Exhibit 4b to Winnebago Industries, Inc. Form 10-K for fiscal year ended 8-29-2009




Exhibit 4b.




[EXECUTION]




LOAN AND SECURITY AGREEMENT


by and among


WINNEBAGO INDUSTRIES, INC.

(as Borrower)


and


THE OTHER LOAN PARTY SIGNATORIES HERETO


BURDALE CAPITAL FINANCE, INC.

(as a Lender and as Agent)


and


THE LENDERS FROM TIME TO TIME HERETO

(as Lenders)


October 13, 2009







TABLE OF CONTENTS


	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
 Page

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 1.

 	
 DEFINITIONS

 	
  

 	
 1

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 1.1

 	
 Accounting
 Terms

 	
  

 	
 1

 
	
  

 	
 1.2

 	
 General
 Terms

 	
  

 	
 1

 
	
  

 	
 1.3

 	
 Uniform
 Commercial Code Terms

 	
  

 	
 24

 
	
  

 	
 1.4

 	
 Certain
 Matters of Construction

 	
  

 	
 24

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 2.

 	
 ADVANCES, PAYMENTS

 	
  

 	
 24

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 2.1

 	
 Revolving
 Advances

 	
  

 	
 24

 
	
  

 	
 2.2

 	
 Procedure
 for Borrowing

 	
  

 	
 25

 
	
  

 	
 2.3

 	
 Disbursement
 of Advance Proceeds

 	
  

 	
 26

 
	
  

 	
 2.4

 	
 Increase in
 Maximum Credit

 	
  

 	
 27

 
	
  

 	
 2.5

 	
 [Reserved]

 	
  

 	
 28

 
	
  

 	
 2.6

 	
 Repayment of
 Advances

 	
  

 	
 28

 
	
  

 	
 2.7

 	
 Repayment of
 Excess Advances

 	
  

 	
 29

 
	
  

 	
 2.8

 	
 Statement of
 Account

 	
  

 	
 29

 
	
  

 	
 2.9

 	
 Letters of
 Credit

 	
  

 	
 29

 
	
  

 	
 2.10

 	
 Issuance of
 Letters of Credit

 	
  

 	
 30

 
	
  

 	
 2.11

 	
 Requirements
 for Issuance of Letters of Credit

 	
  

 	
 30

 
	
  

 	
 2.12

 	
 Additional
 Payments/Protective Advances

 	
  

 	
 31

 
	
  

 	
 2.13

 	
 Manner of
 Borrowing and Payment

 	
  

 	
 31

 
	
  

 	
 2.14

 	
 Mandatory
 Prepayments

 	
  

 	
 33

 
	
  

 	
 2.15

 	
 Use of
 Proceeds

 	
  

 	
 33

 
	
  

 	
 2.16

 	
 Defaulting
 Lender/Impacted Lender

 	
  

 	
 33

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 3.

 	
 INTEREST AND FEES

 	
  

 	
 34

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 3.1

 	
 Interest

 	
  

 	
 34

 
	
  

 	
 3.2

 	
 Letter of
 Credit Fees; Cash Collateral

 	
  

 	
 34

 
	
  

 	
 3.3

 	
 Loan Fees

 	
  

 	
 35

 
	
  

 	
 3.4

 	
 Collateral
 Monitoring Fees and Expenses

 	
  

 	
 35

 
	
  

 	
 3.5

 	
 Computation
 of Interest and Fees

 	
  

 	
 36

 
	
  

 	
 3.6

 	
 Maximum
 Charges

 	
  

 	
 36

 
	
  

 	
 3.7

 	
 Increased
 Costs

 	
  

 	
 36

 
	
  

 	
 3.8

 	
 Basis For
 Determining Interest Rate Inadequate or Unfair

 	
  

 	
 37

 
	
  

 	
 3.9

 	
 Capital
 Adequacy

 	
  

 	
 37

 
	
  

 	
 3.10

 	
 Withholding
 Taxes

 	
  

 	
 38

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 4.

 	
 GRANT OF SECURITY INTEREST; COLLATERAL COVENANTS

 	
  

 	
 38

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 4.1

 	
 Security
 Interest in the Collateral

 	
  

 	
 38

 
	
  

 	
 4.2

 	
 Perfection
 of Security Interest

 	
  

 	
 39

 
	
  

 	
 4.3

 	
 Disposition
 of Collateral/Assets

 	
  

 	
 39

 
	
  

 	
 4.4

 	
 Preservation
 of Collateral

 	
  

 	
 40

 


(i)










	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 4.5

 	
 Ownership
 and Location of Collateral

 	
  

 	
 40

 
	
  

 	
 4.6

 	
 Defense of
 Agent’s and Lenders’ Interests

 	
  

 	
 40

 
	
  

 	
 4.7

 	
 Books and
 Records

 	
  

 	
 41

 
	
  

 	
 4.8

 	
 Financial
 Disclosure

 	
  

 	
 41

 
	
  

 	
 4.9

 	
 Compliance
 with Laws

 	
  

 	
 41

 
	
  

 	
 4.10

 	
 Inspection
 of Premises/Appraisals

 	
  

 	
 41

 
	
  

 	
 4.11

 	
 Insurance

 	
  

 	
 42

 
	
  

 	
 4.12

 	
 Failure to
 Pay Insurance

 	
  

 	
 42

 
	
  

 	
 4.13

 	
 Payment of
 Taxes

 	
  

 	
 42

 
	
  

 	
 4.14

 	
 Payment of
 Leasehold Obligations

 	
  

 	
 43

 
	
  

 	
 4.15

 	
 Accounts and
 other Receivables

 	
  

 	
 43

 
	
  

 	
 4.16

 	
 Inventory

 	
  

 	
 46

 
	
  

 	
 4.17

 	
 Maintenance
 of Equipment

 	
  

 	
 46

 
	
  

 	
 4.18

 	
 Exculpation
 of Liability

 	
  

 	
 46

 
	
  

 	
 4.19

 	
 Environmental
 Matters

 	
  

 	
 46

 
	
  

 	
 4.20

 	
 Financing
 Statements

 	
  

 	
 48

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 5.

 	
 REPRESENTATIONS AND WARRANTIES

 	
  

 	
 48

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 5.1

 	
 Authority,
 Etc.

 	
  

 	
 48

 
	
  

 	
 5.2

 	
 Formation
 and Qualification

 	
  

 	
 48

 
	
  

 	
 5.3

 	
 Survival of
 Representations and Warranties

 	
  

 	
 49

 
	
  

 	
 5.4

 	
 Tax Returns

 	
  

 	
 49

 
	
  

 	
 5.5

 	
 Financial
 Statements

 	
  

 	
 49

 
	
  

 	
 5.6

 	
 Corporate
 Name

 	
  

 	
 50

 
	
  

 	
 5.7

 	
 O.S.H.A. and
 Environmental Compliance

 	
  

 	
 50

 
	
  

 	
 5.8

 	
 Solvency; No
 Litigation, Violation, Indebtedness or Default

 	
  

 	
 50

 
	
  

 	
 5.9

 	
 Patents,
 Trademarks, Copyrights and Licenses

 	
  

 	
 51

 
	
  

 	
 5.10

 	
 Licenses and
 Permits

 	
  

 	
 52

 
	
  

 	
 5.11

 	
 Inventory
 Buy-back and Puts

 	
  

 	
 52

 
	
  

 	
 5.12

 	
 No Default

 	
  

 	
 52

 
	
  

 	
 5.13

 	
 No
 Burdensome Restrictions/No Liens

 	
  

 	
 52

 
	
  

 	
 5.14

 	
 No Labor
 Disputes

 	
  

 	
 52

 
	
  

 	
 5.15

 	
 Margin
 Regulations

 	
  

 	
 52

 
	
  

 	
 5.16

 	
 Investment
 Company Act

 	
  

 	
 53

 
	
  

 	
 5.17

 	
 Disclosure

 	
  

 	
 53

 
	
  

 	
 5.18

 	
 Real
 Property

 	
  

 	
 53

 
	
  

 	
 5.19

 	
 Hedging
 Agreements

 	
  

 	
 53

 
	
  

 	
 5.20

 	
 Conflicting
 Agreements

 	
  

 	
 53

 
	
  

 	
 5.21

 	
 Application
 of Certain Laws and Regulations

 	
  

 	
 53

 
	
  

 	
 5.22

 	
 Business and
 Property of Loan Parties

 	
  

 	
 54

 
	
  

 	
 5.23

 	
 Material
 Contracts

 	
  

 	
 54

 
	
  

 	
 5.24

 	
 Capital
 Structure

 	
  

 	
 54

 
	
  

 	
 5.25

 	
 Bank
 Accounts, Security Accounts, Etc.

 	
  

 	
 54

 
	
  

 	
 5.26

 	
 MCOs and
 MSOs

 	
  

 	
 54

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 6.

 	
 AFFIRMATIVE COVENANTS

 	
  

 	
 55

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 6.1

 	
 Payment of
 Fees

 	
  

 	
 55

 
	
  

 	
 6.2

 	
 Conduct of
 Business and Maintenance of Existence and Assets

 	
  

 	
 55

 
	
  

 	
 6.3

 	
 Violations

 	
  

 	
 55

 


(ii)










	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 6.4

 	
 Government
 Receivables

 	
  

 	
 55

 
	
  

 	
 6.5

 	
 Execution of
 Supplemental Instruments; Further Assurances

 	
  

 	
 55

 
	
  

 	
 6.6

 	
 Payment of
 Indebtedness

 	
  

 	
 56

 
	
  

 	
 6.7

 	
 Standards of
 Financial Statements

 	
  

 	
 56

 
	
  

 	
 6.8

 	
 [Reserved]

 	
  

 	
 56

 
	
  

 	
 6.9

 	
 Financial
 Covenants

 	
  

 	
 56

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 7.

 	
 NEGATIVE COVENANTS

 	
  

 	
 56

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 7.1

 	
 Merger,
 Consolidation, Acquisition and Sale of Assets

 	
  

 	
 56

 
	
  

 	
 7.2

 	
 Creation of
 Liens

 	
  

 	
 57

 
	
  

 	
 7.3

 	
 Guarantees

 	
  

 	
 57

 
	
  

 	
 7.4

 	
 Investments

 	
  

 	
 57

 
	
  

 	
 7.5

 	
 Loans

 	
  

 	
 57

 
	
  

 	
 7.6

 	
 Capital
 Expenditures

 	
  

 	
 57

 
	
  

 	
 7.7

 	
 Dividends
 and Distributions/Management Fees

 	
  

 	
 57

 
	
  

 	
 7.8

 	
 Indebtedness

 	
  

 	
 58

 
	
  

 	
 7.9

 	
 Nature of
 Business

 	
  

 	
 58

 
	
  

 	
 7.10

 	
 Transactions
 with Affiliates

 	
  

 	
 58

 
	
  

 	
 7.11

 	
 Leases

 	
  

 	
 58

 
	
  

 	
 7.12

 	
 Subsidiaries

 	
  

 	
 59

 
	
  

 	
 7.13

 	
 Fiscal Year
 and Accounting Changes

 	
  

 	
 59

 
	
  

 	
 7.14

 	
 Pledge of
 Credit

 	
  

 	
 59

 
	
  

 	
 7.15

 	
 Amendment of
 Organizational Documents

 	
  

 	
 59

 
	
  

 	
 7.16

 	
 Compliance
 with ERISA

 	
  

 	
 59

 
	
  

 	
 7.17

 	
 [Reserved]

 	
  

 	
 60

 
	
  

 	
 7.18

 	
 [Reserved]

 	
  

 	
 60

 
	
  

 	
 7.19

 	
 State of
 Organization/Names/Locations

 	
  

 	
 60

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 8.

 	
 CONDITIONS PRECEDENT

 	
  

 	
 60

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 8.1

 	
 Conditions
 to Initial Advances

 	
  

 	
 60

 
	
  

 	
 8.2

 	
 Conditions
 to Each Advance

 	
  

 	
 63

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 9.

 	
 INFORMATION AS TO LOAN PARTIES

 	
  

 	
 64

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 9.1

 	
 Disclosure
 of Material Matters Pertaining to Collateral

 	
  

 	
 64

 
	
  

 	
 9.2

 	
 Collateral
 and Related Reports

 	
  

 	
 64

 
	
  

 	
 9.3

 	
 Environmental
 Reports

 	
  

 	
 66

 
	
  

 	
 9.4

 	
 Litigation

 	
  

 	
 66

 
	
  

 	
 9.5

 	
 Material
 Occurrences

 	
  

 	
 66

 
	
  

 	
 9.6

 	
 Government
 Receivables

 	
  

 	
 67

 
	
  

 	
 9.7

 	
 Annual
 Financial Statements

 	
  

 	
 67

 
	
  

 	
 9.8

 	
 Quarterly
 Financial Statements

 	
  

 	
 67

 
	
  

 	
 9.9

 	
 Monthly
 Financial Statements

 	
  

 	
 68

 
	
  

 	
 9.10

 	
 Notices re
 Stockholders

 	
  

 	
 68

 
	
  

 	
 9.11

 	
 Additional
 Information

 	
  

 	
 68

 
	
  

 	
 9.12

 	
 Projected
 Operating Budget

 	
  

 	
 68

 
	
  

 	
 9.13

 	
 [Reserved]

 	
  

 	
 69

 
	
  

 	
 9.14

 	
 Notice of
 Suits, Adverse Events

 	
  

 	
 69

 
	
  

 	
 9.15

 	
 ERISA
 Notices and Requests

 	
  

 	
 69

 


(iii)










	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 9.16

 	
 Additional
 Documents

 	
  

 	
 70

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 10.

 	
 EVENTS OF DEFAULT

 	
  

 	
 70

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 11.

 	
 LENDERS’ RIGHTS AND REMEDIES AFTER DEFAULT

 	
  

 	
 72

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 11.1

 	
 Rights and
 Remedies

 	
  

 	
 72

 
	
  

 	
 11.2

 	
 Waterfall

 	
  

 	
 72

 
	
  

 	
 11.3

 	
 Agent’s
 Discretion

 	
  

 	
 73

 
	
  

 	
 11.4

 	
 Setoff

 	
  

 	
 73

 
	
  

 	
 11.5

 	
 Rights and
 Remedies not Exclusive

 	
  

 	
 73

 
	
  

 	
 11.6

 	
 Commercial
 Reasonableness

 	
  

 	
 73

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 12.

 	
 WAIVERS AND JUDICIAL PROCEEDINGS

 	
  

 	
 74

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 12.1

 	
 Waiver of
 Notice

 	
  

 	
 74

 
	
  

 	
 12.2

 	
 Delay

 	
  

 	
 74

 
	
  

 	
 12.3

 	
 Jury Waiver

 	
  

 	
 74

 
	
  

 	
 12.4

 	
 Waiver of
 Counterclaims

 	
  

 	
 75

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 13.

 	
 EFFECTIVE DATE AND TERMINATION

 	
  

 	
 75

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 13.1

 	
 Term

 	
  

 	
 75

 
	
  

 	
 13.2

 	
 Termination

 	
  

 	
 75

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 14.

 	
 REGARDING AGENT

 	
  

 	
 76

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 14.1

 	
 Appointment

 	
  

 	
 76

 
	
  

 	
 14.2

 	
 Nature of
 Duties

 	
  

 	
 76

 
	
  

 	
 14.3

 	
 Lack of
 Reliance on Agent and Resignation

 	
  

 	
 77

 
	
  

 	
 14.4

 	
 Certain
 Rights of Agent

 	
  

 	
 77

 
	
  

 	
 14.5

 	
 Reliance

 	
  

 	
 78

 
	
  

 	
 14.6

 	
 Notice of
 Default

 	
  

 	
 78

 
	
  

 	
 14.7

 	
 Indemnification

 	
  

 	
 78

 
	
  

 	
 14.8

 	
 Agent in its
 Individual Capacity

 	
  

 	
 78

 
	
  

 	
 14.9

 	
 Actions in
 Concert

 	
  

 	
 78

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 15.

 	
 GUARANTEE

 	
  

 	
 79

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 15.1

 	
 Guaranty

 	
  

 	
 79

 
	
  

 	
 15.2

 	
 Waivers

 	
  

 	
 79

 
	
  

 	
 15.3

 	
 No Defense

 	
  

 	
 79

 
	
  

 	
 15.4

 	
 Guaranty of
 Payment

 	
  

 	
 79

 
	
  

 	
 15.5

 	
 Liabilities
 Absolute

 	
  

 	
 80

 
	
  

 	
 15.6

 	
 Waiver of
 Notice

 	
  

 	
 81

 
	
  

 	
 15.7

 	
 Agent’s
 Discretion

 	
  

 	
 81

 
	
  

 	
 15.8

 	
 Reinstatement

 	
  

 	
 81

 
	
  

 	
 15.9

 	
 Action Upon
 Event of Default

 	
  

 	
 82

 
	
  

 	
 15.10

 	
 Statute of
 Limitations

 	
  

 	
 82

 
	
  

 	
 15.11

 	
 Interest

 	
  

 	
 82

 
	
  

 	
 15.12

 	
 Guarantor’s
 Investigation

 	
  

 	
 83

 


(iv)










	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 15.13

 	
 Termination

 	
  

 	
 83

 
	
  

 	
 15.14

 	
 Extension of
 Guarantee

 	
  

 	
 83

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 16.

 	
 MISCELLANEOUS

 	
  

 	
 83

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 16.1

 	
 Governing
 Law

 	
  

 	
 83

 
	
  

 	
 16.2

 	
 Entire
 Understanding; Amendments; Lender Replacements; Overadvances

 	
  

 	
 84

 
	
  

 	
 16.3

 	
 Successors
 and Assigns; Participations; New Lenders; Taxes; Syndication

 	
  

 	
 85

 
	
  

 	
 16.4

 	
 Application
 of Payments

 	
  

 	
 87

 
	
  

 	
 16.5

 	
 Indemnity/Currency
 Indemnity

 	
  

 	
 88

 
	
  

 	
 16.6

 	
 Notice

 	
  

 	
 88

 
	
  

 	
 16.7

 	
 Survival

 	
  

 	
 89

 
	
  

 	
 16.8

 	
 Waiver of
 Subrogation

 	
  

 	
 89

 
	
  

 	
 16.9

 	
 Severability

 	
  

 	
 89

 
	
  

 	
 16.10

 	
 Expenses

 	
  

 	
 89

 
	
  

 	
 16.11

 	
 Injunctive
 Relief

 	
  

 	
 90

 
	
  

 	
 16.12

 	
 Consequential
 Damages

 	
  

 	
 90

 
	
  

 	
 16.13

 	
 Captions

 	
  

 	
 90

 
	
  

 	
 16.14

 	
 Counterparts;
 Facsimile or Emailed Signatures

 	
  

 	
 90

 
	
  

 	
 16.15

 	
 Construction

 	
  

 	
 90

 
	
  

 	
 16.16

 	
 Confidentiality;
 Sharing Information

 	
  

 	
 91

 
	
  

 	
 16.17

 	
 Publicity

 	
  

 	
 91

 
	
  

 	
 16.18

 	
 Patriot Act
 Notice

 	
  

 	
 91

 


(v)







List of Exhibits and Schedules


Exhibits


	
  

 	
  

 
	
 Exhibit A

 	
 Notice of
 Conversion

 
	
 Exhibit B

 	
 Compliance
 Certificate

 
	
 Exhibit 16.3

 	
 Commitment
 Transfer Supplement

 
	
  

 	
  

 
	
 Schedules

 
	
  

 	
  

 
	
 Schedule C-1

 	
 Commitments

 
	
 Schedule R-1

 	
 Real
 Property

 
	
 Schedule 4.5

 	
 Equipment
 and Inventory Locations

 
	
 Schedule
 4.15(c)

 	
 Location of
 Chief Executive Offices

 
	
 Schedule
 5.2(a)

 	
 Jurisdictions
 of Qualification and Good Standing

 
	
 Schedule
 5.2(b)

 	
 Subsidiaries

 
	
 Schedule 5.4

 	
 Federal Tax
 Identification Number

 
	
 Schedule 5.6

 	
 Prior Names

 
	
 Schedule 5.7

 	
 Environmental

 
	
 Schedule
 5.8(b)

 	
 Litigation /
 Commercial Tort Claims / Money Borrowed

 
	
 Schedule
 5.8(d)

 	
 Plans

 
	
 Schedule 5.9

 	
 Intellectual
 Property, Source Code Escrow Agreements

 
	
 Schedule
 5.10

 	
 Licenses and
 Permits

 
	
 Schedule
 5.14

 	
 Labor
 Disputes

 
	
 Schedule
 5.24

 	
 Capital
 Structure

 
	
 Schedule
 5.25

 	
 Bank
 Accounts

 
	
 Schedule
 7.1(b)

 	
 Designated
 Assets Permitted to be Sold

 
	
 Schedule 7.2

 	
 Existing
 Liens

 
	
 Schedule 7.8

 	
 Existing
 Indebtedness

 


-i-







LOAN AND SECURITY AGREEMENT


          LOAN
AND SECURITY AGREEMENT, dated October 13, 2009, among WINNEBAGO INDUSTRIES,
INC., a corporation organized under the laws of the State of Iowa (“Borrower”),
the other Loan Party signatories hereto, the lenders which are now or which
hereafter become a party hereto (each a “Lender” and collectively, the “Lenders”)
and BURDALE CAPITAL FINANCE, INC., a corporation organized under the laws of
the State of Delaware (in its individual capacity, “Burdale”), as administrative
agent for Lenders (Burdale, in such capacity, the “Agent”).


          IN
CONSIDERATION of the mutual covenants and undertakings herein contained, Loan
Parties, Lenders and Agent hereby agree as follows:


1. DEFINITIONS.


          1.1 Accounting Terms.


          As
used in this Agreement, the Note(s), any Other Document, or any certificate,
report or other document made or delivered pursuant to this Agreement,
accounting terms not defined in Section 1.2 or elsewhere in this Agreement and
accounting terms partly defined in Section 1.2 to the extent not defined, shall
have the respective meanings given to them under GAAP.


          1.2
General Terms.


          For
purposes of this Agreement the following terms shall have the following
meanings:


          “Accountants”
shall have the meaning set forth in Section 9.7.


          “Accounts”
shall mean and include as to each Loan Party and each of its Subsidiaries, all
of such Loan Party and Subsidiary’s “accounts” as defined in the UCC, whether
now owned or hereafter acquired including, without limitation all present and
future rights of such Loan Party to payment of a monetary obligation, whether
or not earned by performance, which is not evidenced by chattel paper or an
instrument, (a) for property that has been or is to be sold, leased, licensed,
assigned, or otherwise disposed of, (b) for services rendered or to be
rendered, (c) for a secondary obligation incurred or to be incurred, or (d)
arising out of the use of a credit or charge card or information contained on
or for use with the card.


          “Advances”
shall mean the Revolving Advances (including without limitation the Protective
Advances), or any of them as the context implies.


          “Advance
Rates” shall mean the lending formula percentages set forth in the definition
of Borrowing Base.


          “Affiliate”
of any Person shall mean (a) any Person (other than a Subsidiary) which,
directly or indirectly, is in control of, is controlled by, or is under common
control with such Person, or (b) any Person who is a director, manager or
officer (i) of such Person, (ii) of any Subsidiary of such Person or (iii) of
any Person described in clause (a) above. For purposes of this definition,
control of a Person shall mean the power, direct or indirect, (A) to vote ten
(10%) percent or more of the Capital Stock having ordinary voting power for the
election of directors or managers (or other comparable body) of such Person, or
(B) to direct or cause the direction of the management and policies of such
Person whether by contract or otherwise.







          “Agent”
shall have the meaning set forth in the preamble to this Agreement and shall
include its successors and assigns.


          “Agreement”
shall mean this Loan and Security Agreement, as amended, restated, modified and
supplemented from time to time.


          “Applicable
Margin” for each type of Advance shall mean:


          (a)
prior to the first Applicable Margin Adjustment Date, the applicable percentage
per annum specified below:


	
  

 	
  

 	
  

 
	
 Type of Advance

 	
 Applicable Margin for 

 Base Rate Loans

 	
 Applicable Margin for 

 LIBOR Rate Loans

 
	
 Revolving Advances

 	
 3.00%

 	
 4.00%

 



          (b)
from and after the Applicable Margin Adjustment Date, the Applicable Margin
shall be pursuant to a pricing grid, which pricing grid shall be established
and in form and substance satisfactory to Agent in all respects. If no pricing
grid is established, the Applicable Margin shall be as set forth in clause (a)
of this definition of Applicable Margin.


          “Applicable
Margin Adjustment Date” shall mean the first date of any month following any
month that the Borrower has for such month positive EBITDA, calculated on a
trailing twelve (12) month basis, so that after giving effect to such positive
EBITDA the Borrower has a Fixed Charge Coverage Ratio of not less than 1.1:1.0.


          “Asset
Coverage Amount” shall mean, at any time, an amount equal to the sum of (a) the
Borrowing Base, plus (b) Borrower’s cash then on deposit in one or more
accounts of Borrower at Bank of Ireland in the United States; plus (c) auction
rate securities and Borrower’s trade names, the value of which shall be
determined by Agent, in each case in Agent’s sole discretion.


          “Asset
Coverage Sublimit” shall mean, at any time, an amount equal to the Asset
Coverage Amount divided by 2.25.


          “Authority”
shall have the meaning set forth in Section 4.19(d).


          “Bank
Product Agreement” shall mean any agreement for any service or facility
extended to any Loan Party or any of its Subsidiaries by a Bank Product
Provider including: (a) credit cards, (b) credit card processing services, (c)
debit cards, (d) purchase cards, (e) cash management or related services
(including the Automated Clearing House processing of electronic funds
transfers through the direct Federal Reserve Fedline system), (f) cash
management, including controlled disbursement, accounts or services or (g)
Hedging Agreements.


          “Bank
Product Obligations” shall mean all obligations, liabilities, contingent
reimbursement obligations, fees, and expenses owing by any Loan Party or its
Subsidiaries to a Bank Product Provider pursuant to or evidenced by the Bank
Product Agreements and irrespective of whether for the payment of money,
whether direct or indirect, absolute or contingent, due or to become due, now
existing or hereafter arising, and including all such amounts that any Loan
Party is obligated to reimburse to a Bank Product Provider as a result of such
Person purchasing participations or executing indemnities or reimbursement
obligations with respect to the Bank Products provided to any Loan Party or its
Subsidiaries pursuant to the Bank Product Agreements.


2






          “Bank
Product Provider” shall mean Burdale and its Affiliates.


          “Bankruptcy
Code” shall mean Title 11 of the United States Code, as amended.


          “Base
Rate” shall mean, for any day, a variable rate of interest per annum equal to
the highest of (a) the “prime rate” announced from time to time by JPMorgan
Chase Bank (or any successor to the foregoing or, if such rate ceases to be so
published, as quoted from such other generally available and recognizable
source as Agent may select in its sole discretion) as its “prime rate”, subject
to each increase or decrease in such prime rate, effective as of the day any
such change occurs (with the understanding that any such rate may merely be a
reference rate and may not necessarily represent the lowest or best rate
actually charged to any customer by such bank), (b) the Federal Funds Effective
Rate (as defined below) from time to time plus one-half of one (0.50)
percentage point, (c) LIBOR for a one month Interest Period on such day plus
one half of one (0.50%) percentage point and (d) four and one quarter (4.25%)
percent. The term “Federal Funds Effective Rate” shall mean, for any period, a
fluctuating interest rate per annum equal, for each day during such period, to
the weighted average of the rates on overnight Federal Funds transactions with
member banks of the Federal Reserve System arranged by Federal Funds brokers,
as published for such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New York, or, if such
rate is not published for any day that is a Business Day, the average of the
quotations for such day on such transactions received by Agent from three
Federal Funds brokers of recognized standing selected by Agent.


          “Base
Rate Loan” shall mean any Advance that bears interest based upon the Base Rate.


          “Benefited
Lender” shall have the meaning set forth in Section 2.13(f).


          “Blocked
Accounts” shall have the meaning set forth in Section 4.15(h).


          “Borrower”
shall have the meaning set forth in the preamble to this Agreement and shall
extend to all permitted successors and assigns of such Persons. 


          “Borrower’s
Account” shall have the meaning set forth in Section 2.8.


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


          (a)
eighty-five (85%)percent of the Eligible Accounts; plus


          (b)
the amount equal to the sum of (i) the lesser of (A) sixty-five (65%) of the
Eligible Inventory consisting of raw material parts, (B) eighty-five (85%)
percent times the applicable Net Liquidation Percentage times the Value of such
Eligible Inventory, and (C) $4,000,000, plus (ii) the lesser of (A) sixty-five
(65%) of the Eligible Inventory consisting of finished goods, and (B)
eighty-five (85%) percent times the applicable Net Liquidation Percentage times
the Value of such Eligible Inventory, plus (iii) the lesser of (A) sixty (60%)
of Eligible Inventory consisting of chassis, and (B) eighty-five (85%) percent
times the applicable Net Liquidation Percentage times the Value of such
Eligible Inventory; minus


          (c)
Reserves. 


          “Borrowing
Base Certificate” shall mean a certificate, in form and substance acceptable to
Agent, duly completed and executed by a Responsible Officer of Borrower.


          “Burdale”
shall have the meaning set forth in the preamble to this Agreement and shall
include its successors and assigns.


3






          “Business
Day” shall mean any day other than a Saturday, Sunday or other day on which
commercial banks in New York, New York are authorized or required by law to
close and, if the applicable Business Day relates to any LIBOR Rate Loan, a day
on which dealings are carried on in the London interbank market.


          “Capital
Expenditures” shall mean, without duplication, all expenditures (including
deposits) for, or contracts for expenditures with respect to any fixed assets
or improvements, or for replacements, substitutions or additions thereto, which
have a useful life of more than one year, including the direct or indirect
acquisition of such assets by way of increased product or service charges,
offset items or otherwise, as determined in accordance GAAP consistently
applied.


          “Capital
Lease” shall mean any lease of any property (whether real, personal or mixed)
that, in conformity with GAAP, should be accounted for as a capital lease.


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


          “Cash
Equivalents” shall mean: (a) marketable direct obligations issued or
unconditionally guaranteed by the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within six (6) months from the date of acquisition thereof;
(b) commercial paper maturing no more than six (6) months from the date issued
and, at the time of acquisition, having a rating of at least A-1 from Standard
&Poor’s Corporation or at least P-1 from Moody’s Investors Service, Inc.;
(c) certificates of deposit or bankers’ acceptances maturing within six (6)
months from the date of issuance thereof issued by, or overnight reverse
repurchase agreements from, any commercial bank organized under the laws of the
United States of America or any state thereof or the District of Columbia
having combined capital and surplus of not less than $500,000,000 and whose
debt obligations, or those of a holding company of which it is a Subsidiary, are
rated not less than A (or the equivalent rating) by a nationally recognized
investment rating agency and not subject to setoff rights in favor of such
bank; and (d) money market funds with direct obligations from state or
municipal entities (tax exempt funds).


          “Cash
Interest Expense” shall mean, without duplication, for any period, Interest
Expense (excluding the following non-cash components of Interest Expense: (a)
the amortization of fees and costs with respect to the transactions
contemplated by this Agreement which have been capitalized as transaction
costs, and (b) interest paid in kind).


          “CERCLA”
shall mean the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, 42 U.S.C. §§9601 et seq.


          “Change
of Control” shall mean the occurrence of any event (whether in one or more
transactions) which results in (a) the transfer (in one transaction or a series
of transactions) of all or substantially all of the assets of Borrower or any
Guarantor to any Person or group (as such term is used in Section 13(d)(3) of
the Exchange Act); (b) the liquidation or dissolution of Borrower or any
Guarantor or the adoption of a plan by the stockholders of Borrower or any
Guarantor relating to the dissolution or liquidation of Borrower or any
Guarantor, or (c) the acquisition by any Person or group (as such term is used
in Section 13(d)(3) of the Exchange Act) of more than thirty-five (35%) percent
of beneficial ownership, directly or indirectly, of the voting power of the
total outstanding Capital Stock of Borrower or the Board of Directors of
Borrower.


          “Change
in Management” shall mean Sarah Nielsen and Robert Olson ceasing for any reason
to hold a position as either an officer or member of the Board of Directors of
Borrower and a replacement therefore


4






reasonably
satisfactory to the Agent has not been elected within 120 days of such
cessation unless Ms. Nielsen or Mr. Olson shall resume performing such
functions within such 120-day period.


          “Charges”
shall mean all taxes, charges, fees, imposts, levies or other assessments,
including, without limitation, all net income, gross income, gross receipts,
sales, use, ad valorem, value added, transfer, franchise, profits, inventory,
capital stock, license, withholding, payroll, employment, social security,
unemployment, excise, severance, stamp, occupation and property taxes, custom
duties, fees, assessments, Liens, claims and charges of any kind whatsoever,
together with any interest and any penalties, additions to tax or additional
amounts, imposed by any taxing or other authority, domestic or foreign
(including, without limitation, the PBGC or any environmental agency or
superfund), upon the Collateral, any Loan Party or any Affiliate of any Loan
Party.


          “Closing
Date” shall mean October 13, 2009.


          “Code”
shall mean the Internal Revenue Code of 1986, as amended from time to time and
the regulations promulgated thereunder.


          “Collateral”
shall mean and include all tangible and intangible property of each Loan Party,
all personal and real property of each Loan Party, all movable and immovable
property of each Loan Party, in each case whether now owned or hereafter
acquired and wherever located, including, but not limited to, the following of
each Loan Party: 


          (a)
all Accounts and other Receivables;


          (b)
all certificated securities;


          (c)
all chattel paper, including electronic chattel paper;


          (d)
all Computer Hardware and Software and all rights with respect thereto,
including, any and all licenses, options, warranties, service contracts,
program services, test rights, maintenance rights, supporting information,
improvement rights, renewal rights and indemnifications, and any substitutions,
replacements, additions or model conversions of any of the foregoing;


          (e)
all Contract Rights;


          (f)
all commercial tort claims, (including, without limitation any commercial tort
claims from time to time described on Schedule 5.8(b)(iii) (as such schedule
5.8(b)(iii) may from time to time be updated));


          (g)
all deposit accounts;


          (h)
all documents;


          (i)
all financial assets;


          (j)
all General Intangibles, including payment intangibles and software;


          (k)
all goods (including all Equipment and Inventory), and all embedded software,
accessions, additions, attachments, improvements, substitutions and
replacements thereto and therefor;


          (l)
all instruments;


5






          (m)
all Intellectual Property;


          (n)
all Investment Property;


          (o)
all of the Capital Stock issued by each Loan Party and each of their
Subsidiaries; 


          (p)
all leasehold interests;


          (q)
all cash, cash equivalents or other money;


          (r)
all letter of credit rights;


          (s) all security entitlements;


          (t)
all supporting obligations;


          (u)
all certificated and uncertificated securities; 


          (v)
all Real Property and Fixtures


          (w)
all of each Loan Party’s right, title and interest in and to (i) all of its respective
goods and other property including, but not limited to, all merchandise
returned or rejected by Customers, relating to or securing any of the
Receivables; (ii) all of each Loan Party’s rights as a consignor, a consignee,
an unpaid vendor, mechanic, artisan, or other lienor, including stoppage in
transit, setoff, compensation, detinue, replevin, reclamation and repurchase;
(iii) all supporting obligations and all additional amounts due to any Loan
Party from any Customer relating to the Receivables; (iv) all other property of
any kind whatsoever of each Loan Party, including, but not limited to, warranty
claims, relating to any goods; (v) all of each Loan Party’s Contract Rights,
rights of payment which have been earned under a Contract Right, letter of
credit rights (whether or not the letter of credit is evidenced by a writing),
instruments (including promissory notes), documents, chattel paper (whether
tangible or electronic), warehouse receipts, deposit accounts, money and
securities; (vi) if and when obtained by any Loan Party, all real, immovable,
movable and personal property of third parties in which such Loan Party has
been granted a Lien; and (vii) any other goods, movable or personal property or
real or immovable property of any kind or description, wherever located, now or
hereafter owned or acquired by any Loan Party; and


          (x)
together with all books, records, writings, data bases, information and other
property relating to, used or useful in connection with, or evidencing, embodying,
incorporating or referring to any of the foregoing, and all proceeds, products,
offspring, rents, issues, profits and returns of and from any of the foregoing.


          “Collateral
Access Agreement” shall mean an agreement in writing, in form and substance
satisfactory to Agent, from any lessor of premises to any Loan Party, or any
other Person to whom any Collateral is consigned or who has custody, control or
possession of any such Collateral or is otherwise the owner or operator of any
premises on which any of such Collateral is located, in favor of Agent with
respect to the Collateral at such premises or otherwise in the custody, control
or possession of such lessor, consignee or other Person.


          “COMALA”
shall mean Agent’s proprietary software and system for electronic reporting by
Borrower and other Loan Parties to Agent of Collateral and financial
information.


6






          “Commitment”
shall mean, with respect to each Lender, its Revolver Commitment and, with
respect to all Lenders, their Revolver Commitments in each case as such amounts
are set forth beside such Lender’s name under the applicable heading on
Schedule C-1 or in the Commitment Transfer Supplement pursuant to which such
Lender became a Lender hereunder, as such amounts may be reduced or increased
from time to time pursuant to assignments made in accordance with the
provisions of this Agreement.


          “Commitment
Percentage” 


          (a)
with respect to a Lender’s obligation to make Revolving Advances and
participate in Letters of Credit and right to receive payments of principal,
interest and fees with respect thereto, (i) prior to the Revolver Commitments
being terminated or reduced to zero, the percentage obtained by dividing (y)
such Lender’s Revolver Commitment, by (z) the aggregate Revolver Commitments of
all Lenders, and (ii) from and after the time that the Revolver Commitments
have been terminated or reduced to zero, the percentage obtained by dividing
(y) the outstanding principal amount of such Lender’s Revolving Advances and
ratable portion in Letters of Credit by (z) the outstanding principal amount of
all Revolving Advances made by the Lenders and all Letters of Credit, and 


          (b)
with respect to all other matters as to a particular Lender (including the
indemnification obligations arising under Section 14.7), the percentage
obtained by dividing (i) such Lender’s Revolver Commitment, by (ii) the
aggregate amount of Revolver Commitments of all Lenders; provided, however,
that, in the event the Revolver Commitments have been terminated or
reduced to zero, Commitment Percentage under this clause shall be the
percentage obtained by dividing (A) the outstanding principal amount of such
Lender’s Advances plus such Lender’s participation interest in the outstanding
Letters of Credit, by (B) the outstanding principal amount of all Advances plus
the aggregate amount of outstanding Letters of Credit. 


          “Commitment
Transfer Supplement” shall mean a document in the form of Exhibit 16.3,
properly completed and otherwise in form and substance satisfactory to Agent by
which a Purchasing Lender purchases and assumes all or a portion of Advances
made by a Lender and/or all or a portion of the Commitments of a Lender.


          “Compliance
Certificate” shall mean the Compliance Certificate executed and delivered by a
Responsible Officer of Borrower pursuant to Sections 9.7, 9.8 and 9.9, in the
form of Exhibit B appended hereto.


          “Computer
Hardware and Software” shall mean all of each Loan Party and each of its
Subsidiary’s rights (including rights as licensee and lessee) with respect to
(a) computer and other electronic data processing hardware, including all
integrated computer systems, central processing units, memory units, display
terminals, printers, computer elements, card readers, tape drives, hard and
soft disk drives, cables, electrical supply hardware, generators, power
equalizers, accessories, peripheral devices and other related computer
hardware; (b) all software and all software programs designed for use on the
computers and electronic data processing hardware described in clause (a)
above, including all operating system software, utilities and application
programs in whatsoever form (source code and object code in magnetic tape, disk
or hard copy format or any other listings whatsoever); (c) any firmware
associated with any of the foregoing; and (d) any documentation for hardware,
software and firmware described in clauses (a), (b) and (c) above, including
flow charts, logic diagrams, manuals, specifications, training materials,
charts and pseudo codes.


          “Consents”
shall mean all filings and all licenses, permits, consents, approvals,
authorizations, qualifications and orders of Governmental Bodies and other
third parties, domestic or foreign, necessary to carry on any Loan Party’s
business or to permit the effectuation and performance of this Agreement, the
Other Documents and the other Transactions, including, without limitation, any
Consents required under all applicable federal, state or other applicable law. 


7






          “Contra
Claims” see definition of Eligible Accounts.


          “Contract
Right” shall mean any right of each Loan Party or any of their Subsidiaries to
payment under a contract for the sale or lease of goods or the rendering of
services, which right is at the time not yet earned by performance.


          “Controlled
Affiliate” of any Person shall mean any Person which, directly or indirectly,
is in control of, is controlled by, or is under common control with such Person.
For purposes of this definition, control of a Person shall mean (A) the power,
direct or indirect, to vote fifty-one (51%) percent or more of the Capital
Stock having ordinary voting power for the election of directors or managers
(or other comparable body) of such Person, and (B) to direct or cause the
direction of the management and policies of such Person whether by contract or
otherwise.


          “Controlled
Group” shall mean all members of a Controlled Group of corporations and all
trades or businesses (whether or not incorporated) under common control which,
together with any Loan Party, are treated as a single employer under Section
414 of the Code.


          “Currency
Due” shall have the meaning set forth in Section 16.5.


          “Customer”
shall mean and include the account debtor with respect to any Receivable and/or
the prospective purchaser of goods, services or both with respect to any
contract or Contract Right, and/or any party who enters into or proposes to
enter into any contract or other arrangement with any Loan Party, pursuant to
which such Loan Party is to deliver any personal property or perform any
services.


          “Customs”
shall mean the United States of America Customs Department.


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


          “Default
Rate” shall have the meaning set forth in Section 3.1.


          “Defaulting
Lender” shall have the meaning set forth in Section 2.16(a). 


          “Depository
Accounts” shall have the meaning set forth in Section 4.15(h).


          “Dilution”
shall mean, as of any date of determination, a percentage, based upon the
experience of the immediately prior thirty (30) consecutive days, that is the
result of dividing the amount of (a) bad debt write-downs, discounts,
advertising allowances, credits, or other dilutive items with respect to
Borrower’s Accounts during such period, by (b) Borrower’s billings with respect
to Accounts during such period.


          “Dilution
Reserve” shall mean, as of any date of determination, an amount sufficient to
reduce the Advance Rate against Eligible Accounts by one (1) percentage point
for each percentage point by which Dilution is in excess of five (5%) percent.


          “Disposition”
shall have the meaning set forth in Section 4.3. 


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


          “Dollar
Equivalent” shall mean, at any time, (a) as to any amount denominated in Dollars,
the amount thereof at such time, and (b) as to any amount denominated in a
currency other than Dollars, the equivalent


8






amount in
Dollars as determined by Agent at such time that such amount could be converted
into Dollars by Agent according to prevailing exchange rates selected by Agent.


          “Early
Termination Date” shall have the meaning set forth in Section 13.1.


          “Early
Termination Fee” shall have the meaning set forth in Section 13.1.


          “EBITDA”
shall mean for any period, without duplication, the total of the following for
Loan Parties and their Subsidiaries on a consolidated basis, each calculated
for such period: (a) Net Income; plus (b) (without duplication), to the extent
included in the calculation of Net Income, the sum of (i) non-cash equity based
compensation paid to employees or directors in accordance with GAAP, (ii)
income and franchise taxes paid or accrued, (iii) Interest Expense, net of
interest income, paid or accrued and (iv) amortization and depreciation; less
(c) (without duplication), to the extent included in the calculation of Net
Income, the sum of (i) the income of any Person (other than a Loan Party or a
Subsidiary of any Loan Party) in which any Loan Party or a Subsidiary of any
Loan Party has an ownership interest except to the extent such income is
received by any Loan Party or such Subsidiary in a cash distribution during
such period, (ii) gains or losses from sales or other dispositions of assets
(other than sales of Inventory in the normal course of business) and (iii) the
greater of (A) $0 and (B) the sum of extraordinary or non-recurring gains less
extraordinary or non-recurring losses. 


