RECEIVABLES PURCHASE AGREEMENT

 

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                                                                     EXHIBIT 4.2

 

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                         RECEIVABLES PURCHASE AGREEMENT

 

                          dated as of February 20, 2004

 

                                      among

 

                              EAGLE MATERIALS INC.,

                               as initial Servicer

 

                                EXP FUNDING, LLC,

                                     as Seller

 

                       MARKET STREET FUNDING CORPORATION,

                                    as Issuer

 

                                       and

 

                         PNC BANK, NATIONAL ASSOCIATION,

                                 as Administrator

 

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                                TABLE OF CONTENTS

 

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                                    ARTICLE I

                       AMOUNTS AND TERMS OF THE PURCHASES

 

Section 1.1.   Purchase Facility............................................     1

 

Section 1.2.   Making Purchases.............................................     1

 

Section 1.3.   Purchased Interest Computation...............................     2

 

Section 1.4.   Settlement Procedures........................................     3

 

Section 1.5.   Fees.........................................................     6

 

Section 1.6.   Payments and Computations, Etc. .............................     6

 

Section 1.7.   Increased Costs..............................................     7

 

Section 1.8.   Requirements of Law..........................................     8

 

Section 1.9.   Inability to Determine Euro-Rate.............................     8

 

Section 1.10. Funding Losses...............................................     9

 

Section 1.11. Taxes........................................................     9

 

Section 1.12. Repurchase Option............................................    10

 

                                   ARTICLE II

          REPRESENTATIONS AND WARRANTIES; COVENANTS; TERMINATION EVENTS

 

Section 2.1.   Representations and Warranties; Covenants....................    11

 

Section 2.2.   Termination Events...........................................    11

 

                                   ARTICLE III

                                  INDEMNIFICATION

 

Section 3.1.   Indemnities by the Seller....................................    11

 

Section 3.2.   Indemnities by the Servicer..................................    13

 

                                   ARTICLE IV

                         ADMINISTRATION AND COLLECTIONS

 

Section 4.1.   Appointment of the Servicer..................................    13

 

Section 4.2.   Duties of the Servicer.......................................    14

 

Section 4.3.   Establishment and Use of Certain Accounts....................    15

 

Section 4.4.   Enforcement Rights...........................................    16

 

Section 4.5.   Responsibilities of the Seller...............................    17

 

Section 4.6.   Servicing Fee................................................    17

 

                                    ARTICLE V

                                  MISCELLANEOUS

 

Section 5.1.   Amendments, Etc. ............................................    17

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                                       -i-

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Section 5.2.   Notices, Etc. ...............................................    18

 

Section 5.3.   Successors and Assigns; Assignments; Participations..........    18

 

Section 5.4.   Costs, Expenses and Taxes....................................    19

 

Section 5.5.   Confidentiality..............................................    19

 

Section 5.6.   No Proceedings; Limitation on Payments.......................    20

 

Section 5.7.   GOVERNING LAW AND JURISDICTION...............................    20

 

Section 5.8.   Execution in Counterparts....................................    21

 

Section 5.9.   Survival of Termination......................................    21

 

Section 5.10. WAIVER OF JURY TRIAL.........................................    21

 

Section 5.11. Entire Agreement.............................................    21

 

Section 5.12. Headings.....................................................    21

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EXHIBIT I     Definitions

 

EXHIBIT II    Conditions of Purchases

 

EXHIBIT III   Representations and Warranties

 

EXHIBIT IV    Covenants

 

EXHIBIT V     Termination Events

 

SCHEDULE I    Credit and Collection Policy

 

SCHEDULE II   Lock-Box Banks and Lock-Box Accounts

 

ANNEX A       Form of Purchase Notice

 

ANNEX B       Form of Paydown Notice

 

ANNEX C       Form of Servicer Report

 

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      This RECEIVABLES PURCHASE AGREEMENT (as amended, supplemented or otherwise

modified from time to time, this "Agreement") is entered into as of February 20,

2004, among EXP FUNDING, LLC, a Delaware limited liability company, as seller

(the "Seller"), EAGLE MATERIALS INC., a Delaware corporation ("Eagle

Materials"), as initial servicer (in such capacity, together with its successors

and permitted assigns in such capacity, the "Servicer"), MARKET STREET FUNDING

CORPORATION, a Delaware corporation, as Issuer (the "Issuer") and PNC BANK,

NATIONAL ASSOCIATION, a national banking association ("PNC"), as administrator

for the Issuer (in such capacity, together with its successors and assigns in

such capacity, the "Administrator").

 

                             PRELIMINARY STATEMENTS

 

      WHEREAS, certain terms that are capitalized and used throughout this

Agreement are defined in Exhibit I. References in the Exhibits hereto to "the

Agreement" refer to this Agreement, as amended, supplemented or otherwise

modified from time to time.

 

      WHEREAS, the Seller desires to sell, transfer and assign an undivided

percentage ownership interest in a pool of receivables, and the Issuer desires

to acquire such undivided percentage interest, as such percentage interest shall

be adjusted from time to time based upon, in part, reinvestment payments that

are made by the Issuer.

 

      NOW THEREFORE, in consideration of the mutual agreements, provisions and

covenants contained herein, the parties hereto agree as follows:

 

                                    ARTICLE I

 

                       AMOUNTS AND TERMS OF THE PURCHASES

 

      Section 1.1. Purchase Facility. (a) On the terms and conditions

hereinafter set forth, the Issuer hereby agrees to purchase from the Seller, and

make reinvestments in, undivided percentage ownership interests with regard to

the Purchased Interest from time to time from the date hereof to the Facility

Termination Date. Under no circumstances shall the Issuer make any such purchase

or reinvestment if, after giving effect to such purchase or reinvestment (i) the

aggregate outstanding Capital of the Purchased Interest would exceed the

Purchase Limit or (ii) the Purchased Interest would exceed 100%.

 

      (b)    The Seller may, upon at least 30 days' written notice to the

Administrator, terminate the Facility provided in this Agreement in whole or,

upon at least 30 days' written notice to the Administrator, from time to time,

irrevocably reduce in part the unused portion of the Purchase Limit; provided,

that each partial reduction shall be in the amount of at least $5,000,000, or an

integral multiple of $1,000,000 in excess thereof, and that, unless terminated

in whole, the Purchase Limit shall in no event be reduced below $20,000,000.

 

      Section 1.2. Making Purchases. (a) Each purchase (but not reinvestment) of

undivided percentage ownership interests with regard to the Purchased Interest

hereunder shall be made upon the Seller's irrevocable written notice (a

"Purchase Notice") in the form of Annex A delivered to the Administrator in

accordance with Section 5.2 (which notice must be received by the Administrator

before 11:00 a.m., New York City time) at least two Business Days before the

 

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requested purchase date, which notice shall specify: (A) the amount requested to

be paid to the Seller (such amount, which shall not be less than $300,000 and

anything in excess of $300,000 shall be an integral multiple of $100,000), being

the Capital relating to the undivided percentage ownership interest then being

purchased, (B) the date of such purchase (which shall be a Business Day) and (C)

a pro forma calculation of the Purchased Interest after giving effect to such

purchase. The funding basis for each such purchase shall be the CP Rate or, if

the Issuer has exercised its discretion not to fund or maintain such purchase

through the issuance of Notes because such purchase with the issuance of Notes

would be economically inadvisable to the Issuer, the Administrator, the Seller

or any other similarly situated Person, or otherwise not permitted or available,

the Yield Rate selected at such time by the Administrator.

 

      (b)    On the date of each purchase (but not reinvestment) of undivided

percentage ownership interests with regard to the Purchased Interest hereunder,

the Issuer shall, upon satisfaction of the applicable conditions set forth in

Exhibit II, make available to the Seller in same day funds, at PNC Bank,

National Association, account number 1013639238, ABA 043 000 096 (or such other

account as may be so designated in writing by the Seller to the Administrator)

an amount equal to the Capital relating to the undivided percentage ownership

interest then being funded.

 

      (c)    Effective on the date of each purchase pursuant to this Section and

each reinvestment pursuant to Section 1.4, the Seller hereby sells and assigns

to the Issuer an undivided percentage ownership interest in: (i) each Pool

Receivable then existing, (ii) all Related Security with respect to such Pool

Receivables and (iii) all Collections with respect to, and other proceeds of,

such Pool Receivables and Related Security.

