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[EXECUTION COPY]

LOAN AND SECURITY AGREEMENT

by and among

REPTRON ELECTRONICS, INC.,
as Borrower

and

CONGRESS FINANCIAL CORPORATION (FLORIDA),
as Agent

and

THE FINANCIAL INSTITUTIONS NAMED HEREIN,
as Lenders

Dated: October 10, 2002

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    Page SECTION 1.   DEFINITIONS 1         SECTION 2.   CREDIT FACILITIES 23
2.1   Loans 23 2.2   Letter of Credit Accommodations 24 2.3   Commitments 28    
    SECTION 3.   INTEREST AND FEES 28 3.1   Interest 28 3.2   Fees 29 3.3  
Changes in Laws and Increased Costs of Loans 31         SECTION 4.   CONDITIONS
PRECEDENT 33 4.1   Conditions Precedent to Initial Loans and Letter of Credit
Accommodations 33 4.2   Conditions Precedent to All Loans and Letter of Credit
Accommodations 33         SECTION 5.   GRANT AND PERFECTION OF SECURITY INTEREST
35         SECTION 6.   COLLECTION AND ADMINISTRATION 40 6.1   Borrower Loan
Account 40 6.2   Statements 40 6.3   Collection of Accounts 41 6.4   Payments 42
6.5   Authorization to Make Loans 42 6.6   Use of Proceeds 43 6.7   Pro Rata
Treatment 43 6.8   Sharing of Payments, Etc 43 6.9   Settlement Procedures 44  
      SECTION 7.   COLLATERAL REPORTING AND COVENANTS 47 7.1   Collateral
Reporting 47 7.2   Accounts Covenants 47 7.3   Inventory Covenants 48 7.4  
Equipment and Real Property Covenants 49 7.5   Power of Attorney 49 7.6   Right
to Cure 50 7.7   Access to Premises 51         SECTION 8.   REPRESENTATIONS AND
WARRANTIES 51 8.1   Corporate Existence, Power and Authority 51 8.2   Name;
State of Organization; Chief Executive Office; Collateral Locations 51 8.3  
Financial Statements; No Material Adverse Change 52 8.4   Priority of Liens;
Title to Properties 52 8.5   Tax Returns 52 8.6   Litigation 52

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8.7   Compliance with Other Agreements and Applicable Laws 53 8.8  
Environmental Compliance 53 8.9   Employee Benefits 54  8.10   Bank Accounts 55
 8.11   Intellectual Property 55  8.12   Subsidiaries; Affiliates;
Capitalization; Solvency 55  8.13   Labor Disputes 56  8.14   Restrictions on
Subsidiaries 56  8.15   Material Contracts 56  8.16   Payable Practices 57  8.17
  Indenture. 57  8.18   Accuracy and Completeness of Information 57  8.19  
Survival of Warranties; Cumulative 57         SECTION 9.   AFFIRMATIVE AND
NEGATIVE COVENANTS 57 9.1   Maintenance of Existence 57 9.2   New Collateral
Locations 58 9.3   Compliance with Laws, Regulations, Etc 58 9.4   Payment of
Taxes and Claims 59 9.5   Insurance 59 9.6   Financial Statements and Other
Information 60 9.7   Sale of Assets, Consolidation, Merger, Dissolution, Etc. 61
9.8   Encumbrances 62 9.9   Indebtedness 64  9.10   Loans, Investments, Etc. 66
 9.11   Dividends and Redemptions 67  9.12   Transactions with Affiliates 67
 9.13   Compliance with ERISA 68  9.14   End of Fiscal Years; Fiscal Quarters 68
 9.16   Limitation of Restrictions Affecting Subsidiaries 68  9.17   Minimum
EBITDA 68  9.18   License Agreements 69  9.19   Extension of Maturity Date of
Indenture 69  9.20   Tampa Sale-Leaseback Transaction 70  9.21   After Acquired
Real Property 71  9.22   Costs and Expenses 72  9.23   Further Assurances 72    
    SECTION 10.   EVENTS OF DEFAULT AND REMEDIES 73 10.1   Events of Default 73
10.2   Remedies 76         SECTION 11.   JURY TRIAL WAIVER; OTHER WAIVERS 79
11.1   Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver 79
11.2   Waiver of Notices 80 11.3   Amendments and Waivers 81 11.4   Waiver of
Counterclaims 82 11.5   Indemnification 82

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SECTION 12.   THE AGENT 83 12.1   Appointment, Powers and Immunities 83 12.2  
Reliance by Agent 84 12.3   Events of Default 84 12.4   Congress in its
Individual Capacity 84 12.5   Indemnification 84 12.6   Non-Reliance on Agent
and Other Lenders 85 12.7   Failure to Act 85 12.8   Additional Loans 85 12.9  
Concerning the Collateral and the Related Financing Agreements 86  12.10   Field
Audit, Examination Reports and other Information; Disclaimer by Lenders 86
 12.11   Collateral Matters 87  12.12   Agency for Perfection 88         SECTION
13.   TERM OF AGREEMENT; MISCELLANEOUS 90 13.1   Term 90 13.2   Interpretative
Provisions 91 13.3   Notices 93 13.4   Partial Invalidity 93 13.6   Successors
94 13.7   Assignments; Participations 95 13.8   Entire Agreement 97

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INDEX TO
EXHIBITS AND SCHEDULES

 

Exhibit A   Form of Assignment and Acceptance   Exhibit B   Information
Certificate   Exhibit C   Form of Compliance Certificate   Schedule 1.39  
Existing Lenders   Schedule 1.40   Existing Letters of Credit   Schedule 1.71  
Permitted Holders  

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LOAN AND SECURITY AGREEMENT

         This Loan and Security Agreement dated as of October 10, 2002 is
entered into by and among REPTRON ELECTRONICS, INC., a Florida corporation
(“Borrower”), the financial institutions from time to time parties hereto as
lenders, whether by execution of this Agreement or an Assignment and Acceptance
(each individually, a “Lender” and collectively, “Lenders”) and CONGRESS
FINANCIAL CORPORATION (FLORIDA), a Florida corporation, in its capacity as agent
for Lenders (in such capacity, “Agent”).

W I T N E S S E T H:

         WHEREAS, Borrower has requested that Agent and Lenders enter into
financing arrangements with Borrower pursuant to which Lenders may make loans
and provide other financial accommodations to Borrower; and

         WHEREAS, each Lender is willing to agree (severally and not jointly) to
make such loans and provide such financial accommodations to Borrower on a
pro rata basis according to its Commitment (as defined below) on the terms and
conditions set forth herein and Agent is willing to act as agent for Lenders on
the terms and conditions set forth herein and the other Financing Agreements;

         NOW, THEREFORE, in consideration of the mutual conditions and
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:

SECTION 1.       DEFINITIONS

         For purposes of this Agreement, the following terms shall have the
respective meanings given to them below:

         1.1  “Accounts” shall mean, all present and future rights of Borrower
to payment of a monetary obligation, whether or not earned by performance, which
is not evidenced by chattel paper or an instrument, (a) for property that has
been or is to be sold, leased, licensed, assigned, or otherwise disposed of, (b)
for services rendered or to be rendered, (c) for a secondary obligation incurred
or to be incurred, or (d) arising out of the use of a credit or charge card or
information contained on or for use with the card.

         1.2  “Adjusted Eurodollar Rate” shall mean, with respect to each
Interest Period for any Eurodollar Rate Loan, the rate per annum (rounded
upwards, if necessary, to the next one-sixteenth (1/16) of one (1%) percent)
determined by dividing (a) the Eurodollar Rate for such Interest Period by (b) a
percentage equal to: (i) one (1) minus (ii) the Reserve Percentage. For purposes
hereof, “Reserve Percentage” shall mean the reserve percentage, expressed as a

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decimal, prescribed by any United States or foreign banking authority for
determining the reserve requirement which is or would be applicable to deposits
of United States dollars in a non-United States or an international banking
office of Reference Bank used to fund a Eurodollar Rate Loan or any Eurodollar
Rate Loan made with the proceeds of such deposit, whether or not the Reference
Bank actually holds or has made any such deposits or loans. The Adjusted
Eurodollar Rate shall be adjusted on and as of the effective day of any change
in the Reserve Percentage.

         1.3  “Affiliate” shall mean, with respect to a specified Person, any
other Person which directly or indirectly, through one or more intermediaries,
controls or is controlled by or is under common control with such Person, and
without limiting the generality of the foregoing, includes (i) any Person which
beneficially owns or holds fifteen (15%) percent or more of any class of Voting
Stock of such Person or other equity interests in such Person, (a) any Person of
which such Person beneficially owns or holds fifteen (15%) percent or more of
any class of Voting Stock or in which such Person beneficially owns or holds
fifteen (15%) percent or more of the equity interests and (b) any director or
executive officer of such Person. For the purposes of this definition, the term
“control” (including with correlative meanings, the terms “controlled by” and
“under common control with”), as used with respect to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of Voting Stock, by agreement or otherwise.

         1.4  “Agent” shall mean Congress Financial Corporation (Florida), in
its capacity as agent on behalf of Lenders pursuant to the terms hereof and any
replacement or successor agent hereunder.

         1.5  “Agent Payment Account” shall mean account no. 5000 0000 30334 of
Agent at Wachovia Bank, National Association or such other account of Agent as
Agent may from time to time designate to Borrower as the Agent Payment Account
for purposes of this Agreement and the other Financing Agreements.

         1.6  “Applicable Margin” shall mean, at any time, as to the Interest
Rate for Prime Rate Loans and the Interest Rate for Eurodollar Rate Loans, the
lower applicable percentage (on a per annum basis) set forth below set forth
opposite either the Quarterly Average Excess Availability for the immediately
preceding fiscal quarter or the Leverage Ratio as of the last day of the
immediately preceding fiscal quarter (which ratio for this purpose shall be
calculated based on the four (4) immediately preceding fiscal quarters):

Quarterly Average
Excess Availability Leverage Ratio Applicable
Prime Rate
Margin Applicable
Eurodollar
Rate Margin           (a) $40,000,000 or more Less than 2.50 to 1.00 1/2% 2 1/2%

 

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(b) Greater than or equal to
        $30,000,000 and less
        than $40,000,000 Greater than 2.50 to 1.00 but equal to or less than
3.00 to 1.00 3/4% 2 3/4%           (c) Greater than or equal to
        $20,000,000 and less
        than $30,000,000 Greater than 3.00 to 1.00 but equal to or less than
3.50 to 1.00 1% 3%           (d) Greater than or equal to
        $10,000,000 and less
        than $20,000,000 Greater than 3.50 to 1.00 but equal to or less than
4.00 to 1.00 1 1/4% 3 1/4%           (e) Less than $10,000,000 Greater than 4.00
to 1.00 1 1/2% 3 1/2%

Provided, that, (i) the Applicable Margin shall be calculated and established
once each fiscal quarter (commencing with the fiscal quarter ending on or about
December 31, 2002) and shall remain in effect until such date thereafter as it
may be adjusted in accordance with Sections 1.53(b) or 1.53(c) hereof and (ii)
the Applicable Margin shall be the lower percentage set forth above based on the
Quarterly Average Excess Availability or the Leverage Ratio.

         1.7  “Assignment and Acceptance” shall mean an Assignment and
Acceptance substantially in the form of Exhibit A attached hereto (with blanks
appropriately completed) delivered to Agent in connection with an assignment of
a Lender’s interest hereunder in accordance with the provisions of Section 13.7
hereof.

         1.8  “Blocked Accounts” shall have the meaning set forth in Section 6.3
hereof.

         1.9  “Borrowing Base” shall mean, at any time, the amount equal to:

                  (a)  the lesser of:

                           (i)  the amount equal to: (A) eighty-five (85%)
percent of the Net Amount of the Eligible Accounts plus (B) the lesser of
(1) the Inventory Loan Limit or (2) the lesser of (x) thirty-five (35%) percent
multiplied by the Value of the Eligible Inventory of Borrower consisting of raw
materials or finished goods or (y) eighty-five (85%) percent of the Net Recovery
Percentage multiplied by the Value of such Eligible Inventory, or

                           (ii)  the Revolving Loan Limit;

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                   (b)  Reserves.

For purposes only of applying the Inventory Loan Limit, Agent may treat the then
undrawn amounts of outstanding Letter of Credit Accommodations for the purpose
of purchasing Eligible Inventory as Revolving Loans to the extent Agent is in
effect basing the issuance of the Letter of Credit Accommodations on the Value
of the Eligible Inventory being purchased with such Letter of Credit
Accommodations. In determining the actual amounts of such Letter of Credit
Accommodations to be so treated for purposes of the sublimit, the outstanding
Revolving Loans and Reserves shall be attributed first to any components of the
lending formulas set forth above that are not subject to such sublimit, before
being attributed to the components of the lending formulas subject to such
sublimit.

         1.10  “Business Day” shall mean any day other than a Saturday, Sunday,
or other day on which commercial banks are authorized or required to close under
the laws of the State of New York, or the State of North Carolina, and a day on
which Agent is open for the transaction of business, except that if a
determination of a Business Day shall relate to any Eurodollar Rate Loans, the
term Business Day shall also exclude any day on which banks are closed for
dealings in dollar deposits in the London interbank market or other applicable
Eurodollar Rate market.

         1.11  “Capital Leases” shall mean, as applied to any Person, any lease
of (or any agreement conveying the right to use) any property (whether real,
personal or mixed) by such Person as lessee which in accordance with GAAP, is
required to be reflected as a liability on the balance sheet of such Person.

         1.12  “Capital Stock” shall mean, with respect to any Person, any and
all shares, interests, participations or other equivalents (however designated)
of such Person’s capital stock or partnership, limited liability company or
other equity interests at any time outstanding, and any and all rights, warrants
or options exchangeable for or convertible into such capital stock or other
interests (but excluding any debt security that is exchangeable for or
convertible into such capital stock).

         1.13  “Cash Equivalents” shall mean, at any time, (a) any evidence of
Indebtedness with a maturity date of ninety (90) days or less issued or directly
and fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof; provided, that, the full faith and credit of the United
States of America is pledged in support thereof; (b) certificates of deposit or
bankers’ acceptances with a maturity of ninety (90) days or less of any
financial institution that is a member of the Federal Reserve System having
combined capital and surplus and undivided profits of not less than
$250,000,000; (c) commercial paper (including variable rate demand notes) with a
maturity of ninety (90) days or less issued by a corporation (except an
Affiliate of Borrower) organized under the laws of any State of the United
States of America or the District of Columbia and rated at least A-1 by Standard
& Poor’s Ratings Service, a division of The McGraw-Hill Companies, Inc. or at
least P-1 by Moody’s Investors Service, Inc.; (d) repurchase obligations with a
term of not more than thirty (30) days for underlying securities of the types
described in clause (a) above entered into with any financial institution having
combined capital and surplus and undivided profits of not less than
$250,000,000; (e) repurchase agreements and reverse repurchase agreements
relating to marketable direct obligations issued or

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unconditionally guaranteed by the United States of America or issued by any
governmental agency thereof and backed by the full faith and credit of the
United States of America, in each case maturing within ninety (90) days or less
from the date of acquisition; provided, that, the terms of such agreements
comply with the guidelines set forth in the Federal Financial Agreements of
Depository Institutions with Securities Dealers and Others, as adopted by the
Comptroller of the Currency on October 31, 1985; and (f) investments in money
market funds and mutual funds which invest substantially all of their assets in
securities of the types described in clauses (a) through (e) above.

         1.14  “Change of Control” shall mean (a) the transfer (in one
transaction or a series of transactions) of all or substantially all of the
assets of Borrower or any Obligor to any Person or group (as such term is used
in Section 13(d)(3) of the Exchange Act); (b) the liquidation or dissolution of
Borrower or any Obligor or the adoption of a plan by the stockholders of
Borrower or any Obligor relating to the dissolution or liquidation of Borrower
or any Obligor; (c) without the consent of Agent and Required Lenders, the
acquisition by any Person or group (as such term is used in Section 13(d)(3) of
the Exchange Act), except for one or more Permitted Holders, of beneficial
ownership, directly or indirectly, of a majority of the voting power of the
total outstanding Voting Stock of Borrower or any Obligor or the Board of
Directors of Borrower or any Obligor; or (d) during any period of two (2)
consecutive years, individuals who at the beginning of such period constituted
the Board of Directors of Borrower or any Obligor (together with any new
directors whose nomination for election by the stockholders of Borrower or any
Obligor, as the case may be, was approved by a vote of at least sixty-six and
two-thirds (66 2/3%) percent of the directors then still in office who were
either directors at the beginning of such period or whose election or nomination
for election was previously so approved) cease for any reason to constitute a
majority of the Board of Directors of Borrower or any Obligor then still in
office.

         1.15  “Code” shall mean the Internal Revenue Code of 1986, as the same
now exists or may from time to time hereafter be amended, modified, recodified
or supplemented, together with all rules, regulations and interpretations
thereunder or related thereto.

         1.16  “Collateral” shall have the meaning set forth in Section 5
hereof.

         1.17  “Collateral Access Agreement” shall mean an agreement in writing,
in form and substance satisfactory to Agent, from any lessor of premises to
Borrower, or any other person to whom any Collateral is consigned or who has
custody, control or possession of any such Collateral or is otherwise the owner
or operator of any premises on which any of such Collateral is located, pursuant
to which such lessor, consignee or other person, inter alia, acknowledges the
first priority security interest of Agent in such Collateral, agrees to waive
any and all claims such lessor, consignee or other person may, at any time, have
against such Collateral, whether for processing, storage or otherwise, and
agrees to permit Agent access to, and the right to remain on, the premises of
such lessor, consignee or other person so as to exercise Agent’s rights and
remedies and otherwise deal with such Collateral and in the case of any
consignee or other person who at any time has custody, control or possession of
any Collateral, acknowledges that it holds and will hold possession of the
Collateral for the benefit of Agent and Lenders and agrees to follow all
instructions of Agent with respect thereto.

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         1.18  “Commitment” shall mean, at any time, as to each Lender, the
principal amount set forth below such Lender’s signature on the signatures pages
hereto designated as the Commitment or on Schedule 1 to the Assignment and
Acceptance Agreement pursuant to which such Lender became a Lender hereunder in
accordance with the provisions of Section 13.7 hereof, as the same may be
adjusted from time to time in accordance with the terms hereof; sometimes being
collectively referred to herein as “Commitments”.

         1.19  “Congress” shall mean Congress Financial Corporation (Florida), a
Florida corporation, in its individual capacity, and its successors and assigns.

         1.20  “Consolidated Net Income” shall mean, with respect to any Person
for any period, the aggregate of the net income (loss) of such Person and its
Subsidiaries, on a consolidated basis, for such period (excluding to the extent
included therein any extraordinary or non-recurring gains and extraordinary
non-cash charges and including any gains or non-cash charges relating to the
Tampa Sale Leaseback Transaction*) after deducting all charges which should be
deducted before arriving at the net income (loss) for such period and after
deducting the Provision for Taxes for such period, all as determined in
accordance with GAAP; provided, that, (a) the net income of any Person that is
not a wholly-owned Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid or payable to such Person or a wholly-owned Subsidiary of
such Person; (b) except to the extent included pursuant to the foregoing clause,
the net income of any Person accrued prior to the date it becomes a wholly-owned
Subsidiary of such Person or is merged into or consolidated with such Person or
any of its wholly-owned Subsidiaries or that Person’s assets are acquired by
such Person or by any of its wholly-owned Subsidiaries shall be excluded; and
(c) the effect of any change in accounting principles adopted by such Person or
its Subsidiaries after the date hereof shall be excluded. For the purposes of
this definition, net income excludes any gain and non-cash loss (but not any
cash loss) together with any related Provision for Taxes for such gain and
non-cash loss (but not any cash loss) realized upon the sale or other
disposition of any assets that are not sold in the ordinary course of business
(including, without limitation, dispositions pursuant to sale and leaseback
transactions) or of any capital stock of such Person or a Subsidiary of such
Person and any net income realized as a result of changes in accounting
principles or the application thereof to such Person.

         1.21  “Credit Facility” shall mean the Loans and Letter of Credit
Accommodations provided to or for the benefit of Borrower pursuant to Sections
2.1 and 2.2 hereof.

         1.22  “Default” shall mean an act, condition or event which with notice
or passage of time or both would constitute an Event of Default.

         1.23  “Defaulting Lender” shall have the meaning set forth in Section
6.10 hereof.

         1.24  “Deposit Account Control Agreement” shall mean an agreement in
writing, in form and substance satisfactory to Agent, by and among Agent,
Borrower or the Obligor with a deposit account at any bank and the bank at which
such deposit account is at any time maintained which provides that such bank
will comply with instructions originated by Agent directing disposition of the
funds in the deposit account without further consent by Borrower or

* Portions of this Exhibit have been deleted and filed separately with the
Securities and Exchange Commission pursuant to the Company's request for
confidential treatment pursuant to Rule 24b-2 promulgated under the Securities
Exchange Act.

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such Obligor and such other terms and conditions as Agent may require, including
as to any such agreement with respect to any Blocked Account, providing that all
items received or deposited in the Blocked Accounts are the property of Agent,
that the bank has no lien upon, or right to setoff against, the Blocked
Accounts, the items received for deposit therein, or the funds from time to time
on deposit therein and that the bank will wire, or otherwise transfer, in
immediately available funds, on a daily basis to the Agent Payment Account all
funds received or deposited into the Blocked Accounts.

         1.25  “EBITDA” shall mean, as to any Person, with respect to any
period, an amount equal to: (a) the Consolidated Net Income of such Person for
such period, plus (b) depreciation and amortization for such period (to the
extent deducted in the computation of Consolidated Net Income of such Person),
all in accordance with GAAP, plus (c) Interest Expense for such period (to the
extent deducted in the computation of Consolidated Net Income of such Person),
plus (d) the Provision of Taxes for such period (to the extent deducted in the
computation of Consolidated Net Income of such Person).

         1.26  “Eligible Accounts” shall mean Accounts created by Borrower which
are and continue to be acceptable to Agent based on the criteria set forth
below. In general, Accounts shall be Eligible Accounts if:

                  (a)  such Accounts arise from the actual and bona fide sale
and delivery of goods by such Borrower or rendition of services by such Borrower
in the ordinary course of its business which transactions are completed in
accordance with the terms and provisions contained in any documents related
thereto;

                  (b)  such Accounts are not unpaid more than the earlier of
sixty (60) days after the original due date for them or ninety (90) days after
the date of the original invoice for them;

                  (c)  such Accounts comply with the terms and conditions
contained in Section 7.2(b) of this Agreement;

                  (d)  such Accounts do not arise from sales on consignment,
guaranteed sale, sale and return, sale on approval, or other terms under which
payment by the account debtor may be conditional or contingent;

                  (e)  the chief executive office of the account debtor with
respect to such Accounts is located in the United States of America or Canada
(provided, that, at any time promptly upon Agent’s request, Borrower shall
execute and deliver, or cause to be executed and delivered, such other
agreements, documents and instruments as may be required by Agent to perfect the
security interests of Agent in those Accounts of an account debtor with its
chief executive office or principal place of business in Canada in accordance
with the applicable laws of the Province of Canada in which such chief executive
office or principal place of business is located and take or cause to be taken
such other and further actions as Agent may request to enable Agent as secured
party with respect thereto to collect such Accounts under the applicable Federal
or Provincial laws of Canada) or, at Agent’s option, if the chief executive
office and principal place of business of the account debtor with respect to
such Accounts is located other than in the

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United States of America or Canada, then if either: (i) the account debtor has
delivered to such Borrower an irrevocable letter of credit issued or confirmed
by a bank satisfactory to Agent and payable only in the United States of America
and in U.S. dollars, sufficient to cover such Account, in form and substance
satisfactory to Agent and if required by Agent, the original of such letter of
credit has been delivered to Agent or Agent’s agent and the issuer thereof, and
such Borrower has complied with the terms of Section 5.2(f) hereof with respect
to the assignment of the proceeds of such letter of credit to Agent or naming
Agent as transferee beneficiary thereunder, as Agent may specify, or (ii) such
Account is subject to credit insurance payable to Agent issued by an insurer and
on terms and in an amount acceptable to Agent, or (iii) such Account is
otherwise acceptable in all respects to Agent (subject to such lending formula
with respect thereto as Agent may determine);

                  (f)  such Accounts do not consist of progress billings (such
that the obligation of the account debtors with respect to such Accounts is
conditioned upon Borrower’s satisfactory completion of any further performance
under the agreement giving rise thereto), bill and hold invoices or retainage
invoices, except as to bill and hold invoices, if Agent shall have received an
agreement in writing from the account debtor, in form and substance satisfactory
to Agent, confirming the unconditional obligation of the account debtor to take
the goods related thereto and pay such invoice;

                  (g)  the account debtor with respect to such Accounts has not
asserted a counterclaim, defense or dispute and does not have, and does not
engage in transactions which may give rise to any right of setoff or recoupment
against such Accounts (but the portion of the Accounts of such account debtor in
excess of the amount at any time and from time to time owed by such Borrower to
such account debtor or claimed owed by such account debtor may be deemed
Eligible Accounts),

                  (h)  there are no facts, events or occurrences which would
impair the validity, enforceability or collectability of such Accounts or reduce
the amount payable or delay payment thereunder;

                  (i)  such Accounts are subject to the first priority, valid
and perfected security interest of Agent and any goods giving rise thereto are
not, and were not at the time of the sale thereof, subject to any liens except
those permitted in this Agreement (but not including for purposes of this
exception (i) any purchase money security interests or liens that may be
permitted under this Agreement, or (ii) any other security interests or liens
that may have priority over the security interests of Agent or (iii) any
security interests or liens that are not subject to an intercreditor agreement
in form and substance satisfactory to Agent between the holder of such security
interest or lien and Agent);

                  (j)  neither the account debtor nor any officer or employee of
the account debtor with respect to such Accounts is an officer, employee, agent
or other Affiliate of Borrower or any Obligor;

                  (k)  the account debtors with respect to such Accounts are not
any foreign government, the United States of America, any State, political
subdivision, department, agency

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or instrumentality thereof, unless, if the account debtor is the United States
of America, any State, political subdivision, department, agency or
instrumentality thereof, upon Agent’s request, the Federal Assignment of Claims
Act of 1940, as amended or any similar State or local law, if applicable, has
been complied with in a manner satisfactory to Agent;

                  (l)  there are no proceedings or actions which are threatened
or pending against the account debtors with respect to such Accounts which might
result in any material adverse change in any such account debtor’s financial
condition (including, without limitation, any bankruptcy, dissolution,
liquidation, reorganization or similar proceeding);

                  (m)  such Accounts are not evidenced by or arising under any
instrument or chattel paper;

                  (n)  the aggregate amount of such Accounts owing by a single
account debtor do not constitute more than ten (10%) percent of the aggregate
amount of all otherwise Eligible Accounts, provided that, in the case of
Accounts owing by Diebold, Incorporated, such Accounts do not constitute more
than eighteen (18%) percent of the aggregate amount of all otherwise Eligible
Accounts, provided further that from and after the sale of Borrower’s Reptron
Distribution Division as permitted under Section 9.7(b)(v), the aggregate amount
of such Accounts owing by Diebold, Incorporated do not constitute more than
twenty-five (25%) percent of the aggregate amount of all otherwise Eligible
Accounts; except that, in the event that the short term commercial paper rating
of Diebold, Incorporated is less than A or higher by Moody’s Investors Service,
Inc. or A-3 or higher by Standard & Poor’s Ratings Service, a division of The
McGraw-Hill Companies, Inc. or Diebold, Incorporated’s long term unsecured debt
rating is less than A or higher by Standard & Poor’s Ratings Service, a division
of The McGraw-Hill Companies, Inc. or Moody’s Investors Service, Inc., then the
aggregate amount of Accounts owing by Diebold, Incorporated do not constitute
more than ten (10%) percent of the aggregate amount of all otherwise Eligible
Accounts (but, in each case, with respect to all of the foregoing, the portion
of the Accounts not in excess of the applicable percentages set forth above may
be deemed Eligible Accounts);

                  (o)  such Accounts are not owed by an account debtor who has
Accounts unpaid more than the earlier of sixty (60) days after the original due
date for them or ninety (90) days after the original invoice date for them which
constitute more than fifty (50%) percent of the total Accounts of such account
debtor;

                  (p)  the account debtor is not located in a state requiring
the filing of a Notice of Business Activities Report or similar report in order
to Borrower to seek judicial enforcement in such State of payment of such
Account, unless Borrower has qualified to do business in such state or has filed
a Notice of Business Activities Report or equivalent report for the then current
year or such failure to file and inability to seek judicial enforcement is
capable of being remedied without any material delay or material cost; and

                  (q)  such Accounts are owed by account debtors deemed
creditworthy at all times by Agent.

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The criteria for Eligible Accounts set forth above may only be changed and any
new criteria for Eligible Accounts may only be established by Agent in good
faith based on either: (i) an event, condition or other circumstance arising
after the date hereof, or (ii) an event, condition or other circumstance
existing on the date hereof to the extent Agent has no written notice thereof
from Borrower prior to the date hereof, in either case under clause (i) or (ii)
which adversely affects or could reasonably be expected to adversely affect the
Accounts in the good faith determination of Agent. Any Accounts which are not
Eligible Accounts shall nevertheless be part of the Collateral.

         1.27  “Eligible Inventory” shall mean, Inventory consisting of finished
goods held for resale in the ordinary course of the business of Borrower and raw
materials for such finished goods, in each case which are acceptable to Agent
based on the criteria set forth below. In general, Eligible Inventory shall not
include (a) work-in-process; (b) spare parts for equipment; (c) packaging and
shipping materials; (d) supplies used or consumed in Borrower’s business; (e)
Inventory at premises other than those owned or leased and controlled by
Borrower; provided, that, (i) as to locations which are leased by Borrower, if
Agent shall not have received a Collateral Access Agreement from the owner and
operator with respect to such location, duly authorized, executed and delivered
by such owner and operator (or Agent shall determine to accept a Collateral
Access Agreement that does not include all required provisions or provisions in
the form otherwise required by Agent), Agent may, at its option, establish such
Reserves in respect of amounts at any time due or to become due to the owner and
lessor thereof as Agent shall determine, and (ii) as to locations owned and
operated by a third person, if Agent shall not have received a Collateral Access
Agreement from the owner and operator with respect to such location, duly
authorized, executed and delivered by such owner and operator (or Agent shall
determine to accept a Collateral Access Agreement that does not include all
required provisions or provisions in the form otherwise required by Agent),
Agent may, at its option, establish such Reserves in respect of amounts at any
time due or to become due to the owner and operator thereof as Agent shall
determine, provided that, in addition, if required by Agent, in order for such
Inventory at locations owned and operated by a third person to be Eligible
Inventory, Agent shall have received: (A) UCC financing statements between the
owner and operator, as consignee or bailee and Borrower, as consignor or bailor,
in form and substance satisfactory to Agent, which are duly assigned to Agent
and (B) a written notice to any lender to the owner and operator of the first
priority security interest in such Inventory of Agent; (f) Inventory subject to
a security interest or lien in favor of any Person other than Agent except those
permitted in this Agreement (but not including for purposes of this exception
(i) any purchase money security interests or liens that may be permitted under
this Agreement, or (ii) any other security interests or liens that may have
priority over the security interests of Agent or (iii) any security interests or
liens that are not subject to an intercreditor agreement in form and substance
satisfactory to Agent between the holder of such security interest or lien and
Agent); (g) bill and hold goods; (h) obsolete or slow moving Inventory; (i)
Inventory which is not subject to the first priority, valid and perfected
security interest of Agent; (j) returned, damaged and/or defective Inventory;
(k) Inventory purchased or sold on consignment and (l) Inventory located outside
the United States of America. The criteria for Eligible Inventory set forth
above may only be changed and any new criteria for Eligible Inventory may only
be established by Agent in good faith based on either: (i) an event, condition
or other circumstance arising after the date hereof, or (ii) an event,

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condition or other circumstance existing on the date hereof to the extent Agent
has no written notice thereof from Borrower prior to the date hereof, in either
case under clause (i) or (ii) which adversely affects or could reasonably be
expected to adversely affect the Inventory in the good faith determination of
Agent. Any Inventory which is not Eligible Inventory shall nevertheless be part
of the Collateral.

         1.28  “Eligible Transferee” shall mean (a) any Lender; (b) the parent
company of any Lender and/or any Affiliate of such Lender which is at least
fifty (50%) percent owned by such Lender or its parent company; (c) any person
(whether a corporation, partnership, trust or otherwise) that is engaged in the
business of making, purchasing, holding or otherwise investing in bank loans and
similar extensions of credit in the ordinary course of its business and is
administered or managed by a Lender or with respect to any Lender that is a fund
which invests in bank loans and similar extensions of credit, any other fund
that invests in bank loans and similar extensions of credit and is managed by
the same investment advisor as such Lender or by an Affiliate of such investment
advisor, and in each case is approved by Agent; and (d) any other commercial
bank, financial institution or “accredited investor” (as defined in Regulation D
under the Securities Act of 1933) approved by Agent, provided, that, (i) neither
Borrower nor any Obligor or any Affiliate of Borrower or any Obligor shall
qualify as an Eligible Transferee and (ii) no Person to whom any Indebtedness
which is in any way subordinated in right of payment to any other Indebtedness
of Borrower or Obligor shall qualify as an Eligible Transferee, except as Agent
may otherwise specifically agree.

         1.29  “Environmental Laws” shall mean all foreign, Federal, State and
local laws (including common law), legislation, rules, codes, licenses, permits
(including any conditions imposed therein), authorizations, judicial or
administrative decisions, injunctions or agreements between Borrower and any
Governmental Authority, (a) relating to pollution and the protection,
preservation or restoration of the environment (including air, water vapor,
surface water, ground water, drinking water, drinking water supply, surface
land, subsurface land, plant and animal life or any other natural resource), or
to human health or safety, (b) relating to the exposure to, or the use, storage,
recycling, treatment, generation, manufacture, processing, distribution,
transportation, handling, labeling, production, release or disposal, or
threatened release, of Hazardous Materials, or (c) relating to all laws with
regard to recordkeeping, notification, disclosure and reporting requirements
respecting Hazardous Materials. The term “Environmental Laws” includes (i) the
Federal Comprehensive Environmental Response, Compensation and Liability Act of
1980, the Federal Superfund Amendments and Reauthorization Act, the Federal
Water Pollution Control Act of 1972, the Federal Clean Water Act, the Federal
Clean Air Act, the Federal Resource Conservation and Recovery Act of 1976
(including the Hazardous and Solid Waste Amendments thereto), the Federal Solid
Waste Disposal and the Federal Toxic Substances Control Act, the Federal
Insecticide, Fungicide and Rodenticide Act, and the Federal Safe Drinking Water
Act of 1974, (ii) applicable state counterparts to such laws and (iii) any
common law or equitable doctrine that may impose liability or obligations for
injuries or damages due to, or threatened as a result of, the presence of or
exposure to any Hazardous Materials.

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         1.30  “Equipment” shall mean all of Borrower’s now owned and hereafter
acquired equipment, wherever located, including machinery, data processing and
computer equipment (whether owned or licensed and including embedded software),
vehicles, tools, furniture, fixtures, all attachments, accessions and property
now or hereafter affixed thereto or used in connection therewith, and
substitutions and replacements thereof, wherever located.

         1.31  “ERISA” shall mean the United States Employee Retirement Income
Security Act of 1974, together with all rules, regulations and interpretations
thereunder or related thereto.

         1.32  “ERISA Affiliate” shall mean any person required to be aggregated
with Borrower or any of its Subsidiaries under Sections 414(b), 414(c), 414(m)
or 414(o) of the Code.

