REVOLVING CREDIT AGREEMENT

Exhibit 10.37

 

 

 

[Published CUSIP Number:                          ]

 

REVOLVING CREDIT AGREEMENT

 

Dated as of December 15, 2004

 

among

 

THE PMI GROUP, INC.,

as the Borrower,

 

BANK OF AMERICA, N.A.,

as the Administrative Agent,

 

and

 

The Lenders Party Hereto

 

 

BANC OF AMERICA SECURITIES LLC,

as

Sole Lead Arranger and Sole Book Manager

 

 

CITIBANK, N.A.

and

WACHOVIA BANK, NATIONAL ASSOCIATION

as

Co-Documentation Agents

 

 

TABLE OF CONTENTS

 

 

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REVOLVING CREDIT AGREEMENT

 

This REVOLVING CREDIT AGREEMENT (this “ Agreement ”) is entered into as of December 15, 2004, among THE PMI GROUP, INC., a Delaware corporation (the “ Borrower ”), each lender from time to time party hereto (collectively, the “ Lenders ” and individually, a “ Lender ”), and BANK OF AMERICA, N.A., as Administrative Agent.

 

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

 

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

 

ARTICLE I.

DEFINITIONS AND ACCOUNTING TERMS

 

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

 

“ Adjusted Consolidated Net Worth ” means Consolidated Net Worth, as adjusted to exclude accumulated other comprehensive income net of deferred taxes (whether such accumulated other comprehensive income net of deferred taxes shall be a negative or positive amount ) and solely for purposes of Section 7.06(b), minority interests.

 

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

 

“ Administrative Agent’s Office ” means the Administrative Agent’s address and, as appropriate, account as set forth on Schedule 10.02 , or such other address or account as the Administrative Agent may from time to time notify the Borrower and the Lenders.

 

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

 

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

 

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

 

“ Aggregate Commitment ” means the Commitments of all the Lenders.

 

“ Agreement ” has the meaning specified in the introductory paragraph hereof.

 

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“ Applicable Facility Fee Rate ” means, from time to time, the percentages per annum based upon the Debt Rating set forth below:

 

 

Initially, the Applicable Facility Fee Rate shall be based upon the Debt Rating corresponding to Pricing Level 2. Thereafter, each change in the Applicable Facility Fee Rate shall be effective on the effective date of a publicly announced change in the Debt Rating.

 

“ Applicable Margin ” means, from time to time, the percentages per annum based upon the Debt Rating set forth on below:

 

 

Initially, the Applicable Margin shall be based upon the Debt Rating corresponding to Pricing Level 2. Thereafter, each change in the Applicable Margin shall be effective on the effective date of a publicly announced change in the Debt Rating.

 

“ Applicable Utilization Fee Rate ” means, from time to time, the percentages per annum based upon the Debt Rating set forth on below:

 

 

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Initially, the Applicable Utilization Fee Rate shall be based upon the Debt Rating corresponding to Pricing Level 2. Thereafter, each change in the Applicable Utilization Fee Rate shall be effective on the effective date of a publicly announced change in the Debt Rating.

 

“ Approved Fund ” has the meaning specified in Subsection 10.07(g) .

 

“ Arranger ” means Banc of America Securities LLC, in its capacity as sole lead arranger and sole book manager.

 

“ Asset Disposition ” has the meaning specified in Section 7.03 .

 

“ Assignment and Assumption ” means an Assignment and Assumption substantially in the form of Exhibit D .

 

“ Attorney Costs ” means and includes all reasonable fees, expenses and disbursements of any law firm or other external counsel.

 

“ Availability Period ” means the period from and including the Closing Date to the earliest of (a) the Commitment Termination Date, (b) the date of termination of the Aggregate Commitment pursuant to Section 2.04 and (c) the date of termination of the Commitment of each Lender to make Loans pursuant to Section 8.02(a) .

 

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

 

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

 

“ Base Rate Loan ” means a Loan that bears interest at the Base Rate.

 

“ Borrowing ” means a borrowing consisting of simultaneous Loans of the same Type and, in the case of Eurodollar Loans, having the same Interest Period, made by each of the Lenders pursuant to Section 2.01 .

 

“ Business Day ” means (i) if with regards to a Eurodollar Rate Loan, any day that (x) is not any of a Saturday, a Sunday or other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, the state where the Administrative Agent’s Office is located and (y) on which dealings in Dollar deposits are conducted by and between banks in the London interbank eurodollar market and (ii) if not with regards to a Eurodollar Rate Loan, any day that is not any of a Saturday, a Sunday or other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, the state where the Administrative Agent’s Office is located.

 

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“ Change of Control ” means (a) any “person” as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), is or becomes, directly or indirectly, the “beneficial owner,” as defined in Rule 13D-3 under the Exchange Act, of securities of the Borrower that represent 51% or more of the combined voting power of the Borrower’s then outstanding securities or (b) a majority of the members of the Borrower’s Board of Directors are not persons who were on the Borrower’s Board of Directors on the date hereof, unless the election or nomination to the Borrower’s Board of Directors of any such members was approved by persons constituting at the time of such election or nomination (as the case may be) at least a majority of the Borrower’s Board of Directors; provided that no “Change of Control” shall have occurred pursuant to clause (b) of this definition solely as a result of a Merger of the Borrower permitted by Section 7.02(b) in which the Borrower is not the surviving entity if such Merger has been approved by persons constituting at least a majority of the Borrower’s Board of Directors immediately prior to such Merger.

