**EXHIBIT 10.13**

** **

**SECOND AMENDED ANDRESTATEDCREDIT AGREEMENT**

** **

** **

**among**

** **

** **

**MONACO COACHCORPORATIONROYALE COACH BY MONACO, INC.MCC ACQUISITION CORPORATIONOUTDOOR RESORTS OF NAPLES, INC.OUTDOOR RESORTS OF LAS VEGAS, INC.andOUTDOOR RESORTS MOTORCOACH COUNTRY CLUB, INC.**

** **

**as Borrowers**

** **

** **

**THE LENDERS NAMEDHEREIN,as Lenders**

** **

** **

**U.S. BANK NATIONALASSOCIATION,as Administrative Lender,Swingline Lender, andL/C Bank**

** **

**and**

**BANK OF AMERICA, N.A.,**as Syndication Agent

** **

** **

**TOTAL COMMITMENT —$105,000,000**

** **

** **

**NOVEMBER 17, 2004**

 

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**CONTENTS**

** **
| ARTICLE I.   | DEFINITIONS                                                        | 1      |
|--------------|--------------------------------------------------------------------|--------|
|         |                                                               |   |
| 1.1          | DEFINED  TERMS                                                     | 1      |
|         |                                                               |   |
| 1.2          | ACCOUNTING  AND FINANCIAL DETERMINATIONS                           | 19     |
|         |                                                               |   |
| 1.3          | HEADINGS                                                           | 19     |
|         |                                                               |   |
| 1.4          | ADDITIONAL  DEFINITION PROVISIONS                                  | 19     |
|         |                                                               |   |
| ARTICLE  II. | APPOINTMENT  OF BORROWERS’ AGENT; JOINT AND SEVERAL LIABILITY | 19     |
|         |                                                               |   |
| 2.1          | APPOINTMENT OF AGENT                                               | 19     |
|         |                                                               |   |
| 2.2          | AUTHORIZED  REPRESENTATIVES                                        | 20     |
|         |                                                               |   |
| 2.3          | JOINT  AND SEVERAL LIABILITY; RIGHTS OF CONTRIBUTION               | 20     |
|         |                                                               |   |
| ARTICLE III. | THE CREDITS                                                        | 22     |
|         |                                                               |   |
| 3.1          | REVOLVING LOANS                                                    | 22     |
|         |                                                               |   |
| 3.2          | SWING LOANS                                                        | 24     |
|         |                                                               |   |
| 3.3          | [RESERVED]                                                         | 25     |
|         |                                                               |   |
| 3.4          | LETTER OF CREDIT FACILITY                                          | 25     |
|         |                                                               |   |
| 3.5          | INTEREST/FEES                                                      | 28     |
|         |                                                               |   |
| 3.6          | INTEREST OPTIONS                                                   | 29     |
|         |                                                               |   |
| 3.7          | OTHER PAYMENT TERMS                                                | 30     |
|         |                                                               |   |
| 3.8          | FUNDING                                                            | 31     |
|         |                                                               |   |
| 3.9          | PRO RATA TREATMENT                                                 | 32     |
|         |                                                               |   |
| 3.10         | CHANGE OF CIRCUMSTANCES                                            | 32     |
|         |                                                               |   |
| 3.11         | TAXES ON PAYMENTS                                                  | 34     |
|         |                                                               |   |
| 3.12         | FUNDING LOSS INDEMNIFICATION                                       | 34     |

 

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| ARTICLE IV. | ADMINISTRATION                           | 35     |
|-------------|------------------------------------------|--------|
|        |                                     |   |
| 4.1         | STATEMENTS                               | 35     |
|        |                                     |   |
| 4.2         | PAYMENTS                                 | 35     |
|        |                                     |   |
| ARTICLE V.  | SECURITY                                 | 36     |
|        |                                     |   |
| 5.1         | GRANT OF SECURITY  INTEREST              | 36     |
|        |                                     |   |
| 5.2         | PERFECTION; DUTY OF CARE                 | 36     |
|        |                                     |   |
| ARTICLE VI. | REPRESENTATIONS  AND WARRANTIES          | 37     |
|        |                                     |   |
| 6.1         | LEGAL STATUS; SUBSIDIARIES               | 37     |
|        |                                     |   |
| 6.2         | DUE AUTHORIZATION;  NO VIOLATION         | 37     |
|        |                                     |   |
| 6.3         | GOVERNMENT  APPROVAL, REGULATION         | 37     |
|        |                                     |   |
| 6.4         | VALIDITY; ENFORCEABILITY                 | 38     |
|        |                                     |   |
| 6.5         | CORRECTNESS OF  FINANCIAL STATEMENTS     | 38     |
|        |                                     |   |
| 6.6         | TAXES                                    | 38     |
|        |                                     |   |
| 6.7         | LITIGATION, LABOR  CONTROVERSIES         | 38     |
|        |                                     |   |
| 6.8         | TITLE TO PROPERTY, LIENS                 | 38     |
|        |                                     |   |
| 6.9         | ERISA                                    | 39     |
|        |                                     |   |
| 6.10        | OTHER OBLIGATIONS                        | 39     |
|        |                                     |   |
| 6.11        | ENVIRONMENTAL MATTERS                    | 39     |
|        |                                     |   |
| 6.12        | NO  BURDENSOME RESTRICTIONS; NO DEFAULTS | 39     |
|        |                                     |   |
| 6.13        | NO OTHER VENTURES                        | 39     |
|        |                                     |   |
| 6.14        | INSURANCE                                | 40     |
|        |                                     |   |
| 6.15        | FORCE MAJEURE                            | 40     |
|        |                                     |   |
| 6.16        | INTELLECTUAL PROPERTY                    | 40     |
|        |                                     |   |
| 6.17        | CERTAIN INDEBTEDNESS                     | 40     |
|        |                                     |   |
| 6.18        | SOLVENCY                                 | 41     |

 

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| 6.19          | CHIEF  EXECUTIVE OFFICE AND OTHER LOCATIONS      | 41     |
|---------------|--------------------------------------------------|--------|
|          |                                             |   |
| 6.20          | FISCAL YEAR                                      | 41     |
|          |                                             |   |
| 6.21          | COMPLIANCE WITH LAW                              | 41     |
|          |                                             |   |
| 6.22          | NO SUBORDINATION                                 | 41     |
|          |                                             |   |
| 6.23          | TRUTH, ACCURACY OF  INFORMATION                  | 41     |
|          |                                             |   |
| ARTICLE VII.  | CONDITIONS                                       | 42     |
|          |                                             |   |
| 7.1           | CONDITIONS OF  INITIAL EXTENSION OF CREDIT       | 42     |
|          |                                             |   |
| 7.2           | CONDITIONS  OF EACH EXTENSION OF CREDIT          | 43     |
|          |                                             |   |
| ARTICLE VIII. | AFFIRMATIVE  COVENANTS                           | 43     |
|          |                                             |   |
| 8.1           | PAYMENTS                                         | 43     |
|          |                                             |   |
| 8.2           | ACCOUNTING  RECORDS                              | 44     |
|          |                                             |   |
| 8.3           | INFORMATION AND  REPORTS                         | 44     |
|          |                                             |   |
| 8.4           | COMPLIANCE                                       | 45     |
|          |                                             |   |
| 8.5           | INSURANCE                                        | 45     |
|          |                                             |   |
| 8.6           | FACILITIES                                       | 46     |
|          |                                             |   |
| 8.7           | TAXES AND OTHER  LIABILITIES                     | 47     |
|          |                                             |   |
| 8.8           | LITIGATION                                       | 47     |
|          |                                             |   |
| 8.9           | NOTICE TO  ADMINISTRATIVE LENDER                 | 47     |
|          |                                             |   |
| 8.10          | CONDUCT OF  BUSINESS                             | 48     |
|          |                                             |   |
| 8.11          | PRESERVATION  OF CORPORATE EXISTENCE, ETC.       | 48     |
|          |                                             |   |
| 8.12          | ACCESS                                           | 48     |
|          |                                             |   |
| 8.13          | PERFORMANCE  AND COMPLIANCE WITH OTHER COVENANTS | 49     |
|          |                                             |   |
| 8.14          | FISCAL YEAR;  ACCOUNTING PRACTICES               | 49     |
|          |                                             |   |
| 8.15          | ENVIRONMENTAL                                    | 49     |
|          |                                             |   |
| 8.16          | LIENS                                            | 49     |

 

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| 8.17         | FUTURE  SUBSIDIARIES                            | 50     |
|--------------|-------------------------------------------------|--------|
|         |                                            |   |
| 8.18         | USE OF  PROCEEDS                                | 50     |
|         |                                            |   |
| 8.19         | FURTHER  ASSURANCES                             | 50     |
|         |                                            |   |
| 8.20         | LIEN IN REAL  PROPERTY                          | 50     |
|         |                                            |   |
| ARTICLE  IX. | NEGATIVE  COVENANTS                             | 50     |
|         |                                            |   |
| 9.1          | LIENS                                           | 50     |
|         |                                            |   |
| 9.2          | INDEBTEDNESS                                    | 51     |
|         |                                            |   |
| 9.3          | RESTRICTED PAYMENTS,  REDEMPTIONS               | 52     |
|         |                                            |   |
| 9.4          | MERGERS, STOCK  ISSUANCES, SALE OF ASSETS, ETC. | 52     |
|         |                                            |   |
| 9.5          | INVESTMENTS                                     | 53     |
|         |                                            |   |
| 9.6          | CHANGE IN  NATURE OF BUSINESS                   | 54     |
|         |                                            |   |
| 9.7          | PLANS                                           | 54     |
|         |                                            |   |
| 9.8          | CANCELLATION OF  INDEBTEDNESS OWED TO IT        | 54     |
|         |                                            |   |
| 9.9          | MARGIN  REGULATIONS                             | 55     |
|         |                                            |   |
| 9.10         | ENVIRONMENTAL                                   | 55     |
|         |                                            |   |
| 9.11         | TRANSACTIONS  WITH AFFILIATES                   | 55     |
|         |                                            |   |
| 9.12         | NEW  COLLATERAL LOCATION; NAME CHANGE           | 55     |
|         |                                            |   |
| 9.13         | NO  SPECULATIVE TRANSACTIONS                    | 55     |
|         |                                            |   |
| ARTICLE  X.  | FINANCIAL  COVENANTS                            | 55     |
|         |                                            |   |
| 10.1         | LEVERAGE  RATIO                                 | 55     |
|         |                                            |   |
| 10.2         | CURRENT RATIO                                   | 56     |
|         |                                            |   |
| 10.3         | DEBT SERVICE  COVERAGE RATIO                    | 56     |
|         |                                            |   |
| 10.4         | TANGIBLE NET  WORTH                             | 56     |
|         |                                            |   |
| ARTICLE  XI. | EVENTS  OF DEFAULT                              | 56     |
|         |                                            |   |
| 11.1         | EVENTS OF  DEFAULT                              | 56     |

 

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| 11.2           | REMEDIES                                           | 58     |
|----------------|----------------------------------------------------|--------|
|           |                                               |   |
| 11.3           | ADMINISTRATIVE  LENDER AS BORROWERS’ ATTORNEY | 60     |
|           |                                               |   |
| ARTICLE  XII.  | ADMINISTRATIVE  LENDER                             | 61     |
|           |                                               |   |
| 12.1           | ACTIONS                                            | 61     |
|           |                                               |   |
| 12.2           | RELIANCE BY  ADMINISTRATIVE LENDER                 | 62     |
|           |                                               |   |
| 12.3           | EXCULPATION                                        | 62     |
|           |                                               |   |
| 12.4           | SUCCESSOR                                          | 62     |
|           |                                               |   |
| 12.5           | LOANS BY  ADMINISTRATIVE LENDER; OTHER ACTIONS     | 63     |
|           |                                               |   |
| 12.6           | CREDIT  DECISIONS                                  | 63     |
|           |                                               |   |
| 12.7           | SYNDICATION  AGENT                                 | 63     |
|           |                                               |   |
| ARTICLE  XIII. | MISCELLANEOUS                                      | 64     |
|           |                                               |   |
| 13.1           | NOTICES                                            | 64     |
|           |                                               |   |
| 13.2           | COSTS,  EXPENSES, ATTORNEYS’ FEES             | 64     |
|           |                                               |   |
| 13.3           | INDEMNIFICATION                                    | 64     |
|           |                                               |   |
| 13.4           | WAIVERS,  AMENDMENTS                               | 65     |
|           |                                               |   |
| 13.5           | SUCCESSORS  AND ASSIGNS                            | 66     |
|           |                                               |   |
| 13.6           | SETOFF                                             | 68     |
|           |                                               |   |
| 13.7           | NO WAIVER;  CUMULATIVE REMEDIES                    | 68     |
|           |                                               |   |
| 13.8           | ENTIRE  AGREEMENT                                  | 69     |
|           |                                               |   |
| 13.9           | NO THIRD  PARTY BENEFICIARIES                      | 69     |
|           |                                               |   |
| 13.10          | CONFIDENTIALITY                                    | 69     |
|           |                                               |   |
| 13.11          | TIME                                               | 70     |
|           |                                               |   |
| 13.12          | SEVERABILITY  OF PROVISIONS                        | 70     |
|           |                                               |   |
| 13.13          | GOVERNING  LAW                                     | 70     |
|           |                                               |   |
| 13.14          | SUBMISSION  TO JURISDICTION                        | 70     |

 

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| 13.15  | WAIVER OF  JURY TRIAL    | 70     |
|--------|--------------------------|--------|
|   |                     |   |
| 13.16  | COUNTERPARTS             | 71     |
|   |                     |   |
| 13.17  | OREGON  STATUTORY NOTICE | 71     |

** **

** **

**SCHEDULES**

** **
| I  | Lenders          |
|----|------------------|
| II | Pricing Schedule |

 

**EXHIBITS**

** **
| A | Borrowing  Base Certificate                         |
|---|-----------------------------------------------------|
| B | Note  Forms                                         |
| C | Notice  of Authorized Representatives               |
| D | Notice  of Borrowing                                |
| E | Notice of Conversion or Continuation                |
| F | Form  of Chief Financial Officer’s Certificate |
| G | Assignment  Agreement                               |

 

vi

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**SECOND AMENDED ANDRESTATED CREDIT AGREEMENT**

** **

THIS SECONDAMENDED AND RESTATED CREDIT AGREEMENT is entered into as of November 17,2004 by and among MONACO COACH CORPORATION, a Delaware corporation (“Parent”),ROYALE COACH BY MONACO, INC., an Indiana corporation, MCC ACQUISITIONCORPORATION, a Delaware corporation, OUTDOOR RESORTS OF LAS VEGAS, INC., aNevada corporation, OUTDOOR RESORTS MOTORCOACH COUNTRY CLUB, INC., a Californiacorporation, and OUTDOOR RESORTS OF NAPLES, INC., a Florida corporation, (eachof the foregoing parties individually referred to as “Borrower” and allcollectively referred to as “Borrowers”), each of the financial institutionsfrom time to time listed on Schedule I attached hereto, as amendedfrom time to time, and U.S. BANK NATIONAL ASSOCIATION (“U.S. Bank”), as theadministrator for the Lenders (in such capacity, “Administrative Lender”) andBANK OF AMERICA, N.A. as Syndication Agent.

 

**RECITALS**

** **

Borrowers,Administrative Lender and certain of the Lenders are parties to that certainAmended and Restated Credit Agreement dated September 28, 2001 (as amendedby three amendments, the “Existing Credit Agreement”).  The parties desire to make certain changes tothe Existing Credit Agreement, including, among other changes, removingWashington Mutual Bank as a Lender and adjusting the commitments of theremaining Lenders.  The parties havedecided, for ease of reference, to amend and restate the Existing CreditAgreement in its entirety.

 

NOW,THEREFORE, in consideration of the mutual covenants and promises of the partiescontained herein, Administrative Lender, Lenders and Borrowers hereby agree asfollows:

 

# **ARTICLE I.**               DEFINITIONS

 

## **1.1**                  DEFINED TERMS

 

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

 

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

 

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

 

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

 

“**Applicable Lending Office**” means, with respect to eachLender, (i) initially, its office designated as such in Schedule Ihereto, and (ii) subsequently, such other office designated as such fromtime to time in writing by such Lender to Administrative Lender.

 

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

 

“**Approved Dealer Financing Agreement**” means (i) agreementsentered into by a Borrower in the ordinary course of business with financialinstitutions providing floor-plan financing to customers who purchase finishedgoods inventory of Borrowers, and the terms of which agreements (includingrepurchase obligations) are both customary in the recreational vehicle industryand are no less favorable in all material respects to Borrowers that those ineffect as of the Closing Date.

 

“**Approved Sale**” means a sale by Borrower to a customerevidenced by an account which has been approved for payment by a lender inaccordance with an Approved Dealer Financing Agreement.

 

“**Authorized Representative**” means a person designated as suchby Borrowers’ Agent in a Notice of Authorized Representatives delivered toAdministrative Lender.

 

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

 

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

 

“**Borrowers’ Agent**” means Parent in its capacity as agent forthe Borrowers.

 

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

 

(a)           85% of the outstanding Eligible Accounts;

 

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

 

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

 

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

 

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

 

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

 

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

 

“**Capitalized Lease Obligations**” means, as to any Person, thecapitalized amount of all obligations of such Person and its subsidiaries underCapitalized Leases, as determined on a consolidated basis in accordance withGAAP.

