Exhibit 10.1

 

CREDIT AGREEMENT

 

among

 

ARCTIC CAT INC.,

 

as Borrower;

 

WELLS FARGO BANK, NATIONAL ASSOCIATION,

 

as Administrative Agent and Lead Arranger;

 

and

 

THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO

 

 

Closing Date:  August 29, 2008

 

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$75,000,000 Revolving Credit Facility

 

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Arranged by

 

WELLS FARGO BANK, NATIONAL ASSOCIATION

 

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TABLE OF CONTENTS

 

ARTICLE I Definitions

1

 

Section 1.1

Definitions

1

 

Section 1.2

Times

11

 

 

 

ARTICLE II Amount and Terms of the Loans; Letters of Credit

12

 

Section 2.1

Revolving Facility

12

 

Section 2.2

Procedure Applicable to Borrowings

12

Section 2.3

Procedures Applicable to Letters of Credit

13

Section 2.4

Interest on Notes

14

Section 2.5

Payments

15

Section 2.6

Fees

16

Section 2.7

Prepayments

16

Section 2.8

Termination of Revolving Facility and Voluntary Reduction of Aggregate Revolving
Facility Amount; Automatic Reductions of Aggregate Revolving Facility Amount

16

Section 2.9

Payments

17

Section 2.10

Increased Costs; Capital Adequacy; Funding Exceptions

18

Section 2.11

Funding Losses

22

Section 2.12

Discretion of Lenders as to Manner of Funding

22

Section 2.13

Conclusiveness of Statements; Survival of Provisions

22

Section 2.14

Computation of Interest and Fees

22

 

 

 

ARTICLE III Conditions Precedent

22

 

Section 3.1

Initial Conditions Precedent

22

 

Section 3.2

Conditions Precedent to All Borrowings and Letters of Credit

24

Section 3.3

Perfection of Capital Stock of Applicable Foreign Subsidiaries

24

 

 

 

ARTICLE IV Representations and Warranties

24

 

Section 4.1

Existence and Power

25

 

Section 4.2

Authorization of Borrowing; No Conflict as to Law or Agreements

25

Section 4.3

Legal Agreements

25

Section 4.4

Subsidiaries

25

Section 4.5

Financial Condition

25

Section 4.6

Adverse Change

26

Section 4.7

Litigation

26

Section 4.8

Hazardous Substances

26

Section 4.9

Regulation U

26

Section 4.10

Taxes

26

Section 4.11

Titles and Liens

27

Section 4.12

ERISA

27

 

 

 

ARTICLE V Affirmative Covenants

27

 

Section 5.1

Reporting

27

 

Section 5.2

Books and Records; Inspection and Examination

29

Section 5.3

Compliance with Laws

30

 

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Section 5.4

Payment of Taxes and Other Claims

30

 

Section 5.5

Maintenance of Properties

30

Section 5.6

Insurance

30

Section 5.7

Preservation of Corporate Existence

30

Section 5.8

New Subsidiaries

31

Section 5.9

Asset Coverage Ratio

31

Section 5.10

Minimum EBITDA

31

Section 5.11

Minimum Tangible Net Worth

31

 

 

 

ARTICLE VI Negative Covenants

31

 

Section 6.1

Liens

31

 

Section 6.2

Indebtedness

32

Section 6.3

Guaranties

33

Section 6.4

Investments

33

Section 6.5

Sale of Assets

34

Section 6.6

Transactions with Affiliates

34

Section 6.7

Restrictions on Issuance and Sale of Subsidiary Stock

34

Section 6.8

Restrictions on Repurchase or Redemption of Borrower Stock with Advances

34

Section 6.9

Consolidation and Merger; Purchase of Assets

35

Section 6.10

Sale and Leaseback

35

Section 6.11

Hazardous Substances

35

Section 6.12

Restrictions on Nature of Business

35

 

 

 

ARTICLE VII Events of Default, Rights and Remedies

35

 

Section 7.1

Events of Default

35

 

Section 7.2

Rights and Remedies

37

Section 7.3

Pledge of L/C Cash Collateral Account

38

 

 

 

ARTICLE VIII The Administrative Agent

38

 

Section 8.1

Authorization

38

 

Section 8.2

Distribution of Payments and Proceeds

39

Section 8.3

Expenses

39

Section 8.4

Payments Received Directly by Lenders

40

Section 8.5

Indemnification

40

Section 8.6

Exculpation

40

Section 8.7

Administrative Agent and Affiliates

41

Section 8.8

Credit Investigation

41

Section 8.9

Resignation and Assignment of Administrative Agent

41

Section 8.10

Defaults

41

Section 8.11

Obligations Several

42

Section 8.12

Assignments

42

Section 8.13

Participations

44

Section 8.14

Disclosure of Information

45

 

 

 

ARTICLE IX Miscellaneous

45

 

Section 9.1

No Waiver; Cumulative Remedies

45

 

Section 9.2

Amendments, Etc.

45

Section 9.3

Notice

46

 

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Section 9.4

Costs and Expenses

46

 

Section 9.5

Indemnification by Borrower

47

Section 9.6

Execution in Counterparts

47

Section 9.7

Binding Effect, Assignment

47

Section 9.8

Governing Law

47

Section 9.9

Consent to Jurisdiction

47

Section 9.10

Waiver of Jury Trial

48

Section 9.11

Severability of Provisions

48

Section 9.12

Prior Agreements

48

Section 9.13

Headings

48

Section 9.14

Restatement of Prior Agreement

48

 

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CREDIT AGREEMENT

 

Dated as of August 29, 2008

 

Arctic Cat Inc., a Minnesota corporation; Wells Fargo Bank, National
Association, a national banking association; and the Lenders, as defined below,
agree as follows:

 

ARTICLE I
DEFINITIONS

 

SECTION 1.1                                   DEFINITIONS.

 

For all purposes of this Agreement, except as otherwise expressly provided or
unless the context otherwise requires:

 

(a)                                  the terms defined in this Article have the
meanings assigned to them in this Article, and include the plural as well as the
singular; and

 

(b)                                 all accounting terms not otherwise defined
herein have the meanings assigned to them in accordance with GAAP.

 

“AC Sales” means Arctic Cat Sales Inc., a Minnesota corporation.

 

“Additional Lender” means a financial institution that becomes a Lender pursuant
to the procedures set forth in Section 8.12.

 

“Adjusted Asset Value” means, at any time, the sum of:

 

(i)                                     70% of Eligible Receivables Value,

 

(ii)                                  60% of Eligible Finished Goods Value,

 

(iii)                               45% of Eligible Parts Value, and

 

(iv)                              10% of Eligible Raw Materials Value.

 

“Administrative Agent” means Wells Fargo acting in its capacity as
administrative agent for itself and the other Lender Parties hereunder.

 

“Advance” means an advance by a Lender to the Borrower pursuant to Article II.

 

“Affiliate” means (a) any Subsidiary, (b) any director or officer of the
Borrower or any Subsidiary, (c) any Person who, individually or with his
immediate family, directly or indirectly beneficially owns or holds 5% or more
of the voting interest of the Borrower or any Subsidiary, or (d) any
corporation, partnership or other Person in which any Person or group of Persons
described above directly or indirectly owns a 5% or greater equity interest.

 

“Aggregate Revolving Commitment Amount” means $75,000,000, being an amount equal
to the sum of the Revolving Commitments, as such amount may be reduced

 

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from time to time pursuant to Section 2.8 or amendment in accordance with this
Agreement.

 

“Agreement” means this Credit Agreement.

 

“Applicable Foreign Subsidiary” means a Subsidiary organized under the laws of
any country other than the United States of America, or a State thereof, if the
Borrower and the Administrative Agent have reasonably determined that the
execution by such Subsidiary of the Guaranty or Security Agreement, or the
joinder of such Subsidiary to the Guaranty or Security Agreement, would result
in material adverse tax consequences under Section 956 of the Code.

 

“Asset Coverage Ratio” means, as of any date of determination, the ratio of
(i) the Adjusted Asset Value of the Obligors as of that date, to (ii) the
Revolving Facility Outstandings as of that date.

 

“Assignment Certificate” has the meaning set forth in Section 8.12.

 

“Banking Services Obligations” means each and every debt, liability and other
obligation (whether direct or indirect, absolute or contingent, due or to become
due, now existing or hereafter arising) of every type and description owing by
the Borrower or any Subsidiary to any Person that was a Lender or an affiliate
of a Lender when such obligation, liability, fee or expense arose, with respect
to (a) credit cards, (b) credit card processing services, (c) debit cards,
(d) purchase cards, (e) treasury and cash management or related services
(including but not limited to controlled disbursement, automated clearinghouse
transactions, return items, overdrafts and interstate depository network
services), and (f) any agreement that provides for an interest rate, credit,
commodity or equity swap, cap, floor, collar, forward foreign exchange
transaction, currency swap, cross currency rate swap, currency option, or any
combination of, or option with respect to, these or similar transactions.

 

“Base Rate” means the rate of interest publicly announced from time to time by
the Administrative Agent as its “prime” or “base” rate or, if the Administrative
Agent ceases to announce a rate so designated, any similar successor rate
designated by the Administrative Agent.

 

 “Borrower” means Arctic Cat Inc., a Minnesota corporation and a party to this
Agreement.

 

“Borrowing” means a borrowing under Article II consisting of Advances made to
the Borrower at the same time by each of the Lenders severally.

 

“Business Day” means a day other than a Saturday, Sunday, United States national
holiday or other day on which banks in Minnesota are permitted or required by
law to close. Whenever the context relates to a LIBO Rate Funding or the fixing
of a LIBO Rate, “Business Day” means a day (i) that meets the foregoing
definition, and (ii) on which dealings in U.S. dollar deposits are carried on in
the London interbank eurodollar market.

 

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“Capital Stock” means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated) of such
Person’s capital stock or equity, whether now outstanding or issued after the
date hereof, including all common stock, preferred stock, partnership interests
and limited liability company membership interests.

 

“Change of Control” means any event, circumstance or occurrence that results in
(a) the acquisition by any “person” or “group” (as those terms are used in
Sections 13(d) and 14(d) of the Exchange Act) of beneficial ownership (as
defined in Rules 13d-3 and 13d-5 of the SEC, except that a Person shall be
deemed to have beneficial ownership of all securities that such Person has the
right to acquire, whether such right is exercisable immediately or only after
the passage of time), directly or indirectly, of 40% or more of the
then-outstanding voting capital stock of the Borrower; or (b) a change in the
composition of the Governing Board of the Borrower such that continuing
directors cease to constitute more than 50% of such Governing Board. As used in
this definition, “continuing directors” means, as of any date, (i) those
Directors of the Borrower who assumed office prior to the date hereof, and
(ii) those Directors of the Borrower who assumed office after the date hereof
and whose appointment or nomination for election by the Borrower’s shareholders
was approved by a vote of at least 50% of the Directors of the Borrower in
office immediately prior to such appointment or nomination.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Compliance Certificate” means a certificate in substantially the form of
Exhibit C, or such other form as the Borrower and the Required Lenders may from
time to time agree upon in writing.

 

“Covenant Calculation Date” means the last day of each fiscal quarter of the
Borrower.

 

“Dealer Finance Agreements” means (i) the Program Agreement dated January 20,
2003, between AC Sales and Textron Financial Corporation, and (ii) the Program
Agreement dated May 1, 2007, between AC Sales and Textron Financial Canada
Limited, but not any amendment to or restatement of such agreements entered into
without the prior written consent of the Required Lenders if such amendment or
restatement would change the nature of the obligations of the Borrower or any
Subsidiary thereunder in a manner adverse to the Borrower or such Subsidiary.

 

“Dealer Holdback” means the amount that the Borrower or any Subsidiary may be
obligated to pay to its dealers on account of sales incentives in accordance
with its dealer sales incentive program, including but not limited to any
accounts payable of the Obligors treated as dealer holdback in accordance with
GAAP.

 

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

 

“Domestic Subsidiary” means each Subsidiary that is incorporated under the laws
of the United States or any State thereof.

 

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“EBITDA” means, as of any date, the consolidated net income of the Borrower and
its Subsidiaries before deductions for income taxes, interest expense,
depreciation and amortization, all as determined in accordance with GAAP,
excluding therefrom (a) non-operating gains (including, without limitation,
extraordinary or unusual gains, gains from discontinuance of operations, gains
arising from the sale of assets outside the ordinary course of business, and
other nonrecurring gains) of the Borrower and its Subsidiaries during the
applicable measurement period, and (b) similar non-operating losses (including,
without limitation, losses arising from the sale of assets outside the ordinary
course of business, and other nonrecurring losses) of the Borrower and its
Subsidiaries during such period.

 

“Eligible Finished Goods Value” means, at any time, the value (determined at the
lower of cost or market value as determined in accordance with GAAP) of all
Eligible Inventory of the Obligors consisting of finished goods and engines (and
in no event consisting of other parts, garments, accessories, raw materials or
sub assemblies).

 

“Eligible Inventory” means inventory of the Obligors, excluding:

 

(A)                                  INVENTORY THAT IS (I) IN-TRANSIT;
(II) LOCATED AT ANY LEASED WAREHOUSE OR OTHER LEASED PREMISES OR SUBJECT TO ANY
BAILMENT (IN EACH CASE UNLESS THE ADMINISTRATIVE AGENT SHALL HAVE RECEIVED WITH
RESPECT THERETO EVIDENCE SATISFACTORY TO IT ESTABLISHING THAT (W) ALL STEPS HAVE
BEEN TAKEN TO DULY PERFECT THE ADMINISTRATIVE AGENT’S LIEN THEREIN IN ACCORDANCE
WITH APPLICABLE LAW, (X) THE ADMINISTRATIVE AGENT’S LIEN THEREIN IS FIRST AND
PRIOR TO ANY OTHER COMPETING INTEREST OR LIEN AND (Y) THE ADMINISTRATIVE AGENT
WILL BE ABLE TO OBTAIN POSSESSION TO SUCH INVENTORY UPON DEFAULT WITHOUT UNDUE
DELAY OR OTHER DIFFICULTY); (III) LOCATED OUTSIDE OF THE UNITED STATES;
(IV) COVERED BY ANY NEGOTIABLE OR NON-NEGOTIABLE WAREHOUSE RECEIPT, BILL OF
LADING OR OTHER DOCUMENT OF TITLE; OR (V) ON CONSIGNMENT TO OR FROM ANY OTHER
PERSON; PROVIDED, HOWEVER, THAT INVENTORY DESCRIBED IN THIS PARAGRAPH (A) SHALL
BE EXCLUDED FROM ELIGIBLE INVENTORY ONLY TO THE EXTENT THAT THE AGGREGATE VALUE
OF ALL INVENTORY DESCRIBED IN THIS PARAGRAPH (A) EXCEEDS $8,000,000 AT THE TIME
OF DETERMINATION.

 

(B)                                 INVENTORY (I) THAT IS NOT OWNED BY AN
OBLIGOR FREE AND CLEAR OF ALL LIENS, CLAIMS AND RIGHTS OF OTHERS (OTHER THAN THE
LIEN OF THE ADMINISTRATIVE AGENT THEREIN), OR (II) IN WHICH THE ADMINISTRATIVE
AGENT DOES NOT HAVE A VALID AND PERFECTED FIRST PRIORITY LIEN.

 

(C)                                  INVENTORY THAT, IN THE ADMINISTRATIVE
AGENT’S REASONABLE DISCRETION, IS UNACCEPTABLE DUE TO AGE, TYPE, CATEGORY,
QUANTITY OR OTHERWISE.

 

“Eligible Lender” means (a) a financial institution organized under the laws of
the United States, or any state thereof, and having a combined capital and
surplus of at least $100,000,000; (b) a commercial bank organized under the laws
of any other country which is a member of the Organization for Economic
Cooperation and Development, or a political subdivision of any such country, and
having a combined capital and surplus of at least $100,000,000, provided that
such bank is acting through a branch or agency located

 

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in the United States; or (c) a Person controlled by, controlling, or under
common control with any entity identified in clause (a) or (b) above.

 

“Eligible Parts Value” means, at any time, the value (determined at the lower of
cost or market value as determined in accordance with GAAP) of all Eligible
Inventory of the Obligors consisting of parts, garments and accessories,
excluding engines, raw materials and sub assemblies.

 

“Eligible Raw Materials Value” means, at any time, the value (determined at the
lower of cost or market value as determined in accordance with GAAP) of all
Eligible Inventory of the Obligors consisting of raw materials and sub
assemblies.

 

“Eligible Receivables Value” means, at any time, the value (determined in
accordance with GAAP) of all unpaid accounts receivable owing to any Obligor,
arising from a bona fide sale or rendition of services by any Obligor in the
ordinary course of business on usual and ordinary terms, evidenced by an invoice
and net of (without duplication) any applied or unapplied credits or other
allowance (with any such unapplied credits or other allowances being applied to
the most current accounts receivable owed to such Obligor) and any Dealer
Holdback, excluding (without duplication):

 

(A)                                  THAT PORTION OF ACCOUNTS RECEIVABLE OVER
120 DAYS PAST THE APPLICABLE DUE DATE; PROVIDED, HOWEVER, THAT ACCOUNTS
DESCRIBED IN THIS PARAGRAPH (A) SHALL BE EXCLUDED FROM ELIGIBLE ACCOUNTS ONLY TO
THE EXTENT THAT THE AGGREGATE VALUE OF ALL ACCOUNTS DESCRIBED IN THIS PARAGRAPH
(A) EXCEEDS $2,000,000 AT THE TIME OF DETERMINATION.

 

(B)                                 THAT PORTION OF ACCOUNTS RECEIVABLE THAT ARE
CONDITIONAL, DISPUTED OR SUBJECT TO A KNOWN CLAIM OF OFFSET OR A CONTRA ACCOUNT
OR WITH RESPECT TO WHICH A DEFENSE, COUNTERCLAIM, RIGHT TO DISCOUNT OR DEDUCTION
HAS BEEN ASSERTED.

 

(C)                                  ACCOUNTS RECEIVABLE OWED BY AN ACCOUNT
DEBTOR THAT IS THE SUBJECT OF DISSOLUTION, LIQUIDATION, BANKRUPTCY PROCEEDINGS
OR HAS GONE OUT OF BUSINESS.

 

(D)                                 ACCOUNTS RECEIVABLE OWED BY AN AFFILIATE OF
THE BORROWER AND ACCOUNTS RECEIVABLE WITH ACCOUNT DEBTORS WITH WHOM THE BORROWER
IS OBLIGATED WITH RESPECT TO GOODS SOLD OR SERVICES RENDERED BY SUCH ACCOUNT
DEBTOR.

 

(E)                                  ACCOUNTS RECEIVABLE NOT SUBJECT TO A DULY
PERFECTED LIEN IN FAVOR OF THE ADMINISTRATIVE AGENT OR WHICH ARE SUBJECT TO ANY
LIEN IN FAVOR OF ANY PERSON OTHER THAN THE ADMINISTRATIVE AGENT.

 

(F)                                    THAT PORTION OF ACCOUNTS RECEIVABLE THAT
HAS BEEN RESTRUCTURED, EXTENDED, AMENDED OR MODIFIED AS A RESULT OF AN ACCOUNT
DEBTOR’S INABILITY TO PAY.

 

(G)                                 THAT PORTION OF ACCOUNTS RECEIVABLE WHICH
ARE BILLED BEFORE THE RENDITION OF SERVICES OR WHICH CONSTITUTE A FINANCE
CHARGE, SERVICE CHARGE OR INTEREST.

 

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“Environmental Law” means the Comprehensive Environmental Response, Compensation
and Liability Act, 42 U.S.C. § 9601 et seq., the Resource Conservation and
Recovery Act, 42 U.S.C. § 6901 et seq., the Hazardous Materials Transportation
Act, 49 U.S.C. § 1802 et seq., the Toxic  Substances Control Act, 15 U.S.C.
§ 2601 et seq., the Federal Water Pollution Control Act, 33 U.S.C. § 1252 et
seq., the Clean Water Act, 33 U.S.C. § 1321 et seq., the Clean Air Act, 42
U.S.C. § 7401 et seq., and any other federal, state, county, municipal, local or
other statute, law, ordinance or regulation which may relate to or deal with
human health or the environment, all as may be from time to time amended.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

 

“ERISA Affiliate” means any trade or business (whether or not incorporated) that
is, along with the Borrower, a member of a controlled group of corporations or a
controlled group of trades or businesses, as described in sections 414(b) and
414(c), respectively, of the Code.

 

“Event of Default” has the meaning specified in Section 7.1.

 

“Facility Termination Date” means March 31, 2009, or the earlier date of the
termination of the Revolving Facility pursuant to Section 2.8 or 7.2.

 

“Federal Funds Rate” means at any time an interest rate per annum equal to the
weighted average of the rates for overnight federal funds transactions with
members of the Federal Reserve System arranged by federal funds brokers, as
published for such day by the Federal Reserve Lender of New York, or, if such
rate is not so published for any day which is a Business Day, the average of the
quotations for such day for such transactions received by the Administrative
Agent from three federal funds brokers of recognized standing selected by it, it
being understood that the Federal Funds Rate for any day which is not a Business
Day shall be the Federal Funds Rate for the next preceding Business Day.

 

“Fee Letters” means one or more separate agreements between the Borrower and the
Administrative Agent, setting forth the terms of certain fees to be paid by the
Borrower to the Administrative Agent for the Administrative Agent’s own behalf
or for the benefit of the Lender Parties, as more fully set forth therein.

 

“Floating Rate” means, at any time, an annual rate equal to the sum of (i) 75
basis points (0.75% per annum), and (ii) the greater of:

 

(A)                              the Base Rate; or

 

(B)                                the Federal Funds Rate, plus 50 basis points
(0.50% per annum).

 

The Floating Rate shall change when and as the Base Rate or Federal Funds Rate
changes.

 

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“Floating Rate Funding” means any Borrowing, or any portion of the principal
balance of the Notes, bearing interest at the Floating Rate.

 

“Funded Debt” means (without duplication) (i) all indebtedness of the Borrower
or any Subsidiary for borrowed money; (ii) the deferred and unpaid balance of
the purchase price owing by the Borrower or any Subsidiary on account of any
goods or services purchased (other than trade payables and other accrued
liabilities incurred in the ordinary course of business that are not more than
60 days past due) if such purchase price is (A) due more than 60 days from the
date of incurrence of the obligation in respect thereof or (B) evidenced by a
note or a similar written instrument; (iii) all capitalized lease obligations;
(iv) all indebtedness secured by a Lien on any property owned by the Borrower or
any Subsidiary, whether or not such indebtedness has been assumed by the
Borrower or any Subsidiary or is nonrecourse to the Borrower or any Subsidiary;
(v) notes payable and drafts accepted representing extensions of credit, whether
or not representing obligations for borrowed money (other than such notes or
drafts for the deferred purchase price of assets or services to the extent such
purchase price is excluded from clause (ii) above); (vi) indebtedness evidenced
by bonds, notes or similar written instrument; (vii) the face amount of all
letters of credit and bankers’ acceptances issued for the account of the
Borrower or any Subsidiary, and without duplication, all drafts drawn thereunder
(other than such letters of credit, bankers’ acceptances and drafts for the
deferred purchase price of assets or services to the extent such purchase price
is excluded from clause (ii) above); (viii) all net obligations of the Borrower
or any Subsidiary under interest rate agreements or currency agreements;
(ix) guaranty obligations (including but not limited to floor plan financing
guaranties and other financial guaranties) of the Borrower or any Subsidiary
with respect to indebtedness for borrowed money of another person or entity
(including affiliates), all determined on a consolidated basis in accordance
with GAAP.

 

“Funding” means a Floating Rate Funding or a LIBO Rate Funding.

 

“GAAP” means generally accepted accounting principles as in effect on the date
hereof and applied on a basis consistent with the accounting practices applied
in the financial statements of the Borrower referred to in Section 4.5.

 

“Governing Board” means, with respect to any corporation, limited liability
company or similar Person, the board of directors, board of governors or other
body or entity that sets overall institutional direction for such Person.

 

“Guaranty” means the Subsidiary Obligors’ Guaranty of even date herewith,
guarantying the payment and performance of the Obligations.

 

“Hazardous Substance” means any asbestos, urea-formaldehyde, polychlorinated
biphenyls (“PCBs”), nuclear fuel or material, chemical waste, radioactive
material, explosives, known carcinogens, petroleum products and by-products and
other dangerous, toxic or hazardous pollutants, contaminants, chemicals,
materials or substances listed or identified in, or regulated by, any
Environmental Law.

