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This Credit Agreement, dated as of January 29, 2010, is entered into among COUNTRYPLACE ACCEPTANCE CORPORATION, a Nevada corporation (“CPA”), COUNTRYPLACE MORTGAGE, LTD., a Texas limited partnership (“CPM”), COUNTRYPLACE MORTGAGE HOLDINGS, LLC, a Delaware limited liability company (“Mortgage SPV”, together with CPM and CPA, the “Borrowers” and each individually a “Borrower”), PALM HARBOR HOMES, INC., a Florida corporation (“Parent”), COUNTRYPLACE ACCEPTANCE G.P., LLC, a Texas limited liability company (“GP LLC”), COUNTRYPLACE ACCEPTANCE L.P., LLC, a Delaware limited liability company (“LP LLC”), the Lenders (as defined below), and VIRGO SERVICE COMPANY, LLC, a Delaware limited liability company (“Virgo”), as administrative agent and collateral agent for the Lenders (in such capacity, and together with its successors and permitted assigns, the “Administrative Agent”).

 

The parties hereto agree as follows:

 

ARTICLE I

DEFINITIONS, INTERPRETATION AND ACCOUNTING TERMS

 

Section 1.1            Defined Terms.  As used in this Agreement, the following terms have the following meanings:

 

“2005-1 and 2007-1 Dispositions” means the Disposition by CPH and acquisition by Mortgage SPV, of the Class X Certificates and the Class R Certificates.

 

“2005-1 Offering Circular” means that certain Confidential Offering Circular, dated July 7, 2005, regarding approximately $118,440,000 Country Place Manufactured Housing Contract Trust Pass-Through Certificates, Series 2005-1.

 

 “2005-1 Pooling and Servicing Agreement” means that certain Pooling and Servicing Agreement, dated as of July 1, 2005, among CountryPlace Securitization, LLC, a Delaware limited liability company, as depositor, CPM, as seller and as servicer, Origen Servicing, Inc., as backup servicer, and Citibank, N.A., a national banking association, not in its individual capacity, but solely as trustee and custodian.

 

“2005-1 Securitization” means the securitization facility evidenced in part by the 2005-1 Pooling and Servicing Agreement.

 

“2005-1 Securitization Documents” means the documents executed and delivered in connection with the 2005-1 Securitization.

 

“2005-1 Securitization Virgo Trigger Event” means any of the following on any date of determination:

 

(a)           the Average Sixty-Day Delinquency Ratio (as defined in the 2005-1 Pooling and Servicing Agreement as in effect on the date hereof) as of the most recent preceding Distribution Date (as defined in the 2005-1 Pooling and Servicing Agreement as in effect on the date hereof, the “2005-1 Distribution Date”) shall exceed 6.0%;

 

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(b)           the Current Realized Loss Ratio (as defined in the 2005-1 Pooling and Servicing Agreement as in effect on the date hereof) as of the 2005-1 Distribution Date shall exceed 3.5%; and

 

(c)           the Cumulative Realized Losses (as defined in the 2005-1 Pooling and Servicing Agreement as in effect on the date hereof) as of the most recent preceding 2005-1 Distribution Date set forth below shall not exceed the percentages of the Cut-Off Date Pool Principal Balance (as defined in the 2005-1 Pooling and Servicing Agreement as in effect on the date hereof) set forth below for the applicable 2005-1 Distribution Date:

 

(i)           for any 2005-1 Distribution Date occurring between the Closing Date and February 2011 (inclusive), 6.0%;

 

(ii)          for any 2005-1 Distribution Date occurring between March 2011 and February 2012 (inclusive), 8.0%;

 

(iii)         for any 2005-1 Distribution Date occurring between March 2012 and February 2013 (inclusive), 11.0%; or

 

(iv)         for any 2005-1 Distribution Date occurring on or after March 2013, 13.0%.

 

“2007-1 Offering Circular” means that certain Confidential Offering Circular, dated March 13, 2007, regarding approximately $101,937,000 Country Place Manufactured Housing Contract Trust Pass-Through Certificates, Series 2007-1.

 

“2007-1 Pooling and Servicing Agreement” means that certain Pooling and Servicing Agreement, dated as of March 1, 2007, among CountryPlace Securitization, LLC, a Delaware limited liability company, as depositor, CPM, as seller and as servicer, Origen Servicing, Inc., as backup servicer, and Citibank, N.A., a national banking association, not in its individual capacity, but solely as trustee and custodian.

 

“2007-1 Securitization” means the securitization facility evidenced in part by the 2007-1 Pooling and Servicing Agreement.

 

“2007-1 Securitization Documents” means the documents executed and delivered in connection with the 2007-1 Securitization.

 

“2007-1 Securitization Virgo Trigger Event” means any of the following on any date of determination:

 

(a)           the Average Sixty-Day Delinquency Ratio (as defined in the 2007-1 Pooling and Servicing Agreement as in effect on the date hereof) as of the most recent preceding Distribution Date (as defined in the 2007-1 Pooling and Servicing Agreement as in effect on the date hereof, the “2007-1 Distribution Date”) shall exceed 5.0%;

 

(b)           the Current Realized Loss Ratio (as defined in the 2007-1 Pooling and Servicing Agreement as in effect on the date hereof) as of the most recent preceding 2007-1 Distribution Date beginning with the first 2007-1 Distribution Date occurring after the first anniversary of the Closing Date shall exceed 3.5%; and

 

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(c)           the Cumulative Realized Losses (as defined in the 2007-1 Pooling and Servicing Agreement as in effect on the date hereof) as of the most recent preceding 2007-1 Distribution Date set forth below shall not exceed the percentages of the Cut-Off Date Pool Principal Balance (as defined in the 2007-1 Pooling and Servicing Agreement as in effect on the date hereof) set forth below for the applicable 2007-1 Distribution Date:

 

(i)           for any 2007-1 Distribution Date occurring between the Closing Date and October 2012 (inclusive), 6.5%;

 

(ii)          for any 2007-1 Distribution Date occurring between November 2012 and October 2013 (inclusive), 7.5%; or

 

(iii)         for any 2007-1 Distribution Date occurring on or after November 2013, 8.5%.

 

 “Affected Lender” has the meaning specified in Section 2.15(a).

 

“Affiliate” means, with respect to any Person, each officer, director, general partner or joint-venturer of such Person and any other Person that directly or indirectly controls, is controlled by, or is under common control with, such Person; provided, however, that no Secured Party shall be an Affiliate of any Borrower.  For purpose of this definition, “control” means the possession of either (a) the power to vote, or the beneficial ownership of, 10% or more of the Voting Stock of such Person or (b) the power to direct or cause the direction of the management and policies of such Person, whether by contract or otherwise.

 

“Aggregate Value” means, as of any date of determination, the sum of:

 

(a)           the remainder of (i) the Pool Principal Balance (as defined in the 2005-1 Pooling and Servicing Agreement as in effect on the date hereof) as of the most recent Distribution Date (as defined in the 2005-1 Pooling and Servicing Agreement as in effect on the date hereof) minus (ii) the Class A Principal Balance (as defined in the 2005-1 Pooling and Servicing Agreement as in effect on the date hereof) as of such Distribution Date; and

 

(b)           the remainder of (i) the Pool Principal Balance (as defined in the 2007-1 Pooling and Servicing Agreement as in effect on the date hereof) as of the most recent Distribution Date (as defined in the 2007-1 Pooling and Servicing Agreement as in effect on the date hereof) minus (ii) the Class A Principal Balance (as defined in the 2007-1 Pooling and Servicing Agreement as in effect on the date hereof) as of such Distribution Date; and

 

(c)           the Pool Principal Balance (as defined in the Mortgage Sale, Contribution and Servicing Agreement) on such date of determination.

 

 “Agreement” means this Credit Agreement.

 

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“Applicable Margin” means, with respect to Loans, 12%.

 

“Approved Fund” means, with respect to any Lender, any Person (other than a natural Person) that (a) 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 and (b) is advised or managed by (i) such Lender, (ii) any Affiliate of such Lender or (iii) any Person (other than an individual) or any Affiliate of any Person (other than an individual) that administers or manages such Lender.

 

“Assignment” means an assignment agreement entered into by a Lender, as assignor, and any prospective assignee thereof and accepted by the Administrative Agent, in substantially the form of Exhibit A.

 

“Benefit Plan” means any employee benefit plan as defined in Section 3(3) of ERISA (whether governed by the laws of the United States or otherwise) to which any Group Member incurs or otherwise has any obligation or liability, contingent or otherwise.

 

“Borrowing” means a borrowing consisting of Loans made on the Closing Date by the Lenders according to their respective Commitments.

 

“Business Day” means any day of the year that is not a Saturday, Sunday or a day on which banks are required or authorized to close in New York City and, when determined in connection with notices and determinations in respect of any Eurodollar Rate or Loan or any funding, Interest Period or payment of any Loan, that is also a day on which dealings in Dollar deposits are carried on in the London interbank market.

 

“Capital Expenditures” means, for any Person for any period, the aggregate of all expenditures, whether or not made through the incurrence of Indebtedness, by such Person and its Subsidiaries during such period for the acquisition, leasing (pursuant to a Capital Lease), construction, replacement, repair, substitution or improvement of fixed or capital assets or additions to equipment, in each case required to be capitalized under GAAP on a balance sheet of such Person and its Subsidiaries consolidated in accordance with GAAP, excluding (a) interest capitalized during construction and (b) any expenditure to the extent, for purpose of the definition of Permitted Acquisition, such expenditure is part of the aggregate amounts payable in connection with, or other consideration for, any Permitted Acquisition consummated during or prior to such period.

 

“Capital Lease” means, with respect to any Person, any lease of, or other arrangement conveying the right to use, any property (whether real, personal or mixed) by such Person as lessee that has been or should be accounted for as a capital lease on a balance sheet of such Person prepared in accordance with GAAP.

 

“Capitalized Lease Obligations” means, at any time, with respect to any Capital Lease, any lease entered into as part of any Sale and Leaseback Transaction of any Person or any synthetic lease, the amount of all obligations of such Person that is (or that would be, if such synthetic lease or other lease were accounted for as a Capital Lease) capitalized on a balance sheet of such Person prepared in accordance with GAAP.

 

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“Cash Equivalents” means (a) any readily-marketable securities (i) issued by, or directly, unconditionally and fully guaranteed or insured by the United States federal government or (ii) issued by any agency of the United States federal government the obligations of which are fully backed by the full faith and credit of the United States federal government, (b) any readily-marketable direct obligations issued by any other agency of the United States federal government, any state of the United States or any political subdivision of any such state or any public instrumentality thereof, in each case having a rating of at least “A-1” from S&P or at least “P-1” from Moody’s, (c) any commercial paper rated at least “A-1” by S&P or “P-1” by Moody’s and issued by any Person organized under the laws of any state of the United States, (d) any Dollar-denominated time deposit, insured certificate of deposit, overnight bank deposit or bankers’ acceptance issued or accepted by (i) any Lender or (ii) any commercial bank that is (A) organized under the laws of the United States, any state thereof or the District of Columbia, (B) “adequately capitalized” (as defined in the regulations of its primary federal banking regulators) and (C) has Tier 1 capital (as defined in such regulations) in excess of $250,000,000 and (e) shares of any United States money market fund that (i) has substantially all of its assets invested continuously in the types of investments referred to in clause (a), (b), (c) or (d) above with maturities as set forth in the proviso below, (ii) has net assets in excess of $500,000,000 and (iii) has obtained from either S&P or Moody’s the highest rating obtainable for money market funds in the United States; provided, however, that the maturities of all obligations specified in any of clauses (a), (b), (c) and (d) above shall not exceed 365 days.

 

“Change of Control” means the occurrence of any of the following:  (a) a Parent Control Event, (b) Parent shall cease to own and control legally and beneficially at least 80% of the economic and voting rights associated with ownership of all outstanding Voting Stock of all classes of Voting Stock of CPA, (c) CPA shall cease to own and control, directly or indirectly, legally and beneficially all of the economic and voting rights associated with ownership of all outstanding Voting Stock of all classes of Voting Stock of any other Borrower or (d) a “Change of Control” or any term of similar effect, as defined in any document governing Indebtedness of any Group Member having a principal amount in excess of $1,000,000 shall occur.

 

“Class R Certificate” means each of (i) the “Class R Certificate” as defined in the 2005-1 Pooling and Servicing Agreement and (ii) the “Class R Certificate” as defined in the 2007-1 Pooling and Servicing Agreement.

 

“Class X Certificate” means each of (i) the “Class X Certificate” as defined in the 2005-1 Pooling and Servicing Agreement and (ii) the “Class X Certificate” as defined in the 2007-1 Pooling and Servicing Agreement.

 

“Closing Date” means the first date on which any Loan is made.

 

“Closing Date Commitment” means that portion of the Commitments so designated on Schedule I.

 

“Code” means the U.S. Internal Revenue Code of 1986.

 

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“Collateral” means all property and interests in property and proceeds thereof now owned or hereafter acquired by any Loan Party in or upon which a Lien is granted or purported to be granted pursuant to any Loan Document.

 

“Collateral Account” means a deposit account or securities account in the name of any Borrower and under the “control” (as defined in the applicable UCC) of the Administrative Agent and (a) in the case of a deposit account, from which the Borrowers may not make withdrawals except as permitted by the Administrative Agent and (b) in the case of a securities account, with respect to which the Administrative Agent shall be an entitlement holder, authorized to give entitlement orders with respect thereto.

 

“Commitment” means, with respect to each Lender, the commitment of such Lender to make Loans to the Borrowers, which commitment is in the amount set forth opposite such Lender’s name on Schedule I under the caption “Commitment”, as amended to reflect Assignments.  The aggregate amount of the Commitments on the date hereof equals $24,800,000.

 

“Commitment Termination Date” means the earliest of (a) August 1, 2010, (b) the date of termination of the Commitments pursuant to Section 9.2 and (c) the date on which the Obligations become due and payable pursuant to Section 9.2.

 

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

 

“Consolidated Cash Interest Expense” means, with respect to any Person for any period, the Consolidated Interest Expense of such Person for such period less the sum of, in each case to the extent included in the definition of Consolidated Interest Expense, (a) the amortized amount of debt discount and debt issuance costs, (b) charges relating to write-ups or write-downs in the book or carrying value of existing Consolidated Total Debt, (c) interest payable in evidences of Indebtedness or by addition to the principal of the related Indebtedness and (d) other non-cash interest.

 

“Consolidated Current Assets” means, with respect to any Person at any date, the total  current assets (including accrued interest receivable, loan receivables (net of financed loan fees and points, deferred revenue loan fees and points and allowance for loan loss)) and other assets of such Person and its Subsidiaries (consolidated in accordance with GAAP) at such date other than cash, Cash Equivalents and any Indebtedness owing to such Person or any of its Subsidiaries by Affiliates of such Person.

 

“Consolidated Current Liabilities” means, with respect to any Person at any date, all liabilities of such Person and its Subsidiaries at such date that should be classified as current liabilities, securitized financed debt and subordinated debt on a balance sheet of such Person and its Subsidiaries (consolidated in accordance with GAAP); provided, however, that “Consolidated Current Liabilities” shall exclude the principal amount of the Loans then outstanding.

 

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“Consolidated EBITDA” means, with respect to any Person for any period, (a) the Consolidated Net Income of such Person for such period plus (b) the sum of, in each case to the extent included in the calculation of such Consolidated Net Income but without duplication, (i) any provision for United States federal income taxes or other taxes measured by net income, (ii) Consolidated Interest Expense, amortization of debt discount and commissions and other fees and charges associated with Indebtedness (except amortization and expenses related to the consummation of the Borrowing on the Closing Date and the payment of all fees, costs and expenses associated with the foregoing), (iii) any loss from extraordinary items, (iv) any depreciation, depletion and amortization expense, (v) any aggregate net loss on the Disposition of property (other than accounts (as defined in the applicable UCC) and inventory) outside the ordinary course of business and (vi) any other non-cash expenditure, charge or loss for such period (other than any non-cash expenditure, charge or loss relating to write-offs, write-downs or reserves with respect to accounts and inventory), including the amount of any compensation deduction as the result of any grant of Stock or Stock Equivalents to employees, officers, directors or consultants and minus (c) the sum of, in each case to the extent included in the calculation of such Consolidated Net Income and without duplication, (i) any credit for United States federal income taxes or other taxes measured by net income, (ii) any other non-cash gain, including any reversal of a charge referred to in clause (b)(vi) above by reason of a decrease in the value of any Stock or Stock Equivalent, and (iii) any other cash payment in respect of expenditures, charges and losses that have been added to Consolidated EBITDA of such Person pursuant to clause (b)(vi) above in any prior period.