 

“ Closing Date ” means the date on which all the conditions precedent in Section 4.01 are satisfied, or waived in accordance with Subsection 10.01(a) .

 

“ CMG Company ” means each of the CMG Mortgage Insurance Company, CMG Mortgage Reinsurance Company, CMG Mortgage Assurance Company and each of their respective subsidiaries.

 

“ Code ” means the Internal Revenue Code of 1986, as amended.

 

“ Commitment ” means, as to each Lender, its obligation to make Loans to the Borrower pursuant to Section 2.01 in an aggregate principal amount not to exceed the amount set forth opposite such Lender’s name on Schedule 2.01 or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable, as such amount may be adjusted from time to time in accordance with this Agreement.

 

“ Commitment Termination Date ” means, December 15, 2009 (or, if such day is not a Business Day, the immediately preceding Business Day).

 

“ Commitment Letter ” means the letter agreement dated November 30, 2004, among the Borrower, Bank of America and the Arranger.

 

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

 

“ Compensation Period ” has the meaning specified in Subsection 2.10(c)(ii).

 

“ Consolidated Net Income ” means, for any period, the consolidated net income of the Borrower and its Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP (but excluding the effect of any extraordinary or other non-recurring gain or loss outside the ordinary course of business).

 

“ Consolidated Net Worth ” means, for any period, the sum of the consolidated net worth of the Borrower and its Subsidiaries, as calculated in accordance with GAAP.

 

“ Consolidated Total Capitalization ” shall mean, as of any date of determination, the sum of (a) Consolidated Total Indebtedness and (b) Adjusted Consolidated Net Worth.

 

“ Consolidated Total Indebtedness ” means, as of any date of determination, all Indebtedness of the Borrower and its Subsidiaries determined on a consolidated basis in accordance with GAAP. Notwithstanding the foregoing, the following shall not be included in Consolidated Total Indebtedness: (A) obligations under securities reverse repurchase agreements of the Borrower or any of its Subsidiaries

 

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as the buyer of securities to deliver such securities to the seller thereunder, (B) obligations of an Insurance Subsidiary of the Borrower under financial guarantees and insurance policies in the nature of financial guarantees, in each case from time to time issued in the ordinary course of such Insurance Subsidiary’s business and (C) obligations of the Borrower or any of its Subsidiaries under or in respect of any preferred stock issued or to be issued by the Borrower or any of its Subsidiaries.

 

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

 

“ Debt Rating ” means, as of any date of determination, the rating as determined by S&P or Moody’s of the Borrower non-credit-enhanced, long term senior unsecured long-term debt (collectively, the “ Agency Ratings ”), subject to the last sentence of this definition. In the case of split Agency Ratings where the difference in the Agency Ratings is one notch, the higher of the two Agency Ratings shall constitute the “Debt Rating” for purposes of this Agreement (with the Agency Rating described in Pricing Level 1 being the highest and the Agency Rating described in Pricing Level 4 being the lowest). In the case of split Agency Ratings where the difference is more than one notch, the Pricing Level that is one level lower than the higher of the two Agency Ratings will apply and shall constitute the “Debt Rating” for purposes of this Agreement. In the event that only one of S&P or Moody’s is then publishing Agency Ratings, the Agency Rating that is then being published shall constitute the “Debt Rating” for purposes of this Agreement. In the event that neither S&P nor Moody’s is then publishing Agency Ratings, the Agency Rating that corresponds with Pricing Level 4 shall be the “Debt Rating” for purposes of this Agreement.

 

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

 

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

 

“ Default Rate ” means an interest rate equal to (a) the Base Rate plus (b) 2% per annum; provided , however , that with respect to a Eurodollar Rate Loan (for so long as it is a Eurodollar Rate Loan), the Default Rate shall be an interest rate equal to the interest rate (including the Applicable Margin) otherwise applicable to such Loan plus 2% per annum, in each case to the fullest extent permitted by applicable Laws.

 

“ Departmen t” means the applicable Supervisory Authority.

 

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

 

“ Eligible Assignee ” has the meaning specified in Subsection 10.07(g) .

 

“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended from time to time.

 

“ ERISA Affiliate ” means any trade or business (whether or not incorporated), that, together with the Borrower, is treated as a single employer within the meaning of Section 414(b) or (c) of the Code (or Sections 414(m) and (o) of the Code solely for purposes of provisions relating to Section 412 of the Code).

 

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

 

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

 

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

 

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

 

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

 

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

 

“ Event of Default ” means any of the events or occurrences described in Section 8.01 .

 

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended.

 

“ Federal Funds Rate ” means, for any day, the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Bank of America on such day on such transactions as determined by the Administrative Agent.

 

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“ FGIC Company ” means FGIC Corporation and any of its subsidiaries.

 

“ Foreign Lender ” has the meaning specified in Subsection 10.15(a)(i) .

 

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

 

“ Fund ” has the meaning specified in Subsection 10.07(g) .

 

“ GAAP ” means generally accepted accounting principles in the United States as in effect on the date or during the period with respect to which such principles are applied.