         1.33  “ERISA Event” shall mean (a) any “reportable event”, as defined
in Section 4043(c) of ERISA or the regulations issued thereunder, with respect
to a Plan; (b) the adoption of any amendment to a Plan that would require the
provision of security pursuant to Section 401(a)(29) of the Code or Section 307
of ERISA; (c) the existence with respect to any Plan of an “accumulated funding
deficiency” (as defined in Section 412 of the Code or Section 302 of ERISA),
whether or not waived; (d) the filing pursuant to Section 412 of the Code or
Section 303(d) of ERISA of an application for a waiver of the minimum funding
standard with respect to any Plan; (e) the occurrence of a “prohibited
transaction” with respect to which Borrower or any Obligor, or any of its or
their respective Subsidiaries is a “disqualified person” (within the meaning of
Section 4975 of the Code) or with respect to which Borrower, any Obligor or any
of its or their respective Subsidiaries could otherwise be liable; (f) a
complete or partial withdrawal by Borrower, any Obligor or any ERISA Affiliate
from a Multiemployer Plan or a cessation of operations which is treated as such
a withdrawal or notification that a Multiemployer Plan is in reorganization;
(g) the filing of a notice of intent to terminate, the treatment of a Plan
amendment as a termination under Section 4041 or 4041A of ERISA, or the
commencement of proceedings by the Pension Benefit Guaranty Corporation to
terminate a Plan; (h) 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 Plan; (i) the imposition of any
liability under Title IV of ERISA, other than the Pension Benefit Guaranty
Corporation premiums due but not delinquent under Section 4007 of ERISA, upon
Borrower, any Obligor or any ERISA Affiliate in excess of $25,000 and (j) any
other event or condition with respect to a Plan including any Plan subject to
Title IV of ERISA maintained, or contributed to, by any ERISA Affiliate that
could reasonably be expected to result in liability of Borrower in excess of
$25,000.

         1.34 “Eurodollar Rate” shall mean with respect to the Interest Period
for a Eurodollar Rate Loan, the interest rate per annum equal to the arithmetic
average of the rates of interest per annum (rounded upwards, if necessary, to
the next one-sixteenth (1/16) of one (1%) percent) at which Reference Bank is
offered deposits of United States dollars in the London interbank market (or
other Eurodollar Rate market selected by Borrower or and approved by Agent) on
or about 9:00 a.m. (New York time) two (2) Business Days prior to the
commencement of such Interest Period in amounts substantially equal to the
principal amount of the Eurodollar Rate Loans requested by and available to
Borrower in accordance with this Agreement, with a maturity of comparable
duration to the Interest Period selected by or on behalf of Borrower.

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         1.35  “Eurodollar Rate Loans” shall mean any Loans or portion thereof
on which interest is payable based on the Adjusted Eurodollar Rate in accordance
with the terms hereof.

         1.36  “Event of Default” shall mean the occurrence or existence of any
event or condition described in Section 10.1 hereof.

         1.37  “Excess Availability” shall mean, the amount, as determined by
Agent, calculated at any date, equal to: (a) the lesser of: (i)  the Borrowing
Base and (ii) the Revolving Loan Limit (in each case under (i) or (ii) after
giving effect to any Reserves other than any Reserves in respect of Letter of
Credit Accommodations), minus (b) the sum of: (i) the amount of all then
outstanding and unpaid Obligations (but not including for this purpose the then
outstanding aggregate principal amount of any outstanding Letter of Credit
Accommodations), plus (ii) the amount of all Reserves then established in
respect of Letter of Credit Accommodations, plus (iii) the aggregate amount of
all then outstanding and unpaid trade payables and other obligations of Borrower
which are outstanding more than sixty (60) days past due as of such time (other
than trade payables or other obligations being contested or disputed by Borrower
in good faith).

         1.38  “Exchange Act” shall mean the Securities Exchange Act of 1934,
together with all rules, regulations and interpretations thereunder or related
thereto.

         1.39  “Existing Lenders” shall mean the lenders to Borrower listed on
Schedule 1.39 hereto (and including PNC Bank in its capacity as agent acting for
such lenders) and their respective predecessors, successors and assigns.

         1.40  “Existing Letters of Credit” shall mean, collectively, the
letters of credit issued for the account of Borrower or any Obligor or for which
Borrower is otherwise liable listed on Schedule 1.40 hereto, as the same now
exist or may hereafter be amended, modified, supplemented, extended, renewed,
restated or replaced.

         1.41  “Fee Letter” shall mean the letter agreement, dated of even date
herewith, by and between Borrower and Agent, setting forth certain fees payable
by Borrower to Agent for the benefit of itself and Lenders, as the same now
exists or may hereafter be amended, modified, supplemented, extended, renewed,
restated or replaced.

         1.42  “Financing Agreements” shall mean, collectively, this Agreement
and all notes, guarantees, security agreements, deposit account control
agreements, investment property control agreements, intercreditor agreements and
all other agreements, documents and instruments now or at any time hereafter
executed and/or delivered by Borrower or any Obligor in connection with this
Agreement.

         1.43  “Funded Debt” shall mean, with respect to any Person, any
Indebtedness of such Person and its Subsidiaries consisting of any liability (a)
in respect of borrowed money (whether or not the recourse of the lender is to
the whole of the assets of such Person or only to a portion thereof) or
evidenced by bonds, notes, debentures or similar instruments; (b) representing
the balance deferred and unpaid of the purchase price of any property or
services (except any such balance that constitutes an account payable to a trade
creditor (whether or not an Affiliate)

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created, incurred, assumed or guaranteed by such Person in the ordinary course
of business of such Person in connection with obtaining goods, materials or
services that is not overdue by more than ninety (90) days, unless the trade
payable is being contested in good faith); and (c) all obligations as lessee
under leases which have been, or should be, in accordance with GAAP recorded as
Capital Leases.

         1.44  “GAAP” shall mean generally accepted accounting principles in the
United States of America as in effect from time to time as set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and the statements and pronouncements
of the Financial Accounting Standards Board which are applicable to the
circumstances as of the date of determination consistently applied, except that,
for purposes of Section 9.17 hereof, GAAP shall be determined on the basis of
such principles in effect on the date hereof and consistent with those used in
the preparation of the most recent audited financial statements delivered to
Agent prior to the date hereof.

         1.45  “Governmental Authority” shall mean any nation or government, any
state, province, or other political subdivision thereof, any central bank (or
similar monetary or regulatory authority) thereof, and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.

         1.46  “Hazardous Materials” shall mean any hazardous, toxic or
dangerous substances, materials and wastes, including hydrocarbons (including
naturally occurring or man-made petroleum and hydrocarbons), flammable
explosives, asbestos, urea formaldehyde insulation, radioactive materials,
biological substances, polychlorinated biphenyls, pesticides, herbicides and any
other kind and/or type of pollutants or contaminants (including materials which
include hazardous constituents), sewage, sludge, industrial slag, solvents
and/or any other similar substances, materials, or wastes and including any
other substances, materials or wastes that are or become regulated under any
Environmental Law (including any that are or become classified as hazardous or
toxic under any Environmental Law).

         1.47  “Indebtedness” shall mean, with respect to any Person, any
liability, whether or not contingent, (a) in respect of borrowed money (whether
or not the recourse of the lender is to the whole of the assets of such Person
or only to a portion thereof) or evidenced by bonds, notes, debentures or
similar instruments; (b) representing the balance deferred and unpaid of the
purchase price of any property or services (except any such balance that
constitutes an account payable to a trade creditor (whether or not an Affiliate)
created, incurred, assumed or guaranteed by such Person in the ordinary course
of business of such Person in connection with obtaining goods, materials or
services that is not overdue by more than ninety (90) days, unless the trade
payable is being contested in good faith); (c) all obligations as lessee under
leases which have been, or should be, in accordance with GAAP recorded as
Capital Leases; (d) any contractual obligation, contingent or otherwise, of such
Person to pay or be liable for the payment of any indebtedness described in this
definition of another Person, including, without limitation, any such
indebtedness, directly or indirectly guaranteed, or any agreement to purchase,
repurchase, or otherwise acquire such indebtedness, obligation or liability or
any security therefor, or to provide funds for the payment or discharge thereof,
or to maintain solvency, assets, level of income, or other financial condition;
(e) all obligations with respect to redeemable stock and

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redemption or repurchase obligations under any Capital Stock or other equity
securities issued by such Person; (f) all reimbursement obligations and other
liabilities of such Person with respect to surety bonds (whether bid,
performance or otherwise), letters of credit, banker’s acceptances, drafts or
similar documents or instruments issued for such Person’s account; (g) all
indebtedness of such Person in respect of indebtedness of another Person for
borrowed money or indebtedness of another Person otherwise described in this
definition which is secured by any consensual lien, security interest,
collateral assignment, conditional sale, mortgage, deed of trust, or other
encumbrance on any asset of such Person, whether or not such obligations,
liabilities or indebtedness are assumed by or are a personal liability of such
Person, all as of such time; (h) all obligations, liabilities and indebtedness
of such Person (marked to market) arising under swap agreements, cap agreements
and collar agreements and other agreements or arrangements designed to protect
such person against fluctuations in interest rates or currency or commodity
values; and (i) all obligations owed by such Person under License Agreements
with respect to non-refundable, advance or minimum guarantee royalty payments.

         1.48  “Information Certificate” shall mean the Information Certificates
of Borrower constituting Exhibit B hereto containing material information with
respect to Borrower, its businesses and assets provided by or on behalf of
Borrower to Agent in connection with the preparation of this Agreement and the
other Financing Agreements and the financing arrangements provided for herein.

         1.49  “Intellectual Property” shall mean Borrower’s now owned and
hereafter arising or acquired: patents, patent rights, patent applications,
copyrights, works which are the subject matter of copyrights, copyright
registrations, trademarks, trade names, trade styles, trademark and service mark
applications, and licenses and rights to use any of the foregoing; all
extensions, renewals, reissues, divisions, continuations, and
continuations-in-part of any of the foregoing; all rights to sue for past,
present and future infringement of any of the foregoing; inventions, trade
secrets, formulae, processes, compounds, drawings, designs, blueprints, surveys,
reports, manuals, and operating standards; goodwill (including any goodwill
associated with any trademark or the license of any trademark); customer and
other lists in whatever form maintained; trade secret rights, copyright rights,
rights in works of authorship, domain names and domain name registration;
software and contract rights relating to computer software programs, in whatever
form created or maintained.

         1.50  “Interest Expense” shall mean, for any period, as to any Person,
as determined in accordance with GAAP, the total interest expense of such
Person, whether paid or accrued during such period (including the interest
component of Capital Leases for such period), including, without limitation,
discounts in connection with the sale of any Accounts and bank fees,
commissions, discounts and other fees and charges owed with respect to letters
of credit, banker’s acceptances or similar instruments, but excluding interest
paid in property other than cash and any other interest expense not payable in
cash.

         1.51  “Interest Period” shall mean for any Eurodollar Rate Loan, a
period of approximately one (1), two (2), or three (3) months duration as
Borrower may elect, the exact duration to be determined in accordance with the
customary practice in the applicable Eurodollar

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Rate market; provided, that, Borrower may not elect an Interest Period which
will end after the last day of the then-current term of this Agreement.

         1.52  “Interest Rate” shall mean,

                  (a)  Commencing as of the date of this Agreement and subject
to clauses (b) and (c) of this definition below:

                           (i)  as to Prime Rate Loans, a rate equal to one and
one-quarter (1 ¼%) percent per annum in excess of the Prime Rate,

                           (ii)  as to Eurodollar Rate Loans, a rate equal to
three and one-quarter (3 ¼%) percent per annum in excess of the Adjusted
Eurodollar Rate (in each case, based on the Eurodollar Rate applicable for the
Interest Period selected by Borrower, as in effect two (2) Business Days prior
to the commencement of such Interest Period, whether such rate is higher or
lower than any rate previously quoted to Borrower).

                  (b)  Subject to clause (c) of this definition below, effective
as of the first (1st) day of the second month of each fiscal quarter (commencing
with the fiscal quarter ending on or about December 31, 2002), the Interest Rate
payable by Borrower shall be increased or decreased, as the case may be, (i) as
to Prime Rate Loans, to the rate equal to the Applicable Margin on a per annum
basis in excess of the Prime Rate, and (ii) as to Eurodollar Rate Loans, to the
rate equal to the Applicable Margin on a per annum basis in excess of the
Adjusted Eurodollar Rate.

                  (c)  Notwithstanding anything to the contrary contained in
clauses (a) and (b) of this definition, (i) from the date hereof up to the six
(6) month anniversary of the date hereof, the Applicable Margin used to
calculate the Interest Rate for Prime Rate Loans shall not be less than one (1%)
percent and the Applicable Margin used to calculate the Interest Rate for
Eurodollar Rate Loans shall be not less than three (3%) percent, and (ii) the
Applicable Margin otherwise used to calculate the Interest Rate for Prime Rate
Loans and Eurodollar Rate Loans shall be the highest percentage set forth in the
definition of the term Applicable Margin for each category of Loans (without
regard to the amount of Quarterly Average Excess Availability or the Leverage
Ratio) plus two (2%) percent per annum, at Lender’s option, (A) for the period
(1) from and after the effective date of termination or non-renewal hereof until
Lender has received full and final payment of all outstanding and unpaid
Obligations which are not contingent and cash collateral or letter of credit, as
Lender may specify, in the amounts and on the terms required under Section 12.1
hereof for contingent Obligations (notwithstanding entry of a judgment against
Borrower or any Obligor) and (2) from and after the date of the occurrence of an
Event of Default and for so long as such Event of Default is continuing, and (B)
on Revolving Loans to Borrower at any time outstanding in excess of the
Borrowing Base or the Revolving Loan Limit (whether or not such excess(es) arise
or are made with or without the knowledge or consent of Lender and whether made
before or after an Event of Default).

         1.53  “Inventory” shall mean all of Borrower’s now owned and hereafter
existing or acquired goods, wherever located, which (a) are leased by Borrower
as lessor; (b) are held by

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Borrower for sale or lease or to be furnished under a contract of service; (c)
are furnished by Borrower under a contract of service; or (d) consist of raw
materials, work in process, finished goods or materials used or consumed in its
business.

         1.54  “Inventory Loan Limit” shall mean, the amount of $25,000,000;
except that, from and after the date that Borrower consummates the sale of
Borrower’s Reptron Distribution Division, as permitted under Section 9.7(b)(v)
hereof, the Inventory Loan Limit shall mean the amount of $12,000,000.

         1.55  “Investment Property Control Agreement” shall mean an agreement
in writing, in form and substance satisfactory to Agent, by and among Agent,
Borrower or any Obligor (as the case may be) and any securities intermediary,
commodity intermediary or other person who has custody, control or possession of
any investment property of Borrower or such obligor acknowledging that such
securities intermediary, commodity intermediary or other person has custody,
control or possession of such investment property on behalf of Agent, that it
will comply with entitlement orders originated by Agent with respect to such
investment property, or other instructions of Agent, or (as the case may be)
apply any value distributed on account of any commodity contract as directed by
Agent, in each case, without the further consent of Borrower or such obligor and
including such other terms and conditions as Agent may require.

         1.56  “Lenders” shall mean the financial institutions who are
signatories hereto as Lenders and other persons made a party to this Agreement
as a Lender in accordance with Section 13.7 hereof, and their respective
successors and assigns; each sometimes being referred to herein individually as
a “Lender”.

         1.57  “Letter of Credit Accommodations” shall mean, collectively, the
letters of credit, merchandise purchase or other guaranties which are from time
to time either (a) issued or opened by Agent or any Lender for the account of
Borrower or any Obligor or (b) with respect to which Agent or Lenders have
agreed to indemnify the issuer or guaranteed to the issuer the performance by
Borrower or any Obligor of its obligations to such issuer; sometimes being
referred to herein individually as “Letter of Credit Accommodation”.

         1.58  “Leverage Ratio” shall mean, at any time, the ratio of: (a) the
Funded Debt of Borrower as of such time (and including for this purpose, (i) the
Indebtedness of Borrower evidenced by or arising under the Senior Subordinated
Notes, (ii) all Funded Debt of Borrower, whether foreign or domestic and (iii)
the Obligations) to (b) the EBITDA of Borrower for the four (4) immediately
preceding fiscal quarters of Borrower (treated as a single accounting period).

         1.59  “License Agreements” shall have the meaning set forth in Section
8.11 hereof.

         1.60  “Loans” shall mean the Revolving Loans.

         1.61  “Material Adverse Effect” shall mean a material adverse effect on
(a) the financial condition, business, performance or operations of Borrower, or
(b) the legality, validity or enforceability of this Agreement or any of the
other Financing Agreements; (c) the legality,

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validity, enforceability, perfection or priority of the security interests and
liens of Agent upon the Collateral; (d) the Collateral or its value; (e) the
ability of Borrower to repay the Obligations or of Borrower to perform its
obligations under this Agreement or any of the other Financing Agreements as and
when to be performed; or (f) the ability of Agent or any Lender to enforce the
Obligations or realize upon the Collateral or otherwise with respect to the
rights and remedies of Agent and Lenders under this Agreement or any of the
other Financing Agreements.

         1.62  “Material Contract” shall mean (a) any contract or other
agreement (other than the Financing Agreements and assembly, distribution or
supply agreements entered in the ordinary course of business), written or oral,
of Borrower involving monetary liability of or to any Person in an amount in
excess of $1,000,000 in any fiscal year and (b) any other contract or other
agreement (other than the Financing Agreements), whether written or oral, to
which Borrower is a party as to which the breach, nonperformance, cancellation
or failure to renew by any party thereto would have a Material Adverse Effect.

         1.63  “Maximum Credit” shall mean the amount of $60,000,000.

         1.64  “Mortgages” shall mean, individually and collectively, each of
the following (as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced): the Mortgage, dated of
even date herewith, by Borrower in favor of Agent with respect to the Real
Property and related assets of Borrower located in Gaylord, Michigan.

         1.65  “Multiemployer Plan” shall mean a “multi-employer plan” as
defined in Section 4001(a)(3) of ERISA which is or was at any time during the
current year or the immediately preceding six (6) years contributed to by
Borrower or any ERISA Affiliate.

         1.66  “Net Amount of Eligible Accounts” shall mean, the gross amount of
the Eligible Accounts less (a) sales, excise or similar taxes included in the
amount thereof and (b) returns, discounts, claims, credits and allowances of any
nature at any time issued, owing, granted, outstanding, available or claimed
with respect thereto.

         1.67  “Net Recovery Percentage” shall mean the fraction, expressed as a
percentage, (a) the numerator of which is the amount equal to the amount of the
recovery in respect of the Inventory at such time a “net orderly liquidation
value” basis as set forth in the most recent acceptable appraisal of Inventory
received by Agent in accordance with Section 7.3, net of operating expenses,
liquidation expenses and commissions, and (b) the denominator of which is the
applicable original cost of the aggregate amount of the Inventory subject to
such appraisal.

         1.68  “Obligations” shall mean any and all Loans, Letter of Credit
Accommodations and all other obligations, liabilities and indebtedness of every
kind, nature and description owing by Borrower to Agent or any Lender and/or any
of their Affiliates, including principal, interest, charges, fees, costs and
expenses, however evidenced, whether as principal, surety, endorser, guarantor
or otherwise, arising under this Agreement or any of the other Financing
Agreements, whether now existing or hereafter arising, whether arising before,
during or after the initial or any renewal term of this Agreement or after the
commencement of any case with respect to Borrower under the United States
Bankruptcy Code or any similar statute (including the payment

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of interest and other amounts which would accrue and become due but for the
commencement of such case, whether or not such amounts are allowed or allowable
in whole or in part in such case), whether direct or indirect, absolute or
contingent, joint or several, due or not due, primary or secondary, liquidated
or unliquidated, or secured or unsecured.

         1.69  “Obligor” shall mean any guarantor, endorser, acceptor, surety or
other person liable on or with respect to the Obligations or who is the owner of
any property which is security for the Obligations, other than Borrower.

         1.70  “Participant” shall mean any financial institution that acquires
and holds a participation in the interest of any Lender in any of the Loans and
Letter of Credit Accommodations in conformity with the provisions of Section
13.7 of this Agreement governing participations.

         1.71  “Permitted Holders” shall mean the persons listed on Schedule
1.71 hereto and their respective successors and assigns.

         1.72  “Person” or “person” shall mean any individual, sole
proprietorship, partnership, corporation (including any corporation which elects
subchapter S status under the Code), limited liability company, limited
liability partnership, business trust, unincorporated association, joint stock
corporation, trust, joint venture or other entity or any government or any
agency or instrumentality or political subdivision thereof.

         1.73    “Plan” means an employee benefit plan (as defined in Section
3(3) of ERISA) which Borrower or any Obligor sponsors, maintains, or to which it
makes, is making, or is obligated to make contributions, or in the case of a
Multiemployer Plan has made contributions at any time during the immediately
preceding six (6) plan years.

         1.74    “Prime Rate” shall mean the rate from time to time publicly
announced by Wachovia Bank, National Association, or its successors, as its
prime rate, whether or not such announced rate is the best rate available at
such bank.

         1.75  “Prime Rate Loans” shall mean any Loans or portion thereof on
which interest is payable based on the Prime Rate in accordance with the terms
thereof.

         1.76  “Pro Rata Share” shall mean as to any Lender, the fraction
(expressed as a percentage) the numerator of which is such Lender’s Commitment
and the denominator of which is the aggregate amount of all of the Commitments
of Lenders, as adjusted from time to time in accordance with the provisions of
Section 13.7 hereof; provided, that, if the Commitments have been terminated,
the numerator shall be the unpaid amount of such Lender’s Loans and its interest
in the Letter of Credit Accommodations and the denominator shall be the
aggregate amount of all unpaid Loans and Letter of Credit Accommodations.

         1.77  “Provision for Taxes” shall mean an amount equal to all taxes
imposed on or measured by net income, whether Federal, State, Provincial, county
or local, and whether foreign

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or domestic, that are paid or payable by any Person in respect of any period in
accordance with GAAP.

         1.78  “Quarterly Average Excess Availability” shall mean, at any time,
the daily average of the Excess Availability of Borrower for the immediately
preceding fiscal quarter as calculated by Lender in good faith.

         1.79  “Real Property” shall mean all now owned and hereafter acquired
real property of Borrower, including leasehold interests, together with all
buildings, structures, and other improvements located thereon and all licenses,
easements and appurtenances relating thereto, wherever located, including the
real property and related assets more particularly described in the Mortgages.

         1.80  “Receivables” shall mean all of the following now owned or
hereafter arising or acquired property of Borrower: (a) all Accounts; (b) all
interest, fees, late charges, penalties, collection fees and other amounts due
or to become due or otherwise payable in connection with any Account; (c) all
payment intangibles of Borrower; (d) letters of credit, indemnities, guarantees,
security or other deposits and proceeds thereof issued payable to Borrower or
otherwise in favor of or delivered to Borrower in connection with any Account;
or (e) all other accounts, contract rights, chattel paper, instruments, notes,
general intangibles and other forms of obligations owing to Borrower, whether
from the sale and lease of goods or other property, licensing of any property
(including Intellectual Property or other general intangibles), rendition of
services or from loans or advances by Borrower or to or for the benefit of any
third person (including loans or advances to any Affiliates or Subsidiaries of
Borrower) or otherwise associated with any Accounts, Inventory or general
intangibles of Borrower (including, without limitation, choses in action, causes
of action, tax refunds, tax refund claims, any funds which may become payable to
Borrower in connection with the termination of any Plan or other employee
benefit plan and any other amounts payable to Borrower from any Plan or other
employee benefit plan, rights and claims against carriers and shippers, rights
to indemnification, business interruption insurance and proceeds thereof,
casualty or any similar types of insurance and any proceeds thereof and proceeds
of insurance covering the lives of employees on which Borrower is a
beneficiary).

         1.81  “Records” shall mean all of Borrower’s present and future books
of account of every kind or nature, purchase and sale agreements, invoices,
ledger cards, bills of lading and other shipping evidence, statements,
correspondence, memoranda, credit files and other data relating to the
Collateral or any account debtor, together with the tapes, disks, diskettes and
other data and software storage media and devices, file cabinets or containers
in or on which the foregoing are stored (including any rights of Borrower with
respect to the foregoing maintained with or by any other person).

         1.82  “Reference Bank” shall mean Wachovia Bank, National Association,
or such other bank as Agent may from time to time designate.

         1.83  “Register” shall have the meaning set forth in Section 13.7
hereof.

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         1.84  “Reptron Computer Products Division” shall mean the Borrower’s
division consisting of Reptron Computer Products, which division, as of the date
hereof, sells memory modules.

         1.85   “Reptron Distribution Division” shall mean the Borrower’s
division consisting of Reptron Distribution, which division, as of the date
hereof, sells vendor lines of semiconductors, passive products and
electromechanical components and provides custom logistics and supply chain
management services.

         1.86  “Required Lenders” shall mean, at any time, those Lenders whose
Pro Rata Shares aggregate sixty-six and two-thirds (66 2/3%) percent or more of
the aggregate of the Commitments of all Lenders, or if the Commitments shall
have been terminated, Lenders to whom at least sixty-six and two-thirds (66
2/3%) percent of the then outstanding Obligations are owing.

         1.87  “Reserves” shall mean as of any date of determination, such
amounts as Agent may from time to time establish and revise in good faith
reducing the amount of Revolving Loans and Letter of Credit Accommodations which
would otherwise be available to Borrower under the lending formula(s) provided
for herein: (a) to reflect events, conditions, contingencies or risks which, as
determined by Agent in good faith, adversely affect, or would have a reasonable
likelihood of adversely affecting, either (i) the Collateral or any other
property which is security for the Obligations or its value or (ii) the assets
or business of Borrower or any Obligor or (iii) the security interests and other
rights of Agent or any Lender in the Collateral (including the enforceability,
perfection and priority thereof) or (b) to reflect Agent’s good faith belief
that any collateral report or financial information furnished by or on behalf of
Borrower or any Obligor to Agent is or may have been incomplete, inaccurate or
misleading in any material respect or (c) to reflect outstanding Letter of
Credit Accommodations as provided in Section 2.2 hereof or (d) in respect of any
state of facts which Agent determines in good faith constitutes a Default or an
Event of Default or (e) to reflect any increases from and after the date of this
Agreement in the percentage of Inventory on hand in excess of demand or in the
percentage of Inventory owned by Borrower greater than 180 days from the date of
purchase, in each case, as a percentage of total Inventory against the
respective percentages as set forth in the Inventory appraisal of the Borrower’s
Inventory conducted by Dovebid Valuation Services, Inc., dated August 30, 2002
or to reflect any increase from and after the date of this Agreement in the
obsolete and slow moving inventory reserves as set forth on Borrower’s general
ledger. Without limiting the generality of the foregoing, Reserves may be
established to reflect that dilution with respect to the Accounts (based on the
ratio of the aggregate amount of non-cash reductions in Accounts for any period
to the aggregate dollar amount of the sales of Borrower for such period) as
calculated by Agent for any period is or is reasonably anticipated to be greater
than five (5%) percent. To the extent Agent may revise the lending formulas used
to determine the Borrowing Base or establish new criteria or revise existing
criteria for Eligible Accounts or Eligible Inventory so as to address any
circumstances, condition, event or contingency in a manner satisfactory to
Agent, Agent shall not establish a Reserve for the same purpose. The amount of
any Reserve established by Agent shall have a reasonable relationship to the
event, condition or other matter which is the basis for such reserve as
determined by Agent in good faith.

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         1.88  “Revolving Loan Limit” shall mean, at any time, the amount equal
to $60,000,000.

         1.89  “Revolving Loans” shall mean the loans now or hereafter made by
or on behalf of any Lender or by Agent for the account of any Lender on a
revolving basis pursuant to the Credit Facility (involving advances, repayments
and readvances) as set forth in Section 2.1 hereof.

         1.90  “Senior Subordinated Indenture” shall mean the Indenture dated as
of August __, 1997 among Borrower and Reliance Trust Company, as trustee, as the
same now exists or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced, pursuant to which Borrower issued the Senior
Subordinated Notes on and subject to the terms and conditions set forth therein.

         1.91  “Senior Subordinated Indenture Extension Agreement” shall have
the meaning set forth in Section 9.19.

         1.92  “Senior Subordinated Indenture Trustee” shall mean Reliance Trust
Company, in its capacity as trustee under the Senior Subordinated Indenture for
the holders of the Senior Subordinated Notes and any successor, replacement or
additional trustee under the Senior Subordinated Indenture, and their respective
successors and assigns.

         1.93  “Senior Subordinated Notes” shall mean, collectively, the 6 3/4%
Convertible Subordinated Notes due August 1, 2004, pursuant to the Senior
Subordinated Indenture, as the same now exist or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced.

         1.94  “Solvent” shall mean, at any time with respect to any Person,
that at such time such Person (a) is able to pay its debts as they mature and
has (and has a reasonable basis to believe it will continue to have) sufficient
capital (and not unreasonably small capital) to carry on its business consistent
with its practices as of the date hereof, and (b) the assets and properties of
such Person at a fair valuation (and including as assets for this purpose at a
fair valuation all rights of subrogation, contribution or indemnification
arising pursuant to any guarantees given by such Person) are greater than the
Indebtedness of such Person, and including subordinated and contingent
liabilities computed at the amount which, such person has a reasonable basis to
believe, represents an amount which can reasonably be expected to become an
actual or matured liability (and including as to contingent liabilities arising
pursuant to any guarantee the face amount of such liability as reduced to
reflect the probability of it becoming a matured liability).

         1.95  “Special Agent Advances” shall have the meaning set forth in
Section 12.11 hereof.

         1.96  “Subsidiary” or “subsidiary” shall mean, with respect to any
Person, any corporation, limited liability company, limited liability
partnership or other limited or general partnership, trust, association or other
business entity of which an aggregate of at least a majority of the outstanding
Capital Stock or other interests entitled to vote in the election of the board
of directors of such corporation (irrespective of whether, at the time, Capital
Stock of any other class or classes of such corporation shall have or might have
voting power by reason of the happening of any contingency), managers, trustees
or other controlling persons, or an equivalent

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controlling interest therein, of such Person is, at the time, directly or
indirectly, owned by such Person and/or one or more subsidiaries of such Person.

         1.97  “Tampa Real Property” shall mean the Borrower’s real property
commonly known as 13750 Reptron Boulevard, Tampa, Florida .

         1.98  “Tampa Sale-Leaseback Transaction” shall mean any arrangement
with any Person providing for the leasing by Borrower of the Tampa Real
Property, which property has been or is to be sold or transferred by Borrower to
such Person in contemplation of such leasing.

         1.99  “UCC” shall mean the Uniform Commercial Code as in effect in the
State of Florida, and any successor statute, as in effect from time to time
(except that terms used herein which are defined in the Uniform Commercial Code
as in effect in the State of Florida on the date hereof shall continue to have
the same meaning notwithstanding any replacement or amendment of such statute
except as Agent may otherwise determine).

         1.100  “Value” shall mean, as determined by Agent in good faith, with
respect to Inventory, the lower of (a) cost computed on a first-in first-out
basis in accordance with GAAP or (b) market value, provided, that, for purposes
of the calculation of the Borrowing Base, (i) the Value of the Inventory shall
not include: (A) the portion of the value of Inventory equal to the profit
earned by any Affiliate on the sale thereof to Borrower or (B) write-ups or
write-downs in value with respect to currency exchange rates and (ii)
notwithstanding anything to the contrary contained herein, the cost of the
Inventory shall be computed in the same manner and consistent with the most
recent appraisal of the Inventory received and accepted by Agent prior to the
date hereof, if any.

         1.101  “Voting Stock” shall mean with respect to any Person, (a) one
(1) or more classes of Capital Stock of such Person having general voting powers
to elect at least a majority of the board of directors, managers or trustees of
such Person, irrespective of whether at the time Capital Stock of any other
class or classes have or might have voting power by reason of the happening of
any contingency, and (b) any Capital Stock of such Person convertible or
exchangeable without restriction at the option of the holder thereof into
Capital Stock of such Person described in clause (a) of this definition.

SECTION 2.       CREDIT FACILITIES

         2.1   Loans.

                  (a)  Subject to and upon the terms and conditions contained
herein, each Lender severally (and not jointly) agrees to fund its Pro Rata
Share of Revolving Loans to Borrower from time to time in amounts requested by
Borrower up to the amount outstanding at any time equal to the lesser of: (i)
the Borrowing Base at such time or (ii) the Revolving Loan Limit.

                  (b)  Agent may, in its discretion, from time to time, upon not
less than five (5) days prior notice to Borrower, reduce the lending formula(s)
with respect to Eligible Inventory to the extent that Agent determines in good
faith that: (i) the number of days of the turnover of the

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Inventory for any period has adversely changed or (ii) the liquidation value of
the Eligible Inventory, or any category thereof, has decreased, including any
decrease attributable to a change in the nature, quality or mix of the
Inventory. The amount of any decrease in the lending formulas shall have a
reasonable relationship to the event, condition or circumstance which is the
basis for such decrease as determined by Agent in good faith. In determining
whether to reduce the lending formula(s), Agent may consider events, conditions,
contingencies or risks which are also considered in determining Eligible
Accounts, Eligible Inventory or in establishing Reserves.

                  (c)  Except in Agent’s discretion, with the consent of all
Lenders, or as otherwise provided herein, (i) the aggregate amount of the Loans
and the Letter of Credit Accommodations outstanding at any time shall not exceed
the Maximum Credit, (ii) the aggregate principal amount of the Revolving Loans
and Letter of Credit Accommodations outstanding at any time to Borrower shall
not exceed the lesser of the Borrowing Base or the Revolving Loan Limit, and
(iii) the aggregate principal amount of the Revolving Loans outstanding at any
time to Borrower based on the Eligible Inventory shall not exceed the Inventory
Loan Limit.

                  (d)  In the event that the aggregate principal amount of the
Revolving Loans and Letter of Credit Accommodations outstanding to Borrower
exceed the Borrowing Base or the Revolving Loan Limit of Borrower, or the
aggregate principal amount of Revolving Loans and Letter of Credit
Accommodations based on the Eligible Inventory exceed the Inventory Loan Limit,
or the aggregate amount of the outstanding Letter of Credit Accommodations
exceed the sublimit for Letter of Credit Accommodations set forth in Section
2.2(e), or the aggregate amount of the Loans and Letter of Credit Accommodations
exceed the Maximum Credit, such event shall not limit, waive or otherwise affect
any rights of Agent or Lenders in such circumstances or on any future occasions
and Borrower shall, upon demand by Agent, which may be made at any time or from
time to time, immediately repay to Agent the entire amount of any such
excess(es) for which payment is demanded.

         2.2   Letter of Credit Accommodations.

                  (a)  Subject to and upon the terms and conditions contained
herein, at the request of Borrower, Agent agrees, for the ratable risk of each
Lender according to its Pro Rata Share, to provide or arrange for Letter of
Credit Accommodations for the account of Borrower containing terms and
conditions acceptable to Agent and the issuer thereof. Any payments made by or
on behalf of Agent or any Lender to any issuer thereof and/or related parties in
connection with the Letter of Credit Accommodations provided to or for the
benefit of Borrower shall constitute additional Revolving Loans to Borrower
pursuant to this Section 2.

                  (b)  In addition to any charges, fees or expenses charged by
any bank or issuer in connection with the Letter of Credit Accommodations,
Borrower shall pay to Agent, for the benefit of Lenders, a letter of credit fee
at a rate equal to two and one-half (2 ½%) percent per annum, on the daily
outstanding balance of the Letter of Credit Accommodations for the immediately
preceding month (or part thereof), payable in arrears as of the first day of
each succeeding month, except that Agent may, and upon the written direction of
Required Lenders shall, require Borrower to pay to Agent for the ratable benefit
of Lenders such letter of credit fee, at a rate equal to four and one-half (4
½%) percent per annum on such daily outstanding balance

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for: (i) the period from and after the date of termination hereof until Agent
and Lenders have received full and final payment of all Obligations
(notwithstanding entry of a judgment against Borrower) and (ii) the period from
and after the date of the occurrence of an Event of Default for so long as such
Event of Default is continuing as determined by Agent. Such letter of credit fee
shall be calculated on the basis of a three hundred sixty (360) day year and
actual days elapsed and the obligation of Borrower to pay such fee shall survive
the termination of this Agreement.

                  (c)  Borrower shall give Agent two (2) Business Days’ prior
written notice of Borrower’s request for the issuance of a Letter of Credit
Accommodation. Such notice shall be irrevocable and shall specify the original
face amount of the Letter of Credit Accommodation requested, the effective date
(which date shall be a Business Day) of issuance of such requested Letter of
Credit Accommodation, whether such Letter of Credit Accommodations may be drawn
in a single or in partial draws, the date on which such requested Letter of
Credit Accommodation is to expire (which date shall be a Business Day), the
purpose for which such Letter of Credit Accommodation is to be issued, and the
beneficiary of the requested Letter of Credit Accommodation. Borrower shall
attach to such notice the proposed terms of the Letter of Credit Accommodation.