 

“Consolidated Interest Expense” means, for any Person for any period, (a) total interest expense of such Person and its Subsidiaries (consolidated in accordance with GAAP) for such period and including, in any event, (i) interest capitalized during such period and net costs under Interest Rate Contracts for such period and (ii) all fees, charges, commissions, discounts and other similar obligations (other than reimbursement obligations) with respect to letters of credit, bank guarantees, banker’s acceptances, surety bonds and performance bonds (whether or not matured) payable by such Person and its Subsidiaries during such period minus (b) the sum of (i) net gains of such Person and its Subsidiaries (consolidated in accordance with GAAP) under Interest Rate Contracts for such period and (ii) interest income of such Person and its Subsidiaries (consolidated in accordance with GAAP) for such period.

 

“Consolidated Net Income” means, with respect to any Person, for any period, the net income (or loss) of such Person and its Subsidiaries (consolidated in accordance with GAAP) for such period; provided, however, that the following shall be excluded:  (a) the net income of any other Person in which such Person or one of its Subsidiaries has a joint interest with a third-party (which interest does not cause the net income of such other Person to be consolidated into the net income of such Person pursuant to GAAP), except to the extent of the amount of dividends or distributions paid to such Person or Subsidiary, (b) the net income of any Subsidiary of such Person that is, on the last day of such period, subject to any restriction or limitation on the payment of dividends or the making of other distributions, to the extent of such restriction or limitation and (c) the net income of any other Person arising prior to such other Person becoming a Subsidiary of such Person or merging or consolidating into such Person or its Subsidiaries.

 

“Consolidated Total Debt” of any Person means all Indebtedness of a type described in clause (a), (b), (c)(i), (d) or (f) of the definition thereof and all Guaranty Obligations with respect to any such Indebtedness, in each case of such Person and its Subsidiaries (consolidated in accordance with GAAP).

 

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ARTICLE V

FINANCIAL COVENANTS

 

Each Guarantor and each Borrower (and, to the extent set forth in any other Loan Document, each other Loan Party) agrees with the Lenders and the Administrative Agent to each of the following, as long as any Obligation or any Commitment remains outstanding:

 

Section 5.1            Capital Expenditures.  The Group Members (other than Mortgage SPV) shall not incur, or permit to be incurred, Capital Expenditures in an aggregate amount not exceeding $300,000 in any fiscal year for all such Group Members; provided, however, that, to the extent that actual Capital Expenditures incurred in any such fiscal year shall be less than the maximum amount set forth above for such fiscal year (without giving effect to the carryover permitted by this proviso), 50% of the difference between such stated maximum amount and such actual Capital Expenditures shall, in addition to any amount permitted above, be available for Capital Expenditures in the next succeeding fiscal year; and provided, further, that any Capital Expenditures incurred in any fiscal year shall be deemed to have been incurred first, in respect of amounts permitted under this Section 5.2 without giving effect to the preceding proviso and then, in respect of any amount permitted solely by reason of the preceding proviso.  Mortgage SPV shall not incur, or permit to be incurred, any Capital Expenditures.

 

Section 5.2            Maximum Loan to Value Ratio.  The Borrowers shall not permit, for more than three consecutive months during any period set forth below, the Loan to Value Ratio during such period to exceed the maximum ratio set forth below opposite such period:

		MAXIMUM LOAN TO VALUE RATIO
TIME PERIOD		Prior to the Subsequent Borrowing Date		On and after the Subsequent Borrowing Date
Closing Date through first day prior to first anniversary of Closing Date		0.36 to one		0.45 to one
First anniversary of Closing Date through first day prior to second anniversary of Closing Date		0.35 to one		0.44 to one
Second anniversary of Closing Date through first day prior to third anniversary of Closing Date		0.34 to one		0.43 to one
Third anniversary of Closing Date through first day prior to fourth anniversary of Closing Date		0.33 to one		0.42 to one

ARTICLE VI

REPORTING COVENANTS

 

Each Guarantor and each Borrower (and, to the extent set forth in any other Loan Document, each other Loan Party) agrees with the Lenders and the Administrative Agent to each of the following, as long as any Obligation or any Commitment remains outstanding:

 

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Section 6.1            Financial Statements.  The Borrowers shall deliver to the Administrative Agent each of the following:

 

(a)           Monthly Reports.  As soon as available, each “Monthly Report” (as defined in the 2005-1 Pooling and Servicing Agreement and as defined in the 2007-1 Pooling and Servicing Agreement) prepared pursuant to the 2005-1 Pooling and Servicing Agreement and the 2007-1 Pooling and Servicing Agreement, respectively, and each “Credit Agreement Agent Report” (as defined in the Mortgage Sale, Contribution and Servicing Agreement) prepared pursuant to the Mortgage Sale, Contribution and Servicing Agreement.

 

(b)           Quarterly Reports.  As soon as available, and in any event within 45 days after the end of each of the first three fiscal quarters of each fiscal year, the unaudited balance sheet of CPA and its Subsidiaries (consolidated in accordance with GAAP), and after the Subsequent Borrowing Date, Standard Casualty, as of the close of such fiscal quarter and related statements of income and cash flow of CPA and its Subsidiaries (consolidated in accordance with GAAP), and after the Subsequent Borrowing Date, Standard Casualty, for such fiscal quarter and that portion of the fiscal year ending as of the close of such fiscal quarter, setting forth in comparative form the figures for the corresponding period in the prior fiscal year and the figures contained in the latest Projections, in each case certified by a Responsible Officer of CPA or Standard Casualty, as applicable, as fairly presenting in all material respects the respective financial position, results of operations and cash flow of such Persons as at the dates indicated and for the periods indicated in accordance with GAAP (subject to the absence of footnote disclosure and normal year-end audit adjustments).

 

(c)           Annual Reports.  As soon as available, and in any event within 90 days after the end of each fiscal year, the balance sheet of CPA and its Subsidiaries (consolidated in accordance with GAAP), and after the Subsequent Borrowing Date, Standard Casualty, as of the end of such year and related statements of income, stockholders’ equity and cash flow of CPA and its Subsidiaries (consolidated in accordance with GAAP), and after the Subsequent Borrowing Date, Standard Casualty, for such fiscal year, each prepared in accordance with GAAP, together with a certification by the Group Members’ Accountants that (i) such financial statements fairly present in all material respects the financial position, results of operations and cash flow of CPA and its Subsidiaries (consolidated in accordance with GAAP), and after the Subsequent Borrowing Date, Standard Casualty, as at the dates indicated and for the periods indicated therein in accordance with GAAP without qualification as to the scope of the audit or as to going concern and without any other similar qualification and (ii) in the course of the regular audit of the businesses of the Group Members, which audit was conducted in accordance with the standards of the United States' Public Company Accounting Oversight Board (or any successor entity), such Group Members’ Accountants have obtained no knowledge that a Default in respect of any financial covenant contained in Article V is continuing or, if in the opinion of the Group Members’ Accountants such a Default is continuing, a statement as to the nature thereof.

 

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(d)           Compliance Certificate.  Together with each delivery of any financial statement pursuant to Section 6.1(c), a Compliance Certificate duly executed by a Responsible Officer of CPA that states that no Default related to Section 5.1 is continuing as of the date of delivery of such Compliance Certificate or, if a Default is continuing, states the nature thereof and the action that the Borrowers propose to take with respect thereto.  Together with each delivery of any report pursuant to Section 6.1(a), a Compliance Certificate duly executed by a Responsible Officer of CPA that states that no Default related to Section 5.2 is continuing as of the date of delivery of such Compliance Certificate or, if a Default is continuing, states the nature thereof and the action that the Borrowers propose to take with respect thereto.

 

(e)           Monthly Calculations.  Together with each delivery of any report pursuant to Section 6.1(a), a certificate duly executed by a Responsible Officer of CPA setting forth:

 

(i)           with respect to the 2005-1 Securitization, (A) the Average Sixty-Day Delinquency Ratio (as defined in the 2005-1 Pooling and Servicing Agreement as in effect on the date hereof) as of the most recent preceding Distribution Date (as defined in the 2005-1 Pooling and Servicing Agreement as in effect on the date hereof, the “2005-1 Distribution Date”), (B) the Current Realized Loss Ratio (as defined in the 2005-1 Pooling and Servicing Agreement as in effect on the date hereof) as of the most recent preceding 2005-1 Distribution Date and (C) the Cumulative Realized Losses (as defined in the 2005-1 Pooling and Servicing Agreement as in effect on the date hereof) as of the most recent preceding 2005-1 Distribution Date, as a percentage of the Cut-Off Date Pool Principal Balance (as defined in the 2005-1 Pooling and Servicing Agreement as in effect on the date hereof) for such 2005-1 Distribution Date;

 

(ii)          with respect to the 2007-1 Securitization, (A) the Average Sixty-Day Delinquency Ratio (as defined in the 2007-1 Pooling and Servicing Agreement as in effect on the date hereof) as of the most recent preceding Distribution Date (as defined in the 2007-1 Pooling and Servicing Agreement as in effect on the date hereof, the “2007-1 Distribution Date”), (B) the Current Realized Loss Ratio (as defined in the 2007-1 Pooling and Servicing Agreement as in effect on the date hereof) as of the most recent preceding 2007-1 Distribution Date and (C) the Cumulative Realized Losses (as defined in the 2007-1 Pooling and Servicing Agreement as in effect on the date hereof) as of the most recent preceding 2007-1 Distribution Date, as a percentage of the Cut-Off Date Pool Principal Balance (as defined in the 2007-1 Pooling and Servicing Agreement as in effect on the date hereof) for such 2007-1 Distribution Date;

 

(iii)         with respect to the Mortgages, (A) the Average Sixty-Day Delinquency Ratio (as defined in the Mortgage Sale, Contribution and Servicing Agreement) as of the last day of the month most recently ended, (B) the Current Realized Loss Ratio (as defined in the Mortgage Sale, Contribution and Servicing Agreement) as of such date, (C) the Cumulative Realized Losses (as defined in the Mortgage Sale, Contribution and Servicing Agreement) as of the last day of the month most recently ended, as a percentage of the Pool Principal Balance (as defined in the Mortgage Sale, Contribution and Servicing Agreement) as of the last day of the month most recently ended, and (D) whether the Cumulative Realized Losses Test (as defined in the Mortgage Sale, Contribution and Servicing Agreement) is satisfied as of the last day of the month most recently ended;

 

(iv)         the Loan to Value Ratio as of the last day of the month most recently ended; and

 

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(v)          Excess Cash Flow for the month most recently ended;

 

in each case, setting forth in reasonable detail the calculations used in determining all such ratios and amounts; provided that Borrowers shall provide such certificate separately within 20 days after the end of each month, if the report to be delivered pursuant to Section 6.1(a) is not available at such time.

 

(f)           Other Collateral Updates.  As part of the Compliance Certificate delivered pursuant to Section 6.1(d) above, each in form and substance satisfactory to the Administrative Agent, a certificate by a Responsible Officer of CPA that (i) the Loan Parties have delivered all documents (including updated schedules as to locations of Collateral and acquisition of Intellectual Property or real property) they are required to deliver pursuant to any Loan Document on or prior to the date of delivery of such Compliance Certificate and (ii) complete and correct copies of all documents modifying any term of any Constituent Document of any Group Member or any Subsidiary or joint venture thereof on or prior to the date of delivery of such Compliance Certificate have been delivered to the Administrative Agent or are attached to such certificate.

 

(g)           Additional Projections.  Promptly upon provision thereof to the board of directors of Parent, CPA or CPM, in any fiscal year (and Standard Casualty, in any fiscal year of or following the Subsequent Borrowing Date), forecasts prepared by management of the such entities (i) for each fiscal quarter in such next succeeding fiscal year and (ii) for each other succeeding fiscal year through the fiscal year containing the Maturity Date, in each case including in such forecasts (A) a projected year-end consolidated balance sheet, income statement and statement of cash flows, (B) a statement of all of the material assumptions on which such forecasts are based and (C) substantially the same type of financial information as that contained in the Initial Projections.

 

(h)           Audit Reports, Management Letters, Etc.  Together with each delivery of any financial statement for any fiscal year pursuant to Section 6.1(c) above, copies of each management letter, audit report or similar letter or report received by any Group Member from any independent registered certified public accountant (including the Group Members’ Accountants) in connection with such financial statements or any audit thereof, each certified to be complete and correct copies by a Responsible Officer of CPA as part of the Compliance Certificate delivered in connection with such financial statements.

 

(i)           Insurance.  Together with each delivery of any financial statement for any fiscal year pursuant to Section 6.1(c) above, each in form and substance satisfactory to the Administrative Agent and certified as complete and correct by a Responsible Officer of CPA as part of the Compliance Certificate delivered in connection with such financial statements, a summary of all material insurance coverage maintained as of the date thereof by any Group Member, together with such other related documents and information as the Administrative Agent may reasonably require.

 

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Section 6.2            Other Events.  The Borrowers shall give the Administrative Agent notice of each of the following (which may be made by telephone if promptly confirmed in writing) promptly after any Responsible officer of any Group Member knows or has reason to know of it:  (a)(i) any Default and (ii) any event that would have a Material Adverse Effect, specifying, in each case, the nature and anticipated effect thereof and any action proposed to be taken in connection therewith, (b) any “Event of Termination” as defined in the Mortgage Contribution, Sale and Servicing Agreement, (c) any event (other than any event involving loss or damage to property) reasonably expected to result in a mandatory payment of the Obligations pursuant to Section 2.6, stating the material terms and conditions of such transaction and estimating the Net Cash Proceeds thereof or relevant Excess Cash Flow (together with supporting materials demonstrating the calculation of such Excess Cash Flow), and (d) the commencement of, or any material developments in, any action, investigation, suit, proceeding, audit, claim, demand, order or dispute with, by or before any Governmental Authority affecting any Group Member or any property of any Group Member that (i) in the reasonable judgment of the Borrowers, exposes any Group Member to liability in an aggregate amount in excess of $250,000 or (ii) if adversely determined would have a Material Adverse Effect.

 

Section 6.3            Copies of Notices and Reports.  The Borrowers shall promptly deliver to the Administrative Agent copies of each of the following:  (a) to the extent that Parent is no longer a reporting company under Section 15(d) of the Securities Exchange Act of 1934, as amended, all reports that Parent transmits to its security holders generally, (b) any material document, and any financial statement or report, transmitted or received pursuant to, or in connection with, any Contractual Obligation governing Indebtedness of any Group Member and (c) all reports or notices received or issued by any Group Member in connection with the 2005-1 Securitization or the 2007-1 Securitization.

 

Section 6.4            Taxes.  The Borrowers shall give the Administrative Agent notice of each of the following (which may be made by telephone if promptly confirmed in writing) promptly after any Responsible Officer of any Group Member knows or has reason to know of it:  (a) the creation, or filing with the IRS or any other Governmental Authority, of any Contractual Obligation or other document extending, or having the effect of extending, the period for assessment or collection of any taxes with respect to any Tax Affiliate (excluding routine extensions) and (b) the creation of any Contractual Obligation of any Tax Affiliate, or the receipt of any request directed to any Tax Affiliate, to make any adjustment under Section 481(a) of the Code, by reason of a change in accounting method or otherwise, which would have a Material Adverse Effect.