 

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

 

“ Guarantee ” means any agreement, undertaking or arrangement by which any Person guarantees, endorses or otherwise becomes or is contingently liable upon (by direct or indirect agreement, contingent or otherwise, to provide funds for payment, to supply funds to, or otherwise to invest in, a debtor, or otherwise to assure a creditor against loss) the Indebtedness of any other Person (other than by endorsements of instruments in the ordinary course of collection), or guarantees the payment of dividends or other distributions upon the shares of any other Person. The amount of any Person’s obligation under any Guarantee at any time shall (subject to any limitation set forth therein) be deemed to be the outstanding amount at such time (or, except in the case of the Indebtedness or obligation guaranteed thereby being unutilized credit lines or transactions related to Swap Contracts, if larger, the maximum amount) of the Indebtedness or obligation guaranteed thereby.

 

“ Increase Effective Date ” has the meaning specified in Subsection 2.12(b) .

 

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

 

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

 

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

 

(c) net obligations of such Person under any Swap Contract (other than Swap Contracts that are designated by such Person as hedges in accordance with GAAP);

 

(d) all obligations of such Person to pay the deferred purchase price of property or services (other than intercompany liabilities and trade accounts payable in the ordinary course of business, which shall not constitute Indebtedness for purposes of this clause (d) or any other clause of this definition);

 

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

 

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(f) all capital leases obligations of such Person; and

 

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

 

For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any partnership in which such Person is a general partner, unless such Indebtedness is expressly made non-recourse to such Person. Notwithstanding the foregoing, the following shall not be considered to be or otherwise be included as Indebtedness: (A) any obligation of the Borrower or any of its Subsidiaries under any derivative transaction that qualifies as a derivative under FAS 133 and (B) any obligation (including any contingent obligation) of the Borrower or any of its Subsidiaries under any capital support agreement to provide capital support to one or more Subsidiaries by way of equity or debt investments in such Subsidiaries or any guaranty by any of the Borrower or any Subsidiary of a Subsidiary’s obligations under any such capital support agreement.

 

“ Indemnified Liabilities ” has the meaning specified in Section 10.05 .

 

“ Indemnitees ” has the meaning specified in Section 10.05 .

 

“ Insurance Subsidiary ” means any Subsidiary of the Borrower designated as an Insurance Subsidiary on Schedule 1.01 , as such Schedule may from time to time be amended, modified, supplemented or restated.

 

“ Interest Payment Date ” means (a) as to any Loan other than a Base Rate Loan, the last day of each Interest Period applicable to such Loan and the Maturity Date; provided , however , that if any Interest Period for a Eurodollar Rate Loan exceeds three months, the date that falls three months after the beginning of such Interest Period shall also be an Interest Payment Date and (b) as to any Base Rate Loan, the last Business Day of each March, June, September and December and the Maturity Date.

 

“ Interest Period ” means, as to each Eurodollar Rate Loan, the period commencing on the date such Eurodollar Rate Loan is disbursed or converted to or continued as a Eurodollar Rate Loan and ending on the date one, two, three or six months thereafter, as selected by the Borrower in its Loan Notice; provided that:

 

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

 

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

 

(c) no Interest Period shall extend beyond the Maturity Date.

 

“ IRS ” means the United States Internal Revenue Service.

 

“ Laws ” means, collectively, all international, foreign, Federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including, if consistent therewith, the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof.

 

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“ Lead Arranger ” means Bank of America Securities LLC, in its capacity as lead arranger of the revolving credit facility established pursuant to this Agreement.

 

“ Lender ” and “ Lenders ” have the meanings specified in the introductory paragraph hereof.

 

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

 

“ Lien ” means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement of any kind or nature whatsoever (including any conditional sale or other title retention agreement, and any financing lease having substantially the same economic effect as any of the foregoing); provided , however , that “ Lien ” shall not include (a) any reserve established in respect of insurance obligations on the books of the Borrower or any of its Subsidiaries (provided that such reserve shall not create any preferential claim or priority on any asset of such Person), (b) any reserve established in respect of any Swap Contract that is designated as a hedge in accordance with GAAP on the books of the Borrower or any of its Subsidiaries (provided that such reserve shall not create any preferential claim or priority on any asset of such Person) and (c) any preferential claim or priority on any asset of any insurance company Subsidiary granted or established under applicable insurance laws.

 

“ Loan ” has the meaning specified in Section 2.01 .

 

“ Loan Documents ” means this Agreement and each Note.

 

“ Loan Notice ” means a notice of (a) a Borrowing, (b) a conversion of Loans from one Type to the other or (c) a continuation of Eurodollar Rate Loans, pursuant to Subsection 2.02(a) , which, if in writing, shall be substantially in the form of Exhibit A .

 

“ Material Adverse Effect ” means (a) a material adverse effect on the business, assets, liabilities (actual or contingent), operations, condition (financial or otherwise) or prospects of the Borrower and its Subsidiaries, taken as a whole, (b) a material adverse effect on the ability of the Borrower to perform its obligations under any Loan Document or (c) a material adverse effect on the legality, validity or enforceability of any Loan Document.

 

“ Material Insurance Subsidiary ” means, at any date of determination, (i) each of PMI Mortgage Insurance Co. and Residential Guaranty Company and (ii) any other Insurance Subsidiary that at such date is a Material Subsidiary.

