exv10w1



 







Exhibit 10.1




CREDIT AGREEMENT




     CREDIT AGREEMENT dated as of July 27, 2006 (“Agreement”), between MOBILITY
ELECTRONICS, INC., a Delaware corporation, as Borrower and JPMORGAN CHASE BANK, N.A., a national
banking association, as Lender.



     The parties hereto agree as follows:



ARTICLE I




DEFINITIONS




     Section 1.01 Defined Terms. As used in this Agreement, the following terms have the
meanings specified below:



     “ABR,” when used in reference to any Advance, refers to whether such Advance is
bearing interest at a rate determined by reference to the Alternate Base Rate.



     “Account” means a trade account, account receivable, other receivable, or other right
to payment for goods sold or leased or services rendered owing to the Borrower (or to a third party
grantor acceptable to the Lender).



     “Account Debtor” means the person or entity obligated upon an Account.



     “Adjusted LIBO Rate” means, with respect to any Eurodollar Advance for any Interest
Period, an interest rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to
(a) the LIBO Rate for such interest period, multiplied by (b) the Statutory Reserve Rate.



     “Advance” means a disbursement of a Loan.



     “Affiliate” means, with respect to a specified Person, another Person that directly,
or indirectly through one or more intermediaries, Controls or is Controlled by or is under common
Control with the Person specified.



     “Agreement” means this Credit Agreement.



     “Alternate Base Rate” means, for any day, a rate per annum equal to the Prime Rate in
effect on such day. Any change in the Alternate Base Rate due to a change in the Prime Rate shall
be effective from and including the effective date of such change in the Prime Rate.



     “Applicable Rate” means, for any day, with respect to any ABR Advance or Eurodollar
Advance, or with respect to the facility fees payable hereunder, as the case may be, the applicable
rate per annum set forth below under the caption “ABR spread,” “Eurodollar spread”
or “Facility Fee rate,” as the case may be:



 









 





	 	 	 	 	 	 	 	 	 
	ABR-	 	Eurodollar-	 	Facility Fee-
	Spread	 	Spread	 	Rate
	0
	 	 	200 b.p.	 	 	 	12.5 b.p.	 






     “Availability Period” means the period from and including the Effective Date to and
including the Revolving Loan Maturity Date.



     “Board” means the Board of Governors of the Federal Reserve System of the United
States of America.



     “Borrower” means MOBILITY ELECTRONICS, INC., a Delaware corporation.



     “Borrowing Request” means a request by the Borrower for an Advance substantially in
the form attached hereto as Exhibit B in accordance with Section 2.03.



     “Business Day” means any day that is not a Saturday, Sunday or other day on which
commercial banks in Phoenix, Arizona are authorized or required by law to remain closed;
provided that, when used in connection with a Eurodollar Advance, the term “Business
Day” shall also exclude any day on which banks are not open for dealings in dollar deposits in
the London interbank market.



     “Capital Lease Obligations” of any Person means the obligations of such Person to pay
rent or other amounts under any lease of (or other arrangement conveying the right to use) real or
personal property, or a combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP, and the amount of
such obligations shall be the capitalized amount thereof determined in accordance with GAAP.



     “Change in Control” means the acquisition by any Person, or two or more Persons acting
in concert, of beneficial ownership (within the meaning of Rule 13d-3 of the Securities and
Exchange Commission under the Securities Exchange Act of 1934) of 30% or more of the outstanding
shares of voting stock of the Borrower, excluding acquisitions by any Person with beneficial
ownership of 5% or more of the outstanding shares of voting stock of the Borrower as of the
Effective Date (the “5% Holders”) so long as the aggregate shares acquired by any such 5% Holder
alone or in concert with any other Person, does not exceed 49% of the outstanding shares of voting
stock of the Borrower. The 5% Holders are listed on Schedule 1.01 attached hereto.



     “Change in Law” means (a) the adoption of any law, rule or regulation after the date
of this Agreement, (b) any change in any law, rule or regulation or in the interpretation or
application thereof by any Governmental Authority after the date of this Agreement or (c)
compliance by Lender (or, for purposes of Section 2.15(b), by any lending office of Lender or its
holding company, if any) with any request, guideline or directive (whether or not having the force
of law) of any Governmental Authority made or issued after the date of this Agreement.



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



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     “Collateral” has the meaning set forth in Section 5.09(a).



     “Commitments” means the Revolving Loan Commitment.



     “Compliance Certificate” has the meaning set forth in Section 5.01(c).



     “Continuing Guarantees,” each a Continuing Guarantee, has the meaning set forth in
Section 5.10.



     “Control” means the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of a Person, whether through the ability to
exercise voting power, by contract or otherwise. “Controlling” and “Controlled”
have meanings correlative thereto.



     “Credit Documents” means the Note, the Security Documents, the Continuing Guarantees,
and the Lien Rights Waivers.



     “Default” means any event or condition which constitutes an Event of Default or which
upon notice, lapse of time or both would, unless cured or waived, become an Event of Default.



     “Disclosed Matters” means the actions, suits and proceedings and the environmental
matters disclosed in Schedule 3.06.



     “dollars” or “$” refers to lawful money of the United States of America.



     “Effective Date” means the date on which the conditions specified in Section 4.01 are
satisfied.



     “Eligible Accounts Receivable” means, at any time, all of the Borrower’s Accounts
which contain selling terms and conditions acceptable to the Lender, are payable on ordinary trade
terms, and are not evidenced by a promissory note or chattel paper. The net amount of any Eligible
Account Receivable against which the Borrower may borrow shall exclude all returns, discounts,
credits, and offsets of any nature. Unless otherwise agreed to by the Lender in writing, Eligible
Accounts Receivable do not include Accounts: (1) which are not owned by the Borrower free and clear
of all security interests, liens, encumbrances, and claims of third parties, except the Lender; (2)
with respect to which the Account Debtor is an employee or agent of the Borrower; (3) with respect
to which the Account Debtor is affiliated with or related to the Borrower; (4) with respect to
which goods are placed on consignment, guaranteed sale, or other terms by reason of which the
payment by the Account Debtor may be conditional; (5) with respect to which the Account Debtor is
not a resident of the United States, except to the extent such Accounts are otherwise Eligible
Accounts and are supported by insurance, bonds or other assurances satisfactory to the Lender; (6)
subject to the U.S. Office of Foreign Asset Control Special Designated Nationals and Blocked
Person’s List, or with respect to which the Account Debtor is otherwise a person or entity with
whom the Borrower or the Lender is prohibited from doing business by any applicable law,
regulation, executive order or other legal directive; (7) which are not payable in U.S. Dollars;
(8) with respect to which the Borrower is or may become liable to the Account Debtor for goods sold
or services rendered by the Account Debtor to the Borrower; (9) which are subject to dispute,
counterclaim, withholding, defense, or setoff;



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(10) with respect to which the goods have not been shipped or delivered, or the services have
not been rendered, to the Account Debtor, or which otherwise constitute pre-billed Accounts; (11)
which constitute retainage, or are bonded Accounts; (12) with respect to which the Lender, in its
sole discretion, deems the creditworthiness or financial condition of the Account Debtor to be
unsatisfactory; (13) of any Account Debtor who has filed or has had filed against it a petition in
bankruptcy or an application for relief under any provision of any state or federal bankruptcy,
insolvency, or debtor-in-relief acts; or who has had appointed a trustee, custodian, or receiver
for the assets of such Account Debtor; or who has made an assignment for the benefit of creditors
or has become insolvent or fails generally to pay its debts (including its payrolls) as such debts
become due; (14) with respect to which the Account Debtor is the United States government or any
department or agency of the United States; and any other Accounts deemed ineligible by the Lender
in its sole discretion; (15) which have not been paid in full within ninety (90) days from the
invoice date; (16) due from any one Account Debtor to the extent such Accounts constitute more than
25% of all Eligible Accounts; and (17) of any single Account Debtor whenever the portion of the
Accounts of such Account Debtor which have not been paid within ninety (90) days from the invoice
date is in excess of 25% of the total amount outstanding on all Accounts of such Account Debtor.




     “Eligible Inventory” means, at any time, all of the Borrower’s inventory except: (1)
inventory which is not owned by the Borrower free and clear of all security interests, liens,
encumbrances, and claims of third parties, except the Lender; (2) inventory which the Lender, in
its sole discretion, deems to be obsolete, unsalable, damaged, defective, perishable, or unfit for
further processing; (3) inventory subject to consignment or otherwise in the possession of a third
party, unless otherwise agreed to by the Lender in writing; (4) inventory in transit or located
outside of the United States; (5) inventory identified to be purchased under a contract under which
Borrower has received, or is entitled to receive, an advance payment; (6) inventory determined by
the Lender in its sole discretion to be ineligible due to licensing, intellectual property, or
legal or regulating issues which exist making it difficult to resell such inventory; (7) inventory
which is comprised of work in progress, samples, returns, rejected items, re-work items,
non-standard items, odd-lots, or which is otherwise deemed ineligible by the Lender in its sole
discretion; and (8) transportation and storage charges otherwise included in Eligible Inventory.



     “Environmental Laws” means all laws, rules, regulations, codes, ordinances, orders,
decrees, judgments, injunctions, notices or binding agreements issued, promulgated or entered into
by any Governmental Authority, relating in any way to the environment, preservation or reclamation
of natural resources, the management, release or threatened release of any Hazardous Material or to
health and safety matters.



     “Environmental Liability” means any liability, contingent or otherwise (including any
liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the
Borrower or any Subsidiary directly or indirectly resulting from or based upon (a) violation of any
Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or
threatened release of any Hazardous Materials into the environment or (e) any contract, agreement
or other consensual arrangement pursuant to which liability is assumed or imposed with respect to
any of the foregoing.



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     “Equity Interests” means shares of capital stock, partnership interests, membership
interests in a limited liability company, beneficial interests in a trust or other equity ownership
interests in a Person, and any warrants, options or other rights entitling the holder thereof to
purchase or acquire any such equity interest.



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



     “ERISA Affiliate” means any trade or business (whether or not incorporated) that,
together with the Borrower, is treated as a single employer under Section 414(b) or (c) of the Code
or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single
employer under Section 414 of the Code.



     “ERISA Event” means (a) any “reportable event,” as defined in Section 4043 of ERISA or
the regulations issued thereunder with respect to a Plan (other than an event for which the 30-day
notice period is waived); (b) the existence with respect to any Plan of an “accumulated funding
deficiency” (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived;
(c) the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an application
for a waiver of the minimum funding standard with respect to any Plan; (d) the incurrence by the
Borrower or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to
the termination of any Plan; (e) the receipt by the Borrower or any ERISA Affiliate from the PBGC
or a plan administrator of any notice relating to an intention to terminate any Plan or Plans or to
appoint a trustee to administer any Plan; (f) the incurrence by the Borrower or any of its ERISA
Affiliates of any liability with respect to the withdrawal or partial withdrawal from any Plan or
Multiemployer Plan; or (g) the receipt by the Borrower or any ERISA Affiliate of any notice, or the
receipt by any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is,
or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA.



     “Eurodollar,” when used in reference to any Advance, refers to whether such Advance is
bearing interest at a rate determined by reference to the Adjusted LIBO Rate.



     “Eurodollar Day” means a day (other than a Saturday or Sunday) on which banks
generally are open in Arizona and/or New York for the conduct of substantially all of their
commercial lending activities and on which dealings in United States dollars are carried on in the
London interbank market.



     “Event of Default” has the meaning assigned to such term in Article VII.



     “Excluded Taxes” means, with respect to the Lender, or any other recipient of any
payment to be made by or on account of any obligation of the Borrower hereunder, (a) income or
franchise taxes imposed on (or measured by) its net income by the United States of America, or by
the jurisdiction under the laws of which such recipient is organized or in which its principal
office is located or, in the case of Lender, in which its applicable lending office is located, and
(b) any branch profits taxes imposed by the United States of America or any similar tax imposed by
any other jurisdiction in which the Borrower is located.



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     “Facility Fees” has the meaning set forth in Section 2.12(a).



     “Financial Covenants” means those financial covenants set forth in Section 6.09.



     “Financial Officer” means the chief financial officer, principal accounting officer,
treasurer or controller of the Borrower.



     “GAAP” means generally accepted accounting principles in the United States of America.



     “Governmental Authority” means the government of the United States of America, any
other nation or any political subdivision thereof, whether state or local, and any agency,
authority, instrumentality, regulatory body, court, central bank or other entity exercising
executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government.