 

Section 6.5            Labor Matters.  The Borrowers shall give the Administrative Agent notice of each of the following (which may be made by telephone if promptly confirmed in writing), promptly after, and in any event within 30 days after any Responsible Officer of any Group Member knows or has reason to know of it:  (a) the commencement of any material labor dispute to which any Group Member is or may become a party, including any strikes, lockouts or other disputes relating to any of such Person’s plants and other facilities and (b) the incurrence by any Group Member of any Worker Adjustment and Retraining Notification Act or related or similar liability incurred with respect to the closing of any plant or other facility of any such Person (other than, in the case of this Section 6.5(b), those that would not, in the aggregate, have a Material Adverse Effect).

 

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Section 6.6            ERISA Matters.  The Borrowers shall give the Administrative Agent (a) on or prior to any filing by any ERISA Affiliate of any notice of intent to terminate any Title IV Plan, a copy of such notice and (b) promptly, and in any event within ten days, after any Responsible Officer of any ERISA Affiliate knows or has reason to know that a request for a minimum funding waiver under Section 412 of the Code has been filed with respect to any Title IV Plan or Multiemployer Plan, a notice (which may be made by telephone if promptly confirmed in writing) describing such waiver request and any action that any ERISA Affiliate proposes to take with respect thereto, together with a copy of any notice filed with the PBGC or the IRS pertaining thereto.

 

Section 6.7            Environmental Matters.  (a) The Borrowers shall provide the Administrative Agent notice of each of the following (which may be made by telephone if promptly confirmed by the Administrative Agent in writing) promptly after any Responsible Officer of any Group Member knows or has reason to know of it (and, upon reasonable request of the Administrative Agent, documents and information in connection therewith):  (i)(A) unpermitted Releases, (B) the receipt by any Group Member of any notice of violation of or potential liability or similar notice under, or the existence of any condition that would reasonably be expected to result in violations of or liabilities under, any Environmental Law or (C) the commencement of, or any material change to, any action, investigation, suit, proceeding, audit, claim, demand, dispute alleging a violation of or liability under any Environmental Law, that, for each of clauses (A), (B) and (C) above (and, in the case of clause (C), if adversely determined), in the aggregate for each such clause, could reasonably be expected to result in Environmental Liabilities in excess of $500,000, (ii) the receipt by any Group Member of notification that any property of any Group Member is subject to any Lien in favor of any Governmental Authority securing, in whole or in part, Environmental Liabilities and (iii) any proposed acquisition or lease of real property (except as part of any Permitted Acquisition) if such acquisition or lease would have a reasonable likelihood of resulting in aggregate Environmental Liabilities in excess of $500,000.

 

(b)           Upon request of the Administrative Agent, the Borrowers shall provide the Administrative Agent a report containing an update as to the status of any environmental, health or safety compliance, hazard or liability issue identified in any document delivered to any Secured Party pursuant to any Loan Document or as to any condition reasonably believed by the Administrative Agent to result in material Environmental Liabilities.

 

Section 6.8            Other Information.  The Borrowers shall provide the Administrative Agent with such other documents and information with respect to the business, property, condition (financial or otherwise), legal, financial or corporate or similar affairs or operations of any Group Member as the Administrative Agent or such Lender through the Administrative Agent may from time to time reasonably request.

 

ARTICLE VII

AFFIRMATIVE COVENANTS

 

Each Guarantor and each Borrower (and, to the extent set forth in any other Loan Document, each other Loan Party) agrees with the Lenders and the Administrative Agent to each of the following, as long as any Obligation or any Commitment remains outstanding:

 

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Section 7.1            Maintenance of Corporate Existence.  Each Group Member shall (a) preserve and maintain its legal existence, except in the consummation of transactions expressly permitted by Sections 8.4 and 8.7, and (b) preserve and maintain it rights (charter and statutory), privileges franchises and Permits necessary or desirable in the conduct of its business, except, in the case of this Section 7.1(b), where the failure to do so would not, in the aggregate, have a Material Adverse Effect.

 

Section 7.2            Compliance with Laws, Etc.  Each Group Member shall comply with all applicable Requirements of Law, Contractual Obligations and Permits, except for such failures to comply that would not, in the aggregate, have a Material Adverse Effect.

 

Section 7.3            Payment of Obligations.  Each Group Member shall pay or discharge before they become delinquent (a) all material claims, taxes, assessments, charges and levies imposed by any Governmental Authority and (b) all other lawful claims that if unpaid would, by the operation of applicable Requirements of Law, become a Lien upon any property of any Group Member, except, in each case, for those whose amount or validity is being contested in good faith by proper proceedings diligently conducted and for which adequate reserves are maintained on the books of the appropriate Group Member in accordance with GAAP.

 

Section 7.4            Maintenance of Property.  Each Group Member shall maintain and preserve (a) in good working order and condition all of its property necessary in the conduct of its business and (b) all rights, permits, licenses, approvals and privileges (including all Permits) necessary, used or useful, whether because of its ownership, lease, sublease or other operation or occupation of property or other conduct of its business, and shall make all necessary or appropriate filings with, and give all required notices to, Government Authorities, except for such failures to maintain and preserve the items set forth in clauses (a) and (b) above that would not, in the aggregate, have a Material Adverse Effect.

 

Section 7.5            Maintenance of Insurance.  Each Group Member shall (a) maintain or cause to be maintained in full force and effect all policies of insurance of any kind with respect to the property and businesses of the Group Members (including policies of life, fire, theft, product liability, public liability, property damage, other casualty, employee fidelity, workers’ compensation, business interruption and employee health and welfare insurance) with financially sound and reputable insurance companies or associations (in each case that are not Affiliates of any Borrower) of a nature and providing such coverage as is sufficient and as is customarily carried by businesses of the size and character of the business of the Group Members and (b) cause all such liability insurance relating to any property or business of any Group Member to name the Administrative Agent on behalf of the Secured Parties as additional insured or loss payee, as appropriate, and to provide that no cancellation, material addition in amount or material change in coverage shall be effective until after 30 days’ notice thereof to the Administrative Agent.

 

Section 7.6            Keeping of Books.  The Group Members shall keep proper books of record and account, in which full, true and correct entries shall be made in accordance with GAAP and all other applicable Requirements of Law of all financial transactions and the assets and business of each Group Member.

 

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Section 7.7            Access to Books and Property.  Each Group Member shall permit the Administrative Agent, the Lenders and any Related Person of any of them, at the expense of the Borrowers (except that, unless an Event of Default has occurred and is continuing, any inspection(s) in excess of one per year shall be at the expense of the Administrative Agent or Lenders and provided that the cost of inspections paid by Borrowers, except during an Event of Default, shall not exceed $25,000), as often as reasonably requested, at any reasonable time during normal business hours and with reasonable advance notice to (a) visit and inspect the property of each Group Member and examine and make copies of and abstracts from, the corporate (and similar), financial, operating and other books and records of each Group Member, (b) discuss the affairs, finances and accounts of each Group Member with any officer or director of any Group Member and (c) with the consent of the Group Member, communicate directly with any registered certified public accountants (including the Group Members’ Accountants) of any Group Member.  Each Group Member shall authorize their respective registered certified public accountants (including the Group Members’ Accountants) to communicate directly with the Administrative Agent, the Lenders and their Related Persons and to disclose to the Administrative Agent, the Lenders and their Related Persons all financial statements and other documents and information as they might have and the Administrative Agent or any Lender reasonably requests with respect to any Group Member.

 

Section 7.8            Environmental.  Each Group Member shall comply with, and maintain its real property, whether owned, leased, subleased or otherwise operated or occupied, in compliance with, all applicable Environmental Laws (including by implementing any Remedial Action necessary to achieve such compliance or that is required by orders and directives of any Governmental Authority) except for failures to comply that would not, in the aggregate, have a Material Adverse Effect.  Without limiting the foregoing, if an Event of Default is continuing or if the Administrative Agent at any time has a reasonable basis to believe that there exist violations of Environmental Laws by any Group Member or that there exist any Environmental Liabilities, in each case, that would have, in the aggregate, a Material Adverse Effect, then each Group Member shall, promptly upon receipt of request from the Administrative Agent, cause the performance of, and allow the Administrative Agent and its Related Persons access to such real property for the purpose of conducting, such environmental audits and assessments, including subsurface sampling of soil and groundwater, and cause the preparation of such reports, in each case as the Administrative Agent may from time to time reasonably request.  Such audits, assessments and reports, to the extent not conducted by the Administrative Agent or any of its Related Persons, shall be conducted and prepared by reputable environmental consulting firms reasonably acceptable to the Administrative Agent and shall be in form and substance reasonably acceptable to the Administrative Agent.

 

Section 7.9            Use of Proceeds.  The proceeds of the Loans shall be used by the Borrowers (and, to the extent distributed to Parent by any Borrower, Parent) solely (a) for the payment of transaction costs, fees and expenses incurred in connection with the Loan Documents and the transactions contemplated therein and (b) for working capital and general corporate and similar purposes including, without limitation, the repayment of intercompany and third party Indebtedness.

 

Section 7.10          Additional Collateral and Guaranties.  To the extent not delivered to the Administrative Agent on or before the Closing Date, each Group Member shall, promptly (and promptly upon acquisition or formation of any Subsidiary or interest described below), do each of the following, unless otherwise agreed by the Administrative Agent:

 

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(a)           deliver to the Administrative Agent such modifications to the terms of the Loan Documents (or, to the extent applicable as determined by the Administrative Agent, such other documents), in each case in form and substance reasonably satisfactory to the Administrative Agent and as the Administrative Agent deems necessary or advisable in order to ensure the following:

 

(i)           each Subsidiary of any Loan Party that holds a direct or indirect interest in any Stock of Mortgage SPV shall guaranty, as primary obligor and not as surety, the payment of the Obligations of the Borrowers; and

 

(ii)          each Loan Party shall effectively grant to the Administrative Agent, for the benefit of the Secured Parties, a valid and enforceable security interest in all of its Stock and Stock Equivalents that comprise such Loan Party’s direct or indirect interest in any Stock of Mortgage SPV, as security for the Obligations of such Loan Party;

 

(b)           deliver to the Administrative Agent all documents representing all Stock, Stock Equivalents and other Securities pledged pursuant to the documents delivered pursuant to Section 7.10(a) above, together with undated powers or endorsements duly executed in blank;

 

(c)           to take all other actions necessary or advisable to ensure the validity or continuing validity of any guaranty for any Obligation or any Lien securing any Obligation, to perfect, maintain, evidence or enforce any Lien securing any Obligation or to ensure such Liens have the same priority as that of the Liens on similar Collateral set forth in the Loan Documents executed on the Closing Date (or, for Collateral located outside the United States, a similar priority acceptable to the Administrative Agent), including the filing of UCC financing statements in such jurisdictions as may be required by the Loan Documents or applicable Requirements of Law or as the Administrative Agent may otherwise reasonably request; and

 

(d)           deliver to the Administrative Agent legal opinions relating to the matters described in this Section 7.10, which opinions shall be as reasonably required by, and in form and substance and from counsel reasonably satisfactory to, the Administrative Agent.

 

Section 7.11          Deposit Accounts; Securities Accounts and Collateral Accounts.  (a) Mortgage SPV shall (i) deposit all of its cash in deposit accounts that are the subject of an effective Control Agreement maintained with a financial institution approved by the Administrative Agent, (ii) deposit all of its Cash Equivalents in securities accounts that are the subject of an effective Control Agreement maintained with a securities intermediary approved by the Administrative Agent, in each case except for cash and Cash Equivalents the aggregate value of which does not exceed $10,000 at any time.

 

(b)           The Administrative Agent shall not have any responsibility for, or bear any risk of loss of, any investment or income of any funds in any Collateral Account.  The Group Members and Persons claiming on behalf of or through any Group Member shall have the right to use the funds held in any Collateral Account unless and until an Event of Default or Trigger Event shall have occurred and be continuing and the Administrative Agent shall have otherwise instructed the depository institution maintaining the Collateral Account in accordance with the terms of the applicable Control Agreement.

 

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(c)           Each Group Member shall deposit, or cause to be deposited, into a Collateral Account, as promptly as practicable (and not later than the second Business Day) following receipt thereof by such Group Member or any Affiliate thereof from or on behalf of any Obligor (as defined in the Mortgage Sale, Contribution and Servicing Agreement), any amount paid with respect to any Mortgage.

 

Section 7.12          Payment of Taxes.  Each Tax Affiliate shall properly prepare and file all material tax returns and shall timely pay and discharge (or cause to be paid and discharged) all material taxes, assessments and governmental and other charges or levies imposed upon it or upon its income or profits, or upon property belonging to it; provided that such Tax Affiliate shall not be required to pay any such tax, assessment, charge or levy that is being contested in good faith by appropriate proceedings and for which the affected Tax Affiliate shall have set aside on its books adequate reserves with respect thereto in conformance with GAAP.

 

Section 7.13          Post-Closing Covenants.

 

(a)           Notwithstanding the terms of Section 3.1, the parties acknowledge that the conditions precedent set forth below will not be satisfied on or prior to the Closing Date.  The Administrative Agent and Lenders have agreed to waive the satisfaction thereof as a condition precedent to the initial Loans, and in consideration thereof the Loan Parties agree to fulfill such conditions in the time periods set forth below (unless waived by Required Lenders):

 

(i)           within 30 days after the Closing Date, the Loan Parties shall provide insurance certificates in form and substance satisfactory to the Administrative Agent demonstrating that the insurance policies required by Section 7.5 are in full force and effect and have all endorsements required by such Section 7.5.

 

ARTICLE VIII

NEGATIVE COVENANTS

 

Each Guarantor and each Borrower (and, to the extent set forth in any other Loan Document, each other Loan Party) agrees with the Lenders and the Administrative Agent to each of the following, as long as any Obligation or any Commitment remains outstanding:

 

Section 8.1            Indebtedness.  No Group Member shall, directly or indirectly, incur or otherwise remain liable with respect to or responsible for, any Indebtedness except for the following:

 

(a)           the Obligations;

 

(b)           in the case of any Group Member other than Mortgage SPV:

 

(i)           Indebtedness existing on the date hereof and set forth on Schedule 8.1, together with any Permitted Refinancing thereof;

 

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(ii)          Indebtedness consisting of Capitalized Lease Obligations (other than with respect to a lease entered into as part of a Sale and Leaseback Transaction) and other Indebtedness incurred by any such Group Member solely to finance the acquisition, repair, improvement or construction of fixed or capital assets of such Group Member; provided, however, that (A) the aggregate outstanding principal amount of all such Indebtedness does not exceed $1,000,000 at any time and (B) the principal amount of such Indebtedness does not exceed the lower of the cost or fair market value of the property so acquired or built or of such repairs or improvements financed with such Indebtedness (each measured at the time such acquisition, repair, improvement or construction is made);

 

(iii)         Capitalized Lease Obligations arising under Sale and Leaseback Transactions permitted under Section 8.4(b)(ii);

 

(iv)         up to $23,700,000 (or such higher amount as is approved in writing by Required Lenders) of intercompany loans made in cash by Parent to CPA or CPM on a non-revolving basis; provided that the existing amount of such loans as of the Closing Date may be paid and prepaid without subordination so long as no Default has occurred and is continuing, and provided further that any such new loans made would be subject to the approval of Required Lenders and subordinated to the payment of the Obligations on terms and conditions satisfactory to the Administrative Agent;

 

(v)          intercompany loans owing by such Group Member to any other Group Member and constituting Permitted Investments of such Group Member;

 

(vi)         obligations under Hedging Agreements entered into for the sole purpose of hedging in the normal course of business and consistent with industry practices;

 

(vii)        Guaranty Obligations of any such Group Member with respect to Indebtedness of any other such Group Member (other than Indebtedness described in Section 8.1(b)(i) or (b)(ii) above, for which Guaranty Obligations may be permitted to the extent set forth in Section 8.1(b)(i) or (b)(ii));

 

(viii)       any unsecured Indebtedness, in favor of any Person other than an Affiliate of any Group Member, not described elsewhere in this Section 8.1; provided, however, that the aggregate outstanding principal amount of all such unsecured Indebtedness shall not exceed $1,000,000 at any time; and

 

(ix)          any secured Indebtedness consisting of (A) loan purchase or repurchase agreements, (B) warehouse lines of credit or (C) construction lines of credit, in each case, in favor of any Person other than an Affiliate of any Group Member and not described elsewhere in this Section 8.1; provided, however, that (i) the aggregate outstanding principal amount of all such secured Indebtedness shall not exceed $25,000,000 at any time and (ii) the collateral therefor shall not include any of the Collateral.

