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Exhibit 10.1

LOAN AND SECURITY AGREEMENT

        THIS LOAN AND SECURITY AGREEMENT (this "Agreement"), is entered into as
of July 30, 2002, between and among, on the one hand, the lenders identified on
the signature pages hereof (such lenders, together with their respective
successors and assigns, are referred to hereinafter each individually as a
"Lender" and collectively as the "Lenders"), and FOOTHILL CAPITAL CORPORATION, a
California corporation, as the arranger and administrative agent for the Lenders
("Agent"), and, on the other hand, Holley Performance Products Inc., a Delaware
corporation ("Parent"), and each of Parent's Subsidiaries identified on the
signature pages hereof (such Subsidiaries, together with Parent, are referred to
hereinafter each individually as a "Borrower", and individually and
collectively, jointly and severally, as the "Borrowers").

        The parties agree as follows:

1.    DEFINITIONS AND CONSTRUCTION.

        1.1    Definitions.    As used in this Agreement, the following terms
shall have the following definitions:

        "Account Debtor" means any Person who is or who may become obligated
under, with respect to, or on account of, an Account, chattel paper, or a
General Intangible.

        "Accounts" means all of Borrowers' now owned or hereafter acquired
right, title, and interest with respect to "accounts" (as that term is defined
in the Code), and any and all supporting obligations in respect thereof.

        "ACH Transactions" means any cash management or related services
(including the Automated Clearing House processing of electronic funds transfers
through the direct Federal Reserve Fedline system) provided by Wells Fargo or
its Affiliates for the account of Administrative Borrower or its Subsidiaries.

        "Additional Documents" has the meaning set forth in Section 4.4.

        "Administrative Borrower" has the meaning set forth in Section 17.9.

        "Advances" has the meaning set forth in Section 2.1(a).

        "Affiliate" means, as applied to any Person, any other Person who,
directly or indirectly, controls, is controlled by, or is under common control
with, such Person. For purposes of this definition, "control" means the
possession, directly or indirectly, of the power to direct the management and
policies of a Person, whether through the ownership of Stock, by contract, or
otherwise; provided, however, that, for purposes of the definition of Eligible
Accounts and Section 7.14 hereof: (a) any Person which owns directly or
indirectly 10% or more of the securities having ordinary voting power for the
election of directors or other members of the governing body of a Person or 10%
or more of the partnership or other ownership interests of a Person (other than
as a limited partner of such Person) shall be deemed to control such Person;
(b) each director (or comparable manager) of a Person shall be deemed to be an
Affiliate of such Person; and (c) each partnership or joint venture in which a
Person is a partner or joint venturer shall be deemed to be an Affiliate of such
Person.

        "Agent" means Foothill, solely in its capacity as agent for the Lenders
hereunder, and any successor thereto.

        "Agent's Account" means the account identified on Schedule A-1.

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        "Agent Advances" has the meaning set forth in Section 2.3(e)(i).

        "Agent's Liens" means the Liens granted by Borrowers to Agent for the
benefit of the Lender Group under this Agreement or the other Loan Documents.

        "Agent-Related Persons" means Agent together with its Affiliates,
officers, directors, employees, and agents.

        "Agreement" has the meaning set forth in the preamble hereto.

        "Applicable Prepayment Premium" means, as of any date of determination,
an amount equal to (a) during the period of time from and after the date of the
execution and delivery of this Agreement up to the date that is the first
anniversary of the Closing Date, 5.00% times the Maximum Revolver Amount,
(b) during the period of time from and including the date that is the first
anniversary of the Closing Date up to the date that is the second anniversary of
the Closing Date, 4.00% times the Maximum Revolver Amount, (c) during the period
of time from and including the date that is the second anniversary of the
Closing Date up to the date that is the third anniversary of the Closing Date,
3.00% times the Maximum Revolver Amount, (d) during the period of time from and
including the date that is the third anniversary of the Closing Date up to the
date that is the fourth anniversary of the Closing Date, 2.00% times the Maximum
Revolver Amount, and (e) during the period of time from and including the date
that is the fourth anniversary of the Closing Date up to the Maturity Date,
1.00% times the Maximum Revolver Amount; provided, however, that if the Loan
Agreement is terminated as a result of Borrowers entering into a new financing
arrangement with Wells Fargo, then the Applicable Prepayment Premium shall be
deemed to be zero (0).

        "Assignee" has the meaning set forth in Section 14.1.

        "Assignment and Acceptance" means an Assignment and Acceptance in the
form of Exhibit A-1.

        "Authorized Person" means any officer or other employee of
Administrative Borrower.

        "Availability" means, as of any date of determination (if such date is a
Business Day, and determined at the close of business on the immediately
preceding Business Day, if such date of determination is not a Business Day),
the amount that Borrowers are entitled to borrow as Advances under Section 2.1
(after giving effect to all then outstanding Obligations (other than Bank
Products Obligations) and all sublimits and reserves applicable hereunder).

        "Bank Product Agreements" means those certain agreements entered into
from time to time by Administrative Borrower or its Subsidiaries in connection
with any of the Bank Products.

        "Bank Product Obligations" means all obligations, liabilities,
contingent reimbursement obligations, fees, and expenses owing by Administrative
Borrower or its Subsidiaries to Wells Fargo or its Affiliates pursuant to or
evidenced by the Bank Product Agreements and irrespective of whether for the
payment of money, whether direct or indirect, absolute or contingent, due or to
become due, now existing or hereafter arising, and including all such amounts
that a Borrower is obligated to reimburse to Agent or any member of the Lender
Group as a result of Agent or such member of the Lender Group purchasing
participations or executing indemnities or reimbursement obligations with
respect to the Bank Products provided to Administrative Borrower or its
Subsidiaries pursuant to the Bank Product Agreements; provided, however, that
the maximum amount of such Bank Product Obligations shall not exceed $1,000,000.

        "Bank Products" means any service or facility extended to Administrative
Borrower or its Subsidiaries by Wells Fargo or any Affiliate of Wells Fargo
including: (a) credit cards, (b) credit

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card processing services, (c) debit cards, (d) purchase cards, (e) ACH
Transactions, (f) cash management, including controlled disbursement, accounts
or services, or (g) Hedge Agreements.

        "Bank Product Reserves" means, as of any date of determination, the
amount of reserves that Agent has established (based upon Wells Fargo's or its
Affiliate's reasonable determination of the credit exposure in respect of then
extant Bank Products) for Bank Products then provided or outstanding; provided,
however, that the maximum amount of such reserves that Agent may establish shall
not exceed $500,000.

        "Bankruptcy Code" means the United States Bankruptcy Code, as in effect
from time to time.

        "Base LIBOR Rate" means the rate per annum, determined by Agent in
accordance with its customary procedures, and utilizing such electronic or other
quotation sources as it considers appropriate (rounded upwards, if necessary, to
the next 1/16%), on the basis of the rates at which Dollar deposits are offered
to major banks in the London interbank market on or about 11:00 a.m. (California
time) 2 Business Days prior to the commencement of the applicable Interest
Period, for a term and in amounts comparable to the Interest Period and amount
of the LIBOR Rate Loan requested by Administrative Borrower in accordance with
this Agreement, which determination shall be conclusive in the absence of
manifest error.

        "Base Rate" means, the rate of interest announced within Wells Fargo at
its principal office in San Francisco as its "prime rate", with the
understanding that the "prime rate" is one of Wells Fargo's base rates (not
necessarily the lowest of such rates) and serves as the basis upon which
effective rates of interest are calculated for those loans making reference
thereto and is evidenced by the recording thereof after its announcement in such
internal publication or publications as Wells Fargo may designate.

        "Base Rate Loan" means each portion of an Advance or a Subline Advance
that bears interest at a rate determined by reference to the Base Rate.

        "Base Rate Margin" means 0.50 percentage points.

        "Base Rate Subline A Margin" means 1.50 percentage points.

        "Base Rate Subline B Margin" means 8.25 percentage points.

        "Base Rate Subline C Margin" means 1.50 percentage points.

        "Benefit Plan" means a "defined benefit plan" (as defined in
Section 3(35) of ERISA) for which any Borrower or any Subsidiary or ERISA
Affiliate of any Borrower has been an "employer" (as defined in Section 3(5) of
ERISA) within the past six years.

        "Board of Directors" means the board of directors (or comparable
managers) of Parent or any committee thereof duly authorized to act on behalf
thereof.

        "Books" means all of each Borrower's and its Subsidiaries' now owned or
hereafter acquired books and records (including all of its Records indicating,
summarizing, or evidencing its assets (including the Collateral) or liabilities,
all of each Borrower's or its Subsidiaries' Records relating to its or their
business operations or financial condition, and all of its or their goods or
General Intangibles related to such information).

        "Borrower" and "Borrowers" have the respective meanings set forth in the
preamble to this Agreement.

        "Borrower Intellectual Property Right" means any Intellectual Property
Right owned, held, licensed, used or held for use by any Borrower.

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        "Borrowing" means a borrowing hereunder consisting of Advances or
Subline Advances made on the same day by the Lenders (or Agent on behalf
thereof), or by Swing Lender in the case of a Swing Loan, or by Agent in the
case of an Agent Advance, in each case, to Administrative Borrower.

        "Borrowing Base" has the meaning set forth in Section 2.1.

        "Business Day" means any day that is not a Saturday, Sunday, or other
day on which national banks are authorized or required to close, except that, if
a determination of a Business Day shall relate to a LIBOR Rate Loan, the term
"Business Day" also shall exclude any day on which banks are closed for dealings
in Dollar deposits in the London interbank market.

        "Capital Expenditures" means, with respect to any Person, all
expenditures by such Person that should be capitalized in accordance with GAAP,
including all such expenditures with respect to fixed or capital assets
(including expenditures for maintenance and repairs that should be capitalized
in accordance with GAAP) and, without duplication, the amount of all Capital
Leases incurred by such Person.

        "Capital Lease" means a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP.

        "Capitalized Lease Obligation" means any Indebtedness represented by
obligations under a Capital Lease.

        "Cash Equivalents" means (a) marketable direct obligations issued or
unconditionally guaranteed by the United States or issued by any agency thereof
and backed by the full faith and credit of the United States, in each case
maturing within one (1) year from the date of acquisition thereof,
(b) marketable direct obligations issued by any state of the United States or
any political subdivision of any such state or any public instrumentality
thereof maturing within one (1) year from the date of acquisition thereof and,
at the time of acquisition, having the highest rating obtainable from either S&P
or Moody's, (c) commercial paper maturing no more than 270 days from the date of
acquisition thereof and, at the time of acquisition, having a rating of A-1 or
P-1, or better, from S&P or Moody's, and (d) certificates of deposit or bankers'
acceptances maturing within one (1) year from the date of acquisition thereof
that are either (i) issued by any bank organized under the laws of the United
States or any state thereof which bank has a rating of A or A2, or better, from
S&P or Moody's, or (ii) in an amount less than or equal to $100,000 in the
aggregate issued by any other bank insured by the Federal Deposit Insurance
Corporation.

        "Cash Management Bank" has the meaning set forth in Section 2.7(a).

        "Cash Management Account" has the meaning set forth in Section 2.7(a).

        "Cash Management Agreements" means those certain cash management service
agreements, in form and substance satisfactory to Agent, each of which is among
Administrative Borrower, Agent, and one of the Cash Management Banks.

        "Cash Management Side Letter Agreement" means a letter agreement
executed and delivered by the Existing Lender and Agent with respect to one or
more of the Cash Management Accounts, the form and substance of which is
satisfactory to Agent.

        "Change of Control" means (a) any "person" or "group" (within the
meaning of Sections 13(d) and 14(d) of the Exchange Act), other than Guarantor,
becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of 50% or more of the Stock of Parent having the right
to vote for the election of members of Parent's Board of Directors, or (b) a
majority of the members of Parent's Board of Directors do not constitute
Continuing Directors.

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        "Closing Date" means the date of the making of the initial Advance (or
other extension of credit) hereunder or the date on which Agent sends
Administrative Borrower a written notice that each of the conditions precedent
set forth in Section 3.1 either have been satisfied or have been waived.

        "Closing Date Business Plan" means the set of Projections of Borrowers
for the 3 year period following the Closing Date (on a year by year basis, and
for the 1 year period following the Closing Date, on a month by month basis), in
form and substance (including as to scope and underlying assumptions)
satisfactory to Agent.

        "Code" means the New York Uniform Commercial Code, as in effect from
time to time.

        "Collateral" means all of each Borrower's now owned or hereafter
acquired right, title, and interest in and to each of the following:

        (a) Accounts,

        (b) Books,

        (c) Equipment,

        (d) General Intangibles,

        (e) Inventory,

        (f) Investment Property,

        (g) Negotiable Collateral,

        (h) Real Property Collateral,

        (i) money or other assets of each such Borrower that now or hereafter
come into the possession, custody, or control of any member of the Lender Group,
and

        (j) the proceeds and products, whether tangible or intangible, of any of
the foregoing, including proceeds of insurance covering any or all of the
foregoing, and any and all Accounts, Books, Equipment, General Intangibles,
Inventory, Investment Property, Negotiable Collateral, Real Property, money,
deposit accounts, or other tangible or intangible property resulting from the
sale, exchange, collection, or other disposition of any of the foregoing, or any
portion thereof or interest therein, and the proceeds thereof.

        "Collateral Access Agreement" means a landlord waiver, bailee letter, or
acknowledgement agreement of any lessor, warehouseman, processor, consignee, or
other Person in possession of, having a Lien upon, or having rights or interests
in the Equipment or Inventory, in each case, in form and substance satisfactory
to Agent.

        "Collections" means all cash, checks, notes, instruments, and other
items of payment (including insurance proceeds, proceeds of cash sales, rental
proceeds, and tax refunds) of Borrowers.

        "Commitment" means, with respect to each Lender, its Revolver
Commitment, its Subline A Commitment, its Subline B Commitment, its Subline C
Commitment or its Total Commitment, as the context requires, and, with respect
to all Lenders, their Revolver Commitments, their Subline A Commitments, their
Subline B Commitments, their Subline C Commitments or their Total Commitments,
as the context requires, in each case as such Dollar amounts are set forth
beside such Lender's name under the applicable heading on Schedule C-1 or on the
signature page of the Assignment and Acceptance pursuant to which such Lender
became a Lender hereunder in accordance with the provisions of Section 14.1.

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        "Compliance Certificate" means a certificate substantially in the form
of Exhibit C-1 delivered by the chief financial officer of Parent to Agent.

        "Continuing Director" means (a) any member of the Board of Directors who
was a director (or comparable manager) of Parent on the Closing Date, and
(b) any individual who becomes a member of the Board of Directors after the
Closing Date if such individual was appointed or nominated for election to the
Board of Directors by a majority of the Continuing Directors, but excluding any
such individual originally proposed for election in opposition to the Board of
Directors in office at the Closing Date in an actual or threatened election
contest relating to the election of the directors (or comparable managers) of
Parent (as such terms are used in Rule 14a-11 under the Exchange Act) and whose
initial assumption of office resulted from such contest or the settlement
thereof.

        "Control Agreement" means a control agreement, in form and substance
satisfactory to Agent, executed and delivered by the applicable Borrower, Agent,
and the applicable securities intermediary with respect to a Securities Account
or the applicable bank with respect to a deposit account.

        "Copyrights" means all unregistered and registered copyrights owned or
licensed by Borrowers in any and all schematics, technology, know-how, computer
software programs or applications (in both source code and object form code),
documents, items, materials and all other works that are protectable under
copyright law, and all registrations, applications for registrations, renewals
and extensions thereof, whether now existing or acquired in the future.

        "Copyright Security Agreement" means a copyright security agreement
executed and delivered by each Borrower and Agent, the form and substance of
which is satisfactory to Agent.

        "Daily Balance" means, with respect to each day during the term of this
Agreement, the amount of an Obligation owed at the end of such day.

        "DDA" means any checking or other demand deposit account maintained by
any Borrower.

        "Default" means an event, condition, or default that, with the giving of
notice, the passage of time, or both, would be an Event of Default.

        "Defaulting Lender" means any Lender that fails to make any Advance (or
other extension of credit) that it is required to make hereunder on the date
that it is required to do so hereunder.

        "Defaulting Lender Rate" means (a) the Base Rate for the first 3 days
from and after the date the relevant payment is due, and (b) thereafter, at the
interest rate then applicable to Advances that are Base Rate Loans (inclusive of
the Base Rate Margin applicable thereto).

        "Designated Account" means that certain DDA of Administrative Borrower
identified on Schedule D-1.

        "Dilution" means, as of any date of determination, a percentage, based
upon the experience of the immediately prior 12 months, that is the result of
dividing the Dollar amount of (a) bad debt write-downs, discounts, advertising
allowances, credits, or other dilutive items with respect to the Accounts during
such period, by (b) Borrowers' billings with respect to Accounts during such
period (excluding extraordinary items).

        "Dilution Reserve" means, as of any date of determination, an amount
sufficient to reduce the advance rate against Eligible Accounts by one
percentage point for each percentage point by which Dilution is in excess of
5.0%.

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        "Disbursement Letter" means an instructional letter executed and
delivered by Administrative Borrower to Agent regarding the extensions of credit
to be made on the Closing Date, the form and substance of which is satisfactory
to Agent.

        "Distribution" has the meaning set forth in Section 7.11.

        "Dollars" or "$" means United States dollars.

        "Due Diligence Letter" means the due diligence letter sent by Agent's
counsel to Administrative Borrower, together with Administrative Borrower's
completed responses to the inquiries set forth therein, the form and substance
of such responses to be satisfactory to Agent.

        "EBITDA" means, with respect to any fiscal period, Parent's and its
Subsidiaries' consolidated net earnings (or loss), minus extraordinary gains,
plus non-cash restructuring charges, interest expense, income taxes, and
depreciation and amortization for such period, as determined in accordance with
GAAP. For purposes of calculating EBITDA, "non-cash restructuring charges" shall
include, without limitation, charges to expense recorded to Borrowers' profit
and loss statement that arise from the reorganization and restructuring of
Borrowers' business assets and operations; provided, however, that (a) such
charges shall not include cash payments to vendors, customers, employees,
landlords and any other creditors and (b) any such charges that constitute
write-downs of Inventory shall not exceed $2,500,000 in the aggregate.

        "Eligible Accounts" means those Accounts created by one of Borrowers in
the ordinary course of its business, that arise out of its sale of goods or
rendition of services, that comply with each of the representations and
warranties respecting Eligible Accounts made by Borrowers under the Loan
Documents, and that are not excluded as ineligible by virtue of one or more of
the criteria set forth below; provided, however, that such criteria may be fixed
and revised from time to time by Agent in Agent's Permitted Discretion to
address the results of any audit performed by Agent from time to time after the
Closing Date. In determining the amount to be included, Eligible Accounts shall
be calculated net of customer deposits and unapplied cash remitted to Borrowers.
Eligible Accounts shall not include the following:

        (a)    Accounts that the Account Debtor has failed to pay within 30 days
after the due date,

        (b)    Accounts that are not within 90 days of the due date; provided,
however, that (i) with respect to Accounts for which Autozone is the Account
Debtor in an amount not to exceed $3,000,000 outstanding at any one time, such
Accounts may be within between 90 days and 120 days of the due date and
(ii) with respect to Accounts for which Autozone is not the Account Debtor in an
amount not to exceed $1,000,000 outstanding at any one time, such Accounts may
be within between 90 days and 120 days of the due date,

        (c)    Accounts owed by an Account Debtor (or its Affiliates) where 50%
or more of all Accounts owed by that Account Debtor (or its Affiliates) are
deemed ineligible under clause (a) above,

        (d)    Accounts with respect to which the Account Debtor is an employee,
Affiliate, or agent of any Borrower,

        (e)    Accounts arising in a transaction wherein goods are placed on
consignment or are sold pursuant to a guaranteed sale, a sale or return, a sale
on approval, a bill and hold, or any other terms by reason of which the payment
by the Account Debtor may be conditional,

        (f)    Accounts that are not payable in Dollars,

        (g)    Accounts with respect to which the Account Debtor either (i) does
not maintain its chief executive office in the United States (other than the
Eligible Canadian Accounts and the

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Eligible Puerto Rican Accounts), or (ii) is not organized under the laws of the
United States or any state thereof (other than the Eligible Canadian Accounts
and the Eligible Puerto Rican Accounts), or (iii) is the government of any
foreign country or sovereign state, or of any state, province, municipality, or
other political subdivision thereof, or of any department, agency, public
corporation, or other instrumentality thereof, unless (y) the Account is
supported by an irrevocable letter of credit satisfactory to Agent (as to form,
substance, and issuer or domestic confirming bank) that has been delivered to
Agent and is directly drawable by Agent, or (z) the Account is covered by credit
insurance in form, substance, and amount, and by an insurer, satisfactory to
Agent,

        (h)    Accounts with respect to which the Account Debtor is either
(i) the United States or any department, agency, or instrumentality of the
United States (exclusive, however, of Accounts with respect to which the
applicable Borrower has complied, to the reasonable satisfaction of Agent, with
the Assignment of Claims Act, 31 USC § 3727), or (ii) any state of the United
States (exclusive, however, of (y) Accounts owed by any state that does not have
a statutory counterpart to the Assignment of Claims Act or (z) Accounts owed by
any state that does have a statutory counterpart to the Assignment of Claims Act
as to which the applicable Borrower has complied to Agent's satisfaction),

        (i)    Accounts with respect to which the Account Debtor is a creditor
of any Borrower, has or has asserted a right of setoff, has disputed its
liability, or has made any claim with respect to its obligation to pay the
Account, to the extent of such claim, right of setoff, or dispute,

        (j)    Accounts with respect to an Account Debtor whose total
obligations owing to Borrowers exceed 10% (such percentage as applied to a
particular Account Debtor being subject to reduction by Agent in its Permitted
Discretion if the creditworthiness of such Account Debtor deteriorates) of all
Eligible Accounts, to the extent of the obligations owing by such Account Debtor
in excess of such percentage; provided, however, that, subject to Agent's
ability to adjust such percentage limitations in its Permitted Discretion, as to
the following Account Debtors, the following percentage limitations (in lieu of
10%) shall apply for purposes hereof: (i) Advanced Auto Parts, Inc., 20%;
(ii) Auto Sales, Inc., 15%; provided, however, that with respect to Accounts for
which Auto Sales, Inc. is the Account Debtor, (x) such Accounts shall not be
Eligible Accounts if Auto Sales, Inc. has not paid such Accounts within 60 days
after the original invoice date and (y) no such Accounts shall be Eligible
Accounts if 25% or more of all Accounts owed by Auto Sales, Inc. (or its
Affiliates) are deemed ineligible under clause (x) above; (iii) CSK Auto, Inc.,
15%, and (iv) Autozone, 15%,

        (k)    Accounts with respect to which the Account Debtor is subject to
an Insolvency Proceeding, is not Solvent, has gone out of business, or as to
which a Borrower has received notice of an imminent Insolvency Proceeding or a
material impairment of the financial condition of such Account Debtor,

        (l)    Accounts with respect to which the Account Debtor is located in
the states of New Jersey, Minnesota, or West Virginia (or any other state that
requires a creditor to file a business activity report or similar document in
order to bring suit or otherwise enforce its remedies against such Account
Debtor in the courts or through any judicial process of such state), unless the
applicable Borrower has qualified to do business in New Jersey, Minnesota, West
Virginia, or such other states, or has filed a business activities report with
the applicable division of taxation, the department of revenue, or with such
other state offices, as appropriate, for the then-current year, or is exempt
from such filing requirement,

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        (m)  Accounts, the collection of which, Agent, in its Permitted
Discretion, believes to be doubtful by reason of the Account Debtor's financial
condition,

        (n)  Accounts that are not subject to a valid and perfected first
priority Agent's Lien,

        (o)  Accounts with respect to which (i) the goods giving rise to such
Account have not been shipped and billed to the Account Debtor, or (ii) the
services giving rise to such Account have not been performed and billed to the
Account Debtor, or

        (p)  Accounts that represent the right to receive progress payments or
other advance billings that are due prior to the completion of performance by
the applicable Borrower of the subject contract for goods or services.

        "Eligible Canadian Accounts" means those Accounts created by Borrowers,
in an aggregate amount not to exceed $2,000,000 at any time, with respect to
which the Account Debtor either (i) maintains its chief executive office in
Canada, or (ii) is organized under the laws of Canada or any political
subdivision thereof, provided that such Accounts (x) are not otherwise
ineligible in accordance with the definition of "Eligible Accounts" and (y) are
otherwise acceptable to Agent in all respects.

        "Eligible Capital Equipment Cost" means the cost of eligible capital
equipment (the determination of which Equipment is eligible capital equipment to
be made by Agent, in its sole discretion), net of expenses for taxes, freight,
installation, engineering and related soft costs.

        "Eligible Finished Goods Inventory" means Inventory of Borrowers
consisting of first quality finished goods held for sale in the ordinary course
of Borrowers' business located at one of the business locations of Borrowers set
forth on Schedule E-1 (or in-transit between any such locations), that complies
with each of the representations and warranties respecting Eligible Finished
Goods Inventory made by Borrowers in the Loan Documents, and that is not
excluded as ineligible by virtue of one or more of the criteria set forth below;
provided, however, that such criteria may be fixed and revised from time to time
by Agent in Agent's Permitted Discretion to address the results of any audit or
appraisal performed (or caused to be performed) by Agent from time to time after
the Closing Date. In determining the amount to be so included, Inventory shall
be valued at the lower of cost or market on a basis consistent with Borrowers'
historical accounting practices. An item of Inventory shall not be included in
Eligible Finished Goods Inventory if:

        (a)  a Borrower does not have good, valid, and marketable title thereto,

        (b)  it is not located at one of the locations in the United States set
forth on Schedule E-1 or in transit from one such location to another such
location,

        (c)  it is located on real property leased by a Borrower or in a
contract warehouse, in each case, unless it is subject to a Collateral Access
Agreement executed by the lessor, warehouseman, or other third party, as the
case may be, and unless it is segregated or otherwise separately identifiable
from goods of others, if any, stored on the premises,

        (d)  it is not subject to a valid and perfected first priority security
Agent's Lien,

        (e)  it consists of goods returned or rejected by a Borrower's
customers, or

        (f)    it consists of goods that are obsolete or slow moving,
restrictive or custom items, work-in-process, raw materials, or goods that
constitute spare parts, packaging and shipping materials, supplies used or
consumed in a Borrower's business, bill and hold goods, defective goods (when
identified and reported through Borrowers' normal and ordinary manufacturing
reporting process), "seconds" (it being understood and agreed that "seconds" do
not include

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inventory which has been returned and subsequently reworked into first quality
finished goods, as determined by Agent in its Permitted Discretion), or
Inventory acquired on consignment.

        "Eligible Inventory" means, collectively, Eligible Finished Goods
Inventory, Eligible Raw Materials Inventory and Eligible Work-in-Process
Inventory.

        "Eligible Puerto Rican Accounts" means those Accounts created by
Borrowers, in an aggregate amount not to exceed $300,000 at any time, with
respect to which the Account Debtor either (i) maintains its chief executive
office in Puerto Rico, or (ii) is organized under the laws of Puerto Rico or any
political subdivision thereof, provided that such Accounts (x) are not otherwise
ineligible in accordance with the definition of "Eligible Accounts" and (y) are
otherwise acceptable to Agent in all respects.

        "Eligible Raw Materials Inventory" means Inventory of Borrowers
consisting of raw materials to be used in Borrowers' production process located
at one of the business locations of Borrowers set forth on Schedule E-1 (or
in-transit between any such locations), that complies with each of the
representations and warranties respecting Eligible Raw Materials Inventory made
by Borrowers in the Loan Documents, and that is not excluded as ineligible by
virtue of one or more of the criteria set forth below; provided, however, that
such criteria may be fixed and revised from time to time by Agent in Agent's
Permitted Discretion to address the results of any audit or appraisal performed
(or caused to be performed) by Agent from time to time after the Closing Date.
In determining the amount to be so included, Inventory shall be valued at the
lower of cost or market on a basis consistent with Borrowers' historical
accounting practices. An item of Inventory shall not be included in Eligible Raw
Materials Inventory if:

        (a)  a Borrower does not have good, valid, and marketable title thereto,

        (b)  it is not located at one of the locations in the United States set
forth on Schedule E-1 or in transit from one such location to another such
location,

        (c)  it is located on real property leased by a Borrower or in a
contract warehouse, in each case, unless it is subject to a Collateral Access
Agreement executed by the lessor, warehouseman, or other third party, as the
case may be, and unless it is segregated or otherwise separately identifiable
from goods of others, if any, stored on the premises,

        (d)  it is not subject to a valid and perfected first priority security
Agent's Lien, or

        (e)  it consists of goods that are obsolete or slow moving, restrictive
or custom items, work-in-process, finished goods, or goods that constitute spare
parts, packaging and shipping materials, supplies used or consumed in a
Borrower's business, bill and hold goods, defective goods (when identified and
reported through Borrowers' normal and ordinary manufacturing reporting
process), "seconds" (it being understood and agreed that "seconds" do not
include inventory which has been returned and subsequently reworked into first
quality finished goods, as determined by Agent in its Permitted Discretion), or
Inventory acquired on consignment.

        "Eligible Real Property" means the parcels of Real Property located at
(a) 1801 Russellville Road, Bowling Green, Kentucky and (b) 509 Industrial
Avenue, Springfield, Tennessee.

        "Eligible Transferee" means (a) a commercial bank organized under the
laws of the United States, or any state thereof, and having total assets in
excess of $250,000,000, (b) a commercial bank organized under the laws of any
other country which is a member of the Organization for Economic Cooperation and
Development or a political subdivision of any such country and which has total
assets in excess of $250,000,000, provided that such bank is acting through a
branch or agency located in the United States, (c) a finance company, insurance
company, or other financial institution or fund that is engaged in making,
purchasing, or otherwise investing in commercial loans in the ordinary course of
its business and having (together with its Affiliates) total assets in

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excess of $250,000,000, (d) any Affiliate (other than individuals) of a Lender
that was party hereto as of the Closing Date or any Qualified Lender Account,
(e) so long as no Event of Default has occurred and is continuing, any other
Person approved by Agent and Administrative Borrower, and (f) during the
continuation of an Event of Default, any other Person approved by Agent.

        "Eligible Work-in-Process Inventory" means Inventory of Borrowers
consisting of work-in-process to be sold in the ordinary course of Borrowers'
business that have not yet been completed as finished goods, located at one of
the business locations of Borrowers set forth on Schedule E-1, that complies
with each of the representations and warranties respecting Eligible
Work-in-Process Inventory made by Borrowers in the Loan Documents, and that are
not included in Eligible Finished Goods Inventory but would qualify as Eligible
Finished Goods Inventory if such work-in-process were completed as finished
goods.

        "Environmental Actions" means any complaint, summons, citation, notice,
directive, order, claim, litigation, investigation, judicial or administrative
proceeding, judgment, letter, or other communication from any Governmental
Authority, or any third party involving violations of Environmental Laws or
releases of Hazardous Materials from (a) any assets, properties, or businesses
of any Borrower or any predecessor in interest, (b) from adjoining properties or
businesses, or (c) from or onto any facilities which received Hazardous
Materials generated by any Borrower or any predecessor in interest.

        "Environmental Law" means any applicable federal, state, provincial,
foreign or local statute, law, rule, regulation, ordinance, code, binding and
enforceable guideline, binding and enforceable written policy or rule of common
law now or hereafter in effect and in each case as amended, or any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, to the extent binding on Borrowers, relating
to the environment, employee health and safety, or Hazardous Materials,
including CERCLA; RCRA; the Federal Water Pollution Control Act, 33 USC § 1251
et seq; the Toxic Substances Control Act, 15 USC § 2601 et seq. the Clean Air
Act, 42 USC § 7401 et seq.; the Safe Drinking Water Act, 42 USC § 3803 et seq.;
the Oil Pollution Act of 1990, 33 USC § 2701 et seq.; the Emergency Planning and
the Community Right-to-Know Act of 1986, 42 USC § 11001 et seq.; the Hazardous
Material Transportation Act, 49 USC § 1801 et seq.; and the Occupational Safety
and Health Act, 29 USC §651 et seq. (to the extent it regulates occupational
exposure to Hazardous Materials); any state and local or foreign counterparts or
equivalents, in each case as amended from time to time.

        "Environmental Liabilities and Costs" means all liabilities, monetary
obligations, Remedial Actions, losses, damages, punitive damages, consequential
damages, treble damages, costs and expenses (including all reasonable fees,
disbursements and expenses of counsel, experts, or consultants, and costs of
investigation and feasibility studies), fines, penalties, sanctions, and
interest incurred as a result of any claim or demand by any Governmental
Authority or any third party, and which relate to any Environmental Action.

        "Environmental Lien" means any Lien in favor of any Governmental
Authority for Environmental Liabilities and Costs.

        "Environmental Reserve" means, as of the date of determination, the
amount of reserves that Agent has established (based upon its environment
consultants' reasonable determination of the dollar amount required to take
Remedial Action in respect of the Eligible Real Property) for the Eligible Real
Property.

        "Equipment" means all of Borrowers' now owned or hereafter acquired
right, title, and interest with respect to equipment, machinery, machine tools,
motors, furniture, furnishings, fixtures, vehicles (including motor vehicles),
tools, parts, goods (other than consumer goods, farm

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products, or Inventory), wherever located, including all attachments,
accessories, accessions, replacements, substitutions, additions, and
improvements to any of the foregoing.

        "Equipment Reserve" means a reserve established by Agent in the amount
of $450,000, which reserve shall be reduced by the Agent as follows: (a) such
Equipment Reserve shall be reduced to $35,000 if and when the liens on
Borrowers' Equipment currently held by The CIT Group/Equipment Financing, Inc.
and First Bank & Trust are terminated and released to Agent's satisfaction and
(b) such Equipment Reserve shall be reduced to $0 if and when the liens on
Borrowers' Equipment currently held by the CIT Group/Equipment Financing, Inc.,
First Bank and Trust, Brauer Material Systems Inc., Mellon Leasing and Raco
Industrial Corporation are terminated and released to Agent's satisfaction.

        "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute thereto.

        "ERISA Affiliate" means (a) any Person subject to ERISA whose employees
are treated as employed by the same employer as the employees of a Borrower
under IRC Section 414(b), (b) any trade or business subject to ERISA whose
employees are treated as employed by the same employer as the employees of a
Borrower under IRC Section 414(c), (c) solely for purposes of Section 302 of
ERISA and Section 412 of the IRC, any organization subject to ERISA that is a
member of an affiliated service group of which a Borrower is a member under IRC
Section 414(m), or (d) solely for purposes of Section 302 of ERISA and
Section 412 of the IRC, any Person subject to ERISA that is a party to an
arrangement with a Borrower and whose employees are aggregated with the
employees of a Borrower under IRC Section 414(o).

        "Event of Default" has the meaning set forth in Section 8.

        "Excess Availability" means the amount, as of the date any determination
thereof is to be made, equal to Availability minus the aggregate amount, if any,
of all trade payables and other liabilities of Borrowers not reasonably within
terms or aged in excess of their historical levels with respect thereto and all
book overdrafts in excess of their historical practices with respect thereto, in
each case as determined by Agent in its Permitted Discretion.

