Exhibit 10.1 EXECUTION VERSION OMNIBUS AMENDMENT TO REVOLVING CREDIT AGREEMENT AND GUARANTEE AND COLLATERAL AGREEEMENT dated as of October 12, 2006 among THE PACIFIC LUMBER COMPANY and BRITT LUMBER CO., INC., as Borrowers THE LENDERS PARTY HERETO, MARATHON STRUCTURED FINANCE FUND L.P., as Administrative Agent and MARATHON STRUCTURED FINANCE FUND L.P., as Sole Bookrunner and Sole Lead Arranger and LASALLE BUSINESS CREDIT, LLC, as Collateral Agent and LASALLE BANK NATIONAL ASSOCIATION as Issuing Bank TABLE OF CONTENTS Page SECTION 1 DEFINITIONS.......................................................... SECTION 2 RECITALS............................................................. SECTION 3 AMENDMENTS TO THE CREDIT AGREEMENT................................... SECTION 4 AMENDMENTS TO THE GUARANTEE AND COLLATERAL AGREEMENT................. SECTION 5 CONDITIONS........................................................... SECTION 6 REPRESENTATIONS AND WARRANTIES....................................... SECTION 7 REAFFIRMATION........................................................ SECTION 8 NO WAIVER............................................................ SECTION 9 GENERAL PROVISIONS................................................... THIS OMNIBUS AMENDMENT TO REVOLVING CREDIT AGREEMENT AND GUARANTEE AND COLLATERAL AGREEMENT is dated as of October 12, 2006 (this "Amendment"), among THE PACIFIC LUMBER COMPANY ("PALCO"), a Delaware corporation and BRITT LUMBER CO., INC. ("Britt"), a California corporation, the Lenders (as such term is defined in the Credit Agreement described below), MARATHON STRUCTURED FINANCE FUND L.P., as administrative agent (in such capacity and together with its successors, the "Administrative Agent"), LASALLE BUSINESS CREDIT, LLC, as collateral agent (in such capacity and together with its successors, the "Collateral Agent", and together with the Administrative Agent, the "Agents"), and LASALLE BANK NATIONAL ASSOCIATION ("LaSalle Bank") in its capacity as Issuing Bank, and amends the Credit Agreement (as defined below). PALCO and Britt are sometimes referred to herein collectively as the "Borrowers" and individually as a "Borrower"). WHEREAS, the Administrative Agent, the Borrowers and the Lenders are party to that certain Credit Agreement dated as of July 18, 2006 (as the same has been amended, restated, supplemented or otherwise modified as of the date hereof, the "Credit Agreement"), pursuant to which the Lenders have made certain loans, advances and other accommodations to the Borrowers and the Borrowers have granted to the Administrative Agent, for the benefit of the Lenders and any other lenders who from time to time may become party to the Credit Agreement, a lien on and a security interest in all of the Borrowers' real, personal and intellectual property to secure the Borrowers' liabilities arising under the Credit Agreement (collectively, the "Existing Obligations"); WHEREAS, the Administrative Agent, the Borrowers, Maxxam Group Inc., ("Holdings") Salmon Creek LLC ("Salmon") and Scotia Inn Inc. ("Scotia Inn," and together with Salmon and the Borrowers, the "Grantors") are also party to that certain Guarantee and Collateral Agreement dated as of July 18, 2006 (as the same has been amended, restated, supplemented or otherwise modified as of the date hereof, the "Guarantee and Collateral Agreement"), pursuant to which, among other things, (i) Salmon and Scotia Inn guaranteed the prompt and complete payment and performance by the Borrowers of all of the Borrower Obligations (as defined therein), (ii) each Grantor granted to the Administrative Agent, for the benefit of the Lenders and any other lenders who from time to time may become party to the Credit Agreement, a lien on and a security interest in all of the Grantor's assets, and (iii) Holdings granted to the Administrative Agent, for the benefit of the Lenders and any other lenders who from time to time may become party to the Credit Agreement, a security interest in all equity interests in PALCO; WHEREAS the Borrowers have requested that the Administrative Agent and the Lenders amend the Credit Agreement and the Guarantee and Collateral Agreement, to, among other things, (i) reflect the addition of LaSalle Business Credit, LLC ("LaSalle") as a lender; (ii) assign certain duties of the Administrative Agent to LaSalle and appoint LaSalle as the collateral agent under the Credit Agreement (iii) appoint LaSalle Bank National Association as the Issuing Bank, and (iv) make other modifications to the Credit Agreement and the Guarantee and Collateral Agreement, in each case, upon the terms and conditions set forth herein; and WHEREAS, it is the intention of the Borrowers, the Lenders, the Administrative Agent and the Collateral Agent that the amendment of the Credit Agreement pursuant to this Amendment shall not effect a refinancing or novation of the Existing Obligations which shall remain outstanding under the Credit Agreement and shall remain secured by the "Collateral" (as defined in the Credit Agreement). The parties hereto agree as follows: SECTION 1 DEFINITIONS. Capitalized terms used in this Amendment, unless otherwise defined herein, shall have the applicable meaning ascribed to such terms in the Credit Agreement and/or the Guarantee and Collateral Agreement. SECTION 2 RECITALS. The foregoing Recitals are hereby made a part of this Amendment. SECTION 3 AMENDMENTS TO THE CREDIT AGREEMENT. Subject to the terms and conditions set forth herein and in reliance upon each respective Borrower's representations, acknowledgments and warranties herein contained, the Credit Agreement is hereby amended as follows: SECTION 3.1 Section 1.01 of the Credit Agreement is hereby amended to add the following definitions in their appropriate alphabetical position within such Section: "Administrative Fee Letter" shall mean that certain Fee Letter dated as of the Closing Date between PALCO and Marathon Structured Finance Fund L.P., as amended, supplemented, restated or otherwise modified from time to time. "Agents" shall have the meaning assigned to such term in the preamble. "Cash Collateral" means to deliver cash collateral to the Collateral Agent in an amount equal to 105% of the L/C Exposure as of such date, to be held as cash collateral for outstanding Letters of Credit, pursuant to documentation satisfactory to the Collateral Agent. Derivatives of such term have corresponding meanings. "Collateral Agent" shall have the meaning assigned to such term in the preamble. "Collateral Agent Fee Letter" shall mean that certain Collateral Agent Fee Letter dated as of October 12, 2006 between PALCO and LaSalle Business Credit, LLC, as amended, supplemented, restated or otherwise modified from time to time. "LaSalle" has the meaning assigned such term in the recitals. "LaSalle Bank" has the meaning assigned such term in the preamble. "L/C Application" means, with respect to any request for the issuance of a Letter of Credit, a letter of credit application in the form being used by the Issuing Bank at the time of such request for the type of letter of credit requested. "L/C Fee Rate" shall mean 2.75% per annum. "Master Letter of Credit Agreement" means, at any time, with respect to the issuance of Letters of Credit, a master letter of credit agreement or reimbursement agreement in the form, if any, being used by the Issuing Bank at such time. SECTION 3.2 The definition of each of "Appraisal," "Borrowing Availability," "Borrowing Base," "Borrowing Base Certificate," "Borrowing Request," "Eligible Accounts," "Eligible Inventory," "Excluded Taxes," "Federal Funds Effective Rate," "Fees," "Issuing Bank," ""L/C Exposure," "Lenders," "Letter of Credit," "LIBO Rate," "Loan Documents," "Material Adverse Effect," "Net Cash Proceeds," "Net Orderly Liquidation Value," "Prime Rate," "Reserves," "Statutory Reserve," and "Swingline Lender" set forth in Section 1.01 of the Credit Agreement are hereby amended and restated in their entirety to read as follows: "Appraisal" means an appraisal delivered by Administrative Borrower, at Borrowers' expense, to Administrative Agent prior to the Closing Date and thereafter Collateral Agent pursuant to Section 5.04(k) setting forth the Net Orderly Liquidation Value of the Inventory of each Borrower, in form and substance and prepared by an independent appraiser reasonably acceptable to Collateral Agent. "Borrowing Availability" means as of any time of determination the lesser of (i) the Total Revolving Credit Commitment at such time and (ii) the Borrowing Base at such time, in each case, less the sum of (a) the Loans then outstanding (including, without duplication, the outstanding balance of the Swingline Loan then outstanding), (b) aggregate L/C Exposure at such time (excluding any Letters of Credit which have been Cash Collateralized) and (c) Reserves established by either Agent in its reasonable credit judgment. "Borrowing Base" means, at any time, an amount equal to the sum of: (i) at all times other than during the Seasonal Overadvance Period eighty-five percent (85%) of the Net Amount of Eligible Accounts or (ii) during the Seasonal Overadvance Period ninety-five percent (95%) of the Net Amount of Eligible Accounts; plus (i) at all times other than during the Seasonal Overadvance Period the lesser of (x) eighty percent (80%) of the value (being the lower of cost (on a first-in first-out basis) or market) of Eligible Inventory or (y) eighty-five percent (85%) of the Net Orderly Liquidation Value at such time of the value (being the lower of cost (on a first-in first-out basis) or market) of Eligible Inventory or (ii) during the Seasonal Overadvance Period the lesser of (x) ninety percent (90%) of the value (being the lower of cost (on a first-in first-out basis) or market) of Eligible Inventory or (y) ninety-five percent (95%) of the Net Orderly Liquidation Value at such time of the value (being the lower of cost (on a first-in first-out basis) or market) of Eligible Inventory; less Reserves from time to time established by either Agent in its reasonable credit judgment. "Borrowing Base Certificate" means a certificate by a Responsible Officer of PALCO, substantially in the form of Exhibit H (or another form acceptable to the Collateral Agent) setting forth the calculation of the Borrowing Base, including a calculation of each component thereof, all in such detail as shall be reasonably satisfactory to the Collateral Agent. All calculations of the Borrowing Base in connection with the preparation of any Borrowing Base Certificate shall originally be made by PALCO and certified to the Collateral Agent; provided, that the Collateral Agent shall have the right to review and adjust, in the exercise of its reasonable credit judgment, any such calculation (1) to reflect its reasonable estimate of declines in value of any of the Collateral described therein, and (2) to the extent that such calculation is not in accordance with this Agreement. "Borrowing Request" shall mean a request by the Administrative Borrower in accordance with the terms of Section 2.03 and substantially in the form of Exhibit D, or such other form as shall be approved by the Collateral Agent. "Eligible Accounts" shall mean the Accounts which the Collateral Agent in the exercise of its reasonable commercial discretion determines to be Eligible Accounts. Without limiting the discretion of the Collateral Agent to establish other criteria of ineligibility, Eligible Accounts shall not, unless the Collateral Agent in its sole discretion elects, include any Account: (a) with respect to which more than 60 days have elapsed since the date of the original invoice therefor or which is more than 30 days past due, provided, that during the period from November 1 through March 31 in any year any Account that is subject to an Extended Terms Invoice and with respect to which no more than 120 days have elapsed since the date of the original invoice therefor or which is no more than 30 days past due shall be eligible, provided, that when such Account is aggregated with the gross amount of all other such Accounts then outstanding, such aggregated amount shall not exceed $2,500,000; (b) with respect to which any of the representations, warranties, covenants, and agreements contained in the Security Documents are incorrect or have been breached; (c) with respect to which Account (or any other Account due from such Account Debtor), in whole or in part, a check, promissory note, draft, trade acceptance or other instrument for the payment of money has been received, presented for payment and returned uncollected for any reason; (d) which represents a progress billing (as hereinafter defined) or as to which the applicable Borrower has extended the time for payment without the consent of the Collateral Agent; for the purposes hereof, "progress billing" means any invoice for goods sold or leased or services rendered under a contract or agreement pursuant to which the Account Debtor's obligation to pay such invoice is conditioned upon the applicable Borrower's completion of any further performance under the contract or agreement; (e) with respect to which any one or more of the following events has occurred to the Account Debtor on such Account: death or judicial declaration of incompetency of an Account Debtor who is an individual; the filing by or against the Account Debtor of a request or petition for liquidation, reorganization, arrangement, adjustment of debts, adjudication as a bankrupt, winding-up, or other relief under the bankruptcy, insolvency, or similar laws of the United States, any state or territory thereof, or any foreign jurisdiction, now or hereafter in effect; the making of any general assignment by the Account Debtor for the benefit of creditors; the appointment of a receiver or trustee for the Account Debtor or for any of the assets of the Account Debtor, including, without limitation, the appointment of or taking possession by a "custodian," as defined in the Federal Bankruptcy Code; the institution by or against the Account Debtor of any other type of insolvency proceeding (under the bankruptcy laws of the United States or otherwise) or of any formal or informal proceeding for the dissolution or liquidation of, settlement of claims against, or winding up of affairs of, the Account Debtor; the sale, assignment, or transfer of all or any material part of the assets of the Account Debtor; the nonpayment generally by the Account Debtor of its debts as they become due; or the cessation of the business of the Account Debtor as a going concern; (f) if fifty percent (50%) or more of the aggregate Dollar amount of outstanding Accounts owed at such time by the Account Debtor thereon is classified as ineligible under clause (a) above; (g) owed by an Account Debtor which: (i) does not maintain its chief executive office in the United States of America or Canada (other than the Province of Newfoundland); or (ii) is not organized under the laws of the United States of America or Canada or any state or province thereof; or (iii) is the government of any foreign country or sovereign state, or of any state, province, municipality, or other political subdivision thereof, or of any department, agency, public corporation, or other instrumentality thereof; except to the extent that such Account is secured or payable by a letter of credit satisfactory to the Collateral Agent in its discretion; (h) owed by an Account Debtor which is an Affiliate or employee of the applicable Borrower; (i) except as provided in clause (k) below, with respect to which either the perfection, enforceability, or validity of the Administrative Agent's Liens in such Account, or the Administrative Agent's right or ability to obtain direct payment to the Administrative Agent of the proceeds of such Account, is governed by any federal, state, or local statutory requirements other than those of the UCC; (j) owed by an Account Debtor to which the applicable Borrower or any of its Subsidiaries, is indebted in any way, or which is subject to any right of setoff or recoupment by the Account Debtor, unless the Account Debtor has entered into an agreement acceptable to the Administrative Agent to waive setoff rights; or if the Account Debtor thereon has disputed liability or made any claim with respect to any other Account due from such Account Debtor; but in each such case only to the extent of such indebtedness, setoff, recoupment, dispute, or claim; (k) owed by the government of the United States of America, or any department, agency, public corporation, or other instrumentality thereof, unless the Federal Assignment of Claims Act of 1940, as amended (31 U.S.C. ss. 3727 et seq.), and any other steps necessary to perfect the Administrative Agent's Liens therein, have been complied with to the Collateral Agent's satisfaction with respect to such Account; (l) owed by any state, municipality, or other political subdivision of the United States of America, or any department, agency, public corporation, or other instrumentality thereof and as to which the Collateral Agent determines that its Lien therein is not or cannot be perfected; (m) which represents a sale on a bill-and-hold, guaranteed sale, sale and return, sale on approval, consignment, or other repurchase or return basis; (n) which is evidenced by a promissory note or other instrument or by chattel paper; (o) if the Collateral Agent believes, in the exercise of its reasonable judgment, that the prospect of collection of such Account is impaired or that the Account may not be paid by reason of the Account Debtor's financial inability to pay; (p) with respect to which the Account Debtor is located in any state requiring the filing of a Notice of Business Activities Report or similar report in order to permit the applicable Borrower to seek judicial enforcement in such State of payment of such Account, unless such Borrower has qualified to do business in such state or has filed a Notice of Business Activities Report or equivalent report for the then current year; (q) which arises out of a sale not made in the ordinary course of the applicable Borrower's business; (r) with respect to which the goods giving rise to such Account have not been shipped and delivered to and accepted by the Account Debtor or the services giving rise to such Account have not been performed by the applicable Borrower, and, if applicable, accepted by the Account Debtor, or the Account Debtor revokes its acceptance of such goods or services; (s) owed by an Account Debtor or a group of affiliated Account Debtors which is obligated to the applicable Borrower respecting Accounts the aggregate unpaid balance of which exceeds fifteen percent (15%) of the aggregate unpaid balance of all Accounts owed to such Borrower at such time by all of the Borrower's Account Debtors, but only to the extent of such excess; (t) which is not subject to a first priority and perfected security interest in favor of the Administrative Agent for the benefit of the Secured Parties; (u) as to which any Borrower is not able to bring suit or otherwise enforce its remedies against the Account Debtor through judicial process; (v) that is not a true and correct statement of bona fide indebtedness incurred in the amount of the Account for merchandise sold to or services rendered and accepted by the applicable Account Debtor; (w) with respect to which an invoice, reasonably acceptable to the Collateral Agent in form and substance, has not been sent to the applicable Account Debtor; (x) that (i) is not owned by any Borrower or (ii) is subject to any Lien of any other person, other than Liens in favor of the Administrative Agent, on behalf of itself and the Lenders; (y) to the extent such Account exceeds any credit limit established by the Collateral Agent, in its reasonable credit judgment, following prior notice of such limit by the Collateral Agent to the Administrative Borrower; and (z) that is payable in any currency other than dollars. In addition, (i) to the extent that the amounts in respect of any Account in the general ledger are lower than the amounts in respect of such Account in the monthly aging reports submitted to the Collateral Agent, the difference between such amounts shall be excluded from the calculation of Eligible Accounts and (ii) if PALCO does not own any Equity Interest in Britt, no Account of Britt shall constitute an Eligible Account. If any Account at any time ceases to be an Eligible Account, then such Account shall promptly be excluded from the calculation of Eligible Accounts. "Eligible Inventory" means Inventory which the Collateral Agent, in its reasonable discretion, determines to be Eligible Inventory. Without limiting the discretion of the Collateral Agent to establish other criteria of ineligibility, Eligible Inventory shall not, unless the Collateral Agent in its sole discretion elects, include any Inventory: (a) that is not owned by the applicable Borrower; (b) that is not subject to the Administrative Agent's Liens, which are perfected as to such Inventory, or that are subject to any other Lien whatsoever (other than the Liens described in clause (d) of Section 6.02 provided that such Permitted Liens (i) are junior in priority to the Administrative Agent's Liens or subject to Reserves and (ii) do not impair directly or indirectly the ability of the Administrative Agent to realize on or obtain the full benefit of the Collateral); (c) that does not consist of finished goods or raw materials; (d) that consists of chemicals, samples, prototypes, supplies, or packing and shipping materials; (e) that is not in good condition, is unmerchantable, or does not meet all standards imposed by any Governmental Authority, having regulatory authority over such goods, their use or sale; (f) that is not currently either usable or salable, at prices approximating at least cost, in the normal course of the applicable Borrower's business, or that is slow moving or stale; (g) that is obsolete or returned or repossessed or used goods taken in trade; (h) that is located outside the placecountry-regionUnited States of America (or that is in-transit from vendors or suppliers); (i) that is located in a public warehouse or in possession of a bailee or in a facility leased by the applicable Borrower, if the warehouseman, or the bailee, or the lessor has not delivered to the Collateral Agent, if requested by the Collateral Agent, a subordination agreement in form and substance satisfactory to the Collateral Agent or if a Reserve for rents or storage charges has not been established for Inventory at that location; (j) that contains or bears any proprietary rights licensed to the applicable Borrower by any Person, if the Collateral Agent is not satisfied that the Administrative Agent may sell or otherwise dispose of such Inventory in accordance with the terms of the Security Documents and Section 6.05 without infringing the rights of the licensor of such proprietary rights or violating any contract with such licensor (and without payment of any royalties other than any royalties due with respect to the sale or disposition of such Inventory pursuant to the existing license agreement), and, as to which the applicable Borrower has not delivered to the Collateral Agent a consent or sublicense agreement from such licensor in form and substance acceptable to the Collateral Agent if requested; (k) that is Inventory placed on consignment; (l) that consists of the difference between any Borrower's first-in, first-out log costs and estimated market value log costs; (m) that consists of the difference between any Borrower's first-in, first-out lumber costs and reported market value lumber costs; (n)(i) is not located on premises owned, leased or rented by Borrowers and set forth in Disclosure Schedule 3.20 or (ii) is located at an owned location subject to a mortgage in favor of a lender other than the Administrative Agent, unless a reasonably satisfactory mortgagee waiver has been delivered to the Collateral Agent; (o) that is covered by a negotiable document of title, unless such document has been delivered to the Collateral Agent with all necessary endorsements, free and clear of all Liens except those in favor of the Administrative Agent and Lenders; (p) that is not of a type held for sale in the ordinary course of the applicable Borrower's business; (q) that breaches any of the representations or warranties pertaining to Inventory set forth in the Loan Documents; (r) that consists of any costs associated with "freight in" charges; (s) that consists of Hazardous Materials or goods that can be transported or sold only with licenses that are not readily available; or (t) that is not covered by casualty insurance reasonably acceptable to the Collateral Agent. In addition, (i) to the extent that the amounts in respect of any Inventory in the general ledger are lower than the amounts in respect of such Inventory in the monthly aging reports submitted to the Collateral Agent, the difference between such amounts shall be excluded from the calculation of Eligible Inventory and (ii) to the extent that PALCO does not own an Equity Interest in Britt, no Inventory of Britt shall constitute Eligible Inventory. If any Inventory at any time ceases to be Eligible Inventory, such Inventory shall promptly be excluded from the calculation of Eligible Inventory. "Excluded Taxes" shall mean, with respect to any Agent, any Lender, or any other recipient of any payment to be made by or on account of any obligation of the Borrowers hereunder, (a) taxes imposed on (or measured by) its net income as a result of a connection between such recipient and the jurisdiction imposing such tax (or any political subdivision thereof), other than any such connection arising solely from such recipient having executed, delivered or performed its obligations or received a payment under, or enforced, this Agreement or any other Loan Document and (b) in the case of a Foreign Lender (other than an assignee pursuant to a request by the Administrative Borrower under Section 2.21(a)), any United States withholding tax that is imposed on amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party to this Agreement (or designates a new lending office) or is attributable to such Foreign Lender's failure to comply with Section 2.20(d), except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts from PALCO with respect to such withholding tax pursuant to Section 2.20(a). "Federal Funds Effective Rate" shall mean, for any day, the weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average (rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for the day for such transactions received by the Collateral Agent from three Federal funds brokers of recognized standing selected by it. "Fees" shall mean the Commitment Fees, the Administrative Agent Fees, the Collateral Agent Fees and the Issuing Bank Fees. "Issuing Bank" shall mean, LaSalle Bank National Association, in its capacity as the issuer of Letters of Credit. "L/C Exposure" shall mean, at any time, the sum of (a) the aggregate undrawn amount of all Letters of Credit at such time and (b) the aggregate amount of all unreimbursed payments and disbursements under such Letters of Credit. The L/C Exposure of any Lender at any time shall equal its Pro Rata Percentage of the aggregate L/C Exposure at such time. "Lenders" shall mean (a) the persons