 

      (d)    To secure all of the Seller's obligations (monetary or otherwise)

under this Agreement and the other Transaction Documents to which it is a party,

whether now or hereafter existing or arising, due or to become due, direct or

indirect, absolute or contingent, the Seller hereby grants to the Issuer (and

its assigns) a security interest in all of the Seller's right, title and

interest (including any undivided interest of the Seller) in, to and under all

of the following, whether now or hereafter owned, existing or arising: (i) all

Pool Receivables, (ii) all Related Security with respect to such Pool

Receivables, (iii) all Collections with respect to such Pool Receivables, (iv)

the Lock-Box Accounts and all amounts on deposit therein, and all certificates

and instruments, if any, from time to time evidencing such Lock-Box Accounts and

amounts on deposit therein, (v) all rights (but none of the obligations) of the

Seller under the Sale Agreements, and (vi) all proceeds of, and all amounts

received or receivable under any or all of, the foregoing (collectively, the

"Pool Assets"). The Issuer shall have, with respect to the Pool Assets, and in

addition to all the other rights and remedies available to the Issuer, all the

rights and remedies of a secured party under any applicable UCC.

 

      Section 1.3. Purchased Interest Computation. The Purchased Interest shall

be initially computed on the date of the initial purchase hereunder. Thereafter,

until the Facility Termination Date, the Purchased Interest shall be

automatically recomputed (or deemed to be recomputed) on each Business Day other

than a Termination Day. From and after the occurrence of any Termination Day,

the Purchased Interest shall (until the event(s) giving rise to such Termination

Day are satisfied or waived by the Administrator), be deemed to be 100%. The

Purchased Interest shall become zero when the Capital thereof and Discount

thereon shall have been paid in

 

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full, all the amounts owed by the Seller and the Servicer hereunder to the

Issuer, the Administrator and any other Indemnified Party or Affected Person are

paid in full, and the Servicer shall have received the accrued Servicing Fee

thereon.

 

      Section 1.4. Settlement Procedures. (a) The collection and distribution of

the Pool Receivables shall be administered by the Servicer in accordance with

the terms of this Agreement.

 

      (b)    The Servicer shall, on each day on which Collections of Pool

Receivables are received (or deemed received) by the Seller or Servicer:

 

            (i)    set aside, segregate and hold in trust for the benefit of the

      Issuer (and, if requested by the Administrator, transfer to a separate

      account approved by the Administrator) out of the percentage of

      Collections represented by the Purchased Interest, first, an amount equal

      to the Discount accrued through such day for each Portion of Capital and

      not previously set aside, second, an amount equal to the fees set forth in

      the Fee Letter accrued and unpaid through such day, and third, to the

      extent funds are available therefor, an amount equal to the Issuer's Share

      of the Servicing Fee accrued through such day and not previously set

      aside,

 

            (ii)   subject to Section 1.4(f), if such day is not a Termination

      Day, remit to the Seller, on behalf of the Issuer, the remainder of the

      percentage of Collections represented by the Purchased Interest (to the

      extent representing a return on Capital); such remainder shall be

      automatically reinvested in Pool Receivables, and in the Related Security,

      Collections and other proceeds with respect thereto; provided, however,

      that if after giving effect to such reinvestment the Purchased Interest

      would exceed 100%, then the Servicer shall not remit to the Seller, but

      shall set aside and hold in trust for the Issuer (and, if requested by the

      Administrator, transfer to a separate account approved by the

      Administrator), a portion of such Collections that, together with the

      other Collections set aside pursuant to this paragraph, shall equal the

      amount necessary to reduce the Purchased Interest to 100%,

 

            (iii) if such day is a Termination Day, set aside, segregate and

      hold in trust for the benefit of the Issuer (and, if requested by the

      Administrator, transfer to a separate account approved by the

      Administrator) the entire remainder of the Issuer's Share of the

      Collections; provided, that so long as the Facility Termination Date has

      not occurred, if amounts are set aside and held in trust on any

      Termination Day and, thereafter, the conditions set forth in Section 2 of

      Exhibit II are satisfied or are waived by the Administrator, such

      previously set aside amounts shall, unless already distributed pursuant to

       Section 1.4(d), below, to the extent representing a return on Capital, be

      reinvested in accordance with clause (ii) of this Section 1.4(b) on the

      day of such subsequent satisfaction or waiver, and

 

            (iv)   remit to the Seller (subject to Section 1.4(f)) for its own

      account any Collections in excess of (without duplication): (a) amounts

      required to be reinvested in accordance with clause (ii) or the proviso to

      clause (iii) of this Section 1.4(b) plus (b) the amounts that are required

      to be set aside pursuant to clause (i), the proviso to clause (ii)

 

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      and clause (iii) of this Section 1.4(b) plus (c) the Seller's Share of the

      Servicing Fee accrued and unpaid through such day (which shall be retained

      by the Servicer for its own account and, on each Settlement Date, be

      treated for all purposes hereof as the payment by the Seller of its share

      of the Servicing Fee as contemplated by Section 4.6(a) on such date) plus

      (d) all other amounts owed by the Seller under this Agreement to the

      Issuer, the Administrator, and any other Indemnified Party or Affected

      Person.

 

      (c)    The Servicer shall deposit into the Administration Account (or such

other account designated by the Administrator at such time), on each Settlement

Date with respect to any Portion of Capital, Collections held for the Issuer

pursuant to clause (b)(i) or (f) of this Section 1.4 plus the amount of

Collections then held for the Issuer pursuant to clauses (b)(ii) and (iii) of

this Section 1.4. Prior to the occurrence and continuation of any Termination

Day, the Servicer may deposit into its own account on each Settlement Date from

Collections held on deposit in the Lock-Box Accounts pursuant to Section

1.4(b)(i) in respect of the accrued Servicing Fee, an amount equal to the

Issuer's Share of such accrued Servicing Fee.

 

      (d)    Upon receipt of funds deposited into the Administration Account

pursuant to clause (c) of this Section, the Administrator shall cause such funds

to be distributed as follows:

 

            (i)    if such distribution occurs on a day that is not a Termination

      Day and the Purchased Interest does not exceed 100%, first, to the Issuer,

      in payment in full of all accrued Discount and fees (other than Servicing

      Fees) with respect to each such Portion of Capital, and second, if the

      Servicer has not, in accordance with the last sentence of Section 1.4(c),

      deposited such amounts in its own account, to the Servicer in payment in

      full of the Issuer's Share of accrued Servicing Fees, and

 

            (ii)   if such distribution occurs on a Termination Day or on a day

      when the Purchased Interest exceeds 100%, first, if Eagle Materials or an

      Affiliate thereof is not the Servicer, to the Servicer in payment in full

      of all accrued Servicing Fees; second, to the Issuer, in payment in full

      of all accrued Discount and fees (other than Servicing Fees); third, to

      the Issuer, in payment in full of Capital (or, if such day is not a

      Termination Day, the amount necessary to reduce the Purchased Interest to

      100%), fourth, if the Capital and accrued Discount with respect to each

      Portion of Capital have been reduced to zero, and all accrued Servicing

      Fees payable to the Servicer (if other than Eagle Materials or an

      Affiliate thereof) have been paid in full, to the Issuer, the

      Administrator and any other Indemnified Party or Affected Person in

      payment in full of any other amounts owed thereto by the Seller hereunder

      and, fifth, to the Servicer (if the Servicer is Eagle Materials or an

      Affiliate thereof) in payment in full of the Issuer's Share of all accrued

      Servicing Fees.

 

After the Capital, Discount, fees payable pursuant to the Fee Letter and

Servicing Fees with respect to the Purchased Interest, and any other amounts

payable by the Seller and the Servicer to the Issuer, the Administrator or any

other Indemnified Party or Affected Person hereunder, have been paid in full,

all additional Collections with respect to the Purchased Interest shall be paid

to the Seller for its own account.

 

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      (e)    For the purposes of this Section 1.4:

 

            (i)    if on any day the Outstanding Balance of any Pool Receivable

      is reduced or adjusted as a result of any defective, rejected, returned,

      repossessed or foreclosed goods or services, or any revision,

      cancellation, allowance, discount or other adjustment made by the

       Servicer, the Seller or any Affiliate of the Servicer or the Seller (other

      than as a result of (x) having been written off the Seller's books as

      uncollectible due to credit reasons of an Obligor or (y) a discharge in

      bankruptcy of an Obligor), or any setoff or dispute between the Seller or

      any Affiliate of the Seller and an Obligor, the Seller shall be deemed to

      have received on such day a Collection of such Pool Receivable in the

      amount of such reduction or adjustment and shall immediately pay any and

      all such amounts in respect thereof to a Lock-Box Account for the benefit

      of the Issuer and its assigns and for application pursuant to this Section

      1.4;

 