        "Excess Cash Flow" means, as of the date any determination thereof is to
be made, (a) EBITDA for the immediately preceding 12-month period, less
(b)(i) total interest payments (to the extent paid in cash) on any Indebtedness
of Borrowers permitted hereunder during such period, determined in accordance
with GAAP, (ii) principal payments on any Indebtedness of Borrowers permitted
hereunder (but, in the case of Advances and Subline Advances, only to the extent
that the Maximum Revolver Amount is permanently reduced by the amount of such
payments) paid in cash during such period, (iii) all Lender Group Expenses paid
during such period and (iv) all Capital Expenditures made during such period,
(v) payments of Taxes made in cash during such period.

        "Exchange Act" means the Securities Exchange Act of 1934, as in effect
from time to time.

        "Existing Lender" means Fleet Capital Corporation.

        "Fee Letter" means that certain fee letter, dated as of even date
herewith, between Borrowers and Agent, in form and substance satisfactory to
Agent.

        "FEIN" means Federal Employer Identification Number.

        "Fixed Charge Coverage Ratio" means, with respect to any period of
determination, the ratio of (i)(a) EBITDA for such period less (b) non-financed
Capital Expenditures (i.e., excluding expenditures for assets purchased with the
proceeds of long-term debt financing or subject to a Capital Lease) made within
such period less (c) income taxes paid in cash within such period to

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(ii)(a) interest paid in cash within such period plus (b) all principal payments
scheduled to be made within such period in respect of Indebtedness of the
Borrowers.

        "Foothill" means Foothill Capital Corporation, a California corporation.

        "Funding Date" means the date on which a Borrowing occurs.

        "Funding Losses" has the meaning set forth in Section 2.13(b)(ii).

        "GAAP" means generally accepted accounting principles as in effect from
time to time in the United States, consistently applied.

        "General Intangibles" means all of Borrowers' now owned or hereafter
acquired right, title, and interest with respect to general intangibles
(including payment intangibles, contract rights, rights to payment, rights
arising under common law, statutes, or regulations, choses or things in action,
goodwill, patents, trade names, trademarks, servicemarks, copyrights,
blueprints, drawings, purchase orders, customer lists, monies due or recoverable
from pension funds, route lists, rights to payment and other rights under any
royalty or licensing agreements, infringement claims, computer programs,
information contained on computer disks or tapes, software, literature, reports,
catalogs, money, deposit accounts, insurance premium rebates, tax refunds, and
tax refund claims), and any and all supporting obligations in respect thereof,
and any other personal property other than goods, Accounts, Investment Property,
and Negotiable Collateral.

        "Governing Documents" means, with respect to any Person, the certificate
or articles of incorporation, by-laws, or other organizational documents of such
Person.

        "Governmental Authority" means any federal, state, local, or other
governmental or administrative body, instrumentality, department, or agency or
any court, tribunal, administrative hearing body, arbitration panel, commission,
or other similar dispute-resolving panel or body.

        "Guarantor" means KHPP Holdings, Inc.

        "Guaranty" means that certain general continuing guaranty executed and
delivered by Guarantor in favor of Agent, for the benefit of the Lender Group,
in form and substance satisfactory to Agent.

        "Hazardous Materials" means (a) substances that are defined or listed
in, or otherwise classified pursuant to, any applicable laws or regulations as
"hazardous substances," "hazardous materials," "hazardous wastes," "toxic
substances," or any other formulation intended to define, list, or classify
substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or "EP
toxicity", (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any radioactive materials, and (d) asbestos in any form or electrical
equipment that contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of 50 parts per million.

        "Hedge Agreement" means any and all transactions, agreements, or
documents now existing or hereafter entered into between Administrative Borrower
or its Subsidiaries and Wells Fargo or its Affiliates, which provide for an
interest rate, credit, commodity or equity swap, cap, floor, collar, forward
foreign exchange transaction, currency swap, cross currency rate swap, currency
option, or any combination of, or option with respect to, these or similar
transactions, for the purpose of hedging Administrative Borrower's or its
Subsidiaries' exposure to fluctuations in interest or exchange rates, loan,
credit exchange, security or currency valuations or commodity prices.

        "Highbridge" means Highbridge/Zwirn Special Opportunities Fund, L.P., a
Delaware limited partnership.

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        "Holdout Lender" has the meaning set forth in Section 15.2.

        "Indebtedness" means (a) all obligations for borrowed money, (b) all
obligations evidenced by bonds, debentures, notes, or other similar instruments
and all reimbursement or other obligations in respect of letters of credit,
bankers acceptances, interest rate swaps, or other financial products, (c) all
obligations under Capital Leases, (d) all obligations or liabilities of others
secured by a Lien on any asset of Administrative Borrower or its Subsidiaries,
irrespective of whether such obligation or liability is assumed, (e) all
obligations for the deferred purchase price of assets (other than trade debt
incurred in the ordinary course of business and repayable in accordance with
customary trade practices), and (f) any obligation guaranteeing or intended to
guarantee (whether directly or indirectly guaranteed, endorsed, co-made,
discounted, or sold with recourse) any obligation of any other Person.

        "Indemnified Liabilities" has the meaning set forth in Section 11.3.

        "Indemnified Person" has the meaning set forth in Section 11.3.

        "Insolvency Proceeding" means any proceeding commenced by or against any
Person under any provision of the Bankruptcy Code or under any other state or
federal bankruptcy or insolvency law, assignments for the benefit of creditors,
formal or informal moratoria, compositions, extensions generally with creditors,
or proceedings seeking reorganization, arrangement, or other similar relief.

        "Intangible Assets" means, with respect to any Person, that portion of
the book value of all of such Person's assets that would be treated as
intangibles under GAAP.

        "Intellectual Property Right" means any trademark, copyright, service
mark, trade name, patent (including any registrations or applications for
registration of any of the foregoing), license, or trade secret including, but
not limited to, any such legal rights included in any schematics, technology,
know-how, computer software programs or applications (in both source code and
object code form) or in other tangible or intangible information or material.

        "Intercompany Subordination Agreement" means a subordination agreement
executed and delivered by Borrowers and Agent, the form and substance of which
is satisfactory to Agent.

        "Interest Period" means, with respect to each LIBOR Rate Loan, a period
commencing on the date of the making of such LIBOR Rate Loan and ending 1, 2 or
3 months thereafter; provided, however, that (a) if any Interest Period would
end on a day that is not a Business Day, such Interest Period shall be extended
(subject to clauses (c)-(e) below) to the next succeeding Business Day,
(b) interest shall accrue at the applicable rate based upon the LIBOR Rate from
and including the first day of each Interest Period to, but excluding, the day
on which any Interest Period expires, (c) any Interest Period that would end on
a day that is not a Business Day shall be extended to the next succeeding
Business Day unless such Business Day falls in another calendar month, in which
case such Interest Period shall end on the next preceding Business Day, (d) with
respect to an Interest Period that begins on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period), the Interest Period shall
end on the last Business Day of the calendar month that is 1, 2 or 3 months
after the date on which the Interest Period began, as applicable, and
(e) Borrowers (or Administrative Borrower on behalf thereof) may not elect an
Interest Period which will end after the Maturity Date.

        "Inventory" means all Borrowers' now owned or hereafter acquired right,
title, and interest with respect to inventory, including goods held for sale or
lease or to be furnished under a contract of service, goods that are leased by a
Borrower as lessor, goods that are furnished by a

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Borrower under a contract of service, and raw materials, work in process, or
materials used or consumed in a Borrower's business.

        "Inventory Reserve" means a reserve established by Agent in the amount
of $500,000, which reserve shall be reduced to $0 by Agent on the earlier to
occur of (i) such time that Agent and Borrowers mutually agree to reduce such
Inventory Reserve and (ii) receipt by Agent of audited year-end financial
statements of Borrowers as of December 31, 2002, which audited financial
statements shall include a physical inventory of all of Borrowers' locations and
shall be acceptable to Agent in its Permitted Discretion.

        "Investment" means, with respect to any Person, any investment by such
Person in any other Person (including Affiliates) in the form of loans,
guarantees, advances, or capital contributions (excluding (a) commission,
travel, and similar advances to officers and employees of such Person made in
the ordinary course of business, and (b) bona fide Accounts arising in the
ordinary course of business consistent with past practices), purchases or other
acquisitions for consideration of Indebtedness or Stock, and any other items
that are or would be classified as investments on a balance sheet prepared in
accordance with GAAP.

        "Investment Property" means all of Borrowers' now owned or hereafter
acquired right, title, and interest with respect to "investment property" as
that term is defined in the Code, and any and all supporting obligations in
respect thereof.

        "IRC" means the Internal Revenue Code of 1986, as in effect from time to
time.

        "Issuing Lender" means Foothill or any other Lender that, at the request
of Administrative Borrower and with the consent of Agent agrees, in such
Lender's sole discretion, to become an Issuing Lender for the purpose of issuing
L/Cs or L/C Undertakings pursuant to Section 2.12.

        "Kohlberg" means Kohlberg & Co., L.L.C., a Delaware limited liability
company.

        "L/C" has the meaning set forth in Section 2.12(a).

        "L/C Disbursement" means a payment made by the Issuing Lender pursuant
to a Letter of Credit.

        "L/C Undertaking" has the meaning set forth in Section 2.12(a).

        "Lender" and "Lenders" have the respective meanings set forth in the
preamble to this Agreement, and shall include any other Person made a party to
this Agreement in accordance with the provisions of Section 14.1.

        "Lender Group" means, individually and collectively, each of the Lenders
(including the Issuing Lender) and Agent.

        "Lender Group Expenses" means all (a) costs or expenses (including
taxes, and insurance premiums) required to be paid by a Borrower under any of
the Loan Documents that are paid or incurred by the Lender Group, (b) fees or
charges paid or incurred by Agent in connection with the Lender Group's
transactions with Borrowers, including, fees or charges for photocopying,
notarization, couriers and messengers, telecommunication, public record searches
(including tax lien, litigation, and UCC searches and including searches with
the patent and trademark office, the copyright office, or the department of
motor vehicles), filing, recording, publication, appraisals (including periodic
Collateral appraisals or business valuations to the extent of the fees and
charges (and up to the amount of any limitation) contained in this Agreement),
real estate surveys, real estate title policies and endorsements, and
environmental audits, (c) costs and expenses incurred by Agent in the
disbursement of funds to or for the account of Borrowers (by wire transfer or
otherwise), (d) charges paid or incurred by Agent resulting from the dishonor of
checks, (e) reasonable costs and expenses paid or incurred by the Lender Group
to correct any

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default or enforce any provision of the Loan Documents, or in gaining possession
of, maintaining, handling, preserving, storing, shipping, selling, preparing for
sale, or advertising to sell the Collateral, or any portion thereof,
irrespective of whether a sale is consummated, (f) audit fees and expenses of
Agent related to audit examinations of the Books to the extent of the fees and
charges (and up to the amount of any limitation) contained in this Agreement,
(g) reasonable costs and expenses of third party claims or any other suit paid
or incurred by the Lender Group in enforcing or defending the Loan Documents or
in connection with the transactions contemplated by the Loan Documents or the
Lender Group's relationship with any Borrower or any guarantor of the
Obligations, (h) Agent's and each Lender's reasonable fees and expenses
(including attorneys fees) incurred in advising, structuring, drafting,
reviewing, administering, or amending the Loan Documents, and (i) Agent's and
each Lender's reasonable fees and expenses (including attorneys fees) incurred
in terminating, enforcing (including attorneys fees and expenses incurred in
connection with a "workout," a "restructuring," or an Insolvency Proceeding
concerning any Borrower or in exercising rights or remedies under the Loan
Documents), or defending the Loan Documents, irrespective of whether suit is
brought, or in taking any Remedial Action concerning the Collateral.

        "Lender-Related Person" means, with respect to any Lender, such Lender,
together with such Lender's Affiliates, and the officers, directors, employees,
and agents of such Lender.

        "Lender Side Letter Agreement" means a certain letter agreement, dated
as of the date hereof, by and among Agent, Foothill and Highbridge, as amended,
modified, supplemented or restated from time to time in accordance with the
terms thereof.

        "Letter of Credit" means an L/C or an L/C Undertaking, as the context
requires.

        "Letter of Credit Usage" means, as of any date of determination, the
aggregate undrawn amount of all outstanding Letters of Credit plus 100% of the
amount of outstanding time drafts accepted by an Underlying Issuer as a result
of drawings under Underlying Letters of Credit.

        "LIBOR Deadline" has the meaning set forth in Section 2.13(b)(i).

        "LIBOR Notice" means a written notice in the form of Exhibit L-1.

        "LIBOR Rate" means, for each Interest Period for each LIBOR Rate Loan,
the rate per annum determined by Agent (rounded upwards, if necessary, to the
next 1/16%) by dividing (a) the Base LIBOR Rate for such Interest Period, by
(b) 100% minus the Reserve Percentage. The LIBOR Rate shall be adjusted on and
as of the effective day of any change in the Reserve Percentage.

        "LIBOR Rate Loan" means each portion of an Advance that bears interest
at a rate determined by reference to the LIBOR Rate.

        "LIBOR Rate Margin" means 2.75 percentage points.

        "Lien" means any interest in an asset securing an obligation owed to, or
a claim by, any Person other than the owner of the asset, whether such interest
shall be based on the common law, statute, or contract, whether such interest
shall be recorded or perfected, and whether such interest shall be contingent
upon the occurrence of some future event or events or the existence of some
future circumstance or circumstances, including the lien or security interest
arising from a mortgage, deed of trust, encumbrance, pledge, hypothecation,
assignment, deposit arrangement, security agreement, conditional sale or trust
receipt, or from a lease, consignment, or bailment for security purposes and
also including reservations, exceptions, encroachments, easements,
rights-of-way, covenants, conditions, restrictions, leases, and other title
exceptions and encumbrances affecting Real Property.

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        "Loan Account" has the meaning set forth in Section 2.10.

        "Loan Documents" means this Agreement, the Bank Product Agreements, the
Cash Management Agreements, the Control Agreements, the Copyright Security
Agreement, the Disbursement Letter, the Due Diligence Letter, the Fee Letter,
the Guaranty, the Intercompany Subordination Agreement, the Letters of Credit,
the Mortgages, the Officers' Certificate, the Patent Security Agreement, the
Stock Pledge Agreement, the Trademark Security Agreement, any note or notes
executed by a Borrower in connection with this Agreement and payable to a member
of the Lender Group, and any other agreement entered into, now or in the future,
by any Borrower and the Lender Group in connection with this Agreement.

        "Material Adverse Change" means (a) a material adverse change in the
business, prospects, operations, results of operations, assets, liabilities or
condition (financial or otherwise) of Borrowers, taken as a whole, (b) a
material impairment of the ability of Borrowers, taken as a whole, to perform
their obligations under the Loan Documents to which they are a party or of the
Lender Group's ability to enforce the Obligations or realize upon the
Collateral, or (c) a material impairment of the enforceability or priority of
the Agent's Liens with respect to the Collateral as a result of an action or
failure to act on the part of a Borrower.

        "Maturity Date" has the meaning set forth in Section 3.4.

        "Maximum Revolver Amount" means $50,000,000.

        "Monthly Period" means a four (4) or five (5) week period of which there
are twelve (12) such periods during the fiscal year of Borrowers, determined
based upon a 52-53 week accounting period.

        "Mortgages" means, individually and collectively, one or more mortgages,
deeds of trust, or deeds to secure debt, executed and delivered by a Borrower in
favor of Agent, for the benefit of the Lender Group, in form and substance
satisfactory to Agent, that encumber the Real Property Collateral and the
related improvements thereto.

        "Negotiable Collateral" means all of Borrowers' now owned and hereafter
acquired right, title, and interest with respect to letters of credit, letter of
credit rights, instruments, promissory notes, drafts, documents, and chattel
paper (including electronic chattel paper and tangible chattel paper), and any
and all supporting obligations in respect thereof.

        "Net Equipment Liquidation Value" means the appraised value of
Borrowers' Equipment that is estimated to be recoverable in an orderly
liquidation of such Equipment, such value to be as determined from time to time
by a qualified appraisal company selected by Agent, net of all related costs and
expenses.

        "Net Liquidation Percentage" means the percentage of the book value of
Borrowers' Eligible Inventory that is estimated to be recoverable in an orderly
liquidation of such Inventory, such percentage to be as determined from time to
time by a qualified appraisal company selected by Agent.

        "Obligations" means (a) all loans, Advances, Subline Advances, debts,
principal, interest (including any interest that, but for the provisions of the
Bankruptcy Code, would have accrued), contingent reimbursement obligations with
respect to outstanding Letters of Credit, premiums, liabilities (including all
amounts charged to Borrowers' Loan Account pursuant hereto), obligations, fees
(including the fees provided for in the Fee Letter), charges, costs, Lender
Group Expenses (including any fees or expenses that, but for the provisions of
the Bankruptcy Code, would have accrued), lease payments, guaranties, covenants,
and duties of any kind and description owing by Borrowers to the Lender Group
pursuant to or evidenced by the Loan Documents and irrespective of whether for
the payment of money, whether direct or indirect, absolute or

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contingent, due or to become due, now existing or hereafter arising, and
including all interest not paid when due and all Lender Group Expenses that
Borrowers are required to pay or reimburse by the Loan Documents, by law, or
otherwise, (b) all Bank Product Obligations and (c) all obligations, expenses,
liabilities, losses and indemnities incurred, and any other amount otherwise
payable, by Agent under the Pay-Off Letter. Any reference in this Agreement or
in the Loan Documents to the Obligations shall include all amendments, changes,
extensions, modifications, renewals, replacements, substitutions, and
supplements, thereto and thereof, as applicable, both prior and subsequent to
any Insolvency Proceeding.

        "Officers' Certificate" means the representations and warranties of
officers form submitted by Agent to Administrative Borrower, together with
Borrowers' completed responses to the inquiries set forth therein, the form and
substance of such responses to be satisfactory to Agent.

        "Originating Lender" has the meaning set forth in Section 14.1(e).

        "Overadvance" has the meaning set forth in Section 2.5.

        "Parent" has the meaning set forth in the preamble to this Agreement.

        "Participant" has the meaning set forth in Section 14.1(e).

        "Patent Security Agreement" means a patent security agreement executed
and delivered by Borrowers and Agent, the form and substance of which is
satisfactory to Agent.

        "Pay-Off Letter" means a letter, in form and substance satisfactory to
Agent, from Existing Lender to Agent respecting the amount necessary to repay in
full all of the obligations of Borrowers owing to Existing Lender and obtain a
release of all of the Liens existing in favor of Existing Lender in and to the
assets of Borrowers.

        "Permitted Discretion" means a determination made in good faith and in
the exercise of reasonable (from the perspective of a secured asset-based
lender) business judgment.

        "Permitted Dispositions" means (a) sales or other dispositions by
Administrative Borrower or its Subsidiaries of Equipment that is substantially
worn, damaged, or obsolete in the ordinary course of business, (b) sales by
Administrative Borrower or its Subsidiaries of Inventory to buyers in the
ordinary course of business, (c) the use or transfer of money or Cash
Equivalents by Administrative Borrower or its Subsidiaries in a manner that is
not prohibited by the terms of this Agreement or the other Loan Documents,
(d) the licensing by Administrative Borrower or its Subsidiaries, on a
non-exclusive basis, of patents, trademarks, copyrights, and other intellectual
property rights in the ordinary course of business and (e) sales or dispositions
of Equipment in an aggregate amount during the term of this Agreement (based
upon fair market value) of $1,500,000 or less; provided, however, that if any
Equipment listed on Schedule F-1 is sold or disposed of, Borrowers shall
immediately pay to Agent an amount (and the Subline A Amount shall be deemed to
be prepaid in a principal amount equal to such amount) equal to the appraised
value ascribed to such Equipment (irrespective of whether previously sold or
disposed of) on Schedule F-1 less an amount equal to the product of (i) the
appraised value ascribed to such Equipment (irrespective of whether previously
sold or disposed of) on Schedule F-1 divided by the appraised value of all
Equipment (irrespective of whether previously sold or disposed of) listed on
Schedule F-1 times (ii) the aggregate amount of all principal payments of
Subline A Advances repaid by Borrowers prior to such sale or disposition.

        "Permitted Investments" means (a) investments in Cash Equivalents,
(b) investments in negotiable instruments for collection, (c) advances made in
connection with purchases of goods or services in the ordinary course of
business, and (d) investments by any Borrower in any other Borrower provided
that if any such investment is in the form of Indebtedness, such Indebtedness

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investment shall be subject to the terms and conditions of the Intercompany
Subordination Agreement.

        "Permitted Liens" means (a) Liens held by Agent for the benefit of Agent
and the Lenders, (b) Liens for unpaid taxes that either (i) are not yet
delinquent, or (ii) do not constitute an Event of Default hereunder and are the
subject of Permitted Protests, (c) Liens set forth on Schedule P-1, (d) the
interests of lessors under operating leases, (e) purchase money Liens or the
interests of lessors under Capital Leases to the extent that such Liens or
interests secure Permitted Purchase Money Indebtedness and so long as such Lien
attaches only to the asset purchased or acquired and the proceeds thereof,
(f) Liens arising by operation of law in favor of warehousemen, landlords,
carriers, mechanics, materialmen, laborers, or suppliers, incurred in the
ordinary course of business and not in connection with the borrowing of money,
and which Liens either (i) are for sums not yet delinquent, or (ii) are the
subject of Permitted Protests, (g) Liens arising from deposits made in
connection with obtaining worker's compensation or other unemployment insurance,
(h) Liens or deposits to secure performance of bids, tenders, or leases incurred
in the ordinary course of business and not in connection with the borrowing of
money, (i) Liens granted as security for surety or appeal bonds in connection
with obtaining such bonds in the ordinary course of business, (j) Liens
resulting from any judgment or award that is not an Event of Default hereunder,
(k) Liens with respect to the Real Property Collateral that are exceptions to
the commitments for title insurance issued in connection with the Mortgages, as
accepted by Agent, and (l) with respect to any Real Property that is not part of
the Real Property Collateral, easements, rights of way, and zoning restrictions
that do not materially interfere with or impair the use or operation thereof.

        "Permitted Protest" means the right of Administrative Borrower or any of
its Subsidiaries, as applicable) to protest any Lien (other than any such Lien
that secures the Obligations), taxes (other than payroll taxes or taxes that are
the subject of a United States federal tax lien), or rental payment, provided
that (a) a reserve with respect to such obligation is established on the Books
in such amount as is required under GAAP, (b) any such protest is instituted
promptly and prosecuted diligently by Administrative Borrower or any of its
Subsidiaries, as applicable, in good faith, and (c) Agent is satisfied that,
while any such protest is pending, there will be no impairment of the
enforceability, validity, or priority of any of the Agent's Liens.

        "Permitted Purchase Money Indebtedness" means, as of any date of
determination, Purchase Money Indebtedness incurred after the Closing Date in an
aggregate amount outstanding at any one time not in excess of $5,000,000.

        "Person" means natural persons, corporations, limited liability
companies, limited partnerships, general partnerships, limited liability
partnerships, joint ventures, trusts, land trusts, business trusts, or other
organizations, irrespective of whether they are legal entities, and governments
and agencies and political subdivisions thereof.

        "Personal Property Collateral" means all Collateral other than Real
Property.

        "PIK Interest" means as of any date of determination, the amount of all
interest accrued with respect to the Subline B Advances that has been
paid-in-kind by being added to the balance thereof in accordance with
Section 2.6(a)(iii).

        "Projections" means Parent's forecasted (a) balance sheets, (b) profit
and loss statements, and (c) cash flow statements, all prepared on a consistent
basis with Parent's historical financial statements, together with appropriate
supporting details and a statement of underlying assumptions.

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        "Pro Rata Share" means:

        (a) with respect to a Lender's obligation to make Advances and receive
payments of principal, interest, fees, costs, and expenses with respect thereto,
the percentage obtained by dividing (i) such Lender's Revolver Commitment, by
(ii) the aggregate Revolver Commitments of all Lenders,

        (b) with respect to a Lender's obligation to participate in Letters of
Credit, to reimburse the Issuing Lender, and to receive payments of fees with
respect thereto, the percentage obtained by dividing (i) such Lender's Revolver
Commitment, by (ii) the aggregate Revolver Commitments of all Lenders,

        (c) with respect to a Lender's obligation to make Subline A Advances and
receive payments of interest, fees, and principal with respect thereto, the
percentage obtained by dividing (i) such Lender's Subline A Commitment, by
(ii) the aggregate amount of all Lenders' Subline A Commitments,

        (d) with respect to a Lender's obligation to make Subline B Advances and
receive payments of interest, fees, and principal with respect thereto, the
percentage obtained by dividing (i) such Lender's Subline B Commitment, by
(ii) the aggregate amount of all Lenders' Subline B Commitments,

        (e) with respect to a Lender's obligation to make Subline C Advances and
receive payments of interest, fees, and principal with respect thereto, the
percentage obtained by dividing (i) such Lender's Subline C Commitment, by
(ii) the aggregate amount of all Lenders' Subline C Commitments, and

        (f) with respect to all other matters (including the indemnification
obligations arising under Section 16.7), the percentage obtained by dividing
(i) such Lender's Total Commitment, by (ii) the aggregate amount of Total
Commitments of all Lenders; provided, however, that, in each case, in the event
all Commitments have been terminated, Pro Rata Share shall be determined
according to the Commitments in effect immediately prior to such termination.

        "Purchase Money Indebtedness" means Indebtedness (other than the
Obligations, but including Capitalized Lease Obligations), incurred at the time
of, or within 20 days after, the acquisition of any fixed assets for the purpose
of financing all or any part of the acquisition cost thereof.

        "Qualified Lender Account" means any fund, money market account,
investment account, or other account managed by a Lender or an Affiliate of such
Lender that is set forth on Schedule Q-1 hereto (or any other such fund or
account consented to in writing by Agent, such consent not to be unreasonably
withheld).

        "Real Property" means any estates or interests in real property now
owned or hereafter acquired by any Borrower and the improvements thereto.

        "Real Property Collateral" means the parcel or parcels of Real Property
identified on Schedule R-1 and any Real Property hereafter acquired by a
Borrower.

        "Record" means information that is inscribed on a tangible medium or
which is stored in an electronic or other medium and is retrievable in
perceivable form.

        "Remedial Action" means all actions taken to (a) clean up, remove,
remediate, contain, treat, monitor, assess, evaluate, or in any way address
Hazardous Materials in the indoor or outdoor environment, (b) prevent or
minimize a release or threatened release of Hazardous Materials so they do not
migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment, (c) perform any pre-remedial studies,
investigations, or post-remedial

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operation and maintenance activities, or (d) conduct any other actions
authorized by 42 USC § 9601.

        "Rent Reserve" means $108,000, which reserve shall be reduced by Agent
as follows: (a) the Rent Reserve shall be reduced by $75,000 if and when
Borrowers deliver to Agent a Collateral Access Agreement with respect to 189 W.
Victoria Street, Long Beach, California 90805; (b) the Rent Reserve shall be
reduced by $30,000 if and when Borrowers deliver to Agent a Collateral Access
Agreement with respect to 1357 East Grand Avenue, Pomona, California 91766; and
(c) the Rent Reserve shall be reduced by $3,000 if and when Borrowers deliver to
Agent a Collateral Access Agreement with respect to 15236 Gravillea Avenue,
Lawndale, California 90260.

        "Replacement Lender" has the meaning set forth in Section 15.2.

        "Report" has the meaning set forth in Section 16.17.

        "Required Availability" means Excess Availability and unrestricted cash
and Cash Equivalents in an amount of not less than $5,000,000.

        "Required Lenders" means, at any time, (a) Agent, and (b) Lenders whose
Pro Rata Shares aggregate 51% of the Total Commitments, or if the Commitments
have been terminated irrevocably, 51% of the Obligations (other than Bank
Product Obligations) then outstanding.

        "Reserve Percentage" means, on any day, for any Lender, the maximum
percentage prescribed by the Board of Governors of the Federal Reserve System
(or any successor Governmental Authority) for determining the reserve
requirements (including any basic, supplemental, marginal, or emergency
reserves) that are in effect on such date with respect to eurocurrency funding
(currently referred to as "eurocurrency liabilities") of that Lender, but so
long as such Lender is not required or directed under applicable regulations to
maintain such reserves, the Reserve Percentage shall be zero.

        "Revolver Commitment" means, with respect to each Lender, its Revolver
Commitment, and, with respect to all Lenders, their Revolver Commitments, in
each case as such Dollar amounts are set forth beside such Lender's name under
the applicable heading on Schedule C-1 or on the signature page of the
Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of Section 14.1.

        "Revolver Usage" means, as of any date of determination, the sum of
(a) the then extant amount of outstanding Advances, plus (b) the then extant
amount of the Letter of Credit Usage.

        "Risk Participation Liability" means, as to each Letter of Credit, all
reimbursement obligations of Borrowers to the Issuing Lender with respect to an
L/C Undertaking, consisting of (a) the amount available to be drawn or which may
become available to be drawn, (b) all amounts that have been paid by the Issuing
Lender to the Underlying Issuer to the extent not reimbursed by Borrowers,
whether by the making of an Advance or otherwise, and (c) all accrued and unpaid
interest, fees, and expenses payable with respect thereto.

        "SEC" means the United States Securities and Exchange Commission and any
successor thereto.

        "Securities Account" means a "securities account" as that term is
defined in the Code.

        "Senior Note Indenture" means that certain indenture dated as of
September 20, 1999, by and between Parent and the Trustee, as such indenture has
been amended from time to time.

        "Senior Note Indenture Documents" means the Senior Notes, the Senior
Note Indenture and all other documents, agreements and exhibits and schedules in
connection therewith.

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        "Senior Notes" means those certain 121/4 Senior Notes issued by Parent
pursuant to the Senior Note Indenture.

        "Settlement" has the meaning set forth in Section 2.3(f)(i).

        "Settlement Date" has the meaning set forth in Section 2.3(f)(i).

        "Solvency Certificate" means a certificate substantially in the form of
Exhibit S-1.

        "Solvent" means, with respect to any Person on a particular date, that
such Person is not insolvent (as such term is defined in the Uniform Fraudulent
Transfer Act).

        "Stock" means all shares, options, warrants, interests, participations,
or other equivalents (regardless of how designated) of or in a Person, whether
voting or nonvoting, including common stock, preferred stock, or any other
"equity security" (as such term is defined in Rule 3a11-1 of the General Rules
and Regulations promulgated by the SEC under the Exchange Act).

        "Stock Pledge Agreement" means a stock pledge agreement, in form and
substance satisfactory to Agent, executed and delivered by Guarantor (with
respect to the Stock of Parent) and each Borrower that owns Stock of a
Subsidiary of Parent.

        "Subline A Advances" has the meaning set forth in Section 2.2(a).

        "Subline A Amount" means the lesser of (i) $10,000,000 and (ii) the sum
of (a) 80% times the Net Equipment Liquidation Value, plus (b) (I) 50% times the
net fair market value (as determined by Agent in its Permitted Discretion) of
Borrowers' Eligible Real Property, minus (II) the Environmental Reserve, plus
(c) the lesser of (I) $5,000,000 and (II) 25% times the fair market value (as
determined by Agent in its Permitted Discretion) of Borrowers' trade names and
trademarks.

        "Subline A Commitment" means, with respect to each Lender, its Subline A
Commitment, and, with respect to all Lenders, their Subline A Commitments, in
each case as such Dollar amounts are set forth beside such Lender's name under
the applicable heading on Schedule C-1 or on the signature page of the
Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of Section 14.1.

        "Subline Advances" means, collectively, the Subline A Advances, the
Subline B Advances and the Subline C Advances.

        "Subline B Advances" has the meaning set forth in Section 2.2(b).

        "Subline B Amount" means $10,000,000.

        "Subline B Commitment" means, with respect to each Lender, its Subline B
Commitment, and, with respect to all Lenders, their Subline B Commitments, in
each case as such Dollar amounts are set forth beside such Lender's name under
the applicable heading on Schedule C-1 or on the signature page of the
Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of Section 14.1.

        "Subline B Maturity Date" means the date that is the earlier to occur of
(x) the third anniversary of the Closing Date and (y) the date of termination of
this Agreement, whether by its terms, by prepayment, or by acceleration.

        "Subline C Advances" has the meaning set forth in Section 2.2(c).

        "Subline C Amount" means the least of (i) $5,000,000, (ii) when taken
together with all other amounts borrowed by Borrowers in connection with Capital
Lease Obligations and Purchase Money Indebtedness, the amount permitted to be
borrowed pursuant to Section 4.09(b)(5) of the Senior Note Indenture and
(iii) 80% times the Eligible Capital Equipment Cost.

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        "Subline C Commitment" means, with respect to each Lender, its Subline C
Commitment, and, with respect to all Lenders, their Subline C Commitments, in
each case as such Dollar amounts are set forth beside such Lender's name under
the applicable heading on Schedule C-1 or on the signature page of the
Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of Section 14.1.

        "Subline Commitments" means, collectively, the Subline A Commitment, the
Subline B Commitment and the Subline C Commitment.

        "Subsidiary" of a Person means a corporation, partnership, limited
liability company, or other entity in which that Person directly or indirectly
owns or controls the shares of Stock having ordinary voting power to elect a
majority of the board of directors (or appoint other comparable managers) of
such corporation, partnership, limited liability company, or other entity.

        "Swing Lender" means Foothill or any other Lender that, at the request
of Administrative Borrower and with the consent of Agent agrees, in such
Lender's sole discretion, to become the Swing Lender hereunder.

        "Swing Loan" has the meaning set forth in Section 2.3(d)(i).

        "Tangible Net Worth" means, as of any date of determination, with
respect to any Borrower, the result of (a) the total stockholder's equity of
such Borrower and its Subsidiaries, minus (b) the sum of (i) all Intangible
Assets of such Borrower and its Subsidiaries, (ii) all of such Borrower's
prepaid expenses, and (iii) all amounts due to such Borrower and its
Subsidiaries from Affiliates.

        "Taxes" has the meaning set forth in Section 16.11(e).

        "Total Commitment" means, with respect to each Lender, its Total
Commitment, and, with respect to all Lenders, their Total Commitments, in each
case as such Dollar amounts are set forth beside such Lender's name under the
applicable heading on Schedule C-1 attached hereto or on the signature page of
the Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of Section 14.1.

        "Trademark Security Agreement" means a trademark security agreement
executed and delivered by each Borrower and Agent, the form and substance of
which is satisfactory to Agent.

        "Trustee" means State Street Bank and Trust Company, as Trustee under
the Senior Note Indenture.

        "Underlying Issuer" means a third Person which is the beneficiary of an
L/C Undertaking and which has issued a letter of credit at the request of the
Issuing Lender for the benefit of Borrowers.

        "Underlying Letter of Credit" means a letter of credit that has been
issued by an Underlying Issuer.

        "Voidable Transfer" has the meaning set forth in Section 17.7.

        "Wells Fargo" means Wells Fargo Bank, National Association, a national
banking association.

        1.2    Accounting Terms.    All accounting terms not specifically
defined herein shall be construed in accordance with GAAP. When used herein, the
term "financial statements" shall include the notes and schedules thereto.
Whenever the term "Borrowers" or the term "Parent" is used in respect of a
financial covenant or a related definition, it shall be understood to mean
Parent and its Subsidiaries on a consolidated basis unless the context clearly
requires otherwise.

        1.3    Code.    Any terms used in this Agreement that are defined in the
Code shall be construed and defined as set forth in the Code unless otherwise
defined herein.