 

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

 

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Borrower and approved byAdministrative Lender; or (f) any mutual fund holding investmentsconsisting of at least 95% of the foregoing.

 

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

 

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

 

“**Closing Date**” means the date of this Agreement.

 

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

 

“**Collateral**” means all of Borrowers’ assets (except realproperty), including, without limitation, (a) all Accounts, Rights toPayment, General Intangibles, Records, goods, fixtures, inventory, equipment,money, letter of credit rights, supporting obligations, instruments, chattelpaper, deposit accounts, documents, investment property, and commercial tortclaims; (b) all products, proceeds, rents and profits of the foregoing;and (c) all of the foregoing, whether now owned or existing or hereafteracquired or arising or in which Borrower now has or hereafter acquires anyrights.

 

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

 

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

 

“**Contaminant**” means any pollutant, hazardous substance, toxicsubstance, hazardous waste or other substance regulated or forming the basis ofliability under any Environmental Law.

 

“**Contingent Obligation**” means, as applied to any Person, anydirect or indirect liability, contingent or otherwise, of such Person withrespect to any Indebtedness or Contractual Obligation of another Person, if thepurpose or intent of such Person in incurring the Contingent Obligation is toprovide assurance to the obligee of such Indebtedness or Contractual Obligationthat such Indebtedness or Contractual Obligation will be paid or discharged, orthat any agreement entered into by such other Person relating to such

 

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

 

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

 

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

 

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

 

“**Debt**” of any Person means, without duplication, (a) allobligations of such Person for borrowed money and all obligations of suchPerson evidenced by bonds, debentures, notes, bills or other similarinstruments; (b) all obligations, contingent or otherwise, relative to the faceamount of all letters of credit, whether or not drawn, and banker’s acceptancesissued for such Person’s account; (c) all Capitalized Lease Obligations andOther Lease obligations of such Person; (d) whether or not so included asliabilities in accordance with

 

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GAAP, all obligations of suchPerson to pay the deferred purchase price of property or services, and indebtedness(excluding prepaid interest thereon) secured by a Lien on property owned orbeing purchased by such Person (including indebtedness arising underconditional sales or other title retention agreements), whether or not suchindebtedness shall have been assumed by such Person or is limited in recourse;(e) all Contingent Obligations of such Person in respect of any of theforegoing, other than Contingent Obligations in connection with an ApprovedDealer Financing Agreement; and, with respect to Parent and its Subsidiariescollectively, (f) the amount by which any outstanding book overdraftsexceed $10,000,000.  For purposes ofdetermining the amount of Debt in a circumstance when the creditor has recourseonly to specified assets, the amount shall be the lesser of (i) the amountof such obligation or (ii) the fair market value of such assets.

 

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

 

“**Default**” means (i) an Event of Default, (ii) anevent or condition that with the giving of notice or the passage of time, orboth, would constitute an Event of Default, or (iii) the filing againstBorrower of a petition commencing an involuntary case under the BankruptcyCode.

 

“**Disclosure Letter**” means the Disclosure Letter fromBorrowers’ Agent to Administrative Lender dated the Closing Date.

 

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

 

“**ERISA**” means the Employee Retirement Income Security Act of1974, as amended or recodified from time to time, including (unless the contextotherwise requires) any rules or regulations promulgated thereunder.

 

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

 

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

 

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

 

(iii)          Accounts with respect to which more than60 days have elapsed since the date of the original invoice applicable thereto;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Administrative Lender shall have the right,but not the duty, to declare particular accounts ineligible.  The fact that Administrative Lender has notdeclared a particular account ineligible shall not be deemed to be adetermination or representation by Administrative Lender or any Lender as tothe creditworthiness or financial condition of any account debtor.  Because of banking relationships betweenaccount debtors of Borrower and Administrative Lender or a Lender,Administrative Lender or a Lender may have information about thecreditworthiness of such account debtors; however, neither AdministrativeLender nor any Lender shall have any duty to Borrowers to disclose informationit may have about any of Borrowers’ account debtors and Borrowers shall have noright to rely upon any action or inaction of Administrative Lender or anyLender concerning the creditworthiness or financial condition of Borrowers’account debtors.  **BORROWERSHEREBY COVENANT NOT TO SUE AND TO HOLD HARMLESS LENDERS AND ADMINISTRATIVELENDER AND THEIR OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,**

 

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**SUCCESSORS AND ASSIGNS FOR AND FROM ANY AND ALL DAMAGES, LIABILITY, ORCLAIMS OF LIABILITY, WHETHER KNOWN OR UNKNOWN, OF ANY NATURE ARISING OUT OF ORBASED IN WHOLE OR IN PART UPON ADMINISTRATIVE LENDER’S OR ANY LENDER’S FAILURETO DISCLOSE UNFAVORABLE INFORMATION ABOUT AN ACCOUNT DEBTOR OF BORROWER TOBORROWERS, OR ADMINISTRATIVE LENDER’S FAILURE TO TREAT AS INELIGIBLE THEACCOUNT OF AN ACCOUNT DEBTOR OF BORROWER ABOUT WHOM ADMINISTRATIVE LENDER ORANY LENDER HAS UNFAVORABLE INFORMATION.**

 

“**Eligible Inventory**”means inventory that Administrative Lender determines in the Good Faithexercise of its discretion to be eligible for inclusion in the BorrowingBase.  General criteria for EligibleInventory may be established and revised from time to time by AdministrativeLender in Good Faith.  Without limitingsuch discretion as to other inventory, the following inventory shall in anyevent not constitute Eligible Inventory:

 

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

 

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

 

(iii)          work in process;

 

(iv)          inventory in the possession of any Personother than Borrower, except (subject to any additional requirements imposed byAdministrative Lender, in the Good Faith exercise of its discretion to protectBorrower’s title thereto or Administrative Lender’s Lien therein) goods held instorage solely for the account of Borrower, if the Person in possession hasacknowledged in writing Administrative Lender’s Lien thereon and has not issueda negotiable document of title as to the goods; provided, that notwithstandingthe foregoing, (A) up to $500,000 of inventory located on premises ofsubcontractors and (B) up to $5,000,000 of finished goods inventory located attrade shows or rallies (or in transit for such purposes) shall not be excludedfrom Eligible Inventory by virtue of this item (iv);

 

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

 

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

 

(vii)         except as provided in item (iv),inventory located on premises leased by Borrower if Administrative Lender hasnot received a landlord’s waiver acceptable to Administrative Lender withrespect to such premises to the extent the aggregate value of all suchinventory exceeds $5,000,000.

 

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

 

“**Environmental Law**” means all applicable federal, state and locallaws, statutes, ordinances and regulations, and any applicable judicial oradministrative interpretation, order, consent decree or judgment, relating tothe regulation and protection of the environment.  Environmental Laws include but are notlimited to the Comprehensive Environmental Response, Compensation, andLiability Act of 1980, as amended (42 U.S.C. § 9601 et seq.); the Hazardous Material Transportation Act, as amended (49U.S.C. § 180 et seq.); the FederalInsecticide, Fungicide, and Rodenticide Act, as amended (7 U.S.C. § 136 et seq.); the Resource Conservation andRecovery Act, as amended (42 U.S.C. § 6901 etseq.); the Toxic Substance Control Act, as amended (42 U.S.C. § 7401 et seq.); the Clean Air Act, as amended(42 U.S.C. § 740 et seq.); theFederal Water Pollution Control Act, as amended (33 U.S.C. § 1251 et seq.); and the Safe Drinking Water Act, asamended (42 U.S.C. § 300f et seq.),and their state and local counterparts or equivalents and any applicabletransfer of ownership notification or approval statutes.

 

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

 

“**Event of Default**” has the meaning set forth inSection 11.1 hereof.

 

“**Federal Funds Rate**” means, for any day, the weighted averageof the per annum rates on overnight Federal funds transactions with memberbanks of the Federal Reserve System arranged by Federal funds brokers aspublished by the Federal Reserve Bank of New York for such day (or, if suchrate is not so published for any day, the average rate quoted to AdministrativeLender on such day by three Federal funds brokers of recognized standingselected by Administrative Lender).

 

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“**Fee Percentage**” means the number of basis points determinedin accordance with Schedule II.

 

“**Fixed Rate Term**” means a period of one, two, three or sixmonths, as designated by Borrowers’ Agent, during which a Loan bears interestdetermined in relation to LIBOR; provided, however, that no Fixed Rate Term mayextend beyond the Maturity Date, and if the last day of a Fixed Rate Term isnot a Business Day, such term shall be extended to the next succeeding BusinessDay, or if the next succeeding Business Day falls in another calendar month,such term shall end on the next preceding Business Day.

 

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

 

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

 

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

 

“**Good Faith**” means honesty in fact in the conduct ortransaction concerned, without regard to whether standards that might be deemedcommercially reasonable have been observed.

 

“**Governmental Authority**” means any domestic or foreignnational, state or local government, any political subdivision thereof, anydepartment, agency, authority or bureau of any of the foregoing, or any otherentity exercising executive, legislative, judicial, regulatory oradministrative functions of or pertaining to government, including the FederalDeposit Insurance Corporation, the Federal Reserve Board, the Comptroller ofthe Currency, any central bank or any comparable authority.

 

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

 

“**Highest Lawful Rate**” means, at the particular time inquestion, the maximum rate of interest which, under applicable law, Lenders arethen permitted to charge Borrowers on the applicable Loan, and if the maximumrate changes at any time, the Highest Lawful Rate shall increase or decrease,as the case may be, as of the effective time of each such change, withoutnotice to Borrowers.

 

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

 

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arising under any conditionalsale or other title retention agreement with respect to property acquired bysuch Person (even though the rights and remedies of the seller or lender undersuch agreement in the event of default are limited to repossession or sale ofsuch property), (c) all lease obligations of such Person (including,without limitation, operating leases, Capitalized Leases and Other Leases),(d) all Contingent Obligations of such Person, (e) all obligations ofsuch Person to purchase, redeem, retire, defease or otherwise acquire for valueany Stock or Stock Equivalents of such Person with a mandatory repurchase orredemption date of less than ten years from the date of issuance thereof,(f) all obligations secured by (or for which the holder of suchobligations has an existing right, contingent or otherwise, to be secured by)any Lien upon or in property owned by such Person, even though such Person hasnot assumed or become liable for the payment of such obligations, (g) allliabilities of such Person in connection with the failure to make when due anycontribution or payment pursuant to or under any Plan and (h) netliabilities of such Person under all Commodity Contracts, Interest RateContracts and foreign exchange agreements. For purposes of determining the amount of Indebtedness in a circumstancewhen the creditor has recourse only to specified assets, the amount shall bethe lesser of (i) the amount of such obligation or (ii) the fairmarket value of such assets.

 

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

 

“**Indemnified Liabilities**” has the meaning set forth inSection 13.3.

 

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

 

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

 

“**L/C Bank**” means U.S. Bank.

 

“**Lenders**” means, collectively, each of the financialinstitutions from time to time listed on Schedule I, L/C Bank andSwingline Lender, and “**Lender**” meansany one of the Lenders.

 

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

 

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

 

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

 

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

 

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

 
| LIBOR  = | Base LIBOR                       |   |
|----------|----------------------------------|--------|
|     | 100% - LIBOR Reserve  Percentage |

 

As used herein, (a) ”Base LIBOR” means the rateper annum determined by Administrative Lender to be the offered rate fordeposits in U.S. Dollars with a term comparable to such Fixed Rate Term thatappears on Dow Jones Markets Service, Page 3750 (or any successor page) asthe London interbank offered rate for deposits in U.S. Dollars at approximately11:00 AM (London time) two Business Days prior to the beginning of such FixedRate Term, and (b) ”LIBOR Reserve Percentage” means, for any day, theaggregate (without duplication) of the maximum rates (expressed as a decimal)of reserve requirements in effect on such day (including basic, supplemental,marginal and emergency reserves under any regulations of the Federal ReserveBoard or other Governmental Authority having jurisdiction with respect thereto)dealing with reserve requirements prescribed for eurocurrency funding(currently referred to as “Eurocurrency Liabilities” in Regulation D of theFederal Reserve Board) maintained by a member bank of the Federal ReserveSystem.

 

“**LIBOR Loan**” means any Loan that bears interest withreference to LIBOR.

 

“**LIBOR Margin**” means the number of basis points determined inaccordance with Schedule II.

 

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

 

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

 

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

 

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document, contract orinstrument to which Borrower now or hereafter is a party and that is requiredby Lender in connection with this Agreement, a Note, a Letter of CreditAgreement, a Swap Protection Agreement or any of the obligations arising underany of such agreements or Notes.

 

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

 

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

 

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

 

“**Notice of Authorized Representatives**” has the meaning setforth in Section 2.2 hereof.

 

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

 

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

 

“**Obligations**” means all of Borrowers’ obligations under theLoan Documents, whether direct or indirect, absolute or contingent, due or tobecome due, now existing or hereafter arising.

 

“**Obligor**” means any Borrower or other Person (other thanAdministrative Lender or any Lender) obligated under, or otherwise a party to, anyLoan Document

 

“**Organic Documents**” means, relative to any Obligor, asapplicable, its certificate or articles of incorporation, its by-laws, itspartnership agreement, its certificate of partnership, certificate oforganization, operating agreement and other limited liability companyorganizational documents and all shareholder agreements, voting trusts andsimilar arrangements applicable to any of its Stock or Stock Equivalents.

 

“**Other Lease**” means any synthetic lease, tax retentionoperating lease, financing lease or any other lease having substantially thesame economic effect as a conditional sale, title retention agreement orsimilar arrangement.

 

“**PBGC**” means the Pension Benefit Guaranty Corporationestablished pursuant to Title IV of ERISA.

 

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

 

“**Permitted Liens**” means (a) Liens arising by operationof law for taxes, assessments or governmental charges not yet due;(b) statutory Liens of mechanics, materialmen, shippers, warehousemen,carriers, and other similar persons for services or materials arising in theordinary course of business for which payment is not more than 30 days pastdue; (c) nonconsensual Liens incurred or deposits made in the ordinarycourse of business in connection with workers’ compensation, unemploymentinsurance and other types of social security; (d) Liens for taxes orstatutory Liens of mechanics, materialmen, shippers, warehousemen, carriers andother similar persons for services or materials that are due but are beingcontested in good faith and by appropriate and lawful proceedings promptlyinitiated and diligently conducted and for which reserves have been establishedto the extent required by GAAP; (e) Liens listed on the Disclosure Letter;(f) Liens granted in the Loan Documents; (g) purchase money Liensupon or in any property (other than chassis and real property) of Borrower andused by Borrower in the ordinary course of business and Liens to secureCapitalized Lease Obligations and Other Leases and any related payment andperformance obligations if, in each case, the incurrence of such Indebtednessis permitted by Section 9.2; provided, however, that: (A) any suchLien is created solely for the purpose of securing Indebtedness representing,or incurred to finance, refinance or refund, the cost (including, withoutlimitation, the cost of construction and the reasonable fees and expensesrelating to such Indebtedness) of the property subject thereto, (B) theprincipal amount of the Indebtedness secured by such Lien does not exceed suchcost, and (C) such Lien does not extend to or cover any other propertyother than such item of property, any improvements on or replacements for suchitem, and the proceeds from the disposition of such items; (h) zoningrestrictions, easements, rights of way, survey exceptions, encroachments,covenants, licenses, reservations, leasehold interests, restrictions on the useof real property or minor irregularities incident thereto which do not in theaggregate materially detract from the value or use of the property or assets ofBorrower or impair, in any material manner, the use of such property for thepurposes for which such property is held by Borrower; (i) the interests oflessors or lessees of property leased pursuant to leases permitted hereunder;(j) Liens of a depository institution arising solely by virtue of any statutoryor common law provision relating to banker’s liens, rights of setoff, orsimilar rights and remedies as to deposit accounts or other funds maintainedwith such institution, provided that (A) such deposit account is not adedicated cash collateral account and is not subject to restrictions againstaccess by Borrower in excess of those set forth by regulations promulgated byany Government Authority, and (B) such deposit account is not intended byBorrower to provide collateral to the depository institution; (k) judgmentLiens to the extent the existence of such Liens is not an Event of Defaultunder Section 11.1(g); (l) any of the following arising in theordinary course of business: deposits or pledges to secure bids, tenders,contracts (other than contracts for the payment of money), leases, statutoryobligations, surety and appeal bonds and other obligations of like nature;(m) Liens on chassis purchased by Borrower in the ordinary course ofbusiness; (n) Liens not otherwise included in items (a) through (m) thatdo not encumber real property, do not secure, in the aggregate, amounts inexcess of $5,000,000 and do not have priority over the Liens granted byBorrowers to Administrative Lender; and

 

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(o) Liens on the assets ofan Entity existing on the date an acquisition transaction permitted bySection 9.5(h) is consummated, provided such Liens were not incurred inanticipation of the acquisition transaction.

 

“**Person**” means an individual, partnership, corporation(including, without limitation, a business trust), joint stock company, limitedliability company, trust, unincorporated association, joint venture or otherentity, or a Governmental Authority.

 

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

 

“**Prime Margin**” means the number of basis points determined inaccordance with Schedule II.

 

“**Prime Rate**” means, for any day, an interest rate per annumequal to the rate of interest most recently announced within U.S. Bank at itsprincipal office as its prime rate, with any change in the prime rate to beeffective as of the day such change is announced within U.S. Bank and with theunderstanding that the prime rate is one of U.S. Bank’s base rates used toprice some loans and may not be the lowest rate at which U.S. Bank makes anyloan, and is evidenced by the recording thereof in such internal publication orpublications as U.S. Bank may designate.