          “Eligible
Accounts” shall mean and include each Account of Borrower arising in the
ordinary course of Borrower’s business and which Agent, in its sole credit
judgment shall deem to be an Eligible Account, based on such considerations as
Agent may from time to time deem appropriate in its sole credit judgment. In
addition, without limiting the foregoing, in no event shall an Account be an
Eligible Account if:


          (a)
(i) it does not arise from the actual and bona fide sale and delivery of goods
or rendition of services by Borrower in the ordinary course of business of
Borrower, which transactions are completed in accordance with the terms and
provisions contained in any agreement binding on Borrower or the other party or
parties thereto, and (ii) if such Account arises from the sale of motor homes,
Borrower has not issued an MCO to the Customer with respect thereto;


          (b)
(i) solely in the case of Motor Home Accounts, it is due or unpaid more than
thirty (30) days after the original invoice date, and (ii) solely in the case
of Parts and Service Accounts, it is due or unpaid more than ninety (90) days
after the original invoice date;


          (c)
it is owed by a Customer who has Accounts unpaid more than (i) solely in the case of
Motor Home Accounts, thirty (30) days after the original invoice date, and (ii)
solely in the case of Parts and Service Accounts, ninety (90) days after the
original invoice date; and, in each case, which unpaid Accounts constitute more
than twenty five (25%) percent of the total Accounts of such Customer. Such
percentage may, in Agent’s good faith credit judgment, reasonably exercised, be
increased or decreased from time to time; 


          (d)
it is not subject to the first priority, valid and perfected Lien of Agent;


          (e)
it is subject to a Lien in favor of any Person other than Agent, except
Permitted Encumbrances (but without limiting the right of Agent to establish
any Reserves with respect to amounts secured by such Lien in favor of any
Person even if permitted herein);


          (f)
any covenant, representation or warranty contained in this Agreement with
respect to such Account has been breached;


9






          (g)
the Customer shall (i) apply for, suffer, or consent to the appointment of, or
the taking of possession by, a receiver, custodian, trustee, administrator or
liquidator of itself or of all or a substantial part of its property or call a
meeting of its creditors, (ii) admit in writing its inability, or be generally
unable, to pay its debts as they become due or cease operations of its present
business, (iii) make a general assignment for the benefit of creditors, (iv)
commence a voluntary case under any state, federal or other bankruptcy or
insolvency laws (as now or hereafter in effect), or enter into discussions with
its creditors existing at any one time with respect to rescheduling any of its Indebtedness,
(v) be adjudicated a bankrupt or insolvent, (vi) file a petition seeking to
take advantage of any other law providing for the relief of debtors, (vii)
acquiesce to, or fail to have dismissed, any petition which is filed against it
in any involuntary case under such bankruptcy or insolvency laws, or (viii)
take any action for the purpose of effecting any of the foregoing or which is
indicative of insolvency;


          (h)
the sale is to a Customer located or incorporated (or other analogous term)
outside the United States of America or Canada, unless the sale is on letter of
credit, guaranty or acceptance terms, in each case acceptable to Agent in its
sole discretion;


          (i)
the sale to the Customer is on a bill-and-hold, guaranteed sale,
sale-and-return, sale on approval, consignment or any other repurchase, return
or contingent or conditional basis or is evidenced by chattel paper;


          (j)
the Customer is the United States of America, any state or any department,
agency or instrumentality of any of them, unless Borrower assigns its right to
payment of such Account to Agent pursuant to the Assignment of Claims Act of
1940, as amended (31 U.S.C. Sub-Section 3727 et seq. and 41 U.S.C. Sub-Section
15 et seq.) or has otherwise complied with other applicable statutes or
ordinances;


          (k)
the goods giving rise to such Account have not been shipped and delivered to
and accepted by the Customer or the services giving rise to such Account have
not been performed by Borrower and accepted by the Customer (such as advanced
billings) or the Account otherwise does not represent a final sale;


          (l)
the Accounts of the Customer exceed a credit limit determined by Agent, in its
good faith credit judgment, reasonably exercised, to the extent such Account
exceeds such limit;


          (m)
the Account is subject to any offset, deduction, defense, dispute, or
counterclaim, the Customer is also a creditor or supplier of Borrower or the
Account is contingent in any respect or for any reason (each such offset,
deduction, defense, dispute, counterclaim or contingency, a “Contra Claim”);


          (n)
Borrower has made any agreement with any Customer for any deduction therefrom,
except for discounts or allowances made in the ordinary course of business for
prompt payment, all of which discounts or allowances are reflected in the
calculation of the face value of each respective invoice related thereto;


          (o)
any return, rejection or repossession of the Inventory has occurred the sale of
which gave rise to such Account or such Account relates to a Customer whose
obligation to pay is in any respect, conditional or subject to any such right
of return, rejection, repossession or similar rights;


          (p)
such Account is not payable to Borrower; 


          (q)
in the case of any single Customer and its Affiliates, such Accounts do not
constitute more than twenty five (25%) of all otherwise Eligible Accounts (but
the portion of the Accounts not in excess of such percentage may be deemed
Eligible Accounts), except that, with respect to Motor Home
Accounts, the foregoing percentage limitation shall not apply at any time with
respect to any such Customer and its


10






Affiliates
whose then outstanding Accounts are not unpaid more than fifteen (15) days
after the original invoice date. Such percentage may, in Agent’s sole
discretion, be increased or decreased from time to time;


          (r)
such Account consists of progress billings (such that the obligation of the
Customer with respect to such Account is conditioned upon Borrower’s
satisfactory completion of any further performance under the agreement giving
rise thereto), bill and hold invoices or retainage invoices, except as to bill
and hold invoices, if Agent shall have received an agreement in writing from
the Customer, in form and substance satisfactory to Agent, confirming the
unconditional obligation of the Customer to take the goods related thereto and
pay such invoice;


          (s)
the Customer or any officer or employee of the Customer with respect to such
Account is an officer, employee, agent or other Affiliate of Borrower or any
other Loan Party or any Subsidiary of any Loan Party;


          (t)
there are proceedings or actions which are threatened or pending against the
Customer with respect to such Account which might result in any Material
Adverse Effect with respect to such Customer; or


          (u)
such Account is not payable in Dollars. 


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


          “Eligible
Inventory” shall mean Inventory consisting of finished goods held for resale in
the ordinary course of the business of Borrower, chassis to the extent such
chassis are not ineligible under clause (b) below and other raw materials for
such finished goods, in each case which Agent, in its sole credit judgment,
shall deem to be Eligible Inventory, based on such considerations as Agent may
from time to time deem appropriate in its sole credit judgment. Without
limiting the foregoing, in no event shall Inventory be Eligible Inventory if
such Inventory:


          (a)
is work-in-process; 


          (b)
is a chassis for which Borrower (a) has not paid the purchase price therefor in
full to the applicable vendor thereof, or (b) is not in possession of an MCO or
MSO (as the case may be) issued by the applicable vendor thereof;


          (c)
is spare parts for equipment; 


          (d)
is packaging and shipping materials; 


          (e)
is supplies used or consumed in Borrower’s business; 


          (f)
is not located at premises owned and controlled by Borrower; except, that,
Inventory at premises leased and controlled by Borrower or Inventory at a
warehouse owned and operated by a third Person on behalf of Borrower, in each
case that otherwise satisfies the criteria for Eligible Inventory, may be
considered Eligible Inventory if (i) Agent has received and accepted a
Collateral Access Agreement from the owner and lessor or operator of such
premises, as the case may be, duly authorized, executed and delivered by


11






such owner and
lessor or operator, or (ii) Agent shall have established such Reserves in
respect of amounts at any time due or to become due to the owner and lessor or
operator thereof as Agent shall determine;


          (g)
is not subject to the first priority, valid and perfected Lien of Agent;


          (h)
is subject to a Lien in favor of any Person other than Agent, except Permitted
Encumbrances (but without limiting the right of Agent to establish any Reserves
with respect to amounts secured by such Lien in favor of any Person even if
permitted herein); 


          (i)
is not beneficially and legally owned solely by Borrower;


          (j)
is bill and hold goods; 


          (k)
is unserviceable, obsolete or Inventory in a poor condition; 


          (l)
is returned, damaged and/or defective Inventory; 


          (m)
is purchased or sold on consignment; or


          (n)
is not subject to an appraisal in accordance with the requirements of Agent; or


          (o)
is located outside the continental United States of America.


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


          “Environmental
Complaint” shall have the meaning set forth in Section 4.19(d).


          “Environmental
Laws” shall mean all federal, state, local and other environmental, land use,
zoning, health, chemical use, safety and sanitation laws, statutes, ordinances
and codes relating to the protection of the environment and/or governing the
use, storage, treatment, generation, transportation, processing, handling,
production or disposal of Hazardous Substances and the rules, regulations,
policies, formal agency, interpretations, decisions, orders and directives of
federal, state, local and other Governmental Body with respect thereto.


          “Environmental
Reports” shall mean all such documents as are listed on Schedule 5.7.


          “Equipment”
shall mean and include as to each Loan Party and each of its Subsidiaries all
of such Loan Party and Subsidiary’s, whether now owned or hereafter acquired
and wherever located equipment, machinery, apparatus, motor vehicles, fittings,
furniture, furnishings, fixtures, parts, accessories, and all other goods
(other than Inventory) and all replacements and substitutions therefor or
accessions thereto.


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


          “Event
of Default” shall mean the occurrence of any of the events set forth in Section
10.


12







          “Excess
Availability” shall mean the amount, as determined by Agent, calculated at any
date, equal to: (a) the lesser of: (i) the Borrowing Base and (ii) the Maximum
Revolving Advance Amount less Reserves, minus (b) the sum of: (i) the amount of
all then outstanding and unpaid Revolving Advances plus the amount of all then
outstanding Letters of Credit, plus (ii) the aggregate amount of all then
outstanding and unpaid trade payables and other obligations of the Loan Parties
which are outstanding more than ninety (90)days past invoice date as of the end of
the immediately preceding month or at Agent’s option, as of a more recent date
based on such reports as Agent may from time to time specify (other than trade
payables or other obligations being contested or disputed by the Loan Parties
in good faith), plus (iii) without duplication, the amount of checks issued by
the Loan Parties to pay trade payables and other obligations which are more
than ninety
(90)days
past invoice date as of the end of the immediately preceding month or at
Agent’s option, as of a more recent date based on such reports as Agent may
from time to time specify (other than trade payables or other obligations being
contested or disputed by Borrower in good faith), but not yet sent.


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


          “Extraordinary
Receipts” shall mean any cash received by any Loan Party or any of their
respective Subsidiaries consisting of (a) proceeds of judgments, proceeds of
settlements or other consideration of any kind in connection with any cause of
action, (b) indemnity payments (other than to the extent such indemnity
payments are (i) immediately payable to a Person that is not an Affiliate of a
Loan Party or any of their respective Subsidiaries, or (ii) received by a Loan
Party or any of their respective Subsidiaries as reimbursement for any payment
previously made to such Person), (c) any purchase price adjustment (other than
a working capital adjustment) received in connection with any purchase or other
acquisition agreement, (d) tax refunds, (e) pension plan reversions, (f)
proceeds of insurance and (g) at any time that an Event of Default shall exist,
at the sole discretion of Agent, any other cash received by any Loan Party or
any of their respective Subsidiaries not in the ordinary course of business.


          “Federal
Funds Rate” shall mean, for any day, the rate per annum (rounded upward to the
nearest 1/100th of 1%) equal to the weighted average of the rates on overnight
Federal Funds transactions with members of the Federal Reserve System arranged
by Federal Funds brokers on such day, as published by the Federal Reserve Bank
of New York on the Business Day next succeeding such day; provided, that,
if no such rate is so published on such next succeeding Business Day, the
Federal Funds Rate for such day shall be the average rate quoted to Agent on
such day on such transactions as determined by Agent in a commercially
reasonable manner.


          “Fee
Letter” shall mean the Fee Letter, dated as of the date hereof, among Borrower
and Agent, as amended, restated, modified and supplemented from time to time.


          “Fixed
Charge Coverage Ratio” shall mean, for any period, the ratio of (a) EBITDA for
each period set forth below minus all cash Capital Expenditures made during
each such period, to (b) Fixed Charges.


          “Fixed
Charges” shall mean, as to the Loan Parties and their Subsidiaries determined
on a consolidated basis, with respect to any period, the sum of, without
duplication, (a) all Cash Interest Expense during such period, plus (b) all
regularly scheduled (as determined at the beginning of the respective period)
principal payments of Money Borrowed and Indebtedness with respect to Capital
Leases made or required to be made during such period (and without duplicating
items in (a) and (b) of this definition, the interest component with respect to
Indebtedness under Capital Leases), plus (c) all taxes paid or required to be
paid during such period in cash, plus (d) all cash dividends or other cash
distributions made or required to be made on account of Capital Stock (other
than those made to a Loan Party or any of their Subsidiaries) and all
repurchases or redemptions of Capital Stock (other than those made to a Loan
Party or any of their Subsidiaries) made or required to be made during such
period.


13







          “GAAP”
shall mean generally accepted accounting principles in the United States of
America in effect from time to time, as may be amended from time to time by the
Financial Accounting Standards Board; except, that, if there occurs after the
date of this Agreement any change in GAAP that affects in any respect the
calculation of any covenant contained in Section 6.8 hereof, Agent and Borrower
shall negotiate in good faith amendments to the provisions of this Agreement
that relate to the calculation of such covenants with the intent of having the
respective positions of Agent, Lenders and Borrower, after such change in GAAP
conform as nearly as possible to their respective positions as of the date of
this Agreement and, until any such amendments have been agreed upon, the
covenants in Section 6.8 hereof shall be calculated on the basis of such
principles in effect prior to such change and consistent with those used in the
preparation of the most recent audited financial statements delivered to Agent
prior to the date of such change. 


          “General
Intangibles” shall mean and include as to each Loan Party and each of its
Subsidiaries, all of such Loan Party and Subsidiary’s general intangibles,
whether now owned or hereafter acquired including, without limitation, all
payment intangibles, choses in action, commercial tort claims, causes of
action, corporate or other business records, inventions, designs, patents,
patent applications, equipment formulations, manufacturing procedures, quality
control procedures, trademarks, service marks, trade secrets, goodwill,
copyrights, design rights, registrations, licenses, franchises, customer lists,
tax refunds, tax refund claims, computer programs and computer software, all
claims under guaranties, Liens or other security held by or granted to such
Loan Party or Subsidiary to secure payment of any of the Receivables by a
Customer, all rights of indemnification and all other intangible property of
every kind and nature (other than Receivables). 


          “Governmental
Body” shall mean any nation or government, any state or other political
subdivision thereof or any entity exercising the legislative, judicial,
regulatory or administrative functions of or pertaining to a government. 


          “Guarantor”
or “Guarantors” shall mean each Subsidiary of Borrower that becomes a guarantor
of any of the Obligations after the Closing Date pursuant to Section 7.12(a) or
otherwise. 


          “Guaranty”
shall mean the guaranty set forth in Section 15 of this Agreement and any other
guaranty of the Obligations of Borrower now or hereafter executed by a
Guarantor in favor of Agent for its benefit and for the ratable benefit of
Lenders. 


          “Hazardous
Discharge” shall have the meaning set forth in Section 4.19(d). 


          “Hazardous
Substance” shall mean, without limitation, any flammable explosives, radon,
radioactive materials, asbestos, urea formaldehyde foam insulation,
polychlorinated biphenyls, petroleum and petroleum products, methane, hazardous
materials, Hazardous Wastes, hazardous or Toxic Substances or related materials
as defined in CERCLA, the Hazardous Materials Transportation Act, as amended
(49 U.S.C. Sections 1801, et seq.), RCRA, Articles 15 and 27 of the New York
State Environmental Conservation Law or any other applicable Environmental Law
and in the regulations adopted pursuant thereto. 


          “Hazardous
Wastes” shall mean all waste materials subject to regulation under CERCLA, RCRA
or applicable state or other law, and any other applicable Federal, state or
other laws now in force or hereafter enacted relating to hazardous waste
disposal. 


          “Hedging
Agreements” shall mean an agreement between Borrower or any Guarantor and any
financial institution that is a rate swap agreement, basis swap, forward rate
agreement, commodity swap, interest rate option, forward foreign exchange
agreement, spot foreign exchange agreement, rate cap agreement rate, floor
agreement, rate collar agreement, currency swap agreement, cross-currency rate
swap agreement, currency option, any other similar agreement (including any
option to enter into any of the foregoing or a master agreement for any of the
foregoing together with all supplements thereto) for the


14






purpose of
protecting against fluctuations in or managing exposure with respect to
interest or exchange rates, currency valuations or commodity prices. 


          “Impacted
Lender” shall mean any Lender that fails to promptly provide Agent or Borrower,
upon such Person’s written request, reasonably satisfactory assurance that such
Lender will not become, a Defaulting Lender.” 


          “Indebtedness”
of a Person at a particular date shall mean (a) all indebtedness, debt and
similar monetary obligations of such Person whether direct or guaranteed; (b)
that portion of obligations with respect to Capital Leases that is properly
classified as a liability on a balance sheet in conformity with GAAP; (c) notes
payable and drafts accepted representing extensions of credit; (d) any
obligation owed for all or any part of the deferred purchase price of property
or services if the purchase price is due more than six (6) months from the date
the obligation is incurred or is evidenced by a note or similar written
instrument; (e) all indebtedness secured by any Lien on any property or asset
owned or held by that Person regardless of whether the indebtedness secured
thereby shall have been assumed by that Person or is non-recourse to the credit
of that Person; (f) any contractual obligation, contingent or otherwise, of such
Person to pay or be liable for the payment of any indebtedness described in
this definition of another Person, including, without limitation, any such
indebtedness, directly or indirectly guaranteed, or any agreement to purchase,
repurchase, or otherwise acquire such indebtedness, obligation or liability or
any security therefor, or to provide funds for the payment or discharge
thereof, or to maintain solvency, assets, level of income, or other financial
condition; (g) all reimbursement obligations and other liabilities of such
Person with respect to surety bonds (whether bid, performance or otherwise),
letters of credit, banker’s acceptances, drafts or similar documents or
instruments issued for such Person’s account; (h) all obligations, liabilities
and indebtedness of such Person (marked to market) arising under Hedging
Agreements; and (i) the principal and interest portions of all rental
obligations of such Person under any synthetic lease or similar off-balance
sheet financing where such transaction is considered to be borrowed money for
tax purposes but is classified as an operating lease in accordance with GAAP,
in each case whether such liabilities are present or future, actual or
contingent and whether owned jointly or severally. 


          “Intellectual
Property” shall mean all trade secrets and other proprietary information;
trademarks, service marks, business names, Internet domain names, designs,
logos, trade dress, slogans, indicia and other source and/or business
identifiers, and the goodwill of the business relating thereto and all
registrations or applications for registrations which have heretofore been or
may hereafter be issued thereon throughout the world; copyrights (including
copyrights for computer programs and software) and copyright registrations or
applications for registrations which have heretofore been or may hereafter be
issued throughout the world and all tangible property embodying the copyrights;
unpatented inventions (whether or not patentable); patent applications and
patents; industrial designs, industrial design applications and registered
industrial designs; license agreements related to any of the foregoing and
income therefrom; books, records, writings, computer tapes or disks, flow
diagrams, specification sheets, source codes, object codes and other physical
manifestations, embodiments or incorporations of any of the foregoing; the
right to sue for all infringements of any of the foregoing; and all common law
and other rights throughout the world in and to all of the foregoing. 


          “Interest
Expense” shall mean, for any period, as to any Person, as determined in
accordance with GAAP, the total interest expense of such Person, whether paid
or accrued during such period but without duplication (including the interest component
of Capital Leases for such period), including, without limitation, discounts in
connection with the sale of any Accounts or other Receivables that are sold for
purposes other than collection. 


          “Interest
Period” shall mean the period provided for any LIBOR Rate Loan pursuant to
Section 2.2(b). 


15






          “Interest
Rate” shall mean the Revolving Interest Rate. 


          “Inventory”
shall mean and include as to each Loan Party and each Subsidiary of each Loan
Party, all of such Loan Party and Subsidiary’s now owned or hereafter acquired
goods, merchandise and other personal property, wherever located, to be
furnished under any contract of service or held for sale or lease, all raw
materials, work in process, finished goods and materials and supplies of any
kind, nature or description which are or might be used or consumed in such Loan
Party or Subsidiary’s business or used in selling or furnishing such goods,
merchandise and other personal property, all other inventory of such Loan Party
or Subsidiary, and all documents of title or other documents representing them.



          “Investment
Property” shall mean any “investment property” as such term is defined in
Section 9-115 of the UCC now owned or hereafter acquired by any Loan Party or any
of its Subsidiaries, wherever located, including (a) all securities, whether
certificated or uncertificated, including stocks, bonds, interests in limited
liability companies, partnership interests, treasuries, certificates of
deposit, and mutual fund shares; (b) all securities entitlements of any Loan
Party or Subsidiary, including the rights of any Loan Party to any securities
account and the financial assets held by a securities intermediary in such
securities account and any free credit balance or other money owing by any
securities intermediary with respect to that account; (c) all securities
accounts of any Loan Party or Subsidiary; (d) all commodity contracts of any
Loan Party or Subsidiary; and (e) all commodity accounts held by any Loan Party
or Subsidiary. 


          “Issuer”
shall mean any Person who issues a Letter of Credit and/or accepts a draft
pursuant to the terms thereof (it being agreed that so long as Burdale shall be
Agent, then the Issuer shall be The Governor and Company of the Bank of Ireland
and/or such other Person selected by Burdale in its sole discretion; provided,
however, that, in the event that Burdale is neither Agent nor a
Lender, the “Issuer” with respect to all subsequently issued Letters of Credit
shall be a Person selected by Borrower and acceptable to the Required Lenders,
the Agent and such Person). 


          “Lender”
and “Lenders” shall have the meaning ascribed to such term in the preamble to
this Agreement and shall include each Person which becomes a transferee,
successor or assign of any Lender. 


          “Lender
Default” shall have the meaning set forth in Section 2.16(a). 


          “Lender-Related
Distress Event” shall mean, with respect to any Lender or any Person that
directly or indirectly controls such Lender (each a “Distressed Person”), a
voluntary or involuntary case with respect to such Distressed Person under the
Bankruptcy Code or any similar bankruptcy or insolvency laws of its
jurisdiction of formation, or a custodian, conservator, receiver or similar
official is appointed for such Distressed Person or any substantial party of
such Distressed Person’s assets, or such Distressed Person or any Person that
directly or indirectly controls such Distressed Person is subject to a forced
liquidation, merger, sale or other change of control supported in whole or in
party by guaranties or other support (including, without limitation, the
nationalization or assumption of ownership or operating control by) the U.S.
government or other Governmental Body, or such Distressed Person makes a
general assignment for the benefit of creditors or is otherwise adjudicated as,
or determined by any Governmental Body having regulatory authority over such
Distressed Person or its assets to be, insolvent, bankrupt, or deficient in
meeting any capital adequacy or liquidity standard of any such Governmental
Body. For purposes of this definition, control of a Person shall have the same
meaning as provided in the definition of Affiliate. 


          “Letter
of Credit Application” shall have the meaning set forth in Section 2.10. 


          “Letter
of Credit Fees” shall have the meaning set forth in Section 3.2(a).


          “Letters
of Credit” shall have the meaning set forth in Section 2.9. 


16






          “LIBOR”
shall mean, for each Interest Period, the offered rate per annum, as
conclusively determined by Agent, for deposits of Dollars for the applicable
Interest Period that appears on Reuters Screen LIBOR01 Page (or on any
successor or substitute page of such service, or any successor to or substitute
for such service, providing rate quotations comparable to those currently
provided on such page of such service, as determined by Agent in its sole
discretion from time to time for purposes of providing quotations of interest
rates applicable to eurodollar deposits in Dollars in the London interbank
market) as of 11:00 A.M. (London, England time) two (2) Business Days prior to
the first day in such Interest Period. If no such offered rate exists, such
rate will be the rate of interest per annum, as determined by Agent (rounded
upwards, if necessary, to the nearest 1/16 of 1%) at which deposits of Dollars
in immediately available funds are offered at 11:00 A.M. (London, England time)
two (2) Business Days prior to the first day in such Interest Period by major
financial institutions reasonably satisfactory to Agent in the London interbank
market for such Interest Period for the applicable principal amount on such
date of determination; provided in no instance shall LIBOR be less than two (2%)
percent per annum. 


          “LIBOR
Rate Loan” shall mean an Advance that bears interest based on LIBOR. 


          “Lien”
shall mean any mortgage, deed of trust, pledge, hypothecation, assignment,
security interest, lien (whether statutory or otherwise), charge, claim or
encumbrance, or preference, priority or other security agreement or
preferential arrangement held or asserted in respect of any asset of any kind
or nature whatsoever including, without limitation, any conditional sale or
other title retention agreement, any lease having substantially the same
economic effect as any of the foregoing, and the filing of, or agreement to
give, any financing statement under the UCC or comparable law of any
jurisdiction. Any reference to the Lien of Agent shall be construed in the
broadest sense possible and shall in each cash include a security interest and
other Lien as the context implies. 


          “Liquidity”
means, on any date of determination, the sum of (a) immediately available and
unrestricted cash of the Loan Parties, including but not limited to cash of the
Loan Parties on deposit in deposit accounts in the United States at the Bank of
Ireland subject to control agreements in favor of the Agent in the manner
described in Section 4.15(h), (b) Cash Equivalents subject to an investment
property control agreement in favor of Agent; and (c) Excess Availability. 


          “Loan
Party” shall mean, individually, Borrower and each Guarantor, and “Loan
Parties” shall mean, collectively, Borrower and the Guarantors. 


          “Material
Adverse Effect” shall mean a material adverse effect on (a) the condition,
operations, assets, business or prospects of Borrower and/or the Loan Parties
and their Subsidiaries taken as a whole, (b) any Loan Party’s ability to pay
the Obligations or to comply with this Agreement or any Other Document in
accordance with the terms hereof or thereof, (c) the value of the Collateral,
or Agent’s Liens on the Collateral or the priority of any such Lien or (d) the
Agent’s ability to realize on the Collateral or otherwise enforce the terms of
this Agreement or any of the Other Documents. 


          “Maximum
Credit” shall mean $20,000,000 (subject to adjustment as provided pursuant to
the terms of Section 2.4 of this Agreement). 


          “Maximum
Revolving Advance Amount” shall mean an amount equal to, on any date of
determination, the lesser of (a) Maximum Revolving Advance Amount Sublimit, and
(b) the Asset Coverage Sublimit. 


          “Maximum
Revolving Advance Amount Sublimit” shall mean, as of the date hereof,
$12,500,000. After the date hereof, the Maximum Revolving Advance Amount
Sublimit may be increased, upon the written request of Borrower and in Agent
and Lenders sole discretion based upon Borrower’s order backlog and


17






inventory
turnover tests and/or other financial and operational metrics tests established
by Agent, to an amount not to exceed the Maximum Credit provided that
as of the date of such increase, no Event of Default exists. Any increase to
the Maximum Revolving Advance Amount Sublimit shall be effective upon receipt
by Borrower of written notice from Agent that the Maximum Revolving Advance
Amount Sublimit has been increased. Agent and Lenders shall be under no
obligation or commitment to increase the Maximum Revolving Advance Amount
Sublimit to an amount in excess of the amount as in effect on the date hereof. 


          “MCO”
shall mean a manufacturer’s certificate of origin. 


          “Money
Borrowed” shall mean (a) Indebtedness arising from the lending of money by any
Person to any Loan Party or any of their respective Subsidiaries, (b)
Indebtedness, whether or not in any such case arising from the lending by any
Person of money to any Loan Party or any of their respective Subsidiaries, (i)
which is represented by notes payable or drafts accepted that evidence
extensions of credit, (ii) which constitutes obligations evidenced by bonds,
debentures, notes or similar instruments, or (iii) upon which interest charges
are customarily paid (other than accounts payable) or that was issued or
assumed as full or partial payment for property, (c) reimbursement obligations
with respect to letters of credit or guaranties of letters of credit, and (d)
Indebtedness of any Loan Party or any of their respective Subsidiaries under
any guaranty of obligations that would constitute Indebtedness for Money
Borrowed under clauses (a), (b) or (c) hereof, if owed directly by any Loan
Party or any of their respective Subsidiaries. 


          “Motor
Home Accounts” shall mean Accounts arising from Borrower’s sale of finished
goods consisting of motor homes. 


          “MSO”
shall mean a manufacturers statement of origin. 


          “Multiemployer
Plan” shall mean a “multiemployer plan” as defined in Sections 3(37) and
4001(a)(3) of ERISA. 


          “Net
Income” shall mean, for any period, the aggregate income (or loss) of the Loan
Parties and their Subsidiaries for such period, all computed and calculated in
accordance with GAAP on a consolidated basis. 


          “Net
Liquidation Percentage” shall mean the percentage of the book value of Eligible
Inventory that is estimated to be recoverable in an orderly liquidation of such
Eligible Inventory, net of all associated costs and expenses of such
liquidation, such percentage to be as determined from time to time by an
appraisal company selected by Agent and pursuant to an appraisal report
acceptable to Agent (which report Agent is expressly permitted to rely). 


          “Non-Funding
Lender” shall mean any Lender (a) that has failed to fund any payments required
to be made by it under this Agreement or under any Other Document, (b) that has
given verbal or written notice to Borrower, the Agent or any other Lender or
has otherwise publicly announced that such Lender believes it will fail to fund
all payments required to be made by it or fund all purchases of participations
required to be funded by it under this Agreement and the Other Documents, (c)
as to which the Agent has a good faith belief that such Lender has defaulted in
fulfilling its obligations (as a lender, agent or letter of credit issuer)
under one or more other syndicated credit facilities or (d) with respect to
which one or more Lender-Related Distress Events has occurred with respect to
such Person or any Person that directly or indirectly controls such Lender and
Agent has determined that such Lender may become a Non-Funding Lender. For
purposes of this definition, control of a Person shall have the same meaning as
provided in the definition of Affiliate. 


          “Note”
or “Notes” shall mean, individually or collectively, the Revolving Credit
Notes. 


18






          “Notice
of Conversion” shall mean a notice duly executed by a Responsible Officer of
Borrower appropriately completed and in substantially the form of Exhibit A. 


          “Obligations”
shall mean and include (a) any and all of each Loan Party’s Indebtedness and/or
liabilities pursuant to or evidenced by this Agreement or any Other Documents
to Agent, Lenders, any Issuer or to any Person that directly or indirectly controls
or is controlled by or is under common control with Agent, any Lender or any
Issuer of every kind, nature and description, direct or indirect, secured or
unsecured, joint, several, joint and several, absolute or contingent, due or to
become due, now existing or hereafter arising, contractual or tortious,
liquidated or unliquidated, regardless of how such indebtedness or liabilities
arise (including all interest accruing after the commencement of any bankruptcy
or similar proceeding whether or not enforceable in such proceeding) and all
obligations of any Loan Party to Agent, Lenders or any Issuer to perform acts
or refrain from taking any action under this Agreement or any Other Documents,
and (b) for purposes only of Section 5.1 (and other Lien grants made by the
Loan Parties in the Other Documents to secure the Obligations) only and subject
to the priority in right of payment set forth in Section 11.2, all Bank Product
Obligations; provided, that, (i) as to any such Bank Product
Obligations arising under or pursuant to a Hedge Agreement, the same shall only
be included within the Obligations if upon Agent’s request, Agent shall have
entered into an agreement, in form and substance satisfactory to Agent, with
the Bank Product Provider that is a counterparty to such Hedge Agreement, as
acknowledged and agreed to by Borrower and any other Loan Party, providing for
the delivery to Agent by such counterparty of information with respect to the
amount of such obligations and providing for the other rights of Agent and such
Bank Product Provider in connection with such arrangements, (ii) any Bank
Product Provider, other than Burdale and its Affiliates, shall have delivered
written notice to Agent that (A) such Bank Product Provider has entered into a
transaction to provide Bank Products to Borrower and any other Loan Party and
(B) the Bank Product Obligations arising pursuant to such Bank Products
provided to Borrower and any other Loan Party constitute Obligations entitled
to the benefits of the security interest of Agent granted hereunder, and Agent
shall have accepted such notice in writing and (C) in no event shall any Bank
Product Provider acting in such capacity to whom such obligations, liabilities
or indebtedness are owing be deemed a Lender for purposes hereof except with
respect to the Lien granted in favor of Agent for the benefit of Lenders and
any indemnity contained herein and in no event shall the approval of any such
Person in its capacity as Bank Product Provider be required in connection with
the release or termination of any security interest or other Lien of Agent 


          “Original
Term” shall have the meaning set forth in Section 13.1. 


          “Other
Documents” shall mean any Note, the Questionnaire, any Guaranty, any Collateral
Access Agreement and any and all other agreements, instruments and documents,
including, without limitation, guaranties, pledges, security agreements,
mortgages, deeds of trust, debentures, other collateral documents,
subordination agreements, intercreditor agreements, powers of attorney,
consents, and all other writings heretofore, now or hereafter executed and/or
delivered by any Loan Party to Agent or any Lender in respect of the
transactions contemplated by this Agreement, in each case, as such agreements,
instruments and documents are amended, restated, modified or supplemented from
time to time. 


          “Participant”
shall mean each Person who shall be granted the right by any Lender to
participate in any of the Advances or Commitments of such Lender and who shall
have entered into a participation agreement in form and substance satisfactory
to such Lender. 


          “Payment
Account” shall mean Agent’s account no. 957-358261 maintained at JPMorgan Chase
Bank, N.A. (Swift no. CHASUS33), ABA no. 021000021) or such other account of
Agent, if any, which Agent may designate by notice to Borrower and to each
Lender to be the Payment Account. 


19






          “Parts
and Service Accounts” shall mean Accounts arising from either (a) Borrower’s
business consisting of the sale of parts Inventory with respect to motor homes,
or (b) Borrower’s business consisting of the servicing of motor homes. 


          “PBGC”
shall mean the Pension Benefit Guaranty Corporation. 


          “Permitted
Encumbrances” shall mean (a) Liens in favor of Agent for the benefit of each
Secured Party, which, in each case, secure Obligations; (b) Liens for taxes,
assessments or other governmental charges (“Tax Lien”) not delinquent or being
contested in good faith and by appropriate proceedings and with respect to
which proper reserves have been taken by Loan Parties; provided, that, the Tax
Lien shall have no effect on the priority of the Liens in favor of Agent or the
value of the Collateral in which Agent has such a Lien and a stay of
enforcement of any such Tax Lien shall be in effect; (c) deposits or pledges to
secure obligations under worker’s compensation, social security or similar
laws, or under unemployment insurance, in each case made in the ordinary course
of business and excluding deposits or pledges under ERISA; (d) deposits or
pledges to secure bids, tenders, contracts (other than contracts for the
payment of money), leases, statutory obligations, surety and appeal bonds and
other obligations of like nature arising in the ordinary course of any Loan
Party’s business; (e) judgment Liens that do not constitute an Event of Default
under Section 10.5 and mechanics’, workers’, materialmen’s or other like Liens
arising in the ordinary course of any Loan Party’s business with respect to
obligations which are not due or which are being contested in good faith by the
applicable Loan Party or Subsidiary of a Loan Party for so long as such
proceedings result in a stay of enforcement of such Lien; (f) Liens placed upon
fixed assets hereafter acquired to secure a portion of the purchase price
thereof; provided, that, (i) any such Lien shall not encumber any other
property of the Loan Parties and (ii) the aggregate amount secured by such
Liens shall not exceed the applicable amount provided for in Section 7.8(b);
and (g) Liens disclosed on Schedule 7.2.  


          “Person”
shall mean any individual, sole proprietorship, partnership, corporation,
company, business trust, joint stock company, trust, unincorporated
organization, association, limited liability company, institution, public
benefit corporation, joint venture, entity or government (whether Federal,
state, county, city, municipal or otherwise, including any instrumentality,
division, agency, body or department thereof). 


          “Plan”
shall mean any employee benefit plan within the meaning of Section 3(3) of
ERISA, maintained for employees of Loan Parties or any member of the Controlled
Group or any such Plan to which any Loan Party or any member of the Controlled
Group is required to contribute on behalf of any of its employees. 


          “Protective
Advances” shall have the meaning set forth in Section 2.12. 


          “Purchasing
Lender” shall have the meaning set forth in Section 16.3(c). 


          “Qualified
Assignee” shall mean (a) any Lender, any Affiliate of any Lender and, with
respect to any Lender that is an investment fund that invests in commercial
loans, any other investment fund that invests in commercial loans and that is
managed or advised by the same investment advisor as such Lender or by a
Controlled Affiliate of such investment advisor; (b) any commercial bank,
savings and loan association or savings bank or any other entity which is an
“accredited investor” (as defined in Regulation D under the Securities Act)
which extends credit or buys loans as one of its businesses, including
insurance companies, mutual funds, lease financing companies and commercial
finance companies, in each case, which has a rating of BBB or higher from
S&P and a rating of Baa2 or higher from Moody’s at the date that it becomes
a Lender and which, through its applicable lending office, is capable of
lending to Borrower; and (c) any other Person consented to by Agent in its sole
discretion during the continuance of an Event of Default; provided, that,
no Person proposed to become a Lender after the Closing Date and determined by
Agent to be acting in the capacity of a vulture fund or distressed debt
purchaser or to be a competitor of any Loan Party shall be a 


20






Qualified
Assignee unless consented to by Agent in its sole discretion, and no Person or
Affiliate of such Person proposed to become a Lender after the Closing Date and
that holds any subordinated Indebtedness or Capital Stock issued by any Loan
Party shall be a Qualified Assignee unless consented to by Agent in its sole
discretion. 


          “Questionnaire”
shall mean the Documentation Information Questionnaire and the responses
thereto provided by Loan Parties and delivered to Agent on the Closing Date. 


          “Real
Property” shall mean all of each Loan Party and each of their Subsidiary’s
right, title and interest in and to the owned and leased premises identified on
Schedule R-1. 


          “RCRA”
shall mean the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901 et
seq., as same may be amended from time to time. 


          “Receivables”
shall mean and include, as to each Loan Party and each Subsidiary of each Loan
Party, all of such Loan Party and Subsidiary’s Accounts, Contract Rights,
instruments (including promissory notes and instruments evidencing indebtedness
owed to Loan Parties and their Subsidiaries by their Affiliates), documents,
chattel paper (whether tangible or electronic), General Intangibles relating to
Accounts, drafts and acceptances, and all other forms of obligations owing to
such Loan Party and Subsidiary arising out of or in connection with the sale,
lease or other disposition of Inventory or the rendition of services, all
guarantees and other security therefor, whether secured or unsecured, now
existing or hereafter created, and whether or not specifically sold or assigned
to Agent hereunder. 


          “Release”
shall have the meaning set forth in Section 5.7(c). 


          “Reportable
Event” shall mean a reportable event described in Section 4043(b) of ERISA or the
regulations promulgated thereunder. 


          “Required
Lenders” shall mean Lenders having Commitment Percentages (calculated under
clause (a) of the definition of Commitment Percentages) the aggregate amount of
which equals or exceeds sixty-six and two-thirds (66 2/3%).  


          “Reserves”
shall mean such reserves as Agent may from time to time establish in its sole
credit judgment, including, without limitation, reserves for (a) matters that
could adversely affect the Collateral, its value or the amount that Agent and
the Lenders might receive from the sale or other disposition thereof or the
ability of Agent to realize thereon, (b) sums that the Loan Parties are
required to pay under any provision of this Agreement or any Other Document,
(c) amounts owing by any Loan Party to any Person to the extent secured by a
Lien on, or trust over, any of the Collateral (such as Liens or trusts in favor
of landlords, warehousemen, carriers, mechanics, materialmen, laborers, or
suppliers, or Liens or trusts for ad valorem, income, payroll, excise, sales,
pension plan obligations or other taxes), (d) an amount equal to the aggregate
outstanding Letters of Credit at any time issued hereunder, (e) amounts
believed by the Agent to be necessary to provide for possible inaccuracies, in
any report or in any information provided to the Agent pursuant to this
Agreement and (f) Dilution Reserves. 


          “Responsible
Officer” shall mean with respect to any Person, such Person’s chief executive
officer, president, chief financial officer or other officer having
substantially the same authority and responsibility with respect to the matters
at hand (or having substantially the same knowledge of the contents of the
certificate, document or other document being delivered). 


          “Restricted
Accounts” shall mean deposit accounts or other accounts (a) established and
used (and at all times will be used) solely for the purpose of paying current
payroll obligations of the Loan Parties (and 


21






which do not
(and will not at any time) contain any deposits other than those necessary to
fund current payroll), in each case in the ordinary course of business, (b)
maintained (and at all times will be maintained) solely in connection with an
employee benefit plan, but solely to the extent that all funds on deposit
therein are solely held for the benefit of, and owned by, employees (and will
continue to be so held and owned) pursuant to such plan, and (c) used in the
ordinary course of business for petty cash, the balance of which shall not
exceed $10,000 aggregate at any time; provided, that, without limiting the
foregoing, in order for any such deposit account or other account to constitute
a “Restricted Account”, such deposit or other account must be expressly
designated as a “Restricted Account” on Schedule 5.25 (which designation shall
constitute a representation and warranty by each Loan Party that such deposit
account or other account satisfies the criteria set forth in this definition to
constitute a “Restricted Account”).  


          “Revolving
Advances” shall mean Advances made pursuant to Section 2.1 (and shall also
include Protective Advances to the extent the context implies such). 


          “Revolver
Commitment” shall mean, with respect to each Lender, its Revolver Commitment,
and, with respect to all Lenders, their Revolver Commitments, in each case as
such amounts are set forth beside such Lender’s name under the applicable
heading on Schedule C-1 or in the Commitment Transfer Supplement pursuant to
which such Lender became a Lender hereunder, as such amounts may be reduced or
increased from time to time pursuant to assignments made in accordance with the
provisions of this Agreement. 


          “Revolving
Credit Note” shall have the meaning set forth in Section 2.1. 


          “Revolving
Interest Rate” shall mean an interest rate per annum equal to (a) the sum of
the Base Rate plus the Applicable Margin per annum with respect to Base Rate
Loans that are Revolving Advances and (b) the sum of LIBOR plus the Applicable
Margin per annum with respect to LIBOR Rate Loans that are Revolving Advances. 


          “Secured
Party” shall mean Agent, the Lenders, Issuer and Bank Products Provider. 


          “Settlement
Date” shall mean the Closing Date and thereafter every Business Day designated
by Agent as a “Settlement Date” by notice from Agent to each Lender, but not
less frequently than weekly. 


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


          “Subsidiary”
shall mean a corporation or other entity of whose shares of stock or other ownership
interests having ordinary voting power (other than stock or other ownership
interests having such power only by reason of the happening of a contingency)
to elect a majority of the directors of such corporation, or other Persons
performing similar functions for such entity, are owned, directly or
indirectly, by such Person. 


          “Term”
shall mean the period commencing on the Closing Date and ending on the
Termination Date. 


22






          “Termination
Date” shall have the meaning set forth in Section 13.1. 