 

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“Interest Period” means, with respect to any LIBO Rate Funding, a period of one,
two, three or six months beginning on a Business Day, as elected by the
Borrower; provided, that, if an Interest Period ends on a day which is not a
Business Day, such Interest Period shall end on the next succeeding Business Day
unless such next succeeding Business Day falls in another calendar month, in
which case, such Interest Period shall end on the next preceding Business Day
and when an Interest Period begins on a day which has no numerically
corresponding day in the calendar month in which such Interest Period is to end,
such Interest Period shall end on the last Business Day of such month and all
Interest Periods shall in any event end on or prior to the Facility Termination
Date.

 

“Issuing Lender” means Wells Fargo, acting as the Lender issuing Letters of
Credit.

 

“L/C Amount” means the sum of (i) the aggregate face amount of any issued and
outstanding Letters of Credit, plus (ii) amounts drawn under Letters of Credit
for which the Lenders have neither been reimbursed nor made any Advance.

 

“L/C Cash Collateral Account” means an account maintained with the
Administrative Agent in which funds are deposited pursuant to Section 2.3(e) or
Section 7.2(c).

 

“Lender Parties” means, collectively, the Administrative Agent, the Lenders, the
Issuing Lender and each affiliate of any Lender to whom any Banking Services
Obligations are owed.

 

“Lenders” means Wells Fargo, acting on its own behalf and not as Administrative
Agent, and any financial institution that becomes a Lender pursuant to the
procedures set forth in Section 8.12, collectively.

 

“Letter of Credit” means a standby or commercial letter of credit issued for the
account of the Borrower pursuant to this Agreement. For purposes of this
Agreement, the term “Letter of Credit” shall also include all letters of credit
issued by Wells Fargo for the account of the Borrower on or before the date
hereof and outstanding on the date hereof.

 

“Letter of Credit Fee” has the meaning specified in Section 2.3(b)(ii).

 

“LIBO Base Rate” means, with respect to an Interest Period, (i) the rate per
annum determined by the Administrative Agent as of approximately 11:00 a.m.
London time on the date 2 Business Days before the commencement of such Interest
Period by reference to the British Bankers’ Association Interest Settlement
Rates for deposits in dollars offered on the London interbank dollar market for
a period corresponding to the term of such Interest Period and in an amount
comparable to the aggregate amount of the relevant LIBO Rate Funding (as
displayed in the Bloomberg Financial Market System or any successor thereto or
any other service selected by the Administrative Agent that has been nominated
by the British Bankers’ Association as an authorized information vendor for the
purpose of displaying such rates), or (ii) if such rate cannot be determined,
the rate per annum equal to the rate determined by the Administrative Agent in
accordance with

 

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Section 2.4(c) to be a rate at which U.S. dollar deposits are offered to major
banks in the London interbank eurodollar market for funds to be made available
on the first day of such Interest Period and maturing at the end of such
Interest Period.

 

“LIBO Rate” means the annual rate equal to the sum of (i) the rate obtained by
dividing (a) the applicable LIBO Base Rate (rounded up to the nearest 1/16 of
1%) for funds to be made available on the first day of any Interest Period in an
amount approximately equal to the amount for which a LIBO Rate has been
requested and maturing at the end of such Interest Period, by (b) a percentage
equal to 100% minus the Federal Reserve System requirement (expressed as a
percentage) applicable to such deposits, and (ii) the LIBO Rate Margin.

 

 “LIBO Rate Funding” means any Borrowing, or any portion of the principal
balance of the Notes, bearing interest at a LIBO Rate.

 

“LIBO Rate Margin” means 275 basis points (2.75% per annum).

 

“Lien” means any mortgage, deed of trust, lien, pledge, security interest or
other charge or encumbrance, of any kind whatsoever, including but not limited
to the interest of the lessor or titleholder under any capitalized lease, title
retention contract or similar agreement.

 

“Loan Documents” means this Agreement, the Notes, the Security Agreement and the
Guaranty.

 

“Material Adverse Effect” means an event, change condition or effect that is
materially adverse to (i) the condition (financial or otherwise), properties, or
operations of the Borrower or any Subsidiary, (ii) the ability of any Obligor to
perform its obligations under the Loan Documents, (iii) the validity or
enforceability of any of the Loan Documents or the rights or remedies of the
Lender Parties thereunder, or (iv) the status, existence, perfection, priority
or enforceability of any Lien granted pursuant to the Security Agreement.

 

“Multiemployer Plan” means a “multiemployer plan” as defined in
Section 4001(a)(3) of ERISA.

 

“Notes” means the Revolving Facility Notes.

 

“Obligations” means (i) each and every debt, liability and other obligation of
every type and description arising under or in connection with any of the Loan
Documents which the Borrower may now or at any time hereafter owe to any Lender
Party, whether such debt, liability or obligation now exists or is hereafter
created or incurred, whether it is direct or indirect, due or to become due,
absolute or contingent, primary or secondary, liquidated or unliquidated, or
sole, joint, several or joint and several, and including but not limited to
principal of and interest on the Notes, all fees due under this Agreement or any
related agreement, and the Borrower’s obligation to reimburse any Lender Party
for any amount drawn under any Letter of Credit, whether such reimbursement
obligation arises directly under this Agreement or under a separate
reimbursement agreement, and (ii) Banking Services Obligations.

 

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“Obligor” means the Borrower or any Subsidiary, other than any Applicable
Foreign Subsidiary.

 

“Organizational Documents” means, (i) with respect to any corporation, the
articles of incorporation and bylaws of such corporation, (ii) with respect to
any partnership, the partnership agreement of such partnership, (iii) with
respect to any limited liability company, the articles of organization and
operating agreement or bylaws of such limited liability company, and (iv) with
respect to any entity, any and all other shareholder, partner or member control
agreements and similar organizational documents relating to such entity.

 

“Percentage” means, with respect to each Lender, (i) through and including the
Facility Termination Date, the ratio of that Lender’s Revolving Commitment, to
the Aggregate Revolving Commitment Amount, and (ii) following the Facility
Termination Date, the ratio of (A) the aggregate principal balance of the
Revolving Notes held by that Lender, to (B) the aggregate principal balance of
the Revolving Notes held by all of the Lenders.

 

“Person” means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof or any
other entity of any kind.

 

“Plan” means an employee benefit plan or other plan maintained for employees of
the Borrower or any Subsidiary or ERISA Affiliate and covered by Title IV of
ERISA.

 

“Reportable Event” means (i) a “reportable event” described in Section 4043 of
ERISA and the regulations issued thereunder, (ii) a withdrawal from any Plan, as
described in Section 4063 of ERISA, (iii) an action to terminate a Plan for
which a notice is required to be filed under Section 4041 of ERISA, (iv) any
other event or condition that might constitute grounds for termination of, or
the appointment of a trustee to administer, any Plan, or (v) a complete or
partial withdrawal from a Multiemployer Plan as described in Sections 4203 and
4205 of ERISA.

 

“Required Lenders” means two or more Lenders (including, where relevant,
Additional Lenders) having an aggregate Percentage of 65% or greater.

 

“Revolving Advance” means a Borrowing under Section 2.1.

 

“Revolving Facility” means the revolving credit facility established under
Section 2.1.

 

“Revolving Commitment” means, with respect to each Lender, (i) the amount so
designated opposite such Lender’s name on Exhibit A, plus or minus any such
amount assumed or assigned pursuant to any Assignment and Assumption, or (ii) 
as the context may require, the obligation of such Lender to make Revolving
Advances under Section 2.1 and participate in Letters of Credit in accordance
with Section 2.3(d).

 

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“Revolving Facility Outstandings” means the sum of (i) the aggregate principal
balance of the Revolving Notes, and (ii) the L/C Amount.

 

“Revolving Note” means the Borrower’s promissory note in the form of Exhibit B
hereto.

 

“Security Agreement” means the security agreement of the Obligors in favor of
the Administrative Agent, for the benefit of the Lender Parties, pursuant to
which the Obligors grant the Administrative Agent a Lien on substantially all of
their personal property to secure payment of the Obligations, and all amendments
and supplements thereto and modifications thereof; provided, however, that the
Borrower and its Subsidiaries shall not be required to grant (i) a security
interest in more than 65% of the outstanding Capital Stock of any Applicable
Foreign Subsidiary that is wholly owned by an Obligor, or (ii) a security
interest in any Capital Stock of any Applicable Foreign Subsidiary that is
itself wholly owned by another Applicable Foreign Subsidiary.

 

“Subsidiary” means (i) any corporation of which more than 50% of the outstanding
shares of capital stock having general voting power under ordinary circumstances
to elect a majority of the board of directors of such corporation, irrespective
of whether or not at the time stock of any other class or classes shall have or
might have voting power by reason of the happening of any contingency, is at the
time directly or indirectly owned by the Borrower, by the Borrower and one or
more other Subsidiaries, or by one or more other Subsidiaries, (ii) any
partnership of which 50% or more of the partnership interests therein are
directly or indirectly owned by the Borrower, by the Borrower and one or more
other Subsidiaries, or by one or more other Subsidiaries, and (iii) any limited
liability company or other form of business organization the effective control
of which is held by the Borrower, the Borrower and one or more other
Subsidiaries, or by one or more other Subsidiaries.

 

“Subsidiary Obligor” means any Subsidiary that is not an Applicable Foreign
Subsidiary.

 

“Tangible Net Worth” means stockholders’ equity, less intangible assets included
in calculating such stockholders’ equity, all determined with respect to the
Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP.
For purposes of the foregoing calculation, intangible assets shall include but
not be limited to the value of patents, trademarks, trade names, copyrights,
licenses and goodwill.

 

“Unused Fee” has the meaning specified in Section 2.6(b).

 

“Welfare Plan” means a “welfare plan” as defined in Section 3(1) of ERISA.

 

“Wells Fargo” means Wells Fargo Bank, National Association, a national banking
association and a party to this Agreement.

 

SECTION 1.2                                   TIMES

 

All references to times of day in this Agreement shall be references to
Minneapolis, Minnesota time unless otherwise specifically provided.

 

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ARTICLE II
AMOUNT AND TERMS OF THE LOANS; LETTERS OF CREDIT

 

SECTION 2.1            REVOLVING FACILITY.

 

Each Lender agrees, severally but not jointly, on the terms and subject to the
conditions hereinafter set forth, to make Advances to the Borrower and to
participate in commercial and standby Letters of Credit for the account of the
Borrower from the date hereof through the Facility Termination Date; provided,
however, that in no event shall any Lender’s Percentage of the Revolving
Facility Outstandings exceed that Lender’s Revolving Commitment. The credit
facility established under this Section 2.1 is revolving; within the limits of
the Aggregate Revolving Commitment Amount, the Borrower may request Advances and
Letters of Credit through the Facility Termination Date, repay such Advances or
terminate such Letters of Credit, and reborrow or receive additional Letters of
Credit, so long as no Advance or Letter of Credit causes the limits set forth
below to be exceeded. The Borrower’s obligation to repay the Revolving Advances
made by each Lender will be evidenced by the Borrower’s Revolving Note, payable
to the order of that Lender. The proceeds of each Advance and Letter of Credit
shall be used by the Borrower for the Borrower’s general corporate purposes and
to repurchase or redeem the Borrower’s stock, subject to the limitation imposed
in Section 6.8 hereof.

 

SECTION 2.2            PROCEDURE APPLICABLE TO BORROWINGS.

 

Each Borrowing shall occur on prior written request from the Borrower to the
Administrative Agent or telephonic request from any person purporting to be
authorized to request Borrowings on behalf of the Borrower, which request shall
specify the date of the requested Borrowing and the amount thereof. Except as
set forth in Section 2.4(b), each such request by the Borrower shall be made not
less than one Business Day before the date of the requested Borrowing.  Each
Borrowing shall be in the amount of $100,000 or a multiple thereof.  Promptly
upon receipt of such request (but in no event later than noon with respect to a
Borrowing bearing interest entirely at the Floating Rate, and the close of
business, with respect to any other Borrowing, in each case on the Business Day
of receipt of such notice), the Administrative Agent shall advise each Lender of
the proposed Borrowing. At or before 2:00 p.m. on the date of the requested
Borrowing, each Lender shall provide the Administrative Agent at such office as
the Administrative Agent may designate with immediately available funds covering
such Lender’s pro rata share of such Borrowing.  The Administrative Agent shall
disburse the amount of the requested Borrowing by crediting the same to the
Borrower’s demand deposit account maintained with the Administrative Agent or in
such other manner as the Administrative Agent and the Borrower may from time to
time agree; provided, however, that the Administrative Agent shall have no
obligation to disburse the requested Borrowing if any condition set forth in
Article III has not been satisfied on the day of the requested Borrowing or if
any Lender has failed its fund its pro rata share of the requested Borrowing.
The Borrower shall promptly confirm each telephonic request for a Borrowing by
executing and delivering an appropriate confirmation certificate to the
Administrative Agent. The Borrower shall be obligated to repay all Advances
notwithstanding the failure of the Administrative Agent to receive such
confirmation and notwithstanding the fact that the person requesting same was
not in fact authorized to do so.  Any request for a Borrowing shall be deemed to
be a representation that the statements set forth in Section 3.2 are correct.

 

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SECTION 2.3            PROCEDURES APPLICABLE TO LETTERS OF CREDIT.

 

(A)           PROCEDURES; GOVERNING DOCUMENTS. THE BORROWER SHALL REQUEST EACH
LETTER OF CREDIT ON AT LEAST FIVE BUSINESS DAYS’ PRIOR WRITTEN NOTICE FROM THE
BORROWER TO THE ISSUING LENDER. PRIOR TO THE ISSUANCE OF ANY LETTER OF CREDIT,
THE BORROWER WILL EXECUTE SUCH LETTER OF CREDIT APPLICATIONS AND OTHER DOCUMENTS
AS THE ISSUING LENDER DEEMS NECESSARY. THE RIGHTS AND OBLIGATIONS OF THE
BORROWER AND THE ISSUING LENDER WITH RESPECT TO EACH LETTER OF CREDIT SHALL BE
GOVERNED BY (AMONG OTHER THINGS) (I) THIS CREDIT AGREEMENT, AND (II) ANY SUCH
SEPARATE LETTER OF CREDIT APPLICATION AND OTHER DOCUMENTS EXECUTED IN CONNECTION
THEREWITH. TO THE EXTENT THAT THE TERMS OF THIS AGREEMENT ARE DIFFERENT FROM OR
IN ADDITION TO THE TERMS OF ANY OTHER DOCUMENT IDENTIFIED IN THE PRECEDING
SENTENCE, THE TERMS OF THIS AGREEMENT SHALL GOVERN.

 

(B)           FEES.

 

(I)            THE BORROWER WILL PAY TO THE ADMINISTRATIVE AGENT, FOR THE PRO
RATA ACCOUNT OF ALL LENDERS, A ONE-TIME FRONTING FEE WITH RESPECT TO EACH
DOCUMENTARY LETTER OF CREDIT IN AN AMOUNT EQUAL TO 0.25% OF THE ORIGINAL FACE
AMOUNT OF SUCH LETTER OF CREDIT, PAYABLE UPON ISSUANCE OF SUCH LETTER OF CREDIT.

 

(II)           THE BORROWER WILL PAY TO THE ADMINISTRATIVE AGENT, FOR THE PRO
RATA ACCOUNT OF ALL LENDERS, A COMMISSION (THE “LETTER OF CREDIT FEE”) WITH
RESPECT TO EACH STANDBY LETTER OF CREDIT. THE LETTER OF CREDIT FEE WILL ACCRUE
ON THE FACE AMOUNT OF SUCH STANDBY LETTER OF CREDIT OUTSTANDING FROM TIME TO
TIME AT THE LIBO RATE MARGIN, PAYABLE IN ARREARS ON THE LAST DAY OF EACH
CALENDAR QUARTER AND ON THE FACILITY TERMINATION DATE OR EARLIER TERMINATION OF
THE COMMITMENTS; PROVIDED, HOWEVER, THAT FROM AND AFTER THE OCCURRENCE OF AN
EVENT OF DEFAULT AND CONTINUING THEREAFTER UNTIL SUCH EVENT OF DEFAULT SHALL BE
REMEDIED TO THE WRITTEN SATISFACTION OF THE REQUIRED LENDERS, UPON WRITTEN
NOTICE FROM THE ADMINISTRATIVE AGENT, THE ANNUAL RATE AT WHICH THE LETTER OF
CREDIT FEE ACCRUES WITH RESPECT TO EACH STANDBY LETTER OF CREDIT SHALL BE EQUAL
TO THE SUM OF (A) THE ANNUAL RATE THAT WOULD ACCRUE BUT FOR THIS PROVISO, AND
(B) 2%.

 

(III)          IN ADDITION, THE BORROWERS SHALL PAY TO THE ISSUING LENDER, ON
DEMAND, ANY AND ALL OF THE ISSUING LENDER’S CUSTOMARY FEES IN CONNECTION WITH
THE FRONTING, NEGOTIATION AND ADMINISTRATION OF, AND ANY DRAWINGS OR ACCEPTANCES
UNDER, ANY LETTER OF CREDIT.

 

(C)           REIMBURSEMENT BY BORROWER. THE BORROWER SHALL PAY THE AMOUNT OF
EACH DRAFT DRAWN UNDER ANY LETTER OF CREDIT TO THE ISSUING LENDER ON DEMAND,
TOGETHER WITH INTEREST AT THE FLOATING RATE FROM THE DATE THAT SUCH DRAFT IS
PAID BY THE ISSUING LENDER UNTIL PAYMENT OF SUCH AMOUNT IN FULL.  THE ISSUING
LENDER MAY (AT ITS OPTION) CHARGE ANY DEPOSIT ACCOUNT MAINTAINED WITH THE
ISSUING LENDER FOR THE AMOUNT OF ANY DRAFT DRAWN UNDER A LETTER OF CREDIT.

 

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(D)           REIMBURSEMENT BY LENDERS. EACH LENDER SHALL BE DEEMED TO HOLD A
PARTICIPATION INTEREST IN EACH LETTER OF CREDIT EQUAL TO THAT LENDER’S
PERCENTAGE OF THE FACE AMOUNT OF THAT LETTER OF CREDIT.  IF THE ISSUING LENDER
MAKES ANY PAYMENT PURSUANT TO THE TERMS OF ANY LETTER OF CREDIT AND IS NOT
PROMPTLY REIMBURSED, THE ISSUING LENDER MAY REQUEST THAT EACH OTHER LENDER PAY
SUCH LENDER’S PERCENTAGE OF THE UNREIMBURSED AMOUNT.  UPON RECEIPT OF ANY SUCH
REQUEST PRIOR TO 11:00 A.M. ON A BUSINESS DAY, THE RECIPIENT SHALL BE
UNCONDITIONALLY AND IRREVOCABLY OBLIGATED TO PAY ITS PERCENTAGE OF THE
UNREIMBURSED AMOUNT TO THE ISSUING LENDER IN IMMEDIATELY AVAILABLE FUNDS PRIOR
TO 3:00 P.M. ON SUCH DATE.  NOTICES RECEIVED AFTER 11:00 A.M. SHALL BE DEEMED TO
HAVE BEEN RECEIVED ON THE FOLLOWING BUSINESS DAY.  IF PAYMENT IS NOT MADE BY A
LENDER WHEN DUE HEREUNDER, INTEREST ON THE UNPAID AMOUNT SHALL ACCRUE FROM THE
DATE OF THE ISSUING LENDER’S REQUEST THROUGH THE DATE OF PAYMENT AT THE FEDERAL
FUNDS RATE.  AFTER MAKING ANY PAYMENT TO THE ISSUING LENDER UNDER THIS
SUBSECTION IN CONNECTION WITH A PARTICULAR LETTER OF CREDIT, A LENDER SHALL BE
ENTITLED TO PARTICIPATE TO THE EXTENT OF ITS PERCENTAGE IN THE RELATED
REIMBURSEMENTS RECEIVED BY THE ISSUING LENDER FROM THE BORROWER OR OTHERWISE.
UPON RECEIVING ANY SUCH REIMBURSEMENT, THE ISSUING LENDER WILL DISTRIBUTE TO
EACH LENDER ITS PERCENTAGE OF SUCH REIMBURSEMENT.  AT THE OPTION OF THE ISSUING
LENDER, ANY PAYMENT BY A LENDER HEREUNDER MAY BE DEEMED AN ADVANCE IN ACCORDANCE
WITH SECTION 2.1 AND PAYABLE UNDER THE REVOLVING NOTES.

 

(E)           TERM; L/C CASH COLLATERAL ACCOUNT. UNLESS OTHERWISE APPROVED BY
THE LENDERS, NO LETTER OF CREDIT SHALL HAVE AN INITIAL OR ANY RENEWAL TERM OF
MORE THAN ONE YEAR. UNLESS OTHERWISE AGREED BY THE REQUIRED LENDERS IN WRITING,
THE BORROWER SHALL DEPOSIT IN THE L/C CASH COLLATERAL ACCOUNT, NOT LESS THAN 5
BUSINESS DAYS BEFORE THE FACILITY TERMINATION DATE, AN AMOUNT EQUAL TO THE
AGGREGATE FACE AMOUNT OF ALL LETTERS OF CREDIT THEN OUTSTANDING, LESS THE
BALANCE (IF ANY) THEN OUTSTANDING IN THE L/C CASH COLLATERAL ACCOUNT.

 

SECTION 2.4            INTEREST ON NOTES.

 

(A)           FLOATING RATE FUNDINGS. UNLESS THE BORROWER ELECTS A LIBO RATE
PURSUANT TO THIS SECTION, THE PRINCIPAL BALANCE OF THE NOTES SHALL BEAR INTEREST
AT THE FLOATING RATE.

 

(B)           LIBO RATE FUNDINGS. SO LONG AS NO DEFAULT OR EVENT OF DEFAULT
EXISTS, THE BORROWER MAY REQUEST THAT A PORTION OF ANY REQUESTED BORROWING
CONSTITUTE A LIBO RATE FUNDING, OR MAY CONVERT ALL OR ANY PART OF ANY
OUTSTANDING FLOATING RATE FUNDING INTO A LIBO RATE FUNDING, OR MAY REQUEST THAT
A LIBO RATE FUNDING BE CONVERTED AT THE END OF THE APPLICABLE INTEREST PERIOD TO
ANOTHER LIBO RATE FUNDING, BY GIVING NOTICE TO THE ADMINISTRATIVE AGENT OF SUCH
REQUEST OR CONVERSION NOT LATER THAN 10:30 A.M. ON A BUSINESS DAY WHICH IS AT
LEAST THREE BUSINESS DAYS PRIOR TO THE DATE OF THE REQUESTED BORROWING OR
CONVERSION. EACH SUCH NOTICE SHALL BE EFFECTIVE UPON RECEIPT BY THE
ADMINISTRATIVE AGENT, SHALL BE IN WRITING OR BY TELEPHONE OR TELECOPY
TRANSMISSION, SHALL SPECIFY THE DATE AND AMOUNT OF SUCH BORROWING OR CONVERSION,
AND THE INTEREST PERIOD THEREFOR. THE INTEREST PERIOD APPLICABLE TO EACH LIBO
RATE FUNDING SHALL BEGIN ON A BUSINESS DAY, AND THE AMOUNT OF EACH LIBO RATE
FUNDING SHALL BE EQUAL TO $1,000,000 OR AN INTEGRAL MULTIPLE OF $500,000 GREATER
THAN $1,000,000. SUBJECT TO THE TERMS AND CONDITIONS HEREOF, THE PRINCIPAL
AMOUNT SPECIFIED BY THE BORROWER IN THE APPLICABLE REQUEST FOR A LIBO RATE
FUNDING SHALL BEAR INTEREST FROM AND INCLUDING THE FIRST DAY OF

 

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THE INTEREST PERIOD SPECIFIED THEREIN TO BUT NOT INCLUDING THE LAST DAY OF SUCH
INTEREST PERIOD, AT THE LIBO RATE APPLICABLE THERETO, DETERMINED AS SET FORTH
HEREIN. UNLESS THE BORROWER REQUESTS A NEW LIBO RATE FUNDING IN ACCORDANCE WITH
THE PROCEDURES SET FORTH ABOVE, OR PREPAYS THE PRINCIPAL OF AN OUTSTANDING LIBO
RATE FUNDING AT THE EXPIRATION OF AN INTEREST PERIOD, THE LENDERS SHALL
AUTOMATICALLY AND WITHOUT REQUEST OF THE BORROWER CONVERT EACH LIBO RATE FUNDING
TO A FLOATING RATE FUNDING ON THE LAST DAY OF THE RELEVANT INTEREST PERIOD.

