBLIGATIONS LAW SECTION 5-1402 OR OTHERWISE.

 

11.18                 Waiver of Jury Trial.

 

EACH OF THE
PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY DEALINGS BETWEEN THEM
RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE LENDER/BORROWER
RELATIONSHIP THAT IS BEING ESTABLISHED. 
The scope of this waiver is intended to be all-encompassing of any and
all disputes that may be filed in any court and that relate to the subject
matter of this transaction, including contract claims, tort

 

119

 

claims,
breach of duty claims and all other common law and statutory claims.  Each party hereto acknowledges that this
waiver is a material inducement to enter into a business relationship, that
each has already relied on this waiver in entering into this Agreement, and
that each will continue to rely on this waiver in their related future
dealings.  Each party hereto further
warrants and represents that it has reviewed this waiver with its legal counsel
and that it knowingly and voluntarily waives its jury trial rights following
consultation with legal counsel.  THIS
WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN
WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS
SUBSECTION 11.18 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY
OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS MADE HEREUNDER.  In the event of litigation, this Agreement
may be filed as a written consent to a trial by the court.

 

11.19                 Confidentiality.

 

Each Lender shall
hold all non-public information regarding Holdings and its Subsidiaries
obtained pursuant to the requirements of this Agreement in accordance with such
Lender’s customary procedures for handling confidential information of this
nature and in accordance with safe and sound banking practices, it being
understood and agreed by Borrower and Holdings that in any event a Lender may
make disclosures (a) to its and its Affiliates’ directors, officers,
employees and agents, including accountants, legal counsel and other advisors
(it being understood that the Persons to whom such disclosure is made will be
informed of the confidential nature of such information and instructed to keep
such information confidential), (b) to the extent requested by any
government authority, (c) to the extent required by applicable laws or
regulations or by any subpoena or similar legal process, (d) to any other
party to this Agreement, (e) in connection with the exercise of any
remedies hereunder or any suit, action or proceeding relating to this Agreement
or the enforcement of rights hereunder, (f) subject to an agreement
containing provisions substantially the same as those of this subsection 11.19,
to (i) any Eligible Assignee of or Participant in, or any prospective
Eligible Assignee of or Participant in, any of its rights or obligations under
this Agreement or (ii) any direct or indirect contractual counterparty or
prospective counterparty (or such contractual counterparty’s or prospective
counterparty’s professional advisor) to any credit derivative transaction
relating to obligations of Holdings or Borrower, (g) with the consent of
Holdings or Borrower, (h) to the extent such information (i) becomes
publicly available other than as a result of a breach of this subsection 11.19,
or (ii) becomes available to Administrative Agent or any Lender on a
nonconfidential basis from a source other than Holdings or Borrower, or
(i) to the National Association of Insurance Commissioners or any other
similar organization or any nationally recognized rating agency that requires
access to information about a Lender’s or its Affiliates’ investment portfolio
in connection with ratings issued with respect to such Lender or its
Affiliates; provided that, unless specifically prohibited by applicable
law or court order, each Lender shall notify Holdings or Borrower of any request
by any government authority or representative thereof (other than any such
request in connection with any examination of the financial condition of such
Lender by such government authority) for disclosure of any such non-public
information prior to disclosure of

 

120

 

such
information; and provided, further, that in no event shall any
Lender be obligated or required to return any materials furnished by Holdings
or any of its Subsidiaries. 
Notwithstanding anything contained herein to the contrary, Borrower and
Holdings understand and agree that Administrative Agent and each of the
institutions identified as “Co-Lead Arrangers” on the title page to this
Agreement may make customary disclosures for advertising and “league table”
purposes.

 

Notwithstanding
anything to contrary herein, each party hereto hereby agrees that each party
hereto (and each of their respective employees, representatives and agents) is
permitted to disclose to any Person, the structure and tax aspects of the
transactions contemplated by the Loan Documents, and all materials of any kind
(including opinions and other tax analyses) that are related to such structure
and tax aspects.  In this regard, each
party hereto acknowledges and agrees that their disclosure of the structure or
tax aspects of such transactions is not limited in any way by an express or
implied understanding or agreement, oral or written (whether or not such
agreement or understanding is legally binding).  Furthermore, each party hereto acknowledges and agrees that it
does not know or have reason to know that its use or disclosure of information
relating to the structure or tax aspects of the transactions contemplated by
the Loan Documents is limited in any other manner for the benefit of any other
Person.