that deliver a Lender Addendum (other than any such person that has ceased to be a party hereto pursuant to an Assignment and Acceptance), (b) any person that has become a party hereto pursuant to an Assignment and Acceptance, and (c) the Collateral Agent; provided, that such designation with respect to the Collateral Agent is solely for purposes of enabling its claims against under the Loan Documents to be secured by liens under the Security Documents, and the Collateral Agent shall have no other rights or obligations as a "Lender" under the Loan Documents, including rights to approve or disapprove amendments or modifications or rights to receive payments from collateral, except in accordance with Section 6.5 of the Guarantee and Security Agreement or except as otherwise set forth in such Loan Document. . Unless the context otherwise requires, the term "Lenders" shall include the Swingline Lender and the Issuing Bank to the extent that LaSalle Bank (or any Successor Issuing Bank) may have rights or obligations in addition to those of the other Lenders due to its status as Issuing Bank. "Letter of Credit" shall have the meaning assigned to such term in Section 2.01 (b). "LIBO Rate" shall mean, with respect to any Eurodollar Borrowing for any Interest Period, the rate per annum determined by the Collateral Agent at approximately 11:00 a.m., London time, on the date that is two Business Days prior to the commencement of such Interest Period by reference to the British Bankers' Association Interest Settlement Rates for deposits in dollars (as set forth by the Bloomberg Information Service or any successor thereto or any other service selected by the Collateral Agent which has been nominated by the British Bankers' Association as an authorized information vendor for the purpose of displaying such rates) for a period equal to such Interest Period; provided that, to the extent that an interest rate is not ascertainable pursuant to the foregoing provisions of this definition, the "LIBO Rate" shall be the interest rate per annum determined by the Collateral Agent to be the average of the rates per annum at which deposits in dollars are offered for such relevant Interest Period to major banks in the London interbank market in London, England by the Collateral Agent at approximately 11:00 a.m. (London time) on the date that is two Business Days prior to the beginning of such Interest Period. "Loan Documents" shall mean this Agreement, the Master Letter of Credit Agreement and the Security Documents. "Material Adverse Effect" shall mean a material adverse condition or material adverse change in or materially affecting (a) the business, assets, liabilities, operations or condition (financial or otherwise) or prospects of PALCO and the Subsidiaries, taken as a whole, or (b) the validity or enforceability of any of the Loan Documents or the rights and remedies of the Arranger, the Collateral Agent, the Administrative Agent, or the Secured Parties thereunder. "Material Adverse Effect" shall mean a material adverse condition or material adverse change in or materially affecting (a) the business, assets, liabilities, operations or condition (financial or otherwise) or prospects of PALCO and the Subsidiaries, taken as a whole, or (b) the validity or enforceability of any of the Loan Documents or the rights and remedies of the Arranger, the Collateral Agent, the Administrative Agent, or the Secured Parties thereunder. "Net Cash Proceeds" shall mean (a) with respect to any Asset Sale or Recovery Event, the proceeds thereof in the form of cash (including any such proceeds subsequently received (as and when received) in respect of noncash consideration initially received), net of (i) selling expenses (including reasonable and customary broker's fees or commissions, legal fees, transfer and similar taxes incurred by the Borrowers and the Subsidiaries in connection therewith and the Borrowers' good faith estimate of income taxes paid or payable in connection with such sale, after taking into account any available tax credits or deductions and any tax sharing arrangements), (ii) amounts provided as a reserve, in accordance with GAAP and acceptable to each Agent, against any liabilities under any indemnification obligations or purchase price adjustment associated with such Asset Sale (provided that, to the extent and at the time any such amounts are released from such reserve, such amounts shall constitute Net Cash Proceeds), (iii) the principal amount, premium or penalty, if any, interest and other amounts on any Indebtedness for borrowed money which is secured by the asset sold in such Asset Sale and which is required to be repaid with such proceeds (other than Indebtedness hereunder or any such Indebtedness assumed by the purchaser of such asset) and (iv) to the extent not otherwise included in clause (i) above, Capital Expenditures associated with the preparation and sale of non-core assets, not to exceed $5,000,000 in the aggregate; and (b) with respect to any issuance or disposition of Indebtedness or any Equity Issuance, the cash proceeds thereof, net of all taxes and reasonable and customary fees, commissions, costs and other expenses incurred by the Borrowers and the Subsidiaries in connection therewith. "Net Orderly Liquidation Value" means at any time, with respect to Inventory, the orderly liquidation value (expressed as a percentage of the book value and on a non-conversion basis), if any, of such Inventory (less estimated liquidation expenses) at such time, as determined by reference to the most recent Appraisal thereof delivered to Collateral Agent pursuant to Section 5.04(k), which is reasonably satisfactory to Collateral Agent. "Prime Rate" shall mean the rate of interest per annum announced from time to time by JP Morgan Chase Bank, N.A as its prime rate in effect at its principal office in New York City; each change in the Prime Rate shall be effective as of the opening of business on the date such change is announced as being effective. The Prime Rate is a reference rate and does not necessarily represent the lowest or best rate actually available. "Reserves" shall mean reserves that limit the availability of credit hereunder, consisting of reserves against the Commitments, Eligible Accounts or Eligible Inventory, established by either Agent from time to time in such Agent's reasonable credit judgment. Without limiting the generality of the foregoing, the following reserves shall be deemed to be a reasonable exercise of each Agent's credit judgment: (a) a reserve for accrued, unpaid interest on the Obligations, (b) reserves for rent at leased locations subject to statutory or contractual landlord liens, (c) reserves for any lumberman's liens, logger's liens or other priming liens, (d) Inventory shrinkage, (e) environmental compliance reserves, (f) dilution, and (g) warehousemen's or bailees' charges. "Statutory Reserves" shall mean a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the aggregate of the maximum reserve percentages (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by the Board and any other banking authority, domestic or foreign, to which any Agent or any Lender (including any branch, Affiliate or other fronting office making or holding a Loan) is subject for eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in Regulation D of the Board). Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under such Regulation D or any comparable regulation. Statutory Reserves shall be adjusted automatically on and as of the effective date of any change in any reserve percentage. "Swingline Lender" shall mean LaSalle, in its capacity as lender of Swingline Loans hereunder. SECTION 3.2 The definition of each of "Fee Letter," "L/C Disbursement," "L/C Fee Payment Date," "L/C Guaranty Fee," and "Letter of Credit Guaranty" set forth in Section 1.01 of the Credit Agreement are hereby deleted their entirety. SECTION 3.3 Article II of the Credit Agreement is hereby amended and restated in its entirety to read as follows: "ARTICLE II THE CREDITS SECTION 2.01 Commitments. (a) Subject to the terms and conditions hereof and relying upon the representations and warranties set forth herein, each Lender agrees, severally and not jointly, to make Loans to the Borrowers, at any time and from time to time on or after the Closing Date and until the earlier of the Maturity Date and the termination of the Commitment of such Lender in accordance with the terms hereof, in an aggregate principal amount at any time outstanding that (i) will not result in such Lender's Revolving Credit Exposure exceeding such Lender's Revolving Credit Commitment and (ii) will not result in the Aggregate Revolving Credit Exposure exceeding the Borrowing Base, subject to the Administrative Agent's authority, to make Protective Advances pursuant to the terms of Section 2.24. Within the limits set forth in clause (ii) of the preceding sentence and subject to the terms, conditions and limitations set forth herein, the Borrowers may borrow, pay or prepay and reborrow Loans. (b) L/C Commitment. Subject to Section 2.23, the Issuing Bank agrees to issue letters of credit, in each case containing such terms and conditions as are permitted by this Agreement and are reasonably satisfactory to the Issuing Bank (each, a "Letter of Credit"), at the request of and for the account of the Borrowers from time to time before the Maturity Date and, as more fully set forth in Section 2.23, each Lender agrees to purchase a participation in each such Letter of Credit; provided that (a) the aggregate Stated Amount of all Letters of Credit shall not at any time exceed $ 20,000,000 and (b) the Aggregate Revolving Credit Exposure shall not at any time exceed the Borrowing Availability. SECTION 2.02 Loans. (a) Each Loan (other than Swingline Loans) shall be made as part of a Borrowing consisting of Loans of the same Type made by the Lenders ratably in accordance with their respective Commitments; provided, however, that the failure of any Lender to make any Loan required to be made by it shall not in itself relieve any other Lender of its obligation to lend hereunder (it being understood, however, that no Lender shall be responsible for the failure of any other Lender to make any Loan required to be made by such other Lender). Except for Loans deemed made pursuant to Section 2.02(f) or Section 2.24, and subject to Section 2.22 relating to Swingline Loans, the Loans comprising any Borrowing shall be in an aggregate principal amount that is (i) an integral multiple of $250,000 and not less than $750,000 or (ii) equal to the remaining available balance of the applicable Commitments. (b) Subject to Sections 2.08, 2.15 and 2.24, each Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans as the Administrative Borrower may request pursuant to Section 2.03; provided that all Borrowings made on the Closing Date and during the period ending seven days thereafter must be made as ABR Borrowings (and may not be converted into Eurodollar Borrowings until the end of such seven-day period), and no Borrowings may be converted into or continued as a Eurodollar Borrowing having an Interest Period in excess of one month prior to the date which is 60 days after the Closing Date. Each Lender may at its option make any Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided that any exercise of such option shall not affect the obligation of the Borrowers to repay such Loan in accordance with the terms of this Agreement. Borrowings of more than one Type may be outstanding at the same time; provided, however, that the Administrative Borrower shall not be entitled to request any Borrowing that, if made, would result in more than five (5) Eurodollar Borrowings outstanding hereunder at any time. For purposes of the foregoing, Borrowings having different Interest Periods, regardless of whether they commence on the same date, shall be considered separate Borrowings. (c) Except with respect to Loans made pursuant to Section 2.02(f) or Section 2.24 and subject to Section 2.22 relating to Swingline Loans, each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds to such account in New York City as the Administrative Agent may designate not later than 2:00 p.m., New York City time, and the Administrative Agent shall promptly credit the amounts so received to an account in the name of the applicable Borrower, designated by the Administrative Borrower in the applicable Borrowing Request or, if a Borrowing shall not occur on such date because any condition precedent herein specified shall not have been met, return the amounts so received to the respective Lenders. (d) Unless the Administrative Agent shall have received notice from a Lender prior to the date of any Borrowing that such Lender will not make available to the Administrative Agent such Lender's portion of such Borrowing, the Administrative Agent may assume that such Lender has made such portion available to the Administrative Agent on the date of such Borrowing in accordance with paragraph (c) of this Section and the Administrative Agent may, in reliance upon such assumption, make available to the Borrowers on such date a corresponding amount. If the Administrative Agent shall have so made funds available then, to the extent that such Lender shall not have made such portion available to the Administrative Agent, such Lender and the Borrowers severally agree to repay to the Administrative Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to the Borrowers to but excluding the date such amount is repaid to the Administrative Agent at (i) in the case of the Borrowers, the interest rate applicable at the time to the Loans comprising such Borrowing or (ii) in the case of such Lender, a rate determined by the Administrative Agent to represent its cost of overnight or short term funds (which determination shall be conclusive absent manifest error). If such Lender shall repay to the Administrative Agent such corresponding amount, such amount shall constitute such Lender's Loan as part of such Borrowing for purposes of this Agreement. (e) Notwithstanding any other provision of this Agreement, the Administrative Borrower shall not be entitled to request any Borrowing if the Interest Period requested with respect thereto would end after the Maturity Date. SECTION 2.03 Borrowing Procedure. In order to request a Borrowing (other than a Swingline Loan or a deemed Borrowing pursuant to Section 2.02(f) or Section 2.24, as to which this Section 2.03 shall not apply), the Administrative Borrower shall hand deliver or fax to the Collateral Agent a duly completed Borrowing Request (a) in the case of a Eurodollar Borrowing, not later than 2:00 p.m., New York City time, three Business Days before a proposed Borrowing and (b) in the case of an ABR Borrowing, not later than 2:00 p.m., New York City time, one Business Day before a proposed Borrowing. Each Borrowing Request shall be irrevocable, shall be signed by or on behalf of the Administrative Borrower and shall specify the following information: (i) whether the Borrowing then being requested is to be a Eurodollar Borrowing or an ABR Borrowing; (ii) the date of such Borrowing (which shall be a Business Day); (iii) the number and location of the account to which funds are to be disbursed (which shall be an account that complies with the requirements of Section 2.02(c)); (iv) the amount of such Borrowing; (v) if such Borrowing is to be a Eurodollar Borrowing, the initial Interest Period with respect thereto and (vi) a Borrowing Base Certificate as of such date; provided, however, that, notwithstanding any contrary specification in any Borrowing Request, each requested Borrowing shall comply with the requirements set forth in Section 2.02. If no election as to the Type of Borrowing is specified in any such notice, then the requested Borrowing shall be an ABR Borrowing. If no Interest Period with respect to any Eurodollar Borrowing is specified in any such notice, then the Administrative Borrower shall be deemed to have selected an Interest Period of one month's duration. The Collateral Agent shall promptly advise the applicable Lenders of any notice given in accordance with this Section 2.03 (and the contents thereof), and of each Lender's portion of the requested Borrowing. SECTION 2.04 Repayment of Loans; Evidence of Debt. (a) The Borrowers hereby unconditionally promise to pay to the Collateral Agent for the account of each Lender the then unpaid principal amount of each Loan of such Lender made to the Borrowers on the Maturity Date. The Borrowers hereby unconditionally promise to pay to the Swingline Lender the then unpaid principal amount of each Swingline Loan made to the Borrowers on the Maturity Date or the last day of each calendar month. (b) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrowers to such Lender resulting from each Loan made by such Lender to the Borrowers from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time under this Agreement. (c) The Collateral Agent shall maintain accounts in which it will record (i) the amount of each Loan made hereunder, the Type thereof and the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrowers to each Lender hereunder and (iii) the amount of the sum received by the Collateral Agent hereunder from the Borrowers or any Guarantor and each Lender's share thereof. (d) The entries made in the accounts maintained pursuant to paragraphs (b) and (c) of this Section shall be prima facie evidence of the existence and amounts of the obligations therein recorded; provided, however, that the failure of any Lender or any Agent to maintain such accounts or any error therein shall not in any manner affect the obligations of the Borrowers to repay the Loans made to the Borrowers in accordance with the terms of this Agreement. (e) Any Lender may request that Loans made by it hereunder be evidenced by a promissory note. In such event, the Borrowers shall execute and deliver to such Lender a promissory note payable to such Lender and its registered assigns and in a form and substance reasonably acceptable to the Collateral Agent. Notwithstanding any other provision of this Agreement, in the event any Lender shall request and receive such a promissory note, the interests represented by such note shall at all times (including after any assignment of all or part of such interests pursuant to Section 9.04) be represented by one or more promissory notes payable to the payee named therein or its registered assigns. SECTION 2.05 Fees. (a) The Borrowers agree to pay to each Lender, through the Collateral Agent, on the last Business Day of each calendar month in each year and on each date on which any Commitment of such Lender shall expire or be terminated as provided herein, a commitment fee (a "Commitment Fee") equal to the Commitment Fee Rate on the average daily unused amount of the Commitment of such Lender (other than the Swingline Commitment) during the preceding month (or other period commencing with the date hereof or ending with the Maturity Date or the date on which the Commitments of such Lender shall expire or be terminated). All Commitment Fees shall be computed on the basis of the actual number of days elapsed in a year of 360 days. The Commitment Fee due to each Lender shall commence to accrue on the date hereof and shall cease to accrue on the date on which the Commitment of such Lender shall expire or be terminated as provided herein. For purposes of calculating Commitment Fees, no portion of the Commitments shall be deemed utilized under Section 2.22 as a result of outstanding Swingline Loans. (b) The Borrowers agree to pay to the Administrative Agent and the Arranger, for its own account, the fees in the amounts and at the times from time to time agreed to in writing by the Borrowers (or any Affiliate) and the Administrative Agent, including pursuant to the Administrative Fee Letter (the "Administrative Agent Fees"). The Borrowers agree to pay to the Collateral Agent, for its own account, the fees in the amounts and at the times from time to time agreed to in writing by the Borrowers (or any Affiliate) and the Collateral Agent, including pursuant to the Collateral Agent Fee Letter (the "Collateral Agent Fees"). (c) The Borrowers agree to pay to the Collateral Agent for the account of each Lender a letter of credit fee for each Letter of Credit equal to the L/C Fee Rate in effect from time to time of such Lender's Pro Rata Percentage (as adjusted from time to time) of the undrawn amount of such Letter of Credit (computed for the actual number of days elapsed on the basis of a year of 360 days); provided that, upon the election of either Agent or the Required Lenders, the rate applicable to each Letter of Credit shall be increased by 2% at any time that an Event of Default exists (without duplication of any default interest charge imposed on such letter of credit fee, if any, pursuant to Section 2.07). Such letter of credit fee shall be payable in arrears on the last day of each calendar quarter and on the earlier of the Maturity Date or the termination of all the Commitments (or such later date on which such Letter of Credit expires or is terminated) for the period from the date of the issuance of each Letter of Credit (or the last day on which the letter of credit fee was paid with respect thereto) to the date such payment is due or, if earlier, the date on which such Letter of Credit expired or was terminated. In addition, with respect to each Letter of Credit, the Borrowers agree to pay to the Issuing Bank, for its own account, (i) such fees and expenses as the Issuing Bank customarily requires in connection with the issuance, negotiation, processing and/or administration of letters of credit in similar situations and (ii) a letter of credit fronting fee in the amount and at the times agreed to by the Borrowers and the Issuing Bank (clause (i) and (ii) referred to herein collectively, as the "Issuing Bank Fees"). (d) If, on or prior to the second anniversary of the Closing Date, the Revolving Credit Commitment of any Lender is reduced or terminated, the Borrowers agree to pay to the Collateral Agent for the benefit of such Lender on the date of such reduction or termination a fee equal to the Applicable Percentage (as defined below) multiplied by the amount of each reduction (or the entire amount of such Revolving Credit Commitment in the event of a termination thereof). As used herein, the term "Applicable Percentage" shall mean (w) 3%, in the case of a reduction or termination of the Revolving Credit Commitment on or prior to the first anniversary of the Closing Date, (x) 2%, in the case of a reduction or termination of the Revolving Credit Commitment after the first anniversary of the Closing Date but on or prior to the second anniversary thereof, (y) 1% in the case of a reduction or termination of the Revolving Credit Commitment after the second anniversary of the Closing Date or on or prior to the third anniversary of the Closing Date, and (z) 0%, in the case of a prepayment after the third anniversary of the Closing Date. (e) All Fees shall be paid on the dates due, in immediately available funds, to the Collateral Agent for distribution, if and as appropriate, among the Lenders, except that the Issuing Bank Fees shall be paid for the account of the Issuing Bank. Once paid, none of the Fees shall be refundable under any circumstances. SECTION 2.06 Interest on Loans. (a) Subject to the provisions of Section 2.07, the Loans comprising each ABR Borrowing, including each Swingline Loan, shall bear interest (computed on the basis of the actual number of days elapsed over a year of 360 days) at a rate per annum equal to the Alternate Base Rate plus the Applicable Margin in effect from time to time. (b) Subject to the provisions of Section 2.07, the Loans comprising each Eurodollar Borrowing shall bear interest (computed on the basis of the actual number of days elapsed over a year of 360 days) at a rate per annum equal to the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing plus the Applicable Margin in effect from time to time. (c) Interest on each Loan shall be payable on the Interest Payment Dates applicable to such Loan except as otherwise provided in this Agreement. The applicable Alternate Base Rate or Adjusted LIBO Rate for each Interest Period or day within an Interest Period, as the case may be, shall be determined by the Collateral Agent, and such determination shall be conclusive absent manifest error. SECTION 2.07 Default Interest. If an Event of Default has occurred and is continuing and either Agent or the Required Lenders so elect, the Borrowers shall on written demand from time to time pay interest, to the extent permitted by law, on all Obligations, to but excluding the date of actual payment (after as well as before judgment) at the rate otherwise applicable to Loans pursuant to Section 2.06 plus 2.00% per annum. SECTION 2.08 Alternate Rate of Interest. In the event, and on each occasion, that prior to the commencement of any Interest Period for a Eurodollar Borrowing (a) the Collateral Agent shall have determined that adequate and reasonable means do not exist for determining the Adjusted LIBO Rate for such Interest Period or (b) the Collateral Agent is advised by the Required Lenders in respect of the Facility that the Adjusted LIBO Rate for such Interest Period will not adequately and fairly reflect the cost to such Lenders of making or maintaining their Loans included in such Borrowing for such Interest Period, the Collateral Agent shall, as soon as practicable thereafter, give written or fax notice of such determination to the Borrowers and the Lenders. In the event of any such determination, until the Collateral Agent shall have advised the Borrowers and the Lenders that the circumstances giving rise to such notice no longer exist, (i) any request by the Administrative Borrower for a Eurodollar Borrowing pursuant to Section 2.03 or 2.10 shall be deemed to be a request for an ABR Borrowing and (ii) any Interest Period election that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective. Each determination by the Collateral Agent under this Section 2.08 shall be conclusive absent manifest error. SECTION 2.09 Termination and Reduction of Commitments. (a) Unless previously terminated in accordance with the terms hereof, the Commitments shall automatically terminate on the Maturity Date. Notwithstanding the foregoing, all the Commitments shall automatically terminate at 5:00 p.m., New York City time, on July 18, 2006, if the initial Credit Event shall not have occurred by such time. Upon at least three Business Days' prior irrevocable written or fax notice to the Collateral Agent, the Borrowers may at any time in whole permanently terminate, or from time to time in part permanently reduce, the Commitments; provided, however, that (i) each partial reduction of the Commitments shall be in an integral multiple of $1,000,000 and in a minimum amount of $1,000,000 and (ii) the Commitments shall not be reduced to an amount that is less than the Aggregate Revolving Credit Exposure then in effect. (b) Each reduction in the Commitments hereunder shall be made ratably among the applicable Lenders in accordance with their Pro Rata Percentages. The Borrowers shall pay to the Collateral Agent for the account of the applicable Lenders, on the date