          “Termination
Event” shall mean (a) a Reportable Event with respect to any Plan or
Multiemployer Plan; (b) the withdrawal of any Loan Party or any of their
Subsidiaries or any member of the Controlled Group from a Plan or Multiemployer
Plan during a plan year in which such entity was a “substantial employer” as
defined in Section 4001(a)(2) of ERISA; (c) the providing of notice of intent
to terminate a Plan in a distress termination described in Section 4041(c) of
ERISA; (d) the institution by the PBGC of proceedings to terminate a Plan or
Multiemployer Plan; (e) any event or condition (i) which might constitute
grounds under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Plan or Multiemployer Plan, or (ii) that may
result in termination of a Multiemployer Plan pursuant to Section 4041A of
ERISA; or (f) the partial or complete withdrawal within the meaning of Sections
4203 and 4205 of ERISA, of any Loan Party, any Subsidiary thereof or any member
of the Controlled Group from a Multiemployer Plan. 


          “Toxic
Substance” shall mean and include any material present on the Real Property or
the leasehold interests which has been shown to have significant adverse effect
on human health or which is subject to regulation under the Toxic Substances
Control Act (TSCA), 15 U.S.C. §§ 2601 et seq., applicable state or other law,
or any other applicable Federal, state or other laws now in force or hereafter
enacted relating to toxic substances. “Toxic Substance” includes but is not
limited to asbestos, polychlorinated biphenyls (PCBs) and lead-based paints. 


          “Transactions”
shall have the meaning set forth in Section 5.5(a). 


          “Transferee”
shall have the meaning set forth in Section 16.3. 


          “UCC”
shall mean the Uniform Commercial Code as in effect in the State of New York
from time to time. 


          “US
Loan Party” means a Loan Party organized, incorporated or otherwise formed
under the laws of the United States or any state thereof or the District of
Columbia. 


          “US
Subsidiary” shall mean a Subsidiary organized, incorporated or otherwise formed
under the laws of the United States or any state thereof or the District of
Columbia. 


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


          “Waterfall
Event” shall mean the occurrence of (a) a failure by Borrower to repay all of
the Obligations as of the end of the Term or after the Obligations have been
accelerated, or (b) an Event of Default and the election by the Agent or the
Required Lenders to require that payments and proceeds of Collateral be applied
pursuant to Section 11.2(b). 


          “Week”
shall mean the time period commencing with the opening of business on a Monday
and ending on the end of business the following Sunday. 


23






          1.3 Uniform Commercial Code Terms. 


          All
terms used herein and defined in the UCC, including, the terms account debtor,
certificated security, chattel paper, commercial tort claim, deposit account,
document, electronic chattel paper, equipment, financial asset, fixtures,
goods, health-care-insurance receivable, inventory, instrument, investment
property, letter-of-credit rights, payment intangibles, proceeds, security,
security entitlement, software, supporting obligations and uncertificated
security, shall have the meaning given therein unless otherwise defined herein
or unless the context provides otherwise. 


          1.4 Certain Matters of Construction. 


          The
terms “herein”, “hereof” and “hereunder” and other words of similar import
refer to this Agreement as a whole and not to any particular section, paragraph
or subdivision. Each reference to a Section, an Exhibit or a Schedule shall be
deemed to refer to a Section, an Exhibit or a Schedule, as applicable, of this
Agreement unless otherwise specified. The terms “including” and other words of
similar import refer to “including, but not limited” unless otherwise
specified. Each reference to a Section, an Exhibit or a Schedule shall be deemed
to refer to a Section, an Exhibit or a Schedule, as applicable, of this
Agreement unless otherwise specified. Any pronoun used shall be deemed to cover
all genders. Wherever appropriate in the context, terms used herein in the
singular also include the plural and vice versa. All references to statutes
(including the UCC) and related regulations shall include any amendments of
same and any successor statutes and regulations. Unless otherwise provided, all
references to any instruments or agreements, including, without limitation,
references to this Agreement or any of the Other Documents, shall include any
and all modifications or amendments thereto and any and all extensions or
renewals thereof to the extent not prohibited by this Agreement or any Other Document.
The amount outstanding under any Letter of Credit shall mean, at any date of
determination, (a) the maximum aggregate amount available for drawing
thereunder under any and all circumstances, plus (b) the aggregate amount of
all unreimbursed payments and disbursements under such Letter of Credit. Unless
otherwise provided Dollar ($) baskets set forth in the representations and
warranty, covenants and event of default provisions of this Agreement (an other
similar baskets) are calculated as of each date of measurement by the Dollar
Equivalents thereof as of such date of measurement. Once an Event of Default
occurs, such Event of Default shall remain in existence and be continuing
unless waived in writing by the applicable Lenders and other Persons in accordance
with Section 17.2. 


2. ADVANCES, PAYMENTS. 


          2.1
Revolving Advances. 


                    (a)
Revolving Advances. Subject to the terms and conditions set forth in this
Agreement (including, without limitation, Sections 2.1(b) and 8), each Lender,
severally and not jointly, agrees to make Revolving Advances according to its
Commitment Percentage thereof to Borrower from the Closing Date until the
Termination Date. Revolving Advances shall be funded by Agent or Lenders (as
applicable) in Dollars and shall be repaid in Dollars. To the extent required
by a Lender, the Revolving Advances made by such Lender shall be evidenced by a
promissory note (each, a “Revolving Credit
Note”).  


                    (b)
Revolving Advance Limitations/Protective Advances and Overadvances. The
aggregate amount of the Revolving Advances and the Letters of Credit
outstanding at any time shall not (i) exceed the lesser of (A) the Maximum
Credit or (B) the Maximum Revolving Advance Amount or (ii) except as provided
in Section 2.12 with respect to Protective Advances and in Section 16.2(d) with
respect to overadvances, cause Excess Availability to be less than $0 (it being
understood that it shall be an Event of Default if at any time Excess
Availability is less than $0).


24






          2.2 Procedure for Borrowing. 


                    (a)
Borrower shall notify Agent of the request by Borrower to incur a Revolving
Advance hereunder. Such notice shall be required to be delivered by Borrower to
Agent on or prior to 11:00 a.m. (New York time) (i) on the Business Day of the
date of such requested borrowing with respect to Base Rate Loans and (ii) three
(3) Business Days prior to the date of such requested borrowing with respect to
LIBOR Rate Loans. Each such notice shall include (A) the amount of such
proposed borrowing (which amount with respect to (1) LIBOR Rate Loans shall be
in a minimum amount of $1,000,000 and in integral multiples of $500,000 in
excess thereof and (2) with respect to Base Rate Loans shall be in a minimum
amount of $10,000), (B) the date of such proposed borrowing (which must be a
Business Day) and (C) whether such borrowing is to be initially a LIBOR Rate
Loan (and if so, the duration of the first Interest Period therefor) or a Base
Rate Loan. Additionally, any amount required to be paid as interest, fees,
charges or other Obligations under this Agreement or any Other Document, at the
election of Agent, shall be deemed a request by Borrower for a Revolving
Advance as of the date such payment is due, in the amount required to pay in
full or in part such interest, fee, charge or other Obligation under this
Agreement or any Other Document and such deemed request shall be irrevocable. 


                    (b)
Interest Periods for LIBOR Rate Loans shall be for no less than three (3)
months. At the election of Agent or Required Lenders, no LIBOR Rate Loan shall
be made available to Borrower during the continuance of a Default or an Event
of Default. After giving effect to each LIBOR Rate Loan (or any conversion to a
LIBOR Rate Loan), there shall not be outstanding more than four (4) LIBOR Rate
Loans in the aggregate. 


                    (c)
Each Interest Period of a LIBOR Rate Loan shall commence on the date such LIBOR
Rate Loan is made and shall end on such date as Borrower may elect as set forth
in (a)(iv) above; provided, that, the exact length of each Interest Period
shall be determined in accordance with the practice of the interbank market for
offshore Dollar deposits and no Interest Period shall end after the Termination
Date (in no event shall an Interest Period for any such loan pertain to amounts
than are greater than the amounts of such loans that are permitted to be
outstanding during such Interest Period).  


                    (d)
Borrower shall elect the initial Interest Period applicable to a LIBOR Rate
Loan by its notice of borrowing given to Agent pursuant to Section 2.2(a) or by
its Notice of Conversion given to Agent pursuant to Section 2.2(e), as the case
may be. Borrower shall elect the duration of each succeeding Interest Period by
giving irrevocable written notice to Agent of such duration not less than three
(3) Business Days prior to the last day of the then current Interest Period
applicable to such LIBOR Rate Loan; provided, that, at the election of Agent or
Required Lenders, no loan shall be converted to a LIBOR Rate Loan if an Event
of Default shall have occurred and be continuing. If Agent does not receive
timely notice of the Interest Period elected by Borrower, Borrower shall be
deemed to have elected to convert to a Base Rate Loan subject to Section
2.2(e).  


                    (e)
Borrower may, on the last Business Day of the then current Interest Period
applicable to any outstanding LIBOR Rate Loan, or on any Business Day with
respect to Base Rate Loans, convert any such loan into a loan of another type
in the same aggregate principal amount; provided, that, any
conversion of a LIBOR Rate Loan shall be made only on the last Business Day of
the then current Interest Period applicable to such LIBOR Rate Loan; provided,
further, that, at the election of Agent or Required Lenders, no
loan shall be converted to a LIBOR Rate Loan if an Event of Default shall have
occurred and be continuing. If Borrower desires to convert a loan, Borrower
shall give Agent a Notice of Conversion not less than three (3) Business Days’
prior to a conversion from a Base Rate Loan to a LIBOR Rate Loan or one (1)
Business Day prior to a conversion from a LIBOR Rate Loan to a Base Rate Loan,
specifying the date of such conversion, the loans to be converted and if the
conversion is from a Base Rate Loan to a LIBOR Rate Loan, 


25






the duration
of the first Interest Period therefor. After giving effect to each such
conversion, there shall not be outstanding more than the number of LIBOR Rate
Loans permitted by Section 2.2(b). 


                    (f)
At the option of Borrower and upon three (3) Business Days’ prior written
notice, Borrower may prepay the LIBOR Rate Loans in whole at any time or in
part from time to time, without premium or penalty (except as otherwise
expressly provided in this Agreement), but with accrued interest on the
principal being prepaid to the date of such repayment. Borrower shall specify
the date of prepayment of Advances which are LIBOR Rate Loans and the amount of
such prepayment. In the event that any prepayment of a LIBOR Rate Loan is
required or permitted on a date other than the last Business Day of the then
current Interest Period with respect thereto, Borrower and each other Loan
Party shall indemnify Agent and Lenders therefor in accordance with Section
2.2(g). 


                    (g)
Each Loan Party shall indemnify Agent and Lenders and hold Agent and Lenders
harmless from and against any and all losses or expenses that Agent and Lenders
may sustain or incur as a consequence of any prepayment, conversion of or any
default by Borrower in the payment of the principal of or interest on any LIBOR
Rate Loan or failure by Borrower to complete a borrowing of, a prepayment of or
conversion of or to a LIBOR Rate Loan after notice thereof has been given,
including, but not limited to, any interest payable by Agent or Lenders to
lenders of funds obtained by any of them in order to make or maintain their
respective LIBOR Rate Loans hereunder. A certificate as to any additional
amounts payable pursuant to the foregoing sentence submitted by Agent (or the
applicable Lenders) to Borrower and Agent shall be conclusive absent manifest
error. 


                    (h)
Notwithstanding any other provision hereof, if any applicable law, treaty,
regulation or directive, or any change therein or in the interpretation or
application thereof, shall make it unlawful for any Lender (for purposes of
this Section 2.2(h), the term “Lender” shall include any Lender and the office or
branch where any Lender or any corporation or bank controlling such Lender
makes or maintains any LIBOR Rate Loans) to make or maintain its LIBOR Rate
Loans, the obligation of Lenders to make LIBOR Rate Loans hereunder shall
forthwith be cancelled and Borrower shall, if any affected LIBOR Rate Loans are
then outstanding, promptly upon notice from Agent, either pay all such affected
LIBOR Rate Loans or convert such affected LIBOR Rate Loans into Base Rate
Loans. If any such payment or conversion of any LIBOR Rate Loan is made on a
day that is not the last day of the Interest Period applicable to such LIBOR
Rate Loan, Borrower shall pay Agent, upon Agent’s notice, such amount or
amounts as may be necessary to compensate Lenders for any loss or expense sustained
or incurred by Lenders in respect of such LIBOR Rate Loan as a result of such
payment or conversion, including (but not limited to) any interest or other
amounts payable by Lenders to lenders of funds obtained by Lenders in order to
make or maintain such LIBOR Rate Loan. A certificate as to any additional
amounts payable pursuant to the foregoing sentence submitted by Agent (or the
applicable Lenders) to Borrower and Agent shall be conclusive absent manifest
error. 


          2.3
Disbursement of Advance Proceeds. 


          All
Advances shall be disbursed from whichever office or other place Agent or
Lenders, as applicable, may designate from time to time. During the Term,
Borrower may request, repay and reborrow Revolving Advances, all in accordance
with the terms and conditions of this Agreement. The proceeds of each Revolving
Advance requested by Borrower (or Agent on behalf of Borrower) or deemed to
have been requested by Borrower (or Agent on behalf of Borrower) under Section
2.2(a) shall, subject to the terms and conditions of this Agreement with
respect to requested Revolving Advances, be made available to Borrower on the
Business Day so requested by way of credit to Borrower’s operating account
number 41320 at Wells Fargo Bank, N.A. or such other account and/or bank as
Borrower may designate following written notification to Agent, in immediately
available federal funds or other immediately available funds or, with respect
to Revolving Advances deemed to have been requested by Borrower, be disbursed
to Agent to be applied to the outstanding Obligations giving rise to such
deemed request. 


26






          2.4
Increase in Maximum Credit. 


                    (a)
Borrower may, at any time, deliver a written request to Agent to increase the
Maximum Credit, provided, that, (i) any such increase shall be
subject to the consent of Agent and satisfaction of each of the conditions set
forth in Section 2.4(c) below, (ii) any such written request shall specify the
amount of the increase in the Maximum Credit that Borrower is requesting; (iii)
in no event shall more than two such written requests be delivered to Agent
during the term of this Agreement, (iv) the aggregate amount of any and all
such increases in the Maximum Credit shall not cause the Maximum Credit to
exceed $50,000,000, (v) if such request, as consented to by Agent under clause
(i) above, is to increase the Maximum Credit to an amount less than
$50,000,000, such request shall be permitted if and only if such request is to
increase the Maximum Credit to an amount not to exceed $35,000,000, and (vi)
any such request shall be irrevocable. Under no circumstances shall Borrower be
permitted to increase the Maximum Credit under this Section to an amount
greater than $35,000,000 but less than $50,000,000. 


                    (b)
Upon the receipt by Agent of any such written request, Agent shall notify each
of the Lenders of such request and each Lender shall have the option (but not
the obligation) to increase the amount of its Commitment by an amount up to its
Commitment Percentage of the amount of the increase in the Maximum Credit
requested by Borrower as set forth in the notice from Agent to such Lender.
Each Lender shall notify Agent within ten (10) days after the receipt of such
notice from Agent whether it is willing to so increase its Commitment, and if
so, the amount of such increase; provided, that, (i) the minimum
increase in the Commitments of each such Lender providing the additional
Commitments shall equal or exceed $5,000,000, and (ii) no Lender shall be
obligated to provide such increase in its Commitment and the determination to
increase the Commitment of a Lender shall be within the sole and absolute
discretion of such Lender. If the aggregate amount of the increases in the
Commitments received from the Lenders does not equal or exceed the amount of
the increase in the Maximum Credit requested by Borrower, Agent or Borrower may
seek additional increases from Lenders or Commitments from such Qualified
Assignees as it may determine, after, in the case of the Borrower, consultation
with Agent. In the event Lenders (or Lenders and any such Qualified Assignees,
as the case may be) have committed in writing to provide increases in their
Commitments or new Commitments in an aggregate amount in excess of the increase
in the Maximum Credit requested by Borrower or permitted hereunder, Agent shall
then have the right to allocate such commitments, first to Lenders and then to
Qualified Assignees, in such amounts and manner as Agent may determine, after consultation
with Borrower. 


                    (c)
The Maximum Credit shall be increased by the amount of the increase in
Commitments from Lenders or new Commitments from Qualified Assignees, in each
case selected in accordance with Section 2.4(b) above, for which Agent has
received Commitment Transfer Supplements on the date requested by Borrower for
the increase or such other date as Agent and Borrower may agree (but subject to
the satisfaction of the conditions set forth below), whether or not the aggregate
amount of the increase in Commitments and new Commitments, as the case may be,
equal or exceed the amount of the increase in the Maximum Credit requested by
Borrower in accordance with the terms hereof, effective on the date that Agent
notifies Borrower that each of the following conditions have been satisfied (such date being the “Maximum Credit Increase Effective Date”): 


                              (i)
Agent shall have received from each Lender or Qualified Assignee that is
providing an additional Commitment as part of the increase in the Maximum
Credit, an Commitment Transfer Supplement duly executed by such Lender or
Qualified Assignee and Borrower;


           
                  (ii)
the conditions precedent to the making of Loans set forth in Section 8.2 shall
be satisfied as of the date of the increase in the Maximum Credit, both before
and after giving effect to such increase;




27











           
                  (iii)
Agent shall have received an opinion of counsel to Borrower in form and substance
and from counsel reasonably satisfactory to Agent and Lenders addressing such
matters as Agent may reasonably request (including an opinion as to no defaults
or violations under other Indebtedness);


                             (iv)
such increase in the Maximum Credit on the date of the effectiveness thereof
shall not violate any term or provisions of any applicable law, regulation or
order or decree of any court or other Governmental Body and shall not be
enjoined, temporarily, preliminarily or permanently;


                             (v)
there shall have been paid to each Lender and Qualified Assignee, in each case,
providing an additional Commitment in connection with such increase in the
Maximum Credit all fees and expenses due and payable to such Person on or
before the effectiveness of such increase, including, without limitation, all
such fees payable pursuant to the Fee Letter; and 


                            (vi)
there shall have been paid to Agent, for the account of the Agent and Lenders
(in accordance with any agreement among them) all fees and expenses (including
reasonable fees and expenses of counsel) due and payable pursuant to any of the
Other Documents on or before the effectiveness of such increase to the extent
relating to such increase. 


                    (d)
As of a Maximum Credit Increase Effective Date, each reference to the term
Maximum Credit herein, and in any of the Other Documents shall be deemed
amended to mean the amount of the Maximum Credit specified in the written
notice from Agent to Borrower of the increase in the Maximum Credit. 


          2.5
[Reserved]. 


          2.6
Repayment of Advances. 


                    (a)
The Revolving Advances shall be due and payable in full on the Termination Date
subject to earlier prepayment as herein provided. 


                    (b)
Borrower recognizes that the amounts evidenced by checks, notes, drafts or any
other items of payment relating to and/or proceeds of Collateral may not be
collectible by Agent on the date received. In consideration of Agent’s
consideration (subject to the last sentence of this clause (b)) to
conditionally credit Borrower’s Account as of the Business Day on which Agent
receives those items of payment, Borrower agrees that, in computing the charges
under this Agreement, all items of payment shall be deemed applied by Agent on
account of the applicable Obligations two (2) Business Days after confirmation
to Agent by the Blocked Account bank or Depository Account bank, as provided
for in Section 4.15(h), that such items of payment have been collected in good
funds and finally credited to Agent’s account. Without limiting the above
provisions of this clause (b), Agent is not, however, required to credit
Borrower’s Account for the amount of any item of payment which is
unsatisfactory to Agent and Agent may charge Borrower’s Account for the amount
of any item of payment which is returned to Agent unpaid. 


                    (c)
All payments (including prepayments) of principal, interest and other amounts
payable hereunder and under each Other Document shall be made to Agent at the
Payment Account not later than 12:00 p.m. (New York time) on the due date
therefor (or, if such due date is not a Business Day, on the next Business Day)
in lawful money of the United States of America in funds immediately available
to Agent. Any payment received by Agent subsequent to 12:00 p.m. (New York
time) on any Business Day (regardless of whether such payment is due on such
Business Day) shall be deemed received by Agent, and shall be applied to the
applicable Obligations intended to be paid thereby, on the next Business Day.
Agent shall have the right to effectuate payment on any and all Obligations due
and owing hereunder by charging Borrower’s Account or by making Revolving
Advances as provided in Section 2.2. 


28






                    (d)
Borrower shall pay principal, interest, and all other amounts payable hereunder
and under each Other Document without any deduction whatsoever, including, but
not limited to, any deduction for any setoff or counterclaim. 


                    (e)
If, notwithstanding the terms of this Agreement or any Other Document, Agent or
any Lender receives any payment from or on behalf of Borrower or any other Loan
Party in a currency other than the Currency Due, Agent or such Lender may
convert the payment (including the monetary proceeds of realization upon any
Collateral and any funds then held in a cash collateral account) into the
Currency Due at exchange rate selected by Agent or such lender in the manner contemplated
by Section 16.5 and Borrower shall reimburse Agent and Lenders on demand for
all costs they incur with respect thereto. To the extent permitted by law, the
obligation shall be satisfied only to the extent of the amount actually
received by Agent upon such conversion. 


          2.7
Repayment of Excess Advances. 


          If
for any reason Excess Availability at any time is less than $0 or the balance
of any or all of the outstanding Advances and Letters of Credit at any time is
otherwise in excess of any applicable limitation set forth in this Agreement,
such excess amount shall be immediately due and payable without the necessity
of any demand, at the Payment Account. 


          2.8
Statement of Account. 


          Agent
shall maintain, in accordance with its customary procedures, a loan account
(the “Borrower’s Account”) in the
name of Borrower in which shall be recorded the date and amount of each Advance
made by Lenders and the date and amount of each payment in respect thereof; provided,
however, that, the failure by Agent to record the date or amount
of any Advance or any other item shall not adversely affect Agent or any Lender
under this Agreement or any Other Document or diminish any obligation of any
Loan Party under this Agreement or any Other Document. Each month, Agent shall
send to Borrower a statement showing the accounting for the Advances made,
payments made or credited in respect thereof, and certain other transactions
between Lenders and Borrower, during such month. The monthly statements shall
be deemed correct and binding upon Borrower in the absence of manifest error
and shall constitute an account stated between Lenders and Borrower unless
Agent receives a written statement of Borrower’s specific exceptions thereto within
thirty (30) days after such statement is received by Borrower. The records of
Agent with respect to Borrower’s Account shall be conclusive evidence absent
manifest error of the amounts of Advances and other charges thereto and of
payments applicable thereto. 


          2.9
Letters of Credit. 


          Subject
to the terms and conditions hereof, Agent shall issue or cause the issuance of
letters of credit (collectively, “Letters of
Credit”) by the Issuer on behalf of Borrower; provided, however,
that, Agent will not be required to issue or cause to be issued any
Letters of Credit to the extent that the face amount of such Letters of Credit
would cause Excess Availability to be less than $0. The maximum amount of
outstanding Letters of Credit shall not exceed $5,000,000 in the aggregate at
any time. All outstanding reimbursement obligations and disbursements or
payments related to Letters of Credit shall be deemed to be Base Rate Loans
consisting of Revolving Advances and shall bear interest at the Revolving
Interest Rate for Base Rate Loans. Notwithstanding anything to the contrary
contained in this Agreement, in the event that there is a Defaulting Lender,
Issuer shall not be required to issue any Letter of Credit, or increase or
extend or otherwise amend any Letter of Credit, unless Issuer has entered into
arrangements reasonably satisfactory to it and Borrower with respect to the
participation in Letters of Credit by such Defaulting Lender. Issuer and Agent
may require that Borrower provide cash collateral to them to hold on behalf of
them, on terms and conditions satisfactory 


29







to them, in an
amount equal to such Defaulting Lender’s Commitment Percentage of any Letter of
Credit Obligations. 


          2.10 Issuance of Letters of Credit. 


                    (a)
Borrower may request Agent to issue or cause the issuance of a Letter of Credit
by delivering to Agent Issuer’s standard form of letter of credit application
and, if requested, letter of credit security agreement (collectively, the “Letter of Credit Application”) and any
draft, if applicable, completed to the satisfaction of Agent, together with
such other certificates, documents and other papers and information as Agent or
Issuer may reasonably request. 


                    (b)
Each Letter of Credit shall, among other things, (i) provide for the payment of
sight drafts or acceptances of issuance drafts when presented for honor
thereunder in accordance with the terms thereof and when accompanied by the
documents described therein, (ii) be denominated in Dollars and (iii) have an
expiry date not later than one (1) year after such Letter of Credit’s date of
issuance, and in no event having an expiry date later than the Termination Date
unless Loan Parties provide cash collateral equal to not less than one hundred
five percent (105%) of the face amount thereof to be held by Agent pursuant to
a cash collateral agreement in form and substance satisfactory to Agent. 


                    (c)
Agent shall use its reasonable efforts to notify Lenders of the request by
Borrower for a Letter of Credit hereunder, but any failure to so notify Lenders
shall not reduce any liability or any obligation of the Lenders hereunder or
any rights of Agent hereunder. 


          2.11 Requirements for Issuance of Letters of Credit. 


                    (a)
In connection with the issuance of any Letter of Credit, Borrower shall
indemnify, save and hold Agent, each Lender and each Issuer harmless from any
loss, cost, expense or liability, including, without limitation, payments made
by Agent, any Lender or any Issuer and expenses and reasonable attorneys’ fees
incurred by Agent, any Lender or any Issuer arising out of, or in connection
with, any Letter of Credit. Borrower shall be bound by Agent’s or Issuer’s
regulations and good faith interpretations of any Letter of Credit, although
this interpretation may be different from Borrower’s own interpretation; and,
neither Agent, nor any Lender, nor any Issuer shall be liable for any error,
negligence, or mistakes, whether of omission or commission, in following
Borrower’s instructions or those contained in any Letter of Credit or of any
modifications, amendments or supplements thereto or in issuing or paying any
Letter of Credit except for Agent’s, any Lender’s, or any Issuer’s willful
misconduct. 


                    (b)
Borrower shall authorize and direct any Issuer of a Letter of Credit to deliver
to Agent all related payment/acceptance advices, to deliver to Agent all
instruments, documents, and other writings and property received by the Issuer
pursuant to the Letter of Credit and to accept and rely upon Agent’s
instructions and agreements with respect to all matters arising in connection
with the Letter of Credit or the application therefor. 


                    (c)
In connection with all Letters of Credit issued or caused to be issued by Agent
under this Agreement, Borrower hereby appoints Agent, or its designee, as its
attorney, with full power and authority (i) to sign and/or endorse Borrower’s
name upon any warehouse or other receipts, Letter of Credit Applications and
acceptances; (ii) to sign Borrower’s name on bills of lading; (iii) to clear
Inventory through Customs in the name of Borrower or Agent or Agent’s designee,
and to sign and deliver to Customs officials powers of attorney in the name of
Borrower for such purpose; and (iv) to complete in Borrower’s name or Agent’s,
or in the name of Agent’s designee, any order, sale or transaction, obtain the
necessary documents in connection therewith, and collect the proceeds thereof.
Neither Agent nor its attorneys will be liable for any acts or omissions nor for
any error of judgment or mistakes of fact or law, except for Agent’s or its
attorney’s 


30






willful
misconduct. This power, being coupled with an interest, is irrevocable as long
as any Letters of Credit remain outstanding. 


                    (d)
Each Lender, according to its Commitment Percentage, shall to the extent of the
aggregate amount of all unreimbursed reimbursement obligations arising from
disbursements made or obligations incurred with respect to the Letters of
Credit be deemed to have irrevocably purchased an undivided participation in
(i) each such unreimbursed reimbursement obligation, (ii) Agent’s credit
support enhancement provided to the Issuer of any Letter of Credit and (iii)
each Revolving Advance made as a consequence of the issuance of a Letter of
Credit and all disbursements thereunder. In the event that at the time a
disbursement is made the unpaid balance of Revolving Advances exceeds or would
exceed, with the making of such disbursement, the amount permitted under
Section 2.1, and such disbursement is not reimbursed by Borrower within two (2)
Business Days, upon Agent’s demand each Lender shall pay to Agent such Lender’s
Commitment Percentage of such unreimbursed disbursement together with such
Lender’s Commitment Percentage of Agent’s unreimbursed costs and expenses
relating to such unreimbursed disbursement. Upon receipt by Agent of a
repayment from Borrower of any amount disbursed by Agent for which Agent had
already been reimbursed by Lenders, Agent shall deliver to each Lender that
Lender’s proportionate share of such repayment. Each Lender’s participation
commitment shall continue until the last to occur of any of the following
events: (A) Agent ceases to be obligated to issue or cause to be issued Letters
of Credit hereunder; (B) no Letters of Credit issued hereunder remains
outstanding and uncancelled or (C) Agent, Issuer and all Persons (other than
Borrower) have been fully reimbursed for all payments made under or relating to
Letters of Credit. 


          2.12 Additional Payments/Protective Advances. 


          Any
sums expended (a) by Agent or any Lender due to any Loan Party’s failure to
perform or comply with its Obligations under this Agreement or any Other
Document, or (b) by Agent to protect the Collateral or enhance the likelihood
of repayment of the Obligations or any portion thereof (as determined by Agent
in its sole discretion) may, at the sole discretion of Agent, be charged to
Borrower’s Account as a Revolving Advance (regardless of whether or not the
conditions specified in this Agreement for the making of a Revolving Advance
have been satisfied, including, without limitation, Sections 2.1 or 8.2) and
added to the Obligations, and each Lender shall be obligated in connection
therewith as if such conditions had been satisfied (including, without
limitation, to fund its Commitment Percentage of such Revolving Advances). Such
sums charged to Borrower’s Account as a Revolving Advance (collectively, “Protective Advances”), plus the amount of
intentional over-Advances made pursuant to Section 16.2(d), shall not exceed
ten (10%) of the Maximum Revolving Advance Amount without the consent of each
of the Lenders. 


          2.13 Manner of Borrowing and Payment. 


                    (a)
Each borrowing of Advances shall be advanced according to the applicable
Commitment Percentages of Lenders. 


                    (b)
All proceeds of Collateral, together with each payment (including each
prepayment) by Borrower on account of the principal of the Advances, shall be
applied to the Advances pro rata according to the applicable Commitment
Percentages of Lenders. Except as expressly provided herein, all payments
(including prepayments) to be made by Borrower on account of principal,
interest and fees shall be made in Dollars without setoff or counterclaim and
shall be made to Agent on behalf of the Agent and the Lenders to the Payment
Account, in each case on or prior to the time specified in Section 2.6(c) in
immediately available funds. 


                    (c)
Notwithstanding anything to the contrary contained in Sections 2.13(a) and
2.13(b) or any other provision of this Agreement, commencing with the first
Business Day following the Closing Date, 


31






each or any
borrowing of Advances may, in the sole discretion of Agent, be advanced by
Agent (on behalf of the Lenders) and each payment by Borrower on account of
Advances shall be applied first to those Advances advanced by Agent (any such
Advance provided by the Agent may (at the discretion of the Agent) accrue
interest as a Base Rate Loan, regardless of whether or not Borrower requested
such Advance be a LIBOR Rate Loan, until the Agent is reimbursed for such
Advance). Alternatively, Agent may request that each Lender (and each Lender
shall) on or before 1:00 p.m. (New York time) on the requested borrowing date,
transfer in immediately available funds to Agent such Lender’s Commitment
Percentage of such requested borrowing. On each Settlement Date commencing with
the first Settlement Date following the Closing Date, Agent and Lenders shall
make certain payments as follows: (i) if a Lender’s balance of the Advances
(including Protective Advances) exceeds such Lender’s Commitment Percentage of
the Advances (including Protective Advances) as of a Settlement Date, then
Agent shall transfer in immediately available funds to a deposit account of
such Lender (as such Lender may designate in writing to Agent) an amount such
that each such Lender shall, upon receipt of such amount, have as of the
Settlement Date, its Commitment Percentage of the Advances (including
Protective Advances) and (ii) if a Lender’s balance of the Advances (including
Protective Advances) is less than such Lender’s Commitment Percentage of the
Advances (including Protective Advances) as of a Settlement Date, such Lender
shall transfer in immediately available funds to the Agent an amount such that
each such Lender shall, upon transfer of such amount, have as of the Settlement
Date, its Commitment Percentage of the Advances (including Protective
Advances). 


                    (d)
A Lender shall be entitled to earn interest at the applicable Interest Rate on
outstanding Advances which such Lender has funded for the periods in which such
Advance was so funded by such Lender. Agent shall be entitled to earn interest
at the applicable Interest Rate on outstanding Advances (including Protective
Advances) which Agent has funded for the periods in which such Advance
(including Protective Advances) was so funded by Agent. 


                    (e)
Promptly following each Settlement Date, Agent shall submit to each Lender a
certificate with respect to payments received and Advances made during the Week
immediately preceding such Settlement Date. Such certificate of Agent shall be
conclusive in the absence of manifest error. 


                    (f)
If any Lender or Participant (a “Benefited
Lender”) shall at any time receive any payment of all or part of its
Advances, or interest thereon, or receive any Collateral in respect thereof
(whether voluntarily or involuntarily or by set-off) in a greater proportion
than any such payment to and Collateral received by any other Lender, if any,
in respect of such other Lender’s Advances, or interest thereon, and such
greater proportionate payment or receipt of Collateral is not expressly permitted
hereunder, such Benefited Lender shall purchase for cash from the other Lenders
a participation in such portion of each such other Lender’s Advances, or shall
provide such other Lender with the benefits of any such Collateral, or the
proceeds thereof, as shall be necessary to cause such Benefited Lender to share
the excess payment or benefits of such Collateral or proceeds ratably with each
of Lenders according to their Commitment Percentages thereof; provided, however,
that, if all or any portion of such excess payment or benefits is
thereafter recovered from such Benefited Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest. Each Lender so purchasing a portion of another
Lender’s Advances may exercise all rights of payment (including, without
limitation, rights of set-off) with respect to such portion as fully as if such
Lender were the direct holder of such portion. 


                    (g)
Unless Agent shall have been notified in writing, prior to the making of any
Advance, by any Lender that such Lender will not make the amount which would
constitute its applicable Commitment Percentage of the Advances available to
Agent, Agent may (but shall not be obligated to) assume that such Lender shall
make (and such Lender unconditionally shall be obligated to make) such amount
available to Agent on or prior to the next Settlement Date and, in reliance
upon such assumption, make available to Borrower a corresponding amount. Agent will promptly notify Borrower
of its receipt of any such notice from a Lender. If such amount is made
available to Agent on a date after such next Settlement Date, such 


32






Lender shall
pay to Agent on demand an amount equal to the product of (i) the daily average
Federal Funds Rate (computed on the basis of a year of 360 days) during such
period as quoted by Agent, times (ii) such amount, times (iii) the number of
days from and including such Settlement Date to the date on which such amount becomes
immediately available to Agent. A certificate of Agent submitted to any Lender
with respect to any amounts owing under this paragraph (g) shall be conclusive,
in the absence of manifest error. If such amount is not in fact made available
to Agent by such Lender within three (3) Business Days after such Settlement
Date, Agent shall be entitled to recover such an amount, with interest thereon
at the rate per annum then applicable to such Advance hereunder, on demand from
Borrower; provided,  however,  that, Agent’s right to such recovery shall not
prejudice or otherwise adversely affect Borrower’s rights (if any) against such
Lender.  


          2.14 Mandatory Prepayments. 


          Notwithstanding
the following, within one (1) Business Day of the date of receipt by any Loan
Party or any of its Subsidiaries of any Extraordinary Receipts, Borrower shall
prepay the outstanding amount of the Advances in an amount equal to 100% of
such Extraordinary Receipts, net of any reasonable expenses incurred in
collecting such Extraordinary Receipts, subject to Borrower’s ability to
reborrow Revolving Advances in accordance with the terms hereof; except that
during a Waterfall Event, the order of application to the Obligations shall be
made pursuant to Section 11.2 rather than as is provided in this Section 2.14.  


          2.15 Use of Proceeds. 


          Borrower
shall use the initial proceeds of the Advances and Letters of Credit hereunder
only for: (a) payments on the Closing Date to each of the Persons listed in the
disbursement direction letter furnished by Borrower to Agent on or about the
Closing Date and (b) costs, expenses and fees incurred on or prior to the
Closing Date in connection with the preparation, negotiation, execution and
delivery of this Agreement and the Other Documents. All other Advances made or
Letters of Credit provided to or for the benefit of Borrower pursuant to the
provisions hereof shall be used by Borrower only for general operating, working
capital and other proper corporate purposes of Borrower not otherwise
prohibited by the terms hereof (provided, that, without the prior
written consent of Agent, any such uses of Advance proceeds must be for current
cash needs of Borrower and not for future cash expenditures or to pre-fund
future cash expenditures of Borrower). Further, none of the proceeds will be
used, directly or indirectly, for the purpose of purchasing or carrying any
margin security or for the purposes of reducing or retiring any Indebtedness
which was originally incurred to purchase or carry any margin security or for
any other purpose which might cause any of the Advances to be considered a
“purpose credit” within the meaning of Regulation U of the Board of Governors
of the Federal Reserve System, as amended. 


          2.16 Defaulting Lender/Impacted Lender. 


                    (a)
Notwithstanding anything to the contrary contained herein, in the event any
Lender (i) has refused (if the refusal constitutes a breach by such Lender of
its obligations under this Agreement) to make available its portion of any
Advance or (ii) notifies either Agent or Borrower that it does not intend to
make available its portion of any Advance (if the actual refusal would
constitute a breach by such Lender of its obligations under this Agreement)
(each, a “Lender Default”), all
rights and obligations hereunder of such Lender (a “Defaulting Lender”) as to which a Lender Default is in effect
and of the other parties hereto shall be modified to the extent of the express
provisions of this Section 2.16 while such Lender Default remains in effect. 


                    (b)
The obligations of each Lender to make Advances shall continue to be based on
their respective Commitment Percentages, and no Commitment Percentage of any
Lender or any pro rata share of any Advances required to be advanced by any
Lender shall be increased as a result of a Lender Default. 


33






Amounts
received in respect of the Obligations owing to the Lenders shall be applied to
reduce the applicable Obligations owing to each Lender that is not a Defaulting
Lender prior to any such amounts being applied to reduce the Obligations owing
to such Defaulting Lender to the extent that the aggregate amount of
outstanding Obligations owing to such Defaulting Lender is less than what it
would have been if such Lender Default did not occur. 


                    (c)
A Defaulting Lender shall not be entitled to give instructions to Agent or to
approve, disapprove, consent to or vote on any matters relating to this
Agreement and the Other Documents. All amendments, waivers and other
modifications of this Agreement and the Other Documents may be made without
regard to any Defaulting Lender and, solely for the purposes of the definition
of “Required Lenders”, no Defaulting Lender shall be deemed to be a Lender or
to have either Advances outstanding or Commitments. 


                    (d)
Other than as expressly set forth in this Section 2.16, the rights and
obligations of a Defaulting Lender (including the obligation to indemnify
Agent) and the other parties hereto shall remain unchanged. Nothing in this
Section 2.16 shall be deemed to release any Defaulting Lender from its
obligations under this Agreement and the Other Documents, shall alter such
obligations, shall operate as a waiver of any default by such Defaulting Lender
hereunder, or shall prejudice any rights which Borrower, Agent or any Lender
may have against any Defaulting Lender as a result of any default by such
Defaulting Lender hereunder. 


                    (e)
In the event a Defaulting Lender retroactively cures to the satisfaction of
Agent the breach which caused a Lender to become a Defaulting Lender, then,
from and after the date on which such cure has been so effected, such
Defaulting Lender shall no longer be a Defaulting Lender and shall be treated
as a Lender that is not a Defaulting Lender under this Agreement. 


                    (f)
Agent may replace a Defaulting Lender or an Impacted Lender in accordance with
Section 16(d). 


3. INTEREST
AND FEES. 

          3.1 Interest. 


          Interest
on Advances shall be payable to Agent for the benefit of Lenders in arrears on
the first day of each month with respect to Base Rate Loans and, with respect
to LIBOR Rate Loans, in arrears at the earlier of each date that is three
months following date of the commencement of such Interest Period and at the
end of such Interest Period. Interest charges shall be computed on the actual
principal amount of Advances outstanding at a rate per annum equal to the
applicable Interest Rate. Concurrent with any increase or decrease in the Base
Rate, the Interest Rate for Base Rate Loans shall be similarly changed without
notice or demand of any kind by an amount equal to the amount of such change in
the Base Rate. At the election of Agent or the Required Lenders, upon and after
the occurrence of an Event of Default, and during the continuation thereof, the
outstanding Advances and all other Obligations shall bear interest at the
applicable Interest Rate plus two (2) percentage points per annum (as
applicable, the “Default Rate”).
At the election of Agent or the Required Lenders, such Default Rate shall be
applied retroactively to commence on the date of the first occurrence of the
event giving rise to such Event of Default. 


          3.2 Letter of Credit Fees; Cash Collateral. 


                    (a)
Borrower shall pay (i) to Agent, for the benefit of Lenders according to their
applicable Commitment Percentages, fees for each Letter of Credit for the
period from and excluding the date of issuance of same to and including the
date of expiration or termination, equal to the average daily face 


34






amount of each
outstanding Letter of Credit multiplied by three and one half (3.50%) per
annum, such fees to be calculated on the basis of a 360-day year for the actual
number of days elapsed and to be payable monthly in arrears on the first day of
each month and for so long as any Letter of Credit remains outstanding, and
(ii) to Agent for the benefit of the Issuer, any and all fees and expenses as
agreed upon by the Issuer and Borrower in connection with any Letter of Credit,
including, without limitation, in connection with the opening, amendment or
renewal of any such Letter of Credit and shall reimburse Agent for any and all
fees and expenses, if any, paid by Agent to the Issuer (all of the foregoing
fees described in clauses (i) and (ii) above, the “Letter of Credit Fees”). Any such charge in effect at the time
of a particular transaction shall be the charge for that transaction,
notwithstanding any subsequent change in the Issuer’s prevailing charges for
that type of transaction. At the election of Agent or the Required Lenders,
upon the occurrence of an Event of Default, and during the continuation
thereof, Agent may, and at the direction of the Required Lenders Agent shall,
increase the Letter of Credit Fees by two (2) percentage points per annum. At
the election of Agent or the Required Lenders, such increased Letter of Credit
Fee shall be applied retroactively to commence on the first date of the
occurrence of the event giving rise to such Event of Default. All Letter of
Credit Fees payable hereunder shall be deemed earned in full on the date when
the same are due and payable hereunder and shall not be subject to rebate or
proration upon the termination of this Agreement for any reason. 


                    (b)
(i) At the election of Agent or the Required Lenders, at any time when a
Default or an Event of Default has occurred and is continuing and (ii) on the
Termination Date, Borrower will cause cash to be deposited and maintained in a
non-interest bearing account with Agent, as cash collateral, in an amount equal
to one hundred and five percent (105%) of the outstanding Letters of Credit
and, if requested by Agent, Bank Product Obligations, and Borrower hereby
irrevocably authorizes Agent, in its discretion, on Borrower’s behalf and in
Borrower’s or Agent’s name, to open such an account and to make and maintain
deposits therein, or in an account opened by Borrower, in the amounts required
to be made by Borrower, out of the proceeds of Receivables or other Collateral
or out of any other funds of Borrower coming into Agent or any Lender’s
possession at any time. Borrower may not withdraw amounts credited to any such
account except upon payment and performance in full of all Obligations and all
Letters of Credit and, if applicable, Bank Product Obligations, have expired or
been cancelled. 