            (ii)   if on any day any of the representations or warranties in

      Section 1(l) or Section 3(a) of Exhibit III is not true with respect to

      any Pool Receivable, the Seller shall be deemed to have received on such

      day a Collection of such Pool Receivable in full and shall immediately pay

      any and all such amounts in respect thereof to a Lock-Box Account for the

      benefit of the Issuer and its assigns and for application pursuant to this

      Section 1.4 (Collections deemed to have been received pursuant to clause

       (i) or (ii) of this paragraph (e) are hereinafter sometimes referred to as

      "Deemed Collections") (any Receivable which becomes subject to a Deemed

      Collection in an amount equal to the Outstanding Balance of such

      Receivable, pursuant to clauses (i) or (ii) of this paragraph (e), and for

      which such Deemed Collection has actually been paid in cash and deposited

      into a Lock-Box Account in accordance with the terms hereof, shall no

      longer be a "Receivable" for purposes of this Agreement and the other

      Transaction Documents and the security interest or undivided ownership

      interest of the Issuer therein and in the Related Security solely with

      respect thereto shall be and be deemed to be automatically released upon

      actual receipt of such Deemed Collection by deposit thereof (in an amount

      at least equal to the entire aggregate Outstanding Balance of such

      Receivable) in a Lock-Box Account without any further action by or notice

      to any Person, and the Issuer hereby authorizes at the expense of the

      Seller, the filing of any release or partial termination at such time in

      accordance with the UCC of any applicable jurisdiction solely with respect

      to the Receivable and applicable Related Security to which such Deemed

      Collection relates);

 

            (iii) except as required by applicable law or the relevant Contract,

      all Collections received from an Obligor of any Receivable shall be

      applied to the Receivables of such Obligor in the order of the age of such

      Receivables, starting with the oldest such Receivable, unless such Obligor

      designates in writing its payment for application to specific Receivables;

      and

 

            (iv)   if and to the extent the Administrator or the Issuer shall be

      required for any reason to pay over to an Obligor (or any trustee,

      receiver, custodian or similar official in any Insolvency Proceeding) any

      amount received by it hereunder, such amount shall be deemed not to have

      been so received by the Administrator or the Issuer but rather to have

      been retained by the Seller and, accordingly, the Administrator or the

      Issuer, as the case

 

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      may be, shall have a claim against the Seller for such amount, payable

      when and to the extent that any distribution from or on behalf of such

      Obligor is made in respect thereof.

 

      (f)    If at any time the Seller shall wish to cause the reduction of

Capital, the Seller may do so as follows:

 

            (i)    the Seller shall give the Administrator and the Servicer at

      least two (2) Business Days' prior written notice thereof (a "Paydown

      Notice"), which notice shall be in the form of Annex B hereto;

 

            (ii)   on the proposed date of commencement of such reduction and on

      each day thereafter, the Servicer shall cause Collections not to be

      remitted to the Seller for reinvestment until the amount thereof not so

      remitted shall equal the desired amount of reduction; and

 

            (iii) the Servicer shall account for such Collections and make

      payment to the Administrator on the next succeeding Settlement Date and

      Capital shall be deemed reduced in the amount to be paid to the

      Administrator only when in fact finally so paid;

 

provided, that:

 

                  (A)    the amount of any such reduction shall be not less than

            $300,000 (or for any specific request, $100,000, at the sole

            discretion of the Administrator) and shall be an integral multiple

            of $100,000, and the entire Capital of the Purchased Interest after

            giving effect to such reduction shall be not less than $5,000,000

            and shall be in an integral multiple of $100,000 (unless Capital

            shall have been reduced to zero in accordance with Section 1.1(b));

            and

 

                  (B)    the Seller shall choose a reduction amount, and the date

            of commencement thereof, so that to the extent practicable such

            reduction shall commence and conclude in the same Yield Period.

 

      Section 1.5. Fees. The Seller shall pay to the Administrator for the

benefit of the Issuer and the Administrator, certain fees in the amounts and on

the dates set forth in the Fee Letter.

 

      Section 1.6. Payments and Computations, Etc. (a) All amounts to be paid or

deposited by the Seller or the Servicer hereunder shall be made without

reduction for offset or counterclaim and shall be paid or deposited no later

than 12:00 p.m. (New York City time) on the day when due in same day funds to

the Administration Account. All amounts received after 12:00 p.m. (New York City

time) will be deemed to have been received on the next Business Day.

 

      (b)    The Seller or the Servicer, as the case may be, shall, to the extent

permitted by law, pay interest on any amount not paid or deposited by the Seller

or the Servicer, as the case may be, when due hereunder, at an interest rate

equal to 2.0% per annum above the Base Rate, payable on demand.

 

<PAGE>

 

      (c)    All computations of interest under clause (b) and all computations

of Discount, fees and other amounts hereunder shall be made on the basis of a

year of 360 (or 365 or 366, as applicable, with respect to Discount or other

amounts calculated by reference to the Base Rate) days for the actual number of

days elapsed. Whenever any payment or deposit to be made hereunder shall be due

on a day other than a Business Day, such payment or deposit shall be made on the

next Business Day and such extension of time shall be included in the

computation of such payment or deposit.

 

      Section 1.7. Increased Costs. (a) If, after the date hereof, the

Administrator, the Issuer, any Liquidity Bank, any other Program Support

Provider or any of their respective Affiliates (each an "Affected Person")

reasonably determines that the existence of or compliance with: (i) any law,

rule or regulation (including any applicable law, rule or regulation regarding

capital adequacy) or any change therein or in the interpretation or application

thereof, or (ii) any request, guideline or directive from Financial Accounting

Standards Board ("FASB"), or any central bank or other Governmental Authority

(whether or not having the force of law) affects or would affect the amount of

capital required or expected to be maintained by such Affected Person, and such

Affected Person determines that the amount of such capital is increased by or

based upon the existence of any commitment to make purchases of (or otherwise to

maintain the investment in) Pool Receivables or any related liquidity facility,

credit enhancement facility and other commitments of the same type, then, upon

demand by such Affected Person (with a copy to the Administrator), the Seller

shall promptly pay to the Administrator, for the account of such Affected

Person, from time to time as specified by such Affected Person, additional

amounts sufficient to compensate such Affected Person in the light of such

circumstances, to the extent that such Affected Person reasonably determines

such increase in capital to be allocable to the existence of any of such

commitments. For the avoidance of doubt, if the issuance of FASB Interpretation

No. 46, or any other change in accounting standards or the issuance of any other

pronouncement, release or interpretation, causes or requires the consolidation

of all or a portion of the assets and liabilities of the Issuer or the Seller

with the assets and liabilities of the Administrator or any other Affected

Person, such event shall constitute a circumstance on which such Person may base

a claim for reimbursement under this Section 1.7. A certificate as to such

amounts submitted to the Seller and the Administrator by such Affected Person

shall be conclusive and binding for all purposes, absent manifest error.

 

      (b)    If, subsequent to the execution of this Agreement, due to either:

(i) the introduction of or any change in or in the interpretation of any law or

regulation or (ii) compliance with any guideline or request from any central

bank or other Governmental Authority (whether or not having the force of law),

there shall be any increase in the cost to any Affected Person of agreeing to

purchase or purchasing, or maintaining the ownership of, the Purchased Interest

(or its portion thereof) in respect of which Discount is computed by reference

to the Euro-Rate, then, upon demand by such Affected Person, the Seller shall

promptly pay to such Affected Person, from time to time as specified by such

Affected Person, additional amounts sufficient to compensate such Affected

Person for such increased costs. A certificate as to such amounts submitted to

the Seller and the Administrator by such Affected Person shall be conclusive and

binding for all purposes, absent manifest error.

 

<PAGE>

 

      (c) If such increased costs affect the related Affected Person's portfolio

of financing transactions, such Affected Person shall use reasonable averaging

and attribution methods to allocate such increased costs to the transactions

contemplated by this Agreement.

 

      Section 1.8. Requirements of Law. If, after the date hereof, any Affected

Person reasonably determines that the existence of or compliance with: (a) any

law or regulation or any change therein or in the interpretation or application

thereof, or (b) any request, guideline or directive from any central bank or

other Governmental Authority (whether or not having the force of law):

 

            (i)    does or shall subject such Affected Person to any tax of any

      kind whatsoever with respect to this Agreement, any increase in the

      Purchased Interest (or its portion thereof) or in the amount of Capital

      relating thereto, or does or shall change the basis of taxation of

      payments to such Affected Person on account of Collections, Discount or

      any other amounts payable hereunder (excluding taxes imposed on the

      overall income of such Affected Person, and franchise taxes imposed on

      such Affected Person, by the jurisdiction under the laws of which such

      Affected Person is organized or a political subdivision thereof), or

 

            (ii)   does or shall impose, modify or hold applicable any reserve,

      special deposit, compulsory loan or similar requirement against assets

      held by, or deposits or other liabilities in or for the account of,

      purchases, advances or loans by, or other credit extended by, or any other

      acquisition of funds by, any office of such Affected Person that are not

      otherwise included in the determination of the Euro-Rate hereunder,

 

and the result of any of the foregoing is: (A) to increase the cost to such

Affected Person of agreeing to purchase or purchasing or maintaining the

ownership of undivided percentage ownership interests with regard to the

Purchased Interest (or interests therein) or any Portion of Capital, or (B) to

reduce any amount receivable hereunder (whether directly or indirectly), then,

in any such case, upon demand by such Affected Person, the Seller shall promptly

pay to such Affected Person additional amounts necessary to compensate such

Affected Person for such additional cost or reduced amount receivable. All such

amounts shall be payable as incurred. A certificate as to such amounts from such

Affected Person to the Seller and the Administrator shall be conclusive and

binding for all purposes, absent manifest error.