of each termination or reduction, the Commitment Fees on the amount of the Commitments so terminated or reduced accrued to but excluding the date of such termination or reduction. SECTION 2.10 Conversion and Continuation of Borrowings. The Administrative Borrower shall have the right at any time upon prior irrevocable notice to the Collateral Agent (a) not later than 12:00 p.m., New York City time, one Business Day prior to conversion, to convert any Eurodollar Borrowing of the Borrowers into an ABR Borrowing, (b) not later than 2:00 p.m., New York City time, three Business Days prior to conversion or continuation, to convert any ABR Borrowing of the Borrowers into a Eurodollar Borrowing or to continue any Eurodollar Borrowing of the Borrowers as a Eurodollar Borrowing for an additional Interest Period and (c) not later than 2:00 p.m., New York City time, three Business Days prior to conversion, to convert the Interest Period with respect to any Eurodollar Borrowing of the Borrowers to another permissible Interest Period, subject in each case to the following: (i) each conversion or continuation shall be made pro rata among the Lenders in accordance with the respective principal amounts of the Loans comprising the converted or continued Borrowing; (ii) if less than all the outstanding principal amount of any Borrowing shall be converted or continued, then each resulting Borrowing shall satisfy the limitations specified in Sections 2.02(a) and 2.02(b) regarding the principal amount and maximum number of Borrowings of the relevant Type; (iii) each conversion shall be effected by each Lender and the Collateral Agent by recording for the account of such Lender the new Loan of such Lender resulting from such conversion and reducing the Loan (or portion thereof) of such Lender being converted by an equivalent principal amount; accrued interest on any Eurodollar Loan (or portion thereof) being converted shall be paid by the Borrowers at the time of conversion; (iv) if any Eurodollar Borrowing is converted at a time other than the end of the Interest Period applicable thereto, the Borrowers shall pay, upon demand, any amounts due to the Lenders pursuant to Section 2.16; (v) any portion of a Borrowing maturing or required to be repaid in less than one month may not be converted into or continued as a Eurodollar Borrowing; (vi) any portion of a Eurodollar Borrowing that cannot be converted into or continued as a Eurodollar Borrowing by reason of the immediately preceding clause shall be automatically converted at the end of the Interest Period in effect for such Borrowing into an ABR Borrowing; (vii) after the occurrence and during the continuance of a Default or Event of Default, no outstanding Loan may be converted into, or continued as, a Eurodollar Loan. Each notice pursuant to this Section 2.10 shall be irrevocable and shall refer to this Agreement and specify (i) the identity and amount of the Borrowing that the Administrative Borrower request be converted or continued, (ii) whether such Borrowing is to be converted to or continued as a Eurodollar Borrowing or an ABR Borrowing, (iii) if such notice requests a conversion, the date of such conversion (which shall be a Business Day) and (iv) if such Borrowing is to be converted to or continued as a Eurodollar Borrowing, the Interest Period with respect thereto. If no Interest Period is specified in any such notice with respect to any conversion to or continuation as a Eurodollar Borrowing, the Administrative Borrower shall be deemed to have selected an Interest Period of one month's duration. The Collateral Agent shall advise the Lenders of any notice given pursuant to this Section 2.10 and of each Lender's portion of any converted or continued Borrowing. If the Administrative Borrower shall not have given notice in accordance with this Section 2.10 to continue any Borrowing into a subsequent Interest Period (and shall not otherwise have given notice in accordance with this Section 2.10 to convert such Borrowing), such Borrowing shall, at the end of the Interest Period applicable thereto (unless repaid pursuant to the terms hereof), automatically be converted or continued into an ABR Borrowing. SECTION 2.11 [Reserved] SECTION 2.12 Prepayment. (a) The Borrowers shall, subject to the requirements of Section 2.05(b), have the right at any time and from time to time to prepay any Borrowing, in whole or in part, upon at least three Business Days' prior written or fax notice (or telephone notice promptly confirmed by written or fax notice) in the case of Eurodollar Loans, or written or fax notice (or telephone notice promptly confirmed by written or fax notice) at least one Business Day prior to the date of prepayment in the case of ABR Loans, to the Collateral Agent before 2:00 p.m., New York City time; provided, however, that each partial prepayment shall be in an amount that is an integral multiple of $250,000 and not less than $750,000. (b) Each notice of prepayment shall specify the prepayment date and the principal amount of each Borrowing (or portion thereof) to be prepaid, shall be irrevocable and shall commit the Borrowers to prepay such Borrowing by the amount stated therein on the date stated therein. All prepayments under this Section 2.12 shall be subject to Section 2.16, but otherwise without premium or penalty. All prepayments under this Section 2.12 shall be accompanied by accrued and unpaid interest on the principal amount to be prepaid to but excluding the date of payment. SECTION 2.13 Mandatory Prepayments. (a) In the event of any termination of all the Commitments, the Borrowers shall, on the date of such termination, repay or prepay all its outstanding Borrowings and all its outstanding Swingline Loans and replace all its outstanding Letters of Credit and/or shall Cash Collateralize in full all obligations arising with respect to the Letters of Credit. If as a result of any partial reduction of the Commitments the Aggregate Revolving Credit Exposure would exceed the Commitments after giving effect thereto, then the Borrowers shall, on the date of such reduction, repay or prepay Borrowings or Swingline Loans (or a combination thereof) and/or shall Cash Collateralize in full all obligations arising with respect to the Letters of Credit in an amount sufficient to eliminate such excess. (b) In the event and on each occasion that Aggregate Revolving Credit Exposure (other than amounts constituting Protective Advances) exceeds the Borrowing Base, the Borrowers shall immediately repay Loans and/or Cash Collateralize outstanding Letters of Credit to the extent necessary to cause the Aggregate Revolving Credit Exposure not to exceed the Borrowing Base. (c) In connection with any Asset Sale which consists of (i) the sale of all of the Equity Interests in Britt or (ii) the sale of Eligible Accounts and/or Eligible Inventory (or the sale of certain of such assets and other assets of a Borrower), the Borrowers shall apply the Net Cash Proceeds of such sale to repay outstanding Revolving Loans and/or shall Cash Collateralize in full all obligations arising with respect to the Letters of Credit in an amount equal to the lesser of (i) the amount necessary to cause the Borrowers to comply with Section 2.13(b) or (ii) the sum of (a) 85% of the Net Amount of the Eligible Accounts sold in such Asset Sale plus (b) 75% of the value (being the lower of cost (on a first-in first out basis) or market) of the Eligible Inventory sold in such Asset Sale. SECTION 2.14 Reserve Requirements; Change in Circumstances. (a) Notwithstanding any other provision of this Agreement, if any Change in Law shall: (i) impose, modify or deem applicable any reserve, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender or any Agent (except any such reserve requirement which is reflected in the Adjusted LIBO Rate) or (ii) (impose on any Lender or any Agent or the London interbank market any other condition affecting this Agreement or Eurodollar Loans made by such Lender or any Letter of Credit or participation therein, and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any Eurodollar Loan (or of maintaining its obligation to make any such Loan) or to increase the cost to any Lender or any Agent of issuing or maintaining any Letter of Credit or Letter of Credit Guaranty or purchasing or maintaining a participation therein or to reduce the amount of any sum received or receivable by such Lender hereunder (whether of principal, interest or otherwise) by an amount deemed by such Lender or such Agent to be material, then the Borrowers will pay to such Lender or such Agent, as the case may be, upon demand such additional amount or amounts as will compensate such Lender, such Agent or the Issuing Bank, as the case may be, for such additional costs incurred or reduction suffered. (b) If any Lender or any Agent shall have determined that any Change in Law regarding capital adequacy has or would have the effect of reducing the rate of return on such Lender's or such Agent's capital or on the capital of such Lender's or such Agent's holding company, if any, as a consequence of this Agreement or the Loans made by, or participations in Letters of Credit purchased by, such Lender to a level below that which such Lender, any Agent or such Lender's or such Agent's holding company could have achieved but for such Change in Law (taking into consideration such Lender's or such Agent's policies and the policies of such Lender's or such Agent's holding company with respect to capital adequacy) by an amount deemed by such Lender or such Agent to be material, then from time to time the Borrowers shall pay to such Lender or such Agent, as the case may be, such additional amount or amounts as will compensate such Lender or such Agent or such Lender's or such Agent's holding company for any such reduction suffered. (c) A certificate of a Lender or any Agent setting forth the amount or amounts necessary to compensate such Lender or such Agent or its holding company, as applicable, as specified in paragraph (a) or (b) of this Section 2.14 shall be delivered to the Borrowers and shall be conclusive absent manifest error. The Borrowers shall pay such Lender or such Agent, as the case may be, the amount or amounts shown as due on any such certificate delivered by it within 10 days after its receipt of the same. (d) Failure or delay on the part of any Lender or any Agent to demand compensation pursuant to this Section shall not constitute a waiver of such Lender's or the such Agent's right to demand such compensation; provided that the Borrowers shall not be under any obligation to compensate any Lender or any Agent under paragraph (a) or (b) above for increased costs or reductions with respect to any period prior to the date that is 180 days prior to such request if such Lender or such Agent knew or could reasonably have been expected to know of the circumstances giving rise to such increased costs or reductions and of the fact that such circumstances would result in a claim for increased compensation by reason of such increased costs or reductions; provided further that the foregoing limitation shall not apply to any increased costs or reductions arising out of the retroactive application of any Change in Law within such 180-day period. The protection of this Section shall be available to each Lender and each Agent regardless of any possible contention of the invalidity or inapplicability of the Change in Law that shall have occurred or been imposed. SECTION 2.15 Change in Legality. (a) Notwithstanding any other provision of this Agreement, if any Change in Law shall make it unlawful for any Lender to make or maintain any Eurodollar Loan or to give effect to its obligations as contemplated hereby with respect to any Eurodollar Loan, then, by written notice to the Administrative Borrower and to the Collateral Agent: (i) such Lender may declare that Eurodollar Loans will not thereafter (for the duration of such unlawfulness) be made by such Lender hereunder (or be continued for additional Interest Periods and ABR Loans will not thereafter (for such duration) be converted into Eurodollar Loans), whereupon any request for a Eurodollar Borrowing (or to convert an ABR Borrowing to a Eurodollar Borrowing or to continue a Eurodollar Borrowing for an additional Interest Period) shall, as to such Lender only, be deemed a request for an ABR Loan (or a request to continue an ABR Loan as such for an additional Interest Period or to convert a Eurodollar Loan into an ABR Loan, as the case may be), unless such declaration shall be subsequently withdrawn; and (ii) such Lender may require that all outstanding Eurodollar Loans made by it be converted to ABR Loans, in which event all such Eurodollar Loans shall be automatically converted to ABR Loans as of the effective date of such notice as provided in paragraph (b) below. In the event any Lender shall exercise its rights under (i) or (ii) above, all payments and prepayments of principal that would otherwise have been applied to repay the Eurodollar Loans that would have been made by such Lender or the converted Eurodollar Loans of such Lender shall instead be applied to repay the ABR Loans made by such Lender in lieu of, or resulting from the conversion of, such Eurodollar Loans. Any such conversion of a Eurodollar Loan under (i) above shall be subject to Section 2.16. (b) For purposes of this Section 2.15, a notice to the Administrative Borrower by any Lender shall be effective as to each Eurodollar Loan made by such Lender, if lawful, on the last day of the Interest Period then applicable to such Eurodollar Loan; in all other cases such notice shall be effective on the date of receipt by the Borrowers. SECTION 2.16 Indemnity. The Borrowers shall indemnify each Lender against any loss or expense that such Lender may sustain or incur as a consequence of (a) any event, other than a default by such Lender in the performance of its obligations hereunder, which results in (i) such Lender receiving or being deemed to receive any amount on account of the principal of any Eurodollar Loan prior to the end of the Interest Period in effect therefor, (ii) the conversion of any Eurodollar Loan to an ABR Loan, or the conversion of the Interest Period with respect to any Eurodollar Loan, in each case other than on the last day of the Interest Period in effect therefor or (iii) any Eurodollar Loan to be made by such Lender (including any Eurodollar Loan to be made pursuant to a conversion or continuation under Section 2.10) not being made after notice of such Loan shall have been given by the Administrative Borrower hereunder (any of the events referred to in this clause (a) being called a "Breakage Event") or (b) any default in the making of any payment or prepayment required to be made hereunder. In the case of any Breakage Event, such loss shall include an amount equal to the excess, as reasonably determined by such Lender, of (i) its cost of obtaining funds for the Eurodollar Loan that is the subject of such Breakage Event for the period from the date of such Breakage Event to the last day of the Interest Period in effect (or that would have been in effect) for such Loan over (ii) the amount of interest likely to be realized by such Lender in redeploying the funds released or not utilized by reason of such Breakage Event for such period. A certificate of any Lender setting forth any amount or amounts which such Lender is entitled to receive pursuant to this Section 2.16 shall be delivered to the Borrowers and shall be conclusive absent manifest error. SECTION 2.17 Pro Rata Treatment. Except as provided below in this Section 2.17 with respect to Swingline Loans and as required under Section 2.15, each Borrowing, each payment or prepayment of principal of any Borrowing, each payment of interest on the Loans, each payment of the Commitment Fees, each reduction of the Commitments and each conversion of any Borrowing to or continuation of any Borrowing as a Borrowing of any Type shall be allocated pro rata among the Lenders in accordance with their respective applicable Commitments (or, if such Commitments shall have expired or been terminated, in accordance with the respective principal amounts of their outstanding Loans). For purposes of determining the available Revolving Credit Commitments of the Lenders at any time, each outstanding Swingline Loan shall be deemed to have utilized the Revolving Credit Commitments of the Lenders (including those Lenders which shall not have made Swingline Loans) pro rata in accordance with such respective Revolving Credit Commitments. Each Lender agrees that in computing such Lender's portion of any Borrowing to be made hereunder, the Collateral Agent may, in its discretion, round each Lender's percentage of such Borrowing to the next higher or lower whole dollar amount. SECTION 2.18 Sharing of Setoffs. Each Lender agrees that if it shall, through the exercise of a right of banker's lien, setoff or counterclaim against the Borrowers or any other Loan Party, or pursuant to a secured claim under Section 506 of Title 11 of the United States Code or other security or interest arising from, or in lieu of, such secured claim, received by such Lender under any applicable bankruptcy, insolvency or other similar law or otherwise, or by any other means, obtain payment (voluntary or involuntary) in respect of any Loan or Loans or participation in all Letters of Credit as a result of which the unpaid principal portion of its Loans and participations in all Letters of Credit shall be proportionately less than the unpaid principal portion of the Loans and participations in the Letters of Credit of any other Lender, it shall be deemed simultaneously to have purchased from such other Lender at face value, and shall promptly pay to such other Lender the purchase price for, a participation in the Loans and L/C Exposure of such other Lender, so that the aggregate unpaid principal amount of the Loans and L/C Exposure and participations in Loans and L/C Exposure held by each Lender shall be in the same proportion to the aggregate unpaid principal amount of all Loans and L/C Exposure then outstanding as the principal amount of its Loans and L/C Exposure prior to such exercise of banker's lien, setoff or counterclaim or other event was to the principal amount of all Loans and L/C Exposure outstanding prior to such exercise of banker's lien, setoff or counterclaim or other event; provided, however, that if any such purchase or purchases or adjustments shall be made pursuant to this Section 2.18 and the payment giving rise thereto shall thereafter be recovered, such purchase or purchases or adjustments shall be rescinded to the extent of such recovery and the purchase price or prices or adjustment restored without interest. The Borrowers expressly consent to the foregoing arrangements and agrees that any Lender holding a participation in a Loan or Letter of Credit deemed to have been so purchased may exercise any and all rights of banker's lien, setoff or counterclaim with respect to any and all moneys owing by the Borrowers to such Lender by reason thereof as fully as if such Lender had made a Loan directly to the Borrowers in the amount of such participation. SECTION 2.19 Payments. (a) The Borrowers shall make each payment (including principal of or interest on any Borrowing reimbursement obligations under a Letter of Credit or any Fees or other amounts) hereunder and under any other Loan Document not later than 12:00 (noon), placeCityNew York City time, on the date when due in immediately available dollars, without setoff, defense or counterclaim. Each such payment (other than principal of and interest on Swingline Loans, which shall be paid directly to the Swingline Lender except as otherwise provided in Section 2.21(e)) shall be made to the Collateral Agent at its offices at addressStreet135 S. LaSalle Street, Suite 425, CityChicago, StateIllinois PostalCode60603. All payments hereunder and under each other Loan Document shall be made in dollars. (b) Except as otherwise expressly provided herein, whenever any payment (including principal of or interest on any Borrowing or any Fees or other amounts) hereunder or under any other Loan Document shall become due, or otherwise would occur, on a day that is not a Business Day, such payment may be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of interest or Fees, if applicable. SECTION 2.20 Taxes. (a) Any and all payments by or on account of any obligation of the Borrowers or any other Loan Party hereunder or under any other Loan Document shall be made free and clear of and without deduction for any Indemnified Taxes or Other Taxes; provided that if any Indemnified Taxes or Other Taxes are required to be withheld or deducted from such payments, then (i) the sum payable by the Borrowers shall be increased as necessary so that after all required deductions or withholding (including deductions or withholdings applicable to additional sums payable under this Section 2.20) the Collateral Agent, the Administrative Agent or such Lender (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrowers or such other Loan Party shall make (or cause to be made) such deductions and (iii) the Borrowers or such other Loan Party shall pay (or cause to be paid) the full amount deducted to the relevant Governmental Authority in accordance with applicable law. In addition, the Borrowers or any other Loan Party hereunder shall pay (or cause to be paid) any Other Taxes to the relevant Governmental Authority in accordance with applicable law. (b) The Borrowers shall indemnify the Collateral Agent, the Administrative Agent and each Lender, within 10 days after written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by the Collateral Agent or such Lender, as the case may be, or any of their respective Affiliates, on or with respect to any payment by or on account of any obligation of any Loan Party hereunder or under any other Loan Document (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) and any penalties, interest and expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Borrowers by a Lender, or by the Collateral Agent on its behalf or on behalf of a Lender, shall be conclusive absent manifest error. (c) As soon as practicable after any payment of Indemnified Taxes or Other Taxes pursuant to Section 2.20(a), and in any event within 30 days of any such payment being due, the Borrowers shall deliver (or cause to be delivered) to each Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Collateral Agent. (d) Any Foreign Lender that is entitled to an exemption from or reduction of withholding tax under the law of the jurisdiction in which the Borrowers is located, or any treaty to which such jurisdiction is a party, with respect to payments under this Agreement shall deliver to the Administrative Borrower (with a copy to each Agent), at the reasonable written request of the Administrative Borrower, such properly completed and executed documentation prescribed by applicable law as will permit such payments to be made without withholding or at a reduced rate; provided that such Lender is legally entitled to complete, execute and deliver such documentation and in such Lender's judgment such completion, execution or delivery would not materially prejudice the legal position of such Lender. In addition, each Foreign Lender shall (i) furnish on or before it becomes a party to the Agreement either (a) two accurate and complete originally executed U.S. Internal Revenue Service Form W-8BEN (or successor form) or (b) an accurate and complete U.S. Internal Revenue Service Form W-8ECI (or successor form), certifying, in either case, to such Foreign Lender's legal entitlement to an exemption or reduction from U.S. Federal withholding tax with respect to all interest payments hereunder, and (ii) provide a new Form W 8BEN (or successor form) or U.S. Internal Revenue Service Form W-8ECI (or successor form) upon the expiration or obsolescence of any previously delivered form to reconfirm any complete exemption from, or any entitlement to a reduction in, U.S. Federal withholding tax with respect to any interest payment hereunder; provided that any Foreign Lender that is not a "bank" within the meaning of Section 881(c)(3)(A) of the Tax Code and is relying on the so-called "portfolio interest exemption" shall also furnish a "Non-Bank Certificate" in the form of Exhibit G together with a U.S. Internal Revenue Service Form W 8BEN. Notwithstanding any other provision of this paragraph, a Foreign Lender shall not be required to deliver any form pursuant to this paragraph that such Foreign Lender is not legally able to deliver. (e) Any Lender that is a United States person, as defined in Section 7701(a)(30) of the Tax Code, and is not an exempt recipient within the meaning of Treasury Regulations Section 1.6049-4(c) shall deliver to the Borrowers (with a copy to each Agent) two accurate and complete original signed copies of Internal Revenue Service Form W-9, or any successor form that such person is entitled to provide at such time in order to comply with United States back-up withholding requirements. (f) Without prejudice to the survival of any other agreement of the Borrowers hereunder, the agreements and obligations of the Borrowers contained in this Section 2.20 shall survive the payment in full of all amounts due hereunder. SECTION 2.21 Assignment of Commitments Under Certain Circumstances; Duty to Mitigate. (a) In the event (i) any Lender delivers a certificate requesting compensation pursuant to Section 2.14, (ii) any Lender delivers a notice described in Section 2.15, (iii) the Borrowers are required to pay any additional amount to any Lender or any Governmental Authority on account of any Lender pursuant to Section 2.20 or (iv) any Lender does not consent to a proposed amendment, modification or waiver of this Agreement requested by the Administrative Borrower which requires the consent of all of the Lenders or all of the Lenders under any Facility to become effective (and which is approved by at least the Required Lenders), the Borrowers may, at their sole expense and effort (including with respect to the processing and recordation fee referred to in Section 9.04(b)), upon notice to such Lender and each of the Agents, require such Lender to transfer and assign, without recourse (in accordance with and subject to the restrictions contained in Section 9.04), all of its interests, rights and obligations under this Agreement to an assignee that shall assume such assigned obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that (x) such assignment shall not conflict with any law, rule or regulation or order of any court or other Governmental Authority having jurisdiction, (y) solely with respect to replacements of Lenders pursuant to clauses (i), (ii) or (iii) of this Section, the Borrowers shall have received the prior written consent of each of the Agents (and, if a Revolving Credit Commitment is being assigned, of the Swingline Lender), which consent shall not unreasonably be withheld, and (z) the Borrowers or such assignee shall have paid to the affected Lender in immediately available funds an amount equal to the sum of the principal of and interest accrued to the date of such payment on the outstanding Loans or participations in all Letters of Credit of such