EXHIBIT 10.13


 


SECOND AMENDED AND
RESTATED

CREDIT AGREEMENT


 


 


among


 


 


MONACO COACH
CORPORATION

ROYALE COACH BY MONACO, INC.

MCC ACQUISITION CORPORATION

OUTDOOR RESORTS OF NAPLES, INC.

OUTDOOR RESORTS OF LAS VEGAS, INC.

and

OUTDOOR RESORTS MOTORCOACH COUNTRY CLUB, INC.


 


as Borrowers


 


 


THE LENDERS NAMED
HEREIN,

as Lenders


 


 


U.S. BANK NATIONAL
ASSOCIATION,

as Administrative Lender,

Swingline Lender, and

L/C Bank


 


and




BANK OF AMERICA, N.A.,

as Syndication Agent


 


 


TOTAL COMMITMENT —
$105,000,000


 


 


NOVEMBER 17, 2004


 





















 


CONTENTS


 


	
  ARTICLE I.

  	
  DEFINITIONS

  	
  1

  
	
   

  	
   

  	
   

  
	
  1.1

  	
  DEFINED
  TERMS

  	
  1

  
	
   

  	
   

  	
   

  
	
  1.2

  	
  ACCOUNTING
  AND FINANCIAL DETERMINATIONS

  	
  19

  
	
   

  	
   

  	
   

  
	
  1.3

  	
  HEADINGS

  	
  19

  
	
   

  	
   

  	
   

  
	
  1.4

  	
  ADDITIONAL
  DEFINITION PROVISIONS

  	
  19

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  II.

  	
  APPOINTMENT
  OF BORROWERS’ AGENT; JOINT AND SEVERAL LIABILITY

  	
  19

  
	
   

  	
   

  	
   

  
	
  2.1

  	
  APPOINTMENT OF AGENT

  	
  19

  
	
   

  	
   

  	
   

  
	
  2.2

  	
  AUTHORIZED
  REPRESENTATIVES

  	
  20

  
	
   

  	
   

  	
   

  
	
  2.3

  	
  JOINT
  AND SEVERAL LIABILITY; RIGHTS OF CONTRIBUTION

  	
  20

  
	
   

  	
   

  	
   

  
	
  ARTICLE III.

  	
  THE CREDITS

  	
  22

  
	
   

  	
   

  	
   

  
	
  3.1

  	
  REVOLVING LOANS

  	
  22

  
	
   

  	
   

  	
   

  
	
  3.2

  	
  SWING LOANS

  	
  24

  
	
   

  	
   

  	
   

  
	
  3.3

  	
  [RESERVED]

  	
  25

  
	
   

  	
   

  	
   

  
	
  3.4

  	
  LETTER OF CREDIT FACILITY

  	
  25

  
	
   

  	
   

  	
   

  
	
  3.5

  	
  INTEREST/FEES

  	
  28

  
	
   

  	
   

  	
   

  
	
  3.6

  	
  INTEREST OPTIONS

  	
  29

  
	
   

  	
   

  	
   

  
	
  3.7

  	
  OTHER PAYMENT TERMS

  	
  30

  
	
   

  	
   

  	
   

  
	
  3.8

  	
  FUNDING

  	
  31

  
	
   

  	
   

  	
   

  
	
  3.9

  	
  PRO RATA TREATMENT

  	
  32

  
	
   

  	
   

  	
   

  
	
  3.10

  	
  CHANGE OF CIRCUMSTANCES

  	
  32

  
	
   

  	
   

  	
   

  
	
  3.11

  	
  TAXES ON PAYMENTS

  	
  34

  
	
   

  	
   

  	
   

  
	
  3.12

  	
  FUNDING LOSS INDEMNIFICATION

  	
  34

  



 


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  ARTICLE IV.

  	
  ADMINISTRATION

  	
  35

  
	
   

  	
   

  	
   

  
	
  4.1

  	
  STATEMENTS

  	
  35

  
	
   

  	
   

  	
   

  
	
  4.2

  	
  PAYMENTS

  	
  35

  
	
   

  	
   

  	
   

  
	
  ARTICLE V.

  	
  SECURITY

  	
  36

  
	
   

  	
   

  	
   

  
	
  5.1

  	
  GRANT OF SECURITY
  INTEREST

  	
  36

  
	
   

  	
   

  	
   

  
	
  5.2

  	
  PERFECTION; DUTY OF CARE

  	
  36

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI.

  	
  REPRESENTATIONS
  AND WARRANTIES

  	
  37

  
	
   

  	
   

  	
   

  
	
  6.1

  	
  LEGAL STATUS; SUBSIDIARIES

  	
  37

  
	
   

  	
   

  	
   

  
	
  6.2

  	
  DUE AUTHORIZATION;
  NO VIOLATION

  	
  37

  
	
   

  	
   

  	
   

  
	
  6.3

  	
  GOVERNMENT
  APPROVAL, REGULATION

  	
  37

  
	
   

  	
   

  	
   

  
	
  6.4

  	
  VALIDITY; ENFORCEABILITY

  	
  38

  
	
   

  	
   

  	
   

  
	
  6.5

  	
  CORRECTNESS OF
  FINANCIAL STATEMENTS

  	
  38

  
	
   

  	
   

  	
   

  
	
  6.6

  	
  TAXES

  	
  38

  
	
   

  	
   

  	
   

  
	
  6.7

  	
  LITIGATION, LABOR
  CONTROVERSIES

  	
  38

  
	
   

  	
   

  	
   

  
	
  6.8

  	
  TITLE TO PROPERTY, LIENS

  	
  38

  
	
   

  	
   

  	
   

  
	
  6.9

  	
  ERISA

  	
  39

  
	
   

  	
   

  	
   

  
	
  6.10

  	
  OTHER OBLIGATIONS

  	
  39

  
	
   

  	
   

  	
   

  
	
  6.11

  	
  ENVIRONMENTAL MATTERS

  	
  39

  
	
   

  	
   

  	
   

  
	
  6.12

  	
  NO
  BURDENSOME RESTRICTIONS; NO DEFAULTS

  	
  39

  
	
   

  	
   

  	
   

  
	
  6.13

  	
  NO OTHER VENTURES

  	
  39

  
	
   

  	
   

  	
   

  
	
  6.14

  	
  INSURANCE

  	
  40

  
	
   

  	
   

  	
   

  
	
  6.15

  	
  FORCE MAJEURE

  	
  40

  
	
   

  	
   

  	
   

  
	
  6.16

  	
  INTELLECTUAL PROPERTY

  	
  40

  
	
   

  	
   

  	
   

  
	
  6.17

  	
  CERTAIN INDEBTEDNESS

  	
  40

  
	
   

  	
   

  	
   

  
	
  6.18

  	
  SOLVENCY

  	
  41

  



 


ii





















 


	
  6.19

  	
  CHIEF
  EXECUTIVE OFFICE AND OTHER LOCATIONS

  	
  41

  
	
   

  	
   

  	
   

  
	
  6.20

  	
  FISCAL YEAR

  	
  41

  
	
   

  	
   

  	
   

  
	
  6.21

  	
  COMPLIANCE WITH LAW

  	
  41

  
	
   

  	
   

  	
   

  
	
  6.22

  	
  NO SUBORDINATION

  	
  41

  
	
   

  	
   

  	
   

  
	
  6.23

  	
  TRUTH, ACCURACY OF
  INFORMATION

  	
  41

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII.

  	
  CONDITIONS

  	
  42

  
	
   

  	
   

  	
   

  
	
  7.1

  	
  CONDITIONS OF
  INITIAL EXTENSION OF CREDIT

  	
  42

  
	
   

  	
   

  	
   

  
	
  7.2

  	
  CONDITIONS
  OF EACH EXTENSION OF CREDIT

  	
  43

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII.

  	
  AFFIRMATIVE
  COVENANTS

  	
  43

  
	
   

  	
   

  	
   

  
	
  8.1

  	
  PAYMENTS

  	
  43

  
	
   

  	
   

  	
   

  
	
  8.2

  	
  ACCOUNTING
  RECORDS

  	
  44

  
	
   

  	
   

  	
   

  
	
  8.3

  	
  INFORMATION AND
  REPORTS

  	
  44

  
	
   

  	
   

  	
   

  
	
  8.4

  	
  COMPLIANCE

  	
  45

  
	
   

  	
   

  	
   

  
	
  8.5

  	
  INSURANCE

  	
  45

  
	
   

  	
   

  	
   

  
	
  8.6

  	
  FACILITIES

  	
  46

  
	
   

  	
   

  	
   

  
	
  8.7

  	
  TAXES AND OTHER
  LIABILITIES

  	
  47

  
	
   

  	
   

  	
   

  
	
  8.8

  	
  LITIGATION

  	
  47

  
	
   

  	
   

  	
   

  
	
  8.9

  	
  NOTICE TO
  ADMINISTRATIVE LENDER

  	
  47

  
	
   

  	
   

  	
   

  
	
  8.10

  	
  CONDUCT OF
  BUSINESS

  	
  48

  
	
   

  	
   

  	
   

  
	
  8.11

  	
  PRESERVATION
  OF CORPORATE EXISTENCE, ETC.

  	
  48

  
	
   

  	
   

  	
   

  
	
  8.12

  	
  ACCESS

  	
  48

  
	
   

  	
   

  	
   

  
	
  8.13

  	
  PERFORMANCE
  AND COMPLIANCE WITH OTHER COVENANTS

  	
  49

  
	
   

  	
   

  	
   

  
	
  8.14

  	
  FISCAL YEAR;
  ACCOUNTING PRACTICES

  	
  49

  
	
   

  	
   

  	
   

  
	
  8.15

  	
  ENVIRONMENTAL

  	
  49

  
	
   

  	
   

  	
   

  
	
  8.16

  	
  LIENS

  	
  49

  



 


iii





















 


	
  8.17

  	
  FUTURE
  SUBSIDIARIES

  	
  50

  
	
   

  	
   

  	
   

  
	
  8.18

  	
  USE OF
  PROCEEDS

  	
  50

  
	
   

  	
   

  	
   

  
	
  8.19

  	
  FURTHER
  ASSURANCES

  	
  50

  
	
   

  	
   

  	
   

  
	
  8.20

  	
  LIEN IN REAL
  PROPERTY

  	
  50

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  IX.

  	
  NEGATIVE
  COVENANTS

  	
  50

  
	
   

  	
   

  	
   

  
	
  9.1

  	
  LIENS

  	
  50

  
	
   

  	
   

  	
   

  
	
  9.2

  	
  INDEBTEDNESS

  	
  51

  
	
   

  	
   

  	
   

  
	
  9.3

  	
  RESTRICTED PAYMENTS,
  REDEMPTIONS

  	
  52

  
	
   

  	
   

  	
   

  
	
  9.4

  	
  MERGERS, STOCK
  ISSUANCES, SALE OF ASSETS, ETC.

  	
  52

  
	
   

  	
   

  	
   

  
	
  9.5

  	
  INVESTMENTS

  	
  53

  
	
   

  	
   

  	
   

  
	
  9.6

  	
  CHANGE IN
  NATURE OF BUSINESS

  	
  54

  
	
   

  	
   

  	
   

  
	
  9.7

  	
  PLANS

  	
  54

  
	
   

  	
   

  	
   

  
	
  9.8

  	
  CANCELLATION OF
  INDEBTEDNESS OWED TO IT

  	
  54

  
	
   

  	
   

  	
   

  
	
  9.9

  	
  MARGIN
  REGULATIONS

  	
  55

  
	
   

  	
   

  	
   

  
	
  9.10

  	
  ENVIRONMENTAL

  	
  55

  
	
   

  	
   

  	
   

  
	
  9.11

  	
  TRANSACTIONS
  WITH AFFILIATES

  	
  55

  
	
   

  	
   

  	
   

  
	
  9.12

  	
  NEW
  COLLATERAL LOCATION; NAME CHANGE

  	
  55

  
	
   

  	
   

  	
   

  
	
  9.13

  	
  NO
  SPECULATIVE TRANSACTIONS

  	
  55

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  X.

  	
  FINANCIAL
  COVENANTS

  	
  55

  
	
   

  	
   

  	
   

  
	
  10.1

  	
  LEVERAGE
  RATIO

  	
  55

  
	
   

  	
   

  	
   

  
	
  10.2

  	
  CURRENT RATIO

  	
  56

  
	
   

  	
   

  	
   

  
	
  10.3

  	
  DEBT SERVICE
  COVERAGE RATIO

  	
  56

  
	
   

  	
   

  	
   

  
	
  10.4

  	
  TANGIBLE NET
  WORTH

  	
  56

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  XI.

  	
  EVENTS
  OF DEFAULT

  	
  56

  
	
   

  	
   

  	
   

  
	
  11.1

  	
  EVENTS OF
  DEFAULT

  	
  56

  



 


iv





















 


	
  11.2

  	
  REMEDIES

  	
  58

  
	
   

  	
   

  	
   

  
	
  11.3

  	
  ADMINISTRATIVE
  LENDER AS BORROWERS’ ATTORNEY

  	
  60

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  XII.

  	
  ADMINISTRATIVE
  LENDER

  	
  61

  
	
   

  	
   

  	
   

  
	
  12.1

  	
  ACTIONS

  	
  61

  
	
   

  	
   

  	
   

  
	
  12.2

  	
  RELIANCE BY
  ADMINISTRATIVE LENDER

  	
  62

  
	
   

  	
   

  	
   

  
	
  12.3

  	
  EXCULPATION

  	
  62

  
	
   

  	
   

  	
   

  
	
  12.4

  	
  SUCCESSOR

  	
  62

  
	
   

  	
   

  	
   

  
	
  12.5

  	
  LOANS BY
  ADMINISTRATIVE LENDER; OTHER ACTIONS

  	
  63

  
	
   

  	
   

  	
   

  
	
  12.6

  	
  CREDIT
  DECISIONS

  	
  63

  
	
   

  	
   

  	
   

  
	
  12.7

  	
  SYNDICATION
  AGENT

  	
  63

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  XIII.

  	
  MISCELLANEOUS

  	
  64

  
	
   

  	
   

  	
   

  
	
  13.1

  	
  NOTICES

  	
  64

  
	
   

  	
   

  	
   

  
	
  13.2

  	
  COSTS,
  EXPENSES, ATTORNEYS’ FEES

  	
  64

  
	
   

  	
   

  	
   

  
	
  13.3

  	
  INDEMNIFICATION

  	
  64

  
	
   

  	
   

  	
   

  
	
  13.4

  	
  WAIVERS,
  AMENDMENTS

  	
  65

  
	
   

  	
   

  	
   

  
	
  13.5

  	
  SUCCESSORS
  AND ASSIGNS

  	
  66

  
	
   

  	
   

  	
   

  
	
  13.6

  	
  SETOFF

  	
  68

  
	
   

  	
   

  	
   

  
	
  13.7

  	
  NO WAIVER;
  CUMULATIVE REMEDIES

  	
  68

  
	
   

  	
   

  	
   

  
	
  13.8

  	
  ENTIRE
  AGREEMENT

  	
  69

  
	
   

  	
   

  	
   

  
	
  13.9

  	
  NO THIRD
  PARTY BENEFICIARIES

  	
  69

  
	
   

  	
   

  	
   

  
	
  13.10

  	
  CONFIDENTIALITY

  	
  69

  
	
   

  	
   

  	
   

  
	
  13.11

  	
  TIME

  	
  70

  
	
   

  	
   

  	
   

  
	
  13.12

  	
  SEVERABILITY
  OF PROVISIONS

  	
  70

  
	
   

  	
   

  	
   

  
	
  13.13

  	
  GOVERNING
  LAW

  	
  70

  
	
   

  	
   

  	
   

  
	
  13.14

  	
  SUBMISSION
  TO JURISDICTION

  	
  70

  



 


v





















 


	
  13.15

  	
  WAIVER OF
  JURY TRIAL

  	
  70

  
	
   

  	
   

  	
   

  
	
  13.16

  	
  COUNTERPARTS

  	
  71

  
	
   

  	
   

  	
   

  
	
  13.17

  	
  OREGON
  STATUTORY NOTICE

  	
  71

  



 


 


SCHEDULES


 


	
  I

  	
  Lenders

  
	
  II

  	
  Pricing Schedule

  



 


EXHIBITS


 


	
  A

  	
  Borrowing
  Base Certificate

  
	
  B

  	
  Note
  Forms

  
	
  C

  	
  Notice
  of Authorized Representatives

  
	
  D

  	
  Notice
  of Borrowing

  
	
  E

  	
  Notice of Conversion or Continuation

  
	
  F

  	
  Form
  of Chief Financial Officer’s Certificate

  
	
  G

  	
  Assignment
  Agreement

  



 


vi





















 


SECOND AMENDED AND
RESTATED CREDIT AGREEMENT


 


THIS SECOND
AMENDED AND RESTATED CREDIT AGREEMENT is entered into as of November 17,
2004 by and among MONACO COACH CORPORATION, a Delaware corporation (“Parent”),
ROYALE COACH BY MONACO, INC., an Indiana corporation, MCC ACQUISITION
CORPORATION, a Delaware corporation, OUTDOOR RESORTS OF LAS VEGAS, INC., a
Nevada corporation, OUTDOOR RESORTS MOTORCOACH COUNTRY CLUB, INC., a California
corporation, and OUTDOOR RESORTS OF NAPLES, INC., a Florida corporation, (each
of the foregoing parties individually referred to as “Borrower” and all
collectively referred to as “Borrowers”), each of the financial institutions
from time to time listed on Schedule I attached hereto, as amended
from time to time, and U.S. BANK NATIONAL ASSOCIATION (“U.S. Bank”), as the
administrator for the Lenders (in such capacity, “Administrative Lender”) and
BANK OF AMERICA, N.A. as Syndication Agent.


 


RECITALS


 


Borrowers,
Administrative Lender and certain of the Lenders are parties to that certain
Amended and Restated Credit Agreement dated September 28, 2001 (as amended
by three amendments, the “Existing Credit Agreement”).  The parties desire to make certain changes to
the Existing Credit Agreement, including, among other changes, removing
Washington Mutual Bank as a Lender and adjusting the commitments of the
remaining Lenders.  The parties have
decided, for ease of reference, to amend and restate the Existing Credit
Agreement in its entirety.


 


NOW,
THEREFORE, in consideration of the mutual covenants and promises of the parties
contained herein, Administrative Lender, Lenders and Borrowers hereby agree as
follows:


 


ARTICLE I.               DEFINITIONS


 


1.1                  DEFINED TERMS


 


All terms defined above shall have the meanings
set forth above.  The following terms
shall have the meanings set forth below (with all such meanings to be equally
applicable to both the singular and plural forms of the terms defined):


 


“Accounts” means
(i) all “accounts” as defined in the Code and (ii) all presently
existing and hereafter arising rights to payment of a monetary obligation,
whether or not earned by performance.


 


“Administrative Lender’s
Office” means (i) initially, Administrative Lender’s office
designated as such in Schedule I hereto, and
(ii) subsequently, such other office designated as such, from time to
time, in writing by Administrative Lender to Lenders and Borrower.


 


1





















 


“Agreement”
means this Second Amended and Restated Credit Agreement as amended, modified or
supplemented from time to time.


 


“Applicable Lending Office” means, with respect to each
Lender, (i) initially, its office designated as such in Schedule I
hereto, and (ii) subsequently, such other office designated as such from
time to time in writing by such Lender to Administrative Lender.


 


“Applicable Rate” means, at any date, the lesser of
(a) the Highest Lawful Rate or (b) the following:  (i) with respect to each Prime Rate Loan
(other than a Swing Loan), a per annum rate equal to the Prime Rate in effect
on such date plus the applicable Prime Margin; (ii) with respect to each
Swing Loan, a per annum rate equal to Daily LIBOR plus the applicable LIBOR
Margin; and (iii) with respect to each LIBOR Loan, a per annum rate equal
to the sum of LIBOR plus the applicable LIBOR Margin, both as determined on the
second Business Day before the first day of the applicable Fixed Rate Term.


 


“Approved Dealer Financing Agreement” means (i) agreements
entered into by a Borrower in the ordinary course of business with financial
institutions providing floor-plan financing to customers who purchase finished
goods inventory of Borrowers, and the terms of which agreements (including
repurchase obligations) are both customary in the recreational vehicle industry
and are no less favorable in all material respects to Borrowers that those in
effect as of the Closing Date.


 


“Approved Sale” means a sale by Borrower to a customer
evidenced by an account which has been approved for payment by a lender in
accordance with an Approved Dealer Financing Agreement.


 


“Authorized Representative” means a person designated as such
by Borrowers’ Agent in a Notice of Authorized Representatives delivered to
Administrative Lender.


 


“Available Credit” means, at any time before the Maturity
Date, the amount by which (i) the lesser of (A) the total of the
Revolving Loan Commitments or (B) the Borrowing Base is greater than
(ii) the total of the outstanding principal amount of the Revolving Loans,
the Letter of Credit Obligations and Swing Loans, and on and after the Maturity
Date, Available Credit shall be zero.


 


“Bankruptcy Code” means the Bankruptcy Reform Act, Title 11
of the United States Code, as amended or recodified from time to time,
including (unless the context otherwise requires) any rules or regulations
promulgated thereunder.


 


“Borrowers’ Agent” means Parent in its capacity as agent for
the Borrowers.


 


“Borrowing Base” means, as of any date of determination, an
amount equal to the following amount:


 


(a)           85% of the outstanding Eligible Accounts;


 


2





















 


(b)           plus 50% of Eligible Inventory consisting of raw
materials, valued at the lower of cost (determined on a “first in, first out”
basis) or market value;


 


(c)           plus the lesser of $50,000,000 or 90% of Eligible
Inventory consisting of finished goods, valued at the lower of cost (determined
on a “first in, first out” basis) or market value; and


 


(d)           less the outstanding balance of all accounts payable with
respect to chassis which are secured in whole or in part.


 


“Borrowing Base Certificate” means a certificate
substantially in the form of Exhibit A attached hereto.


 


“Business Day” means (a) for all purposes other than as
covered by clause (b) below, any day other than a Saturday, Sunday or
other day on which commercial banks are authorized or required to be closed in
Portland, Oregon, Minneapolis, Minnesota or New York, New York, and
(b) with respect to all notices, determinations, fundings and payments in
connection with any LIBOR interest selection or LIBOR Loan, any day that is a
Business Day described in clause (a) above and that also is a day for
trading by and between banks in U.S. Dollar deposits in the London interbank
eurocurrency market.


 


“Capitalized Lease” means, as to any Person, any lease of
property by such Person as lessee that would be capitalized on a balance sheet
of such Person prepared in accordance with GAAP.


 


“Capitalized Lease Obligations” means, as to any Person, the
capitalized amount of all obligations of such Person and its subsidiaries under
Capitalized Leases, as determined on a consolidated basis in accordance with
GAAP.


 


“Cash Equivalent Investment” means, at any time: (a) any
evidence of indebtedness, maturing not more than one year after such time,
issued or guaranteed by the United States government; (b) commercial
paper, maturing not more than nine months from the date of issue, which is
issued by (i) a corporation (other than an affiliate of any Obligor)
organized under the laws of any state of the United States or of the District
of Columbia and rated at least A-1 by Standard & Poor’s Corporation or P-1
by Moody’s Investors Service, Inc., or (ii) any Lender (or its
holding company); (c) any certificate of deposit or bankers acceptance,
maturing not more than one year after such time, which is issued by either
(i) a commercial banking institution that is a member of the Federal
Reserve System and has a combined capital and surplus and undivided profits of
not less than $500,000,000, or (ii) any Lender; (d) any repurchase
agreement entered into with any Lender (or other commercial banking institution
of the stature referred to in clause (c)(i)) which (i) is secured by
a fully perfected security interest in any obligation of the type described in
any of clauses (a) through (c), and (ii) has a market value at the time
such repurchase agreement is entered into of not less than 100% of the
repurchase obligation of such Lender (or other commercial banking institution)
thereunder; (e) investments permitted under any investment policy adopted
by


 


3





















 


Borrower and approved by
Administrative Lender; or (f) any mutual fund holding investments
consisting of at least 95% of the foregoing.


 


“Change in Control” means the acquisition by any Person, or
two or more Persons acting in concert to acquire securities, of beneficial
ownership (within the meaning of Rule 13d-3 of the Securities and Exchange
Commission under the Securities Exchange Act of 1934) of 35% or more of the
outstanding shares of voting stock of Borrower.


 


“Change of Law” means the adoption of any Governmental Rule,
any change in any Governmental Rule or the application or requirements thereof
(whether such change occurs in accordance with the terms of such Governmental
Rule as enacted, as a result of amendment or otherwise), any change in the
interpretation or administration of any Governmental Rule by any Governmental
Authority, or compliance by any Lender (or any entity controlling a Lender) with
any request, guideline or directive (whether or not having the force of law) of
any Governmental Authority.


 


“Closing Date” means the date of this Agreement.


 


“Code” means the Uniform Commercial Code of the State of
Oregon, as amended from time to time (including, without limitation, amendments
to defined terms).


 


“Collateral” means all of Borrowers’ assets (except real
property), including, without limitation, (a) all Accounts, Rights to
Payment, General Intangibles, Records, goods, fixtures, inventory, equipment,
money, letter of credit rights, supporting obligations, instruments, chattel
paper, deposit accounts, documents, investment property, and commercial tort
claims; (b) all products, proceeds, rents and profits of the foregoing;
and (c) all of the foregoing, whether now owned or existing or hereafter
acquired or arising or in which Borrower now has or hereafter acquires any
rights.


 


“Commitment” means any obligation of a Lender to extend
credit or any other financial accommodation under any of the Loan Documents.


 


“Commodity Contracts” means commodity options, futures,
swaps, and other similar agreements and arrangements designed to provide
protection against fluctuations in commodity prices.


 


“Contaminant” means any pollutant, hazardous substance, toxic
substance, hazardous waste or other substance regulated or forming the basis of
liability under any Environmental Law.


 


“Contingent Obligation” means, as applied to any Person, any
direct or indirect liability, contingent or otherwise, of such Person with
respect to any Indebtedness or Contractual Obligation of another Person, if the
purpose or intent of such Person in incurring the Contingent Obligation is to
provide assurance to the obligee of such Indebtedness or Contractual Obligation
that such Indebtedness or Contractual Obligation will be paid or discharged, or
that any agreement entered into by such other Person relating to such


 


4





















 


Indebtedness or Contractual
Obligation will be complied with, or that any holder of such Indebtedness or
Contractual Obligation will be protected against loss in respect thereof.  Contingent Obligations of a Person include,
without limitation, (a) the direct or indirect guarantee, endorsement
(other than for collection or deposit in the ordinary course of business),
co-making, discounting with recourse or sale with recourse by such Person of an
obligation of another Person, and (b) any liability of such Person for an
obligation of another Person through any agreement (contingent or otherwise)
(i) to purchase, repurchase or otherwise acquire such obligation or any
security therefor, or to provide funds for the payment or discharge of such
obligation (whether in the form of a loan, advance, stock purchase, capital contribution
or otherwise), (ii) to maintain the solvency or any balance sheet item,
level of income or financial condition of another Person, (iii) to make
take-or-pay or similar payments, if required, regardless of nonperformance by
any other party or parties to an agreement, (iv) to purchase, sell or
lease (as lessor or lessee) property, or to purchase or sell services,
primarily for the purpose of enabling the debtor to make payment of such
obligation or to assure the holder of such obligation against loss, or (v) to
supply funds to or in any other manner invest in such other Person (including,
without limitation, to pay for property or services irrespective of whether
such property is received or such services are rendered), if in the case of any
agreement or liability described under subclauses (i) through (v) of this
sentence the primary purpose or intent thereof is as described in the preceding
sentence.  The amount of any Contingent
Obligation shall be equal to the lesser of (A) the amount payable under
such Contingent Obligation (if quantifiable) or (B) the portion of the
obligation so guaranteed or otherwise supported.


 


“Contractual Obligation” of any Person means any obligation,
agreement, undertaking or similar provision of any security issued by such Person
or of any agreement, undertaking, contract, lease, indenture, mortgage, deed of
trust or other instrument to which such Person is a party or by which it or any
of its property is bound or to which any of its property is subject.


 


“Current Ratio”
means, as of the end of a fiscal quarter, the ratio of (a) Parent’s
consolidated current assets (exclusive of notes and receivables from a
Subsidiary or any affiliate, shareholder, officer, director or employee of any
Borrower or Subsidiary) to (b) the total of Parent’s consolidated
current liabilities and, without duplication, the outstanding principal balance
of the Revolving Loans.


 


“Daily LIBOR” means a rate of interest fluctuating daily
equal on each day to LIBOR that would be applicable on such day for a LIBOR
Loan with a Fixed Rate Term of one month beginning on such day.


 


“Debt” of any Person means, without duplication, (a) all
obligations of such Person for borrowed money and all obligations of such
Person evidenced by bonds, debentures, notes, bills or other similar
instruments; (b) all obligations, contingent or otherwise, relative to the face
amount of all letters of credit, whether or not drawn, and banker’s acceptances
issued for such Person’s account; (c) all Capitalized Lease Obligations and
Other Lease obligations of such Person; (d) whether or not so included as
liabilities in accordance with


 


5





















 


GAAP, all obligations of such
Person to pay the deferred purchase price of property or services, and indebtedness
(excluding prepaid interest thereon) secured by a Lien on property owned or
being purchased by such Person (including indebtedness arising under
conditional sales or other title retention agreements), whether or not such
indebtedness shall have been assumed by such Person or is limited in recourse;
(e) all Contingent Obligations of such Person in respect of any of the
foregoing, other than Contingent Obligations in connection with an Approved
Dealer Financing Agreement; and, with respect to Parent and its Subsidiaries
collectively, (f) the amount by which any outstanding book overdrafts
exceed $10,000,000.  For purposes of
determining the amount of Debt in a circumstance when the creditor has recourse
only to specified assets, the amount shall be the lesser of (i) the amount
of such obligation or (ii) the fair market value of such assets.