          3.3 Loan Fees. 


                    (a)
Unused Line Fee. If, for any month during the Term, the average daily
unpaid balance of the Revolving Advances and Letters of Credit for each day of
such month does not equal the Maximum Credit, then Borrower shall pay to Agent,
for the ratable benefit of Lenders according to their Commitment Percentages, a
fee at a rate equal to one and one quarter (1.25%) on the amount by which the
Maximum Credit exceeds such average daily unpaid balance. Such fee shall be
payable to Agent in arrears on the first day of each month, commencing November
1, 2009. 


                    (b)
Other Fees. Borrower shall pay to Agent, for Agent’s own account (and
not for the account of any Lender), the other fees and amounts set forth in the
Fee Letter in the amounts and at the times specified therein. 


          3.4 Collateral Monitoring Fees and Expenses. 


          Borrower
shall pay to Agent, for Agent’s own account (and not for the account of any
Lender), on the first day of each month following any month in which Agent
performs any collateral monitoring - namely any field examination, collateral
analysis or other business analysis, the need for which is to be determined by
Agent and which monitoring is undertaken by Agent or for Agent’s benefit at any
time in Agent’s sole discretion, all costs and expenses associated with such
collateral monitoring. 


35






          3.5 Computation of Interest and Fees. 


          Interest
and fees hereunder shall be computed on the basis of a year of 360 days and for
the actual number of days elapsed, except that interest on Base Rate Loans
shall be computed on the basis of a year of 365 or 366 days, as applicable, and
for the actual number of days elapsed. If any payment to be made hereunder
becomes due and payable on a day other than a Business Day, the due date
thereof shall be extended to the next succeeding Business Day and interest
thereon shall be payable at the applicable Interest Rate for Base Rate Loans
during such extension. 


          3.6 Maximum Charges. 


          In
no event whatsoever shall interest and other charges charged hereunder exceed
the highest rate permissible under law. In the event interest and other charges
as computed hereunder would otherwise exceed the highest rate permitted under
law, such excess amount shall be first applied to any unpaid principal balance
owed by Borrower, and if the then remaining excess amount is greater than the
previously unpaid principal balance, Lenders shall promptly refund such excess
amount to Borrower and the provisions hereof shall be deemed amended to provide
for such permissible rate. 


          3.7 Increased Costs. 


          In
the event that any applicable law, treaty or governmental regulation, or any
change therein or in the interpretation or application thereof, or compliance
by any Lender (for purposes of this Section 3.7, the term “Lender” shall
include Agent or any Lender and any corporation or bank controlling Agent or
any Lender or any Subsidiary of Agent or any Lender) and the office or branch
where any Lender makes or maintains any LIBOR Rate Loans with any request or
directive (whether or not having the force of law) from any central bank or
other financial, monetary or other authority, shall: 


                    (a)
subject any Lender to any tax of any kind whatsoever with respect to this
Agreement or any Other Document or change the basis of taxation of payments to
any Lender of principal, fees, interest or any other amount payable hereunder
or under any Other Documents (except for changes in the rate of tax on the
overall net income of any Lender by the jurisdiction in which it maintains its
principal office); 


                    (b)
impose, modify or hold applicable any reserve, special deposit, assessment or
similar requirement against assets held by, or deposits in or for the account
of, advances or loans by, or other credit extended by, any office of any Lender,
including (without limitation) pursuant to Regulation D of the Board of
Governors of the Federal Reserve System; or 


                    (c)
impose on any Lender any other condition with respect to this Agreement or any
Other Document; 


and the result
of any of the foregoing is to increase the cost to any Lender of making,
renewing or maintaining its Advances hereunder or to reduce the amount of any
payment (whether of principal, interest or otherwise) in respect of any of the
Advances or the Lender’s overall capital, then, in any case Borrower shall
promptly pay such Lender, upon its demand, such additional amount as will
compensate such Lender for such additional cost or such reduction, as the case
may be. Such Lender shall certify the amount of such additional cost or reduced
amount to Borrower and Agent, and such certification shall be conclusive absent
manifest error. 


36






          3.8 Basis For Determining Interest Rate Inadequate or
Unfair. 


          In
the event that Agent or any Lender shall have determined that: 


                    (a)
reasonable means do not exist for ascertaining LIBOR applicable pursuant to
Section 2.2 for any Interest Period; or 


                    (b)
Dollar deposits in the relevant amount and for the relevant maturity are not
available to Agent or such Lender in the London interbank market, with respect
to an outstanding LIBOR Rate Loan, a proposed LIBOR Rate Loan, or a proposed
conversion of a Base Rate Loan into a LIBOR Rate Loan; or 


                    (c)
the LIBOR for any requested Interest Period with respect to a proposed LIBOR
Rate Loan does not adequately and fairly reflect the cost to Agent or any
Lender of funding such LIBOR Rate Loan, 


then Agent, on
behalf of itself or at the direction of such Lender, shall give Borrower prompt
written, telephonic or telegraphic notice of such determination. If such notice
is given, (i) any such requested LIBOR Rate Loan shall be made as a Base Rate
Loan, unless Borrower shall notify Agent no later than 10:00 a.m. (New York
time) two (2) Business Days prior to the date of such proposed borrowing, that
its request for such borrowing (A) shall be cancelled, (B) shall be made as a
LIBOR Rate Loan with a different Interest Period for which LIBOR can be
ascertained (if such notice is given solely with respect to clause (a) above),
(C) shall be made as a LIBOR Rate Loan with a different Interest Period which
is available in the London interbank market to Agent or such Lender (if such
notice is given solely with respect to clause (b) above) or (D) shall be made
as a LIBOR Rate Loan with a different Interest Period which does adequately and
fairly reflect the cost to Agent or such Lender (if such notice is given solely
with respect to clause (c) above), and (ii) any Base Rate Loan or LIBOR Rate
Loan which was to have been continued as or converted to an affected type of
LIBOR Rate Loan shall be continued as or converted into a Base Rate Loan, or,
if Borrower shall notify Agent, no later than 10:00 a.m. (New York time) two
(2) Business Days prior to the proposed conversion, such Base Rate Loan or
LIBOR Rate Loan, (A) shall be continued or converted as a LIBOR Rate Loan with
a different Interest Period for which LIBOR can be ascertained (if such notice
is given solely with respect to clause (a) above), (B) shall be continued or
converted as a LIBOR Rate Loan with a different Interest Period which is
available in the London interbank market to Agent or such Lender (if such
notice is given solely with respect to clause (b) above) or (C) shall be
continued or converted as a LIBOR Rate Loan with a different Interest Period
which does adequately and fairly reflect the cost to Agent or such Lender (if
such notice is given solely with respect to clause (c) above), and (iii) any
outstanding affected LIBOR Rate Loans shall be converted into a Base Rate Loan,
or, if Borrower shall notify Agent, no later than 10:00 a.m. (New York time)
two (2) Business Days prior to the last Business Day of the then current
Interest Period applicable to such affected LIBOR Rate Loan, shall be converted
into (A) a LIBOR Rate Loan with a different Interest Period for which LIBOR can
be ascertained (if such notice is given solely with respect to clause (a)
above), (B) a LIBOR Rate Loan with a different Interest Period which is
available in the London interbank market to Agent or such Lender (if such
notice is given solely with respect to clause (b) above) or (C) a LIBOR Rate
Loan with a different Interest Period which does adequately and fairly reflect
the cost to Agent or such Lender (if such notice is given solely with respect
to clause (c) above). Until such notice has been withdrawn, Lenders shall have
no obligation to make an affected type of LIBOR Rate Loan or maintain
outstanding affected LIBOR Rate Loans and Borrower shall have no right to convert a Base Rate Loan or an
unaffected type of LIBOR Rate Loan into an affected type of LIBOR Rate Loan. 


          3.9 Capital Adequacy. 


                    (a)
In the event that any Lender (for purposes of this Section 3.9, the term
“Lender” shall include Agent or any Lender and any corporation or bank
controlling Agent or any Lender) shall have 


37






determined
that any applicable law, rule, regulation or guideline regarding capital
adequacy, or any change therein, or any change in the interpretation or
administration thereof by any Governmental Body, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by any Lender and the office or branch where any Lender (as so defined) makes
or maintains any LIBOR Rate Loans with any request or directive regarding
capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has or would have the effect of
reducing the rate of return on any Lender’s capital as a consequence of its
obligations hereunder to a level below that which such Lender could have
achieved but for such adoption, change or compliance (taking into consideration
each Lender’s policies with respect to capital adequacy), then, from time to
time, Borrower shall pay upon demand to such Lender such additional amount or
amounts as will compensate such Lender for such reduction. In determining such
amount or amounts, such Lender may use any reasonable averaging or attribution
methods. The protection of this Section 3.9 shall be available to each Lender
regardless of any possible contention of invalidity or inapplicability with
respect to the applicable law, regulation or condition. 


                    (b)
A certificate of such Lender setting forth such amount or amounts as shall be
necessary to compensate such Lender with respect to Section 3.9(a) when
delivered to Borrower and Agent shall be conclusive absent manifest error. 


          3.10 Withholding Taxes. 


          Except
as otherwise required by law and subject to Section 16.3 hereof, each payment
by Borrower or the Guarantors under this Agreement or the Other Documents shall
be made without withholding or deduction for or on account of any present or
future taxes (other than income taxes or similar levies on or incurred by the
recipient) imposed by or within the jurisdictions in which Borrower or
Guarantors are domiciled, any jurisdiction from which Borrower or Guarantors
make any payment, or (in each case) any political subdivision or taxing
authority thereof or therein. If any such withholding or deduction is so
required, Borrower or Guarantors, as applicable, shall promptly upon becoming
aware that such withholding or deduction is necessary, notify the Agent and
shall make the withholding or deduction, pay the amount withheld to the
appropriate Governmental Body before penalties attach thereto or interest
accrues thereon and forthwith pay such additional amount as may be necessary to
ensure that the net amount actually received by Agent and each Lender free and
clear of such taxes (including such taxes on such additional amount) is equal
to the amount which that Agent or such Lender (as the case may be) would have
received had such withholding or deduction not been made; provided, that,
the lenders have complied with Section 16.3(f) hereof. Within thirty (30) days
of paying any amount withheld or deducted on account of tax, Borrower shall
deliver to the Agent evidence (reasonably satisfactory to the Agent) that the
appropriate payment has been paid to the relevant tax authority. If the Agent
or any Lender pays any amount in respect of any such taxes, penalties or
interest, Borrower and Guarantors shall reimburse the Agent or such Lender for
that payment on demand in the currency in which such payment was made, unless
any such taxes, penalties or interest are imposed as a result of any Lender’s
failure to comply with Section 16.3(f) hereof. If Borrower or Guarantors pay
any such taxes, penalties or interest, it shall deliver official tax receipts
evidencing that payment or certified copies thereof to the Agent or Lender on
whose account such withholding was made (with a copy to the Agent if not the
recipient of the original) on or before the thirtieth day after payment. 


4. GRANT OF SECURITY INTEREST; COLLATERAL COVENANTS. 


          4.1
Security Interest in the Collateral. 


          To
secure the prompt payment and performance of all of the Obligations to the
Secured Parties, each Loan Party hereby assigns, pledges and grants to Agent,
for the ratable benefit of each Secured Party, a continuing Lien in and to all
of its Collateral, whether now owned or existing or hereafter acquired or
arising and wheresoever located. Each Loan Party shall mark its books and
records as may be necessary or 


38






appropriate to
evidence, protect and perfect Agent’s Lien and shall cause its financial
statements, where applicable, to reflect such Lien. 


          4.2 Perfection of Security Interest. 


                    (a)
Each Loan Party shall take all action that may be necessary or desirable, or
that Agent may request, so as at all times to maintain the validity,
perfection, enforceability and priority of Agent’s Lien in the Collateral. 


                    (b)
Agent may at any time and from time to time file in accordance with Section
9-509 of the UCC, financing statements and amendments thereto that describe the
Collateral as “all assets” or similar language of the applicable Loan Party and
which contain any other information required by the UCC for the sufficiency or
filing office acceptance of any financing statements, continuation statements
or amendments. Each Loan Party agrees to furnish any such information to Agent
promptly upon request. 


                    (c)
Each Loan Party shall, at any time and from time to time, take such steps as
Agent may request (i) to obtain an acknowledgment, in form and substance
satisfactory to Agent, of any bailee having possession of any of the
Collateral, stating that the bailee holds such Collateral for Agent, (ii) to
obtain “control” of any letter-of-credit rights, deposit accounts or electronic
chattel paper (as such terms are defined in the UCC with corresponding
provisions thereof defining what constitutes “control” for such items of Collateral),
with any agreements establishing control to be in form and substance reasonably
satisfactory to Agent, and (iii) otherwise to insure the continued perfection
and priority of Agent’s Liens in any of the Collateral for the benefit of the
Lenders and of its rights therein. If any Loan Party shall at any time, acquire
a “commercial tort claim” (as such term is defined in the UCC) in excess of $100,000, such Loan Party
shall promptly notify Agent thereof in writing (which notice shall be deemed to
be an update of Schedule 5.8(b)(iii)), therein providing a reasonable
description and summary thereof, and upon delivery thereof to Agent, such Loan
Party shall be deemed to thereby have granted to Agent, for the ratable benefit
of each Secured Party (and each Loan Party hereby grants to Agent, for the
ratable benefit of each Secured Party) a Lien in and to each such commercial
tort claim and all proceeds thereof, all upon the terms of and governed by this
Agreement to secure the prompt payment and performance of all of the
Obligations. 


                    (d)
Each Loan Party hereby confirms and ratifies all UCC financing statements filed
by Agent with respect to such Loan Party on or prior to the date of the
Agreement. 


                    (e)
All charges, expenses and fees Agent may incur in doing any of the foregoing,
and any taxes relating thereto, shall be charged to Borrower’s Account as a
Revolving Advance and added to the Obligations, or, at Agent’s option, shall be
paid by Loan Parties to Agent immediately upon demand. 


          4.3 Disposition of Collateral/Assets. 


          No
Loan Party or any of their Subsidiaries shall, directly or indirectly, without
the prior written consent of Agent, sell, assign, lease, transfer, abandon or
otherwise dispose of any of its assets or properties (including, without
limitation, the Collateral) to any other Person (each, a “Disposition”), except (a) the sale of
Inventory in the ordinary course of business, and (b) provided no Default or
Event of Default shall have occurred and be continuing, the Disposition of
Collateral (x) consisting of Equipment having a fair market value not to exceed
$500,000 in the aggregate in any fiscal year or (y) consisting of Real Property
having a fair market value not to exceed $1,500,000 in the aggregate in any
fiscal year, so long as, in each case, (i) at least seventy-five (75%) percent
of the consideration payable on account thereof shall consist of cash and/or
Cash Equivalents, (ii) all of the proceeds from such Disposition are utilized to
acquire replacement Collateral consisting of Equipment, (iii) the fair market
value of the acquired Collateral is equal to or greater than the fair market
value of the Collateral or other assets or property which was Disposed of, (iv)
the acquired 


39






Collateral is
purchased by the applicable Loan Party within one hundred eighty (180) days
after the consummation of the Disposition of the Collateral, (v) the acquired
Collateral shall be deemed to be acceptable Collateral by Agent in its
reasonable discretion, (vi) the acquired Collateral shall be subject to Agent’s
first priority Lien, and (vii) the proceeds of such Disposition shall be
applied in accordance with Section 2.13. 


          4.4 Preservation of Collateral. 


          Following
the occurrence of a Default or Event of Default, in addition to the rights and
remedies set forth in Section 11.1, Agent: (a) may at any time take such steps
as Agent deems necessary to protect Agent’s Lien in and to preserve the
Collateral, including, without limitation, the hiring of such security guards
or the placing of other security protection measures as Agent may deem
appropriate; (b) may employ and maintain at any Loan Party’s premises a
custodian who shall have full authority to do all acts necessary to protect Agent’s
interests in the Collateral; (c) may lease warehouse facilities to which Agent
may move all or part of the Collateral; (d) may use any Loan Party’s owned or
leased lifts, hoists, trucks and other facilities or equipment for handling or
removing the Collateral; (e) shall have, and is hereby granted, a right of
ingress and egress to the places where the Collateral is located, and may
proceed over and through any Loan Party’s owned or leased property; and (f)
shall have a non-exclusive, royalty-free, license to use each Loan Party’s
Intellectual Property for the purposes of the completion, processing and sale
of such Loan Party’s Inventory and other assets. Each Loan Party shall
cooperate fully with all of Agent’s efforts to preserve the Collateral and will
take such actions to preserve the Collateral as Agent may direct. All of
Agent’s expenses of preserving the Collateral, including, without limitation,
any expenses relating to any actions by Agent described in this Section 4.4,
may, at the election of the Agent, be charged to Borrower’s Account and added
to the Obligations. 


          4.5 Ownership and Location of Collateral. 


                    (a)
At the time the Collateral becomes subject to Agent’s Lien, each Loan Party
shall be the sole owner of and fully authorized and able to sell, transfer,
pledge and/or grant a first priority Lien in each and every item of its
respective Collateral to Agent; and, except for Permitted Encumbrances, the
Collateral shall be free and clear of all Liens and encumbrances whatsoever. 


                    (b)
Each Loan Party’s books and records, Equipment, Inventory and all other assets
(other than motor vehicles) shall be located as set forth on Schedule 4.5 (as
such schedule may from time to time be updated in accordance with Section 7.19)
and shall not be removed from such location(s) without the prior written
consent of Agent, except with respect to the sale of Inventory in the ordinary
course of business and the sale of Equipment to the extent permitted in Section
4.3. 


          4.6 Defense of Agent’s and Lenders’ Interests. 


          Until
the occurrence of the Termination Date and the payment and performance in full
of all of the Obligations, Agent’s Liens in the Collateral shall continue in
full force and effect. For so long as Agent’s Liens in the Collateral continue
in full force and effect, no Loan Party shall, without Agent’s prior written
consent, pledge, assign, transfer, create, charge or suffer to exist a Lien
upon any part of the Collateral, except for Permitted Encumbrances. Each Loan
Party shall defend Agent’s Liens in the Collateral against any and all Persons
whatsoever. At any time following demand by Agent for payment of all
Obligations in accordance with Section 11.1, in addition to and not in limitation
of Agent’s rights and remedies set forth in Section 11.1: (a) Agent shall have
the right to take possession of the indicia of the Collateral and the
Collateral, (b) Loan Parties shall, upon Agent’s demand, assemble the
Collateral in the best manner possible and make it available to Agent at a
place reasonably convenient to Agent, and (c) each Loan Party shall, and Agent
may, at its option, instruct all suppliers, carriers, forwarders, warehouses or
others receiving or holding 


40






cash, checks,
Inventory, documents or instruments of such Loan Party to deliver same to Agent
and/or subject to Agent’s order and if they shall come into any Loan Party’s
possession, all such Collateral shall be held by such Loan Party in trust as
Agent’s trustee, and such Loan Party will immediately deliver such Collateral
to Agent in their original form, together with any necessary endorsement. 


          4.7 Books and Records. 


          Each
Loan Party shall, and shall cause each of its Subsidiaries to, (a) keep proper books
of record and account in which full, true and correct entries will be made of
all dealings or transactions of or in relation to its business and affairs; (b)
set up on its books accruals with respect to all taxes, assessments, charges,
levies and claims; and (c) on a reasonably current basis set up on its books,
from its earnings, allowances against doubtful Receivables, advances and
investments and all other proper accruals (including without limitation by
reason of enumeration, accruals for premiums, if any, due on required payments
and accruals for depreciation, obsolescence, or amortization of properties),
which should be set aside from such earnings in connection with its business.
All determinations pursuant to this subsection shall be made in accordance
with, or as required by, GAAP consistently applied in the opinion of such
independent public accountant as shall then be regularly engaged by Loan
Parties. 


          4.8 Financial Disclosure. 


          Each
Loan Party hereby irrevocably authorizes and directs all Accountants and
auditors employed by such Loan Party at any time during the Term to exhibit and
deliver to Agent and each Lender copies of any of the Loan Party’s financial
statements, trial balances or other accounting records of any sort in the
Accountant’s or auditor’s possession, and to disclose to Agent and each Lender
any information such Accountants may have concerning such Loan Party’s
financial status and business operations. Each Loan Party hereby authorizes all
federal, state and municipal authorities to furnish to Agent and each Lender
copies of reports or examinations relating to such Loan Party, whether made by
such Loan Party or otherwise. Notwithstanding the foregoing authorization, so
long as no Default or Event if Default is in existence, Agent and each Lender
will attempt to obtain such information or materials directly from such Loan
Party prior to obtaining such information or materials from such Accountants,
auditors or such authorities. 


          4.9 Compliance with Laws. 


          Each
Loan Party shall, and shall cause each of its Subsidiaries to, comply in all
respects with all acts, rules, regulations and orders of any Governmental Body
applicable to its respective Collateral or any part thereof or to the operation
of such Person’s business the non-compliance with which could reasonably be
expected to have a Material Adverse Effect. Each Loan Party may, however,
contest or dispute any acts, rules, regulations, orders and directions of those
bodies or officials in any reasonable manner; provided, that, any related Lien
is inchoate or stayed and, at Agent’s option, sufficient Reserves are
established to the satisfaction of Agent to protect Agent’s Lien in the
Collateral. The Collateral at all times shall be maintained in accordance with
the requirements of all insurance carriers which provide insurance with respect
to the Collateral so that such insurance shall remain in full force and effect. 



          4.10 Inspection of Premises/Appraisals. 


          At
any time during the existence of an Event of Default, and otherwise at all
reasonable times during normal business hours, Agent and each Lender shall have
the right (a) to audit, check, inspect and make abstracts and copies from each
Loan Party’s books, records, audits, correspondence and all other papers
relating to the Collateral and the operation of each Loan Party’s business and
(b) to enter, or to have their agents enter, upon any of Loan Party’s premises
at any time during business hours and at any other reasonable time, and from
time to time, for the purpose of inspecting the Collateral (and/or with respect
to Agent (and 


41






Persons
designated by Agent) appraising the Collateral) and any and all records
pertaining thereto and the operation of such Loan Party’s business. From time
to time as determined by Agent, Agent shall have the right to conduct
appraisals (or have other Persons selected by Agent conduct appraisals) of the
Inventory, Equipment, Real Property and other Collateral (it being understood
that it is the intention of Agent that Inventory appraisals shall be conducted
at least semi-annually, provided that the foregoing shall not be deemed to
limit the Agent’s right to conduct additional appraisals as Agent deems
necessary in its discretion). 


          4.11 Insurance. 


          Each
Loan Party shall bear the full risk of any loss of any nature whatsoever with
respect to the Collateral. At each Loan Party’s own cost and expense, each Loan
Party shall, and shall cause each of its Subsidiaries to, maintain insurance in
amounts, types and with carriers in each case acceptable to Agent. Without
limiting the foregoing, each Loan Party shall, and shall cause each of its
Subsidiaries to, (a) keep all its insurable properties insured against the
hazards of fire, flood, sprinkler leakage, those hazards covered by extended
coverage insurance and such other hazards, and for such amounts, not less than
as is customary in the case of companies engaged in businesses similar to such
Loan Party’s business, including, without limitation, business interruption
insurance; (b) maintain liability insurance against claims for personal injury,
death or property damage suffered by others; and (c) maintain all such worker’s
compensation or similar insurance as may be required under the laws of any
state or jurisdiction in which Loan Party is engaged in business. Each Loan
Party shall (i) furnish Agent with copies of all policies and evidence of the
maintenance of such policies required hereby upon the request of Agent and (ii)
cause all such policies to include appropriate loss payable endorsements,
and/or additional insured endorsements, in form and substance satisfactory to
Agent, providing with respect to loss payable endorsements that (A) all
proceeds thereunder shall be payable to Agent and applied against the
obligations in accordance with the terms of this Agreement, (B) no such
insurance shall be affected by any act or neglect of the insured or owner of
the property described in such policy, and (C) that such policy and loss
payable clauses may not be cancelled, amended or terminated unless at least
thirty (30) days’ prior written notice is given to Agent. If any insurance
losses are paid by check, draft or other instrument payable to any Loan Party
and Agent jointly, Agent may endorse such Loan Party’s name thereon and do such
other things as Agent may deem advisable to reduce the same to cash and apply
the same in accordance with this Agreement. 


          4.12 Failure to Pay Insurance. 


          If
any Loan Party fails to obtain insurance as hereinabove provided, or to keep
the same in force, Agent, at its option, may obtain such insurance and pay the
premium therefor for Borrower’s Account, and charge Borrower’s Account therefor
and such expenses so paid shall be part of the Obligations. 


          4.13 Payment of Taxes. 


          Each
Loan Party will, and will cause each of its Subsidiaries to, pay, when due, all
taxes, assessments and other Charges lawfully levied or assessed upon such
Person or any of the Collateral including, without limitation, real and
personal property taxes, assessments and charges and all franchise, income,
employment, social security benefits, withholding, and sales taxes. If any tax
by any Governmental Body is or may be imposed on or as a result of any
transaction between any such Person and Agent or any Lender with respect to
which Agent or any Lender may be required to withhold or pay or if any taxes,
assessments, or other Charges remain unpaid after the date fixed for their
payment, or if any claim shall be made which, in Agent’s or any Lender’s
opinion, may possibly create a valid Lien on the Collateral, Agent may without
notice to Loan Parties pay such taxes, assessments or other Charges and each
Loan Party hereby indemnifies and holds Agent and each Lender harmless in
respect thereof. The amount of any payment by Agent under this Section 4.13
may, at the election of Agent, be charged to Borrower’s Account and added to
the Obligations and, until Loan Parties shall furnish Agent with an indemnity
therefor (or supply Agent with evidence satisfactory to 


42






Agent that due
provision for the payment thereof has been made), Agent may hold without
interest any balance standing to Loan Parties’ credit and Agent shall retain
its Lien in any and all Collateral held by Agent. 


          4.14 Payment of Leasehold Obligations. 


          Each
Loan Party shall at all times pay, when and as due, its rental obligations
under all leases under which it is a tenant, and shall otherwise comply, in all
material respects, with all other terms of such leases and keep them in full
force and effect and, at Agent’s request will provide evidence of having done
so. 


          4.15 Accounts and other Receivables. 


                    (a)
Nature of Accounts. Each of the Accounts that Borrower reports as being
an Eligible Account or requests be treated as an Eligible Account shall (i) be
a bona fide and valid Account representing a bona fide Indebtedness incurred by
the Customer therein named, for a fixed sum as set forth in the invoice
relating thereto (provided immaterial or unintentional invoice errors shall not
be deemed to be a breach hereof) with respect to an absolute sale or lease and
delivery of Inventory upon stated terms of Borrower, or work, labor or services
theretofore rendered by Borrower as of the date each Account is created, (ii)
be due and owing in accordance with the invoice evidencing such Accounts
without dispute, setoff or counterclaim, except as may be stated on the
Accounts schedules delivered by Loan Parties to Agent and (iii) satisfy each of
the criteria set forth in the definition of “Eligible Accounts” set forth in
this Agreement to qualify as an Eligible Account. 


                    (b)
Solvency of Customers. Each Customer, to the best of each Loan Party’s
knowledge, as of the date each Account (that Borrower reports as being an
Eligible Account or requests be treated as an Eligible Account) is created, is
and will be Solvent and able to pay all Accounts on which the Customer is
obligated in full when due or with respect to such Customers of any Loan Party
who are not Solvent such Loan Party has set up on its books and in its
financial records bad debt reserves adequate to cover such Accounts. 


                    (c)
Locations of Chief Executive Office. Each Loan Party’s chief executive
office is located at the addresses set forth on Schedule 4.15(c) (as such
schedule may from time to time be updated in accordance with Section 7.19).
Until written notice is given to Agent by Borrower of any other office at which
any Loan Party keeps its records pertaining to Accounts and the other
Receivables, all such records shall be kept at such executive office. 


                    (d)
Collection of Accounts and other Receivables. Until any Loan Party’s
authority to do so is terminated by Agent (which notice of termination Agent
may give at any time following the occurrence and during the continuance of an
Event of Default), each Loan Party will, at such Loan Party’s sole cost and
expense, collect all amounts received on Accounts and other Receivables. From
and after the occurrence and during the continuance of an Event of Default,
upon Agent’s demand, each Loan Party shall deliver to Agent, in original form
and on the date of receipt thereof, all checks, drafts, notes, money orders,
acceptances, cash and other evidences of Indebtedness at any time received by
Loan Parties. 


                    (e)
Notification of Assignment of Accounts and other Receivables; Verification.
Whether or not a Default or Event of Default exists, Agent shall have the right
(i) to send notice of the assignment of, and Agent’s Lien in, the Accounts and
other Receivables to any and all Customers, any other Person obligated on such
Accounts and other Receivables or any third party holding or otherwise
concerned with any of the Collateral (which notice may include a direction by
Agent to make all payments thereon to an account designated by Agent) and (ii)
at any time, in the name of Agent, any designee of Agent or Borrower or any
other Loan Party, to verify the validity, amount or any other matter relating
to any Accounts and other 


43






Receivables of
Borrower or any other Loan Party by mail, telephone or otherwise. Each Loan
Party shall cooperate fully with Agent in an effort to facilitate and promptly
conclude any such verification process. Following the occurrence and during the
continuance of any Event of Default, at its option, Agent shall have the
exclusive right to collect the Accounts and other Receivables, take possession
of the Collateral, or both. Agent’s actual collection expenses, including, but
not limited to, stationery and postage, telephone and telecopy, secretarial and
clerical expenses and the salaries of any collection personnel used for
collection, may be charged to Borrower’s Account and added to the Obligations. 


                    (f)
Power of Agent to Act on Loan Parties’ Behalf. Agent shall have the
right to receive, endorse, assign and/or deliver in the name of Agent or any
Loan Party any and all checks, drafts and other instruments for the payment of
money relating to the Accounts and other Receivables, and each Loan Party
hereby waives notice of presentment, protest and non-payment of any instrument
so endorsed. Each Loan Party hereby constitutes Agent or Agent’s designee as
such Loan Party’s attorney with power (i) to endorse such Loan Party’s name
upon any notes, acceptances, checks, drafts, money orders or other evidences of
payment or Collateral; (ii) to sign such Loan Party’s name on any invoice or
bill of lading relating to any of the Accounts and other Receivables, drafts
against Customers, assignments and verifications of Accounts and other
Receivables; (iii) to send verifications of Accounts and other Receivables to
any Customer or Person; (iv) to sign such Loan Party’s name on all financing
statements or any other documents or instruments deemed necessary or
appropriate by Agent to preserve, protect, or perfect Agent’s interest in the
Collateral and to file same; (v) after the occurrence of a Default or an Event
of Default, to demand payment of the Accounts and other Receivables; (vi) after
the occurrence of a Default or an Event of Default, to enforce payment of the
Accounts and other Receivables by legal proceedings or otherwise; (vii) after
the occurrence of a Default or an Event of Default, to exercise all of Loan
Parties’ rights and remedies with respect to the collection of the Accounts,
Receivables and any other Collateral; (viii) after the occurrence of a Default
or an Event of Default, to settle, adjust, compromise, extend or renew the
Accounts and other Receivables; (ix) after the occurrence of a Default or an
Event of Default, to settle, adjust or compromise any legal proceedings brought
to collect Accounts and other Receivables; (x) after the occurrence of a
Default or an Event of Default, to prepare, file and sign such Loan Party’s
name on a proof of claim in bankruptcy or similar document against any Customer
or any other Person obligated with respect to an Account or other Receivable;
(xi) to prepare, file and sign such Loan Party’s name on any notice of Lien,
assignment or satisfaction of Lien or similar document in connection with the
Accounts and other Receivables; and (xii) to do all other acts and things
necessary to carry out this Agreement. All acts of said attorney or designee
are hereby ratified and approved, and said attorney or designee shall not be
liable for any acts of omission or commission nor for any error of judgment or
mistake of fact or of law, unless done maliciously or with gross (not mere)
negligence, as determined pursuant to a final, non-appealable order of a court
of competent jurisdiction; this power being coupled with an interest is
irrevocable while any of the Obligations remain unpaid and this Agreement has
not been terminated. Agent shall have the right at any time following the
occurrence of an Event of Default or Default, to change the address for
delivery of mail addressed to any Loan Party to such address as Agent may
designate and to receive, open and dispose of all mail addressed to any Loan
Party. 


                    (g)
No Liability. Neither Agent nor any Lender shall, under any
circumstances or in any event whatsoever, have any liability for any error or
omission or delay of any kind occurring in the settlement, collection or
payment of any of the Accounts, other Receivables or any instrument received in
payment thereof, or for any damage resulting therefrom. Following the
occurrence and at any time during the continuance of a Default or Event of
Default, Agent may, without notice or consent from any Loan Party, sue upon or
otherwise collect, extend the time of payment of, compromise or settle for
cash, credit or upon any terms any of the Accounts, other Receivables or any
other securities, instruments or insurance applicable thereto and/or release
any obligor thereof. Agent is authorized and empowered to accept following the
occurrence of an Event of Default or Default the return of the goods
represented by any of the Accounts and 


44






other
Receivables, without notice to or consent by any Loan Party, all without
discharging or in any way affecting any Loan Party’s liability hereunder. 


                    (h)
Establishment of a Lockbox Account, Dominion Account; Cash Dominion. As
of the Closing Date and at all times thereafter, each Loan Party shall
establish and maintain a lockbox account, dominion account or such other
“blocked account” (collectively, the “Blocked
Accounts”) with such banks selected by each such Loan Party and
acceptable to Agent. As of the Closing Date and at all times thereafter, all
proceeds of Collateral and all other cash and Cash Equivalents of each such
Loan Party (other than amounts properly on deposit in Restricted Accounts)
shall at all times be deposited by each Loan Party in the Blocked Accounts, and
the Loan Parties shall (as agent and trustee for the Agent) cause each of their
Customers and all other applicable Persons to at all times send payments on all
Accounts and other Receivables of the Loan Parties into the Blocked Accounts.
If, for any reason any Customer makes payments on any Account or other
Receivable directly to any Loan Party, such Loan Party shall collect (as agent
and trustee for the Agent) all such amounts and immediately pay all such
amounts into a Blocked Account; provided, however, that,
until such payment into a Blocked Account all moneys so received will be held
upon trust for the Agent. Each Loan Party shall ensure that all of its
Customers are instructed to make all payments into a Blocked Account. The
Blocked Accounts, and any other deposit accounts or securities accounts of any
Loan Party (other than Restricted Accounts) shall be governed by “control” or
other agreements in form and substance acceptable to Agent satisfactory to,
among other things, establish Agent’s perfection and rights in such Blocked
Accounts or other accounts under the UCC and other applicable law. All invoices
for sales of Inventory or services by the Loan Parties shall contain the
address of the Blocked Accounts as the address for remittance of payment. The
“control” agreement covering the Blocked Accounts and any other deposit
accounts and securities accounts (other than Restricted Accounts) shall provide
that such bank or other institution shall comply with the instructions given by
Agent with respect to the Blocked Accounts and any other deposit accounts and
securities accounts (other than Restricted Accounts) and funds therein without
further consent by Loan Parties, that the proceeds of Collateral and other
funds deposited into such Blocked Accounts and any other deposit accounts and
securities accounts (other than Restricted Accounts) shall be transferred on a
daily basis by such bank or other institution to the Payment Account or such
other account as may be designated by Agent (provided, that, the
“control agreements” covering disbursement accounts that are solely used by the
Loan Parties for making disbursements in the ordinary course of business and
which at no time have funds in an aggregate amount of more than $200,000 as of
the any two (2) consecutive Business Day period shall be subject to a
“springing” dominion control agreement which, unless directed otherwise by the
Agent, shall not require such daily transfers to the Agent) and that such bank
or other institution shall waive any offset rights against the funds so
deposited into such Blocked Accounts and any other deposit accounts and
securities accounts (other than Restricted Accounts), subject to exceptions to
such waiver of offset rights as shall be acceptable to Agent. Neither Agent nor
any Lender assumes any responsibility for any Blocked Account arrangement,
including without limitation, any claim of accord and satisfaction or release
with respect to deposits accepted by any bank thereunder. Alternatively, upon
the occurrence of a Default or Event of Default, Agent may establish depository
accounts (collectively, the “Depository
Accounts”) in the name of Agent at a bank or banks for the deposit
of such funds and Loan Parties shall deposit all proceeds of Collateral or
cause same to be deposited, in kind, in such Depository Accounts of Agent in
lieu of depositing same to the Blocked Accounts. 


                    (i)
Adjustments. No Loan Party will, without Agent’s consent, compromise or
adjust any Accounts or other Receivables (or extend the time for payment
thereof) or accept any returns of merchandise or grant any additional
discounts, allowances or credits thereon except for those compromises,
adjustments, returns, discounts, credits and allowances as have been heretofore
customary in the business of such Loan Party, as previously disclosed to Agent.



45






          4.16 Inventory. 


          All
Inventory held for sale or lease by any Loan Party, has been and will be
produced by such Loan Party in accordance with the Federal Fair Labor Standards
Act of 1938, as amended, and all rules, regulations and orders thereunder. 


          4.17 Maintenance of Equipment. 


          All
Equipment shall be maintained in good operating condition and repair
(reasonable wear and tear excepted) and all necessary replacements of and
repairs thereto shall be made so that the value and operating efficiency of
such Equipment shall be maintained and preserved. No Loan Party shall use or
operate any Equipment in violation of any law, statute, ordinance, code, rule
or regulation. No Loan Party shall sell or otherwise Dispose of any Equipment,
except to the extent set forth in Section 4.3. 


          4.18 Exculpation of Liability. 


          Nothing
herein contained shall be construed to constitute Agent or any Lender as any
Loan Party’s agent for any purpose whatsoever, nor shall Agent or any Lender be
responsible or liable for any shortage, discrepancy, damage, loss or
destruction of any part of the Collateral wherever the same may be located and
regardless of the cause thereof. Neither Agent nor any Lender, whether by
anything herein or in any assignment or otherwise, assumes any of Loan Party’s
obligations under any contract or agreement to which it is a party, and neither
Agent nor any Lender shall be responsible in any way for the performance by
Loan Party of any of the terms and conditions thereof. 


          4.19 Environmental Matters. 


                    (a)
Loan Parties shall ensure that the Real Property remains in compliance with all
Environmental Laws and they shall not place or permit to be placed any
Hazardous Substances on any Real Property except as not prohibited by
applicable law or appropriate Governmental Body. 


                    (b)
Loan Parties shall establish and maintain a system to assure and monitor
continued compliance with all applicable Environmental Laws which system shall
include periodic reviews of such compliance. 


                    (c)
Loan Parties shall (i) employ in connection with the use of the Real Property
appropriate technology necessary to maintain compliance with any applicable
Environmental Laws and (ii) dispose of any and all Hazardous Waste generated at
the Real Property only at facilities and with carriers that maintain valid
permits under RCRA and any other applicable Environmental Laws. Loan Parties
shall use their best efforts to obtain certificates of disposal, such as
hazardous waste manifest receipts, from all treatment, transport, storage or
disposal facilities or operators employed by Loan Parties in connection with
the transport or disposal of any Hazardous Waste generated at the Real
Property. 


                    (d)
In the event any Loan Party obtains, gives or receives notice of any Release or
threat of Release of a reportable quantity of any Hazardous Substances at the
Real Property (any such event being hereinafter referred to as a “Hazardous Discharge”) or receives any
notice of violation, request for information or notification that it is
potentially responsible for investigation or cleanup of environmental
conditions at the Real Property, demand letter or complaint, order, citation,
or other written notice with regard to any Hazardous Discharge or violation of
Environmental Laws affecting the Real Property or any Loan Party’s interest
therein (any of the foregoing is referred to herein as an “Environmental Complaint”) from any Person,
including any state agency responsible in whole or in part for environmental
matters in the state in which the Real Property is located or the United States
Environmental Protection Agency (any such Person 


46






hereinafter
the “Authority”), then Borrower
shall, within five (5) Business Days, give written notice of same to Agent
detailing facts and circumstances of which any Loan Party is aware giving rise
to the Hazardous Discharge or Environmental Complaint. Such information is to
be provided to allow Agent to protect its Lien in the Real Property and is not
intended to create nor shall it create any obligation upon Agent or any Lender
with respect thereto. 


                    (e)
Loan Parties shall promptly forward to Agent copies of any request for
information, notification of potential liability, demand letter relating to
potential responsibility with respect to the investigation or cleanup of
Hazardous Substances at any other site owned, operated or used by any Loan
Party to dispose of Hazardous Substances and shall continue to forward copies
of correspondence between any Loan Party and the Authority regarding such
claims to Agent until the claim is settled. Loan Parties shall promptly forward
to Agent copies of all documents and reports concerning a Hazardous Discharge
at the Real Property that any Loan Party is required to file under any
Environmental Laws. Such information is to be provided solely to allow Agent to
protect Agent’s Lien in the Real Property and the Collateral. 


                    (f)
Loan Parties shall respond promptly to any Hazardous Discharge or Environmental
Complaint and take all necessary action in order to safeguard the health of any
Person and to avoid subjecting the Collateral or Real Property to any Lien. If
any Loan Party shall fail to respond promptly to any Hazardous Discharge or
Environmental Complaint or any Loan Party shall fail to comply with any of the
requirements of any Environmental Laws, Agent on behalf of Lenders may, but
without the obligation to do so, for the sole purpose of protecting Agent’s
interest in Collateral: (i) give such notices or (ii) enter onto the Real
Property (or authorize third parties to enter onto the Real Property) and take
such actions as Agent (or such third parties as directed by Agent) deem
reasonably necessary or advisable, to clean up, remove, mitigate or otherwise
deal with any such Hazardous Discharge or Environmental Complaint. All
reasonable costs and expenses incurred by Agent and Lenders (or such third
parties) in the exercise of any such rights, including any sums paid in
connection with any judicial or administrative investigation or proceedings,
fines and penalties, together with interest thereon from the date expended at
the Default Rate for Base Rate Loans constituting Revolving Advances shall be
paid upon demand by Loan Parties, and until paid shall be added to and become a
part of the Obligations secured by the Liens created by the terms of this
Agreement or any other agreement between Agent, any Lender and any Loan Party. 


                    (g)
Promptly upon the written request of Agent from time to time, Loan Parties
shall provide Agent, at Loan Parties’ expense, with an environmental site
assessment or environmental audit report prepared by an environmental
engineering firm acceptable in the reasonable opinion of Agent, to assess with
a reasonable degree of certainty the existence of a Hazardous Discharge and the
potential costs in connection with abatement, cleanup and removal of any
Hazardous Substances found on, under, at or within the Real Property. Any
report or investigation of such Hazardous Discharge proposed and acceptable to
an appropriate Authority that is charged to oversee the clean-up of such
Hazardous Discharge shall be acceptable to Agent. If such estimates,
individually or in the aggregate, exceed $100,000, Agent shall have the right
to require Loan Parties to post a bond, letter of credit or other security
reasonably satisfactory to Agent to secure payment of these costs and expenses.



                    (h)
Loan Parties shall defend and indemnify Agent and Lenders and hold Agent,
Lenders and their respective employees, agents, directors and officers harmless
from and against all loss, liability, damage and expense, claims, costs, fines
and penalties, including attorney’s fees, suffered or incurred by Agent or
Lenders under or on account of any Environmental Laws, including, without
limitation, the assertion of any Lien thereunder, with respect to any Hazardous
Discharge, the presence of any Hazardous Substances affecting the Real
Property, whether or not the same originates or emerges from the Real Property
or any contiguous real estate, including any loss of value of the Real Property
as a result of the foregoing except to the extent such loss, liability, damage
and expense is attributable to any Hazardous Discharge resulting from actions
on the part of Agent or any Lender. Loan Parties’ obligations under this Section
4.19 shall arise upon 


47






the discovery
of the presence of any Hazardous Substances at the Real Property, whether or
not any federal, state, or local environmental agency has taken or threatened
any action in connection with the presence of any Hazardous Substances. Loan
Parties’ obligation and the indemnifications hereunder shall survive the
termination of this Agreement. 