 

      Section 1.9. Inability to Determine Euro-Rate. (a) If the Administrator

determines before the first day of any Yield Period (which determination shall

be final and conclusive) that, by reason of circumstances affecting the

interbank eurodollar market generally (i) deposits in dollars (in the relevant

amounts for such Yield Period) are not being offered to banks in the interbank

eurodollar market for such Yield Period, (ii) adequate means do not exist for

ascertaining the Euro-Rate for such Yield Period, or (iii) the Euro-Rate does

not accurately reflect the cost to any Liquidity Bank (as determined by the

Administrator) of maintaining any Portion of Capital during such Yield Period,

then until the Administrator notifies the Servicer that the circumstances giving

rise to such suspension no longer exist, (x) no Portions of Capital shall be

Euro-Rate Portions of Capital and (y) the Discount for any outstanding Portions

of Capital that are Euro-Rate Portions of Capital shall, on the last day of the

then current Yield Period, be converted to Base Rate Portions of Capital.

 

<PAGE>

 

      (b)    If, on or before the first day of any Yield Period, the

Administrator shall have been notified by any Affected Person that, such

Affected Person has determined (which determination shall be final and

conclusive) that, any enactment, promulgation or adoption of or any change in

any applicable law, rule or regulation, or any change in the interpretation or

administration thereof by a governmental authority, central bank or comparable

agency charged with the interpretation or administration thereof, or compliance

by such Affected Person with any guideline, request or directive (whether or not

having the force of law) of any such authority, central bank or comparable

agency shall make it unlawful or impossible for such Affected Person to fund or

maintain any Euro-Rate Portion of Capital, then until the Administrator notifies

the Servicer that the circumstances giving rise to such determination no longer

apply, no Portions of Capital shall be Euro-Rate Portions of Capital and any

outstanding Euro-Rate Portions of Capital at such time shall be converted into

Base Rate Portions of Capital.

 

      Section 1.10. Funding Losses. The Seller shall compensate each Affected

Person, upon written request by such Person (which request shall set forth in

reasonable detail the basis for requesting such amounts) for all reasonable

losses, expenses and liabilities (including any interest paid by such Affected

Person to lenders of funds borrowed by it to fund or maintain any Portion of

Capital hereunder at the Yield Rate determined by reference to the Euro-Rate and

any loss sustained by such Person in connection with the re-employment of such

funds), which such Affected Person may sustain with respect to funding or

maintaining such Portion of Capital at the Euro-Rate if, for any reason, at the

applicable request by the Seller to fund or maintain such Portion of Capital at

the Yield Rate determined by reference to the Euro-Rate does not occur on a date

specified therefor.

 

      Section 1.11. Taxes. The Seller agrees that:

 

      (a)    (i) Any and all payments by the Seller under this Agreement shall be

made free and clear of and without deduction for any and all current or future

taxes, stamp or other taxes, levies, imposts, deductions, charges or

withholdings, and all liabilities with respect thereto, excluding overall income

or franchise taxes, in either case, imposed on the Person receiving such payment

by the Seller hereunder by the jurisdiction under whose laws such Person is

organized or any political subdivision thereof (all such nonexcluded taxes,

levies, imposts, deductions, charges, withholdings and liabilities being

hereinafter referred to as "Taxes"). If the Seller shall be required by law to

deduct any Taxes from or in respect of any sum payable hereunder to the Issuer,

any Liquidity Bank or the Administrator, then the sum payable shall be increased

by the amount necessary to yield to such Person (after payment of all Taxes) an

amount equal to the sum it would have received had no such deductions been made.

 

            (i)    Whenever any Taxes are payable by the Seller, as promptly as

      possible thereafter, the Seller shall send to the Administrator for its

      own account or for the account of the Issuer or any Liquidity Bank or

      other Program Support Provider, as the case may be, a certified copy of an

      original official receipt showing payment thereof or such other evidence

      of such payment as may be available to the Seller and acceptable to the

      taxing authorities having jurisdiction over such Person. If the Seller

      fails to pay any Taxes when due to the appropriate taxing authority or

      fails to remit to the Administrator the required receipts or other

      required documentary evidence, the Seller shall indemnify the

      Administrator and/or any other Affected Person, as applicable, for any

      incremental taxes,

 

<PAGE>

 

      interest or penalties that may become payable by such party as a result of

      any such failure.

 

      (b)    (i) If the Administrator or the applicable Affected Person is not

created or organized under the laws of the United States or a political

subdivision thereof, such Person shall, to the extent that it may then do so

under applicable laws and regulations, deliver to the Seller (with, in the case

of any Affected Person, a copy to the Administrator) (i) within thirty (30) days

after the date hereof, or, if later, the date on which such Person becomes an

Affected Person pursuant to this Agreement two (or such other number as may from

time to time be prescribed by applicable laws or regulations) duly completed

copies of IRS Form 4224 or Form 1001 (or any successor form or other certificate

or statement which may be required from time to time by the relevant United

States taxing authorities or applicable law or regulation), as appropriate, to

permit the Seller to make payments hereunder for the account of such Person, as

the case may be, without deduction or withholding of income taxes and (ii) upon

the obsolescence of or after the occurrence of any event requiring a change in

any form or certificate previously delivered pursuant to this Section 1.11(b),

copies (in such numbers as may from time to time be prescribed by applicable law

or regulation) of such additional, amended or successor form, certificate or

statement as may be required under applicable law or regulation to permit the

Seller to make payments hereunder for the account of such Person without

deduction or withholding of income taxes.

 

            (i)    The Seller shall not be required to pay any amounts to any

      Affected Person in respect of Taxes for any period pursuant to paragraph

      (a), above, if the obligation to pay such amounts would not have arisen

      but for a failure by such Affected Person to comply with the provisions of

      this paragraph (b) for such period, unless such Affected Person is unable

       to comply with this paragraph (b) because of (i) a change in applicable

      law, regulation or official interpretation thereof or (ii) an amendment,

      modification or revocation of any applicable tax treaty or a change in

      official position regarding the application or interpretation thereof, in

      each case after the date hereof (or, in the case of any Person who became

      an Affected Person after the date hereof, after the date on which it so

      became an Affected Person).

 

             (ii)   Within thirty (30) days of the written request of the Seller

      therefor, the Administrator or such Affected Person, as appropriate, shall

      execute and deliver to the Borrower such certificates, forms or other

      documents which can be furnished consistent with the facts and which are

      reasonably necessary to assist the Seller in applying for refunds of taxes

      remitted hereunder.

 

      Section 1.12. Repurchase Option. So long as no Termination Event or

Unmatured Termination Event would occur or be continuing after giving effect

thereto, the Seller shall have the right (the "Call Right") to repurchase all,

but not less than all, of the Purchased Interest held by the Issuer upon not

less than 30 days' prior written notice to the Administrator. Such notice shall

specify the date that the Seller desires that such repurchase occur (such date,

the "Repurchase Date"). On the Repurchase Date, the Seller shall transfer to the

Administration Account in immediately available funds an amount equal to (i) the

aggregate outstanding Capital of the Purchased Interest at such time, (ii) all

accrued and unpaid Discount to the Repurchase Date, (iii) all accrued and unpaid

fees owing to the Issuer and the Administrator pursuant to the

 

<PAGE>

 

Fee Letter, and (iv) all expenses, indemnities and other amounts payable

hereunder to the Issuer and the Administrator. Any repurchase pursuant to this

Section 1.12 shall be made without recourse to or warranty by the Issuer or the

Administrator. Further, on the Repurchase Date, the Facility Termination Date

shall have occurred and no further purchases or reinvestments of Collections

shall be made hereunder.

 

                                   ARTICLE II

 

                   REPRESENTATIONS AND WARRANTIES; COVENANTS;

                               TERMINATION EVENTS

 

      Section 2.1. Representations and Warranties; Covenants. Each of the Seller

and the Servicer hereby makes the representations and warranties, and hereby

agrees to perform and observe the covenants, applicable to it set forth in

Exhibits III and IV, respectively.