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        1.4    Construction.    Unless the context of this Agreement or any
other Loan Document clearly requires otherwise, references to the plural include
the singular, references to the singular include the plural, the term
"including" is not limiting, and the term "or" has, except where otherwise
indicated, the inclusive meaning represented by the phrase "and/or." The words
"hereof," "herein," "hereby," "hereunder," and similar terms in this Agreement
or any other Loan Document refer to this Agreement or such other Loan Document,
as the case may be, as a whole and not to any particular provision of this
Agreement or such other Loan Document, as the case may be. Section, subsection,
clause, schedule, and exhibit references herein are to this Agreement unless
otherwise specified. Any reference in this Agreement or in the other Loan
Documents to any agreement, instrument, or document shall include all
alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements, thereto and thereof, as
applicable (subject to any restrictions on such alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements set forth herein). Any reference herein to any Person
shall be construed to include such Person's successors and assigns. Any
requirement of a writing contained herein or in the other Loan Documents shall
be satisfied by the transmission of a Record and any Record transmitted shall
constitute a representation and warranty as to the accuracy and completeness of
the information contained therein.

        1.5    Schedules and Exhibits.    All of the schedules and exhibits
attached to this Agreement shall be deemed incorporated herein by reference.

2.    LOAN AND TERMS OF PAYMENT.

        2.1    Revolver Advances.    

        (a)  Subject to Section 2.2(d) and the other terms and conditions of
this Agreement, and during the term of this Agreement, each Lender with a
Revolver Commitment agrees (severally, not jointly or jointly and severally) to
make advances ("Advances") to Borrowers in an amount at any one time outstanding
not to exceed such Lender's Pro Rata Share of an amount equal to the lesser of
(i) the Maximum Revolver Amount less the Letter of Credit Usage less the
aggregate outstanding principal amount of the Subline Advances, or (ii) the
Borrowing Base less the Letter of Credit Usage. For purposes of this Agreement,
"Borrowing Base," as of any date of determination, shall mean the result of:

        (x)  85% of the amount of Eligible Accounts, less the amount, if any, of
the Dilution Reserve, plus

        (y)  the lowest of

        (i)    the sum of the following:

        (A)  68% of the value of Eligible Finished Goods Inventory, plus

        (B)  31% of the value of Eligible Raw Materials Inventory, plus

        (C)  17% of the value of Eligible Work-in-Process Inventory,

        (ii)  90% times the then extant Net Liquidation Percentage times the
cost of Borrowers' Inventory, and

        (iii)  $16,000,000, minus

        (z)  the sum of (i) the Bank Products Reserve, (ii) the Equipment
Reserve, (iii) the Inventory Reserve, (iv) the Rent Reserve and (v) the
aggregate amount of reserves, if any, established by Agent under Section 2.1(b).

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        (b)  Anything to the contrary in this Section 2.1 notwithstanding, Agent
shall have the right to establish reserves in such amounts, and with respect to
such matters, as Agent in its Permitted Discretion shall deem necessary or
appropriate, against the Borrowing Base, including reserves with respect to
(i) sums that Borrowers are required to pay (such as taxes, assessments,
insurance premiums, or, in the case of leased assets, rents or other amounts
payable under such leases) and has failed to pay under any Section of this
Agreement or any other Loan Document, and (ii) amounts owing by Borrowers to any
Person to the extent secured by a Lien on, or trust over, any of the Collateral
(other than any existing Permitted Lien set forth on Schedule P-1 which is
specifically identified thereon as entitled to have priority over the Agent's
Liens), which Lien or trust, in the Permitted Discretion of Agent likely would
have a priority superior to the Agent's Liens (such as Liens or trusts in favor
of landlords, warehousemen, carriers, mechanics, materialmen, laborers, or
suppliers, or Liens or trusts for ad valorem, excise, sales, or other taxes
where given priority under applicable law) in and to such item of the
Collateral. In addition to the foregoing, Agent shall have the right to have the
Inventory reappraised by a qualified appraisal company selected by Agent from
time to time after the Closing Date for the purpose of redetermining the Net
Liquidation Percentage of the Eligible Inventory portion of the Collateral and,
as a result, redetermining the Borrowing Base.

        (c)  The Lenders with Revolver Commitments shall have no obligation to
make additional Advances hereunder to the extent such additional Advances would
cause the Revolver Usage to exceed the Maximum Revolver Amount.

        (d)  Amounts borrowed pursuant to this Section may be repaid and,
subject to the terms and conditions of this Agreement, reborrowed at any time
during the term of this Agreement.

        2.2    Subline Advances.    

        (a)  Subline A Advances.    Subject to Section 2.2(d) and the other
terms and conditions of this Agreement, on the Closing Date, each Lender with a
Subline A Commitment agrees (severally, not jointly or jointly and severally) to
make advances (collectively, "Subline A Advances") to Borrowers in an aggregate
amount equal to such Lender's Pro Rata Share of the Subline A Amount. Each
Subline A Advance shall be repaid in monthly installments, each in an amount
equal to one-sixtieth (1/60th) of such Subline A Advance, plus accrued and
unpaid interest on such amounts, such installments to be due and payable on the
first day of each month commencing on the first day of the fourth month
following the month in which the first Subline A Advance is made and continuing
until and including the date of termination of this Agreement, whether by its
terms, by prepayment, or by acceleration, on which date the unpaid balance of
all outstanding Subline A Advances shall be due and payable in full, together
with all accrued and unpaid interest on such amount. If, at any time, the
principal amount of all outstanding Subline A Advances exceeds the Subline A
Amount, Borrowers immediately shall pay to Agent, in cash, an amount equal to
100% of such excess, plus all accrued and unpaid interest on such amounts.
Borrowers may prepay all or any portion of the outstanding principal amounts of
Subline A Advances at any time, at their option, provided that upon such
prepayment, Borrowers shall also pay accrued interest on the principal so
prepaid to the date of such prepayment. With the prior written consent of Agent
and Highbridge (which consent may be withheld for any reason in Agent's or
Highbridge's sole and absolute discretion), amounts borrowed pursuant to this
Section 2.2(a) may be reborrowed at any time during the term of this Agreement;
otherwise, upon any repayment or prepayment by the Borrowers of Subline A
Advances, each Lender's Subline A Commitment will be reduced in an amount equal
to such Lender's Pro Rata Share of such repayment or prepayment. All Subline A
Advances shall constitute Obligations.

        (b)  Subline B Advances.    Subject to Section 2.2(d) and the other
terms and conditions of this Agreement, on the Closing Date, each Lender with a
Subline B Commitment agrees (severally, not

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jointly or jointly and severally) to make advances (collectively, "Subline B
Advances") to Borrowers in an aggregate amount equal to such Lender's Pro Rata
Share of the Subline B Amount. To the extent not paid in accordance with the
last sentence of this Section 2.2(b), all outstanding Subline B Advances shall
be repaid on the Subline B Maturity Date, on which date the unpaid balance of
all Subline B Advances shall be due and payable in full, together with all
accrued and unpaid interest on such amount. If, at any time, the principal
amount of all outstanding Subline B Advances exceeds the Subline B Amount,
Borrowers immediately shall pay to Agent, in cash, an amount equal to 100% of
such excess, plus all accrued and unpaid interest on such amounts. Subject to
the last two sentences of this Section 2.2(b), Borrowers may prepay all or any
portion of the outstanding principal amounts of Subline B Advances at any time,
at their option, provided that upon such prepayment, Borrowers shall also pay
accrued interest on the principal so prepaid to the date of such prepayment.
With the prior written consent of Agent and Highbridge (which consent may be
withheld for any reason in Agent's or Highbridge's sole and absolute
discretion), amounts borrowed pursuant to this Section 2.2(b) may be reborrowed
at any time during the term of this Agreement; otherwise, upon any repayment or
prepayment by the Borrowers of Subline B Advances, each Lender's Subline B
Commitment will be reduced in an amount equal to such Lender's Pro Rata Share of
such repayment or prepayment. All Subline B Advances shall constitute
Obligations. Notwithstanding anything to the contrary contained in this
Agreement or any other Loan Document, Borrowers shall not prepay, retire,
redeem, purchase, repay, defease or exchange, or make any deposits or
segregation of funds in respect of, any principal in respect of Subline B
Advances at any time unless (A) no Default or Event of Default shall have
occurred and be continuing on the date of such prepayment, retirement,
redemption, purchase, repayment, defeasement, exchange, deposit or segregation,
nor shall a Default or Event of Default result therefrom, and (B) after giving
effect to such prepayment, retirement, redemption, purchase, repayment,
defeasement, exchange, deposit or segregation, Borrower shall have Excess
Availability in an amount that equals or exceeds $5,000,000. Subject to the
preceding sentence, on or prior to the date that is ninety (90) days after the
end of each fiscal year of Parent, Borrowers shall prepay the principal of all
outstanding Subline B Advances in an amount equal to the lesser of (i) the
outstanding principal amount of all Subline B Advances and (ii) 75% of Excess
Cash Flow of Borrowers for the fiscal year then ended.

        (c)  Subline C Advances.    Subject to the terms and conditions of this
Agreement, each Lender with a Subline C Commitment agrees (severally, not
jointly or jointly and severally) to make advances (collectively, "Subline C
Advances") to Borrowers in an aggregate amount equal to such Lender's Pro Rata
Share of the Subline C Amount. Each Subline C Advance shall be repaid in monthly
installments, each in an amount equal to one-sixtieth (1/60th) of such Subline C
Advance, plus accrued and unpaid interest on such amounts, such installments to
be due and payable on the first day of each month commencing on the first day of
the first month following the month in which the first Subline C Advance is made
and continuing until and including the date of termination of this Agreement,
whether by its terms, by prepayment, or by acceleration, on which date the
unpaid balance of all Subline C Advances shall be due and payable in full,
together with all accrued and unpaid interest on such amount. If, at any time,
the principal amount of all outstanding Subline C Advances exceeds the Subline C
Amount, Borrowers immediately shall pay to Agent, in cash, an amount equal to
100% of such excess, plus all accrued and unpaid interest on such amounts.
Borrowers may prepay all or any portion of the outstanding principal amounts of
Subline C Advances at any time, at their option, provided that upon such
prepayment, Borrowers shall also pay accrued interest on the principal so
prepaid to the date of such prepayment. With the prior written consent of Agent
and Highbridge (which consent may be withheld for any reason in Agent's or
Highbridge's sole and absolute discretion), amounts borrowed pursuant to this
Section 2.2(c) may be reborrowed at any time during the term of this Agreement;
otherwise, upon any repayment or prepayment by the Borrowers of Subline C
Advances, each Lender's Subline C

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Commitment will be reduced in an amount equal to such Lender's Pro Rata Share of
such repayment or prepayment. In no event shall any Lender be obligated to make
any advances to any Borrower under this Section 2.2(c) at any time after the
third anniversary of the Closing Date. All Subline C Advances shall constitute
Obligations.

        (d)  Notwithstanding any provision of Section 2.1 or this Section 2.2 to
the contrary, in no event shall any Lender be obligated to make any advances to
any Borrower under Section 2.1(a), 2.2(a) or 2.2(b) if, after giving effect to
such advances, the aggregate amount of all outstanding Advances, Subline A
Advances and Subline B Advances made to the Borrowers under Sections 2.1(a),
2.2(a) and 2.2(b) would exceed the amount permitted under Section 4.09(b)(2) of
the Senior Note Indenture.

        2.3    Borrowing Procedures and Settlements.    

        (a)  Procedure for Borrowing.    Each Borrowing shall be made by an
irrevocable written request by an Authorized Person delivered to Agent (which
notice must be received by Agent no later than 10:00 a.m. (California time) on
the Business Day prior to the date that is the requested Funding Date in the
case of a request for an Advance specifying (i) the amount of such Borrowing,
and (ii) the requested Funding Date, which shall be a Business Day; provided,
however, that in the case of a request for Swing Loan in an amount of
$5,000,000, or less, such notice will be timely received if it is received by
Agent no later than 10:00 a.m. (California time) on the Business Day that is the
requested Funding Date) specifying (i) the amount of such Borrowing, and
(ii) the requested Funding Date, which shall be a Business Day. At Agent's
election, in lieu of delivering the above-described written request, any
Authorized Person may give Agent telephonic notice of such request by the
required time, with such telephonic notice to be confirmed in writing within
24 hours of the giving of such notice.

        (b)  Agent's Election.    Promptly after receipt of a request for a
Borrowing pursuant to Section 2.3(a), Agent shall elect, in its discretion,
(i) to have the terms of Section 2.3(c) apply to such requested Borrowing, or
(ii) if the Borrowing is for an Advance, to request Swing Lender to make a Swing
Loan pursuant to the terms of Section 2.3(d) in the amount of the requested
Borrowing; provided, however, that if Swing Lender declines in its sole
discretion to make a Swing Loan pursuant to Section 2.3(d), Agent shall elect to
have the terms of Section 2.3(c) apply to such requested Borrowing.

        (c)  Making of Advances and Subline Advances.

        (i)    In the event that Agent shall elect to have the terms of this
Section 2.3(c) apply to a requested Borrowing as described in Section 2.3(b),
then promptly after receipt of a request for a Borrowing pursuant to
Section 2.3(a), Agent shall notify the Lenders, not later than 1:00 p.m.
(California time) on the Business Day immediately preceding the Funding Date
applicable thereto, by telecopy, telephone, or other similar form of
transmission, of the requested Borrowing. Each Lender shall make the amount of
such Lender's Pro Rata Share of the requested Borrowing available to Agent in
immediately available funds, to Agent's Account, not later than 10:00 a.m.
(California time) on the Funding Date applicable thereto. After Agent's receipt
of the proceeds of such Advances (or Subline Advances, as applicable), upon
satisfaction of the applicable conditions precedent set forth in Section 3
hereof, Agent shall make the proceeds thereof available to Administrative
Borrower on the applicable Funding Date by transferring immediately available
funds equal to such proceeds received by Agent to Administrative Borrower's
Designated Account; provided, however, that, subject to the provisions of
Section 2.3(i), Agent shall not request any Lender to make, and no Lender shall
have the obligation to make, any Advance (or its portion of a Subline Advance)
if Agent shall have actual knowledge that (1) one or more of the applicable
conditions precedent set forth in Section 3 will not be satisfied on the
requested Funding Date for the applicable

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Borrowing unless such condition has been waived (in accordance with Section 15.1
hereof), or (2) the requested Borrowing would exceed the Availability on such
Funding Date.

        (ii)  Unless Agent receives notice from a Lender on or prior to the
Closing Date or, with respect to any Borrowing after the Closing Date, at least
1 Business Day prior to the date of such Borrowing, that such Lender will not
make available as and when required hereunder to Agent for the account of
Borrowers the amount of that Lender's Pro Rata Share of the Borrowing, Agent may
assume that each Lender has made or will make such amount available to Agent in
immediately available funds on the Funding Date and Agent may (but shall not be
so required), in reliance upon such assumption, make available to Borrowers on
such date a corresponding amount. If and to the extent any Lender shall not have
made its full amount available to Agent in immediately available funds and Agent
in such circumstances has made available to Borrowers such amount, that Lender
shall on the Business Day following such Funding Date make such amount available
to Agent, together with interest at the Defaulting Lender Rate for each day
during such period. A notice submitted by Agent to any Lender with respect to
amounts owing under this subsection shall be conclusive, absent manifest error.
If such amount is so made available, such payment to Agent shall constitute such
Lender's Advance on the date of Borrowing for all purposes of this Agreement. If
such amount is not made available to Agent on the Business Day following the
Funding Date, Agent will notify Administrative Borrower of such failure to fund
and, upon demand by Agent, Borrowers shall pay such amount to Agent for Agent's
account, together with interest thereon for each day elapsed since the date of
such Borrowing, at a rate per annum equal to the interest rate applicable at the
time to the Advances composing such Borrowing. The failure of any Lender to make
any Advance or Subline Advance on any Funding Date shall not relieve any other
Lender of any obligation hereunder to make an Advance or Subline Advance on such
Funding Date, but no Lender shall be responsible for the failure of any other
Lender to make the Advance or Subline Advance to be made by such other Lender on
any Funding Date.

        (iii)  Agent shall not be obligated to transfer to a Defaulting Lender
any payments made by Borrowers to Agent for the Defaulting Lender's benefit,
and, in the absence of such transfer to the Defaulting Lender, Agent shall
transfer any such payments to each other non-Defaulting Lender member of the
Lender Group ratably in accordance with their Commitments (but only to the
extent that such Defaulting Lender's Advance was funded by the other members of
the Lender Group) or, if so directed by Administrative Borrower and if no
Default or Event of Default had occurred and is continuing (and to the extent
such Defaulting Lender's Advance or Subline Advance was not funded by the Lender
Group), retain same to be re-advanced to Borrowers as if such Defaulting Lender
had made Advances or Subline Advances to Borrowers. Subject to the foregoing,
Agent may hold and, in its Permitted Discretion, re-lend to Borrowers for the
account of such Defaulting Lender the amount of all such payments received and
retained by it for the account of such Defaulting Lender. Solely for the
purposes of voting or consenting to matters with respect to the Loan Documents,
such Defaulting Lender shall be deemed not to be a "Lender" and such Lender's
Commitment shall be deemed to be zero. This Section shall remain effective with
respect to such Lender until (x) the Obligations under this Agreement shall have
been declared or shall have become immediately due and payable, (y) the
non-Defaulting Lenders, Agent, and Administrative Borrower shall have waived
such Defaulting Lender's default in writing, or (z) the Defaulting Lender makes
its Pro Rata Share of the applicable Advance or Subline Advance and pays to
Agent all amounts owing by Defaulting Lender in respect thereof. The operation
of this Section shall not be construed to increase or otherwise affect the
Commitment of any Lender, to relieve or excuse the performance by such
Defaulting Lender or any other Lender of its duties and obligations hereunder,
or to relieve or excuse the performance by Borrowers of their duties and
obligations hereunder to Agent or to the

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Lenders other than such Defaulting Lender. Any such failure to fund by any
Defaulting Lender shall constitute a material breach by such Defaulting Lender
of this Agreement and shall entitle Administrative Borrower at its option, upon
written notice to Agent, to arrange for a substitute Lender to assume the
Commitment of such Defaulting Lender, such substitute Lender to be acceptable to
Agent. In connection with the arrangement of such a substitute Lender, the
Defaulting Lender shall have no right to refuse to be replaced hereunder, and
agrees to execute and deliver a completed form of Assignment and Acceptance
Agreement in favor of the substitute Lender (and agrees that it shall be deemed
to have executed and delivered such document if it fails to do so) subject only
to being repaid its share of the outstanding Obligations (other than Bank
Product Obligations) (including an assumption of its Pro Rata Share of the Risk
Participation Liability) without any premium or penalty of any kind whatsoever;
provided further, however, that any such assumption of the Commitment of such
Defaulting Lender shall not be deemed to constitute a waiver of any of the
Lender Groups' or Borrowers' rights or remedies against any such Defaulting
Lender arising out of or in relation to such failure to fund.

        (d)  Making of Swing Loans.

        (i)    In the event Agent shall elect, with the consent of Swing Lender,
as a Lender, to have the terms of this Section 2.3(d) apply to a requested
Borrowing as described in Section 2.3(b), Swing Lender as a Lender shall make
such Advance in the amount of such Borrowing (any such Advance made solely by
Swing Lender as a Lender pursuant to this Section 2.3(d) being referred to as a
"Swing Loan" and such Advances being referred to collectively as "Swing Loans")
available to Borrowers on the Funding Date applicable thereto by transferring
immediately available funds to Administrative Borrower's Designated Account.
Each Swing Loan is an Advance hereunder and shall be subject to all the terms
and conditions applicable to other Advances, except that no such Swing Loan
shall be eligible for the LIBOR Option and all payments on any Swing Loan shall
be payable to Swing Lender as a Lender solely for its own account (and for the
account of the holder of any participation interest with respect to such Swing
Loan). Subject to the provisions of Section 2.3(i), Agent shall not request
Swing Lender as a Lender to make, and Swing Lender as a Lender shall not make,
any Swing Loan if Agent has actual knowledge that (i) one or more of the
applicable conditions precedent set forth in Section 3 will not be satisfied on
the requested Funding Date for the applicable Borrowing unless such condition
has been waived, or (ii) the requested Borrowing would exceed the Availability
on such Funding Date. Swing Lender as a Lender shall not otherwise be required
to determine whether the applicable conditions precedent set forth in Section 3
have been satisfied on the Funding Date applicable thereto prior to making, in
its sole discretion, any Swing Loan.

        (ii)  The Swing Loans shall be secured by the Agent's Liens, shall
constitute Advances and Obligations hereunder, and shall bear interest at the
rate applicable from time to time to Advances that are Base Rate Loans.

        (e)  Agent Advances.

        (i)    Agent hereby is authorized by Borrowers and the Lenders, from
time to time in Agent's sole discretion, (1) after the occurrence and during the
continuance of a Default or an Event of Default, or (2) at any time that any of
the other applicable conditions precedent set forth in Section 3 have not been
satisfied, to make Advances to Borrowers on behalf of the Lenders that Agent, in
its Permitted Discretion deems necessary or desirable (A) to preserve or protect
the Collateral, or any portion thereof, (B) to enhance the likelihood of
repayment of the Obligations (other than the Bank Product Obligations), or
(C) to pay any other amount chargeable to Borrowers pursuant to the terms of
this Agreement, including Lender Group

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Expenses and the costs, fees, and expenses described in Section 10 (any of the
Advances described in this Section 2.3(e) shall be referred to as "Agent
Advances"); provided, however, that, after giving effect to such Agent Advances,
the Revolver Usage does not exceed the Borrowing Base by more than $2,500,000.
Each Agent Advance is an Advance hereunder and shall be subject to all the terms
and conditions applicable to other Advances, except that no such Agent Advance
shall be eligible for the LIBOR Option and all payments thereon shall be payable
to Agent solely for its own account (and for the account of the holder of any
participation interest with respect to such Agent Advance).

        (ii)  The Agent Advances shall be repayable on demand and secured by the
Agent's Liens granted to Agent under the Loan Documents, shall constitute
Advances and Obligations hereunder, and shall bear interest at the rate
applicable from time to time to Advances that are Base Rate Loans.

        (f)    Settlement.    It is agreed that each Lender's funded portion of
the Advances is intended by the Lenders to equal, at all times, such Lender's
Pro Rata Share of the outstanding Advances. Such agreement notwithstanding,
Agent, Swing Lender, and the other Lenders agree (which agreement shall not be
for the benefit of or enforceable by Borrowers) that in order to facilitate the
administration of this Agreement and the other Loan Documents, settlement among
them as to the Advances, the Swing Loans, and the Agent Advances shall take
place on a periodic basis in accordance with the following provisions:

        (i)    Agent shall request settlement ("Settlement") with the Lenders on
a weekly basis, or on a more frequent basis if so determined by Agent, (1) on
behalf of Swing Lender, with respect to each outstanding Swing Loan, (2) for
itself, with respect to each Agent Advance, and (3) with respect to Collections
received, as to each by notifying the Lenders by telecopy, telephone, or other
similar form of transmission, of such requested Settlement, no later than
2:00 p.m. (California time) on the Business Day immediately prior to the date of
such requested Settlement (the date of such requested Settlement being the
"Settlement Date"). Such notice of a Settlement Date shall include a summary
statement of the amount of outstanding Advances, Swing Loans, and Agent Advances
for the period since the prior Settlement Date. Subject to the terms and
conditions contained herein (including Section 2.3(c)(iii)): (y) if a Lender's
balance of the Advances, Swing Loans, and Agent Advances exceeds such Lender's
Pro Rata Share of the Advances, Swing Loans, and Agent Advances as of a
Settlement Date, then Agent shall, by no later than 12:00 p.m. (California time)
on the Settlement Date, transfer in immediately available funds to the account
of such Lender as such Lender may designate, an amount such that each such
Lender shall, upon receipt of such amount, have as of the Settlement Date, its
Pro Rata Share of the Advances, Swing Loans, and Agent Advances, and (z) if a
Lender's balance of the Advances, Swing Loans, and Agent Advances is less than
such Lender's Pro Rata Share of the Advances, Swing Loans, and Agent Advances as
of a Settlement Date, such Lender shall no later than 12:00 p.m. (California
time) on the Settlement Date transfer in immediately available funds to the
Agent's Account, an amount such that each such Lender shall, upon transfer of
such amount, have as of the Settlement Date, its Pro Rata Share of the Advances,
Swing Loans, and Agent Advances. Such amounts made available to Agent under
clause (z) of the immediately preceding sentence shall be applied against the
amounts of the applicable Swing Loan or Agent Advance and, together with the
portion of such Swing Loan or Agent Advance representing Swing Lender's Pro Rata
Share thereof, shall constitute Advances of such Lenders. If any such amount is
not made available to Agent by any Lender on the Settlement Date applicable
thereto to the extent required by the terms hereof, Agent shall be entitled to
recover for its account such amount on demand from such Lender together with
interest thereon at the Defaulting Lender Rate.

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        (ii)  In determining whether a Lender's balance of the Advances, Swing
Loans, and Agent Advances is less than, equal to, or greater than such Lender's
Pro Rata Share of the Advances, Swing Loans, and Agent Advances as of a
Settlement Date, Agent shall, as part of the relevant Settlement, apply to such
balance the portion of payments actually received in good funds by Agent with
respect to principal, interest and fees payable by Borrowers and allocable to
the Lenders hereunder, and proceeds of Collateral. To the extent that a net
amount is owed to any such Lender after such application, such net amount shall
be distributed by Agent to that Lender as part of such next Settlement.

        (iii)  Between Settlement Dates, Agent, to the extent no Agent Advances
or Swing Loans are outstanding, may pay over to Swing Lender any payments
received by Agent, that in accordance with the terms of this Agreement would be
applied to the reduction of the Advances, for application to Swing Lender's Pro
Rata Share of the Advances. If, as of any Settlement Date, Collections received
since the then immediately preceding Settlement Date have been applied to Swing
Lender's Pro Rata Share of the Advances other than to Swing Loans, as provided
for in the previous sentence, Swing Lender shall pay to Agent for the accounts
of the Lenders, and Agent shall pay to the Lenders, to be applied to the
outstanding Advances of such Lenders, an amount such that each Lender shall,
upon receipt of such amount, have, as of such Settlement Date, its Pro Rata
Share of the Advances. During the period between Settlement Dates, Swing Lender
with respect to Swing Loans, Agent with respect to Agent Advances, and each
Lender (subject to the effect, if any, of the Lender Side Letter Agreement and
any other letter agreements between Agent and individual Lenders) with respect
to the Advances other than Swing Loans and Agent Advances, shall be entitled to
interest at the applicable rate or rates payable under this Agreement on the
daily amount of funds employed by Swing Lender, Agent, or the Lenders, as
applicable.

        (g)  Notation.    Agent shall record on its books the principal amount
of the Advances and Subline Advances owing to each Lender, including the Swing
Loans owing to Swing Lender, and Agent Advances owing to Agent, and the
interests therein of each Lender, from time to time. In addition, each Lender is
authorized, at such Lender's option, to note the date and amount of each payment
or prepayment of principal of such Lender's Advances and Subline Advances in its
books and records, including computer records, such books and records
constituting conclusive evidence, absent manifest error, of the accuracy of the
information contained therein.

        (h)  Lenders' Failure to Perform.    All Advances (other than Swing
Loans and Agent Advances) and Subline Advances shall be made by the Lenders
contemporaneously and in accordance with their Pro Rata Shares. It is understood
that (i) no Lender shall be responsible for any failure by any other Lender to
perform its obligation to make any Advance or Subline Advance (or other
extension of credit) hereunder, nor shall any Commitment of any Lender be
increased or decreased as a result of any failure by any other Lender to perform
its obligations hereunder, and (ii) no failure by any Lender to perform its
obligations hereunder shall excuse any other Lender from its obligations
hereunder.

        (i)    Optional Overadvances.

        (i)    Any contrary provision of this Agreement notwithstanding, the
Lenders hereby authorize Agent or Swing Lender, as applicable, and Agent or
Swing Lender, as applicable, may, but is not obligated to, knowingly and
intentionally, continue to make Advances (including Swing Loans) to Borrowers
notwithstanding that an Overadvance exists or thereby would be created, so long
as (i) after giving effect to such Advances (including a Swing Loan), the
Revolver Usage does not exceed the Borrowing Base by more than $2,500,000,
(ii) after giving effect to such Advances (including a Swing Loan) the
outstanding Revolver Usage (except for and excluding amounts charged to the Loan
Account for interest, fees, or Lender Group Expenses) does not exceed the
Maximum Revolver Amount, and (iii) at the time of

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the making of any such Advance (including a Swing Loan), Agent does not believe,
in good faith, that the Overadvance created by such Advance will be outstanding
for more than 90 days. The foregoing provisions are for the exclusive benefit of
Agent, Swing Lender, and the Lenders and are not intended to benefit Borrowers
in any way. The Advances and Swing Loans, as applicable, that are made pursuant
to this Section 2.3(i) shall be subject to the same terms and conditions as any
other Advance or Swing Loan, as applicable, except that they shall not be
eligible for the LIBOR Option and the rate of interest applicable thereto shall
be the rate applicable to Advances that are Base Rate Loans under Section 2.6(c)
hereof without regard to the presence or absence of a Default or Event of
Default.

        (ii)  In the event Agent obtains actual knowledge that the Revolver
Usage exceeds the amounts permitted by the preceding paragraph, regardless of
the amount of, or reason for, such excess, Agent shall notify Lenders as soon as
practicable (and prior to making any (or any additional) intentional
Overadvances (except for and excluding amounts charged to the Loan Account for
interest, fees, or Lender Group Expenses) unless Agent determines that prior
notice would result in imminent harm to the Collateral or its value), and the
Lenders with Revolver Commitments thereupon shall, together with Agent, jointly
determine the terms of arrangements that shall be implemented with Borrowers and
intended to reduce, within a reasonable time, the outstanding principal amount
of the Advances to Borrowers to an amount permitted by the preceding paragraph.
In the event Agent or any Lender disagrees over the terms of reduction or
repayment of any Overadvance, the terms of reduction or repayment thereof shall
be implemented according to the determination of the Required Lenders.

        (iii)  Each Lender with a Revolver Commitment shall be obligated to
settle with Agent as provided in Section 2.3(f) for the amount of such Lender's
Pro Rata Share of any unintentional Overadvances by Agent reported to such
Lender, any intentional Overadvances made as permitted under this
Section 2.3(i), and any Overadvances resulting from the charging to the Loan
Account of interest, fees, or Lender Group Expenses.

        2.4    Payments.    

        (a)  Payments by Borrowers.

        (i)    Except as otherwise expressly provided herein, all payments by
Borrowers shall be made to Agent's Account for the account of the Lender Group
and shall be made in immediately available funds, no later than 11:00 a.m.
(California time) on the date specified herein. Any payment received by Agent
later than 11:00 a.m. (California time), shall be deemed to have been received
on the following Business Day and any applicable interest or fee shall continue
to accrue until such following Business Day.

        (ii)  Unless Agent receives notice from Administrative Borrower prior to
the date on which any payment is due to the Lenders that Borrowers will not make
such payment in full as and when required, Agent may assume that Borrowers have
made (or will make) such payment in full to Agent on such date in immediately
available funds and Agent may (but shall not be so required), in reliance upon
such assumption, distribute to each Lender on such due date an amount equal to
the amount then due such Lender. If and to the extent Borrowers do not make such
payment in full to Agent on the date when due, each Lender severally shall repay
to Agent on demand such amount distributed to such Lender, together with
interest thereon at the Defaulting Lender Rate for each day from the date such
amount is distributed to such Lender until the date repaid.

        (b)  Apportionment and Application.

        (i)    Except as otherwise provided with respect to Defaulting Lenders
and except as otherwise provided in the Loan Documents (including the Lender
Side Letter Agreement and

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any other letter agreements between Agent and individual Lenders), aggregate
principal and interest payments shall be apportioned ratably among the Lenders
(according to the unpaid principal balance of the Obligations to which such
payments relate held by each Lender) and payments of fees and expenses (other
than fees or expenses that are for Agent's separate account, after giving effect
to the Lender Side Letter Agreement and any other letter agreements between
Agent and individual Lenders) shall be apportioned ratably among the Lenders
having a Pro Rata Share of the type of Commitment or Obligation to which a
particular fee relates. All payments shall be remitted to Agent and all such
payments (other than payments received while no Default or Event of Default has
occurred and is continuing and which relate to the payment of principal or
interest of specific Obligations or which relate to the payment of specific
fees), and all proceeds of Accounts or other Collateral received by Agent, shall
be applied as follows:

        A.    first, to pay any Lender Group Expenses then due to Agent under
the Loan Documents, until paid in full,

        B.    second, to pay any Lender Group Expenses then due to the Lenders
under the Loan Documents, on a ratable basis, until paid in full,

        C.    third, to pay any fees then due to Agent (for its separate
accounts, after giving effect to the Lender Side Letter Agreement and any other
letter agreements between Agent and the individual Lenders) under the Loan
Documents, until paid in full,

        D.    fourth, to pay any fees then due to any or all of the Lenders
(after giving effect to the Lender Side Letter Agreement and any other letter
agreements between Agent and individual Lenders) under the Loan Documents, on a
ratable basis, until paid in full,

        E.    fifth, to pay interest due in respect of all Agent Advances, until
paid in full,

        F.    sixth, ratably to pay interest due in respect of the Advances
(other than Agent Advances), the Swing Loans, the Subline A Advances, the
Subline B Advances (other than PIK Interest) and the Subline C Advances, until
paid in full,

        G.    seventh, to pay the principal of all Agent Advances, until paid in
full,

        H.    eighth, to pay the principal of all Swing Loans, until paid in
full,

        I.    ninth, so long as no Event of Default has occurred and is
continuing, and at Agent's election (which election Agent agrees will not be
made if an Overadvance would be created thereby), to pay amounts then due and
owing by Administrative Borrower or its Subsidiaries in respect of Bank
Products, until paid in full,

        J.    tenth, so long as no Event of Default has occurred and is
continuing, ratably (i) to pay the principal of all Advances, until paid in
full, (ii) to pay all principal amounts then due and payable (other than as a
result of an acceleration thereof) with respect to Subline A Advances, until
paid in full, (iii) to pay all principal amounts then due and payable (other
than as a result of an acceleration thereof) with respect to Subline B Advances
(including PIK Interest), until paid in full and (iv) to pay all principal
amounts then due and payable (other than as a result of an acceleration thereof)
with respect to Subline C Advances, until paid in full,

        K.    eleventh, if an Event of Default has occurred and is continuing,
ratably (i) to pay the principal of all Advances, until paid in full, (ii) to
pay the outstanding principal balance of Subline A Advances, in the inverse
order of the maturity of the installments due thereunder, until paid in full,
(iii) to pay the outstanding principal balance of Subline B Advances (including
PIK Interest), in the inverse order of the maturity of the

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installments due thereunder, until paid in full, (iv) to pay the outstanding
principal balance of Subline C Advances, in the inverse order of the maturity of
the installments due thereunder, until paid in full and (v) to Agent, to be held
by Agent, for the benefit of Wells Fargo or its Affiliates, as applicable, as
cash collateral in an amount up to the amount of the Bank Products Reserve
established prior to the occurrence of, and not in contemplation of, the subject
Event of Default until Administrative Borrower's and its Subsidiaries'
obligations in respect of the then extant Bank Products have been paid in full
or the cash collateral amount has been exhausted,

        L.    twelfth, if an Event of Default has occurred and is continuing, to
Agent, to be held by Agent, for the ratable benefit of Issuing Lender and those
Lenders having a Revolver Commitment, as cash collateral in an amount up to 105%
of the then extant Letter of Credit Usage, until paid in full,

        M.  thirteenth, ratably to pay any other Obligations (including Bank
Product Obligations), until paid in full, and

        N.    fourteenth, to Borrowers (to be wired to the Designated Account)
or such other Person entitled thereto under applicable law.