 

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Section 8.2            Liens.  No Group Member shall incur, maintain or otherwise suffer to exist any Lien upon or with respect to any of its property, whether now owned or hereafter acquired, or assign any right to receive income or profits, except for the following:

 

(a)           Liens created pursuant to any Loan Document;

 

(b)           in the case of any Group Member other than Mortgage SPV:

 

(i)           Liens (A) with respect to the payment of taxes, assessments or other governmental charges or (B) of suppliers, carriers, materialmen, warehousemen, workmen or mechanics and other similar Liens, in each case imposed by law or arising in the ordinary course of business, and, for each of the Liens in clauses (A) and (B) above for amounts that are not yet due or that are being contested in good faith by appropriate proceedings diligently conducted and with respect to which adequate reserves or other appropriate provisions are maintained on the books of such Person in accordance with GAAP;

 

(ii)          Liens of a collection bank on items in the course of collection arising under Section 4-208 of the UCC as in effect in the State of New York or any similar section under any applicable UCC or any similar Requirement of Law of any foreign jurisdiction;

 

(iii)         pledges or cash deposits made in the ordinary course of business (A) in connection with workers’ compensation, unemployment insurance or other types of social security benefits (other than any Lien imposed by ERISA), (B) to secure the performance of bids, tenders, leases (other than Capital Leases) sales or other trade contracts (other than for the repayment of borrowed money) or (C) made in lieu of, or to secure the performance of, surety, customs, reclamation or performance bonds (in each case not related to judgments or litigation);

 

(iv)         judgment liens (other than for the payment of taxes, assessments or other governmental charges) securing judgments and other proceedings not constituting an Event of Default under Section 9.1(e) and pledges or cash deposits made in lieu of, or to secure the performance of, judgment or appeal bonds in respect of such judgments and proceedings;

 

(v)          Liens (A) arising by reason of zoning restrictions, easements, licenses, reservations, restrictions, covenants, rights-of-way, encroachments, minor defects or irregularities in title (including leasehold title) and other similar encumbrances on the use of real property or (B) consisting of leases, licenses or subleases granted by a lessor, licensor or sublessor on its property (in each case other than Capital Leases) otherwise permitted under Section 8.4 that, for each of the Liens in clauses (A) and (B) above, do not, in the aggregate, materially (x) impair the value or marketability of such real property or (y) interfere with the ordinary conduct of the business conducted and proposed to be conducted at such real property;

 

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(vi)         Liens of landlords and mortgagees of landlords (A) arising by statute or under any lease or related Contractual Obligation entered into in the ordinary course of business, (B) on fixtures and movable tangible property located on the real property leased or subleased from such landlord, (C) for amounts not yet due or that are being contested in good faith by appropriate proceedings diligently conducted and (D) for which adequate reserves or other appropriate provisions are maintained on the books of such Person in accordance with GAAP;

 

(vii)        the title and interest of a lessor or sublessor in and to personal property leased or subleased (other than through a Capital Lease), in each case extending only to such personal property;

 

(viii)       Liens existing on the date hereof and set forth on Schedule 8.2, together with Liens on the property of any Borrower or any of its Subsidiaries (other than Mortgage SPV) securing the Permitted Refinancing of any Indebtedness secured by any such Lien without any change in the property subject to such Liens;

 

(ix)         purchase money Liens on the property of any Borrower or any of its Subsidiaries (other than Mortgage SPV) securing Indebtedness described in Section 8.1(b)(ii); provided, however, that (A) such Liens exist prior to the acquisition of, or attach substantially simultaneously with, or within 90 days after, the acquisition, repair, improvement or construction of, such property financed by such Indebtedness and (B) such Liens do not extend to any property of any Group Member other than the property (and proceeds thereof) acquired or built, or the improvements or repairs financed by such Indebtedness;

 

(x)          Liens on any property of any Borrower or any of its Subsidiaries (other than Mortgage SPV) securing any of their Indebtedness or their other liabilities; provided, however, that the aggregate outstanding principal amount of all such Indebtedness and other liabilities shall not exceed $2,000,000 at any time; and

 

(xi)         Liens securing Indebtedness permitted under Section 8.1(b)(ix).

 

Section 8.3            Investments.  No Group Member shall make or maintain, directly or indirectly, any Investment except for the following:

 

(a)           Investments existing on the date hereof and set forth on Schedule 8.3;

 

(b)           Investments in cash and Cash Equivalents;

 

(c)            endorsements for collection or deposit in the ordinary course of business consistent with past practice;

 

(d)           the case of any Group Member other than Mortgage SPV:

 

(i)           (A) extensions of trade credit (other than to Affiliates of any Borrower) arising or acquired in the ordinary course of business and (B) Investments received in settlements in the ordinary course of business of such extensions of trade credit;

 

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(ii)          Investments made as part of a Permitted Acquisition;

 

(iii)         loans or advances to employees of any Borrower (other than Mortgage SPV) or any of its Subsidiaries to finance travel, entertainment and relocation expenses and other ordinary business purposes in the ordinary course of business as presently conducted; provided, however, that the aggregate outstanding principal amount of all loans and advances permitted under this Section 8.3(d)(iii) shall not exceed $500,000 at any time;

 

(iv)         secured loans made and held for sale or investment by any Borrower or any of its Subsidiaries (other than Mortgage SPV) in the ordinary course of its business; provided, however, that (A) the aggregate outstanding amount of all such Investments shall not exceed $10,000,000 at any time and (B) unless made in the ordinary course of such Group Member’s business, such Investments have been approved by the Administrative Agent (which approval shall not be unreasonably withheld or delayed); and

 

(vii)       Guaranty Obligations constituting Indebtedness permitted by Section 8.1.

 

Section 8.4            Asset Dispositions.  Parent shall not Dispose of any Stock of CPA.  No Group Member shall Dispose of any of its property (other than cash) or issue shares of its own Stock, except for the following, in the case of any Group Member other than Mortgage SPV:

 

(a)           In each case to the extent entered into in the ordinary course of business and made to a Person that is not an Affiliate of any Borrower, (i) Dispositions of Cash Equivalents, (ii) property that has become obsolete, no longer in use or insignificant to such Group Member’s business or worn out and (iii) non-exclusive licenses of Intellectual Property;

 

(b)           (i) a true lease or sublease of real property not constituting Indebtedness and not entered into as part of a Sale and Leaseback Transaction and (ii) a Disposition of property pursuant to a Sale and Leaseback Transaction; provided, however, that the aggregate fair market value (measured at the time of the applicable Disposition) of all property covered by any outstanding Sale and Leaseback Transaction at any time shall not exceed $1,000,000;

 

(c)           (i) any Disposition of any property (other than their own Stock or Stock Equivalents) by any such Group Member to any other Group Member (other than Mortgage SPV) to the extent any resulting Investment constitutes a Permitted Investment and (ii) any Restricted Payment by any such Group Member permitted under Section 8.5;

 

(d)           (i) any Disposition or issuance by any such Borrower or any such Subsidiary of any Borrower of its own Stock to any Group Member (other than Mortgage SPV), provided, however, that the proportion of such Stock and of each class of such Stock (both on an outstanding and fully-diluted basis) held by the Loan Parties, taken as a whole, does not change as a result of such Disposition or issuance and (ii) to the extent necessary to satisfy any Requirement of Law in the jurisdiction of incorporation of any Subsidiary of any Borrower, any Disposition or issuance by such Subsidiary of its own Stock constituting directors’ qualifying shares or nominal holdings;

 

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(e)           as long as no Default is continuing or would result therefrom, any Disposition of property (other than as part of a Sale and Leaseback Transaction) of, or Disposition or issuance of its own Stock by, any such Group Member (other than CPA) for fair market value payable in cash upon such Disposition; provided, however, that the aggregate consideration received during any fiscal year for all such Dispositions shall not exceed $1,000,000; and

 

(f)           To the extent entered into in the ordinary course of such Group Member’s business for fair market value and made to a Person that is not an Affiliate of any Borrower, Dispositions of inventory, mortgages, loans, property obtained by foreclosure or deed-in-lieu of foreclosure.

 

Section 8.5            Restricted Payments.  No Group Member shall directly or indirectly, declare, order, pay, make or set apart any sum for any Restricted Payment except for the following:

 

(a)           In the case of Mortgage SPV:

 

(i)           any Restricted Payment to any holder of a Class A membership interest in Mortgage SPV;

 

(ii)          any Restricted Payment if, at the time of such Restricted Payment and after giving effect thereto, (i) no 2005-1 Trigger Event, 2007-1 Trigger Event, Mortgage Trigger Event or Event of Default has occurred and is continuing and (ii) an amount equal to the sum of the next payments of interest and principal (including without limitation any required prepayments thereof), and any other amount then due under the Loan Documents, has been and remains deposited in a Collateral Account.

 

(b)           In the case of any Group Member other than Mortgage SPV or CPA:

 

(i)            (A) Restricted Payments (x) by any Loan Party to any Loan Party and (y) by any Group Member that is not a Loan Party to any Group Member and (B) dividends and distributions by any Subsidiary of any Borrower that is not a Loan Party to any holder of its Stock, to the extent made to all such holders ratably according to their ownership interests in such Stock;

 

(ii)          dividends and distributions declared and paid on the common Stock of any Group Member ratably to the holders of such common Stock and payable only in common Stock of such Group Member; and

 

(c)           In the case of CPA, Restricted Payments in an amount of up to $3,000,000 (or such higher amount as has been approved by the Administrative Agent) in the aggregate.

 

Section 8.6            Prepayment of Indebtedness.  No Group Member shall (x) prepay, redeem, purchase, defease or otherwise satisfy prior to the scheduled maturity thereof any Indebtedness, (y) set apart any property for such purpose, whether directly or indirectly and whether to a sinking fund, a similar fund or otherwise, or (z) make any payment in violation of any subordination terms of any Indebtedness; provided, however, that each Group Member may, to the extent otherwise permitted by the Loan Documents, do each of the following:

 

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(a)           prepay the Obligations;

 

(b)           in the case of any Group Member other than Mortgage SPV:

 

(i)           consummate a Permitted Refinancing;

 

(ii)          while no Default has occurred and is continuing, prepay, redeem, purchase, defease or otherwise satisfy prior to the scheduled maturity thereof (or set apart any property for such purpose) (A) in the case of any Group Member that is not a Loan Party, any Indebtedness owing by such Group Member to any other Group Member and (B) in the case of any Loan Party, any Indebtedness owing to any Loan Party, in each case, in accordance with any terms of subordination applicable thereto;

 

(iii)         while no Default has occurred and is continuing, make regularly scheduled or otherwise required repayments (including mandatory prepayments) or redemptions of Indebtedness and, in the case of Subordinated Debt, to the extent permitted by the subordination provisions thereof; and

 

(iv)         payment of secured Indebtedness that becomes due as a result of the voluntary sale or transfer of property or assets securing such Indebtedness.

 

Section 8.7            Fundamental Changes.  No Group Member shall (a) merge, consolidate or amalgamate with any Person, (b) acquire all or substantially all of the Stock or Stock Equivalents of any Person or (c) acquire any brand or all or substantially all of the assets of any Person or all or substantially all of the assets constituting any line of business, division, branch, operating division or other unit operation of any Person, in each case except for the following, in the case of any Group Member other than Mortgage SPV: (x) to consummate any Permitted Acquisition, (y) the merger, consolidation or amalgamation of any Subsidiary of any Borrower into any Loan Party (other than Mortgage SPV or Parent) and (z) the merger, consolidation or amalgamation of any Group Member (other than Mortgage SPV) for the sole purpose, and with the sole material effect, of changing its State of organization within the United States; provided, however, that (A) in the case of any merger, consolidation or amalgamation involving any Borrower, such Borrower shall be the surviving Person and (B) in the case of any merger, consolidation or amalgamation involving any other Loan Party (other than Mortgage SPV), a Loan Party other than Mortgage SPV or Parent shall be the surviving corporation and all actions required to maintain the perfection of the Lien of the Administrative Agent on the Stock or property of such Loan Party shall have been made.

 

Section 8.8            Change in Nature of Business.  (a) No Group Member shall carry on any business, operations or activities (whether directly, through a joint venture, in connection with a Permitted Acquisition or otherwise) substantially different from those carried on by the Borrowers and their Subsidiaries at the date hereof and business, operations and activities reasonably related thereto.

 

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(b)           Mortgage SPV shall not engage in any business, operations or activity, or hold any property, other than holding the Mortgages, the Class R Certificates and the Class X Certificates.

 

Section 8.9            Transactions with Affiliates.  No Group Member shall, except as otherwise expressly permitted herein, enter into any other transaction directly or indirectly with, or for the benefit of, any Affiliate of any Borrower that is not a Loan Party (including Guaranty Obligations with respect to any obligation of any such Affiliate), except for (a) in the case of any Group Member, transactions in the ordinary course of business and permitted by such Group Member’s Constituent Documents, on a basis no less favorable to such Group Member as would be obtained in a comparable arm’s length transaction with a Person not an Affiliate of any Borrower, (b) Restricted Payments, the proceeds of which, if received by CPA, are used as required by Section 8.5, (c) reasonable salaries and other reasonable director or employee compensation to officers and directors of any Group Member and (d) in the case of Mortgage SPV, the transactions contemplated by the 2005-1 Securitization Documents as in effect on the date hereof, the 2007-1 Securitization Documents as in effect on the date hereof and the Mortgage Sale, Contribution and Servicing Agreement.

 

Section 8.10          Third-Party Restrictions on Indebtedness, Liens, Investments or Restricted Payments.  (a) No Group Member (other than Mortgage SPV) shall incur or otherwise suffer to exist or become effective or remain liable on or responsible for any Contractual Obligation limiting the ability of (a) any Subsidiary of any Borrower to make Restricted Payments to any Group Member, or any Subsidiary of any Borrower (other than Mortgage SPV) to make Investments in, or repay Indebtedness or otherwise Dispose of property to, any Group Member or (b) any Group Member to incur or suffer to exist any Lien upon any property of any Group Member, whether now owned or hereafter acquired, securing any of its Obligations (including any “equal and ratable” clause and any similar Contractual Obligation requiring, when a Lien is granted on any property, another Lien to be granted on such property or any other property), except, for each of clauses (a) and (b) above, (x) pursuant to the Loan Documents and (y) limitations on Liens (other than those securing any Obligation) on any property whose acquisition, repair, improvement or construction is financed by Indebtedness or Permitted Refinancings permitted under Section 8.1(b)(i) or (b)(ii) set forth in the Contractual Obligations governing such Indebtedness, Capitalized Lease Obligations or Permitted Refinancing or Guaranty Obligations with respect thereto.

 

(b)           Mortgage SPV shall not incur or otherwise suffer to exist or become effective or remain liable on or responsible for any Contractual Obligation limiting its ability to incur or suffer to exist any Lien upon any of its property, whether now owned or hereafter acquired, securing any of its Obligations (including any “equal and ratable” clause and any similar Contractual Obligation requiring, when a Lien is granted on any property, another Lien to be granted on such property or any other property), except pursuant to the Loan Documents.