 

11.20                 Co-Lead Arrangers; Syndication Agent;
Documentation Agent.

 

None of the
institutions identified as “Co-Lead Arrangers,” “Syndication Agent” or
“Documentation Agent” on the title page to this Agreement shall have any
obligations, liabilities or duties under this Agreement other than those
applicable to a Lender (but only if such institution is a Lender) as such, and
no such institutions shall have or be deemed to have any fiduciary relationship
with any Lender.  Each Lender
acknowledges that it has not relied, and will not rely, on any such institution
in deciding to enter into this Agreement or in taking or not taking any action
hereunder.

 

11.21                 Counterparts; Effectiveness.

 

This Agreement and
any amendments, waivers, consents or supplements hereto or in connection
herewith may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed and delivered
shall be deemed an original, but all such counterparts together shall
constitute but one and the same instrument; signature pages may be detached
from multiple separate counterparts and attached to a single counterpart so
that all signature pages are physically attached to the same document.  This Agreement shall become effective upon
the execution of a counterpart hereof by each of the parties hereto and receipt
by Holdings, Borrower and Administrative Agent of written or telephonic
notification of such execution and authorization of delivery thereof.

 

[Remainder of page
intentionally left blank]

 

121

 

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

 

	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  LA QUINTA PROPERTIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Steven J. Flowers

  	
   

  
	
   

  	
   

  	
  Name:  Steven J. Flowers

  
	
   

  	
   

  	
  Title:  Vice President and Treasurer

  
	
   

  	
   

  
	
   

  	
  Notice Address:

  
	
   

  	
  909 Hidden Ridge, Suite
  600

  
	
   

  	
  Irving, Texas 75038

  
	
   

  	
  Attention:  General Counsel

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HOLDINGS:

  
	
   

  	
   

  
	
   

  	
  LA
  QUINTA CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Steven J. Flowers

  	
   

  
	
   

  	
   

  	
  Name:  Steven J. Flowers

  
	
   

  	
   

  	
  Title:  Vice President and Treasurer

  
	
   

  	
   

  
	
   

  	
  Notice Address:

  
	
   

  	
  909 Hidden Ridge, Suite
  600

  
	
   

  	
  Irving, Texas 75038

  
	
   

  	
  Attention:  General Counsel

  

 

S-1

 

	
   

  	
  ADMINISTRATIVE AGENT:

  
	
   

  	
   

  
	
   

  	
  CANADIAN IMPERIAL BANK OF COMMERCE,

  as Administrative Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Dean J. Decker

  	
   

  
	
   

  	
  Dean J. Decker

  
	
   

  	
  Managing Director

  
	
   

  	
  CIBC World Markets
  Corp., AS AGENT

  
	
   

  	
   

  
	
   

  	
  Notice Address:

  
	
   

  	
   

  
	
   

  	
  CANADIAN IMPERIAL BANK
  OF COMMERCE

  
	
   

  	
  425 Lexington Avenue

  
	
   

  	
  New York, New York 
  10017

  
	
   

  	
  Attn.: 
  Agency Services Dept.

  
	
   

  	
  Facsimile No.: (212) 856-3799

  
	
   

  	
   

  
	
   

  	
  With a Copy to:

  
	
   

  	
   

  
	
   

  	
  CIBC WORLD MARKETS
  CORP.