 

“**Prime Rate Loan**” means any Loan that bears interest withreference to the Prime Rate.

 

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

 

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

 

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

 

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

 

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

 

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

 

“**Repurchase Obligations**” all obligations of Parent to itsdealers incurred in the ordinary course of Parent’s business to repurchaserecreational vehicles.

 

“**Responsible Officer**” means any executive officer ofBorrower, including, without limitation, president, chief executive officer,chief financial officer, treasurer, controller, general counsel, chief riskmanagement officer, chief environmental officer or any other person performingresponsibilities customarily performed by such officers.

 

“**Revolving Loan**” means a Loan made by a Lender to Borrowerspursuant to Section 3.1.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“**Swingline Lender**” means U.S. Bank.

 

**“Tangible Net Worth”** means the total of Parent’sshareholders’ equity, plus Debt subordinated in writing to theObligations on terms acceptable to Required Lenders in favor of the priorpayment in full in cash of the Obligations, less consolidated intangibleassets.

 

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

 

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

 

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

 

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9:00 AM (Portland time) ona Business Day of a request from a Lender for a settlement under Section3.2(b).

 

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

 

## **1.2**                                                       ACCOUNTING AND FINANCIAL DETERMINATIONS

 

Any accountingterm used in this Agreement that is not specifically defined herein shall havethe meaning customarily given to it under GAAP, and all accountingdeterminations and computations under any Loan Document shall be made, and allfinancial statements required to be delivered under any Loan Document shall beprepared, in accordance with GAAP applied in the preparation of the financialstatements referred to in Section 6.5.

 

## **1.3**                                                       HEADINGS

 

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

 

## **1.4**                                                       ADDITIONAL DEFINITION PROVISIONS

 

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

 

## ** **

## **ARTICLEII.**                                          APPOINTMENT OF BORROWERS’ AGENT; JOINT AND SEVERALLIABILITY

## ** **

## **2.1**                                                       APPOINTMENT OF AGENT

 

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

 

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decisions regarding thedistribution of such proceeds among the Borrowers as Borrowers’ Agent, in thesole exercise of its discretion, deems fair and appropriate; and(iii) making all decisions and elections with respect to requests foradvances of credit, issuance of Letters of Credit and election of interestoptions.

 

## **2.2**                                                       AUTHORIZED REPRESENTATIVES

 

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

 

## **2.3**                                                       JOINT AND SEVERAL LIABILITY; RIGHTS OF CONTRIBUTION

 

(a)           EachBorrower states and acknowledges that: (i) pursuant to this Agreement, Borrowers desire to utilize theirborrowing potential on a consolidated basis to the same extent possible if theywere merged into a single corporate entity; (ii) it has determined that itwill benefit specifically and materially from the advances of creditcontemplated by this Agreement; (iii) it is both a condition precedent tothe obligations of Lenders hereunder and a desire of Borrowers that each Borrowerexecute and deliver to Lenders this Agreement; and (iv) Borrowers haverequested and bargained for the structure and terms of the credit contemplatedby this Agreement.

 

(b)           EachBorrower hereby irrevocably and unconditionally:  (i) agrees that it is jointly andseverally liable to Lenders for the full and prompt payment of the Obligationsand the performance by each Borrower of its obligations hereunder in accordancewith the terms of the Loan Documents; (ii) agrees to fully and promptly performall of its obligations under the Loan Documents with respect to each advance ofcredit hereunder as if such advance had been made directly to it; and(iii) agrees as a primary obligation to indemnify Lenders on demand forand against any loss incurred by Lenders (other than a loss arising any Lender’swillful misconduct or gross negligence) as a result of any of the obligationsof any one or more of Borrowers under the Loan Documents being or becomingvoid, voidable, unenforceable or ineffective for any reason whatsoever, whetheror not known to Lenders or

 

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

 

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

 

(i)            any change in themanner, place or terms of payment or performance and/or any change or extensionof the time of payment or performance of, renewal or alteration of, anyObligation, any security therefor, or any liability incurred directly orindirectly in respect thereof, or any rescission of, or amendment, waiver or othermodification of, or any consent to departure from any Loan Document, includingany increase in the Obligations resulting from the extension of additionalcredit to any Borrower;

 

(ii)           any sale, exchange,release, surrender, realization upon any property at any time pledged ormortgaged to secure any of the Obligations, and/or any offset against, orfailure to perfect, or continue the perfection of, any lien in any suchproperty, or delay in the perfection of any such lien, or any amendment orwaiver of or consent to departure from any other guaranty for any of theObligations;

 

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

 

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

 

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

 

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of any suchcollateral for all or any of the Obligations or any other assets of anyBorrower;

 

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

 

(vii)         any other agreement orcircumstance of any nature whatsoever that might in any manner or to any extentvary the risk of any Borrower, or that might otherwise at law or in equityconstitute a defense available to, or a discharge of, the obligations of anyBorrower, or a defense to, or discharge of, any Borrower or other Personrelating to any of the Obligations.

 

(d)           Thejoint and several liability of Borrowers shall continue in full force andeffect notwithstanding any absorption, merger, amalgamation or any other changewhatsoever in the name, membership, constitution or place of formation of anyBorrower.

 

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

 

## **ARTICLE III.**             THE CREDITS

## ** **

## **3.1**                                                       REVOLVING LOANS

## ** **

(a)           Onthe terms and subject to the conditions contained in this Agreement, eachLender severally agrees to make loans (each a “Revolving Loan”) to Borrowersfrom time to

 

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time until the Maturity Date inan aggregate amount not to exceed at any time outstanding such Lender’sRevolving Loan Commitment; provided, however, that at no time shall any Lenderbe obligated to make a Revolving Loan in excess of such Lender’s RatablePortion of the Available Credit.  Borrowersmay from time to time borrow, partially or wholly repay its outstandingborrowings, and reborrow, subject to all the limitations, terms and conditionscontained herein.  The Revolving Loansshall be evidenced by a Note, and on the Closing Date the promissory noteissued under the Existing Credit Agreement evidencing revolving loans shall beexchanged for a Note.

 

(b)           Ifat any time the Available Credit is negative, Borrowers, without demand ornotice, shall immediately repay that portion of the Revolving Loans necessaryto cause the Available Credit to be zero. Borrowers shall repay the outstanding principal balance of the RevolvingLoans, together with all accrued and unpaid interest and related fees on theMaturity Date.

 

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

 

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

 

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

 

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

 

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

 

Each suchNotice of Borrowing must be received by Administrative Lender not later than9:00 AM (Portland time) (x) on the date of borrowing if a Prime RateLoan or (y) at least three Business Days prior to the date of borrowing ifa LIBOR Loan.  Administrative Lendershall promptly notify each Lender of the contents of each Notice of Borrowingand of the amount of the advance to be made by such Lender no later than10:00 AM (Portland time) on the Business Day of receipt for Prime RateLoans and 1:00 PM (Portland time) the Business Day after receipt withrespect to LIBOR Loans.

 

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

 

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

 

(e)           Onone occasion before the Maturity Date at a time when no Default is continuing,Borrowers may request an increase in the aggregate Revolving Loan Commitmentsof not less than $5,000,000 nor more than $25,000,000 by Borrowers’ Agentdelivering notice of such request to Administrative Lender, which notice mayalso identify one or more banks or other institutional lenders Borrowersbelieve are willing to become Lenders and make such Revolving Loan Commitments(“Potential Lenders”).  Lenders shallhave no obligation to grant any such request, and Administrative Lender andeach Lender, in the exercise of their sole discretion, may respond to suchrequest in such manner and with such conditions (including additional fees) asthey deem appropriate in their sole discretion. If any Lender is willing to increase its Revolving Loan Commitment or ifany Potential Lender acceptable to Administrative Lender is willing to make aRevolving Loan Commitment, Administrative Lender shall advise Borrowers’ Agentof the terms acceptable to such Lenders and/or Potential Lenders on which theaggregate Revolving Loans may be increased. If Borrowers, in their sole discretion, notify Administrative Lenderthat such terms are acceptable, Administrative Lender, at Borrowers’ expense,shall prepare, and the parties shall sign, an amendment to this Agreement reflectingsuch terms.  Upon the execution of anysuch amendment and increase in the aggregate Revolving Loan Commitments, theprincipal portion of each Lender’s outstanding Revolving Loans shall beadjusted so that each Lender holds its Ratable Portion of the aggregateoutstanding Revolving Loans.

 

## **3.2**                                                       SWING LOANS

 

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

 

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

 

(b)           Onthe Business Day that a True-Up Event occurs, regardless of whether theconditions in Section 7.2 exist and without notice or other action by anyBorrower, the balance of each Lender’s Revolving Loans shall beincreased/decreased and the balance of the Swing Loans decreased/increased bythat amount that results in the Swing Loans equaling the Swing Loan BalanceAmount.  Administrative Lender, by notlater than 11:00 AM (Portland time) on such Business Day, shall notifyeach Lender whose Loans are increasing of the principal amount of suchincrease, and each such Lender shall, before 2:00 PM (Portland time) onsuch Business Day, make available to Administrative Lender, in immediatelyavailable funds, the amount of such increase. Administrative Lender shall use such funds to repay the principal amountof the Loans being reduced.  If Lendersare prohibited by the Bankruptcy Code or any other Governmental Rule frommaking the adjustment required by the first sentence of this Section, eachLender shall purchase such participation interest in the Loans of the otherLenders as is necessary to effect the same result among the Lenders as theadjustment required by the first sentence of this Section.

 

## **3.3**                                                       [RESERVED]

## ** **

## **3.4**                                                       LETTER OF CREDIT FACILITY

 

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

 

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

 

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(ii)           L/C Bank shall have received writtennotice from Administrative Lender or Borrowers’ Agent, on or before theBusiness Day prior to the requested date of issuance of such Letter of Credit,that one or more of the applicable conditions contained in Article VII is notthen satisfied;

 

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

 

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

 

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

 

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

 

(b)           Inno event shall the expiry date of any Letter of Credit be more than one yearfor a standby Letter of Credit or fall after ten days before the Maturity Date.

 

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

 

(d)           Inconnection with the issuance of each Letter of Credit, Borrowers’ Agent shallgive L/C Bank and Administrative Lender at least three Business Days priorwritten notice of the requested issuance of such Letter of Credit.  Such notice shall be irrevocable and bindingon Borrowers and shall specify (i) whether the Letter of Credit is to be astandby or commercial (documentary) Letter of Credit, (ii) the statedamount of the Letter of Credit requested, (iii) the date of issuance ofsuch requested Letter of Credit (which day shall be a Business Day),(iv) the date on which such Letter of Credit is to expire (which dateshall be a Business Day), (v) the Person for whose benefit the requestedLetter of Credit is to be issued, and (vi) such other terms and conditionsof the proposed Letter of Credit as are requested by Borrowers’ Agent andacceptable to L/C Bank.  Such notice, tobe effective, must be received by L/C Bank and Administrative Lender not laterthan 10:00 AM (Portland time) on the last Business Day on which notice can begiven under the immediately preceding sentence.

 

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

 

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

 

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

 

(g)           Indetermining whether to pay under any Letter of Credit, L/C Bank shall not haveany obligation relative to Lenders other than to confirm that any documentsrequired to be delivered under such Letter of Credit appear to have beendelivered and that they appear to comply on their face with the requirements ofsuch Letter of Credit.  Any action takenor omitted to be taken by L/C Bank under or in connection with any Letter ofCredit, if taken or omitted in the absence of gross negligence or willfulmisconduct, shall not put L/C Bank under any resulting liability to any otherLender.

 

(h)           IfL/C Bank makes any payment under any Letter of Credit, L/C Bank shall promptlynotify Administrative Lender, who shall promptly notify each Lender, and eachLender shall promptly and unconditionally pay to Administrative Lender for theaccount of L/C Bank the amount of such Lender’s Ratable Portion of such paymentin same day funds (and upon receipt, Administrative Lender shall promptly paythe same to L/C Bank), which payment shall be deemed to be and shall constitutea Revolving Loan that is a Prime Rate Loan made by such Lender to Borrowers;provided, however, that if the Swingline Lender so elects, and if a Swing Loancan be made in such amount, Administrative Lender shall promptly notify theSwingline Lender of such payment by L/C Bank, and the Swingline Lender shall,and Borrowers hereby authorize the Swingline Lender to, pay to AdministrativeLender for the account of L/C Bank the amount of such payment in same dayfunds, which payment shall be deemed to be and shall constitute a Swing Loanmade by the Swingline Lender to Borrowers. The Revolving Loans shall be made, or the Swing Loan may be made, ascontemplated in the preceding sentence notwithstanding Borrowers’ failure tosatisfy the conditions set forth in Section 7.2.  If Administrative Lender so notifies suchLender prior to 10:00 AM (Portland time) on any Business Day, such Lender shallmake available to Administrative Lender for the account of L/C Bank its RatablePortion of the amount of such payment by 1:00 PM (Portland time) on suchBusiness Day in same day funds.  If andto the extent such Lender does not make its Ratable Portion available toAdministrative Lender for the account of L/C Bank, such Lender agrees to repayto Administrative Lender for the account of L/C Bank on demand such amounttogether with interest thereon at the Federal Funds Rate for each day from suchdate until the date paid.  The failure ofany Lender to make available to Administrative Lender for the account of L/CBank its Ratable Portion of any such payment shall not relieve any other Lenderof its obligations hereunder.

 

(i)            Theobligations of Lenders to make payments to Administrative Lender for theaccount of L/C Bank with respect to Letters of Credit shall be irrevocable andnot subject to any qualification or exception whatsoever and shall be made inaccordance with the terms and conditions of this Agreement under allcircumstances (except as expressly provided in Section 3.4(g)), including,without limitation, any of the following circumstances:

 

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

 

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

 

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

 

(iv)          the occurrence of any Default.

 

## **3.5**                  INTEREST/FEES

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

## **3.6**                  INTEREST OPTIONS

 

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

 

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

 

(c)           **Notice to Administrative Lender**.  Borrowers’ Agent shall request each interestrate conversion or continuation by giving Administrative Lender irrevocablewritten notice or telephonic notice (confirmed promptly in writing), in theform of Exhibit E attached

 

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

 

## **3.7**                                                       OTHER PAYMENT TERMS

 

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

 

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

 

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

 

(d)           **Application of Payments**.  All payments under the Loan Documents(including prepayments) shall be applied first to unpaid fees, costs andexpenses then due and payable under the Loan Documents, second to accruedinterest then due and payable under the Loan Documents (applied first tointerest due and payable on the Swing Loans and then to the other Loans), thirdto the outstanding principal of the Swing Loans and finally to reduce theprincipal amount of the other outstanding Loans.

 

(e)           **Failure to Pay Administrative Lender**.  Unless Administrative Lender shall havereceived notice from Borrowers’ Agent at least one Business Day prior to thedate on which any payment is due to Lenders hereunder that Borrowers will notmake such payment

 

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in full, Administrative Lendermay assume that Borrowers have made such payment in full to AdministrativeLender on such date and Administrative Lender may, in reliance upon suchassumption, cause to be distributed to each Lender on such due date an amountequal to the amount then due such Lender. If and to the extent Borrowers shall not have made such payment in fullto Administrative Lender, such Lender shall repay to Administrative Lender ondemand the amount distributed to such Lender together with interest thereon atthe Federal Funds Rate for each day from the date distributed until the daterepaid.  A certificate of AdministrativeLender submitted to any Lender with respect to any amounts owing by such Lenderunder this Section shall be presumptive evidence of such amounts.

 

## **3.8**                  FUNDING

 

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

 

(b)           **Lender Failure to Fund**.  Unless Administrative Lender receives noticefrom a Lender on or before the date of any borrowing hereunder that such Lenderwill not make available to Administrative Lender such Lender’s Ratable Portionthereof, Administrative Lender may assume that such Lender has made suchportion available to Administrative Lender on the date of such borrowing inaccordance with Section 3.8(a) hereof, and Administrative Lender may, inreliance upon such assumption, make available to Borrowers (or otherwisedisburse) on such date a corresponding amount. If any Lender does not make the amount of its Ratable Portion of anyborrowing available to Administrative Lender on the date of such borrowing,such Lender shall pay to Administrative Lender, on demand, interest which shallaccrue on such amount until made available to Administrative Lender at a rateequal to the daily Federal Funds Rate.  Acertificate of Administrative Lender submitted to any Lender with respect toany amounts owing under this Section shall be presumptive evidence of suchamounts.  If any Lender’s Ratable Portionof any borrowing is not in fact made available to Administrative Lender by suchLender within three Business Days after the date of such borrowing, Borrowersshall pay to Administrative Lender, on demand, an amount equal to such RatablePortion together with interest thereon, for each day from the date such amountwas made available to Borrowers until the date such amount is repaid toAdministrative Lender, at the rate of interest then applicable thereto.

 

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

 

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but no Lender shall beresponsible for the failure of any other Lender to make available the RatablePortion to be funded by such other Lender.