Lender, plus all Fees and other amounts accrued for the account of such Lender hereunder (including any amounts under Section 2.14 and Section 2.16); provided further that, if prior to any such transfer and assignment the circumstances or event that resulted in such Lender's claim for compensation under Section 2.14 or notice under Section 2.15 or the amounts paid pursuant to Section 2.20, as the case may be, cease to cause such Lender to suffer increased costs or reductions in amounts received or receivable or reduction in return on capital, or cease to have the consequences specified in Section 2.15, or cease to result in amounts being payable under Section 2.20, as the case may be (including as a result of any action taken by such Lender pursuant to paragraph (b) below), or if such Lender shall waive its right to claim further compensation under Section 2.14 in respect of such circumstances or event or shall withdraw its notice under Section 2.15 or shall waive its right to further payments under Section 2.20 in respect of such circumstances or event, as the case may be, then such Lender shall not thereafter be required to make any such transfer and assignment hereunder. In connection with any such replacement, if the replaced Lender does not execute and deliver to the Collateral Agent a duly completed Assignment and Acceptance reflecting such replacement within five Business Days of the date on which the replacement Lender executes and delivers such Assignment and Acceptance to the replaced Lender, then such replaced Lender shall be deemed to have executed and delivered such Assignment and Acceptance. (b) If (i) any Lender shall request compensation under Section 2.14, (ii) any Lender delivers a notice described in Section 2.15 or (iii) the Borrowers are required to pay any additional amount to any Lender or any Governmental Authority on account of any Lender, pursuant to Section 2.20, then such Lender shall use reasonable efforts (which shall not require such Lender to incur an unreimbursed loss or unreimbursed cost or expense or otherwise take any action inconsistent with its internal policies or legal or regulatory restrictions or suffer any disadvantage or burden deemed by it to be significant) (x) to file any certificate or document reasonably requested in writing by the Administrative Borrower or (y) to assign its rights and delegate and transfer its obligations hereunder to another of its offices, branches or affiliates, if such filing or assignment would reduce its claims for compensation under Section 2.14 or enable it to withdraw its notice pursuant to Section 2.15 or would reduce amounts payable pursuant to Section 2.20, as the case may be, in the future. The Borrowers hereby agree to pay all reasonable costs and expenses incurred by any Lender in connection with any such filing or assignment, delegation and transfer. SECTION 2.22 Swingline Loans. (a) Swingline Commitment. Subject to the terms and conditions hereof and relying upon the representations and warranties set forth herein, the Swingline Lender agrees to make loans to the Borrowers, at any time and from time to time after the Closing Date, and until the earlier of the Maturity Date and the termination of the Commitments in accordance with the terms hereof, in an aggregate principal amount at any time outstanding that will not result in (i) the aggregate principal amount of all Swingline Loans exceeding $2,000,000 in the aggregate or (ii) the Aggregate Revolving Credit Exposure, after giving effect to any Swingline Loan, exceeding the Commitment. Each Swingline Loan shall be in a principal amount that is an integral multiple of $100,000. The Swingline Commitment may be terminated or reduced from time to time as provided herein. Within the foregoing limits, the Borrowers may borrow, pay or prepay and reborrow Swingline Loans hereunder, subject to the terms, conditions and limitations set forth herein. (b) Swingline Loans. The Administrative Borrower shall notify the Collateral Agent by fax, or by telephone (confirmed by fax), not later than 11:00 a.m., New York City time, on the day of a proposed Swingline Loan to be made to it. Such notice shall be delivered on a Business Day, shall be irrevocable and shall refer to this Agreement and shall specify the requested date (which shall be a Business Day) and amount of such Swingline Loan. The Collateral Agent will promptly advise the Swingline Lender of any notice received from the Administrative Borrower pursuant to this paragraph (b). The Swingline Lender shall make each Swingline Loan available to the Borrowers by means of a credit to the general deposit account of the Borrowers with the Swingline Lender by 3:00 p.m. on the date such Swingline Loan is so requested. (c) Prepayment. The Borrowers shall have the right at any time and from time to time to prepay any Swingline Loan, in whole or in part, upon giving written or fax notice (or telephone notice promptly confirmed by written or fax notice) to the Swingline Lender and to the Collateral Agent before 12:00 (noon), New York City time, on the date of prepayment at the Swingline Lender's address for notices specified in the Lender Addendum delivered by the Swingline Lender. All principal payments of Swingline Loans shall be accompanied by accrued interest on the principal amount being repaid to the date of payment. (d) Interest. Each Swingline Loan shall be an ABR Loan and, subject to the provisions of Section 2.07, shall bear interest as provided in Section 2.06(a). (e) Participations. The Swingline Lender may by written notice given to the Collateral Agent not later than 10:00 a.m., New York City time, on any Business Day require the Lenders to acquire participations on such Business Day in all or a portion of the Swingline Loans outstanding. Such notice shall specify the aggregate amount of Swingline Loans in which Lenders will participate. The Collateral Agent will, promptly upon receipt of such notice, give notice to each Lender, specifying in such notice such Lender's Pro Rata Percentage of such Swingline Loan or Loans. In furtherance of the foregoing, each Lender hereby absolutely and unconditionally agrees, upon receipt of notice as provided above, to pay to the Collateral Agent, for the account of the Swingline Lender, such Lender's Pro Rata Percentage of such Swingline Loan or Loans. Each Lender acknowledges and agrees that its obligation to acquire participations in Swingline Loans pursuant to this paragraph is absolute and unconditional and shall not be affected by any circumstance whatsoever, including the occurrence and continuance of a Default or an Event of Default, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever. Each Lender shall comply with its obligation under this paragraph by wire transfer of immediately available funds, in the same manner as provided in Section 2.02(c) with respect to Loans made by such Lender (and Section 2.02(c) shall apply, mutatis mutandis, to the payment obligations of the Lenders under this Section) and the Collateral Agent shall promptly pay to the Swingline Lender the amounts so received by it from the Lenders. The Collateral Agent shall notify the Borrowers of any participations in any Swingline Loan acquired pursuant to this paragraph and thereafter payments in respect of such Swingline Loan shall be made to the Collateral Agent and not to the Swingline Lender. Any amounts received by the Swingline Lender from the Borrowers (or other party on behalf of the Borrowers) in respect of a Swingline Loan after receipt by the Swingline Lender of the proceeds of a sale of participations therein shall be promptly remitted to the Collateral Agent; any such amounts received by the Collateral Agent shall be promptly remitted by the Collateral Agent to the Lenders that shall have made their payments pursuant to this paragraph and to the Swingline Lender, as their interests may appear. The purchase of participations in a Swingline Loan pursuant to this paragraph shall not relieve the Borrowers (or other party liable for obligations of the Borrowers) of any default in the payment thereof. SECTION 2.23 Letters of Credit. (a) L/C Applications. The Borrowers shall execute and deliver to the Issuing Bank the Master Letter of Credit Agreement from time to time in effect. The Borrowers shall give notice to the Collateral Agent and the Issuing Bank of the proposed issuance of each Letter of Credit on a Business Day which is at least three Business Days (or such lesser number of days as the Collateral Agent and the Issuing Bank shall agree in any particular instance in their sole discretion) prior to the proposed date of issuance of such Letter of Credit. Each such notice shall be accompanied by an L/C Application, duly executed by the applicable Borrower and in all respects satisfactory to the Collateral Agent and the Issuing Bank, together with such other documentation as the Collateral Agent or the Issuing Bank may request in support thereof, it being understood that each L/C Application shall specify, among other things, the date on which the proposed Letter of Credit is to be issued, the expiration date of such Letter of Credit (which shall not be later than the Maturity Date (unless such Letter of Credit is Cash Collateralized)) and whether such Letter of Credit is to be transferable in whole or in part. Any Letter of Credit outstanding after the Maturity Date which is Cash Collateralized for the benefit of the Issuing Bank shall be the sole responsibility of the Issuing Bank. So long as the Issuing Bank has not received written notice that the conditions precedent set forth in Section 4 with respect to the issuance of such Letter of Credit have not been satisfied, the Issuing Bank shall issue such Letter of Credit on the requested issuance date. The Issuing Bank shall promptly advise the Collateral Agent of the issuance of each Letter of Credit and of any amendment thereto, extension thereof or event or circumstance changing the amount available for drawing thereunder. In the event of any inconsistency or conflict between the terms of the Master Letter of Credit Agreement, any L/C Application and the terms of this Agreement, the terms of this Agreement shall control. (b) Participations in Letters of Credit. Concurrently with the issuance of each Letter of Credit, the Issuing Bank shall be deemed to have sold and transferred to each Lender with a Revolving Credit Commitment, and each such Lender shall be deemed irrevocably and unconditionally to have purchased and received from the Issuing Bank, without recourse or warranty, an undivided interest and participation, to the extent of such Lender's Pro Rata Percentage, in such Letter of Credit and the Borrowers' reimbursement obligations with respect thereto. If the Borrowers do not pay any reimbursement obligation when due, the Borrowers shall be deemed to have immediately requested that the Lenders make a Revolving Loan which is a Base Rate Loan in a principal amount equal to such reimbursement obligations. The Collateral Agent shall promptly notify such Lenders of such deemed request and, without the necessity of compliance with the requirements of Section 2, Section 4 or otherwise such Lender shall make available to the Collateral Agent its Pro Rata Percentage of such Loan. The proceeds of such Loan shall be paid over by the Collateral Agent to the Issuing Bank for the account of the Borrowers in satisfaction of such reimbursement obligations. For the purposes of this Agreement, the unparticipated portion of each Letter of Credit shall be deemed to be the Issuing Bank's "participation" therein. The Issuing Bank hereby agrees, upon request of any Agent or any Lender, to deliver to such Agent or such Lender a list of all outstanding Letters of Credit issued by the Issuing Bank, together with such information related thereto as such Agent or such Lender may reasonably request. (c) Reimbursement Obligations. (i) The Borrowers hereby unconditionally and irrevocably agree to reimburse the Issuing Bank for each payment or disbursement made by the Issuing Bank under any Letter of Credit honoring any demand for payment made by the beneficiary thereunder, in each case on the date that such payment or disbursement is made. Any amount not reimbursed on the date of such payment or disbursement shall bear interest from the date of such payment or disbursement to the date that the Issuing Bank is reimbursed by the Borrowers therefor, payable on demand, at a rate per annum equal to the Alternate Base Rate from time to time in effect plus the Applicable Margin from time to time in effect plus, upon the election of the Issuing Bank, any Agent or the Required Lenders, 2% (without duplication of any default interest charge imposed on such unreimbursed amounts, if any, pursuant to Section 2.07). The Issuing Bank shall notify the Borrowers and the Collateral Agent whenever any demand for payment is made under any Letter of Credit by the beneficiary thereunder; provided that the failure of the Issuing Bank to so notify the Borrowers or the Collateral Agent shall not affect the rights of the Issuing Bank or the Lenders in any manner whatsoever. (ii) The Borrower's reimbursement obligations hereunder shall be irrevocable and unconditional under all circumstances, including (a) any lack of validity or enforceability of any Letter of Credit, this Agreement or any other Loan Document, (b) the existence of any claim, set-off, defense or other right which any Loan Party may have at any time against a beneficiary named in a Letter of Credit, any transferee of any Letter of Credit (or any Person for whom any such transferee may be acting), any Agent, the Issuing Bank, any Lender or any other Person, whether in connection with any Letter of Credit, this Agreement, any other Loan Document, the transactions contemplated herein or any unrelated transactions (including any underlying transaction between any Loan Party and the beneficiary named in any Letter of Credit), (c) the validity, sufficiency or genuineness of any document which the Issuing Bank has determined complies on its face with the terms of the applicable Letter of Credit, even if such document should later prove to have been forged, fraudulent, invalid or insufficient in any respect or any statement therein shall have been untrue or inaccurate in any respect, or (d) the surrender or impairment of any security for the performance or observance of any of the terms hereof. Without limiting the foregoing, no action or omission whatsoever by any Agent or any Lender (excluding any Lender in its capacity as the Issuing Bank) under or in connection with any Letter of Credit or any related matters shall result in any liability of any Agent or any Lender to the Borrowers, or relieve the Borrowers of any of its obligations hereunder to any such Person. (d) Funding by Lenders to Issuing Bank. If the Issuing Bank makes any payment or disbursement under any Letter of Credit and (a) the Borrowers have not reimbursed the Issuing Bank in full for such payment or disbursement by 11:00 A.M., Chicago time, on the date of such payment or disbursement, (b) a Loan may not be made in accordance with Section 2 or (c) any reimbursement received by the Issuing Bank from the Borrowers is or must be returned or rescinded upon or during any bankruptcy or reorganization of the Borrowers or otherwise, each Lender with a Revolving Credit Commitment shall be obligated to pay to the Collateral Agent for the account of the Issuing Bank, in full or partial payment of the purchase price of its participation in such Letter of Credit, its Pro Rata Percentage of such payment or disbursement (but no such payment shall diminish the obligations of the Borrowers under Section 2.01(c)(3)), and, upon notice from the Issuing Bank, the Collateral Agent shall promptly notify each other Lender thereof. Each Lender irrevocably and unconditionally agrees to so pay to the Collateral Agent in immediately available funds for the Issuing Bank's account the amount of such other Lender's Pro Rata Percentage of such payment or disbursement. If and to the extent any Lender shall not have made such amount available to the Collateral Agent by 2:00 P.M., Chicago time, on the Business Day on which such Lender receives notice from the Collateral Agent of such payment or disbursement (it being understood that any such notice received after noon, Chicago time, on any Business Day shall be deemed to have been received on the next following Business Day), such Lender agrees to pay interest on such amount to the Collateral Agent for the Issuing Bank's account forthwith on demand, for each day from the date such amount was to have been delivered to the Collateral Agent to the date such amount is paid, at a rate per annum equal to (a) for the first day after demand, the Federal Funds Effective Rate from time to time in effect and (b) thereafter, the Alternate Base Rate from time to time in effect. Any Lender's failure to make available to the Collateral Agent its Pro Rata Percentage of any such payment or disbursement shall not relieve any other Lender of its obligation hereunder to make available to the Collateral Agent such other Lender's Pro Rata Percentage of such payment, but no Lender shall be responsible for the failure of any other Lender to make available to the Collateral Agent such other Lender's Pro Rata Percentage of any such payment or disbursement. (e) Commitments Several. The failure of any Lender to make a requested Loan on any date shall not relieve any other Lender of its obligation (if any) to make a Loan on such date, but no Lender shall be responsible for the failure of any other Lender to make any Loan to be made by such other Lender. (f) Certain Conditions. Except as otherwise provided in Sections 2.22, 2.23(d) and 2.24 of this Agreement, no Lender shall have an obligation to make any Loan, or to permit the continuation of or any conversion into any Eurodollar Loans, and the Issuing Bank shall not have any obligation to issue any Letter of Credit, if a Default or an Event of Default exists. (g) The Issuing Bank hereby agrees to not exercise or seek remedies with respect to the security interest granted to it by the Borrowers pursuant to Section 10.1 of the Master Letter of Credit Agreement unless either Agent accelerates the Loans pursuant to Article VII hereof. SECTION 2.24 Protective Advances. (a) Subject to the limitations set forth below, each of the Agents is authorized by the Borrowers and the Lenders, from time to time (but shall have absolutely no obligation to), to make Loans, on behalf of all Lenders, at the request of Administrative Borrower or otherwise in its Permitted Discretion, which such Agent, in its Permitted Discretion, deems necessary or desirable (i) to preserve or protect the Collateral, or any portion thereof, (ii) to enhance the likelihood of, or maximize the amount of, repayment of the Loans and other Obligations, or (iii) to pay any other amount chargeable to or required to be paid by the Borrowers pursuant to the terms of this Agreement, including payments of principal, interest, reimbursements with respect to any Letter of Credit, fees, premiums, reimbursable expenses (including costs, fees, and expenses as described in Section 9.05) and other sums payable under the Loan Documents (any of such Loans are herein referred to as "Protective Advances"); provided that, the aggregate amount of Protective Advances outstanding at any time, which were made pursuant to clauses (i), (ii) and (iii) above, shall not cause the Aggregate Revolving Credit Exposure to exceed the aggregate Commitment of all Lenders and shall not at any time exceed $5,000,000 in the aggregate. Protective Advances may be made even if the conditions precedent set forth in Section 4.01 have not been satisfied. The Protective Advances shall be secured by the Liens in favor of the Administrative Agent in and to the Collateral and shall constitute Obligations hereunder. All Protective Advances shall be ABR Borrowings. Any such revocation must be in writing and shall become effective prospectively upon the Collateral Agent's receipt thereof. At any time that there is sufficient Availability and the conditions precedent set forth in Section 4.01 have been satisfied, the Collateral Agent may request the Revolving Lenders to make a Revolving Loan to repay a Protective Advance. At any other time the Collateral Agent may require the Lenders to fund their risk participations described in Section 2.24(b). (b) Upon the making of a Protective Advance by either of the Agents in accordance with this Agreement (whether before or after the occurrence of a Default or Event of Default), each Lender shall be deemed, without further action by any party hereto, to have unconditionally and irrevocably purchased from such Agent without recourse or warranty, an undivided interest and participation in such Protective Advance in proportion to its Pro Rata Percentage of the Aggregate Revolving Credit Exposure. From and after the date, if any, on which any Lender is required to fund its participation in any Protective Advance purchased hereunder, the Collateral Agent shall promptly distribute to such Lender such Lender's Pro Rata Percentage of all payments of principal and interest and all proceeds of Collateral received by the Collateral Agent in respect of such Protective Advance. SECTION 2.25 Relationship Between the Borrowers. (a) Administrative Borrower. Britt hereby appoints PALCO, and PALCO (in such capacity, the "Administrative Borrower") shall act under this Agreement, as the agent, attorney-in-fact and legal representative of Britt for all purposes, including requesting Loans and receiving account statements and other notices and communications to the Borrowers (or any of them) from any Agent or any Lender. The Administrative Agent, the Collateral Agent and the Lenders may rely, and shall be fully protected in relying, on any Borrowing request, request for a Letter of Credit, disbursement instruction, report, information or any notice or communication made or given by the Administrative Borrower, whether in its own name, as Borrowers' agent, on behalf of Britt or on behalf of the Borrowers, and no Agent or Lender shall have any obligation to make any inquiry or request any confirmation from or on behalf of any other Borrower as to the binding effect on it of any such notice, request, instruction, report, information, other notice or communications, nor shall the joint and several character of the Borrowers' obligations hereunder be affected, provided that the provisions of this Section 2.25 shall not be construed so as to preclude either Borrower from taking actions permitted to be taken by a "Borrower" hereunder. (b) Joint and Several Obligations. The obligations of the Borrowers pursuant to the Loan Documents shall be joint and several. Each Borrower hereby irrevocably and unconditionally guaranties, as primary obligor and not merely as surety, the due and punctual payment in full of all Obligations of the other Borrower when the same shall become due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise (including amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. ss. 362(a)). (c) Obligations Absolute. The obligations of each Borrower under this Section 2.25 are irrevocable, absolute, independent and unconditional and shall not be affected by any circumstance which constitutes a legal or equitable discharge of a guarantor or surety other than payment in full of the Obligations. In furtherance of the foregoing and without limiting the generality thereof, each Borrower agrees that: (i) its obligation under this Section 2.25 with respect to the obligations of the other Borrower is a guaranty of payment when due and not of collectibility; (ii) the Administrative Agent, the Collateral Agent and any Lender may enforce this obligation upon the occurrence of an Event of Default hereunder notwithstanding the existence of any dispute between the other Borrower and the Administrative Agent, the Collateral Agent or any Lender with respect to the existence of such Event of Default; (iii) the obligations of each Borrower hereunder are independent of each of the obligations of the other Borrower under the Loan Documents and the obligations of any other Person and a separate action or actions may be brought and prosecuted against each Borrower whether or not any action is brought against the other Borrower or any other Person and whether or not the other Borrower or any other Person is joined in any such action or actions; and (iv) a payment of a portion, but not all, of the Obligations by any Borrower shall in no way limit, affect, modify or abridge the liability of such or any other Borrower for any portion of the Obligations that has not been paid. Each Borrower agrees that its obligation under this Section 2.25 with respect to the obligations of the other Borrower is a continuing guaranty and shall be binding upon each Borrower and its successors and assigns, and each Borrower irrevocably waives any right to revoke its obligations under this Section 2.25 as to future transactions giving rise to any Obligations. (d) Actions by the Agents and the Lenders. The Agents and any Lender may from time to time, without notice or demand and without affecting the validity or enforceability of this Section 2.25 or giving rise to any limitation, impairment or discharge of any Borrower's liability hereunder, but subject to the provisions of Section 2.25 (i) renew, extend, accelerate or otherwise change the time, place, manner or terms of payment of the Obligations of the other Borrower with the consent of such other Borrower, (ii) settle, compromise, release or discharge, or accept or refuse any offer of performance with respect to, or substitutions for, the Obligations of the other Borrower or any agreement relating thereto and/or subordinate the payment of the same to the payment of any other obligations, (iii) request and accept other guaranties of the Obligations of the other Borrower and take and hold security for the payment of such Obligations, (iv) release, exchange, compromise, subordinate or modify, with or without consideration, any security for payment of the Obligations of the other Borrower, any other guaranties of such Obligations, or any other obligation of any Person with respect to such Obligations, (v) enforce and apply any security now or hereafter held from the other Borrower by or for the benefit of the Agents or any Lender in respect of the Obligations of the other Borrower and direct the order or manner of sale thereof, or exercise any other right or remedy that the Agents or the Lenders, or any of them, may have against any such security, in each case as the Agents or the Lenders in their discretion may determine consistent with this Agreement and any applicable security agreement, including foreclosure on any such security pursuant to one or more judicial or nonjudicial sales, whether or not every aspect of any such sale is commercially reasonable, and (vi) exercise any other rights available to the Agents or the Lenders, or any of them, under the Loan Documents. (e) No Discharge. The obligations of each Borrower under this Section 2.25 shall be valid and enforceable and shall not be subject to any limitation, impairment or discharge for any reason (other than payment in full of the Obligations), including