Exhibit 10.13

 

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CREDIT AGREEMENT

among

NAUTILUS, INC.,

as Borrower,

THE LENDERS NAMED HEREIN,

as Lenders,

KEYBANK NATIONAL ASSOCIATION,

as Lead Arranger, Sole Book Runner and Administrative Agent,

and

U.S. BANK NATIONAL ASSOCIATION,

as Syndication Agent

 

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dated as of

November 18, 2005

 

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TABLE OF CONTENTS

 

    Page

ARTICLE I. DEFINITIONS

  1

Section 1.1. Definitions

  1

Section 1.2. Accounting Terms

  19

Section 1.3. Terms Generally

  19

ARTICLE II. AMOUNT AND TERMS OF CREDIT

  19

Section 2.1. Amount and Nature of Credit

  19

Section 2.2. Revolving Credit

  20

Section 2.3. Interest

  24

Section 2.4. Evidence of Indebtedness

  25

Section 2.5. Notice of Credit Event; Funding of Loans

  26

Section 2.6. Payment on Loans and Other Obligations

  27

Section 2.7. Prepayment

  27

Section 2.8. Facility and Other Fees; Reduction of Commitment

  28

Section 2.9. Reduction of Commitment

  28

Section 2.10. Computation of Interest and Fees

  29

Section 2.11. Mandatory Payments

  29

Section 2.12. Springing Security Interest

  29

ARTICLE III. ADDITIONAL PROVISIONS RELATING TO EURODOLLAR LOANS; INCREASED
CAPITAL; TAXES

  30

Section 3.1. Requirements of Law

  30

Section 3.2. Taxes

  31

Section 3.3. Funding Losses

  32

Section 3.4. Change of Lending Office

  33

Section 3.5. Eurodollar Rate Lending Unlawful; Inability to Determine Rate

  33

ARTICLE IV. CONDITIONS PRECEDENT

  33

Section 4.1. Conditions to Each Credit Event

  33

Section 4.2. Conditions to the First Credit Event

  34

Section 4.3. Post-Closing Conditions

  36

ARTICLE V. COVENANTS

  36

Section 5.1. Insurance

  36

Section 5.2. Money Obligations

  36

Section 5.3. Financial Statements and Information

  37

Section 5.4. Financial Records

  37

Section 5.5. Franchises; Change in Business

  38

Section 5.6. ERISA, Pension and Benefit Plan Compliance

  38

Section 5.7. Financial Covenants

  38

Section 5.8. Borrowing

  39

Section 5.9. Liens

  39

Section 5.10. Regulations T, U and X

  40

Section 5.11. Investments, Loans and Guaranties

  40

Section 5.12. Merger and Sale of Assets

  41

 

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TABLE OF CONTENTS

 

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Section 5.13. Acquisitions

  42

Section 5.14. Notice

  42

Section 5.15. Restricted Payments

  42

Section 5.16. Environmental Compliance

  43

Section 5.17. Affiliate Transactions

  43

Section 5.18. Use of Proceeds

  43

Section 5.19. Corporate Names and Locations of Collateral

  43

Section 5.20. Subsidiary Guaranties, Springing Security Documents and Pledge of
Stock or Other Ownership Interest

  43

Section 5.21. Restrictive Agreements

  44

Section 5.22. Other Covenants

  44

Section 5.23. Guaranty Under Material Indebtedness Agreement

  44

Section 5.24. Right to Take Additional Collateral

  45

Section 5.25. Amendment of Organizational Documents

  45

ARTICLE VI. REPRESENTATIONS AND WARRANTIES

  45

Section 6.1. Corporate Existence; Subsidiaries; Foreign Qualification

  45

Section 6.2. Corporate Authority

  45

Section 6.3. Compliance with Laws and Contracts

  46

Section 6.4. Litigation and Administrative Proceedings

  46

Section 6.5. Title to Assets

  46

Section 6.6. Liens and Security Interests

  46

Section 6.7. Tax Returns

  46

Section 6.8. Environmental Laws

  47

Section 6.9. Locations

  47

Section 6.10. Continued Business

  47

Section 6.11. Employee Benefits Plans

  47

Section 6.12. Consents or Approvals

  48

Section 6.13. Solvency

  48

Section 6.14. Financial Statements

  48

Section 6.15. Regulations

  49

Section 6.16. Material Agreements

  49

Section 6.17. Intellectual Property

  49

Section 6.18. Insurance

  49

Section 6.19. Deposit and Securities Accounts

  49

Section 6.20. Accurate and Complete Statements

  50

Section 6.21. Investment Company; Holding Company

  50

Section 6.22. Defaults

  50

ARTICLE VII. EVENTS OF DEFAULT

  50

Section 7.1. Payments

  50

Section 7.2. Special Covenants

  50

Section 7.3. Other Covenants

  50

Section 7.4. Representations and Warranties

  50

Section 7.5. Cross Default

  50

 

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TABLE OF CONTENTS

 

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Section 7.6. ERISA Default

  51

Section 7.7. Change in Control

  51

Section 7.8. Money Judgment

  51

Section 7.9. Material Adverse Change

  51

Section 7.10. Security

  51

Section 7.11. Validity of Loan Documents

  51

Section 7.12. Solvency

  51 ARTICLE VIII. REMEDIES UPON DEFAULT   52

Section 8.1. Optional Defaults

  52

Section 8.2. Automatic Defaults

  52

Section 8.3. Letters of Credit

  53

Section 8.4. Offsets

  53

Section 8.5. Equalization Provision

  53

Section 8.6. Other Remedies

  54

ARTICLE IX. THE AGENT

  54

Section 9.1. Appointment and Authorization

  54

Section 9.2. Note Holders

  54

Section 9.3. Consultation With Counsel

  54

Section 9.4. Documents

  54

Section 9.5. Agent and Affiliates

  55

Section 9.6. Knowledge of Default

  55

Section 9.7. Action by Agent

  55

Section 9.8. Release of a Guarantor of Payment

  55

Section 9.9. Notice of Default

  55

Section 9.10. Delegation of Duties

  56

Section 9.11. Indemnification of Agent

  56

Section 9.12. Successor Agent

  56

Section 9.13. Other Agents

  56

ARTICLE X. MISCELLANEOUS

  57

Section 10.1. Lenders’ Independent Investigation

  57

Section 10.2. No Waiver; Cumulative Remedies

  57

Section 10.3. Amendments, Waivers and Consents

  57

Section 10.4. Notices

  58

Section 10.5. Costs, Expenses and Taxes

  58

Section 10.6. Indemnification

  58

Section 10.7. Obligations Several; No Fiduciary Obligations

  59

Section 10.8. Execution in Counterparts

  59

Section 10.9. Binding Effect; Borrower’s Assignment

  59

Section 10.10. Lender Assignments

  59

Section 10.11. Sale of Participations

  61

Section 10.12. Patriot Act Notice

  62

Section 10.13. Severability of Provisions; Captions; Attachments

  62

 

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TABLE OF CONTENTS

 

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Section 10.14. Investment Purpose

  62

Section 10.15. Entire Agreement

  62

Section 10.16. Legal Representation of Parties

  62

Section 10.17. Governing Law; Submission to Jurisdiction

  63

Section 10.18. Jury Trial Waiver

   Signature Page 1

(The schedules and exhibits to this agreement have been omitted. Copies of the
schedules and exhibits will be supplementally furnished to the Commission upon
request.)

 

Exhibit A   Form of Revolving Credit Note Exhibit B   Form of Swing Line Note
Exhibit C   Form of Notice of Loan Exhibit D   Form of Compliance Certificate
Exhibit E   Form of Assignment and Acceptance Agreement Exhibit F   Borrower
Investment Policy Exhibit G   Form of Security Agreement Exhibit H   Form of
Guaranty of Payment Exhibit I   Form of Pledge Agreement Exhibit J   Form of
Deposit Account Control Agreement Exhibit K   Form of Securities Account Control
Agreement Exhibit L   Form of Landlord’s Waiver Schedule 1   Commitment of
Lenders Schedule 2   Guarantors of Payment Schedule 2.2   Existing Letters of
Credit Schedule 3   Pledged Securities Schedule 5.8   Indebtedness Schedule 5.9
  Liens Schedule 5.11   Permitted Foreign Subsidiary Loans and Investments
Schedule 6.1   Corporate Existence; Subsidiaries; Foreign Qualification Schedule
6.4   Litigation and Administrative Proceedings Schedule 6.9   Locations
Schedule 6.11   Employee Benefits Plans Schedule 6.16   Material Agreements
Schedule 6.18   Insurance Schedule 6.19   Deposit Accounts and Securities
Accounts

 

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This CREDIT AGREEMENT (as the same may from time to time be amended, restated or
otherwise modified, this “Agreement”) is made effective as of the 18th day of
November, 2005 among:

(a) NAUTILUS, INC., a Washington corporation (“Borrower”);

(b) the lenders listed on Schedule 1 hereto and each other Eligible Transferee,
as hereinafter defined, that becomes a party hereto pursuant to Section 10.10
hereof (collectively, the “Lenders” and, individually, each a “Lender”);

(c) KEYBANK NATIONAL ASSOCIATION, as lead arranger, sole book runner and
administrative agent for the Lenders under this Agreement (“Agent”); and

(d) U.S. BANK NATIONAL ASSOCIATION, as syndication agent (“Syndication Agent”).

WITNESSETH:

WHEREAS, Borrower, Agent and the Lenders desire to contract for the
establishment of credits in the aggregate principal amounts hereinafter set
forth, to be made available to Borrower upon the terms and subject to the
conditions hereinafter set forth;

NOW, THEREFORE, it is mutually agreed as follows:

ARTICLE I. DEFINITIONS

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

“Acquisition” shall mean any transaction or series of related transactions for
the purpose of or resulting, directly or indirectly, in (a) the acquisition of
all or substantially all of the assets of any Person (other than a Company), or
any business or division of any Person (other than a Company), (b) the
acquisition of in excess of fifty percent (50%) of the stock (or other equity
interest) of any Person (other than a Company), or (c) the acquisition of
another Person (other than a Company) by a merger, amalgamation or consolidation
or any other combination with such Person.

“Advantage” shall mean any payment (whether made voluntarily or involuntarily,
by offset of any deposit or other indebtedness or otherwise) received by any
Lender in respect of the Obligations, if such payment results in that Lender
having less than its pro rata share of the Obligations then outstanding.

“Affiliate” shall mean any Person, directly or indirectly, controlling,
controlled by or under common control with a Company and “control” (including
the correlative meanings, the

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terms “controlling”, “controlled by” and “under common control with”) shall mean
the power, directly or indirectly, to direct or cause the direction of the
management and policies of a Company, whether through the ownership of voting
securities, by contract or otherwise.

“Agent” shall mean that term as defined in the first paragraph hereof.

“Agent Fee Letter” shall mean the Agent Fee Letter between Borrower and Agent,
dated as of the Closing Date, as the same may from time to time be amended,
restated or otherwise modified.

“Agreement” shall mean that term as defined in the first paragraph hereof.

“Applicable Facility Fee Rate” shall mean:

(a) for the period from the Closing Date through November 30, 2005, fifteen
(15.0) basis points; and

(b) commencing with the Consolidated financial statements of Borrower for the
fiscal quarter ending September 30, 2005, the number of basis points set forth
in the following matrix, based upon the result of the computation of the
Leverage Ratio, shall be used to establish the number of basis points that will
go into effect on December 1, 2005 and thereafter:

 

Leverage Ratio

   Applicable Facility Fee Rate

Greater than or equal to 2.50 to 1.00

   25.0

Greater than or equal to 2.00 to 1.00 but less than 2.50 to 1.00

   20.0

Greater than or equal to 1.50 to 1.00 but less than 2.00 to 1.00

   17.5

Less than 1.50 to 1.00

   15.0

After December 1, 2005, changes to the Applicable Facility Fee Rate shall be
effective on the first day of each month following the date upon which Agent
should have received, pursuant to Section 5.3(a) and (b) hereof, the
Consolidated financial statements of Borrower. The above matrix does not modify
or waive, in any respect, the requirements of Section 5.7 hereof, the rights of
Agent and the Lenders to charge the Default Rate, or the rights and remedies of
Agent and the Lenders pursuant to Articles VII and VIII hereof. Notwithstanding
anything herein to the contrary, during any period when Borrower shall have
failed to timely deliver the Consolidated financial statements pursuant to
Section 5.3(a) or (b) hereof, or the Compliance Certificate pursuant to
Section 5.3(c) hereof, until such time as the appropriate Consolidated financial
statements and Compliance Certificate are delivered, the Applicable Facility Fee
Rate shall be the highest rate per annum indicated in the above pricing grid
regardless of the Leverage Ratio at such time.

 

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“Applicable Margin” shall mean:

(a) for the period from the Closing Date through November 30, 2005, sixty-five
(65.0) basis points for Eurodollar Loans and zero (0.0) basis points for Base
Rate Loans; and

(b) commencing with the Consolidated financial statements of Borrower for the
fiscal quarter ending September 30, 2005, the number of basis points (depending
upon whether Loans are Eurodollar Loans or Base Rate Loans) set forth in the
following matrix, based upon the result of the computation of the Leverage
Ratio, shall be used to establish the number of basis points that will go into
effect on December 1, 2005 and thereafter:

 

Leverage Ratio

  

Applicable Basis

Points for
Eurodollar Loans

  

Applicable Basis

Points for

Base Rate Loans

Greater than or equal to 2.50 to 1.00

   115.0    0.0

Greater than or equal to 2.00 to 1.00 but less than 2.50 to 1.00

   100.0    0.0

Greater than or equal to 1.50 to 1.00 but less than 2.00 to 1.00

   82.5    0.0

Greater than or equal to 1.00 to 1.00 but less than 1.50 to 1.00

   75.0    0.0

Less than 1.00 to 1.00

   65.0    0.0

After December 1, 2005, changes to the Applicable Margin shall be effective on
the first day of each month following the date upon which Agent should have
received, pursuant to Section 5.3(a) and (b) hereof, the Consolidated financial
statements of Borrower. The above matrix does not modify or waive, in any
respect, the requirements of Section 5.7 hereof, the rights of Agent and the
Lenders to charge the Default Rate, or the rights and remedies of Agent and the
Lenders pursuant to Articles VII and VIII hereof. Notwithstanding anything
herein to the contrary, during any period when Borrower shall have failed to
timely deliver the Consolidated financial statements pursuant to Section 5.3(a)
or (b) hereof, or the Compliance Certificate pursuant to Section 5.3(c) hereof,
until such time as the appropriate Consolidated financial statements and
Compliance Certificate are delivered, the Applicable Margin shall be the highest
rate per annum indicated in the above pricing grid regardless of the Leverage
Ratio at such time.

“Assignment Agreement” shall mean an Assignment and Acceptance Agreement in the
form of the attached Exhibit E.

“Authorized Officer” shall mean a Financial Officer or other individual
authorized by a Financial Officer in writing (with a copy to Agent) to handle
certain administrative matters in connection with this Agreement.

 

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“Base Rate” shall mean a rate per annum equal to the greater of (a) the Prime
Rate or (b) one-half of one percent (.50%) in excess of the Federal Funds
Effective Rate. Any change in the Base Rate shall be effective immediately from
and after such change in the Base Rate.

“Base Rate Loan” shall mean a Revolving Loan described in Section 2.2(a) hereof,
that shall be denominated in Dollars and on which Borrower shall pay interest at
a rate equal to the Derived Base Rate.

“Borrower” shall mean that term as defined in the first paragraph hereof.

“Borrower Investment Policy” shall mean the investment policy of Borrower as in
effect on the Closing Date, attached hereto as Exhibit F, together with such
modifications as approved from time to time by the Board of Directors of
Borrower.

“Business Day” shall mean any day that is not a Saturday, Sunday or other day on
which national banks are authorized or required to close in Cleveland, Ohio,
and, if the applicable Business Day relates to a Eurodollar Loan, a day of the
year on which dealings in deposits are carried on in the London interbank
Eurodollar market.

“Capital Distribution” shall mean a payment made, liability incurred or other
consideration given by a Company to any Person that is not a Company, for the
purchase, acquisition, redemption, repurchase or retirement of any capital stock
or other equity interest of such Company or as a dividend, return of capital or
other distribution (other than any stock dividend, stock split or other equity
distribution payable only in capital stock or other equity of such Company) in
respect of such Company’s capital stock or other equity interest.

“Capitalized Lease Obligations” shall mean obligations of any of the Companies
for the payment of rent for any real or personal property under leases or
agreements to lease that, in accordance with GAAP, have been or should be
capitalized on the books of the lessee and, for purposes hereof, the amount of
any such obligation shall be the capitalized amount thereof determined in
accordance with GAAP.

“Change in Control” shall mean (a) the acquisition of, or, if earlier, the
approval by Borrower’s shareholders or directors of the acquisition of,
ownership or voting control, directly or indirectly, beneficially or of record,
on or after the Closing Date, by any Person or group (within the meaning of Rule
13d-3 of the SEC under the Securities Exchange Act of 1934, as then in effect),
of shares representing more than twenty-five percent (25%) of the aggregate
ordinary Voting Power represented by the issued and outstanding capital stock of
Borrower; (b) the occupation of a majority of the seats (other than vacant
seats) on the board of directors or other governing body of Borrower by Persons
who were neither (i) nominated by the board of directors or other governing body
of Borrower nor (ii) appointed by directors so nominated; or (c) the occurrence
of a change in control, or other similar provision, as defined in any Material
Indebtedness Agreement.

“Closing Date” shall mean the effective date of this Agreement as set forth in
the first paragraph of this Agreement.

 

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“Closing Fee Letter” shall mean the Closing Fee Letter among Borrower, Agent and
the Lenders, dated as of the Closing Date.

“Code” shall mean the Internal Revenue Code of 1986, as amended, together with
the rules and regulations promulgated thereunder.

“Commitment” shall mean the obligation hereunder of the Lenders, during the
Commitment Period, to make Loans (including their respective pro rata shares of
Swing Loans) and to participate in the issuance of Letters of Credit pursuant to
the Revolving Credit Commitment, up to the Total Commitment Amount.

“Commitment Percentage” shall mean, for each Lender, the percentage set forth
opposite such Lender’s name under the column headed “Commitment Percentage”, as
listed in Schedule 1 hereto.

“Commitment Period” shall mean the period from the Closing Date to November 17,
2010 or such earlier date on which the Commitment shall have been terminated
pursuant to Article VIII hereof.

“Companies” shall mean Borrower and all Subsidiaries.

“Company” shall mean Borrower or a Subsidiary.

“Compliance Certificate” shall mean a Compliance Certificate in the form of the
attached Exhibit D.

“Consideration” shall mean, in connection with an Acquisition, the aggregate
consideration paid, including borrowed funds, cash, the issuance of securities
or notes, the assumption or incurring of liabilities (direct or contingent), the
payment of consulting fees or fees for a covenant not to compete and any other
consideration paid for such Acquisition.

“Consolidated” shall mean the resultant consolidation, without duplication, of
the financial statements of Borrower and its Subsidiaries in accordance with
GAAP, including principles of consolidation consistent with those applied in
preparation of the consolidated financial statements referred to in Section 6.14
hereof.

“Consolidated Capital Expenditures” shall mean, for any period, the amount of
capital expenditures of Borrower, as determined on a Consolidated basis and in
accordance with GAAP.

“Consolidated Depreciation and Amortization Charges” shall mean, for any period,
the aggregate of all depreciation and amortization charges for fixed assets,
leasehold improvements and general intangibles (excluding goodwill) of Borrower
for such period, as determined on a Consolidated basis and in accordance with
GAAP.

 

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“Consolidated EBITDAR” shall mean, for any period, as determined on a
Consolidated basis and in accordance with GAAP, Consolidated Net Earnings for
such period plus the aggregate amounts deducted in determining such Consolidated
Net Earnings in respect of (a) Consolidated Interest Expense, (b) Consolidated
Income Tax Expense, (c) Consolidated Depreciation and Amortization Charges,
(d) (i) extraordinary or unusual non-cash losses not incurred in the ordinary
course of business but that were counted in the net income calculation for such
period, minus (ii) extraordinary or unusual non-cash gains not incurred in the
ordinary course of business but that were counted in the net income calculation
for such period, and (e) Consolidated Rent Expense.

“Consolidated Fixed Charges” shall mean, for any period, as determined on a
Consolidated basis and in accordance with GAAP, the aggregate of
(a) Consolidated Interest Expense (including, without limitation, the “imputed
interest” portion of capital leases, synthetic leases and asset securitizations,
if any), (b) Consolidated Income Tax Expense paid in cash, (c) Consolidated Rent
Expense, (d) current maturities of long-term Indebtedness (excluding the Loans
and Letters of Credit), and (e) Capital Distributions.

“Consolidated Funded Indebtedness” shall mean, at any date, all Indebtedness
(including, but not limited to, current, long-term and Subordinated
Indebtedness, if any) of Borrower, as determined on a Consolidated basis and in
accordance with GAAP.

“Consolidated Income Tax Expense” shall mean, for any period, all provisions for
taxes based on the gross or net income of Borrower (including, without
limitation, any additions to such taxes, and any penalties and interest with
respect thereto), and all franchise taxes of Borrower, as determined on a
Consolidated basis and in accordance with GAAP.

“Consolidated Interest Expense” shall mean, for any period, the interest expense
of Borrower for such period, as determined on a Consolidated basis and in
accordance with GAAP.

“Consolidated Net Earnings” shall mean, for any period, the net income (loss) of
Borrower for such period, as determined on a Consolidated basis and in
accordance with GAAP.

“Consolidated Net Worth” shall mean, at any date, the stockholders’ equity of
Borrower, determined as of such date on a Consolidated basis and in accordance
with GAAP.