 

## **3.9**                  PRO RATA TREATMENT

 

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

 

(b)           **Sharing of Payments, Etc.**  Except as otherwise provided herein, eachpayment of principal, interest or fees shall be made or shared among Lendersratably.  If any Lender obtains anypayment (whether voluntary, involuntary, through the exercise of any right ofsetoff or otherwise) on account of a Loan in excess of its Ratable Portion ofpayments on the Loans obtained by all Lenders, such Lender (“Purchasing Lender”)shall forthwith purchase from the other Lenders sufficient participations tocause the Purchasing Lender’s interest in the Loans to be in the sameproportionate relationship with all Loans as before such payment was received;provided, however, that if all or any portion of such excess payment isthereafter recovered from the Purchasing Lender, the purchased participationshall be rescinded and each other Lender shall repay to the Purchasing Lender(i) the purchase price to the extent of such recovery together with(ii) an amount equal to such other Lender’s ratable share (according tothe proportion of (A) the amount of such other Lender’s required repaymentto (B) the total amount so recovered from the Purchasing Lender) of anyinterest or other amount paid or payable by the Purchasing Lender in respect ofthe total amount so recovered.  Borrowersagree that any Purchasing Lender may, to the fullest extent permitted by law,exercise all its rights of payment (including the right of setoff) with respectto such participation as fully as if the Purchasing Lender were the directcreditor of Borrowers in the amount of such participation.

 

## **3.10**                CHANGE OF CIRCUMSTANCES

 

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

 

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

 

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

 

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

 

(d)           **Increased LIBOR Loan Costs, etc**.  Borrowers shall reimburse each Lender for anyincrease in the cost to such Lender of, or any reduction in the amount of anysum receivable by such Lender in respect of, making, continuing or maintaining(or of its obligation to make, continue or maintain) any Loans as, or ofconverting (or of its obligation to convert) any Loans into, LIBOR Loans whichresults from any Change of Law announced after the Closing Date.  Such Lender shall promptly notifyAdministrative Lender and Borrowers’ Agent in writing of the occurrence of anysuch event, such notice to state, in reasonable detail, the reasons therefor,that substantially all similarly situated borrowers are being treated similarlyand the calculation of the additional amount required fully to compensate suchLender for such increased cost or reduced amount.  Such additional amounts shall be payable byBorrowers directly to such Lender within five days of Borrowers’ Agent’sreceipt of such notice, and such notice shall, in the absence of manifesterror, be conclusive and binding on Borrowers.

 

(e)           **Capital Requirements**.  If any Lender determines that any Change ofLaw regarding capital adequacy which is announced after the Closing Date has orshall have the effect of reducing the rate of return on the capital of suchLender (or any entity controlling such Lender) as a consequence of such Lender’sobligations hereunder to a level below that which such Lender or such entitywould have achieved but for such Change of Law (taking into consideration suchLender’s or such entity’s policies with respect to capital adequacy), by anamount deemed by such Lender to be material, then from time to time, withinfifteen days after demand by such Lender (with a copy to Administrative Lender)to Borrowers’ Agent, Borrowers shall pay to such Lender or such entity suchadditional amounts as shall compensate such Lender or such entity for suchreduction.  Any request by a Lender underthis Section shall set forth in reasonable detail the basis of thecalculation of such additional amounts, shall state that substantially allsimilarly situated borrowers are being treated

 

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similarly and shall, in theabsence of manifest error, be conclusive and binding on Borrowers for allpurposes.

 

## **3.11**                TAXES ON PAYMENTS

 

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

 

(b)           **Withholding Exemption Certificates**.  Each Lender agrees that it will deliver toBorrowers’ Agent and Administrative Lender, upon the reasonable request ofBorrowers’ Agent or Administrative Lender, either (i) a statement that itis incorporated under the laws of the United States of America or a statethereof, or (ii) if it is not so incorporated, two duly completed copiesof the applicable United States Internal Revenue Service form(s) certifyingthat such Lender is entitled to receive payments under this Agreement withoutdeduction or withholding of any United States federal income taxes.

 

## **3.12**                                                FUNDING LOSS INDEMNIFICATION

 

Borrowers willindemnify Lenders upon demand against any loss or expense which Lenders maysustain or incur as a consequence of (a) any payment of any portion of theprincipal of a LIBOR Loan before the last day of the Fixed Rate Term applicablethereto (whether through voluntary prepayment, acceleration or otherwise), or(b)  any failure to borrow the full amount of a requested LIBOR Loan setforth in any Notice of Borrowing or to convert or continue at the LIBORinterest option any portion of a Loan in accordance with a

 

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Notice of Conversion orContinuation (in either event, whether as a result of the failure to satisfyany applicable conditions or otherwise). The determination by Administrative Lender of the amount payable underthis Section shall, in the absence of manifest error, be conclusive and bindingon Borrowers for all purposes.  Indetermining such amount, Administrative Lender may use any reasonable averagingand attribution methods and each Lender shall be deemed to have actually fundedand maintained all LIBOR Loans during the applicable Fixed Rate Term throughthe purchase of deposits having a term corresponding to such Fixed Rate Termand bearing interest at a rate equal to LIBOR for such Fixed Rate Term.  This Section shall survive the payment infull and performance of all of Borrowers’ other Obligations.

 

## **ARTICLE IV.**            ADMINISTRATION

## ** **

## **4.1**                                                       STATEMENTS

 

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

 

## **4.2**                                                       PAYMENTS

 

All amountsdue under any of the Loan Documents shall be payable to such account asAdministrative Lender may designate from time to time.  Borrowers shall make all payments duehereunder free and clear of, and without deduction or withholding for or onaccount of, any setoff, counterclaim, defense, duties, taxes, levies, imposts,fees, deductions, withholding, restrictions or conditions of any kind.  If after receipt of any payment of, orproceeds of Collateral applied to the payment of, any of the Obligations anyLender is required to surrender or return such payment or proceeds to anyperson or entity for any reason, then the Obligations intended to be satisfiedby such payment or proceeds shall be reinstated and continue and this Agreementshall continue in full force and effect as if such payment or proceeds had notbeen received by such Lender.  Borrowershereby indemnify and hold Lenders harmless for the amount of any payments orproceeds surrendered or returned.  ThisSection shall remain effective notwithstanding any contrary action whichmay be taken by any Lender in reliance upon such payment or proceeds.  This Section shall survive the payment infull and performance of all of Borrowers’ other Obligations.

 

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## **ARTICLE V.**              SECURITY

## ** **

## **5.1**                  GRANT OF SECURITY INTEREST

 

Borrowershereby grant to Administrative Lender, for the benefit of and on behalf ofLenders, a security interest in all of the Collateral as security for the fulland prompt payment in cash and performance of the Obligations.

 

## **5.2**                  PERFECTION; DUTY OF CARE

 

(a)           Untilall the Obligations have been fully satisfied and paid in cash and theCommitments terminated, Borrowers shall perform all steps requested byAdministrative Lender to perfect, maintain and protect Administrative Lender’ssecurity interest in the Collateral, including, without limitation,(i) executing and filing financing and continuation statements in form andsubstance satisfactory to Administrative Lender, and (ii) delivering allCollateral in which Administrative Lender’s security interest may be perfectedby possession together with such indorsements as Administrative Lender mayrequest.  Borrowers hereby authorizeAdministrative Lender to execute and file UCC financing statements signed onlyby Administrative Lender, except to the extent prohibited by law.

 

(b)           AdministrativeLender shall have the right at all times, and from time to time, to contactBorrowers’ account debtors to verify Rights to Payment; provided that at alltimes when a Default is not continuing, verifications shall be made underreasonable procedures directly with the obligors thereon.

 

(c)           Borrowersshall pay or cause to be paid all taxes, assessments and governmental chargeslevied or assessed or imposed upon or with respect to the Collateral or anypart thereof; provided, however, Borrowers shall not be required to pay any taxif the validity and/or amount thereof is being contested in good faith and byappropriate and lawful proceedings promptly initiated and diligently conductedand for which appropriate reserves have been established and so long as levyand execution have been and continue to be stayed.  If Borrowers fail to pay or so contest andreserve for such taxes, assessments and governmental charges, AdministrativeLender may (but shall not be required to) pay the same and add the amount ofsuch payment to the principal of the Revolving Loans.

 

(d)           Inorder to protect or perfect the security interest granted under the LoanDocuments, Administrative Lender may discharge any Lien that is not a PermittedLien or bond the same, pay for any insurance that Borrowers have failed tomaintain as required by this Agreement, maintain guards, pay any servicebureau, or obtain any record and add the same to the principal of the RevolvingLoans.

 

(e)           AdministrativeLender shall have no duty of care with respect to the Collateral, except toexercise reasonable care with respect to the Collateral in its custody, butshall be deemed to have exercised reasonable care if such property is accordedtreatment either (i) substantially equal to that which it accords its ownproperty or (ii) as Borrowers’ Agent requests in writing, provided that nofailure to comply with any such request nor any

 

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omission to do any such actrequested by Borrowers’ Agent shall be deemed a failure to exercise reasonablecare.  Administrative Lender’s failure totake steps to preserve rights against any parties or property shall not bedeemed to be a failure to exercise reasonable care with respect to the Collateralin its custody.

 

## **ARTICLEVI.**            REPRESENTATIONS AND WARRANTIES

 

Borrower makesthe following representations and warranties to Administrative Lender andLenders, subject to the exceptions set forth on the Disclosure Letter, whichrepresentations and warranties shall survive the execution of this Agreementand shall continue in full force and effect until the performance and paymentin full, in cash, of all Obligations:

 

## **6.1**                                                       LEGAL STATUS; SUBSIDIARIES

 

Each Borrowerand Subsidiary is a corporation validly organized and existing and in goodstanding under the laws of the jurisdiction of its incorporation, is dulyqualified to do business and is in good standing as a foreign corporation ineach jurisdiction where the nature of its business requires such qualification,and has full power and authority and holds all Permits and other approvals toenter into and perform the Obligations and to own and hold under lease itsproperty and to conduct its business substantially as currently conducted byit, except where the failure to have so qualified or have such power andauthority could not reasonably be expected to have a Material AdverseEffect.  Except as otherwise disclosed inSection 6.1 of the Disclosure Letter, Borrower has no Subsidiaries other thanthose which it is permitted to acquire in accordance with Section 9.4 and doesnot otherwise own or hold, directly or indirectly, any Stock or StockEquivalents.

 

## **6.2**                                                       DUE AUTHORIZATION; NO VIOLATION

 

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

 

## **6.3**                                                       GOVERNMENT APPROVAL, REGULATION

 

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

 

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

 

## **6.4**                                                       VALIDITY; ENFORCEABILITY

 

The LoanDocuments executed by each Obligor constitute, the legal, valid and bindingobligations of such Obligor enforceable in accordance with their respectiveterms.

 

## **6.5**                                                       CORRECTNESS OF FINANCIAL STATEMENTS

 

Theconsolidated financial statements of Parent and each Subsidiary dated as ofJuly 3, 2004 heretofore delivered by Borrowers’ Agent to AdministrativeLender, (a) present fairly in all material respects the financialcondition and results of operations of Parent and the Subsidiaries;(b) disclose all liabilities of Parent and the Subsidiaries that arerequired to be reflected or reserved against under GAAP, whether liquidated orunliquidated, fixed or contingent; and (c) have been prepared inaccordance with GAAP consistently applied. Except as disclosed to Administrative Lender pursuant toSection 8.3, since the date of such financial statements there has been nochange or changes that have resulted in a Material Adverse Effect.

 

## **6.6**                                                       TAXES

 

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

 

## **6.7**                                                       LITIGATION, LABOR CONTROVERSIES

 

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

 

## **6.8**                                                       TITLE TO PROPERTY, LIENS

 

Each Borrowerand Subsidiary has good, indefeasible, and merchantable title to and ownershipof the Collateral and its real property, free and clear of all Liens, exceptPermitted Liens.

 

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## **6.9**                                                       ERISA

 

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

 

## **6.10**                                                OTHER OBLIGATIONS

 

No Borrower orSubsidiary is in default with respect to (i) any of its ContractualObligations default of which could reasonably be expected to result in aMaterial Adverse Effect or (ii) any Debt in excess of $1,000,000.

 

## **6.11**                                                ENVIRONMENTAL MATTERS

 

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

 

## **6.12**                                                NO BURDENSOME RESTRICTIONS; NO DEFAULTS

 

(a)           NoBorrower or Subsidiary is a party to any Contractual Obligation the compliancewith which could reasonably be expected to have a Material Adverse Effect orthe performance of which, either unconditionally or upon the happening of anevent, will result in the creation of a Lien (other than Permitted Liens) onits property or assets.

 

(b)           Nofacts or circumstances exist which would constitute a breach of any obligation,representation or warranty of Borrower hereunder if this Agreement were ineffect immediately prior to Borrower’s execution hereof.

 

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

 

## **6.13**                                                NO OTHER VENTURES

 

As of theClosing Date, no Borrower or Subsidiary is engaged in any joint purchasingarrangement, joint venture, partnership or other joint enterprise with anyother Person.

 

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## **6.14**                                                INSURANCE

 

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

 

## **6.15**                                                FORCE MAJEURE

 

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

 

## **6.16**                                                INTELLECTUAL PROPERTY

 

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

 

## **6.17**                                                CERTAIN INDEBTEDNESS

 

The DisclosureLetter identifies as of the Closing Date all Indebtedness of Parent and theSubsidiaries which is either (a) Debt or (b) which is material to thecondition (financial or otherwise), business, performance, operations orproperties of Borrowers and which was incurred outside of the ordinary courseof the business.

 

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## **6.18**                                                SOLVENCY

 

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

 

## **6.19**                                                CHIEF EXECUTIVE OFFICE AND OTHER LOCATIONS

 

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

 

## **6.20**                                                FISCAL YEAR

 

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

 

## **6.21**                                                COMPLIANCE WITH LAW

 

Each Borrowerand Subsidiary is in compliance with all Governmental Rules and law, exceptwhere the failure to do so could not reasonably be expected to have a MaterialAdverse Effect.

 

## **6.22**                                                NO SUBORDINATION

 

There is noagreement, indenture, contract or instrument to which any Borrower orSubsidiary is a party or by which it may be bound that requires thesubordination in right of payment of any of the Obligations to any otherobligation of it.

 

## **6.23**                                                TRUTH, ACCURACY OF INFORMATION

 

All factualinformation furnished by each Borrower and Subsidiary to Administrative Lenderor any Lender in connection with the Loan Documents is accurate in all materialrespects and does not contain any untrue statement of a material fact or omitto state a material fact necessary in order to make the information furnished,in light of the circumstances under which furnished, not misleading (it beingrecognized that the projections and forecasts provided by Borrowers are not tobe viewed as facts and that actual results during the period covered by anysuch projections and forecasts may differ from the projected or forecastedresults).

 

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## **ARTICLE VII.**           CONDITIONS

## ** **

## **7**.1                                                       CONDITIONS OF INITIAL EXTENSION OF CREDIT

 

The obligationof Lenders to extend any credit contemplated by this Agreement is subject tothe fulfillment to Administrative Lender’s satisfaction of all of the followingconditions:

 

(a)           **Documentation**. AdministrativeLender shall have received, in form and substance satisfactory to it, each ofthe following duly executed:

 

(i)            this Agreement and the Notes;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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## **7.2**                                                       CONDITIONS OF EACH EXTENSION OF CREDIT

 

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

 

(a)           thefollowing statements shall be true on the date such credit is advanced, bothbefore and after giving effect thereto and to the application of the proceedstherefrom, and the acceptance by Borrowers’ Agent of the proceeds of suchcredit shall constitute a representation and warranty by Borrowers that on thedate such credit is advanced such statements are true:

 

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

 

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

 

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

 

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

 

(d)           noevent or circumstance exists that could reasonably be expected to have aMaterial Adverse Effect.

 

## **ARTICLEVIII.          AFFIRMATIVE COVENANTS**

 

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

 

## **8.1**                                                       PAYMENTS

 

Pay allprincipal, interest, fees and other liabilities due under any of the LoanDocuments at the times and place and in the manner specified therein.

 

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## ** **

## **8.2**                                                       ACCOUNTINGRECORDS

## ** **

Keep, and cause eachSubsidiary to keep, accurate books and records of its financial affairssufficient to permit the preparation of financial statements therefrom inaccordance with GAAP.

 

## **8.3**                                                       INFORMATIONAND REPORTS

## ** **

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

 

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

 

(ii)                                  assoon as available but not later than 50 days after and as of the end of each ofParent’s first three fiscal quarters, nor later than 100 days after and as ofthe end of each of Parent’s fourth fiscal quarters, a consolidated balancesheet of Parent and the Subsidiaries as of the end of such fiscal quarter andconsolidated statement of earnings and cash flow of Parent and the Subsidiariesfor such fiscal quarter and for fiscal year-to-date, together with a comparisonof Parent’s financial condition for such quarter and year-to-date with thecorresponding quarter and year-to-date in Parent’s immediately preceding fiscalyear;

 

(iii)                               contemporaneouslywith the delivery of each financial statement required hereby, a certificate ofParent’s principal financial officer substantially in the form of Exhibit Fattached hereto (A) certifying that such financial statements fairly present inaccordance with GAAP such balance sheet as of the end of such quarter/year andincome and cash flow for such quarter/year and year-to-date (subject to normalyear-end adjustments and the absence of footnotes in the case of quarterlyfinancial statements), (B) stating that no Default existed at any timeduring the period covered by such statement, except for those events orconditions, if any, described in such certificate in reasonable detail togetherwith a statement of any action taken or proposed to be taken with respect thereto,and (C) setting forth the calculations 

 

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

 

(iv)                              notlater than the end of each of Parent’s fiscal years beginning with the fiscalyear ending in 2001, or sooner if available, Borrowers’ Agent shall furnish toAdministrative Lender detailed projections setting forth Parent’s projectedconsolidated income and cash flow for Parent’s next fiscal year and for each ofParent’s fiscal years through the Maturity Date and Parent’s projectedconsolidated balance sheet as of the end of each such fiscal year, togetherwith a certificate of Parent’s principal financial officer setting forth theassumptions on which such projections are based;

 

(v)                                 promptlyafter the sending or filing thereof, copies of all reports which Borrower sendsto any of its securityholders, and all reports and registration statementswhich any Borrower or Subsidiary files with the Securities and ExchangeCommission or any national securities exchange;

 

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

 

(vii)                           fromtime to time such other information as Administrative Lender may reasonablyrequest.