        (ii)  Agent promptly shall distribute to each Lender, pursuant to the
applicable wire instructions received from each Lender in writing, such funds as
it may be entitled to receive, subject to a Settlement delay as provided in
Section 2.3(f).

        (iii)  In each instance, so long as no Default or Event of Default has
occurred and is continuing, Section 2.4(b)(i) shall not be deemed to apply to
any payment by Borrowers specified by Borrowers to be for the payment of
specific Obligations then due and payable (or prepayable) under any provision of
this Agreement.

        (iv)  For purposes of the foregoing, "paid in full" means payment of all
amounts owing under the Loan Documents according to the terms thereof, including
loan fees, service fees, professional fees, interest (and specifically including
interest accrued after the commencement of any Insolvency Proceeding), default
interest, interest on interest, and expense reimbursements, whether or not the
same would be or is allowed or disallowed in whole or in part in any Insolvency
Proceeding.

        (v)  In the event of a direct conflict between the priority provisions
of this Section 2.4 and other provisions contained in any other Loan Document,
it is the intention of the parties hereto that such priority provisions in such
documents shall be read together and construed, to the fullest extent possible,
to be in concert with each other. In the event of any actual, irreconcilable
conflict that cannot be resolved as aforesaid, the terms and provisions of this
Section 2.4 shall control and govern.

        2.5    Overadvances.    If, at any time or for any reason, the amount of
Obligations (other than Bank Product Obligations) owed by Borrowers to the
Lender Group pursuant to Sections 2.1, 2.2 and 2.12 is greater than either the
Dollar or percentage limitations set forth in Sections 2.1, 2.2 or 2.12 (an
"Overadvance"), Borrowers immediately shall pay to Agent, in cash, the amount of
such excess, which amount shall be used by Agent to reduce the Obligations in
accordance with the priorities set forth in Section 2.4(b). In addition,
Borrowers hereby promise to pay the Obligations (including principal, interest,
fees, costs, and expenses) in Dollars in full to the Lender Group as and when
due and payable under the terms of this Agreement and the other Loan Documents.

        2.6    Interest Rates and Letter of Credit Fee: Rates, Payments, and
Calculations.    

        (a)  Interest Rates.    Except as provided in clause (c) below, all
Obligations (except for undrawn Letters of Credit and except for Bank Product
Obligations) that have been charged to the

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Loan Account pursuant to the terms hereof shall bear interest on the Daily
Balance thereof as follows: (i) if the relevant Obligation is an Advance that is
a LIBOR Rate Loan, at a per annum rate equal to the LIBOR Rate plus the LIBOR
Rate Margin, (ii) if the relevant Obligation is a Subline A Advance, at a per
annum rate equal to the Base Rate plus the Base Rate Subline A Margin, (iii) if
the relevant Obligation is a Subline B Advance, at a per annum rate equal to the
Base Rate plus the Base Rate Subline B Margin; provided, however, that so long
as no Event of Default has occurred and is continuing, interest on the Daily
Balance of the Subline B Advances at a per annum rate equal to 3.00% shall, in
the absence of an election by Borrowers to pay such interest in cash, be
paid-in-kind, by being added to the principal balance of the Subline B Amount
(inclusive of any PIK Interest theretofore so added), (iv) if the relevant
Obligation is a Subline C Advance, at a per annum rate equal to the Base Rate
plus the Base Rate Subline C Margin, and (v) otherwise, at a per annum rate
equal to the Base Rate plus the Base Rate Margin.

        The foregoing notwithstanding, at no time shall any portion of the
Subline B Advances bear interest on the Daily Balance thereof at a per annum
rate less than 13.25%. To the extent that interest accrued hereunder at the rate
set forth herein would be less than the foregoing minimum daily rate, the
interest rate chargeable hereunder for such day automatically shall be deemed
increased to the minimum rate.

        (b)  Letter of Credit Fee.    Borrowers shall pay Agent (for the ratable
benefit of the Lenders with a Revolver Commitment, subject to the Lender Side
Letter Agreement and any other letter agreement between Agent and individual
Lenders), a Letter of Credit fee (in addition to the charges, commissions, fees,
and costs set forth in Section 2.12(e)) which shall accrue at a rate equal to
2.75% per annum times the Daily Balance of the undrawn amount of all outstanding
Letters of Credit.

        (c)  Default Rate.    Upon the occurrence and during the continuation of
an Event of Default (and at the election of Agent or the Required Lenders),

        (i)    all Obligations (except for undrawn Letters of Credit and except
for Bank Product Obligations) that have been charged to the Loan Account
pursuant to the terms hereof shall bear interest on the Daily Balance thereof at
a per annum rate equal to 3.00 percentage points above the per annum rate
otherwise applicable hereunder, and

        (ii)  the Letter of Credit fee provided for above shall be increased to
3.00 percentage points above the per annum rate otherwise applicable hereunder.

        (d)  Payment.    Except as provided in Section 2.13(a), interest, Letter
of Credit fees, and all other fees payable hereunder shall be due and payable,
in arrears, on the first day of each month at any time that Obligations or
Commitments are outstanding. Borrowers hereby authorize Agent, from time to
time, without prior notice to Borrowers, to charge such interest and fees, all
Lender Group Expenses (as and when incurred), the charges, commissions, fees,
and costs provided for in Section 2.12(e) (as and when accrued or incurred), the
fees and costs provided for in Section 2.11 (as and when accrued or incurred),
and all other payments as and when due and payable under any Loan Document
(including the installments due and payable with respect to the Subline Advances
and including any amounts due and payable to Wells Fargo or its Affiliates in
respect of Bank Products up to the amount of the then extant Bank Products
Reserve) to Borrowers' Loan Account, which amounts thereafter shall constitute
Advances hereunder and shall accrue interest at the rate then applicable to
Advances hereunder; provided, that, notwithstanding the foregoing, with respect
to interest on a Subline Advance, such amounts thereafter shall constitute the
applicable Subline Advance hereunder and shall accrue interest at the rate then
applicable to such Subline Advance hereunder. Any interest not paid when due
shall be compounded by being charged to Borrowers' Loan Account and shall
thereafter constitute Advances hereunder and shall accrue interest at the rate
then applicable to Advances that are Base Rate Loans hereunder; provided,

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that, notwithstanding the foregoing, with respect to interest on a Subline
Advance, such amounts thereafter shall constitute the applicable Subline Advance
hereunder and shall accrue interest at the rate then applicable to such Subline
Advance hereunder.

        (e)  Computation.    All interest and fees chargeable under the Loan
Documents shall be computed on the basis of a 360-day year for the actual number
of days elapsed. In the event the Base Rate is changed from time to time
hereafter, the rates of interest hereunder based upon the Base Rate
automatically and immediately shall be increased or decreased by an amount equal
to such change in the Base Rate.

        (f)    Intent to Limit Charges to Maximum Lawful Rate.    In no event
shall the interest rate or rates payable under this Agreement, plus any other
amounts paid in connection herewith, exceed the highest rate permissible under
any law that a court of competent jurisdiction shall, in a final determination,
deem applicable. Borrowers and the Lender Group, in executing and delivering
this Agreement, intend legally to agree upon the rate or rates of interest and
manner of payment stated within it; provided, however, that, anything contained
herein to the contrary notwithstanding, if said rate or rates of interest or
manner of payment exceeds the maximum allowable under applicable law, then, ipso
facto, as of the date of this Agreement, Borrowers are and shall be liable only
for the payment of such maximum as allowed by law, and payment received from
Borrowers in excess of such legal maximum, whenever received, shall be applied
to reduce the principal balance of the Obligations to the extent of such excess.

        2.7    Cash Management.    

        (a)  Borrowers shall (i) establish and maintain cash management services
of a type and on terms satisfactory to Agent at one or more of the banks set
forth on Schedule 2.7(a) (each, a "Cash Management Bank"), and shall request in
writing and otherwise take such reasonable steps to ensure that all of its
Account Debtors forward payment of the amounts owed by them directly to such
Cash Management Bank, and (ii) deposit or cause to be deposited promptly, and in
any event no later than the first Business Day after the date of receipt
thereof, all Collections (including those sent directly by Account Debtors to a
Cash Management Bank) into a bank account in Agent's name (a "Cash Management
Account") at one of the Cash Management Banks.

        (b)  Each Cash Management Bank shall establish and maintain Cash
Management Agreements with Agent and Borrowers, in form and substance acceptable
to Agent. Each such Cash Management Agreement shall provide, among other things,
that (i) all items of payment deposited in such Cash Management Account and
proceeds thereof are held by such Cash Management Bank as agent or
bailee-in-possession for Agent, (ii) the Cash Management Bank has no rights of
setoff or recoupment or any other claim against the applicable Cash Management
Account, other than for payment of its service fees and other charges directly
related to the administration of such Cash Management Account and for returned
checks or other items of payment, and (iii) it immediately will forward by daily
sweep all amounts in the applicable Cash Management Account to the Agent's
Account.

        (c)  So long as no Default or Event of Default has occurred and is
continuing, Administrative Borrower may amend Schedule 2.7(a) to add or replace
a Cash Management Account Bank or Cash Management Account; provided, however,
that (i) such prospective Cash Management Bank shall be satisfactory to Agent
and Agent shall have consented in writing in advance to the opening of such Cash
Management Account with the prospective Cash Management Bank, and (ii) prior to
the time of the opening of such Cash Management Account, Borrowers and such
prospective Cash Management Bank shall have executed and delivered to Agent a
Cash Management Agreement. Borrowers shall close any of their Cash Management
Accounts (and establish replacement cash management accounts in accordance with
the foregoing sentence) promptly and in any event within

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30 days of notice from Agent that the creditworthiness of any Cash Management
Bank is no longer acceptable in Agent's reasonable judgment, or as promptly as
practicable and in any event within 60 days of notice from Agent that the
operating performance, funds transfer, or availability procedures or performance
of the Cash Management Bank with respect to Cash Management Accounts or Agent's
liability under any Cash Management Agreement with such Cash Management Bank is
no longer acceptable in Agent's reasonable judgment.

        (d)  The Cash Management Accounts shall be cash collateral accounts,
with all cash, checks and similar items of payment in such accounts securing
payment of the Obligations, and in which Borrowers are hereby deemed to have
granted a Lien to Agent.

        2.8    Crediting Payments; Float Charge.    The receipt of any payment
item by Agent (whether from transfers to Agent by the Cash Management Banks
pursuant to the Cash Management Agreements or otherwise) shall not be considered
a payment on account unless such payment item is a wire transfer of immediately
available federal funds made to the Agent's Account or unless and until such
payment item is honored when presented for payment. Should any payment item not
be honored when presented for payment, then Borrowers shall be deemed not to
have made such payment and interest shall be calculated accordingly. Anything to
the contrary contained herein notwithstanding, any payment item shall be deemed
received by Agent only if it is received into the Agent's Account on a Business
Day on or before 11:00 a.m. (California time). If any payment item is received
into the Agent's Account on a non-Business Day or after 11:00 a.m. (California
time) on a Business Day, it shall be deemed to have been received by Agent as of
the opening of business on the immediately following Business Day. From and
after the Closing Date, Agent shall be entitled to charge Borrowers for one
(1) Business Day of "clearance" or "float" at the rate applicable to Base Rate
Loans under Section 2.6 on all Collections that are received by Borrowers
(regardless of whether forwarded by the Cash Management Banks to Agent). This
across-the-board one (1) Business Day clearance or float charge on all
Collections is acknowledged by the parties to constitute an integral aspect of
the pricing of the financing of Borrowers and shall apply irrespective of
whether or not there are any outstanding monetary Obligations; the effect of
such clearance or float charge being the equivalent of charging one (1) Business
Day of interest on such Collections. The parties acknowledge and agree that the
economic benefit of the foregoing provisions of this Section 2.8 shall be for
the exclusive benefit of Agent.

        2.9    Designated Account.    Agent is authorized to make the Advances
and Subline Advances, and Issuing Lender is authorized to issue the Letters of
Credit, under this Agreement based upon telephonic or other instructions
received from anyone purporting to be an Authorized Person, or without
instructions if pursuant to Section 2.6(d). Administrative Borrower agrees to
establish and maintain the Designated Account with the Designated Account Bank
for the purpose of receiving the proceeds of the Advances and Subline Advances
requested by Borrowers and made by Agent or the Lenders hereunder. Unless
otherwise agreed by Agent and Administrative Borrower, any Advance, Subline
Advance, Agent Advance, or Swing Loan requested by Borrowers and made by Agent
or the Lenders hereunder shall be made to the Designated Account.

        2.10    Maintenance of Loan Account; Statements of Obligations.    Agent
shall maintain an account on its books in the name of Borrowers (the "Loan
Account") on which Borrowers will be charged with all Subline Advances and all
Advances (including Agent Advances and Swing Loans) made by Agent, Swing Lender,
or the Lenders to Borrowers or for Borrowers' account, the Letters of Credit
issued by Issuing Lender for Borrowers' account, and with all other payment
Obligations hereunder or under the other Loan Documents (except for Bank Product
Obligations), including accrued interest, fees and expenses, and Lender Group
Expenses. In accordance with Section 2.8, the Loan Account will be credited with
all payments received by Agent from Borrowers or for Borrowers' account,
including all amounts received in the Agent's Account from any Cash Management
Bank. Agent shall render statements regarding the Loan Account to Administrative
Borrower, including principal, interest, fees, and including an itemization of
all charges and expenses constituting Lender Group Expenses owing,

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and such statements shall be conclusively presumed to be correct and accurate
and constitute an account stated between Borrowers and the Lender Group unless,
within 30 days after receipt thereof by Administrative Borrower, Administrative
Borrower shall deliver to Agent written objection thereto describing the error
or errors contained in any such statements.

        2.11    Fees.    Borrowers shall pay to Agent the following fees and
charges, which fees and charges shall be non-refundable when paid (irrespective
of whether this Agreement is terminated thereafter) and shall be apportioned
among the Lenders in accordance with the terms of the Lender Side Letter
Agreement and any other letter agreements between Agent and individual Lenders:

        (a)  Unused Line Fee.    On the first day of each month during the term
of this Agreement, an unused line fee in the amount equal to 0.375% per annum
times the result of (a) the Maximum Revolver Amount, less (b) the sum of (i) the
average Daily Balance of Advances and Subline Advances that were outstanding
during the immediately preceding month, plus (ii) the average Daily Balance of
the Letter of Credit Usage during the immediately preceding month,

        (b)  Fee Letter Fees.    As and when due and payable under the terms of
the Fee Letter, Borrowers shall pay to Agent the fees set forth in the Fee
Letter, and

        (c)  Audit, Appraisal, and Valuation Charges.    For the separate
account of Agent, audit, appraisal, and valuation fees and charges as follows:
(i) a fee of $850 per day, per auditor, plus out-of-pocket expenses for each
financial audit of a Borrower performed by personnel employed by Agent, (ii) if
implemented, a one time charge of $5,000 plus out-of-pocket expenses for
expenses for the establishment of electronic collateral reporting systems,
(iii) the actual charges paid or incurred by Agent for each appraisal of the
Collateral performed by personnel employed by Agent, and (iv) the actual charges
paid or incurred by Agent if it elects to employ the services of one or more
third Persons to perform financial audits of Borrowers, to appraise the
Collateral, or any portion thereof, or to assess a Borrower's business
valuation; provided, that, notwithstanding the foregoing, so long as no Event of
Default shall have occurred, Borrowers shall not be responsible for the charges
incurred in connection with appraisals of Collateral and assessments of business
valuations to the extent that such appraisals or assessments are done more
frequently than once each calendar year (it being understood and agreed that the
foregoing shall not prohibit in any way Agent from performing, or causing the
performance of, such appraisals or assessments more frequently than once each
calendar year).

        2.12    Letters of Credit    

        (a)  Subject to the terms and conditions of this Agreement, the Issuing
Lender agrees to issue letters of credit for the account of Borrowers (each, an
"L/C") or to purchase participations or execute indemnities or reimbursement
obligations (each such undertaking, an "L/C Undertaking") with respect to
letters of credit issued by an Underlying Issuer (as of the Closing Date, the
prospective Underlying Issuer is to be Wells Fargo) for the account of
Borrowers. To request the issuance of an L/C or an L/C Undertaking (or the
amendment, renewal, or extension of an outstanding L/C or L/C Undertaking),
Administrative Borrower shall hand deliver or telecopy (or transmit by
electronic communication, if arrangements for doing so have been approved by the
Issuing Lender) to the Issuing Lender and Agent (reasonably in advance of the
requested date of issuance, amendment, renewal, or extension) a notice
requesting the issuance of an L/C or L/C Undertaking, or identifying the L/C or
L/C Undertaking to be amended, renewed, or extended, the date of issuance,
amendment, renewal, or extension, the date on which such L/C or L/C Undertaking
is to expire, the amount of such L/C or L/C Undertaking, the name and address of
the beneficiary thereof (or of the Underlying Letter of Credit, as applicable),
and such other information as shall be necessary to prepare, amend, renew, or
extend such L/C or L/C Undertaking. If requested by the Issuing Lender,
Borrowers also shall be an applicant under the application with respect to any
Underlying Letter of Credit that is to be the subject of an L/C

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Undertaking. The Issuing Lender shall have no obligation to issue a Letter of
Credit if any of the following would result after giving effect to the requested
Letter of Credit:

        (i)    the Letter of Credit Usage would exceed the Borrowing Base less
the amount of outstanding Advances and Subline Advances, or

        (ii)  the Letter of Credit Usage would exceed $2,000,000, or

        (iii)  the Letter of Credit Usage would exceed the Maximum Revolver
Amount less the then extant amount of outstanding Advances and Subline Advances.

        Borrowers and the Lender Group acknowledge and agree that certain
Underlying Letters of Credit may be issued to support letters of credit that
already are outstanding as of the Closing Date. Each Letter of Credit (and
corresponding Underlying Letter of Credit) shall be in form and substance
acceptable to the Issuing Lender (in the exercise of its Permitted Discretion),
including the requirement that the amounts payable thereunder must be payable in
Dollars. If Issuing Lender is obligated to advance funds under a Letter of
Credit, Borrowers immediately shall reimburse such L/C Disbursement to Issuing
Lender by paying to Agent an amount equal to such L/C Disbursement not later
than 11:00 a.m., California time, on the date that such L/C Disbursement is
made, if Administrative Borrower shall have received written or telephonic
notice of such L/C Disbursement prior to 10:00 a.m., California time, on such
date, or, if such notice has not been received by Administrative Borrower prior
to such time on such date, then not later than 11:00 a.m., California time, on
(i) the Business Day that Administrative Borrower receives such notice, if such
notice is received prior to 10:00 a.m., California time, on the date of receipt,
or (ii) the Business Day immediately succeeding the Business Day that
Administrative Borrower receives such notice, if such notice is not received
prior to 10:00 a.m., California time, on the date of receipt, and, in the
absence of such reimbursement, the L/C Disbursement immediately and
automatically shall be deemed to be an Advance hereunder and, thereafter, shall
bear interest at the rate then applicable to Advances that are Base Rate Loans
under Section 2.6. To the extent an L/C Disbursement is deemed to be an Advance
hereunder, Borrowers' obligation to reimburse such L/C Disbursement shall be
discharged and replaced by the resulting Advance. Promptly following receipt by
Agent of any payment from Borrowers pursuant to this paragraph, Agent shall
distribute such payment to the Issuing Lender or, to the extent that Lenders
have made payments pursuant to Section 2.12(c) to reimburse the Issuing Lender,
then to such Lenders and the Issuing Lender as their interest may appear.

        (b)  Promptly following receipt of a notice of L/C Disbursement pursuant
to Section 2.12(a), each Lender with a Revolver Commitment agrees to fund its
Pro Rata Share of any Advance deemed made pursuant to the foregoing subsection
on the same terms and conditions as if Borrowers had requested such Advance and
Agent shall promptly pay to Issuing Lender the amounts so received by it from
the Lenders. By the issuance of a Letter of Credit (or an amendment to a Letter
of Credit increasing the amount thereof) and without any further action on the
part of the Issuing Lender or the Lenders with Revolver Commitment, the Issuing
Lender shall be deemed to have granted to each Lender with a Revolver
Commitment, and each Lender with a Revolver Commitment shall be deemed to have
purchased, a participation in each Letter of Credit, in an amount equal to its
Pro Rata Share of the Risk Participation Liability of such Letter of Credit, and
each such Lender agrees to pay to Agent, for the account of the Issuing Lender,
such Lender's Pro Rata Share of any payments made by the Issuing Lender under
such Letter of Credit. In consideration and in furtherance of the foregoing,
each Lender with a Revolver Commitment hereby absolutely and unconditionally
agrees to pay to Agent, for the account of the Issuing Lender, such Lender's Pro
Rata Share of each L/C Disbursement made by the Issuing Lender and not
reimbursed by Borrowers on the date due as provided in clause (a) of this
Section, or of any reimbursement payment required to be refunded to Borrowers
for any reason. Each

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Lender with a Revolver Commitment acknowledges and agrees that its obligation to
deliver to Agent, for the account of the Issuing Lender, an amount equal to its
respective Pro Rata Share pursuant to this Section 2.12(b) shall be absolute and
unconditional and such remittance shall be made notwithstanding the occurrence
or continuation of an Event of Default or Default or the failure to satisfy any
condition set forth in Section 3 hereof. If any such Lender fails to make
available to Agent the amount of such Lender's Pro Rata Share of any payments
made by the Issuing Lender in respect of such Letter of Credit as provided in
this Section, Agent (for the account of the Issuing Lender) shall be entitled to
recover such amount on demand from such Lender together with interest thereon at
the Defaulting Lender Rate until paid in full.

        (c)  Each Borrower hereby agrees to indemnify, save, defend, and hold
the Lender Group harmless from any loss, cost, expense, or liability, and
reasonable attorneys fees incurred by the Lender Group arising out of or in
connection with any Letter of Credit; provided, however, that no Borrower shall
be obligated hereunder to indemnify for any loss, cost, expense, or liability
that is caused by the gross negligence or willful misconduct of the Issuing
Lender or any other member of the Lender Group. Each Borrower agrees to be bound
by the Underlying Issuer's regulations and interpretations of any Underlying
Letter of Credit or by Issuing Lender's interpretations of any L/C issued by
Issuing Lender to or for such Borrower's account, even though this
interpretation may be different from such Borrower's own, and each Borrower
understands and agrees that the Lender Group shall not be liable for any error,
negligence, or mistake, whether of omission or commission, in following
Borrowers' instructions or those contained in the Letter of Credit or any
modifications, amendments, or supplements thereto. Each Borrower understands
that the L/C Undertakings may require Issuing Lender to indemnify the Underlying
Issuer for certain costs or liabilities arising out of claims by Borrowers
against such Underlying Issuer. Each Borrower hereby agrees to indemnify, save,
defend, and hold the Lender Group harmless with respect to any loss, cost,
expense (including reasonable attorneys fees), or liability incurred by the
Lender Group under any L/C Undertaking as a result of the Lender Group's
indemnification of any Underlying Issuer; provided, however, that no Borrower
shall be obligated hereunder to indemnify for any loss, cost, expense, or
liability that is caused by the gross negligence or willful misconduct of the
Issuing Lender or any other member of the Lender Group.

        (d)  Each Borrower hereby authorizes and directs any Underlying Issuer
to deliver to the Issuing Lender all instruments, documents, and other writings
and property received by such Underlying Issuer pursuant to such Underlying
Letter of Credit and to accept and rely upon the Issuing Lender's instructions
with respect to all matters arising in connection with such Underlying Letter of
Credit and the related application.

        (e)  Any and all charges, commissions, fees, and costs incurred by the
Issuing Lender relating to Underlying Letters of Credit shall be Lender Group
Expenses for purposes of this Agreement and immediately shall be reimbursable by
Borrowers to Agent for the account of the Issuing Lender; it being acknowledged
and agreed by each Borrower that, as of the Closing Date, the issuance charge
imposed by the prospective Underlying Issuer is .825% per annum times the face
amount of each Underlying Letter of Credit, that such issuance charge may be
changed from time to time, and that the Underlying Issuer also imposes a
schedule of charges for amendments, extensions, drawings, and renewals.

        (f)    If by reason of (i) any change in any applicable law, treaty,
rule, or regulation or any change in the interpretation or application thereof
by any Governmental Authority, or (ii) compliance by the Underlying Issuer or
the Lender Group with any direction, request, or requirement (irrespective of
whether having the force of law) of any Governmental Authority or

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monetary authority, including Regulation D of the Federal Reserve Board as from
time to time in effect (and any successor thereto):

        (i)    any reserve, deposit, or similar requirement is or shall be
imposed or modified in respect of any Letter of Credit issued hereunder, or

        (ii)  there shall be imposed on the Underlying Issuer or the Lender
Group any other condition regarding any Underlying Letter of Credit or any
Letter of Credit issued pursuant hereto;

and the result of the foregoing is to increase, directly or indirectly, the cost
to the Lender Group of issuing, making, guaranteeing, or maintaining any Letter
of Credit or to reduce the amount receivable in respect thereof by the Lender
Group, then, and in any such case, Agent may, at any time within a reasonable
period after the additional cost is incurred or the amount received is reduced,
notify Administrative Borrower, and Borrowers shall pay on demand such amounts
as Agent may specify to be necessary to compensate the Lender Group for such
additional cost or reduced receipt, together with interest on such amount from
the date of such demand until payment in full thereof at the rate then
applicable to Base Rate Loans hereunder. The determination by Agent of any
amount due pursuant to this Section, as set forth in a certificate setting forth
the calculation thereof in reasonable detail, shall, in the absence of manifest
or demonstrable error, be final and conclusive and binding on all of the parties
hereto.

        2.13    LIBOR Option.    

        (a)  Interest and Interest Payment Dates.    In lieu of having interest
charged at the rate based upon the Base Rate, Borrowers shall have the option
(the "LIBOR Option") to have interest on all or a portion of the Advances be
charged at a rate of interest based upon the LIBOR Rate. Interest on LIBOR Rate
Loans shall be payable on the earliest of (i) the last day of the Interest
Period applicable thereto, (ii) the occurrence of an Event of Default in
consequence of which the Required Lenders or Agent on behalf thereof elect to
accelerate the maturity of all or any portion of the Obligations, or
(iii) termination of this Agreement pursuant to the terms hereof. On the last
day of each applicable Interest Period, unless Administrative Borrower properly
has exercised the LIBOR Option with respect thereto, the interest rate
applicable to such LIBOR Rate Loan automatically shall convert to the rate of
interest then applicable to Base Rate Loans of the same type hereunder. At any
time that an Event of Default has occurred and is continuing, Borrowers no
longer shall have the option to request that Advances bear interest at the LIBOR
Rate and Agent shall have the right to convert the interest rate on all
outstanding LIBOR Rate Loans to the rate then applicable to Base Rate Loans
hereunder.

        (b)  LIBOR Election.

        (i)    Administrative Borrower may, at any time and from time to time,
so long as no Event of Default has occurred and is continuing, elect to exercise
the LIBOR Option by notifying Agent prior to 11:00 a.m. (California time) at
least 3 Business Days prior to the commencement of the proposed Interest Period
(the "LIBOR Deadline"). Notice of Administrative Borrower's election of the
LIBOR Option for a permitted portion of the Advances and an Interest Period
pursuant to this Section shall be made by delivery to Agent of a LIBOR Notice
received by Agent before the LIBOR Deadline, or by telephonic notice received by
Agent before the LIBOR Deadline (to be confirmed by delivery to Agent of a LIBOR
Notice received by Agent prior to 5:00 p.m. (California time) on the same day.
Promptly upon its receipt of each such LIBOR Notice, Agent shall provide a copy
thereof to each of the Lenders having a Revolver Commitment.

        (ii)  Each LIBOR Notice shall be irrevocable and binding on Borrowers.
In connection with each LIBOR Rate Loan, each Borrower shall indemnify, defend,
and hold Agent and the

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Lenders harmless against any loss, cost, or expense incurred by Agent or any
Lender as a result of (a) the payment of any principal of any LIBOR Rate Loan
other than on the last day of an Interest Period applicable thereto (including
as a result of an Event of Default), (b) the conversion of any LIBOR Rate Loan
other than on the last day of the Interest Period applicable thereto, or (c) the
failure to borrow, convert, continue or prepay any LIBOR Rate Loan on the date
specified in any LIBOR Notice delivered pursuant hereto (such losses, costs, and
expenses, collectively, "Funding Losses"). Funding Losses shall, with respect to
Agent or any Lender, be deemed to equal the amount determined by Agent or such
Lender to be the excess, if any, of (i) the amount of interest that would have
accrued on the principal amount of such LIBOR Rate Loan had such event not
occurred, at the LIBOR Rate that would have been applicable thereto, for the
period from the date of such event to the last day of the then current Interest
Period therefor (or, in the case of a failure to borrow, convert or continue,
for the period that would have been the Interest Period therefor), minus
(ii) the amount of interest that would accrue on such principal amount for such
period at the interest rate which Agent or such Lender would be offered were it
to be offered, at the commencement of such period, Dollar deposits of a
comparable amount and period in the London interbank market. A certificate of
Agent or a Lender delivered to Administrative Borrower setting forth any amount
or amounts that Agent or such Lender is entitled to receive pursuant to this
Section shall be conclusive absent manifest error.

        (iii)  Borrowers shall have not more than 5 LIBOR Rate Loans in effect
at any given time. Borrowers only may exercise the LIBOR Option for LIBOR Rate
Loans of at least $1,000,000 and integral multiples of $500,000 in excess
thereof.

        (c)  Prepayments.    Borrowers may prepay LIBOR Rate Loans at any time;
provided, however, that in the event that LIBOR Rate Loans are prepaid on any
date that is not the last day of the Interest Period applicable thereto,
including as a result of any automatic prepayment through the required
application by Agent of proceeds of Collections in accordance with
Section 2.4(b) or for any other reason, including early termination of the term
of this Agreement or acceleration of all or any portion of the Obligations
pursuant to the terms hereof, each Borrower shall indemnify, defend, and hold
Agent and the Lenders and their Participants harmless against any and all
Funding Losses in accordance with clause (b) above.

        (d)  Special Provisions Applicable to LIBOR Rate.

        (i)    The LIBOR Rate may be adjusted by Agent with respect to any
Lender on a prospective basis to take into account any additional or increased
costs to such Lender of maintaining or obtaining any eurodollar deposits or
increased costs due to changes in applicable law occurring subsequent to the
commencement of the then applicable Interest Period, including changes in tax
laws (except changes of general applicability in corporate income tax laws) and
changes in the reserve requirements imposed by the Board of Governors of the
Federal Reserve System (or any successor), excluding the Reserve Percentage,
which additional or increased costs would increase the cost of funding loans
bearing interest at the LIBOR Rate. In any such event, the affected Lender shall
give Administrative Borrower and Agent notice of such a determination and
adjustment and Agent promptly shall transmit the notice to each other Lender
and, upon its receipt of the notice from the affected Lender, Administrative
Borrower may, by notice to such affected Lender (y) require such Lender to
furnish to Administrative Borrower a statement setting forth the basis for
adjusting such LIBOR Rate and the method for determining the amount of such
adjustment, or (z) repay the LIBOR Rate Loans with respect to which such
adjustment is made (together with any amounts due under clause (b)(ii) above).

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        (ii)  In the event that any change in market conditions or any law,
regulation, treaty, or directive, or any change therein or in the interpretation
of application thereof, shall at any time after the date hereof, in the
reasonable opinion of any Lender, make it unlawful or impractical for such
Lender to fund or maintain LIBOR Advances or to continue such funding or
maintaining, or to determine or charge interest rates at the LIBOR Rate, such
Lender shall give notice of such changed circumstances to Agent and
Administrative Borrower and Agent promptly shall transmit the notice to each
other Lender and (y) in the case of any LIBOR Rate Loans of such Lender that are
outstanding, the date specified in such Lender's notice shall be deemed to be
the last day of the Interest Period of such LIBOR Rate Loans, and interest upon
the LIBOR Rate Loans of such Lender thereafter shall accrue interest at the rate
then applicable to Base Rate Loans, and (z) Borrowers shall not be entitled to
elect the LIBOR Option until such Lender determines that it would no longer be
unlawful or impractical to do so.

        (e)  No Requirement of Matched Funding.    Anything to the contrary
contained herein notwithstanding, neither Agent, nor any Lender, nor any of
their Participants, is required actually to acquire eurodollar deposits to fund
or otherwise match fund any Obligation as to which interest accrues at the LIBOR
Rate. The provisions of this Section shall apply as if each Lender or its
Participants had match funded any Obligation as to which interest is accruing at
the LIBOR Rate by acquiring eurodollar deposits for each Interest Period in the
amount of the LIBOR Rate Loans.

        2.14    Capital Requirements.    If, after the date hereof, any Lender
determines that (i) the adoption of or change in any law, rule, regulation or
guideline regarding capital requirements for banks or bank holding companies, or
any change in the interpretation or application thereof by any Governmental
Authority charged with the administration thereof, or (ii) compliance by such
Lender or its parent bank holding company with any guideline, request or
directive of any such entity regarding capital adequacy (whether or not having
the force of law), has the effect of reducing the return on such Lender's or
such holding company's capital as a consequence of such Lender's Commitments
hereunder to a level below that which such Lender or such holding company could
have achieved but for such adoption, change, or compliance (taking into
consideration such Lender's or such holding company's then existing policies
with respect to capital adequacy and assuming the full utilization of such
entity's capital) by any amount deemed by such Lender to be material, then such
Lender may notify Administrative Borrower and Agent thereof within a reasonable
time after such event has occurred. Following receipt of such notice, Borrowers
agree to pay such Lender on demand the amount of such reduction of return of
capital as and when such reduction is determined, payable within 90 days after
presentation by such Lender of a statement in the amount and setting forth in
reasonable detail such Lender's calculation thereof and the assumptions upon
which such calculation was based (which statement shall be deemed true and
correct absent manifest error). In determining such amount, such Lender may use
any reasonable averaging and attribution methods.

        2.15    Joint and Several Liability of Borrowers.    

        (a)  Each Borrower is accepting joint and several liability hereunder
and under the other Loan Documents in consideration of the financial
accommodations to be provided by the Agent and the Lenders under this Agreement,
for the mutual benefit, directly and indirectly, of all Borrowers and in
consideration of the undertakings of the other Borrowers to accept joint and
several liability for the Obligations.

        (b)  Each Borrower, jointly and severally, hereby irrevocably and
unconditionally accepts, not merely as a surety but also as a co-debtor, joint
and several liability with the other Borrowers, with respect to the payment and
performance of all of the Obligations (including, without limitation, any
Obligations arising under this Section 2.15), it being the intention of the
parties hereto that all

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the Obligations shall be the joint and several obligations of each Person
composing Borrowers without preferences or distinction among them.