 

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Section 8.11          Modification of Certain Documents.  No Group Member shall do any of the following:

(a)           waive or otherwise modify any term of any Constituent Document of, or otherwise change the capital structure of, any Group Member (including the terms of any of their outstanding Stock or Stock Equivalents), in each case for any Group Member other than Mortgage SPV, except for those modifications and waivers that (x) do not elect, or permit the election, to treat the Stock or Stock Equivalents of any limited liability company (or similar entity) as uncertificated and (y) do not materially and adversely affect the rights and privileges of any Group Member and do not materially and adversely affect the interests of any Secured Party under the Loan Documents or in the Collateral;

 

(b)           waive or otherwise modify any term of any Subordinated Debt if the effect thereof on such Subordinated Debt is to (i) increase the interest rate, (ii) shorten the time of payments of principal and interest due, (iii) modify any subordination provision, or (vi) modify any other term if such modification would materially increase the obligations of any Group Member or confer additional material rights to the holder of such Subordinated Debt in a manner materially adverse to any Group Member or any Secured Party as a senior creditor; or

 

(c)           modify or supplement, or consent to the modification or supplement of, any term of any 2005-1 Securitization Document or any 2007-1 Securitization Document if such modification or consent would materially and adversely affect the Lenders, without the prior written consent of the Majority Lenders, which consent shall not be unreasonably withheld or delayed.

 

Section 8.12          Accounting Changes; Fiscal Year.  No Group Member shall change its (a) accounting treatment or reporting practices, except as required by GAAP or any Requirement of Law, or (b) its fiscal year or its method for determining fiscal quarters or fiscal months.

 

Section 8.13          Margin Regulations.  No Group Member shall use all or any portion of the proceeds of any credit extended hereunder to purchase or carry margin stock (within the meaning of Regulation U of the Federal Reserve Board) in contravention of Regulation U of the Federal Reserve Board.

 

Section 8.14          Compliance with ERISA.  No ERISA Affiliate shall cause or suffer to exist (a) any event that could result in the imposition of a Lien with respect to any Title IV Plan or Multiemployer Plan or (b) any other ERISA Event, that would, in the aggregate, have a Material Adverse Effect.  No Group Member shall cause or suffer to exist any event that would  result in the imposition of a Lien with respect to any Benefit Plan.

 

Section 8.15          Hazardous Materials.  No Group Member shall cause or suffer to exist any Release of any Hazardous Material at, to or from any real property owned, leased, subleased or otherwise operated or occupied by any Group Member that would violate any Environmental Law, form the basis for any Environmental Liabilities or otherwise adversely affect the value or marketability of any real property (whether or not owned by any Group Member), other than such violations, Environmental Liabilities and effects that would not, in the aggregate, have a Material Adverse Effect.

 

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ARTICLE IX

EVENTS OF DEFAULT

 

Section 9.1            Definition.  Each of the following shall be an Event of Default:

 

(a)           the Borrowers shall fail to pay (i) any principal of any Loan or any Prepayment Premium when the same becomes due and payable or (ii) any interest on any Loan, any fee under any Loan Document or any other Obligation (other than those set forth in clause (i) above) and, in the case of this clause (ii), such non-payment continues for a period of five Business Days after the due date therefor; or

 

(b)           any representation, warranty or certification made or deemed made by or on behalf of any Loan Party in any Loan Document (except for any representation or warranty that triggers a repurchase under Section 3.5(a) of the Mortgage Sale, Contribution and Servicing Agreement, if such repurchase is consummated in accordance with the Mortgage Sale, Contribution and Servicing Agreement, including the time frames therein stipulated) or by or on behalf of any Loan Party (or any Responsible Officer thereof) in writing in connection with any Loan Document (including in any document delivered in connection with any Loan Document) shall prove to have been incorrect in any material respect when made or deemed made; or

 

(c)           any Loan Party shall fail to comply with (i) any provision of Article V, 6.2(a)(i), 6.2(b), 7.1, 7.9 or 7.13 or Article VIII, (ii) any provision of Section 6.1 if, in the case of this clause (ii), such failure shall remain unremedied for five days after the earlier of (A) the date on which a Responsible Officer of any Borrower becomes aware of such failure and (B) the date on which notice thereof shall have been given to the Borrowers by the Administrative Agent or the Required Lenders (any such written notice to be identified as a “notice of default” and to refer specifically to this Section 9.1(c)), or (iii) any other provision of any Loan Document if, in the case of this clause (iii), such failure shall remain unremedied for 30 days after the earlier of (A) the date on which a Responsible Officer of any Borrower becomes aware of such failure and (B) the date on which notice thereof shall have been given to the Borrowers by the Administrative Agent or the Required Lenders (any such written notice to be identified as a “notice of default” and to refer specifically to this Section 9.1(c)); or

 

(d)           (i) any Group Member shall fail to make any payment when due (whether due because of scheduled maturity, required prepayment provisions, acceleration, demand or otherwise) on any Indebtedness of any Group Member (other than the Obligations or any Hedging Agreement) having an outstanding principal amount of $1,000,000 or more, (ii) any other event shall occur or condition shall exist under any Contractual Obligation relating to any such Indebtedness, if the effect of such event or condition is to accelerate, or to permit the acceleration of, the maturity of such Indebtedness or (iii) any such Indebtedness shall become or be declared to be due and payable, or be required to be prepaid, redeemed, defeased or repurchased (other than by a regularly scheduled required prepayment), prior to the stated maturity thereof; provided, however, the termination (other than in connection with any breach or default thereunder), maturity or non-renewal of any existing or future warehouse, construction or repurchase facility permitted under Section 8.1 shall not constitute an Event of Default under this Section 9.1(d);

 

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(e)           (i) any Group Member shall generally not pay its debts as such debts become due, shall admit in writing its inability to pay its debts generally or shall make a general assignment for the benefit of creditors, (ii) any proceeding shall be instituted by or against any Group Member seeking to adjudicate it a bankrupt or insolvent or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, composition of it or its debts or any similar order, in each case under any Requirement of Law relating to bankruptcy, insolvency or reorganization or relief of debtors or seeking the entry of an order for relief or the appointment of a custodian, receiver, trustee, conservator, liquidating agent, liquidator, other similar official or other official with similar powers, in each case for it or for any substantial part of its property and, in the case of any such proceedings instituted against (but not by or with the consent of) any Group Member, either such proceedings shall remain undismissed or unstayed for a period of 60 days or more or any action sought in such proceedings shall occur or (iii) any Group Member shall take any corporate or similar action or any other action to authorize any action described in clause (i) or (ii) above; or

 

(f)           one or more judgments, orders or decrees (or other similar process) shall be rendered against any Group Member (i)(A) in the case of money judgments, orders and decrees, involving an aggregate amount (excluding amounts adequately covered by insurance payable to any Group Member, to the extent the relevant insurer has not denied coverage therefor) in excess of $1,000,000 or (B) otherwise, that would have, in the aggregate, a Material Adverse Effect and (ii)(A) enforcement proceedings shall have been commenced by any creditor upon any such judgment, order or decree or (B) such judgment, order or decree shall not have been vacated or discharged for a period of 30 consecutive days and there shall not be in effect (by reason of a pending appeal or otherwise) any stay of enforcement thereof; or

 

(g)           except pursuant to a valid, binding and enforceable termination or release permitted under the Loan Documents and executed by the Administrative Agent or as otherwise expressly permitted under any Loan Document, (i) any Loan Document shall, at any time after the delivery of such Loan Document, fail to be valid and binding on, or enforceable against, any Loan Party party thereto, (ii) any Loan Document purporting to grant a Lien to secure any Obligation shall, at any time after the delivery of such Loan Document, fail to create a valid and enforceable Lien on any Collateral purported to be covered thereby or such Lien shall fail or cease to be a perfected Lien with the priority required in the relevant Loan Document or (iii) any subordination provision set forth in any subordination agreement in favor of Administrative Agent or any Lender shall, in whole or in part, terminate or otherwise fail or cease to be valid and binding on, or enforceable against, or any holder of the applicable Subordinated Debt (or any such holder shall so state in writing), or any Group Member shall state in writing that any of the events described in clause (i), (ii) or (iii) above shall have occurred;

 

(h)           there shall occur any Change of Control without the prior written consent of the Required Lenders; or

 

(i)           Mortgage SPV shall fail to comply in any material respect with any of its Constituent Documents.

 

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Section 9.2            Remedies.  During the continuance of any Event of Default, the Administrative Agent may, and, at the request of the Required Lenders, shall, in each case by notice to each Borrower and in addition to any other right or remedy provided under any Loan Document or by any applicable Requirement of Law, do each of the following:  (a) declare all or any portion of the Commitments terminated, whereupon the Commitments shall immediately be reduced by such portion or, in the case of a termination in whole, shall terminate together with any obligation any Lender may have hereunder to make any Loan and (b) declare immediately due and payable all or part of any Obligation (including any accrued but unpaid interest thereon), whereupon the same shall become immediately due and payable, without presentment, demand, protest or further notice or other requirements of any kind, all of which are hereby expressly waived by the Borrowers (and, to the extent provided in any other Loan Document, other Loan Parties); provided, however, that, effective immediately upon the occurrence of the Events of Default specified in Section 9.1(e)(ii), (x) the Commitments of each Lender to make Loans shall automatically be terminated and (y) each Obligation (including in each case any accrued all accrued but unpaid interest thereon) shall automatically become and be due and payable, without presentment, demand, protest or further notice or other requirement of any kind, all of which are hereby expressly waived by the Borrowers (and, to the extent provided in any other Loan Document, any other Loan Party).

 

ARTICLE X

THE ADMINISTRATIVE AGENT

 

Section 10.1          Appointment and Duties.  (a) Appointment of Administrative Agent.  Each Lender hereby appoints Virgo (together with any successor Administrative Agent pursuant to Section 10.9) as the Administrative Agent hereunder and authorizes the Administrative Agent to (i) execute and deliver the Loan Documents and accept delivery thereof on its behalf from any Group Member, (ii) take such action on its behalf and to exercise all rights, powers and remedies and perform the duties as are expressly delegated to the Administrative Agent under such Loan Documents and (iii) exercise such powers as are reasonably incidental thereto.

 

(b)           Duties as Collateral and Disbursing Agent.  Without limiting the generality of Section 10.01(a) above, the Administrative Agent shall have the sole and exclusive right and authority (to the exclusion of the Lenders), and is hereby authorized, to (i) act as the disbursing and collecting agent for the Lenders with respect to all payments and collections arising in connection with the Loan Documents (including in any proceeding described in Section 9.1(e)(ii) or any other bankruptcy, insolvency or similar proceeding), and each Person making any payment in connection with any Loan Document to any Secured Party is hereby authorized to make such payment to the Administrative Agent, (ii) file and prove claims and file other documents necessary or desirable to allow the claims of the Secured Parties with respect to any Obligation in any proceeding described in Section 9.1(e)(ii) or any other bankruptcy, insolvency or similar proceeding (but not to vote, consent or otherwise act on behalf of such Secured Party), (iii) act as collateral agent for each Secured Party for purposes of the perfection of all Liens created by such agreements and all other purposes stated therein, (iv) manage, supervise and otherwise deal with the Collateral, (v) take such other action as is necessary or desirable to maintain the perfection and priority of the Liens created or purported to be created by the Loan Documents, (vi) except as may be otherwise specified in any Loan Document, exercise all remedies given to the Administrative Agent and the other Secured Parties with respect to the Collateral, whether under the Loan Documents, applicable Requirements of Law or otherwise and (vii) execute any amendment, consent or waiver under the Loan Documents on behalf of any Lender that has consented in writing to such amendment, consent or waiver; provided, however, that the Administrative Agent hereby appoints, authorizes and directs each Lender to act as collateral sub-agent for the Administrative Agent, the Lenders for purposes of the perfection of all Liens with respect to the Collateral, including any deposit account maintained by a Loan Party with, and cash and Cash Equivalents held by, such Lender, and may further authorize and direct the Lenders to take further actions as collateral sub-agents for purposes of enforcing such Liens or otherwise to transfer the Collateral subject thereto to the Administrative Agent, and each Lender hereby agrees to take such further actions to the extent, and only to the extent, so authorized and directed.

 

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(c)           Limited Duties.  Under the Loan Documents, the Administrative Agent (i) is acting solely on behalf of the Lenders (except to the limited extent provided in Section 2.11(b) with respect to the Register and in Section 10.11), with duties that are entirely administrative in nature, notwithstanding the use of the defined term “Administrative Agent”, the terms “agent”, “administrative agent” and “collateral agent” and similar terms in any Loan Document to refer to the Administrative Agent, which terms are used for title purposes only, (ii) is not assuming any obligation under any Loan Document other than as expressly set forth therein or any role as agent, fiduciary or trustee of or for any Lender or any other Secured Party and (iii) shall have no implied functions, responsibilities, duties, obligations or other liabilities under any Loan Document, and each Lender hereby waives and agrees not to assert any claim against the Administrative Agent based on the roles, duties and legal relationships expressly disclaimed in clauses (i) through (iii) above.

 

Section 10.2          Binding Effect.  Each Lender agrees that (i) any action taken by the Administrative Agent or the Required Lenders (or, if expressly required hereby, a greater proportion of the Lenders) in accordance with the provisions of the Loan Documents, (ii) any action taken by the Administrative Agent in reliance upon the instructions of Required Lenders (or, where so required, such greater proportion) and (iii) the exercise by the Administrative Agent or the Required Lenders (or, where so required, such greater proportion) of the powers set forth herein or therein, together with such other powers as are reasonably incidental thereto, shall be authorized and binding upon all of the Secured Parties.

 

Section 10.3          Use of Discretion.  (a) No Action without Instructions.  The Administrative Agent shall not be required to exercise any discretion or take, or to omit to take, any action, including with respect to enforcement or collection, except any action it is required to take or omit to take (i) under any Loan Document or (ii) pursuant to instructions from the Required Lenders (or, where expressly required by the terms of this Agreement, a greater proportion of the Lenders).

 

(b)           Right Not to Follow Certain Instructions.  Notwithstanding Section 10.3(a) above, the Administrative Agent shall not be required to take, or to omit to take, any action (i) unless, upon demand, the Administrative Agent receives an indemnification satisfactory to it from the Lenders (or, to the extent applicable and acceptable to the Administrative Agent, any other Secured Party) against all Liabilities that, by reason of such action or omission, may be imposed on, incurred by or asserted against the Administrative Agent or any Related Person thereof or (ii) that is, in the opinion of the Administrative Agent or its counsel, contrary to any Loan Document or applicable Requirement of Law.

 

Section 10.4          Delegation of Rights and Duties.  The Administrative Agent may, upon any term or condition it specifies, delegate or exercise any of its rights, powers and remedies under, and delegate or perform any of its duties or any other action with respect to, any Loan Document by or through any trustee, co-agent, employee, attorney-in-fact and any other Person (including any Secured Party).  Any such Person shall benefit from this Article X to the extent provided by the Administrative Agent.

 

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Section 10.5          Reliance and Liability.  (a) The Administrative Agent may, without incurring any liability hereunder, (i) rely on the Register to the extent set forth in Section 2.11, (ii) consult with any of its Related Persons and, whether or not selected by it, any other advisors, accountants and other experts (including advisors to, and accountants and experts engaged by, any Loan Party) and (iii) rely and act upon any document and information and any telephone message or conversation, in each case believed by it to be genuine and transmitted, signed or otherwise authenticated by the appropriate parties.

