“Advance Date” means the date on which an Advance is made.     “Affiliate” means, with respect to any Person, any Person that owns or controls directly orindirectly such Person, any Person that controls or is controlled by or is under common controlwith such Person, and each of such Person’s senior executive officers, directors and partners.     “Asset Coverage Ratio” means, as of any date of calculation, the ratio of (a) the total amountof Borrower’s Obligations outstanding under the Primary Revolving Loan and the Secondary RevolvingLoan divided by (b) the sum of (i) Borrower’s Accounts, net of allowance for doubtful Accounts,plus (ii) its Inventory, net of reserves (such net Inventory capped at $20,000,000), less (iii) itsaccounts payable.     “Authority” shall mean any governmental authority, central bank or comparable agency chargedwith the interpretation or administration of any applicable law, rule or regulation, or any changetherein, or any change in the interpretation or administration thereof.     “Business Day” means any day that is not a Saturday, Sunday or other day on which banks in theState of Georgia are authorized or required to close.     “Capital Expenditures” means any amounts accrued or paid in respect of any purchase or otheracquisition for value of capital assets and, for greater certainty, excludes amounts expended inrespect of the normal repair and maintenance of capital assets utilized in the ordinary course ofbusiness.     “Capitalized Leases” means all leases that have been or should be, in accordance with GAAP,recorded as capitalized leases.     “Change in Ownership” shall mean a transaction or series of transactions in which any “person”or “group” (within the meaning of Section 13(d) and 14(d)(2) of the Securities Exchange Act of1934) becomes the “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act of1934), directly or indirectly, of a sufficient number of shares of all classes of stock thenoutstanding of Borrower ordinarily entitled to vote in the election of directors, empowering such“person” or “group” to elect a majority of the Board of Directors of Borrower, who did not havesuch power before such transaction.     “Change in Senior Management” shall mean (a) any one or more of Ronald D. Ordway, GregoryOsborne or Ervin Kuczogi shall cease to be actively involved with the day-to-day management ofBorrower in an executive officer capacity, or (b) any two or more of David Mutcher, WilliamFrohoff, Murray Fox or Carl Beacher shall cease to be actively involved with the day-to-daymanagement of Borrower in an executive officer capacity.     “Change of Law” shall mean the adoption of any applicable law, rule or regulation, or anychange therein, or any change in the interpretation or administration thereof by any Authority.
2

 
     “Chattel Paper” means “chattel paper” as defined in the Code from time to time, together withany guaranties, Letters of Credit and other security therefor.     “Code” means the Uniform Commercial Code, as in effect in Georgia from time to time.     “Collateral” means all assets and personal property of Borrower, wherever located and whethernow owned by Borrower or hereafter acquired, including, without limitation, the following: (a) allAccounts; (b) all General Intangibles; (c) all Chattel Paper, Documents and Instruments and rightsto payment evidenced thereby, (d) all Inventory; (e) all Equipment and Fixtures; (f) all InvestmentProperty; (g) all Deposit Accounts; (h) all Letters of Credit and Letter of Credit Rights; (i) anyother collateral in which Bank may be hereafter granted a security interest or Lien; and (j) allparts, replacements, substitutions, profits, products and cash and non-cash Proceeds of any of theforegoing (including insurance proceeds payable by reason of loss or damage thereto) in any formand wherever located. Collateral shall include all written or electronically recorded books andrecords relating to any such Collateral and other rights relating thereto.     “Contingent Liabilities” means, as applied to any Person, any direct or indirect liability,contingent or otherwise, of that Person with respect to (i) any account, instrument, chattel paper,document, general intangible, indebtedness, lease, dividend, letter of credit, letter of creditright or other obligation of another Person, including, without limitation, any such obligationdirectly or indirectly guaranteed, endorsed, co-made or discounted or sold with recourse by thatPerson, or in respect of which that person is otherwise directly or indirectly liable; (ii) anyobligations with respect to undrawn letters of credit issued for the account of that Person; and(iii) all obligations arising under any Interest Rate Agreement or other agreement or arrangementdesignated to protect a person against fluctuation in interest rates, currency exchange rates orcommodity prices; provided, however, that the term “Contingent Obligation” shall not includeendorsements for collection or deposit in the ordinary course of business. The amount of anyContingent Obligation shall be deemed to be an amount equal to the stated or determined amount ofthe primary obligation in respect of which such Contingent Obligation is made or, if not stated ordeterminable, the maximum reasonably anticipated liability in respect thereof as determined by suchperson in good faith; provided, however, that such amount shall not in any event exceed the maximumamount of the obligations under the guarantee or other support arrangement.     “Corporate Distributions” means all payments to (i) any shareholder (or other holder of anequity interest in Borrower), director, executive or officer of the Borrower, (ii) any Affiliate orholder of Subordinated Debt of the Borrower, or (iii) any shareholder (or other holder of an equityinterest in Borrower), director, executive or officer of any Affiliate or holder of SubordinatedDebt of the Borrower. For greater certainty, it includes bonuses, dividends, salaries (exceptsalaries to officers or other employees in the ordinary course of business), and repayment ofIndebtedness or making of loans to any such Person.     “Debt” means (a) all liabilities which would be reflected on a balance sheet prepared inaccordance with GAAP, (b) all indebtedness for borrowed money or the deferred purchase price ofproperty or services, including without limitation reimbursement and other obligations with respectto surety bonds and letters of credit, (c) all obligations evidenced by notes, bonds,
3

 
debentures or similar instruments, (d) all capital lease obligations and (e) all Contingent Obligations.     “Default” or “default” means any of the events specified in Section 8.1, whether or not anyrequirement in such Section for the giving of notice or the lapse of time or the happening of anyfurther condition, event or act shall have been satisfied.     “Default Rate” means the “default rate” of interest per annum specified in the applicableNote.     “Deposit Account” means “deposit account” as defined in the Code from time to time.     “Document” means “document” as defined in the Code from time to time.     “EBITDA” shall mean, as of any date of calculation, Borrower’s net income, plus its InterestExpense, plus its income tax expense, plus its depreciation and amortization, calculated on aconsolidated basis and in accordance with GAAP.     “Environmental Laws” means, collectively the following acts and laws, as amended: theComprehensive Environmental Response, Compensation and Liability Act of 1980; the SuperfundAmendments and Reauthorization Act of 1986; the Resource Conservation and Recovery Act; the ToxicSubstances Act; the Clean Water Act; the Clean Air Act; the Oil Pollution and Hazardous SubstancesControl Act of 1978; and any other “Superfund” or “Superlien” law or any other federal, state orlocal statute, law, ordinance, code, rule, regulation, order or decree relating to, or imposingliability or standards of conduct concerning, any hazardous, toxic or dangerous waste, substance ormaterial, as now or at any time hereafter in effect.     “Equipment” means “equipment” as defined in the Code from time to time.     “Event of Default” means any event specified as such in Section 8.1 hereof, provided thatthere shall have been satisfied any requirement in connection with such event for the giving ofnotice or the lapse of time, or both.     “Fixed Charge Coverage Ratio” means, as of any date of calculation: (a) the sum of Borrower’sEBITDA, plus its rent and lease expense, less its Unfunded Capital Expenditures, less its cashtaxes, divided by (b) the sum of Borrower’s rent and lease expense, plus its current maturities oflong term Funded Debt, plus its Interest Expense, plus its Corporate Distributions, each calculatedon a consolidated basis for the trailing four quarter period and in accordance with GAAP.     “Fixtures” means “fixtures” as defined in the Code from time to time.     “Funded Debt” means, at any time, all obligations for borrowed money which bear interest or towhich interest is imputed plus, without duplication, all obligations for the deferred payment ofthe purchase of property, all Capitalized Lease obligations and all Indebtedness secured bypurchase money security interests.
4