        (c)  If and to the extent that any Borrower shall fail to make any
payment with respect to any of the Obligations as and when due or to perform any
of the Obligations in accordance with the terms thereof, then in each such event
the other Persons composing Borrowers will make such payment with respect to, or
perform, such Obligation.

        (d)  The Obligations of each Person composing Borrowers under the
provisions of this Section 2.15 constitute the absolute and unconditional, full
recourse Obligations of each Person composing Borrowers enforceable against each
such Borrower to the full extent of its properties and assets, irrespective of
the validity, regularity or enforceability of this Agreement or any other
circumstances whatsoever.

        (e)  Except as otherwise expressly provided in this Agreement, each
Person composing Borrowers hereby waives notice of acceptance of its joint and
several liability, notice of any Advances or Letters of Credit issued under or
pursuant to this Agreement, notice of the occurrence of any Default, Event of
Default, or of any demand for any payment under this Agreement, notice of any
action at any time taken or omitted by Agent or Lenders under or in respect of
any of the Obligations, any requirement of diligence or to mitigate damages and,
generally, to the extent permitted by applicable law, all demands, notices and
other formalities of every kind in connection with this Agreement (except as
otherwise provided in this Agreement). Each Person composing Borrowers hereby
assents to, and waives notice of, any extension or postponement of the time for
the payment of any of the Obligations, the acceptance of any payment of any of
the Obligations, the acceptance of any partial payment thereon, any waiver,
consent or other action or acquiescence by Agent or Lenders at any time or times
in respect of any default by any Person composing Borrowers in the performance
or satisfaction of any term, covenant, condition or provision of this Agreement,
any and all other indulgences whatsoever by Agent or Lenders in respect of any
of the Obligations, and the taking, addition, substitution or release, in whole
or in part, at any time or times, of any security for any of the Obligations or
the addition, substitution or release, in whole or in part, of any Person
composing Borrowers. Without limiting the generality of the foregoing, each
Borrower assents to any other action or delay in acting or failure to act on the
part of any Agent or Lender with respect to the failure by any Person composing
Borrowers to comply with any of its respective Obligations, including, without
limitation, any failure strictly or diligently to assert any right or to pursue
any remedy or to comply fully with applicable laws or regulations thereunder,
which might, but for the provisions of this Section 2.15 afford grounds for
terminating, discharging or relieving any Person composing Borrowers, in whole
or in part, from any of its Obligations under this Section 2.15, it being the
intention of each Person composing Borrowers that, so long as any of the
Obligations hereunder remain unsatisfied, the Obligations of such Person
composing Borrowers under this Section 2.15 shall not be discharged except by
performance and then only to the extent of such performance. The Obligations of
each Person composing Borrowers under this Section 2.15 shall not be diminished
or rendered unenforceable by any winding up, reorganization, arrangement,
liquidation, reconstruction or similar proceeding with respect to any Person
composing Borrowers or any Agent or Lender. The joint and several liability of
the Persons composing Borrowers hereunder shall continue in full force and
effect notwithstanding any absorption, merger, amalgamation or any other change
whatsoever in the name, constitution or place of formation of any of the Persons
composing Borrowers or any Agent or Lender.

        (f)    Each Person composing Borrowers represents and warrants to Agent
and Lenders that such Borrower is currently informed of the financial condition
of Borrowers and of all other circumstances which a diligent inquiry would
reveal and which bear upon the risk of nonpayment of the Obligations. Each
Person composing Borrowers further represents and warrants to Agent

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and Lenders that such Borrower has read and understands the terms and conditions
of the Loan Documents. Each Person composing Borrowers hereby covenants that
such Borrower will continue to keep informed of Borrowers' financial condition,
the financial condition of other guarantors, if any, and of all other
circumstances which bear upon the risk of nonpayment or nonperformance of the
Obligations.

        (g)  Each of the Persons composing Borrowers waives all rights and
defenses arising out of an election of remedies by the Agent or any Lender, even
though that election of remedies, such as a nonjudicial foreclosure with respect
to security for a guaranteed obligation, has destroyed the Agent's or such
Lender's rights of subrogation and reimbursement against such Borrower by the
operation of Section 580(d) of the California Code of Civil Procedure or
otherwise:

        (h)  Each of the Persons composing Borrowers waives all rights and
defenses that such Borrower may have because the Obligations are secured by Real
Property. This means, among other things:

        (i)    Agent and Lenders may collect from such Borrower without first
foreclosing on any Real Property Collateral or Personal Property Collateral
pledged by Borrowers.

        (ii)  If Agent or any Lender forecloses on any Real Property Collateral
pledged by Borrowers:

        A.    The amount of the Obligations may be reduced only by the price for
which that collateral is sold at the foreclosure sale, even if the collateral is
worth more than the sale price.

Agent and Lenders may collect from such Borrower even if Agent or Lenders, by
foreclosing on the Real Property Collateral, has destroyed any right such
Borrower may have to collect from the other Borrowers.

This is an unconditional and irrevocable waiver of any rights and defenses such
Borrower may have because the Obligations are secured by Real Property. These
rights and defenses include, but are not limited to, any rights or defenses
based upon Section 580a, 580b, 580d or 726 of the California Code of Civil
Procedure.

        (i)    The provisions of this Section 2.15 are made for the benefit of
the Agent, the Lenders and their respective successors and assigns, and may be
enforced by it or them from time to time against any or all of the Persons
composing Borrowers as often as occasion therefor may arise and without
requirement on the part of any such Agent, Lender, successor or assign first to
marshal any of its or their claims or to exercise any of its or their rights
against any of the other Persons composing Borrowers or to exhaust any remedies
available to it or them against any of the other Persons composing Borrowers or
to resort to any other source or means of obtaining payment of any of the
Obligations hereunder or to elect any other remedy. The provisions of this
Section 2.15 shall remain in effect until all of the Obligations shall have been
paid in full or otherwise fully satisfied. If at any time, any payment, or any
part thereof, made in respect of any of the Obligations, is rescinded or must
otherwise be restored or returned by any Agent or Lender upon the insolvency,
bankruptcy or reorganization of any of the Persons composing Borrowers, or
otherwise, the provisions of this Section 2.15 will forthwith be reinstated in
effect, as though such payment had not been made.

        (j)    Each of the Persons composing Borrowers hereby agrees that it
will not enforce any of its rights of contribution or subrogation against the
other Persons composing Borrowers with respect to any liability incurred by it
hereunder or under any of the other Loan Documents, any payments made by it to
the Agent or the Lenders with respect to any of the Obligations or any
collateral security therefor until such time as all of the Obligations have been
paid in full in cash. Any claim

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which any Borrower may have against any other Borrower with respect to any
payments to any Agent or Lender hereunder or under any other Loan Documents are
hereby expressly made subordinate and junior in right of payment, without
limitation as to any increases in the Obligations arising hereunder or
thereunder, to the prior payment in full in cash of the Obligations and, in the
event of any insolvency, bankruptcy, receivership, liquidation, reorganization
or other similar proceeding under the laws of any jurisdiction relating to any
Borrower, its debts or its assets, whether voluntary or involuntary, all such
Obligations shall be paid in full in cash before any payment or distribution of
any character, whether in cash, securities or other property, shall be made to
any other Borrower therefor.

        (k)  Each of the Persons composing Borrowers hereby agrees that, after
the occurrence and during the continuance of any Default or Event of Default,
the payment of any amounts due with respect to the indebtedness owing by any
Borrower to any other Borrower is hereby subordinated to the prior payment in
full in cash of the Obligations. Each Borrower hereby agrees that after the
occurrence and during the continuance of any Default or Event of Default, such
Borrower will not demand, sue for or otherwise attempt to collect any
indebtedness of any other Borrower owing to such Borrower until the Obligations
shall have been paid in full in cash. If, notwithstanding the foregoing
sentence, such Borrower shall collect, enforce or receive any amounts in respect
of such indebtedness, such amounts shall be collected, enforced and received by
such Borrower as trustee for the Agent, and the Agent shall deliver any such
amounts to the Administrative Agent for application to the Obligations in
accordance with Section 2.4(b).

3.    CONDITIONS; TERM OF AGREEMENT.

        3.1    Conditions Precedent to the Initial Extension of Credit.    The
obligation of the Lender Group (or any member thereof) to make the initial
Advance or any Subline Advance (or otherwise to extend any credit provided for
hereunder), is subject to the fulfillment, to the satisfaction of Agent, of each
of the conditions precedent set forth below:

        (a)  the Closing Date shall occur on or before July 31, 2002;

        (b)  Agent shall have received all financing statements required by
Agent, duly authorized by the applicable Borrowers, and Agent shall have
received searches reflecting the filing of all such financing statements;

        (c)  Agent shall have received each of the following documents, in form
and substance satisfactory to Agent, duly executed, and each such document shall
be in full force and effect:

        (i)    the Cash Management Agreements,

        (ii)  the Cash Management Side Letter Agreement,

        (iii)  the Control Agreements,

        (iv)  the Copyright Security Agreement,

        (v)  the Disbursement Letter,

        (vi)  the Due Diligence Letter,

        (vii) the Fee Letter,

        (viii) the Guaranty,

        the Intercompany Subordination Agreement,

        (ix)  the Lender Side Letter Agreement,

        (x)  the Mortgages,

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        (xi)  the Officers' Certificate,

        (xii) the Patent Security Agreement,

        (xiii) the Pay-Off Letter, together with UCC termination statements and
other documentation evidencing the termination by Existing Lender of its Liens
in and to the properties and assets of Borrower,

        (xiv) the Stock Pledge Agreement, together with all certificates
representing the shares of Stock pledged thereunder, as well as Stock powers
with respect thereto endorsed in blank, and

        (xv) the Trademark Security Agreement;

        (d)  Agent shall have received a certificate from the Secretary of each
Borrower attesting to the resolutions of such Borrower's board of directors
authorizing its execution, delivery, and performance of this Agreement and the
other Loan Documents to which such Borrower is a party and authorizing specific
officers of such Borrower to execute the same;

        (e)  Agent shall have received copies of each Borrower's Governing
Documents, as amended, modified, or supplemented to the Closing Date, certified
by the Secretary of such Borrower;

        (f)    Agent shall have received a certificate of status with respect to
each Borrower, dated within 10 days of the Closing Date, such certificate to be
issued by the appropriate officer of the jurisdiction of organization of such
Borrower, which certificate shall indicate that such Borrower is in good
standing in such jurisdiction;

        (g)  Agent shall have received certificates of status with respect to
each Borrower, each dated within 30 days of the Closing Date, such certificates
to be issued by the appropriate officer of the jurisdictions (other than the
jurisdiction of organization of such Borrower) in which its failure to be duly
qualified or licensed would constitute a Material Adverse Change, which
certificates shall indicate that such Borrower is in good standing in such
jurisdictions;

        (h)  Agent shall have received a certificate from the Secretary of
Guarantor attesting to the resolutions of Guarantor's board of directors
authorizing its execution, delivery, and performance of the Loan Documents to
which Guarantor is a party and authorizing specific officers of Guarantor to
execute the same;

        (i)    Agent shall have received copies of Guarantor's Governing
Documents, as amended, modified, or supplemented to the Closing Date, certified
by the Secretary of Guarantor;

        (j)    Agent shall have received a certificate of status with respect to
Guarantor, dated within 10 days of the Closing Date, such certificate to be
issued by the appropriate officer of the jurisdiction of organization of
Guarantor, which certificate shall indicate that Guarantor is in good standing
in such jurisdiction;

        (k)  Agent shall have received certificates of status with respect to
Guarantor, each dated within 30 days of the Closing Date, such certificates to
be issued by the appropriate officer of the jurisdictions (other than the
jurisdiction of organization of Guarantor) in which its failure to be duly
qualified or licensed would constitute a Material Adverse Change, which
certificates shall indicate that Guarantor is in good standing in such
jurisdictions;

        (l)    Agent shall have received a certificate of insurance, together
with the endorsements thereto, as are required by Section 6.8, the form and
substance of which shall be satisfactory to Agent;

        (m)  Agent shall have received Collateral Access Agreements with respect
to the following locations: (i) 200 Mitch McConnell Road, Bowling Green,
Kentucky 42101; (ii) 4770 Amer Avenue, Memphis, Tennessee 38118 and (iii) 704
Highway 25S Street, Aberdeen, Mississippi 39730;

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        (n)  Agent shall have received opinions of Borrowers' counsel in form
and substance satisfactory to Agent;

        (o)  Agent shall have received satisfactory evidence (including a
certificate of the chief financial officer of Parent) that all tax returns
required to be filed by Borrowers have been timely filed and all taxes upon
Borrowers or their properties, assets, income, and franchises (including Real
Property taxes and payroll taxes) have been paid prior to delinquency, except
such taxes that are the subject of a Permitted Protest;

        (p)  Borrowers shall have the Required Availability after giving effect
to the initial extensions of credit hereunder;

        (q)  Agent shall have completed its legal due diligence, the results of
which shall be satisfactory to Agent;

        (r)  Agent shall have received completed reference checks with respect
to Borrowers' senior management, the results of which are satisfactory to Agent
in its sole discretion;

        (s)  Agent shall have received satisfactory appraisals of Borrowers'
Inventory and Equipment;

        (t)    Agent shall have received Borrowers' Closing Date Business Plan;

        (u)  Borrowers shall pay all Lender Group Expenses incurred in
connection with the transactions evidenced by this Agreement;

        (v)  Agent shall have received (i) appraisals of the Real Property
Collateral satisfactory to Agent, and (ii) mortgagee title insurance policies
(or marked commitments to issue the same) for the Real Property Collateral
issued by a title insurance company satisfactory to Agent (each a "Mortgage
Policy" and, collectively, the "Mortgage Policies") in amounts satisfactory to
Agent assuring Agent that the Mortgages on such Real Property Collateral are
valid and enforceable first priority mortgage Liens on such Real Property
Collateral free and clear of all defects and encumbrances except Permitted
Liens, and the Mortgage Policies otherwise shall be in form and substance
satisfactory to Agent. In addition, Borrowers shall have paid to said title
insurance company all expenses and premiums of said title insurance company in
connection with the issuance of the Mortgage Policies and in addition shall have
paid to said title insurance company an amount equal to the recording, stamp,
mortgage and/or intangibles taxes payable in connection with the recording of
the Mortgages in the appropriate county recording offices;

        (w)  Agent shall have received an as-built real estate survey of recent
date with respect to each parcel composing the Real Property Collateral; the
surveyors retained for such surveys, the scope of the surveys, and the results
thereof shall be acceptable to Agent;

        (x)  Borrowers shall have received all licenses, approvals or evidence
of other actions required by any Governmental Authority in connection with the
execution and delivery by Borrowers of this Agreement or any other Loan Document
or with the consummation of the transactions contemplated hereby and thereby;

        (y)  Agent shall be satisfied with its legal review of the Senior Note
Indenture Documents to ensure that (i) all Obligations to be incurred pursuant
to this Agreement are permitted by the terms of the Senior Note Indenture
Documents and (ii) Lenders' lien status could not be compromised or challenged
in any way if Parent were to breach the terms of the Senior Note Indenture
Documents;

        (z)  Agent shall have reconciled to its satisfaction the appraised
Equipment with Borrowers' debt schedules and UCC financing statement filings;

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        (aa) Agent shall have verified to its satisfaction the payment history
of Auto Sales, Inc. in order to support the increased concentration request with
respect to Auto Sales, Inc.;

        (bb) Agent shall be satisfied with its visitation of Earl's Supply
Company's Long Beach facility and its review of the Inventory roll forward at
such location;

        (cc) Agent shall have verified to its satisfaction that each Borrower
has paid all due and owing unemployment taxes imposed by Kentucky and Tennessee;

        (dd) Agent shall have received a first priority perfected leasehold
mortgage interest with respect to the Real Property located at 200 Mitch
McConnell Way, Bowling Green, Kentucky;

        (ee) Agent shall have reconciled to its satisfaction Borrowers' most
recent physical inventory to the general ledger;

        (ff)  Agent shall be satisfied with the takeover audit, which shall
include complete cash testing for the prior 120 days, including a cash diagram
and reconciliation of cash collections to bank statements;

        (gg) Agent shall be satisfied that it has a first priority perfected
security interest in all vehicles which are part of the Collateral; and

        (hh) all other documents and legal matters in connection with the
transactions contemplated by this Agreement shall have been delivered, executed,
or recorded and shall be in form and substance satisfactory to Agent.

        3.2    Conditions Subsequent to the Initial Extension of Credit.    The
obligation of the Lender Group (or any member thereof) to continue to make
Advances or Subline Advances (or otherwise extend credit hereunder) is subject
to the fulfillment, on or before the date applicable thereto, of each of the
conditions subsequent set forth below (the failure by Borrowers to so perform or
cause to be performed constituting an Event of Default):

        (a)  within 30 days of the Closing Date, deliver to Agent certified
copies of the policies of insurance, together with the endorsements thereto, as
are required by Section 6.8, the form and substance of which shall be
satisfactory to Agent and its counsel;

        (b)  an Inventory perpetual system shall be implemented at Earl's Supply
Company no later than June 30, 2003;

        (c)  within 60 days after the Closing Date, Agent shall have received
and be satisfied with an appraisal of Borrowers' trade names and trademarks
performed by a valuation firm selected by Agent;

        (d)  within 60 days after the Closing Date, Agent shall have received a
phase-II environmental report with respect to each parcel comprising the Real
Property Collateral, and the environmental consultants, the scope of the report
and the results thereof shall be acceptable to Agent;

        (e)  within 60 days after the Closing Date, Agent shall have received a
reconciliation of the variance in the book to physical inventory performed in
May, 2002;

        (f)    within 10 days after the Closing Date, Administrative Borrower
shall have delivered to Agent certificates representing all of the shares of
common stock of Parent, Holley Performance Systems, Inc., a Delaware
corporation, Weiand Automotive Industries, Inc., a California corporation,
Lunati Cams, Inc., a Tennessee corporation, Hooker Industries, Inc., a
California corporation, So-Cal Speed Shops, Inc., a Delaware corporation and
EfastParts.com, Inc., a Delaware corporation; and

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        (g)  within 90 days after the Closing Date, Administrative Borrower
shall have delivered to Agent Collateral Access Agreements with respect to the
following locations: (a) 189 W. Victoria Street, Long Beach, California 90805,
(b) 15236 Gravillea Avenue, Lawndale, California 90260 and (c) 1357 East Grand
Avenue, Pomona, California 91766.

        3.3    Conditions Precedent to all Extensions of Credit.    The
obligation of the Lender Group (or any member thereof) to make all Advances or
Subline Advances (or to extend any other credit hereunder) shall be subject to
the following conditions precedent:

        (a)  the representations and warranties contained in this Agreement and
the other Loan Documents shall be true and correct in all material respects on
and as of the date of such extension of credit, as though made on and as of such
date (except to the extent that such representations and warranties relate
solely to an earlier date);

        (b)  no Default or Event of Default shall have occurred and be
continuing on the date of such extension of credit, nor shall either result from
the making thereof;

        (c)  no injunction, writ, restraining order, or other order of any
nature prohibiting, directly or indirectly, the extending of such credit shall
have been issued and remain in force by any Governmental Authority against any
Borrower, Agent, any Lender, or any of their Affiliates;

        (d)  no Material Adverse Change shall have occurred;

        (e)  Agent shall have received a Solvency Certificate from the Chief
Financial Officer of the applicable Borrower certifying that such Borrower is
Solvent and has positive Tangible Net Worth as of the date of any such Advance,
Subline Advance or other extension of credit;

        (f)    Agent shall have received satisfactory evidence (including a
certificate from Parent) that the making of such Advance or Subline Advance (or
other extension of credit hereunder) does not violate Section 4.09 of the Senior
Note Indenture; and

        (g)  with respect to each Subline C Advance:

        (i)    Agent shall have received satisfactory evidence that (A) such
Subline C Advance is to be used by the Borrowers to finance the purchase of
Equipment and (B) the Equipment to be purchased with the proceeds of such
Subline C Advance will not be subject to any purchase money Liens;

        (ii)  Agent shall have received, and be satisfied with (in its Permitted
Discretion), true and complete copies of all documentation relating to the
purchase of the Equipment to be financed with the proceeds of such Subline C
Advance; and

        (iii)  any documents (including, without limitation, financing
statements) required to be filed in order to create, in favor of Agent, a first
priority fully perfected security interest in the Equipment to be purchased with
the proceeds of such Subline C Advance shall have been properly filed in each
office in each jurisdiction necessary to create in favor of Agent a first
priority fully perfected security interest in such Equipment.

        3.4    Term.    This Agreement shall continue in full force and effect
for a term ending on the date that is the fifth anniversary of the Closing Date
(the "Maturity Date"). The foregoing notwithstanding, the Lender Group, upon the
election of the Required Lenders, shall have the right to terminate its
obligations under this Agreement immediately and without notice upon the
occurrence and during the continuation of an Event of Default.

        3.5    Effect of Termination.    On the date of termination of this
Agreement, all Obligations (including contingent reimbursement obligations of
Borrowers with respect to any outstanding Letters of Credit and including all
Bank Products Obligations) immediately shall become due and payable

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without notice or demand (including (a) either (i) providing cash collateral to
be held by Agent for the benefit of those Lenders with a Revolver Commitment in
an amount equal to 105% of the then extant Letter of Credit Usage, or
(ii) causing the original Letters of Credit to be returned to the Issuing
Lender, and (b) providing cash collateral to be held by Agent for the benefit of
Wells Fargo or its Affiliates with respect to the then extant Bank Products
Obligations). No termination of this Agreement, however, shall relieve or
discharge Borrowers of their duties, Obligations, or covenants hereunder and the
Agent's Liens in the Collateral shall remain in effect until all Obligations
have been fully and finally discharged (or, with respect to outstanding Letters
of Credit or Bank Product Obligations, such Obligations have been collateralized
as provided in the second parenthetical of the preceding sentence) and the
Lender Group's obligations to provide additional credit hereunder have been
terminated. When this Agreement has been terminated and all of the Obligations
have been fully and finally discharged and the Lender Group's obligations to
provide additional credit under the Loan Documents have been terminated
irrevocably, Agent will, at Borrowers' sole expense, execute and deliver any UCC
termination statements, lien releases, mortgage releases, re-assignments of
trademarks, discharges of security interests, and other similar discharge or
release documents (and, if applicable, in recordable form) as are reasonably
necessary to release, as of record, the Agent's Liens and all notices of
security interests and liens previously filed by Agent with respect to the
Obligations.

        3.6    Early Termination by Borrowers.    Borrowers have the option, at
any time upon 90 days prior written notice by Administrative Borrower to Agent,
to terminate this Agreement by paying to Agent, for the benefit of the Lender
Group, in cash, the Obligations (including (a) either (i) providing cash
collateral to be held by Agent for the benefit of those Lenders with a Revolver
Commitment in an amount equal to 105% of the then extant Letter of Credit Usage,
or (ii) causing the original Letters of Credit to be returned to the Issuing
Lender, and (b) providing cash collateral to be held by Agent for the benefit of
Wells Fargo or its Affiliates with respect to the then extant Bank Products
Obligations), in full, together with the Applicable Prepayment Premium (to be
allocated based upon the Lender Side Letter Agreement and any other letter
agreements between Agent and individual Lenders). If Administrative Borrower has
sent a notice of termination pursuant to the provisions of this Section, then
the Commitments shall terminate and Borrowers shall be obligated to repay the
Obligations (including (a) either (i) providing cash collateral to be held by
Agent for the benefit of those Lenders with a Revolver Commitment in an amount
equal to 105% of the then extant Letter of Credit Usage, or (ii) causing the
original Letters of Credit to be returned to the Issuing Lender, and
(b) providing cash collateral to be held by Agent for the benefit of Wells Fargo
or its Affiliates with respect to the then extant Bank Products Obligations), in
full, together with the Applicable Prepayment Premium, on the date set forth as
the date of termination of this Agreement in such notice. In the event of the
termination of this Agreement and repayment of the Obligations at any time prior
to the Maturity Date, for any other reason, including (a) termination upon the
election of the Required Lenders to terminate after the occurrence of an Event
of Default, (b) foreclosure and sale of Collateral, (c) sale of the Collateral
in any Insolvency Proceeding, or (iv) restructure, reorganization or compromise
of the Obligations by the confirmation of a plan of reorganization, or any other
plan of compromise, restructure, or arrangement in any Insolvency Proceeding,
then, in view of the impracticability and extreme difficulty of ascertaining the
actual amount of damages to the Lender Group or profits lost by the Lender Group
as a result of such early termination, and by mutual agreement of the parties as
to a reasonable estimation and calculation of the lost profits or damages of the
Lender Group, Borrowers shall pay the Applicable Prepayment Premium to Agent (to
be allocated based upon the Lender Side Letter Agreement and any other letter
agreements between Agent and individual Lenders), measured as of the date of
such termination.

4.    CREATION OF SECURITY INTEREST.

        4.1    Grant of Security Interest.    Each Borrower hereby grants to
Agent, for the benefit of the Lender Group and (with respect to Bank Product
Obligations) Wells Fargo and its Affiliates, a

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continuing security interest in all of its right, title, and interest in all
currently existing and hereafter acquired or arising Personal Property
Collateral in order to secure prompt repayment of any and all of the Obligations
in accordance with the terms and conditions of the Loan Documents and in order
to secure prompt performance by Borrowers of each of their covenants and duties
under the Loan Documents. The Agent's Liens in and to the Personal Property
Collateral shall attach to all Personal Property Collateral without further act
on the part of Agent or Borrowers. Anything contained in this Agreement or any
other Loan Document to the contrary notwithstanding, except for Permitted
Dispositions, Borrowers have no authority, express or implied, to dispose of any
item or portion of the Collateral.

        4.2    Negotiable Collateral.    In the event that any Collateral,
including proceeds, is evidenced by or consists of Negotiable Collateral, and if
and to the extent that perfection or priority of Agent's security interest is
dependent on or enhanced by possession, the applicable Borrower, immediately
upon the request of Agent, shall endorse and deliver physical possession of such
Negotiable Collateral to Agent.

        4.3    Collection of Accounts, General Intangibles, and Negotiable
Collateral.    At any time after the occurrence and during the continuation of
an Event of Default, Agent or Agent's designee may (a) notify Account Debtors of
Borrowers that the Accounts, chattel paper, or General Intangibles have been
assigned to Agent or that Agent has a security interest therein, or (b) collect
the Accounts, chattel paper, or General Intangibles directly and charge the
collection costs and expenses to the Loan Account. Each Borrower agrees that it
will hold in trust for the Lender Group, as the Lender Group's trustee, any
Collections that it receives and immediately will deliver said Collections to
Agent or a Cash Management Bank in their original form as received by the
applicable Borrower.

        4.4    Delivery of Additional Documentation Required.    At any time
upon the request of Agent, Borrowers shall execute and deliver to Agent, any and
all financing statements, original financing statements in lieu of continuation
statements, fixture filings, security agreements, pledges, mortgages, surveys,
assignments, endorsements of certificates of title, and all other documents (the
"Additional Documents") that Agent may request in its Permitted Discretion, in
form and substance satisfactory to Agent, to perfect and continue perfected or
better perfect the Agent's Liens in the Collateral (whether now owned or
hereafter arising or acquired), to create and perfect Liens in favor of Agent in
any Real Property acquired after the Closing Date, and in order to fully
consummate all of the transactions contemplated hereby and under the other Loan
Documents. To the maximum extent permitted by applicable law, each Borrower
authorizes Agent to execute any such Additional Documents in the applicable
Borrower's name and authorize Agent to file such executed Additional Documents
in any appropriate filing office. In addition, on such periodic basis as Agent
shall require, Borrowers shall (a) provide Agent with a report of all new
patentable, copyrightable, or trademarkable materials acquired or generated by
Borrowers during the prior period, (b) cause all patents, copyrights, and
trademarks acquired or generated by Borrowers that are not already the subject
of a registration with the appropriate filing office (or an application therefor
diligently prosecuted) to be registered with such appropriate filing office in a
manner sufficient to impart constructive notice of Borrowers' ownership thereof,
and (c) cause to be prepared, executed, and delivered to Agent supplemental
schedules to the applicable Loan Documents to identify such patents, copyrights,
and trademarks as being subject to the security interests created thereunder.

        4.5    Power of Attorney.    Each Borrower hereby irrevocably makes,
constitutes, and appoints Agent (and any of Agent's officers, employees, or
agents designated by Agent) as such Borrower's true and lawful attorney, with
power to (a) if such Borrower refuses to, or fails timely to execute and deliver
any of the documents described in Section 4.4, sign the name of such Borrower on
any of the documents described in Section 4.4, (b) at any time that an Event of
Default has occurred and is continuing, sign such Borrower's name on any invoice
or bill of lading relating to the Collateral, drafts against Account Debtors, or
notices to Account Debtors, (c) send requests for verification of Accounts,
(d) endorse such Borrower's name on any Collection item that may come into the
Lender Group's possession,

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(e) at any time that an Event of Default has occurred and is continuing, make,
settle, and adjust all claims under such Borrower's policies of insurance and
make all determinations and decisions with respect to such policies of
insurance, and (f) at any time that an Event of Default has occurred and is
continuing, settle and adjust disputes and claims respecting the Accounts,
chattel paper, or General Intangibles directly with Account Debtors, for amounts
and upon terms that Agent determines to be reasonable, and Agent may cause to be
executed and delivered any documents and releases that Agent determines to be
necessary. The appointment of Agent as each Borrower's attorney, and each and
every one of its rights and powers, being coupled with an interest, is
irrevocable until all of the Obligations have been fully and finally repaid and
performed and the Lender Group's obligations to extend credit hereunder are
terminated.

        4.6    Right to Inspect.    Agent and each Lender (through any of their
respective officers, employees, or agents) shall have the right, from time to
time hereafter (during normal business hours or, after the occurrence and
continuance of an Event of Default, at any time) to inspect the Books and to
check, test, and appraise the Collateral in order to verify Borrowers' financial
condition or the amount, quality, value, condition of, or any other matter
relating to, the Collateral.

        4.7    Control Agreements.    Each Borrower agrees that it will not
transfer assets out of any Securities Accounts other than as permitted under
Section 7.19 and, if to another securities intermediary, unless each of the
applicable Borrower, Agent, and the substitute securities intermediary have
entered into a Control Agreement. No arrangement contemplated hereby or by any
Control Agreement in respect of any Securities Accounts or other Investment
Property shall be modified by Borrowers without the prior written consent of
Agent. Upon the occurrence and during the continuance of a Default or Event of
Default, Agent may notify any securities intermediary to liquidate the
applicable Securities Account or any related Investment Property maintained or
held thereby and remit the proceeds thereof to the Agent's Account.

5.    REPRESENTATIONS AND WARRANTIES.

        In order to induce the Lender Group to enter into this Agreement, each
Borrower makes the following representations and warranties to the Lender Group
which shall be true, correct, and complete, in all material respects, as of the
date hereof, and shall be true, correct, and complete, in all material respects,
as of the Closing Date, and at and as of the date of the making of each Advance
or Subline Advance (or other extension of credit) made thereafter, as though
made on and as of the date of such Advance or Subline Advance (or other
extension of credit) (except to the extent that such representations and
warranties relate solely to an earlier date) and such representations and
warranties shall survive the execution and delivery of this Agreement:

        5.1    No Encumbrances.    Each Borrower has good and indefeasible title
to its Collateral and the Real Property, free and clear of Liens except for
Permitted Liens.

        5.2    Eligible Accounts.    As of the date of each borrowing base
report submitted to Agent, the Eligible Accounts described therein are bona fide
existing payment obligations of Account Debtors created by the sale and delivery
of Inventory or the rendition of services to such Account Debtors in the
ordinary course of Borrowers' business, owed to Borrowers without defenses,
disputes, offsets, counterclaims, or rights of return or cancellation, except as
disclosed on the applicable borrowing base report. As to each Account that is
identified by Administrative Borrower as an Eligible Account in a borrowing base
report submitted to Agent, such Account is not excluded as ineligible by virtue
of one or more of the excluding criteria set forth in the definition of Eligible
Accounts.

        5.3    Eligible Inventory.    (a)    All Eligible Finished Goods
Inventory is of good and merchantable quality, free from defects (the
determination of defects to be made when identified and reported through
Borrowers' normal and ordinary manufacturing process). As to each item of
Inventory that is identified by Administrative Borrower as Eligible Finished
Goods Inventory in a borrowing base report

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submitted to Agent, at the time such report is delivered to Agent, such
Inventory is not excluded as ineligible by virtue of one or more of the
excluding criteria set forth in the definition of Eligible Finished Goods
Inventory.

        (b)  As of the date of each borrowing base report submitted to Agent,
all Eligible Raw Materials Inventory described therein is of good and
merchantable quality and, to Borrowers' knowledge, free from defects (the
determination of defects to be made when identified and reported through
Borrowers' normal and ordinary manufacturing process). As to each item of
Inventory that is identified by Administrative Borrower as Eligible Raw
Materials Inventory in a borrowing base report submitted to Agent, at the time
such report is delivered to Agent, such Inventory is not excluded as ineligible
by virtue of one or more of the excluding criteria set forth in the definition
of Eligible Raw Materials Inventory.

        (c)  As of the date of each borrowing base report submitted to Agent,
all Eligible Work-in-Process Inventory described therein is of good and
merchantable quality and, to Borrowers' knowledge, free from defects (the
determination of defects to be made when identified and reported through
Borrowers' normal and ordinary manufacturing process). As to each item of
Inventory that is identified by Administrative Borrower as Eligible
Work-in-Process Inventory in a borrowing base report submitted to Agent, at the
time such report is delivered to Agent, such Inventory is not excluded as
ineligible by virtue of one or more of the excluding criteria set forth in the
definition of Eligible Work-in-Process Inventory.

        5.4    Equipment.    All of the Equipment (other than obsolete or worn
out Equipment) is used or held for use in Borrowers' business and is fit for
such purposes.

        5.5    Location of Inventory and Equipment.    Except as set forth on
Schedule 5.5(a), the Inventory and Equipment are not stored with a bailee,
warehouseman, or similar party, and such Inventory and Equipment are located
only at the locations identified on Schedule 5.5(b) (as may be amended in
accordance with Section 6.9). Borrowers have no Collateral (including Real
Property Collateral) or any other assets or properties having a fair market
value (as determined by Agent) in excess of $22,000,000 in the aggregate at any
one time in the State of Tennessee; provided, however, that Borrowers may keep
Collateral or any other assets or properties having a fair market value (as
determined by Agent) in excess of $22,000,000 in the aggregate at any one time
in the State of Tennessee if (i) Borrowers execute any necessary financing
statements and pay any necessary filing fees to the State of Tennessee or any
county within the State of Tennessee in connection with the perfection of
security interests granted to Agent hereunder or under any of the other Loan
Documents, for the benefit of the Lender Group, and (ii) from time to time at
and after the Closing Date, Borrowers will execute all such instruments and take
all such actions as the Agent or any Lender shall reasonably request, in
connection with the carrying out, protection of and effectuating of the security
interests granted to Agent hereunder or under any of the other Loan Documents.

        5.6    Inventory Records.    Each Borrower keeps correct and accurate
records itemizing and describing the type, quality, and quantity of its
Inventory and the book value thereof.

        5.7    Location of Chief Executive Office; FEIN.    The chief executive
office of each Borrower is located at the address indicated in Schedule 5.7 and
each Borrower's FEIN is identified in Schedule 5.7.