 

“ Material Subsidiary ” means, at any date of determination, any Subsidiary that, together with its Subsidiaries, is the owner of at least 20% of the consolidated total assets of the Borrower and its Subsidiaries, taken as a whole.

 

“ Maturity Date ” means the Commitment Termination Date.

 

“ Maximum Rate ” has the meaning specified in Section 10.10 .

 

“ Merger ” has the meaning set forth in Section 7.02 .

 

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

 

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“ Multiemployer Plan ” means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding five plan years, has made or been obligated to make contributions.

 

“ Net Risk in Force ” means, at any date, the dollar amount equal to, in the case of primary insurance, the product of each insured mortgage loan’s current principal balance multiplied by such loan’s coverage percentage or, in the case of pool insurance, the remaining aggregate loss limit, in each case net of third-party reinsurance, in each case as determined at such date.

 

“ Note ” means a promissory note made by the Borrower in favor of a Lender evidencing Loans made by such Lender to the Borrower, substantially in the form of Exhibit B .

 

“ Obligations ” means all advances to, and debts, liabilities, obligations, covenants and duties of, the Borrower arising under any Loan Document, whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against the Borrower of any proceeding under any Debtor Relief Laws naming such Borrower as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding.

 

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

 

“ Other Taxes ” has the meaning specified in Subsection 3.01(b) .

 

“ Participant ” has the meaning specified in Subsection 10.07(d) .

 

“ PBGC ” means the Pension Benefit Guaranty Corporation.

 

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

 

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

 

“ Principal Debt ” means, on any date, the aggregate outstanding principal amount of the Loans, after giving effect to any Borrowing or any prepayments or repayments occurring on such date.

 

“ Pro Rata Share ” means, with respect to each Lender, (a) at any time prior to the termination of the Commitments of the Lenders, a fraction (expressed as a percentage, carried out to the ninth decimal place), the numerator of which is the amount of the Commitment of such Lender at such time and the

 

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denominator of which is the amount of the Aggregate Commitment at such time and (b) at any time after the termination of the Commitments of the Lenders, a fraction (expressed as a fraction, carried out to the ninth decimal place), the numerator of which is the portion of the Principal Debt owing to such Lender at such time and the denominator of which is the Principal Debt at such time. The initial Pro Rata Share of each Lender is set forth opposite the name of such Lender on Schedule 2.01 or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable.

 

“ Ram Re Company ” means RAM Reinsurance Company Ltd. and any of its subsidiaries.

 

“ Register ” has the meaning specified in Subsection 10.07(c) .

 

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

 

“ Required Lender Rating ” means an unsecured short-term senior debt rating of not less than A-2 from Moody’s or P-2 from S&P.

 

“ Required Lenders ” means, as of any date of determination, Lenders whose Pro Rata Shares aggregate more than 50%.

 

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

 

“ Risk to Capital Ratio ” means, at any date, the ratio of (i) Net Risk in Force to (ii) Statutory Capital, in each case at such date.

 

“ SAP ” shall mean statutory accounting principles prescribed or permitted by the applicable insurance regulatory authority.

 

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

 

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

 

“ SPS Company ” means SPS Holding Corp., a Delaware corporation, and any of its subsidiaries.

 

“ Statutory Capital ” means, at any date, the sum of Statutory Surplus and the contingency reserve, in each case at such date.

 

“ Statutory Surplus ” means with respect to an Insurance Subsidiary as of the date of an Annual Statement, the total amount shown on line 35, page 3, column 1 of the 2003 Annual Statement of such Insurance Subsidiary, or an amount determined in a consistent manner in accordance with SAP for any date other than one as of which an Annual Statement is prepared. Notwithstanding the foregoing, if the format of the Annual Statement is changed in future years so that different information is contained in such line or such line no longer exists, it is understood that the foregoing shall refer to information consistent with that reported in the referenced line in the 2003 Annual Statement of such Insurance Subsidiary.

 

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“ Subsidiary ” of a Person means any corporation, association, partnership, joint venture or other business entity (other than any SPS Company) of which more than 50% of the voting stock or other equity interests (in the case of Persons other than corporations), is owned or controlled directly or indirectly by the Person, or one or more of the Subsidiaries of the Person, or a combination thereof; provided that so long as any FGIC Company or CMG Company is not included as a consolidated subsidiary of the Borrower in the Borrower’s financial statements, such FGIC Company or CMG Company, as the case may be, shall not be considered a “Subsidiary” under this Agreement. Unless the context otherwise clearly requires, references herein to a Subsidiary refer to a Subsidiary of the Borrower.

 

“ Supervisory Authority ” means, with respect to the Borrower or any Material Subsidiary, the department of insurance of the state of domicile of the Borrower or such Material Subsidiary, as the case may be.

 

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

 

“ Taxes ” has the meaning specified in Subsection 3.01(a) .

 

“ Threshold Amount ” means $45,000,000.

 

“ Type ” means, with respect to a Loan, its character as a Base Rate Loan or a Eurodollar Rate Loan.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

1.03 Accounting Terms . (a) All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP or SAP, as applicable, applied on a consistent basis, as in effect from time to time, applied in a manner consistent with that used in preparing the audited financial statements of the Borrower described in Subsection 5.05(a) , except as otherwise specifically prescribed herein.