 

(C)           SETTING OF LIBO RATES. THE APPLICABLE LIBO RATE FOR EACH INTEREST
PERIOD SHALL BE DETERMINED BY THE ADMINISTRATIVE AGENT BETWEEN THE OPENING OF
BUSINESS AND NOON ON THE SECOND BUSINESS DAY PRIOR TO THE BEGINNING OF SUCH
INTEREST PERIOD, WHEREUPON NOTICE THEREOF (WHICH MAY BE BY TELEPHONE) SHALL BE
GIVEN BY THE ADMINISTRATIVE AGENT TO THE BORROWER AND EACH OF THE LENDERS. EACH
SUCH DETERMINATION OF THE APPLICABLE LIBO RATE SHALL BE CONCLUSIVE AND BINDING
UPON THE PARTIES HERETO, IN THE ABSENCE OF DEMONSTRABLE ERROR. THE
ADMINISTRATIVE AGENT, UPON WRITTEN REQUEST OF THE BORROWER, SHALL DELIVER TO THE
BORROWER A STATEMENT SHOWING THE COMPUTATIONS USED BY THE ADMINISTRATIVE AGENT
IN DETERMINING THE APPLICABLE LIBO RATE HEREUNDER.

 

(D)           LIMITATIONS ON LIBO RATE FUNDINGS. IN NO EVENT SHALL MORE THAN
FOUR LIBO RATE FUNDINGS BE OUTSTANDING AT ANY ONE TIME. IN NO EVENT MAY THE
BORROWER REQUEST A LIBO RATE FUNDING IF, AFTER GIVING EFFECT TO SUCH LIBO RATE
FUNDING, THE BORROWER WOULD BE REQUIRED TO PREPAY A LIBO RATE FUNDING IN ORDER
TO MAKE ANY REGULARLY SCHEDULED PRINCIPAL PAYMENT.

 

(E)           DEFAULT RATE. FROM AND AFTER THE OCCURRENCE OF ANY DEFAULT OR
EVENT OF DEFAULT AND CONTINUING THEREAFTER UNTIL SUCH DEFAULT OR EVENT OF
DEFAULT SHALL BE REMEDIED TO THE WRITTEN SATISFACTION OF THE ADMINISTRATIVE
AGENT, THE OUTSTANDING PRINCIPAL BALANCE OF THE NOTES SHALL BEAR INTEREST, UNTIL
PAID IN FULL, AT AN ANNUAL RATE EQUAL TO THE SUM OF (I) THE INTEREST RATE
OTHERWISE IN EFFECT WITH RESPECT THERETO, AND (II) 200 BASIS POINTS (2.00% PER
ANNUM) (THE “DEFAULT RATE”). CALCULATION OF INTEREST AT THE DEFAULT RATE SHALL
NOT BE DEEMED A WAIVER OR EXCUSE OF ANY SUCH DEFAULT OR EVENT OF DEFAULT.

 

SECTION 2.5            PAYMENTS.

 

(A)           INTEREST. INTEREST ACCRUING ON FLOATING RATE FUNDINGS EACH MONTH
SHALL BE DUE AND PAYABLE ON THE LAST DAY OF THAT MONTH, COMMENCING ON THE LAST
DAY OF THE MONTH HEREOF. INTEREST ON ANY LIBO RATE FUNDING SHALL BE DUE AND
PAYABLE ON THE LAST DAY OF THE APPLICABLE INTEREST PERIOD OR, IF SUCH INTEREST
PERIOD IS IN EXCESS OF THREE MONTHS, ON THE LAST DAY OF EACH THREE-MONTH PERIOD
DURING SUCH INTEREST PERIOD AND ON THE LAST DAY OF SUCH INTEREST PERIOD.

 

(B)           PRINCIPAL. THE PRINCIPAL BALANCE OF THE REVOLVING NOTES SHALL BE
DUE AND PAYABLE IN FULL ON THE FACILITY TERMINATION DATE. IN ADDITION, THE
BORROWER SHALL MAKE SUCH PREPAYMENTS OF THE REVOLVING NOTES AS MAY BE REQUIRED
UNDER ANY OTHER SECTION OF THIS AGREEMENT (INCLUDING BUT NOT LIMITED TO
SECTION 2.8(B)).

 

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SECTION 2.6            FEES.

 

(A)           FEE LETTERS. THE BORROWER SHALL PAY THE ADMINISTRATIVE AGENT AND
THE ISSUING LENDER SUCH FEES AS ARE OUTLINED IN THE FEE LETTERS.

 

(B)           UNUSED FEE. THE BORROWER WILL PAY TO THE ADMINISTRATIVE AGENT, FOR
THE PRO RATA ACCOUNT OF THE LENDERS, AN ONGOING UNUSED FEE (THE “UNUSED FEE”)
EQUAL TO 35 BASIS POINTS (0.35% PER ANNUM) APPLIED TO THE DAILY AVERAGE AMOUNT
BY WHICH (I) THE SUM OF THE AGGREGATE REVOLVING COMMITMENT AMOUNT EXCEEDS
(II) THE REVOLVING FACILITY OUTSTANDINGS, FROM THE DATE HEREOF TO AND INCLUDING
THE FACILITY TERMINATION DATE, PAYABLE QUARTERLY IN ARREARS ON THE LAST BUSINESS
DAY OF EACH CALENDAR QUARTER. ANY UNUSED FEE REMAINING UNPAID ON THE FACILITY
TERMINATION DATE SHALL BE DUE AND PAYABLE ON SUCH DATE. THE UNUSED FEE SHALL BE
SHARED BY THE LENDERS ON THE BASIS OF THEIR RESPECTIVE PERCENTAGES.

 

(C)           AUDIT FEES. THE BORROWER SHALL PAY TO THE ADMINISTRATIVE AGENT, ON
WRITTEN DEMAND, REASONABLE FEES CHARGED BY THE ADMINISTRATIVE AGENT IN
CONNECTION WITH ANY AUDITS OR INSPECTIONS BY THE ADMINISTRATIVE AGENT OF ANY
COLLATERAL OR THE OPERATIONS OR BUSINESSES OF THE BORROWER, TOGETHER WITH ACTUAL
OUT-OF-POCKET COSTS AND EXPENSES INCURRED IN CONDUCTING ANY SUCH AUDIT OR
INSPECTION. ALL SUCH AUDITS AND INSPECTIONS SHALL BE FOR THE SOLE BENEFIT OF THE
LENDER PARTIES.

 

SECTION 2.7            PREPAYMENTS.

 

Subject to the conditions set forth herein, the Borrower from time to time may
voluntarily prepay the Notes in whole or in part; provided that (i) prepayment
of any Lender’s Revolving Note must be accompanied by pro rata prepayment of
each other Lender’s Revolving Note, (ii) the Borrower may not prepay any LIBO
Rate Funding in part, (iii) any prepayment of the full amount of any Note shall
include accrued interest thereon, (iv) each partial prepayment shall be in an
aggregate amount equal to an integral multiple of $500,000 equal to or greater
than $1,000,000, (v) any prepayment of any LIBO Rate Funding shall be made only
upon three Business Days’ notice to the Administrative Agent, and (vi) any
prepayment of any Floating Rate Funding shall be made only upon one Business
Day’s notice to the Administrative Agent. All prepayments hereunder shall be
applied, first, to the principal of the Notes, and second, to interest and fees
with respect thereto. Any prepayment of a LIBO Rate Funding shall be accompanied
by accrued interest on such partial prepayment through the date of prepayment
and additional compensation calculated in accordance with Section 2.11.

 

SECTION 2.8            TERMINATION OF REVOLVING FACILITY AND VOLUNTARY REDUCTION
OF AGGREGATE REVOLVING FACILITY AMOUNT; AUTOMATIC REDUCTIONS OF AGGREGATE
REVOLVING FACILITY AMOUNT.

 

(A)           VOLUNTARY TERMINATION OR REDUCTION. THE BORROWER MAY AT ANY TIME
AND FROM TIME TO TIME UPON THREE BUSINESS DAYS’ PRIOR NOTICE TO THE
ADMINISTRATIVE AGENT PERMANENTLY TERMINATE THE REVOLVING FACILITY IN WHOLE OR
PERMANENTLY REDUCE THE AGGREGATE REVOLVING COMMITMENT AMOUNT IN PART, PROVIDED
THAT (I) THE REVOLVING FACILITY MAY NOT BE TERMINATED WHILE ANY BORROWINGS OR
LETTERS OF CREDIT REMAIN OUTSTANDING, (II) EACH PARTIAL REDUCTION SHALL BE IN
THE AMOUNT OF $500,000 OR A MULTIPLE

 

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THEREOF, AND (III) NO REDUCTION SHALL REDUCE THE AGGREGATE REVOLVING COMMITMENT
AMOUNT TO AN AMOUNT LESS THAN THE REVOLVING FACILITY OUTSTANDINGS AT THAT TIME.
ANY PARTIAL REDUCTION OF THE AGGREGATE REVOLVING COMMITMENT AMOUNT SHALL REDUCE
EACH LENDER’S REVOLVING COMMITMENT PRO RATA IN ACCORDANCE WITH THAT LENDER’S
PERCENTAGE.

 

(B)           AUTOMATIC REDUCTIONS. ON EACH DATE SET FORTH BELOW, IF THE
REVOLVING COMMITMENTS HAVE NOT BEEN TERMINATED AND THE AGGREGATE REVOLVING
COMMITMENT AMOUNT EXCEEDS THE AMOUNT SET FORTH BELOW OPPOSITE SUCH DATE, THE
AGGREGATE REVOLVING COMMITMENT AMOUNT SHALL AUTOMATICALLY REDUCE TO THE AMOUNT
SET FORTH OPPOSITE SUCH DATE:

 

Date

 

Aggregate Revolving Commitment Amount

 

October 31, 2008

 

$

60,000,000

 

December 31, 2008

 

$

40,000,000

 

 

Each reduction in the Aggregate Revolving Commitment Amount shall be distributed
pro rata to each Lender’s Revolving Commitment in accordance with that Lender’s
Percentage. If, after giving effect to any such reduction, the Revolving
Facility Outstandings exceed the then-applicable Aggregate Revolving Commitment
Amount, the Borrower shall immediately remit to the Administrative Agent an
amount equal to such excess, without notice or demand by any Lender Party. Such
amount shall be applied to the prepayment of the Obligations in such order as
the Administrative Agent may in its sole discretion elect; and if any such
amount remains after giving effect to the prepayment of all outstanding
Obligations other than the undrawn amount of any outstanding Letters of Credit,
such remainder shall be deposited in the L/C Cash Collateral Account and shall
secure the Obligations and otherwise be governed in accordance with Section 7.3.

 

SECTION 2.9            PAYMENTS.

 

(A)           MAKING OF PAYMENTS. ALL PAYMENTS OF PRINCIPAL OF AND INTEREST DUE
UNDER THE NOTES SHALL BE MADE TO THE ADMINISTRATIVE AGENT IN IMMEDIATELY
AVAILABLE FUNDS NOT LATER THAN 12:00 NOON ON THE DATE DUE AT SUCH PLACE AS THE
ADMINISTRATIVE AGENT MAY FROM TIME TO TIME DESIGNATE IN WRITING, AND FUNDS
RECEIVED AFTER THAT HOUR SHALL BE DEEMED TO HAVE BEEN RECEIVED BY THE
ADMINISTRATIVE AGENT ON THE NEXT FOLLOWING BUSINESS DAY. THE BORROWER HEREBY
AUTHORIZES THE ADMINISTRATIVE AGENT TO CHARGE THE BORROWER’S DEMAND DEPOSIT
ACCOUNT MAINTAINED WITH THE ADMINISTRATIVE AGENT FOR THE AMOUNT OF ANY SUCH
PAYMENT ON ITS DUE DATE, OR (AT THE OPTION OF THE ADMINISTRATIVE AGENT) TO
EFFECT A BORROWING IN SUCH AMOUNT, ALL WITHOUT RECEIPT OF ANY REQUEST FOR SUCH
CHARGE OR BORROWING, BUT THE LENDER’S FAILURE TO SO CHARGE SUCH ACCOUNT OR
EFFECT SUCH BORROWING SHALL IN NO WAY AFFECT THE OBLIGATION OF THE BORROWER TO
MAKE ANY SUCH PAYMENT.

 

(B)           ASSUMED PAYMENTS. UNLESS THE ADMINISTRATIVE AGENT HAS BEEN
NOTIFIED BY A LENDER OR THE BORROWER PRIOR TO THE DATE ON WHICH SUCH LENDER OR
THE BORROWER IS SCHEDULED TO MAKE PAYMENT TO THE ADMINISTRATIVE AGENT OF (IN THE
CASE OF A LENDER) THE PROCEEDS OF AN ADVANCE TO BE MADE BY IT HEREUNDER OR (IN
THE CASE OF THE BORROWER) A PAYMENT TO THE ADMINISTRATIVE AGENT FOR THE ACCOUNT
OF ONE OR MORE OF THE LENDERS HEREUNDER (SUCH PAYMENT BY A LENDER OR THE
BORROWER (AS THE CASE MAY BE) BEING HEREIN

 

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CALLED A “REQUIRED PAYMENT”), WHICH NOTICE SHALL BE EFFECTIVE UPON RECEIPT, THAT
IT DOES NOT INTEND TO MAKE THE REQUIRED PAYMENT TO THE ADMINISTRATIVE AGENT, THE
ADMINISTRATIVE AGENT MAY ASSUME THAT THE REQUIRED PAYMENT HAS BEEN MADE AND MAY
(BUT SHALL NOT BE REQUIRED TO), IN RELIANCE UPON SUCH ASSUMPTION, MAKE THE
AMOUNT THEREOF AVAILABLE TO THE INTENDED RECIPIENT ON SUCH DATE AND, IF SUCH
LENDER OR THE BORROWER (AS THE CASE MAY BE) HAS NOT IN FACT MADE THE REQUIRED
PAYMENT TO THE ADMINISTRATIVE AGENT, THE RECIPIENT OF SUCH PAYMENT SHALL, ON
DEMAND, REPAY TO THE ADMINISTRATIVE AGENT THE AMOUNT SO MADE AVAILABLE TOGETHER
WITH INTEREST THEREON FOR EACH DAY DURING THE PERIOD COMMENCING ON THE DATE SUCH
AMOUNT WAS SO MADE AVAILABLE BY THE ADMINISTRATIVE AGENT UNTIL THE DATE THE
ADMINISTRATIVE AGENT RECOVERS SUCH AMOUNT AT A RATE (I) EQUAL TO THE FEDERAL
FUNDS RATE FOR SUCH DAY, IN THE CASE OF A REQUIRED PAYMENT OWING BY A LENDER, OR
(II) EQUAL TO THE APPLICABLE RATE OF INTEREST AS PROVIDED IN THIS AGREEMENT, IN
THE CASE OF A REQUIRED PAYMENT OWING BY THE BORROWER.

 

(C)           SETOFF. THE BORROWER AGREES THAT EACH LENDER SHALL HAVE ALL RIGHTS
OF SETOFF AND BANKERS’ LIEN PROVIDED BY APPLICABLE LAW, AND IN ADDITION THERETO,
THE BORROWER AGREES THAT IF AT ANY TIME ANY AMOUNT IS DUE AND OWING BY THE
BORROWER UNDER THIS AGREEMENT TO ANY LENDER AT A TIME WHEN AN EVENT OF DEFAULT
HAS OCCURRED AND IS CONTINUING HEREUNDER, ANY LENDER MAY APPLY ANY AND ALL
BALANCES, CREDITS, AND DEPOSITS, ACCOUNTS OR MONEYS OF THE BORROWER THEN OR
THEREAFTER IN THE POSSESSION OF THAT LENDER (EXCLUDING, HOWEVER, ANY TRUST OR
ESCROW ACCOUNTS HELD BY THE BORROWER FOR THE BENEFIT OF ANY THIRD PARTY) TO THE
PAYMENT THEREOF.

 

(D)           DUE DATE EXTENSION. IF ANY PAYMENT OF PRINCIPAL OF OR INTEREST ON
ANY FLOATING RATE FUNDING OR ANY FEES PAYABLE HEREUNDER FALLS DUE ON A DAY WHICH
IS NOT A BUSINESS DAY, THEN SUCH DUE DATE SHALL BE EXTENDED TO THE NEXT
FOLLOWING BUSINESS DAY, AND (IN THE CASE OF PRINCIPAL) ADDITIONAL INTEREST SHALL
ACCRUE AND BE PAYABLE FOR THE PERIOD OF SUCH EXTENSION.

 

(E)           APPLICATION OF PAYMENTS. EXCEPT AS OTHERWISE PROVIDED HEREIN, SO
LONG AS NO DEFAULT OR EVENT OF DEFAULT HAS OCCURRED AND IS CONTINUING HEREUNDER,
EACH PAYMENT RECEIVED FROM THE BORROWER SHALL BE APPLIED TO SUCH OBLIGATION AS
THE BORROWER SHALL SPECIFY BY NOTICE RECEIVED BY THE ADMINISTRATIVE AGENT ON OR
BEFORE THE DATE OF SUCH PAYMENT, OR IN THE ABSENCE OF SUCH NOTICE, AS THE
REQUIRED LENDERS SHALL DETERMINE IN THEIR DISCRETION. EXCEPT AS OTHERWISE
PROVIDED HEREIN, AFTER THE OCCURRENCE OF A DEFAULT OR EVENT OF DEFAULT, THE
LENDERS SHALL HAVE THE RIGHT TO APPLY ALL PAYMENTS RECEIVED BY THE
ADMINISTRATIVE AGENT FROM THE BORROWER AS THE REQUIRED LENDERS MAY DETERMINE IN
THEIR DISCRETION. THE BORROWER AGREES THAT THE AMOUNT SHOWN ON THE BOOKS AND
RECORDS OF THE LENDER PARTIES AS BEING THE PRINCIPAL BALANCE OF AND INTEREST ON
THE NOTES SHALL BE CONCLUSIVE ABSENT DEMONSTRABLE ERROR.

 

SECTION 2.10         INCREASED COSTS; CAPITAL ADEQUACY; FUNDING EXCEPTIONS.

 

(A)           INCREASED COSTS ON LIBO RATE FUNDINGS. IF REGULATION D OF THE
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM OR AFTER THE DATE OF THIS
AGREEMENT THE ADOPTION OF ANY APPLICABLE LAW, RULE OR REGULATION, OR ANY CHANGE
IN ANY EXISTING LAW, OR ANY CHANGE IN THE INTERPRETATION OR ADMINISTRATION
THEREOF BY ANY GOVERNMENTAL AUTHORITY, CENTRAL BANK OR COMPARABLE AGENCY CHARGED
WITH THE INTERPRETATION OR ADMINISTRATION

 

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THEREOF, OR COMPLIANCE BY ANY LENDER WITH ANY REQUEST OR DIRECTIVE (WHETHER OR
NOT HAVING THE FORCE OF LAW) OF ANY SUCH AUTHORITY, CENTRAL BANK OR COMPARABLE
AGENCY, SHALL:

 

(I)            SUBJECT THAT LENDER TO OR CAUSE THE WITHDRAWAL OR TERMINATION OF
ANY EXEMPTION PREVIOUSLY GRANTED TO THAT LENDER WITH RESPECT TO, ANY TAX, DUTY
OR OTHER CHARGE WITH RESPECT TO ITS LIBO RATE FUNDINGS OR ITS OBLIGATION TO MAKE
LIBO RATE FUNDINGS, OR SHALL CHANGE THE BASIS OF TAXATION OF PAYMENTS TO THAT
LENDER OF THE PRINCIPAL OF OR INTEREST UNDER THIS AGREEMENT IN RESPECT OF ITS
LIBO RATE FUNDINGS OR ITS OBLIGATION TO MAKE LIBO RATE FUNDINGS (EXCEPT FOR
CHANGES IN THE RATE OF TAX ON THE OVERALL NET INCOME OF THAT LENDER IMPOSED BY
THE JURISDICTIONS IN WHICH THAT LENDER’S PRINCIPAL EXECUTIVE OFFICE IS LOCATED);
OR

 

(II)           IMPOSE, MODIFY OR DEEM APPLICABLE ANY RESERVE (INCLUDING, WITHOUT
LIMITATION, ANY RESERVE IMPOSED BY THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE
SYSTEM, BUT EXCLUDING ANY RESERVE INCLUDED IN THE DETERMINATION OF INTEREST
RATES PURSUANT TO SECTION 2.4), SPECIAL DEPOSIT OR SIMILAR REQUIREMENT AGAINST
ASSETS OF, DEPOSITS WITH OR FOR THE ACCOUNT OF, OR CREDIT EXTENDED BY, THAT
LENDER; OR

 

(III)          IMPOSE ON THAT LENDER ANY OTHER CONDITION AFFECTING ITS MAKING,
MAINTAINING OR FUNDING OF ITS LIBO RATE FUNDINGS OR ITS OBLIGATION TO MAKE LIBO
RATE FUNDINGS;

 

and the result of any of the foregoing is to increase the cost to that Lender of
making or maintaining any LIBO Rate Funding, or to reduce the amount of any sum
received or receivable by that Lender under this Agreement or under its Notes
with respect to a LIBO Rate Funding, then that Lender will notify the Borrower
of such increased cost and within fifteen (15) days after demand by that Lender
(which demand shall be accompanied by a statement setting forth the basis of
such demand and representing that that Lender has made similar demand on one or
more other commercial borrowers with revolving or term loans in excess of
$500,000) the Borrower shall pay to that Lender such additional amount or
amounts as will compensate that Lender for such increased cost or such
reduction; provided, however, that no such increased cost or such reduction
shall be payable by the Borrower for any period longer than ninety (90) days
prior to the date on which notice thereof is delivered to the Borrower, unless
such increased cost or such reduction shall apply retroactively, in which case,
the Borrower shall pay such additional amount or amounts as will compensate that
Lender for such increased cost or such reduction for the longer of ninety (90)
days prior to the date on which notice thereof is delivered to the Borrower or
the retroactive period applicable to such increased cost or such reduction. Each
Lender will promptly notify the Borrower of any event of which it has knowledge,
occurring after the date hereof, which will entitle that Lender to compensation
pursuant to this Section 2.10. If the Borrower receives notice from any Lender
of any event which will entitle that Lender to compensation pursuant to this
Section 2.10, the Borrower may prepay any then outstanding LIBO Rate Fundings or
notify that Lender that any pending request for a LIBO Rate Funding shall be
deemed to be a request for a Floating Rate Funding, in each case subject to the
provisions of Section 2.11.

 

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(B)           CAPITAL ADEQUACY. IF ANY LENDER DETERMINES AT ANY TIME THAT ITS
RETURN HAS BEEN REDUCED AS A RESULT OF ANY CAPITAL ADEQUACY RULE CHANGE, THAT
LENDER MAY REQUIRE THE BORROWER TO PAY IT THE AMOUNT NECESSARY TO RESTORE THAT
LENDER’S RETURN TO WHAT IT WOULD HAVE BEEN HAD THERE BEEN NO CAPITAL ADEQUACY
RULE CHANGE. FOR PURPOSES OF THIS 2.10, THE FOLLOWING DEFINITIONS SHALL APPLY:

 

(I)            “RETURN”, FOR ANY CALENDAR QUARTER OR SHORTER PERIOD, MEANS THE
PERCENTAGE DETERMINED BY DIVIDING (A) THE SUM OF INTEREST AND ONGOING FEES
EARNED BY A LENDER UNDER THIS AGREEMENT DURING SUCH PERIOD BY (B) THE AVERAGE
CAPITAL THAT LENDER IS REQUIRED TO MAINTAIN DURING SUCH PERIOD AS A RESULT OF
ITS BEING A PARTY TO THIS AGREEMENT, AS DETERMINED BY THAT LENDER BASED UPON ITS
TOTAL CAPITAL REQUIREMENTS AND A REASONABLE ATTRIBUTION FORMULA THAT TAKES
ACCOUNT OF THE CAPITAL ADEQUACY RULES THEN IN EFFECT. RETURN MAY BE CALCULATED
FOR EACH CALENDAR QUARTER AND FOR THE SHORTER PERIOD BETWEEN THE END OF A
CALENDAR QUARTER AND THE DATE OF TERMINATION IN WHOLE OF THIS AGREEMENT.

 

(II)           “CAPITAL ADEQUACY RULE” MEANS ANY LAW, RULE, REGULATION OR
GUIDELINE REGARDING CAPITAL ADEQUACY THAT APPLIES TO ANY LENDER, OR THE
INTERPRETATION THEREOF BY ANY GOVERNMENTAL OR REGULATORY AUTHORITY. CAPITAL
ADEQUACY RULES INCLUDE RULES REQUIRING FINANCIAL INSTITUTIONS TO MAINTAIN TOTAL
CAPITAL IN AMOUNTS BASED UPON PERCENTAGES OF OUTSTANDING LOANS, BINDING LOAN
COMMITMENTS AND LETTERS OF CREDIT.