        5.8    Due Organization and Qualification; Subsidiaries    

        (a)  Each Borrower is duly organized and existing and in good standing
under the laws of the jurisdiction of its organization and qualified to do
business in any state where the failure to be so qualified reasonably could be
expected to have a Material Adverse Change.

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        (b)  Set forth on Schedule 5.8(b) is a complete and accurate description
of the authorized capital Stock of each Borrower, by class, and, as of the
Closing Date, a description of the number of shares of each such class that are
issued and outstanding. Other than as described on Schedule 5.8(b), there are no
subscriptions, options, warrants, or calls relating to any shares of each
Borrower's capital Stock, including any right of conversion or exchange under
any outstanding security or other instrument. No Borrower is subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of its capital Stock or any security convertible into or
exchangeable for any of its capital Stock.

        (c)  Set forth on Schedule 5.8(c) is a complete and accurate list of
each Borrower's direct and indirect Subsidiaries, showing: (i) the jurisdiction
of their organization; (ii) the number of shares of each class of common and
preferred Stock authorized for each of such Subsidiaries; and (iii) the number
and the percentage of the outstanding shares of each such class owned directly
or indirectly by the applicable Borrower. All of the outstanding capital Stock
of each such Subsidiary has been validly issued and is fully paid and
non-assessable.

        (d)  Except as set forth on Schedule 5.8(c), there are no subscriptions,
options, warrants, or calls relating to any shares of any Borrower's
Subsidiaries' capital Stock, including any right of conversion or exchange under
any outstanding security or other instrument. No Borrower or any of its
respective Subsidiaries is subject to any obligation (contingent or otherwise)
to repurchase or otherwise acquire or retire any shares of any Borrower's
Subsidiaries' capital Stock or any security convertible into or exchangeable for
any such capital Stock.

        5.9    Due Authorization; No Conflict.    

        (a)  As to each Borrower, the execution, delivery, and performance by
such Borrower of this Agreement and the Loan Documents to which it is a party
have been duly authorized by all necessary action on the part of such Borrower.

        (b)  As to each Borrower, the execution, delivery, and performance by
such Borrower of this Agreement and the Loan Documents to which it is a party do
not and will not (i) violate any provision of federal, state, or local law or
regulation applicable to any Borrower, the Governing Documents of any Borrower,
or any order, judgment, or decree of any court or other Governmental Authority
binding on any Borrower, (ii) conflict with, result in a breach of, or
constitute (with due notice or lapse of time or both) a default under any
material contractual obligation of any Borrower, including Section 4.09 of the
Senior Note Indenture, (iii) result in or require the creation or imposition of
any Lien of any nature whatsoever upon any properties or assets of any Borrower,
other than Permitted Liens, or (iv) require any approval of any Borrower's
stockholders or any approval or consent of any Person under any material
contractual obligation of any Borrower.

        (c)  Other than the filing of financing statements, fixture filings,
Mortgages and filings with the U.S. Patent and Trademark Office, the execution,
delivery, and performance by each Borrower of this Agreement and the Loan
Documents to which such Borrower is a party do not and will not require any
registration with, consent, or approval of, or notice to, or other action with
or by, any Governmental Authority or other Person.

        (d)  As to each Borrower, this Agreement and the other Loan Documents to
which such Borrower is a party, and all other documents contemplated hereby and
thereby, when executed and delivered by such Borrower will be the legally valid
and binding obligations of such Borrower, enforceable against such Borrower in
accordance with their respective terms, except as enforcement may be limited by
equitable principles or by bankruptcy, insolvency, reorganization, moratorium,
or similar laws relating to or limiting creditors' rights generally.

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        (e)  The Agent's Liens are validly created and will, upon perfection and
termination of Liens described in the Pay-Off Letter, constitute first priority
Liens, subject only to Permitted Liens.

        (f)    The execution, delivery, and performance by Guarantor of the Loan
Documents to which it is a party have been duly authorized by all necessary
action on the part of Guarantor.

        (g)  The execution, delivery, and performance by Guarantor of the Loan
Documents to which it is a party do not and will not (i) violate any provision
of federal, state, or local law or regulation applicable to Guarantor, the
Governing Documents of Guarantor, or any order, judgment, or decree of any court
or other Governmental Authority binding on Guarantor, (ii) conflict with, result
in a breach of, or constitute (with due notice or lapse of time or both) a
default under any material contractual obligation of Guarantor, (iii) result in
or require the creation or imposition of any Lien of any nature whatsoever upon
any properties or assets of Guarantor, other than Permitted Liens, or
(iv) require any approval of Guarantor's stockholders or any approval or consent
of any Person under any material contractual obligation of Guarantor.

        (h)  The execution, delivery, and performance by Guarantor of the Loan
Documents to which Guarantor is a party do not and will not require any
registration with, consent, or approval of, or notice to, or other action with
or by, any Governmental Authority or other Person.

        (i)    The Loan Documents to which Guarantor is a party, and all other
documents contemplated hereby and thereby, when executed and delivered by
Guarantor will be legally valid and binding obligations of Guarantor,
enforceable against Guarantor in accordance with their respective terms, except
as enforcement may be limited by equitable principles or by bankruptcy,
insolvency, reorganization, moratorium, or similar laws relating to or limiting
creditors' rights generally.

        5.10    Litigation.    Other than those matters disclosed on
Schedule 5.10, there are no actions, suits, or proceedings pending or, to the
best knowledge of Borrowers, threatened against Borrowers, or any of their
Subsidiaries, as applicable, except for (a) matters that are fully covered by
insurance (subject to customary deductibles), and (b) matters arising after the
Closing Date that, if decided adversely to Borrowers, or any of their
Subsidiaries, as applicable, reasonably could not be expected to result in a
Material Adverse Change.

        5.10    No Material Adverse Change.    All financial statements relating
to Borrowers or Guarantor that have been delivered by Borrowers or Guarantor to
the Lender Group have been prepared in accordance with GAAP (except, in the case
of unaudited financial statements, for the lack of footnotes and being subject
to year-end audit adjustments) and present fairly in all material respects,
Borrowers' (or Guarantor's, as applicable) financial condition as of the date
thereof and results of operations for the period then ended. There has not been
a Material Adverse Change with respect to Borrowers (or Guarantor, as
applicable) since the date of the latest financial statements submitted to the
Lender Group on or before the Closing Date.

        5.12    Fraudulent Transfer.    

        (a)  Each Borrower and Guarantor is Solvent.

        (b)  No transfer of property is being made by any Borrower or Guarantor
and no obligation is being incurred by any Borrower or Guarantor in connection
with the transactions contemplated by this Agreement or the other Loan Documents
with the intent to hinder, delay, or defraud either present or future creditors
of Borrowers or Guarantor.

        5.13    Employee Benefits.    Except as set forth on Schedule 5.13, none
of Borrowers, any of their Subsidiaries, or any of their ERISA Affiliates has
maintained or contributed, or currently maintains or contributes, to any Benefit
Plan.

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        5.14    Environmental Condition.    Except as set forth on Schedule 5.14
(which Borrowers may amend from time to time so long as the environmental
conditions scheduled on Schedule 5.14, individually or in the aggregate, would
not result in, and reasonably could not be expected to result in, a Material
Adverse Change), (a) to Borrowers' knowledge, none of Borrowers' properties or
assets has ever been used by Borrowers or by previous owners or operators in the
disposal of, or to produce, store, handle, treat, release, or transport, any
Hazardous Materials, where such production, storage, handling, treatment,
release or transport was in violation, in any material respect, of applicable
Environmental Law, (b) to Borrowers' knowledge, none of Borrowers' properties or
assets has ever been designated or identified in any manner pursuant to any
environmental protection statute as a Hazardous Materials disposal site,
(c) none of Borrowers have received notice that a Lien arising under any
Environmental Law has attached to any revenues or to any Real Property owned or
operated by Borrowers, and (d) none of Borrowers have received a summons,
citation, notice, or directive from the Environmental Protection Agency or any
other federal or state governmental agency concerning any action or omission by
any Borrower resulting in the releasing or disposing of Hazardous Materials into
the environment.

        5.15    Brokerage Fees.    Borrowers have not utilized the services of
any broker or finder in connection with Borrowers' obtaining financing from the
Lender Group under this Agreement and no brokerage commission or finders fee is
payable by Borrowers in connection herewith.

        5.16    Intellectual Property    

        (a)  Each Borrower owns, or holds licenses in, all Intellectual Property
Rights that are necessary to the conduct of its business as currently conducted.
Attached hereto as Schedule 5.16(a) (which Borrowers may amend from time to time
provided that notice and copies thereof are promptly provided to Agent) is a
true, correct, and complete listing of all material patents, patent
applications, trademarks, trademark applications and copyrights (including
copyright registrations and applications) as to which each Borrower is the owner
or is an exclusive licensee.

        (b)  Each Borrower represents and warrants that it has taken all actions
reasonably necessary to protect Intellectual Property Rights, including, without
limitation, (i) protecting the secrecy and confidentiality of such Borrower's
confidential information and trade secrets by having and enforcing a policy
requiring all current and former employees, consultants, licensees, vendors and
contractors to execute appropriate confidentiality and invention assignment
agreements; (ii) taking all actions reasonably necessary to ensure that no trade
secret of such Borrower falls or has fallen into the public domain; and
(iii) protecting the secrecy and confidentiality of the source code of all
computer software programs and applications of which such Borrower is the owner
or licensee by having and enforcing a policy requiring any licensees of such
source code to enter into license agreements with appropriate use and
non-disclosure restrictions. Each Borrower has only entered into such source
code licenses as set forth in Schedule 5.16(b).

        (c)  No past or present employee or contractor of any Borrower has any
ownership interest, license, permission or other Intellectual Property Right in
or to any material Intellectual Property Rights.

        (d)  Each Borrower has made all necessary payments, filings and
recordations to protect and maintain its interest in material Intellectual
Property Rights in the United States or any other jurisdiction, including,
without limitation, (i) making all necessary registration, maintenance, and
renewal fee payments; and (ii) filing all necessary documents, including,
without limitation, all applications for registration of copyrights, trademarks,
and patents.

        (e)  No claim has been made and is continuing or threatened that the use
by any Borrower of any item of General Intangibles is invalid or unenforceable
or that the use by such Borrower of

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any General Intangibles does or may violate the rights of any Person, other than
any such claim which would not cause a Material Adverse Change. To the best of
each Borrower's knowledge, there is currently no infringement or unauthorized
use of any item of Intellectual Property Rights contained on Schedule 5.16(a).

        (f)    Each Borrower has filed applications and taken any and all other
actions reasonably necessary to register all material Copyrights, in good faith
in accordance with the procedures and regulations of the U.S. Copyright Office.

        5.17    Leases.    Borrowers enjoy peaceful and undisturbed possession
under all leases material to the business of Borrowers and to which Borrowers
are a party or under which Borrowers are operating. All of such leases are valid
and subsisting and no material default by Borrowers exists under any of them.

        5.18    DDAs.    Set forth on Schedule 5.18 (as such schedule may be
amended from time to time so long as Administrative Borrower provides Agent with
notice and copies thereof upon any such amendments) are all of the DDAs of each
Borrower, including, with respect to each depository, (i) the name and address
of that depository, and (ii) the account numbers of the accounts maintained with
such depository.

        5.19    Complete Disclosure.    All factual information (taken as a
whole) furnished by or on behalf of Borrowers in writing to Agent or any Lender
(including all information contained in the Schedules hereto or in the other
Loan Documents) for purposes of or in connection with this Agreement, the other
Loan Documents or any transaction contemplated herein or therein is, and all
other such factual information (taken as a whole) hereafter furnished by or on
behalf of Borrowers in writing to the Agent or any Lender will be, true and
accurate in all material respects on the date as of which such information is
dated or certified and not incomplete by omitting to state any fact necessary to
make such information (taken as a whole) not misleading in any material respect
at such time in light of the circumstances under which such information was
provided. On the Closing Date, the Closing Date Projections represent, and as of
the date on which any other Projections are delivered to Agent, such additional
Projections represent Borrowers' good faith reasonable estimate of its future
performance for the periods covered thereby.

        5.20    Indebtedness.    Set forth on Schedule 5.20 is a true and
complete list of all Indebtedness of each Borrower outstanding immediately prior
to the Closing Date that is to remain outstanding after the Closing Date and
such Schedule accurately reflects the aggregate principal amount of such
Indebtedness and the principal economic terms thereof (including the Persons to
whom the Indebtedness is owed, the interest rate and the maturity date).

        5.21    Senior Note Indenture Documents.    Parent has delivered to
Agent true and correct copies of the Senior Note Indenture Documents. All of the
representations and warranties of Parent and any Borrower in the Senior Note
Indenture Documents were at the time made or deemed made true and correct in all
respects.

        5.22    Real Property Collateral.    Set forth on Schedule R-1 is a true
and complete list of all Real Property Collateral of the Borrowers as of the
Closing Date, including, with respect to each property, (i) whether such Real
Property Collateral is owned or leased, (ii) the identity of the owner or lessee
and (iii) the location of such Real Property Collateral.

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6.    AFFIRMATIVE COVENANTS.

        Each Borrower covenants and agrees that, so long as any credit hereunder
shall be available and until full and final payment of the Obligations,
Borrowers shall and shall cause each of their respective Subsidiaries to do all
of the following:

        6.1    Accounting System.    Maintain a system of accounting that
enables Borrowers to produce financial statements in accordance with GAAP and
maintain records pertaining to the Collateral that contain information as from
time to time reasonably may be requested by Agent. Borrowers also shall keep an
inventory reporting system that shows all additions, sales, claims, returns, and
allowances with respect to the Inventory.

        6.2    Collateral Reporting.    Provide Agent (and if so requested by
Agent, with copies for each Lender) with the following documents at the
following times in form satisfactory to Agent:

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

Daily
 
(a) a sales journal, collection journal, and credit register since the last such
schedule and a calculation of the Borrowing Base as of such date, and

(b) notice of all returns, disputes, or claims.

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

Weekly
 
(c) Inventory reports specifying each Borrower's cost and the wholesale market
value of its Inventory, by mix (raw material, work in process and finished
goods) and category, with additional detail showing additions to and deletions
from the Inventory.

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Monthly Period (not later than the 10th day of each Monthly Period)
 
(d) a detailed calculation of the Borrowing Base (including detail regarding
those Accounts that are not Eligible Accounts),

(e) a detailed aging, by total, of the Accounts, together with a reconciliation
to the detailed calculation of the Borrowing Base previously provided to Agent,

(f) a summary aging, by vendor, of Borrowers' accounts payable and any book
overdraft, and

(g) a calculation of Dilution for the prior month.

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Quarterly
 
(h) a detailed list of each Borrower's customers,

(i) a report regarding each Borrower's accrued, but unpaid, ad valorem taxes,

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

Upon request by Agent
 
(j) copies of invoices in connection with the Accounts, credit memos, remittance
advices, deposit slips, shipping and delivery documents in connection with the
Accounts and, for Inventory and Equipment acquired by Borrowers, purchase orders
and invoices, and

(k) such other reports as to the Collateral, or the financial condition of
Borrowers, as Agent may request.

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

        In addition, each Borrower agrees to cooperate fully with Agent to
facilitate and implement a system of electronic collateral reporting in order to
provide electronic reporting of each of the items set forth above.

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        6.3    Financial Statements, Reports, Certificates.    Deliver to Agent,
with copies to each Lender:

        (a)  as soon as available, but in any event within 30 days (45 days in
the case of a month that is the end of one of the first 3 fiscal quarters in a
fiscal year) after the end of each month during each of Parent's fiscal years,

        (i)    a company prepared consolidated balance sheet, income statement,
and statement of cash flow covering Parent's and its Subsidiaries' operations
during such period,

        (ii)  a certificate signed by the chief financial officer of Parent to
the effect that:

        A.    the financial statements delivered hereunder have been prepared in
accordance with GAAP (except for the lack of footnotes and being subject to
year-end audit adjustments) and fairly present in all material respects the
financial condition of Parent and its Subsidiaries,

        B.    the representations and warranties of Borrowers contained in this
Agreement and the other Loan Documents are true and correct in all material
respects on and as of the date of such certificate, as though made on and as of
such date (except to the extent that such representations and warranties relate
solely to an earlier date), and

        C.    there does not exist any condition or event that constitutes a
Default or Event of Default (or, to the extent of any non-compliance, describing
such non-compliance as to which he or she may have knowledge and what action
Borrowers have taken, are taking, or propose to take with respect thereto), and

        (iii)  for each month that is the date on which a financial covenant in
Section 7.20 is to be tested, a Compliance Certificate demonstrating, in
reasonable detail, compliance at the end of such period with the applicable
financial covenants contained in Section 7.20, and

        (b)  as soon as available, but in any event within 90 days after the end
of each of Parent's fiscal years,

        (i)    financial statements of Parent and its Subsidiaries for each such
fiscal year, audited by independent certified public accountants reasonably
acceptable to Agent and certified, without any qualifications, by such
accountants to have been prepared in accordance with GAAP (such audited
financial statements to include a balance sheet, income statement, and statement
of cash flow and, if prepared, such accountants' letter to management),

        (ii)  a certificate of such accountants addressed to Agent and the
Lenders stating that such accountants do not have knowledge of the existence of
any Default or Event of Default under Section 7.20,

        (c)  as soon as available, but in any event within 30 days prior to the
start of each of Parent's fiscal years,

        (i)    copies of Borrowers' Projections, in form and substance
(including as to scope and underlying assumptions) satisfactory to Agent, in its
sole discretion, for the forthcoming 3 years, year by year, and for the
forthcoming fiscal year, month by month, certified by the chief financial
officer of Parent as being such officer's good faith reasonable estimate of the
financial performance of Parent and its Subsidiaries during the period covered
thereby,

        (d)  if and when filed by any Borrower,

        (i)    10-Q quarterly reports, Form 10-K annual reports, and Form 8-K
current reports,

        (ii)  any other filings made by any Borrower with the SEC,

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        (iii)  copies of Borrowers' federal income tax returns, and any
amendments thereto, filed with the Internal Revenue Service, and

        (iv)  any other information that is provided by Parent to its
shareholders generally,

        (e)  if and when filed by any Borrower and as requested by Agent,
satisfactory evidence of payment of applicable excise taxes in each jurisdiction
in which (i) any Borrower conducts business or is required to pay any such
excise tax, (ii) where any Borrower's failure to pay any such applicable excise
tax would result in a Lien on the properties or assets of any Borrower, or
(iii) where any Borrower's failure to pay any such applicable excise tax
reasonably could be expected to result in a Material Adverse Change,

        (f)    as soon as an officer or director of a Borrower has knowledge of
any event or condition that constitutes a Default or an Event of Default, notice
thereof and a statement of the curative action that Borrowers propose to take
with respect thereto, and

        (g)  upon the request of Agent, any other report reasonably requested,
in Agent's Permitted Discretion, relating to the financial condition of
Borrowers.

        In addition to the financial statements referred to above, Borrowers
agree to deliver financial statements prepared on both a consolidated and
consolidating basis and that no Borrower, or any Subsidiary of a Borrower, will
have a fiscal year different from that of Parent. Borrowers agree that their
independent certified public accountants are authorized to communicate with
Agent and to release to Agent whatever financial information concerning
Borrowers that Agent reasonably may request. Each Borrower waives, solely for
the benefit of Agent and the Lender Group, the right to assert a confidential
relationship, if any, it may have with any accounting firm or service bureau in
connection with any information requested by Agent pursuant to or in accordance
with this Agreement (but only to the extent that such waiver does not cause any
Borrower to waive such right as to any Person other than the Agent and the
Lender Group), and each Borrower agrees that Agent may contact directly any such
accounting firm or service bureau in order to obtain such information.

        6.4    Guarantor Reports.    Cause Guarantor to deliver its annual
financial statements at the time when Parent provides its audited financial
statements to Agent and copies of all federal income tax returns as soon as the
same are available and in any event no later than 30 days after the same are
required to be filed by law.

        6.5    Return.    Cause returns and allowances as between Borrowers and
their Account Debtors, to be in accordance with the usual customary practices of
the applicable Borrower, as they exist at the time of the execution and delivery
of this Agreement; provided that, notwithstanding the foregoing, any Borrower
may cause returns and allowances as between such Borrower and its Account
Debtors to be in accordance with practices that are more restrictive than the
practices of such Borrower as of the execution and delivery of this Agreement.
If, at a time when no Event of Default has occurred and is continuing, any
Account Debtor returns any Inventory to any Borrower, the applicable Borrower
promptly shall determine the reason for such return and, if the applicable
Borrower accepts such return, issue a credit memorandum (with a copy to be sent
to Agent) in the appropriate amount to such Account Debtor. If, at a time when
an Event of Default has occurred and is continuing, any Account Debtor returns
any Inventory to any Borrower, the applicable Borrower promptly shall determine
the reason for such return and, if Agent consents (which consent shall not be
unreasonably withheld), issue a credit memorandum (with a copy to be sent to
Agent) in the appropriate amount to such Account Debtor.

        6.6    Maintenance of Properties.    Maintain and preserve all of its
properties which are necessary or useful in the proper conduct to its business
in good working order and condition, ordinary wear and

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tear excepted, and comply at all times with the provisions of all leases to
which it is a party as lessee, except to the extent it would not result in a
Material Adverse Change.

        6.7    Taxes.    Cause all assessments and taxes, whether real,
personal, or otherwise, due or payable by, or imposed, levied, or assessed
against Borrowers or any of their assets to be paid in full, before delinquency
or before the expiration of any extension period, except to the extent that the
validity of such assessment or tax shall be the subject of a Permitted Protest.
Borrowers will make timely payment or deposit of all tax payments and
withholding taxes required of it by applicable laws, including those laws
concerning F.I.C.A., F.U.T.A., state disability, and local, state, and federal
income taxes, and will, upon request, furnish Agent with proof satisfactory to
Agent indicating that the applicable Borrower has made such payments or
deposits. Borrowers shall, upon request by Agent, deliver satisfactory evidence
of payment of applicable excise taxes in each jurisdiction in which any Borrower
is required to pay any such excise tax.

        6.8    Insurance.    

        (a)  At Borrowers' expense, maintain insurance respecting its property
and assets wherever located, covering loss or damage by fire, theft, explosion,
and all other hazards and risks as ordinarily are insured against by other
Persons engaged in the same or similar businesses. Borrowers also shall maintain
business interruption, public liability, and product liability insurance, as
well as insurance against larceny, embezzlement, and criminal misappropriation.
All such policies of insurance shall be in such amounts and with such insurance
companies as are reasonably satisfactory to Agent. Borrowers shall deliver
copies of all such policies to Agent with a satisfactory lender's loss payable
endorsement naming Agent as sole loss payee or additional insured, as
appropriate. Each policy of insurance or endorsement shall contain a clause
requiring the insurer to give not less than 30 days prior written notice to
Agent in the event of cancellation of the policy for any reason whatsoever.

        (b)  Administrative Borrower shall give Agent prompt notice of any loss
covered by such insurance. Agent shall have the exclusive right to adjust any
losses payable under any such insurance policies (but, with respect to business
interruption insurance policies, subject to the last sentence of this
Section 6.8(b)) in excess of $500,000, without any liability to Borrowers
whatsoever in respect of such adjustments. Any monies received as payment for
any loss under any insurance policy mentioned above (other than liability
insurance policies and business interruption insurance policies) or as payment
of any award or compensation for condemnation or taking by eminent domain, shall
be paid over to Agent to be applied at the option of the Required Lenders either
to the prepayment of the Obligations or shall be disbursed to Administrative
Borrower under staged payment terms reasonably satisfactory to the Required
Lenders for application to the cost of repairs, replacements, or restorations.
Any such repairs, replacements, or restorations shall be effected with
reasonable promptness and shall be of a value at least equal to the value of the
items or property destroyed prior to such damage or destruction. All proceeds of
Borrowers' business interruption insurance shall be paid over to Agent to be
applied at the option of the Required Lenders either to the prepayment of the
Obligations or shall be disbursed to Administrative Borrower under staged
payment terms reasonably satisfactory to the Required Lenders for application to
the cost of repairs, replacements, or restorations (under the conditions
described in the preceding sentence); provided, that, unless a Default or Event
of Default shall have occurred and be continuing, Borrowers may settle or adjust
any such claim with respect to such insurance and Agent shall remit such
proceeds to Borrowers for use in the ordinary course of their business.

        (c)  Borrowers shall not take out separate insurance concurrent in form
or contributing in the event of loss with that required to be maintained under
this Section 6.8, unless Agent is included thereon as named insured with the
loss payable to Agent under a lender's loss payable endorsement or its
equivalent. Administrative Borrower immediately shall notify Agent whenever

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such separate insurance is taken out, specifying the insurer thereunder and full
particulars as to the policies evidencing the same, and copies of such policies
promptly shall be provided to Agent.

        6.9    Location of Inventory and Equipment.    Keep the Inventory and
Equipment only at the locations identified on Schedule 5.5; provided, however,
that Administrative Borrower may amend Schedule 5.5 so long as such amendment
occurs by written notice to Agent not less than 30 days prior to the date on
which the Inventory or Equipment is moved to such new location, so long as such
new location is within the continental United States, and so long as, at the
time of such written notification, the applicable Borrower provides any
financing statements or fixture filings necessary to perfect and continue
perfected the Agent's Liens on such assets and also provides to Agent a
Collateral Access Agreement.

        6.10    Compliance with Laws.    Comply with the requirements of all
applicable laws, rules, regulations, and orders of any Governmental Authority,
including the Fair Labor Standards Act and the Americans With Disabilities Act,
other than laws, rules, regulations, and orders the non-compliance with which,
individually or in the aggregate, would not result in and reasonably could not
be expected to result in a Material Adverse Change.

        6.11    Leases.    Pay when due all rents and other amounts payable
under any leases to which any Borrower is a party or by which any Borrower's
properties and assets are bound, unless such payments are the subject of a
Permitted Protest.

        6.12    Brokerage Commissions.    Pay any and all brokerage commission
or finders fees incurred in connection with or as a result of Borrowers'
obtaining financing from the Lender Group under this Agreement. Borrowers agree
and acknowledge that payment of all such brokerage commissions or finders fees
shall be the sole responsibility of Borrowers, and each Borrower agrees to
indemnify, defend, and hold Agent and the Lender Group harmless from and against
any claim of any broker or finder arising out of Borrowers' obtaining financing
from the Lender Group under this Agreement.

        6.13    Existence.    At all times preserve and keep in full force and
effect each Borrower's valid existence and good standing and any rights and
franchises material to Borrowers' businesses.

        6.14    Environmental.    

        (a)  Keep any property either owned or operated by any Borrower free of
any Environmental Liens or post bonds or other financial assurances sufficient
to satisfy the obligations or liability evidenced by such Environmental Liens,
(b) comply, in all material respects, with Environmental Laws and provide to
Agent documentation of such compliance which Agent reasonably requests,
(c) promptly notify Agent of any release of a Hazardous Material of any
reportable quantity from or onto property owned or operated by any Borrower and
take any Remedial Actions required to abate said release or otherwise to come
into compliance with applicable Environmental Law, and (d) promptly provide
Agent with written notice within 10 days of the receipt of any of the following:
(i) notice that an Environmental Lien has been filed against any of the real or
personal property of any Borrower, (ii) commencement of any Environmental Action
or notice that an Environmental Action will be filed against any Borrower, and
(iii) notice of a violation, citation, or other administrative order which
reasonably could be expected to result in a Material Adverse Change.

        6.15    Disclosure Updates.    Promptly and in no event later than 5
Business Days after obtaining knowledge thereof, (a) notify Agent if any written
information, exhibit, or report furnished to the Lender Group contained any
untrue statement of a material fact or omitted to state any material fact
necessary to make the statements contained therein not misleading in light of
the circumstances in which made, and (b) correct any defect or error that may be
discovered therein or in any Loan Document or in the execution, acknowledgement,
filing, or recordation thereof.

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        6.16    Intellectual Property Rights.    

        (a)  Each Borrower agrees that, should it obtain an ownership interest
in any Intellectual Property Right which is not now a part of the Collateral,
(i) any such Intellectual Property Right shall automatically become Collateral
and (ii) with respect to any ownership interest in any Intellectual Property
Right that Borrower should obtain, it shall give prompt written notice thereof
to Agent in accordance with Section 12 hereof. Each Borrower authorizes Agent to
modify this Agreement by amending Schedule 5.16(a) (and will cooperate
reasonably with Agent in effecting any such amendment) to include any
Intellectual Property Right which becomes part of the Collateral under this
Section.

        (b)  With respect to material Borrower Intellectual Property Rights,
each Borrower agrees, subject to the last sentence of this subsection, to take
all necessary steps, including, without limitation, making all necessary
payments and filings in connection with registration, maintenance, and renewal
of copyrights, trademarks, and patents in the U.S. Copyright Office, the U.S.
Patent and Trademark Office, any other appropriate government agencies in
foreign jurisdictions or in any court, to maintain each such Borrower
Intellectual Property Right. Each Borrower agrees to take corresponding steps
with respect to each new or acquired material Intellectual Property Right to
which it is now or later becomes entitled. Any expenses incurred in connection
with such activities shall be borne solely by Borrower. Each Borrower shall not
discontinue use of or otherwise abandon any Intellectual Property Right without
the written consent of Agent, unless such Borrower shall have previously
determined that such use or the pursuit or maintenance of such registration is
no longer desirable in the conduct of Borrower's business and that the loss
thereof will not cause a Material Adverse Change, in which case, such Borrower
will give notice of any such abandonment to Agent pursuant to the terms of
Section 12 hereof.

        (c)  Each Borrower will continue to take all actions reasonably
necessary to protect such Borrower's Intellectual Property Rights, including,
without limitation, such steps as are set forth in Sections 5.16(a) and (b)
above. Each Borrower further agrees to give Agent prompt written notice in
accordance with Section 12 hereof if such Borrower enters into any agreements
after the Closing Date pursuant to which it grants any right to a third party to
use or access the source code of any computer software programs or applications
of which such Borrower is the owner or licensee. Each Borrower authorizes Agent
to modify this Agreement by amending Schedule 5.16(b) (and will cooperate
reasonably with Agent in effecting any such amendment) to include any such
additional license grant(s).

        (d)  Each Borrower agrees to notify Agent promptly and in writing if it
learns (i) that any item of the Intellectual Property Rights contained on
Schedule 5.16(a) may be determined to have become abandoned or dedicated or
(ii) of any adverse determination or the institution of any proceeding
(including, without limitation, the institution of any proceeding in the U.S.
Copyright Office, U.S. Patent and Trademark Office and any other appropriate
government agencies in foreign jurisdictions, or any court) regarding any item
of the Intellectual Property Rights that would cause a Material Adverse Change.

        (e)  In the event that any Borrower becomes aware that any item of the
General Intangibles is infringed or misappropriated by a third party, such
Borrower shall promptly notify Agent and shall take such actions as Borrowers or
Agent deems appropriate under the circumstances to protect such General
Intangibles, including, without limitation, suing for infringement or
misappropriation and for an injunction against such infringement or
misappropriation, unless any such infringement or misappropriation would not
cause a Material Adverse Change. Any expense incurred in connection with such
activities shall be borne solely by Borrowers.

        (f)    Each Borrower agrees that, should it obtain an ownership interest
in, or license of, material Copyrights after the Closing Date, it shall,
promptly after such acquisition, file

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applications and take any and all other actions reasonably necessary to register
all such Copyrights in good faith in accordance with the procedures and
regulations of the U.S. Copyright Office.

        6.17    Senior Note Indenture Documents.    Parent promptly will provide
Agent with true and complete copies of any and all documents and other
information delivered to any Person pursuant to, or in connection with, the
Senior Note Indenture Documents.

7.    NEGATIVE COVENANTS.

        Each Borrower covenants and agrees that, so long as any credit hereunder
shall be available and until full and final payment of the Obligations,
Borrowers will not and will not permit any of their respective Subsidiaries to
do any of the following:

        7.1    Indebtedness.    Create, incur, assume, permit, guarantee, or
otherwise become or remain, directly or indirectly, liable with respect to any
Indebtedness, except:

        (a)  Indebtedness evidenced by this Agreement and the other Loan
Documents, together with Indebtedness owed to Underlying Issuers with respect to
Underlying Letters of Credit;

        (b)  Indebtedness set forth on Schedule 5.20, including Indebtedness
outstanding in respect of the Senior Notes;

        (c)  Permitted Purchase Money Indebtedness;

        (d)  refinancings, renewals, or extensions of Indebtedness permitted
under clauses (b) and (c) of this Section 7.1 (and continuance or renewal of any
Permitted Liens associated therewith) so long as: (i) the terms and conditions
of such refinancings, renewals, or extensions do not, in Agent's Permitted
Discretion, materially impair the prospects of repayment of the Obligations by
Borrowers or materially impair Borrowers' creditworthiness, (ii) such
refinancings, renewals, or extensions do not result in an increase in the
principal amount of, or interest rate with respect to, the Indebtedness so
refinanced, renewed, or extended (provided, that, notwithstanding the foregoing,
such refinancings, renewals, or extensions may result in an increase in the
interest rate (I) to the extent that such increased interest rate is not
materially above the market rate at such time and (II) so long as Agent, in its
Permitted Discretion, determines that such increased interest rate would not
materially impair the prospects of repayment of the Obligations by Borrowers or
materially impair Borrowers' creditworthiness), (iii) such refinancings,
renewals, or extensions do not result in a shortening of the average weighted
maturity of the Indebtedness so refinanced, renewed, or extended, nor are they
on terms or conditions, that, taken as a whole, are materially more burdensome
or restrictive to the applicable Borrower, and (iv) if the Indebtedness that is
refinanced, renewed, or extended was subordinated in right of payment to the
Obligations, then the terms and conditions of the refinancing, renewal, or
extension Indebtedness must be include subordination terms and conditions that
are at least as favorable to the Lender Group as those that were applicable to
the refinanced, renewed, or extended Indebtedness;

        (e)  Indebtedness owed to any other Borrower so long as such
Indebtedness is (i) not secured by any of the assets or properties of any
Borrower and (ii) subject to the terms and provisions of the Intercompany
Subordination Agreement; and

        (f)    Indebtedness not included in paragraphs (a) through (e) above
which does not exceed at any time, in the aggregate, the sum of $500,000.

        7.2    Liens.    Create, incur, assume, or permit to exist, directly or
indirectly, any Lien on or with respect to any of its assets, of any kind,
whether now owned or hereafter acquired, or any income or profits therefrom,
except for Permitted Liens (including Liens that are replacements of Permitted
Liens to the extent that the original Indebtedness is refinanced, renewed, or
extended under Section 7.1(d)

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and so long as the replacement Liens only encumber those assets that secured the
refinanced, renewed, or extended Indebtedness).

        7.3    Restrictions on Fundamental Changes.    

        (a)  Enter into any merger, consolidation, reorganization, or
recapitalization, or reclassify its Stock, except that a Borrower may merge with
and into another Borrower.

        (b)  Liquidate, wind up, or dissolve itself (or suffer any liquidation
or dissolution).

        (c)  Convey, sell, lease, license, assign, transfer, or otherwise
dispose of, in one transaction or a series of transactions, all or any
substantial part of its assets.

        7.4    Disposal of Assets.    Other than Permitted Dispositions, convey,
sell, lease, license, assign, transfer, or otherwise dispose of any of the
assets of any Borrower.