 

      Section 2.2. Termination Events. If any of the Termination Events set

forth in Exhibit V shall occur, the Administrator may by notice to the Seller,

declare the Facility Termination Date to have occurred (in which case the

Facility Termination Date shall be deemed to have occurred); provided, that

automatically upon the occurrence of any event (without any requirement for the

passage of time or the giving of notice) described in paragraph (f) of Exhibit

V, the Facility Termination Date shall occur. Upon any such declaration,

occurrence or deemed occurrence of the Facility Termination Date, the Issuer and

the Administrator shall have, in addition to the rights and remedies that they

may have under this Agreement, all other rights and remedies provided after

default under the New York UCC and under other applicable law, which rights and

remedies shall be cumulative.

 

                                  ARTICLE III

 

                                 INDEMNIFICATION

 

      Section 3.1. Indemnities by the Seller. Without limiting any other rights

that the Administrator, the Issuer, the Liquidity Banks, any other Program

Support Providers or any of their respective Affiliates, employees, officers,

directors, agents, counsel, successors, transferees or assigns (each, an

"Indemnified Party") may have hereunder or under applicable law, the Seller

hereby agrees to indemnify each Indemnified Party from and against any and all

claims, damages, expenses, costs, losses and liabilities (including Attorney

Costs) (all of the foregoing being collectively referred to as "Indemnified

Amounts"), which may be asserted against or incurred by any of them, arising out

of or resulting from this Agreement (whether directly or indirectly), the use of

proceeds of purchases or reinvestments, the ownership of the Purchased Interest,

or any interest therein, or in respect of any Receivable, Related Security or

Contract, excluding, however: (a) Indemnified Amounts to the extent resulting

from gross negligence or willful misconduct on the part of such Indemnified

Party, (b) recourse (except as otherwise specifically provided in this

Agreement) for uncollectible Receivables, or (c) any overall income taxes or

franchise taxes, in either case, imposed on such Indemnified Party by the

jurisdiction under the laws of which such Indemnified Party is organized or any

political subdivision thereof. Without limiting or being limited by the

foregoing, and subject to the exclusions set forth in the preceding sentence,

the Seller shall pay on demand to each Indemnified Party any and all

 

<PAGE>

 

amounts necessary to indemnify such Indemnified Party from and against any and

all Indemnified Amounts relating to or resulting from any of the following:

 

            (i)    the failure of any Receivable included in the calculation of

      the Net Receivables Pool Balance as an Eligible Receivable to be an

      Eligible Receivable, the failure of any information contained in any

      Servicer Report to be true and correct, or the failure of any other

      information provided to the Issuer or the Administrator with respect to

      Receivables or this Agreement to be true and correct,

 

            (ii)   the failure of any representation, warranty or certification

      made or deemed made by the Seller (or any of its officers) under or in

      connection with this Agreement to have been true and correct as of the

      date made or deemed made in all respects when made,

 

            (iii) the failure by the Seller to comply with any applicable law,

      rule or regulation with respect to any Pool Receivable or the related

      Contract, or the failure of any Pool Receivable or the related Contract to

      conform to any such applicable law, rule or regulation,

 

            (iv)   the failure to vest in the Issuer a valid and enforceable: (A)

      perfected undivided percentage ownership or security interest, to the

      extent of the Purchased Interest, in the Receivables in, or purporting to

       be in, the Receivables Pool and the other Pool Assets, or (B) first

      priority perfected security interest in the Pool Assets, in each case,

      free and clear of any Adverse Claim,

 

            (v)    the failure to have filed, or any delay in filing, financing

      statements or other similar instruments or documents under the UCC of any

      applicable jurisdiction or other applicable laws with respect to any

      Receivables in, or purporting to be in, the Receivables Pool and the other

       Pool Assets, whether at the time of any purchase or reinvestment or at any

      subsequent time,

 

            (vi)   any dispute, claim, offset or defense (other than discharge in

      bankruptcy of the related Obligor) of the related Obligor to the payment

      of any Receivable in, or purporting to be in, the Receivables Pool

      (including a defense based on such Receivable or the related Contract not

      being a legal, valid and binding obligation of such Obligor enforceable

      against it in accordance with its terms), or any other claim resulting

      from the sale of the goods or services related to such Receivable or the

      furnishing or failure to furnish such goods or services or relating to

      collection activities with respect to such Receivable,

 

            (vii) any failure of the Seller to perform its duties or obligations

      in accordance with the provisions hereof,

 

            (viii) any products liability or other claim, investigation,

      litigation or proceeding arising out of or in connection with merchandise,

      insurance or services that are the subject of any Contract,

 

            (ix)   the commingling of Collections at any time with other funds,

 

<PAGE>

 

            (x)    the use of proceeds of purchases or reinvestments, or

 

            (xi)   any reduction in Capital as a result of the distribution of

      Collections pursuant to Section 1.4(d), if all or a portion of such

      distributions shall thereafter be rescinded or otherwise must be returned

       for any reason.

 

      Section 3.2. Indemnities by the Servicer. Without limiting any other

rights that the Administrator, the Issuer or any other Indemnified Party may

have hereunder or under applicable law, but subject to the exclusions set forth

in clauses (a) through (c) of the first sentence of Section 3.1, the Servicer

hereby agrees to indemnify each Indemnified Party from and against any and all

Indemnified Amounts arising out of or resulting from (whether directly or

indirectly): (a) the failure of any information contained in any Servicer Report

to be true and correct, or the failure of any other information provided to any

such Indemnified Party by, or on behalf of, the Servicer to be true and correct,

(b) the failure of any representation, warranty or statement made or deemed made

by the Servicer (or any of its officers) under or in connection with this

Agreement to have been true and correct as of the date made or deemed made in

all respects when made, (c) the failure by the Servicer to comply with any

applicable law, rule or regulation with respect to any Pool Receivable or the

related Contract, (d) any dispute, claim, offset or defense of the Obligor to

the payment of any Receivable in, or purporting to be in, the Receivables Pool

resulting from or related to the collection activities with respect to such

Receivable, or (e) any failure of the Servicer to perform its duties or

obligations in accordance with the provisions hereof.

 

                                   ARTICLE IV

 

                          ADMINISTRATION AND COLLECTIONS

 

      Section 4.1. Appointment of the Servicer. (a) The servicing, administering

and collection of the Pool Receivables shall be conducted by the Person so

designated from time to time as the Servicer in accordance with this Section.

Until the Administrator gives notice to Eagle Materials (in accordance with this

Section) of the designation of a new Servicer, Eagle Materials is hereby

designated as, and hereby agrees to perform the duties and obligations of, the

Servicer pursuant to the terms hereof. Upon the occurrence of a Termination

Event or, to the extent not capable of cure, an Unmatured Termination Event, the

Administrator may designate as Servicer any Person (including itself) to succeed

Eagle Materials or any successor Servicer, on the condition in each case that

any such Person so designated shall agree to perform the duties and obligations

of the Servicer pursuant to the terms hereof.

 

      (b)    Upon the designation of a successor Servicer as set forth in clause

(a), Eagle Materials agrees that it will terminate its activities as Servicer

hereunder in a manner that the Administrator determines will facilitate the

transition of the performance of such activities to the new Servicer, and Eagle

Materials shall in all reasonable respects cooperate with and assist such new

Servicer in the transition. Such cooperation shall include, access to and

transfer of related records and use by the new Servicer of all licenses,

hardware or software (to the extent legally permissible and to the extent Eagle

Materials may transfer or grant access to any such licenses or software without

violating the terms of any agreement between Eagle Materials and the

 

<PAGE>

 

applicable provider of such licenses or software and relating to the transfer

and/or assignment thereof), reasonably necessary to collect the Pool Receivables

and the Related Security.

 

      (c)    Eagle Materials acknowledges that, in making their decision to

execute and deliver this Agreement, the Administrator and the Issuer have relied

on Eagle Materials' agreement to act as Servicer hereunder. Accordingly, Eagle

Materials agrees that it will not voluntarily resign as Servicer, except to the

extent required by law.

 

      (d)    The Servicer may delegate its duties and obligations hereunder to

any subservicer (each a "Sub-Servicer"); provided, that, in each such

delegation: (i) such Sub-Servicer shall agree in writing to perform the duties

and obligations of the Servicer pursuant to the terms hereof, (ii) the Servicer

shall remain primarily liable for the performance of the duties and obligations

so delegated, (iii) the Seller, the Administrator and the Issuer shall have the

right to look solely to the Servicer for performance and (iv) the terms of any

agreement with any Sub-Servicer shall provide that the Administrator may

terminate such agreement upon the termination of the Servicer hereunder by

giving notice of its desire to terminate such agreement to the Servicer (and the

Servicer shall provide appropriate notice to each such Sub-Servicer); provided,

however, that if any such delegation is to any Person other than an Affiliate of

the Servicer, the Administrator shall have consented in writing in advance to

such delegation.