 


“Debt Service Coverage Ratio” means, as of the end of a
fiscal quarter, the ratio of (A) EBITDA to (B) the sum
of the following for the twelve month period ending with such quarter:
(i) Parent’s consolidated interest expense; (ii) scheduled principal
payments of Debt of Parent and the Subsidiaries; and (iii) cash dividends
and distributions paid in respect of Parent’s Stock.


 


“Default” means (i) an Event of Default, (ii) an
event or condition that with the giving of notice or the passage of time, or
both, would constitute an Event of Default, or (iii) the filing against
Borrower of a petition commencing an involuntary case under the Bankruptcy
Code.


 


“Disclosure Letter” means the Disclosure Letter from
Borrowers’ Agent to Administrative Lender dated the Closing Date.


 


“EBITDA” means, as of the end of a fiscal quarter, Parent’s
consolidated net income after taxes for the twelve months ending with such
quarter plus (A) the sum of the amounts for such twelve month period
included in determining such net income of (i) interest expense,
(ii) income tax expense, (iii) depreciation expense,
(iv) amortization expense, and (v) extraordinary non-cash losses and
charges and other non-recurring non-cash losses and charges; less
(B) gains on sales of assets (excluding sales of inventory in the ordinary
course of business) and other extraordinary non-cash gains for such twelve
month period.


 


“ERISA” means the Employee Retirement Income Security Act of
1974, as amended or recodified from time to time, including (unless the context
otherwise requires) any rules or regulations promulgated thereunder.


 


“Eligible Accounts” means those Accounts that Administrative
Lender determines in the Good Faith exercise of its discretion to be eligible
for inclusion in the Borrowing Base. 
General criteria for Eligible Accounts may be established and revised
from time to time by Administrative Lender in Good Faith.  Without limiting such discretion as to other
Accounts, the following Accounts shall not be Eligible Accounts:


 


6





















 


(i)            Accounts that do not consist of ordinary
trade accounts receivable owned by Borrower, payable in cash in United States
Dollars and arising out of the final sale of recreational vehicles in the
ordinary course of Borrower’s business as presently conducted by it;


 


(ii)           Accounts with respect to which Borrower
failed to issue an original invoice at the agreed-upon purchase price to the account
debtor promptly after delivering such goods to the account debtor;


 


(iii)          Accounts with respect to which more than
60 days have elapsed since the date of the original invoice applicable thereto;


 


(iv)          Accounts with respect to which the
account debtor is an affiliate of Borrower or any officer, employee, or agent
of the account debtor is an officer, employee or agent of or affiliated with
Borrower directly or indirectly by virtue of family membership, ownership,
control, management or otherwise;


 


(v)           Accounts with respect to which the
account debtor is a Governmental Authority, except for those Accounts as to
which Borrower has assigned its right to payment thereof to Administrative
Lender, and the assignment has been acknowledged, pursuant to the Assignment of
Claims Act of 1940, as amended (31 U.S.C. § 3727);


 


(vi)          the chief executive office of the account
debtor with respect to such Account is not located in the United States of
America, unless (A) the account debtor has delivered to Borrower an irrevocable
letter of credit issued or confirmed by a bank satisfactory to Administrative
Lender, sufficient to cover such Account, in form and substance satisfactory to
Administrative Lender, and, if required by Administrative Lender, the original
of such letter of credit has been delivered to Administrative Lender or
Administrative Lender’s agent and the issuer thereof notified of the assignment
of the proceeds of such letter of credit to Administrative Lender,
(B) such Account is subject to credit insurance payable to Administrative
Lender issued by an insurer and on terms and in an amount acceptable to
Administrative Lender, (C) the account debtor resides in a province of
Canada that recognizes Administrative Lender’s perfection and enforcement
rights as to Accounts by reason of the filing of a UCC financing statement in
Oregon or by reason of other methods of perfection that have been completed, or
(D) such Account is otherwise acceptable in all respects to Administrative
Lender;


 


(vii)         Accounts with respect to which
Administrative Lender does not have a valid and prior, fully perfected Lien or
which are not free of all Liens or other claims (including, without limitation,
claims for rebates, credits, allowances or adjustments, but “other claims”
shall not include Approved Sales) of all other Persons;


 


7





















 


(viii)        Accounts with respect to which the
account debtor is the subject of bankruptcy or a similar insolvency proceeding,
or has made an assignment for the benefit of creditors, or whose assets have
been conveyed to a receiver or trustee, or who has failed or suspended or gone
out of business;


 


(ix)           Accounts with respect to which the
account debtor’s obligation to pay the Accounts is conditional upon the account
debtor’s approval to the extent such Accounts exceed $300,000 in the aggregate;


 


(x)            Accounts from an account debtor to the
extent that the account debtor’s indebtedness to Borrowers (whether evidenced
by such Accounts or otherwise) exceeds an amount which is greater than 25% of
the face amount (less maximum discounts, credits and allowances which may be
taken by or granted to account debtors in connection therewith) of all then
outstanding Eligible Accounts, but only to the extent of the excess over 25%;


 


(xi)           Accounts owed by a particular account
debtor if 25% or more of the aggregate Accounts then owed to Borrowers by that
account debtor and its affiliates are not Eligible Accounts;


 


(xii)          Accounts that represent a prepayment or
progress payment or a partial payment under an installment contract;


 


(xiii)         Accounts that are evidenced by a
promissory note or other instrument; and


 


(xiv)        Accounts with respect to which the
account debtor is located in any jurisdiction requiring the timely filing by
Borrower of a report or document before such Account is created in order to
bring suit or otherwise enforce its remedies against such account debtor in the
courts or through any judicial process of such jurisdiction, unless Borrower
has filed, or is exempt from filing, such a report.


 


Administrative Lender shall have the right,
but not the duty, to declare particular accounts ineligible.  The fact that Administrative Lender has not
declared a particular account ineligible shall not be deemed to be a
determination or representation by Administrative Lender or any Lender as to
the creditworthiness or financial condition of any account debtor.  Because of banking relationships between
account debtors of Borrower and Administrative Lender or a Lender,
Administrative Lender or a Lender may have information about the
creditworthiness of such account debtors; however, neither Administrative
Lender nor any Lender shall have any duty to Borrowers to disclose information
it may have about any of Borrowers’ account debtors and Borrowers shall have no
right to rely upon any action or inaction of Administrative Lender or any
Lender concerning the creditworthiness or financial condition of Borrowers’
account debtors.  BORROWERS
HEREBY COVENANT NOT TO SUE AND TO HOLD HARMLESS LENDERS AND ADMINISTRATIVE
LENDER AND THEIR OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,


 


8





















 


SUCCESSORS AND ASSIGNS FOR AND FROM ANY AND ALL DAMAGES, LIABILITY, OR
CLAIMS OF LIABILITY, WHETHER KNOWN OR UNKNOWN, OF ANY NATURE ARISING OUT OF OR
BASED IN WHOLE OR IN PART UPON ADMINISTRATIVE LENDER’S OR ANY LENDER’S FAILURE
TO DISCLOSE UNFAVORABLE INFORMATION ABOUT AN ACCOUNT DEBTOR OF BORROWER TO
BORROWERS, OR ADMINISTRATIVE LENDER’S FAILURE TO TREAT AS INELIGIBLE THE
ACCOUNT OF AN ACCOUNT DEBTOR OF BORROWER ABOUT WHOM ADMINISTRATIVE LENDER OR
ANY LENDER HAS UNFAVORABLE INFORMATION.


 


“Eligible Inventory”
means inventory that Administrative Lender determines in the Good Faith
exercise of its discretion to be eligible for inclusion in the Borrowing
Base.  General criteria for Eligible
Inventory may be established and revised from time to time by Administrative
Lender in Good Faith.  Without limiting
such discretion as to other inventory, the following inventory shall in any
event not constitute Eligible Inventory:


 


(i)            finished goods that are not held by
Borrower for sale as inventory in the ordinary course of Borrower’s business as
presently conducted by it or that are obsolete, not in good condition, not of
merchantable quality or not salable in the ordinary course of Borrower’s
business or that are subject to defects that would affect their market value;


 


(ii)           inventory that Administrative Lender, in
the Good Faith exercise of its discretion determines to be unacceptable due to
age, type, category or quantity;


 


(iii)          work in process;


 


(iv)          inventory in the possession of any Person
other than Borrower, except (subject to any additional requirements imposed by
Administrative Lender, in the Good Faith exercise of its discretion to protect
Borrower’s title thereto or Administrative Lender’s Lien therein) goods held in
storage solely for the account of Borrower, if the Person in possession has
acknowledged in writing Administrative Lender’s Lien thereon and has not issued
a negotiable document of title as to the goods; provided, that notwithstanding
the foregoing, (A) up to $500,000 of inventory located on premises of
subcontractors and (B) up to $5,000,000 of finished goods inventory located at
trade shows or rallies (or in transit for such purposes) shall not be excluded
from Eligible Inventory by virtue of this item (iv);


 


(v)           inventory with respect to which
Administrative Lender does not have a valid and prior, fully perfected Lien and
that is not free of all other Liens, except Permitted Liens other than
Permitted Liens described in items (g) or (n) of the definition of “Permitted
Liens;”


 


9





















 


(vi)          inventory in the possession of a
warehouseman or other bailee if Administrative Lender has not received a bailee
letter acceptable to Administrative Lender from such warehouseman or bailee;
and


 


(vii)         except as provided in item (iv),
inventory located on premises leased by Borrower if Administrative Lender has
not received a landlord’s waiver acceptable to Administrative Lender with
respect to such premises to the extent the aggregate value of all such
inventory exceeds $5,000,000.


 


“Entity” has the meaning set forth in Section 9.5(h).


 


“Environmental Law” means all applicable federal, state and local
laws, statutes, ordinances and regulations, and any applicable judicial or
administrative interpretation, order, consent decree or judgment, relating to
the regulation and protection of the environment.  Environmental Laws include but are not
limited to the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended (42 U.S.C. § 9601 et seq.); the Hazardous Material Transportation Act, as amended (49
U.S.C. § 180 et seq.); the Federal
Insecticide, Fungicide, and Rodenticide Act, as amended (7 U.S.C. § 136 et seq.); the Resource Conservation and
Recovery Act, as amended (42 U.S.C. § 6901 et
seq.); the Toxic Substance Control Act, as amended (42 U.S.C. § 7401 et seq.); the Clean Air Act, as amended
(42 U.S.C. § 740 et seq.); the
Federal Water Pollution Control Act, as amended (33 U.S.C. § 1251 et seq.); and the Safe Drinking Water Act, as
amended (42 U.S.C. § 300f et seq.),
and their state and local counterparts or equivalents and any applicable
transfer of ownership notification or approval statutes.


 


“Environmental Liabilities and Costs” means, as to any
Person, all liabilities, obligations, responsibilities, Remedial Actions,
losses, damages, punitive damages, consequential damages, treble damages, costs
and expenses (including, without limitation, all fees, disbursements and
expenses of counsel, experts and consultants and costs of investigation and
feasibility studies), fines, penalties, sanctions and interest incurred as a
result of any claim or demand by any other Person, whether based in contract,
tort, implied or express warranty, strict liability, criminal or civil statute,
including, without limitation, any thereof arising under any Environmental Law,
Permit, order or agreement with any Governmental Authority or other Person, and
which relate to any violation or alleged violation of an Environmental Law or a
Permit, or a Release or threatened Release.


 


“Event of Default” has the meaning set forth in
Section 11.1 hereof.


 


“Federal Funds Rate” means, for any day, the weighted average
of the per annum rates on overnight Federal funds transactions with member
banks of the Federal Reserve System arranged by Federal funds brokers as
published by the Federal Reserve Bank of New York for such day (or, if such
rate is not so published for any day, the average rate quoted to Administrative
Lender on such day by three Federal funds brokers of recognized standing
selected by Administrative Lender).


 


10





















 


“Fee Percentage” means the number of basis points determined
in accordance with Schedule II.


 


“Fixed Rate Term” means a period of one, two, three or six
months, as designated by Borrowers’ Agent, during which a Loan bears interest
determined in relation to LIBOR; provided, however, that no Fixed Rate Term may
extend beyond the Maturity Date, and if the last day of a Fixed Rate Term is
not a Business Day, such term shall be extended to the next succeeding Business
Day, or if the next succeeding Business Day falls in another calendar month,
such term shall end on the next preceding Business Day.


 


“Foreign Subsidiary”
means any Subsidiary that is a “controlled foreign corporation” as that term is
used in the Internal Revenue Code.


 


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


 


“General Intangibles” means (i) all “general intangibles”
as defined in the Code and (ii) all tax and duty refunds, registered and
unregistered patents, trademarks, service marks, copyrights, trade names,
applications for the foregoing, trade secrets, goodwill, processes, drawings,
blueprints, customer lists, licenses, whether as licensor or licensee, choses
in action, causes of action and other claims, judgments in favor of Borrower,
leasehold interests in equipment, software and payment intangibles.


 


“Good Faith” means honesty in fact in the conduct or
transaction concerned, without regard to whether standards that might be deemed
commercially reasonable have been observed.


 


“Governmental Authority” means any domestic or foreign
national, state or local government, any political subdivision thereof, any
department, agency, authority or bureau of any of the foregoing, or any other
entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government, including the Federal
Deposit Insurance Corporation, the Federal Reserve Board, the Comptroller of
the Currency, any central bank or any comparable authority.


 


“Governmental Rule” means any applicable law, rule,
regulation, ordinance, order, code interpretation, judgment, decree, directive,
guidelines, policy or similar form of decision of any Governmental Authority.


 


“Highest Lawful Rate” means, at the particular time in
question, the maximum rate of interest which, under applicable law, Lenders are
then permitted to charge Borrowers on the applicable Loan, and if the maximum
rate changes at any time, the Highest Lawful Rate shall increase or decrease,
as the case may be, as of the effective time of each such change, without
notice to Borrowers.


 


“Indebtedness” of any Person means, without duplication,
(a) all liabilities of such Person as determined in accordance with GAAP,
(b) all obligations of such Person created or


 


11





















 


arising under any conditional
sale or other title retention agreement with respect to property acquired by
such Person (even though the rights and remedies of the seller or lender under
such agreement in the event of default are limited to repossession or sale of
such property), (c) all lease obligations of such Person (including,
without limitation, operating leases, Capitalized Leases and Other Leases),
(d) all Contingent Obligations of such Person, (e) all obligations of
such Person to purchase, redeem, retire, defease or otherwise acquire for value
any Stock or Stock Equivalents of such Person with a mandatory repurchase or
redemption date of less than ten years from the date of issuance thereof,
(f) all obligations secured by (or for which the holder of such
obligations has an existing right, contingent or otherwise, to be secured by)
any Lien upon or in property owned by such Person, even though such Person has
not assumed or become liable for the payment of such obligations, (g) all
liabilities of such Person in connection with the failure to make when due any
contribution or payment pursuant to or under any Plan and (h) net
liabilities of such Person under all Commodity Contracts, Interest Rate
Contracts and foreign exchange agreements. 
For purposes of determining the amount of Indebtedness in a circumstance
when the creditor has recourse only to specified assets, the amount shall be
the lesser of (i) the amount of such obligation or (ii) the fair
market value of such assets.


 


“Indemnitees” has the meaning set forth in Section 13.3
hereof.


 


“Indemnified Liabilities” has the meaning set forth in
Section 13.3.


 


“Interest Rate Contracts” means interest rate swap
agreements, interest rate cap agreements, interest rate collar agreements,
interest rate insurance, and other agreements or arrangements designed to
provide protection against fluctuations in interest rates.


 


“Investment” means, relative to any Person, (a) any loan or
advance made by such Person to any other Person (excluding commission, travel
and similar advances to officers and employees made in the ordinary course of
business) and (b) any ownership or similar interest held by such Person in any
other Person.  The amount of any Investment
shall be the original principal or capital amount thereof less all returns of
principal or equity thereon (and without adjustment by reason of the financial
condition of such other Person) and shall, if made by the transfer or exchange
of property other than cash, be deemed to have been made in an original
principal or capital amount equal to the fair market value of such property.


 


“L/C Bank” means U.S. Bank.


 


“Lenders” means, collectively, each of the financial
institutions from time to time listed on Schedule I, L/C Bank and
Swingline Lender, and “Lender” means
any one of the Lenders.


 


“Letter of Credit” means a letter of credit issued by L/C
Bank under the Existing Credit Agreement or pursuant to Section 3.4 hereof.


 


12





















 


“Letter of Credit Agreement” means L/C Bank’s standard letter
of credit application and documentation modified to such extent, if any, as L/C
Bank deems necessary.


 


“Letter of Credit Obligations” means, at any time, all
liabilities at such time of Borrowers to L/C Bank with respect to Letters of
Credit, whether or not any such liability is contingent.


 


“Leverage Ratio” means, as of the end of a fiscal quarter, the
ratio of (i) Debt (exclusive of any Contingent Obligations) as of the end
of such quarter to (ii) EBITDA.


 


“LIBOR” means, for each Fixed Rate Term, the rate per annum
(rounded upward if necessary to the nearest whole 1/100 of 1%) and determined
pursuant to the following formula:


 


	
  LIBOR
  =

  	
  Base LIBOR

  	
   

  
	
   

  	
  100% - LIBOR Reserve
  Percentage

  



 


As used herein, (a) ”Base LIBOR” means the rate
per annum determined by Administrative Lender to be the offered rate for
deposits in U.S. Dollars with a term comparable to such Fixed Rate Term that
appears on Dow Jones Markets Service, Page 3750 (or any successor page) as
the London interbank offered rate for deposits in U.S. Dollars at approximately
11:00 AM (London time) two Business Days prior to the beginning of such Fixed
Rate Term, and (b) ”LIBOR Reserve Percentage” means, for any day, the
aggregate (without duplication) of the maximum rates (expressed as a decimal)
of reserve requirements in effect on such day (including basic, supplemental,
marginal and emergency reserves under any regulations of the Federal Reserve
Board or other Governmental Authority having jurisdiction with respect thereto)
dealing with reserve requirements prescribed for eurocurrency funding
(currently referred to as “Eurocurrency Liabilities” in Regulation D of the
Federal Reserve Board) maintained by a member bank of the Federal Reserve
System.


 


“LIBOR Loan” means any Loan that bears interest with
reference to LIBOR.


 


“LIBOR Margin” means the number of basis points determined in
accordance with Schedule II.


 


“Lien” means any mortgage, deed of trust, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other), security interest, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever, including, without limitation,
any conditional sale or other title retention agreement or the interest of a
lessor under a Capitalized Lease Obligation or any Other Lease.


 


“Loan” means an advance made by a Lender to Borrowers
pursuant to either Section 3.1 or Section 3.2.


 


“Loan Documents” means this Agreement, the Notes, each Letter
of Credit Agreement, each Swap Protection Agreement and each other agreement,
note, notice,


 


13





















 


document, contract or
instrument to which Borrower now or hereafter is a party and that is required
by Lender in connection with this Agreement, a Note, a Letter of Credit
Agreement, a Swap Protection Agreement or any of the obligations arising under
any of such agreements or Notes.


 


“Material Adverse Effect” means a material adverse effect on
(a) the condition (financial or otherwise), business, performance,
operations or properties of Borrowers, (b) the ability of Borrowers to
perform their obligations under the Loan Documents, or (c) the rights and
remedies of any Lender or Administrative Lender under the Loan Documents.


 


“Maturity Date” means the earlier of November 17, 2009
or the due date determined pursuant to Section 11.2.


 


“Note” means either (i) a master promissory note
executed by Borrowers in favor of Administrative Lender for the ratable benefit
of Lenders evidencing Revolving Loans or (ii) a promissory note executed
by Borrowers in favor of Swingline Lender evidencing the Swing Loans, each
substantially in the form of one of the forms attached as Exhibit B.


 


“Notice of Authorized Representatives” has the meaning set
forth in Section 2.2 hereof.


 


“Notice of Borrowing” has the meaning set forth in
Section 3.1(c) hereof.


 


“Notice of Conversion or Continuation” has the meaning set
forth in Section 3.6(c) hereof.


 


“Obligations” means all of Borrowers’ obligations under the
Loan Documents, whether direct or indirect, absolute or contingent, due or to
become due, now existing or hereafter arising.


 


“Obligor” means any Borrower or other Person (other than
Administrative Lender or any Lender) obligated under, or otherwise a party to, any
Loan Document


 


“Organic Documents” means, relative to any Obligor, as
applicable, its certificate or articles of incorporation, its by-laws, its
partnership agreement, its certificate of partnership, certificate of
organization, operating agreement and other limited liability company
organizational documents and all shareholder agreements, voting trusts and
similar arrangements applicable to any of its Stock or Stock Equivalents.


 


“Other Lease” means any synthetic lease, tax retention
operating lease, financing lease or any other lease having substantially the
same economic effect as a conditional sale, title retention agreement or
similar arrangement.


 


“PBGC” means the Pension Benefit Guaranty Corporation
established pursuant to Title IV of ERISA.


 


14





















 


“Permit” means any permit, approval, authorization, license,
variance or permission required from a Governmental Authority under an
applicable Governmental Rule.


 


“Permitted Liens” means (a) Liens arising by operation
of law for taxes, assessments or governmental charges not yet due;
(b) statutory Liens of mechanics, materialmen, shippers, warehousemen,
carriers, and other similar persons for services or materials arising in the
ordinary course of business for which payment is not more than 30 days past
due; (c) nonconsensual Liens incurred or deposits made in the ordinary
course of business in connection with workers’ compensation, unemployment
insurance and other types of social security; (d) Liens for taxes or
statutory Liens of mechanics, materialmen, shippers, warehousemen, carriers and
other similar persons for services or materials that are due but are being
contested in good faith and by appropriate and lawful proceedings promptly
initiated and diligently conducted and for which reserves have been established
to the extent required by GAAP; (e) Liens listed on the Disclosure Letter;
(f) Liens granted in the Loan Documents; (g) purchase money Liens
upon or in any property (other than chassis and real property) of Borrower and
used by Borrower in the ordinary course of business and Liens to secure
Capitalized Lease Obligations and Other Leases and any related payment and
performance obligations if, in each case, the incurrence of such Indebtedness
is permitted by Section 9.2; provided, however, that: (A) any such
Lien is created solely for the purpose of securing Indebtedness representing,
or incurred to finance, refinance or refund, the cost (including, without
limitation, the cost of construction and the reasonable fees and expenses
relating to such Indebtedness) of the property subject thereto, (B) the
principal amount of the Indebtedness secured by such Lien does not exceed such
cost, and (C) such Lien does not extend to or cover any other property
other than such item of property, any improvements on or replacements for such
item, and the proceeds from the disposition of such items; (h) zoning
restrictions, easements, rights of way, survey exceptions, encroachments,
covenants, licenses, reservations, leasehold interests, restrictions on the use
of real property or minor irregularities incident thereto which do not in the
aggregate materially detract from the value or use of the property or assets of
Borrower or impair, in any material manner, the use of such property for the
purposes for which such property is held by Borrower; (i) the interests of
lessors or lessees of property leased pursuant to leases permitted hereunder;
(j) Liens of a depository institution arising solely by virtue of any statutory
or common law provision relating to banker’s liens, rights of setoff, or
similar rights and remedies as to deposit accounts or other funds maintained
with such institution, provided that (A) such deposit account is not a
dedicated cash collateral account and is not subject to restrictions against
access by Borrower in excess of those set forth by regulations promulgated by
any Government Authority, and (B) such deposit account is not intended by
Borrower to provide collateral to the depository institution; (k) judgment
Liens to the extent the existence of such Liens is not an Event of Default
under Section 11.1(g); (l) any of the following arising in the
ordinary course of business: 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;
(m) Liens on chassis purchased by Borrower in the ordinary course of
business; (n) Liens not otherwise included in items (a) through (m) that
do not encumber real property, do not secure, in the aggregate, amounts in
excess of $5,000,000 and do not have priority over the Liens granted by
Borrowers to Administrative Lender; and


 


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(o) Liens on the assets of
an Entity existing on the date an acquisition transaction permitted by
Section 9.5(h) is consummated, provided such Liens were not incurred in
anticipation of the acquisition transaction.


 


“Person” means an individual, partnership, corporation
(including, without limitation, a business trust), joint stock company, limited
liability company, trust, unincorporated association, joint venture or other
entity, or a Governmental Authority.


 


“Plan” means an employee benefit plan, as defined in Section 3(3)
of ERISA, which Borrower maintains, contributes to or has an obligation to
contribute to on behalf of participants who are or were employed by any of
them.


 


“Prime Margin” means the number of basis points determined in
accordance with Schedule II.


 


“Prime Rate” means, for any day, an interest rate per annum
equal to the rate of interest most recently announced within U.S. Bank at its
principal office as its prime rate, with any change in the prime rate to be
effective as of the day such change is announced within U.S. Bank and with the
understanding that the prime rate is one of U.S. Bank’s base rates used to
price some loans and may not be the lowest rate at which U.S. Bank makes any
loan, and is evidenced by the recording thereof in such internal publication or
publications as U.S. Bank may designate.


 


“Prime Rate Loan” means any Loan that bears interest with
reference to the Prime Rate.


 


“Ratable Portion” means, with respect to any Lender:  (i) with respect to Revolving Loans, the
quotient obtained by dividing the total of such Lender’s Revolving Loan
Commitment by the total Revolving Loan Commitments of all Lenders; and
(ii) with respect to all Loans, the quotient obtained by dividing the
total of such Lender’s Revolving Loan Commitment and Swing Loan Commitment by
the Total Commitments.  At all times when
the Total Commitments are zero, all references in the preceding sentence to “Commitments”
shall mean Commitments existing immediately before the Total Commitments became
zero.


 


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


 


“Release” means, as to any Person, any unpermitted spill,
emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal,
leaching or migration of a Contaminant into the environment, and any “release”
as defined in the Comprehensive


 


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Environmental Response,
Compensation, and Liability Act of 1980, as amended (42 U.S.C. § 9601 et seq.).


 


“Remedial Action” means all actions required to clean up,
remove, prevent or minimize a Release or threat of Release or to perform
pre-remedial studies and investigations and post-remedial monitoring and care.


 


“Required Lenders” means any non-defaulting Lender or Lenders
having more than two-thirds of the Total Commitments.


 


“Repurchase Obligations” all obligations of Parent to its
dealers incurred in the ordinary course of Parent’s business to repurchase
recreational vehicles.


 


“Responsible Officer” means any executive officer of
Borrower, including, without limitation, president, chief executive officer,
chief financial officer, treasurer, controller, general counsel, chief risk
management officer, chief environmental officer or any other person performing
responsibilities customarily performed by such officers.


 


“Revolving Loan” means a Loan made by a Lender to Borrowers
pursuant to Section 3.1.


 


“Revolving Loan Commitment” means, as to any Lender, the
amount set opposite such Lender’s name on Schedule I as its “Revolving
Loan Commitment,” as such amount may be reduced from time to time pursuant to
this Agreement or as such amount may be adjusted pursuant to
Section 13.5(c).


 


“Rights to Payment” means all Accounts, General Intangibles,
contract rights, chattel paper, documents, instruments, letters of credit, bankers
acceptances and guaranties, and all present and future liens, security
interests, rights, remedies, title and interest in, to and in respect of
Accounts and other Collateral, and shall include without limitation,
(a) rights and remedies under or relating to guaranties, contracts of
suretyship, letters of credit and credit and other insurance related to the
Collateral, (b) rights of stoppage in transit, replevin, repossession,
reclamation and other rights and remedies of an unpaid vendor, lienor or secured
party, (c) goods described in invoices, documents, contracts or
instruments with respect to, or otherwise representing or evidencing, Accounts
or other Collateral, including without limitation, returned, repossessed and
reclaimed goods, and (d) deposits by and property of account debtors or
other persons securing the obligations of account debtors, moneys, securities,
credit balances, deposits, deposit accounts and other property of Borrower now
or hereafter held or received by or in transit to Administrative Lender, any
Lender or any of their affiliates or at any other depository or other
institution from or for the account of Borrower, whether for safekeeping,
pledge, custody, transmission, collection or otherwise.


 


“Stock” means shares of capital stock, membership interests,
beneficial or partnership interests, participations or other equivalents
(regardless of how designated) of or in a corporation, limited liability
company, partnership or other entity, whether voting or nonvoting, and
includes, without limitation, common stock and preferred stock.


 


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“Stock Equivalents” means all securities convertible into or
exchangeable for Stock and all warrants, options or other rights to purchase or
subscribe for any Stock, whether or not presently convertible, exchangeable or
exercisable.


 


“Subsidiary” means any Person required by GAAP to be included
in the consolidated financial reporting of Borrower.


 


“Swap Protection Agreement” means
an Interest Rate Contract between Borrower and a Lender which is entered into
by Borrower for hedging purposes with respect to transactions engaged in by
Borrower in the ordinary course of business and not for speculative purposes.