 

## **8.4**                                                       COMPLIANCE

## ** **

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

 

## **8.5**                                                       INSURANCE

## ** **

(a)                                  Maintain,and cause each Subsidiary to maintain, insurance with insurance companiesreasonably acceptable to Administrative Lender with respect to its propertiesand business (including business interruption and extra expense endorsements)against such casualties and contingencies and of such types, with suchdeductibles and in such amounts as is customary in the case of similarbusinesses.  With respect to theinsurance maintained by Borrower: (i) such insurance shall contain a lender’s loss payableendorsement acceptable to Administrative Lender and shall name AdministrativeLender as an additional named insured; (ii) the policies or a certificatethereof signed by the insurer shall be delivered to Administrative Lenderwithin ten Business Days after the issuance or renewal of the policies toBorrower; (iii) each such policy shall provide that such policy may not beamended (except to increase coverage) or canceled without thirty days priornotice to Administrative Lender; and (iv) at least five days before theexpiration of a policy, Borrowers’ Agent shall deliver to 

 

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

 

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

 

(c)                                  Thefollowing is inserted pursuant to ORS 746.201:

 

**WARNING**

 

**UnlessBorrowers provide Administrative Lender with evidence of the insurance coverageas required by this Agreement, Administrative Lender may purchase insurance atBorrowers’ expense to protect Administrative Lender’s interest.  This insurance may, but need not, alsoprotect Borrowers’ interest.  If thecollateral becomes damaged, the coverage Administrative Lender purchases maynot pay any claim Borrowers make or any claim made against Borrowers.  Borrowers may later cancel this coverage byproviding evidence that Borrowers have obtained property coverage elsewhere.**

 

**Borrowersare responsible for the cost of any insurance purchased by AdministrativeLender.  The cost of this insurance maybe added to Borrowers’ contract or loan balance.  If the cost is added to Borrowers’ contractor loan balance, the interest rate on the underlying contract or loan willapply to this added amount.  Theeffective date of coverage may be the date Borrowers’ prior coverage lapsed orthe date Borrowers failed to provide proof of coverage.**

 

**Thecoverage Administrative Lender purchases may be considerably more expensive thaninsurance Borrowers can obtain on its own and may not satisfy any need forproperty damage coverage or any mandatory liability insurance requirementsimposed by applicable law.**

 

## **8.6**                                                       FACILITIES

## ** **

Keep, and cause eachSubsidiary to keep, all properties useful or necessary to its business in goodrepair and condition, and from time to time make necessary repairs, renewalsand replacements thereto so that such property shall be fully and efficiently 

 

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

 

## **8.7**                                                       TAXESAND OTHER LIABILITIES

## ** **

Pay and discharge, andcause each Subsidiary to pay and discharge, when due any and all indebtedness,obligations, assessments and taxes, both real or personal, including withoutlimitation Federal and state income taxes and state and local property taxesand assessments, except such as Borrower may in good faith contest or as towhich a bona fide dispute may arise, and for which Borrowers have madeprovision for adequate reserves in accordance with GAAP, except where thefailure to do so could not reasonably be expected to have a Material AdverseEffect.

 

## **8.8**                                                       LITIGATION

## ** **

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

 

## **8.9**                                                       NOTICETO ADMINISTRATIVE LENDER

## ** **

(a)                                  Promptly(but in no event more than two Business Days after a Responsible Officer hasknowledge of the occurrence of each such event or matter) cause Borrowers’Agent to give notice to Administrative Lender in reasonable detail of:  (i) the occurrence of any Default;(ii) any termination or cancellation of any insurance policy which anyBorrower or Subsidiary is required to maintain, unless such policy is replacedwithout any break in coverage with an equivalent or better policy;(iii) any uninsured or partially uninsured loss or losses throughliability or property damage, or through fire, theft or any other causeaffecting the property of any Borrower or Subsidiary in excess of an aggregateof $10,000,000 during any twelve month period; (iv) any change in theOrganic Documents of any Borrower or Subsidiary; (v) the occurrence of anyadverse development with respect to any litigation, action, proceeding, orlabor controversy described in Section 6.7 or the commencement of anylabor controversy, litigation, action, proceeding of the type described in Section 6.7together with copies of all documentation relating thereto; or (vi) theoccurrence of any event that could have a Material Adverse Effect.

 

(b)                                 Assoon as possible and in any event within ten days after Borrower knows or hasreason to know that any “reportable event” (as defined in Title IV ofERISA) that triggers an obligation to file a notice with the PBGC with respectto any Plan has occurred, cause Borrowers’ Agent to deliver to AdministrativeLender a statement of the President or principal financial officer of Parentsetting forth details as to such reportable event and the action whichBorrowers propose to take with respect thereto, together with a copy of thenotice of such reportable event to the PBGC.

 

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

 

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Plan that the PBGC hasinstituted proceedings to terminate a Plan or to appoint a trustee toadminister a Plan, cause Borrowers’ Agent to provide to Administrative Lender acopy of such notice.

 

## **8.10**                                                CONDUCTOF BUSINESS

## ** **

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

 

## **8.11**                                                PRESERVATIONOF CORPORATE EXISTENCE, ETC.

## ** **

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

 

## **8.12**                                                ACCESS

## ** **

(a)                                  Atsuch reasonable times as determined by Administrative Lender and upon at leasttwo Business Days prior notice from Administrative Lender (unless a Defaultshall have occurred and be continuing, in which case no prior notice isnecessary), permit Lender and/or any of Lender’s agents or representatives, to(i) examine and make copies of and abstracts from each Borrower’s andSubsidiary’s records and books of account, (ii) visit each Borrower’s andSubsidiary’s properties, (iii) discuss each Borrower’s and Subsidiary’saffairs, finances and accounts with any of its officers or directors who maythen be reasonably available, (iv) communicate directly with each Borrower’sand Subsidiary’s independent certified public accountants, (v) arrange forverification of Borrower’s Rights to Payment under reasonable proceduresdirectly with the obligors thereon or by other methods, and (vi) examineand inspect each Borrower’s and Subsidiary’s assets.  Each Borrower and Subsidiary shall authorizeits independent certified public accountants to disclose to Lender any and allfinancial statements and other information of any kind, including, withoutlimitation, copies of any management letter, work papers or the substance ofany oral information that such accountants may have with respect to thebusiness, financial condition, results of operations or other affairs of eachBorrower and Subsidiary.

 

(b)                                 Borrowershall execute and deliver at the request of Administrative Lender suchinstruments as may be necessary for Administrative Lender or any Lender toobtain such information concerning the business of each Borrower and Subsidiaryas Administrative Lender or any Lender may reasonably require from accountants,service bureaus or others 

 

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

 

## **8.13**                                                PERFORMANCEAND COMPLIANCE WITH OTHER COVENANTS

## ** **

Perform and observe, andcause each Subsidiary to perform and observe, all the terms, covenants andconditions required to be performed and observed by it under its ContractualObligations, and do all things necessary to preserve and to keep unimpaired itsrights under such Contractual Obligations, other than such failures theconsequences of which in the aggregate could not reasonably be expected to havea Material Adverse Effect.

 

## **8.14**                                                FISCALYEAR; ACCOUNTING PRACTICES

## ** **

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

 

## **8.15**                                                ENVIRONMENTAL

## ** **

(a)                                  Promptlygive notice to Administrative Lender upon a Responsible Officer obtainingknowledge of (i) any claim, injury, proceeding, investigation or otheraction, including a request for information or a notice of potentialenvironmental liability, by or from any Governmental Authority or anythird-party claimant that could result in any Borrower or Subsidiary incurringEnvironmental Liabilities and Costs that could reasonably be expected to have aMaterial Adverse Effect or (ii) the discovery of any Release at, on, underor from any real property, facility or equipment owned or leased by anyBorrower or Subsidiary in excess of reportable or allowable standards or levelsunder any applicable Environmental Law, or in any manner or amount that couldresult in any Borrower or Subsidiary incurring Environmental Liabilities andCosts that could reasonably be expected to have a Material Adverse Effect.

 

(b)                                 Upondiscovery of the presence on any property owned or leased by any Borrower orSubsidiary of any Contaminant that reasonably could be expected to result inEnvironmental Liabilities and Costs that could reasonably be expected to have aMaterial Adverse Effect, take all Remedial Action required by applicableEnvironmental Law.

 

## **8.16**                                                LIENS

## ** **

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

 

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## **8.17**                                                FUTURESUBSIDIARIES

## ** **

Upon any Person becominga Subsidiary after the Closing Date, notify Administrative Lender of suchevent, and execute and deliver, and cause such Subsidiary to execute anddeliver, such additional Loan Documents as Administrative Lender may reasonablyrequire, including such as are necessary to cause any such Subsidiary which isnot a Foreign Subsidiary to become a “Borrower.”

 

## **8.18**                                                USEOF PROCEEDS

## ** **

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

 

## **8.19**                                                FURTHERASSURANCES

## ** **

At Administrative Lender’srequest at any time and from time to time, duly execute and deliver, and causeeach Subsidiary to execute and deliver, such further agreements, documents andinstruments, and do or cause to be done such further acts as may reasonably benecessary or proper to evidence, perfect, maintain and enforce the securityinterests and the priority thereof in the Collateral and to otherwiseeffectuate the provisions or purposes of the Loan Documents, at Borrowers’expense.  Administrative Lender may atany time and from time to time request a certificate from Borrowers’ Agentrepresenting that all conditions precedent to the advancement of creditcontained herein are satisfied.  In theevent of such request by Administrative Lender, each Lender may cease to makeany further advancements of credit until Administrative Lender has receivedsuch certificate and Administrative Lender has determined that such conditionsare satisfied.

 

## **8.20**                                                LIENIN REAL PROPERTY

## ** **

Promptly uponAdministrative Lender’s request, Borrower shall execute and deliver toAdministrative Lender such mortgages, deeds of trust and other agreements anddocuments, and take such actions, as Administrative Lender determines to be reasonablynecessary to grant Administrative Lender a first priority Lien (subject only toPermitted Liens) in Borrower’s real property.

 

# **ARTICLE IX**.        NEGATIVECOVENANTS

# ** **

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

 

## **9.1**                                                       LIENS

## ** **

Create or suffer toexist, or permit any Subsidiary to create or suffer to exist, any Lien upon orwith respect to any of its properties (including, without limitation any realproperty), whether now owned or hereafter acquired, or assign any right toreceive income, except 

 

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

 

## **9.2**                                                       INDEBTEDNESS

## ** **

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

 

(a)                                  theObligations;

 

(b)                                 currentliabilities in respect of taxes, assessments and governmental charges or leviesincurred, or liabilities for labor, materials, inventory, services, suppliesand rentals incurred, or for goods or services purchased, in the ordinary courseof business consistent with past practice and industry practice in respect ofarm’s length transactions;

 

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

 

(d)                                 Debtsubordinated in writing to the Obligations on terms acceptable to RequiredLenders in favor of the prior payment in full in cash of the Obligations;

 

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

 

(f)                                    Indebtednessunder Interest Rate Contracts, Commodity Contracts and foreign exchangeagreements permitted under Section 9.13;

 

(g)                                 RepurchaseObligations;

 

(h)                                 Debtof any Borrower to another Borrower, and each Borrower hereby agrees that if ithas or hereafter acquires a Lien in any Collateral in which AdministrativeLender has or hereafter acquires a perfected Lien, then Borrower’s Lien shallbe junior in priority to Administrative Lender’s Lien, notwithstanding thedate, manner or order of perfection of Borrower’s Lien and AdministrativeLender’s Lien;

 

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

 

(j)                                     otherIndebtedness not to exceed 20% of Tangible Net Worth at any time, provided thatno Default exists or is created by incurrence of such Indebtedness; and

 

(k)                                  ContingentObligations in connection with Approved Dealer Financing Agreements.

 

## **9.3**                                                       RESTRICTEDPAYMENTS, REDEMPTIONS

## ** **

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

 

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

 

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

 

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

## ** **

Except as permitted inSections 9.5(h) and 9.5(i):

 

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

 

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

 

(c)                                  Sell,convey, transfer, lease or otherwise dispose of, or permit any Subsidiary tosell, convey, transfer, lease or otherwise dispose of, any of its assets or anyinterest therein 

 

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

 

## **9.5**                                                       INVESTMENTS

## ** **

Make, incur, assume orsuffer to exist any Investment in any other Person, except, withoutduplication:

 

(a)                                  Investmentsexisting on the Closing Date and identified in Section 9.5 of theDisclosure Letter;

 

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

 

(c)                                  Investmentspermitted as Indebtedness pursuant to Section 9.2;

 

(d)                                 Investmentsconsisting of employee relocation loans and other loans to employees, officersor directors for the purchase of equity securities of Parent;

 

(e)                                  inthe ordinary course of business, Investments by Borrower or any Subsidiary inany Subsidiary that is not a Foreign Subsidiary (or, with the prior writtenconsent of Administrative Lender (which consent will not be unreasonablywithheld), any Subsidiary that is a Foreign Subsidiary), by way ofcontributions to capital or loans or advances, provided that immediately beforeand after giving effect thereto no Default is continuing;

 

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

 

(g)                                 Investmentsarising under Interest Rate Contracts, Commodity Contracts and foreign exchangeagreements permitted hereunder;

 

(h)                                 subjectto the dollar limitations set forth below, any acquisition of (1) all orsubstantially all of the Stock or Stock Equivalents of any Person (whether bypurchase or merger), (2) all or substantially all of the assets of anyPerson or (3) all or substantially all of the assets constituting thebusiness of a division, branch or other unit operation of any Person; providedthat immediately before and after giving effect thereto no Default iscontinuing and provided further, that (A) after combining Parent’sconsolidated actual and 

 

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

 

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

 

The aggregateconsideration paid in cash or property (other than common Stock and commonStock Equivalents of Parent) for all acquisitions and other Investmentspermitted under clauses (h) and (i) above shall not (after taking into accountany losses incurred on Investments made under clause (i)) at any time exceed20% of Tangible Net Worth.

 

## **9.6**                                                       CHANGEIN NATURE OF BUSINESS

## ** **

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

 

## **9.7**                                                       PLANS

## ** **

(a)                                  Adoptor become obligated to contribute to, or permit any Subsidiary to adopt orbecome obligated to contribute to, any Plan subject to Title IV or anymulti-employer Plan or any other Plan subject to Section 412 of theInternal Revenue Code (except for any such Plan listed on the Disclosure Letteron the Closing Date), (b) establish or become obligated with respect to,or permit any Subsidiary to establish or become obligated to contribute to, anynew welfare benefit Plan, or modify any existing welfare benefit Plan, which isreasonably likely to result in an increase of the present value of futureliabilities for post-retirement life insurance and medical benefits, or(c) establish or become obligated to contribute to, or permit anySubsidiary to establish or become obligated to contribute to, any new unfundedpension Plan, or modify any existing unfunded pension Plan, which is reasonablylikely to result in an increase in the present value of future unfundedliabilities under all such plans.

 

## **9.8**                                                       CANCELLATIONOF INDEBTEDNESS OWED TO IT

## ** **

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

 

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## **9.9**                                                       MARGINREGULATIONS

## ** **

Use, or permit anySubsidiary to use, the proceeds of any Loan to purchase or carry any marginstock (within the meaning of Regulation U of the Board of Governors of theFederal Reserve System).

 

## **9.10**                                                ENVIRONMENTAL

## ** **

Permit any lessee or anyother Person to dispose of any Contaminant by placing it in or on the ground orwaters of any property owned or leased by any Borrower or Subsidiary, except inmaterial compliance with Environmental Law or the terms of any Permit or otherthan those that in the aggregate could not reasonably be expected to have aMaterial Adverse Effect.

 

## **9.11**                                                TRANSACTIONSWITH AFFILIATES

## ** **

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

 

## **9.12**                                                NEWCOLLATERAL LOCATION; NAME CHANGE

## ** **

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

 

## **9.13**                                                NOSPECULATIVE TRANSACTIONS

## ** **

Engage in, or permit anySubsidiary to engage in, any Commodity Contract, Interest Rate Contract orforeign exchange agreement, except for hedging purposes with respect totransactions engaged in by Borrowers in the ordinary course of business and notfor speculative purposes.

 

# **ARTICLE X**.                                                   FINANCIALCOVENANTS

# ** **

## **10.1**                                                LEVERAGERATIO

## ** **

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

 

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## **10.2**                                                CURRENTRATIO

## ** **

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

 

## **10.3**                                                DEBTSERVICE COVERAGE RATIO

## ** **

As of the end of eachfiscal quarter , Parent shall maintain a Debt Service Coverage Ratio greaterthan 1.50:1.