        7.5    Change Name.    Change any Borrower's name, FEIN, corporate
structure or identity, or add any new fictitious name; provided, however, that a
Borrower may change its name upon at least 30 days' prior written notice by
Administrative Borrower to Agent of such change and so long as, at the time of
such written notification, such Borrower provides any financing statements or
fixture filings necessary to perfect and continue perfected Agent's Liens.

        7.6    Guarantee.    Guarantee or otherwise become in any way liable
with respect to the obligations of any third Person except by endorsement of
instruments or items of payment for deposit to the account of Borrowers or which
are transmitted or turned over to Agent.

        7.7    Nature of Business.    Make any change in the principal nature of
Borrowers' business.

        7.8    Prepayments and Amendments.    

        (a)  Except in connection with a refinancing permitted by
Section 7.1(d), prepay, redeem, defease, purchase, or otherwise acquire any
Indebtedness of any Borrower prior to its scheduled maturity, other than the
Obligations in accordance with this Agreement, and

        (b)  Except in connection with a refinancing permitted by
Section 7.1(d), directly or indirectly, amend, modify, alter, increase, or
change any of the terms or conditions of any agreement, instrument, document,
indenture, or other writing evidencing or concerning Indebtedness permitted
under Sections 7.1(b) or (c), except that Borrowers may amend, modify, alter,
increase or change any of the terms or conditions of any agreement, instrument,
document, indenture or other writing evidencing or concerning Indebtedness
permitted under Section 7.1(b) or (c) in order to (i) cure ambiguities,
(ii) correct inconsistencies, (iii) extend maturities, (iv) change conversion
features or (v) waive or amend covenants or other provisions, which waivers or
amendments would not adversely affect the Lender Group (provided, however, that
Borrowers shall immediately following the execution of any such amendment,
modification, alteration or change, provide Agent with a true and complete copy
thereof).

        7.9    Change of Control.    Cause, permit, or suffer, directly or
indirectly, any Change of Control.

        7.10    Consignments.    Except as set forth on Schedule 7.10, consign
any Inventory or sell any Inventory on bill and hold, sale or return, sale on
approval, or other conditional terms of sale.

        7.11    Distributions.    Other than distributions or declaration and
payment of dividends by a Borrower to another Borrower, make any distribution or
declare or pay any dividends (in cash or other property, other than common
Stock) on, or purchase, acquire, redeem, or retire any of any Borrower's Stock,
of any class, whether now or hereafter outstanding (collectively, a
"Distribution"), other than to Guarantor for all accrued and unpaid management
fees and expenses owed by Guarantor to Kohlberg on the Closing Date (in an
aggregate amount not to exceed $913,000) and such annual management fees in an
aggregate amount not to exceed $500,000 per annum, payable quarterly, and
operating expenses of Guarantor not to exceed $50,000 during any fiscal year so
long as (x) no Default or Event

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of Default has occurred and is continuing at the time of such Distribution and
(y) Borrowers' Excess Availability will equal at least $5,000,000, in each case
both before and immediately after giving effect to any such Distribution.

        7.12    Accounting Methods.    Modify or change its method of accounting
(other than as may be required to conform to GAAP) or enter into, modify, or
terminate any agreement currently existing, or at any time hereafter entered
into with any third party accounting firm or service bureau for the preparation
or storage of Borrowers' accounting records without said accounting firm or
service bureau agreeing to provide Agent information regarding the Collateral or
Borrowers' financial condition.

        7.13    Investments.    Except for Permitted Investments, directly or
indirectly, make or acquire any Investment, or incur any liabilities (including
contingent obligations) for or in connection with any Investment; provided,
however, that Administrative Borrower and its Subsidiaries shall not have
Permitted Investments (other than in the Cash Management Accounts) in deposit
accounts or Securities Accounts in excess of $100,000 outstanding at any one
time unless the Administrative Borrower or any of its Subsidiaries, as
applicable, and the applicable securities intermediary or bank have entered into
Control Agreements or similar arrangements governing such Permitted Investments,
as Agent shall determine in its Permitted Discretion, to perfect (and further
establish) the Agent's Liens in such Permitted Investments.

        7.14    Transactions with Affiliates.    Except as expressly permitted
by Section 7.11, directly or indirectly enter into or permit to exist any
transaction with any Affiliate of any Borrower except for transactions that are
in the ordinary course of Borrowers' business, upon fair and reasonable terms,
that are fully disclosed to Agent, and that are no less favorable to Borrowers
than would be obtained in an arm's length transaction with a non-Affiliate.

        7.15    Suspension.    Suspend or go out of a substantial portion of its
business.

        7.16    Compensation.    Increase the annual fee or per-meeting fees
paid to the members of its Board of Directors during any year by more than 15%
over the prior year; pay or accrue total cash compensation, during any year, to
its officers and senior management employees in an aggregate amount in excess of
115% of that paid or accrued in the prior year.

        7.17    Use of Proceeds.    

        (a)  Use the proceeds of the Advances, the Subline A Advances and the
Subline B Advances for any purpose other than (a) on the Closing Date, (i) to
repay in full the outstanding principal, accrued interest, and accrued fees and
expenses owing to Existing Lender, and (ii) to pay transactional fees, costs,
and expenses incurred in connection with this Agreement, the other Loan
Documents, and the transactions contemplated hereby and thereby and
(b) thereafter, consistent with the terms and conditions hereof, for its lawful
and permitted purposes.

        (b)  Use the proceeds of the Subline C Advances for any purpose other
than to finance the purchase of Equipment in a manner permitted by
Section 4.09(b)(5) of the Senior Note Indenture and consistent with the terms
and conditions hereof.

        7.18    Change in Location of Chief Executive Office; Inventory and
Equipment with Bailees.    Relocate its chief executive office to a new location
without Administrative Borrower providing 30 days prior written notification
thereof to Agent and so long as, at the time of such written notification, the
applicable Borrower provides any financing statements or fixture filings
necessary to perfect and continue perfected the Agent's Liens and also provides
to Agent a Collateral Access Agreement with respect to such new location. The
Inventory and Equipment shall not at any time now or hereafter be stored with a
bailee, warehouseman, or similar party (other than as set forth on
Schedule 5.5(a)) without Agent's prior written consent; provided, that such
Agent's consent shall not be required if a Collateral Access Agreement is
entered into with respect thereto.

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        Securities Accounts.    Establish or maintain any Securities Account
unless Agent shall have received a Control Agreement in respect of such
Securities Account. Borrowers agree to not transfer assets out of any Securities
Account; provided, however, that, so long as no Event of Default has occurred
and is continuing or would result therefrom, Borrowers may use such assets (and
the proceeds thereof) to the extent not prohibited by this Agreement.

        7.19    Financial Covenants.    

        (a)  Fail to maintain:

        (i)    Fixed Charge Coverage Ratio.    A Fixed Charge Coverage Ratio,
measured on a fiscal quarter-end basis, of not less than the applicable Fixed
Charge Coverage Ratio set forth in the following table for the applicable period
set forth opposite thereto:

 
  Applicable Fixed Charge Coverage Ratio

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

  Applicable Period

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

    0.7:1   For the 6 month period ending December 31, 2002
 
 
0.6:1
 
For the 9 month period ending March 30, 2003
 
 
An amount determined by Agent based upon the Projections delivered pursuant to
Section 3.2(b); provided that if Agent does not receive such Projections or
Borrowers and Agent cannot agree (for any reason) on covenants acceptable to
Borrowers and Agent, then the ratio shall be 0.9:1
 
For the 12 month period ending June 30, 2003
 
 
An amount determined by Agent based upon the Projections delivered pursuant to
Section 3.2(b); provided that if Agent does not receive such Projections or
Borrowers and Agent cannot agree (for any reason) on covenants acceptable to
Borrowers and Agent, then the ratio shall be 0.9:1
 
For the 12 month period ending September 30, 2003
 
 
0.9:1
 
For the 12 month period ending December 31, 2003
 
 
1:1
 
For the 12 month period ending each fiscal quarter thereafter

        (b)  Capital Expenditures.    Make Capital Expenditures in any fiscal
year in excess of the amount set forth in the following table for the applicable
period:

 
  Fiscal Year 2002

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

  Fiscal Year 2003

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

  Fiscal Year 2004

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

  Fiscal Year 2005

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

  Fiscal Year 2006

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

    $2,000,000   $2,000,000   $2,000,000   $2,000,000   $2,000,000

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        7.20    Senior Note Indenture Documents.    Except in connection with a
refinancing permitted by Section 7.1(d), amend or modify in any way materially
adverse to Borrowers, Agent or Lenders, any term or provision of the Senior Note
Indenture Documents or redeem, repurchase or otherwise prepay any of the Senior
Notes.

8.    EVENTS OF DEFAULT.

        Any one or more of the following events shall constitute an event of
default (each, an "Event of Default") under this Agreement:

        8.1  If (a) Borrowers fail to pay when due and payable or when declared
due and payable, all or any portion of the Obligations (whether of principal,
interest (including any interest which, but for the provisions of the Bankruptcy
Code, would have accrued on such amounts), fees and charges due the Lender
Group, reimbursement of Lender Group Expenses, or other amounts constituting
Obligations), other than Bank Product Obligations or (b) Borrowers fail to pay
when due and payable or when declared due and payable, all or any portion of the
Bank Product Obligations (whether of principal, interest (including any interest
which, but for the provisions of the Bankruptcy Code, would have accrued on such
amounts), fees and charges due the Lender Group with respect thereto,
reimbursement of Lender Group Expenses with respect thereto, or other amounts
constituting Bank Product Obligations) and such failure or neglect continues for
a period of five (5) days after the date on which such failure or neglect first
occurs;

        8.2  If (a) Borrowers fail to perform, keep, or observe any term,
provision, condition, covenant, or agreement contained in Sections 6.2 or 6.3
and such failure or neglect continues for a period of five (5) days after the
date on which such failure or neglect first occurs, or (b) Borrowers fail to
perform, keep, or observe any term, provision, condition, covenant, or agreement
contained in any other section of this Agreement or in any of the other Loan
Documents; provided, however, that, during any period of time that any such
failure or neglect of Borrowers referred to in this Section 8.2 exists, even if
such failure or neglect is not yet an Event of Default by virtue of the
existence of a grace period or the pre-condition of the giving of a notice, the
Lenders shall be relieved of their obligations to extend any credit under this
Agreement;

        8.3  If any material portion of any Borrower's or any of its
Subsidiaries' assets is attached, seized, subjected to a writ or distress
warrant, levied upon, or comes into the possession of any third Person;

        8.4  If an Insolvency Proceeding is commenced by any Borrower or any of
its Subsidiaries;

        8.5  If an Insolvency Proceeding is commenced against any Borrower, or
any of its Subsidiaries, and any of the following events occur: (a) the
applicable Borrower or the Subsidiary consents to the institution of the
Insolvency Proceeding against it, (b) the petition commencing the Insolvency
Proceeding is not timely controverted, (c) the petition commencing the
Insolvency Proceeding is not dismissed within 60 calendar days of the date of
the filing thereof; provided, however, that, during the pendency of such period,
Agent (including any successor agent) and each other member of the Lender Group
shall be relieved of their obligations to extend credit hereunder, (d) an
interim trustee is appointed to take possession of all or any substantial
portion of the properties or assets of, or to operate all or any substantial
portion of the business of, any Borrower or any of its Subsidiaries, or (e) an
order for relief shall have been entered therein;

        8.6  If any Borrower or any of its Subsidiaries is enjoined, restrained,
or in any way prevented by court order from continuing to conduct all or any
material part of its business affairs;

        8.7  If (a) a notice of Lien, levy, or assessment is filed of record
with respect to any Borrower's or any of its Subsidiaries' assets by the United
States, or any department, agency, or instrumentality thereof, or by any state,
county, municipal, or governmental agency, or (b) if any

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taxes or debts owing at any time hereafter to any one or more of such entities
becomes a Lien, whether choate or otherwise, upon any Borrower's or any of its
Subsidiaries' assets, and in each of cases (a) and (b) the same is not paid on
or before the delinquency date thereof unless such nonpayment is the result of a
Permitted Protest;

        8.8  If a judgment or other claim becomes a Lien or encumbrance upon any
material portion of any Borrower's or any of its Subsidiaries' properties or
assets, unless (a) any such judgment or claim is stayed, released or discharged
within 30 days or (b) all such judgments and claims, in the aggregate, do not
exceed $100,000;

        8.9  If there is a default in any material agreement to which any
Borrower or any of its Subsidiaries is a party and such default (a) occurs at
the final maturity of the obligations thereunder, or (b) results in a right by
the other party thereto, irrespective of whether exercised, to accelerate the
maturity of the applicable Borrower's or its Subsidiaries' obligations
thereunder, to terminate such agreement, or to refuse to renew such agreement
pursuant to an automatic renewal right therein; provided that the aggregate
amount of all obligations in respect of such agreement equals or exceeds
$100,000 at such time;

        8.10 If any Borrower or any of its Subsidiaries makes any payment on
account of Indebtedness that has been contractually subordinated in right of
payment to the payment of the Obligations, except to the extent such payment is
permitted by the terms of the subordination provisions applicable to such
Indebtedness;

        8.11 If any misstatement or misrepresentation exists now or hereafter in
any warranty, representation, statement, or Record made to the Lender Group by
any Borrower, its Subsidiaries, or any officer, employee, agent, or director of
any Borrower or any of its Subsidiaries;

        8.12 If the obligation of Guarantor under its Guaranty is limited or
terminated by operation of law or by Guarantor thereunder;

        8.13 If this Agreement or any other Loan Document that purports to
create a Lien, shall, for any reason, fail or cease to create a valid and
perfected and, except to the extent permitted by the terms hereof or thereof,
first priority Lien on or security interest in the Collateral covered hereby or
thereby; or

        8.14 Any provision of any Loan Document shall at any time for any reason
be declared to be null and void, or the validity or enforceability thereof shall
be contested by any Borrower, or a proceeding shall be commenced by any
Borrower, or by any Governmental Authority having jurisdiction over any
Borrower, seeking to establish the invalidity or unenforceability thereof, or
any Borrower shall deny that any Borrower has any liability or obligation
purported to be created under any Loan Document.

9.    THE LENDER GROUP'S RIGHTS AND REMEDIES.

        9.1    Rights and Remedies.    Upon the occurrence, and during the
continuation, of an Event of Default, the Required Lenders (at their election
but without notice of their election and without demand) may authorize and
instruct Agent to do any one or more of the following on behalf of the Lender
Group (and Agent, acting upon the instructions of the Required Lenders, shall do
the same on behalf of the Lender Group), all of which are authorized by
Borrowers:

        (a)  Declare all Obligations, whether evidenced by this Agreement, by
any of the other Loan Documents, or otherwise, immediately due and payable;

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        (b)  Cease advancing money or extending credit to or for the benefit of
Borrowers under this Agreement, under any of the Loan Documents, or under any
other agreement between Borrowers and the Lender Group;

        (c)  Terminate this Agreement and any of the other Loan Documents as to
any future liability or obligation of the Lender Group, but without affecting
any of the Agent's Liens in the Collateral and without affecting the
Obligations;

        (d)  Settle or adjust disputes and claims directly with Account Debtors
for amounts and upon terms which Agent considers advisable, and in such cases,
Agent will credit the Loan Account with only the net amounts received by Agent
in payment of such disputed Accounts after deducting all Lender Group Expenses
incurred or expended in connection therewith;

        (e)  Cause Borrowers to hold all returned Inventory in trust for the
Lender Group, segregate all returned Inventory from all other assets of
Borrowers or in Borrowers' possession and conspicuously label said returned
Inventory as the property of the Lender Group;

        (f)    Without notice to or demand upon any Borrower or Guarantor, make
such payments and do such acts as Agent considers necessary or reasonable to
protect its security interests in the Collateral. Each Borrower agrees to
assemble the Personal Property Collateral if Agent so requires, and to make the
Personal Property Collateral available to Agent at a place that Agent may
designate which is reasonably convenient to both parties. Each Borrower
authorizes Agent to enter the premises where the Personal Property Collateral is
located, to take and maintain possession of the Personal Property Collateral, or
any part of it, and to pay, purchase, contest, or compromise any Lien that in
Agent's determination appears to conflict with the Agent's Liens and to pay all
expenses incurred in connection therewith and to charge Borrowers' Loan Account
therefor. With respect to any of Borrowers' owned or leased premises, each
Borrower hereby grants Agent a license to enter into possession of such premises
and to occupy the same, without charge, in order to exercise any of the Lender
Group's rights or remedies provided herein, at law, in equity, or otherwise;

        (g)  Without notice to any Borrower (such notice being expressly
waived), and without constituting a retention of any collateral in satisfaction
of an obligation (within the meaning of the Code), set off and apply to the
Obligations any and all (i) balances and deposits of any Borrower held by the
Lender Group (including any amounts received in the Cash Management Accounts),
or (ii) Indebtedness at any time owing to or for the credit or the account of
any Borrower held by the Lender Group;

        (h)  Hold, as cash collateral, any and all balances and deposits of any
Borrower held by the Lender Group, and any amounts received in the Cash
Management Accounts, to secure the full and final repayment of all of the
Obligations;

        (i)    Ship, reclaim, recover, store, finish, maintain, repair, prepare
for sale, advertise for sale, and sell (in the manner provided for herein) the
Personal Property Collateral. Each Borrower hereby grants to Agent a license or
other right to use, without charge, such Borrower's labels, patents, copyrights,
trade secrets, trade names, trademarks, service marks, and advertising matter,
or any property of a similar nature, as it pertains to the Personal Property
Collateral, in completing production of, advertising for sale, and selling any
Personal Property Collateral and such Borrower's rights under all licenses and
all franchise agreements shall inure to the Lender Group's benefit;

        (j)    Sell the Personal Property Collateral at either a public or
private sale, or both, by way of one or more contracts or transactions, for cash
or on terms, in such manner and at such places (including Borrowers' premises)
as Agent determines is commercially reasonable. It is not necessary that the
Personal Property Collateral be present at any such sale;

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        (k)  Agent shall give notice of the disposition of the Personal Property
Collateral as follows:

        (i)    Agent shall give Administrative Borrower (for the benefit of the
applicable Borrower) a notice in writing of the time and place of public sale,
or, if the sale is a private sale or some other disposition other than a public
sale is to be made of the Personal Property Collateral, the time on or after
which the private sale or other disposition is to be made; and

        (ii)  The notice shall be personally delivered or mailed, postage
prepaid, to Administrative Borrower as provided in Section 12, at least 10 days
before the earliest time of disposition set forth in the notice; no notice needs
to be given prior to the disposition of any portion of the Personal Property
Collateral that is perishable or threatens to decline speedily in value or that
is of a type customarily sold on a recognized market;

        (l)    Agent, on behalf of the Lender Group may credit bid and purchase
at any public sale;

        (m)  Agent may seek the appointment of a receiver or keeper to take
possession of all or any portion of the Collateral or to operate same and, to
the maximum extent permitted by law, may seek the appointment of such a receiver
without the requirement of prior notice or a hearing;

        (n)  The Lender Group shall have all other rights and remedies available
to it at law or in equity pursuant to any other Loan Documents; and

        (o)  Any deficiency that exists after disposition of the Personal
Property Collateral as provided above will be paid immediately by Borrowers. Any
excess will be returned, without interest and subject to the rights of third
Persons, by Agent to Administrative Borrower (for the benefit of the applicable
Borrower).

        9.2    Remedies Cumulative.    The rights and remedies of the Lender
Group under this Agreement, the other Loan Documents, and all other agreements
shall be cumulative. The Lender Group shall have all other rights and remedies
not inconsistent herewith as provided under the Code, by law, or in equity. No
exercise by the Lender Group of one right or remedy shall be deemed an election,
and no waiver by the Lender Group of any Event of Default shall be deemed a
continuing waiver. No delay by the Lender Group shall constitute a waiver,
election, or acquiescence by it.

10.  TAXES AND EXPENSES.

        If any Borrower fails to pay any monies (whether taxes, assessments,
insurance premiums, or, in the case of leased properties or assets, rents or
other amounts payable under such leases) due to third Persons, or fails to make
any deposits or furnish any required proof of payment or deposit, all as
required under the terms of this Agreement, after notice and demand by Agent,
then, Agent, in its sole discretion and without any further prior notice to any
Borrower, may do any or all of the following: (a) make payment of the same or
any part thereof, (b) set up such reserves in Borrowers' Loan Account as Agent
deems necessary to protect the Lender Group from the exposure created by such
failure, or (c) in the case of the failure to comply with Section 6.8 hereof,
obtain and maintain insurance policies of the type described in Section 6.8 and
take any action with respect to such policies as Agent deems prudent. Any such
amounts paid by Agent shall constitute Lender Group Expenses and any such
payments shall not constitute an agreement by the Lender Group to make similar
payments in the future or a waiver by the Lender Group of any Event of Default
under this Agreement. Agent need not inquire as to, or contest the validity of,
any such expense, tax, or Lien and the receipt of the usual official notice for
the payment thereof shall be conclusive evidence that the same was validly due
and owing.

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11.  WAIVERS; INDEMNIFICATION.

        11.1    Demand; Protest; etc.    Each Borrower waives demand, protest,
notice of protest, notice of default or dishonor, notice of payment and
nonpayment, nonpayment at maturity, release, compromise, settlement, extension,
or renewal of documents, instruments, chattel paper, and guarantees at any time
held by the Lender Group on which any such Borrower may in any way be liable.

        11.2    The Lender Group's Liability for Collateral.    Each Borrower
hereby agrees that: (a) so long as the Lender Group complies with its
obligations, if any, under the Code, Agent shall not in any way or manner be
liable or responsible for: (i) the safekeeping of the Collateral, (ii) any loss
or damage thereto occurring or arising in any manner or fashion from any cause,
(iii) any diminution in the value thereof, or (iv) any act or default of any
carrier, warehouseman, bailee, forwarding agency, or other Person, and (b) all
risk of loss, damage, or destruction of the Collateral shall be borne by
Borrowers.

        11.3    Indemnification.    Each Borrower shall pay, indemnify, defend,
and hold the Agent-Related Persons, the Lender-Related Persons with respect to
each Lender, each Participant, and each of their respective officers, directors,
employees, agents, and attorneys-in-fact (each, an "Indemnified Person")
harmless (to the fullest extent permitted by law) from and against any and all
claims, demands, suits, actions, investigations, proceedings, and damages, and
all reasonable attorneys fees and disbursements and other costs and expenses
actually incurred in connection therewith (as and when they are incurred and
irrespective of whether suit is brought), at any time asserted against, imposed
upon, or incurred by any of them (a) in connection with or as a result of or
related to the execution, delivery, enforcement, performance, or administration
of this Agreement, any of the other Loan Documents, or the transactions
contemplated hereby or thereby, and (b) with respect to any investigation,
litigation, or proceeding related to this Agreement, any other Loan Document, or
the use of the proceeds of the credit provided hereunder (irrespective of
whether any Indemnified Person is a party thereto), or any act, omission, event,
or circumstance in any manner related thereto (all the foregoing, collectively,
the "Indemnified Liabilities"). The foregoing to the contrary notwithstanding,
Borrowers shall have no obligation to any Indemnified Person under this
Section 11.3 with respect to any Indemnified Liability that a court of competent
jurisdiction finally determines to have resulted from the gross negligence or
willful misconduct of such Indemnified Person. This provision shall survive the
termination of this Agreement and the repayment of the Obligations. If any
Indemnified Person makes any payment to any other Indemnified Person with
respect to an Indemnified Liability as to which Borrowers were required to
indemnify the Indemnified Person receiving such payment, the Indemnified Person
making such payment is entitled to be indemnified and reimbursed by Borrowers
with respect thereto. WITHOUT LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO
EACH INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE
OR IN PART ARE CAUSED BY OR ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH
INDEMNIFIED PERSON OR OF ANY OTHER PERSON.

12.  NOTICES.

        Unless otherwise provided in this Agreement, all notices or demands by
Borrowers or Agent to the other relating to this Agreement or any other Loan
Document shall be in writing and (except for financial statements and other
informational documents which may be sent by first-class mail, postage prepaid)
shall be personally delivered or sent by registered or certified mail (postage
prepaid, return receipt requested), overnight courier, electronic mail (at such
email addresses as Administrative Borrower or Agent, as applicable, may
designate to each other in accordance herewith), or telefacsimile

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to Borrowers in care of Administrative Borrower or to Agent, as the case may be,
at its address set forth below:

    If to Administrative         Borrower:   HOLLEY PERFORMANCE PRODUCTS, INC.
1801 Russellville Road
P.O. Box 10360
Bowling Green, KY 42101
Attn: Chief Financial Officer
Fax No. 270-745-9545
 
 
with copies to:
 
HUNTON & WILLIAMS
Bank of America Plaza
600 Peachtree Street, N.E.
Suite 4100
Atlanta, GA 30308
Attn: John B. Miller, Jr., Esq.
Fax No. 404-888-4190
 
 
If to Agent:
 
FOOTHILL CAPITAL CORPORATION
One Boston Place
Boston, MA 02109
Attn: Business Finance Division Manager
Fax No. 617-523-5839
 
 
with copies to:
 
MORRISON & FOERSTER LLP
1290 Avenue of the Americas
New York, NY 10104
Attn: Mark B. Joachim, Esq.
Fax No. 212-468-7900
 
 
If to Highbridge:
 
HIGHBRIDGE/ZWIRN SPECIAL
OPPORTUNITIES FUND, L.P.
9 West 57th Street, 27th Floor
New York, NY 10019
Attn: Daniel Zwirn, Portfolio Manager,
Special Opportunities Group
Fax No. 212-287-4263
 
 
with copies to:
 
BROBECK, PHLEGER & HARRISON LLP
550 South Hope Street, Suite 2100
Los Angeles, California 90071
Attn: John Francis Hilson, Esq.
Fax No. 213-745-3345

        Agent, Highbridge and Borrowers may change the address at which they are
to receive notices hereunder, by notice in writing in the foregoing manner given
to the other party. All notices or demands sent in accordance with this
Section 12, other than notices by Agent in connection with enforcement rights
against the Collateral under the provisions of the Code, shall be deemed
received on the earlier of the date of actual receipt or 3 Business Days after
the deposit thereof in the mail. Each Borrower acknowledges and agrees that
notices sent by the Lender Group in connection with the exercise of enforcement
rights against Collateral under the provisions of the Code shall be deemed sent
when deposited in the mail or personally delivered, or, where permitted by law,
transmitted by telefacsimile or any other method set forth above.

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13.  CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.

        (a)  THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS
EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH
OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF
AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO
ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL
BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK.

        (b)  THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND
LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF NEW
YORK, STATE OF NEW YORK, PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT
AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT AGENT'S OPTION, IN
THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS TO BRING SUCH ACTION OR WHERE
SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. BORROWERS AND THE LENDER GROUP
WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO
ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT
ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 13(b).

        BORROWERS AND THE LENDER GROUP HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF
THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. BORROWERS AND THE LENDER GROUP REPRESENT THAT EACH HAS
REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL
RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A
COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.

14.  ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.

        14.1    Assignments and Participations.    

        (a)  Any Lender may, with the written consent of Agent (provided that no
written consent of Agent shall be required in connection with any assignment and
delegation by a Lender to an Eligible Transferee), assign and delegate to one or
more assignees (each, an "Assignee") all, or any ratable part of all, of the
Obligations, the Commitments and the other rights and obligations of such Lender
hereunder and under the other Loan Documents, in a minimum amount of $5,000,000
(except such minimum amount shall not apply to any Affiliate of a Lender or to a
Qualified Lender Account, provided that if the minimum amount is not met,
Borrowers and Agent may continue to deal solely and directly with such Lender in
connection with the interest so assigned to an Assignee); provided, however,
that Borrowers and Agent may continue to deal solely and directly with such
Lender in connection with the interest so assigned to an Assignee until
(i) written notice of such assignment, together with payment instructions,
addresses, and related information with respect to the Assignee, have been given
to Administrative Borrower and Agent by such Lender and the Assignee, (ii) such
Lender and its Assignee have delivered to Administrative Borrower and Agent an
Assignment and Acceptance in form and substance satisfactory to Agent, and
(iii) the assignor Lender or Assignee has paid to Agent for Agent's separate
account a processing fee in the amount of $5,000. Anything contained herein to
the

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contrary notwithstanding, the consent of Agent shall not be required (and
payment of any fees shall not be required) if such assignment is in connection
with any merger, consolidation, sale, transfer, or other disposition of all or
any substantial portion of the business or loan portfolio of such Lender or the
Assignee is an Affiliate (other than individuals) of a Lender or a Qualified
Lender Account.

        (b)  From and after the date that Agent notifies the assignor Lender
(with a copy to Administrative Borrower) that it has received an executed
Assignment and Acceptance and payment of the above-referenced processing fee,
(i) the Assignee thereunder shall be a party hereto and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, shall have the rights and obligations of a Lender
under the Loan Documents, and (ii) the assignor Lender shall, to the extent that
rights and obligations hereunder and under the other Loan Documents have been
assigned by it pursuant to such Assignment and Acceptance, relinquish its rights
(except with respect to Section 11.3 hereof) and be released from its
obligations under this Agreement (and in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement and the other Loan Documents, such Lender
shall cease to be a party hereto and thereto), and such assignment shall affect
a novation between Borrowers and the Assignee.

        (c)  By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the Assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (1) other than as
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other Loan Document furnished
pursuant hereto, (2) such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of
Borrowers or the performance or observance by Borrowers of any of their
obligations under this Agreement or any other Loan Document furnished pursuant
hereto, (3) such Assignee confirms that it has received a copy of this
Agreement, together with such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance, (4) such Assignee will, independently and without
reliance upon Agent, such assigning Lender or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement, (5) such Assignee appoints and authorizes Agent to take such
actions and to exercise such powers under this Agreement as are delegated to
Agent, by the terms hereof, together with such powers as are reasonably
incidental thereto, and (6) such Assignee agrees that it will perform all of the
obligations which by the terms of this Agreement are required to be performed by
it as a Lender.

        (d)  Immediately upon each Assignee's making its processing fee payment
under the Assignment and Acceptance and receipt and acknowledgment by Agent of
such fully executed Assignment and Acceptance, this Agreement shall be deemed to
be amended to the extent, but only to the extent, necessary to reflect the
addition of the Assignee and the resulting adjustment of the Commitments arising
therefrom. The Commitment allocated to each Assignee shall reduce such
Commitments of the assigning Lender pro tanto.

        (e)  Any Lender may at any time, with the written consent of Agent, sell
to one or more commercial banks, financial institutions, or other Persons not
Affiliates of such Lender (a "Participant") participating interests in its
Obligations, the Commitment, and the other rights and interests of that Lender
(the "Originating Lender") hereunder and under the other Loan Documents
(provided that no written consent of Agent shall be required in connection with
any

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sale of any such participating interests by a Lender to an Eligible Transferee);
provided, however, that (i) the Originating Lender shall remain a "Lender" for
all purposes of this Agreement and the other Loan Documents and the Participant
receiving the participating interest in the Obligations, the Commitments, and
the other rights and interests of the Originating Lender hereunder shall not
constitute a "Lender" hereunder or under the other Loan Documents and the
Originating Lender's obligations under this Agreement shall remain unchanged,
(ii) the Originating Lender shall remain solely responsible for the performance
of such obligations, (iii) Borrowers, Agent, and the Lenders shall continue to
deal solely and directly with the Originating Lender in connection with the
Originating Lender's rights and obligations under this Agreement and the other
Loan Documents, (iv) no Lender shall transfer or grant any participating
interest under which the Participant has the right to approve any amendment to,
or any consent or waiver with respect to, this Agreement or any other Loan
Document, except to the extent such amendment to, or consent or waiver with
respect to, this Agreement or of any other Loan Document would (A) extend the
final maturity date of the Obligations hereunder in which such Participant is
participating, (B) reduce the interest rate applicable to the Obligations
hereunder in which such Participant is participating, (C) release all or a
material portion of the Collateral or guaranties (except to the extent expressly
provided herein or in any of the Loan Documents) supporting the Obligations
hereunder in which such Participant is participating, (D) postpone the payment
of, or reduce the amount of, the interest or fees payable to such Participant
through such Lender, or (E) change the amount or due dates of scheduled
principal repayments or prepayments or premiums; and (v) all amounts payable by
Borrowers hereunder shall be determined as if such Lender had not sold such
participation; except that, if amounts outstanding under this Agreement are due
and unpaid, or shall have been declared or shall have become due and payable
upon the occurrence of an Event of Default, each Participant shall be deemed to
have the right of set off in respect of its participating interest in amounts
owing under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement. The rights of any Participant only shall be derivative through the
Originating Lender with whom such Participant participates and no Participant
shall have any rights under this Agreement or the other Loan Documents or any
direct rights as to the other Lenders, Agent, Borrowers, the Collections, the
Collateral, or otherwise in respect of the Obligations. No Participant shall
have the right to participate directly in the making of decisions by the Lenders
among themselves.

        (f)    In connection with any such assignment or participation or
proposed assignment or participation, a Lender may disclose all documents and
information which it now or hereafter may have relating to Borrowers or
Borrowers' business.

        (g)  Any other provision in this Agreement notwithstanding, any Lender
may at any time create a security interest in, or pledge, all or any portion of
its rights under and interest in this Agreement in favor of any Federal Reserve
Bank in accordance with Regulation A of the Federal Reserve Bank or U.S.
Treasury Regulation 31 CFR §203.14, and such Federal Reserve Bank may enforce
such pledge or security interest in any manner permitted under applicable law.

        14.2    Successors.    This Agreement shall bind and inure to the
benefit of the respective successors and assigns of each of the parties;
provided, however, that Borrowers may not assign this Agreement or any rights or
duties hereunder without the Lenders' prior written consent and any prohibited
assignment shall be absolutely void ab initio. No consent to assignment by the
Lenders shall release any Borrower from its Obligations. A Lender may assign
this Agreement and the other Loan Documents and its rights and duties hereunder
and thereunder pursuant to Section 14.1 hereof and, except as expressly required
pursuant to Section 14.1 hereof, no consent or approval by any Borrower is
required in connection with any such assignment.

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15.  AMENDMENTS; WAIVERS.

        15.1    Amendments and Waivers.    No amendment or waiver of any
provision of this Agreement or any other Loan Document, and no consent with
respect to any departure by Borrowers therefrom, shall be effective unless the
same shall be in writing and signed by the Required Lenders (or by Agent at the
written request of the Required Lenders) and Administrative Borrower (on behalf
of all Borrowers) and then any such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given; provided,
however, that no such waiver, amendment, or consent shall, unless in writing and
signed by all of the Lenders affected thereby and Administrative Borrower (on
behalf of all Borrowers) and acknowledged by Agent, do any of the following:

        (a)  increase or extend any Commitment of any Lender,

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

        (c)  reduce the principal of, or the rate of interest on, any loan or
other extension of credit hereunder, or reduce any fees or other amounts payable
hereunder or under any other Loan Document,

        (d)  change the percentage of the Commitments that is required to take
any action hereunder,

        (e)  amend this Section or any provision of this Agreement providing for
consent or other action by all Lenders,

        (f)    release Collateral other than as permitted by Section 16.12,

        (g)  change the definition of "Required Lenders",

        (h)  contractually subordinate any of the Agent's Liens,

        (i)    release any Borrower or Guarantor from any obligation for the
payment of money, or

        (j)    change the definition of Borrowing Base or the definitions of
Eligible Accounts, Eligible Finished Goods Inventory, Eligible Inventory,
Eligible Raw Materials Inventory, Eligible Work-in-Process Inventory, Maximum
Revolver Amount, Subline A Amount, Subline B Amount, Subline C Amount or change
Section 2.1(b); or

        (k)  amend any of the provisions of Section 16,

and, provided further, however, that no amendment, waiver or consent shall,
unless in writing and signed by Agent, Issuing Lender, or Swing Lender, affect
the rights or duties of Agent, Issuing Lender, or Swing Lender, as applicable,
under this Agreement or any other Loan Document. The foregoing notwithstanding,
any amendment, modification, waiver, consent, termination, or release of, or
with respect to, any provision of this Agreement or any other Loan Document that
relates only to the relationship of the Lender Group among themselves, and that
does not affect the rights or obligations of Borrowers, shall not require
consent by or the agreement of Borrowers.