 


“Swing Loan” means a Loan made by the Swingline Lender to
Borrowers pursuant to Section 3.2.


 


“Swing Loan Balance Amount” means, at any time, the amount
that the outstanding balance of the Swing Loans would need to be so that
Swingline Lender’s percentage of the aggregate Revolving Loans and Swing Loans
equals the True-Up Percentage.


 


“Swing Loan Commitment” means the amount set opposite the
Swingline Lender’s name on Schedule I as its “Swing Loan
Commitment,” as such amount may be adjusted from time to time pursuant to this
Agreement.


 


“Swingline Lender” means U.S. Bank.


 


“Tangible Net Worth” means the total of Parent’s
shareholders’ equity, plus Debt subordinated in writing to the
Obligations on terms acceptable to Required Lenders in favor of the prior
payment in full in cash of the Obligations, less consolidated intangible
assets.


 


“Total Commitments” means the total of all Revolving Loan
Commitments and the Swing Loan Commitment.


 


“Tranche” means a collective reference to all LIBOR Loans
which have a Fixed Rate Term starting on the same day and ending on the same
day; provided that if, notwithstanding that all
such loans have the same interest term, Borrowers request that a group of such
Loans be treated separately for LIBOR calculation purposes, then each such
separate group of Loans shall be treated as a separate Tranche.


 


“True-Up Event” means the occurrence of both: (i) any of
the following: (A) the aggregate outstanding balance of the Swing Loans
exceeds the Swing Loan Balance Amount by at least $4,000,000 for ten
consecutive Business Days; (B) at any time during the continuation of a
Default the balance of the Swing Loans does not equal the Swing Loan Balance
Amount; or (C) at any time the balance of the Swing Loans exceeds the
Swing Loan Balance Amount and Swingline Lender, by notice to the Administrative
Lender, requests that the amount of the Swing Loans be reduced; and
(ii) receipt by Administrative Lender before


 


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9:00 AM (Portland time) on
a Business Day of a request from a Lender for a settlement under Section
3.2(b).


 


“True-Up Percentage” means, with respect to any Lender, the
quotient obtained by dividing the total of such Lender’s Revolving Loan
Commitment and Swing Loan Commitment by the total of the Revolving Loan
Commitments and Swing Loan Commitments of all Lenders.  At all times when the Total Commitments are
zero, all references in the preceding sentence to “Commitments” shall mean
Commitments existing immediately before the Total Commitments became zero.


 


1.2                                                       ACCOUNTING AND FINANCIAL DETERMINATIONS


 


Any accounting
term used in this Agreement that is not specifically defined herein shall have
the meaning customarily given to it under GAAP, and all accounting
determinations and computations under any Loan Document shall be made, and all
financial statements required to be delivered under any Loan Document shall be
prepared, in accordance with GAAP applied in the preparation of the financial
statements referred to in Section 6.5.


 


1.3                                                       HEADINGS


 


Headings in
this Agreement and each of the other Loan Documents are for convenience of
reference only and are not part of the substance hereof or thereof.


 


1.4                                                       ADDITIONAL DEFINITION PROVISIONS


 


Whenever the
terms “herein,” “hereof,” “hereto,” “hereunder,” “therein,” “thereof,” “thereto,”
“thereunder,” and similar terms contained in this Agreement or any Loan
Document refer to this Agreement or other Loan Document, such terms refer to
the whole of this Agreement or other Loan Document and not to any particular
section, paragraph or provision.  All
other terms contained in this Agreement that are not defined herein shall,
unless the context indicates otherwise, have the meanings provided in the Code
to the extent such terms are defined therein.


 


 


ARTICLE
II.                                          APPOINTMENT OF BORROWERS’ AGENT; JOINT AND SEVERAL
LIABILITY


 


2.1                                                       APPOINTMENT OF AGENT


 


In order to
facilitate and insure prompt and accurate communication among Borrowers and
Lenders and to insure the efficient and effective distribution of proceeds of
the Loans, each Borrower hereby appoints Parent as its agent to perform the
functions of Borrowers’ Agent under the Loan Documents, to take such actions
and make such elections on such Borrower’s behalf as are delegated to the
Borrowers’ Agent in the Loan Documents and for the following purposes: (i)
communicating to and receiving communications from Administrative Lender and
Lenders; (ii) receiving all proceeds of the Loans and making all


 


19





















 


decisions regarding the
distribution of such proceeds among the Borrowers as Borrowers’ Agent, in the
sole exercise of its discretion, deems fair and appropriate; and
(iii) making all decisions and elections with respect to requests for
advances of credit, issuance of Letters of Credit and election of interest
options.


 


2.2                                                       AUTHORIZED REPRESENTATIVES


 


On the Closing
Date, and from time to time subsequent thereto at Borrowers’ Agent’s option,
Borrowers’ Agent shall deliver to Administrative Lender a written notice in the
form of Exhibit C attached hereto, which designates by name one or
more Authorized Representatives and includes each of their respective specimen
signatures (each, a “Notice of Authorized Representatives”).  Administrative Lender shall be entitled to
rely conclusively on the authority of each person designated as an Authorized
Representative in the most current Notice of Authorized Representatives
delivered by Borrowers’ Agent to Administrative Lender, to request borrowings,
to select interest rate options hereunder, and to give to Administrative Lender
such other notices as are specified herein as being made through an Authorized
Representative, until such time as Borrowers’ Agent has delivered to
Administrative Lender, and Administrative Lender has actual receipt of, a new
written Notice of Authorized Representatives. 
Administrative Lender shall have no duty or obligation to Borrowers to
verify the authenticity of any signature appearing on any Notice of Borrowing,
Notice of Conversion or Continuation or any other notice from an Authorized
Representative or to verify the authenticity of any person purporting to be an
Authorized Representative giving any telephonic notice permitted hereby.


 


2.3                                                       JOINT AND SEVERAL LIABILITY; RIGHTS OF CONTRIBUTION


 


(a)           Each
Borrower states and acknowledges that: 
(i) pursuant to this Agreement, Borrowers desire to utilize their
borrowing potential on a consolidated basis to the same extent possible if they
were merged into a single corporate entity; (ii) it has determined that it
will benefit specifically and materially from the advances of credit
contemplated by this Agreement; (iii) it is both a condition precedent to
the obligations of Lenders hereunder and a desire of Borrowers that each Borrower
execute and deliver to Lenders this Agreement; and (iv) Borrowers have
requested and bargained for the structure and terms of the credit contemplated
by this Agreement.


 


(b)           Each
Borrower hereby irrevocably and unconditionally:  (i) agrees that it is jointly and
severally liable to Lenders for the full and prompt payment of the Obligations
and the performance by each Borrower of its obligations hereunder in accordance
with the terms of the Loan Documents; (ii) agrees to fully and promptly perform
all of its obligations under the Loan Documents with respect to each advance of
credit hereunder as if such advance had been made directly to it; and
(iii) agrees as a primary obligation to indemnify Lenders on demand for
and against any loss incurred by Lenders (other than a loss arising any Lender’s
willful misconduct or gross negligence) as a result of any of the obligations
of any one or more of Borrowers under the Loan Documents being or becoming
void, voidable, unenforceable or ineffective for any reason whatsoever, whether
or not known to Lenders or


 


20





















 


any other Person, the amount of
such loss being the amount which Lenders would otherwise have been entitled to
recover from any one or more of Borrowers. 
Each Borrower hereby irrevocably and unconditionally accepts, not merely
as a surety but also as a co-debtor, joint and several liability with each
other Borrower with respect to the payment and performance of all of the
Obligations.  If and to the extent that
any Borrower fails to make any payment with respect to the Obligations as and
when due or to perform any of its obligations in accordance with the terms of
the Loan Documents, then in each such event the other Borrowers will make such
payment with respect to, or perform, such obligations.


 


(c)           The
joint and several liability of each Borrower for the Obligations shall be
absolute and unconditional irrespective of and shall not be subject to any
reduction, limitation, impairment or termination for any reason, including,
without limitation, any claim of waiver, release, surrender, alteration or
compromise, and shall not be subject to any defense or setoff, counterclaim,
recoupment or termination whatsoever by reason of the invalidity, illegality or
unenforceability of any of the Obligations. 
Without limiting the generality of the foregoing, the obligations of
each Borrower shall not be discharged or impaired or otherwise affected by:


 


(i)            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, renewal or alteration of, 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 any Loan Document, including
any increase in the Obligations resulting from the extension of additional
credit to any Borrower;


 


(ii)           any sale, exchange,
release, surrender, realization upon any property at any time pledged or
mortgaged to secure any of the Obligations, and/or any offset 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 any of the
Obligations;


 


(iii)          the failure of Lenders
to assert any claim or demand or to enforce any right or remedy against any
Borrower or other Person under the provisions of any Loan Document;


 


(iv)          any settlement or
compromise of any Obligation, any security therefor or any liability incurred
directly or indirectly in respect thereof, and any subordination of the payment
of any part thereof to the payment of any obligation (whether due or not) of any
other Borrower to creditors of such other Borrower other than any other
Borrower;


 


(v)           any manner of
application of any collateral for the Obligations or proceeds thereof, to any
of the Obligations, or any manner of sale or other disposition


 


21





















 


of any such
collateral for all or any of the Obligations or any other assets of any
Borrower;


 


(vi)          any change,
restructuring or termination of the existence of any Borrower; or


 


(vii)         any other agreement or
circumstance of any nature whatsoever that might in any manner or to any extent
vary the risk of any Borrower, or that might otherwise at law or in equity
constitute a defense available to, or a discharge of, the obligations of any
Borrower, or a defense to, or discharge of, any Borrower or other Person
relating to any of the Obligations.


 


(d)           The
joint and several liability of Borrowers shall continue in full force and
effect notwithstanding any absorption, merger, amalgamation or any other change
whatsoever in the name, membership, constitution or place of formation of any
Borrower.


 


(e)           It
is the intent of each Borrower that the indebtedness, obligations and liability
hereunder of no one of them be subject to challenge on any basis.  Accordingly, as of the date hereof, the
liability of each Borrower under the Loan Documents, together with all of its
other liabilities to all Persons as of the date hereof and as of any other date
on which a transfer is deemed to occur by virtue of this Agreement, calculated
in an amount sufficient to pay its probable net liabilities (including
Contingent Obligations) as the same become absolute and matured (“Dated
Liabilities”) is, and is to be, less than the amount of the aggregate of a fair
valuation of its property as of such corresponding date (“Dated Assets”).  To this end each Borrower hereby
(i) grants to and recognizes in each other Borrower, ratably, rights of
subrogation and contribution in the amount, if any, by which the Dated Assets
of such Borrower, but for the aggregate of subrogation and contribution in its
favor recognized herein, would exceed the Dated Liabilities of such Borrower
or, as the case may be (ii) acknowledges receipt of and recognizes its
right to subrogation and contribution ratably from each of the other Borrowers
in the amount, if any, by which the Dated Liabilities of such Borrower, but for
the aggregate of subrogation and contribution in its favor recognized herein,
would exceed the Dated Assets of such Borrower. 
In recognizing the value of the Dated Assets and the Dated Liabilities,
it is understood that Borrowers will recognize, to at least the same extent of
their aggregate recognition of liabilities hereunder, their rights to
subrogation and contribution hereunder. 
It is a material objective of this Section that each Borrower recognizes
rights to subrogation and contribution rather than be deemed to be insolvent
(or in contemplation thereof) by reason of its joint and several obligations
hereunder.


 


ARTICLE III.             THE CREDITS


 


3.1                                                       REVOLVING LOANS


 


(a)           On
the terms and subject to the conditions contained in this Agreement, each
Lender severally agrees to make loans (each a “Revolving Loan”) to Borrowers
from time to


 


22





















 


time until the Maturity Date in
an aggregate amount not to exceed at any time outstanding such Lender’s
Revolving Loan Commitment; provided, however, that at no time shall any Lender
be obligated to make a Revolving Loan in excess of such Lender’s Ratable
Portion of the Available Credit.  Borrowers
may from time to time borrow, partially or wholly repay its outstanding
borrowings, and reborrow, subject to all the limitations, terms and conditions
contained herein.  The Revolving Loans
shall be evidenced by a Note, and on the Closing Date the promissory note
issued under the Existing Credit Agreement evidencing revolving loans shall be
exchanged for a Note.


 


(b)           If
at any time the Available Credit is negative, Borrowers, without demand or
notice, shall immediately repay that portion of the Revolving Loans necessary
to cause the Available Credit to be zero. 
Borrowers shall repay the outstanding principal balance of the Revolving
Loans, together with all accrued and unpaid interest and related fees on the
Maturity Date.


 


(c)           Borrowers’
Agent, through an Authorized Representative, shall request each advance of a
Revolving Loan by giving Administrative Lender irrevocable written notice or
telephonic notice (confirmed promptly by fax or email), in the form of Exhibit D
attached hereto (each, a “Notice of Borrowing”), which specifies, among other
things:


 


(i)            the aggregate principal amount of the
requested advances (which amount must be a minimum of $1,000,000 and in
integral multiples of $100,000 if a LIBOR Loan);


 


(ii)           the proposed date of borrowing, which
shall be a Business Day;


 


(iii)          whether such advance is to be a Prime
Rate Loan or a LIBOR Loan; and


 


(iv)          if such advance is to be a LIBOR Loan,
the length of the Fixed Rate Term applicable thereto.


 


Each such
Notice of Borrowing must be received by Administrative Lender not later than
9:00 AM (Portland time) (x) on the date of borrowing if a Prime Rate
Loan or (y) at least three Business Days prior to the date of borrowing if
a LIBOR Loan.  Administrative Lender
shall promptly notify each Lender of the contents of each Notice of Borrowing
and of the amount of the advance to be made by such Lender no later than
10:00 AM (Portland time) on the Business Day of receipt for Prime Rate
Loans and 1:00 PM (Portland time) the Business Day after receipt with
respect to LIBOR Loans.


 


(d)           From
time to time before 9:00 AM (Portland time) on any Business Day, Borrowers may
make a voluntary prepayment, in whole or in part, of the outstanding principal
amount of any Revolving Loan(s) that are Prime Rate Loans.  From time to time before 9:00 AM
(Portland time) on any Business Day, Borrowers may make a voluntary prepayment,
in whole or in part, of the outstanding principal amount of any Revolving
Loan(s) that are LIBOR Loans; provided, however, that (i) Borrowers’ Agent
gives


 


23





















 


Administrative Lender notice of
such prepayment before 2:00 PM (Portland time) on the third Business Day before
the date of prepayment (which notice shall be irrevocable), (ii) each
voluntary partial prepayment must be in a minimum of $1,000,000 and in integral
multiples of $100,000; and (iii) any prepayment shall be subject to the
provisions of Section 3.12 hereof.


 


(e)           On
one occasion before the Maturity Date at a time when no Default is continuing,
Borrowers may request an increase in the aggregate Revolving Loan Commitments
of not less than $5,000,000 nor more than $25,000,000 by Borrowers’ Agent
delivering notice of such request to Administrative Lender, which notice may
also identify one or more banks or other institutional lenders Borrowers
believe are willing to become Lenders and make such Revolving Loan Commitments
(“Potential Lenders”).  Lenders shall
have no obligation to grant any such request, and Administrative Lender and
each Lender, in the exercise of their sole discretion, may respond to such
request in such manner and with such conditions (including additional fees) as
they deem appropriate in their sole discretion. 
If any Lender is willing to increase its Revolving Loan Commitment or if
any Potential Lender acceptable to Administrative Lender is willing to make a
Revolving Loan Commitment, Administrative Lender shall advise Borrowers’ Agent
of the terms acceptable to such Lenders and/or Potential Lenders on which the
aggregate Revolving Loans may be increased. 
If Borrowers, in their sole discretion, notify Administrative Lender
that such terms are acceptable, Administrative Lender, at Borrowers’ expense,
shall prepare, and the parties shall sign, an amendment to this Agreement reflecting
such terms.  Upon the execution of any
such amendment and increase in the aggregate Revolving Loan Commitments, the
principal portion of each Lender’s outstanding Revolving Loans shall be
adjusted so that each Lender holds its Ratable Portion of the aggregate
outstanding Revolving Loans.


 


3.2                                                       SWING LOANS


 


(a)           On
the terms and subject to the conditions contained in this Agreement, Swingline
Lender agrees to make loans (each a “Swing Loan”) to Borrowers from time to
time until the Maturity Date in an aggregate amount not to exceed at any time
outstanding the Swing Loan Commitment; provided, however, Swingline Lender, in
its sole discretion, may elect not to make a Swing Loan at any time that the
Available Credit is negative or would become negative upon the making of such
Swing Loan.  Each Swing Loan shall be
made and prepaid upon such notice as the Swingline Lender and Borrowers’ Agent
shall agree; provided that in the absence of a written agreement to the
contrary, Swingline Lender must receive each request for a Swing Loan not later
than 2:00 PM (Portland time) on the Business Day of borrowing and any
prepayment made after 2:00 PM (Portland time) shall be credited on the next
Business Day.  Further, Swingline Lender
may make Swing Loans without notice from Borrowers’ Agent or any Borrower
(A) automatically pursuant to cash management arrangements, if any, made
from time to time by Borrowers with Administrative Lender and/or (B) to
allow Administrative Lender to pay each Lender its share of fees, interest and
other amounts due hereunder to the extent such fees, interest and other amounts
are then due and payable.  All Swing
Loans shall be evidenced by a Note payable to the order of the Swingline
Lender, and on the Closing Date the promissory note issued under the Existing


 


24





















 


Credit Agreement evidencing
swing loans shall be exchanged for a Note. 
Subject to all the limitations, terms and conditions contained herein,
Borrowers may from time to time borrow, partially or wholly repay outstanding
Swing Loans and reborrow Swing Loans. 
Borrower shall repay the outstanding principal balance of the Swing
Loans, together with all accrued and unpaid interest and related fees on the
Maturity Date.  All interest due on the
Swing Loans shall be payable to the Swingline Lender.  After receipt of payment of principal or
interest on the Swing Loans, Administrative Lender will promptly distribute the
same to the Swingline Lender at its Applicable Lending Office.


 


(b)           On
the Business Day that a True-Up Event occurs, regardless of whether the
conditions in Section 7.2 exist and without notice or other action by any
Borrower, the balance of each Lender’s Revolving Loans shall be
increased/decreased and the balance of the Swing Loans decreased/increased by
that amount that results in the Swing Loans equaling the Swing Loan Balance
Amount.  Administrative Lender, by not
later than 11:00 AM (Portland time) on such Business Day, shall notify
each Lender whose Loans are increasing of the principal amount of such
increase, and each such Lender shall, before 2:00 PM (Portland time) on
such Business Day, make available to Administrative Lender, in immediately
available funds, the amount of such increase. 
Administrative Lender shall use such funds to repay the principal amount
of the Loans being reduced.  If Lenders
are prohibited by the Bankruptcy Code or any other Governmental Rule from
making the adjustment required by the first sentence of this Section, each
Lender shall purchase such participation interest in the Loans of the other
Lenders as is necessary to effect the same result among the Lenders as the
adjustment required by the first sentence of this Section.


 


3.3                                                       [RESERVED]


 


3.4                                                       LETTER OF CREDIT FACILITY


 


(a)           On
the terms and subject to the conditions contained in this Agreement, L/C Bank
agrees promptly to issue one or more Letters of Credit at the request of
Borrowers’ Agent for the account of Borrowers from time to time until ten days
before the Maturity Date; provided, however, that L/C Bank shall not issue any
Letter of Credit if:


 


(i)            any order, judgment or decree of any
Governmental Authority or arbitrator of which L/C Bank is aware shall purport
by its terms to enjoin or restrain L/C Bank from issuing such Letter of Credit
or any Governmental Rule applicable to L/C Bank or any request or directive
(whether or not having the force of law) from any Governmental Authority with
jurisdiction over L/C Bank shall prohibit, or request that L/C Bank refrain
from, the issuance of letters of credit generally or such Letter of Credit in
particular or shall impose upon L/C Bank with respect to such Letter of Credit
any restriction or reserve or capital requirement (for which L/C Bank is not
otherwise compensated) not in effect on the date hereof or result in any loss,
cost or expense which (A) was not applicable, in effect or known to L/C Bank on
the Closing Date and which L/C Bank in Good Faith deems material to it, and (B)
the reimbursement of which is not provided for hereunder;


 


25





















 


(ii)           L/C Bank shall have received written
notice from Administrative Lender or Borrowers’ Agent, on or before the
Business Day prior to the requested date of issuance of such Letter of Credit,
that one or more of the applicable conditions contained in Article VII is not
then satisfied;


 


(iii)          after giving effect to the issuance of
such Letter of Credit, the Letter of Credit Obligations exceed $5,000,000;


 


(iv)          the amount of the Letter of Credit
requested exceeds the Available Credit; or


 


(v)           fees due in connection with a requested
issuance have not been paid.


 


None of the Lenders (other than the Lender that is L/C
Bank) shall have any obligation to issue any Letters of Credit.


 


(b)           In
no event shall the expiry date of any Letter of Credit be more than one year
for a standby Letter of Credit or fall after ten days before the Maturity Date.


 


(c)           Prior
to the issuance of each Letter of Credit, Borrowers’ Agent shall have delivered
to L/C Bank, if requested by L/C Bank, a Letter of Credit Agreement, signed by
Borrowers, and such other documents or items as L/C Bank may require pursuant
to the terms thereof.


 


(d)           In
connection with the issuance of each Letter of Credit, Borrowers’ Agent shall
give L/C Bank and Administrative Lender at least three Business Days prior
written notice of the requested issuance of such Letter of Credit.  Such notice shall be irrevocable and binding
on Borrowers and shall specify (i) whether the Letter of Credit is to be a
standby or commercial (documentary) Letter of Credit, (ii) the stated
amount of the Letter of Credit requested, (iii) the date of issuance of
such requested Letter of Credit (which day shall be a Business Day),
(iv) the date on which such Letter of Credit is to expire (which date
shall be a Business Day), (v) the Person for whose benefit the requested
Letter of Credit is to be issued, and (vi) such other terms and conditions
of the proposed Letter of Credit as are requested by Borrowers’ Agent and
acceptable to L/C Bank.  Such notice, to
be effective, must be received by L/C Bank and Administrative Lender not later
than 10:00 AM (Portland time) on the last Business Day on which notice can be
given under the immediately preceding sentence.


 


(e)           Subject
to the terms and conditions of this Section 3.4 and provided that the
applicable conditions set forth in Article VII have been satisfied, L/C Bank
shall, on the requested date, issue a Letter of Credit on behalf of Borrowers
in accordance with the applicable request and L/C Bank’s usual and customary
business practices and in a final form reasonably satisfactory to Borrowers’
Agent.


 


(f)            Immediately
upon L/C Bank’s issuance of a Letter of Credit, L/C Bank shall be deemed to
have sold and transferred to each Lender, and each Lender shall be deemed
irrevocably and unconditionally to have purchased and received from L/C Bank,
without


 


26





















 


recourse or warranty, an
undivided interest and participation, to the extent of such Lender’s Ratable
Portion, in such Letter of Credit and the obligations of Borrowers with respect
thereto (including, without limitation, all Letter of Credit Obligations with
respect thereto) and any security therefor and guaranty pertaining thereto and
each Lender’s Revolving Loan Commitment shall be deemed used to the extent of
such Lender’s Ratable Portion of such Letter of Credit Obligations.


 


(g)           In
determining whether to pay under any Letter of Credit, L/C Bank shall not have
any obligation relative to Lenders other than to confirm that any documents
required to be delivered under such Letter of Credit appear to have been
delivered and that they appear to comply on their face with the requirements of
such Letter of Credit.  Any action taken
or omitted to be taken by L/C Bank under or in connection with any Letter of
Credit, if taken or omitted in the absence of gross negligence or willful
misconduct, shall not put L/C Bank under any resulting liability to any other
Lender.


 


(h)           If
L/C Bank makes any payment under any Letter of Credit, L/C Bank shall promptly
notify Administrative Lender, who shall promptly notify each Lender, and each
Lender shall promptly and unconditionally pay to Administrative Lender for the
account of L/C Bank the amount of such Lender’s Ratable Portion of such payment
in same day funds (and upon receipt, Administrative Lender shall promptly pay
the same to L/C Bank), which payment shall be deemed to be and shall constitute
a Revolving Loan that is a Prime Rate Loan made by such Lender to Borrowers;
provided, however, that if the Swingline Lender so elects, and if a Swing Loan
can be made in such amount, Administrative Lender shall promptly notify the
Swingline Lender of such payment by L/C Bank, and the Swingline Lender shall,
and Borrowers hereby authorize the Swingline Lender to, pay to Administrative
Lender for the account of L/C Bank the amount of such payment in same day
funds, which payment shall be deemed to be and shall constitute a Swing Loan
made by the Swingline Lender to Borrowers. 
The Revolving Loans shall be made, or the Swing Loan may be made, as
contemplated in the preceding sentence notwithstanding Borrowers’ failure to
satisfy the conditions set forth in Section 7.2.  If Administrative Lender so notifies such
Lender prior to 10:00 AM (Portland time) on any Business Day, such Lender shall
make available to Administrative Lender for the account of L/C Bank its Ratable
Portion of the amount of such payment by 1:00 PM (Portland time) on such
Business Day in same day funds.  If and
to the extent such Lender does not make its Ratable Portion available to
Administrative Lender for the account of L/C Bank, such Lender agrees to repay
to Administrative Lender for the account of L/C Bank on demand such amount
together with interest thereon at the Federal Funds Rate for each day from such
date until the date paid.  The failure of
any Lender to make available to Administrative Lender for the account of L/C
Bank its Ratable Portion of any such payment shall not relieve any other Lender
of its obligations hereunder.


 


(i)            The
obligations of Lenders to make payments to Administrative Lender for the
account of L/C Bank with respect to Letters of Credit shall be irrevocable and
not subject to any qualification or exception whatsoever and shall be made in
accordance with the terms and conditions of this Agreement under all
circumstances (except as expressly provided in Section 3.4(g)), including,
without limitation, any of the following circumstances:


 


27





















 


(i)            any lack of validity or enforceability of
any of the other Loan Documents;


 


(ii)           the existence of any claim, setoff,
defense or other right which Borrowers may have at any time against a
beneficiary named in a Letter of Credit, any transferee of any Letter of Credit
(or any Person for whom any such transferee may be acting), Administrative
Lender, any Lender or any other Person, whether in connection with this
Agreement, any Letter of Credit, the transactions contemplated herein or any
unrelated transactions (including, without limitation, any underlying
transaction between Borrower and the beneficiary named in any Letter of
Credit);


 


(iii)          any draft, certificate or any other
document presented under the Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect; or


 


(iv)          the occurrence of any Default.


 


3.5                  INTEREST/FEES


 


(a)           Interest.  The outstanding principal balance of each
Loan shall bear interest at the Applicable Rate.  The foregoing notwithstanding, the rate of
interest applicable at all times during the continuation of an Event of Default
shall be a fluctuating rate per annum equal to the Prime Rate in effect from
time to time, plus 200 basis points.  All
fees, expenses and other amounts not paid when due shall bear interest (from
the date due until paid) at the rate set forth in the preceding sentence.


 


(b)           Letter
of Credit Fees.  With respect to each
Letter of Credit, upon the issuance, renewal and/or amendment thereof,
Borrowers shall pay to Administrative Lender, for the ratable benefit of
Lenders, the following fees, each of which shall be nonrefundable even if any
Letter of Credit is terminated or canceled before its stated expiration date:


 


(i)            with respect to each Letter of Credit
that is a standby letter of credit, a fee equal to the face amount thereof (or,
with respect to an amendment increasing the face amount, the increase in the
face amount only) multiplied by a rate per annum equal to the then applicable
LIBOR Margin for Revolving Loans for a period equal to the term of such Letter
of Credit (or, with respect to an amendment increasing the term, the increase
in the term only); and


 


(ii)           with respect to each Letter of Credit
that is a commercial (documentary) Letter of Credit, a fee equal to the greater
of $350 or a percentage of the face amount thereof equal to the then applicable
LIBOR Margin for Revolving Loans for the period it is outstanding.


 


In addition, upon the occurrence of any other activity
with respect to any Letter of Credit, Borrowers shall pay to L/C Bank a fee
determined in accordance with L/C Bank’s standard fees and charges then in
effect for such activity.


 


28





















 


(c)           Administrative Lender’s Fees.  Borrowers shall pay to Administrative Lender,
for Administrative Lender’s own account, the fees set forth in that certain fee
letter from U.S. Bank to Borrowers’ Agent dated November 12, 2004.


 


(d)           Unused Line Fee.  On the last day of each calendar quarter
beginning December 31, 2004 and on the Maturity Date, Borrowers shall pay
to Administrative Lender, for the ratable benefit of Lenders, an unused line
fee equal to (i) the amount by which the Revolving Loan Commitments are greater
than the total of the average daily outstanding balance of the Revolving Loans
and the average daily face amount of outstanding Letters of Credit for such
quarter or period multiplied by (ii) a per annum rate equal to the
Fee Percentage.  On the last day of each
calendar quarter beginning December 31, 2004 and on the Maturity Date,
Borrowers shall pay to Administrative Lender, for the benefit of the Swingline
Lender, an unused line fee equal to (i) the amount by which the Swing Loan
Commitment is greater than the total of the average daily outstanding balance
of the Swing Loans for such quarter or period multiplied by (ii) a
per annum rate equal to the Fee Percentage.