     “Guarantee” of or by any Person (the “guarantor”) means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation of any other Person (the “primary
obligor”) in any manner, whether directly or indirectly, and including any obligation of the
guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase
or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment thereof, (b) to purchase or lease property,
securities or services for the purpose of assuring the owner of such Indebtedness or other
obligation of the payment thereof, (c) to maintain working capital, equity capital or any other
financial statement condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation or (d) as an account party in respect of any
letter of credit or letter of guaranty issued to support such Indebtedness or obligation;
provided, that the term Guarantee shall not include endorsements for collection or deposit
in the ordinary course of business.



     “Guarantors,” each a Guarantor, means any Subsidiary that delivers a Continuing
Guarantee pursuant to Section 5.10.



     “Hazardous Materials” means all explosive or radioactive substances or wastes and all
hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum
distillates, asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas,
infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to
any Environmental Law.



     “Indebtedness” of any Person means, without duplication, (a) all obligations of such
Person for borrowed money or with respect to deposits or advances of any kind, (b) all obligations
of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of
such Person upon which interest charges are customarily paid, (d) all obligations of such Person
under conditional sale or other title retention agreements relating to property acquired by such
Person, (e) all obligations of such Person in respect of the deferred purchase price of property or
services (excluding current accounts payable incurred in the ordinary course of business), (f) all
Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien on



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property owned or acquired by such Person, whether or not the Indebtedness secured thereby has
been assumed, (g) all Guarantees by such Person of Indebtedness of others, (h) all Capital Lease
Obligations of such Person, (i) all obligations, contingent or otherwise, of such Person as an
account party in respect of letters of credit and letters of guaranty and (j) all obligations,
contingent or otherwise, of such Person in respect of bankers’ acceptances. The Indebtedness of
any Person shall include the Indebtedness of any other entity (including any partnership in which
such Person is a general partner) to the extent such Person is liable therefor as a result of such
Person’s ownership interest in or other relationship with such entity, except to the extent the
terms of such Indebtedness provide that such Person is not liable therefor.



     “Indemnified Taxes” means Taxes other than Excluded Taxes.



     “Interest Election Request” means a request by the Borrower to convert or continue a
Revolving Loan Advance in the form attached hereto as Exhibit B in accordance with Section 2.08.



     “Interest Payment Date” means (a) with respect to any ABR Advance, the 15th
day of each month and (b) with respect to any Eurodollar Advance, the last day of the Interest
Period applicable to the Advance and, in the case of a Eurodollar Advance with an Interest Period
of more than three months’ duration, each day prior to the last day of such Interest Period that
occurs at intervals of three months’ duration after the first day of such Interest Period.



     “Interest Period” means with respect to any Eurodollar Advance, the period commencing
on the date of such Advance and ending on the numerically corresponding day in the calendar month
that is one, two, three or six months thereafter, as the Borrower may elect; provided, that (i) if
any Interest Period would end on a day other than a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless, in the case of a Eurodollar Advance only, such
next succeeding Business Day would fall in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day and (ii) any Interest Period pertaining to a
Eurodollar Advance that commences on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the last calendar month of such Interest Period)
shall end on the last Business Day of the last calendar month of such Interest Period. For
purposes hereof, the date of an Advance initially shall be the date on which such Advance is made
and thereafter shall be the effective date of the most recent conversion or continuation of such
Advance.



     “LC Disbursement” means a payment made by the Lender pursuant to a Letter of Credit.



     “LC Exposure” means, at any time, the sum of (a) the aggregate undrawn amount of all
outstanding Letters of Credit at such time plus (b) the aggregate amount of all LC Disbursements
that have not yet been reimbursed by or on behalf of the Borrower at such time.



     “LC Fee” has the meaning set forth in Section 2.12(b).



     “Lender” means JPMorgan Chase Bank, N.A., a national banking association.



     “Letter of Credit” means any letter of credit issued pursuant to this Agreement.



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     “LIBO Rate” means with respect to any Eurodollar Advance for any Interest Period, the
interest rate determined by the Lender by reference to Page 3750 of the Moneyline Telerate Service
(“MTS”) (or on any successor or substitute page of the MTS, or any successor to or substitute for
the MTS, providing rate quotations comparable to those currently provided on Page 3750 of the MTS,
as determined by the Lender from time to time for purposes of providing quotations of interest
rates applicable to dollar deposits in the London interbank market) to be the rate at approximately
11:00 a.m. London time, two Business Days prior to the commencement of the Interest Period for the
offering by the Lender’s London office, of dollar deposits in an amount comparable to such
Eurodollar Advance with a maturity equal to such Interest Period. If no LIBO Rate is available to
the Lender, the applicable LIBO Rate for the relevant Interest Period shall instead be the rate
determined by the Lender to be the rate at which the Lender offers to place deposits in U.S.
dollars with first-class banks in the London interbank market at approximately 11:00 a.m. (London
time) two Business Days prior to the first day of such Interest Period, in the approximate amount
of the principal amount outstanding on such date and having a maturity equal to such Interest
Period.



     “Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien,
pledge, hypothecation, encumbrance, charge or security interest in, on or of such asset, (b) the
interest of a vendor or a lessor under any conditional sale agreement, capital lease or title
retention agreement (or any financing lease having substantially the same economic effect as any of
the foregoing) relating to such asset and (c) in the case of securities, any purchase option, call
or similar right of a third party with respect to such securities.



     “Lien Rights Waiver” has the meaning assigned to such term in Section 5.09(d).



     “Loans” means the loans made by the Lender to the Borrower pursuant to this Agreement.



     “Material Adverse Effect” means a material adverse effect on (a) the business, assets,
operations, prospects or condition, financial or otherwise, of the Borrower and the Subsidiaries
taken as a whole, (b) the ability of the Borrower to perform any of its obligations under this
Agreement or (c) the rights of or benefits available to the Lender under this Agreement.



     “Material Indebtedness” means Indebtedness (other than the Loans and Letters of
Credit), or obligations in respect of one or more Swap Agreements, of any one or more of the
Borrower and its Subsidiaries in an aggregate principal amount exceeding $500,000.00. For purposes
of determining Material Indebtedness, the “principal amount” of the obligations of the Borrower or
any Subsidiary in respect of any Swap Agreement at any time shall be the maximum aggregate amount
(giving effect to any netting agreements) that the Borrower or such Subsidiary would be required to
pay if such Swap Agreement were terminated at such time.



     “Maturity Date” means the Revolving Loan Maturity Date.



     “Moody’s” means Moody’s Investors Service, Inc.



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



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     “Note” has the meaning assigned to such term in Section 2.10(e).



     “Other Taxes” means any and all present or future stamp or documentary taxes or any
other excise or property taxes, charges or similar levies arising from any payment made hereunder
or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement.



     “Participant” has the meaning set forth in Section 8.04.



     “PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA
and any successor entity performing similar functions.



     “Permitted Encumbrances” means:




     (a) Liens imposed by law for taxes that are not yet due or are being contested
in compliance with Section 5.04;




     (b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and other
like Liens imposed by law, arising in the ordinary course of business and securing
obligations that are not overdue by more than thirty (30) days or are being
contested in compliance with Section 5.04;




     (c) pledges and deposits made in the ordinary course of business in compliance
with workers’ compensation, unemployment insurance and other social security laws or
regulations;




     (d) deposits to secure the performance of bids, trade contracts, leases,
statutory obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature, in each case in the ordinary course of business;




     (e) judgment liens in respect of judgments that do not constitute an Event of
Default under clause (k) of Article VII; and




     (f) easements, zoning restrictions, rights-of-way and similar encumbrances on
real property imposed by law or arising in the ordinary course of business that do
not secure any monetary obligations and do not materially detract from the value of
the affected property or interfere with the ordinary conduct of business of the
Borrower or any Subsidiary;


provided that the term “Permitted Encumbrances” shall not include any Lien securing
Indebtedness.




     “Permitted Investments” means:




     (a) direct obligations of, or obligations the principal of and interest on
which are unconditionally guaranteed by, the United States of America (or by any
agency thereof to the extent such obligations are backed by the full faith and



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credit of the United States of America), in each case maturing within one year
from the date of acquisition thereof;




     (b) investments in commercial paper maturing within two hundred seventy (270)
days from the date of acquisition thereof and having, at such date of acquisition,
the highest credit rating obtainable from S&P or from Moody’s;




     (c) investments in certificates of deposit, banker’s acceptances and time
deposits maturing within one hundred eighty (180) days from the date of acquisition
thereof issued or guaranteed by or placed with, and money market deposit accounts
issued or offered by, any domestic office of any commercial bank organized under the
laws of the United States of America or any State thereof which has a combined
capital and surplus and undivided profits of not less than $500,000,000;




     (d) fully collateralized repurchase agreements with a term of not more than
thirty (30) days for securities described in clause (a) above and entered into with
a financial institution satisfying the criteria described in clause (c) above; and




     (e) money market funds that (i) comply with the criteria set forth in
Securities and Exchange Commission Rule 2a-7 under the Investment Company Act of
1940, (ii) are rated AAA by S&P and Aaa by Moody’s and (iii) have portfolio assets
of at least $5,000,000,000.



     “Person” means any natural person, corporation, limited liability company, trust,
joint venture, association, company, partnership, Governmental Authority or other entity.



     “Plan” means any employee pension benefit plan (other than a Multiemployer Plan)
subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA,
and in respect of which the Borrower or any ERISA Affiliate is (or, if such plan were terminated,
would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of
ERISA.



     “Prime Rate” means the rate of interest per annum publicly announced from time to time
by JPMorgan Chase Bank, N.A. as its prime rate in effect at its principal office in New York City;
each change in the Prime Rate shall be effective from and including the date such change is
publicly announced as being effective.



     “Regulation D” means Regulation D of the Board as from time to time in effect and any
successor thereto or other regulation or official interpretation of said Board relating to reserve
requirements applicable to member banks of the Federal Reserve System.



     “Related Parties” means, with respect to any specified Person, such Person’s
Affiliates and the respective directors, officers, employees, agents and advisors of such Person
and such Person’s Affiliates.



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     “Restricted Payment” means any dividend or other distribution (whether in cash,
securities or other property) with respect to any Equity Interests in the Borrower or any
Subsidiary, or any payment (whether in cash, securities or other property), including any sinking
fund or similar deposit, on account of the purchase, redemption, retirement, acquisition,
cancellation or termination of any such Equity Interests in the Borrower or any option, warrant or
other right to acquire any such Equity Interests in the Borrower.



     “Revolving Credit Exposure” means the sum of the outstanding principal amount of
Lender’s Revolving Loan and its LC Exposure at such time.



     “Revolving Loan” means the Loan made pursuant to Section 2.03.



     “Revolving Loan Advance” means a disbursement of the Revolving Loan pursuant to
Section 2.03.



     “Revolving Loan Commitment” means the commitment of Lender to make Revolving Loans and
to issue Letters of Credit hereunder, expressed as an amount representing the maximum aggregate
amount of Lender’s Revolving Credit Exposure hereunder. The initial amount of Lender’s Commitment
is TEN MILLION AND NO/100 DOLLARS ($10,000,000.00).



     “Revolving Loan Maturity Date” means June 30, 2008.



     “RLC Borrowing Base” means an amount equal to the sum of the following:




     (i) Eighty percent (80%) of the aggregate book value of the Eligible Accounts
Receivable; and




     (ii) the lesser of twenty-five percent (25.0%) of the Eligible Inventory or
fifty percent (50.0%) of the Revolving Credit Exposure of Lender at any time.



     “RLC Borrowing Base Certificate” has the meaning set forth in Section 5.01(d).



     “Security Agreement” has the meaning set forth in Section 5.09(a).



     “Security Documents” has the meaning set forth in Section 5.09(b).



     “Statutory Reserve Rate” means a fraction (expressed as a decimal), the numerator of
which is the number one and the denominator of which is the number one minus the aggregate of the
maximum reserve percentages (including any marginal, special, emergency or supplemental reserves)
expressed as a decimal established by the Board to which the Lender is subject, for Eurocurrency
funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of the Board).
Such reserve percentages shall include those imposed pursuant to such Regulation D. Eurodollar
Loans shall be deemed to constitute Eurocurrency funding and to be subject to such reserve
requirements without benefit of or credit for proration, exemptions or offsets that may be
available from time to time to the Lender under such Regulation D or any comparable regulation.
The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any
change in any reserve percentage.



-11-









 





     “S&P” means Standard & Poor’s.



     “subsidiary” means, with respect to any Person (the “parent”) at any date, any
corporation, limited liability company, partnership, association or other entity the accounts of
which would be consolidated with those of the parent in the parent’s consolidated financial
statements if such financial statements were prepared in accordance with GAAP as of such date, as
well as any other corporation, limited liability company, partnership, association or other entity
(a) of which securities or other ownership interests representing more than 50% of the equity or
more than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the
general partnership interests are, as of such date, owned, controlled or held, or (b) that is, as
of such date, otherwise Controlled, by the parent or one or more subsidiaries of the parent or by
the parent and one or more subsidiaries of the parent.