 
     “GAAP” means generally accepted accounting principles as in effect in the United States fromtime to time.     “General Intangibles” means “general intangibles” as defined in the Code from time to time,including “payment intangibles” and “software” (each as defined in the Code from time to time).     “Instrument” means “instrument” as defined in the Code from time to time.     “Interest Expense” means the total of the costs of advances outstanding under Indebtednessincluding (i) interest charges, (ii) capitalized interest, (iii) the interest component ofCapitalized Leases, (iv) fees payable in respect of letters of credit and letters of guarantee, and(v) discounts incurred and fees payable in respect of bankers’ acceptances.     “Interest Rate Agreement” means any interest rate swap agreement, interest rate cap agreement,interest rate collar agreement, interest rate hedge agreement or other similar agreement orarrangement designed to protect a Person against fluctuations in interest rates or to hedge suchPerson’s interest rate risk exposure, including any swap agreements as defined in 11 U.S.C. §101,as amended.     “Inventory” means “inventory” as defined in the Code from time to time.     “Investment” means any beneficial ownership of (including stock, partnership interest or othersecurities) any Person, or any loan, advance or capital contribution to any Person.     “Investment Property” means “investment property” as defined in the Code from time to time.     “Letters of Credit” and “Letter of Credit Rights” means “letters of credit” and “letter ofcredit rights”, respectively, each as defined in the Code from time to time.     “Lien” means any mortgage, pledge, statutory lien or other lien arising by operation of law,security interest, trust arrangement, security deed, financing lease, collateral assignment orother encumbrance, conditional sale or title retention agreement, or any other interest in propertydesigned to secure the repayment of Obligations, whether arising by agreement or under any statuteor law or otherwise.     “Loan Documents” means this Agreement, the Notes, the Shareholder Subordination Agreement, theNegative Pledge Agreement, any Interest Rate Agreement, the Advance requests, and all otherdocuments and instruments now or hereafter evidencing, describing, guaranteeing or securing theObligations contemplated hereby or delivered in connection herewith, as they may be modified.     “Loans” has the meaning set forth in Section 2.1 and “Loan” means any of such loans identifiedtherein as the context may require.
5

 
     “Material Adverse Effect” means any (i) material adverse effect upon the validity, performanceor enforceability of any of the Loan Documents or any of the transactions contemplated hereby orthereby, (ii) material adverse effect upon the properties, business, prospects or condition(financial or otherwise) of Borrower, any Subsidiary and/or any other Person obligated under any ofthe Loan Documents, or (iii) material adverse effect upon the ability of Borrower, any Subsidiaryor any other Person to fulfill any obligation under any of the Loan Documents.     “Maximum Primary Revolving Loan Amount” means $17,000,000.     “Maximum Secondary Revolving Loan Amount” means $3,500,000.     “Negative Pledge Agreement” means that certain Negative Pledge Agreement of even date herewithfrom Borrower in favor of the Bank, as amended, modified, supplemented or restated from time totime.     “Notes” has the meaning set forth in Section 2.2 and “Note” means any of such notes identifiedtherein as the context may require.     “Obligations” means all obligations now or hereafter owed to Bank by Borrower, whetherrelated or unrelated to the Loans, including, without limitation, amounts owed or to be owed underthe terms of the Loan Documents, or arising out of the transactions described therein, including,without limitation, the Loans, sums advanced to pay overdrafts on any account maintained byBorrower with Bank, reimbursement obligations for outstanding letters of credit or banker’sacceptances issued for the account of Borrower or its Subsidiaries, amounts paid by Bank underletters of credit or drafts accepted by Bank for the account of Borrower or its Subsidiaries,together with all interest accruing thereon, all obligations, whether now existing or hereafterarising, under any Interest Rate Agreement, including any swap agreements as defined in 11 U.S.C.§101, as amended, between Bank and Borrower whenever executed, all fees, all costs of collection,attorneys’ fees and expenses of or advances by Bank which Bank pays or incurs in discharge ofobligations of Borrower, whether such amounts are now due or hereafter become due, direct orindirect and whether such amounts due are from time to time reduced or entirely extinguished andthereafter re-incurred.     “Permitted Debt” means (a) the Obligations; (b) Debt payable to suppliers and other tradecreditors in the ordinary course of business on ordinary and customary trade terms and which is notpast due; (c) Debt of any Subsidiary to Borrower or another Subsidiary; (d) Capitalized Leases ineffect on the date hereof; and (e) endorsement of checks for collection in the ordinary course ofbusiness.     “Permitted Investment” means: (i) Investments existing on the date disclosed on Exhibit 1.1hereto; (ii) (A) Marketable direct obligations issued or unconditionally guaranteed by the UnitedStates of America or any agency or any State thereof maturing within one year from the date ofacquisition thereof, (B) commercial paper maturing no more than one year from the date of creationthereof and currently having a rating of at least A-2 or P-2 from either Standard &
6

 
Poor’s Corporation or Moody’s Investors Service, (C) certificates of deposit maturing no morethan one year from the date of investment therein issued by Bank, and (D) Bank’s money marketaccounts; (iii) Investments accepted in connection with Permitted Transfers; (iv) Investmentsconsisting of travel advances and employee relocation loans and other employee loans and advancesin the ordinary course of business; (v) Investments (including Debt obligations) received inconnection with the bankruptcy or reorganization of customers or suppliers and in settlement ofdelinquent obligations of, and other disputes with, customers or suppliers arising in the ordinarycourse of Borrower’s business; and (vi) Investments consisting of notes receivable of, or prepaidroyalties and other credit extensions, to customers and suppliers who are not Affiliates, in theordinary course of business, provided that this part shall not apply to Investments of Borrower inany Subsidiary.     “Permitted Liens” means (a) Liens securing the Obligations; (b) Liens for taxes and otherstatutory Liens, landlord’s Liens and similar Liens arising out of operation of law so long as theobligations secured thereby are not past due or are being contested and the proceedings contestingsuch obligations have the effect of preventing the forfeiture or sale of the property subject tosuch Lien; (c) Liens for deposits made in the ordinary course of business in connection withworkers’ compensation, unemployment insurance, social security and similar laws; (d) attachment,judgment and other similar non-tax Liens arising in connection with court proceedings but only ifand for so long as (i) the execution or enforcement of such Liens is and continues to beeffectively stayed and bonded on appeal, (ii) the validity and/or amount of the claims securedthereby are being actively contested in good faith by appropriate legal proceedings and (iii) suchLiens do not, in the aggregate, materially detract from the value of the assets of the Person whoseassets are subject to such Lien or materially impair the use thereof in the operation of suchPerson’s business; (e) Liens securing Permitted Debt described in clause (d) of the definition ofPermitted Debt; and (f) Liens in the nature of easements or other similar encumbrances orrestrictions (not securing Debt) on the use of Borrower’s properties, so long as such Liens do notmaterially impair Borrower’s use of such property.     “Permitted Transfer” means the conveyance, sale, lease, transfer or disposition by Borrower orany Subsidiary of: (i) Inventory in the ordinary course of business; (ii) non-exclusive licensesand similar arrangements for the use of the property of Borrower or its Subsidiaries in theordinary course of business; (iii) surplus, worn-out or obsolete Equipment in the ordinary andnormal replacement program for Equipment under which Bank’s Lien priority continues in thereplacement Equipment, or (iv) its Wintron Technology unit.     “Person” means any natural person, corporation, unincorporated organization, trust,joint-stock company, joint venture, association, company, limited or general partnership, limitedliability company, any government or any agency or political subdivision of any government, or anyother entity or organization.     “Primary Revolving Loan” shall have the meaning set forth in Section 2.1.     “Proceeds” means “proceeds” as defined in the Code from time to time.
7

