Exhibit 10.1

 

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Published CUSIP Number:                     

 

LOGO [g37076image002.jpg]

 

AMENDED AND RESTATED CREDIT AGREEMENT

 

Dated as of April 28, 2004

 

among

 

FLIR SYSTEMS, INC.

as the Borrower,

 

BANK OF AMERICA, N.A.,

as Administrative Agent, Swing Line Lender

and

L/C Issuer,

 

and

 

The Other Lenders Party Hereto

 

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TABLE OF CONTENTS

 

Section

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       Page

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SECTION 1. DEFINITIONS AND ACCOUNTING TERMS

   1

1.01

 

Defined Terms.

   1

1.02

 

Other Interpretive Provisions

   18

1.03

 

Accounting Terms

   19

1.04

 

Rounding.

   19

1.05

 

References to Agreements and Laws.

   19

SECTION 2. THE COMMITMENTS AND CREDIT EXTENSIONS

   20

2.01

 

Committed Revolving Loans, Possible Increase in Aggregate Commitments.

   20

2.02

 

Borrowings, Conversions and Continuations of Committed Loans.

   21

2.03

 

This section intentionally left blank.

   22

2.04

 

Letters of Credit.

   22

2.05

 

Swing Line Loans.

   29

2.06

 

Prepayments.

   32

2.07

 

Reduction or Termination of Commitments.

   33

2.08

 

Repayment of Loans.

   33

2.09

 

Interest.

   33

2.10

 

Fees.

   34

2.11

 

Computation of Interest and Fees.

   35

2.12

 

Evidence of Debt.

   35

2.13

 

Payments Generally.

   35

2.14

 

Sharing of Payments.

   37

SECTION 3. TAXES, YIELD PROTECTION AND ILLEGALITY

   38

3.01

 

Taxes.

   38

3.02

 

Illegality.

   39

3.03

 

Inability to Determine Rates.

   39

3.04

 

Increased Cost and Reduced Return; Capital Adequacy; Reserves on Eurodollar Rate
Loans.

   40

3.05

 

Funding Losses.

   40

3.06

 

Matters Applicable to all Requests for Compensation.

   41

3.07

 

Survival.

   41

SECTION 4. CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

   41

4.01

 

Conditions of Initial Credit Extension.

   41

4.02

 

Conditions to all Credit Extensions and Conversions and Continuations.

   42

SECTION 5. REPRESENTATIONS AND WARRANTIES

   43

5.01

 

Existence, Qualification and Power; Compliance with Laws.

   43

5.02

 

Authorization; No Contravention.

   43

5.03

 

Governmental Authorization.

   43

5.04

 

Binding Effect.

   44

5.05

 

Financial Statements; No Material Adverse Effect.

   44

5.06

 

Litigation.

   44

5.07

 

No Default.

   44

5.08

 

Ownership of Property; Liens.

   45

 

i

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5.09

  

Environmental Compliance.

   45

5.10

  

Insurance.

   45

5.11

  

Taxes.

   45

5.12

  

ERISA Compliance.

   45

5.13

  

Subsidiaries.

   46

5.14

  

Margin Regulations; Investment Company Act; Public Utility Holding Company Act.

   46

5.15

  

Disclosure.

   46

5.16

  

Intellectual Property; Licenses, Etc.

   46

SECTION 6. AFFIRMATIVE COVENANTS

   47

6.01

  

Financial Statements.

   47

6.02

  

Certificates; Other Information.

   48

6.03

  

Notices.

   48

6.04

  

Payment of Obligations.

   49

6.05

  

Preservation of Existence, Etc.

   49

6.06

  

Maintenance of Properties.

   49

6.07

  

Maintenance of Insurance.

   50

6.08

  

Compliance with Laws.

   50

6.09

  

Books and Records.

   50

6.10

  

Inspection Rights.

   50

6.11

  

Compliance with ERISA.

   50

6.12

  

Use of Proceeds.

   50

6.13

  

Maintenance of Security Interests and Liens.

   50

6.14

  

Pledge of Stock of Certain Subsidiaries

   51

6.15

  

Material Domestic Subsidiaries to Execute Guaranty and Security Agreement

   51

SECTION 7. NEGATIVE COVENANTS

   51

7.01

  

Liens.

   51

7.02

  

Investments.

   52

7.03

  

Indebtedness.

   53

7.04

  

Fundamental Changes.

   54

7.05

  

Dispositions.

   54

7.06

  

Lease Obligations.

   55

7.07

  

Restricted Payments.

   55

7.08

  

ERISA.

   56

7.09

  

Change in Nature of Business.

   56

7.10

  

Transactions with Affiliates.

   56

7.11

  

Capital Expenditures.

   56

7.12

  

Burdensome Agreements.

   56

7.13

  

Use of Proceeds.

   56

7.14

  

Financial Covenants.

   56

SECTION 8. EVENTS OF DEFAULT AND REMEDIES

   57

8.01

  

Events of Default.

   57

8.02

  

Remedies Upon Event of Default.

   59

SECTION 9. ADMINISTRATIVE AGENT

   59

9.01

  

Appointment and Authorization of Administrative Agent.

   59

9.02

  

Delegation of Duties.

   60

9.03

  

Liability of Administrative Agent.

   60

 

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9.04

  

Reliance by Administrative Agent.

   60

9.05

  

Notice of Default.

   61

9.06

  

Credit Decision; Disclosure of Information by Administrative Agent.

   61

9.07

  

Indemnification of Administrative Agent.

   62

9.08

  

Administrative Agent in its Individual Capacity.

   62

9.09

  

Successor Administrative Agent.

   63

SECTION 10. MISCELLANEOUS

   63

10.01

  

Amendments, Etc.

   63

10.02

  

Notices and Other Communications; Facsimile Copies.

   65

10.03

  

No Waiver; Cumulative Remedies.

   66

10.04

  

Attorney Costs, Expenses and Taxes.

   66

10.05

  

Indemnification by the Borrower.

   66

10.06

  

Payments Set Aside.

   67

10.07

  

Successors and Assigns.

   67

10.08

  

Confidentiality.

   70

10.09

  

Set-off

   71

10.10

  

Interest Rate Limitation.

   71

10.11

  

Counterparts.

   72

10.12

  

Integration.

   72

10.13

  

Survival of Representations and Warranties.

   72

10.14

  

Severability

   72

10.15

  

Tax Forms.

   72

10.16

  

Governing Law.

   73

10.17

  

Arbitration and Waiver of Right to Trial by Jury

   74

10.18

  

Time of the Essence

   75

10.19

  

Entire Agreement

   75

10.20

  

Certain Agreements Not Enforceable

   75

 

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SCHEDULES

 

1.01

 

Existing Letters of Credit

2.01

 

Commitments and Pro Rata Shares

5.06

 

Litigation

5.09

 

Environmental Matters

5.13

 

Subsidiaries and Other Equity Investments

5.16

 

Intellectual Property Matters

7.01

 

Existing Liens

7.02

 

Existing Investments

7.03

 

Existing Indebtedness

7.06

 

Existing Leases

10.02

 

Information for Borrower, Administrative Agent and Lenders

 

EXHIBITS

 

    Form of

A

 

Committed Loan Notice

B

 

Swing Line Loan Notice

C-1

 

Committed Revolving Loan Note

C-2

 

Swing Line Note

D

 

Compliance Certificate

E

 

Assignment and Assumption

F

 

Guaranty

G

 

Opinion of Counsel

 

iv

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AMENDED AND RESTATED CREDIT AGREEMENT

 

This AMENDED AND RESTATED CREDIT AGREEMENT (“Agreement”) is entered into as of
April 28, 2004, among FLIR Systems, Inc., an Oregon corporation (the
“Borrower”), each lender from time to time party hereto (collectively, the
“Lenders” and individually, a “Lender”), and BANK OF AMERICA, N.A., as
Administrative Agent, Swing Line Lender and L/C Issuer. This Agreement is a
restatement of that certain Credit Agreement among Borrower, the Lenders then
party thereto, and Bank of America, N.A. as Administrative Agent, Swing Line
Lender and L/C Issuer, dated as of March 22, 2002, as amended by a First
Amendment to Credit Agreement dated as of June 5, 2003. This Agreement amends,
supercedes and restates the Credit Agreement of March 22, 2002, as so amended.

 

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

 

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

 

SECTION 1.

DEFINITIONS AND ACCOUNTING TERMS

 

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

 

“Adjusted Leverage Ratio” means, as of any date of determination, for the
Borrower and its Subsidiaries on a consolidated basis, the ratio of (a)
Consolidated Funded Indebtedness as of such date to (b) Consolidated EBITDA for
the period of the four fiscal quarters ending on such date. For the purpose of
computing Adjusted Leverage Ratio, there shall be deducted from Consolidated
Funded Indebtedness the amount of cash held by Borrower and its Subsidiaries on
the date of determination in excess of $10,000,000.

 

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

 

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

 

“Affiliate” means, with respect to any Person, another Person that directly, or
indirectly through one or more intermediaries, Controls or is Controlled by or
is under common Control with the Person specified. “Control” means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the ability
to exercise voting power, by contract or otherwise. “Controlling” and
“Controlled” have meanings correlative thereto. A Person shall be deemed to be
Controlled by another Person if such other Person possesses, directly or
indirectly, power to vote 10% or more of the securities having ordinary voting
power for the election of directors or managing general partners.

 

1

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

 

“Aggregate Commitments” means the sum of the Revolving Commitments.

 

“Agreement” means this Amended and Restated Credit Agreement.

 

“Applicable Rate” means, from time to time, the following percentages per annum,
based upon the Adjusted Leverage Ratio as set forth below:

 

Applicable Rate Per Annum

 

Pricing

Level

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Adjusted

Leverage

Ratio

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Base Rate

+

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Eurodollar

Rate +

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Standby

Letters of

Credit

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Commitment

Fee

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1

   ³2.25:1    .25%   1.75%   1.75%   0.40%

2

   ³1.75:1 but
<2.25:1    .0%   1.50%   1.50%   0.35%

3

   ³1.00:1
but
<1.75:1    -.25%   1.25%   1.25%   0.30%

4

   <1.00:1    -.50%   1.00%   1.00%   0.25%

 

Any increase or decrease in the Applicable Rate resulting from a change in the
Adjusted Leverage Ratio shall become effective as of the first day of the month
immediately following the date a Compliance Certificate is delivered pursuant to
Section 6.02(b); provided, however, that if no Compliance certificate is
delivered during a fiscal quarter when due in accordance with such Section, then
Pricing Level 1 shall apply as of the first day of such following fiscal
quarter. Any change in the Applicable Rate shall be applicable to all existing
Committed Loans as well as to new Committed Loans. The Applicable Rate in effect
from the Closing Date through receipt of the Compliance Certificate following
the quarter ending March 31, 2004 shall be determined based upon Pricing Level 2
for Base Rate, Eurodollar Rate and Standby Letter of Credit Rate and Pricing
Level 1 for the Commitment Fee. The Commitment Fee is eligible for a potential
reduction described in Section 2.10(a).

 

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

 

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

 

“Attorney Costs” means and includes all fees and disbursements of any law firm
or other external counsel and the allocated cost of internal legal services and
all disbursements of internal counsel.

 

2

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“Attributable Indebtedness” means, on any date, (a) in respect of any capital
lease of any Person, the capitalized amount thereof that would appear on a
balance sheet of such Person prepared as of such date in accordance with GAAP,
and (b) in respect of any Synthetic Lease Obligation, the capitalized amount of
the remaining lease payments under the relevant lease that would appear on a
balance sheet of such Person prepared as of such date in accordance with GAAP if
such lease were accounted for as a capital lease.

 

“Audited Financial Statements” means the audited consolidated and consolidating
balance sheet of the Borrower and its Subsidiaries for the fiscal year ended
December 31, 2003, and the related consolidated and consolidating statements of
income or operations, shareholders’ equity and cash flows for such fiscal year
of the Borrower and its Subsidiaries.

 

“Bank of America” means Bank of America, N.A.

 

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

 

“Base Rate Committed Loan” means a Committed Loan that is a Base Rate Loan.

 

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

 

“Borrower” has the meaning set forth in the introductory paragraph hereto.

 

“Borrowing” means a Committed Borrowing or a Swing Line Borrowing, as the
context may require.

 

“Business Day” means any day other than a Saturday, Sunday or other day on which
commercial banks are authorized to close under the Laws of, or are in fact
closed in, the state where the Administrative Agent’s Office is located and, if
such day relates to any Eurodollar Rate Loan, means any such day on which
dealings in Dollar deposits are conducted by and between banks in the London
interbank eurodollar market.

 

“Cash Collateralize” means to pledge and deposit with or deliver to the
Administrative Agent, for the benefit of the L/C Issuer and the Lenders, as
collateral for the L/C Obligations, cash or deposit account balances pursuant to
documentation in form and substance satisfactory to the Administrative Agent and
the L/C Issuer (which documents are hereby consented to by the Lenders).
Derivatives of such term shall have corresponding meaning. The Borrower hereby
grants the Administrative Agent, for the benefit of the L/C Issuer and the
Lenders, a Lien on all such cash and deposit account balances. Cash collateral
shall be maintained in blocked, interest bearing deposit accounts at Bank of
America.

 

3

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“Closing Date” means the first date all the conditions precedent in Section 4.01
are satisfied or waived in accordance with Section 4.01 (or, in the case of
Section 4.01(b), waived by the Person entitled to receive the applicable
payment).

 

“Code” means the Internal Revenue Code of 1986.

 

“Collateral” means all property and interests in property and proceeds thereof
now owned or hereafter acquired by Borrower in or upon which a Lien now or
hereafter exists in favor of Lenders, or Administrative Agent on behalf of the
Lenders, whether under the any Security Agreement, any Pledge Agreement or under
any of the other Collateral Documents. Collateral includes, but is not limited
to, all domestic accounts receivable, domestic machinery and equipment, domestic
inventory and general intangibles of Borrower and domestic Subsidiaries, as well
as a pledge of 100% of Borrower’s stock or ownership interest in present or
future domestic Material Subsidiaries, and 65% of Borrower’s stock or ownership
interest in present or future direct foreign Material Subsidiaries.

 

“Collateral Documents” means, collectively, (i) the Security Agreements, the
Pledge Agreement, the Pledge Agreement Supplement, all landlord, mortgagee,
warehousemen and bailee waivers, third party consents, intercreditor agreements
and other agreements requested by the Administrative Agent, in each case, in
form and substance satisfactory to the Administrative Agent and all other
security agreements, assignments, guarantees and other similar agreements, if
any, between Borrower or any Subsidiary and Lenders or Administrative Agent for
the benefit of Lenders now or hereafter delivered to Lenders or Administrative
Agent pursuant to or in connection with the transactions contemplated hereby,
and all financing statements (or comparable documents now or hereafter filed in
accordance with the Uniform Commercial Code or comparable law) against Borrower
or any Subsidiary as debtor in favor of Lenders or Administrative Agent for the
benefit of Lenders as secured party, and (ii) any amendments, supplements,
modifications, renewals, replacements, consolidations, substitutions and
extensions of any of the foregoing.

 

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

 

“Committed Loan” means a Committed Revolving Loan.

 

“Committed Loan Note” means a promissory note made by the Borrower in favor of a
Lender evidencing Committed Revolving Loans made by such Lender, substantially
in the form of Exhibit C-1.

 

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

 

“Committed Revolving Loan” has the meaning specified in Section 2.01(a).

 

4

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

 

“Consolidated Assets” means, at any time, the total assets of Borrower and its
Subsidiaries on a consolidated basis.

 

“Consolidated EBITDA” means, for any period, for the Borrower and its
Subsidiaries on a consolidated basis, an amount equal to the Consolidated Net
Income for such period plus (a) the following to the extent deducted in
calculating Consolidated Net Income: (i) Consolidated Interest Charges for such
period, (ii) federal, state, local and foreign income tax for such period, (iii)
depreciation, depletion and amortization expense deducted in determining
Consolidated Net Income for such period, (iv) foreign exchange losses, and (v)
other expenses reducing Consolidated Net Income for such period which did not or
will not require a cash settlement in such period or any future period
(including but not limited to impairment charges, costs associated with exit or
disposal activities, in-process research and development charges, and stock
based compensation), and minus (b) the following to the extent added in
calculating Consolidated Net Income: (i) foreign exchange gains, and (ii) all
items increasing net income for such period which did not or will not result in
a cash settlement in such period or any future period. Consolidated EBITDA shall
be adjusted for sales of all or a portion of an ongoing business, the financial
results of which have been included in Borrower’s consolidated financial
statement, and for acquisitions of all or a portion of a business permitted
under Section 7.04(c), the financial results of which will be included with
Borrower’s through consolidation or under the equity method of accounting in
accordance with GAAP, in each case, pursuant to the definition of “Pro Forma
Basis.” Sale of a business does not include a sale of assets of all or a portion
of a business that the Borrower has decided to abandon or discontinue.
Consolidated EBITDA shall not include any gain resulting from the sale of all or
a portion of an ongoing business.

 

“Consolidated Funded Indebtedness” means, as of any date of determination, for
the Borrower and its Subsidiaries on a consolidated basis, the sum of (a) the
outstanding principal amount of all obligations, whether current or long-term,
for borrowed money (including Obligations hereunder) and all obligations
evidenced by bonds, debentures, notes, loan agreements or other similar
instruments, (b) Attributable Indebtedness in respect of capital leases and
Synthetic Lease Obligations, and (c) without duplication, all Guaranty
Obligations with respect to Indebtedness of the types specified in subsections
(a) and (b) above of Persons other than the Borrower or any Subsidiary.

 

“Consolidated Interest Charges” means, for any period, for the Borrower and its
Subsidiaries on a consolidated basis, the sum of (a) all interest, premium
payments, fees, charges and related expenses of the Borrower and its
Subsidiaries in connection with borrowed money (including capitalized interest)
or in connection with the deferred purchase price of assets, in each case to the
extent treated as interest in accordance with GAAP, and (b) the portion of rent
expense of the Borrower and its Subsidiaries with respect to such period under
capital leases that is treated as interest in accordance with GAAP.

 

“Consolidated Net Income” means, for any period, for the Borrower and its
Subsidiaries on a consolidated basis, the net income of the Borrower and its
Subsidiaries from continuing operations after extraordinary items (excluding
gains or losses from Dispositions of assets) for that period.

 

5

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“Consolidated Net Worth” means, as of any date of determination, for the
Borrower and its Subsidiaries on a consolidated basis, Shareholders’ Equity of
the Borrower and its Subsidiaries on that date.

 

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

 

“Credit Extension” means each of the following: (a) a Committed Borrowing, (b) a
borrowing of a Swing Line Loan, and (c) an L/C Credit Extension.

 

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

 

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

 

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

 

“Disposition” or “Dispose” means the sale, transfer, license or other
disposition (including any sale and leaseback transaction) of any property by
any Person, including any sale, assignment, transfer or other disposal, with or
without recourse, of any notes or accounts receivable or any rights and claims
associated therewith.

 

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

 

“EBITDA” means for any period, for any Person, an amount equal to the sum of (a)
net income, (b) interest charges, (c) the amount of taxes, based on or measured
by income, used or included in the determination of such net income, and (d) the
amount of depreciation and amortization expense deducted in determining such net
income. EBITDA shall be calculated in a manner consistent with the calculation
of Consolidated EBITDA, but applicable only to a single Person, except that in
calculating EBITDA for a Person other than Borrower, no adjustment pursuant to
the definition of “Pro Forma Basis” shall be made.

 

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

 

6

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“Environmental Laws” means all Laws relating to environmental, health, safety
and land use matters applicable to any property.

 

“Environmental Liability” means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Borrower or any other Loan Party directly or
indirectly resulting from or based upon (a) violation of any Environmental Law,
(b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the release or threatened release of any Hazardous Materials into the
environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.

 

“ERISA” means the Employee Retirement Income Security Act of 1974 and any
regulations issued pursuant thereto.

 

“ERISA Affiliate” means any trade or business (whether or not incorporated)
under common control with the Borrower within the meaning of Section 414(b) or
(c) of the Code (and Sections 414(m) and (o) of the Code for purposes of
provisions relating to Section 412 of the Code).

 

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

 

“Eurodollar Rate” means for any Interest Period with respect to any Eurodollar
Rate Loan, a rate per annum determined by the Administrative Agent pursuant to
the following formula:

 

Eurodollar Rate =

  

Eurodollar Base Rate

--------------------------------------------------------------------------------

   1.00 - Eurodollar Reserve Percentage

 

Where,

 

“Eurodollar Base Rate” means, for such Interest Period:

 

(a) the rate per annum equal to the rate determined by the Administrative Agent
to be the offered rate that appears on the page of the Telerate screen (or any

 

7

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successor thereto) that displays an average British Bankers Association Interest
Settlement Rate for deposits in Dollars (for delivery on the first day of such
Interest Period) with a term equivalent to such Interest Period, determined as
of approximately 11:00 a.m. (London time) two Business Days prior to the first
day of such Interest Period, or

 

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

 

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

 

“Eurodollar Reserve Percentage” means, for any day during any Interest Period,
the reserve percentage (expressed as a decimal, carried out to five decimal
places) in effect on such day, whether or not applicable to any Lender, 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”). The Eurodollar Rate for each outstanding
Eurodollar Rate Loan shall be adjusted automatically as of the effective date of
any change in the Eurodollar Reserve Percentage.

 

“Eurodollar Base Rate” has the meaning set forth in the definition of Eurodollar
Rate.

 

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

 

“Eurodollar Rate Loan” means a Eurodollar Rate Committed Loan.

 

“Event of Default” means any of the events or circumstances specified in Section
8.

 

“Existing Letters of Credit” means letters of credit listed on Schedule 1.01.

 

“Federal Funds Rate” means, for any day, the rate per annum equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank

 

8

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on the Business Day next succeeding such day; provided that (a) if such day is
not a Business Day, the Federal Funds Rate for such day shall be such rate on
such transactions on the next preceding Business Day as so published on the next
succeeding Business Day, and (b) if no such rate is so published on such next
succeeding Business Day, the Federal Funds Rate for such day shall be the
average rate charged to Bank of America on such day on such transactions as
determined by the Administrative Agent.

 

“Fee Letter” has the meaning specified in Section 2.10(b).

 

“Fixed Charge Coverage Ratio” means, as of any date of determination, the ratio
of (a) (i) Consolidated EBITDA for the period of the four prior fiscal quarters
ending on such date less (ii) capital expenditures and income taxes paid in cash
by the Borrower and its Subsidiaries on a consolidated basis for such period to
(b) the sum of (i) Consolidated Interest Charges for such period and (ii)
scheduled debt service (other than interest charges) including payments on
capital leases, for such period.

 

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

 

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

 

“GAAP” means generally accepted accounting principles set forth 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 such other principles as may be approved
by a significant segment of the accounting profession, that are applicable to
the circumstances as of the date of determination, consistently applied.

 

“Governmental Authority” means any nation or government, any state or other
political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, administrative tribunal, central bank or other entity
exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government, and any
corporation or other entity owned or controlled, through stock or capital
ownership or otherwise, by any of the foregoing.

 

“Guaranty” means the Guaranty made by Indigo Systems Corporation and any future
Subsidiary in favor of the Administrative Agent on behalf of the Lenders,
substantially in the form of Exhibit F.

 

“Guarantor” means Indigo Systems Corporation and any future domestic Subsidiary
executing a Guaranty.

 

“Guaranty Obligation” means, as to any Person, any (a) any obligation,
contingent or otherwise, of such Person guarantying or having the economic
effect of guarantying any Indebtedness or other obligation payable or
performable by another Person (the “primary obligor”) in any manner, whether
directly or indirectly, and including any obligation of such Person, direct or
indirect, (i) to purchase or pay (or advance or supply funds for the purchase or

 

9

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payment of) such Indebtedness or other obligation, (ii) to purchase or lease
property, securities or services for the purpose of assuring the obligee in
respect of such Indebtedness or other obligation of the payment or performance
of such Indebtedness or other obligation, (iii) to maintain working capital,
equity capital or any other financial statement condition or liquidity of the
primary obligor so as to enable the primary obligor to pay such Indebtedness or
other obligation, or (iv) entered into for the purpose of assuring in any other
manner the obligee in respect of such Indebtedness or other obligation of the
payment or performance thereof or to protect such obligee against loss in
respect thereof (in whole or in part), or (b) any Lien on any assets of such
Person securing any Indebtedness or other obligation of any other Person,
whether or not such Indebtedness or other obligation is assumed by such Person;
provided, however, that the term Guaranty Obligation shall not include
endorsements of instruments for deposit or collection in the ordinary course of
business. The amount of any Guaranty Obligation shall be deemed to be an amount
equal to the stated or determinable amount of the related primary obligation, or
portion thereof, in respect of which such Guaranty Obligation is made or, if not
stated or determinable, the maximum reasonably anticipated liability in respect
thereof as determined by the guarantying Person in good faith.

 

“Hazardous Materials” means all explosive or radioactive substances or wastes
and all hazardous or toxic substances, wastes or other pollutants, including
petroleum or petroleum distillates, asbestos or asbestos-containing materials,
polychlorinated biphenyls, radon gas, infectious or medical wastes and all other
substances or wastes of any nature regulated pursuant to any Environmental Law.

 

“Indebtedness” means, as to any Person at a particular time, all of the
following, whether or not included as indebtedness or liabilities in accordance
with GAAP:

 

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

 

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

 

(c) net obligations under any Swap Contract in an amount equal to the Swap
Termination Value thereof;

 

(d) all obligations of such Person to pay the deferred purchase price of
property or services (other than trade accounts payable in the ordinary course
of business);

 

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

 

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(f) capital leases and Synthetic Lease Obligations; and

 

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

 

For all purposes hereof, the Indebtedness of any Person shall include the
Indebtedness of any partnership or joint venture (other than a joint venture
that is itself a corporation or limited liability company) in which such Person
is a general partner or a joint venturer, unless such Indebtedness is expressly
made non-recourse to such Person (subject only to customary exceptions
acceptable to the Required Lenders). The amount of any capital lease or
Synthetic Lease Obligation as of any date shall be deemed to be the amount of
Attributable Indebtedness in respect thereof as of such date.

 

“Indemnified Liabilities” has the meaning set forth in Section 10.05.

 

“Indemnitees” has the meaning set forth in Section 10.05.

 

“Interest Payment Date” means, (a) as to any Loan other than a Base Rate Loan,
the last day of each Interest Period applicable to such Loan; provided however,
that if any Interest Period for a Eurodollar Rate Loan exceeds three months, the
respective dates that fall every three months after the beginning of such
Interest Period shall also be Interest Payment Dates: and (b) as to any Base
Rate Loan (including a Swing Line Loan), the last Business Day of each month and
the Revolving Loan Maturity Date.

 

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

 

(i) any Interest Period that would otherwise end on a day that is not a Business
Day shall be extended to the next succeeding Business Day unless, in the case of
a Eurodollar Rate Loan, such Business Day falls in another calendar month, in
which case such Interest Period shall end on the next preceding Business Day;

 

(ii) any Interest Period pertaining to a Eurodollar 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 shall extend beyond the scheduled Revolving Loan
Maturity Date.