     “Subsidiary” means any subsidiary of the Borrower.



     “Swap Agreement” means any agreement with respect to any swap, forward, future or
derivative transaction or option or similar agreement involving, or settled by reference to, one or
more rates, currencies, commodities, equity or debt instruments or securities, or economic,
financial or pricing indices or measures of economic, financial or pricing risk or value or any
similar transaction or any combination of these transactions; provided that no phantom
stock or similar plan providing for payments only on account of services provided by current or
former directors, officers, employees or consultants of the Borrower or the Subsidiaries shall be a
Swap Agreement.



     “Taxes” means any and all present or future taxes, levies, imposts, duties,
deductions, charges or withholdings imposed by any Governmental Authority.



     “Transactions” means the execution, delivery and performance by the Borrower of this
Agreement, the borrowing of Loans, the use of the proceeds thereof and the issuance of Letters of
Credit hereunder.



     “Type,” when used in reference to any Loan or Advance, refers to whether the rate of
interest on such Loan is determined by reference to the Adjusted LIBO Rate or the Alternate Base
Rate.



     “Withdrawal Liability” means liability to a Multiemployer Plan as a result of a
complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of
Subtitle E of Title IV of ERISA.



     Section 1.02 Classification of Loans and Advances. For purposes of this Agreement,
Loans may be classified and referred to by Type. Advances also may be classified and referred to
by Type (e.g., a “Eurodollar Advance”).



     Section 1.03 Terms Generally. The definitions of terms herein shall apply equally to
the singular and plural forms of the terms defined. Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms. The words “include,”
“includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The
word “will” shall be construed to have the same meaning and effect as the word “shall.”



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Unless the context requires otherwise (a) any definition of or reference to any agreement,
instrument or other document herein shall be construed as referring to such agreement, instrument
or other document as from time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person’s successors and assigns, (c) the
words “herein,” “hereof” and “hereunder,” and words of similar import, shall be construed to refer
to this Agreement in its entirety and not to any particular provision hereof, (d) all references
herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement and (e) the words “asset” and “property”
shall be construed to have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, securities, accounts and contract rights.



     Section 1.04 Accounting Terms; GAAP. Except as otherwise expressly provided herein,
all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in
effect from time to time; provided that, if the Borrower notifies the Lender that the
Borrower requests an amendment to any provision hereof to eliminate the effect of any change
occurring after the date hereof in GAAP or in the application thereof on the operation of such
provision, regardless of whether any such notice is given before or after such change in GAAP or in
the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect
and applied immediately before such change shall have become effective until such notice shall have
been withdrawn or such provision amended in accordance herewith.



ARTICLE II




THE REVOLVING LOAN




     Section 2.01 Revolving Loan Commitment. Subject to the terms and conditions set forth
herein, Lender agrees to make Revolving Loan Advances to the Borrower from time to time during the
Availability Period in an aggregate principal amount that will not result in Lender’s Revolving
Credit Exposure exceeding the lesser of Lender’s Revolving Loan Commitment or the RLC Borrowing
Base. Within the foregoing limits and subject to the terms and conditions set forth herein, the
Borrower may borrow, prepay and reborrow Revolving Loans.



     Section 2.02 Revolving Loan Advances.



          (a) Subject to Section 2.14, each Revolving Loan Advance shall be comprised entirely of an ABR
Advance or a Eurodollar Advance as the Borrower may request in accordance herewith. Lender at its
option may make any Eurodollar Advance by causing any domestic or foreign branch or Affiliate of
such Lender to make such Loan; provided that any exercise of such option shall not affect
the obligation of the Borrower to repay such Advance in accordance with the terms of this
Agreement.




          (b) At the commencement of each Interest Period for any Eurodollar Revolving Loan Advance,
such Advance shall be in an aggregate amount that is an integral multiple of $500,000.00 and not
less than $500,000.00. Revolving Loan Advances of more than





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one Type may be outstanding at the same time; provided that there shall not at any
time be more than a total of eight (8) Eurodollar Revolving Loan Advances outstanding.




          (c) Notwithstanding any other provision of this Agreement, the Borrower shall not be entitled
to request, or to elect to convert or continue, any Advance if the Interest Period requested with
respect thereto would end after the Revolving Loan Maturity Date.




     Section 2.03 Requests for Revolving Loan Advances. To request a Revolving Loan
Advance, the Borrower shall notify the Lender of such request by telephone (a) in the case of a
Eurodollar Advance, not later than 11:00 a.m., Phoenix, Arizona time, three (3) Business Days
before the date of the proposed Advance or (b) in the case of an ABR Advance, not later than 11:00
a.m., Phoenix, Arizona time, on the Business Day of the proposed Advance. Each such telephonic
Borrowing Request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy
to the Lender of a written Borrowing Request substantially in the form attached hereto as Exhibit
“B” and signed by the Borrower. Each such telephonic and written Borrowing Request shall specify
the following information in compliance with Section 2.02:




               (i) the aggregate amount of the requested Advance;




               (ii) the date of such Advance, which shall be a Business Day;




               (iii) whether such Advance is to be an ABR Advance or a Eurodollar Advance;




               (iv) in the case of a Eurodollar Advance, the initial Interest Period to be
applicable thereto, which shall be a period contemplated by the definition of the
term “Interest Period”; and




               (v) the location and number of the Borrower’s account to which funds are to be
disbursed, which shall comply with the requirements of Section 2.07.


If no election as to the Type of Revolving Loan Advance is specified, then the requested Revolving
Loan Advance shall be an ABR Advance. If no Interest Period is specified with respect to any
requested Eurodollar Revolving Loan Advance, then the Borrower shall be deemed to have selected an
Interest Period of one month’s duration.




     Section 2.04 [Intentionally left blank].



     Section 2.05 [Intentionally left blank].



     Section 2.06 Letters of Credit.



          (a) General. Subject to the terms and conditions set forth herein, the Borrower may
request the issuance of Letters of Credit for its own account whether as a standby Letter of Credit
or as a commercial Letter of Credit, in a form reasonably acceptable to the Lender, at any time and
from time to time during the Availability Period. In the event of any inconsistency between the
terms and conditions of this Agreement and the terms and conditions




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of any form of letter of credit application or other agreement submitted by the Borrower to,
or entered into by the Borrower with, the Lender relating to any Letter of Credit, the terms and
conditions of this Agreement shall control.




          (b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions. To request
the issuance of a Letter of Credit (or the amendment, renewal or extension of an outstanding Letter
of Credit), the Borrower shall hand deliver or telecopy (or transmit by electronic communication,
if arrangements for doing so have been approved by the Lender) to the Lender (reasonably in advance
of the requested date of issuance, amendment, renewal or extension) a notice requesting the
issuance of a Letter of Credit, or identifying the Letter of Credit to be amended, renewed or
extended, and specifying the date of issuance, amendment, renewal or extension (which shall be a
Business Day), the date on which such Letter of Credit is to expire (which shall comply with
paragraph (c) of this Section), the amount of such Letter of Credit, the name and address of the
beneficiary thereof and such other information as shall be necessary to prepare, amend, renew or
extend such Letter of Credit. The Borrower also shall submit a letter of credit application on the
Lender’s standard form in connection with any request for a Letter of Credit. A Letter of Credit
shall be issued, amended, renewed or extended only if (and upon issuance, amendment, renewal or
extension of each Letter of Credit the Borrower shall be deemed to represent and warrant that),
after giving effect to such issuance, amendment, renewal or extension (i) the LC Exposure shall not
exceed $2,500,000.00 and (ii) the Revolving Credit Exposure shall not exceed the lesser of the
Revolving Loan Commitment or the RLC Borrowing Base.




          (c) Expiration Date. Each Letter of Credit shall expire at or prior to the close of
business on the earlier of (i) the date one year after the date of the issuance of such Letter of
Credit (or, in the case of any renewal or extension thereof, one year after such renewal or
extension) and (ii) the date that is five (5) Business Days prior to the Revolving Loan Maturity
Date.




          (d) [Intentionally left blank].




          (e) Reimbursement. If the Lender shall make any LC Disbursement in respect of a
Letter of Credit, the Borrower shall reimburse such LC Disbursement by paying to the Lender an
amount equal to such LC Disbursement not later than 12:00 noon, Phoenix, Arizona time, on the date
that such LC Disbursement is made, if the Borrower shall have received notice of such LC
Disbursement prior to 10:00 a.m., Phoenix, Arizona time, on such date, or, if such notice has not
been received by the Borrower prior to such time on such date, then not later than 12:00 noon,
Phoenix, Arizona time, on (i) the Business Day that the Borrower receives such notice, if such
notice is received prior to 10:00 a.m., Phoenix, Arizona time, on the day of receipt, or (ii) the
Business Day immediately following the day that the Borrower receives such notice, if such notice
is not received prior to such time on the day of receipt.




          (f) Obligations Absolute. The Borrower’s obligation to reimburse LC Disbursements as
provided in paragraph (e) of this Section shall be absolute, unconditional and irrevocable, and
shall be performed strictly in accordance with the terms of this Agreement under any and all
circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any
Letter of Credit or this Agreement, or any term or provision therein, (ii) any draft or other




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document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any
respect or any statement therein being untrue or inaccurate in any respect, (iii) payment by the
Lender under a Letter of Credit against presentation of a draft or other document that does not
comply with the terms of such Letter of Credit, or (iv) any other event or circumstance whatsoever,
whether or not similar to any of the foregoing, that might, but for the provisions of this Section,
constitute a legal or equitable discharge of, or provide a right of setoff against, the Borrower’s
obligations hereunder. Neither the Lender, nor any Related Parties, shall have any liability or
responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit
or any payment or failure to make any payment thereunder (irrespective of any of the circumstances
referred to in the preceding sentence), or any error, omission, interruption, loss or delay in
transmission or delivery of any draft, notice or other communication under or relating to any
Letter of Credit (including any document required to make a drawing thereunder), any error in
interpretation of technical terms or any consequence arising from causes beyond the control of the
Lender; provided that the foregoing shall not be construed to excuse the Lender from
liability to the Borrower to the extent of any direct damages (as opposed to consequential damages,
claims in respect of which are hereby waived by the Borrower to the extent permitted by applicable
law) suffered by the Borrower that are caused by the Lender’s failure to exercise care when
determining whether drafts and other documents presented under a Letter of Credit comply with the
terms thereof. The parties hereto expressly agree that, in the absence of gross negligence or
willful misconduct on the part of the Lender (as finally determined by a court of competent
jurisdiction), the Lender shall be deemed to have exercised care in each such determination. In
furtherance of the foregoing and without limiting the generality thereof, the parties agree that,
with respect to documents presented which appear on their face to be in substantial compliance with
the terms of a Letter of Credit, the Lender may, in its sole discretion, either accept and make
payment upon such documents without responsibility for further investigation, regardless of any
notice or information to the contrary, or refuse to accept and make payment upon such documents if
such documents are not in strict compliance with the terms of such Letter of Credit.




          (g) Disbursement Procedures. The Lender shall, promptly following its receipt
thereof, examine all documents purporting to represent a demand for payment under a Letter of
Credit. The Lender shall promptly notify the Borrower by telephone (confirmed by telecopy) of such
demand for payment and whether the Lender has made or will make an LC Disbursement thereunder;
provided that any failure to give or delay in giving such notice shall not relieve the
Borrower of its obligation to reimburse the Lender with respect to any such LC Disbursement.




          (h) Interim Interest. If the Lender shall make any LC Disbursement, then, unless the
Borrower shall reimburse such LC Disbursement in full on the date such LC Disbursement is made, the
unpaid amount thereof shall bear interest, for each day from and including the date such LC
Disbursement is made to but excluding the date that the Borrower reimburses such LC Disbursement,
at the rate per annum then applicable to ABR Advances; provided that, if the Borrower fails
to reimburse such LC Disbursement when due pursuant to paragraph (e) of this Section, then Section
2.13(d) shall apply.




          (i) [Intentionally left blank].