 
     “Regulated Materials” means any hazardous, toxic or dangerous waste, substance or material,the generation, handling, storage, disposal, treatment or emission of which is subject to anyEnvironmental Law.     “Revolving Loan Period” means the period from and including the date of this Agreement to andincluding the Revolving Loan Termination Date.     “Revolving Loans” means collectively, the Primary Revolving Loan and the Secondary RevolvingLoan and “Revolving Loan” means either of such loans as the context may require.     “Revolving Loan Termination Date” or “Termination Date” means (i) with respect to the PrimaryRevolving Loan only, June 30, 2010 and (ii) with respect to the Secondary Revolving Loan only, June30, 2009, in each case as such date may be renewed from time to time as provided herein.     “Sarbanes-Oxley” means the Sarbanes-Oxley Act of 2002, as amended from time to time.     “Secondary Revolving Loan” shall have the meaning set forth in Section 2.1.     “Security Agreement” means this Agreement as it relates to a security interest in theCollateral and any other mortgage, security agreement or similar instrument now or hereafterexecuted by Borrower or other Person granting Bank a security interest in any Collateral to securethe Obligations (including any arising under any Interest Rate Agreement).     “Shareholder Equity” means the total of (i) share capital (excluding redeemable preferredshares and treasury stock), (ii) contributed surplus, and (iii) retained earnings; and fornon-corporate organizations such as partnerships or limited liability companies, equity accountssimilar to those described herein for corporations.     “Shareholder Subordination Agreement” means that certain Subordination Agreement, dated as ofeven date herewith, among Bank, Ronald D. Ordway and Borrower, as amended, modified, supplementedor restated from time to time.     “Solvent” means, as to any Person, that such Person has capital sufficient to carry on itsbusiness and transactions in which it is currently engaged and all business and transactions inwhich it is about to engage, is able to pay its debts as they mature, and has assets having a fairvaluation greater than its liabilities, at fair valuation.     “Subordinated Debt” means Debt of Borrower that is subordinated to the Obligations pursuant toa written agreement in form and substance satisfactory to Bank in its sole discretion.     “Subordinated Shareholder Note” means that certain unsecured promissory note from Borrower infavor of Ronald D. Ordway in the principal amount of $6,000,000.
8

 
     “Subsidiary” means any corporation, partnership or other entity in which Borrower, directlyor indirectly, owns more than fifty percent (50%) of the stock, capital or income interests, orother beneficial interests, or which is effectively controlled by such Person.     “Term Loan” shall have the meaning set forth in Section 2.1.     “Term Loan Amount” means $1,700,000.     “Total Liabilities” means all liabilities of a Person, including Contingent Liabilities,exclusive of deferred tax liabilities, calculated on a consolidated basis and in accordance withGAAP.     “Unfunded Capital Expenditures” means those Capital Expenditures which are not financed byFunded Debt.          1.2. Financial Terms. All financial terms used herein shall have the meaningsassigned to them under GAAP unless another meaning shall be specified     2. **The Loan Facility**.          2.1. The Loans. Bank agrees to extend the following credit to Borrower, subject tothe terms set forth herein:          (a) Bank agrees, on the terms and conditions set forth in this Agreement, to make revolvingloan Advances (including issuing letters of credit) to or for the account of Borrower from time totime during the Revolving Loan Period in amounts such that the aggregate principal amount of suchrevolving loan Advances (including the face amount of any letters of credit) under this loan at anyone time outstanding will not exceed the Maximum Primary Revolving Loan Amount (the “PrimaryRevolving Loan”). Within the foregoing limit, Borrower may borrow, prepay and reborrow suchAdvances at any time during the Revolving Loan Period.          (b) Bank agrees, on the terms and conditions set forth in this Agreement, to make additionalrevolving loan Advances to or for the account of Borrower under a second revolving loan facilityfrom time to time during the Revolving Loan Period in amounts such that the aggregate principalamount of such revolving loan Advances at any one time outstanding will not exceed the MaximumSecondary Revolving Loan Amount (the “Secondary Revolving Loan”). Within the foregoing limit,Borrower may borrow, prepay and reborrow such Advances at any time during the Revolving LoanPeriod.          (c) Bank agrees, on the terms and conditions set forth in this Agreement, to make a term loanto Borrower in an amount equal to the Term Loan Amount in a single advance on the date hereof (the“Term Loan” and together with the Primary Revolving Loan and the Secondary Revolving Loan, the“Loans”). Once repaid, principal of the Term Loan cannot be reborrowed.
9

 
          2.2. Promissory Notes.          (a) The Primary Revolving Loan shall be evidenced by a promissory note in the face amount ofthe Maximum Primary Revolving Loan Amount, dated of even date herewith, from Borrower to the orderof Bank (as amended, modified, supplemented, restated or renewed from time to time, the “PrimaryRevolving Note”).          (b) The Secondary Revolving Loan shall be evidenced by a promissory note in the face amount ofthe Maximum Secondary Revolving Loan Amount, dated of even date herewith, from Borrower to theorder of Bank (as amended, modified, supplemented, restated or renewed from time to time, the“Secondary Revolving Note”).          (c) The Term Loan shall be evidenced by a promissory note in the face amount of the Term LoanAmount, dated of even date herewith, from Borrower to the order of Bank (as amended, modified,supplemented, restated or renewed from time to time, the “Term Note” and together with theRevolving Note and the Revolving Note, the “Notes”).          2.3. Repayment of Loans.          (a) The Primary Revolving Loan shall be repayable in accordance with the terms of the PrimaryRevolving Note and this Agreement.          (b) The Secondary Revolving Loan shall be repayable in accordance with the terms of theSecondary Revolving Note and this Agreement.          (c) The Term Loan shall be repayable in accordance with the terms of the Term Note and thisAgreement.          (d) Borrower shall make each required payment of principal of and interest on the Loans andfees hereunder not later than 12:00 noon (local time Atlanta, Georgia) on the date when due,without set off, counterclaim or other deduction, in immediately available funds to Bank at itsaddress provided to Borrower from time to time. Whenever any payment of principal of, or intereston, the Loans or of fees shall be due on a day which is not a Business Day, the date for paymentthereof shall be extended to the next succeeding Business Day. If the date for any payment ofprincipal is extended by operation of law or otherwise, interest thereon shall be payable for suchextended time.          2.4. Extension of Termination Date. Bank may, in its sole and absolute discretion,extend the Termination Date for successive one-year terms which shall terminate on the anniversaryof the then applicable Termination Date by giving written notice thereof to Borrower at least oneyear prior to the then applicable Termination Date (an “Extension Notice”); provided, unless Bankgives such Extension Notice in writing to Borrower at least one year prior to the then applicableTermination Date, the Termination Date shall not be extended.          2.5. Overdue Amounts.
10

