**Exhibit 10.1**

 

 

 

U.S. $25,000,000

 

 

CREDIT AGREEMENT

 

 

dated as of August 12, 2005

 

 

among

NATIONAL R.V. HOLDINGS, INC.,

NATIONAL R.V., INC.,

and

COUNTRY COACH, INC.,

 

as the Borrowers,

 

VARIOUS LENDERS,

 

as the Lenders,

 

and

 

 

UPS CAPITAL CORPORATION,

 

as Agent for the Lenders

 

 

 

----

 

**TABLE OF CONTENTS**

 
| ARTICLE 1    DEFINITIONS      |                                                               |
|--------------------------------------------------------|--------------------------------------------------------------------|
| SECTION 1.1                                       | Defined Terms                                                      |   |
| SECTION 1.2                                       | Use of Defined Terms                                               |   |
| SECTION 1.3                                       | Cross-References                                                   |   |
| SECTION 1.4                                       | Accounting and Financial  Determinations                           |   |
| ARTICLE 2    COMMITMENTS      |                                                               |
| SECTION 2.1                                       | Commitment                                                         |   |
| SECTION 2.1.1                                     | Commitments                                                        |   |
| SECTION 2.1.2                                     | Agent and Lenders Not  Required to Extend Credit under Commitments |   |
| SECTION 2.2                                       | Establishment of Reserves                                          |   |
| SECTION 2.3                                       | Increase in Working Capital  Commitment Amount                     |   |
| SECTION 2.4                                       | Certain Fees                                                       |   |
| SECTION 2.5                                       | Increased Costs; Capital  Adequacy                                 |   |
| ARTICLE 3    LOANS  AND NOTES |                                                               |
| SECTION 3.1                                       | Borrowing Procedure                                                |   |
| SECTION 3.2                                       | Notes                                                              |   |
| SECTION 3.3                                       | Principal Payments                                                 |   |
| SECTION 3.3.1                                     | Repayments and Prepayments                                         |   |
| SECTION 3.3.2                                     | [not used]                                                         |   |
| SECTION 3.3.3                                     | Collections                                                        |   |
| SECTION 3.3.4                                     | Termination Fee                                                    |   |
| SECTION 3.3.5                                     | Working Capital Facility  Loans on Borrower’s Behalf          |   |
| SECTION 3.3.6                                     | Termination of Commitments                                         |   |
| SECTION 3.3A                                      | Settlement                                                         |   |
| SECTION 3.4                                       | Interest                                                           |   |
| SECTION 3.4.1                                     | Loan Rates                                                         |   |
| SECTION 3.4.2                                     | Continuation and Conversion Elections                              |   |
| SECTION 3.4.3                                     | Post-Default Rates                                                 |   |
| SECTION 3.4.4                                     | Payment Dates                                                      |   |
| SECTION 3.4.5                                     | Rate Determinations                                                |   |
| SECTION 3.4.6                                     | Limitation on Types of Loans                                       |   |
| SECTION 3.4.7                                     | Illegality                                                         |   |
| SECTION 3.4.8                                     | Treatment of Affected Loans                                        |   |
| SECTION 3.4.9                                     | Compensation                                                       |   |
| SECTION 3.5                                       | Taxes                                                              |   |
| SECTION 3.6                                       | Payments, Interest Rate  Computations, Other Computations, Etc.    |   |
| SECTION 3.7                                       | Proration of Payments                                              |   |
| SECTION 3.8                                       | Setoff                                                             |   |
| SECTION 3.9                                       | Use of Proceeds                                                    |   |
| SECTION 3.10                                      | Letters of Credit                                                  |   |
| SECTION 3.10.1                                    | Manner of Issuance                                                 |   |

 

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| SECTION 3.10.2                                                         | Terms of Letters of Credit                                                 |   |
|-----------------------------------------------------------------------------|----------------------------------------------------------------------------|--------|
| SECTION 3.10.3                                                         | Drawings Under Letters of  Credit.                                         |   |
| SECTION 3.10.4                                                         | Letter of Credit Fees.                                                     |   |
| SECTION 3.10.5                                                         | Limitation of Liability With  Respect to Letters of Credit                 |   |
| SECTION 3.11                                                           | Defaulting Lenders                                                         |   |
| ARTICLE 4    CONDITIONS  TO LOANS                  |                                                                       |
| SECTION 4.1                                                            | Initial  Loans and Letters of Credit                                       |   |
| SECTION 4.1.1                                                          | Loan  Documents                                                            |   |
| SECTION 4.1.2                                                          | Resolutions,  Etc.                                                         |   |
| SECTION 4.1.3                                                          | Notes                                                                      |   |
| SECTION 4.1.4                                                          | No Contest,  Etc.                                                          |   |
| SECTION 4.1.5                                                          | Certificate  as to Completed Conditions, Warranties, No Default, Etc.      |   |
| SECTION 4.1.6                                                          | Compliance  with Requirements of Law                                       |   |
| SECTION 4.1.7                                                          | Opinions of  Counsel                                                       |   |
| SECTION 4.1.8                                                          | Closing  Fees, Expenses, Etc.                                              |   |
| SECTION 4.1.9                                                          | Perfection                                                                 |   |
| SECTION 4.1.10                                                         | Employment  Agreements; Compensation                                       |   |
| SECTION 4.1.11                                                         | Pension and  Welfare Liabilities                                           |   |
| SECTION 4.1.12                                                         | Insurance                                                                  |   |
| SECTION 4.1.13                                                         | Financial  Information, Etc.                                               |   |
| SECTION 4.1.14                                                         | Review of  Borrowers’ Operations                                      |   |
| SECTION 4.1.15                                                         | [Intentionally  not used]                                                  |   |
| SECTION 4.1.16                                                         | Material  Contracts                                                        |   |
| SECTION 4.1.17                                                         | Letter to  Accountants                                                     |   |
| SECTION 4.1.18                                                         | Affiliate  Agreements                                                      |   |
| SECTION 4.1.19                                                         | Borrowing  Base Certificate; Minimum Working Capital Facility Availability |   |
| SECTION 4.1.20                                                         | Real Estate                                                                |   |
| SECTION 4.1.21                                                         | [Intentionally  not used]                                                  |   |
| SECTION 4.1.22                                                         | Other  Documents, Certificates, Etc.                                       |   |
| SECTION 4.2                                                            | Incremental  Increases; All Loans and Letters of Credit                    |   |
| SECTION 4.2.1                                                          | Compliance  with Warranties, No Default, Etc.                              |   |
| SECTION 4.2.2                                                          | Borrowing  Request, Letter of Credit Request, Etc.                         |   |
| SECTION 4.2.3                                                          | Satisfactory  Legal Form                                                   |   |
| SECTION 4.2.4                                                          | Margin Regulation                                                          |   |
| SECTION 4.2.5                                                          | Adverse  Change                                                            |   |
| SECTION 4.2.6                                                          | Change in  Law                                                             |   |
| ARTICLE 5    REPRESENTATIONS  AND WARRANTIES, ETC. |                                                                       |
| SECTION 5.1                                                            | Organization,  Power, Authority, Etc.                                      |   |
| SECTION 5.2                                                            | Due  Authorization                                                         |   |
| SECTION 5.3                                                            | Validity,  Etc.                                                            |   |
| SECTION 5.4                                                            | Financial  Information; Solvency                                           |   |
| SECTION 5.5                                                            | Material  Adverse Change                                                   |   |
| SECTION 5.6                                                            | Absence of  Default                                                        |   |

 

ii

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| SECTION 5.7                                | Litigation,  Legislation, Etc.             |   |
|-------------------------------------------------|--------------------------------------------|--------|
| SECTION 5.8                                | Regulations  T, U and X                    |   |
| SECTION 5.9                                | Government  Regulation                     |   |
| SECTION 5.10                               | Taxes                                      |   |
| SECTION 5.11                               | Pension and  Welfare Plans                 |   |
| SECTION 5.12                               | Labor  Controversies                       |   |
| SECTION 5.13                               | Ownership  of Properties; Collateral       |   |
| SECTION 5.14                               | Intellectual  Property                     |   |
| SECTION 5.15                               | Accuracy of  Information                   |   |
| SECTION 5.16                               | Insurance                                  |   |
| SECTION 5.17                               | Indebtedness                               |   |
| SECTION 5.18                               | Environmental  Matters                     |   |
| SECTION 5.19                               | No  Burdensome Agreements                  |   |
| SECTION 5.20                               | Consents                                   |   |
| SECTION 5.21                               | Contracts                                  |   |
| SECTION 5.22                               | Employment  Agreements                     |   |
| SECTION 5.23                               | Condition  of Property                     |   |
| SECTION 5.24                               | Subsidiaries                               |   |
| SECTION 5.25                               | Trade  Relations                           |   |
| SECTION 5.26                               | Leases                                     |   |
| ARTICLE 6    COVENANTS |                                       |
| SECTION 6.1                                | Affirmative  Covenants                     |   |
| SECTION 6.1.1                              | Financial  Information, Etc.               |   |
| SECTION 6.1.2                              | Maintenance  of Corporate Existence, Etc.  |   |
| SECTION 6.1.3                              | Foreign  Qualification                     |   |
| SECTION 6.1.4                              | Payment of  Taxes, Etc.                    |   |
| SECTION 6.1.5                              | Insurance                                  |   |
| SECTION 6.1.6                              | Notice of  Default, Litigation, Etc.       |   |
| SECTION 6.1.7                              | Books and  Records                         |   |
| SECTION 6.1.8                              | Maintenance  of Properties, Etc.           |   |
| SECTION 6.1.9                              | Maintenance  of Licenses and Permits       |   |
| SECTION 6.1.10                             | Employee  Plans                            |   |
| SECTION 6.1.11                             | Compliance  with Laws                      |   |
| SECTION 6.1.12                             | Real Estate                                |   |
| SECTION 6.1.13                             | Subsidiary  Guaranty, etc.                 |   |
| SECTION 6.1.14                             | Inventory  Appraisals                      |   |
| SECTION 6.2                                | Negative  Covenants                        |   |
| SECTION 6.2.1                              | Business  Activities                       |   |
| SECTION 6.2.2                              | Indebtedness                               |   |
| SECTION 6.2.3                              | Liens                                      |   |
| SECTION 6.2.4                              | Financial  Condition                       |   |
| SECTION 6.2.5                              | Capital  Expenditures                      |   |
| SECTION 6.2.6                              | Investments                                |   |
| SECTION 6.2.7                              | Restricted  Payments, Etc.                 |   |
| SECTION 6.2.8                              | Take or Pay  Contracts; Sale/Leasebacks    |   |
| SECTION 6.2.9                              | Consolidation,  Merger, Subsidiaries, Etc. |   |

 

iii

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| SECTION 6.2.10                                      | Asset  Dispositions, Etc.                                                  |   |
|----------------------------------------------------------|----------------------------------------------------------------------------|--------|
| SECTION 6.2.11                                      | Modification  of Organic Documents, Etc.                                   |   |
| SECTION 6.2.12                                      | Transactions  with Affiliates                                              |   |
| SECTION 6.2.13                                      | Inconsistent  Agreements                                                   |   |
| SECTION 6.2.14                                      | Change in  Accounting Method                                               |   |
| SECTION 6.2.15                                      | Change in  Fiscal Year End                                                 |   |
| SECTION 6.2.16                                      | Compliance  with ERISA                                                     |   |
| SECTION 6.2.17                                      | Amendments  to Certain Agreements                                          |   |
| SECTION 6.2.18                                      | Modification  of Subordinated Debt                                         |   |
| SECTION 6.2.19                                      | Prohibition  on Prepayment of Subordinated Debt                            |   |
| ARTICLE 7    EVENTS  OF DEFAULT |                                                                       |
| SECTION 7.1                                         | Events of  Default                                                         |   |
| SECTION 7.1.1                                       | Non-Payment  of Obligations                                                |   |
| SECTION 7.1.2                                       | Non-Performance  of Certain Covenants                                      |   |
| SECTION 7.1.3                                       | Defaults  Under Other Loan Documents; Non-Performance of Other Obligations |   |
| SECTION 7.1.4                                       | Bankruptcy,  Insolvency, Etc.                                              |   |
| SECTION 7.1.5                                       | Breach of  Warranty                                                        |   |
| SECTION 7.1.6                                       | Default on  Other Indebtedness, Etc.                                       |   |
| SECTION 7.1.7                                       | Failure of  Valid, Perfected Lien                                          |   |
| SECTION 7.1.8                                       | Employee  Plans.                                                           |   |
| SECTION 7.1.9                                       | Judgments                                                                  |   |
| SECTION 7.1.10                                      | Loss of  Permits, Etc.                                                     |   |
| SECTION 7.1.11                                      | Delisting                                                                  |   |
| SECTION 7.2                                         | Action if  Bankruptcy                                                      |   |
| SECTION 7.3                                         | Action if  Other Event of Default                                          |   |
| SECTION 7.4                                         | Application  of Proceeds Following Default                                 |   |
| ARTICLE 8    THE  AGENT         |                                                                       |
| SECTION 8.1                                         | Actions                                                                    |   |
| SECTION 8.2                                         | Funding  Reliance, Etc.                                                    |   |
| SECTION 8.3                                         | Exculpation                                                                |   |
| SECTION 8.4                                         | Successor                                                                  |   |
| SECTION 8.5                                         | Loans and  other Transactions by the Agent and its Affiliates              |   |
| SECTION 8.6                                         | Credit Decisions                                                           |   |
| SECTION 8.7                                         | Copies,  Etc.                                                              |   |
| ARTICLE 9    MISCELLANEOUS      |                                                                       |
| SECTION 9.1                                         | Waivers,  Amendments, Etc.                                                 |   |
| SECTION 9.2                                         | Notices                                                                    |   |
| SECTION 9.3                                         | Costs and  Expenses                                                        |   |
| SECTION 9.4                                         | Indemnification                                                            |   |
| SECTION 9.5                                         | Survival                                                                   |   |
| SECTION 9.6                                         | Severability                                                               |   |
| SECTION 9.7                                         | Headings                                                                   |   |
| SECTION 9.8                                         | Counterparts,  Effectiveness, Etc.                                         |   |
| SECTION 9.9                                         | Governing  Law; Entire Agreement                                           |   |

 

iv

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| SECTION 9.10                                        | Successors  and Assigns                   |   |
|----------------------------------------------------------|-------------------------------------------|--------|
| SECTION 9.11                                        | Sale and  Transfers, Participations, Etc. |   |
| SECTION 9.12                                        | Other  Transactions                       |   |
| SECTION 9.13                                        | Confidentiality                           |   |
| SECTION 9.14                                        | Change in  Accounting Principles          |   |
| SECTION 9.15                                        | Waiver of  Jury Trial, Etc.               |   |
| SECTION 9.16                                        | Limitation  of Liability                  |   |
| SECTION 9.17                                        | Usury  Savings Clause                     |   |
| SECTION 9.18                                        | TM Services                               |   |
| ARTICLE 10    BORROWING  AGENCY |                                      |
| SECTION 10.1                                        | Borrowing  Agency Provisions              |   |
| SECTION 10.2                                        | Waiver of  Subrogation                    |   |
| SECTION 10.3                                        | Patriot Act                               |   |

 

**SCHEDULESAND EXHIBITS**

 
| Schedules          |   |                                         |
|--------------------|--------|----------------------------------------------|
|               |   |                                         |
| Schedule I    |   | Commitments                                  |
|               |   |                                         |
| Schedule E-1  |   | Locations of  Inventory                      |
|               |   |                                         |
| Schedule 5.4  |   | Financial  Statement Compliance              |
|               |   |                                         |
| Schedule 5.6  |   | Compliance with  Laws                        |
|               |   |                                         |
| Schedule 5.7  |   | Litigation and  Government Investigation     |
|               |   |                                         |
| Schedule 5.11 |   | Pension and  Welfare Plans                   |
|               |   |                                         |
| Schedule 5.13 |   | Existing Liens                               |
|               |   |                                         |
| Schedule 5.14 |   | Intellectual  Property                       |
|               |   |                                         |
| Schedule 5.16 |   | Insurance                                    |
|               |   |                                         |
| Schedule 5.21 |   | Material  Contracts                          |
|               |   |                                         |
| Schedule 5.22 |   | Employment  Contracts                        |
|               |   |                                         |
| Schedule 5.24 |   | Subsidiaries                                 |
|               |   |                                         |
| Schedule 5.26 |   | Existing Leases                              |
|               |   |                                         |
|               |   |                                         |
| Exhibit A     |   | Form of  Working Capital Facility Note  |
|               |   |                                         |
| Exhibit B     |   | Form of  Borrowing Request              |
|               |   |                                         |
| Exhibit C     |   | Form of  Borrowing Base Certificate     |
|               |   |                                         |
| Exhibit D     |   | Form of  Compliance Certificate         |
|               |   |                                         |
| Exhibit E     |   | Form of  Continuation/Conversion Notice |
|               |   |                                         |
| Exhibit F     |   | Form of  Letter of Credit Request       |
|               |   |                                         |
| Exhibit G     |   | Form of  Security Agreement             |

 

v

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**CREDIT AGREEMENT**

 

THIS CREDIT AGREEMENT,dated as of August 12, 2005 (this “Agreement”), is made amongNATIONAL R.V. HOLDINGS, INC., a Delaware corporation (“Holdings”);NATIONAL R.V., INC., a California corporation (“NRV”); and COUNTRYCOACH, INC., an Oregon corporation (“CCI”), Holdings, NRV and CCIhereinafter called, individually, a “Borrower” and, collectively witheach other, the “Borrowers”), with Holdings as Borrowers’ representativeacting on Borrowers’ behalf pursuant hereto (in such capacity, “Borrowers’Representative”), the various lenders from time to time party hereto (the “Lenders”)and UPS CAPITAL CORPORATION, a Delaware corporation, as a Lender and as agentfor the Lenders (in such capacity, the “Agent”).

 

W I T N E S S E T H:

 

RECITALS.

 

WHEREAS, Holdings is thesole shareholder and parent company of NRV and CCI; and

 

WHEREAS, Holdings, NRVand CCI are engaged in a common business enterprise in which extensions ofcredit to any one of them will result in direct and substantive economicbenefit to each of them; and

 

WHEREAS, accordingly theBorrowers have applied jointly and severally to obtain from the Lenders asenior secured credit facility in an aggregate principal amount of up to TwentyFive Million Dollars ($25,000,000), subject to increase to up to Forty MillionDollars ($40,000,000) as provided herein; and

 

WHEREAS, the Lenders arewilling, on the terms and conditions hereinafter set forth (including, withoutlimitation, Articles 2 and 4), to extend such credit facility andmake extensions of credit pursuant thereto; and

 

WHEREAS, the creditfacility will be used in the manner described in Section 3.9 below;

 

NOW, THEREFORE, theparties hereto, intending to be legally bound, agree as follows:

 

# ARTICLE 1DEFINITIONS

#  

## SECTION 1.1         DefinedTerms.  The following terms (whetheror not underscored) when used in this Agreement, including its preamble andrecitals, shall, except where the context otherwise requires, have thefollowing meanings (such meanings to be equally applicable to the singular andplural forms thereof):

##  

“Account Debtor”means any Person who is or may become obligated to a Borrower under, withrespect to, or on account of, an Account.

 

----

 

“Accounts” shallmean, for any Person, all “accounts” (as defined in the UCC) and all amountspayable to such Person, now or hereafter owned or acquired by such Person or inwhich such Person now or hereafter has or acquires any rights.

 

“Affiliate” of anyPerson means any other Person which, directly or indirectly, controls or iscontrolled by or under common control with such Person (excluding any trusteeunder, or any committee with responsibility for administering, any Plan).  A Person shall be deemed to be “controlled by”any other Person if such other Person possesses, directly or indirectly, thepower:  (a) to vote ten percent(10%) or more of the securities having ordinary voting power for the electionof the Board of Directors of such Person; or (b) to direct or cause thedirection of the management or policies of such Person whether by contract orotherwise; *provided, however,* that no Lender shallbe deemed to be an Affiliate of any Borrower, and *providedfurther*, notwithstanding the foregoing, with respect to Holdings, “Affiliate”has the meaning ascribed to such term in Rule 12b-2 of the general Rules andRegulations under the Securities Exchange Act of 1934.

 

“Agent” meansUPSC, as agent for the Lenders pursuant to the terms of this Agreement, or suchother Person as shall have subsequently been appointed as the successor agentpursuant to Section 8.4.

 

“Agreement” meansthis Credit Agreement as originally in effect on the Closing Date and asthereafter from time to time amended, supplemented, amended and restated, orotherwise modified and in effect.

 

“Applicable Margin”shall have the meaning set forth in Section 3.4.

 

“Approval” meanseach and every approval, consent, filing and registration by or with anyfederal, state or other regulatory authority (domestic or foreign) necessary toauthorize or permit the execution, delivery or performance of this Agreement,the Notes or any other Loan Document, the granting of any security contemplatedhereby or thereby, the validity or enforceability hereof or thereof, or theconsummation of the transactions contemplated by the Loan Documents.

 

“Assignment of ClaimsAct” means the federal Assignment of Claims Act of 1940, as it may beamended from time to time; together with all regulations promulgated from timeto time with respect thereto.

 

“Authorized Officer”means, relative to any Loan Party, the chief executive officer, president,chief operating officer, chief financial officer, treasurer or chief accountingofficer of such Loan Party (or other officer of such Loan Party approved byAgent for such purpose) whose signatures, incumbency and authority shall havebeen certified to the Agent and the Lenders pursuant to Section 4.1.2(a) orwhich are certified after the Closing Date in a certificate conforming to therequirements of Section 4.1.2(a).

 

“Base Rate” meansa fluctuating rate of interest per annum equal to the higher of:

 

#### (a)           thePrime Rate; and

 

2

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#### (b)           theFederal Funds Rate from time to time in effect plus one-half of onepercent (0.50%) per annum.

####  

Changes in the rate ofinterest on Base Rate Loans shall take effect on the date of each change in theBase Rate.

 

“Base Rate Loans”means Loans, or portions thereof, that bear interest on the basis of the BaseRate.

 

“Blocked AccountAgreement” has the meaning assigned to it in Section 3.3.3.

 

“Board of Directors”means the board of director of a corporation or any comparable governing bodyof any entity that is not a corporation.

 

“Borrower” and “Borrowers”have the meaning set forth in the preamble to this Agreement.

 

“Borrowers’Representative” has the meaning set forth in the preamble to thisAgreement.

 

“Borrowing” meansany group of Loans, or portions thereof, of the same type and, in the case ofLIBOR Loans, having the same Interest Period, in each case made, converted orcontinued by the Lenders on the same Business Day pursuant to the sameBorrowing Request or Continuation/Conversion Notice in accordance with Sections 3.1or 3.4.2, respectively.

 

“BorrowingBase” shall mean a sum determined by Agent, in its credit judgment, fromtime to time, equal to: (i) up to eighty-five percent (85%) of the netdollar amount of Eligible Accounts as at the date of determination; plus(ii) up to fifty percent (50%) of the dollar amount of the EligibleInventory, valued at the lower of cost (computed on a first-in- first-out(FIFO) basis in accordance with GAAP) or market value, at the date ofdetermination, not to exceed, in any event as to Eligible Inventory, the lesserof (A) the Inventory Sublimit, or (B) then current borrowingavailability under the Working Capital Facility Commitment Amount determined byreference to Eligible Accounts under clause (i) above without regard toEligible Inventory; minus (iii) reserves established pursuant to Section 2.2.  Agent shall have the right to adjust theadvance rates hereunder from time to time as it shall deem necessary orappropriate it in its credit judgment, including, without limitation,reductions in advance rates against Eligible Inventory determined by Agent to benecessary or appropriate following its receipt of results of collateral auditsconducted pursuant to Section 6.1.7 or Inventory appraisalsconducted pursuant to Section 6.1.14.

 

“Borrowing BaseCertificate” means a certificate of an Authorized Officer of the Borrowers’Representative in the form of Exhibit C attached hereto.

 

“Borrowing Request”means a Loan request and certificate duly executed by an Authorized Officer ofthe Borrowers’ Representative in the form of Exhibit B attachedhereto.

 

“Business Day”means a day other than a Saturday, Sunday or other day on which commercialbanks in Atlanta, Georgia are authorized or required by law to close, provided,that

 

3

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with respect to notices and determinations inconnection with, and payments of principal and interest on, LIBOR Loans, suchday is also a day for trading by and between banks in Dollar deposits in theinterbank LIBOR market.

 

“Capital Stock” ofany Person means any and all shares, interests, rights to purchase, warrants,options, participations or other equivalents of or interests in (howeverdesignated) corporate Stock or other equity participations, includingpartnership interests and limited liability company membership interests,whether general or limited, voting or non-voting, of such Person, including anypreferred Stock.

 

“Capitalized LeaseLiabilities” means all monetary obligations of the Borrowers and theirSubsidiaries under any leasing or similar arrangement which, in accordance withGAAP, are or would be classified as capitalized leases.

 

“Cash EquivalentInvestment” means, at any time:

 

#### (c)           anydirect obligation issued or guaranteed by the United States of America or anyagency or instrumentality thereof and backed by the full faith and credit ofthe United States of America, or issued by any state or political subdivisionor public instrumentality thereof, (i) which has a remaining maturity atthe time of purchase of not more than one year or (ii) which is subject toa repurchase agreement with any Lender or any Eligible Lending Institutionexercisable within one year from the time of purchase so long as such directobligation remains in the possession of a Borrower or in the possession of suchLender or Eligible Lending Institution and (iii) which, in the case ofobligations of any state or political subdivision or public instrumentalitythereof, is rated “AA” or better by Moody’s Investors Service, Inc. or theequivalent thereof by Standard & Poor’s Rating Services;

####  

#### (d)           certificatesof deposit, time deposits, demand deposits and bankers’ acceptances, having aremaining maturity at the time of purchase of not more than one year, issued byany Lender or by any Eligible Lending Institution;

####  

#### (e)           corporateobligations rated Prime-1 by Moody’s Investors Service, Inc. or A-1 byStandard & Poor’s Corporation, having a remaining maturity at the timeof purchase of not more than one year; and

####  

#### (f)            sharesof funds registered under the Investment Company Act of 1940, as amended,having assets of at least $100,000,000 which invest only in obligationsdescribed above and which shares are rated by Moody’s Investors Service, Inc.or Standard & Poor’s Corporation in one of the two highest ratingcategories assigned by such agencies for obligations of such nature.

####  

“Change in Control”means the occurrence of one or more of the following: (i) the consummationof any transaction the result of which is that any Person or “group” (as suchterm is used in Section 13(d)(3) of the Securities Exchange Act) (otherthan Permitted Holders) is or becomes the “beneficial owner” (as defined in Rule 13d-3of the Securities Exchange Act), directly or indirectly, of Voting Stockrepresenting more than thirty percent (30%) of the voting power of the VotingStock of Holdings; (ii) Holdings consolidates with, or merges with orinto, another Person or sells, assigns, conveys, transfers, leases or otherwisedisposes of all or

 

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substantially all of the assets of Holdings and itsSubsidiaries taken as a whole to any Person, or any Person consolidates with,or merges with or into, Holdings, in any such event pursuant to a transactionin which the outstanding Voting Stock of Holdings is converted into orexchanged for cash, securities or other property, other than any suchtransaction where the outstanding Voting Stock of Holdings is converted into orexchanged for Voting Stock of the surviving or transferee corporation and thebeneficial owners of the Voting Stock of Holdings immediately prior to suchtransaction own, directly or indirectly, Voting Stock representing not lessthan a majority of the voting power of the Voting Stock of the surviving ortransferee corporation immediately after such transaction; (iii) duringany consecutive two-year period, individuals who at the beginning of suchperiod constituted the Board of Directors of Holdings (together with any newdirectors whose election by such Board of Directors or whose nomination forelection by the stockholders of Holdings was approved by a vote of two-thirdsof the directors then still in office who were either directors at thebeginning of such period or whose election or nomination for election waspreviously so approved) cease for any reason to constitute a majority of theBoard of Directors of Holdings then in office, (iv) the approval by theholders of Capital Stock of Holdings of any plan or proposal for liquidation ordissolution of Holdings, (v) Holdings shall own or control less than onehundred percent (100%) of the issued and outstanding Capital Stock of each ofNRV and CCI.

 

“Charges” meansall federal, state, county, city, municipal, local, foreign or othergovernmental (including, without limitation, PBGC) (a) taxes at thetime due and payable, and (b) levies, assessments, charges, liens, claimsor encumbrances upon or relating to (i) the Collateral, (ii) theObligations, (iii) the Borrowers’ and their Subsidiaries’ employees,payroll, income or gross receipts, (iv) the Borrowers’ and theirSubsidiaries’ ownership or use of their assets, or (v) any other aspect ofthe Borrowers’ and their Subsidiaries’ respective businesses.

 

“Clearing Banks”has the meaning assigned to it in Section 3.3.3.

 

“Closing Date”means the date of this Agreement.

 

“Collateral” meansall property and interests in property and proceeds thereof now owned orhereafter acquired by a Borrower or any Subsidiary of a Borrower in and uponwhich a Lien is granted to the Agent, for its benefit and the ratable benefitof the Lenders, under any of the Loan Documents.

 

“Commitment”means, with respect to any Lender, the commitment of such Lender to makeWorking Capital Facility Loans pursuant to Section 2.1 and toparticipate in Letters of Credit pursuant to Section 3.10.  Schedule I sets forth the Commitmentof each Lender as of the Closing Date.

 

“Commonly ControlledEntity” means an entity, trade or business, whether or not incorporated,which is from time to time a member of a controlled group or a group undercommon control with a Borrower within the meaning of Sections 414(b),414(c), 414(m) or 414(o) of the IRC or Section 4001(a)(14) of ERISA.

 

“ComplianceCertificate” means a certificate duly executed by an Authorized Officer ofthe Borrowers’ Representative in the form of Exhibit D attachedhereto.

 

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“ConcentrationAccounts” has the meaning assigned to it in Section 3.3.3.

 

“Condition PrecedentMaterial Adverse Change” means (a) a material adverse changein the condition (financial or otherwise), operations, performance,business, properties or prospects of the Borrowers and their Subsidiaries,taken as a whole, which is reasonably likely to result in a decrease in theaggregate Net Worth of Borrowers and their Subsidiaries to an amount less than$50,000,000, or (b) a material adverse change in (i) the rights andremedies of the Lenders or the Agent under the Loan Documents, the ability ofthe Borrowers to repay the Obligations or the ability of any Loan Party toperform its obligations under the Loan Documents, (iii) the legality,validity or enforceability of any Loan Document or (iv) the Liens in theCollateral granted the Agent for its benefit and the ratable benefit of theLenders pursuant to the Security Documents.