 


(e)           Computation and Payment.  All interest and per annum fees shall be
computed on the basis of a 360-day year, actual days elapsed, except interest
on Prime Rate Loans shall be computed on the basis of a 365/366-day year,
actual days elapsed.  Interest on Prime
Rate Loans shall be payable monthly, in arrears, on the first day of each month
and on the Maturity Date.  Interest on
LIBOR Loans shall be paid on the last day of each Fixed Rate Term, at the end
of the third month with respect to each Fixed Rate Term of six months and on
the Maturity Date.


 


3.6                  INTEREST OPTIONS


 


(a)           Election.  Subject to the requirement that each LIBOR
Loan be in a minimum amount of $1,000,000 and in integral multiples of $100,000
and the limitation in Section 3.6(b) regarding the number of Tranches
outstanding at any time, (i) except as otherwise provided herein, at any
time when a Default is not continuing Borrowers’ Agent may convert all or any
portion of a Prime Rate Loan to a LIBOR Loan for a Fixed Rate Term designated
by Borrowers’ Agent, and (ii) at any time Borrowers’ Agent may convert all
or a portion of a LIBOR Loan at the end of the Fixed Rate Term applicable
thereto to a Prime Rate Loan or, if no Default is continuing, to a LIBOR Loan
for a new Fixed Rate Term designated by Borrowers’ Agent.  If Borrowers’ Agent has not made the required
interest rate conversion or continuation election prior to the last day of any
Fixed Rate Term, Borrowers shall be deemed to have elected to convert such
LIBOR Loan to a Prime Rate Loan.


 


(b)           Maximum Number of Tranches.  At no time shall there be more than ten
Tranches outstanding at any time.


 


(c)           Notice to Administrative Lender.  Borrowers’ Agent shall request each interest
rate conversion or continuation by giving Administrative Lender irrevocable
written notice or telephonic notice (confirmed promptly in writing), in the
form of Exhibit E attached


 


29





















 


hereto (a “Notice of Conversion
or Continuation”), that specifies, among other things:  (i) the Loan to which such Notice of
Conversion or Continuation applies; (ii) the principal amount that is the
subject of such conversion or continuation; (iii) the proposed date of
such conversion or continuation, which shall be a Business Day; and
(iv) if such Notice pertains to a LIBOR Loan, the length of the applicable
Fixed Rate Term.  Any such Notice of
Conversion or Continuation must be received by Administrative Lender not later
than 9:00 AM (Portland time) (i) at least one Business Day prior to
the effective date of any Prime Rate interest selection, and (ii) at least
three Business Days prior to the effective date of any LIBOR interest
selection.  Administrative Lender shall
promptly notify each Lender of the contents of each such Notice of Conversion
or Continuation, or if timely notice is not received from Borrowers’ Agent
prior to the last day of any Fixed Rate Term, of the automatic conversion of
such LIBOR Loan to a Prime Rate Loan.


 


3.7                                                       OTHER PAYMENT TERMS


 


(a)           Automatic Debit.  Administrative Lender may, and Borrowers
hereby authorize Administrative Lender to, debit any deposit account of
Borrower with Administrative Lender for all payments of principal, interest,
fees and other amounts due under the Loan Documents as they become due,
provided that Administrative Lender shall first debit Borrowers’ Agent’s
account no. 1536-9121-3778 with Administrative Lender, before debiting any
other account.


 


(b)           Place and Manner.  Borrowers shall make all payments due to each
Lender under the Loan Documents by payment to Administrative Lender at
Administrative Lender’s Office, for the account of such Lender, in lawful money
of the United States and in same day or immediately available funds not later
than 11:00 AM (Portland time) on the date due.  Administrative Lender shall promptly disburse
to each Lender at such Lender’s Applicable Lending Office each such payment
received by Administrative Lender for such Lender no later than 2:00 PM
(Portland time) on the Business Day received if received before 11:00 AM
(Portland time), or if received later, by 2:00 PM (Portland time) on the
next Business Day.


 


(c)           Date.  Whenever any payment due hereunder shall fall
due on a day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall be included in the
computation of interest or fees, as the case may be.


 


(d)           Application of Payments.  All payments under the Loan Documents
(including prepayments) shall be applied first to unpaid fees, costs and
expenses then due and payable under the Loan Documents, second to accrued
interest then due and payable under the Loan Documents (applied first to
interest due and payable on the Swing Loans and then to the other Loans), third
to the outstanding principal of the Swing Loans and finally to reduce the
principal amount of the other outstanding Loans.


 


(e)           Failure to Pay Administrative Lender.  Unless Administrative Lender shall have
received notice from Borrowers’ Agent at least one Business Day prior to the
date on which any payment is due to Lenders hereunder that Borrowers will not
make such payment


 


30





















 


in full, Administrative Lender
may assume that Borrowers have made such payment in full to Administrative
Lender on such date and Administrative Lender may, in reliance upon such
assumption, cause to be distributed to each Lender on such due date an amount
equal to the amount then due such Lender. 
If and to the extent Borrowers shall not have made such payment in full
to Administrative Lender, such Lender shall repay to Administrative Lender on
demand the amount distributed to such Lender together with interest thereon at
the Federal Funds Rate for each day from the date distributed until the date
repaid.  A certificate of Administrative
Lender submitted to any Lender with respect to any amounts owing by such Lender
under this Section shall be presumptive evidence of such amounts.


 


3.8                  FUNDING


 


(a)           Lender Funding and Disbursement.  Each Lender shall, by 11:00 AM (Portland
time) on the date of each borrowing under Section 3.1, make available to
Administrative Lender at Administrative Lender’s Office, in same day or
immediately available funds, such Lender’s Ratable Portion thereof.  After Administrative Lender’s receipt of such
funds and upon fulfillment of the applicable conditions set forth in
Article VII hereof, Administrative Lender will promptly disburse such
funds in same day or immediately available funds to Borrowers.  Unless otherwise directed by Borrowers’ Agent
in writing, Administrative Lender shall disburse the proceeds of each borrowing
to Parent by deposit to any demand deposit account maintained by Parent with
Administrative Lender designated by Borrowers’ Agent in a notice to
Administrative Lender.


 


(b)           Lender Failure to Fund.  Unless Administrative Lender receives notice
from a Lender on or before the date of any borrowing hereunder that such Lender
will not make available to Administrative Lender such Lender’s Ratable Portion
thereof, Administrative Lender may assume that such Lender has made such
portion available to Administrative Lender on the date of such borrowing in
accordance with Section 3.8(a) hereof, and Administrative Lender may, in
reliance upon such assumption, make available to Borrowers (or otherwise
disburse) on such date a corresponding amount. 
If any Lender does not make the amount of its Ratable Portion of any
borrowing available to Administrative Lender on the date of such borrowing,
such Lender shall pay to Administrative Lender, on demand, interest which shall
accrue on such amount until made available to Administrative Lender at a rate
equal to the daily Federal Funds Rate.  A
certificate of Administrative Lender submitted to any Lender with respect to
any amounts owing under this Section shall be presumptive evidence of such
amounts.  If any Lender’s Ratable Portion
of any borrowing is not in fact made available to Administrative Lender by such
Lender within three Business Days after the date of such borrowing, Borrowers
shall pay to Administrative Lender, on demand, an amount equal to such Ratable
Portion together with interest thereon, for each day from the date such amount
was made available to Borrowers until the date such amount is repaid to
Administrative Lender, at the rate of interest then applicable thereto.


 


(c)           Lenders’ Obligations Several.  The obligation of each Lender hereunder is
several.  The failure of any Lender to
make available its Ratable Portion of any borrowing shall not relieve any other
Lender of its obligation hereunder to do so on the date requested,


 


31





















 


but no Lender shall be
responsible for the failure of any other Lender to make available the Ratable
Portion to be funded by such other Lender.


 


3.9                  PRO RATA TREATMENT


 


(a)           Borrowings.  Each Loan, except a Swing Loan, shall be made
or shared among Lenders ratably.


 


(b)           Sharing of Payments, Etc.  Except as otherwise provided herein, each
payment of principal, interest or fees shall be made or shared among Lenders
ratably.  If any Lender obtains any
payment (whether voluntary, involuntary, through the exercise of any right of
setoff or otherwise) on account of a Loan in excess of its Ratable Portion of
payments on the Loans obtained by all Lenders, such Lender (“Purchasing Lender”)
shall forthwith purchase from the other Lenders sufficient participations to
cause the Purchasing Lender’s interest in the Loans to be in the same
proportionate relationship with all Loans as before such payment was received;
provided, however, that if all or any portion of such excess payment is
thereafter recovered from the Purchasing Lender, the purchased participation
shall be rescinded and each other Lender shall repay to the Purchasing Lender
(i) the purchase price to the extent of such recovery together with
(ii) an amount equal to such other Lender’s ratable share (according to
the proportion of (A) the amount of such other Lender’s required repayment
to (B) the total amount so recovered from the Purchasing Lender) of any
interest or other amount paid or payable by the Purchasing Lender in respect of
the total amount so recovered.  Borrowers
agree that any Purchasing Lender may, to the fullest extent permitted by law,
exercise all its rights of payment (including the right of setoff) with respect
to such participation as fully as if the Purchasing Lender were the direct
creditor of Borrowers in the amount of such participation.


 


3.10                CHANGE OF CIRCUMSTANCES


 


(a)           Inability to Determine Rate.  If Administrative Lender at any time
determines that adequate and reasonable means do not exist for ascertaining
LIBOR, or the Required Lenders determine at any time that LIBOR does not
accurately reflect the cost to Lenders of making or maintaining LIBOR interest
rates hereunder, then Administrative Lender shall give telephonic notice
(promptly confirmed in writing) to Borrowers’ Agent and each Lender of such
determination.  If such notice is given
and until such notice has been withdrawn in writing by Administrative Lender,
no LIBOR interest option may be selected by Borrowers’ Agent and each LIBOR
Loan, subsequent to the end of the Fixed Rate Term applicable thereto, shall
become a Prime Rate Loan.


 


(b)           Illegality: 
Termination of Commitment.  Notwithstanding any other provisions herein,
if any Change of Law shall make it unlawful for any Lender (i) to make a
LIBOR interest rate available, or (ii) to maintain LIBOR interest rates
hereunder, then, in the former event, any obligation of such Lender to make
available such unlawful LIBOR interest rate shall be suspended until such time
as it is once again lawful to make such rate available, and in the latter
event, any such unlawful LIBOR interest rate then outstanding shall be


 


32





















 


converted so that interest is
determined in relation to the Prime Rate pursuant to the terms of this
Agreement; provided, however, if any such Change in Law shall permit a LIBOR
interest rate until the expiration of the Fixed Rate Term relating thereto,
then such permitted LIBOR interest rate shall continue as such until the end of
such Fixed Rate Term.  If as a result of
this Section a LIBOR interest rate is converted to a lower interest rate,
Borrowers shall pay to each Lender immediately upon demand such amount or
amounts as may be necessary to compensate such Lender for any loss in
connection therewith.


 


(c)           Charges: 
Illegality.  Upon
the occurrence of any event described in Section 3.10(b) hereof, Borrowers
shall pay to each Lender, on demand, such amount or amounts as may be necessary
to compensate such Lender for any fines, fees, charges, penalties or other
amounts payable by such Lender as a result thereof and that are attributable to
LIBOR interest rates made available to Borrowers hereunder.  In determining which amounts payable by any
Lender and/or losses incurred by any Lender are attributable to LIBOR interest
rates made available to Borrowers hereunder, any reasonable allocation made by
any Lender among its operations shall, in the absence of manifest error, be
conclusive and binding upon Borrowers.


 


(d)           Increased LIBOR Loan Costs, etc.  Borrowers shall reimburse each Lender for any
increase in the cost to such Lender of, or any reduction in the amount of any
sum receivable by such Lender in respect of, making, continuing or maintaining
(or of its obligation to make, continue or maintain) any Loans as, or of
converting (or of its obligation to convert) any Loans into, LIBOR Loans which
results from any Change of Law announced after the Closing Date.  Such Lender shall promptly notify
Administrative Lender and Borrowers’ Agent in writing of the occurrence of any
such event, such notice to state, in reasonable detail, the reasons therefor,
that substantially all similarly situated borrowers are being treated similarly
and the calculation of the additional amount required fully to compensate such
Lender for such increased cost or reduced amount.  Such additional amounts shall be payable by
Borrowers directly to such Lender within five days of Borrowers’ Agent’s
receipt of such notice, and such notice shall, in the absence of manifest
error, be conclusive and binding on Borrowers.


 


(e)           Capital Requirements.  If any Lender determines that any Change of
Law regarding capital adequacy which is announced after the Closing Date has or
shall have the effect of reducing the rate of return on the capital of such
Lender (or any entity controlling such Lender) as a consequence of such Lender’s
obligations hereunder to a level below that which such Lender or such entity
would have achieved but for such Change of Law (taking into consideration such
Lender’s or such entity’s policies with respect to capital adequacy), by an
amount deemed by such Lender to be material, then from time to time, within
fifteen days after demand by such Lender (with a copy to Administrative Lender)
to Borrowers’ Agent, Borrowers shall pay to such Lender or such entity such
additional amounts as shall compensate such Lender or such entity for such
reduction.  Any request by a Lender under
this Section shall set forth in reasonable detail the basis of the
calculation of such additional amounts, shall state that substantially all
similarly situated borrowers are being treated


 


33





















 


similarly and shall, in the
absence of manifest error, be conclusive and binding on Borrowers for all
purposes.


 


3.11                TAXES ON PAYMENTS


 


(a)           Payments Free of Taxes.  All payments made by Borrowers under the Loan
Documents shall be made free and clear of, and without deduction or withholding
for or on account of, any present or future income, stamp or other taxes,
levies, imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any Governmental
Authority (except taxes based on overall net income imposed on Administrative
Lender or any Lender) (with all such non-excluded taxes, levies, imposts,
duties, charges, fees, deductions and withholdings being hereinafter referred
to herein as “Taxes”).  Except to the
extent that withholding results from a failure of a  Lender to comply with Section 3.11(b), if any
Taxes are required to be withheld from any amounts payable to Administrative
Lender or any Lender under the Loan Documents, the amounts so payable to
Administrative Lender or such Lender shall be increased to the extent necessary
to yield to Administrative Lender or such Lender (after payment of all Taxes)
interest or any such other amounts payable hereunder at the rates or in the
amounts specified in the Loan Documents. 
Whenever any Taxes are payable by Borrowers, as promptly as possible thereafter,
Borrowers’ Agent shall send to Administrative Lender for its own account or for
the account of such Lender, as the case may be, a certified copy of an original
official receipt received by Borrowers showing payment thereof.  If Borrowers fail to pay any Taxes when due
to the appropriate taxing authority or Borrowers’ Agent fails to remit to
Administrative Lender the required receipts or other required documentary
evidence, Borrowers shall indemnify Administrative Lender and Lenders for any
incremental taxes, interest or penalties that may become payable by
Administrative Lender or any Lender as a result of any such failure.  This Section shall survive the payment in
full and performance of all of Borrowers’ other Obligations.


 


(b)           Withholding Exemption Certificates.  Each Lender agrees that it will deliver to
Borrowers’ Agent and Administrative Lender, upon the reasonable request of
Borrowers’ Agent or Administrative Lender, either (i) a statement that it
is incorporated under the laws of the United States of America or a state
thereof, or (ii) if it is not so incorporated, two duly completed copies
of the applicable United States Internal Revenue Service form(s) certifying
that such Lender is entitled to receive payments under this Agreement without
deduction or withholding of any United States federal income taxes.


 


3.12                                                FUNDING LOSS INDEMNIFICATION


 


Borrowers will
indemnify Lenders upon demand against any loss or expense which Lenders may
sustain or incur as a consequence of (a) any payment of any portion of the
principal of a LIBOR Loan before the last day of the Fixed Rate Term applicable
thereto (whether through voluntary prepayment, acceleration or otherwise), or
(b)  any failure to borrow the full amount of a requested LIBOR Loan set
forth in any Notice of Borrowing or to convert or continue at the LIBOR
interest option any portion of a Loan in accordance with a


 


34





















 


Notice of Conversion or
Continuation (in either event, whether as a result of the failure to satisfy
any applicable conditions or otherwise). 
The determination by Administrative Lender of the amount payable under
this Section shall, in the absence of manifest error, be conclusive and binding
on Borrowers for all purposes.  In
determining such amount, Administrative Lender may use any reasonable averaging
and attribution methods and each Lender shall be deemed to have actually funded
and maintained all LIBOR Loans during the applicable Fixed Rate Term through
the purchase of deposits having a term corresponding to such Fixed Rate Term
and bearing interest at a rate equal to LIBOR for such Fixed Rate Term.  This Section shall survive the payment in
full and performance of all of Borrowers’ other Obligations.


 


ARTICLE IV.            ADMINISTRATION


 


4.1                                                       STATEMENTS


 


From time to
time, Administrative Lender may render to Borrowers’ Agent a statement setting
forth the balance in the loan account(s) maintained by Administrative Lender
for Borrowers pursuant to this Agreement, including principal, interest, fees,
costs and expenses.  Each such statement
shall be subject to subsequent adjustment by Administrative Lender but shall,
absent manifest errors or omissions, be considered correct and deemed accepted
by Borrowers and conclusively binding upon Borrowers as an account stated
except to the extent that Administrative Lender receives notice from Borrowers’
Agent of any specific exceptions thereto within thirty days after the date such
statement has been mailed by Administrative Lender.  Until such time as Administrative Lender
shall have rendered to Borrowers’ Agent a written statement as provided above,
the balance in the loan account(s) shall be presumptive evidence of the amounts
due and owing to Lenders by Borrowers.


 


4.2                                                       PAYMENTS


 


All amounts
due under any of the Loan Documents shall be payable to such account as
Administrative Lender may designate from time to time.  Borrowers shall make all payments due
hereunder free and clear of, and without deduction or withholding for or on
account of, any setoff, counterclaim, defense, duties, taxes, levies, imposts,
fees, deductions, withholding, restrictions or conditions of any kind.  If after receipt of any payment of, or
proceeds of Collateral applied to the payment of, any of the Obligations any
Lender is required to surrender or return such payment or proceeds to any
person or entity for any reason, then the Obligations intended to be satisfied
by such payment or proceeds shall be reinstated and continue and this Agreement
shall continue in full force and effect as if such payment or proceeds had not
been received by such Lender.  Borrowers
hereby indemnify and hold Lenders harmless for the amount of any payments or
proceeds surrendered or returned.  This
Section shall remain effective notwithstanding any contrary action which
may be taken by any Lender in reliance upon such payment or proceeds.  This Section shall survive the payment in
full and performance of all of Borrowers’ other Obligations.


 


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ARTICLE V.              SECURITY


 


5.1                  GRANT OF SECURITY INTEREST


 


Borrowers
hereby grant to Administrative Lender, for the benefit of and on behalf of
Lenders, a security interest in all of the Collateral as security for the full
and prompt payment in cash and performance of the Obligations.


 


5.2                  PERFECTION; DUTY OF CARE


 


(a)           Until
all the Obligations have been fully satisfied and paid in cash and the
Commitments terminated, Borrowers shall perform all steps requested by
Administrative Lender to perfect, maintain and protect Administrative Lender’s
security interest in the Collateral, including, without limitation,
(i) executing and filing financing and continuation statements in form and
substance satisfactory to Administrative Lender, and (ii) delivering all
Collateral in which Administrative Lender’s security interest may be perfected
by possession together with such indorsements as Administrative Lender may
request.  Borrowers hereby authorize
Administrative Lender to execute and file UCC financing statements signed only
by Administrative Lender, except to the extent prohibited by law.


 


(b)           Administrative
Lender shall have the right at all times, and from time to time, to contact
Borrowers’ account debtors to verify Rights to Payment; provided that at all
times when a Default is not continuing, verifications shall be made under
reasonable procedures directly with the obligors thereon.


 


(c)           Borrowers
shall pay or cause to be paid all taxes, assessments and governmental charges
levied or assessed or imposed upon or with respect to the Collateral or any
part thereof; provided, however, Borrowers shall not be required to pay any tax
if the validity and/or amount thereof is being contested in good faith and by
appropriate and lawful proceedings promptly initiated and diligently conducted
and for which appropriate reserves have been established and so long as levy
and execution have been and continue to be stayed.  If Borrowers fail to pay or so contest and
reserve for such taxes, assessments and governmental charges, Administrative
Lender may (but shall not be required to) pay the same and add the amount of
such payment to the principal of the Revolving Loans.


 


(d)           In
order to protect or perfect the security interest granted under the Loan
Documents, Administrative Lender may discharge any Lien that is not a Permitted
Lien or bond the same, pay for any insurance that Borrowers have failed to
maintain as required by this Agreement, maintain guards, pay any service
bureau, or obtain any record and add the same to the principal of the Revolving
Loans.


 


(e)           Administrative
Lender shall have no duty of care with respect to the Collateral, except to
exercise reasonable care with respect to the Collateral in its custody, but
shall be deemed to have exercised reasonable care if such property is accorded
treatment either (i) substantially equal to that which it accords its own
property or (ii) as Borrowers’ Agent requests in writing, provided that no
failure to comply with any such request nor any


 


36





















 


omission to do any such act
requested by Borrowers’ Agent shall be deemed a failure to exercise reasonable
care.  Administrative Lender’s failure to
take steps to preserve rights against any parties or property shall not be
deemed to be a failure to exercise reasonable care with respect to the Collateral
in its custody.


 


ARTICLE
VI.            REPRESENTATIONS AND WARRANTIES


 


Borrower makes
the following representations and warranties to Administrative Lender and
Lenders, subject to the exceptions set forth on the Disclosure Letter, which
representations and warranties shall survive the execution of this Agreement
and shall continue in full force and effect until the performance and payment
in full, in cash, of all Obligations:


 


6.1                                                       LEGAL STATUS; SUBSIDIARIES


 


Each Borrower
and Subsidiary is a corporation validly organized and existing and in good
standing under the laws of the jurisdiction of its incorporation, is duly
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction where the nature of its business requires such qualification,
and has full power and authority and holds all Permits and other approvals to
enter into and perform the Obligations and to own and hold under lease its
property and to conduct its business substantially as currently conducted by
it, except where the failure to have so qualified or have such power and
authority could not reasonably be expected to have a Material Adverse
Effect.  Except as otherwise disclosed in
Section 6.1 of the Disclosure Letter, Borrower has no Subsidiaries other than
those which it is permitted to acquire in accordance with Section 9.4 and does
not otherwise own or hold, directly or indirectly, any Stock or Stock
Equivalents.


 


6.2                                                       DUE AUTHORIZATION; NO VIOLATION


 


The execution,
delivery and performance by each Obligor of the Loan Documents executed or to
be executed by it are within such Obligor’s powers, have been duly authorized
by all necessary action, and do not (a) contravene such Obligor’s Organic
Documents; (b) contravene any contractual restriction or Governmental Rule
binding on or affecting such Obligor; or (c) result in, or require the
creation or imposition of, any Lien on any Obligor’s or Subsidiary’s property,
except Liens for the benefit of Lenders.


 


6.3                                                       GOVERNMENT APPROVAL, REGULATION


 


No
authorization or approval or other action by, and no notice to or filing with,
any Governmental Authority or other Person is required for the due execution,
delivery or performance by any Obligor of the Loan Documents to which it is a
party.  No Borrower or Subsidiary is an “investment
company” within the meaning of the Investment Company Act of 1940, as amended,
or a “holding company”, or a “subsidiary company” of a “holding company”, or an
“affiliate” of a “holding company” or of a “subsidiary company” of a “holding
company”, within the meaning of the Public Utility Holding Company Act of 1935,
as amended.  No Borrower or Subsidiary is
engaged in the business of extending credit for


 


37





















 


the purpose of purchasing or
carrying margin stock, and no proceeds of any Loans will be used for a purpose
which violates, or would be inconsistent with, Regulation U or X of the Board
of Governors of the Federal Reserve System


 


6.4                                                       VALIDITY; ENFORCEABILITY


 


The Loan
Documents executed by each Obligor constitute, the legal, valid and binding
obligations of such Obligor enforceable in accordance with their respective
terms.


 


6.5                                                       CORRECTNESS OF FINANCIAL STATEMENTS


 


The
consolidated financial statements of Parent and each Subsidiary dated as of
July 3, 2004 heretofore delivered by Borrowers’ Agent to Administrative
Lender, (a) present fairly in all material respects the financial
condition and results of operations of Parent and the Subsidiaries;
(b) disclose all liabilities of Parent and the Subsidiaries that are
required to be reflected or reserved against under GAAP, whether liquidated or
unliquidated, fixed or contingent; and (c) have been prepared in
accordance with GAAP consistently applied. 
Except as disclosed to Administrative Lender pursuant to
Section 8.3, since the date of such financial statements there has been no
change or changes that have resulted in a Material Adverse Effect.


 


6.6                                                       TAXES


 


Each Borrower
and Subsidiary has filed, or caused to be filed, all federal, state, local and
foreign tax returns required to be filed by it, and has paid, or caused to be
paid, all taxes as are shown on such returns, or on any assessment received by
it, to the extent that such taxes have become due, except as otherwise
contested in good faith.  Borrower has
set aside proper amounts on its books, determined in accordance with GAAP, for
the payment of all taxes for the years that have not been audited by the
respective tax authorities and for taxes being contested by it.


 


6.7                                                       LITIGATION, LABOR CONTROVERSIES


 


There is no
pending or, to the knowledge of Borrower, threatened litigation, action,
proceeding, or labor controversy affecting any Borrower or Subsidiary, or any
of their respective properties, businesses, assets or revenues, which could
reasonably be expected to have a Material Adverse Effect.  As of the Closing Date, no Borrower or
Subsidiary is a party to, and has no obligations under, any collective
bargaining agreement.


 


6.8                                                       TITLE TO PROPERTY, LIENS


 


Each Borrower
and Subsidiary has good, indefeasible, and merchantable title to and ownership
of the Collateral and its real property, free and clear of all Liens, except
Permitted Liens.


 


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6.9                                                       ERISA


 


Each Borrower
and Subsidiary is in compliance in all material respects with the applicable
provisions of ERISA.  No Borrower or
Subsidiary has violated any provision of any Plan maintained or contributed to
by it in a manner that could reasonably be expected to result in a Material
Adverse Effect.  No “reportable event”
(as defined in Title IV of ERISA) has occurred and is continuing with
respect to any Plan initiated by it.


 


6.10                                                OTHER OBLIGATIONS


 


No Borrower or
Subsidiary is in default with respect to (i) any of its Contractual
Obligations default of which could reasonably be expected to result in a
Material Adverse Effect or (ii) any Debt in excess of $1,000,000.


 


6.11                                                ENVIRONMENTAL MATTERS


 


Each Borrower
and Subsidiary is in compliance in all material respects with all Environmental
Laws applicable to it, other than such noncompliance as in the aggregate could
not reasonably be expected to have a Material Adverse Effect.  No Borrower or Subsidiary has received notice
that it is the subject of any federal or state investigation evaluating whether
any Remedial Action is needed, except for such notices received that in the
aggregate do not refer to Remedial Actions that could reasonably be expected to
result in a Material Adverse Effect. 
There have been no Releases by any Borrower or Subsidiary that could result
in a Material Adverse Effect.


 


6.12                                                NO BURDENSOME RESTRICTIONS; NO DEFAULTS


 


(a)           No
Borrower or Subsidiary is a party to any Contractual Obligation the compliance
with which could reasonably be expected to have a Material Adverse Effect or
the performance of which, either unconditionally or upon the happening of an
event, will result in the creation of a Lien (other than Permitted Liens) on
its property or assets.


 


(b)           No
facts or circumstances exist which would constitute a breach of any obligation,
representation or warranty of Borrower hereunder if this Agreement were in
effect immediately prior to Borrower’s execution hereof.


 


(c)           There
is no Governmental Rule the compliance with which by any Borrower or Subsidiary
could reasonably be expected to have a Material Adverse Effect.


 


6.13                                                NO OTHER VENTURES


 


As of the
Closing Date, no Borrower or Subsidiary is engaged in any joint purchasing
arrangement, joint venture, partnership or other joint enterprise with any
other Person.


 


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6.14                                                INSURANCE


 


All current
policies of insurance of any kind or nature owned by or issued to Borrower and
the Subsidiaries, including, without limitation, policies of fire, theft,
product liability, public liability, property damage, other casualty, employee
fidelity, workers’ compensation and employee health and welfare insurance, are
in full force and effect and are of a nature and provide such coverage as is
sufficient and as is customarily carried by companies of its size and character.  No Borrower or Subsidiary has any reason to
believe that it will be unable to comply with Section 8.5.


 


6.15                                                FORCE MAJEURE


 


No Borrower’s
or Subsidiary’s business or properties is currently suffering from the effects
of any fire, explosion, accident, strike, lockout or other labor dispute,
drought, storm, hail, earthquake, embargo, act of God or of the public enemy or
other casualty (whether or not covered by insurance), other than those the
consequences of which in the aggregate could not reasonably be expected to have
a Material Adverse Effect.