 

(III)          “CAPITAL ADEQUACY RULE CHANGE” MEANS ANY CHANGE IN ANY CAPITAL
ADEQUACY RULE OCCURRING AFTER THE DATE OF THIS AGREEMENT, BUT DOES NOT INCLUDE
ANY CHANGES IN APPLICABLE REQUIREMENTS THAT AT THE DATE HEREOF ARE SCHEDULED TO
TAKE PLACE UNDER THE EXISTING CAPITAL ADEQUACY RULES OR ANY INCREASES IN THE
CAPITAL THAT ANY LENDER IS REQUIRED TO MAINTAIN TO THE EXTENT THAT THE INCREASES
ARE REQUIRED DUE TO A REGULATORY AUTHORITY’S ASSESSMENT OF THAT LENDER’S
FINANCIAL CONDITION.

 

(IV)          “LENDER” INCLUDES (BUT IS NOT LIMITED TO) THE ADMINISTRATIVE
AGENT, THE LENDERS, AS DEFINED ELSEWHERE IN THIS AGREEMENT, AND ANY ASSIGNEE OF
ANY INTEREST OF ANY LENDER HEREUNDER AND ANY PARTICIPANT IN THE LOANS MADE
HEREUNDER.

 

The initial notice sent by a Lender shall be sent as promptly as practicable
after that Lender learns that its Return has been reduced, shall include a
demand for payment of the amount necessary to restore that Lender’s Return for
the quarter in which the notice is sent, shall state in reasonable detail the
cause for the reduction in that Lender’s Return and that Lender’s calculation of
the amount of such reduction, and shall include that Lender’s representation
that it has made similar demand on one or more other commercial borrowers with
revolving or term loans in excess of $500,000. Thereafter, that Lender may send
a new notice during each calendar quarter setting forth the calculation of the
reduced Return for that quarter and including a demand for payment of the amount
necessary to restore that Lender’s Return for that quarter. A Lender’s
calculation in any such notice shall be conclusive and binding absent
demonstrable error.

 

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(C)           BASIS FOR DETERMINING INTEREST RATE INADEQUATE OR UNFAIR. IF WITH
RESPECT TO ANY INTEREST PERIOD:

 

(I)            ANY LENDER DETERMINES THAT DEPOSITS IN U.S. DOLLARS (IN THE
APPLICABLE AMOUNTS) ARE NOT BEING OFFERED IN THE LONDON INTERBANK EURODOLLAR
MARKET FOR SUCH INTEREST PERIOD; OR

 

(II)           ANY LENDER OTHERWISE DETERMINES THAT BY REASON OF CIRCUMSTANCES
AFFECTING THE LONDON INTERBANK EURODOLLAR MARKET ADEQUATE AND REASONABLE MEANS
DO NOT EXIST FOR ASCERTAINING THE APPLICABLE LIBO RATE; OR

 

(III)          ANY LENDER DETERMINES THAT THE LIBO RATE AS DETERMINED BY THE
ADMINISTRATIVE AGENT WILL NOT ADEQUATELY AND FAIRLY REFLECT THE COST TO THAT
LENDER OF MAINTAINING OR FUNDING A LIBO RATE FUNDING FOR SUCH INTEREST PERIOD,
OR THAT THE MAKING OR FUNDING OF LIBO RATE FUNDINGS HAS BECOME IMPRACTICABLE AS
A RESULT OF AN EVENT OCCURRING AFTER THE DATE OF THIS AGREEMENT WHICH IN THE
OPINION OF THAT LENDER MATERIALLY AFFECTS SUCH LIBO RATE FUNDINGS;

 

then that Lender shall promptly notify the Borrower and (A) upon the occurrence
of any event described in the foregoing clause (i) the Borrower shall enter into
good faith negotiations with that Lender in order to determine an alternate
method to determine the LIBO Rate for that Lender, and during the pendency of
such negotiations with that Lender, the Lenders shall be under no obligation to
make any new LIBO Rate Fundings, and (B) upon the occurrence of any event
described in the foregoing clauses (ii) or (iii), for so long as such
circumstances shall continue, the Lenders shall be under no obligation to make
any new LIBO Rate Fundings.

 

(D)           ILLEGALITY. IF ANY CHANGE IN (INCLUDING THE ADOPTION OF ANY NEW)
APPLICABLE LAWS OR REGULATIONS, OR ANY CHANGE IN THE INTERPRETATION OF
APPLICABLE LAWS OR REGULATIONS BY ANY GOVERNMENTAL AUTHORITY, CENTRAL BANK,
COMPARABLE AGENCY OR ANY OTHER REGULATORY BODY CHARGED WITH THE INTERPRETATION,
IMPLEMENTATION OR ADMINISTRATION THEREOF, OR COMPLIANCE BY ANY LENDER WITH ANY
REQUEST OR DIRECTIVE (WHETHER OR NOT HAVING THE FORCE OF LAW) OF ANY SUCH
AUTHORITY, CENTRAL BANK, COMPARABLE AGENCY OR OTHER REGULATORY BODY, SHOULD MAKE
IT OR, IN THE GOOD FAITH JUDGMENT OF THAT LENDER, SHALL RAISE A SUBSTANTIAL
QUESTION AS TO WHETHER IT IS UNLAWFUL FOR THAT LENDER TO MAKE, MAINTAIN OR FUND
LIBO RATE FUNDINGS, THEN (I) THAT LENDER SHALL PROMPTLY NOTIFY THE BORROWER AND
THE ADMINISTRATIVE AGENT, (II) THE OBLIGATION OF THE LENDERS TO MAKE, MAINTAIN
OR CONVERT INTO LIBO RATE FUNDINGS SHALL, UPON THE EFFECTIVENESS OF SUCH EVENT,
BE SUSPENDED FOR THE DURATION OF SUCH UNLAWFULNESS (AND TO THE EXTENT IT SHALL
BE UNLAWFUL FOR ONE OR MORE OF THE LENDERS TO MAINTAIN ANY SUCH LIBO RATE
FUNDINGS, SUCH LIBO RATE FUNDINGS SHALL BE IMMEDIATELY CONVERTED TO FLOATING
RATE FUNDINGS), AND (III)  FOR THE DURATION OF SUCH UNLAWFULNESS, ANY NOTICE BY
THE BORROWER REQUESTING THE LENDERS TO MAKE OR CONVERT INTO LIBO RATE FUNDINGS
SHALL BE CONSTRUED AS A REQUEST TO MAKE OR TO CONTINUE MAKING FLOATING RATE
FUNDINGS.

 

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SECTION 2.11         FUNDING LOSSES.

 

Upon demand by any Lender (which demand shall be accompanied by a statement
setting forth the basis for the calculations of the amount being claimed), the
Borrower shall indemnify that Lender against any loss or expense which that
Lender may have sustained or incurred (including, without limitation, any net
loss or expense incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by that Lender to fund or maintain LIBO Rate
Fundings) or which that Lender may be deemed to have sustained or incurred, as
reasonably determined by that Lender, (i) as a consequence of any failure by the
Borrower to make any payment when due of any amount due hereunder in connection
with any LIBO Rate Fundings, (ii) due to any failure of the Borrower to borrow
or convert any LIBO Rate Fundings on a date specified therefor in a notice
thereof or (iii) due to any payment or prepayment of any LIBO Rate Funding on a
date other than the last day of the applicable Interest Period for such LIBO
Rate Funding. For this purpose, all notices under Section 2.4(b) shall be deemed
to be irrevocable.

 

SECTION 2.12         DISCRETION OF LENDERS AS TO MANNER OF FUNDING.

 

Notwithstanding any provision of this Agreement to the contrary, each Lender
shall be entitled to fund and maintain all or any part of its LIBO Rate Fundings
in any manner it deems fit, it being understood, however, that for the purposes
of this Agreement (specifically including, without limitation, Section 2.11
hereof) all determinations hereunder shall be made as if that Lender had
actually funded and maintained each LIBO Rate Funding during each Interest
Period for such LIBO Rate Funding through the purchase of deposits having a
maturity corresponding to such Interest Period and bearing an interest rate
equal to the appropriate LIBO Rate for such Interest Period.

 

SECTION 2.13         CONCLUSIVENESS OF STATEMENTS; SURVIVAL OF PROVISIONS.

 

Determinations and statements of any Lender pursuant to Section 2.10 and 2.11
shall be conclusive absent demonstrable error. Without limiting the generality
of the foregoing, the Borrower shall have no right to review any records of any
Lender or its other customers to determine the accuracy of any statement by that
Lender under Section 2.10(a) or 2.10(b) regarding that Lender’s demands upon
other customers of that Lender.  Each Lender may use reasonable averaging and
attribution methods in determining compensation pursuant to such Sections 2.10
and 2.11 and the provisions of Sections 2.10 and 2.11 shall survive termination
of this Agreement.

 

SECTION 2.14         COMPUTATION OF INTEREST AND FEES.

 

Interest under the Notes and the fees hereunder shall be computed on the basis
of actual number of days elapsed in a year of 360 days.

 

ARTICLE III
CONDITIONS PRECEDENT

 

SECTION 3.1            INITIAL CONDITIONS PRECEDENT.

 

The obligation of the Lender Parties to effect any Borrowing or to issue any
Letter of Credit is subject to the condition precedent that the Administrative
Agent shall have received on or before

 

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the day of the first Borrowing or Letter of Credit all of the following, each
dated (unless otherwise indicated) as of the date hereof, in form and substance
satisfactory to each Lender:

 

(A)           THE NOTES, PROPERLY EXECUTED ON BEHALF OF THE BORROWER.

 

(B)           THE GUARANTY, DULY EXECUTED BY EACH SUBSIDIARY OBLIGOR.

 

(C)           THE SECURITY AGREEMENT, PROPERLY EXECUTED ON BEHALF OF EACH
OBLIGOR, TOGETHER (SUBJECT TO SECTION 3.3) WITH:

 

(I)            FINANCING STATEMENTS WITH RESPECT TO EACH OBLIGOR TO BE FILED IN
EACH JURISDICTION WHICH, IN THE OPINION OF THE ADMINISTRATIVE AGENT, IS
REASONABLY NECESSARY TO PERFECT THE LIENS CREATED BY THE SECURITY AGREEMENT, TO
THE EXTENT SUCH LIENS CAN BE PERFECTED BY FILING.

 

(II)           CURRENT SEARCHES OF APPROPRIATE FILING OFFICES IN EACH
JURISDICTION IN WHICH ANY OBLIGOR IS ORGANIZED, HAS AN OFFICE OR OTHERWISE
CONDUCTS BUSINESS SHOWING THAT NO STATE OR FEDERAL TAX LIENS HAVE BEEN FILED AND
REMAIN IN EFFECT AGAINST THE BORROWER OR ANY SUBSIDIARY, AND THAT NO FINANCING
STATEMENTS OR OTHER NOTIFICATIONS OR FILINGS HAVE BEEN FILED AND REMAIN IN
EFFECT AGAINST THE BORROWER OR ANY SUBSIDIARY EXCEPT (A) TO PERFECT LIENS NOT
PROHIBITED UNDER SECTION 6.1, AND (B) AS SET FORTH IN SCHEDULE 4.11.

 

(III)          ORIGINAL STOCK CERTIFICATES (OR OTHER APPLICABLE EVIDENCE OF
OWNERSHIP) EVIDENCING ALL ISSUED AND OUTSTANDING CAPITAL STOCK OF EACH
SUBSIDIARY OBLIGOR AND NOT LESS THAN 65% OF THE CAPITAL STOCK OF EACH APPLICABLE
FOREIGN SUBSIDIARY, TOGETHER WITH STOCK POWERS EXECUTED IN BLANK BY THE
APPLICABLE OWNER OF SUCH CAPITAL STOCK.

 

(IV)          EVIDENCE OF ALL INSURANCE REQUIRED BY THE TERMS OF THE SECURITY
AGREEMENT, INCLUDING BUT NOT LIMITED TO CERTIFICATES AND LOSS PAYABLE
ENDORSEMENTS SHOWING THE ADMINISTRATIVE AGENT, FOR THE BENEFIT OF THE LENDER
PARTIES, AS ADDITIONAL INSURED AND LENDER’S LOSS PAYEE THEREUNDER.

 

(D)           FINANCIAL STATEMENTS OF THE BORROWER FOR THE 12-MONTH PERIOD
ENDING MARCH 31, 2008, TOGETHER WITH A COMPLIANCE CERTIFICATE WITH RESPECT TO
SUCH FINANCIAL STATEMENTS, DULY EXECUTED BY THE CHIEF FINANCIAL OFFICER OF THE
BORROWER.

 

(E)           A CERTIFICATE OF THE SECRETARY OF EACH OBLIGOR (I) CERTIFYING THAT
THE EXECUTION, DELIVERY AND PERFORMANCE OF THE LOAN DOCUMENTS AND OTHER
DOCUMENTS CONTEMPLATED HEREUNDER TO WHICH SUCH OBLIGOR IS A PARTY HAVE BEEN DULY
APPROVED BY ALL NECESSARY ACTION OF THE GOVERNING BOARD OF SUCH OBLIGOR, AND
ATTACHING TRUE AND CORRECT COPIES OF THE APPLICABLE RESOLUTIONS GRANTING SUCH
APPROVAL, (II) CERTIFYING THAT ATTACHED TO SUCH CERTIFICATE ARE TRUE AND CORRECT
COPIES OF THE ORGANIZATIONAL DOCUMENTS OF SUCH OBLIGOR, TOGETHER WITH SUCH
COPIES, AND (III) CERTIFYING THE NAMES OF THE OFFICERS OF SUCH OBLIGOR THAT ARE
AUTHORIZED TO SIGN THE LOAN DOCUMENTS AND OTHER DOCUMENTS CONTEMPLATED
HEREUNDER, INCLUDING (IN THE CASE OF THE BORROWER) REQUESTS FOR BORROWINGS AND
LETTERS OF CREDIT, TOGETHER WITH THE TRUE SIGNATURES OF SUCH OFFICERS. THE
LENDER PARTIES MAY CONCLUSIVELY RELY ON SUCH CERTIFICATE UNTIL THEY SHALL
RECEIVE A FURTHER

 

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CERTIFICATE OF THE SECRETARY OR ASSISTANT SECRETARY OF SUCH OBLIGOR CANCELING OR
AMENDING THE PRIOR CERTIFICATE AND SUBMITTING THE SIGNATURES OF THE OFFICERS
NAMED IN SUCH FURTHER CERTIFICATE.

 

(F)            CERTIFICATES OF GOOD STANDING OF EACH OBLIGOR, DATED NOT MORE
THAN TEN DAYS BEFORE SUCH DATE.

 

(G)           A SIGNED COPY OF AN OPINION OF COUNSEL FOR THE BORROWER, ADDRESSED
TO THE LENDER PARTIES AS TO MATTERS REFERRED TO IN SECTIONS 4.1, 4.2, 4.3 AND
4.7, AND AS TO SUCH OTHER MATTERS AS THE LENDER PARTIES MAY REASONABLY REQUEST,
WITH THAT OPINION BEING ACCEPTABLE TO EACH LENDER’S COUNSEL.  IN THE CASE OF
SECTION 4.7, THE OPINION MAY BE TO THE KNOWLEDGE OF SUCH COUNSEL AND MAY BE MADE
WITHOUT REGARD TO PRODUCTS LIABILITY AND INTELLECTUAL PROPERTY LITIGATION, AND,
IN THE CASE OF SECTION 4.3, INSOFAR AS IT RELATES TO ENFORCEMENT OF REMEDIES, IT
MAY BE SUBJECT TO APPLICABLE BANKRUPTCY, INSOLVENCY, REORGANIZATION OR SIMILAR
LAWS AFFECTING THE RIGHTS OF CREDITORS GENERALLY FROM TIME TO TIME, AND TO USUAL
EQUITY PRINCIPLES.

 

(H)           ALL FEES REQUIRED TO BE PAID AS OF THE DATE HEREOF UNDER THIS
AGREEMENT OR ANY FEE LETTER.

 

SECTION 3.2            CONDITIONS PRECEDENT TO ALL BORROWINGS AND LETTERS OF
CREDIT.

 

The obligation of the Lender Parties to effect any Borrowing or to issue any
Letter of Credit shall be subject to the further conditions precedent that on
the date of such Borrowing or Letter of Credit:

 

(A)           THE REPRESENTATIONS AND WARRANTIES CONTAINED IN ARTICLE IV ARE
CORRECT ON AND AS OF THE DATE OF SUCH BORROWING OR LETTER OF CREDIT AS THOUGH
MADE ON AND AS OF SUCH DATE, EXCEPT TO THE EXTENT THAT SUCH REPRESENTATIONS AND
WARRANTIES RELATE SOLELY TO AN EARLIER DATE; AND

 

(B)           NO EVENT HAS OCCURRED AND IS CONTINUING, OR WOULD RESULT FROM SUCH
BORROWING OR LETTER OF CREDIT, WHICH CONSTITUTES A DEFAULT OR AN EVENT OF
DEFAULT.

 

SECTION 3.3            PERFECTION OF CAPITAL STOCK OF APPLICABLE FOREIGN
SUBSIDIARIES.

 

Notwithstanding any other term of this Agreement or any other Loan Document,
perfection of the Administrative Agent’s security interest in the Capital Stock
(or any portion thereof) of any Applicable Foreign Subsidiary shall not be a
condition precedent to any Borrowing or Letter of Credit, and the Borrower shall
not be required to effect such perfection, unless, not less than 15 days before
the date of such Borrowing or Letter of Credit, the Administrative Agent has
delivered notice to the Borrower requiring such perfection.

 

ARTICLE IV
REPRESENTATIONS AND WARRANTIES

 

The Borrower represents and warrants to the Lender Parties as follows:

 

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SECTION 4.1            EXISTENCE AND POWER.

 

The Borrower and its Subsidiaries are each corporations or limited liability
companies duly organized, validly existing and in good standing under the laws
of their respective jurisdictions of incorporation, and are each duly licensed
or qualified to transact business in all jurisdictions where the character of
the property owned or leased or the nature of the business transacted by it
makes such licensing or qualification necessary.  Each of the Borrower and its
Subsidiaries has all requisite power and authority, corporate or otherwise, to
conduct its business, to own its properties and to execute and deliver, and to
perform all of its obligations under, the Loan Documents to which it is a party.

 

SECTION 4.2            AUTHORIZATION OF BORROWING; NO CONFLICT AS TO LAW OR
AGREEMENTS.

 

The execution, delivery and performance by the Obligors of the Loan Documents
and the borrowings from time to time hereunder have been duly authorized by all
necessary corporate or limited liability company action and do not and will not
(i) require any consent or approval of the shareholders or members of the
Obligors, or any authorization, consent or approval by any governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, (ii) violate any provision of any law, rule or regulation (including,
without limitation, Regulation X of the Board of Governors of the Federal
Reserve System) or of any order, writ, injunction or decree presently in effect
having applicability to any Obligor or of the Organizational Documents of any
Obligor, (iii) result in a breach of or constitute a default under any indenture
or loan or credit agreement or any other agreement, lease or instrument to which
any Obligor is a party or by which it or its properties may be bound or
affected, or (iv) result in, or require, the creation or imposition of any Lien
or other charge or encumbrance of any nature upon or with respect to any of the
properties now owned or hereafter acquired by any Obligor.

 

SECTION 4.3            LEGAL AGREEMENTS.

 

This Agreement and the other Loan Documents constitute, the legal, valid and
binding obligations of the Obligors that are parties thereto, enforceable
against such Obligors in accordance with their respective terms.

 

SECTION 4.4            SUBSIDIARIES.

 

Schedule 4.4 hereto is a complete and correct list of all present Subsidiaries
and of the percentage of the ownership of the Borrower or any other Subsidiary
in each as of the date of this Agreement.  Except as otherwise indicated in that
Schedule, all Capital Stock of each Subsidiary owned by the Borrower or by any
such other Subsidiary is validly issued and fully paid and nonassessable.

 

SECTION 4.5            FINANCIAL CONDITION.

 

The Borrower has heretofore furnished to the Administrative Agent its audited
financial statement as of March 31, 2008. That financial statement fairly
presents the financial condition of the Borrower and its Subsidiaries on the
date thereof and the results of their operations and cash flows for the period
then ended, and was prepared in accordance with GAAP.

 

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SECTION 4.6            ADVERSE CHANGE.

 

There has been no material adverse change in the business, properties or
condition (financial or otherwise) of the Borrower or any Subsidiary since the
date of the latest financial statement referred to in Section 4.5.

 

SECTION 4.7            LITIGATION.

 

There are no actions, suits or proceedings pending or, to the knowledge of the
Borrower, threatened against or affecting the Borrower or any Subsidiary or the
properties of the Borrower or any Subsidiary before any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, which, if determined adversely to the Borrower or that Subsidiary,
could reasonably be expected to have a Material Adverse Effect.

 

SECTION 4.8            HAZARDOUS SUBSTANCES.

 

To the best of the Borrower’s knowledge after reasonable inquiry, neither the
Borrower nor any Subsidiary nor any other Person has ever caused or permitted
any Hazardous Substance to be disposed of in any manner which might result in
any material liability to the Borrower or any Subsidiary on, under or at any
real property which is operated by the Borrower or any Subsidiary or in which
the Borrower or any Subsidiary has any interest; and no such real property has
ever been used (either by the Borrower, by any Subsidiary or by any other
Person) as a dump site or permanent or temporary storage site for any Hazardous
Substance (other than the temporary storage of products used or consumed in the
ordinary course of the Borrower’s business in accordance with all applicable
Environmental Laws).

 

SECTION 4.9            REGULATION U.

 

The Borrower is not engaged in the business of extending credit for the purpose
of purchasing or carrying margin stock (within the meaning of Regulation U of
the Board of Governors of the Federal Reserve System), and no part of the
proceeds of any Borrowing will be used to purchase or carry any margin stock or
to extend credit to others for the purpose of purchasing or carrying any margin
stock.

 

SECTION 4.10         TAXES.

 

The Borrower and its Subsidiaries have each paid or caused to be paid to the
proper authorities when due all federal, state and local taxes required to be
withheld by them.  The Borrower and its Subsidiaries have each filed all
federal, state and local tax returns which to the knowledge of the officers of
the Borrower are required to be filed, and the Borrower and its Subsidiaries
have each paid or caused to be paid to the respective taxing authorities all
taxes as shown on said returns or on any assessment received by them to the
extent such taxes have become due, other than taxes whose amount, applicability
or validity is being contested in good faith by appropriate proceedings and for
which the Borrower or the applicable Subsidiary has provided adequate reserves
in accordance with GAAP.

 

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SECTION 4.11         TITLES AND LIENS.

 

The Borrower or one of its Subsidiaries has good title to each of the properties
and assets reflected in the latest balance sheet referred to in Section 4.5
(other than any sold, as permitted by Section 6.5), free and clear of all Liens,
except for Liens permitted by Section 6.1 and covenants, restrictions, rights,
easements and minor irregularities in title which do not materially interfere
with the business or operations of the Borrower or such Subsidiary as presently
conducted.  Except as set forth in Schedule 4.11, no financing statement naming
the Borrower or any Subsidiary as debtor is on file in any office except to
perfect only Liens permitted by Section 6.1.

 

SECTION 4.12         ERISA.

 

No Plan established or maintained by the Borrower, any Subsidiary or any ERISA
Affiliate that is subject to Part 3 of Subtitle B of Title I of ERISA had an
accumulated funding deficiency (as such term is defined in Section 302 of ERISA)
in excess of $1,000,000 as of the last day of the most recent fiscal year of
such Plan ended prior to the date hereof, and no liability to the Pension
Benefit Guaranty Corporation or the Internal Revenue Service in excess of such
amount has been, or is expected by the Borrower, any Subsidiary or any ERISA
Affiliate to be, incurred with respect to any Plan of the Borrower, any
Subsidiary or any ERISA Affiliate.  The Borrower has no contingent liability
with respect to any post-retirement benefit under a Welfare Plan, other than
liability for continuation coverage described in Part 6 of Subtitle B of Title I
of ERISA.

 

ARTICLE V
AFFIRMATIVE COVENANTS

 

So long as any Note or any other Obligations shall remain unpaid or the
Revolving Facility shall be outstanding, the Borrower will comply with the
following requirements, unless the Required Lenders shall otherwise consent in
writing:

 

SECTION 5.1            REPORTING.