                    (i)
For purposes of Sections 4.19 and 5.7, all references to Real Property shall be
deemed to include all of Loan Parties’ and their respective Subsidiaries’
right, title and interest in and to their respective owned and leased premises.



          4.20 Financing Statements. 


          As
of the Closing Date, except for the financing statements filed by Agent and the
other financing statements described on Schedule 7.2 (if any), no financing
statement covering any of the Collateral or any proceeds thereof is on file in
any public office. 


5. REPRESENTATIONS AND WARRANTIES. 


          Each
Loan Party represents and warrants as follows: 


          5.1 Authority, Etc. 


          Each
Loan Party has full power, authority and legal right to enter into this
Agreement and the Other Documents and to perform all its respective Obligations
hereunder and thereunder. The execution, delivery and performance of this
Agreement and of the Other Documents (a) are within such Loan Party’s limited
liability company, partnership or corporate powers, as applicable, have been
duly authorized, are not in contravention of law or the terms of such Loan
Party’s certificate of formation, limited liability company agreement,
certificate of incorporation, by-laws, partnership agreement or other
applicable documents relating to such Loan Party’s formation and governance or
to the conduct of such Loan Party’s business or of any material agreement or
undertaking to which such Loan Party is a party or by which such Loan Party is
bound, and (b) will not conflict with nor result in any breach in any of the
provisions of or constitute a default under or result in the creation of any
Lien except Permitted Encumbrances upon any asset of such Loan Party under the
provisions of any agreement or instrument to which such Loan Party or its
property is a party or by which it may be bound. The execution, delivery, and
performance by each Loan Party of this Agreement and the Other Documents to
which such Loan Party is a party and the consummation of the transactions
contemplated by this Agreement and the Other Documents do not and will not
require any registration with, Consent, or approval of, or notice to, or other
action with or by, any Government Body, other than Consents or approvals that
have been obtained and that are still in force and effect and except for
filings and recordings with respect to the Collateral to be made, or otherwise
delivered to the Agent for filing or recordation, as of the Closing Date. This
Agreement and each Other Document has been duly executed and delivered by each
Loan Party that is a party thereto and is the legally valid and binding obligation
of such Loan Party, enforceable against such Loan Party in accordance with its
respective terms, except as enforcement may be limited by equitable principles
or by bankruptcy, insolvency, reorganization, moratorium, or similar laws
relating to or limiting creditors’ rights generally. 


          5.2 Formation and Qualification. 


                    (a)
Each Loan Party is duly formed or incorporated and in good standing under the
laws of the states and other jurisdictions listed on Schedule 5.2(a) (as such
schedule may from time to time be updated in accordance with Section 7.19) and
each Loan Party is qualified to do business and is in good standing in the
states and other jurisdictions listed on Schedule 5.2(a) (as such schedule may
from time to time be updated in accordance with Section 7.19) which constitute
all states and other jurisdictions in which 


48






qualification
and good standing are necessary for such Loan Party to conduct its business and
own its property and where the failure to so qualify could reasonably be
expected to have a Material Adverse Effect. The exact State organizational
number of each Loan Party is set forth on Schedule 5.2(a) (as such schedule may
from time to time be updated in accordance with Section 7.19). Each Loan Party
has delivered to Agent true and complete copies of its certificate of
formation, limited liability company agreement, certificate of incorporation,
by-laws, partnership agreement or other applicable documents relating to such
Loan Party’s formation and governance, as the case may be, and will promptly
notify Agent of any amendment or changes thereto. 


                    (b)
The only Subsidiaries of each Loan Party are listed on Schedule 5.2(b) (as such
schedule may from time to time be updated in accordance with Section 7.12(a)). 


          5.3 Survival of Representations and Warranties. 


          All
representations and warranties of such Loan Party contained in this Agreement
and the Other Documents shall be true at the time of such Loan Party’s execution
of this Agreement and the Other Documents, and shall survive the execution,
delivery and acceptance thereof by the parties thereto and the closing of the
transactions described therein or related thereto. 


          5.4 Tax Returns. 


          Each
Loan Party’s federal tax identification number is set forth on Schedule 5.4.
Each Loan Party and each of its Subsidiaries has (a) filed all federal, state,
local and other tax returns and other reports each is required by law to file
and (b) paid all taxes, assessments, fees and other governmental charges that
are due and payable. The provision for taxes on the books of each Loan Party
and each of its Subsidiaries are adequate for all years not closed by
applicable statutes, and for its current fiscal year, and no Loan Party nor any
of its Subsidiaries has any knowledge of any deficiency or additional
assessment in connection therewith not provided for on its books. 


          5.5 Financial Statements. 


                    (a)
The (i) monthly cash flow projections of the Loan Parties and their
Subsidiaries on a consolidated basis and their through the end of Borrower’s
fiscal year ending August 31, 2010, and (ii) projected balance sheets, income
statements, statements of cash flow and Excess Availability as of the Closing
Date through the end of Borrower’s fiscal year ending August 31, 2011, copies
of which have been delivered to Agent and were prepared by a Responsible
Officer of Borrower, are based on underlying assumptions which provide a
reasonable basis for the projections contained therein and reflect Loan
Parties’ judgment based on present circumstances of the most likely set of
conditions and course of action for the projected period. 


                    (b)
The consolidated balance sheets of the Loan Parties, their Subsidiaries and
such other Persons described therein as of May 30, 2009, and the related
statements of income, changes in stockholder’s equity, and changes in cash flow
for the period ended on such date, copies of which have been delivered to Agent,
have been prepared in accordance with GAAP, consistently applied (except for
changes in application in which such accountants concur and present fairly the
financial position of the Loan Parties and their Subsidiaries at such date and
the results of their operations for such period). Since May 30, 2009, there has
been no change in the condition, financial or otherwise, of Borrower, or the
Loan Parties and their Subsidiaries taken as a whole, as shown on the
consolidated balance sheet as of such date and no change in the aggregate value
of machinery, Equipment and Real Property owned by Loan Parties and their
Subsidiaries, except changes in the ordinary course of business, none of which
individually or in the aggregate has been materially adverse. 


49






          5.6 Corporate Name. 


          The
exact legal name of each Loan Party is set forth in the first paragraph to this
Agreement (or, if such Loan Party is not listed in such first paragraph, such
exact legal name is set forth on Schedule 5.6 (as such schedule may from time
to time be updated in accordance with Section 7.19)). No Loan Party has been
known by any other corporate, limited liability company or partnership name in
the past five years and no Loan Party sells Inventory or has submitted tax
returns under any other name except as set forth on Schedule 5.6 (as such
schedule may from time to time be updated in accordance with Section 7.19), nor
has any Loan Party been the surviving corporation of a merger or consolidation
or acquired all or substantially all of the assets of any Person or has
acquired any assets of any Person outside the ordinary course of business
during the preceding five (5) years except as set forth on Schedule 5.6 (as
such schedule may from time to time be updated in accordance with Section
7.19). 


          5.7 O.S.H.A. and Environmental Compliance. 


                    (a)
Each Loan Party and each of their Subsidiaries has duly complied with, and its
facilities, business, assets, property, leaseholds and Equipment are in compliance
in all material respects with, the provisions of the Federal Occupational
Safety and Health Act, the Environmental Protection Act, RCRA and all other
Environmental Laws; there have been no outstanding citations, notices or orders
of non-compliance issued to any Loan Party or any of their Subsidiaries or
relating to its business, assets, property, leaseholds or Equipment under any
such laws, rules or regulations, except as set forth on Schedule 5.7. 


                    (b)
Each Loan Party and each of their Subsidiaries has been issued all required
federal, state and local licenses, certificates or permits relating to all
applicable Environmental Laws, except as set forth on Schedule 5.7. 


                    (c)
(i) There are no visible signs of releases, spills, discharges, leaks or
disposal (each, a “Release”) of
Hazardous Substances at, upon, under or within any Real Property or any
premises leased by any Loan Party or any of their Subsidiaries; (ii) there are
no underground storage tanks or polychlorinated biphenyls on the Real Property
or any premises leased by any Loan Party or any of their Subsidiaries; (iii)
neither the Real Property nor any premises leased by any Loan Party or any of
their Subsidiaries has ever been used as a treatment, storage or disposal
facility of Hazardous Waste; and (iv) no Hazardous Substances are present on
the Real Property or any premises leased by any Loan Party or any of their
Subsidiaries, excepting such quantities as are handled in accordance with all
applicable manufacturer’s instructions and governmental regulations and in
proper storage containers and as are necessary for the operation of the
commercial business of any Loan Party or any of their Subsidiaries or of their
respective tenants, in each case except as set forth on Schedule 5.7. 


          5.8 Solvency; No Litigation, Violation, Indebtedness
or Default. 


                    (a)
After giving effect to the Transactions, each Loan Party is Solvent. 


                    (b)
No Loan Party nor any of their Subsidiaries has (i) except as disclosed in
Schedule 5.8(b)(i), any pending (or, to the knowledge of any Loan Party,
threatened) litigation, arbitration, actions or proceedings which involve the
possibility of having a Material Adverse Effect, (ii) except as disclosed in
Schedule 5.8(b)(ii) and in Schedule 5.8(b)(i), as of the Closing Date, any
pending (or, to the knowledge of any Loan Party, threatened) litigation,
arbitration, actions or proceedings which involve the possibility of having
liability in excess of $375,000, (iii) except as disclosed in Schedule
5.8(b)(iii) (as such schedule may from time to time be updated by Borrower
providing written notice to Agent of any new commercial tort claims), any
commercial tort claims and (iv) except as disclosed in Schedule 5.8(b)(iv), as
of the Closing Date, any Money Borrowed other than the Obligations. 


50






                    (c)
No Loan Party nor any of their Subsidiaries is in violation of any applicable
statute, regulation or ordinance in any respect which could reasonably be
expected to have a Material Adverse Effect, nor is any Loan Party or any of
their Subsidiaries in violation of any order of any court or Governmental Body
which could reasonably be expected to have a Material Adverse Effect. 


                    (d)
No Loan Party, no Subsidiary of a Loan Party, nor any member of the Controlled
Group maintains or contributes to any Plan other than those listed on Schedule
5.8(d). No Plan has incurred any “accumulated funding deficiency,” as defined
in Section 302(a)(2) of ERISA and Section 412(a) of the Code, whether or not
waived, and each Loan Party, each such Subsidiary and each member of the
Controlled Group has met all applicable minimum funding requirements under
Section 302 of ERISA in respect of each Plan. Each Plan which is intended to be
a qualified plan under Section 401(a) of the Code as currently in effect has
been determined by the Internal Revenue Service to be qualified under Section
401(a) of the Code and the trust related thereto is exempt from federal income
tax under Section 501(a) of the Code. No Loan Party, no Subsidiary of a Loan
Party, nor any member of the Controlled Group has incurred any liability to the
PBGC other than for the payment of premiums, and there are no premium payments
which have become due which are unpaid. No Plan has been terminated by the plan
administrator thereof nor by the PBGC, and there is no occurrence which could
reasonably be expected to cause the PBGC to institute proceedings under Title
IV of ERISA to terminate any Plan. The current value of the assets of each Plan
exceeds the present value of the accrued benefits and other liabilities of such
Plan and no Loan Party, no Subsidiary of a Loan Party, nor any member of the
Controlled Group knows of any facts or circumstances which could reasonably be
expected to materially change the value of such assets and accrued benefits and
other liabilities. No Loan Party, no Subsidiary of any Loan Party, nor any
member of the Controlled Group has breached any of the responsibilities,
obligations or duties imposed on it by ERISA with respect to any Plan. No Loan
Party, no Subsidiary of a Loan Party, nor any member of a Controlled Group has
incurred any liability for any excise tax arising under Section 4972 or 4980B
of the Code, and no fact exists which could give rise to any such liability. No
Loan Party, no Subsidiary of a Loan Party, nor any member of the Controlled
Group nor any fiduciary of, nor any trustee to, any Plan, has engaged in a
“prohibited transaction” described in Section 406 of ERISA or Section 4975 of
the Code nor taken any action which would constitute or result in a Termination
Event with respect to any such Plan which is subject to ERISA. Each Loan Party,
each of their Subsidiaries and each member of the Controlled Group has made all
contributions due and payable with respect to each Plan. There exists no event
described in Section 4043(b) of ERISA, for which the thirty (30) day notice
period contained in 29 CFR §2615.3 has not been waived, (xi) no Loan Party, no
Subsidiary of any Loan Party, nor any member of the Controlled Group has any
fiduciary responsibility for investments with respect to any plan existing for
the benefit of persons other than employees or former employees of any Loan
Party, any of their Subsidiaries and any member of the Controlled Group. No
Loan Party nor any member of the Controlled Group has withdrawn, completely or
partially, from any Multiemployer Plan so as to incur liability under the
Multiemployer Pension Plan Amendments Act of 1980. 


          5.9 Patents, Trademarks, Copyrights and Licenses. 


          All
patents, patent applications, trademarks, trademark applications, service
marks, service mark applications, copyrights, copyright applications, design
rights, trade names, assumed names, trade secrets and licenses owned or
utilized by any Loan Party or any of their Subsidiaries are set forth on
Schedule 5.9 (as such schedule may from time to time be updated by Borrower
providing written notice to Agent of any newly acquired Intellectual Property
rights, so long as the Loan Parties have taken (or caused to be taken) all
steps required by Agent with respect thereto), are valid and have been duly
registered or filed with all appropriate Governmental Body and constitute all of
the Intellectual Property rights which are necessary for the operation of its
business; there is no objection to or pending challenge to the validity of any
such material patent, trademark, copyright, design right, trade name, trade
secret or license and no Loan Party nor any Subsidiary of any Loan Party is
aware of any grounds for any challenge. Each patent, patent application, patent
license, trademark, trademark application, trademark license, service mark,
service mark application, service mark 


51






license,
copyright, copyright application and copyright license owned or held by any
Loan Party or any such Subsidiary and all trade secrets used by any Loan Party
or any such Subsidiary consist of original material or property developed by
such Loan Party or such Subsidiary or was lawfully acquired by such Loan Party
or such Subsidiary from the proper and lawful owner thereof. Each of such items
has been maintained so as to preserve the value thereof from the date of
creation or acquisition thereof. With respect to all software used by any Loan
Party, such Loan Party is in possession of all source and object codes related
to each piece of software or is the beneficiary of a source code escrow
agreement, each such source code escrow agreement being listed on Schedule 5.9
(as such schedule may from time to time be updated by Borrower providing
written notice to Agent of any newly acquired Intellectual Property rights, so
long as the Loan Parties have taken (or caused to be taken) all steps required
by Agent with respect thereto). 


          5.10 Licenses and Permits. 


          Except
as set forth in Schedule 5.10, each Loan Party and each Subsidiary of each Loan
Party (a) is in compliance with and (b) has procured and is now in possession
of, all material licenses or permits required by any applicable federal, state,
local or other law or regulation for the operation of its business in each
jurisdiction wherein it is now conducting or proposes to conduct business and
where the failure to procure such licenses or permits could have a Material
Adverse Effect. 


          5.11 Inventory Buy-back and Puts. 


          Except
as disclosed to Agent in writing as of the date hereof, or which may be
disclosed to Agent after the date hereof, provided that such arrangements disclosed
after the date hereof are on substantially the same terms as existing on the
date hereof with the Borrower’s existing Customers, none of Borrower’s
Customers have any right to return or “put” to Borrower any finished goods
Inventory previously sold to such Customers. 


          5.12 No Default. 


          No
Loan Party nor any Subsidiary of any Loan Party is in default in the payment or
performance of any of its contractual obligations with respect to which a
default thereunder could be reasonably expected to have a Material Adverse
Effect. 


          5.13 No Burdensome Restrictions/No Liens. 


          No
Loan Party nor any Subsidiary of any Loan Party is party to any contract or
agreement the performance of which could have a Material Adverse Effect. No
Loan Party has agreed or consented to cause or permit in the future (upon the
happening of a contingency or otherwise) any of its property, whether now owned
or hereafter acquired, to be subject to a Lien which is not a Permitted
Encumbrance. 


          5.14 No Labor Disputes. 


          No
Loan Party nor any Subsidiary of any Loan Party is involved in any labor
dispute; there are no strikes or walkouts or union organization of any Loan
Party’s or any of such Subsidiary’s employees threatened or in existence and no
labor contract is scheduled to expire during the Term other than as set forth
on Schedule 5.14. 


          5.15 Margin Regulations. 


          No
Loan Party nor any Subsidiary of any Loan Party is engaged, nor will it engage,
principally or as one of its important activities, in the business of extending
credit for the purpose of “purchasing” or 


52






“carrying” any
“margin stock” within the meaning of the quoted term under Regulation U of the
Board of Governors of the Federal Reserve System as now and from time to time
hereafter in effect. No part of the proceeds of any Advance will be used for
“purchasing” or “carrying” “margin stock” as defined in Regulation U of such
Board of Governors. 


          5.16 Investment Company Act. 


          No
Loan Party nor any Subsidiary of any Loan Party is an “investment company”
registered or required to be registered under the Investment Company Act of
1940, as amended, nor is it controlled by such a company. 


          5.17 Disclosure. 


          No
representation or warranty made by or on behalf of any Loan Party or any
Subsidiary of any Loan Party in this Agreement, any Other Document or in any
financial statement, report, certificate or any other document furnished in
connection herewith contains any untrue statement of a material fact or omits
to state any material fact necessary to make the statements herein or therein
not misleading. There is no fact known to Loan Parties or which reasonably
should be known to Loan Parties which Loan Parties have not disclosed to Agent
in writing with respect to the Transactions contemplated by this Agreement
which could reasonably be expected to have a Material Adverse Effect. 


          5.18 Real Property. 


          Each
Loan Party and each of its Subsidiaries owns record title in fee simple or the
leasehold interest to the Real Property described on Schedule R-1 (as such
Schedule may from time to time be updated by written notice from Borrower to
Agent, so long as the Loan Parties have taken (or caused to be taken) all steps
required by Agent with respect thereto), free and clear of all Liens, except
Permitted Encumbrances. The Real Property described on Schedule R-1 (as such
Schedule may from time to time be updated by written notice from Borrower to
Agent, so long as the Loan Parties have taken (or caused to be taken) all steps
required by Agent with respect thereto) constitutes all of the Real Property of
the Loan Parties. 


          5.19 Hedging Agreements. 


          No
Loan Party nor any Subsidiary of any Loan Party is a party to any Hedging
Agreement as of the Closing Date. 


          5.20 Conflicting Agreements. 


          No
provision of any mortgage, indenture, contract, agreement, judgment, decree or
order binding on any Loan Party or affecting the Collateral conflicts with, or
requires any Consent which has not already been obtained, or would in any way
prevent the execution, delivery or performance of the terms of this Agreement
or the Other Documents. 


          5.21 Application of Certain Laws and Regulations. 


          No
Loan Party nor any Affiliate of any Loan Party is subject to any statute, rule
or regulation which regulates the incurrence of any Indebtedness. 


53






          5.22 Business and Property of Loan Parties. 


          Upon
and after the Closing Date, Loan Parties and their Subsidiaries do not propose
to engage in any business other than as currently conducted and related
activities necessary to conduct the foregoing. Each Loan Party and each
Subsidiary of a Loan Party owns all the property and possesses all of the
rights and consents necessary for the conduct of the business of such Loan
Party and such Subsidiary. 


          5.23 Material Contracts. 


          Borrower
has provided Agent with a true, correct and complete list of all contracts
which are material to the operation of any Loan Party’s and any Subsidiary of
any Loan Party’s business. Each such contract is in full force and effect and
no material defaults enforceable against such Loan Party or such Subsidiary
exist thereunder. No Loan Party nor any Subsidiary of any Loan Party has
received notice from any party to such contract stating that it intends to
terminate or amend such contract. 


          5.24 Capital Structure. 


          Schedule
5.24 sets forth the authorized Capital Stock of each of the Loan Parties and
each of their Subsidiaries as of August 29, 2009. All of the Capital Stock of
each of the Loan Parties (other than Borrower) and each of their Subsidiaries
are owned directly or indirectly by Borrower. All issued and outstanding
Capital Stock of each of the Loan Parties and each of their Subsidiaries are
duly authorized and validly issued, fully paid, non-assessable, and such
Capital Stock were issued in compliance with all applicable laws. All issued
and outstanding Capital Stock of each Loan Party (other than Borrower) and each
of their Subsidiaries is free and clear of all Liens other than those in favor
of Agent for the benefit of Agent and Lenders. The identity of the top ten (10)
holders of the Capital Stock of each of the Loan Parties and each of their
Subsidiaries and the percentage of their diluted ownership of the Capital Stock
of each of the Loan Parties and each of their Subsidiaries as of August 29,
2009 is set forth on Schedule 5.24. No shares of the Capital Stock of any Loan
Party or any of their Subsidiaries, other than those described above, are
issued and outstanding as of the Closing Date. As of the Closing Date there are
no preemptive or other outstanding rights, options, warrants, conversion rights
or similar agreements or understandings for the purchase or acquisition from
any Loan Party (other than Borrower) or any of their Subsidiaries of any
Capital Stock of any such entity. 


          5.25 Bank Accounts, Security Accounts, Etc. 


          No
Loan Party has any bank accounts, deposit accounts, investments accounts,
securities accounts or any other similar accounts other than the accounts set
forth Schedule 5.25 (as such Schedule may from time to time be updated by
Borrower delivering a written update thereto to Agent, so long as such updates
are approved by Agent and the Loan Parties take all action required by Section
4.15(h) with respect thereto). The purpose and type of each such account is
specified on Schedule 5.25. 


          5.26 MCOs and MSOs. 


          Borrower
receives an MCO or MSO (as the case may be) with respect to each individual
chassis purchased by Borrower from the manufacturer thereof upon delivery of
the chassis to Borrower and payment in full to the applicable manufacturer of
the purchase price therefor. All MCOs and MSOs (as the case may be) are
maintained by Borrower in a fire-rated safe located at Borrower’s chief
executive office described on Schedule 4.15(c) unless Agent requests that all
MCOs and MSOs (as the case may be) are to be delivered to Agent or its
designee. 


54






6. AFFIRMATIVE COVENANTS. 


          Each
Loan Party shall, until payment in full of the Obligations and termination of
this Agreement: 


          6.1 Payment of Fees. 


          Pay
to Agent on demand all usual and customary fees and expenses which Agent incurs
in connection with (a) the forwarding of Advance proceeds and (b) the
establishment and maintenance of any Blocked Accounts or Depository Accounts as
provided for in Section 4.15(h). Agent may, without making demand, charge
Borrower’s Account for all such fees and expenses. 


          6.2 Conduct of Business and Maintenance of Existence
and Assets. 


          Conduct,
and cause each Subsidiary of each Loan Party to conduct, continuously and
operate actively its business according to good business practices and
maintain, and cause each Subsidiary of each Loan Party to maintain, all of its
properties useful or necessary in its business in good working order and
condition (reasonable wear and tear excepted and except as may be Disposed of
in accordance with the terms of this Agreement (including, without limitation,
Section 4.3)), including, without limitation, all Intellectual Property and
take all actions necessary to enforce and protect the validity of its
Intellectual Property. Each Loan Party shall, and shall cause each Subsidiary
of each Loan Party to, (i) keep in full force and effect its existence and
comply in all material respects with the laws and regulations governing the
conduct of its business where the failure to do so could reasonably be expected
to have a Material Adverse Effect and (ii) make all such reports and pay all
such franchise and other taxes and license fees and do all such other acts and
things as may be lawfully required to maintain its rights, licenses, leases,
powers and franchises under the laws of the United States or any applicable
foreign jurisdiction or any political subdivision of any of the foregoing. 


          6.3 Violations. 


          Promptly
notify Agent in writing of any violation of any law, statute, regulation or
ordinance of any Governmental Body, or of any agency thereof, applicable to any
Loan Party or any of their Subsidiaries which could reasonably be expected to
have a Material Adverse Effect. 


          6.4 Government Receivables. 


          Take
all steps necessary to protect Agent’s interest in the Collateral under the
Federal Assignment of Claims Act or other applicable state or local statutes or
ordinances and deliver to Agent appropriately endorsed, any instrument or
chattel paper connected with any Receivable arising out of contracts between
any Loan Party and the United States, any state or any department, agency or
instrumentality of any of them. 


          6.5 Execution of Supplemental Instruments; Further
Assurances. 


                    (a)
Execute and deliver to Agent from time to time, upon demand, such supplemental
agreements, statements, assignments and transfers, or instructions or documents
relating to the Collateral, and such other instruments as Agent may request,
consistent with the provisions of this Agreement and the Other Documents. 


                    (b)
Promptly upon request by Agent, each Loan Party shall take such additional
actions as Agent may require from time to time in order (i) to carry out more
effectively the purposes of this Agreement or any Other Document, (ii) to
subject all of the existing or hereinafter acquired personal and real property
of each Loan Party to first-priority perfected Liens in favor of Agent to
secure the Obligations, (iii) to perfect and maintain the validity,
effectiveness and priority of any of the Liens created, or intended to be 


55






created
thereby, by this Agreement or any Other Document and (iv) to better assure,
convey, grant, assign, transfer, preserve, protect and confirm to Agent and
Lenders the rights granted or now or hereafter intended to be granted to Agent
and the Lenders under this Agreement or any Other Document. Without limiting
the generality of the foregoing, each Loan Party shall (and shall cause each
other Loan Party to) guaranty (to the extent not already directly obligated
with respect thereto) all of the Obligations and to grant to Agent, for the
benefit of Agent, Lenders, Bank Product Provider and Issuer, a Lien in all of
such Loan Party’s existing or hereinafter acquired personal and real property
to secure all of the Obligations. 


          6.6 Payment of Indebtedness. 


          Each
Loan Party shall, and shall cause each Subsidiary of each Loan Party to,
subject at all times to any applicable subordination or intercreditor
arrangement in favor of Agent and/or Lenders, pay, discharge or otherwise
satisfy at or before maturity (subject, where applicable, to specified grace
periods and, in the case of the trade payables, to normal payment practices)
all its obligations and Indebtedness of whatever nature, except when the
failure to do so could not reasonably be expected to have a Material Adverse
Effect or when the amount or validity thereof is currently being contested in
good faith by appropriate proceedings and each Loan Party and each of their
Subsidiaries shall have provided for such reserves as Agent may reasonably deem
proper and necessary. 


          6.7 Standards of Financial Statements. 


          Each
Loan Party shall, and shall cause each Subsidiary of each Loan Party to, cause
all financial statements referred to in Sections 9.7, 9.8, 9.9, 9.10 and 9.12
as to which GAAP is applicable to be complete and correct in all material
respects (subject, in the case of interim financial statements, to normal
year-end audit adjustments) and to be prepared in reasonable detail and in
accordance with GAAP applied consistently throughout the periods reflected
therein (except as concurred in by such reporting accountants or officer, as
the case may be, and disclosed therein). 


          6.8 [Reserved]. 


          6.9 Financial Covenants. If at any time
after the Closing Date Agent shall agree, in its sole discretion, to increase
the applicable amount set forth in clause (a) and/or clause (b) of the
definition Maximum Revolving Advance Amount (it being acknowledged that Agent
has no obligation whatsoever to agree to any such increase), then Borrower
shall at all times thereafter maintain a minimum EBITDA and minimum Liquidity
in amounts to be agreed upon between Borrower and Agent.


7. NEGATIVE COVENANTS. 


          No
Loan Party shall, or shall permit any of their Subsidiaries to, until
satisfaction in full of the Obligations and termination of this Agreement: 


          7.1 Merger, Consolidation, Acquisition and Sale of
Assets. 


                    (a)
Enter into any merger, consolidation or other reorganization with or into any
other Person or acquire all or a substantial portion of the assets or stock of
any Person or permit any other Person to consolidate with or merge with it; provided,
that, a Loan Party may merge or consolidate into another Loan Party so
long as (i) no Event of Default shall have occurred and be continuing, (ii)
Borrower shall give Agent at least ten (10) Business Days prior notice thereof,
(iii) if Borrower is a party to such merger or consolidation, it shall be the
surviving entity, (iv) no Loan Party shall merge or consolidate with a Loan
Party that exists under the laws of a country different than the country in which
such Loan Party exists and (v) prior to such merger or consolidation the Loan
Parties have taken (or caused to be taken) all steps required by 


56






Agent with
respect thereto (including without limitation all steps required by Agent to
maintain Agent’s Lien on the Collateral granted by such Loan Parties, as well
as the priority and effectiveness of such Lien). 


                    (b)
Sell, lease, transfer or otherwise Dispose of any of its properties or assets,
except (i) as provided in Section 4.3 and (ii) so long as no Event of Default
exists and is continuing, the assets set forth on Schedule 7.1(b) provided that
the proceeds from the sale of such assets are remitted to Agent for application
against the Obligations in accordance with Section 11.2 hereof. 


          7.2 Creation of Liens. 


          Create
or suffer to exist any Lien or transfer upon or against any of its property or
assets now owned or hereafter acquired, except Permitted Encumbrances. 


          7.3 Guarantees. 


          Become
liable upon the obligations of any Person by assumption, endorsement or
guaranty thereof or otherwise (other than with respect to the Obligations)
except the endorsement of checks in the ordinary course of business. 


          7.4 Investments. 


          Purchase
or acquire Indebtedness or Capital Stock of, or any other interest in, any
Person, except Cash Equivalents.


          7.5 Loans. 


          Make
advances, loans or other extensions of credit to any Person, including without
limitation, any Subsidiary or Affiliate except with respect to 


                    (a)
the extension of commercial trade credit in connection with the sale of
Inventory or the provision of services, each in the ordinary course of its
business; and 


                    (b)
loans made to officers or directors of a Loan Party or any Subsidiary of a Loan
Party in the ordinary course of business in an aggregate amount not to exceed
$100,000 at any time outstanding. 


          7.6 Capital Expenditures. 


          If
at any time after the Closing Date Agent shall agree, in its sole discretion,
to increase the applicable amount set forth in clause (a) and/or clause (b) of
the definition Maximum Revolving Advance Amount (it being acknowledged that
Agent has no obligation whatsoever to agree to any such increase), then
Borrower shall not make Capital Expenditures in an amount in excess of an
amount to be agreed upon between Borrower and Agent: 


          7.7 Dividends and Distributions/Management Fees. 


          Declare,
pay or make any dividend or distribution or payment with respect to 


                    (a)
any shares of the Capital Stock of any Loan Party or any of their Subsidiaries
(other than dividends or distributions payable in its Capital Stock and other
than dividends made by any Loan Party or any Subsidiary of any Loan Party to
any other Loan Party or any other Subsidiary to any Loan Party); except that so
long as no Event of Default exists and is continuing,  


57






                              (i)
Borrower may redeem, in cash, the preferred share purchase rights in accordance
with the terms of any shareholder rights plan, provided, that,
(A) the cash purchase price shall not exceed $.01 per right and (B) during the
Term of this Agreement, the aggregate payments made in respect of such rights
shall not exceed the aggregate amount of $325,000; and 


                              (ii)
Borrower may redeem, in cash, the Capital Stock of its employees, provided,
that, in any fiscal year, the aggregate of such redemptions, in cash,
shall not exceed $250,000 and 


                              (iii)
in the sole discretion of Agent and Lenders, Borrower may make cash dividends
and distributions with respect to any Capital Stock provided, that,
(A) Agent shall have received the audited annual financial statements required
by Section 9.7 for the fiscal year ending August 31, 2010, the results of which
shall be satisfactory to Agent in its sole discretion, (B) in any fiscal year,
the aggregate amount of such dividends and distributions shall not exceed an
amount to be determined by Agent in its sole discretion, (C) the payment of any
such dividends and distributions shall be subject to such financial tests and
Excess Availability requirements as Agent shall determine in its sole
discretion, or 


                    (b)
any management fees or similar fees to any Affiliate, or in each case apply any
of its funds, property or assets to the purchase, redemption or other
retirement of any such Capital Stock or management or similar fees or other
amounts or of any options to purchase or acquire any such items, except that
Borrower may redeem, on a non-cash basis, the Capital Stock of its officers and
directors. 


          7.8 Indebtedness. 


          Create,
incur, assume or suffer to exist any Indebtedness (exclusive of trade debt)
except in respect of (a) the Obligations; (b) Indebtedness (other than the
Obligations) to the extent incurred to finance Capital Expenditures not to
exceed $250,000 at any one time outstanding; (c) Indebtedness existing on the Closing
Date as set forth on Schedule 7.8; (d) Indebtedness expressly permitted by
Section 7.5; and (e) Indebtedness arising under Hedging Agreements which are
not entered into for speculative purposes and are intended to provide
protection against fluctuations in interest rates or foreign currency exchange
rates. 


          7.9 Nature of Business. 


          Substantially
change the nature of the business in which it is presently engaged, nor except
as specifically permitted hereby purchase or invest, directly or indirectly, in
any assets or property other than in the ordinary course of business for assets
or property which are useful in, necessary or appropriate for and are to be
used in its business as presently conducted. 


          7.10 Transactions with Affiliates. 


          Directly
or indirectly, purchase, acquire or lease any property from, or sell, transfer
or lease any property to, or otherwise deal with, any Affiliate, except
transactions entered into in the ordinary course of business, on an arm’s-length
basis on terms no less favorable than terms which would have been obtainable
from a Person other than an Affiliate. 


          7.11 Leases. 


          Enter
as lessee into any lease arrangement for real or personal property (unless
capitalized and permitted under Sections 7.6 and 7.8) if after giving effect
thereto, aggregate annual rental payments for all leased property would exceed
$500,000 in any one fiscal year for all Loan Parties and their Subsidiaries. 


58






          7.12 Subsidiaries. 


                    (a)
Form any Subsidiary unless (i) such Subsidiary expressly joins in this
Agreement as a Loan Party, becomes jointly and severally liable for, or
otherwise guaranties, all of the Obligations and grants a Lien on substantially
all of its assets to secure all of the Obligations and consents to the pledge
of its Capital Stock to secure all of the Obligations in form and substance
satisfactory to Agent, (ii) Agent is provided with a pledge of all of the
outstanding Capital Stock of such Subsidiary to secure all of the Obligations
in form and substance satisfactory to Agent, (iii) Agent shall have received
fifteen (15) days prior written notice thereof (along with an update of
Schedule 5.2(b)) and all documents, including collateral documents, guaranties,
corporate authority documents and legal opinions Agent may require in
connection therewith, all in form and substance satisfactory to Agent and (iv)
Agent provides its prior written consent to such formation. 


                    (b)
Enter into any partnership, joint venture or similar arrangement. 


          7.13 Fiscal Year and Accounting Changes. 


          Change
its fiscal year-end from the last Saturday of August, or make any change (a) in
accounting treatment and reporting practices except as required by GAAP or (b)
in tax reporting treatment except as required by law. 


          7.14 Pledge of Credit. 


          Now
or hereafter pledge Agent’s or any Lender’s credit on any purchases or for any
purpose. 


          7.15 Amendment of Organizational Documents. 


          Amend,
modify or waive any term or provision of its certificate of formation, limited
liability company agreement, certificate of incorporation, by-laws, partnership
agreement or other applicable documents relating to such Loan Party’s or
Subsidiary’s formation or governance, or any shareholders agreement, unless
Agent is provided prior five (5) Business Days’ prior written notice of any
such amendment, modification or waiver and such amendment, modification or
waiver is not adverse in any respect to Agent and the Lenders. 


          7.16 Compliance with ERISA. 


                    (a)
Maintain, or permit any member of the Controlled Group to maintain, or become
obligated to contribute, or permit any member of the Controlled Group to become
obligated to contribute, to any Plan, other than those Plans disclosed on
Schedule 5.8(d), (b) engage, or permit any member of the Controlled Group to
engage, in any non-exempt “prohibited transaction”, as that term is defined in
Section 406 of ERISA and Section 4975 of the Code, (c) incur, or permit any
member of the Controlled Group to incur, any “accumulated funding deficiency”,
as that term is defined in Section 302 of ERISA or Section 412 of the Code, (d)
terminate, or permit any member of the Controlled Group to terminate, any Plan
where such event could result in any liability of any Loan Party or any member
of the Controlled Group or the imposition of a Lien on the property of any Loan
Party or any member of the Controlled Group pursuant to Section 4068 of ERISA,
(e) assume, or permit any member of the Controlled Group to assume, any
obligation to contribute to any Multiemployer Plan not disclosed on Schedule
5.8(d), (f) incur, or permit any member of the Controlled Group to incur, any
withdrawal liability to any Multiemployer Plan, (g) fail promptly to notify
Agent of the occurrence of any Termination Event, (h) fail to comply, or permit
a member of the Controlled Group to fail to comply, with the requirements of
ERISA or the Code or other applicable laws in respect of any Plan, or (i) fail
to meet, or permit any member of the Controlled Group to fail to meet, all
minimum 


59






funding
requirements under ERISA or the Code or postpone or delay or allow any member
of the Controlled Group to postpone or delay any funding requirement with
respect of any Plan. 


          7.17 [Reserved]. 


          7.18 [Reserved]. 


          7.19 State of Organization/Names/Locations. 


          Change
the jurisdiction in which it is incorporated or otherwise organized, or change
its legal name (or use a different name), location of chief executive office or
location of any of the Collateral, unless Borrower has given Agent not less
than thirty (30) days prior written notice thereof (along with an update of
Schedule 4.5, Schedule 4.15(c), Schedule 5.2(a) and Schedule 5.6, as
applicable) and the Loan Parties have taken (or caused to be taken) all steps
required by Agent with respect thereto (including without limitation all steps
required by Agent to maintain Agent’s Lien on such Collateral, as well as the
priority and effectiveness of such Lien); provided, that, no Loan
Party shall change its jurisdiction of incorporation or organization or
location of any of its Collateral to a jurisdiction or location from (i) the
continental United States to outside of the continental United States or (ii)
one country to another country. 


8. CONDITIONS PRECEDENT.


           8.1 Conditions to Initial
Advances. 


          The
agreement of Lenders to make the initial Advances and Letters of Credit requested
to be made on the Closing Date is subject to the satisfaction, or waiver by
Lenders, immediately prior to or concurrently with the making of such Advances
and Letters of Credit, of the following conditions precedent, all in form and
substance acceptable to Agent: 


                    (a)
Agreement. Agent shall have received this Agreement duly executed and
delivered by an authorized officer of each of the parties hereto; 


                    (b)
Notes. Agent, to the extent required by Lenders, shall have received the
Notes duly executed and delivered by an authorized officer of Borrower in favor
of such Lenders (it being understood that as of the Closing Date, none of the
Lenders have required that a Note be issued to them); 


                    (c)
Filings, Registrations, Recordings and Searches. Each document
(including, without limitation, any UCC financing statement) required by this
Agreement, any Other Document or under law or reasonably requested by Agent to
be filed, registered or recorded in order to create, in favor of Agent, a
perfected Lien upon the Collateral shall have been properly filed, registered
or recorded in each jurisdiction in which the filing, registration or
recordation thereof is so required or requested, and Agent shall have received
an acknowledgment copy, or other evidence satisfactory to it, of each such
filing, registration or recordation and satisfactory evidence of the payment of
any necessary fee, tax or expense relating thereto. Agent shall also have
received UCC, tax, judgment and other Lien searches with respect to each Loan
Party in such jurisdictions as Agent shall require, and the results of such
searches shall be satisfactory to Agent; 


                    (d)
Payoff Letters; Releases. Fully executed payoff letters (or other
evidence of repayment) from all creditors being repaid (in whole or in part) in
connection with the making of the initial Advances, along with appropriate Lien
releases; 


                    (e)
Corporate Proceedings of Loan Parties. Agent shall have received a copy
of the resolutions of the board of directors (or equivalent authority) of each
Loan Party authorizing (i) the execution, 


60







delivery and
performance of this Agreement and the Other Documents, and (ii) the granting by
each Loan Party of the Liens upon the Collateral in each case certified by the
Secretary or an Assistant Secretary of each Loan Party as of the Closing Date;
and, such certificate shall state that the resolutions thereby certified have
not been amended, modified, revoked or rescinded as of the date of such
certificate; 


                    (f)
Incumbency Certificates of Loan Parties. Agent shall have received a
certificate of the Secretary or an Assistant Secretary of each Loan Party,
dated as of the Closing Date, as to the incumbency and signature of the
officers of each Loan Party executing this Agreement, any certificate or Other
Documents to be delivered by it pursuant hereto, together with evidence of the
incumbency of such Secretary or Assistant Secretary; 


                    (g)
Certificates. Agent shall have received a copy of the certificate of
formation, limited liability company agreement, certificate of incorporation,
by-laws, partnership agreement or other applicable documents relating to each
Loan Party’s formation and governance, and all amendments thereto, certified in
the case of formation documents by the Secretary of State or other appropriate
official of its jurisdiction of incorporation or formation and certified in the
case of the formation and governance documents as accurate and complete by the
Secretary or Assistant Secretary of each Loan Party; 


                    (h)
Good Standing Certificates. Agent shall have received good standing
certificates for each Loan Party dated not more than thirty (30) days prior to
the Closing Date, issued by the Secretary of State or other appropriate
official of each such Loan Party’s jurisdiction of incorporation or formation
and each jurisdiction where the conduct of each Loan Party’s business
activities or the ownership of its properties necessitates qualification; 


                    (i)
Legal Opinion. Agent shall have received the executed legal opinions of
Borrower’s counsel which shall cover such matters incident to the transactions
contemplated by this Agreement and the Other Documents as Agent may reasonably
require and each Loan Party hereby authorizes and directs such counsel to
deliver such opinions to Agent and Lenders; 


                    (j)
No Litigation. (i) No litigation, investigation or proceeding before or
by any arbitrator or Governmental Body shall be continuing or threatened
against any Loan Party or against the officers or directors of any Loan Party
(A) in connection with this Agreement and/or the Other Documents or any of the
transactions contemplated thereby and which, in the reasonable opinion of
Agent, is deemed material or (B) which could, in the reasonable opinion of
Agent, have a Material Adverse Effect; and (ii) no injunction, writ,
restraining order or other order of any nature materially adverse to any Loan
Party or the conduct of its business or inconsistent with the due consummation
of the Transactions shall have been issued by any Governmental Body; 


                    (k)
Collateral Examination. Agent shall received the Inventory appraisal
dated July 27, 2009 performed by Hilco Appraisal Services and such appraisal
shall be addressed to Agent and expressly permit Agent to rely thereon; 


                    (l)
Fees and Expenses. Agent shall have received all fees payable to Agent
and Lenders on or prior to the Closing Date pursuant to Sections 3.3 and 3.4
and the Fee Letter and all reimbursable expenses of Agent invoiced to date in
accordance with this Agreement; 


                    (m)
Financial Statements. Agent shall have received a copy of the financial
statements referred to in Section 5.5; 


                    (n)
Other Documents. Agent shall have received fully executed copies of all
Other Documents; 


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                    (o)
Insurance. Agent shall have received insurance certificates and loss
payable endorsements naming Agent as loss payee or additional insured, as
applicable, with respect to the Loan Parties’ property and liability insurance
policies; 


                    (p)
Payment Instructions. Agent shall have received written instructions
from Borrower directing the application of proceeds of the initial Advances
made pursuant to this Agreement; 


                    (q)
Blocked Accounts. Agent shall have received duly executed agreements
establishing the Blocked Accounts or Depository Accounts with financial
institutions acceptable to Agent for the collection or servicing of Accounts
and other Receivables and proceeds of the related Collateral; 


                    (r)
Consents. Agent shall have received any and all Consents necessary to
permit the effectuation of the Transactions contemplated by this Agreement and
the Other Documents; and, Agent shall have received such Consents and waivers
of such third parties as might assert claims with respect to the Collateral, as
Agent and its counsel shall deem necessary; 


                    (s)
No Adverse Material Change. Since August 29, 2009, there shall not have
occurred any event, condition or state of facts which could reasonably be
expected to have a Material Adverse Effect; 


                    (t)
Collateral Access Agreements. Agent shall have received duly executed
Collateral Access Agreements satisfactory to Agent with respect to all third
party Collateral locations required by Agent; 


                    (u)
Contract Review. Agent shall have reviewed all material contracts of
Loan Parties including, without limitation, leases, union contracts, labor
contracts, vendor supply contracts, license agreements and distributorship
agreements and such contracts and agreements shall be satisfactory in all
respects to Agent; 


                    (v)
Closing Certificate. Agent shall have received a closing certificate
signed by a Responsible Officer of Borrower on behalf of all Loan Parties dated
as of the date hereof, stating that (i) all representations and warranties set
forth in this Agreement and the Other Documents are true and correct on and as
of such date (except to the extent that such representations and warranties
expressly relate solely to an earlier date (in which case such representations
and warranties shall have been true and accurate on and as of such earlier
date)), (ii) Loan Parties are on such date in compliance with all the terms and
provisions set forth in this Agreement and the Other Documents and (iii) on
such date no Default or Event of Default has occurred or is continuing or would
result from the consummation of the Transactions; 


                    (w)
Borrowing Base. Agent shall have received a duly executed Borrowing Base
Certificate which shall indicate that the aggregate amount of Eligible Accounts
and Eligible Inventory is sufficient in value and amount to support Revolving
Advances and Letters of Credit in the amount requested by Borrower on the
Closing Date; 


                    (x)
Excess Availability. After giving effect to the initial Advances and
Letters of Credit and all fees and expenses pertaining to the closing of the
Transactions, Borrower shall have Excess Availability of at least $12,500,000; 


                    (y)
Control Agreements. Agent shall have received duly executed control
agreements with respect to all Collateral in which a Lien may be perfected by
means of control under the UCC (other than Restricted Accounts); 


                    (z)
Due Diligence. Agent and its counsel shall have completed its business
and legal due diligence with results satisfactory to Agent and its counsel,
including without limitation (i) pre-funding field 


62






examination of
the business and collateral of each Loan Party in accordance with Agent’s
customary procedures and practices and as otherwise required by the nature and
circumstances of the businesses of each Loan Party, (ii) favorable trade and
customer references and (iii) background checks with respect to such
individuals as Agent determines issued by investigatory firms satisfactory to
Agent; and Agent shall be satisfied with the corporate and capital structure
and management of each Loan Party’s license agreements and with all legal, tax,
accounting and other matters relating to each Loan Party; and 


                    (aa) Other. All corporate and other proceedings, and all documents, instruments and
other legal matters in connection with the Transactions shall be satisfactory
in form and substance to Agent and its counsel.  