                  (d)  In addition to being subject to the satisfaction of the
applicable conditions precedent contained in Section 4 hereof and the other
terms and conditions contained herein, no Letter of Credit Accommodations shall
be available unless each of the following conditions precedent have been
satisfied in a manner satisfactory to Agent: (i) Borrower shall have delivered
to the proposed issuer of such Letter of Credit Accommodation at such times and
in such manner as such proposed issuer may require, an application, in form and
substance satisfactory to such proposed issuer and Agent, for the issuance of
the Letter of Credit Accommodation and such other documents as may be required
pursuant to the terms thereof, and the form and terms of the proposed Letter of
Credit Accommodation shall be satisfactory to Agent and such proposed issuer,
(ii) as of the date of issuance, no order of any court, arbitrator or other
Governmental Authority shall purport by its terms to enjoin or restrain money
center banks generally from issuing letters of credit of the type and in the
amount of the proposed Letter of Credit Accommodation, and no law, rule or
regulation applicable to money center banks generally and no request or
directive (whether or not having the force of law) from any Governmental
Authority with jurisdiction over money center banks generally shall prohibit, or
request that the proposed issuer of such Letter of Credit Accommodation refrain
from, the issuance of letters of credit generally or the issuance of such
Letters of Credit Accommodation; and (iii) the Excess Availability, prior to
giving effect to any Reserves with respect to such Letter of Credit
Accommodations, on the date of the proposed issuance of any Letter of Credit
Accommodations, shall be equal to or greater than: (A) if the proposed Letter of
Credit Accommodation is for the purpose of purchasing Eligible Inventory and the
documents of title with respect thereto are consigned to the issuer, the sum of
(1) the percentage equal to one hundred (100%) percent minus the then applicable
percentage with respect to Eligible Inventory set forth in the definition of the
term Borrowing Base multiplied by the Value of such Eligible Inventory, plus
(2) freight, taxes, duty and other amounts which Agent estimates must be paid in
connection with such Inventory upon arrival and for delivery to one of
Borrower’s locations for Eligible Inventory within the United States of America
and (B) if the proposed Letter of Credit

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Accommodation is for any other purpose or the documents of title are not
consigned to the issuer in connection with a Letter of Credit Accommodation for
the purpose of purchasing Inventory, an amount equal to one hundred (100%)
percent of the face amount thereof and all other commitments and obligations
made or incurred by Agent with respect thereto. Effective on the issuance of
each Letter of Credit Accommodation, a Reserve shall be established in the
applicable amount set forth in Section 2.2(d)(iii)(A) or Section 2.2(d)(iii)(B).

                  (e)  Except in Agent’s discretion, with the consent of all
Lenders, the amount of all outstanding Letter of Credit Accommodations and all
other commitments and obligations made or incurred by Agent or any Lender in
connection therewith shall not at any time exceed $10,000,000.

                  (f)  Borrower shall indemnify and hold Agent and Lenders
harmless from and against any and all losses, claims, damages, liabilities,
costs and expenses which Agent or any Lender may suffer or incur in connection
with any Letter of Credit Accommodations and any documents, drafts or
acceptances relating thereto, including any losses, claims, damages,
liabilities, costs and expenses due to any action taken by any issuer or
correspondent with respect to any Letter of Credit Accommodation, except for
such losses, claims, damages, liabilities, costs or expenses that are a direct
result of the gross negligence or wilful misconduct of Agent or any Lender as
determined pursuant to a final non-appealable order of a court of competent
jurisdiction. Borrower assumes all risks with respect to the acts or omissions
of the drawer under or beneficiary of any Letter of Credit Accommodation and for
such purposes the drawer or beneficiary shall be deemed such Borrower’s agent.
Borrower assumes all risks for, and agrees to pay, all foreign, Federal, State
and local taxes, duties and levies relating to any goods subject to any Letter
of Credit Accommodations or any documents, drafts or acceptances thereunder.
Borrower hereby releases and holds Agent and Lenders harmless from and against
any acts, waivers, errors, delays or omissions, whether caused by Borrower, by
any issuer or correspondent or otherwise with respect to or relating to any
Letter of Credit Accommodation, except for the gross negligence or wilful
misconduct of Agent or any Lender as determined pursuant to a final,
non-appealable order of a court of competent jurisdiction. The provisions of
this Section 2.2(f) shall survive the payment of Obligations and the termination
of this Agreement.

                  (g)  In connection with Inventory purchased pursuant to Letter
of Credit Accommodations, Borrower shall, at Agent’s request, instruct all
suppliers, carriers, forwarders, customs brokers, warehouses or others receiving
or holding cash, checks, Inventory, documents or instruments in which Agent
holds a security interest to deliver them to Agent and/or subject to Agent’s
order, and if they shall come into Borrower’s possession, to deliver them, upon
Agent’s request, to Agent in their original form. Borrower shall also, at
Agent’s request, designate Agent as the consignee on all bills of lading and
other negotiable and non-negotiable documents.

                  (h)  Borrower hereby irrevocably authorizes and directs any
issuer of a Letter of Credit Accommodation to name Borrower as the account party
therein and to deliver to Agent all instruments, documents and other writings
and property received by issuer pursuant to the Letter of Credit Accommodations
and to accept and rely upon Agent’s instructions and agreements with respect to
all matters arising in connection with the Letter of Credit Accommodations or
the

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applications therefor. Nothing contained herein shall be deemed or construed to
grant Borrower any right or authority to pledge the credit of Agent or any
Lender in any manner. Agent and Lenders shall have no liability of any kind with
respect to any Letter of Credit Accommodation provided by an issuer other than
Agent or any Lender unless Agent has duly executed and delivered to such issuer
the application or a guarantee or indemnification in writing with respect to
such Letter of Credit Accommodation. Borrower shall be bound by any reasonable
interpretation made in good faith by Agent, or any other issuer or correspondent
under or in connection with any Letter of Credit Accommodation or any documents,
drafts or acceptances thereunder, notwithstanding that such interpretation may
be inconsistent with any instructions Borrower. Agent shall have the sole and
exclusive right and authority to, and Borrower shall not: (i) at any time an
Event of Default exists or has occurred and is continuing, (A) approve or
resolve any questions of non-compliance of documents, (B) give any instructions
as to acceptance or rejection of any documents or goods or (C) execute any and
all applications for steamship or airway guaranties, indemnities or delivery
orders, and (ii) at all times (provided that if no Event of Default has
occurred, Agent shall not exercise any of the following unless agreed to by or
on behalf of Borrower), (A) grant any extensions of the maturity of, time of
payment for, or time of presentation of, any drafts, acceptances, or documents,
and (B) agree to any amendments, renewals, extensions, modifications, changes or
cancellations of any of the terms or conditions of any of the applications,
Letter of Credit Accommodations, or documents, drafts or acceptances thereunder
or any letters of credit included in the Collateral. Agent may take such actions
either in its own name or in Borrower’s name.

                  (i)  Any rights, remedies, duties or obligations granted or
undertaken by Borrower to any issuer or correspondent in any application for any
Letter of Credit Accommodation, or any other agreement in favor of any issuer or
correspondent relating to any Letter of Credit Accommodation, shall be deemed to
have been granted or undertaken Borrower to Agent for the ratable benefit of
Lenders. Any duties or obligations undertaken by Agent to any issuer or
correspondent in any application for any Letter of Credit Accommodation, or any
other agreement by Agent in favor of any issuer or correspondent to the extent
relating to any Letter of Credit Accommodation, shall be deemed to have been
undertaken by Borrower to Agent for the ratable benefit of Lenders and to apply
in all respects to Borrower.

                  (j)  Immediately upon the issuance or amendment of any Letter
of Credit Accommodation, each Lender shall be deemed to have irrevocably and
unconditionally purchased and received, without recourse or warranty, an
undivided interest and participation to the extent of such Lender’s Pro Rata
Share of the liability with respect to such Letter of Credit Accommodation
(including, without limitation, all Obligations with respect thereto).

                  (k)  Borrower is irrevocably and unconditionally obligated,
without presentment, demand or protest, to pay to Agent any amounts paid by an
issuer of a Letter of Credit Accommodation with respect to such Letter of Credit
Accommodation (whether through the borrowing of Loans in accordance with Section
2.2(a) or otherwise). In the event that Borrower fails to pay Agent on the date
of any payment under a Letter of Credit Accommodation in an amount equal to the
amount of such payment, Agent (to the extent it has actual notice thereof) shall
promptly notify each Lender of the unreimbursed amount of such payment and each
Lender

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agrees, upon one (1) Business Day’s notice, to fund to Agent the purchase of its
participation in such Letter of Credit Accommodation in an amount equal to its
Pro Rata Share of the unpaid amount. The obligation of each Lender to deliver to
Agent an amount equal to its respective participation pursuant to the foregoing
sentence is absolute and unconditional and such remittance shall be made
notwithstanding the occurrence or continuance of any Event of Default, the
failure to satisfy any other condition set forth in Section 4 or any other event
or circumstance. If such amount is not made available by a Lender when due,
Agent shall be entitled to recover such amount on demand from such Lender with
interest thereon, for each day from the date such amount was due until the date
such amount is paid to Agent at the interest rate then payable by Borrower in
respect of Loans that are Prime Rate Loans as set forth in Section 3.1(a)
hereof.

         2.3    Commitments.  The aggregate amount of each Lender’s Pro Rata
Share of the Loans and Letter of Credit Accommodations shall not exceed the
amount of such Lender’s Commitment, as the same may from time to time be amended
in accordance with the provisions hereof.

SECTION 3.       INTEREST AND FEES

         3.1   Interest.

                  (a)  Borrower shall pay to Agent, for the benefit of Lenders,
interest on the outstanding principal amount of the Loans at the Interest Rate.
All interest accruing hereunder on and after the date of any Event of Default or
termination hereof shall be payable on demand.

                  (b)  Borrower may from time to time request Eurodollar Rate
Loans or may request that Prime Rate Loans be converted to Eurodollar Rate Loans
or that any existing Eurodollar Rate Loans continue for an additional Interest
Period. Such request from Borrower shall specify the amount of the Eurodollar
Rate Loans or the amount of the Prime Rate Loans to be converted to Eurodollar
Rate Loans or the amount of the Eurodollar Rate Loans to be continued (subject
to the limits set forth below) and the Interest Period to be applicable to such
Eurodollar Rate Loans. Subject to the terms and conditions contained herein,
three (3) Business Days after receipt by Agent of such a request from Borrower,
such Eurodollar Rate Loans shall be made or Prime Rate Loans shall be converted
to Eurodollar Rate Loans or such Eurodollar Rate Loans shall continue, as the
case may be, provided, that, (i) no Default or Event of Default shall exist or
have occurred and be continuing, (ii) no party hereto shall have sent any notice
of termination of this Agreement, (iii) Borrower shall have complied with such
customary procedures as are established by Agent and specified by Agent to
Borrower for Eurodollar Rate Loans, (iv) no more than four (4) Interest Periods
may be in effect at any one time, (v) the aggregate amount of the Eurodollar
Rate Loans must be in an amount not less than $5,000,000 or an integral multiple
of $1,000,000 in excess thereof, and (vi) Agent and each Lender shall have
determined that the Interest Period or Adjusted Eurodollar Rate is available to
Agent and such Lender and can be readily determined as of the date of the
request for such Eurodollar Rate Loan by Borrower. Any request by or on behalf
of Borrower for Eurodollar Rate Loans or to convert Prime Rate Loans to
Eurodollar Rate Loans or to continue any existing Eurodollar Rate Loans shall be
irrevocable. Notwithstanding anything to the contrary contained herein, Agent
and Lenders shall not be required to purchase United States Dollar deposits in
the London interbank market or other

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applicable Eurodollar Rate market to fund any Eurodollar Rate Loans, but the
provisions hereof shall be deemed to apply as if Agent and Lenders had purchased
such deposits to fund the Eurodollar Rate Loans.

                  (c)  Any Eurodollar Rate Loans shall automatically convert to
Prime Rate Loans upon the last day of the applicable Interest Period, unless
Agent has received and approved a request to continue such Eurodollar Rate Loan
at least three (3) Business Days prior to such last day in accordance with the
terms hereof. Any Eurodollar Rate Loans shall, at Agent’s option, upon notice by
Agent to Borrower, be subsequently converted to Prime Rate Loans in the event
that this Agreement shall terminate or not be renewed. Borrower shall pay to
Agent, for the benefit of Lenders, upon demand by Agent (or Agent may, at its
option, charge any loan account Borrower) any amounts required to compensate any
Lender or Participant for any loss (including loss of anticipated profits), cost
or expense incurred by such person, as a result of the conversion of Eurodollar
Rate Loans to Prime Rate Loans pursuant to any of the foregoing.

                  (d)  Interest shall be payable by Borrower to Agent, for the
account of Lenders, monthly in arrears not later than the first day of each
calendar month and shall be calculated on the basis of a three hundred sixty
(360) day year and actual days elapsed. The interest rate on non-contingent
Obligations (other than Eurodollar Rate Loans) shall increase or decrease by an
amount equal to each increase or decrease in the Prime Rate effective on the
first day of the month after any change in such Prime Rate is announced based on
the Prime Rate in effect on the last day of the month in which any such change
occurs. In no event shall charges constituting interest payable by Borrower to
Agent and Lenders exceed the maximum amount or the rate permitted under any
applicable law or regulation, and if any such part or provision of this
Agreement is in contravention of any such law or regulation, such part or
provision shall be deemed amended to conform thereto.

         3.2   Fees.

                  (a)  Borrower shall pay to Agent, for its own account, monthly
a servicing fee in an amount equal to $4,000 in respect of the services of Agent
for each month (or part thereof) while this Agreement remains in effect and for
so long thereafter as any Obligations are outstanding. Such fee shall be fully
earned as of and payable in advance on the date hereof and on the first day of
each month hereafter.

                  (b)  Borrowers shall pay to Agent for the ratable benefit of
Lenders monthly an unused line fee at a rate equal to the percentage (on a per
annum basis) set forth below calculated upon the amount by which the Maximum
Credit as then in effect exceeds the average daily principal balance of the
outstanding Loans and Letter of Credit Accommodations during the immediately
preceding month (or part thereof) while this Agreement is in effect and for so
long thereafter as any Obligations are outstanding. Such fee shall be payable on
the first day of each month in arrears. The percentage used for determining the
unused line fee shall be one-half (½%) percent, provided, that, effective as of
the first (1st) day of the second month of each fiscal quarter (commencing with
the fiscal quarter ending on or about December 31, 2002), the percentage used
for determining the unused line fee shall be as set forth below if either the
Quarterly Average Excess Availability for the immediately preceding fiscal
quarter is at or

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within the amounts indicated for such percentage or the Leverage Ratio as of the
last day of the immediately preceding fiscal quarter (which ratio for this
purpose shall be calculated based on the four (4) immediately preceding fiscal
quarters) is at or within the levels indicated for such percentage:

Quarterly Average
Excess Availability
Leverage Ratio
Unused Line
Fee Percentage
        (i) $40,000,000 or more Less than 2.50 to 1.00 3/8%         (ii) Greater
than or equal
    to $30,000,000 and less
    than $40,000,000 Greater than 2.50 to 1.00
but equal to or less than
3.00 to 1.00 3/8%         (iii) Greater than or equal
    to $20,000,000 and less
    than $30,000,000 Greater than 3.00 to 1.00
but equal to or less than
3.50 to 1.00 3/8%

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(iv) Greater than or equal to
    $10,000,000 and less than
    $20,000,000 Greater than 3.50 to 1.00
but equal to or less than
4.00 to 1.00 1/2%         (v) Less than $10,000,000 Greater than 4.00 to 1.00
1/2%

provided, that, (A) the unused line fee percentage shall be calculated and
established once each fiscal quarter (commencing with the fiscal quarter ending
on or about December 31, 2002) and (B) the unused line fee percentage shall be
the lower applicable percentage set forth above opposite either the Quarterly
Average Excess Availability or the Leverage Ratio.

                  (c)  Borrower agrees to pay to Agent the other fees and
amounts set forth in the Fee Letter in the amounts and at the times specified
therein.

         3.3   Changes in Laws and Increased Costs of Loans.

                  (a)  If after the date hereof, either (i) any change in, or in
the interpretation of, any law or regulation is introduced, including, without
limitation, with respect to reserve requirements, applicable to any Lender or
any banking or financial institution from whom any Lender borrows funds or
obtains credit (a “Funding Bank”), or (ii) a Funding Bank or any Lender complies
with any future guideline or request from any central bank or other Governmental
Authority or (iii) a Funding Bank or any Lender determines that the adoption of
any applicable law, rule or regulation regarding capital adequacy, or any change
therein, or any change in the interpretation or administration thereof by any
Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof has or would have the effect described
below, or a Funding Bank or any Lender complies with any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, and in the case of any event set
forth in this clause (iii), such adoption, change or compliance has or would
have the direct or indirect effect of reducing the rate of return on any
Lender’s capital as a consequence of its obligations hereunder to a level below
that which such Lender could have achieved but for such adoption, change or
compliance (taking into consideration the Funding Bank’s or Lender’s policies
with respect to capital adequacy) by an amount deemed by such Lender to be
material, and the result of any of the foregoing events described in clauses
(i), (ii) or (iii) is or results in an increase in the cost to any Lender of
funding or maintaining the Loans, the Letter of Credit Accommodations or its
Commitment, then Borrower shall from time to time upon demand by Agent pay to
Agent additional amounts sufficient to indemnify Lenders against such increased
cost on an after-tax basis (after taking into account applicable deductions and
credits in respect of the amount indemnified). A certificate as to the amount of
such increased cost shall be submitted to Borrower by Agent and shall be
conclusive, absent manifest error.

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                   (b)  If prior to the first day of any Interest Period, (i)
Agent shall have determined in good faith (which determination shall be
conclusive and binding upon Borrower) that, by reason of circumstances affecting
the relevant market, adequate and reasonable means do not exist for ascertaining
the Eurodollar Rate for such Interest Period, (ii) Agent has received notice
from the Required Lenders that the Eurodollar Rate determined or to be
determined for such Interest Period will not adequately and fairly reflect the
cost to such Lenders of making or maintaining their Eurodollar Rate Loans during
such Interest Period, or (iii) Dollar deposits in the principal amounts of the
Eurodollar Rate Loans to which such Interest Period is to be applicable are not
generally available in the London interbank market, Agent shall give telecopy or
telephonic notice thereof to Borrower and Lenders as soon as practicable
thereafter, and will also give prompt written notice to Borrower when such
conditions no longer exist. If such notice is given (A) any Eurodollar Rate
Loans requested to be made on the first day of such Interest Period shall be
made as Prime Rate Loans, (B) any Loans that were to have been converted on the
first day of such Interest Period to or continued as Eurodollar Rate Loans shall
be converted to or continued as Prime Rate Loans and (C) each outstanding
Eurodollar Rate Loan shall be converted, on the last day of the then-current
Interest Period thereof, to Prime Rate Loans. Until such notice has been
withdrawn by Agent, no further Eurodollar Rate Loans shall be made or continued
as such, nor shall Borrower have the right to convert Prime Rate Loans to
Eurodollar Rate Loans.

                  (c)  Notwithstanding any other provision herein, if the
adoption of or any change in any law, treaty, rule or regulation or final,
non-appealable determination of an arbitrator or a court or other Governmental
Authority or in the interpretation or application thereof occurring after the
date hereof shall make it unlawful for Agent or any Lender to make or maintain
Eurodollar Rate Loans as contemplated by this Agreement, (i) Agent or such
Lender shall promptly give written notice of such circumstances to Borrower and
Agent (which notice shall be withdrawn whenever such circumstances no longer
exist), (ii) the commitment of such Lender hereunder to make Eurodollar Rate
Loans, continue Eurodollar Rate Loans as such and convert Prime Rate Loans to
Eurodollar Rate Loans shall forthwith be canceled and, until such time as it
shall no longer be unlawful for such Lender to make or maintain Eurodollar Rate
Loans, such Lender shall then have a commitment only to make a Prime Rate Loan
when a Eurodollar Rate Loan is requested and (iii) such Lender’s Loans then
outstanding as Eurodollar Rate Loans, if any, shall be converted automatically
to Prime Rate Loans on the respective last days of the then current Interest
Periods with respect to such Loans or within such earlier period as required by
law. If any such conversion of a Eurodollar Rate Loan occurs on a day which is
not the last day of the then current Interest Period with respect thereto,
Borrower shall pay to such Lender such amounts, if any, as may be required
pursuant to Section 3.3(d) below.

                  (d)  Borrower shall indemnify Agent and each Lender and hold
Agent and each Lender harmless from any loss or expense which Agent or such
Lender may sustain or incur as a consequence of (i) default by Borrower in
making a borrowing of, conversion into or extension of Eurodollar Rate Loans
after Borrower has given a notice requesting the same in accordance with the
provisions of this Agreement, (ii) default by Borrower in making any prepayment
of a Eurodollar Rate Loan after Borrower has given a notice thereof in
accordance with the provisions of this Loan Agreement, and (iii) the making of a
prepayment of Eurodollar Rate Loans on a day which is not the last day of an
Interest Period with respect thereto. With respect

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to Eurodollar Rate Loans, such indemnification may include an amount equal to
the excess, if any, of (A) the amount of interest which would have accrued on
the amount so prepaid, or not so borrowed, converted or extended, for the period
from the date of such prepayment or of such failure to borrow, convert or extend
to the last day of the applicable Interest Period (or, in the case of a failure
to borrow, convert or extend, the Interest Period that would have commenced on
the date of such failure) in each case at the applicable rate of interest for
such Eurodollar Rate Loans provided for herein over (B) the amount of interest
(as determined by Agent or such Lender) which would have accrued to Agent or
such Lender on such amount by placing such amount on deposit for a comparable
period with leading banks in the interbank Eurodollar market. This covenant
shall survive the termination or non-renewal of this Agreement and the payment
of the Obligations.

SECTION 4.       CONDITIONS PRECEDENT.

         4.1   Conditions Precedent to Initial Loans and Letter of Credit
Accommodations. Each of the following is a condition precedent to Agent and
Lenders making the initial Loans and providing the initial Letter of Credit
Accommodations hereunder:

                  (a)  Agent shall have received, in form and substance
satisfactory to Agent, all releases, terminations and such other documents as
Agent may request to evidence and effectuate the termination by the Existing
Lenders of their respective financing arrangements with Borrower and the
termination and release by it or them, as the case may be, of any interest in
and to any assets and properties of Borrower, duly authorized, executed and
delivered by it or each of them, including, but not limited to, (i) UCC
termination statements for all UCC financing statements previously filed by it
or any of them or their predecessors, as secured party and Borrower, as debtor;
and (ii) satisfactions and discharges of any mortgages, deeds of trust or deeds
to secure debt by Borrower in favor of it or any of them, in form acceptable for
recording with the appropriate Governmental Authority;

                  (b)  all requisite corporate action and proceedings in
connection with this Agreement and the other Financing Agreements shall be
satisfactory in form and substance to Agent, and Agent shall have received all
information and copies of all documents, including records of requisite
corporate action and proceedings which Agent may have requested in connection
therewith, such documents where requested by Agent or its counsel to be
certified by appropriate corporate officers or Governmental Authority (and
including a copy of the certificate of incorporation of Borrower certified by
the Secretary of State (or equivalent Governmental Authority) which shall set
forth the same complete corporate name of Borrower as is set forth herein and
such document as shall set forth the organizational identification number of
Borrower, if one is issued in its jurisdiction of incorporation);

                  (c)  no material adverse change shall have occurred in the
assets, business or prospects of Borrower since the date of Agent’s latest field
examination (not including for this purpose the field review referred to in
clause (d) below) and no change or event shall have occurred which would impair
the ability of Borrower or any Obligor to perform its obligations hereunder or
under any of the other Financing Agreements to which it is a party or of Agent
or any Lender to enforce the Obligations or realize upon the Collateral;

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                   (d)  Agent shall have completed a field review of the Records
and such other information with respect to the Collateral as Agent may require
to determine the amount of Loans available to Borrower (including, without
limitation, current perpetual inventory records and/or roll-forwards of Accounts
and Inventory through the date of closing and test counts of the Inventory in a
manner satisfactory to Agent, together with such supporting documentation as may
be necessary or appropriate, and other documents and information that will
enable Agent to accurately identify and verify the Collateral), the results of
which in each case shall be satisfactory to Agent, not more than three (3)
Business Days prior to the date hereof;

                  (e)  Agent shall have received, in form and substance
satisfactory to Agent, all consents, waivers, acknowledgments and other
agreements from third persons which Agent may deem necessary or desirable in
order to permit, protect and perfect its security interests in and liens upon
the Collateral or to effectuate the provisions or purposes of this Agreement and
the other Financing Agreements, including, without limitation, Collateral Access
Agreements by owners and lessors of leased premises of Borrower and by
processors and warehouses at which Collateral is located;

                  (f)  the Excess Availability as determined by Agent, as of the
date hereof, shall be not less than $10,000,000 after giving effect to the
initial Loans made or to be made and Letter of Credit Accommodations issued or
to be issued in connection with the initial transactions hereunder;

                  (g)  Agent shall have received, in form and substance
satisfactory to Agent, Deposit Account Control Agreements by and among Agent,
Borrower, as the case and each bank where Borrower has a deposit account, in
each case, duly authorized, executed and delivered by such bank and Borrower, as
the case may be (or Agent shall be the bank’s customer with respect to such
deposit account as Agent may specify);

                  (h)  Agent shall have received evidence, in form and substance
satisfactory to Agent, that Agent has a valid perfected first priority security
interest in all of the Collateral;

                  (i)  Agent shall have received and reviewed lien and judgement
search results for the jurisdiction of incorporation of Borrower, the
jurisdiction of the chief executive office of Borrower and all jurisdictions in
which assets of Borrower is located, which search results shall be in form and
substance satisfactory to Agent;

                  (j)  Agent shall have received, in form and substance
satisfactory to Agent, a valid and effective title insurance policy issued by a
company and agent acceptable to Agent: (i) insuring the priority, amount and
sufficiency of the Mortgages, (ii) insuring against matters that would be
disclosed by surveys and (iii) containing any legally available endorsements,
assurances or affirmative coverage requested by Agent for protection of its
interests;

                  (k)  Agent shall have received evidence of insurance and loss
payee endorsements required hereunder and under the other Financing Agreements,
in form and substance satisfactory to Agent, and certificates of insurance
policies and/or endorsements naming Agent as loss payee;

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                   (l)  Agent shall have received participations from
Participants and/or Commitments in the Loans and in the financing arrangements
under this Agreement in such amounts and on terms acceptable to Agent;

                  (m)  Agent shall have received, in form and substance
satisfactory to Agent, such opinion letters of counsel to Borrower with respect
to the Financing Agreements and such other matters as Agent may request; and

                  (n)  the other Financing Agreements and all instruments and
documents hereunder and thereunder shall have been duly executed and delivered
to Agent, in form and substance satisfactory to Agent.

         4.2   Conditions Precedent to All Loans and Letter of Credit
Accommodations.Each of the following is an additional condition precedent to the
Loans and/or providing Letter of Credit Accommodations to Borrower, including
the initial Loans and Letter of Credit Accommodations and any future Loans and
Letter of Credit Accommodations:

                  (a)  all representations and warranties contained herein and
in the other Financing Agreements shall be true and correct in all material
respects with the same effect as though such representations and warranties had
been made on and as of the date of the making of each such Loan or providing
each such Letter of Credit Accommodation and after giving effect thereto, except
to the extent that such representations and warranties expressly relate solely
to an earlier date (in which case such representations and warranties shall have
been true and accurate on and as of such earlier date);

                  (b)  no law, regulation, order, judgment or decree of any
Governmental Authority shall exist, and no action, suit, investigation,
litigation or proceeding shall be pending or threatened in any court or before
any arbitrator or Governmental Authority, which (i) purports to enjoin,
prohibit, restrain or otherwise affect (A) the making of the Loans or providing
the Letter of Credit Accommodations, or (B) the consummation of the transactions
contemplated pursuant to the terms hereof or the other Financing Agreements or
(ii) has or has a reasonable likelihood of having a Material Adverse Effect; and

                  (c)  no Default or Event of Default shall exist or have
occurred and be continuing on and as of the date of the making of such Loan or
providing each such Letter of Credit Accommodation and after giving effect
thereto.

SECTION 5.       GRANT AND PERFECTION OF SECURITY INTEREST

         5.1  Grant of Security Interest. To secure payment and performance of
all Obligations, Borrower hereby grants to Agent, for itself and the ratable
benefit of Lenders, a continuing security interest in, a lien upon, and a right
of set off against, and hereby assigns to Agent, for itself and the ratable
benefit of Lenders, as security, all personal and real property and fixtures,
and interests in property and fixtures, of Borrower, whether now owned or
hereafter acquired or existing, and wherever located (together with all other
collateral security for the Obligations at any time granted to or held or
acquired by Agent or any Lender, collectively, the “Collateral”):

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                   (a)  all Accounts;

                  (b)  all general intangibles, including, without limitation,
all Intellectual Property;

                  (c)  all goods, including, without limitation, Inventory and
Equipment;

                  (d)  all Real Property and fixtures;

                  (e)  all chattel paper, including, without limitation, all
tangible and electronic chattel paper;

                  (f)  all instruments, including, without limitation, all
promissory notes;

                  (g)  all documents;

                  (h)  all deposit accounts;

                  (i)  all letters of credit, banker’s acceptances and similar
instruments and including all letter-of-credit rights;

                  (j)  all supporting obligations and all present and future
liens, security interests, rights, remedies, title and interest in, to and in
respect of Receivables and other Collateral, including (i) rights and remedies
under or relating to guaranties, contracts of suretyship, letters of credit and
credit and other insurance related to the Collateral, (ii) rights of stoppage in
transit, replevin, repossession, reclamation and other rights and remedies of an
unpaid vendor, lienor or secured party, (iii) goods described in invoices,
documents, contracts or instruments with respect to, or otherwise representing
or evidencing, Receivables or other Collateral, including returned, repossessed
and reclaimed goods, and (iv) deposits by and property of account debtors or
other persons securing the obligations of account debtors;

                  (k)  all (i) investment property (including securities,
whether certificated or uncertificated, securities accounts, security
entitlements, commodity contracts or commodity accounts) and (ii) monies, credit
balances, deposits and other property of Borrower now or hereafter held or
received by or in transit to Agent, any Lender or its Affiliates or at any other
depository or other institution from or for the account of Borrower, whether for
safekeeping, pledge, custody, transmission, collection or otherwise;

                  (l)  all commercial tort claims, including, without
limitation, those identified in the Information Certificate;

                  (m)  to the extent not otherwise described above, all
Receivables;

                  (n)  all Records; and

                  (o)  all products and proceeds of the foregoing, in any form,
including insurance proceeds and all claims against third parties for loss or
damage to or destruction of or other involuntary conversion of any kind or
nature of any or all of the other Collateral.

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         5.2  Perfection of Security Interests.

                  (a)  Borrower irrevocably and unconditionally authorizes Agent
(or its agent) to file at any time and from time to time such financing
statements with respect to the Collateral naming Agent or its designee as the
secured party and Borrower as debtor, as Agent may require, and including any
other information with respect to Borrower or otherwise required by part 5 of
Article 9 of the Uniform Commercial Code of such jurisdiction as Agent may
determine, together with any amendment and continuations with respect thereto,
which authorization shall apply to all financing statements filed on, prior to
or after the date hereof. Borrower hereby ratifies and approves all financing
statements naming Agent or its designee as secured party and Borrower, as debtor
with respect to the Collateral (and any amendments with respect to such
financing statements) filed by or on behalf of Agent prior to the date hereof
and ratifies and confirms the authorization of Agent to file such financing
statements (and amendments, if any). Borrower hereby authorizes Agent to adopt
on behalf of Borrower any symbol required for authenticating any electronic
filing. In the event that the description of the collateral in any financing
statement naming Agent or its designee as the secured party and Borrower as
debtor includes assets and properties of Borrower that do not at any time
constitute Collateral, whether hereunder, under any of the other Financing
Agreements or otherwise, the filing of such financing statement shall
nonetheless be deemed authorized by such Borrower to the extent of the
Collateral included in such description and it shall not render the financing
statement ineffective as to any of the Collateral or otherwise affect the
financing statement as it applies to any of the Collateral. In no event shall
Borrower at any time file, or permit or cause to be filed, any correction
statement or termination statement with respect to any financing statement (or
amendment or continuation with respect thereto) naming Agent or its designee as
secured party and Borrower as debtor.

                  (b)  Borrower does not have any chattel paper (whether
tangible or electronic) or instruments as of the date hereof, except as set
forth in the Information Certificate. In the event that Borrower shall be
entitled to or shall receive any chattel paper or instrument after the date
hereof, Borrower shall promptly notify Agent thereof in writing. Promptly upon
the receipt thereof by or on behalf of Borrower (including by any agent or
representative), Borrower shall deliver, or cause to be delivered to Agent, all
tangible chattel paper and instruments that such Borrower has or may at any time
acquire, accompanied by such instruments of transfer or assignment duly executed
in blank as Agent may from time to time specify, in each case except as Agent
may otherwise agree. At Agent’s option, Borrower shall, or Agent may at any time
on behalf of Borrower, cause the original of any such instrument or chattel
paper to be conspicuously marked in a form and manner acceptable to Agent with
the following legend referring to chattel paper or instruments as applicable:
“This [chattel paper][instrument] is subject to the security interest of
Congress Financial Corporation and any sale, transfer, assignment or encumbrance
of this [chattel paper][instrument] violates the rights of such secured party.”

                  (c)  In the event that Borrower shall at any time hold or
acquire an interest in any electronic chattel paper or any “transferable record”
(as such term is defined in Section 201 of the Federal Electronic Signatures in
Global and National Commerce Act or in Section 16 of the

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Uniform Electronic Transactions Act as in effect in any relevant jurisdiction),
Borrower shall promptly notify Agent thereof in writing. Promptly upon Agent’s
request, Borrower shall take, or cause to be taken, such actions as Agent may
request to give Agent control of such electronic chattel paper under Section
9-105 of the UCC and control of such transferable record under Section 201 of
the Federal Electronic Signatures in Global and National Commerce Act or, as the
case may be, Section 16 of the Uniform Electronic Transactions Act, as in effect
in such jurisdiction.

                  (d)  Borrower does not have any deposit accounts as of the
date hereof, except as set forth in the Information Certificate. Borrower shall
not, directly or indirectly, after the date hereof open, establish or maintain
any deposit account unless each of the following conditions is satisfied: (i)
Agent shall have received not less than five (5) Business Days prior written
notice of the intention of Borrower to open or establish such account which
notice shall specify in reasonable detail and specificity acceptable to Agent
the name of the account, the owner of the account, the name and address of the
bank at which such account is to be opened or established, the individual at
such bank with whom Borrower is dealing and the purpose of the account, (ii) the
bank where such account is opened or maintained shall be acceptable to Agent,
and (iii) on or before the opening of such deposit account, Borrower or shall as
Agent may specify either (A) deliver to Agent a Deposit Account Control
Agreement with respect to such deposit account duly authorized, executed and
delivered by Borrower and the bank at which such deposit account is opened and
maintained or (B) arrange for Agent to become the customer of the bank with
respect to the deposit account on terms and conditions acceptable to Agent. The
terms of this subsection (d) shall not apply to deposit accounts specifically
and exclusively used for payroll, payroll taxes and other employee wage and
benefit payments to or for the benefit of Borrower’s salaried employees.

                  (e)  Borrower does not own or hold, directly or indirectly,
beneficially or as record owner or both, any investment property, as of the date
hereof, or have any investment account, securities account, commodity account or
other similar account with any bank or other financial institution or other
securities intermediary or commodity intermediary as of the date hereof, in each
case except as set forth in the Information Certificate.

                           (i)  In the event that Borrower shall be entitled to
or shall at any time after the date hereof hold or acquire any certificated
securities, Borrower shall promptly endorse, assign and deliver the same to
Agent, accompanied by such instruments of transfer or assignment duly executed
in blank as Agent may from time to time specify. If any securities, now or
hereafter acquired by Borrower is uncertificated and are issued to Borrower or
its nominee directly by the issuer thereof, Borrower shall immediately notify
Agent thereof and shall as Agent may specify, either (A) cause the issuer to
agree to comply with instructions from Agent as to such securities, without
further consent of Borrower or such nominee, or (B) arrange for Agent to become
the registered owner of the securities.