 

The Borrower will deliver to the Administrative Agent, with sufficient copies
for each Lender:

 

(A)           AS SOON AS AVAILABLE, AND IN ANY EVENT WITHIN 75 DAYS AFTER THE
END OF EACH FISCAL YEAR OF THE BORROWER (OR, IF EARLIER, CONCURRENT WITH THE
FILING OF THE BORROWER’S ANNUAL REPORT ON FORM 10-K WITH THE SECURITIES AND
EXCHANGE COMMISSION WITH RESPECT TO SUCH YEAR), A COPY OF THE ANNUAL AUDIT
REPORT OF THE BORROWER PREPARED ON A CONSOLIDATED BASIS WITH THE UNQUALIFIED
OPINION OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS SELECTED BY THE BORROWER AND
ACCEPTABLE TO THE REQUIRED LENDERS, WHICH ANNUAL REPORT SHALL INCLUDE THE
CONSOLIDATED BALANCE SHEET OF THE BORROWER AND ITS SUBSIDIARIES AS AT THE END OF
SUCH FISCAL YEAR AND THE RELATED CONSOLIDATED STATEMENTS OF INCOME,
SHAREHOLDERS’ EQUITY AND CASH FLOWS OF THE BORROWER AND ITS SUBSIDIARIES FOR THE
FISCAL YEAR THEN ENDED, ALL IN REASONABLE DETAIL AND ALL PREPARED IN ACCORDANCE
WITH GAAP, TOGETHER WITH A COPY OF SUCH ACCOUNTANTS’ MANAGEMENT LETTER ISSUED TO
THE BORROWER FOR SUCH YEAR.

 

(B)           AS SOON AS AVAILABLE AND IN ANY EVENT WITHIN 40 DAYS AFTER THE END
OF EACH FISCAL QUARTER OF THE BORROWER (OR, IF EARLIER, CONCURRENT WITH THE
FILING OF THE BORROWER’S

 

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QUARTERLY REPORT ON FORM 10-Q WITH THE SECURITIES AND EXCHANGE COMMISSION WITH
RESPECT TO SUCH QUARTER), CONSOLIDATED BALANCE SHEETS OF THE BORROWER AND ITS
SUBSIDIARIES AS AT THE END OF SUCH QUARTER AND RELATED CONSOLIDATED STATEMENTS
OF EARNINGS AND CASH FLOWS OF THE BORROWER AND ITS SUBSIDIARIES FOR SUCH QUARTER
AND FOR THE YEAR TO DATE, IN REASONABLE DETAIL AND STATING IN COMPARATIVE FORM
THE FIGURES FOR THE CORRESPONDING DATE AND PERIOD IN THE PREVIOUS YEAR, ALL
PREPARED IN ACCORDANCE WITH GAAP, AND CERTIFIED BY THE CHIEF FINANCIAL OFFICER
OF THE BORROWER, SUBJECT TO YEAR-END AUDIT ADJUSTMENTS.

 

(C)           AS SOON AS AVAILABLE AND IN ANY EVENT WITHIN 30 DAYS AFTER THE END
OF EACH CALENDAR MONTH:

 

(I)            CONSOLIDATED BALANCE SHEETS OF THE BORROWER AND ITS SUBSIDIARIES
AS AT THE END OF SUCH MONTH AND RELATED CONSOLIDATED STATEMENTS OF EARNINGS OF
THE BORROWER AND ITS SUBSIDIARIES FOR SUCH MONTH AND FOR THE YEAR TO DATE, IN
REASONABLE DETAIL AND STATING IN COMPARATIVE FORM THE FIGURES FOR THE
CORRESPONDING DATE AND PERIOD IN THE PREVIOUS YEAR, ALL PREPARED IN ACCORDANCE
WITH GAAP, AND CERTIFIED BY THE CHIEF FINANCIAL OFFICER OF THE BORROWER, SUBJECT
TO YEAR-END AUDIT ADJUSTMENTS.

 

(II)           A PLAN AND FINANCIAL FORECAST FOR THE 12-MONTH PERIOD COMMENCING
WITH THE MONTH FOLLOWING SUCH MONTH, INCLUDING (A) A FORECASTED CONSOLIDATED
BALANCE SHEET, FORECASTED CONSOLIDATED AND CONSOLIDATING STATEMENTS OF INCOME,
AND (B) FORECASTED FINANCING NEEDS DURING SUCH PERIOD (INCLUDING A FORECAST OF
BORROWINGS HEREUNDER), ALL PRESENTED ON A MONTH-BY-MONTH BASIS IN SUCH DETAIL AS
THE ADMINISTRATIVE AGENT MAY REASONABLY REQUEST.

 

(D)           CONCURRENT WITH THE DELIVERY OF ANY FINANCIAL STATEMENTS UNDER
PARAGRAPH (A), (B) OR (C), A COMPLIANCE CERTIFICATE, DULY EXECUTED BY THE CHIEF
FINANCIAL OFFICER OF THE BORROWER.

 

(E)           PROMPTLY UPON ENTERING ANY AMENDMENT TO OR MODIFICATION OF ANY
DEALER FINANCE AGREEMENT, A COPY OF SUCH AMENDMENT OR MODIFICATION.

 

(F)            PROMPTLY UPON THEIR DISTRIBUTION, COPIES OF ALL FINANCIAL
STATEMENTS, REPORTS AND PROXY STATEMENTS WHICH THE BORROWER OR ANY SUBSIDIARY
SHALL HAVE SENT TO ITS STOCKHOLDERS.

 

(G)           PROMPTLY AFTER THE SENDING OR FILING THEREOF, COPIES OF ALL
REGULAR AND PERIODIC FINANCIAL REPORTS WHICH THE BORROWER OR ANY SUBSIDIARY
SHALL FILE WITH THE SECURITIES AND EXCHANGE COMMISSION OR ANY NATIONAL
SECURITIES EXCHANGE.

 

(H)           IMMEDIATELY AFTER THE COMMENCEMENT THEREOF, NOTICE IN WRITING OF
ALL LITIGATION AND OF ALL PROCEEDINGS BEFORE ANY GOVERNMENTAL OR REGULATORY
AGENCY AFFECTING THE BORROWER OR ANY SUBSIDIARY OF THE TYPE DESCRIBED IN
SECTION 4.7.

 

(I)            AS PROMPTLY AS PRACTICABLE (BUT IN ANY EVENT NOT LATER THAN FIVE
BUSINESS DAYS) AFTER THE CHIEF EXECUTIVE OFFICER OR THE CHIEF FINANCIAL OFFICER
OF THE BORROWER OBTAINS KNOWLEDGE OF THE OCCURRENCE OF ANY DEFAULT OR EVENT OF
DEFAULT, NOTICE OF SUCH OCCURRENCE, TOGETHER WITH A DETAILED STATEMENT BY A
RESPONSIBLE OFFICER OF THE BORROWER OR

 

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THE APPROPRIATE SUBSIDIARY OF THE STEPS BEING TAKEN BY THE BORROWER OR THE
APPROPRIATE SUBSIDIARY TO CURE THE EFFECT OF SUCH EVENT.

 

(J)            PROMPTLY UPON BECOMING AWARE OF ANY REPORTABLE EVENT OR ANY
PROHIBITED TRANSACTION (AS DEFINED IN SECTION 4975 OF THE CODE OR SECTION 406 OF
ERISA) IN CONNECTION WITH ANY PLAN OR ANY TRUST CREATED THEREUNDER, A WRITTEN
NOTICE SPECIFYING THE NATURE THEREOF, WHAT ACTION THE BORROWER HAS TAKEN, IS
TAKING OR PROPOSES TO TAKE WITH RESPECT THERETO, AND, WHEN KNOWN, ANY ACTION
TAKEN OR THREATENED BY THE INTERNAL REVENUE SERVICE, THE PENSION BENEFIT
GUARANTY CORPORATION OR THE DEPARTMENT OF LABOR WITH RESPECT THERETO.

 

(K)           PROMPTLY UPON THEIR RECEIPT OR FILING, COPIES OF (I) ALL NOTICES
RECEIVED BY THE BORROWER, ANY SUBSIDIARY OR ANY ERISA AFFILIATE OF THE PENSION
BENEFIT GUARANTY CORPORATION’S INTENT TO TERMINATE ANY PLAN OR TO HAVE A TRUSTEE
APPOINTED TO ADMINISTER ANY PLAN, AND (II) ALL NOTICES RECEIVED BY THE BORROWER,
ANY SUBSIDIARY OR ANY ERISA AFFILIATE FROM A MULTIEMPLOYER PLAN CONCERNING THE
IMPOSITION OR AMOUNT OF WITHDRAWAL LIABILITY PURSUANT TO SECTION 4202 OF ERISA.

 

(L)            UPON REQUEST OF ANY LENDER, COPIES OF THE MOST RECENT ANNUAL
REPORT (FORM 5500 SERIES), INCLUDING ANY SUPPORTING SCHEDULES, FILED BY THE
BORROWER, ANY SUBSIDIARY OR ANY ERISA AFFILIATE WITH THE INTERNAL REVENUE
SERVICE WITH RESPECT TO ANY PLAN.

 

(M)          SUCH INFORMATION (IN ADDITION TO THAT SPECIFIED ELSEWHERE IN THIS
SECTION) RESPECTING THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF THE
BORROWER OR ANY SUBSIDIARY AS ANY LENDER MAY FROM TIME TO TIME REASONABLY
REQUEST.

 

Documents required to be delivered pursuant to Sections 5.1(a) and 5.1(b) (to
the extent any such documents are included in materials otherwise filed with the
Securities and Exchange Commission) may be delivered electronically and, if so
delivered, shall be deemed to have been delivered on the date (i) on which the
Borrower posts such documents on www.sec.gov, or provides a link thereto on the
Borrower’s website at www.arcticcatinc.com; or (ii) on which such documents are
posted on the Borrower’s behalf on IntraLinks/IntraAgency or another relevant
website, if any, to which each Lender and the Administrative Agent have ready
access without charge (whether a commercial, third-party website or whether
sponsored by the Administrative Agent), in each case so long as, concurrent
therewith, the Borrower provides each Lender and the Administrative Agent with
e-mail or other notice alerting them to such posting, together with any
additional materials required to be delivered therewith, including but not
limited to any Compliance Certificate required to be provided in accordance with
Section 5.1(d); provided that the Borrower shall deliver paper copies of such
documents to any Lender that requests the Borrower to deliver such paper copies.

 

SECTION 5.2            BOOKS AND RECORDS; INSPECTION AND EXAMINATION.

 

The Borrower will keep, and will cause each Subsidiary to keep, accurate books
of record and account for itself in which true and complete entries will be made
in accordance with GAAP and, upon request of any Lender, will, and will cause
each Subsidiary to, give any representative of that Lender access to, and permit
such representative to examine, copy or make extracts from,

 

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any and all books, records and documents in its possession, to inspect any of
its properties and to discuss its affairs, finances and accounts with any of its
principal officers, all at such times during normal business hours and as often
as any Lender may reasonably request.

 

SECTION 5.3            COMPLIANCE WITH LAWS.

 

The Borrower will, and will cause each Subsidiary to, comply with the
requirements of applicable laws and regulations, the noncompliance with which
would have a Material Adverse Effect.

 

SECTION 5.4            PAYMENT OF TAXES AND OTHER CLAIMS.

 

The Borrower will pay or discharge, and will cause each Subsidiary to pay or
discharge, when due, (a) all taxes, assessments and governmental charges levied
or imposed upon it or upon its income or profits, or upon any properties
belonging to it, prior to the date on which penalties attach thereto, (b) all
federal, state and local taxes required to be withheld by it, and (c) all lawful
claims for labor, materials and supplies which, if unpaid, might by law become a
Lien or charge upon any properties of the Borrower or any Subsidiary; provided,
that neither the Borrower nor any Subsidiary shall be required to pay any such
tax, assessment, charge or claim whose amount, applicability or validity is
being contested in good faith by appropriate proceedings and for which the
Borrower or such Subsidiary has provided adequate reserves in accordance with
GAAP.

 

SECTION 5.5            MAINTENANCE OF PROPERTIES.

 

The Borrower will keep and maintain, and will cause each Subsidiary to keep and
maintain, all of its properties necessary or useful in its business in good
condition, repair and working order; provided, however, that nothing in this
Section shall prevent the Borrower or any Subsidiary from discontinuing the
operation and maintenance of any of its properties if such discontinuance is, in
the judgment of the Borrower or the appropriate Subsidiary, desirable in the
conduct of its business, not disadvantageous in any material respect to any
Lender as holder of the Notes and will not result in a Material Adverse Effect.

 

SECTION 5.6            INSURANCE.

 

The Borrower will, and will cause each Subsidiary to, obtain and maintain
insurance with insurers believed by the Borrower to be responsible and
reputable, in such amounts and against such risks as is usually carried by
companies engaged in similar business and owning similar properties in the same
general areas in which the Borrower or such Subsidiary operates.

 

SECTION 5.7            PRESERVATION OF CORPORATE EXISTENCE.

 

The Borrower will, and will cause each Subsidiary to, preserve and maintain its
corporate existence and all of its rights, privileges and franchises; provided,
however, that neither the Borrower nor any Subsidiary shall be required to
preserve any of its rights, privileges and franchises if its Governing Board
shall determine that the preservation thereof is no longer desirable in the
conduct of the business of the Borrower or the appropriate Subsidiary, that the
loss thereof is not disadvantageous in any material respect to any Lender as a
holder of the Notes and will not result in a Material Adverse Effect.

 

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SECTION 5.8            NEW SUBSIDIARIES.

 

If the Borrower acquires or creates any Subsidiary, other than an Applicable
Foreign Subsidiary, the Borrower will cause such Subsidiary to execute and
deliver to the Administrative Agent, (i) a joinder to the Guaranty and Security
Agreement, in form and content acceptable to the Administrative Agent, (ii) a
certificate of the secretary or other appropriate officer of such Subsidiary
(A) certifying that the execution, delivery and performance of that joinder have
been duly approved by all necessary action of the Governing Board of such
Subsidiary, and attaching true and correct copies of the applicable resolutions
granting such approval, (B) certifying that attached to such certificate are
true and correct copies of the Organizational Documents of such Subsidiary,
together with such copies, and (C) certifying the names of the officers of such
Subsidiary that are authorized to sign that joinder; and (iii) an opinion of
counsel to the Subsidiary, opining as to the due execution, delivery and
enforceability of such joinder, and of the enforceability of the Guaranty and
Security Agreement as to such Subsidiary, in form and substance reasonably
acceptable to the Administrative Agent.

 

SECTION 5.9            ASSET COVERAGE RATIO.

 

The Borrower will maintain its Asset Coverage Ratio, determined as of the last
day of each calendar month, at not less than 1.25 to 1.

 

SECTION 5.10         MINIMUM EBITDA.

 

The Borrower will maintain its EBITDA, determined as of each Covenant
Calculation Date, at not less than the applicable amount set forth below:

 

Covenant Calculation Date

 

EBITDA

 

September 30, 2008

 

$

15,000,000

 

December 31, 2008

 

$

27,500,000

 

 

SECTION 5.11         MINIMUM TANGIBLE NET WORTH.

 

The Borrower will maintain Tangible Net Worth, determined as of each Covenant
Calculation Date, in an amount not less than $150,000,000.

 

ARTICLE VI
NEGATIVE COVENANTS

 

So long as any Note or other Obligations shall remain unpaid or the Revolving
Facility shall be outstanding, the Borrower agrees that, without the prior
written consent of the Required Lenders:

 

SECTION 6.1            LIENS.

 

The Borrower will not, and will not permit any Subsidiary to, create, incur,
assume or suffer to exist any Lien or other charge or encumbrance of any nature
on any of its assets, now owned or hereafter acquired, or assign or otherwise
convey any right to receive income or give its consent to the subordination of
any right or claim of the Borrower or any Subsidiary to any right or claim of
any other Person; excluding, however, from the operation of the foregoing:

 

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(A)           LIENS FOR TAXES OR ASSESSMENTS OR OTHER GOVERNMENTAL CHARGES TO
THE EXTENT NOT REQUIRED TO BE PAID BY SECTION 5.4.

 

(B)           LIENS IN FAVOR OF CUSTOMS AND REVENUE AUTHORITIES ARISING AS A
MATTER OF LAW TO SECURE PAYMENT OF CUSTOMS DUTIES IN CONNECTION WITH THE
IMPORTATION OF GOODS, MATERIALMEN’S, MERCHANTS’, CARRIERS’, WORKERS’, REPAIRERS’
OR OTHER LIKE LIENS ARISING IN THE ORDINARY COURSE OF BUSINESS TO THE EXTENT NOT
REQUIRED TO BE PAID BY SECTION 5.4.

 

(C)           PLEDGES OR DEPOSITS TO SECURE OBLIGATIONS UNDER WORKER’S
COMPENSATION LAWS, UNEMPLOYMENT INSURANCE AND SOCIAL SECURITY LAWS, OR TO SECURE
THE PERFORMANCE OF BIDS, TENDERS, CONTRACTS (OTHER THAN FOR THE REPAYMENT OF
BORROWED MONEY) OR LEASES OR TO SECURE STATUTORY OBLIGATIONS OR SURETY OR APPEAL
BONDS, OR TO SECURE INDEMNITY, PERFORMANCE OR OTHER SIMILAR BONDS IN THE
ORDINARY COURSE OF BUSINESS.

 

(D)           ZONING RESTRICTIONS, EASEMENTS, LICENSES, RESTRICTIONS ON THE USE
OF REAL PROPERTY OR MINOR IRREGULARITIES IN TITLE THERETO, WHICH DO NOT
MATERIALLY IMPAIR THE USE OF SUCH PROPERTY IN THE OPERATION OF THE BUSINESS OF
THE BORROWER OR ANY SUBSIDIARY OR THE VALUE OF SUCH PROPERTY FOR THE PURPOSE OF
SUCH BUSINESS.

 

(E)           PURCHASE MONEY LIENS (INCLUDING CAPITALIZED LEASES), SO LONG AS
THE AGGREGATE AMOUNT OF ALL DEBTS SECURED BY SUCH PURCHASE MONEY LIENS DOES NOT
EXCEED $1,000,000 AT ANY ONE TIME OUTSTANDING.

 

(F)            LIENS CREATED BY ANY SUBSIDIARY OBLIGOR AS SECURITY FOR
INDEBTEDNESS OWING TO ANOTHER OBLIGOR.

 

(G)           LIENS ON ANY PROPERTY OF ANY OBLIGOR (OTHER THAN THOSE DESCRIBED
IN SUBSECTION (E) AND (F)) SECURING ANY INDEBTEDNESS FOR BORROWED MONEY IN
EXISTENCE ON THE DATE HEREOF AND LISTED IN SCHEDULE 6.1 HERETO, AND LIENS ON THE
SAME PROPERTY SECURING INDEBTEDNESS THE PROCEEDS OF WHICH ARE USED SOLELY TO
REFINANCE THE INDEBTEDNESS FOR BORROWED MONEY SECURED BY SUCH EXISTING LIENS.

 

(H)           LIENS GRANTED TO THE ADMINISTRATIVE AGENT PURSUANT TO THE SECURITY
AGREEMENT.

 

(I)            LIENS GRANTED UNDER THE DEALER FINANCE AGREEMENTS TO TEXTRON
FINANCIAL CORPORATION AND TEXTRON FINANCIAL CANADA LIMITED, BUT ONLY SO LONG AS
(I) SUCH LIENS SECURE ONLY OBLIGATIONS DESCRIBED IN AND PERMITTED UNDER SECTIONS
6.2(E) AND 6.3(D), AND (II) SUCH LIENS COVER ONLY THE RIGHT, TITLE AND INTEREST
(IF ANY) OF AC SALES IN THE OBLIGATIONS OF PURCHASERS OF THE BORROWER’S PRODUCTS
WHICH OBLIGATIONS ARE ACQUIRED OR HELD BY TEXTRON FINANCIAL CORPORATION OR
TEXTRON FINANCIAL CANADA LIMITED PURSUANT TO THE DEALER FINANCE AGREEMENTS.

 

SECTION 6.2            INDEBTEDNESS.

 

The Borrower will not, and will not permit any Subsidiary to, incur, create,
assume or permit to exist any indebtedness or liability on account of deposits
or advances or any indebtedness for borrowed money, or any other indebtedness or
liability evidenced by notes, bonds, debentures or similar obligations, except:

 

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(A)           INDEBTEDNESS TO THE LENDER PARTIES ARISING UNDER OR RELATED TO
THIS AGREEMENT.

 

(B)           INDEBTEDNESS OF THE BORROWER OR ANY SUBSIDIARY IN EXISTENCE ON THE
DATE HEREOF AND LISTED IN SCHEDULE 6.2 HERETO, AND INDEBTEDNESS THE PROCEEDS OF
WHICH ARE USED SOLELY TO REFINANCE SUCH EXISTING INDEBTEDNESS.

 

(C)           INDEBTEDNESS OF ONE OBLIGOR TO ANOTHER OBLIGOR ON ACCOUNT OF
BORROWINGS FROM THAT OTHER OBLIGOR.

 

(D)           PURCHASE MONEY INDEBTEDNESS OF THE BORROWER OR ANY SUBSIDIARY
SECURED BY LIENS PERMITTED BY SUBSECTION 6.1(E).

 

(E)           OBLIGATIONS OF THE BORROWER AND AC SALES UNDER THE DEALER FINANCE
AGREEMENTS.

 

SECTION 6.3            GUARANTIES.

 

The Borrower will not, and will not permit any Subsidiary to, assume, guarantee,
endorse or otherwise become directly or contingently liable in connection with
any obligations of any other Person, except:

 

(A)           THE GUARANTY.

 

(B)           THE ENDORSEMENT OF NEGOTIABLE INSTRUMENTS BY THE BORROWER OR ANY
SUBSIDIARY FOR DEPOSIT OR COLLECTION OR SIMILAR TRANSACTIONS IN THE ORDINARY
COURSE OF BUSINESS.

 

(C)           GUARANTIES, ENDORSEMENTS AND OTHER DIRECT OR CONTINGENT
LIABILITIES IN CONNECTION WITH THE OBLIGATIONS OF OTHER PERSONS IN EXISTENCE ON
THE DATE HEREOF AND LISTED IN SCHEDULE 6.3 HERETO.

 

(D)           OBLIGATIONS OF THE BORROWER AND AC SALES UNDER THE DEALER FINANCE
AGREEMENTS.

 

(E)           GUARANTIES BY ANY OBLIGOR IN RESPECT OF THE OBLIGATIONS OF ANY
OTHER OBLIGOR, SO LONG AS SUCH OTHER OBLIGOR’S GUARANTIED OBLIGATIONS ARE NOT
PROHIBITED BY THIS AGREEMENT.

 

SECTION 6.4            INVESTMENTS.

 

The Borrower will not, and will not permit any Subsidiary to, purchase or hold
beneficially any stock or other securities or evidence of indebtedness of, make
or permit to exist any loans or advances to, or make any investment or acquire
any interest whatsoever in, any other Person, except:

 

(A)           INVESTMENTS IN (I) DIRECT OBLIGATIONS OF THE UNITED STATES OF
AMERICA OR ANY AGENCY OR INSTRUMENTALITY THEREOF WHOSE OBLIGATIONS CONSTITUTE
FULL FAITH AND CREDIT OBLIGATIONS OF THE UNITED STATES OF AMERICA,
(II) COMMERCIAL PAPER ISSUED BY U.S. CORPORATIONS RATED “A-1” BY STANDARD &
POORS CORPORATION OR “P1” BY MOODY’S INVESTORS

 

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SERVICE, (III) CERTIFICATES OF DEPOSIT OR BANKERS’ ACCEPTANCES HAVING A MATURITY
OF ONE YEAR OR LESS ISSUED BY MEMBERS OF THE FEDERAL RESERVE SYSTEM HAVING
DEPOSITS IN EXCESS OF $100,000,000, OR (IV) TAX EXEMPT SECURITIES RATED A OR
BETTER BY STANDARD & POORS CORPORATION OR M1G1 BY MOODY’S INVESTORS SERVICE.

 

(B)           ANY EXISTING INVESTMENT BY THE BORROWER OR ANY SUBSIDIARY IN THE
STOCK OF ANY OTHER SUBSIDIARY.

 

(C)           TRAVEL ADVANCES TO OFFICERS AND EMPLOYEES OF THE BORROWER OR ANY
SUBSIDIARY IN THE ORDINARY COURSE OF BUSINESS.

 

(D)           ADVANCES IN THE FORM OF PROGRESS PAYMENTS, PREPAID RENT OR
SECURITY DEPOSITS.

 

SECTION 6.5            SALE OF ASSETS.

 

The Borrower will not, and will not permit any Subsidiary to, sell, lease,
assign, transfer or otherwise dispose of all or a substantial part of its assets
(whether in one transaction or a series of transactions) except for the sale of
inventory in the ordinary course of the Borrower’s business.   For purposes of
this Section, “substantial part” means 10% or more of the assets of the
Borrower, as determined in accordance with GAAP.

 

SECTION 6.6            TRANSACTIONS WITH AFFILIATES.