“Consolidated Rent Expense” shall mean, for any period, as determined on a
Consolidated basis and in accordance with GAAP, the amount of (a) all fixed
rental expenses of Borrower arising under all operating leases of real property
for such period, less (b) any sublease (operating) rents received by Borrower
for such period for the sublease to persons other than Affiliates of any such
real property. In the case of any lease or sublease covering both real property
and personal property, the component of rental expense or rental income relating
to the personal property (other than fixtures) shall be excluded from the
determination of Consolidated Rent Expense.

“Control Agreement” shall mean a Deposit Account Control Agreement or a
Securities Account Control Agreement.

 

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“Controlled Group” shall mean a Company and each Person required to be
aggregated with a Company under Code Section 414(b), (c), (m) or (o).

“Credit Event” shall mean the making by the Lenders of a Loan, the conversion by
the Lenders of a Base Rate Loan to a Eurodollar Loan, the continuation by the
Lenders of a Eurodollar Loan after the end of the applicable Interest Period,
the making by the Swing Line Lender of a Swing Loan, or the issuance by the
Fronting Lender of a Letter of Credit.

“Credit Party” shall mean Borrower and any Subsidiary or other Affiliate that is
a Guarantor of Payment.

“Default” shall mean an event or condition that constitutes, or with the lapse
of any applicable grace period or the giving of notice or both would constitute,
an Event of Default, and that has not been waived by the Required Lenders (or,
if applicable, all of the Lenders) in writing.

“Default Rate” shall mean (a) with respect to any Loan, a rate per annum equal
to two percent (2%) in excess of the rate otherwise applicable thereto, and
(b) with respect to any other amount, if no underlying rate is specified or
available, a rate per annum equal to two percent (2%) in excess of the Derived
Base Rate from time to time in effect.

“Deposit Account Control Agreement” shall mean each Deposit Account Control
Agreement among a Credit Party, Agent and a depository institution,
substantially in the form of the attached Exhibit J, executed and delivered to
Agent, for the benefit of the Lenders on or after the Closing Date, as the same
may from time to time be amended, restated or otherwise modified or replaced.

“Derived Base Rate” shall mean a rate per annum equal to the sum of the
Applicable Margin (from time to time in effect) for Base Rate Loans plus the
Base Rate.

“Derived Eurodollar Rate” shall mean a rate per annum equal to the sum of the
Applicable Margin (from time to time in effect) for Eurodollar Loans plus the
Eurodollar Rate.

“Derived Swing Loan Rate” shall mean a rate per annum equal to (a) Agent’s cost
of funds as quoted to Borrower by Agent and agreed to by Borrower, plus (b) the
Applicable Margin (from time to time in effect) applicable to Eurodollar Loans.

“Disposition” shall mean the lease, transfer or other disposition of assets
(whether in one or more transaction) by a Company, other than a sale, lease,
transfer or other disposition made by a Company in the ordinary course of
business.

“Dollar” or the sign $ shall mean lawful money of the United States of America.

“Domestic Subsidiary” shall mean a Subsidiary that is not a Foreign Subsidiary.

 

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“Dormant Subsidiary” shall mean a Company that (a) is not a Credit Party,
(b) has aggregate assets of less than Five Hundred Thousand Dollars ($500,000),
(c) has aggregate sales of less than Five Hundred Thousand Dollars ($500,000)
during each fiscal year of Borrower, and (d) has no direct or indirect
Subsidiaries with aggregate assets or sales for all such Subsidiaries of more
than Five Hundred Thousand Dollars ($500,000).

“Eligible Transferee” shall mean a commercial bank, financial institution or
other “accredited investor” (as defined in SEC Regulation D) that is not
Borrower, a Subsidiary or an Affiliate.

“Environmental Laws” shall mean all provisions of law (including the common
law), statutes, ordinances, codes, rules, guidelines, policies, procedures,
orders-in-council, regulations, permits, licenses, judgments, writs,
injunctions, decrees, orders, awards and standards promulgated by a Governmental
Authority or by any court, agency, instrumentality, regulatory authority or
commission of any of the foregoing concerning environmental health or safety and
protection of, or regulation of the discharge of substances into, the
environment.

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated pursuant thereto.

“ERISA Event” shall mean (a) the imposition of an excise tax or the assessment
of liability on a Company or of the imposition of a Lien on the assets of a
Company; (b) the engagement by a Controlled Group member in a non-exempt
“prohibited transaction” (as defined under ERISA Section 406 or Code
Section 4975) or a breach of a fiduciary duty under ERISA that could result in
liability to a Company; (c) the application by a Controlled Group member for a
waiver from the minimum funding requirements of Code Section 412 or ERISA
Section 302 or a Controlled Group member is required to provide security under
Code Section 401(a)(29) or ERISA Section 307; (d) the occurrence of a Reportable
Event with respect to any Pension Plan as to which notice is required to be
provided to the PBGC; (e) the withdrawal by a Controlled Group member from a
Multiemployer Plan in a “complete withdrawal” or a “partial withdrawal” (as such
terms are defined in ERISA Sections 4203 and 4205, respectively); (f) the
reorganization under ERISA Section 4241 of a Multiemployer Plan involving a
Controlled Group; (g) the failure of an ERISA Plan (and any related trust) that
is intended to be qualified under Code Sections 401 and 501 to be so qualified
or the failure of any “cash or deferred arrangement” under any such ERISA Plan
to meet the requirements of Code Section 401(k); (h) the taking by the PBGC of
any steps to terminate a Pension Plan or appoint a trustee to administer a
Pension Plan, or the taking by a Controlled Group member of any steps to
terminate a Pension Plan in a “distressed termination” as described in ERISA;
(i) the failure by a Controlled Group member or an ERISA Plan to satisfy any
requirements of law applicable to an ERISA Plan; (j) the commencement, existence
or threatening of a claim, action, suit, audit or investigation with respect to
an ERISA Plan, other than a routine claim for benefits; or (k) any incurrence by
or any expectation of the incurrence by a Controlled Group member of any
liability for post-retirement benefits under any Welfare Plan, other than as
required by ERISA Section 601, et. seq. or Code Section 4980B.

 

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“ERISA Plan” shall mean an “employee benefit plan” (within the meaning of ERISA
Section 3(3)) that a Controlled Group member at any time sponsors, maintains,
contributes to, has liability with respect to or has an obligation to contribute
to such plan.

“Eurocurrency Liabilities” shall have the meaning assigned to that term in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.

“Eurodollar” shall mean a Dollar denominated deposit in a bank or branch outside
of the United States.

“Eurodollar Loan” shall mean a Revolving Loan described in Section 2.2(a)
hereof, that shall be denominated in Dollars and on which Borrower shall pay
interest at a rate based upon the Eurodollar Rate.

“Eurodollar Rate” shall mean, with respect to a Eurodollar Loan, for any
Interest Period, a rate per annum equal to the quotient obtained (rounded
upwards, if necessary, to the nearest 1/16th of 1%) by dividing (a) the rate of
interest, determined by Agent in accordance with its usual procedures (which
determination shall be conclusive absent manifest error) as of approximately
11:00 A.M. (London time) two Business Days prior to the beginning of such
Interest Period pertaining to such Eurodollar Loan, as listed on British Bankers
Association Interest Rate LIBOR 01 or 02 as provided by Reuters (or, if for any
reason such rate is unavailable from Reuters, from any other similar company or
service that provides rate quotations comparable to those currently provided by
Reuters) as the rate in the London interbank market for Dollar deposits in
immediately available funds with a maturity comparable to such Interest Period,
provided that, in the event that such rate quotation is not available for any
reason, then the Eurodollar Rate shall be the average (rounded upward to the
nearest 1/16th of 1%) of the per annum rates at which deposits in immediately
available funds in Dollars for the relevant Interest Period and in the amount of
the Eurodollar Loan to be disbursed or to remain outstanding during such
Interest Period, as the case may be, are offered to Agent (or an affiliate of
Agent, in Agent’s discretion) by prime banks in any Eurodollar market reasonably
selected by Agent, determined as of 11:00 A.M. (London time) (or as soon
thereafter as practicable), two Business Days prior to the beginning of the
relevant Interest Period pertaining to such Eurodollar Loan hereunder; by
(b) 1.00 minus the Reserve Percentage.

“Event of Default” shall mean an event or condition that shall constitute an
event of default as defined in Article VII hereof.

“Excluded Taxes” shall mean net income taxes (and franchise taxes imposed in
lieu of net income taxes) and business and occupation taxes imposed in the State
of Washington that are imposed on Agent or a Lender by any Governmental
Authority located in the jurisdiction where Agent or such Lender is organized or
in a state of the United States where such Lender maintains a lending office.

“Existing Letter of Credit” shall mean that term as defined in
Section 2.2(b)(vi) hereof.

 

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“Federal Funds Effective Rate” shall mean, for any day, the rate per annum
(rounded upward to the nearest one one-hundredth of one percent (1/100 of 1%))
announced by the Federal Reserve Bank of New York (or any successor) on such day
as being the weighted average of the rates on overnight federal funds
transactions arranged by federal funds brokers on the previous trading day, as
computed and announced by such Federal Reserve Bank (or any successor) in
substantially the same manner as such Federal Reserve Bank computes and
announces the weighted average it refers to as the “Federal Funds Effective
Rate” as of the Closing Date.

“Financial Officer” shall mean any of the following officers: chief executive
officer, president, chief financial officer or vice president-controller. Unless
otherwise qualified, all references to a Financial Officer in this Agreement
shall refer to a Financial Officer of Borrower.

“Fixed Charge Coverage Ratio” shall mean, as determined for the most recently
completed four fiscal quarters of Borrower, on a Consolidated basis and in
accordance with GAAP, the ratio of (a) (i) Consolidated EBITDAR, minus
(ii) Consolidated Capital Expenditures, to (b) Consolidated Fixed Charges;
provided, however, that (A) with respect to any Acquisition, Borrower shall make
pro forma adjustments in the calculation of the Fixed Charge Coverage Ratio
using the historical financial information of the division or entity acquired,
and (B) with respect to any Disposition or a division or entity, Borrower shall
make pro forma adjustments in the calculation of the Fixed Charge Coverage Ratio
using the historical financial information of the disposed division or entity;
but, in each case of (A) or (B), only so long as Borrower shall have provided to
Agent and the Lenders sufficient written evidence to support such pro forma
adjustments, in form and substance satisfactory to Agent.

“Foreign Subsidiary” shall mean a Subsidiary that is organized outside of the
United States.

“Fronting Lender” shall mean, (a) as to any Letter of Credit transaction
hereunder, Agent as issuer of the Letter of Credit, or, in the event that Agent
either shall be unable to issue or shall agree that another Lender may issue a
Letter of Credit, such other Lender as shall agree to issue the Letter of Credit
in its own name, but on behalf of the Lenders hereunder; or (b) as to any
Existing Letter of Credit, U.S. Bank National Association.

“GAAP” shall mean generally accepted accounting principles in the United States
as then in effect, which shall include the official interpretations thereof by
the Financial Accounting Standards Board, applied on a basis consistent with the
past accounting practices and procedures of Borrower.

“Governmental Authority” shall mean any nation or government, any state,
province or territory or other political subdivision thereof, any governmental
agency, department, authority, instrumentality, regulatory body, court, central
bank or other governmental entity exercising executive, legislative, judicial,
taxing, regulatory or administrative functions of or pertaining to government,
any securities exchange.

 

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“Guarantor” shall mean a Person that shall have pledged its credit or property
in any manner for the payment or other performance of the indebtedness, contract
or other obligation of another and includes (without limitation) any guarantor
(whether of payment or of collection), surety, co-maker, endorser or Person that
shall have agreed conditionally or otherwise to make any purchase, loan or
investment in order thereby to enable another to prevent or correct a default of
any kind.

“Guarantor of Payment” shall mean each of the Companies designated a “Guarantor
of Payment” on Schedule 2 hereto, each of which is executing and delivering a
Guaranty of Payment, and any other Domestic Subsidiary that shall be required to
deliver a Guaranty of Payment to Agent subsequent to the Closing Date pursuant
to Section 5.20(a) hereof.

“Guaranty of Payment” shall mean each Guaranty of Payment, substantially in the
form of the attached Exhibit H, executed and delivered on or after the Closing
Date in connection with this Agreement by the Guarantors of Payment, as the same
may from time to time be amended, restated or otherwise modified or replaced.

“Hedge Agreement” shall mean any (a) hedge agreement, interest rate swap, cap,
collar or floor agreement, or other interest rate management device entered into
by a Company with any Person in connection with any Indebtedness of such
Company, or (b) currency swap agreement, forward currency purchase agreement or
similar arrangement or agreement designed to protect against fluctuations in
currency exchange rates entered into by a Company.

“Indebtedness” shall mean, for any Company (excluding in all cases trade
payables payable in the ordinary course of business by such Company), without
duplication, (a) all obligations to repay borrowed money, direct or indirect,
incurred, assumed, or guaranteed, (b) all obligations for the deferred purchase
price of capital assets, (c) all obligations under conditional sales or other
title retention agreements, (d) all obligations (contingent or otherwise) under
any letter of credit or banker’s acceptance, (e) all net obligations under any
currency swap agreement, interest rate swap, cap, collar or floor agreement or
other interest rate management device or any Hedge Agreement, (f) all synthetic
leases, (g) all lease obligations that have been or should be capitalized on the
books of such Company in accordance with GAAP, (h) all obligations of such
Company with respect to asset securitization financing programs to the extent
that there is recourse against such Company or such Company is liable
(contingent or otherwise) under any such program, (i) all obligations to advance
funds to, or to purchase assets, property or services from, any other Person in
order to maintain the financial condition of such Person, (j) all indebtedness
of any partnership in which such Company is a general partner that would
otherwise satisfy the definition of Indebtedness, (k) any other transaction
(including forward sale or purchase agreements) having the commercial effect of
a borrowing of money entered into by such Company to finance its operations or
capital requirements, and (l) any guaranty of any obligation described in
subparts (a) through (k) hereof.

“Interest Adjustment Date” shall mean the last day of each Interest Period.

“Interest Period” shall mean, with respect to a Eurodollar Loan, the period
commencing on the date such Eurodollar Loan is made and ending on the last day
of such period, as selected

 

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by Borrower pursuant to the provisions hereof, and, thereafter (unless, with
respect to a Eurodollar Loan, such Eurodollar Loan is converted to a Base Rate
Loan), each subsequent period commencing on the last day of the immediately
preceding Interest Period and ending on the last day of such period, as selected
by Borrower pursuant to the provisions hereof. The duration of each Interest
Period for a Eurodollar Loan shall be one month, two months, three months or six
months, in each case as Borrower may select upon notice, as set forth in
Section 2.5 hereof; provided that if Borrower shall fail to so select the
duration of any Interest Period for a Eurodollar Loan at least three Business
Days prior to the Interest Adjustment Date applicable to such Eurodollar Loan,
Borrower shall be deemed to have converted such Eurodollar Loan to a Base Rate
Loan at the end of the then current Interest Period.

“Landlord’s Waiver” shall mean a landlord’s waiver or mortgagee’s waiver,
substantially in the form of the attached Exhibit L, each in form and substance
satisfactory to Agent, delivered by a Company in connection with this Agreement,
as such waiver may from time to time be amended, restated or otherwise modified
or replaced.

“Letter of Credit” shall mean a standby letter of credit that shall be issued by
the Fronting Lender for the account of Borrower or a Guarantor of Payment,
including amendments thereto, if any, and shall have an expiration date no later
than the earlier of (a) one year after its date of issuance, or (b) thirty
(30) days prior to the last day of the Commitment Period.

“Letter of Credit Commitment” shall mean the commitment of the Fronting Lender,
on behalf of the Lenders, to issue Letters of Credit in an aggregate face amount
of up to Twenty Million Dollars ($20,000,000).

“Letter of Credit Exposure” shall mean, at any time, the sum of (a) the
aggregate undrawn amount of all issued and outstanding Letters of Credit, and
(b) the aggregate of the draws made on Letters of Credit that have not been
reimbursed by Borrower or converted to a Revolving Loan pursuant to
Section 2.2(b)(iv) hereof.

“Leverage Ratio” shall mean, as determined on a Consolidated basis and in
accordance with GAAP, the ratio of (a) the sum of (i) Consolidated Funded
Indebtedness (as of the last day of the most recently completed fiscal quarter
of Borrower), plus (ii) six times the Consolidated Rent Expense (for the most
recently completed four fiscal quarters of Borrower), to (b) Consolidated
EBITDAR (for the most recently completed four fiscal quarters of Borrower);
provided, however, that (A) with respect to any Acquisition, Borrower shall make
pro forma adjustments in the calculation of the Leverage Ratio using the
historical financial information of the acquired entity for the relevant
periods, and (B) with respect to any Disposition, Borrower shall make pro forma
adjustments in the calculation of the Leverage Ratio using the historical
financial information of the disposed entity; but, in each case of (A) or (B),
only so long as Borrower shall have provided to Agent and the Lenders sufficient
written evidence to support such pro forma adjustments, in form and substance
satisfactory to Agent.

“Lien” shall mean any mortgage, deed of trust, security interest, lien
(statutory or other), charge, assignment, hypothecation, encumbrance on, pledge
or deposit of, or conditional sale, leasing (other than operating leases), sale
with a right of redemption or other title retention agreement and the
vendor-lessor’s interest under any capitalized lease with respect to any
property (real or personal) or asset.

 

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“Loan” shall mean a Revolving Loan or a Swing Loan granted to Borrower by the
Lenders in accordance with Section 2.2(a) or (c) hereof.

“Loan Documents” shall mean, collectively, this Agreement, each Note, each
Guaranty of Payment, all documentation relating to each Letter of Credit, each
Springing Security Document, the Agent Fee Letter and the Closing Fee Letter, as
any of the foregoing may from time to time be amended, restated or otherwise
modified or replaced, and any other document delivered pursuant thereto.

“Material Adverse Effect” shall mean a material adverse effect on (a) the
business, operations, property, condition (financial or otherwise) or prospects
of Borrower, (b) the business, operations, property, condition (financial or
otherwise) or prospects of the Companies taken as a whole, (c) the ability of
any Credit Party to perform its obligations under any Loan Document, or (d) the
validity or enforceability of this Agreement or any of the other Loan Documents
or the ability to judicially enforce payment of the principal of or interest on
any Loan or any guaranty thereof or security therefor, or any other material
rights or remedies of Agent or the Lenders hereunder or thereunder.

“Material Indebtedness Agreement” shall mean any debt instrument, lease
(capital, operating or otherwise), guaranty, contract, commitment, agreement or
other arrangement evidencing any Indebtedness of any Company or the Companies in
excess of the amount of Five Million Dollars ($5,000,000).

“Maximum Amount” shall mean, for each Lender, the amount set forth opposite such
Lender’s name under the column headed “Maximum Amount” as set forth on Schedule
1 hereto, subject to decreases determined pursuant to Section 2.9 hereof and
assignments of interests pursuant to Section 10.10 hereof; provided, however,
that the Maximum Amount for the Swing Line Lender shall exclude the Swing Line
Commitment (other than its pro rata share), and the Maximum Amount of the
Fronting Lender shall exclude the Letter of Credit Commitment (other than its
pro rata share).

“Maximum Rate” shall mean that term as defined in Section 2.3(d) hereof.

“Multiemployer Plan” shall mean a Pension Plan that is subject to the
requirements of Subtitle E of Title IV of ERISA.

“Non-Credit Party Exposure” shall mean the aggregate amount, incurred on or
after the Closing Date, of loans by a Credit Party to, investments by a Credit
Party in, guaranties by a Credit Party of Indebtedness of, and Letters of Credit
issued to or for the benefit of, a Foreign Subsidiary.

“Note” shall mean a Revolving Credit Note or the Swing Line Note, or any other
promissory note delivered pursuant to this Agreement.

 

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“Notice of Loan” shall mean a Notice of Loan in the form of the attached Exhibit
C.

“Obligations” shall mean, collectively, (a) all Indebtedness and other
obligations incurred by Borrower to Agent, the Fronting Lender, the Swing Line
Lender, or any Lender pursuant to this Agreement and the other Loan Documents,
and includes the principal of and interest on all Loans and all obligations
pursuant to Letters of Credit, (b) each extension, renewal or refinancing of the
foregoing, in whole or in part, (c) the facility and other fees and any
prepayment fees payable hereunder, (d) all fees and charges in connection with
Letters of Credit, and (e) all Related Expenses.

“Organizational Documents” shall mean, with respect to any Person (other than an
individual), such Person’s Articles (Certificate) of Incorporation, operating
agreement or equivalent formation documents, and Regulations (Bylaws), or
equivalent governing documents, and any amendments to any of the foregoing.

“Other Taxes” shall mean any and all present or future stamp or documentary
taxes or any other excise, ad valorem or property taxes, goods and services
taxes, harmonized sales taxes and other sales taxes, use taxes, value added
taxes, charges or similar taxes or levies arising from any payment made
hereunder or from the execution, delivery or enforcement of, or otherwise with
respect to, this Agreement or any other Loan Document.

“Participant” shall mean that term as defined in Section 10.11 hereof.

“Patriot Act” shall mean Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, USA
Patriot Act, Title III of Pub. L. 107-56, signed into law October 26, 2001, as
amended from time to time.

“PBGC” shall mean the Pension Benefit Guaranty Corporation, or its successor.

“Pension Plan” shall mean an ERISA Plan that is a “pension plan” (within the
meaning of ERISA Section 3(2)).

“Permitted Foreign Subsidiary Loans and Investments” shall mean:

(a) the investments by Borrower or a Domestic Subsidiary in a Foreign
Subsidiary, existing as of the Closing Date and set forth on Schedule 5.11
hereto;

(b) the loans by Borrower or a Domestic Subsidiary to a Foreign Subsidiary, in
such amounts existing as of the Closing Date and set forth on Schedule 5.11
hereto;

(c) any investment by a Foreign Subsidiary in, or loan from a Foreign Subsidiary
to, or guaranty from a Foreign Subsidiary of Indebtedness of, a Company;

 

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(d) any obligations among Borrower and its Subsidiaries, or any thereof, for
sales of inventory (as that term is defined in the Uniform Commercial Code, as
in effect from time to time in Ohio) in the ordinary course of business; and

(e) any Non-Credit Party Exposure (exclusive of the amounts permitted under
subparts (a), (b), (c) and (d) hereof) with respect to a Foreign Subsidiary, not
otherwise permitted under this definition, up to the aggregate amount of Five
Hundred Thousand Dollars ($500,000) for such Foreign Subsidiary so long as the
Non-Credit Party Exposure to all Foreign Subsidiaries incurred pursuant to this
subpart (d) does not exceed the aggregate amount of One Million Dollars
($1,000,000) at any time outstanding.