 
          (a) Any payments not made as and when due shall bear interest from the date due until paid atthe Default Rate, in Bank’s discretion.          (b) If any payments are not timely made, Borrower shall also pay to Bank a late charge equalto 5% of each payment past due for 15 or more days to Bank. The Borrower acknowledges that thelate charge imposed herein represents a reasonable estimate of the expenses of Bank incurredbecause of such lateness. Acceptance by Bank of any late payment without an accompanying latecharge shall not be deemed a waiver of Bank’s right to collect such late charge or to collect alate charge for any subsequent late payment received.          2.6. Calculation of Interest. All interest under the Notes or hereunder shall becalculated on the basis of the Actual/360 Computation, as defined in the Notes.          2.7. Letters of Credit.          (a) At its discretion Bank may from time to time issue, extend or renew letters of credit forthe account of Borrower or its Subsidiaries; provided, the stated expiration date thereof shall notbe later than the Revolving Loan Termination Date. The availability of Advances under the PrimaryRevolving Loan shall be reduced by outstanding obligations of Bank under any letters of credit.All payments made by Bank under any such letters of credit (whether or not Borrower is the accountparty) and all fees, commissions, discounts and other amounts owed or to be owed to Bank inconnection therewith, shall be deemed to be Advances under the Primary Revolving Note, and shall berepaid on demand. Borrower shall complete and sign such applications and supplemental agreementsand provide such other documentation as Bank may require. The form and substance of all letters ofcredit, including expiration dates, shall be subject to Bank’s approval. Bank may charge a fee orcommission for each issuance, renewal or extension of a letter of credit, such fee to be the“Applicable Margin” (as defined in the Primary Revolving Note) as then in effect under the PrimaryRevolving Note of the stated amount of such letter of credit. Borrower unconditionally guaranteesall obligations of any Subsidiary with respect to letters of credit issued by Bank for the accountof such Subsidiary. Upon a Default, Borrower shall, on demand, deliver to Bank good funds equal to100% of Bank’s maximum liability under all outstanding letters of credit, to be held as cashcollateral for Borrower’s reimbursement obligations and other Obligations.          (b) Any letter of credit issued hereunder shall be governed by the International StandbyPractices (1998) of the Institute of International Banking Law & Practice, International Chamber ofCommerce Publication No. 590 (“ISP98”), as revised from time to time, except to the extent that theterms of such publication would limit or diminish rights granted to Bank hereunder or in any otherLoan Document.          2.8. Statement of Account. If Bank provides Borrower with a statement of account on aperiodic basis, such statement will bepresumed complete and accurate and will be definitive and binding on Borrower, unless objectedto with specificity by Borrower in writing within forty-five (45) days after receipt.
11

 
          2.9. Fees. Borrower shall pay to Bank on or before the date hereof a commitment fee inthe amount of $17,000, which fee has been fully earned by Bank and is non-refundable in itsentirety.          2.10. Termination. Upon at least thirty (30) days prior written notice to Bank,Borrower may, at its option, terminate this Agreement and repay the Loans in full.          2.11. Increased Costs; Reduced Returns.          (a) If after the date hereof, a Change of Law or compliance by Bank with any request ordirective (whether or not having the force of law) of any Authority either: (i) shall subject Bankto any tax, duty or other charge with respect to its Loans, its Notes or its obligation to makeAdvances, or shall change the basis of taxation of payments to it of the principal of or intereston its Loans or any other amounts due under this Agreement or the other Loan Documents in respectof its Loans or its obligation to make Advances (except for changes in the rate of tax on itsoverall net income imposed by the jurisdiction in which its principal executive office is located);or (ii) shall impose, modify or deem applicable any reserve, special deposit insurance or similarrequirement (including, without limitation, any such requirements imposed by the Board of Governorsof the Federal Reserve System) against assets of, deposits with or for the account of, or creditextended by, it; or (iii) shall impose on it or the London Interbank Market any other similarcondition affecting its Loans, its Notes or its obligation to make Advances; and the result of anyof the foregoing is to increase the cost to it of making or maintaining any of its Loans, or toreduce the amount received or receivable by it under this Agreement, under its Notes or under theother Loan Documents with respect thereto, by an amount deemed by it to be material, then, withinfifteen (15) days after demand by Bank, Borrower shall pay to Bank such additional amount oramounts as will compensate Bank for such increased cost or reduction.          (b) If Bank shall have determined that after the date hereof the adoption of any applicablelaw, rule or regulation regarding capital adequacy, or any change therein, or any change in theinterpretation or administration thereof, or compliance by it with any request or directiveregarding capital adequacy (whether or not having the force of law) of any Authority, has or wouldhave the effect of reducing the rate of return on its capital as a consequence of its obligationswith respect to such adoption, change or compliance (taking into consideration its policies withrespect to capital adequacy), by an amount deemed by it to be material, then from time to time,within fifteen (15) days after demand by Bank, Borrower shall pay to Bank such additional amount oramounts as will compensate Bank for such reduction.          (c) Bank shall promptly notify Borrower of any event of which it has knowledge, occurringafter the date hereof, which will entitle it to compensation or reimbursement pursuant to thisSection. A certificate of Bank claiming compensation under thisSection and setting forth the additional amount or amounts to be paid to it hereunder shall beconclusive in the absence of manifest error. In determining such amount, Bank may use anyreasonable averaging and attribution methods. Notwithstanding anything to the contrary herein,Bank may not claim compensation or reimbursement for any period more than twelve (12)
12

 
months prior to the date any such demand for payment is made under this Section 2.12, regardless of the cost toBank.     3. **Conditions Precedent to Borrowing****.**          3.1. Conditions Precedent to Initial Advance. In addition to any other requirementset forth in this Agreement, Bank will not make the initial Advance under its Revolving Loan unlessand until the following conditions shall have been satisfied:          (a) Loan Documents. Borrower and each other party to any Loan Document, as applicable,shall have executed and delivered this Agreement, the Notes, Negative Pledge Agreement, and otherrequired Loan Documents, all in form and substance satisfactory to Bank.          (b) Supporting Documents. Borrower shall cause to be delivered to Bank the followingdocuments:     (i) A copy of the governing instruments of Borrower and its Subsidiaries,and a good standing certificate of Borrower and Subsidiaries, certified by theappropriate official of its state of incorporation, if different;     (ii) Incumbency certificate and certified resolutions of the board ofdirectors (or other appropriate Persons) of Borrower and each other Personexecuting any Loan Documents, signed by the Secretary or another authorizedofficer of Borrower or such other Person, authorizing the execution, deliveryand performance of the Loan Documents;     (iii) The legal opinion of Borrower’s legal counsel addressed to Bankregarding such matters as Bank and its counsel may request;     (iv) Satisfactory evidence of payment of all fees due and reimbursement ofall costs incurred by Bank, and evidence of payment to other parties of allfees or costs which Borrower is required under this Agreement to pay by thedate of the initial Advance; and     (v) UCC searches and other Lien searches showing no existing securityinterests in or Liens on the Borrower’s or its Subsidiaries’ assets, other thanPermitted Liens.          (c) Insurance. Borrower shall have delivered to Bank satisfactory evidence ofinsurance meeting the requirements of Section 5.3.          (d) Perfection of Liens. UCC-1 financing statements covering the Collateral shall dulyhave been recorded or filed in the manner and places required by law to establish, preserve,protect and perfect the interests and rights created or intended to be created by the SecurityAgreement; and all taxes, fees and other charges in connection with the execution,
13

 
delivery and filing of the Security Agreement and the financing statements shall duly have been paid.          (e) Shareholder Subordinated Note. The Shareholder Subordinated Note shall be on termsand in form and substance satisfactory to Bank in its sole discretion, and Ronald D. Ordway andBorrower shall have executed and delivered the Shareholder Subordination Agreement.          (f) Additional Documents. Borrower shall have delivered to Bank all additionalopinions, documents, certificates and other assurances that Bank or its counsel may require.          (g) Payment of Fees. Borrower shall have paid all fees, costs and expenses as requiredby the Loan Documents in connection with the Closing.          3.2. Conditions Precedent to Each Revolving Loan Advance. The following conditions,in addition to any other requirements set forth in this Agreement, shall have been met or performedby the Advance Date with respect to any request for an Advance and each request for an Advance(whether or not a written Advance request is required) shall be deemed to be a representation thatall such conditions have been satisfied:          (a) Advance Request. Borrower shall have delivered to Bank a request for an Advanceand such other information as may be reasonably required by Bank.          (b) No Default. No Default or Event of Default shall have occurred and be continuingor could occur upon the making of the Advance in question.          (c) Correctness of Representations. All representations and warranties made byBorrower herein or otherwise in writing in connection herewith shall be true and correct in allmaterial respects with the same effect as though the representations and warranties had been madeon and as of the proposed Advance Date.          (d) No Adverse Change. There shall have been no event or condition which could have aMaterial Adverse Effect since the date of the most recent financial statements of Borrowerdelivered prior to date hereof.          (e) Limitation on Advances. Borrower shall not draw on the Primary Revolving Loanunless the Secondary Revolving Loan is fully funded.          (f) Further Assurances. Borrower shall have delivered such further documentation orassurances as Bank may reasonably require.     4. **Representations and Warranties****.**In order to induce Bank to enter into thisAgreement and to make the Loans provided for herein, Borrower hereby represents and warrants (allof which shall survive the execution and delivery of the Loan Documents and all of which
14