 

## **10.4**                                                TANGIBLENET WORTH

## ** **

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

 

# **ARTICLE XI**.             EVENTSOF DEFAULT

# ** **

## **11.1**          EVENTS OFDEFAULT

## ** **

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

 

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

 

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

 

(c)                                  Borrowersor Borrowers’ Agent shall fail to provide any certificate, report or otherinformation which it is required to provide pursuant to Section 8.3 or Section 8.9on the date specified in Section 8.3 or Section 8.9; provided thatunless Borrowers and Borrowers’ Agent have previously failed to provide anyrequired certificate, report or other information by the required date on twoprior occasions within the preceding 12 months such failure shall be consideredan Event of Default only if Borrowers and Borrowers’ Agent fail to provide suchcertificate, report or other information within five Business Days (twoBusiness Days with respect to Section 8.9(a)) of the earlier of(i) the date an officer of Borrower has knowledge of the failure to soprovide such certificate, report or other information, or (ii) the dateAdministrative Lender, at the request of a Lender, notifies Borrowers’ Agent ofsuch failure;

 

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

 

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

 

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

 

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

 

(h)                                 anyObligor becomes insolvent, or suffers or consents to or applies for theappointment of a receiver, trustee, custodian or liquidator of itself or any ofits property, or is generally unable to or fails to pay its debts as theybecome due, or makes a general assignment for the benefit of creditors; anyObligor files a voluntary petition in bankruptcy, or seeks to effect a plan orother arrangement with creditors or any other relief under the Bankruptcy Codeor under any state or other Federal law granting relief to debtors, whether nowor hereafter in effect; or any involuntary petition or proceeding pursuant tothe Bankruptcy Code or any other applicable state or Federal law relating tobankruptcy, reorganization or other relief for debtors is filed or commencedagainst any Obligor and is not dismissed, stayed or vacated within 60 daysthereafter or any Obligor files an answer admitting the jurisdiction of thecourt and the material allegations of any such involuntary petition; anyObligor is adjudicated a bankrupt, or an order for relief is entered by anycourt of competent jurisdiction under the Bankruptcy Code or any otherapplicable state or Federal law relating to bankruptcy, reorganization or otherrelief for debtors; or any Obligor takes any corporate, partnership or companyaction authorizing, or in furtherance of, any of the foregoing;

 

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

 

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

 

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

 

(k)                                  anyChange in Control; or

 

(l)                                     anyLoan Document, or any Lien granted thereunder, shall (except in accordance withits terms), in whole or in part, terminate, cease to be effective or cease tobe the legally valid, binding and enforceable obligation of any Obligor partythereto; any Obligor shall, directly or indirectly, contest in any manner sucheffectiveness, validity, binding nature or enforceability; or any Lien securingany Obligation shall, in whole or in part, cease to be a perfected firstpriority Lien, subject only to those exceptions expressly permitted by suchLoan Document.

 

## **11.2**                                                REMEDIES

## ** **

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

 

(b)                                 Duringthe continuance of an Event of Default, Administrative Lender, in addition toany other rights and remedies contained in the Loan Documents, shall have all ofthe rights and remedies of a secured party under the Code and all otherapplicable law, all of which rights and remedies shall be cumulative andnonexclusive to the extent permitted by law. Administrative Lender may cause the Collateral to remain on Borrower’spremises, at Borrowers’ expense, pending sale or other dispositionthereof.  Administrative Lender shallhave the right to conduct such sales on Borrower’s premises or elsewhere, atBorrowers’ expense, on such occasion(s) as Administrative Lender may see fit,and Borrowers, at Administrative Lender’s request, will, at Borrowers’ expense,assemble the Collateral and make it available to Administrative Lender at suchplace(s) as Administrative Lender may reasonably designate from time totime.  Any sale, lease or otherdisposition by 

 

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

 

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

 

(d)                                 Anynotice required to be given by Administrative Lender with respect to any of theCollateral, which notice is given pursuant to Section 13.1 and deemedreceived pursuant to Section 13.1 at least five Business Days before asale, lease, disposition or other intended action by Administrative Lender withrespect to any of the Collateral, shall constitute fair and reasonable noticeto Borrowers of any such action.  Apublic sale in the following fashion shall be conclusively presumed to bereasonable:  (i) the sale is held ina county where any part of the Collateral is located or in which Borrower has aplace of business; (ii) the sale is conducted by auction, but it need notbe by a professional auctioneer; (iii) any Collateral is sold as is andwithout any preparation for sale; and (iv) Borrowers’ Agent is givennotice of such public sale pursuant to the preceding sentence.

 

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

 

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

 

(g)                                 Borrowersrecognize that federal and/or state securities and other laws may limit theflexibility desired to achieve an otherwise commercially reasonable dispositionof Collateral, and in the event of potential conflict between such laws andwhat in other circumstances might constitute commercial reasonableness, it isintended that consideration of such laws will prevail over attempts to achievesuch commercial reasonableness.  Inconnection with any sale or other disposition of Collateral, compliance byAdministrative Lender with the written advice of its counsel concerning thepotential effect of any such law will not be cause for Borrower, or any otherPerson, to claim that such sale or other disposition was not commerciallyreasonable.

 

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

 

## **11.3**                                                ADMINISTRATIVELENDER AS BORROWERS’ ATTORNEY

## ** **

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

 

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

 

# **ARTICLE XII**.                  ADMINISTRATIVELENDER

# ** **

## **12.1**                ACTIONS

## ** **

Each Lender herebyappoints U.S. Bank as Administrative Lender and authorizes U.S. Bank to performthe functions of Administrative Lender under the Loan Documents.  Each Lender authorizes Administrative Lenderto act on behalf of such Lender under the Loan Documents and, in the absence ofother written instructions from the Required Lenders received from time to timeby Administrative Lender (with respect to which Administrative Lender agreesthat it will comply, except as otherwise provided in this Section or asotherwise advised by counsel), to exercise such powers thereunder as arespecifically delegated to or required of Administrative Lender by the termsthereof, together with such powers as may be reasonably incidentalthereto.  Each Lender hereby indemnifies(which indemnity shall survive any termination of this Agreement)Administrative Lender ratably from and against any and all liabilities,obligations, losses, damages, claims, costs or expenses of any kind or naturewhatsoever which may at any time be imposed on, incurred by, or assertedagainst Administrative Lender in any way relating to or arising out of the LoanDocuments, including reasonable attorneys’ fees (whether incurred at the trialor appellate level, in an arbitration or administrative proceeding, inbankruptcy, (including, without limitation, any adversary proceeding, contestedmatter or motion) or otherwise), and as to which Administrative Lender is not reimbursedby Borrowers; provided, however, that no Lender shall be liable for the paymentof any portion of such liabilities, obligations, losses, damages, claims, costsor expenses which are determined by a court of competent jurisdiction in afinal proceeding to have resulted solely from Administrative Lender’s grossnegligence or willful misconduct. Administrative Lender shall not be required to take any action under anyLoan Document, or to prosecute or defend any suit in respect of any LoanDocument, unless it is indemnified hereunder to its satisfaction.  If any indemnity in favor of AdministrativeLender shall be or become, in Administrative Lender’s determination,inadequate, 

 

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Administrative Lender maycall for additional indemnification from Lenders and cease to do the actsindemnified against hereunder until such additional indemnity is given.

 

## **12.2**                                                RELIANCEBY ADMINISTRATIVE LENDER

## ** **

Administrative Lendershall be entitled to rely upon any certificate, notice or other document(including any cable, telegram, fax, or telex) or telephonic notice believed byit in Good Faith to be genuine and correct and to have been signed, sent ormade by or on behalf of the proper person or persons, and upon advice andstatements of legal counsel (including Borrower’s counsel), independentaccountants and other experts selected by Administrative Lender with reasonablecare.  As to any matters not expresslyprovided for by this Agreement, Administrative Lender shall not be required totake any action or exercise any discretion, but shall be required to act or torefrain from acting upon instructions of the Required Lenders and shall in allcases be fully protected by Lenders in acting, or in refraining from acting, underany Loan Document in accordance with the instructions of the Required Lenders,and such instructions of the Required Lenders and any action taken or failureto act pursuant thereto shall be binding on all Lenders.

 

## **12.3**                                                EXCULPATION

## ** **

Neither AdministrativeLender nor any of its directors, officers, employees or agents shall be liableto any Lender for any action taken or omitted to be taken by it under any LoanDocument, or in connection herewith or therewith, except for its own willfulmisconduct or gross negligence, nor responsible for any recitals or warrantiestherein, nor for the effectiveness, enforceability, validity or due executionof any Loan Document, nor for the creation, perfection or priority of any Lienspurported to be created by any Loan Document, or the validity, genuineness,enforceability, existence, value or sufficiency of any collateral security, norto make any inquiry respecting the performance by Obligors of their obligationsunder any Loan Document.  Any suchinquiry which may be made by Administrative Lender shall not obligate it tomake any further inquiry or to take any action. Administrative Lender shall be entitled to rely upon advice of counselconcerning legal matters and upon any notice, consent, certificate, statement orwriting which Administrative Lender believes to be genuine and to have beenpresented by a proper Person.

 

## **12.4**                                                SUCCESSOR

## ** **

Administrative Lender mayresign as such at any time upon at least 30 days prior notice to Borrowers’Agent and all Lenders.  If AdministrativeLender at any time shall resign, the Required Lenders may appoint anotherLender as a successor Administrative Lender which shall thereupon becomeAdministrative Lender hereunder.  If nosuccessor Administrative Lender shall have been so appointed by the RequiredLenders, and shall have accepted such appointment, within 30 days after theretiring Administrative Lender’s giving notice of resignation, then theretiring Administrative Lender may, on behalf of Lenders, appoint a successorAdministrative Lender, which shall be one of the Lenders or a commercialbanking institution organized under the laws of the United States (or any State

 

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

 

## **12.5**                                                LOANSBY ADMINISTRATIVE LENDER; OTHER ACTIONS

## ** **

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

 

## **12.6**                                                CREDITDECISIONS

## ** **

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

 

## **12.7**                                                SYNDICATIONAGENT

## ** **

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

 

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# **ARTICLE XIII**.        MISCELLANEOUS

# ** **

## **13.1**                NOTICES

## ** **

Except as specifiedotherwise herein, all notices, requests and demands which any party is requiredor may desire to give to any other party under this Agreement must be inwriting.  Each notice to be given toAdministrative Lender or any Lender shall be addressed to Administrative Lenderand each Lender at its address or fax number set forth as the “Address forNotices” for Administrative Lender or such Lender in Schedule Ihereto, or to such other address or fax number as Administrative Lender or anyLender may designate for itself by notice to all other parties.  Each notice to be given to Borrowers’ Agentor Borrower shall be addressed to Borrowers’ Agent at the following address orfax number:

 
| To Borrowers’ Agent: |   | Monaco Coach Corporation      |
|---------------------------|--------|-------------------------------|
|                      |   | 91320 Industrial Way          |
|                      |   | Coburg, Oregon 97408          |
|                      |   | Attn: Chief Financial Officer |
|                      |   | Fax: (541) 302-3835           |

 

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

 

## **13.2**                                                COSTS,EXPENSES, ATTORNEYS’ FEES

## ** **

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

 

## **13.3**                                                INDEMNIFICATION

## ** **

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

 

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

 

(b)                                 Uponreceiving knowledge of any suit, claim or demand asserted by a third party thatAdministrative Lender and/or any Lender believes is covered by this indemnity,such Indemnitee shall give Borrowers’ Agent notice of the matter and anopportunity to defend it, at Borrowers’ sole cost and expense, with legalcounsel satisfactory to such Lender. Such Lender may also require Borrowers to defend the matter.  Any failure or delay of such Lender to notifyBorrowers’ Agent of any such suit, claim or demand shall not relieve Borrowersof their obligations under this Section, but shall reduce such obligations tothe extent of any increase in those obligations caused solely by anunreasonable failure or delay in providing such notice.  Borrowers may not settle or otherwise compromiseany claim with respect to any Indemnified Liability unless the settlementincludes an unconditional release of the Indemnitee from all liability onclaims that are the subject of such settlement and may not settle or otherwisecompromise any claim with respect to any Indemnified Liability, other than aclaim for money damages, without the prior written consent of the Indemnitee,which consent shall not be unreasonably withheld.

 

(c)                                  Ifand to the extent that the foregoing undertaking may be unenforceable for anyreason Borrowers shall make the maximum contribution permissible underapplicable law to the payment and satisfaction of each of the IndemnifiedLiabilities.

 

(d)                                 ThisSection shall survive the payment in full and performance of all ofBorrowers’ other Obligations.

 

## **13.4**                                                WAIVERS,AMENDMENTS

## ** **

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

 

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

 

## **13.5**                                                SUCCESSORSAND ASSIGNS

## ** **

(a)                                  **Binding****Effect**.  The Loan Documents shall be binding upon andinure to the benefit of Borrowers, Administrative Lender, Lenders and theirrespective successors and permitted assigns, except that Borrower may notassign or transfer any of its rights or obligations under any Loan Documentwithout the prior written consent of Administrative Lender and eachLender.  All references in this Agreementto any Person shall be deemed to include all successors and assigns of suchPerson.

 

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

 

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

 

(c)                                  **Assignments**.  Any Lender may, in the ordinary course of itsbusiness and in accordance with applicable law, at any time, sell and assign toany Lender, any affiliate of a Lender or any other bank or financialinstitution (individually, an “Assignee”) all or any portion of its rights andobligations under the Loan Documents (such a sale and assignment to be referredto herein as an “Assignment”) pursuant to an Assignment and AssumptionAgreement in the form of Exhibit G attached hereto (an “AssignmentAgreement”) executed by each Assignee and such assignor Lender (an “Assignor”)and delivered to Administrative Lender for its acceptance and recording in theRegister (as defined below); provided, however, that:  (i) each Assignment shall be in aminimum amount of $5,000,000; (ii) if the Assignment is not an assignmentof Assignor’s entire commitment, Assignor maintains a minimum commitment of$5,000,000; and (iii) each Assignment which is not to a Lender or an affiliatethereof, shall be made only with the written consent of Administrative Lender(and, in the absence of a Default, Borrowers’ Agent), which consent(s) shallnot be unreasonably withheld.  Upon theexecution, delivery, acceptance and recording of each Assignment Agreement,from and after the effective date set forth therein, (A) each Assignee shall bea Lender with a commitment as set forth in Section 1 of such AssignmentAgreement and shall have the rights, duties and obligations of a Lender underthe Loan Documents, and (B) the Assignor shall be a Lender with a commitment asset forth in Section 1 of such Assignment Agreement, or, if the commitmentof the Assignor has been reduced to zero, the Assignor shall cease to be aLender; provided, however, that each Assignor shall nevertheless be entitled tothe indemnification rights contained in Section 13.3 hereof for anyevents, acts or omissions occurring before the effective date of itsAssignment.  Each Assignment Agreementshall be deemed to amend Schedule I hereto to the extent necessaryto reflect the addition of each Assignee and the resulting adjustment ofcommitments arising from the purchase by each Assignee of all or a portion ofthe rights and obligations of an Assignor under this Agreement and the otherLoan Documents.

 

(d)                                 **Register**.  Administrative Lender shall maintain atAdministrative Lender’s Office a copy of each Assignment Agreement delivered toand accepted by Administrative Lender and a register (“Register”) for therecordation of the names and addresses of Lenders and the commitment of eachLender from time to time.  The entries inthe Register shall be conclusive and binding for all purposes, absent manifesterror, and Borrowers, Administrative Lender and Lenders may treat each entitywhose name is recorded in the Register as a Lender hereunder for all purposesof this Agreement.  The Register shall be

 

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available for inspectionby Borrowers’ Agent or any Lender at any reasonable time and from time to timeupon reasonable prior notice.

 

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

 

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

 

## **13.6**                                                SETOFF

## ** **

In addition to any rightsand remedies of Lenders provided by law, each Lender shall have the right, withthe prior consent of Administrative Lender (which consent will not beunreasonably withheld) but without prior notice to Borrower, any such noticebeing expressly waived by Borrower to the extent permitted by applicable law,during the continuance of an Event of Default to setoff and apply against anyindebtedness, whether matured or unmatured, of Borrower to such Lender anyamount owing from such Lender or any affiliate thereof to Borrower at any timeduring the continuation of an Event of Default. This right of setoff may be exercised by such Lender against Borrower oragainst any trustee in bankruptcy, debtor in possession, assignee for thebenefit of creditors, receiver or execution, judgment or attachment creditor ofBorrower or against anyone else claiming through or against Borrower or suchtrustee in bankruptcy, debtor in possession, assignee for the benefit ofcreditors, receiver, or execution, judgment or attachment creditor,notwithstanding the fact that such right of setoff shall not have beenexercised by such Lender prior to the occurrence of an Event of Default.  Each Lender agrees promptly to notifyBorrower after any such setoff and application made by such Lender, providedthat the failure to give such notice shall not affect the validity of suchsetoff and application.

 

## **13.7**                                                NOWAIVER; CUMULATIVE REMEDIES

## ** **

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

 

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right, power, privilegeor remedy.  The rights and remedies underthe Loan Documents are cumulative and not exclusive of any rights, powers,privileges and remedies that may otherwise be available to Administrative Lenderor any Lender.

 

## **13.8**                                                ENTIREAGREEMENT

## ** **

The Loan Documentsconstitute the entire agreement among Borrowers, Administrative Lender andLenders with respect to the Loans and the Letters of Credit and supersede allprior negotiations, communications, discussions, correspondence and agreementsconcerning the subject matter hereof. This Agreement cannot be changed orally or by the conduct of the partiesand may be amended or modified only in writing signed by the party against whomenforcement is sought.