 


6.16                                                INTELLECTUAL PROPERTY


 


Each Borrower
and Subsidiary owns or licenses or otherwise has the right to use all material
licenses, Permits, patents, patent applications, trademarks, trademark
applications, service marks, trade names, copyrights, copyright applications,
franchises, authorizations and other intellectual property rights and General
Intangibles that are necessary for the operation of its businesses, without
infringement upon or conflict with the rights of any other Person with respect
thereto, including, without limitation, all trade names, which infringement or
conflict could reasonably be expected to have a Material Adverse Effect.  No slogan or other advertising device,
product, process, method, substance, part or other material now employed, or
now contemplated to be employed, by any Borrower or Subsidiary infringes upon
or conflicts with any rights owned by any other Person, which infringement or
conflict could reasonably be expected to have a Material Adverse Effect, and no
claim or litigation regarding any of the foregoing is pending or, to its
knowledge, threatened, the existence of which could reasonably be expected to
have a Material Adverse Effect.  No
patent, invention, device, application, principle or any statute, law, rule,
regulation, standard or code is pending or, to its knowledge, proposed, other
than those the consequences of which in the aggregate could not have a Material
Adverse Effect.


 


6.17                                                CERTAIN INDEBTEDNESS


 


The Disclosure
Letter identifies as of the Closing Date all Indebtedness of Parent and the
Subsidiaries which is either (a) Debt or (b) which is material to the
condition (financial or otherwise), business, performance, operations or
properties of Borrowers and which was incurred outside of the ordinary course
of the business.


 


40





















 


6.18                                                SOLVENCY


 


Each Obligor
has received consideration that is the reasonably equivalent value of the
obligations and liabilities that it has incurred to Lenders.  Each Obligor is not insolvent as defined in
any applicable state or federal statute, nor will it be rendered insolvent by
the execution and delivery of this Agreement or the other Loan Documents.  No Obligor intends to, nor does it believe
that it will, incur debts beyond its ability to pay them as they mature.  Each Obligor has capital sufficient to carry
on its business and transactions and all business and transactions in which it
is about to engage.


 


6.19                                                CHIEF EXECUTIVE OFFICE AND OTHER LOCATIONS


 


Borrower’s
chief executive office and principal place of business is set forth in
Section 6.19 of the Disclosure Letter. 
Borrower’s books and records are located at its chief executive office,
and the only other offices and/or locations where it keeps the Collateral
(except for inventory which is in transit) or conducts any of its business are
set forth in Section 6.19 of the Disclosure Letter.


 


6.20                                                FISCAL YEAR


 


Parent’s
fiscal year ends on the Saturday closest to December 31.


 


6.21                                                COMPLIANCE WITH LAW


 


Each Borrower
and Subsidiary is in compliance with all Governmental Rules and law, except
where the failure to do so could not reasonably be expected to have a Material
Adverse Effect.


 


6.22                                                NO SUBORDINATION


 


There is no
agreement, indenture, contract or instrument to which any Borrower or
Subsidiary is a party or by which it may be bound that requires the
subordination in right of payment of any of the Obligations to any other
obligation of it.


 


6.23                                                TRUTH, ACCURACY OF INFORMATION


 


All factual
information furnished by each Borrower and Subsidiary to Administrative Lender
or any Lender in connection with the Loan Documents is accurate in all material
respects and does not contain any untrue statement of a material fact or omit
to state a material fact necessary in order to make the information furnished,
in light of the circumstances under which furnished, not misleading (it being
recognized that the projections and forecasts provided by Borrowers are not to
be viewed as facts and that actual results during the period covered by any
such projections and forecasts may differ from the projected or forecasted
results).


 


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ARTICLE VII.           CONDITIONS


 


7.1                                                       CONDITIONS OF INITIAL EXTENSION OF CREDIT


 


The obligation
of Lenders to extend any credit contemplated by this Agreement is subject to
the fulfillment to Administrative Lender’s satisfaction of all of the following
conditions:


 


(a)           Documentation. Administrative
Lender shall have received, in form and substance satisfactory to it, each of
the following duly executed:


 


(i)            this Agreement and the Notes;


 


(ii)           from each Obligor, a certificate of its
secretary or assistant secretary dated as of the Closing Date as to:  (A) resolutions of its board of directors
or other governing body then in full force and effect authorizing the
execution, delivery and performance of each of the Loan Documents to be
executed by it; (B) its Organic Documents, a copy of each of which is
attached; and (C) the incumbency and signatures of those of its officers
authorized to act with respect to the Loan Documents to be executed by it;


 


(iii)          with respect to each Obligor:  (A) from the Secretary of State (or
other appropriate governmental official) of its jurisdiction of incorporation
or organization, a good standing certificate or certificate of existence, as
applicable, and a certified copy of its filed Organic Documents; and (B) a
certificate of good standing as a foreign corporation in each jurisdiction
described in Section 6.1;


 


(iv)          the opinion of Wilson Sonsini Goodrich
& Rosati, P.C., counsel to Borrowers, and of Richard Bond, Parent’s general
counsel, as to such matters as Administrative Lender and each Lender shall
reasonably require; and


 


(v)           such other documents as Administrative
Lender and each Lender may require.


 


(b)           Financial Condition.  There is no event or circumstance that can
reasonably be expected to have a Material Adverse Effect.


 


(c)           Fees and Expenses.  Borrowers shall have paid all fees and
invoiced costs and expenses then due pursuant to the terms of this Agreement.


 


(d)           Insurance.  Borrowers’ Agent shall have delivered to
Administrative Lender evidence of the insurance coverage, including loss
payable endorsements, required pursuant to Section 8.5.


 


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7.2                                                       CONDITIONS OF EACH EXTENSION OF CREDIT


 


The obligation
of each Lender to make any credit available under the Loan Documents (including
any Loan being made by such Lender on the Closing Date) shall be subject to the
further conditions precedent that:


 


(a)           the
following statements shall be true on the date such credit is advanced, both
before and after giving effect thereto and to the application of the proceeds
therefrom, and the acceptance by Borrowers’ Agent of the proceeds of such
credit shall constitute a representation and warranty by Borrowers that on the
date such credit is advanced such statements are true:


 


(i)            the representations and warranties of
Borrowers contained in the Loan Documents are correct in all material respects
on and as of such date as though made on and as of such date or, as to those
representations and warranties limited by their terms to a specified date, were
correct in all material respects on and as of such date; and


 


(ii)           no Default is continuing or would result
from the credit being advanced;


 


(b)           advancing
such credit on such date does not violate any Governmental Rule and is not
enjoined, temporarily, preliminarily or permanently;


 


(c)           Administrative
Lender shall have received such additional documents, information and materials
as any Lender, through Administrative Lender, may reasonably request; and


 


(d)           no
event or circumstance exists that could reasonably be expected to have a
Material Adverse Effect.


 


ARTICLE
VIII.          AFFIRMATIVE COVENANTS


 


Borrowers
covenant that so long as Lenders remain committed to extend credit to Borrowers
pursuant to the terms hereof and until performance and payment in full, in
cash, of all Obligations and termination of the Commitments, Borrowers shall:


 


8.1                                                       PAYMENTS


 


Pay all
principal, interest, fees and other liabilities due under any of the Loan
Documents at the times and place and in the manner specified therein.


 


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8.2                                                       ACCOUNTING
RECORDS


 


Keep, and cause each
Subsidiary to keep, accurate books and records of its financial affairs
sufficient to permit the preparation of financial statements therefrom in
accordance with GAAP.


 


8.3                                                       INFORMATION
AND REPORTS


 


Provide to Administrative
Lender all of the following, in form and detail reasonably satisfactory to
Administrative Lender and with sufficient copies for distribution to all
Lenders:


 


(i)                                     as
soon as available but not later than 100 days after and as of the end of each
fiscal year of Parent, a copy of the annual unqualified audit report for such
fiscal year for Parent and the Subsidiaries, including therein consolidated
balance sheets of Parent and the Subsidiaries as of the end of such fiscal year
and consolidated statements of earnings and cash flow of Parent and the
Subsidiaries for such fiscal year, in each case certified in a manner
acceptable to Administrative Lender by independent public accountants
acceptable to Administrative Lender, together with a report from such
accountants to the effect that, in making the examination necessary for the
signing of such annual report by such accountants, they have not become aware
of any Default that has occurred and is continuing, or, if they have become
aware of such Default, describing such Default and the steps, if any, of which
they are aware being taken to cure it;


 


(ii)                                  as
soon as available but not later than 50 days after and as of the end of each of
Parent’s first three fiscal quarters, nor later than 100 days after and as of
the end of each of Parent’s fourth fiscal quarters, a consolidated balance
sheet of Parent and the Subsidiaries as of the end of such fiscal quarter and
consolidated statement of earnings and cash flow of Parent and the Subsidiaries
for such fiscal quarter and for fiscal year-to-date, together with a comparison
of Parent’s financial condition for such quarter and year-to-date with the
corresponding quarter and year-to-date in Parent’s immediately preceding fiscal
year;


 


(iii)                               contemporaneously
with the delivery of each financial statement required hereby, a certificate of
Parent’s principal financial officer substantially in the form of Exhibit F
attached hereto (A) certifying that such financial statements fairly present in
accordance with GAAP such balance sheet as of the end of such quarter/year and
income and cash flow for such quarter/year and year-to-date (subject to normal
year-end adjustments and the absence of footnotes in the case of quarterly
financial statements), (B) stating that no Default existed at any time
during the period covered by such statement, except for those events or
conditions, if any, described in such certificate in reasonable detail together
with a statement of any action taken or proposed to be taken with respect thereto,
and (C) setting forth the calculations 


 


44





















 


required to establish
compliance by Borrowers with the covenants set forth in Article X;


 


(iv)                              not
later than the end of each of Parent’s fiscal years beginning with the fiscal
year ending in 2001, or sooner if available, Borrowers’ Agent shall furnish to
Administrative Lender detailed projections setting forth Parent’s projected
consolidated income and cash flow for Parent’s next fiscal year and for each of
Parent’s fiscal years through the Maturity Date and Parent’s projected
consolidated balance sheet as of the end of each such fiscal year, together
with a certificate of Parent’s principal financial officer setting forth the
assumptions on which such projections are based;


 


(v)                                 promptly
after the sending or filing thereof, copies of all reports which Borrower sends
to any of its securityholders, and all reports and registration statements
which any Borrower or Subsidiary files with the Securities and Exchange
Commission or any national securities exchange;


 


(vi)                              a
Borrowing Base Certificate not later than 30 days after and as of the end of
each of Parent’s fiscal quarters if (a) the Leverage Ratio as of the end
of quarter exceeds 2.00:1 or (b) the outstanding principal balance of the
Revolving Loans at any time during such quarter exceeds 50% of the Borrowing
Base; and


 


(vii)                           from
time to time such other information as Administrative Lender may reasonably
request.


 


8.4                                                       COMPLIANCE


 


Comply in all material
respects, and cause each Subsidiary to comply in all material respects, with
all Governmental Rules, Contractual Obligations, commitments, instruments,
licenses, Permits and franchises, other than such noncompliance the
consequences of which in the aggregate could not reasonably be expected to have
a Material Adverse Effect.


 


8.5                                                       INSURANCE


 


(a)                                  Maintain,
and cause each Subsidiary to maintain, insurance with insurance companies
reasonably acceptable to Administrative Lender with respect to its properties
and business (including business interruption and extra expense endorsements)
against such casualties and contingencies and of such types, with such
deductibles and in such amounts as is customary in the case of similar
businesses.  With respect to the
insurance maintained by Borrower: 
(i) such insurance shall contain a lender’s loss payable
endorsement acceptable to Administrative Lender and shall name Administrative
Lender as an additional named insured; (ii) the policies or a certificate
thereof signed by the insurer shall be delivered to Administrative Lender
within ten Business Days after the issuance or renewal of the policies to
Borrower; (iii) each such policy shall provide that such policy may not be
amended (except to increase coverage) or canceled without thirty days prior
notice to Administrative Lender; and (iv) at least five days before the
expiration of a policy, Borrowers’ Agent shall deliver to 


 


45





















 


Administrative Lender a
binder (or other evidence reasonably acceptable to Administrative Lender)
indicating that such policy has been renewed or that a substitute for such
policy will be issued effective upon the expiration of such policy.  If Borrowers’ Agent fails to comply with the
foregoing, Administrative Lender may (but shall not be required to) procure
such insurance and add the cost thereof to the Revolving Loans.


 


(b)                                 Maintain,
and cause each Subsidiary to maintain, in full force and effect such liability
and other insurance with respect to its activities as is customary in the case
of similar businesses or as may be reasonably required by Administrative
Lender.  Such liability insurance
maintained by Borrower shall name Administrative Lender as an additional insured
with respect to the activities of Borrower and shall be provided by insurer(s)
reasonably acceptable to Administrative Lender.


 


(c)                                  The
following is inserted pursuant to ORS 746.201:


 


WARNING


 


Unless
Borrowers provide Administrative Lender with evidence of the insurance coverage
as required by this Agreement, Administrative Lender may purchase insurance at
Borrowers’ expense to protect Administrative Lender’s interest.  This insurance may, but need not, also
protect Borrowers’ interest.  If the
collateral becomes damaged, the coverage Administrative Lender purchases may
not pay any claim Borrowers make or any claim made against Borrowers.  Borrowers may later cancel this coverage by
providing evidence that Borrowers have obtained property coverage elsewhere.


 


Borrowers
are responsible for the cost of any insurance purchased by Administrative
Lender.  The cost of this insurance may
be added to Borrowers’ contract or loan balance.  If the cost is added to Borrowers’ contract
or loan balance, the interest rate on the underlying contract or loan will
apply to this added amount.  The
effective date of coverage may be the date Borrowers’ prior coverage lapsed or
the date Borrowers failed to provide proof of coverage.


 


The
coverage Administrative Lender purchases may be considerably more expensive than
insurance Borrowers can obtain on its own and may not satisfy any need for
property damage coverage or any mandatory liability insurance requirements
imposed by applicable law.


 


8.6                                                       FACILITIES


 


Keep, and cause each
Subsidiary to keep, all properties useful or necessary to its business in good
repair and condition, and from time to time make necessary repairs, renewals
and replacements thereto so that such property shall be fully and efficiently 


 


46





















 


preserved and maintained,
except where the failure to do so could not reasonably be expected to have a
Material Adverse Effect.


 


8.7                                                       TAXES
AND OTHER LIABILITIES


 


Pay and discharge, and
cause each Subsidiary to pay and discharge, when due any and all indebtedness,
obligations, assessments and taxes, both real or personal, including without
limitation Federal and state income taxes and state and local property taxes
and assessments, except such as Borrower may in good faith contest or as to
which a bona fide dispute may arise, and for which Borrowers have made
provision for adequate reserves in accordance with GAAP, except where the
failure to do so could not reasonably be expected to have a Material Adverse
Effect.


 


8.8                                                       LITIGATION


 


Promptly give notice in
writing to Administrative Lender of any litigation pending or threatened in
writing against any Borrower or Subsidiary with a claim in excess of $5,000,000
in the aggregate for Parent and all Subsidiaries.


 


8.9                                                       NOTICE
TO ADMINISTRATIVE LENDER


 


(a)                                  Promptly
(but in no event more than two Business Days after a Responsible Officer has
knowledge of the occurrence of each such event or matter) cause Borrowers’
Agent to give notice to Administrative Lender in reasonable detail of:  (i) the occurrence of any Default;
(ii) any termination or cancellation of any insurance policy which any
Borrower or Subsidiary is required to maintain, unless such policy is replaced
without any break in coverage with an equivalent or better policy;
(iii) any uninsured or partially uninsured loss or losses through
liability or property damage, or through fire, theft or any other cause
affecting the property of any Borrower or Subsidiary in excess of an aggregate
of $10,000,000 during any twelve month period; (iv) any change in the
Organic Documents of any Borrower or Subsidiary; (v) the occurrence of any
adverse development with respect to any litigation, action, proceeding, or
labor controversy described in Section 6.7 or the commencement of any
labor controversy, litigation, action, proceeding of the type described in Section 6.7
together with copies of all documentation relating thereto; or (vi) the
occurrence of any event that could have a Material Adverse Effect.


 


(b)                                 As
soon as possible and in any event within ten days after Borrower knows or has
reason to know that any “reportable event” (as defined in Title IV of
ERISA) that triggers an obligation to file a notice with the PBGC with respect
to any Plan has occurred, cause Borrowers’ Agent to deliver to Administrative
Lender a statement of the President or principal financial officer of Parent
setting forth details as to such reportable event and the action which
Borrowers propose to take with respect thereto, together with a copy of the
notice of such reportable event to the PBGC.


 


(c)                                  Promptly,
upon receipt (but in no event more than ten Business Days after receipt) of a
notice by Borrower, any affiliate of any Borrower or any administrator of any 


 


47





















 


Plan that the PBGC has
instituted proceedings to terminate a Plan or to appoint a trustee to
administer a Plan, cause Borrowers’ Agent to provide to Administrative Lender a
copy of such notice.


 


8.10                                                CONDUCT
OF BUSINESS


 


Except as otherwise
permitted by this Agreement, (a) conduct, and cause each Subsidiary to
conduct, its business in the ordinary course and (b) use, and cause each
Subsidiary to use, its reasonable efforts in the ordinary course and consistent
with past practice to (i) preserve its business and the goodwill and
business of the customers, advertisers, suppliers and others with whom it has
business relations and (ii) keep available the services and goodwill of
its present employees.  Notwithstanding
the foregoing, any Borrower may liquidate or merge with and into Parent.


 


8.11                                                PRESERVATION
OF CORPORATE EXISTENCE, ETC.


 


Except to the extent that
the failure to do so could not reasonably be expected to have a Material
Adverse Effect, preserve and maintain, and cause each Subsidiary to preserve
and maintain, all licenses, Permits, governmental approvals, rights,
privileges, franchises and General Intangibles necessary for the conduct of its
business, and its corporate existence and rights (charter and statutory).


 


8.12                                                ACCESS


 


(a)                                  At
such reasonable times as determined by Administrative Lender and upon at least
two Business Days prior notice from Administrative Lender (unless a Default
shall have occurred and be continuing, in which case no prior notice is
necessary), permit Lender and/or any of Lender’s agents or representatives, to
(i) examine and make copies of and abstracts from each Borrower’s and
Subsidiary’s records and books of account, (ii) visit each Borrower’s and
Subsidiary’s properties, (iii) discuss each Borrower’s and Subsidiary’s
affairs, finances and accounts with any of its officers or directors who may
then be reasonably available, (iv) communicate directly with each Borrower’s
and Subsidiary’s independent certified public accountants, (v) arrange for
verification of Borrower’s Rights to Payment under reasonable procedures
directly with the obligors thereon or by other methods, and (vi) examine
and inspect each Borrower’s and Subsidiary’s assets.  Each Borrower and Subsidiary shall authorize
its independent certified public accountants to disclose to Lender any and all
financial statements and other information of any kind, including, without
limitation, copies of any management letter, work papers or the substance of
any oral information that such accountants may have with respect to the
business, financial condition, results of operations or other affairs of each
Borrower and Subsidiary.


 


(b)                                 Borrower
shall execute and deliver at the request of Administrative Lender such
instruments as may be necessary for Administrative Lender or any Lender to
obtain such information concerning the business of each Borrower and Subsidiary
as Administrative Lender or any Lender may reasonably require from accountants,
service bureaus or others 


 


48





















 


having custody of or
maintaining records or assets of any Borrower or Subsidiary, provided that the
foregoing shall not (and is not intended to) require any Borrower or Subsidiary
to take any action that would constitute a waiver of any Borrower’s or
Subsidiary’s attorney/client privilege.


 


8.13                                                PERFORMANCE
AND COMPLIANCE WITH OTHER COVENANTS


 


Perform and observe, and
cause each Subsidiary to perform and observe, all the terms, covenants and
conditions required to be performed and observed by it under its Contractual
Obligations, and do all things necessary to preserve and to keep unimpaired its
rights under such Contractual Obligations, other than such failures the
consequences of which in the aggregate could not reasonably be expected to have
a Material Adverse Effect.


 


8.14                                                FISCAL
YEAR; ACCOUNTING PRACTICES


 


Notify Administrative
Lender at least 30 days in advance of any action any Borrower or Subsidiary
intends to take to change (i) its fiscal year or (ii) its method of
accounting, or any accounting practice used by it, or the application of GAAP in
a manner inconsistent with the financial statements previously delivered by it
to Administrative Lender.


 


8.15                                                ENVIRONMENTAL


 


(a)                                  Promptly
give notice to Administrative Lender upon a Responsible Officer obtaining
knowledge of (i) any claim, injury, proceeding, investigation or other
action, including a request for information or a notice of potential
environmental liability, by or from any Governmental Authority or any
third-party claimant that could result in any Borrower or Subsidiary incurring
Environmental Liabilities and Costs that could reasonably be expected to have a
Material Adverse Effect or (ii) the discovery of any Release at, on, under
or from any real property, facility or equipment owned or leased by any
Borrower or Subsidiary in excess of reportable or allowable standards or levels
under any applicable Environmental Law, or in any manner or amount that could
result in any Borrower or Subsidiary incurring Environmental Liabilities and
Costs that could reasonably be expected to have a Material Adverse Effect.


 


(b)                                 Upon
discovery of the presence on any property owned or leased by any Borrower or
Subsidiary of any Contaminant that reasonably could be expected to result in
Environmental Liabilities and Costs that could reasonably be expected to have a
Material Adverse Effect, take all Remedial Action required by applicable
Environmental Law.


 


8.16                                                LIENS


 


Keep the Collateral and
all of its real property free and clear of all Liens, except Permitted Liens.


 


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8.17                                                FUTURE
SUBSIDIARIES


 


Upon any Person becoming
a Subsidiary after the Closing Date, notify Administrative Lender of such
event, and execute and deliver, and cause such Subsidiary to execute and
deliver, such additional Loan Documents as Administrative Lender may reasonably
require, including such as are necessary to cause any such Subsidiary which is
not a Foreign Subsidiary to become a “Borrower.”


 


8.18                                                USE
OF PROCEEDS


 


Use the proceeds of the
Loans solely for Borrowers’ general working capital and corporate purposes.


 


8.19                                                FURTHER
ASSURANCES


 


At Administrative Lender’s
request at any time and from time to time, duly execute and deliver, and cause
each Subsidiary to execute and deliver, such further agreements, documents and
instruments, and do or cause to be done such further acts as may reasonably be
necessary or proper to evidence, perfect, maintain and enforce the security
interests and the priority thereof in the Collateral and to otherwise
effectuate the provisions or purposes of the Loan Documents, at Borrowers’
expense.  Administrative Lender may at
any time and from time to time request a certificate from Borrowers’ Agent
representing that all conditions precedent to the advancement of credit
contained herein are satisfied.  In the
event of such request by Administrative Lender, each Lender may cease to make
any further advancements of credit until Administrative Lender has received
such certificate and Administrative Lender has determined that such conditions
are satisfied.


 


8.20                                                LIEN
IN REAL PROPERTY


 


Promptly upon
Administrative Lender’s request, Borrower shall execute and deliver to
Administrative Lender such mortgages, deeds of trust and other agreements and
documents, and take such actions, as Administrative Lender determines to be reasonably
necessary to grant Administrative Lender a first priority Lien (subject only to
Permitted Liens) in Borrower’s real property.


 


ARTICLE IX.        NEGATIVE
COVENANTS


 


Borrowers covenant that
so long as Lenders remain committed to extend credit to Borrowers pursuant to
the terms hereof and until performance and payment in full, in cash, of all
Obligations and termination of the Commitments, Borrowers will not:


 


9.1                                                       LIENS


 


Create or suffer to
exist, or permit any Subsidiary to create or suffer to exist, any Lien upon or
with respect to any of its properties (including, without limitation any real
property), whether now owned or hereafter acquired, or assign any right to
receive income, except 


 


50





















 


Permitted Liens and Liens
subordinated to the Administrative Lender’s Liens by Section 9.2(h).


 


9.2                                                       INDEBTEDNESS


 


Create or suffer to
exist, or permit any Subsidiary to create or suffer to exist, any Debt or other
Indebtedness that is not Debt, except:


 


(a)                                  the
Obligations;


 


(b)                                 current
liabilities in respect of taxes, assessments and governmental charges or levies
incurred, or liabilities for labor, materials, inventory, services, supplies
and rentals incurred, or for goods or services purchased, in the ordinary course
of business consistent with past practice and industry practice in respect of
arm’s length transactions;


 


(c)                                  Debt
outstanding on the Closing Date and referenced on Section 6.17 of the
Disclosure Letter and all renewals, extensions, refinancing or refunding of
such Indebtedness in a principal amount which does not exceed the principal
amount outstanding immediately before such refinancing, together with all
prepayment fees, penalties and expenses in respect of the Indebtedness being
renewed, extended, refinanced or refunded, provided each such renewal,
extension, refinancing or refunding is on terms and conditions no less
favorable to the creditors than the Indebtedness being renewed, extended,
refinanced or refunded;


 


(d)                                 Debt
subordinated in writing to the Obligations on terms acceptable to Required
Lenders in favor of the prior payment in full in cash of the Obligations;


 


(e)                                  purchase
money Debt (including Capitalized Leases and Other Leases) to finance the
purchase of fixed assets (including equipment); provided that (i) the
total of all such Indebtedness (exclusive of such Indebtedness for the purchase
of chassis and the Indebtedness referred to in clause (c) above) shall not
exceed an aggregate principal amount of $10,000,000 at any one time outstanding;
(ii) such Indebtedness when incurred shall not exceed the purchase price
of the assets financed; (iii) no such Indebtedness shall be refinanced for a
principal amount in excess of the principal balance outstanding thereon at the
time of such refinancing; and (iv) no Default exists at the time such
Indebtedness is incurred;


 


(f)                                    Indebtedness
under Interest Rate Contracts, Commodity Contracts and foreign exchange
agreements permitted under Section 9.13;


 


(g)                                 Repurchase
Obligations;


 


(h)                                 Debt
of any Borrower to another Borrower, and each Borrower hereby agrees that if it
has or hereafter acquires a Lien in any Collateral in which Administrative
Lender has or hereafter acquires a perfected Lien, then Borrower’s Lien shall
be junior in priority to Administrative Lender’s Lien, notwithstanding the
date, manner or order of perfection of Borrower’s Lien and Administrative
Lender’s Lien;


 


51





















 


(i)                                     Indebtedness
incurred in the ordinary course of business for the purchase of chassis;


 


(j)                                     other
Indebtedness not to exceed 20% of Tangible Net Worth at any time, provided that
no Default exists or is created by incurrence of such Indebtedness; and


 


(k)                                  Contingent
Obligations in connection with Approved Dealer Financing Agreements.


 


9.3                                                       RESTRICTED
PAYMENTS, REDEMPTIONS


 


Do any of the following
at any time a Default is continuing or if after giving effect to any such
action a Default would be caused by such action:


 


(a)                                  declare
or make any dividend payment or other distribution of assets, properties, cash,
rights, obligations or securities on account or in respect of any of its Stock
or Stock Equivalents except (i) dividends paid to Borrower or
(ii) dividends paid by Parent solely in Stock or Stock Equivalents of Parent;
or


 


(b)                                 purchase,
redeem or otherwise acquire for value any of Parent’s Stock or Stock
Equivalents, except that (i) Parent may convert any of its convertible
securities of the type in existence on the Closing Date into other securities
pursuant to the terms of such convertible securities or otherwise in exchange
therefor and (ii) for so long as a Default is not continuing and would not
be caused by such action, Parent may repurchase stock from employees or former
employees of Borrowers in accordance with the terms of repurchase agreements
between Borrowers and their employees or former employees.


 


9.4                                                       MERGERS,
STOCK ISSUANCES, SALE OF ASSETS, ETC.


 


Except as permitted in
Sections 9.5(h) and 9.5(i):


 


(a)                                  Merge
or consolidate with, or permit any Subsidiary to merge or consolidate with, any
Person or acquire all or substantially all of the Stock or Stock Equivalents of
any Person; provided any Borrower may liquidate or dissolve voluntarily into,
and may merge with and into, or have its stock otherwise acquired by Parent and
any Subsidiary other than a Borrower may liquidate or dissolve voluntarily
into, and may merge with and into, or have its stock otherwise acquired by
Parent or any other Subsidiary that is not a Foreign Subsidiary;


 


(b)                                 Acquire
all or substantially all, or permit any Subsidiary to acquire all or
substantially all of (i) the assets of any Person or (ii) the assets
constituting the business of a division, branch or other unit operation of any
Person; provided any Subsidiary may acquire all or substantially all of the
assets of (or the assets constituting the business of a division, branch or
other unit operation of) any other Subsidiary that is not a Foreign Subsidiary;
or


 


(c)                                  Sell,
convey, transfer, lease or otherwise dispose of, or permit any Subsidiary to
sell, convey, transfer, lease or otherwise dispose of, any of its assets or any
interest therein 


 


52





















 


to any Person, or permit
or suffer any other Person to acquire any interest in any of its assets, except
(i) Permitted Liens, (ii) as otherwise permitted under item (a) or
(b) above, (iii) the sale or disposition of inventory in the ordinary
course of business and/or assets which have become obsolete, unneeded or are
replaced in the ordinary course of business or (iv) the sale or
disposition of assets outside the ordinary course of business, provided that
the aggregate value of assets so sold or disposed of in any twelve-month period
does not exceed 10% of Tangible Net Worth. 
As used in item (iv), “value” means the highest of book value, fair
market value or value of consideration received in exchange for such sale or
disposition.