 
shall be deemed made as of the date hereof and as of the Advance Date), on behalf of it and each of itsSubsidiaries, that:          4.1. Valid Existence and Power. It is duly organized, validly existing and in goodstanding under the laws of the jurisdiction of its organization and is duly qualified or licensedto transact business in all places where the failure to be so qualified could reasonably beexpected to have a Material Adverse Effect on it; the state of its organization, its organizationnumber in such state, if any, and its tax identification number or other identifying number are asset forth in Exhibit 4.1; and it has the power to make and perform the Loan Documents executed byit, and all such instruments will constitute its legal, valid and binding obligations, enforceablein accordance with their respective terms, subject only to bankruptcy and similar laws affectingcreditors’ rights generally.          4.2. Authority. Its execution, delivery and performance of the Loan Documents havebeen duly authorized by all necessary action, and do not and will not violate any provision of lawor regulation, or any writ, order or decree of any court or Authority or any provision of itsgoverning instruments, and do not and will not, with the passage of time or the giving of notice,result in a breach of, or constitute a default or require any consent under, or result in thecreation of any Lien upon any of its property or assets pursuant to, any law, regulation,instrument or agreement to which it is a party or by which it or its properties may be subject,bound or affected.          4.3. Financial Condition. Other than as disclosed in financial statements delivered onor prior to the date hereof to Bank, it has no direct or contingent obligations or liabilities(including any guarantees or leases) or any unrealized or anticipated losses from any of itscommitments which could reasonably be expected to have a Material Adverse Effect; all suchfinancial statements have been prepared in accordance with GAAP and fairly present its financialcondition as of the date thereof; and it is not aware of any adverse fact (other than facts whichare generally available to the public and not particular to it, such as general economic orindustry trends) concerning its financial or business condition or future prospects which couldreasonably be expected to have a Material Adverse Effect and which has not been fully disclosed toBank, including any adverse change in its operations or financial condition since the date of themost recent financial statements delivered to Bank; and it is Solvent, and after consummation ofthe transactions set forth in this Agreement and the other Loan Documents, it will be Solvent.          4.4. Litigation. There are no suits or proceedings pending, or to its knowledgethreatened, before any court or by or before any governmental or regulatory authority, commission,bureau or agency or public regulatory body against or affecting it or its assets which, if adversely determined, could reasonably be expected tohave a Material Adverse Effect.          4.5. Agreements, Etc. It is not a party to any agreement or instrument or subject toany court order, governmental decree or any charter or other corporate restriction, adverselyaffecting its business, assets, operations or condition (financial or otherwise), nor is it indefault in the performance, observance or fulfillment of any of the material obligations, covenantsor conditions contained in any agreement or instrument to which it is a party, or any law,regulation, decree, order or the like.
15

 
          4.6. Authorizations. All authorizations, consents, approvals and licenses requiredunder applicable law or regulation for its ownership or operation of the property owned or operatedby it or for the conduct of any business in which it is engaged have been duly issued and are infull force and effect, and it is not in default, nor has any event occurred which with the passageof time or the giving of notice, or both, would constitute a default, under any of the terms orprovisions of any part thereof, or under any order, decree, ruling, regulation, closing agreementor other decision or instrument of any Authority having jurisdiction over it, which default couldreasonably be expected to have a Material Adverse Effect. Except as noted herein, no approval,consent or authorization of, or filing or registration with, any Authority or agency is requiredwith respect to the execution, delivery or performance of any Loan Document.          4.7. Title. It has good title to all of the assets shown in its financial statementsfree and clear of all Liens, except Permitted Liens, and it alone has full ownership rights in allCollateral.          4.8. Collateral. The security interests granted to Bank herein and pursuant to anyother Security Agreement (a) constitute and, as to subsequently acquired property included in theCollateral covered by the Security Agreement, will constitute, security interests under the Codeentitled to all of the rights, benefits and priorities provided by the Code and (b) are, and as tosuch subsequently acquired Collateral will be, fully perfected, superior and prior to the rights ofall third persons, now existing or hereafter arising, subject only to Permitted Liens; and all ofthe Collateral is intended for use solely in its business.          4.9. Location. Its chief executive office where its business records are located,all of its other places of business and any other places where any Collateral is kept, are alllocated at the addresses indicated on Exhibit 4.9; the Collateral is located and shall at all timesbe kept and maintained only at its location or locations as described on Exhibit 4.9 herein; and nosuch Collateral is attached or affixed to any real property so as to be classified as a fixtureunless Collateral Agent has otherwise agreed in writing.          4.10. Taxes. It has filed all federal and state income and other tax returns whichare required to be filed, and have paid all taxes as shown on said returns and all taxes, includingwithholding, FICA and ad valorem taxes, shown on all assessments received by it to the extent thatsuch taxes have become due; and it is not subject to any federal, state or local tax Liens nor has it received any notice of deficiency or otherofficial notice to pay any taxes; and it has paid all sales and excise taxes payable by it.          4.11. Labor Law Matters. No goods or services have been or will be produced by it inviolation of any applicable labor laws or regulations or any collective bargaining agreement orother labor agreements or in violation of any minimum wage, wage-and-hour or other similar laws orregulations.          4.12. Judgment Liens. Neither it nor any of its assets are subject to any unpaidjudgments (whether or not stayed) or any judgment liens in any jurisdiction.
16

 
          4.13. Subsidiaries. If it has any Subsidiaries, they are listed on Exhibit 4.13.          4.14. Environmental. Except for ordinary and customary amounts of solvents, cleanersand similar materials used in the ordinary course of its business and in strict compliance with allEnvironmental Laws, neither it, nor to its best knowledge any other previous owner or operator ofany real property currently owned or operated by it, has generated, stored or disposed of anyRegulated Material on any portion of such property, or transferred any Regulated Material from suchproperty to any other location in violation of any applicable Environmental Laws; no RegulatedMaterial has been generated, stored or disposed of on any portion of the real property currentlyowned or operated by it by any other Person, or is now located on such property; and it is in fullcompliance with all applicable Environmental Laws and it has not been notified of any action, suit,proceeding or investigation which calls into question compliance by it with any Environmental Lawsor which seeks to suspend, revoke or terminate any license, permit or approval necessary for thegeneration, handling, storage, treatment or disposal of any Regulated Material.          4.15. ERISA. It has no unfunded liabilities with respect to any pension,profit-sharing or other benefit plan subject to the Employee Retirement Income Security Act of1974, as amended (“ERISA”).          4.16. Investment Company Act. It is not an “investment company” as defined in theInvestment Company Act of 1940, as amended.          4.17. Names. It currently conducts all business only under its legal name as setforth above in the introductory section of this Agreement; and during the preceding five (5) yearsit has not (i) been known as or used any other corporate, fictitious or trade name, (ii) been thesurviving entity of a merger or consolidation or (iii) acquired all or substantially all of theassets of any Person.          4.18. Accounts. Each Account, instrument, Chattel Paper and other writingconstituting any portion of the Collateral (a) is genuine and enforceable in accordance with itsterms except for such limits thereon arising from bankruptcy and similar laws relating tocreditors’ rights; (b) is not subject to any deduction or discount (other than as stated in the invoice), defense, set off, claim or counterclaim of a material nature againstit except as to which it has notified Bank in writing; (c) is not subject to any othercircumstances that would impair the validity, enforceability or amount of such Collateral except asto which it has notified Bank in writing; (d) arises from a bona fide sale of goods or delivery ofservices in the ordinary course and in accordance with the terms and conditions of any applicablepurchase order, contract or agreement; (e) is free of all Liens other than Permitted Liens; and (f)is for a liquidated amount maturing as stated in the invoice therefor.          4.19. Intellectual Property. It possesses all licenses, certificates, franchises,permits and other authorizations from governmental and political subdivisions or regulatoryauthorities, and all patents, trademarks, service marks, trade names, copyrights, franchises,licenses and other rights that are necessary for ownership, maintenance and operation of any of
17