 

      Section 4.2. Duties of the Servicer. (a) The Servicer shall take or cause

to be taken all such action as may be necessary or advisable to administer and

collect each Pool Receivable from time to time, all in accordance with this

Agreement and all applicable laws, rules and regulations, with reasonable care

and diligence, and in accordance with the Credit and Collection Policies. The

Servicer shall set aside for the accounts of the Seller and the Issuer the

amount of Collections to which each is entitled in accordance with Article I

hereof. The Servicer and the Originators may, in accordance with the applicable

Credit and Collection Policy, take such action, including modifications, waivers

or restructurings of Pool Receivables and the related Contracts, as the Servicer

and the Originators may reasonably determine to be appropriate to maximize

Collections thereof or reflect adjustments permitted under the Credit and

Collection Policy or required under applicable laws, rules or regulations or the

applicable Contract; provided, however, that for the purposes of this Agreement:

(i) such action shall not change the number of days such Pool Receivable has

remained unpaid from the date of the original due date related to such Pool

Receivable, (ii) such action shall not alter the status of such Pool Receivable

as a Delinquent Receivable or a Defaulted Receivable under this Agreement or

limit the rights of the Issuer or the Administrator under this Agreement and

(iii) if a Termination Event or an Unmatured Termination Event has occurred and

is continuing and Eagle Materials or an Affiliate thereof is serving as the

Servicer, Eagle Materials or such Affiliate may take such action only upon the

prior approval of the Administrator or without such prior approval to the extent

such action is required by applicable laws, rules or regulations. The Seller

shall deliver to the Servicer and the Servicer shall hold for the benefit of the

Seller and the Issuer, in accordance with their respective interests, all

records and documents (including computer tapes or disks) with respect to each

Pool Receivable. Notwithstanding anything to the contrary contained herein, the

Administrator may direct the Servicer (whether the Servicer is Eagle Materials

or any other Person) to commence or settle any legal action to enforce

collection of any Pool Receivable or to foreclose upon or repossess any Related

Security; provided, however, that no such direction may be given unless either:

(A) a Termination Event or Unmatured Termination Event has occurred

 

<PAGE>

 

and is continuing or (B) the Administrator reasonably believes that failure to

commence, settle or effect such legal action, foreclosure or repossession could

adversely affect Receivables constituting a material portion of the Pool

Receivables.

 

      (b)    The Servicer shall, as soon as practicable following actual receipt

of collected funds, turn over to the Seller the collections of any indebtedness

that is not a Pool Receivable, less, if Eagle Materials or an Affiliate thereof

is not the Servicer, all reasonable and appropriate out-of-pocket costs and

expenses of such Servicer of servicing, collecting and administering such

collections. The Servicer, if other than Eagle Materials or an Affiliate

thereof, shall, as soon as practicable upon demand, deliver to the Seller all

records in its possession that evidence or relate to any indebtedness that is

not a Pool Receivable, and copies of records in its possession that evidence or

relate to any indebtedness that is a Pool Receivable.

 

      (c)    The Servicer's obligations hereunder shall terminate on the latest

of the Facility Termination Date, the date on which no Capital of or Discount in

respect of the Purchased Interest shall be outstanding or the date all other

amounts owed by the Seller under the Agreement to the Issuer, the Administrator

and any other Indemnified Party or Affected Person shall be paid in full.

 

      After such termination, if Eagle Materials or an Affiliate thereof was not

the Servicer on the date of such termination, the Servicer shall promptly

deliver to the Seller all books, records and related materials that the Seller

previously provided to the Servicer, or that have been obtained by the Servicer,

in connection with this Agreement.

 

      Section 4.3. Establishment and Use of Certain Accounts.

 

      (a)    Lock-Box Accounts. Prior to the initial purchase hereunder, the

Seller and the Servicer shall enter into Lock-Box Agreements establishing the

Lock-Box Accounts listed on Schedule II with all of the Lock-Box Banks, and

deliver original counterparts thereof to the Administrator.

 

      (b)    Permitted Investments. Prior to the occurrence and continuation of

any Termination Event or Unmatured Termination Event, any amounts in the

Lock-Box Accounts may be invested by the Lock-Box Bank at Servicer's direction,

in Permitted Investments, so long as (i) either (A) such Permitted Investments

are credited to a "securities account" (as defined in the applicable UCC) over

which the Administrator (for the benefit of the Issuer) shall have a first

priority perfected security interest, (B) such Permitted Investments are

purchased in the name of the Issuer or (C) such Permitted Investments are held

in another manner sufficient to establish the Administrator's first priority

perfected security interest over such Permitted Investments and (ii) such

Permitted Investments are scheduled to mature prior to the last day of the Yield

Period during which such investment is made.

 

      (c)    Control of Accounts. The Administrator may at any time following the

occurrence and during the continuance of a Termination Event or Unmatured

Termination Event give notice to each Lock-Box Bank that the Administrator is

exercising its rights under the Lock-Box Agreements to do any or all of the

following: (i) to have the exclusive ownership and control of the Lock-Box

Accounts transferred to the Administrator, to the extent provided in the

 

<PAGE>

 

related Lock-Box Agreement, (ii) to have the proceeds that are sent to the

respective Lock-Box Accounts be redirected pursuant to its instructions rather

than deposited in the applicable Lock-Box Account and (iii) to take any or all

other actions permitted under the applicable Lock-Box Agreement. The Seller

hereby agrees that if the Administrator at any time takes any action set forth

in the preceding sentence, the Administrator shall have exclusive control of the

proceeds (including Collections) of all Pool Receivables and the Seller hereby

further agrees to take any other action that the Administrator may reasonably

request to transfer such control. Any proceeds of Pool Receivables received by

the Seller or the Servicer, thereafter shall be sent immediately to the

Administrator. The parties hereto hereby acknowledge that if at any time the

Administrator takes control of any Lock-Box Account, the Administrator shall not

have any rights to the funds therein in excess of the unpaid amounts due to the

Administrator, the Issuer or any other Person hereunder and any such funds shall

be distributed by the Administrator in accordance with the provisions set forth

in Section 1.4.

 

      Section 4.4. Enforcement Rights. (a) At any time following the occurrence

and during the continuance of a Termination Event or Unmatured Termination

Event:

 

            (i)    the Administrator may notify any or all of the Obligors of the

      Issuer's interest in the Pool Receivables and may direct any or all of the

      Obligors of Pool Receivables to pay all amounts payable under any such

      Receivables directly to the Administrator or its designee;

 

            (ii)   at the Administrator's request and at the Seller's expense,

      the Seller shall give notice of the Issuer's interest in the Pool

      Receivables to each Obligor and direct that payments be made directly to

      the Administrator or its designee;

 

            (iii) the Seller shall assemble all books and records necessary or

      desirable to collect the Pool Receivables and Related Security, and make

      the same available to the Administrator at a place selected by the

      Administrator or its designee; and

 

            (iv)   the Administrator may enforce the Sale Agreements against the

      parties thereto and shall have the right to give or withhold any or all

      consents, requests, notices, directions, approvals, demands, extensions or

      waivers under or with respect thereto, to the same extent as the Seller

      would otherwise be entitled to do.

 

      (b)    The Seller hereby authorizes the Administrator , and gives to the

Administrator its irrevocable power of attorney, which shall be coupled with an

interest, during the occurrence and continuation of a Termination Event or

Unmatured Termination Event, to take any and all steps during such occurrence

and continuance in the name of the Seller, which steps are necessary or

desirable, in the reasonable determination of the Administrator, to collect all

amounts due under the Pool Receivables and Related Security, including, without

limitation, endorsing the Seller's name on checks and other instruments

representing Collections and, enforcing such Receivables and the related

Contracts. Notwithstanding anything to the contrary contained in this

subsection, none of the powers conferred upon such attorney-in-fact pursuant to

the preceding sentence shall subject such attorney-in-fact to any liability if

any action taken by it shall prove to be inadequate or invalid, nor shall they

confer any obligations upon such attorney-in-fact in any manner whatsoever.

 

<PAGE>

 

      Section 4.5. Responsibilities of the Seller. (a) Anything herein to the

contrary notwithstanding, the Seller shall (directly or indirectly by causing

the applicable Originator to): (i) perform all of its obligations, if any, under

the Contracts related to the Pool Receivables to the same extent as if interests

in such Pool Receivables had not been transferred hereunder, and the exercise by

the Administrator or the Issuer of their respective rights hereunder shall not

relieve the Seller from such obligations, and (ii) pay when due any taxes,

including any sales taxes payable in connection with the Pool Receivables and

their creation and satisfaction. The Administrator and the Issuer shall not have

any obligation or liability with respect to any Pool Asset, nor shall any of

them be obligated to perform any of the obligations of the Seller, Eagle

Materials or any Originator thereunder.