 

“Consolidated CapitalExpenditures” means, for any period, without duplication, the sum of (a) thegross dollar amount of additions during such period to property, plant,equipment and other fixed assets of the Borrowers and their Subsidiaries,including those additions made in the ordinary course of business, plus (b) (tothe extent not otherwise included in clause (a) of this definition) theaggregate amount of Capitalized Lease Liabilities incurred during such periodby the Borrowers and their Subsidiaries, all as determined in accordance withGAAP.

 

“Continuation/ConversionNotice” means a notice of continuation or conversion and certificate dulyexecuted by an Authorized Officer of the Borrowers’ Representative in the formof Exhibit E attached hereto.

 

“ContractualObligation” means, relative to any Person, any provision of any securityissued by such Person or of any Instrument or undertaking to which such Personis a party or by which it or any of its property is bound, excluding, in thecase of any Loan Party, any Loan Document to which it is party.

 

“Default” meansany condition that constitutes an Event of Default, or that, with the giving ofany notice or lapse of time or both, would constitute an Event of Default.

 

“Defaulting Lender”has the meaning assigned to it in Section 3.11.

 

“Deposit Account”means any deposit account, as such term is defined in the UCC.

 

“Deposit AccountControl Agreement” means any control agreement executed by and among a LoanParty, the Agent, for the benefit of itself and the Lenders, and the depositoryinstitution at which such Loan Party maintains a Deposit Account.

 

“Dollar” and thesign “$” mean lawful money of the United States.

 

“EBITDA” means,for any fiscal period, an amount equal to Net Income plus (to the extentdeducted in determining Net Income) Interest Expense, provisions for incometaxes, depreciation and amortization of intangible assets for the Borrowers andtheir Subsidiaries determined on a consolidated basis in accordance with GAAP.

 

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“Eligible Account”means that portion of each Borrower’s Accounts consisting of trade accountsreceivable actually billed to, and owing to such Borrower by, its AccountDebtors in the ordinary course of its business (net of any rebates with respectto the invoice applicable to any Account), which Agent, in its credit judgment,has determined to be eligible for credit extensions hereunder excluding,however, in any event, unless otherwise approved by Agent, in its creditjudgment, any such Account:  (i) withrespect to which any portion thereof is more than ninety (90) days past invoicedate; (ii) which is owing by any Affiliate of such Borrower; (iii) whichis owing by any Account Debtor having twenty-five percent (25%) or more in facevalue of its then existing accounts with one or more Borrowers ineligiblehereunder pursuant to the operation and effect of clause (i) above; (iv) whicharises from any contract on which such Borrower’s performance is assured by aperformance, completion or other bond; (v) constituting retainage whichhas been withheld from such Borrower pending contract completion, to the extentthereof; (vi) constituting a service, warranty or similar charge, to theextent thereof; (vii) which is evidenced by a promissory note, other instrumentor chattel paper; (viii) which represents an accord and satisfaction inrespect of any prior account receivable; (ix) the assignment of which issubject to any requirements set forth in the Assignment of Claims Act (unlessand except to the extent that such Borrower has complied therewith to Agent’ssatisfaction); (x) which does not conform in any respect to the warranties andrepresentations set forth in the Loan Documents in respect of Accounts;(xi) which is owing by any Account Debtor (excepting, however, Lazydays RV**)** whose accounts in face amount with one or more Borrowersexceed twenty percent (20%) of all Borrowers’ Eligible Accounts, but only tothe extent of such excess; (xii) which is owing by, billed to or paid by anyAccount Debtor not located in the United States of America (unless and exceptto the extent that it is backed by a letter of credit issued to such Borroweras beneficiary by or through a bank headquartered in the United States which isacceptable to Agent), (xiii) as to which a duly perfected, first prioritysecurity interest does not exist at any time in favor of Agent for the ratablebenefit of itself and the Lenders, (xiv) which is subject to any Liens otherthan as described in the preceding clause (xiii) and junior Liens permitted by Section 6.2.3;(xv) as to which any counterclaim, defense, setoff, deduction or contra-accountexists, to the extent thereof; or (xvi) which has otherwise been determined byAgent in its credit judgment not to be an “Eligible Account” for purposeshereof.

 

“Eligible Inventory”shall mean that portion of the Inventory consisting of (A) raw materials, (B) chassis,(C) if Agent elects in its credit judgment following completion of a fieldexam pursuant to Section 6.1.7, Final Stage Work-in-Process Inventory and (D) new,saleable finished goods inventory of a Borrower, in each case which Agent, inits credit judgment, has determined to be eligible for credit extensionshereunder, excluding, however, in any event, unless otherwiseapproved by Agent, in its credit judgment, any such Inventory which (i) isnot at all times subject to a duly perfected, first priority security interestin favor of Agent, for the ratable benefit of itself and Lenders; (ii)  issubject to any Liens other than as described in the preceding clause (i) andjunior Liens permitted by Section 6.2.3; (iii) is not in goodand saleable condition; (iv) is on consignment from, or is subject to anypurchase money security interest in favor of, any supplier (unless and exceptto the extent that a reserve has been imposed in respect of, and in the amountof, such supplier’s claim); (v) constitutes returned, repurchased,repossessed, damaged or slow-moving goods (inventory that is more than twelve(12) months old); (vi) does not conform in all respects to the warrantiesand representations set forth in the Loan Documents in respect of Inventory; (vii) issubject to a negotiable document of title (unless issued or endorsed to Agent);(viii) is subject to any license or other agreement that limits or

 

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restricts such Borrower’s or Agent’s right to sell orotherwise dispose of such Inventory; (ix) is not located at one of thelocations in the United States set forth in Schedule E-1 hereto,(x) is located on real property leased by a Borrower, in a contractwarehouse, or is in the possession of a third party, in each case, unless it issubject to a landlord’s waiver, warehousemen’s agreement, bailee agreement, orsimilar agreement, in each case in form and substance satisfactory to Agent,executed by the landlord, warehouseman, bailee, or other third party, as thecase may be, or Agent has established a rent or other appropriate reserve, inits discretion, with respect to such Inventory; and (xi) has otherwise beendetermined by Agent in its credit judgment to be excluded from “EligibleInventory” for purposes hereof.

 

“Eligible LendingInstitution” means a financial institution having a branch or office in theUnited States and having capital and surplus and undivided profits aggregatingat least $100,000,000 and rated Prime-1 or better by Moody’s Investors Service, Inc.or A-1 or better by Standard & Poor’s Corporation.

 

“Environment”means soil, surface waters, ground waters, land, streams, sediments, surface orsubsurface strata and ambient air.

 

“Environmental Laws”means all federal, state, local and foreign laws or regulations, codes, commonlaw, consent agreements, orders, decrees, judgments or injunctions issued,promulgated, approved or entered thereunder relating to pollution or protectionof the Environment, natural resource or occupational health and safety.

 

“EnvironmentalLiabilities and Costs” means all liabilities, obligations,responsibilities, remedial actions, losses, damages, punitive damages,consequential damages, treble damages, costs and expenses (including all fees,disbursements and expenses of counsel, expert and consulting fees and costs ofinvestigation and feasibility studies), fines, penalties, settlement costs,sanctions and interest incurred as a result of any claim or demand, by anyPerson, whether based in contract, tort, implied or express warranty, strictliability, criminal or civil statute, any Environmental Law, permit, order,variance or agreement with a Governmental Authority or other Person, arisingfrom or related to the administration of any Environmental Law or arising fromenvironmental, health or safety conditions or a release or threatened releaseresulting from the past, present or future operations of the Borrowers or anyof their Subsidiaries or affecting any of their properties, or any release orthreatened release for which any Borrower or any of its Subsidiaries isotherwise responsible under any Environmental Law.

 

“ERISA” means theEmployee Retirement Income Security Act of 1974, as amended, and any successorstatute of similar import, together with the regulations thereunder, in eachcase as in effect from time to time. References to Sections of ERISA also refer to any successor sections.

 

“Event of Default”means any of the events set forth in Section 7.1.

 

“Federal Funds Rate”means, for any period, a fluctuating interest rate per annum equal for each dayduring such period to:

 

(a)           theweighted average of the rates on overnight federal funds transactions withmembers of the Federal Reserve System arranged by federal funds brokers, aspublished for such

 

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day (or, if such day is not a Business Day, for thenext preceding Business Day) by the Federal Reserve Bank of New York; or

 

(b)           ifsuch rate is not so published for any day which is a Business Day, thearithmetic average of the quotations for such transactions received by theAgent, in its sole discretion, either from (i) three (3) federalfunds brokers of recognized standing selected by the Agent in its solediscretion or (ii) the Bank of America, N.A., J.P. Morgan Chase Bank andWachovia Bank, N.A.

 

“Fee Letter” meansthat certain confidential letter agreement dated between the Agent and theBorrowers’ Representative, dated on or prior to the Closing Date.

 

“Final StageWork-in-Process Inventory”  meansmotor coaches which are at least ninety percent (90%) complete.

 

“Financing Statements”means the UCC-1 financing statements filed with respect to the SecurityDocuments pursuant to Section 4.1.9.

 

“Fiscal Month”means any fiscal month of a Fiscal Year.

 

“Fiscal Quarter”means any fiscal quarter of a Fiscal Year.

 

“Fiscal Year”means, subject to Sections 6.2.15 and 9.14, each twelve (12)month accounting period of the Borrowers ending on December 31.

 

“Fixed Charge CoverageRatio” means, for any fiscal period, the ratio of (a) EBITDA for suchperiod minus Consolidated Capital Expenditures for such period to (b) FixedCharges for such period.

 

“Fixed Charges”means, for any period, the sum of (a) Interest Expense for such period, plus(b) scheduled principal repayments of Indebtedness (including, withoutlimitation, scheduled payments of principal in respect of Capitalized LeaseLiabilities) of the Borrowers and their Subsidiaries for such period, plus,(c) provisions for income taxes made by the Borrowers and theirSubsidiaries for such period plus (d) dividends and distributionspaid by the Borrowers during such period, determined on a consolidated basis inaccordance with GAAP.

 

“F.R.S. Board”means the Board of Governors of the Federal Reserve System (or any successor).

 

“Funded Debt”  means Indebtedness of any Person that by itsterms matures more than one (1) year after the date of its creation or matureswithin one (1) year from such date but is renewable or extendible, at theoption of such Person, to a date more than one (1) year after such date orthat arises under a revolving credit or similar agreement that obligates thelender or lenders to extend credit during a period of more than one (1) yearfrom such date, including, without limitation, all amounts of FundedIndebtedness of such Person required to be paid or prepaid within one year fromthe date of determination.  For purposeshereof, in the case of Borrowers, the term “Funded Debt” shall include, withoutlimitation, all Loans.

 

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“GAAP” meansgenerally accepted accounting principles in effect from time to time in theUnited States.

 

“GovernmentalAuthority” means any nation or government, any state or other politicalsubdivision thereof and any entity exercising executive, legislative, judicial,regulatory or administrative functions of or pertaining to government.

 

“Guarantor” meanseach Subsidiary Guarantor (if any) and any other Person who now or hereafterbecomes a party to a Guaranty Agreement with respect to the Obligations.

 

“Guaranty Agreement”means, individually and collectively, any Subsidiary Guaranty and any otherguaranty of the Obligations now or hereafter made by any other Person in favorof the Agent and the Lenders, as the same may be amended, restated,supplemented or otherwise modified from time to time.

 

“herein”, “hereof”,“hereto”, “hereunder” and similar terms contained in thisAgreement or any other Loan Document refer to this Agreement or such other LoanDocument, as the case may be, as a whole and not to any particular section,subsection, clause or provision of this Agreement or such other Loan Document.

 

“including” meansincluding without limiting the generality of any description preceding suchterm.

 

“Incremental Increase”has the meaning set forth in Section 2.3.

 

“Indebtedness” ofany Person means, without duplication,

 

(a)           allobligations of such Person for borrowed money (including all notes payable anddrafts accepted representing extensions of credit) and all obligationsevidenced by bonds, debentures, notes or other similar instruments on whichinterest charges are customarily paid;

 

(b)           allobligations, contingent or otherwise, relative to the face amount of allletters of credit, whether or not drawn, and banker’s acceptances issued forthe account of such Person;

 

(c)           allCapitalized Lease Liabilities of such Person (to the extent required by GAAP tobe included on the balance sheet of such Person);

 

(d)           whetheror not so included as liabilities in accordance with GAAP:

 

(i)            allobligations of such Person to pay the deferred purchase price of property orservices (excluding trade accounts payable arising in the ordinary course ofbusiness) and Indebtedness secured by a Lien on property owned or beingpurchased by such Person (including Indebtedness arising under conditionalsales or other title retention agreements), whether or not such Indebtednessshall have been assumed by such Person or is limited in recourse; and

 

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(ii)           allobligations of such Person in respect of, and obligations (contingent orotherwise) to purchase or otherwise acquire, or otherwise assure a creditoragainst loss in respect of, Indebtedness of another Person of the typedescribed in clause (a), (b), (c) or (d)(i), above, or clause (e) below;

 

(e)           allobligations of such Person to redeem, purchase or otherwise retire orextinguish any of its Stock at a fixed or determinable date (whether byoperation of a sinking fund or otherwise), at another’s option or upon theoccurrence of a condition not solely within the control of such Person (*e.g.,* redemption from future earnings).

 

“Indemnified Liabilities”means any and all actions, causes of action, suits, losses, costs, liabilities,damages and expenses incurred by or asserted or awarded against any LenderParty and against which the Borrowers have indemnified the Lender Parties asprovided in Section 9.4.

 

“Insolvency” or “Insolvent”means, at any particular time, a Multiemployer Pension Plan is insolvent withinthe meaning of Section 4245 of ERISA.

 

“Instrument” meansany contract, agreement, letter of credit, indenture, mortgage, warrant, deed,certificate of title, document or writing (whether by formal agreement, letteror otherwise) under which any obligation is evidenced, assumed or undertaken,any Lien (or right or interest therein) is granted or perfected, or anyproperty (or right or interest therein) is conveyed.

 

“Intellectual Property”means, collectively, (a) patents, patent rights and patent applications,copyrights and copyright applications, trademarks, trademark rights, tradenames, trade name rights, service marks, service mark rights, applications forregistration of trademarks, trade names and service marks, fictitious namesregistrations and trademarks, trade name and service mark registrations, domainnames and domain name registration agreements, and (b) patent licenses,trademark licenses, copyright licenses and other licenses to use any of theitems described in clause (a), and any other similar items necessary toconduct or operate the business of a Borrower and its Subsidiaries.

 

“Interest Expense”means, for any fiscal period, the interest expense accrued during such periodin respect of Indebtedness of the Borrowers and their Subsidiaries, determinedon a consolidated basis in accordance with GAAP.

 

“Interest Period”means, relative to any LIBOR Loans comprising part of the same Borrowing, theperiod beginning on (and including) the date on which such LIBOR Loans are madeor continued as, or converted into, LIBOR Loans pursuant to Section 3.1or Section 3.4.2 and ending on (but excluding) the date whichnumerically corresponds to such date one (1), three (3) or six (6) monthsthereafter (or, if such month has no numerically corresponding date, on thelast Business Day of such month), in either case as the BorrowersRepresentative may select in its relevant notice pursuant to Section 3.1or Section 3.4.2; *provided, however,*that:

 

(a)           theBorrowers Representative shall not be permitted to select Interest Periods tobe in effect at any one time which have expiration dates occurring on more thanfive (5) different dates;

 

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(b)           ifsuch Interest Period would otherwise end on a day which is not a Business Day,such Interest Period shall end on the next following Business Day (unless suchnext following Business Day is the first Business Day of a calendar month, inwhich case such Interest Period shall end on the Business Day next precedingsuch numerically corresponding date); and

 

(c)           nosuch Interest Period with respect to Working Capital Facility Loans may endlater than the Working Capital Facility Maturity Date.

 

“Internal RevenueService” means the Internal Revenue Service of the United States of America(and its successors).

 

“Inventory” meansall “inventory” (as defined in the UCC), now or hereafter owned or acquired bya Person or in which a Person now or hereafter has or acquires any rights,wherever located, and, in any event, shall mean and include, withoutlimitation, all raw materials, packaging materials inventory and othermaterials and supplies, work in process, finished goods, and any products madeor processed therefrom and all substances, if any, commingled therewith oradded thereto.

 

“Inventory Sublimit”means Fifteen Million Dollars ($15,000,000), initially, subject to increase asprovided in Section 2.3.

 

“Investment”means, relative to any Person:  (a) anyloan or advance made by such Person to any other Person (excluding commission,travel and similar advances to officers and employees made in the ordinarycourse of business); (b) any ownership or similar interest held by suchPerson in any other Person; and (c) the purchase of any debt or equitysecurities or instruments issued by any other Person (including, withoutlimitation, Stock, notes, debentures, drafts and acceptances, trustcertificates, partnership interests or units or membership interests in limitedliability companies).  The amount of anyInvestment shall be the original principal or capital amount thereof less allreturns of principal or equity thereon (and without adjustment by reason of thefinancial condition of such other Person) and shall, if made by the transfer orexchange of property other than cash, be deemed to have been made in anoriginal principal or capital amount equal to the fair market value of suchproperty.

 

“IRC” means theInternal Revenue Code of 1986, as amended, and any successor statute of similarimport, together with the regulations thereunder, in each case as in effectfrom time to time.  References toSections of the IRC also refer to any successor sections.

 

“Junction CityProperty” means that certain real property that comprises approximately 74acres located adjacent to 135 E. First Avenue, Junction City, Oregon 97448.

 

“Lender” meansUPSC and any other of the various lenders as are, or may become, parties tothis Agreement as “Lenders” hereunder from time to time.

 

“Lender Default”has the meaning assigned to it in Section 3.11.

 

“Lender Parties”means, collectively, the Agent and each Lender, and each of their respectivesuccessors and assigns, and each of the respective officers, directors,employees, attorneys and agents of the Agent and each Lender and each of theirrespective successors and assigns, indemnified by the Borrowers as provided in Section 9.4.

 

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“Letter of Credit”means an irrevocable standby or commercial letter of credit issued by anissuing bank selected by Agent for the account of a Borrower or one of itsSubsidiaries pursuant to Section 3.10.

 

“Letter of CreditObligation” means, in respect of each Letter of Credit, the undrawn faceamount of such Letter of Credit, plus the amount of all drawings undersuch Letter of Credit for which any Lender has not been reimbursed by theBorrowers pursuant hereto.

 

“Letter of CreditSub-Facility” means the letter of credit facility provided by the Lendersto the Borrowers pursuant to Section 2.1.2 and Section 3.10.

 

“Letter of CreditSub-Facility Amount” means Eight****MillionDollars ($8,000,000).

 

“Letter of CreditRequest” means a request and certificate for the issuance of a Letter ofCredit, duly executed by an Authorized Officer of the Borrowers’ Representativein the form of Exhibit F, delivered to the Agent pursuant to Section 3.10.1,together with the letter of credit application accompanying such request.

 

“Leverage Ratio”means, as of any date, the ratio of (a) Funded Debt as of such date to (b) EBITDAfor the period of twelve consecutive months most recently ending on or prior tosuch date.

 

“LIBOR Base Rate”means, with respect to any Interest Period, the interest rate published forsuch period under the “Money Rates” section of The Wall Street Journal onthe date which is two (2) Business Days prior to the commencement of suchInterest Period as the London Interbank Offered Rate (LIBOR) for suchperiod.  If The Wall Street Journal shallcease to publish such rate (or itself to be published ) then “LIBOR Base Rate”shall be determined by such comparable method as Agent shall select in itscredit judgment.

 

“LIBOR Loans”means Loans, or portions thereof, that bear interest on the basis of the LIBORRate.

 

“LIBOR Rate”means, with respect to any Borrowing of LIBOR Loans for any Interest Periodtherefor, the rate per annum (rounded upwards, if necessary, to the nearest1/16th of 1%) determined by the Agent to be equal to (i) theLIBOR Base Rate for such Borrowing for such Interest Period divided by (ii) one(1) minus the Reserve Requirement. The LIBOR Rate for any Interest Period will be determined initially bythe Agent on the basis of the Reserve Requirement in effect on the date two (2) BusinessDays prior to the commencement of such Interest Period and, from time to timethereafter during such Interest Period, such LIBOR Rate shall be adjustedautomatically on and as of the effective date of any change in the ReserveRequirement during such Interest Period.

 

“Lien” means anysecurity interest, mortgage, pledge, hypothecation, assignment, charge, depositarrangement, encumbrance, lien (statutory or otherwise), adverse claim orpreference, priority or other security agreement or preferential arrangement ofany kind or nature whatsoever, including any conditional sale or other titleretention agreement, any financing lease involving substantially the sameeconomic effect as any of the foregoing and the filing of any financingstatement under the UCC or comparable law of any jurisdiction.

 

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“Loan Documents”means, collectively, this Agreement, the Notes, each Security Document, the FeeLetter, each Guaranty Agreement (if any), each Borrowing Request, eachBorrowing Base Certificate, and each other Instrument executed and delivered byany Loan Party, on or prior to the date hereof or at any time hereafter, inconnection with the transactions contemplated by this Agreement, in each case,as amended, modified or supplemented from time to time.

 

“Loan Party” meansany of the Borrowers, each Borrower’s Subsidiaries (if any) and any Affiliateof any of them which is a party to any of the Loan Documents at any time.

 

“Loans” means theWorking Capital Facility Loans made to the Borrowers pursuant to Section 2.1.1.

 

“Loss” means anyloss, damage, destruction, theft, or seizure of, or any other casualty withrespect to, or any condemnation of, any property or asset of any Loan Party inan amount in excess of Five Hundred Thousand Dollars ($500,000) individually orOne Million Dollars ($1,000,000) in the aggregate for any Fiscal Year; and the “amount”of any Loss means the greater of (i) the cost to repair or replace theproperty or asset that was the subject of such Loss and (ii) the amount ofinsurance proceeds or condemnation awards payable as a result of such Loss.

 

“Material AdverseChange” means a material adverse change in (a) the condition(financial or otherwise), operations, performance, business, properties orprospects of the Borrowers and their Subsidiaries, taken as a whole,  (b) the rights and remedies of theLenders or the Agent under the Loan Documents, (c) the ability of the Borrowers to repay the Obligations or theability of any Loan Party to perform its obligations under the Loan Documents, (d) thelegality, validity or enforceability of any Loan Document or (e) the Liensin the Collateral granted the Agent for its benefit and the ratable benefit ofthe Lenders pursuant to the Security Documents.

 

 “Material Contract” has the meaning setforth in Section 5.21.

 

“Maturity” meansrelative to any Working Capital Facility Loan or portion thereof, the earlierof the Working Capital Facility Maturity Date or such other date when suchWorking Capital Facility Loan or portion thereof shall be or become due andpayable in accordance with the terms of this Agreement, whether by requiredrepayment, prepayment, declaration, acceleration or otherwise.

 

“Maximum Lawful Rate”shall have the meaning set forth in Section 9.17.

 

“Minimum ExcessAvailability” shall mean $5,000,000, provided that such amount shall beautomatically increased proportionally concurrently with any IncrementalIncrease.

 

“Monthly Payment Date”means the first day of each calendar month or, if such day is not a BusinessDay, the immediately preceding Business Day.

 

“Multiemployer PensionPlan” means a Multiemployer Plan which is subject to Subtitle E ofTitle IV of ERISA.

 

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“Multiemployer Plan”means a Plan which is a “multiemployer plan” within the meaning of Section 3(37)of ERISA.

 

“Net DispositionProceeds” means, with respect to any sale or disposition of any asset, (A) thegross cash proceeds received from such sale or disposition minus (B) thesum of (x) all reasonable out-of-pocket fees and expenses incurred inconnection with such sale or disposition plus (y) all taxes incurred inconnection with such sale or disposition.

 

“Net Income”means, as to any Person for any fiscal period, the net income (or loss) of suchPerson for such period, determined in accordance with GAAP, but excludingextraordinary gains or losses for such period.

 

“Net IndebtednessProceeds”******means, with respect to theissuance or incurrence by any Loan Party of any Indebtedness, the excess of: (a) thegross cash proceeds received by such Loan Party from such Indebtedness, minus(b) all reasonable out-of-pocket fees and expenses incurred in connectiontherewith.

 

“Net Securities Proceeds”means, with respect to the issuance or sale by any Loan Party of any securitiesrepresenting Stock of such Loan Party, the excess of (a) the gross cashproceeds received by such Loan Party from such issuance and sale, minus (b) allreasonable out-of-pocket fees and expenses incurred in connection with suchissuance and sale and paid or payable to Persons that are not Affiliates of anyLoan Party.

 

“Net Worth” means,at a particular date, (a) the aggregate amount of all assets of Borrowersand their Subidiaries on a consolidated basis as may properly be classified assuch in accordance with GAAP, less (b) the aggregate amount of allliabilities of the Borrowers and their Subsidiaries on a consolidated basis asmay properly be classified as such in accordance with GAAP.

 

“Non-Defaulting Lender”has the meaning assigned to it in Section 3.11.

 

“Notes” means,collectively, the Working Capital Facility Notes.

 

“Obligations”means all obligations of each and every Loan Party with respect to the paymentor performance of any obligations (monetary or otherwise) of such Loan Partiesarising under or in connection with this Agreement, the Notes or any other LoanDocument.

 

“Organic Document”means, relative to any Person, its articles or certificate of incorporation orcertificate of limited partnership or organization, its bylaws, partnership oroperating agreement or other organizational documents, and all stockholdersagreements, voting trusts and similar arrangements applicable to any of itsStock, partnership interests, membership interests or other ownershipinterests, in each case, as amended.

 

“OSHA” means theOccupational Safety and Health Act of 1970, as amended from time to time, andany successor statute.

 

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“Participant”means the banks or other entities that purchase participating interests in anyLoan, Note, Commitment or other interest hereunder, as provided in subsection (a) ofSection 9.11.

 

“Patent SecurityAgreement” means that certain Patent Security Agreement, dated as of theClosing Date, made by a Loan Party in favor of the Agent, for its benefit andfor the ratable benefit of the Lenders, as such agreement may be amended,restated, supplemented or otherwise modified from time to time.

 

“PBGC” means thePension Benefit Guaranty Corporation and any entity succeeding to any or all ofits functions under ERISA.

 

“Pension Plan”means any Plan which is subject to the provisions of Title IV of ERISA, or tothe provisions of Section 302 of ERISA or Section 412 of the IRC.

 

“PerfectionCertificate” means that certain Perfection Certificate executed by theBorrowers Representative and delivered to Agent in connection with thetransactions contemplated herein.

 

“Person” means anynatural person, corporation, partnership, limited liability company, firm,association, government, governmental agency or any other entity, whetheracting in an individual, fiduciary or other capacity.

 

“Plan” means, at aparticular time, any employee benefit plan (within the meaning of Section 3(3) ofERISA), which is covered by ERISA and in respect of which the Borrower, aSubsidiary or a Commonly Controlled Entity is (or, if such plan were terminatedat such time, would under Section 4069 of ERISA be deemed to be) an “employer”as defined in Section 3(5) of ERISA.

 

“Post-Default Rate”means the sum of (i) the highest contract rate per annum applicable to anyLoans from time to time pursuant hereto, plus (ii) two percent(2.00%) per annum.

 

“Prime Rate” shallmean the interest rate published under the “Money Rates” section ofThe Wall Street Journal (on each day on which it is published) as the “primerate” on such day, as such rate may change from time to time; provided,however, that if The Wall Street Journal shall cease to publish such rate (oritself to be published); then, the “Prime Rate” shall be the highest among theprime or base rates then publicly announced by Bank of America, N.A., J.P.Morgan Chase Bank and Wachovia Bank, N.A. (or their respectivesuccessors-in-interest).

 

“Projections”means, collectively, the projected balance sheets, statements of operations andchanges in cash flows of the Borrowers and their Subsidiaries for the FiscalYears 2005 through 2008 inclusive, delivered to Agent from time to time,prepared by the Borrowers on a monthly basis for the first year and on anannual basis, together with supporting details and a statement of underlyingassumptions.

 

“Purchase MoneyIndebtedness” means Indebtedness incurred to finance part or all of (butnot more than) the purchase price of equipment in which neither a Borrower norany of its Subsidiaries had an interest at any time prior to such purchase.

 

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“Purchasing Lender”means any Person purchasing all or any part of the rights and obligations underthis Agreement and the Notes of any Lender in accordance with Section 9.11.

 

“Register” has themeaning assigned to it in Section 9.11(c).

 

“Regulatory Change”means, as to any or all of the Lenders or the Agent, any change (including,without limitation, any change in the interpretation) occurring after theClosing Date in, or the adoption after the Closing Date of, (i) any UnitedStates federal or state law or foreign law applicable to the Agent or suchLender, or (ii) any regulation, interpretation, directive, guideline orrequest (whether or not having the force of law) applicable to the Agent orsuch Lender of any court or Governmental Authority charged with theinterpretation or administration of any law referred to in clause (i) orof any central bank or fiscal, monetary or other authority having jurisdictionover the Agent or a Lender.

 

“Reorganization”means with respect to any Multiemployer Pension Plan, the condition that suchplan is in reorganization within the meaning of such term as used in Section 4241of ERISA.

 

“Reportable Event”means (i) a reportable event described in Section 4043 of ERISA andregulations thereunder (other than any Reportable Event described in Section 4043(c)(2) or(7) for which notice is waived), (ii) a withdrawal by a “substantialemployer” (within the meaning of Section 4001(a)(2) ofERISA) from a Single Employer Plan to which more than one employercontributes, as referred to in Section 4063(b) of ERISA, or (iii) acessation of operations at a facility causing more than twenty percent (20%) ofparticipants under a Single Employer Plan to be separated from employment, asreferred to in Section 4062(e) of ERISA.

 

“Required Lenders”means, (a) Lenders having, in the aggregate, fifty-one percent (51%) ormore of the aggregate Commitments or (b) if the Commitments shall havebeen terminated, whether pursuant to this Agreement or otherwise, Lendershaving, in the aggregate, fifty-one percent (51%) or more of the aggregate ofthe outstanding principal amount of the Loans. Notwithstanding the foregoing, during any period in which there are lessthan three (3) Lenders, “Required Lenders” shall mean all Lenders.