 

## **13.9**                                                NOTHIRD PARTY BENEFICIARIES

## ** **

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

 

## **13.10**                                         CONFIDENTIALITY

## ** **

Lenders shall hold allnon-public information (which has been identified as such by Borrowers’ Agent)obtained pursuant to the requirements of this Agreement in accordance withtheir customary procedures for handling confidential information of this natureand in accordance with safe and sound banking practices and in any event maymake disclosure to any of their examiners, affiliates, outside auditors,counsel and other professional advisors in connection with this Agreement or asreasonably required by any *bona fide*transferee,participant or assignee or as required or requested by any GovernmentalAuthority or pursuant to legal process; provided, however, that (a) unlessspecifically prohibited by applicable law or court order, each Lender shallnotify Borrowers’ Agent of any request by any Governmental Authority (otherthan any such request in connection with an examination of the financialcondition of such Lender by such Governmental Authority) for disclosure of anysuch non-public information prior to disclosure of such information,(b) prior to any such disclosure pursuant to this Section, each Lendershall require any such *bona fide*transferee,participant and assignee receiving a disclosure of non–public information toagree in writing (i) to be bound by this Section and (ii) torequire such Person to require any other Person to whom such Person disclosessuch non-public information to be similarly bound by this Section, and(c) except as may be required by an order of a court of competentjurisdiction and to the extent set forth therein, no Lender shall be obligatedor required to return any materials furnished by any Borrower or Subsidiary.

 

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## **13.11**                                         TIME

## ** **

Time is of the essence ofeach and every provision of this Agreement and each other of the LoanDocuments.

 

## **13.12**                                         SEVERABILITYOF PROVISIONS

## ** **

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

 

## **13.13**                                         GOVERNINGLAW

## ** **

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

 

## **13.14**                                         SUBMISSIONTO JURISDICTION

## ** **

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

 

## **13.15**                                         WAIVEROF JURY TRIAL

## ** **

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

 

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

 

## **13.16**                                         COUNTERPARTS

## ** **

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

 

## **13.17**                                         OREGONSTATUTORY NOTICE

## ** **

**UNDER OREGON LAW, MOSTAGREEMENTS, PROMISES AND COMMITMENTS MADE BY LENDER CONCERNING LOANS AND OTHERCREDIT EXTENSIONS WHICH ARE NOT FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES ORSECURED SOLELY BY THE BORROWER’S RESIDENCE MUST BE IN WRITING, EXPRESSCONSIDERATION AND BE SIGNED BY THE LENDER TO BE ENFORCEABLE.**

 

 

**[INTENTIONALLYLEFT BLANK]**

** **

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** **

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

 

 
| MONACO COACH CORPORATION                          |                     | ROYALE COACH BY MONACO, INC.              |
|---------------------------------------------------|--------------------------|-------------------------------------------|
|                                              |                     |                                      |
|                                              |                     |                                      |
| By:                                               | /s/ John Nepute          |                                      |   | By: | /s/ John Nepute |   |
| Title:                                            | President                |                                      |   | Title: | Vice President and Treasurer |   |
|                                              |                     |                                      |
|                                              |                     |                                      |
| OUTDOOR RESORTS  MOTORCOACH   COUNTRY CLUB, INC.  |                     | MCC ACQUISITION  CORPORATION              |
|                                              |                     |                                      |
|                                              |                     | By:                                       | /s/ John Nepute |   |
| By:                                               | /s/ John Nepute          |                                      |   | Title: | Vice President |   |
| Title:                                            | President                |                                      |   |   |   |   |
|                                              |                     |                                      |
|                                              |                     |                                      |
| OUTDOOR RESORTS OF  NAPLES, INC.                  |                     | OUTDOOR RESORTS OF LAS  VEGAS,   INC.     |
|                                              |                     |                                      |
|                                              |                     |                                      |
| By:                                               | /s/ John Nepute          |                                      |   | By: | /s/ John Nepute |   |
| Title:                                            | President                |                                      |   | Title: | President |   |
|                                              |                     |                                      |
|                                              |                     |                                      |
| GE COMMERCIAL  DISTRIBUTION   FINANCE CORPORATION |                     | WELLS FARGO BANK,  NATIONAL   ASSOCIATION |
|                                              |                     |                                      |
|                                              |                     |                                      |
| By:                                               | /s/ Timothy Wass         |                                      |   | By: | /s/ Kathy Lucier |   |
| Title:                                            | Director of Underwriting |                                      |   | Title: | Vice President |   |
|                                              |                     |                                      |
|                                              |                     |                                      |
| UNION BANK OF  CALIFORNIA, N.A.                   |                     | BANK OF AMERICA, N.A.                     |
|                                              |                     |                                      |
|                                              |                     |                                      |
| By:                                               | /s/ Thomas Marks         |                                      |   | By: | /s/ Brad DeSpain |   |
| Title:                                            | Vice President           |                                      |   | Title: | Senior Vice President |   |
|                                                   |                          |                                           |  |  |  |  |  |  |  |  |

 

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| NATIONAL CITY BANK OF INDIANA |            | U.S. BANK NATIONAL   ASSOCIATION |
|-------------------------------|-----------------|----------------------------------|
|                          |            |                             |
|                          |            |                             |
| By:                           | /s/ Mike Callas |                             |   | By: | /s/ Daryl Hogge |   |
| Title:                        | Vice President  |                             |   | Title: | Vice President |   |
|                               |                 |                                  |  |  |  |  |  |  |

 

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**SCHEDULE I**

**1.****                                      RevolvingLoan Commitments:**

 
| U.S. Bank National  Association -                 |  $20,000,000.00  (22.222222222222%)          |
|---------------------------------------------------|---------------------------------------------------|
|                                              | (maximum L/C exposure -  $1,111,111.11)           |
|                                              |
| Bank of America, N.A. -                           | $20,000,000.00  (22.222222222222%)                |
|                                              |  (maximum L/C  exposure - $1,111,111.11)     |
|                                              |
| Wells Fargo Bank,  National Association -         |   $15,000,000.00  (16.666666666667%)    |
|                                              | (maximum L/C exposure -  $833,333.33)             |
|                                              |
| GE Commercial Distribution  Finance Corporation - |  $15,000,000.00 (16.666666666667%)           |
|                                              | (maximum L/C exposure -  $833,333.33)             |
|                                              |
| Union Bank of California,  N.A. -                 | $10,000,000.00  (11.111111111111%)                |
|                                              |   (maximum  L/C exposure - $555,555.56) |
|                                              |
| National City Bank of  Indiana -                  |  $10,000,000.00 (11.111111111111%)           |
|                                              |   (maximum  L/C exposure - $555,555.56) |
|                                                   |                                                   |  |  |  |  |

 

**2.****                                      SwingLoan Commitment:**

 

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

 

**3.****                                      ApplicableLending Office and Address for Notices for each Lender:**

 

U.S. Bank NationalAssociationOregon Commercial BankingPD-OR-T4BD111 SW Fifth Ave., Suite 400Portland, OR  97204Attn: Daryl K. HoggeTelephone:  (503) 275-5271Fax:  (503) 275-5795Email:  daryl.hogge@usbank.com

 

GE CommercialDistribution Finance Corporation2625 S. Plaza Drive, Suite 201Tempe, AZ  85282Attn: Timothy Wass, Director of UnderwritingTelephone:  (480) 449-7124Fax:  (480) 829-3963

Email:timothy.wass@ge.com

 

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Wells Fargo Bank,National Association99 E. Broadway, 2nd FloorEugene, OR  97440Attn:  Kathy Lucier, Vice PresidentTelephone:  (541) 465-5965Fax:  (541) 465-5764Email:  lucierki@wellsfargo.com

 

Union Bank of California,N.A.407 SW BroadwayPortland, OR  97205Attn:  Tom Marks, Vice PresidentTelephone:  (503) 225-3693Fax:  (503) 225-2846Email:  thomas.marks@uboc.com

 

Bank of America, N.A.121 SW Morrison, #1700Portland, OR  97204Attn:  Brad DeSpain, Senior VicePresidentTelephone:  (503) 275-1573Fax:  (503) 275-1377Email:  brad.w.despain@bankofamerica.com

 

National City Bank ofIndiana1 National City Center, Suite 200 EIndianapolis, Indiana  46255Attn:  Mike CallasTelephone:  (317) 267-7443Fax:  (317) 267-7441Email:  mike.callas@nationalcity.com

 

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**SCHEDULE II**

**Pricing Schedule**

 
| ** **      | ** ** | **Level I** | ** ** | **Level II** | ** ** | **Level III** | ** ** | **Level IV** | ** ** |
|-----------------|------------|-------------|------------|--------------|------------|---------------|------------|--------------|------------|
| LIBOR  Margin   |       | 100         |       | 125          |       | 150           |       | 175          |       |
| Prime  Margin   |       | 0           |       | 0            |       | 0             |       | 25           |       |
| Fee  Percentage |       | 20          |       | 25           |       | 30            |       | 35           |       |

 

For purposes of thisPricing Schedule, the following terms have the following meanings:

 

“**Level I**”applies on any day if, on such day, the applicable Leverage Ratio is less than1.00:1.

 

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

 

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

 

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

 

For purposes of thisPricing Schedule, the Leverage Ratio shall be calculated once every quarterbased on the financial information most recently reported by Borrowers’ Agentpursuant to Section 8.3 of the Agreement; provided, however,that the Leverage Ratio shall not be computed on the financial information mostrecently reported by Borrowers’ Agent until the later of the first day of themonth after receipt of such information or five Business Days after the receiptthereof, and if the most recent report required pursuant to Section 8.3has not been delivered, or if Administrative Lender reasonably objects to theaccuracy of such report within five Business Days after the receipt thereof,the next higher Level from the Level then in effect shall apply until such timeas the delinquent report is delivered or Administrative Lender’s objections areresolved to Administrative Lender’s reasonable satisfaction.

 

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**EXHIBITATOSECOND AMENDED AND RESTATED CREDIT AGREEMENT**

 

**Borrowing Base CertificateofMonaco Coach Corporation et al.**

 

**As of:                    **

 
| **Aggregate  RV A/R balance**                                | ** **                                                                                                                                                                                                     | ** **                                                                                                                                                                                                     |
|--------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **                                                   | ** **                                                                                                                                                                                                     | ** **                                                                                                                                                                                                     |
| **Ineligible  RV A/R:**                                      |                                                                                                                                                                                                           | ** **                                                                                                                                                                                                     |
| **Over 60  days**                                            | (                                  ) | ** **                                                                                                                                                                                                     |
| **Excess  concentration**                                    | (                                  ) | ** **                                                                                                                                                                                                     |
| **Cross-Ineligibles**                                        | (                                  ) | ** **                                                                                                                                                                                                     |
| **Affiliates**                                               | (                                  ) | ** **                                                                                                                                                                                                     |
| **International**                                            | (                                  ) | ** **                                                                                                                                                                                                     |
| **Other**                                                    | (                                  ) | ** **                                                                                                                                                                                                     |
| **Eligible  A/R**                                            |                                                                                                                                                                                                           | ** **                                                                                                                                                                                                     |
| **85% of  Eligible A/R**                                     |                                                                                                                                                                                                           |                                                                                                                                                                                                           |
| ** **                                                   |                                                                                                                                                                                                           |                                                                                                                                                                                                           |
| ** **                                                   |                                                                                                                                                                                                           |                                                                                                                                                                                                           |
| **50% of  Eligible Raw Materials**                           |                                                                                                                                                                                                           |                                                                                                                                                                                                           |
| **Lesser  of 90% of Eligible Finished Goods or $50,000,000** |                                                                                                                                                                                                           |                                                                                                                                                                                                           |
| **Secured  Chassis Accounts Payable**                        | (                                  ) |                                                                                                                                                                                                           |
| **Inventory  Availability**                                  |                                                                                                                                                                                                           |                                                                                                                                                                                                           |
| ** **                                                   |                                                                                                                                                                                                           |                                                                                                                                                                                                           |
| **Borrowing  Base**                                          |                                                                                                                                                                                                           |                                                                                                                                                                                                           |
| **Outstanding  Revolving Loans**                             |                                                                                                                                                                                                           | (                                  ) |
| **Outstanding  Swing Loans**                                 |                                                                                                                                                                                                           | (                                  ) |
| **Outstanding  Letters of Credit**                           |                                                                                                                                                                                                           | (                                  ) |
| **Available  Credit**                                        |                                                                                                                                                                                                           | ** **                                                                                                                                                                                                     |

 

**CERTIFICATE**

 

The undersigned ChiefFinancial Officer of Monaco Coach Corporation hereby certifies toAdministrative Lender that:  (i) theforegoing information is true, accurate and complete as of the close of businesson                       ,             ;(ii) the undersigned is familiar with Borrowers’ businesses and financialaffairs and has access to all of Borrowers’ business records material to thecompilation and determination of the information set forth above; and(iii) this Certificate is being delivered to Administrative Lenderpursuant to the Second Amended and Restated Credit Agreement among Borrowers,U.S. Bank, National Association as Administrative Lender, and the lenders namedtherein for the purpose of inducing Lenders to extend credit to Borrowers.

 

DATED:                       ,            .

 

 
|   | By:    |                    |   |
|--------|--------|-------------------------|--------|
|   |   |                    |   |   |
|   |   | Chief Financial Officer |
|        |        |                         |        |  |

 

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**EXHIBITBTOSECOND AMENDED AND RESTATED CREDIT AGREEMENT**

 

 

**FORM OF PROMISSORYNOTES**

 

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**Revolving LoansPromissory Note**

 
| $90,000,000 |   | November 17,  2004 |
|-------------|--------|-------------------------|

 

FOR VALUE RECEIVED, theundersigned, MONACO COACH CORPORATION, a Delaware corporation, ROYALE COACH BYMONACO, INC., an Indiana corporation, MCC ACQUISITION CORPORATION, a Delawarecorporation, OUTDOOR RESORTS OF LAS VEGAS, INC., a Nevada corporation, OUTDOORRESORTS MOTORCOACH COUNTRY CLUB, INC., a California corporation, and OUTDOORRESORTS OF NAPLES, INC., a Florida corporation (each individually referred toas “Borrower” and all collectively referred to as “Borrowers”) hereby jointlyand severally promise to pay to the order of U.S. BANK NATIONAL ASSOCIATION asAdministrative Lender for the ratable benefit of the Lenders (“AdministrativeLender”) on the Maturity Date, or at such earlier time as is provided in thatcertain Second Amended and Restated Credit Agreement among Borrowers, U.S. BankNational Association (as Administrative Lender) and the lenders named thereindated as of November 17, 2004, (as amended, modified or supplemented fromtime to time, the “Credit Agreement”), the principal sum of Ninety MillionDollars ($90,000,000), or such lesser amount as shall equal the aggregateoutstanding principal balance of all Revolving Loans made by Lenders toBorrowers pursuant to the Credit Agreement.

 

This promissory note isone of the promissory notes referred to in, and subject to the terms of, theCredit Agreement.  Capitalized terms usedherein shall have the respective meanings assigned to them in the CreditAgreement.

 

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

 

Administrative Lender isauthorized but not required to record the date and amount of each advance madehereunder, the date and amount of each payment of principal and interesthereunder, and the resulting unpaid principal balance hereof, in AdministrativeLender’s internal records, and any such recordation shall be prima facieevidence of the accuracy of the information so recorded; provided however, thatAdministrative Lender’s failure to so record such amounts shall not limit orotherwise affect Borrower’s obligations hereunder and under the CreditAgreement to repay the principal hereof and interest hereon.

 

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

 

1

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motion) orotherwise).  No delay or failure on thepart of Administrative Lender to exercise any of its rights hereunder shall bedeemed a waiver of such rights or any other right of Administrative Lender norshall any delay, omission or waiver on any one occasion be deemed a bar to orwaiver of such rights or any other right on any future occasion.  Borrowers and every surety, indorser andguarantor of this Note waive presentment, demand, protest, notice of intentionto accelerate, notice of acceleration, notice of nonpayment and all othernotices of every kind, and agree that their liability under this Note shall notbe affected by any renewal, postponement or extension in the time of paymenthereof, by any indulgence granted by any holder hereof with respect hereto, orby any release or change in any security for the payment of this Note, and theyhereby consent to any and all renewals, extensions, indulgences, releases or changes,regardless of the number of such renewals, extensions, indulgences, releases orchanges.

 

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

 

Borrowers’ obligationsevidenced by this promissory note are secured by the collateral described inthe Loan Documents.  The Loan Documentsdescribe the rights of Administrative Lender with respect to the collateral.

 

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

 

This promissory noteshall be governed by and construed in accordance with the laws of the State ofOregon.