 

(b)           None of the Administrative Agent and its Related Persons shall be liable for any action taken or omitted to be taken by any of them under or in connection with any Loan Document, and each Lender, each Guarantor and each Borrower hereby waives and shall not assert (and each Guarantor and each Borrower shall cause each other Loan Party to waive and agree not to assert) any right, claim or cause of action based thereon, except to the extent of liabilities resulting primarily from the gross negligence or willful misconduct of the Administrative Agent or, as the case may be, such Related Person (each as determined in a final, non-appealable judgment by a court of competent jurisdiction) in connection with the duties expressly set forth herein.  Without limiting the foregoing, the Administrative Agent:

 

(i)           shall not be responsible or otherwise incur liability for any action or omission taken in reliance upon the instructions of the Required Lenders or for the actions or omissions of any of its Related Persons selected with reasonable care (other than employees, officers and directors of the Administrative Agent, when acting on behalf of the Administrative Agent);

 

(ii)          shall not be responsible to any Secured Party for the due execution, legality, validity, enforceability, effectiveness, genuineness, sufficiency or value of, or the attachment, perfection or priority of any Lien created or purported to be created under or in connection with, any Loan Document;

 

(iii)         makes no warranty or representation, and shall not be responsible, to any Secured Party for any statement, document, information, representation or warranty made or furnished by or on behalf of any Related Person, in or in connection with any Loan Document or any transaction contemplated therein, whether or not transmitted by the Administrative Agent, including as to completeness, accuracy, scope or adequacy thereof, or for the scope, nature or results of any due diligence performed by the Administrative Agent in connection with the Loan Documents; and

 

(iv)         shall not have any duty to ascertain or to inquire as to the performance or observance of any provision of any Loan Document, whether any condition set forth in any Loan Document is satisfied or waived, as to the financial condition of any Loan Party or as to the existence or continuation or possible occurrence or continuation of any Default or Event of Default and shall not be deemed to have notice or knowledge of such occurrence or continuation unless it has received a notice from the Borrowers, any Lender describing such Default or Event of Default clearly labeled “notice of default” (in which case the Administrative Agent shall promptly give notice of such receipt to all Lenders);

 

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and, for each of the items set forth in clauses (i) through (iv) above, each Lender, each Guarantor and each Borrower hereby waives and agrees not to assert (and each Guarantor and each Borrower shall cause each other Loan Party to waive and agree not to assert) any right, claim or cause of action it might have against the Administrative Agent based thereon.

 

Section 10.6          Administrative Agent Individually.  The Administrative Agent and its Affiliates may make loans and other extensions of credit to, acquire Stock and Stock Equivalents of, engage in any kind of business with, any Loan Party or Affiliate thereof as though it were not acting the Administrative Agent and may receive separate fees and other payments therefor.  To the extent the Administrative Agent or any of its Affiliates makes any Loan or otherwise becomes a Lender hereunder, it shall have and may exercise the same rights and powers hereunder and shall be subject to the same obligations and liabilities as any other Lender and the terms “Lender”, “Required Lender”, and any similar terms shall, except where otherwise expressly provided in any Loan Document, include, without limitation, the Administrative Agent or such Affiliate, as the case may be, in its individual capacity as Lender or as one of the Required Lenders, respectively.

 

Section 10.7          Lender Credit Decision.  Each Lender acknowledges that it shall, independently and without reliance upon the Administrative Agent, any Lender or any of their Related Persons or upon any document (including the Disclosure Documents) solely or in part because such document was transmitted by the Administrative Agent or any of its Related Persons, conduct its own independent investigation of the financial condition and affairs of each Loan Party and make and continue to make its own credit decisions in connection with entering into, and taking or not taking any action under, any Loan Document or with respect to any transaction contemplated in any Loan Document, in each case based on such documents and information as it shall deem appropriate.

 

Section 10.8          Expenses; Indemnities.  (a) Each Lender agrees to reimburse the Administrative Agent and each of its Related Persons (to the extent not reimbursed by any Loan Party) promptly upon demand for such Lender’s Pro Rata Share of any costs and expenses (including fees, charges and disbursements of financial, legal and other advisors and Other Taxes paid in the name of, or on behalf of, any Loan Party) that may be incurred by the Administrative Agent or any of its Related Persons in connection with the preparation, syndication, execution, delivery, administration, modification, consent, waiver or enforcement (whether through negotiations, through any work-out, bankruptcy, restructuring or other legal or other proceeding or otherwise) of, or legal advice in respect of its rights or responsibilities under, any Loan Document.

 

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(b)           Each Lender further agrees to indemnify the Administrative Agent and each of its Related Persons (to the extent not reimbursed by any Loan Party), from and against such Lender’s aggregate Pro Rata Share of the Liabilities (including taxes, interests and penalties imposed for not properly withholding or backup withholding on payments made to on or for the account of any Lender) that may be imposed on, incurred by or asserted against the Administrative Agent or any of its Related Persons in any matter relating to or arising out of, in connection with or as a result of any Loan Document or any other act, event or transaction related, contemplated in or attendant to any such document, or, in each case, any action taken or omitted to be taken by the Administrative Agent or any of its Related Persons under or with respect to any of the foregoing; provided, however, that no Lender shall be liable to the Administrative Agent or any of its Related Persons to the extent such liability has resulted primarily from the gross negligence or willful misconduct of the Administrative Agent or, as the case may be, such Related Person, as determined by a court of competent jurisdiction in a final non-appealable judgment or order.

 

Section 10.9          Resignation of Administrative Agent.  (a) The Administrative Agent may resign at any time by delivering notice of such resignation to the Lenders and the Borrowers, effective on the date set forth in such notice (which shall be at least 30 days from the date of delivery of such notice).  If the Administrative Agent delivers any such notice, the Required Lenders shall have the right to appoint a successor Administrative Agent.  If, within 30 days after the retiring Administrative Agent having given notice of resignation, no successor Administrative Agent has been appointed by the Required Lenders that has accepted such appointment, then the retiring Administrative Agent may, on behalf of the Lenders, appoint a successor Administrative Agent from among the Lenders.  Each appointment under this Section 10.9(a) shall be subject to the prior consent of the Borrowers, which may not be unreasonably withheld but shall not be required during the continuance of a Default.

 

(b)           Effective immediately upon its resignation, (i) the retiring Administrative Agent shall be discharged from its duties and obligations under the Loan Documents, (ii) the Lenders shall assume and perform all of the duties of the Administrative Agent until a successor Administrative Agent shall have accepted a valid appointment hereunder, (iii) the retiring Administrative Agent and its Related Persons shall no longer have the benefit of any provision of any Loan Document other than with respect to any actions taken or omitted to be taken while such retiring Administrative Agent was, or because such Administrative Agent had been, validly acting as Administrative Agent under the Loan Documents and (iv) subject to its rights under Section 10.3, the retiring Administrative Agent shall take such action as may be reasonably necessary to assign to the successor Administrative Agent its rights as Administrative Agent under the Loan Documents.  Effective immediately upon its acceptance of a valid appointment as Administrative Agent, a successor Administrative Agent shall succeed to, and become vested with, all the rights, powers, privileges and duties of the retiring Administrative Agent under the Loan Documents.

 

Section 10.10        Release of Collateral or Guarantors.  Each Lender hereby consents to the release and hereby directs the Administrative Agent to release (or, in the case of Section 10.10(b)(ii) below, release or subordinate) the following:

 

(a)           any Subsidiary of any Borrower from its guaranty of any Obligation of any Loan Party if all of the Securities of such Subsidiary owned by any Group Member are Disposed of in a Disposition permitted under the Loan Documents (including pursuant to a waiver or consent), to the extent that, after giving effect to such Disposition, such Subsidiary would not be required to guaranty any Obligations pursuant to Section 7.10; and

 

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(b)           any Lien held by the Administrative Agent for the benefit of the Secured Parties against (i) any Collateral that is Disposed of by a Loan Party in a Disposition permitted by the Loan Documents (including pursuant to a valid waiver or consent), to the extent all Liens required to be granted in such Collateral pursuant to Section 7.10 after giving effect to such Disposition have been granted, (ii) any property subject to a Lien described in Section 8.2(b)(ix) and (iii) all of the Collateral and all Loan Parties, upon (A) termination of the Commitments, (B) payment and satisfaction in full of all Loans and all other Obligations that the Administrative Agent has been notified in writing are then due and payable, (C) deposit of cash collateral with respect to all contingent Obligations, in amounts and on terms and conditions and with parties satisfactory to the Administrative Agent and each Indemnitee that is owed such Obligations and (D) to the extent requested by the Administrative Agent, receipt by the Secured Parties of liability releases from the Loan Parties each in form and substance acceptable to the Administrative Agent.

 

Each Lender hereby directs the Administrative Agent, and the Administrative Agent hereby agrees, upon receipt of reasonable advance notice from the Borrowers, to execute and deliver or file such documents and to perform other actions reasonably necessary to release the guaranties and Liens when and as directed in this Section 10.10.

 

Section 10.11        Additional Secured Parties.  The benefit of the provisions of the Loan Documents directly relating to the Collateral or any Lien granted thereunder shall extend to and be available to any Secured Party that is not a Lender as long as, by accepting such benefits, such Secured Party agrees, as among the Administrative Agent and all other Secured Parties, that such Secured Party is bound by (and, if requested by the Administrative Agent, shall confirm such agreement in a writing in form and substance acceptable to the Administrative Agent) this Article X and Sections 11.8, 11.9 and 11.20 and the decisions and actions of the Administrative Agent and the Required Lenders (or, where expressly required by the terms of this Agreement, a greater proportion of the Lenders) to the same extent a Lender is bound; provided, however, that, notwithstanding the foregoing, (a) such Secured Party shall be bound by Section 10.8 only to the extent of Liabilities, costs and expenses with respect to or otherwise relating to the Collateral held for the benefit of such Secured Party, in which case the obligations of such Secured Party thereunder shall not be limited by any concept of Pro Rata Share or similar concept, (b) each of the Administrative Agent, the Lenders shall be entitled to act at its sole discretion, without regard to the interest of such Secured Party, regardless of whether any Obligation to such Secured Party thereafter remains outstanding, is deprived of the benefit of the Collateral, becomes unsecured or is otherwise affected or put in jeopardy thereby, and without any duty or liability to such Secured Party or any such Obligation and (c) such Secured Party shall not have any right to be notified of, consent to, direct, require or be heard with respect to, any action taken or omitted in respect of the Collateral or under any Loan Document.

 

ARTICLE XI

MISCELLANEOUS

Section 11.1          Amendments, Waivers, Etc.  (a) No amendment or waiver of any provision of any Loan Document (other than the Fee Letter and the Control Agreements) and no consent to any departure by any Loan Party therefrom shall be effective unless the same shall be in writing and signed (1) in the case of an amendment, consent or waiver to cure any ambiguity, omission, defect or inconsistency or granting a new Lien for the benefit of the Secured Parties or extending an existing Lien over additional property, by the Administrative Agent and the Borrowers, (2) in the case of any other waiver or consent, by the Required Lenders (or by the Administrative Agent with the consent of the Required Lenders) and (3) in the case of any other amendment, by the Required Lenders (or by the Administrative Agent with the consent of the Required Lenders) and the Borrowers; provided, however, that no amendment, consent or waiver described in clause (2) or (3) above shall, unless in writing and signed by each Lender directly affected thereby (or by the Administrative Agent with the consent of such Lender), in addition to any other Person the signature of which is otherwise required pursuant to any Loan Document, do any of the following:

 

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(i)           waive any condition specified in Section 3.1, except any condition referring to any other provision of any Loan Document;

 

(ii)          increase the Commitment of such Lender or subject such Lender to any additional obligation;

 

(iii)         reduce (including through release, forgiveness, assignment or otherwise) (A) the principal amount of, the interest rate on, or any obligation of the Borrowers to repay (whether or not on a fixed date), any outstanding Loan owing to such Lender, or (B) any fee or accrued interest payable to such Lender; provided, however, that this clause (iii) does not apply to (x) any change to any provision increasing any interest rate or fee during the continuance of an Event of Default or to any payment of any such increase or (y) any modification to any financial covenant set forth in Article V or in any definition set forth therein or principally used therein;

 

(iv)         waive or postpone any scheduled maturity date or other scheduled date fixed for the payment, in whole or in part, of principal of or interest on any Loan or fee owing to such Lender; provided, however, that this clause (iv) does not apply to any change to mandatory prepayments, including those required under Section 2.6, or to the application of any payment, including as set forth in Section 2.9;

 

(v)          except as provided in Section 10.10, release all or substantially all of the Collateral or any Guarantor from its guaranty of any Obligation of the Borrowers;

 

(vi)         reduce or increase the proportion of Lenders required for the Lenders (or any subset thereof) to take any action hereunder or change the definition of the terms “Required Lenders” or “Pro Rata Share”; or

 

(vii)        amend Section 10.10 or 11.9 or this Section 11.1;

 

and provided, further, that (x)(A) any waiver of any payment applied pursuant to Section 2.9(b) to, and any modification of the application of any such payment to, the Loans shall require the consent of the Required Lenders and (B) any change to the definition of the term “Required Lender” shall require the consent of the Required Lenders, and (y) no amendment, waiver or consent shall affect the rights or duties under any Loan Document of, or any payment to, the Administrative Agent (or otherwise modify any provision of Article X or the application thereof) or any SPV that has been granted an option pursuant to Section 11.2(f) unless in writing and signed by the Administrative Agent or, as the case may be, such SPV in addition to any signature otherwise required.

 

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(b)           Each waiver or consent under any Loan Document shall be effective only in the specific instance and for the specific purpose for which it was given.  No notice to or demand on any Loan Party shall entitle any Loan Party to any notice or demand in the same, similar or other circumstances.  No failure on the part of any Secured Party to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right.

 

Section 11.2          Assignments and Participations; Binding Effect.  (a) Binding Effect.  This Agreement shall be binding upon and inure to the benefit of, but only to the benefit of, the Guarantors, the Borrowers (in each case except for Article X), the Administrative Agent, each Lender and, to the extent provided in Section 10.11, each other Indemnitee and Secured Party and, in each case, their respective successors and permitted assigns.  Except as expressly provided in any Loan Document (including in Section 10.9), none of any Guarantor, any Borrower or the Administrative Agent shall have the right to assign any rights or obligations hereunder or any interest herein.

 

(b)           Right to Assign.  Each Lender may sell, transfer, negotiate or assign all or a portion of its rights and obligations hereunder (including all or a portion of its Commitments and its rights and obligations with respect to Loans) to (i) any existing Lender, (ii) any Affiliate or Approved Fund of any existing Lender or (iii) any other Person acceptable (which acceptance shall not be unreasonably withheld or delayed) to the Administrative Agent; provided, however, that (x) such Dispositions must be ratable among the obligations owing to and owed by such Lender and (y) the aggregate outstanding principal amount (determined as of the effective date of the applicable Assignment) of the Loans and Commitments subject to any such Disposition shall be an integral multiple of $1,000,000, unless such Disposition is made to an existing Lender or an Affiliate or Approved Fund of any existing Lender, is of the assignor’s (together with its Affiliates and Approved Funds) entire interest or is made with the prior consent of the Borrowers and the Administrative Agent.

 

(c)           Procedure.  The parties to each Disposition described in Section 11.2(b) above (other than those described in Section 11.2(e) or (f) below) shall execute and deliver to the Administrative Agent (which shall keep a copy thereof) an Assignment, any tax forms required to be delivered pursuant to Section 2.14(f) and payment by the assignee of an assignment fee in the amount of $3,500.  Upon receipt of all the foregoing, and conditioned upon such receipt and upon the Administrative Agent consenting to such Assignment, from and after the effective date specified in such Assignment, the Administrative Agent shall record or cause to be recorded in the Register the information contained in such Assignment.

 

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(d)           Effectiveness.  Effective upon the entry of such record in the Register, (i) such assignee shall become a party hereto and, to the extent that rights and obligations under the Loan Documents have been assigned to such assignee pursuant to such Assignment, shall have the rights and obligations of a Lender and (ii) the assignor thereunder shall, to the extent that rights and obligations under this Agreement have been assigned by it pursuant to such Assignment, relinquish its rights (except for those surviving the termination of the Commitments and the payment in full of the Obligations) and be released from its obligations under the Loan Documents, other than those relating to events or circumstances occurring prior to such assignment (and, in the case of an Assignment covering all or the remaining portion of an assigning Lender’s rights and obligations under the Loan Documents, such Lender shall cease to be a party hereto except that each Lender agrees to remain bound by Article X and Sections 11.8 and 11.9 to the extent provided in Section 10.11).

 

(e)           Grant of Security Interests.  In addition to the other rights provided in this Section 11.2, each Lender may grant a security interest in, or otherwise assign as collateral, any of its rights under this Agreement, whether now owned or hereafter acquired (including rights to payments of principal or interest on the Loans), to (A) any federal reserve bank (pursuant to Regulation A of the Federal Reserve Board), without notice to the Administrative Agent or (B) any holder of, or trustee for the benefit of the holders of, such Lender’s Securities by notice to the Administrative Agent; provided, however, that no such holder or trustee, whether because of such grant or assignment or any foreclosure thereon (unless such foreclosure is made through an assignment in accordance with Section 11.2(b) above), shall be entitled to any rights of such Lender hereunder and no such Lender shall be relieved of any of its obligations hereunder.