 

“Requirements of Law”means, as to any Person, the Organic Documents of such Person, and all federal,state and local laws, rules, regulations, orders, decrees or otherdeterminations of an arbitrator, court or other Governmental Authority,including all disclosure and other requirements of ERISA, the requirements ofEnvironmental Laws and environmental permits, the requirements of OSHA, in eachcase applicable to or binding upon such Person or any of its property or towhich such Person or any of its property is subject.

 

“Reserve Requirement”means, relative to any Interest Period for any LIBOR Loans, from time to timeduring such Interest Period, the reserve percentage (expressed as a decimal)equal to the maximum aggregate reserve requirements (including all basic,emergency, supplemental, marginal and other reserves and taking into accountany transitional adjustments or other scheduled changes in reserverequirements) specified under regulations issued from time to time by theF.R.S. Board and then applicable to assets or liabilities consisting of orincluding “LIBOR Liabilities”, as currently defined under Regulation D of theF.R.S. Board, having a term approximately equal or comparable to suchInterest Period.

 

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“Schedule” meanseach Schedule attached hereto, as each may be amended, supplemented orotherwise modified from time to time by the Borrowers with the consent of theRequired Lenders as provided in Section 4.2.2.

 

“Security Agreement”means the Security Agreement, dated as of the Closing Date, in the form of Exhibit Gattached hereto, made by the Borrowers in favor of the Agent, for its benefitand for the ratable benefit of the Lenders, as such agreement may be amended,restated, supplemented or otherwise modified from time to time.

 

“Security Documents”means, collectively, the Security Agreement, any Subsidiary Pledge Agreement,any Subsidiary Security Agreement,  anyTrademark Security Agreement, any Patent Security Agreement, the FinancingStatements, the Perfection Certificate, each of the Deposit Account ControlAgreements, the Blocked Account Agreement, and each other Instrument at anytime delivered in connection with the foregoing to secure the Obligations.

 

“Senior FinancialOfficer” shall mean the treasurer or chief financial officer of a Person.

 

“Settlement Date”,in respect of settlements among Lenders, if UPSC is not the only Lender, shallmean the Closing Date and thereafter Wednesday****ofeach calendar week unless such day is not a Business Day in which case it shallbe the next succeeding Business Day.

 

“Single Employer Plan”means any Plan which is covered by Title IV of ERISA, other than aMultiemployer Plan.

 

“Solvent” means,with respect to any Person on a particular date, that on such date (i) thefair value of the assets of such Person (both at fair valuation and at presentfair saleable value) is greater than the total amount of liabilities, includingcontingent and unliquidated liabilities, of such Person, (ii) such Personis able to pay all liabilities of such Person as they mature, and (iii) suchPerson does not have unreasonably small capital with which to carry on itsbusiness.  In computing the amount ofcontingent or unliquidated liabilities at any time, such liabilities will becomputed at the amount which, in light of all the facts and circumstancesexisting at such time, represents the amount that can reasonably be expected tobecome an actual or matured liability.

 

“Stock” means allshares of capital stock of or in a Person which is a corporation, whethervoting or non-voting, and including common stock and preferred stock, allmembership or other equity interests of or in a Person which is a limitedliability company, all partnership and other equity interests of or in a Personwhich is a partnership, and all similar equity and other interests of or in anyother Person.

 

“Subordinated Debt”shall mean any Indebtedness owing by a Borrower from time to time which hasbeen subordinated to the Obligations pursuant to a Subordination Agreement.

 

“SubordinationAgreement” shall mean an agreement in form and substance satisfactory toAgent and the Required Lenders among one or more Borrowers, Lenders, Agent andany other creditor of such Borrower or Borrowers pursuant to which such othercreditor shall agree to subordinate Indebtedness of such Borrower or Borrowersowing to it to the Obligations.

 

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“Subsidiary” ofany corporation means any other corporation, partnership or limited liabilitycompany of which greater than fifty percent (50%) of the outstanding shares ofStock or other ownership interests having ordinary voting power for theelection of directors (or others serving equivalent functions) is owneddirectly or indirectly by such corporation. Except as otherwise indicated herein, references herein and in the LoanDocuments to “Subsidiaries” shall refer to Subsidiaries of each Borrower or allBorrowers, as the case may be.

 

“Subsidiary Guarantor”means each Subsidiary of any Borrower which on the Closing Date or subsequentthereto executes in favor of the Agent and the Lenders a Subsidiary Guaranty.

 

“Subsidiary Guaranty”means each guaranty of the Obligations which on the Closing or subsequentthereto may be executed by a Subsidiary Guarantor in favor of the Agent and theLenders, as such agreement may be amended, restated, supplemented or otherwisemodified from time to time.

 

“Subsidiary PledgeAgreement” means a pledge agreement to secure the obligations of theSubsidiary Guarantors under the Subsidiary Guaranty, which on the Closing Dateor subsequent thereto may be executed by a Subsidiary Guarantor in favor of theAgent, for its benefit and for the ratable benefit of the Lenders, as suchagreement may be amended, restated, supplemented or otherwise modified fromtime to time.

 

“Subsidiary SecurityAgreement” means a security agreement or a supplement to the SecurityAgreement, to secure the obligations of a Subsidiary Guarantor under itsSubsidiary Guaranty, which on the Closing Date or subsequent thereto may beexecuted by a Subsidiary Guarantor in favor of the Agent, for its benefit andfor the ratable benefit of the Lenders, as such agreement may be amended,restated, supplemented or otherwise modified from time to time.

 

“Taxes” means alltaxes, levies, imposts, deductions, charges or withholdings, and allliabilities with respect thereto, excluding, in the case of each Lender and theAgent, taxes imposed on its Net Income and franchise taxes imposed on it.

 

“Termination Fee”means the fee payable by the Borrowers to the Lenders prior to or concurrentlywith any early termination by the Borrowers of the Commitment as required underSection 3.3.2.

 

“TrademarkSecurity Agreement” means that certain Trademark Security Agreement, datedas of the Closing Date, made by a Loan Party in favor of the Agent, for itsbenefit and for the ratable benefit of the Lenders, as such agreement may beamended, restated, supplemented or otherwise modified from time to time.

 

“Transfer Supplement”means a Transfer Supplement in substantially the form of Exhibit Hattached hereto.

 

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“UCC” means theUniform Commercial Code of the State of Georgia, as in effect from time to time

 

“United States” or“U.S.” means the United States of America, its constituent States and theDistrict of Columbia.

 

“Unused Amount”shall have the meaning set forth in Section 2.4(c).

 

“UPSC” means UPSCapital Corporation, a Delaware corporation, and its successors and assigns.

 

“Voting Stock”means, with respect to any Person, Stock of such Person of the class or classespursuant to which the holders thereof have the general voting power underordinary circumstances to elect at least a majority of the board of directors,managers or trustees of such Person (irrespective of whether or not at the timeStock of any other class or classes shall have or might have voting power byreason of the happening of any contingency).

 

“Working CapitalFacility Availability” means, on any date, an amount equal to (a) thelesser of (i) the Working Capital Facility Commitment Amount or (ii) theBorrowing Base minus (b) the then aggregate outstanding principalamount of Working Capital Facility Loans minus (c) the thenaggregate outstanding amount of Letter of Credit Obligations.

 

“Working CapitalFacility Commitment Amount” means Twenty-Five Million Dollars($25,000,000), as such amount may be increased from time to time pursuant to Section 2.3.

 

“Working CapitalFacility Loan” means, relative to any Lender, any Loan made by such Lenderto the Borrower pursuant to Section 2.1.2.

 

“Working CapitalFacility Maturity Date” means the earliest to occur of:

 

(a)                                  thethird (3rd) anniversary of the Closing Date;

 

(b)                                 immediatelyand without further action, the date on which any Event of Default described inSection 7.1.4 occurs;

 

(c)                                  thedate on which any Event of Default other than an Event of Default described in Section 7.1.4shall have occurred and be continuing and either:

 

###### (i)            any Loansare declared to be due and payable pursuant to Section 7.3; or

######  

###### (ii)           in theabsence of such declaration, the Agent, acting at the direction of the RequiredLenders, shall give notice to Borrower that the Commitments shall have beenterminated; and

######  

(d)                                 thedate on which a Change in Control occurs.

 

“Working CapitalFacility Note” means the promissory note of the Borrower, dated the datehereof, and substantially in the form of Exhibit A attached hereto,as amended, restated, supplemented or otherwise modified from time to time, andshall also refer to all other promissory notes accepted from time to time insubstitution therefor or renewal thereof.

 

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“Working CapitalFacility Percentage” means, as to any Lender, the percentage equivalent ofa fraction the numerator of which is the amount of such Lender’s Commitment andthe denominator of which is the aggregate amount of the Commitments of allLenders.

 

“written” or “inwriting” means any form of written communication or a communication bymeans of telex, telecopier device, telegraph or cable.

 

## SECTION 1.2         Useof Defined Terms.  Unless otherwisedefined or the context otherwise requires, terms for which meanings areprovided in this Agreement shall have such meanings when used in the Schedulesand each Note, Borrowing Request, Compliance Certificate, the Borrowing BaseCertificate, notice and other communication delivered from time to time inconnection with this Agreement or any other Loan Document.

##  

## SECTION 1.3         Cross-References.  Unless otherwise specified, references inthis Agreement and in each other Loan Document to any Article or Section arereferences to such Article or Section of this Agreement or such otherLoan Document, as the case may be, and unless otherwise specified, referencesin any Article, Section, or definition to any subsection or clause arereferences to such subsection or clause of such Section, Article ordefinition.

##  

## SECTION 1.4         Accountingand Financial Determinations.  Unlessotherwise specified, all accounting terms used herein or in any other LoanDocument shall be interpreted, all accounting determinations and computationshereunder or thereunder shall be made, and all financial statements required tobe delivered hereunder or thereunder shall be prepared, in accordance with GAAPconsistently applied in accordance with historical practices.

##  

# ARTICLE 2COMMITMENTS

#  

## SECTION 2.1         Commitment.  Subject to the terms and conditions of thisAgreement (including Article 4), each Lender agrees to provide itsCommitment; as more fully described in this Section 2.1.

##  

### SECTION 2.1.1      Commitments.  Subject to the limitations set forth in thisAgreement, from time to time on any Business Day occurring during the periodcommencing on the Closing Date to, but excluding, the Working Capital FacilityMaturity Date, each Lender severally will make its Working Capital FacilityPercentage of any Borrowing of Working Capital Facility Loans on such BusinessDay as the Borrowers’ Representative shall request on behalf of itself and theother Borrowers in accordance with Section 3.1 and shall arrangefor the issuance of Letters of Credit as the Borrowers’ Representative shallrequest on behalf of itself and the other Borrowers in accordance with Section 3.10.  Subject to the terms hereof, the Borrowers’Representative may, on behalf of itself and the other Borrowers, from time totime borrow, repay, and reborrow Working Capital Facility Loans pursuant to theCommitments.

###  

### SECTION 2.1.2      Agentand Lenders Not Required to Extend Credit under Commitments.  The Agent and the Lenders shall not berequired to make any Working Capital

 

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### Facility Loan orissue or cause the issuance of any Letter of Credit if, after giving effectthereto, the then aggregate outstanding principal amount of all Working CapitalFacility Loans plus the outstanding amount of all Letter of CreditObligations would exceed the lesser of (i) the Working Capital FacilityCommitment Amount or (ii) the Borrowing Base.  The Agent and the Lenders shall not berequired to issue or cause the issuance of any Letter of Credit if, aftergiving effect thereto, the then aggregate outstanding amount of all Letter ofCredit Obligations would exceed the Letter of Credit Sub-Facility Amount.

###  

## SECTION 2.2         Establishmentof Reserves  The Agent shall have theright to establish, and the Agent shall, at the request of the Required Lendersestablish, in such amounts, and with respect to such matters, as the Agent orRequired Lenders, based on the Agent’s or Required Lenders’ good faith creditjudgment, shall deem necessary or appropriate, reserves with respect to (i) Chargesand Liens; (ii) Environmental Liabilities and Costs, (iii) sums as towhich the Agent and the Lenders are permitted to make Working Capital FacilityLoans on the Borrowers’ behalf under Section 3.3.5 of thisAgreement; (iv) Accounts for which the Agent, based on its customarycredit decisions, reasonably determines that the prospect of payment orperformance is impaired or that there is a reasonable probability that suchAccount will not be paid, (v) Requirements of Law, (vi) reductions inInventory liquidation value as determined by Agent following its receipt of theresults of any collateral audit pursuant to Section 6.1.7 orInventory appraisal pursuant to Section 6.1.14, and (vii) suchother matters, events, conditions or contingencies as to which the Agent orRequired Lenders, based on the Agent’s or Required Lenders’ creditconsiderations, determines reserves should be established from time to timehereunder in the Agent’s or Required Lenders’ credit judgment.

##  

## SECTION 2.3         Increasein Working Capital Facility Commitment Amount.  Borrowers’ Representative may at any time orfrom time to time after the Closing Date, by written notice to Agent, requestone or more increases in the Working Capital Commitment Amount andcorresponding pro rata increases in the Inventory Sublimit (collectively, “IncrementalIncreases”); provided, however, that (a) each Incremental Increase inthe Working Capital Facility Amount shall be in the amount of Five MillionDollars ($5,000,000) or a multiple of Five Million Dollars ($5,000,000), (b) thetotal amount of Incremental Increases in the Working Capital FacilityCommitment Amount during the term of this Agreement shall not exceed FifteenMillion Dollars $15,000,000), (c)  Lenders shall have consented to therequested Incremental Increase and shall have agreed to make the requestedIncremental Increase available to Borrowers on a pro rata basis,  and (d) the conditions set forth in Sections 4.2.1,4.2.3, 4.2.4, 4.2.5 and 4.2.6 shall besatisfied.  If the conditions set forthin the preceding sentence are satisfied, the Agent shall determine theeffective date of the Incremental Increase and on such date (a) theWorking Capital Facility Commitment Amount shall be increased by the amount ofthe Incremental Increase, (b) the Inventory Sublimit shall be increased ona pro rata basis with the increase in the Working Capital FacilityCommitment Amount, (c) the Commitments of Lenders shall be increased on apro rata basis by the amount of the Incremental Increase, (d) Borrowersshall deliver to each Lender a Note in the amount of such Lender’s adjustedCommitment, (e) Borrowers shall pay to each Lender the fee payable to itpursuant to Section 2.4(b), (f) Borrowers shall join with the Agentand Lenders in the execution of such amendments as the Agent shall determine tobe necessary or appropriate in connection with such Incremental Increase and (g) Borrowersshall deliver to the Agent resolutions of their respective Boards of Directorscertified by a secretary or assistant secretary of each Borrower authorizing

 

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## Borrowers toobtain the subject Incremental Increase and to execute and deliver the Notesand other Loan Documents required hereby in regard thereto, as well as anopinion of Borrowers’ counsel as to the due execution,  authorization and delivery and enforceabilityof such Notes and other Loan Documents as to such other matters as the Agentshall request, each to be in form and substance satisfactory to the Agent..

##  

## SECTION 2.4         CertainFees.

##  

#### (a)         TheBorrowers agree to pay to each Lender which is a party to this Agreement on theClosing Date a non-refundable commitment fee equal to such Lender’s WorkingCapital Facility Percentage of three hundred seventy-five one-thousandths ofone percent (.375%) of the Working Capital Facility Commitment Amount.  The commitment fee described in this subsection (a) shallbe payable by the Borrowers on the Closing Date.

####  

#### (b)         TheBorrowers agree to pay to each Lender a non-refundable increase fee equal toone-fourth of one percent (.25%) of such Lender’s portion of each IncrementalIncrease pursuant to Section 2.3. Such fee shall be payable by the Borrowers on the effective date of anIncremental Increase.

####  

#### (c)         TheBorrowers agree to pay to each Lender a nonrefundable unused commitment feeequal to such Lender’s Working Capital Facility Percentage of one-fourth of onepercent (25%) per annum of the amount by which (A) the Working Capital FacilityCommitment Amount exceeds (B) the aggregate outstanding principal amountof all Working Capital Facility Loans plus the aggregate outstandingamount of Letter of Credit Obligations (the “Unused Amount”).  The unused commitment fee described in thissubsection (c) shall be calculated on a daily basis and shall bepayable by the Borrowers in arrears on each Monthly Payment Date and on theWorking Capital Facility Maturity Date.

####  

#### (d)         TheBorrowers shall pay to the Agent, for its own account, the fees in the amountsand at such times as shall be set forth in the Fee Letter.

####  

## SECTION 2.5         IncreasedCosts; Capital Adequacy.

##  

#### (a)         TheBorrowers shall pay to each Lender from time to time on demand such amounts assuch Lender may determine to be reasonably necessary to compensate it or itsholding company for any costs which such Lender determines are attributable toits making or maintaining Loans, issuing Letters of Credit, or maintainingCommitments hereunder, or any reduction in any amount receivable by such Lenderhereunder in respect of any such Loans, Letters of Credit or Commitments,resulting from any Regulatory Change which: (i) changes the basis oftaxation of any amounts payable to such Lender under this Agreement in respectof any of such Loans, Letters of Credit or Commitments (other than taxesimposed on the overall net income or franchise taxes of such Lender); or (ii) imposesor modifies any reserve, special deposit, deposit insurance or assessment,minimum capital, capital ratio or similar requirement relating to anyextensions of credit or other assets of, or any deposits with or otherliabilities of, such Lender or any holding company of such Lender (including arequest or requirement which affects the manner in which such Lender or theholding company thereof allocates capital resources to commitments, includingthe Commitments).  Each affected Lenderwill notify the

 

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#### Borrowers’Representative of any event occurring after the date of this Agreement whichwill entitle such Lender to compensation pursuant to this subsection (a) aspromptly as practicable after it obtains knowledge thereof and determines torequest such compensation.

####  

#### (b)         Withoutlimiting the effect of the foregoing provisions of this Section 2.5(but without duplication), the Borrowers shall pay to each Lender from time totime upon demand by such Lender such amounts as such Lender may determine to bereasonably necessary to compensate such Lender for any costs which itdetermines are attributable to the maintenance by it or its holding company,pursuant to any law or regulation of any jurisdiction or any interpretation,directive or request (whether or not having the force of law) of any court orgovernmental or monetary authority, in effect after the date of this Agreement,of capital in respect of its Loans, Letters of Credit or Commitments (suchcompensation to include an amount equal to any reduction in return on assets orequity of such Lender or its holding company to a level below that which itcould have achieved but for such law, regulation, interpretation, directive orrequest).  Each Lender will notify theBorrowers’ Representative if it is entitled to compensation pursuant to thissubsection (b) as promptly as practicable after it determines torequest such compensation.

####  

#### (c)         Eachnotice delivered by a Lender pursuant to this Section 2.5 shallcontain a statement of such Lender as to any such additional amount or amounts(including calculations thereof in reasonable detail) which shall, in theabsence of manifest error, be presumed correct of the matters stated thereinand be binding upon the Borrowers.  Indetermining such amount, each affected Lender may use any method of averaging andattribution that it in good faith shall deem applicable.

####  

# ARTICLE 3LOANS AND NOTES

#  

## SECTION 3.1         BorrowingProcedure.  The Borrowers’Representative may from time to time request that a Borrowing of WorkingCapital Facility Loans be made on the Business Day specified in its BorrowingRequest, by delivering such Borrowing Request to the Agent’s office (i) onor before 2:00 p.m., Atlanta, Georgia time, at least three (3) BusinessDays in advance of the requested borrowing date for a LIBOR Loan and (ii) onor before 12:00 Noon, Atlanta, Georgia time, on the requested borrowing datefor a Base Rate Loan.  Such Borrowings ofWorking Capital Facility Loans which are LIBOR Loans shall be in a minimumaggregate amount equal to One Million Dollars ($1,000,000) and incrementalmultiples of One Hundred Thousand Dollars ($100,000); provided, however,that no LIBOR Loan may be requested when a Default exists or the Leverage Ratiois greater than 4.00:1.00.  EachBorrowing shall be made on the Business Day specified in the Borrowing Requesttherefor (including the initial Borrowing to be made on the Closing Date, ifany).  On such Business Day, each Lendershall, on or before 3:00 p.m., Atlanta, Georgia time, deposit same dayfunds with the Agent in the amount equal to such Lender’s Working CapitalFacility Percentage of such Borrowing, such deposit to be made to such accountas the Agent shall specify from time to time by notice to the Lenders.  On the Business Day specified by theBorrowers’ Representative in the Borrowing Request, the proceeds of such Borrowingshall be made available to the Borrowers by wire transfer of such proceeds tosuch transferees, or to such accounts of the Borrowers, as the Borrowers shallhave specified in the Borrowing Request therefor; provided, however, that,except as provided in

 

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## Section 3.3A,in each case the Agent shall be required to make available to the Borrowers theproceeds of any Borrowing only to the extent received by it in same day fundsfrom the Lenders.  No Lender’s obligationto make any Working Capital Facility Loan shall be affected by any other Lender’sfailure to make any Working Capital Facility Loan.

##  

## SECTION 3.2         Notes.  All Working Capital Facility Loans made byany Lender shall be evidenced by a Working Capital Facility Note made by theBorrowers payable to the order of such Lender in a principal amount equal tosuch Lender’s Working Capital Facility Percentage of the Working CapitalFacility Commitment Amount.  TheBorrowers hereby irrevocably authorize each Lender to make (or cause to bemade) appropriate notations on a grid schedule attached to such Lender’sNotes (or on a continuation of any such grid attached to any Note and made apart thereof), which notations shall evidence, among other things, the date andoutstanding principal amount of the Loans evidenced thereby.  The notations on any such grid (and on anysuch continuation) indicating the outstanding principal amount of a Lender’sLoans shall be presumptive evidence of the principal amount thereof owing andunpaid, but the failure to record any such amount on any such grid (or on anysuch continuation) shall not limit or otherwise affect the obligations of theBorrowers hereunder or under such Note to make payments of principal of orinterest on such Loans when due.

##  

## SECTION 3.3         PrincipalPayments.  Repayments and prepaymentsof principal of the Loans shall be made in accordance with this Section 3.3.

##  

### SECTION 3.3.1      Repaymentsand Prepayments.  The Borrowers willmake payment in full of all unpaid principal of the Working Capital FacilityLoans on the Working Capital Facility Maturity Date (or such earlier date asthe Loans may become or be declared due and payable pursuant to Article 7).  Prior thereto, the Borrowers:

###  

#### (a)         may,from time to time on any Business Day, make a voluntary prepayment, in whole orin part, of the outstanding principal amount of any Working Capital FacilityLoans so long as the Borrowers pay to the Lenders any termination fee requiredto be paid pursuant to Section 3.3.4.

####  

#### (b)         shall,on any Business Day on which the aggregate outstanding principal amount of allWorking Capital Facility Loans plus the then aggregate amount of Letterof Credit Obligations exceeds the lesser of (i) the Working CapitalFacility Commitment Amount or (ii) the Borrowing Base, make a mandatoryprepayment of the outstanding principal amount of the Working Capital FacilityLoans and provide cash collateral in respect of Letter of Credit Obligations inan amount equal to such excess amount;

####  

#### (c)         shall,promptly after receipt by the Borrowers or any Subsidiary or the Agent of anycondemnation awards with respect to any Loss, make a mandatory prepayment ofthe Loans in an amount by which such condemnation award proceeds exceed theactual cost incurred by the applicable Borrower or such Subsidiary to repair orreplace the property or asset which was the subject of the condemnation givingrise to such condemnation award proceeds;

####  

#### (d)         shall,promptly after receipt by the Borrowers or any Subsidiary or the Agent of anyinsurance proceeds with respect to any Loss resulting from a casualty, make a

 

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#### mandatoryprepayment of the Loans in an amount by which such insurance proceeds exceedthe actual cost incurred by the applicable Borrower or such Subsidiary torepair or replace the property or asset which was the subject of the Loss ordeemed Loss giving rise to such insurance proceeds;

####  

#### (e)         shall,promptly after receipt by the Borrowers or any Subsidiary or the Agent of anyinsurance proceeds with respect to any Loss resulting from a liability, make amandatory prepayment of the Loans in an amount by which such insurance proceedsexceed the amount of the liability to be satisfied with such proceeds (to theextent such liability is so satisfied);

####  

#### (f)          shall,upon receipt by the Borrowers or any Subsidiary or the Agent of any NetDisposition Proceeds, make a mandatory prepayment of the Loans in an amountequal to such Net Disposition Proceeds, provided, that this clause (f) ofSection 3.3.1 shall not in any event be deemed a consent to anydisposition by any Loan Party which is otherwise prohibited by the terms ofthis Agreement or of any of the other Loan Documents;

####  

#### (g)         shall,upon receipt by the Borrowers or any Subsidiary of any Net Securities Proceeds,make a mandatory prepayment of the Loans in an amount equal to such NetSecurities Proceeds; provided, that this clause (g) of Section 3.3.1shall not in any event be deemed a consent to any issuance or sale of Stock byany Loan Party which is otherwise prohibited by the terms of this Agreement orof any of the other Loan Documents;

####  

#### (h)         shall,concurrently with receipt by any Loan Party after the Closing Date of any NetIndebtedness Proceeds during any Fiscal Year (excluding any Indebtednessincurred by any Loan Party pursuant to Section 6.2.2 or thisAgreement), make a mandatory prepayment of the Loans, in an aggregate amountequal to such Net Indebtedness Proceeds; provided that this clause (i) ofSection 3.3.1 shall not in any event be deemed a consent to anyincurrence or issuance of Indebtedness by any Loan Party which is otherwiseprohibited by the terms of this Agreement or any of the other Loan Documents;

####  

#### (i)          shall,concurrently with the delivery of the Borrowing Base Certificate required underclause (i) of Section 6.1.1, make a mandatory prepayment ofthe Working Capital Facility Loans and, if the Working Capital Facility Loanshave been prepaid in full, provide cash collateral for outstanding Letter ofCredit Obligations in the aggregate amount, if any, by which the outstandingprincipal amount of Working Capital Facility Loans plus the outstanding amountof Letter of Credit Obligations exceed the Borrowing Base shown thereon; and

####  

#### (j)          shall,upon the occurrence of a Change of Control, make a mandatory prepayment of theentire outstanding principal amount of all Loans together with accrued andunpaid interest and all other outstanding Obligations.

####  

Unless expresslyset forth to the contrary in this Section 3.3.1 or elsewhere in theAgreement, any mandatory prepayment of Loans required to be made by theBorrowers pursuant to this Section 3.3.1 shall be applied to thepayment in full of the outstanding Working Capital Facility Loans, but shallnot cause a reduction in the Commitments.

 

### SECTION 3.3.2      [notused]

 

26

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### SECTION 3.3.3      Collections.  Effective not later than the Closing Date,Borrowers shall have established, and thereafter Borrowers shall maintain, withBank of America, N.A. or one or more other banks acceptable to Agent (“ClearingBanks”), deposit accounts into which all proceeds of Collateral, including,particularly, payments on Accounts, shall be remitted (“ConcentrationAccounts”).  Each Borrower shall instructits Account Debtors to remit all payments directly to a ConcentrationAccount.  In the event that any Borrowerreceives any payment or other remittance with respect to any Account or anyInventory, such Borrower shall hold such payment in trust for the Agent, suchBorrower shall not co-mingle such payment with such Borrower’s other assets,and such Borrower shall promptly, and in any event within one Business Day,cause such payment to be deposited into a Concentration Account.  Concentration Accounts shall be maintained ina Borrower’s name, but for Agent’s benefit, and the applicable Borrower,Clearing Bank and Agent shall have entered into a tri-party agreement, in formand substance satisfactory to Agent (a “Blocked Account Agreement”)pursuant to which, among other things, Clearing Bank shall agree to remit allcollected funds in its Concentration Account directly to Agent for applicationto the Obligations as prescribed below. All such collected funds shall be applied by Agent in payment of outstandingWorking Capital Facility Loans (in accordance with each Lender’s WorkingCapital Facility Percentage of each such payment); provided that if an Event ofDefault has occurred and is continuing, such funds shall be applied inaccordance with the provisions of Section 7.4.  The foregoing shall be in addition to, andnot in limitation of, Agent’s rights to collect Accounts directly after anEvent of Default has occurred and while it is continuing, as provided in theSecurity Agreement.  Without limitationof the foregoing, within fifteen (15) Business Days after the date hereof,Borrowers will deliver to Agent replacement Blocked Account Agreements withrespect to the existing blocked account agreements with Bank of America, N.A.,as Clearing Bank, signed by Borrowers and Bank of America, N.A. and applicableto each Concentration Account maintained by Borrowers with Bank of America,N.A.

###  

### SECTION 3.3.4      TerminationFee.

###  

#### (a)         Uponany cancellation of the Commitments by the Borrowers subsequent to the ClosingDate pursuant to Section 3.3.6, the Borrowers shall pay to theLenders prior to or concurrently with such termination a Termination Fee in anamount equal to the amount of the Working Capital Facility Commitment at thetime of such early termination times (i) two percent (2%) if suchtermination occurs on or prior to the first (1st) anniversary of theClosing Date, (ii) one percent (1%) if such termination occurs afterthe first (1st) anniversary of the Closing Date but on or prior to the second(2nd) anniversary of the Closing Date and (iii) one-half of onepercent (1⁄2%) if such termination occurs after the second (2nd) anniversaryof the Closing Date.  Notwithstanding theforegoing, if the Commitments are cancelled in connection with Borrowers’prepayment in full of the Obligations from the proceeds of a replacementfinancing provided to Borrowers by UPSC or by a group of lenders for whom UPSCacts as agent, the portion of the Termination Fee that would otherwise bepayable to any Lender which participates in such replacement financing will notbe payable, it being understood, however, that each Lender which is notparticipating in such replacement financing will be entitled to receive theportion of the Termination Fee payable to such Lender in such event.

####  

#### (b)         AnyTermination Fees shall be paid by the Borrowers to the Lenders as liquidateddamages for the loss of the bargain and shall not constitute a penalty.