                           (ii)  Borrower shall not, directly or indirectly,
after the date hereof open, establish or maintain any investment account,
securities account, commodity account or any other similar account (other than a
deposit account) with any securities intermediary or commodity intermediary
unless each of the following conditions is satisfied: (A) Agent shall

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have received not less than five (5) Business Days prior written notice of the
intention of Borrower to open or establish such account which notice shall
specify in reasonable detail and specificity acceptable to Agent the name of the
account, the owner of the account, the name and address of the securities
intermediary or commodity intermediary at which such account is to be opened or
established, the individual at such intermediary with whom Borrower is dealing
and the purpose of the account, (B) the securities intermediary or commodity
intermediary (as the case may be) where such account is opened or maintained
shall be acceptable to Agent, and (C) on or before the opening of such
investment account, securities account or other similar account with a
securities intermediary or commodity intermediary, Borrower shall as Agent may
specify either (1) execute and deliver, and cause to be executed and delivered
to Agent, an Investment Property Control Agreement with respect thereto duly
authorized, executed and delivered by Borrower and such securities intermediary
or commodity intermediary or (2) arrange for Agent to become the entitlement
holder with respect to such investment property on terms and conditions
acceptable to Agent.

                  (f)  Borrower is not the beneficiary or otherwise entitled to
any right to payment under any letter of credit, banker’s acceptance or similar
instrument as of the date hereof, except as set forth in the Information
Certificate. In the event that Borrower shall be entitled to or shall receive
any right to payment under any letter of credit, banker’s acceptance or any
similar instrument, whether as beneficiary thereof or otherwise after the date
hereof, Borrower shall promptly notify Agent thereof in writing. Borrower shall
immediately, as Agent may specify, either (i) deliver, or cause to be delivered
to Agent, with respect to any such letter of credit, banker’s acceptance or
similar instrument, the written agreement of the issuer and any other nominated
person obligated to make any payment in respect thereof (including any
confirming or negotiating bank), in form and substance satisfactory to Agent,
consenting to the assignment of the proceeds of the letter of credit to Agent by
Borrower and agreeing to make all payments thereon directly to Agent or as Agent
may otherwise direct or (ii) cause Agent to become, at Borrower’s expense, the
transferee beneficiary of the letter of credit, banker’s acceptance or similar
instrument (as the case may be).

                  (g)  Borrower does not have any commercial tort claims as of
the date hereof, except as set forth in the Information Certificate. In the
event that Borrower shall at any time after the date hereof have any commercial
tort claims, Borrower shall promptly notify Agent thereof in writing, which
notice shall (i) set forth in reasonable detail the basis for and nature of such
commercial tort claim and (ii) include the express grant by Borrower to Agent of
a security interest in such commercial tort claim (and the proceeds thereof). In
the event that such notice does not include such grant of a security interest,
the sending thereof by Borrower to Agent shall be deemed to constitute such
grant to Agent. Upon the sending of such notice, any commercial tort claim
described therein shall constitute part of the Collateral and shall be deemed
included therein. Without limiting the authorization of Agent provided in
Section 5.2(a) hereof or otherwise arising by the execution by Borrower of this
Agreement or any of the other Financing Agreements, Agent is hereby irrevocably
authorized from time to time and at any time to file such financing statements
naming Agent or its designee as secured party and Borrower as debtor, or any
amendments to any financing statements, covering any such commercial tort claim
as Collateral. In addition, Borrower shall promptly upon Agent’s request,
execute and deliver, or

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cause to be executed and delivered, to Agent such other agreements, documents
and instruments as Agent may require in connection with such commercial tort
claim.

                  (h)  Borrower does not have any goods, documents of title or
other Collateral in the custody, control or possession of a third party as of
the date hereof, except as set forth in the Information Certificate and except
for goods located in the United States in transit to a location of Borrower
permitted herein in the ordinary course of business of Borrower in the
possession of the carrier transporting such goods. In the event that any goods,
documents of title or other Collateral are at any time after the date hereof in
the custody, control or possession of any other person not referred to in the
Information Certificate or such carriers, Borrower shall promptly notify Agent
thereof in writing. Promptly upon Agent’s request, Borrower shall deliver to
Agent a Collateral Access Agreement duly authorized, executed and delivered by
such person and Borrower.

                  (i)  Borrower shall take any other actions reasonably
requested by Agent from time to time to cause the attachment, perfection and
first priority of, and the ability of Agent to enforce, the security interest of
Agent in any and all of the Collateral, including, without limitation, (i)
executing, delivering and, where appropriate, filing financing statements and
amendments relating thereto under the UCC or other applicable law, to the
extent, if any, that Borrower’s signature thereon is required therefor, (ii)
causing Agent’s name to be noted as secured party on any certificate of title
for a titled good if such notation is a condition to attachment, perfection or
priority of, or ability of Agent to enforce, the security interest of Agent in
such Collateral, (iii) complying with any provision of any statute, regulation
or treaty of the United States as to any Collateral if compliance with such
provision is a condition to attachment, perfection or priority of, or ability of
Agent to enforce, the security interest of Agent in such Collateral, (iv)
obtaining the consents and approvals of any Governmental Authority or third
party, including, without limitation, any consent of any licensor, lessor or
other person obligated on Collateral, and taking all actions required by any
earlier versions of the UCC or by other law, as applicable in any relevant
jurisdiction.

SECTION 6.       COLLECTION AND ADMINISTRATION

         6.1   Borrower Loan Account. Agent shall maintain one or more loan
account(s) on its books in which shall be recorded (a) all Loans, Letter of
Credit Accommodations and other Obligations and the Collateral, (b) all payments
made by or on behalf of Borrower and (c) all other appropriate debits and
credits as provided in this Agreement, including fees, charges, costs, expenses
and interest. All entries in the loan account(s) shall be made in accordance
with Agent’s customary practices as in effect from time to time.

         6.2   Statements. Agent shall render to Borrower each month a statement
setting forth the balance in the Borrower’s loan account(s) maintained by Agent
for Borrower pursuant to the provisions of this Agreement, including principal,
interest, fees, costs and expenses. Each such statement shall be subject to
subsequent adjustment by Agent but shall, absent manifest errors or omissions,
be considered correct and deemed accepted by Borrower and conclusively binding
upon Borrower as an account stated except to the extent that Agent receives a
written notice from Borrower of any specific exceptions of Borrower thereto
within thirty (30) days after the date

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such statement has been received by Borrower. Until such time as Agent shall
have rendered to Borrower a written statement as provided above, the balance in
Borrower’s loan account(s) shall be presumptive evidence of the amounts due and
owing to Agent and Lenders by Borrower.

         6.3   Collection of Accounts.

                  (a)  Borrower shall establish and maintain, at their expense,
blocked accounts or lockboxes and related blocked accounts (in either case,
“Blocked Accounts”), as Agent may specify, with such banks as are acceptable to
Agent into which Borrower shall promptly deposit and direct their respective
account debtors to directly remit all payments on Receivables and all payments
constituting proceeds of Inventory or other Collateral in the identical form in
which such payments are made, whether by cash, check or other manner. Borrower
shall deliver, or cause to be delivered to Agent a Deposit Account Control
Agreement duly authorized, executed and delivered by each bank where a Blocked
Account is maintained as provided in Section 5.2 hereof or at any time and from
time to time Agent may become the bank’s customer with respect to any of the
Blocked Accounts and promptly upon Agent’s request, Borrower shall execute and
deliver such agreements and documents as Agent may require in connection
therewith. Borrower agrees that all payments made to such Blocked Accounts or
other funds received and collected by Agent or any Lender, whether in respect of
the Receivables, as proceeds of Inventory or other Collateral or otherwise shall
be treated as payments to Agent and Lenders in respect of the Obligations and
therefore shall constitute the property of Agent and Lenders to the extent of
the then outstanding Obligations.

                  (b)  For purposes of calculating the amount of the Loans
available to Borrower, such payments will be applied (conditional upon final
collection) to the Obligations on the Business Day of receipt by Agent of
immediately available funds in the Agent Payment Account provided such payments
and notice thereof are received in accordance with Agent’s usual and customary
practices as in effect from time to time and within sufficient time to credit
Borrower’s loan account on such day, and if not, then on the next Business Day.
For the purposes of calculating interest on the Obligations, such payments or
other funds received will be applied (conditional upon final collection) to the
Obligations one (1) Business Day following the date of receipt of immediately
available funds by Agent in the Agent Payment Account provided such payments or
other funds and notice thereof are received in accordance with Agent’s usual and
customary practices as in effect from time to time and within sufficient time to
credit Borrower’s loan account on such day, and if not, then on the next
Business Day.

                  (c)  Borrower and its shareholders, directors, employees,
agents, Subsidiaries or other Affiliates shall, acting as trustee for Agent,
receive, as the property of Agent, any monies, checks, notes, drafts or any
other payment relating to and/or proceeds of Accounts or other Collateral which
come into their possession or under their control and immediately upon receipt
thereof, shall deposit or cause the same to be deposited in the Blocked
Accounts, or remit the same or cause the same to be remitted, in kind, to Agent.
In no event shall the same be commingled with Borrower’s own funds. Borrower
agrees to reimburse Agent on demand for any amounts owed or paid to any bank at
which a Blocked Account or any other deposit account is established or any other
bank or person involved in the transfer of funds to or from the Blocked Accounts
arising out of Agent’s payments to or indemnification of such bank or person.

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The obligations of Borrower to reimburse Agent for such amounts pursuant to this
Section 6.3 shall survive the termination of this Agreement.

         6.4   Payments.

                  (a)  All Obligations shall be payable to the Agent Payment
Account as provided in Section 6.3 or such other place as Agent may designate
from time to time. Agent shall apply payments received or collected from
Borrower or any Obligor or for the account of Borrower (including the monetary
proceeds of collections or of realization upon any Collateral) as follows:
first, to pay any fees, indemnities or expense reimbursements then due to Agent
and Lenders from Borrower; second, to pay interest due in respect of any Loans
(and including any Special Agent Advances); third, to pay or prepay principal in
respect of Special Agent Advances; fourth, principal due in respect of the
Loans; fifth, to pay or prepay any other Obligations whether or not then due, in
such order and manner as Agent determines. Notwithstanding anything to the
contrary contained in this Agreement, (i) unless so directed by Borrower, or
unless a Default or an Event of Default shall exist or have occurred and be
continuing, Agent shall not apply any payments which it receives to any
Eurodollar Rate Loans, except (A) on the expiration date of the Interest Period
applicable to any such Eurodollar Rate Loans or (B) in the event that there are
no outstanding Prime Rate Loans and (ii) to the extent Borrower uses any
proceeds of the Loans or Letter of Credit Accommodations to acquire rights in or
the use of any Collateral or to repay any Indebtedness used to acquire rights in
or the use of any Collateral, payments in respect of the Obligations shall be
deemed applied first to the Obligations arising from Loans and Letter of Credit
Accommodations that were not used for such purposes and second to the
Obligations arising from Loans and Letter of Credit Accommodations the proceeds
of which were used to acquire rights in or the use of any Collateral in the
chronological order in which Borrower acquired such rights in or the use of such
Collateral.

                  (b)  At Agent’s option, all principal, interest, fees, costs,
expenses and other charges provided for in this Agreement or the other Financing
Agreements may be charged directly to the loan account(s) of Borrower maintained
by Agent. Borrower shall make all payments to Agent and Lenders on the
Obligations free and clear of, and without deduction or withholding for or on
account of, any setoff, counterclaim, defense, duties, taxes, levies, imposts,
fees, deductions, withholding, restrictions or conditions of any kind. If after
receipt of any payment of, or proceeds of Collateral applied to the payment of,
any of the Obligations, Agent or any Lender is required to surrender or return
such payment or proceeds to any Person for any reason, then the Obligations
intended to be satisfied by such payment or proceeds shall be reinstated and
continue and this Agreement shall continue in full force and effect as if such
payment or proceeds had not been received by Agent or such Lender. Borrower
shall be liable to pay to Agent, and does hereby indemnify and hold Agent and
Lenders harmless for the amount of any payments or proceeds surrendered or
returned. This Section 6.4(b) shall remain effective notwithstanding any
contrary action which may be taken by Agent or any Lender in reliance upon such
payment or proceeds. This Section 6.4 shall survive the payment of the
Obligations and the termination of this Agreement.

         6.5   Authorization to Make Loans. Agent and Lenders are authorized to
make the Loans and provide the Letter of Credit Accommodations based upon
telephonic or other instructions

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received from anyone purporting to be an officer of Borrower or other authorized
person or, at the discretion of Agent, if such Loans are necessary to satisfy
any Obligations. All requests for Loans or Letter of Credit Accommodations
hereunder shall specify the date on which the requested advance is to be made or
Letter of Credit Accommodations established (which day shall be a Business Day)
and the amount of the requested Loan. Requests received after 11:00 a.m. Miami,
Florida time on any day shall be deemed to have been made as of the opening of
business on the immediately following Business Day. All Loans and Letter of
Credit Accommodations under this Agreement shall be conclusively presumed to
have been made to, and at the request of and for the benefit of, Borrower or
when deposited to the credit of Borrower or otherwise disbursed or established
in accordance with the instructions of Borrower or in accordance with the terms
and conditions of this Agreement.

         6.6   Use of Proceeds. Borrower shall use the initial proceeds of the
Loans provided by Agent to Borrower hereunder only for: (a) payments to each of
the persons listed in the disbursement direction letter furnished by Borrower to
Agent on or about the date hereof and (b) costs, expenses and fees in connection
with the preparation, negotiation, execution and delivery of this Agreement and
the other Financing Agreements. All other Loans made or Letter of Credit
Accommodations provided to or for the benefit of Borrower pursuant to the
provisions hereof shall be used by Borrower only for general operating, working
capital and other proper corporate purposes of Borrower not otherwise prohibited
by the terms hereof. None of the proceeds will be used, directly or indirectly,
for the purpose of purchasing or carrying any margin security or for the
purposes of reducing or retiring any indebtedness which was originally incurred
to purchase or carry any margin security or for any other purpose which might
cause any of the Loans to be considered a “purpose credit” within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System, as
amended.

         6.7   Pro Rata Treatment. Except to the extent otherwise provided in
this Agreement: (a) the making and conversion of Loans shall be made among the
Lenders based on their respective Pro Rata Shares as to the Loans and (b) each
payment on account of any Obligations to or for the account of one or more of
Lenders in respect of any Obligations due on a particular day shall be allocated
among the Lenders entitled to such payments based on their respective Pro Rata
Shares and shall be distributed accordingly.

         6.8   Sharing of Payments, Etc

                  (a)  Borrower agrees that, in addition to (and without
limitation of) any right of setoff, banker’s lien or counterclaim Agent or any
Lender may otherwise have, each Lender shall be entitled, at its option (but
subject, as among Agent and Lenders, to the provisions of Section 12.3(b)
hereof), to offset balances held by it for the account of Borrower at any of its
offices, in dollars or in any other currency, against any principal of or
interest on any Loans owed to such Lender or any other amount payable to such
Lender hereunder, that is not paid when due (regardless of whether such balances
are then due to Borrower), in which case it shall promptly notify Borrower and
Agent thereof; provided, that, such Lender’s failure to give such notice shall
not affect the validity thereof.

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                   (b)  If any Lender (including Agent) shall obtain from
Borrower payment of any principal of or interest on any Loan owing to it or
payment of any other amount under this Agreement or any of the other Financing
Agreements through the exercise of any right of setoff, banker’s lien or
counterclaim or similar right or otherwise (other than from Agent as provided
herein), and, as a result of such payment, such Lender shall have received more
than its Pro Rata Share of the principal of the Loans or more than its share of
such other amounts then due hereunder or thereunder by Borrower to such Lender
than the percentage thereof received by any other Lender, it shall promptly pay
to Agent, for the benefit of Lenders, the amount of such excess and
simultaneously purchase from such other Lenders a participation in the Loans or
such other amounts, respectively, owing to such other Lenders (or such interest
due thereon, as the case may be) in such amounts, and make such other
adjustments from time to time as shall be equitable, to the end that all Lenders
shall share the benefit of such excess payment (net of any expenses that may be
incurred by such Lender in obtaining or preserving such excess payment) in
accordance with their respective Pro Rata Shares or as otherwise agreed by
Lenders. To such end all Lenders shall make appropriate adjustments among
themselves (by the resale of participation sold or otherwise) if such payment is
rescinded or must otherwise be restored.

                  (c)  Borrower agrees that any Lender purchasing a
participation (or direct interest) as provided in this Section may exercise, in
a manner consistent with this Section, all rights of setoff, banker’s lien,
counterclaim or similar rights with respect to such participation as fully as if
such Lender were a direct holder of Loans or other amounts (as the case may be)
owing to such Lender in the amount of such participation.

                  (d)  Nothing contained herein shall require any Lender to
exercise any right of setoff, banker’s lien, counterclaims or similar rights or
shall affect the right of any Lender to exercise, and retain the benefits of
exercising, any such right with respect to any other Indebtedness or obligation
of Borrower. If, under any applicable bankruptcy, insolvency or other similar
law, any Lender receives a secured claim in lieu of a setoff to which this
Section applies, such Lender shall, to the extent practicable, assign such
rights to Agent for the benefit of Lenders and, in any event, exercise its
rights in respect of such secured claim in a manner consistent with the rights
of Lenders entitled under this Section to share in the benefits of any recovery
on such secured claim.

         6.9   Settlement Procedures.

                  (a)  In order to administer the Credit Facility in an
efficient manner and to minimize the transfer of funds between Agent and
Lenders, Agent may, at its option, subject to the terms of this Section, make
available, on behalf of Lenders, the full amount of the Loans requested or
charged to Borrower’s loan account(s) or otherwise to be advanced by Lenders
pursuant to the terms hereof, without requirement of prior notice to Lenders of
the proposed Loans.

                  (b)  With respect to all Loans made by Agent on behalf of
Lenders as provided in this Section, the amount of each Lender’s Pro Rata Share
of the outstanding Loans shall be computed weekly, and shall be adjusted upward
or downward on the basis of the amount of the outstanding Loans as of 5:00 p.m.
Miami, Florida time on the Business Day immediately preceding the date of each
settlement computation; provided, that, Agent retains the absolute

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right at any time or from time to time to make the above described adjustments
at intervals more frequent than weekly, but in no event more than twice in any
week. Agent shall deliver to each of the Lenders after the end of each week, or
at such lesser period or periods as Agent shall determine, a summary statement
of the amount of outstanding Loans for such period (such week or lesser period
or periods being hereinafter referred to as a “Settlement Period”). If the
summary statement is sent by Agent and received by a Lender prior to 12:00 p.m.
Miami, Florida time, then such Lender shall make the settlement transfer
described in this Section by no later than 3:00 p.m. Miami, Florida time on the
same Business Day and if received by a Lender after 12:00 p.m. Miami, Florida
time, then such Lender shall make the settlement transfer by not later than 3:00
p.m. Miami, Florida time on the next Business Day following the date of receipt.
If, as of the end of any Settlement Period, the amount of a Lender’s Pro Rata
Share of the outstanding Loans is more than such Lender’s Pro Rata Share of the
outstanding Loans as of the end of the previous Settlement Period, then such
Lender shall forthwith (but in no event later than the time set forth in the
preceding sentence) transfer to Agent by wire transfer in immediately available
funds the amount of the increase. Alternatively, if the amount of a Lender’s Pro
Rata Share of the outstanding Loans in any Settlement Period is less than the
amount of such Lender’s Pro Rata Share of the outstanding Loans for the previous
Settlement Period, Agent shall forthwith transfer to such Lender by wire
transfer in immediately available funds the amount of the decrease. The
obligation of each of the Lenders to transfer such funds and effect such
settlement shall be irrevocable and unconditional and without recourse to or
warranty by Agent. Agent and each Lender agrees to mark its books and records at
the end of each Settlement Period to show at all times the dollar amount of its
Pro Rata Share of the outstanding Loans and Letter of Credit Accommodations.
Each Lender shall only be entitled to receive interest on its Pro Rata Share of
the Loans to the extent such Loans have been funded by such Lender. Because the
Agent on behalf of Lenders may be advancing and/or may be repaid Loans prior to
the time when Lenders will actually advance and/or be repaid such Loans,
interest with respect to Loans shall be allocated by Agent in accordance with
the amount of Loans actually advanced by and repaid to each Lender and the Agent
and shall accrue from and including the date such Loans are so advanced to but
excluding the date such Loans are either repaid by Borrower or actually settled
with the applicable Lender as described in this Section.

                  (c)  To the extent that Agent has made any such amounts
available and the settlement described above shall not yet have occurred, upon
repayment of any Loans by Borrower, Agent may apply such amounts repaid directly
to any amounts made available by Agent pursuant to this Section. In lieu of
weekly or more frequent settlements, Agent may, at its option, at any time
require each Lender to provide Agent with immediately available funds
representing its Pro Rata Share of each Loan, prior to Agent’s disbursement of
such Loan to Borrower. In such event, all Loans under this Agreement shall be
made by the Lenders simultaneously and proportionately to their Pro Rata Shares.
No Lender shall be responsible for any default by any other Lender in the other
Lender’s obligation to make a Loan requested hereunder nor shall the Commitment
of any Lender be increased or decreased as a result of the default by any other
Lender in the other Lender’s obligation to make a Loan hereunder.

                  (d)  If Agent is not funding a particular Loan to Borrower
pursuant to this Section on any day, Agent may assume that each Lender will make
available to Agent such Lender’s Pro

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Rata Share of the Loan requested or otherwise made on such day and Agent may, in
its discretion, but shall not be obligated to, cause a corresponding amount to
be made available to or for the benefit of Borrower on such day. If Agent makes
such corresponding amount available to Borrower and such corresponding amount is
not in fact made available to Agent by such Lender, Agent shall be entitled to
recover such corresponding amount on demand from such Lender together with
interest thereon for each day from the date such payment was due until the date
such amount is paid to Agent at the Federal Funds Rate for each day during such
period (as published by the Federal Reserve Bank of New York or at Agent’s
option based on the arithmetic mean determined by Agent of the rates for the
last transaction in overnight Federal funds arranged prior to 9:00 a.m. (New
York City time) on that day by each of the three leading brokers of Federal
funds transactions in New York City selected by Agent) and if such amounts are
not paid within three (3) days of Agent’s demand, at the highest Interest Rate
provided for in Section 3.1 hereof applicable to Prime Rate Loans. During the
period in which such Lender has not paid such corresponding amount to Agent,
notwithstanding anything to the contrary contained in this Agreement or any of
the other Financing Agreements, the amount so advanced by Agent to or for the
benefit of Borrower shall, for all purposes hereof, be a Loan made by Agent for
its own account. Upon any such failure by a Lender to pay Agent, Agent shall
promptly thereafter notify Borrower of such failure and Borrower shall pay such
corresponding amount to Agent for its own account within five (5) Business Days
of Borrower’s receipt of such notice. A Lender who fails to pay Agent its Pro
Rata Share of any Loans made available by the Agent on such Lender’s behalf, or
any Lender who fails to pay any other amount owing by it to Agent, is a
“Defaulting Lender”. Agent shall not be obligated to transfer to a Defaulting
Lender any payments received by Agent for the Defaulting Lender’s benefit, nor
shall a Defaulting Lender be entitled to the sharing of any payments hereunder
(including any principal, interest or fees). Amounts payable to a Defaulting
Lender shall instead be paid to or retained by Agent. Agent may hold and, in its
discretion, relend to Borrower the amount of all such payments received or
retained by it for the account of such Defaulting Lender. For purposes of voting
or consenting to matters with respect to this Agreement and the other Financing
Agreements and determining Pro Rata Shares, such Defaulting Lender shall be
deemed not to be a “Lender” and such Lender’s Commitment shall be deemed to be
zero (0). This Section shall remain effective with respect to a Defaulting
Lender until such default is cured. The operation of this Section shall not be
construed to increase or otherwise affect the Commitment of any Lender, or
relieve or excuse the performance by Borrower or any Obligor of their duties and
obligations hereunder.

                  (e)  Nothing in this Section or elsewhere in this Agreement or
the other Financing Agreements shall be deemed to require Agent to advance funds
on behalf of any Lender or to relieve any Lender from its obligation to fulfill
its Commitment hereunder or to prejudice any rights that Borrower may have
against any Lender as a result of any default by any Lender hereunder in
fulfilling its Commitment.

         6.10  Obligations Several; Independent Nature of Lenders’ Rights. The
obligation of each Lender hereunder is several, and no Lender shall be
responsible for the obligation or commitment of any other Lender hereunder.
Nothing contained in this Agreement or any of the other Financing Agreements and
no action taken by the Lenders pursuant hereto or thereto shall be deemed to
constitute the Lenders to be a partnership, an association, a joint venture or
any

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other kind of entity. The amounts payable at any time hereunder to each Lender
shall be a separate and independent debt, and subject to Section 12.3 hereof,
each Lender shall be entitled to protect and enforce its rights arising out of
this Agreement and it shall not be necessary for any other Lender to be joined
as an additional party in any proceeding for such purpose.

SECTION 7.   COLLATERAL REPORTING AND COVENANTS

         7.1   Collateral Reporting.

                  (a)     Borrower shall provide Agent with the following
documents in a form satisfactory to Agent:

                           (i)  on a weekly basis (or more frequently as Agent
may request), schedules of sales made, credits issued and cash received;

                           (ii)  as soon as possible after the end of each month
(but in any event within ten (10) Business Days after the end thereof), on a
monthly basis or more frequently as Agent may request, (A) perpetual inventory
reports, (B) inventory reports by location and category (and including the
amounts of Inventory and the value thereof at any leased locations and at
premises of warehouses, processors or other third parties), (C) reports setting
forth Inventory on hand in excess of demand and Inventory on hand greater than
180 days from the date of purchase; (D) agings of accounts receivable (together
with a reconciliation to the previous month’s aging and general ledger) and (E)
agings of accounts payable (and including information indicating the amounts
owing to owners and lessors of leased premises, warehouses, processors and other
third parties from time to time in possession of any Collateral);

                           (iii)  upon Agent’s request, (A) copies of customer
statements and credit memos, remittance advices and reports, and copies of
deposit slips and bank statements, (B) copies of shipping and delivery
documents, and (C) copies of purchase orders, invoices and delivery documents
for Inventory and Equipment acquired by Borrower;

                           (iv)  such other reports as to the Collateral as
Agent shall request from time to time.

                  (b)  If Borrower’s records or reports of the Collateral are
prepared or maintained by an accounting service, contractor, shipper or other
agent, Borrower hereby irrevocably authorizes such service, contractor, shipper
or agent to deliver such records, reports, and related documents to Agent and to
follow Agent’s instructions with respect to further services at any time that an
Event of Default exists or has occurred and is continuing.

         7.2   Accounts Covenants.

                  (a)  Borrower shall notify Agent promptly of: (i) any material
delay in Borrower’s performance of any of its material obligations to any
account debtor or the assertion of any material claims, offsets, defenses or
counterclaims by any account debtor, or any material disputes with account
debtors, or any settlement, adjustment or compromise thereof, (ii) all

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material adverse information known to Borrower relating to the financial
condition of any account debtor and (iii) any event or circumstance which, to
the best of Borrower’s knowledge, would cause Agent to consider any then
existing Accounts as no longer constituting Eligible Accounts. No credit,
discount, allowance or extension or agreement for any of the foregoing shall be
granted to any account debtor without Agent’s consent, except in the ordinary
course of Borrower’s business in accordance with practices and policies
previously disclosed in writing to Agent and except as set forth in the
schedules delivered to Agent pursuant to Section 7.1(a) above. So long as no
Event of Default exists or has occurred and is continuing, Borrower shall, in
the ordinary course of its business, settle, adjust or compromise to settle,
adjust or compromise any claim, offset, counterclaim or dispute with any account
debtor. At any time that an Event of Default exists or has occurred and is
continuing, Agent shall, at its option, have the exclusive right to settle,
adjust or compromise any claim, offset, counterclaim or dispute with account
debtors or grant any credits, discounts or allowances.

                  (b)  With respect to each Account: (i) the amounts shown on
any invoice delivered to Agent or schedule thereof delivered to Agent shall be
true and complete, (ii) no payments shall be made thereon except payments
immediately delivered to Agent pursuant to the terms of this Agreement, (iii) no
credit, discount, allowance or extension or agreement for any of the foregoing
shall be granted to any account debtor except as reported to Agent in accordance
with this Agreement and except for credits, discounts, allowances or extensions
made or given in the ordinary course of Borrower’s business in accordance with
practices and policies previously disclosed to Agent, (iv) there shall be no
setoffs, deductions, contras, defenses, counterclaims or disputes existing or
asserted with respect thereto except as reported to Agent in accordance with the
terms of this Agreement, (v) none of the transactions giving rise thereto will
violate any applicable foreign, Federal, State or local laws or regulations, all
documentation relating thereto will be legally sufficient under such laws and
regulations and all such documentation will be legally enforceable in accordance
with its terms.

                  (c)  Agent shall have the right at any time or times, in
Agent’s name or in the name of a nominee of Agent, to verify the validity,
amount or any other matter relating to any Receivables or other Collateral, by
mail, telephone, facsimile transmission or otherwise.

         7.3   Inventory Covenants. With respect to the Inventory: (a) Borrower
shall at all times maintain inventory records reasonably satisfactory to Agent,
keeping correct and accurate records itemizing and describing the kind, type,
quality and quantity of Inventory, Borrower’s cost therefor and daily
withdrawals therefrom and additions thereto; (b) Borrower shall conduct a
physical count of the Inventory either through periodic cycle counts or
otherwise at least once each year but at any time or times as Agent may request
on or after an Event of Default, and promptly following such physical inventory
(whether pursuant to periodic cycle counts or otherwise) shall supply Agent with
a report in the form and with such specificity as may be satisfactory to Agent
concerning such physical count; (c) Borrower shall not remove any Inventory from
the locations set forth or permitted herein, without the prior written consent
of Agent, except for sales of Inventory in the ordinary course of its business
and except to move Inventory directly from one location set forth or permitted
herein to another such location and except for Inventory shipped from the
manufacturer thereof to Borrower which is in transit to the

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locations set forth or permitted herein; (d) upon Agent’s request, Borrower
shall, at its expense, no more than two (2) times in any twelve (12) month
period, but at any time or times as Agent may request on or after an Event of
Default, deliver or cause to be delivered to Agent written appraisals as to the
Inventory in form, scope and methodology acceptable to Agent and by an appraiser
acceptable to Agent, addressed to Agent and Lenders and upon which Agent and
Lenders are expressly permitted to rely; (e) Borrower shall produce, use, store
and maintain the Inventory with all reasonable care and caution and in
accordance with applicable standards of any insurance and in conformity with
applicable laws (including the requirements of the Federal Fair Labor Standards
Act of 1938, as amended and all rules, regulations and orders related thereto);
(f) none of the Inventory or other Collateral constitutes farm products or the
proceeds thereof; (g) Borrower assumes all responsibility and liability arising
from or relating to the production, use, sale or other disposition of the
Inventory; (h) Borrower shall not sell Inventory to any customer on approval, or
any other basis which entitles the customer to return or may obligate Borrower
to repurchase such Inventory; (i) Borrower shall keep the Inventory in good and
marketable condition; and (j) Borrower shall not, without prior written notice
to Agent or the specific identification of such Inventory in a report with
respect thereto provided by Borrower to Agent pursuant to Section 7.1(a) hereof,
acquire or accept any Inventory on consignment or approval. In addition to the
foregoing, in the event that the Borrower, at any time, has Inventory on
consignment having a value in excess of $1,000,000 in the aggregate, Borrower,
at the request of Agent, shall obtain consignee waivers, which shall be in form
and substance satisfactory to Agent, from any consignee in possession or control
of Inventory having a value in excess of $300,000.

         7.4   Equipment and Real Property Covenants. With respect to the
Equipment and Real Property: (a) at any time or times as Agent may request on or
after an Event of Default, deliver or cause to be delivered to Agent, at
Borrower’s sole cost and expense, written appraisals as to the Equipment and/or
the Real Property in form, scope and methodology acceptable to Agent and by an
appraiser acceptable to Agent, addressed to Agent and upon which Agent is
expressly permitted to rely; (b) Borrower shall keep the Equipment in good
order, repair, running and marketable condition (ordinary wear and tear
excepted); (c) Borrower shall use the Equipment and Real Property with all
reasonable care and caution and in accordance with applicable standards of any
insurance and in conformity with all applicable laws; (d) the Equipment is and
shall be used in the business of Borrower and not for personal, family,
household or farming use; (e) Borrower shall not remove any Equipment from the
locations set forth or permitted herein, except to the extent necessary to have
any Equipment repaired or maintained in the ordinary course of its business or
to move Equipment directly from one location set forth or permitted herein to
another such location and except for the movement of motor vehicles used by or
for the benefit of Borrower in the ordinary course of business; (f) the
Equipment is now and shall remain personal property and Borrower shall not
permit any of the Equipment to be or become a part of or affixed to real
property; and (g) Borrower assumes all responsibility and liability arising from
the use of the Equipment and Real Property.

         7.5   Power of Attorney. Borrower hereby irrevocably designates and
appoints Agent (and all persons designated by Agent) as Borrower’s true and
lawful attorney-in-fact, and authorizes Agent, in Borrower’s, or Agent’s name,
to: (a) at any time an Event of Default exists

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or has occurred and is continuing (i) demand payment on Receivables or other
Collateral, (ii) enforce payment of Receivables by legal proceedings or
otherwise, (iii) exercise all of Borrower’s rights and remedies to collect any
Receivable or other Collateral, (iv) sell or assign any Receivable upon such
terms, for such amount and at such time or times as the Agent deems advisable,
(v) settle, adjust, compromise, extend or renew an Account, (vi) discharge and
release any Receivable, (vii) prepare, file and sign Borrower’s name on any
proof of claim in bankruptcy or other similar document against an account debtor
or other obligor in respect of any Receivables or other Collateral, (viii)
notify the post office authorities to change the address for delivery of
remittances from account debtors or other obligors in respect of Receivables or
other proceeds of Collateral to an address designated by Agent, and open and
dispose of all mail addressed to Borrower and handle and store all mail relating
to the Collateral; and (ix) do all acts and things which are necessary, in
Agent’s determination, to fulfill Borrower’s obligations under this Agreement
and the other Financing Agreements and (b) at any time to (i) take control in
any manner of any item of payment in respect of Receivables or constituting
Collateral or otherwise received in or for deposit in the Blocked Accounts or
otherwise received by Agent or any Lender, (ii) have access to any lockbox or
postal box into which remittances from account debtors or other obligors in
respect of Receivables or other proceeds of Collateral are sent or received,
(iii) endorse Borrower’s name upon any items of payment in respect of
Receivables or constituting Collateral or otherwise received by Agent and any
Lender and deposit the same in Agent’s account for application to the
Obligations, (iv) endorse Borrower’s name upon any chattel paper, document,
instrument, invoice, or similar document or agreement relating to any Receivable
or any goods pertaining thereto or any other Collateral, including any warehouse
or other receipts, or bills of lading and other negotiable or non-negotiable
documents, (v) clear Inventory the purchase of which was financed with Letter of
Credit Accommodations through U.S. Customs or foreign export control authorities
in Borrower’s name, Agent’s name or the name of Agent’s designee, and to sign
and deliver to customs officials powers of attorney in Borrower’s o name for
such purpose, and to complete in Borrower’s or Agent’s name, any order, sale or
transaction, obtain the necessary documents in connection therewith and collect
the proceeds thereof, and (vi) sign such Borrower’s name on any verification of
Receivables and notices thereof to account debtors or any secondary obligors or
other obligors in respect thereof. Borrower hereby releases Agent and Lenders
and their respective officers, employees and designees from any liabilities
arising from any act or acts under this power of attorney and in furtherance
thereof, whether of omission or commission, except as a result of Agent’s or any
Lender’s own gross negligence or wilful misconduct as determined pursuant to a
final non-appealable order of a court of competent jurisdiction.

         7.6   Right to Cure. Agent may, at its option, upon notice to Borrower,
(a) cure any default by Borrower under any material agreement with a third party
that affects the Collateral, its value or the ability of Agent to collect, sell
or otherwise dispose of the Collateral or the rights and remedies of Agent or
any Lender therein or the ability of Borrower or any Obligor to perform its
obligations hereunder or under any of the other Financing Agreements, (b) pay or
bond on appeal any judgment entered against Borrower, (c) discharge taxes,
liens, security interests or other encumbrances at any time levied on or
existing with respect to the Collateral and (d) pay any amount, incur any
expense or perform any act which, in Agent’s judgment, is necessary or
appropriate to preserve, protect, insure or maintain the Collateral and the
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Agent and Lenders with respect thereto. Agent may add any amounts so expended to
the Obligations and charge Borrower’s account therefor, such amounts to be
repayable by Borrower on demand. Agent and Lenders shall be under no obligation
to effect such cure, payment or bonding and shall not, by doing so, be deemed to
have assumed any obligation or liability of Borrower or any Obligor. Any payment
made or other action taken by Agent or any Lender under this Section shall be
without prejudice to any right to assert an Event of Default hereunder and to
proceed accordingly.