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          (j) Cash Collateralization. If any Event of Default shall occur and be continuing, on
the Business Day that the Borrower receives notice from the Lender demanding the deposit of cash
collateral pursuant to this paragraph, the Borrower shall deposit in an account with the Lender, in
the name of the Lender, an amount in cash equal to the LC Exposure as of such date plus any accrued
and unpaid interest thereon; provided that the obligation to deposit such cash collateral
shall become effective immediately, and such deposit shall become immediately due and payable,
without demand or other notice of any kind, upon the occurrence of any Event of Default with
respect to the Borrower described in clause (h) or (i) of Article VII. Such deposit shall be held
by the Lender as collateral for the payment and performance of the obligations of the Borrower
under this Agreement. The Lender shall have exclusive dominion and control, including the
exclusive right of withdrawal, over such account. Other than any interest earned on the investment
of such deposits, which investments shall be made at the option and sole discretion of the Lender
and at the Borrower’s risk and expense, such deposits shall not bear interest. Interest or
profits, if any, on such investments shall accumulate in such account. Moneys in such account
shall be applied by the Lender to reimburse the Lender for LC Disbursements for which it has not
been reimbursed and, to the extent not so applied, shall be held for the satisfaction of the
reimbursement obligations of the Borrower for the LC Exposure at such time or, if the maturity of
the Revolving Loan has been accelerated, be applied to satisfy other obligations of the Borrower
under this Agreement. If the Borrower is required to provide an amount of cash collateral
hereunder as a result of the occurrence of an Event of Default, such amount (to the extent not
applied as aforesaid) shall be returned to the Borrower within three (3) Business Days after all
Events of Default have been cured or waived.




     Section 2.07 Funding of Advances. The Lender will make Revolving Loan Advances
available to the Borrower by promptly crediting the amount requested, to an account of the Borrower
maintained with the Lender in Phoenix, Arizona.



     Section 2.08 Interest Elections.



          (a) Each Revolving Loan Advance initially shall be of the Type specified in the applicable
Borrowing Request and, in the case of a Eurodollar Advance, shall have an initial Interest Period
as specified in such Borrowing Request. Thereafter, the Borrower may elect to convert such Advance
to a different Type or to continue such Advance and, in the case of a Eurodollar Advance, may elect
Interest Periods therefor, all as provided in this Section. The Borrower may elect different
options with respect to different portions of the affected Advance.




          (b) To make an election pursuant to this Section, the Borrower shall notify the Lender of such
election by telephone by the time that a Borrowing Request would be required under Section 2.03 if
the Borrower were requesting a Revolving Loan Advance of the Type resulting from such election to
be made on the effective date of such election. Each such telephonic Interest Election Request
shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to the Lender of
a written Interest Election Request in a form approved by the Lender and signed by the Borrower.




          (c) Each telephonic and written Interest Election Request shall specify the following
information in compliance with Section 2.02:




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               (i) the Advance to which such Interest Election Request applies and, if
different options are being elected with respect to different portions thereof, the
portions thereof to be allocated to each resulting Advance (in which case the
information to be specified pursuant to clauses (iii) and (iv) below shall be
specified for each resulting Advance);




               (ii) the effective date of the election made pursuant to such Interest Election
Request, which shall be a Business Day;




               (iii) whether the resulting Advance is to be an ABR Advance or a Eurodollar
Advance; and




               (iv) if the resulting Advance is a Eurodollar Advance, the Interest Period to
be applicable thereto after giving effect to such election, which shall be a period
contemplated by the definition of the term “Interest Period”.


If any such Interest Election Request requests a Eurodollar Advance but does not specify an
Interest Period, then the Borrower shall be deemed to have selected an Interest Period of one
month’s duration.




          (d) If the Borrower fails to deliver a timely Interest Election Request with respect to a
Eurodollar Revolving Loan Advance prior to the end of the Interest Period applicable thereto, then,
unless such Advance is repaid as provided herein, at the end of such Interest Period such Advance
shall be converted to an ABR Advance. Notwithstanding any contrary provision hereof, if an Event
of Default has occurred and is continuing and the Lender so notifies the Borrower, then, so long as
an Event of Default is continuing (i) no outstanding Revolving Loan Advance may be converted to or
continued as a Eurodollar Advance and (ii) unless repaid, each Eurodollar Advance shall be
converted to an ABR Advance at the end of the Interest Period applicable thereto.




     Section 2.09 Termination and Reduction of Revolving Loan Commitment.



          (a) Unless previously terminated, the Revolving Loan Commitment shall terminate on the
Maturity Date.




          (b) The Borrower may at any time terminate, or from time to time reduce, the Revolving Loan
Commitment; provided that (i) each reduction of the Revolving Loan Commitment shall be in
an amount that is an integral multiple of $500,000.00 and not less than $500,000.00 and (ii) the
Borrower shall not terminate or reduce the Revolving Loan Commitment if, after giving effect to any
concurrent prepayment of the Advances in accordance with Section 2.11, the Revolving Credit
Exposure would exceed the Revolving Loan Commitment.




          (c) The Borrower shall notify the Lender of any election to terminate or reduce the Revolving
Loan Commitment under paragraph (b) of this Section at least three (3) Business Days prior to the
effective date of such termination or reduction, specifying such election and the effective date
thereof. Each notice delivered by the Borrower pursuant to this Section shall be irrevocable;
provided that a notice of termination of the Revolving Loan




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Commitment delivered by the Borrower may state that such notice is conditioned upon the
effectiveness of other credit facilities, in which case such notice may be revoked by the Borrower
(by notice to the Lender on or prior to the specified effective date) if such condition is not
satisfied. Any termination or reduction of the Revolving Loan Commitment shall be permanent.




     Section 2.10 Repayment of Loans; Evidence of Debt.



          (a) The Borrower hereby unconditionally promises to pay to the Lender the then unpaid
principal amount of the Revolving Loan on the Revolving Loan Maturity Date.




          (b) Lender shall maintain in accordance with its usual practice an account or accounts
evidencing the indebtedness of the Borrower to Lender resulting from each Advance made by Lender,
including the amounts of principal and interest payable and paid to Lender from time to time
hereunder.




          (c) The Lender shall maintain accounts in which it shall record (i) the amount of each Advance
made hereunder, the Type thereof and the Interest Period applicable thereto, (ii) the amount of any
principal or interest due and payable or to become due and payable from the Borrower to Lender
hereunder and (iii) the amount of any sum received by the Lender hereunder.




          (d) The entries made in the accounts maintained pursuant to paragraph (b) or (c) of this
Section shall be prima facie evidence of the existence and amounts of the
obligations recorded therein; provided that the failure of Lender to maintain such accounts
or any error therein shall not in any manner affect the obligation of the Borrower to repay the
Revolving Loan in accordance with the terms of this Agreement.




          (e) The Revolving Loan shall be evidenced by a promissory note substantially in the form of
Exhibit “A” (the “Note”).




     Section 2.11 Prepayment of the Revolving Loan.



          (a) The Borrower shall have the right at any time and from time to time to prepay any Advance
in whole or in part, subject to prior notice in accordance with paragraph (b) of this Section.




          (b) The Borrower shall notify the Lender by telephone (confirmed by telecopy) of any
prepayment hereunder (i) in the case of prepayment of a Eurodollar Advance, not later than 11:00
a.m., Phoenix, Arizona time, three (3) Business Days before the date of prepayment, or (ii) in the
case of prepayment of an ABR Advance, not later than 11:00 a.m., Phoenix, Arizona time, one
Business Day before the date of prepayment. Each such notice shall be irrevocable and shall
specify the prepayment date and the principal amount to be prepaid; provided that, if a
notice of prepayment is given in connection with a conditional notice of termination of the
Revolving Loan Commitment as contemplated by Section 2.09, then such notice of prepayment may be
revoked if such notice of termination is revoked in accordance with Section 2.09. Each partial
prepayment of any Revolving Loan Advance shall be in an amount that would be permitted in the case
of an advance of a Revolving Loan Advance of the same

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Type as provided in Section 2.02. Prepayments shall be accompanied by accrued interest to the
extent required by Section 2.13.




     Section 2.12 Fees.



          (a) The Borrower agrees to pay to the Lender a facility fee (the “Facility Fee”),
which shall accrue at the Applicable Rate on the daily amount of the unused Revolving Loan
Commitment during the period from and including the Effective Date to but excluding the date on
which such Revolving Loan Commitment terminates; provided that, if Lender continues to have
any Revolving Credit Exposure after the Revolving Loan Commitment terminates, then such Facility
Fee shall continue to accrue on the daily amount of Lender’s Revolving Credit Exposure from and
including the date on which the Revolving Loan Commitment terminates to but excluding the date on
which Lender ceases to have any Revolving Credit Exposure. Accrued Facility Fees shall be payable
in arrears on the last day of March, June, September and December of each year and on the date on
which the Revolving Loan Commitment terminates, commencing on the first such date to occur after
the date hereof; provided that any Facility Fees accruing after the date on which the
Revolving Loan Commitment terminates shall be payable on demand. All Facility Fees shall be
computed on the basis of a year of 360 days and shall be payable for the actual number of days
elapsed (including the first day but excluding the last day).




          (b) The Borrower agrees to pay (i) to the Lender its standard fee with respect to its issuance
of each Letter of Credit, and (ii) to the Lender a fee (the “LC Fee”), which shall accrue
at the rate or rates per annum separately agreed upon between the Borrower and the Lender on the
amount of the LC Exposure of each Letter of Credit for the period such Letter of Credit is to be
outstanding; absent such agreement, Lender shall not be required to issue any such Letter of
Credit. All such fees shall be payable on or before the date on which the Letter of Credit is
issued. All such fees shall be computed on the basis of a year of 360 days and shall be payable
for the actual number of days elapsed (including the first day but excluding the last day).




          (c) All fees payable hereunder shall be paid on the dates due, in immediately available funds,
to the Lender. Fees paid shall not be refundable under any circumstances.




     Section 2.13 Interest.



          (a) The Revolving Loan comprising ABR Advances shall bear interest at the Alternate Base Rate
plus the Applicable Rate.




          (b) The Revolving Loan comprising each Eurodollar Advance shall bear interest at the Adjusted
LIBO Rate for the Interest Period in effect for such Advance plus the Applicable Rate.




          (c) [Intentionally left blank.]




          (d) Notwithstanding the foregoing, if any principal of or interest on any Advance or any fee
or other amount payable by the Borrower hereunder is not paid when due, whether at stated maturity,
upon acceleration or otherwise, such overdue amount shall bear interest, after as well as before
judgment, at a rate per annum equal to (i) in the case of overdue principal of any Advance, 5% plus
the rate otherwise applicable to such Advance as provided in




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the preceding paragraphs of this Section or (ii) in the case of any other amount, 5% plus the
rate applicable to ABR Advances as provided in paragraph (a) of this Section.




          (e) Accrued interest on each Advance shall be payable in arrears on each Interest Payment Date
for such Advance and, upon the Revolving Loan Maturity Date; provided that (i) interest
accrued pursuant to paragraph (d) of this Section shall be payable on demand, (ii) in the event of
any repayment or prepayment of any Advance (other than a prepayment of an ABR Advance prior to the
end of the Availability Period), accrued interest on the principal amount repaid or prepaid shall
be payable on the date of such repayment or prepayment and (iii) in the event of any conversion of
any Eurodollar Advance prior to the end of the current Interest Period therefor, accrued interest
on such Loan shall be payable on the effective date of such conversion.




          (f) All interest hereunder shall be computed on the basis of a year of 360 days, and shall be
payable for the actual number of days elapsed (including the first day but excluding the last day).
The applicable Alternate Base Rate, Adjusted LIBO Rate or LIBO Rate shall be determined by the
Lender, and such determination shall be conclusive absent manifest error.




     Section 2.14 Alternate Rate of Interest. If prior to the commencement of any Interest
Period for a Eurodollar Advance:




               (a) the Lender determines (which determination shall be conclusive absent
manifest error) that adequate and reasonable means do not exist for ascertaining the
Adjusted LIBO Rate or the LIBO Rate, as applicable, for such Interest Period; or




               (b) the Adjusted LIBO Rate or the LIBO Rate, as applicable, for such Interest
Period will not adequately and fairly reflect the cost to Lender of making or
maintaining such Eurodollar Advance for such Interest Period;


then the Lender shall give notice thereof to the Borrower by telephone or telecopy as promptly as
practicable thereafter and, until the Lender notifies the Borrower that the circumstances giving
rise to such notice no longer exist, (i) any Interest Election Request that requests the conversion
of any Revolving Loan Advance to, or continuation of any Revolving Loan Advance as, a Eurodollar
Advance shall be ineffective, and (ii) if any Borrowing Request requests a Eurodollar Advance, such
Advance shall be made as an ABR Advance.




     Section 2.15 Increased Costs.



          (a) If any Change in Law shall:





               (i) impose, modify or deem applicable any reserve, special deposit or similar
requirement against assets of, deposits with or for the account of, or credit
extended by, Lender (except any such reserve requirement reflected in the Adjusted
LIBO Rate); or



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               (ii) impose on Lender or the London interbank market any other condition
affecting this Agreement or Eurodollar Advances or any Letter of Credit or
participation therein;


and the result of any of the foregoing shall be to increase the cost to Lender of making or
maintaining any Eurodollar Advance (or of maintaining its obligation to make any such Advance) or
to increase the cost to Lender of issuing or maintaining any Letter of Credit or to reduce the
amount of any sum received or receivable by Lender hereunder (whether of principal, interest or
otherwise), then the Borrower will pay to Lender such additional amount or amounts as will
compensate Lender for such additional costs incurred or reduction suffered.