 

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### SECTION 3.3.5      WorkingCapital Facility Loans on Borrower’s Behalf.  The Agent may, at its option, and at therequest of the Required Lenders, the Agent shall, make Working Capital FacilityLoans on behalf of the Borrowers for payment of all fees, expenses, charges,costs, principal and interest owed by the Borrowers to the Lenders or the Agentunder this Agreement and the other Loan Documents and to pay such other amountsas the Agent or the Required Lenders deem necessary in order to protect theCollateral or the perfection or priority of the Agent’s security interesttherein (including, without limitation, any insurance premium or anytaxes).  Such Working Capital FacilityLoans shall be made when and as the Borrowers fail promptly to pay same, andall such Working Capital Facility Loans shall constitute Loans made to theBorrowers and shall be secured by all of the Collateral.  Following the making of any Working CapitalFacility Loans pursuant to this Section 3.3.5, the Agent shallpromptly notify the Borrowers’ Representative of the making of such WorkingCapital Facility Loans and the aggregate principal amount of such Loans; *provided* that the failure by the Agent to give such noticeshall not affect the Borrowers’ obligations under this Agreement or withrespect to such Working Capital Facility Loans. Each Lender shall be obligated to make its Working Capital FacilityPercentage of any Working Capital Facility Loans made by the Agent pursuant tothis Section 3.3.5 available to the Agent in accordance with theprovisions of Section 3.3A.

###  

### SECTION 3.3.6      Terminationof Commitments.  Subject tocompliance with Section 3.3.4 and Section 3.4.9,Borrowers shall have the right to cancel the Commitments upon three (3) BusinessDays prior notice to Agent.

###  

SECTION 3.3A     Settlement.  Notwithstanding anything contained herein tothe contrary, at Agent’s election, the following provisions shall apply:

 

#### (a)         Commencingwith the first Business Day following the Closing Date, each borrowing ofWorking Capital Facility Loans shall be advanced by the Agent and each paymentby Borrowers on account of Working Capital Facility Loans shall be appliedfirst to those Working Capital Facility Loans advanced by Agent.  On or before 1:00 P.M., on eachSettlement Date commencing with the first Settlement Date following the ClosingDate, Agent and Lenders shall make certain payments as follows: (i) if theaggregate amount of new Working Capital Facility Loans made by the Agent duringthe preceding Week (if any) exceeds the aggregate amount of repayments appliedto outstanding Working Capital Facility Loans during such preceding Week, theneach such Lender shall provide Agent with funds in an amount equal to itsapplicable Working Capital Facility Percentage of the difference between (1) suchWorking Capital Facility Loans and (2) such repayments and (ii) ifthe aggregate amount of repayments applied to outstanding Working CapitalFacility Loans during such Week exceeds the aggregate amount of new WorkingCapital Facility Loans made during such Week, then Agent shall provide eachsuch Lender with funds in an amount equal to its applicable Working CapitalFacility Percentage of the difference between (1) such repayments and (2) suchWorking Capital Facility Loans.  EachLender shall be entitled to earn interest at the applicable rate provided in Section 3.4on outstanding Working Capital Facility Loans which it has funded.  Promptly following each Settlement Date,Agent shall submit to each Lender a certificate with respect to paymentsreceived and Working Capital Facility Loans made during the Week immediatelypreceding such Settlement Date.  Suchcertificate of Agent shall be conclusive in the absence of manifest error.  As used herein, “Week” means a timeperiod beginning with the opening of business on a Wednesday and ending at theend of business on the following****Tuesday.

 

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#### (b)         UnlessAgent shall have been notified by telephone, confirmed in writing, by anyLender having a Working Capital Facility Commitment that such Lender will not makethe amount which would constitute its applicable Working Capital FacilityPercentage of Working Capital Facility Loans available to Agent, Agent may (butshall not be obligated to) assume that such Lender shall make such amountavailable to Agent on the next Settlement Date and, in reliance upon suchassumption, make available to Borrowers a corresponding amount.  Agent will promptly notify Borrowers of itsreceipt of any such notice from a Lender. If such amount is made available to Agent on a date after such nextSettlement Date, such Lender shall pay to Agent on demand an amount equal tothe product of (i) the daily average Federal Funds Rate (computed on thebasis of a year of 360 days) during such period as quoted by Agent, times (ii) suchamount, times (iii) the number of days from and including such SettlementDate to the date on which such amount becomes immediately available toAgent.  A certificate of Agent submittedto any Lender with respect to any amounts owing under this paragraph (b) shallbe conclusive, in the absence of manifest error.  If such amount is not in fact made availableto Agent by such Lender within three (3) Business Days after suchSettlement Date, Agent shall be entitled to recover such an amount, withinterest thereon at the rate per annum then applicable to such Working CapitalFacility Loans hereunder, on demand from Borrowers; provided, however,that Agent’s right to such recovery shall not prejudice or otherwise adverselyaffect Borrowers’ rights (if any) against such Lender.

####  

## SECTION 3.4         Interest.  Interest on the outstanding principal amountof the Loans and other outstanding Obligations shall accrue and be payable inaccordance with this Section 3.4.

##  

### SECTION 3.4.1      LoanRates.  Subject to Section 3.4.3,each Borrowing of Working Capital Facility Loans shall accrue interest at thefollowing rates per annum, at the election of the Borrowers pursuant to anappropriately delivered Borrowing Request or Continuation/Conversion Notice:

###  

#### (a)         duringsuch periods as such Borrowing consists of Base Rate Loans, the Base Rate as ineffect from time to time plus the Applicable Margin, and

####  

#### (b)         duringsuch periods as such Borrowing consists of LIBOR Loans, for each InterestPeriod relating thereto, the LIBOR Rate for such Interest Period plus theApplicable Margin; provided, however, that notwithstandinganything contained herein to the contrary, Borrowers shall have no option toelect that any Borrowing consist of or be converted into LIBOR Loans if as ofthe last day of Borrowers’ most recently ended Fiscal Quarter or Fiscal Yearfor which Borrowers have provided financial statements to Agent, Borrowers’Leverage Ratio was greater than 4.00:1.00.

####  

#### (c)         Asused herein, “Applicable Margin” shall mean, initially, one-half of onepercent (.50%) per annum, in respect of Base Rate Loans (and Borrowers shallhave no option to elect that any Borrowing consist of or be converted to LIBORLoans); provided, however, that, notwithstanding the foregoing,commencing upon receipt by Agent pursuant to Section 6.1 ofBorrowers’ audited financial statements for its Fiscal Year ending December 31,2005, and continuing thereafter, the Applicable Margin shall be determinedquarterly, based upon Borrower’s Leverage Ratio computed at the end of eachFiscal Quarter (beginning with the Fiscal Quarter ending December 31,2005), and then compared to the following table (provided

 

29

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#### that if as of anysuch date the Leverage Ratio is greater than 4.00:1.00, Borrowers shall have nooption to elect that any Borrowing consist of or be converted into LIBORLoans):

 
| **If Leverage Ratio is:**      | ** ** | **Applicable Margin for LIBOR  Loans shall be:** | ** ** | **Applicable Margin for Base Rate  Loans shall be:** | ** ** |
|--------------------------------|------------|--------------------------------------------------|------------|------------------------------------------------------|------------|
|                           |       |                                             |       |                                                 |       |
| >2.25:1.00                  |       | 2.50                                             | %          | .50                                                  | %          |
| > .50:1.00; <  2.25:1.00 |       | 2.00                                             | %          | .25                                                  | %          |
| < .5:1.00                   |       | 1.50                                             | %          | 0                                                    |       |

 

#### (d)         Exceptas set forth hereinabove in respect of Borrowers’ 2005 audited financialstatements, all determinations of Applicable Margin by Agent shall be made fromBorrowers’ unaudited quarterly financial statements delivered to Agent pursuantto Section 6.1.  If any financialstatements (whether audited or unaudited) used in making the foregoingdeterminations of Applicable Margin are not timely delivered in accordance withSection 6.1, then, unless and until such financial statements aredelivered to Agent (and without waiving any Event of Default resulting fromtheir non-delivery), the Applicable Margin shall be determined based on apresumed Leverage Ratio of greater than 2.25:1.00.  In addition, if and so long as any Event ofDefault then exists, no downward adjustment to the Applicable Margin otherwiseavailable to Borrowers hereunder shall be implemented.

####  

### SECTION 3.4.2      Continuationand Conversion Elections.  Bydelivering a Continuation/Conversion Notice to the Agent on or before 3:00 p.m.,Atlanta, Georgia time, on a Business Day, the Borrowers’ Representative mayfrom time to time irrevocably elect, on not less than three (3), and no morethan five (5), Business Days’ notice, that all or any portion of an aggregateminimum amount of One Million Dollars ($1,000,000) and an aggregate multiple ofOne Hundred Thousand ($100,000) of Working Capital Facility Loans be, in thecase of Base Rate Loans, converted into LIBOR Loans or, in the case of LIBOR Loans,continued as LIBOR Loans; *provided, however,*that no portion of the outstanding principal amount of any Working CapitalFacility Loan may be continued as, or converted into, a LIBOR Loan when anyDefault has occurred and while it is continuing or when the Leverage Ratio(determined as of the last day of Borrowers’ most recently ended Fiscal Quarteror Fiscal Year for which Borrowers have provided financial statements to Agent)is greater than 4.00:1.00.

###  

The Agent shallgive prompt telephonic notice to each Lender of the interest rate determinedpursuant to this Section 3.4.2 with respect to such Loans.  Absent delivery of a Continuation/ConversionNotice with respect to any LIBOR Loan at least three (3) Business Daysbefore the last day of the then current Interest Period with respect thereto,such LIBOR Loan shall, on such last day, automatically convert to a Base RateLoan.

 

### SECTION 3.4.3      Post-DefaultRates.  From and after the occurrenceof an Event of Default and during the continuance thereof, at the election ofAgent or the Required Lenders,  theBorrowers shall pay interest (after as well as before judgment) on theoutstanding principal amount of all Loans and other Obligations at a rate perannum equal to the Post-Default Rate applicable to such Loans and otherObligations.

 

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### SECTION 3.4.4      PaymentDates.  Accrued interest on the Loansshall be payable, without duplication:

###  

#### (a)         onMaturity of such Loans;

####  

#### (b)         withrespect to any portion of any Loan prepaid or repaid pursuant to Section 3.3.1,on the date of such prepayment or repayment is due as provided in Section 3.3.1and, in the case of a voluntary prepayment, on the date set forth in any noticerequired for such prepayment; and

####  

#### (c)         withrespect to Base Rate Loans, on each Monthly Payment Date, commencing with thefirst such day following the Closing Date;

####  

#### (d)         withrespect to LIBOR Loans, on each Monthly Payment Date, commencing with the firstsuch day following the Closing Date and, if Agent so elects, on the last day ofeach applicable Interest Period;

####  

#### (e)         withrespect to any Base Rate Loans converted into LIBOR Loans on a day which is nota Monthly Payment Date, on the date of such conversion;

####  

#### (f)          onthe date of acceleration of such Loans pursuant to Section 7.2 or Section 7.3;and

####  

#### (g)         withrespect to interest accruing at any Post-Default Rate and, to the extentpermitted by applicable law, interest on overdue amounts (including overdueinterest), upon demand.

####  

### SECTION 3.4.5      RateDeterminations.  All determinationsby the Agent of the rate of interest applicable to any Loan shall be presumedcorrect in the absence of manifest error.

###  

### SECTION 3.4.6      Limitationon Types of Loans.  (a) Anythingherein to the contrary notwithstanding, if on or prior to the determination ofany LIBOR Rate for any Interest Period, the Agent determines in good faith,which determination shall be conclusive, that quotations of interest rates forthe relevant deposits referred to in the definition of “LIBOR Rate” are notbeing provided in the relevant amounts or for the relevant maturities forpurposes of determining rates of interest for LIBOR Loans as provided herein;or (b) the Required Lenders determine in good faith, which determinationshall be conclusive, and notify the Agent that the relevant rates of interestreferred to in the definition of “LIBOR Rate” upon the basis of which the rateof interest for LIBOR Loans for such Interest Period is to be determined arenot likely to cover adequately the cost to such Lenders of making ormaintaining LIBOR Loans for such Interest Period; then the Agent shall give theBorrowers’ Representative and each Lender prompt notice thereof, and so long assuch condition remains in effect, the Lenders shall be under no obligation to makeadditional LIBOR Loans, to continue LIBOR Loans or to convert Base Rate Loansinto LIBOR Loans, and the Borrowers shall, on the last day(s) of the thencurrent Interest Period(s) for the outstanding LIBOR Loans, either prepay suchLoans or such Loans shall be converted into Base Rate Loans in accordance with Section 3.4.8hereof.

 

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### SECTION 3.4.7      Illegality.  Notwithstanding any other provision of thisAgreement, in the event that it becomes unlawful for any Lender to honor itsobligation to make or maintain LIBOR Loans hereunder, then such Lender shallpromptly notify the Borrowers’ Representative thereof (with a copy to theAgent) and such Lender’s obligation to make or continue, or to convert Base RateLoans into, LIBOR Loans shall be suspended until such time as such Lender mayagain make and maintain LIBOR Loans (in which case the provisions of Section 3.4.8hereof shall be applicable).

###  

### SECTION 3.4.8      Treatmentof Affected Loans.  If the obligationof any Lender to make LIBOR Loans or continue, or to convert Base Rate Loansinto, LIBOR Loans shall be suspended pursuant to Sections 3.4.6 or 3.4.7hereof, such Lender’s LIBOR Loans shall be automatically converted into BaseRate Loans on the last day(s) of the then current Interest Period(s) for LIBORLoans (or, in the case of a conversion required by Sections 3.4.6or 3.4.7 hereof, on such earlier date as such Lender may specify to theBorrowers with a copy to the Agent) and, unless and until such Lender givesnotice as provided below that the circumstances specified in Sections 3.4.6or 3.4.7 hereof which gave rise to such conversion no longer exist:

###  

#### (a)         tothe extent that such Lender’s LIBOR Loans have been so converted, all paymentsand prepayments of principal which would otherwise be applied to such Lender’sLIBOR Loans shall be applied instead to its Base Rate Loans; and

####  

#### (b)         allLoans which would otherwise be made or continued by such Lender as LIBOR Loansshall be made or continued instead as Base Rate Loans and all Base Rate Loansof such Lender which would otherwise be converted into LIBOR Loans shall remainas Base Rate Loans.

####  

Promptly after thecircumstances specified in Sections 3.4.6 or 3.4.7 whichgave rise to the conversion of such Lender’s LIBOR Loans pursuant to this Section 3.4.8no longer exist, such Lender shall give the Agent and the Borrowers noticethereof, and the Borrowers may thereafter request conversion of such Loans toLIBOR Loans, subject to the subsequent application of Section 3.4.6or 3.4.7.

 

### SECTION 3.4.9      Compensation.  The Borrowers shall pay to the Agent for theaccount of each Lender, upon the request of such Lender through the Agent, suchamount or amounts as shall be sufficient (in the opinion of such Lender) tocompensate it for any loss, cost or expense which such Lender determines isattributable to:

###  

#### (a)         anypayment, prepayment or conversion of a LIBOR Loan made by Lender for any reason(including, without limitation, the acceleration of the Loans pursuant to Article 7hereof) on a date other than the last day of the Interest Period for such Loan;or

####  

#### (b)         anyfailure by the Borrowers for any reason (including, without limitation, thefailure of any of the conditions precedent specified in Article 4hereof to be satisfied) to borrow a LIBOR Loan from Lenders on the date forsuch borrowing specified in the Borrowing Request given pursuant to Section 3.1hereof.

 

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## SECTION 3.5         Taxes.

##  

#### (a)         Anyand all payments by the Borrowers hereunder or under the Notes or any otherLoan Document shall be made, in accordance with this Section 3.5,free and clear of and without deduction for any and all present or futureTaxes.  If any Borrowers shall berequired by law to deduct any Taxes from or in respect of any sum payablehereunder or under any Note to any Lender or the Agent, (i) the sumpayable shall be increased as may be necessary so that after making allrequired deductions (including deductions applicable to additional sums payableunder this Section 3.5), such Lender or the Agent (as the case maybe) receives an amount equal to the sum it would have received had no suchdeductions been made, (ii) the Borrowers shall make such deductions and (iii) theBorrowers shall pay the full amount deducted to the relevant taxation authorityor other authority in accordance with applicable law;

####  

#### (b)         Inaddition, the Borrowers agree to pay any present or future stamp or documentarytaxes or intangibles taxes or any other excise or property taxes, transfertaxes, charges or similar levies which arise from any payment made hereunder orunder the Notes or from the execution, delivery or registration of, orotherwise with respect to this Agreement, the Notes, or any other LoanDocument;

####  

#### (c)         TheBorrowers will indemnify each Lender and the Agent for the full amount of thetaxes, charges and levies described in subsections (a) and (b) ofthis Section 3.5 (including, without limitation, any such taxes,charges and levies imposed by any jurisdiction on amounts payable under this Section 3.5)paid by such Lender or the Agent (as the case may be) and any liability(including penalties, interest and expenses) arising therefrom or with respectthereto, whether or not such taxes, charges and levies were correctly orlegally asserted.  Payment under this subsection (c) shallbe made within ten (10) days from the date such Lender or the Agent (asthe case may be) makes written demand therefor to the Borrowers’ Representativeand provides a certificate to the Borrowers’ Representative in reasonabledetail of the amount required under Sections 3.5(a) and (b);

####  

#### (d)         Withinten (10) days after the date of any payment of Taxes by the Borrowers, theBorrowers’ Representative will furnish to the Agent, at its address referred toin Section 9.2, the original or a certified copy of any receiptreceived by the Borrowers evidencing payment thereof.

####  

## SECTION 3.6         Payments,Interest Rate Computations, Other Computations, Etc.  All payments by the Borrowers pursuant tothis Agreement, the Notes or any other Loan Document, in respect of principalor interest on the Working Capital Facility Notes shall be made by theBorrowers to the Agent for the account of the Lenders, pro rata according totheir respective Working Capital Facility Percentages.  The payment of the fees referred to in Section 2.4(except Section 2.4(d)) shall be made by the Borrowers to the Agent forthe account of the Lenders pro rata according to their respective WorkingCapital Facility Percentages.  All otheramounts payable to the Agent or any Lender under this Agreement or any otherLoan Document (except under Section 2.5) shall be paid to the Agentfor the account of the Person entitled thereto. All such payments required to be made to the Agent shall be made,without setoff, deduction or counterclaim, not later than 1:00 p.m.,Atlanta, Georgia time, on the date due, in immediately available funds, to anaccount of the Agent specified from time to time in writing to theBorrowers.  Funds received after that timeshall be deemed to have been received by the Agent on the next followingBusiness Day.  Subject to the provisionsof Section 3.3A, the Agent shall

 

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## promptly remit toeach Lender in the type of funds received such Lender’s share, if any, of suchpayments received by the Agent for the account of such Lender.  All interest and fees shall be computed onthe basis of the actual number of days (including the first day but excludingthe last day) occurring during the period for which such interest or fee ispayable over a year comprised of 360 days. Whenever any payment to be made shall otherwise be due on a day which isnot a Business Day, such payment shall be made on the immediately precedingBusiness Day.

##  

## SECTION 3.7         Prorationof Payments.  If any Lender shallobtain any payment or other recovery (whether voluntary, involuntary, byapplication of setoff or otherwise) on account of principal of or interest onany Loan or other Obligations in excess of such Lender’s respective share ofpayments then or therewith obtained thereon by all Lenders, such Lender whichhas received in excess of its pro rata share shall purchase from the otherLenders such participations in such Notes or other Obligations held by them asshall be necessary to cause such purchaser to share the excess payment or otherrecovery ratably with each of them; *provided, however,*that if all or any portion of the excess payment or other recovery isthereafter recovered from such purchasing holder, the purchase shall berescinded and the purchase price restored to the extent of such recovery, butwithout interest.  The Borrowers agreethat any Lender so purchasing a participation from another Lender pursuant tothis Section 3.7 may, to the fullest extent permitted by law,exercise all its rights of payment (including pursuant to Section 3.8)with respect to such participation as fully as if such Lender were the directcreditor of the Borrowers in the amount of such participation.  If under any applicable bankruptcy,insolvency or other similar law, any Lender receives a secured claim in lieu ofa setoff to which this Section 3.7 applies, such Lender shall, tothe extent practicable, exercise its rights in respect of such secured claim ina manner consistent with the rights of the Lenders under this Section 3.7to share in the benefits of any recovery on such secured claim.

##  

## SECTION 3.8         Setoff.  In addition to and not in limitation of anyrights of any Lender under applicable law, each Lender shall, upon theoccurrence and during the continuance of any Event of Default, have the rightto appropriate and apply to the payment of the Obligations owing to it (whetheror not then due), and each Borrower hereby grants to each Lender, as securityfor such Obligations, a continuing security interest in any and all balances,credits, deposits, accounts or moneys of such Borrower then or thereaftermaintained with such Lender; provided, however, any such appropriation andapplication shall be subject to the provisions of Section 3.7.

##  

## SECTION 3.9         Useof Proceeds.

##  

#### (a)         TheBorrowers shall use the proceeds of the Working Capital Facility Loans made onthe Closing Date (i) to refinance existing Indebtedness, (ii) to payfees and expenses associated with this Agreement and (iii) for generalcorporate purposes (including a Borrower’s purchase of the Junction CityProperty).  The Borrowers shall (i) usethe proceeds of the Working Capital Facility Loans made after the Closing Dateto provide for the ongoing working capital needs and general corporate purposesof the Borrowers and (ii) use Letters of Credit pursuant to the terms of Section 3.10for the purposes provided therein.

####  

#### (b)         Nopart of the proceeds of any Loans shall be used for any purpose which violatesRegulations T, U or X of the F.R.S. Board.

 

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## SECTION 3.10       Lettersof Credit.  Upon and subject to theterms and conditions of this Section 3.10, in addition to the termsand conditions set forth elsewhere in this Agreement, the Agent shall arrangefor the issuance of Letters of Credit for the account of one or more Borrowers,in which each Lender severally shall participate as provided herein.

##  

### SECTION 3.10.1    Mannerof Issuance.  The Borrowers’Representative shall deliver to the Agent prior to 1:00 p.m. Atlanta,Georgia at least three (3) Business Days before the requested date ofissuance of a Letter of Credit, a Letter of Credit Request for the issuance ofsuch Letter of Credit setting forth (i) the beneficiary of the Letter ofCredit, (ii) the stated amount thereof, (iii) the requested issuedate, (iv) the requested expiration date, and (v) the purpose forsuch Letter of Credit.  Each such Letterof Credit Request shall be accompanied by the proposed issuer’s standard formstandby or commercial letter of credit application, duly completed and executedby the Borrowers’ Representative (which application shall be deemed forpurposes of this Agreement to constitute part of such Letter of CreditRequest), together with all other documents, materials and evidences reasonablyrequired by the Agent prior to the issuance of such Letter of Credit.

###  

### SECTION 3.10.2    Termsof Letters of Credit.  Each Letter ofCredit shall (a) have an expiration date not later than the earlier of (i) 365days or, in the case of a leap year, 366 days, after the date of issuancethereof (or such longer period to which the Agent shall consent provided thatthe Borrowers agree to pay any additional issuance cost or facing fees arisingby virtue of the issuance of a Letter of Credit for a period longer than theperiod specified in this clause (i)) and (ii) the third anniversaryof the Closing Date and (b) be issued solely to secure bid, tender,surety, payment, performance, litigation or similar bonds required by theBorrowers and their Subsidiaries in the ordinary course of business.

###  

### SECTION 3.10.3    DrawingsUnder Letters of Credit.

###  

#### (a)         Noticeto Borrowers’ Representative and Lenders. Promptly upon receipt by the Agent (from the issuing bank or otherwise)of any draft upon, or other notice of drawing under, a Letter of Credit, theAgent shall give the Borrowers’ Representative and each Lender written ortelephonic notice (promptly followed in writing) of the amount of such draft ornotice of drawing, of the Letter of Credit against which it is drawn and of thedate upon which the issuing bank proposes to honor such draft.

####  

#### (b)         Repaymentby Borrowers.  The Borrowers shallpay to the Agent for the account of the issuing bank the amount of any drawing underany Letter of Credit on the date of such drawing if notice is received by 1:00 p.m.on the date of drawing and otherwise on the next Business Day.  The amount of any drawing under a Letter ofCredit that is not paid on the date provided herein shall bear interest,payable on demand, from the due date thereof until paid, at the Post-DefaultRate.

####  

#### (c)         Repaymentof Letters of Credit with Loans.  Onthe date of any drawing under a Letter of Credit, the amount of such drawingautomatically shall be paid with, and the Borrowers hereby authorize theLenders to make, a Borrowing of Working Capital Facility Loans in the amount ofsuch drawing, regardless of whether or not all conditions set forth in Section 4.2have been satisfied.

 

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#### (d)         Borrowers’Obligation Absolute.  The obligationof the Borrowers to repay any Loans advanced pursuant to the foregoingclause (c) and any other amounts paid by the Agent or any Lender toany issuing bank with respect to any Letter of Credit shall be irrevocable,shall not be subject to any qualification or exception whatsoever and shall bebinding in accordance with the terms and conditions of this Agreement under allcircumstances, including the following circumstances:  (i) any lack of validity orenforceability of this Agreement or any of the other Loan Documents; (ii) theexistence of any claim, set-off, defense or right which any Borrower or theaccount party may have at any time against the issuer of any Letter of Credit,a beneficiary of any Letter of Credit or any transferee of any Letter of Credit(or any Person for whom any such transferee may be acting), the Lender or anyother Person, whether in connection with this Agreement, or any Letter ofCredit, the transactions contemplated herein or any unrelated transactions;(iii)any draft, certificate or any other document presented under any Letter ofCredit proving to be forged, fraudulent, invalid or insufficient in any respector any statement therein being untrue or inaccurate in any respect; (iv) thesurrender or impairment of any security for the performance or observance ofany of the terms of this Agreement or the other Loan Documents; (v) anyfailure of the Agent or any Letter of Credit Issuer to provide notice to anyBorrower of any drawing under any Letter of Credit; (vi) the occurrence orcontinuance of any Default; or (vii) any other reason.

####  

#### (e)         Lenders’Participation Obligations.  In theevent that an issuing bank makes any payment under any Letter of Credit andBorrowers shall not have reimbursed such amount in full to the issuing bankpursuant to Section 3.10.3(b) or (c), the issuing bankshall promptly notify the Agent, which shall promptly notify each Lender ofsuch failure, and each Lender shall promptly and unconditionally pay to theAgent for the account of the issuing bank the amount of such Lender’s WorkingCapital Facility Percentage of such unreimbursed payment in same dayfunds.  If the Agent so notifies, priorto 11:00 A.M. (Atlanta, Georgia time) on any Business Day, any Lenderrequired to fund a payment under a Letter of Credit, such Lender shall makeavailable to the Agent for the account of the issuing bank in Dollars suchLenders Working Capital Facility Percentage of the amount of such payment onsuch Business Day in same day funds.  Ifand to the extent such Lender shall not have so made its Working CapitalFacility Percentage of the amount of such payment available to the Agent forthe account of the issuing bank, such Lender agrees to pay to the Agent for theaccount of the issuing bank, forthwith on demand, such amount, together withinterest thereon, for each day from such date until the date such amount ispaid to the Agent for the account of the issuing bank at the overnight FederalFunds Rate.  The failure of any Lender tomake available to the Agent for the account of the issuing bank its WorkingCapital Facility Percentage of any payment under any Letter of Credit shall notrelieve any other Lenders of its obligation hereunder to make available to theAgent for the account of such issuing bank its Working Capital FacilityPercentage of any Letter of Credit on the date required, as specified above,but no Lender shall be responsible for the failure of any other Lender to makeavailable to the Agent for the account of such issuing bank such other Lenders’Working Capital Facility Percentage of any such payment.

####  

#### (f)          Reimbursements.  Whenever the issuing bank receives a paymentof a reimbursement obligation as to which the Agent has received for theaccount of the issuing bank any payments from the Lenders pursuant to Section 3.10.3(e),the issuing bank shall pay to the Agent and the Agent shall promptly pay toeach Lender which has paid its Working Capital Facility Percentage thereof, inDollars and in same day funds, an amount equal to such Lender’s

 

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#### share (based onthe proportionate aggregate amount funded by such Lender to the aggregateamount funded by all Lenders) of the principal amount of such reimbursementobligation and interest thereon accruing after the purchase of the respectiveparticipations.

####  

#### (g)         Lenders’Obligation Absolute.  The obligationof the Lenders to pay the Agent for any amount paid by it to any issuing bankin respect of a Letter of Credit shall be irrevocable, shall not be subject toany qualification or exception whatsoever and shall be binding in accordancewith the terms and conditions of this Agreement under all circumstances,including the following circumstances:  (i) anylack of validity or enforceability of this Agreement or any of the other LoanDocuments; (ii) the existence of any claim, set-off, defense or rightwhich any Lender or the account party may have at any time against abeneficiary of any Letter of Credit or any transferee of any Letter of Credit(or any Person for whom any such transferee may be acting), the Lender or anyother Person, whether in connection with this Agreement, or any Letter ofCredit, the transactions contemplated herein or any unrelated transactions;(iii)any draft, certificate or any other document presented under any Letter ofCredit proving to be forged, fraudulent, invalid or insufficient in any respector any statement therein being untrue or inaccurate in any respect; (iv) thesurrender or impairment of any security for the performance or observance ofany of the terms of this Agreement or the other Loan Documents; (v) anyfailure of the Agent to provide notice to the Lender of any drawing under anyLetter of Credit; (vi) the occurrence or continuance of any Default; or (vii) anyother reason.

####  

### SECTION 3.10.4    Letterof Credit Fees.  With respect to eachLetter of Credit, the Borrowers shall pay to the Agent, for the benefit of theLenders in accordance with their respective Working Capital FacilityPercentages, a per annum fee equal to the Applicable Margin in effect for LIBORRate Loans times the undrawn face amount of such Letter of Credit.  Such fee shall be calculated on a daily basisand shall be payable by the Borrowers monthly in arrears on each MonthlyPayment Date and on the Maturity Date. In addition Borrowers shall pay (i) the Agent, for the ratablebenefit of Lenders, a fronting fee equal to .125% of the face amount of eachLetter of Credit,  and (ii) Agent’sand/or the issuing bank’s customary fees with respect to issuance, amendment,renewal or extension of any Letter of Credit or processing of drawingsthereunder. ** **Fromand after the occurrence of an Event of Default and during the continuancethereof, the fee payable pursuant to the first sentence hereof shall increaseto a per annum rate equal to the Applicable Margin in effect for LIBOR RateLoans plus two percent (2.00%) times the undrawn face amount ofeach Letter of Credit, payable on demand. All fees payable under this Section 3.10.4 shall be fullyearned and nonrefundable on the date such fees are due.