the occurrence of any of the following, whether or not any Borrower shall have had notice or knowledge of any of them: (i) any failure to assert or enforce or agreement not to assert or enforce, or the stay or enjoining, by order of court, by operation of law or otherwise, of the exercise or enforcement of, any claim or demand or any right, power or remedy with respect to the Obligations of the other Borrower or any agreement relating thereto, or with respect to any other guaranty of or security for the payment of such Obligations, (ii) any waiver or modification of, or any consent to departure from, any of the terms or provisions of this Agreement or any of the other Loan Documents or any agreement or instrument executed pursuant thereto, or of any other guaranty or security for the Obligations of the other Borrower, (iii) the Obligations of the other Borrower, or any agreement relating thereto, at any time being found to be illegal, invalid or unenforceable in any respect, (iv) the application of payments received from any source to the payment of indebtedness other than the Obligations of the other Borrower, even though the Collateral Agent or the Lenders, or any of them, might have elected to apply such payment to any part or all of the Obligations of the other Borrower, (v) any failure to perfect or continue perfection of a security interest in any collateral which secures any of the Obligations of the other Borrower, (vi) any defenses, set-offs or counterclaims which the other Borrower or any other Person may assert against the any Agent or any Lender in respect of the Obligations, including but not limited to failure of consideration, breach of warranty, payment, statute of frauds, statute of limitations, accord and satisfaction and usury and (vii) any other act or thing or omission, or delay to do any other act or thing, which may or might in any manner or to any extent vary the risk of any Borrower as an obligor in respect of the Obligations. (f) Waivers. Each Borrower waives, for the benefit of each Agent and each Lender: (i) any right to require the any Agent or any Lender, as a condition of payment or performance by such Borrower, to (A) proceed against the other Borrower or any other Person, (B) proceed against or exhaust any security held from the other Borrower or any other Person, (C) proceed against or have resort to any balance of any deposit account or credit on the books of the any Agent or any Lender in favor of the other Borrower or any other Person, or (D) pursue any other remedy in the power of any Agent or any Lender; (ii) any defense arising by reason of the incapacity, lack of authority or any disability or other defense of the other Borrower including any defense based on or arising out of the lack of validity or the unenforceability of the Obligations or any agreement or instrument relating thereto or by reason of the cessation of the liability of the other Borrower from any cause other than payment in full of the Obligations; (iii) any defense based upon any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in other respects more burdensome than that of the principal; (iv) any defense based upon any Agent's or any Lender's errors or omissions in the administration of the Obligations, except behavior that amounts to gross negligence or willful misconduct; (v) (A) any principles or provisions of law, statutory or otherwise, that are or might be in conflict with the terms of this Section 2.25 and any legal or equitable discharge of such Borrower's obligations hereunder, (B) the benefit of any statute of limitations affecting such Borrower's liability hereunder or the enforcement hereof, (C) any rights to set-offs, recoupments and counterclaims and (D) promptness, diligence and any requirement that the any Agent or any Lender protect, secure, perfect or insure any Lien or any property subject thereto; (vi) notices, demands, presentments, protests, notices of protest, notices of dishonor and notices of any action or inaction, including acceptance of this Section 2.25, notices of default under this Agreement or any agreement or instrument related thereto, notices of any renewal, extension or modification of the Obligations or any agreement related thereto, notices of any extension of credit to the other Borrower and notices of any of the matters referred to in Sections 2.24(d) and (e) and any right to consent to any thereof; and (vii) to the fullest extent permitted by law, any defenses or benefits that may be derived from or afforded by law which limit the liability of or exonerate guarantors or sureties, or which may conflict with the terms of this Section 2.25. As used in this paragraph, any reference to "the principal" includes each Borrower and any reference to "the creditor" includes each Agent and each of the Lenders. In accordance with Section 2856 of the California Civil Code each Borrower waives any and all rights and defenses available to it by reason of Sections 2787 to 2855, inclusive, 2899 and 3433 of the California Civil Code, including any and all rights or defenses such Borrower may have because the Obligations are secured by real property or by reason of protection afforded to the principal with respect to any of the Obligations, or to any other guarantor of any of the Obligations with respect to any of such guarantor's obligations under its guaranty, in either case pursuant to the antideficiency or other laws of the State of California limiting or discharging the principal's indebtedness or such guarantor's obligations, including Section 580a, 580b, 580d or 726 of the California Code of Civil Procedure. Consequently, among other things: (1) the creditor may collect from such Borrower without first foreclosing on any real or personal property collateral pledged by the principal; and (2) if the creditor forecloses on any real property collateral pledged by the principal: (x) the amount of the Obligations may be reduced only by the price for which the collateral is sold at the foreclosure sale, even if the collateral is worth more than the sale price and (y) the creditor may collect from such Borrower even if the creditor, by foreclosing on the real property collateral, has destroyed any right such Borrower may have to collect from the principal. This is an unconditional and irrevocable waiver of any rights and defenses such Borrower may have because the Obligations are secured by real property. Each Borrower also waives all rights and defenses arising out of an election of remedies by the creditor, even though that election of remedies, such as a nonjudicial foreclosure with respect to security for an Obligation, has destroyed such Borrower's rights of subrogation and reimbursement against the principal by the operation of Section 580d of the Code of Civil Procedure or otherwise; and even though that election of remedies by the creditor, such as nonjudicial foreclosure with respect to security for an obligation of any other guarantor of any of the Obligations, has destroyed such Borrower's rights of contribution against such other Borrower or any other guarantor. No other provision of this Section 2.25 shall be construed as limiting the generality of any of the covenants and waivers set forth in this paragraph. (g) Borrowers' Rights of Subrogation, Contribution, Etc.; Subordination of Other Obligations. Each Borrower waives any claim, right or remedy, direct or indirect, that such Borrower now has or may hereafter have against the other Borrower or any of its assets in connection with this Section 2.25 or the performance by such Borrower of its obligations hereunder, in each case whether such claim, right or remedy arises in equity, under contract, by statute (including under California Civil Code Section 2847, 2848 or 2849), under common law or otherwise and including (i) any right of subrogation, reimbursement or indemnification that such Borrower now has or may hereafter have against the other Borrower, (ii) any right to enforce, or to participate in, any claim, right or remedy that any Agent or any Lender now have or may hereafter have against the other Borrower and (iii) any benefit of, and any right to participate in, any collateral or security now or hereafter held by any Agent or any Lender. In addition, until the Obligations shall have been paid in full, the Commitments shall have terminated and all Letters of Credit shall have expired or been cancelled, each Borrower shall withhold the exercise of any right of contribution such Borrower may have against the other Borrower. Each Borrower further agrees that, to the extent the waiver or agreement to withhold the exercise of its rights of subrogation, reimbursement, indemnification and contribution as set forth herein is found by a court of competent jurisdiction to be void or voidable for any reason, any rights of subrogation, reimbursement or indemnification such Borrower may have against the other Borrower or against any collateral or security, and any rights of contribution such Borrower may have against such other Borrower, shall be junior and subordinate to any rights the any Agent or any Lender may have against such Borrower to all right, title and interest the any Agent or any Lender may have in any such collateral or security, and to any right the any Agent or any Lender may have against such other Borrower. Any indebtedness of any Borrower now or hereafter held by any Borrower is subordinated in right of payment to the Obligations, and any such indebtedness of the other Borrower to such Borrower collected or received by such Borrower after an Event of Default has occurred and is continuing, and any amount paid to a Borrower on account of any subrogation, reimbursement, indemnification or contribution rights referred to in the preceding paragraph when all Obligations have not been paid in full, shall be held in trust for the Agents and the Lenders and shall forthwith be paid over to the Collateral Agent for the benefit of the Lenders to be credited and applied against the Obligations. (h) Fraudulent Transfer Laws. Anything contained in this Section 2.25 to the contrary notwithstanding, the obligations of each Borrower under this Section 2.25 shall be limited to a maximum aggregate amount equal to the largest amount that would not render its obligations hereunder subject to avoidance as a fraudulent transfer or conveyance under Section 548 of Title 11 of the United States Code or any applicable provisions of comparable state law (collectively, the "Fraudulent Transfer Laws"), in each case after giving effect to all other liabilities of such Borrower, contingent or otherwise, that are relevant under the Fraudulent Transfer Laws and after giving effect as assets to the value (as determined under the applicable provisions of the Fraudulent Transfer Laws) of any rights to subrogation, reimbursement, indemnification or contribution of such Borrower pursuant to applicable law or pursuant to the terms of any agreement. (i) Related Guaranties. Each Borrower under this Section 2.25 and any other guaranties, if any, relating to the Agreement (the "Related Guaranties") that contain a contribution provision similar to that set forth in this Section 2.25, together desire to allocate among themselves (collectively, the "Contributing Guarantors"), in a fair and equitable manner, their obligations arising under this Section 2.25 and the Related Guaranties. Accordingly, in the event any payment or distribution is made on any date by any Borrower under this Section 2.25 or a guarantor under a Related Guaranty, each such Borrower or such guarantor shall be entitled to a contribution from each of the other Contributing Guarantors in the maximum amount permitted by law so as to maximize the aggregate amount of the Obligations paid to the Collateral Agent and the Lenders. SECTION 2.26 COLLECTIONS. (a) On or before November 27, 2006, each Borrower shall direct all of its existing Account Debtors (and thereafter shall make such direction to all future Account Debtors) to make all payments on the Accounts directly to a post office box (the "Lock Box") designated by, and under the exclusive control of, the Collateral Agent (as the sub-agent for the Administrative Agent), at LaSalle Bank. Each Borrower shall establish an account (the "Lock Box Account") in the Collateral Agent's name (for the benefit of such Borrower) with LaSalle Bank, into which all payments received in the Lock Box shall be deposited, and into which each Borrower will immediately deposit all payments received by such Borrower on Accounts in the identical form in which such payments were received, whether by cash or check. If any Borrower, any Subsidiary or any Affiliate of a Borrower, any shareholder, officer, director, employee or agent of any of the foregoing or any other person acting for or in concert with any Borrower shall receive any monies, checks, notes, drafts or other payments relating to or as Proceeds (as defined in the Guarantee and Collateral Agreement, the "Proceeds") of Accounts, such Borrower or such other person shall receive all such items in trust for, and as the sole and exclusive property of, the Collateral Agent (as the sub-agent of the Administrative Agent) and, immediately upon receipt thereof, shall remit the same (or cause the same to be remitted) in kind to the Lock Box Account. LaSalle Bank shall acknowledge and agree, in a manner satisfactory to the Collateral Agent, that the amounts on deposit in such Lock Box and Lock Box Account are the sole and exclusive property of the Collateral Agent (as the sub-agent for the Administrative Agent), that it will follow the instructions of the Collateral Agent with respect to disposition of funds in the Lock Box and Lock Box Account without further consent from any Borrower, that it has no right to setoff against the Lock Box or Lock Box Account or against any other account maintained by it into which the contents of the Lock Box or Lock Box Account are transferred, and that it shall wire, or otherwise transfer in immediately available funds to the Collateral Agent in a manner satisfactory to the Collateral Agent, funds deposited in the Lock Box Account on a daily basis as such funds are collected. Each Borrower and each Agent hereby agree that all payments made to such Lock Box Account or otherwise received by the Collateral Agent, whether in respect of the Accounts or as Proceeds of other Revolving Collateral or otherwise, will be applied on account of the Obligations in accordance with the terms of this Agreement. Borrowers agree to pay all reasonable and customary fees, costs and expenses in connection with opening and maintaining the Lock Box and Lock Box Account. All of such fees, costs and expenses if not paid by Borrowers, may be paid by the Collateral Agent and in such event all amounts paid by the Collateral Agent shall constitute Obligations hereunder, and shall be charged to Borrowers' accounts or shall be funded with Loans advanced hereunder; provided that, if the Collateral Agent is not able to charge such accounts or advance Loans to pay such fees, costs and expenses, the unpaid amount thereof shall be payable by Borrowers to the Collateral Agent on demand and, until paid, shall bear interest at the highest rate then applicable to Loans hereunder. All checks, drafts, instruments and other items of payment or Proceeds of Accounts shall be endorsed by the applicable Borrower to the Collateral Agent, and, if that endorsement of any such item shall not be made for any reason, the Collateral Agent is hereby irrevocably authorized to endorse the same on such Borrower's behalf. For the purpose of this section, each Borrower irrevocably hereby makes, constitutes and appoints the Collateral Agent (and all persons designated by the Collateral Agent for that purpose) as such Borrower's true and lawful attorney and agent-in-fact (i) to endorse such Borrower's name upon said items of payment and/or Proceeds of Accounts, Collateral and upon any Chattel Paper, Document, Instrument, (each as defined in the Guarantee and Collateral Agreement) invoice or similar document or agreement relating to any Account of such Borrower or Goods (as defined in the Guarantee and Collateral Agreement) pertaining thereto; (ii) to take control in any manner of any item of payment or such Proceeds thereof and (iii) to have access to any lock box or postal box into which any of any Borrower's mail is deposited, and open and process all mail addressed to any Borrower and deposited therein. (b) For purposes of calculating interest and fees, Collateral Agent shall, within one and one-quarter Business Days after receipt by Collateral Agent at its office in Chicago, Illinois of (i) checks and (ii) cash or other immediately available funds from collections of items of payment and Proceeds of any Revolving Collateral, apply the whole or any part of such collections or Proceeds against the Obligations in accordance with this Agreement. For purposes of determining the amount of Loans available for borrowing purposes, checks and cash or other immediately available funds from collections of items of payment shall be applied in whole or in part against the Obligations in accordance with this Agreement on the day of receipt, subject to actual collection. (c) On a monthly basis, the Collateral Agent shall deliver to Administrative Borrower an account statement showing all Loans, charges and payments, which, absent manifest error, shall be deemed final, binding and conclusive upon Borrowers unless Administrative Borrower notifies Agent in writing, specifying any error therein, within 30 days of the date such account statement is sent to Administrative Borrower and any such notice shall only constitute an objection to the items specifically identified. The Collateral Agent shall be deemed to have delivered any such account statement made available by Collateral Agent to Administrative Borrower by means of e-mail, e-mail attachments, data submitted on web-based forms or any other communication method that delivers machine readable data or information to Administrative Borrower. (d) The Administrative Agent may at any time or from time to time appoint Collateral Agent to act as its agent on behalf of the Secured Parties. For purposes of this Section 2.26 or otherwise to manage, take and hold Collateral on behalf of the Secured Parties and apply such Collateral to the Obligations of the Borrowers as set forth herein, the Administrative Agent hereby irrevocably appoints the Collateral Agent to act as its agent on behalf of the Secured Parties with such powers and authority as may be necessary for the effectual operation of the provisions of this Agreement, including this Section 2.26. The Collateral Agent hereby accepts such appointment." SECTION 3.4 Article III of the Credit Agreement is hereby amended to amend and restate the first sentence thereof in its entirety to read as follows: "Each of the Borrowers, jointly and severally represents and warrants to the Arranger, each of the Agents and each of the Lenders that:" SECTION 3.5 Section 3.15 of the Credit Agreement is hereby amended and restated in its entirety to read as follows: "SECTION 3.15 No Material Misstatements. Each of the Loan Parties has disclosed to the Arranger, the Administrative Agent, the Collateral Agent and the Lenders all agreements, instruments and corporate or other restrictions to which any Loan Party is subject, and all other matters known to any of them, that, individually or in the aggregate, would reasonably be expected to result in a Material Adverse Effect. No other information, report, financial statement, exhibit or schedule furnished by or on behalf of any Loan Party to the Arranger, the Administrative Agent, the Collateral Agent or any Lender for use in connection with the transactions contemplated by the Loan Documents or in connection with the negotiation of any Loan Document or included therein or delivered pursuant thereto contained, contains or will contain any material misstatement of fact or omitted, omits or will omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were, are or will be made, not misleading; provided that to the extent any such information, report, financial statement, exhibit or schedule was based upon or constitutes a forecast or projection, the Borrowers represent only that they acted in good faith and utilized reasonable assumptions and due care in the preparation of such information, report, financial statement, exhibit or schedule." SECTION 3.5 The first sentence of Article IV and Section 4.01 of the Credit Agreement are hereby amended and restated in their entirety to read as follows: "ARTICLE IV CONDITIONS OF LENDING The obligations of the Lenders to make Loans, and the agreement of the Issuing Bank to issue Letters of Credit in accordance with Section 2.23, are subject to the satisfaction of the following conditions: SECTION 4.01 All Credit Events. On the date of each Borrowing, including each Borrowing of a Swingline Loan, and on the date of each issuance, amendment, extension or renewal of a Letter of Credit (each such event being called a "Credit Event"): (a) The Collateral Agent shall have received a notice of such Borrowing as required by Section 2.03 (or such notice shall have been deemed given in accordance with Section 2.03) or, in the case of the issuance, amendment, extension or renewal of a Letter of Credit, the Collateral Agent shall have received a notice requesting the issuance, amendment, extension or renewal of such Letter of Credit as required by Section 2.23 or, in the case of the Borrowing of a Swingline Loan, the Swingline Lender and the Collateral Agent shall have received a notice requesting such Swingline Loan as required by Section 2.22(b). (b) The representations and warranties set forth in each Loan Document shall be true and correct in all material respects on and as of the date of such Credit Event with the same effect as though made on and as of such date, except to the extent such representations and warranties expressly relate to an earlier date, in which case such representations and warranties shall be true and correct in all material respects on and as of such earlier date. (c) The Borrowers and each other Loan Party shall be in compliance with all the terms and provisions set forth in each Loan Document on its part to be observed or performed, and, at the time of and immediately after such Credit Event, no Event of Default or Default shall have occurred and be continuing. Each Credit Event shall be deemed to constitute a joint and several representation and warranty by each of the Borrowers on the date of such Credit Event as to the matters specified in paragraphs (b) and (c) of this Section 4.01." SECTION 3.6 Section 5.04 of the Credit Agreement is hereby amended and restated in its entirety to read as follows: "SECTION 5.04 Financial Statements, Reports, etc. Furnish to each Agent and each Lender: (a) within 90 days after the end of each fiscal year, the balance sheet and related statements of income, stockholders' equity and cash flows showing the financial condition of the Borrowers on a combined basis as of the close of such fiscal year and the results of its operations and the operations of the Borrowers on a combined basis during such year, together with comparative figures for the immediately preceding fiscal year, all audited by an independent public accountant of recognized national standing and accompanied by an opinion of such accountants (which shall not be qualified in any material respect except for a going concern qualification and as indicated below) to the effect that such financial statements fairly present the financial condition and results of operations of the Borrowers in accordance with GAAP (except for the exclusion of Scotia Pacific, Salmon Creek and Scotia Inn except as losses in excess of investments in subsidiaries as a component of stockholder's equity unless otherwise indicated or the context indicates otherwise) consistently applied; (b) within 45 days after the end of each of the first three fiscal quarters of each fiscal year, the balance sheet and related statements of income, stockholders' equity and cash flows showing the financial condition of the Borrowers on a combined basis as of the close of such fiscal quarter and the results of its operations and the operations of the Borrowers during such fiscal quarter and the then elapsed portion of the fiscal year, and commencing April, 2006, comparative figures for the same periods in the immediately preceding fiscal year, all certified by one of PALCO's Financial Officers as fairly presenting the financial condition and results of operations of the Borrowers on a combined basis in accordance with GAAP (except for the exclusion of Scotia Pacific, Salmon Creek and Scotia Inn except as losses in excess of investments in subsidiaries as a component of stockholder's equity and consolidating the financial statements thereof, and inventory presented on a FIFO basis) consistently applied, subject to normal year-end audit adjustments and the absence of footnotes; (c) within 30 days after the end of each fiscal month of each fiscal quarter, (i) the combined balance sheet and related statements of income and cash flows showing the financial condition of the Borrowers during such fiscal month and the then elapsed portion of the fiscal year, all certified by one of its Financial Officers as fairly presenting the financial condition and results of operations of the Borrowers in accordance with GAAP (except for the exclusion of Scotia Pacific, Salmon Creek and Scotia Inn except as losses in excess of investments in subsidiaries as a component of stockholder's equity and consolidating the financial statements thereof, and inventory presented on a FIFO basis) consistently applied, subject to normal year-end audit adjustments and the absence of footnotes and (ii) the separate, internally prepared entity-only balance sheet and related statements of income and cash flows showing the financial condition of each Borrower, and the eliminations reflected in the corresponding financial statements delivered pursuant to the preceding clause (i), for such month and the then-elapsed portion of the fiscal year (and, commencing with such financial statements for the month of April, 2006, for the corresponding month and elapsed portion of the preceding fiscal year) all certified by one of its Financial Officers as fairly presenting the financial condition and results of operations of the Borrowers in accordance with GAAP (except for the exclusion of PALCO's wholly owned subsidiaries Scotia Pacific, Salmon Creek and Scotia Inn except as losses in excess of investments in subsidiaries as a component of stockholder's equity and consolidating the financial statements thereof, and inventory presented on a FIFO basis) consistently applied, subject to normal year-end audit adjustments and the absence of footnotes; (d) concurrently with any delivery of financial statements under paragraph (a), (b) or (c) above, (i) a certificate of the accounting firm (in the case of paragraph (a)) or Financial Officer (in the case of paragraph (b)) opining on or certifying such statements and certifying that no Event of Default or Default has occurred or, if such an Event of Default or Default has occurred, specifying the nature and extent thereof