         7.7   Access to Premises. From time to time as requested by Agent, at
the cost and expense of Borrower, (a) Agent or its designee shall have complete
access to all of Borrower’s premises during normal business hours and after
notice to, or at any time and without notice to Borrower if an Event of Default
exists or has occurred and is continuing, for the purposes of inspecting,
verifying and auditing the Collateral and all of Borrower’s books and records,
including the Records, and (b) Borrower shall promptly furnish to Agent such
copies of such books and records or extracts therefrom as Agent may request, and
(c) Agent or any Lender or Agent’s designee may use during normal business hours
such of Borrower’s personnel, equipment, supplies and premises as may be
reasonably necessary for the foregoing and if an Event of Default exists or has
occurred and is continuing for the collection of Receivables and realization of
other Collateral.

SECTION 8.   REPRESENTATIONS AND WARRANTIES

         Borrower hereby represents and warrants to Agent and Lenders the
following (which shall survive the execution and delivery of this Agreement),
the truth and accuracy of which are a continuing condition of the making of
Loans and providing Letter of Credit Accommodations to Borrower:

         8.1   Corporate Existence, Power and Authority. Borrower is a
corporation duly organized and in good standing under the laws of its state of
incorporation and is duly qualified as a foreign corporation and in good
standing in all states or other jurisdictions where the nature and extent of the
business transacted by it or the ownership of assets makes such qualification
necessary, except for those jurisdictions in which the failure to so qualify
would not have a material adverse effect on Borrower’s financial condition,
results of operation or business or the rights of Agent in or to any of the
Collateral. The execution, delivery and performance of this Agreement, the other
Financing Agreements and the transactions contemplated hereunder and thereunder
(a) are all within Borrower’s corporate powers, (b) have been duly authorized,
(c) are not in contravention of law or the terms of Borrower’s certificate of
incorporation, by-laws, or other organizational documentation, or any indenture,
agreement or undertaking to which Borrower is a party or by which Borrower or
its property are bound and (d) will not result in the creation or imposition of,
or require or give rise to any obligation to grant, any lien, security interest,
charge or other encumbrance upon any property of Borrower. This Agreement and
the other Financing Agreements to which Borrower is a party constitute legal,
valid and binding obligations of Borrower enforceable in accordance with their
respective terms.

         8.2   Name; State of Organization; Chief Executive Office; Collateral
Locations.

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                   (a)  The exact legal name of Borrower is as set forth on the
signature page of this Agreement and in the Information Certificate. Borrower
has not, during the past five years, been known by or used any other corporate
or fictitious name or been a party to any merger or consolidation, or acquired
all or substantially all of the assets of any Person, or acquired any of its
property or assets out of the ordinary course of business, except as set forth
in the Information Certificate.

                  (b)  Borrower is an organization of the type and organized in
the jurisdiction set forth in the Information Certificate. The Information
Certificate accurately sets forth the organizational identification number of
Borrower or accurately states that Borrower has none and accurately sets forth
the federal employer identification number of Borrower.

                  (c)  The chief executive office and mailing address of
Borrower and Borrower’s Records concerning Accounts are located only at the
address identified as such in Schedule 8.2 to the Information Certificate and
its only other places of business and the only other locations of Collateral, if
any, are the addresses set forth in Schedule 8.2 to the Information Certificate,
subject to the rights of Borrower to establish new locations in accordance with
Section 9.2 below. The Information Certificate correctly identifies any of such
locations which are not owned by Borrower and sets forth the owners and/or
operators thereof.

         8.3   Financial Statements; No Material Adverse Change. All financial
statements relating to Borrower which have been or may hereafter be delivered by
Borrower to Agent and Lenders have been prepared in accordance with GAAP (except
as to any interim financial statements, to the extent such statements are
subject to normal year-end adjustments and do not include any notes) and fairly
present in all material respects the financial condition and the results of
operation of Borrower as at the dates and for the periods set forth therein.
Except as disclosed in any interim financial statements furnished by Borrower to
Agent prior to the date of this Agreement, there has been no act, condition or
event which has had or is reasonably likely to have a Material Adverse Effect
since the date of the most recent audited financial statements of Borrower
furnished by Borrower to Agent prior to the date of this Agreement.

         8.4   Priority of Liens; Title to Properties. The security interests
and liens granted to Agent under this Agreement and the other Financing
Agreements constitute valid and perfected first priority liens and security
interests in and upon the Collateral subject only to the liens indicated on
Schedule 8.4 to the Information Certificate and the other liens permitted under
Section 9.8 hereof. Borrower has good and marketable fee simple title to or
valid leasehold interests in all of its Real Property and good, valid and
merchantable title to all of its other properties and assets subject to no
liens, mortgages, pledges, security interests, encumbrances or charges of any
kind, except those granted to Agent and such others as are specifically listed
on Schedule 8.4 to the Information Certificate or permitted under Section 9.8
hereof.

         8.5   Tax Returns. Borrower has filed, or caused to be filed, in a
timely manner all tax returns, reports and declarations which are required to be
filed by it. All information in such tax returns, reports and declarations is
complete and accurate in all material respects. Borrower has paid or caused to
be paid all taxes due and payable or claimed due and payable in any assessment
received by it, except taxes the validity of which are being contested in good
faith by appropriate

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proceedings diligently pursued and available to Borrower and with respect to
which adequate reserves have been set aside on its books. Adequate provision has
been made for the payment of all accrued and unpaid Federal, State, county,
local, foreign and other taxes whether or not yet due and payable and whether or
not disputed.

         8.6   Litigation. Except as set forth on Schedule 8.6 to the
Information Certificate, (a) there is no investigation by any Governmental
Authority pending, or to the best of Borrower’s knowledge threatened, against or
affecting Borrower, its or their assets or business and (b) there is no action,
suit, proceeding or claim by any Person pending, or to the best of Borrower’s
knowledge threatened, against Borrower or its or their assets or goodwill, or
against or affecting any transactions contemplated by this Agreement, in each
case, which if adversely determined against Borrower has or could reasonably be
expected to have a Material Adverse Effect.

         8.7   Compliance with Other Agreements and Applicable Laws.

                  (a)  Borrower is not in default in any respect under, or in
violation in any respect of the terms of, any material agreement, contract,
instrument, lease or other commitment to which it is a party or by which it or
any of its assets are bound. Borrower is in compliance with the requirements of
all applicable laws, rules, regulations and orders of any Governmental Authority
relating to their respective businesses, including, without limitation, those
set forth in or promulgated pursuant to the Occupational Safety and Health Act
of 1970, as amended, the Fair Labor Standards Act of 1938, as amended, ERISA,
the Code, as amended, and the rules and regulations thereunder, and all
Environmental Laws.

                  (b)  Borrower has obtained all material permits, licenses,
approvals, consents, certificates, orders or authorizations of any Governmental
Authority required for the lawful conduct of its business (the “Permits”). All
of the Permits are valid and subsisting and in full force and effect. There are
no actions, claims or proceedings pending or to the best of Borrower’s
knowledge, threatened that seek the revocation, cancellation, suspension or
modification of any of the Permits.

         8.8   Environmental Compliance.

                  (a)  Except as set forth on Schedule 8.8 to the Information
Certificate, Borrower and any Subsidiary of Borrower have not generated, used,
stored, treated, transported, manufactured, handled, produced or disposed of any
Hazardous Materials, on or off its premises (whether or not owned by it) in any
manner which at any time violates in any material respect any applicable
Environmental Law or Permit, and the operations of Borrower and any Subsidiary
of Borrower complies in all material respects with all Environmental Laws and
all Permits.

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                   (b)  Except as set forth on Schedule 8.8 to the Information
Certificate, to the best of Borrower’s knowledge, there has been no
investigation by any Governmental Authority or any proceeding, complaint, order,
directive, claim, citation or notice by any Governmental Authority or any other
person nor is any pending or to the best of Borrower’s knowledge threatened,
with respect to any non-compliance with or violation of the requirements of any
Environmental Law by Borrower and any Subsidiary of Borrower or the release,
spill or discharge, threatened or actual, of any Hazardous Material or the
generation, use, storage, treatment, transportation, manufacture, handling,
production or disposal of any Hazardous Materials or any other environmental,
health or safety matter, which adversely affects or could reasonably be expected
to adversely affect in any material respect Borrower or its or their business,
operations or assets or any properties at which Borrower has transported, stored
or disposed of any Hazardous Materials.

                  (c)  Except as set forth on Schedule 8.8 to the Information
Certificate, Borrower and its Subsidiaries have no material liability
(contingent or otherwise) in connection with a release, spill or discharge,
threatened or actual, of any Hazardous Materials or the generation, use,
storage, treatment, transportation, manufacture, handling, production or
disposal of any Hazardous Materials.

                  (d)  Borrower and its Subsidiaries have all Permits required
to be obtained or filed in connection with the operations of Borrower under any
Environmental Law and all of such licenses, certificates, approvals or similar
authorizations and other Permits are valid and in full force and effect.

         8.9   Employee Benefits.

                  (a)  Each Plan is in compliance in all material respects with
the applicable provisions of ERISA, the Code and other Federal or State law.
Each Plan which is intended to qualify under Section 401(a) of the Code has
received a favorable determination letter from the Internal Revenue Service and
to the best of Borrower’s knowledge, nothing has occurred which would cause the
loss of such qualification. Borrower and its ERISA Affiliates have made all
required contributions to any 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 of Borrower’s
knowledge, threatened claims, actions or lawsuits, or action by any Governmental
Authority, with respect to any Plan. There has been no prohibited transaction or
violation of the fiduciary responsibility rules with respect to any Plan.

                  (c)  (i)  No ERISA Event has occurred or is reasonably
expected to occur; (ii) the current value of each Plan’s assets (determined in
accordance with the assumptions used for funding such Plan pursuant to Section
412 of the Code) are not less than such Plan’s liabilities under Section
4001(a)(16) of ERISA; (iii) Borrower and its ERISA Affiliates, have not incurred
and do not reasonably expect to incur, any liability under Title IV of ERISA
with respect to any Plan (other than premiums due and not delinquent under
Section 4007 of ERISA); (iv) Borrower

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and its ERISA Affiliates, have not incurred and do not reasonably expect 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 Section 4201
or 4243 of ERISA with respect to a Multiemployer Plan; and (v) Borrower and its
ERISA Affiliates, have not engaged in a transaction that would be subject to
Section 4069 or 4212(c) of ERISA.

         8.10   Bank Accounts. All of the deposit accounts, investment accounts
or other accounts in the name of or used by Borrower maintained at any bank or
other financial institution are set forth on Schedule 8.10 to the Information
Certificate, subject to the right of Borrower to establish new accounts in
accordance with Section 5.2 hereof.

         8.11   Intellectual Property. Borrower owns or licenses or otherwise
has the right to use all Intellectual Property necessary for the operation of
its business as presently conducted or proposed to be conducted. As of the date
hereof, Borrower does not have any Intellectual Property registered, or subject
to pending applications, in the United States Patent and Trademark Office or any
similar office or agency in the United States, any State thereof, any political
subdivision thereof or in any other country, other than those described in
Schedule 8.11 to the Information Certificate and has not granted any licenses
with respect thereto other than as set forth in Schedule 8.11 to the Information
Certificate. Except as set forth on Schedule 8.11, no event has occurred which
permits or would permit after notice or passage of time or both, the revocation,
suspension or termination of such rights. To the best of Borrower’s knowledge,
no slogan or other advertising device, product, process, method, substance or
other Intellectual Property or goods bearing or using any Intellectual Property
presently contemplated to be sold by or employed by Borrower infringes any
patent, trademark, servicemark, tradename, copyright, license or other
Intellectual Property owned by any other Person presently and no claim or
litigation is pending or threatened against or affecting Borrower contesting its
right to sell or use any such Intellectual Property. Schedule 8.11 to the
Information Certificate sets forth all of the agreements or other arrangements
of Borrower pursuant to which Borrower has a license or other right to use any
trademarks, logos, designs, representations or other Intellectual Property owned
by another person as in effect on the date hereof and the dates of the
expiration of such agreements or other arrangements of Borrower as in effect on
the date hereof (collectively, together with such agreements or other
arrangements as may be entered into by Borrower after the date hereof,
collectively, the “License Agreements” and individually, a “License Agreement”).
No trademark, servicemark, copyright or other Intellectual Property at any time
used by Borrower which is owned by another person, or owned by Borrower subject
to any security interest, lien, collateral assignment, pledge or other
encumbrance in favor of any person other than Agent, is affixed to any Eligible
Inventory, except (a) to the extent permitted under the term of the license
agreements listed on Schedule 8.11 to the Information Certificate and (b) to the
extent the sale of Inventory to which such Intellectual Property is affixed is
permitted to be sold by Borrower under applicable law (including the United
States Copyright Act of 1976).

         8.12   Subsidiaries; Affiliates; Capitalization; Solvency.

                  (a)  Borrower does not have any direct or indirect
Subsidiaries or Affiliates and is not engaged in any joint venture or
partnership except as set forth in Schedule 8.12 to the Information Certificate.

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                   (b)  Borrower is the record and beneficial owner of all of
the issued and outstanding shares of Capital Stock of each of the Subsidiaries
listed on Schedule 8.12 to the Information Certificate as being owned by
Borrower and there are no proxies, irrevocable or otherwise, with respect to
such shares and no equity securities of any of the Subsidiaries are or may
become required to be issued by reason of any options, warrants, rights to
subscribe to, calls or commitments of any kind or nature and there are no
contracts, commitments, understandings or arrangements by which any Subsidiary
is or may become bound to issue additional shares of it Capital Stock or
securities convertible into or exchangeable for such shares.

                  (c)  Each Person who beneficially owns or holds five (5%)
percent or more of any class of the issued and outstanding shares of Capital
Stock of Borrower are indicated in the Information Certificate. All of the
issued and outstanding shares of Capital Stock of Borrower have been duly
authorized and issued.

                  (d)  Borrower is Solvent and will continue to be Solvent after
the creation of the Obligations, the security interests of Agent and the other
transaction contemplated hereunder.

         8.13   Labor Disputes.

                  (a)  Set forth on Schedule 8.13 to the Information Certificate
is a list (including dates of termination) of all collective bargaining or
similar agreements between or applicable to Borrower and any union, labor
organization or other bargaining agent in respect of the employees of Borrower
on the date hereof.

                  (b)  There is (i) no significant unfair labor practice
complaint pending against Borrower or, to the best of Borrower’s knowledge,
threatened against it, before the National Labor Relations Board, and no
significant grievance or significant arbitration proceeding arising out of or
under any collective bargaining agreement is pending on the date hereof against
Borrower or, to best of Borrower’s knowledge, threatened against it, and (ii) no
significant strike, labor dispute, slowdown or stoppage is pending against
Borrower or, to the best of Borrower’s knowledge, threatened against Borrower.

         8.14   Restrictions on Subsidiaries. Except for restrictions contained
in this Agreement or any other agreement with respect to Indebtedness of
Borrower permitted hereunder as in effect on the date hereof, there are no
contractual or consensual restrictions on Borrower or any of its Subsidiaries
which prohibit or otherwise restrict (a) the transfer of cash or other assets
(i) between Borrower and any of its Subsidiaries or (ii) between any
Subsidiaries of Borrower or (b) the ability of Borrower or any of its
Subsidiaries to incur Indebtedness or grant security interests to Agent or any
Lender in the Collateral.

         8.15   Material Contracts. Schedule 8.15 to the Information Certificate
sets forth all Material Contracts to which Borrower is a party or is bound as of
the date hereof. Borrower has delivered true, correct and complete copies of
such Material Contracts to Agent on or before the date hereof. Borrower are not
in breach or in default in any material respect of or under any Material
Contract and have not received any notice of the intention of any other party
thereto to terminate any Material Contract.

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         8.16   Payable Practices. Borrower has not made any material change in
the historical accounts payable practices from those in effect immediately prior
to the date hereof.

         8.17   Indenture. Borrower hereby acknowledges, confirms and agrees
that the Obligations constitute “Designated Senior Indebtedness”, as defined in
the Senior Subordinated Indenture.

         8.18   Accuracy and Completeness of Information. All information
furnished by or on behalf of Borrower in writing to Agent or any Lender in
connection with this Agreement or any of the other Financing Agreements or any
transaction contemplated hereby or thereby, including all information on the
Information Certificate is true and correct in all material respects on the date
as of which such information is dated or certified and does not omit any
material fact necessary in order to make such information not misleading. No
event or circumstance has occurred which has had or could reasonably be expected
to have a Material Adverse Affect, which has not been fully and accurately
disclosed to Agent in writing prior to the date hereof.

         8.19   Survival of Warranties; Cumulative. All representations and
warranties contained in this Agreement or any of the other Financing Agreements
shall survive the execution and delivery of this Agreement and shall be deemed
to have been made again to Agent and Lenders on the date of each additional
borrowing or other credit accommodation hereunder and shall be conclusively
presumed to have been relied on by Agent and Lenders regardless of any
investigation made or information possessed by Agent or any Lender. The
representations and warranties set forth herein shall be cumulative and in
addition to any other representations or warranties which Borrower shall now or
hereafter give, or cause to be given, to Agent or any Lender.

SECTION 9.       AFFIRMATIVE AND NEGATIVE COVENANTS

         9.1   Maintenance of Existence.

                  (a)  Borrower shall at all times preserve, renew and keep in
full force and effect its corporate existence and rights and franchises with
respect thereto and maintain in full force and effect all licenses, trademarks,
tradenames, approvals, authorizations, leases, contracts and Permits necessary
to carry on the business as presently or proposed to be conducted.

                  (b)  Borrower shall not change its name unless each of the
following conditions is satisfied: (i) Agent shall have received not less than
thirty (30) days prior written notice from Borrower of such proposed change in
its corporate name, which notice shall accurately set forth the new name; and
(ii) Agent shall have received a copy of the amendment to the Certificate of
Incorporation of Borrower providing for the name change certified by the
Secretary of State of the jurisdiction of incorporation or organization of
Borrower as soon as it is available.

                  (c)  Borrower shall not change its chief executive office or
its mailing address or organizational identification number (or if it does not
have one, shall not acquire one) unless Agent shall have received not less than
thirty (30) days’ prior written notice from Borrower of such proposed change,
which notice shall set forth such information with respect thereto as Agent may
require and Agent shall have received such agreements as Agent may reasonably

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require in connection therewith. Borrower shall not change its type of
organization, jurisdiction of organization or other legal structure.

         9.2   New Collateral Locations. Borrower may only open any new location
within the continental United States provided Borrower (a) gives Agent thirty
(30) days prior written notice of the intended opening of any such new location
and (b) executes and delivers, or causes to be executed and delivered, to Agent
such agreements, documents, and instruments as Agent may deem reasonably
necessary or desirable to protect its interests in the Collateral at such
location.

         9.3   Compliance with Laws, Regulations, Etc.

                  (a)  Borrower shall, and shall cause any Subsidiary to, at all
times, comply in all material respects with all laws, rules, regulations,
licenses, approvals, orders and other Permits applicable to it and duly observe
all requirements of any foreign, Federal, State or local Governmental Authority,
including ERISA, the Code, the Occupational Safety and Health Act of 1970, as
amended, the Fair Labor Standards Act of 1938, as amended, and all statutes,
rules, regulations, orders, permits and stipulations relating to environmental
pollution and employee health and safety, including all of the Environmental
Laws.

                  (b)  Borrower shall give written notice to Agent immediately
upon Borrower’s receipt of any notice of, or Borrower’s otherwise obtaining
knowledge of, (i) the occurrence of any event involving the release, spill or
discharge, threatened or actual, of any Hazardous Material or (ii) any
investigation, proceeding, complaint, order, directive, claims, citation or
notice with respect to: (A) any non-compliance with or violation of any
Environmental Law by Borrower or (B) the release, spill or discharge, threatened
or actual, of any Hazardous Material other than in the ordinary course of
business and other than as permitted under any applicable Environmental Law.
Copies of all environmental surveys, audits, assessments, feasibility studies
and results of remedial investigations shall be promptly furnished, or caused to
be furnished, by Borrower to Agent. Borrower shall take prompt action to respond
to any material non-compliance with any of the Environmental Laws and shall
regularly report to Agent on such response.

                  (c)  Without limiting the generality of the foregoing,
whenever Agent reasonably determines that there is non-compliance, or any
condition which requires any action by or on behalf of Borrower in order to
avoid any non-compliance, with any Environmental Law, Borrower shall, at Agent’s
request and Borrower’s expense: (i) cause an independent environmental engineer
reasonably acceptable to Agent to conduct such tests of the site where
non-compliance or alleged non-compliance with such Environmental Laws has
occurred as to such non-compliance and prepare and deliver to Agent a report as
to such non-compliance setting forth the results of such tests, a proposed plan
for responding to any environmental problems described therein, and an estimate
of the costs thereof and (ii) provide to Agent a supplemental report of such
engineer whenever the scope of such non-compliance, or Borrower’s response
thereto or the estimated costs thereof, shall change in any material respect.

                  (d)  Borrower shall indemnify and hold harmless Agent and
Lenders and their respective directors, officers, employees, agents, invitees,
representatives, successors and

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assigns, from and against any and all losses, claims, damages, liabilities,
costs, and expenses (including reasonable attorneys’ fees and expenses) directly
or indirectly arising out of or attributable to the use, generation,
manufacture, reproduction, storage, release, threatened release, spill,
discharge, disposal or presence of a Hazardous Material, including the costs of
any required or necessary repair, cleanup or other remedial work with respect to
any property of Borrower and the preparation and implementation of any closure,
remedial or other required plans. All representations, warranties, covenants and
indemnifications in this Section 9.3 shall survive the payment of the
Obligations and the termination of this Agreement.

         9.4   Payment of Taxes and Claims. Borrower shall, and shall cause each
Subsidiary to, duly pay and discharge all taxes, assessments, contributions and
governmental charges upon or against it or its properties or assets, except for
taxes the validity of which are being contested in good faith by appropriate
proceedings diligently pursued and available to Borrower or such Subsidiary, as
the case may be, and with respect to which adequate reserves have been set aside
on its books. Borrower shall be liable for any tax or penalties imposed on Agent
or any Lender as a result of the financing arrangements provided for herein and
Borrower agrees to indemnify and hold Agent harmless with respect to the
foregoing, and to repay to Agent, for the benefit of Lenders, on demand the
amount thereof, and until paid by Borrower such amount shall be added and deemed
part of the Loans, provided, that, nothing contained herein shall be construed
to require Borrower to pay any income or franchise taxes attributable to the
income of Lenders from any amounts charged or paid hereunder to Lenders. The
foregoing indemnity shall survive the payment of the Obligations and the
termination of this Agreement.

         9.5   Insurance. Borrower shall, and shall cause each Subsidiary to, at
all times, maintain with financially sound and reputable insurers insurance with
respect to the Collateral against loss or damage and all other insurance of the
kinds and in the amounts customarily insured against or carried by corporations
of established reputation engaged in the same or similar businesses and
similarly situated. Said policies of insurance shall be reasonably satisfactory
to Agent as to form, amount and insurer. Borrower shall furnish certificates,
policies or endorsements to Agent as Agent shall reasonably require as proof of
such insurance, and, if Borrower fails to do so, Agent is authorized, but not
required, to obtain such insurance at the expense of Borrower. All policies
shall provide for at least thirty (30) days prior written notice to Agent of any
cancellation or reduction of coverage and that Agent may act as attorney for
Borrower in obtaining, and at any time an Event of Default exists or has
occurred and is continuing, adjusting, settling, amending and canceling such
insurance. Borrower shall cause Agent to be named as a loss payee and an
additional insured (but without any liability for any premiums) under such
insurance policies and Borrower shall obtain non-contributory lender’s loss
payable endorsements to all insurance policies in form and substance
satisfactory to Agent. Such lender’s loss payable endorsements shall specify
that the proceeds of such insurance shall be payable to Agent as its interests
may appear and further specify that Agent and Lenders shall be paid regardless
of any act or omission by Borrower or any of its or their Affiliates. Without
limiting any other rights of Agent or Lenders, any insurance proceeds received
by Agent at any time may be applied to payment of the Obligations, whether or
not then due, in any order and in such manner as Agent may determine. Upon
application of such proceeds to the Revolving Loans, Revolving Loans may be
available subject and pursuant to the terms hereof to be used for

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the costs of repair or replacement of the Collateral lost or damages resulting
in the payment of such insurance proceeds.

         9.6   Financial Statements and Other Information.

                  (a)  Borrower shall, and shall cause each Subsidiary to, keep
proper books and records in which true and complete entries shall be made of all
dealings or transactions of or in relation to the Collateral and the business of
Borrower and its Subsidiaries in accordance with GAAP. Borrower shall promptly
furnish to Agent and Lenders all such financial and other information as Agent
shall reasonably request relating to the Collateral and the assets, business and
operations of Borrower, and Borrower shall notify the auditors and accountants
of Borrower that Agent is authorized to obtain such information directly from
them. Without limiting the foregoing, Borrower shall furnish or cause to be
furnished to Agent, the following: (i) within thirty (30) days after the end of
each fiscal month, monthly unaudited consolidated financial statements, and
unaudited consolidating financial statements (including in each case balance
sheets, statements of income and loss, statements of cash flow, and statements
of shareholders’ equity), all in reasonable detail, fairly presenting the
financial position and the results of the operations of Borrower and its
Subsidiaries as of the end of and through such fiscal month, certified to be
correct by the chief financial officer of Borrower, subject to normal year-end
adjustments and no footnotes and accompanied by a compliance certificate
substantially in the form of Exhibit C hereto, along with a schedule in a form
satisfactory to Agent of the calculations used in determining, as of the end of
such month, whether Borrower is in compliance with the covenants set forth in
Section 9.17 of this Agreement for such month and (ii) within ninety (90) days
after the end of each fiscal year, audited consolidated financial statements and
unaudited consolidating financial statements of Borrower and its Subsidiaries
(including in each case balance sheets, statements of income and loss,
statements of cash flow, and statements of shareholders’ equity), and the
accompanying notes thereto, all in reasonable detail, fairly presenting the
financial position and the results of the operations of Borrower and its
Subsidiaries as of the end of and for such fiscal year, together with the
unqualified opinion of independent certified public accountants with respect to
the audited consolidated financial statements, which accountants shall be an
independent accounting firm selected by Borrower and acceptable to Agent, that
such audited consolidated financial statements have been prepared in accordance
with GAAP, and present fairly the results of operations and financial condition
of Borrower and its Subsidiaries as of the end of and for the fiscal year then
ended.

                  (b)  Borrower shall promptly notify Agent in writing of the
details of (i) any loss, damage, investigation, action, suit, proceeding or
claim relating to Collateral having a value of more than $250,000 or which if
adversely determined would result in any material adverse change in Borrower’s
business, properties, assets, goodwill or condition, financial or otherwise,
(ii) any Material Contract being terminated or amended or any new Material
Contract entered into (in which event Borrower shall provide Agent with a copy
of such Material Contract), (iii) any order, judgment or decree in excess of
$250,000 shall have been entered against Borrower any of its properties or
assets, (iv) any notification of a material violation of laws or regulations
received by Borrower, (v) any ERISA Event, and (vi) the occurrence of any
Default or Event of Default.

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                   (c)  Borrower shall promptly after the sending or filing
thereof furnish or cause to be furnished to Agent copies of all reports which
Borrower sends to its stockholders generally and copies of all reports and
registration statements which Borrower files with the Securities and Exchange
Commission, any national securities exchange or the National Association of
Securities Dealers, Inc.

                  (d)  Borrower shall furnish or cause to be furnished to Agent
such budgets, forecasts, projections and other information respecting the
Collateral and the business of Borrower, as Agent may, from time to time,
reasonably request. Agent is hereby authorized to deliver a copy of any
financial statement or any other information relating to the business of
Borrower to any court or other Governmental Authority, or to any Lender or
Participant or prospective Lender or Participant, or any Affiliate of any Lender
or Participant. Borrower hereby irrevocably authorizes and directs all
accountants or auditors to deliver to Agent, at Borrower’s expense, copies of
the financial statements of Borrower and any reports or management letters
prepared by such accountants or auditors on behalf of Borrower and to disclose
to Agent and Lenders such information as they may have regarding the business of
Borrower. Any documents, schedules, invoices or other papers delivered to Agent
or any Lender may be destroyed or otherwise disposed of by Agent or such Lender
one (1) year after the same are delivered to Agent or such Lender, except as
otherwise designated by Borrower to Agent or such Lender in writing.

         9.7   Sale of Assets, Consolidation, Merger, Dissolution, Etc. Borrower
shall not, and shall not permit any Subsidiary to, directly or indirectly,

                  (a)  merge into or with or consolidate with any other Person
or permit any other Person to merge into or with or consolidate with it;

                  (b)  sell, issue, assign, lease, license, transfer, abandon or
otherwise dispose of any Capital Stock or Indebtedness to any other Person or
any of its assets to any other Person, except for

                           (i)  sales of Inventory in the ordinary course of
business,

                           (ii)  the sale or other disposition of Equipment
(including worn-out or obsolete Equipment or Equipment no longer used or useful
in the business of Borrower) so long as such sales or other dispositions do not
involve Equipment having an aggregate fair market value in excess of $500,000
for all such Equipment disposed of in any fiscal year of Borrower or as Agent
may otherwise agree, and

                           (iii)  the issuance and sale by Borrower of Capital
Stock of Borrower after the date hereof; provided, that, (A) Agent shall have
received not less than ten (10) Business Days’ prior written notice of such
issuance and sale by Borrower, which notice shall specify the parties to whom
such shares are to be sold, the terms of such sale, the total amount which it is
anticipated will be realized from the issuance and sale of such stock and the
net cash proceeds which it is anticipated will be received by Borrower from such
sale, (B) Borrower shall not be required to pay any cash dividends or repurchase
or redeem such Capital Stock or make any

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other payments in respect thereof, except as otherwise permitted in Section 9.11
hereof, (C) the terms of such Capital Stock, and the terms and conditions of the
purchase and sale thereof, shall not include any terms that include any
limitation on the right of Borrower to request or receive Loans or Letter of
Credit Accommodations or the right of Borrower to amend or modify any of the
terms and conditions of this Agreement or any of the other Financing Agreements
or otherwise in any way relate to or affect the arrangements of Borrower with
Agent and Lenders or are more restrictive or burdensome to Borrower than the
terms of any Capital Stock in effect on the date hereof, (D) except as Agent may
otherwise agree in writing, all of the proceeds of the sale and issuance of such
Capital Stock shall be paid to Agent for application to the Obligations in such
order and manner as Agent may determine and may be reborrowed subject to the
provisions of Section 2.1, and (E) as of the date of such issuance and sale and
after giving effect thereto, no Default or Event of Default shall exist or have
occurred,

                           (iv)  the issuance of Capital Stock of Borrower
consisting of common stock pursuant to an employee stock option or grant or
similar equity plan or 401(k) plans of Borrower for the benefit of its
employees, directors and consultants, provided, that, in no event shall Borrower
be required to issue, or shall Borrower issue, Capital Stock pursuant to such
stock plans or 401(k) plans which would result in a change of Control or other
Event of Default,

                           (v)   *  

                           (vi)  *  

                           (vii)  sale of the Tampa Real Property pursuant to
the Tampa Sale-Leaseback Transaction as permitted under Section 9.20;

                  (c)  wind up, liquidate or dissolve;

                  (d)  agree to do any of the foregoing.

         9.8   Encumbrances. Borrower shall not, and shall not permit any
Subsidiary to, create, incur, assume or suffer to exist any security interest,
mortgage, pledge, lien, charge or other encumbrance of any nature whatsoever on
any of its assets or properties, including the Collateral, or file or permit the
filing of, or permit to remain in effect, any financing statement or other
similar notice of any security interest or lien with respect to any such assets
or properties, except:

                  (a)  the security interests and liens of Agent for itself and
the benefit of Lenders;

                  (b)  liens securing the payment of taxes, assessments or other
governmental charges or levies either not yet overdue or the validity of which
are being contested in good faith by appropriate proceedings diligently pursued
and available to Borrower or Subsidiary, as the case may be and with respect to
which adequate reserves have been set aside on its books;

                  (c)  non-consensual statutory liens (other than liens securing
the payment of taxes) arising in the ordinary course of Borrower ‘s or such
Subsidiary’s business to the extent: (i) such liens secure Indebtedness which is
not overdue or (ii) such liens secure Indebtedness relating to

*     Portions of this Exhibit have been deleted and filed separately with the
Securities and Exchange Commission pursuant to the Company's request for
confidential treatment pursuant to Rule 24b-2 promulgated under the Securities
Exchange Act.

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claims or liabilities which are fully insured and being defended at the sole
cost and expense and at the sole risk of the insurer or being contested in good
faith by appropriate proceedings diligently pursued and available to Borrower or
such Subsidiary, in each case prior to the commencement of foreclosure or other
similar proceedings and with respect to which adequate reserves have been set
aside on its books;

                  (d)  zoning restrictions, easements, licenses, covenants and
other restrictions affecting the use of Real Property which do not interfere in
any material respect with the use of such Real Property or ordinary conduct of
the business of Borrower or such Subsidiary as presently conducted thereon or
materially impair the value of the Real Property which may be subject thereto;

                  (e)  purchase money security interests in Equipment (including
Capital Leases) and purchase money mortgages on Real Property to secure
Indebtedness permitted under Section 9.9(b) hereof;

                  (f)  pledges and deposits of cash by Borrower after the date
hereof in the ordinary course of business in connection with workers’
compensation, unemployment insurance and other types of social security benefits
consistent with the current practices of Borrower as of the date hereof;

                  (g)  pledges and deposits of cash by Borrower after the date
hereof to secure the performance of tenders, bids, leases, trade contracts
(other than for the repayment of Indebtedness), statutory obligations and other
similar obligations in each case in the ordinary course of business consistent
with the current practices of Borrower as of the date hereof; provided, that, in
connection with any performance bonds issued by a surety or other person, the
issuer of such bond shall have waived in writing any rights in or to, or other
interest in, any of the Collateral in an agreement, in form and substance
satisfactory to Agent;

                  (h)  liens arising from (i) operating leases and the
precautionary UCC financing statement filings in respect thereof and
(ii) equipment or other materials which are not owned by Borrower located on the
premises of Borrower (but not in connection with, or as part of, the financing
thereof) from time to time in the ordinary course of business and consistent
with current practices of Borrower and the precautionary UCC financing statement
filings in respect thereof;

                  (i)  judgments and other similar liens arising in connection
with court proceedings that do not constitute an Event of Default, provided,
that, (i) such liens are being contested in good faith and by appropriate
proceedings diligently pursued, (ii) adequate reserves or other appropriate
provision, if any, as are required by GAAP have been made therefor, (iii) a stay
of enforcement of any such liens is in effect and (iv) Agent may establish a
Reserve with respect thereto; and

                  (j)  the security interests and liens set forth on Schedule
8.4 to the Information Certificate.