 


9.5                                                       INVESTMENTS


 


Make, incur, assume or
suffer to exist any Investment in any other Person, except, without
duplication:


 


(a)                                  Investments
existing on the Closing Date and identified in Section 9.5 of the
Disclosure Letter;


 


(b)                                 Cash
Equivalent Investments (provided that any Investment which when made complies
with the requirements of the definition of the term “Cash Equivalent Investment”
may continue to be held notwithstanding that such Investment if made thereafter
would not comply with such requirements);


 


(c)                                  Investments
permitted as Indebtedness pursuant to Section 9.2;


 


(d)                                 Investments
consisting of employee relocation loans and other loans to employees, officers
or directors for the purchase of equity securities of Parent;


 


(e)                                  in
the ordinary course of business, Investments by Borrower or any Subsidiary in
any Subsidiary that is not a Foreign Subsidiary (or, with the prior written
consent of Administrative Lender (which consent will not be unreasonably
withheld), any Subsidiary that is a Foreign Subsidiary), by way of
contributions to capital or loans or advances, provided that immediately before
and after giving effect thereto no Default is continuing;


 


(f)                                    Investments
(including debt obligations) received in connection with the bankruptcy or
reorganization of customers or suppliers in settlement of obligations of, or
disputes with, such Persons arising in the ordinary course of business;


 


(g)                                 Investments
arising under Interest Rate Contracts, Commodity Contracts and foreign exchange
agreements permitted hereunder;


 


(h)                                 subject
to the dollar limitations set forth below, any acquisition of (1) all or
substantially all of the Stock or Stock Equivalents of any Person (whether by
purchase or merger), (2) all or substantially all of the assets of any
Person or (3) all or substantially all of the assets constituting the
business of a division, branch or other unit operation of any Person; provided
that immediately before and after giving effect thereto no Default is
continuing and provided further, that (A) after combining Parent’s
consolidated actual and 


 


53





















 


projected financial performance
with the actual and projected financial performance of the “Entity” (as defined
below) on a pro forma, consolidated basis in a manner acceptable to
Administrative Lender, Administrative Lender is satisfied that no Default would
have occurred or will occur as a result of such acquisition, (B) the
Entity is located in and organized under the laws of Canada, a jurisdiction in
Canada, the United States or a jurisdiction in the United States, (C) the
Entity is not a Foreign Subsidiary or, if it is or would be a Foreign
Subsidiary, not without first obtaining the written consent of Administrative
Lender, which consent will not be unreasonably withheld and (D) such
acquisition is a consensual acquisition and not a hostile take-over or other
non-negotiated acquisition.  “Entity”
means the entity which is the subject of such acquisition or which is the
seller of assets in connection with such acquisition; and


 


(i)                                     subject
to the dollar limitations set forth below, other Investments provided that
immediately before and after giving effect thereto no Default is continuing.


 


The aggregate
consideration paid in cash or property (other than common Stock and common
Stock Equivalents of Parent) for all acquisitions and other Investments
permitted under clauses (h) and (i) above shall not (after taking into account
any losses incurred on Investments made under clause (i)) at any time exceed
20% of Tangible Net Worth.


 


9.6                                                       CHANGE
IN NATURE OF BUSINESS


 


Directly or indirectly
engage, or permit any Subsidiary to directly or indirectly engage, in any
business activity other than the type of business activities in which Borrowers
are engaged on the Closing Date and activities reasonably related thereto.


 


9.7                                                       PLANS


 


(a)                                  Adopt
or become obligated to contribute to, or permit any Subsidiary to adopt or
become obligated to contribute to, any Plan subject to Title IV or any
multi-employer Plan or any other Plan subject to Section 412 of the
Internal Revenue Code (except for any such Plan listed on the Disclosure Letter
on the Closing Date), (b) establish or become obligated with respect to,
or permit any Subsidiary to establish or become obligated to contribute to, any
new welfare benefit Plan, or modify any existing welfare benefit Plan, which is
reasonably likely to result in an increase of the present value of future
liabilities for post-retirement life insurance and medical benefits, or
(c) establish or become obligated to contribute to, or permit any
Subsidiary to establish or become obligated to contribute to, any new unfunded
pension Plan, or modify any existing unfunded pension Plan, which is reasonably
likely to result in an increase in the present value of future unfunded
liabilities under all such plans.


 


9.8                                                       CANCELLATION
OF INDEBTEDNESS OWED TO IT


 


Cancel, or permit any Subsidiary
to cancel, any claim or Indebtedness owed to it except for legitimate business
purposes in the reasonable judgment of Borrowers and in the ordinary course of
business.


 


54





















 


9.9                                                       MARGIN
REGULATIONS


 


Use, or permit any
Subsidiary to use, the proceeds of any Loan to purchase or carry any margin
stock (within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System).


 


9.10                                                ENVIRONMENTAL


 


Permit any lessee or any
other Person to dispose of any Contaminant by placing it in or on the ground or
waters of any property owned or leased by any Borrower or Subsidiary, except in
material compliance with Environmental Law or the terms of any Permit or other
than those that in the aggregate could not reasonably be expected to have a
Material Adverse Effect.


 


9.11                                                TRANSACTIONS
WITH AFFILIATES


 


Enter, or permit any
Subsidiary to enter, into any transaction directly or indirectly with or for
any affiliate of Borrower (other than another Borrower or any Subsidiary that
is not a Foreign Subsidiary) except (a) in the ordinary course of business
on a basis no less favorable to such affiliate than would be obtained in a
comparable arm’s length transaction with a Person not an affiliate of Borrower
or (b) any transaction involving assets that are not material to the
business and operations of Borrowers or the Subsidiaries.


 


9.12                                                NEW
COLLATERAL LOCATION; NAME CHANGE


 


Open any new location or
change its name, or permit any Subsidiary to do so, unless (a) Borrowers’
Agent gives Administrative Lender (i) 30 days prior notice of the intended
name change, (ii) 30 days prior notice of the intended opening of such new
location, and (b) Borrowers execute and Borrowers’ Agent delivers to
Administrative Lender such agreements, documents and instruments as
Administrative Lender deems reasonably necessary or desirable to protect its
interests in the Collateral.


 


9.13                                                NO
SPECULATIVE TRANSACTIONS


 


Engage in, or permit any
Subsidiary to engage in, any Commodity Contract, Interest Rate Contract or
foreign exchange agreement, except for hedging purposes with respect to
transactions engaged in by Borrowers in the ordinary course of business and not
for speculative purposes.


 


ARTICLE X.                                                   FINANCIAL
COVENANTS


 


10.1                                                LEVERAGE
RATIO


 


As of the end of each
fiscal quarter, Parent shall maintain a Leverage Ratio not greater than 2.50:1.


 


55





















 


10.2                                                CURRENT
RATIO


 


As of the end of each
fiscal quarter, Parent shall maintain a Current Ratio not less than 1.10:1.


 


10.3                                                DEBT
SERVICE COVERAGE RATIO


 


As of the end of each
fiscal quarter , Parent shall maintain a Debt Service Coverage Ratio greater
than 1.50:1.


 


10.4                                                TANGIBLE
NET WORTH


 


Parent will not permit
its Tangible Net Worth as of the end of any fiscal quarter to be less than the
total of (i) 90% of Tangible Net Worth as of January 3, 2004 plus
(ii) 50% of the sum of Parent’s consolidated net income for each fiscal quarter
since January 3, 2004 (exclusive of any fiscal quarter in which Parent’s consolidated
net income is less than zero).


 


ARTICLE XI.             EVENTS
OF DEFAULT


 


11.1          EVENTS OF
DEFAULT


 


The occurrence of any of
the following shall constitute an “Event of Default” under this Agreement:


 


(a)                                  any
Obligor shall fail to pay when due any principal amount payable under the Loan
Documents, shall fail to pay any interest payable under the Loan Documents
within 5 days of the due date therefor, or shall fail to pay any other
amount payable under the Loan Documents within 10 days of the due date
therefor;


 


(b)                                 any
financial statement or certificate furnished to Administrative Lender or any
Lender in connection with, or any representation or warranty made by any
Obligor under any of the Loan Documents shall prove to be false or misleading
in any material respect when furnished or made;


 


(c)                                  Borrowers
or Borrowers’ Agent shall fail to provide any certificate, report or other
information which it is required to provide pursuant to Section 8.3 or Section 8.9
on the date specified in Section 8.3 or Section 8.9; provided that
unless Borrowers and Borrowers’ Agent have previously failed to provide any
required certificate, report or other information by the required date on two
prior occasions within the preceding 12 months such failure shall be considered
an Event of Default only if Borrowers and Borrowers’ Agent fail to provide such
certificate, report or other information within five Business Days (two
Business Days with respect to Section 8.9(a)) of the earlier of
(i) the date an officer of Borrower has knowledge of the failure to so
provide such certificate, report or other information, or (ii) the date
Administrative Lender, at the request of a Lender, notifies Borrowers’ Agent of
such failure;


 


56





















 


(d)                                 any
default by Borrowers in the performance of or compliance with any obligation,
agreement or other provision contained in Sections 5.2(a), 8.5, 8.10,
8.11, 8.12, 8.14, 8.16, 8.17, 9.1, 9.2, 9.3, 9.4, 9.5, 9.6 and 9.12 and
contained in Article X;


 


(e)                                  any
default by any Obligor in the performance of or compliance with any obligation,
agreement or other provision contained in any Loan Document (other than those
referred to in subsections (a) through (d) above) for 30 days after notice
thereof has been given to Borrowers’ Agent by Administrative Lender;


 


(f)                                    any
breach(es) by any Obligor in the payment or performance of any other
obligation(s) under the terms of any contract(s) or instrument(s) (other than
any of the Loan Documents) evidencing Indebtedness in excess of $7,500,000 in
the aggregate if such breach(es) has/have not been cured to the satisfaction of
the affected creditor(s) or waived by such creditor(s) within any applicable
cure period provided under the contract(s) or instrument(s);


 


(g)                                 any
judgment(s) or order(s) for the payment of money in excess of $7,500,000 in the
aggregate shall be rendered against one or more Obligors and Subsidiaries and
either (i) enforcement proceedings shall have been commenced by any
creditor upon any such judgment or order; or (ii) there shall be any
period of 10 consecutive days during which a stay of enforcement of any such
judgment or order, by reason of a pending appeal or otherwise, shall not be in
effect;


 


(h)                                 any
Obligor becomes insolvent, or suffers or consents to or applies for the
appointment of a receiver, trustee, custodian or liquidator of itself or any of
its property, or is generally unable to or fails to pay its debts as they
become due, or makes a general assignment for the benefit of creditors; any
Obligor files a voluntary petition in bankruptcy, or seeks to effect a plan or
other arrangement with creditors or any other relief under the Bankruptcy Code
or under any state or other Federal law granting relief to debtors, whether now
or hereafter in effect; or any involuntary petition or proceeding pursuant to
the Bankruptcy Code or any other applicable state or Federal law relating to
bankruptcy, reorganization or other relief for debtors is filed or commenced
against any Obligor and is not dismissed, stayed or vacated within 60 days
thereafter or any Obligor files an answer admitting the jurisdiction of the
court and the material allegations of any such involuntary petition; any
Obligor is adjudicated a bankrupt, or an order for relief is entered by any
court of competent jurisdiction under the Bankruptcy Code or any other
applicable state or Federal law relating to bankruptcy, reorganization or other
relief for debtors; or any Obligor takes any corporate, partnership or company
action authorizing, or in furtherance of, any of the foregoing;


 


(i)                                     if
any of the following events occur: 
(1) any Plan incurs any “accumulated funding deficiency” (as
defined in ERISA) whether waived or not, (2) Parent or any affiliate of
Parent engages in any “prohibited transaction” (as defined in ERISA),
(3) any Plan is terminated, (4) a trustee is appointed by an
appropriate United States district court to 


 


57





















 


administer any Plan, or
(5) the PBGC institutes proceedings to terminate any Plan or to appoint a
trustee to administer any Plan;


 


(j)                                     the
dissolution or liquidation of any Obligor, or any Obligor or its directors or
stockholders shall take action seeking to effect the dissolution or liquidation
of any Obligor;


 


(k)                                  any
Change in Control; or


 


(l)                                     any
Loan Document, or any Lien granted thereunder, shall (except in accordance with
its terms), in whole or in part, terminate, cease to be effective or cease to
be the legally valid, binding and enforceable obligation of any Obligor party
thereto; any Obligor shall, directly or indirectly, contest in any manner such
effectiveness, validity, binding nature or enforceability; or any Lien securing
any Obligation shall, in whole or in part, cease to be a perfected first
priority Lien, subject only to those exceptions expressly permitted by such
Loan Document.


 


11.2                                                REMEDIES


 


(a)                                  During
the continuance of any Event of Default (other than an Event of Default
referred to in Section 11.1(h)), Administrative Lender may, with the
consent of the Required Lenders, or shall, upon instructions from the Required
Lenders, by notice to Borrowers’ Agent, (i) terminate the obligations of
Lenders to extend any further credit under any of the Loan Documents, and
(ii) declare all or any part of the Obligations to be immediately due and
payable without presentment, demand, protest or any other notice of any kind,
all of which are hereby expressly waived by Borrowers, and/or take such
enforcement action as is permitted under this Section.  Upon the occurrence or existence of any Event
of Default described in Section 11.1(h), immediately and without notice,
(A) the obligations, if any, of Lenders to extend any further credit under
any of the Loan Documents shall automatically cease and terminate, and (B) all
indebtedness of Borrowers under the Loan Documents shall automatically become
immediately due and payable, without presentment, demand, protest or any other
notice of any kind, all of which are hereby expressly waived by Borrowers.  Immediately after taking any action under
this Section, Administrative Lender shall notify each Lender of such action.


 


(b)                                 During
the continuance of an Event of Default, Administrative Lender, in addition to
any other rights and remedies contained in the Loan Documents, shall have all of
the rights and remedies of a secured party under the Code and all other
applicable law, all of which rights and remedies shall be cumulative and
nonexclusive to the extent permitted by law. 
Administrative Lender may cause the Collateral to remain on Borrower’s
premises, at Borrowers’ expense, pending sale or other disposition
thereof.  Administrative Lender shall
have the right to conduct such sales on Borrower’s premises or elsewhere, at
Borrowers’ expense, on such occasion(s) as Administrative Lender may see fit,
and Borrowers, at Administrative Lender’s request, will, at Borrowers’ expense,
assemble the Collateral and make it available to Administrative Lender at such
place(s) as Administrative Lender may reasonably designate from time to
time.  Any sale, lease or other
disposition by 


 


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Administrative Lender of
the Collateral, or any part thereof, may be for cash or other value.  Borrowers shall execute and deliver, or cause
to be executed and delivered, such instruments, documents, assignments, deeds,
waivers, certificates and affidavits and take such further action as
Administrative Lender shall reasonably require in connection with such sale,
and Borrower hereby constitutes Administrative Lender as its attorney-in-fact
to execute any such instrument, document, assignment, deed, waiver, certificate
or affidavit on behalf of Borrower and in its name.  At any sale of the Collateral, the Collateral
to be sold may be sold in one lot as an entirety or in separate lots as
Administrative Lender may determine. 
Administrative Lender shall not be obligated to make any sale of any
Collateral if it determines not to do so, regardless of the fact that notice of
sale was given.  Administrative Lender
may, without notice or publication, adjourn any public or private sale or cause
the sale to be adjourned from time to time by announcement at the time and
place fixed for sale, and such sale may, without further notice, be made at the
time and place to which it is so adjourned. 
In case any sale of Collateral is made on credit or for future delivery,
the Collateral so sold may be retained by Administrative Lender until the sale
price is paid, but Administrative Lender shall not incur any liability if any
purchaser fails to pay for any Collateral so sold and, in case of any such
failure, such Collateral may be sold again. 
At any public sale, any Lender (i) may bid for or purchase the
Collateral offered for sale free (to the extent permitted by law) from any
rights of redemption, stay or appraisal on the part of Borrower with respect to
the Collateral, (ii) make payment on account thereof by using any claim then
due and payable to such Lender from Borrower as a credit against the purchase
price, and (iii) upon compliance with the terms of sale, hold, retain and
dispose of such property without further accountability to Borrower
therefor.  Borrowers acknowledge that
portions of the Collateral may be difficult to preserve and dispose of and may
be subject to complex maintenance and management; accordingly, Administrative
Lender shall have the widest possible latitude in the exercise of its rights
and remedies hereunder.


 


(c)                                  Administrative
Lender is hereby granted a license and right to use, without charge upon the
occurrence and during the continuance of an Event of Default and until the
Obligations are fully and finally paid in cash and the Commitments terminated,
Borrowers’ labels, patents, copyrights, rights of use of any name, trade
secrets, trade names, trademarks, service marks, advertising material, General
Intangibles and any other property of a similar nature in completing the
production, advertising for sale and sale of any Collateral.


 


(d)                                 Any
notice required to be given by Administrative Lender with respect to any of the
Collateral, which notice is given pursuant to Section 13.1 and deemed
received pursuant to Section 13.1 at least five Business Days before a
sale, lease, disposition or other intended action by Administrative Lender with
respect to any of the Collateral, shall constitute fair and reasonable notice
to Borrowers of any such action.  A
public sale in the following fashion shall be conclusively presumed to be
reasonable:  (i) the sale is held in
a county where any part of the Collateral is located or in which Borrower has a
place of business; (ii) the sale is conducted by auction, but it need not
be by a professional auctioneer; (iii) any Collateral is sold as is and
without any preparation for sale; and (iv) Borrowers’ Agent is given
notice of such public sale pursuant to the preceding sentence.


 


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(e)                                  Upon
the occurrence and during the continuance of an Event of Default,
Administrative Lender shall have, with respect to Rights to Payment, all rights
and powers to:  (i) direct any and
all account debtors to make all payments in respect of the Rights to Payment
directly to Administrative Lender or otherwise demand payment of any or all of
the Rights to Payment; (ii) enforce payment of any or all of the Rights to
Payment by legal proceedings or otherwise; (iii) exercise Borrower’s rights and
remedies with respect to any actions or proceedings brought to collect a Right
to Payment; (iv) sell or assign any Right to Payment upon such terms, for
such amount and at such time or times as Administrative Lender deems advisable;
(v) settle, adjust, compromise, extend or renew a Right to Payment; (vi)
discharge or release any Right to Payment; and (vii) prepare, file and sign
Borrower’s name on any proof of claim in bankruptcy or any similar document
against an account debtor, and to otherwise exercise the rights granted herein.


 


(f)                                    Administrative
Lender shall have no obligation (i) to preserve any rights to the
Collateral against any Person, (ii) to make any demand upon or pursue or
exhaust any rights or remedies against Borrowers or others with respect to
payment of the Obligations, (iii) to pursue or exhaust any rights or
remedies with respect to any of the Collateral or any other security for the
Obligations, or (iv) to marshal any assets in favor of Borrower or any
other Person against or in payment of any or all of the Obligations.


 


(g)                                 Borrowers
recognize that federal and/or state securities and other laws may limit the
flexibility desired to achieve an otherwise commercially reasonable disposition
of Collateral, and in the event of potential conflict between such laws and
what in other circumstances might constitute commercial reasonableness, it is
intended that consideration of such laws will prevail over attempts to achieve
such commercial reasonableness.  In
connection with any sale or other disposition of Collateral, compliance by
Administrative Lender with the written advice of its counsel concerning the
potential effect of any such law will not be cause for Borrower, or any other
Person, to claim that such sale or other disposition was not commercially
reasonable.


 


(h)                                 Borrowers
shall pay to Administrative Lender (for distribution to Lenders, as
appropriate), on demand and as part of the Obligations, all costs and expenses,
including court costs and costs of sale, incurred by Administrative Lender or
any Lender in exercising any of its rights or remedies hereunder, and all costs
and expenses incurred in connection with any review of any part of the
Collateral.


 


11.3                                                ADMINISTRATIVE
LENDER AS BORROWERS’ ATTORNEY


 


Borrower hereby appoints
Administrative Lender or any other Person whom Administrative Lender may
designate, as Borrower’s attorney, with power during the continuation of an
Event of Default:  to indorse Borrower’s
name on any checks, notes, acceptances, money orders, drafts or other forms of
payment or security that may come into Administrative Lender’s possession; to
sign Borrower’s name on any invoice or bill of lading relating to any Right to
Payment, on drafts against customers, on schedules and assignments of Rights to
Payment, on notices of assignment, financing statements and other public 


 


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records, and on notices
to customers; to notify the post office authorities to change the address for
delivery of Borrower’s mail to an address designated by Administrative Lender;
to receive, open and process all mail addressed to Borrower; to ask for,
demand, sue for, collect, receive, receipt and give acquittance for any and all
moneys due or to become due with respect to any Collateral; to settle,
compromise, prosecute or defend any action, claim or proceeding with respect to
Collateral; to sell, assign, pledge, transfer and make any agreement with
respect to or otherwise deal with the Collateral; and to do all things
necessary to perfect Administrative Lender’s security interest in the
Collateral, to preserve and protect the Collateral and to otherwise carry out
this Agreement; provided, however, that nothing contained in this Section will
be construed as requiring or obligating Administrative Lender to take any
action.  Provided Administrative Lender
acts in a reasonable manner, Borrower ratifies and approves all acts of such
attorney, and neither Administrative Lender nor the attorney will be liable for
any acts or omissions nor for any error of judgment or mistake of fact or
law.  This power being coupled with an
interest is irrevocable until the Obligations have been fully satisfied and
indefeasibly paid in cash and the Commitments terminated.


 


ARTICLE XII.                  ADMINISTRATIVE
LENDER


 


12.1                ACTIONS


 


Each Lender hereby
appoints U.S. Bank as Administrative Lender and authorizes U.S. Bank to perform
the functions of Administrative Lender under the Loan Documents.  Each Lender authorizes Administrative Lender
to act on behalf of such Lender under the Loan Documents and, in the absence of
other written instructions from the Required Lenders received from time to time
by Administrative Lender (with respect to which Administrative Lender agrees
that it will comply, except as otherwise provided in this Section or as
otherwise advised by counsel), to exercise such powers thereunder as are
specifically delegated to or required of Administrative Lender by the terms
thereof, together with such powers as may be reasonably incidental
thereto.  Each Lender hereby indemnifies
(which indemnity shall survive any termination of this Agreement)
Administrative Lender ratably from and against any and all liabilities,
obligations, losses, damages, claims, costs or expenses of any kind or nature
whatsoever which may at any time be imposed on, incurred by, or asserted
against Administrative Lender in any way relating to or arising out of the Loan
Documents, including reasonable attorneys’ fees (whether incurred at the trial
or appellate level, in an arbitration or administrative proceeding, in
bankruptcy, (including, without limitation, any adversary proceeding, contested
matter or motion) or otherwise), and as to which Administrative Lender is not reimbursed
by Borrowers; provided, however, that no Lender shall be liable for the payment
of any portion of such liabilities, obligations, losses, damages, claims, costs
or expenses which are determined by a court of competent jurisdiction in a
final proceeding to have resulted solely from Administrative Lender’s gross
negligence or willful misconduct. 
Administrative Lender shall not be required to take any action under any
Loan Document, or to prosecute or defend any suit in respect of any Loan
Document, unless it is indemnified hereunder to its satisfaction.  If any indemnity in favor of Administrative
Lender shall be or become, in Administrative Lender’s determination,
inadequate, 


 


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Administrative Lender may
call for additional indemnification from Lenders and cease to do the acts
indemnified against hereunder until such additional indemnity is given.


 


12.2                                                RELIANCE
BY ADMINISTRATIVE LENDER


 


Administrative Lender
shall be entitled to rely upon any certificate, notice or other document
(including any cable, telegram, fax, or telex) or telephonic notice believed by
it in Good Faith to be genuine and correct and to have been signed, sent or
made by or on behalf of the proper person or persons, and upon advice and
statements of legal counsel (including Borrower’s counsel), independent
accountants and other experts selected by Administrative Lender with reasonable
care.  As to any matters not expressly
provided for by this Agreement, Administrative Lender shall not be required to
take any action or exercise any discretion, but shall be required to act or to
refrain from acting upon instructions of the Required Lenders and shall in all
cases be fully protected by Lenders in acting, or in refraining from acting, under
any Loan Document in accordance with the instructions of the Required Lenders,
and such instructions of the Required Lenders and any action taken or failure
to act pursuant thereto shall be binding on all Lenders.


 


12.3                                                EXCULPATION


 


Neither Administrative
Lender nor any of its directors, officers, employees or agents shall be liable
to any Lender for any action taken or omitted to be taken by it under any Loan
Document, or in connection herewith or therewith, except for its own willful
misconduct or gross negligence, nor responsible for any recitals or warranties
therein, nor for the effectiveness, enforceability, validity or due execution
of any Loan Document, nor for the creation, perfection or priority of any Liens
purported to be created by any Loan Document, or the validity, genuineness,
enforceability, existence, value or sufficiency of any collateral security, nor
to make any inquiry respecting the performance by Obligors of their obligations
under any Loan Document.  Any such
inquiry which may be made by Administrative Lender shall not obligate it to
make any further inquiry or to take any action. 
Administrative Lender shall be entitled to rely upon advice of counsel
concerning legal matters and upon any notice, consent, certificate, statement or
writing which Administrative Lender believes to be genuine and to have been
presented by a proper Person.


 


12.4                                                SUCCESSOR


 


Administrative Lender may
resign as such at any time upon at least 30 days prior notice to Borrowers’
Agent and all Lenders.  If Administrative
Lender at any time shall resign, the Required Lenders may appoint another
Lender as a successor Administrative Lender which shall thereupon become
Administrative Lender hereunder.  If no
successor Administrative Lender shall have been so appointed by the Required
Lenders, and shall have accepted such appointment, within 30 days after the
retiring Administrative Lender’s giving notice of resignation, then the
retiring Administrative Lender may, on behalf of Lenders, appoint a successor
Administrative Lender, which shall be one of the Lenders or a commercial
banking institution organized under the laws of the United States (or any State



 


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thereof) or a U.S. branch
or agency of a commercial banking institution, and having a combined capital
and surplus of at least $500,000,000. 
Upon the acceptance of any appointment as Administrative Lender
hereunder by a successor Administrative Lender, such successor Administrative
Lender shall give Borrowers’ Agent notice of such acceptance, shall be entitled
to receive from the retiring Administrative Lender such documents of transfer
and assignment as such successor Administrative Lender may reasonably request,
and shall thereupon succeed to and become vested with all rights, powers,
privileges and duties of the retiring Administrative Lender, and the retiring
Administrative Lender shall be discharged from its duties and obligations under
the Loan Documents.  After any retiring
Administrative Lender’s resignation hereunder as Administrative Lender, the
provisions of (a) this Article XII shall inure to its benefit as to
any actions taken or omitted to be taken by it while it was Administrative
Lender under this Agreement; and (b) Section 13.2 and Section 13.3
shall continue to inure to its benefit.


 


12.5                                                LOANS
BY ADMINISTRATIVE LENDER; OTHER ACTIONS


 


Administrative Lender
shall have the same rights and powers with respect to the Loans made by it or
any of its affiliates as any other Lender and may exercise such rights and
powers as if it were not Administrative Lender. 
Administrative Lender and each Lender and its respective affiliates may
accept deposits from, lend money to, and generally engage in any kind of
business with any Borrower or Subsidiary or affiliate of Borrower as if it were
not the Administrative Lender or a Lender, provided that the forgoing shall not
be deemed to relieve Borrower of any of its obligations under the Loan
Documents.


 


12.6                                                CREDIT
DECISIONS


 


Each Lender acknowledges
that it has made its own credit decision to extend its commitments hereunder
independently of Administrative Lender and each other Lender, and based on such
Lender’s review of the financial information of Borrowers, this Agreement, the
other Loan Documents (the terms and provisions of which being satisfactory to
such Lender) and such other documents, information and investigations as such
Lender has deemed appropriate.  Each
Lender also acknowledges that it will continue to make its own credit decisions
as to exercising or not exercising from time to time any rights and privileges
available to it under the Loan Document independently of Administrative Lender
and each other Lender and based on such other documents, information and
investigations as it shall deem appropriate at any time.


 


12.7                                                SYNDICATION
AGENT


 


No Lender identified as a
“Syndication Agent” herein shall have any right, power, obligation, liability,
responsibility or duty under this Agreement in such capacity.  Each Lender acknowledges that it has not
relied on and will not rely on any Lender identified as a “Syndication Agent”
in deciding to enter into this Agreement or in taking or not taking any action
hereunder.


 


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ARTICLE XIII.        MISCELLANEOUS


 


13.1                NOTICES


 


Except as specified
otherwise herein, all notices, requests and demands which any party is required
or may desire to give to any other party under this Agreement must be in
writing.  Each notice to be given to
Administrative Lender or any Lender shall be addressed to Administrative Lender
and each Lender at its address or fax number set forth as the “Address for
Notices” for Administrative Lender or such Lender in Schedule I
hereto, or to such other address or fax number as Administrative Lender or any
Lender may designate for itself by notice to all other parties.  Each notice to be given to Borrowers’ Agent
or Borrower shall be addressed to Borrowers’ Agent at the following address or
fax number:


 


	
  To Borrowers’ Agent:

  	
   

  	
  Monaco Coach Corporation

  
	
   

  	
   

  	
  91320 Industrial Way

  
	
   

  	
   

  	
  Coburg, Oregon 97408

  
	
   

  	
   

  	
  Attn: Chief Financial Officer

  
	
   

  	
   

  	
  Fax: (541) 302-3835

  



 


or to such other address
or fax number as Borrowers’ Agent may designate for itself by notice to all
other parties.  Each such notice, request
and demand shall be deemed given or made as follows:  (a) three Business Days following deposit in
the United States mails, with first class postage prepaid, (b) the next
Business Day after such notice was delivered to a regularly scheduled overnight
delivery, or (c) upon receipt of notice given by fax, mailgram, telegram,
telex, or personal delivery.