 

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

 

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| MONACO COACH CORPORATION                         |   | ROYALE COACH BY MONACO, INC.          |
|--------------------------------------------------|--------|---------------------------------------|
|                                             |   |                                  |
|                                             |   |                                  |
| By:                                              |   |                                  |   | By: |   |   |
| Title:                                           |   |                                  |   | Title: |   |   |
|                                             |   |                                  |
|                                             |   |                                  |
| OUTDOOR RESORTS  MOTORCOACH   COUNTRY CLUB, INC. |   | MCC ACQUISITION  CORPORATION          |
|                                             |   |                                  |
|                                             |   | By:                                   |   |   |
| By:                                              |   |                                  |   | Title: |   |   |
| Title:                                           |   |                                  |   |   |
|                                             |   |                                  |
|                                             |   |                                  |
| OUTDOOR RESORTS OF  NAPLES, INC.                 |   | OUTDOOR RESORTS OF LAS  VEGAS,   INC. |
|                                             |   |                                  |
|                                             |   |                                  |
| By:                                              |   |                                  |   | By: |   |   |
| Title:                                           |   |                                  |   | Title: |   |   |
|                                                  |        |                                       |  |  |  |  |  |  |  |  |  |

 

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**Swing LoansPromissory Note**

 
| $15,000,000 |   | November 17,  2004 |
|-------------|--------|-------------------------|

 

 

FOR VALUE RECEIVED,MONACO COACH CORPORATION, a Delaware corporation, ROYALE COACH BY MONACO, INC.,an Indiana corporation, MCC ACQUISITION CORPORATION, a Delaware corporation,OUTDOOR RESORTS OF LAS VEGAS, INC., a Nevada corporation, OUTDOOR RESORTSMOTORCOACH COUNTRY CLUB, INC., a California corporation, and OUTDOOR RESORTS OFNAPLES, INC., a Florida corporation (each individually referred to as “Borrower”and all collectively referred to as “Borrowers”) hereby jointly and severallypromise to pay to the order of U.S. BANK NATIONAL ASSOCIATION (“Lender”) on theMaturity Date, or at such earlier time as is provided in that certain SecondAmended and Restated Credit Agreement among Borrowers, U.S. Bank NationalAssociation (as Administrative Lender and as Swingline Lender) and the lendersnamed therein dated as of November 17, 2004, (as amended, modified orsupplemented from time to time, the “Credit Agreement”), the principal sum ofFifteen Million Dollars ($15,000,000), or such lesser amount as shall equal theaggregate outstanding principal balance of all Swing Loans made by Lender toBorrowers pursuant to the Credit Agreement.

 

This promissory note isone of the promissory notes referred to in, and subject to the terms of, theCredit Agreement.  Capitalized terms usedherein shall have the respective meanings assigned to them in the CreditAgreement.

 

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

 

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

 

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

 

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hereunder shall be deemeda waiver of such rights or any other right of Lender nor shall any delay, omissionor waiver on any one occasion be deemed a bar to or waiver of such rights orany other right on any future occasion. Borrowers and every surety, indorser and guarantor of this Note waivepresentment, demand, protest, notice of intention to accelerate, notice ofacceleration, notice of nonpayment and all other notices of every kind, andagree that their liability under this Note shall not be affected by anyrenewal, postponement or extension in the time of payment hereof, by anyindulgence granted by any holder hereof with respect hereto, or by any releaseor change in any security for the payment of this Note, and they hereby consentto any and all renewals, extensions, indulgences, releases or changes,regardless of the number of such renewals, extensions, indulgences, releases orchanges.

 

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

 

Borrowers’ obligationsevidenced by this promissory note are secured by the collateral described inthe Loan Documents.  The Loan Documentsdescribe the rights of Administrative Lender, Lender and any other holderhereof with respect to the collateral.

 

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

 

This promissory noteshall be governed by and construed in accordance with the laws of the State ofOregon.

 

**UNDER OREGON LAW, MOSTAGREEMENTS, PROMISES AND COMMITMENTS MADE BY LENDER CONCERNING LOANS AND OTHERCREDIT EXTENSIONS WHICH ARE NOT FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES ORSECURED SOLELY BY THE BORROWER’S RESIDENCE MUST BE IN WRITING, EXPRESSCONSIDERATION AND BE SIGNED BY THE LENDER TO BE ENFORCEABLE.**

 

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| MONACO COACH CORPORATION                         |   | ROYALE COACH BY MONACO, INC.          |
|--------------------------------------------------|--------|---------------------------------------|
|                                             |   |                                  |
|                                             |   |                                  |
| By:                                              |   |                                  |   | By: |   |   |
| Title:                                           |   |                                  |   | Title: |   |   |
|                                             |   |                                  |
|                                             |   |                                  |
| OUTDOOR RESORTS  MOTORCOACH   COUNTRY CLUB, INC. |   | MCC ACQUISITION  CORPORATION          |
|                                             |   |                                  |
|                                             |   | By:                                   |   |   |
| By:                                              |   |                                  |   | Title: |   |   |
| Title:                                           |   |                                  |   |   |
|                                             |   |                                  |
|                                             |   |                                  |
| OUTDOOR RESORTS OF  NAPLES, INC.                 |   | OUTDOOR RESORTS OF LAS  VEGAS,   INC. |
|                                             |   |                                  |
|                                             |   |                                  |
| By:                                              |   |                                  |   | By: |   |   |
| Title:                                           |   |                                  |   | Title: |   |   |
|                                                  |        |                                       |  |  |  |  |  |  |  |  |  |

 

3

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**EXHIBITCTOSECOND AMENDED AND RESTATED CREDIT AGREEMENT**

** **

**Notice ofAuthorized Representatives**

 

U.S. Bank NationalAssociationOregon Commercial BankingPD-OR-T4BD111 SW Fifth Ave., Suite 400Portland, OR  97204Attn: Daryl K. Hogge

 

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

 

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

 
| **Name  and Office** | ** ** | **Signature** | ** ** |
|----------------------|------------|---------------|------------|
| ** **           | ** ** | ** **    | ** ** |
|                 |       |          |       |   |
|                 |       |          |       |   |
|                 |       |          |       |   |
|                 |       |          |       |   |
|                 |       |          |       |   |

 

Administrative Lender isauthorized to rely on this Notice of Authorized Representatives until suchtime, if any, as Borrowers’ Agent has delivered to Administrative Lender, andAdministrative Lender has received, a duly executed Notice of Authorized 

 

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Representatives insubstitution hereof.  This Notice ofAuthorized Representatives cancels and supersedes any Notice of AuthorizedRepresentatives at any time prior to the date hereof delivered by Borrowers’Agent to Administrative Lender.

 

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

 
|   | MONACO COACH CORPORATION |
|--------|--------------------------|
|   |                     |
|   |                     |
|   | By:                      |   |   |
|   | Title:                   |   |   |
|        |                          |  |  |  |

 

2

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**EXHIBIT DTOSECOND AMENDED AND RESTATED CREDIT AGREEMENT**

 

**Notice ofBorrowing**

 

U.S. Bank NationalAssociationAgency Services Group1420 Fifth Ave., 9th FloorP.O. Box 720Seattle, WA.  98111-0720Attn:  Young HahnFax:  (206) 587-7022

 

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

 

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

 

(a)                                  Theaggregate principal amount is to be $                .

 

(b)                                 Thedate of borrowing is to be                          .

 

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

 

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

 

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

 

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(b)                                 noDefault is continuing or would result from the requested Loans being made; and

 

(c)                                  noevent or circumstance exists that can reasonably be expected to have a MaterialAdverse Effect.

 

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

 
|   | MONACO COACH CORPORATION |
|--------|--------------------------|
|   |                     |
|   |                     |
|   | By:                      |   |   |
|   | Title:                   |   |   |
|        |                          |  |  |  |

 

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**EXHIBIT E**

** **

**Notice ofConversion or Continuation**

 

U.S. Bank NationalAssociationAgency Services Group1420 Fifth Ave., 9th FloorP.O. Box 720Seattle, WA.  98111-0720Attn:  Young HahnFax:  (206) 587-7022

 

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

 

1.                                       Pursuantto Section 3.6 of the Credit Agreement, Borrowers’ Agent, on behalf ofBorrowers, hereby requests [the continuation of all or part of outstandingLIBOR Loans with Fixed Rate Terms ending on                       ][the conversion of all or part of its outstanding Prime Rate Loans], asfollows:

 

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

 

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

 

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

 

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| **Amount** | ** ** | **Fixed Rate Term**                                                                                                                              |
|------------|------------|--------------------------------------------------------------------------------------------------------------------------------------------------|
| $          |       |                                                                                                                                             |                        months |
| $          |       |                        months |
|            |            |                                                                                                                                                  |  |

 

(d)                                 Theaggregate amount of said outstanding LIBOR Loans that are Revolving Loans to becontinued as Prime Rate Loans is $                  .

 

2.                                       Borrowers’Agent, on behalf of Borrowers, hereby certifies to Administrative Lender andLenders that, on the date of this Notice of Conversion or Continuation, noDefault has occurred and is continuing.

 

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

 
|   | MONACO COACH CORPORATION |
|--------|--------------------------|
|   |                     |
|   |                     |
|   | By:                      |   |   |
|   | Title:                   |   |   |
|        |                          |  |  |  |

 

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**EXHIBITFTOSECOND AMENDED AND RESTATED CREDIT AGREEMENT**

 

**Certificate ofChief Financial Officer**

U.S. Bank NationalAssociationOregon Commercial BankingPD-OR-T4BD111 SW Fifth Ave., Suite 400Portland, OR  97204Attn: Daryl K. Hogge

 

and each Lender

 

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

 

The undersigned herebycertifies that:

 

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

 

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

 

(3)                                  thecalculation demonstrating Borrowers’ compliance with the covenants set forth inArticle X is attached hereto.

 

Dated:                     ,         .

 
|   |                    |   |
|--------|-------------------------|--------|
|   | Name:                   |   |   |
|   | Chief Financial Officer |
|        |                         |        |  |  |

 

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**EXHIBITGTOSECOND AMENDED AND RESTATED CREDIT AGREEMENT**

** **

**Assignment andAssumption Agreement**

 

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

 

WHEREAS, Assignor is aLender under that certain Second Amended and Restated Credit Agreement amongMonaco Coach Corporation, Royale Coach By Monaco, Inc., MCC AcquisitionCorporation, Outdoor Resorts of Naples, Inc., Outdoor Resorts ofLas Vegas, Inc. and Outdoor Resorts Motorcoach Country Club, Inc. (eachindividually referred to as “Borrower” and all collectively referred to as “Borrowers”),U.S. Bank National Association (as Administrative Lender) and the lenders namedtherein dated as of November 17, 2004, (as amended, modified orsupplemented from time to time, the “Credit Agreement”).  Capitalized terms used but not defined inthis Agreement shall have the meanings set forth in the Credit Agreement.

 

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

 

NOW, THEREFORE, inconsideration of the mutual agreements herein contained, the parties heretoagree as follows:

 

1.                                       Assignment.** **Effective on theAssignment Effective Date (as defined in Section 3 hereof), Assignor,without recourse and without representation or warranty (except as expresslyprovided in Section 6 hereof), hereby assigns to Assignee the AssignedRights and Obligations (as defined below).

 

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

 

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

 

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

 

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

 

4.                                       Paymentson Assignment Effective Date.  Inconsideration of the assignment by Assignor to, and the assumption by Assigneeof, the Assigned Rights and Obligations, on the Assignment Effective Date:  (a) Assignee shall pay to Assignor theprincipal amount of all Loans made by Assignor pursuant to the Credit Agreementthat are attributable to the Assigned Rights and Obligations and outstanding onthe Assignment Effective Date; (b) each of Assignor and Assignee shall pay tothe other such amounts (if any) as are specified in any written agreement orexchange of letters between them; and (c) Assignee shall pay to AdministrativeLender an assignment processing and recordation fee of $                 .

 

5.                                       Allocationand Payment of Interest and Fees.

 

(a)                                  AdministrativeLender shall pay to Assignee all interest, commitment fees and other amountsnot constituting principal that are paid by or on behalf of Borrowers pursuantto the Loan Documents and are attributable to the Assigned Rights andObligations (“Borrower Amounts”) which accrue on and after the AssignmentEffective Date.  If Assignor receives orcollects any such Borrower Amounts, Assignor shall promptly pay them toAssignee.

 

(b)                                 AdministrativeLender shall pay to Assignor all Borrower Amounts that accrue before theAssignment Effective Date.  If Assigneereceives or collects any such Borrower Amounts, Assignee shall promptly paythem to Assignor.

 

6.                                       Representationsand Warranties.

 

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

 

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

 

(ii)                                  themaking and performance of this Agreement and all documents required to beexecuted and delivered by it pursuant hereto do not and will not violate anylaw or regulation applicable to it;

 

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

 

(iv)                              allapprovals, authorizations or other actions by, or filings with, any governmentalauthority necessary for the validity or enforceability of its obligations underthis Agreement have been made or obtained.

 

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

 

(c)                                  Assigneerepresents and warrants to Assignor as follows:

 

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

 

(ii)                                  Assigneehas received a copy of the Loan Documents and such other documents, financialstatements and information as Assignee deems appropriate to make its own creditanalysis and decision to enter into this Agreement.

 

7.                                       NoAssignor Responsibility.  Assignormakes no representation or warranty and assumes no responsibility to Assigneefor:

 

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

 

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

 

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

 

(d)                                 theaccuracy or completeness of any information provided to Assignee, whether byAssignor or by or on behalf of Borrowers.

 

Assignor shall have noinitial or continuing duty or responsibility to make any investigation of thefinancial condition, affairs or creditworthiness of Borrowers, or the value ofany 

 

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

 

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

 

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

 

[10.                             ForeignWithholding.

 

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

 

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

 

[11.]                         General.

 

(a)                                  ThisAgreement constitutes the entire understanding of the parties with respect tothe subject matter hereof and supersedes all prior and current understandingsand 

 

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

 

(b)                                 Noterm or provision of this Agreement may be amended, waived or terminatedorally, but only by an instrument signed by the parties hereto.

 

(c)                                  ThisAgreement may be executed in one or more counterparts.  Each set of executed counterparts shall be anoriginal.  Executed counterparts may bedelivered by facsimile transmission.

 

(d)                                 Assignormay at any time and from time to time grant to others pursuant to the LoanDocuments assignments of or participations in all or part of Assignor’s shareof the Loans, Letter of Credit Obligations and Total Commitments, but not withrespect to the Assigned Rights and Obligations.

 

(e)                                  ThisAgreement shall be binding upon and inure to the benefit of the parties heretoand their respective successors and assigns. Neither Assignor nor Assignee may assign or transfer any of its rightsor obligations under this Agreement without the prior written consent of theother.  The preceding sentence shall notlimit the right of Assignee to grant to others assignments of or participationsin all or part of the Assigned Rights and Obligations to the extent permittedby the terms of the Loan Documents.

 

(f)                                    Allpayments to Assignor or Assignee hereunder shall, unless otherwise specified bythe party entitled thereto, be made in United States Dollars, in immediatelyavailable funds, and to the address or account specified on the signature pagesof this Agreement.  The address ofAssignee for notice purposes under the Credit Agreement shall be as specifiedon the signature pages of this Agreement.

 

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

 

(h)                                 Eachparty shall bear its own expenses in connection with the preparation andexecution of this Agreement.

 

(i)                                     ThisAgreement shall be governed by and construed in accordance with the laws of theState of Oregon.

 

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

 
|   | ASSIGNOR:                                         |
|--------|---------------------------------------------------|
|   |                                              |
|   |                                              |
|   |                                              |
|   | By:                                               |   |
|   | Name:                                             |   |
|   | Title:                                            |   |
|   |                                              |   |
|   |                                              |   |
|   | Assignor’s Notice Instructions:              |
|   |                                              |
|   |                                              |
|   |                                              |
|   |                                              |
|   |                                              |
|   | Attn:                                             |   |
|   | Ref:                                              |   |
|   | Telephone: (     )       |
|   | Facsimile: (      ) |
|   |                                              |
|   |                                              |
|   | Assignor’s Payment Instructions:             |
|   |                                              |
|   |                                              |
|   |                                              |
|   |                                              |
|   |                                              |
|   | ABA No.                                           |   |
|   | Account No.                                       |   |
|   | Attn:                                             |   |
|   | Ref:                                              |   |
|   |                                              |   |
|   |                                              |   |
|   |                                              |
|   | ASSIGNEE:                                         |
|   |                                              |
|   |                                              |
|   |                                              |
|   | By:                                               |   |
|   | Name:                                             |   |
|   | Title:                                            |   |
|        |                                                   |  |  |  |  |  |  |  |  |

 

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|   | Assignee’s Notice Instructions:                                                                                                                            |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                            |
|   |                                                                                                                                                            |
|   |                                                                                                                                                            |
|   |                                                                                                                                                            |
|   |                                                                                                                                                            |
|   | Attn:                                                                                                                                                           |   |
|   | Ref:                                                                                                                                                            |   |
|   | Telephone: (       )                    |
|   | Facsimile: (       )                              |
|   |                                                                                                                                                            |
|   |                                                                                                                                                            |
|   | Assignee’s Payment Instructions:                                                                                                                           |
|   |                                                                                                                                                            |
|   |                                                                                                                                                            |
|   |                                                                                                                                                            |
|   | ABA No.                                                                                                                                                         |   |
|   | Account No.                                                                                                                                                     |   |
|   | Attn:                                                                                                                                                           |   |
|   | Ref:                                                                                                                                                            |   |
|   |                                                                                                                                                            |   |
|   |                                                                                                                                                            |   |
|   |                                                                                                                                                            |
|   | ACKNOWLEDGED AND AGREED:                                                                                                                                        |
|   |                                                                                                                                                            |
|   | ADMINISTRATIVE LENDER:                                                                                                                                          |
|   |                                                                                                                                                            |
|   |                                                                                                                                                            |
|   |                                                                                                                                                            |
|   | By:                                                                                                                                                             |   |
|   | Name:                                                                                                                                                           |   |
|   | Title:                                                                                                                                                          |   |
|        |                                                                                                                                                                 |  |  |  |  |  |  |  |

 

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