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         9.9   Indebtedness. Borrower shall not, and shall not permit any
Subsidiary to, incur, create, assume, become or be liable in any manner with
respect to, or permit to exist, any Indebtedness, or guarantee, assume, endorse,
or otherwise become responsible for (directly or indirectly), the Indebtedness,
performance, obligations or dividends of any other Person, except:

                  (a)  the Obligations;

                  (b)  purchase money Indebtedness (including Capital Leases)
arising after the date hereof to the extent secured by purchase money security
interests in Equipment (including Capital Leases) and purchase money mortgages
on Real Property not to exceed, in any calendar year, $2,000,000 in the
aggregate at any time outstanding so long as such security interests and
mortgages do not apply to any property of Borrower or any Subsidiary other than
the Equipment or Real Property so acquired, and the Indebtedness secured thereby
does not exceed the cost of the Equipment or Real Property so acquired, as the
case may be;

                  (c)  the Indebtedness set forth on Schedule 9.9 to the
Information Certificate; provided, that, (i) Borrower may only make regularly
scheduled payments of principal and interest in respect of such Indebtedness in
accordance with the terms of the agreement or instrument evidencing or giving
rise to such Indebtedness as in effect on the date hereof, (ii) Borrower shall
not, directly or indirectly, (A) amend, modify, alter or change the terms of
such Indebtedness or any agreement, document or instrument related thereto as in
effect on the date hereof except, that, Borrower may, after prior written notice
to Agent, amend, modify, alter or change the terms thereof so as to extend the
maturity thereof, or defer the timing of any payments in respect thereof, or to
forgive or cancel any portion of such Indebtedness (other than pursuant to
payments thereof), or to reduce the interest rate or any fees in connection
therewith, or (B) redeem, retire, defease, purchase or otherwise acquire such
Indebtedness, or set aside or otherwise deposit or invest any sums for such
purpose, and (iii) Borrower shall furnish to Agent all notices or demands in
connection with such Indebtedness either received by Borrower or on its behalf,
promptly after the receipt thereof, or sent by Borrower or on its behalf,
concurrently with the sending thereof, as the case may be;

                  (d)  unsecured Indebtedness of Borrower evidenced by or
arising under the Senior Subordinated Notes as in effect on the date hereof,
provided, that:

                           (i)  the aggregate principal amount of such
Indebtedness shall not exceed $76,315,000, which is the principal amount
outstanding as of the date of this Agreement, less the aggregate amount of all
repayments, repurchases or redemptions, whether optional or mandatory, in
respect thereof, made from and after the date of this Agreement, plus interest
thereon at the rate provided for in the Senior Subordinated Notes as in effect
on the date hereof,

                           (ii)  Borrower and any Obligor shall not, directly or
indirectly, make any payments in respect of such Indebtedness; except that,

                                    (A) Borrower may make payments of interest
in respect of the Senior Subordinated Notes in accordance with the terms of the
Senior Subordinated Note and/or Senior Subordinated Indenture as in effect on
the date hereof;

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                                     (B)  Borrower may use not greater than
$10,000,000 of proceeds of Revolving Loans made hereunder to make a prepayment
in respect of the principal Indebtedness evidenced by the Senior Subordinated
Notes, provided, that, (1) Borrower provides Agent with not less than ten (10)
days prior written notice of any intended payment, (2) such prepayment is made
in connection with the contemporaneous execution and delivery of the Senior
Subordinated Indenture Extension Agreement, (3) as of the date of such
prepayment, Borrower * has consummated the Tampa Sale-Leaseback Transaction as
permitted under Sections 9.7(b)(vii) and 9.20, (4) as of the last day of the
month immediately preceding the date of such intended prepayment, Borrower’s
EBITDA was in an amount not less than the minimum EBITDA amount for such month
as set forth in the table in Section 9.17, notwithstanding that as of such date,
Borrower may not be required to comply with such covenant pursuant to the terms
of Section 9.17, (5) no Default or Event of Default exists, immediately prior to
and after giving effect to the making of such payment, (6) for the consecutive
thirty (30) days immediately prior to such payment Borrower had Excess
Availability of not less than $12,500,000, and (7) immediately after giving
effect to such payment, Borrower has Excess Availability of not less than
$12,500,000, and

                                     (C)  Borrower may use Designated Equity
Proceeds (as defined below) to make a prepayment in respect of the principal
Indebtedness evidenced by the Senior Subordinated Notes, provided, that,
(1) Borrower provides Agent with not less than ten (10) days prior written
notice of any intended payment, (2) such payment shall be made either from
proceeds of a cash equity contribution received by Borrower within ten (10) days
prior to the date of such intended payment or from proceeds of a cash equity
contribution made to Borrower not within such ten day period so long as such
cash equity contribution is continuously held in a segregated bank or attorney
trust account and not commingled with any other funds (the “Designated Equity
Proceeds”), (3) such payment shall not exceed the Designated Equity Proceeds and
is made in connection with the contemporaneous execution and delivery of the
Senior Subordinated Indenture Extension Agreement, (4) no Default or Event of
Default exists, immediately prior to and after giving effect to the making of
such payment, (5) for the consecutive thirty (30) days immediately prior to such
payment Borrower had Excess Availability of not less than $12,500,000, and
(6) immediately after giving effect to such payment, Borrower has Excess
Availability of not less than $12,500,000; and

                                     (D)  Borrower may only use amounts
permitted under Sections (d)(ii)(B) and (C) above if such amounts are used
contemporaneously in connection with the execution and delivery by the Borrower
of the Senior Subordinated Indenture Extension Agreement and the consummation of
the transactions thereunder as permitted under such subsections.

                           (iii)  the Obligations of Borrower shall at all times
constitute “Designated Senior Indebtedness” (as such term is defined in the
Senior Subordinated Indenture),

                           (iv)  Borrower shall not, directly or indirectly,
(A) amend, modify, alter or change in any material respect any terms of such
Indebtedness or any of the Senior Subordinated Notes, the Senior Subordinated
Indenture or any related agreements, documents or instruments, except that
Borrower may, subject to the provisions of Section 9.19 hereof, extend the
maturity thereof or defer the timing of any payments in respect thereof, or
Borrower may forgive or

* Portions of this Exhibit have been deleted and filed separately with the
Securities and Exchange Commission pursuant to the Company's request for
confidential treatment pursuant to Rule 24b-2 promulgated under the Securities
Exchange Act.

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cancel any portion of such Indebtedness other than pursuant to payments thereof,
or reduce the interest rate or any fees in connection therewith, or (B) redeem,
retire, defease, purchase or otherwise acquire such Indebtedness, or set aside
or otherwise deposit or invest any sums for such purpose, and

                           (v)  Borrower shall furnish to Lender all notices or
demands in connection with such Indebtedness received by Borrower or on its
behalf, promptly after receipt thereof or sent by Borrower or on its behalf
concurrently with the sending thereof.

         9.10   Loans, Investments, Etc. Borrower shall not, and shall not
permit any Subsidiary to, directly or indirectly, make any loans or advance
money or property to any person, or invest in (by capital contribution, dividend
or otherwise) or purchase or repurchase the Capital Stock or Indebtedness or all
or a substantial part of the assets or property of any person, or form or
acquire any Subsidiaries, or agree to do any of the foregoing, except:

                  (a)  the endorsement of instruments for collection or deposit
in the ordinary course of business;

                  (b)  investments in cash or Cash Equivalents, provided, that,
(i) no Loans are then outstanding and (ii) the terms and conditions of Section
5.2 hereof shall have been satisfied with respect to the deposit account,
investment account or other account in which such cash or Cash Equivalents are
held;

                  (c)  the existing equity investments of Borrower as of the
date hereof in its Subsidiaries, provided, that, Borrower shall not have any
further obligations or liabilities to make any capital contributions or other
additional investments or other payments to or in or for the benefit of any of
such Subsidiaries;

                  (d)  loans and advances by Borrower to employees of Borrower
not to exceed the principal amount of $100,000 in the aggregate at any time
outstanding for: (i) reasonable and necessary work-related travel or other
ordinary business expenses to be incurred by such employee in connection with
their work for Borrower and (ii) reasonable and necessary relocation expenses of
such employees (including home mortgage financing for relocated employees);

                  (e)  stock or obligations issued to Borrower by any Person (or
the representative of such Person) in respect of Indebtedness of such Person
owing to Borrower in connection with the insolvency, bankruptcy, receivership or
reorganization of such Person or a composition or readjustment of the debts of
such Person; provided, that, the original of any such stock or instrument
evidencing such obligations shall be promptly delivered to Agent, upon Agent’s
request, together with such stock power, assignment or endorsement by Borrower
as Agent may request;

                  (f)  obligations of account debtors to Borrower arising from
Accounts which are past due evidenced by a promissory note made by such account
debtor payable to Borrower; provided, that, promptly upon the receipt of the
original of any such promissory note by

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Borrower, such promissory note shall be endorsed to the order of Agent by
Borrower and promptly delivered to Agent as so endorsed;

                  (g)  the loans and advances set forth on Schedule 9.10 to the
Information Certificate; provided, that, as to such loans and advances, (i)
Borrower shall not, directly or indirectly, amend, modify, alter or change the
terms of such loans and advances or any agreement, document or instrument
related thereto and (ii) Borrower shall furnish to Agent all notices or demands
in connection with such loans and advances either received by Borrower or on its
behalf, promptly after the receipt thereof, or sent by Borrower or on its
behalf, concurrently with the sending thereof, as the case may be.

         9.11   Dividends and Redemptions. Borrower shall not, directly or
indirectly, declare or pay any dividends on account of any shares of class of
any Capital Stock of Borrower now or hereafter outstanding, or set aside or
otherwise deposit or invest any sums for such purpose, or redeem, retire,
defease, purchase or otherwise acquire any shares of any class of Capital Stock
(or set aside or otherwise deposit or invest any sums for such purpose) for any
consideration or apply or set apart any sum, or make any other distribution (by
reduction of capital or otherwise) in respect of any such shares or agree to do
any of the foregoing, exceptthat:

                  (a)  Borrower may declare and pay such dividends or redeem,
retire, defease, purchase or otherwise acquire any shares of any class of
Capital Stock for consideration in the form of shares of common stock (so long
as after giving effect thereto no Change of Control or other Default or Event of
Default shall exist or occur);

                  (b)  Borrower may pay dividends to the extent permitted in
Section 9.12 below;

                  (c)  Borrower may repurchase Capital Stock consisting of
common stock held by employees pursuant to any employee stock ownership plan
thereof upon the termination, retirement or death of any such employee in
accordance with the provisions of such plan, provided, that, as to any such
repurchase, each of the following conditions is satisfied: (i) as of the date of
the payment for such repurchase and after giving effect thereto, no Default or
Event of Default shall exist or have occurred and be continuing, (ii) such
repurchase shall be paid with funds legally available therefor, (iii) such
repurchase shall not violate any law or regulation or the terms of any
indenture, agreement or undertaking to which Borrower is a party or by which
Borrower or its or their property are bound, and (iv) the aggregate amount of
all payments for such repurchases in any calendar year shall not exceed
$100,000.

         9.12   Transactions with Affiliates. Borrower shall not, directly or
indirectly:

                  (a)  purchase, acquire or lease any property from, or sell,
transfer or lease any property to, any officer, director or other Affiliate of
Borrower, except in the ordinary course of and pursuant to the reasonable
requirements of Borrower’s business (as the case may be) and upon fair and
reasonable terms no less favorable to Borrower than Borrower would obtain in a
comparable arm’s length transaction with an unaffiliated person; or

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                   (b)  make any payments (whether by dividend, loan or
otherwise) of management, consulting or other fees for management or similar
services, or of any Indebtedness owing to any officer, employee, shareholder,
director or any other Affiliate of Borrower, except reasonable compensation to
officers, employees and directors for services rendered to Borrower in the
ordinary course of business.

         9.13   Compliance with ERISA. Borrower shall, and shall cause each of
its ERISA Affiliates, to: (a) maintain each Plan in compliance in all material
respects with the applicable provisions of ERISA, the Code and other Federal and
State law; (b) cause each Plan which is qualified under Section 401(a) of the
Code to maintain such qualification; (c) not terminate any of such Plans so as
to incur any material liability to the Pension Benefit Guaranty Corporation;
(d) not allow or suffer to exist any prohibited transaction involving any of
such Plans or any trust created thereunder which would subject Borrower or such
ERISA Affiliate to a material tax or penalty or other liability on prohibited
transactions imposed under Section 4975 of the Code or ERISA; (e) make all
required contributions to any Plan which it is obligated to pay under Section
302 of ERISA, Section 412 of the Code or the terms of such Plan; (f) not allow
or suffer to exist any accumulated funding deficiency, whether or not waived,
with respect to any such Plan; or (g) allow or suffer to exist any occurrence of
a reportable event or any other event or condition which presents a material
risk of termination by the Pension Benefit Guaranty Corporation of any such Plan
that is a single employer plan, which termination could result in any material
liability to the Pension Benefit Guaranty Corporation.

         9.14   End of Fiscal Years; Fiscal Quarters. Borrower shall, for
financial reporting purposes, cause its, and each of its Subsidiaries’
(a) fiscal years to end on December 31 of each year and (b) fiscal quarters to
end on March 31, June 30, September 30 and December 31 of each year.

         9.15  Change in Business. Borrower shall not engage in any business
other than the business of Borrower on the date hereof and any business
reasonably related, ancillary or complimentary to the business in which Borrower
is engaged on the date hereof.

         9.16   Limitation of Restrictions Affecting Subsidiaries. Borrower
shall not, directly, or indirectly, create or otherwise cause or suffer to exist
any encumbrance or restriction which prohibits or limits the ability of any
Subsidiary of Borrower to (a) pay dividends or make other distributions or pay
any Indebtedness owed to Borrower or any Subsidiary of Borrower; (b) make loans
or advances to Borrower or any Subsidiary of Borrower, (c) transfer any of its
properties or assets to Borrower or any Subsidiary of Borrower; or (d) 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 encumbrances and
restrictions arising under (i) applicable law, (ii) this Agreement,
(iii) customary provisions restricting subletting or assignment of any lease
governing a leasehold interest of Borrower or any Subsidiary of Borrower,
(iv) customary restrictions on dispositions of real property interests found in
reciprocal easement agreements of Borrower or any Subsidiary of Borrower,
(v) any agreement relating to permitted Indebtedness incurred by a Subsidiary of
Borrower prior to the date on which such Subsidiary was acquired by Borrower and
outstanding on such acquisition date, and (vi) the extension or continuation of
contractual obligations in existence on the date hereof; provided, that, any
such encumbrances or

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restrictions contained in such extension or continuation are no less favorable
to Agent and Lenders than those encumbrances and restrictions under or pursuant
to the contractual obligations so extended or continued.

         9.17   Minimum EBITDA. At any time that the Excess Availability of
Borrower is less than $17,500,000, the EBITDA of Borrower for the immediately
preceding three (3) consecutive month period (treated as a single accounting
period) ending on the dates set forth below shall not be less than the
corresponding Minimum EBITDA amount set forth below:

Minimum EBITDA Amounts* Date         October 31, 2002 $2,000       November 30,
2002 $508,000       December 31, 2002 $1,160,000       January 31, 2003
$1,401,000       February 28, 2003 $1,821,000       March 31, 2003 $2,362,000  
    April 30, 2003 $2,467,000       May 31, 2003 $2,652,000       June 30, 2003
$2,888,000       July 31, 2003 $3,048,000       August 31, 2003 $3,329,000      
September 30, 2003 $3,689,000       October 31, 2003 $4,043,000       November
30, 2003 $4,663,000       December 31, 2003, and as at the end of each calendar
month thereafter $5,460,000      

         9.18   License Agreements.

* Portions of Exhibit have been deleted and filed separately with the Securities
and Exchange Commission pursuant to the Company's request for confidential
treatment pursuant to Rule 24b-2 promulgated under the Securities Exchange Act.

 

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                   (a)  Borrower shall (i) promptly and faithfully observe and
perform all of the material terms, covenants, conditions and provisions of the
material License Agreements to which it is a party to be observed and performed
by it, at the times set forth therein, if any, (ii) not do, permit, suffer or
refrain from doing anything that could reasonably be expected to result in a
default under or breach of any of the terms of any material License Agreement,
(iii) not cancel, surrender, modify, amend, waive or release any material
License Agreement in any material respect or any term, provision or right of the
licensee thereunder in any material respect, or consent to or permit to occur
any of the foregoing; except, that, subject to Section 9.18(b) below, Borrower
may cancel, surrender or release any material License Agreement in the ordinary
course of the business of Borrower; provided, that, Borrower (as the case may
be) shall give Agent not less than thirty (30) days prior written notice of its
intention to so cancel, surrender and release any such material License
Agreement, (iv) give Agent prompt written notice of any material License
Agreement entered into by Borrower after the date hereof, together with a true,
correct and complete copy thereof and such other information with respect
thereto as Agent may request, (v) give Agent prompt written notice of any
material breach of any obligation, or any default, by any party under any
material License Agreement, and deliver to Agent (promptly upon the receipt
thereof by Borrower in the case of a notice to Borrower and concurrently with
the sending thereof in the case of a notice from Borrower ) a copy of each
notice of default and every other notice and other communication received or
delivered by Borrower in connection with any material License Agreement which
relates to the right of Borrower to continue to use the property subject to such
License Agreement, and (vi) furnish to Agent, promptly upon the request of
Agent, such information and evidence as Agent may reasonably require from time
to time concerning the observance, performance and compliance by Borrower or the
other party or parties thereto with the material terms, covenants or provisions
of any material License Agreement.

                  (b)  Borrower will either exercise any option to renew or
extend the term of each material License Agreement to which it is a party in
such manner as will cause the term of such material License Agreement to be
effectively renewed or extended for the period provided by such option and give
prompt written notice thereof to Agent or give Agent prior written notice that
Borrower does not intend to renew or extend the term of any such material
License Agreement or that the term thereof shall otherwise be expiring, not less
than sixty (60) days prior to the date of any such non-renewal or expiration. In
the event of the failure of Borrower to extend or renew any material License
Agreement to which it is a party, Agent shall have, and is hereby granted, the
irrevocable right and authority, at its option, to renew or extend the term of
such material License Agreement, whether in its own name and behalf, or in the
name and behalf of a designee or nominee of Agent or in the name and behalf of
Borrower, as Agent shall determine at any time that an Event of Default shall
exist or have occurred and be continuing. Agent may, but shall not be required
to, perform any or all of such obligations of Borrower under any of the License
Agreements, including, but not limited to, the payment of any or all sums due
from Borrower thereunder. Any sums so paid by Agent shall constitute part of the
Obligations.

         9.19   Extension of Maturity Date of Indenture. Borrower shall extend
the maturity date of the Senior Subordinated Indenture and Senior Subordinated
Note from August 1, 2004 to a date not earlier than November 30, 2005 pursuant
to the terms and provisions of a written agreement

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(the “Senior Subordinated Indenture Extension Agreement”), which Senior
Subordinated Indenture Extension Agreement (a) shall be duly executed and valid
and binding upon the Indenture Trustee, Borrower and the Holders of the
Securities (as such terms re defined in the Senior Subordinated Indenture), (b)
shall extend the maturity date of the Senior Subordinated Indenture and Senior
Subordinated Note from August 1, 2004 to a date not earlier than November 30,
2005, (c) shall not require Borrower to make payments in respect of the
principal balance of such Indebtedness (or any fees other than reasonably and
customary fees) during the term of this Agreement, (d) shall not increase the
principal amount of the Indebtedness under the Senior Subordinated Notes, (e)
shall not include terms and conditions that affect or limit the ability of
Borrower to borrow from Agent and Lenders, to amend, supplement or extend any of
the terms of the financing arrangements of Agent and Lenders with Borrower
pursuant to the terms hereof and of the other Financing Agreements or contain
any other terms and conditions that are more restrictive or burdensome with
respect to Borrower in any material respect than those included in the Senior
Subordinated Indenture or Senior Subordinated Notes as in effect on the date
hereof, and (f) shall be in form and substance satisfactory to Agent and Lenders
in all respects.

         9.20   Tampa Sale-Leaseback Transaction. (a) Notwithstanding anything
to the contrary contained in this Agreement, Borrower shall, on or prior to
January 31, 2003, be permitted to sell the Tampa Real Property in connection
with the Tampa Sale-Leaseback Transaction, provided, that, (i) Agent shall have
received not less than ten (10) Business Days prior written notice of any such
proposed transaction which notice shall set forth, in reasonable detail, the
terms of the Tampa Sale-Leaseback Transaction, (ii) the sale is a single,
bona fide arms-length transaction to a Person that is not an Affiliate of
Borrower, (iii) Agent shall have received such information with respect thereto
as Agent may request, (iv) Agent shall have received true, correct and complete
copies of all agreements, documents and instruments relating to the Tampa
Sale-Leaseback Transaction, (v) the closing of the Tampa Sale-Leaseback
Transaction shall occur on or prior to January 31, 2003, (vi) the aggregate
purchase price for the Tampa Real Property shall not be less than $8,000,000,
(vii) the net cash proceeds from such sale, after payment of any Indebtedness
outstanding as of the date hereof which is secured by the Tampa Real Property,
shall be immediately remitted to Agent for application against the Obligations
in such order and manner as Agent shall elect and may be reborrowed subject to
the provisions of Section 2.1, (viii) if applicable, Borrower pledges and
assigns to Agent, for the ratable benefit of Lenders, as additional security for
the Obligations, any documents, notes or instruments evidencing the deferred
portion of the purchase price, (ix) no Default or Event of Default exists,
immediately prior to and after giving effect to the Tampa Sale-Leaseback
Transaction, and (x) the purchaser of the Tampa Real Property shall deliver to
Agent a Collateral Access Agreement, which shall be in form and substance
satisfactory to Agent.

                  (b)  In the event that the Tampa Sale-Leaseback Transaction
does not close by January 31, 2003, if Borrower elects to sell the Tampa Real
Property after February 1, 2003, Agent and Lenders agree to consent to such sale
provided, that, (i) Agent shall have received not less than ten (10) Business
Days prior written notice of any such proposed transaction which notice shall
set forth, in reasonable detail, the terms of such sale, (ii) the sale is a
single, bona fide arms-length transaction to a Person that is not an Affiliate
of Borrower, (iii) Agent shall have received

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such information with respect thereto as Agent may request, (iv) Agent shall
have received true, correct and complete copies of all agreements, documents and
instruments relating to such sale, (v) the aggregate purchase price for the
Tampa Real Property shall not be less than $8,000,000, (vi) if applicable,
Borrower pledges and assigns to Agent, for the ratable benefit of Lenders, as
additional security for the Obligations, any documents, notes or instruments
evidencing the deferred portion of the purchase price, (vii) no Default or Event
of Default exists, immediately prior to and after giving effect to such sale,
and (viii) the purchaser of the Tampa Real Property shall deliver to Agent a
Collateral Access Agreement, which shall be in form and substance satisfactory
to Agent. In addition to and not in limitation of the foregoing, the net cash
proceeds from such sale, after payment of any Indebtedness outstanding as of the
date hereof which is secured by the Tampa Real Property shall be immediately
remitted to Agent for application against the Obligations in such order and
manner as Agent shall elect and, after the establishment by Agent of a Reserve
in the amount of $2,000,000 (which Reserve shall be in addition to and not in
limitation of any other Reserves established under this Agreement) may be
reborrowed subject to the provisions of Section 2.1.

         9.21   After Acquired Real Property. If Borrower hereafter acquires any
Real Property, fixtures or any other property that is of the kind or nature
described in the Mortgages and such Real Property, fixtures or other property is
adjacent to, contiguous with or necessary or related to or used in connection
with any Real Property then subject to a Mortgage, or if such Real Property is
not adjacent to, contiguous with or related to or used in connection with such
Real Property, then if such Real Property, fixtures or other property at any
location (or series of adjacent, contiguous or related locations, and regardless
of the number of parcels) has a fair market value in an amount equal to or
greater than $500,000 (or if a Default or Event of Default exists, then
regardless of the fair market value of such assets), without limiting any other
rights of Agent or any Lender, or duties or obligations of Borrower, promptly
upon Agent’s request, Borrower shall execute and deliver to Agent a mortgage,
deed of trust or deed to secure debt, as Agent may determine, in form and
substance substantially similar to the Mortgages and as to any provisions
relating to specific state laws satisfactory to Agent and in form appropriate
for recording in the real estate records of the jurisdiction in which such Real
Property or other property is located granting to Agent a first and only lien
and mortgage on and security interest in such Real Property, fixtures or other
property (except as Borrower would otherwise be permitted to incur hereunder or
under the Mortgages or as otherwise consented to in writing by Agent) and such
other agreements, documents and instruments as Agent may require in connection
therewith.

         9.22   Costs and Expenses. Borrower shall pay to Agent on demand all
costs, expenses, filing fees and taxes paid or payable in connection with the
preparation, negotiation, execution, delivery, recording, administration,
collection, liquidation, enforcement and defense of the Obligations, Agent’s
rights in the Collateral, this Agreement, the other Financing Agreements and all
other documents related hereto or thereto, including any amendments, supplements
or consents which may hereafter be contemplated (whether or not executed) or
entered into in respect hereof and thereof, including: (a) all costs and
expenses of filing or recording (including Uniform Commercial Code financing
statement filing taxes and fees, documentary taxes, intangibles taxes and
mortgage recording taxes and fees, if applicable); (b) costs and expenses

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and fees for insurance premiums, appraisal fees and search fees, costs and
expenses of remitting loan proceeds, collecting checks and other items of
payment, and establishing and maintaining the Blocked Accounts, together with
Agent’s customary charges and fees with respect thereto; (c) charges, fees or
expenses charged by any bank or issuer in connection with the Letter of Credit
Accommodations; (d) costs and expenses of preserving and protecting the
Collateral; (e) costs and expenses paid or incurred in connection with obtaining
payment of the Obligations, enforcing the security interests and liens of Agent,
selling or otherwise realizing upon the Collateral, and otherwise enforcing the
provisions of this Agreement and the other Financing Agreements or defending any
claims made or threatened against Agent or any Lender arising out of the
transactions contemplated hereby and thereby (including preparations for and
consultations concerning any such matters); (f) all out-of-pocket expenses and
costs heretofore and from time to time hereafter incurred by Agent during the
course of periodic field examinations of the Collateral and Borrower ‘s
operations, plus a per diem charge at the then standard rate for Agent’s field
examiners in the field and office (which rate as of the date hereof is of $750
per person per day); and (g) the fees and disbursements of counsel (including
legal assistants) to Agent in connection with any of the foregoing.

         9.23   Further Assurances. At the request of Agent at any time and from
time to time, Borrower shall, at its expense, duly execute and deliver, or cause
to be duly executed and delivered, such further agreements, documents and
instruments, and do or cause to be done such further acts as may be necessary or
proper to evidence, perfect, maintain and enforce the security interests and the
priority thereof in the Collateral and to otherwise effectuate the provisions or
purposes of this Agreement or any of the other Financing Agreements. Agent may
at any time and from time to time request a certificate from an officer of
Borrower representing that all conditions precedent to the making of Loans and
providing Letter of Credit Accommodations contained herein are satisfied. In the
event of such request by Agent, Agent and Lenders may, at Agent’s option, cease
to make any further Loans or provide any further Letter of Credit Accommodations
until Agent has received such certificate and, in addition, Agent has determined
that such conditions are satisfied.

SECTION 10.       EVENTS OF DEFAULT AND REMEDIES

         10.1   Events of Default. The occurrence or existence of any one or
more of the following events are referred to herein individually as an “Event of
Default”, and collectively as “Events of Default”:

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                   (a)  (i)  Borrower fails to pay any of the Obligations when
due or (ii) Borrower fails to perform any of the covenants contained in Sections
9.4, 9.14, 9.15, and 9.16 of this Agreement and such failure shall continue for
ten (10) days; provided, that, such ten (10) day period shall not apply in the
case of: (A) any failure to observe any such covenant which is not capable of
being cured at all or within such ten (10) day period or which has been the
subject of a prior failure within a six (6) month period or (B) an intentional
breach by Borrower of any such covenant or (iii) Borrower fails to perform any
of the covenants contained in Section 9.3 of this Agreement and such failure
shall continue for forty-five (45) days, after giving effect to any extensions
of time allowed by any Governmental Authority; provided, that, such forty-five
(45) day period shall not apply in the case of: (A) any failure to observe any
such covenant which is not capable of being cured at all or within such
forty-five (45) day period or which has been the subject of a prior failure
within a six (6) month period or (B) an intentional breach by Borrower of any
such covenant or (iv) Borrower fails to perform any of the covenants contained
in Section 9.13 of this Agreement and such failure shall continue for sixty (60)
days; provided, that, such sixty (60) day period shall not apply in the case of:
(A) any failure to observe any such covenant which is not capable of being cured
at all or within such sixty (60) day period or which has been the subject of a
prior failure within a six (6) month period or (B) an intentional breach by
Borrower of any such covenant, or (v) Borrower fails to perform any of the
terms, covenants, conditions or provisions contained in this Agreement or any of
the other Financing Agreements other than those described in Sections
10.1(a)(i),(ii), (iii) and (iv) above;

                  (b)  any representation, warranty or statement of fact made by
Borrower to Agent in this Agreement, the other Financing Agreements or any other
written agreement, schedule, confirmatory assignment or otherwise shall when
made or deemed made be false or misleading in any material respect;

                  (c)  any Obligor revokes or terminates, or purports to revoke
or terminate, or fails to perform any of the terms, covenants, conditions or
provisions of any guarantee, endorsement or other agreement of such party in
favor of Agent or any Lender;

                  (d)  any judgment for the payment of money is rendered against
Borrower or any Obligor in excess of $100,000 in any one case or in excess of
$500,000 in the aggregate (to the extent not covered by insurance where the
insurer has assumed responsibility in writing for such judgment) and shall
remain undischarged or unvacated for a period in excess of thirty (30) days or
execution shall at any time not be effectively stayed, or any judgment other
than for the payment of money, or injunction, attachment, garnishment or
execution is rendered against Borrower or any Obligor or any of the Collateral
having a value in excess of $100,000;

                  (e)  any Obligor (being a natural person or a general partner
of an Obligor which is a partnership) dies or Borrower or any Obligor, which is
a partnership, limited liability company, limited liability partnership or a
corporation, dissolves or suspends or discontinues doing business;

                  (f)  Borrower or any Obligor makes an assignment for the
benefit of creditors, makes or sends notice of a bulk transfer or calls a
meeting of its creditors or principal creditors in connection with a moratorium
or adjustment of the Indebtedness due to them;

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                   (g)  a case or proceeding under the bankruptcy laws of the
United States of America now or hereafter in effect or under any insolvency,
reorganization, receivership, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction now or hereafter in effect (whether at law or
in equity) is filed against Borrower or any Obligor or all or any part of its
properties and such petition or application is not dismissed within thirty (30)
days after the date of its filing or Borrower or any Obligor shall file any
answer admitting or not contesting such petition or application or indicates its
consent to, acquiescence in or approval of, any such action or proceeding or the
relief requested is granted sooner;

                  (h)  a case or proceeding under the bankruptcy laws of the
United States of America now or hereafter in effect or under any insolvency,
reorganization, receivership, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction now or hereafter in effect (whether at a law
or equity) is filed by Borrower or any Obligor or for all or any part of its
property;

                  (i)  any default under the Senior Subordinated Indenture or
any default in respect of any Indebtedness of Borrower or any Obligor (other
than Indebtedness owing to Agent and Lenders hereunder), in any case in an
amount in excess of $500,000, which default continues for more than the
applicable cure period, if any, with respect thereto and/or is not waived in
writing by the other parties thereto, or any default by Borrower or any Obligor
under any Material Contract, which default continues for more than the
applicable cure period, if any, with respect thereto and/or is not waived in
writing by the other parties thereto;

                  (j)  any material provision hereof or of any of the other
Financing Agreements shall for any reason cease to be valid, binding and
enforceable with respect to any party hereto or thereto (other than Agent) in
accordance with its terms, or any such party shall challenge the enforceability
hereof or thereof, or shall assert in writing, or take any action or fail to
take any action based on the assertion that any provision hereof or of any of
the other Financing Agreements has ceased to be or is otherwise not valid,
binding or enforceable in accordance with its terms, or any security interest
provided for herein or in any of the other Financing Agreements shall cease to
be a valid and perfected first priority security interest in any of the
Collateral purported to be subject thereto (except as otherwise permitted herein
or therein);

                  (k)  an ERISA Event shall occur which results in or could
reasonably be expected to result in liability of Borrower in an aggregate amount
in excess of $500,000;

                  (l)  any Change of Control;

                  (m)  the indictment by any Governmental Authority, or as Agent
may reasonably and in good faith determine, the threatened indictment by any
Governmental Authority of Borrower or any Obligor of which Borrower, such
Obligor or Agent receives notice, in either case, as to which there is a
reasonable possibility of an adverse determination, in the good faith
determination of Agent, under any criminal statute, or commencement or
threatened commencement of criminal or civil proceedings against Borrower or any
Obligor, pursuant to which statute or proceedings the penalties or remedies
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(i) any of the Collateral having a value in excess of $100,000, or (ii) any
other property of Borrower which is necessary or material to the conduct of its
business;

                  (n)  the failure by Borrower to deliver to Agent a duly
executed Senior Subordinated Indenture Extension Agreement by June 30, 2004;

                  (o)  there shall be a material adverse change in the business,
assets or prospects of Borrower or any Obligor after the date hereof; or

                  (p)  there shall be an event of default under any of the other
Financing Agreements.

         10.2   Remedies.

                  (a)  At any time an Event of Default exists or has occurred
and is continuing, Agent and Lenders shall have all rights and remedies provided
in this Agreement, the other Financing Agreements, the UCC and other applicable
law, all of which rights and remedies may be exercised without notice to or
consent by Borrower or any Obligor, except as such notice or consent is
expressly provided for hereunder or required by applicable law. All rights,
remedies and powers granted to Agent and Lenders hereunder, under any of the
other Financing Agreements, the UCC or other applicable law, are cumulative, not
exclusive and enforceable, in Agent’s discretion, alternatively, successively,
or concurrently on any one or more occasions, and shall include, without
limitation, the right to apply to a court of equity for an injunction to
restrain a breach or threatened breach by Borrower or any Obligor of this
Agreement or any of the other Financing Agreements. Subject to Section 12
hereof, Agent may, and at the direction of the Required Lenders shall, at any
time or times, proceed directly against Borrower or any Obligor to collect the
Obligations without prior recourse to the Collateral.

                  (b)  Without limiting the foregoing, at any time an Event of
Default exists or has occurred and is continuing, Agent may, in its discretion,
and upon the direction of the Required Lenders, shall (i) accelerate the payment
of all Obligations and demand immediate payment thereof to Agent for itself and
the ratable benefit of Lenders (provided, that, upon the occurrence of any Event
of Default described in Sections 10.1(g) and 10.1(h), all Obligations shall
automatically become immediately due and payable), (ii) with or without judicial
process or the aid or assistance of others, enter upon any premises on or in
which any of the Collateral may be located and take possession of the Collateral
or complete processing, manufacturing and repair of all or any portion of the
Collateral, (iii) require Borrower or any Obligor, at Borrower’s expense, to
assemble and make available to Agent any part or all of the Collateral at any
place and time designated by Agent, (iv) collect, foreclose, receive,
appropriate, setoff and realize upon any and all Collateral, (v) remove any or
all of the Collateral from any premises on or in which the same may be located
for the purpose of effecting the sale, foreclosure or other disposition thereof
or for any other purpose, (vi) sell, lease, transfer, assign, deliver or
otherwise dispose of any and all Collateral (including entering into contracts
with respect thereto, public or private sales at any exchange, broker’s board,
at any office of Agent or elsewhere) at such prices or terms as Agent may deem
reasonable, for cash, upon credit or for future delivery, with the Agent having
the right to purchase the whole or any part of the Collateral at any such public
sale, all of the foregoing being free from any right or equity of redemption of
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right or equity of redemption is hereby expressly waived and released by
Borrower and Obligors and/or (vii) terminate this Agreement. If any of the
Collateral is sold or leased by Agent upon credit terms or for future delivery,
the Obligations shall not be reduced as a result thereof until payment therefor
is finally collected by Agent. If notice of disposition of Collateral is
required by law, ten (10) days prior notice by Agent to Borrower designating the
time and place of any public sale or the time after which any private sale or
other intended disposition of Collateral is to be made, shall be deemed to be
reasonable notice thereof and Borrower waives any other notice. In the event
Agent institutes an action to recover any Collateral or seeks recovery of any
Collateral by way of prejudgment remedy, Borrower waives the posting of any bond
which might otherwise be required. At any time an Event of Default exists or has
occurred and is continuing, upon Agent’s request, Borrower will either, as Agent
shall specify, furnish cash collateral to the issuer to be used to secure and
fund Agent’s reimbursement obligations to the issuer in connection with any
Letter of Credit Accommodations or furnish cash collateral to Agent for the
Letter of Credit Accommodations. Such cash collateral shall be in the amount
equal to one hundred ten (110%) percent of the amount of the Letter of Credit
Accommodations plus the amount of any fees and expenses payable in connection
therewith through the end of the latest expiration date of such Letter of Credit
Accommodations.