and any corrective action taken or proposed to be taken with respect thereto (which certificate, when furnished by an accounting firm, may be limited to providing negative assurances regarding financial covenants related to accounting matters and disclaim responsibility for legal interpretations), (ii) a certificate executed by any officer of PALCO setting forth computations in reasonable detail satisfactory to the Agents demonstrating compliance with the covenants contained in Sections 6.10, 6.11, 6.12 and 6.13, (iii) (x) a management report, in reasonable detail, signed by the chief financial officer of PALCO, describing the operations and financial condition of the Loan Parties and their Subsidiaries for the month and the portion of the fiscal year then ended (or for the fiscal year then ended in the case of annual financial statements) and (y) a report setting forth in comparative form the corresponding figures for the corresponding periods of the previous fiscal year and the corresponding figures from the most recent budget for the applicable periods delivered to the Agents (and discussing the reasons for any significant variations from such budget), (iv) a report, in form reasonably acceptable to the Agents, setting forth the Asset Sales which have occurred during such period and since the Closing Date and a description of the status of the sale process with respect to all other Assets Sales and (v) (v) a report, in form reasonably acceptable to the Agents, in reasonable detail, signed by the chief financial officer of PALCO, describing (A) the occurrence of any matter that could reasonably be expected to result in Environmental Liability to Holdings, the Borrower or its Subsidiaries in excess of $5,000,000, (B) the status of Borrower's and its Subsidiaries' compliance with the matters discussed in the "Water Quality" subsection of Schedule 3.17, including without limitation (1) TMDL's, (2) waste discharge reporting, (3) operational requirements and (4) WWDR's (including the results of the required monitoring program and any modifications or amendments thereto), and (C) the occurrence of any Environmental Liability pursuant to Senate Bill 810 or related to a violation of the Borrower's Habitat Conservation Plan or other plans and/or Permits related to listed species and (v) a report, in form reasonably acceptable to the Agents, with respect to the Annexation process listing all applicable material objections, milestones, changes in scheduling, new governmental requirements and all other issues material to the Annexation process, and generally setting forth the status and progress of the Annexation since the delivery of the prior financial statements; (e) at least 30 days prior to the end of each fiscal year of PALCO, a detailed consolidated budget for the following fiscal year (including a projected consolidated and consolidating balance sheet and related statements of projected operations and cash flows as of the end of and for such following fiscal year and setting forth the assumptions used for purposes of preparing such budget) and, promptly when available, any significant revisions of such budget; (f) promptly after the same become publicly available, copies of all periodic and other reports, proxy statements and other materials filed by PALCO or any Subsidiary with the Securities and Exchange Commission, or any Governmental Authority succeeding to any or all of the functions of said Commission, or with any national securities exchange; (g) promptly after the receipt thereof by either PALCO or any of the Subsidiaries, a copy of any final "management letter" received by any such person from its certified public accountants and the management's response thereto (it being understood that the term "management letter" does not include communications from such public accountants to an audit committee that by their terms expressly state that they may not be provided to third parties); (h) promptly, upon the Collateral Agent's request, and in any event no less frequently than noon New York time on the third (3rd) Business Day after the end of each week, each of the following reports, each of which shall be prepared by Borrowers as of the last day of the immediately preceding week: (A) a Borrowing Base Certificate with respect to each Borrower, accompanied by such supporting detail and documentation as shall be requested by the Collateral Agent in its reasonable discretion; (B) with respect to each Borrower, a summary of Inventory by location and type with a supporting perpetual Inventory report, in each case accompanied by such supporting detail and documentation as shall be requested by the Collateral Agent in its reasonable discretion; and (C) with respect to each Borrower, a trial balance showing Accounts outstanding aged from invoice date as follows: 1 to 30 days, 31 to 60 days, 61 to 90 days, 91 days to 120 days and 120 days or more, accompanied by such supporting detail and documentation as shall be requested by the Collateral Agent in its reasonable discretion; (i) on a weekly basis or at such more frequent intervals as the Collateral Agent may request from time to time (together with a copy of all or any part of such delivery requested by any Lender in writing after the Closing Date), collateral reports with respect to each Borrower, including all additions and reductions (cash and non-cash) with respect to Accounts of each Borrower, in each case accompanied by such supporting detail and documentation as shall be requested by Collateral Agent in its reasonable discretion each of which shall be prepared by the applicable Borrower as of the last day of the immediately preceding week or the date 2 days prior to the date of any request; (j) at the time of delivery of each of the monthly financial statements delivered pursuant to Section 5.04(c): (A) a reconciliation of the most recent monthly Borrowing Base, general ledger and month-end Inventory reports of each Borrower to each Borrower's general ledger and monthly financial statements delivered pursuant to Section 5.04(c), in each case accompanied by such supporting detail and documentation as shall be requested by the Collateral Agent in its reasonable discretion; (B) a reconciliation of the perpetual inventory by location to each Borrower's most recent monthly Borrowing Base Certificate, general ledger and monthly financial statements delivered pursuant to Section 5.04(c), in each case accompanied by such supporting detail and documentation as shall be requested by the Collateral Agent in its reasonable discretion; (C) an aging of accounts payable and a reconciliation of that accounts payable aging to each Borrower's general ledger and monthly financial statements delivered pursuant to Section 5.04(c), in each case accompanied by such supporting detail and documentation as shall be requested by the Collateral Agent in its reasonable discretion; and (D) a reconciliation of the outstanding Loans to each Borrower's general ledger and monthly financial statements delivered pursuant to Section 5.04(c), in each case accompanied by such supporting detail and documentation as shall be requested by the Collateral Agent in its reasonable discretion; (k) from time to time, if Collateral Agent determines in its sole discretion that obtaining appraisals is necessary or appropriate for any reason, the Collateral Agent will, at Borrower's expense, obtain appraisal reports in form and substance and from appraisers satisfactory to the Collateral Agent stating the then current market values of all or any portion of the Real Property and personal property, including Appraisals of Borrowers' Inventory, owned by any of the Loan Parties; (l) Borrowers, at their own expense, shall deliver to the Collateral Agent the results of each physical verification, if any, that any Loan Party may in their discretion have made, or caused any other person to have made on their behalf, of all or any portion of their Inventory (and, if a Default or an Event of Default has occurred and is continuing, Borrowers shall, upon the request of the Collateral Agent, conduct, and deliver the results of, such physical verifications as the Collateral Agent may require); and (m) promptly, from time to time, such other information regarding the operations, business affairs and financial condition of any Loan Party or Scotia Pacific, or compliance with the terms of any Loan Document, as the Administrative Agent, the Collateral Agent or any Lender may reasonably request." SECTION 3.7 Section 5.05 of the Credit Agreement is hereby amended and restated in its entirety to read as follows: "Section 5.05 Litigation and Other Notices. Furnish to the, Agents and each Lender prompt written notice of the following: (a) any Event of Default or Default, specifying the nature and extent thereof and the corrective action (if any) taken or proposed to be taken with respect thereto; (b) the filing or commencement of, or any threat or notice of intention of any person to file or commence, any action, suit or proceeding, whether at law or in equity or by or before any arbitrator or Governmental Authority, against any Loan Party or Scotia Pacific that would reasonably be expected to result in a Material Adverse Effect; (c) the occurrence of any ERISA Event described in clause (b) of the definition thereof or any other ERISA Event that, alone or together with any other ERISA Events that have occurred, would reasonably be expected to result in liability of any Loan Party or Scotia Pacific in an aggregate amount exceeding $1,000,000; and (d) any development that has resulted in, or would reasonably be expected to result in, a Material Adverse Effect." SECTION 3.8 Section 5.06 of the Credit Agreement is hereby amended and restated in its entirety to read as follows: "SECTION 5.06 Information Regarding Collateral. (a) Furnish to each Agent prompt written notice of any change (i) in any Loan Party's corporate name or in any trade name used to identify it in the conduct of its business or in the ownership of its properties, (ii) in the location of any Loan Party's chief executive office, its principal place of business, any office in which it maintains books or records relating to Collateral owned by it or any office or facility at which Collateral owned by it is located (including the establishment of any such new office or facility), (iii) in any Loan Party's identity or corporate structure or (iv) in any Loan Party's Federal Taxpayer Identification Number. Each of the Borrowers agrees not to effect or permit any change of its corporate or identity or state of organization unless all filings have been made under the UCC or otherwise and all other actions have been taken that are required in order for the Administrative Agent to continue at all times following such change to have a valid, legal and perfected security interest in all the Collateral. The Administrative Borrower also agrees promptly to notify the Agents if any material portion of the Collateral is damaged or destroyed. (b) Deliver to each Agent, each year, at the time of delivery of the annual financial statements with respect to the preceding fiscal year pursuant to Section 5.04(a), a certificate of a Financial Officer setting forth the information required pursuant to Section I of the Perfection Certificate or confirming that there has been no change in such information since the date of the Perfection Certificate delivered on the Closing Date or the date of the most recent certificate delivered pursuant to this Section." SECTION 3.9 Section 5.07 of the Credit Agreement is hereby amended and restated in its entirety to read as follows: "SECTION 5.07 Maintaining Records; Access to Properties and Inspections; Environmental Assessments. (a) Keep proper books of record and account in which full, true and correct entries in conformity with GAAP and all requirements of law are made of all dealings and transactions in relation to its business and activities. Each of the Borrowers will, and will cause each of the Subsidiaries to, permit any representatives designated by any Agent or any Lender to visit and inspect the financial records and the properties of the Loan Party, and conduct field examinations relating to the Collateral, at reasonable times and as often as reasonably requested and to make extracts from and copies of such financial records, and permit any representatives designated by any Agent or any Lender to discuss the affairs, finances and condition of the Loan Parties with the officers thereof and independent accountants therefor. (b) In the event that any Agent or any Lender shall have reason to believe that Hazardous Materials have been Released or are threatened to be Released on or from any Mortgaged Property or other facility of any Loan Party or that any such property or facility is not being operated in compliance with applicable Environmental Law, either Agent may, at its election and after reasonable notice to the Administrative Borrower, retain an independent engineer or other qualified environmental consultant to evaluate whether Hazardous Materials are present in the soil, groundwater, or surface water at such Mortgaged Property or facility or whether the facilities or properties are being operated and maintained in compliance with applicable Environmental Laws; provided however that, no Agent shall retain a consultant to evaluate a particular Release to the extent the other Agent shall have already retained such a consultant. Such environmental assessments may include detailed visual inspections of the Mortgaged Property or facility, including any and all storage areas, storage tanks, drains, dry wells and leaching areas, and the taking of soil samples, surface water samples and groundwater samples as well as such other reasonable investigations or analyses as are necessary. The scope of any such environmental assessments under this paragraph shall be determined in the sole discretion of either Agent. Each of the Borrowers shall, and shall cause each of the Subsidiaries to, cooperate in the performance of any such environmental assessment and permit any such engineer or consultant designated by either Agent to have full access to each property or facility at reasonable times and after reasonable notice to the Administrative Borrower of the plans to conduct such an environmental assessment. All environmental assessments conducted pursuant to this paragraph shall be at the Borrowers' sole cost and expense." SECTION 3.10 Section 5.09 of the Credit Agreement is hereby amended and restated in its entirety to read as follows: "SECTION 5.09 Additional Collateral, etc. (a) With respect to any Collateral acquired after the Closing Date (other than the Settlement Property) or, in the case of inventory or equipment, any Collateral (having a value in excess of $25,000) moved after the Closing Date by any other Loan Party (other than any Collateral described in paragraphs (b) or (c) of this Section 5.09) as to which the Administrative Agent, for the benefit of the Secured Parties, does not have a perfected security interest, promptly (and, in any event, within 10 days following the date of such acquisition) (i) execute and deliver to the Administrative Agent such amendments to the Guarantee and Collateral Agreement or such other Security Documents as the Administrative Agent or the Collateral Agent deems necessary or advisable to grant to the Administrative Agent, for the benefit of the Secured Parties, a security interest in such Collateral and (ii) take all actions necessary or advisable to grant to, or continue on behalf of, the Administrative Agent, for the benefit of the Secured Parties, a perfected security interest in such Collateral, including the filing of UCC financing statements in such jurisdictions as may be required by the Guarantee and Collateral Agreement or by law or as may be requested by the Administrative Agent or the Collateral Agent. (b) With respect to any fee interest in any Collateral consisting of Real Property (other than the Settlement Property) or any material lease of Collateral consisting of Real Property acquired or leased after the Closing Date by the Borrowers or any other Loan Party, promptly (and, in any event, within 10 days following the date of such acquisition) (i) execute and deliver a first priority Mortgage in favor of the Administrative Agent (subject only to Liens permitted by Section 6.02), for the benefit of the Secured Parties, covering such real property and complying with the provisions herein and in the Security Documents, (ii) provide the Secured Parties with title and extended coverage insurance in an amount at least equal to the purchase price of such Real Property (or such other amount as the Agents shall reasonably specify), surveys, and if applicable, flood insurance, lease estoppel certificates, memoranda or amendments, all in accordance with the standards for deliveries contemplated on the Closing Date, (iii) if requested by any Agent, deliver to the Agents legal opinions relating to the matters described above, which opinions shall be in form and substance, and from counsel, reasonably satisfactory to the Agents and (iv) deliver to the Agents a notice identifying, and upon any Agent's request, provide a copy of, the consultant's reports, environmental site assessments or other documents relied upon by any Loan Party to determine that any such real property included in such Collateral does not contain Hazardous Materials of a form or type or in a quantity or location that could reasonably be expected to result in a material Environmental Liability. (c) With respect to any Subsidiary created or acquired after the Closing Date by any Loan Party, promptly (and, in any event, within 10 days following such creation or the date of such acquisition) (i) execute and deliver to the Administrative Agent such amendments to the Guarantee and Collateral Agreement as the Administrative Agent or the Collateral Agent deems necessary or advisable to grant to the Administrative Agent, for the benefit of the Secured Parties, a valid, perfected first priority security interest in the Equity Interests in such new Subsidiary that are owned by any Loan Party (subject only to Liens permitted by Section 6.02), (ii) deliver to the Administrative Agent the certificates, if any, representing such Equity Interests, together with undated stock powers, in blank, executed and delivered by a duly authorized officer of the Borrowers or such Subsidiary, as the case may be, (iii) cause such new Subsidiary (A) to become a party to the Guarantee and Collateral Agreement (and provide Guarantees of the Obligations) and the Intellectual Property Security Agreements and (B) to take such actions necessary or advisable to grant to the Administrative Agent, for the benefit of the Secured Parties, a perfected first priority security interest in the Collateral described in the Guarantee and Collateral Agreement and the Intellectual Property Security Agreement with respect to such new Subsidiary, including the recording of instruments in the United States Patent and Trademark Office and the United States Copyright Office and the filing of UCC financing statements in such jurisdictions as may be required by the Guarantee and Collateral Agreement, the Intellectual Property Security Agreement or by law or as may be requested by the Administrative Agent or the Collateral Agent and (iv) if requested by the Administrative Agent or the Collateral Agent, deliver to the Administrative Agent legal opinions relating to the matters described above, which opinions shall be in form and substance, and from counsel, reasonably satisfactory to the Administrative Agent or the Collateral Agent, as applicable." SECTION 3.11 Section 5.10 of the Credit Agreement is hereby amended and restated in its entirety to read as follows: "SECTION 5.10 Further Assurances. From time to time duly authorize, execute and deliver, or cause to be duly authorized, executed and delivered, such additional instruments, certificates, financing statements, agreements or documents, and take all such actions (including filing UCC and other financing statements), as the Administrative Agent or the Collateral Agent may reasonably request, for the purposes of implementing or effectuating the provisions of this Agreement and the other Loan Documents, or of more fully perfecting or renewing the rights of the Administrative Agent and the Secured Parties with respect to the Collateral (or with respect to any additions thereto or replacements or proceeds or products thereof or with respect to any other property or assets hereafter acquired by or any of the Loan Parties which may be deemed to be part of the Collateral) pursuant hereto or thereto. Upon the exercise by the Administrative Agent, the Collateral Agent, or any Lender of any power, right, privilege or remedy pursuant to this Agreement or the other Loan Documents which requires any consent, approval, recording, qualification or authorization of any Governmental Authority, each of the Borrowers will execute and deliver, or will cause the execution and delivery of, all applications, certifications, instruments and other documents and papers that the Administrative Agent, the Collateral Agent or such Lender may be required to obtain from any Loan Party for such governmental consent, approval, recording, qualification or authorization." SECTION 3.12 Section 5.13 of the Credit Agreement is hereby amended and restated in its entirety to read as follows: "SECTION 5.13 Landlords' Agreements, Mortgagee Agreements, Bailee Letters and Real Estate Purchases. Upon the request of the Administrative Agent or the Collateral Agent, each Loan Party shall use reasonable efforts to obtain a landlord's agreement, mortgagee agreement or bailee letter, as applicable, from the lessor of each leased property (other than the lessor of the leased property which the mill owned by Britt on the Closing Date is on), mortgagee of owned property or bailee with respect to any warehouse, processor or converter facility or other location where Collateral is stored or located, which agreement or letter shall contain a waiver or subordination of all Liens or claims that the landlord, mortgagee or bailee may assert against the Collateral at that location, and shall otherwise be reasonably satisfactory in form and substance to the Administrative Agent. With respect to such locations or warehouse space leased, owned or where Collateral is stored or located as of the Closing Date and thereafter, if the Administrative Agent has not received a landlord or mortgagee agreement or bailee letter as of the Closing Date (or, if later, as of the date such location is acquired, leased or Collateral stored or located), the Eligible Inventory at that location shall, in either Agent's discretion, be subject to such Reserves as may be established by such Agent in its reasonable credit judgment. After the Closing Date, no real property or warehouse space shall be leased by any Loan Party and no Inventory shall be shipped to a processor or converter under arrangements established after the Closing Date (excluding renewals of existing leases and arrangements) without the prior written consent of the Agents (which consent, in either Agent's discretion, may be conditioned upon the establishment of Reserves acceptable to either Agent) or, unless and until a satisfactory landlord agreement or bailee letter, as appropriate, shall first have been obtained with respect to such location. Each Loan Party shall and shall cause its Subsidiaries to timely and fully pay and perform their obligations under all leases and other agreements with respect to each leased location or public warehouse where any Collateral is or may be located (other than Collateral in an aggregate amount for all such locations not to exceed $100,000 in the aggregate)." SECTION 3.13 Article VII of the Credit Agreement is hereby amended and restated in its entirety to read as follows: "ARTICLE VII EVENTS OF DEFAULT In case of the happening of any of the following events ("Events of Default"): (a) any representation or warranty made or deemed made in or in connection with any Loan Document or the Borrowings or issuances of Letters of Credit hereunder, or any representation, warranty, statement or information contained in any report, certificate, financial statement or other instrument furnished in connection with or pursuant to any Loan Document, shall prove to have been false or misleading in any material respect when so made, deemed made or furnished; (b) default shall be made in the payment of any principal of any Loan or the reimbursement with respect to any Letter of Credit when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof or by acceleration thereof in accordance with the Loan Documents; (c) default shall be made in the payment of any interest on any Loan or reimbursement with respect to any Letter of Credit or any Fee or any other amount (other than an amount referred to in (b) above) due under any Loan Document, when and as the same shall become due and payable, and such default shall continue unremedied for a period of three Business Days; (d) default shall be made in the due observance or performance by any Loan Party of any covenant, condition or agreement contained in Section 5.01(a), 5.02 (other than a default which arises as a result of the downgrade in the rating of an insurance carrier), 5.05 or 5.08 or in Article VI; (e) default shall be made in the due observance or performance by any Loan Party of any covenant, condition or agreement contained in Section 5.04(c), 5.04(h), 5.04(i) or 5.04(j) and such default shall continue unremedied for a period of 5 days; (f) default shall be made in the due observance or performance by any Loan Party or Holdings of any covenant, condition or agreement contained in any Loan Document (other than those specified in clauses (b), (c) or (d) above) and such default shall continue unremedied for a period of 30 days; (g) any Loan Party shall (i) fail to pay any principal or interest, regardless of amount, due in respect of any Material Indebtedness, when and as the same shall become due and payable, or (ii) any other event or condition occurs that results in any Material Indebtedness becoming due prior to its scheduled maturity or that enables or permits (with or without the giving of notice, the lapse of time or both) the holder or holders of any Material Indebtedness or any trustee or agent on its or their behalf to cause any Material Indebtedness to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity; provided that this clause (ii) shall not apply to secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the property or assets securing such Indebtedness; (h) an involuntary proceeding shall be commenced or an involuntary petition shall be filed in a court of competent jurisdiction seeking (i) relief in respect of any Loan Party (other than Salmon Creek), or of a substantial part of the property or assets of any Loan Party (other than Salmon Creek), under Title 11 of the United States Code, as now constituted or hereafter amended, or any other Federal, state or foreign bankruptcy, insolvency, receivership or similar law, (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for any Loan Party (other than Salmon Creek)or for a substantial part of the property or assets of any Loan