 

(f)           Participants and SPVs.  In addition to the other rights provided in this Section 11.2, each Lender may, (x) with notice to the Administrative Agent, grant to an SPV the option to make all or any part of any Loan that such Lender would otherwise be required to make hereunder (and the exercise of such option by such SPV and the making of Loans pursuant thereto shall satisfy the obligation of such Lender to make such Loans hereunder) and such SPV may assign to such Lender the right to receive payment with respect to any Obligation and (y) without notice to or consent from the Administrative Agent or the Borrowers, sell participations to one or more Persons in or to all or a portion of its rights and obligations under the Loan Documents (including all its rights and obligations with respect to the Loans); provided, however, that, whether as a result of any term of any Loan Document or of such grant or participation, (i) no such SPV or participant shall have a commitment, or be deemed to have made an offer to commit, to make Loans hereunder, and, except as provided in the applicable option agreement, none shall be liable for any obligation of such Lender hereunder, (ii) such Lender’s rights and obligations, and the rights and obligations of the Loan Parties and the Secured Parties towards such Lender, under any Loan Document shall remain unchanged and each other party hereto shall continue to deal solely with such Lender, which shall remain the holder of the Obligations in the Register, except that (A) each such participant and SPV shall be entitled to the benefit of Sections 2.13 and 2.14, but only to the extent such participant or SPV delivers the tax forms such Lender is required to collect pursuant to Section 2.14(f) and then only to the extent of any amount to which such Lender would be entitled in the absence of any such grant or participation and (B) each such SPV may receive other payments that would otherwise be made to such Lender with respect to Loans funded by such SPV to the extent provided in the applicable option agreement and set forth in a notice provided to the Administrative Agent by such SPV and such Lender, provided, however, that in no case (including pursuant to clause (A) or (B) above) shall an SPV or participant have the right to enforce any of the terms of any Loan Document, and (iii) the consent of such SPV or participant shall not be required (either directly, as a restraint on such Lender’s ability to consent hereunder or otherwise) for any amendments, waivers or consents with respect to any Loan Document or to exercise or refrain from exercising any powers or rights such Lender may have under or in respect of the Loan Documents (including the right to enforce or direct enforcement of the Obligations), except for those described in clauses (iii) and (iv) of Section 11.1(a) with respect to amounts, or dates fixed for payment of amounts, to which such participant or SPV would otherwise be entitled and, in the case of participants, except for those described in Section 11.1(a)(v) (or amendments, consents and waivers with respect to Section 10.10 to release all or substantially all of the Collateral).  No party hereto shall institute against any SPV grantee of an option pursuant to this Section 11.2(f) any bankruptcy, reorganization, insolvency, liquidation or similar proceeding, prior to the date that is one year and one day after the payment in full of all outstanding commercial paper of such SPV; provided, however, that each Lender having designated an SPV as such agrees to indemnify each Indemnitee against any Liability that may be incurred by, or asserted against, such Indemnitee as a result of failing to institute such proceeding (including a failure to get reimbursed by such SPV for any such Liability).  The agreement in the preceding sentence shall survive the termination of the Commitments and the payment in full of the Obligations.

 

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Section 11.3          Costs and Expenses.  Any action taken by any Loan Party under or with respect to any Loan Document, even if required under any Loan Document or at the request of any Secured Party, shall be at the expense of such Loan Party, and no Secured Party shall be required under any Loan Document to reimburse any Loan Party or Group Member therefor except as expressly provided therein.  In addition, each Borrower agrees to pay or reimburse upon demand (a) the Administrative Agent for all reasonable out-of-pocket costs and expenses incurred by it or any of its Related Persons in connection with the investigation, development, preparation, negotiation, syndication, execution, interpretation or administration of, any modification of any term of or termination of, any Loan Document, any commitment or proposal letter therefor, any other document prepared in connection therewith or the consummation and administration of any transaction contemplated therein (including, subject to Sections 7.7 and 7.8, periodic audits in connection therewith and environmental audits and assessments), in each case including the reasonable fees, charges and disbursements of legal counsel to the Administrative Agent or such Related Persons, and reasonable fees, charges and disbursements of the auditors, appraisers, printers and other of their Related Persons retained by or on behalf of any of them or any of their Related Persons, up to an amount equal to $300,000, and (b) each of the Administrative Agent, its Related Persons, and each Lender for all costs and expenses incurred in connection with (i) any refinancing or restructuring of the credit arrangements provided hereunder in the nature of a “work-out”, (ii) the enforcement or preservation of any right or remedy under any Loan Document, any Obligation, with respect to the Collateral or any other related right or remedy or (iii) the commencement, defense, conduct of, intervention in, or the taking of any other action with respect to, any proceeding (including any bankruptcy or insolvency proceeding) related to any Group Member, Loan Document or Obligation (or the response to and preparation for any subpoena or request for document production relating thereto), including fees and disbursements of counsel (including allocated costs of internal counsel).

 

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Section 11.4          Indemnities.  (a) Each Borrower agrees to indemnify, hold harmless and defend the Administrative Agent, each Lender and each of their respective Related Persons (each such Person being an “Indemnitee”) from and against all Liabilities (including brokerage commissions, fees and other compensation) that may be imposed on, incurred by or asserted by, any Person other than the Borrowers, against any such Indemnitee in any matter relating to or arising out of, in connection with or as a result of (i) any Loan Document, any Disclosure Document, any Obligation (or the repayment thereof), the use or intended use of the proceeds of any Loan, or any securities filing of, or with respect to, any Group Member, (ii) any commitment letter, proposal letter or term sheet with any Person or any Contractual Obligation, arrangement or understanding with any broker, finder or consultant, in each case entered into by or on behalf of any Group Member or any Affiliate of any of them in connection with any of the foregoing, (iii) any actual or prospective investigation, litigation or other proceeding, whether or not brought by any such Indemnitee or any of its Related Persons, any holders of Securities or creditors (and including attorneys’ fees in any case), whether or not any such Indemnitee, Related Person, holder or creditor is a party thereto, and whether or not based on any securities or commercial law or regulation or any other Requirement of Law or theory thereof, including common law, equity, contract, tort or otherwise, or (iv) any other act, event or transaction related, contemplated in or attendant to any of the foregoing (collectively, the “Indemnified Matters”); provided, however, that the Borrowers shall not have any liability under this Section 11.4 to any Indemnitee with respect to any Indemnified Matter, and no Indemnitee shall have any liability with respect to any Indemnified Matter other than (to the extent otherwise liable), to the extent such liability has resulted primarily from the gross negligence or willful misconduct of such Indemnitee, as determined by a court of competent jurisdiction in a final non-appealable judgment or order or from the failure of any such Indemnitee to comply with any Requirements of Law; provided, further, that such indemnity shall not, as to any Indemnitee, be available to the extent that such liability results from any litigation brought by such Indemnitee against any Loan Party or by any Loan Party against such Indemnitee, in which such Loan Party is the prevailing party.  Furthermore, each Guarantor and each Borrower waives and agrees not to assert against any Indemnitee, and shall cause each other Loan Party to waive and not assert against any Indemnitee, any right of contribution with respect to any Liabilities that may be imposed on, incurred by or asserted against any Related Person.

 

(b)           Without limiting the foregoing, “Indemnified Matters” includes all Environmental Liabilities, including those arising from, or otherwise involving, any property of any Related Person or any actual, alleged or prospective damage to property or natural resources or harm or injury alleged to have resulted from any Release of Hazardous Materials on, upon or into such property or natural resource or any property on or contiguous to any real property of any Related Person, whether or not, with respect to any such Environmental Liabilities, any Indemnitee is a mortgagee pursuant to any leasehold mortgage, a mortgagee in possession, the successor-in-interest to any Related Person or the owner, lessee or operator of any property of any Related Person through any foreclosure action, in each case except to the extent such Environmental Liabilities (i) are incurred solely following foreclosure by any Secured Party or following any Secured Party having become the successor-in-interest to any Loan Party and (ii) are attributable solely to acts of such Indemnitee.

 

Section 11.5          Survival.  Any indemnification or other protection provided to any Indemnitee pursuant to any Loan Document (including pursuant to Section 2.14 or 2.13, Article X, Section 11.3 or 11.4 or this Section 11.5) and all representations and warranties made in any Loan Document shall (A) survive the termination of the Commitments and the payment in full of other Obligations and (B) inure to the benefit of any Person that at any time held a right thereunder (as an Indemnitee or otherwise) and, thereafter, its successors and permitted assigns.

 

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Section 11.6          Limitation of Liability for Certain Damages.  In no event shall any Indemnitee be liable on any theory of liability for any special, indirect, consequential or punitive damages (including any loss of profits, business or anticipated savings).  Each Guarantor and each Borrower hereby waives, releases and agrees (and shall cause each other Loan Party to waive, release and agree) not to sue upon any such claim for any special, indirect, consequential or punitive damages, whether or not accrued and whether or not known or suspected to exist in its favor.

 

Section 11.7          Lender-Creditor Relationship.  The relationship between the Lenders and the Administrative Agent, on the one hand, and the Loan Parties, on the other hand, is solely that of lender and creditor.  No Secured Party has any fiduciary relationship or duty to any Loan Party arising out of or in connection with, and there is no agency, tenancy or joint venture relationship between the Secured Parties and the Loan Parties by virtue of, any Loan Document or any transaction contemplated therein.

 

Section 11.8          Right of Setoff.  Each of the Administrative Agent, each Lender and each Affiliate (including each branch office thereof) of any of them is hereby authorized, without notice or demand (each of which is hereby waived by the Guarantors and the Borrowers), at any time and from time to time during the continuance of any Event of Default and to the fullest extent permitted by applicable Requirements of Law, to set off and apply any and all deposits (whether general or special, time or demand, provisional or final) at any time held and other Indebtedness, claims or other obligations at any time owing by the Administrative Agent, such Lender or any of their respective Affiliates to or for the credit or the account of any Guarantor or any Borrower against any Obligation of any Loan Party now or hereafter existing, whether or not any demand was made under any Loan Document with respect to such Obligation and even though such Obligation may be unmatured.  Each of the Administrative Agent and each Lender agrees promptly to notify the Borrowers and the Administrative Agent after any such setoff and application made by such Lender or its Affiliates; provided, however, that the failure to give such notice shall not affect the validity of such setoff and application.  The rights under this Section 11.8 are in addition to any other rights and remedies (including other rights of setoff) that the Administrative Agent, the Lenders and their Affiliates and other Secured Parties may have.

 

Section 11.9          Sharing of Payments, Etc.  If any Lender, directly or through an Affiliate or branch office thereof, obtains any payment of any Obligation of any Loan Party (whether voluntary, involuntary or through the exercise of any right of setoff or the receipt of any Collateral or “proceeds” (as defined in the applicable UCC) of Collateral) other than pursuant to Sections 2.13, 2.14 and 2.15 and such payment exceeds the amount such Lender would have been entitled to receive if all payments had gone to, and been distributed by, the Administrative Agent in accordance with the provisions of the Loan Documents, such Lender shall purchase for cash from other Secured Parties such participations in their Obligations as necessary for such Lender to share such excess payment with such Secured Parties to ensure such payment is applied as though it had been received by the Administrative Agent and applied in accordance with this Agreement (or, if such application would then be at the discretion of the Borrowers, applied to repay the Obligations in accordance herewith); provided, however, that (a) if such payment is rescinded or otherwise recovered from such Lender in whole or in part, such purchase shall be rescinded and the purchase price therefor shall be returned to such Lender without interest and (b) such Lender shall, to the fullest extent permitted by applicable Requirements of Law, be able to exercise all its rights of payment (including the right of setoff) with respect to such participation as fully as if such Lender were the direct creditor of the Borrowers in the amount of such participation.

 

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Section 11.10        Co-Borrower Provisions.

 

(a)           Borrower Agent.  Each Borrower appoints CPM its agent for purposes of the giving and receiving of any notice, and the agreement to any consent or waiver under this Agreement (CPM, in such capacity, the “Borrower Agent”).  Any notice required by this Agreement to be delivered to any Borrower shall be deemed to have been delivered to such Borrower upon delivery of such notice to the Borrower Agent, and receipt of any notice by the Borrower Agent shall constitute receipt of such notice by each Borrower.  Any notice or consent to be delivered hereunder by any Borrower shall be deemed to have been delivered by such Borrower upon delivery thereof by the Borrower Agent.

 

(b)           Joint and Several Nature of Obligations.  All Loans made to the Borrowers shall be deemed to have been made to all Borrowers and each Borrower hereby agrees that it shall jointly and severally, and unconditionally, be obligated to pay all of the Obligations, including, without limitation, the Obligations incurred for the benefit of each of the other Borrowers.

 

(c)           Co-Borrower Waivers.

 

(i)           General Waivers.  Each Borrower hereby expressly waives (A) diligence, presentment, demand for payment, protest, benefit of any statute of limitations affecting any Borrower’s liability under the Loan Documents; (B) discharge due to any disability of any Borrower; (C) any defenses of any Borrower to obligations under the Loan Documents not arising under the express terms of the Loan Documents or from a material breach thereof by Administrative Agent or any Lender which under applicable law has the effect of discharging any Borrower from the Obligations as to which this Agreement is sought to be enforced; (D) the benefit of any act or omission by Administrative Agent or Lender which directly or indirectly results in or aids the discharge of any Borrower from any of the Obligations by operation of law or otherwise; (E) all notices whatsoever, including, without limitation, notice of acceptance of the incurring of the Obligations; (F) any right it may have to require Administrative Agent or Lenders to disclose to it any information that Administrative Agent or any Lender may now or hereafter acquire concerning the financial condition or any circumstances that bear on the risk of nonpayment by any other Borrower, including without limitation the release of such other Borrower from its Obligations hereunder; and (G) any requirement that Administrative Agent or any Lender exhaust any right, power or remedy or proceed against the other Borrower or any other security for, or any guarantor of, or any other party liable for, any of the Obligations, or any portion thereof.  Each Borrower specifically agrees that it shall not be necessary or required, and Borrowers shall not be entitled to require, that Administrative Agent or any Lender (1) file suit or proceed to assert or obtain a claim for personal judgment against any other Borrower for all or any part of the Obligations; (2) make any effort at collection or enforcement of all or any part of the Obligations from any Borrower; (3) foreclose against or seek to realize upon the Collateral or any other security now or hereafter existing for all or any part of the Obligations; (4) file suit or proceed to obtain or assert a claim for personal judgment against any Borrower or any guarantor or other party liable for all or any part of the Obligations; (5) exercise or assert any other right or remedy to which Administrative Agent or any Lender is or may be entitled in connection with the Obligations or any security or guaranty relating thereto to assert; or (6) file any claim against assets of one Borrower before or as a condition of enforcing the liability of any other Borrower under any Loan Document.

 

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(ii)          Real Property Security Waivers.  Each Borrower acknowledges that all or any portion of the Obligations may now or hereafter be secured by a Lien or Liens upon real property evidenced by certain documents including, without limitation, deeds of trust and assignments of rents.  Administrative Agent and Lenders may, pursuant to the terms of said real property security documents and applicable law, foreclose under all or any portion of one or more of said Liens by means of judicial or nonjudicial sale or sales.  Each Borrower agrees that Administrative Agent and Lenders may exercise whatever rights and remedies they may have with respect to said real property security, all without affecting the liability of any Borrower hereunder, except to the extent Administrative Agent and Lenders realize payment by such action or proceeding.  No election to proceed in one form of action or against any party, or on any obligation shall constitute a waiver of Administrative Agent’s or Lenders' rights to proceed in any other form of action or against any Borrower or any other Person, or diminish the liability of any Borrower, or affect the right of Administrative Agent or Lenders to proceed against any Borrower for any deficiency, except to the extent Administrative Agent and Lenders realize payment by such action, notwithstanding the effect of such action upon any Borrower’s rights of subrogation, reimbursement or indemnity, if any, against Borrower or any other Person.