 

“Investment” means, as to any Person, any acquisition or investment by such
Person, whether by means of (a) the purchase or other acquisition of capital
stock or other securities of another Person, (b) a loan, advance or capital
contribution to, guaranty of debt of, or purchase or other acquisition of any
other debt or equity participation or interest in, another Person, including any
partnership or joint venture interest in such other Person, or (c) the purchase
or other

 

11

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acquisition (in one transaction or a series of transactions) of assets of
another Person that constitute a business unit. For purposes of covenant
compliance, the amount of any Investment shall be the amount actually invested,
without adjustment for subsequent increases or decreases in the value of such
Investment.

 

“IP Rights” has the meaning set forth in Section 5.16.

 

“IRS” means the United States Internal Revenue Service.

 

“Laws” means, collectively, all international, foreign, Federal, state and local
statutes, treaties, rules, guidelines, regulations, ordinances, codes and
administrative or judicial precedents or authorities, including the
interpretation or administration thereof by any Governmental Authority charged
with the enforcement, interpretation or administration thereof, and all
applicable administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental Authority,
in each case whether or not having the force of law.

 

“L/C Advance” means, with respect to each Lender, such Lender’s participation in
any L/C Borrowing in accordance with its Pro Rata Share.

 

“L/C Borrowing” means an extension of credit resulting from a drawing under any
Letter of Credit which has not been reimbursed on the date when made or
refinanced as a Committed Borrowing.

 

“L/C Credit Extension” means, with respect to any Letter of Credit, the issuance
thereof or extension of the expiry date thereof, or the renewal or increase of
the amount thereof.

 

“L/C Issuer” means Bank of America in its capacity as issuer of Letters of
Credit hereunder, or any successor issuer of Letters of Credit hereunder.

 

“L/C Obligations” means, as at any date of determination, the aggregate undrawn
face amount of all outstanding Letters of Credit plus the aggregate of all
Unreimbursed Amounts, including all L/C Borrowings.

 

“Lender” has the meaning specified in the introductory paragraph hereto and, as
the context requires, includes the L/C Issuer and the Swing Line Lender.

 

“Lending Office” means, as to any Lender, the office or offices of such Lender
described as such on Schedule 10.02, or such other office or offices as a Lender
may from time to time notify the Borrower and the Administrative Agent.

 

“Letter of Credit” means any letter of credit issued hereunder and shall include
the Existing Letters of Credit. A Letter of Credit may be a commercial letter of
credit or a standby letter of credit.

 

“Letter of Credit Application” means an application and agreement for the
issuance or amendment of a letter of credit in the form from time to time in use
by the L/C Issuer.

 

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“Letter of Credit Expiration Date” means the day that is seven days prior to the
Revolving Loan Maturity Date (or, if such day is not a Business Day, the next
preceding Business Day).

 

“Letter of Credit Sublimit” means an amount equal to the lesser of the aggregate
Revolving Commitments and $10,000,000. The Letter of Credit Sublimit is part of,
and not in addition to, the Aggregate Commitments.

 

“Leverage Ratio” means, as of any date of determination, for the Borrower and
its Subsidiaries on a consolidated basis, the ratio of (a) Consolidated Funded
Indebtedness as of such date to (b) Consolidated EBITDA for the period of the
four fiscal quarters ending on such date.

 

“Lien” means any mortgage, pledge, hypothecation, assignment, deposit
arrangement (in the nature of compensating balances, cash collateral accounts or
security interests), encumbrance, lien (statutory or other), charge, or
preference, priority or other security interest or preferential arrangement of
any kind or nature whatsoever (including any conditional sale or other title
retention agreement, any financing lease having substantially the same economic
effect as any of the foregoing, and the filing of any financing statement under
the Uniform Commercial Code or comparable Laws of any jurisdiction), including
the interest of a purchaser of accounts receivable.

 

“Loan” means an extension of credit by a Lender to the Borrower under Section 2
in the form of a Committed Loan or a Swing Line Loan.

 

“Loan Documents” means this Agreement, each Note, the Fee Letter, the Security
Agreements, the Pledge Agreement, each Request for Credit Extension, each
Compliance Certificate and each Guaranty.

 

“Loan Parties” means, collectively, the Borrower and each Guarantor.

 

“Material Adverse Effect” means (a) a material adverse change in, or a material
adverse effect upon, the operations, business, properties, condition (financial
or otherwise) of the Borrower or the Borrower and its Subsidiaries taken as a
whole; (b) a material impairment of the ability of any Loan Party to perform its
obligations under any Loan Document to which it is a party; or (c) a material
adverse effect upon the legality, validity, binding effect or enforceability
against any Loan Party of any Loan Document to which it is a party. Failure of
Borrower to achieve the results forecasted pursuant to Section 6.01(d) shall
not, by itself, constitute a Material Adverse Effect.

 

“Material Subsidiary” means a Subsidiary, the assets of which, exceed 7.5% of
Consolidated Assets at the time of determination, or the EBITDA of which, for
the four quarters immediately preceding the time of determination, exceed 10% of
Consolidated EBITDA for the same period.

 

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

 

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“Notes” means, collectively, the Committed Loan Notes, and the Swing Line Note.

 

“Obligations” means all advances to, and debts, liabilities, obligations,
covenants and duties of, any Loan Party arising under any Loan Document, whether
direct or indirect (including those acquired by assumption), absolute or
contingent, due or to become due, now existing or hereafter arising and
including interest that accrues after the commencement by or against any Loan
Party or any Affiliate thereof of any proceeding under any Debtor Relief Laws
naming such Person as the debtor in such proceeding.

 

“Organization Documents” means, (a) with respect to any corporation, the
certificate or articles of incorporation and the bylaws; (b) with respect to any
limited liability company, the articles of formation and operating agreement;
and (c) with respect to any partnership, joint venture, trust or other form of
business entity, the partnership, joint venture or other applicable agreement of
formation and any agreement, instrument, filing or notice with respect thereto
filed in connection with its formation with the secretary of state or other
department in the state of its formation, in each case as amended from time to
time.

 

“Outstanding Amount” means (i) with respect to Committed Loans and Swing Line
Loans on any date, the aggregate outstanding principal amount thereof after
giving effect to any borrowings and prepayments or repayments of Committed
Loans, and Swing Line Loans, as the case may be, occurring on such date; and
(ii) with respect to any L/C Obligations on any date, the amount of such L/C
Obligations on such date after giving effect to any L/C Credit Extension
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.

 

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

 

“PBGC” means the Pension Benefit Guaranty Corporation.

 

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

 

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

 

“Plan” means any “employee benefit plan” (as such term is defined in Section
3(3) of ERISA) established by the Borrower or any ERISA Affiliate.

 

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“Pledge Agreement” means that Pledge Agreement between Borrower and
Administrative Agent dated as of March 22, 2002 which shall remain in full force
and effect (except as to the shares of FLIR Systems Boston, Inc. which has been
merged into Borrower).

 

“Pledge Agreement Supplement” means that Pledge Agreement Supplement between
Borrower and Administrative Agent by which Borrower will add 100% of the capital
stock of Indigo Systems Corporation to the “Pledged Collateral” as defined in
the Pledge Agreement.

 

“Pro Forma Basis” means, for purposes of calculating the financial covenants set
forth in Section 7.14 (including for purposes of determining the Applicable
Rate), that any sale of all or a portion of an ongoing business, the financial
results of which have been included in Borrower’s financial statements, or
acquisition permitted by Section 7.04(c), the financial results of which will be
included with Borrower’s under the equity method of accounting in accordance
with GAAP, shall be deemed to have occurred as of the first day of the most
recent four fiscal quarter period preceding the date of such transaction for
which the Borrower was required to deliver financial statements pursuant to
Section 6.01(a) or (c). In connection with the foregoing, (a) with respect to
any such sale, (i) income statement and cash flow statement items (whether
positive or negative) attributable to the property sold shall be excluded to the
extent relating to any period occurring prior to the date of such transaction
and (ii) Indebtedness which is retired shall be excluded and deemed to have been
retired as of the first day of the applicable period and (b) with respect to any
such acquisition permitted by Section 7.04(c), (i) income statement items
attributable to the Person acquired shall be included to the extent relating to
any period applicable in such calculations to the extent (A) such items are not
otherwise included in such income statement items for the Borrower and its
Subsidiaries in accordance with GAAP or in accordance with any defined terms set
forth in Section 1.01 and (B) such items are supported by financial statements
or other information reasonably satisfactory to the Agent and (ii) any
Indebtedness incurred or assumed by the Borrower or any Subsidiary (including
the Person acquired) in connection with such transaction and any Indebtedness of
the Person acquired which is not retired in connection with such transaction (A)
shall be deemed to have been incurred as of the first day of the applicable
period and (B) if such Indebtedness has a floating or formula rate, shall have
an implied rate of interest for the applicable period for purposes of this
definition determined by utilizing the rate which is or would be in effect with
respect to such Indebtedness as at the relevant date of determination.

 

“Pro Rata Share” means, with respect to each Lender, the percentage (carried out
to the ninth decimal place) of the Aggregate Commitments set forth opposite the
name of such Lender on Schedule 2.01, as such share may be adjusted as
contemplated herein.

 

“Register” has the meaning set forth in Section 10.07(c).

 

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

 

“Request for Credit Extension” means (a) with respect to a Borrowing, conversion
or continuation of Committed Loans, a Committed Loan Notice, (b) with respect to
an L/C Credit Extension, a Letter of Credit Application, and (c) with respect to
a Swing Line Loan, a Swing Line Loan Notice.

 

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“Required Lenders” means, as of any date of determination, at least two Lenders
whose Voting Percentages aggregate more than 50%.

 

“Responsible Officer” means the president, chief financial officer, treasurer or
assistant treasurer of a Loan Party. Any document delivered hereunder that is
signed by a Responsible Officer of a Loan Party shall be conclusively presumed
to have been authorized by all necessary corporate, partnership and/or other
action on the part of such Loan Party and such Responsible Officer shall be
conclusively presumed to have acted on behalf of such Loan Party.

 

“Restricted Payment” means any dividend or other distribution (whether in cash,
securities or other property) with respect to any capital stock of the Borrower
or any Subsidiary.

 

“Revolving Commitment” means, as to each Lender, its obligation to (a) make
Committed Revolving Loans to the Borrower pursuant to Section 2.01(a), (b)
purchase participations in L/C Obligations, and (c) purchase participations in
Swing Line Loans, in an aggregate principal amount at any one time outstanding
not to exceed the amount set forth opposite such Lender’s name on Schedule 2.01,
as such amount may be reduced or adjusted from time to time in accordance with
this Agreement.

 

“Revolving Loan Maturity Date” means (a) the date which is five years from the
Closing Date or (b) such earlier date upon which the Revolving Commitments may
be terminated in accordance with the terms hereof.

 

“Security Agreements” means that Security Agreement executed by the Borrower and
Indigo Systems Corporation and the Security Agreement to be executed by any
future domestic Subsidiary which secures the Obligations and any liability of
the Borrower under any Swap Contract with any Lender. “Security Agreements” also
includes that certain Security Agreement between Borrower and Administrative
Agent dated as of March 22, 2002, which shall remain in full force and effect.

 

“Shareholders’ Equity” means, as of any date of determination for the Borrower
and its Subsidiaries on a consolidated basis, shareholders’ equity as of that
date determined in accordance with GAAP.

 

“Subsidiary” of a Person means a corporation, partnership, joint venture,
limited liability company or other business entity of which a majority of the
shares of securities or other interests having ordinary voting power for the
election of directors or other governing body (other than securities or
interests having such power only by reason of the happening of a contingency)
are at the time beneficially owned, or the management of which is otherwise
controlled, directly, or indirectly through one or more intermediaries, or both,
by such Person. Unless otherwise specified, all references herein to a
“Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of
the Borrower.

 

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

 

“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 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 Lender).

 

“Swing Line” means the revolving credit facility made available by the Swing
Line Lender pursuant to Section 2.05.

 

“Swing Line Borrowing” means a borrowing of a Swing Line Loan pursuant to
Section 2.05.

 

“Swing Line Lender” means Bank of America in its capacity as provider of Swing
Line Loans, or any successor swing line lender hereunder.

 

“Swing Line Loan” has the meaning specified in Section 2.05(a).

 

“Swing Line Note” means a promissory note made by the Borrower in favor of the
Swing Line Lender evidencing Swing Line Loans made by such Lender, substantially
in the form of Exhibit C-2.

 

“Swing Line Loan Notice” means a notice of a Swing Line Borrowing pursuant to
Section 2.05(b), which, if in writing, shall be substantially in the form of
Exhibit B.

 

“Swing Line Sublimit” means an amount equal to the lesser of (a) $5,000,000 and
(b) the aggregate Revolving Commitments. The Swing Line Sublimit is part of, and
not in addition to, the aggregate Revolving Commitments.

 

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“Synthetic Lease Obligation” means the monetary obligation of a Person under (a)
a so-called synthetic, off-balance sheet or tax retention lease, or (b) an
agreement for the use or possession of property creating obligations that do not
appear on the balance sheet of such Person but which, upon the insolvency or
bankruptcy of such Person, would be characterized as the indebtedness of such
Person (without regard to accounting treatment).

 

“Threshold Amount” means $5,000,000.

 

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

 

“Unfunded Pension Liability” means the excess of a Pension Plan’s benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of that
Pension Plan’s assets, determined in accordance with the assumptions used for
funding the Pension Plan pursuant to Section 412 of the Code for the applicable
plan year.

 

“Unreimbursed Amount” has the meaning set forth in Section 2.04(c)(i).

 

“Voting Percentage” means, as to any Lender, (a) at any time when the Aggregate
Commitments are in effect, such Lender’s Pro Rata Share and (b) at any time
after the termination of the Aggregate Commitments, the percentage (carried out
to the ninth decimal place) which (i) the sum of (A) the Outstanding Amount of
such Lender’s Committed Loans, plus (B) such Lender’s Pro Rata Share of the
Outstanding Amount of L/C Obligations, plus (C) such Lender’s Pro Rata Share of
the Outstanding Amount of Swing Line Loans, then comprises of (ii) the
Outstanding Amount of all Loans and L/C Obligations; provided, however, that if
any Lender has failed to fund any portion of the Committed Loans, participations
in L/C Obligations or participations in Swing Line Loans required to be funded
by it hereunder, such Lender’s Voting Percentage shall be deemed to be zero, and
the respective Pro Rata Shares and Voting Percentages of the other Lenders shall
be recomputed for purposes of this definition and the definition of “Required
Lenders” without regard to such Lender’s Commitment or the outstanding amount of
its Committed Loans, L/C Advances and funded participations in Swing Line Loans,
as the case may be.

 

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

 

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

 

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

 

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

 

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

 

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

 

(b) 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.”

 

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

 

1.03 Accounting Terms.

 

(a) All accounting terms not specifically or completely defined herein shall be
construed in conformity with, and all financial data required to be submitted
pursuant to this Agreement shall be prepared in conformity with, GAAP applied on
a consistent basis, as in effect from time to time, applied in a manner
consistent with that used in preparing the Audited Financial Statements, except
as otherwise specifically prescribed herein.

 

(b) If at any time any change in GAAP would affect the computation of any
financial ratio or requirement set forth in any Loan Document, and either the
Borrower or the Required Lenders shall so request, the Administrative Agent, the
Lenders and the Borrower shall negotiate in good faith to amend such ratio or
requirement to preserve the original intent thereof in light of such change in
GAAP (subject to the approval of the Required Lenders); provided that, until so
amended, (i) such ratio or requirement shall continue to be computed in
accordance with GAAP prior to such change therein and (ii) the Borrower shall
provide to the Administrative Agent and the Lenders financial statements and
other documents required under this Agreement or as reasonably requested
hereunder setting forth a reconciliation between calculations of such ratio or
requirement made before and after giving effect to such change in GAAP.

 

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

 

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

 

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SECTION 2.

THE COMMITMENTS AND CREDIT EXTENSIONS

 

2.01 Committed Revolving Loans, Possible Increase in Aggregate Commitments.

 

(a) Subject to the terms and conditions set forth herein, each Lender severally
agrees to make revolving loans (each such loan, a “Committed Revolving Loan”) to
the Borrower from time to time on any Business Day during the period from the
Closing Date to the Revolving Loan Maturity Date, in an aggregate amount not to
exceed at any time outstanding the amount of such Lender’s Revolving Commitment;
provided, however, that after giving effect to any Committed Borrowing, (i) the
aggregate Outstanding Amount of all Revolving Loans and L/C Obligations shall
not exceed the sum of all Revolving Commitments, and (ii) the aggregate
Outstanding Amount of the Committed Revolving Loans of any Lender, plus such
Lender’s Pro Rata Share of the Outstanding Amount of all L/C Obligations, plus
such Lender’s Pro Rata Share of the Outstanding Amount of all Swing Line Loans
shall not exceed such Lender’s Revolving Commitment. Within the limits of each
Lender’s Revolving Commitment, and subject to the other terms and conditions
hereof, the Borrower may borrow under this Section 2.01(a), prepay under Section
2.06, and reborrow under this Section 2.01(a). Committed Revolving Loans may be
Base Rate Loans or Eurodollar Rate Loans, as further provided herein.

 

(b) The Borrower may, at its option any time before four years following the
Closing Date, on no more than two occasions seek to increase the Aggregate
Commitments by up to an aggregate amount not exceeding $50,000,000 (resulting in
maximum Aggregate Commitments of $100,000,000) upon written notice to the Agent,
which notice shall specify the amount of any such increase (which shall not be
less than $5,000,000) and shall be delivered at a time when no Default or Event
of Default has occurred and is continuing. The Agent, subject to the consent of
Borrower, which shall not be unreasonably withheld, may allocate the increase
(which may be declined by any Lender in its sole discretion) in the Aggregate
Commitments on either a ratable basis to the Lenders or on a non pro-rata basis
to one or more Lenders and/or to other banks or entities reasonably acceptable
to the Agent and the Borrower which have expressed a desire to accept the
increase in Aggregate Commitments. The Agent will then notify each existing and
potentially new Lender of such revised allocations of the Aggregate Commitments,
including the desired increase. No increase in the Aggregate Commitments shall
become effective until the existing or new Lenders extending such incremental
Revolving Commitment amount and the Borrower shall have delivered to the Agent a
document in form reasonably satisfactory to the Agent pursuant to which any such
existing Lender states the amount of its Revolving Commitment increase, any such
new Lender states its Revolving Commitment amount and agrees to assume and
accept the obligations and rights of a Lender hereunder and the Borrower accepts
such incremental Revolving Commitments. After giving effect to such increase in
Aggregate Commitments, all Loans and all such other credit exposure shall be
held ratably by the Lenders in proportion to their respective Revolving
Commitments, as revised to accommodate the increase in the Aggregate
Commitments. Upon any increase in Aggregate Commitments pursuant to this
Section, Borrower shall pay Agent for the ratable benefit of the Lender’s whose
Revolving Commitments are increased an upfront fee equal to .50% of the increase
in Aggregate Commitments.

 

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2.02 Borrowings, Conversions and Continuations of Committed Loans.

 

(a) Each Committed Borrowing, each conversion of Committed Loans from one Type
to the other, and each continuation of Committed Loans as the same Type shall be
made upon the Borrower’s irrevocable notice to the Administrative Agent, which
may be given by telephone. Each such notice must be received by the
Administrative Agent not later than 10:00 a.m., Seattle time. (i) three Business
Days prior to the requested date of any Borrowing of, conversion to or
continuation of Eurodollar Rate Committed Loans or of any conversion of
Eurodollar Rate Committed Loans to Base Rate Committed Loans, and (ii) on the
requested date of any Borrowing of Base Rate Committed Loans. Each such
telephonic notice must be confirmed promptly by delivery to the Administrative
Agent of a written Committed Loan Notice, appropriately completed and signed by
a Responsible Officer of the Borrower. Each Committed Borrowing of, conversion
to or continuation of Eurodollar Rate Committed Loans shall be in a principal
amount of $1,000,000 or a whole multiple of $1,000,000 in excess thereof. Each
Committed Borrowing of or conversion to Base Rate Committed Loans shall be in a
principal amount of $500,000 or a whole multiple of $100,000 in excess thereof.
Each Committed Loan Notice (whether telephonic or written) shall specify (i)
whether the Borrower is requesting a Committed Borrowing, a conversion of
Committed Loans from one Type to the other, or a continuation of Committed Loans
as the same Type, (ii) the requested date of the Borrowing, conversion or
continuation, as the case may be (which shall be a Business Day), (iii) the
principal amount of Committed Loans to be borrowed, converted or continued, (iv)
the Type of Committed Loans to be borrowed or to which existing Committed Loans
are to be converted, and (v) if applicable, the duration of the Interest Period
with respect thereto. If the Borrower fails to specify a Type of Committed Loan
in a Committed Loan Notice or if the Borrower fails to give a timely notice
requesting a conversion or continuation, then the applicable Committed Loans
shall be made or continued as, or converted to, Base Rate Loans. Any such
automatic conversion to Base Rate Loans shall be effective as of the last day of
the Interest Period then in effect with respect to the applicable Eurodollar
Rate Committed Loans. If the Borrower requests a Borrowing of, conversion to, or
continuation of Eurodollar Rate Committed Loans in any such Committed Loan
Notice, but fails to specify an Interest Period, it will be deemed to have
specified an Interest Period of one month.

 

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

 

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(c) Except as otherwise provided herein, a Eurodollar Rate Committed Loan may be
continued or converted only on the last day of the Interest Period for such
Eurodollar Rate Committed Loan. During the existence of a Default or Event of
Default, no Loans may be requested as, converted to or continued as Eurodollar
Rate Committed Loans without the consent of the Required Lenders, and the
Required Lenders may demand that any or all of the then outstanding Eurodollar
Rate Committed Loans be converted immediately to Base Rate Committed Loans.

 

(d) The Administrative Agent shall promptly notify the Borrower and the Lenders
of the interest rate applicable to any Eurodollar Rate Committed Loan upon
determination of such interest rate. The determination of the Eurodollar Rate by
the Administrative Agent shall be conclusive in the absence of manifest error.
The Administrative Agent shall notify the Borrower and the Lenders of any change
in Bank of America’s prime rate used in determining the Base Rate promptly
following the public announcement of such change.

 

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

 

2.03 This section intentionally left blank.

 

2.04 Letters of Credit.

 

(a) The Letter of Credit Commitment.

 

(i) Subject to the terms and conditions set forth herein, (A) the L/C Issuer
agrees, in reliance upon the agreements of the other Lenders set forth in this
Section 2.04, (1) from time to time on any Business Day during the period from
the Closing Date until the Letter of Credit Expiration Date, to issue Letters of
Credit for the account of the Borrower or its Subsidiaries, and to amend or
renew Letters of Credit previously issued by it, in accordance with subsection
(b) below, and (2) to honor drafts under the Letters of Credit; and (B) the
Lenders severally agree to participate in Letters of Credit issued for the
account of the Borrower; provided that the L/C Issuer shall not be obligated to
make any L/C Credit Extension with respect to any Letter of Credit, and no
Lender shall be obligated to participate in, any Letter of Credit if as of the
date of such L/C Credit Extension, (x) the Outstanding Amount of all L/C
Obligations and all Revolving Loans would exceed the aggregate Revolving
Commitments, (y) the aggregate Outstanding Amount of the Committed Revolving
Loans of any Lender, plus such Lender’s Pro Rata Share of the Outstanding Amount
of all L/C Obligations, plus such Lender’s Pro Rata Share of the Outstanding
Amount of all Swing Line Loans would exceed such Lender’s Revolving Commitment,
or (z) the Outstanding Amount of the L/C Obligations would exceed the Letter of
Credit Sublimit. Within the foregoing limits, and subject to the terms and
conditions hereof, the Borrower’s ability to obtain Letters of Credit shall be
fully revolving, and accordingly the Borrower may, during the foregoing period,
obtain Letters of Credit to replace Letters of Credit that have expired or that
have been drawn upon and reimbursed. All Existing Letters of Credit shall be
deemed to have been issued pursuant hereto, and from and after the Closing Date
shall be subject to and governed by the terms and conditions hereof.

 

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(ii) The L/C Issuer shall be under no obligation to issue any Letter of Credit
if:

 

(A) any order, judgment or decree of any Governmental Authority or arbitrator
shall by its terms purport to enjoin or restrain the L/C Issuer from issuing
such Letter of Credit, or any Law applicable to the L/C Issuer or any request or
directive (whether or not having the force of law) from any Governmental
Authority with jurisdiction over the L/C Issuer shall prohibit, or request that
the L/C Issuer refrain from, the issuance of letters of credit generally or such
Letter of Credit in particular or shall impose upon the L/C Issuer with respect
to such Letter of Credit any restriction, reserve or capital requirement (for
which the L/C Issuer is not otherwise compensated hereunder) not in effect on
the Closing Date, or shall impose upon the L/C Issuer any unreimbursed loss,
cost or expense which was not applicable on the Closing Date and which the L/C
Issuer in good faith deems material to it;

 

(B) subject to Section 2.04(b)(iii), the expiry date of such requested Letter of
Credit would occur more than twelve months after the date of issuance or last
renewal, unless the Required Lenders have approved such expiry date;

 

(C) the expiry date of such requested Letter of Credit would occur after the
Letter of Credit Expiration Date, unless all the Lenders have approved such
expiry date;

 

(D) the issuance of such Letter of Credit would violate one or more policies of
the L/C Issuer; or

 

(E) such Letter of Credit is denominated in a currency other than Dollars or
unless approved by the Administrative Agent.

 

(iii) The L/C Issuer shall be under no obligation to amend any Letter of Credit
if (A) the L/C Issuer would have no obligation at such time to issue such Letter
of Credit in its amended form under the terms hereof, or (B) the beneficiary of
such Letter of Credit does not accept the proposed amendment to such Letter of
Credit.

 

(b) Procedures for Issuance and Amendment of Letters of Credit; Auto-Renewal
Letters of Credit.

 

(i) Each Letter of Credit shall be issued or amended, as the case may be, upon
the request of the Borrower delivered to the L/C Issuer (with a copy to the
Administrative Agent) in the form of a Letter of Credit Application,
appropriately completed and signed by a Responsible Officer of the Borrower.
Such L/C Application must be received by the L/C Issuer and the Administrative
Agent not later than 10:00 a.m., Seattle time, at least two Business Days (or
such later date and time as the L/C Issuer may agree in a particular instance in
its sole discretion) prior to the proposed issuance date or date of amendment,

 

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as the case may be. In the case of a request for an initial issuance of a Letter
of Credit, such Letter of Credit Application shall specify in form and detail
satisfactory to the L/C Issuer: (A) the proposed issuance date of the requested
Letter of Credit (which shall be a Business Day); (B) the amount thereof; (C)
the expiry date thereof; (D) the name and address of the beneficiary thereof;
(E) the documents to be presented by such beneficiary in case of any drawing
thereunder; (F) the full text of any certificate to be presented by such
beneficiary in case of any drawing thereunder; and (G) such other matters as the
L/C Issuer may require. In the case of a request for an amendment of any
outstanding Letter of Credit, such Letter of Credit Application shall specify in
form and detail satisfactory to the L/C Issuer (A) the Letter of Credit to be
amended; (B) the proposed date of amendment thereof (which shall be a Business
Day); (C) the nature of the proposed amendment; and (D) such other matters as
the L/C Issuer may require.