 

(b) If at any time any change in GAAP or SAP, as applicable, would affect the computation of any financial ratio or requirement set forth in any Loan Document, and the Borrower or the Required Lenders shall so request, the Administrative Agent, the Lenders and the Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP or SAP, as applicable, (subject to the approval of the Required Lenders); provided that , until so amended, such ratio or requirement shall continue to be computed in accordance with GAAP or SAP, as applicable, prior to such change therein.

 

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

 

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

 

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

 

ARTICLE II.

THE COMMITMENTS AND CREDIT EXTENSIONS

 

2.01 Loans . Subject to the terms and conditions set forth herein, each Lender severally agrees to make loans (each such loan, a “ Loan ”) to the Borrower from time to time, on any Business Day during the Availability Period, in an aggregate amount not to exceed the amount of such Lender’s Commitment; provided , however , that after giving effect to each Borrowing, the Principal Debt shall not exceed the Aggregate Commitment. Within the limits of each Lender’s Commitment, and subject to the other terms and conditions hereof, the Borrower may borrow under this Section 2.01 , prepay under Section 2.03 , and reborrow under this Section 2.01 . Loans may be Base Rate Loans or Eurodollar Rate Loans, as further provided herein.

 

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2.02 Borrowing, Conversions and Continuations of Loans .

 

(a) Each Borrowing, each conversion of Loans from one Type to the other, and each continuation of Eurodollar Rate Loans shall be made upon the Borrower’s irrevocable notice to the Administrative Agent, which may be given by telephone. Each such notice must be received by the Administrative Agent not later than 11:00 a.m. (i) three Business Days prior to the requested date of the Borrowing of, conversion to or continuation of Eurodollar Rate Loans or of any conversion of Eurodollar Rate Loans to Base Rate Loans and (ii) on the requested date of a Borrowing of Base Rate Loans. Each telephonic notice by the Borrower pursuant to this Subsection 2.02(a) must be confirmed promptly by delivery to the Administrative Agent of a written Loan Notice, appropriately completed and signed by a Responsible Officer of such Borrower. A Borrowing of, conversion to or continuation of Eurodollar Rate Loans shall be in a principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof. A Borrowing of or conversion to Base Rate Loans shall be in a principal amount of $500,000 or a whole multiple of $100,000 in excess thereof. Each Loan Notice (whether telephonic or written) shall specify (i) whether the Borrower is requesting a Borrowing, a conversion of Loans from one Type to the other or a continuation of Eurodollar Rate Loans, (ii) the requested date of the Borrowing, conversion or continuation, as the case may be (which shall be a Business Day), (iii) the principal amount of Loans to be borrowed, converted or continued, (iv) if applicable, the Type of Loans to be borrowed or to which existing Loans are to be converted and (v) if applicable, the duration of the Interest Period with respect thereto. If the Borrower fails to specify a Type of Loan in a Loan Notice or if the Borrower fails to give a timely notice requesting a conversion or continuation, then the applicable Loans shall be made as or converted to (as the case may be) Base Rate Loans. Any such automatic conversion to Base Rate Loans shall be effective as of the last day of the Interest Period then in effect with respect to the applicable Eurodollar Rate Loans. If the Borrower requests a Borrowing of, conversion to or continuation of Eurodollar Rate Loans in any such Loan Notice, but fails to specify an Interest Period, it will be deemed to have specified an Interest Period of one month.

 

(b) Following receipt of a Loan Notice, the Administrative Agent shall promptly notify each Lender of the amount of its Pro Rata Share of the applicable Loans, and if no timely notice of a conversion or continuation is provided by the Borrower, the Administrative Agent shall notify each Lender of the details of any automatic conversion to Base Rate Loans described in the preceding subsection. In the case of a Borrowing, each Lender shall make the amount of its Loan available to the Administrative Agent in immediately available funds at the Administrative Agent’s Office not later than 1:00 p.m. on the Business Day specified in the applicable Loan Notice. Upon satisfaction or waiver of the conditions set forth in Section 4.02 , the Administrative Agent shall make all funds so received available to the Borrower in like funds as received by the Administrative Agent either by (i) crediting the account of the Borrower on the books of Bank of America with the amount of such funds or (ii) wire transfer of such funds, in each case in accordance with instructions provided to (and reasonably acceptable to) the Administrative Agent by the Borrower.

 

(c) Unless the Borrower pays all amounts, if any, due under Section 3.05 , except as otherwise provided herein, a continuation or conversion of a Eurodollar Rate Loan shall be effective only as of the last day of an Interest Period for such Eurodollar Rate Loan. During the existence of an Event of Default, the Administrative Agent may (and upon the request of the Required Lenders shall) prohibit Loans from being requested as, converted to or continued as Eurodollar Rate Loans.

 

(d) The Administrative Agent shall promptly notify the Borrower and the Lenders of the interest rate applicable to any Interest Period for Eurodollar Rate Loans upon determination of such

 

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

 

(e) After giving effect to all Borrowings, all conversions of Loans from one Type to the other and all continuations of Loans as the same Type, there shall not be more than ten Interest Periods in effect with respect to Loans.