 

      (b)    Eagle Materials hereby irrevocably agrees that if at any time it

shall cease to be the Servicer hereunder, it shall act (if the then-current

Servicer so requests) as the data-processing agent of the Servicer and, in such

capacity, Eagle Materials shall conduct the data-processing functions of the

administration of the Receivables and the Collections thereon in substantially

the same way that Eagle Materials conducted such data-processing functions while

it acted as the Servicer.

 

      Section 4.6. Servicing Fee. (a) Subject to clause (b), the Servicer shall

be paid a fee equal to 1.0% per annum (the "Servicing Fee Rate") of the daily

average aggregate Outstanding Balance of the Pool Receivables. The Issuer's

Share of such fee shall be paid through the distributions contemplated by

Section 1.4(d), and the Seller's Share of such fee shall be paid directly by the

Seller in the manner contemplated by Section 1.4(b)(iv).

 

      (b)    If the Servicer ceases to be Eagle Materials or an Affiliate

thereof, the servicing fee shall be the greater of: (i) the amount calculated

pursuant to clause (a) and (ii) an alternative amount specified by the successor

Servicer not to exceed 110% of the aggregate reasonable costs and expenses

incurred by such successor Servicer in connection with the performance of its

obligations as Servicer.

 

                                   ARTICLE V

 

                                 MISCELLANEOUS

 

      Section 5.1. Amendments, Etc. No amendment or waiver of any provision of

this Agreement or any other Transaction Document, or consent to any departure by

a party therefrom, shall be effective unless in a writing signed by the

Administrator, and, in the case of any such waiver or consent, by the party or

parties thereto against whom such waiver or consent is sought to be enforced,

and, in the case of any amendment, by the other parties thereto; and then such

amendment, waiver or consent shall be effective only in the specific instance

and for the specific purpose for which given; provided, however, that, to the

extent required at such time in connection with the Issuer's commercial paper

program, no such material amendment shall be effective until both Moody's and

Standard & Poor's have notified the Servicer and the Administrator in writing

that such action will not result in a reduction or withdrawal of the rating of

any Notes. No failure on the part of the Issuer or the Administrator to

exercise, and no delay in exercising any right hereunder shall operate as a

waiver thereof, nor shall any single or partial

 

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exercise of any right hereunder preclude any other or further exercise thereof

or the exercise of any other right.

 

      Section 5.2. Notices, Etc. All notices and other communications hereunder

shall, unless otherwise stated herein, be in writing (which shall include

facsimile communication) and be sent or delivered to each party hereto at its

address set forth under its name on the signature pages hereof or at such other

address as shall be designated by such party in a written notice to the other

parties hereto. Notices and communications by facsimile shall be effective when

sent (and shall be followed by hard copy sent by first class mail), and notices

and communications sent by other means shall be effective when received.

 

      Section 5.3. Successors and Assigns; Assignments; Participations. (a)

Whenever in this Agreement any of the parties hereto is referred to, such

reference shall be deemed to include the successors and assigns of such party;

all covenants, promises and agreements by or on behalf of any parties hereto

that are contained in this Agreement shall bind and inure to the benefit of

their respective successors and assigns. The Seller may not assign or transfer

any of its rights or obligations hereunder without the written consent of the

Administrator.

 

      (b)    This Agreement and the Issuer's rights and obligations herein

(including ownership of the Purchased Interest or an interest therein)shall be

assignable, in whole or in part, by the Issuer and its successors and assigns

with the prior written consent of the Seller; provided, however, that such

consent shall not be unreasonably withheld; and provided further, that no such

consent shall be required if the assignment is made to PNC, any Affiliate of PNC

(other than a director or officer of PNC), or any Person that is: (i) in the

business of issuing Notes and (ii) associated with or administered by PNC or any

Affiliate of PNC. Each assignor may, in connection with the assignment, disclose

to the applicable assignee any information relating to the Seller, the Servicer,

any Originator or the Pool Receivables furnished to such assignor by or on

behalf of the Servicer, the Seller, the Issuer or the Administrator, subject to

compliance with the provisions of Section 5.5.

 

      (c)    The Issuer may at any time grant to one or more banks or other

institutions (each a "Liquidity Bank") party to the Liquidity Agreement, or to

any other Program Support Provider, participating interests in the Purchased

Interest. In the event of any such grant by the Issuer of a participating

interest to a Liquidity Bank or other Program Support Provider, the Issuer shall

remain responsible for the performance of its obligations hereunder. The Seller

agrees that each Liquidity Bank or other Program Support Provider shall be

entitled to the benefits of Sections 1.7, 1.8 and 1.10.

 

      (d)    This Agreement and the rights and obligations of the Administrator

hereunder shall be assignable, in whole or in part, by the Administrator and its

successors and assigns; provided, that unless: (i) such assignment is to an

Affiliate of PNC, (ii) it becomes unlawful for PNC to serve as the Administrator

or (iii) a Termination Event exists, the Seller has consented to such

assignment, which consent shall not be unreasonably withheld.

 

      (e)    Without limiting any other rights that may be available under

applicable law, the rights of each Liquidity Bank may be enforced through it or

by its agents.

 

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      (f)    Promptly, but in any event within two (2) Business Days following

the effectiveness thereof, the Administrator agrees to provide the Seller with

written notice of any reductions in the aggregate commitments of the then

existing Liquidity Banks under the Liquidity Agreement. On or prior to the date

which is 30 days prior to the then existing scheduled termination date of the

Liquidity Agreement, and promptly after it obtains knowledge thereof during such

30-day period, the Administrator shall provide the Seller with written notice of

any Liquidity Bank's decision not to renew or extend its commitment thereunder

on or prior to such scheduled termination date.

 

      Section 5.4. Costs, Expenses and Taxes. (a) In addition to the

indemnification provisions set forth in Section 3.1, the Seller shall pay on

demand (i) all reasonable out-of-pocket fees and expenses (including Attorneys

Costs) of the Administrator incurred in connection with the preparation,

execution, delivery, administration, amendment, modification and waiver of this

Agreement and the other Transaction Documents and (ii) all reasonable

out-of-pocket fees and expenses of the Administrator and the Issuer (including

Attorneys Costs) incurred in connection with the enforcement of this Agreement

and the other Transaction Documents, including, without limitation, any Servicer

fees paid to any third party other than the Seller or Eagle Materials for

services rendered to the Issuer and the Administrator in collecting the

Receivables and the other Related Security.

 

      (b)    In addition, the Seller will pay any and all stamp and other taxes

and fees payable or determined to be payable in connection with the execution,

delivery, filing, recording or enforcement of this Agreement or the other

Transaction Documents, and hereby indemnifies and saves the Administrator and

the Issuer harmless from and against any and all liabilities with respect to or

resulting from any delay in paying or omission to pay such taxes and fees.

 

      Section 5.5. Confidentiality. Unless otherwise required by applicable law,

regulation or legal process, each of the Seller and the Servicer agrees to

maintain the confidentiality of this Agreement and the other Transaction

Documents (and all drafts thereof) in communications with third parties and

otherwise; provided, that this Agreement and the other Transaction Documents may

be disclosed to: (a) third parties to the extent such disclosure is made

pursuant to a written agreement of confidentiality in form and substance

reasonably satisfactory to the Administrator, (b) the Originators and their

Affiliates if they agree to hold such documents confidential, and (c) the legal

counsel and auditors of the Seller, the Servicer and the Originators if they

agree to hold such documents confidential. Unless otherwise required by

applicable law, regulation or legal process, each of the Administrator and the

Issuer agree to maintain the confidentiality of non-public information regarding

Eagle Materials and its Affiliates and the Receivables Pool; provided, that such

information may be disclosed to: (i) assignees or participants under Section 5.3

to the extent such disclosure is made pursuant to a written agreement of

confidentiality in form and substance reasonably satisfactory to Eagle

Materials, (ii) legal counsel and auditors of the Issuer or the Administrator if

they agree to hold it confidential in accordance with this Section, (iii) the

rating agencies rating the Notes, (iv) any Program Support Provider or potential

Program Support Provider (if they agree to hold it confidential in accordance

with this Section), (v) any placement agency placing the Notes and (vi) any

regulatory authorities having jurisdiction over the Administrator, the Issuer,

any Program Support Provider or any Liquidity Bank. Anything herein to the

contrary notwithstanding, each Person to whom any such nonpublic information has

been disclosed pursuant to this Section and

 

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any successor or assign of any such

Person (and each employee, representative or other agent of any of the

foregoing), may disclose to any and all Persons, without limitation of any kind,

the "tax treatment" and "tax structure" (in each case, within the meaning of

Treasury Regulation Section 1.6011-4) of the transactions contemplated herein

and all materials of any kind (including opinions or other tax analyses) that

are or have been provided to any of the foregoing relating to such tax treatment

or tax structure.