 

(ii) Promptly after receipt of any Letter of Credit Application, the L/C Issuer
will confirm with the Administrative Agent (by telephone or in writing) that the
Administrative Agent has received a copy of such Letter of Credit Application
from the Borrower and, if not, the L/C Issuer will provide the Administrative
Agent with a copy thereof. Upon receipt by the L/C Issuer of confirmation from
the Administrative Agent that the requested issuance or amendment is permitted
in accordance with the terms hereof, then, subject to the terms and conditions
hereof, the L/C Issuer shall, on the requested date, issue a Letter of Credit
for the account of the Borrower or enter into the applicable amendment, as the
case may be, in each case in accordance with the L/C Issuer’s usual and
customary business practices. Immediately upon the issuance of each Letter of
Credit, each Lender shall be deemed to, and hereby irrevocably and
unconditionally agrees to, purchase from the L/C Issuer a risk participation in
such Letter of Credit in an amount equal to the product of such Lender’s Pro
Rata Share times the amount of such Letter of Credit.

 

(iii) If the Borrower so requests in any applicable Letter of Credit
Application, the L/C Issuer may, in it sole and absolute discretion, agree to
issue a Letter of Credit that has automatic renewal provisions (each, an
“Auto-Renewal Letter of Credit”); provided that any such Auto-Renewal Letter of
Credit must permit the L/C Issuer to prevent any such renewal at least once in
each twelve-month period (commencing with the date of issuance of such Letter of
Credit) by giving prior notice to the beneficiary thereof not later than a day
(the “Nonrenewal Notice Date”) in each such twelve-month period to be agreed
upon at the time such Letter of Credit is issued. Unless otherwise directed by
the L/C Issuer, the Borrower shall not be required to make a specific request to
the L/C Issuer for any such renewal. Once an Auto-Renewal Letter of Credit has
been issued, the Lenders shall be deemed to have authorized (but may not
require) the L/C Issuer to permit the renewal of such Letter of Credit at any
time to a date not later than the Letter of Credit Expiration Date; provided,
however, that the L/C Issuer shall not permit any such renewal if (A) the L/C
Issuer would have no obligation at such time to issue such Letter of Credit in
its renewed form under the terms hereof, or (B) it has received notice (which
may be by telephone or in writing) on or before the day that is two Business
Days before the Nonrenewal Notice Date (1) from the Administrative Agent that
the Required Lenders have elected not to permit such renewal or (2) from the
Administrative Agent, any Lender

 

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or the Borrower that one or more of the applicable conditions specified in
Section 4.02 is not then satisfied. Notwithstanding anything to the contrary
contained herein, the L/C Issuer shall have no obligation to permit the renewal
of any Auto-Renewal Letter of Credit at any time.

 

(iv) Promptly after its delivery of any Letter of Credit or any amendment to a
Letter of Credit to an advising bank with respect thereto or to the beneficiary
thereof, the L/C Issuer will also deliver to the Borrower and the Administrative
Agent a true and complete copy of such Letter of Credit or amendment.

 

(c) Drawings and Reimbursements; Funding of Participations.

 

(i) Upon any drawing under any Letter of Credit, the L/C Issuer shall notify the
Borrower and the Administrative Agent thereof. Not later than 10:00 a.m.,
Seattle time, on the date of any payment by the L/C Issuer under a Letter of
Credit (each such date, an “Honor Date”), the Borrower shall reimburse the L/C
Issuer through the Administrative Agent in an amount equal to the amount of such
drawing. If the Borrower fails to so reimburse the L/C Issuer by such time, the
Administrative Agent shall promptly notify each Lender of the Honor Date, the
amount of the unreimbursed drawing (the “Unreimbursed Amount”), and such
Lender’s Pro Rata Share thereof. In such event, the Borrower shall be deemed to
have requested a Committed Borrowing of Base Rate Loans to be disbursed on the
Honor Date in an amount equal to the Unreimbursed Amount, without regard to the
minimum and multiples specified in Section 2.02 for the principal amount of Base
Rate Loans, but subject to the amount of the unutilized portion of the aggregate
Revolving Commitments and the conditions set forth in Section 4.02 (other than
the delivery of a Committed Loan Notice). Any notice given by the L/C Issuer or
the Administrative Agent pursuant to this Section 2.04(c)(i) may be given by
telephone if immediately confirmed in writing; provided that the lack of such an
immediate confirmation shall not affect the conclusiveness or binding effect of
such notice.

 

(ii) Each Lender (including the Lender acting as L/C Issuer) shall upon any
notice pursuant to Section 2.04(c)(i) make funds available to the Administrative
Agent for the account of the L/C Issuer at the Administrative Agent’s Office in
an amount equal to its Pro Rata Share of the Unreimbursed Amount not later than
1:00 p.m., Seattle time, on the Business Day specified in such notice by the
Administrative Agent, whereupon, subject to the provisions of Section
2.04(c)(iii), each Lender that so makes funds available shall be deemed to have
made a Committed Revolving Base Rate Loan to the Borrower in such amount. The
Administrative Agent shall remit the funds so received to the L/C Issuer.

 

(iii) With respect to any Unreimbursed Amount that is not fully refinanced by a
Committed Borrowing of Revolving Base Rate Loans because the conditions set
forth in Section 4.02 cannot be satisfied or for any other reason, the Borrower
shall be deemed to have incurred from the L/C Issuer an L/C Borrowing in the
amount of the Unreimbursed Amount that is not so refinanced, which L/C Borrowing
shall be due and payable on

 

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demand (together with interest) and shall bear interest at the Default Rate. In
such event, each Lender’s payment to the Administrative Agent for the account of
the L/C Issuer pursuant to Section 2.04(c)(ii) shall be deemed payment in
respect of its participation in such L/C Borrowing and shall constitute an L/C
Advance from such Lender in satisfaction of its participation obligation under
this Section 2.04.

 

(iv) Until each Lender funds its Committed Revolving Loan or L/C Advance
pursuant to this Section 2.04(c) to reimburse the L/C Issuer for any amount
drawn under any Letter of Credit, interest in respect of such Lender’s Pro Rata
Share of such amount shall be solely for the account of the L/C Issuer.

 

(v) Each Lender’s obligation to make Committed Revolving Loans or L/C Advances
to reimburse the L/C Issuer for amounts drawn under Letters of Credit, as
contemplated by this Section 2.04(c), shall be absolute and unconditional and
shall not be affected by any circumstance, including (A) any set-off,
counterclaim, recoupment, defense or other right which such Lender may have
against the L/C Issuer, the Borrower or any other Person for any reason
whatsoever; (B) the occurrence or continuance of a Default or Event of Default,
or (C) any other occurrence, event or condition, whether or not similar to any
of the foregoing; provided, however, that each Lender’s obligation to make
Committed Revolving Loans pursuant to this Section 2.04(c) is subject to the
conditions set forth in Section 4.02. Any such reimbursement shall not relieve
or otherwise impair the obligation of the Borrower to reimburse the L/C Issuer
for the amount of any payment made by the L/C Issuer under any Letter of Credit,
together with interest as provided herein.

 

(vi) If any Lender fails to make available to the Administrative Agent for the
account of the L/C Issuer any amount required to be paid by such Lender pursuant
to the foregoing provisions of this Section 2.04(c) by the time specified in
Section 2.04(c)(ii), the L/C Issuer shall be entitled to recover from such
Lender (acting through the Administrative Agent), on demand, such amount with
interest thereon for the period from the date such payment is required to the
date on which such payment is immediately available to the L/C Issuer at a rate
per annum equal to the Federal Funds Rate from time to time in effect. A
certificate of the L/C Issuer submitted to any Lender (through the
Administrative Agent) with respect to any amounts owing under this clause (vi)
shall be conclusive absent manifest error.

 

(d) Repayment of Participations.

 

(i) At any time after the L/C Issuer has made a payment under any Letter of
Credit and has received from any Lender such Lender’s L/C Advance in respect of
such payment in accordance with Section 2.04(c), if the Administrative Agent
receives for the account of the L/C Issuer any payment related to such Letter of
Credit (whether directly from the Borrower or otherwise, including proceeds of
Cash Collateral applied thereto by the Administrative Agent), or any payment of
interest thereon, the Administrative Agent will distribute to such Lender its
Pro Rata Share thereof in the same funds as those received by the Administrative
Agent.

 

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(ii) If any payment received by the Administrative Agent for the account of the
L/C Issuer pursuant to Section 2.04(c)(i) is required to be returned, each
Lender shall pay to the Administrative Agent for the account of the L/C Issuer
its Pro Rata Share thereof on demand of the Administrative Agent, plus interest
thereon from the date of such demand to the date such amount is returned by such
Lender, at a rate per annum equal to the Federal Funds Rate from time to time in
effect.

 

(e) Obligations Absolute. The obligation of the Borrower to reimburse the L/C
Issuer for each drawing under each Letter of Credit, and to repay each L/C
Borrowing and each drawing under a Letter of Credit that is refinanced by a
Borrowing of Committed Revolving Loans, shall be absolute, unconditional and
irrevocable, and shall be paid strictly in accordance with the terms of this
Agreement under all circumstances, including the following:

 

(i) any lack of validity or enforceability of such Letter of Credit, this
Agreement, or any other agreement or instrument relating thereto;

 

(ii) the existence of any claim, counterclaim, set-off, defense or other right
that the Borrower may have at any time against any beneficiary or any transferee
of such Letter of Credit (or any Person for whom any such beneficiary or any
such transferee may be acting), the L/C Issuer or any other Person, whether in
connection with this Agreement, the transactions contemplated hereby or by such
Letter of Credit or any agreement or instrument relating thereto, or any
unrelated transaction;

 

(iii) any draft, demand, certificate or other document presented under such
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 such Letter of Credit;

 

(iv) any payment by the L/C Issuer under such Letter of Credit against
presentation of a draft or certificate that does not strictly comply with the
terms of such Letter of Credit; or any payment made by the L/C Issuer under such
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 such Letter of Credit, including any arising in connection with
any proceeding under any Debtor Relief Law; or

 

(v) 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 Borrower.

 

The Borrower shall promptly examine a copy of each Letter of Credit and each
amendment thereto that is delivered to it and, in the event of any claim of
noncompliance with the Borrower’s instructions or other irregularity, the
Borrower will immediately notify the L/C Issuer. The Borrower shall be
conclusively deemed to have waived any such claim against the L/C Issuer and its
correspondents unless such notice is given as aforesaid.

 

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(f) Role of L/C Issuer. Each Lender and the Borrower agree that, in paying any
drawing under a Letter of Credit, the L/C Issuer shall not have any
responsibility to obtain any document (other than any sight draft, certificates
and documents 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. No Agent-Related Person
nor any of the respective correspondents, participants or assignees of the L/C
Issuer shall be liable to any Lender for (i) any action taken or omitted in
connection herewith at the request or with the approval of the Lenders or the
Required Lenders, as applicable; (ii) any action taken or omitted in the absence
of gross negligence or willful misconduct; or (iii) the due execution,
effectiveness, validity or enforceability of any document or instrument related
to any Letter of Credit or Letter of Credit Application. The Borrower 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 Borrower’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 L/C Issuer, shall be
liable or responsible for any of the matters described in clauses (i) through
(v) of Section 2.04(e); provided, however, that anything in such clauses to the
contrary notwithstanding, the Borrower may have a claim against the L/C Issuer,
and the L/C Issuer may be liable to the Borrower, to the extent, but only to the
extent, of any direct, as opposed to consequential or exemplary, damages
suffered by the Borrower which the Borrower proves were caused by the L/C
Issuer’s willful misconduct or gross negligence or the L/C Issuer’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, the L/C Issuer 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 the L/C Issuer 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.

 

(g) Cash Collateral. Upon the request of the Administrative Agent, (i) if the
L/C Issuer has honored any full or partial drawing request under any Letter of
Credit and such drawing has resulted in an L/C Borrowing, or (ii) if, as of the
Letter of Credit Expiration Date, any Letter of Credit may for any reason remain
outstanding and partially or wholly undrawn, the Borrower shall immediately Cash
Collateralize the then Outstanding Amount of all L/C Obligations (in an amount
equal to such Outstanding Amount determined as of the date of such L/C Borrowing
or the Letter of Credit Expiration Date, as the case may be).

 

(h) Applicability of ISP98 and UCP. Unless otherwise expressly agreed by the L/C
Issuer and the Borrower when a Letter of Credit is issued (including any such
agreement applicable to an Existing Letter of Credit), (i) the rules of the
“International Standby Practices 1998” published by the Institute of
International Banking Law & Practice (or such later version thereof as may be in
effect at the time of issuance) shall apply to each standby Letter of Credit,
and (ii) the rules of the Uniform Customs and Practice for Documentary Credits,
as most recently published by the International Chamber of Commerce (the “ICC”)
at the time of issuance (including the ICC decision published by the Commission
on Banking Technique and Practice on April 6, 1998 regarding the European single
currency (euro)) shall apply to each commercial Letter of Credit.

 

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(i) Letter of Credit Fees. The Borrower shall pay to the Administrative Agent
for the account of each Lender in accordance with its Pro Rata Share (i) a
Letter of Credit fee for each commercial Letter of Credit equal to .125% per
annum times the actual daily maximum amount available to drawn under each such
Letter of Credit, and (ii) a Letter of Credit fee for each standby Letter of
Credit equal to the Applicable Rate times the actual daily maximum amount
available to be drawn under each such Letter of Credit. Such fee for each Letter
of Credit shall be due and payable quarterly in arrears on the last Business Day
of each March, June, September and December, commencing with the first such date
to occur after the issuance of such Letter of Credit, and on the Letter of
Credit Expiration Date. If there is any change in the Applicable Rate during any
quarter, the actual daily amount of each standby Letter of Credit shall be
computed and multiplied by the Applicable Rate separately for each period during
such quarter that such Applicable Rate was in effect.

 

(j) Fronting Fee and Documentary and Processing Charges Payable to L/C Issuer.
The Borrower shall pay directly to the L/C Issuer for its own account a fronting
fee in an amount (i) with respect to each commercial Letter of Credit, equal to
.125% of the amount of such Letter of Credit, due and payable upon the issuance
thereof, and (ii) with respect to each standby Letter of Credit, equal to .125%
of the amount of such Letter of Credit, due and payable upon the issuance
thereof. In addition, the Borrower shall pay directly to the L/C Issuer for its
own account the customary issuance, presentation, amendment and other processing
fees, and other standard costs and charges, of the L/C Issuer relating to
letters of credit as from time to time in effect. Such fees and charges are due
and payable on demand and are nonrefundable.

 

(k) Conflict with Letter of Credit Application. In the event of any conflict
between the terms hereof and the terms of any Letter of Credit Application, the
terms hereof shall control.

 

2.05 Swing Line Loans.

 

(a) The Swing Line. Subject to the terms and conditions set forth herein, the
Swing Line Lender agrees to make loans (each such loan, a “Swing Line Loan”) to
the Borrower from time to time on any Business Day during the period from the
Closing Date to the Revolving Loan Maturity Date in an aggregate amount not to
exceed at any time outstanding the amount of the Swing Line Sublimit,
notwithstanding the fact that such Swing Line Loans, when aggregated with the
Outstanding Amount of Committed Revolving Loans of the Swing Line Lender in its
capacity as a Lender of Committed Revolving Loans, may exceed the amount of such
Lender’s Revolving Commitment; provided, however, that after giving effect to
any Swing Line Loan, (i) the aggregate Outstanding Amount of all Loans and L/C
Obligations shall not exceed the aggregate Revolving Commitments, and (ii) the
aggregate Outstanding Amount of the Committed Revolving Loans of any Lender,
plus such Lender’s Pro Rata Share of the Outstanding Amount of all L/C
Obligations, plus such Lender’s Pro Rata Share of the Outstanding Amount of all
Swing Line Loans shall not exceed such Lender’s Revolving Commitment, and
provided, further, that the Swing Line Lender shall not make any Swing Line Loan
to refinance any outstanding Swing Line Loan. Within the foregoing limits, and
subject to

 

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the other terms and conditions hereof, the Borrower may borrow under this
Section 2.05, prepay under Section 2.06, and reborrow under this Section 2.05 ;
provided, however, that the Swing Line Lender may terminate or suspend the Swing
Line at any time in its sole discretion upon notice to the Borrower. Each Swing
Line Loan shall be a Base Rate Loan. Immediately upon the making of a Swing Line
Loan, each Lender shall be deemed to, and hereby irrevocably and unconditionally
agrees to, purchase from the Swing Line Lender a risk participation in such
Swing Line Loan in an amount equal to the product of such Lender’s Pro Rata
Share times the amount of such Swing Line Loan.

 

(b) Borrowing Procedures. Unless the Swing Line Lender has notified the Borrower
that the Swing Line has been terminated or suspended as provided in Section
2.05(a), each Swing Line Borrowing shall be made upon the Borrower’s irrevocable
notice to the Swing Line Lender and the Administrative Agent, which may be given
by telephone. Each such notice must be received by the Swing Line Lender and the
Administrative Agent not later than 12:00 noon, Seattle time, on the requested
borrowing date, and shall specify (i) the amount to be borrowed, which shall be
a minimum of $250,000, and (ii) the requested borrowing date, which shall be a
Business Day. Each such telephonic notice must be confirmed promptly by delivery
to the Swing Line Lender and the Administrative Agent of a written Swing Line
Loan Notice, appropriately completed and signed by a Responsible Officer of the
Borrower. Promptly after receipt by the Swing Line Lender of any telephonic
Swing Line Loan Notice, the Swing Line Lender will confirm with the
Administrative Agent (by telephone or in writing) that the Administrative Agent
has also received such Swing Line Loan Notice and, if not, the Swing Line Lender
will notify the Administrative Agent (by telephone or in writing) of the
contents thereof. Unless the Swing Line Lender has received notice (by telephone
or in writing) from the Administrative Agent (including at the request of any
Lender) prior to 1:00 p.m., Seattle time, on the date of the proposed Swing Line
Borrowing (A) directing the Swing Line Lender not to make such Swing Line Loan
as a result of the limitations set forth in the proviso to the first sentence of
Section 2.05(a), or (B) that one or more of the applicable conditions specified
in Section 4 is not then satisfied, then, subject to the terms and conditions
hereof, the Swing Line Lender will, not later than 2:00 p.m., Seattle time, on
the borrowing date specified in such Swing Line Loan Notice, make the amount of
its Swing Line Loan available to the Borrower at its office by crediting the
account of the Borrower on the books of the Swing Line Lender in immediately
available funds.

 

(c) Refinancing of Swing Line Loans.

 

(i) The Swing Line Lender at any time in its sole and absolute discretion may
request, on behalf of the Borrower (which hereby irrevocably requests the Swing
Line Lender to so request on its behalf), that each Lender make a Committed Base
Rate Revolving Loan in an amount equal to such Lender’s Pro Rata Share of the
amount of Swing Line Loans then outstanding. Such request shall be made in
accordance with the requirements of Section 2.02, without regard to the minimum
and multiples specified therein for the principal amount of Base Rate Loans, but
subject to the unutilized portion of the aggregate Revolving Commitments and the
conditions set forth in Section 4.02. The Swing Line Lender shall furnish the
Borrower with a copy of the applicable Committed Loan Notice promptly after
delivering such notice to the Administrative Agent. Each Lender shall make an
amount equal to its Pro Rata Share of the amount

 

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specified in such Committed Loan Notice available to the Administrative Agent in
immediately available funds for the account of the Swing Line Lender at the
Administrative Agent’s Office not later than 1:00 p.m., Seattle time, on the day
specified in such Committed Loan Notice, whereupon, subject to Section
2.05(c)(ii), each Lender that so makes funds available shall be deemed to have
made a Base Rate Committed Revolving Loan to the Borrower in such amount. The
Administrative Agent shall remit the funds so received to the Swing Line Lender.

 

(ii) If for any reason any Committed Borrowing cannot be requested in accordance
with Section 2.05(c)(i) or any Swing Line Loan cannot be refinanced by such a
Committed Borrowing, the Committed Loan Notice submitted by the Swing Line
Lender shall be deemed to be a request by the Swing Line Lender that each of the
Lenders fund its risk participation in the relevant Swing Line Loan and each
Lender’s payment to the Administrative Agent for the account of the Swing Line
Lender pursuant to Section 2.05(c)(i) shall be deemed payment in respect of such
participation.

 

(iii) If any Lender fails to make available to the Administrative Agent for the
account of the Swing Line Lender any amount required to be paid by such Lender
pursuant to the foregoing provisions of this Section 2.05(c) by the time
specified in Section 2.05(c)(i), the Swing Line Lender shall be entitled to
recover from such Lender (acting through the Administrative Agent), on demand,
such amount with interest thereon for the period from the date such payment is
required to the date on which such payment is immediately available to the Swing
Line Lender at a rate per annum equal to the Federal Funds Rate from time to
time in effect. A certificate of the Swing Line Lender submitted to any Lender
(through the Administrative Agent) with respect to any amounts owing under this
clause (iii) shall be conclusive absent manifest error.

 

(iv) Each Lender’s obligation to make Committed Revolving Loans or to purchase
and fund risk participations in Swing Line Loans pursuant to this Section
2.05(c) shall be absolute and unconditional and shall not be affected by any
circumstance, including (A) any set-off, counterclaim, recoupment, defense or
other right which such Lender may have against the Swing Line Lender, the
Borrower or any other Person for any reason whatsoever, (B) the occurrence or
continuance of a Default or Event of Default, or (C) any other occurrence, event
or condition, whether or not similar to any of the foregoing; provided, however,
that each Lender’s obligation to make Committed Revolving Loans pursuant to this
Section 2.05(c) is subject to the conditions set forth in Section 4.02. Any such
purchase of participations shall not relieve or otherwise impair the obligation
of the Borrower to repay Swing Line Loans, together with interest as provided
herein.

 

(d) Repayment of Participations.

 

(i) At any time after any Lender has purchased and funded a participation in a
Swing Line Loan, if the Swing Line Lender receives any payment on account of
such Swing Line Loan, the Swing Line Lender will distribute to such Lender its
Pro Rata Share of such payment (appropriately adjusted, in the case of interest
payments, to reflect the period of time during which such Lender’s participation
was outstanding and funded) in the same funds as those received by the Swing
Line Lender.

 

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(ii) If any payment received by the Swing Line Lender in respect of principal or
interest on any Swing Line Loan is required to be returned by the Swing Line
Lender, each Lender shall pay to the Swing Line Lender its Pro Rata Share
thereof on demand of the Administrative Agent, plus interest thereon from the
date of such demand to the date such amount is returned, at a rate per annum
equal to the Federal Funds Rate. The Administrative Agent will make such demand
upon the request of the Swing Line Lender.

 

(e) Interest for Account of Swing Line Lender. The Swing Line Lender shall be
responsible for invoicing the Borrower for interest on the Swing Line Loans.
Until each Lender funds its Committed Base Rate Revolving Loan or participation
pursuant to this Section 2.05 to refinance such Lender’s Pro Rata Share of any
Swing Line Loan, interest in respect of such Pro Rata Share shall be solely for
the account of the Swing Line Lender.

 

(f) Payments Directly to Swing Line Lender. The Borrower shall make all payments
of principal and interest in respect of the Swing Line Loans directly to the
Swing Line Lender.

 

2.06 Prepayments.

 

(a) The Borrower may, upon notice to the Administrative Agent, at any time or
from time to time voluntarily prepay Committed Loans in whole or in part without
premium or penalty; provided that (i) such notice must be received by the
Administrative Agent not later than 10:00 a.m., Seattle time, (A) three Business
Days prior to any date of prepayment of Eurodollar Rate Committed Loans, and (B)
on the date of prepayment of Base Rate Committed Loans; (ii) any prepayment of
Eurodollar Rate Committed Loans shall be in a principal amount of $1,000,000 or
a whole multiple of $1,000,000 in excess thereof; and (iii) any prepayment of
Base Rate Committed Loans shall be in a principal amount of $500,000 or a whole
multiple of $100,000 in excess thereof. Each such notice shall specify the date
and amount of such prepayment and the Type(s) of Committed Loans to be prepaid.
The Administrative Agent will promptly notify each Lender of its receipt of each
such notice, and of such Lender’s Pro Rata Share of such prepayment. If such
notice is given by the Borrower, the Borrower shall make such prepayment and the
payment amount specified in such notice shall be due and payable on the date
specified therein. Any prepayment of a Eurodollar Rate Loan shall be accompanied
by all accrued interest thereon, together with any additional amounts required
pursuant to Section 3.05. Each such prepayment shall be applied to the Committed
Loans of the Lenders in accordance with their respective Pro Rata Shares.

 

(b) The Borrower may, upon notice to the Swing Line Lender (with a copy to the
Administrative Agent), at any time or from time to time, voluntarily prepay
Swing Line Loans in whole or in part without premium or penalty; provided that
(i) such notice must be received by the Swing Line Lender and the Administrative
Agent not later than 10:00 a.m., Seattle time, on the date of the prepayment,
and (ii) any such prepayment shall be in a minimum principal amount of $100,000.
Each such notice shall specify the date and amount of such prepayment. If such
notice is given by the Borrower, the Borrower shall make such prepayment and the
payment amount specified in such notice shall be due and payable on the date
specified therein.

 

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(c) If for any reason the Outstanding Amount of all Loans and L/C Obligations at
any time exceeds the Aggregate Commitments then in effect, the Borrower shall
immediately prepay Loans and/or Cash Collateralize the L/C Obligations in an
aggregate amount equal to such excess.

 

2.07 Reduction or Termination of Commitments. (a) The Borrower may, upon notice
to the Administrative Agent, terminate the Aggregate Commitments, or permanently
reduce the Aggregate Commitments to an amount not less than the then Outstanding
Amount of all Revolving Loans and L/C Obligations; provided that (i) any such
notice shall be received by the Administrative Agent not later than 10:00 a.m.,
Seattle time, five Business Days prior to the date of termination or reduction,
and (ii) any such partial reduction shall be in an aggregate amount of
$5,000,000 or any whole multiple of $100,000 in excess thereof. The
Administrative Agent shall promptly notify the Lenders of any such notice of
reduction or termination of the Aggregate Commitments. Once reduced in
accordance with this Section, the Aggregate Commitments may not be increased.
Any reduction of the Aggregate Commitments shall be applied to the Revolving
Commitment of each Lender according to its Pro Rata Share.

 

(b) The Aggregate Commitments shall be permanently reduced by an amount equal to
100% of the proceeds (net of sales expenses and taxes actually paid) received by
Borrower or any of its Subsidiaries from the sale of any property including
capital stock of any Subsidiary; provided that sales of the capital stock of
Borrower shall not reduce the Aggregate Commitment. The foregoing provision
shall not apply to dispositions of property in the ordinary course of business
or sales not exceeding $1,000,000 in any 12 month period.

 

2.08 Repayment of Loans.

 

(a) The Borrower shall repay to the Lenders on the Revolving Loan Maturity Date
the aggregate principal amount of Committed Revolving Loans outstanding on such
date.

 

(b) The Borrower shall repay each Swing Line Loan on the earlier to occur of (i)
the date five Business Days after such Loan is made and (ii) the Revolving Loan
Maturity Date.