 
their respective material Properties and assets, and it is not in violation of any thereof, which,individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.          4.20. Insider. It is not, and no Person having “control” (as that term is defined in12 U.S.C. §  375(b)(5) or in regulations promulgated pursuant thereto) of it is, an “executiveofficer,” “director,” or “principal shareholder” (as those terms are defined in 12 U.S.C. § 375(b)or in regulations promulgated pursuant thereto) of Bank, of a bank holding company of which Bank isa subsidiary, or of any subsidiary of a bank holding company of which Bank is a subsidiary.          4.21. Compliance with Covenants; No Default. It is, and upon funding of the Loanswill be, in compliance with all of the covenants hereof; and no Default or Event of Default hasoccurred, and the execution, delivery and performance of the Loan Documents and the funding of theLoans will not cause a Default or Event of Default.          4.22. Full Disclosure. There is no material fact which is known or which should beknown by it that it has not disclosed to Bank which could have a Material Adverse Effect; and noLoan Document, nor any agreement, document, certificate or statement delivered by it to Bank,contains any untrue statement of a material fact or omits to state any material fact which is knownor which should be known by it necessary to keep the other statements from being misleading.     5. **Affirmative Covenants**. Borrower covenants and agrees that from the date hereof anduntil payment in full of the Obligations and the formal termination of this Agreement, Borrower andeach Subsidiary:          5.1. Use of Loan Proceeds. Shall use the proceeds of the Loans to refinance existingindebtedness of the Borrower, other than the Subordinated Shareholder Note. The proceeds from thePrimary Revolving Loan and the Secondary Revolving Loan may also be use to finance working capitalneeds and general corporate purposes of the Borrower. In each case, Borrower shall furnish Bankall evidence that the Bank may reasonably require with respect to such use.          5.2. Maintenance of Business and Properties. Shall at all times maintain, preserveand protect its material property used or useful in the conduct of its business, and keep the samein good repair, working order and condition, and from time to time make, or cause to be made, allmaterial needful and proper repairs, renewals, replacements, betterments and improvements theretoso that the business carried on in connection therewith may be conducted properly and in accordancewith standards generally accepted in businesses of a similar type and size at all times, andmaintain and keep in full force and effect all licenses and permits necessary to the proper conductof its business.          5.3. Insurance. Shall maintain such liability insurance, workers’ compensationinsurance, business interruption insurance and casualty insurance as may be required by law,customary and usual for prudent businesses in its industry or as may be reasonably required by
18

 
Bank and shall insure and keep insured all of its material properties in good and responsible insurancecompanies satisfactory to Bank.          5.4. Notice of Default. Shall provide to Bank immediate notice of (a) the occurrenceof a Default or Event of Default and what action (if any) it is taking to correct the same, (b) anymaterial litigation or material changes in existing litigation or any judgment against it or itsassets, (c) any damage or loss to property that could reasonably be expected to have a MaterialAdverse Effect, (d) any notice from taxing authorities as to claimed deficiencies or any tax lienor any notice relating to alleged ERISA violations, (e) any Reportable Event, as defined in ERISA,(f) any rejection, return, offset, dispute, loss or other circumstance that could reasonably beexpected to have a Material Adverse Effect, (g) the cancellation or termination of, or any defaultunder, any agreement to which it is a party or by which any of its properties are bound, whichcancellation or termination could reasonably be expected to have a Material Adverse Effect, or anyacceleration of the maturity of any of its Debt, and (h) any loss or threatened loss of licenses orpermits, which loss could reasonably be expected to have a Material Adverse Effect.          5.5. Inspections. Shall permit inspections of its records, at such times and in suchmanner as may be reasonably required by Bank and shall further permit such inspections, reviews andexaminations of its other records and its properties (with such reasonable frequency and at suchreasonable times as Bank may desire) by Bank as Bank may deem necessary or desirable from time totime. The cost of any such examinations, reviews, verifications and inspections shall be borne byBorrower.          5.6. Financial Information. Shall maintain books and records in accordance with GAAPand shall furnish to Bank the following periodic financial information:          (a) Quarterly Interim Statements. Within forty five (45) days after the end of eachfiscal quarter, Borrower’s consolidated unaudited balance sheet at the end of that period and itsconsolidated income statement and statement of cash flows for the portion of the fiscal year endingwith such period, together with all supporting schedules, setting forth in comparativeform the figures for the same period of the preceding fiscal year, and certified by its chieffinancial officer as true and correct and fairly representing its and its Subsidiaries financialcondition and that such statements are prepared in accordance with GAAP, except without footnotesand subject to normal year-end audit adjustments;          (b) Annual Statement. Within one hundred fifty (150) days after the end of eachfiscal year, Borrower’s audited financial statements containing a consolidated balance sheet at theend of that period and a consolidated income statement and statement of cash flows for that period,setting forth in comparative form the figures for the preceding fiscal year, together with allsupporting schedules and footnotes, and containing an unqualified audit opinion of independentcertified public accountants reasonably acceptable to Bank that the financial statements wereprepared in accordance with GAAP;          (c) No Default Certificates. Within forty five (45) days after the end of each fiscalquarter, a certificate of Borrower’s president or chief financial officer, in the form attached
19

 
hereto as Exhibit 5.6 (a “Compliance Certificate”), that no Default or Event of Default then existsor if a Default or Event of Default exists, the nature and duration thereof and its intention withrespect thereto, and in addition, shall cause its independent auditors (if applicable) to submit toBank, together with its audit report, a statement that, in the course of such audit, it discoveredno circumstances which it believes would result in a Default or Event of Default or if itdiscovered any such circumstances, the nature and duration thereof;          (d) Budget. Annually, within thirty (30) days following the close of each fiscal year,Borrower’s internally prepared budget for the following year, in form and substance satisfactory toBank;          (e) Other Information. Such other information reasonably requested by Bank from timeto time concerning its business, properties or financial condition.          5.7. Maintenance of Existence and Rights. Shall preserve and maintain its corporateexistence, authorities to transact business, rights and franchises, trade names, patents,trademarks and permits necessary to the conduct of its business.          5.8. Payment of Taxes, Etc. Shall pay before delinquent all of its Debts and taxes,except that Bank shall not unreasonably withhold its consent to nonpayment of taxes being activelycontested in accordance with law (provided that Bank may require bonding or other assurances).          5.9. Subordination. Shall cause all Debt and other obligations now or hereafter owedto any shareholder or Affiliate to be subordinated in right of payment and security to theObligations in accordance with subordination agreements satisfactory to Bank.          5.10. Compliance; Hazardous Materials. Shall strictly comply with all laws,regulations, ordinances and other legal requirements, specifically including, without limitation, ERISA, all securities laws,Sarbanes-Oxley (if applicable) and all laws relating to hazardous materials and the environment;and unless approved in writing by Bank, it shall not engage in the storage, manufacture,disposition, processing, handling, use or transportation of any hazardous or toxic materials,whether or not in compliance with applicable laws and regulations.          5.11. Further Assurances. Shall take such further action and provide to Bank suchfurther assurances as may be reasonably requested to ensure compliance with the intent of thisAgreement and the other Loan Documents.          5.12. Covenants Regarding Collateral. Shall, regarding the Collateral:          (a) use the Collateral only in the ordinary course of its business and will not permit theCollateral to be used in violation of any applicable law or policy of insurance;          (b) as agent for Bank, will defend the Collateral against all claims and demands of allPersons, except for Permitted Liens;
20