          (b) If Lender determines that any Change in Law regarding capital requirements has or would
have the effect of reducing the rate of return on Lender’s capital or on the capital of Lender’s
holding company, if any, as a consequence of this Agreement or the Advances made by, or the Letters
of Credit issued by the Lender, to a level below that which Lender or Lender’s holding company
could have achieved but for such Change in Law (taking into consideration Lender’s policies and the
policies of Lender’s holding company with respect to capital adequacy), then from time to time the
Borrower will pay to Lender such additional amount or amounts as will compensate Lender or Lender’s
holding company for any such reduction suffered.




          (c) A certificate of Lender setting forth the amount or amounts necessary to compensate Lender
or its holding company, as the case may be, as specified in paragraph (a) or (b) of this Section
shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower
shall pay Lender the amount shown as due on any such certificate within ten (10) days after receipt
thereof.




          (d) Failure or delay on the part of Lender to demand compensation pursuant to this Section
shall not constitute a waiver of Lender’s right to demand such compensation; provided that
the Borrower shall not be required to compensate Lender pursuant to this Section for any increased
costs or reductions incurred more than two hundred seventy (270) days prior to the date that
Lender, notifies the Borrower of the Change in Law giving rise to such increased costs or
reductions and of Lender’s intention to claim compensation therefor; provided
further that, if the Change in Law giving rise to such increased costs or reductions is
retroactive, then the 270-day period referred to above shall be extended to include the period of
retroactive effect thereof.




     Section 2.16 Break Funding Payments. In the event of (a) the payment of any principal
of any Eurodollar Advance other than on the last day of an Interest Period applicable thereto
(including as a result of an Event of Default), (b) the conversion of any Eurodollar Advance other
than on the last day of the Interest Period applicable thereto, (c) the failure to borrow, convert,
continue or prepay any Eurodollar Advance on the date specified in any notice delivered pursuant
hereto (regardless of whether such notice may be revoked under Section 2.11(b) and is revoked in
accordance therewith), or (d) the assignment of any Eurodollar Advance other than on the last day
of the Interest Period applicable thereto as a result of a request by the Borrower pursuant to
Section 2.19, then, in any such event, the Borrower shall compensate Lender for the loss, cost and
expense attributable to such event. In the case of a Eurodollar Advance, such loss,



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cost or expense to Lender shall be deemed to include an amount determined by Lender to be the
excess, if any, of (i) the amount of interest which would have accrued on the principal amount of
such Advance had such event not occurred, at the Adjusted LIBO Rate that would have been applicable
to such Advance, for the period from the date of such event to the last day of the then current
Interest Period therefor (or, in the case of a failure to borrow, convert or continue, for the
period that would have been the Interest Period for such Advance), over (ii) the amount of interest
which would accrue on such principal amount for such period at the interest rate which Lender would
bid were it to bid, at the commencement of such period, for dollar deposits of a comparable amount
and period from other banks in the Eurodollar market. A certificate of Lender setting forth any
amount or amounts that Lender is entitled to receive pursuant to this Section shall be delivered to
the Borrower and shall be conclusive absent manifest error. The Borrower shall pay Lender the
amount shown as due on any such certificate within ten (10) days after receipt thereof.



     Section 2.17 Taxes.



          (a) Any and all payments by or on account of any obligation of the Borrower hereunder shall be
made free and clear of and without deduction for any Indemnified Taxes or Other Taxes;
provided that if the Borrower shall be required to deduct any Indemnified Taxes or Other
Taxes from such payments, then (i) the sum payable shall be increased as necessary so that after
making all required deductions (including deductions applicable to additional sums payable under
this Section) the Lender receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall pay
the full amount deducted to the relevant Governmental Authority in accordance with applicable law.




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




          (c) The Borrower shall indemnify the Lender, within ten (10) days after written demand
therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by the Lender, on or
with respect to any payment by or on account of any obligation of the Borrower hereunder (including
Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under
this Section) and any penalties, interest and reasonable expenses arising therefrom or with respect
thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or
liability delivered to the Borrower by Lender shall be conclusive absent manifest error.




          (d) As soon as practicable after any payment of Indemnified Taxes or Other Taxes by the
Borrower to a Governmental Authority, the Borrower shall deliver to the Lender the original or a
certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy
of the return reporting such payment or other evidence of such payment reasonably satisfactory to
the Lender.




          (e) If the Lender determines, in its sole discretion, that it has received a refund of any
Taxes or Other Taxes as to which it has been indemnified by the Borrower or with respect




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to which the Borrower has paid additional amounts pursuant to this Section 2.17, it shall pay
over such refund to the Borrower (but only to the extent of indemnity payments made, or additional
amounts paid, by the Borrower under this Section 2.17 with respect to the Taxes or Other Taxes
giving rise to such refund), net of all out-of-pocket expenses of the Lender and without interest
(other than any interest paid by the relevant Governmental Authority with respect to such refund);
provided, that the Borrower, upon the request of the Lender, agrees to repay the amount paid over
to the Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental
Authority) to the Lender in the event the Lender is required to repay such refund to such
Governmental Authority. This Section shall not be construed to require the Lender to make
available its tax returns (or any other information relating to its taxes which it deems
confidential) to the Borrower or any other Person.




     Section 2.18 Payments Generally.



          (a) The Borrower shall make each payment required to be made by it hereunder (whether of
principal, interest, fees or reimbursement of LC Disbursements, or of amounts payable under Section
2.15, 2.16 or 2.17, or otherwise) prior to 12:00 noon, Phoenix, Arizona time, on the date when due,
in immediately available funds, without setoff or counterclaim. Any amounts received after such
time on any date may, in the discretion of the Lender, be deemed to have been received on the next
succeeding Business Day for purposes of calculating interest thereon. All such payments shall be
made to the Lender at its offices at 201 North Central Avenue, 21st Floor, Phoenix, Arizona 85004,
Attention: Commercial Banking, AZ1-1178. If any payment hereunder shall be due on a day that is
not a Business Day, the date for payment shall be extended to the next succeeding Business Day,
and, in the case of any payment accruing interest, interest thereon shall be payable for the period
of such extension. All payments hereunder shall be made in dollars.




          (b) If at any time insufficient funds are received by and available to the Lender to pay fully
all amounts of principal, unreimbursed LC Disbursements, interest and fees then due hereunder, such
funds shall be applied (i) first, towards payment of interest and fees then due hereunder, and (ii)
second, towards payment of principal and unreimbursed LC Disbursements then due hereunder.




     Section 2.19 Mitigation Obligations. If Lender requests compensation under Section
2.15, or if the Borrower is required to pay any additional amount to Lender or any Governmental
Authority for the account of Lender pursuant to Section 2.17, then Lender shall use reasonable
efforts to designate a different lending office for funding or booking its Loans hereunder or to
assign its rights and obligations hereunder to another of its offices, branches or affiliates, if,
in the judgment of Lender, such designation or assignment (i) would eliminate or reduce amounts
payable pursuant to Section 2.15 or 2.17, as the case may be, in the future and (ii) would not
subject Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to
Lender. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by Lender in
connection with any such designation or assignment.



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ARTICLE III




REPRESENTATIONS AND WARRANTIES




     The Borrower represents and warrants to the Lender that:



     Section 3.01 Organization; Powers. Each of the Borrower and its Subsidiaries is duly
organized, validly existing and in good standing under the laws of the jurisdiction of its
organization, has all requisite power and authority to carry on its business as now conducted and,
except where the failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business in, and is in good
standing in, every jurisdiction where such qualification is required.



     Section 3.02 Authorization; Enforceability. The Transactions are within the
Borrower’s corporate powers and have been duly authorized by all necessary corporate and, if
required, stockholder action. This Agreement has been duly executed and delivered by the Borrower
and constitutes a legal, valid and binding obligation of the Borrower, enforceable in accordance
with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other
laws affecting creditors’ rights generally and subject to general principles of equity, regardless
of whether considered in a proceeding in equity or at law.



     Section 3.03 Governmental Approvals; No Conflicts. The Transactions (a) do not
require any consent or approval of, registration or filing with, or any other action by, any
Governmental Authority, except such as have been obtained or made and are in full force and effect,
(b) will not violate any applicable law or regulation or the charter, by-laws or other
organizational documents of the Borrower or any of its Subsidiaries or any order of any
Governmental Authority, (c) will not violate or result in a default under any indenture, agreement
or other instrument binding upon the Borrower or any of its Subsidiaries or its assets, or give
rise to a right thereunder to require any payment to be made by the Borrower or any of its
Subsidiaries, and (d) will not result in the creation or imposition of any Lien on any asset of the
Borrower or any of its Subsidiaries.



     Section 3.04 Financial Condition; No Material Adverse Change.



          (a) The Borrower has heretofore furnished to the Lender its consolidated balance sheet and
statements of income, stockholders equity and cash flows (i) as of and for the fiscal year ended
December 31, 2005, reported on by KPMG LLC, independent public accountants, and (ii) as of and for
the fiscal quarter and the portion of the fiscal year ended March 31, 2006, certified by its chief
financial officer. Such financial statements present fairly, in all material respects, the
financial position and results of operations and cash flows of the Borrower and its consolidated
Subsidiaries as of such dates and for such periods in accordance with GAAP, subject to year-end
audit adjustments and the absence of footnotes in the case of the statements referred to in clause
(ii) above.




          (b) Since March 31, 2006, there has been no material adverse change in the business, assets,
operations, prospects or condition, financial or otherwise, of the Borrower and its Subsidiaries,
taken as a whole.




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     Section 3.05 Properties.



          (a) Each of the Borrower and its Subsidiaries has good title to, or valid leasehold interests
in, all its real and personal property material to its business, except for minor defects in title
that do not interfere with its ability to conduct its business as currently conducted or to utilize
such properties for their intended purposes.




          (b) Each of the Borrower and its Subsidiaries owns, or is licensed to use, all trademarks,
tradenames, copyrights, patents and other intellectual property material to its business, and the
use thereof by the Borrower and its Subsidiaries does not infringe upon the rights of any other
Person, except for any such infringements that, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.




     Section 3.06 Litigation and Environmental Matters.



          (a) There are no actions, suits or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of the Borrower, threatened against or affecting the
Borrower or any of its Subsidiaries (i) as to which there is a reasonable possibility of an adverse
determination and that, if adversely determined, could reasonably be expected, individually or in
the aggregate, to result in a Material Adverse Effect (other than the Disclosed Matters) or (ii)
that involve this Agreement or the Transactions.




          (b) Except for the Disclosed Matters and except with respect to any other matters that,
individually or in the aggregate, could not reasonably be expected to result in a Material Adverse
Effect, neither the Borrower nor any of its Subsidiaries (i) has failed to comply with any
Environmental Law or to obtain, maintain or comply with any permit, license or other approval
required under any Environmental Law, (ii) has become subject to any Environmental Liability, (iii)
has received notice of any claim with respect to any Environmental Liability or (iv) knows of any
basis for any Environmental Liability.




          (c) Since the date of this Agreement, there has been no change in the status of the Disclosed
Matters that, individually or in the aggregate, has resulted in, or materially increased the
likelihood of, a Material Adverse Effect.




     Section 3.07 Compliance with Laws and Agreements. Each of the Borrower and its
Subsidiaries is in compliance with all laws, regulations and orders of any Governmental Authority
applicable to it or its property and all indentures, agreements and other instruments binding upon
it or its property, except where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect. No Default has occurred and is
continuing.



     Section 3.08 Investment and Holding Company Status. Neither the Borrower nor any of
its Subsidiaries is (a) an “investment company” as defined in, or subject to regulation under, the
Investment Company Act of 1940 or (b) a “holding company” as defined in, or subject to regulation
under, the Public Utility Holding Company Act of 1935.



     Section 3.09 Taxes. Each of the Borrower and its Subsidiaries has timely filed or
caused to be filed all Tax returns and reports required to have been filed and has paid or caused
to be



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paid all Taxes required to have been paid by it, except (a) Taxes that are being contested in
good faith by appropriate proceedings and for which the Borrower or such Subsidiary, as applicable,
has set aside on its books adequate reserves or (b) to the extent that the failure to do so could
not reasonably be expected to result in a Material Adverse Effect.