 


13.2                                                COSTS,
EXPENSES, ATTORNEYS’ FEES


 


Borrowers shall pay
immediately upon demand the full amount of all payments, advances, charges,
costs and expenses, including reasonable attorneys’ fees (whether incurred at
the trial or appellate level, in an arbitration or administrative proceeding,
in bankruptcy (including, without limitation, any adversary proceeding,
contested matter or motion) or otherwise), incurred by Administrative Lender
and/or any Lender in connection with (a) the negotiation and preparation
of the Loan Documents, (b) the enforcement, preservation or protection (or
attempted enforcement, preservation or protection) of Administrative Lender’s
and/or any Lender’s rights (except in a dispute solely between Lenders),
including, without limitation, periodic collateral examinations, and/or the
collection of any amounts which become due under any of the Loan Documents, and
(c) the prosecution or defense of any action in any way related to any of
the Loan Documents, including without limitation, any action for declaratory
relief, and including any of the foregoing incurred in connection with any
bankruptcy proceeding relating to Borrower.


 


13.3                                                INDEMNIFICATION


 


(a)                                  To
the fullest extent permitted by law, Borrowers hereby agree to protect,
indemnify, defend and hold harmless each of Administrative Lender and Lenders
and each of 


 


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their respective
officers, directors, shareholders, employees, agents, attorneys and affiliates
(collectively, “Indemnitees”) from and against any liabilities, losses, damages
or expenses of any kind or nature and from any suits, claims or demands
(including in respect of or for reasonable attorneys’ fees (whether incurred at
the trial or appellate level, in an arbitration or administrative proceeding,
in bankruptcy (including, without limitation, any adversary proceeding,
contested matter or motion) or otherwise) and other expenses, including the
allocated costs and expenses of internal counsel) arising on account of or in
connection with any matter or thing or action or failure to act by Indemnitees,
or any of them, arising out of or relating to any Loan Document, including
without limitation any use by Borrower of any proceeds of credit advanced,
except to the extent such liability arises from the willful misconduct or gross
negligence of the Indemnitees (collectively, the “Indemnified Liabilities”).


 


(b)                                 Upon
receiving knowledge of any suit, claim or demand asserted by a third party that
Administrative Lender and/or any Lender believes is covered by this indemnity,
such Indemnitee shall give Borrowers’ Agent notice of the matter and an
opportunity to defend it, at Borrowers’ sole cost and expense, with legal
counsel satisfactory to such Lender. 
Such Lender may also require Borrowers to defend the matter.  Any failure or delay of such Lender to notify
Borrowers’ Agent of any such suit, claim or demand shall not relieve Borrowers
of their obligations under this Section, but shall reduce such obligations to
the extent of any increase in those obligations caused solely by an
unreasonable failure or delay in providing such notice.  Borrowers may not settle or otherwise compromise
any claim with respect to any Indemnified Liability unless the settlement
includes an unconditional release of the Indemnitee from all liability on
claims that are the subject of such settlement and may not settle or otherwise
compromise any claim with respect to any Indemnified Liability, other than a
claim for money damages, without the prior written consent of the Indemnitee,
which consent shall not be unreasonably withheld.


 


(c)                                  If
and to the extent that the foregoing undertaking may be unenforceable for any
reason Borrowers shall make the maximum contribution permissible under
applicable law to the payment and satisfaction of each of the Indemnified
Liabilities.


 


(d)                                 This
Section shall survive the payment in full and performance of all of
Borrowers’ other Obligations.


 


13.4                                                WAIVERS,
AMENDMENTS


 


Any term, covenant,
agreement or condition of any Loan Document may be amended or waived if such
amendment or waiver is in writing and is signed by the Required Lenders (or by
Administrative Lender with written consent of the Required Lenders), Borrowers’
Agent and any other party thereto; provided, however, that any amendment,
waiver or consent which affects the rights or duties of Administrative Lender,
L/C Bank or Swingline Lender must be in writing and be signed also by the
affected Administrative Lender, L/C Bank or Swingline Lender; and provided
further, that any amendment, waiver or consent which effects any of the
following changes must be in writing and signed by all Lenders (or 


 


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by Administrative Lender
with the written consent of all Lenders): (a) increases the maximum amount
of credit available hereunder; (b) extends the maturity date of any Loan;
(c) reduces the principal of, or interest (including default rate interest)
on, any Loan or any fees or other amounts payable for the account of Lenders
hereunder; (d) postpones or conditions any date fixed for any payment of
the principal of, or interest on, any Loan or any fees or other amounts payable
for the account of Lenders hereunder; (e) waives or amends this Section;
(f) amends the definition of Required Lenders or any provision of this
Agreement requiring approval of the Required Lenders or some other specified
amount of Lenders; (g) increases or decreases the commitment or the Ratable
Portion of any Lender (other than through an assignment under Section 13.5);
(h) waives any of the conditions set forth in Article VII;
(i) releases any material Collateral; or (j) amends any guaranty of
the Obligations (or releases any guarantor of its obligations thereunder).  The foregoing notwithstanding, any increase
or decrease in the Ratable Portion of any Lender and any increase in the
Revolving Loan Commitment of any Lender must be in writing and signed by such
Lender.  Unless otherwise specified in
such waiver or consent, a waiver or consent given hereunder shall be effective
only in the specific instance and for the specific purpose for which given.


 


13.5                                                SUCCESSORS
AND ASSIGNS


 


(a)                                  Binding Effect.  The Loan Documents shall be binding upon and
inure to the benefit of Borrowers, Administrative Lender, Lenders and their
respective successors and permitted assigns, except that Borrower may not
assign or transfer any of its rights or obligations under any Loan Document
without the prior written consent of Administrative Lender and each
Lender.  All references in this Agreement
to any Person shall be deemed to include all successors and assigns of such
Person.


 


(b)                                 Participations.  Any Lender may, in the ordinary course of its
business and in accordance with applicable law, at any time sell to one or more
banks or other financial institutions (“Participants”) participating interests
in any obligations owing to such Lender under the Loan Documents.  In the event of any such sale, (i) such
Lender’s obligations under the Loan Documents to the other parties to the Loan
Documents shall remain unchanged, (ii) such Lender shall remain solely
responsible for the performance thereof and (iii) Borrowers, Borrowers’ Agent
and Administrative Lender shall continue to deal solely and directly with such
Lender in connection with such Lender’s rights and obligations under the Loan
Documents.  Participants shall have no
rights under the Loan Documents except as provided below.  No Lender shall sell any participating interest
under which the Participant shall have any right to vote on any amendment,
consent or waiver of this Agreement or any other Loan Document; provided,
however, that any agreement under which any Lender sells a participating
interest to a Participant may require the selling Lender to obtain the consent
of such Participant in order for such Lender to agree or consent to any
amendment of a type specified in items (a)-(j) of Section 13.4.  No agreement under which any Lender sells a
participating interest to a Participant may permit the Participant to transfer,
pledge, assign, sell participations in or otherwise encumber its participating
interest.  If any amount outstanding
under the Loan Documents is due and unpaid, each Participant shall have all the



 


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rights of a “Lender”
under Section 13.6 in respect of its participating interest in amounts
owing under the Loan Documents to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under the Loan
Documents; provided, however, that such rights of setoff shall be subject to
the obligation of such Participant to share with Lenders, and Lenders agree to
share with such Participant, as provided in Section 3.9(b) hereof.  Borrowers also agree that any Lender that has
transferred all or part of its interests in the Obligations to one or more
Participants shall, notwithstanding any such transfer, be entitled to the full
benefits accorded such Lender under Sections 3.10 and 3.12 hereof, as if such
Lender had not made such transfer. 
Without limiting the foregoing, no Participant shall be entitled to
costs, expenses or attorneys’ fees under Section 13.2 or Section 13.3.


 


(c)                                  Assignments.  Any Lender may, in the ordinary course of its
business and in accordance with applicable law, at any time, sell and assign to
any Lender, any affiliate of a Lender or any other bank or financial
institution (individually, an “Assignee”) all or any portion of its rights and
obligations under the Loan Documents (such a sale and assignment to be referred
to herein as an “Assignment”) pursuant to an Assignment and Assumption
Agreement in the form of Exhibit G attached hereto (an “Assignment
Agreement”) executed by each Assignee and such assignor Lender (an “Assignor”)
and delivered to Administrative Lender for its acceptance and recording in the
Register (as defined below); provided, however, that:  (i) each Assignment shall be in a
minimum amount of $5,000,000; (ii) if the Assignment is not an assignment
of Assignor’s entire commitment, Assignor maintains a minimum commitment of
$5,000,000; and (iii) each Assignment which is not to a Lender or an affiliate
thereof, shall be made only with the written consent of Administrative Lender
(and, in the absence of a Default, Borrowers’ Agent), which consent(s) shall
not be unreasonably withheld.  Upon the
execution, delivery, acceptance and recording of each Assignment Agreement,
from and after the effective date set forth therein, (A) each Assignee shall be
a Lender with a commitment as set forth in Section 1 of such Assignment
Agreement and shall have the rights, duties and obligations of a Lender under
the Loan Documents, and (B) the Assignor shall be a Lender with a commitment as
set forth in Section 1 of such Assignment Agreement, or, if the commitment
of the Assignor has been reduced to zero, the Assignor shall cease to be a
Lender; provided, however, that each Assignor shall nevertheless be entitled to
the indemnification rights contained in Section 13.3 hereof for any
events, acts or omissions occurring before the effective date of its
Assignment.  Each Assignment Agreement
shall be deemed to amend Schedule I hereto to the extent necessary
to reflect the addition of each Assignee and the resulting adjustment of
commitments arising from the purchase by each Assignee of all or a portion of
the rights and obligations of an Assignor under this Agreement and the other
Loan Documents.


 


(d)                                 Register.  Administrative Lender shall maintain at
Administrative Lender’s Office a copy of each Assignment Agreement delivered to
and accepted by Administrative Lender and a register (“Register”) for the
recordation of the names and addresses of Lenders and the commitment of each
Lender from time to time.  The entries in
the Register shall be conclusive and binding for all purposes, absent manifest
error, and Borrowers, Administrative Lender and Lenders may treat each entity
whose name is recorded in the Register as a Lender hereunder for all purposes
of this Agreement.  The Register shall be



 


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available for inspection
by Borrowers’ Agent or any Lender at any reasonable time and from time to time
upon reasonable prior notice.


 


(e)                                  Registration.  Upon its receipt of an Assignment Agreement
executed by an Assignor and an Assignee (and, in the case of an Assignee that
is not then a Lender or an affiliate of a Lender, by Borrowers’ Agent and
Administrative Lender) together with payment by such Assignee to Administrative
Lender of a registration and processing fee of $3,500, Administrative Lender
shall (i) promptly accept such Assignment Agreement and (ii) on the
effective date of such Assignment record the information contained therein in
the Register and give notice of such acceptance and recordation to Lenders and
Borrowers’ Agent.  Administrative Lender
may, from time to time at its election, prepare and deliver to Lenders and
Borrowers’ Agent a revised Schedule I reflecting the names,
addresses and respective commitments of all Lenders then parties hereto.


 


(f)                                    Federal Reserve Bank.  Notwithstanding the foregoing provisions of
this Section, any Lender may at any time pledge or assign all or any portion of
such Lender’s rights under this Agreement and the other Loan Documents to a
Federal Reserve Bank; provided, however, that no such pledge or
assignment will release such Lender from such Lender’s obligations hereunder or
under any other Loan Document.


 


13.6                                                SETOFF


 


In addition to any rights
and remedies of Lenders provided by law, each Lender shall have the right, with
the prior consent of Administrative Lender (which consent will not be
unreasonably withheld) but without prior notice to Borrower, any such notice
being expressly waived by Borrower to the extent permitted by applicable law,
during the continuance of an Event of Default to setoff and apply against any
indebtedness, whether matured or unmatured, of Borrower to such Lender any
amount owing from such Lender or any affiliate thereof to Borrower at any time
during the continuation of an Event of Default. 
This right of setoff may be exercised by such Lender against Borrower or
against any trustee in bankruptcy, debtor in possession, assignee for the
benefit of creditors, receiver or execution, judgment or attachment creditor of
Borrower or against anyone else claiming through or against Borrower or such
trustee in bankruptcy, debtor in possession, assignee for the benefit of
creditors, receiver, or execution, judgment or attachment creditor,
notwithstanding the fact that such right of setoff shall not have been
exercised by such Lender prior to the occurrence of an Event of Default.  Each Lender agrees promptly to notify
Borrower after any such setoff and application made by such Lender, provided
that the failure to give such notice shall not affect the validity of such
setoff and application.


 


13.7                                                NO
WAIVER; CUMULATIVE REMEDIES


 


No failure on the part of
Administrative Lender or any Lender to exercise, and no delay in exercising,
any right, power, privilege or remedy under any Loan Document shall operate as
a waiver thereof; nor shall any single or partial exercise of any such right,
power, privilege or remedy preclude any other or further exercise thereof or
the exercise of any other 


 


68





















 


right, power, privilege
or remedy.  The rights and remedies under
the Loan Documents are cumulative and not exclusive of any rights, powers,
privileges and remedies that may otherwise be available to Administrative Lender
or any Lender.


 


13.8                                                ENTIRE
AGREEMENT


 


The Loan Documents
constitute the entire agreement among Borrowers, Administrative Lender and
Lenders with respect to the Loans and the Letters of Credit and supersede all
prior negotiations, communications, discussions, correspondence and agreements
concerning the subject matter hereof. 
This Agreement cannot be changed orally or by the conduct of the parties
and may be amended or modified only in writing signed by the party against whom
enforcement is sought.


 


13.9                                                NO
THIRD PARTY BENEFICIARIES


 


This Agreement is made
and entered into for the sole protection and benefit of the parties hereto and
their respective permitted successors and assigns, and no other person or
entity shall be a third party beneficiary of, or have any direct or indirect
cause of action or claim in connection with, this Agreement or any other of the
Loan Documents to which it is not a party.


 


13.10                                         CONFIDENTIALITY


 


Lenders shall hold all
non-public information (which has been identified as such by Borrowers’ Agent)
obtained pursuant to the requirements of this Agreement in accordance with
their customary procedures for handling confidential information of this nature
and in accordance with safe and sound banking practices and in any event may
make disclosure to any of their examiners, affiliates, outside auditors,
counsel and other professional advisors in connection with this Agreement or as
reasonably required by any bona fide transferee,
participant or assignee or as required or requested by any Governmental
Authority or pursuant to legal process; provided, however, that (a) unless
specifically prohibited by applicable law or court order, each Lender shall
notify Borrowers’ Agent of any request by any Governmental Authority (other
than any such request in connection with an examination of the financial
condition of such Lender by such Governmental Authority) for disclosure of any
such non-public information prior to disclosure of such information,
(b) prior to any such disclosure pursuant to this Section, each Lender
shall require any such bona fide transferee,
participant and assignee receiving a disclosure of non–public information to
agree in writing (i) to be bound by this Section and (ii) to
require such Person to require any other Person to whom such Person discloses
such non-public information to be similarly bound by this Section, and
(c) except as may be required by an order of a court of competent
jurisdiction and to the extent set forth therein, no Lender shall be obligated
or required to return any materials furnished by any Borrower or Subsidiary.


 


69





















 


13.11                                         TIME


 


Time is of the essence of
each and every provision of this Agreement and each other of the Loan
Documents.


 


13.12                                         SEVERABILITY
OF PROVISIONS


 


If any provision of this
Agreement shall be prohibited by or invalid under applicable law, such
provision shall be ineffective only to the extent of such prohibition or
invalidity without invalidating the remainder of such provision or any
remaining provisions of this Agreement.


 


13.13                                         GOVERNING
LAW


 


This Agreement shall be
governed by and construed in accordance with the laws of the State of Oregon.


 


13.14                                         SUBMISSION
TO JURISDICTION


 


EACH OF BORROWER,
ADMINISTRATIVE LENDER AND LENDERS HEREBY: 
(A) SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF
OREGON AND THE FEDERAL COURTS OF THE UNITED STATES FOR THE DISTRICT OF OREGON
FOR THE PURPOSE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY
OF THE LOAN DOCUMENTS; (B) AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION
OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH COURTS; (C) IRREVOCABLY
WAIVES (TO THE FULL EXTENT PERMITTED BY APPLICABLE LAW) ANY OBJECTION WHICH IT
NOW OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH ACTION OR PROCEEDING
BROUGHT IN ANY OF THE FOREGOING COURTS, AND ANY OBJECTION ON THE GROUND THAT
ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM; AND (D) AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR
PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY
SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PERMITTED BY LAW.


 


13.15                                         WAIVER
OF JURY TRIAL


 


EACH OF BORROWER,
ADMINISTRATIVE LENDER AND LENDERS, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY
ACTION, PROCEEDING, COUNTERCLAIM OR OTHER LITIGATION IN ANY WAY ARISING OUT OF
OR RELATING TO THIS AGREEMENT, ANY OTHER OF THE LOAN DOCUMENTS OR ANY OF THE
TRANSACTIONS OR EVENTS REFERENCED HEREIN OR THEREIN OR CONTEMPLATED HEREBY OR
THEREBY, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS OR
OTHERWISE.  THIS WAIVER SHALL 


 


70





















 


APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND/OR ANY
OTHER OF THE LOAN DOCUMENTS.  A COPY OF
THIS SECTION MAY BE FILED WITH ANY COURT AS WRITTEN EVIDENCE OF THE WAIVER
OF THE RIGHT TO TRIAL BY JURY AND THE CONSENT TO TRIAL BY COURT.


 


13.16                                         COUNTERPARTS


 


This Agreement may be
executed in any number of identical counterparts, any set of which signed by
all the parties hereto shall be deemed to constitute a complete, executed
original for all purposes.  Delivery of
an executed signature page of this Agreement by fax shall be effective as
delivery of a manually executed counterpart hereof.


 


13.17                                         OREGON
STATUTORY NOTICE


 


UNDER OREGON LAW, MOST
AGREEMENTS, PROMISES AND COMMITMENTS MADE BY LENDER CONCERNING LOANS AND OTHER
CREDIT EXTENSIONS WHICH ARE NOT FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR
SECURED SOLELY BY THE BORROWER’S RESIDENCE MUST BE IN WRITING, EXPRESS
CONSIDERATION AND BE SIGNED BY THE LENDER TO BE ENFORCEABLE.


 


 


[INTENTIONALLY
LEFT BLANK]


 


71





















 


IN WITNESS WHEREOF,
this Second Amended and Restated Credit Agreement has been duly executed as of
the date first written above.


 


 


	
  MONACO COACH CORPORATION

  	
   

  	
  ROYALE COACH BY MONACO, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ John Nepute

  	
   

  	
   

  	
  By:

  	
  /s/ John Nepute

  	
   

  
	
  Title:

  	
  President

  	
   

  	
   

  	
  Title:

  	
  Vice President and Treasurer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  OUTDOOR RESORTS
  MOTORCOACH 

  COUNTRY CLUB, INC.

  	
   

  	
  MCC ACQUISITION
  CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ John Nepute

  	
   

  
	
  By:

  	
  /s/ John Nepute

  	
   

  	
   

  	
  Title:

  	
  Vice President

  	
   

  
	
  Title:

  	
  President

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  OUTDOOR RESORTS OF
  NAPLES, INC.

  	
   

  	
  OUTDOOR RESORTS OF LAS
  VEGAS, 

  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ John Nepute

  	
   

  	
   

  	
  By:

  	
  /s/ John Nepute

  	
   

  
	
  Title:

  	
  President

  	
   

  	
   

  	
  Title:

  	
  President

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  GE COMMERCIAL
  DISTRIBUTION 

  FINANCE CORPORATION

  	
   

  	
  WELLS FARGO BANK,
  NATIONAL 

  ASSOCIATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Timothy Wass

  	
   

  	
   

  	
  By:

  	
  /s/ Kathy Lucier

  	
   

  
	
  Title:

  	
  Director of Underwriting

  	
   

  	
   

  	
  Title:

  	
  Vice President

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  UNION BANK OF
  CALIFORNIA, N.A.

  	
   

  	
  BANK OF AMERICA, N.A.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Thomas Marks

  	
   

  	
   

  	
  By:

  	
  /s/ Brad DeSpain

  	
   

  
	
  Title:

  	
  Vice President

  	
   

  	
   

  	
  Title:

  	
  Senior Vice President

  	
   

  
											



 


72





















 


	
  NATIONAL CITY BANK OF INDIANA

  	
   

  	
  U.S. BANK NATIONAL 

  ASSOCIATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Mike Callas

  	
   

  	
   

  	
  By:

  	
  /s/ Daryl Hogge

  	
   

  
	
  Title:

  	
  Vice President

  	
   

  	
   

  	
  Title:

  	
  Vice President

  	
   

  
									



 


73





















 


SCHEDULE I


1.                                      Revolving
Loan Commitments:


 


	
  U.S. Bank National
  Association - 

  	
   $20,000,000.00
  (22.222222222222%)

  
	
   

  	
  (maximum L/C exposure -
  $1,111,111.11)

  
	
   

  
	
  Bank of America, N.A. -
  

  	
  $20,000,000.00
  (22.222222222222%)

  
	
   

  	
   (maximum L/C
  exposure - $1,111,111.11)

  
	
   

  
	
  Wells Fargo Bank,
  National Association -

  	
    $15,000,000.00
  (16.666666666667%)

  
	
   

  	
  (maximum L/C exposure -
  $833,333.33)

  
	
   

  
	
  GE Commercial Distribution
  Finance Corporation -

  	
   $15,000,000.00 (16.666666666667%)

  
	
   

  	
  (maximum L/C exposure -
  $833,333.33)

  
	
   

  
	
  Union Bank of California,
  N.A. - 

  	
  $10,000,000.00
  (11.111111111111%)

  
	
   

  	
    (maximum
  L/C exposure - $555,555.56)

  
	
   

  
	
  National City Bank of
  Indiana -

  	
   $10,000,000.00 (11.111111111111%)

  
	
   

  	
    (maximum
  L/C exposure - $555,555.56)

  
						



 


2.                                      Swing
Loan Commitment:


 


U.S. Bank National
Association  -  $15,000,000     (100%)


 


3.                                      Applicable
Lending Office and Address for Notices for each Lender:


 


U.S. Bank National
Association

Oregon Commercial Banking

PD-OR-T4BD

111 SW Fifth Ave., Suite 400

Portland, OR  97204

Attn: Daryl K. Hogge

Telephone:  (503) 275-5271

Fax:  (503) 275-5795

Email:  daryl.hogge@usbank.com


 


GE Commercial
Distribution Finance Corporation

2625 S. Plaza Drive, Suite 201

Tempe, AZ  85282

Attn: Timothy Wass, Director of Underwriting

Telephone:  (480) 449-7124

Fax:  (480) 829-3963


Email:
timothy.wass@ge.com


 


1





















 


Wells Fargo Bank,
National Association

99 E. Broadway, 2nd Floor

Eugene, OR  97440

Attn:  Kathy Lucier, Vice President

Telephone:  (541) 465-5965

Fax:  (541) 465-5764

Email:  lucierki@wellsfargo.com


 


Union Bank of California,
N.A.

407 SW Broadway

Portland, OR  97205

Attn:  Tom Marks, Vice President

Telephone:  (503) 225-3693

Fax:  (503) 225-2846

Email:  thomas.marks@uboc.com


 


Bank of America, N.A.

121 SW Morrison, #1700

Portland, OR  97204

Attn:  Brad DeSpain, Senior Vice
President

Telephone:  (503) 275-1573

Fax:  (503) 275-1377

Email:  brad.w.despain@bankofamerica.com


 


National City Bank of
Indiana

1 National City Center, Suite 200 E

Indianapolis, Indiana  46255

Attn:  Mike Callas

Telephone:  (317) 267-7443

Fax:  (317) 267-7441

Email:  mike.callas@nationalcity.com


 


2





















 


SCHEDULE II


Pricing Schedule


 


	
   

  	
   

  	
  Level I

  	
   

  	
  Level II

  	
   

  	
  Level III

  	
   

  	
  Level IV

  	
   

  
	
  LIBOR
  Margin

  	
   

  	
  100

  	
   

  	
  125

  	
   

  	
  150

  	
   

  	
  175

  	
   

  
	
  Prime
  Margin

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  25

  	
   

  
	
  Fee
  Percentage

  	
   

  	
  20

  	
   

  	
  25

  	
   

  	
  30

  	
   

  	
  35

  	
   

  



 


For purposes of this
Pricing Schedule, the following terms have the following meanings:


 


“Level I”
applies on any day if, on such day, the applicable Leverage Ratio is less than
1.00:1.


 


“Level II”
applies on any day if, on such day, the applicable Leverage Ratio is equal to
or greater than 1.00:1 and less than 1.50:1.


 


“Level III”
applies on any day if, on such day, the applicable Leverage Ratio is equal to
or greater than 1.50:1 and less than 2.00:1.


 


“Level IV”
applies on any day if, on such day, the applicable Leverage Ratio is 2.00:1 or
greater.


 


For purposes of this
Pricing Schedule, the Leverage Ratio shall be calculated once every quarter
based on the financial information most recently reported by Borrowers’ Agent
pursuant to Section 8.3 of the Agreement; provided, however,
that the Leverage Ratio shall not be computed on the financial information most
recently reported by Borrowers’ Agent until the later of the first day of the
month after receipt of such information or five Business Days after the receipt
thereof, and if the most recent report required pursuant to Section 8.3
has not been delivered, or if Administrative Lender reasonably objects to the
accuracy of such report within five Business Days after the receipt thereof,
the next higher Level from the Level then in effect shall apply until such time
as the delinquent report is delivered or Administrative Lender’s objections are
resolved to Administrative Lender’s reasonable satisfaction.


 


1





















 


EXHIBIT
A

TO

SECOND AMENDED AND RESTATED CREDIT AGREEMENT


 


Borrowing Base Certificate

of

Monaco Coach Corporation et al.


 


As of:                    


 


	
  Aggregate
  RV A/R balance

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Ineligible
  RV A/R:

  	
   

  	
   

  
	
  Over 60
  days

  	
  (                                  )

  	
   

  
	
  Excess
  concentration

  	
  (                                  )

  	
   

  
	
  Cross-Ineligibles

  	
  (                                  )

  	
   

  
	
  Affiliates

  	
  (                                  )

  	
   

  
	
  International

  	
  (                                  )

  	
   

  
	
  Other

  	
  (                                  )

  	
   

  
	
  Eligible
  A/R

  	
   

  	
   

  
	
  85% of
  Eligible A/R

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  50% of
  Eligible Raw Materials

  	
   

  	
   

  
	
  Lesser
  of 90% of Eligible Finished Goods or $50,000,000

  	
   

  	
   

  
	
  Secured
  Chassis Accounts Payable

  	
  (                                  )

  	
   

  
	
  Inventory
  Availability

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Borrowing
  Base 

  	
   

  	
   

  
	
  Outstanding
  Revolving Loans

  	
   

  	
  (                                  )

  
	
  Outstanding
  Swing Loans

  	
   

  	
  (                                  )

  
	
  Outstanding
  Letters of Credit

  	
   

  	
  (                                  )

  
	
  Available
  Credit

  	
   

  	
   

  



 


CERTIFICATE


 


The undersigned Chief
Financial Officer of Monaco Coach Corporation hereby certifies to
Administrative Lender that:  (i) the
foregoing information is true, accurate and complete as of the close of business
on                       ,
             ;
(ii) the undersigned is familiar with Borrowers’ businesses and financial
affairs and has access to all of Borrowers’ business records material to the
compilation and determination of the information set forth above; and
(iii) this Certificate is being delivered to Administrative Lender
pursuant to the Second Amended and Restated Credit Agreement among Borrowers,
U.S. Bank, National Association as Administrative Lender, and the lenders named
therein for the purpose of inducing Lenders to extend credit to Borrowers.


 


DATED:                       ,
            .


 


 


	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Chief Financial Officer

  
					



 


1





















 


EXHIBIT
B

TO

SECOND AMENDED AND RESTATED CREDIT AGREEMENT


 


 


FORM OF PROMISSORY
NOTES


 


1





















 


Revolving Loans
Promissory Note


 


	
  $90,000,000

  	
   

  	
  November 17,
  2004

  



 


FOR VALUE RECEIVED, the
undersigned, MONACO COACH CORPORATION, a Delaware corporation, ROYALE COACH BY
MONACO, INC., an Indiana corporation, MCC ACQUISITION CORPORATION, a Delaware
corporation, OUTDOOR RESORTS OF LAS VEGAS, INC., a Nevada corporation, OUTDOOR
RESORTS MOTORCOACH COUNTRY CLUB, INC., a California corporation, and OUTDOOR
RESORTS OF NAPLES, INC., a Florida corporation (each individually referred to
as “Borrower” and all collectively referred to as “Borrowers”) hereby jointly
and severally promise to pay to the order of U.S. BANK NATIONAL ASSOCIATION as
Administrative Lender for the ratable benefit of the Lenders (“Administrative
Lender”) on the Maturity Date, or at such earlier time as is provided in that
certain Second Amended and Restated Credit Agreement among Borrowers, U.S. Bank
National Association (as Administrative Lender) and the lenders named therein
dated as of November 17, 2004, (as amended, modified or supplemented from
time to time, the “Credit Agreement”), the principal sum of Ninety Million
Dollars ($90,000,000), or such lesser amount as shall equal the aggregate
outstanding principal balance of all Revolving Loans made by Lenders to
Borrowers pursuant to the Credit Agreement.