          8.2
Conditions to Each Advance. 


          The
agreement of Lenders to make or to issue or to cause to be issued any Advance
or Letter of Credit requested to be made or issued on any date (including,
without limitation, the initial Advance or Letter of Credit), is subject to the
satisfaction of the following conditions precedent as of the date such Advance
or Letter of Credit is made or issued: 


                    (a)
Representations and Warranties. Each of the representations and
warranties made by any Loan Party in or pursuant to this Agreement and any
Other Document to which it is a party, and each of the representations and
warranties contained in any certificate, document or financial or other
statement furnished at any time under or in connection with this Agreement or
any Other Document shall be true and correct in all material respects (without
duplication of any materiality qualifiers already set forth therein; or in all
respects with respect to representations and warranties made on the Closing
Date) on and as of such date as if made on and as of such date, except to the
extent that such representations and warranties expressly relate solely to an earlier
date (in which case such representations and warranties shall have been true
and accurate on and as of such earlier date); provided, however, that, each
Lender, in its sole discretion, may (and at the direction of Agent and Required
Lenders, shall) continue to make Advances and participate in Letters of Credit
notwithstanding the failure to make such representations and warranties and
that any Advances so made and Letters of Credit so issued shall not be deemed a
waiver of any applicable Default or Event of Default;  


                    (b)
No Default. No Event of Default or Default shall have occurred and be
continuing on such date, or would exist after giving effect to the Advances
requested to be made, on such date; provided, however, that, each Lender, in
its sole discretion, may (and at the direction of Agent and Required Lenders,
shall) continue to make Advances and participate in Letters of Credit
notwithstanding the existence of a Default or Event of Default and that any
Advances so made and Letters of Credit so issued shall not be deemed a waiver
of any such Default or Event of Default; and  


                    (c)
Maximum Revolving Advances/Letters of Credit. The limits set forth in
Section 2.1(b) are not exceeded after giving to such Advances or Letters or
Credit, as applicable. 


Each request
for an Advance or Letter of Credit by Borrower hereunder shall constitute a
representation and warranty by Borrower as of the date of such Advance or
Letter of Credit that the conditions contained in this subsection shall have
been satisfied. 


63






9. INFORMATION AS TO LOAN PARTIES. 


          Each
Loan Party shall, until satisfaction in full of the Obligations and the
termination of this Agreement: 


          9.1 Disclosure of Material Matters Pertaining to
Collateral. 


          Immediately
upon learning thereof, report to Agent all matters materially affecting the
value, enforceability or collectibility of any portion of the Collateral
including, without limitation, any Loan Party’s reclamation or repossession of,
or the return to any Loan Party of, a material amount of goods or claims or
disputes asserted by any Customer or other obligor. 


          9.2 Collateral and Related Reports. 


                    (a)
Deliver to Agent concurrently with each Advance request, current as of the end
of the immediately preceding day, and in any event no less frequently than
weekly if any Advances are outstanding: 


                              (i)
an Accounts Borrowing Base posting through COMALA, including gross billings,
cash receipts, credit memos (reported separately by dilutive and non-dilutive
categories) and other adjustments issued (recorded directly to the Accounts
receivable aging), write-offs, other debit and credit adjustments (including an
explanation of all such adjustments); and 


                              (ii)
a perpetual Inventory summary report as of the end of the immediately preceding
week posted through COMALA; 


                    (b)
Deliver to Agent on or before the fifteenth (15th) Business Day after a fiscal
month end (or more frequently if required by Agent) a Borrowing Base
Certificate completed and executed by a Responsible Officer of Borrower, which
shall be calculated as of the last day of the immediately preceding month
(which shall not be binding upon Agent or restrictive of Agent’s rights under
this Agreement, and which shall not restrict the rights of Agent to recalculate
the Borrowing Base or any of the related components), setting forth an updated
calculation of all components of the Borrowing Base including without
limitation Reserves that Borrower is aware of (it being understood that Agent
may institute additional Reserves), the Borrowing Base and Excess Availability,
if any, and supported by schedules showing the derivation thereof and
containing such detail and such other information as Agent may request from
time to time; 


                    (c)
Deliver to Agent on or before the fifteenth (15th) Business Day after a fiscal
month end (or more frequently if required by Agent) the following reports,
which shall be current as of the close of business on the last Business Day of
the fiscal month immediately prior to such date: 


                              (i)
with respect to Borrower, a summary Accounts receivable aging by Customer, along
with a listing of related Contra Claims; 


                              (ii)
with respect to Borrower, if during any given month Agent and Lenders have made
Loans to the Borrower, an Accounts receivable rollforward report, which shall
separately identify (A) the Accounts receivable aging balance as of the first
(1st) day of such immediately preceding fiscal month, and (B) gross billings,
cash receipts, credit memos and other adjustments issued (recorded directly to
the Accounts receivable aging), write-offs, other debit and credit adjustments
on a cumulative basis for such fiscal month (together with an explanation for
all such adjustments that individually exceed $10,000) during such immediately
preceding fiscal month; 


64






                              (iii)
(A) a reconciliation of the Accounts receivable aging balance as of the last
day of such immediately preceding fiscal month to each of the following for
such fiscal month: (1) Accounts receivable balance delivered to Agent pursuant
to COMALA, (2) Borrower’s general ledger, and (3) Borrower’s balance sheet,
together with supporting documentation for any reconciling items, and (B)
notice of all claims, offsets, or disputes or other Contra Claims asserted by
Customers with respect to any Borrower’s Accounts receivable; 


                              (iv)
with respect to Borrower, a perpetual Inventory report, current as of the close
of business on the last Business Day of the immediately preceding fiscal month
end, and reconciliation to Borrower’s general ledger and balance sheet and
Inventory reporting posted through COMALA for the same fiscal month end; 


                              (v)
with respect to Borrower, an Inventory report by component (i.e., raw materials,
work in process and finished goods) and, if requested by Agent, an Inventory
aging report (and including the amounts of Inventory and the value thereof at
any leased locations and at premises of warehouses, processors or other third
parties); 


                              (vi)
with respect to each Loan Party’s accounts payable and expenses for the
immediately preceding fiscal month end, a report including an accounts payable
aging, accrued expenses, and listing of checks held, together with a
reconciliation to each Loan Party’s general ledger and balance sheet for such
fiscal month; 


                              (vii)
(A) a detailed report of accrued and other liabilities of the Loan Parties as
of the end of such immediately preceding fiscal month end reconciled to the
balance sheet for such fiscal month; and (B) confirmation that all sales,
personal property and payroll and other taxes of the Loan Parties are currently
paid; 


                              (viii)
(A) a reconciliation of outstanding Advances and undrawn Letters of Credit pursuant
to COMALA as of the end of such immediately preceding fiscal month end to
Borrower’s general ledger and balance sheet for such fiscal month; and (B) a
detailed list of Letters of Credit outstanding, including for each Letter of
Credit the undrawn principal amount thereof, beneficiary name, issuer name, and
expiration date; and 


                              (ix)
notice of termination or breach of any material contract of a Loan Party or any
of their Subsidiaries (A) which could reasonably be expected to result in a
Material Adverse Effect or (B) with respect to a contract in which the
aggregate payments thereunder by any Loan Party or any of their Subsidiaries
exceed $250,000 in any fiscal year; 


                    (d)
Deliver to Agent on or before the sixtieth (60th) day after the end of
Borrower’s fiscal year: 


                              (i)
for each of Borrower’s ten (10) largest Customers, the payment terms of such
Customer’s Accounts receivable, its address, credit ratings and an aging for
such Customers’ Accounts receivable balances as set forth in the accounts
receivable aging most recently delivered to Agent; 


                              (ii)
current certificates of insurance and loss payee endorsements for all insurance
policies which the Loan Parties and their Subsidiaries are required to maintain
pursuant to Section 4.11; and 


                              (iii)
a list of all Customers of Borrower owing Accounts receivable as of the end of
such fiscal year, including such Customers’ respective name, address, phone
number, and e-mail address; 


65






                    (e)
Upon Agent’s request, (i) copies of customer statements, purchase orders,
customer sales invoices, credit memos, remittance advices and reports, and
copies of deposit slips and bank statements, (ii) copies of purchase orders,
invoices and delivery documents for Accounts or other Receivables created by
any Loan Party, (iii) copies of shipping and delivery documents for Inventory
and Equipment acquired by any Loan Party, and (iv) trial balances and test
verifications; 


                    (f)
Deliver to Agent such other reports as to the Collateral, the Loan Parties or
their Subsidiaries as Agent shall request from time to time; and 


                    (g)
All Collateral reporting which shall be provided to Agent pursuant to this
Sections 9.2 shall be delivered to Agent electronically (or other manner
satisfactory to Agent) and in form satisfactory to Agent. All such reports are
solely for Agent’s convenience in maintaining records of the Collateral, and
any Loan Party’s failure to deliver any of such reports to Agent shall not
affect, terminate, modify or otherwise limit Agent’s Lien with respect to the
Collateral. Agent shall have the right to confirm and verify all Receivables by
any manner and through any medium it considers advisable and do whatever it may
deem reasonably necessary to protect its interests hereunder. 


          9.3 Environmental Reports. 


          Furnish
Agent, concurrently with the delivery of the financial statements referred to
in Sections 9.7 and 9.8, with a certificate signed by a Responsible Officer of
Borrower stating, to the best of such officer’s knowledge, that each Loan Party
and each of their respective Subsidiaries is in compliance in all material
respects with all Environmental Laws. To the extent any Loan Party or any
Subsidiary of any Loan Party is not in compliance with any Environmental Laws,
the certificate shall set forth with specificity all areas of non-compliance
and the proposed action such Loan Party or Subsidiary, as applicable, will
implement in order to achieve full compliance. 


          9.4 Litigation. 


          Promptly
(but in any event within five (5) Business Days thereafter) notify Agent in
writing of (or of any material development in) any litigation, suit or
administrative proceeding affecting any Loan Party, whether or not the claim is
covered by insurance, and of (or of any material development in) any suit or
administrative proceeding, which in any such matter could reasonably be
expected to (i) result in liability in excess of $250,000 or (ii) have a
Material Adverse Effect. 


          9.5 Material Occurrences. 


          Promptly
(but in any event within five (5) Business Days thereafter) notify Agent in
writing upon the occurrence of (a) any Event of Default or Default; (b) any
event, development or circumstance whereby any financial statements or other
reports furnished to Agent fail in any material respect to present fairly, in
accordance with GAAP consistently applied, the financial condition or operating
results of any Loan Party or any Subsidiary of any Loan Party as of the date of
such statements; (c) any accumulated retirement plan funding deficiency which,
if such deficiency continued for two plan years and was not corrected as
provided in Section 4971 of the Code, could subject any Loan Party or any
Subsidiary of any Loan Party to a tax imposed by Section 4971 of the Code; (d)
each and every default by any Loan Party or any Subsidiary of any Loan Party
which might result in the acceleration of the maturity of any Indebtedness,
including the names and addresses of the holders of such Indebtedness with
respect to which there is a default existing or with respect to which the
maturity has been or could be accelerated, and the amount of such Indebtedness;
and (e) any other development in the business or affairs of any Loan Party or
any Subsidiary of any Loan Party which could reasonably be expected to have a
Material Adverse Effect; in each case describing the nature thereof and the
action Loan Parties or such Subsidiaries propose to take with respect thereto. 


66






          9.6 Government Receivables. 


          Notify
Agent immediately if any of its Receivables arise out of contracts between any
Loan Party and the United States, any state, or any department, agency or
instrumentality of any of them. 


          9.7 Annual Financial Statements. 


          Furnish
Agent and each Lender within ninety (90) days after the end of each fiscal year
of Loan Parties, financial statements of Loan Parties and their Subsidiaries on
a consolidating basis, including, but not limited to, statements of income and
stockholders’ equity and cash flow from the beginning of the current fiscal
year to the end of such fiscal year and the balance sheet as at the end of such
fiscal year, all prepared in accordance with GAAP applied on a basis consistent
with prior practices, and in reasonable detail and reported upon without
qualification by an independent certified public accounting firm selected by
Loan Parties and satisfactory to Agent (the “Accountants”).
The report of the Accountants shall be accompanied by (a) copies of all
management letters, exception reports or similar letters or reports received by
Loan Parties or their Subsidiaries from the Accountants, and (b) a statement of
the Accountants certifying that (i) they have caused this Agreement to be
reviewed, and (ii) in making the examination upon which such report was based,
either no information came to their attention which to their knowledge
constituted an Event of Default or a Default under this Agreement or any
related agreement or, if such information came to their attention, specifying
any such Default or Event of Default, its nature, when it occurred and whether
it is continuing, and such report shall contain or have appended thereto
calculations which set forth Loan Parties’ compliance with the requirements or
restrictions imposed by Sections 6.9(if applicable), 7.6, 7.7, 7.8 and 7.11. In
addition, the reports shall be accompanied by (a) a Compliance Certificate of a
Responsible Officer of Borrower which shall state that, based on an examination
sufficient to permit such Responsible Officer to make an informed statement, no
Default or Event of Default exists, or, if such is not the case, specifying
such Default or Event of Default, its nature, when it occurred, whether it is
continuing and the steps being taken by Loan Parties with respect to such
event, and such Compliance Certificate shall have appended thereto calculations
which set forth Loan Parties’ compliance with the requirements or restrictions
imposed by Sections 6.9(if applicable), 7.6, 7.7, 7.8 and 7.11; and (b) an
analysis and discussion of results comparing the Loan Parties’ performance for
the fiscal year which is the subject of such reports against the immediately
prior fiscal year together with an analysis and discussion of (i) the results
for the fourth (4th) fiscal quarter of such fiscal year against the
fourth (4th) fiscal quarter for the immediately prior fiscal year,
each prepared by senior management of Loan Parties with respect thereto,
satisfactory to Agent and (ii) if requested by Agent, he projections for such
fiscal year against the actual results for such fiscal year, prepared by senior
management of Loan Parties with respect thereto, satisfactory to Agent. 


          9.8 Quarterly Financial Statements. 


          Furnish
Agent and each Lender within forty-five (45) days after the end of each of
Borrower’s first three (3) fiscal quarters, an unaudited balance sheet of Loan
Parties and their Subsidiaries on a consolidated basis and unaudited statements
of income and stockholders’ equity and cash flow of Loan Parties and their
Subsidiaries reflecting results of operations from the beginning of the fiscal year
to the end of such quarter and for such quarter, prepared on a basis consistent
with prior practices and complete and correct in all material respects, subject
to normal and recurring year end adjustments that individually and in the
aggregate are not material to the business of Loan Parties or their
Subsidiaries. Each such balance sheet, statement of income and stockholders’
equity and statement of cash flow shall set forth a comparison of the figures
for (a) the current fiscal period and the current year-to-date with the figures
for the same fiscal period and year-to-date period of the immediately preceding
fiscal year and (b) the projections for such fiscal period and year-to-date
period delivered pursuant to Section 5.5(b) or Section 9.12, as applicable and
shall be accompanied by an analysis and discussion of results prepared by
senior management of Loan Parties with respect thereto, satisfactory to Agent.
The financial statements shall be accompanied by a Compliance Certificate
signed by a 


67






Responsible
Officer of Borrower, which shall state that, based on an examination sufficient
to permit such Responsible Officer to make an informed statement, no Default or
Event of Default exists, or, if such is not the case, specifying such Default
or Event of Default, its nature, when it occurred, whether it is continuing and
the steps being taken by Loan Parties with respect to such default and, such
Compliance Certificate shall have appended thereto calculations which set forth
Loan Parties’ compliance with the requirements or restrictions imposed by
Sections 6.9(if applicable), 7.6, 7.7, 7.8 and 7.11. 


          9.9 Monthly Financial Statements. 


          Furnish
Agent and each Lender within twenty-five (25) days after the end of each fiscal
month, an unaudited balance sheet of Loan Parties and their Subsidiaries on a
consolidated basis and unaudited statements of income and stockholders’ equity
and cash flow of Loan Parties and their Subsidiaries on a consolidated and
consolidating basis reflecting results of operations from the beginning of the
fiscal year to the end of such month and for such month, prepared on a basis
consistent with prior practices and complete and correct in all material
respects, subject to normal and recurring year end adjustments that
individually and in the aggregate are not material to the business of Loan
Parties or their Subsidiaries. Each such balance sheet, statement of income and
stockholders’ equity and statement of cash flow shall set forth a comparison of
the figures for (a) the current fiscal period and the current year-to-date with
the figures for the same fiscal period and year-to-date period of the
immediately preceding fiscal year and (b) the projections for such fiscal
period and year-to-date period delivered pursuant to Section 5.5. The financial
statements shall be accompanied by a Compliance Certificate signed by a
Responsible Officer of Borrower, which shall state that, based on an
examination sufficient to permit such Responsible Officer to make an informed
statement, no Default or Event of Default exists, or, if such is not the case,
specifying such Default or Event of Default, its nature, when it occurred,
whether it is continuing and the steps being taken by Loan Parties with respect
to such event and, such Compliance Certificate shall have appended thereto
calculations which set forth Loan Parties’ compliance with the requirements or
restrictions imposed by Sections 6.9(if applicable), 7.6, 7.7, 7.8 and 7.11. 


          9.10 Notices re Stockholders. 


          Furnish
promptly to Agent with copies of such financial statements, reports and returns
as each Loan Party shall send to its stockholders. 


          9.11 Additional Information. 


          Furnish
promptly to Agent or any requesting Lender with such additional information as
Agent or such Lender shall reasonably request in order to enable Agent or such
Lender to determine whether Loan Parties are in compliance with the terms,
covenants, provisions and conditions of this Agreement and the Other Documents.



          9.12 Projected Operating Budget. 


          Furnish
Agent, no later than fifteen (15) days prior to the beginning of each Loan
Party’s fiscal years, commencing with fiscal year beginning August 29, 2010, a
month by month projected operating budget and cash flow of Loan Parties and
their Subsidiaries on a consolidated basis for such fiscal year (including an
income statement for each month and a balance sheet as at the end of the last
month in each fiscal quarter), such projections to be accompanied by a
certificate signed by a Responsible Officer of Borrower to the effect that such
projections have been prepared on the basis of sound financial planning
practice consistent with past budgets and financial statements and that such
Responsible Officer has no reason to question the reasonableness of any
material assumptions on which such projections were prepared. 


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          9.13 [Reserved]. 


          9.14 Notice of Suits, Adverse Events. 


          Furnish
Agent with prompt (and, in any event, not more than five (5) Business Days)
notice of (a) any lapse or other termination of any Consent issued to any Loan
Party or any Subsidiary of any Loan Party by any Governmental Body or any other
Person that is material to the operation of any Loan Party’s or such
Subsidiaries’ business, (b) any refusal by any Governmental Body or any other
Person to renew or extend any such Consent; and (c) copies of any periodic or
special reports filed by any Loan Party or any Subsidiary of any Loan Party
with any Governmental Body or Person, if such reports indicate any material
change in the business, operations, affairs or condition of any Loan Party or
any such Subsidiary, or if copies thereof are requested by Agent or any Lender,
(d) material developments with respect to any litigation or potential
litigation against any Loan Party or any Subsidiary of any Loan Party and (e)
copies of any material notices and other communications from any Governmental
Body or Person which specifically relate to any Loan Party or any Subsidiary of
any Loan Party. 


          9.15 ERISA Notices and Requests. 


          Furnish
Agent with immediate written notice in the event that (a) any Loan Party, any
Subsidiary of any Loan Party or any member of the Controlled Group knows or has
reason to know that a Termination Event has occurred, together with a written
statement describing such Termination Event and the action, if any, which such
Loan Party, such Subsidiary of any Loan Party or member of the Controlled Group
has taken, is taking, or proposes to take with respect thereto and, when known,
any action taken or threatened by the Internal Revenue Service, Department of
Labor or PBGC with respect thereto, (b) any Loan Party, any Subsidiary of any
Loan Party or any member of the Controlled Group knows or has reason to know
that a prohibited transaction (as defined in Sections 406 of ERISA and 4975 of
the Code) has occurred together with a written statement describing such
transaction and the action which such Loan Party, such Subsidiary of any Loan
Party or any member of the Controlled Group has taken, is taking or proposes to
take with respect thereto, (c) a funding waiver request has been filed with
respect to any Plan together with all communications received by any Loan
Party, any Subsidiary of any Loan Party or any member of the Controlled Group
with respect to such request, (d) any increase in the benefits of any existing
Plan or the establishment of any new Plan or the commencement of contributions
to any Plan to which any Loan Party, any Subsidiary of any Loan Party or any
member of the Controlled Group was not previously contributing shall occur, (e)
any Loan Party, any Subsidiary of any Loan Party or any member of the
Controlled Group shall receive from the PBGC a notice of intention to terminate
a Plan or to have a trustee appointed to administer a Plan, together with
copies of each such notice, (f) any Loan Party, any Subsidiary of any Loan
Party or any member of the Controlled Group shall receive any favorable or
unfavorable determination letter from the Internal Revenue Service regarding
the qualification of a Plan under Section 401(a) of the Code, together with
copies of each such letter; (g) any Loan Party, any Subsidiary of any Loan
Party or any member of the Controlled Group shall receive a notice regarding
the imposition of withdrawal liability, together with copies of each such
notice; (h) any Loan Party, any Subsidiary of any Loan Party or any member of
the Controlled Group shall fail to make a required installment or any other required
payment under Section 412 of the Code on or before the due date for such
installment or payment; (i) any Loan Party, any Subsidiary of any Loan Party or
any member of the Controlled Group knows that (i) a Multiemployer Plan has been
terminated, (ii) the administrator or plan sponsor of a Multiemployer Plan
intends to terminate a Multiemployer Plan, or (iii) the PBGC has instituted or
will institute proceedings under Section 4042 of ERISA to terminate a
Multiemployer Plan. 


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          9.16 Additional Documents. 


          Execute
and deliver to Agent, upon request, such documents and agreements as Agent may,
from time to time, reasonably request to carry out the purposes, terms or
conditions of this Agreement and the Other Documents. 


10. EVENTS OF DEFAULT. 


          The
occurrence of any one or more of the following events shall constitute an
“Event of Default”: 


          10.1 Failure by any Loan Party to pay any
of the Obligations when due, whether at maturity or by reason of acceleration
pursuant to the terms of this Agreement or any Other Document; 


          10.2 (a) Failure by Loan Parties to
perform, keep or observe any provision of Sections 4.2, 4.3, 4.4, 4.5, 4.6,
4.10, 4.11, 4.15(h), 6.9, 7, 9.2, 9.7, 9.8, 9.9 and 9.12 or (b) any representation
or warranty made or deemed made by any Loan Party in this Agreement or any
Other Document or in any certificate, document or financial or other statement
furnished at any time in connection herewith or therewith shall prove to have
been misleading in any material respect (without duplication of any materiality
qualifiers already set forth herein) on the date when made or deemed to have
been made; 


          10.3 Issuance of a notice of Lien (other
than Permitted Encumbrances), levy, assessment, injunction or attachment
against a material portion of any Loan Party’s or any Subsidiary of any Loan
Party’s property which is not stayed or lifted within thirty (30) days; 


          10.4 Failure or neglect of any Loan Party
to perform, keep or observe any term, provision, condition, covenant contained
in this Agreement or in any Other Document (to the extent such breach is not
otherwise embodied in any other provision of this Section 10 for which a
different grace or cure period is specified or which constitute an immediate
Event of Default under this Agreement or the Other Documents), which is not
cured within five (5) Business Days after the occurrence thereof; 


          10.5 Any judgment or judgments are rendered
or judgment Liens filed against one or more Loan Parties or Subsidiaries of
Loan Parties for an amount, individually or in the aggregate, in excess of
$500,000, which within thirty (30) days of such rendering or filing is not
either satisfied, stayed or discharged of record or any action is taken to
enforce any Lien over the assets of any Loan Party (or any analogous procedure
or step is taken in any jurisdiction) for an amount, individually or in the
aggregate, in excess of $500,000; 


          10.6 Any Loan Party or any Subsidiary of
any Loan Party shall (a) apply for, consent to or suffer the appointment of, or
the taking of possession by, a receiver, custodian, trustee, liquidator or
similar fiduciary of itself or of all or a substantial part of its property,
(b) admit in writing its inability, or be generally unable, to pay its debts as
they become due or cease operations of its present business, (c) make a general
assignment for the benefit of creditors, (d) commence a voluntary case under
any state, federal or other bankruptcy laws (as now or hereafter in effect),
(e) be adjudicated a bankrupt or insolvent, (f) file a petition seeking to take
advantage of any other law providing for the relief of debtors, (g) acquiesce
to, or fail to have dismissed, within thirty (30) days, any petition filed
against it in any involuntary case under such bankruptcy laws, or (h) take any
action for the purpose of effecting any of the foregoing; 


          10.7 Any change in any Loan Party’s or any
Subsidiary of any Loan Party’s condition or affairs (financial or otherwise)
which has a Material Adverse Effect or any other event that has a Material
Adverse Effect; 


70






          10.8 Any Lien created hereunder or provided
for hereby or under any Other Document for any reason ceases to be or is not a
valid and perfected Lien having a first priority interest; 


          10.9 Any default under one or more
documents, instruments or agreements to which any Loan Party, any Subsidiary or
any Loan Party is a party or by which any of its properties is bound, relating to
any Indebtedness (other than the Obligations) individually or in aggregate in
excess of $250,000, which default continues for more than the applicable cure
period, if any, with respect thereto; 


          10.10 A default of the obligations of
Borrower and/or the Loan Parties and their Subsidiaries taken as a whole under
any other agreement to which it is a party shall occur which materially and
adversely affects its condition, affairs or prospects (financial or otherwise)
which default is not cured within any applicable grace period; 


          10.11 Termination or breach of the Guaranty
or similar agreement executed and delivered to Agent in connection with the
Obligations of any Loan Party, or if any Guarantor attempts to terminate,
challenges the validity of, or its liability under, any such Guaranty or
similar agreement; 


          10.12 Any (a) Change of Control shall occur
or (b) Change of Management shall occur;


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


          10.14 The indictment by any Governmental
Body of any Loan Party or any Subsidiary of any Loan Party of which any Loan
Party, such Subsidiary or Agent receives notice, in either case, as to which
there is a reasonable possibility of an adverse determination, in the good
faith determination of Agent, under any criminal statute, or commencement or
threatened commencement of criminal or civil proceedings against such Loan
Party or such Subsidiary, pursuant to which statute or proceedings the
penalties or remedies sought or available include forfeiture of (a) any of the
Collateral having a value in excess of $250,000 or (b) any other property of
Borrower, or of the Loan Parties and their Subsidiaries taken as a whole, which
is necessary or material to the conduct of its business; or 


          10.15 Any portion of the Collateral shall
be seized or taken by a Governmental Body, or any Loan Party or the title and
rights of any Loan Party in and to any material portion of the Collateral shall
have become the subject matter of litigation which might, in the opinion of
Agent, upon final determination, result in impairment or loss of the security
provided by this Agreement or the Other Documents; 


          10.16 The operations of Borrower’s
facility, or the Loan Parties’ and Subsidiaries’ facilities taken as a whole,
is interrupted in any material respect and such interruption could reasonably
be expected to have a Material Adverse Effect; or 


          10.17 An event or condition specified in
Section 7.16 or Section 9.15 shall occur or exist with respect to any Plan and,
as a result of such event or condition, together with all other such events or
conditions, any Loan Party or any member of the Controlled Group shall incur a
liability to a Plan or the PBGC (or both) in excess of $250,000. 


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11. LENDERS’ RIGHTS AND REMEDIES AFTER
DEFAULT. 


          11.1
Rights and Remedies. 


          Upon
the occurrence of (a) an Event of Default pursuant to Section 10.6, all
Obligations shall be immediately due and payable and this Agreement and the
obligation of Lenders to make Advances shall be deemed terminated, (b) any of
the other Events of Default and at any time thereafter, Agent may (and at the
direction of Required Lenders, shall) declare that all or any portion of the
Obligations shall be immediately due and payable and Agent or Required Lenders
shall have the right to terminate this Agreement and to terminate or limit the
obligation of Lenders to make Advances (including, without limitation, reducing
the lending formulas or amounts of Revolving Advances and Letters of Credit
available to Borrower), and (c) a filing of a petition against any Loan Party
in any involuntary case under any state, federal or other bankruptcy laws, the
obligation of Lenders to make Advances hereunder shall be terminated other than
as may be required by an appropriate order of the bankruptcy court having
jurisdiction over any Loan Party. Upon the occurrence of any Event of Default,
Agent shall have the right to exercise any and all other rights and remedies
provided for herein, under the UCC and at law or equity generally, including,
without limitation, the right to foreclose the Liens granted herein and in the
Other Documents and to realize upon any Collateral by any available judicial
procedure and/or to take possession of and sell any or all of the Collateral
with or without judicial process. Agent may enter any Loan Party’s premises or
other premises without legal process and without incurring liability to any
Loan Party therefor, and Agent may thereupon, or at any time thereafter, in its
discretion, without notice or demand, take the Collateral (including, without
limitation, all MCOs and MSO’s and MCO’s (as the case may be) then in
Borrower’s control or possession) and remove the same to such place as Agent
may deem advisable and Agent may require Loan Parties to make the Collateral
available to Agent at a convenient place. With or without having the Collateral
at the time or place of sale, Agent may sell the Collateral, or any part
thereof, at public or private sale, at any time or place, in one or more sales,
at such price or prices, and upon such terms, either for cash, credit or future
delivery, as Agent may elect. Except as to that part of the Collateral which is
perishable or threatens to decline speedily in value or is of a type
customarily sold on a recognized market, Agent shall give Loan Parties
reasonable notification of such sale or sales, it being agreed that in all
events written notice mailed to Loan Parties at least ten (10) days prior to
such sale or sales is reasonable notification. At any public sale Agent or any
Lender may bid for and become the purchaser, and Agent, any Lender or any other
purchaser at any such sale thereafter shall hold the Collateral sold absolutely
free from any claim or right of whatsoever kind, including any equity of
redemption and such right and equity are hereby expressly waived and released
by each Loan Party. Agent may specifically disclaim any warranties of title or
the like at any sale of Collateral. In connection with the exercise of the
foregoing remedies, Agent shall have the right to use all of each Loan Party’s
Intellectual Property and other proprietary rights which are used in connection
with (i) Inventory for the purpose of disposing of such Inventory and (ii)
Equipment for the purpose of completing the manufacture of unfinished goods, in
each case without any obligation to compensate any Loan Party therefor. 


          11.2 Waterfall. 


                    (a)
So long as no Waterfall Event has occurred and is continuing and except as
otherwise provided with respect to Defaulting Lenders, all principal and
interest payments, shall be apportioned ratably among the Lenders (according to
their Commitment Percentages thereof) and all payments of fees, costs and
expenses (other than fees, costs or expenses that are for Agent’s separate
account) shall be apportioned ratably among the Lenders according to their
Commitment Percentages thereof (it being understood that all costs and expenses
due and owing to Agent, and all principal and interest of Advances (including
Protective Advances) made by Agent and not reimbursed by Lenders, shall first
be paid in full before any such payments are made to any of the Lenders).
Payments for the purposes of this clause (a) shall include proceeds of
Collateral received by Agent. 


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                    (b)
At any time that a Waterfall Event has occurred and is continuing and except as
otherwise provided with respect to Defaulting Lenders, all payments remitted to
Agent and all proceeds of Collateral received by Agent shall be applied to the
Obligations as follows (it being understood that in the event that any Lender,
as opposed to Agent, receives such payment or proceeds from any source other
than Agent, such Lender shall remit such payment or proceeds, as applicable to
Agent for application to the Obligations as provided in this Agreement): first,
to the Obligations consisting of costs and expenses (including attorneys’ fees
and expenses) incurred by Agent in connection with this Agreement or any Other
Document and to the principal and interest of Advances (including Protective
Advances) made by Agent and not reimbursed by Lenders until paid in full;
second, pro rata to interest due to Lenders upon any of the Advances according
to their respective Commitment Percentages thereof until paid in full; third,
pro rata to fees due to Agent and the Lenders in connection with this Agreement
or any Other Document according to their respective Commitment Percentages
thereof until paid in full; fourth, pro rata to the principal of the Advances
made by each Lender according to their respective Commitment Percentages
thereof and, after an Event of Default pursuant to Section 10.6 or if requested
by Agent or Required Lenders after the occurrence of any other Event of
Default, on a pro rata basis, to furnish to Agent cash collateral in an amount
not less than 105% of the aggregate undrawn amount of all Letters of Credit,
such cash collateral arrangements to be in form and substance satisfactory to
Agent until paid in full; fifth pro rata to any other Obligations (other than
Bank Product Obligations) until paid in full; and sixth pro rata to any Bank
Product Obligations until paid in full. 


                    (c)
If any deficiency shall arise, Loan Parties shall remain liable to Agent and
Lenders therefor. If it is determined by an authority of competent jurisdiction
that a disposition by Agent did not occur in a commercially reasonably manner,
Agent may obtain a deficiency judgment for the difference between the amount of
the Obligation and the amount that a commercially reasonable sale would have
yielded. Agent will not be considered to have offered to retain the Collateral
in satisfaction of the Obligations unless Agent has entered into a written
agreement with Loan Party to that effect. 


          11.3 Agent’s Discretion. 


          Agent
shall have the right in its sole discretion to determine which rights, Liens or
remedies Agent may at any time pursue, relinquish, subordinate, or modify or to
take any other action with respect thereto and such determination will not in
any way modify or affect any of Agent’s or Lenders’ rights hereunder. 


          11.4
Setoff. 


          In
addition to any other rights which Agent, any Lender or any Issuer may have
under applicable law, upon the occurrence of an Event of Default hereunder,
Agent, such Lender, such Issuer and their Affiliates shall have a right to
setoff and apply any Loan Party’s property held by Agent, such Lender, such
Issuer or such Affiliate to reduce the Obligations, all without notice to the
Loan Parties. No Lender, Issuer or Affiliate shall setoff or apply such
property without the prior written consent of Agent. 


          11.5
Rights and Remedies not Exclusive. 


          The
enumeration of the foregoing rights and remedies is not intended to be
exhaustive and the exercise of any right or remedy shall not preclude the
exercise of any other right or remedies provided for herein or otherwise
provided by law, all of which shall be cumulative and not alternative. 


          11.6
Commercial Reasonableness. 


          To
the extent that applicable law imposes duties on Agent or any Lender to
exercise remedies in a commercially reasonable manner (which duties cannot be
waived under such law), each Loan Party 


73






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


12. WAIVERS AND JUDICIAL PROCEEDINGS. 


          12.1
Waiver of Notice. 


          Each
Loan Party hereby waives notice of non-payment of any of the Receivables,
demand, presentment, protest and notice thereof with respect to any and all
instruments, notice of acceptance hereof, notice of loans or advances made,
credit extended, Collateral received or delivered, or any other action taken in
reliance hereon, and all other demands and notices of any description, except
such as are expressly provided for herein. 


          12.2
Delay. 


          No
delay or omission on Agent’s or any Lender’s part in exercising any right,
remedy or option shall operate as a waiver of such or any other right, remedy
or option or of any Default or Event of Default. 


          12.3
Jury Waiver. 


          EACH
PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF
ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING UNDER THIS AGREEMENT
OR ANY OTHER DOCUMENT, OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR
INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO
THIS AGREEMENT OR ANY OTHER DOCUMENT, OR THE 


74






TRANSACTIONS
RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND EACH PARTY
HEREBY CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE
DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY
FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENTS OF THE PARTIES HERETO TO THE WAIVER OF THEIR
RIGHT TO TRIAL BY JURY. 


          12.4
Waiver of Counterclaims. 


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


13. EFFECTIVE DATE AND TERMINATION. 


          13.1
Term. 


          This
Agreement, which shall inure to the benefit of and shall be binding upon the
respective successors and permitted assigns of each Loan Party, Agent and each
Lender, shall become effective on the date hereof and shall continue in full
force and effect until the earliest of (a) October 13, 2012 (the “Original Term”), (b) the acceleration of
all Obligations pursuant to the terms of this Agreement or (c) the date on
which this Agreement shall be terminated in accordance with the provisions
hereof or by operation of law (the “Termination
Date”). Loan Parties may terminate this Agreement at any time upon
ninety (90) days’ prior written notice upon payment in full of the Obligations.
In the event the Obligations are paid in full prior to the last day of the Term
(the date of such prepayment hereinafter referred to as the “Early Termination Date”), the Loan Parties
shall pay to Agent for the benefit of Lenders an early termination fee (the “Early Termination Fee”) in an amount equal
to (i) three (3%) percent of the Maximum Credit if the Early Termination Date
occurs on or after the Closing Date to and including the date immediately
preceding the first anniversary of the Closing Date, (ii) two (2%) percent of
the Maximum Credit if the Early Termination Date occurs on or after the first
anniversary of the Closing Date to and including the date immediately preceding
the second anniversary of the Closing Date, and (iii) one (1%) percent of the
Maximum Credit if the Early Termination Date occurs on or after the second
anniversary of the Closing Date to and including the Termination Date. The
Early Termination Fee shall be fully earned, due and payable as of the date of
such prepayment and shall not be subject to rebate or proration upon
termination of this Agreement for any reason. 


          13.2
Termination. 


          The
termination of the Agreement shall not affect any Loan Party’s, Agent’s or any
Lender’s rights, or any of the Obligations arising or incurred prior to the
effective date of such termination, and each of the provisions of this
Agreement and of the Other Documents shall continue to be fully operative until
all of the Obligations have been paid in full. The Liens and rights granted to
Agent and Lenders hereunder and the financing statements filed hereunder shall
continue in full force and effect, notwithstanding the termination of this
Agreement or the fact that Borrower’s Account may from time to time be
temporarily in a zero or credit position, until all of the Obligations have
been paid and performed in full after the termination of this Agreement (or (a)
in the case of outstanding Letters of Credit, Borrower has furnished to Agent
cash collateral in an amount not less than 105% of the aggregate undrawn amount
of all Letters of Credit (pursuant to cash collateral arrangements to be in
form and substance satisfactory to Agent) and (b) in the case of any other
contingent Obligations, each Loan Party shall have furnished Agent and Lenders
with cash collateral or an indemnification from a Person, and pursuant to terms
and conditions, in each case which are satisfactory to Agent in all respects).
Accordingly, each Loan Party waives any rights which it may have under Section
9-


75






513 of the UCC
to demand the filing of termination statements with respect to the Collateral,
and Agent shall not be required to send such termination statements to each
Loan Party, or to file them with any filing office, until all of the
Obligations have been paid and performed in full after the termination of this
Agreement (or (i) in the case of outstanding Letters of Credit, Borrower has
furnished to Agent cash collateral in an amount not less than 105% of the
aggregate undrawn amount of all Letters of Credit (pursuant to cash collateral
arrangements to be in form and substance satisfactory to Agent) and (ii) in the
case of any other contingent Obligations, each Loan Party shall have furnished
Agent and Lenders with cash collateral or an indemnification from a Person, and
pursuant to terms and conditions, in each case which are satisfactory to Agent
in all respects). All representations, warranties, covenants, waivers and
agreements contained herein and in the Other Documents shall survive
termination hereof until all of the Obligations of each Loan Party have been
paid or performed in full after the termination of this Agreement (or (A) in
the case of outstanding Letters of Credit, Borrower has furnished to Agent cash
collateral in an amount not less than 105% of the aggregate undrawn amount of
all Letters of Credit (pursuant to cash collateral arrangements to be in form
and substance satisfactory to Agent) and (B) in the case of any other
contingent Obligations, each Loan Party shall have furnished Agent and Lenders
with cash collateral or an indemnification from a Person, and pursuant to terms
and conditions, in each case which are satisfactory to Agent in all respects). 


14. REGARDING AGENT. 


          14.1
Appointment. 


          Each
Lender hereby designates Burdale to act as Agent for such Lender under this
Agreement and the Other Documents. Each Lender hereby irrevocably authorizes
Agent to take such action on its behalf under the provisions of this Agreement
and the Other Documents and to exercise such powers and to perform such duties
hereunder and thereunder as are specifically delegated to or required of Agent
by the terms hereof and thereof and such other powers as are reasonably
incidental thereto. Agent may perform any of its duties hereunder by or through
its agents or employees. As to any matters not expressly provided for by this
Agreement (including without limitation, collection of the Notes) 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, and such instructions shall be binding; provided, however,
that, Agent shall not be required to take any action which exposes Agent
to liability or which is contrary to this Agreement or the Other Documents or
applicable law unless Agent agrees to do so in its sole discretion and is
furnished with an indemnification satisfactory to Agent in its sole discretion
with respect thereto. 


