EX-10.24 2 a2043421zex-10_24.txt EX-10.24 EXHIBIT 10.24 AMENDMENT NO. 3 TO AMENDED AND RESTATED CREDIT AGREEMENT -------------------------------- AMENDMENT NO. 3 (this "AGREEMENT") dated as of October 29, 1999 to the Amended and Restated Credit Agreement dated as of May 20, 1998 , as amended by that Amendment No. 1 to Amended and Restated Credit Agreement dated as of September 1, 1998 and Amendment No. 2 to Amended and Restated Credit Agreement dated as of December 31, 1998 (the "CREDIT AGREEMENT"), among CB RICHARD ELLIS SERVICES, INC., a Delaware corporation (the "COMPANY"), BANK OF AMERICA, N.A., as Issuing Bank and as Agent, WELLS FARGO BANK, N.A., THE BANK OF NOVA SCOTIA and CREDIT LYONNAIS LOS ANGELES BRANCH, as Senior Managing Agents for the Banks (as such term is defined in the Credit Agreement), DRESDNER BANK AG, NEW YORK AND GRAND CAYMAN BRANCHES and KEYBANK NATIONAL ASSOCIATION , as Co-Agents, and the BANKS (as such term is defined in the Credit Agreement). RECITALS WHEREAS, the Company, Agent and Banks entered into the Credit Agreement pursuant to which the Banks agreed, among other things, to provide Company with a reducing revolving credit facility; WHEREAS, the parties to this Agreement wish to amend the Credit Agreement as set forth herein to, among other things, (i) accelerate the mandatory commitment reduction scheduled for December 31, 1999 and, accordingly, decrease the reducing revolving credit facility from $400,000,000 to $350,000,000, (ii) revise certain covenants, and (iii) revise certain debt provisions; and WHEREAS, Section 11.01 of the Credit Agreement provides that the Credit Agreement may be amended after the Closing Date with the written consent of the Company, and, in certain circumstances, the Required Banks; NOW, THEREFORE, in consideration of the covenants, conditions and agreements hereinafter set forth, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: 1 SECTION I. RELATION TO THE CREDIT AGREEMENT; DEFINITIONS. A. RELATION TO CREDIT AGREEMENT. This Agreement constitutes an integral part of the Credit Agreement. B. CAPITALIZED TERMS. For all purposes of this Agreement, capitalized terms used herein without definition shall have the meanings specified in the Credit Agreement, as said agreement shall be in effect on the Third Amendment Effective Date after giving effect to this Agreement. SECTION II. AMENDMENTS TO THE CREDIT AGREEMENT. A. AMENDMENT TO CREDIT AGREEMENT. Effective on (and subject to the occurrence of) the Third Amendment Effective Date referred to in Section 4.1 hereof, the Credit Agreement (including the annexes, schedules and exhibits thereto) is hereby amended in its entirety as set forth in the Amended and Restated Credit Agreement dated as of May 20, 1998 by and among the Company, the Agent, the Issuing Bank and the Banks in the form annexed hereto as EXHIBIT A. SECTION III. REPRESENTATION AND WARRANTIES OF THE COMPANY. A. REPRESENTATIONS AND WARRANTIES. To induce each of the Agent, the Issuing Bank and the Banks to execute and deliver this Agreement, the Company represents and warrants (which representations and warranties shall survive the execution and delivery of this Agreement) to each of the Agent, the Issuing Bank and the Banks that: a. AUTHORITY. This Agreement has been duly authorized, executed and delivered by it and this Agreement constitutes the legal, valid and binding obligation, contract and agreement of the Company enforceable against it in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or limiting creditors' rights generally. b. VALIDITY OF AGREEMENT. The Loan Documents, as amended by this Agreement, constitute the legal, valid and binding obligations, contracts and agreements of the Company enforceable against it in accordance with their respective terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or limiting creditors' rights generally. 2 c. AUTHORIZATION; NO VIOLATION. The execution, delivery and performance by the Company of this Agreement (i) has been duly authorized by all requisite corporate action and, if required, shareholder action, (ii) does not require the consent or approval of any governmental or regulatory body or agency, and (iii) will not (A) violate (1) any provision of law, statute, rule or regulation or its certificate of incorporation or bylaws, (2) any order of any court or any rule, regulation or order of any other agency or government binding upon it, or (3) any provision of any material indenture, agreement or other instrument to which it is a party or by which its properties or assets are or may be bound, or (B) result in a breach or constitute (alone or with due notice or lapse of time or both) a default under any indenture, agreement or other instrument referred to in clause (iii)(A)(3) of this Section 3.1(c). d. NO DEFAULT OR EVENT OF DEFAULT. As of the date hereof and after giving effect to this Agreement, no Default or Event of Default has occurred which is continuing. e. ALL OTHER REPRESENTATIONS AND WARRANTIES. All the representations and warranties contained in Section VI of the Credit Agreement as annexed hereto as EXHIBIT A are true and correct in all material respects with the same force and effect as if made by the Company on and as of the date hereof. SECTION IV. CONDITIONS TO EFFECTIVENESS OF THIS AGREEMENT. A. EFFECTIVE DATE. This Agreement shall not become effective until, and shall become effective when, each and every one of the following conditions shall have been satisfied or waived by the Agent, the Issuing Bank and the Required Banks (the "THIRD AMENDMENT EFFECTIVE DATE") (which date shall be specified in a written notice from the Agent): a. The Agent shall have received the following documents in form and substance satisfactory to Agent and the Required Banks. (i) AGREEMENT; SUPPORT AGREEMENT AND NOTES. This Agreement, the Support Agreement and the Notes executed by each party thereto. 3 (ii) RESOLUTIONS; INCUMBENCY. (A) Copies of the resolutions of the Board of the Company and each Material Subsidiary (which is a Domestic Subsidiary) that may become party to a Loan Document authorizing the transactions contemplated hereby, certified as of the Third Amendment Effective Date by the Secretary or an Assistant Secretary of such Person; and (B) A certificate of the Secretary or Assistant Secretary of the Company and each Material Subsidiary (which is a Domestic Subsidiary) that may become party to a Loan Document certifying the names and true signatures of the officers of the Company or such Subsidiary authorized to execute, deliver and perform, as applicable, this Agreement, and all other Loan Documents to be delivered by it hereunder. (iii) ORGANIZATION DOCUMENTS; GOOD STANDING. Each of the following documents: (A) the articles or certificate of incorporation and the bylaws of the Company and each Material Subsidiary, which is a Domestic Subsidiary, party to any Loan Document as in effect on the Third Amendment Effective Date, certified by the Secretary or Assistant Secretary of the Company or such Material Subsidiary (which is a Domestic Subsidiary) as of the Third Amendment Effective Date; and (B) a good standing certificate for the Company and each Material Subsidiary (which is a Domestic Subsidiary) party to any Loan Document from the Secretary of State (or similar, applicable Governmental Authority) of its state of incorporation. (iv) LEGAL OPINIONS. An opinion of Walter V. Stafford, Esq., general counsel to the Company and addressed to the Agent and the Banks, substantially in the form annexed hereto as EXHIBIT B. (v) PAYMENT OF FEES. Evidence of payment by the Company of all fees, costs and expenses hereunder or under the Fee Letter to the extent then due and payable on the Third Amendment Effective Date, including any such costs, fees and expenses arising under or referenced in Sections 2.10 and 11.04 of the Credit Agreement as annexed hereto as EXHIBIT A. 4 (vi) CERTIFICATE. A certificate signed by a Responsible Officer, dated as of the Third Amendment Effective Date, stating that: (A) the representations and warranties contained in Section 3 of this Agreement are true and correct on and as of such date, as though made on and as of such date; (B) no Default or Event of Default exists or would result from the Credit Extension; (C) any necessary consents, waivers, approvals, authorizations, registrations, filings and notifications of the character referred to in Section 6.03 of the Credit Agreement have been obtained or made and are in full force and effect; and (D) except as otherwise disclosed in the Projections, there has occurred since December 31, 1998, no event or circumstance that has resulted or could reasonably be expected to result in a Material Adverse Effect. (vii) REDUCTION IN COMMITMENT. Evidence that the mandatory reduction in the Commitment as of the Third Amendment Effective Date as set forth in Section 2.07(a) of the Credit Agreement as annexed hereto as Exhibit A, has been effected. (vii) OTHER DOCUMENTS. Such other approvals, opinions, documents or materials as the Agent or any Bank may request. SECTION V. MISCELLANEOUS. A. CROSS-REFERENCES. References in this Agreement to any Section are, unless otherwise specified, to such Section of this Agreement. B. INSTRUMENT PURSUANT TO EXISTING CREDIT AGREEMENT; LIMITED AMENDMENT. This Agreement is executed pursuant to Section 11.01 of the Credit Agreement and shall (unless otherwise expressly indicated herein) be construed, administered, and applied in accordance with all of the terms and provisions of the Credit Agreement, including Section 11.01 thereof. Except as expressly amended, any conditions of the Credit Agreement shall remain unamended and unwaived. The amendments set forth herein shall be limited precisely as provided for herein to the provisions expressly amended herein and shall not be deemed to be a waiver of, amendment of, consent to or 5 modification of any other term or provision of any other document or of any transaction or further action on the part of the Company or the Guarantors which would require the consent of any Bank, the Issuing Bank or the Agent under the Credit Agreement. C.. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. D. COUNTERPARTS. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed to be an original but all of which shall constitute together but one and the same instrument. E. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of California. [remainder of page intentionally left blank] 6 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered in Los Angeles, California by their proper and duly authorized officers as of the day and year first above written. CB RICHARD ELLIS SERVICES, INC. By: /s/ JOHN C. HAECKEL ----------------------------- Name: John C. Haeckel Title: Chief Financial Officer BANK OF AMERICA, N.A., as Agent By: /s/ GINA MEADOR ----------------------------- Name: Gina Meador Title: Vice President BANK OF AMERICA, N.A., as Issuing Bank By: /s/ THERESE FONTAINE ----------------------------- Name: Therese Fontaine Title: Principal 7 BANK OF AMERICA, N.A., as a Bank By: /s/ THERESE FONTAINE ----------------------------- Name: Therese Fontaine Title: Principal WELLS FARGO BANK, N.A. By: /s/ TIM EGAN ----------------------------- Name: Tim Egan Title: Vice President THE BANK OF NOVA SCOTIA By: /s/ MAARTEN VAN OTTERLOO ----------------------------- Name: Maarten Van Otterloo Title: Senior Relationship Manager CREDIT LYONNAIS LOS ANGELES BRANCH By: /s/ DIANNE M. SCOTT ----------------------------- Name: Dianne M. Scott Title: First Vice President and Manager 8 DRESDNER BANK AG, NEW YORK AND GRAND CAYMAN BRANCHES By: /s/ JOHN R. MORRISON ----------------------------- Name: John R. Morrison Title: Vice President By: /s/ ANTHONY C. CARABALLO ----------------------------- Name: Anthony C. Caraballo Title: Vice President KEYBANK NATIONAL ASSOCIATION By: /s/ KEVIN P. McBRIDE ----------------------------- Name: Kevin P. McBride Title: Senior Vice President GENERAL ELECTRIC CAPITAL CORPORATION By: /s/ THOMAS E. JOHNSTONE ----------------------------- Name: Thomas E. Johnstone Title: Duly Authorized Signatory THE BANK OF NEW YORK By: /s/ JONATHAN ROLLINS ----------------------------- Name: Jonathan Rollins Title: Vice President BHF (USA) CAPITAL CORPORATION By: [Not Required] ----------------------------- Name: Title: 9 MORGAN GUARANTY TRUST COMPANY OF NEW YORK By: /s/ GERY SEMPERE ----------------------------- Name: Gery Sempere Title: Vice President LASALLE BANK NATIONAL ASSOCIATION By: /s/ JOHN HEIBERGER ----------------------------- Name: John Heiberger Title: Vice President 10 MELLON BANK, N.A. By: /s/ LAWRENCE C. IVEY ----------------------------- Name: Lawrence C. Ivey Title: Vice President THE MITSUBISHI TRUST AND BANKING CORPORATION By: /s/ TOSHIHIRO HAYASHI ----------------------------- Name: Toshihiro Hayashi Title: Senior Vice President NATIONAL CITY BANK By: /s/ JOSHUA R. SOSLAND ----------------------------- Name: Joshua R. Sosland Title: Assistant Vice President THE SAKURA BANK, LIMITED By: /s/ YOSHIKAZU NAGURA ----------------------------- Name: Yoshikazu Nagura Title: Senior Vice President 11 NATEXIS BANQUE-BFCE By: /s/ PEYMAN PARHAMI ----------------------------- Name: Peyman Parhami Title: Assistant Treasurer By: /s/ IAIN A. WHYTE ----------------------------- Name: Iain A. Whyte Title: Vice President and Group Manager Corporate Finance 12 AMENDED AND RESTATED CREDIT AGREEMENT This AMENDED AND RESTATED CREDIT AGREEMENT is entered into as of May 20, 1998, among CB Richard Ellis Services, Inc., a Delaware corporation formerly known as CB Commercial Real Estate Services Group, Inc. (the "COMPANY"), the several financial institutions from time to time party to this Agreement (collectively, the "BANKS"; individually, a "BANK"), Wells Fargo Bank, N.A., The Bank of Nova Scotia and Credit Lyonnais Los Angeles Branch, as senior managing agents for the Banks (collectively, the "SENIOR MANAGING AGENTS"), Dresdner Bank AG, New York and Grand Cayman Branches and KeyBank National Association, as Co-Agents, and Bank of America, N.A., as Issuing Bank and as Agent. WHEREAS, the Company, Agent and certain financial institutions (collectively, the "ORIGINAL BANKS") entered into that certain Credit Agreement dated as of August 28, 1997 (the "EXISTING CREDIT AGREEMENT"), pursuant to which Original Banks agreed, among other things, to provide Company with a reducing revolving credit facility; WHEREAS, the parties to this Agreement wish to amend and restate the Existing Credit Agreement to, among other things, (i) decrease the reducing revolving credit facility, (ii) revise certain covenants, and (iii) revise certain debt provisions; and WHEREAS, in addition to its inclusion as a Bank hereunder, Bank of America has agreed to act as the Issuing Bank and as the Agent upon the terms and conditions set forth in this Agreement; NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained herein, the parties agree as follows: ARTICLE I DEFINITIONS 1.01 CERTAIN DEFINED TERMS. The following terms have the following meanings: A-1 "ACCUMULATED FUNDING DEFICIENCY" means with respect to any Plan that is subject to the minimum funding standards of Section 412 of the Code, an amount described in Section 412(a) of the Code. "ACQUISITION" means any transaction or series of related transactions for the purpose of or resulting, directly or indirectly, in (a) the acquisition of all or substantially all of the assets of a Person, or of any business or division of a Person, (b) the acquisition of in excess of 50% of the Capital Stock, partnership interests, membership interests or equity of any Person, or otherwise causing any Person to become a Subsidiary, or (c) a merger or consolidation or any other combination with another Person (other than a Person that is a Subsidiary) provided that the Company or the Subsidiary is the surviving entity. The term Acquisition, for purposes of compliance with Section 8.04, shall include any Investment in a Joint Venture. "ADJUSTMENT DATE" means the second Business Day following receipt by the Agent of both (a) the financial statements required to be delivered pursuant to Section 7.01(a) or 7.01(b), as the case may be, for the most recently completed fiscal period and (b) the Compliance Certificate required to be delivered pursuant to subsection 7.02(b) with respect to such fiscal period; PROVIDED, HOWEVER, that any increase in the Applicable Commitment Fee Rate or the Applicable Margin, as the case may be, shall be retroactive to the first day of the next succeeding fiscal period relating to such financial statements and Compliance Certificate; PROVIDED, FURTHER, that the initial decrease, if any, in the Applicable Commitment Fee Rate or the Applicable Margin, as the case may be, after the Initial Adjustment Date but prior to June 30, 2000 shall be retroactive to such Initial Adjustment Date. "AFFECTED BANK" has the meaning specified in Section 4.08. "AFFILIATE" means, as to any Person, any other Person which, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. A Person shall be deemed to control another Person if the controlling Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of the other Person, whether through the ownership of voting securities, membership interests, by contract, or otherwise. "AGENT" means Bank of America in its capacity as administrative agent for the Banks hereunder, and any successor agent arising under Section 10.09. "AGENT-RELATED PERSONS" means Bank of America, in its capacity as Agent, and any successor agent arising under Section 10.09 and any successor letter of credit issuing bank hereunder, together with their respective Affiliates (including, in the A-2 case of Bank of America, the Arranger), and the officers, directors, employees, agents and attorneys-in-fact of such Persons and Affiliates. "AGENT'S PAYMENT OFFICE" means the address for payments set forth on Schedule 11.02 or such other address as the Agent may from time to time specify. "AGREEMENT" means this Amended and Restated Credit Agreement, as it may be amended from time to time. "AMORTIZATION EXPENSE" means, for any fiscal period, without duplication, the total expense of the Company and its Subsidiaries during such fiscal period for amortization of Intangible Assets all calculated in accordance with GAAP. "APPLICABLE COMMITMENT FEE RATE" means, from the Third Amendment Effective Date until the Initial Adjustment Date, a rate per annum equal to fifty (50) basis point; PROVIDED, that on and after the Initial Adjustment Date, the Applicable Commitment Fee Rate will be adjusted, on each Adjustment Date, to the applicable rates per annum set forth in the Applicable Commitment Fee Grid attached hereto as Annex B opposite the Leverage Ratio determined from the financial statements and the Compliance Certificate relating to such Adjustment Date; and PROVIDED, FURTHER, that in the event that the financial statements required to be delivered pursuant to Section 7.01(a) and 7.01(b), as applicable, and the related Compliance Certificate required pursuant to Section 7.02(b), are not delivered when due (without giving effect to any grace period), then from such due date until the date the Agent receives such financial statements and the related Compliance Certificate, the Applicable Commitment Fee Rate shall conclusively equal the highest Applicable Commitment Fee Rate as set forth on ANNEX B hereto. "APPLICABLE MARGIN" means for each Offshore Rate Loan, from the Third Amendment Effective Date until the Initial Adjustment Date, two hundred fifty (250) basis points and for each Base Rate Loan, from the Third Amendment Effective Date until the Initial Adjustment Rate, one hundred (100) basis points; PROVIDED, that, on and after the Initial Adjustment Date, with respect to each Revolving Loan, the Applicable Margin for all Revolving Loans will be adjusted, on each Adjustment Date, to the applicable rates per annum set forth in the Pricing Grid attached hereto as ANNEX A opposite the Leverage Ratio determined from the financial statements and the Compliance Certificate relating to such Adjustment Date; and PROVIDED, FURTHER, that in the event that the financial statements required to be delivered pursuant to Section 7.01(a) and 7.01(b), as applicable, and the related Compliance Certificate required pursuant to Section 7.02(b), are not delivered when due (without giving effect to any grace period), then from such due date until the date the Agent receives such financial statements and A-3 the related Compliance Certificate, the Applicable Margin (as adjusted on such Adjustment Date) shall conclusively equal the highest Applicable Margin with respect to such Type of Revolving Loan as set forth on ANNEX A attached hereto. Notwithstanding anything herein to the contrary, if as of any fiscal period as determined from the financial statements and the Compliance Certificate relating to any Adjustment Date, the Company shall maintain a Senior Leverage Ratio less than 1.50:1.0, then the Applicable Margin for all Revolving Loans will be decreased by an amount equal to twelve and one-half (12.5) basis points below the then current rates set forth in the Pricing Grid attached hereto as ANNEX A. For purposes hereof, the "Senior Leverage Ratio" shall mean the "Leverage Ratio" as defined herein excluding from the definition of Consolidated Indebtedness the Indebtedness evidenced by the Subordinated Note Documents and any other Subordinated Debt of the Company, which is acceptable to each of the Agent and the Required Banks as determined in its reasonable discretion. "ARRANGER" means Banc of America Securities LLC, a Delaware limited liability company. "ASSET SALE" has the meaning set forth in the Indenture. "ASSIGNEE" has the meaning specified in Section 11.08(a). "ATTORNEY COSTS" means and includes all reasonable fees and disbursements of any law firm or other external counsel, the reasonable allocated cost of internal legal services and all disbursements of internal counsel. "BANK" has the meaning specified in the introductory clause hereto. References to the "Banks" shall include Bank of America, including in its capacity as Issuing Bank; for purposes of clarification only, to the extent that Bank of America may have any rights or obligations in addition to those of the Banks due to its status as Issuing Bank, its status as such will be specifically referenced. "BANKRUPTCY CODE" means the Federal Bankruptcy Reform Act of 1978 (11 U.S.C.Section101, ET SEQ.). "BASE RATE" means, for any day, the higher of: (a) 0.50% per annum above the latest Federal Funds Rate; and (b) the rate of interest in effect for such day as publicly announced from time to time by Bank of America in San Francisco, California, as its "reference rate." (The "reference rate" is a rate set by Bank of America based upon various factors including Bank of America's costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate.) Any change in the A-4 reference rate announced by Bank of America shall take effect at the opening of business on the day specified in the public announcement of such change. "BASE RATE LOAN" means a Revolving Loan, or an L/C Advance, that bears interest based on the Base Rate. "BANK OF AMERICA" means Bank of America N.A., a national banking association, together with any permitted successor financial institution thereto. "BOARD" means, with respect to any Person, its board of directors or, if it does not have a board of directors, its governing body which performs the same duties as a board of directors. Unless the context otherwise clearly requires, references herein to the "Board" shall refer to the Board of the Company and shall (except with respect to the definition of "Change of Control") include the executive committee of the Board of the Company. "BORROWING" means a borrowing hereunder consisting of Revolving Loans of the same Type made to the Company on the same day by the Banks under Article II, and, other than in the case of Base Rate Loans, having the same Interest Period. "BORROWING DATE" means any date on which a Borrowing occurs under Section 2.03. "BUSINESS DAY" means any day other than a Saturday, Sunday or other day on which commercial banks in New York City or San Francisco are authorized or required by law to close and, if the applicable Business Day relates to any Offshore Rate Loan, means such day on which dealings are carried on in the applicable offshore dollar interbank market. With respect to any calculations pertaining to any Offshore Currency Loan, the term "Business Day" shall mean a day on which commercial banks are open for foreign exchange business in London, England, and on which dealings in the relevant Offshore Currency are carried on in the applicable offshore foreign exchange interbank market. "CAPITAL ADEQUACY REGULATION" means any guideline, request or directive of any central bank or other Governmental Authority, or any other law, rule or regulation, whether or not having the force of law, in each case, regarding capital adequacy of any bank or of any corporation controlling a bank. "CAPITAL EXPENDITURES" means, with respect to any Person, all payments or accruals (including Capitalized Lease Obligations) of such Person for any fixed assets or improvements or for replacements, substitutions or additions thereto, that are required to be capitalized under GAAP; PROVIDED, that "Capital Expenditures" shall not include costs which A-5 represent any part of Total Consideration incurred in connection with any Permitted Acquisition. "CAPITAL LEASE" means any lease or other agreement for the use of property which is required to be capitalized on a balance sheet of the lessee or other user of property in accordance with GAAP. "CAPITALIZED LEASE OBLIGATIONS" with respect to any Person, means the aggregate amount which, in accordance with GAAP, is required to be reported as a liability on the balance sheet of such Person at such time in respect of such Person's interest as lessee under a Capital Lease. "CAPITAL STOCK" means, as to any Person, all shares, interests, partnership interests, limited liability company interests, participations, rights in or other equivalents (however designated) of such Person's equity (however designated) and any rights, warrants or options exchangeable for or convertible into such shares, interests, participations, rights or other equity. "CASH COLLATERALIZE" means to pledge and deposit with or deliver to the Agent, for the benefit of the Agent, the Issuing Bank and the Banks, as additional collateral for the L/C Obligations, cash or deposit account balances pursuant to documentation in form and substance satisfactory to the Agent and the Issuing Bank (which documents are hereby consented to by the Banks). Derivatives of such term shall have the corresponding meaning. The Company hereby grants the Agent, for the benefit of the Agent, the Issuing Bank and the Banks, a security interest in all such cash and deposit account balances. Cash collateral shall be maintained in blocked, interest bearing deposit accounts at Bank of America. "CB ELLIS" means CB Richard Ellis, Inc., a Delaware corporation. "CB ELLIS CANADIAN PLEDGE AGREEMENT" means the Securities Pledge Agreement dated as of June 11, 1999 from CB Ellis to the Agent for the benefit of the Banks. "CB ELLIS CANADIAN PLEDGED SHARES" means the shares of CB Richard Ellis Limited, a Nova Scotia, Canada company, pledged to the Agent for the benefit of the Banks pursuant to the CB Ellis Canadian Pledge Agreement. "CB ELLIS ENGLISH PLEDGE AGREEMENT" means the Share Charge dated as of June 7, 1999 from CB Ellis to the Agent for the benefit of the Banks. A-6 "CB ELLIS ENGLISH PLEDGED SHARES" means the shares of CB Hillier Parker Limited, an English company, pledged to the Agent for the benefit of the Banks pursuant to the CB English Pledge Agreement. "CB ELLIS PLEDGE AGREEMENT" means the Amended and Restated Pledge Agreement dated as of May 20, 1998 from CB Ellis to the Agent, for the benefit of the Banks, substantially in the form annexed hereto as EXHIBIT I-2. "CB ELLIS PLEDGED SHARES" means the shares of Melody pledged by CB Ellis to the Agent, for the benefit of the Banks, pursuant to the CB Ellis Pledge Agreement. "CHANGE OF CONTROL" means the point in time at which (i) any Person (as defined in Section 13(d) and Section 14(d)(2) under the Securities Exchange Act of 1934, as amended) (A) acquires all or substantially all of the properties and assets of the Company or (B) shall have (directly or indirectly) acquired beneficial ownership of fifty percent (50%) or more of the issued and outstanding Voting Stock of the Company or (ii) less than a majority of the members of the Company's Board shall be persons who either (A) were serving as directors on the date of this Agreement or (B) were nominated as directors by the vote of a majority of the directors who are directors referred to in clause (ii)(A) above or this clause (ii)(B) or (iii) any "Change of Control" (as such term is defined in the Subordinated Note Documents) has occurred. "CLOSING DATE" means the date as specified in a written notice from the Agent on which all conditions precedent set forth in Section 5.01 are satisfied or waived by all Banks (or, in the case of Section 5.01(e), waived by the Person entitled to receive such payment). "CODE" means the Internal Revenue Code of 1986 and regulations promulgated thereunder, as amended from time to time. "COLLATERAL" has the meaning specified in each Pledge Agreement. "COMBINED COMMITMENTS" means, at any time, the sum at such time of the Commitments of all the Banks. "COMMITMENT" as to each Bank, has the meaning specified in Section 2.01. "COMMON STOCK" has the meaning specified in Section 6.16(a). A-7 "COMPANY" has the meaning specified in the introductory clause hereto. "COMPANY ENGLISH PLEDGE AGREEMENT" means the Share Charge dated as of June 7, 1999 from the Company to the Agent for the benefit of the Banks. "COMPANY ENGLISH PLEDGED SHARES" means the shares of CB Commercial Limited, an English company, pledged to the Agent for the benefit of the Banks pursuant to the Company English Pledge Agreement. "COMPANY PLEDGE AGREEMENT" means the Amended and Restated Pledge Agreement dated as of May 20, 1998 from the Company to the Agent, for the benefit of the Banks, substantially in the form annexed hereto as EXHIBIT I-1. "COMPANY PLEDGED SHARES" means the shares of CB Ellis, pledged by the Company to the Agent, for the benefit of the Banks, pursuant to the Company Pledge Agreement. "COMPLIANCE CERTIFICATE" means a certificate substantially in the form of EXHIBIT C. "CONSOLIDATED EBITDA" means, for any period for which the amount thereof is to be determined, the Consolidated Net Income of such Person for such period PLUS (A) the aggregate amounts deducted in determining such Consolidated Net Income in respect of (i) Interest Expense for such period (including deferred financing costs not paid in cash), (ii) income and other taxes measured by income or profits for such period (iii) Depreciation Expense for such period, and (iv) Amortization Expense for such period, PLUS (B) any noncash losses on the sale (or other disposition) or write down of investments or fixed or capital assets and minus any gains on the sale or other disposition of investments or fixed or capital assets and noncash extraordinary income, in each case in accordance with GAAP. "CONSOLIDATED INDEBTEDNESS" means, as of any date of determination, the total of all Indebtedness of the Company and its Subsidiaries outstanding on such date, after eliminating all offsetting debits and credits between the Company and its Subsidiaries and all other items required to be eliminated in the course of the preparation of consolidated financial statements of the Company and its Subsidiaries in accordance with GAAP. "CONSOLIDATED NET INCOME" means, with reference to any period, the net income (or loss) of the Company and its Subsidiaries for such period (taken as a cumulative whole), as determined in accordance with GAAP, after eliminating all A-8 offsetting debits and credits between the Company and its Subsidiaries and all other items required to be eliminated in the course of the preparation of consolidated financial statements of the Company and its subsidiaries in accordance with GAAP; PROVIDED, that there shall be excluded: (a) the income (or loss) of any Person accrued prior to the date it becomes a Subsidiary or is merged into or consolidated with the Company or a Subsidiary, and the income (or loss) of any Person, substantially all of the assets of which have been acquired in any manner, realized by such other Person prior to the date of acquisition; (b) the income (or loss) of any Person (other than a Subsidiary) in which the Company or any Subsidiary has an ownership interest, except to the extent that any such income has been actually received by the Company or such Subsidiary in the form of cash dividends or similar cash distributions; (c) the undistributed earnings of any Subsidiary to the extent that the declaration or payment of dividends or similar distributions by such Subsidiary is not at the time permitted by the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to such Subsidiary; (d) any net income or gain (but not any net loss) during such period from (i) any change in accounting principles in accordance with GAAP, (ii) any prior period adjustments resulting from any change in accounting principles in accordance with GAAP, (iii) any extraordinary items, or (iv) any discontinued operations or the disposition thereof; (e) any deferred credit representing the excess of equity in any Subsidiary at the date of acquisition over the cost of the investment in such Subsidiary; (f) in the case of a successor to the Company by consolidation or merger or as a transferee of its assets, any earnings of the successor corporation prior to such consolidation, merger or transfer of assets; and (g) any portion of such net income that cannot be freely converted into Dollars. "CONSOLIDATED NET WORTH" means, at any time, (a) the total assets of the Company and its Subsidiaries which would be shown as assets on a consolidated balance A-9 sheet of the Company and its Subsidiaries as of such time prepared in accordance with GAAP, MINUS (b) (i) all amounts properly attributable to Minority Interests, if any, and (ii) the total liabilities of the Company and its Subsidiaries which would be shown as liabilities on a consolidated balance sheet of the Company and its Subsidiaries as of such time prepared in accordance with GAAP. "CONTINGENT OBLIGATION" means, as to any Person, any direct or indirect liability of that Person, whether or not contingent, (a) with respect to any Indebtedness, lease, dividend, letter of credit or other obligation (the "primary obligations") of another Person (the "primary obligor"), including any obligation of that Person (i) to purchase, repurchase or otherwise acquire such primary obligations or any security therefor, (ii) to advance or provide funds for the payment or discharge of any such primary obligation, or to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency or any balance sheet item, level of income or financial condition of the primary obligor, (iii) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation, or (iv) otherwise to assure or hold harmless the holder of any such primary obligation against loss in respect thereof (each, a "GUARANTY OBLIGATION"); (b) with respect to any Surety Instrument (other than any Letter of Credit) issued for the account of that Person or as to which that Person is otherwise liable for reimbursement of drawings or payments; (c) to purchase any materials, supplies or other property from, or to obtain the services of, another Person if the relevant contract or other related document or obligation requires that payment for such materials, supplies or other property, or for such services, shall be made regardless of whether delivery of such materials, supplies or other property is ever made or tendered, or such services are ever performed or tendered, or (d) in respect of any Swap Contract. The amount of any Contingent Obligation shall, in the case of Guaranty Obligations, be deemed equal to the stated or determinable amount of the primary obligation in respect of which such Guaranty Obligation is made or, if not stated or if indeterminable, the maximum reasonably anticipated liability in respect thereof, and in the case of other Contingent Obligations other than in respect of Swap Contracts, shall be equal to the maximum reasonably anticipated liability in respect thereof and, in the case of Contingent Obligations in respect of Swap Contracts, shall be equal to the Swap Termination Value. "CONTRACTUAL OBLIGATION" means, as to any Person, any provision of any security issued by such Person or of any agreement, undertaking, contract, indenture, mortgage, deed of trust or other instrument, document or agreement to which such Person is a party or by which it or any of its property is bound. A-10 "CONVERSION/CONTINUATION DATE" means any date on which, under Section 2.04, the Company (a) converts Loans of one Type to another Type, or (b) continues as Loans of the same Type, but with a new Interest Period, Loans having Interest Periods expiring on such date. "CREDIT EXTENSION" means and includes (a) the making of any Revolving Loans hereunder, and (b) the Issuance of any Letters of Credit hereunder. "DEBT" means, with respect to any Person, all items (other than capital stock, capital surplus, retained earnings, deferred revenues and deferred credits), which in accordance with GAAP would be included in determining Indebtedness of such Person as shown on the liability side of a balance sheet of such Person as at the date on which Debt is to be determined. "DEFAULT" means any event or circumstance which, with the giving of notice, the lapse of time, or both, would (if not cured or otherwise remedied during such time) constitute an Event of Default. "DEPRECIATION EXPENSE" means, for any fiscal period, without duplication, the total expense of the Company and its Subsidiaries during such fiscal period for depreciation, calculated in accordance with GAAP. "DOLLARS", "DOLLARS" and "$" each mean lawful money of the United States. "DOMESTIC SUBSIDIARY" means each Subsidiary of the Company organized under the laws of the United States or any State thereof. "EBITDA" means for any period for which the amount thereof is to be determined, the consolidated net income of such Person for such period PLUS the aggregate amounts deducted in determining such consolidated net income in respect of (i) consolidated interest expense of such Person for such period, (ii) income and other taxes measured by income or profits of such Person for such period, and (iii) depreciation and amortization for such period, in each case in accordance with GAAP; PROVIDED, HOWEVER, that consolidated net income shall be computed for these purposes without giving effect to extraordinary losses or extraordinary gains. "EFFECTIVE AMOUNT" means (i) with respect to any Revolving Loans on any date, the aggregate outstanding principal amount thereof after giving effect to any Borrowings and prepayments or repayments of Revolving Loans occurring on such date; and (ii) with respect to any outstanding L/C Obligations on any date, the amount of such L/C Obligations on such date after giving effect to any Issuances of Letters of Credit A-11 occurring on such date and any other changes in the aggregate amount of the L/C Obligations as of such date, including as a result of any reimbursements of outstanding unpaid drawings under any Letters of Credit or any reductions in the maximum amount available for drawing under Letters of Credit taking effect on such date. For purposes of Section 2.07(c) the Effective Amount shall be determined without giving effect to any mandatory prepayments to be made under Section 2.07. "ELIGIBLE ASSIGNEE" means (a) a commercial bank organized under the laws of the United States, or any state thereof, and having a combined capital and surplus of at least $100,000,000; (b) a commercial bank organized under the laws of any other country which is a member of the Organization for Economic Cooperation and Development (the "OECD"), or a political subdivision of any such country, and having a combined capital and surplus of at least the equivalent of $100,000,000, provided that such bank is acting through a branch or agency located in the country in which it is organized or another country which is also a member of the OECD; or (c) a Person that is primarily engaged in the business of commercial banking and that is (i) a Subsidiary of a Bank, (ii) a Subsidiary of a Person of which a Bank is a Subsidiary, or (iii) a Person of which a Bank is a Subsidiary. "ENVIRONMENTAL CLAIMS" means all claims, however asserted, by any Governmental Authority or other Person alleging potential liability or responsibility for violation of any Environmental Law, or for release or injury to the environment. "ENVIRONMENTAL LAWS" means all federal, state or local laws, statutes, common law duties, rules, regulations, ordinances and codes, together with all administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authorities, in each case relating to environmental, health, safety and land use matters. "EQUIVALENT AMOUNT" means the equivalent in an Offshore Currency of an amount expressed in Dollars as determined by the Agent on the date of any borrowing by the Company or any Subsidiary of an Offshore Currency Loan on the basis of the Spot Rate for the purchase of such Offshore Currency with Dollars on such date; PROVIDED, HOWEVER, that if the date of determination of the Equivalent Amount is on a day other than a Business Day, then the Equivalent Amount shall be determined as of the next succeeding Business Day. "ERISA" means the Employee Retirement Income Security Act of 1974 and regulations promulgated thereunder, as amended from time to time. A-12 "ERISA AFFILIATE" means each trade or business, whether or not incorporated, which together with the Company would be treated as a single employer under Title IV of ERISA. "EURODOLLAR RESERVE PERCENTAGE" has the meaning specified in the definition of "Offshore Rate". "EVENT OF DEFAULT" means any of the events or circumstances specified in Section 9.01. "EXCESS SUBORDINATED DEBT ISSUANCE" means, any issuance or issuances of Subordinated Debt which exceed in the aggregate at any time the principal amount of $225,000,000, after giving effect to the amount of any unused portion of Indebtedness permitted under Section 8.05(c). "EXISTING CREDIT AGREEMENT" has the meaning specified in the introductory clause hereto. "EXCHANGE ACT" means the Securities Exchange Act of 1934, and regulations promulgated thereunder, as amended from time to time. "FDIC" means the Federal Deposit Insurance Corporation, and any Governmental Authority succeeding to any of its principal functions. "FEDERAL FUNDS RATE" means, for any day, the rate set forth in the weekly statistical release designated as H.15(519), or any successor publication, published by the Federal Reserve Bank of New York (including any such successor, "H.15(519)") on the preceding Business Day opposite the caption "Federal Funds (Effective)"; or, if for any relevant day such rate is not so published on any such preceding Business Day, the rate for such day will be the arithmetic mean as determined by the 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 three leading brokers of Federal funds transactions in New York City selected by the Agent. "FEE LETTER" has the meaning specified in Section 2.10(a). "FOREIGN SUBSIDIARY" means each Subsidiary of the Company other than a Domestic Subsidiary. "FRB" means the Board of Governors of the Federal Reserve System, and any Governmental Authority succeeding to any of its principal functions. A-13 "FURTHER TAXES" means any and all present or future taxes, levies, assessments, imposts, duties, deductions, fees, withholdings or similar charges (including, without limitation, net income taxes and franchise taxes), and all liabilities with respect thereto, imposed by any jurisdiction on account of amounts payable or paid pursuant to Section 4.01. "FX TRADING OFFICE" means the Foreign Exchange Trading Center #5193, San Francisco, California, of Bank of America, or such other of Bank of America's offices as Bank of America may designate from time to time. "GAAP" means generally accepted accounting principles set forth from time to time in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the U.S. accounting profession), which are applicable to the circumstances as of the date of determination. "GOVERNMENTAL AUTHORITY" means any nation or government, any state or other political subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of, or pertaining to, government, and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing. "GUARANTOR" means each Material Subsidiary party to the Guaranty. "GUARANTY" shall mean the Amended and Restated Subsidiary Guaranty dated as of May 20, 1998 executed by each Material Subsidiary, which is obligated to execute such Guaranty pursuant to the terms of the Agreement, in favor of the Agent for the benefit of the Banks, substantially in the form attached hereto as EXHIBIT H, as the same may be amended from time to time and any supplement or additional guaranty entered into pursuant to Section 7.13. "GUARANTY OBLIGATION" has the meaning specified in the definition of "Contingent Obligation." "HONOR DATE" has the meaning specified in Section 3.03(b). "INDEBTEDNESS" of any Person means, without duplication, (a) all indebtedness for borrowed money; (b) all obligations issued, undertaken or assumed as A-14 the deferred purchase price of property or services (other than trade payables entered into or commissions or bonuses payable in the ordinary course of business on ordinary terms); (c) all non-contingent reimbursement or payment obligations with respect to Surety Instruments; (d) all obligations evidenced by notes, bonds, debentures or similar instruments, including obligations so evidenced incurred in connection with the acquisition of property, assets or businesses; (e) all indebtedness created or arising under any conditional sale or other title retention agreement, or incurred as financing, in either case with respect to property acquired by the Person (even though the rights and remedies of the seller or bank under such agreement in the event of default are limited to repossession or sale of such property); (f) all obligations with respect to capital leases and operating leases which are treated as capital leases for GAAP reporting purposes; (g) all indebtedness referred to in clauses (a) through (f) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien upon or in property (including accounts and contracts rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness; and (h) all Contingent Obligations (excluding any portion of recorded liabilities for legal judgments which are collateralized by cash secured letters of credit or other similar forms of cash collateral). For all purposes of this Agreement, the Indebtedness of any Person shall include all obligations of such Person of the character described in clauses (a) through (h) above to the extent such Person remains legally liable in respect thereof notwithstanding that any such obligation is deemed to be extinguished under GAAP. Notwithstanding anything in this definition to the contrary, the Indebtedness of any Person shall include Indebtedness of any Joint Venture in which such Person is a participant, but only to the extent such Person is legally liable in respect of such Indebtedness. "INDEMNIFIED LIABILITIES" has the meaning specified in Section 11.05. "INDEMNIFIED PERSON" has the meaning specified in Section 11.05. "INDENTURE" means the First Supplemental Indenture dated as of May 26, 1998, between the Company and State Street Bank & Trust Company, as trustee, supplemental to the Indenture dated as of May 26, 1998, as amended, modified, restated, replaced or supplemented from time to time pursuant to the terms thereof and hereof. "INDEPENDENT AUDITOR" has the meaning specified in Section 7.01(a). "INITIAL ADJUSTMENT DATE" means the date which is the