                  (c)  At any time or times that an Event of Default exists or
has occurred and is continuing, Agent may, in its discretion, and upon the
direction of the Required Lenders, Agent shall, enforce the rights of Borrower
or any Obligor against any account debtor, secondary obligor or other obligor in
respect of any of the Accounts or other Receivables. Without limiting the
generality of the foregoing, Agent may, in its discretion, and upon the
direction of the Required Lenders, Agent shall, at such time or times (i) notify
any or all account debtors, secondary obligors or other obligors in respect
thereof that the Receivables have been assigned to Agent and that Agent has a
security interest therein and Agent may direct any or all account debtors,
secondary obligors and other obligors to make payment of Receivables directly to
Agent, (ii) extend the time of payment of, compromise, settle or adjust for
cash, credit, return of merchandise or otherwise, and upon any terms or
conditions, any and all Receivables or other obligations included in the
Collateral and thereby discharge or release the account debtor or any secondary
obligors or other obligors in respect thereof without affecting any of the
Obligations, (iii) demand, collect or enforce payment of any Receivables or such
other obligations, but without any duty to do so, and Agent and Lenders shall
not be liable for any failure to collect or enforce the payment thereof nor for
the negligence of its agents or attorneys with respect thereto and (iv) take
whatever other action Agent may deem necessary or desirable for the protection
of its interests and the interests of Lenders. At any time that an Event of
Default exists or has occurred and is continuing, at Agent’s request, all
invoices and statements sent to any account debtor shall state that the Accounts
and such other obligations have been assigned to Agent and are payable directly
and only to Agent and Borrower shall deliver to Agent such originals of
documents evidencing the sale and delivery of goods or the performance of
services giving rise to any Accounts as Agent may require. In the event any
account debtor returns Inventory when an Event of Default exists or has occurred
and is continuing, Borrower shall, upon Agent’s request, hold the returned
Inventory in trust for Agent, segregate all returned Inventory from all of its
other property, dispose of the returned Inventory solely according to Agent’s
instructions,

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and not issue any credits, discounts or allowances with respect thereto without
Agent’s prior written consent.

                  (d)  To the extent that applicable law imposes duties on Agent
or any Lender to exercise remedies in a commercially reasonable manner (which
duties cannot be waived under such law), Borrower acknowledges and agrees that
it is not commercially unreasonable for Agent or any Lender (i) to fail to incur
expenses reasonably deemed significant by Agent or any Lender to prepare
Collateral for disposition or otherwise to complete raw material or work in
process into finished goods or other finished products for disposition, (ii) to
fail to obtain third party consents for access to Collateral to be disposed of,
or to obtain or, if not required by other law, to fail to obtain consents of any
Governmental Authority or other third party for the collection or disposition of
Collateral to be collected or disposed of, (iii) to fail to exercise collection
remedies against account debtors, secondary obligors or other persons obligated
on Collateral or to remove liens or encumbrances on or any adverse claims
against Collateral, (iv) to exercise collection remedies against account debtors
and other persons obligated on Collateral directly or through the use of
collection agencies and other collection specialists, (v) to advertise
dispositions of Collateral through publications or media of general circulation,
whether or not the Collateral is of a specialized nature, (vi) to contact other
persons, whether or not in the same business as Borrower, for expressions of
interest in acquiring all or any portion of the Collateral, (vii) to hire one or
more professional auctioneers to assist in the disposition of Collateral,
whether or not the collateral is of a specialized nature, (viii) to dispose of
Collateral by utilizing Internet sites that provide for the auction of assets of
the types included in the Collateral or that have the reasonable capability of
doing so, or that match buyers and sellers of assets, (ix) to dispose of assets
in wholesale rather than retail markets, (x) to disclaim disposition warranties,
(xi) to purchase insurance or credit enhancements to insure Agent or Lenders
against risks of loss, collection or disposition of Collateral or to provide to
Agent or Lenders a guaranteed return from the collection or disposition of
Collateral, or (xii) to the extent deemed appropriate by Agent, to obtain the
services of other brokers, investment bankers, consultants and other
professionals to assist Agent in the collection or disposition of any of the
Collateral. Borrower acknowledges that the purpose of this Section is to provide
non-exhaustive indications of what actions or omissions by Agent or any Lender
would not be commercially unreasonable in the exercise by Agent or any Lender of
remedies against the Collateral and that other actions or omissions by Agent or
any Lender shall not be deemed commercially unreasonable solely on account of
not being indicated in this Section. Without limitation of the foregoing,
nothing contained in this Section shall be construed to grant any rights to
Borrower or to impose any duties on Agent or Lenders that would not have been
granted or imposed by this Agreement or by applicable law in the absence of this
Section.

                  (e)  For the purpose of enabling Agent to exercise the rights
and remedies hereunder, Borrower hereby grants to Agent, to the extent
assignable, an irrevocable, non-exclusive license (exercisable at any time an
Event of Default shall exist or have occurred and for so long as the same is
continuing) without payment of royalty or other compensation to Borrower, to
use, assign, license or sublicense any of the trademarks, service-marks, trade
names, business names, trade styles, designs, logos and other source of business
identifiers and other Intellectual Property and general intangibles now owned or
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Borrower, wherever the same maybe located, including in such license reasonable
access to all media in which any of the licensed items may be recorded or stored
and to all computer programs used for the compilation or printout thereof.

                  (f)  Agent may apply the cash proceeds of Collateral actually
received by Agent from any sale, lease, foreclosure or other disposition of the
Collateral to payment of the Obligations, in whole or in part and in such order
as Agent may elect, whether or not then due. Borrower and Obligors shall remain
liable to Agent and Lenders for the payment of any deficiency with interest at
the highest rate provided for herein and all costs and expenses of collection or
enforcement, including attorneys’ fees and expenses.

                  (g)  Without limiting the foregoing, upon the occurrence of a
Default or an Event of Default, (i) Agent and Lenders may, at Agent’s option,
and upon the occurrence of an Event of Default, at the direction of the Required
Lenders, Agent and Lenders shall, without notice, (A) cease making Loans or
arranging for Letter of Credit Accommodations or reduce the lending formulas or
amounts of Loans and Letter of Credit Accommodations available to Borrower
and/or (B) terminate any provision of this Agreement providing for any future
Loans or Letter of Credit Accommodations to be made by Agent and Lenders to
Borrower, and (ii) Agent may, at its option, establish such Reserves as Agent
determines without limitation or restriction, notwithstanding anything to the
contrary provided herein.

SECTION 11.       JURY TRIAL WAIVER; OTHER WAIVERSAND CONSENTS; GOVERNING LAW

         11.1   Governing Law; Choice of Forum; Service of Process; Jury Trial
Waiver.

                  (a)  The validity, interpretation and enforcement of this
Agreement and the other Financing Agreements (other than the Mortgages to the
extent provided therein) and any dispute arising out of the relationship between
the parties hereto, whether in contract, tort, equity or otherwise, shall be
governed by the internal laws of the State of Florida but excluding any
principles of conflicts of law or other rule of law that would cause the
application of the law of any jurisdiction other than the laws of the State of
Florida.

                  (b)  Borrower, Agent and Lenders irrevocably consent and
submit to the non-exclusive jurisdiction of the Circuit Court of Dade County,
Florida and the United States District Court for the Southern District of
Florida, whichever Agent may elect, and waive any objection based on venue or
forum non conveniens with respect to any action instituted therein arising under
this Agreement or any of the other Financing Agreements or in any way connected
with or related or incidental to the dealings of the parties hereto in respect
of this Agreement or any of the other Financing Agreements or the transactions
related hereto or thereto, in each case whether now existing or hereafter
arising, and whether in contract, tort, equity or otherwise, and agree that any
dispute with respect to any such matters shall be heard only in the courts
described above (except that Agent and Lenders shall have the right to bring any
action or proceeding against Borrower or any Obligor or its or their property in
the courts of any other jurisdiction which Agent deems necessary or appropriate
in order to realize on the Collateral or to otherwise enforce its rights against
Borrower or any Obligor or its or their property).

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                   (c)  Borrower hereby waives personal service of any and all
process upon it and consents that all such service of process may be made by
certified mail (return receipt requested) directed to its address set forth
herein and service so made shall be deemed to be completed five (5) days after
the same shall have been so deposited in the U.S. mails, or, at Agent’s option,
by service upon Borrower in any other manner provided under the rules of any
such courts. Within thirty (30) days after such service, Borrower shall appear
in answer to such process, failing which Borrower shall be deemed in default and
judgment may be entered by Agent against Borrower for the amount of the claim
and other relief requested.

                  (d)  BORROWER, AGENT AND LENDERS EACH HEREBY WAIVES ANY RIGHT
TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING
UNDER THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR (ii) IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN
RESPECT OF THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR THE
TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. BORROWER,
AGENT AND LENDERS EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND
THAT BORROWER, AGENT OR ANY LENDER MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF
THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES
HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

                  (e)  Agent and Lenders shall not have any liability to
Borrower or any Obligor (whether in tort, contract, equity or otherwise) for
losses suffered by Borrower in connection with, arising out of, or in any way
related to the transactions or relationships contemplated by this Agreement, or
any act, omission or event occurring in connection herewith, unless it is
determined by a final and non-appealable judgment or court order binding on
Agent and such Lender, that the losses were the result of acts or omissions
constituting gross negligence or willful misconduct. In any such litigation,
Agent and Lenders shall be entitled to the benefit of the rebuttable presumption
that it acted in good faith and with the exercise of ordinary care in the
performance by it of the terms of this Agreement. Borrower: (i) certifies that
neither Agent, any Lender nor any representative, agent or attorney acting for
or on behalf of Agent or any Lender has represented, expressly or otherwise,
that Agent and Lenders would not, in the event of litigation, seek to enforce
any of the waivers provided for in this Agreement or any of the other Financing
Agreements and (ii) acknowledges that in entering into this Agreement and the
other Financing Agreements, Agent and Lenders are relying upon, among other
things, the waivers and certifications set forth in this Section 11.1 and
elsewhere herein and therein.

         11.2   Waiver of Notices. Borrower hereby expressly waives demand,
presentment, protest and notice of protest and notice of dishonor with respect
to any and all instruments and chattel paper, included in or evidencing any of
the Obligations or the Collateral, and any and all other demands and notices of
any kind or nature whatsoever with respect to the Obligations, the Collateral
and this Agreement, except such as are expressly provided for herein. No notice
to or

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demand on Borrower which Agent or any Lender may elect to give shall entitle
Borrower to any other or further notice or demand in the same, similar or other
circumstances.

         11.3   Amendments and Waivers.

                  (a)  Neither this Agreement nor any other Financing Agreement
nor any terms hereof or thereof may be amended, waived, discharged or terminated
unless such amendment, waiver, discharge or termination is in writing signed by
Agent and the Required Lenders or at Agent’s option, by Agent with the
authorization of the Required Lenders, and as to amendments to any of the
Financing Agreements (other than with respect to any provision of Section 12
hereof), by Borrower; except, that, no such amendment, waiver, discharge or
termination shall:

                           (i)  reduce the interest rate or any fees or extend
the time of payment of principal, interest or any fees or reduce the principal
amount of any Loan or Letter of Credit Accommodations, in each case without the
consent of each Lender directly affected thereby,

                           (ii)  increase the Commitment of any Lender over the
amount thereof then in effect or provided hereunder, in each case without the
consent of the Lender directly affected thereby,

                           (iii)  release any Collateral (except as expressly
required hereunder or under any of the other Financing Agreements or applicable
law and except as permitted under Section 12.11(b) hereof), or modify the
provisions of Sections 12.8(a) or 12.11(a)(ii) without the consent of Agent and
all of Lenders,

                           (iv)  reduce any percentage specified in the
definition of Required Lenders, without the consent of Agent and all of Lenders,

                           (v)  consent to the assignment or transfer by
Borrower or any Obligor of any of their rights and obligations under this
Agreement, without the consent of Agent and all of Lenders,

                           (vi)  amend, modify or waive any terms of this
Section 11.3 hereof, without the consent of Agent and all of Lenders, or

                           (vii)  increase the advance rates constituting part
of the Borrowing Base, without the consent of Agent and all of Lenders.

                  (b)  Agent and Lenders shall not, by any act, delay, omission
or otherwise be deemed to have expressly or impliedly waived any of its or their
rights, powers and/or remedies unless such waiver shall be in writing and signed
as provided herein. Any such waiver shall be enforceable only to the extent
specifically set forth therein. A waiver by Agent or any Lender of any right,
power and/or remedy on any one occasion shall not be construed as a bar to or
waiver of any such right, power and/or remedy which Agent or any Lender would
otherwise have on any future occasion, whether similar in kind or otherwise.

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                   (c)  Notwithstanding anything to the contrary contained in
Section 11.3(a) above, in connection with any amendment, waiver, discharge or
termination, in the event that any Lender whose consent thereto is required
shall fail to consent or fail to consent in a timely manner (such Lender being
referred to herein as a “Non-Consenting Lender”), but the consent of any other
Lenders to such amendment, waiver, discharge or termination that is required are
obtained, if any, then Congress shall have the right, but not the obligation, at
any time thereafter, and upon the exercise by Congress of such right, such
Non-Consenting Lender shall have the obligation, to sell, assign and transfer to
Congress or such Eligible Transferee as Congress may specify, the Commitment of
such Non-Consenting Lender and all rights and interests of such Non-Consenting
Lender pursuant thereto. Congress shall provide the Non-Consenting Lender with
prior written notice of its intent to exercise its right under this Section,
which notice shall specify on date on which such purchase and sale shall occur.
Such purchase and sale shall be pursuant to the terms of an Assignment and
Acceptance (whether or not executed by the Non-Consenting Lender), except that
on the date of such purchase and sale, Congress, or such Eligible Transferee
specified by Congress, shall pay to the Non-Consenting Lender the amount equal
to: (i) the principal balance of the Loans held by the Non-Consenting Lender
outstanding as of the close of business on the business day immediately
preceding the effective date of such purchase and sale, plus (ii) amounts
accrued and unpaid in respect of interest and fees payable to the Non-Consenting
Lender to the effective date of the purchase (but in no event shall the
Non-Consenting Lender be deemed entitled to any early termination fee), minus
(iii) the amount of the closing fee received by the Non-Consenting Lender
pursuant to the terms hereof or of any of the other Financing Agreements
multiplied by the fraction, the numerator of which is the number of months
remaining in the then current term of the Credit Facility and the denominator of
which is the number of months in the then current term thereof. Such purchase
and sale shall be effective on the date of the payment of such amount to the
Non-Consenting Lender and the Commitment of the Non-Consenting Lender shall
terminate on such date.

                  (d)  The consent of Agent shall be required for any amendment,
waiver or consent affecting the rights or duties of Agent hereunder or under any
of the other Financing Agreements, in addition to the consent of the Lenders
otherwise required by this Section and the exercise by Agent of any of its
rights hereunder with respect to Reserves or Eligible Accounts or Eligible
Inventory shall not be deemed an amendment to the advance rates provided for in
this Section 11.3.

         11.4   Waiver of Counterclaims. Borrower waives all rights to interpose
any claims, deductions, setoffs or counterclaims of any nature (other then
compulsory counterclaims) in any action or proceeding with respect to this
Agreement, the Obligations, the Collateral or any matter arising therefrom or
relating hereto or thereto.

         11.5   Indemnification. Borrower shall indemnify and hold Agent and
each Lender, and its officers, directors, agents, employees, advisors and
counsel and their respective Affiliates (each such person being an
“Indemnitee”), harmless from and against any and all losses, claims, damages,
liabilities, costs or expenses (including attorneys’ fees and expenses) imposed
on, incurred by or asserted against any of them in connection with any
litigation, investigation, claim or proceeding commenced or threatened related
to the negotiation, preparation, execution,

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delivery, enforcement, performance or administration of this Agreement, any
other Financing Agreements, or any undertaking or proceeding related to any of
the transactions contemplated hereby or any act, omission, event or transaction
related or attendant thereto, including amounts paid in settlement, court costs,
and the fees and expenses of counsel except that Borrower shall not have any
obligation under this Section 11.5 to indemnify an Indemnitee with respect to a
matter covered hereby resulting from the gross negligence or wilful misconduct
of such Indemnitee as determined pursuant to a final, non-appealable order of a
court of competent jurisdiction (but without limiting the obligations of
Borrower as to any other Indemnitee). To the extent that the undertaking to
indemnify, pay and hold harmless set forth in this Section may be unenforceable
because it violates any law or public policy, Borrower shall pay the maximum
portion which it is permitted to pay under applicable law to Agent and Lenders
in satisfaction of indemnified matters under this Section. To the extent
permitted by applicable law, Borrower shall not assert, and Borrower hereby
waives any claim against any Indemnitee, on any theory of liability, for
special, indirect, consequential or punitive damages (as opposed to direct or
actual damages) arising out of, in connection with, or as a result of, this
Agreement, any of the other Financing Agreements or any undertaking or
transaction contemplated hereby. All amounts due under this Section shall be
payable upon demand. The foregoing indemnity shall survive the payment of the
Obligations and the termination or non-renewal of this Agreement.

SECTION 12.       THE AGENT

         12.1   Appointment, Powers and Immunities. Each Lender irrevocably
designates, appoints and authorizes Congress to act as Agent hereunder and under
the other Financing Agreements with such powers as are specifically delegated to
Agent by the terms of this Agreement and of the other Financing Agreements,
together with such other powers as are reasonably incidental thereto. Agent (a)
shall have no duties or responsibilities except those expressly set forth in
this Agreement and in the other Financing Agreements, and shall not by reason of
this Agreement or any other Financing Agreement be a trustee or fiduciary for
any Lender; (b) shall not be responsible to Lenders for any recitals,
statements, representations or warranties contained in this Agreement or in any
of the other Financing Agreements, or in any certificate or other document
referred to or provided for in, or received by any of them under, this Agreement
or any other Financing Agreement, or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other
Financing Agreement or any other document referred to or provided for herein or
therein or for any failure by Borrower or any Obligor or any other Person to
perform any of its obligations hereunder or thereunder; and (c) shall not be
responsible to Lenders for any action taken or omitted to be taken by it
hereunder or under any other Financing Agreement or under any other document or
instrument referred to or provided for herein or therein or in connection
herewith or therewith, except for its own gross negligence or willful misconduct
as determined by a final non-appealable judgment of a court of competent
jurisdiction. Agent may employ agents and attorneys-in-fact and shall not be
responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it in good faith. Agent may deem and treat the
payee of any note as the holder thereof for all purposes hereof unless and until
the assignment thereof pursuant to an agreement (if and to the extent permitted
herein) in form and substance satisfactory to Agent shall have been delivered to
and acknowledged by Agent.

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         12.2   Reliance by Agent. Agent shall be entitled to rely upon any
certification, notice or other communication (including any thereof by
telephone, telecopy, telex, telegram or cable) believed by it to be genuine and
correct and to have been signed or sent by or on behalf of the proper Person or
Persons, and upon advice and statements of legal counsel, independent
accountants and other experts selected by Agent. As to any matters not expressly
provided for by this Agreement or any other Financing Agreement, Agent shall in
all cases be fully protected in acting, or in refraining from acting, hereunder
or thereunder in accordance with instructions given by the Required Lenders or
all of Lenders as is required in such circumstance, and such instructions of
such Agents and any action taken or failure to act pursuant thereto shall be
binding on all Lenders.

         12.3   Events of Default.

                  (a)  Agent shall not be deemed to have knowledge or notice of
the occurrence of a Default or an Event of Default or other failure of a
condition precedent to the Loans and Letter of Credit Accommodations hereunder,
unless and until Agent has received written notice from a Lender, or a Borrower
specifying such Event of Default or any unfulfilled condition precedent, and
stating that such notice is a “Notice of Default or Failure of Condition”. In
the event that Agent receives such a Notice of Default or Failure of Condition,
Agent shall give prompt notice thereof to the Lenders. Agent shall (subject to
Section 12.7) take such action with respect to any such Event of Default or
failure of condition precedent as shall be directed by the Required Lenders;
provided, that, unless and until Agent shall have received such directions,
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to or by reason of such Event of Default or
failure of condition precedent, as it shall deem advisable in the best interest
of Lenders.

                  (b)  Except with the prior written consent of Agent, no Lender
may assert or exercise any enforcement right or remedy in respect of the Loans,
Letter of Credit Accommodations or other Obligations, as against Borrower or any
Obligor or any of the Collateral or other property of Borrower or any Obligor.

         12.4   Congress in its Individual Capacity. With respect to its
Commitment and the Loans made and Letter of Credit Accommodations issued or
caused to be issued by it (and any successor acting as Agent), so long as
Congress shall be a Lender hereunder, it shall have the same rights and powers
hereunder as any other Lender and may exercise the same as though it were not
acting as Agent, and the term “Lender” or “Lenders” shall, unless the context
otherwise indicates, include Congress in its individual capacity as Lender
hereunder. Congress (and any successor acting as Agent) and its Affiliates may
(without having to account therefor to any Lender) lend money to, make
investments in and generally engage in any kind of business with Borrower (and
any of its Subsidiaries or Affiliates) as if it were not acting as Agent, and
Congress and its Affiliates may accept fees and other consideration from
Borrower or any Obligor and any of its Subsidiaries and Affiliates for services
in connection with this Agreement or otherwise without having to account for the
same to Lenders.

         12.5   Indemnification. Lenders agree to indemnify Agent (to the extent
not reimbursed by Borrower hereunder and without limiting any obligations of
Borrower hereunder) ratably, in

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accordance with their Pro Rata Shares, for any and all claims of any kind and
nature whatsoever that may be imposed on, incurred by or asserted against Agent
(including by any Lender) arising out of or by reason of any investigation in or
in any way relating to or arising out of this Agreement or any other Financing
Agreement or any other documents contemplated by or referred to herein or
therein or the transactions contemplated hereby or thereby (including the costs
and expenses that Agent is obligated to pay hereunder) or the enforcement of any
of the terms hereof or thereof or of any such other documents, provided, that,
no Lender shall be liable for any of the foregoing to the extent it arises from
the gross negligence or willful misconduct of the party to be indemnified as
determined by a final non-appealable judgment of a court of competent
jurisdiction. The foregoing indemnity shall survive the payment of the
Obligations and the termination or non-renewal of this Agreement.

         12.6   Non-Reliance on Agent and Other Lenders. Each Lender agrees that
it has, independently and without reliance on Agent or other Lender, and based
on such documents and information as it has deemed appropriate, made its own
credit analysis of Borrower and Obligors and has made its own decision to enter
into this Agreement and that it will, independently and without reliance upon
Agent or any other Lender, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own analysis and
decisions in taking or not taking action under this Agreement or any of the
other Financing Agreements. Agent shall not be required to keep itself informed
as to the performance or observance by Borrower or Obligor of any term or
provision of this Agreement or any of the other Financing Agreements or any
other document referred to or provided for herein or therein or to inspect the
properties or books of Borrower or any Obligor. Agent will use reasonable
efforts to provide Lenders with any information received by Agent from Borrower
or any Obligor which is required to be provided to Lenders hereunder and with a
copy of any Notice of Default or Failure of Condition received by Agent from
Borrower or any Lender; provided, that, Agent shall not be liable to any Lender
for any failure to do so, except to the extent that such failure is attributable
to Agent’s own gross negligence or willful misconduct as determined by a final
non-appealable judgment of a court of competent jurisdiction. Except for
notices, reports and other documents expressly required to be furnished to
Lenders by Agent hereunder, Agent shall not have any duty or responsibility to
provide any Lender with any other credit or other information concerning the
affairs, financial condition or business of Borrower or any Obligor that may
come into the possession of Agent.

         12.7   Failure to Act. Except for action expressly required of Agent
hereunder and under the other Financing Agreements, Agent shall in all cases be
fully justified in failing or refusing to act hereunder and thereunder unless it
shall receive further assurances to its satisfaction from Lenders of their
indemnification obligations under Section 12.5 hereof against any and all
liability and expense that may be incurred by it by reason of taking or
continuing to take any such action.

         12.8   Additional Loans. Agent shall not make any Revolving Loans or
provide any Letter of Credit Accommodations to Borrower on behalf of Lenders
intentionally and with actual knowledge that such Revolving Loans or Letter of
Credit Accommodations would cause the aggregate amount of the total outstanding
Revolving Loans and Letter of Credit

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Accommodations to Borrower to exceed the Borrowing Base, without the prior
consent of all Lenders, except, that, Agent may make such additional Revolving
Loans or provide such additional Letter of Credit Accommodations on behalf of
Lenders, intentionally and with actual knowledge that such Revolving Loans or
Letter of Credit Accommodations will cause the total outstanding Revolving Loans
and Letter of Credit Accommodations to Borrower to exceed the Borrowing Base, as
Agent may deem necessary or advisable in its discretion, provided, that: (a) the
total principal amount of the additional Revolving Loans or additional Letter of
Credit Accommodations to Borrower which Agent may make or provide after
obtaining such actual knowledge that the aggregate principal amount of the
Revolving Loans equal or exceed the Borrowing Base, plus the Special Agent
Advances pursuant to Section 12.11(a)(ii) then outstanding, shall not cause the
total of all outstanding Loans and Letter of Credit Accommodations to exceed the
amount of the Revolving Loans and Letter of Credit Accommodations available to
Borrower hereunder by more than five (5%) percent of such amount and shall not
cause the total principal amount of the Revolving Loans and Letter of Credit
Accommodations to exceed the Maximum Credit and (b) no such additional Revolving
Loans or Letter of Credit Accommodations shall be outstanding more than sixty
(60) days after the date such additional Revolving Loan or Letter of Credit
Accommodation is made or issued (as the case may be), except as the Required
Lenders may otherwise agree. Each Lender shall be obligated to pay Agent the
amount of its Pro Rata Share of any such additional Revolving Loans or Letter of
Credit Accommodations.

         12.9   Concerning the Collateral and the Related Financing Agreements.
Each Lender authorizes and directs Agent to enter into this Agreement and the
other Financing Agreements. Each Lender agrees that any action taken by Agent or
Required Lenders in accordance with the terms of this Agreement or the other
Financing Agreements and the exercise by Agent or Required Lenders of their
respective powers set forth therein or herein, together with such other powers
that are reasonably incidental thereto, shall be binding upon all of the
Lenders.

         12.10   Field Audit, Examination Reports and other Information;
Disclaimer by Lenders. By signing this Agreement, each Lender:

                  (a)  is deemed to have requested that Agent furnish such
Lender, promptly after it becomes available, a copy of each field audit or
examination report and a weekly report with respect to the Borrowing Base
prepared by Agent (each field audit or examination report and monthly report
with respect to the Borrowing Base being referred to herein as a “Report” and
collectively, “Reports”);

                  (b)  expressly agrees and acknowledges that Agent (A) does not
make any representation or warranty as to the accuracy of any Report, or
(B) shall not be liable for any information contained in any Report;

                  (c)  expressly agrees and acknowledges that the Reports are
not comprehensive audits or examinations, that Agent or any other party
performing any audit or examination will inspect only specific information
regarding Borrower and any Obligor and will rely significantly

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upon Borrower’s and Obligors’ books and records, as well as on representations
of Borrower’ and Obligors’ personnel; and

                  (d)  agrees to keep all Reports confidential and strictly for
its internal use in accordance with the terms of Section 13.5 hereof, and not to
distribute or use any Report in any other manner.

         12.11   Collateral Matters.

                  (a)  Agent may, at its option, from time to time, at any time
on or after an Event of Default and for so long as the same is continuing or
upon any other failure of a condition precedent to the Loans and Letter of
Credit Accommodations hereunder, make such disbursements and advances (“Special
Agent Advances”) which Agent, in its sole discretion, deems necessary or
desirable either (i) to preserve or protect the Collateral or any portion
thereof or (ii) to enhance the likelihood or maximize the amount of repayment by
Borrower of the Loans and other Obligations, provided, that, the aggregate
principal amount of the Special Agent Advances pursuant to this clause (ii),
plus the then outstanding principal amount of the additional Loans and Letter of
Credit Accommodations which Agent may make or provide as set forth in Section
12.8 hereof, shall not cause the total of all outstanding Loans and Letter of
Credit Accommodations to exceed the amount of the Revolving Loans and Letter of
Credit Accommodations available to Borrower hereunder by more than five (5%)
percent of such amount or (iii) to pay any other amount chargeable to Borrower
or Obligor pursuant to the terms of this Agreement or any of the other Financing
Agreements consisting of costs, fees and expenses and payments to any issuer of
Letter of Credit Accommodations. Special Agent Advances shall be repayable on
demand and be secured by the Collateral. Special Agent Advances shall not
constitute Loans but shall otherwise constitute Obligations hereunder. Agent
shall notify each Lender and Borrower in writing of each such Special Agent
Advance, which notice shall include a description of the purpose of such Special
Agent Advance. Without limitation of its obligations pursuant to Section 6.10,
each Lender agrees that it shall make available to Agent, upon Agent’s demand,
in immediately available funds, the amount equal to such Lender’s Pro Rata Share
of each such Special Agent Advance. If such funds are not made available to
Agent by such Lender, then such Lender shall be deemed a Defaulting Lender and
Agent shall be entitled to recover such funds, on demand from such Lender
together with interest thereon for each day from the date such payment was due
until the date such amount is paid to Agent at the Federal Funds Rate for each
day during such period (as published by the Federal Reserve Bank of New York or
at Agent’s option based on the arithmetic mean determined by Agent of the rates
for the last transaction in overnight Federal funds arranged prior to 9:00 a.m.
(New York City time) on that day by each of the three leading brokers of Federal
funds transactions in New York City selected by Agent) and if such amounts are
not paid within three (3) days of Agent’s demand, at the highest Interest Rate
provided for in Section 3.1 hereof applicable to Prime Rate Loans.

                  (b)  Lenders hereby irrevocably authorize Agent, at its option
and in its discretion to release any security interest in, mortgage or lien
upon, any of the Collateral (i) upon termination

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of the Commitments and payment and satisfaction of all of the Obligations and
delivery of cash collateral to the extent required under Section 13.1 below, or
(ii) constituting property being sold or disposed of if Borrower certifies to
Agent that the sale or disposition is made in compliance with Section 9.7 hereof
(and Agent may rely conclusively on any such certificate, without further
inquiry), or (iii) constituting property in which Borrower or any Obligor did
not own an interest at the time the security interest, mortgage or lien was
granted or at any time thereafter, or (iv) having a value in the aggregate in
any twelve (12) month period of less than $5,000,000, or (v) if required under
the terms of any of the other Financing Agreements, including any intercreditor
agreement, or (vi) if approved, authorized or ratified in writing by all of
Lenders. Except as provided above, Agent will not release any security interest
in, mortgage or lien upon, any of the Collateral without the prior written
authorization of all of Lenders. Upon request by Agent at any time, Lenders will
promptly confirm in writing Agent’s authority to release particular types or
items of Collateral pursuant to this Section.

                  (c)  Without in any manner limiting Agent’s authority to act
without any specific or further authorization or consent by the Required
Lenders, each Lender agrees to confirm in writing, upon request by Agent, the
authority to release Collateral conferred upon Agent under this Section. Agent
shall (and is hereby irrevocably authorized by Lenders to) execute such
documents as may be necessary to evidence the release of the security interest,
mortgage or liens granted to Agent upon any Collateral to the extent set forth
above; provided, that, (i) Agent shall not be required to execute any such
document on terms which, in Agent’s opinion, would expose Agent to liability or
create any obligations or entail any consequence other than the release of such
security interest, mortgage or liens without recourse or warranty and (ii) such
release shall not in any manner discharge, affect or impair the Obligations or
any security interest, mortgage or lien upon (or obligations of Borrower or any
Obligor in respect of) the Collateral retained by Borrower or such Obligor.

                  (d)  Agent shall have no obligation whatsoever to any Lender
or any other Person to investigate, confirm or assure that the Collateral exists
or is owned by Borrower or any Obligor or is cared for, protected or insured or
has been encumbered, or that any particular items of Collateral meet the
eligibility criteria applicable in respect of the Loans or Letter of Credit
Accommodations hereunder, or whether any particular reserves are appropriate, or
that the liens and security interests granted to Agent pursuant hereto or any of
the Financing Agreements or otherwise have been properly or sufficiently or
lawfully created, perfected, protected or enforced or are entitled to any
particular priority, or to exercise at all or in any particular manner or under
any duty of care, disclosure or fidelity, or to continue exercising, any of the
rights, authorities and powers granted or available to Agent in this Agreement
or in any of the other Financing Agreements, it being understood and agreed that
in respect of the Collateral, or any act, omission or event related thereto,
Agent may act in any manner it may deem appropriate, in its discretion, given
Agent’s own interest in the Collateral as a Lender and that Agent shall have no
duty or liability whatsoever to any other Lender, except as otherwise expressly
set forth in this Agreement.

         12.12   Agency for Perfection. Each Lender hereby appoints Agent and
each other Lender as agent and bailee for the purpose of perfecting the security
interests in and liens upon

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the Collateral of Agent in assets which, in accordance with Article 9 of the UCC
can be perfected only by possession (or where the security interest of a secured
party with possession has priority over the security interest of another secured
party) and Agent and each Lender hereby acknowledges that it holds possession of
any such Collateral for the benefit of Agent as secured party. Should any Lender
obtain possession of any such Collateral, such Lender shall notify Agent
thereof, and, promptly upon Agent’s request therefor shall deliver such
Collateral to Agent or in accordance with Agent’s instructions.

         12.13  Successor Agent. Agent may resign as Agent upon thirty (30)
days’ notice to Lenders and Borrower. If Agent resigns under this Agreement, the
Required Lenders shall appoint from among the Lenders a successor agent for
Lenders. If no successor agent is appointed prior to the effective date of the
resignation of Agent, Agent may appoint, after consulting with Lenders and
Borrower,a successor agent from among Lenders. Upon the acceptance by the Lender
so selected of its appointment as successor agent hereunder, such successor
agent shall succeed to all of the rights, powers and duties of the retiring
Agent and the term “Agent” as used herein and in the other Financing Agreements
shall mean such successor agent and the retiring Agent’s appointment, powers and
duties as Agent shall be terminated. After any retiring Agent’s resignation
hereunder as Agent, the provisions of this Section 12 shall inure to its benefit
as to any actions taken or omitted by it while it was Agent under this
Agreement. If no successor agent has accepted appointment as Agent by the date
which is thirty (30) days after the date of a retiring Agent’s notice of
resignation, the retiring Agent’s resignation shall nonetheless thereupon become
effective and Lenders shall perform all of the duties of Agent hereunder until
such time, if any, as the Required Lenders appoint a successor agent as provided
for above.

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SECTION 13.   TERM OF AGREEMENT; MISCELLANEOUS

         13.1   Term.

                  (a)  This Agreement and the other Financing Agreements shall
become effective as of the date set forth on the first page hereof and shall
continue in full force and effect for a term ending on the date three (3) years
from the date hereof. In addition, Borrower may terminate this Agreement at any
time upon ten (10) days prior written notice to Agent (which notice shall be
irrevocable) and Agent may, at its option, and shall at the direction of
Required Lenders, terminate this Agreement at any time on or after an Event of
Default. Upon the effective date of termination of the Financing Agreements,
Borrower shall pay to Agent all outstanding and unpaid Obligations and shall
furnish cash collateral to Agent (or at Agent’s option, a letter of credit
issued for the account of Borrower and at Borrower’s expense, in form and
substance satisfactory to Agent, by an issuer acceptable to Agent and payable to
Agent as beneficiary) in such amounts as Agent determines are reasonably
necessary to secure Agent and Lenders from loss, cost, damage or expense,
including attorneys’ fees and expenses, in connection with any contingent
Obligations, including issued and outstanding Letter of Credit Accommodations
and checks or other payments provisionally credited to the Obligations and/or as
to which Agent or any Lender has not yet received final and indefeasible
payment. The amount of such cash collateral (or letter of credit, as Agent may
determine) as to any Letter of Credit Accommodations shall be in the amount
equal to one hundred ten (110%) percent of the amount of the Letter of Credit
Accommodations plus the amount of any fees and expenses payable in connection
therewith through the end of the latest expiration date of such Letter of Credit
Accommodations. Such payments in respect of the Obligations and cash collateral
shall be remitted by wire transfer in Federal funds to the Agent Payment Account
or such other bank account of Agent, as Agent may, in its discretion, designate
in writing to Borrower for such purpose. Interest shall be due until and
including the next Business Day, if the amounts so paid by Borrower to the Agent
Payment Account or other bank account designated by Agent are received in such
bank account later than 12:00 noon, Miami, Florida time.

                  (b)  No termination of this Agreement or the other Financing
Agreements shall relieve or discharge Borrower or any Obligor of its respective
duties, obligations and covenants under this Agreement or the other Financing
Agreements until all Obligations have been fully and finally discharged and
paid, and Agent’s continuing security interest in the Collateral and the rights
and remedies of Agent and Lenders hereunder, under the other Financing
Agreements and applicable law, shall remain in effect until all such Obligations
have been fully and finally discharged and paid. Accordingly, Borrower waives
any rights it may have under the UCC to demand the filing of termination
statements with respect to the Collateral and Agent shall not be required to
send such termination statements to Borrower, or to file them with any filing
office, unless and until this Agreement shall have been terminated in accordance
with its terms and all Obligations paid and satisfied in full in immediately
available funds.