###  

### SECTION 3.10.5    Limitationof Liability With Respect to Letters of Credit.  As among the Borrowers, the Agent, theissuing bank and Lenders,  the Borrowersassume all risks of the acts and omissions of, or misuse of any Letter ofCredit by, the beneficiaries of such Letter of Credit.  Without limiting the foregoing, none of theAgent, any Lender or the issuing bank shall not be responsible for:  (a) the form, validity, sufficiency,accuracy, genuineness or legal effect of any draft, demand, application orother documents submitted by any party in connection with any Letter of Crediteven if such document should in fact prove to be in any and all respects invalid,insufficient, inaccurate, fraudulent or forged; (b) the validity,genuineness or sufficiency of any instrument transferring or assigning orpurporting to transfer or assign a Letter of Credit or the rights or benefitsthereunder or proceeds thereof, in whole or in part, which may prove to beinvalid or ineffective for any reason; (c) failure of the beneficiary of aLetter of Credit to

 

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### comply fully withthe conditions required in order to draw upon such Letter of Credit; (d) errors,omissions, interruptions or delays in transmission or delivery of any messagesby mail, cable, telegraph, telex or otherwise, whether or not they be incipher; (e) errors in interpretations of technical terms; (f) anyloss or delay in the transmission or otherwise of any document required to makea drawing under any Letter of Credit or with respect to the proceeds thereof; (g) themisapplication by the beneficiary of a Letter of Credit of the proceeds of anydrawing under such Letter of Credit; or (h) any consequences arising fromcauses beyond the control of the Agent, the issuing bank or any Lender,including any act or omission, rightfully or wrongfully, of any present orfuture Governmental Authority.  None ofthe above circumstances shall affect, impair or prevent the vesting of any ofthe Agent’s or any Lender’s rights or powers under this Agreement.

###  

## SECTION 3.11       DefaultingLenders.

##  

#### (a)         Notwithstandinganything to the contrary contained herein, if any Lender (x) has refused (whichrefusal constitutes a breach by such Lender of its obligations under thisAgreement) to make available its portion of any Working Capital Facility Loansor, such Lender’s participation in any Letter of Credit or (y) notifies eitherAgent or Borrowers’ Representative that it does not intend to make availableits portion of any Working Capital Facility Loan or its participation in anyLetter of Credit (if, in each case, the actual refusal to do so thenconstitutes a breach by such Lender of its obligations under this Agreement)(each, a “Lender Default”), all rights and obligations hereunder andunder the Loan Documents of such Lender (a “Defaulting Lender”) as towhich a Lender Default is in effect and of the other parties hereto shall bemodified to the extent of the express provisions of this Section whilesuch Lender Default remains in effect.

####  

#### (b)         Insuch event, Working Capital Facility Loans shall be incurred pro rata fromLenders (the “Non-Defaulting Lenders”) having Commitments which are notDefaulting Lenders based on their respective Working Capital FacilityPercentages in regard thereto, and no Working Capital Facility Percentage ofany Lender or any pro rata share of any Working Capital Facility Loans requiredto be advanced by any Lender shall be increased as a result of such LenderDefault.  Amounts received in respect ofprincipal of any type of Working Capital Facility Loans shall be applied toreduce the applicable Working Capital Facility Loans of each Lender pro ratabased on the aggregate of the outstanding Working Capital Facility Loans ofthat type of all Lenders at the time of such application; provided,however, that, such amount shall not be applied to any Working Capital FacilityLoans of a Defaulting Lender at any time when, and to the extent that, theaggregate amount of Working Capital Facility Loans of any Non-Defaulting Lenderexceeds such Non-Defaulting Lender’s Working Capital Facility Percentage of allWorking Capital Facility Loans then outstanding.

####  

#### (c)         ADefaulting Lender shall not be entitled to give instructions to Agent or toapprove, disapprove, consent to or vote on any matters relating to thisAgreement and the other Loan Documents. All amendments, waivers and other modifications of this Agreement andthe other Loan Documents may be made without regard to a Defaulting Lender and,for purposes of the definition of “Required Lenders”, a DefaultingLender shall be deemed not to be a Lender and not to have Loans outstanding.

 

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# ARTICLE 4CONDITIONS TO LOANS

#  

## SECTION 4.1         InitialLoans and Letters of Credit.  Theobligations of the Lenders to make the initial Loans and to cause the issuanceof the initial Letters of Credit on the Closing Date shall be subject to theprior or concurrent satisfaction of each of the conditions precedent set forthin this Section 4.1 each in form and substance satisfactory to theAgent in its sole discretion, except as the Required Lenders shall otherwiseconsent.

##  

### SECTION 4.1.1      LoanDocuments. Each Loan Party shall have delivered each of the Loan Documentsto which it is a party, each duly executed by an authorized officer of suchLoan Party.

###  

### SECTION 4.1.2      Resolutions,Etc.  The Agent shall have received:

###  

#### (a)         acertificate, dated the date hereof, of the secretary or an assistant secretaryof each Loan Party as to: (i) resolutions of its board of directors (orcomparable body), then in full force and effect authorizing the execution,delivery and performance of the Loan Documents to which such Loan Party is aparty and the related transactions contemplated thereby, and (ii) theincumbency and signatures of those of its officers authorized to act withrespect to the Loan Documents to which it is party, upon which certificate theAgent and the Lenders may conclusively rely until it shall have receivedfurther certificates of the secretary or an assistant secretary of such LoanParty canceling or amending such prior certificates;

####  

#### (b)         copiesof the Organic Documents of each Loan Party certified by, in the case of thecharters, the appropriate Governmental Authority of the State of such LoanParty’s incorporation (or organization) and, in the case of its other OrganicDocuments, such Loan Party’s secretary or assistant secretary, which documentsshall be satisfactory to the Agent;

####  

#### (c)         aso-called “good standing” certificate with respect to each Loan Party from theappropriate Governmental Authority of the State of its incorporation;

####  

#### (d)         evidenceof qualification of each Loan Party to do business in each other jurisdictionin which such Loan Party is required to qualify;

####  

#### (e)         suchother documents (certified if requested) as Agent may reasonably request, withrespect to this Agreement, the Notes, any other Loan Document, the transactionscontemplated hereby and thereby, or any Organic Document, ContractualObligation of any Borrower or any of its Subsidiaries, or Approval.

####  

### SECTION 4.1.3      Notes.  The Agent shall have received, for theaccount of each Lender, such Lender’s Note, in each case duly executed and deliveredpursuant to subsections (a) and (b) of Section 3.2.

###  

### SECTION 4.1.4      NoContest, Etc.  On the Closing Date,no litigation, arbitration, governmental investigation, injunction, proceedingor inquiry shall be pending or, to the knowledge of any Borrower, threatenedwhich:  (a) seeks to enjoin orotherwise prevent the consummation of, or to recover any damages or obtainrelief as a result of, the transactions

 

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### contemplated by orin connection with this Agreement or any other Loan Document; or (b) would,in the opinion of the Required Lenders, be materially adverse to any of theparties hereto with respect to the transactions contemplated hereby or giverise to any liability on the part of the Agent or any Lender in connection withthis Agreement or the other Loan Documents or the transactions contemplatedhereby or thereby.

###  

### SECTION 4.1.5      Certificateas to Completed Conditions, Warranties, No Default, Etc.  The Agent shall have received a certificate,dated the Closing Date, with counterparts for each Lender, of the AuthorizedOfficer of the Borrowers’ Representative, to the effect that:

###  

#### (a)         allconditions precedent set forth in this Section 4.1 have beensatisfied;

####  

#### (b)         allrepresentations and warranties set forth in Article 5 are true andcorrect in all material respects;

####  

#### (c)         allrepresentations and warranties set forth in the other Loan Documents are trueand correct in all material respects; and

####  

#### (d)         noDefault or Event of Default has occurred and is continuing.

####  

### SECTION 4.1.6      Compliancewith Requirements of Law.  The Agentshall have received a certificate, dated the Closing Date, with counterpartsfor each Lender, of an Authorized Officer of the Borrowers’ Representative, tothe effect that the Borrowers are in compliance in all material respects withall Requirements of Law except as specified in Section 6.1.11 and haveobtained and maintain in full force and effect (a) all licenses, permitsand approvals issued by Governmental Authorities necessary to carry on theirrespective businesses, (b) all permits and consents necessary toconsummate this Agreement and necessary for Agent to have a first priorityperfected security interest in any such permits or licenses, and (c) allApprovals.

###  

### SECTION 4.1.7      Opinionsof Counsel.  The Agent shall havereceived an opinion letter, dated the Closing Date and addressed to the Agentand the Lenders from legal counsel to the Borrowers, in form and substancesatisfactory to the Agent.

###  

### SECTION 4.1.8      ClosingFees, Expenses, Etc.  The Agent shallhave received, for its own account, the fees payable on the Closing Datepursuant to this Agreement and all costs and expenses of the Agent which arepayable upon the initial Borrowing pursuant to Section 9.3.

###  

### SECTION 4.1.9      Perfection.  The Agent shall have received evidence of allfilings of the Financing Statements with respect to the Security Agreement andother Security Documents; searches or other evidence as to the absence of anyLiens; and evidence that all other actions with respect to the Liens created bythe Security Documents have been taken as are necessary or appropriate toperfect such Liens;

###  

### SECTION 4.1.10    EmploymentAgreements; Compensation.  The Agentshall have received copies of all senior management employment agreements towhich any Borrower is a party.

 

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### SECTION 4.1.11    Pensionand Welfare Liabilities.  Ifrequested by the Agent, the Agent shall have received, with counterparts foreach of the Lenders, (i) the most recent actuarial valuation report, ifany, for each Single Employer Plan, if any, and a copy of Schedule B tothe Annual Report on Form 5500 of the Internal Revenue Service, if any,for each Single Employer Plan, if any, most recently filed with the InternalRevenue Service, and (ii) a report prepared by the Borrowers in form andsubstance satisfactory to the Lenders detailing any liabilities of the Borrowerand each Subsidiary and Commonly Controlled Entity for post-retirement benefitsunder Plans which are welfare benefit plans (as defined in Section 3(1) ofERISA).

###  

### SECTION 4.1.12    Insurance.  The Agent shall have received evidencesatisfactory to it that the insurance maintained by the Borrowers and theirSubsidiaries is issued by an insurance company with a Best’s rating of “A” orbetter (“B+” or better, in the case of Lumbermen’s Underwriting Alliance) and afinancial size category of not less than XII, is in amounts under policiesnaming the Agent, for its benefit and for the benefit of the Lenders, as losspayee (in the case of casualty insurance policies) and as additional insured(in the case of liability policies), and otherwise complies with therequirements of this Agreement and the Security Documents.

###  

### SECTION 4.1.13    FinancialInformation, Etc.  The Agent shallhave received, with counterparts for each Lender, the historical financialstatements referred to in Section 5.4, the Projections and asolvency certificate of each Borrower and its Subsidiaries, and the Agent shallbe satisfied in all respects with such materials.  Additionally, the Agent shall be satisfied inall respects with materials contained on Schedules.

###  

### SECTION 4.1.14    Reviewof Borrowers’ Operations.  The Agentor its representatives shall have completed their review of the Borrowers’ andtheir Subsidiaries management information systems, accounting, financialreporting and cash management systems as well as the legal structure of eachLoan Party and the nature of each Loan Party’s asset composition and contingentliabilities.

###  

### SECTION 4.1.15    [Intentionallynot used].

###  

### SECTION 4.1.16    MaterialContracts.  The Agent shall havereceived a certificate from an Authorized Officer of the Borrowers’Representative to the effect that attached thereto are true and correct copiesof each Material Contract.

###  

### SECTION 4.1.17    Letterto Accountants.  The Agent shall havereceived satisfactory evidence that the Borrowers’ Representative has delivereda letter to its independent public accountants authorizing such publicaccountants to discuss the Borrowers’ financial matters with the Agent and eachLender or any of their representatives whether or not a representative of anyBorrower is present.

###  

### SECTION 4.1.18    AffiliateAgreements.  The Agent shall havereceived copies of all management, shared expense or similar agreements betweeneach Borrower and any of its Affiliates.

###  

### SECTION 4.1.19    BorrowingBase Certificate; Minimum Working Capital Facility Availability. The Agentshall have received a Borrowing Base Certificate dated as of the Closing Datefrom an Authorized Officer of the Borrowers’ Representative, and, after givingeffect to any Loans to be made or Letters of Credit to be issued on the ClosingDate, Working Capital Facility Availability shall be at least $5,000,000.

 

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### SECTION 4.1.20    RealEstate.  The Borrowers shall havedelivered to Agent a negative pledge agreement in form and substancesatisfactory to the Agent relative to all real estate owned by the Borrowers.

###  

### SECTION 4.1.21    [Intentionallynot used].

###  

### SECTION 4.1.22    OtherDocuments, Certificates, Etc.  TheAgent shall have received such other documents, certificates, opinions ofcounsel or other materials as it reasonably requests from any Loan Party.

###  

## SECTION 4.2         IncrementalIncreases; All Loans and Letters of Credit. Without duplication of any conditions precedent required to be satisfiedpursuant to Section 4.1, the obligations of the Lenders to makeavailable to Borrowers any Incremental Increase and to make any Loans and to causethe issuance of Letters of Credit (including the initial Loans and Letter ofCredit), shall be subject to the satisfaction of each of the additionalconditions precedent set forth in this Section 4.2.

##  

### SECTION 4.2.1      Compliancewith Warranties, No Default, Etc. The representations and warranties set forth in Article 5and all other Loan Documents shall have been true and correct in all materialrespects as of the date initially made, and both before and after giving effectto the effectiveness of any such Incremental Increase or the making of any suchLoan or the issuance of such Letter of Credit (except to the extent expresslystated to be as of an earlier date), and

###  

#### (a)         aftergiving effect to any amendment to the Schedules accepted by Required Lenderspursuant to Section 4.2.2, such representations and warrantiesshall be true and correct in all material respects with the same effect as ifthen made (except to the extent expressly stated to be as of an earlier date);

####  

#### (b)         aftergiving effect to any amendment to the Schedules accepted by Required Lenderspursuant to Section 4.2.2, all representations and warranties setforth in the other Loan Documents shall be true and correct in all materialrespects with the same effect as if then made (except to the extent expresslystated to be as of an earlier date);

####  

#### (c)         nomaterial adverse development shall have occurred in any litigation, arbitrationor governmental investigation or proceeding which renders such litigation,arbitration or governmental investigation or proceeding likely to succeed inthe opinion of the Required Lenders and, if successful, could result in aMaterial Adverse Change;

####  

#### (d)         noDefault or Event of Default shall have occurred and be continuing or wouldresult therefrom; and

####  

#### (e)         theaggregate of all Working Capital Facility Loans plus the aggregate outstandingamount of all Letter of Credit Obligations does not exceed the Borrowing Base.

 

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### SECTION 4.2.2      BorrowingRequest, Letter of Credit Request, Etc. The Agent shall have received a duly completed Borrowing Request in thecase of a Borrowing,  a Letter of CreditRequest in the case of the issuance of a Letter of Credit or a request forIncremental Increase pursuant to Section 2.3 in the case of anIncremental Increase.  Each delivery ofany such Borrowing Request or Letter of Credit Request or request forIncremental Increase and the acceptance by the Borrowers of the proceeds of theLoan or the benefits of a Letter of Credit or the Incremental Increaserequested thereby shall constitute a representation and warranty by theBorrowers that on the date of such request, and before and after giving effectto the making of such Loans and the application of any proceeds of such Loansor the issuance of such Letter of Credit or such Incremental Increase, as thecase may be, all statements set forth in Section 4.2.1 are true andcorrect.  In the event that, inconnection with the delivery of any such Borrowing Request or Letter of CreditRequest or request for Incremental Increase, the Borrowers are required toamend any item on the Schedules attached hereto in order that the statement setforth in subsection (a) or (b) of Section 4.2.1shall be true and correct, the Borrowers’ Representative shall deliver to theAgent at least five (5) Business Days prior to the date of the Borrowing,Letter of Credit or Incremental Increase requested or to be requested, arequest that such Schedule be amended, and the Agent shall promptlyforward such request to the Lenders.  Tothe extent that the Required Lenders agree to such requested amendment orotherwise agree to make any Loans or issue any Letters of Credit after receiptof such request, the representations and warranties proposed to be amended bysuch requested amendment to the Schedules will be deemed amended for purposesof this Agreement.

###  

### SECTION 4.2.3      SatisfactoryLegal Form.  All documents executedor submitted by or on behalf of any of the Borrowers or any other Loan Partyshall be reasonably satisfactory in form and substance to the Agent and itscounsel; the Required Lenders shall have received all information, and suchcounterpart originals or such certified or other copies of such Instruments, asthe Required Lenders may reasonably request; and all legal matters incident tothe transactions contemplated by this Agreement shall be reasonablysatisfactory to the Required Lenders.

###  

### SECTION 4.2.4      MarginRegulations.  The making of such Loanor the issuance of such Letter of Credit and the use of the proceeds thereofshall not violate Regulations T, U and X of the F.R.S. Board.

###  

### SECTION 4.2.5      AdverseChange.  Since March 31, 2005,no Condition Precedent Material Adverse Change shall have occurred.

###  

### SECTION 4.2.6      Changein Law.  On the date of such Borrowing,no change shall have occurred in applicable law, or in applicable regulationsthereunder or in interpretations thereof by any court or Governmental Authoritywhich, in the reasonable opinion of any Lender, would make it illegal for suchLender to make the Loan required to be made on such date.

###  

# ARTICLE 5REPRESENTATIONS AND WARRANTIES, ETC.

#  

In order to induce theLenders and the Agent to enter into this Agreement, to engage in thetransactions contemplated herein and in the other Loan Documents and to makethe Loans and cause the issuance of Letters of Credit, each Borrower representsand warrants to the Agent

 

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and each Lender as set forth in this Article 5.  Each and all of the representations and warrantiesset forth in this Article 5 shall be true and correct, assuming andafter giving effect to the consummation of the transactions contemplated bythis Agreement and the other Loan Documents.

 

## SECTION 5.1         Organization,Power, Authority, Etc.  Each of theLoan Parties (i) is duly organized and existing and in good standing underthe laws of the jurisdiction of its organization or incorporation, (ii) isduly qualified to do business and is in good standing as a foreign corporationin each jurisdiction where the failure to so qualify could reasonably beexpected to result in a Material Adverse Change, and (iii) has full powerand authority, and, holds all governmental licenses, permits, registrations andother approvals required under all Requirements of Law, to own and hold underlease its property and to conduct its business as conducted prior to theClosing Date, including all Approvals. Each Loan Party has full power and authority to enter into and performits Obligations under this Agreement, the Notes and each other Loan Documentexecuted or to be executed by it and to obtain Loans hereunder.

##  

## SECTION 5.2         DueAuthorization.  The execution anddelivery by each Loan Party of this Agreement, the Notes and each other LoanDocument executed or to be executed by it, and the incurrence and performanceby each Loan Party of the Obligations have been duly authorized by allnecessary corporate action, do not require any Approval (except those Approvalsalready obtained), do not and will not conflict with, result in any violationof, or constitute any default under, any provision of any Organic Document orContractual Obligation of any Loan Party or any law or governmental regulationor court decree or order, and will not result in or require the creation or impositionof any Lien on any Loan Party’s properties pursuant to the provisions of anyContractual Obligation of any Loan Party other than the Loan Documents.

##  

## SECTION 5.3         Validity,Etc.  This Agreement, the Notes andeach other Loan Document executed by such Loan Party constitute the legal,valid and binding obligations of such Loan Party, enforceable in accordancewith their respective terms subject to the effect of any applicable bankruptcy,insolvency, moratorium or similar laws affecting creditors’ rights generally,and the effect of general principles of equity (regardless of whetherconsidered in a proceeding in equity or at law).

##  

## SECTION 5.4         FinancialInformation; Solvency.

##  

#### (a)         Allbalance sheets, all statements of operations, stockholders’ equity and cashflows, and all other financial information of the Loan Parties which have beenor shall hereafter be furnished by or on behalf of the Borrowers to each Lenderand the Agent for the purposes of or in connection with this Agreement or anytransaction contemplated hereby, have been prepared in accordance with GAAPconsistently applied (except (i) as described in Schedule 5.4and (ii) to the extent items in the Projections are based upon estimates)throughout the periods involved and present fairly in all material respects thematters reflected therein subject, in the case of unaudited statements, tochanges resulting from normal year-end audit adjustments and except as to theabsence of footnotes.  Other than the repurchaseobligations described in Section 6.2.2(h), neither any Borrower norits Subsidiaries, has material contingent liabilities or material liabilitiesfor taxes, long-term leases or unusual forward or long-term commitments.

 

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#### (b)         Givingeffect to the transactions contemplated by this Agreement and the other LoanDocuments (including, without limitation, the making of Loans, the issuance ofLetters of Credit and the consummation of the Acquisition), each of the LoanParties is Solvent.

####  

#### (c)         [Intentionallynot used].

####  

#### (d)         Noneof the transactions with respect to the Loan Documents are being entered intowith the intent to delay, hinder or defraud any of the creditors of anyBorrower or any of the Borrowers’ Subsidiaries.

####  

## SECTION 5.5         MaterialAdverse Change.  Since March 31,2005, there has been no Condition Precedent Material Adverse Change.

##  

## SECTION 5.6         Absenceof Default.  Neither any Borrower norits Subsidiaries is in default in the payment of (or in the performance of anyobligation applicable to) any Indebtedness, or is in default under anyregulation of any Governmental Agency or court decree or order, or, except asdescribed in Schedule 5.6, is in default under any Requirements ofLaw.

##  

## SECTION 5.7         Litigation,Legislation, Etc.  Except as setforth on Schedule 5.7, there is no pending or, to the knowledge ofthe Borrowers, threatened litigation, arbitration or governmentalinvestigation, proceeding or inquiry which, if adversely determined, couldreasonably be expected to result in a Material Adverse Change.  To the knowledge of the Borrowers, there isno legislation, governmental regulation or judicial decision that couldreasonably be expected to result in a Material Adverse Change.

##  

## SECTION 5.8         RegulationsT, U and X.  No Loan Party is engagedprincipally, or as one of its important activities, in the business ofextending credit for the purpose of purchasing or carrying Margin Stock (asdefined in F.R.S. Board Regulation U), and no assets of any Loan Partyconsist of Margin Stock.  The Loanshereunder will not be used for a purpose which violates, or would beinconsistent with, F.R.S. Board Regulation T, U or X.

##  

## SECTION 5.9         GovernmentRegulation.  No Loan Party is an “investmentcompany” within the meaning of the Investment Holding Company Act of 1940, asamended, or a “holding company,” or a “subsidiary company” of a “holdingcompany,” or an “affiliate” of a “holding company” or of a “subsidiary company”of a “holding company,” within the meaning of the Public Utility HoldingCompany Act of 1935, as amended, or subject to regulation under the FederalPower Act, the Interstate Commerce Act or any other federal or state lawlimiting its ability to incur Indebtedness or to execute, deliver or performthe Loan Documents to which it is party.

##  

## SECTION 5.10       Taxes.  Neither any Borrower nor its Subsidiaries hasfailed to file any tax returns and reports required by law to have been filedby it and has paid all taxes and Charges thereby shown to be owing, except anysuch taxes or Charges which are being diligently contested in good faith byappropriate proceedings and for which adequate reserves in accordance with GAAPshall have been set aside on its books.

 

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## SECTION 5.11       Pensionand Welfare Plans.

##  

#### (a)         NoLoan Party has assumed any liability (other than the liability to pay routineplan expenses or to make required contributions or premiums) under any employeebenefit plan, fund, program, arrangement, agreement or commitment maintained byor on behalf of or contributed to by or on behalf of any entity or trade orbusiness which, together with any of such corporations, is treated as a singleemployer under Sections 414(b), (c), (m) or (o) of the IRC.  Except as described in Schedule 5.11,  no Loan Party or Commonly Controlled Entitywill be subject (directly or indirectly) to any liability (other than theliability to pay routine plan expenses or to make required contributions orpremiums), tax or penalty whatsoever to any person whomsoever with respect toany employee benefit plan, fund, program, arrangement, agreement or commitment,described in the immediately preceding sentence.

####  

#### (b)         NoReportable Event which could result in a Material Adverse Change has occurredduring the six-year period prior to the date as of which this representation ismade or deemed made with respect to any Single Employer Plan.  Each Loan Party, each Commonly ControlledEntity, Subsidiary, each Plan, and each trust maintained pursuant to any suchPlan have complied in all material respects with the applicable provisions ofERISA, the IRC, and any other applicable laws. The present value of all “benefit liabilities” (within the meaning of Section 4001(a)(16)of ERISA) under each Single Employer Plan (based on those assumptions thatwould be used in a termination of each such Plan, did not, as of the lastannual valuation date for which an actuarial valuation report has been done),did not, as of such date, exceed the value of the assets of such Plan as ofsuch date.  No Loan Party nor anyCommonly Controlled Entity has incurred any liability to the PBGC or to anyother Person under Section 4062, 4063 or Section 4064 of ERISA onaccount of the termination of, or its withdrawal from, a Single Employer Plan,and no Lien has been imposed on the assets of any Loan Party or any CommonlyControlled Entity under Section 4068 of ERISA.  There does not exist any event or conditionwhich would permit the institution of proceedings to terminate any SingleEmployer Plan pursuant to Section 4042 of ERISA.  No “accumulated funding deficiency” (asdefined in Section 302 of ERISA or Section 412 of IRC), whether ornot waived, exists with respect to any Pension Plan.  The Loan Parties and each Commonly ControlledEntity have timely made in full each quarterly installment payment to anyPension Plan required under Section 302(e) of ERISA or Section 412(m)of the IRC and have also made full and timely payment of any other costs orexpenses related to such a Plan.  TheLoan Parties and all Commonly Controlled Entities have made full and timelypayment of all contributions to Multiemployer Plans required under ERISA, theIRC or applicable collective bargaining agreements.  No Loan Party nor any Commonly ControlledEntity has had a complete or partial withdrawal from any Multiemployer PensionPlan and the liability to which such Loan Party or Commonly Controlled Entitywould become subject under ERISA if such Loan Party or any such CommonlyControlled Entity were to withdraw completely from all Multiemployer PensionPlans as of the valuation date most closely preceding the date hereof is not inexcess of $250,000.  No suchMultiemployer Pension Plan has been terminated or is in Reorganization orInsolvent, nor, is any such Multiemployer Pension Plan likely to be terminatedor to become in Reorganization or Insolvent. No “accumulated funding deficiency” (as defined in Section 302 ofERISA or Section 412 of the IRC), whether or not waived, exists withrespect to any Multiemployer Plan.  Thepresent value (determined using assumptions which are reasonable in respect ofthe benefits provided and the employees participating) of the aggregateliability of the Loan Parties and any Commonly Controlled Entities forpost-retirement benefits to be provided to their current and former employeesunder all Plans which are welfare benefit plans (as defined in Section 3(1) of

 

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#### ERISA) is not in excess of Two Hundred Fifty Thousand Dollars($250,000).  No written notice of liabilityhas been received with respect to the Loan Parties, or any Plan for any “prohibitedtransaction” (within the meaning of Section 4975 of the IRC or Section 406of ERISA), nor has any such prohibited transaction resulting in liability tothe Loan Party occurred.  No Loan Partyor Commonly Controlled Entity will, as a result of consummating thetransactions contemplated by this Agreement (pursuant to the provisions of theAgreement, by operation of law or otherwise) (i) have incurred or becomeliable for any tax assessed by the Internal Revenue Service for any allegedviolations of Section 4975 of the IRC or any civil penalty imposed by theDepartment of Labor for any alleged violations of Section 406 of ERISA, (ii) havecaused or permitted to occur any “prohibited transaction” within the meaning ofsuch Section 4975 of the IRC or Section 406 of ERISA with respect toany Plan for which no exemption is available or (iii) have incurred anyliability to the PBGC (other than ordinary and usual PBGC premium liability) orany liability for complete or partial withdrawal to any Multiemployer PensionPlan.  No Loan Party is subject (directlyor indirectly) to, and no facts exist which could subject any Loan Party(directly or indirectly) to, any other liability, penalty, tax or lienwhatsoever, which could result in a Material Adverse Change and which isdirectly or indirectly related to any Plan, including, but not limited to,liability for any damages or penalties arising under Title I or Title IV ofERISA, liability for any tax or penalty resulting from a loss of deductionunder Section 404 or 419 of the IRC, any tax or penalty under chapter 43of the IRC, or any taxes or penalties under any other applicable law, butexcluding any liability to make contributions or pay premiums to or under anongoing Plan before the last due date on which such contributions or premiumscould be paid or made without penalty or to pay benefits when due in accordancewith Plan terms.

####  

## SECTION 5.12       LaborControversies.  There are no materiallabor controversies pending or, to the best knowledge of the Borrowers,threatened, relating to any Loan Party. There is (i) no unfair labor practice complaint pending against (orassumed by) any Loan Party or, to the best knowledge of the Borrowers,threatened against any of them, before the National Labor Relations Board, andno grievance or arbitration proceeding arising out of or under any collectivebargaining agreement is so pending against any Loan Party or, to the bestknowledge of the Borrowers, threatened against any of them, (ii) nostrike, labor dispute, slowdown or stoppage is pending against any LoanParty or, to the best knowledge of the Borrowers, threatened against any LoanParty, and (iii) no union representation question existing with respect tothe employees of any Loan Party.  EachLoan Party is in compliance in all material respects with all collectivebargaining agreements to which it is subject.

##  

## SECTION 5.13       Ownershipof Properties; Collateral.

##  

#### (a)         Eachof the Loan Parties shall own good title to, or in the case of leased propertyor assets, valid leasehold interests in, all of its material personalproperties and assets of any nature whatsoever, free and clear of all Liensexcept as expressly permitted pursuant to Section 6.2.3.  Any Liens attaching to property or assets ofany Loan Party as of the Closing Date and expressly permitted under Section 6.2.3are identified in Schedule 5.13 (“Existing Liens”).

####  

#### (b)         Exceptto the extent otherwise consented to in writing by the Required Lenders, theprovisions of the Security Documents are effective to create in favor of theAgent for the benefit of the Agent and the Lenders a legal, valid andenforceable security interest in all

 

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#### right, title and interest of the Loan Parties in the Collateraldescribed therein, and, upon the filing of the Financing Statements, theSecurity Documents will create a fully perfected first priority securityinterest in all right, title and interest of the Loan Parties in all of theCollateral subject to no other Liens other than Liens permitted by Section 6.2.3.