        Foothill and Highbridge have executed the Lender Side Letter Agreement
pursuant to which they have agreed, among other things, to certain voting
arrangements relative to matters requiring the approval of the Lenders. The
rights and duties of the Lenders, with respect to such matters, are subject to
the Lender Side Letter Agreement.

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        15.2    Replacement of Holdout Lender.    If any action to be taken by
the Lender Group or Agent hereunder requires the unanimous consent,
authorization, or agreement of all Lenders, and a Lender ("Holdout Lender")
fails to give its consent, authorization, or agreement, then Agent, upon at
least 5 Business Days prior irrevocable notice to the Holdout Lender, may
permanently replace the Holdout Lender with one or more substitute Lenders
(each, a "Replacement Lender"), and the Holdout Lender shall have no right to
refuse to be replaced hereunder. Such notice to replace the Holdout Lender shall
specify an effective date for such replacement, which date shall not be later
than 15 Business Days after the date such notice is given.

        Prior to the effective date of such replacement, the Holdout Lender and
each Replacement Lender shall execute and deliver an Assignment and Acceptance
Agreement, subject only to the Holdout Lender being repaid its share of the
outstanding Obligations (including an assumption of its Pro Rata Share of the
Risk Participation Liability) without any premium or penalty of any kind
whatsoever. If the Holdout Lender shall refuse or fail to execute and deliver
any such Assignment and Acceptance Agreement prior to the effective date of such
replacement, the Holdout Lender shall be deemed to have executed and delivered
such Assignment and Acceptance Agreement. The replacement of any Holdout Lender
shall be made in accordance with the terms of Section 14.1. Until such time as
the Replacement Lenders shall have acquired all of the Obligations, the
Commitments, and the other rights and obligations of the Holdout Lender
hereunder and under the other Loan Documents, the Holdout Lender shall remain
obligated to make the Holdout Lender's Pro Rata Share of Advances and Subline
Advances and to purchase a participation in each Letter of Credit, in an amount
equal to its Pro Rata Share of the Risk Participation Liability of such Letter
of Credit.

        15.3    No Waivers; Cumulative Remedies.    No failure by Agent or any
Lender to exercise any right, remedy, or option under this Agreement or, any
other Loan Document, or delay by Agent or any Lender in exercising the same,
will operate as a waiver thereof. No waiver by Agent or any Lender will be
effective unless it is in writing, and then only to the extent specifically
stated. No waiver by Agent or any Lender on any occasion shall affect or
diminish Agent's and each Lender's rights thereafter to require strict
performance by Borrowers of any provision of this Agreement. Agent's and each
Lender's rights under this Agreement and the other Loan Documents will be
cumulative and not exclusive of any other right or remedy that Agent or any
Lender may have.

16.  AGENT; THE LENDER GROUP.

        16.1    Appointment and Authorization of Agent.    Each Lender hereby
designates and appoints Foothill as its representative under this Agreement and
the other Loan Documents and each Lender hereby irrevocably authorizes Agent to
take such action on its behalf under the provisions of this Agreement and each
other Loan Document and to exercise such powers and perform such duties as are
expressly delegated to Agent by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental thereto. Agent
agrees to act as such on the express conditions contained in this Section 16.
The provisions of this Section 16 are solely for the benefit of Agent, and the
Lenders, and Borrowers shall have no rights as a third party beneficiary of any
of the provisions contained herein. Any provision to the contrary contained
elsewhere in this Agreement or in any other Loan Document notwithstanding, Agent
shall not have any duties or responsibilities, except those expressly set forth
herein, nor shall Agent have or be deemed to have any fiduciary relationship
with any Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against Agent; it being expressly understood and
agreed that the use of the word "Agent" is for convenience only, that Foothill
is merely the representative of the Lenders, and only has the contractual duties
set forth herein. Except as expressly otherwise provided in this Agreement,
Agent shall have and may use its sole discretion with respect to exercising or
refraining from exercising any discretionary rights or taking or refraining from
taking any actions that Agent expressly is entitled to

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take or assert under or pursuant to this Agreement and the other Loan Documents.
Without limiting the generality of the foregoing, or of any other provision of
the Loan Documents that provides rights or powers to Agent, Lenders agree that
Agent shall have the right to exercise the following powers as long as this
Agreement remains in effect: (a) maintain, in accordance with its customary
business practices, ledgers and records reflecting the status of the
Obligations, the Collateral, the Collections, and related matters, (b) execute
or file any and all financing or similar statements or notices, amendments,
renewals, supplements, documents, instruments, proofs of claim, notices and
other written agreements with respect to the Loan Documents, (c) make Advances
and Subline Advances, for itself or on behalf of Lenders as provided in the Loan
Documents, (d) exclusively receive, apply, and distribute the Collections as
provided in the Loan Documents, (e) open and maintain such bank accounts and
cash management arrangements as Agent deems necessary and appropriate in
accordance with the Loan Documents for the foregoing purposes with respect to
the Collateral and the Collections, (f) perform, exercise, and enforce any and
all other rights and remedies of the Lender Group with respect to Borrowers, the
Obligations, the Collateral, the Collections, or otherwise related to any of
same as provided in the Loan Documents, and (g) incur and pay such Lender Group
Expenses as Agent may deem necessary or appropriate for the performance and
fulfillment of its functions and powers pursuant to the Loan Documents.

        16.2    Delegation of Duties.    Agent may execute any of its duties
under this Agreement or any other Loan Document by or through agents, employees
or attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects as
long as such selection was made without gross negligence or willful misconduct.

        16.3    Liability of Agent.    None of the Agent-Related Persons shall
(i) be liable for any action taken or omitted to be taken by any of them under
or in connection with this Agreement or any other Loan Document or the
transactions contemplated hereby (except for its own gross negligence or willful
misconduct), or (ii) be responsible in any manner to any of the Lenders for any
recital, statement, representation or warranty made by any Borrower or any
Subsidiary or Affiliate of any Borrower, or any officer or director thereof,
contained in this Agreement or in any other Loan Document, or in any
certificate, report, statement or other document referred to or provided for in,
or received by Agent under or in connection with, this Agreement or any other
Loan Document, or the validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Loan Document, or for any failure of
any Borrower or any other party to any Loan Document to perform its obligations
hereunder or thereunder. No Agent-Related Person shall be under any obligation
to any Lender to ascertain or to inquire as to the observance or performance of
any of the agreements contained in, or conditions of, this Agreement or any
other Loan Document, or to inspect the Books or properties of Borrowers or the
books or records or properties of any of Borrowers' Subsidiaries or Affiliates.

        16.4    Reliance by Agent.    Agent shall be entitled to rely, and shall
be fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent, or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to Borrowers
or counsel to any Lender), independent accountants and other experts selected by
Agent. Agent shall be fully justified in failing or refusing to take any action
under this Agreement or any other Loan Document unless Agent shall first receive
such advice or concurrence of the Lenders as it deems appropriate and until such
instructions are received, Agent shall act, or refrain from acting, as it deems
advisable. If Agent so requests, it shall first be indemnified to its reasonable
satisfaction by Lenders against any and all liability and expense that may be
incurred by it by reason of taking or continuing to take any such action. Agent
shall in all cases be fully protected in acting, or in refraining from acting,
under this Agreement or any other Loan

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Document in accordance with a request or consent of the Lenders and such request
and any action taken or failure to act pursuant thereto shall be binding upon
all of the Lenders.

        16.5    Notice of Default or Event of Default.    Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default, except with respect to defaults in the payment of principal, interest,
fees, and expenses required to be paid to Agent for the account of the Lenders,
except with respect to Events of Default of which Agent has actual knowledge,
unless Agent shall have received written notice from a Lender or Administrative
Borrower referring to this Agreement, describing such Default or Event of
Default, and stating that such notice is a "notice of default." Agent promptly
will notify the Lenders of its receipt of any such notice or of any Event of
Default of which Agent has actual knowledge. If any Lender obtains actual
knowledge of any Event of Default, such Lender promptly shall notify the other
Lenders and Agent of such Event of Default. Each Lender shall be solely
responsible for giving any notices to its Participants, if any. Subject to
Section 16.4, Agent shall take such action with respect to such Default or Event
of Default as may be requested by the Required Lenders in accordance with
Section 9; provided, however, that unless and until Agent has received any such
request, Agent may (but shall not be obligated to) take such action, or refrain
from taking such action, with respect to such Default or Event of Default as it
shall deem advisable.

        16.6    Credit Decision.    Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by Agent hereinafter taken, including any review of the affairs of Borrowers
and their Subsidiaries or Affiliates, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to Agent that it has, independently and without reliance upon
any Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of Borrowers and any other Person (other than the Lender Group)
party to a Loan Document, and all applicable bank regulatory laws relating to
the transactions contemplated hereby, and made its own decision to enter into
this Agreement and to extend credit to Borrowers. Each Lender also represents
that it will, independently and without reliance upon any Agent-Related Person
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigations as it deems necessary to inform itself as to the
business, prospects, operations, property, financial and other condition and
creditworthiness of Borrowers and any other Person (other than the Lender Group)
party to a Loan Document. Except for notices, reports, and other documents
expressly herein required to be furnished to the Lenders by Agent, Agent shall
not have any duty or responsibility to provide any Lender with any credit or
other information concerning the business, prospects, operations, property,
financial and other condition or creditworthiness of Borrowers and any other
Person party to a Loan Document that may come into the possession of any of the
Agent-Related Persons.

        16.7    Costs and Expenses; Indemnification.    Agent may incur and pay
Lender Group Expenses to the extent Agent reasonably deems necessary or
appropriate for the performance and fulfillment of its functions, powers, and
obligations pursuant to the Loan Documents, including court costs, reasonable
attorneys fees and expenses, costs of collection by outside collection agencies
and auctioneer fees and costs of security guards or insurance premiums paid to
maintain the Collateral, whether or not Borrowers are obligated to reimburse
Agent or Lenders for such expenses pursuant to this Agreement or otherwise.
Agent is authorized and directed to deduct and retain sufficient amounts from
Collections received by Agent to reimburse Agent for such out-of-pocket costs
and expenses prior to the distribution of any amounts to Lenders. In the event
Agent is not reimbursed for such costs and expenses from Collections received by
Agent, each Lender hereby agrees that it is and shall be obligated to pay to or
reimburse Agent for the amount of such Lender's Pro Rata Share thereof.

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Whether or not the transactions contemplated hereby are consummated, the Lenders
shall indemnify upon demand the Agent-Related Persons (to the extent not
reimbursed by or on behalf of Borrowers and without limiting the obligation of
Borrowers to do so), according to their Pro Rata Shares, from and against any
and all Indemnified Liabilities; provided, however, that no Lender shall be
liable for the payment to any Agent-Related Person of any portion of such
Indemnified Liabilities resulting solely from such Person's gross negligence or
willful misconduct nor shall any Lender be liable for the obligations of any
Defaulting Lender in failing to make an Advance, a Subline Advance or other
extension of credit hereunder. Without limitation of the foregoing, each Lender
shall reimburse Agent upon demand for such Lender's ratable share of any costs
or out-of-pocket expenses (including attorneys fees and expenses) incurred by
Agent in connection with the preparation, execution, delivery, administration,
modification, amendment, or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any document
contemplated by or referred to herein or therein, to the extent that Agent is
not reimbursed for such expenses by or on behalf of Borrowers. The undertaking
in this Section shall survive the payment of all Obligations hereunder and the
resignation or replacement of Agent.

        16.8    Agent in Individual Capacity.    Foothill and its Affiliates may
make loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in, and generally engage in any kind of banking, trust,
financial advisory, underwriting, or other business with Borrowers and their
Subsidiaries and Affiliates and any other Person (other than the Lender Group)
party to any Loan Documents as though Foothill were not Agent hereunder, and, in
each case, without notice to or consent of the other members of the Lender
Group. The other members of the Lender Group acknowledge that, pursuant to such
activities, Foothill or its Affiliates may receive information regarding
Borrowers or their Affiliates and any other Person (other than the Lender Group)
party to any Loan Documents that is subject to confidentiality obligations in
favor of Borrowers or such other Person and that prohibit the disclosure of such
information to the Lenders, and the Lenders acknowledge that, in such
circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver Agent will use its reasonable best efforts to obtain),
Agent shall not be under any obligation to provide such information to them. The
terms "Lender" and "Lenders" include Foothill in its individual capacity.

        16.9    Successor Agent.    Agent may resign as Agent upon 45 days
notice to the Lenders. If Agent resigns under this Agreement, the Required
Lenders shall appoint a successor Agent for the Lenders. If no successor Agent
is appointed prior to the effective date of the resignation of Agent, Agent may
appoint, after consulting with the Lenders, a successor Agent. If Agent has
materially breached or failed to perform any material provision of this
Agreement or of applicable law, the Required Lenders may agree in writing to
remove and replace Agent with a successor Agent from among the Lenders. In any
such event, upon the acceptance of its appointment as successor Agent hereunder,
such successor Agent shall succeed to all the rights, powers, and duties of the
retiring Agent and the term "Agent" shall mean such successor Agent and the
retiring Agent's appointment, powers, and duties as Agent shall be terminated.
After any retiring Agent's resignation hereunder as Agent, the provisions of
this Section 16 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Agent under this Agreement. If no successor Agent
has accepted appointment as Agent by the date which is 45 days following a
retiring Agent's notice of resignation, the retiring Agent's resignation shall
nevertheless thereupon become effective and the Lenders shall perform all of the
duties of Agent hereunder until such time, if any, as the Lenders appoint a
successor Agent as provided for above.

        16.10    Lender in Individual Capacity    

        Any Lender and its respective Affiliates may make loans to, issue
letters of credit for the account of, accept deposits from, acquire equity
interests in and generally engage in any kind of banking, trust, financial
advisory, underwriting or other business with Borrowers and their Subsidiaries
and Affiliates

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and any other Person (other than the Lender Group) party to any Loan Documents
as though such Lender were not a Lender hereunder without notice to or consent
of the other members of the Lender Group. The other members of the Lender Group
acknowledge that, pursuant to such activities, such Lender and its respective
Affiliates may receive information regarding Borrowers or their Affiliates and
any other Person (other than the Lender Group) party to any Loan Documents that
is subject to confidentiality obligations in favor of Borrowers or such other
Person and that prohibit the disclosure of such information to the Lenders, and
the Lenders acknowledge that, in such circumstances (and in the absence of a
waiver of such confidentiality obligations, which waiver such Lender will use
its reasonable best efforts to obtain), such Lender not shall be under any
obligation to provide such information to them. With respect to the Swing Loans
and Agent Advances, Swing Lender shall have the same rights and powers under
this Agreement as any other Lender and may exercise the same as though it were
not the sub-agent of the Agent.

        16.11    Withholding Taxes.    

        (a)  If any Lender is a "foreign corporation, partnership or trust"
within the meaning of the IRC and such Lender claims exemption from, or a
reduction of, United States withholding tax under Sections 1441 or 1442 of the
IRC, such Lender agrees with and in favor of Agent and Borrowers, to deliver to
Agent and Administrative Borrower:

        (i)    if such Lender claims an exemption from withholding tax pursuant
to its portfolio interest exception, (a) a statement of the Lender, signed under
penalty of perjury, that it is not a (I) a "bank" as described in Section
881(c)(3)(A) of the IRC, (II) a 10% shareholder (within the meaning of
Section 881(c)(3)(B) of the IRC), or (III) a controlled foreign corporation
described in Section 881(c)(3)(C) of the IRC, and (B) a properly completed IRS
Form W-8BEN, before the first payment of any interest under this Agreement and
at any other time reasonably requested by Agent or Administrative Borrower;

        (ii)  if such Lender claims an exemption from, or a reduction of,
withholding tax under a United States tax treaty, properly completed IRS
Form W-8BEN before the first payment of any interest under this Agreement and at
any other time reasonably requested by Agent or Administrative Borrower;

        (iii)  if such Lender claims that interest paid under this Agreement is
exempt from United States withholding tax because it is effectively connected
with a United States trade or business of such Lender, two properly completed
and executed copies of IRS Form W-8ECI before the first payment of any interest
is due under this Agreement and at any other time reasonably requested by Agent
or Administrative Borrower; and

        (iv)  such other form or forms as may be required under the IRC or other
laws of the United States as a condition to exemption from, or reduction of,
United States withholding tax.

Such Lender agrees promptly to notify Agent and Administrative Borrower of any
change in circumstances which would modify or render invalid any claimed
exemption or reduction.

        (b)  If any Lender claims exemption from, or reduction of, withholding
tax under a United States tax treaty by providing IRS Form W-8BEN and such
Lender sells, assigns, grants a participation in, or otherwise transfers all or
part of the Obligations of Borrowers to such Lender, such Lender agrees to
notify Agent of the percentage amount in which it is no longer the beneficial
owner of Obligations of Borrowers to such Lender. To the extent of such
percentage amount, Agent will treat such Lender's IRS Form W-8BEN as no longer
valid.

        (c)  If any Lender is entitled to a reduction in the applicable
withholding tax, Agent may withhold from any interest payment to such Lender an
amount equivalent to the applicable withholding tax after taking into account
such reduction. If the forms or other documentation

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required by subsection (a) of this Section are not delivered to Agent, then
Agent may withhold from any interest payment to such Lender not providing such
forms or other documentation an amount equivalent to the applicable withholding
tax.

        (d)  If the IRS or any other Governmental Authority of the United States
or other jurisdiction asserts a claim that Agent did not properly withhold tax
from amounts paid to or for the account of any Lender (because the appropriate
form was not delivered, was not properly executed, or because such Lender failed
to notify Agent of a change in circumstances which rendered the exemption from,
or reduction of, withholding tax ineffective, or for any other reason) such
Lender shall indemnify and hold Agent harmless for all amounts paid, directly or
indirectly, by Agent as tax or otherwise, including penalties and interest, and
including any taxes imposed by any jurisdiction on the amounts payable to Agent
under this Section, together with all costs and expenses (including attorneys
fees and expenses). The obligation of the Lenders under this subsection shall
survive the payment of all Obligations and the resignation or replacement of
Agent.

        (e)  All payments made by Borrowers hereunder or under any note or other
Loan Document will be made without setoff, counterclaim, or other defense,
except as required by applicable law other than for Taxes (as defined below).
All such payments will be made free and clear of, and without deduction or
withholding for, any present or future taxes, levies, imposts, duties, fees,
assessments or other charges of whatever nature now or hereafter imposed by any
jurisdiction (other than the United States) or by any political subdivision or
taxing authority thereof or therein (other than of the United States) with
respect to such payments (but excluding, any tax imposed by any jurisdiction or
by any political subdivision or taxing authority thereof or therein (i) measured
by or based on the net income or net profits of a Lender, or (ii) to the extent
that such tax results from a change in the circumstances of a Lender, including
a change in the residence, place of organization, or principal place of business
of a Lender, or a change in the branch or lending office of a Lender
participating in the transactions set forth herein) and all interest, penalties
or similar liabilities with respect thereto (all such non-excluded taxes,
levies, imposts, duties, fees, assessments or other charges being referred to
collectively as "Taxes"). If any Taxes are so levied or imposed, each Borrower
agrees to pay the full amount of such Taxes, and such additional amounts as may
be necessary so that every payment of all amounts due under this Agreement or
under any note, including any amount paid pursuant to this Section 16.11(e)
after withholding or deduction for or on account of any Taxes, will not be less
than the amount provided for herein; provided, however, that Borrowers shall not
be required to increase any such amounts payable to Agent or any Lender (i) that
is not organized under the laws of the United States, if such Person fails to
comply with the other requirements of this Section 16.11, or (ii) if the
increase in such amount payable results from Agent's or such Lender's own
willful misconduct or gross negligence. Borrowers will furnish to Agent as
promptly as possible after the date the payment of any Taxes is due pursuant to
applicable law certified copies of tax receipts evidencing such payment by
Borrowers.

        16.12    Collateral Matters.    

        (a)  The Lenders hereby irrevocably authorize Agent, at its option and
in its sole discretion, to release any Lien on any Collateral (i) upon the
termination of the Commitments and payment and satisfaction in full by Borrowers
of all Obligations, (ii) constituting property being sold or disposed of if a
release is required or desirable in connection therewith and if Administrative
Borrower certifies to Agent that the sale or disposition is permitted under
Section 7.4 of this Agreement or the other Loan Documents (and Agent may rely
conclusively on any such certificate, without further inquiry),
(iii) constituting property in which no Borrower owned any interest at the time
the security interest was granted or at any time thereafter, or
(iv) constituting property leased to a Borrower under a lease that has expired
or is terminated in a transaction permitted under this

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Agreement. Except as provided above, Agent will not execute and deliver a
release of any Lien on any Collateral without the prior written authorization of
(y) if the release is of all or substantially all of the Collateral, all of the
Lenders, or (z) otherwise, the Required Lenders. Upon request by Agent or
Administrative Borrower at any time, the Lenders will confirm in writing Agent's
authority to release any such Liens on particular types or items of Collateral
pursuant to this Section 16.12; provided, however, that (1) Agent shall not be
required to execute any document necessary to evidence such release on terms
that, in Agent's opinion, would expose Agent to liability or create any
obligation or entail any consequence other than the release of such Lien without
recourse, representation, or warranty, and (2) such release shall not in any
manner discharge, affect, or impair the Obligations or any Liens (other than
those expressly being released) upon (or obligations of Borrowers in respect of)
all interests retained by Borrowers, including the proceeds of any sale, all of
which shall continue to constitute part of the Collateral.

        (b)  Agent shall have no obligation whatsoever to any of the Lenders to
assure that the Collateral exists or is owned by Borrowers or is cared for,
protected, or insured or has been encumbered, or that the Agent's Liens 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 pursuant to any of the Loan Documents, it being understood
and agreed that in respect of the Collateral, or any act, omission, or event
related thereto, subject to the terms and conditions contained herein, Agent may
act in any manner it may deem appropriate, in its sole discretion given Agent's
own interest in the Collateral in its capacity as one of the Lenders and that
Agent shall have no other duty or liability whatsoever to any Lender as to any
of the foregoing, except as otherwise provided herein.

        16.13    Restrictions on Actions by Lenders; Sharing of Payments.    

        (a)  Each of the Lenders agrees that it shall not, without the express
consent of Agent, and that it shall, to the extent it is lawfully entitled to do
so, upon the request of Agent, set off against the Obligations, any amounts
owing by such Lender to Borrowers or any deposit accounts of Borrowers now or
hereafter maintained with such Lender. Each of the Lenders further agrees that
it shall not, unless specifically requested to do so by Agent, take or cause to
be taken any action, including, the commencement of any legal or equitable
proceedings, to foreclose any Lien on, or otherwise enforce any security
interest in, any of the Collateral the purpose of which is, or could be, to give
such Lender any preference or priority against the other Lenders with respect to
the Collateral.

        (b)  If, at any time or times any Lender shall receive (i) by payment,
foreclosure, setoff, or otherwise, any proceeds of Collateral or any payments
with respect to the Obligations arising under, or relating to, this Agreement or
the other Loan Documents, except for any such proceeds or payments received by
such Lender from Agent pursuant to the terms of this Agreement, or (ii) payments
from Agent in excess of such Lender's ratable portion of all such distributions
by Agent, such Lender promptly shall (1) turn the same over to Agent, in kind,
and with such endorsements as may be required to negotiate the same to Agent, or
in immediately available funds, as applicable, for the account of all of the
Lenders and for application to the Obligations in accordance with the applicable
provisions of this Agreement, or (2) purchase, without recourse or warranty, an
undivided interest and participation in the Obligations owed to the other
Lenders so that such excess payment received shall be applied ratably as among
the Lenders in accordance with their Pro Rata Shares; provided, however, that if
all or part of such excess payment received by the purchasing party is
thereafter recovered from it, those purchases of participations shall be
rescinded in whole or in part, as applicable, and the applicable portion of the
purchase price paid therefor shall be returned to such purchasing party, but
without interest except to the extent that

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such purchasing party is required to pay interest in connection with the
recovery of the excess payment.

        16.14    Agency for Perfection.    Agent hereby appoints each other
Lender as its agent (and each Lender hereby accepts such appointment) for the
purpose of perfecting the Agent's Liens in assets which, in accordance with
Article 9 of the Code can be perfected only by possession. 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.

        16.15    Payments by Agent to the Lenders.    All payments to be made by
Agent to the Lenders shall be made by bank wire transfer or internal transfer of
immediately available funds pursuant to such wire transfer instructions as each
party may designate for itself by written notice to Agent. Concurrently with
each such payment, Agent shall identify whether such payment (or any portion
thereof) represents principal, premium, or interest of the Obligations.

        16.16    Concerning the Collateral and Related Loan Documents.    Each
member of the Lender Group authorizes and directs Agent to enter into this
Agreement and the other Loan Documents relating to the Collateral, for the
benefit of the Lender Group. Each member of the Lender Group agrees that any
action taken by Agent in accordance with the terms of this Agreement or the
other Loan Documents relating to the Collateral and the exercise by Agent of its
powers set forth herein or therein, together with such other powers that are
reasonably incidental thereto, shall be binding upon all of the Lenders.

        16.17    Field Audits and Examination Reports; Confidentiality;
Disclaimers by Lenders; Other Reports and Information.    By becoming a party to
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 (each, a "Report" and collectively, "Reports") prepared by Agent, and
Agent shall so furnish each Lender with such Reports,

        (b)  expressly agrees and acknowledges that Agent does not (i) make any
representation or warranty as to the accuracy of any Report, and (ii) 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 other party performing any
audit or examination will inspect only specific information regarding Borrowers
and will rely significantly upon the Books, as well as on representations of
Borrowers' personnel,

        (d)  agrees to keep all Reports and other material, non-public
information regarding Borrowers and their Subsidiaries and their operations,
assets, and existing and contemplated business plans in a confidential manner;
it being understood and agreed by Borrowers that in any event such Lender may
make disclosures (a) to counsel for and other advisors, accountants, and
auditors to such Lender, (b) reasonably required by any bona fide potential or
actual Assignee or Participant in connection with any contemplated or actual
assignment or transfer by such Lender of an interest herein or any participation
interest in such Lender's rights hereunder, (c) of information that has become
public by disclosures made by Persons other than such Lender, its Affiliates,
assignees, transferees, or Participants, or (d) as required or requested by any
court, governmental or administrative agency, pursuant to any subpoena or other
legal process, or by any law, statute, regulation, or court order; provided,
however, that, unless prohibited by applicable law, statute, regulation, or
court order, such Lender shall notify Administrative Borrower of any request by
any court, governmental or administrative agency, or pursuant to any subpoena or
other legal process for disclosure of any such non-public material information
concurrent with, or where practicable, prior to the disclosure thereof, and

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        (e)  without limiting the generality of any other indemnification
provision contained in this Agreement, agrees: (i) to hold Agent and any such
other Lender preparing a Report harmless from any action the indemnifying Lender
may take or conclusion the indemnifying Lender may reach or draw from any Report
in connection with any loans or other credit accommodations that the
indemnifying Lender has made or may make to Borrowers, or the indemnifying
Lender's participation in, or the indemnifying Lender's purchase of, a loan or
loans of Borrowers; and (ii) to pay and protect, and indemnify, defend and hold
Agent, and any such other Lender preparing a Report, harmless from and against,
the claims, actions, proceedings, damages, costs, expenses, and other amounts
(including, attorneys fees and costs) incurred by Agent and any such other
Lender preparing a Report as the direct or indirect result of any third parties
who might obtain all or part of any Report through the indemnifying Lender.

        In addition to the foregoing: (x) any Lender may from time to time
request of Agent in writing that Agent provide to such Lender a copy of any
report or document provided by Borrowers to Agent that has not been
contemporaneously provided by Borrowers to such Lender, and, upon receipt of
such request, Agent shall provide a copy of same to such Lender, (y) to the
extent that Agent is entitled, under any provision of the Loan Documents, to
request additional reports or information from Borrowers, any Lender may, from
time to time, reasonably request Agent to exercise such right as specified in
such Lender's notice to Agent, whereupon Agent promptly shall request of
Administrative Borrower the additional reports or information reasonably
specified by such Lender, and, upon receipt thereof from Administrative
Borrower, Agent promptly shall provide a copy of same to such Lender, and
(z) any time that Agent renders to Administrative Borrower a statement regarding
the Loan Account, Agent shall send a copy of such statement to each Lender.

        16.18    Several Obligations; No Liability.    Notwithstanding that
certain of the Loan Documents now or hereafter may have been or will be executed
only by or in favor of Agent in its capacity as such, and not by or in favor of
the Lenders, any and all obligations on the part of Agent (if any) to make any
credit available hereunder shall constitute the several (and not joint)
obligations of the respective Lenders on a ratable basis, according to their
respective Commitments, to make an amount of such credit not to exceed, in
principal amount, at any one time outstanding, the amount of their respective
Commitments. Nothing contained herein shall confer upon any Lender any interest
in, or subject any Lender to any liability for, or in respect of, the business,
assets, profits, losses, or liabilities of any other Lender. Each Lender shall
be solely responsible for notifying its Participants of any matters relating to
the Loan Documents to the extent any such notice may be required, and no Lender
shall have any obligation, duty, or liability to any Participant of any other
Lender. Except as provided in Section 16.7, no member of the Lender Group shall
have any liability for the acts or any other member of the Lender Group. No
Lender shall be responsible to any Borrower or any other Person for any failure
by any other Lender to fulfill its obligations to make credit available
hereunder, nor to advance for it or on its behalf in connection with its
Commitment, nor to take any other action on its behalf hereunder or in
connection with the financing contemplated herein.

        16.19    Legal Representation of Agent.    In connection with the
negotiation, drafting, and execution of this Agreement and the other Loan
Documents, or in connection with future legal representation relating to loan
administration, amendments, modifications, waivers, or enforcement of remedies,
Morrison & Foerster LLP ("Morrison") only has represented and only shall
represent Foothill in its capacity as Agent and as a Lender. Each other Lender
hereby acknowledges that Morrison does not represent it in connection with any
such matters.

17.  GENERAL PROVISIONS.

        17.1    Effectiveness.    This Agreement shall be binding and deemed
effective when executed by Borrowers, Agent, and each Lender whose signature is
provided for on the signature pages hereof.

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        17.2    Section Headings.    Headings and numbers have been set forth
herein for convenience only. Unless the contrary is compelled by the context,
everything contained in each Section applies equally to this entire Agreement.

        17.3    Interpretation.    Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against the Lender Group or
Borrowers, whether under any rule of construction or otherwise. On the contrary,
this Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used so as to
accomplish fairly the purposes and intentions of all parties hereto.

        17.4    Severability of Provisions.    Each provision of this Agreement
shall be severable from every other provision of this Agreement for the purpose
of determining the legal enforceability of any specific provision.

        17.5    Amendments in Writing.    This Agreement only can be amended by
a writing in accordance with Section 15.1.

        17.6    Counterparts; Telefacsimile Execution.    This Agreement may be
executed in any number of counterparts and by different parties on separate
counterparts, each of which, when executed and delivered, shall be deemed to be
an original, and all of which, when taken together, shall constitute but one and
the same Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile shall be equally as effective as delivery of an original executed
counterpart of this Agreement. Any party delivering an executed counterpart of
this Agreement by telefacsimile also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement. The foregoing shall apply to each other Loan Document mutatis
mutandis.

        17.7    Revival and Reinstatement of Obligations.    If the incurrence
or payment of the Obligations by any Borrower or Guarantor or the transfer to
the Lender Group of any property should for any reason subsequently be declared
to be void or voidable under any state or federal law relating to creditors'
rights, including provisions of the Bankruptcy Code relating to fraudulent
conveyances, preferences, or other voidable or recoverable payments of money or
transfers of property (collectively, a "Voidable Transfer"), and if the Lender
Group is required to repay or restore, in whole or in part, any such Voidable
Transfer, or elects to do so upon the reasonable advice of its counsel, then, as
to any such Voidable Transfer, or the amount thereof that the Lender Group is
required or elects to repay or restore, and as to all reasonable costs,
expenses, and attorneys fees of the Lender Group related thereto, the liability
of Borrowers or Guarantor automatically shall be revived, reinstated, and
restored and shall exist as though such Voidable Transfer had never been made.

        17.8    Integration.    This Agreement, together with the other Loan
Documents, reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.

        17.9    Parent as Agent for Borrowers.    Each Borrower hereby
irrevocably appoints Parent as the borrowing agent and attorney-in-fact for all
Borrowers (the "Administrative Borrower"), which appointment shall remain in
full force and effect unless and until Agent shall have received prior written
notice signed by each Borrower that such appointment has been revoked and that
another Borrower has been appointed Administrative Borrower. Each Borrower
hereby irrevocably appoints and authorizes the Administrative Borrower (i) to
provide Agent with all notices with respect to Advances, Subline Advances and
Letters of Credit obtained for the benefit of any Borrower and all other notices
and instructions under this Agreement and (ii) to take such action as the
Administrative Borrower deems appropriate on its behalf to obtain Advances,
Subline Advances and Letters of Credit and to exercise such other powers as are
reasonably incidental thereto to carry out the purposes of this Agreement. It is
understood that the handling of the Loan Account and Collateral of Borrowers in
a

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combined fashion, as more fully set forth herein, is done solely as an
accommodation to Borrowers in order to utilize the collective borrowing powers
of Borrowers in the most efficient and economical manner and at their request,
and that Lender Group shall not incur liability to any Borrower as a result
hereof. Each Borrower expects to derive benefit, directly or indirectly, from
the handling of the Loan Account and the Collateral in a combined fashion since
the successful operation of each Borrower is dependent on the continued
successful performance of the integrated group. To induce the Lender Group to do
so, and in consideration thereof, each Borrower hereby jointly and severally
agrees to indemnify each member of the Lender Group and hold each member of the
Lender Group harmless against any and all liability, expense, loss or claim of
damage or injury, made against the Lender Group by any Borrower or by any third
party whosoever, arising from or incurred by reason of (a) the handling of the
Loan Account and Collateral of Borrowers as herein provided, (b) the Lender
Group's relying on any instructions of the Administrative Borrower, or (c) any
other action taken by the Lender Group hereunder or under the other Loan
Documents, except that Borrowers will have no liability to the relevant
Agent-Related Person or Lender-Related Person under this Section 17.9 with
respect to any liability that has been finally determined by a court of
competent jurisdiction to have resulted solely from the gross negligence or
willful misconduct of such Agent-Related Person or Lender-Related Person, as the
case may be.

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Exhibit 10.1

LOAN AND SECURITY AGREEMENT