 

2.09 Interest.

 

(a) Subject to the provisions of subsection (b) below, (i) each Eurodollar Rate
Committed Loan shall bear interest on the outstanding principal amount thereof
for each Interest Period at a rate per annum equal to the Eurodollar Rate for
such Interest Period plus the Applicable Rate; (ii) each Base Rate Committed
Loan shall bear interest on the outstanding principal amount thereof from the
applicable borrowing date at a rate per annum equal to the Base Rate plus the
Applicable Rate; and (iii) each Swing Line Loan shall bear interest on the
outstanding principal amount thereof from the applicable borrowing date at a
rate per annum equal to the Base Rate plus the Applicable Rate.

 

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(b) If any amount payable by the Borrower under any Loan Document is not paid
when due (without regard to any applicable grace periods), such amount shall
thereafter bear interest at a fluctuating interest rate per annum at all times
equal to the Default Rate to the fullest extent permitted by applicable Law.
While any Event of Default exists or after acceleration, the Borrower shall pay
interest on the principal amount of all outstanding Obligations at a fluctuating
interest rate per annum at all times equal to the Default Rate to the fullest
extent permitted by applicable Law. Accrued and unpaid interest on past due
amounts (including interest on past due interest) shall be due and payable upon
demand.

 

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

 

2.10 Fees.

 

In addition to certain fees described in subsections (i) and (j) of Section
2.04:

 

(a) Commitment Fee. The Borrower shall pay to the Administrative Agent for the
account of each Lender in accordance with its Pro Rata Share, a commitment fee
equal to the Applicable Rate times the actual daily amount by which the
aggregate Revolving Commitments exceed the sum of (i) the Outstanding Amount of
Committed Revolving Loans (not including the Outstanding Amount of Swing Line
Loans) and (ii) the Outstanding Amount of L/C Obligations; provided, however,
that for each day that the sum of (i) the Outstanding Amount of Committed
Revolving Loans (not including the Outstanding Amount of Swing Line Loans) and
(ii) the Outstanding Amount of L/C Obligations exceeds 33% of the aggregate
Revolving Commitments, such Applicable Rate shall be reduced by 5 basis points.
The commitment fee shall accrue at all times from the Closing Date until the
Revolving Loan Maturity Date and shall be due and payable quarterly in arrears
on the last Business Day of each March, June, September and December, commencing
with the first such date to occur after the Closing Date, and on the Revolving
Loan Maturity Date. The commitment fee shall be calculated quarterly in arrears,
and if there is any change in the Applicable Rate during any quarter, the actual
daily amount shall be computed and multiplied by the Applicable Rate separately
for each period during such quarter that such Applicable Rate was in effect. The
commitment fee shall accrue at all times, including at any time during which one
or more of the conditions in Section 4 is not met.

 

(b) Arrangement and Agency Fees. The Borrower shall pay an arrangement fee to
the Arranger for the Arranger’s own account, and shall pay an agency fee to the
Administrative Agent for the Administrative Agent’s own account, in the amounts
and at the times specified in the letter agreement, dated April 14, 2004 (the
“Fee Letter”), between the Borrower, the Arranger and the Administrative Agent.
Such fees shall be fully earned when paid and shall be nonrefundable for any
reason whatsoever.

 

(c) Lenders’ Upfront Fee. On the Closing Date, the Borrower shall pay to the
Administrative Agent, for the account of the Lenders an upfront fee. The amount
of such fee and the allocation of it is set forth in the Fee Letter. Such
upfront fee is for the credit facilities committed by the Lenders and is
nonrefundable for any reason whatsoever.

 

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2.11 Computation of Interest and Fees. Interest on Base Rate Loans shall be
calculated on the basis of a year of 365 or 366 days, as the case may be, and
the actual number of days elapsed. Computation of all other types of interest
and all fees shall be calculated on the basis of a year of 360 days and the
actual number of days elapsed, which results in a higher yield to the payee
thereof than a method based on a year of 365 or 366 days. Interest shall accrue
on each Loan for the day on which the Loan is made, and shall not accrue on a
Loan, or any portion thereof, for the day on which the Loan or such portion is
paid, provided that any Loan that is repaid on the same day on which it is made
shall bear interest for one day.

 

2.12 Evidence of Debt.

 

(a) The Credit Extensions made by each Lender shall be evidenced by one or more
accounts or records maintained by such Lender and by the Administrative Agent in
the ordinary course of business. The accounts or records maintained by the
Administrative Agent and each Lender shall be conclusive absent manifest error
of the amount of the Credit Extensions made by the Lenders to the Borrower and
the interest and payments thereon. Any failure to so record or any error in
doing so shall not, however, limit or otherwise affect the obligation of the
Borrower hereunder to pay any amount owing with respect to the Loans or L/C
Obligations. In the event of any conflict between the accounts and records
maintained by any Lender and the accounts and records of the Administrative
Agent in respect of such matters, the accounts and records of the Administrative
Agent shall control in the absence of manifest error. Upon the request of any
Lender made through the Administrative Agent, such Lender’s Loans may be
evidenced by a Committed Loan Note, and/or a Swing Line Note, as applicable, in
addition to such accounts or records. Each Lender may attach schedules to its
Note(s) and endorse thereon the date, Type (if applicable), amount and maturity
of the applicable Loans and payments with respect thereto.

 

(b) In addition to the accounts and records referred to in subsection (a), each
Lender and the Administrative Agent shall maintain in accordance with its usual
practice accounts or records evidencing the purchases and sales by such Lender
of participations in Letters of Credit and Swing Line Loans. In the event of any
conflict between the accounts and records maintained by the Administrative Agent
and the accounts and records of any Lender in respect of such matters, the
accounts and records of the Administrative Agent shall control.

 

2.13 Payments Generally.

 

(a) All payments to be made by the Borrower shall be made without condition or
deduction for any counterclaim, defense, recoupment or setoff. The
Administrative Agent is authorized to deduct all principal, interest and all
other fees and expenses due from any of the Borrower’s checking accounts
maintained with the Administrative Agent. If such payments are not taken from
the Borrower’s checking accounts, all payments by the Borrower hereunder shall
be made to the Administrative Agent, for the account of the respective Lenders
to which such payment is owed, at the Administrative Agent’s Office in Dollars
and in immediately available funds not later than 12:00 noon, Seattle time, on
the date specified herein. The Administrative

 

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Agent will promptly distribute to each Lender its Pro Rata Share (or other
applicable share as provided herein) of such payment in like funds as received
by wire transfer to such Lender’s Lending Office. All payments received by the
Administrative Agent after 2:00 p.m., Seattle time, shall be deemed received on
the next succeeding Business Day and any applicable interest or fee shall
continue to accrue.

 

(b) Subject to the definition of “Interest Period,” if any payment to be made by
the Borrower shall come due on a day other than a Business Day, payment shall be
made on the next following Business Day, and such extension of time shall be
reflected in computing interest or fees, as the case may be.

 

(c) If at any time insufficient funds are received by and available to the
Administrative Agent to pay fully all amounts of principal, L/C Borrowings,
interest and fees then due hereunder, such funds shall be applied (i) first,
toward costs and expenses (including Attorney Costs and amounts payable under
Section 3) incurred by the Administrative Agent and each Lender, (ii) second,
toward repayment of interest and fees then due hereunder, ratably among the
parties entitled thereto in accordance with the amounts of interest and fees
then due to such parties, and (iii) third, toward repayment of principal and L/C
Borrowings then due hereunder, ratably among the parties entitled thereto in
accordance with the amounts of principal and L/C Borrowings then due to such
parties.

 

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

 

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

 

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

 

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Administrative Agent may make a demand therefor upon the Borrower, and the
Borrower shall pay such amount to the Administrative Agent, together with
interest thereon for the Compensation Period at a rate per annum equal to the
rate of interest applicable to the applicable Borrowing. Nothing herein shall be
deemed to relieve any Lender from its obligation to fulfill its Commitment or to
prejudice any rights which the Administrative Agent or the Borrower may have
against any Lender as a result of any default by such Lender hereunder.

 

A notice of the Administrative Agent to any Lender with respect to any amount
owing under this subsection (d) shall be conclusive, absent manifest error.

 

(e) If any Lender makes available to the Administrative Agent funds for any Loan
to be made by such Lender as provided in the foregoing provisions of this
Section 2, and the conditions to the applicable Credit Extension set forth in
Section 4 are not satisfied or waived in accordance with the terms hereof, the
Administrative Agent shall return such funds (in like funds as received from
such Lender) to such Lender, without interest.

 

(f) The obligations of the Lenders hereunder to make Committed Loans and to fund
participations in Letters of Credit and Swing Line Loans are several and not
joint. The failure of any Lender to make any Committed Loan or to fund any such
participation on any date required hereunder shall not relieve any other Lender
of its corresponding obligation to do so on such date, and no Lender shall be
responsible for the failure of any other Lender to so make its Committed Loan or
purchase its participation.

 

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

 

2.14 Sharing of Payments. If, other than as expressly provided elsewhere herein,
any Lender shall obtain on account of the Committed Loans made by it, or the
participations in L/C Obligations or in Swing Line Loans held by it, 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) thereof, such Lender shall immediately (a) notify the Administrative
Agent of such fact, and (b) purchase from the other Lenders such participations
in the Committed Loans made by them and/or such subparticipations in the
participations in L/C Obligations or Swing Line Loans held by them, as the case
may be, as shall be necessary to cause such purchasing Lender to share the
excess payment in respect of such Committed Loans or such participations, as the
case may be, pro rata with each of them; provided, however, that if all or any
portion of such excess payment is thereafter recovered from the purchasing
Lender, such purchase shall to that extent be rescinded and each other Lender
shall repay to the purchasing Lender the purchase price paid therefor, together
with an amount equal to such paying Lender’s ratable share (according to the
proportion of (i) the amount of such paying Lender’s required repayment to (ii)
the total amount so recovered from the purchasing Lender) of any interest or
other amount paid or payable by the purchasing Lender in respect of the total
amount so recovered. The Borrower agrees that any Lender so purchasing a
participation from another Lender may, to the fullest extent permitted by law,
exercise all its rights of payment (including

 

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the right of set-off, but subject to Section 10.09 with respect to such
participation as fully as if such Lender were the direct creditor of the
Borrower in the amount of such participation. The Administrative Agent will keep
records (which shall be conclusive and binding in the absence of manifest error)
of participations purchased under this Section and will in each case notify the
Lenders following any such purchases or repayments. Each Lender that purchases a
participation pursuant to this Section shall from and after such purchase have
the right to give all notices, requests, demands, directions and other
communications under this Agreement with respect to the portion of the
Obligations purchased to the same extent as though the purchasing Lender were
the original owner of the Obligations purchased.

 

SECTION 3.

TAXES, YIELD PROTECTION AND ILLEGALITY

 

3.01 Taxes.

 

(a) Any and all payments by the Borrower to or for the account of the
Administrative Agent or any Lender under any Loan Document shall be made free
and clear of and without deduction for any and all present or future taxes,
duties, levies, imposts, deductions, assessments, fees, withholdings or similar
charges, and all liabilities with respect thereto, excluding, in the case of the
Administrative Agent and each Lender, taxes imposed on or measured by its net
income, and franchise taxes imposed on it (in lieu of net income taxes), by the
jurisdiction (or any political subdivision thereof) under the Laws of which the
Administrative Agent or such Lender, as the case may be, is organized or
maintains a lending office (all such non-excluded taxes, duties, levies,
imposts, deductions, assessments, fees, withholdings or similar charges, and
liabilities being hereinafter referred to as “Taxes”). If the Borrower shall be
required by any Laws to deduct any Taxes from or in respect of any sum payable
under any Loan Document to the Administrative Agent or any Lender, (i) the sum
payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section), the Administrative Agent and such Lender receives an amount equal
to the sum it would have received had no such deductions been made, (ii) the
Borrower shall make such deductions, (iii) the Borrower shall pay the full
amount deducted to the relevant taxation authority or other authority in
accordance with applicable Laws, and (iv) within 30 days after the date of such
payment, the Borrower shall furnish to the Administrative Agent (which shall
forward the same to such Lender) the original or a certified copy of a receipt
evidencing payment thereof.

 

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

 

(c) If the Borrower shall be required to deduct or pay any Taxes or Other Taxes
from or in respect of any sum payable under any Loan Document to the
Administrative Agent or any Lender, the Borrower shall also pay to the
Administrative Agent (for the account of such Lender) or to such Lender, at the
time interest is paid, such additional amount that such Lender specifies

 

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is necessary to preserve the after-tax yield (after factoring in all taxes,
including taxes imposed on or measured by net income) such Lender would have
received if such Taxes or Other Taxes had not been imposed.

 

(d) The Borrower agrees to indemnify the Administrative Agent and each Lender
for (i) the full amount of Taxes and Other Taxes (including any Taxes or Other
Taxes imposed or asserted by any jurisdiction on amounts payable under this
Section) paid by the Administrative Agent and such Lender, (ii) amounts payable
under Section 3.01(c) and (iii) any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto, in each case whether or not
such Taxes or Other Taxes were correctly or legally imposed or asserted by the
relevant Governmental Authority. Payment under this subsection (d) shall be made
within 30 days after the date the Lender or the Administrative Agent makes a
demand therefor.

 

3.02 Illegality. If any Lender determines that any Law has made it unlawful, or
that any Governmental Authority has asserted that it is unlawful, for any Lender
or its applicable Lending Office to make, maintain or fund Eurodollar Rate
Loans, or to determine or charge interest rates based upon the Eurodollar Rate,
then, on notice thereof by such Lender to the Borrower through the
Administrative Agent, any obligation of such Lender to make or continue
Eurodollar Rate Loans or to convert Base Rate Committed Loans to Eurodollar Rate
Committed Loans shall be suspended until such Lender notifies the Administrative
Agent and the Borrower that the circumstances giving rise to such determination
no longer exist. Upon receipt of such notice, the Borrower shall, upon demand
from such Lender (with a copy to the Administrative Agent), prepay or, if
applicable, convert all Eurodollar Rate Loans of such Lender to Base Rate Loans,
either on the last day of the Interest Period thereof, if such Lender may
lawfully continue to maintain such Eurodollar Rate Loans to such day, or
immediately, if such Lender may not lawfully continue to maintain such
Eurodollar Rate Loans. Upon any such prepayment or conversion, the Borrower
shall also pay accrued interest on the amount so prepaid or converted. Each
Lender agrees to designate a different Lending Office if such designation will
avoid the need for such notice and will not, in the good faith judgment of such
Lender, otherwise be materially disadvantageous to such Lender.

 

3.03 Inability to Determine Rates. If the Administrative Agent determines in
connection with any request for a Eurodollar Rate Loan or a conversion to or
continuation thereof that (a) Dollar deposits are not being offered to banks in
the London interbank eurodollar market for the applicable amount and Interest
Period of such Eurodollar Rate Loan, (b) adequate and reasonable means do not
exist for determining the Eurodollar Base Rate for such Eurodollar Rate Loan, or
(c) the Eurodollar Base Rate for such Eurodollar Rate Loan does not adequately
and fairly reflect the cost to the Lenders of funding such Eurodollar Rate Loan,
the Administrative Agent will promptly notify the Borrower and all Lenders.
Thereafter, the obligation of the Lenders to make or maintain Eurodollar Rate
Loans shall be suspended until the Administrative Agent revokes such notice.
Upon receipt of such notice, the Borrower may revoke any pending request for a
Borrowing, conversion or continuation of Eurodollar Rate Committed Loans or,
failing that, will be deemed to have converted such request into a request for a
Committed Borrowing of Base Rate Loans in the amount specified therein.

 

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3.04 Increased Cost and Reduced Return; Capital Adequacy; Reserves on Eurodollar
Rate Loans.

 

(a) If any Lender determines that as a result of the introduction of or any
change in or in the interpretation of any Law, or such Lender’s compliance
therewith, there shall be any increase in the cost to such Lender of agreeing to
make or making, funding or maintaining Eurodollar Rate Loans or (as the case may
be) issuing or participating in Letters of Credit, or a reduction in the amount
received or receivable by such Lender in connection with any of the foregoing
(excluding for purposes of this subsection (a) any such increased costs or
reduction in amount resulting from (i) Taxes or Other Taxes (as to which Section
3.01 shall govern), (ii) changes in the basis of taxation of overall net income
or overall gross income by the United States or any foreign jurisdiction or any
political subdivision of either thereof under the Laws of which such Lender is
organized or has its Lending Office, and (iii) reserve requirements utilized, as
to Eurodollar Rate Committed Loans, in the determination of the Eurodollar
Rate), then from time to time upon demand of such Lender (with a copy of such
demand to the Administrative Agent), the Borrower shall pay to such Lender such
additional amounts as will compensate such Lender for such increased cost or
reduction.

 

(b) If any Lender determines that the introduction of any Law regarding capital
adequacy or any change therein or in the interpretation thereof, or compliance
by such Lender (or its Lending Office) therewith, has the effect of reducing the
rate of return on the capital of such Lender or any corporation controlling such
Lender as a consequence of such Lender’s obligations hereunder (taking into
consideration its policies with respect to capital adequacy and such Lender’s
desired return on capital), then from time to time upon demand of such Lender
(with a copy of such demand to the Administrative Agent), the Borrower shall pay
to such Lender such additional amounts as will compensate such Lender for such
reduction.

 

3.05 Funding Losses. Upon demand of any Lender (with a copy to the
Administrative Agent) from time to time, the Borrower shall promptly compensate
such Lender for and hold such Lender harmless from any loss, cost or expense
incurred by it as a result of:

 

(a) any continuation, conversion, payment or prepayment of any Loan other than a
Base Rate Loan on a day other than the last day of the Interest Period for such
Loan (whether voluntary, mandatory, automatic, by reason of acceleration, or
otherwise); or

 

(b) any failure by the Borrower (for a reason other than the failure of such
Lender to make a Loan) to prepay, borrow, continue or convert any Loan other
than a Base Rate Loan on the date or in the amount notified by the Borrower; or

 

(c) any assignment of a Eurodollar Rate Loan on a day other than the last day of
the Interest Period therefor as a result of a request by the Borrower pursuant
to Section 10.15;

 

including any loss of anticipated profits and any loss or expense arising from
the liquidation or reemployment of funds obtained by it to maintain such Loan or
from fees payable to terminate the deposits from which such funds were obtained.
The Borrower shall also pay any customary administrative fees charged by such
Lender in connection with the foregoing.

 

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For purposes of calculating amounts payable by the Borrower to the Lenders under
this Section 3.05, each Lender shall be deemed to have funded each Eurodollar
Rate Committed Loan made by it at the Eurodollar Base Rate used in determining
the Eurodollar Rate for such Loan by a matching deposit or other borrowing in
the London interbank eurodollar market for a comparable amount and for a
comparable period, whether or not such Eurodollar Rate Committed Loan was in
fact so funded.

 

3.06 Matters Applicable to all Requests for Compensation. A certificate of the
Administrative Agent or any Lender claiming compensation under this Section 3
and setting forth the additional amount or amounts to be paid to it hereunder
shall be conclusive in the absence of manifest error. In determining such
amount, the Administrative Agent or such Lender may use any reasonable averaging
and attribution methods.

 

3.07 Survival. All of the Borrower’s obligations under this Section 3 shall
survive termination of the Aggregate Commitments and repayment of all other
Obligations.

 

SECTION 4.

CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

 

4.01 Conditions of Initial Credit Extension. The obligation of each Lender to
make its initial Credit Extension hereunder is subject to satisfaction of the
following conditions precedent:

 

(a) Unless waived by all the Lenders (or by the Administrative Agent with
respect to immaterial matters or items specified in clause (vi) or (vii) below
with respect to which the Borrower has given assurances satisfactory to the
Administrative Agent that such items shall be delivered promptly following the
Closing Date), the Administrative Agent’s receipt of the following, each of
which shall be originals or facsimiles (followed promptly by originals) unless
otherwise specified, each properly executed by a Responsible Officer of the
signing Loan Party, each dated the Closing Date (or, in the case of certificates
of governmental officials, a recent date before the Closing Date) and each in
form and substance satisfactory to the Administrative Agent and its legal
counsel:

 

(i) executed counterparts of this Agreement and the Guaranties, sufficient in
number for distribution to the Administrative Agent, each Lender and the
Borrower;

 

(ii) Committed Loan Notes executed by the Borrower in favor of each Lender which
requests a Note, each in a principal amount equal to such Lender’s Commitment;

 

(iii) the Collateral Documents;

 

(iv) such evidence as the Administrative Agent may reasonably require to verify
that it holds a valid perfected first priority security interest and lien in the
Collateral;

 

(v) this item intentionally left blank;

 

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(vi) such certificates of resolutions or other action, incumbency certificates
and/or other certificates of Responsible Officers of each Loan Party as the
Administrative Agent may require to establish the identities of and verify the
authority and capacity of each Responsible Officer thereof authorized to act as
a Responsible Officer in connection with this Agreement and the other Loan
Documents to which such Loan Party is a party;

 

(vii) such evidence as the Administrative Agent may reasonably require to verify
that each Loan Party is duly organized or formed, validly existing, in good
standing and qualified to engage in business in each jurisdiction in which it is
required to be qualified to engage in business, including certified copies of
each Loan Party’s Organization Documents, certificates of good standing and/or
qualification to engage in business;

 

(viii) a certificate signed by a Responsible Officer of the Borrower certifying
(A) that the conditions specified in Sections 4.02(a) and (b) have been
satisfied, and (B) that there has been no event or circumstance since the date
of the Audited Financial Statements which has or could be reasonably expected to
have a Material Adverse Effect;

 

(ix) an opinion of counsel to each Loan Party substantially in the form of
Exhibit G in form and substance satisfactory to the Administrative Agent; and

 

(x) such other assurances, certificates, documents, consents or opinions as the
Administrative Agent, the L/C Issuer, the Swing Line Lender or the Required
Lenders reasonably may require.

 

(b) Any fees required to be paid on or before the Closing Date shall have been
paid.

 

(c) Unless waived by the Administrative Agent, the Borrower shall have paid all
Attorney Costs of the Administrative Agent to the extent invoiced prior to or on
the Closing Date, plus such additional amounts of Attorney Costs as shall
constitute its reasonable estimate of Attorney Costs incurred or to be incurred
by it through the closing proceedings (provided that such estimate shall not
thereafter preclude a final settling of accounts between the Borrower and the
Administrative Agent).

 

4.02 Conditions to all Credit Extensions and Conversions and Continuations. The
obligation of each Lender to honor any Request for Credit Extension is subject
to the following conditions precedent:

 

(a) The representations and warranties of the Borrower contained in Section 5,
or which are contained in any document furnished at any time under or in
connection herewith, shall be true and correct in all material respects on and
as of the date of such Credit Extension, conversion or continuation, except to
the extent that such representations and warranties specifically refer to an
earlier date, in which case they shall be true and correct as of such earlier
date.

 

(b) No Default or Event of Default shall exist, or would result from such
proposed Credit Extension, conversion or continuation.

 

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(c) The Administrative Agent and, if applicable, the L/C Issuer or the Swing
Line Lender shall have received a Request for Credit Extension in accordance
with the requirements hereof.

 

(d) The Administrative Agent shall have received, in form and substance
satisfactory to it, such other assurances, certificates, documents or consents
related to the foregoing as the Administrative Agent or the Required Lenders
reasonably may require.

 

Each Request for Credit Extension (other than a Committed Loan Notice requesting
only a conversion of Committed Loans to the other Type or a continuation of
Committed Loans as the same Type) submitted by the Borrower shall be deemed to
be a representation and warranty that the conditions specified in Sections
4.02(a) and (b) have been satisfied on and as of the date of the applicable
Credit Extension.

 

SECTION 5.

REPRESENTATIONS AND WARRANTIES

 

The Borrower represents and warrants to the Administrative Agent and the Lenders
that:

 

5.01 Existence, Qualification and Power; Compliance with Laws. Each Loan Party
(a) is a corporation duly organized or formed, validly existing and in good
standing under the Laws of the jurisdiction of its incorporation or
organization, (b) has all corporate 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, (c) is duly qualified and is licensed and in
good standing or existence under the Laws of each jurisdiction where its
ownership, lease or operation of properties or the conduct of its business
requires such qualification or license, and (d) is in compliance with all Laws,
except in each case referred to in clause (c) or this clause (d), to the extent
that failure to do so could not reasonably be expected to have a Material
Adverse Effect.

 

5.02 Authorization; No Contravention. The execution, delivery and performance by
each Loan Party of each Loan Document to which such Person is party, have been
duly authorized by all necessary corporate or other organizational action, and
do not and will not (a) contravene the terms of any of such Person’s
Organization Documents; (b) conflict with or result in any breach or
contravention of, or the creation of any Lien under, any material 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 Law.

 

5.03 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, any Loan Party of this Agreement or any other Loan
Document.

 

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5.04 Binding Effect. This Agreement has been, and each other Loan Document, when
delivered hereunder, will have been, duly executed and delivered by each Loan
Party that is party thereto. This Agreement constitutes, and each other Loan
Document when so delivered will constitute, a legal, valid and binding
obligation of such Loan Party, enforceable against each Loan Party that is party
thereto in accordance with its terms.

 

5.05 Financial Statements; No Material Adverse Effect.

 

(a) The Audited Financial Statements (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
Borrower and its Subsidiaries as of the date thereof and their results of
operations for the period covered thereby in accordance with GAAP consistently
applied throughout the period covered thereby, except as otherwise expressly
noted therein; and (iii) show all material indebtedness and other liabilities,
direct or contingent, of the Borrower and its consolidated Subsidiaries as of
the date thereof, including liabilities for taxes, material commitments and
Indebtedness.

 

(b) The audited consolidated and consolidating financial statements of the
Borrower and its Subsidiaries dated December 31, 2003, and the related
consolidated statements of income or operations, shareholders’ equity and cash
flows for the fiscal quarter ended on such date (i) were prepared in accordance
with GAAP consistently applied throughout the period covered thereby, except as
otherwise expressly noted therein, and subject to ordinary, good faith year end
audit adjustments; (ii) fairly present the financial condition of the Borrower
and its Subsidiaries as of such date and their results of operations for the
period covered thereby; and (iii) show all material indebtedness and other
liabilities, direct or contingent, of the Borrower and its consolidated
Subsidiaries as of such date, including liabilities for taxes, material
commitments and Indebtedness.

 

(c) Since December 31, 2003, there has been no event or circumstance that has
had or could reasonably be expected to have a Material Adverse Effect.

 

5.06 Litigation. Except as specifically disclosed in Schedule 5.06, there are no
actions, suits, proceedings, claims or disputes pending or, to the knowledge of
the Borrower after due and diligent investigation, threatened or contemplated,
at law, in equity, in arbitration or before any Governmental Authority, by or
against the Borrower or any of its Subsidiaries or against any of their
properties or revenues that (a) purport to affect or pertain to this Agreement
or any other Loan Document, or any of the transactions contemplated hereby, or
(b) if determined adversely, could result in an award or judgment exceeding
$1,000,000.

 

5.07 No Default. Neither the Borrower nor any Subsidiary is in default under or
with respect to any Contractual Obligation that could be reasonably expected to
have a Material Adverse Effect. No Default or Event of Default has occurred and
is continuing or would result from the consummation of the transactions
contemplated by this Agreement or any other Loan Document.