“Permitted Investment” shall mean an investment of a Company in the stock (or
other debt or equity instruments) of a Person (other than a Company), so long as
(a) the Company making the investment is a Credit Party; and (b) the aggregate
amount of all such investments of all Companies does not exceed, at any time, an
aggregate amount of Five Million Dollars ($5,000,000).

“Person” shall mean any individual, sole proprietorship, partnership, joint
venture, unincorporated organization, corporation, limited liability company,
unlimited liability company, institution, trust, estate, government or other
agency or political subdivision thereof or any other entity.

“Pledge Agreement” shall mean each of the Pledge Agreements, substantially in
the form of the attached Exhibit I, relating to the Pledged Securities, executed
and delivered to Agent, for the benefit of the Lenders, by Borrower or a
Guarantor of Payment, as applicable, dated as of the Closing Date, and any other
such Pledge Agreement executed by any other Subsidiary on or after the Closing
Date, as any of the foregoing may from time to time be amended, restated or
otherwise modified or replaced.

“Pledged Securities” shall mean all of the shares of capital stock or other
equity interest of a Subsidiary of Borrower (other than Foreign Subsidiaries of
Dashamerica, Inc.), whether now owned or hereafter acquired or created, and all
proceeds thereof; provided, however, that Pledged Securities (a) shall only
include up to sixty-five percent (65%) of the shares of capital stock or other
equity interest of any first-tier Foreign Subsidiary, and (b) shall not include
the shares of capital stock or other equity interests of any lower-tier Foreign
Subsidiary. Schedule 3 hereto lists, as of the Closing Date, all of the Pledged
Securities.

“Prime Rate” shall mean the interest rate established from time to time by Agent
as Agent’s prime rate, whether or not such rate shall be publicly announced; the
Prime Rate may not be the lowest interest rate charged by Agent for commercial
or other extensions of credit. Each change in the Prime Rate shall be effective
immediately from and after such change.

“Register” shall mean that term as described in Section 10.10(i) hereof.

“Regularly Scheduled Payment Date” shall mean the last day of each March, June,
September and December of each year.

 

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“Related Business” shall mean the development, manufacture, purchase and resale
of, or provision of goods or services related to, fitness, nutrition or apparel,
and related activities.

“Related Expenses” shall mean all reasonable costs, liabilities and expenses
(including, without limitation, losses, damages, penalties, claims, actions,
attorneys’ fees, legal expenses, judgments, suits and disbursements)
(a) incurred by Agent, or imposed upon or asserted against Agent or any Lender
in any attempt by Agent and the Lenders to (i) obtain, preserve, perfect or
enforce any Loan Document or any security interest evidenced by any Loan
Document; (ii) obtain payment, performance or observance of any and all of the
Obligations; or (iii) maintain, insure, audit, collect, preserve, repossess or
dispose of any of the collateral securing the Obligations or any part thereof,
including, without limitation, costs and expenses for appraisals, assessments
and audits of any Company or any such collateral; or (b) incidental or related
to (a) above, including, without limitation, interest thereupon from the date
incurred, imposed or asserted until paid at the Default Rate.

“Related Writing” shall mean each Loan Document and any other assignment,
mortgage, security agreement, guaranty agreement, subordination agreement,
financial statement, audit report or other writing furnished by any Credit
Party, or any of its officers, to Agent or the Lenders pursuant to or otherwise
in connection with this Agreement.

“Reportable Event” shall mean any of the events described in Section 4043 of
ERISA except where notice is waived by the PBGC.

“Required Lenders” shall mean the holders of at least fifty-one percent (51%) of
the Total Commitment Amount, or, if there is any borrowing hereunder, the
holders of at least fifty-one percent (51%) of the aggregate amount of the
Revolving Credit Exposure (excluding the Swing Line Exposure); provided that, if
there shall be two or more Lenders, Required Lenders shall constitute at least
two Lenders.

“Requirement of Law” shall mean, as to any Person, any law, treaty, rule or
regulation or determination or policy statement or interpretation of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property.

“Reserve Percentage” shall mean for any day that percentage (expressed as a
decimal) that is in effect on such day, as prescribed by the Board of Governors
of the Federal Reserve System (or any successor) for determining the maximum
reserve requirement (including, without limitation, all basic, supplemental,
marginal and other reserves and taking into account any transitional adjustments
or other scheduled changes in reserve requirements) for a member bank of the
Federal Reserve System in Cleveland, Ohio, in respect of Eurocurrency
Liabilities. The Eurodollar Rate shall be adjusted automatically on and as of
the effective date of any change in the Reserve Percentage.

“Responsible Officer” shall mean a chief executive officer or chief financial
officer of a Company.

 

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“Restricted Payment” shall mean, with respect to any Company, any amount paid by
such Company in repayment, redemption, retirement or repurchase, directly or
indirectly, of any Subordinated Indebtedness.

“Revolving Credit Commitment” shall mean the obligation hereunder, during the
Commitment Period, of (a) each Lender to make Revolving Loans up to the Maximum
Amount for such Lender, (b) the Fronting Lender to issue and each Lender to
participate in Letters of Credit pursuant to the Letter of Credit Commitment,
and (c) the Swing Line Lender to make and each Lender to participate in Swing
Loans pursuant to the Swing Line Commitment.

“Revolving Credit Exposure” shall mean, at any time, the sum of (a) the
aggregate principal amount of all Revolving Loans outstanding, (b) the Swing
Line Exposure, and (c) the Letter of Credit Exposure.

“Revolving Credit Note” shall mean a Revolving Credit Note executed and
delivered pursuant to Section 2.4(a) hereof.

“Revolving Loan” shall mean a Loan granted to Borrower by the Lenders in
accordance with Section 2.2(a) hereof.

“SEC” shall mean the United States Securities and Exchange Commission, or any
governmental body or agency succeeding to any of its principal functions.

“Secured Obligations” shall mean, collectively, (a) the Obligations, and (b) all
obligations and liabilities of the Companies owing to Lenders under Hedge
Agreements.

“Securities Account Control Agreement” shall mean each Securities Account
Control Agreement among a Credit Party, Agent and a broker, substantially in the
form of the attached Exhibit K, executed and delivered to Agent, for the benefit
of the Lenders on or after the Closing Date, as the same may from time to time
be amended, restated or otherwise modified or replaced.

“Security Agreement” shall mean each Security Agreement, substantially in the
form of the attached Exhibit G, executed and delivered by Borrower and each
Guarantor of Payment in favor of Agent, for the benefit of the Lenders, dated as
of the Closing Date, and any other such Security Agreement executed on or after
the Closing Date, for the benefit of the Lenders, as the same may from time to
time be amended, restated or otherwise modified or replaced.

“Springing Security Documents” shall mean each Security Agreement, each Pledge
Agreement, each Control Agreement, each Landlord’s Waiver and any other document
pursuant to which any Lien is granted by a Company to Agent, for the benefit of
the Lenders, as security for the Secured Obligations, or any part thereof, and
each other agreement executed in connection with any of the foregoing, as any of
the foregoing may from time to time be amended, restated or otherwise modified
or replaced.

 

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“Subordinated” shall mean, as applied to Indebtedness, Indebtedness that shall
have been subordinated (by written terms or written agreement being, in either
case, in form and substance satisfactory to Agent and the Required Lenders) in
favor of the prior payment in full of the Obligations.

“Subsidiary” shall mean (a) a corporation more than fifty percent (50%) of the
Voting Power of which is owned, directly or indirectly, by Borrower or by one or
more other subsidiaries of Borrower or by Borrower and one or more subsidiaries
of Borrower, (b) a partnership, limited liability company or unlimited liability
company of which Borrower, one or more other subsidiaries of Borrower or
Borrower and one or more subsidiaries of Borrower, directly or indirectly, is a
general partner or managing member, as the case may be, or otherwise has an
ownership interest greater than fifty percent (50%) of all of the ownership
interests in such partnership, limited liability company or unlimited liability
company, or (c) any other Person (other than a corporation, partnership, limited
liability company or unlimited liability company) in which Borrower, one or more
other subsidiaries of Borrower and one or more subsidiaries of Borrower,
directly or indirectly, has at least a majority interest in the Voting Power or
the power to elect or direct the election of a majority of directors or other
governing body of such Person.

“Swing Line Commitment” shall mean the commitment of the Swing Line Lender to
make Swing Loans to Borrower up to the aggregate amount at any time outstanding
of Ten Million Dollars ($10,000,000).

“Swing Line Exposure” shall mean, at any time, the aggregate principal amount of
all Swing Loans outstanding.

“Swing Line Lender” shall mean KeyBank National Association, as holder of the
Swing Line Commitment.

“Swing Line Note” shall mean the Swing Line Note executed and delivered pursuant
to Section 2.4(b) hereof.

“Swing Loan” shall mean a loan granted to Borrower by the Swing Line Lender
under the Swing Line Commitment, in accordance with Section 2.2(c) hereof.

“Swing Loan Maturity Date” shall mean, with respect to any Swing Loan, the
earlier of (a) fifteen (15) days after the date such Swing Loan is made, or
(b) the last day of the Commitment Period.

“Syndication Agent” shall mean that term as defined in the first paragraph
hereof.

“Taxes” shall mean any and all present or future taxes of any kind, including
but not limited to, levies, imposts, duties, surtaxes, charges, fees, deductions
or withholdings now or hereafter imposed, levied, collected, withheld or
assessed by any Governmental Authority (together with any interest, penalties,
fines, additions to taxes or similar liabilities with respect thereto) other
than Excluded Taxes.

 

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“Total Commitment Amount” shall mean Sixty-Five Million Dollars ($65,000,000).

“Triggering Event Date” shall mean the earlier of (a) the first date that the
Leverage Ratio is equal to or greater than 2.00 to 1.00, or (b) the date that an
Event of Default occurs.

“U.C.C. Financing Statement” shall mean a financing statement filed or to be
filed in accordance with the Uniform Commercial Code, as in effect from time to
time, in the relevant state or states.

“Voting Power” shall mean, with respect to any Person, the exclusive ability to
control, through the ownership of shares of capital stock, partnership
interests, membership interests or otherwise, the election of members of the
board of directors or other similar governing body of such Person. The holding
of a designated percentage of Voting Power of a Person means the ownership of
shares of capital stock, partnership interests, membership interests or other
interests of such Person sufficient to control exclusively the election of that
percentage of the members of the board of directors or similar governing body of
such Person.

“Welfare Plan” shall mean an ERISA Plan that is a “welfare plan” within the
meaning of ERISA Section 3(l).

Section 1.2. Accounting Terms. Any accounting term not specifically defined in
this Article I shall have the meaning ascribed thereto by GAAP.

Section 1.3. Terms Generally. The foregoing definitions shall be applicable to
the singular and plurals of the foregoing defined terms.

ARTICLE II. AMOUNT AND TERMS OF CREDIT

Section 2.1. Amount and Nature of Credit.

(a) Subject to the terms and conditions of this Agreement, the Lenders, during
the Commitment Period and to the extent hereinafter provided, shall make Loans
to Borrower, participate in Swing Loans made by the Swing Line Lender to
Borrower, and issue or participate in Letters of Credit at the request of
Borrower, in such aggregate amount as Borrower shall request pursuant to the
Commitment; provided, however, that in no event shall the Revolving Credit
Exposure be in excess of the Total Commitment Amount.

(b) Each Lender, for itself and not one for any other, agrees to make Loans,
participate in Swing Loans, and issue or participate in Letters of Credit,
during the Commitment Period, on such basis that, immediately after the
completion of any borrowing by Borrower or the issuance of a Letter of Credit:

(i) the aggregate outstanding principal amount of Loans made by such Lender
(other than Swing Loans made by the Swing Line Lender), when combined with such
Lender’s pro rata share, if any, of the Letter of Credit Exposure and the Swing
Line Exposure, shall not be in excess of the Maximum Amount for such Lender; and

 

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(ii) the aggregate outstanding principal amount of Loans (other than Swing
Loans) made by such Lender shall represent that percentage of the aggregate
principal amount then outstanding on all Loans (other than Swing Loans) that
shall be such Lender’s Commitment Percentage.

Each borrowing (other than Swing Loans which shall be risk participated on a pro
rata basis) from the Lenders shall be made pro rata according to the respective
Commitment Percentages of the Lenders.

(c) The Loans may be made as Revolving Loans as described in Section 2.2(a)
hereof and as Swing Loans as described in Section 2.2(c) hereof, and Letters of
Credit may be issued in accordance with Section 2.2(b) hereof.

Section 2.2. Revolving Credit.

(a) Revolving Loans. Subject to the terms and conditions of this Agreement,
during the Commitment Period, the Lenders shall make a Revolving Loan or
Revolving Loans to Borrower in such amount or amounts as Borrower may from time
to time request, but not exceeding in aggregate principal amount at any time
outstanding hereunder the Total Commitment Amount, when such Revolving Loans are
combined with the Letter of Credit Exposure and the Swing Line Exposure.
Borrower shall have the option, subject to the terms and conditions set forth
herein, to borrow Revolving Loans, maturing on the last day of the Commitment
Period, by means of any combination of Base Rate Loans or Eurodollar Loans.
Subject to the provisions of this Agreement, Borrower shall be entitled under
this Section 2.2(a) to borrow funds, repay the same in whole or in part and
re-borrow hereunder at any time and from time to time during the Commitment
Period.

(b) Letters of Credit.

(i) Generally. Subject to the terms and conditions of this Agreement, during the
Commitment Period, the Fronting Lender shall, in its own name, on behalf of the
Lenders, issue such Letters of Credit for the account of a Credit Party, as
Borrower may from time to time request. Borrower shall not request any Letter of
Credit (and the Fronting Lender shall not be obligated to issue any Letter of
Credit) if, after giving effect thereto, (A) the Letter of Credit Exposure would
exceed the Letter of Credit Commitment or (B) the Revolving Credit Exposure
would exceed the Total Commitment Amount. The issuance of each Letter of Credit
shall confer upon each Lender the benefits and liabilities of a participation
consisting of an undivided pro rata interest in the Letter of Credit to the
extent of such Lender’s Commitment Percentage.

(ii) Request for Letter of Credit. Each request for a Letter of Credit shall be
delivered to Agent (and to the Fronting Lender, if the Fronting Lender is a
Lender other than Agent) by an Authorized Officer not later than 10:00 A.M.
(Pacific time) three

 

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Business Days prior to the day upon which the Letter of Credit is to be issued.
Each such request shall be in a form acceptable to Agent (and the Fronting
Lender, if the Fronting Lender is a Lender other than Agent) and shall specify
the face amount thereof, the account party, the beneficiary, the intended date
of issuance, the expiry date thereof, and the nature of the transaction to be
supported thereby. Concurrently with each such request, Borrower, and any
Guarantor of Payment for whose account the Letter of Credit is to be issued,
shall execute and deliver to the Fronting Lender an appropriate application and
agreement, being in the standard form of the Fronting Lender for such letters of
credit, as amended to conform to the provisions of this Agreement if required by
Agent. Agent shall give the Fronting Lender and each Lender notice of each such
request for a Letter of Credit.

(iii) Standby Letters of Credit. With respect to each Letter of Credit and the
drafts thereunder, if any, whether issued for the account of Borrower or any
other Credit Party, Borrower agrees to (A) pay to Agent, for the pro rata
benefit of the Lenders, a non-refundable commission based upon the face amount
of such Letter of Credit, which shall be paid quarterly in arrears, on each
Regularly Scheduled Payment Date, at the rate of the Applicable Margin for
Eurodollar Loans (in effect on the Regularly Scheduled Payment Date) multiplied
by the face amount of such Letter of Credit; (B) pay to Agent, for the sole
benefit of the Fronting Lender that is issuing or has issued such Letter of
Credit, an additional Letter of Credit fee, which shall be paid on each date
that such Letter of Credit shall be issued, amended or renewed at the rate of
one-eighth percent (1/8%) of the face amount of such Letter of Credit; and
(C) pay to Agent, for the sole benefit of the Fronting Lender that is issuing or
has issued such Letter of Credit, such other issuance, amendment, negotiation,
draw, acceptance, telex, courier, postage and similar transactional fees as are
generally charged by the Fronting Lender of such Letter of Credit under its fee
schedule as in effect from time to time.

(iv) Refunding of Letters of Credit with Revolving Loans. Whenever a Letter of
Credit shall be drawn, Borrower shall immediately reimburse Agent for the amount
drawn. Agent will forward such payment to the Fronting Lender on the Letter of
Credit that was drawn. In the event that the amount drawn shall not have been
reimbursed to Agent by Borrower on the date of the drawing of such Letter of
Credit, Borrower shall be deemed to have requested a Revolving Loan, subject to
the provisions of Sections 2.2(a) and 2.5 hereof, in the amount drawn. Such
Revolving Loan shall be evidenced by the Revolving Credit Notes (or, if a Lender
has not requested a Revolving Credit Note, by the records of Agent and such
Lender). Each Lender agrees to make a Revolving Loan on the date of such notice,
subject to no conditions precedent whatsoever. Each Lender acknowledges and
agrees that its obligation to make a Revolving Loan pursuant to Section 2.2(a)
hereof when required by this Section 2.2(b)(iv) shall be absolute and
unconditional and shall not be affected by any circumstance whatsoever,
including, without limitation, the occurrence and continuance of a Default or
Event of Default, and that its payment to Agent, for the account of the Fronting
Lender, of the proceeds of such Revolving Loan shall be made without any offset,
abatement, recoupment, counterclaim, withholding or reduction whatsoever and
whether or not such Lender’s Revolving Credit Commitment shall have been reduced
or terminated. Borrower irrevocably authorizes

 

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and instructs Agent to apply the proceeds of any borrowing pursuant to this
Section 2.2(b)(iv) to reimburse, in full (other than the Fronting Lender’s pro
rata share of such borrowing), the Fronting Lender for the amount drawn on such
Letter of Credit. Each such Revolving Loan shall be deemed to be a Base Rate
Loan unless otherwise requested by and available to Borrower hereunder. Each
Lender is hereby authorized to record on its records relating to its Revolving
Credit Note (or, if such Lender has not requested a Revolving Credit Note, its
records relating to Revolving Loans) such Lender’s pro rata share of the amounts
paid and not reimbursed on the Letters of Credit.

(v) Participation in Letters of Credit. If, for any reason, Agent (and the
Fronting Lender if the Fronting Lender is a Lender other than Agent) shall be
unable to or, in the opinion of Agent, it shall be impracticable to, convert any
Letter of Credit to a Revolving Loan pursuant to the preceding subsection, Agent
(and the Fronting Lender if the Fronting Lender is a Lender other than Agent)
shall have the right to request that each Lender purchase a participation in the
amount due with respect to such Letter of Credit, and Agent shall promptly
notify each Lender thereof (by facsimile or telephone, confirmed in writing).
Upon such notice, but without further action, the Fronting Lender hereby agrees
to grant to each Lender, and each Lender hereby agrees to acquire from the
Fronting Lender, an undivided participation interest in the amount due with
respect to such Letter of Credit in an amount equal to such Lender’s Commitment
Percentage of the principal amount due with respect to such Letter of Credit. In
consideration and in furtherance of the foregoing, each Lender hereby absolutely
and unconditionally agrees, upon receipt of notice as provided above, to pay to
Agent, for the account of the Fronting Lender, such Lender’s ratable share of
the amount due with respect to such Letter of Credit (determined in accordance
with such Lender’s Commitment Percentage). Each Lender acknowledges and agrees
that its obligation to acquire participations in the amount due under any Letter
of Credit that is drawn but not reimbursed by Borrower pursuant to this
subsection (v) shall be absolute and unconditional and shall not be affected by
any circumstance whatsoever, including, without limitation, the occurrence and
continuance of a Default or Event of Default, and that each such payment shall
be made without any offset, abatement, recoupment, counterclaim, withholding or
reduction whatsoever and whether or not such Lender’s Revolving Credit
Commitment shall have been reduced or terminated. Each Lender shall comply with
its obligation under this subsection (v) by wire transfer of immediately
available funds, in the same manner as provided in Section 2.5 hereof with
respect to Revolving Loans. Each Lender is hereby authorized to record on its
records such Lender’s pro rata share of the amounts paid and not reimbursed on
the Letters of Credit. In addition, each Lender agrees to risk participate in
the Existing Letters of Credit as provided in subsection (vi) below.

(vi) Existing Letters of Credit. Schedule 2.2 hereto contains a description of
all letters of credit issued by a Lender for the account of a Credit Party and
outstanding on, and to continue in effect after, the Closing Date. Each such
letter of credit issued by a bank that is or becomes a Lender under this
Agreement on the Closing Date (each, an “Existing Letter of Credit”) shall
constitute a “Letter of Credit” for all purposes of this Agreement, issued, for
purposes of Section 2.2(b) hereof, on the Closing Date. Borrower, Agent and the
Lenders hereby agree that, from and after such date, the terms

 

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of this Agreement shall apply to the Existing Letters of Credit, superseding any
other agreement theretofore applicable to them to the extent inconsistent with
the terms hereof (including but not limited to the fees payable under subsection
(iii) above). Notwithstanding anything to the contrary in any reimbursement
agreement applicable to the Existing Letters of Credit, the fees payable in
connection with each Existing Letter of Credit shall accrue from the Closing
Date at the rate provided in Section 2.2(b)(iii) hereof, and shall be shared
with the Lenders in accordance with subsection (iii) above.