 

(iii)         Waiver of Specific Rights.  WITHOUT LIMITING THE FOREGOING IN ANY WAY, EACH BORROWER HEREBY IRREVOCABLY WAIVES AND RELEASES TO THE EXTENT PERMITTED BY LAW ANY AND ALL RIGHTS IT MAY HAVE AT ANY TIME (WHETHER ARISING DIRECTLY OR INDIRECTLY, BY OPERATION OF LAW, CONTRACT OR OTHERWISE) TO REQUIRE THE MARSHALING OF ANY ASSETS OF ANY BORROWER, WHICH RIGHT OF MARSHALING MIGHT OTHERWISE ARISE FROM ANY SUCH PAYMENTS MADE OR OBLIGATIONS PERFORMED.

 

Section 11.11        Marshaling; Payments Set Aside.  No Secured Party shall be under any obligation to marshal any property in favor of any Loan Party or any other party or against or in payment of any Obligation.  To the extent that any Secured Party receives a payment from the Borrowers, from the proceeds of the Collateral, from the exercise of its rights of setoff, any enforcement action or otherwise, and such payment is subsequently, in whole or in part, invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to a trustee, receiver or any other party, then to the extent of such recovery, the obligation or part thereof originally intended to be satisfied, and all Liens, rights and remedies therefor, shall be revived and continued in full force and effect as if such payment had not occurred.

 

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Section 11.12        Notices.  (a) Addresses.  All notices, demands, requests, directions and other communications required or expressly authorized to be made by this Agreement shall, whether or not specified to be in writing but unless otherwise expressly specified to be given by any other means, be given in writing and (i) addressed to (A) if to any Guarantor or any Borrower, to 15303 Dallas Parkway, Suite 800, Addison, Texas 75001-4600, Attention:  Kelly Tacke, Tel:  (972) 991-2422, Fax:  972-764-9018, with copy to 15303 Dallas Parkway, Suite 900, Addison, Texas 75001, Attention: Jennifer Morrow, Tel: 972/764-9213, Fax:  972-764-9104, (B) if to the Administrative Agent, to Virgo Service Company LLC, 677 Madison Avenue, 11th Floor, New York, New York 10065, Attention:  Bob Racusin, Tel: 646/289-3037, Fax: 646-619-4035, with a copy to Virgo Investment Group LLC, 250 University Avenue, Suite 300, Palo Alto, California 94301, Attention:  Elizabeth Ketterer, Tel: 650-331-8858, Fax: 650-331-8801 and (C) otherwise to the party to be notified at its address specified opposite its name on Schedule II or on the signature page of any applicable Assignment, or (ii) addressed to such other address as shall be notified in writing (A) in the case of each Borrower and the Administrative Agent, to the other parties hereto and (B) in the case of all other parties, to each Borrower and the Administrative Agent.

 

(b)           Effectiveness.  All communications described in Section 11.1(a) above and all other notices, demands, requests and other communications made in connection with this Agreement shall be effective and be deemed to have been received (i) if delivered by hand, upon personal delivery, (ii) if delivered by overnight courier service, one Business Day after delivery to such courier service, (iii) if delivered by mail, three Business Days after the date deposited in the mails, and (iv) if delivered by facsimile, upon sender’s receipt of confirmation of proper transmission; provided, however, that no communications to the Administrative Agent pursuant to Article II or Article X shall be effective until received by the Administrative Agent.

 

Section 11.13        Governing Law.  This Agreement, each other Loan Document that does not expressly set forth its applicable law, and the rights and obligations of the parties hereto and thereto shall be governed by, and construed and interpreted in accordance with, the law of the State of New York.

 

Section 11.14        Jurisdiction.  (a) Submission to Jurisdiction.  Any legal action or proceeding with respect to any Loan Document may be brought in the courts of the State of New York located in the City of New York, Borough of Manhattan, or of the United States of America for the Southern District of New York and, by execution and delivery of this Agreement, each Guarantor and each Borrower hereby accepts for itself and in respect of its property, generally and unconditionally, the jurisdiction of the aforesaid courts.  The parties hereto (and, to the extent set forth in any other Loan Document, each other Loan Party) hereby irrevocably waive any objection, including any objection to the laying of venue or based on the grounds of forum non conveniens, that any of them may now or hereafter have to the bringing of any such action or proceeding in such jurisdictions.

 

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(b)           Service of Process.  Each Guarantor and each Borrower (and, to the extent set forth in any other Loan Document, each other Loan Party) hereby irrevocably waives personal service of any and all legal process, summons, notices and other documents and other service of process of any kind and consents to such service in any suit, action or proceeding brought in the United States of America with respect to or otherwise arising out of or in connection with any Loan Document by any means permitted by applicable Requirements of Law, including by the mailing thereof (by registered or certified mail, postage prepaid) to the addresses of Borrowers specified in Section 11.12 (and shall be effective when such mailing shall be effective, as provided therein).  Each Guarantor and each Borrower (and, to the extent set forth in any other Loan Document, each other Loan Party) agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.

 

(c)           Non-Exclusive Jurisdiction.  Nothing contained in this Section 11.14 shall affect the right of the Administrative Agent or any Lender to serve process in any other manner permitted by applicable Requirements of Law or commence legal proceedings or otherwise proceed against any Loan Party in any other jurisdiction.

 

Section 11.15        Waiver of Jury Trial.  Each party hereto hereby irrevocably waives trial by jury in any suit, action or proceeding with respect to, or directly or indirectly arising out of, under or in connection with, any Loan Document or the transactions contemplated therein or related thereto (whether founded in contract, tort or any other theory).  Each party hereto (A) certifies that no other party and no Related Person of any other party has represented, expressly or otherwise, that such other party would not, in the event of litigation, seek to enforce the foregoing waiver and (B) acknowledges that it and the other parties hereto have been induced to enter into the Loan Documents, as applicable, by the mutual waivers and certifications in this Section 11.15.

 

Section 11.16        Severability.  Any provision of any Loan Document being held illegal, invalid or unenforceable in any jurisdiction shall not affect any part of such provision not held illegal, invalid or unenforceable, any other provision of any Loan Document or any part of such provision in any other jurisdiction.

 

Section 11.17        Execution in Counterparts.  This Agreement may be executed in any number of counterparts and by different parties in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.  Signature pages may be detached from multiple separate counterparts and attached to a single counterpart.  Delivery of an executed signature page of this Agreement by facsimile transmission shall be as effective as delivery of a manually executed counterpart hereof.

 

Section 11.18        Entire Agreement.  The Loan Documents embody the entire agreement of the parties and supersede all prior agreements and understandings relating to the subject matter thereof and any prior letter of interest, commitment letter, fee letter, confidentiality and similar agreements involving any Loan Party and any of the Administrative Agent or any Lender or any of their respective Affiliates relating to a financing of substantially similar form, purpose or effect.  In the event of any conflict between the terms of this Agreement and any other Loan Document, the terms of this Agreement shall govern (unless such terms of such other Loan Documents are necessary to comply with applicable Requirements of Law, in which case such terms shall govern to the extent necessary to comply therewith).

 

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Section 11.19        Use of Name.  Each Guarantor and each Borrower agrees, and shall cause each other Loan Party to agree, that it shall not, and none of its Affiliates shall, issue any press release or other public disclosure (other than any document filed with any Governmental Authority relating to a public offering of the Securities of any Loan Party) using the name, logo or otherwise referring to Virgo or of any of its Affiliates, the Loan Documents or any transaction contemplated therein to which the Secured Parties are party without at least two Business Days’ prior notice to Virgo and without the prior consent of Virgo except to the extent required to do so under applicable Requirements of Law.

 

Section 11.20        Non-Public Information; Confidentiality.  (a) Each Lender acknowledges and agrees that it may receive material non-public information hereunder concerning the Loan Parties and their Affiliates and Securities and agrees to use such information in compliance with all relevant policies, procedures and Contractual Obligations and applicable Requirements of Laws (including United States federal and state security laws and regulations).

 

(b)           Each Lender and the Administrative Agent agrees to use all reasonable efforts to maintain, in accordance with its customary practices, the confidentiality of information obtained by it pursuant to any Loan Document and designated in writing by any Loan Party as confidential, except that such information may be disclosed (i) with the Borrowers’ consent, (ii) to Related Persons of such Lender or the Administrative Agent, as the case may be, that are advised of the confidential nature of such information and are instructed to keep such information confidential, (iii) to the extent such information presently is or hereafter becomes available to such Lender or the Administrative Agent, as the case may be, on a non-confidential basis from a source other than any Loan Party, (iv) to the extent disclosure is required by applicable Requirements of Law or other legal process or requested or demanded by any Governmental Authority, (v) to the extent necessary or customary for inclusion in league table measurements or in any tombstone or other advertising materials (and the Loan Parties consent to the publication of such tombstone or other advertising materials by the Administrative Agent, any Lender or any of their Related Persons), (vi) to the National Association of Insurance Commissioners or any similar organization, any examiner or any nationally recognized rating agency or otherwise to the extent consisting of general portfolio information that does not identify borrowers, (vii) to current or prospective assignees, SPV grantees of any option described in Section 11.2(f) or participants, direct or contractual counterparties to any Hedging Agreement permitted hereunder and to their respective Related Persons, in each case to the extent such assignees, participants, counterparties or Related Persons agree to be bound by the provisions of this Section 11.20 and (viii) in connection with the exercise of any remedy under any Loan Document.  In the event of any conflict between the terms of this Section 11.20 and those of any other Contractual Obligation entered into with any Loan Party (whether or not a Loan Document), the terms of this Section 11.20 shall govern.

 

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Section 11.21        PATRIOT Act.  Each Lender that is subject to the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Public Law 107-56) (the “PATRIOT Act”) and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies each Guarantor and each Borrower that pursuant to the requirements of the PATRIOT Act, it is required to obtain, verify and record information that identifies each Loan Party, which information includes the name and address of each Loan Party and other information that will allow such Lender or the Administrative Agent, as applicable, to identify each Loan Party in accordance with the PATRIOT Act.  Each Guarantor and each Borrower shall, promptly following a request by the Administrative Agent or any Lender, provide all documentation and other information that the Administrative Agent or such Lender requests in order to comply with its ongoing obligations under applicable “know your customer” and any anti-money laundering rules and regulations, including the PATRIOT Act.

 

[SIGNATURE PAGES FOLLOW]

 

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

 

	COUNTRYPLACE ACCEPTANCE
		CORPORATION, as Borrower
	By	/s/ Larry Keener
		Name: Larry Keener
		Title: Vice President
	COUNTRYPLACE MORTGAGE, LTD., as
		Borrower
		By COUNTRYPLACE ACCEPTANCE GP, LLC, as its General Partner
			By COUNTRYPLACE ACCEPTANCE CORPORATION, as its Sole Member
			By	/s/ Larry Keener
				Name: Larry Keener
				Title: Vice President
	COUNTRYPLACE MORTGAGE HOLDINGS,
		LLC, as Borrower
	By	/s/ Larry Keener
		Name: Larry Keener
		Title: Vice President
	PALM HARBOR HOMES, INC.
	By	/s/ Larry Keener
		Name: Larry Keener
		Title: CEO
	COUNTRYPLACE ACCEPTANCE G.P., LLC
		By COUNTRYPLACE ACCEPTANCE CORPORATION, as its Sole Member
		By	/s/ Larry Keener
			Name: Larry Keener
			Title: Vice President

 

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	COUNTRYPLACE ACCEPTANCE L.P., LLC
		By COUNTRYPLACE ACCEPTANCE CORPORATION, as its Sole Member
		By	/s/ Larry Keener
			Name: Larry Keener
			Title: Vice President

 

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	VIRGO SERVICE COMPANY LLC, as
		Administrative Agent
	By	/s/ Jesse C. Watson
		Name: Jesse C. Watson
		Title: Managing Member
	VIRGO - REDWOOD, LP, as a Lender
		By VIRGO INVESTMENT GROUP, LLC, its General Partner
		By	/s/ Jesse C. Watson
			Jesse C. Watson
			Managing Member
	VIRGO - WILLOW, LP, as a Lender
		By VIRGO INVESTMENT GROUP, LLC, its General Partner
		By	/s/ Jesse C. Watson
			Jesse C. Watson
			Managing Member
	VIRGO - SIERRA, LP, as a Lender
		By VIRGO INVESTMENT GROUP, LLC, its General Partner
		By	/s/ Jesse C. Watson
			Jesse C. Watson
			Managing Member
	VIRGO - MAGNOLIA, as a Lender
		By VIRGO INVESTMENT GROUP, LLC, its General Partner
		By	/s/ Jesse C. Watson
			Jesse C. Watson
			Managing Member

 

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Exhibit A

to Credit Agreement

 

FORM OF ASSIGNMENT

 

This ASSIGNMENT, dated as of the Effective Date, is entered into between the Assignor and the Assignee (each as defined below).

 

The parties hereto hereby agree as follows:

 

Borrowers:	CountryPlace Acceptance Corporation, a Nevada corporation, CountryPlace Mortgage, Ltd., a Texas limited partnership, and CountryPlace Mortgage Holdings, LLC, a Delaware limited liability company (collectively, the “Borrowers”)
Administrative Agent:	VIRGO SERVICE COMPANY LLC, a Delaware limited liability company, as administrative agent and collateral agent for the Lenders (in such capacity and together with its successors and permitted assigns, the “Administrative Agent”)
Credit Agreement:	Credit Agreement, dated as of January 29, 2010, among the Borrowers, Palm Harbor Homes, Inc., a Florida corporation, Countryplace Acceptance G.P., LLC, a Texas limited liability company, Countryplace Acceptance L.P., LLC, a Delaware limited liability company, the Guarantors and the Lenders party thereto and the Administrative Agent (as the same may be amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”; capitalized terms used herein without definition are used as defined in the Credit Agreement)
[Trade Date:	_________, ____]1
Effective Date:	_________, ____2

1 Insert for informational purposes only if needed to determine other arrangements between the assignor and the assignee.

 

[SIGNATURE PAGE FOR ASSIGNMENT FOR COUNTRYPLACE CREDIT AGREEMENT]

 

 

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Exhibit B

to Credit Agreement

 

FORM OF NOTICE OF BORROWING

 

VIRGO SERVICE COMPANY LLC

as Administrative Agent under the

Credit Agreement referred to below

 

Attention:

_________ __, ____

Re:

CountryPlace Acceptance Corporation, a Nevada corporation, CountryPlace Mortgage, Ltd., a Texas limited partnership, and CountryPlace Mortgage Holdings, LLC, a Delaware limited liability company (collectively, the “Borrowers”)

 

Reference is made to the Credit Agreement, to be dated as of January 29, 2010 (as the same may be amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), among the Borrowers, Palm Harbor Homes, Inc., a Florida corporation, Countryplace Acceptance G.P., LLC, a Texas limited liability company, Countryplace Acceptance L.P., LLC, a Delaware limited liability company, the Lenders party thereto and Virgo Service Company LLC, a Delaware limited liability company, as administrative agent and collateral agent for such Lenders.  Capitalized terms used herein without definition are used as defined in the Credit Agreement.

 

The Borrowers hereby give you irrevocable notice, pursuant to Section 2.2 of the Credit Agreement of its request of the Borrowing (the “Proposed Borrowing”) under the Credit Agreement and, in that connection, sets forth the following information:

 

A.           The date of the Proposed Borrowing is __________, ____8 (the “Funding Date”).

 

B.           The aggregate principal amount of Loans is $_______.

 

The undersigned hereby certifies that the following statements are true on the date hereof, both before and after giving effect to the Proposed Borrowing and any other Loan to be made on or before the Funding Date:

 

A.           the representations and warranties set forth in Article IV of the Credit Agreement and elsewhere in the Loan Documents are true and correct; and

 

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9 Insert date of delivery of certificate.

13 Insert other information reasonably required by the Administrative Agent.