                  (c)  If for any reason this Agreement is terminated prior to
the third anniversary of the date hereof, in view of the impracticality and
extreme difficulty of ascertaining actual damages and by mutual agreement of the
parties as to a reasonable calculation of Agent’s and each Lender’s lost profits
as a result thereof, Borrower agrees to pay to Agent for itself and the

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ratable benefit of Lenders, upon the effective date of such termination, an
early termination fee in the amount equal to

 Amount Period (i)      1/2% of Maximum Credit From the date hereof to but not
including the third anniversary of the date hereof.

Such early termination fee shall be presumed to be the amount of damages
sustained by Agent and Lenders as a result of such early termination and
Borrower agrees that it is reasonable under the circumstances currently
existing. In addition, Agent and Lenders shall be entitled to such early
termination fee upon the occurrence of any Event of Default described in
Sections 10.1(g) and 10.1(h) hereof, even if Agent and Lenders do not exercise
the right to terminate this Agreement, but elect, at their option, to provide
financing to Borrower permit the use of cash collateral under the United States
Bankruptcy Code. The early termination fee provided for in this Section 13.1
shall be deemed included in the Obligations.

                  (d)  Notwithstanding anything to the contrary contained in
Section 13.1(c), (i) in the event of the termination of this Agreement by
Borrower prior to the end of the then current term and the full and final
repayment of all of the Obligations and the receipt by Agent of cash collateral
all as provided in Section 13.1(a), Borrower shall not be required to pay the
early termination fee provided for above if each of the following conditions is
satisfied: (A) no Event of Default or act, condition or event which with notice
or passage of time or both would constitute an Event of Default shall exist or
have occurred and be continuing, (B)  Agent shall have received not less than
thirty (30) days prior written notice of the intention of Borrower to so
terminate this Agreement, and (C)  the final payment in full of all of the
Obligations is received simultaneously with the refinancing of the Credit
Facility with proceeds of loans made by Wachovia Bank, National Association, or
its affiliates to Borrower; and (ii) Borrower shall not be required to pay the
early termination fee provided for above if prior to the occurrence of any Event
of Default described in Sections 10.1(g) and 10.1(h) hereof, Agent terminates
this Agreement in accordance with the terms hereof and final payment in full of
all of the Obligations is received by Agent and Lenders within ninety (90 ) days
from the date that Agent terminates this Agreement.

         13.2   Interpretative Provisions.

                  (a)  All terms used herein which are defined in Article 1,
Article 8 or Article 9 of the UCC shall have the meanings given therein unless
otherwise defined in this Agreement.

                  (b)  All references to the plural herein shall also mean the
singular and to the singular shall also mean the plural unless the context
otherwise requires.

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                   (c)  All references to Borrower, any Obligor, Agent and
Lenders pursuant to the definitions set forth in the recitals hereto, or to any
other person herein, shall include their respective successors and assigns.

                  (d)  The words “hereof”, “herein”, “hereunder”, “this
Agreement” and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not any particular provision of this Agreement
and as this Agreement now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.

                  (e)  The word “including” when used in this Agreement shall
mean “including, without limitation”.

                  (f)  An Event of Default shall exist or continue or be
continuing until such Event of Default is waived in accordance with Section 11.3
or is cured in a manner satisfactory to Agent, if such Event of Default is
capable of being cured as determined by Agent.

                  (g)  All references to the term “good faith” used herein when
applicable to Agent or any Lender shall mean, notwithstanding anything to the
contrary contained herein or in the UCC, honesty in fact in the conduct or
transaction concerned. Borrower shall have the burden of proving any lack of
good faith on the part of Agent or any Lender alleged by Borrower at any time.

                  (h)  Any accounting term used in this Agreement shall have,
unless otherwise specifically provided herein, the meaning customarily given in
accordance with GAAP, and all financial computations hereunder shall be computed
unless otherwise specifically provided herein, in accordance with GAAP as
consistently applied and using the same method for inventory valuation as used
in the preparation of the financial statements of Borrower most recently
received by Agent prior to the date hereof.

                  (i)  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”.

                  (j)  Unless otherwise expressly provided herein,
(i) references herein to any agreement, document or instrument shall be deemed
to include all subsequent amendments, modifications, supplements, extensions,
renewals, restatements or replacements with respect thereto, but only to the
extent the same are not prohibited by the terms hereof or of any other Financing
Agreement, and (ii) references to any statute or regulation are to be construed
as including all statutory and regulatory provisions consolidating, amending,
replacing, recodifying, supplementing or interpreting the statute or regulation.

                  (k)  The captions and headings of this Agreement are for
convenience of reference only and shall not affect the interpretation of this
Agreement.

                  (l)  This Agreement and other Financing Agreements may use
several different limitations, tests or measurements to regulate the same or
similar matters. All such limitations,

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tests and measurements are cumulative and shall each be performed in accordance
with their terms.

                  (m)  This Agreement and the other Financing Agreements are the
result of negotiations among and have been reviewed by counsel to Agent and the
other parties, and are the products of all parties. Accordingly, this Agreement
and the other Financing Agreements shall not be construed against Agent or
Lenders merely because of Agent’s or any Lender’s involvement in their
preparation.

         13.3   Notices. All notices, requests and demands hereunder shall be in
writing and deemed to have been given or made: if delivered in person,
immediately upon delivery; if by telex, telegram or facsimile transmission,
immediately upon sending and upon confirmation of receipt; if by nationally
recognized overnight courier service with instructions to deliver the next
Business Day, one (1) Business Day after sending; and if by certified mail,
return receipt requested, five (5) days after mailing. All notices, requests and
demands upon the parties are to be given to the following addresses (or to such
other address as any party may designate by notice in accordance with this
Section):

If to Borrower:   REPTRON ELECTRONICS, INC.       13700 McCormick Drive
Tampa, Florida 33626-3021
Attention:             Mr. Paul J. Plante
Telephone No.:     813 854-2351
Telecopy No.:       813 891-4007           If to Agent:   CONGRESS FINANCIAL
CORPORATION
(FLORIDA)       777 Brickell Avenue
Miami, Florida 33131
Attention:             Ms. Kerry Maxwell
Telephone No.:     305 371-6674
Telecopy No.:       305 371-9456  

         13.4   Partial Invalidity. If any provision of this Agreement is held
to be invalid or unenforceable, such invalidity or unenforceability shall not
invalidate this Agreement as a whole, but this Agreement shall be construed as
though it did not contain the particular provision held to be invalid or
unenforceable and the rights and obligations of the parties shall be construed
and enforced only to such extent as shall be permitted by applicable law.

         13.5  Confidentiality.

                  (a)  Agent and each Lender shall use all reasonable efforts to
keep confidential, in accordance with its customary procedures for handling
confidential information and safe and sound lending practices, any non-public
information supplied to it by Borrower pursuant to this Agreement which is
clearly and conspicuously marked as confidential at the time such information is
furnished by Borrower to Agent or such Lender, provided,  that, nothing
contained

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herein shall limit the disclosure of any such information: (i) to the extent
required by statute, rule, regulation, subpoena or court order, (ii) to bank
examiners and other regulators, auditors and/or accountants, in connection with
any litigation to which Agent or such Lender is a party, (iii) to any Lender or
Participant (or prospective Lender or Participant) or to any Affiliate of any
Lender so long as such Lender or Participant (or prospective Lender or
Participant) or Affiliate shall have been instructed to treat such information
as confidential in accordance with this Section 13.5, or (iv) to counsel for
Agent or any Lender or Participant (or prospective Lender or Participant).

                  (b)  In the event that Agent or any Lender receives a request
or demand to disclose any confidential information pursuant to any subpoena or
court order, Agent or such Lender, as the case may be, agrees (i) to the extent
permitted by applicable law or if permitted by applicable law, to the extent
Agent or such Lender determines in good faith that it will not create any risk
of liability to Agent or such Lender, Agent or such Lender will promptly notify
Borrower of such request so that Borrower may seek a protective order or other
appropriate relief or remedy and (ii) if disclosure of such information is
required, disclose such information and, subject to reimbursement by Borrower of
Agent’s or such Lender’s expenses, cooperate with Borrower in the reasonable
efforts to obtain an order or other reliable assurance that confidential
treatment will be accorded to such portion of the disclosed information which
Borrower so designates, to the extent permitted by applicable law or if
permitted by applicable law, to the extent Agent or such Lender determines in
good faith that it will not create any risk of liability to Agent or such
Lender.

                  (c)  In no event shall this Section 13.5 or any other
provision of this Agreement, any of the other Financing Agreements or applicable
law be deemed: (i) to apply to or restrict disclosure of information that has
been or is made public by Borrower, any Obligor or any third party or otherwise
becomes generally available to the public other than as a result of a disclosure
in violation hereof, (ii) to apply to or restrict disclosure of information that
was or becomes available to Agent or any Lender (or any Affiliate of any Lender)
on a non-confidential basis from a person other than Borrower, (iii) to require
Agent or any Lender to return any materials furnished by Borrower to Agent or a
Lender or prevent Agent or a Lender from responding to routine informational
requests in accordance with the Code of Ethics for the Exchange of Credit
Information  promulgated by The Robert Morris Associates or other applicable
industry standards relating to the exchange of credit information. The
obligations of Agent and Lenders under this Section 13.5 shall supersede and
replace the obligations of Agent and Lenders under any confidentiality letter
signed prior to the date hereof.

         13.6   Successors.  This Agreement, the other Financing Agreements and
any other document referred to herein or therein shall be binding upon and inure
to the benefit of and be enforceable by Agent, Lenders, Borrower, and their
respective successors and assigns, except that Borrower may not assign its
rights under this Agreement, the other Financing Agreements and any other
document referred to herein or therein without the prior written consent of
Agent and Lenders. Any such purported assignment without such express prior
written consent shall be void. No Lender may assign its rights and obligations
under this Agreement without the prior written consent of Agent, except as
provided in Section 13.7 below. The terms and provisions of

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this Agreement and the other Financing Agreements are for the purpose of
defining the relative rights and obligations of Borrower, Agent and Lenders with
respect to the transactions contemplated hereby and there shall be no third
party beneficiaries of any of the terms and provisions of this Agreement or any
of the other Financing Agreements.

         13.7   Assignments; Participations.

                  (a)  Each Lender may, with the prior written consent of Agent,
assign all or, if less than all, a portion equal to at least $5,000,000 in the
aggregate for the assigning Lender, of such rights and obligations under this
Agreement to one or more Eligible Transferees (but not including for this
purpose any assignments in the form of a participation), each of which assignees
shall become a party to this Agreement as a Lender by execution of an Assignment
and Acceptance; provided, that, such transfer or assignment will not be
effective until: (i) it is recorded by Agent on the Register and (ii) Agent
shall have received for its sole account payment of a processing fee from the
assigning Lender or the assignee in the amount of $5,000.

                  (b)  Agent shall maintain a register of the names and
addresses of Lenders, their Commitments and the principal amount of their Loans
(the “Register”). Agent shall also maintain a copy of each Assignment and
Acceptance delivered to and accepted by it and shall modify the Register to give
effect to each Assignment and Acceptance. The entries in the Register shall be
conclusive and binding for all purposes, absent manifest error, and Borrower,
Obligors, Agent and Lenders may treat each Person whose name is recorded in the
Register as a Lender hereunder for all purposes of this Agreement. The Register
shall be available for inspection by Borrower and any Lender at any reasonable
time and from time to time upon reasonable prior notice.

                  (c)  Upon such execution, delivery, acceptance and recording,
from and after the effective date specified in each Assignment and Acceptance,
(i) the assignee thereunder shall be a party hereto and to the other Financing
Agreements and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance, have the rights and
obligations (including, without limitation, the obligation to participate in
Letter of Credit Accommodations) of a Lender hereunder and thereunder and
(ii) the assigning Lender shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment and Acceptance,
relinquish its rights and be released from its obligations under this Agreement.

                  (d)  By execution and delivery of an Assignment and
Acceptance, the assignor and assignee thereunder confirm to and agree with each
other and the other parties hereto as follows: (i) other than as provided in
such Assignment and Acceptance, the assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
any of the other Financing Agreements or the execution, legality,
enforceability, genuineness, sufficiency or value of this Agreement or any of
the other Financing Agreements furnished pursuant hereto, (ii) the assigning
Lender makes no representation or warranty and assumes no responsibility with
respect to the financial condition of Borrower, any Obligor or any of their
Subsidiaries or the performance or observance by Borrower or any Obligor of any
of the Obligations; (iii) such

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assignee confirms that it has received a copy of this Agreement and the other
Financing Agreements, together with such other documents and information it has
deemed appropriate to make its own credit analysis and decision to enter into
such Assignment and Acceptance, (iv) such assignee will, independently and
without reliance upon the assigning Lender, Agent and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under this Agreement and the
other Financing Agreements, (v) such assignee appoints and authorizes Agent to
take such action as agent on its behalf and to exercise such powers under this
Agreement and the other Financing Agreements as are delegated to Agent by the
terms hereof and thereof, together with such powers as are reasonably incidental
thereto, and (vi) such assignee agrees that it will perform in accordance with
their terms all of the obligations which by the terms of this Agreement and the
other Financing Agreements are required to be performed by it as a Lender. Agent
and Lenders may furnish any information concerning Borrower or any Obligor in
the possession of Agent or any Lender from time to time to assignees and
Participants.

                  (e)  Each Lender may sell participations to one or more banks
or other entities in or to all or a portion of its rights and obligations under
this Agreement and the other Financing Agreements (including, without
limitation, all or a portion of its Commitments and the Loans owing to it and
its participation in the Letter of Credit Accommodations, without the consent of
Agent or the other Lenders); provided, that, (i) such Lender’s obligations under
this Agreement (including, without limitation, its Commitment hereunder) and the
other Financing Agreements shall remain unchanged, (ii) such Lender shall remain
solely responsible to the other parties hereto for the performance of such
obligations, and Borrower, the other Lenders and Agent shall continue to deal
solely and directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement and the other Financing Agreements, (iii) the
Participant shall not have any rights under this Agreement or any of the other
Financing Agreements (the Participant’s rights against such Lender in respect of
such participation to be those set forth in the agreement executed by such
Lender in favor of the Participant relating thereto) and all amounts payable by
Borrower or any Obligor hereunder shall be determined as if such Lender had not
sold such participation.

                  (f)  Nothing in this Agreement shall prevent or prohibit any
Lender from pledging its Loans hereunder to a Federal Reserve Bank in support of
borrowings made by such Lenders from such Federal Reserve Bank,

                  (g)  Borrower shall assist Agent or any Lender permitted to
sell assignments or participations under this Section 13.7 in whatever manner
reasonably necessary in order to enable or effect any such assignment or
participation, including (but not limited to) the execution and delivery of any
and all agreements, notes and other documents and instruments as shall be
requested and the delivery of informational materials, appraisals or other
documents for, and the participation of relevant management in meetings and
conference calls with, potential Lenders or Participants. Borrower shall certify
the correctness, completeness and accuracy, in all material respects, of all
descriptions of Borrower and its affairs provided, prepared or reviewed by
Borrower that are contained in any selling materials and all other information
provided by it and included in such materials.

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         13.8    Entire Agreement. This Agreement, the other Financing
Agreements, any supplements hereto or thereto, and any instruments or documents
delivered or to be delivered in connection herewith or therewith represents the
entire agreement and understanding concerning the subject matter hereof and
thereof between the parties hereto, and supersede all other prior agreements,
understandings, negotiations and discussions, representations, warranties,
commitments, proposals, offers and contracts concerning the subject matter
hereof, whether oral or written. In the event of any inconsistency between the
terms of this Agreement and any schedule or exhibit hereto, the terms of this
Agreement shall govern.

         13.9   Counterparts, Etc.  This Agreement or any of the other Financing
Agreements may be executed in any number of counterparts, each of which shall be
an original, but all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of this Agreement or any of the
other Financing Agreements by telefacsimile shall have the same force and effect
as the delivery of an original executed counterpart of this Agreement or any of
such other Financing Agreements. Any party delivering an executed counterpart of
any such agreement by telefacsimile shall also deliver an original executed
counterpart, but the failure to do so shall not affect the validity,
enforceability or binding effect of such agreement.

         IN WITNESS WHEREOF, Agent, Lenders and Borrower has caused these
presents to be duly executed as of the day and year first above written.

[SIGNATURE PAGE FOLLOWS]

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 AGENT BORROWER CONGRESS FINANCIAL CORPORATION (FLORIDA), as Agent

By:                                        
                                         
Title:                                        
                                      REPTRON ELECTRONICS, INC.

By:                                        
                                         
Title:                                        
                                          LENDER   CONGRESS FINANCIAL
CORPORATION (FLORIDA), as Lender

By:                                        
                                         
Title:                                        
                                        Commitment: $60,000,000  

 

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EXHIBIT A
to
LOAN AND SECURITY AGREEMENT

ASSIGNMENT AND ACCEPTANCE AGREEMENT

         This ASSIGNMENT AND ACCEPTANCE AGREEMENT (this “Assignment and
Acceptance”) dated as of _____________, 2002 is made between
________________________ (the “Assignor”) and ____________________ (the
“Assignee”).

W I T N E S S E T H:

         WHEREAS, Congress Financial Corporation (Florida), in its capacity as
agent pursuant to the Loan Agreement (as hereinafter defined) acting for and on
behalf of the financial institutions which are parties thereto as lenders (in
such capacity, “Agent”), and the financial institutions which are parties to the
Loan Agreement as lenders (individually, each a “Lender” and collectively,
“Lenders”) have entered or are about to enter into financing arrangements
pursuant to which Agent and Lenders may make loans and advances and provide
other financial accommodations to Reptron Electronics, Inc. (“Borrower”) as set
forth in the Loan and Security Agreement, dated October __, 2002, by and among
Borrower, Agent and Lenders (as the same now exists or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced, the “Loan
Agreement”), and the other agreements, documents and instruments referred to
therein or at any time executed and/or delivered in connection therewith or
related thereto (all of the foregoing, together with the Loan Agreement, as the
same now exist or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced, being collectively referred to herein as the
“Financing Agreements”);

         WHEREAS, as provided under the Loan Agreement, Assignor committed to
making Loans (the “Committed Loans”) to Borrower in an aggregate amount not to
exceed $___________ (the “Commitment”);

         WHEREAS, Assignor wishes to assign to Assignee [part of the] [all]
rights and obligations of Assignor under the Loan Agreement in respect of its
Commitment in an amount equal to $______________ (the “Assigned Commitment
Amount”) on the terms and subject to the conditions set forth herein and
Assignee wishes to accept assignment of such rights and to assume such
obligations from Assignor on such terms and subject to such conditions;

         NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:

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         1.       Assignment and Acceptance.

                  (a)  Subject to the terms and conditions of this Assignment
and Acceptance, Assignor hereby sells, transfers and assigns to Assignee, and
Assignee hereby purchases, assumes and undertakes from Assignor, without
recourse and without representation or warranty (except as provided in this
Assignment and Acceptance) an interest in (i) the Commitment and each of the
Committed Loans of Assignor and (ii) all related rights, benefits, obligations,
liabilities and indemnities of the Assignor under and in connection with the
Loan Agreement and the other Financing Agreements, so that after giving effect
thereto, the Commitment of Assignee shall be as set forth below and the Pro Rata
Share of Assignee shall be _______ (__%) percent.

                  (b)  With effect on and after the Effective Date (as defined
in Section 5 hereof), Assignee shall be a party to the Loan Agreement and
succeed to all of the rights and be obligated to perform all of the obligations
of a Lender under the Loan Agreement, including the requirements concerning
confidentiality and the payment of indemnification, with a Commitment in an
amount equal to the Assigned Commitment Amount. Assignee agrees that it will
perform in accordance with their terms all of the obligations which by the terms
of the Loan Agreement are required to be performed by it as a Lender. It is the
intent of the parties hereto that the Commitment of Assignor shall, as of the
Effective Date, be reduced by an amount equal to the Assigned Commitment Amount
and Assignor shall relinquish its rights and be released from its obligations
under the Loan Agreement to the extent such obligations have been assumed by
Assignee; provided, that, Assignor shall not relinquish its rights under
Sections 2.1, 6.4, 6.8 and 6.9 of the Loan Agreement to the extent such rights
relate to the time prior to the Effective Date.

                  (c)  After giving effect to the assignment and assumption set
forth herein, on the Effective Date Assignee’s Commitment will be
$_____________.

                  (d)  After giving effect to the assignment and assumption set
forth herein, on the Effective Date Assignor’s Commitment will be
$______________ (as such amount may be further reduced by any other assignment
by Assignor on or after the date hereof).

         2.       Payments.

                  (a)  As consideration for the sale, assignment and transfer
contemplated in Section 1 hereof, Assignee shall pay to Assignor on the
Effective Date in immediately available funds an amount equal to $____________,
representing Assignee’s Pro Rata Share of the principal amount of all Committed
Loans.

                  (b)  Assignee shall pay to Agent the processing fee in the
amount specified in Section 13.7(a) of the Loan Agreement.

         3.       Reallocation of Payments. Any interest, fees and other
payments accrued to the Effective Date with respect to the Commitment, Committed
Loans and outstanding Letter of Credit Accommodations shall be for the account
of Assignor. Any interest, fees and other payments accrued on and after the
Effective Date with respect to the Assigned Commitment

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Amount shall be for the account of Assignee. Each of Assignor and Assignee
agrees that it will hold in trust for the other party any interest, fees and
other amounts which it may receive to which the other party is entitled pursuant
to the preceding sentence and pay to the other party any such amounts which it
may receive promptly upon receipt.

         4.       Independent Credit Decision. Assignee acknowledges that it has
received a copy of the Loan Agreement and the Schedules and Exhibits thereto,
together with copies of the most recent financial statements of _____________
and its Subsidiaries, and such other documents and information as it has deemed
appropriate to make its own credit and legal analysis and decision to enter into
this Assignment and Acceptance and agrees that it will, independently and
without reliance upon Assignor, Agent or any Lender and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit and legal decisions in taking or not taking action under the Loan
Agreement.

         5.       Effective Date; Notices.

                  (a)  As between Assignor and Assignee, the effective date for
this Assignment and Acceptance shall be _______________, 200_ (the “Effective
Date”); provided, that, the following conditions precedent have been satisfied
on or before the Effective Date:

                           (i)  this Assignment and Acceptance shall be executed
and delivered by Assignor and Assignee;

                           (ii)  the consent of Agent as required for an
effective assignment of the Assigned Commitment Amount by Assignor to Assignee
shall have been duly obtained and shall be in full force and effect as of the
Effective Date;

                           (iii)  written notice of such assignment, together
with payment instructions, addresses and related information with respect to
Assignee, shall have been given to Borrower and Agent;

                           (iv)  Assignee shall pay to Assignor all amounts due
to Assignor under this Assignment and Acceptance; and

                           (v)  the processing fee referred to in Section 2(b)
hereof shall have been paid to Agent.

                  (b)  Promptly following the execution of this Assignment and
Acceptance, Assignor shall deliver to Borrower and Agent for acknowledgment by
Agent, a Notice of Assignment in the form attached hereto as Schedule 1.

         [6.      Agent. [INCLUDE ONLY IF ASSIGNOR IS AN AGENT]

                  (a)  Assignee hereby appoints and authorizes Assignor in its
capacity as Agent to take such action as agent on its behalf to exercise such
powers under the Loan Agreement as are delegated to Agent by Lenders pursuant to
the terms of the Loan Agreement.

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                   (b)  Assignee shall assume no duties or obligations held by
Assignor in its capacity as Agent under the Loan Agreement.]

         7.       Withholding Tax. Assignee (a) represents and warrants to
Assignor, Agent and Borrower that under applicable law and treaties no tax will
be required to be withheld by Assignee, Agent or Borrower with respect to any
payments to be made to Assignee hereunder or under any of the Financing
Agreements, (b) agrees to furnish (if it is organized under the laws of any
jurisdiction other than the United States or any State thereof) to Agent and
Borrower prior to the time that Agent or Borrower are required to make any
payment of principal, interest or fees hereunder, duplicate executed originals
of either U.S. Internal Revenue Service Form 4224 or U.S. Internal Revenue
Service Form 1001 (wherein Assignee claims entitlement to the benefits of a tax
treaty that provides for a complete exemption from U.S. federal income
withholding tax on all payments hereunder) and agrees to provide new Forms 4224
or 1001 upon the expiration of any previously delivered form or comparable
statements in accordance with applicable U.S. law and regulations and amendments
thereto, duly executed and completed by Assignee, and (c) agrees to comply with
all applicable U.S. laws and regulations with regard to such withholding tax
exemption.

         8.       Representations and Warranties.

                  (a)  Assignor represents and warrants that (i) it is the legal
and beneficial owner of the interest being assigned by it hereunder and that
such interest is free and clear of any security interest, lien, encumbrance or
other adverse claim, (ii) it is duly organized and existing and it has the full
power and authority to take, and has taken, all action necessary to execute and
deliver this Assignment and Acceptance and any other documents required or
permitted to be executed or delivered by it in connection with this Assignment
and Acceptance and to fulfill its obligations hereunder, (iii) no notices to, or
consents, authorizations or approvals of, any Person are required (other than
any already given or obtained) for its due execution, delivery and performance
of this Assignment and Acceptance, and apart from any agreements or undertakings
or filings required by the Loan Agreement, no further action by, or notice to,
or filing with, any Person is required of it for such execution, delivery or
performance, and (iv) this Assignment and Acceptance has been duly executed and
delivered by it and constitutes the legal, valid and binding obligation of
Assignor, enforceable against Assignor in accordance with the terms hereof,
subject, as to enforcement, to bankruptcy, insolvency, moratorium,
reorganization and other laws of general application relating to or affecting
creditors’ rights and to general equitable principles.

                  (b)  Assignor makes no representation or warranty and assumes
no responsibility with respect to any statements, warranties or representations
made in or in connection with the Loan Agreement or any of the other Financing
Agreements or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Loan Agreement or any other instrument or document
furnished pursuant thereto. Assignor makes no representation or warranty in
connection with, and assumes no responsibility with respect to, the solvency,
financial condition or statements of Borrower, or the performance or observance
by Borrower or any other Person, of any of its respective obligations under the
Loan Agreement or any other instrument or document furnished in connection
therewith.

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                   (c)  Assignee represents and warrants that (i) it is duly
organized and existing and it has full power and authority to take, and has
taken, all action necessary to execute and deliver this Assignment and
Acceptance and any other documents required or permitted to be executed or
delivered by it in connection with this Assignment and Acceptance, and to
fulfill its obligations hereunder, (ii) no notices to, or consents,
authorizations or approvals of, any Person are required (other than any already
given or obtained) for its due execution, delivery and performance of this
Assignment and Acceptance, and apart from any agreements or undertakings or
filings required by the Loan Agreement, no further action by, or notice to, or
filing with, any Person is required of it for such execution, delivery or
performance; and (iii) this Assignment and Acceptance has been duly executed and
delivered by it and constitutes the legal, valid and binding obligation of
Assignee, enforceable against Assignee in accordance with the terms hereof,
subject, as to enforcement, to bankruptcy, insolvency, moratorium,
reorganization and other laws of general application relating to or affecting
creditors’ rights to general equitable principles.

         9.       Further Assurances. Assignor and Assignee each hereby agree to
execute and deliver such other instruments, and take such other action, as
either party may reasonably request in connection with the transactions
contemplated by this Assignment and Acceptance, including the delivery of any
notices or other documents or instruments to Borrower or Agent, which may be
required in connection with the assignment and assumption contemplated hereby.

         10.      Miscellaneous

                  (a)  Any amendment or waiver of any provision of this
Assignment and Acceptance shall be in writing and signed by the parties hereto.
No failure or delay by either party hereto in exercising any right, power or
privilege hereunder shall operate as a waiver thereof and any waiver of any
breach of the provisions of this Assignment and Acceptance shall be without
prejudice to any rights with respect to any other for further breach thereof.

                  (b)  All payments made hereunder shall be made without any
set-off or counterclaim.

                  (c)  Assignor and Assignee shall each pay its own costs and
expenses incurred in connection with the negotiation, preparation, execution and
performance of this Assignment and Acceptance.

                  (d)  This Assignment and Acceptance may be executed in any
number of counterparts and all of such counterparts taken together shall be
deemed to constitute one and the same instrument.

                  (e)  THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF FLORIDA. Assignor and
Assignee each irrevocably submits to the non-exclusive jurisdiction of any State
or Federal court sitting in Dade County, Florida over any suit, action or
proceeding arising out of or relating to this Assignment and Acceptance and
irrevocably agrees that all claims in respect of such action or proceeding may
be heard and determined in such Florida State or Federal court.

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Each party to this Assignment and Acceptance hereby irrevocably waives, to the
fullest extent it may effectively do so, the defense of an inconvenient forum to
the maintenance of such action or proceeding.

                  (f)  ASSIGNOR AND ASSIGNEE EACH HEREBY KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH
THIS ASSIGNMENT AND ACCEPTANCE, THE LOAN AGREEMENT, ANY OF THE OTHER FINANCING
AGREEMENTS OR ANY RELATED DOCUMENTS AND AGREEMENTS OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, OR STATEMENTS (WHETHER ORAL OR WRITTEN).

         IN WITNESS WHEREOF, Assignor and Assignee have caused this Assignment
and Acceptance to be executed and delivered by their duly authorized officers as
of the date first above written.

    [ASSIGNOR]
          By: 

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                    Title:   

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    [ASSIGNEE]
          By: 

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                    Title:   

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SCHEDULE 1
NOTICE OF ASSIGNMENT AND ACCEPTANCE

                             __________, 2002

Attn.:                            

Re: Reptron Electronics, Inc.

Ladies and Gentlemen:

         Congress Financial Corporation (Florida), in its capacity as agent
pursuant to the Loan Agreement (as hereinafter defined) acting for and on behalf
of the financial institutions which are parties thereto as lenders (in such
capacity, “Agent”), and the financial institutions which are parties to the Loan
Agreement as lenders (individually, each a “Lender” and collectively, “Lenders”)
have entered or are about to enter into financing arrangements pursuant to which
Agent and Lenders may make loans and advances and provide other financial
accommodations to Reptron Electronics, Inc. (“Borrower”) as set forth in the
Loan and Security Agreement, dated October __, 2002, by and among Borrower,
Agent and Lenders (as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced, the “Loan Agreement”),
and the other agreements, documents and instruments referred to therein or at
any time executed and/or delivered in connection therewith or related thereto
(all of the foregoing, together with the Loan Agreement, as the same now exist
or may hereafter be amended, modified, supplemented, extended, renewed, restated
or replaced, being collectively referred to herein as the “Financing
Agreements”). Capitalized terms not otherwise defined herein shall have the
respective meanings ascribed thereto in the Loan Agreement.

         1.       We hereby give you notice of, and request your consent to, the
assignment by __________________________ (the “Assignor”) to
___________________________ (the “Assignee”) such that after giving effect to
the assignment Assignee shall have an interest equal to ________ (__%) percent
of the total Commitments pursuant to the Assignment and Acceptance Agreement
attached hereto (the “Assignment and Acceptance”). We understand that the
Assignor’s Commitment shall be reduced by $_____________, as the same may be
further reduced by other assignments on or after the date hereof.

         2.       Assignee agrees that, upon receiving the consent of Agent to
such assignment, Assignee will be bound by the terms of the Loan Agreement as
fully and to the same extent as if the Assignee were the Lender originally
holding such interest under the Loan Agreement.

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         3.       The following administrative details apply to Assignee:

           (A)      Notice address:

Assignee name:          

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Address:          

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            Attention:          

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Telephone:          

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Telecopier:          

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           (B)      Payment instructions:

Assignee name:          

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Address:          

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            Attention:          

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Telephone:          

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Telecopier:          

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         4.       You are entitled to rely upon the representations, warranties
and covenants of each of Assignor and Assignee contained in the Assignment and
Acceptance.

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         IN WITNESS WHEREOF, Assignor and Assignee have caused this Notice of
Assignment and Acceptance to be executed by their respective duly authorized
officials, officers or agents as of the date first above mentioned.

    Very truly yours,

[NAME OF ASSIGNOR]
          By: 

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                    Title:   

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    [NAME OF ASSIGNEE]
          By: 

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                    Title:   

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ACKNOWLEDGED AND ASSIGNMENT
CONSENTED TO:

CONGRESS FINANCIAL CORPORATION FLORIDA), as Agent     By: 
     

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          Title:         

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EXHIBIT C
TO
LOAN AND SECURITY AGREEMENT

Compliance Certificate

To:   Congress Financial Corporation (Florida), as Agent
777 Brickell Avenue
Miami, Florida 33131  

Ladies and Gentlemen:

         I hereby certify to you pursuant to Section 9.6 of the Loan Agreement
(as defined below) as follows:

         1.       I am the duly elected Chief Financial Officer of Reptron
Electronics, Inc., a Florida corporation (“Borrower”). Capitalized terms used
herein without definition shall have the meanings given to such terms in the
Loan and Security Agreement, dated October __, 2002, by and among Congress
Financial Corporation (Florida) as agent for the financial institutions party
thereto as lenders (in such capacity, “Agent”) and the financial institutions
party thereto as lenders (collectively, “Lenders”) and Borrower (as such Loan
and Security Agreement is amended, modified or supplemented, from time to time,
the “Loan Agreement”).

         2.       I have reviewed the terms of the Loan Agreement, and have
made, or have caused to be made under my supervision, a review in reasonable
detail of the transactions and the financial condition of Borrower and each of
its Subsidiaries, during the immediately preceding fiscal month.

         3.       The review described in Section 2 above did not disclose the
existence during or at the end of such fiscal month, and I have no knowledge of
the existence and continuance on the date hereof, of any condition or event
which constitutes a Default or an Event of Default, except as set forth on
Schedule I attached hereto. Described on Schedule I attached hereto are the
exceptions, if any, to this Section 3 listing, in detail, the nature of the
condition or event, the period during which it has existed and the action which
Borrower or any Obligor has taken, is taking, or proposes to take with respect
to such condition or event.

         4.       I further certify that, based on the review described in
Section 2 above, Borrower and Obligors have not at any time during or at the end
of such fiscal month, except as specifically described on Schedule II attached
hereto or as permitted by the Loan Agreement, done any of the following:

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  (a)   Changed its respective corporate name, or transacted business under any
trade name, style, or fictitious name, other than those previously described to
you and set forth in the Financing Agreements.

  (b)   Changed the location of its chief executive office, changed its
jurisdiction of incorporation, changed its type of organization or changed the
location of or disposed of any of its properties or assets (other than pursuant
to the sale of Inventory in the ordinary course of its business or as otherwise
permitted by Section 9.7 of the Loan Agreement), or established any new asset
locations.         (c)   Materially changed the terms upon which it sells goods
(including sales on consignment) or provides services, nor has any vendor or
trade supplier to Borrower or any Obligor during or at the end of such period
materially adversely changed the terms upon which it supplies goods to Borrower
or such Obligor.         (d)   Permitted or suffered to exist any security
interest in or liens on any of its properties, whether real or personal, other
than as specifically permitted in the Financing Agreements.         (e)  
Received any notice of, or obtained knowledge of any of the following not
previously disclosed to Agent: (i) the occurrence of any event involving the
release, spill or discharge of any Hazardous Material in violation of applicable
Environmental Law in a material respect or (ii) any investigation, proceeding,
complaint, order, directive, claims, citation or notice with respect to: (A) any
non-compliance with or violation of any applicable Environmental Law by Borrower
or any Obligor in any material respect or (B) the release, spill or discharge of
any Hazardous Material in violation of applicable Environmental Law in a
material respect or (C) the generation, use, storage, treatment, transportation,
manufacture, handling, production or disposal of any Hazardous Materials in
violation of applicable Environmental Laws in a material respect or (D) any
other environmental, health or safety matter, which has a material adverse
effect on Borrower or any Obligor or its business, operations or assets or any
properties at which Borrower or such Obligor transported, stored or disposed of
any Hazardous Materials.         (f)   Become aware of, obtained knowledge of,
or received notification of, any breach or violation of any material covenant
contained in any instrument or agreement in respect of Indebtedness for money
borrowed by Borrower or any Obligor.

         5.       Attached hereto as Schedule III are the calculations used in
determining, as of the end of such fiscal month whether Borrower is in
compliance with the covenant set forth in Section 9.17 of the Loan Agreement for
such fiscal month.

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         The foregoing certifications are made and delivered this day of
                , 2002.

  Very truly yours,

  REPTRON ELECTRONICS, INC.
 
By: 

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    Title:

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