 

The Borrower will not, and will not permit any Subsidiary, to purchase or sell
any goods or services from or to any Affiliate on terms less favorable to the
Borrower or the applicable Subsidiary than would otherwise be obtainable if no
Affiliate relationship existed.

 

SECTION 6.7            RESTRICTIONS ON ISSUANCE AND SALE OF SUBSIDIARY STOCK.

 

The Borrower will not:

 

(A)           PERMIT ANY SUBSIDIARY TO ISSUE OR SELL ANY SHARES OF STOCK OF ANY
CLASS OF SUCH SUBSIDIARY TO ANY OTHER PERSON (OTHER THAN THE BORROWER OR A
WHOLLY-OWNED SUBSIDIARY OF THE BORROWER), EXCEPT FOR THE PURPOSE OF QUALIFYING
DIRECTORS OR OF SATISFYING PRE-EMPTIVE RIGHTS OR OF PAYING A COMMON STOCK
DIVIDEND ON, OR SPLITTING, COMMON STOCK OF SUCH SUBSIDIARY; OR

 

(B)           SELL, TRANSFER OR OTHERWISE DISPOSE OF ANY SHARES OF STOCK OF ANY
CLASS (EXCEPT TO A WHOLLY-OWNED SUBSIDIARY OF THE BORROWER) OF ANY SUBSIDIARY OR
PERMIT ANY SUBSIDIARY TO SELL, TRANSFER OR OTHERWISE DISPOSE OF (EXCEPT TO THE
BORROWER OR A WHOLLY-OWNED SUBSIDIARY OF THE BORROWER OR FOR THE PURPOSE OF
QUALIFYING DIRECTORS) ANY SHARES OF STOCK OF ANY CLASS OF ANY OTHER SUBSIDIARY.

 

SECTION 6.8            RESTRICTIONS ON REPURCHASE OR REDEMPTION OF BORROWER
STOCK WITH ADVANCES.

 

The Borrower will not use Advances to repurchase or redeem more than $10,000,000
of its stock during any calendar year.

 

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SECTION 6.9            CONSOLIDATION AND MERGER; PURCHASE OF ASSETS.

 

The Borrower will not, and will not permit any Subsidiary to, consolidate with
or merge into any Person, or permit any other Person to merge into it, or
acquire (in a transaction analogous in purpose or effect to a consolidation or
merger) all or substantially all of the assets of any other Person; provided,
however, that the restrictions contained in this Section shall not apply to or
prevent the consolidation or merger of a Subsidiary with, or a conveyance or
transfer of its assets to, the Borrower (if the Borrower shall be the continuing
or surviving entity) or another then-existing wholly-owned Domestic Subsidiary
of the Borrower.

 

SECTION 6.10         SALE AND LEASEBACK.

 

The Borrower will not, and will not permit any Subsidiary to, enter into any
arrangement, directly or indirectly, with any other Person whereby the Borrower
or such Subsidiary shall sell or transfer any real or personal property, whether
now owned or hereafter acquired, and then or thereafter rent or lease as lessee
such property or any part thereof or any other property which the Borrower or
such Subsidiary, as the case may be, intends to use for substantially the same
purpose or purposes as the property being sold or transferred.

 

SECTION 6.11         HAZARDOUS SUBSTANCES.

 

The Borrower will not, and will not permit any Subsidiary to, cause or permit
any Hazardous Substance to be disposed of, in any manner which might result in
any material liability to the Borrower or any Subsidiary, on, under or at any
real property which is operated by the Borrower or any Subsidiary or in which
the Borrower or any Subsidiary has any interest.

 

SECTION 6.12         RESTRICTIONS ON NATURE OF BUSINESS.

 

The Borrower will not, and will not permit any Subsidiary to, engage in any line
of business materially different from that presently engaged in by the Borrower
or such Subsidiary.

 

ARTICLE VII
EVENTS OF DEFAULT, RIGHTS AND REMEDIES

 

SECTION 7.1            EVENTS OF DEFAULT.

 

“Event of Default”, wherever used herein, means any one of the following events:

 

(A)           DEFAULT IN THE PAYMENT OF ANY PRINCIPAL OF OR INTEREST ON ANY NOTE
WHEN THE SAME BECOMES DUE AND PAYABLE.

 

(B)           DEFAULT IN THE PAYMENT OF ANY FEES REQUIRED UNDER THIS AGREEMENT
OR ANY FEE LETTER WHEN THE SAME BECOME DUE AND PAYABLE.

 

(C)           DEFAULT IN THE PERFORMANCE, OR BREACH, OF ANY COVENANT OR
AGREEMENT ON THE PART OF THE BORROWER CONTAINED IN THIS AGREEMENT.

 

(D)           A DEFAULT UNDER ANY BOND, DEBENTURE, NOTE OR OTHER EVIDENCE OF
INDEBTEDNESS OF THE BORROWER OR UNDER ANY INDENTURE OR OTHER INSTRUMENT UNDER
WHICH ANY SUCH EVIDENCE OF INDEBTEDNESS HAS BEEN ISSUED OR BY WHICH IT IS
GOVERNED AND THE

 

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EXPIRATION OF THE APPLICABLE PERIOD OF GRACE, IF ANY, SPECIFIED IN SUCH EVIDENCE
OF INDEBTEDNESS, INDENTURE OR OTHER INSTRUMENT.

 

(E)           ANY REPRESENTATION OR WARRANTY MADE BY THE BORROWER IN THIS
AGREEMENT OR BY THE BORROWER (OR ANY OF ITS OFFICERS) IN ANY CERTIFICATE,
INSTRUMENT, OR STATEMENT CONTEMPLATED BY OR MADE OR DELIVERED PURSUANT TO OR IN
CONNECTION WITH THIS AGREEMENT, SHALL PROVE TO HAVE BEEN INCORRECT OR MISLEADING
IN ANY MATERIAL RESPECT WHEN MADE.

 

(F)            AN EVENT OF DEFAULT SHALL OCCUR UNDER ANY SECURITY AGREEMENT,
MORTGAGE, DEED OF TRUST, ASSIGNMENT OR OTHER INSTRUMENT OR AGREEMENT DIRECTLY OR
INDIRECTLY SECURING ANY OBLIGATIONS OF THE BORROWER HEREUNDER OR UNDER ANY NOTE
OR ANY GUARANTY OF SUCH OBLIGATIONS.

 

(G)           THE BORROWER OR ANY SUBSIDIARY SHALL BE ADJUDICATED A BANKRUPT OR
INSOLVENT, OR ADMIT IN WRITING ITS INABILITY TO PAY ITS DEBTS AS THEY MATURE, OR
MAKE AN ASSIGNMENT FOR THE BENEFIT OF CREDITORS; OR THE BORROWER OR ANY
SUBSIDIARY SHALL APPLY FOR OR CONSENT TO THE APPOINTMENT OF ANY RECEIVER,
TRUSTEE, OR SIMILAR OFFICER FOR IT OR FOR ALL OR ANY SUBSTANTIAL PART OF ITS
PROPERTY; OR SUCH RECEIVER, TRUSTEE OR SIMILAR OFFICER SHALL BE APPOINTED
WITHOUT THE APPLICATION OR CONSENT OF THE BORROWER OR SUCH SUBSIDIARY, AS THE
CASE MAY BE, AND SUCH APPOINTMENT SHALL CONTINUE UNDISCHARGED FOR A PERIOD OF 30
DAYS; OR THE BORROWER OR ANY SUBSIDIARY SHALL INSTITUTE (BY PETITION,
APPLICATION, ANSWER, CONSENT OR OTHERWISE) ANY BANKRUPTCY, INSOLVENCY,
REORGANIZATION, ARRANGEMENT, READJUSTMENT OF DEBT, DISSOLUTION, LIQUIDATION OR
SIMILAR PROCEEDING RELATING TO IT UNDER THE LAWS OF ANY JURISDICTION; OR ANY
SUCH PROCEEDING SHALL BE INSTITUTED (BY PETITION, APPLICATION OR OTHERWISE)
AGAINST THE BORROWER OR ANY SUBSIDIARY; OR ANY JUDGMENT, WRIT, WARRANT OF
ATTACHMENT OR EXECUTION OR SIMILAR PROCESS SHALL BE ISSUED OR LEVIED AGAINST A
SUBSTANTIAL PART OF THE PROPERTY OF THE BORROWER OR ANY SUBSIDIARY AND SUCH
JUDGMENT, WRIT, OR SIMILAR PROCESS SHALL NOT BE RELEASED, VACATED OR FULLY
BONDED WITHIN 60 DAYS AFTER ITS ISSUE OR LEVY.

 

(H)           A PETITION NAMING THE BORROWER OR ANY SUBSIDIARY AS DEBTOR SHALL
BE FILED BY OR AGAINST THE BORROWER OR ANY SUBSIDIARY UNDER THE UNITED STATES
BANKRUPTCY CODE.

 

(I)            THE RENDERING AGAINST THE BORROWER OF A FINAL JUDGMENT, DECREE OR
ORDER FOR THE PAYMENT OF MONEY IN EXCESS OF $2,000,000 (TO THE EXTENT NOT
COVERED BY A REPUTABLE AND SOLVENT INSURANCE COMPANY OR BORROWER’S RESERVE
THEREFOR) AND THE CONTINUANCE OF SUCH JUDGMENT, DECREE OR ORDER UNSATISFIED AND
IN EFFECT FOR ANY PERIOD OF 45 CONSECUTIVE DAYS WITHOUT A STAY OF EXECUTION.

 

(J)            A WRIT OF ATTACHMENT, GARNISHMENT, LEVY OR SIMILAR PROCESS SHALL
BE ISSUED AGAINST OR SERVED UPON THE ADMINISTRATIVE AGENT WITH RESPECT TO
(I) ANY PROPERTY OF THE BORROWER OR ANY SUBSIDIARY IN THE POSSESSION OF THE
ADMINISTRATIVE AGENT HAVING A VALUE IN EXCESS OF $500,000, OR (II) ANY
INDEBTEDNESS OF ANY LENDER TO THE BORROWER OR ANY SUBSIDIARY HAVING A VALUE IN
EXCESS OF $500,000.

 

(K)           ANY SUBSIDIARY OBLIGOR SHALL REPUDIATE, PURPORT TO REVOKE, OR FAIL
TO PERFORM ANY OBLIGATION UNDER ITS GUARANTY OR THE SECURITY AGREEMENT OR SHALL
CONTEST IN

 

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ANY MANNER THE VALIDITY, BINDING NATURE OR ENFORCEABILITY OF ITS GUARANTY OR THE
SECURITY AGREEMENT.

 

(L)            ANY PLAN SHALL HAVE BEEN TERMINATED, OR A TRUSTEE SHALL HAVE BEEN
APPOINTED BY AN APPROPRIATE UNITED STATES DISTRICT COURT TO ADMINISTER ANY PLAN,
OR THE PENSION BENEFIT GUARANTY CORPORATION SHALL HAVE INSTITUTED PROCEEDINGS TO
TERMINATE ANY PLAN OR TO APPOINT A TRUSTEE TO ADMINISTER ANY PLAN, OR WITHDRAWAL
LIABILITY SHALL HAVE BEEN ASSERTED AGAINST THE BORROWER, ANY SUBSIDIARY OR ANY
ERISA AFFILIATE BY A MULTIEMPLOYER PLAN; OR THE BORROWER, ANY SUBSIDIARY OR ANY
ERISA AFFILIATE SHALL HAVE INCURRED LIABILITY TO THE PENSION BENEFIT GUARANTY
CORPORATION, THE INTERNAL REVENUE SERVICE, THE DEPARTMENT OF LABOR OR PLAN
PARTICIPANTS IN EXCESS OF $1,000,000 WITH RESPECT TO ANY PLAN; OR ANY REPORTABLE
EVENT THAT THE REQUIRED LENDERS MAY DETERMINE IN GOOD FAITH MIGHT CONSTITUTE
GROUNDS FOR THE TERMINATION OF ANY PLAN, FOR THE APPOINTMENT BY THE APPROPRIATE
UNITED STATES DISTRICT COURT OF A TRUSTEE TO ADMINISTER ANY PLAN OR FOR THE
IMPOSITION OF WITHDRAWAL LIABILITY WITH RESPECT TO A MULTIEMPLOYER PLAN, SHALL
HAVE OCCURRED AND BE CONTINUING 30 DAYS AFTER WRITTEN NOTICE TO SUCH EFFECT
SHALL HAVE BEEN GIVEN TO THE BORROWER BY THE ADMINISTRATIVE AGENT.

 

(M)          A CHANGE OF CONTROL SHALL OCCUR.

 

SECTION 7.2            RIGHTS AND REMEDIES.

 

Upon the occurrence of an Event of Default or at any time thereafter until such
Event of Default is cured to the written satisfaction of the Required Lenders,
the Administrative Agent may, with the consent of the Required Lenders, and
shall, at the request of the Required Lenders, exercise any or all of the
following rights and remedies:

 

(A)           THE ADMINISTRATIVE AGENT MAY, BY NOTICE TO THE BORROWER, DECLARE
THE REVOLVING FACILITY TO BE TERMINATED, WHEREUPON THE SAME SHALL FORTHWITH
TERMINATE.

 

(B)           THE ADMINISTRATIVE AGENT MAY, BY NOTICE TO THE BORROWER, DECLARE
THE ENTIRE UNPAID PRINCIPAL AMOUNT OF THE NOTES THEN OUTSTANDING, ALL INTEREST
ACCRUED AND UNPAID THEREON, AND ALL OTHER AMOUNTS PAYABLE UNDER THIS AGREEMENT
TO BE FORTHWITH DUE AND PAYABLE, WHEREUPON THE NOTES, ALL SUCH ACCRUED INTEREST
AND ALL SUCH AMOUNTS SHALL BECOME AND BE FORTHWITH DUE AND PAYABLE, WITHOUT
PRESENTMENT, DEMAND, PROTEST OR FURTHER NOTICE OF ANY KIND, ALL OF WHICH ARE
HEREBY EXPRESSLY WAIVED BY THE BORROWER.

 

(C)           IF ANY LETTER OF CREDIT REMAINS OUTSTANDING, THE ADMINISTRATIVE
AGENT MAY, BY NOTICE TO THE BORROWER, REQUIRE THE BORROWER TO DEPOSIT IN THE L/C
CASH COLLATERAL ACCOUNT IMMEDIATELY AVAILABLE FUNDS EQUAL TO THE AGGREGATE FACE
AMOUNT OF ALL SUCH OUTSTANDING LETTERS OF CREDIT.

 

(D)           THE ADMINISTRATIVE AGENT MAY, WITHOUT NOTICE TO THE BORROWER AND
WITHOUT FURTHER ACTION, APPLY ANY AND ALL MONEY OWING BY ANY LENDER TO THE
BORROWER TO THE PAYMENT OF THE NOTES THEN OUTSTANDING, INCLUDING INTEREST
ACCRUED THEREON, AND OF ALL OTHER SUMS THEN OWING BY THE BORROWER HEREUNDER.

 

(E)           THE LENDER PARTIES MAY EXERCISE ANY OTHER RIGHTS AND REMEDIES
AVAILABLE TO THEM BY LAW OR AGREEMENT.

 

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Notwithstanding the foregoing, upon the occurrence of an Event of Default
described in Section 7.1(h) or 7.1(j) hereof, the entire unpaid principal amount
of the Notes then outstanding, all interest accrued and unpaid thereon, and all
other amounts payable under this Agreement shall be immediately due and payable
without presentment, demand, protest or notice of any kind.

 

SECTION 7.3            PLEDGE OF L/C CASH COLLATERAL ACCOUNT.

 

The Borrower hereby pledges, and grants the Administrative Agent, as agent for
the Lender Parties, including the Issuing Lender, a security interest in, all
sums held in the L/C Cash Collateral Account from time to time and all proceeds
thereof as security for the payment of the Obligations.  Upon request of the
Borrower, the Administrative Agent shall permit the Borrower to withdraw from
the L/C Cash Collateral Account the lesser of (i) the amount by which the
balance of the L/C Cash Collateral Account exceeds the aggregate amount secured
by the sums held in the L/C Cash Collateral Account, or (ii) the balance of the
L/C Cash Collateral Account. The Administrative Agent shall have full ownership
and control of the L/C Cash Collateral Account, and, except as set forth above,
the Borrower shall have no right to withdraw the funds maintained in the L/C
Cash Collateral Account.

 

ARTICLE VIII
THE ADMINISTRATIVE AGENT

 

SECTION 8.1            AUTHORIZATION.

 

Each Lender and the holder of each Note irrevocably appoints and authorizes the
Administrative Agent to act on behalf of such Lender or holder to the extent
provided herein or in any document or instrument delivered hereunder or in
connection herewith, and to take such other action as may be reasonably
incidental thereto. In furtherance of the foregoing, and not in limitation
thereof, each Lender irrevocably (i) authorizes the Administrative Agent to
execute and deliver and perform its obligations under this Agreement and each of
the Loan Documents to which the Administrative Agent is a party, and to exercise
all rights, powers and remedies that the Administrative Agent may have hereunder
or thereunder, (ii) appoints the Administrative Agent as nominal beneficiary or
nominal secured party, as the case may be, under the Loan Documents and all
related UCC-1 financing statements, and (iii) authorizes the Administrative
Agent to act as agent of and for such Lender for purposes of holding, perfecting
and disposing of the collateral under the Loan Documents.  As to any matters not
expressly provided for by this Agreement or the Loan Documents, the
Administrative Agent shall not be required to exercise any discretion or take
any action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
the Required Lenders or, if so required pursuant to Section 9.2, upon the
instructions of all Lenders; provided, however, that except for action expressly
required of the Administrative Agent hereunder, the Administrative Agent shall
in all cases be fully justified in failing or refusing to act hereunder unless
it shall be indemnified to its satisfaction by the Lenders against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action, and the Administrative Agent shall not in
any event be required to take any action which is contrary to this Agreement,
the Loan Documents or applicable law.

 

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SECTION 8.2                                   DISTRIBUTION OF PAYMENTS AND
PROCEEDS.

 

(A)           AFTER DEDUCTION OF ANY COSTS OF COLLECTION, AS PROVIDED IN THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS, AND ANY FEE PAYABLE TO THE
ADMINISTRATIVE AGENT IN ITS CAPACITY AS SUCH UNDER THIS AGREEMENT, ANY FEE
LETTER OR ANY OTHER AGREEMENT, THE ADMINISTRATIVE AGENT SHALL REMIT TO EACH
LENDER THAT LENDER’S PRO RATA SHARE OF ALL PAYMENTS OF PRINCIPAL AND INTEREST
AND OF ALL FEES AND OTHER AMOUNTS PAYABLE HEREUNDER FOR THE BENEFIT OF THE
LENDERS THAT ARE RECEIVED BY THE ADMINISTRATIVE AGENT UNDER THE LOAN DOCUMENTS. 
EACH LENDER’S INTEREST IN THE LOAN DOCUMENTS SHALL BE PAYABLE SOLELY FROM
PAYMENTS, COLLECTIONS AND PROCEEDS ACTUALLY RECEIVED BY THE ADMINISTRATIVE AGENT
UNDER THE LOAN DOCUMENTS; AND THE ADMINISTRATIVE AGENT’S ONLY LIABILITY TO THE
LENDERS HEREUNDER SHALL BE TO ACCOUNT FOR EACH LENDER’S PRO RATA SHARE OF SUCH
PAYMENTS, COLLECTIONS AND PROCEEDS IN ACCORDANCE WITH THIS AGREEMENT.  IF THE
ADMINISTRATIVE AGENT IS EVER REQUIRED FOR ANY REASON TO REFUND ANY SUCH
PAYMENTS, COLLECTIONS OR PROCEEDS, EACH LENDER WILL REFUND TO THE ADMINISTRATIVE
AGENT, UPON DEMAND, ITS PRO RATA SHARE OF SUCH PAYMENTS, COLLECTIONS OR
PROCEEDS, TOGETHER WITH ITS PRO RATA SHARE OF INTEREST OR PENALTIES, IF ANY,
PAYABLE BY THE ADMINISTRATIVE AGENT IN CONNECTION WITH SUCH REFUND.

 

(B)           NOTWITHSTANDING THE FOREGOING, IF ANY LENDER HAS WRONGFULLY
REFUSED TO FUND ITS APPLICABLE PERCENTAGE OF ANY BORROWING OR OTHER ADVANCE AS
REQUIRED HEREUNDER, OR IF THE PRINCIPAL BALANCE OF ANY LENDER’S NOTE IS FOR ANY
OTHER REASON LESS THAN ITS APPLICABLE PERCENTAGE OF THE AGGREGATE PRINCIPAL
BALANCES OF THE NOTES THEN OUTSTANDING, THE ADMINISTRATIVE AGENT MAY REMIT ALL
PAYMENTS RECEIVED BY IT TO THE OTHER LENDERS UNTIL SUCH PAYMENTS HAVE REDUCED
THE AGGREGATE AMOUNTS OWED BY THE BORROWER TO THE EXTENT THAT THE AGGREGATE
AMOUNT OWING TO SUCH LENDER HEREUNDER IS EQUAL TO ITS APPLICABLE PERCENTAGE OF
THE AGGREGATE AMOUNT OWING TO ALL OF THE LENDERS HEREUNDER.  THE PROVISIONS OF
THIS PARAGRAPH ARE INTENDED ONLY TO SET FORTH CERTAIN RULES FOR THE APPLICATION
OF PAYMENTS, PROCEEDS AND COLLECTIONS IN THE EVENT THAT A LENDER HAS BREACHED
ITS OBLIGATIONS HEREUNDER AND SHALL NOT BE DEEMED TO EXCUSE ANY LENDER FROM SUCH
OBLIGATIONS.

 

SECTION 8.3                                   EXPENSES.

 

All payments, collections and proceeds received or effected by the
Administrative Agent may be applied, first, to pay or reimburse the
Administrative Agent for all costs, expenses, damages and liabilities at any
time incurred by or imposed upon the Administrative Agent in connection with
this Agreement or any other Loan Document (including but not limited to all
reasonable attorney’s fees (whether paid to outside counsel or allocated to the
Administrative Agent by in-house counsel), foreclosure expenses and advances
made to protect the security of any collateral).  If the Administrative Agent
does not receive payments, collections or proceeds sufficient to cover any such
costs, expenses, damages or liabilities within 30 days after their incurrence or
imposition, each Lender shall, upon demand, remit to the Administrative Agent
its Percentage of the difference between (i) such costs, expenses, damages and
liabilities, and (ii) such payments, collections and proceeds, together with
interest on such amount for each day following the thirtieth day after demand
therefor until so remitted at a rate equal to the Federal Funds Rate for each
such day.

 

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SECTION 8.4            PAYMENTS RECEIVED DIRECTLY BY LENDERS.

 

If any Lender or other holder of a Note shall obtain any payment or other
recovery (whether voluntary, involuntary, by application of offset or otherwise)
on account of the Obligations other than through distributions made in
accordance with Section 8.2, such Lender or holder shall promptly give notice of
such fact to the Administrative Agent and shall purchase from the other Lenders
or holders such participations in the Obligations held by them as shall be
necessary to cause the purchasing Lender or holder to share the excess payment
or other recovery ratably with each of them; provided, however, that if all or
any portion of the excess payment or other recovery is thereafter recovered from
such purchasing Lender or holder, the purchase shall be rescinded and the
purchasing Lender restored to the extent of such recovery (but without interest
thereon).

 

SECTION 8.5            INDEMNIFICATION.

 

Each Lender severally (but not jointly) hereby agrees to indemnify and hold
harmless the Administrative Agent, as well as the Administrative Agent’s agents,
employees, officers and directors, ratably according to their respective
Percentages from and against any and all losses, liabilities (including
liabilities for penalties), actions, suits, judgment, demands, damages, costs,
disbursements, or expenses (including attorneys’ fees and expenses) of any kind
or nature whatsoever, which are imposed on, incurred by, or asserted against the
Administrative Agent or its agents, employees, officers or directors in any way
relating to or arising out of this Agreement or the Loan Documents, or as a
result of any action taken or omitted to be taken by the Administrative Agent;
provided, however, that no Lender shall be liable for any portion of any such
losses, liabilities (including liabilities for penalties), actions, suits,
judgments, demands, damages, costs disbursements, or expenses resulting from the
gross negligence or willful misconduct of the Administrative Agent.

 

SECTION 8.6            EXCULPATION.