     Section 3.10 ERISA. No ERISA Event has occurred or is reasonably expected to occur
that, when taken together with all other such ERISA Events for which liability is reasonably
expected to occur, could reasonably be expected to result in a Material Adverse Effect. The
present value of all accumulated benefit obligations under each Plan (based on the assumptions used
for purposes of Statement of Financial Accounting Standards No. 87) did not, as of the date of the
most recent financial statements reflecting such amounts, exceed by more than $500,000.00 the fair
market value of the assets of such Plan, and the present value of all accumulated benefit
obligations of all underfunded Plans (based on the assumptions used for purposes of Statement of
Financial Accounting Standards No. 87) did not, as of the date of the most recent financial
statements reflecting such amounts, exceed by more than $500,000.00 the fair market value of the
assets of all such underfunded Plans.



     Section 3.11 Disclosure. The Borrower has disclosed to the Lender all agreements,
instruments and corporate or other restrictions to which it or any of its Subsidiaries is subject,
and all other matters known to it, that, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect. None of the reports, financial statements,
certificates or other information furnished by or on behalf of the Borrower to the Lender in
connection with the negotiation of this Agreement or delivered hereunder (as modified or
supplemented by other information so furnished) contains any material misstatement of fact or omits
to state any material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that, with respect to
projected financial information, the Borrower represents only that such information was prepared in
good faith based upon assumptions believed to be reasonable at the time.



     Section 3.12 Subsidiaries. All current Subsidiaries of the Borrower are listed on
Schedule 3.12 attached hereto.



     Section 3.13 Location of Collateral.



          (a) All Collateral consisting of personal property is located at a location listed on Schedule
3.13(a) attached hereto.




          (b) All real property owned by the Borrower and its Subsidiaries is listed on Schedule 3.13(b)
attached hereto.




ARTICLE IV




CONDITIONS




     Section 4.01 Effective Date. The obligations of the Lender to make Advances and to
issue Letters of Credit hereunder shall not become effective until the date on which each of the
following conditions is satisfied:



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               (a) The Lender (or its counsel) shall have received from each party hereto
either (i) a counterpart of this Agreement signed on behalf of such party or (ii)
written evidence satisfactory to the Lender (which may include telecopy transmission
of a signed signature page of this Agreement) that such party has signed a
counterpart of this Agreement.




               (b) [Intentionally left blank.]




               (c) The Lender shall have received such documents and certificates as the
Lender or its counsel may reasonably request relating to the organization, existence
and good standing of the Borrower, the authorization of the Transactions and any
other legal matters relating to the Borrower, each Guarantor, this Agreement or the
Transactions, all in form and substance satisfactory to the Lender and its counsel.




               (d) The Lender shall have received a fully executed RLC Borrowing Base
Certificate and Compliance Certificate.




               (e) The Lender shall have received all fees and other amounts due and payable
on or prior to the Effective Date, including, to the extent invoiced, reimbursement
or payment of all out-of-pocket expenses required to be reimbursed or paid by the
Borrower hereunder.




               (f) The Lender shall have received executed copies of the Credit Documents.




               (g) The Lender shall have received such other documents and instruments as it
may reasonably request.


The Lender shall notify the Borrower of the Effective Date, and such notice shall be conclusive and
binding.




     Section 4.02 Each Credit Event. The obligation of Lender to make an Advance, and to
issue, amend, renew or extend any Letter of Credit, is subject to the satisfaction of the following
conditions:




               (a) The representations and warranties of the Borrower set forth in this
Agreement shall be true and correct on and as of the date of such Advance or the
date of issuance, amendment, renewal or extension of such Letter of Credit, as
applicable.




               (b) At the time of and immediately after giving effect to such Advance or the
issuance, amendment, renewal or extension of such Letter of Credit, as applicable,
no Default shall have occurred and be continuing.


Each Advance and each issuance, amendment, renewal or extension of a Letter of Credit shall be
deemed to constitute a representation and warranty by the Borrower on the date thereof as to the
matters specified in paragraphs (a) and (b) of this Section.




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ARTICLE V




AFFIRMATIVE COVENANTS




     Until the Commitments have expired or been terminated and the principal of and interest on the
Loan and all fees payable hereunder shall have been paid in full and all Letters of Credit shall
have expired or terminated and all LC Disbursements shall have been reimbursed, the Borrower
covenants and agrees with the Lender that:



     Section 5.01 Financial Statements; Ratings Change and Other Information. The Borrower
will furnish to the Lender:




               (a) within one hundred twenty (120) days after the end of each fiscal year of
the Borrower, its audited consolidated balance sheet and related statements of
operations, stockholders’ equity and cash flows as of the end of and for such year,
setting forth in each case in comparative form the figures for the previous fiscal
year, all reported on by independent public accountants of recognized national
standing (without a “going concern” or like qualification or exception and without
any qualification or exception as to the scope of such audit) to the effect that
such consolidated financial statements present fairly in all material respects the
financial condition and results of operations of the Borrower and its consolidated
Subsidiaries on a consolidated basis in accordance with GAAP consistently applied;




               (b) within forty-five (45) days after the end of each of the first three fiscal
quarters of each fiscal year of the Borrower, its consolidated balance sheet and
related statements of operations, stockholders’ equity and cash flows as of the end
of and for such fiscal quarter and the then elapsed portion of the fiscal year,
setting forth in each case in comparative form the figures for the corresponding
period or periods of (or, in the case of the balance sheet, as of the end of) the
previous fiscal year, all certified by one of its Financial Officers as presenting
fairly in all material respects the financial condition and results of operations of
the Borrower and its consolidated Subsidiaries on a consolidated basis in accordance
with GAAP consistently applied, subject to normal year-end audit adjustments and the
absence of footnotes;




               (c) concurrently with any delivery of financial statements under clause (a) or
(b) above, a certificate of a Financial Officer of the Borrower (the “Compliance
Certificate”) substantially in the form of Exhibit “D”, (i) certifying as to
whether a Default has occurred and, if a Default has occurred, specifying the
details thereof and any action taken or proposed to be taken with respect thereto,
(ii) setting forth reasonably detailed calculations demonstrating compliance with
Section 6.09 and (iii) stating whether any change in GAAP or in the application
thereof has occurred since the date of the audited financial statements referred to
in Section 3.04 and, if any such change has occurred, specifying the effect of such
change on the financial statements accompanying such certificate;



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               (d) In the event there are Revolving Loan Advances outstanding, within thirty
(30) days after the end of each month, a certificate of a Financial Officer of the
Borrower (the “RLC Borrowing Base Certificate”) substantially in the form of
Exhibit “C” setting forth reasonably detailed calculation of the RLC Borrowing Base;
and




               (e) promptly following any request therefor, such other information regarding
the operations, business affairs and financial condition of the Borrower or any
Subsidiary, or compliance with the terms of this Agreement, as the Lender may
reasonably request.



     Section 5.02 Notices of Material Events. The Borrower will furnish to the Lender
prompt written notice of the following:




               (a) the occurrence of any Default;




               (b) the filing or commencement of any action, suit or proceeding by or before
any arbitrator or Governmental Authority against or affecting the Borrower or any
Affiliate thereof that, if adversely determined, could reasonably be expected to
result in a Material Adverse Effect;




               (c) the occurrence of any ERISA Event that, alone or together with any other
ERISA Events that have occurred, could reasonably be expected to result in liability
of the Borrower and its Subsidiaries in an aggregate amount exceeding $500,000.00;
and




               (d) any other development that results in, or could reasonably be expected to
result in, a Material Adverse Effect.


Each notice delivered under this Section shall be accompanied by a statement of a Financial Officer
or other executive officer of the Borrower setting forth the details of the event or development
requiring such notice and any action taken or proposed to be taken with respect thereto.




     Section 5.03 Existence; Conduct of Business. The Borrower will, and will cause each
of its Subsidiaries to, do or cause to be done all things necessary to preserve, renew and keep in
full force and effect its legal existence and the rights, licenses, permits, privileges and
franchises material to the conduct of its business; provided that the foregoing shall not
prohibit any merger, consolidation, liquidation or dissolution permitted under Section 6.03.



     Section 5.04 Payment of Obligations. The Borrower will, and will cause each of its
Subsidiaries to, pay its obligations, including Tax liabilities, that, if not paid, could result in
a Material Adverse Effect before the same shall become delinquent or in default, except where (a)
the validity or amount thereof is being contested in good faith by appropriate proceedings, (b) the
Borrower or such Subsidiary has set aside on its books adequate reserves with respect thereto in
accordance with GAAP and (c) the failure to make payment pending such contest could not reasonably
be expected to result in a Material Adverse Effect.



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     Section 5.05 Maintenance of Properties; Insurance. The Borrower will, and will cause
each of its Subsidiaries to, (a) keep and maintain all property material to the conduct of its
business in good working order and condition, ordinary wear and tear excepted, and (b) maintain,
with financially sound and reputable insurance companies, insurance in such amounts and against
such risks as are customarily maintained by companies engaged in the same or similar businesses
operating in the same or similar locations.



     Section 5.06 Books and Records; Inspection Rights. The Borrower will, and will cause
each of its Subsidiaries to, keep proper books of record and account in which full, true and
correct entries are made of all dealings and transactions in relation to its business and
activities. The Borrower will, and will cause each of its Subsidiaries to, permit any
representatives designated by the Lender, upon reasonable prior notice, to visit and inspect its
properties, to examine and make extracts from its books and records, and to discuss its affairs,
finances and condition with its officers and independent accountants, all at such reasonable times
and as often as reasonably requested.



     Section 5.07 Compliance with Laws. The Borrower will, and will cause each of its
Subsidiaries to, comply with all laws, rules, regulations and orders of any Governmental Authority
applicable to it or its property, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse Effect.



     Section 5.08 Use of Proceeds and Letters of Credit. The proceeds of the Loans will be
used only for general corporate purposes of the Borrower. No part of the proceeds of any Loan will
be used, whether directly or indirectly, for any purpose that entails a violation of any of the
Regulations of the Board, including Regulations T, U and X.



     Section 5.09 Security Documents.



          (a) So long as Lender has any Commitment outstanding to the Borrower and so long as any Loan
or other obligation hereunder is outstanding, the Borrower shall cause such Loan and the Borrower’s
other obligations under this Agreement to be secured at all times by a valid and effective first
priority security interest granted pursuant to a pledge and security agreement substantially in the
form attached hereto as Exhibit “E” (each a “Security Agreement”), each duly executed and
delivered by or on behalf of the Borrower and each Guarantor, granting the Lender a valid and
enforceable security interest in all of its personal property described therein
(“Collateral”), subject to no Lien other than Permitted Encumbrances.




          (b) All of the documents required by this Section 5.09 shall be in form satisfactory to the
Lender and its counsel, and, together with any financing statements for filing and/or recording,
and any other items required by the Lender to effectuate the liens and security interests of the
Lender contemplated by the Security Agreement and this Agreement and to perfect such liens and
security interests with respect to Collateral located in the United States, may heretofore or
hereinafter be referred to as the “Security Documents.”




          (c) The Borrower shall obtain and deliver to the Lender, and maintain in full force and effect
so long as any obligation of the Borrower to Lender remains unpaid or




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unperformed, valid and effective security agreements in the form of the Security Agreement
from any new Subsidiaries as the Lender may require in its sole and absolute discretion.




          (d) The Borrower shall obtain and deliver to the Lender within sixty (60) days after the
Effective Date Waivers/Releases of Lien Rights (each a “Lien Rights Waiver”) executed by
the landlord of each leased location in the United States where Collateral is located on the
Effective Date. Thereafter, the Borrower shall promptly obtain and deliver to the Lender Lien
Rights Waivers executed by the landlord of each new leased location in the United States where
Collateral is located. Such Lien Rights Waiver shall be substantially in the form attached hereto
as Exhibit “G.”




     Section 5.10 Continuing Guarantees. So long as any Loan is outstanding, the Borrower
shall cause such Loan and the Borrower’s obligations under this Agreement to be guaranteed at all
times by a continuing guarantee substantially in the form attached hereto as Exhibit “F” (each a
“Continuing Guarantee”) from each existing (except as noted on Schedule 3.12 attached
herein) or new Subsidiary for the benefit of the Lender.



     Section 5.11 Application of Net Proceeds. The Borrower will apply to the payment of
all amounts payable hereunder all net proceeds received by it from its issuance of any
Indebtedness, its issuance of any Equity Interests and its sale of any assets outside the ordinary
course of its business.



ARTICLE VI




NEGATIVE COVENANTS




     Until the Commitments have expired or terminated and the principal of and interest on each
Loan and all fees payable hereunder have been paid in full and all Letters of Credit have expired
or terminated and all LC Disbursements shall have been reimbursed, the Borrower covenants and
agrees with the Lender that:



     Section 6.01 Indebtedness. The Borrower will not, and will not permit any Subsidiary
to, create, incur, assume or permit to exist any Indebtedness, except:




               (a) Indebtedness created hereunder;




               (b) Indebtedness existing on the date hereof and set forth in Schedule 6.01,
but not any extensions, renewals or replacements of any such Indebtedness; and




               (c) Indebtedness of the Borrower to any Subsidiary and of any Subsidiary to the
Borrower or any other Subsidiary.