six (6) month anniversary of the Third Amendment Effective Date. A-15 "INSOLVENCY PROCEEDING" means, with respect to any Person, (a) any case, action or proceeding with respect to such Person before any court or other Governmental Authority relating to bankruptcy, reorganization, insolvency, liquidation, receivership, dissolution, winding-up or relief of debtors, or (b) any general assignment for the benefit of creditors, composition, marshaling of assets for creditors, or other, similar arrangement in respect of its creditors generally or any substantial portion of its creditors; undertaken under U.S. Federal, state or foreign law, including the Bankruptcy Code. "INTANGIBLE ASSETS", with respect to any Person, means that portion of the book value of the assets of such Person which would be treated as intangibles under generally accepted accounting principles, including all items such as goodwill, trademarks, trade names, brands, trade secrets, customer lists, computer software, copyrights, patents, licenses, franchise conversion rights and rights with respect to any of the foregoing and all unamortized debt or equity discount and expenses. "INTEREST EXPENSE" means, for any period, without duplication, the aggregate of all interest paid or accrued of the Company and its Subsidiaries as determined on a consolidated basis in accordance with GAAP (including without limitation the interest portion of Capitalized Lease Obligations of such Person and capitalized interest and the interest portion of operating leases of such Person which are treated as capital leases for tax purposes), other than deferred financing costs not paid in cash. "INTEREST COVERAGE RATIO" means, as of the date of any determination thereof, the ratio of Consolidated EBITDA for the period of the four (4) most recently ended consecutive fiscal quarters of the Company to Interest Expense for the period of the four (4) most recently ended consecutive fiscal quarters of the Company. With respect to any Person acquired by the Company in accordance with the terms of Section 8.04(d), such Person's EBITDA for the period of the four (4) most recently ended consecutive fiscal quarters of such Person may be included in the determination of Consolidated EBITDA for purposes of compliance with the Interest Coverage Ratio; PROVIDED, that (i) such Person, if a Material Subsidiary, is a Guarantor and is not subject to any restrictions on upstreaming cash to the Company; and (ii) with respect to any includable fiscal quarters preceding the Acquisition of such Person, the actual EBITDA of such Person for such prior fiscal quarters will be used so long as audited financial statements of such Person for each of the preceding four (4) most recently ended consecutive fiscal quarters have been made available to the Agent and the Required Banks; PROVIDED, that unaudited financial statements of such Person may be used during interim fiscal periods so long as such unaudited financial statements are prepared in conformity with GAAP applied on a basis consistent with prior years and audited financial statements of such Person are delivered at the end of such applicable fiscal year. A-16 "INTEREST PAYMENT DATE" means, as to any Loan other than a Base Rate Loan, the last day of each Interest Period applicable to such Loan and, as to any Base Rate Loan, the last Business Day of each calendar quarter; PROVIDED, HOWEVER, that if any Interest Period for an Offshore Rate Loan exceeds three (3) months, the date that falls three (3) months after the beginning of such Interest Period and after each Interest Payment Date thereafter is also an Interest Payment Date. "INTEREST PERIOD" means, as to any Offshore Rate Loan, the period commencing on the Borrowing Date of such Loan or on the Conversion/Continuation Date on which the Loan is converted into or continued as an Offshore Rate Loan, and ending on the date seven (7) days or one (1), two (2), three (3) or six (6) months thereafter as selected by the Company in its Notice of Borrowing or Notice of Conversion/Continuation; PROVIDED, that, the Company may only select a seven (7) day Interest Period up to six (6) times per calendar year; PROVIDED, FURTHER that: (i) if any Interest Period would otherwise end on a day that is not a Business Day, that Interest Period shall be extended to the following Business Day unless the result of such extension would be to carry such Interest Period into another calendar month, in which event such Interest Period shall end on the preceding Business Day; (ii) other than with respect to a seven (7) day Interest Period, any Interest Period pertaining to an Offshore Rate Loan that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period; and (iii) no Interest Period for any Loan shall extend beyond the Revolving Termination Date. "INVESTMENT" means any loan, advance, extension of credit (except for accounts and notes receivable for merchandise sold or services furnished in the ordinary course of business, and amounts paid in advance on account of the purchase price of merchandise to be delivered to the payor within one year of the date of the advance), or purchase of stock, notes, bonds, other securities or evidences of Indebtedness of any Person or capital contribution to any Person, whether in cash or other property. The amount of any Investment shall be its Total Consideration. A-17 "IRS" means the Internal Revenue Service, and any Governmental Authority succeeding to any of its principal functions under the Code. "ISSUANCE DATE" has the meaning specified in Section 3.01(a). "ISSUE" means, with respect to any Letter of Credit, to issue or to extend the expiry of, or to renew or increase the amount of, such Letter of Credit; and the terms "ISSUED," "ISSUING" and "ISSUANCE" have corresponding meanings. "ISSUING BANK" means Bank of America in its capacity as issuer of one or more Letters of Credit hereunder, together with any replacement letter of credit issuer arising under Section 10.01(b) or Section 10.09. "JOINT VENTURE" means a corporation, partnership, limited liability company, joint venture or other similar legal arrangement (whether created by contract or conducted through a separate legal entity) now or hereafter formed by the Company or any of its Subsidiaries with another Person in order to conduct a common venture or enterprise with such Person in which the Company or any of its Subsidiaries owns fifty percent (50%) or less of the voting stock, membership interests or other equity interests of such common venture or enterprise. For purposes of this Agreement, the term "Joint Venture" shall also include any real estate related co-investments by the Company or any of its Subsidiaries in corporations, partnerships, limited liability companies, joint ventures or other similar legal arrangements (whether created by contract or conducted through separate legal entities) now or hereafter formed in order to conduct and operate real estate related projects; PROVIDED THAT (i) the Company or any Subsidiary owns a minority interest in such Joint Venture and (ii) the Indebtedness attributable to the Company or any of its Subsidiaries in connection with such real estate related co- investment in any partnership, joint venture or limited liability company in which the Company or such Subsidiary is a general partner, joint venturer or member shall be nonrecourse Indebtedness. "KOLL" means Koll Real Estate Services, Inc., a Delaware corporation. "KMSC Pledge Agreement" means the Amended and Restated Pledge Agreement dated as of May 20, 1998 from Koll Management Services, Inc., a Delaware corporation to the Agent, for the benefit of the Banks, substantially in the form annexed hereto as EXHIBIT I-3. "KMSC PLEDGED SHARES" means (A) the shares of each of (i) CB Richard Ellis Corporate Facilities Management, Inc., (ii) Koll Investment Management, Inc., (iii) A-18 CBC Fremont, Incorporated (iv) CBS Investment Realty, Inc., (v) Koll Partnerships I, Inc., and (vi) Koll Partnerships II., Inc. and (B) the partnership interests of Koll/CC&F Management Services, a California general partnership each pledged pursuant to the KMSC Pledge Agreement. "KRES PLEDGE AGREEMENT" means the Amended and Restated Pledge Agreement dated as of May 20, 1998 from Koll Real Estate Services, a Delaware corporation to the Agent, for the benefit of the Banks, substantially in the form annexed hereto as EXHIBIT I-4. "KRES PLEDGED SHARES" means the shares of Koll Management Services, Inc., a Delaware corporation, pledged to the Agent for the benefit of the Banks, pursuant to the KRES Pledge Agreement. "KVK PLEDGE AGREEMENT" means the Amended and Restated Pledge Agreement dated as of May 20, 1998 from Koll Von Karman, Inc., a Delaware corporation, to the Agent for the benefit of the Banks, substantially in the form annexed hereto as EXHIBIT I-6. "KVK PLEDGED SHARES" means the partnership interests of Koll/CC&F Management Services, a California general partnership pledged by Koll Von Karman, Inc., a Delaware corporation, to the Agent for the benefit of the Banks pursuant to the KVK Pledge Agreement. "L/C ADVANCE" means each Bank's participation in any L/C Borrowing in accordance with its Pro Rata Share. "L/C AMENDMENT APPLICATION" means an application form for amendment of outstanding standby or commercial documentary letters of credit as shall at any time be in use at the Issuing Bank, as the Issuing Bank shall request. "L/C APPLICATION" means an application form for issuances of standby or commercial documentary letters of credit as shall at any time be in use at the Issuing Bank, as the Issuing Bank shall request. "L/C BORROWING" means an extension of credit resulting from a drawing under any Letter of Credit which shall not have been reimbursed on the date when made nor converted into a Borrowing of Revolving Loans under Section 3.03(b). "L/C COMMITMENT" means the commitment of the Issuing Bank to Issue, and the commitment of the Banks severally to participate in, Letters of Credit from time A-19 to time Issued or outstanding under Article III, in an aggregate amount not to exceed on any date the amount of $25,000,000 with respect to standby letters of credit and in an aggregate amount not to exceed on any date the amount of $5,000,000 with respect to commercial documentary letters of credit, as the same may be reduced as a result of a reduction in the L/C Commitment pursuant to Section 2.05 or as the same shall be reduced as a result of a reduction in the L/C Commitment pursuant to Section 2.07; PROVIDED that the L/C Commitment is a part of the Combined Commitments, rather than a separate, independent commitment. "L/C OBLIGATIONS" means at any time the sum of (a) the aggregate undrawn amount of all Letters of Credit then outstanding, plus (b) the amount of all unreimbursed drawings under all Letters of Credit, including all outstanding L/C Borrowings. "L/C-RELATED DOCUMENTS" means the Letters of Credit, the L/C Applications, the L/C Amendment Applications and any other document relating to any Letter of Credit, including any of the Issuing Bank's standard form documents for letter of credit issuances. "LENDING OFFICE" means, as to any Bank, the office or offices of such Bank specified as its "Lending Office" or "Domestic Lending Office" or "Offshore Lending Office", as the case may be, on SCHEDULE 11.02, or such other office or offices as such Bank may from time to time notify the Company and the Agent. "LETTERS OF CREDIT" means any letters of credit (whether standby letters of credit or commercial documentary letters of credit) Issued by the Issuing Bank pursuant to Article III. "LEVERAGE RATIO" means, as of the date of any determination thereof, the ratio of Consolidated Indebtedness existing as of such date to Consolidated EBITDA for the period of the four (4) most recently ended consecutive fiscal quarters of the Company. With respect to any Person acquired by the Company in accordance with the terms of Section 8.04(d), such Person's EBITDA for the period of the four (4) most recently ended consecutive fiscal quarters of such Person may be included in the determination of Consolidated EBITDA for purposes of compliance with the Leverage Ratio; PROVIDED, that (i) such Person, if a Material Subsidiary, has complied with the requirements of Section 7.13(a) and is not subject to any restrictions on upstreaming cash to the Company, and (ii) with respect to any includable fiscal quarters preceding the Acquisition of such Person, the actual EBITDA of such Person for such prior fiscal quarters will be used so long as audited financial statements of such Person for each of the preceding four (4) most recently ended consecutive fiscal quarters have been made available to the Agent and the Required Banks; PROVIDED, that unaudited financial statements of such Person A-20 may be used during interim fiscal periods so long as such unaudited financial statements are prepared in conformity with GAAP applied on a basis consistent with prior years and audited financial statements of such Person are delivered at the end of such applicable fiscal year. Notwithstanding anything contained herein to the contrary, solely for purposes of determining compliance with Section 8.08, the term "Leverage Ratio" shall exclude from the portion of Consolidated Indebtedness for purposes of determining the ratio, Permitted Melody Indebtedness in an aggregate amount not to exceed $50,000,000 at any time. "LIEN" means any security interest, mortgage, deed of trust, pledge, hypothecation, assignment, charge or deposit arrangement, encumbrance, lien (statutory or other) or preferential arrangement of any kind or nature whatsoever in respect of any property (including those created by, arising under or evidenced by any conditional sale or other title retention agreement, the interest of a lessor under a capital lease, any financing lease having substantially the same economic effect as any of the foregoing, or the filing of any financing statement naming the owner of the asset to which such lien relates as debtor, under the Uniform Commercial Code or any comparable law) and any contingent or other agreement to provide any of the foregoing, but not including the interest of a lessor under an operating lease. "LOAN" means an extension of credit by a Bank to the Company under Article II or Article III in the form of a Revolving Loan or L/C Advance. "LOAN DOCUMENTS" means this Agreement, any Notes, the Guaranty, the Pledge Agreements, the Support Agreement, the Fee Letter, the L/C-Related Documents and all other documents delivered to the Agent or any Bank in connection herewith. "LONDON BUSINESS DAY" means a Business Day on which commercial banks in London, U.K. are open for domestic and international business. "MARGIN STOCK" means "margin stock" as such term is defined in Regulation G, T, U or X of the FRB. "MATERIAL ADVERSE EFFECT" means (a) a material adverse change in, or a material adverse effect upon, the operations, business, properties or condition (financial or otherwise) of the Company and its Subsidiaries taken as a whole; (b) a material impairment of the ability of the Company or any Subsidiary to perform under any Loan Document to which it is a party and to avoid any Event of Default; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against the Company or any Subsidiary of any Loan Document to which it is a party. A-21 "MATERIAL SALE OF ASSETS" has the meaning specified in Section 8.03. "MATERIAL SUBSIDIARY" means: (a) with respect to any Domestic Subsidiary, the Persons listed on ANNEX C hereto and in addition any other Subsidiary which has achieved, as of the date of any determination thereof, total (gross) revenues for the preceding four (4) fiscal quarter period in excess of $1,000,000, based upon the Company's most recent annual or quarterly financial statements delivered to the Agent under Section 7.01; and (b) with respect to any Foreign Subsidiary, (i) a Foreign Subsidiary which has achieved, as of the date of any determination thereof, total (gross) revenues for the preceding four (4) fiscal quarter period in excess of $10,000,000 based upon the Company's most recent annual or quarterly financial statements delivered to the Agent under Section 7.01, or (ii) a Foreign Subsidiary with total (gross) revenues of less than $10,000,000 (as determined in accordance with the preceding clause (b)(i)), whose stock has been pledged in accordance with Section 7.13(a), so long as no Default or Event of Default shall have occurred or be continuing; PROVIDED, THAT if any of total (gross) revenues (as calculated in the manner set forth above) of all Foreign Subsidiaries that are not deemed Material Subsidiaries is, in the aggregate, greater than or equal to twenty-five percent (25%) of the consolidated total (gross) revenues (as calculated above) of the Company and its Subsidiaries, then Foreign Subsidiaries, beginning with the Foreign Subsidiary with the largest total (gross) revenues (for purposes of this clause (b), calculated for the preceding four (4) fiscal quarter period) and continuing in descending order of size of total (gross) revenues, shall be deemed Material Subsidiaries until the total (gross) revenues of all remaining Foreign Subsidiaries that are not Material Subsidiaries are less than twenty-five percent (25%) of the consolidated total (gross) revenues of the Company and its Subsidiaries. "MELODY" means L.J. Melody & Company, a Texas corporation. "MELODY LOAN ARBITRAGE FACILITY" means a credit facility provided to Melody by any depository bank in which Melody deposits payments made with respect to mortgage loans for which Melody is servicer prior to distribution of such payments to or for the benefit of the holders of such loans, so long as (i) Melody applies all proceeds of loans made under such credit facility to purchase Permitted Investments, and (ii) all A-22 Permitted Investments purchased by Melody with the proceeds of loans thereunder (and proceeds thereof and distributions thereon) are pledged to the depository bank providing such credit facility, and such bank has a first priority perfected security interest therein, to secure loans made under such credit facility. "MELODY MORTGAGE WAREHOUSING FACILITY" means the credit facility provided by Residential Funding Corporation ("RFC") or any substantially similar facility extended to any Mortgage Banking Subsidiary in connection with any Mortgage Banking Activities, pursuant to which RFC or another lender makes loans to Melody (or any Mortgage Banking Subsidiary), the proceeds of which loans are applied by Melody (or any Mortgage Banking Subsidiary) to fund commercial mortgage loans originated and owned by Melody (or any Mortgage Banking Subsidiary) subject to an unconditional, irrevocable commitment to purchase such mortgage loans by the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Association or any other quasi-federal governmental entity, so long as loans made by RFC or such other lender to Melody (or any Mortgage Banking Subsidiary) thereunder are secured by a pledge of commercial mortgage loans made by Melody (or any Mortgage Banking Subsidiary) with the proceeds of such loans, and RFC or such other lender has a perfected first priority security interest therein, to secure loans made under such credit facility. "MELODY WORKING CAPITAL FACILITY" means a credit facility provided by a financial institution to Melody, so long as (i) the proceeds of loans thereunder are applied only to provide working capital to Melody, (ii) loans under such credit facility are unsecured, and (iii) the aggregate principal amount of loans outstanding under such credit facility at no time exceeds $1,000,000. "MINORITY INTERESTS" means any shares of stock of any class of any of the Subsidiaries (other than directors' qualifying shares as required by law) that are not owned by the Company or another Subsidiary. "MINORITY INTERESTS" shall be valued by valuing "MINORITY INTERESTS" constituting preferred stock at the voluntary or involuntary liquidation value of such preferred stock, whichever is greater, and by valuing "MINORITY INTERESTS" constituting common stock at the book value of capital and surplus applicable thereto adjusted, if necessary, to reflect any changes from the book value of such common stock required by the foregoing method of valuing "MINORITY INTERESTS" in preferred stock. "MORTGAGE BANKING ACTIVITIES" means the origination by a Mortgage Banking Subsidiary of mortgage loans in respect of commercial and multi-family residential real property, and the sale (including secondary sales by other Mortgage Banking Subsidiaries), put or assignment of such mortgage loans and the related mortgages to another Person (other than the Company or another of its Subsidiaries A-23 which is not a Mortgage Banking Subsidiary) within 60 days after the origination thereof; PROVIDED, HOWEVER, that in each case prior to origination of any mortgage loan, the Company or a Mortgage Banking Subsidiary, as the case may be, shall have entered into a legally binding and enforceable purchase and sale agreement with respect to such mortgage loan with a Person that purchases such loans in the ordinary course of its business. "MORTGAGE BANKING SUBSIDIARY" means Melody and its Subsidiaries that are engaged in Mortgage Banking Activities. "NET CASH PROCEEDS" has the meaning set forth in the Indenture. "NET PROCEEDS" shall mean, with respect to any Excess Subordinated Debt Issuance, the proceeds resulting therefrom net of (x) cash expenses of issuance (including brokerage fees, if any, and payment of principal, premium and interest of Indebtedness), and (y) incremental income taxes paid or payable as a result thereof. "NOTE" means a promissory note executed by the Company in favor of a Bank pursuant to Section 2.02(b), in substantially the form of Exhibit G. "NOTICE OF BORROWING" means a notice in substantially the form of EXHIBIT A. "NOTICE OF CONVERSION/CONTINUATION" means a notice in substantially the form of EXHIBIT B. "OBLIGATIONS" means all advances, debts, liabilities, obligations, covenants and duties arising under any Loan Document owing by the Company to any Bank, the Agent, or any Indemnified Person, whether direct or indirect (including those acquired by assignment), absolute or contingent, due or to become due, now existing or hereafter arising. "OFFSHORE CURRENCY" means a currency other than Dollars. "OFFSHORE CURRENCY LOAN" shall have the meaning specified in Section 8.05(e). "OFFSHORE RATE" means, for any Interest Period, with respect to Offshore Rate Loans comprising part of the same Borrowing, the rate of interest per annum (rounded upward to the next 1/16th of 1%) determined by the Agent as follows: A-24 Offshore Rate = LIBOR ----------------------- 1.00 - Eurodollar Reserve Percentage Where, "EURODOLLAR RESERVE PERCENTAGE" means for any day for any Interest Period the maximum reserve percentage (expressed as a decimal, rounded upward to the next 1/100th of 1%) in effect on such day (whether or not applicable to any Bank) under regulations issued from time to time by the FRB for determining the maximum reserve requirement (including any emergency, supplemental or other marginal reserve requirement) with respect to Eurocurrency funding (currently referred to as "Eurocurrency liabilities"); and "LIBOR" means the rate calculated by the Agent on the basis of the offered rates for deposits in Dollars for a period equal to the relevant Interest Period which appear on Dow Jones Markets Page 3750 as the "British Bankers Association Interest Settlement Rate" as of 11:00 a.m. London time, on the day that is two London Business Days preceding the Borrowing Date or the Conversion/Continuation Date, as the case may be, for the relevant Offshore Rate Loan. If at least two such offered rates appear on the Dow Jones Markets Page 3750 as the "British Bankers Association Interest Settlement Rate," LIBOR with respect to such Offshore Rate Loan will be the arithmetic mean of such offered rates (rounded to the nearest 0.0001 percentage point). If fewer than two offered rates appear, the rate will be the arithmetic mean (rounded to the nearest 0.0001 percentage point) of the rates quoted by the Reference Banks at approximately 11:00 a.m., New York time, two (2) London Business Days prior to the Borrowing Date or Conversion/Continuation Date for the relevant Offshore Rate Loan, as the case may be. The Offshore Rate shall be adjusted automatically as to all Offshore Rate Loans then outstanding as of the effective date of any change in the Eurodollar Reserve Percentage. "OFFSHORE RATE LOAN" means a Loan that bears interest based on the Offshore Rate. "ORGANIZATION DOCUMENTS" means, for any corporation, the certificate or articles of incorporation, the bylaws, any certificate of determination or instrument relating to the rights of preferred shareholders of such corporation, any shareholder rights agreement, and all applicable resolutions of the Board (or any committee thereof) of such corporation. A-25 "OTHER TAXES" means any present or future stamp, court or documentary taxes or any other excise or property taxes, charges or similar levies which arise from any payment made hereunder or from the execution, delivery, performance, enforcement or registration of, or otherwise with respect to, this Agreement or any other Loan Documents. "PARTICIPANT" has the meaning specified in Section 11.08(d). "PBGC" means the Pension Benefit Guaranty Corporation established under Section 4002 of ERISA, and any successor thereto. "PERMITTED ACQUISITION" means any Acquisition permitted by Section 8.04 hereof. "PERMITTED INVESTMENTS" means any one of the following Investments: (a) Investments held by the Company or any Subsidiary in the form of cash equivalents or short term marketable securities; (b) extensions of credit in the nature of accounts receivable or notes receivable arising from the sale or lease of goods or services in the ordinary course of business; (c) Investments by the Company in any Material Subsidiary or by any Material Subsidiary in another Material Subsidiary or in the Company; (d) Investments by the Company or any of its Material Subsidiaries in any non-Material Subsidiaries; PROVIDED, that, (i) the aggregate outstanding principal amount of such Investments (without duplication) do not exceed $ $20,000,000 and (ii) the proceeds of such Investments are used solely for the general working capital needs of any such non-Material Subsidiary; (e) Investments incurred in order to consummate Permitted Acquisitions; PROVIDED, that (i) such Acquisitions are undertaken in accordance with all applicable Requirements of Law; (ii) the prior, effective written consent or approval to such Acquisition of the Board or equivalent governing body of the acquiree is obtained; and (c) all other requirements of Section 8.04 have been satisfied; (f) Investments in the Whittier Transaction in an amount not to exceed $8,000,000 in the aggregate; A-26 (g) Investments incurred in connection with the Melody Loan Arbitrage Facility or the Melody Mortgage Warehousing Facility; (h) Investments in Joint Ventures not exceeding $50,000,000 in the aggregate during any consecutive twelve (12) month period; PROVIDED, that the aggregate amount of Investments in any Joint Ventures during any consecutive twelve (12) month period shall be included as an "Acquisition" for all purposes of Section 8.04(d); and (i) Other Investments existing on the Third Amendment Effective Date and set forth in SCHEDULE 8.13 hereto. "PERMITTED LIENS" has the meaning specified in Section 8.01. "PERMITTED MELODY INDEBTEDNESS" means Indebtedness of Melody under the Melody Loan Arbitrage Facility and the Melody Working Capital Facility and Indebtedness of any Mortgage Banking Subsidiary under the Melody Mortgage Warehousing Facility. "PERSON" means an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture or Governmental Authority. "PLAN" means an employee benefit plan (as defined in Section 3(3) of ERISA) that is or, within the preceding five years, has been established or maintained, or to which contributions are or, within the preceding five years, have been made or required to be made, by the Company or any ERISA Affiliate or with respect to which the Company or any ERISA Affiliate may have any liability. "PLEDGE AGREEMENTS" means collectively, each of the Company Pledge Agreement, the CB Ellis Pledge Agreement, the WREAP Pledge Agreement, the KRES Pledge Agreement, the KMSC Pledge Agreement, the KVK Pledge Agreement, the CB Ellis Canadian Pledge Agreement, the CB Ellis English Pledge Agreement, the Company English Pledge Agreement, the Relam Australian Pledge Agreement and the Relam French Pledge Agreement, as each of the same may be amended from time to time, and any supplement to any Pledge Agreement or any additional Pledge Agreement entered into from time to time pursuant to Section 7.13. "PLEDGED SHARES" means all of the Company Pledged Shares, the CB Ellis Pledged Shares, the WREAP Pledged Shares, the KRES Pledged Shares, the KMSC A-27 Pledged Shares, the KVK Pledged Shares, the CB Ellis Canadian Pledged Shares, the CB Ellis English Pledged Shares, the Company English Pledged Shares, the Relam Australian Pledged Shares, the Relam French Pledged Shares and any additional pledged shares, partnership interests or membership interests pledged pursuant to a Pledge Agreement. "PROJECTIONS" has the meaning specified in Section 6.11(b). "PRO RATA SHARE" means, as to any Bank at any time, the percentage equivalent (expressed as a decimal, rounded to the ninth decimal place) at such time of such Bank's Commitment divided by the Combined Commitments. "PROHIBITED TRANSACTION" means, with respect to any Plan, a transaction described in (i) Section 406 of ERISA which is not exempt pursuant to Section 408 of ERISA, or (ii) Section 4957(c)(1) of the Code which is not exempt pursuant to Section 4975(c)(2) or Section 4975(d) of the Code. "REFERENCE BANKS" means Wells Fargo Bank, N.A., The Bank of Nova Scotia, Credit Lyonnais Los Angeles Branch and the Agent or such other leading banks as shall be designated from time to time by the Company and which shall be reasonably satisfactory to the Agent and the Required Banks. "RELAM" means Relam Amsterdam Holdings B.V., a Netherlands company. "RELAM AUSTRALIAN PLEDGE AGREEMENT" means the Equitable Mortgage of Shares dated as of August 13, 1999 from Relam to the Agent for the benefit of the Banks. "RELAM AUSTRALIAN PLEDGED SHARES" means the shares of CB Richard Ellis Pty Ltd., an Australian company, pledged to the Agent for the benefit of the Banks pursuant to the Relam Australian Pledge Agreement. "RELAM FRENCH PLEDGE AGREEMENT" means the Pledge Over Financial Instrument (Share) Account dated as of August 18, 1999 from Relam to the Agent for the benefit of Banks. "RELAM FRENCH PLEDGED SHARES" means the shares of CB Richard Ellis S.A., a French company, pledged to the Agent for the benefit of the Banks pursuant to the Relam French Pledge Agreement. "REPLACEMENT BANK" has the meaning specified in Section 4.08. A-28 "REQUIRED BANKS" means at any time Banks then holding at least 51% of the then aggregate unpaid principal amount of the Loans, or, if no amounts are outstanding, Banks then having at least 51% of the aggregate amount of the Commitments. "REQUIREMENT OF LAW" means, as to any Person, any law (statutory or common), treaty, rule or regulation or determination of an arbitrator or of a Governmental Authority, in each case applicable to or binding upon the Person or any of its property or to which the Person or any of its property is subject. "RESPONSIBLE OFFICER" means the chief executive officer, the president or any executive vice president of such Person, or any other officer having substantially the same authority and responsibility; or, with respect to compliance with financial covenants, the chief financial officer or the treasurer of the Company, or any other officer having substantially the same authority and responsibility. "RESTRICTED INVESTMENT" means any Investment other than a Permitted Investment. "RESTRICTED PAYMENT" means, (a) any dividend or other distribution, direct or indirect, in respect of any shares of the Capital Stock of the Company or any of its Subsidiaries, other than dividends or other distributions payable solely in shares of its Capital Stock, or warrants, rights, or options therefor, and dividends or other distributions by any of its Subsidiaries to the Company or another Subsidiary; and (b) any purchase, redemption, retirement or other acquisition of any shares of Capital Stock of the Company or any of its Subsidiaries, now or hereafter outstanding (except for any purchase, redemption, retirement or other acquisition of any shares of Capital Stock of any Subsidiary by the Company or another Subsidiary), or of any warrants, rights or options evidencing a right to purchase or acquire any such shares (except in exchange for other shares of Capital Stock or warrants, rights or options evidencing a right to purchase or acquire any such shares). "REVOLVING LOAN" has the meaning specified in Section 2.01, and may be a Base Rate Loan or an Offshore Rate Loan (each, a "TYPE" of Revolving Loan). "REVOLVING TERMINATION DATE" means the earlier to occur of: (a) the fifth anniversary following May 20, 1998; and A-29 (b) the date on which the Commitments terminate in accordance with the provisions of this Agreement; provided, that in no event shall the Revolving Termination Date be later than June 30, 2003. "SALE" has the meaning specified in Section 8.03 hereof. "SEC" means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions. "SENIOR MANAGING AGENTS" has the meaning specified in the introductory clause hereto. "SOLVENT" means, with respect to any Person that: (i) the total present fair value and fair salable value of such Person's assets on a going concern basis is in excess of the total amount of such Person's liabilities, including contingent liabilities; (ii) such Person is able to pay its liabilities and contingent liabilities as they become due; and (iii) such Person does not have unreasonably small capital with which to engage in such Person's business as theretofore operated and as proposed to be operated. "SPOT RATE" means, with respect to a currency, the rate quoted by Bank of America as the spot rate for the purchase by Bank of America of such currency with another currency through its FX Trading Office at approximately 8:00 a.m. (San Francisco time) on the date two Business Days prior to the date as of which the foreign exchange computation is made. "SUBORDINATED DEBT" means any Indebtedness that is in any manner subordinated in right of payment or security in any respect to Indebtedness evidenced by the Notes under this Agreement, including, without limitation, the Indebtedness evidenced by the Subordinated Note Documents. "SUBORDINATED NOTE DOCUMENTS" means the Subordinated Notes, the Indenture and all other documents and instruments executed in connection therewith. "SUBORDINATED NOTES" means the 8.875 % senior subordinated notes of the Company due 2006 in the aggregate principal amount of $175,000,000 issued pursuant to the Indenture. A-30 "SUBSIDIARY" of a Person means any corporation, association, partnership, limited liability company, joint venture or other business entity of which more than 50% of the voting stock, membership interests or other equity interests (in the case of Persons other than corporations), is owned or controlled directly or indirectly by the Person, or one or more of the Subsidiaries of the Person, or a combination thereof. Unless the context otherwise clearly requires, references herein to a "Subsidiary" refer to a Subsidiary of the Company. "SUPPORT AGREEMENT" means the Support Agreement dated as of October 29, 1999 from each of (i) Company, (ii) CB Ellis, (iii) WREAP, (iv) Melody, (v) CB Richard Ellis Corporate Facilities Management, Inc., (vi) Koll Investment Management, Inc., (vii) Koll Partnerships I, Inc., (viii) Koll Partnerships II, Inc., (ix) Hold Par A, (x) Hold Par B, (xi) Relam and (xii) CB Richard Ellis S.A. to the Agent for the benefit of the Banks. "SURETY INSTRUMENTS" means all letters of credit (including standby and commercial), banker's acceptances, bank guaranties, shipside bonds, surety bonds and similar instruments. "SWAP CONTRACT" means any agreement, whether or not in writing, relating to any transaction that is a rate swap, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap or option, bond, note or bill option, interest rate option, forward foreign exchange transaction, cap, collar or floor transaction, currency swap, cross-currency rate swap, swaption, currency option or any other, similar transaction (including any option to enter into any of the foregoing) or any combination of the foregoing, and, unless the context otherwise clearly requires, any master agreement relating to or governing any or all of the foregoing. "SWAP TERMINATION VALUE" means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a) the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined by the Company based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include any Bank). "TAXES" means any and all present or future taxes, levies, assessments, imposts, duties, deductions, fees, withholdings or similar charges, and all liabilities with A-31 respect thereto, excluding, in the case of each Bank and the Agent, respectively, taxes imposed on or measured by its net income by the jurisdiction (or any political subdivision thereof) under the laws of which such Bank or the Agent, as the case may be, is organized or maintains its lending office hereunder. "TERMINATION EVENT" means with respect to a Plan included in clause (i) of the definition of the term "Plan" hereunder, (i) the occurrence of a reportable event described in Section 4043(b) of ERISA, including any failure to satisfy the minimum funding standard of Section 412 of the Code of Section 302 of ERISA regardless of any waiver issued under Section 412(d) of the Code or Section 303 of ERISA, other than a reportable event occurring with response to a Plan as to which the PBGC has waived the 30-day notice requirement; (ii) a cessation of operations as described in Section 4062(e) of ERISA by the Company or any ERISA Affiliate; (iii) the filing of a notice under Section 4041 of ERISA of intent to terminate a Plan which is a single-employer plan or the termination of such Plan; (iv) the receipt of notice by the Company or an ERISA Affiliate of the occurrence of an event described in Section 4041A of ERISA which constitutes a termination of a Plan which is a multiemployer plan; (v) the institution of proceedings by the PBGC under Section 4042 of ERISA to terminate a Plan or to appoint a trustee to administer a Plan, or the receipt of notice by the Company or an ERISA Affiliate that such action has been taken with respect to a Plan which is a multiemployer plan; (vi) a withdrawal by the Company or an ERISA Affiliate from a Plan which is a single-employer plan with respect to which the Company or such ERISA Affiliate was a "substantial employer" under Section 4001(a)(2) of ERISA; (vii) a complete or partial withdrawal by the Company or an ERISA Affiliate from a Plan which is a multiemployer plan as described in Section 4203 or 4205 of ERISA; (viii) the receipt of notice by the Company or an ERISA Affiliate that a Plan which is a multiemployer plan is in reorganization or is insolvent under Sections 4241 or 4245 of ERISA; and A-32 (ix) the entering into of a transaction by the Company or an ERISA Affiliate a principal purpose of which is to evade or avoid liability under Title IV of ERISA and that could be subject to Section 4069(a) or 42 ERISA. "THIRD PARTY INTERACTIVES" means all Persons with whom each of the Company and its Material Subsidiaries exchanges data electronically in the ordinary course of business, including, without limitation, customers, suppliers, third-party vendors, subcontractors, processors-converters, shippers and warehousemen. "THIRD AMENDMENT EFFECTIVE DATE" shall have the meaning set forth in Amendment No. 3 dated as of October 29, 1999 to Amended and Restated Credit Agreement by and among the Company, the Agent, the Issuing Bank and the Banks signatory thereto. "TOTAL CONSIDERATION" means, with respect to any Acquisition by any Person, (a) the sum of (i) all cash consideration paid or agreed to be paid by such Person to make such Acquisition (inclusive of payments by such Person of the seller's professional fees and expenses and other out-of-pocket expenses in connection therewith), PLUS (ii) the fair market value of all non-cash consideration paid by such Person in connection therewith, PLUS (iii) an amount equal to the principal or stated amount of all liabilities assumed or incurred by such Person in connection therewith excluding trade payables and accruals incurred in the ordinary course, MINUS (b) cash, if any, acquired as part of such Acquisition. The principal or stated amount of any liability assumed or incurred by a Person in connection with an Acquisition which is a contingent liability shall be an amount equal to the stated amount of such liability or, if the same is not stated, such contingent liability shall be an amount equal to (i) if such contingent liability is required to be reflected on a balance sheet of such Person in accordance with GAAP, the amount required to be so reflected and (ii) if such contingent liability is not required to be reflected on a balance sheet of such Person in accordance with GAAP, the maximum reasonably anticipated amount payable by such Person in respect thereof as determined by such Person in good faith. Notwithstanding anything herein to the contrary, the present value of any liability assumed in connection with any covenants not to compete shall be discounted by a rate equal to the Base Rate. "TYPE" has the meaning specified in the definition of "Revolving Loan." "UNFUNDED CURRENT LIABILITY" means, with respect to all Plans included in clause (i) of the definition of the term "Plan" hereunder (other than any such Plan referred to in the definition of the term "Withdrawal Liability" hereunder), an amount equal to the sum of the amounts (none of which shall be less than zero), if any, by which the current A-33 liability of each such Plan under Section 412(c)(7)(B) of the Code, as most recently determined (which determination shall be made no less frequently than annually), exceeds the value of the assets of each such Plan, as determined under Section 412(c)(2) of the Code and the regulations thereunder as of the same date for which the current liability of the Plan is determined. "UNITED STATES" and "U.S." each means the United States of America. "VOTING STOCK" with respect to a corporation or limited liability company, means the stock or membership interests, as the case may be, of such corporation or limited liability company the holders of which are ordinarily, in the absence of contingencies, entitled to elect members of the Board (or other governing body), as the case may be, of such corporation or limited liability company, and with respect to any partnership, shall mean the partnership interests in such partnership the owners of which are entitled to manage the affairs of such partnership, or vote in connection with the management of the affairs of such partnership or the designation of another Person as the Person entitled to manage the affairs of such partnership (it being understood that, in the case of any partnership, "shares" of Voting Stock shall refer to such partnership interests). "WITHDRAWAL LIABILITY" means, with respect to all Plans included in clause (i) of the definition of the term "Plan" hereunder which are single-employer plans having two or more contributing sponsors at least two of whom are not common control or which are multiemployer plans, an amount equal to the sum of the liabilities to all such Plans of the Company and all ERISA Affiliates under Sections 4063, 4064, and 4211 of ERISA if the Company and all such ERISA Affiliates were to withdraw from all such Plans or if all such Plans were to terminate. "WHITTIER TRANSACTION" means the transaction described on ANNEX D hereto. "WHOLLY-OWNED SUBSIDIARY" means any corporation in which (other than directors' qualifying shares required by law) 100% of the Capital Stock of each class having ordinary voting power, and 100% of the Capital Stock of every other class, in each case, at the time as of which any determination is being made, is owned, beneficially and of record, by the Company, or by one or more of the other Wholly-Owned Subsidiaries, or both. "WREAP PLEDGE AGREEMENT" means the Amended and Restated Pledge Agreement dated as of May 20, 1998 from each of Hold Par A, a Delaware general partnership ("Hold Par A"), Hold Par B, a Delaware general partnership ("Hold Par B") A-34 and Westmark Real Estate Acquisition Partnership, L.P. ("WREAP") to the Agent, for the benefit of the Banks, substantially in the form annexed hereto as EXHIBIT I-5. "WREAP PLEDGED SHARES" means the membership units of Westmark Realty Advisors LLC pledged by each of Hold Par A, Hold Par B and WREAP to the Agent, for the benefit of the Banks, pursuant to the WREAP Pledge Agreement. "YEAR 2000 DATE-SENSITIVE SYSTEM/COMPONENT" shall mean, as to any Person, any system software, network software, applications software, data base, computer file, embedded microchip, firmware or hardware that accepts, creates, manipulates, sorts, sequences, calculates, compares or outputs calendar-related data accurately; such systems and components shall include, without limitation, mainframe computers, file server/client systems, computer workstations, routers, hubs, other network-related hardware, and other computer-related software, firmware or hardware and information processing and delivery systems of any kind and telecommunications systems and other communications processors, security systems, alarms, elevators and HVAC systems. "YEAR 2000 PROBLEMS" shall mean, with respect to each of the Company and its Material Subsidiaries, limitations on the capacity or readiness of any of its Year 2000 Date-Sensitive Systems/Components to accurately accept, create, manipulate, sort, sequence, calculate, compare or output calendar date information with respect to calendar year 1999 or any subsequent calendar year beginning on or after January 1, 2000 (including leap year computations), including, without limitation, exchanges of information among Year 2000 Date-Sensitive Systems/Components of the Company and its Material Subsidiaries and exchanges of information among the Company, its Material Subsidiaries and Year 2000 Date-Sensitive Systems/Components of Third Party Interactives and functionality of peripheral interfaces, firmware and embedded microchips. 1.02 OTHER INTERPRETIVE PROVISIONS. (a) The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms. (b) The words "hereof", "herein", "hereunder" and similar words refer to this Agreement as a whole and not to any particular provision of this Agreement; and Section, Annex, Schedule and Exhibit references are to this Agreement unless otherwise specified. (c) (i) The term "documents" includes any and all instruments, documents, agreements, certificates, indentures, notices and other writings, however evidenced. A-35 (ii) The term "including" is not limiting and means "including without limitation." (iii) In the computation of periods of time from a specified date to a later specified date, the word "from" means "from and including"; the words "to" and "until" each mean "to but excluding", and the word "through" means "to and including." (d) Unless otherwise expressly provided herein, (i) references to agreements (including this Agreement) and other contractual instruments shall be deemed to include all subsequent amendments and other modifications thereto, but only to the extent such amendments and other modifications are not prohibited by the terms of any Loan Document, and (ii) references to any statute or regulation are to be construed as including all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting the statute or regulation. (e) The captions and headings of this Agreement are for convenience of reference only and shall not affect the interpretation of this Agreement. (f) This Agreement and other Loan Documents may use several different limitations, tests or measurements to regulate the same or similar matters. All such limitations, tests and measurements are cumulative and shall each be performed in accordance with their terms. (g) This Agreement and the other Loan Documents are the result of negotiations among and have been reviewed by counsel to the Agent, the Company and the other parties, and are the products of all parties. Accordingly, they shall not be construed against the Banks, the Agent or the Arranger merely because of the Agent's, Banks' or Arranger's involvement in their preparation. 