 

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5.08 Ownership of Property; Liens. Each of the Borrower and its Subsidiaries has
good record and marketable title in fee simple to, or valid leasehold interests
in, all real property necessary or used in the ordinary conduct of its business,
except for such defects in title as could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. As of the Closing
Date, the property of the Borrower and its Subsidiaries is subject to no Liens,
other than Liens permitted by Section 7.01.

 

5.09 Environmental Compliance. Borrower and its Subsidiaries comply with all
existing Environmental Laws and, to the best of Borrower’s knowledge, there are
no claims alleging potential liability or responsibility for violation of any
Environmental Law on their respective businesses, operations and properties, and
as a result thereof Borrower has reasonably concluded that such Environmental
Laws and claims do not, individually or in the aggregate, have a material
adverse effect.

 

5.10 Insurance. The properties of the Borrower and its Subsidiaries are insured
with financially sound and reputable insurance companies not Affiliates of the
Borrower, 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 Borrower or its Subsidiaries operate.

 

5.11 Taxes. The Borrower and its Subsidiaries have filed all Federal, state and
other material tax returns and reports required to be filed, and have paid all
Federal, state 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 Borrower or any Subsidiary that would, if made, have a Material Adverse
Effect.

 

5.12 ERISA Compliance.

 

(a) Each Plan is in compliance in all material respects with the applicable
provisions of ERISA, the Code and other Federal or state Laws. Each Plan that is
intended to qualify under Section 401(a) of the Code has received a favorable
determination letter from the IRS or an application for such a letter is
currently being processed by the IRS with respect thereto and, to the best
knowledge of the Borrower, nothing has occurred which would prevent, or cause
the loss of, such qualification. The Borrower and each ERISA Affiliate have made
all required contributions to each Plan subject to Section 412 of the Code, and
no application for a funding waiver or an extension of any amortization period
pursuant to Section 412 of the Code has been made with respect to any Plan.

 

(b) There are no pending or, to the best knowledge of the Borrower, threatened
claims, actions or lawsuits, or action by any Governmental Authority, with
respect to any Plan that could be reasonably be expected to have a Material
Adverse Effect. There has been no prohibited transaction or violation of the
fiduciary responsibility rules with respect to any Plan that has resulted or
could reasonably be expected to result in a Material Adverse Effect.

 

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(c) (i) No ERISA Event has occurred or is reasonably expected to occur; (ii) no
Pension Plan has any Unfunded Pension Liability; (iii) neither the Borrower nor
any ERISA Affiliate has incurred, or reasonably expects to incur, any liability
under Title IV of ERISA with respect to any Pension Plan (other than premiums
due and not delinquent under Section 4007 of ERISA); (iv) neither the Borrower
nor any ERISA Affiliate has incurred, or reasonably expects to incur, any
liability (and no event has occurred which, with the giving of notice under
Section 4219 of ERISA, would result in such liability) under Sections 4201 or
4243 of ERISA with respect to a Multiemployer Plan; and (v) neither the Borrower
nor any ERISA Affiliate has engaged in a transaction that could be subject to
Sections 4069 or 4212(c) of ERISA.

 

5.13 Subsidiaries. The Borrower has no active operational Subsidiaries other
than those specifically disclosed in Part (a) of Schedule 5.13 and has no equity
investments in any other corporation or entity other than those specifically
disclosed in Part (b) of Schedule 5.13.

 

5.14 Margin Regulations; Investment Company Act; Public Utility Holding Company
Act.

 

(a) The Borrower is not engaged and will not engage, principally or as one of
its important activities, in the business of purchasing or carrying margin stock
(within the meaning of Regulation U issued by the FRB), or extending credit for
the purpose of purchasing or carrying margin stock.

 

(b) None of the Borrower, any Person controlling the Borrower, or any Subsidiary
(i) is a “holding company,” or a “subsidiary company” of a “holding company,” or
an “affiliate” of a “holding company” or of a “subsidiary company” of a “holding
company,” within the meaning of the Public Utility Holding Company Act of 1935,
or (ii) is or is required to be registered as an “investment company” under the
Investment Company Act of 1940.

 

5.15 Disclosure. No statement, information, report, representation, or warranty
made by any Loan Party in any Loan Document or furnished to the Administrative
Agent or any Lender by or on behalf of any Loan Party in connection with any
Loan Document contains any untrue statement of a material fact or omits any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.

 

5.16 Intellectual Property; Licenses, Etc. The Borrower and its Subsidiaries
own, or possess the right to use, all of the trademarks, service marks, trade
names, copyrights, patents, patent rights, franchises, licenses and other
intellectual property rights (collectively, “IP 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 Borrower, no
slogan or other advertising device, product, process, method, substance, part or
other material now employed, or now contemplated to be employed, by the Borrower
or any Subsidiary infringes upon any rights held by any other Person. Except as
specifically disclosed in Schedule 5.16, no claim or litigation regarding any of
the foregoing is pending or, to the best knowledge of the Borrower, 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
Borrower, proposed, which, in either case, could reasonably be expected to have
a Material Adverse Effect.

 

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SECTION 6.

AFFIRMATIVE COVENANTS

 

So long as any Lender shall have any Commitment hereunder, any Loan or other
Obligation shall remain unpaid or unsatisfied, or any Letter of Credit shall
remain outstanding, the Borrower shall, and shall (except in the case of the
covenants set forth in Sections 6.01, 6.02, 6.03 and 6.11) cause each Subsidiary
to:

 

6.01 Financial Statements. Deliver to the Administrative Agent and each Lender,
in form and detail satisfactory to the Administrative Agent and the Required
Lenders:

 

(a) as soon as available, but in any event within 120 days after the end of each
fiscal year of the Borrower, a consolidated balance sheet of the Borrower and
its Subsidiaries as at the end of such fiscal year, and the related consolidated
statements of income or operations, shareholders’ equity and cash flows for such
fiscal year, setting forth in each case in comparative form the figures for the
previous fiscal year, all in reasonable detail, audited and accompanied by a
report and opinion of an independent certified public accountant of nationally
recognized standing reasonably acceptable to the Required Lenders, which report
and opinion shall be prepared in accordance with GAAP and shall not be subject
to any qualifications or exceptions as to the scope of the audit nor to any
qualifications and exceptions not reasonably acceptable to the Required Lenders;
and

 

(b) as soon as available, but in any event within 120 days after the end of each
fiscal year of the Borrower, a copy of the unaudited consolidating balance
sheets of the Borrower and its Subsidiaries as of the end of such fiscal year
and the related consolidating statements of income or operations for such fiscal
year. Such consolidating balance sheets and statements of income or operations
shall tie to the annual audited financial statements referred to in the
preceding in Section 6.01(a) and shall be certified by the chief financial
officer of the Borrower as having been developed and used in connection with the
preparation of such annual audited financial statements.

 

(c) as soon as available, but in any event within 45 days after the end of each
of the fiscal quarters of each fiscal year of the Borrower, a consolidated
balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal
quarter, and the related consolidated statements of income or operations for
such fiscal quarter and for the portion of the Borrower’s fiscal year then
ended, setting forth in each case in comparative form the figures for the
corresponding fiscal quarter of the previous fiscal year and the corresponding
portion of the previous fiscal year, all in reasonable detail and certified by a
Responsible Officer of the Borrower as fairly presenting the financial
condition, results of operations and cash flows of the Borrower and its
Subsidiaries in accordance with GAAP, subject only to normal year-end audit
adjustments and the absence of footnotes. Such balance sheet and related
consolidated statements of income or operations shall be accompanied by
consolidating balance sheets of the Borrower and its Subsidiaries as of the end
of such quarter and the related consolidating statements of income or operations
for such quarter and shall tie to the quarterly financial statements for such
quarter.

 

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(d) As soon as available, and in any event within sixty (60) days after the end
of each fiscal year of the Borrower, a financial forecast for the ensuing two
fiscal years consisting of a projected consolidated balance sheet as at the end
of each such ensuing fiscal year, a projected consolidated statement of income
or operations for each such ensuing fiscal year and a projected consolidated
statement of cash flow for each such ensuing fiscal year. Such forecasts will be
Borrower’s best estimates of future results.

 

6.02 Certificates; Other Information. Deliver to the Administrative Agent and
each Lender, in form and detail satisfactory to the Administrative Agent and the
Required Lenders:

 

(a) concurrently with the delivery of the financial statements referred to in
Section 6.01(a), a certificate of its independent certified public accountants
certifying such financial statements and stating that in making the examination
necessary therefor no knowledge was obtained of any Default or Event of Default
or, if any such Default or Event of Default shall exist, stating the nature and
status of such event;

 

(b) concurrently with the delivery of the financial statements referred to in
Sections 6.01(a) and (b), a duly completed Compliance Certificate signed by a
Responsible Officer of the Borrower;

 

(c) promptly after any request by the Administrative Agent or any Lender, copies
of any detailed audit reports, management letters or recommendations submitted
to the board of directors (or the audit committee of the board of directors) of
the Borrower by independent accountants in connection with the accounts or books
of the Borrower or any Subsidiary, or any audit of any of them;

 

(d) promptly after the same are available, copies of each annual report, proxy
or financial statement or other report or communication sent to the stockholders
of the Borrower, and copies of all annual, regular, periodic and special reports
and registration statements which the Borrower may file or be required to file
with the Securities and Exchange Commission under Section 13 or 15(d) of the
Securities Exchange Act of 1934, and not otherwise required to be delivered to
the Administrative Agent pursuant hereto; and

 

(e) promptly, such additional information regarding the business, financial or
corporate affairs of the Borrower or any Subsidiary as the Administrative Agent,
at the request of any Lender, may from time to time request.

 

6.03 Notices.

 

Promptly notify the Administrative Agent and each Lender:

 

(a) of the occurrence of any Default or Event of Default;

 

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(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 material
Contractual Obligation of the Borrower or any Subsidiary; (ii) any dispute,
litigation, investigation, proceeding or suspension between the Borrower or any
Subsidiary and any Governmental Authority; or (iii) the commencement of, or any
material development in, any litigation or proceeding affecting the Borrower or
any Subsidiary, including pursuant to any applicable Environmental Laws;

 

(c) of any dispute, liability out of the ordinary course of business,
litigation, investigation or proceeding affecting any Loan Party in which the
amount involved exceeds $2,500,000, or in which injunctive relief or similar
relief is sought, which relief, if granted, could reasonably be expected to have
a Material Adverse Effect;

 

(d) of the occurrence of any ERISA Event; and

 

(e) of any material change in accounting policies or financial reporting
practices by the Borrower or any Subsidiary.

 

Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer of the Borrower setting forth details of the occurrence
referred to therein and stating what action the Borrower has taken and proposes
to take with respect thereto. Each notice pursuant to Section 6.03(a) shall
describe with particularity any and all provisions of this Agreement or other
Loan Document that have been breached.

 

6.04 Payment of Obligations. Pay and discharge as the same shall become due and
payable, all its material 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 Borrower 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.

 

6.05 Preservation of Existence, Etc. Preserve, renew and maintain in full force
and effect its legal existence and good standing under the Laws of the
jurisdiction of its organization; take all reasonable action to maintain all
rights, privileges, permits, licenses and franchises necessary or desirable in
the normal conduct of its business, except in a transaction permitted by Section
7.04 or 7.05; and 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.

 

6.06 Maintenance of Properties. Maintain, preserve and protect all of its
material properties and equipment necessary in the operation of its business in
good working order and condition, ordinary wear and tear excepted; make all
necessary repairs thereto and renewals and replacements thereof except where the
failure to do so could not reasonably be expected to have a Material Adverse
Effect; and use the standard of care typical in the industry in the operation
and maintenance of its facilities.

 

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6.07 Maintenance of Insurance. Maintain with financially sound and reputable
insurance companies not Affiliates of the Borrower, 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.

 

6.08 Compliance with Laws. Comply in all material respects with the requirements
of all Laws applicable to it or to its business or property, except in such
instances in which (i) such requirement of Law is being contested in good faith
or a bona fide dispute exists with respect thereto; or (ii) the failure to
comply therewith could not reasonably be expected to have a Material Adverse
Effect.

 

6.09 Books and Records. 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 Borrower or such Subsidiary, as the case may be; and maintain
such books of record and account in material conformity with all applicable
requirements of any Governmental Authority having regulatory jurisdiction over
the Borrower or such Subsidiary, as the case may be.

 

6.10 Inspection Rights. Permit representatives and independent contractors of
the Administrative Agent and each Lender to visit and inspect any of its
properties, to examine its corporate, financial and operating records, and make
copies thereof or abstracts therefrom, and to discuss its affairs, finances and
accounts with its directors, officers, and independent public accountants, all
at the expense of the Borrower and at such reasonable times during normal
business hours and as often as may be reasonably desired, upon reasonable
advance notice to the Borrower; provided, however, that when an Event of Default
exists the Administrative Agent or any Lender (or any of their respective
representatives or independent contractors) may do any of the foregoing at the
expense of the Borrower at any time during normal business hours and without
advance notice.

 

6.11 Compliance with ERISA. Do, and cause each of its ERISA Affiliates to do,
each of the following: (a) maintain each Plan in compliance in all material
respects with the applicable provisions of ERISA, the Code and other Federal or
state law; (b) cause each Plan which is qualified under Section 401(a) of the
Code to maintain such qualification; and (c) make all required contributions to
any Plan subject to Section 412 of the Code.

 

6.12 Use of Proceeds. Use the proceeds of the Credit Extensions for working
capital, capital expenditures, acquisitions permitted under Section 7.04(c) and
other general corporate purposes not in contravention of any Law or of any Loan
Document.

 

6.13 Maintenance of Security Interests and Liens. Execute and deliver all
Collateral Documents and perform such other acts as the Administrative Agent
reasonably requests to maintain the continuous perfection and priority of
Lenders’ security interests and Liens in the Collateral.

 

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6.14 Pledge of Stock of Certain Subsidiaries. Pledge to the Administrative Agent
for the benefit of the Lenders:

 

(a) 100% of the stock or ownership interest in each domestic Subsidiary and 65%
of the stock or ownership interest in each foreign Subsidiary, in each case,
when such Subsidiary becomes a Material Subsidiary; and

 

(b) if at any time the Subsidiaries which are not Material Subsidiaries,
together have assets exceeding 7.5% of Consolidated Assets or EBITDA exceeding
10% of Consolidated EBITDA, Borrower will, within 60 days, pledge 100% or 65% of
the stock or ownership interest (depending on whether domestic or foreign) in
one or more of such Subsidiaries, which will then be deemed a Material
Subsidiary(s), so that neither of such percentages of Consolidated Assets or
Consolidated EBITDA is exceeded by Subsidiaries which are not Material
Subsidiaries

 

6.15 Material Domestic Subsidiaries to Execute Guaranty and Security Agreement.

 

(a) Cause each domestic Subsidiary, when it becomes a Material Subsidiary to
execute a Guaranty and a Security Agreement.

 

(b) If at any time the domestic Subsidiaries which are not Material
Subsidiaries, together have assets exceeding 7.5% of Consolidated Assets or
EBITDA exceeding 10% of Consolidated EBITDA, Borrower will, within 60 days,
cause one or more of such domestic Subsidiaries, which will then be deemed a
Material Subsidiary(s), to execute a Guaranty and a Security Agreement so that
neither of such percentages of Consolidated Assets or Consolidated EBITDA is
exceeded by domestic Subsidiaries which are not Material Subsidiaries.

 

SECTION 7.

NEGATIVE COVENANTS

 

So long as any Lender shall have any Commitment hereunder, any Loan or other
Obligation shall remain unpaid or unsatisfied, or any Letter of Credit shall
remain outstanding, the Borrower shall not, nor shall it permit any Subsidiary
to, directly or indirectly:

 

7.01 Liens. Create, incur, assume or suffer to exist, any Lien upon any of its
property, assets or revenues, whether now owned or hereafter acquired, other
than the following:

 

(a) Liens pursuant to any Loan Document;

 

(b) Liens existing on the date hereof and listed on Schedule 7.01 and any
renewals or extensions thereof, provided that the property covered thereby is
not increased and any renewal or extension of the obligations secured or
benefited thereby is permitted by Section 7.03(b);

 

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(c) Liens for taxes not yet due or which are being contested in good faith and
by appropriate proceedings, if adequate reserves with respect thereto are
maintained on the books of the applicable Person in accordance with GAAP;

 

(d) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other
like Liens arising in the ordinary course of business which are not overdue for
a period of more than 30 days or which are being contested in good faith and by
appropriate proceedings, if adequate reserves with respect thereto are
maintained on the books of the applicable Person;

 

(e) pledges or deposits in the ordinary course of business in connection with
workers’ compensation, unemployment insurance and other social security
legislation, other than any Lien imposed by ERISA;

 

(f) deposits to secure the performance of bids, trade contracts (other than for
borrowed money), leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature incurred in the
ordinary course of business;

 

(g) easements, rights-of-way, restrictions and other similar encumbrances
affecting real property 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 materially interfere with the ordinary conduct of the
business of the applicable Person;

 

(h) Liens securing judgments for the payment of money in an aggregate amount not
in excess of the Threshold Amount (except to the extent covered by independent
third-party insurance as to which the insurer has acknowledged in writing its
obligation to cover), unless any such judgment remains undischarged for a period
of more than 30 consecutive days during which execution is not effectively
stayed; and

 

(i) Liens securing Indebtedness permitted under Section 7.03(e) or Section
7.03(h); provided, however, that (i) such Liens do not at any time encumber any
property other than the property financed by such Indebtedness and (ii) the
Indebtedness secured thereby does not exceed the cost or fair market value,
whichever is lower, of the property being acquired on the date of acquisition.

 

7.02 Investments. Make any Investments, except:

 

(a) Investments other than those permitted by subsections (b) through (h) that
are existing on the date hereof and listed on Schedule 7.02;

 

(b) Investments held by the Borrower or such Subsidiary in the form of cash
equivalents or short-term marketable securities;

 

(c) advances to officers, directors and employees of the Borrower and
Subsidiaries in an aggregate amount not to exceed $250,000 at any time
outstanding, for travel, entertainment, relocation and analogous ordinary
business purposes;

 

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(d) Investments of Borrower in any Subsidiary or Investments of any Subsidiary
in the Borrower or another Subsidiary;

 

(e) Investments consisting of 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, and Investments received in
satisfaction or partial satisfaction thereof from financially troubled account
debtors to the extent reasonably necessary in order to prevent or limit loss;

 

(f) Guaranty Obligations permitted by Section 7.03;

 

(g) Investments permitted by Section 7.04; and

 

(h) Investments not otherwise permitted herein, totaling not more than
$2,000,000 in each fiscal year.

 

7.03 Indebtedness. Create, incur, assume or suffer to exist any Indebtedness,
except:

 

(a) Indebtedness under the Loan Documents or contemplated by Section 2.01(b);

 

(b) Indebtedness outstanding on the date hereof and listed on Schedule 7.03 and
any refinancings, refundings, renewals or extensions thereof; provided that the
amount of such Indebtedness is not increased at the time of such refinancing,
refunding, renewal or extension except by an amount equal to a reasonable
premium or other reasonable amount paid, and fees and expenses reasonably
incurred, in connection with such refinancing and by an amount equal to any
existing commitments unutilized thereunder;

 

(c) Guaranty Obligations of the Borrower or any Subsidiary in respect of
Indebtedness otherwise permitted hereunder of the Borrower or any wholly-owned
Subsidiary;

 

(d) obligations (contingent or otherwise) of the Borrower or any Subsidiary
existing or arising under any Swap Contract, provided that (i) such obligations
are (or were) entered into by such Person in the ordinary course of business for
the purpose of directly mitigating risks associated with liabilities,
commitments, investments, assets, or property held or reasonably anticipated by
such Person, or changes in the value of securities issued by such Person and not
for purposes of speculation or taking a “market view;” and (ii) such Swap
Contract does not contain any provision exonerating the non-defaulting party
from its obligation to make payments on outstanding transactions to the
defaulting party;

 

(e) Indebtedness in respect of capital leases, Synthetic Lease Obligations and
purchase money obligations for fixed or capital assets within the limitations
set forth in Section 7.01(i); provided, however, that the aggregate amount of
all such Indebtedness at any one time outstanding shall not exceed $5,000,000;
and provided further that such Indebtedness shall not be Indebtedness secured by
real property.

 

(f) Existing or future Indebtedness of FLIR Systems, AB or foreign Subsidiaries
which are not Material Subsidiaries which may be secured or unsecured, not
exceeding in the aggregate at any time, $10,000,000 including the existing line
of credit and overdraft facility

 

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from Svenska Handelsbanken in the current maximum amount of 55,000,000 Swedish
kroner, 40,000,000 Swedish kroner of which is secured; provided that the total
Indebtedness of foreign Subsidiaries which are not Material Subsidiaries shall
not exceed $3,000,000 at any time; and

 

(g) Indebtedness arising from the honoring of a check, draft or similar
instrument against insufficient funds.

 

(h) Indebtedness on real property owned by Borrower; provided, however, that the
aggregate amount of all of such Indebtedness at any one time outstanding shall
not exceed $20,000,000.

 

7.04 Fundamental Changes. Merge, consolidate with or into, or convey, transfer,
lease or otherwise dispose of (whether in one transaction or in a series of
transactions) all or substantially all of its assets (whether now owned or
hereafter acquired) to or in favor of any Person, except that, so long as no
Default or Event of Default exists or would result therefrom:

 

(a) any Subsidiary may merge with (i) the Borrower, provided that the Borrower
shall be the continuing or surviving Person, or (ii) any one or more
Subsidiaries, provided that when any wholly-owned Subsidiary is merging with
another Subsidiary, the wholly-owned Subsidiary shall be the continuing or
surviving Person;

 

(b) any Subsidiary may sell all or substantially all of its assets (upon
voluntary liquidation or otherwise), to the Borrower or to another Subsidiary;
provided that if the seller in such a transaction is a wholly-owned Subsidiary,
then the purchaser must also be a wholly-owned Subsidiary; and

 

(c) Borrower or any Subsidiary may merge with or acquire any Person in the same
or similar business of Borrower, but only if Borrower or the applicable
Subsidiary shall remain the parent or surviving entity, and only if the after
consummation of such transaction, no Default or Event of Default shall have
occurred, and the aggregate Revolving Commitments exceed the sum of (i) the
Outstanding Amount of Committed Revolving Loans, (ii) the Outstanding Amount of
L/C Obligations, and (iii) the Outstanding Amount of any Swing Loans by at least
$10,000,000.

 

7.05 Dispositions. Make any Disposition or enter into any agreement to make any
Disposition, except:

 

(a) Dispositions of obsolete or worn out property, whether now owned or
hereafter acquired, in the ordinary course of business;

 

(b) Dispositions of cash, cash equivalents or inventory in the ordinary course
of business;

 

(c) Dispositions of equipment or real property to the extent that (i) such
property is exchanged for credit against the purchase price of similar
replacement property, (ii) the proceeds of such Disposition are reasonably
promptly applied to the purchase price of such replacement property or (iii) the
board of directors or senior management of the Borrower or such Subsidiary has
determined in good faith that the failure to replace such property will not be
detrimental to the business of the Borrower or such Subsidiary;

 

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(d) Dispositions of property by any Subsidiary to the Borrower or to a
wholly-owned Subsidiary;

 

(e) Dispositions permitted by Section 7.04; and

 

(f) Non-exclusive licenses of IP Rights in the ordinary course of business and
substantially consistent with past practice;

 

provided, however, that any Disposition pursuant to clauses (a) through (f)
shall be for fair market value.

 

7.06 Lease Obligations. Create or suffer to exist any obligations for the
payment of rent for any property under lease or agreement to lease, except:

 

(a) leases in existence on the date hereof and listed on Schedule 7.06, and any
renewal, extension or refinancing thereof;

 

(b) operating leases (other than those constituting Synthetic Lease Obligations)
entered into or assumed by the Borrower or any Subsidiary after the date hereof
in the ordinary course of business; and

 

(c) capital leases and Synthetic Lease Obligations to the extent permitted by
Section 7.03.

 

7.07 Restricted Payments. Declare or make, directly or indirectly, any
Restricted Payment, or incur any obligation (contingent or otherwise) to do so,
except that:

 

(a) each Subsidiary may make Restricted Payments to the Borrower and to
wholly-owned Subsidiaries (and, in the case of a Restricted Payment by a
non-wholly-owned Subsidiary, to the Borrower and any Subsidiary and to each
other owner of capital stock of such Subsidiary on a pro rata basis based on
their relative ownership interests); and

 

(b) the Borrower and each Subsidiary may declare and make dividend payments or
other distributions payable solely in the common stock of such Person.

 

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7.08 ERISA. At any time engage in a transaction which could be subject to
Section 4069 or 4212(c) of ERISA, or permit any Plan to (a) engage in any
non-exempt “prohibited transaction” (as defined in Section 4975 of the Code);
(b) fail to comply with ERISA or any other applicable Laws; or (c) incur any
material “accumulated funding deficiency” (as defined in Section 302 of ERISA),
which, with respect to each event listed above, could reasonably be expected to
have a Material Adverse Effect.

 

7.09 Change in Nature of Business. Engage in any material line of business
substantially different from those lines of business conducted by the Borrower
and its Subsidiaries on the date hereof.

 

7.10 Transactions with Affiliates. Enter into any transaction of any kind with
any Affiliate of the Borrower (other than a Subsidiary), other than arm’s-length
transactions with Affiliates that are otherwise permitted hereunder.

 

7.11 Capital Expenditures. Make or become legally obligated to make any
expenditure in respect of the purchase or other acquisition of any fixed or
capital asset except for normal replacements and maintenance which are properly
charged to current operations, the purchase of real estate, the construction of
a building or buildings on owned or purchased real estate, and except for
capital expenditures in the ordinary course of business not exceeding
$25,000,000 in the aggregate for the Borrower and it Subsidiaries during each
fiscal year; provided, however, that unexpended amounts in any fiscal year may
not be carried over for expenditure in any succeeding fiscal year.

 

7.12 Burdensome Agreements. Enter into any Contractual Obligation that limits
the ability (a) of any Subsidiary to make Restricted Payments to the Borrower or
to otherwise transfer property to the Borrower or (b) of the Borrower or any
Subsidiary to create, incur, assume or suffer to exist Liens on property of such
Person.

 

7.13 Use of Proceeds. Use the proceeds of any Credit Extension, whether directly
or indirectly, and whether immediately, incidentally or ultimately, to purchase
or carry margin stock (within the meaning of Regulation U of the FRB) or to
extend credit to others for the purpose of purchasing or carrying margin stock
or to refund indebtedness originally incurred for such purpose.

 

7.14 Financial Covenants.

 

(a) Minimum Consolidated EBITDA. Permit the Consolidated EBITDA for any period
of four consecutive fiscal quarters to be less than $50,000,000.

 

(b) Minimum Consolidated Net Worth. Permit Consolidated Net Worth as of the end
of any fiscal quarter of the Borrower to be less than the sum of (a)
$130,000,000, (b) an amount equal to 50% of the Consolidated Net Income earned
in each fiscal quarter ending on March 31, 2004 or thereafter (with no deduction
for a net loss in any such fiscal quarter) and (c) an amount equal to 80% of the
aggregate increases in Shareholders’ Equity of the Borrower and its Subsidiaries
after the date hereof by reason of the issuance and sale of capital stock of the
Borrower or any Subsidiary (including upon any conversion of debt securities of
the Borrower into such capital stock).