     Section 6.02 Liens. The Borrower will not, and will not permit any Subsidiary to,
create, incur, assume or permit to exist any Lien on any property or asset now owned or hereafter
acquired by it, or assign or sell any income or revenues (including accounts receivable) or rights
in respect of any thereof, except:



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               (a) Permitted Encumbrances; and




               (b) any Lien on any property or asset of the Borrower or any Subsidiary
existing on the date hereof and set forth in Schedule 6.02; provided that
(i) such Lien shall not apply to any other property or asset of the Borrower or any
Subsidiary and (ii) such Lien shall secure only those obligations which it secures
on the date hereof.



     Section 6.03 Fundamental Changes.



          (a) The Borrower will not, and will not permit any Subsidiary to, merge into or consolidate
with any other Person, or permit any other Person to merge into or consolidate with it, or sell,
transfer, lease or otherwise dispose of (in one transaction or in a series of transactions) all or
any substantial part of its assets, or all or substantially all of the stock of any of its
Subsidiaries (in each case, whether now owned or hereafter acquired), or liquidate or dissolve.




          (b) The Borrower will not, and will not permit any of its Subsidiaries to, engage to any
material extent in any business other than businesses of the type conducted by the Borrower and its
Subsidiaries on the date of execution of this Agreement and businesses reasonably related thereto.




          (c) The Borrower will not allow a Change in Control.




     Section 6.04 Investments, Loans, Advances, Guarantees and Acquisitions. The Borrower
will not, and will not permit any of its Subsidiaries to, purchase, hold or acquire (including
pursuant to any merger with any Person that was not a wholly owned Subsidiary prior to such merger)
any capital stock, evidences of indebtedness or other securities (including any option, warrant or
other right to acquire any of the foregoing) of, make or permit to exist any loans or advances to,
Guarantee any obligations of, or make or permit to exist any investment or any other interest in,
any other Person, or purchase or otherwise acquire (in one transaction or a series of transactions)
any assets of any other Person constituting a business unit, except:




               (a) Permitted Investments;




               (b) investments by the Borrower existing on the date hereof in the capital
stock of its Subsidiaries; and




               (c) loans or advances made by the Borrower to any Subsidiary and made by any
Subsidiary to the Borrower or any other Subsidiary.



     Section 6.05 Swap Agreements. The Borrower will not, and will not permit any of its
Subsidiaries to, enter into any Swap Agreement, except (a) Swap Agreements entered into to hedge or
mitigate risks to which the Borrower or any Subsidiary has actual exposure (other than those in
respect of Equity Interests of the Borrower or any of its Subsidiaries), and (b) Swap Agreements
entered into in order to effectively cap, collar or exchange interest rates (from fixed to floating
rates, from one floating rate to another floating rate or otherwise) with respect to any
interest-bearing liability or investment of the Borrower or any Subsidiary.



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     Section 6.06 Restricted Payments. The Borrower will not, and will not permit any of
its Subsidiaries to, declare or make, or agree to pay or make, directly or indirectly, any
Restricted Payment, except (a) the Borrower may declare and pay dividends with respect to its
Equity Interests payable solely in additional shares of its common stock, (b) Subsidiaries may
declare and pay dividends ratably with respect to their Equity Interests, and (c) the Borrower may
make Restricted Payments pursuant to and in accordance with stock option plans or other benefit
plans for management or employees of the Borrower and its Subsidiaries.



     Section 6.07 Transactions with Affiliates. The Borrower will not, and will not permit
any of its Subsidiaries to, sell, lease or otherwise transfer any property or assets to, or
purchase, lease or otherwise acquire any property or assets from, or otherwise engage in any other
transactions with, any of its Affiliates, except (a) in the ordinary course of business at prices
and on terms and conditions not less favorable to the Borrower or such Subsidiary than could be
obtained on an arm’s-length basis from unrelated third parties, (b) transactions between or among
the Borrower and its Subsidiaries not involving any other Affiliate and (c) any Restricted Payment
permitted by Section 6.06.



     Section 6.08 Restrictive Agreements. The Borrower will not, and will not permit any
of its Subsidiaries to, directly or indirectly, enter into, incur or permit to exist any agreement
or other arrangement that prohibits, restricts or imposes any condition upon (a) the ability of the
Borrower or any Subsidiary to create, incur or permit to exist any Lien upon any of its property or
assets, or (b) the ability of any Subsidiary to pay dividends or other distributions with respect
to any shares of its capital stock or to make or repay loans or advances to the Borrower or any
other Subsidiary or to Guarantee Indebtedness of the Borrower or any other Subsidiary;
provided that (i) the foregoing shall not apply to restrictions and conditions imposed by
law or by this Agreement, (ii) the foregoing shall not apply to restrictions and conditions
existing on the date hereof identified on Schedule 6.08 (but shall apply to any extension or
renewal of, or any amendment or modification expanding the scope of, any such restriction or
condition), (iii) the foregoing shall not apply to customary restrictions and conditions contained
in agreements relating to the sale of a Subsidiary pending such sale, provided such restrictions
and conditions apply only to the Subsidiary that is to be sold and such sale is permitted
hereunder, (iv) clause (a) of the foregoing shall not apply to restrictions or conditions imposed
by any agreement relating to secured Indebtedness permitted by this Agreement if such restrictions
or conditions apply only to the property or assets securing such Indebtedness and (v) clause (a) of
the foregoing shall not apply to customary provisions in leases restricting the assignment thereof.



     Section 6.09 Financial Covenants. The Borrower will not permit at any time its net
income, plus interest expense, tax expense, amortization, and depreciation, minus distributions for
the twelve months then ended to be less than $750,000.00 beginning March 31, 2007, $1,250,000.00
beginning June 30, 2007, and $1,500,000.00 beginning September 30, 2007 and thereafter;



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ARTICLE VII




EVENTS OF DEFAULT




     If any of the following events (“Events of Default”) shall occur:




               (a) the Borrower shall fail to pay any principal of any Loan or any
reimbursement obligation in respect of any LC Disbursement when and as the same
shall become due and payable, whether at the due date thereof or at a date fixed for
prepayment thereof or otherwise;




               (b) the Borrower shall fail to pay any interest on any Loan or any fee or any
other amount (other than an amount referred to in clause (a) of this Article)
payable under this Agreement, when and as the same shall become due and payable, and
such failure shall continue unremedied for a period of three (3) Business Days;




               (c) any representation or warranty made or deemed made by or on behalf of the
Borrower or any Subsidiary in or in connection with this Agreement or any amendment
or modification hereof or waiver hereunder, or in any report, certificate, financial
statement or other document furnished pursuant to or in connection with this
Agreement or any amendment or modification hereof or waiver hereunder, shall prove
to have been incorrect when made or deemed made;




               (d) the Borrower shall fail to observe or perform any covenant, condition or
agreement contained in Section 5.02, 5.03 (with respect to the Borrower’s existence)
or 5.08 or in Article VI;




               (e) the Borrower shall fail to observe or perform any covenant, condition or
agreement contained in this Agreement (other than those specified in clause (a), (b)
or (d) of this Article), and such failure shall continue unremedied for a period of
thirty (30) days after notice thereof from the Lender to the Borrower;




               (f) the Borrower or any Subsidiary shall fail to make any payment (whether of
principal or interest and regardless of amount) in respect of any Material
Indebtedness, when and as the same shall become due and payable;




               (g) any event or condition occurs that results in any Material Indebtedness
becoming due prior to its scheduled maturity or that enables or permits (with or
without the giving of notice, the lapse of time or both) the holder or holders of
any Material Indebtedness or any trustee or agent on its or their behalf to cause
any Material Indebtedness to become due, or to require the prepayment, repurchase,
redemption or defeasance thereof, prior to its scheduled maturity; provided
that this clause (g) shall not apply to secured Indebtedness that becomes due as a
result of the voluntary sale or transfer of the property or assets securing such
Indebtedness;



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               (h) an involuntary proceeding shall be commenced or an involuntary petition
shall be filed seeking (i) liquidation, reorganization or other relief in respect of
the Borrower or any Subsidiary or its debts, or of a substantial part of its assets,
under any Federal, state or foreign bankruptcy, insolvency, receivership or similar
law now or hereafter in effect or (ii) the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for the Borrower or any
Subsidiary or for a substantial part of its assets, and, in any such case, such
proceeding or petition shall continue undismissed for sixty (60) days or an order or
decree approving or ordering any of the foregoing shall be entered;




               (i) the Borrower or any Subsidiary shall (i) voluntarily commence any
proceeding or file any petition seeking liquidation, reorganization or other relief
under any Federal, state or foreign bankruptcy, insolvency, receivership or similar
law now or hereafter in effect, (ii) consent to the institution of, or fail to
contest in a timely and appropriate manner, any proceeding or petition described in
clause (h) of this Article, (iii) apply for or consent to the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar official for the
Borrower or any Subsidiary or for a substantial part of its assets, (iv) file an
answer admitting the material allegations of a petition filed against it in any such
proceeding, (v) make a general assignment for the benefit of creditors or (vi) take
any action for the purpose of effecting any of the foregoing;




               (j) the Borrower or any Subsidiary shall become unable, admit in writing its
inability or fail generally to pay its debts as they become due;




               (k) one or more judgments for the payment of money in an aggregate amount in
excess of $250,000.00 shall be rendered against the Borrower, any Subsidiary or any
combination thereof and the same shall remain undischarged for a period of thirty
(30) consecutive days during which execution shall not be effectively stayed, or any
action shall be legally taken by a judgment creditor to attach or levy upon any
assets of the Borrower or any Subsidiary to enforce any such judgment;




               (l) an ERISA Event shall have occurred that, in the opinion of the Lender, when
taken together with all other ERISA Events that have occurred, could reasonably be
expected to result in a Material Adverse Effect;




               (m) a Change in Control shall occur; or




               (n) the occurrence of a Default under any Credit Document;


then, and in every such event (other than an event with respect to the Borrower described in clause
(h) or (i) of this Article), and at any time thereafter during the continuance of such event, the
Lender may, by notice to the Borrower, take either or both of the following actions, at the same or
different times: (i) terminate the Commitments, and thereupon the Commitments shall terminate
immediately, and (ii) declare the Loans then outstanding to be due and payable in whole (or in
part, in which case any principal not so declared to be due and payable may


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thereafter be declared to be due and payable), and thereupon the principal of the Loans so declared
to be due and payable, together with accrued interest thereon and all fees and other obligations of
the Borrower accrued hereunder, shall become due and payable immediately, without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by the Borrower; and in
case of any event with respect to the Borrower described in clause (h) or (i) of this Article, the
Commitments shall automatically terminate and the principal of the Loans then outstanding, together
with accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder,
shall automatically become due and payable, without presentment, demand, protest or other notice of
any kind, all of which are hereby waived by the Borrower.




ARTICLE VIII




MISCELLANEOUS




     Section 8.01 Notices.



          (a) Except in the case of notices and other communications expressly permitted to be given by
telephone (and subject to paragraph (b) below), all notices and other communications provided for
herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by
certified or registered mail or sent by telecopy, as follows:




	 	 	 	 	 
	 

	 	(i)
	 	if to the Borrower, to it at:
	 
	 	 	 	 
	 

	 	 	 	17800 N. Perimeter Dr., Suite 200
	 

	 	 	 	Scottsdale, AZ 85255
	 

	 	 	 	Attention: Chief Accounting Officer
	 

	 	 	 	Telecopy No.: (480) 596-0349
	 
	 	 	 	 
	 

	 	(ii)
	 	if to the Lender, to:
	 
	 	 	 	 
	 

	 	 	 	JPMorgan Chase Bank, N.A.
	 

	 	 	 	201 North Central Avenue, 21st Floor
	 

	 	 	 	Phoenix, Arizona 85004
	 

	 	 	 	Attention: Commercial Banking, AZ1-1178
	 

	 	 	 	Telecopy No.: (602) 221-1192






          (b) Notices and other communications to the Lender hereunder may be delivered or furnished by
electronic communications pursuant to procedures approved by the Lender; provided that the
foregoing shall not apply to notices pursuant to Article II unless otherwise agreed by the Lender.
The Lender or the Borrower may, in its discretion, agree to accept notices and other communications
to it hereunder by electronic communications pursuant to procedures approved by it;
provided that approval of such procedures may be limited to particular notices or
communications.




          (c) Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices and other
communications given to any party hereto in accordance with the provisions of this Agreement shall
be deemed to have been given on the date of receipt.




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     Section 8.02 Waivers; Amendments.