          14.2
Nature of Duties. 


          Agent
shall have no duties or responsibilities except those expressly set forth in
this Agreement and the Other Documents. None of Agent, any Lender, or any
Issuer nor any of their respective officers, directors, employees or agents
shall be (a) liable for any action taken or omitted by them as such under this
Agreement or any Other Document or in connection herewith or therewith, unless
caused by their gross (not mere) negligence or willful misconduct, as
determined pursuant to a final, non-appealable order of a court of competent
jurisdiction, or (b) responsible in any manner for any recitals, statements,
representations or warranties made by any Loan Party or any officer thereof
contained in this Agreement, or in any of the Other Documents or in any
certificate, report, statement or other document referred to or provided for
in, or received by Agent under or in connection with, this Agreement or any of
the Other Documents or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement, or any of the Other Documents
or for any failure of Loan Party to perform its obligations hereunder. Agent
shall not be under any obligation to any Lender to ascertain or to inquire as
to the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any of the Other Documents, or to inspect or
appraise the properties, books or records of any Loan Party or any other
Person. The duties of Agent in 


76






respect of the
Advances shall be mechanical and administrative in nature; Agent shall not have
by reason of this Agreement or any Other Document a fiduciary relationship in
respect of any Secured Party, nor shall the Agent constitute a trustee in
respect of any Secured Party; and nothing in this Agreement or any Other
Document, expressed or implied, is intended to or shall be so construed as to
impose upon Agent any obligations in respect of this Agreement or any Other
Document except as expressly set forth herein or therein. 


          14.3
Lack of Reliance on Agent and Resignation. 


                    (a)
Independently and without reliance upon Agent, any Issuer or any other Lender,
each Lender has made and shall continue to make (i) its own independent
investigation of the financial condition and affairs of each Loan Party and each
other Person in connection with the making and the continuance of the Advances
hereunder and the taking or not taking of any action in connection with this
Agreement or any Other Document, and (ii) its own appraisal of the
creditworthiness of each Loan Party and each other Person. Agent shall have no
duty or responsibility, either initially or on a continuing basis, to provide
any Lender with any credit or other information with respect thereto, whether
coming into its possession before making of the Advances or at any time or
times thereafter except to the extent, if any, expressly required in this
Agreement. Agent shall not be responsible to any Lender for any recitals,
statements, information, representations or warranties herein or in any
agreement, document, certificate or a statement delivered in connection with or
for the execution, effectiveness, genuineness, validity, enforceability,
perfection, priority, collectibility or sufficiency of this Agreement or any
Other Document, the Collateral, or of the financial condition of any Loan Party
or any other Person, or be required to make any inquiry concerning either the
performance or observance of any of the terms, provisions or conditions of this
Agreement, the Note, the Other Documents, the Collateral, or the financial
condition of any Loan Party or any other Person, or the existence of any Event
of Default or any Default. 


                    (b)
Agent may resign on thirty (30) days’ written notice to each of Lenders and
Borrower and upon such resignation, the Required Lenders will promptly
designate a successor Agent with the consent of Borrower (provided if an Event
of Default is in existence, no such consent of Borrower shall be required). If
no such successor Agent is appointed at the end of such thirty (30) day period,
Agent may designate one of the Lenders as a successor Agent. If no Lender
accepts such designation, Required Lenders shall serve as the successor Agent,
and Agent shall remain entitled to so resign. 


                    (c)
Any such successor Agent shall succeed to the rights, powers and duties of
Agent, and the term “Agent” shall mean such successor agent effective upon its
appointment, and the former Agent’s powers and duties as Agent shall be
terminated, without any other or further act or deed on the part of such former
Agent. After any Agent’s resignation as Agent, the provisions of this Section
14, Section 16.5 and Section 16.10 shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under this Agreement. 


          14.4
Certain Rights of Agent. 


          If
Agent shall request instructions from Lenders with respect to any act or action
(including failure to act) in connection with this Agreement or any Other
Document, Agent shall be entitled to refrain from such act or taking such
action unless and until Agent shall have received instructions from the
Required Lenders; and Agent shall not incur liability to any Person by reason
of so refraining. Without limiting the foregoing, Lenders shall not have any
right of action whatsoever against Agent as a result of its acting or
refraining from acting hereunder in accordance with the instructions of the
Required Lenders. 


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          14.5
Reliance. 


          Agent
shall be entitled to rely, and shall be fully protected in relying, upon any
note, writing, resolution, notice, statement, certificate, telex, teletype or
telecopier message, cablegram, email, order or other document or telephone
message believed by it to be genuine and correct and to have been signed, sent
or made by the proper Person, and, with respect to all legal matters pertaining
to this Agreement and the Other Documents and its duties hereunder, upon advice
of counsel selected by it. Agent may employ agents and attorneys-in-fact and
shall not be liable for the default or misconduct of any such agents or
attorneys-in-fact selected by Agent with reasonable care. 


          14.6
Notice of Default. 


          Agent
shall not be deemed to have knowledge or notice of the occurrence of any
Default or Event of Default hereunder or under the Other Documents, unless
Agent has received notice from a Lender or a Loan Party referring to this
Agreement or the Other Documents, describing such Default or Event of Default
and stating that such notice is a “notice of default”. In the event that Agent
receives such a notice, Agent shall give notice thereof to Lenders. Subject to
Section 14.1, Agent shall take such action with respect to such Default or
Event of Default (including, without limitation, the institution of the Default
Rate pursuant to Section 3.1 hereof) as shall be reasonably directed by the
Required Lenders; provided, that, unless and until Agent shall
have received such directions, Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to such Default
or Event of Default (including, without limitation, the institution of the
Default Rate pursuant to Section 3.1 hereof) as it shall deem advisable in the
best interests of Lenders. 


          14.7
Indemnification. 


          To
the extent Agent and/or Issuer, as applicable, is not reimbursed and
indemnified by Loan Parties, each Lender will reimburse and indemnify Agent and
each Issuer in proportion to its respective Commitment Percentage, from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by or asserted against
Agent and/or such Issuer in performing its duties hereunder or under any Other
Document, or in any way relating to or arising out of this Agreement or any
Other Document; provided, that, Lenders shall not be liable for
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from the
indemnified party’s gross (not mere) negligence or willful misconduct, as
determined pursuant to a final, non-appealable order of a court of competent
jurisdiction. 


          14.8
Agent in its Individual Capacity. 


          With
respect any Advances made by Agent, except as otherwise provided in this
Agreement, the Advances made by Agent shall have the same rights and powers
hereunder as any other Lender and as if it were not performing the duties as
Agent specified herein. Agent may engage in business with any Loan Party as if
it were not performing the duties specified herein, and may accept fees and
other consideration from any Loan Party for services in connection with this
Agreement or otherwise without having to account for the same to Lenders. 


          14.9
Actions in Concert. 


          Anything
in this Agreement to the contrary notwithstanding, each Lender hereby agrees
with each other Lender and Agent that (a) Agent shall have the exclusive right
to enforce and exercise all rights and remedies of Agent and Lenders hereunder
and under the Other Documents at all times following the 


78






occurrence and
during the continuance of an Event of Default, on behalf of Agent and all
Lenders, subject to the direction of Required Lenders as provided for herein,
and (b) no Lender shall take any action to protect or enforce its rights
arising out of this Agreement or the Other Documents (including exercising any
rights of setoff or compensation) without first obtaining the prior written
consent of Agent or Requisite Lenders, it being the intent of Lenders that any
such action to protect or enforce rights under this Agreement and the Notes
shall be taken in concert and at the direction or with the consent of Agent or
Requisite Lenders. 


15. GUARANTEE. 


          15.1
Guaranty. 


          Each
Guarantor hereby unconditionally guarantees, as a primary obligor and not
merely as a surety, jointly and severally with each other Guarantor when and as
due, whether at maturity, by acceleration, by notice of prepayment or
otherwise, the due and punctual performance of all Obligations. Each payment
made by any Guarantor pursuant to this Guarantee shall be made in lawful money
of the United States in immediately available funds. 


          15.2
Waivers. 


          Each
Guarantor hereby absolutely, unconditionally and irrevocably waives (a)
promptness, diligence, notice of acceptance, notice of presentment of payment
and any other notice hereunder, (b) demand of payment, protest, notice of
dishonor or nonpayment, notice of the present and future amount of the
Obligations and any other notice with respect to the Obligations, (c) any
requirement that Agent or any Lender protect, secure, perfect or insure any
Lien or Lien or any property subject thereto or exhaust any right or take any
action against any other Loan Party, or any Person or any Collateral, (d) any
other action, event or precondition to the enforcement hereof or the performance
by each such Guarantor of the Obligations, and (e) any defense arising by any
lack of capacity or authority or any other defense of any Loan Party or any
notice, demand or defense by reason of cessation from any cause of Obligations
other than payment and performance in full of the Obligations by the Loan
Parties and any defense that any other guarantee or security was or was to be
obtained by Agent. 


          15.3
No Defense. 


          No
invalidity, irregularity, voidableness, voidness or unenforceability of this
Agreement or any Other Document or any other agreement or instrument relating
thereto, or of all or any part of the Obligations or of any collateral security
therefor shall affect, impair or be a defense hereunder. 


          15.4
Guaranty of Payment. 


          The
Guaranty hereunder is one of payment and performance, not collection, and the
obligations of each Guarantor hereunder are independent of the Obligations of
the other Loan Parties, and a separate action or actions may be brought and
prosecuted against any Guarantor to enforce the terms and conditions of this
Section 15, irrespective of whether any action is brought against any other
Loan Party or other Persons or whether any other Loan Party or other Persons
are joined in any such action or actions. Each Guarantor waives any right to
require that any resort be had by Agent or any Lender to any security held for
payment of the Obligations or to any balance of any deposit account or credit
on the books of Agent or any Lender in favor of any Loan Party or any other
Person. No election to proceed in one form of action or proceedings, or against
any Person, or on any Obligations, shall constitute a waiver of Agent’s right
to proceed in any other form of action or proceeding or against any other
Person unless Agent has expressed any such right in writing. Without limiting
the generality of the foregoing, no action or proceeding by Agent against any
Loan Party under any document evidencing or securing indebtedness of any Loan
Party to Agent shall diminish the 


79






liability of
any Guarantor hereunder, except to the extent Agent receives actual payment on
account of Obligations by such action or proceeding, notwithstanding the effect
of any such election, action or proceeding upon the right of subrogation of any
Guarantor in respect of any Loan Party. 


          15.5
Liabilities Absolute. 


          The
liability of each Guarantor hereunder shall be absolute, unlimited and
unconditional and shall not be subject to any reduction, limitation, impairment,
discharge or termination for any reason, including, without limitation, any
claim of waiver, release, surrender, alteration or compromise, and shall not be
subject to any claim, defense or setoff, counterclaim, recoupment or
termination whatsoever by reason of the invalidity, illegality or
unenforceability of any other Obligation or otherwise. Without limiting the
generality of the foregoing, the obligations of each Guarantor shall not be
discharged or impaired, released, limited or otherwise affected by: 


                    (a)
any change in the manner, place or terms of payment or performance, and/or any
change or extension of the time of payment or performance of, release, renewal
or alteration of, or any new agreements relating to any Obligation, any
security therefor, or any liability incurred directly or indirectly in respect
thereof, or any rescission of, or amendment, waiver or other modification of,
or any consent to departure from, this Agreement or any Other Document,
including any increase in the Obligations resulting from the extension of
additional credit to Borrower or otherwise; 


                    (b)
any sale, exchange, release, surrender, loss, abandonment, realization upon any
property by whomsoever at any time pledged or mortgaged to secure, or howsoever
securing, all or any of the Obligations, and/or any offset there against, or
failure to perfect, or continue the perfection of, any Lien in any such
property, or delay in the perfection of any such Lien, or any amendment or waiver
of or consent to departure from any other guaranty for all or any of the
Obligations; 


                    (c)
the failure of Agent or any Lender to assert any claim or demand or to enforce
any right or remedy against Borrower or any other Loan Party or any other
Person under the provisions of this Agreement or any Other Document or any
other document or instrument executed an delivered in connection herewith or
therewith; 


                    (d)
any settlement or compromise of any Obligation, any security therefor or any
liability (including any of those hereunder) incurred directly or indirectly in
respect thereof or hereof, and any subordination of the payment of all or any
part thereof to the payment of any obligation (whether due or not) of any Loan Party
to creditors of any Loan Party other than any other Loan Party; 


                    (e)
any manner of application of Collateral, or proceeds thereof, to all or any of
the Obligations, or any manner of sale or other disposition of any Collateral
for all or any of the Obligations or any other assets of any Loan Party; and 


                    (f)
any other agreements or circumstance of any nature whatsoever that may or might
in any manner or to any extent vary the risk of any Guarantor, or that might otherwise
at law or in equity constitute a defense available to, or a discharge of, the
Guaranty hereunder and/or the obligations of any Guarantor, or a defense to, or
discharge of, any Loan Party or any other Person or party hereto or the
Obligations or otherwise with respect to the Advances, Letters of Credit or
other financial accommodations to Borrower pursuant to this Agreement and/or
the Other Documents. 


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          15.6
Waiver of Notice. 


          The
Agent shall have the right to do any of the above without notice to or the
consent of any Guarantor and each Guarantor expressly waives any right to
notice of, consent to, knowledge of and participation in any agreements
relating to any of the above or any other present or future event relating to Obligations
whether under this Agreement or otherwise or any right to challenge or question
any of the above and waives any defenses of such Guarantor which might arise as
a result of such actions. 


          15.7
Agent’s Discretion. 


          Agent
may at any time and from time to time (whether prior to or after the revocation
or termination of this Agreement) without the consent of, or notice to, any
Guarantor, and without incurring responsibility to any Guarantor or impairing
or releasing the Obligations, apply any sums by whomsoever paid or howsoever
realized to any Obligations regardless of what Obligations remain unpaid. 


          15.8
Reinstatement. 


          The
Guaranty provisions herein contained shall continue to be effective or be
reinstated, as the case may be, if claim is ever made upon Agent or any Lender
for repayment or recovery of any amount or amounts received by Agent or such
Lender in payment or on account of any of the Obligations and Agent or such
Lender repays all or part of said amount for any reason whatsoever, including,
without limitation, by reason of any judgment, decree or order of any court or
administrative body having jurisdiction over Agent or such Lender or the
respective property of each, or any settlement or compromise of any claim
effected by Agent or such Lender with any such claimant (including any Loan
Party); and in such event each Guarantor hereby agrees that any such judgment,
decree, order, settlement or compromise or other circumstances shall be binding
upon such Guarantor, notwithstanding any revocation hereof or the cancellation
of any note or other instrument evidencing any Obligation, and each Guarantor
shall be and remain liable to Agent and/or Lenders for the amount so repaid or
recovered to the same extent as if such amount had never originally been
received by Agent or such Lenders. 


                    (a)
Agent shall not be required to marshal any assets in favor of any Guarantor, or
against or in payment of Obligations. 


                    (b)
No Guarantor shall be entitled to claim against any present or future security
held by Agent from any Person for Obligations in priority to or equally with
any claim of Agent, or assert any claim for any liability of any Loan Party to
any Guarantor in priority to or equally with claims of Agent for Obligations,
and no Guarantor shall be entitled to compete with Agent with respect to, or to
advance any equal or prior claim to any security held by Agent for Obligations.



                    (c)
If any Loan Party makes any payment to Agent, which payment is wholly or partly
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to any Person under any federal or provincial or other
statute or at common law or under equitable principles, then to the extent of
such payment, the Obligation intended to be paid shall be revived and continued
in full force and effect as if the payment had not been made, and the resulting
revived Obligation shall continue to be guaranteed, uninterrupted, by each
Guarantor hereunder. 


                    (d)
All present and future monies payable by any Loan Party to any Guarantor,
whether arising out of a right of subrogation or otherwise, are assigned to
Agent for its benefit and for the ratable benefit of Lenders as security for
such Guarantor’s liability to Agent and Lenders hereunder and are postponed and
subordinated to Agent’s and Lenders’ prior right to payment in full of
Obligations. Except to the extent prohibited otherwise by this Agreement, all
monies received by any Guarantor from any Loan Party 


81






shall be held
by such Guarantor as agent and trustee for Agent and Lenders. This assignment,
postponement and subordination shall only terminate when the Obligations are
paid in full in cash and this Agreement is irrevocably terminated. 


                    (e)
Each Loan Party acknowledges this assignment, postponement and subordination
and, except as otherwise set forth herein, agrees to make no payments to any
Guarantor without the prior written consent of Agent. Each Loan Party agrees to
give full effect to the provisions hereof. 


          15.9
Action Upon Event of Default. 


          Upon
the occurrence and during the continuance of any Event of Default, Agent may
and upon written request of the Required Lenders shall, without notice to or
demand upon any Loan Party or any other Person, declare all or any portion of
the Obligations of such Guarantor hereunder immediately due and payable, and
shall be entitled to enforce the Obligations of each Guarantor. Upon such
declaration by Agent, Agent, Lenders and any of their Affiliates are hereby
authorized at any time and from time to time to set off and apply any and all
deposits (general or special, time or demand, provisions or final) at any time
held and other indebtedness at any time owing by Agent or Lenders to or for the
credit or the account of any Guarantor against any and all of the Obligations
of each Guarantor now or hereafter existing hereunder in accordance with the
terms of this Agreement, whether or not Agent or Lenders shall have made any
demand hereunder against any other Loan Party and although such Obligations may
be contingent and unmatured. The rights of Agent and Lenders hereunder are in
addition to other rights and remedies (including other rights of set-off) which
Agent and Lenders may have. Upon such declaration by Agent, with respect to any
claims (other than those claims referred to in the immediately preceding
paragraph) of any Guarantor against any Loan Party (the “Claims”), Agent shall
have the full right on the part of Agent in its own name or in the name of such
Guarantor to collect and enforce such Claims by legal action, proof of debt in
bankruptcy or other liquidation proceedings, vote in any proceeding for the arrangement
of debts at any time proposed, or otherwise, Agent and each of its officers
being hereby irrevocably constituted attorneys-in-fact for each Guarantor for
the purpose of such enforcement and for the purpose of endorsing in the name of
each Guarantor any instrument for the payment of money. Each Guarantor will
receive as trustee for Agent and will pay to Agent forthwith upon receipt
thereof any amounts which such Guarantor may receive from any Loan Party on
account of the Claims. Each Guarantor agrees that at no time hereafter will any
of the Claims be represented by any notes or other negotiable instruments or
writings, except and in such event they shall either be made payable to Agent,
or if payable to any Guarantor, shall forthwith be endorsed by such Guarantor
to Agent. Each Guarantor agrees that no payment on account of the Claims or any
Lien therein shall be created, received, accepted or retained during the
continuance of any Event of Default nor shall any financing statement be filed
with respect thereto by any Guarantor.  


          15.10
Statute of Limitations. 


          Any
acknowledgment or new promise, whether by payment of principal or interest or
otherwise and whether by any Loan Party or others (including any Lenders) with
respect to any of the Obligations shall, if the statute of limitations in favor
of any Guarantor against Agent or Lenders shall have commenced to run, toll the
running of such statute of limitations and, if the period of such statute of
limitations shall have expired, prevent the operation of such statute of
limitations. 


          15.11
Interest. 


          All
amounts due, owing and unpaid from time to time by any Guarantor hereunder
shall bear interest at the interest rate per annum then chargeable with respect
to Base Rate Loans constituting Revolving Advances. 


82






          15.12
Guarantor’s Investigation. 


          Each
Guarantor acknowledges receipt of a copy of each of this Agreement and the
Other Documents. Each Guarantor has made an independent investigation of the
Loan Parties and of the financial condition of the Loan Parties. Neither Agent
nor any Lender has made, Agent and Lenders do not hereby make, any
representations or warranties as to the income, expense, operation, finances or
any other matter or thing affecting any Loan Party nor has Agent or any Lender
made any representations or warranties as to the amount or nature of the
Obligations of any Loan Party to which this Section 15 applies as specifically
herein set forth, nor has Agent or any Lender or any officer, agent or employee
of Agent or any Lender or any representative thereof, made any other oral
representations, agreements or commitments of any kind or nature, and each
Guarantor hereby expressly acknowledges that no such representations or warranties
have been made and such Guarantor expressly disclaims reliance on any such
representations or warranties. 


          15.13
Termination. 


          The
provisions of this Section 15 shall remain in effect until the indefeasible
payment in full in cash of all Obligations and irrevocable termination of this
Agreement. 


          15.14
Extension of Guarantee. 


          Without
prejudice to the generality of this Section 15, each Guarantor expressly
confirms that it intends that the guarantee provided in this Section 15 shall
extend from time to time to any (however fundamental) variation, increase,
extension or addition of or to any of the provisions of this Agreement or any
Other Document and/or any facility or amount made available hereunder or thereunder.



16. MISCELLANEOUS. 


          16.1
Governing Law. 


          This
Agreement shall be governed by and construed in accordance with the laws of the
State of New York applied to contracts to be performed wholly within the State
of New York, without regard to conflicts of laws principles. Any judicial
proceeding brought by or against any Loan Party with respect to any of the
Obligations, this Agreement or any Other Document may be brought in any court
of competent jurisdiction located in the County and State of New York, United
States of America, and, by execution and delivery of this Agreement, each Loan
Party accepts for itself and in connection with its properties, generally and
unconditionally, the non-exclusive jurisdiction of the aforesaid courts, and
irrevocably agrees to be bound by any judgment rendered thereby in connection
with this Agreement. Each Loan Party hereby waives personal service of any and
all process upon it and consents that all such service of process may be made
by registered mail (return receipt requested) directed to Borrower at its
address set forth in Section 16.6 and service so made shall be deemed completed
five (5) days after the same shall have been so deposited in the mails of the
United States of America, or, at Agent’s and/or any Lender’s option, by service
upon Borrower which each Loan Party irrevocably appoints as such Loan Party’s
agent for the purpose of accepting service within the State of New York.
Nothing herein shall affect the right to serve process in any manner permitted
by law or shall limit the right of Agent or any Lender to bring proceedings
against any Loan Party in the courts of any other jurisdiction. Each Loan Party
waives any objection to jurisdiction and venue of any action instituted
hereunder and shall not assert any defense based on lack of jurisdiction or
venue or based upon forum non conveniens. Any judicial proceeding by any Loan
Party against Agent or any Lender involving, directly or indirectly, any matter
or claim in any way arising out of, related to or connected with this Agreement
or any Other Document, shall be brought only in a federal or state court
located in the City of New York, State of New York. 


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          16.2 Entire Understanding;
Amendments; Lender
Replacements; Overadvances. 


                    (a)
This Agreement and the Other Documents executed concurrently herewith or on or
after the Closing Date contain the entire understanding between each Loan
Party, Agent and each Lender and supersedes all prior agreements and
understandings, if any, relating to the subject matter hereof or thereof. Any
promises, representations, warranties or guarantees of Agent or any Lender to
any Loan Party not herein contained or not contained in any Other Document
executed on or after the Closing Date shall have no force and effect. Neither
this Agreement nor any portion or provisions hereof may be changed, modified,
amended, waived, supplemented, discharged, cancelled or terminated orally or by
any course of dealing, or in any manner other than by an agreement in writing
pursuant to clause (b) below. Any Default or Event of Default that occurs
hereunder shall continue unless and until expressly waived in writing pursuant
to clause (b) below. Each Loan Party acknowledges that it has been advised by
counsel in connection with the execution of this Agreement and Other Documents
and is not relying upon oral representations or statements inconsistent with
the terms and provisions of this Agreement.


                    (b)
Agent and the Required Lenders (or Agent with the consent in writing of the
Required Lenders), and Borrower may, subject to the provisions of this Section
16.2(b), from time to time enter into written amendments and supplemental
agreements to this Agreement or the Other Documents executed by Borrower, for
the purpose of adding or deleting any provisions or otherwise changing, varying
or waiving in any manner the rights of Lenders, Agent or Loan Parties hereunder
or thereunder or the conditions, provisions or terms thereof or waiving any
Default or Event of Default hereunder or thereunder, but only to the extent
specified in such written agreements; provided, however, that,
no such amendment or supplemental agreement shall:


                              (i)
increase the Commitment of any Lender without the consent of Agent and all
Lenders;


                              (ii)
increase the Maximum Credit or the Maximum Revolving Advance Amount without the
consent of Agent and all Lenders;


                              (iii)
extend the Term or maturity of any Note or the due date for any amount payable
hereunder, or decrease the rate of interest (other than the waiver of any
default rate) or reduce any scheduled (as opposed to mandatory prepayment)
principal payment or fee payable by Borrower to such Lender pursuant to this
Agreement, without the consent of Agent and each Lender directly affected
thereby;


                              (iv)
alter the definition of the term Required Lenders or alter, amend or modify
this Section 16.2(b) without the consent of Agent and all Lenders;


                              (v)
release any Collateral during any calendar year (other than in accordance with
the provisions of this Agreement, including any Disposition thereof permitted
by this Agreement) having an aggregate value in excess of $2,000,000 without
the consent of Agent and all Lenders;


                              (vi)
change the rights and duties of Agent without the consent of Agent; or


                              (vii)
increase the Advance Rate above the Advance Rate in effect on the Closing Date
without the consent of Agent and all Lenders.


Any such
amendment or supplemental agreement shall apply equally to each Lender and
shall be binding upon Loan Parties, Lenders and Agent and all future holders of
the Obligations. In the case of any waiver, Loan Parties, Agent and Lenders
shall be restored to their former positions and rights, and any Event of
Default waived shall be deemed to be cured and not continuing, but no waiver of
a specific Event of Default  


84






shall extend to any subsequent Event of Default
(whether or not the subsequent Event of Default is the same as
the Event of Default which was waived), or impair any right consequent thereon.


                    (c)
In the event that Agent requests the consent of a Lender pursuant to this
Section 16.2 and such Lender shall not respond or reply to Agent in writing
within ten (10) days of delivery of such request, such Lender shall be deemed
to have consented to the matter that was the subject of the request. 


                    (d)
In the event that (i) Agent requests the consent of a Lender pursuant to this
Section 16.2 and such consent is denied, (ii) a Lender is a Defaulting Lender
or (iii) a Lender is an Impacted Lender, then in each case Agent may, at its
option, require such Lender to assign its Advances and Commitments to Agent or
to another Lender or to any other Person designated by Agent (a “Designated
Lender”), for a price equal to the then outstanding principal amount
of all Advances held by such Lender plus accrued and unpaid interest and fees
owing to such Lender, which interest and fees shall be paid when, and if,
collected from Borrower. In the event Agent elects to require any Lender to
assign such Lender’s Advances and Commitments to Agent or to a Designated
Lender, Agent will so notify such Lender in writing within forty five (45) days
following such Lender’s denial (or with respect to clause (ii) or (iii) above,
during the time that such Lender is a Defaulting Lender or an Impacted Lender,
as applicable, or within forty five (45) days thereafter), and such Lender will
assign its interest to Agent or the Designated Lender no later than five (5)
days following receipt of such notice pursuant to a Commitment Transfer
Supplement executed by such Lender (or Agent on behalf of such Lender if such
Lender refuses to execute such Commitment Transfer Supplement within such time
period; and each Lender hereby irrevocable authorizes Agent to so execute such
a Commitment Transfer Supplement on its behalf), Agent or the Designated
Lender, as appropriate, and Agent (if Agent is not the Designated Lender).


                    (e)
Notwithstanding the foregoing (and in addition to the Agent’s rights to make
Protective Advances hereunder), Agent may at its discretion and without the
consent of the Required Lenders, voluntarily permit the outstanding Revolving
Advances and Letters of Credit at any time to exceed the Borrowing Base (but
not exceed the Maximum Revolving Advance Amount) by up to ten percent (10%) of
the Borrowing Base for up to sixty (60) consecutive Business Days; provided,
that, any such overadvance shall still constitute an Event of Default as
of the first day of such overadvance regardless of the reason for or amount of
such overadvance. For purposes of the preceding sentence, the discretion
granted to Agent hereunder shall not preclude involuntary overadvances that may
result from time to time due to the fact that the Borrowing Base was
unintentionally exceeded for any reason, including, but not limited to,
Collateral previously deemed to be eligible for inclusion in the Borrowing
Base, becomes ineligible, collections of Receivables applied to reduce outstanding
Advances are thereafter returned for insufficient funds or overadvances are
made to protect or preserve the Collateral; provided, that, any
such overadvance shall still constitute an Event of Default as of the first day
of such overadvance regardless of the reason for or amount of such overadvance.
In the event Agent involuntarily permits the outstanding Revolving Advances and
Letters of Credit to exceed the Borrowing Base by more than ten percent (10%)
of the Borrowing Base, Borrower shall decrease such excess in as expeditious a
manner as is practicable under the circumstances and not inconsistent with the
reason for such excess, provided, that, any Event of Default
resulting therefrom shall remain in existence. Revolving Advances made or
Letters of Credit issued after Agent has determined the existence of
involuntary overadvances shall be deemed to be involuntary overadvances and
shall be decreased in accordance with the preceding sentence, and in all events
shall constitute an Event of Default.


          16.3 Successors and Assigns;
Participations; New
Lenders; Taxes; Syndication.


                    (a)
This Agreement and the Other Documents shall be binding upon and inure to the
benefit of Loan Parties, Agent, each Lender, all future holders of the Obligations
and their respective successors and assigns; except, that, no Loan Party may
assign or transfer any of its rights or obligations under this Agreement or any
Other Document without the prior written consent of Agent and each Lender.


85






                    (b)
Each Loan Party acknowledges that one or more Lenders may at any time and from
time to time sell participating interests in the Advances to other Persons with
the consent of Agent (each such transferee or purchaser of a participating
interest, a “Transferee”). Each Transferee may exercise all rights of
payment (including without limitation rights of set-off) with respect to the
portion of such Advances held by it or other Obligations payable hereunder as
fully as if such Transferee were the direct holder thereof; provided, that,
Loan Parties shall not be required to pay to any Transferee more than the
amount which it would have been required to pay to the Lender which granted an
interest in its Advances or other Obligations payable hereunder to such
Transferee, had such Lender retained such interest in the Advances hereunder or
other Obligations payable hereunder, and in no event shall Loan Parties be
required to pay any such amount arising from the same circumstances and with
respect to the same Advances or other Obligations payable hereunder to both
such Lender and such Transferee. Transferee’s rights under Section 16.2 shall
be limited to those items in Section 16.2(b) which require consent of each
Lender or each directly affected Lender, as applicable. Each Loan Party hereby
grants to any Transferee a continuing Lien in any deposits, moneys or other
property actually or constructively held by such Transferee as security for the
Transferee’s interest in the Advances. Neither Agent nor any Lender (other than
the Lender selling a participation) shall have any duty to any Participant and
may continue to deal solely with the Lender selling a participation as if no
such sale had occurred.


                    (c)
Any Lender may with the consent of Agent which shall not be unreasonably
withheld or delayed sell, assign or transfer all or any part of its Advances
and Commitments (and related rights and obligations under this Agreement and
the Other Documents) to Qualified Assignees (each a “Purchasing Lender”), in
minimum amounts of not less than $5,000,000 (except such minimum amount shall
not apply to (i) a sale, assignment or transfer by any Lender to an Affiliate
of such Lender or to a group of new Lenders, each of which is an Affiliate of
each other to the extent that the aggregate amount to be assigned to all such
new Lenders is at least $5,000,000 or (ii) a sale, assignment or transfer by
any Lender of all of its Commitments and all of its Advances), pursuant to a
Commitment Transfer Supplement, executed by a Purchasing Lender, the transferor
Lender, and Agent and delivered to Agent for recording. Upon such execution,
delivery, acceptance and recording, from and after the transfer effective date
determined pursuant to such Commitment Transfer Supplement, (A) Purchasing
Lender thereunder shall be a party to this Agreement and the Other Documents as
a Lender and, to the extent transferred pursuant to such Commitment Transfer
Supplement, have Commitments and outstanding Advances, and (B) the transferor Lender
thereunder shall, to the extent its Advances and Commitments have been
transferred pursuant to such Commitment Transfer Supplement, be released from
its obligations under this Agreement and the Other Documents. Such Commitment
Transfer Supplement shall be deemed to amend this Agreement to the extent, and
only to the extent, necessary to reflect the addition of such Purchasing Lender
as a Lender and the resulting adjustment of the Commitment Percentages arising
from the purchase by such Purchasing Lender of all or a portion of the Advances
and Commitments of such transferor Lender under this Agreement and the Other
Documents. Loan Parties hereby consent to the addition of such Purchasing
Lender as a Lender and the resulting adjustment of the Commitment Percentages
arising from the purchase by such Purchasing Lender of all or a portion of the
Advances and Commitments of such transferor Lender. Loan Parties shall execute
and deliver such further documents and do such further acts and things in order
to effectuate the foregoing. Notwithstanding the foregoing, any Lender may
assign all or any portion of the Advances or Notes held by it to any Federal
Reserve Bank or the United States Treasury as collateral security pursuant to
Regulation A of the Board of Governors of the Federal Reserve System and any
Operating Circular issued by such Federal Reserve Bank; provided, that,
any payment in respect of such assigned Advances or Notes made by Borrower to
or for the account of the assigning or pledging Lender in accordance with the
terms of this Agreement shall satisfy Borrower’s obligations hereunder in
respect to such assigned Advances or Notes to the extent of such payment. No
such assignment described in the immediately preceding sentence shall release
the assigning Lender from its obligations hereunder.


86






                    (d)
Agent shall maintain at its address a copy of each Commitment Transfer
Supplement delivered to it and a register (the “Register”) for the
recordation of the names and addresses of the Advances owing to each Lender
from time to time. The entries in the Register shall be conclusive, in the
absence of manifest error, and Loan Parties, Agent and Lenders may treat each
Person whose name is recorded in the Register as the owner of the Advance
recorded therein for the purposes of this Agreement. The Register shall be
available for inspection by Loan Parties or any Lender at any reasonable time
and from time to time upon reasonable prior notice. Agent shall receive a fee
in the amount of $3,500 payable by the applicable Purchasing Lender upon the
effective date of each transfer or assignment to such Purchasing Lender.


                    (e)
Loan Parties authorize each Lender to disclose to any Transferee or Purchasing
Lender and any prospective Transferee or Purchasing Lender any and all
financial and other information in such Lender’s possession concerning Loan
Parties which has been delivered to Agent or such Lender by or on behalf of
Loan Parties pursuant to this Agreement or in connection with Agent’s or such
Lender’s credit evaluation of Loan Parties.


                    (f)
Each Lender or Participant organized under the laws of a jurisdiction outside
the United States, and from time to time thereafter if either requested by
Borrower or
Agent or upon the obsolescence or expiration of any previously delivered form,
shall provide Agent and Borrower with (i) two (2) original executed copies
of a correct and completed Internal Revenue Service Form W-8BEN or W-8ECI, as
appropriate, or any successor or other form prescribed by the Internal Revenue
Service, certifying that payments to such Lender or Participant are not subject
to United States federal withholding tax under the Code because such payment is
either effectively connected with the conduct by such Lender or Participant of
a trade or business in the United States or totally exempt from United States
federal withholding tax by reason of the application of an income tax treaty to
which the United States is a party or such Lender is otherwise exempt, and (ii)
or to the extent permitted by law, as an alternative to form W-8BEN or W-8ECI,
each such Lender or Participant may provide Borrower and Agent with two original
executed copies of any successor form prescribed by the Internal Revenue
Service, certifying that such Lender is exempt from United States federal
withholding tax pursuant to Section 871(h) or 881(c) of the Code, together with
an annual certificate stating that such Lender or Participant is not a “person”
described in Section 871(h)(3) or 881(c)(3) of the Code. Each such Lender
further agrees to complete and deliver to Borrower, upon its request, such
other forms or other documentation as may be appropriate to minimize any
withholding tax on payments pursuant to this Agreement under the laws of any
other jurisdiction unless such completion and delivery may in any event be
disadvantageous for such Lender. For purposes of this subsection (f), the term
“United States” shall have the meaning specified in Section 7701 of the Code.


                    (g)
At the request of Agent from time to time both before and after the Closing
Date, the Loan Parties will assist Agent in the syndication of the credit
facility provided pursuant to this Agreement and the Other Documents. Such
assistance shall include, but not be limited to (i) prompt assistance in the
preparation of an information memorandum and the verification of the
completeness and accuracy of the information and the reasonableness of the
projections contained therein, (ii) preparation of offering materials and
financial projections by Loan Parties and their advisors, (iii) providing Agent
with all information reasonably deemed necessary by Agent to successfully
complete the syndication, (iv) confirmation as to the accuracy and completeness
of such offering materials and information and confirmation that management’s
projections are based on assumptions believed by the Loan Parties to be
reasonable at the time made, and (v) participation of the Loan Parties’ senior
management in meetings and conference calls with potential lenders at such
times and places as Agent may reasonably request.


          16.4 Application of
Payments.


          Agent
shall have the continuing and exclusive right to apply or reverse and re-apply
any payment and any and all proceeds of Collateral to any portion of the
Obligations. To the extent that any Loan Party makes 


87






a payment or
Agent or any Lender receives any payment or proceeds of the Collateral for any
Loan Party’s benefit, which are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be repaid to a trustee,
debtor in possession, receiver, custodian or any other party under any
bankruptcy law, common law or equitable cause, then, to such extent, the
Obligations or part thereof intended to be satisfied shall be revived and
continue as if such payment or proceeds had not been received by Agent or such
Lender.


          16.5 Indemnity/Currency
Indemnity.


                    (a)
Each Loan Party shall indemnify Agent, each Issuer, each Lender and each of
their respective officers, directors, Affiliates, employees, representatives
and agents from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses and disbursements
of any kind or nature whatsoever (including, without limitation, fees and
disbursements of counsel) which may be imposed on, incurred by, or asserted
against Agent, such Issuer or any Lender in any litigation, proceeding or
investigation instituted or conducted by any Governmental Body or any other
Person, including any broker, with respect to any aspect of, or any transaction
contemplated by, or referred to in, or any matter related to, this Agreement or
the Other Documents, whether or not Agent, any Issuer or any Lender is a party
thereto, except to the extent that any of the foregoing arises out of the
willful misconduct of the party being indemnified, as determined pursuant to a
final, non-appealable order of a court of competent jurisdiction.


                    (b)
If for the purposes of obtaining or enforcing judgment in any court in any
jurisdiction with respect to this Agreement or any Other Document, it becomes
necessary to convert into the currency of such jurisdiction (the “Judgment
Currency”) any amount due under this Agreement or under any Other
Document in any currency other than the Judgment Currency (the “Currency Due”)
(or for the purposes of Section 2.6) then, to the extent permitted by law,
conversion shall be made at the exchange rate selected by Agent on the Business
Day before the day on which judgment is given (or for the purposes of Section
2.6 on the Business Day on which the payment was received by the Agent). In the
event that there is a change in such exchange rate between the Business Day
before the day on which the judgment is given and the date of receipt by the
Agent of the amount due, Borrower shall to the extent permitted by law, on the
date of receipt by Agent, pay such additional amounts, if any, or be entitled
to receive reimbursement of such amount, if any, as may be necessary to ensure
that the amount received by Agent on such date is the amount in the Judgment
Currency which (when converted at such exchange rate on the date of receipt by
Agent in accordance with normal banking procedures in the relevant
jurisdiction) is the amount then due under this Agreement or such Other
Document in the Currency Due. If the amount of the Currency Due (including any
Currency Due for purposes of Section 2.6) which the Agent is so able to
purchase is less than the amount of the Currency Due (including any Currency
Due for purposes of Section 2.6) originally due to it, Borrower shall to the
extent permitted by law jointly and severally indemnify and save Agent and
Lenders harmless from and against loss or damage arising as a result of such
deficiency.


          16.6 Notice.


          Any
notice or request required to be given hereunder to any Loan Party or to Agent
or any Lender shall be in writing (except as expressly provided herein) at
their respective addresses set forth below or at such other address as may
hereafter be specified in a notice designated as a notice of change of address
under this Section 16.6. Any notice or request required to be given hereunder
shall be given by (a) hand delivery, (b) overnight courier, (c) registered or
certified mail, return receipt requested, or (d) telecopy to the number set out
below (or such other number as may hereafter be specified in a notice
designated as a notice of change of address) with electronic confirmation of
its receipt. Any notice or request required to be given hereunder shall be
deemed given on the earlier of (i) actual receipt thereof, and (ii) (A) one
Business Day following posting thereof by a recognized overnight courier, (B)
three (3) days following posting thereof by registered or certified mail,
return receipt requested, or (C) upon the sending thereof when sent by
facsimile with 


88






electronic
confirmation of its receipt, in each case addressed to each party at its address
set forth below or at such other address as has been furnished in writing by a
party to the other by like notice:


	
  

 	
  

 	
  

 
	
           (A)
 If to Agent or to Burdale as Lender at:

 	
 BURDALE
 CAPITAL FINANCE, INC.

 
	
  

 	
 300 First
 Stamford Place

 
	
  

 	
 Stamford,
 Connecticut 06902

 
	
  

 	
 Attention:

 	
 Account
 Manager - Winnebago

 
	
  

 	
 Telephone:

 	
 203-391-5940

 
	
  

 	
 Facsimile:

 	
 203-353-0152

 
	
  

 
	
           (B)
 If to a Lender other than Burdale, as specified on the signature pages hereof
 or in the applicable Commitment Transfer Supplement.

 
	
  

 
	
           (C)
 If to Borrower or any Loan Party:

 	
 Winnebago
 Industries, Inc.

 
	
  

 	
 605 West
 Crystal Lake Road

 
	
  

 	
 Forest City,
 Iowa 50436

 
	
  

 	
 Attention:

 	
 Ms. Sarah N.
 Nielsen

 
	
  

 	
  

 	
 Chief
 Financial Officer

 
	
  

 	
 Telephone:

 	
 641-585-6865

 
	
  

 	
 Facsimile:

 	
 641-585-6806

 



          16.7 Survival.


          The
obligations of Loan Parties under Sections 2.2(g), 3.7, 3.9, 4.19(h), 14.7,
16.5 and 16.10 shall survive termination of this Agreement and the Other
Documents and payment in full of the Obligations.


          16.8 Waiver of
Subrogation.


          Each
Loan Party expressly waives any and all rights of subrogation, reimbursement,
indemnity, exoneration, contribution of any other claim which such Loan Party
may now or hereafter have against the other Loan Parties or other Person
directly or contingently liable for the Obligations hereunder, or against or
with respect to the other Loan Parties’ property (including, without
limitation, any property which is Collateral for the Obligations), arising from
the existence or performance of this Agreement, until termination of this
Agreement and repayment in full of the Obligations.


          16.9 Severability.


          If
any part of this Agreement is contrary to, prohibited by, or deemed invalid
under applicable laws or regulations, such provision shall be inapplicable and
deemed omitted to the extent so contrary, prohibited or invalid, but the
remainder hereof shall not be invalidated thereby and shall be given effect so
far as possible.