1.03 ACCOUNTING PRINCIPLES. (a) Unless the context otherwise clearly requires, all accounting terms not expressly defined herein shall be construed, and all financial computations required under this Agreement shall be made, in accordance with GAAP, consistently applied. (b) References herein to "fiscal year" and "fiscal quarter" refer to such fiscal periods of the Company. A-36 ARTICLE II THE CREDITS 2.01 AMOUNTS AND TERMS OF COMMITMENTS. Each Bank severally agrees, on the terms and conditions set forth herein, to make loans to the Company (each such loan, a "REVOLVING LOAN") from time to time on any Business Day during the period from the Closing Date to the Revolving Termination Date, in an aggregate amount not to exceed at any time outstanding the amount set forth on SCHEDULE 2.01 (such amount, as the same may be reduced under Sections 2.05 or 2.07 or as a result of one or more assignments under Section 11.08, the Bank's "COMMITMENT"); PROVIDED, HOWEVER, that, after giving effect to any Borrowing of Revolving Loans, the Effective Amount of all outstanding Revolving Loans, and the Effective Amount of all L/C Obligations, shall not at any time exceed the Combined Commitments; and PROVIDED FURTHER, that the Effective Amount of the Revolving Loans of any Bank plus the participation of such Bank in the Effective Amount of all L/C Obligations shall not at any time exceed such Bank's Commitment. Within the limits of each Bank's Commitment, and subject to the other terms and conditions hereof, the Company may borrow under this Section 2.01, prepay under Section 2.06 and reborrow under this Section 2.01. 2.02 LOAN ACCOUNTS. (a) The Loans made by each Bank and the Letters of Credit Issued by the Issuing Bank shall be evidenced by one or more accounts or records maintained by such Bank or Issuing Bank, as the case may be, in the ordinary course of business. The accounts or records maintained by the Agent, the Issuing Bank and each Bank shall be conclusive absent manifest error of the amount of the Loans made by the Banks to the Company and the Letters of Credit Issued for the account of the Company, and the interest and payments thereon. Any failure so to record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Company hereunder to pay any amount owing with respect to the Loans or any Letter of Credit. (b) Upon the request of any Bank made through the Agent, the Loans made by such Bank may be evidenced by one or more Notes, instead of or in addition to loan accounts. Each such Bank shall endorse on the schedules annexed to its Note(s) the date, amount and maturity of each Loan made by it and the amount of each payment of principal made by the Company with respect thereto. Each such Bank is irrevocably authorized by the Company to endorse its Note(s) and each Bank's record shall be conclusive absent manifest error; PROVIDED, HOWEVER, that the failure of a Bank to make, or an error in making, a notation thereon with respect to any Loan shall not limit or otherwise affect the obligations of the Company hereunder or under any such Note to such Bank. A-37 2.03 PROCEDURE FOR BORROWING. (a) Each Borrowing of Revolving Loans shall be made upon the Company's irrevocable written notice delivered to the Agent in the form of a Notice of Borrowing (which notice must be received by the Agent (i) prior to 10:00 a.m. (San Francisco time) three Business Days prior to the requested Borrowing Date, in the case of Offshore Rate Loans; and (ii) prior to 9:00 A.M. (San Francisco time) on the requested Borrowing Date, in the case of Base Rate Loans, specifying: (A) the amount of the Borrowing, which shall be in an aggregate minimum amount of $5,000,000 or any multiple of $1,000,000 in excess thereof; (B) the requested Borrowing Date, which shall be a Business Day; (C) the Type of Loans comprising the Borrowing; and (D) with respect to Offshore Rate Loans; the duration of the Interest Period applicable to such Loans included in such notice. If the Notice of Borrowing fails to specify the duration of the Interest Period for any Borrowing comprised of Offshore Rate Loans, such Interest Period shall be one (1) month. (b) The Agent will promptly notify each Bank of its receipt of any Notice of Borrowing and of the amount of such Bank's Pro Rata Share of that Borrowing. (c) Each Bank will make the amount of its Pro Rata Share of each Borrowing available to the Agent for the account of the Company at the Agent's Payment Office by 11:00 a.m. (San Francisco time) on the Borrowing Date requested by the Company in funds immediately available to the Agent. The proceeds of all such Loans will then be made available to the Company by the Agent at such office by crediting the account of the Company on the books of Bank of America with the aggregate of the amounts made available to the Agent by the Banks and in like funds as received by the Agent or by wire transfer in accordance with written instructions provided to the Agent by the Company of like funds as received by the Agent. (d) After giving effect to any Borrowing, unless the Agent shall otherwise consent, there may not be more than five (5) different Interest Periods in effect. 2.04 CONVERSION AND CONTINUATION ELECTIONS. (a) The Company may, upon irrevocable written notice to the Agent in accordance with Section 2.04(b): A-38 (i) elect, as of any Business Day, in the case of Base Rate Loans, or as of the last day of the applicable Interest Period, in the case of any other Type of Revolving Loans, to convert any such Loans (or any part thereof in an amount not less than $5,000,000, or that is in an integral multiple of $1,000,000 in excess thereof) into Loans of any other Type; or (ii) elect as of the last day of the applicable Interest Period, to continue any Offshore Rate Loans (or any part thereof in an amount not less than $5,000,000, or that is in an integral multiple of $1,000,000 in excess thereof) with Interest Periods identical to the then expiring Offshore Rate Loan or with different Interest Periods as specified in the Notice of Conversion/Continuation. provided, that if at any time the aggregate amount of Offshore Rate Loans in respect of any Borrowing is reduced, by payment, prepayment, or conversion of part thereof to be less than $5,000,000, such Offshore Rate Loans shall automatically convert into Base Rate Loans, and on and after such date the right of the Company to continue such Loans as Offshore Rate Loans shall terminate. (b) The Company shall deliver a Notice of Conversion/Continuation to be received by the Agent (i) not later than 10:00 a.m. (San Francisco time) at least three Business Days in advance of the Conversion/Continuation Date, if the Loans are to be converted into or continued as Offshore Rate Loans; and (ii) not later than 9:00 a.m. (San Francisco time) on the Conversion/Continuation Date, if the Loans are to be converted into Base Rate Loans, specifying: (A) the proposed Conversion/Continuation Date; (B) the aggregate amount of Loans to be converted or continued; (C) the Type of Loans resulting from the proposed conversion or continuation; and (D) other than in the case of conversions into Base Rate Loans, the duration of the requested Interest Period. (c) If upon the expiration of any Interest Period applicable to Offshore Rate Loans, the Company has failed to select timely a new Interest Period to be applicable to such Offshore Rate Loans, or if any Default or Event of Default then exists, the Company shall be deemed to have elected to convert such Offshore Rate Loans into Base Rate Loans effective as of the expiration date of such Interest Period. A-39 (d) The Agent will promptly notify each Bank of its receipt of a Notice of Conversion/Continuations, or, if no timely notice is provided by the Company, the Agent will promptly notify each Bank of the details of any automatic conversion. All conversions and continuations shall be made ratably according to the respective outstanding principal amounts of the Loans with respect to which the notice was given held by each Bank. (e) Unless the Required Banks otherwise consent, during the existence of a Default or Event of Default, the Company may not elect to have a Loan converted into or continued as an Offshore Rate Loan. (f) After giving effect to any conversion or continuation of Loans, unless the Agent shall otherwise consent, there may not be more than five (5) different Interest Periods in effect. 2.05 VOLUNTARY TERMINATION OR REDUCTION OF COMMITMENTS. Subject to Section 4.04, the Company may, upon not less than three (3) Business Days' prior notice to the Agent (and upon receipt of such notice the Agent shall promptly notify the Banks thereof), terminate the Commitments, or permanently reduce the Commitments by an aggregate minimum amount of $5,000,000 or any multiple of $1,000,000 in excess thereof; UNLESS, after giving effect thereto and to any prepayments of Loans made on the effective date thereof, (a) the Effective Amount of all Revolving Loans and L/C Obligations together would exceed the amount of the Combined Commitments then in effect, or (b) the Effective Amount of all L/C Obligations then outstanding would exceed the L/C Commitment. Once reduced in accordance with this Section, the Commitments may not be increased. Any reduction of the Commitments shall be applied to each Bank according to its Pro Rata Share. If and to the extent specified by the Company in the notice to the Agent, some or all of the reduction in the Combined Commitments shall be applied to reduce the L/C Commitment. All accrued commitment and letter of credit fees to, but not including, the effective date of any reduction or termination of Commitments, shall be paid on the effective date of such reduction or termination. Any reduction of the Combined Commitments pursuant to this Section 2.05 shall reduce the next remaining reductions of the Combined Commitments pursuant to Section 2.07 scheduled to occur after the date of such reduction. 2.06 OPTIONAL PREPAYMENTS. Subject to Section 4.04, the Company may, at any time or from time to time, upon not less than three (3) Business Days' irrevocable notice to the Agent with respect to Offshore Rate Loans and upon not less than one (1) Business Days' irrevocable notice to the Agent with respect to Base Rate Loans, ratably prepay Loans in whole or in part, in minimum amounts of $5,000,000 or any multiple of A-40 $1,000,000 in excess thereof. Such notice of prepayment shall specify the date (which shall be a Business Day) and amount of such prepayment and the Type(s) of Loans to be prepaid. The Agent will promptly notify each Bank of its receipt of any such notice, and of such Bank's Pro Rata Share of such prepayment. If such notice is given by the Company, the Company shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein, together with accrued interest to each such date on the amount prepaid and any amounts required pursuant to Section 4.04. 2.07 MANDATORY COMMITMENT REDUCTIONS; MANDATORY PREPAYMENTS OF LOANS. (a) The Combined Commitments shall be automatically and permanently reduced on each reduction date set forth below by the amount set forth opposite such date as follows: REDUCTION DATE REDUCTION AMOUNT Third Amendment Effective $50,000,000 December 31, 2000 $80,000,000 December 31, 2001 $70,000,000 Revolving Termination Date Balance of Combined Commitments In the event that on any date the Combined Commitments are reduced pursuant to clause (a) or (b) of this Section 2.07, the Effective Amount of all outstanding Revolving Loans, and the Effective Amount of all L/C Obligations, exceeds the Combined Commitments in effect on such date after giving effect to such reduction, the Company shall, on such date, make a mandatory prepayment of the Loans in a principal amount equal to such excess, so that after giving effect to such prepayment, the Effective Amount of all outstanding Revolving Loans, and the Effective Amount of all L/C Obligations, shall not exceed the Combined Commitments as of such date and the Effective Amount of the Revolving Loans of any Bank plus the participation of such Bank in the Effective Amount of all L/C Obligations shall not exceed such Bank's Commitment as of such date. (b) (i) Upon consummation of any Excess Subordinated Debt Issuance, a portion of the Combined Commitments equal to the amount of Net Proceeds of such Excess Subordinated Debt Issuance shall be permanently reduced by an amount equal to the sum of such Net Proceeds. (ii) Upon consummation of any Asset Sale (as such term is defined in the Indenture) which results in any amounts becoming due and owing under the Subordinated Note Documents, a portion of the Combined Commitments equal to A-41 the amount of Net Cash Proceeds (as such term is defined in the Indenture) resulting from such Asset Sale shall be permanently reduced by an amount equal to the sum of such Net Cash Proceeds resulting from such Asset Sale. (iii) Upon the creation, incurrence, assumption or existence of any Indebtedness of the Company or any of its Subsidiaries in connection with any Offshore Currency Loan, a portion of the Combined Commitments equal to the Equivalent Amount of the aggregate principal amount of each such Offshore Currency Loan shall be permanently reduced by an amount equal to the sum of the Equivalent Amount of each such Offshore Currency Loan. (c) If on any date the Effective Amount of L/C Obligations exceeds the L/C Commitment, the Company shall Cash Collateralize on such date the outstanding Letters of Credit in an amount equal to the excess of the maximum amount then available to be drawn under the Letters of Credit over the Aggregate L/C Commitment. Subject to Section 4.04, if on any date after giving effect to any Cash Collateralization made on such date pursuant to the preceding sentence, the Effective Amount of all Revolving Loans then outstanding plus the Effective Amount of all L/C Obligations exceeds the Combined Commitments, the Company shall immediately, and without notice or demand, prepay the outstanding principal amount of the Revolving Loans and L/C Advances by an amount equal to the applicable excess. (d) Each reduction in the Combined Commitments hereunder shall be made ratably among the Banks in accordance with their respective Commitments. The Company shall pay to the Agent for the account of the Banks on the date of each termination or reduction in the Combined Commitments, the commitment fees on the amount of the Combined Commitments so terminated or reduced accrued to the date of such termination or reduction. (e) On any date when the outstanding Loans (after giving effect to any Borrowings effected on such date) exceeds the Combined Commitments, the Company shall make a mandatory prepayment of the Loans in such amount as may be necessary so that the aggregate amount of outstanding Loans after giving effect to such prepayment does not exceed the Combined Commitments then in effect. (f) Simultaneously with each prepayment of a Loan, the Company shall prepay all accrued interest on the amount prepaid through the date of prepayment. Unless otherwise specified by the Company, each prepayment of Revolving Credit Loans shall first be applied to Base Rate Loans. If any prepayment is made in respect of any of Offshore Rate Loans, in whole or in part, prior to the last day of the applicable Interest Period, the Company agrees to indemnify the Banks in accordance with Section 4.04. A-42 2.08 REPAYMENT. The Company shall repay to the Banks on the Revolving Termination Date the aggregate principal amount of Revolving Loans, and subject to Section 3.01 hereof, the aggregate principal amount of L/C Advances, each outstanding on such date. 2.09 INTEREST. (a) Each Revolving Loan shall bear interest on the outstanding principal amount thereof from the applicable Borrowing Date at a rate per annum equal to the Offshore Rate or the Base Rate, as the case may be (and subject to the Company's right to convert to other Types of Loans under Section 2.04), PLUS the Applicable Margin. (b) Interest on each Revolving Loan shall be paid in arrears on each Interest Payment Date. Interest shall also be paid on the date of any prepayment of Loans under Section 2.06 or 2.07 for the portion of the Loans so prepaid and upon payment (including prepayment) in full thereof and, during the existence of any Event of Default, interest shall be paid on demand of the Agent at the request or with the consent of the Required Banks. (c) Notwithstanding clause (a) of this Section 2.09, while any Event of Default exists or after acceleration of any of the Obligations hereunder, the Company shall pay interest (after as well as before entry of judgment thereon to the extent permitted by law) on the principal amount of all outstanding Loans, at a rate per annum which is determined by adding 2% per annum to the Applicable Margin then in effect for such Loans and, in the case of Obligations not subject to an Applicable Margin, at a rate per annum which is determined by adding 2% per annum to the Base Rate; PROVIDED, HOWEVER, that, on and after the expiration of any Interest Period applicable to any Offshore Rate Loan outstanding on the date of occurrence of such Event of Default or acceleration, the principal amount of such Loan shall, during the continuation of such Event of Default or after acceleration, bear interest at a rate per annum which is determined by adding 2% per annum to the Base Rate. (d) Anything herein to the contrary notwithstanding, the obligations of the Company to any Bank hereunder shall be subject to the limitation that payments of interest shall not be required for any period for which interest is computed hereunder, to the extent (but only to the extent) that contracting for or receiving such payment by such Bank would be contrary to the provisions of any law applicable to such Bank limiting the highest rate of interest that may be lawfully contracted for, charged or received by such Bank, and in such event the Company shall pay such Bank interest at the highest rate permitted by applicable law. A-43 2.10 FEES. In addition to certain fees described in Section 3.08: (a) ARRANGEMENT AGENCY FEES. The Company shall pay an arrangement fees to the Arranger for the Arranger's own account, and shall pay agency fees to the Agent for the Agent's own account, as required by the letter agreement ("FEE LETTER") among the Company, the Arranger and Agent dated September 28, 1999. (b) COMMITMENT FEES. The Company shall pay to the Agent for the account of each Bank a commitment fee on the average daily unused portion of such Bank's Commitment, computed on a quarterly basis in arrears on the last Business Day of each calendar quarter based upon the daily utilization for that quarter as calculated by the Agent, equal to the Applicable Commitment Fee Rate. For purposes of calculating utilization under this Section, the Commitments shall be deemed used to the extent of the Effective Amount of Revolving Loans then outstanding, plus the Effective Amount of L/C Obligations then outstanding. Such commitment fee shall accrue from the Closing Date to the Revolving Termination Date and shall be due and payable quarterly in arrears on the last Business Day of each calendar year quarter commencing on June 30, 1998 through the Revolving Termination Date, with the final payment to be made on the Revolving Termination Date; PROVIDED that, in connection with any reduction or termination of Commitments under Section 2.05 or Section 2.07, the accrued commitment fee calculated for the period ending on such date shall also be paid on the date of such reduction or termination, with the following quarterly payment being calculated on the basis of the period from such reduction or termination date to such quarterly payment date. The commitment fees provided in this Section shall accrue at all times after the above- mentioned commencement date, including at any time during which one or more conditions in Article V are not met. 2.11 COMPUTATION OF FEES AND INTEREST. (a) All computations of interest for Base Rate Loans when the Base Rate is determined by Bank of America's "reference rate" shall be made on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed. All other computations of fees and interest shall be made on the basis of a 360-day year and actual days elapsed (which results in more interest being paid than if computed on the basis of a 365-day year). Interest and fees shall accrue during each period during which interest or such fees are computed from the first day thereof to the last day thereof. (b) Each determination of an interest rate and any fees referenced in Section 2.10 by the Agent shall be conclusive and binding on the Company and the Banks in the absence of manifest error. The Agent will, at the request of the Company or any Bank, deliver to the Company or the Bank, as the case may be, a statement showing the quotations used by the Agent in determining any interest rate and the resulting interest rate. A-44 2.12 PAYMENTS BY THE COMPANY. (a) All payments to be made by the Company shall be made without set-off, recoupment or counterclaim. Except as otherwise expressly provided herein, all payments by the Company shall be made to the Agent for the account of the Banks at the Agent's Payment Office, and shall be made in dollars and in immediately available funds, no later than 11:00 A.M. (San Francisco time) on the date specified herein. The Agent will promptly distribute to each Bank its Pro Rata Share (or other applicable share as expressly provided herein) of such payment in like funds as received. Any payment received by the Agent later than 11:00 A.M. (San Francisco time) shall be deemed to have been received on the following Business Day and any applicable interest or fee shall continue to accrue. (b) Subject to the provisions set forth in the definition of "Interest Period" herein, whenever any payment is due on a day other than a Business Day, such payment shall be made on the following Business Day, and such extension of time shall in such case be included in the computation of interest or fees, as the case may be. (c) Unless the Agent receives notice from the Company prior to the date on which any payment is due to the Banks that the Company will not make such payment in full as and when required, the Agent may assume that the Company has made such payment in full to the Agent on such date in immediately available funds and the Agent may (but shall not be so required), in reliance upon such assumption, distribute to each Bank on such due date an amount equal to the amount then due such Bank. If and to the extent the Company has not made such payment in full to the Agent, each Bank shall repay to the Agent on demand such amount distributed to such Bank, together with interest thereon at the Federal Funds Rate for each day from the date such amount is distributed to such Bank until the date repaid. 2.13 PAYMENTS BY THE BANKS TO THE AGENT. (a) Unless the Agent receives notice from a Bank on or prior to the Closing Date or, with respect to any Borrowing after the Closing Date, at least one Business Day prior to the date of such Borrowing, that such Bank will not make available as and when required hereunder to the Agent for the account of the Company the amount of that Bank's Pro Rata Share of the Borrowing, the Agent may assume that each Bank has made such amount available to the Agent in immediately available funds on the Borrowing Date and the Agent may (but shall not be so required), in reliance upon such assumption, make available to the Company on such date a corresponding amount. If and to the extent any Bank shall not have made its full amount available to the Agent in immediately available funds as and when required and the Agent in such circumstances has made available to the Company such amount, that Bank shall on the Business Day following such Borrowing Date make such amount available to the Agent, together with interest at the Federal Funds Rate for each day during such period. A notice of the Agent submitted to any Bank with respect to amounts owing under this Section (a) shall be conclusive, absent manifest error. If such amount is so made available, such A-45 payment to the Agent shall constitute such Bank's Loan on the date of Borrowing for all purposes of this Agreement. If such amount is not made available to the Agent on the Business Day following the Borrowing Date, the Agent will notify the Company of such failure to fund and, upon demand by the Agent, the Company shall pay such amount to the Agent for the Agent's account, together with interest thereon for each day elapsed since the date of such Borrowing, at a rate per annum equal to the interest rate applicable at the time to the Loans comprising such Borrowing. (b) The failure of any Bank to make any Loan on any Borrowing Date shall not relieve any other Bank of any obligation hereunder to make a Loan on such Borrowing Date, but no Bank shall be responsible for the failure of any other Bank to make the Loan to be made by such other Bank on any Borrowing Date. 2.14 SHARING OF PAYMENTS, ETC. If, other than as expressly provided elsewhere herein, any Bank shall obtain on account of the Obligations in its favor any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) in excess of its ratable share (or other share contemplated hereunder), such Bank shall immediately (a) notify the Agent of such fact, and (b) purchase from the other Banks such participations in the Loans made by them as shall be necessary to cause such purchasing Bank to share the excess payment pro rata with each of them; PROVIDED, HOWEVER, that if all or any portion of such excess payment is thereafter recovered from the purchasing Bank, such purchase shall to that extent be rescinded and each other Bank shall repay to the purchasing Bank the purchase price paid therefor, together with an amount equal to such paying Bank's ratable share (according to the proportion of (i) the amount of such paying Bank's required repayment to (ii) the total amount so recovered from the purchasing Bank) of any interest or other amount paid or payable by the purchasing Bank in respect of the total amount so recovered. The Company agrees that any Bank so purchasing a participation from another Bank may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off, but subject to Section 11.10) with respect to such participation as fully as if such Bank were the direct creditor of the Company in the amount of such participation. The Agent will keep records (which shall be conclusive and binding in the absence of manifest error) of participations purchased under this Section and will in each case notify the Banks following any such purchases or repayments. A-46 ARTICLE III THE LETTERS OF CREDIT 3.01 THE LETTER OF CREDIT SUBFACILITY. (a) On the terms and conditions set forth herein (i) the Issuing Bank agrees, (A) from time to time on any Business Day during the period from the Closing Date to the Revolving Termination Date to issue Letters of Credit for the account of the Company, and to amend or renew Letters of Credit previously issued by it, in accordance with Sections 3.02(c) and 3.02(d), and (B) to honor drafts under the Letters of Credit; and (ii) the Banks severally agree to participate in Letters of Credit Issued for the account of the Company; PROVIDED, that the Issuing Bank shall not be obligated to Issue, and no Bank shall be obligated to participate in, any Letter of Credit if upon the Issuance of such Letter of Credit (the "ISSUANCE DATE") or the date of any renewal thereof (1) the Effective Amount of all L/C Obligations plus the Effective Amount of all Revolving Loans would exceed the Combined Commitments, (2) the participation of any Bank in the Effective Amount of all L/C Obligations plus the Effective Amount of the Revolving Loans of such Bank would exceed such Bank's Commitment, or (3) the Effective Amount of L/C Obligations would exceed the L/C Commitment. Within the foregoing limits, and subject to the other terms and conditions hereof, the Company's ability to obtain Letters of Credit shall be fully revolving, and, accordingly, the Company may, during the foregoing period, obtain Letters of Credit to replace Letters of Credit which have expired or which have been drawn upon and reimbursed. (b) The Issuing Bank is under no obligation to Issue any Letter of Credit if: (i) any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain the Issuing Bank from Issuing such Letter of Credit, or any Requirement of Law applicable to the Issuing Bank or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over the Issuing Bank shall prohibit, or request that the Issuing Bank refrain from, the Issuance of letters of credit generally or such Letter of Credit in particular or shall impose upon the Issuing Bank with respect to such Letter of Credit any restriction, reserve or capital requirement (for which the Issuing Bank is not otherwise compensated hereunder) not in effect on the Closing Date, or shall impose upon the Issuing Bank any unreimbursed loss, cost or expense which was not applicable on the Closing Date and which the Issuing Bank in good faith deems material to it; (ii) the Issuing Bank has received written notice from any Bank, the Agent or the Company, on or prior to the Business Day prior to the requested date of A-47 Issuance of such Letter of Credit, that one or more of the applicable conditions contained in Article V is not then satisfied; (iii) the expiry date of any requested Letter of Credit is (A) more than 360 days after the date of Issuance, in the case of any commercial Letter of Credit, or more than 365 or 366 days after the date of Issuance, in the case of any standby Letter of Credit, unless, in either case, the Required Banks have approved such expiry date in writing, or (B) after the Revolving Termination Date, unless all of the Banks have approved such expiry date in writing; (iv) the expiry date of any requested Letter of Credit is prior to the maturity date of any financial obligation to be supported by the requested Letter of Credit; (v) any requested Letter of Credit does not provide for drafts, or is not otherwise in form and substance acceptable to the Issuing Bank, or the Issuance of a Letter of Credit shall violate any applicable policies of the Issuing Bank; (vi) any standby Letter of Credit is for the purpose of supporting the issuance of any letter of credit by any other Person; or (vii) such Letter of Credit is in a face amount less than $250,000 or denominated in a currency other than Dollars. 3.02 ISSUANCE, AMENDMENT AND RENEWAL OF LETTERS OF CREDIT. (a) Each Letter of Credit shall be issued upon the irrevocable written request of the Company received by the Issuing Bank (with a copy sent by the Company to the Agent) at least four days (or such shorter time as the Issuing Bank may agree in a particular instance in its sole discretion) prior to the proposed date of issuance. Each such request for issuance of a Letter of Credit shall be by facsimile, confirmed immediately in an original writing, in the form of an L/C Application, and shall specify in form and detail satisfactory to the Issuing Bank: (i) the proposed date of issuance of the Letter of Credit (which shall be a Business Day); (ii) the face amount of the Letter of Credit; (iii) the expiry date of the Letter of Credit; (iv) the name and address of the beneficiary thereof; (v) the documents to be presented by the beneficiary of the Letter of Credit in case of any drawing thereunder; (vi) the full text of any certificate to be presented by the beneficiary in case of any drawing thereunder; and (vii) such other matters as the Issuing Bank may require. (b) At least two Business Days prior to the Issuance of any Letter of Credit, the Issuing Bank will confirm with the Agent (by telephone or in writing) that the Agent has received a copy of the L/C Application or L/C Amendment Application from the A-48 Company and, if not, the Issuing Bank will provide the Agent with a copy thereof. Unless the Issuing Bank has received notice on or before the Business Day immediately preceding the date the Issuing Bank is to issue a requested Letter of Credit from the Agent (A) directing the Issuing Bank not to issue such Letter of Credit because such issuance is not then permitted under Section 3.01(a) as a result of the limitations set forth in clauses (1) through (3) thereof or Section 3.01(b)(ii); or (B) that one or more conditions specified in Article V are not then satisfied; then, subject to the terms and conditions hereof, the Issuing Bank shall, on the requested date, issue a Letter of Credit for the account of the Company in accordance with the Issuing Bank's usual and customary business practices. (c) From time to time while a Letter of Credit is outstanding and prior to the Revolving Termination Date, the Issuing Bank will, upon the written request of the Company received by the Issuing Bank (with a copy sent by the Company to the Agent) at least five days (or such shorter time as the Issuing Bank may agree in a particular instance in its sole discretion) prior to the proposed date of amendment, amend any Letter of Credit issued by it. Each such request for amendment of a Letter of Credit shall be made by facsimile, confirmed immediately in an original writing, made in the form of an L/C Amendment Application and shall specify in form and detail satisfactory to the Issuing Bank: (i) the Letter of Credit to be amended; (ii) the proposed date of amendment of the Letter of Credit (which shall be a Business Day); (iii) the nature of the proposed amendment; and (iv) such other matters as the Issuing Bank may require. The Issuing Bank shall be under no obligation to amend any Letter of Credit if: (A) the Issuing Bank would have no obligation at such time to issue such Letter of Credit in its amended form under the terms of this Agreement; or (B) the beneficiary of any such letter of Credit does not accept the proposed amendment to the Letter of Credit. The Agent will promptly notify the Banks of the receipt by it of any L/C Application or L/C Amendment Application. (d) The Issuing Bank and the Banks agree that, while a Letter of Credit is outstanding and prior to the Revolving Termination Date, at the option of the Company and upon the written request of the Company received by the Issuing Bank (with a copy sent by the Company to the Agent) at least five days (or such shorter time as the Issuing Bank may agree in a particular instance in its sole discretion) prior to the proposed date of notification of renewal, the Issuing Bank shall be entitled to authorize the renewal of any Letter of Credit issued by it. Each such request for renewal of a Letter of Credit shall be made by facsimile, confirmed immediately in an original writing, in the form of an L/C Amendment Application, and shall specify in form and detail satisfactory to the Issuing Bank: (i) the Letter of Credit to be renewed; (ii) the proposed date of notification of renewal of the Letter of Credit (which shall be a Business Day); (iii) the revised expiry date of the Letter of Credit; and (iv) such other matters as the Issuing Bank may require. The Issuing Bank shall be under no obligation so to renew any Letter of Credit if: (A) the Issuing Bank would have no obligation at such time to issue or amend such Letter of Credit in its renewed form under A-49 the terms of this Agreement; or (B) the beneficiary of any such Letter of Credit does not accept the proposed renewal of the Letter of Credit. If any outstanding Letter of Credit shall provide that it shall be automatically renewed unless the beneficiary thereof receives notice from the Issuing Bank that such Letter of Credit shall not be renewed, and if at the time of renewal the Issuing Bank would be entitled to authorize the automatic renewal of such Letter of Credit in accordance with this Section 3.02(d) upon the request of the Company but the Issuing Bank shall not have received any L/C Amendment Application from the Company with respect to such renewal or other written direction by the Company with respect thereto, the Issuing Bank shall nonetheless be permitted to allow such Letter of Credit to renew, and the Company and the Banks hereby authorize such renewal, and, accordingly, the Issuing Bank shall be deemed to have received an L/C Amendment Application from the Company requesting such renewal. (e) The Issuing Bank may, at its election (or as required by the Agent at the direction of the Required Banks), deliver any notices of termination or other communications to any Letter of Credit beneficiary or transferee, and take any other action as necessary or appropriate, at any time and from time to time, in order to cause the expiry date of such Letter of Credit to be a date not later than the Revolving Termination Date. (f) This Agreement shall control in the event of any conflict with any L/C-Related Document (other than any Letter of Credit). (g) The Issuing Bank will also deliver to the Agent, concurrently or promptly following its delivery of a Letter of Credit, or amendment to or renewal of a Letter of Credit, to an advising bank or a beneficiary, a true and complete copy of each such Letter of Credit or amendment to or renewal of a Letter of Credit. 3.03 PARTICIPATIONS, DRAWINGS AND REIMBURSEMENTS. (a) Immediately upon the Issuance of each Letter of Credit, each Bank shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the Issuing Bank a participation in such Letter of Credit and each drawing thereunder in an amount equal to the product of (i) the Pro Rata Share of such Bank, times (ii) the maximum amount available to be drawn under such Letter of Credit and the amount of such drawing, respectively. For purposes of Section 2.01, each Issuance of a Letter of Credit shall be deemed to utilize the Commitment of each Bank by an amount equal to the amount of such participation. (b) In the event of any request for a drawing under a Letter of Credit by the beneficiary or transferee thereof, the Issuing Bank will promptly notify the Company. The Company shall reimburse the Issuing Bank prior to 11:00 a.m. (San Francisco time) on each date that any amount is paid by the Issuing Bank under any Letter of Credit (each such A-50 date, an "HONOR DATE"), in an amount equal to the amount so paid by the Issuing Bank. In the event the Company fails to reimburse the Issuing Bank for the full amount of any drawing under any Letter of Credit by 11:00 a.m. (San Francisco time) on the Honor Date, the Issuing Bank will promptly notify the Agent and the Agent will promptly notify each Bank thereof, and the Company shall be deemed to have requested that Base Rate Loans be made by the Banks to be disbursed on the Honor Date under such Letter of Credit, subject to the amount of the unutilized portion of the Revolving Commitment and subject to the conditions set forth in Section 5.02. Any notice given by the Issuing Bank or the Agent pursuant to this Section 3.03(b) may be oral if immediately confirmed in writing (including by facsimile); PROVIDED that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice. (c) Each Bank shall upon any notice pursuant to Section 3.03(b) make available to the Agent for the account of the relevant Issuing Bank an amount in Dollars and in immediately available funds equal to its Pro Rata Share of the amount of the drawing, whereupon the participating Banks shall (subject to Section 3.03(d)) each be deemed to have made a Revolving Loan consisting of a Base Rate Loan to the Company in that amount. If any Bank so notified fails to make available to the Agent for the account of the Issuing Bank the amount of such Bank's Pro Rata Share of the amount of the drawing by no later than 12:00 noon (San Francisco time) on the Honor Date, then interest shall accrue on such Bank's obligation to make such payment, from the Honor Date to the date such Bank makes such payment, at a rate per annum equal to the Federal Funds Rate in effect from time to time during such period. The Agent will promptly give notice of the occurrence of the Honor Date, but failure of the Agent to give any such notice on the Honor Date or in sufficient time to enable any Bank to effect such payment on such date shall not relieve such Bank from its obligations under this Section 3.03. (d) With respect to any unreimbursed drawing that is not converted into Revolving Loans consisting of Base Rate Loans to the Company in whole or in part, because of the Company's failure to satisfy the conditions set forth in Section 5.02 or for any other reason, the Company shall be deemed to have incurred from the Issuing Bank an L/C Borrowing in the amount of such drawing, which L/C Borrowing shall be due and payable on demand (together with interest) and shall bear interest at a rate per annum determined by adding 2% per annum to the Applicable Margin assuming such L/C Borrowing were a Base Rate Loan plus the Base Rate, and each Bank's payment to the Issuing Bank pursuant to Section 3.03(c) shall be deemed payment in respect of its participation in such L/C Borrowing and shall constitute an L/C Advance from such Bank in satisfaction of its participation obligation under this Section 3.03. (e) Each Bank's obligation in accordance with this Agreement to make the Revolving Loans or L/C Advances, as contemplated by Sections 3.03(c) and (d), as a A-51 result of a drawing under a Letter of Credit, shall be absolute and unconditional and without recourse to the Issuing Bank and shall not be affected by any circumstance, including (i) any set-off, counterclaim, recoupment, defense or other right which such Bank may have against the Issuing Bank, the Company or any other Person for any reason whatsoever; (ii) the occurrence or continuance of a Default, an Event of Default or a Material Adverse Effect; or (iii) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing; PROVIDED, however, that each Bank's obligation to make Revolving Loans under Section 3.03(c) is subject to the conditions set forth in Section 5.02. 3.04 REPAYMENT OF PARTICIPATIONS. (a) Upon (and only upon) receipt by the Agent for the account of the Issuing Bank of immediately available funds from the Company (i) in reimbursement of any payment made by the Issuing Bank under the Letter of Credit with respect to which any Bank has paid the Agent for the account of the Issuing Bank for such Bank's participation in the Letter of Credit pursuant to Section 3.03 or (ii) in payment of interest thereon, the Agent will pay to each Bank, in the same funds as those received by the Agent for the account of the Issuing Bank, the amount of such Bank's Pro Rata Share of such funds, and the Issuing Bank shall receive the amount of the Pro Rata Share of such funds of any Bank that did not so pay the Agent for the account of the Issuing Bank. (b) If the Agent or the Issuing Bank is required at any time to return to the Company, or to a trustee, receiver, liquidator, custodian, or any official in any Insolvency Proceeding, any portion of the payments made by the Company to the Agent for the account of the Issuing Bank pursuant to Section 3.04(a) in reimbursement of a payment made under the Letter of Credit or interest or fee thereon, each Bank shall, on demand of the Agent, forthwith return to the Agent or the Issuing Bank the amount of its Pro Rata Share of any amounts so returned by the Agent or the Issuing Bank plus interest thereon from the date such demand is made to the date such amounts are returned by such Bank to the Agent or the Issuing Bank, at a rate per annum equal to the Federal Funds Rate in effect from time to time. 3.05 ROLE OF THE ISSUING BANK. (a) Each Bank and the Company agree that, in paying any drawing under a Letter of Credit, the Issuing Bank shall not have any responsibility to obtain any document (other than any sight draft and any other documentation expressly required by the Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the authority of the Person executing or delivering any such document. (b) No Agent-Related Person nor any of the respective correspondents, participants or assignees of the Issuing Bank shall be liable to any Bank for: (i) any action taken or omitted in connection herewith at the request or with the approval of the Banks (including the Required Banks, as applicable); (ii) any action taken or omitted in the A-52 absence of gross negligence or willful misconduct; or (iii) the due execution, effectiveness, validity or enforceability of any L/C-Related Document. (c) The Company hereby assumes all risks of the acts or omissions of any beneficiary or transferee with respect to its use of any Letter of Credit; PROVIDED, however, that this assumption is not intended to, and shall not, preclude the Company's pursuing such rights and remedies as it may have against the beneficiary or transferee at law or under any other agreement. No Agent-Related Person, nor any of the respective correspondents, participants or assignees of the Issuing Bank, shall be liable or responsible for any of the matters described in clauses (i) through (vii) of Section 3.06; PROVIDED, however, anything in such clauses to the contrary notwithstanding, that the Company may have a claim against the Issuing Bank, and the Issuing Bank may be liable to the Company, to the extent, but only to the extent, of any direct, as opposed to consequential or exemplary, damages suffered by the Company which the Company proves were caused by the Issuing Bank's willful misconduct or gross negligence or the Issuing Bank's willful failure to pay under any Letter of Credit after the presentation to it by the beneficiary of a sight draft and certificate(s) strictly complying with the terms and conditions of a Letter of Credit. In furtherance and not in limitation of the foregoing: (i) the Issuing Bank may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary; and (ii) the Issuing Bank shall not be responsible for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason. 3.06 OBLIGATIONS ABSOLUTE. The obligations of the Company under this Agreement and any L/C-Related Document to reimburse the Issuing Bank for a drawing under a Letter of Credit, and to repay any L/C Borrowing and any drawing under a Letter of Credit converted into Revolving Loans, shall be unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement and each such other L/C- Related Document under all circumstances, including the following: (i) any lack of validity or enforceability of this Agreement or any L/C-Related Document; (ii) any change in the time, manner or place of payment of, or in any other term of, all or any of the obligations of the Company in respect of any Letter of Credit or any other amendment or waiver of or any consent to departure from all or any of the L/C-Related Documents; A-53 (iii) the existence of any claim, set-off, defense or other right that the Company may have at any time against any beneficiary or any transferee of any Letter of Credit (or any Person for whom any such beneficiary or any such transferee may be acting), the Issuing Bank or any other Person, whether in connection with this Agreement, the transactions contemplated hereby or by the L/C-Related Documents or any unrelated transaction; (iv) any draft, demand, certificate or other document presented under any Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; or any loss or delay in the transmission or otherwise of any document required in order to make a drawing under any Letter of Credit; (v) any payment by the Issuing Bank under any Letter of Credit against presentation of a draft or certificate that does not strictly comply with the terms of any Letter of Credit; or any payment made by the Issuing Bank under any Letter of Credit to any Person purporting to be a trustee in bankruptcy, debtor-in- possession, assignee for the benefit of creditors, liquidator, receiver or other representative of or successor to any beneficiary or any transferee of any Letter of Credit, including any arising in connection with any Insolvency Proceeding; (vi) any exchange, release or non-perfection of any collateral, or any release or amendment or waiver of or consent to departure from any other guarantee, for all or any of the obligations of the Company in respect of any Letter of Credit; or (vii) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including any other circumstance that might otherwise constitute a defense available to, or a discharge of, the Company or a guarantor. 