 

      Section 5.6. No Proceedings; Limitation on Payments. (a) Each of the

Seller, the Servicer, the Administrator and each assignee of the Purchased

Interest or any interest therein, hereby covenants and agrees that it will not

institute against, or join any other Person in instituting against, the Issuer

any bankruptcy, reorganization, arrangement, insolvency or liquidation

proceeding, or other proceeding under any federal or state bankruptcy or similar

law, for one year and one day after the latest maturing Note issued by the

Issuer is paid in full. The provisions of this Section 5.6(a) shall survive any

termination of this Agreement.

 

      (b)    Notwithstanding any provisions contained in this Agreement to the

contrary, except with respect to the Issuer's commitment to make purchases and

reinvestments pursuant to and in accordance with the terms of this Agreement,

the Issuer shall not, and shall not be obligated to, pay any amount, if any,

payable by it pursuant to this Agreement or any other Transaction Document

unless (i) the Issuer has received funds which may be used to make such payment

and which funds are not required to repay the Notes when due and (ii) after

giving effect to such payment, either (x) the Issuer could issue Notes to

refinance all outstanding Notes (assuming such outstanding Notes matured at such

time) in accordance with the program documents governing the Issuer's

securitization program or (y) all Notes are paid in full. Any amount which the

Issuer does not pay pursuant to the operation of the preceding sentence shall

not constitute a claim (as defined in Section 101 of the Bankruptcy Code)

against or company obligation of the Issuer for any such insufficiency unless

and until the Issuer satisfies the provisions of clauses (i) and (ii) above. The

provisions of this Section 5.6(b) shall survive any termination of this

Agreement.

 

      Section 5.7. GOVERNING LAW AND JURISDICTION. (a) THIS AGREEMENT SHALL BE

DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE

STATE OF NEW YORK (INCLUDING FOR SUCH PURPOSE SECTIONS 5-1401 AND 5-1402 OF THE

GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK) EXCEPT TO THE EXTENT THAT THE

VALIDITY OR PERFECTION OF A SECURITY INTEREST OR REMEDIES HEREUNDER, IN RESPECT

OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER

THAN THE STATE OF NEW YORK.

 

      (b)    ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE

BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FEDERAL

COURT SITTING IN THE SOUTHERN DISTRICT OF NEW YORK; AND, BY EXECUTION AND

DELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES HERETO CONSENTS, FOR ITSELF AND

IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS.

EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT PERMITTED

BY LAW, ANY OBJECTION, INCLUDING ANY OBJECTION TO THE

 

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LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, THAT IT MAY NOW

OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH

JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. EACH

OF THE PARTIES HERETO WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER

PROCESS, WHICH SERVICE MAY BE MADE BY ANY OTHER MEANS PERMITTED BY APPLICABLE

LAW.

 

      Section 5.8. Execution in Counterparts. This Agreement may be executed in

any number of counterparts, each of which when so executed shall be deemed to be

an original and all of which when taken together shall constitute one and the

same agreement.

 

      Section 5.9. Survival of Termination. The provisions of Sections 1.7, 1.8,

3.1, 3.2, 5.4, 5.5, 5.6, 5.7 and 5.10 shall survive any termination of this

Agreement.

 

      Section 5.10. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO WAIVES

THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED

UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS

CONTEMPLATED HEREBY IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE

BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR PARTIES, WHETHER WITH

RESPECT TO CONTRACT CLAIMS, TORT CLAIMS OR OTHERWISE. EACH OF THE PARTIES HERETO

AGREES THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL

WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, EACH OF THE PARTIES HERETO

FURTHER AGREES THAT ITS RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY

OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING

THAT SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF

THIS AGREEMENT OR ANY PROVISION HEREOF. THIS WAIVER SHALL APPLY TO ANY

SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.

 

      Section 5.11. Entire Agreement. This Agreement and the other Transaction

Documents embody the entire agreement and understanding between the parties

hereto, and supersede all prior or contemporaneous agreements and understandings

of such Persons, verbal or written, relating to the subject matter hereof and

thereof.

 

      Section 5.12. Headings. The captions and headings of this Agreement and in

any Exhibit, Schedule or Annex hereto are for convenience of reference only and

shall not affect the interpretation hereof or thereof.

 

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

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      IN WITNESS WHEREOF, the parties have caused this Agreement to be executed

by their respective officers thereunto duly authorized, as of the date first

above written.

 

                                    EXP FUNDING, LLC

 

                                    By: /s/ Arthur R. Zunker, Jr.

                                        ----------------------------------------

                                    Name:   Arthur R. Zunker, Jr.

                                    Title: Senior Vice President -

                                           Finance and Treasurer

 

                                     Address:

 

                                            2728 N. Harwood, Suite 600

                                            Dallas, Texas 75201-1516

 

                                            Attention:   Art Zunker

                                             Telephone No.: (214) 981-6510

                                            Facsimile No.: (214) 981-6559

 

                                    New address information to be effective on

                                    or about March 8, 2004:

 

                                     Address:

 

                                            3811 Turtle Creek Boulevard

                                            Suite 1100

                                            Dallas, Texas 75219

 

                                             Attention: Art Zunker

                                            Telephone No.: (214) 432-2000

                                            Facsimile No.: (214) 432-2100

 

                                                  Receivables Purchase Agreement

 

                                       S-1

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                                    EAGLE MATERIALS INC.,

                                    as initial Servicer

 

                                    By: /s/ Arthur R. Zunker, Jr.

                                         ----------------------------------------

                                    Name:   Arthur R. Zunker, Jr.

                                    Title: Senior Vice President -

                                           Finance and Treasurer

 

                                    Address:

 

                                           2728 N. Harwood, Suite 600

                                           Dallas, Texas 75201-1516

 

                                           Attention: Art Zunker

                                           Telephone No.: (214) 981-6510

                                           Facsimile No.: (214) 981-6559

 

                                    New address information to be effective on

                                     or about March 8, 2004:

 

                                    Address:

 

                                            3811 Turtle Creek Boulevard

                                            Suite 1100

                                             Dallas, Texas 75219

 

                                            Attention: Art Zunker

                                            Telephone No.: (214) 432-2000

                                            Facsimile No.: (214) 432-2100

 

                                                   Receivables Purchase Agreement

 

                                       S-2

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                                    PNC BANK, NATIONAL ASSOCIATION,

                                    as Administrator

 

                                     By: /s/ John T. Smathers

                                        ----------------------------------------

                                    Name:   John T. Smathers

                                    Title: Vice President

 

                                     Address:

 

                                             PNC Bank, National Association

                                             One PNC Plaza

                                             249 Fifth Avenue

                                              Pittsburgh, Pennsylvania 15222

 

                                             Attention: John Smathers

                                             Telephone No.: (412) 762-6440

                                             Facsimile No.: (412) 762-9184

 

                                    MARKET STREET FUNDING CORPORATION,

                                    as Issuer

 

                                    By: /s/ Evelyn Echevarria

                                        ----------------------------------------

                                    Name:   Evelyn Echevarria

                                    Title: Vice President

 

                                    Address:

 

                                            c/o AMACAR Group, LLC

                                            6525 Morrison Blvd., Suite 318

                                            Charlotte, North Carolina 28211

 

                                            Attention: Douglas Johnson

                                             Telephone No.: (704) 365-0569

                                            Facsimile No.: (704) 365-1362

 

                                                  Receivables Purchase Agreement

 

                                       S-3

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                                     EXHIBIT I

                                   DEFINITIONS

 

      As used in the Agreement (including its Exhibits, Schedules and Annexes),

the following terms shall have the following meanings (such meanings to be

equally applicable to both the singular and plural forms of the terms defined).

Unless otherwise indicated, all Section, Annex, Exhibit and Schedule references

in this Exhibit are to Sections of and Annexes, Exhibits and Schedules to the

Agreement.

 

      "Administration Account" means the account (account number 1002422076) of

the Administrator maintained at the office of PNC at One PNC Plaza, 249 Fifth

Avenue, Pittsburgh, Pennsylvania 15220-2707, or such other account as may be so

designated in writing by the Administrator to the Servicer.

 

      "Administrative Services Agreement" means the Administrative Services and

Lease Agreement, dated as of February 20, 2004 between Eagle Materials and the

Seller, as such agreement may be amended, supplemented or otherwise modified

from time to time.

 

      "Administrator" has the meaning set forth in the preamble to the

Agreement.

 

      "Adverse Claim" means a lien, security interest or other charge or

encumbrance, or any other type of preferential arrangement; it being understood

that any thereof in favor of Eagle Materials as against the Affiliate

Originators, in favor of the Seller as against Eagle Materials or in favor of

the Issuer, in each case pursuant to the Transaction Documents, shall not

constitute an Adverse Claim.

 

       "Affected Person" has the meaning set forth in Section 1.7 of the

Agreement.

 

      "Affiliate" means, as to any Person: (a) any Person