Party (other than Salmon Creek)or (iii) the winding-up or liquidation of any Loan Party (other than Salmon Creek); and such proceeding or petition shall continue undismissed for 60 days or an order or decree approving or ordering any of the foregoing shall be entered; (i) any Loan Party (other than Salmon Creek) shall (i) voluntarily commence any proceeding or file any petition seeking relief under Title 11 of the United States Code, as now constituted or hereafter amended, or any other Federal, state or foreign bankruptcy, insolvency, receivership or similar law, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or the filing of any petition described in (g) above, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for any Loan Party (other than Salmon Creek)or for a substantial part of the property or assets of any Loan Party (other than Salmon Creek), (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors or (vi) become unable, admit in writing its inability or fail generally to pay its debts as they become due; (j) one or more judgments for the payment of money in an aggregate amount in excess of $5,000,000 or other judgments that, individually or in the aggregate, would reasonably be expected to result in a Material Adverse Effect shall be rendered against any Loan Party or any combination thereof and the same shall remain undischarged for a period of 30 consecutive days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to levy upon assets or properties of any Loan Party to enforce any such judgment; (k) an ERISA Event described in clause (b) of the definition thereof shall have occurred or any other ERISA Event shall have occurred that, when taken together with all other such ERISA Events, would reasonably be expected to result in liability of any Loan Party and their ERISA Affiliates in an aggregate amount exceeding $5,000,000; (l) any Guarantee under the Guarantee and Collateral Agreement for any reason shall cease to be in full force and effect (other than in accordance with its terms), or any Guarantor shall deny that it has any further liability under its Guarantee (other than as a result of the discharge of such Guarantor in accordance with the terms of the Loan Documents); (m) any Lien purported to be created under any Security Document shall cease to be, or shall be asserted by any Loan Party or Holdings not to be, a valid, perfected and, with respect to the Secured Parties, first priority (except as otherwise expressly provided in this Agreement or such Security Document) Lien on any material Collateral covered thereby, except to the extent that any such loss of perfection or priority results from the failure of the Administrative Agent to maintain possession of certificates representing Equity Interests pledged under the Guarantee and Collateral Agreement; or (n) there shall have occurred a Change in Control; then, and in every such event (other than an event with respect to any Loan Party described in paragraph (h) or (i) above), and at any time thereafter during the continuance of such event either or both of the following actions may be taken: (i) the Administrative Agent may, and at the request of the Required Lenders with respect to the Facility shall, and the Collateral Agent may, solely with respect to an event described in paragraph (b), (c) or (g) above or in the event of any default in the due observance or performance by any Loan Party of any covenant, condition or agreement contained in Sections 6.10, 6.11, 6.12 or 6.13 hereof, in each case, by notice to the Administrative Borrower, terminate forthwith the Revolving Credit Commitments and the Swingline Commitment and (ii) the Administrative Agent may, and at the request of the Required Lenders shall, , and the Collateral Agent may, solely with respect to an event described in paragraph (b), (c) or (g) above or in the event of any default in the due observance or performance by any Loan Party of any covenant, condition or agreement contained in Sections 6.10, 6.11, 6.12 or 6.13 hereof, in each case, by notice to the Administrative Borrower, declare the Loans then outstanding to be forthwith due and payable in whole or in part, whereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and any unpaid accrued Fees and all other liabilities of the Borrowers accrued hereunder and under any other Loan Document, shall become forthwith due and payable, and, upon such declaration, the Borrowers shall become immediately obligated to Cash Collateralize all Letters of Credit, all without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by the Borrowers, anything contained herein or in any other Loan Document to the contrary notwithstanding, and the Collateral Agent and the Administrative Agent, as applicable, shall have the right to take all or any actions and exercise any remedies available to a secured party under the Security Documents or applicable law or in equity; and in any event with respect to any Loan Party described in paragraph (h) or (i) above, the Revolving Credit Commitments and the Swingline Commitment shall automatically terminate and the principal of the Loans then outstanding, together with accrued interest thereon and any unpaid accrued Fees and all other liabilities of the Borrowers accrued hereunder and under any other Loan Document, shall automatically become due and payable, and the Borrowers shall become immediately obligated to Cash Collateralize all Letters of Credit, all without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by the Borrowers, anything contained herein or in any other Loan Document to the contrary notwithstanding, and the Administrative Agent and the Collateral Agent, as applicable, shall have the right to take all or any actions and exercise any remedies available to a secured party under the Security Documents or applicable law or in equity. Any cash collateral delivered hereunder shall be held by the Collateral Agent (without liability for interest thereon) and applied to the liabilities of the Borrowers arising in connection with any drawings under a Letter of Credit. Other than any interest earned on the investment of such deposits in Permitted Investments, which investments shall be made at the option and sole discretion of the Collateral Agent, such deposits shall not bear interest. After the expiration or termination of all Letters of Credit, such cash collateral shall be applied by the Collateral Agent to any remaining liabilities of the Borrowers accrued hereunder and any excess shall be delivered to the Borrowers or as a court of competent jurisdiction may elect." SECTION 3.14 Article VIII of the Credit Agreement is hereby amended and restated in its entirety to read as follows: "ARTICLE VIII THE AGENTS AND THE ARRANGER Each of the Lenders hereby irrevocably appoints each of the Agents its agent and authorizes each Agent to take such actions on its behalf and to exercise such powers as are delegated to such Agent by the terms of the Loan Documents, together with such actions and powers as are reasonably incidental thereto. Without limiting the generality of the foregoing, the Administrative Agent is hereby expressly authorized by the Lenders to execute any and all documents (including releases and the Security Documents) with respect to the Collateral and the rights of the Secured Parties with respect thereto, as contemplated by and in accordance with the provisions of this Agreement and the Security Documents. Each Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent or the Collateral Agent, as applicable, and such bank and its Affiliates may accept deposits from, lend money to and generally engage in any kind of business with Holdings, the Borrowers or any Subsidiary or any of their respective Affiliates as if it were not the Administrative Agent hereunder. Neither the Administrative Agent nor the Collateral Agent shall have any duties or obligations except those expressly set forth in the Loan Documents. Without limiting the generality of the foregoing, (a) the Agents shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing, (b) the Agents shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby that such Agent is required to exercise in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 9.08), and (c) except as expressly set forth in the Loan Documents, the Agents shall not have any duty to disclose, nor shall it be liable for the failure to disclose, any information relating to Holdings, the Borrowers or any of the Subsidiaries that is communicated to or obtained by the bank serving as the Administrative Agent or the Collateral Agent, as applicable, or any of its respective Affiliates in any capacity. The Agents shall not be liable for any action taken or not taken by it with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 9.08) or in the absence of its own gross negligence or willful misconduct. The Agents shall not be deemed to have knowledge of any Default unless and until written notice thereof is given to such Agent by Holdings, the Borrowers, the other Agent or a Lender, and the Agents shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with any Loan Document, (ii) the contents of any certificate, report or other document delivered thereunder or in connection therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth in any Loan Document, (iv) the validity, enforceability, effectiveness or genuineness of any Loan Document or any other agreement, instrument or document, or (v) the satisfaction of any condition set forth in Article IV or elsewhere in any Loan Document, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent or the Collateral Agent, as applicable. Each of the Agents shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing believed by it to be genuine and to have been signed or sent by the proper person. Each of the Agents may also rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper person, and shall not incur any liability for relying thereon. Each of the Agents may consult with legal counsel (who may be counsel for Holdings or the Borrowers), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts. Each of the Agents may perform any and all its duties and exercise its rights and powers by or through any one or more sub-agents appointed by it. Each of the Agents and any sub-agent of such Agent may perform any and all its duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of the preceding paragraphs shall apply to any such sub-agent and to the Related Parties of each Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as the Administrative Agent and the Collateral Agent, as applicable. Subject to the appointment and acceptance of a successor Administrative Agent as provided below, the Administrative Agent may resign at any time by notifying the Lenders and the Borrowers. Upon any such resignation of the Administrative Agent, the Required Lenders shall have the right, in consultation with the Borrowers, to appoint a successor. If no successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative Agent may, on behalf of the Lenders, appoint a successor Administrative Agent which shall be a bank with an office in New York, New York, or an Affiliate of any such bank. Upon the acceptance of its appointment as Administrative Agent hereunder by a successor, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations hereunder. The fees payable by the Borrowers to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrowers and such successor. After an Administrative Agent's resignation hereunder, the provisions of this Article and Section 9.05 shall continue in effect for the benefit of such retiring Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while acting as the Administrative Agent. The Collateral Agent may resign at any time by notifying the Administrative Agent and the Borrowers. Upon any such resignation of the Collateral Agent, the Administrative Agent shall have the right, in consultation with the Borrowers, to appoint a successor. Upon the acceptance of its appointment as Collateral Agent hereunder by a successor, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Collateral Agent, and the retiring Collateral Agent shall be discharged from its duties and obligations hereunder. The fees payable by the Borrowers to a successor Collateral Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrowers and such successor. After an Collateral Agent's resignation hereunder, the provisions of this Article and Section 9.05 shall continue in effect for the benefit of such retiring Collateral Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while acting as the Collateral Agent. The Arranger, in its capacity as such, shall have no duties or responsibilities, and shall incur no liability, under this Agreement or any other Loan Document. Each Lender acknowledges that it has, independently and without reliance upon the Administrative Agent, the Collateral Agent, the Arranger, or any Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent, the Collateral Agent, the Arranger, or any Lender and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement or any other Loan Document, any related agreement or any document furnished hereunder or thereunder. To the extent required by any applicable law, the Administrative Agent and the Collateral Agent, as applicable may withhold from any interest payment to any Lender an amount equivalent to any applicable withholding tax. If the Internal Revenue Service or any other Governmental Authority asserts a claim that the Administrative Agent or the Collateral Agent, as applicable, did not properly withhold tax from amounts paid to or for the account of any Lender because the appropriate form was not delivered or was not properly executed or because such Lender failed to notify the Administrative Agent and the Collateral Agent of a change in circumstance which rendered the exemption from, or reduction of, withholding tax ineffective or for any other reason, such Lender shall indemnify the Administrative Agent and the Collateral Agent fully for all amounts paid, directly or indirectly, by such Agent as tax or otherwise, including any penalties or interest and together with all expenses (including legal expenses, allocated internal costs and out-of-pocket expenses) incurred. Each Agent hereby agrees to promptly give the other Agent copies of each (i) material notice, report, document and other writing received by it from the Borrower, Holdings or any Loan Party in its capacity as the Administrative Agent or Collateral Agent hereunder, and (ii) material notice, report, document or other writing delivered by such Agent to the Borrower, Holdings or any Loan Party (in each case of clause (i) and (ii) above, other than in connection with periodic borrowings by Borrowers and notices of Borrowing, except as otherwise set forth herein)." SECTION 3.15 Section 9.01 is hereby amended to (i) delete the period at the end of clause (c) and substitute a semi-colon and the word "or" therefore and (ii) add the following new clause (d) immediately following clause (c): "(d) if to the Collateral Agent, to LaSalle Business Credit, LLC One Centerpointe Drive Suite 500 Lake Oswego, State 97035 Attention: Gregory A. Jones Telecopy No.: 503-684-4665. SECTION 3.16 Section 9.02 is hereby amended and restated in its entirety to read as follows: "SECTION 9.02 Survival of Agreement. All covenants, agreements, representations and warranties made herein and in the certificates or other instruments prepared or delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the Lenders and shall survive the making by the Lenders of the Loans and the issuance of Letters of Credit by the Issuing Bank, regardless of any investigation made by the Lenders or on their behalf, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any Fee or any other amount payable under this Agreement or any other Loan Document is outstanding and unpaid or any Letter of Credit is outstanding and so long as the Commitments have not been terminated. The provisions of Sections 2.14, 2.16, 2.20 and 9.05 shall remain operative and in full force and effect regardless of the expiration of the term of this Agreement, the consummation of the transactions contemplated hereby, the repayment of any of the Loans, the expiration of the Commitments, the expiration of any Letter of Credit, the invalidity or unenforceability of any term or provision of this Agreement or any other Loan Document or any investigation made by or on behalf of the Administrative Agent, the Collateral Agent, the Arranger, any Lender or the Issuing Bank." SECTION 3.17 Section 9.04 is hereby amended and restated in its entirety to read as follows: "SECTION 9.04 Successors and Assigns. (a) Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the permitted successors and assigns of such party; and all covenants, promises and agreements by or on behalf of the Borrowers, the Administrative Agent, the Collateral Agent or the Lenders that are contained in this Agreement shall bind and inure to the benefit of their respective successors and assigns. (b) Each Lender may assign to one or more assignees all or a portion of its interests, rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it); provided, however, that (i) the Administrative Agent must give its prior written consent to such assignment (which consent shall not be unreasonably withheld or delayed), (ii) in the case of any assignment of a Revolving Credit Commitment, the Swingline Lender and each of the Borrowers must give its prior written consent to such assignment (which consent shall not be unreasonably withheld or delayed); provided that the consent of the Borrowers shall not be required to any such assignment so long as an Event of Default exists, (iii) the amount of the Commitment of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Acceptance with respect to such assignment is delivered to the Administrative Agent) shall not be less than $1,000,000 (or, if less, the entire remaining amount of such Lender's Commitment) and shall be in an amount that is an integral multiple of $1,000,000 (or the entire remaining amount of such Lender's Commitment), (iv) the parties to each such assignment shall execute and deliver to the Administrative Agent an Assignment and Acceptance (such Assignment and Acceptance to be manually executed and delivered together with a processing and recordation fee of $3,500 payable to the Administrative Agent and (v) the assignee, if it shall not be a Lender immediately prior to the assignment, shall deliver to the Administrative Agent an Administrative Questionnaire. Upon acceptance and recording pursuant to paragraph (e) of this Section 9.04, from and after the effective date specified in each Assignment and Acceptance, (A) the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Acceptance, have the rights and obligations of a Lender under this Agreement and (B) the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Acceptance, be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.14, 2.16, 2.20 and 9.05, as well as to any Fees accrued for its account and not yet paid). (c) By executing and delivering an Assignment and Acceptance, the assigning Lender thereunder and the assignee thereunder shall be deemed to confirm to and agree with each other and the other parties hereto as follows: (i) such assigning Lender warrants that it is the legal and beneficial owner of the interest being assigned thereby free and clear of any adverse claim and that its Commitment, and the outstanding balances of its Loans, in each case without giving effect to assignments thereof which have not become effective, are as set forth in such Assignment and Acceptance, (ii) except as set forth in (i) above, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement, or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement, any other Loan Document or any other instrument or document furnished pursuant hereto, or the financial condition of Holdings, the Borrowers or any Subsidiary or the performance or observance by Holdings, the Borrowers or any Subsidiary of any of its obligations under this Agreement, any other Loan Document or any other instrument or document furnished pursuant hereto; (iii) such assignee represents and warrants that it is legally authorized to enter into such Assignment and Acceptance; (iv) such assignee confirms that it has received a copy of this Agreement, together with copies of the most recent financial statements referred to in Section 3.05(a) or delivered pursuant to Section 5.04 and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (v) such assignee will independently and without reliance upon the Administrative Agent, the Arranger, such assigning Lender or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (vi) such assignee appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers under this Agreement as are delegated to the Administrative Agent by the terms hereof, together with such powers as are reasonably incidental thereto; and (vii) such assignee agrees that it will perform in accordance with their terms all the obligations which by the terms of this Agreement are required to be performed by it as a Lender. (d) The Administrative Agent, acting for this purpose as an agent of the Borrowers, shall maintain at one of its offices a copy of each Assignment and Acceptance delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitment of, and principal amount of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the "Register"). The entries in the Register shall be conclusive and the Borrowers, the Administrative Agent, and the Lenders may treat each person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrowers, and any Lender, at any reasonable time and from time to time upon reasonable prior notice. (e) Upon its receipt of a duly completed Assignment and Acceptance executed by an assigning Lender and an assignee, an Administrative Questionnaire completed in respect of the assignee (unless the assignee shall already be a Lender hereunder) and the written consent of the Swingline Lender and the Administrative Agent to such assignment, the Administrative Agent shall (i) accept such Assignment and Acceptance, (ii) record the information contained therein in the Register and (iii) give prompt notice thereof to the Lenders and the Swingline Lender. No assignment shall be effective unless it has been recorded in the Register as provided in this paragraph (e). (f) Each Lender may without the consent of the Borrowers, the Swingline Lender, the Issuing Bank, the Administrative Agent or the Collateral Agent sell participations to one or more banks or other entities in all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans); provided, however, that (i) such Lender's obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) the participating banks or other entities shall be entitled to the benefit of the cost protection provisions contained in Sections 2.14, 2.16 and 2.20 to the same extent as if they were Lenders (but, with respect to any particular participant, to no greater extent than the Lender that sold the participation to such participant) and (iv) the Borrowers, the Administrative Agent, the Collateral Agent and the Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement, and such Lender shall retain the sole right to enforce the obligations of the Borrowers relating to the Loans or reimbursement obligations under any Letter of Credit and to approve any amendment, modification or waiver of any provision of this Agreement (other than amendments, modifications or waivers decreasing any fees payable hereunder or the amount of principal of or the rate at which interest is payable on the Loans, extending any scheduled principal payment date or date fixed for the payment of interest on the Loans, increasing or extending the Commitments or releasing any Guarantor or all or any substantial part of the Collateral). (g) Any Lender or participant may, in connection with any assignment or participation or proposed assignment or participation pursuant to this Section 9.04, disclose to the assignee or participant or proposed assignee or participant any information relating to the Borrowers furnished to such Lender by or on behalf of the Borrowers; provided that, prior to any such disclosure of information designated by the Borrowers as confidential, each such assignee or participant or proposed assignee or participant shall execute an agreement whereby such assignee or participant shall agree (subject to customary exceptions) to preserve the confidentiality of such confidential information on terms no less restrictive than those applicable to the Lenders pursuant to Section 9.16. (h) Any Lender may at any time assign all or any portion of its rights under this Agreement to secure extensions of credit to such Lender or in support of obligations owed by such Lender; provided that no such assignment shall release a Lender from any of its obligations hereunder or substitute any such assignee for such Lender as a party hereto. (i) Notwithstanding anything to the contrary contained herein, any Lender (a "Granting Lender") may grant to a special purpose funding vehicle (an "SPC"), identified as such in writing from time to time by the Granting Lender to the Administrative Agent and the Borrowers, the option to provide to the Borrowers all or any part of any Loan that such Granting Lender would otherwise be obligated to make to the Borrowers pursuant to this Agreement; provided that (i) nothing herein shall constitute a commitment by any SPC to make any Loan and (ii) if an SPC elects not to exercise such option or otherwise fails to provide all or any part of such Loan, the Granting Lender shall be obligated to make such Loan pursuant to the terms hereof. The making of a Loan by an SPC hereunder shall utilize the Commitment of the Granting Lender to the same extent, and as if, such Loan were made by such Granting Lender. Each party hereto hereby agrees that no SPC shall be liable for any indemnity or similar payment obligation under this Agreement (all liability for which shall remain with the Granting Lender). In furtherance of the foregoing, each party hereto hereby agrees (which agreement shall survive the termination of this Agreement) that, prior to the date that is one year and one day after the payment in full of all outstanding commercial paper or other senior indebtedness of any SPC, it will not institute against, or join any other person in instituting against, such SPC any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings under the laws of the United States or any State thereof. In addition, notwithstanding anything to the contrary contained in this Section 9.04, any SPC may (i) with notice to, but without the prior written consent of, the Borrowers and the Administrative Agent and without paying any processing fee therefor, assign all or a portion of its interests in any Loans to the Granting Lender or to any financial institutions (consented to by the Borrowers and Administrative Agent) providing liquidity and/or credit support to or for the account of such SPC to support the funding or maintenance of Loans and (ii) disclose on a confidential basis any non-public information relating to its Loans to any rating agency, commercial paper dealer or provider of any surety, guarantee or credit or liquidity enhancement