(c) Swing Loans.

(i) Generally. Subject to the terms and conditions of this Agreement, during the
Commitment Period, the Swing Line Lender shall make a Swing Loan or Swing Loans
to Borrower in such amount or amounts as Borrower, through an Authorized
Officer, may from time to time request; provided that Borrower shall not request
any Swing Loan if, after giving effect thereto, (A) the Revolving Credit
Exposure would exceed the Total Commitment Amount, or (B) the Swing Line
Exposure would exceed the Swing Line Commitment. Such request shall be made in
accordance with Section 2.5 hereof. At the time of such request, Agent shall
provide a quote for the proposed interest rate for the requested Swing Loan.
Upon agreement by Borrower (which may be verbal), Agent shall make the Swing
Loan. Each Swing Loan shall be due and payable on the Swing Loan Maturity Date
applicable thereto. Borrower shall not request that more than two Swing Loans be
outstanding at any time.

(ii) Refunding of Swing Loans. If the Swing Line Lender so elects, by giving
notice to Borrower and the Lenders, Borrower agrees that the Swing Line Lender
shall have the right, in its sole discretion, to require that any Swing Loan be
refinanced as a Revolving Loan. Such Revolving Loan shall be a Base Rate Loan
unless otherwise requested by and available to Borrower hereunder. Upon receipt
of such notice by Borrower and the Lenders, Borrower shall be deemed, on such
day, to have requested a Revolving Loan in the principal amount of the Swing
Loan in accordance with Sections 2.2(a) and 2.5 hereof (other than the
requirement set forth in Section 2.5(d) hereof). Such Revolving Loan shall be
evidenced by the Revolving Credit Notes (or, if a Lender has not requested a
Revolving Credit Note, by the records of Agent and such Lender). Each Lender
agrees to make a Revolving Loan on the date of such notice, subject to no
conditions precedent whatsoever. Each Lender acknowledges and agrees that such
Lender’s obligation to make a Revolving Loan pursuant to Section 2.2(a) hereof
when required by this Section 2.2(c)(ii) is absolute and unconditional and shall
not be affected by any circumstance whatsoever, including, without limitation,
the occurrence and continuance of a Default or Event of Default, and that its
payment to Agent, for the account of the Swing Line Lender, of the proceeds of
such Revolving Loan shall be made without any offset, abatement, recoupment,
counterclaim, withholding or reduction whatsoever and whether or not such
Lender’s Revolving Credit Commitment shall have been reduced or terminated.
Borrower irrevocably authorizes and instructs Agent to apply the proceeds of any
borrowing pursuant to this Section 2.2(c)(ii) to repay in full such Swing Loan.
Each Lender is hereby authorized to record on its records relating to its
Revolving Credit Note (or, if such Lender has not requested a Revolving Credit
Note, its records relating to Revolving Loans) such Lender’s pro rata share of
the amounts paid to refund such Swing Loan.

 

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(iii) Participation in Swing Loans. If, for any reason, Agent is unable to or,
in the opinion of Agent, it is impracticable to, convert any Swing Loan to a
Revolving Loan pursuant to the preceding Section 2.2(c)(ii), then on any day
that a Swing Loan is outstanding (whether before or after the maturity thereof),
Agent shall have the right to request that each Lender purchase a participation
in such Swing Loan, and Agent shall promptly notify each Lender thereof (by
facsimile or telephone, confirmed in writing). Upon such notice, but without
further action, the Swing Line Lender hereby agrees to grant to each Lender, and
each Lender hereby agrees to acquire from the Swing Line Lender, an undivided
participation interest in such Swing Loan in an amount equal to such Lender’s
Commitment Percentage of the principal amount of such Swing Loan. In
consideration and in furtherance of the foregoing, each Lender hereby absolutely
and unconditionally agrees, upon receipt of notice as provided above, to pay to
Agent, for the benefit of the Swing Line Lender, such Lender’s ratable share of
such Swing Loan (determined in accordance with such Lender’s Commitment
Percentage). Each Lender acknowledges and agrees that its obligation to acquire
participations in Swing Loans pursuant to this Section 2.2(c)(iii) is absolute
and unconditional and shall not be affected by any circumstance whatsoever,
including, without limitation, the occurrence and continuance of a Default or an
Event of Default, and that each such payment shall be made without any offset,
abatement, recoupment, counterclaim, withholding or reduction whatsoever and
whether or not such Lender’s Revolving Credit Commitment shall have been reduced
or terminated. Each Lender shall comply with its obligation under this
Section 2.2(c)(iii) by wire transfer of immediately available funds, in the same
manner as provided in Section 2.5 hereof with respect to Revolving Loans to be
made by such Lender.

Section 2.3. Interest.

(a) Revolving Loans.

(i) Base Rate Loan. Borrower shall pay interest on the unpaid principal amount
of a Base Rate Loan outstanding from time to time from the date thereof until
paid at the Derived Base Rate from time to time in effect. Interest on such Base
Rate Loan shall be payable, commencing December 31, 2005, and on each Regularly
Scheduled Payment Date thereafter and at the maturity thereof.

(ii) Eurodollar Loans. Borrower shall pay interest on the unpaid principal
amount of each Eurodollar Loan outstanding from time to time, fixed in advance
on the first day of the Interest Period applicable thereto through the last day
of the Interest Period applicable thereto (but subject to changes in the
Applicable Margin for Eurodollar Loans), at the Derived Eurodollar Rate.
Interest on such Eurodollar Loan shall be payable on each Interest Adjustment
Date with respect to an Interest Period (provided that if an Interest Period
shall exceed three months, the interest must be paid every three months,
commencing three months from the beginning of such Interest Period).

 

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(b) Swing Loans. Borrower shall pay interest to Agent, for the sole benefit of
the Swing Line Lender (and any Lender that shall have purchased a participation
in such Swing Loan), on the unpaid principal amount of each Swing Loan
outstanding from time to time from the date thereof until paid at a fixed rate
equal to the Derived Swing Loan Rate applicable to such Swing Loan. Interest on
each Swing Loan shall be payable on the Swing Loan Maturity Date applicable
thereto. Each Swing Loan shall bear interest for a minimum of one day.

(c) Default Rate. Anything herein to the contrary notwithstanding, if an Event
of Default shall occur, (i) the principal of each Loan and the unpaid interest
thereon shall bear interest, until paid, at the Default Rate, (ii) the fee for
the aggregate undrawn amount of all issued and outstanding Letters of Credit
shall be increased by two percent (2%) in excess of the rate otherwise
applicable thereto, and (iii) in the case of any other amount not paid when due
from Borrower hereunder or under any other Loan Document, such amount shall bear
interest at the Default Rate.

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

Section 2.4. Evidence of Indebtedness.

(a) Revolving Loans. Upon request of a Lender, to evidence the obligation of
Borrower to repay the Revolving Loans made by such Lender and to pay interest
thereon, Borrower shall execute a Revolving Credit Note in the form of the
attached Exhibit A, payable to the order of such Lender in the principal amount
of its Revolving Credit Commitment, or, if less, the aggregate unpaid principal
amount of Revolving Loans made by such Lender; provided, however, that failure
of a Lender to request a Revolving Credit Note shall in no way detract from
Borrower’s obligations to such Lender hereunder.

(b) Swing Loan. Upon request of the Swing Line Lender, to evidence the
obligation of Borrower to repay the Swing Loans and to pay interest thereon,
Borrower shall execute a Swing Line Note in the form of the attached Exhibit B,
and payable to the order of the Swing Line Lender in the principal amount of the
Swing Line Commitment, or, if less, the aggregate unpaid principal amount of
Swing Loans made by the Swing Line Lender; provided, however, that failure of
the Swing Line Lender to request a Swing Line Note shall in no way detract from
Borrower’s obligations to the Swing Line Lender hereunder.

 

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Section 2.5. Notice of Credit Event; Funding of Loans.

(a) Notice of Credit Event. Borrower, through an Authorized Officer, shall
provide to Agent a Notice of Loan prior to (i) 10:00 A.M. (Pacific time) on the
proposed date of borrowing or conversion of any Base Rate Loan, (ii) 10:00 A.M.
(Pacific time) three Business Days prior to the proposed date of borrowing,
conversion or continuation of any Eurodollar Loan, and (iii) 11:00 A.M. (Pacific
time) on the proposed date of borrowing of any Swing Loan. Borrower shall comply
with the notice provisions set forth in Section 2.2(b)(ii) hereof with respect
to Letters of Credit.

(b) Funding of Loans. Agent shall notify each Lender of the date, amount and
Interest Period (if applicable) promptly upon the receipt of a Notice of Loan,
and, in any event, by 1:00 P.M. (Pacific time) on the date such Notice of Loan
is received. On the date that the Credit Event set forth in such Notice of Loan
is to occur, each such Lender shall provide to Agent, not later than 2:00 P.M.
(Pacific time), the amount in Dollars, in federal or other immediately available
funds, required of it. If Agent shall elect to advance the proceeds of such Loan
prior to receiving funds from such Lender, Agent shall have the right, upon
prior notice to Borrower, to debit any account of Borrower or otherwise receive
such amount from Borrower, on demand, in the event that such Lender shall fail
to reimburse Agent in accordance with this subsection. Agent shall also have the
right to receive interest from such Lender at the Federal Funds Effective Rate
in the event that such Lender shall fail to provide its portion of the Loan on
the date requested and Agent shall elect to provide such funds.

(c) Conversion of Loans. At the request of Borrower to Agent, subject to the
notice and other provisions of this Section 2.5, the Lenders shall convert a
Base Rate Loan to one or more Eurodollar Loans at any time and shall convert a
Eurodollar Loan to a Base Rate Loan on any Interest Adjustment Date applicable
thereto. Swing Loans may be converted by the Swing Line Lender to Revolving
Loans in accordance with Section 2.2(c)(ii) hereof.

(d) Minimum Amount. Each request for:

(i) a Base Rate Loan shall be in an amount of not less than One Million Dollars
($1,000,000), increased by increments of Five Hundred Thousand Dollars
($500,000);

(ii) a Eurodollar Loan shall be in an amount of not less than Five Million
Dollars ($5,000,000), increased by increments of One Million Dollars
($1,000,000); and

(iii) a Swing Loan shall be in an amount of not less than Five Hundred Thousand
Dollars ($500,000).

(e) Interest Periods. Borrower shall not request that Eurodollar Loans be
outstanding for more than eight different Interest Periods at the same time.

 

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Section 2.6. Payment on Loans and Other Obligations.

(a) Payments Generally. Each payment made hereunder by a Credit Party shall be
made without any offset, abatement, recoupment, counterclaim, withholding or
reduction whatsoever.

(b) Payments from Borrower. All payments (including prepayments) to Agent of the
principal of or interest on each Loan or other payment, including but not
limited to principal, interest, fees or any other amount owed by Borrower under
this Agreement, shall be made in Dollars. All payments described in this
subsection (b) shall be remitted to Agent, at the address of Agent for notices
referred to in Section 10.4 hereof for the account of the Lenders (or the
Fronting Lender or the Swing Line Lender, as appropriate) not later than 10:00
A.M. (Pacific time) on the due date thereof in immediately available funds. Any
such payments received by Agent after 10:00 A.M. (Pacific time) shall be deemed
to have been made and received on the next Business Day.

(c) Payments to Lenders. Upon Agent’s receipt of payments hereunder, Agent shall
immediately distribute to each Lender its ratable shares, if any, of the amount
of principal, interest, and facility and other fees received by Agent for the
account of such Lender. Payments received by Agent shall be delivered to the
Lenders in Dollars in immediately available funds. As among Borrower and the
Lenders, immediately available funds received by Agent that Agent is to
distribute to the Lenders shall be deemed received by the appropriate Lenders on
receipt of such funds by Agent. Each Lender shall record any principal, interest
or other payment, the principal amounts of Base Rate Loans, Eurodollar Loans,
Swing Loans and Letters of Credit, all prepayments and the applicable dates,
including Interest Periods, with respect to the Loans made, and payments
received by such Lender, by such method as such Lender may generally employ;
provided, however, that failure to make any such entry shall in no way detract
from the obligations of Borrower under this Agreement or any Note. The aggregate
unpaid amount of Loans, types of Loans, Interest Periods and similar information
with respect to the Loans and Letters of Credit set forth on the records of
Agent shall be rebuttably presumptive evidence with respect to such information,
including the amounts of principal, interest and fees owing to each Lender.

(d) Timing of Payments. Whenever any payment to be made hereunder, including,
without limitation, any payment to be made on any Loan, shall be stated to be
due on a day that is not a Business Day, such payment shall be made on the next
Business Day and such extension of time shall in each case be included in the
computation of the interest payable on such Loan; provided, however, that, with
respect to a Eurodollar Loan, if the next Business Day shall fall in the
succeeding calendar month, such payment shall be made on the preceding Business
Day and the relevant Interest Period shall be adjusted accordingly.

Section 2.7. Prepayment.

(a) Right to Prepay. Borrower shall have the right at any time or from time to
time to prepay, on a pro rata basis for all of the Lenders (except with respect
to Swing Loans that have not been funded by the other Lenders, which shall be
paid to the Swing Line Lender), all or any part of the principal amount of the
Loans, as designated by Borrower. Such payment shall include interest accrued on
the amount so prepaid to the date of such prepayment and any

 

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amount payable under Article III hereof with respect to the amount being
prepaid. Prepayments of Base Rate Loans shall be without any premium or penalty,
other than any prepayment fees, penalties or other charges that may be contained
in any Hedge Agreement.

(b) Notice of Prepayment. Borrower shall give Agent notice of prepayment of a
Base Rate Loan or Swing Loan by no later than 10:00 A.M. (Pacific time) on the
Business Day such prepayment is to be made and written notice of the prepayment
of any Eurodollar Loan not later than 11:00 A.M. (Pacific time) three Business
Days before the Business Day on which such prepayment is to be made.

(c) Minimum Amount. Each prepayment of a Eurodollar Loan shall be in the
principal amount of not less than the lesser of the entire outstanding principal
balance thereof or Five Million Dollars ($5,000,000), or, with respect to a
Swing Loan, the principal balance of such Swing Loan, except in the case of a
mandatory payment pursuant to Section 2.11 or Article III hereof.

Section 2.8. Facility and Other Fees; Reduction of Commitment.

(a) Facility Fee. Borrower shall pay to Agent, for the ratable account of the
Lenders, as a consideration for the Commitment, a facility fee from the Closing
Date to and including the last day of the Commitment Period, payable quarterly,
at a rate per annum equal to (i) the Applicable Facility Fee Rate in effect on
the payment date, multiplied by (ii) the average daily Total Commitment Amount
in effect during such quarter. The facility fee shall be payable in arrears, on
December 31, 2005 and continuing on each Regularly Scheduled Payment Date
thereafter, and on the last day of the Commitment Period.

(b) Agent Fee. Borrower shall pay to Agent, for its sole benefit, the fees set
forth in the Agent Fee Letter.

Section 2.9. Reduction of Commitment. Borrower may at any time and from time to
time permanently reduce in whole or ratably in part the Total Commitment Amount
to an amount not less than the then existing Revolving Credit Exposure, by
giving Agent not fewer than three Business Days’ (or thirty (30) days if the
Commitment is to be reduced or terminated in its entirety) written notice of
such reduction, provided that any such partial reduction shall be in an
aggregate amount, for all of the Lenders, of not less than Ten Million Dollars
($10,000,000), increased by increments of One Million Dollars ($1,000,000).
Agent shall promptly notify each Lender of the date of each such reduction and
such Lender’s proportionate share thereof. After each such reduction, the
facility fees payable hereunder shall be calculated upon the Total Commitment
Amount as so reduced. If Borrower reduces to zero the Revolving Credit
Commitment, on the effective date of such reduction (Borrower having prepaid in
full the unpaid principal balance, if any, of the Loans, together with all
interest and facility and other fees accrued and unpaid, and provided that no
Letter of Credit Exposure or Swing Line Exposure shall exist), all of the Notes
shall be delivered to Agent marked “Canceled” and Agent shall redeliver such
Notes to Borrower. Any partial reduction in the Total Commitment Amount shall be
effective during the remainder of the Commitment Period.

 

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Section 2.10. Computation of Interest and Fees. Interest on Loans and facility
and other fees and charges hereunder shall be computed on the basis of a year
having three hundred sixty (360) days and calculated for the actual number of
days elapsed.

Section 2.11. Mandatory Payments.

(a) If, at any time, the Revolving Credit Exposure shall exceed the Total
Commitment Amount as then in effect, Borrower shall, as promptly as practicable,
but in no event later than the next Business Day, pay an aggregate principal
amount of the Revolving Loans sufficient to bring the Revolving Credit Exposure
within the Total Commitment Amount.

(b) If, at any time, the Swing Line Exposure shall exceed the Swing Line
Commitment, Borrower shall, as promptly as practicable, but in no event later
than the next Business Day, prepay an aggregate principal amount of the Swing
Loans sufficient to bring the Swing Line Exposure within the Swing Line
Commitment.

(c) Unless otherwise designated by Borrower, each prepayment pursuant to
Section 2.11(a) hereof shall be applied in the following order (i) first, on a
pro rata basis for the Lenders, to outstanding Base Rate Loans, and (ii) second,
on a pro rata basis for the Lenders, to outstanding Eurodollar Loans (to
Eurodollar Loans with the earliest Interest Adjustment Dates first), provided
that if the outstanding principal amount of any Eurodollar Loan shall be reduced
to an amount less than the minimum amount set forth in Section 2.5 hereof as a
result of such prepayment, then such Eurodollar Loan shall be converted into a
Base Rate Loan on the date of such prepayment. Any prepayment of a Eurodollar
Loan or Swing Loan pursuant to this Section 2.11 shall be subject to the
prepayment penalties set forth in Article III hereof.

Section 2.12. Springing Security Interest.

(a) Generally. On the Closing Date, Borrower and each Guarantor of Payment shall
execute and deliver to Agent, for the benefit of the Lenders, the Springing
Security Documents required to be delivered pursuant to Section 4.2 hereof.
Agent and the Lenders acknowledge that the Springing Security Documents will be
held in escrow by Agent and that any Lien granted by Borrower or a Guarantor of
Payment in the Springing Security Documents shall not be effective until the
Triggering Event Date.

(b) Automatic and Retroactive Effect. On the Triggering Event Date the Springing
Security Documents shall be automatically released from escrow and be fully
effective retroactively as of the Closing Date, without Agent or any Lender
taking any action or providing notice of any kind to Borrower or any Guarantor
of Payment.

(c) Perfection of Security Interests of Agent and the Lenders. At any time on or
after the Triggering Event Date, Agent shall be authorized to take all such
action (including, but not limited to, filing U.C.C. Financing Statements and
other appropriate filings in the appropriate filing offices) that Agent, in its
reasonable judgment deems advisable under the circumstances, in order to perfect
the Liens granted to Agent, for the benefit of the Lenders, pursuant to the
Springing Security Documents. Borrower hereby authorizes Agent to take such
action and make

 

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such filings, on behalf of itself and each Guarantor of Payment, on or after the
Triggering Event Date, without providing notice of any kind to Borrower or any
Guarantor of Payment. Borrower shall pay all filing and recording fees and taxes
in connection with the filing or recordation of such U.C.C. Financing Statements
and security interests and shall immediately reimburse Agent therefore if Agent
pays the same. Such amounts shall be Related Expenses hereunder. After the
Triggering Event Date, Borrower and each Guarantor of Payment agree to execute
such additional security documents and take such additional action, promptly
upon request of Agent, as Agent shall deem necessary or appropriate in order to
create or perfect a Lien in favor of Agent, for the benefit of the Lenders, in
any property of any Credit Party in which a Lien is required to be granted to
Agent, for the benefit of the Lenders, pursuant to any of the Loan Documents.
The provisions in this Section 2.12 shall control over the provisions of the
Springing Security Documents.

ARTICLE III. ADDITIONAL PROVISIONS RELATING TO

EURODOLLAR LOANS; INCREASED CAPITAL; TAXES

Section 3.1. Requirements of Law.

(a) If, after the Closing Date, (i) the adoption of or any change in any
Requirement of Law or in the interpretation or application thereof or (ii) the
compliance by any Lender with any request or directive (whether or not having
the force of law) from any central bank or other Governmental Authority:

(A) shall subject any Lender to any tax of any kind whatsoever with respect to
this Agreement, any Letter of Credit or any Eurodollar Loan made by it, or
change the basis of taxation of payments to such Lender in respect thereof
(except for Excluded Taxes, and for other Taxes which are governed by
Section 3.2 hereof);

(B) shall impose, modify or hold applicable any reserve, special deposit,
compulsory loan or similar requirement against assets held by, deposits or other
liabilities in or for the account of, advances, loans or other extensions of
credit by, or any other acquisition of funds by, any office of such Lender that
is not otherwise included in the determination of the Eurodollar Rate; or

(C) shall impose on such Lender any other condition;

and the result of any of the foregoing is to increase the cost to such Lender of
making, converting into, continuing or maintaining Eurodollar Loans or issuing
or participating in Letters of Credit, or to reduce any amount receivable
hereunder in respect thereof, then, in any such case, Borrower shall pay to such
Lender, promptly after receipt of a written request therefor, any additional
amounts necessary to compensate such Lender for such increased cost or reduced
amount receivable. If any Lender becomes entitled to claim any additional
amounts pursuant to this subsection (a), such Lender shall promptly notify
Borrower (with a copy to Agent) of the event by reason of which it has become so
entitled.

 

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(b) If any Lender shall have determined that, after the Closing Date, the
adoption of or any change in any Requirement of Law regarding capital adequacy
or in the interpretation or application thereof or compliance by such Lender or
any corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority shall have the effect of reducing the rate of return on such Lender’s
or such corporation’s capital as a consequence of its obligations hereunder, or
under or in respect of any Letter of Credit, to a level below that which such
Lender or such corporation could have achieved but for such adoption, change or
compliance (taking into consideration the policies of such Lender or corporation
with respect to capital adequacy), then from time to time, upon submission by
such Lender to Borrower (with a copy to Agent) of a written request therefor
(which shall include the method for calculating such amount), Borrower shall
promptly pay or cause to be paid to such Lender such additional amount or
amounts as will compensate such Lender for such reduction.