 


This promissory note is
one of the promissory notes referred to in, and subject to the terms of, the
Credit Agreement.  Capitalized terms used
herein shall have the respective meanings assigned to them in the Credit
Agreement.


 


Borrower further promises
to pay interest on the outstanding principal balance hereof at the interest
rates, and payable on the dates, set forth in the Credit Agreement.  All payments of principal and interest
hereunder shall be made to Administrative Lender in lawful money of the United
States and in same day or immediately available funds.


 


Administrative Lender is
authorized but not required to record the date and amount of each advance made
hereunder, the date and amount of each payment of principal and interest
hereunder, and the resulting unpaid principal balance hereof, in Administrative
Lender’s internal records, and any such recordation shall be prima facie
evidence of the accuracy of the information so recorded; provided however, that
Administrative Lender’s failure to so record such amounts shall not limit or
otherwise affect Borrower’s obligations hereunder and under the Credit
Agreement to repay the principal hereof and interest hereon.


 


Borrowers shall pay all
costs of collection, including reasonable attorneys’ fees (whether incurred at
the trial or appellate level, in an arbitration or administrative proceeding,
in bankruptcy (including, without limitation, any adversary proceeding,
contested matter or 


 


1





















 


motion) or
otherwise).  No delay or failure on the
part of Administrative Lender to exercise any of its rights hereunder shall be
deemed a waiver of such rights or any other right of Administrative Lender nor
shall any delay, omission or waiver on any one occasion be deemed a bar to or
waiver of such rights or any other right on any future occasion.  Borrowers and every surety, indorser and
guarantor of this Note waive presentment, demand, protest, notice of intention
to accelerate, notice of acceleration, notice of nonpayment and all other
notices of every kind, and agree that their liability under this Note shall not
be affected by any renewal, postponement or extension in the time of payment
hereof, by any indulgence granted by any holder hereof with respect hereto, or
by any release or change in any security for the payment of this Note, and they
hereby consent to any and all renewals, extensions, indulgences, releases or changes,
regardless of the number of such renewals, extensions, indulgences, releases or
changes.


 


The Credit Agreement
provides, among other things, for acceleration (which in certain cases shall be
automatic) of the maturity hereof upon the occurrence of certain stated events,
in each case without presentment, demand, protest or further notice of any
kind, all of which are hereby expressly waived by Borrowers.


 


Borrowers’ obligations
evidenced by this promissory note are secured by the collateral described in
the Loan Documents.  The Loan Documents
describe the rights of Administrative Lender with respect to the collateral.


 


In the event of any
conflict between the terms of this promissory note and the terms of the Credit
Agreement, the terms of the Credit Agreement shall control.


 


This promissory note
shall be governed by and construed in accordance with the laws of the State of
Oregon.


 


UNDER OREGON LAW, MOST
AGREEMENTS, PROMISES AND COMMITMENTS MADE BY ANY LENDER OR ADMINISTRATIVE
LENDER CONCERNING LOANS AND OTHER CREDIT EXTENSIONS WHICH ARE NOT FOR PERSONAL,
FAMILY OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY THE BORROWER’S RESIDENCE MUST
BE IN WRITING, EXPRESS CONSIDERATION AND BE SIGNED BY SUCH LENDER OR
ADMINISTRATIVE LENDER TO BE ENFORCEABLE.


 


2





















 


	
  MONACO COACH CORPORATION

  	
   

  	
  ROYALE COACH BY MONACO, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  OUTDOOR RESORTS
  MOTORCOACH 

  COUNTRY CLUB, INC.

  	
   

  	
  MCC ACQUISITION
  CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  OUTDOOR RESORTS OF
  NAPLES, INC.

  	
   

  	
  OUTDOOR RESORTS OF LAS
  VEGAS, 

  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
												



 


3





















 


Swing Loans
Promissory Note


 


	
  $15,000,000

  	
   

  	
  November 17,
  2004

  



 


 


FOR VALUE RECEIVED,
MONACO COACH CORPORATION, a Delaware corporation, ROYALE COACH BY MONACO, INC.,
an Indiana corporation, MCC ACQUISITION CORPORATION, a Delaware corporation,
OUTDOOR RESORTS OF LAS VEGAS, INC., a Nevada corporation, OUTDOOR RESORTS
MOTORCOACH COUNTRY CLUB, INC., a California corporation, and OUTDOOR RESORTS OF
NAPLES, INC., a Florida corporation (each individually referred to as “Borrower”
and all collectively referred to as “Borrowers”) hereby jointly and severally
promise to pay to the order of U.S. BANK NATIONAL ASSOCIATION (“Lender”) on the
Maturity Date, or at such earlier time as is provided in that certain Second
Amended and Restated Credit Agreement among Borrowers, U.S. Bank National
Association (as Administrative Lender and as Swingline Lender) and the lenders
named therein dated as of November 17, 2004, (as amended, modified or
supplemented from time to time, the “Credit Agreement”), the principal sum of
Fifteen Million Dollars ($15,000,000), or such lesser amount as shall equal the
aggregate outstanding principal balance of all Swing Loans made by Lender to
Borrowers pursuant to the Credit Agreement.


 


This promissory note is
one of the promissory notes referred to in, and subject to the terms of, the
Credit Agreement.  Capitalized terms used
herein shall have the respective meanings assigned to them in the Credit
Agreement.


 


Borrower further promises
to pay interest on the outstanding principal balance hereof at the interest
rates, and payable on the dates, set forth in the Credit Agreement.  All payments of principal and interest
hereunder shall be made to Administrative Lender in lawful money of the United
States and in same day or immediately available funds.


 


Lender is authorized but
not required to record the date and amount of each advance made hereunder, the
date and amount of each payment of principal and interest hereunder, and the
resulting unpaid principal balance hereof, in Lender’s internal records, and
any such recordation shall be prima facie evidence of the accuracy of the information
so recorded; provided however, that Lender’s failure to so record such amounts
shall not limit or otherwise affect Borrower’s obligations hereunder and under
the Credit Agreement to repay the principal hereof and interest hereon.


 


Borrowers shall pay all
costs of collection, including reasonable attorneys’ fees (whether incurred at
the trial or appellate level, in an arbitration or administrative proceeding,
in bankruptcy (including, without limitation, any adversary proceeding,
contested matter or motion) or otherwise). 
No delay or failure on the part of Lender to exercise any of its rights 


 


1





















 


hereunder shall be deemed
a waiver of such rights or any other right of Lender nor shall any delay, omission
or waiver on any one occasion be deemed a bar to or waiver of such rights or
any other right on any future occasion. 
Borrowers and every surety, indorser and guarantor of this Note waive
presentment, demand, protest, notice of intention to accelerate, notice of
acceleration, notice of nonpayment and all other notices of every kind, and
agree that their liability under this Note shall not be affected by any
renewal, postponement or extension in the time of payment hereof, by any
indulgence granted by any holder hereof with respect hereto, or by any release
or change in any security for the payment of this Note, and they hereby consent
to any and all renewals, extensions, indulgences, releases or changes,
regardless of the number of such renewals, extensions, indulgences, releases or
changes.


 


The Credit Agreement
provides, among other things, for acceleration (which in certain cases shall be
automatic) of the maturity hereof upon the occurrence of certain stated events,
in each case without presentment, demand, protest or further notice of any
kind, all of which are hereby expressly waived by Borrowers.


 


Borrowers’ obligations
evidenced by this promissory note are secured by the collateral described in
the Loan Documents.  The Loan Documents
describe the rights of Administrative Lender, Lender and any other holder
hereof with respect to the collateral.


 


In the event of any
conflict between the terms of this promissory note and the terms of the Credit
Agreement, the terms of the Credit Agreement shall control.


 


This promissory note
shall be governed by and construed in accordance with the laws of the State of
Oregon.


 


UNDER OREGON LAW, MOST
AGREEMENTS, PROMISES AND COMMITMENTS MADE BY LENDER CONCERNING LOANS AND OTHER
CREDIT EXTENSIONS WHICH ARE NOT FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR
SECURED SOLELY BY THE BORROWER’S RESIDENCE MUST BE IN WRITING, EXPRESS
CONSIDERATION AND BE SIGNED BY THE LENDER TO BE ENFORCEABLE.


 


2





















 


	
  MONACO COACH CORPORATION

  	
   

  	
  ROYALE COACH BY MONACO, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  OUTDOOR RESORTS
  MOTORCOACH 

  COUNTRY CLUB, INC.

  	
   

  	
  MCC ACQUISITION
  CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  OUTDOOR RESORTS OF
  NAPLES, INC.

  	
   

  	
  OUTDOOR RESORTS OF LAS
  VEGAS, 

  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
												



 


3





















 


EXHIBIT
C

TO

SECOND AMENDED AND RESTATED CREDIT AGREEMENT


 


Notice of
Authorized Representatives


 


U.S. Bank National
Association

Oregon Commercial Banking

PD-OR-T4BD

111 SW Fifth Ave., Suite 400

Portland, OR  97204

Attn: Daryl K. Hogge


 


Reference is made to that
certain Second Amended and Restated Credit Agreement among Monaco Coach
Corporation, Royale Coach By Monaco, Inc., MCC Acquisition Corporation, Outdoor
Resorts of Naples, Inc., Outdoor Resorts of Las Vegas, Inc. and Outdoor
Resorts Motorcoach Country Club, Inc. (each individually referred to as a “Borrower”
and all collectively referred to as “Borrowers”), U.S. Bank National
Association (as Administrative Lender) and the lenders named therein dated as
of November 17, 2004, (as amended, modified or supplemented from time to
time, the “Credit Agreement”). 
Capitalized terms used herein shall have the respective meanings
assigned to them in the Credit Agreement.


 


Borrowers’ Agent hereby
represents to Administrative Lender that the following persons are the
Authorized Representatives, as defined in the Credit Agreement, and that the
signatures opposite their names are their true signatures:


 


	
  Name
  and Office

  	
   

  	
  Signature

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	 




 


Administrative Lender is
authorized to rely on this Notice of Authorized Representatives until such
time, if any, as Borrowers’ Agent has delivered to Administrative Lender, and
Administrative Lender has received, a duly executed Notice of Authorized 


 


1





















 


Representatives in
substitution hereof.  This Notice of
Authorized Representatives cancels and supersedes any Notice of Authorized
Representatives at any time prior to the date hereof delivered by Borrowers’
Agent to Administrative Lender.


 


IN WITNESS WHEREOF,
Borrowers’ Agent hereby confirms that it has caused this Notice of Authorized
Representatives to be duly executed as of                        .


 


	
   

  	
  MONACO COACH CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
					



 


2





















 


EXHIBIT D

TO

SECOND AMENDED AND RESTATED CREDIT AGREEMENT


 


Notice of
Borrowing


 


U.S. Bank National
Association

Agency Services Group

1420 Fifth Ave., 9th Floor

P.O. Box 720

Seattle, WA.  98111-0720

Attn:  Young Hahn

Fax:  (206) 587-7022


 


Reference is made to that
certain Second Amended and Restated Credit Agreement among Monaco Coach
Corporation, Royale Coach By Monaco, Inc., MCC Acquisition Corporation, Outdoor
Resorts of Naples, Inc., Outdoor Resorts of Las Vegas, Inc. and Outdoor
Resorts Motorcoach Country Club, Inc. (each individually referred to as a “Borrower”
and all collectively referred to as “Borrowers”), U.S. Bank National
Association (as Administrative Lender) and the lenders named therein dated as
of November 17, 2004, (as amended, modified or supplemented from time to
time, the “Credit Agreement”). 
Capitalized terms used herein shall have the respective meanings
assigned to them in the Credit Agreement.


 


1.                                       Pursuant
to Section 3.1 of the Credit Agreement, Borrowers’ Agent, on behalf of
Borrowers, hereby requests Revolving Loans upon the following terms:


 


(a)                                  The
aggregate principal amount is to be $                .


 


(b)                                 The
date of borrowing is to be                          .


 


(c)                                  $                    
of the Loans are to be Prime Rate Loans, and $                
of the Loans are to be LIBOR Loans with a Fixed Rate Term of                        months.


 


2.                                       Borrowers’
Agent, on behalf of Borrowers, hereby certifies to Administrative Lender and
Lenders that, on the date of this Notice of Borrowing and after giving effect
to the requested disbursement (including the use of the proceeds thereof):


 


(a)                                  Borrowers’
representations and warranties in the Loan Documents are correct in all
material respects as if made on the date hereof;


 


1





















 


(b)                                 no
Default is continuing or would result from the requested Loans being made; and


 


(c)                                  no
event or circumstance exists that can reasonably be expected to have a Material
Adverse Effect.


 


The party signing below
on behalf of Borrowers’ Agent is an Authorized Representative and has caused
this Notice of Borrowing to be duly executed on behalf of Borrowers as of                        .


 


	
   

  	
  MONACO COACH CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
					



 


2





















 


EXHIBIT E


 


Notice of
Conversion or Continuation


 


U.S. Bank National
Association

Agency Services Group

1420 Fifth Ave., 9th Floor

P.O. Box 720

Seattle, WA.  98111-0720

Attn:  Young Hahn

Fax:  (206) 587-7022


 


Reference is made to that
certain Second Amended and Restated Credit Agreement among Monaco Coach
Corporation, Royale Coach By Monaco, Inc., MCC Acquisition Corporation, Outdoor
Resorts of Naples, Inc., Outdoor Resorts of Las Vegas, Inc. and Outdoor
Resorts Motorcoach Country Club, Inc. (each individually referred to as a “Borrower”
and all collectively referred to as “Borrowers”), U.S. Bank National
Association (as Administrative Lender) and the lenders named therein dated as
of November 17, 2004, (as amended, modified or supplemented from time to
time, the “Credit Agreement”). 
Capitalized terms used herein shall have the respective meanings
assigned to them in the Credit Agreement.


 


1.                                       Pursuant
to Section 3.6 of the Credit Agreement, Borrowers’ Agent, on behalf of
Borrowers, hereby requests [the continuation of all or part of outstanding
LIBOR Loans with Fixed Rate Terms ending on                       ]
[the conversion of all or part of its outstanding Prime Rate Loans], as
follows:


 


(a)                                  The
Loans to which this Notice applies are $                
of Revolving Loans.


 


(b)                                 The
effective date of continuation and/or conversion is to be                        .


 


(c)                                  The
aggregate amount of [said outstanding LIBOR Loans that are Revolving Loans to
be continued as] [said outstanding Prime Rate Loans that are Revolving Loans to
be converted to] LIBOR Loans, and each requested Fixed Rate Term, are:


 


1





















 


 


	
  Amount

  	
   

  	
  Fixed Rate Term

  
	
  $

  	
   

  	
   

  	
                         months

  
	
  $

  	
   

  	
                         months

  
				



 


(d)                                 The
aggregate amount of said outstanding LIBOR Loans that are Revolving Loans to be
continued as Prime Rate Loans is $                  .


 


2.                                       Borrowers’
Agent, on behalf of Borrowers, hereby certifies to Administrative Lender and
Lenders that, on the date of this Notice of Conversion or Continuation, no
Default has occurred and is continuing.


 


The party signing below
on behalf of Borrowers’ Agent is an Authorized Representative and has caused
this Notice of Conversion or Continuation to be duly executed on behalf of
Borrowers as of                        .


 


	
   

  	
  MONACO COACH CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
					



 


2





















 


EXHIBIT
F

TO

SECOND AMENDED AND RESTATED CREDIT AGREEMENT


 


Certificate of
Chief Financial Officer


U.S. Bank National
Association

Oregon Commercial Banking

PD-OR-T4BD

111 SW Fifth Ave., Suite 400

Portland, OR  97204

Attn: Daryl K. Hogge


 


and each Lender


 


This certificate is
furnished pursuant to Section 8.3 of that certain Second Amended and
Restated Credit Agreement among Monaco Coach Corporation, Royale Coach By
Monaco, Inc., MCC Acquisition Corporation, Outdoor Resorts of Naples, Inc., Outdoor
Resorts of Las Vegas, Inc. and Outdoor Resorts Motorcoach Country Club,
Inc. (each individually referred to as a “Borrower” and all collectively
referred to as “Borrowers”), U.S. Bank National Association (as Administrative
Lender) and the lenders named therein dated as of November 17, 2004, (as
amended, modified or supplemented from time to time, the “Credit Agreement”).  Capitalized terms used herein shall have the
respective meanings assigned to them in the Credit Agreement.


 


The undersigned hereby
certifies that:


 


(1)                                  the
financial statements of Borrowers attached hereto for the [quarter] [year]
ending                        ,
          were prepared in
accordance with GAAP and fairly present in all material respects Borrowers’
balance sheet as of the end of such [quarter] [year] and income and cash flow
for such [quarter] [year] and year-to-date (subject to normal year end
adjustments and without notes);


 


(2)                                  [no
Default existed at any time during such [quarter] [year]] [no Default existed
at any time during such [quarter] [year] except for the events described below
and a detailed statement of the action which Borrowers [have taken] [propose to
take] with respect to each such event is set forth the description of such
event below]; and


 


(3)                                  the
calculation demonstrating Borrowers’ compliance with the covenants set forth in
Article X is attached hereto.


 


Dated:                     ,
         .


 


	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Chief Financial Officer

  
					



 


1





















 


EXHIBIT
G

TO

SECOND AMENDED AND RESTATED CREDIT AGREEMENT


 


Assignment and
Assumption Agreement


 


THIS ASSIGNMENT AND
ASSUMPTION AGREEMENT (“Agreement”) is entered into as of                    ,
between                                     
(“Assignor”) and                              
(“Assignee”).


 


WHEREAS, Assignor is a
Lender under that certain Second Amended and Restated Credit Agreement among
Monaco Coach Corporation, Royale Coach By Monaco, Inc., MCC Acquisition
Corporation, Outdoor Resorts of Naples, Inc., Outdoor Resorts of
Las Vegas, Inc. and Outdoor Resorts Motorcoach Country Club, Inc. (each
individually referred to as “Borrower” and all collectively referred to as “Borrowers”),
U.S. Bank National Association (as Administrative Lender) and the lenders named
therein dated as of November 17, 2004, (as amended, modified or
supplemented from time to time, the “Credit Agreement”).  Capitalized terms used but not defined in
this Agreement shall have the meanings set forth in the Credit Agreement.


 


WHEREAS, it is the intention
of Assignor and Assignee that (a) Assignor assign to Assignee [all] [a portion]
of Assignor’s rights and obligations under the Credit Agreement, (b) Assignee
assume all such assignment obligations of Assignor, and (c) Assignor be
released from such assigned obligations.


 


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


 


1.                                       Assignment.  Effective on the
Assignment Effective Date (as defined in Section 3 hereof), Assignor,
without recourse and without representation or warranty (except as expressly
provided in Section 6 hereof), hereby assigns to Assignee the Assigned
Rights and Obligations (as defined below).


 


[The “Assigned Rights and
Obligations” means all of Assignor’s rights and obligations under the Credit
Agreement on the Assignment Effective Date.]


 


[The “Assigned Rights and
Obligations” means:  [a $                    
portion] [                       %]
of Assignor’s share of the Loans, Letter of Credit Obligations and Total
Commitments on the Assignment Effective Date; and all of Assignor’s other
rights and obligations under the Credit Agreement that are attributable to such
share.]


 


1





















 


2.                                       Assumption.  Effective on the
Assignment Effective Date, Assignee hereby accepts the foregoing assignment of,
and hereby assumes from Assignor all of, the Assigned Rights and Obligations.


 


3.                                       Effectiveness.  This Agreement shall
become effective on such date as shall be selected by Assignor (the “Assignment
Effective Date”), which date shall be on or as soon as practicable after the
execution and delivery of counterparts of this Agreement by Assignor, Assignee,
Administrative Lender and Borrowers’ Agent on behalf of Borrowers.  Assignor shall promptly notify Assignee,
Administrative Lender and Borrowers’ Agent in writing of the Assignment
Effective Date.


 


4.                                       Payments
on Assignment Effective Date.  In
consideration of the assignment by Assignor to, and the assumption by Assignee
of, the Assigned Rights and Obligations, on the Assignment Effective Date:  (a) Assignee shall pay to Assignor the
principal amount of all Loans made by Assignor pursuant to the Credit Agreement
that are attributable to the Assigned Rights and Obligations and outstanding on
the Assignment Effective Date; (b) each of Assignor and Assignee shall pay to
the other such amounts (if any) as are specified in any written agreement or
exchange of letters between them; and (c) Assignee shall pay to Administrative
Lender an assignment processing and recordation fee of $                 .


 


5.                                       Allocation
and Payment of Interest and Fees.


 


(a)                                  Administrative
Lender shall pay to Assignee all interest, commitment fees and other amounts
not constituting principal that are paid by or on behalf of Borrowers pursuant
to the Loan Documents and are attributable to the Assigned Rights and
Obligations (“Borrower Amounts”) which accrue on and after the Assignment
Effective Date.  If Assignor receives or
collects any such Borrower Amounts, Assignor shall promptly pay them to
Assignee.


 


(b)                                 Administrative
Lender shall pay to Assignor all Borrower Amounts that accrue before the
Assignment Effective Date.  If Assignee
receives or collects any such Borrower Amounts, Assignee shall promptly pay
them to Assignor.


 


6.                                       Representations
and Warranties.


 


(a)                                  Each
of Assignor and Assignee represents and warrants to the other party as follows:


 


(i)                                     it
has full power and authority, and has taken all action necessary, to execute
and deliver this Agreement and to fulfill its obligations under, and to
consummate the transactions contemplated by, this Agreement;


 


(ii)                                  the
making and performance of this Agreement and all documents required to be
executed and delivered by it pursuant hereto do not and will not violate any
law or regulation applicable to it;


 


2





















 


(iii)                               this
Agreement has been duly executed and delivered by, and constitutes a legal,
valid and binding obligation of, it, enforceable in accordance with its terms;
and


 


(iv)                              all
approvals, authorizations or other actions by, or filings with, any governmental
authority necessary for the validity or enforceability of its obligations under
this Agreement have been made or obtained.


 


(b)                                 Assignor
represents and warrants to Assignee that Assignor owns the Assigned Rights and
Obligations, free and clear of all liens or other encumbrances.


 


(c)                                  Assignee
represents and warrants to Assignor as follows:


 


(i)                                     Assignee
has made and shall continue to make its own independent investigation of the
financial condition, affairs and creditworthiness of Borrowers, and the value
of any Collateral now or hereafter securing any of the obligations,
indebtedness, liabilities or undertakings under the Loan Documents, in
connection with Assignee’s assumption of the Assigned Rights and Obligations;
and


 


(ii)                                  Assignee
has received a copy of the Loan Documents and such other documents, financial
statements and information as Assignee deems appropriate to make its own credit
analysis and decision to enter into this Agreement.


 


7.                                       No
Assignor Responsibility.  Assignor
makes no representation or warranty and assumes no responsibility to Assignee
for:


 


(a)                                  the
execution by any party other than Assignor, or the effectiveness, genuineness,
validity, enforceability, collectibility or sufficiency of the Loan Documents;


 


(b)                                 any
representations, warranties, recitals or statements made in the Loan Documents
or in any financial statement or other statement, instrument, report,
certificate or any other document made or furnished or made available by or on
behalf of Borrowers to Assignor or Assignee in connection with the Loan
Documents and the transactions contemplated thereby;


 


(c)                                  the
performance or observance of any of the terms, conditions, provisions,
covenants or agreements contained in any of the Loan Documents or the existence
or possible existence of any default or event of default under the Loan
Documents; or


 


(d)                                 the
accuracy or completeness of any information provided to Assignee, whether by
Assignor or by or on behalf of Borrowers.


 


Assignor shall have no
initial or continuing duty or responsibility to make any investigation of the
financial condition, affairs or creditworthiness of Borrowers, or the value of
any 


 


3





















 


Collateral, in connection
with the assignment of the Assigned Rights and Obligations hereunder, or to
provide Assignee with any credit or other information with respect thereto,
whether coming into Assignor’s possession before the date hereof or at any time
or times thereafter.


 


8.                                       Assignee
Bound By Credit Agreement.  Effective
on the Assignment Effective Date, Assignee: 
(a) shall be deemed to be a party to and “Lender” under the Credit
Agreement; (b) agrees to be bound by the Credit Agreement to the same extent as
it would have been if it had been an original Lender party thereto; and (c)
agrees to perform in accordance with their respective terms all obligations
which are required under the Loan Documents to be performed by it as a
Lender.  Assignee appoints and authorizes
Administrative Lender to take such actions as Administrative Lender on Assignee’s
behalf and to exercise such powers under the Loan Documents as are delegated to
Administrative Lender by the terms thereof, together with such powers as are
reasonably incidental thereto.


 


9.                                       Assignor
Released From Credit Agreement. 
Effective on the Assignment Effective Date, Assignor shall be released
from the Assigned Rights and Obligations; provided, however, that Assignor
shall retain all of its rights to indemnification under the Loan Documents for
any events, acts or omissions occurring before the Assignment Effective Date.


 


[10.                             Foreign
Withholding.


 


(a)                                  Assignee
represents and warrants to Administrative Lender, Borrowers and Assignor that,
under applicable law and treaties, Assignee is entitled to receive all payments
under the Loan Documents and this Agreement payable to it, without deduction or
withholding of any taxes imposed by the United States or any political
subdivision thereof.


 


(b)                                 On
or before the Assignment Effective Date, Assignee shall deliver to each of Borrowers’
Agent and Administrative Lender two executed copies of valid and properly
completed:  (i) United States Internal
Revenue Service Form 1001 or 4224 certifying that Assignee is entitled to
receive payments under the Credit Agreement and the Loan Documents payable to
it, without deduction or withholding of any United States federal income taxes;
or (ii) Internal Revenue Service Form W-8 or W-9 establishing an exemption from
United States backup withholding tax.  If
any such form is found to be incomplete or incorrect, or must be replaced (on
the same or a successor form) in order to maintain its effectiveness, Assignee
shall execute and deliver to each of Borrowers’ Agent and Administrative Lender
two executed copies of a valid, complete and correct replacement form.]


 


[11.]                         General.


 


(a)                                  This
Agreement constitutes the entire understanding of the parties with respect to
the subject matter hereof and supersedes all prior and current understandings
and 


 


4





















 


agreements, whether
written or oral (other than with respect to any fees payable as provided in Section 4
hereof).


 


(b)                                 No
term or provision of this Agreement may be amended, waived or terminated
orally, but only by an instrument signed by the parties hereto.


 


(c)                                  This
Agreement may be executed in one or more counterparts.  Each set of executed counterparts shall be an
original.  Executed counterparts may be
delivered by facsimile transmission.


 


(d)                                 Assignor
may at any time and from time to time grant to others pursuant to the Loan
Documents assignments of or participations in all or part of Assignor’s share
of the Loans, Letter of Credit Obligations and Total Commitments, but not with
respect to the Assigned Rights and Obligations.


 


(e)                                  This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. 
Neither Assignor nor Assignee may assign or transfer any of its rights
or obligations under this Agreement without the prior written consent of the
other.  The preceding sentence shall not
limit the right of Assignee to grant to others assignments of or participations
in all or part of the Assigned Rights and Obligations to the extent permitted
by the terms of the Loan Documents.


 


(f)                                    All
payments to Assignor or Assignee hereunder shall, unless otherwise specified by
the party entitled thereto, be made in United States Dollars, in immediately
available funds, and to the address or account specified on the signature pages
of this Agreement.  The address of
Assignee for notice purposes under the Credit Agreement shall be as specified
on the signature pages of this Agreement.


 


(g)                                 If
any provision of this Agreement is held invalid, illegal or unenforceable, the
remaining provisions hereof will not be affected or impaired in any way.


 


(h)                                 Each
party shall bear its own expenses in connection with the preparation and
execution of this Agreement.


 


(i)                                     This
Agreement shall be governed by and construed in accordance with the laws of the
State of Oregon.


 


5





















 


IN WITNESS WHEREOF, the
parties hereto have executed this Agreement as of the date first above written.


 


	
   

  	
  ASSIGNOR:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Assignor’s Notice Instructions:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Attn:

  	
   

  
	
   

  	
  Ref:

  	
   

  
	
   

  	
  Telephone: (     ) 

  
	
   

  	
  Facsimile: (      ) 

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Assignor’s Payment Instructions:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ABA No.

  	
   

  
	
   

  	
  Account No.

  	
   

  
	
   

  	
  Attn:

  	
   

  
	
   

  	
  Ref:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ASSIGNEE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
										



 


6





















 


	
   

  	
  Assignee’s Notice Instructions:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Attn:

  	
   

  
	
   

  	
  Ref:

  	
   

  
	
   

  	
  Telephone: (       )
                   

  
	
   

  	
  Facsimile: (       )
                 

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Assignee’s Payment Instructions:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ABA No.

  	
   

  
	
   

  	
  Account No.

  	
   

  
	
   

  	
  Attn:

  	
   

  
	
   

  	
  Ref:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ACKNOWLEDGED AND AGREED:

  
	
   

  	
   

  
	
   

  	
  ADMINISTRATIVE LENDER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
									



 


7