 

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(c) Leverage Ratio. Permit the Leverage Ratio as of the end of any fiscal
quarter ending prior to December 31, 2007 to be greater than 3.00:1 or permit
the Leverage Ratio as of the end of any fiscal quarter ending on or after
December 31, 2007 to be greater than 2.5:1.

 

SECTION 8.

EVENTS OF DEFAULT AND REMEDIES

 

8.01 Events of Default. Any of the following shall constitute an Event of
Default:

 

(a) Non-Payment. The Borrower fails to pay (i) when and as required to be paid
herein, any amount of principal of any Loan, or any L/C Obligation, or (ii)
within three days after the same becomes due, any interest on any Loan or on any
L/C Obligation, or any fee due hereunder, or (iii) within five days after the
same becomes due, any other amount payable hereunder or under any other Loan
Document; or

 

(b) Specific Covenants. The Borrower fails to perform or observe any term,
covenant or agreement contained in any of Section 6.01 (excluding 6.01(d)),
6.02, 6.03, 6.05, 6.10 or 6.12 or Section 7; or

 

(c) Other Defaults. Any Loan Party fails to perform or observe any other
covenant or agreement (not specified in subsection (a) or (b) above) contained
in any Loan Document on its part to be performed or observed and such failure
continues for 30 days; or

 

(d) Representations and Warranties. Any representation or warranty made or
deemed made by the Borrower or any other Loan Party herein, in any other Loan
Document, or in any document delivered in connection herewith or therewith
proves to have been materially incorrect when made or deemed made; or

 

(e) Cross-Default. (i) The Borrower or any Subsidiary (A) fails to make any
payment when due (whether by scheduled maturity, required prepayment,
acceleration, demand, or otherwise) in respect of any Indebtedness or Guaranty
Obligation (other than Indebtedness hereunder and Indebtedness under Swap
Contracts) 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 the Threshold Amount, or
(B) fails to observe or perform any other agreement or condition relating to any
such Indebtedness or Guaranty Obligation or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event occurs,
the effect of which default or other event is to cause, or to permit the holder
or holders of such Indebtedness or the beneficiary or beneficiaries of such
Guaranty Obligation (or a trustee or agent on behalf of such holder or holders
or beneficiary or beneficiaries) to cause, with the giving of notice if
required, such Indebtedness to be demanded or to become due or to be repurchased
or redeemed (automatically or otherwise) prior to its stated maturity, or such
Guaranty Obligation to become payable or cash collateral in respect thereof to
be demanded; or (ii) there occurs under any Swap Contract an

 

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Early Termination Date (as defined in such Swap Contract) resulting from (A) any
event of default under such Swap Contract as to which the Borrower or any
Subsidiary is the Defaulting Party (as defined in such Swap Contract) or (B) any
Termination Event (as so defined) under such Swap Contract as to which the
Borrower or any Subsidiary is an Affected Party (as so defined) and, in either
event, the Swap Termination Value owed by the Borrower or such Subsidiary as a
result thereof is greater than the Threshold Amount; or

 

(f) Insolvency Proceedings, Etc. Any Loan Party or any of its Subsidiaries
institutes or consents to the institution of any proceeding under any Debtor
Relief Law, or makes an assignment for the benefit of creditors; or applies for
or consents to the appointment of any receiver, trustee, custodian, conservator,
liquidator, rehabilitator or similar officer for it or for all or any material
part of its property; or any receiver, trustee, custodian, conservator,
liquidator, rehabilitator or similar officer is appointed without the
application or consent of such Person and the appointment continues undischarged
or unstayed for 60 calendar days; or any proceeding under any Debtor Relief Law
relating to any such Person or to all or any part of its property is instituted
without the consent of such Person and continues undismissed or unstayed for 60
calendar days, or an order for relief is entered in any such proceeding; or

 

(g) Inability to Pay Debts; Attachment. (i) The Borrower or any Subsidiary
becomes unable or admits in writing its inability or fails generally to pay its
debts as they become due, or (ii) any writ or warrant of attachment or execution
or similar process is issued or levied against all or any material part of the
property of any such Person and is not released, vacated or fully bonded within
30 days after its issue or levy; or

 

(h) Judgments. There is entered against the Borrower or any Subsidiary (i) a
final judgment or order for the payment of money in an aggregate amount
exceeding the Threshold Amount (to the extent not covered by independent
third-party insurance as to which the insurer does not dispute coverage), or
(ii) any non-monetary final judgment that has, or could reasonably be expected
to have, a Material Adverse Effect; or

 

(i) ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or
Multiemployer Plan which has resulted or could reasonably be expected to result
in liability of the Borrower under Title IV of ERISA to the Pension Plan,
Multiemployer Plan or the PBGC in an aggregate amount in excess of the Threshold
Amount, or (ii) the Borrower or any ERISA Affiliate fails to pay when due, after
the expiration of any applicable grace period, any installment payment with
respect to its withdrawal liability under Section 4201 of ERISA under a
Multiemployer Plan in an aggregate amount in excess of the Threshold Amount; or

 

(j) Invalidity of Loan Documents. Any Loan Document, at any time after its
execution and delivery and for any reason other than the agreement of all the
Lenders or satisfaction in full of all the Obligations, ceases to be in full
force and effect, or is declared by a court of competent jurisdiction to be null
and void, invalid or unenforceable, all in any material respect; or any Loan
Party denies that it has any or further liability or obligation under any Loan
Document, or purports to revoke, terminate or rescind any Loan Document; or

 

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(k) Material Adverse Effect. There occurs any event or circumstance that has a
Material Adverse Effect.

 

8.02 Remedies Upon Event of Default. If any Event of Default occurs, the
Administrative Agent shall, at the request of, or may, with the consent of, the
Required Lenders,

 

(a) declare the commitment of each Lender to make Loans and any obligation of
the L/C Issuer to make L/C Credit Extensions to be terminated, whereupon such
commitments and obligation shall be terminated;

 

(b) 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 Borrower;

 

(c) require that the Borrower Cash Collateralize the L/C Obligations (in an
amount equal to the then Outstanding Amount thereof); and

 

(d) exercise on behalf of itself and the Lenders all rights and remedies
available to it and the Lenders under the Loan Documents or applicable law;

 

provided, however, that upon the occurrence of any event specified in subsection
(f) of Section 8.01, the obligation of each Lender to make Loans and any
obligation of the L/C Issuer to make L/C Credit Extensions shall automatically
terminate, the unpaid principal amount of all outstanding Loans and all interest
and other amounts as aforesaid shall automatically become due and payable, and
the obligation of the Borrower to Cash Collateralize the L/C Obligations as
aforesaid shall automatically become effective, in each case without further act
of the Administrative Agent or any Lender.

 

SECTION 9.

ADMINISTRATIVE AGENT

 

9.01 Appointment and Authorization of Administrative Agent.

 

(a) Each Lender hereby irrevocably appoints, designates and authorizes the
Administrative 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 herein or in any other Loan Document, the Administrative
Agent shall not have any duties or responsibilities, except those expressly set
forth herein, nor shall the Administrative Agent have or be deemed to have any
fiduciary relationship with any Lender or participant, 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
Administrative Agent. Without limiting the generality of the foregoing sentence,
the use of the term “agent” herein and in the other Loan Documents with
reference to the Administrative Agent

 

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is not intended to 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 L/C Issuer shall act on behalf of the Lenders 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 Administrative Agent may agree at the
request of the Required Lenders to act for the L/C Issuer with respect thereto;
provided, however, that the L/C Issuer shall have all of the benefits and
immunities (i) provided to the Administrative Agent in this Section 9 with
respect to any acts taken or omissions suffered by the L/C Issuer in connection
with Letters of 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 “Administrative Agent” as used in this Section 9
included the L/C Issuer with respect to such acts or omissions, and (ii) as
additionally provided herein with respect to the L/C Issuer.

 

9.02 Delegation of Duties. The Administrative 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 and
other consultants or experts concerning all matters pertaining to such duties.
The Administrative Agent shall not be responsible for the negligence or
misconduct of any agent or attorney-in-fact that it selects in the absence of
gross negligence or willful misconduct.

 

9.03 Liability of Administrative Agent. No Agent-Related Person shall (a) 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
in connection with its duties expressly set forth herein), or (b) be responsible
in any manner to any Lender or participant for any recital, statement,
representation or warranty made by any Loan Party or any officer thereof,
contained herein 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
Administrative 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
any Loan Party 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 Lender or participant 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 any Loan Party or any Affiliate thereof.

 

9.04 Reliance by Administrative Agent.

 

(a) The Administrative Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, communication, signature, resolution,
representation, 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

 

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(including counsel to any Loan Party), independent accountants and other experts
selected by the Administrative Agent. The Administrative Agent shall be fully
justified in failing or refusing to take any action under any Loan Document
unless it shall first receive such advice or concurrence of the Required Lenders
as it deems appropriate and, if it so requests, it shall first be indemnified to
its satisfaction by the Lenders 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 Administrative 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 Required Lenders or all the Lenders,
if required hereunder, and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Lenders and participants. Where
this Agreement expressly permits or prohibits an action unless the Required
Lenders otherwise determine, the Administrative Agent shall, and in all other
instances, the Administrative Agent may, but shall not be required to, initiate
any solicitation for the consent or a vote of the Lenders.

 

(b) For purposes of determining compliance with the conditions specified in
Section 4.01, each Lender that has signed 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 Administrative Agent to such Lender for consent,
approval, acceptance or satisfaction, or required thereunder to be consented to
or approved by or acceptable or satisfactory to a Lender.

 

9.05 Notice of Default. The Administrative 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 Administrative Agent for the account of the Lenders, unless
the Administrative Agent shall have received written notice from a Lender or the
Borrower referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a “notice of default.” The
Administrative Agent will notify the Lenders of its receipt of any such notice.
The Administrative Agent shall take such action with respect to such Default or
Event of Default as may be directed by the Required Lenders in accordance with
Section 8; provided, however, that unless and until the Administrative Agent has
received any such direction, the Administrative 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 Lenders.

 

9.06 Credit Decision; Disclosure of Information by Administrative Agent. Each
Lender acknowledges that no Agent-Related Person has made any representation or
warranty to it, and that no act by the Administrative Agent hereafter taken,
including any consent to and acceptance of any assignment or review of the
affairs of any Loan Party or any Affiliate thereof, shall be deemed to
constitute any representation or warranty by any Agent-Related Person to any
Lender as to any matter, including whether Agent-Related Persons have disclosed
material information in their possession. Each Lender represents to the
Administrative 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 Loan Parties and their respective Subsidiaries, and all
applicable bank or other regulatory Laws relating to the transactions
contemplated hereby, and made its own

 

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decision to enter into this Agreement and to extend credit to the Borrower and
the other Loan Parties hereunder. Each Lender 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 Borrower and the other Loan Parties. Except for notices,
reports and other documents expressly required to be furnished to the Lenders by
the Administrative Agent herein, the Administrative Agent shall not have any
duty or responsibility to provide any Lender with any credit or other
information concerning the business, prospects, operations, property, financial
and other condition or creditworthiness of any of the Loan Parties or any of
their respective Affiliates which may come into the possession of any
Agent-Related Person. Each Lender waives its right to receive any Note to
evidence any Loan.

 

9.07 Indemnification of Administrative Agent. Whether or not the transactions
contemplated hereby are consummated, the Lenders shall indemnify upon demand
each Agent-Related Person (to the extent not reimbursed by or on behalf of any
Loan Party and without limiting the obligation of any Loan Party to do so), pro
rata, and hold harmless each Agent-Related Person from and against any and all
Indemnified Liabilities incurred by it; provided, however, that no Lender shall
be liable for the payment to any Agent-Related Person of any portion of such
Indemnified Liabilities to the extent determined in a final, nonappealable
judgment by a court of competent jurisdiction to have resulted from such
Person’s own gross negligence or willful misconduct; provided, however, that no
action taken in accordance with the directions of the Required Lenders shall be
deemed to constitute gross negligence or willful misconduct for purposes of this
Section. Without limitation of the foregoing, each Lender shall reimburse the
Administrative Agent upon demand for its ratable share of any costs or
out-of-pocket expenses (including Attorney Costs) incurred by the Administrative
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 Administrative
Agent is not reimbursed for such expenses by or on behalf of the Borrower. The
undertaking in this Section shall survive termination of the Aggregate
Commitments, the payment of all Obligations hereunder and the resignation of the
Administrative Agent.

 

9.08 Administrative Agent in its 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 each of
the Loan Parties and their respective Affiliates as though Bank of America were
not the Administrative Agent or the L/C Issuer hereunder and without notice to
or consent of the Lenders. The Lenders acknowledge that, pursuant to such
activities, Bank of America or its Affiliates may receive information regarding
any Loan Party or its Affiliates (including information that may be subject to
confidentiality obligations in favor of such Loan Party or such Affiliate) and
acknowledge that the Administrative Agent shall be under no obligation to
provide such information to them. With respect to its Loans, Bank of America

 

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shall have the same rights and powers under this Agreement as any other Lender
and may exercise such rights and powers as though it were not the Administrative
Agent or the L/C Issuer, and the terms “Lender” and “Lenders” include Bank of
America in its individual capacity.

 

9.09 Successor Administrative Agent. The Administrative Agent may resign as
Administrative Agent upon 30 days’ notice to the Lenders; provided that any such
resignation by Bank of America shall also constitute its resignation as L/C
Issuer and Swing Line Lender. If the Administrative Agent resigns under this
Agreement, the Required Lenders shall appoint from among the Lenders a successor
administrative agent for the Lenders which successor administrative agent shall
be consented to by the Borrower at all times other than during the existence of
an Event of Default (which consent of the Borrower shall not be unreasonably
withheld or delayed). If no successor administrative agent is appointed prior to
the effective date of the resignation of the Administrative Agent, the
Administrative Agent may appoint, after consulting with the Lenders and the
Borrower, a successor administrative agent from among the Lenders. Upon the
acceptance of its appointment as successor administrative agent hereunder, the
Person acting as such successor administrative agent shall succeed to all the
rights, powers and duties of the retiring Administrative Agent, L/C Issuer and
Swing Line Lender and the respective terms “Administrative Agent,” “L/C Issuer”
and “Swing Line Lender” shall mean such successor administrative agent, Letter
of Credit issuer and swing line lender, and the retiring Administrative Agent’s
appointment, powers and duties as Administrative Agent shall be terminated and
the retiring L/C Issuer’s and Swing Line Lender’s rights, powers and duties as
such shall be terminated, without any other or further act or deed on the part
of such retiring L/C Issuer or Swing Line Lender or any other Lender, other than
the obligation of the successor L/C Issuer to issue letters of credit in
substitution for the Letters of Credit, if any, outstanding at the time of such
succession. After any retiring Administrative Agent’s resignation hereunder as
Administrative Agent, the provisions of this Section 9 and Sections 10.04 and
10.05 shall inure to its benefit as to any actions taken or omitted to be taken
by it while it was Administrative Agent under this Agreement. If no successor
administrative agent has accepted appointment as Administrative Agent by the
date which is 30 days following a retiring Administrative Agent’s notice of
resignation, the retiring Administrative Agent’s resignation shall nevertheless
thereupon become effective and the Lenders shall perform all of the duties of
the Administrative Agent hereunder until such time, if any, as the Required
Lenders appoint a successor agent as provided for above.

 

SECTION 10.

MISCELLANEOUS

 

10.01 Amendments, Etc. No amendment or waiver of any provision of this Agreement
or any other Loan Document, and no consent to any departure by the Borrower or
any other Loan Party therefrom, shall be effective unless in writing signed by
the Required Lenders and the Borrower or the applicable Loan Party, as the case
may be, and acknowledged by the Administrative Agent, and each 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 amendment, waiver or
consent shall, unless in writing and signed by each of the Lenders directly
affected thereby and by the Borrower, and acknowledged by the Administrative
Agent, do any of the following:

 

(a) extend or increase the Commitment of any Lender (or reinstate any Commitment
terminated pursuant to Section 8.02);

 

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(b) postpone any date fixed by this Agreement or any other Loan Document for any
payment of principal, interest, fees or other amounts due to the Lenders (or any
of them) hereunder or under any other Loan Document;

 

(c) reduce the principal of, or the rate of interest specified herein on, any
Loan or L/C Borrowing, or (subject to clause (iv) of the proviso below) any fees
or other amounts payable hereunder or under any other Loan Document, or change
the manner of computation of any financial covenant used in determining the
Applicable Rate that would result in a reduction of any interest rate on any
Loan; provided, however, that only the consent of the Required Lenders shall be
necessary to amend the definition of “Default Rate” or to waive any obligation
of the Borrower to pay interest at the Default Rate;

 

(d) change the percentage of the Aggregate Commitments or of the aggregate
unpaid principal amount of the Loans and L/C Obligations which is required for
the Lenders or any of them to take any action hereunder;

 

(e) change the Pro Rata Share or Voting Percentage of any Lender;

 

(f) amend this Section, or Section 2.14, or any provision herein providing for
consent or other action by all the Lenders;

 

(g) release any Guarantor from its Guaranty; or

 

(h) release all or substantially all of the Collateral.

 

and, provided further, that (i) no amendment, waiver or consent shall, unless in
writing and signed by the L/C Issuer in addition to the Required Lenders or each
directly-affected Lender, as the case may be, affect the rights or duties of the
L/C Issuer under this Agreement or any Letter of Credit Application 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 Swing Line Lender in addition
to the Required Lenders or each directly-affected Lender, as the case may be,
affect the rights or duties of the Swing Line Lender under this Agreement; (iii)
no amendment, waiver or consent shall, unless in writing and signed by the
Administrative Agent in addition to the Required Lenders or each
directly-affected Lender, as the case may be, affect the rights or duties of the
Administrative Agent under this Agreement or any other Loan Document; and (iv)
the Fee Letter may be amended, or rights or privileges thereunder waived, in a
writing executed only by the respective parties thereto. Notwithstanding
anything to the contrary herein, any Lender that has a Voting Percentage of zero
shall not have any right to approve or disapprove any amendment, waiver or
consent hereunder, except that the Pro Rata Share of such Lender may not be
increased without the consent of such Lender.

 

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10.02 Notices and Other Communications; Facsimile Copies.

 

(a) General. Unless otherwise expressly provided herein, all notices and other
communications provided for hereunder shall be in writing (including by
facsimile transmission) and mailed, faxed or delivered, to the address,
facsimile number or (subject to subsection (c) below) electronic mail address
specified for notices on Schedule 10.02; or, in the case of the Borrower, the
Administrative Agent, the L/C Issuer or the Swing Line Lender, to such other
address as shall be designated by such party in a notice to the other parties,
and in the case of any other party, to such other address as shall be designated
by such party in a notice to the Borrower, the Administrative Agent, the L/C
Issuer and the Swing Line Lender. All such notices and other communications
shall be deemed to be given or made upon the earlier to occur of (i) actual
receipt by the intended recipient and (ii) (A) if delivered by hand or by
courier, when signed for by the intended recipient; (B) if delivered by mail,
four Business Days after deposit in the mails, postage prepaid; (C) if delivered
by facsimile, when sent and receipt has been confirmed by telephone; and (D) if
delivered by electronic mail (which form of delivery is subject to the
provisions of subsection (c) below), when delivered; provided, however, that
notices and other communications to the Administrative Agent, the L/C Issuer and
the Swing Line Lender pursuant to Section 2 shall not be effective until
actually received by such Person. Any notice or other communication permitted to
be given, made or confirmed by telephone hereunder shall be given, made or
confirmed by means of a telephone call to the intended recipient at the number
specified on Schedule 10.02, it being understood and agreed that a voicemail
message shall in no event be effective as a notice, communication or
confirmation hereunder.

 

(b) Effectiveness of Facsimile Documents and Signatures. Loan Documents may be
transmitted and/or signed by facsimile. The effectiveness of any such documents
and signatures shall, subject to applicable Law, have the same force and effect
as manually-signed originals and shall be binding on all Loan Parties, the
Administrative Agent and the Lenders. The Administrative Agent may also require
that any such documents and signatures be confirmed by a manually-signed
original thereof; provided, however, that the failure to request or deliver the
same shall not limit the effectiveness of any facsimile document or signature.

 

(c) Limited Use of Electronic Mail. Electronic mail and internet and intranet
websites may be used only to distribute routine communications, such as
financial statements and other information, and to distribute Loan Documents for
execution by the parties thereto, and may not be used for any other purpose.

 

(d) Reliance by Administrative Agent and Lenders. The Administrative Agent and
the Lenders shall be entitled to rely and act upon any notices (including
telephonic Committed Loan Notices and Swing Line Loan Notices) purportedly given
by or on behalf of the Borrower even if (i) such notices were not made in a
manner specified herein, were incomplete or were not preceded or followed by any
other form of notice specified herein, or (ii) the terms thereof, as understood
by the recipient, varied from any confirmation thereof. The Borrower shall
indemnify each Agent-Related Person and each Lender from all losses, costs,
expenses and liabilities resulting from the reliance by such Person on each
notice purportedly given by or on behalf of the Borrower. All telephonic notices
to and other communications with the Administrative Agent may be recorded by the
Administrative Agent, and each of the parties hereto hereby consents to such
recording.

 

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10.03 No Waiver; Cumulative Remedies. No failure by any Lender or the
Administrative Agent to exercise, and no delay by any such Person in exercising,
any right, remedy, power or privilege 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. The rights, remedies,
powers and privileges herein or therein provided are cumulative and not
exclusive of any rights, remedies, powers and privileges provided by law.

 

10.04 Attorney Costs, Expenses and Taxes. The Borrower agrees (a) to pay or
reimburse the Administrative Agent for all costs and expenses incurred in
connection with the development, preparation, negotiation and execution of this
Agreement and the other Loan Documents and any amendment, waiver, consent or
other modification of the provisions hereof and thereof (whether or not the
transactions contemplated hereby or thereby are consummated), and the
consummation and administration of the transactions contemplated hereby and
thereby, including all Attorney Costs, and (b) to pay or reimburse the
Administrative Agent and each Lender for all costs and expenses incurred in
connection with the enforcement, attempted enforcement, or preservation of any
rights or remedies under this Agreement or the other Loan Documents (including
all such costs and expenses incurred during any “workout” or restructuring in
respect of the Obligations and during any legal proceeding, including any
proceeding under any Debtor Relief Law), including all Attorney Costs. The
foregoing costs and expenses shall include all search, filing, recording, title
insurance and appraisal charges and fees and taxes related thereto, and other
out-of-pocket expenses incurred by the Administrative Agent and the cost of
independent public accountants and other outside experts retained by the
Administrative Agent or any Lender. The agreements in this Section shall survive
the termination of the Aggregate Commitments and repayment of all other
Obligations.

 

10.05 Indemnification by the Borrower. Whether or not the transactions
contemplated hereby are consummated, the Borrower shall indemnify and hold
harmless each Agent-Related Person, each Lender and their respective Affiliates,
directors, officers, employees, counsel, agents and attorneys-in-fact
(collectively the “Indemnitees”) from and against any and all liabilities,
obligations, losses, damages, penalties, claims, demands, actions, judgments,
suits, costs, expenses and disbursements (including Attorney Costs) of any kind
or nature whatsoever which may at any time be imposed on, incurred by or
asserted against any such Indemnitee in any way relating to or arising out of or
in connection with (a) the execution, delivery, enforcement, performance or
administration of any Loan Document or any other agreement, letter or instrument
delivered in connection with the transactions contemplated thereby or the
consummation of the transactions contemplated thereby, (b) any Commitment, Loan
or Letter of Credit or the use or proposed use of the proceeds therefrom
(including any refusal by the L/C Issuer to honor a demand for payment under a
Letter of Credit if the documents presented in connection with such demand do
not strictly comply with the terms of such Letter of Credit), or (c) any actual
or alleged presence or release of Hazardous Materials on or from any property
currently or formerly owned or operated by the Borrower or any other Loan Party,
or any Environmental Liability related in any way to the Borrower or any other
Loan Party, or (d) any

 

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actual or prospective claim, litigation, investigation or proceeding relating to
any of the foregoing, whether based on contract, tort or any other theory
(including any investigation of, preparation for, or defense of any pending or
threatened claim, investigation, litigation or proceeding) and regardless of
whether any Indemnitee is a party thereto (all the foregoing, collectively, the
“Indemnified Liabilities”), in all cases, whether or not caused by or arising,
in whole or in part, out of the negligence of the Indemnitee; provided that such
indemnity shall not, as to any Indemnitee, be available to the extent that such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the gross
negligence or willful misconduct of such Indemnitee. The agreements in this
Section shall survive the resignation of the Administrative Agent, the
replacement of any Lender, the termination of the Commitments and the repayment,
satisfaction or discharge of all the other Obligations. All amount due under
this Section 10.05 shall be payable within ten Business Days after demand
therefor.

 

10.06 Payments Set Aside. To the extent that the Borrower makes a payment to the
Administrative Agent or any Lender, or the Administrative Agent or any Lender
exercises its right of set-off, and such payment or the proceeds of such set-off
or any part thereof is subsequently invalidated, declared to be fraudulent or
preferential, set aside or required (including pursuant to any settlement
entered into by the Administrative Agent or such Lender in its discretion) to be
repaid to a trustee, receiver or any other party, in connection with any
proceeding under any Debtor Relief Law 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 Lender
severally agrees to pay to the Administrative Agent upon demand its applicable
share of any amount so recovered from or repaid by the Administrative Agent,
plus interest thereon from the date of such demand to the date such payment is
made at a rate per annum equal to the Federal Funds Rate from time to time in
effect.

 

10.07 Successors and Assigns.

 

(a) The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns
permitted hereby, except that the Borrower may not assign or otherwise transfer
any of its rights or obligations hereunder without the prior written consent of
each Lender (and any attempted assignment or transfer by the Borrower without
such consent shall be null and void). Nothing in this Agreement, expressed or
implied, shall be construed to confer upon any Person (other than the parties
hereto, their respective successors and assigns permitted hereby, Participants
to the extent provided in subsection (d) of this Section and, to the extent
expressly contemplated hereby, the Indemnitees) any legal or equitable right,
remedy or claim under or by reason of this Agreement.