3.07 CASH COLLATERAL PLEDGE. Upon (i) the request of the Agent, (A) if the Issuing Bank has honored any full or partial drawing request on any Letter of Credit and such drawing has resulted in an L/C Borrowing hereunder, or (B) if, as of the Revolving Termination Date, any Letters of Credit may for any reason remain outstanding and partially or wholly undrawn, or (ii) the occurrence of the circumstances described in Section 2.07(a) requiring the Company to Cash Collateralize Letters of Credit, then, the Company shall immediately Cash Collateralize the L/C Obligations in an amount equal to L/C Obligations. 3.08 LETTER OF CREDIT FEES. The Company agrees to pay to the Agent, for the account of the Banks in accordance with each Bank's Commitment, fees (the "LETTER OF A-54 CREDIT FEES") with respect to the Letters of Credit for the period from and including the date of issuance of each thereof to and including the expiration date thereof, at a rate per annum equal to (i) with respect to standby Letters of Credit, the Applicable Margin for Offshore Rate Loans in effect as of the date of any determination thereof on the average daily maximum amount available under any contingency to be drawn under such standby Letters of Credit and (ii) with respect to commercial Letters of Credit, 0.125% on the average daily maximum amount available under any contingency to be drawn under such commercial Letters of Credit. The Letter of Credit Fees shall be (i) calculated on the basis of a 360-day year for the actual number of days elapsed and (ii) payable on the Issuance Date and on the date of each drawing under a commercial Letter of Credit, in the case of commercial Letters of Credit, and payable quarterly in arrears on the last Business Day of each March, June, September and December of each year and on the date that the Commitments shall expire (or such later date upon which the outstanding letters of credit shall expire), in the case of standby Letters of Credit. In addition to the Letter of Credit Fees, the Company agrees to pay to the Issuing Bank, for its own account, its standard fees and charges customarily charged to customers similar to the Company with respect to any Letter of Credit. (b) The Company shall pay to the Issuing Bank a letter of credit fronting fee for each Letter of Credit Issued by the Issuing Bank equal to 0.15% of the face amount (or increased face amount, as the case may be) of such Letter of Credit. Such Letter of Credit fronting fee shall be due and payable on each date of Issuance of a Letter of Credit. (c) The Company shall pay to the Issuing Bank from time to time on demand the normal issuance, presentation, amendment and other processing fees, and other standard costs and charges, of the Issuing Bank relating to letters of credit as from time to time in effect. 3.09 UNIFORM CUSTOMS AND PRACTICE. With respect to standby Letters of Credit, the International Standby Practices as published by the International Chamber of Commerce most recently at the time of issuance of any such standby Letter of Credit shall (unless otherwise expressly provided in such standby Letters of Credit) apply to such standby Letters of Credit. With respect to commercial documentary Letters of Credit, the Uniform Customs and Practice for Documentary Credits as published by the International Chamber of Commerce most recently at the time of issuance of any such commercial documentary Letter of Credit shall (unless otherwise expressly provided in such commercial documentary Letters of Credit) apply to such commercial documentary Letters of Credit. A-55 ARTICLE IV TAXES, YIELD PROTECTION AND ILLEGALITY 4.01 TAXES. (a) Any and all payments by the Company to each Bank or the Agent under this Agreement and any other Loan Document shall be made free and clear of, and without deduction or withholding for, any Taxes. In addition, the Company shall pay all Other Taxes. (b) If the Company shall be required by law to deduct or withhold any Taxes, Other Taxes or Further Taxes from or in respect of any sum payable hereunder to any Bank or the Agent, then: (i) the sum payable shall be increased as necessary so that, after making all required deductions and withholdings (including deductions and withholdings applicable to additional sums payable under this Section), such Bank or the Agent, as the case may be, receives and retains an amount equal to the sum it would have received and retained had no such deductions or withholdings been made; (ii) the Company shall make such deductions and withholdings; (iii) the Company shall pay the full amount deducted or withheld to the relevant taxing authority or other authority in accordance with applicable law; and (iv) the Company shall also pay to each Bank or the Agent for the account of such Bank, at the time interest is paid, Further Taxes in the amount that the respective Bank specifies as necessary to preserve the after-tax yield the Bank would have received if such Taxes, Other Taxes or Further Taxes had not been imposed. (c) The Company agrees to indemnify and hold harmless each Bank and the Agent for the full amount of i) Taxes, ii) Other Taxes, and iii) Further Taxes in the amount that the respective Bank specifies as necessary to preserve the after-tax yield the Bank would have received if such Taxes, Other Taxes or Further Taxes had not been imposed, and any liability (including penalties, interest, additions to tax and expenses) arising therefrom or with respect thereto, whether or not such Taxes, Other Taxes or Further Taxes were correctly or legally asserted. Payment under this indemnification shall be made within thirty (30) days after the date the Bank or the Agent makes written demand therefor. A-56 (d) Within thirty (30) days after the date of any payment by the Company of Taxes, Other Taxes or Further Taxes, the Company shall furnish to each Bank or the Agent the original or a certified copy of a receipt evidencing payment thereof, or other evidence of payment satisfactory to such Bank or the Agent. (e) If the Company is required to pay any amount to any Bank or the Agent pursuant to Section (b) or (c) of this Section 4.01, then such Bank shall use reasonable efforts (consistent with legal and regulatory restrictions) to change the jurisdiction of its Lending Office so as to eliminate any such additional payment by the Company which may thereafter accrue, if such change in the sole judgment of such Bank is not otherwise disadvantageous to such Bank. (f) Notwithstanding anything herein to the contrary in Section 10.10 and in furtherance of such Section, each Bank organized under the laws of a jurisdiction outside the United States, before it signs and delivers this Agreement in the case of each Bank listed on the signature pages hereof and before it becomes a Bank in the case of each other Bank, and from time to time thereafter (unless such Bank can no longer do so due to a change in treaty, law or regulation), before the date that any such form expires or becomes obsolete or invalid, shall provide each of the Company and the Agent with IRS from 1001 or 4224 in duplicate, as appropriate, or any successor form prescribed by the IRS, certifying that such Bank is entitled to benefits under an income tax treaty to which the United States is a party which exempts the Bank from United States withholding tax on payments of interest for the account of such Bank or certifying that the income receivable pursuant to this Agreement is effectively connected with the conduct of such Bank's trade or business in the United States and exempt from United States withholding tax. Each such Bank that so delivers a form 1001 or 4224 (or applicable successor forms) agrees to deliver to the Company undated or modified forms, or other manner of certification acceptable to the Company, at any time that any such form is required to be resubmitted or modified, as a result of any action taken by Bank, as a condition to obtaining an exemption from withholding tax. In addition, each Bank that so delivers a form 1001 shall thereby be deemed to have made a representation to the effect that the fees to be received by such Bank pursuant to this Agreement will not be received in connection with the active conduct of a trade or business in the United States by such Bank. (g) For any period with respect to which a Bank has failed to provide the Company and the Agent with the appropriate form referred to in Section 4.01(f) (whether or not such Bank is lawfully able to do so, unless such failure is due to a change in treaty, law or regulation occurring after the date on which such form originally was required to be provided), such Bank shall not be entitled to any additional payment under Section 4.01(b) or any indemnification under Section 4.01(c); PROVIDED, that if such Bank shall have satisfied such requirements on the Closing Date (in the case of each Bank listed on the A-57 signature pages hereof) or on the effective date of the Assignment and Acceptance Agreement or other document pursuant to which it became a Bank (in the case of each other Bank), nothing in this subsection shall relieve the Company of its obligation to pay any additional amounts pursuant to Section 4.01(b) or Section 4.01(c) in the event that, as a result of any change in applicable law or treaty, such Bank is no longer properly entitled to deliver certificates, documents or other evidence at a subsequent date establishing the fact that such Bank is entitled to such exemption or reduced rate. 4.02 ILLEGALITY. (a) If any Bank determines that the introduction of any Requirement of Law, or any change in any Requirement of Law, or in the interpretation or administration of any Requirement of Law, has made it unlawful, or that any central bank or other Governmental Authority has asserted that it is unlawful, for any Bank or its applicable Lending Office to make Offshore Rate Loans, then, on notice thereof by the Bank to the Company through the Agent, any obligation of that Bank to make Offshore Rate Loans shall be suspended until the Bank notifies the Agent and the Company that the circumstances giving rise to such determination no longer exist. (b) If a Bank determines that it is unlawful to maintain any Offshore Rate Loan, the Company shall, upon its receipt of notice of such fact and demand from such Bank (with a copy to the Agent), prepay in full such Offshore Rate Loans of that Bank then outstanding, together with interest accrued thereon and amounts required under Section 4.04, either on the last day of the Interest Period thereof, if the Bank may lawfully continue to maintain such Offshore Rate Loans to such day, or immediately, if the Bank may not lawfully continue to maintain such Offshore Rate Loan. If the Company is required to so prepay any Offshore Rate Loan, then concurrently with such prepayment, the Company shall borrow from the affected Bank, in the amount of such repayment, a Base Rate Loan. (c) If the obligation of any Bank to make or maintain Offshore Rate Loans has been so terminated or suspended, the Company may elect, by giving notice to the Bank through the Agent that all Loans which would otherwise be made by the Bank as Offshore Rate Loans shall be instead Base Rate Loans. (d) Before giving any notice to the Agent under this Section, the affected Bank shall designate a different Lending Office with respect to its Offshore Rate Loans if such designation will avoid the need for giving such notice or making such demand and will not, in the judgment of the Bank, be illegal or otherwise disadvantageous to the Bank. 4.03 INCREASED COSTS AND REDUCTION OF RETURN. (a) If any Bank determines that, due to either (i) the introduction of or any change in or in the interpretation of any law or regulation or (ii) the compliance by that Bank with any guideline or request from any A-58 central bank or other Governmental Authority (whether or not having the force of law), there shall be any increase in the cost to such Bank of agreeing to make or making, funding or maintaining any Offshore Rate Loans or participating in Letters of Credit, or, in the case of the Issuing Bank, any increase in the cost to the Issuing Bank of agreeing to issue, issuing or maintaining any Letter of Credit or of agreeing to make or making, funding or maintaining any unpaid drawing under any Letter of Credit, then the Company shall be liable for, and shall from time to time, upon demand (with a copy of such demand to be sent to the Agent), pay to the Agent for the account of such Bank, additional amounts as are sufficient to compensate such Bank for such increased costs. (b) If any Bank shall have determined that (i) the introduction of any Capital Adequacy Regulation, (ii) any change in any Capital Adequacy Regulation, (iii) any change in the interpretation or administration of any Capital Adequacy Regulation by any central bank or other Governmental Authority charged with the interpretation or administration thereof, or (iv) compliance by the Bank (or its Lending Office) or any corporation controlling the Bank with any Capital Adequacy Regulation, affects or would affect the amount of capital required or expected to be maintained by the Bank or any corporation controlling the Bank and (taking into consideration such Bank's or such corporation's policies with respect to capital adequacy and such Bank's desired return on capital) determines that the amount of such capital is increased as a consequence of its Commitments, loans, credits or obligations under this Agreement, then, upon demand of such Bank to the Company through the Agent, the Company shall pay to the Bank, from time to time as specified by the Bank, additional amounts sufficient to compensate the Bank for such increase. 4.04 FUNDING LOSSES. The Company shall reimburse each Bank and hold each Bank harmless from any loss or expense which the Bank may sustain or incur as a consequence of: (a) the failure of the Company to make on a timely basis any payment of principal of any Offshore Rate Loan; (b) the failure of the Company to borrow, continue or convert a Loan after the Company has given (or is deemed to have given) a Notice of Borrowing or a Notice of Conversion/Continuation; (c) the failure of the Company to make any prepayment in accordance with any notice delivered under Section 2.06; A-59 (d) the prepayment (including pursuant to Section 2.07) or other payment (including after acceleration thereof) of an Offshore Rate Loan on a day that is not the last day of the relevant Interest Period; or (e) the automatic conversion under Section 2.04 of any Offshore Rate Loan to a Base Rate Loan on a day that is not the last day of the relevant Interest Period; including any such loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain its Offshore Rate Loans or from fees payable to terminate the deposits from which such funds were obtained. For purposes of calculating amounts payable by the Company to the Banks under this Section and under Section 4.03(a), each Offshore Rate Loan made by a Bank (and each related reserve, special deposit or similar requirement) shall be conclusively deemed to have been funded at the LIBOR used in determining the Offshore Rate for such Offshore Rate Loan by a matching deposit or other borrowing in the interbank eurodollar market for a comparable amount and for a comparable period, whether or not such Offshore Rate Loan is in fact so funded. 4.05 INABILITY TO DETERMINE RATES. If the Agent determines that for any reason adequate and reasonable means do not exist for determining the Offshore Rate for any requested Interest Period with respect to a proposed Offshore Rate Loan, that the Offshore Rate applicable pursuant to Section 2.09(a) for any requested Interest Period with respect to a proposed Offshore Rate Loan does not adequately and fairly reflect the cost to the Banks of funding such Loan, or that the Banks are unable to acquire funding in a reasonable manner so as to make available Offshore Rate Loans in the amount and for the Interest Period requested, the Agent will promptly so notify the Company and each Bank. Thereafter, the obligation of the Banks to make or maintain Offshore Rate Loans hereunder shall be suspended until the Agent, upon the instruction of the Required Banks, revokes such notice in writing. Upon receipt of such notice, the Company may revoke any Notice of Borrowing or Notice of Conversion/Continuation then submitted by it. If the Company does not revoke such Notice, the Banks shall make, convert or continue the Loans, as proposed by the Company, in the amount specified in the applicable notice submitted by the Company, but such Loans shall be made, converted or continued as Base Rate Loans instead of Offshore Rate Loans. 4.06 RESERVES ON OFFSHORE RATE LOANS. The Company shall pay to each Bank, as long as such Bank shall be required under regulations of the FRB to maintain reserves with respect to liabilities or assets consisting of or including Eurocurrency funds or deposits (currently known as "Eurocurrency liabilities"), additional costs on the unpaid principal amount of each Offshore Rate Loan equal to the actual costs of such reserves allocated to such Loan by the Bank (as determined by the Bank in good faith, which determination shall be conclusive), payable on each date on which interest is payable on such Loan, provided A-60 the Company shall have received at least 15 days' prior written notice (with a copy to the Agent) of such additional interest from the Bank. If a Bank fails to give notice 15 days prior to the relevant Interest Payment Date, such additional interest shall be payable 15 days from receipt of such notice. 4.07 CERTIFICATES OF BANKS. Any Bank claiming reimbursement or compensation under this Article IV shall deliver to the Company (with a copy to the Agent) a certificate setting forth in reasonable detail the computations in determining the amount payable to the Bank hereunder and such certificate shall be conclusive and binding on the Company in the absence of manifest error. 4.08 SUBSTITUTION OF BANKS. Upon the receipt by the Company from any Bank (an "Affected Bank") of a claim for compensation under Sections 4.01 and 4.03, the Company may: (i) request the Affected Bank to use commercially reasonable efforts to obtain a replacement bank or financial institution satisfactory to the Company to acquire and assume all or a ratable part of all of such Affected Bank's Loans and Commitment (a "REPLACEMENT BANK"); (ii) request one more of the other Banks to acquire and assume all or part of such Affected Bank's Loans and Commitment; or (iii) designate a Replacement Bank. Any such designation of a Replacement Bank under clause (i) or (iii) shall be subject to the prior written consent of the Agent (which consent shall not be unreasonably withheld). 4.09 SURVIVAL. The agreements and obligations of the Company in this Article IV shall survive the payment of all other Obligations. ARTICLE V CONDITIONS PRECEDENT 5.01 CONDITIONS OF INITIAL CREDIT EXTENSIONS. The obligations of each Bank to make its initial Credit Extension hereunder and the effectiveness of this Agreement are subject to the condition that the Agent shall have received on or before the Closing Date all of the following, in form and substance satisfactory to the Agent and each Bank, and in sufficient copies for each Bank: (a) CREDIT AGREEMENT; LOAN DOCUMENTS AND NOTES. (i) This Agreement, the Guaranty, the Pledge Agreements and the Notes executed by each party thereto; A-61 (ii) Evidence that each of the Pledge Agreements has been duly authorized by all necessary corporate action and has been duly executed and delivered by the parties thereto. Evidence that all of the Pledged Shares have been delivered to the Agent, accompanied by stock powers duly executed in blank by the Person executing such Pledge Agreement pursuant to each respective Pledge Agreement. (iii) Evidence that the Guaranty has been duly authorized by necessary corporate action. Evidence that each Guarantor has duly executed and delivered the Guaranty. (b) RESOLUTIONS; INCUMBENCY. (i) Copies of the resolutions of the Board of the Company and each Material Subsidiary that may become party to a Loan Document authorizing the transactions contemplated hereby, certified as of the Closing Date by the Secretary or an Assistant Secretary of such Person; and (ii) A certificate of the Secretary or Assistant Secretary of the Company, and each Material Subsidiary that may become party to a Loan Document certifying the names and true signatures of the officers of the Company or such Subsidiary authorized to execute, deliver and perform, as applicable, this Agreement, and all other Loan Documents to be delivered by it hereunder; (c) ORGANIZATION DOCUMENTS; GOOD STANDING. Each of the following documents: (i) the articles or certificate of incorporation and the bylaws of the Company and each Material Subsidiary party to any Loan Document as in effect on the Closing Date, certified by the Secretary or Assistant Secretary of the Company or such Material Subsidiary as of the Closing Date; and (ii) a good standing and tax good standing certificate for the Company and each Material Subsidiary party to any Loan Document from the Secretary of State (or similar, applicable Governmental Authority) of its state of incorporation and each state where the Company or such Material Subsidiary is qualified to do business as a foreign corporation as of a recent date; provided, that the Company shall deliver tax good standing certificates for the Company and each Material Subsidiary party to any Loan Document only from the Secretary of State of each of Arizona, California, Delaware, Georgia, Illinois, New York, Texas and Washington, respectively; A-62 (d) LEGAL OPINIONS. (i) (A) an opinion of Pillsbury Madison & Sutro LLP, counsel to the Company and addressed to the Agent and the Banks, substantially in the form of EXHIBIT D-1; and (B) an opinion of Walter V. Stafford, Esq., general counsel to the Company and addressed to the Agent and the Banks, substantially in the form of EXHIBIT D-2; and (ii) a favorable opinion of Paul, Hastings, Janofsky & Walker LLP, special counsel to the Agent and addressed to the Agent and the Banks, substantially in the form of EXHIBIT E; (e) PAYMENT OF FEES. Evidence of payment by the Company of all fees, costs and expenses hereunder or under the Fee Letter to the extent then due and payable on the Closing Date, including any such costs, fees and expenses arising under or referenced in Sections 2.10 and 11.04; (f) CERTIFICATE. A certificate signed by a Responsible Officer, dated as of the Closing Date, stating that: (i) the representations and warranties contained in Article VI are true and correct on and as of such date, as though made on and as of such date; (ii) no Default or Event of Default exists or would result from the Credit Extension; (iii) any necessary consents, waivers, approvals, authorizations, registrations, filings and notifications of the character referred to in Section 6.03 have been obtained or made and are in full force and effect; and (iv) except as otherwise disclosed in the Projections, there has occurred since December 31, 1997, no event or circumstance that has resulted or could reasonably be expected to result in a Material Adverse Effect; (g) CONSOLIDATED BALANCE SHEETS. Copies of audited consolidated financial statements as of December 31, 1997 for each of the Company and its Subsidiaries together with the most recent financial Projections, which financial statements and Projections shall not differ in any material adverse respect from those delivered to the Agent and each of the Banks pursuant to the Confidential Information Memorandum dated April 1998. A-63 (h) REPLACEMENT OF EXISTING BANK AGREEMENT. Evidence that the Existing Credit Agreement has been, or has been deemed to be, superseded in its entirety by this Agreement. (i) SUBORDINATED NOTE DOCUMENTS. Evidence that the offering of the Subordinated Notes (in an amount not less than $175,000,000 in the aggregate) shall have been consummated contemporaneously with the transactions contemplated hereby, and the Subordinated Note Documents have been reduced to writing and furnished to the Agent and Banks, and such agreements, instruments and arrangements shall be in form and substance satisfactory to the Agent and Banks. The Agent and Banks shall have received a certificate signed by a Responsible Officer attaching copies of the fully executed Subordinated Note Documents and each other agreements and instruments related thereto, including without limitation, any subordination agreements, certifying that each such document is a true, correct and complete copy thereof, that such documents are the only agreements between the parties to such documents, that each such document is in full force and effect, without any term or condition thereof having been amended, modified or waived or any exercise of rights with respect thereto forborne without the Agent's and the Banks' prior written consent and that there is no default thereunder. (j) OTHER DOCUMENTS. Such other approvals, opinions, documents or materials as the Agent or any Bank may request. 5.02 CONDITIONS TO ALL CREDIT EXTENSIONS. The obligation of each Bank to make any Revolving Loan to be made by it (including its initial Revolving Loan) or to continue or convert any Revolving Loan under Section 2.04 and the obligation of the Issuing Bank to Issue any Letter of Credit (including the initial Letter of Credit) is subject to the satisfaction of the following conditions precedent on the relevant Borrowing Date, Conversion/Continuation Date or Issuance Date: (a) NOTICE, APPLICATION. The Agent shall have received (with, in the case of the initial Revolving Loan only, a copy for each Bank) a Notice of Borrowing or a Notice of Conversion/Continuation, as applicable or in the case of any Issuance of any Letter of Credit, the Issuing Bank and the Agent shall have received an L/C Application or L/C Amendment Application, as required under Section 3.02; (b) CONTINUATION OF REPRESENTATIONS AND WARRANTIES. The representations and warranties in Article VI shall be true and correct on and as of such Borrowing Date or Conversion/Continuation Date or Issuance Date with the same effect as if made on and as of such Borrowing Date or Conversion/Continuation Date or Issuance Date (except to the extent such representations and warranties expressly refer to an earlier date, in which case they shall be true and correct as of such earlier date); and A-64 (c) NO EXISTING DEFAULT. No Default or Event of Default shall exist or shall result from such Borrowing or continuation or conversion or Issuance. Each Notice of Borrowing, Notice of Conversion/Continuation and L/C Application or L/C Amendment Application submitted by the Company hereunder shall constitute a representation and warranty by the Company hereunder, as of the date of each such notice and as of each Borrowing Date, Conversion/Continuation Date, or Issuance Date, as applicable, that the conditions in this Section 5.02 are satisfied. ARTICLE VI REPRESENTATIONS AND WARRANTIES The Company represents and warrants to the Agent and each Bank, at and as of the date of execution of this Agreement, after giving effect to the transactions contemplated hereby, that: 6.01 CORPORATE EXISTENCE AND POWER. The Company and each of its Material Subsidiaries: (a) is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation; (b) has the power and authority and all governmental licenses, authorizations, consents and approvals to own its assets, carry on its business and to execute, deliver, and perform its obligations under the Loan Documents, to which it is a party, except to the extent that the failure to have such licenses, authorizations, consents and approvals would not reasonably be expected to have a Material Adverse Effect; (c) is duly qualified as a foreign corporation and is licensed and in good standing under the laws of each jurisdiction where its ownership, lease or operation of property or the conduct of its business requires such qualification or license, except to the extent where the failure to be so qualified or licensed would not reasonably be expected to have a Material Adverse Effect; and (d) is in compliance with all Requirements of Law, except to the extent that the failure to be in compliance with any particular Requirement of Law would not reasonably be expected to have a Material Adverse Effect. A-65 6.02 CORPORATE AUTHORIZATION; NO CONTRAVENTION. The execution, delivery and performance by the Company and its Material Subsidiaries of this Agreement and each other Loan Document to which such Person is party, have been duly authorized by all necessary corporate action, and do not and will not: (a) contravene the terms of any of that Person's Organization Documents; (b) conflict with or result in any breach or contravention of, or the creation of any Lien under, any document evidencing any Contractual Obligation to which such Person is a party or any order, injunction, writ or decree of any Governmental Authority to which such Person or its property is subject; or (c) violate any Requirement of Law. 6.03 GOVERNMENTAL AUTHORIZATION. No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority is necessary or required in connection with the execution, delivery or performance by, or enforcement against, the Company or any of its Material Subsidiaries of this Agreement or any other Loan Document, to which such Person is a party. 6.04 BINDING EFFECT. This Agreement and each other Loan Document to which the Company or any of its Material Subsidiaries is a party constitute the legal, valid and binding obligations of the Company and any of its Material Subsidiaries to the extent it is a party thereto, enforceable against such Person in accordance with their respective terms, except as enforceability may be limited by applicable bankruptcy, insolvency, or similar laws affecting the enforcement of creditors' rights generally or by equitable principles relating to enforceability. 6.05 LITIGATION. There are no actions, suits, proceedings at law or in equity, claims, investigations or disputes pending, or to the best knowledge of the Company, threatened or contemplated, at law, in equity, in arbitration or before any Governmental Authority, against the Company or its Subsidiaries or any of their respective properties: (a) which purport to affect or pertain to this Agreement or any other Loan Document, or any of the transactions contemplated hereby or thereby, or (b) as to which there exists a substantial likelihood of an adverse determination, which determination would reasonably be expected to have a Material Adverse Effect. No injunction, writ, temporary restraining order or any order of any nature has been issued by any court or other Governmental Authority purporting to enjoin or A-66 restrain the execution, delivery or performance of this Agreement or any other Loan Document, or directing that the transactions provided for herein or therein, not be consummated as herein or therein provided. 6.06 NO DEFAULT. No Default or Event of Default exists or would result from the incurring of any Obligations by the Company. As of the Closing Date, neither the Company nor any Material Subsidiary is in default under or with respect to any Contractual Obligation in any respect which, individually or together with all such defaults, could reasonably be expected to have a Material Adverse Effect, or that would, if such default had occurred after the Closing Date, create an Event of Default under Section 9.01(e). 6.07 ERISA COMPLIANCE. SCHEDULE 6.07 hereto sets forth a list of all Plans. Except as set forth in SCHEDULE 6.07, (i) no Plan, and neither the Company nor any ERISA Affiliate or Subsidiary of the Company is in violation in any material respect with any applicable provisions of ERISA and the Code, including, without limitation, the reporting and disclosure requirements of Part 1, and the fiduciary responsibility requirements of Part 4, of Subtitle B of Title I of ERISA, (ii) no Plan which is intended to qualify under Sections 401 or 403 of the Code fails to meet applicable qualification requirements of the Code, (iii) no Prohibited Transaction has occurred which could result in any material liability to the Company, an ERISA Affiliate, or a Subsidiary of the Company, (iv) there are no pending or, to the best knowledge of the Company, threatened claims or actions (other than routine claims for benefits in the normal and ordinary course) asserted against any Plan, the Company, an ERISA Affiliate, a Subsidiary of the Company, or any Person for which the Company may be directly or indirectly liable through indemnification arrangements or otherwise, (v) no material Accumulated Funding Deficiency has been incurred or is reasonably expected to be incurred, no waiver of any material Accumulated Funding Deficiency or permitted increase or decrease in the funding standard account under Section 412 of the Code has been obtained or is reasonably expected to be requested, and no event described in Sections 302(f) (imposing a Lien for failure to make required contributions) or 307(a) (requiring the provision of security on adoption of certain amendments resulting in underfunding) of ERISA has occurred or is reasonably expected to occur, A-67 (vi) no material Unfunded Current Liability or Withdrawal Liability exists, (vii) no Termination Event has occurred or is reasonably expected to occur which might result in any material liability for the Company or any ERISA Affiliate, (viii) no proceeding has been instituted or is reasonably expected to be instituted under Section 515 of ERISA to collect delinquent contributions to a Plan, (ix) neither the Company nor any ERISA Affiliate or Subsidiary of the Company has failed to pay all premiums or make all contributions, if any, required of it with respect to any Plan which is a "welfare plan" under Section 3(1) of ERISA, (x) no Plan provides medical or other welfare benefits or extends coverage relating to such benefits beyond the third anniversary of the date of a Plan participant's termination of employment, except to the extent required by Section 4980B of the Code and at the sole expense of such participant or the participant's beneficiary to the fullest extent permitted under such Code Section, and (xi) no event has occurred which could subject any Plan, the Company, an ERISA Affiliate, or a Subsidiary of the Company to any material liability under any statute, regulation, or governmental order relating to any Plan or pursuant to any obligation of the Company or any ERISA Affiliate or Subsidiary of the Company to indemnify any Person against liability incurred under any such statute, regulation, or order. 6.08 USE OF PROCEEDS; MARGIN REGULATIONS. The proceeds of the Loans are to be used solely for the purposes set forth in and permitted by Section 7.12 and Section 8.07. Neither the Company nor any Subsidiary is generally engaged in the business of purchasing or selling Margin Stock or extending credit for the purpose of purchasing or carrying Margin Stock. 6.09 TITLE TO PROPERTIES. The Company and each Material Subsidiary have good record and marketable title in fee simple to, or valid leasehold interests in, all real property and good title to, or a valid leasehold interest in, all its personal property, necessary or used in the ordinary conduct of their respective businesses, except for such defects in title as could not reasonably be expected to, individually or in the aggregate, have a Material Adverse Effect. As of the Closing Date, the property of the Company and its Material Subsidiaries is subject to no Liens, other than Permitted Liens. Except as contemplated A-68 hereby, neither the Company nor any of its Material Subsidiaries has signed any agreement or instrument authorizing any secured party thereunder to file any such financing statement, deed, agreement or other instrument. 6.10 TAXES. The Company and its Material Subsidiaries have filed all Federal and other material tax returns and reports required to be filed, and have paid all Federal and other material taxes, assessments, fees and other governmental charges levied or imposed upon them or their properties, income or assets otherwise due and payable, except those which are being contested in good faith by appropriate proceedings and for which adequate reserves have been provided in accordance with GAAP. There is no proposed tax assessment against the Company or any Material Subsidiary that would, if made, have a Material Adverse Effect. 6.11 FINANCIAL CONDITION. (a) The audited consolidated financial statements of the Company dated December 31, 1998, together with any notes thereto, and the related consolidated statements of income or operations, shareholders' equity and cash flows for the fiscal year ended on that date: (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; (ii) fairly present the financial condition of the Company and its Material Subsidiaries as of the date thereof and results of operations for the period covered thereby; and (iii) except as specifically disclosed in Schedule 6.11, show all material indebtedness and other liabilities, direct or contingent, of the Company and its consolidated Material Subsidiaries as of the date thereof, including liabilities for taxes, material commitments and Contingent Obligations. (b) The forward-looking financial information delivered to the Agent (the "PROJECTIONS") has been prepared on the basis of reasonable assumptions made in good faith by the Company, and as of the date on which such assumptions were made, no relevant facts known to the Company existed that were not taken into account that were, individually or in the aggregate, reasonably likely to have a material effect on the reasonableness of such assumptions as they relate to the Company or any of its Material Subsidiaries, and no events have occurred subsequent thereto that are, individually or in the aggregate, reasonably likely to have a material effect on the reasonableness of such assumptions as they relate to the Company. There are no facts known to the Company that are inconsistent in any material respect with the Projections taken as a whole or such assumptions. A-69 (c) Other than as set forth on Schedule 6.11, since December 31, 1998 there has been no Material Adverse Effect. 6.12 ENVIRONMENTAL MATTERS. The Company conducts in the ordinary course of business a review of the effect of existing Environmental Laws and existing Environmental Claims on its business, operations and properties, and as a result thereof the Company has reasonably concluded that, except as specifically disclosed in Schedule 6.12, such Environmental Laws and Environmental Claims could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. 6.13 REGULATED ENTITIES. None of the Company, any Person controlling the Company, or any Subsidiary, is an "Investment Company" within the meaning of the Investment Company Act of 1940. The Company is not subject to regulation under the Public Utility Holding Company Act of 1935, the Federal Power Act, the Interstate Commerce Act, any state public utilities code, or any other Federal or state statute or regulation limiting its ability to incur Indebtedness. 6.14 NO BURDENSOME RESTRICTIONS. Neither the Company nor any Material Subsidiary is a party to or bound by any Contractual Obligation, or subject to any restriction in any Organization Document, or any Requirement of Law, which could reasonably be expected to have a Material Adverse Effect. 6.15 COPYRIGHTS, PATENTS, TRADEMARKS AND LICENSES, ETC. The Company and its Material Subsidiaries own or are licensed or otherwise have the right to use all of the patents, trademarks, service marks, trade names, copyrights, contractual franchises, authorizations and other rights that are reasonably necessary for the operation of their respective businesses, without conflict with the rights of any other Person. To the best knowledge of the Company, no slogan or other advertising device, product, process, method, substance, part or other material now employed, or now contemplated to be employed, by the Company or any Material Subsidiary infringes upon any rights held by any other Person. No claim or litigation regarding any of the foregoing is pending or threatened, and no patent, invention, device, application, principle or any statute, law, rule, regulation, standard or code is pending or, to the knowledge of the Company, proposed, which, in either case, could reasonably be expected to have a Material Adverse Effect. 6.16 CAPITAL STOCK; SUBSIDIARIES. (a) The authorized Capital Stock of the Company is disclosed on Schedule 6.16(a) hereto. All outstanding shares have been duly authorized, validly issued and are fully paid, nonassessable and free of preemptive rights. There are no subscriptions, options, warrants or calls relating to the issuance by the Company of any shares of its common stock ("COMMON STOCK"), including any right of A-70 conversion or exchange under any outstanding security or other instrument, except for options granted to employees of the Company under employee stock option plans and except as otherwise disclosed on Schedule 6.16(a) hereto. The Company is not subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any shares of its Capital Stock or any security convertible into or exchangeable for any of its Common Stock except as set forth in Schedule 6.16(b) hereto. (b) The Company has no Material Subsidiaries other than as set forth in Item I of Schedule 6.16(b) hereto. Item I of Schedule 6.16(b) correctly sets forth as to each Material Subsidiary its name, the jurisdiction of its formation, if a partnership, or incorporation, if a corporation, its parent corporation and the value of the investment in it as carried on the books of the Company or such parent corporation. All of the outstanding shares of the Capital Stock of each class of each corporate Material Subsidiary have been validly issued and are fully paid and nonassessable and, except as otherwise indicated in Item I of Schedule 6.16(b) are owned, beneficially and of record, by the Company or such parent corporation, free and clear of any Liens other than Permitted Liens. 6.17 INSURANCE. Except as specifically disclosed in Schedule 6.17, the properties of the Company and its Subsidiaries are insured with financially sound and reputable insurance companies not Affiliates of the Company, in such amounts, with such deductibles and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where the Company or such Subsidiary operates. 6.18 LABOR RELATIONS. None of the Company or its Material Subsidiaries is engaged in any unfair labor practice which could reasonably be expected to have a Material Adverse Effect. There is (a) no unfair labor practice complaint pending or, to the best knowledge of the Company, threatened against the Company or any of its Material Subsidiaries before the National Labor Relations Board or any court or labor board, and no grievance or arbitration proceedings arising out of or under collective bargaining agreements is so pending or, to the best knowledge of the Company, threatened; (b) no strike, lock-out, labor dispute, slowdown or work stoppage pending or, to the best knowledge of the Company, threatened against the Company or any of its Material Subsidiaries; and (c) no union representation or certification question existing or pending with respect to the employees of the Company or any of its Material Subsidiaries and, to the best knowledge of the Company, no union organization activity taking place, which unfair labor practice complaint, grievance or arbitration proceedings, strike, lock-out, labor dispute, slowdown or work stoppage or union representation or certification question could reasonably be expected to have a Material Adverse Effect. True and correct copies of each collective bargaining agreement, to which the Company or any of its Material Subsidiaries is a party, have been provided to the Agent. A-71 6.19 REPRESENTATIONS AND WARRANTIES IN RELATED DOCUMENTS. On the Closing Date, the representations of the Company and of its Material Subsidiaries contained in the Guaranty, each of the Pledge Agreements and in any document, certificate or instrument delivered pursuant to this Agreement will be true and correct in all material respects and each of the Agent and the Banks may rely on such representations and warranties, if not made directly to each of the Agent and the Banks, as if such representations and warranties were made directly to each of the Agent and the Banks. 6.20 SOLVENCY. Each of the Company and its Material Subsidiaries, considered as a whole, is Solvent and, immediately after giving effect to the consummation of the transactions contemplated by this Agreement, each of the Company and its Material Subsidiaries, considered as a whole, will remain Solvent. 6.21 SUBORDINATED DEBT. The Company has the corporate power and authority to incur the Indebtedness evidenced by the Subordinated Notes. The subordination provisions of the Subordinated Notes are enforceable against the holders of the Subordinated Notes by the Agent and the Banks. All Obligations, including the Obligations to pay principal of and interest on the Loans and the L/C Obligations, constitute senior Indebtedness entitled to the benefits of the subordination provisions contained in the Subordinated Notes. The principal of and interest on the Notes, all L/C Obligations and all other Obligations will constitute "senior indebtedness" as that or any similar term is or may be used in any other instrument evidencing or applicable to any other Subordinated Debt. The Company acknowledges that the Agent and each Bank are entering into this Agreement and are extending the Commitments in reliance upon the subordination provisions of the Subordinated Notes and this SECTION 6.21. 