####  

## SECTION 5.14       IntellectualProperty.  Each of the Loan Partiesowns or licenses all such Intellectual Property, and has obtained assignmentsof all licenses and other rights, as the Borrowers consider necessary for or asare otherwise material to the conduct of the business of the Loan Parties asnow conducted without, individually or in the aggregate, any infringement uponrights of other Persons.  AllIntellectual Property owned or licensed from third Persons described in this Section 5.14is set forth in Schedule 5.14 (“Intellectual Property”).

##  

## SECTION 5.15       Accuracyof Information.  Neither thisAgreement nor any document or written statement furnished to the Agent or anyof the Lenders by or on behalf of the Loan Parties in connection with thenegotiation, execution and delivery of this Agreement or any transactioncontemplated hereby contains any untrue statement of a material fact or omits tostate any material fact necessary in order to make the statements containedherein or therein not misleading.

##  

## SECTION 5.16       Insurance.  All policies of insurance in effect of anykind or nature owned by or issued to the Loan Parties, including policies offire, theft, product liability, public liability, property damage, othercasualty, employee fidelity, workers’ compensation, property and liabilityinsurance, (a) as of the Closing Date are listed in Schedule 5.16(“Insurance”), (b) are, together with all policies of employeehealth and welfare and title insurance, in full force and effect, (c) complyin all material respects with the applicable requirements set forth herein andin the Security Documents and (d) are of a nature and provide suchcoverage as is customarily carried by companies engaged in similar businessesand owning similar properties in the same general areas in which the LoanParties operate.  No Loan Party providesany of its insurance through self-insurance except as disclosed in Schedule 5.16and ordinary course insurance deductibles.

##  

## SECTION 5.17       Indebtedness.  Other than the Obligations, SubordinatedDebt, and other Indebtedness expressly permitted by the terms of this Agreementand the other Loan Documents, there is no other Indebtedness of any of the LoanParties as of the Closing Date.

##  

## SECTION 5.18       EnvironmentalMatters.  The Loan Parties are incompliance in all material respects with all applicable Environmental Lawsexcept where failure to comply could not reasonably be expected to result in aMaterial Adverse Change or to give rise to any environmental Lien, and thereare no conditions or circumstances associated with the currently or previouslyowned, operated, used or leased properties or current or past operations of theLoan Parties or any predecessor interest of the Loan Parties, which may giverise to Environmental Liabilities and Costs which could reasonably be expectedto result in a Material Adverse Change or which may give rise to anyenvironmental Lien.

##  

## SECTION 5.19       NoBurdensome Agreements.  No Loan Partyis a party to or has assumed any indenture, loan or credit agreement or anylease or other agreement or instrument or subject to any charter or othercorporate restriction which could reasonably be expected to result in aMaterial Adverse Change.

 

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## SECTION 5.20       Consents.  The Loan Parties have all material permitsand governmental consents and approvals necessary under Requirements of Law or,in the reasonable business judgment of the Borrowers, deemed advisable underRequirements of Law, in connection with the transactions contemplated hereby orthe ongoing business and operations of each Borrower and its Subsidiariessubsequent to the Acquisition.

##  

## SECTION 5.21       Contracts.  Set forth in Schedule 5.21 is anaccurate and complete list of all Contractual Obligations of the Loan Partiesrequired to be filed with the Securities and Exchange Commission with thefiling of the Holdings’ Form 10-K for its Fiscal Year ending December 31,2004 (such contracts, herein “Material Contracts”).  Each such Contractual Obligation is in fullforce and effect in accordance with the terms thereof.  There are no defaults by any Loan Party or,to the Borrower’s knowledge after due inquiry, any other default in existenceunder any such Contractual Obligations.

##  

## SECTION 5.22       EmploymentAgreements.  Set forth in Schedule 5.22(“Employment Contracts”) is a complete and accurate list of eachemployment agreement with any senior officer or senior manager to which anyLoan Party is a party, or by which it is bound.

##  

## SECTION 5.23       Conditionof Property.  All of the assets andproperties owned by, leased to or used by any Loan Party material to theconduct of their business are in adequate operating condition and repair,ordinary wear and tear excepted, and are free and clear of known defects exceptfor defects which do not substantially interfere with the use thereof in theconduct of normal operations.

##  

## SECTION 5.24       Subsidiaries.  There are no Subsidiaries of any Borrower asof the Closing Date, except as set forth on Schedule 5.24.

##  

## SECTION 5.25       TradeRelations.  There exists no actualor, to the best of the Borrowers’ knowledge, threatened termination,cancellation or limitation of, or any modification or change in, the businessrelationship of any Loan Party with any customer or group of customers of theBorrowers or any supplier of goods or services to any Loan Party which couldreasonably be expected to result in a Material Adverse Change.

##  

## SECTION 5.26       Leases.  Schedule 5.26 (“ExistingLeases”) sets forth all of the existing leases of each Loan Party, and noLoan Party is in default under or respect to any such existing leasesor any other lease of real or personal property entered into by such LoanParty in the ordinary course of business.

##  

# ARTICLE 6COVENANTS

#  

## SECTION 6.1         AffirmativeCovenants.  The Borrowers agree thatuntil the Commitments have terminated and all Obligations (other thanObligations that expressly survive the termination of this Agreement pursuantto Section 9.5) have been paid and performed in full, the Borrowerswill perform the Obligations set forth in this Section 6.1.

 

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### SECTION 6.1.1      FinancialInformation, Etc.  The Borrowers’Representative will furnish, or will cause to be furnished, to each Lender andto the Agent copies of the following financial statements, reports andinformation:

###  

#### (a)         (i) promptlywhen available and in any event on or prior to December 15, 2005, with respectto Borrowers’ Fiscal Year ending December 31, 2004, and within ninety (90)days after the close of each Fiscal Year thereafter, commencing with Borrowers’Fiscal Year ending December 31, 2005, a consolidated balance sheet and aconsolidating balance sheet for the Borrowers and their Subsidiaries at theclose of such Fiscal Year, and related consolidated and consolidatingstatements of operations, retained earnings, and cash flows for such FiscalYear, of the Borrowers and their Subsidiaries (with comparable information atthe close of and for the prior Fiscal Year), in each case certified (in thecase of consolidated statements) without qualification (except that thecertification with respect to the financial statements for Borrowers’ FiscalYear ending December 31, 2004 may be subject to a going concernqualification) by its certified public accountants existing on the ClosingDate, or other independent public accountants reasonably satisfactory to theAgent, which statements shall be delivered together with a report frommanagement of the Borrowers containing a description of projected businessprospects (including capital expenditures) and management’s discussion andanalysis of financial condition and results of operation of the Borrowers andtheir Subsidiaries; and (ii) promptly when available and in any eventwithin thirty (30) days after the close of each Fiscal Year, a ComplianceCertificate calculated as of the computation date at the close of such FiscalYear; and

####  

#### (b)         promptlywhen available and in any event within thirty (30) days after the close of eachcalendar month of each Fiscal Year a consolidated balance sheet and aconsolidating balance sheet for the Borrowers and their Subsidiaries at theclose of such month, and consolidated and consolidating statements ofoperations, retained earnings, and cash flows for such month and for the periodcommencing at the close of the previous Fiscal Year and ending with the closeof such month, of the Borrowers and their Subsidiaries (with comparable informationat the close of and for the corresponding month of the prior Fiscal Year andfor the corresponding portion of such prior Fiscal Year and with comparableinformation set forth in the Projections for the relevant period), certified bythe Senior Financial Officer of the Borrowers’ Representative, together with(x) a description of projected business prospects (including ConsolidatedCapital Expenditures), and (y) an explanation of any variation greater thanfive percent (5%) from the Projections as updated in accordance with clause (f) ofthis Section 6.1.1; and

####  

#### (c)         withinthirty (30) days after the close of each Fiscal Month and forty-five(45) days after the close of each Fiscal Quarter, a Compliance Certificatecalculated as of the close of such Fiscal Month or Fiscal Quarter and a briefreport containing management’s discussion and analysis of the financialcondition and results of operations of the Borrowers and their Subsidiaries(together with a report from management of the Borrowers containing management’sdiscussion and analysis of any changes compared to prior results and theProjections as updated in accordance with clause (f) of this Section 6.1.1);

####  

#### (d)         assoon as available, but in any event, not later than fifteen (15) daysafter Holdings’ audit committee has reviewed the same, copies of all finaldetailed financial and

 

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#### management reports submitted to the Borrowers by their independentpublic accountants in connection with each annual or interim audit made by suchindependent public accountants of the books of the Borrowers and theirSubsidiaries;

####  

#### (e)         withinten (10) days after the end of each Fiscal Year of the Borrowers, (i) areport summarizing the insurance coverage (specifying type, amount and carrier)in effect for each Loan Party and containing such additional information as theAgent or any Lender may reasonably request, and (ii) written evidence ofpayment of all premiums with respect to each policy of such insurance;

####  

#### (f)          whenapproved by Holdings’ board of directors but no later than January 31 ofeach Fiscal Year of the Borrowers, updates to the Projections containingprojected balance sheets, statements of operations and changes in cash flows ofthe Borrowers and their Subsidiaries prepared on a consolidated basis for suchFiscal Year and each of the three (3) Fiscal Years (but in no event beyondthe end of Fiscal Year 2008) thereafter, prepared on a monthly basis for theupcoming Fiscal Year and on an annual basis for such Fiscal Years thereafter,together with (A) supporting details and a statement of underlyingassumptions, (B) a report from management of the Borrowers containingmanagement’s discussion and analysis of the projected financial condition andresults of operations of the Borrowers’ and their Subsidiaries, (C) projectedtrends of business and (D) a detailed schedule of Capital LeaseObligations and outstanding Indebtedness;

####  

#### (g)         promptlyafter approval by the Borrowers’ boards of directors (or comparable body), anyupdates or revisions to any business plan described in the precedingclause (f) of this Section 6.1.1;

####  

#### (h)         promptlyupon the sending or filing thereof, copies of all reports that any Borrower orany of its Subsidiaries sends to its security holders generally, and copies ofall reports and registration statements that any Borrower or any of itsSubsidiaries files with the Securities and Exchange Commission or any nationalsecurities exchange;

####  

#### (i)          onor before the twentieth (20th) day of each calendar month (or more frequentlyas Agent may require), a completed Borrowing Base Certificate accurate as ofthe last day of the immediately preceding calendar month together with allsupporting schedules including but not limited to accounts receivable agings, schedule ofcross-aging, schedule of credits, schedule of contra accounts, schedule detailingany other ineligible accounts, reconciliation of accounts receivable aging togeneral ledger, schedule of type, dollar value and location of inventory,reconciliation of perpetual inventory to general ledger, including generalledger trial balance, and listing of supporting documentation for all inventoryreserves;

####  

#### (j)          onor before the fifteenth (15th) day of each calendar month, an accounts payableaging certified by a Senior Financial Officer of the Borrowers to be true,correct and complete;

####  

#### (k)         uponrequest from Agent, made at any time hereafter and, in any event, with the lastborrowing Base Certificate delivered in each Fiscal Year, a current AccountDebtor name and address list;

 

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#### (l)          suchother information with respect to the financial condition, business, property,assets, revenues and operations of each Borrower or any Subsidiary as anyLender may from time to time reasonably request.

####  

### SECTION 6.1.2      Maintenanceof Corporate Existence, Etc.  Exceptas permitted by Section 6.2.10, the Borrowers will cause to be doneat all times all things necessary to maintain and preserve the corporateexistences of each Borrower and each Subsidiary.

###  

### SECTION 6.1.3      ForeignQualification.  The Borrowers will,and will cause each Subsidiary to, cause to be done at all times all thingsnecessary to be duly qualified to do business and be in good standing as aforeign corporation in each jurisdiction where the failure to so qualify couldresult in a Material Adverse Change.

###  

### SECTION 6.1.4      Paymentof Taxes, Etc.  The Borrowers will,and will cause each Subsidiary to, pay and discharge, as the same become dueand payable, (a) all Charges against it or on any of its property, as wellas claims of any kind which, if unpaid, could reasonably be expected to becomea Lien upon any one of its properties, and (b) all lawful claims forlabor, materials, supplies, services or otherwise before any thereof become adefault; *provided, however,* that the foregoingshall not require any Borrower or any such Subsidiary to pay or discharge anysuch Charge or claim so long as it shall be diligently contesting the validitythereof in good faith by appropriate proceedings and shall have set aside onits books adequate reserves in accordance with GAAP with respect thereto.

###  

### SECTION 6.1.5      Insurance.  In addition to any insurance required to bemaintained pursuant to any other Loan Document, the Borrowers will, and willcause each Subsidiary to, maintain or cause to be maintained (a) insurancewith respect to its properties and business against such casualties,contingencies and liabilities and of such types and in such amounts as isacceptable to the Agent and the Lenders and will furnish to the Agent, annuallyat the policy renewal date, a certificate of an Authorized Officer settingforth the nature and extent of all insurance maintained by the Borrowers andtheir Subsidiaries in accordance with this Section 6.1.5, and (b) thepolicies referred to in Section 4.1.12.  Each such policy shall be issued by aninsurance company with a Best’s rating of “A” or better (“B+” or better, in thecase of Lumbermen’s Underwriting Alliance) and a financial size category of notless than XII, shall be in effect on the Closing Date, and the premiums foreach such policy shall be paid as such premiums shall come due.  All policies of casualty insurance shallcontain an endorsement, in the form submitted to the Borrowers’ Representativeby the Agent, showing loss payable to the Agent for its benefit and the ratableinterests of the Lenders, as their interests may appear.  All policies of liability insurance,including, without limitation, all primary and umbrella liability policies,shall name the Agent and the Lenders as additional insured.  The Borrowers shall retain all the incidentsof ownership of the insurance maintained pursuant to this Section 6.1.5,but shall not borrow upon or otherwise impair its right to receive the proceedsof such insurance, other than customary financing of annual premiums.

 

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### SECTION 6.1.6      Noticeof Default, Litigation, Etc.  TheBorrowers’ Representative will give prompt written notice (with a descriptionin reasonable detail) to the Agent and the Lenders of:

###  

#### (a)         theoccurrence of any Default;

####  

#### (b)         theoccurrence of any litigation, arbitration or governmental investigation orproceeding not previously disclosed in writing by the Borrowers to the Lenderswhich has been instituted or, to the knowledge of any Borrower, is threatenedagainst, any Loan Party or to which any of its properties, assets or revenuesis subject which, if adversely determined, could reasonably be expected toresult in a Material Adverse Change;

####  

#### (c)         anymaterial development which shall occur in any litigation, arbitration orgovernmental investigation or proceeding previously disclosed by any Borrowerto the Lenders pursuant to Section 5.7 which could reasonably beexpected to result in a Material Adverse Change;

####  

#### (d)         theoccurrence of any other circumstance which could reasonably be expected toresult in a Material Adverse Change;

####  

#### (e)         theoccurrence of any Loss; and

####  

#### (f)          theoccurrence or expected occurrence of any Reportable Event with respect to anySingle Employer Plan (and a statement of a Senior Financial Officer describingsuch event and the action, if any, that any Borrower or any Commonly ControlledEntity has taken and proposes to take with respect thereto), or any withdrawalfrom, or the termination, Reorganization or Insolvency of any MultiemployerPension Plan, the institution of proceedings or the taking of any other actionby the PBGC or any Borrower or any Commonly Controlled Entity or Subsidiary orany Multiemployer Pension Plan with respect to the withdrawal from, or thetermination, Reorganization or Insolvency of, any Single Employer Plan orMultiemployer Pension Plan, or the receipt of notice by any Loan Party or anyCommonly Controlled Entity that the institution of any such proceedings or thetaking of any such action is under consideration or anticipated, theinstitution of any proceedings or other action by the Internal Revenue Serviceor the Department of Labor with respect to the minimum funding requirements ofany Pension Plan, or the receipt of notice by any Loan Party or any CommonlyControlled Entity that the institution of any such proceedings or the taking ofany such action is under consideration or anticipated, the occurrence orexpected occurrence of any event which could result in the incurrence ofunpredictable contingent event benefits under Section 302 of ERISA or Section 412of the IRC with respect to any Pension Plan, any event or condition which couldincrease the liability of any Loan Party or any Commonly Controlled Entity withrespect to post-retirement welfare benefits under any Plan, or the occurrenceof any other event or condition with respect to any Plan which could subjectthe Borrower or any Subsidiary (directly or indirectly) to any tax, penalty,lien or liability under Title I or Title IV of ERISA, Section 404 or 419and Chapter 43 of the IRC, or any other applicable laws, and in each case, suchevent or condition, together with all other events or conditions, if any, couldsubject any Loan Party (directly or indirectly) to any tax, fine, penalty, lienor other liabilities in amounts which in the aggregate could result in aMaterial Adverse Change.  The Borrowerswill deliver to each of the Lenders a true and complete copy of each annualreport (Form 5500) of each Plan (other than a MultiEmployer Plan) requiredto be filed with the Internal Revenue Service, promptly after the filingthereof; and

 

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#### (g)         thecondemnation or threat of condemnation with respect to any property used ornecessary in the conduct of the business of any Loan Party.

####  

### SECTION 6.1.7      Booksand Records.  The Borrowers will, andwill cause each Subsidiary to, keep books and records reflecting all of itsbusiness affairs and transactions in accordance with GAAP and permit the Agentand each Lender or any of their respective representatives, at reasonable timesand reasonable intervals (upon one Business Day’s notice if no Event of Defaultexists and without notice if an Event of Default exists) to visit all of itsoffices, to discuss its financial matters with its officers and independentpublic accountants and to examine (and, at the expense of the Borrowers,photocopy extracts from) any of its books or other corporate records.  The Agent may conduct all such field auditsof all Inventory and Accounts of each Borrower as the Agent may reasonablyrequest, all at reasonable times and upon advance notice to Borrowers’Representative if no Event of Default exists and without notice if an Event ofDefault exists, all such field audits to be conducted by internal auditors ofthe Agent or of outside auditors engaged by the Agent, and in form andsubstance reasonably satisfactory to the Agent and at such intervals as Agentshall determine.  Any Lender mayaccompany the Agent on any such field audit at such Lender’s expense.  The Borrowers shall pay any fees and expensesincurred by Agent and Lenders in connection with the exercise of their rightshereunder; provided that with respect to field audits the following sentenceshall apply.  With respect to fieldaudits conducted by Agent pursuant hereto based on a one hundred twenty (120)day audit cycle (which may be increased, in Agent’s discretion, whenever anEvent of Default exists), Borrowers shall reimburse Agent on demand the sum of$850.00 per auditor per day plus out-of-pocket expenses.

###  

### SECTION 6.1.8      Maintenanceof Properties, Etc.  The Borrowerswill maintain and preserve, and cause each of their Subsidiaries to maintainand preserve, all of their material properties (real and personal and includingall intangible assets), except obsolete properties which are not used ornecessary in the conduct of its business, in good working order and condition,ordinary wear and tear excepted.

###  

### SECTION 6.1.9      Maintenanceof Licenses and Permits.  TheBorrowers will maintain and preserve, and will cause each of their Subsidiariesto maintain and preserve, all material Intellectual Property, rights, permits,licenses, approvals and privileges issued under or arising under anyRequirements of Law.

###  

### SECTION 6.1.10    EmployeePlans.  The Borrowers will, and willcause each of their Subsidiaries to, comply in all material respects with theprovisions of ERISA and the IRC which are applicable to any of the Plans.

###  

### SECTION 6.1.11    Compliancewith Laws.  The Borrowers will, andwill cause each of their Subsidiaries to, comply in all material respects withall applicable Requirements of Law, subject to the matters set forth in Schedule 5.6.  Holdings will cause all reports described on Schedule 5.6to be filed with the Securities and Exchange Commission on or prior to December 15,2005.

###  

### SECTION 6.1.12    RealEstate**. **Ifthe Borrowers or any of its Subsidiaries shall own, or acquire, a fee orleasehold interest in real estate either on the Closing Date or subsequentthereto, then, the applicable Borrower or such Subsidiary, as the case may be,will execute in favor of Agent a negative pledge agreement in regard thereto.

 

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### SECTION 6.1.13    SubsidiaryGuaranty, etc..  The Borrowers shallcause each of their Subsidiaries now existing or hereafter formed or acquiredto become a party to a Subsidiary Guaranty, a Subsidiary Security Agreement anda Security Pledge Agreement, and to enter into such other agreements as theAgent shall reasonably request with respect thereto and as required under thelaws of the applicable jurisdiction and to provide an opinion of counsel tosuch Subsidiary with respect thereto.

###  

### SECTION 6.1.14    InventoryAppraisals.  Promptly, upon theirreceipt of notice thereof from Agent, which notice may be given by Agent at anytime that either (i) an Event of Default exists or (ii) any InventoryAdvances are outstanding, Borrowers shall, at their own expense, obtain anappraisal of their inventory from an independent appraiser selected or approvedby, Agent using an appraisal methodology required or approved by Agent.  For purposes hereof, Loans shall be consideredmade, first, against Eligible Accounts and, then, against Eligible Inventory(and repayments of Loans shall be considered made viceversa).  In such regard, any Loans outstanding madeagainst Eligible Inventory shall be considered as “Inventory Advances.”

###  

## SECTION 6.2         NegativeCovenants.  The Borrowers agree thatuntil all Commitments have terminated and all Obligations (other thanObligations that expressly survive the termination of this Agreement pursuantto Section 9.5) have been paid and performed in full, the Borrowerswill perform the Obligations set forth in this Section 6.2.

##  

### SECTION 6.2.1      BusinessActivities.  The Borrowers will not,and will not permit any Subsidiary to, engage in any business activity, exceptthose in which a Borrower and its Subsidiaries are engaged on the Closing Dateand such activities as may be incidental or related thereto.

###  

### SECTION 6.2.2      Indebtedness.  The Borrowers will not, and will not permitany Subsidiary to, create, incur, assume or suffer to exist or otherwise becomeor be liable in respect of any Indebtedness other than:

###  

#### (a)         Indebtednessin respect of the Loans, Letters of Credit and other Obligations;

####  

#### (b)         obligationsthat constitute Indebtedness solely by virtue of being secured by Lienspermitted under Section 6.2.3;

####  

#### (c)         Indebtednessin respect of liabilities resulting from (i) endorsements of negotiableinstruments in the ordinary course of business; and (ii) surety bondsissued for the account of any Borrower or any of its Subsidiaries in theordinary course of business;

####  

#### (d)         Indebtednessexisting on the Closing Date and secured by Liens set forth on Schedule 5.13(“Existing Liens”);

####  

#### (e)         unsecuredIndebtedness in respect of trade accounts payable arising from time to time inthe ordinary course of business;

 

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#### (f)          SubordinatedDebt;

####  

#### (g)         CapitalizedLease Liabilities and Purchase Money Indebtedness, in addition to theIndebtedness permitted under clause (d) of this Section 6.2.2,in an amount not to exceed $2,000,000 in the aggregate at any time outstanding;and

####  

#### (h)         Indebtednessarising from repurchase obligations owed to floor plan lenders and dealers inthe ordinary course of business;

####  

#### (i)          intercompanyIndebtedness and intercompany lease obligations among Borrowers;

####  

#### (j)          Indebtednessunder workers’ compensation self-insurance; and

####  

#### (k)         otherIndebtedness (in addition to that described in the preceding clauses (a) through(j) in principal amount not in excess of $250,000 (as to all Borrowerscombined) at any time.

####  

### SECTION 6.2.3      Liens.  The Borrowers will not, and will not permitany Subsidiary to, create, incur, assume or suffer to exist any Lien upon anyof its property, revenues or assets, whether now owned or hereafter acquired,except:

###  

#### (a)         Liensin favor of the Agent or the Lenders granted pursuant to any Loan Document;

####  

#### (b)         Liensevidencing rights of lessors in leased equipment and/or purchase money liens onspecific items of equipment (so long as such purchase money Liens secure onlyIndebtedness permitted pursuant to Section 6.2.2(d) and Section 6.6.2(g)),and any extensions, renewals or replacements of any such Liens, *provided* that the principal amount of the obligation securedthereby is not increased and that any such extension, renewal or replacement islimited to the property originally encumbered thereby.

####  

#### (c)         Liensfor taxes, assessments or other governmental charges or levies not at the timedelinquent or thereafter payable with penalty or being contested in good faithby appropriate proceedings and for which adequate reserves in accordance withGAAP shall have been set aside on its books;

####  

#### (d)         Liensof carriers, warehousemen, mechanics, and materialmen incurred in the ordinarycourse of business for sums not overdue or being contested in good faith byappropriate proceedings (which proceedings have the effect of preventing theforfeiture or sale of the asset subject to such Lien) and for which adequatereserves in accordance with GAAP shall have been set aside on its books;

####  

#### (e)         Liens(other than Liens arising under ERISA or Section 412(n) of the Code)incurred in the ordinary course of business in respect of deposits made inconnection with workmen’s compensation, unemployment insurance or other formsof governmental insurance or benefits, or to secure performance of tenders,statutory obligations, leases and contracts (other than for borrowed money)entered into in the ordinary course of business or to secure obligations onsurety or appeal bonds;

 

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#### (f)          typicalrestrictions imposed by licenses and leases of software (including location andtransfer restrictions);

####  

#### (g)         judgmentLiens with respect to judgments to the extent such judgments do not constitutean Event of Default described in Section 7.1.9;

####  

#### (h)         Lienswhich arise by operation of law under Article 2 of the UCC in favor ofunpaid sellers of goods, or Liens in items or any accompanying documents orproceeds arising by operation of law under Article 4 of the UCC in favorof a collecting bank; and

####  

#### (i)          easements(including, without limitation, reciprocal easement agreements and utilityagreements), rights-of-way, covenants, consents, reservations, encroachments,variations and other restrictions, charges or encumbrances (whether or notrecorded) affecting the use of property, which do not materially detract fromthe value of such property or impair the use thereof.

####  

### SECTION 6.2.4      FinancialCondition.  The Borrowers herebycovenant and agree as set forth below:

###  

#### (a)         LeverageRatio.  The Borrowers will not permitthe Leverage Ratio with respect to the twelve consecutive month period endingon the last day of any Fiscal Month of any Fiscal Year to be greater than4.00:1.00.

####  

#### (b)         FixedCharge Coverage Ratio.  The Borrowerswill not permit the Fixed Charge Coverage Ratio with respect to the twelveconsecutive month period ending on the last day of any Fiscal Month of anyFiscal Year to be less than 1.10:1.00.

####  

Notwithstanding theforegoing, if and so long as average daily Working Capital FacilityAvailability, determined as of the last day of each Fiscal Month for the onemonth period ending on such date, equals or exceeds Minimum ExcessAvailability, failure of Borrowers to comply with the covenants set forth inthis Section 6.2.4 shall not constitute an Event of Default; provided,however, that (i) Borrowers shall continue to provide calculationsof such financial covenants in each Compliance Certificate delivered to Agentpursuant to Section 6.1.1 and (ii) the financial covenant setforth at Section 6.2.4(a) shall continue to apply for purposesof determining Applicable Margin.

 

### SECTION 6.2.5      CapitalExpenditures.  The Borrowers willnot, and will not permit any Subsidiary to, make or commit to make anyConsolidated Capital Expenditures, except that the Borrowers and theirSubsidiaries may make Consolidated Capital Expenditures during the period fromthe Closing Date through December 31, 2005 in an aggregate amount not toexceed Two Million Dollars ($2,000,000) and during the 2006 Fiscal Year andeach Fiscal Year thereafter in an aggregate amount not to exceed Four MillionDollars ($4,000,000) plus in the 2005 Fiscal Year and/or 2006 Fiscal Yearadditional Consolidated Capital Expenditures in an aggregate amount as to bothsuch Fiscal Years combined not to exceed Three Million Five Hundred ThousandDollars ($3,500,000) solely in connection with a Borrower’s purchase of theJunction City Property.

 

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### SECTION 6.2.6      Investments.  The Borrowers will not, and will not permitany Subsidiary to, make, incur, assume or suffer to exist any Investment in anyother Person except:  (a) CashEquivalent Investments; (b) deposits for utilities, security depositsunder leases and similar prepaid expenses; (c) accounts receivable arisingin the ordinary course of business; (d) loans or advances made toemployees for salary, commissions, travel or the like, made in the ordinarycourse of business, not to exceed, in aggregate amount at any time outstanding,the sum of $500,000 as to all Borrowers combined; (e) intercompanyinvestments among Borrowers, (f) Investments consisting of depositaccounts of the Borrowers and their Subsidiaries maintained with banks in theordinary course of business; and (g) other Investments not to exceed, inaggregate amount at any time outstanding, the sum of $500,000 as to allBorrowers combined.

###  

### SECTION 6.2.7      RestrictedPayments, Etc.  The Borrowers willnot (a) apply, or permit any Subsidiary to apply, any of its funds,property or assets to the purchase, redemption, sinking fund or otherretirement of any shares of any class of Stock (now or hereafter outstanding)of any Borrower or any rights, options or warrants to subscribe for or purchaseany shares of any class of Stock of any Borrower, or make any deposit for anyof the foregoing except that Holdings may accept Stock for payment of sharesunderlying its options or (b) declare, pay or make any dividend ordistribution (in cash, property or obligations) on any shares of any class ofStock (now or hereafter outstanding) of any Borrower or on any warrants,options or other rights in respect of any class of Stock (now or hereafteroutstanding) of any Borrower unless (a) for a period of thirty (30) daysprior to the payment of any such dividend or distribution and after givingeffect thereto, average Working Capital Facility Availability is in an amountat least equal to Minimum Excess Availability and (b) no Default or Eventof Default has occurred and is continuing or would result therefrom.

###  

### SECTION 6.2.8      Takeor Pay Contracts; Sale/Leasebacks.

###  

#### (a)         TheBorrowers will not, and will not permit any Subsidiary to, enter into or be aparty to any arrangement for the purchase of materials, supplies, otherproperty or services if such arrangement by its express terms requires thatpayment be made by a Borrower or such Subsidiary regardless of whether or notsuch materials, supplies, other properties or services are delivered orfurnished to it; and

####  

#### (b)         TheBorrowers will not enter into, or permit any Subsidiary to enter into, anyarrangement with any Person providing for the leasing by a Borrower or one ormore Subsidiaries of any property or assets, which property or assets has beenor is to be sold or transferred by a Borrower or such Subsidiary to suchPerson.