 

(b) Any Lender may at any time assign to one or more Eligible Assignees all or a
portion of its rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans (including for purposes of this
subsection (b), participations in L/C Obligations and in Swing Line Loans) at
the time owing to it); provided that (i) except in the case of an assignment of
the entire remaining amount of the assigning Lender’s Commitment and the

 

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Loans at the time owing to it or in the case of an assignment to a Lender or an
Affiliate of a Lender or an Approved Fund with respect to a Lender, the
aggregate amount of the Commitment (which for this purpose includes Loans
outstanding thereunder) subject to each such assignment, determined as of the
date the Assignment and Assumption with respect to such assignment is delivered
to the Administrative Agent or, if “Trade Date” is specified in the Assignment
and Assumption, as of the Trade Date, shall not be less than $2,500,000 unless
each of the Administrative Agent and, so long as no Event of Default has
occurred and is continuing, the Borrower otherwise consents (each such consent
not to be unreasonably withheld or delayed), (ii) each partial assignment shall
be made as an assignment of a proportionate part of all the assigning Lender’s
rights and obligations under this Agreement with respect to the Loans or the
Commitment assigned, except that this clause (ii) shall not (x) apply to rights
in respect of Swing Line Loans or (y) prohibit any Lender from assigning all or
a portion of its rights and obligations among separate tranches on a non-pro
rata basis, and (iii) the parties to each assignment shall execute and deliver
to the Administrative Agent an Assignment and Assumption, together with a
processing and recordation fee of $3,500. Subject to acceptance and recording
thereof by the Administrative Agent pursuant to subsection (c) of this Section,
from and after the effective date specified in each Assignment and Assumption,
the Eligible Assignee thereunder shall be a party to this Agreement and, to the
extent of the interest assigned by such Assignment and Assumption, have the
rights and obligations of a Lender under this Agreement, and the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Assumption, be released from its obligations under this Agreement
(and, in the case of an Assignment and Assumption covering all of the assigning
Lender’s rights and obligations under this Agreement, such Lender shall cease to
be a party hereto but shall continue to be entitled to the benefits of Sections
3.01, 3.04 and 3.05 with respect to facts and circumstances occurring prior to
the effective date of such assignment). Upon request, the Borrower (at its
expense) shall execute and deliver new or replacement Notes to the assigning
Lender and the assignee Lender. Any assignment or transfer by a Lender of rights
or obligations under this Agreement that does not comply with this subsection
shall be treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with subsection (d)
of this Section.

 

(c) The Administrative Agent, acting solely for this purpose as an agent of the
Borrower, shall maintain at the Administrative Agent’s Office a copy of each
Assignment and Assumption delivered to it and a register for the recordation of
the names and addresses of the Lenders, and the Commitments of, and principal
amounts of the Loans and L/C Obligations owing to, each Lender pursuant to the
terms hereof from time to time (the “Register”). The entries in the Register
shall be conclusive, and the Borrower, the Administrative Agent and the Lenders
may treat each Person whose name is recorded in the Register pursuant to the
terms hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. The Register shall be available for
inspection by the Borrower and any Lender, at any reasonable time and from time
to time upon reasonable prior notice.

 

(d) Any Lender may at any time, without the consent of, or notice to, the
Borrower or the Administrative Agent, sell participations to any Person (other
than a natural person or the Borrower or any of the Borrower’s Affiliates or
Subsidiaries (each, a “Participant”) in all or a portion of such Lender’s rights
and/or obligations under this Agreement (including all or a

 

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portion of its Commitment and/or the Loans (including such Lender’s
participations in L/C Obligations and/or Swing Line Loans) owing to it);
provided that (i) such Lender’s obligations under this Agreement shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations and (iii) the Borrower, the
Administrative Agent and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement. Any agreement or instrument pursuant to which
a Lender sells such a participation shall provide that such Lender shall retain
the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any provision of this Agreement; provided that such
agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, waiver or other modification
that would (i) postpone any date upon which any payment of money is scheduled to
be paid to such Participant, (ii) reduce the principal, interest, fees or other
amounts payable to such Participant, (iii) release any Guarantor from its
Guaranty or (iv) release all or substantially all of the Collateral. Subject to
subsection (e) of this Section, the Borrower agrees that each Participant shall
be entitled to the benefits of Sections 3.01, 3.04 and 3.05 to the same extent
as if it were a Lender and had acquired its interest by assignment pursuant to
subsection (b) of this Section. To the extent permitted by law, each Participant
also shall be entitled to the benefits of Section 10.09 as though it were a
Lender, provided such Participant agrees to be subject to Section 2.14 as though
it were a Lender.

 

(e) A Participant shall not be entitled to receive any greater payment under
Section 3.01 or 3.04 than the applicable Lender would have been entitled to
receive with respect to the participation sold to such Participant, unless the
sale of the participation to such Participant is made with the Borrower’s prior
written consent. A Participant that would be a Foreign Lender if it were a
Lender shall not be entitled to the benefits of Section 3.01 unless the Borrower
is notified of the participation sold to such Participant and such Participant
agrees, for the benefit of the Borrower, to comply with Section 10.15 as though
it were a Lender.

 

(f) Any Lender may at any time pledge or assign a security interest in all or
any portion of its rights under this Agreement (including under its Notes, if
any) to secure obligations of such Lender, including any pledge or assignment to
secure obligations to a Federal Reserve Bank; provided that no such pledge or
assignment shall release such Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for such Lender as a party hereto.

 

(g) As used herein, the following terms have the following meanings:

 

“Eligible Assignee” means (a) a Lender; (b) an Affiliate of a Lender; (c) an
Approved Fund; and (d) any other Person (other than a natural person) approved
by (i) the Administrative Agent, the L/C Issuer and the Swing Line Lender, and
(ii) unless (A) such Person is taking delivery of an assignment in connection
with physical settlement of a credit derivative transaction or (B) an Event of
Default has occurred and is continuing, the Borrower (each such approval not to
be unreasonably withheld or delayed); provided that notwithstanding the
foregoing, “Eligible Assignee” shall not include the Borrower or any of the
Borrower’s Affiliates or Subsidiaries.

 

69

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“Fund” means any Person (other than a natural person) that is (or will be)
engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course of its business.

 

“Approved Fund” means any Fund that is administered or managed by (a) a Lender,
(b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that
administers or manages a Lender.

 

(h) Notwithstanding anything to the contrary contained herein, if at any time
Bank of America assigns all of its Commitment and Loans pursuant to subsection
(b) above, Bank of America shall, (i) upon 30 days’ notice to the Borrower and
the Lenders, resign as L/C Issuer and (ii) upon five Business Days’ notice to
the Borrower, terminate the Swing Line. In the event of any such resignation as
L/C Issuer or termination of the Swing Line, the Borrower shall be entitled to
appoint from among the Lenders a successor L/C Issuer or Swing Line Lender
hereunder; provided, however, that no failure by the Borrower to appoint any
such successor shall affect the resignation of Bank of America as L/C Issuer or
the termination of the Swing Line, as the case may be. Bank of America shall
retain all the rights and obligations of the L/C Issuer hereunder with respect
to all Letters of Credit outstanding as of the effective date of its resignation
as L/C Issuer and all L/C Obligations with respect thereto (including the right
to require the Lenders to make Base Rate Committed Loans or fund participations
in Unreimbursed Amounts pursuant to Section 2.04(c)). If Bank of America
terminates the Swing Line, it shall retain all the rights of the Swing Line
Lender provided for hereunder with respect to Swing Line Loans made by it and
outstanding as of the effective date of such termination, including the right to
require the Lenders to make Base Rate Committed Loans or fund participations in
outstanding Swing Line Loans pursuant to Section 2.05(c).

 

10.08 Confidentiality. Each of the Administrative Agent and the Lenders agrees
to maintain the confidentiality of the Information (as defined below), except
that Information may be disclosed (a) to its and its Affiliates’ directors,
officers, employees and agents, including accountants, legal counsel and other
advisors (it being understood that the Persons to whom such disclosure is made
will be informed of the confidential nature of such Information and instructed
to keep such Information confidential); (b) to the extent requested by any
regulatory authority; (c) to the extent required by applicable laws or
regulations or by any subpoena or similar legal process; (d) to any other party
to this Agreement; (e) in connection with the exercise of any remedies hereunder
or any suit, action or proceeding relating to this Agreement or the enforcement
of rights hereunder; (f) subject to an agreement containing provisions
substantially the same as those of this Section, to (i) any Eligible Assignee of
or Participant in, or any prospective Eligible Assignee of or Participant in,
any of its rights or obligations under this Agreement or (ii) any direct or
indirect contractual counterparty or prospective counterparty (or such
contractual counterparty’s or prospective counterparty’s professional advisor)
to any credit derivative transaction relating to obligations of the Borrower;
(g) with the consent of the Borrower; (h) to the extent such Information (i)
becomes publicly available other than as a result of a breach of this Section or
(ii) becomes available to the Administrative Agent or any Lender on a
nonconfidential basis from a source other than the Borrower; or (i) to the
National Association of Insurance Commissioners or any other similar
organization or any nationally recognized rating agency that requires access to
information about a Lender’s or its Affiliates’

 

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investment portfolio in connection with ratings issued with respect to such
Lender or its Affiliates. In addition, the Administrative Agent and the Lenders
may disclose the existence of this Agreement and information about this
Agreement to market data collectors, similar service providers to the lending
industry, and service providers to the Administrative Agent and the Lenders in
connection with the administration and management of this Agreement, the other
Loan Documents, the Commitments, and the Credit Extensions. For the purposes of
this Section, “Information” means all information received from the Borrower
relating to the Borrower or its business, other than any such information that
is available to the Administrative Agent or any Lender on a nonconfidential
basis prior to disclosure by the Borrower; provided that, in the case of
information received from the Borrower after the date hereof, such information
is clearly identified in writing at the time of delivery as confidential. Any
Person required to maintain the confidentiality of Information as provided in
this Section shall be considered to have complied with its obligation to do so
if such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own
confidential information.

 

10.09 Set-off. In addition to any rights and remedies of the Lenders provided by
law, upon the occurrence and during the continuance of any Event of Default,
each Lender is authorized at any time and from time to time, without prior
notice to the Borrower or any other Loan Party, any such notice being waived by
the Borrower (on its own behalf and on behalf of each Loan Party) 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 Lender to or for the credit or the
account of the respective Loan Parties against any and all Obligations owing to
such Lender, now or hereafter existing, irrespective of whether or not the
Administrative Agent or such Lender shall have made demand under this Agreement
or any other Loan Document and although such Obligations may be contingent or
unmatured. Each Lender agrees promptly to notify the Borrower and the
Administrative Agent after any such set-off and application made by such Lender;
provided, however, that the failure to give such notice shall not affect the
validity of such set-off and application.

 

10.10 Interest Rate Limitation. Notwithstanding anything to the contrary
contained in any Loan Document, the interest paid or agreed to be paid under the
Loan Documents shall not exceed the maximum rate of non-usurious interest
permitted by applicable Law (the “Maximum Rate”). If the Administrative Agent or
any Lender shall receive interest in an amount that exceeds the Maximum Rate,
the excess interest shall be applied to the principal of the Loans or, if it
exceeds such unpaid principal, refunded to the Borrower. In determining whether
the interest contracted for, charged, or received by the Administrative Agent or
a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by
applicable Law, (a) characterize any payment that is not principal as an
expense, fee, or premium rather than interest, (b) exclude voluntary prepayments
and the effects thereof, and (c) amortize, prorate, allocate, and spread in
equal or unequal parts the total amount of interest throughout the contemplated
term of the Obligations.

 

71

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10.11 Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.

 

10.12 Integration. This Agreement, together with the other Loan Documents,
comprises the complete and integrated agreement of the parties on the subject
matter hereof and thereof and supersedes all prior agreements, written or oral,
on such subject matter. In the event of any conflict between the provisions of
this Agreement and those of any other Loan Document, the provisions of this
Agreement shall control; provided that the inclusion of supplemental rights or
remedies in favor of the Administrative Agent or the Lenders in any other Loan
Document shall not be deemed a conflict with this Agreement. Each Loan Document
was drafted with the joint participation of the respective parties thereto and
shall be construed neither against nor in favor of any party, but rather in
accordance with the fair meaning thereof.

 

10.13 Survival of Representations and Warranties. All representations and
warranties made hereunder and in any other Loan Document or other document
delivered pursuant hereto or thereto or in connection herewith or therewith
shall survive the execution and delivery hereof and thereof. Such
representations and warranties have been or will be relied upon by the
Administrative Agent and each Lender, regardless of any investigation made by
the Administrative Agent or any Lender or on their behalf and notwithstanding
that the Administrative Agent or any Lender may have had notice or knowledge of
any Default or Event of Default at the time of any Credit Extension, and shall
continue in full force and effect as long as any Loan or any other Obligation
shall remain unpaid or unsatisfied or any Letter of Credit shall remain
outstanding.

 

10.14 Severability. Any provision of this Agreement and the other Loan Documents
to which the Borrower is a party that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions thereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

 

10.15 Tax Forms.

 

(a) Each Lender that is not a “United States person” within the meaning of
Section 7701(a)(30) of the Code (a “Foreign Lender”) shall deliver to the
Administrative Agent, prior to receipt of any payment subject to withholding
under the Code (or upon accepting an assignment of an interest herein), two duly
signed completed copies of either IRS Form W-8BEN or any successor thereto
(relating to such Person and entitling it to an exemption from, or reduction of,
withholding tax on all payments to be made to such Person by the Borrower
pursuant to this Agreement) or IRS Form W-8ECI or any successor thereto
(relating to all payments to be made to such Person by the Borrower pursuant to
this Agreement) or such other evidence satisfactory to the Borrower and the
Administrative Agent that such Person is entitled to an exemption from, or
reduction of, U.S. withholding tax. Thereafter and from time to time, each such
Person shall (i) promptly submit to the Administrative Agent such additional
duly completed and signed copies of one of such forms (or such successor forms
as shall be adopted from time to time by the relevant United States taxing
authorities) as may then be available under then current United

 

72

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States laws and regulations to avoid, or such evidence as is satisfactory to the
Borrower and the Administrative Agent of any available exemption from or
reduction of, United States withholding taxes in respect of all payments to be
made to such Person by the Borrower pursuant to this Agreement, (ii) promptly
notify the Administrative Agent of any change in circumstances which would
modify or render invalid any claimed exemption or reduction, and (iii) take such
steps as shall not be materially disadvantageous to it, in the reasonable
judgment of such Lender, and as may be reasonably necessary (including the
re-designation of its Lending Office) to avoid any requirement of applicable
Laws that the Borrower make any deduction or withholding for taxes from amounts
payable to such Person. If such Person fails to deliver the above forms or other
documentation, then the Administrative Agent may withhold from any interest
payment to such Person an amount equivalent to the applicable withholding tax
imposed by Sections 1441 and 1442 of the Code, without reduction.

 

(b) Upon the request of the Administrative Agent, each Lender that is a “United
States person” within the meaning of Section 7701(a)(30) of the Code shall
deliver to the Administrative Agent two duly signed completed copies of IRS Form
W-9. If such Lender fails to deliver such forms, then the Administrative Agent
may withhold from any interest payment to such Lender an amount equivalent to
the applicable back-up withholding tax imposed by the Code, without reduction.

 

(c) If any Governmental Authority asserts that the Administrative Agent did not
properly withhold or backup withhold, as the case may be, any tax or other
amount from payments made to or for the account of any Lender, such Lender shall
indemnify the Administrative Agent therefor, including all penalties and
interest, any taxes imposed by any jurisdiction on the amounts payable to the
Administrative Agent under this Section, and costs and expenses (including
Attorney Costs) of the Administrative Agent. The obligation of the Lenders under
this Section shall survive the termination of the Aggregate Commitments,
repayment of all Obligations and the resignation of the Administrative Agent.

 

10.16 Governing Law.

 

(a) This agreement shall be governed by, and construed in accordance with, the
law of the state of Oregon applicable to agreements made and to be performed
entirely within such state; provided that the Administrative Agent and each
Lender shall retain all rights arising under federal law.

 

(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 Oregon or of the
United States for the district of such state, and by execution and delivery of
this agreement, the Borrower, the Administrative Agent and each Lender consents,
for itself and in respect of its property, to the non-exclusive jurisdiction of
those courts. The Borrower, the Administrative Agent and each Lender 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 any loan
document or other document related thereto. The Borrower, the Administrative
Agent and each Lender waives personal service of any summons, complaint or other
process, which may be made by any other means permitted by the law of such
state.

 

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10.17 Arbitration and Waiver of Right to Trial by Jury

 

(a) This Section concerns the resolution of any controversies or claims among
the Borrower, the Administrative Agent and Lenders, whether arising in contract,
tort or by statute, including but not limited to controversies or claims that
arise out of or relate to: (i) this Agreement (including any renewals,
extensions or modifications); or (ii) any document related to this Agreement
(collectively a “Claim”).

 

(b) At the request of the Borrower, the Administrative Agent or any Lender, any
Claim shall be resolved by arbitration in accordance with the Federal
Arbitration Act (Title 9, U. S. Code) (the “Act”). The Act will apply even
though this Agreement provides that it is governed by the law of a specified
state.

 

(c) Arbitration proceedings will be determined in accordance with the Act, the
rules and procedures for the arbitration of financial services disputes of
JAMS/Endispute, LLC, a Delaware limited liability company or any successor
thereof (“JAMS”), and the terms of this paragraph. In the event of any
inconsistency, the terms of this paragraph shall control.

 

(d) The arbitration shall be administered by JAMS and conducted in Oregon. All
Claims shall be determined by one arbitrator; however, if Claims exceed Five
Million Dollars ($5,000,000), upon the request of any party, the Claims shall be
decided by three arbitrators. All arbitration hearings shall commence within
ninety (90) days of the demand for arbitration and close within ninety (90) days
of commencement and the award of the arbitrator(s) shall be issued within thirty
(30) days of the close of the hearing. However, the arbitrator(s), upon a
showing of good cause, may extend the commencement of the hearing for up to an
additional sixty (60) days. The arbitrator(s) shall provide a concise written
statement of reasons for the award. The arbitration award may be submitted to
any court having jurisdiction to be confirmed and enforced.

 

(e) The arbitrator(s) will have the authority to decide whether any Claim is
barred by the statute of limitations and, if so, to dismiss the arbitration on
that basis. For purposes of the application of the statute of limitations, the
service on JAMS under applicable JAMS rules of a notice of Claim is the
equivalent of the filing of a lawsuit. Any dispute concerning this arbitration
provision or whether a Claim is arbitrable shall be determined by the
arbitrator(s). The arbitrator(s) shall have the power to award legal fees
pursuant to the terms of this Agreement.

 

(f) This paragraph does not limit the right of Borrower, the Administrative
Agent or any Lender to: (i) exercise self-help remedies, such as but not limited
to, setoff; (ii) initiate judicial or nonjudicial foreclosure against any real
or personal property collateral; (iii) exercise any judicial or power of sale
rights, or (iv) act in a court of law to obtain an interim remedy, such as but
not limited to, injunctive relief, writ of possession or appointment of a
receiver, or additional or supplementary remedies.

 

74

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(g) The filing of a court action is not intended to constitute a waiver of the
right of Borrower or Lender, including the suing party, thereafter to require
submittal of the Claim to arbitration.

 

(h) BY AGREEING TO BINDING ARBITRATION, THE PARTIES IRREVOCABLY AND VOLUNTARILY
WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM.
FURTHERMORE, WITHOUT INTENDING IN ANY WAY TO LIMIT THIS AGREEMENT TO ARBITRATE,
TO THE EXTENT ANY CLAIM IS NOT ARBITRATED, THE PARTIES IRREVOCABLY AND
VOLUNTARILY WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF SUCH
CLAIM. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES ENTERING INTO
THIS AGREEMENT.

 

10.18 Time of the Essence. Time is of the essence of the Loan Documents.

 

10.19 Entire Agreement. This Agreement and the other Loan Documents represent
the final agreement among the parties and may not be contradicted by evidence of
prior, contemporaneous, or subsequent oral agreements of the parties. There are
no unwritten oral agreements among the parties.

 

10.20 Certain Agreements Not Enforceable. UNDER OREGON LAW, MOST AGREEMENTS,
PROMISES AND COMMITMENTS MADE BY THE LENDERS AFTER OCTOBER 3, 1989, CONCERNING
LOANS AND OTHER CREDIT EXTENSIONS WHICH ARE NOT FOR PERSONAL, FAMILY OR
HOUSEHOLD PURPOSES OR SECURED SOLELY BY THE BORROWER’S RESIDENCE MUST BE IN
WRITING, EXPRESS CONSIDERATION, AND BE SIGNED BY LENDERS TO BE ENFORCEABLE.

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first above written.

 

FLIR SYSTEMS, INC., as Borrower

By:

 

/s/ STEPHEN M. BAILEY

--------------------------------------------------------------------------------

Name:

 

Stephen M. Bailey

Title:

 

Vice President and Chief Financial Officer

BANK OF AMERICA, N.A., as

Administrative Agent

By:

 

/s/ DORA A. BROWN

--------------------------------------------------------------------------------

Name:

 

Dora A. Brown

Title:

 

Vice President

 

75

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BANK OF AMERICA, N.A., as a Lender, L/C

Issuer and Swing Line Lender

By:

 

/s/ ERIC EIDLER

--------------------------------------------------------------------------------

Name:

 

Eric Eidler

Title:

 

Senior Vice President

UNION BANK OF CALIFORNIA, N.A., as a

Lender

By:

 

 

/s/ MICHAEL SCHLIESKI        

--------------------------------------------------------------------------------

Name:

 

Michael Schlieski

Title:

 

Vice President

U.S. BANK NATIONAL ASSOCIATION, as a

Lender

By:

 

 

/s/ DARYL K. HOGGE        

--------------------------------------------------------------------------------

Name:

 

Daryl K. Hogge

Title:

 

Vice President

 

 

76

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SCHEDULE 1.01

 

EXISTING LETTERS OF CREDIT

 

L/C No.

--------------------------------------------------------------------------------

   Balance as of
04/28/04

--------------------------------------------------------------------------------

  

Expiration

Date

--------------------------------------------------------------------------------

   Beneficiary

--------------------------------------------------------------------------------

3011848

   $ 55,000.00    7/31/04    Credit Agricole Indosuez Gulf

3037996

     500,000.00    12/23/04    Abu Dhabi International Bank

3041416

     248,040.50    10/30/04    Banco Do Brasil

3050365

     345,800.00    08/02/04    Abu Dhabi Commercial Bank

3059052

     15,958.70    01/12/05    Union National Bank

3061476

     151,837.00    02/28/05    Chilean Navy Mission

3061477

     454,161.00    02/28/05    Chilean Navy Mission

3061961

     299,927.00    03/15/05    Bank of Jordan

3062458

     125,000.00    11/01/04    Ericsson Inc.     

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

         

Total

   $ 2,195,724.20          

 

1

--------------------------------------------------------------------------------

SCHEDULE 2.01

 

COMMITMENTS AND PRO RATA SHARES

 

Lender

--------------------------------------------------------------------------------

   Commitment

--------------------------------------------------------------------------------

   Lender’s Pro Rata Share of
Aggregate Commitments

--------------------------------------------------------------------------------

 

Bank of America, N.A.

   $ 25,000,000    50.00 %

Union Bank of California, N.A.

   $ 15,000,000    30.00 %

U.S. Bank National Association

   $ 10,000,000    20.00 %     

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

  

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

Total Aggregate Commitments:

   $ 50,000,000    100 %     

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

  

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

 

 

1

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SCHEDULE 5.06

 

LITIGATION

 

SEC Investigation:

 

On June 8, 2000, the Securities and Exchange Commission (the “SEC”) issued a
formal order of investigation of the Company and certain officers, directors,
employees and other individuals presently and formerly associated with the
Company to determine whether any violations of the federal securities laws
occurred during 1998 and 1999. The investigation relates to the Company’s
revenue recognition policies, accounting controls, financial reports and other
public disclosures during that time period.

 

Pursuant to an offer of settlement submitted by the Company, on September 30,
2002, the SEC instituted and simultaneously settled a proceeding against the
Company under Section 8A of the Securities Act of 1933 (the “Securities Act”)
and Section 21C of the Securities Exchange Act of 1934 (the “Exchange Act”).
Without admitting or denying the allegations of the SEC’s order, the Company
agreed to the entry of an order requiring that it cease and desist from
committing or causing any violations and any future violations of the antifraud
provisions of the Securities Act and the antifraud, periodic reporting, record
keeping and internal control provisions of the federal securities laws set forth
in Section 17(a) of the Securities Act and Sections 10(b), 13(a), 13(b)(2)(A)
and 13(b)(2)(B) of the Exchange Act and Rules 10b-5, 12b-20, 13a-1 and 13a-13
thereunder. The Company incurred no financial fine or penalty under the terms of
settlement.

 

The SEC’s order states that the Company materially overstated its earnings
before income taxes for each of the quarters of 1998 and 1999 as well as for
fiscal year 1998, and that the Company’s revenue recognition practices resulted
in material misstatements and omissions in the financial statements contained in
the Company’s Annual Report on Form 10-K as originally filed for the year ended
December 31, 1998 and the Company’s Quarterly Reports on Form 10-Q as originally
filed for each of the first three quarters of both 1998 and 1999. In 2000 and
2001, the Company restated its financial statements for 1998 and 1999. No
further restatements of the Company’s financial statements are required by the
order, and the Company does not expect that the entry of the order will have a
material adverse impact on its financial condition or results of operations.

 

Steven R. Palmquist v. FLIR Systems, Inc. (Case No. C000376CV, Washington County
Circuit Court)

 

On or about February 8, 2000, a former employee, Steven R. Palmquist, filed an
action in Washington County (Oregon) Circuit Court. In the action, Palmquist
sought to recover $721,542.94, together with interest and attorney fees, for
alleged breach of an Executed Employment Agreement. Company filed a motion for
summary judgment on all plaintiff’s claims, which the court granted on December
26, 2000. The court entered a final judgment on Company’s behalf on March 13,
2001. Plaintiff’s motions for a new trial and to set aside the judgment were
denied. Plaintiff filed a notice of appeal on May 30, 2001, and an undertaking
on appeal on June 4, 2001, with the Oregon Court of Appeals. On October 1, 2003,
the Court of

 

1

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Appeals issued an opinion reversing the trial court and remanding the case with
instructions to enter judgment of dismissal without prejudice. On November 5,
2003, Company filed a petition for review of the Court’s decision with the
Oregon Supreme Court. The parties are awaiting a decision of the Oregon Supreme
Court on the petition for review.

 

Steven R. Palmquist v. FLIR Systems, Inc. Multnomah County Circuit Court, Case
No. 0107-07360

 

Palmquist filed a second action against Company, this time in Multnomah County
(Oregon) Circuit Court, on July 17, 2001. In the action, Palmquist again sought
to recover $721,542.94, together with interest and attorney fees, for alleged
breach of an Executive Employment Agreement. Palmquist also included a new
claim, of constructive wrongful discharge, and noticed his intention to seek
punitive damages. Company filed a motion for summary judgment on all Palmquist’s
claims, which was granted at oral argument on October 19, 2001. On November 18,
2001, the court signed Company’s proposed form of order, granting Company’s
Motion for Summary Judgment. The court entered a final judgment on Company’s
behalf on January 7, 2002. On February 22, 2002, the circuit court awarded
Company $7,143.50 for its attorney fees and $413.75 for its costs and
disbursements. Plaintiff filed a notice of appeal with the Oregon Court of
Appeals, but the appeal was subsequently dismissed on June 19, 2002. Plaintiff
and company have agreed that Company will not execute on the judgment for
attorney fees and costs until resolution of the proceedings in the Washington
County action described above.

 

2

--------------------------------------------------------------------------------

SCHEDULE 5.09

 

ENVIRONMENTAL MATTERS

 

None

 

1

--------------------------------------------------------------------------------

SCHEDULE 5.13

 

SUBSIDIARIES AND OTHER EQUITY INVESTMENTS

 

List of Subsidiaries

 

Subsidiary

--------------------------------------------------------------------------------

  

Jurisdiction/Organization

--------------------------------------------------------------------------------

  

Percentage of Ownership

--------------------------------------------------------------------------------

FLIR Systems, AB

Indirect Subsidiaries:

FLIR Systems GmbH

FLIR Systems Srl

FLIR Systems Sarl

FLIR Systems Co., Ltd.