(c) A certificate as to any additional amounts payable pursuant to this
Section 3.1 submitted by any Lender to Borrower (with a copy to Agent) shall be
conclusive absent manifest error. In determining any such additional amounts,
such Lender may use any reasonable method of averaging and attribution that it
shall deem applicable or appropriate. The obligations of Borrower pursuant to
this Section 3.1 shall survive the termination of this Agreement and the payment
of the Loans and all other amounts payable hereunder.

Section 3.2. Taxes.

(a) All payments made by any Credit Party under any Loan Document shall be made
free and clear of, and without deduction or withholding for or on account of any
Taxes or Other Taxes. If any Taxes or Other Taxes are required to be deducted or
withheld from any amounts payable to Agent or any Lender thereunder, the amounts
so payable to Agent or such Lender shall be increased to the extent necessary to
yield to Agent or such Lender (after deducting, withholding and payment of all
Taxes and Other Taxes) interest or any such other amounts payable hereunder at
the rates or in the amounts specified in the Loan Documents.

(b) In addition, the Credit Parties shall pay Taxes and Other Taxes to the
relevant Governmental Authority in accordance with applicable law.

(c) Whenever any Taxes or Other Taxes are required to be withheld and paid by a
Credit Party, such Credit Party shall timely withhold and pay such taxes to the
relevant Governmental Authorities. As promptly as possible thereafter, Borrower
shall send to Agent for its own account or for the account of the relevant
Lender, as the case may be, a certified copy of an original official receipt
received by such Credit Party showing payment thereof or other evidence of
payment reasonably acceptable to Agent or such Lender. If such Credit Party
shall fail to pay any Taxes or Other Taxes when due to the appropriate
Governmental Authority or fails to remit to Agent the required receipts or other
required documentary evidence, such Credit Party and Borrower shall indemnify
Agent and the appropriate Lenders on demand for any incremental taxes, interest
or penalties that may become payable by Agent or such Lender as a result of any
such failure.

 

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(d) Each Lender that is not (i) a citizen or resident of the United States of
America, (ii) a corporation, partnership or other entity created or organized in
or under the laws of the United States of America (or any jurisdiction thereof),
or (iii) an estate or trust that is subject to federal income taxation
regardless of the source of its income (any such Person, a “Non-U.S. Lender”)
shall deliver to Borrower and Agent two copies of either U.S. Internal Revenue
Service Form W-8BEN or Form W-8ECI, or, in the case of a Non-U.S. Lender
claiming exemption from U.S. federal withholding tax under Section 871(h) or
881(c) of the Code with respect to payments of “portfolio interest”, a statement
with respect to such interest and a Form W-8BEN, or any subsequent versions
thereof or successors thereto, properly completed and duly executed by such
Non-U.S. Lender claiming complete exemption from, or a reduced rate of, U.S.
federal withholding tax on all payments by Credit Parties under this Agreement
and the other Loan Documents. Such forms shall be delivered by each Non-U.S.
Lender on or before the date it becomes a party to this Agreement or such other
Loan Document. In addition, each Non-U.S. Lender shall deliver such forms or
appropriate replacements promptly upon the obsolescence or invalidity of any
form previously delivered by such Non-U.S. Lender. Each Non-U.S. Lender shall
promptly notify Borrower at any time it determines that such Lender is no longer
in a position to provide any previously delivered certificate to Borrower (or
any other form of certification adopted by the U.S. taxing authorities for such
purpose).

(e) The agreements in this Section 3.2 shall survive the termination of the Loan
Documents and the payment of the Loans and all other amounts payable hereunder.

Section 3.3. Funding Losses. Borrower agrees to indemnify each Lender, promptly
after receipt of a written request therefor, and to hold each Lender harmless
from, any loss or expense that such Lender may sustain or incur as a consequence
of (a) default by Borrower in making a borrowing of, conversion into or
continuation of Eurodollar Loans after Borrower has given a notice requesting
the same in accordance with the provisions of this Agreement, (b) default by
Borrower in making any prepayment of or conversion from Eurodollar Loans after
Borrower has given a notice thereof in accordance with the provisions of this
Agreement, (c) the making of a prepayment of a Eurodollar Loan on a day that is
not the last day of an Interest Period applicable thereto, (d) the making of a
prepayment of a Swing Loan on a day that is not the Swing Loan Maturity Date
applicable thereto, or (e) any conversion of a Eurodollar Loan to a Base Rate
Loan on a day that is not the last day of an Interest Period applicable thereto.
Such indemnification shall be in an amount equal to the excess, if any, of
(i) the amount of interest that would have accrued on the amounts so prepaid, or
not so borrowed, converted or continued, for the period from the date of such
prepayment or of such failure to borrow, convert or continue to the last day of
such Interest Period (or, in the case of a failure to borrow, convert or
continue, the Interest Period that would have commenced on the date of such
failure) or the applicable Swing Loan Maturity Date in each case at the
applicable rate of interest for such Loans provided for herein over (ii) the
amount of interest (as reasonably determined by such Lender) that would have
accrued to such Lender on such amount by placing such amount on deposit for a
comparable period with leading banks in the appropriate London interbank market,
along with any administration fee charged by such Lender. A certificate as to
any amounts payable pursuant to this Section 3.3 submitted to Borrower (with a
copy to Agent) by any Lender shall be conclusive absent manifest error. The
obligations of Borrower pursuant to this Section 3.3 shall survive the
termination of this Agreement and the payment of the Loans and all other amounts
payable hereunder.

 

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Section 3.4. Change of Lending Office. Each Lender agrees that, upon the
occurrence of any event giving rise to the operation of Section 3.1 or 3.2(a)
hereof with respect to such Lender, it will, if requested by Borrower, use
reasonable efforts (subject to overall policy considerations of such Lender) to
designate another lending office (or an affiliate of such Lender, if practical
for such Lender) for any Loans affected by such event with the object of
avoiding the consequences of such event; provided, that such designation is made
on terms that, in the sole judgment of such Lender, cause such Lender and its
lending office(s) to suffer no economic, legal or regulatory disadvantage; and
provided, further, that nothing in this Section shall affect or postpone any of
the obligations of Borrower or the rights of any Lender pursuant to Section 3.1
or 3.2(a) hereof.

Section 3.5. Eurodollar Rate Lending Unlawful; Inability to Determine Rate.

(a) If any Lender shall determine (which determination shall, upon notice
thereof to Borrower and Agent, be conclusive and binding on Borrower) that,
after the Closing Date, (i) the introduction of or any change in or in the
interpretation of any law makes it unlawful, or (ii) any Governmental Authority
asserts that it is unlawful, for such Lender to make or continue any Loan as, or
to convert (if permitted pursuant to this Agreement) any Loan into, a Eurodollar
Loan, the obligations of such Lender to make, continue or convert any such
Eurodollar Loan shall, upon such determination, be suspended until such Lender
shall notify Agent that the circumstances causing such suspension no longer
exist, and all outstanding Eurodollar Loans payable to such Lender shall
automatically convert into a Base Rate Loan at the end of the then current
Interest Periods with respect thereto or sooner, if required by law or such
assertion.

(b) If Agent or the Required Lenders determine that for any reason adequate and
reasonable means do not exist for determining the Eurodollar Rate for any
requested Interest Period with respect to a proposed Eurodollar Loan, or that
the Eurodollar Rate for any requested Interest Period with respect to a proposed
Eurodollar Loan does not adequately and fairly reflect the cost to the Lenders
of funding such Loan, Agent will promptly so notify Borrower and each Lender.
Thereafter, the obligation of the Lenders to make or maintain such Eurodollar
Loan shall be suspended until Agent (upon the instruction of the Required
Lenders) revokes such notice. Upon receipt of such notice, Borrower may revoke
any pending request for a borrowing of, conversion to or continuation of such
Eurodollar Loan or, failing that, will be deemed to have converted such request
into a request for a borrowing of a Base Rate Loan in the amount specified
therein.

ARTICLE IV. CONDITIONS PRECEDENT

Section 4.1. Conditions to Each Credit Event. The obligation of the Lenders, the
Fronting Lender and the Swing Line Lender to participate in any Credit Event
shall be conditioned, in the case of each Credit Event, upon the following:

(a) all conditions precedent as listed in Section 4.2 hereof required to be
satisfied prior to the first Credit Event shall have been satisfied prior to or
as of the first Credit Event;

 

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(b) Borrower shall have submitted a Notice of Loan (or with respect to a Letter
of Credit, complied with the provisions of Section 2.2(b)(ii) hereof) and
otherwise complied with Section 2.5 hereof;

(c) no Default or Event of Default shall then exist or immediately after such
Credit Event would exist; and

(d) each of the representations and warranties contained in Article VI hereof
shall be true in all material respects as if made on and as of the date of such
Credit Event, except to the extent that any thereof expressly relate to an
earlier date

Each request by Borrower for a Credit Event shall be deemed to be a
representation and warranty by Borrower as of the date of such request as to the
satisfaction of the conditions precedent specified in subsections (c) and
(d) above.

Section 4.2. Conditions to the First Credit Event. Borrower shall cause the
following conditions to be satisfied on or prior to the Closing Date. The
obligation of the Lenders, the Fronting Lender and the Swing Line Lender to
participate in the first Credit Event is subject to Borrower satisfying each of
the following conditions prior to or concurrently with such Credit Event:

(a) Notes. Borrower shall have executed and delivered to Agent for (i) each
Lender requesting a Revolving Credit Note, such Lender’s Revolving Credit Note,
and (ii) the Swing Line Lender the Swing Line Note, if requested by the Swing
Line Lender.

(b) Guaranties of Payment. Each Guarantor of Payment shall have executed and
delivered to Agent a Guaranty of Payment.

(c) Springing Security Documents. Borrower and each Guarantor of Payment shall
have executed and delivered to Agent, for the benefit of the Lenders, a Security
Agreement, a Pledge Agreement (with respect to the Pledged Securities) and
Control Agreements (with respect to the deposit and securities accounts set
forth in Schedule 6.19 hereto).

(d) Officer’s Certificate, Resolutions, Organizational Documents. Each Credit
Party shall have delivered to Agent an officer’s certificate (or comparable
domestic or foreign documents) certifying the names of the officers of such
Credit Party authorized to sign the Loan Documents, together with the true
signatures of such officers and certified copies of (i) the resolutions of the
board of directors (or comparable domestic or foreign documents) of such Credit
Party evidencing approval of the execution and delivery of the Loan Documents
and the execution of other Related Writings to which such Credit Party is a
party, and (ii) the Organizational Documents of such Credit Party.

 

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(e) Good Standing and Full Force and Effect Certificates. Borrower shall have
delivered to Agent a good standing certificate or full force and effect
certificate, as the case may be, for each Credit Party, issued on or about the
Closing Date by the Secretary of State in the state or states where such Credit
Party is incorporated or formed or qualified as a foreign entity.

(f) Legal Opinion. Borrower shall have delivered to Agent an opinion of counsel
for each Credit Party, in form and substance satisfactory to Agent and the
Lenders.

(g) Borrower Investment Policy. Borrower shall have delivered to Agent a copy of
the Borrower Investment Policy as in effect on the Closing Date.

(h) Agent Fee Letter, Closing Fee Letter and Other Fees. Borrower shall have
(i) executed and delivered to Agent the Agent Fee Letter and paid to Agent, for
its sole account, the fees stated therein to be due, (ii) executed and delivered
to Agent the Closing Fee Letter and paid to Agent, for the benefit of the
Lenders, the fees stated therein to be due, and (iii) paid all legal fees and
expenses of Agent in connection with the preparation and negotiation of the Loan
Documents.

(i) Lien Searches. With respect to the property owned or leased by Borrower and
each Guarantor of Payment and any other property securing the Obligations,
Borrower shall have caused to be delivered to Agent (i) the results of Uniform
Commercial Code lien searches, satisfactory to Agent and the Lenders, (ii) the
results of federal and state tax lien and judicial lien searches, satisfactory
to Agent and the Lenders, and (iii) Uniform Commercial Code termination
statements reflecting termination of all U.C.C. Financing Statements previously
filed by any Person and not expressly permitted pursuant to Section 5.9 hereof.

(j) Existing Credit Agreements. Borrower shall have terminated (A) the facility
evidenced by the promissory note payable to U.S. Bank National Association, and
(B) the Demand Master Promissory Note between Borrower and KeyBank National
Association, dated as of August 18, 2005; which terminations shall be deemed to
have occurred upon payment in full of all of the Indebtedness outstanding
thereunder and termination of the commitments (if any) established therein.

(k) Closing Certificate. Borrower shall have delivered to Agent and the Lenders
an officer’s certificate certifying that, as of the Closing Date, (i) all
conditions precedent set forth in this Article IV have been satisfied, (ii) no
Default or Event of Default exists nor immediately after the first Credit Event
will exist, and (iii) each of the representations and warranties contained in
Article VI hereof are true and correct as of the Closing Date.

(l) Letter of Direction. Borrower shall have delivered to Agent a letter of
direction authorizing Agent, on behalf of the Lenders, to disburse the proceeds
of the Loans, which includes the transfer of funds under this Agreement and wire
instructions setting forth the locations to which such funds shall be sent.

 

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(m) No Material Adverse Change. No material adverse change, in the opinion of
Agent, shall have occurred in the financial condition, operations or prospects
of the Companies since June 30, 2005.

(n) Miscellaneous. Borrower shall have provided to Agent and the Lenders such
other items and shall have satisfied such other conditions as may be reasonably
required by Agent or the Lenders.

Section 4.3. Post-Closing Conditions.

(a) Landlords’ Waivers. Within forty-five (45) days after the Closing Date
(unless a longer period is agreed to in writing by Agent), Borrower shall have
delivered Landlords’ Waivers to Agent, for the benefit of the Lenders, each in
form and substance reasonably satisfactory to Agent, for the locations of
Borrower at Portland, Oregon and Bolingbroke, Illinois.

(b) Stock Certificates and Stock Powers. Within thirty (30) days after the
Closing Date (unless a longer period is agreed to in writing by Agent), Borrower
shall have delivered to Agent, for the benefit of the Lenders, the stock
certificates representing the Pledged Securities and corresponding stock
transfer powers.

(c) UCC Termination Statements. Within thirty (30) days after the Closing Date
(unless a longer period is agreed to in writing by Agent), Borrower shall have
delivered to Agent evidence, in form and substance satisfactory to Agent,
reflecting the termination of all U.C.C. Financing Statements previsouly filed
by U.S. Bank National Association and Bank One, N.A. (n.k.a. JPMorgan Chase
Bank, N.A.) with respect to any of the Companies.

ARTICLE V. COVENANTS

Section 5.1. Insurance. Each Company shall (a) maintain insurance to such extent
and against such hazards and liabilities as is commonly maintained by Persons
similarly situated; and (b) within ten days of any Lender’s written request,
furnish to such Lender such information about such Company’s insurance as that
Lender may from time to time reasonably request, which information shall be
prepared in form and detail satisfactory to such Lender and certified by a
Financial Officer of such Company.

Section 5.2. Money Obligations. Each Company shall pay in full (a) prior in each
case to the date when penalties would attach, all taxes, assessments and
governmental charges and levies (except only those so long as and to the extent
that the same shall be contested in good faith by appropriate and timely
proceedings and for which adequate provisions have been established in
accordance with GAAP) for which it may be or become liable or to which any or
all of its properties may be or become subject; (b) all of its material wage
obligations to its employees in compliance with the Fair Labor Standards Act (29
U.S.C. §§ 206-207) or any comparable provisions; and (c) all of its other
material obligations calling for the payment of money (except only those so long
as and to the extent that the same shall be contested in good faith and for
which adequate provisions have been established in accordance with GAAP) before
such payment becomes overdue.

 

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Section 5.3. Financial Statements and Information.

(a) Quarterly Financials. Borrower shall deliver to Agent and the Lenders,
within forty-five (45) days after the end of each of the first three
quarter-annual periods of each fiscal year of Borrower, balance sheets of the
Companies as of the end of such period and statements of income (loss),
stockholders’ equity and cash flow for the quarter and fiscal year to date
periods, all prepared on a Consolidated and consolidating basis, in accordance
with GAAP, and in form and detail satisfactory to Agent and the Lenders and
certified by a Financial Officer of Borrower as fairly presenting the financial
condition, results of operations, and cash flows of the Companies in accordance
with GAAP, subject to normal year-end audit adjustments and the absence of
footnotes.

(b) Annual Audit Report. Borrower shall deliver to Agent and the Lenders, within
ninety (90) days after the end of each fiscal year of Borrower, an annual audit
report of the Companies for that year prepared on a Consolidated and
consolidating basis, in accordance with GAAP, and in form and detail
satisfactory to Agent and the Lenders and certified by an independent public
accountant satisfactory to Agent, which report shall include balance sheets and
statements of income (loss), stockholders’ equity and cash-flow for that period.

(c) Compliance Certificate. Borrower shall deliver to Agent and the Lenders,
concurrently with the delivery of the financial statements set forth in
subsections (a) and (b) above, a Compliance Certificate.

(d) Shareholder and SEC Documents. Borrower shall notify Agent and the Lenders,
as soon as practicable, of the availability of all notices, reports, definitive
proxy or other statements and other documents sent by Borrower to its
shareholders, to the holders of any of its debentures or bonds or the trustee of
any indenture securing the same or pursuant to which they are issued, or sent by
Borrower (in final form) to the SEC; provided, however, that such notification
shall not be necessary to the extent Borrower provides for automatic notices to
be sent to Agent through the SEC website (or similar service) with respect to
any notices, reports or other statements filed on such website.

(e) Financial Information of Companies. Borrower shall deliver to Agent and the
Lenders, within ten days of the written request of Agent or any Lender, such
other information about the financial condition, properties and operations of
any Company as Agent or such Lender may from time to time reasonably request,
which information shall be submitted in form and detail satisfactory to Agent or
such Lender and certified by a Financial Officer of the Company or Companies in
question.

Section 5.4. Financial Records. Each Company shall at all times maintain true
and complete records and books of account, including, without limiting the
generality of the foregoing, appropriate provisions for possible losses and
liabilities, all in accordance with GAAP, and at all reasonable times (during
normal business hours and upon notice to such

 

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Company) permit Agent or any Lender, or any representative of Agent or such
Lender, to examine such Company’s books and records and to make excerpts
therefrom and transcripts thereof.

Section 5.5. Franchises; Change in Business.

(a) Each Company (other than a Dormant Subsidiary) shall preserve and maintain
at all times its existence, and its rights and franchises necessary for its
business, except as otherwise permitted pursuant to Section 5.12 hereof.

(b) No Company shall engage in any business if, as a result thereof, the general
nature of the business of the Companies taken as a whole would be substantially
changed from a Related Business.

Section 5.6. ERISA, Pension and Benefit Plan Compliance. No Company shall incur
any material accumulated funding deficiency within the meaning of ERISA, or any
material liability to the PBGC, established thereunder in connection with any
ERISA Plan. Borrower shall furnish to the Lenders (a) as soon as possible and in
any event within thirty (30) days after any Company knows or has reason to know
that any Reportable Event with respect to any ERISA Plan has occurred, a
statement of a Financial Officer of such Company, setting forth details as to
such Reportable Event and the action that such Company proposes to take with
respect thereto, together with a copy of the notice of such Reportable Event
given to the PBGC if a copy of such notice is available to such Company, and
(b) promptly after receipt thereof a copy of any notice such Company, or any
member of the Controlled Group may receive from the PBGC or the Internal Revenue
Service with respect to any ERISA Plan administered by such Company; provided,
that this latter clause shall not apply to notices of general application
promulgated by the PBGC or the Internal Revenue Service. Borrower shall promptly
notify the Lenders of any material taxes assessed, proposed to be assessed or
that Borrower has reason to believe may be assessed against a Company by the
Internal Revenue Service with respect to any ERISA Plan. As used in this
Section 5.6, “material” means the measure of a matter of significance that shall
be determined as being an amount equal to five percent (5%) of Consolidated Net
Worth. As soon as practicable, and in any event within twenty (20) days, after
any Company shall become aware that an ERISA Event shall have occurred, such
Company shall provide Agent with notice of such ERISA Event with a certificate
by a Financial Officer of such Company setting forth the details of the event
and the action such Company or another Controlled Group member proposes to take
with respect thereto. Borrower shall, at the request of Agent or any Lender,
deliver or cause to be delivered to Agent or such Lender, as the case may be,
true and correct copies of any documents relating to the ERISA Plan of any
Company.

Section 5.7. Financial Covenants.

(a) Leverage Ratio. The Companies shall not suffer or permit at any time the
Leverage Ratio to exceed 3.25 to 1.00.

(b) Fixed Charge Coverage Ratio. The Companies shall not suffer or permit at any
time the Fixed Charge Coverage Ratio to be less than 1.20 to 1.00.

 

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Section 5.8. Borrowing. No Company shall create, incur or have outstanding any
Indebtedness of any kind; provided that this Section 5.8 shall not apply to the
following:

(a) the Loans, the Letters of Credit and any other Indebtedness under this
Agreement;

(b) any loans granted to or Capitalized Lease Obligations entered into by any
Company for the purchase or lease of fixed assets (and refinancings of such
loans or Capitalized Lease Obligations), which loans and Capitalized Lease
Obligations shall only be secured by the fixed assets being purchased or leased,
so long as the aggregate principal amount of all such loans and Capitalized
Lease Obligations for all Companies shall not exceed Ten Million Dollars
($10,000,000) at any time outstanding;

(c) the Indebtedness existing on the Closing Date, in addition to the other
Indebtedness permitted to be incurred pursuant to this Section 5.8, as set forth
in Schedule 5.8 hereto (and any extension, renewal or refinancing thereof so
long as the principal amount thereof shall not be increased after the Closing
Date);

(d) loans to a Company from a Company so long as each such Company is a Credit
Party;

(e) Indebtedness under any Hedge Agreement, so long as such Hedge Agreement
shall have been entered into in the ordinary course of business and not for
speculative purposes;

(f) Permitted Foreign Subsidiary Loans and Investments; and

(g) other unsecured Indebtedness, in addition to the Indebtedness listed above,
so long as no Default or Event of Default shall then exist or immediately
thereafter shall begin to exist.