 

2.03 Prepayments . The Borrower may, upon notice to the Administrative Agent, at any time or from time to time voluntarily prepay Loans in whole or in part without premium or penalty; provided that (a) such notice must be received by the Administrative Agent not later than 11:00 a.m. (i) three Business Days prior to any date of prepayment of Eurodollar Rate Loans and (ii) on the date of prepayment of Base Rate Loans, (b) any prepayment of Eurodollar Rate Loans shall be in a principal amount of (1) $5,000,000 or a whole multiple of $1,000,000 in excess thereof or (2) equal to the entire principal amount thereof then outstanding and (c) any prepayment of Base Rate Loans shall be in a principal amount of (1) $500,000 or a whole multiple of $100,000 in excess thereof or (2) equal to the entire principal amount thereof then outstanding. Each such notice shall specify the date and amount of such prepayment and the Type(s) of Loans to be prepaid. The Administrative Agent will promptly notify each Lender of its receipt of each such notice, and of the amount of such Lender’s Pro Rata Share of such prepayment. If such notice is given by the Borrower, the Borrower shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein. Any prepayment of a Eurodollar Rate Loan shall be accompanied by all accrued interest thereon, together with any additional amounts required pursuant to Section 3.05 . Each such prepayment shall be applied to the Loans of the Lenders in accordance with their respective Pro Rata Shares.

 

2.04 Termination or Reduction of Commitments . The Borrower may, upon notice to the Administrative Agent, terminate the Aggregate Commitment, or from time to time permanently reduce the Aggregate Commitment; provided that (a) any such notice shall be received by the Administrative Agent not later than 11:00 a.m. three Business Days prior to the date of termination or reduction, (b) any such partial reduction shall be in an aggregate amount of $5,000,000 or any whole multiple of $1,000,000 in excess thereof and (c) the Borrower shall not terminate or reduce the Aggregate Commitment if, after giving effect thereto and to any concurrent prepayments hereunder, the Principal Debt would exceed the Aggregate Commitment. The Administrative Agent will promptly notify the Lenders of any such notice of termination or reduction of the Aggregate Commitment. Any reduction of the Aggregate Commitment shall be applied to the Commitment of each Lender according to its Pro Rata Share. In the case of a termination of the Aggregate Commitment, all facility fees accrued to the effective date of any termination of the Aggregate Commitment shall be paid on the effective date of such termination. On the date of effectiveness of any reduction of the Aggregate Commitment, all facility fees accrued on the portion of the Aggregate Commitment reduced pursuant to such reduction shall be paid.

 

2.05 Repayment of Loans .

 

On the Maturity Date the Borrower shall repay the Principal Debt then unpaid and outstanding (if any).

 

2.06 Interest .

 

(a) Subject to the provisions of Subsection 2.06(b) below, (i) each Eurodollar Rate Loan shall bear interest on the outstanding principal amount thereof for each Interest Period at a rate per annum equal to the Eurodollar Rate for such Interest Period plus the Applicable Margin and (ii) each Base Rate Loan shall bear interest on the outstanding principal amount thereof at a rate per annum equal to the Base Rate.

 

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(b) If any amount payable by the Borrower under any Loan Document is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws. Accrued and unpaid interest on past due amounts (including interest on past due interest) shall be due and payable upon demand.

 

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

 

2.07 Fees .

 

(a) Facility Fee . The Borrower shall pay to the Administrative Agent for the account of each Lender in accordance with such Lender’s Pro Rata Share, a facility fee equal to the Applicable Facility Fee Rate times the actual daily amount of the Aggregate Commitment, regardless of usage (or, from and after the Closing Date, the Principal Debt). The facility fee shall accrue from and after the date of this Agreement, including at any time during which one or more of the conditions in Section 4.02 is not met, and shall be due and payable quarterly in arrears on the last Business Day of each March, June, September and December, commencing with the first such date to occur after the Closing Date, and on the Maturity Date.

 

(b) Utilization Fee . The Borrower shall pay to the Administrative Agent for the account of each Lender in accordance with such Lender’s Pro Rata Share, a utilization fee equal to the Applicable Utilization Fee Rate times the actual daily amount of the Principal Debt; provided that, prior to the Commitment Termination Date, such utilization fee shall be payable only in respect of each day that the Principal Debt exceeds 50% of the Aggregate Commitment. The utilization fee shall be due and payable quarterly in arrears on the last Business Day of each March, June, September and December, commencing with the first such date to occur after the Closing Date, and on the Maturity Date.

 

(c) Other Fees . The Borrower shall pay to the Administrative Agent, for its own account, fees in the amounts and at the times specified in the Fee Letter. Such fees shall be fully earned when paid and shall not be refundable for any reason whatsoever.

 

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

 

2.09 Evidence of Debt . The Loans made by each Lender shall be evidenced by one or more accounts or records maintained by such Lender and by the Administrative Agent in the ordinary course of business. The accounts or records maintained by the Administrative Agent and each Lender shall be conclusive absent manifest error of the amount of the Loans made by the Lenders to the Borrower and the interest and payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrower hereunder to pay any amount owing by it with respect

 

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to the Obligations. In the event of any conflict between the accounts and records maintained by any Lender and the accounts and records of the Administrative Agent in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error. Upon the request of any Lender made through the Administrative Agent, the Borrower shall execute and deliver to such Lender (through the Administrative Agent) a Note, which shall evidence such Lender’s Loans to such Borrower in addition to such accounts or records. Each Lender may attach schedules to its Note and endorse thereon the date, Type (if applicable), amount and maturity of its Loans and payments with respect thereto.