          16.10 Expenses.


          Borrower
shall reimburse Agent (and, with respect to clause (a) below, Lenders) for all
costs and expenses (including without limitation, travel expenses) paid or
incurred by Agent (and, with respect to clause (a) below, Lenders) in
connection with this Agreement and the Other Documents, including, without
limitation:


                    (a)
reasonable attorneys’ fees and disbursements incurred by Agent and, during the
continuance of a Default or Event of Default, by Lenders (i) in all efforts
made to enforce payment of any Obligation or effect collection of any
Collateral, (ii) in defending or prosecuting any actions or proceedings 


89






arising out of
or relating to this Agreement and the Other Documents, (iii) in connection with
the enforcement of this Agreement or Other Document, and (iv) in enforcing
Agent’s security interest in or Lien on any of the Collateral, whether through
judicial proceedings or otherwise;


                    (b)
reasonable attorneys’ fees and expenses, fees and expenses of financial
accountants, advisors, consultants, appraisers and other professionals incurred
by Agent and other costs and expenses incurred by Agent (i) in connection with
the preparing, negotiating, entering into, performing or syndicating this
Agreement and/or the Other Documents, any amendment, waiver, consent or other
modification with respect thereto and the administration, work-out or
enforcement of this Agreement and the Other Documents, (ii) in instituting,
maintaining, preserving and foreclosing on Lien on any of the Collateral, whether
through judicial proceedings or otherwise, (iii) in connection with any advice
given to Agent with respect to its rights and obligations under this Agreement
and all Other Documents or (iv) that Agent reasonably deems necessary or
appropriate for the performance and fulfillment of its functions, powers, and
obligations pursuant to this Agreement and the Other Documents; and


                    (c)
reasonable fees and disbursements incurred by Agent in connection with any
appraisals of Inventory, Equipment or other Collateral, field examinations,
collateral analysis or monitoring or other business analysis conducted by
outside Persons in connection with this Agreement and the Other Documents.


          16.11 Injunctive
Relief.


          Each
Loan Party recognizes that, in the event any Loan Party fails to perform,
observe or discharge any of its obligations or liabilities under this
Agreement, any remedy at law may prove to be inadequate relief to Agent and the
Lenders; therefore, Agent, if Agent so requests, shall be entitled to temporary
and permanent injunctive relief in any such case without the necessity of
proving that actual damages are not an adequate remedy.


          16.12 Consequential
Damages.


          None
of Agent, any Issuer, any Lender, nor any agent or attorney for any of them,
shall be liable to any Loan Party for special, punitive, exemplary, indirect or
consequential damages arising from any breach of contract, tort or other wrong
relating to the establishment, administration or collection of the Obligations.


          16.13 Captions.


          The
captions at various places in this Agreement are intended for convenience only
and do not constitute and shall not be interpreted as part of this Agreement.


          16.14 Counterparts; Facsimile or
Emailed Signatures.


          This
Agreement may be executed in any number of and by different parties hereto on
separate counterparts, all of which, when so executed, shall be deemed an
original, but all such counterparts shall constitute one and the same
agreement. Any signature delivered by a party by facsimile or email
transmission shall be deemed to be an original signature hereto.


          16.15 Construction.


          The
parties acknowledge that each party and its counsel have reviewed this
Agreement and that the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of this Agreement or any amendments, schedules or
exhibits thereto.

90






          16.16 Confidentiality; Sharing
Information. 


                    (a)
Agent, each Lender and each Transferee shall hold all non-public information
designated as confidential and obtained by Agent, such Lender or such
Transferee pursuant to the requirements of this Agreement in accordance with
Agent’s, such Lender’s and such Transferee’s customary procedures for handling
confidential information of this nature; provided, however, that,
Agent, each Lender and each Transferee may disclose such confidential information
(i) to its examiners, affiliates, outside auditors, counsel and other
professional advisors, (ii) to Agent, any Lender or to any prospective
Transferees and Purchasing Lenders, (iii) that ceases to be non-public
information through no fault of Agent or any Lender, and (iv) as required or
requested by any Governmental Body or representative thereof or pursuant to
legal process; provided, further, that, (A) unless
specifically prohibited by applicable law or court order, Agent, each Lender
and each Transferee shall use reasonable efforts prior to disclosure thereof,
to notify Borrower of the applicable request for disclosure of such non-public
information (1) by a Governmental Body or representative thereof (other than
any such request in connection with an examination of the financial condition
of Agent, a Lender or a Transferee by such Governmental Body) or (2) pursuant
to legal process, and (B) in no event shall Agent, any Lender or any Transferee
be obligated to return any materials furnished by any Loan Party other than
those documents and instruments in possession of Agent or any Lender in order
to perfect its Lien on the Collateral once the Obligations have been paid in
full and this Agreement has been terminated. 


                    (b)
Each Loan Party acknowledges that from time to time financial advisory,
investment banking and other services may be offered or provided to such Loan
Party or one or more of its Affiliates (in connection with this Agreement or
otherwise) by Agent, any Lender or by one or more Subsidiaries or Affiliates of
Agent or such Lender and each Loan Party hereby authorizes Agent and each
Lender to share any information delivered to Agent or such Lender by such Loan
Party and its Subsidiaries pursuant to this Agreement, or in connection with
the decision of Agent or such Lender to enter into this Agreement, to any such
Subsidiary or Affiliate of Agent or such Lender, it being understood that any
such Subsidiary or Affiliate of Agent or any Lender receiving such information
shall be bound by the provision of this Section 16.16 as if it were a Lender
hereunder. Such authorization shall survive the repayment of the Obligations
and the termination of this Agreement.


          16.17 Publicity.


          Each
Loan Party hereby authorizes Agent to make appropriate announcements of the
financial arrangement entered into among Loan Parties, Agent and Lenders,
including, without limitation, announcements which are commonly known as
tombstones, in such publications and to such selected parties as Agent shall in
its sole and absolute discretion deem appropriate. In addition, each Loan Party
authorizes Agent to include Loan Party’s name and logo in select transaction
profiles and client testimonials prepared by Agent for use in publications,
company brochures and other marketing materials of Agent.


          16.18 Patriot Act
Notice.


          Each
Lender subject to the USA Patriot Act of 2001 (31 U.S.C. 5318 et seq.) hereby
notifies the Loan Parties that, pursuant to Section 326 thereof, it is required
to obtain, verify and record information that identifies the Loan Parties,
including the name and address of each Loan Party and other information
allowing such Lender to identify the Loan Parties in accordance with such act.


 [SIGNATURE PAGE FOLLOWS]


91






          Each
of the parties has signed this Agreement as of the day and year first above
written.


	
  

 	
  

 	
  

 
	
  

 	
 BORROWER:

 
	
  

 	
  

 
	
  

 	
 WINNEBAGO INDUSTRIES, INC.

 
	
  

 	
  

 
	
  

 	
 By:

 	
 /s/ Sarah
 Nielsen



 
	
  

 	
 Name:

 	
 Sarah
 Nielsen



 
	
  

 	
 Title:

 	
 VP-CFO



 


 [SIGNATURES
CONTINUED ON NEXT PAGE]


[Signature Page to
Burdale/Winnebago LSA]






 [SIGNATURES
CONTINUED FROM PREVIOUS PAGE]


	
  

 	
  

 
	
  

 	
 AGENT AND LENDERS:

 
	
  

 	
  

 
	
  

 	
 BURDALE CAPITAL FINANCE, INC.,

 
	
  

 	
 as Agent and
 a Lender

 
	
  

 	
  

 
	
  

 	
 /s/ Phillip
 R. Webb



 
	
  

 	
 Phillip R.
 Webb

 
	
  

 	
 Director

 
	
  

 	
  

 
	
  

 	
 /s/ Anthony
 Lavinio



 
	
  

 	
 Anthony
 Lavinio

 
	
  

 	
 Senior Vice
 President

 


[Signature Page to
Burdale/Winnebago LSA]






EXHIBIT
A

to

LOAN AND SECURITY AGREEMENT


FORM OF NOTICE OF CONVERSION


	
  

 	
  

 
	
 To:

 	
 Burdale
 Capital Finance, Inc., as Agent

 
	
  

 	
 300 First
 Stamford Place

 
	
  

 	
 Stamford,
 Connecticut 06902

 
	
  

 	
 Attention:
 Account Manager - Winnebago

 



Ladies and
Gentlemen:


          Reference
is made to the Loan and Security Agreement, dated as of October 13, 2009, by
and among WINNEBAGO INDUSTRIES, INC., a corporation organized under the laws of
the State of Iowa (“Borrower”), BURDALE CAPITAL FINANCE, INC., as agent
for the financial institutions party thereto as lenders (in such capacity,
“Agent”), and the financial institutions party thereto as lenders
(collectively, “Lenders”) (as such Loan and Security Agreement is amended,
modified or supplemented, from time to time, the “Loan Agreement”). Capitalized
terms used and not defined herein shall have the meaning ascribed to them in
the Loan Agreement.


          Borrower
hereby gives irrevocable notice, pursuant to Section 2.2(e) of the Loan
Agreement, of its request to, on [INSERT DATE], convert a [Base Rate Loan in
the amount of $__________ to a [XX] day LIBOR Rate Loan in the amount of
$__________][a [XX] day LIBOR Rate Loan in the amount of $__________ to a Base
Rate Loan in the amount of $__________].


          Borrower
hereby (a) represents and warrants that all of the conditions contained in
Section 8.2 of the Loan Agreement have been satisfied on and as of the date
hereof, and will continue to be satisfied on and as of the date of the
conversion requested hereby, before and after giving effect thereto; (b)
represents and warrants that Section 2.2(b) of the Loan Agreement shall have
been satisfied on and as of the date hereof, and will continue to be satisfied
on and as of the date of the conversion requested hereby, before and after
giving effect thereto; and (c) reaffirms the continuation of Agent’s Liens, on
behalf of itself and Lenders, pursuant to the Loan Agreement.


Date: __________ __, 20__


	
  

 	
  

 	
  

 	
  

 
	
  

 	
 Very truly
 yours,

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 [BORROWER]

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
  



 	
  

 
	
  

 	
 Name:

 	
  



 	
  

 
	
  

 	
 Title:

 	
  



 	
  

 
















EXHIBIT
B

to

LOAN AND SECURITY AGREEMENT


FORM OF COMPLIANCE CERTIFICATE


	
  

 	
  

 
	
 To:

 	
 Burdale Capital Finance, Inc., as Agent

 
	
  

 	
 300  First Stamford Place

 
	
  

 	
 Stamford, Connecticut 06902

 
	
  

 	
 Attention: Account
 Manager - Winnebago

 



Ladies and
Gentlemen:


          I
hereby certify to you pursuant to Section [9.7][9.8][9.9] of the Loan Agreement
(as defined below) as follows:


                    1.
I am the duly elected Chief Financial Officer of WINNEBAGO INDUSTRIES, INC., a
corporation organized under the laws of the State of Iowa (“Borrower”).
Capitalized terms used herein without definition shall have the meanings given
to such terms in the Loan and Security Agreement, dated as of October 13, 2009,
by and among Burdale Capital Finance, Inc., as agent for the financial
institutions party thereto as lenders (in such capacity, “Agent”), the
financial institutions party thereto as lenders (collectively, “Lenders”)
and Borrower (as such Loan and Security Agreement is amended, modified or
supplemented, from time to time, the “Loan Agreement”). Capitalized
terms used and not defined herein shall have the meaning ascribed to them in
the Loan Agreement.


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


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


                    4.
I further certify that, based on the review described in Section 2 above,
neither Borrower nor any of its Subsidiaries has at any time during or at the
end of such fiscal [month][quarter][year], except as specifically described on
Schedule II attached hereto or as permitted by the Loan Agreement, done any of
the following:


	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 Changed its
 respective corporate name, or transacted business under any trade name,
 style, or fictitious name, other than those previously described to you and
 set forth in the Loan Agreement or the Other Documents.

 


95










	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 Changed the
 location of its chief executive office, changed its jurisdiction of
 incorporation, changed its type of organization or changed the location of or
 disposed of any of its properties or assets (other than as permitted by
 Section 4.3 of the Loan Agreement), or established any new asset locations which
 have not already been disclosed in writing to you in accordance with the
 terms of the Loan Agreement.

 
	
  

 	
  

 	
  

 
	
  

 	
 (c)

 	
 Permitted or
 suffered to exist any security interest in or liens on any of its properties,
 whether real or personal, other than a Permitted Encumbrance.

 
	
  

 	
  

 	
  

 
	
  

 	
 (d)

 	
 Has any
 knowledge of any of the following not previously disclosed to Agent:
 (i) the occurrence of any event involving the release, spill or
 discharge, threatened or actual, of any material amount of Hazardous Material
 which constitutes non-compliance with or a violation of any applicable
 Environmental Law, (ii) any investigation, proceeding, complaint, order,
 directive, claim, citation or notice with respect to: (A) any
 non-compliance with or violation of any applicable Environmental Law by
 Borrower or such Subsidiary in any material respect or (B) the release,
 spill or discharge, threatened or actual, of any material amount of Hazardous
 Material, other than in the ordinary course of business and other than as
 permitted under any applicable Environmental Law.

 



                    [5.[
To be completed if Section 6.9 amended to
add financial covenants to Loan Agreement — Attached hereto as
Schedule III are the calculations used in determining, as of the end of such
fiscal month or quarter, as applicable, whether Borrower and its Subsidiaries
are in compliance with the covenants set forth in Section 6.9 of the Loan
Agreement for such fiscal [month][quarter][year], as applicable.]


                    The
foregoing certifications are made and delivered this ____ day of ___________,
20__.


	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 Very truly
 yours,

 
	
  

 	
  

 
	
  

 	
 WINNEBAGO
 INDUSTRIES, INC.

 
	
  

 	
  

 
	
  

 	
 By: 

 	
  

 
	
  

 	
 Name:

 	
  

 
	
  

 	
 Title: 

 	
  

 


96






SCHEDULE I TO COMPLIANCE CERTIFICATE


DEFAULTS AND EVENTS OF DEFAULT


 [to be provided by Borrower]


97






SCHEDULE II TO COMPLIANCE CERTIFICATE


CHANGES IN REPRESENTATIONS


 [to be provided by Borrower]


98






SCHEDULE III TO COMPLIANCE CERTIFICATE


Covenant 6.9 – Financial Covenant
Calculations


TO BE COMPLETED IF SECTION 6.9 AMENDED TO ADD
FINANCIAL COVENANTS TO LOAN AGREEMENT


99






EXHIBIT
16.3

to

LOAN AND SECURITY AGREEMENT


FORM OF COMMITMENT TRANSFER SUPPLEMENT


                    This
COMMITMENT TRANSFER SUPPLEMENT (this “Supplement”) dated as of
_____________, 20__ is made between _______________________ (the “Assignor”)
and ____________________ (the “Assignee”).


W I T N
E S S E T H:


                    WHEREAS,
BURDALE CAPITAL FINANCE, INC., in its capacity as agent pursuant to the Loan
Agreement (as hereinafter defined) acting for and on behalf of the financial
institutions which are parties thereto as lenders (in such capacity, “Agent”),
and the financial institutions which are parties to the Loan Agreement as
lenders (individually, each a “Lender” and collectively, “Lenders”)
have entered or are about to enter into financing arrangements pursuant to
which Agent and Lenders may make loans and advances and provide other financial
accommodations to WINNEBAGO INDUSTRIES, INC., an Iowa corporation (“Borrower”),
as set forth in the Loan and Security Agreement, dated as of October 13, 2009,
by and among Borrower, Agent and Lenders (as the same now exists or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced, the “Loan Agreement”; all capitalized terms used but not
defined herein shall have the meanings given to them in the Loan Agreement),
and the other agreements, documents and instruments referred to therein or at
any time executed and/or delivered in connection therewith or related thereto
(all of the foregoing, together with the Loan Agreement, as the same now exist
or may hereafter be amended, modified, supplemented, extended, renewed,
restated or replaced, being collectively referred to herein as the “Financing
Agreements”);


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


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


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


                    16.19 Commitment Transfer.


                    (a)
Subject to the terms and conditions of this Supplement, (i) Assignor
hereby sells, transfers and assigns to Assignee, and (ii) Assignee hereby
purchases, assumes and undertakes from Assignor, without recourse and without
representation or warranty (except as provided in this Supplement) an interest
in (A) the Commitment and each of the Committed Advances of Assignor and (B)
all related rights, benefits, obligations, liabilities and indemnities of the
Assignor under and 


100






in connection
with the Loan Agreement and the other Financing Agreements, so that after
giving effect thereto, the Commitment of Assignee and the Commitment of
Assignor shall be as set forth below and the Pro Rata Share of Assignee shall
be _______ percent (__%) and the Pro Rata Share of Assignor shall be _______
percent (__%).


                    (b)
With effect on and after the Effective Date (as defined in Section 5 hereof),
Assignee shall be a party to the Loan Agreement and succeed to all of the
rights and be obligated to perform all of the obligations of a Lender under the
Loan Agreement, including the requirements concerning confidentiality and the
payment of indemnification, with a Commitment in an amount equal to the
Assigned Commitment Amount. Assignee agrees that it will perform in accordance
with their terms all of the obligations which by the terms of the Loan
Agreement are required to be performed by it as a Lender. It is the intent of
the parties hereto that the Commitment of Assignor shall, as of the Effective
Date, be reduced by an amount equal to the Assigned Commitment Amount and
Assignor shall relinquish its rights and be released from its obligations under
the Loan Agreement to the extent such obligations have been assumed by
Assignee.


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


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


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


                    16.21 Reallocation of Payments. Any interest,
fees and other payments accrued to the Effective Date with respect to the
Commitment, Committed Advances and outstanding Letters of Credit shall be for
the account of Assignor. Any interest, fees and other payments accrued on and
after the Effective Date with respect to the Assigned Commitment Amount shall
be for the account of Assignee. Each of Assignor and Assignee agrees that it
will hold in trust for the other party any interest, fees and other amounts
which it may receive to which the other party is entitled pursuant to the preceding
sentence and pay to the other party any such amounts which it may receive
promptly upon receipt.


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


101






                    16.23 Effective Date; Notices.


                    (a)
As between Assignor and Assignee, the effective date for this Supplement shall
be _______________, 20__ (the “Effective Date”); provided, that,
the following conditions precedent have been satisfied on or before the
Effective Date:


	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

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

 
	
  

 	
  

 
	
  

 	
           (iv)
 Assignee shall pay to Assignor all amounts due to Assignor under this
 Supplement.

 



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


                    16.24 Agent. 


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


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


                    16.25 Withholding Tax. Assignee (a) represents
and warrants to Assignor, Agent and Borrower that under applicable law and
treaties no tax will be required to be withheld by Assignee, Agent or Borrower
with respect to any payments to be made to Assignee hereunder or under any of
the Financing Agreements, (b) agrees to furnish (if it is organized under the
laws of any jurisdiction other than the United States or any State thereof) to
Agent and Borrower prior to the time that Agent or any Borrower is required to
make any payment of principal, interest or fees hereunder, duplicate executed
originals of either U.S. Internal Revenue Service Form W-8ECI or U.S. Internal
Revenue Service Form W-8BEN (wherein Assignee claims entitlement to the
benefits of a tax treaty that provides for a complete exemption from U.S.
federal income withholding tax on all payments hereunder) and agrees to provide
new Forms W-8ECI or W-8BEN upon the expiration of any previously delivered form
or comparable statements in accordance with applicable U.S. law and regulations
and amendments thereto, duly executed and completed by Assignee, and (c) agrees
to comply with all applicable U.S. laws and regulations with regard to such
withholding tax exemption.


102






                    16.26 Representations and Warranties.


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


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


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


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


103






                    16.28 Miscellaneous


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


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


                    
(c) Assignor and Assignee shall each pay its own costs and expenses incurred in
connection with the negotiation, preparation, execution and performance of this
Supplement, except as provided in the Loan Agreement.


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


                    
(e) THIS SUPPLEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAW OF THE STATE OF NEW YORK, Assignor and Assignee each irrevocably submits to
the non-exclusive jurisdiction of any State or Federal court sitting in New
York, New York over any suit, action or proceeding arising out of or relating
to this Supplement and irrevocably agrees that all claims in respect of such
action or proceeding may be heard and determined in such New York State or
Federal court. Each party to this Supplement hereby irrevocably waives, to the
fullest extent it may effectively do so, the defense of an inconvenient forum
to the maintenance of such action or proceeding.


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


[Signature Page Follows]


104






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


	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  [ASSIGNOR]

 
	
  

 	
  

 
	
  

 	
 By: 

 	
  

 
	
  

 	
 Name: 

 	
  

 
	
  

 	
 Title:

 	
  

 
	
  

 	
  

 
	
  

 	
  [ASSIGNEE]

 
	
  

 	
  

 
	
  

 	
 By:

 	
  

 
	
  

 	
 Name:

 	
  

 
	
  

 	
 Title:

 	
  

 



 [Consent
of Borrower, if applicable]






SCHEDULE 1


NOTICE OF COMMITMENT TRANSFER SUPPLEMENT


____________________, 20__              


Attn.:
_______________________


         
           Re:          
WINNEBAGO
INDUSTRIES, INC.  


Ladies and
Gentlemen:


                    BURDALE
CAPITAL FINANCE, INC., in its capacity as agent pursuant to the Loan Agreement
(as hereinafter defined) acting for and on behalf of the financial institutions
which are parties thereto as lenders (in such capacity, “Agent”), and the
financial institutions which are parties to the Loan Agreement as lenders (individually,
each a “Lender” and collectively, “Lenders”) have entered or are about to enter
into financing arrangements pursuant to which Agent and Lenders may make loans
and advances and provide other financial accommodations to WINNEBAGO
INDUSTRIES, INC., an Iowa corporation (“Borrower”), as set forth in the Loan
and Security Agreement, dated as of October 13, 2009, by and among Borrower,
Agent and Lenders (as the same now exists or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced, the “Loan
Agreement”), and the other agreements, documents and instruments referred to
therein or at any time executed and/or delivered in connection therewith or
related thereto (all of the foregoing, together with the Loan Agreement, as the
same now exist or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced, being collectively referred to herein as the
“Financing Agreements”). Capitalized terms not otherwise defined herein shall
have the respective meanings ascribed thereto in the Loan Agreement.


                    1.
We hereby give you notice of, and request your consent to, the assignment by
__________________________ (the “Assignor”) to ___________________________ (the
“Assignee”) such that after giving effect to the assignment Assignee
shall have an interest equal to _______ percent (__%) of the total Commitments
pursuant to the Commitment Transfer Supplement attached hereto (the “Supplement”).
We understand that the Assignor’s Commitment shall be reduced by
$_____________.


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


Schedules to Loan and Security Agreement
[Winnebago]






                    3.     The
following administrative details apply to Assignee:


	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (A)

 	
 Notice
 address:

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Assignee
 name: 

 	
  



 	
  

 
	
  

 	
  

 	
 Address:

 	
  



 	
  

 
	
  

 	
  

 	
 Attention:

 	
  



 	
  

 
	
  

 	
  

 	
 Telephone: 

 	
  



 	
  

 
	
  

 	
  

 	
 Telecopier:

 	
  



 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (B)

 	
 Payment
 instructions:

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Account No.:
 

 	
  



 	
  

 
	
  

 	
  

 	
 At: 

 	
  



 	
  

 
	
  

 	
  

 	
  

 	
  



 
	
  

 	
  

 	
 Reference: 

 	
  



 	
  

 
	
  

 	
  

 	
 Attention:

 	
  



 	
  

 



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


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


	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 Very truly
 yours,

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 [NAME OF ASSIGNOR]

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
  



 	
  

 
	
  

 	
 Name:

 	
  



 	
  

 
	
  

 	
 Title:

 	
  



 	
  

 






	
  

 	
  

 	
  

 	
  

 	
  

 
	
 ACKNOWLEDGED
 AND

 ASSIGNMENT CONSENTED TO:

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 BURDALE
 CAPITAL FINANCE, INC., as Agent

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 By:

 	
  



 	
  

 
	
 Name:

 	
  



 	
  

 
	
 Title:

 	
  



 	
  

 


Schedules to Loan and Security Agreement
[Winnebago]






Schedule C-1 Commitments


	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 Lender 

 	
  

 	
  

 	
  

 	
 Commitment 

 	
  

 
	
 Burdale Capital Finance, Inc.

 	
  

 	
  

 	
 $20,000,000

 
	
 Total:

 	
  

 	
  

 	
 $20,000,000

 


Schedules to Loan and Security Agreement
[Winnebago]






Schedule R-1 Real Property


605 West
Crystal Lake Road, Forest City, Iowa 50436 


2100 West
Corporate Drive, Charles City, Iowa


1280 Olive
Avenue, Hampton, Iowa


Schedules to Loan and Security Agreement
[Winnebago]






Schedule 4.5 Equipment and Inventory
Locations


	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Name/Address of Lessor or

 Address

 	
  

 	
  

 	
 Owned/Leased/Third Party

 	
  

 	
  

 	
 Third Party, as Applicable

 
	
 Winnebago Industries, Inc.,

 2100 West Corporate Drive,

 Charles City, IA

 	
  

 	
  

 	
 Owned by WGO

 	
  

 	
  

 	
 N/A

 
	
 Winnebago Industries, Inc.,

 1280 Olive Avenue, Hampton, IA

 	
  

 	
  

 	
 Owned by WGO

 	
  

 	
  

 	
 N/A

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 


Schedules to Loan and Security Agreement [Winnebago]






Schedule 4.15(c)   Location of
Executive Offices


Chief Executive Office: 


605 West
Crystal Lake Road, Forest City, Iowa 50436 


Mailing
address: P.O. Box 152, Forest City, IA 50436.


Schedules to Loan and Security Agreement
[Winnebago]











Schedule 5.2(a) Jurisdictions of Qualification and Good Standing


 


Iowa 


California


Missouri


Rhode Island


Washington


North Carolina


 



 











Schedule 5.2(b) Subsidiaries


None.


Schedules to Loan and Security Agreement
[Winnebago]









Schedule 5.4 Federal Tax Identification
Number


42-0802678


Schedules to Loan and Security Agreement
[Winnebago]






Schedule 5.6 Prior Names


	
  

 	
  

 	
  

 
	
 Date

 	
  

 	
 Prior Name

 
	
  

 	
  

 	
  

 
	
   February 12,
 1958

 	
  

 	
 Modernistic
 Industries of Iowa

 
	
  

 	
  

 	
  

 
	
   February 28,
 1961

 	
  

 	
 Winnebago
 Industries, Inc.

 
	
  

 	
  

 	
  

 


Schedules to Loan and Security Agreement
[Winnebago]







Schedule 5.7 Environmental


None.


Schedules to Loan and Security Agreement
[Winnebago]






Schedule 5.8(b) Litigation/Commercial Tort
Claims/Money Borrowed


None.


Schedules to Loan and Security Agreement
[Winnebago]






Schedule 5.8(d)

Plans


Employee
Benefit Plans


	
  

 	
  

 	
  

 
	
 Active
 Plans:

 
	
  

 	
 1.

 	
 Winnebago
 Industries, Inc. Profit Sharing and Deferred Savings and Investment Plan

 


Schedules to Loan and Security Agreement
[Winnebago]






Schedule 5.9 Intellectual Property, Source
Code, Escrow Agreements


Intellectual Property


	
 

	
 


	
A.

	
Trademarks








	
 

	
 

	
 


	
 

	
1.

	
Owned








	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Trademark

	
 

	
Registration 

 Number

	
 

	
Registration

 Date

	
 

	
Expiration

 Date

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
GPGO

	
 

	
3680134

	
 

	
9/8/2009

	
 

	
9/8/2019

	
 

	
 


	
IDEAL
 REST

	
 

	
3680133

	
 

	
9/8/2009

	
 

	
9/8/2019

	
 

	
 


	
SIGHTSEER

	
 

	
2751901

	
 

	
8/19/2003

	
 

	
8/19/2013

	
 

	
 


	
REST
 EASY

	
 

	
2701992

	
 

	
4/1/2003

	
 

	
4/1/2013

	
 

	
 


	
ONE
 PLACE

	
 

	
2692547

	
 

	
3/4/2003

	
 

	
3/4/2013

	
 

	
 


	
SUNOVA

	
 

	
2563720

	
 

	
1/1/2002

	
 

	
1/1/2012

	
 

	
 


	
SUNSTAR

	
 

	
2564622

	
 

	
4/23/2002

	
 

	
4/23/2012

	
 

	
 


	
VISTA

	
 

	
2564621

	
 

	
4/23/2002

	
 

	
4/23/2012

	
 

	
 


	
RV
 RADIO W/LOGO

	
 

	
2743995

	
 

	
7/29/2003

	
 

	
7/29/2013

	
 

	
 


	
ERA

	
 

	
3468503

	
 

	
7/15/2008

	
 

	
7/15/2018

	
 

	
 


	
MAXUM
 CHASSIS

	
 

	
3450010

	
 

	
6/17/2008

	
 

	
6/17/2018

	
 

	
 


	
DESTINATION

	
 

	
3411270

	
 

	
4/15/2008

	
 

	
4/15/2018

	
 

	
 


	
TOUR BUILT PROUDLY 

 BY WINNEBAGO IND.

	
 

	
3254539

	
 

	
6/26/2007

	
 

	
6/26/2017

	
 

	
 


	
LATITUDE

	
 

	
3340586

	
 

	
11/20/2007

	
 

	
11/20/2017

	
 

	
 


	
BENCHMARK

	
 

	
3173015

	
 

	
11/21/2006

	
 

	
11/21/2016

	
 

	
 


	
ROAD DESIGN

	
 

	
3172965

	
 

	
11/21/2006

	
 

	
11/21/2016

	
 

	
 


	
ITASCA

	
 

	
3172964

	
 

	
11/21/2006

	
 

	
11/21/2016

	
 

	
 


	
SUNRISE

	
 

	
3072644

	
 

	
3/28/2006

	
 

	
3/28/2016

	
 

	
 


	
IMPULSE

	
 

	
3268838

	
 

	
7/24/2007

	
 

	
7/24/2017

	
 

	
 


	
WINNEBAGO VOYAGE

	
 

	
3052707

	
 

	
1/31/2006

	
 

	
1/31/2016

	
 

	
 


	
THERMO-PANEL

	
 

	
3128401

	
 

	
8/15/2006

	
 

	
8/15/2016

	
 

	
 


	
ELLIPSE

	
 

	
3096191

	
 

	
5/23/2006

	
 

	
5/23/2016

	
 

	
 


	
OUTLOOK

	
 

	
3021576

	
 

	
11/29/2005

	
 

	
11/29/2015

	
 

	
 


	
TRIMLINE

	
 

	
3230201

	
 

	
4/17/2007

	
 

	
4/17/2017

	
 

	
 


	
NAVION

	
 

	
2998807

	
 

	
9/20/2005

	
 

	
9/20/2015

	
 

	
 


	
VIEW

	
 

	
2978015

	
 

	
7/26/2005

	
 

	
7/26/2015

	
 

	
 


	
VOYAGE

	
 

	
3102623

	
 

	
6/13/2006

	
 

	
6/13/2016

	
 

	
 


	
ASPECT

	
 

	
2977946

	
 

	
7/26/2005

	
 

	
7/26/2015

	
 

	
 


	
CAMBRIA

	
 

	
2972440

	
 

	
7/19/2005

	
 

	
7/19/2015

	
 

	
 


	
QUICK CONNECT

	
 

	
2943172

	
 

	
4/19/2005

	
 

	
4/19/2015

	
 

	
 


	
QUICK PORT

	
 

	
2898995

	
 

	
11/2/2004

	
 

	
11/2/2014

	
 

	
 


	
EVOLUTION

	
 

	
3013613

	
 

	
11/8/2005

	
 

	
11/8/2015

	
 

	
 


	
MERIDIAN ITASCA

	
 

	
2919427

	
 

	
1/18/2005

	
 

	
1/18/2015

	
 

	
 


	
FREEDOM

	
 

	
2816111

	
 

	
2/24/2004

	
 

	
2/24/2014

	
 

	
 


	
WINNEBAGO INDUSTRIES

	
 

	
2706495

	
 

	
4/15/2003

	
 

	
4/15/2013

	
 

	
 


	
SUPER STRUCTURE

	
 

	
2690367

	
 

	
2/25/2003

	
 

	
2/25/2013

	
 

	
 


	
RV RADIO

	
 

	
2682021

	
 

	
1/28/2003

	
 

	
1/28/2013

	
 

	
 





Schedules
to Loan and Security Agreement [Winnebago]







	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
CHALET

	
 

	
2285158

	
 

	
10/12/1999

	
 

	
Renewal in process

	
 


	
THE MOST RECOGNIZED 

 NAME IN MOTOR HOMES

	
 

	
2635922

	
 

	
10/15/2002

	
 

	
10/15/2012

	
 

	
 


	
SIGHTSEER

	
 

	
2742541

	
 

	
7/29/2003

	
 

	
7/29/2013

	
 

	
 


	
ITASCA

	
 

	
2329254

	
 

	
3/14/2000

	
 

	
3/14/2010

	
 

	
 


	
POWERLINE ENERGY

 MANAGEMENT SYSTEM

	
 

	
2508202

	
 

	
11/13/2001

	
 

	
11/13/2011

	
 

	
 


	
HORIZON

	
 

	
2444955

	
 

	
4/17/2001

	
 

	
4/17/2011

	
 

	
 


	
JOURNEY

	
 

	
2474109

	
 

	
7/31/2001

	
 

	
7/31/2011

	
 

	
 


	
STOREMORE

	
 

	
2279013

	
 

	
9/21/1999

	
 

	
Renewal in process

	
 


	
RIALTA

	
 

	
1907271

	
 

	
7/25/1995

	
 

	
7/25/2015

	
 

	
 


	
WINNEBAGO

	
 

	
1908349

	
 

	
8/1/1995

	
 

	
8/1/2015

	
 

	
 


	
WINNEBAGO

	
 

	
1907269

	
 

	
7/25/1995

	
 

	
7/25/2015

	
 

	
 


	
VECTRA

	
 

	
1780170

	
 

	
7/6/1993

	
 

	
7/6/2013

	
 

	
 


	
SPIRIT

	
 

	
1526756

	
 

	
2/28/1989

	
 

	
2/28/2019

	
 

	
 


	
SUNDANCER

	
 

	
1135087

	
 

	
5/13/1980

	
 

	
5/13/2010

	
 

	
 


	
WINNEBAGO

	
 

	
1008781

	
 

	
4/15/1975

	
 

	
4/15/2015

	
 

	
 








	
 

	
 

	
 

	
 

	
 

	
 


	
Trademark

 Application

	
 

	
Application/Serial

 Number

	
 

	
Application

 Date

	
 


	
 

	
 

	
 

	
 

	
 

	
 


	
ACCESS BUILT PROUDLY 

 BY WINNEBAGO IND.

	
 

	
76/698,858

	
 

	
4/18/2005

	
 


	
 

	
 

	
 

	
 

	
 

	
 


	
INTELLISENSE ONE TOUCH 

 CONTROL

	
 

	
76/697,825

	
 

	
In process

	
 


	
 

	
 

	
 

	
 

	
 

	
 


	
MERIDIAN

	
 

	
76/695,975

	
 

	
3/21/2005

	
 


	
 

	
 

	
 

	
 

	
 

	
 


	
VIA

	
 

	
76/677,329

	
 

	
5/23/2007

	
 


	
 

	
 

	
 

	
 

	
 

	
 


	
REYO

	
 

	
76/677,309

	
 

	
5/23/2007

	
 








	
 

	
 

	
 


	
 

	
2.

	
Licensed


	
 

	
 

	
 


	
 

	
 

	
Trademark


	
 

	
 

	
NONE


	
 

	
 

	
 


	
 

	
 

	
Trademark Application


	
 

	
 

	
NONE





Schedules
to Loan and Security Agreement [Winnebago]







	
 

	
 

	
 


	
B.

	
Patents

	
 


	
 

	
 

	
 


	
 

	
1.

	
Owned






	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Patent

 Description

	
 

	
 

	
Registration

 Number

	
 

	
Registration

 Date

	
 

	
Expiration

 Date

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Recreation Vehicle With

 Slide-Out Room

	
 

	
5,785,373

	
 

	
7/8/1998

	
 

	
5/30/2016

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Vehicle With Slide-Out 

 Room

	
 

	
6,048,016

	
 

	
4/11/2000

	
 

	
5/30/2016

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Latch Mechanism For

 A Door

	
 

	
6,006,560

	
 

	
12/28/1999

	
 

	
11/20/2017

	
 








	
 

	
 

	
 


	
 

	
Patent
 Application


	
 

	
 

	
 


	
 

	
NONE

	
 


	
 

	
 

	
 


	
C.

	
Copyrights

	
 


	
 

	
 

	
 


	
 

	
NONE

	
 


	
 

	
 

	
 


	
D.

	
Other

	
 


	
 

	
 

	
 


	
 

	
NONE

	
 


	
 

	
 

	
 


	
E.

	
License
 Agreements


	
 

	
 

	
 


	
 

	
NONE

	
 





Schedules
to Loan and Security Agreement [Winnebago]







Schedule 5.10 Licenses and Permits


None.


Schedules to Loan and Security Agreement [Winnebago]






Schedule 5.14 Labor Disputes


None.


Schedules to Loan and Security Agreement [Winnebago]






Schedule 5.24 Capital Structure



	
  

 	
  

 	
  

 
	
 8/29/09

 	
 In thousands

 
	
 Outstanding:

 	
  

 	
  

 
	
 Common Shares

 	
 51,776

 	
  

 
	
 Treasury Shares

 	
  (22,690)

 	
  

 
	
  

 	
 29,086

 	
  

 






	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Top 10 Investors as of June 30, 2009 per
 13F Filings

 
	
  

 	
  

 	
  

 
	
 Investor Name

 	
 Position

 (in thousands)

 	
 % of Total

 
	
 Fidelity Management & Research

 	
 4,038

 	
  

 	
 13.9

 	
  

 
	
 T. Rowe Price Associates, Inc.

 	
 3,141

 	
  

 	
 10.8

 	
  

 
	
 Royce & Associates, LLC

 	
 3,082

 	
  

 	
 10.6

 	
  

 
	
 Barclays Global Investors, N.A.

 	
 1,753

 	
  

 	
 6.0

 	
  

 
	
 Franklin Advisory Services, LLC

 	
 1,642

 	
  

 	
 5.6

 	
  

 
	
 Columbia Wanger Asset Management, L.P.

 	
 1,483

 	
  

 	
 5.1

 	
  

 
	
 Vanguard Group, Inc.

 	
 1,214

 	
  

 	
 4.2

 	
  

 
	
 Phillips, Hager & North Investment
 Management Ltd.

 	
 1,106

 	
  

 	
 3.8

 	
  

 
	
 TAMRO Capital Partners, LLC

 	
 1,021

 	
  

 	
 3.5

 	
  

 
	
 AllianceBernstein L.P.

 	
      862

 	
  

 	
 3.0

 	
  

 
	
 Sub-Total

 	
 19,342

 	
  

 	
  

 	
  

 


Schedules to Loan and Security Agreement
[Winnebago]






Schedule 5.25 Bank Accounts


	
  

 	
  

 	
  

 
	
 Name and Address of Bank

 	
 Account No.

 	
 Purpose

 
	
   Wells
 Fargo

   666 Walnut Street

   Des Moines, IA 50309

 	
   xxxxxx

 	
   Short-term
 money market fund

   Workers Comp Trust Account

   Cash Concentration

   Blocked account for cash collection/line of credit

   Van Wart Clearing Account

 
	
  

 	
  

 	
  

 
	
   MBT
 Investment Center

   245 E J Street

   Forest City, IA 50436

 	
   xxxxxx

 	
   General
 Office

   WIT Depository

   Customer Service

   Local Disbursement

   WIT Disbursement

   Payroll

 



          B.
Part 2 - Investment and Other Accounts




	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Name and Address of Broker

 or Other Institution

 	
 Account No.

 	
 Purpose

 	
 Types of

 Investments

 	
 Balance as of

 
	
   Bank
 of America

   200 N. College St

   3rd Floor NC1-004-03-45

   Charlotte NC 28255

 	
   xxxxxx

 	
   Short-term
 money   market fund

 	
   Tax-exempt

   money market

 	
   33,696,099.10

 
	
   UBS

   1000 Harbor Blvd

   7th Floor

   Weehawken NJ 07086

 	
   xxxxxx

 	
   Long-term

   investments

 	
   Auction
 Rate

   Security portfolio

 	
   13,500,000

 
	
   RBC

   500 W. Madison

   Ste 2500

   Chicago IL 60661

 	
   xxxxxxx

 	
   Long-term

   investments

 	
   Auction
 Rate

   Security portfolio

 	
   20,200,000

 


Schedules to Loan and Security Agreement [Winnebago]






Schedule 7.1 (b) - Designated Assets
Permitted to be Sold


Winnebago
Corporate Jet:


	
  

 	
  

 
	
  

 	
 Astra SP

 
	
  

 	
 Registration
 # N331SK

 
	
  

 	
 Serial #
 1125-063

 
	
  

 	
 Serial #
 96213 (left engine)

 
	
  

 	
 Serial #
 96214 (right engine). 

 


Schedules to Loan and Security Agreement [Winnebago]






Schedule 7.2 Existing Liens


	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 Name and Address

 of Secured Party

 	
  

 	
  

 	
 Description

 of

 Collateral

 	
  

 	
  

 	
 File No. of Financing

 Statement/Jurisdiction

 (Optional)

 
	
  

 	
 ALLIANCE
 LEASING, INC. as assigned from FIRST AMERICAN COMMERCIAL BANCORP, INC.

 	
  

 	
  

 	
 Leased
 equipment

 	
  

 	
  

 	
 P538061,
 P542153

 
	
  

 	
 WINMARK
 CAPITAL CORPORATION

 	
  

 	
  

 	
 Leased
 equipment

 	
  

 	
  

 	
 X078879

 
	
  

 	
 WINMARK
 CAPITAL CORPORATION

 	
  

 	
  

 	
 Leased
 equipment

 	
  

 	
  

 	
 P548421-8

 
	
  

 	
 WINMARK
 CAPITAL CORPORATION

 	
  

 	
  

 	
 Leased
 equipment

 	
  

 	
  

 	
 P571311-2

 




Schedules to Loan and Security Agreement
[Winnebago]








Schedule 7.8 Existing Indebtedness


Direct Debt


	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Name/Address of

 Payee

 	
  

 	
  

 	
 Principal Balance

 as of

 	
  

 	
  

 	
 Nature of Debt

 	
  

 	
  

 	
 Term

 	
  

 
	
 UBS AG

 	
  

 	
  

 	
 $9,100,000

 	
  

 	
  

 	
  

 	
 Borrowings
 against Auction Rate Securities of $13.5M held by UBS AG owned by WGO

 	
  

 	
  

 	
 June 30, 2010 

 	
  

 
	
 Xerox

 	
  

 	
  

 	
 $58,000

 	
  

 	
  

 	
  

 	
 Equipment
 capital lease (printer)

 	
  

 	
  

 	
 March 2014

 	
  

 
	
 Employees/Retirees

 	
  

 	
  

 	
 $26,152,000

 	
  

 	
  

 	
  

 	
 Deferred
 compensation benefits

 	
  

 	
  

 	
 2036

 	
  

 
	
 Employees/Retirees

 	
  

 	
  

 	
 $3,259,000

 	
  

 	
  

 	
  

 	
 SERP
 benefits

 	
  

 	
  

 	
 2040

 	
  

 
	
 Employees/Retirees

 	
  

 	
  

 	
 $35,311,000

 	
  

 	
  

 	
  

 	
 Postretirement
 healthcare benefits

 	
  

 	
  

 	
 2040

 	
  

 




Schedules to Loan and Security Agreement
[Winnebago]