Section 5.9. Liens. No Company shall create, assume or suffer to exist (upon the
happening of a contingency or otherwise) any Lien upon any of its property or
assets, whether now owned or hereafter acquired; provided that this Section 5.9
shall not apply to the following:

(a) Liens for taxes not yet due or that are being actively contested in good
faith by appropriate proceedings and for which adequate reserves shall have been
established in accordance with GAAP;

(b) other statutory (including landlord Liens), carrier, warehouse, or maritime
Liens incidental to the conduct of its business or the ownership of its property
and assets that (i) were not incurred in connection with the borrowing of money
or the obtaining of advances or credit, and (ii) do not in the aggregate
materially detract from the value of its property or assets or materially impair
the use thereof in the operation of its business;

(c) Liens on property or assets of a Subsidiary to secure obligations of such
Subsidiary to a Credit Party;

 

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(d) purchase money Liens on fixed assets securing the loans and Capitalized
Lease Obligations pursuant to Section 5.8 (b) hereof, provided that such Lien is
limited to the purchase price and only attaches to the property being acquired;

(e) the Liens existing on the Closing Date as set forth in Schedule 5.9 hereto
and replacements, extensions, renewals, refundings or refinancings thereof, but
only to the extent that the principal amount of debt secured thereby shall not
be increased;

(f) easements, covenants, license agreements, or other minor defects or
irregularities in title or possession of real property not interfering in any
material respect with the use of such property in the business of any Company;

(g) Liens on assets of a Company located at a leased facility that have become a
fixture to such real property and thus subject to a Lien by the mortgagor of or
grantor of a deed of trust on such real property; or

(h) any Lien granted to Agent, for the benefit of the Lenders.

No Company shall enter into any contract or agreement (other than a contract or
agreement entered into in connection with the purchase or lease of fixed assets
that prohibits Liens on such fixed assets) that would prohibit Agent or the
Lenders from acquiring a security interest, mortgage or other Lien on, or a
collateral assignment of, any of the property or assets of such Company.

Section 5.10. Regulations T, U and X. No Company shall take any action that
would result in any non-compliance of the Loans or Letters of Credit with
Regulations T, U or X, or any other applicable regulation, of the Board of
Governors of the Federal Reserve System.

Section 5.11. Investments, Loans and Guaranties. No Company shall (a) create,
acquire or hold any Subsidiary, (b) make or hold any investment in any stocks,
bonds or securities of any kind, (c) be or become a party to any joint venture
or other partnership, (d) make or keep outstanding any advance or loan to any
Person, or (e) be or become a Guarantor of any kind (other than a Guarantor of
Payment under the Loan Documents); provided that this Section 5.11 shall not
apply to the following:

(i) any endorsement of a check or other medium of payment for deposit or
collection through normal banking channels or similar transaction in the normal
course of business;

(ii) any investment in direct obligations of the United States of America or in
certificates of deposit issued by a member bank (having capital resources in
excess of One Hundred Million Dollars ($100,000,000)) of the Federal Reserve
System;

(iii) any investment made in accordance with the Borrower Investment Policy;

 

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(iv) the holding of each of the Subsidiaries listed on Schedule 6.1 hereto, and
the creation, acquisition and holding of, and any investment in, any new
Subsidiary after the Closing Date so long as such new Subsidiary shall have been
created, acquired or held, and investments made, in accordance with the terms
and conditions of this Agreement and such Subsidiary shall, if required pursuant
to Section 5.20 hereof, promptly become a Guarantor of Payment;

(v) loans to a Company from a Company so long as each such Company is a Credit
Party;

(vi) any Permitted Foreign Subsidiary Loans and Investments or Permitted
Investment, so long as no Default or Event of Default shall then exist or would
result therefrom;

(vii) the holding of any stock or equity interest that has been acquired
pursuant to an Acquisition permitted by Section 5.13 hereof; or

(viii) guaranties or indemnifications with respect to leases and purchase money
secured financing extended by third parties for the lease or purchase by
customers of the Companies’ inventory so long as the aggregate amount all such
guaranties and indemnifications under this provision are included in the
calculation of Consolidated Funded Indebtedness.

Section 5.12. Merger and Sale of Assets. No Company shall merge, amalgamate or
consolidate with any other Person, or sell, lease or transfer or otherwise
dispose of any assets to any Person other than in the ordinary course of
business, except that, if no Default or Event of Default shall then exist or
immediately thereafter shall begin to exist:

(a) any Domestic Subsidiary may merge with (i) Borrower (provided that Borrower
shall be the continuing or surviving Person) or (ii) any one or more Guarantors
of Payment;

(b) any Domestic Subsidiary may sell, lease, transfer or otherwise dispose of
any of its assets to (i) Borrower or (ii) any Guarantor of Payment;

(c) any Foreign Subsidiary may merge or amalgamate with (i) a Credit Party
(provided that such Credit Party shall be the continuing or surviving Person),
and (ii) a Company that is not a Credit Party;

(d) any Foreign Subsidiary may sell, lease, transfer or otherwise dispose of any
of its assets to a Company;

(e) any Company may sell, lease, transfer or otherwise dispose of any assets
that are obsolete, out of style or no longer useful in such Company’s business;
and

(f) Acquisitions may be effected in accordance with the provisions of
Section 5.13 hereof.

 

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Section 5.13. Acquisitions. No Company shall effect an Acquisition; provided,
however, that a Credit Party may effect an Acquisition so long as:

(a) in the case of a merger, amalgamation or other combination including
Borrower, Borrower shall be the surviving entity;

(b) in the case of a merger, amalgamation or other combination including a
Credit Party (other than Borrower), a Credit Party shall be the surviving
entity;

(c) the business to be acquired shall be principally in any Related Businesses;

(d) no Default or Event of Default shall exist prior to or after giving effect
to such Acquisition;

(e) Borrower shall have provided to Agent and the Lenders, at least ten
(10) days prior to such Acquisition, historical financial statements of the
target entity as provided by the target entity and a pro forma financial
statement of the Companies accompanied by a certificate of a Financial Officer
of Borrower showing pro forma compliance with Sections 5.7 and 5.13(h) hereof,
both before and after the proposed Acquisition; provided, however, that, if the
Acquisition price (in cash, securities, debt assumption, or other consideration)
does not exceed Twenty-Five Million Dollars ($25,000,000), such financial
statements and pro formas may be provided not later than thirty (30) days after
consummation of the Acquisition;

(f) such Acquisition is not actively opposed by the board of directors (or
similar governing body) of the selling Persons or the Persons whose equity
interests are to be acquired; and

(g) the aggregate Consideration paid by the Companies for all Acquisitions
(i) shall not exceed the aggregate amount of One Hundred Million Dollars
($100,000,000) during any fiscal year of Borrower, and (ii) shall not exceed the
aggregate amount of Two Hundred Fifty Million Dollars ($250,000,000) during the
Commitment Period; provided, however, that such limits shall exclude any
Consideration paid for Acquisitions completed prior to the Closing Date.

Section 5.14. Notice. Borrower shall cause a Financial Officer of Borrower to
promptly notify Agent and the Lenders, in writing, whenever a Default or Event
of Default may occur hereunder or any representation or warranty made in Article
VI hereof or elsewhere in this Agreement or in any Related Writing may for any
reason cease in any material respect to be true and complete.

Section 5.15. Restricted Payments No Company shall make or commit itself to make
any Restricted Payment at any time, except that Borrower may make scheduled
interest payments on Subordinated Indebtedness so long as no Default or Event of
Default shall then exist or immediately thereafter shall begin to exist.

 

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Section 5.16. Environmental Compliance. Each Company shall comply in all
material respects with any and all Environmental Laws including, without
limitation, all Environmental Laws in jurisdictions in which such Company owns
or operates a facility or site, arranges for disposal or treatment of hazardous
substances, solid waste or other wastes, accepts for transport any hazardous
substances, solid waste or other wastes or holds any interest in real property
or otherwise. Borrower shall furnish to the Lenders, promptly after receipt
thereof, a copy of any notice such Company may receive from any Governmental
Authority or private Person, or otherwise, that any material litigation or
proceeding pertaining to any environmental, health or safety matter has been
filed or is threatened against such Company, any real property in which such
Company holds any interest or any past or present operation of such Company. No
Company shall allow any material release or disposal of hazardous waste, solid
waste or other wastes on, under or to any real property in which any Company
holds any ownership interest or performs any of its operations, in violation of
any Environmental Law. As used in this Section 5.16, “litigation or proceeding”
means any demand, claim, notice, suit, suit in equity action, administrative
action, investigation or inquiry whether brought by any Governmental Authority,
private Person or otherwise. Borrower shall defend, indemnify and hold Agent and
the Lenders harmless against all costs, expenses, claims, damages, penalties and
liabilities of every kind or nature whatsoever (including attorneys’ fees)
arising out of or resulting from the noncompliance of any Company with any
Environmental Law. Such indemnification shall survive any termination of this
Agreement.

Section 5.17. Affiliate Transactions. No Company shall, directly or indirectly,
enter into or permit to exist any transaction (including, without limitation,
the purchase, sale, lease or exchange of any property or the rendering of any
service) with any Affiliate (other than a Company that is a Credit Party or a
Foreign Subsidiary) on terms that shall be less favorable to such Company than
those that might be obtained at the time in a transaction with a non-Affiliate;
provided, however, that the foregoing shall not prohibit the payment of
customary and reasonable compensation to directors who are not employees of a
Company or an Affiliate.

Section 5.18. Use of Proceeds. Borrower’s use of the proceeds of the Loans shall
be solely for working capital and other general corporate purposes (including
Acquisitions) of the Companies.

Section 5.19. Corporate Names. No Company shall change its corporate name or its
state, province or other jurisdiction of organization, unless, in each case,
Borrower shall have provided Agent and the Lenders with at least thirty
(30) days prior written notice thereof.

Section 5.20. Subsidiary Guaranties, Springing Security Documents and Pledge of
Stock or Other Ownership Interest.

(a) Guaranties and Springing Security Documents. Each Domestic Subsidiary (that
is not Dashamerica, Inc. or a Dormant Subsidiary) created, acquired or held
subsequent to the Closing Date, shall, within thirty (30) days after the date
such Domestic Subsidiary is created or acquired, or within thirty (30) days
after the end of the fiscal quarter in which a Dormant Subsidiary becomes a
non-Dormant Subsidiary, execute and deliver to Agent, for the benefit of the
Lenders, a Guaranty of Payment of all of the Obligations and Springing Security
Documents

 

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(as required on the Closing Date with respect to Companies that were Guarantors
on the Closing Date) along with any such other supporting documentation,
corporate governance and authorization documents, and an opinion of counsel as
may be deemed necessary or advisable by Agent, such documentation to be in form
and substance acceptable to Agent; provided, however, that the Springing
Security Documents shall be subject to Section 2.12 hereof.

(b) Pledge of Stock. With respect to the creation or acquisition, after the
Closing Date, of a first-tier Foreign Subsidiary of Borrower or a Guarantor of
Payment, Borrower shall deliver to Agent, for the benefit of the Lenders,
subject to Section 2.12 hereof, all of the share certificates (or other evidence
of equity) owned by a Credit Party pursuant to the terms of a Pledge Agreement
executed by the appropriate Credit Party; provided, however, that no Company
shall be required to pledge more than sixty-five percent (65%) of the
outstanding shares or other ownership interest of any Foreign Subsidiary.

(c) Perfection or Registration of Interest in Foreign Shares. With respect to
any foreign shares pledged to Agent, for the benefit of the Lenders, on or after
the Triggering Event Date, Agent shall at all times, in the discretion of Agent
or the Required Lenders, have the right to perfect, at Borrower’s cost, payable
upon request therefor (including, without limitation, any foreign counsel, or
foreign notary, filing, registration or similar, fees, costs or expenses), its
security interest in such shares in the respective foreign jurisdiction.

Section 5.21. Restrictive Agreements. Except as set forth in this Agreement,
Borrower shall not, and shall not permit any of its Subsidiaries to, directly or
indirectly, create or otherwise cause or suffer to exist or become effective any
encumbrance or restriction on the ability of any Subsidiary to (a) make,
directly or indirectly, any Capital Distribution to Borrower, (b) make, directly
or indirectly, loans or advances or capital contributions to Borrower or
(c) transfer, directly or indirectly, any of the properties or assets of such
Subsidiary to Borrower; except for such encumbrances or restrictions existing
under or by reason of (i) applicable law, (ii) customary non-assignment
provisions in leases or other agreements entered in the ordinary course of
business and consistent with past practices, or (iii) customary restrictions in
security agreements or mortgages securing Indebtedness or capital leases, of a
Company to the extent such restrictions shall only restrict the transfer of the
property subject to such security agreement, mortgage or lease.

Section 5.22. Other Covenants. In the event that any Company shall be a party to
any Material Indebtedness Agreement, wherein the covenants contained therein
shall be more restrictive than the covenants set forth herein, then the
Companies shall be bound hereunder by such more restrictive covenants with the
same force and effect as if such covenants were written herein.

Section 5.23. Guaranty Under Material Indebtedness Agreement. No Company shall
be or become a Guarantor of the Indebtedness incurred pursuant to any Material
Indebtedness Agreement unless such Company shall also be a Guarantor of Payment
under this Agreement prior to or concurrently therewith.

 

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Section 5.24. Right to Take Additional Collateral. In addition to any other
right that Agent and the Lenders may have pursuant to this Agreement or
otherwise, upon written request of Agent whenever made after the Triggering
Event Date, Borrower shall, and shall cause each Guarantor of Payment to, grant
to Agent, for the benefit of the Lenders, as additional security for the Secured
Obligations, a first (except as to fixed assets subject to a capitalized lease
or purchase money security interest) security interest in or Lien on any real or
personal property of Borrower and each Guarantor of Payment in which Agent does
not have a first priority security interest Lien, subject only to Liens
permitted under Section 5.9 hereof. Borrower agrees that, within thirty
(30) days after such written request, Borrower shall secure all of the Secured
Obligations by delivering to Agent, for the benefit of the Lenders, such
Springing Security Documents or other documents, instruments or agreements as
Agent may reasonably require. Borrower shall pay all recordation, legal and
other expenses in connection therewith.

Section 5.25. Amendment of Organizational Documents. No Company shall amend its
Organizational Documents to change its name or state, province or other
jurisdiction of organization, or otherwise amend its Organizational Documents in
any manner adverse to Lenders, without the prior written consent of Agent.

ARTICLE VI. REPRESENTATIONS AND WARRANTIES

Section 6.1. Corporate Existence; Subsidiaries; Foreign Qualification. Each
Company is duly organized, validly existing, and in good standing under the laws
of its state or jurisdiction of incorporation or organization and is duly
qualified and authorized to do business and is in good standing as a foreign
entity in the jurisdictions set forth opposite its name on Schedule 6.1 hereto,
which are all of the states or jurisdictions where the character of its property
or its business activities makes such qualification necessary, except where a
failure to qualify will not result in a Material Adverse Effect. Each Foreign
Subsidiary is validly existing under the laws of its jurisdiction of
organization. Schedule 6.1 hereto sets forth, as of the Closing Date, each
Subsidiary of Borrower (and whether such Subsidiary is a Dormant Subsidiary),
its state of formation, its relationship to Borrower, including the percentage
of each class of stock or membership interests owned by a Company, each Person
that owns the stock or other equity interest of each Company, the location of
its chief executive office and its principal place of business.

Section 6.2. Corporate Authority. Each Credit Party has the right and power and
is duly authorized and empowered to enter into, execute and deliver the Loan
Documents to which it is a party and to perform and observe the provisions of
the Loan Documents. The Loan Documents to which each Credit Party is a party
have been duly authorized and approved by such Credit Party’s board of directors
or other governing body, as applicable, and are the valid and binding
obligations of such Credit Party, enforceable against such Credit Party in
accordance with their respective terms. The execution, delivery and performance
of the Loan Documents will not conflict with, result in a breach in any of the
provisions of, constitute a default under, or result in the creation of a Lien
(other than Liens permitted under Section 5.9 hereof) upon any assets or
property of any Company under the provisions of, such Company’s Organizational
Documents or any material agreement.

 

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Section 6.3. Compliance with Laws and Contracts. Each Company:

(a) holds permits, certificates, licenses, orders, registrations, franchises,
authorizations, and other approvals from any Governmental Authority necessary
for the conduct of its business and is in compliance with all applicable laws
relating thereto, the lack of which has or could have a Material Adverse Effect;

(b) is in compliance with all material federal, state, local, or foreign
applicable statutes, rules, regulations, and orders including, without
limitation, those relating to environmental protection, occupational safety and
health, and equal employment practices; and

(c) is not in violation of or in default under any agreement to which it is a
party or by which its assets are subject or bound, the effect of which has or
could have a Material Adverse Effect.

Section 6.4. Litigation and Administrative Proceedings. Except as disclosed on
Schedule 6.4 hereto, there are (a) no material lawsuits, actions,
investigations, or other proceedings pending or threatened against any Company,
or in respect of which any Company may have any liability, in any court or
before any Governmental Authority, arbitration board, or other tribunal, (b) no
orders, writs, injunctions, judgments, or decrees of any court or government
agency or instrumentality to which any Company is a party or by which the
property or assets of any Company are bound, and (c) no material grievances,
disputes, or controversies outstanding with any union or other organization of
the employees of any Company, or threats of work stoppage, strike, or pending
demands for collective bargaining.

Section 6.5. Title to Assets. Each Company has good title to and ownership of
all material property it purports to own, which property is free and clear of
all Liens, except those permitted under Section 5.9 hereof.

Section 6.6. Liens and Security Interests. On and after the Closing Date, except
for Liens permitted pursuant to Section 5.9 hereof, (a) there is and will be no
U.C.C. Financing Statement or similar notice of Lien outstanding covering any
personal property of any Company; (b) there is and will be no mortgage
outstanding covering any real property of any Company; and (c) no real or
personal property of any Company is subject to any security interest or Lien of
any kind. No Company has entered into any contract or agreement (other than a
contract or agreement entered into in connection with the purchase or lease of
fixed assets that prohibits Liens on such fixed assets) that exists on or after
the Closing Date that would prohibit Agent or the Lenders from acquiring a Lien
on, or a collateral assignment of, any of the property or assets of any Company.

Section 6.7. Tax Returns. All federal, state and local tax returns and other
reports required by law to be filed in respect of the income, business,
properties and employees of each Company have been filed and all taxes,
assessments, fees and other governmental charges that are due and payable have
been paid, except as otherwise permitted herein except any of the foregoing
which are disputed in good faith and for which the Company maintains adequate
reserves under GAAP. The provision for taxes on the books of each Company is
adequate for all years not closed by applicable statutes and for the current
fiscal year.

 

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Section 6.8. Environmental Laws. Each Company is in material compliance with all
Environmental Laws, including, without limitation, all Environmental Laws in all
jurisdictions in which any Company owns or operates, or has owned or operated, a
facility or site, arranges or has arranged for disposal or treatment of
hazardous substances, solid waste or other wastes, accepts or has accepted for
transport any hazardous substances, solid waste or other wastes or holds or has
held any interest in real property. No litigation or other material proceeding
arising under, relating to or in connection with any Environmental Law is
pending or, to the best knowledge of each Responsible Officer of the relevant
Company, threatened, against any Company, any real property in which any Company
holds or has held an interest or any past or present operation of any Company.
No release, threatened release or disposal of hazardous waste, solid waste or
other wastes is occurring, or has occurred (other than those that are currently
being cleaned up in accordance with Environmental Laws), on, under or to any
real property in which any Company holds any interest or performs any of its
operations, in violation of any Environmental Law. As used in this Section 6.8,
“litigation or proceeding” means any demand, claim, notice, suit, suit in
equity, action, administrative action, investigation or inquiry whether brought
by any Governmental Authority or private Person, or otherwise.

Section 6.9. Locations. As of the Closing Date, the Companies have places of
business or maintain their accounts, inventory and equipment, other than
inventory and equipment that is in transit or in temporary storage, at the
locations set forth on Schedule 6.9 hereto, and each Company’s chief executive
office is set forth on Schedule 6.9 hereto. Schedule 6.9 further specifies
whether each location, as of the Closing Date, (a) is owned by the Companies, or
(b) is leased by a Company from a third party. As of the Closing Date, Schedule
6.9 correctly identifies the name and address of each third party location where
assets of the Companies are located.

Section 6.10. Continued Business. There exists no actual, pending, or, to
Borrower’s knowledge, any threatened termination, cancellation or limitation of,
or any modification or change in the business relationship of any Company and
any customer or supplier, or any group of customers or suppliers, whose
purchases or supplies, individually or in the aggregate, are material to the
business of any Company, and there exists no present condition or state of facts
or circumstances that would have a Material Adverse Effect or prevent a Company
from conducting such business or the transactions contemplated by this Agreement
in substantially the same manner in which it was previously conducted.