 

2.10 Payments Generally .

 

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

 

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

 

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

 

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

 

(ii) if any Lender failed to make such payment, such Lender shall forthwith on demand pay to the Administrative Agent the amount thereof in immediately available funds, together with interest thereon for the period from the date such amount was made available by the Administrative Agent to the Borrower to the date such amount is recovered by the Administrative Agent (the “ Compensation Period ”) at a rate per annum equal to the Federal Funds Rate from time to time in effect. If such Lender pays such amount to the Administrative Agent, then such amount shall constitute such Lender’s Loan included in the applicable Borrowing. If such Lender does not pay such amount forthwith upon the Administrative Agent’s demand therefor, the Administrative Agent may make a demand therefor upon the Borrower, and the Borrower shall pay such amount to the Administrative Agent, together with interest thereon for the Compensation Period at a rate per annum equal to the rate of interest applicable to such

 

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Borrowing. Nothing herein shall be deemed to relieve any Lender from its obligation to fulfill its Commitment or to prejudice any rights which the Administrative Agent or the Borrower may have against any Lender as a result of any default by such Lender hereunder.

 

A notice of the Administrative Agent to any Lender or the Borrower with respect to any amount owing under this Subsection 2.10(c) shall be conclusive, absent manifest error.

 

(d) If any Lender makes available to the Administrative Agent funds for any Loan to be made by such Lender as provided in the foregoing provisions of this Article II , and such funds are not made available to the Borrower by the Administrative Agent because the conditions to the Borrowing set forth in Section 4.03 are not satisfied or waived in accordance with the terms hereof, the Administrative Agent shall return such funds (in like funds as received from such Lender) to such Lender, without interest.

 

(e) The obligations of the Lenders hereunder to make Loans are several and not joint. The failure of any Lender to make its Loans on the date of any Borrowing shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any other Lender to so make its Loans.

 

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

 

2.11 Sharing of Payments . If, other than as expressly provided in Section 2.12 or elsewhere herein, any Lender shall obtain on account of the Loans made by it, any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) in excess of its Pro Rata Share (or other share contemplated hereunder) thereof, such Lender shall immediately (a) notify the Administrative Agent of such fact and (b) purchase from the other Lenders such participations in the Loans made by them as shall be necessary to cause such purchasing Lender to share the excess payment in respect of such Loans, pro rata with each of them; provided , however , that if all or any portion of such excess payment is thereafter recovered from the purchasing Lender under any of the circumstances described in Section 10.06 (including pursuant to any settlement entered into by the purchasing Lender in its discretion), such purchase shall to that extent be rescinded and each other Lender shall repay to the purchasing Lender the purchase price paid therefor, together with an amount equal to such paying Lender’s ratable share (according to the proportion of (i) the amount of such paying Lender’s required repayment to (ii) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered, without further interest thereon. The Borrower agrees that any Lender so purchasing a participation from another Lender may, to the fullest extent permitted by applicable law, exercise all its rights of payment (including the right of set-off, but subject to Section 10.09 ) with respect to such participation as fully as if such Lender were the direct creditor of such Borrower in the amount of such participation. The Administrative Agent will keep records (which shall be conclusive and binding in the absence of manifest error) of participations purchased under this Section and will in each case notify the Lenders following any such purchases or repayments. Each Lender that purchases a participation pursuant to this Section shall from and after such purchase have the right to give all notices, requests, demands, directions and other communications under this Agreement with respect to the portion of the Obligations purchased to the same extent as though the purchasing Lender were the original owner of the Obligations purchased.

 

2.12 Increase of Aggregate Commitment .

 

(a) Provided there exists no Default and the Borrower shall not have previously terminated the Aggregate Commitment pursuant to Section 2.04 , upon notice to the Administrative Agent (which

 

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shall promptly notify the Lenders), the Borrower may from time to time, request an increase in the Aggregate Commitment by an amount (for all such requests) not exceeding $25,000,000. At the time of sending such notice, the Borrower (in consultation with the Administrative Agent) shall specify the time period within which each Lender is requested to respond (which shall in no event be less than ten days from the date of delivery of such notice to the Lenders). Each Lender shall notify the Administrative Agent within such time period whether or not it agrees to increase its Commitment and, if so, whether by an amount equal to, greater than, or less than its Pro Rata Share of such requested increase. Any Lender not responding within such time period shall be deemed to have declined to increase its Commitment. The Administrative Agent shall notify the Borrower and each Lender of the Lenders’ responses to each request made hereunder. To achieve the full amount of a requested increase, the Borrower may also invite one or more Persons who then qualify as Eligible Assignees to become Lenders pursuant to a joinder agreement in form and substance reasonably satisfactory to the Administrative Agent and its counsel.