####  

### SECTION 6.2.9      Consolidation,Merger, Subsidiaries, Etc.

###  

#### (a)         TheBorrowers will not, and will not permit any Subsidiary to, liquidate ordissolve, consolidate with, or merge into or with, any other corporation, orpurchase or otherwise acquire all or substantially all of the assets of anyPerson (or of any division or business unit thereof) or otherwise make or agreeto make acquisitions, except for a merger, reorganization or consolidation ofNRV with or into CCI or of CCI with or into NRV or of NRV or CCI with or intoHoldings; and

 

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#### (b)         TheBorrowers will not, and will not permit any Subsidiary to, create anySubsidiary or transfer any assets to any Subsidiary.

####  

### SECTION 6.2.10    AssetDispositions, Etc.  The Borrowerswill not, and will not permit any Subsidiary to, sell, transfer, lease orotherwise dispose of, or grant options, warrants or other rights with respectto, any of its assets to any Person, unless (a) such dispositionconstitutes a disposition of obsolete or retired equipment not used in thebusiness of any Borrower and its Subsidiaries, (b) such dispositionconstitutes a transfer of Inventory in the ordinary course of business, (c) suchdisposition constitutes the sale of Inventory in the ordinary course of theBorrower’s business, (d) such disposition is among Borrowers or (e) suchdisposition constitutes the grant of a non-exclusive license relating to aBorrower’s Intellectual Property in the ordinary course of business.

###  

### SECTION 6.2.11    Modificationof Organic Documents, Etc.  TheBorrowers will not consent to any amendment, supplement or other modificationof any of the terms or provisions contained in, or applicable to, the OrganicDocuments of any Borrower if such amendment supplement or other modificationcould reasonably be expected to result in a Material Adverse Change.

###  

### SECTION 6.2.12    Transactionswith Affiliates.  The Borrowers willnot, and will not permit any Subsidiary to, enter into, or cause, suffer orpermit to exist (a) any management contract or arrangement, consultingagreement or arrangement, contract or arrangement relating to the allocation ofrevenues, expenses or similar contract or arrangement requiring any payments tobe made by the Borrowers or any Subsidiary to any Affiliate (other thanemployment agreements with employees of a Borrower or Subsidiary entered intoin the ordinary course of business), or (b) any other transaction,arrangement or contract with any of its other Affiliates which is on termswhich are less favorable than are obtainable from any Person which is not oneof its Affiliates.

###  

### SECTION 6.2.13    InconsistentAgreements.  The Borrowers will not,and will not permit any Subsidiary to, enter into any material agreementcontaining any provision which would be violated or breached in any materialrespect by any Loan or by the performance by any Borrower or any Subsidiary ofits obligations hereunder or under any Loan Document.

###  

### SECTION 6.2.14    Changein Accounting Method.  The Borrowerswill not, and will not permit any Subsidiary to, make any change in accountingtreatment and reporting practices except as required by GAAP.

###  

### SECTION 6.2.15    Changein Fiscal Year End.  The Borrowerswill not change their Fiscal Year end.

###  

### SECTION 6.2.16    Compliancewith ERISA.  The Borrowers will not,and shall not permit any Subsidiary to, take or fail to take any action withrespect to a Plan, including, but not limited to, establishing, amending, orterminating or withdrawing from any Plan, engaging in any prohibitedtransaction (within the meaning of Section 4975 of the IRC or Section 406or ERISA),

 

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### or causing anyoccurrence of any Reportable Event, or permitting to exist any accumulatedfunding deficiency (as defined in Section 412 of the IRC or Section 302of ERISA), or engaging or failing to engage in any other activity which couldresult in any liabilities under the IRC, ERISA, or any other applicable lawwhich individually or in the aggregate could result in a Material AdverseChange, without first obtaining the Required Lenders’ written approval.

###  

### SECTION 6.2.17    Amendmentsto Certain Agreements.  The Borrowerswill not, and shall not permit any Subsidiary to, amend, restate or otherwisemodify any Material Contracts other than those agreements (if any) constitutingsales contracts, which a Borrower or any Subsidiary may modify in the ordinarycourse of its business in a manner that would not result in a Material AdverseChange.

###  

### SECTION 6.2.18    Modificationof Subordinated Debt.  The Borrowersshall not amend or modify, or consent to any amendment or modification of, anyof the terms of any Subordinated Debt.

###  

### SECTION 6.2.19    Prohibitionon Prepayment of Subordinated Debt. The Borrowers shall not and shall not permit any Subsidiary to prepay,redeem, purchase, defease or otherwise satisfy prior to the final scheduledmaturity thereof in any manner (including by setoff or otherwise), or make anypayment in violation of any subordination terms of, the Subordinated Debt.

###  

# ARTICLE 7EVENTS OF DEFAULT

#  

## SECTION 7.1         Eventsof Default.  The term “Event ofDefault” shall mean any of the events set forth in this Section 7.1.

##  

### SECTION 7.1.1      Non-Paymentof Obligations.  Any Borrowers shalldefault:  (a) in the payment orprepayment when due of any principal of any Loan; or (b) in the paymentwhen due of the interest payable in respect of any Loan, the fees provided forin Section 2.3 hereof or any other Obligations and such defaultshall continue unremedied for a period of three (3) Business Days.

###  

### SECTION 7.1.2      Non-Performanceof Certain Covenants.  Any Borrowershall default in the due performance and observance of any of its obligationsunder Section 3.3,  Section 6.1.1,Section 6.1.2, Section 6.1.4, Section 6.1.5,Section 6.1.6, Section 6.1.7, Section 6.1.8,Section 6.1.10, Section 6.1.11, Section 6.1.12,Section 6.1.13, Section 6.1.14, or Section 6.2.

###  

### SECTION 7.1.3      DefaultsUnder Other Loan Documents; Non-Performance of Other Obligations.  Any “Event of Default” shall occur under theother Loan Documents; or any Loan Party or Guarantor shall default in the dueperformance and observance of any other obligation, covenant or agreementcontained herein or in any other Loan Document and such default shall continueunremedied for a period of thirty (30) days after the sooner to occur ofreceipt of notice of such default from Agent or the date on which such defaultfirst becomes known to Borrowers.

 

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### SECTION 7.1.4      Bankruptcy,Insolvency, Etc.  Any Loan Party orany Guarantor shall:

###  

#### (a)         becomeinsolvent or generally fail to pay, or admit in writing its inability to pay,debts as they become due;

####  

#### (b)         applyfor, consent to, or acquiesce in, the appointment of a trustee, receiver,sequestrator or other custodian for itself or any of its property, or make ageneral assignment for the benefit of creditors;

####  

#### (c)         inthe absence of such application, consent or acquiescence, permit or suffer toexist the appointment of a trustee, receiver, sequestrator or other custodianfor itself or for a substantial part of its property and such trustee,receiver, sequestrator or other custodian shall not be discharged within sixty(60) days;

####  

#### (d)         permitor suffer to exist the commencement of any bankruptcy, reorganization, debtarrangement or other case or proceeding under any bankruptcy or insolvency law,or any dissolution, winding up or liquidation proceeding, and, if such case orproceeding is not commenced by the Loan Party, such case or proceeding shall beconsented to or acquiesced in by the Loan Party or shall result in the entry ofan order for relief or shall remain for sixty (60) days undismissed; or

####  

#### (e)         takeany corporate action authorizing, or in furtherance of, any of the foregoing.

####  

### SECTION 7.1.5      Breachof Warranty.  Any representation orwarranty of any Loan Party or any Guarantor hereunder or in any other LoanDocument or in any other writing furnished by or on behalf of any Loan Party tothe Agent or any Lender for the purposes of or in connection with thisAgreement or any such Loan Document is or shall be incorrect when made.

###  

### SECTION 7.1.6      Defaulton Other Indebtedness, Etc.  (a) AnyIndebtedness of any Loan Party or any Guarantor in an aggregate principalamount exceeding Five Hundred Thousand Dollars ($500,000) (i) shall be dulydeclared to be or shall become due and payable prior to the stated maturitythereof, or (ii) shall not be paid as and when the same becomes due andpayable including any applicable grace period; or (b) there shall occurand be continuing any event which constitutes an event of default under anyInstrument relating to any Indebtedness of any Loan Party in an aggregateprincipal amount exceeding Five Hundred Thousand Dollars ($500,000) the effectof which is to permit the holder or holders of such Indebtedness, or a trustee,agent or other representative on behalf of such holder or holders, to causesuch Indebtedness to become due prior to its stated maturity.

###  

### SECTION 7.1.7      Failureof Valid, Perfected Lien.  Agent’sLien in the Collateral, and all proceeds thereof, securing the Obligationsshall cease to be valid or perfected at any time after the Closing Date, orshall, except as expressly contemplated by the Loan Documents, cease to be afirst-priority security interest, except to the extent any failure to beperfected or to be a first priority security interest, arises as a result ofthe Agent failing to file continuation statements under the Uniform CommercialCode or inadvertently filing termination statements under the UniformCommercial Code.

###  

### SECTION 7.1.8      EmployeePlans.  Any of the following eventsshall occur with respect to any Plan:  (i) anyPerson shall engage in any “prohibited transaction” (as defined in

 

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### Section 406of ERISA or Section 4975 of the Code) involving any Plan and such “prohibitedtransaction” could result in a Material Adverse Change, (ii) any “accumulatedfunding deficiency” (as defined in Section 412 of the Code or Section 302of ERISA), whether or not waived, shall exist with respect to any SingleEmployer Plan, (iii) a Reportable Event shall occur with respect to, orproceedings shall commence to have a trustee appointed, or a trustee shall beappointed, to administer or to terminate, any Single Employer Plan, whichReportable Event or commencement of proceedings or appointment of a trustee is,in the opinion of the Required Lenders, likely to result in the termination ofsuch Plan for purposes of Title IV of ERISA, (iv) a notice of intentto terminate any Single Employer Plan for purposes of Title IV of ERISA isissued by the plan administrator thereof without the prior written consent ofthe Required Lenders, or the PBGC shall commence proceedings to terminate anySingle Employer Plan, (v) any Loan Party or any Commonly Controlled Entityshall, or in the opinion of the Required Lenders is likely to, incur anyliability in connection with a withdrawal from, or the Insolvency,Reorganization or termination of, a Multiemployer Plan, (vi) any LoanParty or any Commonly Controlled Entity shall fail to make any quarterlyinstallment payment to a Pension Plan required under Section 302(e) ofERISA or Section 412(m) of the Code, (vii) any Loan Party or anyCommonly Controlled Entity shall fail to make any contribution to aMultiemployer Plan which is required under ERISA, the Code or applicablecollective bargaining agreements, or (viii) any other event or conditionshall occur or exist with respect to a Plan; and in each case in clauses (i) through(viii) above, such event or condition, together with all other such eventsor conditions, if any, could subject any Loan Party (directly or indirectly) toany tax, penalty or other liabilities under Title I or Title IV of ERISA, Section 404or 419 and Chapter 43 of the IRC or any other applicable law which in theaggregate could result in a Material Adverse Change.

###  

### SECTION 7.1.9      Judgments.  A final judgment which, with other suchoutstanding final judgments against the Loan Parties and Guarantors (in eachcase to the extent not covered by insurance), exceeds an aggregate of FiveHundred Dollars ($500,000), shall be entered against any Loan Party or anyGuarantor and, within thirty (30) days after entry thereof, such judgment shallnot have been discharged or execution thereof stayed pending appeal, or, withinthirty (30) days after the expiration of any such stay, such judgment shall nothave been discharged.

###  

### SECTION 7.1.10    Lossof Permits, Etc.  The expiration,loss, termination, cancellation, revocation, forfeiture, suspension,diminution, impairment of or failure to renew any Intellectual Property, right,permit, license or approval, which could result in a Material Adverse Change;or the entry of any order of a court enjoining, restraining or otherwisepreventing any Loan Party or Guarantor from conducting all or any material partof its business affairs; or the cessation of business or dissolution of anyLoan Party or Guarantor.

###  

### SECTION 7.1.11    Delisting.  The Stock of Holdings ceases to be listed fortrading on the New York Stock Exchange.

###  

## SECTION 7.2         Actionif Bankruptcy.  If any Event ofDefault described in Section 7.1.4 shall occur, the outstandingprincipal amount of all outstanding Loans and all other Obligationsautomatically shall be and become immediately due and payable, without noticeor demand, and the Borrowers will deposit with the Agent, as cash collateral,an amount equal to the aggregate undrawn face amount of all Letters of Credit,which amount automatically shall become immediately due and payable by theBorrowers and to the extent paid by the Borrowers

 

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## shall constitute aprepayment under this Agreement, and the Agent may exercise any and all rightsand remedies available under this Agreement or any other Loan Document, oravailable at law or in equity, at any time, in any order and in anycombination.

##  

## SECTION 7.3         Actionif Other Event of Default.  If anyEvent of Default (other than any Event of Default described in Section 7.1.4)shall occur for any reason, whether voluntary or involuntary, and becontinuing, the Agent may, and upon the direction of the Required Lenders,shall (a) declare all or any portion of the outstanding principal amountof the Loans to be due and payable and any or all other Obligations to be due andpayable, whereupon the full unpaid amount of such Loans and any and all otherObligations which shall be so declared due and payable shall be and becomeimmediately due and payable, without further notice, demand, or presentment, (b) demandthat the Borrowers deposit with the Agent, as cash collateral, an amount equalto the aggregate undrawn face amount of all Letters of Credit, which amountshall become immediately due and payable by the Borrowers and to the extentpaid by the Borrowers shall constitute a prepayment under this Agreement, and (c) tothe extent permitted under any Letter of Credit, require the beneficiarythereof to draw upon the undrawn face amount thereof, and the Agent mayexercise any and all rights and remedies available under this Agreement or anyother Loan Document, or available at law or in equity, at any time, in anyorder and in any combination.

##  

## SECTION 7.4         Applicationof Proceeds Following Default. Notwithstanding anything to the contrary setforth in this Agreement, following the occurrence of an Event of Default andthe acceleration of the Obligations pursuant to Section 7.3, allproceeds of Collateral and other payments made by the Borrowers or anyGuarantor, or received from any other source, shall be applied as follows:  (a)  first to the payment of all feesand reasonable expenses of the Agent then due hereunder or under any of theother Loan Documents and allocated to the Working Capital Facility until paidin full; (b) second to the payment of all fees and expenses in respect ofthe Working Capital Facility then due to the Lenders having Commitmentshereunder, pro rata based on the outstanding principal balance of each suchLender’s Working Capital Facility Loan until paid in full; (c) third, topay interest due in respect of the Working Capital Facility Loans, pro ratabased on the outstanding principal balance of each such Lender’s WorkingCapital Facility Loan until paid in full; (d) fourth, to repay principalof the Working Capital Facility Loans, pro rata based on the outstandingprincipal balance of each such Lender’s Working Capital Facility Loan untilpaid in full; (e) fifth, to be held by the Agent as cash collateral in anamount up to one hundred five percent (105%) of the then outstanding faceamount of all Letters of Credit issued hereunder; (f) sixth, to pay allother Obligations, including all fees, expenses and interest thereon, inaccordance with the provisions of subsection (ii) hereof, until allsuch Obligations are paid in full; and (ii) thereafter, to the Borrowersor such other Person entitled thereto under applicable law.

##  

# ARTICLE 8THE AGENT

#  

## SECTION 8.1         Actions.  Each Lender and the holder of each Noteauthorize the Agent to act on behalf of such Lender or holder under thisAgreement and any other Loan Document and, in the absence of other writteninstructions from the Required Lenders received from time to time by the Agent(with respect to which the Agent agrees that it will, subject to the last two

 

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## sentences of this Section 8.1,comply), to exercise such powers hereunder and thereunder as are specificallydelegated to or required of the Agent by the terms hereof and thereof, togetherwith such powers as may be reasonably incidental thereto.  Each Lender (including, without limitation,UPSC in its capacity as a Lender) agrees (which agreement shall survive anytermination of this Agreement) to indemnify the Agent, severally but notjointly, pro rata according to such Lender’s aggregate percentage of theCommitments from and against any and all liabilities, obligations, losses,damages, penalties, actions, judgments, suits, costs, expenses or disbursementsof any kind or nature whatsoever which may at any time be imposed on, incurredby, or asserted against the Agent in any way relating to or arising out of thisAgreement, the Notes, or any other Loan Document, including the reimbursementof the Agent for all out-of-pocket expenses (including reasonable attorneys’fees actually incurred) incurred by the Agent hereunder or in connectionherewith or in enforcing the Obligations of the Borrowers under this Agreementor any other Loan Document, in all cases as to which the Agent is notreimbursed by the Borrowers; provided that no Lender shall be liable for thepayment of any portion of such liabilities, obligations, losses, damages,penalties, actions, judgments, suits, costs, expenses or disbursementsdetermined by a court of competent jurisdiction in a final proceeding to haveresulted primarily from the Agent’s gross negligence or willfulmisconduct.  Notwithstanding any otherprovision of this Agreement to the contrary, the Agent shall not be required totake any action hereunder or under any other Loan Document, or to prosecute ordefend any suit in respect of this Agreement or any other Loan Document, unlessit is indemnified to its satisfaction by the Lenders against loss, costs,liability and expense.  If any indemnityin favor of the Agent shall become impaired in any material respect, it maycall for additional indemnity and cease to do the acts indemnified againstuntil such additional indemnity is given.

##  

## SECTION 8.2         FundingReliance, Etc.  Unless the Agentshall have been notified by telephone, confirmed in writing, by any Lender by3:00 p.m., Atlanta, Georgia time, on the day prior to a Borrowing thatsuch Lender will not make available the amount which would constitute itsWorking Capital Loan Percentage of the Working Capital Facility Loans on thedate specified therefor, the Agent may assume that such Lender has made suchamount available to the Agent and, in reliance upon such assumption, makeavailable to the Borrowers a corresponding amount; *provided,however,* that the Agent shall have no obligation to do so.  If such amount is made available by suchLender to the Agent on a date after the date of such Borrowing, such Lendershall pay to the Agent on demand interest on such amount at the Federal FundsRate for the number of days from and including the date of such Borrowing tothe date on which such amount becomes immediately available to the Agent,together with such other compensatory amounts as may be required to be paid bysuch Lender to the Agent pursuant to the Rules for Interbank Compensationof the Council on International Banking or the Clearinghouse CompensationCommittee, as the case may be, as in effect from time to time.  A statement of the Agent submitted to anyLender with respect to any amounts owing under this Section 8.2shall be conclusive, in the absence of manifest error.  If such amount is not in fact made availableto the Agent by such Lender within three (3) Business Days after the dateof such Borrowing, the Agent shall be entitled to recover such amount, withinterest thereon at the rate per annum then applicable to the Loans comprisingsuch Borrowing, within five Business Days after demand, from the Borrowers.

##  

## SECTION 8.3         Exculpation.  Neither the Agent nor any of its directors,officers, employees or agents shall be liable to any Lender for any actiontaken or omitted to be taken by

 

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## it under thisAgreement, the Notes, or any Loan Document, or in connection herewith ortherewith, except for its own willful misconduct or gross negligence.  The Agent shall not be responsible to anyLender for any recitals, statements, representations or warranties herein or inany certificate or other document delivered in connection herewith or for theauthorization, execution, effectiveness, genuineness, validity, enforceability,perfection, collectibility, or sufficiency of any of the Loan Documents, thefinancial condition of the Borrowers or any Subsidiary or the condition orvalue of any of the Collateral, or be required to make any inquiry concerningeither the performance or observance of any of the terms, provisions orconditions of any of the Loan Documents, the financial condition of anyBorrower or any Subsidiary or the existence or possible existence of anyDefault.  The Agent shall be entitled torely upon advice of counsel concerning legal matters and upon any notice,consent, certificate, statement or writing which it believes to be genuine andto have been presented by a proper Person.

##  

## SECTION 8.4         Successor.  The Agent may resign as such at any time uponat least thirty (30) days’ prior notice to the Borrowers’ Representative andall Lenders, such resignation not to be effective until a successor Agent is inplace.  If the Agent at any time resigns,the Required Lenders may appoint another Lender as a successor Agent which shallthereupon become the Agent hereunder.  Ifno successor Agent shall have been so appointed by the Required Lenders, andshall have accepted such appointment, within thirty (30) days after theretiring Agent’s giving notice of resignation, then the retiring Agent may, onbehalf of the Lenders, appoint a successor Agent, which shall be one of theLenders or a financial institution reasonably acceptable to the Borrowersorganized under the laws of the United States or any state thereof and having acombined capital and surplus of at least Five Hundred Million Dollars($500,000,000).  Upon the acceptance ofany appointment as Agent hereunder by a successor Agent, such successor Agentshall be entitled to receive from the retiring Agent such documents of transferand assignment as such successor Agent may reasonably request, and shallthereupon succeed to and become vested with all rights, powers, privileges, andduties of the retiring Agent, and the retiring Agent shall be discharged fromits duties and obligations under this Agreement and the other Loan Documents.

##  

## SECTION 8.5         Loansand other Transactions by the Agent and its Affiliates.  The Agent shall have the same rights andpowers with respect to (a) the Loans made by it or any of its Affiliates,and (b) the Notes held by it or any of its Affiliates, as any Lender andmay exercise the same as if it were not the Agent.  UPSC and its Affiliates may accept depositsfrom, lend money to, act as trustee under indentures of, and generally engagein any kind of business with, any Loan Party or any Person who may do businesswith or own securities of the any Loan Party, all as if UPSC were not the Agentand without any duty to account therefor to the Lenders.

##  

## SECTION 8.6         CreditDecisions.  Each Lender acknowledges thatit has, independently of the Agent and each other Lender, and based on suchfinancial information and such other documents, information and investigationsas it has deemed appropriate, made its own credit decision to extend itsCommitments, to make the Loans.  EachLender also acknowledges that it will, independently of the Agent and eachother Lender, and based on such other documents, information and investigationsas it shall deem appropriate at any time, continue to make its own creditdecisions as to exercising or not exercising from time to time any rights andprivileges available to it under this Agreement or any other Loan Document.

 

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## SECTION 8.7         Copies,Etc.  The Agent shall give promptnotice to each Lender of each notice or request required or permitted to begiven to the Agent by the Borrowers pursuant to the terms of thisAgreement.  The Agent will distribute toeach Lender each Instrument received for its account and copies of all othercommunications received by the Agent from the Borrower for distribution to theLenders by the Agent in accordance with the terms of this Agreement.  The Agent shall also promptly provide eachLender with true, correct and complete copies of all appraisals and field auditreports conducted with respect to any Collateral and any Borrower.  Notwithstanding anything herein contained tothe contrary, all notices and communications to, with or from the Borrowersunder this Agreement and the other Loan Documents shall be effected by theBorrowers through the Agent.

##  

# ARTICLE 9MISCELLANEOUS

#  

## SECTION 9.1         Waivers,Amendments, Etc.

##  

#### (a)         Theprovisions of this Agreement and of each other Loan Document may from time totime be amended, modified or waived, if such amendment, modification or waiveris in writing and, (x) in the case of an amendment or modification, isconsented to by the Borrowers and the Required Lenders or (y) in the case of awaiver of any obligation of any Loan Party or of compliance by any Loan Partywith any prohibition contained in this Agreement or any other Loan Document, isconsented to by the Required Lenders; provided, however, that no suchamendment, modification or waiver, or any other agreement with respect to thetransactions contemplated hereby:

####  

###### (i)          whichwould modify any requirement hereunder that any particular action be taken byall the Lenders or by the Required Lenders shall be effective unless consentedto in writing by each Lender;

######  

###### (ii)         whichwould modify this Section 9.1, change the definition of “RequiredLenders,” “Borrowing Base,” “Eligible Account,” “Eligible Inventory” or “InventorySublimit”; increase the Working Capital Facility Commitment Amount; change anyWorking Capital Facility Percentage for any Lender; reduce any fees payable tothe Lenders described in Article 2 or Article 3; extend the WorkingCapital Facility Maturity Date; or subject any Lender to any additionalobligations shall be made without the written consent of each Lender;

######  

###### (iii)        whichwould extend the due date for, or reduce the amount of, any payment orprepayment of principal of or interest on any Loan or any fee or otherObligation (or reduce the principal amount of or rate of interest on any Loan)shall be made without the written consent of each Lender affected thereby;

######  

###### (iv)        whichwould subordinate any of the Obligations or any Lien in favor of the Agent toany other Indebtedness or any Lien securing any such Indebtedness shall be madewithout the written consent of each Lender;

######  

###### (v)         whichwould release any Borrower or any Guarantor from liability for all or any partof the Obligations, or which would release the Agent’s security interest in anyCollateral with a value in excess of $250,000 in the aggregate for any calendaryear, shall be made without the written consent of all Lenders; or

 

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###### (vi)        whichwould affect adversely the interests, rights, compensation or obligations ofthe Agent shall be made without the written consent of the Agent.

######  

#### (b)         Nofailure or delay on the part of the Agent, any Lender or the holder of any Notein exercising any power or right under this Agreement or any other LoanDocument shall operate as a waiver thereof, nor shall any single or partialexercise of any such power or right preclude any other or further exercisethereof or the exercise of any other power or right.  No notice to or demand on any Borrower in anycase shall entitle any Borrower to any notice or demand in similar or other circumstances.  No waiver or approval by the Agent, anyLender or the holder of any Note under this Agreement or any other LoanDocument shall, except as may be otherwise stated in such waiver or approval,be applicable to subsequent transactions. No waiver or approval hereunder shall require any similar or dissimilarwaiver or approval thereafter to be granted hereunder.

####  

#### (c)         Neitherany Lender or the Agent shall be under any obligation to marshal any assets infavor of any Borrower or any other Loan Party or against or in payment of anyor all of the Obligations.  Recourse forsecurity shall not be required at any time. To the extent that any Borrower makes a payment or payments to the Agentor the Lenders, or the Agent or the Lenders enforce their security interests orexercise their rights of setoff, and such payment or payments or the proceedsof such enforcement or setoff or any part thereof are subsequently for anyreason invalidated, set aside or required to be repaid to a trustee, receiveror any other party under any bankruptcy law, state or federal law, common lawor equitable cause, then to the extent of such recovery, the obligation or partthereof originally intended to be satisfied, and all Liens, rights and remediestherefor, shall be revived and continued in full force and effect as if suchpayment had not been made or such enforcement or setoff had not occurred.

####  

## SECTION 9.2         Notices.  All notices hereunder shall be in writing orby telecopy and shall be sufficiently given to the Agent, the Lenders or theBorrowers if addressed or delivered to them at the following addresses:

##  

| If to the  Lender:   |   | UPS Capital  Corporation                          |
|----------------------|--------|---------------------------------------------------|
|                 |   | 35 Glenlake  Parkway                              |
|                 |   | Suite 500                                    |
|                 |   | Atlanta, GA  30328                                |
|                 |   | Attention: Legal  Department                      |
|                 |   | Telecopier No.:  (404) 828-3775                   |
|                 |   |                                              |
| with a copy to       |   | King &  Spalding, LLP                    |
| (which shall not     |   | 191 Peachtree  Street                             |
| constitute  notice): |   | Atlanta, Georgia  30303-1763                      |
|                 |   | Attention:  Albert H. Conrad, Jr., Esq. |
|                 |   | Telecopier No.:  (404) 572-5100                   |

 

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| If one or more  Borrowers: |   | National R.V.  Holdings, Inc.                                                                                                                                                                                                                                                            |
|----------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                       |   | 3411 North  Perris Blvd.                                                                                                                                                                                                                                                                      |
|                       |   | Perris,  California 92571                                                                                                                                                                                                                                                                |
|                       |   | Attention: Chief  Financial Officer                                                                                                                                                                                                                                                           |
|                       |   | Telecopier No.:  (951) 943-8498                                                                                                                                                                                                                                                               |
|                       |   |                                                                                                                                                                                                                                                                                          |
| with a copy to             |   | Heller Ehrman,  LLP                                                                                                                                                                                                                                                                           |
| (which shall not           |   | Times Square  Tower                                                                                                                                                                                                                                                                           |
| constitute  notice):       |   | 7 Times Square                                                                                                                                                                                                                                                                                |
|                       |   | New York, New  York 10036                                                                                                                                                                                                                                                                     |
|                       |   | Attention:  Stephen M. Davis, Esq.                                                                                                                                                                                                                                                       |
|                       |   | Telecopier No.:  (212) 763-7600                                                                                                                                                                                                                                                               |
|                       |   |                                                                                                                                                                                                                                                                                          |
| If to a Lender:            |   | In accordance  with the notice information set forth on the signature page attached  hereto for such Lender or, for Lenders that become Lenders after the Closing  Date, in accordance with the notice information set forth in the applicable  assignment documentation for such Lender |

 

or at such otheraddress as any party may designate to any other party by written notice.  All such notices and communications shall bedeemed to have been duly given:  at thetime delivered by hand, if personally delivered; when received, if deposited inthe mail, postage prepaid; when transmission is verified, if telecopied; and onthe next Business Day, if timely delivered to an air courier guaranteeingovernight delivery.

 

## SECTION 9.3         Costsand Expenses.  The Borrowers agree topay all reasonable out-of-pocket expenses of the Agent for the negotiation,preparation, execution, and delivery of this Agreement and each other LoanDocument, including schedules and exhibits, and any amendments, waivers,consents, supplements, terminations, releases or other modifications to thisAgreement or any other Loan Document as may from time to time hereafter berequired (including the reasonable fees and expenses of counsel for the Agent,or of any consultants or other experts retained by the Agent from time to timein connection therewith) whether or not the transactions contemplated herebyare consummated, and to pay all expenses of the Lender (including reasonablefees and expenses of counsel to the Agent, or of any consultants or otherexperts retained by the Agent) incurred in connection with the preparation andreview of the form of any Instrument relevant to this Agreement, the Notes orany other Loan Document.  The Borrowersalso agree to pay and hold the Agent and the Lenders harmless from any stamp,documentary, intangibles, transfer or similar taxes or charges, and allrecording or filing fees with respect to the Loan Documents or any payments tobe made thereunder, and to reimburse the Agent and each Lender upon demand forall out-of-pocket expenses (including attorneys’ fees and expenses) incurred bythe Agent or such Lender in enforcing the Obligations of the Borrower or anySubsidiary under this Agreement or any other Loan Document or related Documentor in connection with any restructuring or “work-out” of any Obligations.  The Agent will provide copies of statementsand invoices with respect to such fees and expenses upon request by theBorrowers from time to time.