Section 6.11. Employee Benefits Plans. Schedule 6.11 hereto identifies each
ERISA Plan as of the Closing Date. No ERISA Event has occurred or is expected to
occur with respect to an ERISA Plan. Full payment has been made of all amounts
that a Controlled Group member is required, under applicable law or under the
governing documents, to have paid as a contribution to or a benefit under each
ERISA Plan. The liability of each Controlled Group member with respect to each
ERISA Plan has been fully funded based upon reasonable and proper actuarial
assumptions, has been fully insured, or has been fully reserved for on its
financial statements. No changes have occurred or are expected to occur that
would cause a

 

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material increase in the cost of providing benefits under the ERISA Plan (other
than increases in the number of Company employees, revision of the scope of
health care plans, and deductibles, franchises, and co-pay clauses thereunder,
or increases in costs imposed by plan providers or administrators). With respect
to each ERISA Plan that is intended to be qualified under Code Section 401(a),
(a) the ERISA Plan and any associated trust operationally comply with the
material applicable requirements of Code Section 401(a); (b) the ERISA Plan and
any associated trust have been amended to comply with all such material
requirements as currently in effect, other than those requirements for which a
retroactive amendment can be made within the “remedial amendment period”
available under Code Section 401(b) (as extended under Treasury Regulations and
other Treasury pronouncements upon which taxpayers may rely); (c) the ERISA Plan
and any associated trust have received a favorable determination letter from the
Internal Revenue Service stating that the ERISA Plan qualifies under Code
Section 401(a), that the associated trust qualifies under Code Section 501(a)
and, if applicable, that any cash or deferred arrangement under the ERISA Plan
qualifies under Code Section 401(k), unless the ERISA Plan was first adopted at
a time for which the above-described “remedial amendment period” has not yet
expired; (d) the ERISA Plan currently satisfies the requirements of Code
Section 410(b), subject to any retroactive amendment that may be made within the
above-described “remedial amendment period”; and (e) no contribution made to the
ERISA Plan is subject to an excise tax under Code Section 4972. With respect to
any Pension Plan, the “accumulated benefit obligation” of Controlled Group
members with respect to the Pension Plan (as determined in accordance with
Statement of Accounting Standards No. 87, “Employers’ Accounting for Pensions”)
does not exceed the fair market value of Pension Plan assets. As used in this
Section 6.11, “material” means the measure of a matter of significance that
shall be determined as being an amount equal to five percent (5%) of
Consolidated Net Worth.

Section 6.12. Consents or Approvals. No consent, approval or authorization of,
or filing, registration or qualification with, any Governmental Authority or any
other Person is required to be obtained or completed by any Company in
connection with the execution, delivery or performance of any of the Loan
Documents, that has not already been obtained or completed.

Section 6.13. Solvency. Borrower has received consideration that is the
reasonable equivalent value of the obligations and liabilities that Borrower has
incurred to Agent and the Lenders. Borrower is not insolvent as defined in any
applicable state, federal or relevant foreign statute, nor will Borrower be
rendered insolvent by the execution and delivery of the Loan Documents to Agent
and the Lenders. Borrower is not engaged or about to engage in any business or
transaction for which the assets retained by it are or will be an unreasonably
small amount of capital, taking into consideration the obligations to Agent and
the Lenders incurred hereunder. Borrower does not intend to, nor does it believe
that it will, incur debts beyond its ability to pay such debts as they mature.

Section 6.14. Financial Statements. The audited Consolidated financial
statements of Borrower for the fiscal year ended December 31, 2004 and the
unaudited Consolidated financial statements of Borrower for the fiscal quarter
ended June 30, 2005, furnished to Agent and the Lenders, are true and complete,
have been prepared in accordance with GAAP, and fairly present the financial
condition of the Companies as of the dates of such financial statements and the
results of their operations for the periods then ending. Since the dates of such
statements, there has been no material adverse change in any Company’s financial
condition, properties or business or any change in any Company’s accounting
procedures.

 

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Section 6.15. Regulations. No Company is engaged principally or as one of its
important activities, in the business of extending credit for the purpose of
purchasing or carrying any “margin stock” (within the meaning of Regulation U of
the Board of Governors of the Federal Reserve System of the United States of
America). Neither the granting of any Loan (or any conversion thereof) or Letter
of Credit nor the use of the proceeds of any Loan or Letter of Credit will
violate, or be inconsistent with, the provisions of Regulation T, U or X or any
other Regulation of such Board of Governors.

Section 6.16. Material Agreements. Except as disclosed on Schedule 6.16 hereto,
as of the Closing Date, no Company is a party to any (a) debt instrument
(excluding the Loan Documents); (b) lease (capital, operating or otherwise),
whether as lessee or lessor thereunder; (c) contract, commitment, agreement, or
other arrangement involving the purchase or sale of any inventory other than
guaranties or indemnifications described in Section 5.11(viii) hereof by it, or
the license of any right to or by it; (d) contract, commitment, agreement, or
other arrangement with any of its “Affiliates” (as such term is defined in the
Securities Exchange Act of 1934, as amended) other than a Company or pertaining
to director compensation; (e) management or employment contract or contract for
personal services with any of its Affiliates that is not otherwise terminable at
will or on less than ninety-one (91) days’ notice without liability;
(f) collective bargaining agreement; or (g) other contract, agreement,
understanding, or arrangement with a third party; that, as to subsections
(a) through (g), above, if violated, breached, or terminated for any reason,
would have or would be reasonably expected to have a Material Adverse Effect.

Section 6.17. Intellectual Property. Other than as disclosed on Schedule 6.17
hereto, each Company owns or has the right to use all of the material patents,
patent applications, industrial designs, designs, trademarks, service marks,
copyrights and licenses, and rights with respect to the foregoing, necessary for
the conduct of its business, and none of the Responsible Officers of any Company
are aware of any material claim by any other party which, if true, would
terminate such Company’s rights with respect thereto.

Section 6.18. Insurance. Each Company maintains with financially sound and
reputable insurers insurance with coverage and limits as required by law and as
is customary with Persons engaged in the same businesses as the Companies.
Schedule 6.18 hereto sets forth all insurance carried by Borrowers and its
Domestic Subsidiaries on the Closing Date, setting forth in detail the amount
and type of such insurance. Upon request, Borrower shall provide Agent and the
Lenders with such additional information as Agent or the Lenders may from time
to time reasonably request.

Section 6.19. Deposit and Securities Accounts. Schedule 6.19 hereto lists all
banks and other financial institutions at which any Company maintains deposit or
other accounts as of the Closing Date, and Schedule 6.19 hereto correctly
identifies the name, address and telephone number of each depository, the name
in which the account is held, a description of the purpose of the account, and
the complete account number therefor.

 

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Section 6.20. Accurate and Complete Statements. Neither the Loan Documents nor
any written statement made by any Company in connection with any of the Loan
Documents contains any untrue statement of a material fact or omits a material
fact necessary to make the statements contained therein or in the Loan Documents
not misleading. After due inquiry by Borrower, there is no known fact that any
Company has not disclosed to Agent and the Lenders that has or is likely to have
a Material Adverse Effect.

Section 6.21. Investment Company; Holding Company. No Company is an “investment
company” or a company “controlled” by an “investment company” within the meaning
of the Investment Company Act of 1940, as amended.

Section 6.22. Defaults. No Default or Event of Default exists hereunder, nor
will any begin to exist immediately after the execution and delivery hereof.

ARTICLE VII. EVENTS OF DEFAULT

Each of the following shall constitute an Event of Default hereunder:

Section 7.1. Payments. If (a) the interest on any Loan or any facility or other
fee shall not be paid in full when due and payable or within five days
thereafter, or (b) the principal of any Loan or any obligation under any Letter
of Credit shall not be paid in full when due and payable.

Section 7.2. Special Covenants. If any Company shall fail or omit to perform and
observe Section 5.7, 5.8, 5.9, 5.11, 5.12, 5.13, 5.15, 5.22 or 5.23 hereof.

Section 7.3. Other Covenants. If any Company shall fail or omit to perform and
observe any agreement or other provision (other than those referred to in
Section 7.1 or 7.2 hereof) contained or referred to in this Agreement or any
Related Writing that is on such Company’s part to be complied with, and that
Default shall not have been fully corrected within thirty (30) days after the
earlier of (a) any Financial Officer of such Company becomes aware of the
occurrence thereof, or (b) the giving of written notice thereof to Borrower by
Agent or the Required Lenders that the specified Default is to be remedied.

Section 7.4. Representations and Warranties. If any material representation,
warranty or statement made in or pursuant to this Agreement or any Related
Writing or any other material information furnished by any Company to Agent or
the Lenders or any thereof or any other holder of any Note, shall be false or
erroneous.

Section 7.5. Cross Default. If any Company shall default in any payment due and
owing under any Material Indebtedness Agreement beyond any period of grace
provided with respect thereto or in the performance or observance of any other
agreement, term or condition contained in any agreement under which such
obligation is created, if the effect of such default is to allow the
acceleration of the maturity of such Indebtedness or to permit the holder
thereof to cause such Indebtedness to become due prior to its stated maturity.

 

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Section 7.6. ERISA Default. The occurrence of one or more ERISA Events that
(a) has a Material Adverse Effect equal to five percent (5%) of Consolidated Net
Worth, or (b) results in a Lien on any of the assets of any Company.

Section 7.7. Change in Control. If any Change in Control shall occur.

Section 7.8. Money Judgment. A final judgment or order for the payment of money
shall be rendered against any Company by a court of competent jurisdiction, that
remains unpaid or unstayed and undischarged for a period (during which execution
shall not be effectively stayed) of thirty (30) days after the date on which the
right to appeal has expired, provided that the aggregate of all such judgments
for all such Companies shall exceed Five Hundred Thousand Dollars ($500,000).

Section 7.9. Material Adverse Change. There shall have occurred any condition or
event that Agent or the Required Lenders determine has or is reasonably likely
to have a Material Adverse Effect.

Section 7.10. Security. If any Lien granted in any Loan Document in favor of
Agent, for the benefit of the Lenders, shall be determined to be void, voidable
or invalid, or does not otherwise have the priority contemplated (whether
perfected or not) by this Agreement or the Springing Security Documents and
Borrower has failed to promptly execute appropriate documents to correct such
matters.

Section 7.11. Validity of Loan Documents. (a) Any material provision, in the
sole opinion of Agent, of any Loan Document shall at any time for any reason
cease to be valid, binding and enforceable against any Credit Party; (b) the
validity, binding effect or enforceability of any Loan Document against any
Credit Party shall be contested by any Credit Party; (c) any Credit Party shall
deny that it has any or further liability or obligation under any Loan Document;
or (d) any Loan Document shall be terminated, invalidated or set aside, or be
declared ineffective or inoperative or in any way cease to give or provide to
Agent and the Lenders the benefits purported to be created thereby.

Section 7.12. Solvency. If any Company (other than a Dormant Subsidiary) shall
(a) except as permitted pursuant to Section 5.12 hereof, discontinue business,
(b) generally not pay its debts as such debts become due, (c) make a general
assignment for the benefit of creditors, (d) apply for or consent to the
appointment of an interim receiver, a receiver, a receiver and manager, an
administrator, sequestrator, monitor, a custodian, a trustee, an interim trustee
or liquidator of all or a substantial part of its assets or of such Company,
(e) be adjudicated a debtor or insolvent or have entered against it an order for
relief under Title 11 of the United States Code, or under any other bankruptcy
insolvency, liquidation, winding-up, corporate or similar statute or law,
foreign, federal state or provincial, in any applicable jurisdiction, now or
hereafter existing, as any of the foregoing may be amended from time to time, or
other applicable statute for jurisdictions outside of the United States, as the
case may be, which adjudication or entry is not stayed or rescinded within
thirty (30) days thereafter, (f) file a voluntary petition in bankruptcy, or
file a proposal or notice of intention to file a proposal or have an involuntary

 

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proceeding filed against it and the same shall continue undismissed for a period
of thirty (30) days from commencement of such proceeding or case, or file a
petition or an answer or an application or a proposal seeking reorganization or
an arrangement with creditors or seeking to take advantage of any other law
(whether federal, provincial or state, or, if applicable, other jurisdiction)
relating to relief of debtors, or admit (by answer, by default or otherwise) the
material allegations of a petition filed against it in any bankruptcy,
reorganization, insolvency or other proceeding (whether federal, provincial or
state, or, if applicable, other jurisdiction) relating to relief of debtors,
(g) suffer or permit to continue unstayed and in effect for thirty
(30) consecutive days any judgment, decree or order entered by a court of
competent jurisdiction, that approves a petition or an application or a proposal
seeking its reorganization or appoints an interim receiver, a receiver and
manager, an administrator, custodian, trustee, interim trustee or liquidator of
all or a substantial part of its assets or of such Company, (h) have an
administrative receiver appointed over the whole or substantially the whole of
its assets or of such Company, whose appointment is not rescinded within thirty
(30) days thereafter, (i) take, or omit to take, any action in order thereby to
effect any of the foregoing have assets the value of which is less than its
liabilities (taking into account prospective and contingent liabilities), or
(j) have a moratorium declared in respect of any of its Indebtedness, or any
analogous procedure or step is taken in any jurisdiction, which is not rescinded
within thirty (30) days thereafter.

ARTICLE VIII. REMEDIES UPON DEFAULT

Notwithstanding any contrary provision or inference herein or elsewhere:

Section 8.1. Optional Defaults. If any Event of Default referred to in
Section 7.1, 7.2, 7.3, 7.4, 7.5, 7.6, 7.7, 7.8, 7.9, 7.10 or 7.11 hereof shall
occur, Agent may, with the consent of the Required Lenders, and shall, at the
written request of the Required Lenders, give written notice to Borrower to:

(a) terminate the Commitment, if not previously terminated, and, immediately
upon such election, the obligations of the Lenders, and each thereof, to make
any further Loan and the obligation of the Fronting Lender to issue any Letter
of Credit immediately shall be terminated; and/or

(b) accelerate the maturity of all of the Obligations (if the Obligations are
not already due and payable), whereupon all of the Obligations shall become and
thereafter be immediately due and payable in full without any presentment or
demand and without any further or other notice of any kind, all of which are
hereby waived by Borrower.

Section 8.2. Automatic Defaults. If any Event of Default referred to in
Section 7.12 hereof shall occur:

(a) all of the Commitment shall automatically and immediately terminate, if not
previously terminated, and no Lender thereafter shall be under any obligation to
grant any further Loan, nor shall the Fronting Lender be obligated to issue any
Letter of Credit; and

 

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(b) the principal of and interest then outstanding on all of the Loans, and all
of the other Obligations, shall thereupon become and thereafter be immediately
due and payable in full (if the Obligations are not already due and payable),
all without any presentment, demand or notice of any kind, which are hereby
waived by Borrower.

Section 8.3. Letters of Credit. If the maturity of the Obligations shall be
accelerated pursuant to Section 8.1 or 8.2 hereof, Borrower shall immediately
deposit with Agent, as security for the obligations of Borrower and any
Guarantor of Payment to reimburse Agent and the Lenders for any then outstanding
Letters of Credit, cash equal to the sum of the aggregate undrawn balance of any
then outstanding Letters of Credit. Agent and the Lenders are hereby authorized,
at their option, to deduct any and all such amounts from any deposit balances
then owing by any Lender (or any affiliate of such Lender, wherever located) to
or for the credit or account of any Credit Party, as security for the
obligations of Borrower and any Guarantor of Payment to reimburse Agent and the
Lenders for any then outstanding Letters of Credit.

Section 8.4. Offsets. If there shall occur or exist any Event of Default
referred to in Section 7.12 hereof or if the maturity of the Obligations is
accelerated pursuant to Section 8.1 or 8.2 hereof, each Lender shall have the
right at any time to set off against, and to appropriate and apply toward the
payment of, any and all of the Obligations then owing by Borrower or a Guarantor
of Payment to such Lender (including, without limitation, any participation
purchased or to be purchased pursuant to Section 2.2(b), 2.2(c) or 8.5 hereof),
whether or not the same shall then have matured, any and all deposit (general or
special) balances and all other indebtedness then held or owing by such Lender
(including, without limitation, by branches and agencies or any affiliate of
such Lender, wherever located) to or for the credit or account of Borrower or
any Guarantor of Payment, all without notice to or demand upon Borrower or any
other Person, all such notices and demands being hereby expressly waived by
Borrower.

Section 8.5. Equalization Provision. Each Lender agrees with the other Lenders
that if it, at any time, shall obtain any Advantage over the other Lenders or
any thereof in respect of the Obligations (except as to Swing Loans and Letters
of Credit prior to Agent’s giving of notice to participate and except under
Article III hereof), it shall purchase from the other Lenders, for cash and at
par, such additional participation in the Obligations as shall be necessary to
nullify the Advantage. If any such Advantage resulting in the purchase of an
additional participation as aforesaid shall be recovered in whole or in part
from the Lender receiving the Advantage, each such purchase shall be rescinded,
and the purchase price restored (but without interest unless the Lender
receiving the Advantage is required to pay interest on the Advantage to the
Person recovering the Advantage from such Lender) ratably to the extent of the
recovery. Each Lender further agrees with the other Lenders that if it at any
time shall receive any payment for or on behalf of Borrower on any indebtedness
owing by Borrower to that Lender pursuant to this Agreement (whether by
voluntary payment, by realization upon security, by reason of offset of any
deposit or other indebtedness, by counterclaim or cross-action, by the
enforcement of any right under any Loan Document, or otherwise), it will apply
such payment first to any and all Obligations owing by Borrower to that Lender
(including, without limitation, any participation purchased or to be purchased
pursuant to this Section 8.5 or any other Section of this Agreement). Each
Credit Party agrees that any Lender so purchasing a participation from the other
Lenders or any thereof pursuant to this Section 8.5 may exercise all of its
rights of payment (including the right of set-off) with respect to such
participation as fully as if such Lender were a direct creditor of such Credit
Party in the amount of such participation.

 

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Section 8.6. Other Remedies. The remedies in this Article VIII are in addition
to, not in limitation of, any other right, power, privilege, or remedy, either
in law, in equity, or otherwise, to which the Lenders may be entitled. Agent
shall exercise the rights under this Article VIII and all other collection
efforts on behalf of the Lenders and no Lender shall act independently with
respect thereto, except as otherwise specifically set forth in this Agreement.

ARTICLE IX. THE AGENT

The Lenders authorize KeyBank National Association and KeyBank National
Association hereby agrees to act as agent for the Lenders in respect of this
Agreement upon the terms and conditions set forth elsewhere in this Agreement,
and upon the following terms and conditions:

Section 9.1. Appointment and Authorization. Each Lender hereby irrevocably
appoints and authorizes Agent to take such action as agent on its behalf and to
exercise such powers hereunder as are delegated to Agent by the terms hereof,
together with such powers as are reasonably incidental thereto. Neither Agent
nor any of its affiliates, directors, officers, attorneys or employees shall
(a) be liable to the Lenders for any action taken or omitted to be taken by it
or them hereunder or in connection herewith, except for its or their own gross
negligence or willful misconduct (as determined by a court of competent
jurisdiction), or be responsible in any manner to any of the Lenders for the
effectiveness, enforceability, genuineness, validity or due execution of this
Agreement or any other Loan Documents, (b) be under any obligation to any Lender
to ascertain or to inquire as to the performance or observance of any of the
terms, covenants or conditions hereof or thereof on the part of Borrower or any
other Company, or the financial condition of Borrower or any other Company, or
(c) be liable to any of the Companies for consequential damages resulting from
any breach of contract, tort or other wrong in connection with the negotiation,
documentation, administration or collection of the Loans or Letters of Credit or
any of the Loan Documents.

Section 9.2. Note Holders. Agent may treat the payee of any Note as the holder
thereof (or, if there is no Note, the holder of the interest as reflected on the
books and records of Agent) until written notice of transfer shall have been
filed with Agent, signed by such payee and in form satisfactory to Agent.

Section 9.3. Consultation With Counsel. Agent may consult with legal counsel
selected by Agent and shall not be liable to the Lenders for any action taken or
suffered in good faith by Agent in accordance with the opinion of such counsel.

Section 9.4. Documents. Agent shall not be under any duty to examine into or
pass upon the validity, effectiveness, genuineness or value of any Loan Document
or any other Related Writing furnished pursuant hereto or in connection herewith
or the value of any collateral obtained hereunder, and Agent shall be entitled
to assume that the same are valid, effective and genuine and what they purport
to be.

 

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Section 9.5. Agent and Affiliates. KeyBank National Association (“KeyBank”) and
its affiliates may make loans to, issue letters of credit for the account of,
accept deposits from, acquire equity interests in and generally engage in any
kind of banking, trust, financial advisory, underwriting or other business with
the Companies and Affiliates as though KeyBank were not Agent hereunder and
without notice to or consent of any Lender. Each Lender acknowledges that,
pursuant to such activities, KeyBank or its affiliates may receive information
regarding any Company or any Affiliate (including information that may be
subject to confidentiality obligations in favor of such Company or such
Affiliate) and acknowledge that Agent shall be under no obligation to provide
such information to other Lenders. With respect to Loans and Letters of Credit
(if any), KeyBank and its affiliates shall have the same rights and powers under
this Agreement as any other Lender and may exercise the same as though KeyBank
were not Agent, and the terms “Lender” and “Lenders” include KeyBank and its
affiliates, to the extent applicable, in their individual capacities.

Section 9.6. Knowledge of Default. It is expressly understood and agreed that
Agent shall be entitled to assume that no Default or Event of Default has
occurred, unless Agent has been notified by a Lender in writing that such Lender
believes that a Default or Event of Default has occurred and is continuing and
specifying the nature thereof or has been notified by Borrower pursuant to
Section 5.14 hereof.

Section 9.7. Action by Agent. Subject to the other terms and conditions hereof,
so long as Agent shall be entitled, pursuant to Section 9.6 hereof, to assume
that no Default or Event of Default shall have occurred and be continuing, Agent
shall be entitled to use its discretion with respect to exercising or refraining
from exercising any rights that may be vested in it by, or with respect to
taking or refraining from taking any action or actions that it may be able to
take under or in respect of, this Agreement. Agent shall incur no liability
under or in respect of this Agreement by acting upon any notice, certificate,
warranty or other paper or instrument believed by it to be genuine or authentic
or to be signed by the proper party or parties, or with respect to anything that
it may do or refrain from doing in the reasonable exercise of its judgment, or
that may seem to it to be necessary or desirable in the premises.