6.22 FULL DISCLOSURE. None of the representations or warranties made by the Company or any Material Subsidiary in the Loan Documents as of the date such representations and warranties are made or deemed made, and none of the statements contained in any exhibit, report, statement or certificate furnished by or on behalf of the Company or any Material Subsidiary in connection with the Loan Documents and the Subordinated Note Documents (including the offering and disclosure materials delivered by the Agent on behalf of the Company to the Banks prior to the Closing Date, other than the offering and disclosure materials delivered in connection with the Subordinated Notes), contains any untrue statement of a material fact or omits any material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they are made, not misleading as of the time when made or delivered. A-72 6.23 PLEDGE AGREEMENTS. The provisions of each of the Pledge Agreements (other than the Relam French Pledge Agreement) are effective to create, in favor of the Agent for the benefit of the Banks, a legal, valid and enforceable security interest in all of the collateral described therein; and the Pledged Collateral or share certificates (as each such term is defined in each of the Pledge Agreements) was delivered to the Agent or its nominee in accordance with the terms thereof. The Lien of each of the Pledge Agreements (other than the Relam French Pledge Agreement) constitutes a perfected, first priority security interest in all right, title and interest of the Company or such Subsidiary, as the case may be, in the Collateral described therein, prior and superior to all other Liens and interests. The Relam French Pledge Agreement grants to the Agent for the benefit of the Banks, a valid and continuing first ranking charge over the Pledged Account (as defined therein), the effect of which is to grant to Agent, absent fraud by the Company or any of its Subsidiaries, the ability to effect a sale of the shares of CB Richard Ellis, S.A. pledged thereunder and collect all proceeds from such sale, subject to the claims over such proceeds of the French Treasury and other creditors whose claims are preferred under French law. 6.24 YEAR 2000 PROBLEMS. Each of the Company and its Subsidiaries has eliminated all Year 2000 Problems, except where the failure to correct the same could not reasonably be expected to have a Material Adverse Effect, individually or in the aggregate. ARTICLE VII AFFIRMATIVE COVENANTS So long as any Bank shall have any Commitment hereunder, or any Loan or other Obligation shall remain unpaid or unsatisfied, or any Letter of Credit shall remain outstanding, unless the Required Banks waive compliance in writing: 7.01 FINANCIAL STATEMENTS. The Company shall deliver to the Agent, in form and detail satisfactory to the Agent and the Required Banks, with sufficient copies for each Bank: (a) as soon as available, but not later than one hundred (100) days after the end of each fiscal year (commencing with the fiscal year ended December 31, 1998), a copy of the audited consolidated balance sheet of the Company and its Subsidiaries as at the end of such year and the related consolidated statements of income or operations, shareholders' equity and cash flows for such year, setting forth in each case in comparative form the figures for the previous fiscal year, and accompanied by the opinion of Arthur Andersen LLP or another nationally-recognized independent public accounting firm ("INDEPENDENT AUDITOR") which report shall state that such consolidated financial statements A-73 present fairly the financial position for the periods indicated in conformity with GAAP applied on a basis consistent with prior years. Such opinion shall not be qualified or limited because of a restricted or limited examination by the Independent Auditor of any material portion of the Company's or any Subsidiary's records; (b) as soon as available, but not later than fifty-five (55) days after the end of each of the first three fiscal quarters of each fiscal year (commencing with the fiscal quarter ended March 31, 1998), a copy of the unaudited consolidated balance sheet of the Company and its Subsidiaries as of the end of such quarter and the related consolidated statements of income, shareholders' equity and cash flows for the period commencing on the first day and ending on the last day of such quarter, and certified by a Responsible Officer as fairly presenting, in accordance with GAAP (subject to ordinary, good faith year-end audit adjustments), the financial position and the results of operations of the Company and the Subsidiaries; (c) and as soon as available, but not later than one hundred (100) days after the end of each fiscal year (commencing with the fiscal year ended December 31, 1998), (i) a copy of an unaudited consolidating balance sheet of the Company and its Material Subsidiaries as of the end of such year, and (ii) a copy of the unaudited consolidating statement of income of the Company and its Material Subsidiaries for such year, all certified by a Responsible Officer as having been developed and used in connection with the preparation of the financial statements referred to in Section 7.01(a); PROVIDED, that financial information for all Subsidiaries of the Company which are not deemed to be "Material Subsidiaries" hereunder shall be consolidated and reflected under one column in such consolidating financial statements; and (d) as soon as available, but not later than fifty-five (55) days after the end of each of the first three fiscal quarters of each fiscal year (commencing with the fiscal quarter ended March 31, 1998), (i) a copy of the unaudited consolidating balance sheets of the Company and its Material Subsidiaries as of the end of such fiscal quarter, and (ii) a copy of the unaudited consolidating statement of income of the Company and its Material Subsidiaries for the year to date, all certified by a Responsible Officer as having been developed and used in connection with the preparation of the financial statements referred to in Section 7.01(b); PROVIDED, that financial information for all Subsidiaries of the Company which are not deemed to be "Material Subsidiaries" hereunder shall be consolidated and reflected under one column in such consolidating financial statements. A-74 7.02 CERTIFICATES; OTHER INFORMATION. The Company shall furnish to the Agent, with sufficient copies for each Bank: (a) concurrently with the delivery of the financial statements referred to in Section 7.01(a), a certificate of the Independent Auditor stating that in making the examination necessary therefor no knowledge was obtained of any Default or Event of Default (other than with respect to a Default or Event of Default pursuant to Section 9.01(l)), except as specified in such certificate; (b) concurrently with the delivery of the financial statements referred to in Sections 7.01(a) and (b), a Compliance Certificate executed by a Responsible Officer; PROVIDED, that the Compliance Certificate delivered in connection with the financial statements for the fiscal quarter ended September 30, 1999 shall comply with the Compliance Certificate for this Agreement as in effect on the Third Amendment Effective Date. (c) concurrently with the delivery of the financial statements referred to in Section 7.01(a), a copy of the annual budget of the Company and its Subsidiaries for the then current fiscal year; (d) promptly, copies of all financial statements and reports that the Company sends to its shareholders, and copies of all financial statements and regular, periodical or special reports (including Forms 10K, 10Q and 8K) that the Company or any Subsidiary may make to, or file with, the SEC; and (e) promptly, such additional information regarding the business, financial or corporate affairs of the Company or any Subsidiary as the Agent, at the request of any Bank, may from time to time reasonably request. 7.03 NOTICES. The Company shall promptly notify the Agent and each Bank: (a) of the occurrence of any Default or Event of Default, and of the occurrence or existence of any event or circumstance that with the giving of notice, the lapse of time, or both, is reasonably likely to (if not cured or otherwise remedied during such time) constitute a Default or an Event of Default; (b) of any matter that has resulted or may result in a Material Adverse Effect, including (i) breach or non-performance of, or any default under, a Contractual Obligation of the Company or any Subsidiary; (ii) any dispute, litigation, investigation, proceeding or suspension between the Company or any Subsidiary and any Governmental Authority; or (iii) the commencement of, or any material development in, any litigation or A-75 proceeding affecting the Company or any Subsidiary; including pursuant to any applicable Environmental Laws; (c) as soon as possible and, in any event, within five (5) Business Days after the Company or an ERISA Affiliate or Subsidiary of the Company knows or has reason to know that any event or condition described in Section 6.07 has occurred or exists, or is reasonably likely to occur or exist, the Company will deliver to the Agent and each Bank a certificate of the Company's chief financial officer setting forth the details of the event or condition and the action, if any, which the Company or such ERISA Affiliate or Subsidiary is required or proposes to take, together with copies of all relevant notices or other documents received or required or proposed to be given or filed by the Company or such ERISA Affiliate or Subsidiary in connection with such event or condition; and (d) of any material change in accounting policies or financial reporting practices by the Company or any of its consolidated Subsidiaries. Each notice under this Section shall be accompanied by a written statement by a Responsible Officer setting forth details of the occurrence referred to therein, and stating what action the Company or any affected Subsidiary proposes to take with respect thereto and at what time. Each notice under Section 7.03(a) shall describe with particularity any and all clauses or provisions of this Agreement or other Loan Document that have been (or foreseeably will be) breached or violated. 7.04 PRESERVATION OF CORPORATE EXISTENCE, ETC. The Company shall, and shall cause each Material Subsidiary to: (a) preserve and maintain in full force and effect its corporate existence and good standing under the laws of its state or jurisdiction of incorporation; (b) preserve and maintain in full force and effect all governmental rights, privileges, qualifications, permits, licenses and franchises necessary or desirable in the normal conduct of its business except as necessary in connection with sales of assets permitted by Section 8.03 and transactions permitted by Section 8.04; (c) use reasonable efforts, in the ordinary course of business, to preserve its business organization and goodwill; and (d) preserve or renew all of its registered patents, trademarks, trade names and service marks, the non-preservation of which could reasonably be expected to have a Material Adverse Effect. A-76 7.05 MAINTENANCE OF PROPERTY. The Company shall maintain and preserve, and shall cause each Subsidiary to maintain and preserve, all its property which is used or useful in its business in good working order and condition, ordinary wear and tear excepted, except as permitted by Section 8.03. The Company and each Subsidiary shall use the standard of care typical in the industry in the operation and maintenance of its facilities. 7.06 INSURANCE. The Company shall maintain, and shall cause each Subsidiary to maintain, with financially sound and reputable independent insurers, insurance with respect to its properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business, of such types and in such amounts as are customarily carried under similar circumstances by such other Persons. 7.07 PAYMENT OF OBLIGATIONS. The Company shall, and shall cause each Subsidiary to, pay and discharge as the same shall become due and payable, all their respective obligations and liabilities, including: (a) all tax liabilities, assessments and governmental charges or levies upon it or its properties or assets, unless the same are being contested in good faith by appropriate proceedings and adequate reserves in accordance with GAAP are being maintained by the Company or such Subsidiary; (b) all lawful claims which, if unpaid, would by law become a Lien upon its property; and (c) all indebtedness, as and when due and payable, but subject to any subordination provisions contained in any instrument or agreement evidencing such Indebtedness. 7.08 COMPLIANCE WITH LAWS. The Company shall comply, and shall cause each Subsidiary to comply, in all material respects with all Requirements of Law of any Governmental Authority having jurisdiction over it or its business (including the Federal Fair Labor Standards Act), except such as may be contested in good faith or as to which a bona fide dispute may exist. 7.09 COMPLIANCE WITH ERISA. (a) The Company shall, and shall cause each of its ERISA Affiliates to: (i) maintain each Plan in compliance in all material respects with the applicable provisions of ERISA, the Code and other federal or state law; (ii) cause each Plan which is qualified under Section 401(a) of the Code to maintain such qualification; and (iii) make all required contributions to any Plan subject to Section 412 of the Code; A-77 (b) Within five (5) Business Days after the annual report (Form 5500) of each Plan is filed with the Internal Revenue Service, the Company shall deliver a complete copy thereof (including schedules and attachments) to the Agent and each Bank; and (c) The Company shall furnish to the Agent and each Bank such additional information concerning any Plan as the Agent and each Bank may reasonably request. 7.10 INSPECTION OF PROPERTY AND BOOKS AND RECORDS. The Company shall maintain, and shall cause each Subsidiary to maintain, proper books of record and account, in which full, true and correct entries in conformity with GAAP consistently applied shall be made of all financial transactions and matters involving the assets and business of the Company and such Subsidiary. The Company shall permit, and shall cause each Subsidiary to permit, representatives and independent contractors of the Agent or any Bank to visit and inspect any of their respective properties, to examine their respective corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss their respective affairs, finances and accounts with their respective directors, officers, and independent public accountants, at such reasonable times during normal business hours and as often as may be reasonably desired, upon reasonable advance notice to the Company; PROVIDED, HOWEVER, when an Event of Default exists the Agent or any Bank may do any of the foregoing at the expense of the Company at any time during normal business hours and without advance notice. 7.11 ENVIRONMENTAL LAWS. The Company shall, and shall cause each Subsidiary to, conduct its operations and keep and maintain its property in compliance with all Environmental Laws. 7.12 USE OF PROCEEDS. The Company shall use the proceeds of the Loans (i) to refinance all of the outstanding indebtedness of the Company under the Existing Credit Agreement; (ii) to pay related expenses and costs associated with the Loans; and (iii) to provide for general corporate purposes including funding working capital needs, issuing letters of credit, and financing future acquisitions not in contravention of any Requirement of Law or of any Loan Document. 7.13 FUTURE MATERIAL SUBSIDIARIES. After the Closing Date, upon any Person becoming a Material Subsidiary of the Company, or upon the Company or any Subsidiary acquiring additional Capital Stock of any existing Subsidiary whose Capital Stock has been pledged pursuant to a Pledge Agreement, the Company shall notify the Agent of such acquisition, and A-78 (a) the Company promptly shall cause such Material Subsidiary to execute and deliver to the Agent, with counterparts for each party, a supplement to the Guaranty; PROVIDED, that if any such Guaranty or supplement to such Guaranty given by any Foreign Subsidiary would be taxable, the Company will instead pledge, or cause to be pledged, all of its equity interests in such new Foreign Subsidiary pursuant to clause (b) below (or such lesser amount of its equity interests as it can without such pledge being taxable), and (b) the Company or any Subsidiary, as the case may be, promptly shall deliver, or cause to be delivered, to the Agent under a Pledge Agreement (or a supplement thereto) certificates (if any) representing all of the issued and outstanding shares of Capital Stock of such Subsidiary owned by the Company or any other Subsidiary of the Company, as the case may be, along with undated stock powers for such certificates, executed in blank, or, if any securities subject thereto are uncertificated securities, confirmation and evidence satisfactory to the Agent that appropriate book entries have been made in the relevant books or records of a financial intermediary or the issuer of such securities, as the case may be, under applicable law resulting in the perfection of the security interest granted in favor of the Agent pursuant to the terms of a Pledge Agreement; together, in each case, with such opinions (including opinions from local counsel in the jurisdiction in which any Foreign Subsidiary is organized or formed), in form and substance and from counsel satisfactory to the Agent and the Required Banks, as the Agent and the Required Banks may reasonably require; PROVIDED, that, no opinion of local counsel shall be required with respect to any Foreign Subsidiary which is a Material Subsidiary with total (gross) revenues of less than $30,000,000 as set forth in clause (b)(ii) of the definition of "Material Subsidiary" in Section 1.01. 7.14 FURTHER ASSURANCES. The Company will, and will cause each Subsidiary to, promptly execute and deliver all further instruments and documents and take all further action that may be necessary in order to give effect to the provisions of this Agreement, any of the Pledge Agreements (including any supplements thereto), the Guaranty and the Notes. A-79 ARTICLE VIII NEGATIVE COVENANTS So long as any Bank shall have any Commitment hereunder, or any Loan or other Obligation shall remain unpaid or unsatisfied, or any Letter of Credit shall remain outstanding, unless the Required Banks waive compliance in writing: 8.01 LIMITATION ON LIENS. The Company shall not, and shall not suffer or permit any Subsidiary to, directly or indirectly, make, create, incur, assume or suffer to exist any Lien upon or with respect to any part of its property, whether now owned or hereafter acquired, other than the following ("PERMITTED LIENS"): (a) any Lien existing on property of the Company or any Subsidiary on the Third Amendment Effective Date and set forth in SCHEDULE 8.01 securing Indebtedness outstanding on such date; (b) any Lien created under any Loan Document; (c) Liens for taxes, fees, assessments or other governmental charges which are not delinquent or remain payable without penalty, or to the extent that non-payment thereof is permitted by Section 7.07; PROVIDED, that no notice of lien has been filed or recorded under the Code; (d) carriers', warehousemen's, mechanics', landlords', materialmen's, repairmen's or other similar Liens arising in the ordinary course of business which are not delinquent or remain payable without penalty or which are being contested in good faith and by appropriate proceedings, which proceedings have the effect of preventing the forfeiture or sale of the property subject thereto; (e) Liens (other than any Lien imposed by ERISA) consisting of pledges or deposits required in the ordinary course of business in connection with workers' compensation, unemployment insurance and other social security legislation; (f) Liens on the property of the Company or its Subsidiary securing (i) the non-delinquent performance of bids, trade contracts (other than for borrowed money), leases, statutory obligations, (ii) contingent obligations on surety and appeal bonds, and (iii) other non-delinquent obligations of a like nature; in each case, incurred in the ordinary course of business; PROVIDED, that all such Liens in the aggregate would not (even if enforced) cause a Material Adverse Effect; A-80 (g) Liens consisting of judgment or judicial attachment liens, provided that the enforcement of such Liens is effectively stayed and all such liens in the aggregate at any time outstanding for the Company and its Subsidiaries do not exceed $8,500,000 and the Liens listed on SCHEDULE 8.01(g) hereto. (h) easements, rights-of-way, restrictions and other similar encumbrances incurred in the ordinary course of business which, in the aggregate, are not substantial in amount, and which do not in any case materially detract from the value of the property subject thereto or interfere with the ordinary conduct of the businesses of the Company and its Subsidiaries; (i) Liens on assets of corporations which become Subsidiaries after the date of this Agreement; PROVIDED, HOWEVER, that such Liens existed at the time the respective corporations became Subsidiaries and were not created in anticipation thereof; provided, that all such Liens in the aggregate at any time outstanding for such Subsidiaries do not exceed $15,000,000; (j) purchase money security interests on any property acquired or held by the Company or its Subsidiaries in the ordinary course of business, securing Indebtedness incurred or assumed for the purpose of financing all or any part of the cost of acquiring such property; PROVIDED, THAT (i) any such Lien attaches to such property concurrently with or within 20 days after the acquisition thereof, (ii) such Lien attaches solely to the property so acquired in such transaction, (iii) the principal amount of the debt secured thereby does not exceed 100% of the cost of such property, and (iv) the principal amount of the Indebtedness secured by any and all such purchase money security interests shall not at any time exceed $5,000,000; (k) Liens securing obligations in respect of capital leases on assets subject to such leases, provided that such capital leases are otherwise permitted hereunder; (l) Liens arising solely by virtue of any statutory or common law provision relating to banker's liens, rights of set-off or similar rights and remedies as to deposit accounts or other funds maintained with a creditor depository institution; PROVIDED, THAT (i) such deposit account is not a dedicated cash collateral account and is not subject to restrictions against access by the Company in excess of those set forth by regulations promulgated by the FRB, and (ii) such deposit account is not intended by the Company or any Subsidiary to provide collateral to the depository institution; (m) Liens on Permitted Investments owned by Melody, to secure Indebtedness under the Melody Loan Arbitrage Facility, if such Permitted Investments were acquired by Melody with the proceeds of incurrence of such Indebtedness; A-81 (n) Liens on commercial mortgage loans originated and owned by Melody or any Mortgage Banking Subsidiary subject to an irrevocable, unconditional commitment to purchase such commercial mortgage loans, to secure Indebtedness of Melody or any Mortgage Banking Subsidiary under the Melody Mortgage Warehousing Facility; (o) Liens on the assets of any direct or indirect Subsidiary of the Company created or acquired in connection with a Permitted Acquisition and Liens on assets acquired by such Subsidiary in a Permitted Acquisition, which Liens secure Indebtedness permitted by Section 8.05(c) in connection with such Permitted Acquisition (but not including any refinancing thereof), in an amount not to exceed $10,000,000 in the aggregate; (p) Liens on the assets of any Foreign Subsidiary, which Liens secure Indebtedness permitted by Section 8.05(e) in an amount not to exceed $75,000,000 in the aggregate; and (q) any Lien existing on any asset of any Joint Venture in which the Company or any of its Subsidiaries is a participant but only to the extent such Liens secure Indebtedness of such Joint Venture for which the Company or such Subsidiary is not legally liable. PROVIDED, that if, notwithstanding this Section 8.01, any Lien which this Section 8.01 prohibits shall be created or arise without the prior written consent of the Agent and the Required Banks (including with respect to this proviso), the Obligations shall be secured by such Lien equally and ratably with the other Indebtedness secured thereby, the Company will take or cause to be taken all such action as may be requested by the Agent and the Required Banks to confirm and protect such Lien in favor of the Agent and the holder of such other Indebtedness, by accepting such Lien, shall be deemed to have agreed thereto and to share ratably with the Agent on that basis, the proceeds of such Lien, whether or not the Agent's security interest shall be perfected; PROVIDED FURTHER, however, that notwithstanding such equal and ratable securing and sharing, the existence of such Lien shall constitute a default by the Company in the performance or observance of this Section 8.01. 8.02 NEGATIVE PLEDGES, RESTRICTIVE AGREEMENTS, ETC. The Company shall not, and shall not permit any of its Subsidiaries to, enter into any agreement (excluding this Agreement, any other Loan Documents and, the Subordinated Note Documents and with respect to clause (b) below the shareholders agreement for the French Subsidiary) prohibiting: A-82 (a) the creation or assumption of any Lien (other than Liens pursuant to the Melody Mortgage Warehousing Facility or the Melody Loan Arbitrage Facility) upon its properties, revenues or assets, whether now owned or hereafter acquired, or the ability of the Company or any other Subsidiary to amend or otherwise modify this Agreement or any other Loan Document; or (b) the ability of any Subsidiary to make any payments, directly or indirectly, to the Company by way of dividends, advances, repayments of the loans or advances, reimbursements of management and other intercompany charges, expenses and accruals or other returns on investments, or any other agreement or arrangement which restricts the ability of any such Subsidiary to make any payment, directly or indirectly, to the Company (other than with respect to any Subsidiary in connection with an Offshore Currency Loan permitted by Section 8.05(e) so long as the amount of such Offshore Currency Loan results in a permanent reduction of the Combined Commitments as set forth in Section 2.07(b)(iii)). 8.03 SALE OF ASSETS. The Company shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, in a single transaction or a series of transactions, sell, lease, transfer, abandon or otherwise dispose of or suffer to be sold, leased, transferred, abandoned or otherwise disposed of, all or any part of its assets except: (i) the Company or any of its Subsidiaries may sell its surplus and obsolete equipment and other surplus and obsolete assets, in each case, in the ordinary course of its business; (ii) any of its Subsidiaries may sell, lease, transfer or otherwise dispose of any or all of its assets (other than accounts and inventory except to the extent permitted under clause (i) or in connection with any disposition of assets) to the Company or any Wholly-Owned Subsidiary that is a Guarantor; (iii) Melody or any Mortgage Banking Subsidiary may sell assets (including mortgage loans) purchased and/or funded pursuant to the Melody Mortgage Warehousing Facility or the Melody Loan Arbitrage Facility; (iv) the Company or any of its Subsidiaries may sell, transfer or otherwise dispose of its assets arising in connection with the Whittier Transaction; (v) the Company may sell its office building located at 533 S. Fremont Avenue, Los Angeles, California 90071; and A-83 (vi) subject to Section 2.07(b)(ii), the Company or any of its Subsidiaries may sell, lease or otherwise dispose of assets (excluding accounts receivable of the Company or any of its Subsidiaries) in transactions not otherwise permitted under clauses (i) through (v) hereof in an amount not to exceed $20,000,000 in the aggregate during any one fiscal year (each such sale, lease or other disposition of assets being hereinafter referred to as a "SALE"), so long as (A) both before and immediately after the consummation of such Sale after giving effect hereto, no Default or Event of Default shall exist; and (B) immediately after the consummation of such Sale, after giving effect thereto, the Company shall be permitted under the provisions of this Agreement to incur at least $1.00 of additional Indebtedness; PROVIDED, HOWEVER, that if the proceeds of any Sale within 90 days thereafter are reinvested in Permitted Investments, or such assets are contributed within ninety (90) days to any Permitted Investment, then such Sale may be excluded from the calculation of assets sales permitted under this clause (vi). 8.04 MERGER, CONSOLIDATIONS AND ACQUISITIONS. The Company shall not, and shall not permit any Subsidiary to, consolidate with, be acquired by, merge into or with any Person, make any Acquisition or enter into any binding agreement to do any of the foregoing which is not contingent on obtaining the consent of the Required Banks except: (a) provided that (i) the Agent shall have received written notice of any such merger within thirty (30) days after each fiscal year of the Company and (ii) immediately before and after giving effect thereto no Default or Event of Default shall exist, (A) any Subsidiary may merge with the Company or another Subsidiary; PROVIDED, that if any transaction shall be between the Company and a Subsidiary, the Company shall be the continuing or surviving corporation; and PROVIDED, FURTHER that if any transaction shall be between Subsidiaries, the Subsidiary which is the continuing or surviving corporation shall assume by an instrument reasonably satisfactory in form and substance to the Agent and the Required Banks, the obligations of such other Subsidiary if party to any Loan Document hereunder; and (B) any Subsidiary may sell all or substantially all of its assets (upon voluntary liquidation or otherwise), to the Company or another Subsidiary; PROVIDED, FURTHER that if any transaction shall be between Subsidiaries, the Subsidiary which is the continuing or surviving corporation shall assume by an instrument reasonably satisfactory in form and substance to the Agent and the Required Banks, the obligations of such other Subsidiary if party to any Loan Document hereunder; (b) mergers involving Subsidiaries as part of an Acquisition permitted by subsection (d) below; A-84 (c) Investments permitted by Section 8.13; and (d) Acquisitions, the Total Consideration of which, for all Acquisitions made after May 20, 1998 for any consecutive twelve (12) month period, shall not exceed $115,000,000 in the aggregate (including, in determining such Total Consideration, Acquisitions in connection with Joint Ventures in accordance with clause (h) of the definition of "Permitted Investments"); PROVIDED, that the Acquisitions listed on SCHEDULE 8.04(d) hereof and Acquisitions which otherwise may be consented to in writing from time to time by the Agent and the Required Banks (the "EXCLUDED ACQUISITIONS") shall not be included for purposes of this Section 8.04 in calculating the Total Consideration for all Acquisitions made after the Closing Date for any consecutive twelve (12) month period; and, PROVIDED, FURTHER, that with respect to all such Acquisitions (including Excluded Acquisitions), (i) subject to the proviso in clause (viii) below, the Agent and the Banks shall have been given ten (10) Business Days' prior written notice thereof; (ii) no Default or Event of Default shall exist immediately before or after giving effect to such Acquisition; (iii)the Company will be in compliance with each of the financial covenants contained in Sections 8.08, 8.09, 8.10 and 8.11 on a pro-forma basis after giving effect to such Acquisition and any Indebtedness incurred or assumed in connection therewith, such Indebtedness having been contracted in accordance with the provisions of Section 8.05 hereof; (iv) immediately after giving effect to each such Acquisition, all of the representations and warranties contained in Article VI shall be true and correct as if then made; (v) the Person, business or assets acquired in connection with such Acquisition are a real estate services-related business or a related line of business to the Company or any of its Subsidiaries; (vi) the prior, effective written consent or approval to such Acquisition of the Board or equivalent governing body of the acquiree is obtained; A-85 (vii)immediately after giving effect to each such Acquisition, (A) the Company and each of its Subsidiaries, on a consolidated basis, shall have a Minimum Liquidity of at least $25,000,000 and (B) EBITDA of the acquired Person for the preceding twelve (12) month period from the date of the Acquisition is a positive number. "Minimum Liquidity" shall mean all cash balances PLUS any unutilized Commitment hereunder after giving effect to such Acquisition; (viiithe Agent shall have received a certificate of a Responsible Officer of the Company, (A) identifying the Person or Property to be acquired, the name of the Person making such Acquisition and setting forth the total consideration to be paid in respect of such Acquisition and (B) certifying the information set forth in clauses (ii), (iii), (iv) and (vii) above and containing computations (in reasonable detail) in support thereof, such certificate to be in form and substance satisfactory to the Administrative Agent; PROVIDED, that with respect to any Acquisitions the Total Consideration of which is equal to or less than $5,000,000, individually (up to an aggregate amount of $10,000,000), the Agent shall receive notice of such Acquisition and receive the information required in such aforementioned certificate upon delivery of the quarterly Compliance Certificate; and (ix) the Agent shall have received such other information, documents, or opinions of counsel, as the Agent shall have reasonably requested. Notwithstanding anything herein to the contrary set forth in this Section 8.04(d), the Company and its Subsidiaries may make Acquisitions hereunder, the Total Consideration of which, for all Acquisitions made after May 20, 1998 for any consecutive twelve (12) month period, shall be greater than $115,000,000 but shall in no event exceed $400,000,000 (excluding from such calculations the Excluded Acquisitions); PROVIDED, that the additional Total Consideration in excess of $115,000,000 is financed by the issuance of new equity securities of the Company or its Subsidiaries, and PROVIDED, further that all other requirements set forth in subclauses (i) through (ix) above have been satisfied. 8.05 LIMITATION ON INDEBTEDNESS. The Company shall not, and shall not suffer or permit any Subsidiary to, create, incur, assume, suffer to exist, or otherwise become or remain directly or indirectly liable with respect to, any Indebtedness, except: (a) Indebtedness incurred pursuant to this Agreement; A-86 (b) Subject to Section 2.07 hereof, Subordinated Debt, but only to the extent that the aggregate amount outstanding at any one time does not exceed $300,000,000 in the aggregate for the Company; PROVIDED, that the terms of such Subordinated Debt are acceptable to the Agent and the Required Banks; (c) Subject to Section 2.07 hereof, additional Indebtedness of the Company and its Subsidiaries in an aggregate principal amount not to exceed $50,000,000; (d) Permitted Melody Indebtedness; (e) Notwithstanding clause 8.05(c) above, Indebtedness under credit facilities comprised of loans made in an Offshore Currency ("OFFSHORE CURRENCY LOANS") in an aggregate principal amount not to exceed $75,000,000 at any time or Indebtedness of the Company or any Subsidiary incurred pursuant to any guaranty of any the Company's or Subsidiary's obligations (without duplication) in support of such Offshore Currency Loan; (f) Indebtedness under the Company's deferred compensation plan for periods prior to May 1, 1999 in an amount not to exceed $27,500,000 in the aggregate plus all Indebtedness under such plan after April 30, 1999 which is either payable in Company stock or funded through the purchase of insurance contracts; (g) Indebtedness consisting of Guaranty Obligations (A) by the Company of Indebtedness permitted to be incurred by Wholly-Owned Subsidiaries of the Company, (B) by Domestic Subsidiaries of the Company of Indebtedness permitted to be incurred by the Company or other Wholly-Owned Subsidiaries of the Company, (C) by Foreign Subsidiaries of Indebtedness permitted to be incurred by other Wholly-Owned Foreign Subsidiaries of the Company and (D) by the Company or any Wholly-Owned Foreign Subsidiary of contractual obligations (not constituting Indebtedness) of Wholly- Owned Foreign Subsidiaries incurred in the ordinary course of business; and (h) All other Indebtedness existing on the Third Amendment Effective Date as set forth in SCHEDULE 8.05. 8.06 TRANSACTIONS WITH AFFILIATES. Other than transactions which are solely undertaken for reasons of international tax planning between Wholly-Owned Subsidiaries and transactions between the Company and Wholly-Owned Subsidiaries which in either case involve contributions of the stock of a Subsidiary, contributions of a promissory note or other evidence of Indebtedness of a Subsidiary or an exchange of such stock or such note for stock of a Wholly-Owned Subsidiary and which do not have a material adverse affect on the Company and its Subsidiaries, taken as a whole, the Company shall not, and shall not A-87 suffer or permit any Subsidiary to, enter into any transaction with any Affiliate of the Company, except upon fair and reasonable terms no less favorable to the Company or such Subsidiary than it would obtain in a comparable arm's-length transaction with a Person not an Affiliate of the Company or such Subsidiary. 8.07 USE OF PROCEEDS. (a) The Company shall not, and shall not suffer or permit any Subsidiary to, use any portion of the Loan proceeds or any Letter of Credit, directly or indirectly, (i) to purchase or carry Margin Stock, (ii) to repay or otherwise refinance indebtedness of the Company or others incurred to purchase or carry Margin Stock, (iii) to extend credit for the purpose of purchasing or carrying any Margin Stock, or (iv) to acquire any security in any transaction that is subject to Section 13 or 14 of the Exchange Act. (b) The Company shall not, directly or indirectly, use any portion of the Loan proceeds or any Letter of Credit (i) knowingly to purchase Ineligible Securities from the Arranger during any period in which the Arranger makes a market in such Ineligible Securities, (ii) knowingly to purchase during the underwriting or placement period Ineligible Securities being underwritten or privately placed by the Arranger, or (iii) to make payments of principal or interest on Ineligible Securities underwritten or privately placed by the Arranger and issued by or for the benefit of the Company or any Affiliate of the Company. The Arranger is a registered broker-dealer and permitted to underwrite and deal in certain Ineligible Securities; and "INELIGIBLE SECURITIES" means securities which may not be underwritten or dealt in by member banks of the Federal Reserve System under Section 16 of the Banking Act of 1933 (12 U.S.C. Section 24, Seventh), as amended. 8.08 LEVERAGE RATIO MAINTENANCE. The Company shall not permit the Leverage Ratio for each of the following fiscal periods to be greater than the applicable ratio set forth below opposite the fiscal period in which such date occurs. A-88 Fiscal Period Ending Maximum Ratio ------------- ------------- September 30, 1999 4.25 to 1.0 December 31, 1999 and the reafter 4.0 to 1.0 8.09 INTEREST COVERAGE RATIO MAINTENANCE. The Company shall not permit the Interest Coverage Ratio for each of the following fiscal periods to be less than the applicable ratio set forth below opposite the fiscal period in which such date occurs:
Fiscal Period Ending Minimum Ratio ------------- ------------- September 30, 1999 2.75:1.00 December 31, 1999 through September 30, 2000 3.00:1.00 December 31, 2000 through September 30, 2000 3.50:1.00 December 31, 2001 and thereafter 4.00:1.00
8.10 MINIMUM EBITDA. The Company shall maintain for each of the following fiscal periods, Consolidated EBITDA for the period of the four (4) most recently ended consecutive fiscal quarters of the Company, of not less than:
Fiscal Period Ending Minimum EBITDA ------------- -------------- From the Third Amendment Effective Date and thereafter $100,000,000
8.11 MAINTENANCE OF CONSOLIDATED NET WORTH. The Company shall not permit Consolidated Net Worth at any time to be less than the sum of (i) $82,000,000 PLUS (ii) seventy percent (70%) of Consolidated Net Income for each completed fiscal quarter beginning with the fiscal quarter ended June 30, 1998, for which Consolidated Net Income is a positive number (Consolidated Net Income for any such fiscal quarter where Consolidated Net Income is a loss having no effect on the calculation of the amount referred to in this clause (ii)), PLUS (iii) seventy percent (70%) of any new equity issuances of the Company and its Subsidiaries for each completed fiscal quarter beginning with the fiscal quarter ended June 30, 1998. A-89 8.12 JOINT VENTURES. The Company shall not, and shall not suffer or permit any Subsidiary to enter into any Joint Venture, other than as otherwise permitted in accordance with the terms of this Agreement. 8.13 RESTRICTED INVESTMENTS AND RESTRICTED PAYMENTS. (a) The Company shall not, and shall not suffer or permit any of its Subsidiaries to, declare, make or pay, or incur any liability to make or pay, or cause or permit to be declared, made or paid, any Restricted Payment or Restricted Investment, unless prior thereto, immediately thereafter, and after giving effect thereto: (i) the aggregate amount of such Restricted Payment or Restricted Investment, plus all other Restricted Payments or Restricted Investments made or paid, or for which a liability to make or pay has been incurred, by the Company or any of its Subsidiaries during the period of the four (4) most recently ended fiscal quarters of the Company, shall not exceed an amount equal to twenty-five percent (25%) of Consolidated Net Income during such period of the four (4) most recently ended fiscal quarters of the Company, so long as Consolidated Net Income is a positive number; and (ii) no Default or Event of Default shall exist. (b) Notwithstanding the foregoing provisions of this Section 8.13, the Company may, at any time following the date hereof, and from time to time thereafter, repurchase or redeem shares of its capital stock previously received by employees of the Company and held by such employees, at a price to be determined (a "STOCK REPURCHASE"), so long as both before and after giving effect to such Stock Repurchase, (i) no Default or Event of Default shall have occurred and be continuing, and (ii) the aggregate amount of such Stock Repurchases does not exceed $3,000,000 during any fiscal year of the Company, and such Stock Repurchase shall not be deemed a Restricted Payment hereunder. (c) Notwithstanding anything herein to the contrary, the Company shall not, and shall not permit any of its Subsidiaries to: (i) make (a) any optional payment or prepayment on (or deliver a notice of prepayment under) or redemption (including, without limitation, by making payments to a sinking or analogous fund), defeasance or repurchase of any Indebtedness (other than Indebtedness pursuant to this Agreement or any intercompany Indebtedness) or (b) any payments in violation of the A-90 subordination provisions of any Subordinated Debt; PROVIDED, that the Company may refinance the Indebtedness evidenced by the Subordinated Note Documents with other Subordinated Debt permitted hereunder and acceptable to the Agent and the Required Banks; or (ii) change or amend the terms of any Subordinated Debt (or any indenture or agreement in connection therewith) if the effect of such amendment is to: (a) increase the interest rate on such Subordinated Debt; (b) change the dates upon which payments of principal or interest are due on such Subordinated Debt other than to extend such dates; (c) change any default or event of default other than to delete or make less restrictive any default provision therein, or add any covenant with respect to such Subordinated Debt; (d) change the redemption or prepayment provision of such Subordinated Debt other than to extend the dates therefor or to reduce the premiums payable in connection therewith; (e) grant any security or collateral to secure payment of such Subordinated Debt; (f) add any guarantor thereof, or (g) change or amend any other term if such change or amendment would materially increase the obligations of any obligor or confer additional material rights on the holder of any Subordinated Debt in a manner adverse to the Company or any of its Subsidiaries, the Agent, any Bank or Issuing Bank. 8.14 CAPITAL EXPENDITURES, ETC. The Company shall not make, and shall not permit any of its Subsidiaries to make, Capital Expenditures (excluding any Capital Expenditures deemed to be made as a result of a Permitted Acquisition) during any consecutive twelve (12) month period in an aggregate amount in excess of Two Hundred Percent (200%) of the amount of Depreciation Expense incurred by the Company and its Subsidiaries for the preceding consecutive twelve (12) month period. 8.15 ERISA. The Company shall not, and shall not permit any ERISA Affiliate or Subsidiary of the Company to, directly or indirectly, establish any new Plan or modify any existing Plan so as to increase its obligations thereunder (except in the ordinary course of business consistent with past practice), which increase in obligations would reasonably be expected to have a Material Adverse Effect. 8.16 CHANGE IN BUSINESS. The Company shall not, and shall not suffer or permit any Subsidiary to, engage in any material line of business substantially different from those lines of business carried on by the Company and its Subsidiaries on the date hereof. 8.17 STOCK OF MATERIAL SUBSIDIARIES. Except as set forth in Annex D hereto with respect to the Whittier Transaction, the Company shall not permit any Material Subsidiary A-91 to issue any Capital Stock (whether for value or otherwise) to any Person other than the Company, another Wholly-Owned Subsidiary or Material Subsidiary of the Company. 8.18 SALE AND LEASEBACK. The Company shall not, and shall not permit any of its Subsidiaries to, enter into any agreement or arrangement with any other Person providing for the leasing by the Company or any of its Subsidiaries of real or personal property which has been or is to be sold or transferred by the Company or any of its Subsidiaries to such other Person or to any other Person to whom funds have been or are to be advanced by such Person on the security of such property or rental obligations of the Company or any of its Subsidiaries other than in connection with the sale and leaseback of improved real estate owned by the Company in San Diego, California and Phoenix, Arizona with an aggregate value not in excess of $10,000,000. 8.19 AMENDMENTS. Without limiting the generality of any restrictions contained in any Contractual Obligation evidencing the Permitted Melody Indebtedness, the Company covenants and agrees that it shall not, and shall not permit any of its Subsidiaries to, without the prior consent of the Agent and the Required Banks, consent or agree to, or otherwise suffer, any amendment, waiver or modification of, or supplement to, any Contractual Obligation evidencing the Permitted Melody Indebtedness, except for modifications made in the ordinary course of business which do not adversely affect the Agent and the Banks or increase any amounts paid by the Company or any of its Subsidiaries thereunder (other than increases in the amount paid under the Permitted Melody Indebtedness). 