 
          (c) at Bank’s request, obtain and deliver to Bank such waivers as Bank may require waiving thelandlord’s, mortgagee’s or other lienholder’s enforcement rights against the Collateral andassuring Bank’s access to the Collateral in the exercise of their rights hereunder;          (d) promptly deliver to Collateral Agent all promissory notes, drafts, trade acceptances,chattel paper, instruments or documents of title which are Collateral, appropriately endorsed toCollateral Agent’s order; and          (e) except for sales of Inventory in the ordinary course of business, not sell, assign, lease,transfer, pledge, hypothecate or otherwise dispose of or encumber any Collateral or any interesttherein.          5.13. Deposit Account. Shall maintain its primary depository accounts and cashmanagement accounts with Bank.     6. **Negative Covenants**. Borrower covenants and agrees that from the date hereof anduntil payment in full of the Obligations and the formal termination of this Agreement, neitherBorrower nor any Subsidiary:          6.1. Debt. Shall create or permit to exist any Debt, including any guaranties orother contingent obligations, except Permitted Debt.          6.2. Liens. Shall create or permit any Liens on any of its property except PermittedLiens.          6.3. Corporate Distributions; Subordinated Debt. Shall pay or declare any dividends(other than stock dividends) or other CorporateDistribution or make any payment on or otherwise acquire any Subordinated Debt if any Defaultor Event of Default has occurred and is continuing or would be caused thereby.          6.4. Investments. Shall directly or indirectly acquire or own, or make any Investmentin or to, any Person (including advances of Loan proceeds to any Person not a Borrower), other thanPermitted Investments.          6.5. Change in Business. Shall enter into any business which is substantiallydifferent from the business in which it is presently engaged.          6.6. Transactions with Affiliates. Shall directly or indirectly purchase, acquire orlease any property from, or sell, transfer or lease any property to, pay any management fees to orotherwise deal with, in the ordinary course of business or otherwise, any Affiliate (other than aSubsidiary); provided, however, that any acts or transactions prohibited by this Section may beperformed or engaged in after written notice to Bank if upon terms not less favorable to Borroweror such Subsidiary than if no such relationship existed.          6.7. No Change in Name, Offices; Removal of Collateral. Shall unless it shall havegiven 60 days’ advance written notice thereof to Bank: (a) change its name or the location
21

 
of its chief executive office or other office where books or records are kept, (b) use any new trade orfictitious name (provided its use of any trade or fictitious name shall be in compliance with alllaws regarding the use of such names), or (c) permit any Inventory or other tangible Collateral tobe located at any location other than as specified in Section 4.9.          6.8. No Sale, Leaseback. Shall enter into any sale-and-leaseback or similartransaction.          6.9. Margin Stock. Shall use any proceeds of the Loans to purchase or carry anymargin stock (within the meaning of Regulation U of the Board of Governors of Federal ReserveSystem) or extend credit to others for the purpose of purchasing or carrying any margin stock.          6.10. Tangible Collateral. Shall, except as otherwise provided herein, allow anyInventory or other tangible Collateral to be commingled with, or become an accession to or part of,any property of any other Person so long as such property is Collateral; or allow any tangibleCollateral to become a fixture unless Collateral Agent shall have given its prior writtenauthorization.          6.11. Subsidiaries. Shall acquire, form or dispose of any Subsidiaries or permit anySubsidiary to issue capital stock except to its parent.          6.12. Dispositions. Shall voluntarily or involuntarily through its direct actions orinactions, or indirectly through the actions or inactionsof others, do any one or more of the following: sell, transfer, lease, liquidate, franchise,license, dispose of or part with possession or control of all or any part of or interest in(whether legal or equitable) any part of or any interest in its business or properties (includingany equity ownership interests in any Subsidiary), including any of the Collateral or all of theCollateral, except for Permitted Transfers.          6.13. Liquidation, Mergers, Consolidations, Acquisitions. Shall dissolve orliquidate, or become a party to any merger or consolidation, or acquire by purchase, lease orotherwise, all or any part of the assets of any Person.          6.14. Change in Ownership. Shall have or permit a Change in Ownership without theprior written approval of Bank.          6.15. Change of Fiscal Year or Accounting Methods. Shall change its fiscal year orits accounting methods.          6.16. Foreign Corrupt Practices. Shall use any part of or all of the Loans, directlyor indirectly, for any payments to any governmental official or employee, political party, officialof a political party, candidate for political office, or anyone else acting in an officialcapacity, in order to obtain, retain or direct business or obtain any improper advantage, inviolation of the United States Foreign Corrupt Practices Act of 1977, as amended.
22

 
          6.17. Negative Pledge Agreements. Shall permit the inclusion in any contract to whichit becomes a party of any provisions that could restrict or invalidate the creation of a securityinterest in Borrower’s rights and interests in any Collateral or its other property.     7. **Financial Covenants**. Borrower covenants and agrees that from the date hereof anduntil payment in full of the Obligations and the formal termination of this Agreement, it shallcomply with the following provisions:          7.1. Fixed Charge Coverage Ratio. Borrower shall have a Fixed Charge Coverage Ratioof at least 1.35 to 1.00 at each fiscal quarter end.          7.2. Adjusted Total Liabilities to Adjusted Tangible Net Worth Ratio. Borrower shallhave an Adjusted Total Liabilities to Adjusted Tangible Net Worth Ratio of not greater than 1.50 to1.0 at each fiscal quarter end.          7.3. Asset Coverage Ratio. Borrower shall have an Asset Coverage Ratio of not greaterthan 1.0 to 1.0 at each fiscal quarter end.     8. **Default**.          8.1. Events of Default. Each of the following shall constitute an Event of Default:          (a) There shall occur any default by Borrower in the payment, when due, of any principal of orinterest on the Notes, any amounts due hereunder or any other Loan Document, or any otherObligations, including under any Interest Rate Agreement; or          (b) There shall occur any default by Borrower or any other party to any Loan Document (otherthan Bank) in the performance of any agreement, covenant or obligation contained in this Agreementor such Loan Document or in any Interest Rate Agreement not provided for elsewhere in this Section8; or          (c) Any representation or warranty made by Borrower or any other party to any Loan Document(other than Bank) herein or therein or in any certificate or report furnished in connectionherewith or therewith shall prove to have been untrue or incorrect in any material respect whenmade; or          (d) Any other obligation now or hereafter owed by Borrower or any other party to any LoanDocument to Bank shall be in default and not cured within the grace period, if any, providedtherein; or          (e) Borrower or any Subsidiary shall be in default under any obligation in excess of $100,000owed to any other Person, which default entitles the Person to accelerate any such obligations orexercise other remedies with respect thereto; or
23