  

A Swedish Corporation

A German Corporation

An Italian Corporation

A French Corporation

A Hong Kong Corporation

   100%

FSI International, Inc.

   A Barbados Corporation    100%

FLIR Systems, Ltd.

   A Canadian Corporation    100%

FLIR Systems International, Ltd.

   A UK Corporation    100%

Indigo Systems Corporation

   A California Corporation    100%

 

Other Equity Investments:

 

  • Thermogenic Imaging, Inc. - $394,367 preferred stock equity investment at
March 31, 2004. This is a minority investment. See schedule 7.02.

 

  • Max-Viz, Inc. - $500,000 preferred stock equity investment at March 31,
2004. This is a minority investment. See schedule 7.02.

 

1

--------------------------------------------------------------------------------

SCHEDULE 5.16

 

INTELLECTUAL PROPERTY MATTERS

 

Patent Claim of Computational Systems, Inc.

 

The Company has received correspondence dated January 30, 2004 from Emerson
Process Management, parent company of Computational Systems, Inc. (“CSI”),
questioning whether certain of the Company’s thermography products conflict with
certain patents owned by CSI pertaining to the method by which images are
recorded onto a data storage device. The Company is evaluating this matter and
is in discussions with CSI regarding a possible licensing agreement involving a
one-time payment for a non-exclusive license. The outcome of such discussions is
dependent upon the completion of the Company’s analysis of the validity of the
patents in question and the

 

1

--------------------------------------------------------------------------------

SCHEDULE 7.01

 

EXISTING LIENS

 

  • Liens existing under Credit Agreement dated December 16, 1999.

 

  • Liens existing under 50,000,000 SEK Handelsbanken Line of Credit dated
January 1, 2004

 

  • Liens existing under $2,000,000 HSBC Bank Line of Credit dated July 1, 2003.

 

  • Liens existing under Indigo Systems purchase of software from Control
Systems Research

 

1

--------------------------------------------------------------------------------

SCHEDULE 7.02

 

EXISTING INVESTMENTS

 

Existing Investments:

 

  • Thermogenic Imaging, Inc. - $394,367 preferred stock equity investment and
$199,912 in convertible notes at March 31, 2004. Commitment to purchase an
additional $352,060 in convertible notes prior to May 31, 2004. Notes will be
converted to preferred stock on May 31, 2004.

 

  • Max-Viz, Inc. - $500,000 preferred stock equity investment and $953,466 in
notes receivable at March 31, 2004. Notes will be converted to preferred stock
by June 30, 2004.

 

1

--------------------------------------------------------------------------------

SCHEDULE 7.03

 

EXISTING INDEBTEDNESS

 

Debt:

 

  • Credit Agreement dated December 16, 1999 - $0 outstanding as of March 31,
2004.

 

  • Handelsbanken Line of Credit - $0 outstanding as of March 31, 2004.

 

  • HSBC Bank Line of Credit - $0 outstanding as of March 31, 2004.

 

  • 3% Senior Convertible Notes due 2023 - $204,594,032 outstanding as of March
31, 2004.

 

  • Control Systems Research term loan due June, 2006 - $240,912 outstanding as
of March 31, 2004.

 

  • Ericson term loan due April, 2010 - $42,804 outstanding as of March 31, 2004

 

  • Capitalized lease with Dolphin Capital dated April 7, 2004 - $12,600
outstanding as of April 7, 2004.

 

 

1

--------------------------------------------------------------------------------

SCHEDULE 7.06

 

EXISTING LEASES

 

Capital Leases:

 

Dolphin Capital – Original lease dated April 7, 2004 in the amount of
$13,230.00.

 

Property Leases:

 

•

  16505 & 16195 SW 72nd Avenue, Portland, OR    2005

•

 

16280 SW Upper Boones Ferry Road, Portland, OR

   2005

•

 

Rinkebuyägen 19, Danderyd, Sweden

   2004

•

 

Rinkebuyägen 21, Danderyd, Sweden

   2007

•

 

Rinkebuyägen 21, Danderyd, Sweden

   2007

•

 

16 Esquire Road, North Billerica, MA

   2005

•

 

2 Kings Hill Avenue, West Malling, Kent

   2006

•

 

5230 South Service Road, Unit 125, Burlington, ON L7L 2K5 Canada

   2005

•

 

18 Rue Hoche – Issy les Moulineaux – 92134 France

   2005

•

 

Berner Strasse 81, Frankfurt

   2006

•

 

Via L. Manara 2,20051, Limbiate

   2009

•

 

Uitbreidingstraat 60-62, Berchem, Brussels Belgium

   2006

•

 

Unit 1613, Tower 2, Grand Central Plaza, 138 Shatin Rural Committee Rd, Hong
Kong

   2004

•

 

7101 Presidents Drive, Orlando FL

   2007

•

 

5756 Thornwood Dr., Goleta, CA

   2013

•

 

70 Castailian Dr., Goleta, CA

   2010

 

1

--------------------------------------------------------------------------------

SCHEDULE 10.02

 

INFORMATION FOR BORROWER,

ADMINISTRATIVE AGENT AND LENDERS

 

Borrower:

 

FLIR Systems, Inc.

16505 S.W. 72nd Avenue

Portland, OR 97224

Attention: Chief Financial Officer

Telephone: (503) 684-3731

Fax: (503) 495-1715

 

With a copy to: Corporate Counsel

 

Administrative Agent:

 

Bank of America, N.A.

Commercial Agency Management

WA1-501-37-20

800 Fifth Avenue, Floor 37

Seattle WA 98104

Attention: Dora A. Brown, Vice President

Telephone: (206) 358-0101

Fax: (206) 358-0971

Email: dora.a.brown@bankofamerica.com

 

Lenders:

 

BANK OF AMERICA, N.A.

Commercial Banking

121 SW Morrison, Suite 1700

Portland OR 97204

Attention: Eric R. Eidler, Senior Vice President

Telephone: (503) 275-1407

Fax: (503) 275-1391

Email: eric.r.eidler@bankofamerica.com

 

1

--------------------------------------------------------------------------------

UNION BANK OF CALIFORNIA, N.A.

P.O. Box 3121

Portland, OR 97208

Attention: Thomas Marks, Vice President

Telephone: (503) 225-3693

Fax: (503) 225-2846

Email: thomas.marks@uboc.com

 

U.S. BANK NATIONAL ASSOCIATION

111 S.W. Fifth Avenue, Suite 400

Portland, OR 97204

Attention: Daryl K. Hogge, Vice President

Telephone: (503) 275-5271

Fax: (503) 275-5795

Email: Daryl.Hogge@usbank.com

 

Requests for Credit Extensions:

 

BANK OF AMERICA, N.A.

Credit Services

Mail Code: CA4-706-05-09

1850 Gateway Boulevard

Concord CA 94520

Attn:   Lorrie McLain

Telephone: (925) 675-8365

Facsimile: (888) 969-2432

Electronic mail: lorrie.mclain@bankofamerica.com

Account Name: Corporate FTA

Account No.: 3750836479

Ref: FLIR Systems, Inc.

ABA # 111000012

 

Requests for Credit Extensions:

 

UNION BANK OF CALIFORNIA, N.A.

601 Potrero Grande

Monterey Park CA 91755

Attn:   Shirley Davis

Telephone: (323) 720-2870

Facsimile: (323) 720-2224

Account Name: Commercial Loan Operations

Account No.: 77070-196431

Ref: FLIR Systems, Inc.

ABA # 122-000-496

 

2

--------------------------------------------------------------------------------

Requests for Credit Extensions:

 

U.S. BANK NATIONAL ASSOCIATION

555 S.W. Oak Street

PD-OR-PTLN

Portland, OR 97204

Attn:   Lennie Regalado

Telephone: (503) 275-4395

Facsimile: (503) 275-8181

Account Name: Commercial Loan Servicing-West

Account No.: 00340012160600

Ref: FLIR Systems, Inc., Loan No. 3021313582

ABA # 123000220

 

3

--------------------------------------------------------------------------------

EXHIBIT A

 

FORM OF COMMITTED LOAN NOTICE

 

Date:                     ,         

 

To: Bank of America, N.A., as Administrative Agent

 

Ladies and Gentlemen:

 

Reference is made to that certain Amended and Restated Credit Agreement, dated
as of April 28, 2004 (as amended, restated, extended, supplemented or otherwise
modified in writing from time to time, the “Agreement;” the terms defined
therein being used herein as therein defined), among FLIR Systems, Inc., a
corporation (the “Borrower”), the Lenders from time to time party thereto, and
Bank of America, N.A., as Administrative Agent, L/C Issuer and Swing Line
Lender.

 

The undersigned hereby requests (select one):

 

¨    A Borrowing of Committed Loans     ¨    A conversion or continuation of
Loans

 

  1. On                                                                   (a
Business Day).

 

  2. In the amount of $                                        .

 

  3. Comprised of                                                  .

                [Type of Committed Loan requested]

 

  4. For Eurodollar Rate Loans: with an Interest Period of      months.

 

[The Committed Borrowing requested herein complies with the proviso to the first
sentence of Section 2.01 of the Agreement.]

 

FLIR SYSTEMS, INC.

By:

 

 

--------------------------------------------------------------------------------

Name:

 

 

--------------------------------------------------------------------------------

Title:

 

 

--------------------------------------------------------------------------------

 

1

--------------------------------------------------------------------------------

EXHIBIT B

 

FORM OF SWING LINE LOAN NOTICE

 

Date:                     ,         

 

To: Bank of America, N.A., as Swing Line Lender

Bank of America, N.A., as Administrative Agent

 

Ladies and Gentlemen:

 

Reference is made to that certain Amended and Restated Credit Agreement, dated
as of April 28, 2004 (as amended, restated, extended, supplemented or otherwise
modified in writing from time to time, the “Agreement;” the terms defined
therein being used herein as therein defined), among FLIR Systems, Inc., a
corporation (the “Borrower”), the Lenders from time to time party thereto, and
Bank of America, N.A., as Administrative Agent, L/C Issuer and Swing Line
Lender.

 

The undersigned hereby requests a Swing Line Loan:

 

1. On                                                                   (a
Business Day).

 

2. In the amount of $                                        .

 

The Swing Line Borrowing requested herein complies with the requirements of the
provisos to the first sentence of Section 2.05(a) of the Agreement.

 

FLIR SYSTEMS, INC.

By:

 

 

--------------------------------------------------------------------------------

Name:

 

 

--------------------------------------------------------------------------------

Title:

 

 

--------------------------------------------------------------------------------

 

1

--------------------------------------------------------------------------------

EXHIBIT C-1

 

FORM OF COMMITTED REVOLVING LOAN NOTE

 

 

FOR VALUE RECEIVED, the undersigned (the “Borrower”), hereby promises to pay to
                     or registered assigns (the “Lender”), in accordance with
the provisions of the Agreement (as hereinafter defined), the principal amount
of each Committed Loan from time to time made by the Lender to the Borrower
under that certain Amended and Restated Credit Agreement, dated as of April
    , 2004 (as amended, restated, extended, supplemented or otherwise modified
in writing from time to time, the “Agreement;” the terms defined therein being
used herein as therein defined), among the Borrower, the Lenders from time to
time party thereto, and Bank of America, N.A., as Administrative Agent, L/C
Issuer and Swing Line Lender.

 

The Borrower promises to pay interest on the unpaid principal amount of each
Committed Loan from the date of such Committed Loan until such principal amount
is paid in full, at such interest rates and at such times as provided in the
Agreement. All payments of principal and interest shall be made to the
Administrative Agent for the account of the Lender in Dollars in immediately
available funds at the Administrative Agent’s Office. If any amount is not paid
in full when due hereunder, such unpaid amount shall bear interest, to be paid
upon demand, from the due date thereof until the date of actual payment (and
before as well as after judgment) computed at the per annum rate set forth in
the Agreement.

 

This Note is one of the Notes referred to in the Agreement, is entitled to the
benefits thereof and may be prepaid in whole or in part subject to the terms and
conditions provided therein. This Note is also entitled to the benefits of any
Guaranty and is secured by the Collateral. Upon the occurrence and continuation
of one or more of the Events of Default specified in the Agreement, all amounts
then remaining unpaid on this Note shall become, or may be declared to be,
immediately due and payable all as provided in the Agreement. Committed Loans
made by the Lender shall be evidenced by one or more loan accounts or records
maintained by the Lender in the ordinary course of business. The Lender may also
attach schedules to this Note and endorse thereon the date, amount and maturity
of its Committed Loans and payments with respect thereto.

 

The Borrower, for itself, its successors and assigns, hereby waives diligence,
presentment, protest and demand and notice of protest, demand, dishonor and
non-payment of this Note.

 

THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF OREGON.

 

FLIR SYSTEMS, INC.

By:

 

 

--------------------------------------------------------------------------------

Name:

 

 

--------------------------------------------------------------------------------

Title:

 

 

--------------------------------------------------------------------------------

 

1

--------------------------------------------------------------------------------

LOANS AND PAYMENTS WITH RESPECT THERETO

 

Date

--------------------------------------------------------------------------------

 

Type of

Loan Made

--------------------------------------------------------------------------------

 

Amount of

Loan Made

--------------------------------------------------------------------------------

   End of
Interest
Period

--------------------------------------------------------------------------------

  

Amount of
Principal or
Interest

Paid This
Date

--------------------------------------------------------------------------------

  

Outstanding
Principal
Balance

This Date

--------------------------------------------------------------------------------

   Notation
Made By

--------------------------------------------------------------------------------

 

 

2

--------------------------------------------------------------------------------

EXHIBIT C-2

 

FORM OF SWING LINE NOTE

 

 

FOR VALUE RECEIVED, the undersigned (the “Borrower”), hereby promises to pay to
                     (the “Swing Line Lender”), in accordance with the
provisions of the Agreement (as hereinafter defined), the principal amount of
each Swing Line Loan from time to time made by the Swing Line Lender to the
Borrower under that certain Amended and Restated Credit Agreement, dated as of
April     , 2004 (as amended, restated, extended, supplemented or otherwise
modified in writing from time to time, the “Agreement;” the terms defined
therein being used herein as therein defined), among the Borrower, the Lenders
from time to time party thereto, and Bank of America, N.A., as Administrative
Agent, L/C Issuer and Swing Line Lender.

 

The Borrower promises to pay interest on the unpaid principal amount of each
Swing Line Loan from the date of such Swing Line Loan until such principal
amount is paid in full, at such interest rates and at such times as provided in
the Agreement. All payments of principal and interest shall be made to the Swing
Line Lender in Dollars in immediately available funds. If any amount is not paid
in full when due hereunder, such unpaid amount shall bear interest, to be paid
upon demand, from the due date thereof until the date of actual payment (and
before as well as after judgment) computed at the per annum rate set forth in
the Agreement.

 

This Note is one of the Notes referred to in the Agreement, is entitled to the
benefits thereof and may be prepaid in whole or in part subject to the terms and
conditions provided therein. This Note is also entitled to the benefits of any
Guaranty and is secured by the Collateral. Upon the occurrence and continuation
of one or more of the Events of Default specified in the Agreement, all amounts
then remaining unpaid on this Note shall become, or may be declared to be,
immediately due and payable all as provided in the Agreement. Swing Line Loans
made by the Swing Line Lender shall be evidenced by one or more loan accounts or
records maintained by the Swing Line Lender in the ordinary course of business.
The Swing Line Lender may also attach schedules to this Note and endorse thereon
the date, amount and maturity of its Swing Line Loans and payments with respect
thereto.

 

The Borrower, for itself, its successors and assigns, hereby waives diligence,
presentment, protest and demand and notice of protest, demand, dishonor and
non-payment of this Note.

 

THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF OREGON.

 

FLIR SYSTEMS, INC.

By:

 

 

--------------------------------------------------------------------------------

Name:

 

 

--------------------------------------------------------------------------------

Title:

 

 

--------------------------------------------------------------------------------

 

1

--------------------------------------------------------------------------------

LOANS AND PAYMENTS WITH RESPECT THERETO

 

Date

--------------------------------------------------------------------------------

 

Type of

Loan Made

--------------------------------------------------------------------------------

 

Amount of

Loan Made

--------------------------------------------------------------------------------

   End of
Interest
Period

--------------------------------------------------------------------------------

  

Amount of
Principal or
Interest

Paid This
Date

--------------------------------------------------------------------------------

  

Outstanding
Principal
Balance

This Date

--------------------------------------------------------------------------------

   Notation
Made By

--------------------------------------------------------------------------------

 

2

--------------------------------------------------------------------------------

EXHIBIT D

 

FORM OF COMPLIANCE CERTIFICATE

 

Financial Statement Date:                 ,

 

To: Bank of America, N.A., as Administrative Agent

 

Ladies and Gentlemen:

 

Reference is made to that certain Amended and Restated Credit Agreement, dated
as of April 28, 2004 (as amended, restated, extended, supplemented or otherwise
modified in writing from time to time, the “Agreement;” the terms defined
therein being used herein as therein defined), among FLIR Systems, Inc., a
corporation (the “Borrower”), the Lenders from time to time party thereto, and
Bank of America, N.A., as Administrative Agent, L/C Issuer and Swing Line
Lender.

 

The undersigned Responsible Officer hereby certifies as of the date hereof that
he/she is the of the                              Borrower, and that, as such,
he/she is authorized to execute and deliver this Certificate to the
Administrative Agent on the behalf of the Borrower, and that:

 

[Use following for fiscal year-end financial statements]

 

1. Attached hereto as Schedule 1 are the year-end audited financial statements
required by Section 6.01(a) and year-end unaudited consolidating financial
statements required by Section 6.01(b) of the Agreement for the fiscal year of
the Borrower ended as of the above date, together with the report and opinion of
an independent certified public accountant required by such section.

 

[Use following for fiscal quarter-end financial statements]

 

1. Attached hereto as Schedule 1 are the unaudited financial statements required
by Section 6.01(c) of the Agreement for the fiscal quarter of the Borrower ended
as of the above date. Such financial statements fairly present the financial
condition, results of operations and cash flows of the Borrower and its
Subsidiaries in accordance with GAAP as at such date and for such period,
subject only to normal year-end audit adjustments and the absence of footnotes.

 

2. The undersigned has reviewed and is familiar with the terms of the Agreement
and has made, or has caused to be made under his/her supervision, a detailed
review of the transactions and condition (financial or otherwise) of the
Borrower during the accounting period covered by the attached financial
statements.

 

1

--------------------------------------------------------------------------------

3. A review of the activities of the Borrower during such fiscal period has been
made under the supervision of the undersigned with a view to determining whether
during such fiscal period the Borrower performed and observed all its
Obligations under the Loan Documents, and

 

[select one:]

 

[to the best knowledge of the undersigned during such fiscal period, the
Borrower performed and observed each covenant and condition of the Loan
Documents applicable to it.]

 

—or—

 

[the following covenants or conditions have not been performed or observed and
the following is a list of each such Default or Event of Default and its nature
and status:]

 

4. The 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
                    ,             ,

 

FLIR SYSTEMS, INC.

By:

 

--------------------------------------------------------------------------------

Name:

 

--------------------------------------------------------------------------------

Title:

 

--------------------------------------------------------------------------------

 

2

--------------------------------------------------------------------------------

EXHIBIT E

 

ASSIGNMENT AND ASSUMPTION

 

This Assignment and Assumption (this “Assignment and Assumption”) is dated as of
the Effective Date set forth below and is entered into by and between [Insert
name of Assignor] (the “Assignor”) and [Insert name of Assignee] (the
“Assignee”). Capitalized terms used but not defined herein shall have the
meanings given to them in the Amended and Restated Credit Agreement identified
below (the “Credit Agreement”), receipt of a copy of which is hereby
acknowledged by the Assignee. The Standard Terms and Conditions set forth in
Annex 1 attached hereto are hereby agreed to and incorporated herein by
reference and made a part of this Assignment and Assumption as if set forth
herein in full.

 

For an agreed consideration, the Assignor hereby irrevocably sells and assigns
to the Assignee, and the Assignee hereby irrevocably purchases and assumes from
the Assignor, subject to and in accordance with the Standard Terms and
Conditions and the Credit Agreement, as of the Effective Date inserted by the
Administrative Agent as contemplated below, the interest in and to all of the
Assignor’s rights and obligations under the Credit Agreement and any other
documents or instruments delivered pursuant thereto that represents the amount
and percentage interest identified below of all of the Assignor’s outstanding
rights and obligations under the respective facilities identified below
(including, without limitation, Letters of Credit and Swing Line Loans included
in such facilities and, to the extent permitted to be assigned under applicable
law, all claims (including, without limitation, contract claims, tort claims,
malpractice claims and all other claims at law or in equity, including claims
under any law governing the purchase and sale of securities or governing
indentures pursuant to which securities are issued), suits, causes of action and
any other right of the Assignor against any other Person) (the “Assigned
Interest”). Such sale and assignment is without recourse to the Assignor and,
except as expressly provided in this Assignment and Assumption, without
representation or warranty by the Assignor.

 

     1.    Assignor:   

___________________________          

     2.    Assignee:                                          
                       [and is an Affiliate/Approved Fund of [identify Lender]1]
     3.    Borrower(s):    ___________________________      4.   
Administrative Agent:                                             , as the
administrative agent under the Credit Agreement      5.    Credit Agreement:   
[The Credit Agreement, dated as of April 28, 2004, among FLIR Systems, Inc., the
Lenders parties thereto, and Bank of America, N.A., as Administrative Agent.

--------------------------------------------------------------------------------

1 Select as applicable

 

1

--------------------------------------------------------------------------------

6. Assigned Interest:

 

Facility Assigned

--------------------------------------------------------------------------------

  

Aggregate

Amount of

Commitment/Loans

for all Lenders*

--------------------------------------------------------------------------------

  

Amount of

Commitment/Loans

Assigned*

--------------------------------------------------------------------------------

  

Percentage

Assigned of

Commitment/Loans2

--------------------------------------------------------------------------------

 

_____________3

   $ ________________    $ ________________    ______________ %

_____________

   $ ________________    $ ________________    ______________ %

_____________

   $ ________________    $ ________________    ______________ %

 

[7. Trade Date:                                 ]4

 

Effective Date:                             , 20     [TO BE INSERTED BY
ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF
TRANSFER IN THE REGISTER THEREFOR.]

 

The terms set forth in this Assignment and Assumption are hereby agreed to:

 

ASSIGNOR

[NAME OF ASSIGNOR]

By:

 

 

--------------------------------------------------------------------------------

Title:

   

ASSIGNEE

[NAME OF ASSIGNEE]

By:

 

 

--------------------------------------------------------------------------------

Title:

   

 

--------------------------------------------------------------------------------

* Amount to be adjusted by the counterparties to take into account any payments
or prepayments made between the Trade Date and the Effective Date.

2 Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of
all Lenders thereunder.

3 Fill in the appropriate terminology for the types of facilities under the
Credit Agreement that are being assigned under this Assignment (e.g. “Revolving
Credit Commitment”, “Term Loan Commitment”, etc.).

4 To be completed if the Assignor and the Assignee intend that the minimum
assignment amount is to be determined as of the Trade Date.

 

2

--------------------------------------------------------------------------------

[Consented to and]5 Accepted:

 

[NAME OF ADMINISTRATIVE AGENT], as

Administrative Agent

By:

 

 

--------------------------------------------------------------------------------

Title:

   

[Consented to:]6

By:

 

 

--------------------------------------------------------------------------------

Title:

   

 

--------------------------------------------------------------------------------

5 To be added only if the consent of the Administrative Agent is required by the
terms of the Credit Agreement.

6 To be added only if the consent of the Borrower and/or other parties (e.g.
Swing Line Lender, L/C Issuer) is required by the terms of the Credit Agreement.

 

3

--------------------------------------------------------------------------------

ANNEX 1 TO ASSIGNMENT AND ASSUMPTION

 

STANDARD TERMS AND CONDITIONS FOR

 

ASSIGNMENT AND ASSUMPTION

 

1. Representations and Warranties.

 

1.1. Assignor. The Assignor (a) represents and warrants that (i) it is the legal
and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is
free and clear of any lien, encumbrance or other adverse claim and (iii) it has
full power and authority, and has taken all action necessary, to execute and
deliver this Assignment and Assumption and to consummate the transactions
contemplated hereby; and (b) assumes no responsibility with respect to (i) any
statements, warranties or representations made in or in connection with the
Credit Agreement or any other Loan Document, (ii) the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Loan
Documents or any collateral thereunder, (iii) the financial condition of the
Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in
respect of any Loan Document or (iv) the performance or observance by the
Borrower, any of its Subsidiaries or Affiliates or any other Person of any of
their respective obligations under any Loan Document.

 

1.2. Assignee. The Assignee (a) represents and warrants that (i) it has full
power and authority, and has taken all action necessary, to execute and deliver
this Assignment and Assumption and to consummate the transactions contemplated
hereby and to become a Lender under the Credit Agreement, (ii) it meets all
requirements of an Eligible Assignee under the Credit Agreement (subject to
receipt of such consents as may be required under the Credit Agreement), (iii)
from and after the Effective Date, it shall be bound by the provisions of the
Credit Agreement as a Lender thereunder and, to the extent of the Assigned
Interest, shall have the obligations of a Lender thereunder, (iv) it has
received a copy of the Credit Agreement, together with copies of the most recent
financial statements delivered pursuant to Section 6 thereof, as applicable, and
such other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into this Assignment and Assumption
and to purchase the Assigned Interest on the basis of which it has made such
analysis and decision independently and without reliance on the Administrative
Agent or any other Lender, and (v) if it is a Foreign Lender, attached hereto is
any documentation required to be delivered by it pursuant to the terms of the
Credit Agreement, duly completed and executed by the Assignee; and (b) agrees
that (i) it will, independently and without reliance on the Administrative
Agent, the Assignor or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Loan Documents, and
(ii) it will perform in accordance with their terms all of the obligations which
by the terms of the Loan Documents are required to be performed by it as a
Lender.

 

4

--------------------------------------------------------------------------------

1.3 Assignee’s Address for Notices, etc. Attached hereto as Schedule 1 is all
contact information, address, account and other administrative information
relating to the Assignee.

 

2. Payments. From and after the Effective Date, the Administrative Agent shall
make all payments in respect of the Assigned interest (including payments of
principal, interest, fees and other amounts) to the Assignee whether such
amounts have accrued prior to or on or after the Effective Date. The Assignor
and the Assignee shall make all appropriate adjustments in payments by the
Administrative Agent for periods prior to the Effective Date or with respect to
the making of this assignment directly between themselves.

 

3. General Provisions. This Assignment and Assumption shall be binding upon, and
inure to the benefit of, the parties hereto and their respective successors and
assigns. This Assignment and Assumption may be executed in any number of
counterparts, which together shall constitute one instrument. Delivery of an
executed counterpart of a signature page of this Assignment and Assumption by
telecopy shall be effective as delivery of a manually executed counterpart of
this Assignment and Assumption. This Assignment and Assumption shall be governed
by, and construed in accordance with, the law of the State of Oregon.

 

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SCHEDULE 1 TO ASSIGNMENT AND ASSUMPTION

 

ADMINISTRATIVE DETAILS

 

(Assignee to list names of credit contacts, addresses, phone and facsimile
numbers,

electronic mail addresses and account and payment information)

 

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