Section 9.8. Release of a Guarantor of Payment. In the event of a merger, sale
of assets or other transaction permitted pursuant to Section 5.12 hereof and so
long as there is no Event of Default existing, Agent, at the request and expense
of Borrower, is hereby authorized by the Lenders to release, in connection
therewith one or more Guarantors of Payment or pledge of pledged securities, and
any Springing Security Documents, as appropriate, upon the written request of
Borrower.

Section 9.9. Notice of Default. In the event that Agent shall have acquired
actual knowledge of any Default or Event of Default, Agent shall promptly notify
the Lenders and shall take such action and assert such rights under this
Agreement as the Required Lenders shall direct and Agent shall inform the other
Lenders in writing of the action taken. Agent may take such action and assert
such rights as it deems to be advisable, in its discretion, for the protection
of the interests of the holders of the Obligations.

 

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Section 9.10. 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 and other
consultants or experts 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 in the absence of gross negligence or willful
misconduct, as determined by a court of competent jurisdiction.

Section 9.11. Indemnification of Agent. The Lenders agree to indemnify Agent (to
the extent not reimbursed by Borrower) ratably, according to their respective
Commitment Percentages, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses
(including attorneys’ fees) or disbursements of any kind or nature whatsoever
that may be imposed on, incurred by or asserted against Agent in its capacity as
agent in any way relating to or arising out of this Agreement or any Loan
Document or any action taken or omitted by Agent with respect to this Agreement
or any Loan Document, provided that no Lender shall be liable for any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses (including attorneys’ fees) or disbursements resulting
from Agent’s gross negligence or willful misconduct as determined by a court of
competent jurisdiction, or from any action taken or omitted by Agent in any
capacity other than as agent under this Agreement or any other Loan Document. No
action taken in accordance with the directions of the Required Lenders shall be
deemed to constitute gross negligence or willful misconduct for purposes of this
Section 9.11. The undertaking in this Section 9.11 shall survive repayment of
the Loans, cancellation of the Notes, if any, expiration or termination of the
Letters of Credit, any foreclosure under, or modification, release or discharge
of, any or all of the Springing Security Documents, termination of this
Agreement and the resignation or replacement of the agent.

Section 9.12. Successor Agent. Agent may resign as agent hereunder by giving not
fewer than thirty (30) days prior written notice to Borrower and the Lenders. If
Agent shall resign under this Agreement, then either (a) the Required Lenders
shall appoint from among the Lenders a successor agent for the Lenders (with the
consent of Borrower so long as an Event of Default has not occurred and which
consent shall not be unreasonably withheld), or (b) if a successor agent shall
not be so appointed and approved within the thirty (30) day period following
Agent’s notice to the Lenders of its resignation, then Agent shall appoint a
successor agent that shall serve as agent until such time as the Required
Lenders appoint a successor agent. Upon its appointment, such successor agent
shall succeed to the rights, powers and duties as agent, and the term “Agent”
shall mean such successor effective upon its appointment, and the former agent’s
rights, powers and duties as agent shall be terminated without any other or
further act or deed on the part of such former agent or any of the parties to
this Agreement.

Section 9.13. Other Agents. As used in this Agreement, the term “Agent” shall
only include Agent. The Syndication Agent shall not have any rights, obligations
or responsibilities hereunder in such capacity.

 

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ARTICLE X. MISCELLANEOUS

Section 10.1. Lenders’ Independent Investigation. Each Lender, by its signature
to this Agreement, acknowledges and agrees that Agent has made no representation
or warranty, express or implied, with respect to the creditworthiness, financial
condition, or any other condition of any Company or with respect to the
statements contained in any information memorandum furnished in connection
herewith or in any other oral or written communication between Agent and such
Lender. Each Lender represents that it has made and shall continue to make its
own independent investigation of the creditworthiness, financial condition and
affairs of the Companies in connection with the extension of credit hereunder,
and agrees that Agent has no duty or responsibility, either initially or on a
continuing basis, to provide any Lender with any credit or other information
with respect thereto (other than such notices as may be expressly required to be
given by Agent to the Lenders hereunder), whether coming into its possession
before the first Credit Event hereunder or at any time or times thereafter. Each
Lender further represents that it has reviewed each of the Loan Documents.

Section 10.2. No Waiver; Cumulative Remedies. No omission or course of dealing
on the part of Agent, any Lender or the holder of any Note (or, if there is no
Note, the holder of the interest as reflected on the books and records of Agent)
in exercising any right, power or remedy hereunder or under any of the Loan
Documents shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or remedy hereunder
or under any of the Loan Documents. The remedies herein provided are cumulative
and in addition to any other rights, powers or privileges held by operation of
law, by contract or otherwise.

Section 10.3. Amendments, Waivers and Consents.

(a) General Rule. No amendment, modification, termination, or waiver of any
provision of any Loan Document nor consent to any variance therefrom, shall be
effective unless the same shall be in writing and signed by the Required Lenders
and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.

(b) Exceptions to the General Rule. Anything herein to the contrary
notwithstanding, unanimous consent of the Lenders shall be required with respect
to (i) any increase in the Commitment hereunder, (ii) the extension of maturity
of the Loans, the payment date of interest or scheduled principal thereunder, or
the payment date of facility or other fees payable hereunder, (iii) any
reduction in the rate basis of interest on the Loans (provided that the
institution of the Default Rate and a subsequent removal of the Default Rate
shall not constitute a decrease in interest rate pursuant to this Section 10.3),
or in any amount of interest or scheduled principal due on any Loan, or the
payment of facility or other fees hereunder or any change in the manner of pro
rata application of any payments made by Borrower to the Lenders hereunder,
(iv) any change in any percentage voting requirement, voting rights, or the
Required Lenders definition in this Agreement, (v) the release of any Guarantor
of Payment or any material amount of collateral, except as specifically
permitted hereunder, or (vi) any amendment to this Section 10.3 or Section 8.5
hereof.

 

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(c) Generally. Notice of amendments or consents ratified by the Lenders
hereunder shall be forwarded by Agent to all of the Lenders. Each Lender or
other holder of a Note (or interest in any Loan) shall be bound by any
amendment, waiver or consent obtained as authorized by this Section 10.3,
regardless of its failure to agree thereto.

Section 10.4. Notices. All notices, requests, demands and other communications
provided for hereunder shall be in writing and, if to Borrower, mailed or
delivered to it, addressed to it at the address specified on the signature pages
of this Agreement, if to Agent or a Lender, mailed or delivered to it, addressed
to the address of Agent or such Lender specified on the signature pages of this
Agreement, or, as to each party, at such other address as shall be designated by
such party in a written notice to each of the other parties. All notices,
statements, requests, demands and other communications provided for hereunder
shall be given by overnight delivery or first class mail with postage prepaid by
registered or certified mail, addressed as aforesaid, or sent by facsimile with
telephonic confirmation of receipt, except that all notices hereunder shall not
be effective until received.

Section 10.5. Costs, Expenses and Taxes. Borrower agrees to pay on demand all
costs and expenses of Agent and all Related Expenses, including, but not limited
to, (a) syndication, administration, travel and out-of-pocket expenses,
including but not limited to attorneys’ fees and expenses, of Agent in
connection with the preparation, negotiation and closing of the Loan Documents
and the administration of the Loan Documents, the collection and disbursement of
all funds hereunder and the other instruments and documents to be delivered
hereunder, (b) extraordinary expenses of Agent in connection with the
administration of the Loan Documents and the other instruments and documents to
be delivered hereunder, and (c) the reasonable fees and out-of-pocket expenses
of special counsel for Agent, with respect to the foregoing, and of local
counsel, if any, who may be retained by said special counsel with respect
thereto. Borrower also agrees to pay on demand all costs and expenses of Agent
and the Lenders, including reasonable attorneys’ fees and expenses, in
connection with the restructuring or enforcement of the Obligations, this
Agreement or any Related Writing. In addition, Borrower shall pay any and all
stamp, transfer, documentary and other taxes, assessments, charges and fees
payable or determined to be payable in connection with the execution and
delivery of the Loan Documents, and the other instruments and documents to be
delivered hereunder, and agrees to hold Agent and each Lender harmless from and
against any and all liabilities with respect to or resulting from any delay in
paying or failure to pay such taxes or fees.

Section 10.6. Indemnification. Borrower agrees to defend, indemnify and hold
harmless Agent and the Lenders (and their respective affiliates, officers,
directors, attorneys, agents and employees) from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses (including attorneys’ fees) or disbursements of any kind or
nature whatsoever that may be imposed on, incurred by or asserted against Agent
or any Lender in connection with any investigative, administrative or judicial
proceeding (whether or not such Lender or Agent shall be designated a party
thereto) or any other claim by any Person relating to or arising out of any Loan
Document or any actual or proposed use of proceeds of the Loans or any of the
Obligations, or any activities of any Company or its Affiliates; provided that
no Lender nor Agent shall have the right to be indemnified under this
Section 10.6 for its own gross negligence or willful misconduct as determined by
a court of competent jurisdiction. All obligations provided for in this
Section 10.6 shall survive any termination of this Agreement.

 

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Section 10.7. Obligations Several; No Fiduciary Obligations. The obligations of
the Lenders hereunder are several and not joint. Nothing contained in this
Agreement and no action taken by Agent or the Lenders pursuant hereto shall be
deemed to constitute Agent or the Lenders a partnership, association, joint
venture or other entity. No default by any Lender hereunder shall excuse the
other Lenders from any obligation under this Agreement; but no Lender shall have
or acquire any additional obligation of any kind by reason of such default. The
relationship between Borrower and the Lenders with respect to the Loan Documents
and the Related Writings is and shall be solely that of debtor and creditors,
respectively, and neither Agent nor any Lender shall have any fiduciary
obligation toward any Credit Party with respect to any such documents or the
transactions contemplated thereby.

Section 10.8. Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts
and by facsimile signature, each of which counterparts when so executed and
delivered shall be deemed to be an original and all of which taken together
shall constitute but one and the same agreement.

Section 10.9. Binding Effect; Borrower’s Assignment. This Agreement shall become
effective when it shall have been executed by Borrower, Agent and each Lender
and thereafter shall be binding upon and inure to the benefit of Borrower, Agent
and each of the Lenders and their respective successors and assigns, except that
Borrower shall not have the right to assign its rights hereunder or any interest
herein without the prior written consent of Agent and all of the Lenders.

Section 10.10. Lender Assignments.

(a) Assignments of Commitments. Each Lender shall have the right at any time or
times to assign to an Eligible Transferee (other than to a Lender that shall not
be in compliance with this Agreement), without recourse, all or a percentage of
all of the following: (i) such Lender’s Commitment, (ii) all Loans made by that
Lender, (iii) such Lender’s Notes, and (iv) such Lender’s interest in any Letter
of Credit or Swing Loan, and any participation purchased pursuant to
Section 2.2(b), 2.2(c) or 8.5 hereof.

(b) Prior Consent. No assignment may be consummated pursuant to this
Section 10.10 without the prior written consent of Borrower and Agent (other
than an assignment by any Lender to any affiliate of such Lender which affiliate
is an Eligible Transferee and either wholly-owned by a Lender or is wholly-owned
by a Person that wholly owns, either directly or indirectly, such Lender, or to
another Lender, and which would not result in a withholding tax with respect to
any payment made with respect to the Obligations or require Borrower to make any
payment under Article III hereof, or result in any illegality as contemplated in
Section 3.5(a) hereof), which consent of Borrower and Agent shall not be
unreasonably withheld; provided, however, that Borrower’s consent shall not be
required if, at the time of the proposed assignment, any Default or Event of
Default shall then exist. Anything herein to the contrary notwithstanding, any
Lender may at any time make a collateral assignment of all or any portion of its
rights under the Loan Documents to a Federal Reserve Bank, and no such
assignment shall release such assigning Lender from its obligations hereunder.

 

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(c) Minimum Amount. Each such assignment shall be in a minimum amount of the
lesser of Five Million Dollars ($5,000,000) of the assignor’s Commitment and
interest herein or the entire amount of the assignor’s Commitment and interest
herein.

(d) Assignment Fee. Unless the assignment shall be to an affiliate of the
assignor or the assignment shall be due to merger of the assignor or for
regulatory purposes, either the assignor or the assignee shall remit to Agent,
for its own account, an administrative fee of Three Thousand Five Hundred
Dollars ($3,500).

(e) Assignment Agreement. Unless the assignment shall be due to merger of the
assignor or a collateral assignment for regulatory purposes, the assignor shall
(i) cause the assignee to execute and deliver to Borrower and Agent an
Assignment Agreement, and (ii) execute and deliver, or cause the assignee to
execute and deliver, as the case may be, to Agent such additional amendments,
assurances and other writings as Agent may reasonably require.

(f) Non-U.S. Assignee. If the assignment is to be made to an assignee that is
organized under the laws of any jurisdiction other than the United States or any
state thereof, the assignor Lender shall cause such assignee, at least five
Business Days prior to the effective date of such assignment, (i) to represent
to the assignor Lender (for the benefit of the assignor Lender, Agent and
Borrower) that under applicable law and treaties no taxes will be required to be
withheld by Agent, Borrower or the assignor with respect to any payments to be
made to such assignee in respect of the Loans hereunder, (ii) to furnish to the
assignor Lender (and, in the case of any assignee registered in the Register (as
defined below), Agent and Borrower) either U.S. Internal Revenue Service Form
W-8ECI or U.S. Internal Revenue Service Form W-8BEN, as applicable (wherein such
assignee claims entitlement to complete exemption from U.S. federal withholding
tax on all payments hereunder), and (iii) to agree (for the benefit of the
assignor, Agent and Borrower) to provide to the assignor Lender (and, in the
case of any assignee registered in the Register, to Agent and Borrower) a new
Form W-8ECI or Form W-8BEN, as applicable, upon the expiration or obsolescence
of any previously delivered form, and to provide comparable statements in
accordance with applicable U.S. laws and regulations and amendments duly
executed and completed by such assignee, and to comply from time to time with
all applicable U.S. laws and regulations with regard to such withholding tax
exemption.

(g) Deliveries by Borrower. Upon satisfaction of all applicable requirements
specified in subsections (a) through (f) above, Borrower shall execute and
deliver (i) to Agent, the assignor and the assignee, any consent or release (of
all or a portion of the obligations of the assignor) that is reasonably required
to be delivered by Borrower in connection with the Assignment Agreement, and
(ii) to the assignee, if requested, and the assignor, if applicable, an
appropriate Note or Notes. After delivery of the new Note or Notes, the
assignor’s Note or Notes, if any, being replaced shall be returned to Borrower
marked “replaced”.

(h) Effect of Assignment. Upon satisfaction of all applicable requirements set
forth in subsections (a) through (g) above, and any other condition contained in
this Section 10.10,

 

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(i) the assignee shall become and thereafter be deemed to be a “Lender” for the
purposes of this Agreement, (ii) the assignor shall be released from its
obligations hereunder to the extent that its interest has been assigned,
(iii) in the event that the assignor’s entire interest has been assigned, the
assignor shall cease to be and thereafter shall no longer be deemed to be a
“Lender” and (iv) the signature pages hereto and Schedule 1 hereto shall be
automatically amended, without further action, to reflect the result of any such
assignment.

(i) Agent to Maintain Register. Agent shall maintain at the address for notices
referred to in Section 10.4 hereof a copy of each Assignment Agreement delivered
to it and a register (the “Register”) for the recordation of the names and
addresses of the Lenders and the Commitment of, and principal amount of the
Loans owing to, each Lender from time to time. The entries in the Register shall
be conclusive, in the absence of manifest error, and Borrower, Agent and the
Lenders may treat each Person whose name is recorded in the Register as the
owner of the Loan recorded therein for all purposes of this Agreement. The
Register shall be available for inspection by Borrower or any Lender at any
reasonable time and from time to time upon reasonable prior notice.

Section 10.11. Sale of Participations. Any Lender may, in the ordinary course of
its commercial banking business and in accordance with applicable law, at any
time sell participations to one or more Eligible Transferees (each a
“Participant”) in all or a portion of its rights or obligations under this
Agreement and the other Loan Documents (including, without limitation, all or a
portion of the Commitment and the Loans and participations owing to it and the
Note, if any, held by it); provided, that:

(a) any such Lender’s obligations under this Agreement and the other Loan
Documents shall remain unchanged;

(b) such Lender shall remain solely responsible to the other parties hereto for
the performance of such obligations;

(c) the parties hereto shall continue to deal solely and directly with such
Lender in connection with such Lender’s rights and obligations under this
Agreement and each of the other Loan Documents;

(d) such Participant shall be bound by the provisions of Section 8.5 hereof, and
the Lender selling such participation shall obtain from such Participant a
written confirmation of its agreement to be so bound; and

(e) no Participant (unless such Participant is itself a Lender) shall be
entitled to require such Lender to take or refrain from taking action under this
Agreement or under any other Loan Document, except that such Lender may agree
with such Participant that such Lender will not, without such Participant’s
consent, take action of the type described as follows:

(i) increase the portion of the participation amount of any Participant over the
amount thereof then in effect, or extend the Commitment Period, without the
written consent of each Participant affected thereby; or

 

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(ii) reduce the principal amount of or extend the time for any payment of
principal of any Loan, or reduce the rate of interest or extend the time for
payment of interest on any Loan, or reduce the facility fee, without the written
consent of each Participant affected thereby.

Borrower agrees that any Lender that sells participations pursuant to this
Section 10.11 shall still be entitled to the benefits of Article III hereof,
notwithstanding any such transfer; provided, however, that the obligations of
Borrower shall not increase as a result of such transfer and Borrower shall have
no obligation to any Participant.

Section 10.12. Patriot Act Notice. Each Lender and Agent (for itself and not on
behalf of any other party) hereby notifies the Credit Parties that, pursuant to
the requirements of the Patriot Act, such Lender and Agent are required to
obtain, verify and record information that identifies the Credit Parties, which
information includes the name and address of the Credit Parties and other
information that will allow such Lender or Agent, as applicable, to identify the
Credit Parties in accordance with the Patriot Act. Borrower shall provide, to
the extent commercially reasonable, such information and take such actions as
are reasonably requested by Agent or a Lender in order to assist Agent or such
Lender in maintaining compliance with the Patriot Act.

Section 10.13. Severability of Provisions; Captions; Attachments. Any provision
of this Agreement that shall be prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction. The several captions to Sections and subsections herein are
inserted for convenience only and shall be ignored in interpreting the
provisions of this Agreement. Each schedule or exhibit attached to this
Agreement shall be incorporated herein and shall be deemed to be a part hereof.

Section 10.14. Investment Purpose. Each of the Lenders represents and warrants
to Borrower that it is entering into this Agreement with the present intention
of acquiring any Note issued pursuant hereto (or, if there is no Note, the
interest as reflected on the books and records of Agent) for investment purposes
only and not for the purpose of distribution or resale, it being understood,
however, that each Lender shall at all times retain full control over the
disposition of its assets.

Section 10.15. Entire Agreement. This Agreement, any Note and any other Loan
Document or other agreement, document or instrument attached hereto or executed
on or as of the Closing Date integrate all of the terms and conditions mentioned
herein or incidental hereto and supersede all oral representations and
negotiations and prior writings with respect to the subject matter hereof.

Section 10.16. Legal Representation of Parties. The Loan Documents were
negotiated by the parties with the benefit of legal representation and any rule
of construction or interpretation otherwise requiring this Agreement or any
other Loan Document to be construed or interpreted against any party shall not
apply to any construction or interpretation hereof or thereof.

 

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Section 10.17. Governing Law; Submission to Jurisdiction.

(a) Governing Law. This Agreement, each of the Notes and any Related Writing
shall be governed by and construed in accordance with the laws of the State of
Ohio and the respective rights and obligations of Borrower, Agent, and the
Lenders shall be governed by Ohio law, without regard to principles of conflicts
of laws.

(b) Submission to Jurisdiction. Borrower hereby irrevocably submits to the
exclusive jurisdiction (assuming jurisdiction is available) of any Washington
state or federal court sitting in Seattle, Washington, over any action or
proceeding arising out of or relating to this Agreement, the Obligations or any
Related Writing, and Borrower hereby irrevocably agrees that all claims in
respect of such action or proceeding may be heard and determined in such
Washington state or federal court. Borrower, on behalf of itself and its
Subsidiaries, hereby irrevocably waives, to the fullest extent permitted by law,
any objection it may now or hereafter have to the laying of venue in any action
or proceeding in any such court as well as any right it may now or hereafter
have to remove such action or proceeding, once commenced, to another court on
the grounds of FORUM NON CONVENIENS or otherwise. Borrower agrees that a final,
nonappealable judgment in any such action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law.

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Section 10.18. Jury Trial Waiver. TO THE EXTENT PERMITTED BY LAW, BORROWER,
AGENT AND EACH LENDER WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING
ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AMONG BORROWER,
AGENT AND THE LENDERS, OR ANY THEREOF, ARISING OUT OF, IN CONNECTION WITH,
RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN
CONNECTION WITH THIS AGREEMENT OR ANY NOTE OR OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS
RELATED THERETO.

IN WITNESS WHEREOF, the parties have executed and delivered this Credit
Agreement as of the date first set forth above.

 

Address:   16400 SE Nautilus Drive   NAUTILUS, INC.   Vancouver, Washington
98683     Attention: James Tener   By:  

/s/ William D. Meadowcroft

      William D. Meadowcroft       Secretary – Treasurer Address:   127 Public
Square   KEYBANK NATIONAL ASSOCIATION,   Cleveland, Ohio 44114-1306       as
Agent and as a Lender   Attention: Institutional Banking       By:  

/s/ Jeffrey R. Dincher

    Name:   Jeffrey R. Dincher     Title:   Assistant Vice President      
Address:   555 S.W. Oak Street   U.S. BANK NATIONAL ASSOCIATION,   Portland,
Oregon 97204       as Syndication Agent and as a Lender   Attention: Scott J.
Bell       By:  

/s/ Scott J. Bell

    Name:   Scott J. Bell     Title:   Senior Vice President