 

The Administrative Agent shall not be liable for any action taken or omitted to
be taken by the Administrative Agent in connection with this Agreement or the
Loan Documents, except for its own gross negligence or willful misconduct.  The
Administrative Agent shall be entitled to rely upon advice of counsel concerning
legal matters, the advice of independent public accountants with respect to
accounting matters and advice of other experts as to any other matters, and upon
this Agreement, any Loan Document and any schedule, certificate, statement,
report, notice or other writing which it believes to be genuine or to have been
presented by a proper person.  Neither the Administrative Agent nor any of its
directors, officers, employees or agents shall (a) be responsible for any
recitals, representations or warranties contained in, or for the execution,
validity, genuineness, effectiveness or enforceability of this Agreement, any
Loan Document, or any other instrument or document delivered hereunder or in
connection herewith, (b) be responsible for the validity, genuineness,
perfection, effectiveness, enforceability, existence, value or enforcement of
any collateral security, (c) be under any duty to inquire into or pass upon any
of the foregoing matters, or to make any inquiry concerning the performance by
the Borrower or any other obligor of its obligations, or (d) in any event, be
liable as such for any action taken or omitted by it or them, except for its or
their own gross negligence or willful misconduct.  The agency hereby created
shall in no way impair or affect any of the rights and

 

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powers of, or impose any duties or obligations upon, the Administrative Agent in
its individual capacity.

 

SECTION 8.7            ADMINISTRATIVE AGENT AND AFFILIATES.

 

The Administrative Agent shall have the same rights and powers hereunder in its
individual capacity as any other Lender, and may exercise or refrain from
exercising the same as though it were not the Administrative Agent, and the
Administrative Agent and its affiliates may accept deposits from and generally
engage in any kind of business with the Borrower as fully as if the
Administrative Agent were not the Administrative Agent hereunder.

 

SECTION 8.8            CREDIT INVESTIGATION.

 

Each Lender acknowledges that it has made such inquiries and taken such care on
its own behalf as would have been the case had its obligations hereunder been
incurred and the Advances made directly by such Lender to the Borrower without
the intervention of the Administrative Agent or any other Lender.  Each Lender
agrees and acknowledges that the Administrative Agent makes no representations
or warranties about the creditworthiness of the Borrower or any other party to
this Agreement or with respect to the legality, validity, sufficiency or
enforceability of this Agreement, any Loan Document, or any other instrument or
document delivered hereunder or in connection herewith.

 

SECTION 8.9            RESIGNATION AND ASSIGNMENT OF ADMINISTRATIVE AGENT.

 

(A)           THE ADMINISTRATIVE AGENT MAY RESIGN AS SUCH AT ANY TIME UPON AT
LEAST 30 DAYS’ PRIOR NOTICE TO THE BORROWER AND THE LENDERS. IN THE EVENT OF ANY
RESIGNATION OF THE ADMINISTRATIVE AGENT, THE REQUIRED LENDERS SHALL AS PROMPTLY
AS PRACTICABLE APPOINT A SUCCESSOR ADMINISTRATIVE AGENT. IF NO SUCH SUCCESSOR
ADMINISTRATIVE AGENT SHALL HAVE BEEN SO APPOINTED BY THE REQUIRED LENDERS AND
SHALL HAVE ACCEPTED SUCH APPOINTMENT WITHIN 30 DAYS AFTER THE RESIGNING
ADMINISTRATIVE AGENT’S GIVING OF NOTICE OF RESIGNATION, THEN THE RESIGNING
ADMINISTRATIVE AGENT MAY, ON BEHALF OF THE LENDERS, APPOINT A SUCCESSOR
ADMINISTRATIVE AGENT, WHICH SHALL BE A COMMERCIAL BANK ORGANIZED UNDER THE LAWS
OF THE UNITED STATES OF AMERICA OR OF ANY STATE THEREOF.

 

(B)           UPON THE ACCEPTANCE OF ANY APPOINTMENT AS ADMINISTRATIVE AGENT
HEREUNDER BY A SUCCESSOR ADMINISTRATIVE AGENT, SUCH SUCCESSOR ADMINISTRATIVE
AGENT SHALL THEREUPON BE ENTITLED TO RECEIVE FROM THE PRIOR ADMINISTRATIVE AGENT
SUCH DOCUMENTS OF TRANSFER AND ASSIGNMENT AS SUCH SUCCESSOR ADMINISTRATIVE AGENT
MAY REASONABLY REQUEST AND THE RESIGNING OR ASSIGNING ADMINISTRATIVE AGENT SHALL
BE DISCHARGED FROM ITS DUTIES AND OBLIGATIONS UNDER THIS AGREEMENT. AFTER ANY
RESIGNATION OR ASSIGNMENT PURSUANT TO THIS SECTION, THE PROVISIONS OF THIS
SECTION SHALL INURE TO THE BENEFIT OF THE RETIRING ADMINISTRATIVE AGENT AS TO
ANY ACTIONS TAKEN OR OMITTED TO BE TAKEN BY IT WHILE IT WAS ACTING AS
ADMINISTRATIVE AGENT HEREUNDER.

 

SECTION 8.10         DEFAULTS.

 

The Administrative Agent shall not be deemed to have knowledge of the occurrence
of a Default or an Event of Default (other than under paragraph (a) of
Section 7.1) hereof unless the Administrative Agent has received notice from a
Lender or the Borrower specifying the

 

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occurrence of such Default or Event of Default.  In the event that the
Administrative Agent receives such a notice of the occurrence of a Default or an
Event of Default, the Administrative Agent shall give prompt notice thereof to
the Lenders. The Administrative Agent shall (subject to Section 8.5 hereof) take
such actions with respect to such Default as shall be directed by the Required
Lenders; provided that, unless and until the Administrative Agent shall have
received such directions, the Administrative Agent may take any action, or
refrain from taking any action, with respect to such Default as it shall deem
advisable in the best interest of the Lenders.

 

SECTION 8.11                            OBLIGATIONS SEVERAL.

 

The obligations of each Lender hereunder are the several obligations of such
Lender, and neither any Lender nor the Administrative Agent shall be responsible
for the obligations of any other Lender hereunder, nor will the failure by the
Lender Parties to perform any of their obligations hereunder relieve the
Administrative Agent or any other Lender from the performance of its respective
obligations hereunder.  Nothing contained in this Agreement, and no action taken
by any Lender or the Administrative Agent pursuant hereto or in connection
herewith or pursuant to or in connection with the Loan Documents shall be deemed
to constitute the Lenders, together or with or without the Administrative Agent,
as a partnership, association, joint venture, or other entity.

 

SECTION 8.12                            ASSIGNMENTS.

 

(A)           ANY LENDER MAY, AT ANY TIME, ASSIGN A PORTION OF ITS NOTES AND
REVOLVING COMMITMENT AND OTHER RIGHTS AND INTERESTS HEREUNDER TO AN ELIGIBLE
LENDER (AN “APPLICANT”) ON ANY DATE (THE “ADJUSTMENT DATE”) SELECTED BY SUCH
LENDER. THE AGGREGATE PRINCIPAL AMOUNT OF THE NOTES AND THE PORTION OF THE
REVOLVING COMMITMENT SO ASSIGNED IN ANY ASSIGNMENT SHALL BE NOT LESS THAN
$5,000,000, AND THE ASSIGNING LENDER SHALL RETAIN AT LEAST $5,000,000 OF SUCH
NOTES AND THE CORRESPONDING REVOLVING COMMITMENT FOR ITS OWN ACCOUNT; PROVIDED,
HOWEVER, THAT THE FOREGOING RESTRICTION SHALL NOT APPLY TO A LENDER ASSIGNING
ITS ENTIRE NOTE AND REVOLVING COMMITMENT TO THE APPLICANT. ANY LENDER PROPOSING
AN ASSIGNMENT HEREUNDER SHALL GIVE NOTICE OF SUCH ASSIGNMENT TO THE
ADMINISTRATIVE AGENT AT LEAST TEN BUSINESS DAYS PRIOR TO SUCH ASSIGNMENT (UNLESS
THE ADMINISTRATIVE AGENT CONSENTS TO A SHORTER PERIOD OF TIME). SUCH NOTICE
SHALL SPECIFY THE IDENTITY OF SUCH APPLICANT AND THE REVOLVING COMMITMENT WHICH
IT PROPOSES THAT SUCH APPLICANT ACQUIRE. ANY ASSIGNMENT HEREUNDER MAY BE MADE
ONLY WITH THE PRIOR WRITTEN CONSENT OF THE ADMINISTRATIVE AGENT AND THE
BORROWER; PROVIDED, HOWEVER, THAT THE CONSENT OF THE BORROWER SHALL NOT BE
REQUIRED IF ANY DEFAULT OR EVENT OF DEFAULT HAS OCCURRED AND IS CONTINUING AT
THE TIME OF SUCH ASSIGNMENT.

 

(B)           TO CONFIRM THE STATUS OF EACH ADDITIONAL LENDER AS A PARTY TO THIS
AGREEMENT AND TO EVIDENCE THE ASSIGNMENT IN ACCORDANCE HEREWITH:

 

(i)                                     the Borrower, such Lender, such
Applicant, and the Administrative Agent shall, on or before the Adjustment Date,
execute and deliver to the Administrative Agent an Assignment Certificate in
substantially the form of Exhibit D (an “Assignment Certificate”) (provided that
the assignment will be effective without the signature of the Borrower or the

 

42

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Administrative Agent to the extent that the consent of the Borrower or the
Administrative Agent, as the case may be, is not required hereunder); and

 

(ii)           the Borrower will, at its own expense, execute and deliver to the
assigning Lender a new Note or Notes, each payable to the order of the Applicant
in an amount corresponding to the applicable interest in the assigning Lender’s
rights and obligations acquired by such Applicant pursuant to such assignment,
and, if the assigning Lender has retained interests in such rights and
obligations, a new Note or Notes, each payable to the order of that Lender in an
amount corresponding to such retained interests.  Such new Notes shall be in an
aggregate principal amount equal to the aggregate principal amount of the
applicable Notes to be replaced by such new Notes, shall be dated the effective
date of such assignment and shall otherwise be in the form of the Notes to be
replaced thereby.  Such new Notes shall be issued in substitution for, but not
in satisfaction or payment of, the Notes being replaced thereby.

 

Upon the execution and delivery of such Assignment Certificate and such Notes,
(a) this Agreement shall be deemed to be amended to the extent, and only to the
extent, necessary to reflect the addition of such Additional Lender and the
resulting adjustment of Revolving Commitments arising therefrom, (b) the
assigning Lender shall be relieved of all obligations hereunder to the extent of
the reduction of all obligations hereunder and to the extent of the reduction of
such Lender’s Revolving Commitments, and (c) the Additional Lender shall become
a party hereto and shall be entitled to all rights, benefits and privileges
accorded to a Lender herein and in each other document or instrument executed
pursuant hereto and subject to all obligations of a Lender hereunder, including
the right to approve or disapprove actions which, in accordance with the terms
hereof, require the approval of the Required Lenders or all Lenders, and the
obligations to make Advances hereunder.  Promptly after the execution of any
Assignment Certificate, a copy thereof shall be delivered by the Administrative
Agent to each Lender.

 

(C)           IN ORDER TO FACILITATE THE ADDITION OF ADDITIONAL LENDERS HERETO,
THE BORROWER SHALL COOPERATE FULLY WITH EACH LENDER AND THE ADMINISTRATIVE AGENT
IN CONNECTION THEREWITH AND SHALL PROVIDE ALL REASONABLE ASSISTANCE REQUESTED BY
EACH LENDER AND THE ADMINISTRATIVE AGENT RELATING THERETO, INCLUDING, WITHOUT
LIMITATION, THE FURNISHING OF SUCH WRITTEN MATERIALS AND FINANCIAL INFORMATION
REGARDING THE BORROWER AS ANY LENDER OR THE ADMINISTRATIVE AGENT MAY REASONABLY
REQUEST, THE EXECUTION OF SUCH DOCUMENTS AS ANY LENDER OR THE ADMINISTRATIVE
AGENT MAY REASONABLY REQUEST WITH RESPECT THERETO, AND THE PARTICIPATION BY
OFFICERS OF THE BORROWER IN A MEETING OR TELECONFERENCE CALL WITH ANY APPLICANT
UPON THE REQUEST OF ANY LENDER OR THE ADMINISTRATIVE AGENT.

 

(D)           WITHOUT LIMITING ANY OTHER PROVISION HEREOF:

 

(I)            EACH LENDER MAY AT ANY TIME, UPON WRITTEN NOTICE TO THE BORROWER
AND THE ADMINISTRATIVE AGENT, SELL, ASSIGN, TRANSFER, OR NEGOTIATE ALL OR ANY
PART OF ITS REVOLVING COMMITMENTS, ADVANCES, NOTES, AND OTHER RIGHTS AND
OBLIGATIONS UNDER THIS AGREEMENT AND THE LOAN DOCUMENTS TO ONE OR MORE

 

43

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AFFILIATES OF SUCH LENDER, PROVIDED THAT, UNLESS CONSENTED TO BY THE BORROWER
AND THE ADMINISTRATIVE AGENT (WHICH CONSENT SHALL NOT BE UNREASONABLY WITHHELD),
NO SUCH SALE, ASSIGNMENT, TRANSFER OR NEGOTIATION OF REVOLVING COMMITMENTS SHALL
RELIEVE THE TRANSFERRING LENDER FROM ITS OBLIGATIONS (TO THE EXTENT SUCH
AFFILIATE DOES NOT FULFILL ITS OBLIGATIONS) HEREUNDER; AND

 

(II)           EACH LENDER MAY AT ANY TIME SELL, ASSIGN, TRANSFER, OR NEGOTIATE
ALL OR ANY PART OF ITS REVOLVING COMMITMENT, ADVANCES, NOTES, AND OTHER RIGHTS
AND OBLIGATIONS UNDER THIS AGREEMENT AND THE LOAN DOCUMENTS TO ONE OR MORE
LENDERS, AND ANY SUCH SALE, ASSIGNMENT, TRANSFER OR NEGOTIATION SHALL RELIEVE
THE TRANSFERRING LENDER FROM ITS OBLIGATIONS HEREUNDER TO THE EXTENT OF THE
OBLIGATIONS SO TRANSFERRED (EXCEPT, IN ANY EVENT, TO THE EXTENT THAT THE
BORROWER, ANY OTHER LENDER OR THE ADMINISTRATIVE AGENT HAS RIGHTS AGAINST SUCH
TRANSFERRING LENDER AS A RESULT OF ANY DEFAULT BY SUCH TRANSFERRING LENDER UNDER
THIS AGREEMENT);

 

provided, however, that any partial sale, assignment, transfer or negotiation
pursuant to this Section shall be pro rata as to all of the Revolving
Commitment, Notes and Advances transferred.

 

(E)           ANY LENDER MAKING AN ASSIGNMENT UNDER THIS SECTION SHALL PAY THE
ADMINISTRATIVE AGENT A TRANSFER FEE IN THE AMOUNT OF $3,000 SIMULTANEOUS WITH
SUCH ASSIGNMENT.

 

(F)            NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, ANY LENDER
MAY AT ANY TIME CREATE A SECURITY INTEREST IN ALL OR ANY PORTION OF ITS RIGHTS
UNDER THIS AGREEMENT AND THAT LENDER’S NOTE IN FAVOR OF ANY FEDERAL RESERVE
LENDER IN ACCORDANCE WITH REGULATION A OF THE BOARD OF GOVERNORS OF THE FEDERAL
RESERVE SYSTEM.

 

(G)           EXCEPT AS SET FORTH IN THIS SECTION 8.12 AND THE FOLLOWING
SECTION 8.13, NO LENDER MAY ASSIGN ANY OF ITS RIGHTS OR OBLIGATIONS UNDER ANY
LOAN DOCUMENT.

 

SECTION 8.13         PARTICIPATIONS

 

In addition to the rights granted in Section 8.12, each Lender may grant
participations in all or any portion of its Notes and Revolving Commitment and
other rights and interests hereunder to any institutional investor, without the
consent of the Borrower or the Administrative Agent, but only so long as:

 

(A)           WITHIN FIVE BUSINESS DAYS AFTER GRANTING ANY PARTICIPATION, SUCH
LENDER GIVES THE ADMINISTRATIVE AGENT NOTICE OF SUCH PARTICIPATION, INCLUDING
THE NAME, ADDRESS AND TELECOPIER NUMBER OF THE PARTICIPANT AND THE AMOUNT OF THE
NOTES AND REVOLVING COMMITMENT COVERED BY THE PARTICIPATION; AND

 

(B)           THE PRINCIPAL AMOUNT OF THE PARTICIPATION SO GRANTED IS NO LESS
THAN $5,000,000.

 

44

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

 

No holder of any such participation, other than an affiliate of such Lender,
shall be entitled to require such Lender to take or omit to take any action
hereunder, except that such Lender may agree with such participant that such
Lender will not, without such participant’s consent, (i) forgive any
indebtedness of the Borrower under this Agreement or the Notes, (ii) agree to
reduce the rate of interest charged under this Agreement, or (iii) agree to
extend the final maturity of any indebtedness evidenced by the Notes, except as
expressly provided by the terms of the Loan Documents.  No Lender shall, as
between the Borrower and such Lender, be relieved of any of its obligations
hereunder as a result of any such granting of a participation.  The Borrower
hereby acknowledges and agrees that any participant described in this
Section will, for purposes of Section 2.10(b), be considered to be a Lender
hereunder (provided that such participant shall not be entitled to receive any
more than the Lender selling such participation would have received had such
sale not taken place) and may rely on, and possess all rights under, any
opinions, certificates, or other instruments or documents delivered under or in
connection with any Loan Document.  Except as set forth in this Section 8.13, no
Lender may grant any participation in any Loan Document or Revolving Commitment.

 

SECTION 8.14         DISCLOSURE OF INFORMATION.

 

The Borrower authorizes each Lender and the Administrative Agent to disclose to
any participant, assignee or Additional Lender (each, a “Transferee”) and any
prospective Transferee any and all financial and other information in the
possession of any Lender Party concerning the Borrower which has been or
hereafter is delivered to the Administrative Agent or such Lender by the
Borrower pursuant to this Agreement or which has been or is hereafter delivered
to the Administrative Agent or such Lender by the Borrower in connection with
the credit evaluation of the Borrower by the Administrative Agent or such Lender
prior to entering into this Agreement.

 

ARTICLE IX
MISCELLANEOUS

 

SECTION 9.1            NO WAIVER; CUMULATIVE REMEDIES.

 

No failure or delay on the part of the Lenders in exercising any right, power or
remedy under the Loan Documents shall operate as a waiver thereof; nor shall any
Lender’s acceptance of payments while any Default or Event of Default is
outstanding operate as a waiver of such Default or Event of Default, or any
right, power or remedy under the Loan Documents; 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 under the
Loan Documents.  The remedies provided in the Loan Documents are cumulative and
not exclusive of any remedies provided by law.

 

SECTION 9.2            AMENDMENTS, ETC.

 

No amendment or waiver of any provision of any Loan Document or consent to any
departure by the Borrower therefrom shall be effective unless the same shall be
in writing and signed by the Required Lenders (or by the Administrative Agent
with the consent or at the request of the Required Lenders), and any such waiver
shall be effective only in the specific instance and for the specific purpose
for which given.  No notice to or demand on the Borrower in any case shall

 

45

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entitle the Borrower to any other or further notice or demand in similar or
other circumstances. Notwithstanding the foregoing, no such amendment, waiver or
consent shall be effective to do any of the following unless signed by each of
the Lenders (or by the Administrative Agent with the consent or at the request
of each of the Lenders):

 

(A)           REDUCE THE PRINCIPAL OF, OR THE RATE OF INTEREST SPECIFIED HEREIN
ON ANY NOTE, OR ANY FEES OR OTHER AMOUNTS PAYABLE TO OR FOR THE BENEFIT OF THE
LENDERS HEREUNDER OR UNDER ANY OTHER LOAN DOCUMENT.

 

(B)           POSTPONE OR DELAY ANY DATE FIXED BY THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT FOR ANY PAYMENT OF PRINCIPAL, INTEREST, FEES OR OTHER MATERIAL
AMOUNTS DUE TO THE LENDERS (OR ANY OF THEM) HEREUNDER OR UNDER ANY OTHER LOAN
DOCUMENT.

 

(C)           INCREASE THE REVOLVING COMMITMENT OF ANY LENDER OR EXTEND THE
REVOLVING COMMITMENT OF ANY LENDER.

 

(D)           PERMIT THE BORROWER TO ASSIGN ITS RIGHTS UNDER THIS AGREEMENT.

 

(E)           AGREE TO RELEASE ANY GUARANTY.

 

(F)            AMEND THIS SECTION, THE DEFINITION OF “REQUIRED LENDERS” IN
SECTION 1.1, OR ANY PROVISION HEREIN PROVIDING FOR CONSENT OR OTHER ACTION BY
ALL LENDERS.

 

No amendment, waiver or consent shall affect the rights or duties of the
Administrative Agent under this Agreement or any other Loan Document unless in
writing and signed by the Administrative Agent.

 

SECTION 9.3            NOTICE.

 

Except as otherwise expressly provided herein, all notices and other
communications hereunder shall be in writing and shall be (i)  personally
delivered, (ii)  transmitted by registered mail, postage prepaid, (iii)  sent by
Federal Express or similar expedited delivery service, or (iv)  transmitted by
telecopy, in each case addressed to the party to whom notice is being given at
its address or telecopier number (as the case may be) as set forth in Exhibit A
or in any applicable Assignment Certificate; or, as to each party, at such other
address or telecopier number as may hereafter be designated in a notice by that
party to the other party complying with the terms of this Section.  All such
notices or other communications shall be deemed to have been given on (i) the
date received if delivered personally or by mail, (ii) the date of receipt, if
delivered by Federal Express or similar expedited delivery service, or (iii) the
date of transmission if delivered by telecopy, except that notices or requests
to any Lender Party pursuant to any of the provisions of Article II shall not be
effective until received.

 

SECTION 9.4            COSTS AND EXPENSES.

 

The Borrower agrees to pay on demand all costs and expenses incurred by the
Administrative Agent in connection with the negotiation, preparation, execution,
administration, amendment or enforcement of the Loan Documents and the other
instruments and documents to be delivered hereunder and thereunder, including
the reasonable fees and out-of-pocket expenses of counsel

 

46

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for any Lender with respect thereto, whether paid to outside counsel or
allocated to the Administrative Agent by in-house counsel.

 

SECTION 9.5            INDEMNIFICATION BY BORROWER.

 

The Borrower hereby agrees to indemnify the Lender Parties and each officer,
director, employee and agent thereof (herein individually each called an
“Indemnitee” and collectively called the “Indemnitees”) from and against any and
all losses, claims, damages, reasonable expenses (including, without limitation,
reasonable attorneys’ fees) and liabilities (all of the foregoing being herein
called the “Indemnified Liabilities”) incurred by an Indemnitee in connection
with or arising out of the execution or delivery of this Agreement or any
agreement or instrument contemplated hereby, the performance by the parties
hereto of their respective obligations hereunder or the use of the proceeds of
any Borrowing or Letter of Credit hereunder (including but not limited to any
such loss, claim, damage, expense or liability arising out of any claim in which
it is alleged that any Environmental Law has been breached with respect to any
activity or property of the Borrower), except for any portion of such losses,
claims, damages, expenses or liabilities incurred solely as a result of the
gross negligence or willful misconduct of the applicable Indemnitee.  If and to
the extent that the foregoing indemnity may be unenforceable for any reason, the
Borrower hereby agrees to make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is permissible under
applicable law.  All obligations provided for in this Section shall survive any
termination of this Agreement.

 

SECTION 9.6            EXECUTION IN COUNTERPARTS.

 

This Agreement and the other Loan Documents may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which counterparts of this Agreement or such other Loan
Document, as the case may be, taken together, shall constitute but one and the
same instrument.

 

SECTION 9.7            BINDING EFFECT, ASSIGNMENT.

 

The Loan Documents shall be binding upon and inure to the benefit of the
Borrower and the Lenders and their respective successors and assigns, except
that the Borrower shall not have the right to assign its rights thereunder or
any interest therein without the prior written consent of each of  the Lenders.

 

SECTION 9.8            GOVERNING LAW.

 

The Loan Documents shall be governed by, and construed in accordance with, the
laws of the State of Minnesota.

 

SECTION 9.9            CONSENT TO JURISDICTION.

 

The Borrower irrevocably (i) agrees that any suit, action or other legal
proceeding arising out of or relating to this Agreement or any other Loan
Document may be brought in a court of record in Hennepin County in the State of
Minnesota or in the courts of the United States located in such State,
(ii) consents to the jurisdiction of each such court in any suit, action or
proceeding, (iii) waives any objection which it may have to the laying of venue
of any such suit, action or

 

47

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proceeding in any such courts and any claim that any such suit, action or
proceeding has been brought in an inconvenient forum, and (iv) agrees that a
final judgment in any such suit, 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.

 

SECTION 9.10         WAIVER OF JURY TRIAL.