 

(b) If the Aggregate Commitment is increased in accordance with this Section, the Administrative Agent and the Borrower shall determine the effective date (the “ Increase Effective Date ”) and the final allocation of such increase. The Administrative Agent shall promptly notify the Borrower and the Lenders of the final allocation of such increase and the Increase Effective Date. As a condition precedent to such increase, the Borrower shall deliver to the Administrative Agent a certificate of the Borrower dated as of the Increase Effective Date, executed by a Responsible Officer of the Borrower (i) certifying and attaching the resolutions adopted by the Borrower approving or consenting to such increase, and (ii) certifying that, before and after giving effect to such increase, (A) the representations and warranties contained in Article V are true and correct in all material respects on and as of the Increase Effective Date, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct as of such earlier date, and except that for purposes of this Section 2.12 , the representations and warranties contained in Subsections 5.05(a) and 5.05(b) shall be deemed to refer to the most recent statements furnished pursuant to Subsections 6.01(a) , 6.01(b) , 6.01(c) and 6.01(d) , respectively and (B) no Default exists. On the Increase Effective Date following any such increase undertaken pursuant to the provisions of this Section 2.12 , the Pro Rata Share of each Lender shall be adjusted (as so adjusted, the “ Adjusted Pro Rata Share ”) so as to reflect the amount of each Lender’s Commitment relative to the Aggregate Commitment of all Lenders as in effect immediately following such increase (as so adjusted, the “ Adjusted Pro Rata Share ”) and, immediately after giving effect to such adjustments any Loans then outstanding shall be reallocated among the Lenders if such reallocation shall be necessary in order to keep the outstanding Loans ratable with the Adjusted Pro Rata Shares.

 

(c) This Section 2.12 shall supersede any provisions in Section 2.11 or 10.01 to the contrary.

 

ARTICLE III.

TAXES, YIELD PROTECTION AND ILLEGALITY

 

3.01 Taxes .

 

(a) Subject to the provisions of Subsection 10.15(a)(iii) , any and all payments by the Borrower to or for the account of the Administrative Agent or any Lender under any Loan Document shall be made free and clear of and without deduction for any and all present or future taxes, duties, levies, imposts, deductions, assessments, fees, withholdings or similar charges, and all liabilities with respect thereto, excluding , in the case of the Administrative Agent and each Lender, (x) taxes (and withholdings in respect thereof) imposed on or measured by its overall net income and (y) branch profits taxes, franchise taxes, taxes on doing business and taxes measured by or imposed upon its capital or net worth, in each case imposed as a result of a present or former connection between the Administrative

 

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Agent or such Lender and the jurisdiction imposing such taxes (other than any such connection arising solely from the Administrative Agent or such Lender having executed, delivered or performed its obligations or received a payment under, or enforced, any Loan Document) (all such non-excluded taxes, duties, levies, imposts, deductions, assessments, fees, withholdings or similar charges, and liabilities being hereinafter referred to as “ Taxes ”). Subject to the provisions of Subsection 10.15(a)(iii) , if the Borrower shall be required by any applicable Laws to deduct any Taxes from or in respect of any sum payable under any Loan Document to the Administrative Agent or any Lender, (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section), each of the Administrative Agent and such Lender receives an amount equal to the sum it would have received (on an after-tax basis) had no such deductions been made, (ii) the Borrower shall make such deductions, (iii) the Borrower shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable Laws and (iv) within 30 days after the date of such payment, the Borrower shall furnish to the Administrative Agent (which shall forward the same to such Lender) the original or a certified copy of a receipt, or other evidence reasonably satisfactory to the Administrative Agent, evidencing payment thereof; provided that the Borrower shall not be required to increase any sum payable to any Lender with respect to any Taxes that are attributable to such Lender’s failure to comply with the requirements of Section 10.15 .

 

(b) In addition, the Borrower agrees to pay any and all present or future stamp, court or documentary taxes and any other excise or property taxes or charges or similar levies which arise from any payment made under any Loan Document or from the execution, delivery, performance, enforcement or registration of, or otherwise with respect to, any Loan Document (hereinafter referred to as “ Other Taxes ”).

 

(c) Subject to the provisions of Subsection 10.15(a)(iii) , the Borrower agrees to indemnify the Administrative Agent and each Lender for (i) the full amount of Taxes and Other Taxes (including any Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable under this Section 3.01 ) paid by the Administrative Agent or such Lender and (ii) any liability (including additions to tax, penalties, interest and expenses) arising therefrom or with respect thereto. Payment under this Subsection 3.01(c) shall be made within 30 days after the date the affected Lender or the Administrative Agent makes a demand to the Borrower therefor.

 

(d) If the Borrower is required to pay any amounts pursuant to this Section 3.01 to or for the account of the Administrative Agent or any Lender, and if thereafter the Administrative Agent or such Lender, as the case may be, receives a refund (including if such refund is not actually received but is applied against other Tax or Other Tax obligations owed by such Lender or Administrative Agent to the same taxing authority) of any Taxes or Other Taxes paid by or on behalf of the Administrative Agent or such Lender, as the case may be, that is attributable solely to the amounts so paid by the Borrower, the Administrative Agent or such Lender, as the case may be, shall, to the extent that it can do so without prejudice to the retention of the amount of such refund, pay to the Borrower, within 30 days after the date the Administrative Agent or such Lender, as the case may be, actually receives such refund, an amount equal to the portion of such refund as will leave it, after such payment, in no better or worse position than it would have been if the Taxes or Other Taxes had not been imposed and the corresponding additional amount or indemnification payment had not been paid by the Borrower. Nothing in this Subsection 3.01(d) shall require the Administrative Agent or any Lender to conduct its