8.20 ACCOUNTING CHANGES. The Company shall not, and shall not suffer or permit any Subsidiary to, make any significant change in accounting treatment or reporting practices, except as required by GAAP, or change the fiscal year of the Company or of any Subsidiary. ARTICLE IX EVENTS OF DEFAULT 9.01 EVENT OF DEFAULT. Any of the following shall constitute an "EVENT OF DEFAULT": (a) NON-PAYMENT. The Company fails to pay, (i) when and as required to be paid herein, any amount of principal of any Loan or of any L/C Obligation, or (ii) within five (5) days after the same becomes due, any interest, fee or any other amount payable hereunder or under any other Loan Document; or A-92 (b) REPRESENTATION OR WARRANTY. Any representation or warranty by the Company or any Subsidiary made or deemed made herein, in any other Loan Document, or which is contained in any certificate, document or financial or other statement by the Company, any Subsidiary, or any Responsible Officer, furnished at any time under this Agreement, or in or under any other Loan Document, is incorrect in any material respect on or as of the date made or deemed made; or (c) SPECIFIC DEFAULTS. The Company or any Subsidiary fails to perform or observe any term, covenant or agreement contained in any of Section 7.02, 7.09 or 7.12 or in Article VIII; or (d) OTHER DEFAULTS. The Company or any Subsidiary party thereto fails to perform or observe any other term or covenant contained in this Agreement or any other Loan Document, and such default shall continue unremedied for a period of twenty (20) days after the earlier of (i) the date upon which a Responsible Officer knew or reasonably should have known of such failure or (ii) the date upon which written notice thereof is given to the Company by the Agent or any Bank; or (e) CROSS-DEFAULT. The Company or any Subsidiary (A) fails to make any payment in respect of any Indebtedness having an aggregate principal amount (including undrawn committed or available amounts and including amounts owing to all creditors under any combined or syndicated credit arrangement) of more than $10,000,000 when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) and such failure continues after the applicable grace or notice period, if any, specified in the relevant document on the date of such failure; or (B) fails to perform or observe any other condition or covenant, or any other event shall occur or condition exist, under any agreement or instrument relating to any such Indebtedness or Contingent Obligation, and such failure continues after the applicable grace or notice period, if any, specified in the relevant document on the date of such failure if the effect of such failure, event or condition is to cause, or to permit the holder or holders of such Indebtedness or beneficiary or beneficiaries of such Indebtedness (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause such Indebtedness to be declared to be due and payable prior to its stated maturity, or such Contingent Obligation to become payable or cash collateral in respect thereof to be demanded; or (f) INSOLVENCY; VOLUNTARY PROCEEDINGS. The Company or any Material Subsidiary (i) ceases or fails to be Solvent, or generally fails to pay, or admits in writing its inability to pay, its debts as they become due, subject to applicable grace periods, if any, whether at stated maturity or otherwise; (ii) voluntarily ceases to conduct its business in the ordinary course; (iii) commences any Insolvency Proceeding with respect to itself; or (iv) takes any action to effectuate or authorize any of the foregoing; or A-93 (g) INVOLUNTARY PROCEEDINGS. (i) Any involuntary Insolvency Proceeding is commenced or filed against the Company or any Material Subsidiary, or any writ, judgment, warrant of attachment, execution or similar process, is issued or levied against a substantial part of the Company's or any Material Subsidiary's properties, and any such proceeding or petition shall not be dismissed, or such writ, judgment, warrant of attachment, execution or similar process shall not be released, vacated or fully bonded within 60 days after commencement, filing or levy; (ii) the Company or any Material Subsidiary admits the material allegations of a petition against it in any Insolvency Proceeding, or an order for relief (or similar order under non-U.S. law) is ordered in any Insolvency Proceeding; or (iii) the Company or any Material Subsidiary acquiesces in the appointment of a receiver, trustee, custodian, conservator, liquidator, mortgagee in possession (or agent therefor), assignee for the benefit of creditors or other similar Person for itself or a substantial portion of its property or business; or (h) ERISA. An event or condition described in Section 6.07 shall occur or exist and, as a result of such event or condition, together with all other such events or conditions, the Company, an ERISA Affiliate or a Subsidiary of the Company shall incur or in the opinion of the Agent or the Required Banks shall be reasonably likely to incur a liability of any kind under ERISA, the Code, or otherwise which, in the opinion of the Agent or the Required Banks, could have a Material Adverse Effect; or (i) MONETARY JUDGMENTS. One or more non-interlocutory judgments, non-interlocutory orders, decrees or arbitration awards is entered against the Company or any Subsidiary involving in the aggregate a liability (to the extent not covered by independent third-party insurance as to which the insurer does not dispute coverage) as to any single or related series of transactions, incidents or conditions, of $8,500,000 or more, and the same shall remain unvacated and unstayed pending appeal for a period of 30 days after the entry thereof; or (j) NON-MONETARY JUDGMENTS. Any non-monetary judgment, order or decree is entered against the Company or any Subsidiary which does or would reasonably be expected to have a Material Adverse Effect, and there shall be any period of 30 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; or (k) CHANGE OF CONTROL. There occurs any Change of Control; or (l) MATERIAL ADVERSE EFFECT. There occurs a Material Adverse Effect; or A-94 (m) GUARANTOR DEFAULTS. Any Guarantor fails in any material respect to perform or observe any term, covenant or agreement in the Guaranty; or the Guaranty is for any reason partially (including with respect to future advances) or wholly revoked or invalidated, or otherwise ceases to be in full force and effect, or any Guarantor or any other Person contests in any manner the validity or enforceability thereof or denies that it has any further liability or obligation thereunder; or any event described at Sections (f) or (g) of this Section occurs with respect to any Guarantor; or (n) INVALIDITY OF SUBORDINATION PROVISIONS. The subordination provisions of any agreement or instrument governing any Subordinated Debt is for any reason revoked or invalidated, or otherwise ceases to be in full force and effect, any Person contests in any manner the validity or enforceability thereof or denies that it has any further liability or obligation thereunder, or the Indebtedness hereunder is for any reason subordinated or does not have the priority contemplated by this Agreement or such subordination provisions; or (o) PLEDGE AGREEMENTS. The Company or any of its Subsidiaries shall have knowledge that any Lien created or intended to be created by any of the Pledge Agreements shall cease to be a valid and enforceable Lien, or any such Lien shall cease to be a perfected Lien and such Lien remains invalid, unenforceable or unperfected for ten (10) days. 9.02 REMEDIES. If any Event of Default occurs, the Agent shall, at the request of, or may, with the consent of, the Required Banks, take any one or more of the following actions: (a) declare the commitment of each Bank to make Loans and any obligation of the Issuing Bank to Issue Letters of Credit to be terminated, whereupon such commitments and obligation shall be terminated; (b) declare an amount equal to the maximum aggregate amount that is or at any time thereafter may become available for drawing under any outstanding Letters of Credit (whether or not any beneficiary shall have presented, or shall be entitled at such time to present, the drafts or other documents required to draw under such Letters of Credit) to be immediately due and payable, and declare the unpaid principal amount of all outstanding Loans, all interest accrued and unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan Document to be immediately due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Company; and/or (c) exercise on behalf of itself and the Banks all rights and remedies available to it and the Banks under the Loan Documents or applicable law; A-95 PROVIDED, HOWEVER, that upon the occurrence of any event specified in subsection (f) or (g) of Section 9.01 (in the case of clause (i) of subsection (g) upon the expiration of the 60-day period mentioned therein), the obligation of each Bank to make Loans and any obligation of the Issuing Bank to Issue Letters of Credit shall automatically terminate and the unpaid principal amount of all outstanding Loans and all interest and other amounts as aforesaid shall automatically become due and payable without further act of the Agent, the Issuing Bank or any Bank. 9.03 RIGHTS NOT EXCLUSIVE. The rights provided for in this Agreement and the other Loan Documents are cumulative and are not exclusive of any other rights, powers, privileges or remedies provided by law or in equity, or under any other instrument, document or agreement now existing or hereafter arising. ARTICLE X THE AGENT 10.01 APPOINTMENT AND AUTHORIZATION; "AGENT". (a) Each Bank hereby irrevocably (subject to Section 10.09) appoints, designates and authorizes the Agent to take such action on its behalf under the provisions of this Agreement and each other Loan Document and to exercise such powers and perform such duties as are expressly delegated to it by the terms of this Agreement or any other Loan Document, together with such powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary contained elsewhere in this Agreement or in any other Loan Document, the Agent shall not have any duties or responsibilities, except those expressly set forth herein, nor shall the Agent have or be deemed to have any fiduciary relationship with any Bank, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against the Agent. Without limiting the generality of the foregoing sentence, the use of the term "agent" in this Agreement with reference to the Agent is not intended to represent or connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law. Instead, such term is used merely as a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties. (b) The Issuing Bank shall act on behalf of the Banks with respect to any Letters of Credit Issued by it and the documents associated therewith until such time and except for so long as the Agent may agree at the request of the Required Banks to act for such Issuing Bank with respect thereto; PROVIDED, HOWEVER, that the Issuing Bank shall have all of the benefits and immunities (i) provided to the Agent in this Article X with respect to any acts taken or omissions suffered by the Issuing Bank in connection with Letters of A-96 Credit Issued by it or proposed to be Issued by it and the application and agreements for letters of credit pertaining to the Letters of Credit as fully as if the term "Agent," as used in this Article X, included the Issuing Bank with respect to such acts or omissions, and (ii) as additionally provided in this Agreement with respect to the Issuing Bank. 10.02 DELEGATION OF DUTIES. The Agent may execute any of its duties under this Agreement or any other Loan Document by or through agents, employees or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Agent shall not be responsible for the negligence or misconduct of any agent or attorney-in-fact that it selects with reasonable care. 10.03 LIABILITY OF AGENT. None of the Agent-Related Persons shall (i) be liable for any action taken or omitted to be taken by any of them under or in connection with this Agreement or any other Loan Document or the transactions contemplated hereby (except for its own gross negligence or willful misconduct), or (ii) be responsible in any manner to any of the Banks for any recital, statement, representation or warranty made by the Company or any Subsidiary or Affiliate of the Company, or any officer thereof, contained in this Agreement or in any other Loan Document, or in any certificate, report, statement or other document referred to or provided for in, or received by the Agent under or in connection with, this Agreement or any other Loan Document, or the validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document, or for any failure of the Company or any other party to any Loan Document to perform its obligations hereunder or thereunder. No Agent-Related Person shall be under any obligation to any Bank to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the properties, books or records of the Company or any of the Company's Subsidiaries or Affiliates. 10.04 RELIANCE BY AGENT. (a) The Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice, consent, certificate, affidavit, letter, telegram, facsimile, telex or telephone message, statement or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons, and upon advice and statements of legal counsel (including counsel to the Company), independent accountants and other experts selected by the Agent. The Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless it shall first receive such advice or concurrence of the Required Banks as it deems appropriate and, if it so requests, it shall first be indemnified to its satisfaction by the Banks against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. The Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement or any other Loan Document in accordance with a request or consent of the A-97 Required Banks and such request and any action taken or failure to act pursuant thereto shall be binding upon all of the Banks. (b) For purposes of determining compliance with the conditions specified in Section 5.01, each Bank that has executed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter either sent by the Agent to such Bank for consent, approval, acceptance or satisfaction, or required thereunder to be consented to or approved by or acceptable or satisfactory to the Bank. 10.05 NOTICE OF DEFAULT. The Agent shall not be deemed to have knowledge OR notice of the occurrence of any Default or Event of Default, except with respect to defaults in the payment of principal, interest and fees required to be paid to the Agent for the account of the Banks, unless the Agent shall have received written notice from a Bank or the Company referring to this Agreement, describing such Default or Event of Default and stating that such notice is a "notice of default." The Agent will notify the Banks of its receipt of any such notice. The Agent shall take such action with respect to such Default or Event of Default as may be requested by the Required Banks in accordance with Article IX; provided, however, that unless and until the Agent has received any such request, the Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable or in the best interest of the Banks. 10.06 CREDIT DECISION. Each Bank acknowledges that none of the Agent-Related Persons has made any representation or warranty to it, and that no act by the Agent hereinafter taken, including any review of the affairs of the Company and its Subsidiaries, shall be deemed to constitute any representation or warranty by any Agent-Related Person to any Bank. Each Bank represents to the Agent that it has, independently and without reliance upon any Agent-Related Person and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, prospects, operations, property, financial and other condition and creditworthiness of the Company and its Subsidiaries, and all applicable bank regulatory laws relating to the transactions contemplated hereby, and made its own decision to enter into this Agreement and to extend credit to the Company hereunder. Each Bank also represents that it will, independently and without reliance upon any Agent-Related Person and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition and creditworthiness of the Company. Except for notices, reports and other documents expressly herein required to be furnished to the Banks by the Agent, the Agent A-98 shall not have any duty or responsibility to provide any Bank with any credit or other information concerning the business, prospects, operations, property, financial and other condition or creditworthiness of the Company which may come into the possession of any of the Agent-Related Persons. 10.07 INDEMNIFICATION OF AGENT. Whether or not the transactions contemplated hereby are consummated, the Banks shall indemnify upon demand the Agent-Related Persons (to the extent not reimbursed by or on behalf of the Company and without limiting the obligation of the Company to do so), pro rata, from and against any and all Indemnified Liabilities; PROVIDED, HOWEVER, that no Bank shall be liable for the payment to the Agent-Related Persons of any portion of such Indemnified Liabilities resulting from such Person's gross negligence or willful misconduct. Without limitation of the foregoing, each Bank shall reimburse the Agent upon demand for its ratable share of any costs or out-of-pocket expenses (including Attorney Costs) incurred by the Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, any other Loan Document, or any document contemplated by or referred to herein, to the extent that the Agent is not reimbursed for such expenses by or on behalf of the Company. The undertaking in this Section shall survive the payment of all Obligations hereunder and the resignation or replacement of the Agent. 10.08 AGENT IN INDIVIDUAL CAPACITY. Bank of America and its Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, acquire equity interests in and generally engage in any kind of banking, trust, financial advisory, underwriting or other business with the Company and its Subsidiaries and Affiliates as though Bank of America were not the Agent or the Issuing Bank hereunder and without notice to or consent of the Banks. The Banks acknowledge that, pursuant to such activities, Bank of America or its Affiliates may receive information regarding the Company or its Affiliates (including information that may be subject to confidentiality obligations in favor of the Company or such Subsidiary) and acknowledge that the Agent shall be under no obligation to provide such information to them. With respect to its Loans, Bank of America shall have the same rights and powers under this Agreement as any other Bank and may exercise the same as though it were not the Agent or the Issuing Bank. 10.09 SUCCESSOR AGENT. The Agent may, and at the request of the Required Banks shall, resign as Agent upon 30 days' notice to the Banks. If the Agent resigns under this Agreement, the Required Banks shall appoint from among the Banks, with the consent of the Company, which consent shall not be unreasonably withheld, a successor agent for the Banks. If no successor agent is appointed prior to the effective date of the resignation of the Agent, the Agent may appoint, after consulting with the Banks and the Company, a A-99 successor agent from among the Banks. Upon the acceptance of its appointment as successor agent hereunder, such successor agent shall succeed to all the rights, powers and duties of the retiring Agent and the term "Agent" shall mean such successor agent and the retiring Agent's appointment, powers and duties as Agent shall be terminated. After any retiring Agent's resignation hereunder as Agent, the provisions of this Article X and Sections 11.04 and 11.05 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement. If no successor agent has accepted appointment as Agent by the date which is 30 days following a retiring Agent's notice of resignation, the retiring Agent's resignation shall nevertheless thereupon become effective and the Banks shall perform all of the duties of the Agent hereunder until such time, if any, as the Required Banks appoint a successor agent as provided for above. Notwithstanding the foregoing, however, Bank of America may not be removed as the Agent at the request of the Required Banks unless Bank of America shall also be replaced simultaneously as "Issuing Bank" hereunder pursuant to documentation in form and substance reasonably satisfactory to Bank of America. 10.10 WITHHOLDING TAX. (a) If any Bank is a "foreign corporation, partnership or trust" within the meaning of the Code and such Bank claims exemption from, or a reduction of, U.S. withholding tax under Sections 1441 or 1442 of the Code, such Bank agrees with and in favor of the Agent, to deliver to the Agent (with a copy to the Company): (i) if such Bank claims an exemption from, or a reduction of, withholding tax under a United States tax treaty, two properly completed and executed copies of IRS Form 1001 before the payment of any interest in the first calendar year and before the payment of any interest in each third succeeding calendar year during which interest may be paid under this Agreement; (ii) if such Bank claims that interest paid under this Agreement is exempt from United States withholding tax because it is effectively connected with a United States trade or business of such Bank, two properly completed and executed copies of IRS Form 4224 before the payment of any interest is due in the first taxable year of such Bank and in each succeeding taxable year of such Bank during which interest may be paid under this Agreement; and (iii) such other form or forms as may be required under the Code or other laws of the United States as a condition to exemption from, or reduction of, United States withholding tax. Such Bank agrees to notify promptly the Agent of any change in circumstances which would modify or render invalid any claimed exemption or reduction. A-100 (b) If any Bank claims exemption from, or reduction of, withholding tax under a United States tax treaty by providing IRS Form 1001 and such Bank sells, assigns, grants a participation in, or otherwise transfers all or part of the Obligations of the Company to such Bank, such Bank agrees to notify the Agent of the percentage amount in which it is no longer the beneficial owner of Obligations of the Company to such Bank. To the extent of such percentage amount, the Agent will treat such Bank's IRS Form 1001 as no longer valid. (c) If any Bank claiming exemption from United States withholding tax by filing IRS Form 4224 with the Agent sells, assigns, grants a participation in, or otherwise transfers all or part of the Obligations of the Company to such Bank, such Bank agrees to undertake sole responsibility for complying with the withholding tax requirements imposed by Sections 1441 and 1442 of the Code. (d) If any Bank is entitled to a reduction in the applicable withholding tax, the Agent may withhold from any interest payment to such Bank an amount equivalent to the applicable withholding tax after taking into account such reduction. However, if the forms or other documentation required by Section (a) of this Section are not delivered to the Agent, then the Agent may withhold from any interest payment to such Bank not providing such forms or other documentation an amount equivalent to the applicable withholding tax imposed by Sections 1441 and 1442 of the Code, without reduction. (e) If the IRS or any other Governmental Authority of the United States or other jurisdiction asserts a claim that the Agent did not properly withhold tax from amounts paid to or for the account of any Bank (because the appropriate form was not delivered or was not properly executed, or because such Bank failed to notify the Agent of a change in circumstances which rendered the exemption from, or reduction of, withholding tax ineffective, or for any other reason) such Bank shall indemnify the Agent fully for all amounts paid, directly or indirectly, by the Agent as tax or otherwise, including penalties and interest, and including any taxes imposed by any jurisdiction on the amounts payable to the Agent under this Section, together with all costs and expenses (including Attorney Costs). The obligation of the Banks under this Section shall survive the payment of all Obligations and the resignation or replacement of the Agent. 10.11 SENIOR MANAGING AGENTS; CO-AGENTS. None of the Banks identified on the facing page or signature pages of this Agreement as a "senior managing agent" or a "co-agent" shall have any right, power, obligation, liability, responsibility or duty under this Agreement other than those applicable to all Banks as such. Without limiting the foregoing, none of the Banks so identified as a "senior managing agent" or a "co-agent" shall have or be deemed to have any fiduciary relationship with any Bank. Each Bank A-101 acknowledges that it has not relied, and will not rely, on any of the Banks so identified in deciding to enter into this Agreement or in taking or not taking action hereunder. 10.12 COLLATERAL MATTERS. (a) The Agent is authorized on behalf of all the Banks, without the necessity of any notice to or further consent from the Banks, from time to time to take any action with respect to any Collateral or the Guaranty or any of the Pledge Agreements which may be necessary to perfect and maintain perfected the security interest in and Liens upon the Collateral granted pursuant to the Guaranty or any of the Pledge Agreements. (b) The Banks irrevocably authorize the Agent, at its option and in its discretion, to release any Lien granted to or held by the Agent upon any Collateral (i) upon termination of the Commitments and payment in full of all Loans and all other Obligations payable under this Agreement and under any other Loan Document; (ii) constituting Property sold or to be sold or disposed of as part of or in connection with any disposition permitted hereunder; (iii) constituting Property in which the Company or any Subsidiary of the Company owned no interest at the time the Lien was granted or at any time thereafter; (iv) constituting Property leased to the Company or any Subsidiary of the Company under a lease which has expired or been terminated in a transaction permitted under this Agreement or is about to expire and which has not been, and is not intended by the Company or such Subsidiary to be, renewed or extended; (v) consisting of an instrument evidencing Indebtedness or other debt instrument, if the indebtedness evidenced thereby has been paid in full; or (vi) if approved, authorized or ratified in writing by the Required Banks or all the Banks, as the case may be, as provided in subsection 11.01(f). Upon request by the Agent at any time, the Banks will confirm in writing the Agent's authority to release particular types or items of Collateral pursuant to this subsection 10.12(b). A-102 ARTICLE XI MISCELLANEOUS 11.01 AMENDMENTS AND WAIVERS. No amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent with respect to any departure by the Company or any applicable Subsidiary therefrom, shall be effective unless the same shall be in writing and signed by the Required Banks (or by the Agent at the written request of the Required Banks) and the Company and acknowledged by the Agent, and then any such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; PROVIDED, HOWEVER, that no such waiver, amendment, or consent shall, unless in writing and signed by all the Banks and the Company and acknowledged by the Agent, do any of the following: (a) increase or extend the Commitment of any Bank (or reinstate any Commitment terminated pursuant to Section 2.05 or Section 2.07); (b) postpone or delay any date fixed by this Agreement or any other Loan Document for any payment of principal, interest, fees or other amounts due to the Banks (or any of them) hereunder or under any other Loan Document, including, without limitation, any mandatory prepayments contemplated by Section 2.07 hereof; (c) reduce the principal of, or the rate of interest specified herein on any Loan, or (subject to clause (iii) below) any fees or other amounts payable hereunder or under any other Loan Document; (d) change the percentage of the Commitments or of the aggregate unpaid principal amount of the Loans which is required for the Banks or any of them to take any action hereunder; (e) amend this Section, or Section 2.14, or any provision herein providing for consent or other action by all Banks; or (f) discharge any Guarantor, or release any portion of any of the Pledged Shares or the other Collateral under the Loan Documents except as otherwise may be provided in this Agreement, the Guaranty or any Pledge Agreement, as the case may be, or except where the consent of the Required Banks only is specifically provided for; and, PROVIDED FURTHER, that (i) no amendment, waiver or consent shall, unless in writing and signed by the Issuing Bank in addition to the Required Banks or all the Banks, as the case may be, affect the rights or duties of the Issuing Bank under this Agreement or any L/C- A-103 Related Document relating to any Letter of Credit Issued or to be Issued by it, (ii) no amendment, waiver or consent shall, unless in writing and signed by the Agent in addition to the Required Banks or all the Banks, as the case may be, affect the rights or duties of the Agent under this Agreement or any other Loan Document, and (iii) the Fee Letter may only be amended, or rights or privileges thereunder waived, in a writing executed by the parties thereto. 11.02 NOTICES. (a) All notices, requests, consents, approvals, waivers and other communications shall be in writing (including, unless the context expressly otherwise provides, by facsimile transmission, provided that any matter transmitted by the Company by facsimile (i) shall be immediately confirmed by a telephone call to the recipient at the number specified on SCHEDULE 11.02, and (ii) shall be followed promptly by delivery of a hard copy original thereof) and mailed, faxed or delivered, to the address or facsimile number specified for notices on SCHEDULE 11.02; or, as directed to the Company or the Agent, to such other address as shall be designated by such party in a written notice to the other parties, and as directed to any other party, at such other address as shall be designated by such party in a written notice to the Company and the Agent. (b) All such notices, requests and communications shall, when transmitted by overnight delivery, or faxed, be effective when delivered for overnight (next-day) delivery, or transmitted in legible form by facsimile machine, respectively, or if mailed, upon the fifth Business Day after the date deposited into the U.S. mail, or if delivered, upon delivery; except that notices pursuant to Article II, III or X to the Agent shall not be effective until actually received by the Agent, and notices pursuant to Article III to the Issuing Bank shall not be effective until actually received by the Issuing Bank at the address specified for the "Issuing Bank" on the applicable signature page hereof. (c) Any agreement of the Agent and the Banks herein to receive certain notices by telephone or facsimile is solely for the convenience and at the request of the Company. The Agent and the Banks shall be entitled to rely on the authority of any Person purporting to be a Person authorized by the Company to give such notice and the Agent and the Banks shall not have any liability to the Company or other Person on account of any action taken or not taken by the Agent or the Banks in reliance upon such telephonic or facsimile notice. The obligation of the Company to repay the Loans and L/C Obligations shall not be affected in any way or to any extent by any failure by the Agent and the Banks to receive written confirmation of any telephonic or facsimile notice or the receipt by the Agent and the Banks of a confirmation which is at variance with the terms understood by the Agent and the Banks to be contained in the telephonic or facsimile notice. 11.03 NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and no delay in exercising, on the part of the Agent or any Bank, any right, remedy, power or privilege A-104 hereunder, shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. 11.04 COSTS AND EXPENSES. The Company shall: (a) whether or not the transactions contemplated hereby are consummated, pay or reimburse Bank of America (including in its capacity as Agent and Issuing Bank) within five Business Days after demand (subject to Section 5.01(e)) for all reasonable costs and expenses incurred by Bank of America (including in its capacity as Agent and Issuing Bank) in connection with the development, preparation, delivery, administration and execution of, and any amendment, supplement, consent, waiver or modification to (in each case, whether or not consummated), this Agreement, any Loan Document and any other documents prepared in connection herewith or therewith, and the consummation of the transactions contemplated hereby and thereby, including reasonable Attorney Costs incurred solely by Bank of America (including in its capacity as Agent and Issuing Bank) with respect thereto; and (b) pay or reimburse the Agent, the Arranger and each Bank within five Business Days after demand (subject to Section 5.01(e)) for all costs and expenses (including Attorney Costs) incurred by them in connection with the enforcement, attempted enforcement, or preservation of any rights or remedies under this Agreement or any other Loan Document during the existence of an Event of Default or after acceleration of the Loans (including in connection with any "workout" or restructuring regarding the Loans, and including in any Insolvency Proceeding or appellate proceeding). 11.05 COMPANY INDEMNIFICATION. Whether or not the transactions contemplated hereby are consummated, the Company shall indemnify, defend and hold the Agent-Related Persons, and each Bank and each of its respective officers, directors, employees, counsel, agents and attorneys-in-fact (each, an "INDEMNIFIED PERSON") harmless from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, charges, expenses and disbursements (including Attorney Costs) of any kind or nature whatsoever which may at any time (including at any time following repayment of the Loans, the termination of the Letters of Credit and the termination, resignation or replacement of the Agent or replacement of any Bank) be imposed on, incurred by or asserted against any such Person in any way relating to or arising out of this Agreement or any document contemplated by or referred to herein, or the transactions contemplated hereby, or any action taken or omitted by any such Person under or in connection with any of the foregoing, including with respect to any investigation, litigation or proceeding (including any Insolvency Proceeding or appellate proceeding) related to or arising out of this Agreement or the Loans or Letters of Credit or the use of the proceeds thereof, whether A-105 or not any Indemnified Person is a party thereto (all the foregoing, collectively, the "INDEMNIFIED LIABILITIES"); PROVIDED, that the Company shall have no obligation hereunder to any Indemnified Person with respect to Indemnified Liabilities resulting from the gross negligence or willful misconduct of such Indemnified Person. The agreements in this Section shall survive payment of all other Obligations. 11.06 PAYMENTS SET ASIDE. To the extent that the Company makes a payment to the Agent or the Banks, or the Agent or the Banks exercise their right of set-off, and such payment or the proceeds of such set-off or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Agent or such Bank in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any Insolvency Proceeding or otherwise, then (a) to the extent of such recovery the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such set-off had not occurred, and (b) each Bank severally agrees to pay to the Agent upon demand its pro rata share of any amount so recovered from or repaid by the Agent. 11.07 SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, except that the Company may not assign or transfer any of its rights or obligations under this Agreement without the prior written consent of the Agent and each Bank. 11.08 ASSIGNMENTS, PARTICIPATIONS, ETC. (a) With the written consent of the Company (at all times other than during the existence of an Event of Default) and the Agent and the Issuing Bank, which consents shall not be unreasonably withheld or delayed, any Bank may, at any time, assign and delegate to one or more Eligible Assignees (provided that no written consent of the Company, the Agent or the Issuing Bank shall be required in connection with any assignment and delegation by a Bank to an Eligible Assignee that is a Bank or an Affiliate of a Bank) (each an "ASSIGNEE") all, or any ratable part of all, of the Loans, the Commitments, the L/C Obligations and the other rights and obligations of such Bank hereunder, in a minimum amount of $5,000,000 and so long as, after giving effect thereto, the Bank's remaining Commitment is either (i) equal to or greater than $5,000,000 or (ii) zero; PROVIDED, HOWEVER, that the Company and the Agent may continue to deal solely and directly with such Bank in connection with the interest so assigned to an Assignee until (X) written notice of such assignment, together with payment instructions, addresses and related information with respect to the Assignee, shall have been given to the Company and the Agent by such Bank and the Assignee; (Y) such Bank and its Assignee shall have delivered to the Company and the Agent an Assignment and Acceptance in the form of EXHIBIT F ("ASSIGNMENT AND ACCEPTANCE") together with any Note or Notes subject A-106 to such assignment and (Z) the assignor Bank or Assignee has paid to the Agent a processing fee in the amount of $3,000. (b) From and after the date that the Agent notifies the assignor Bank that it has received (and provided its consent with respect to) an executed Assignment and Acceptance and payment of the above-referenced processing fee, (i) the Assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, shall have the rights and obligations of a Bank under the Loan Documents, and (ii) the assignor Bank shall, to the extent that rights and obligations hereunder and under the other Loan Documents have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights and be released from its obligations under the Loan Documents. (c) Within five Business Days after its receipt of notice by the Agent that it has received an executed Assignment and Acceptance and payment of the processing fee, (and provided that it consents to such assignment in accordance with Section 11.08(a)), the Company shall execute and deliver to the Agent, new Notes evidencing such Assignee's assigned Loans and Commitment and, if the assignor Bank has retained a portion of its Loans and its Commitment, replacement Notes in the principal amount of the Loans retained by the assignor Bank (such Notes to be in exchange for, but not in payment of, the Notes held by such Bank). Immediately upon each Assignee's making its processing fee payment under the Assignment and Acceptance, this Agreement shall be deemed to be amended to the extent, but only to the extent, necessary to reflect the addition of the Assignee and the resulting adjustment of the Commitments arising therefrom. The Commitment allocated to each Assignee shall reduce such Commitments of the assigning Bank PRO TANTO. (d) Any Bank may at any time sell to one or more commercial banks or other Persons not Affiliates of the Company (a "PARTICIPANT") participating interests in any Loans, the Commitment of that Bank and the other interests of that Bank (the "originating Bank") hereunder and under the other Loan Documents; PROVIDED, HOWEVER, that (i) the originating Bank's obligations under this Agreement shall remain unchanged, (ii) the originating Bank shall remain solely responsible for the performance of such obligations, (iii) the Company, the Issuing Bank and the Agent shall continue to deal solely and directly with the originating Bank in connection with the originating Bank's rights and obligations under this Agreement and the other Loan Documents, and (iv) no Bank shall transfer or grant any participating interest under which the Participant has rights to approve any amendment to, or any consent or waiver with respect to, this Agreement or any other Loan Document, except to the extent such amendment, consent or waiver would require unanimous consent of the Banks as described in the first proviso to Section 11.01. In the case of any such participation, the Participant shall be entitled to the benefit of Sections A-107 4.01, 4.03 and 11.05 as though it also were a Bank hereunder, and if amounts outstanding under this Agreement are due and unpaid, or shall have been declared or shall have become due and payable upon the occurrence of an Event of Default, each Participant shall be deemed to have the right of set-off in respect of its participating interest in amounts owing under this Agreement to the same extent as if the amount of its participating interest were owing directly to it as a Bank under this Agreement. (e) Notwithstanding any other provision in this Agreement, any Bank may at any time create a security interest in, or pledge, all or any portion of its rights under and interest in this Agreement and the Note held by it in favor of any Federal Reserve Bank in accordance with Regulation A of the FRB or U.S. Treasury Regulation 31 CFR Section 203.14, and such Federal Reserve Bank may enforce such pledge or security interest in any manner permitted under applicable law. 11.09 CONFIDENTIALITY. Each Bank agrees to take and to cause its Affiliates to take normal and reasonable precautions and exercise due care to maintain the confidentiality of all information identified as "confidential" or "secret" by the Company and provided to it by the Company or any Subsidiary, or by the Agent on the Company's or such Subsidiary's behalf, under this Agreement or any other Loan Document, and neither it nor any of its Affiliates shall use any such information other than in connection with or in enforcement of this Agreement and the other Loan Documents or in connection with other business now or hereafter existing or contemplated with the Company or any Subsidiary; except to the extent such information (i) was or becomes generally available to the public other than as a result of disclosure by the Bank, or (ii) was or becomes available on a non-confidential basis from a source other than the Company, provided that such source is not bound by a confidentiality agreement with the Company known to the Bank; PROVIDED, HOWEVER, that any Bank may disclose such information (A) at the request or pursuant to any requirement of any Governmental Authority to which the Bank is subject or in connection with an examination of such Bank by any such authority; (B) pursuant to subpoena or other court process; (C) when required to do so in accordance with the provisions of any applicable Requirement of Law; (D) to the extent reasonably required in connection with any litigation or proceeding relating to this Agreement and the transactions contemplated hereby to which the Agent, any Bank or their respective Affiliates may be party; (E) to the extent reasonably required in connection with the exercise of any remedy hereunder or under any other Loan Document; (F) to such Bank's independent auditors and other professional advisors; (G) to any Participant or Assignee, actual or potential, with the prior consent of the Company, which consent shall not be unreasonably withheld; PROVIDED, that such Person agrees in writing to keep such information confidential to the same extent required of the Banks hereunder; and (H) as to any Bank or its Affiliate, as expressly permitted under the terms of any other document or agreement regarding confidentiality to which the Company or any Subsidiary is party or is deemed party with such Bank or such Affiliate. A-108 11.10 SET-OFF. In addition to any rights and remedies of the Banks provided by law, if an Event of Default exists or the Loans have been accelerated, each Bank is authorized at any time and from time to time, without prior notice to the Company, any such notice being waived by the Company to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held by, and other indebtedness at any time owing by, such Bank to or for the credit or the account of the Company against any and all Obligations owing to such Bank, now or hereafter existing, irrespective of whether or not the Agent or such Bank shall have made demand under this Agreement or any Loan Document and although such Obligations may be contingent or unmatured. Each Bank agrees promptly to notify the Company and the Agent after any such set-off and application made by such Bank; PROVIDED, HOWEVER, that the failure to give such notice shall not affect the validity of such set-off and application. 11.11 NOTIFICATION OF ADDRESSES, LENDING OFFICES, ETC. Each Bank shall notify the Agent in writing of any changes in the address to which notices to the Bank should be directed, of addresses of any Lending Office, of payment instructions in respect of all payments to be made to it hereunder and of such other administrative information as the Agent shall reasonably request. 11.12 COUNTERPARTS. This Agreement may be executed in any number of separate counterparts, each of which, when so executed, shall be deemed an original, and all of said counterparts taken together shall be deemed to constitute but one and the same instrument. 11.13 SEVERABILITY. The illegality or unenforceability of any provision of this Agreement or any instrument or agreement required hereunder shall not in any way affect or impair the legality or enforceability of the remaining provisions of this Agreement or any instrument or agreement required hereunder. 11.14 NO THIRD PARTIES BENEFITTED. This Agreement is made and entered into for the sole protection and legal benefit of the Company, the Banks, the Agent and the Agent- Related Persons, and their permitted successors and assigns, and no other Person shall be a direct or indirect legal beneficiary of, or have any direct or indirect cause of action or claim in connection with, this Agreement or any of the other Loan Documents. 11.15 GOVERNING LAW AND JURISDICTION. (a) THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA; PROVIDED THAT THE AGENT AND THE BANKS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW. A-109 (b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF CALIFORNIA OR OF THE UNITED STATES FOR THE CENTRAL DISTRICT OF CALIFORNIA, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE COMPANY, THE AGENT AND THE BANKS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE COMPANY, THE AGENT AND THE BANKS IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. THE COMPANY, THE AGENT AND THE BANKS EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY CALIFORNIA LAW. 11.16 WAIVER OF JURY TRIAL. THE COMPANY, THE BANKS AND THE AGENT EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE COMPANY, THE BANKS AND THE AGENT EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS. 11.17 ENTIRE AGREEMENT. This Agreement, together with the other Loan Documents, embodies the entire agreement and understanding among the Company, the Banks and the Agent, and supersedes all prior or contemporaneous agreements and A-110 understandings of such Persons, verbal or written, relating to the subject matter hereof and thereof. [remainder of page intentionally left blank] A-111 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered in Los Angeles, California by their proper and duly authorized officers as of the day and year first above written. CB RICHARD ELLIS SERVICES, INC. By: ----------------------------- Name: John Haeckel Title: BANK OF AMERICA, N.A. as Agent By: ----------------------------- Name: Title: BANK OF AMERICA, N.A., as Issuing Bank By: ----------------------------- Name: Title: A-112 BANK OF AMERICA, N.A., as a Bank By: ----------------------------- Name: Title: WELLS FARGO BANK, N.A. By: ----------------------------- Name: Title: THE BANK OF NOVA SCOTIA By: ----------------------------- Name: Title: CREDIT LYONNAIS LOS ANGELES BRANCH By: ----------------------------- Name: Title: A-113 DRESDNER BANK AG, NEW YORK AND GRAND CAYMAN BRANCHES By: ----------------------------- Name: Title: By: ----------------------------- Name: Title: KEYBANK NATIONAL ASSOCIATION By: ----------------------------- Name: Title: GENERAL ELECTRIC CAPITAL CORPORATION By: ----------------------------- Name: Title: A-114 THE BANK OF NEW YORK By: ----------------------------- Name: Title: BHF (USA) CAPITAL CORPORATION By: ----------------------------- Name: Title: By: ----------------------------- Name: Title: MORGAN GUARANTY TRUST COMPANY OF NEW YORK By: ----------------------------- Name: Title: A-115 LASALLE BANK NATIONAL ASSOCIATION By: ----------------------------- Name: Title: MELLON BANK, N.A. By: ----------------------------- Name: Title: THE MITSUBISHI TRUST AND BANKING CORPORATION, NEW YORK BRANCH By: ----------------------------- Name: Title: NATIONAL CITY BANK By: ----------------------------- Name: Title: A-116 THE SAKURA BANK, LIMITED By: ----------------------------- Name: Title: NATEXIS BANQUE-BFCE By: ----------------------------- Name: Title: By: ----------------------------- Name: Title: A-117 ANNEX A PRICING GRID (in basis points) FOR CB RICHARD ELLIS SERVICES, INC.