to such SPC. (j) The Borrowers shall not assign or delegate any of its rights or duties hereunder without the prior written consent of the Administrative Agent and each Lender, and any attempted assignment without such consent shall be null and void." SECTION 3.18 Section 9.05 is hereby amended and restated in its entirety to read as follows: "SECTION 9.05 Expenses; Indemnity. (a) The Borrowers agree, to pay all out-of-pocket costs and expenses incurred by the Administrative Agent, the Collateral Agent, the Arranger and the Swingline Lender in connection with the syndication of the Facility and the preparation and administration of this Agreement and the other Loan Documents or in connection with any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions hereby or thereby contemplated shall be consummated) or incurred by the Administrative Agent, the Collateral Agent, the Arranger or any Lender in connection with the enforcement or protection of its rights in connection with this Agreement and the other Loan Documents or in connection with the Loans made or Letters of Credit issued hereunder, including in each case the fees, disbursements and other charges of counsel, Latham & Watkins LLP and Winston & Strawn LLP, for the Arranger and the Administrative Agent, and, in connection with any such enforcement or protection, the reasonable fees, disbursements and other charges of any counsel for the Administrative Agent, the Collateral Agent, the Arranger or any Lender. (b) The Borrowers agree to indemnify the Administrative Agent, the Collateral Agent, the Arranger, the Issuing Bank, each Lender and each Related Party of any of the foregoing persons (each such person being called an "Indemnitee") against, and to hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related costs and expenses, including reasonable counsel fees, disbursements and other charges, incurred by or asserted against any Indemnitee arising out of, in any way connected with, or as a result of (i) the execution or delivery of this Agreement or any other Loan Document or any agreement or instrument contemplated thereby, the performance by the parties thereto of their respective obligations thereunder or the consummation of the Transactions and the other transactions contemplated thereby, (ii) the use of the proceeds of the Loans or issuances of Letters of Credit, (iii) any claim, litigation, investigation or proceeding relating to any of the foregoing, whether or not any Indemnitee is a party thereto, or (iv) any actual or alleged presence or Release of Hazardous Materials on any property owned or operated by any Loan Party, or any Environmental Liability related in any way to any Loan Party; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related costs and expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from primarily the gross negligence or willful misconduct of such Indemnitee (and, upon any such determination, any indemnification payments with respect to such losses, claims, damages, liabilities or related costs and expenses previously received by such Indemnitee shall be subject to reimbursement by such Indemnitee). (c) To the extent that the Borrowers fail to pay any amount required to be paid by them to the Administrative Agent, the Collateral Agent, the Arranger, the Issuing Bank or the Swingline Lender under paragraph (a) or (b) of this Section, each Lender severally agrees to pay to the Administrative Agent, Collateral Agent, the Arranger, the Issuing Bank or the Swingline Lender, as the case may be, such Lender's pro rata share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount; provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent, the Collateral Agent, the Arranger, the Issuing Bank or the Swingline Lender in its capacity as such. (d) To the extent permitted by applicable law, neither of the Borrowers shall assert, and each hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement or any agreement or instrument contemplated hereby, the Transactions, any Loan or Letter of Credit or the use of the proceeds thereof. (e) Either Agent may, at its option, from time to time, at any time on or after an Event of Default and for so long as the same is continuing or upon any other failure of a condition precedent to the Loans and Letter of Credit accommodations hereunder, make such disbursements and advances ("Special Agent Advances") which such Agent, in its sole discretion, (i) deems necessary or desirable either to preserve or protect the Collateral or any portion thereof or (ii) to enhance the likelihood or maximize the amount of repayment by any Loan Party of the Loans and other Obligations or (iii) to pay any other amount chargeable to any Loan Party pursuant to the terms of this Agreement or any of the other Loan Documents consisting of costs, fees and expenses and payments to the Issuing Bank. Special Agent Advances shall be repayable on demand and be secured by the Collateral. Special Agent Advances shall constitute Obligations hereunder. Each Lender agrees that it shall make available to the Collateral Agent, upon the Collateral Agent's demand, in immediately available funds, the amount equal to such Lender's Pro Rata Percentage of each such Special Agent Advance. If such funds are not made available to the Collateral Agent by such Lender, the Collateral Agent shall be entitled to recover such funds, on demand from such Lender together with interest thereon for each day from the date such payment was due until the date such amount is paid to the Collateral Agent at the Federal Funds Rate for each day during such period (as published by the Federal Reserve Bank of New York or at the Collateral Agent's option based on the arithmetic mean determined by the Collateral Agent of the rates for the last transaction in overnight Federal funds arranged prior to 9:00 a.m. (New York City time) on that day by each of the three leading brokers of Federal funds transactions in New York City selected by the Collateral Agent) and if such amounts are not paid within three (3) days of the Collateral Agent's demand, at the Alternative Base Rate plus the Applicable Margin. (f) The provisions of this Section 9.05 shall remain operative and in full force and effect regardless of the expiration of the term of this Agreement, the consummation of the Transactions or the other transactions contemplated hereby, the repayment of any of the Loans, the expiration of the Commitments, the expiration of any Letter of Credit, the invalidity or unenforceability of any term or provision of this Agreement or any other Loan Document, or any investigation made by or on behalf of the Administrative Agent, the Collateral Agent, the Arranger, any Lender or the Issuing Bank. All amounts due under this Section 9.05 shall be payable on written demand therefor." SECTION 3.19 Section 9.08 is hereby amended and restated in its entirety to read as follows: "SECTION 9.08 Waivers; Amendment. (a) No failure or delay of the Administrative Agent, the Collateral Agent or any Lender in exercising any power or right hereunder or under any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Administrative Agent, the Collateral Agent and the Lenders hereunder and under the other Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or any other Loan Document or consent to any departure by the Borrowers or any other Loan Party therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) below, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice or demand on the Borrowers in any case shall entitle the Borrowers to any other or further notice or demand in similar or other circumstances. (b) Neither this Agreement, any other Loan Document, nor any provision hereof or thereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Borrowers and the Required Lenders. No such waiver, amendment, modification or consent shall (i) decrease the principal amount of, or extend the maturity of or any scheduled principal payment date or date for the payment of any interest on any Loan or any date for reimbursement of any Letter of Credit, or waive or excuse any such payment or any part thereof, or decrease the rate of interest on any Loan or reimbursement obligation of any Letter of Credit, without the prior written consent of each Lender affected thereby, (ii) increase or extend the Commitment or decrease or extend the date for payment of any Fees of any Lender without the prior written consent of such Lender, (iii) amend or modify the pro rata requirements of Section 2.17, the provisions of Section 9.04(j), the provisions of this Section or the definition of the term "Required Lenders," or release any Guarantor, without the prior written consent of each Lender, (iv) release all or any substantial part of the Collateral without the prior written consent of each Lender, or (v) modify the protections afforded to an SPC pursuant to the provisions of Section 9.04(i) without the written consent of such SPC; provided further that no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent, the Collateral Agent, the Swingline Lender, the Issuing Bank or the Arranger hereunder or under any other Loan Document without the prior written consent of the Administrative Agent, the Collateral Agent, the Swingline Lender, the Issuing Bank or Arranger, as applicable." SECTION 3.20 Section 9.09 is hereby amended and restated in its entirety to read as follows: "SECTION 9.09 Interest Rate Limitation. Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Loan or any participation in any Letter of Credit, together with all fees, charges and other amounts which are treated as interest on such Loan or any participation in any Letter of Credit under applicable law (collectively the "Charges"), shall exceed the maximum lawful rate (the "Maximum Rate") which may be contracted for, charged, taken, received or reserved by the Lender holding such Loan or participation in accordance with applicable law, the rate of interest payable in respect of such Loan or participation hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would have been payable in respect of such Loan or participation but were not payable as a result of the operation of this Section 9.09 shall be cumulated and the interest and Charges payable to such Lender in respect of other Loans or participations or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the Federal Funds Effective Rate to the date of repayment, shall have been received by such Lender." SECTION 3.21 Section 9.10 is hereby amended and restated in its entirety to read as follows: "SECTION 9.10 Entire Agreement. This Agreement, the Administrative Fee Letter, the Collateral Fee Letter and the other Loan Documents constitute the entire contract between the parties relative to the subject matter hereof. Any other previous agreement among the parties with respect to the subject matter hereof is superseded by this Agreement and the other Loan Documents. Nothing in this Agreement or in the other Loan Documents, expressed or implied, is intended to confer upon any person (other than the parties hereto and thereto, their respective successors and assigns permitted hereunder and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent, the Collateral Agent, the Arranger and the Lenders) any rights, remedies, obligations or liabilities under or by reason of this Agreement or the other Loan Documents." SECTION 3.22 Section 9.15 is hereby amended and restated in its entirety to read as follows: "SECTION 9.15 Jurisdiction; Consent to Service of Process. (a) Each of the Borrowers hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court or Federal court of the United States of America sitting in New York City, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or the other Loan Documents, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that the Administrative Agent, the Collateral Agent, the Arranger or any Lender may otherwise have to bring any action or proceeding relating to this Agreement or the other Loan Documents against the Borrowers or their properties in the courts of any jurisdiction. (b) Each of the Borrowers hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or the other Loan Documents in any New York State or Federal court. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court. (c) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 9.01. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law." SECTION 3.23 Section 9.16 is hereby amended and restated in its entirety to read as follows: "SECTION 9.16 Confidentiality. Each of the Administrative Agent, the Collateral Agent and the Lenders agrees to maintain the confidentiality of the Information, except that Information may be disclosed (a) to its and its Affiliates' officers, directors, employees and agents, including accountants, legal counsel and other advisors (it being understood that the persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority or quasi-regulatory authority (such as the National Association of Insurance Commissioners), (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) in connection with the exercise of any remedies hereunder or under the other Loan Documents or any suit, action or proceeding relating to the enforcement of its rights hereunder or thereunder, (e) subject to an agreement containing provisions substantially the same as those of this Section 9.16, to (i) any actual or prospective assignee of or participant in any of its rights or obligations under this Agreement and the other Loan Documents or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to any Loan Party or any of their respective obligations, (f) with the consent of the Borrowers or (g) to the extent such Information becomes publicly available other than as a result of a breach of this Section 9.16. For the purposes of this Section, "Information" shall mean all information received from the Borrowers and related to the Borrowers or their business, other than any such information that was available to the Administrative Agent, the Collateral Agent or any Lender on a nonconfidential basis prior to its disclosure by Holdings or the Borrowers; provided that, in the case of Information received from the Borrowers after the date hereof, such information is clearly identified at the time of delivery as confidential. Any person required to maintain the confidentiality of Information as provided in this Section 9.16 shall be considered to have complied with its obligation to do so if such person has exercised the same degree of care to maintain the confidentiality of such Information as such person would accord its own confidential information. Notwithstanding any other express or implied agreement, arrangement or understanding to the contrary, each of the parties hereto agrees that each other party hereto (and each of its employees, representatives or agents) are permitted to disclose to any persons, without limitation, the tax treatment and tax structure of the Loans and the other transactions contemplated by the Loan Documents and all materials of any kind (including opinions and tax analyses) that are provided to the Loan Parties, the Lenders, the Arranger, the Administrative Agent or the Collateral Agent related to such tax treatment and tax aspects. To the extent not inconsistent with the immediately preceding sentence, this authorization does not extend to disclosure of any other information or any other term or detail not related to the tax treatment or tax aspects of the Loans or the transactions contemplated by the Loan Documents." SECTION 3.24 All references in the Credit Agreement to Exhibit D Form of Borrowing Request and to Exhibit H Form of Borrowing Base Certificate shall be deemed to be references to the Form of Borrowing Request and Form of Borrowing Base Certificate attached hereto as Exhibits A and B, respectively. SECTION 4 AMENDMENTS TO THE GUARANTEE AND COLLATERAL AGREEMENT. Subject to the terms and conditions set forth herein and in reliance upon Holdings and each respective Loan Party's representations, acknowledgments and warranties herein contained, the Guarantee and Collateral Agreement is hereby amended as follows: SECTION 4.1 The definition of "Secured Parties" set forth in Section 1.1 of the Guarantee and Collateral Agreement is hereby amended and restated in its entirety to read as follows: "Secured Parties" shall mean, collectively, the Administrative Agent, the Collateral Agent, the Lenders and, with respect to any Specified Hedge Agreement, any Qualified Counterparty that has agreed to be bound by the provisions of Article VIII of the Credit Agreement as if it were a Lender party thereto; provided that no Qualified Counterparty shall have any rights in connection with the management or release of any Collateral or the obligations of any Guarantor under this Agreement or any other Loan Document." SECTION 4.2 Section 6.5 of the Guarantee and Collateral Agreement is hereby amended and restated in its entirety to read as follows: "6.5 Application of Proceeds. If an Event of Default shall have occurred and be continuing, at any time at either Agent's election, the Collateral Agent, as sub- agent of the Administrative Agent may apply all or any part of the net Proceeds (after deducting fees and expenses as provided in Section 6.6) constituting Collateral realized through the exercise by the Administrative Agent of its remedies hereunder, whether or not held in any Collateral Account, and any proceeds of the guarantee set forth in Section 2, in payment of the Obligations in the following order: FIRST, to the payment of all fees, costs, and expenses of the Secured Parties which constitute Obligations, until paid in full; SECOND, to the payment of all of the Obligations in respect of the Swingline Loans to the Swingline Lender, until paid in full; THIRD, to the payment of all of the Obligations (other than Obligations arising under any Specified Hedge Agreement) consisting of accrued and unpaid interest owing to any Lender, pro-rata, until paid in full; FOURTH, to the payment of all Obligations (other than Obligations arising under any Specified Hedge Agreement) consisting of principal owing to any Lender, pro-rata, until paid in full; FIFTH, to the Collateral Agent for the benefit of the Issuing Bank an amount equal to all Obligations in respect of outstanding Letters of Credit to be held as cash collateral in respect of such obligations; SIXTH, to the payment of all Obligations arising under any Specified Hedge Agreement owing to any Lender or its Affiliates, pro-rata, until paid in full; SEVENTH, to the payment of all other Obligations owing to each Secured Party, pro-rata, until paid in full; and EIGHTH, to the payment of any remaining Proceeds, if any, to whomever may be lawfully entitled to receive such amounts." SECTION 5 CONDITIONS. The effectiveness of this Amendment is subject to the satisfaction of the following conditions precedent (unless specifically waived in writing by the Administrative Agent): SECTION 5.1 The Administrative Agent shall have received fully executed copies of this Amendment executed by the Administrative Agent, the Collateral Agent, the Lenders and the Loan Parties. SECTION 5.2 The Administrative Agent shall have received all other instruments, documents, certificates and agreements set forth on the Closing Document List attached hereto as Exhibit I. SECTION 5.3 All of the representations and warranties set forth in Section 6 of this Amendment shall be true and correct. SECTION 5.4 No Default or Event of Default is outstanding. SECTION 6 REPRESENTATIONS AND WARRANTIES. The Loan Parties represent and warrant to the Agents that: SECTION 6.1 Authorization. The Loan Parties are duly authorized to execute and deliver this Amendment and are and will continue to be duly authorized to borrow monies under the Credit Agreement, as amended hereby, and to perform their respective obligations under the Credit Agreement, as amended hereby. SECTION 6.2 No Conflicting Agreements. The execution and delivery of this Amendment and the performance by the Borrowers of their obligation under the Credit Agreement, as amended hereby, do not and will not conflict with any provision of law or of the governing documents of the Borrowers or any agreement binding upon the Borrowers. SECTION 6.3 Validity and Binding Effect. The Credit Agreement, as amended hereby, and this Amendment are legal, valid and binding obligations of the Borrowers, enforceable against the Borrowers in accordance with their terms, except as enforceability may be limited by bankruptcy, insolvency or other similar laws of general application affecting the enforcement of creditors' rights or by general principles of equity limiting the availability of equitable remedies. SECTION 6.4 Compliance with Credit Agreement. The representations and warranties set forth in Section 3 of the Credit Agreement, are true and correct with the same effect as if such representations and warranties had been made on the date hereof. In addition, the Borrowers have complied with and are in compliance with all of the covenants set forth in the Credit Agreement, as amended hereby. SECTION 6.5 No Event of Default. As of the date hereof, no Default or Event of Default under Section 7 of the Credit Agreement, as amended hereby, or event or condition which, with the giving of notice or the passage of time, or both, would constitute an Event of Default, has occurred or is continuing. SECTION 7 REAFFIRMATION. The Loan Parties expressly reaffirm and assume all of their obligations and liabilities to the Administrative Agent and the Lenders as set forth in the Credit Agreement and the Loan Documents and agree to be bound by and abide by and operate and perform under and pursuant to and comply fully with all of the terms, conditions, provisions, agreements, representations, undertakings, warranties, indemnities, grants of security interests and covenants contained in the Credit Agreement and the Loan Documents, in so far as such obligations and liabilities may be modified by this Amendment, as though such Credit Agreement and Loan Documents were being re-executed on the date hereof, except to the extent that such terms expressly relate to an earlier date. The Loan Parties ratify, confirm and affirm without condition, all liens and security interests granted to the Administrative Agent pursuant to the Credit Agreement and the Loan Documents and such liens and security interests shall continue to secure the Obligations, including but not limited to, the Loans made by the Administrative Agent and the Lenders to the Borrowers under the Credit Agreement as amended by this Amendment, and all extensions renewals, refinancings, amendments or modifications of any of the foregoing. SECTION 8 NO WAIVER. This Amendment shall not be deemed to constitute a waiver or release of any existing Default or Event of Default by the Loan Parties under the Credit Agreement or the Loan Documents or any remedies or rights of the Administrative Agent with respect thereto, all of which are hereby reserved by the Administrative Agent. SECTION 9 GENERAL PROVISIONS. SECTION 9.1 No Changes. Except as expressly provided in this Amendment, the terms and provisions of the Credit Agreement and the Guarantee and Collateral Agreement and each of the other Loan Documents shall remain in full force and effect and are hereby affirmed, confirmed and ratified in all respects. SECTION 9.2 Compliance. The Borrowers hereby acknowledge that their failure to comply with the terms of this Amendment will constitute an Event of Default under the Credit Agreement. SECTION 9.3 Attorney's Fees and Costs. The Loan Parties hereby agree to reimburse the Administrative Agent and the Collateral Agent for all of its out-of-pocket legal fees and expenses incurred in the preparation and documentation of this Amendment and related documents. SECTION 9.4 Governing Law. This Amendment shall be construed in accordance with and governed by the internal laws (as distinguished from the conflicts of law provisions) of the State of placeStateNew York. SECTION 9.5 Counterparts. This Amendment may be executed in one or more counterparts, each of which shall constitute an original, but all of which taken together shall be one and the same instrument. This Amendment may also be executed by facsimile and each facsimile signature hereto shall be deemed for all purposes to be an original signatory page. SECTION 9.6 Further Assurances. Each Loan Party covenants and agrees that it will at any time and from time to time do, execute, acknowledge and deliver, or will cause to be done, executed, acknowledged and delivered, all such further acts, documents and instruments as reasonably may be required by the Administrative Agent, the Collateral Agent or the Lenders to effectuate fully the intent of this Amendment. SECTION 9.7 Captions. The captions in this Amendment are inserted for convenience of reference only and in no way define, describe or limit the scope or intent of this Amendment or any of the provisions hereof. SECTION 9.8 References. On or after the effective date hereof, each reference in the Credit Agreement, the Guarantee and Collateral Agreement to this "Agreement" or words of like import, and all references in any other Loan Document to the Credit Agreement or the Guaranty and Collateral Agreement shall, in each case, unless the context otherwise requires, be deemed to refer to the Credit Agreement or the Guaranty and Collateral Agreement, respectively, as amended hereby. SECTION 9.9 Severability. Any provision of this Amendment held by a court of competent jurisdiction to be invalid or unenforceable shall not impair or invalidate the remainder of this Amendment and the effect thereof shall be confined to the provision so held to be invalid or unenforceable. SECTION 9.10 Successors and Assigns. This Amendment shall inure to the benefit of the Administrative Agent, the Collateral Agent, the Issuing Bank, the Arranger and the Lenders, their respective successors and assigns and be binding upon the Loan Parties, their successors and assigns. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] [Signature Page to Omnibus Amendment to Revolving Credit Agreement and Guarantee and Collateral Agreement] IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their respective authorized officers as of the day and year first above written. THE PACIFIC LUMBER COMPANY By: /s/ Gary L. Clark Name: Gary L. Clark Title: VP Finance & Administration and CFO BRITT LUMBER CO., INC. By: /s/ Gary L. Clark Name: Gary L. Clark Title: VP Finance & Administration and CFO SALMON CREEK LLC By: /s/ Gary L. Clark Name: Gary L. Clark Title: President and CEO SCOTIA INN INC. By: /s/ Gary L. Clark Name: Gary L. Clark Title: VP Finance & Administration and CFO MAXXAM GROUP INC. By: /s/ Gary L. Clark Name: Gary L. Clark Title: VP Finance & Administration and CFO MARATHON STRUCTURED FINANCE FUND L.P., as Administrative Agent and Lender By: /s/ David Arzi Name: David Arzi Title: Managing Director LASALLE BUSINESS CREDIT, LLC., as Collateral Agent, Swingline Lender and Lender By: /s/ Raphael Shin Name: Raphael Shin Title: Vice President LASALLE BANK NATIONAL ASSOCIATION, as Issuing Bank By: /s/ Raphael Shin Name: Raphael Shin Title: Vice President
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8-K Filing
MAXXAM Inactive 8-KOther Events
Filed: 17 Oct 06, 12:00am