 
          (f) Borrower or any Subsidiary or any other party to any Loan Document shall voluntarilydissolve, liquidate or terminate operations or apply for or consent to the appointment of, or thetaking of possession by, a receiver, custodian, trustee or liquidator of such Person or of all orof a substantial part of its assets,  admit in writing its inability, or be generally unable, topay its debts as the debts become due,  make a general assignment for the benefit of its creditors, commence a voluntary case under the federal Bankruptcy Code (as now or hereafter in effect), filea petition seeking to take advantage of any other law relating to bankruptcy, insolvency,reorganization, winding-up, or composition or adjustment of debts,  fail to controvert in a timelyand appropriate manner, or acquiesce in writing to, any petition filed against it in an involuntarycase under Bankruptcy Code, or  take any corporate action for the purpose of effecting any of theforegoing; or          (g) An involuntary petition or complaint shall be filed against Borrower or any Subsidiary orany other party to any Loan Document seeking bankruptcy relief or reorganization or the appointmentof a receiver, custodian, trustee, intervenor or liquidator of Borrower or any Subsidiary or anyother party to any Loan Document, of all or substantially all of its assets, and such petition orcomplaint shall not have been dismissed within sixty (60) days of the filing thereof; or an order,order for relief, judgment or decree shall be entered by any court of competent jurisdiction or other competent authority approving or ordering any of theforegoing actions;          (h) A judgment in excess of $100,000 shall be rendered against the Borrower or any Subsidiaryor any other party to any Loan Document and shall remain undischarged, undismissed and unstayed formore than thirty days (except judgments validly covered by insurance with a deductible of not morethan $100,000) or there shall occur any levy upon, or attachment, garnishment or other seizure of,any material portion of the assets of Borrower or any Subsidiary or any other party to any LoanDocument by reason of the issuance of any tax levy, judicial attachment or garnishment or levy ofexecution; or          (i) Loss, theft, damage or destruction of any material portion of the tangible assets ofBorrower or any of its Subsidiaries for which there is either no insurance coverage or for which,in the reasonable opinion of Collateral Agent, there is insufficient insurance coverage; or          (j) Any Change in Ownership or any Change in Senior Management shall occur; or          (k) There shall occur any event or condition that could reasonably be expected to have aMaterial Adverse Effect.          8.2. Remedies. If any Default or Event of Default shall occur, Bank may, withoutnotice to Borrower, at its sole option, withhold further Advances to Borrower. If an Event ofDefault shall have occurred and be continuing, Bank may at its sole option take any or all of thefollowing actions:
24

 
          (a) Declare any or all Obligations (other than in respect of any Interest Rate Agreement) tobe immediately due and payable (if not earlier demanded), terminate its obligation to make Advancesto Borrower, bring suit against Borrower to collect the Obligations, exercise any remedy availableto it hereunder or at law and take any action or exercise any remedy provided herein or in anyother Loan Document or under applicable law; provided, that no remedy shall be exclusive of otherremedies or impair the right of Bank to exercise any other remedies.          (b) Without waiving any of its other rights hereunder or under any other Loan Document,exercise any or all rights and remedies of a secured party under the Code (and the UniformCommercial Code of any other applicable jurisdiction) and such other rights and remedies as may beavailable hereunder, under other applicable law or pursuant to contract.          (c) Demand, collect and sue for all amounts owed pursuant to Accounts, General Intangibles,Chattel Paper, Instruments or for Proceeds of any Collateral (either in Borrower’s name or Bank’sname at the latter’s option), with the right to enforce, compromise, settle or discharge any suchamounts.          (d) Terminate any Interest Rate Agreement in accordance with the documentation therefore, andexercise any or all rights under such documentation relating to any such Interest Rate Agreement,including accelerating any such Interest Rate Agreement Obligations or unwinding such transactionsin accordance with the terms thereof.          8.3. Assembly of Collateral. If requested by Bank, Borrower will promptly assemblethe Collateral and make it available to Bank at a place to be designated by Bank. Borrower agreesthat any notice by Bank of the sale or disposition of the Collateral or any other intended actionhereunder, whether required by the Code or otherwise, shall constitute reasonable notice toBorrower if the notice is mailed to Borrower by regular or certified mail, postage prepaid, atleast five days before the action to be taken. Borrower shall be liable for any deficiencies inthe event the proceeds of the disposition of the Collateral do not satisfy the Obligations in full.          8.4. Notice of Sales, etc. Any notice of sale, disposition or other action by Bankrequired by law and sent to Borrower at Borrower’s address herein, or at such other address ofBorrower as may from time to time be shown on the records of Bank, at least 5 days prior to suchaction, shall constitute reasonable notice to Borrower. Notice shall be deemed given or sent whenmailed postage prepaid to Borrower’s address as provided herein. Collateral that is subject torapid declines in value and is customarily sold in recognized markets may be disposed of by Bank ina recognized market for such collateral without providing notice of sale. Borrower waives any andall requirements that the Bank sell or dispose of all or any part of the Collateral at anyparticular time, regardless of whether Borrower has requested such sale or disposition.          8.5. Receiver. In addition to any other remedy available to it, Bank shall have theabsolute right, upon the occurrence of an Event of Default, to seek and obtain the
25

 
appointment of a receiver to take possession of and operate and/or dispose of the business and assets of Borrowerand any costs and expenses incurred by Bank in connection with such receivership shall bearinterest at the Default Rate, at Bank’s option.          8.6. Deposits. After the occurrence of an Event of Default, Borrower authorizes Bankto collect and apply against the Obligations when due any cash or deposit accounts in itspossession, and irrevocably appoints Bank as its attorney-in-fact to endorse any check or draft ortake other action necessary to obtain such funds.          8.7. Priorities. On and after an Event of Default and during the continuation of anEvent of Default, Bank collects any money pursuant to this Agreement, the Notes, or under any otherLoan Document, such money shall be applied to the Obligations in such order and manner as Bank maydecide in its sole discretion.     9. **Security Agreement**.          9.1. Security Interest.          (a) As security for the payment and performance of any and all of the Obligations and theperformance of all other obligations and covenants of Borrower hereunder and under the other LoanDocuments, certain or contingent, now existing or hereafter arising, which are now, or may at anytime or times hereafter be owing by Borrower to Bank, Borrower hereby pledges and grants to Bankand gives Bank a continuing security interest in and general Lien upon and right of set-offagainst, all right, title and interest of Borrower in and to the Collateral, whether now owned orhereafter acquired by Borrower and wherever located.          (b) Except as herein or by applicable law otherwise expressly provided, Bank shall not beobligated to exercise any degree of care in connection with any Collateral in its possession, totake any steps necessary to preserve any rights in any of the Collateral or to preserve any rightstherein against prior parties, and Borrower agrees to take such steps. In any case, Bank shall bedeemed to have exercised reasonable care if it shall have taken such steps for the care andpreservation of the Collateral or rights therein as Borrower may have reasonably requested it totake and its omission to take any action not requested by Borrower shall not be deemed a failure toexercise reasonable care. No segregation or specific allocation by Bank of specified items ofCollateral against any liability of Borrower shall waive or affect any security interest in or Lienagainst other items of Collateral or Bank’s options, powers or rights under this Agreement or theother Loan Documents or otherwise arising.          (c) While a Default or Event of Default exists, Bank may, with or without notice to Borrower:(i) transfer into the name of Bank or the name of Bank’s nominee any of the Collateral, (ii) notifyany Account Debtor or other obligor of any Collateral to make payment thereon direct to Bank of anyamounts due or to become due thereon and (iii) receive and direct the disposition of any proceedsof any Collateral.          9.2. Power of Attorney. Bank is authorized to file financing statements relating toCollateral without Borrower’s signature where authorized by law. Borrower authorizes Bank,
26

 
at Borrower’s expense, to file any financing statements relating to the Collateral (without Borrower’ssignature thereon) which it deems appropriate and Borrower irrevocably appoints Bank as itsattorney-in-fact to execute any such financing statements in Borrower’s name and to perform allother acts which it deems appropriate to perfect and to continue perfection of its Liens. Borrowerhereby appoints Bank as Borrower’s attorney-in-fact to endorse, present and collect on behalf ofBorrower and in Borrower’s name any draft, checks or other documents necessary or desirable tocollect any amounts which Borrower may be owed. Borrower hereby also constitutes and appoints Bankthe true and lawful attorney of Borrower with full power of substitution to take any and allappropriate action and to execute any and all documents or instruments that may be necessary ordesirable to accomplish the purpose and carry out the terms of this Agreement. Bank is herebygranted a license or other right to use, without charge, Borrower’s labels, patents, copyrights,rights of use of any name, trade secrets, trade names, trademarks and advertising matter, or anyProperty of a similar nature, as it pertains to the Collateral, in advertising for sale and sellingany Collateral, and Borrower’s rights under all licenses and all franchise agreements shall inureto Bank’s benefit. The proceeds realized from the sale or other disposition of any Collateralshall be applied, after allowing two (2) Business Days for collection, as provided above in