  
	
   

  	
  10880 Wilshire
  Boulevard, Suite 1700

  
	
   

  	
  Los Angeles, California  90024

  

 

S-2

 

	
   

  	
  SYNDICATION AGENT:

  
	
   

  	
   

  
	
   

  	
  FLEET SECURITIES INC.,

  
	
   

  	
  as Syndication Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Dan Stegemoeller

  	
   

  
	
   

  	
  Name:  Dan Stegemoeller

  
	
   

  	
  Title:  Director

  
	
   

  	
   

  
	
   

  	
  Notice Address:

  
	
   

  	
   

  
	
   

  	
  Fleet National Bank

  
	
   

  	
  115 Perimeter Center
  Place, N.E.

  
	
   

  	
  Suite 500

  
	
   

  	
  Atlanta, Georgia 30346

  

 

S-3

 

	
   

  	
  DOCUMENTATION AGENT:

  
	
   

  	
   

  
	
   

  	
  CREDIT LYONNAIS NEW YORK BRANCH

  
	
   

  	
  as Documentation Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Bruno De Floor

  	
   

  
	
   

  	
  Name:  Bruno De Floor

  
	
   

  	
  Title:  Vice President

  
	
   

  	
   

  

 

S-4

 

	
   

  	
  LENDERS:

  
	
   

  	
   

  
	
   

  	
  CIBC, INC., as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Dean J. Decker

  	
   

  
	
   

  	
  Dean J. Decker

  
	
   

  	
  Managing Director

  
	
   

  	
  CIBC World Markets
  Corp., AS AGENT

  
	
   

  	
   

  
	
   

  	
  Notice Address:

  
	
   

  	
   

  
	
   

  	
  CIBC, INC.

  
	
   

  	
  425 Lexington Avenue

  
	
   

  	
  New York, New York 
  10017

  
	
   

  	
  Attn.: Agency Services Dept.

  
	
   

  	
   

  
	
   

  	
  Facsimile No.: (212) 856-3799

  
	
   

  	
   

  
	
   

  	
  With a Copy to:

  
	
   

  	
   

  
	
   

  	
  CIBC WORLD MARKETS
  CORP.

  
	
   

  	
  10880 Wilshire
  Boulevard, Suite 1700

  
	
   

  	
  Los Angeles, California  90024

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  FLEET NATIONAL BANK,  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Dan Stegemoeller

  	
   

  
	
   

  	
  Name:  Dan
  Stegemoeller

  
	
   

  	
  Title:    Director

  
	
   

  	
   

  
	
   

  	
  Notice Address:

  
	
   

  	
   

  
	
   

  	
  Fleet National Bank

  
	
   

  	
  115 Perimeter Center Place, N.E.

  
	
   

  	
  Suite 500

  
	
   

  	
  Atlanta, Georgia 30346

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CREDIT LYONNAIS NEW YORK BRANCH, as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Bruno De Floor

  	
   

  
	
   

  	
  Name:  Bruno
  De Floor

  
	
   

  	
  Title:    Vice President

  

 

S-5

 

	
   

  	
  LEHMAN COMMERCIAL
  PAPER, Inc., as a Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Francis Chang

  	
   

  
	
   

  	
  Name:

  	
  Francis Chang

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
  Notice Address:

  
	
   

  	
   

  
	
   

  	
   

  	
  745 Seventh Ave., 19th
  Floor

  
	
   

  	
   

  	
  New York, NY 10019

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MORGAN STANLEY SENIOR
  FUNDING, as a Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jaap L. Tonckens

  	
   

  
	
   

  	
  Name:

  	
  Jaap L. Tonckens

  
	
   

  	
  Title:

  	
  Vice President, Morgan
  Stanley Senior Funding

  
	
   

  	
   

  
	
   

  	
  Notice Address:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1585 Broadway

  
	
   

  	
   

  	
  New York, NY 10036

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WELLS FARGO BANK,
  NATIONAL ASSOCIATION,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ J. Kent Howard

  	
   

  
	
   

  	
  Name:

  	
  J. Kent Howard

  
	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Notice Address:

  
	
   

  	
   

  	
  5400 LBJ Freeway

  
	
   

  	
   

  	
  Suite 100

  
	
   

  	
   

  	
  Dallas, Texas 75240

  
	
   

  	
   

  	
  Attn: J. Kent Howard

  
	
   

  	
   

  
	
   

  	
  With a copy to:

  
	
   

  	
   

  	
  c/o Chief Credit
  Officer - Real Estate Group

  
	
   

  	
   

  	
  Wells Fargo Bank, N.A.

  
	
   

  	
   

  	
  420 Montgomery Street,
  6th Floor

  
	
   

  	
   

  	
  San Francisco,
  California 94163

  
					

 

S-6

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00058-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00058-of-00352.parquet"}]]