Applicable Margin for Base Applicable Margin for Offshore Rate Rate Loans Leverage Ratio Loans --------------- -------------- ------------- Less than 1.50:1.00 0 100 Greater than or equal to 0 125 1.50:1.00 but less than 1.75:1.00 Greater than or equal to 0 137.5 1.75:1.00 but less than 2.25:1.00 Greater than or equal to 25.0 162.5 2.25:1.00 but less than 2.50:1.00 Greater than or equal to 37.50 175.0 2.50:1.00 but less than 2.75:1.00 Greater than or equal to 50 187.5 2.75:1.00 but less than 3.00:1.00 Greater than or equal to 62.50 200.00 3.00:1.00 but less than 3.50:1.00 Greater than or equal to 100 250 3.50:1.00
ANNEX B APPLICABLE COMMITMENT FEE GRID FOR CB RICHARD ELLIS SERVICES, INC.
Leverage Ratio Applicable Commitment Fee Rate -------------- (In Basis Points) ----------------- Less than 1.50:1.00 25 Greater than or equal to 1.50:1.00 but 25 less than 1.75:1.00 Greater than or equal to 1.75:1.00 but 37.5 less than 2.25:1.00 Greater than or equal to 2.25:1.00 but 37.5 less than 2.50:1.00 Greater than or equal to 2.50:1.00 but 37.5 less than 2.75:1.00 Greater than or equal to 2.75:1.00 but 37.5 less than 3.00:1.00 Greater than or equal to 3.00:1.00 but 50 less than 3.50:1.00 Greater than or equal to 3.50:1.00 50
ANNEX C MATERIAL SUBSIDIARIES 1. CB Richard Ellis, Inc., a Delaware corporation 2. Westmark Real Estate Acquisition Partnership, L.P., a Delaware limited partnership 3. L.J. Melody & Company, a Texas corporation 4. CB Richard Ellis Corporate Facilities Management, Inc., a Delaware corporation 5. Koll Investment Management, Inc., a California corporation 6. Koll Partnership I, Inc., a Delaware corporation 7. Koll Partnerships II, Inc., a Delaware corporation 8. CB Hillier Parker Ltd., an English company 9. CB Commercial Ltd., an English company 10. CB Richard Ellis, S.A., a French company 11. CB Richard Ellis Pty Ltd., an Australian company 12. CB Richard Ellis Limited, a Canadian company 13. CB Richard Ellis (Pte) Limited, a Singapore company 14. CB Richard Ellis Limited, a Hong Kong company 15. CB Richard Ellis S.A., a Spanish company ANNEX D THE WHITTIER TRANSACTION Whittier Partners Group, L.P. consists of a holding partnership and two operating partnerships--Whittier Partners and Farley Whittier Partners. Whittier Partners is the largest commercial real estate brokerage firm in New England and one of the largest property managers. Farley Whittier operates mainly in Connecticut and is one of the leading firms in Hartford. Whittier Partners Group had $19.8 million in revenues in 1996, EBITDA of $2.265 million and net income of $2 million. Currently CB Richard Ellis Services, Inc. has a limited commercial brokerage operation in Boston, and a highly productive brokerage operation in Hartford and [Koll] has an extensive property management and facilities management operation in New England. Whittier Partners Group has an agreed value of approximately $15.5 million. Whittier Partners Group is contributing all of its operations in New England to a new partnership, CBC/Whittier Partners. At the same time CB Richard Ellis Services, Inc. will contribute its and [Koll's] New England assets (agreed value $6.25 million) plus cash of $4.5 million. CB Richard Ellis Services, Inc. has loaned Whittier Partners Group approximately $3.1 million for which it has received a promissory note with an interest rate at approximately LIBOR +2.50%. The structure of this transaction is designed to provide tax advantages to the individual partners in Whittier Partners Group. As partners of Whittier Partners Group retire their interests will either be sold to CB Richard Ellis Services, Inc. or to the next generation of brokers. Schedule 2.01 COMMITMENTS AND PRO RATA SHARES
Pro Rata Bank Commitment Share ---- ---------- ----- Bank of America, N.A. $34,125,000 9.8% Wells Fargo Bank, N.A. $30,625,000 8.8% The Bank of Nova Scotia $30,625,000 8.8% Credit Lyonnais Los Angeles Branch $30,625,000 8.8% Dresdner Bank AG, New York $23,625,000 6.8% and Grand Cayman Branches KeyBank National Association $23,625,000 6.8% General Electric Capital Corporation $23,625,000 6.8% The Bank of New York $17,500,000 5.0% BHF (USA) Capital Corporation $17,500,000 5.0% Morgan Guaranty Trust Company $17,500,000 5.0% of New York LaSalle Bank National Association $17,500,000 5.0% Mellon Bank, N.A. $17,500,000 5.0% The Mitsubishi Trust and Banking $17,500,000 5.0% Corporation, New York Branch National City Bank $17,500,000 5.0% The Sakura Bank, Limited $17,500,000 5.0% Natexis Banque-BFCE $13,125,000 3.8% TOTAL $350,000,000 100%
Schedule 11.02 LENDING OFFICES, ADDRESSES FOR NOTICES BANK OF AMERICA, N.A., as Agent Bank of America, N.A. Agency Administrative Services - West Mail Code: CA4-706-05-09 1850 Gateway Boulevard, 5th Floor Concord, California 94520 Attentio Kathy Eddy, Assistant Vice President Telephone: (925) 675-8458 Facsimile: (925) 969-2810 and to Bank of America, N.A. Agency Management Services - Los Angeles Mail Code: CA9-706-11-03 555 South Flower Street, 11th Floor Los Angeles, California 90071 Attention: Gina Meador, Vice President Telephone: (213) 228-5245 Facsimile: (213) 228-2299 AGENT'S PAYMENT OFFICE: Bank of America, N.A. Agency Administrative Services - West 1850 Gateway Boulevard, 5th floor Concord, California 94520 ABA No. 111000012 Account No. 3750836479 Reference: CB Richard Ellis Attention: Kathy Eddy BANK OF AMERICA, N.A., as a Bank DOMESTIC AND OFFSHORE LENDING OFFICE: Bank of America, N.A. Agency Administrative Services - West Mail Code: CA4-706-05-09 1850 Gateway Boulevard, 5th Floor Concord, CA 94520 Attention: Kathy Eddy Telephone: (925) 675-8458 Facsimile: (925) 969-2810 NOTICES (OTHER THAN BORROWING NOTICES AND NOTICES OF CONVERSION/CONTINUATION): Bank of America, N.A. 555 South Flower Street, 11th Floor Los Angeles, California 90071 Attention: Therese Fontaine, Principal Telephone: (213) 228-2053 Facsimile: (213) 623-1959 2 BANK OF AMERICA, N.A., as Issuing Bank Address for Notices: Trade Operations #22621 333 S. Beaudry Ave., 19th Floor Los Angeles, California 90017 Attention: Sandra Leon, AVP Telephone: (213) 345-5231 Facsimile: (213) 345-6694 WELLS FARGO BANK, N.A. DOMESTIC AND OFFSHORE LENDING OFFICE: 333 S. Grand Avenue 3rd Floor Los Angeles, California 90071 Attention: Tim Egan Telephone: (213) 253-6193 Facsimile: (213) 687-3501 Attention: Kris Schuhr Telephone: (415) 477-5430 Facsimile: (415) 979-0675 NOTICES (OTHER THAN BORROWING NOTICES AND NOTICES OF CONVERSION/CONTINUATION): 333 S. Grand Avenue 3rd Floor Los Angeles, California 90071 Attention: Time Egan THE BANK OF NOVA SCOTIA DOMESTIC AND OFFSHORE LENDING OFFICE: 600 Peachtree Street, N.E. Suite 2700 Atlanta, Georgia 30308 Facsimile: (404) 888-8998 3 NOTICES (OTHER THAN BORROWING NOTICES AND NOTICES OF CONVERSION/CONTINUATION): Bank of Nova Scotia San Francisco Agency 580 California Street Suite 2100 San Francisco, CA 94104 Attention: Maarten Van Otterloo Facsimile: (415) 397-0791 CREDIT LYONNAIS LOS ANGELES BRANCH DOMESTIC AND OFFSHORE LENDING OFFICE: 515 South Flower Street 22nd Floor Los Angeles, California 90071 Attention: D. Michael Jackson Telephone: (213) 362-5952 Facsimile: (213) 623-3437 NOTICES (OTHER THAN BORROWING NOTICES AND NOTICES OF CONVERSION/CONTINUATION): Credit Lyonnais Los Angeles Branch 515 South Flower Street 22nd Floor Los Angeles, California 90071 DRESDNER BANK AG, NEW YORK AND GRAND CAYMAN BRANCHES DOMESTIC AND OFFSHORE LENDING OFFICE: 75 Wall Street New York, New York 10005 4 NOTICES (OTHER THAN BORROWING NOTICES AND NOTICES OF CONVERSION/CONTINUATION): Los Angeles Agency 333 S. Grand Avenue Suite 1700 Los Angeles, California 90071 Attention: Sidney Jordan KEYBANK NATIONAL ASSOCIATION DOMESTIC AND OFFSHORE LENDING OFFICE: 700 Fifth Avenue 46th Floor Seattle, Washington 98104 NOTICES (OTHER THAN BORROWING NOTICES AND NOTICES OF CONVERSION/CONTINUATION): 700 Fifth Avenue 46th Floor Seattle, Washington 98104 Attention: Mary Young GENERAL ELECTRIC CAPITAL CORPORATION DOMESTIC AND OFFSHORE LENDING OFFICE: General Electric Capital Corporation 60 Long Ridge Road Stamford, CT 06927 Facsimile: (203) 316-7978 5 NOTICES (OTHER THAN BORROWING NOTICES AND NOTICES OF CONVERSION/CONTINUATION): General Electric Capital Corporation 60 Long Ridge Road Stamford, CT 06927 Attention: Linda Kwon, Account Manager Telephone: (203) 316-7843 Facsimile: (203) 316-7978 THE BANK OF NEW YORK DOMESTIC AND OFFSHORE LENDING OFFICE: One Wall Street 22nd Floor New York, New York 10286 Attention: Sandra Morgan Telephone: (212) 635-6743 Facsimile: (212) 635-6399 or Dawn Hertling Telephone: (212) 635-6742 Facsimile: (212) 635-6877 NOTICES (OTHER THAN BORROWING NOTICES AND NOTICES OF CONVERSION/CONTINUATION): 10990 Wilshire Boulevard Suite 1125 Los Angeles, California 90024 Attention: Jonathan Rollins Telephone: (310) 996-8658 Facsimile: (310) 996-8667 BHF (USA) CAPITAL CORPORATION DOMESTIC LENDING OFFICE: BHF (USA) Capital Corporation 590 Madison Avenue New York, New York 10022-2540 6 OFFSHORE LENDING OFFICE: BHF (USA) Capital Corporation 590 Madison Avenue New York, New York 10022-2540 NOTICES (OTHER THAN BORROWING NOTICES AND NOTICES OF CONVERSION/CONTINUATION): BHF (USA) Capital Corporation 590 Madison Avenue New York, New York 10022-2540 Attention: Patrick Marsh Telephone: (212) 756-5553 Facsimile: (212) 756-5536 MORGAN GUARANTY TRUST COMPANY OF NEW YORK DOMESTIC AND OFFSHORE LENDING OFFICE: Morgan Guaranty Trust Company of New York 60 Wall Street, 22nd Floor New York, New York 10260-0060 NOTICES (OTHER THAN BORROWING NOTICES AND NOTICES OF CONVERSION/CONTINUATION): Morgan Guaranty Trust Company of New York 60 Wall Street, 22nd Floor New York, New York 10260-0060 Attention: Julie Prince Telephone: (212) 648-3021 Facsimile: (212) 648-5229 LASALLE BANK NATIONAL ASSOCIATION DOMESTIC AND OFFSHORE LENDING OFFICE: 135 LaSalle Suite 1225 Chicago, Illinois 60603 Attention: Lisa J. Cunningham Telephone: (312) 904-8625 Facsimile: (312) 904-6691 7 NOTICES (OTHER THAN BORROWING NOTICES AND NOTICES OF CONVERSION/CONTINUATION): 135 LaSalle Suite 1225 Chicago, Illinois 60603 Attention: Karen B. Case Telephone: (312) 904-8007 Facsimile: (312) 904-6691 MELLON BANK, N.A. DOMESTIC AND OFFSHORE LENDING OFFICE: Mellon Bank, N.A. Loan Administration: 12th Floor Three Mellon Bank Center Pittsburgh, Pennsylvania 15259 Attention: Dorrie Gardell Telephone: (412) 234-7365 Facsimile: (412) 209-6122 NOTICES (OTHER THAN BORROWING NOTICES AND NOTICES OF CONVERSION/CONTINUATION): Mellon Bank, N.A. 400 S. Hope Street 5th Floor Los Angeles, California 90071-2806 Attention: Lawrence C. Ivey THE MITSUBISHI TRUST AND BANKING CORPORATION DOMESTIC AND OFFSHORE LENDING OFFICE: The Mitsubishi Trust and Banking Corporation 520 Madison Avenue, 26th Floor New York, New York 10022 Attention: Mildred Chiu Telephone: (212) 891-8256 Facsimile: (212) 755-2349 or 486-0970 8 NOTICES (OTHER THAN BORROWING NOTICES AND NOTICES OF CONVERSION/CONTINUATION): The Mitsubishi Trust Banking Corporation Leveraged Finance Department 520 Madison Avenue, 26th Floor New York, New York 10022 Attention: Daniel Chang, Assistant Vice President Telephone: (212) 891-8218 Facsimile: (212) 644-6825 or 593-4691 NATIONAL CITY BANK DOMESTIC AND OFFSHORE LENDING OFFICE: 1900 East Ninth Street Cleveland, Ohio 44114 Attention: Debbie McAuliff Telephone: (216) 488-1055 Facsimile: (216) 488-1088 NOTICES (OTHER THAN BORROWING NOTICES AND NOTICES OF CONVERSION/CONTINUATION): 1900 East Ninth Street Cleveland, Ohio 44114 Attention: Barry Robinson Telephone: (216) 575-9322 Facsimile: (216) 222-0003 THE SAKURA BANK, LIMITED DOMESTIC AND OFFSHORE LENDING OFFICE: 515 S. Figueroa Street Suite 400 Los Angeles, California 90071 Attention: Fernando Buesa 9 NOTICES (OTHER THAN BORROWING NOTICES AND NOTICES OF CONVERSION/CONTINUATION): 101 Park Avenue, 15th Floor New York, New York 10178 Attention: Yasuhiro Terada Telephone: (212) 909-4550 Facsimile: (212) 909-4599 NATEXIS BANQUE-BFCE DOMESTIC AND OFFSHORE LENDING OFFICE: NATEXIS Banque - BFCE 645 Fifth Avenue New York, New York 10022 NOTICES (OTHER THAN BORROWING NOTICES AND NOTICES OF CONVERSION/CONTINUATION): Los Angeles Representative Office 660 S. Figueroa Street, Suite 1400 Los Angeles, California 90017 Attention: Mr. Iain Whyte, Vice President CB RICHARD ELLIS SERVICES, INC. NOTICES 333 South Beaudry Avenue, 9th Floor Los Angeles, California 90017 Attention: Jane Adam 10 MATERIAL SUBSIDIARIES, KOLL REAL ESTATE SERVICES, HOLDPAR A, HOLDPAR B, KOLL VON KARMAN, INC. and KOLL MANAGEMENT SERVICES, INC. NOTICES c/o CB Richard Ellis Services, Inc. 333 South Beaudry Avenue, 9th Floor Los Angeles, California 90017 Attention: Jane Adam 11 EXHIBIT A NOTICE OF BORROWING Date:________________, [199_]/[200_] To: Bank of America, N.A. , as Agent for the Banks parties to the Amended and Restated Credit Agreement dated as of May 20, 1998 (as extended, renewed, amended or restated from time to time, the "CREDIT AGREEMENT") among CB Richard Ellis Services, Inc., certain Banks which are signatories thereto and Bank of America, N.A., as Agent and as Issuing Bank. Ladies and Gentlemen: The undersigned, CB Richard Ellis Services, Inc., a Delaware corporation (the "COMPANY"), refers to the Credit Agreement, the terms defined therein being used herein as therein defined, and hereby gives you notice irrevocably, pursuant to Section 2.03 of the Credit Agreement, of the Borrowing specified below: 1. The Business Day of the proposed Borrowing is________________, [199_][2000]. 2. The aggregate amount of the proposed Borrowing is $________________. 3. The Borrowing is to be comprised of $__________ of [Base Rate] [Offshore Rate] Loans. 4. The duration of the Interest Period for the [Offshore Rate Loans] included in the Borrowing shall be [_____ days] [_____ months]. The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the date of the proposed Borrowing, before and after giving effect thereto and to the application of the proceeds therefrom: (a) the representations and warranties of the Company contained in Article VI of the Credit Agreement are true and correct as though made on and as of such date (except to the extent such representations and warranties relate to an earlier date, in which case they are true and correct as of such date); A-A-1 (b) no Default or Event of Default has occurred and is continuing, or would result from such proposed Borrowing; and (c) The proposed Borrowing will not cause the aggregate principal amount of all outstanding Revolving Loans PLUS the aggregate amount available for drawing under all outstanding Letters of Credit PLUS the aggregate principal amount of all outstanding L/C Borrowings to exceed the Combined Commitments. CB RICHARD ELLIS SERVICES, INC. By: ----------------------------- Name: Title: A-A-2 EXHIBIT B NOTICE OF CONVERSION/CONTINUATION Date:_________________, [199_][200_] To: Bank of America, N.A. , as Agent for the Banks parties to the Amended and Restated Credit Agreement dated as of May 20, 1998 (as extended, renewed, amended or restated from time to time, the "CREDIT AGREEMENT") among CB Richard Ellis Services, Inc., a Delaware corporation, certain Banks which are signatories thereto and Bank of America, N.A., as Agent and as Issuing Bank Ladies and Gentlemen: The undersigned, CB Richard Ellis Services, Inc., a Delaware corporation (the "COMPANY"), refers to the Credit Agreement, the terms defined therein being used herein as therein defined, and hereby gives you notice irrevocably, pursuant to Section 2.04 of the Credit Agreement, of the [conversion] [continuation] of the Loans specified herein, that: 1. The Conversion/Continuation Date is _______________, [199_][200_]. 2. The aggregate amount of the Loans to be [converted] [continued] is $_________________ 3. The Loans are to be [converted into] [continued as] [Offshore Rate] [Base Rate] Loans. 4. [If applicable:] The duration of the Interest Period for the Loans included in the [conversion] [continuation] shall be [_____days] [______months]. The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the proposed Conversion/Continuation Date, before and after giving effect thereto and to the application of the proceeds therefrom: (a) the representations and warranties of the Company contained in Article VI of the Credit Agreement are true and correct as though made on and as of such date (except to the extent such representations and warranties relate to an earlier date, in which case they are true and correct as of such date); (b) no Default or Event of Default has occurred and is continuing, or would result from such proposed [conversion] [continuation][; and A-B-1 (c) the proposed [conversion][continuation] will not cause the aggregate principal amount of all outstanding Revolving Loans PLUS the aggregate amount available for drawing under all outstanding Letters of Credit PLUS the aggregate principal amount of all outstanding L/C Borrowings to exceed the Combined Commitments. CB RICHARD ELLIS SERVICES, INC. By: ----------------------------- Name: Title: A-B-2 EXHIBIT C CB RICHARD ELLIS SERVICES, INC. COMPLIANCE CERTIFICATE Financial Statement Date: ______, [1999][200_] Reference is made to that certain Amended and Restated Credit Agreement dated as of May 20, 1998, 1999 (as extended, renewed, amended or restated from time to time, the "CREDIT AGREEMENT") among CB Richard Ellis Services, Inc., a Delaware corporation (the "COMPANY"), the several financial institutions from time to time parties to this Credit Agreement (the "BANKS") and Bank of America, N.A., as agent for the Banks (in such capacity, the "AGENT") and as Issuing Bank. Unless otherwise defined herein, capitalized terms used herein have the respective meanings assigned to them in the Credit Agreement. The undersigned, a Responsible Officer of the Company, hereby certifies as of the date hereof that he/she is the ____________ of the Company, and that, as such, he/she is authorized to execute and deliver this Certificate to the Banks and the Agent on the behalf of the Company and its consolidated Subsidiaries, and that: [USE THE FOLLOWING PARAGRAPH IF THIS CERTIFICATE IS DELIVERED IN CONNECTION WITH THE FINANCIAL STATEMENTS REQUIRED BY Section [7.01(a)] OF THE CREDIT AGREEMENT.] 1. Attached as SCHEDULE 1 hereto are (a) a true and correct copy of the audited consolidated balance sheet of the Company and its consolidated Subsidiaries as at the end of the fiscal year ended _______________, [199_][200_] and (b) the related consolidated statements of income or operations, [retained earnings,] shareholders' equity and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, [reported on without a "going concern" or like qualification or exception, or qualification arising out of the scope of the audit] and accompanied by the opinion of _________________ or another nationally-recognized certified independent public accounting firm (the "INDEPENDENT AUDITOR") which report shall state that such consolidated financial statements are complete and correct and have been prepared in accordance with GAAP, and fairly present, in all material respects, the financial position of the Company and its consolidated Subsidiaries for the periods indicated and on a basis consistent with prior periods. or A-C-1 [USE THE FOLLOWING PARAGRAPH IF THIS CERTIFICATE IS DELIVERED IN CONNECTION WITH THE FINANCIAL STATEMENTS REQUIRED BY SECTION [7.01(b)] OF THE CREDIT AGREEMENT.] 1. Attached as SCHEDULE 1 hereto are (a) a true and correct copy of the unaudited consolidated balance sheet of the Company and its consolidated Subsidiaries as of the end of the fiscal quarter ended __________, [1999][200_], and (b) the related unaudited consolidated statements of income, shareholders' equity, [retained earnings,] and cash flows for the period commencing on the first day and ending on the last day of such quarter, [setting forth in each case in comparative form the figures for the previous year,] and certified by a Responsible Officer that such financial statements were prepared in accordance with GAAP (subject only to ordinary, good faith year-end audit adjustments and the absence of footnotes) and fairly present, in all material respects, the financial position and the results of operations of the Company and its consolidated Subsidiaries. or [USE THE FOLLOWING PARAGRAPH IF THIS CERTIFICATE IS DELIVERED IN CONNECTION WITH THE FINANCIAL STATEMENTS REQUIRED BY SUBSECTION [7.01(c)] OF THE CREDIT AGREEMENT.] 1. Attached as SCHEDULE 1 hereto are (a) a true and correct copy of the unaudited consolidating balance sheet of the Company and its consolidated Material Subsidiaries as of the end of the fiscal year ended ______________, [199_][200_] and (b) a copy of the unaudited consolidating statement of income of the Company and its Material Subsidiaries for such year, all certified by a Responsible Officer that such financial statements [were prepared in accordance with GAAP (subject only to ordinary, good faith year-end audit adjustments and the absence of footnotes) and] fairly present, in all material respects, the financial position and results of operations of the Company and its consolidated Subsidiaries and that such financial statements were developed and used in connection with the preparation of the financial statements referred to in subsection [7.01(a)]. or [USE THE FOLLOWING PARAGRAPH IF THIS CERTIFICATE IS DELIVERED IN CONNECTION WITH THE FINANCIAL STATEMENTS REQUIRED BY SUBSECTION [7.01(d)] OF THE CREDIT AGREEMENT.] 1. Attached as SCHEDULE 1 hereto are (a) a true and correct copy of the unaudited consolidating balance sheets of the Company and its consolidated Material Subsidiaries as of the end of the fiscal quarter ended ______________, [199_][200_] and (b) a copy of the unaudited consolidating statement of income of the Company and its Material Subsidiaries for the year to date, all certified by a Responsible Officer that such financial statements [were prepared in accordance with GAAP (subject only to ordinary, good-faith year-end audit adjustments and the absence of footnotes) and] fairly present, in all material respects, the financial position and results of operations of the Company and its consolidated Subsidiaries and that such financial statements were developed and used in connection with the preparation of the financial statements referred to in subsection [7.01(b)]. A-C-2 2. The undersigned has reviewed and is familiar with the terms of the Credit Agreement and has made, or has caused to be made under his/her supervision, a detailed review of the transactions and conditions (financial or otherwise) of the Company during the accounting period covered by the attached financial statements. 3. To the best of the undersigned's knowledge, the Company, during such period, has observed, performed or satisfied all of its covenants and other agreements, and satisfied every condition in the Credit Agreement to be observed, performed or satisfied by the Company, and the undersigned has no knowledge of any Default or Event of Default. 4. The following financial covenant analyses and information set forth on SCHEDULE 2 attached hereto are true and accurate on and as of the date of this Certificate. IN WITNESS WHEREOF, the undersigned has executed this Certificate as of _________, [1999][200_]. CB RICHARD ELLIS SERVICES, INC. By:________________________________________ Name: Title: A-C-3 SCHEDULE 1 TO COMPLIANCE CERTIFICATE [FINANCIAL STATEMENTS] SCHEDULE 2 TO COMPLIANCE CERTIFICATE [Date] In determining compliance with the provisions identified in paragraph (4) above, the following calculations have been made: A. LIENS (Section 8.01) 1. Liens consisting of judgment or judicial attachment liens, provided that the enforcement of such Liens is effectively stayed and all such liens in the aggregate at any time outstanding for the Company and its Subsidiaries do not exceed $8,500,000: $________ 2. Liens on assets of corporations which become Subsidiaries after the date of this Agreement; PROVIDED HOWEVER, that such Liens existed at the time the respective corporations became Subsidiaries and were not created in anticipation thereof; PROVIDED, that all such Liens in the aggregate at any time outstanding for such Subsidiaries do not exceed $15,000,000: $________ 3. Purchase money security interests on any property acquired or held by the Company or its Subsidiaries in the ordinary course of business, securing Indebtedness incurred or assumed for the purpose of financing all or any part of the cost of acquiring such property; PROVIDED, THAT (i) any such Lien attaches to such property concurrently with or within 20 days after the acquisition thereof, (ii) such Lien attaches solely to the property so acquired in such transaction, (iii) the principal amount of the debt secured thereby does not exceed 100% of the cost of such property, and (iv) the principal amount of the Indebtedness secured by any and all such purchase money security interests shall not at any time exceed $5,000,000: $________ 4. Liens on the assets of any direct or indirect Subsidiary of the Company created or acquired in connection with a Permitted Acquisition and Liens on assets acquired by such Subsidiary in a Permitted Acquisition, which Liens secure Indebtedness permitted by Section 8.05(c) in connection with such Permitted Acquisition (but not including any refinancing thereof), in an amount not to exceed $10,000,000 in the aggregate: $________ 5. Liens on the assets of any Foreign Subsidiary, which Liens secure Indebtedness permitted by Section 8.05(e) in an amount not to exceed $75,000,000 in the aggregate: $________ B. SALES OF ASSETS (Section 8.03) 1. Sales, transfers, conveyances, leases or other dispositions of assets, or contributions of assets pursuant to Section 8.03(a)(v): $________ Line B1 may not exceed $20,000,000 during any one fiscal year. C. MERGERS, CONSOLIDATIONS AND ACQUISITIONS (Section 8.04(d)) 1. Total Consideration for all Acquisitions made during the consecutive twelve (12) month period up to and including the last day of the computation period. Line C1 may not exceed $115,000,000 during any consecutive twelve (12) month period; provided that it may not exceed $400,000,000 if such additional Total Consideration in excess of $115,000,000 is financed by the issuance of new equity securities of the Company or its Subsidiaries as indicated herein. $________ [Note: Itemize debt and equity in connection with each Acquisition.] 2. Minimum Liquidity of at least $25,000,000 after giving effect to each such Acquisition. $________ 3. EBITDA of each acquired Person for the preceding twelve (12) month period from the date of each Acquisition. $________(1/) D. INDEBTEDNESS (Section 8.05) 1. Subordinated Debt pursuant to Section 8.05 not to exceed $300,000,000 at any time. $________ 2. Additional Indebtedness of the Company and its Subsidiaries in an aggregate amount not to exceed $50,000,000 at any time. $________ 3. Indebtedness comprised of Offshore Currency Loans in an aggregate principal amount not to exceed $75,000,000 at any time or Indebtedness of the Company incurred pursuant to any guaranty (without duplication) in support of such Offshore Currency Loans. $________ 4. Indebtedness under the Company's deferred compensation plan for periods prior to May 1, 1999 in an amount not to exceed $27,500,000 in the aggregate plus all Indebtedness under such plan after April 30, 1999 which is either payable in Company stock or funded through the purchase of insurance contracts; $________ E. CONSOLIDATED LEVERAGE RATIO (Section 8.08) 1. Indebtedness on the last day of the computation period: (excluding up to $50,000,000 of Permitted Melody Indebtedness) $________ 2. Consolidated EBITDA: a. Consolidated Net Income for the computation period: $________ b. Interest Expense for the computation period (including deferred financing costs not paid in cash): $________ ---------------------------------- 1/ Must be a positive number for each such Acquisition. 3 c. Taxes on Consolidated Net Income or profits for the computation period: $________ d. Depreciation and amortization for the computation period: $________ e. Non-cash losses on sale or other disposition of investments or fixed or capital assets or non-cash write down of investments or fixed or capital assets: $________ f. Gains on sale or other disposition of investments or fixed or capital assets and non-cash extraordinary income: $________ g. Consolidated EBITDA (Lines E2a + E2b + E2c + E2d + E2e LESS Line E2f)(2/): $ ======= 3. Leverage Ratio (Line E1 divided by Line E2g): ======= to 1:00 4. Maximum Permitted Leverage Ratio: 4.25 to 1.00 for fiscal period ending September 30, 1999 and 4.00 to 1.00 for fiscal periods ending December 31, 1999 and thereafter F. INTEREST COVERAGE RATIO (Section 8.09) 1. Consolidated EBITDA: a. Consolidated Net Income for the computation period: $________ b. Interest Expense for the computation period (including deferred financing costs not paid in cash): $________ ---------------------------- 2/ For the purposes of calculating Consolidated EBITDA, items E2b through E2f shall be added back or subtracted, as the case may be, only to the extent utilized in arriving at Consolidated Net Income as set forth in E2a. 4 c. Taxes on Consolidated Net Income or profits for the computation period: $________ d. Depreciation Expense and Amortization Expense for the computation period: $________ e. Non-cash losses on sale or other disposition of investments or fixed or capital assets or non-cash write down of investments or fixed or capital assets: $________ f. Gains on sale or other disposition of investments or fixed or capital assets and non-cash extraordinary income: $________ g. Consolidated EBITDA (Lines F1a + F1b + F1c +F1d + F1e LESS Line F1f)(3/): $ ======== 2. Interest Expense for such computation period: $________ 3. Interest Coverage Ratio (Line E1 divided by Line E2): ======= to 1:00 4. Minimum Required Interest Coverage Ratio: --------------------- 3/ For the purposes of calculating Consolidated EBITDA, items F1b through F1f shall be added back or subtracted, as the case may be, only to the extent utilized in arriving at Consolidated Net Income as set forth in F1a. 5
Fiscal Quarters Ending Minimum Ratio ---------------------- ------------- September 30, 1999 2.75:1.00 December 31, 1999 through September 30, 2000 3.00:1.00 December 31, 2000 through September 30, 2000 3.50:1.00 December 31, 2001 and thereafter 4.00:1.00
G. MINIMUM EBITDA (Section 8.10) 1. Consolidated EBITDA: a. Consolidated Net Income for the computation period (including deferred financing costs not paid in cash): $______ b. Interest Expense for the computation period: $______ c. Taxes on Consolidated Net Income or profits for the computation period: $______ d. Depreciation and amortization for the computation period: $______ e. Non-cash losses on sale or other disposition of investments or fixed or capital assets or non-cash write down of investments or fixed or capital assets: $______ f. Gains on sale or other disposition of investments or fixed or capital assets and non-cash extraordinary income: $______ g. Consolidated EBITDA (Lines G1a + G1b + G1c + G1d + G1e LESS Line G1f)(4/): [Minimum: $100,000,000]. $______ ------------------------- 4/ For the purposes of calculating Consolidated EBITDA, items G1b through G1f shall be added back or subtracted, as the case may be, only to the extent utilized in arriving at Consolidated Net Income as set forth in G1a. 6 $ ====== H. CONSOLIDATED NET WORTH (Section 8.11) 1. Consolidated Net Income for each Fiscal Quarter (beginning with the Fiscal Quarter ended June 30, 1998) in which Consolidated Net Income is greater than zero (Line Bla): $______ 2. 70% of Line 1: $______ 3. Net proceeds of any equity securities issued by the Company or any of its Subsidiaries for each Fiscal Quarter (beginning with the Fiscal Quarter ended June 30, 1998): $______ 4. 70% of Line 3: $______ 5. Add $82,000,000 $______ 6. Consolidated Net Worth for each Fiscal Quarter (beginning with the Fiscal Quarter ended June 30, 1998): $______ 7. Required Minimum Consolidated Tangible Net Worth: a. Lines H2+ H4 + H5: $______ b. Line H7a LESS Line H6: $______ Line H6b must not be less than zero.] I. RESTRICTED PAYMENTS (Section 8.13) 1. Consolidated Net Income for each Fiscal Quarter:
First Second Third Fourth Quarter Quarter Quarter Quarter ------- ------- ------- ------- 1999 __________+_____________ + ____________+____________ 2000 __________+_____________ + ____________+____________ 2001 __________+_____________ + ____________+____________