 

THE BORROWER AND THE LENDER PARTIES HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL
PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN
TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED
WITH THIS AGREEMENT AND THE NOTES OR THE RELATIONSHIPS ESTABLISHED HEREUNDER.

 

SECTION 9.11         SEVERABILITY OF PROVISIONS.

 

Any provision of this Agreement which is prohibited or unenforceable shall be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof.

 

SECTION 9.12         PRIOR AGREEMENTS.

 

This Agreement and the other Loan Documents and related documents described
herein restate and supersede in their entirety any and all prior agreements and
understandings, oral or written, between the Lenders and the Borrower.

 

SECTION 9.13         HEADINGS.

 

Article and Section headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose.

 

SECTION 9.14         RESTATEMENT OF PRIOR AGREEMENT.

 

This Agreement is executed for the purpose of replacing and restating the Credit
Agreement dated July 24, 2002 among the Borrower, Wells Fargo and the other
Banks, as defined therein (together with all amendments, modifications and
restatements thereof, the “Prior Agreement”). Upon execution and delivery of
this Agreement by each of the parties hereto and satisfaction of the conditions
precedent set forth in Section 3.1, (i) the Prior Agreement shall be deemed
amended, superseded and restated in its entirety by the terms and provisions of
this Agreement, (ii) the Commitment of Wells Fargo under the Prior Agreement
shall automatically be deemed amended in accordance with this Agreement, and
(iii) all outstanding Letters of Credit (as defined in the Prior Agreement)
shall continue as Letters of Credit under (and shall be governed by the terms
of) this Agreement.

 

Signature pages follow

 

48

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers thereunto duly authorized as of the date first
above written.

 

 

ARCTIC CAT INC.

 

 

 

 

 

By

 

 

 

Name: Timothy C. Delmore

 

 

Title: Chief Financial Officer

 

Signature Page to Arctic Cat Inc. Credit Agreement

 

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

 

 

WELLS FARGO BANK, NATIONAL
ASSOCIATION,
as Administrative Agent and Lender

 

 

 

 

 

By:

 

 

 

Name: Mark H. Halldorson

 

 

Title: Vice President

 

Signature Page to Arctic Cat Inc. Credit Agreement

 

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

 

EXHIBITS AND SCHEDULES

 

Exhibit A

 

Revolving Commitments and Addresses

 

 

 

Exhibit B

 

Revolving Note

 

 

 

Exhibit C

 

Form of Compliance Certificate

 

 

 

Exhibit D

 

Assignment Certificate

 

 

 

Schedule 4.4

 

Subsidiaries

 

 

 

Schedule 4.11

 

Other Filed Financing Statements

 

 

 

Schedule 6.1

 

Permitted Liens

 

 

 

Schedule 6.2

 

Permitted Indebtedness

 

 

 

Schedule 6.3

 

Permitted Guaranties

 

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

 

Exhibit A

 

REVOLVING COMMITMENTS AND ADDRESSES

 

Name

 

Revolving Commitments

 

Notice Address

 

 

 

 

 

 

 

Arctic Cat Inc.

 

N/A

 

505 North Highway 169

 

 

 

 

 

Suite 1000

 

 

 

 

 

Plymouth MN 55441

 

 

 

 

 

Attention: Timothy C. Delmore

 

 

 

 

 

Telecopier: 763-354-1803

 

 

 

 

 

 

 

Wells Fargo Bank,

 

N/A

 

MAC N9305-077

 

National Association,

 

 

 

Sixth and Marquette

 

as Administrative

 

 

 

Minneapolis, Minnesota 55479

 

Agent

 

 

 

Attention: Mark Halldorson

 

 

 

 

 

Telecopier: 612-667-2276

 

 

 

 

 

 

 

Wells Fargo Bank,

 

$

75,000,000

 

MAC N9305-077

 

National Association,

 

 

 

Sixth and Marquette

 

as a Lender

 

 

 

Minneapolis, Minnesota 55479

 

 

 

 

 

Attention: Mark Halldorson

 

 

 

 

 

Telecopier: 612-667-2276

 

 

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

 

Exhibit B

 

PROMISSORY NOTE

 

$         

Minneapolis, Minnesota

 

                            , 200  

 

For value received, Arctic Cat Inc., a Minnesota corporation (the “Borrower”),
promises to pay to the order of
                                                                          , a
                                           (the “Lender”), at such place as the
Administrative Agent under the Credit Agreement defined below may from time to
time designate in writing, the principal sum of
                                                                              
Dollars ($                            ), or so much thereof as is advanced by
the Lender to the Borrower pursuant to Section 2.1 of the Credit Agreement dated
as of August 29, 2008 among the Borrower, Wells Fargo Bank, National
Association, a national banking association, as Administrative Agent, and
various lenders, including the Lender (together with all amendments,
modifications and restatements thereof, the “Credit Agreement”), and to pay
interest on the principal balance of this Note outstanding from time to time at
the rate or rates determined pursuant to the Credit Agreement.

 

This Note is issued pursuant to, and is subject to, the Credit Agreement, which
provides (among other things) for the amount and date of payments of principal
and interest required hereunder, for the acceleration of the maturity hereof
upon the occurrence of an Event of Default (as defined therein) and for the
voluntary prepayment hereof. This Note is a Revolving Note, as defined in the
Credit Agreement.

 

The Borrower shall pay all costs of collection, including reasonable attorneys’
fees and legal expenses, if this Note is not paid when due, whether or not legal
proceedings are commenced.

 

Presentment or other demand for payment, notice of dishonor and protest are
expressly waived.

 

 

ARCTIC CAT INC.

 

 

 

 

 

By

 

 

 

Name:

 

 

 

Title:

 

 

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

 

Exhibit C

 

COMPLIANCE CERTIFICATE

 

                                                    , 200   

 

Wells Fargo Bank, National Association

MAC N9305-031
Sixth Street and Marquette Avenue
Minneapolis, Minnesota 55479

 

Compliance Certificate

 

Ladies and Gentlemen:

 

Reference is made to the Credit Agreement (the “Credit Agreement”) dated as of
August 29, 2008 entered into among Wells Fargo Bank, National Association,
Arctic Cat Inc. and the Lenders, as defined therein (the “Borrower”).

 

All terms defined in the Credit Agreement and not otherwise defined herein shall
have the meanings given them in the Credit Agreement.

 

This is a Compliance Certificate submitted in connection with the Borrower’s
financial statements (the “Statements”) as of
                                          , 200     (the “Effective Date”).

 

I hereby certify to you as follows:

 

1.                                       I am the
                                                   of the Borrower, and I am
familiar with the financial statements and financial affairs of the Borrower.

 

2.                                       The Statements, and the computations
below, have been prepared in accordance with GAAP.

 

3.                                       Exhibit 1 sets forth the Asset Coverage
Ratio of the Obligors as of the Effective Date.

 

[4.                                   Exhibit 2 sets forth the Borrower’s
compliance or non-compliance with the requirements set forth in Sections 5.10
and 5.11 of the Credit Agreement as of the Effective Date. Also attached hereto
are all relevant facts in reasonable detail to evidence, and the computations
of, the covenants referred to above.](1)

 

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

(1)                                  Paragraph 4 and Exhibit 2 should be
included only if the applicable statements are being provided under paragraph
(a) or (b) of Section 5.1 of the Credit Agreement (i.e., they are quarterly or
annual statements, not monthly statements).

 

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

 

5.                                       I have no knowledge of the occurrence
of any Default or Event of Default under the Credit Agreement, except as set
forth in the attachments, if any, hereto.

 

 

Very truly yours,

 

 

 

 ARCTIC CAT INC.

 

 

 

 

 

 By

 

 

 

Name:

 

 

 

Title:

 

 

2

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

 

Exhibit 1 to
Compliance Certificate

 

Asset Coverage Ratio

 

Descriptions of terms below are for ease of reference but not necessarily
comprehensive. The actual meaning of all terms shall be as set forth in the
Credit Agreement.

 

Section 5.9 Asset Coverage Ratio

 

 

 

 

 

 

Adjusted Asset Value:

 

 

 

 

 

 

Eligible Receivable Value

 

 

 

 

 

 

Total value of unpaid accounts

 

 

 $

  

 

 

- credits and allowances

 

-

 $

 

 

 

- Dealer Holdback

 

-

 $

 

 

 

- over 120 days past due (to extent > $2,000,000)

 

-

 $

 

 

 

- accounts that are disputed or subject to a contra accounts

 

-

 $

 

 

 

- accounts owed by a dissolved debtor

 

-

 $

 

 

 

- accounts owed by an Affiliate

 

-

 $

 

 

 

- accounts not a duly perfected in favor of the Administrative Agent

 

-

 $

 

 

 

- modified or extended accounts

 

-

 $

 

 

 

- accounts tied to finance or services charges

 

-

 $

 

 

 

Total Eligible Receivables Value

 

 

 $

 

 

 

(A) 70% of Eligible Receivables Value

 

 

 

 

$

  

 

Total Eligible Raw Materials Value

 

 

 $

 

 

 

(B) 10% of Eligible Raw Materials Value

 

 

 

 

$

  

 

Total Eligible Finished Goods Value

 

 

 $

 

 

 

(C) 60% of Eligible Finished Goods Value

 

 

 

 

$

   

 

Total Eligible Parts Value

 

 

 $

 

 

 

(D) 45% of Eligible Parts Value

 

 

 

 

$

  

 

(E) Adjusted Asset Value (A + B + C + D):

 

 

 

 

$

  

 

(F) Revolving Facility Advances (as of Effective Date):

 

 

 

 

$

  

 

Asset Coverage Ratio (E:F)

 

 

 

 

: 1

 

Required Asset Coverage Ratio

 

 

 

 

> 1.25:1

 

 

3

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

 

Exhibit 2 to
Compliance Certificate

 

EBITDA and Tangible Net Worth

 

Descriptions of terms below are for ease of reference but not necessarily
comprehensive. The actual meaning of all terms shall be as set forth in the
Credit Agreement.

 

Section 5.10 Minimum EBITDA

 

 

 

 

 

Consolidated Net Income

 

 

 $

 

 

 

+ Income taxes

 

+

 $

 

 

 

+ Interest expense

 

+

 $

 

 

 

+ Depreciation

 

+

 $

 

 

 

+ Amortization

 

+

 $

 

 

 

- Non-operating gains

 

-

 $

 

 

 

+ Non-operating losses

 

+

 $

 

 

 

EBITDA

 

 

 

 

$

   

 

Required EBITDA

 

 

 

> $15,000,000 @ September 31, 2008
> $27,500,000 @ December 31, 2008

 

 

 

 

 

 

 

Section 5.11 Minimum Tangible Net Worth

 

 

 

 

 

Stockholders’ Equity

 

 

 

 

 

- Intangible Assets

 

 

 

 

 

Tangible Net Worth

 

 

 

 

 

Required Tangible Net Worth

 

 

 

> $150,000,000

 

 

4

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

 

Exhibit D

 

ASSIGNMENT CERTIFICATE

 

Assigning Lender:                          

 

Applicant:                     

 

This Certificate (the “Certificate”) is delivered pursuant to Section 8.12 of
the Credit Agreement dated as of August 29, 2008 (together with all amendments,
supplements, restatements and other modifications, if any, from time to time
made thereto, the “Credit Agreement”), among Arctic Cat Inc., a Minnesota
corporation (the “Borrower”), Wells Fargo Bank, National Association, as lead
arranger and administrative agent (the “Administrative Agent”), and the various
lenders now or hereafter parties thereto.

 

The Assigning Lender named above wishes to assign all or a portion of its
interest arising under the Credit Agreement to the Applicant named above
pursuant to Section 8.12 of the Credit Agreement, and the Applicant wishes to
become an Additional Lender pursuant thereto. This Certificate is an Assignment
Certificate, as defined in the Credit Agreement, and is executed for purposes of
informing the Administrative Agent and the Borrower of the transactions
contemplate hereby and obtaining the consent of the Administrative Agent and the
Borrower to the extent required under the Credit Agreement.

 

Accordingly, the undersigned hereby agree as follows:

 

1.                                       Definitions. Unless otherwise defined
herein, terms used herein have the meanings provided in the Credit Agreement.

 

2.                                       Authorization; No Prior Assignment. 
The Assigning Lender is duly authorized to assign the interest assigned pursuant
to Section 4 of this Certificate and such interest is not subject to any other
assignment, participation, claim or other right or interest of any other Person
other than rights and interests of the Borrower and the Lenders as set forth in
the Credit Agreement.

 

3.                                       Allocation of Payments. Any interest,
fees and other payments accrued to the Effective Date with respect to the
Assigning Lender’s interest under the Loan Documents shall be for the account of
the Assigning Lender. Any interest, fees and other payments accruing on and
after the Effective Date with respect to the interests assigned hereunder shall
be for the account of the Applicant.  Each of the Assigning Lender and the
Applicant agrees that it will hold in trust for the other party any interest,
fees and other amounts which it may receive to which the other party is entitled
pursuant to the preceding sentence and pay to the other party any such amounts
which it may receive promptly upon receipt.

 

4.                                       Effective Date; Conditions. The date on
which the Applicant shall become an Additional Lender (the “Effective Date”) is
                          , 20    ; provided, however, that the assignment and
assumption described in this Certificate shall not be effective unless, on or
before the Effective Date, (i) the Administrative Agent has received
counterparts of this Certificate duly executed and delivered by the Borrower
(unless the Borrower’s consent to the

 

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

 

assignment hereunder is not required under Section 8.12 of the Credit
Agreement), the Assigning Lender, the Administrative Agent and the Applicant,
(ii) the Administrative Agent has received the transfer fee for the account of
the Administrative Agent in the amount of $3,000, and (iii) all other terms and
conditions of this Certificate and the Credit Agreement relating to the
assignment hereunder have been satisfied.

 

5.                                       Applicant’s Interest. Effective as of
the Effective Date, (i) the Applicant’s Revolving Commitment shall be the
amounts so designated by the Applicant’s signature below (and the Applicant
shall be deemed to have assumed the Assigning Lender’s obligations in the amount
of such Revolving Commitment), and (ii) the principal amount of Revolving
Advances owing to the Applicant shall be the amount so designated by the
Applicant’s signature below.

 

6.                                       Retained Interest. Effective as of the
Effective Date, (i) the Assigning Lender’s Revolving Commitment shall be the
amounts so designated by the Assigning Lender’s signature below (which amounts
shall, when added to the Applicant’s applicable Revolving Commitment as
determined under paragraph 5., equal the Assigning Lender’s Revolving Commitment
as determined immediately before giving effect to this Certificate) (and the
Assigning Lender shall be relieved of all of its obligations under the Credit
Agreement to the extent of the reduction in its Revolving Commitment in
accordance herewith), and (ii) the principal amount of Revolving Advances owing
to the Assigning Lender shall be the amount so designated by the Assigning
Lender’s signature below.

 

7.                                       New Notes. Concurrently with the
execution and delivery hereof, the Borrower shall issue and deliver to the
Administrative Agent in exchange for the Assigning Lender’s Revolving Note:

 

(I)                                     A REVOLVING NOTE PAYABLE TO THE ORDER OF
THE APPLICANT IN A FACE PRINCIPAL AMOUNT EQUAL TO THE APPLICANT’S REVOLVING
COMMITMENT (OR, IF THE EFFECTIVE DATE IS AFTER THE FACILITY TERMINATION DATE,
THE PRINCIPAL AMOUNT OF THE REVOLVING ADVANCES ASSIGNED TO THE APPLICANT), IN
SUBSTANTIALLY THE FORM OF THE APPLICABLE EXHIBITS TO THE CREDIT AGREEMENT;

 

(II)                                  A REVOLVING NOTE PAYABLE TO THE ORDER OF
THE ASSIGNING LENDER IN A FACE PRINCIPAL AMOUNT EQUAL TO THE ASSIGNING LENDER’S
REVOLVING COMMITMENT (OR, IF THE EFFECTIVE DATE IS AFTER THE FACILITY
TERMINATION DATE, THE PRINCIPAL AMOUNT OF THE REVOLVING ADVANCES RETAINED BY THE
ASSIGNING LENDER), IN SUBSTANTIALLY THE FORM OF THE APPLICABLE EXHIBITS TO THE
CREDIT AGREEMENT;

 

The Administrative Agent shall deliver the foregoing Notes to the Applicant and
the Assigning Lender promptly after the Effective Date, or (if later) the
receipt by the Administrative Agent thereof.

 

8.                                       Notice Address. The address shown below
the Applicant’s signature hereto shall be its notice address for purposes of
Section 9.3 of the Credit Agreement, unless and until it shall designate, in
accordance with such Section 9.3, another address for such purposes.

 

9.                                       Assumption. Upon the Effective Date,
the Applicant shall become a party to the Credit Agreement and a Lender
thereunder and (i) shall be entitled to all rights, benefits

 

2

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

 

and privileges accorded to a Lender in the Credit Agreement, (ii) shall be
subject to all obligations of a Lender thereunder, and (iii) shall be deemed to
have specifically ratified, confirmed and agreed to be bound by (and by
executing this Certificate the Applicant hereby specifically ratifies, confirms
and agrees to be bound by) all of the provisions of the Credit Agreement and the
Loan Documents.

 

10                                    Independent Credit Decision. The Applicant
(a) acknowledges that it has received a copy of the Credit Agreement and the
Schedules and Exhibits thereto, together with copies of the most recent
financial statements referred to in Section 4.5 or 5.1 of the Credit Agreement,
and such other documents and information as it has deemed appropriate to make
its own credit and legal analysis and decision to enter into this Assignment and
Acceptance; (b) acknowledges and agrees that in becoming an Additional Lender
and in making any Advance under the Credit Agreement, such actions have been and
will be made without recourse to, or representation or warranty by, the
Assigning Lender or the Administrative Agent; and (c) agrees that it will,
independently and without reliance upon the Assigning Lender, the Administrative
Agent or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit and legal
decisions in taking or not taking action under the Credit Agreement.

 

11.                                 Withholding Tax. The Applicant
(a) represents and warrants to the Administrative Agent and the Borrower that
under applicable law and treaties no tax will be required to be withheld by the
Administrative Agent with respect to any payments to be made to the Applicant
hereunder, (b) agrees to furnish (if it is organized under the laws of any
jurisdiction other than the United States or any State thereof) to the
Administrative Agent and the Borrower prior to the time that the Administrative
Agent or Borrower is required to make any payment of principal, interest or fees
hereunder, duplicate executed originals of U.S. Internal Revenue Service
Form W-8ECI or W-8BEN (or appropriate replacement forms) and agrees to provide
new Forms W-8ECI or W-8BEN (or appropriate replacement forms) upon the
expiration of any previously delivered form or comparable statements in
accordance with applicable U.S. law and regulations and amendments thereto, duly
executed and completed by the Applicant, and (c) agrees to comply with all
applicable U.S. laws and regulations with regard to such withholding tax
exemption.

 

12.                                 Further Assurances. The Borrower, the
Assigning Lender and the Applicant shall, at any time and from time to time upon
the written request of the Administrative Agent, execute and deliver such
further documents and do such further acts and things as the Administrative
Agent may reasonably request in order to effect the purpose of this Certificate.

 

13.                                 MISCELLANEOUS. THIS CERTIFICATE MAY BE
EXECUTED IN ANY NUMBER OF COUNTERPARTS BY THE PARTIES HERETO, EACH OF WHICH
COUNTERPARTS SHALL BE DEEMED TO BE AN ORIGINAL AND ALL OF WHICH SHALL TOGETHER
CONSTITUTE ONE AND THE SAME CERTIFICATE.  MATTERS RELATING TO THIS CERTIFICATE
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE
STATE OF MINNESOTA.

 

3

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

 

IN WITNESS WHEREOF, the undersigned have executed this Certificate as of the
Effective Date set forth above.

 

Retained:

 

 

Revolving Commitment: $                

[Assigning Lender]

 

 

 

 

Revolving Advances: $

 

 

 

 

By

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 

 

 

Assigned:

 

 

Revolving Commitment: $

 

 

 

[Applicant]

 

Revolving Advances: $

 

 

 

 

 

 

 

 

By

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 

 

 

 

Notice Address:

 

 

 

 

 

 

 

 

Telecopier:

 

 

Consent of Administrative Agent

 

The Administrative Agent hereby consents to the foregoing Assignment.

 

 

WELLS FARGO BANK, NATIONAL
ASSOCIATION

 

 

 

 

 

 

 

 

 

 

By

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 

Consent of Borrower

 

The Borrower hereby consents to the foregoing Assignment.

 

 

ARCTIC CAT INC.

 

 

 

 

 

 

 

 

 

 

By

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 

4

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

 

Schedule 4.4

 

Subsidiaries of Arctic Cat Inc.

 

Entity

 

Incorporation/
Organization

 

Authorized
Shares/Units

 

Outstanding
Shares/Units

 

Ownership

 

 

 

 

 

 

 

 

 

 

 

Arctic Cat Sales Inc.

 

Minnesota

 

50,000

 

1,000

 

Arctic Cat Inc.

 

 

 

 

 

 

 

 

 

 

 

Arctic Cat Production LLC

 

Minnesota

 

N/A

 

1,000

 

Arctic Cat Inc.

 

 

 

 

 

 

 

 

 

 

 

Arctic Cat Production Support LLC

 

Minnesota

 

N/A

 

1,000

 

Arctic Cat Inc.

 

 

 

 

 

 

 

 

 

 

 

Arctic Cat Shared Services LLC

 

Minnesota

 

N/A

 

1,000

 

Arctic Cat Inc.

 

 

 

 

 

 

 

 

 

 

 

Arctic Cat ACE Holding GmbH

 

Austria

 

N/A

 

N/A

 

Arctic Cat Sales Inc.

 

 

 

 

 

 

 

 

 

 

 

Arctic Cat GmbH

 

Austria

 

N/A

 

N/A

 

Arctic Cat ACE Holding GmbH

 

 

 

 

 

 

 

 

 

 

 

ARCTIC CAT France SARL

 

France

 

 

 

 

 

Arctic Cat GmbH

 

 

 

 

 

 

 

 

 

 

 

ARCTIC CAT Deutschland GmbH

 

Germany

 

 

 

 

 

Arctic Cat GmbH

 

 

 

 

 

 

 

 

 

 

 

ARCTIC CAT Italia S.R.L.

 

Italy

 

 

 

 

 

Arctic Cat GmbH

 

 

 

 

 

 

 

 

 

 

 

ARCTIC CAT España S.L.

 

Spain

 

 

 

 

 

Arctic Cat GmbH

 

 

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

 

Schedule 4.11

 

Other Filed Financing Statements

 

Debtor

 

Secured
Party

 

Filing No.

 

Filing
Date

 

Collateral

 

 

 

 

 

 

 

 

 

Arctic Cat Inc.

 

General Electric Capital Corporation

 

1944140

 

05/23/97

 

All Loans and Loan Documentation; all deposits, credit balances and reserves on
GECC’s books relative to the Loans; all proceeds of the foregoing

 

 

 

 

 

 

 

 

 

Arctic Cat Inc.

 

Monogram Credit Card Bank of Georgia

 

1944143

 

05/23/97

 

All Accounts and Indebtedness; all deposits, credit balances and reserves on
Monogram’s books relative to any Accounts; and all proceeds of the foregoing

 

 

 

 

 

 

 

 

 

Arctic Cat Sales Inc.

 

General Electric Capital Corporation

 

1944141

 

05/23/97

 

All Loans and Loan Documentation; all deposits, credit balances and reserves on
GECC’s books relative to the Loans; all proceeds of the foregoing

 

 

 

 

 

 

 

 

 

Arctic Cat Sales Inc.

 

Monogram Credit Card Bank of Georgia

 

1944142

 

05/23/97

 

All Accounts and Indebtedness; all deposits, credit balances and reserves on
Monogram’s books relative to any Accounts; and all proceeds of the foregoing

 

The above financing statements for General Electric Capital Corporation and
Monogram Credit Card Bank of Georgia were filed in connection with dealer
finance arrangements that have been terminated.  The Borrower is diligently
working to have those financing statements terminated of record.

 

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

 

Schedule 6.1

 

Permitted Liens

 

Security Interest of City of St. Cloud, Minnesota in equipment located in
Borrower’s St. Cloud, Minnesota manufacturing plant to secure indebtedness owed
to the City of St. Cloud described in Schedule 6.2.

 

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

 

Schedule 6.2

 

Permitted Indebtedness

 

Indebtedness in the original amount of $500,000.00 (current balance of
$346,667.00) to City of St. Cloud, Minnesota under that certain Agreement for
Loan of Minnesota Investment Fund dated as of March 30, 2006, in connection with
Borrower’s participation in the State of Minnesota’s Job Opportunity Building
Zones (“JOBZ”) program

 

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

 

Schedule 6.3

 

Permitted Guaranties

 

None.

 

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