          (a) No failure or delay by the Lender in exercising any right or power hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The rights and remedies of
the Lender hereunder are cumulative and are not exclusive of any rights or remedies that they would
otherwise have. No waiver of any provision of this Agreement or consent to any departure by the
Borrower therefrom shall in any event be effective unless the same shall be permitted by paragraph
(b) of this Section, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. Without limiting the generality of the foregoing,
the making of a Loan or issuance of a Letter of Credit shall not be construed as a waiver of any
Default, regardless of whether the Lender may have had notice or knowledge of such Default at the
time.




          (b) Neither this Agreement nor any provision hereof may be waived, amended or modified except
pursuant to an agreement or agreements in writing entered into by the Borrower and the Lender.




     Section 8.03 Expenses; Indemnity; Damage Waiver.



          (a) The Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by the Lender
and its Affiliates, including the reasonable fees, charges and disbursements of counsel for the
Lender, in connection with the preparation and administration of this Agreement or any amendments,
modifications or waivers of the provisions hereof (whether or not the transactions contemplated
hereby or thereby shall be consummated), (ii) all reasonable out-of-pocket expenses incurred by the
Lender in connection with the issuance, amendment, renewal or extension of any Letter of Credit or
any demand for payment thereunder and (iii) all out-of-pocket expenses incurred by the Lender
including the fees, charges and disbursements of any counsel for the Lender, in connection with the
enforcement or protection of its rights in connection with this Agreement, including its rights
under this Section, or in connection with the Loans made or Letters of Credit issued hereunder,
including all such out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans or Letters of Credit.




          (b) The Borrower shall indemnify the Lender, and each Related Party of any of the foregoing
Persons (each such Person being called an “Indemnitee”) against, and hold each Indemnitee
harmless from, any and all losses, claims, damages, liabilities and related expenses, including the
fees, charges and disbursements of any counsel for any Indemnitee, incurred by or asserted against
any Indemnitee arising out of, in connection with, or as a result of (i) the execution or delivery
of this Agreement or any agreement or instrument contemplated hereby, the performance by the
parties hereto of their respective obligations hereunder or the consummation of the Transactions or
any other transactions contemplated hereby, (ii) any Loan or Letter of Credit or the use of the
proceeds therefrom (including any refusal by the Lender to honor a demand for payment under a
Letter of Credit if the documents presented in connection with such demand do not strictly comply
with the terms of such Letter of Credit), (iii) any actual or alleged presence or release of
Hazardous Materials on or from any property owned or




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operated by the Borrower or any of its Subsidiaries, or any Environmental Liability related in
any way to the Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim,
litigation, investigation or proceeding relating to any of the foregoing, whether based on
contract, tort or any other theory and regardless of whether any Indemnitee is a party thereto;
provided that such indemnity shall not, as to any Indemnitee, be available to the extent
that such losses, claims, damages, liabilities or related expenses [are determined by a court of
competent jurisdiction by final and nonappealable judgment to have] resulted from the gross
negligence or willful misconduct of such Indemnitee.




          (c) To the extent permitted by applicable law, the Borrower shall not assert, and hereby
waives, any claim against any Indemnitee, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages) arising out of, in
connection with, or as a result of, this Agreement or any agreement or instrument contemplated
hereby, the Transactions, any Loan or Letter of Credit or the use of the proceeds thereof.




          (d) All amounts due under this Section shall be payable promptly after written demand
therefor.




     Section 8.04 Successors and Assigns.



          (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns permitted hereby (including any
Affiliate of the Lender), except that (i) the Borrower may not assign or otherwise transfer any of
its rights or obligations hereunder without the prior written consent of Lender (and any attempted
assignment or transfer by the Borrower without such consent shall be null and void) and (ii) Lender
may not assign or otherwise transfer its rights or obligations hereunder except in accordance with
this Section. Nothing in this Agreement, expressed or implied, shall be construed to confer upon
any Person (other than the parties hereto, their respective successors and assigns permitted hereby
(including any Affiliate of the Lender), Participants (to the extent provided in paragraph (c) of
this Section) and, to the extent expressly contemplated hereby, the Related Parties of each of the
Lender) any legal or equitable right, remedy or claim under or by reason of this Agreement.





          (b) Lender may assign to one or more assignees all or a portion of its rights
and obligations under this Agreement (including all or a portion of its Commitments
and the Loans at the time owing to it) with the prior written consent (such consent
not to be unreasonably withheld) of the Borrower, provided that no consent
of the Borrower shall be required for an assignment to an Affiliate of a Lender, if
an Event of Default has occurred and is continuing, any other assignee.




          (c) (i) Lender may, without the consent of the Borrower, sell participations to
one or more banks or other entities (a “Participant”) in all or a portion of
Lender’s rights and obligations under this Agreement (including all or a portion of
its Commitment and the Loans owing to it); provided that (A) Lender’s
obligations under this Agreement shall remain unchanged, (B) Lender shall remain
solely responsible to the other parties hereto for the performance of such



-39-









 







obligations and (C) the Borrower shall continue to deal solely and directly
with Lender in connection with Lender’s rights and obligations under this Agreement.
Any agreement or instrument pursuant to which Lender sells such a participation
shall provide that Lender shall retain the sole right to enforce this Agreement and
to approve any amendment, modification or waiver of any provision of this Agreement;
provided that such agreement or instrument may provide that Lender will not,
without the consent of the Participant, agree to any amendment, modification or
waiver described in the first proviso to Section 8.02(b) that affects such
Participant. Subject to paragraph (c)(ii) of this Section, the Borrower agrees that
each Participant shall be entitled to the benefits of Sections 2.15, 2.16 and 2.17
to the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to paragraph (b) of this Section. To the extent permitted by
law, each Participant also shall be entitled to the benefits of Section 8.08 as
though it were the Lender, provided such Participant agrees to be subject to Section
2.18(c) as though it were the Lender.




          (ii) A Participant shall not be entitled to receive any greater payment under
Section 2.15 or 2.17 than the Lender would have been entitled to receive with
respect to the participation sold to such Participant, unless the sale of the
participation to such Participant is made with the Borrower’s prior written consent.



          (d) Lender may at any time pledge or assign a security interest in all or any portion of its
rights under this Agreement to secure obligations of Lender, including without limitation any
pledge or assignment to secure obligations to a Federal Reserve Bank, and this Section shall not
apply to any such pledge or assignment of a security interest; provided that no such pledge
or assignment of a security interest shall release Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for Lender as a party hereto.




     Section 8.05 Survival. All covenants, agreements, representations and warranties made
by the Borrower herein and in the certificates or other instruments delivered in connection with or
pursuant to this Agreement shall be considered to have been relied upon by the other parties hereto
and shall survive the execution and delivery of this Agreement and the making of any Loans and
issuance of any Letters of Credit, regardless of any investigation made by any such other party or
on its behalf and notwithstanding that the Lender may have had notice or knowledge of any Default
or incorrect representation or warranty at the time any credit is extended hereunder, and shall
continue in full force and effect as long as the principal of or any accrued interest on any Loan
or any fee or any other amount payable under this Agreement is outstanding and unpaid or any Letter
of Credit is outstanding and so long as the Commitments have not expired or terminated. The
provisions of Sections 2.15, 2.16, 2.17 and 8.03 and Article VIII shall survive and remain in full
force and effect regardless of the consummation of the transactions contemplated hereby, the
repayment of the Loans, the expiration or termination of the Letters of Credit and the Commitments
or the termination of this Agreement or any provision hereof.



     Section 8.06 Counterparts; Integration; Effectiveness. This Agreement may be executed
in counterparts (and by different parties hereto on different counterparts), each of which shall



-40-









 







constitute an original, but all of which when taken together shall constitute a single
contract. This Agreement constitutes the entire contract among the parties relating to the subject
matter hereof and supersede any and all previous agreements and understandings, oral or written,
relating to the subject matter hereof. Except as provided in Section 4.01, this Agreement shall
become effective when it shall have been executed by the Lender and when the Lender shall have
received counterparts hereof which, when taken together, bear the signatures of each of the other
parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. Delivery of an executed counterpart of a signature
page of this Agreement by telecopy shall be effective as delivery of a manually executed
counterpart of this Agreement.



     Section 8.07 Severability. Any provision of this Agreement held to be invalid,
illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such invalidity, illegality or unenforceability without affecting the validity, legality
and enforceability of the remaining provisions hereof; and the invalidity of a particular provision
in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.



     Section 8.08 Right of Setoff. If an Event of Default shall have occurred and be
continuing, Lender and each of its Affiliates is hereby authorized at any time and from time to
time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other obligations at any time
owing by Lender or Affiliate to or for the credit or the account of the Borrower against any of and
all the obligations of the Borrower now or hereafter existing under this Agreement held by Lender,
irrespective of whether or not Lender shall have made any demand under this Agreement and although
such obligations may be unmatured. The rights of Lender under this Section are in addition to
other rights and remedies (including other rights of setoff) which Lender may have.



     Section 8.09 Governing Law; Jurisdiction; Consent to Service of Process.



          (a) This Agreement shall be construed in accordance with and governed by the law of the State
of Arizona.




          (b) The Borrower hereby irrevocably and unconditionally submits, for itself and its property,
to the nonexclusive jurisdiction of the Superior Court of the State of Arizona sitting in Maricopa
County and of the United States District Court of Phoenix, Arizona, and any appellate court from
any thereof, in any action or proceeding arising out of or relating to this Agreement, or for
recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and
unconditionally agrees that all claims in respect of any such action or proceeding may be heard and
determined in such state court or, to the extent permitted by law, in such Federal court. Each of
the parties hereto 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 provided by law. Nothing in this Agreement shall affect any right that the Lender may
otherwise have to bring any action or proceeding relating to this Agreement against the Borrower or
its properties in the courts of any jurisdiction.




     (c) The Borrower hereby irrevocably and unconditionally waives, to the fullest extent it may
legally and effectively do so, any objection which it may now or hereafter



-41-









 







have to the laying of venue of any suit, action or proceeding arising out of or relating to
this Agreement in any court referred to in paragraph (b) of this Section. Each of the parties
hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such court.



          (d) Each party to this Agreement irrevocably consents to service of process in the manner
provided for notices in Section 8.01. Nothing in this Agreement will affect the right of any party
to this Agreement to serve process in any other manner permitted by law.




     Section 8.10 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL
PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A)
CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO
ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.



     Section 8.11 Headings. Article and Section headings and the Table of Contents used
herein are for convenience of reference only, are not part of this Agreement and shall not affect
the construction of, or be taken into consideration in interpreting, this Agreement.



     Section 8.12 Confidentiality. The Lender agrees to maintain the confidentiality of
the Information (as defined below), except that Information may be disclosed (a) to its and its
Affiliates’ directors, officers, employees and agents, including accountants, legal counsel and
other advisors (it being understood that the Persons to whom such disclosure is made will be
informed of the confidential nature of such Information and instructed to keep such Information
confidential), (b) to the extent requested by any regulatory authority, (c) to the extent required
by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other
party to this Agreement, (e) in connection with the exercise of any remedies hereunder or any suit,
action or proceeding relating to this Agreement or the enforcement of rights hereunder, (f) subject
to an agreement containing provisions substantially the same as those of this Section, to (i) any
assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights
or obligations under this Agreement or (ii) any actual or prospective counterparty (or its
advisors) to any swap or derivative transaction relating to the Borrower and its obligations, (g)
with the consent of the Borrower or (h) to the extent such Information (i) becomes publicly
available other than as a result of a breach of this Section or (ii) becomes available to the
Lender on a non-confidential basis from a source other than the Borrower. For the purposes of this
Section, “Information” means all information received from the Borrower relating to the
Borrower or its business, other than any such information that is available to the Lender on a
non-confidential basis prior to disclosure by the Borrower; provided that, in the case of
information received from the Borrower after the date hereof, such information is clearly
identified at the time of delivery as confidential. Any Person required to maintain the



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confidentiality of Information as provided in this Section shall be considered to have
complied with its obligation to do so if such Person has exercised the same degree of care to
maintain the confidentiality of such Information as such Person would accord to its own
confidential information.



     Section 8.13 USA PATRIOT Act. Each Lender that is subject to the requirements of the
USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the
“Act”) hereby notifies the Borrower that pursuant to the requirements of the Act, it is
required to obtain, verify and record information that identifies the Borrower, which information
includes the name and address of the Borrower and other information that will allow such Lender to
identify the Borrower in accordance with the Act.



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



	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 	 	MOBILITY ELECTRONICS, INC., a Delaware corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Joan W. Brubacher	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Joan W. Brubacher	 	 
	 

	 	Title:
	 	EVP & CFO	 	 
	 
	 	 	 	 	 	 
	 	 	JPMORGAN CHASE BANK, N.A., a national banking
association	 	 
	 
	 	 	 	 	 	 
	 

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