7 a. Sum of above Consolidated Net Income in quarters where GREATER than zero at the date the payment was made: $_______ b. Sum of above Consolidated Net Income in quarters where LESS than zero at the date the payment was made: $_______ 2. 25% of Line B1a: $_______ 3. Aggregate amount paid by Company for the purchase or redemption of its capital stock after _____ [last day of fifth quarter preceding the payment] prior to the first day of the fiscal quarter ended: $_______ 4. Aggregate amount of dividends paid by the Company on its common stock after ___________ [last day of fifth quarter preceding the payment]: $_______ 5. Line I2 minus Lines I3 and also LESS Line B4: $_______ Line 5 must be greater than zero unless Line 3 and Line 4 both equal zero. Maximum additional amount available for stock purchases and redemptions and dividends is set forth in Line 5. J. CAPITAL EXPENDITURES (Section 8.14) 1. Depreciation Expense for immediately preceding consecutive twelve (12) month period: $_______ 2. 200% of Line 1: $_______ 3. Capital Expenditures in the consecutive twelve (12) month period including the last day of the computation period: $_______ Line E3 may not exceed Line E2. 8 EXHIBIT D FORM OF LEGAL OPINION OF COMPANY'S GENERAL COUNSEL EXHIBIT F FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT This ASSIGNMENT AND ACCEPTANCE AGREEMENT (this "ASSIGNMENT AND ACCEPTANCE") dated as of ____________, [199_][2000_] is made between ______________________________ (the "ASSIGNOR") and __________________________ (the "ASSIGNEE"). RECITALS WHEREAS, the Assignor is party to that certain Amended and Restated Credit Agreement dated as of May 20, 1998 (as amended, amended and restated, modified, supplemented or renewed, the "CREDIT AGREEMENT") among CB Richard Ellis Services, Inc., a Delaware corporation (the "COMPANY"), the several financial institutions from time to time party thereto (including the Assignor, the "BANKS"), and Bank of America, N.A., as letter of credit issuing bank ("ISSUING BANK") and as agent for the Banks (the "AGENT"). Any terms defined in the Credit Agreement and not defined in this Assignment and Acceptance are used herein as defined in the Credit Agreement; WHEREAS, as provided under the Credit Agreement, the Assignor has committed to making Loans (the "COMMITTED LOANS") to the Company in an aggregate amount not to exceed $__________ (the "COMMITMENT"); WHEREAS, [the Assignor has made Committed Loans in the aggregate principal amount of $__________ to the Company] [no Committed Loans are outstanding under the Credit Agreement]; WHEREAS, [the Assignor has acquired a participation in the Issuing Bank's liability under Letters of Credit in an aggregate principal amount of $____________ (the "L/C OBLIGATIONS")] [no Letters of Credit are outstanding under the Credit Agreement]; and WHEREAS, the Assignor wishes to assign to the Assignee [part of the] [all] rights and obligations of the Assignor under the Credit Agreement in respect of its Commitment, [together with a corresponding portion of each of its outstanding Committed Loans and L/C Obligations,] in an amount equal to $__________ (the "ASSIGNED AMOUNT") on the terms and subject to the conditions set forth herein and the Assignee wishes to accept assignment of such rights and to assume such obligations from the Assignor on such terms and subject to such conditions; NOW, THEREFORE, in consideration of the foregoing and the mutual agreements contained herein, the parties hereto agree as follows: A-F-1 1. ASSIGNMENT AND ACCEPTANCE. (a) Subject to the terms and conditions of this Assignment and Acceptance, (i) the Assignor hereby sells, transfers and assigns to the Assignee, and (ii) the Assignee hereby purchases, assumes and undertakes from the Assignor, without recourse and without representation or warranty (except as provided in this Assignment and Acceptance) __% (the "ASSIGNEE'S PERCENTAGE SHARE") of (A) the Commitment [and the Committed Loans and the L/C Obligations] of the Assignor and (B) all related rights, benefits, obligations, liabilities and indemnities of the Assignor under and in connection with the Credit Agreement and the Loan Documents. [IF APPROPRIATE, ADD PARAGRAPH SPECIFYING PAYMENT TO ASSIGNOR BY ASSIGNEE OF OUTSTANDING PRINCIPAL OF, ACCRUED INTEREST ON, AND FEES WITH RESPECT TO, COMMITTED LOANS AND L/C OBLIGATIONS ASSIGNED.] (b) With effect on and after the Effective Date (as defined in Section 5 hereof), the Assignee shall be a party to the Credit Agreement and succeed to all of the rights and be obligated to perform all of the obligations of a Bank under the Credit Agreement, including the requirements concerning confidentiality and the payment of indemnification, with a Commitment in an amount equal to the Assigned Amount. The Assignee agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Credit Agreement are required to be performed by it as a Bank. It is the intent of the parties hereto that the Commitment of the Assignor shall, as of the Effective Date, be reduced by an amount equal to the Assigned Amount and the Assignor shall relinquish its rights and be released from its obligations under the Credit Agreement to the extent such obligations have been assumed by the Assignee; PROVIDED, HOWEVER, the Assignor shall not relinquish its rights under Sections 4.01, 4.03 and 11.05 of the Credit Agreement to the extent such rights relate to the time prior to the Effective Date. (c) After giving effect to the assignment and assumption set forth herein, on the Effective Date the Assignee's Commitment will be $__________. (d) After giving effect to the assignment and assumption set forth herein, on the Effective Date the Assignor's Commitment will be $__________. 2. PAYMENTS. (a) As consideration for the sale, assignment and transfer contemplated in Section 1 hereof, the Assignee shall pay to the Assignor on the Effective Date in immediately available funds an amount equal to $__________, representing the Assignee's Pro Rata Share of the principal amount of all Committed Loans. (b) The [Assignor] [Assignee] further agrees to pay to the Agent a processing fee in the amount specified in Section 11.08(a) of the Credit Agreement. 3. REALLOCATION OF PAYMENTS. A-F-2 Any interest, fees and other payments accrued to the Effective Date with respect to the Commitment[,] [and] Committed Loans [and L/C Obligations] shall be for the account of the Assignor. Any interest, fees and other payments accrued on and after the Effective Date with respect to the Assigned Amount shall be for the account of the Assignee. Each of the Assignor and the Assignee agrees that it will hold in trust for the other party any interest, fees and other amounts which it may receive to which the other party is entitled pursuant to the preceding sentence and pay to the other party any such amounts which it may receive promptly upon receipt. 4. INDEPENDENT CREDIT DECISION. The Assignee (a) acknowledges that it has received a copy of the Credit Agreement and the Annexes, Schedules and Exhibits thereto, together with copies of the most recent financial statements referred to in Section 7.01 of the Credit Agreement, and such other documents and information as it has deemed appropriate to make its own credit and legal analysis and decision to enter into this Assignment and Acceptance; and (b) agrees that it will, independently and without reliance upon the Assignor, the Agent or any other Bank and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit and legal decisions in taking or not taking action under the Credit Agreement. 5. EFFECTIVE DATE; NOTICES. (a) As between the Assignor and the Assignee, the effective date for this Assignment and Acceptance shall be __________, [199__/][200__](the "EFFECTIVE DATE"); provided that the following conditions precedent have been satisfied on or before the Effective Date: (i) this Assignment and Acceptance shall be executed and delivered by the Assignor and the Assignee; (ii) the consent of the Company, the Issuing Bank and the Agent required for an effective assignment of the Assigned Amount by the Assignor to the Assignee under Section 11.08 of the Credit Agreement shall have been duly obtained and shall be in full force and effect as of the Effective Date; (iii) the Assignee shall pay to the Assignor all amounts due to the Assignor under this Assignment and Acceptance; (iv) the Assignee shall have complied with Section 11.08 of the Credit Agreement (if applicable); (v) the processing fee referred to in Section 2(b) hereof and in Section 11.08 of the Credit Agreement shall have been paid to the Agent; and (vi) the Assignor shall have assigned and the Assignee shall have assumed a percentage equal to the Assignee's Percentage Share of the rights and obligations of the Assignor under the Credit Agreement (if such agreement exists). A-F-3 (b) Promptly following the execution of this Assignment and Acceptance, the Assignor shall deliver to the Company, the Issuing Bank and the Agent for acknowledgment by the Agent, a Notice of Assignment substantially in the form attached hereto as Schedule 1. 6. AGENT. (a) The Assignee hereby appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers under the Credit Agreement as are delegated to the Agent by the Banks pursuant to the terms of the Credit Agreement. [(b) The Assignee shall assume no duties or obligations held by the Assignor in its capacity as Agent under the Credit Agreement.] [INCLUDE ONLY IF ASSIGNOR IS AGENT] 7. WITHHOLDING TAX. The Assignee (a) represents and warrants to the Bank, the Agent and the Company that under applicable law and treaties no tax will be required to be withheld by the Bank with respect to any payments to be made to the Assignee hereunder, (b) agrees to furnish (if it is organized under the laws of any jurisdiction other than the United States or any State thereof) to the Agent and the Company prior to the time that the Agent or Company is required to make any payment of principal, interest or fees hereunder, duplicate executed originals of either U.S. Internal Revenue Service Form 4224 or U.S. Internal Revenue Service Form 1001 (wherein the Assignee claims entitlement to the benefits of a tax treaty that provides for a complete exemption from U.S. federal income withholding tax on all payments hereunder) and agrees to provide new Forms 4224 or 1001 upon the expiration of any previously delivered form or comparable statements in accordance with applicable U.S. law and regulations and amendments thereto, duly executed and completed by the Assignee, and (c) agrees to comply with all applicable U.S. laws and regulations with regard to such withholding tax exemption. 8. REPRESENTATIONS AND WARRANTIES. A-F-4 (a) The Assignor represents and warrants that (i) it is the legal and beneficial owner of the interest being assigned by it hereunder and that such interest is free and clear of any Lien or other adverse claim; (ii) it is duly organized and existing and it has the full power and authority to take, and has taken, all action necessary to execute and deliver this Assignment and Acceptance and any other documents required or permitted to be executed or delivered by it in connection with this Assignment and Acceptance and to fulfill its obligations hereunder; (iii) no notices to, or consents, authorizations or approvals of, any Person are required (other than any already given or obtained) for its due execution, delivery and performance of this Assignment and Acceptance, and apart from any agreements or undertakings or filings required by the Credit Agreement, no further action by, or notice to, or filing with, any Person is required of it for such execution, delivery or performance; and (iv) this Assignment and Acceptance has been duly executed and delivered by it and constitutes the legal, valid and binding obligation of the Assignor, enforceable against the Assignor in accordance with the terms hereof, subject, as to enforcement, to bankruptcy, insolvency, moratorium, reorganization and other laws of general application relating to or affecting creditors' rights and to general equitable principles. (b) The Assignor makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Credit Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement or any other instrument or document furnished pursuant thereto. The Assignor makes no representation or warranty in connection with, and assumes no responsibility with respect to, the solvency, financial condition or statements of the Company, or the performance or observance by the Company, of any of its respective obligations under the Credit Agreement or any other instrument or document furnished in connection therewith. (c) The Assignee represents and warrants that (i) it is duly organized and existing and it has full power and authority to take, and has taken, all action necessary to execute and deliver this Assignment and Acceptance and any other documents required or permitted to be executed or delivered by it in connection with this Assignment and Acceptance, and to fulfill its obligations hereunder; (ii) no notices to, or consents, authorizations or approvals of, any Person are required (other than any already given or obtained) for its due execution, delivery and performance of this Assignment and Acceptance; and apart from any agreements or undertakings or filings required by the Credit Agreement, no further action by, or notice to, or filing with, any Person is required of it for such execution, delivery or performance; (iii) this Assignment and Acceptance has been duly executed and delivered by it and constitutes the legal, valid and binding obligation of the Assignee, enforceable against the Assignee in accordance with the terms hereof, subject, as to enforcement, to bankruptcy, insolvency, moratorium, reorganization and other laws of general application relating to or affecting creditors' rights and to general equitable principles; and (iv) it is an Eligible Assignee. 9. FURTHER ASSURANCES. The Assignor and the Assignee each hereby agree to execute and deliver such other instruments, and take such other action, as either party may reasonably request in connection A-F-5 with the transactions contemplated by this Assignment and Acceptance, including the delivery of any notices or other documents or instruments to the Company or the Agent, which may be required in connection with the assignment and assumption contemplated hereby. 10. MISCELLANEOUS. (a) Any amendment or waiver of any provision of this Assignment and Acceptance shall be in writing and signed by the parties hereto. No failure or delay by either party hereto in exercising any right, power or privilege hereunder shall operate as a waiver thereof and any waiver of any breach of the provisions of this Assignment and Acceptance shall be without prejudice to any rights with respect to any other or further breach thereof. (b) All payments made hereunder shall be made without any set-off or counterclaim. (c) The Assignor and the Assignee shall each pay its own costs and expenses incurred in connection with the negotiation, preparation, execution and performance of this Assignment and Acceptance. (d) This Assignment and Acceptance may be executed in any number of counterparts and all of such counterparts taken together shall be deemed to constitute one and the same instrument. (e) THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF CALIFORNIA. The Assignor and the Assignee each irrevocably submits to the non-exclusive jurisdiction of any State or Federal court sitting in California over any suit, action or proceeding arising out of or relating to this Assignment and Acceptance and irrevocably agrees that all claims in respect of such action or proceeding may be heard and determined in such California State or Federal court. Each party to this Assignment and Acceptance hereby irrevocably waives, to the fullest extent it may effectively do so, the defense of an inconvenient forum to the maintenance of such action or proceeding. (f) THE ASSIGNOR AND THE ASSIGNEE EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS ASSIGNMENT AND ACCEPTANCE, THE CREDIT AGREEMENT, ANY RELATED DOCUMENTS AND AGREEMENTS OR ANY COURSE OF CONDUCT, COURSE OF DEALING, OR STATEMENTS (WHETHER ORAL OR WRITTEN). [OTHER PROVISIONS TO BE ADDED AS MAY BE NEGOTIATED BETWEEN THE ASSIGNOR AND THE ASSIGNEE, PROVIDED THAT SUCH PROVISIONS ARE NOT INCONSISTENT WITH THE CREDIT AGREEMENT.] A-F-6 IN WITNESS WHEREOF, the Assignor and the Assignee have caused this Assignment and Acceptance to be executed and delivered by their duly authorized officers as of the date first above written. [ASSIGNOR] By: ---------------------------------- Name: Title: Address: By: ---------------------------------- Name: Title: Address: [ASSIGNEE] By: ---------------------------------- Name: Title: Address: By: ---------------------------------- Name: Title: Address: A-F-7 Schedule 1 NOTICE OF ASSIGNMENT AND ACCEPTANCE _______________, [199_][200_] Bank of America, N.A., as Agent 1455 Market Street, 12th Floor San Francisco, CA 94103 Attn: Agency Management Services #5596 [Bank of America, N.A., as Issuing Bank International Trade Banking Division #5655 333 S. Beaudry Ave., 19th Floor Los Angeles, CA 90017] CB Richard Ellis Services, Inc. 533 South Fremont Avenue Los Angeles, California 90071] Ladies and Gentlemen: We refer to the Amended and Restated Credit Agreement dated as of May 20, 1998 (as amended, amended and restated, modified, supplemented or renewed from time to time the "CREDIT AGREEMENT") among CB Richard Ellis Services, Inc., a Delaware corporation (the "COMPANY"), the Banks referred to therein and Bank of America, N.A., as letter of credit issuing bank ("ISSUING BANK") and as agent for the Banks (the "AGENT"). Terms defined in the Credit Agreement are used herein as therein defined. 1. We hereby give you notice of, and request your consent to, the assignment by __________________ (the "ASSIGNOR") to _______________ (the "ASSIGNEE") of _____% of the right, title and interest of the Assignor in and to the Credit Agreement (including, without limitation, the right, title and interest of the Assignor in and to the Commitments of the Assignor[,] [and] all outstanding Loans made by the Assignor [and the Assignor's participation in the Letters of Credit]) pursuant to the Assignment and Acceptance Agreement attached hereto (the "ASSIGNMENT AND ACCEPTANCE"). Before giving effect to such assignment the Assignor's Commitment is $ ___________[,] [and] the aggregate amount of its outstanding Loans is $_____________[, and its participation in L/C Obligations is $_____________]. 2. The Assignee agrees that, upon receiving the consent of the Agent, [the Issuing Bank] and, if applicable, CB Richard Ellis Services, Inc. to such assignment, the Assignee will be bound by the terms of the Credit Agreement as fully and to the same extent as if the Assignee were the Bank originally holding such interest in the Credit Agreement. 3. The following administrative details apply to the Assignee: (A) Notice Address: Assignee name:_______________________________ Address:_____________________________________ ___ ___ Attention:___________________________________ Telephone: (___)_________ Telecopier: (___)_________ Telex (Answerback):__________________ (B) Payment Instructions: Account No.:__________________________________ At:______________________________________ ______________________________________ Reference:____________________________________ Attention:____________________________________ 4. You are entitled to rely upon the representations, warranties and covenants of each of the Assignor and Assignee contained in the Assignment and Acceptance. IN WITNESS WHEREOF, the Assignor and the Assignee have caused this Notice of Assignment and Acceptance to be executed by their respective duly authorized officials, officers or agents as of the date first above mentioned. Very truly yours, [NAME OF ASSIGNOR] By: Name: Title: 2 [NAME OF ASSIGNEE] By:_________________________________ Name: Title: By:_________________________________ Name: Title: ACKNOWLEDGED AND ASSIGNMENT CONSENTED TO: CB RICHARD ELLIS SERVICES, INC. By:____________________________ Name: Title: BANK OF AMERICA, N.A., as Agent By:____________________________ Name: Title: [BANK OF AMERICA, N.A., as Issuing Bank By:____________________________ Name: Title:] 3 EXHIBIT G FORM OF PROMISSORY NOTE $__________________ __________________________, [199__][200_] FOR VALUE RECEIVED, the undersigned, CB RICHARD ELLIS SERVICES, INC., a Delaware corporation (the "COMPANY"), hereby promises to pay to the order of ____________ (the "BANK") the principal sum of ____________ Dollars ($_________) or, if less, the aggregate unpaid principal amount of all Loans made by the Bank to the Company pursuant to the Amended and Restated Credit Agreement, dated as of May 20, 1998 (such Amended and Restated Credit Agreement, as it may be amended, restated, supplemented or otherwise modified from time to time, being hereinafter called the "CREDIT AGREEMENT"), among the Company, the Bank, the other banks parties thereto, and Bank of America, N.A., as Agent for the Banks and as Issuing Bank, on the dates and in the amounts provided in the Credit Agreement. The Company further promises to pay interest on the unpaid principal amount of the Loans evidenced hereby from time to time at the rates, on the dates, and otherwise as provided in the Credit Agreement. The Bank is authorized to endorse the amount and the date on which each Loan is made, the maturity date therefor and each payment of principal with respect thereto on the schedules annexed hereto and made a part hereof, or on continuations thereof which shall be attached hereto and made a part hereof; provided, that any failure to endorse such information on such schedule or continuation thereof shall not in any manner affect any obligation of the Company under the Credit Agreement and this Promissory Note (the "NOTE"). This Note is one of the Notes referred to in, and is entitled to the benefits of, the Credit Agreement, which Credit Agreement, among other things, contains provisions for acceleration of the maturity hereof upon the happening of certain stated events and also for prepayments on account of principal hereof prior to the maturity hereof upon the terms and conditions therein specified. A-G-1 Terms defined in the Credit Agreement are used herein with their defined meanings therein unless otherwise defined herein. This Note shall be governed by, and construed and interpreted in accordance with, the laws of the State of California applicable to contracts made and to be performed entirely within such State. CB RICHARD ELLIS SERVICES, INC. By:____________________________ Name: Title: A-G-2 SCHEDULE A TO NOTE BASE RATE LOANS AND REPAYMENT OF BASE RATE LOANS
(3) (4) (2) Maturity Amount Amount Date of of Base (5) (1) of Base Base Rate Loan Notation Date Rate Loan Loan Repaid Made By ---------- --------- ---------- ---------- ------------ ---------- --------- ---------- ---------- ------------ ---------- --------- ---------- ---------- ------------ ---------- --------- ---------- ---------- ------------ ---------- --------- ---------- ---------- ------------ ---------- --------- ---------- ---------- ------------ ---------- --------- ---------- ---------- ------------ ---------- --------- ---------- ---------- ------------ ---------- --------- ---------- ---------- ------------ ---------- --------- ---------- ---------- ------------ ---------- --------- ---------- ---------- ------------ ---------- --------- ---------- ---------- ------------ ---------- --------- ---------- ---------- ------------ ---------- --------- ---------- ---------- ------------ ---------- --------- ---------- ---------- ------------ ---------- --------- ---------- ---------- ------------ ---------- --------- ---------- ---------- ------------ ---------- --------- ---------- ---------- ------------ ---------- --------- ---------- ---------- ------------ ---------- --------- ---------- ---------- ------------
SCHEDULE B TO NOTE A-G-3 OFFSHORE RATE LOANS AND REPAYMENT OF OFFSHORE RATE LOANS
(4) (2) (3) Amount Amount Maturity of of Date of Offshore (5) (1) Offshore Offshore Rate Loan Notation Date rate Loan Rate Loan Repaid Made By ---------- --------- ---------- ---------- ------------ ---------- --------- ---------- ---------- ------------ ---------- --------- ---------- ---------- ------------ ---------- --------- ---------- ---------- ------------ ---------- --------- ---------- ---------- ------------ ---------- --------- ---------- ---------- ------------ ---------- --------- ---------- ---------- ------------ ---------- --------- ---------- ---------- ------------ ---------- --------- ---------- ---------- ------------ ---------- --------- ---------- ---------- ------------ ---------- --------- ---------- ---------- ------------ ---------- --------- ---------- ---------- ------------ ---------- --------- ---------- ---------- ------------ ---------- --------- ---------- ---------- ------------ ---------- --------- ---------- ---------- ------------ ---------- --------- ---------- ---------- ------------ ---------- --------- ---------- ---------- ------------ ---------- --------- ---------- ---------- ------------
A-G-4 EXHIBIT H FORM OF GUARANTY [No Revisions] A-H-1 EXHIBIT I [FORM OF PLEDGE AGREEMENTS] [No Revisions] A-I-1 EXHIBIT A TO AMENDMENT NO. 3 TO AMENDED AND RESTATED CREDIT AGREEMENT -------------------------- AMENDED AND RESTATED CREDIT AGREEMENT Dated as of May 20, 1998 among CB RICHARD ELLIS SERVICES, INC., as Company, BANK OF AMERICA, N.A., as Agent and Letter of Credit Issuing Bank, WELLS FARGO BANK, N.A., THE BANK OF NOVA SCOTIA AND CREDIT LYONNAIS LOS ANGELES BRANCH as Senior Managing Agents, DRESDNER BANK AG, NEW YORK AND GRAND CAYMAN BRANCHES AND KEYBANK NATIONAL ASSOCIATION, as Co-Agents and THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO Arranged by BANC OF AMERICA SECURITIES LLC TABLE OF CONTENTS
Page ---- ARTICLE I DEFINITIONS.............................................A-1 1.01 Certain Defined Terms...................................A-1 1.02 Other Interpretive Provisions...........................A-36 1.03 Accounting Principles...................................A-37 ARTICLE II THE CREDITS.............................................A-38 2.01 Amounts and Terms of Commitments........................A-38 2.02 Loan Accounts...........................................A-38 2.03 Procedure for Borrowing.................................A-39 2.04 Conversion and Continuation Elections...................A-40 2.05 Voluntary Termination or Reduction of Commitments.......A-41 2.06 Optional Prepayments....................................A-42 2.07 Mandatory Commitment Reductions.........................A-42 2.08 Repayment...............................................A-44 2.09 Interest................................................A-45 2.10 Fees....................................................A-45 (a) Arrangement, Agency Fees............................A-45 (b) Commitment Fees.....................................A-45 2.11 Computation of Fees and Interest........................A-46 2.12 Payments by the Company.................................A-46 2.13 Payments by the Banks to the Agent......................A-47 2.14 Sharing of Payments, Etc................................A-47 ARTICLE III THE LETTERS OF CREDIT...................................A-48 3.01 The Letter of Credit Subfacility........................A-48 3.02 Issuance, Amendment and Renewal of Letters of Credit....A-49 3.03 Participations, Drawings and Reimbursements.............A-52 3.04 Repayment of Participations.............................A-53 3.05 Role of the Issuing Bank................................A-54 3.06 Obligations Absolute....................................A-55 3.07 Cash Collateral Pledge..................................A-56 3.08 Letter of Credit Fees...................................A-56 3.09 Uniform Customs and Practice............................A-57 ARTICLE IV TAXES, YIELD PROTECTION AND ILLEGALITY..................A-57 4.01 Taxes...................................................A-57 4.02 Illegality..............................................A-59 4.03 Increased Costs and Reduction of Return.................A-60 4.04 Funding Losses..........................................A-60 4.05 Inability to Determine Rates............................A-61 ii Page ---- 4.06 Reserves on Offshore Rate Loans.........................A-61 4.07 Certificates of Banks...................................A-62 4.08 Substitution of Banks...................................A-62 4.09 Survival................................................A-63 ARTICLE V CONDITIONS PRECEDENT....................................A-63 5.01 Conditions of Initial Credit Extensions.................A-63 (a) Credit Agreement; Loan Documents and Notes..........A-63 (b) Resolutions; Incumbency.............................A-63 (c) Organization Documents; Good Standing...............A-64 (d) Legal Opinions......................................A-64 (e) Payment of Fees.....................................A-64 (f) Certificate.........................................A-65 (g) Consolidated Balance Sheets.........................A-65 (h) Replacement of Existing Bank Agreement..............A-65 (i) Subordinated Note Documents.........................A-65 (j) Other Documents.....................................A-66 5.02 Conditions to All Credit Extensions.....................A-66 (a) Notice, Application.................................A-66 (b) Continuation of Representations and Warranties......A-66 (c) No Existing Default.................................A-66 ARTICLE VI REPRESENTATIONS AND WARRANTIES..........................A-67 6.01 Corporate Existence and Power...........................A-67 6.02 Corporate Authorization; No Contravention...............A-67 6.03 Governmental Authorization..............................A-68 6.04 Binding Effect..........................................A-68 6.05 Litigation..............................................A-68 6.06 No Default..............................................A-68 6.07 ERISA Compliance........................................A-69 6.08 Use of Proceeds; Margin Regulations.....................A-70 6.09 Title to Properties.....................................A-70 6.10 Taxes...................................................A-70 6.11 Financial Condition.....................................A-71 6.12 Environmental Matters...................................A-71 6.13 Regulated Entities......................................A-72 6.14 No Burdensome Restrictions..............................A-72 6.15 Copyrights, Patents, Trademarks and Licenses, etc.......A-72 6.16 Capital Stock; Subsidiaries.............................A-72 6.17 Insurance...............................................A-73 6.18 Labor Relations.........................................A-73 6.19 Representations and Warranties in Related Documents.....A-73 6.20 Solvency................................................A-74 6.21 Subordinated Debt.......................................A-74 6.22 Full Disclosure.........................................A-74 iii Page ---- 6.23 Pledge Agreements.......................................A-74 6.24 Year 2000 Problems......................................A-75 ARTICLE VII AFFIRMATIVE COVENANTS...................................A-75 7.01 Financial Statements....................................A-75 7.02 Certificates; Other Information.........................A-77 7.03 Notices.................................................A-77 7.04 Preservation of Corporate Existence, Etc................A-78 7.05 Maintenance of Property.................................A-78 7.06 Insurance...............................................A-79 7.07 Payment of Obligations..................................A-79 7.08 Compliance with Laws....................................A-79 7.09 Compliance with ERISA...................................A-79 7.10 Inspection of Property and Books and Records............A-80 7.11 Environmental Laws......................................A-80 7.12 Use of Proceeds.........................................A-80 7.13 Future Material Subsidiaries............................A-80 7.14 Further Assurances......................................A-81 ARTICLE VIII NEGATIVE COVENANTS......................................A-82 8.01 Limitation on Liens.....................................A-82 8.02 Negative Pledges, Restrictive Agreements, etc...........A-85 8.03 Sale of Assets..........................................A-85 8.04 Merger, Consolidations and Acquisitions.................A-86 8.05 Limitation on Indebtedness..............................A-89 8.06 Transactions with Affiliates............................A-90 8.07 Use of Proceeds.........................................A-90 8.08 Leverage Ratio Maintenance..............................A-90 8.09 Interest Coverage Ratio Maintenance.....................A-90 8.10 Minimum EBITDA..........................................A-90 8.11 Maintenance of Consolidated Net Worth...................A-90 8.12 Joint Ventures..........................................A-92 8.13 Restricted Investments and Restricted Payments..........A-92 8.14 Capital Expenditures, etc...............................A-93 8.15 ERISA...................................................A-93 8.16 Change in Business......................................A-93 8.17 Stock of Material Subsidiaries..........................A-94 8.18 Sale and Leaseback......................................A-94 8.19 Amendments..............................................A-94 8.20 Accounting Changes......................................A-94 ARTICLE IX EVENTS OF DEFAULT.......................................A-94 9.01 Event of Default........................................A-94 (a) Non-Payment.........................................A-94 (b) Representation or Warranty..........................A-94 iv Page ---- (c) Specific Defaults...................................A-95 (d) Other Defaults......................................A-95 (e) Cross-Default.......................................A-95 (f) Insolvency; Voluntary Proceedings...................A-95 (g) Involuntary Proceedings.............................A-96 (h) ERISA...............................................A-96 (i) Monetary Judgments..................................A-96 (j) Non-Monetary Judgments..............................A-96 (k) Change of Control...................................A-97 (l) Material Adverse Effect.............................A-97 (m) Guarantor Defaults..................................A-97 (n) Invalidity of Subordination Provisions..............A-97 (o) Pledge Agreements...................................A-97 9.02 Remedies................................................A-97 9.03 Rights Not Exclusive....................................A-98 ARTICLE X THE AGENT...............................................A-98 10.01 Appointment and Authorization; "Agent"..................A-98 10.02 Delegation of Duties....................................A-99 10.03 Liability of Agent......................................A-99 10.04 Reliance by Agent.......................................A-99 10.05 Notice of Default......................................A-100 10.06 Credit Decision........................................A-100 10.07 Indemnification of Agent...............................A-100 10.08 Agent in Individual Capacity...........................A-101 10.09 Successor Agent........................................A-102 10.10 Withholding Tax........................................A-102 10.11 Senior Managing Agents; Co-Agents......................A-104 10.12 Collateral Matters.....................................A-104 ARTICLE XI MISCELLANEOUS .........................................A-105 11.01 Amendments and Waivers.................................A-105 11.02 Notices................................................A-106 11.03 No Waiver; Cumulative Remedies.........................A-107 11.04 Costs and Expenses.....................................A-107 11.05 Company Indemnification................................A-107 11.06 Payments Set Aside.....................................A-108 11.07 Successors and Assigns.................................A-108 11.08 Assignments, Participations, etc.......................A-108 11.09 Confidentiality........................................A-110 11.10 Set-off................................................A-111 11.11 Notification of Addresses, Lending Offices, Etc........A-111 11.12 Counterparts...........................................A-111 11.13 Severability...........................................A-111 11.14 No Third Parties Benefitted............................A-111 v Page ---- 11.15 Governing Law and Jurisdiction.........................A-112 11.16 Waiver of Jury Trial...................................A-113 11.17 Entire Agreement
ANNEXES Annex A Pricing Grid Annex B Applicable Commitment Fee Grid Annex C Material Subsidiaries Annex D the Whittier Transaction SCHEDULES Schedule 2.01 Commitments and Pro Rata Shares Schedule 6.07 ERISA Schedule 6.11 Permitted Liabilities Schedule 6.12 Environmental Matters Schedule 6.16(a) Capital Stock Schedule 6.16(b) Material Subsidiaries and Repurchase Obligations Schedule 6.17 Insurance Matters Schedule 8.01 Permitted Liens Schedule 8.01(g) Existing Judgments Schedule 8.04(d) Excluded Acquisitions Schedule 8.05 Permitted Indebtedness Schedule 8.13 Investments Schedule 11.02 Lending Offices; Addresses for Notices EXHIBITS Exhibit A Form of Notice of Borrowing Exhibit B Form of Notice of Conversion/Continuation Exhibit C Form of Compliance Certificate Exhibit D Form of Legal Opinion of Company's General Counsel Exhibit E Intentionally Omitted Exhibit F Form of Assignment and Acceptance Agreement Exhibit G Form of Promissory Note Exhibit H Form of Guaranty Exhibit I Form of Pledge Agreements vi