 

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## SECTION 9.4         Indemnification.  In consideration of the execution anddelivery of this Agreement by the Agent and each Lender and the extension ofthe Commitments, Borrowers hereby, jointly and severally, indemnify, exonerateand hold the Agent and each Lender, their respective successors and assigns,each of their respective officers, directors, employees, partners, attorneysand agents and each of their respective successors and assigns (collectively,the “Lender Parties”) free and harmless from and against any and allactions, causes of action, suits, losses, costs, liabilities (including, butnot limited to, Environmental Liabilities and Costs), damages and expenses(irrespective of whether such Lender Party is a party to the action for whichindemnification hereunder is sought), including attorneys’ fees anddisbursements (the “Indemnified Liabilities”), incurred by the LenderParties or any of them or asserted or awarded against the Lender Parties or anyof them as a result of, or arising out of, or relating to:

##  

#### (a)         anytransaction financed or to be financed in whole or in part, directly orindirectly, with the proceeds of any Loan or Letter of Credit (including,without limitation, the Acquisition);

####  

#### (b)         theuse of any of the proceeds of any Loan or Letter of Credit by any Borrower orany of its Subsidiaries or any beneficiary of a Letter of Credit for any otherpurpose;

####  

#### (c)         anyinformation furnished by any Loan Party in connection with the syndication ofthis Agreement;

####  

#### (d)         themaking of any claim by any investment banking firm, broker or third party ineach case claiming through any Loan Party or as a result of their relationshipto such parties that it is entitled to compensation from the Agent or anyLender in connection with this Agreement;

####  

#### (e)         theentering into and performance of this Agreement and any other Loan Document byany of the Lender Parties (other than the breach by such Lender Party of thisAgreement);

####  

#### (f)          theexistence of any contaminant, in, under, on or otherwise affecting any propertyowned, used, operated, or leased by any Borrower or any Subsidiary in the past,present, or future or any surrounding areas affected by such property,regardless of whether the existence of the contaminant is related to the past,present, or future operations of any Borrower and its Subsidiaries, or theirpredecessors in interest or any other Person; any Environmental Liabilities andCosts related to any property owned, used, operated, or leased by any Borroweror any Subsidiary in the past, present, or future; any EnvironmentalLiabilities and Costs related to the past, present, or future operations of anyBorrower or any Subsidiaries; any alleged violations of any Environmental Lawrelated to any property owned, used, operated, or leased by any Borrower or anySubsidiary in the past, present, or future; any alleged violations of anyEnvironmental Law related to the past, present, or future operations of anyBorrower or any Subsidiaries; the performance of any remedial action that isrelated to any property owned, used, operated, or leased by any Borrower or anySubsidiaries in the past, present, or future; the performance of any remedialaction that is related to the past, present, or future operations of anyBorrower or any Subsidiaries; and the imposition of any Lien on any propertyaffected by this Agreement or any of the other Loan Documents arising from anyEnvironmental Liabilities or Costs;

 

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#### (g)         thebreach in any material respect by any Loan Party of any representation orwarranty set forth in this Agreement or any Loan Document;

####  

#### (h)         thefailure of any Loan Party to comply in any material respect with any term,condition, or covenant set forth in this Agreement or any Loan Document; or

####  

#### (i)          anyclaim, litigation, investigation or proceeding relating to any of theforegoing, whether or not the Agent or any Lender (or any of their respectiveofficers, directors, partners, employees or agents) is a party thereto;

####  

except for anysuch Indemnified Liabilities arising for the account of a particular LenderParty by reason of the relevant Lender Party’s gross negligence or willfulmisconduct as determined by a final and nonappealable decision of a court ofcompetent jurisdiction.  If and to theextent that the foregoing undertaking may be unenforceable for any reason, theBorrowers hereby agree to make the maximum contribution to the payment andsatisfaction of each of the Indemnified Liabilities which is permissible underapplicable law.  The foregoing indemnityshall become effective immediately upon the execution and delivery hereof andshall remain operative and in full force and effect notwithstanding theconsummation of the transactions contemplated hereunder, the repayment of anyof the Loans made hereunder, the invalidity or unenforceability of any term orprovision of this Agreement or any other Loan Document, or any investigationmade by or on behalf of any Lender or the Agent.

 

## SECTION 9.5         Survival.  The obligations of the Borrowers under Sections 2.4, 3.5, 9.3 and 9.4 in each case survive any termination ofthis Agreement and the payment in full of principal, interest and other amountspayable hereunder and under the Notes and the other Loan Documents.  The representations and warranties made bythe Borrowers in this Agreement, the Notes and in each other Loan Documentshall survive the execution and delivery of this Agreement, the Notes and eachsuch other Loan Document.

##  

## SECTION 9.6         Severability.  Any provision of this Agreement, the Notes orany other Loan Document which is prohibited or unenforceable in anyjurisdiction shall, as to such jurisdiction, be ineffective to the extent ofsuch prohibition or unenforceability without invalidating the remainingprovisions of this Agreement, the Notes or such other Loan Document oraffecting the validity or enforceability of such provision in any otherjurisdiction.

##  

## SECTION 9.7         Headings.  The various headings of this Agreement, theNotes and of each other Loan Document are inserted for convenience only andshall not affect the meaning or interpretation of this Agreement, the Notes orsuch other Loan Document or any provisions hereof or thereof.

##  

## SECTION 9.8         Counterparts,Effectiveness, Etc.  This Agreementmay be executed by the parties hereto in several counterparts, each of whichshall be executed by the Borrowers, the Lenders and the Agent and be deemed tobe an original and all of which shall constitute together but one and the sameagreement.  This Agreement shall becomeeffective when counterparts hereof executed on behalf of the Borrowers and eachLender shall have been received by the Agent and notice thereof shall have beengiven by the Agent to the Borrowers and each Lender.

 

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## SECTION 9.9         GoverningLaw; Entire Agreement.

##  

#### (a)         THISAGREEMENT AND THE NOTES SHALL EACH BE DEEMED TO BE A CONTRACT MADE UNDER ANDGOVERNED BY THE INTERNAL LAWS OF THE STATE OF GEORGIA.  THIS AGREEMENT, THE NOTES AND THE OTHER LOANDOCUMENTS CONSTITUTE THE ENTIRE UNDERSTANDING AMONG THE PARTIES HERETO WITHRESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDE ANY PRIOR AGREEMENTS,WRITTEN OR ORAL, WITH RESPECT THERETO. WITHOUT LIMITATION OF THE FOREGOING, THIS AGREEMENT AMENDS, RESTATES,SUPERSEDES AND REPLACES THAT CERTAIN LOAN AND SECURITY AGREEMENT, DATED AS OF AUGUST 282002, BETWEEN UPSC AND BORROWERS, AS AMENDED TO DATE (“EXISTING AGREEMENT”),AND UPON THE FUNDING OF THE INITIAL WORKING CAPITAL FACILITY LOAN UNDER THISAGREEMENT, THE EXISTING AGREEMENT SHALL BE DEEMED TO BE TERMINATED WITHOUTFURTHER ACTION BY ANY PARTY THERETO, PROVIDED, HOWEVER, THAT THOSE PROVISIONSOF THE EXISTING AGREEMENT WHICH BY THEIR TERMS EXPRESSLY SURVIVE TERMINATION OFTHE EXISTING AGREEMENT SHALL CONTINUE IN FULL FORCE AND EFFECT.

####  

#### (b)         EACHPARTY TO THIS AGREEMENT HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANYGEORGIA STATE OR FEDERAL COURT SITTING IN ATLANTA, GEORGIA IN ANY ACTION OR PROCEEDINGARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT ORRELATED DOCUMENT, AND EACH HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECTOF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH GEORGIASTATE OR FEDERAL COURT.  EACH BORROWERAGREES THAT SUCH JURISDICTION SHALL BE EXCLUSIVE WITH RESPECT TO ANY SUCHACTION OR PROCEEDING BROUGHT BY IT AGAINST THE AGENT OR ANY LENDER.  EACH PARTY TO THIS AGREEMENT HEREBYIRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, THEDEFENSE OF ANY INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION ORPROCEEDING.

####  

#### (c)         EACHBORROWER HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT IN ANYACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHERLOAN DOCUMENT OR RELATED DOCUMENT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESSMAY BE MADE BY REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TOBORROWERS’ REPRESENTATIVE AT ITS ADDRESS SET FORTH IN SECTION 9.2 ANDSERVICE SO MADE SHALL BE DEEMED COMPLETED FIVE (5) DAYS AFTER THE SAMESHALL HAVE BEEN SO DEPOSITED IN THE MAILS OF THE UNITED STATES OF AMERICA, OR,AT THE AGENT’S AND/OR ANY LENDER’S OPTION, BY SERVICE UPON CSC THE UNITEDSTATES CORPORATION COMPANY (OR ANY SUCCESSOR CORPORATION), OR ANY OTHER LIKEORGANIZATION WHICH EACH

 

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#### BORROWER IRREVOCABLY APPOINTS AS SUCH BORROWER’S AGENT FOR THE PURPOSEOF ACCEPTING SERVICE WITHIN THE STATE OF GEORGIA.  NOTHING HEREIN SHALL AFFECT THE RIGHT TOSERVE PROCESS IN ANY MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF AGENTOR ANY LENDER TO BRING PROCEEDINGS AGAINST ANY BORROWER IN THE COURTS OF ANYOTHER JURISDICTION.  EACH BORROWER WAIVESANY OBJECTION TO JURISDICTION AND VENUE OF ANY ACTION INSTITUTED HEREUNDER ANDSHALL NOT ASSERT ANY DEFENSE BASED ON LACK OF JURISDICTION OR VENUE OR BASEDUPON FORUM NON CONVENIENS.

####  

## SECTION 9.10       Successorsand Assigns.  This Agreement shall bebinding upon and shall inure to the benefit of the parties hereto and theirrespective successors and assigns; *provided, however,*that the Borrowers may not assign or transfer their rights or obligationshereunder without the prior written consent of all Lenders; and the rights ofsale, assignment and transfer of the Lenders are subject to Section 9.11.

##  

## SECTION 9.11       Saleand Transfers, Participations, Etc.

##  

#### (a)         AnyLender may at any time assign, syndicate or sell to one or more Participantsparticipating interests in any Loan owing to such Lender, any Note held by suchLender, the Commitment of such Lender, any interest of any Lender in any Letterof Credit Obligations or any other interest of Lender under this Agreement andany Loan Document.  In the event of anysuch sale by a Lender of participating interests to a Participant, such Lender’sobligations under this Agreement shall remain unchanged and such Lender shallremain solely responsible for the performance thereof, such Lender shall remainthe holder of any such Note for all purposes under this Agreement and the otherLoan Documents and the Borrowers and the Agent shall continue to deal solelyand directly with such Lender in connection with such Lender’s rights andobligations under this Agreement and the other Loan Documents.  The Borrowers agree that if amountsoutstanding under this Agreement and the Notes are due or unpaid, or shall havebeen declared or shall have become due and payable upon the occurrence andcontinuance of an Event of Default, each Participant shall be deemed to havethe right of setoff in respect of its participating interest in amounts owingunder this Agreement and any Note to the same extent as if the amount of itsparticipating interest were owing directly to it as a Lender under thisAgreement or any Note, provided that such right of setoff shall be subject tothe approval of the Required Lenders and to the obligations of such Participantto share with the Lenders, and the Lenders agree to share with suchParticipant, as provided in Section 3.7 as if the Participant werea Lender hereunder.  The Borrowers alsoagree that any Participant shall be entitled to the benefits of (i) Section 9.4and (ii) Sections 2.5 and 3.5, with respect to itsparticipation in the Commitments and the Loans outstanding from time to time; *provided*, that no Participant shall be entitled to receiveany greater amount pursuant to the Sections referred to in clause (ii) thanthe transferor Lender would have been entitled to receive in respect of theamount of the participation transferred by such transferor Lender to suchParticipant had no such transfer occurred and each Participant shall be subjectto the obligations of such Lender set forth in such Sections.  No Lender shall grant any participation underwhich the Participant shall have rights to approve any amendment to or waiverof this Agreement or any other Loan Document, other than those items whichrequire the consent of all Lenders hereunder.

 

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#### (b)         Withthe consent of the Agent (and prior to the occurrence of an Event of Default,with the consent of the Borrowers’ Representative which shall not beunreasonably withheld or delayed), any Lender may at any time sell to anyPurchasing Lender all or any part in a minimum amount of Five Million Dollars($5,000,000), of its rights and obligations under this Agreement and the Notespursuant to a Transfer Supplement, executed by such Purchasing Lender, suchtransferor Lender and the Agent.  Upon (i) suchexecution of such Transfer Supplement, and (ii) delivery of a fullyexecuted copy thereof to the Borrowers’ Representative, such Purchasing Lendershall for all purposes be a Lender party to this Agreement and shall have allthe rights and obligations of a Lender under this Agreement, to the same extentas if it were an original party hereto with an Working Capital FacilityPercentage as set forth in such Transfer Supplement, and no further consent oraction by the Borrowers, the Lenders or the Agent shall be required.  Such Transfer Supplement shall be deemed toamend this Agreement to the extent, and only to the extent, necessary toreflect the addition of such Purchasing Lender and the resulting adjustment ofWorking Capital Facility Percentages arising from the purchase by suchPurchasing Lender of all or a portion of the rights and obligations of suchtransferor Lender under this Agreement and the Notes.  Upon the consummation of any transfer to aPurchasing Lender pursuant to this paragraph (b), the transferor Lender, theAgent and the Borrowers shall make appropriate arrangements so that, ifrequired, replacement Notes are issued to such transferor Lender and new Notesto the Purchasing Lender in the amount equal to their respective Commitmentsand outstanding Loans, as appropriately adjusted pursuant to such TransferSupplement.

####  

#### (c)         TheAgent shall maintain at its address referred to herein a copy of each TransferSupplement delivered to it and a register (“Register”)for therecordation of the names and addresses of the Lenders and the Commitment of,and principal amount of the Loans owing to, each Lender from time to time.  The entries in the Register shall beconclusive, in the absence of manifest error, and the Borrowers, the Agent andthe Lenders may treat each Person whose name is recorded in the Register as theowner of the Loans recorded therein for all purposes of this Agreement.  The Register shall be available forinspection by the Borrowers or any Lender at any reasonable time and from timeto time upon reasonable prior notice.

####  

#### (d)         Uponits receipt of a Transfer Supplement executed by a transferor Lender, the Agentand a Purchasing Lender together with payment by such Purchasing Lender to theAgent, for the account of the Agent and not for the account of the Lenders, ofa registration and processing fee of Three Thousand Five Hundred Dollars($3,500), and the Notes subject to such Transfer Supplement, the Agent shall (i) acceptsuch Transfer Supplement, (ii) record the information therein in theRegister and (iii) give prompt notice of such acceptance and recordationto the Lenders and the Borrowers.

####  

#### (e)         If,pursuant to this Section 9.11, any interest in this Agreement orany Note is transferred to any Participant or Purchasing Lender which isorganized under the laws of any jurisdiction other than the United States orany State thereof, the Agent shall cause such Participant or Purchasing Lender,concurrently with the effectiveness of such transfer, (i) to represent tothe transferor Lender (for the benefit of the transferor Lender, the Agent andthe Borrowers) that under applicable law and treaties no taxes will be requiredto be withheld by the Agent, the Borrowers or the transferor Lender withrespect to any payments to be made to such Participant or Purchasing Lender inrespect of the Loans, (ii) to furnish to the transferor Lender,

 

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#### the Agent and the Borrowers two (2) properly executed originalInternal Revenue Service Forms 4224 or 1001 (or any successor forms) andproperly executed Internal Revenue Service Forms W-8 and W-9, as the case maybe (wherein such Participant or Purchasing Lender claims entitlement tocomplete exemption from the United States federal withholding tax on allinterest payments hereunder and all fees payable under Section 2.3),and (iii) to agree (for the benefit of the transferor Lender, the Agentand the Borrowers) to provide the transferor Lender, the Agent and theBorrowers’ Representative new Internal Revenue Service Forms 4224 or 1001 uponthe expiration or obsolescence of any previously delivered form or after theoccurrence of any event requiring a change in the most recent forms deliveredby it to the transferor Lender, the Agent and the Borrowers, and comparablestatements in accordance with applicable United States laws and regulations andamendments duly executed and completed by such Participant or PurchasingLender, and to comply from time to time with all applicable United States lawsand regulations with regard to such withholding tax exemption.

####  

#### (f)          Notwithstandinganything to the contrary set forth in this Section 9.11, (i) anyLender may sell to any of its Affiliates all or any part of its rights andobligations under this Agreement and the Notes, (ii) any Lender may createa security interest in all or any portion of its rights under this Agreement(including, without limitation, the Loans owing to it and the Notes held by it)in favor of the Federal Reserve Bank in accordance with Regulation A of theF.R.S. Board, and (iii) upon the occurrence and during the continuance ofan Event of Default, any Lender may sell to any Purchasing Lender all or anypart of its rights and obligations under this Agreement and the Notes, in thecase of clauses (i) and (ii) above, notwithstanding that theBorrowers do not consent to such sale, provided such Lender has obtained theconsent of the Agent (which consent shall not be unreasonably withheld ordelayed) and otherwise meets the requirements of this Section 9.11.

####  

## SECTION 9.12       OtherTransactions.  Nothing containedherein shall preclude the Agent or any other Lender from engaging in anytransaction, in addition to those contemplated by this Agreement or any otherLoan Document, with any Borrower or any of its Affiliates in which any Borroweror such Affiliate is not restricted hereby from engaging with any other Person.

##  

## SECTION 9.13       Confidentiality.  The Lenders and the Agent shall hold allnon-public, proprietary or confidential information (which has been identifiedas such by the Borrowers) obtained pursuant to the requirements of thisAgreement in accordance with their customary procedures for handlingconfidential information of this nature and in accordance with safe and soundlending practices; however, the Lenders and the Agent may make disclosure ofany such information to their examiners, Affiliates, outside auditors, counsel,consultants, operators and other professional advisors in connection with thisAgreement or as required by any proposed syndicate member, transferee orparticipant in connection with the contemplated transfer of any Note,Obligations or Commitments or the contemplating granting of a participationtherein, as required or requested by any governmental authority orrepresentative thereof or in connection with the enforcement hereof or of anyother Loan Document or pursuant to legal process; *provided,however,* that any such proposed syndicate member or proposedtransferee or participant shall have agreed in writing for the Borrowers’benefit to be bound by the terms of this Section 9.13.  In no event shall any Lender or the Agent beobligated or required to return any materials furnished to it by the Borrowersor any of their Subsidiaries.

 

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## SECTION 9.14       Changein Accounting Principles.  If anychanges in accounting principles from those used in the preparation of thefinancial statements referred to in clause (a)(i) of Section 5.4hereafter occur as a result of the promulgation of rules, regulations,pronouncements or opinions by the Financial Accounting Standards Board or theAmerican Institute of Certified Public Accountants (or successors thereto oragencies with similar functions) result in a change in the method ofcalculation of financial covenants, standards or terms found in this Agreement,the parties hereto agree to enter into negotiations in order to amend suchfinancial covenants, standards or terms so as to equitably reflect such changeswith the desired result that the evaluations of the Borrowers’ financialcondition shall be the same after such changes as if such changes had not beenmade; *provided, however,* that, until theparties hereto have reached a definitive agreement on such amendments theBorrowers shall not change their Fiscal Year and the Borrowers’ financialcondition and operations shall continue to be evaluated on the same principlesas those used in the preparation of the financial statements referred to inclause (a)(i) of Section 5.4.

##  

## SECTION 9.15       Waiverof Jury Trial, Etc.  THE AGENT, THELENDERS AND THE BORROWERS HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLYWAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANYLITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THISAGREEMENT, THE NOTES OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT,COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF THEAGENT, SUCH LENDERS OR THE BORROWERS. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE AGENT AND SUCH LENDERSENTERING INTO THIS AGREEMENT.

##  

## SECTION 9.16       Limitationof Liability.  NEITHER THE AGENT, THELENDERS NOR ANY AFFILIATE THEREOF SHALL HAVE ANY LIABILITY WITH RESPECT TO, ANDTHE BORROWERS HEREBY WAIVE, RELEASE AND AGREE NOT TO SUE UPON, ANY CLAIM FORANY SPECIAL, INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES SUFFERED BYANY BORROWER IN CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO THISAGREEMENT, THE LOAN DOCUMENTS, THE TRANSACTIONS CONTEMPLATED HEREIN, OR ANYACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH.

##  

## SECTION 9.17       UsurySavings Clause.  Notwithstandinganything to the contrary in this Agreement or any other Loan Document, if atany time any rate of interest accruing on any Obligation, when aggregated withall amounts payable by any Loan Party under any of the Loan Documents that aredeemed or construed to be interest accrued or accruing on such Obligation underapplicable law, exceeds the highest rate of interest permissible under any lawwhich a court of competent jurisdiction shall, in a final determination, deemapplicable to such Lender with respect to such Obligation (each a “MaximumLawful Rate”), then in such event and so long as the Maximum Lawful Ratewould be so exceeded, such rate of interest shall be reduced to the MaximumLawful Rate; *provided* that if at any timethereafter such rate of interest accruing on Obligations held by such Lender isless than the Maximum Lawful Rate, the Borrowers shall continue to pay interestto such Lender at the Maximum Lawful Rate until such time as the total interestreceived by such Lender in respect of the Obligations held by it is equal tothe total interest which such Lender would have received had interest on allObligations held

 

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## by such Lender(but for the operation of this Section 9.17) accrued at the rateotherwise applicable under this Agreement and the other Loan Documents.  Thereafter, interest payable to such Lenderin respect of the Obligations held by it shall accrue at the applicable rateset forth in this Agreement or other Loan Documents unless and until such rateagain exceeds the Maximum Lawful Rate, in which event this Section 9.17shall again apply.  In no event, shallthe total interest received by any Lender pursuant to the terms hereof exceedthe amount which such Lender could lawfully have received had interest beencalculated for the full term of this Agreement at the Maximum Lawful Rate.  In the event that the Maximum Lawful Rate iscalculated pursuant to this Section 9.17, (a) if required byapplicable law, such interest shall be calculated at a daily rate equal to theMaximum Lawful Rate divided by the number of days in the year in which suchcalculation is made, and (b) if permitted by applicable law, the Borrowersand such Lender shall (i) characterize any non-principal payment as anexpense, fee or premium rather than as interest, (ii) exclude voluntaryprepayments and the effect thereof, and (iii) amortize, prorate, allocateand spread in equal or unequal parts the total amount of interest throughoutthe entire contemplated term of the Loans so that interest for the entire termof the Loans shall not exceed the Maximum Lawful Rate.  In the event that a court of competentjurisdiction, notwithstanding the provisions of this Section 9.17shall make a final determination that such Lender has received interest inexcess of the Maximum Lawful Rate, such Lender shall, to the extent permittedby applicable law, promptly apply such excess, first to any interest due andoutstanding under this Agreement and the other Loan Documents, second to anyprincipal due and payable under this Agreement and the Notes, third to theremaining principal amount of the Notes and fourth to other unpaid Obligationsheld by such Lender, and thereafter shall refund any excess to the Borrowers oras a court of competent jurisdiction may otherwise order.

##  

## SECTION 9.18       TMServices.  To the extent that at anytime or from time to time hereafter Agent or Lenders arrange for, or giveassurances on Borrowers’ behalf in regard to, any TM Services (as hereinafterdefined), Borrowers acknowledge and agree that: (i) neither Agent nor any Lender shall have any duty, obligation orliability whatsoever to any Borrower in respect thereof, including, withoutlimitation, as to (A) their initiation, continuation, suspension ortermination, (B) any actions (or omissions) of the party(ies) providingsuch services or any other Person, or (C) any charges, fees or other costsassociated therewith; (ii) if this Agreement is terminated, Borrowersshall cease obtaining all TM Services and if Borrowers shall fail to do so,Agent may do so itself on behalf of Borrowers under the power of attorneygranted in the Security Agreement; and (iii) the indemnity of Borrowersgranted in Section 9.4 shall extend to and include, without limitation,any cost, damage, loss or expense occasioned by Agent’s or any Lender’sarrangement of, or the giving of assurances in regard to, any TM Services.  As used herein, “TM Services” shallmean all treasury management services, including, without limitation, foreignexchange, automated clearing house (ACH) services, controlled disbursements andwire transfer and deposit actively performed by any financial institutions onbehalf of Borrowers.

 

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# ARTICLE 10BORROWING AGENCY

#  

## SECTION 10.1       BorrowingAgency Provisions.  If and so long asthere are multiple Borrowers, then:

##  

#### (a)         EachBorrower acknowledges that it together with each other Borrower make up arelated organization of various entities constituting a single economic andbusiness enterprise and sharing a substantial identity of interests such that,without limitation, Borrowers render services to or for the benefit of eachother, purchase or sell and supply goods to or for or forth benefit of eachother, make loans, advances and provide other financial accommodations to orfor the benefit of each other (including the payment of creditors andguarantees of Indebtedness), provide administrative and management services toor for the benefit of each other; have centralized accounting, common officersand directors; and a common business enterprise.  Accordingly, and without limitation, anycredit or other financial accommodation extended to any one Borrower pursuanthereto will result in direct and substantial economic benefit to each otherBorrower, and each Borrower will likewise benefit from the economic benefit toeach other Borrower, and the Borrowers, as a group, are applying for credit orother financial accommodations pursuant hereto on a collective basis.

####  

#### (b)         EachBorrower hereby irrevocably designates Borrowers’ Representative to be itsattorney and agent and in such capacity to borrow, sign and endorse notes, andexecute and deliver all instruments, documents, writings and further assurancesnow or hereafter required hereunder, on behalf of such Borrower or Borrowers,and hereby authorizes Agent to pay over or credit all loan proceeds hereunderin accordance with the request of Borrowers’ Representative.

####  

#### (c)         Thehandling of this credit facility as a co-borrowing facility with a borrowingagent in the manner set forth in this Agreement is solely an accommodation toBorrowers and at their specific request. None of Agent, any Lender or any other Lender Party shall incur anyliability to Borrowers as a result thereof. To induce Agent, the Lenders and each other Lender Party to do so and inconsideration thereof, each Borrower hereby indemnifies Agent, Bank and eachLender and each other Lender Party and holds Agent, Bank, each issuer of anyLetter of Credit and each Lender harmless from and against any and allliabilities, expenses, losses, damages and claims of damage or injury assertedagainst Agent, any Lender or any other Lender Party by any Person arising fromor incurred by reason of the handling of the financing arrangements ofBorrowers as provided herein, reliance by Agent or any Lender or any otherLender Party on any request or instruction from Borrowing Representative or anyother action taken by Agent, any Lender or any other Lender Party with respectto this Section except due to willful misconduct or gross (not mere)negligence by the indemnified party.

####  

#### (d)         AllObligations shall be joint and several, and each Borrower shall make paymentupon the maturity of the Obligations by acceleration or otherwise, and suchobligation and liability on the part of each Borrower shall in no way beaffected by any extensions, renewals and forbearance granted by Agent anyLender or any other Lender Party to any Borrower, failure of Agent or anyLender, or any other Lender Party to give any Borrower notice of borrowing orany other notice, any failure of Agent, any Lender to pursue or preserve itsrights against any Borrower, the release by Agent or any Lender or any otherLender Party of any Collateral now or thereafter acquired from any Borrower,and such agreement by each Borrower to pay upon any notice issued pursuantthereto is unconditional and unaffected by prior recourse by Agent, any Lenderor any other Lender Party to the other Borrowers or any Collateral for suchBorrower’s Obligations or the lack thereof.

 

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## SECTION 10.2       Waiverof Subrogation.  Each Borrowerexpressly waives any and all rights of subrogation, reimbursement, indemnity,exoneration, contribution of any other claim which such Borrower may now orhereafter have against the other Borrowers or other Person directly orcontingently liable for the Obligations hereunder, or against or with respectto the other Borrowers’ property (including, without limitation, any propertywhich is Collateral for the Obligations), arising from the existence orperformance of this Agreement, until termination of this Agreement andrepayment in full of the Obligations.

##  

## SECTION 10.3       PatriotAct.  Each Lender that is subject tothe Act (as hereinafter defined) and the Agent (for itself and on behalf of anyLender) hereby notifies the Borrowers that pursuant to the requirements of theUSA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26,2001)) (the “Act”), it is required to obtain, verify and recordinformation that identifies each Borrower, which information includes the nameand address of each Borrower and other information that will allow such Lenderor the Agent, as applicable, to identify the Borrowers in accordance with theAct.

##  

[signature pages follow]

 

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IN WITNESS WHEREOF, theparties hereto have caused this Credit Agreement to be executed by theirrespective officers thereunto duly authorized as of the day and year firstabove written.

 
|   | NATIONAL R.V.  HOLDINGS, INC., as a  Borrower |
|--------|-----------------------------------------------|
|   |                                          |
|   |                                          |   |
|   | By:                                           | /s/ Thomas J.  Martini |
|   |                                          |  Name:   Thomas  J. Martini |
|   |                                          |  Title:     Chief  Financial Officer |
|   |                                          |   |
|   |                                          |
|   | NATIONAL R.V.,  INC., as a Borrower           |
|   |                                          |   |
|   |                                          |   |
|   | By:                                           | /s/ Thomas J.  Martini |
|   |                                          |  Name:   Thomas  J. Martini |
|   |                                          |  Title:     Treasurer |
|   |                                          |   |
|   |                                          |
|   | COUNTRY COACH,  INC., as a Borrower           |
|   |                                          |   |
|   |                                          |   |
|   | By:                                           | /s/ Thomas J.  Martini |
|   |                                          |  Name:   Thomas  J. Martini |
|   |                                          |  Title:     Treasurer |

 

[Signature Page to CreditAgreement]

 

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|   | UPS CAPITAL  CORPORATION |
|--------|--------------------------|
|   | as Agent and a  Lender   |
|   |                     |   |
|   |                     |   |
|   | By:                      | /s/ John P.  Holloway |
|   |                     |  Name:   John  P. Holloway |
|   |                     |  Title:    Director  of Portfolio Management |

 

[Signature Page to CreditAgreement]

 

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|   | WELLS FARGO  BANK, NATIONAL  ASSOCIATION, acting through its Wells Fargo  Business Credit operating division, as a Lender |
|--------|---------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                      |   |
|   |                                                                                                                      |   |
|   | By:                                                                                                                       | /s/ Charlie  Liles |
|   |                                                                                                                      |  Name:   Charlie  Liles |
|   |                                                                                                                      |  Title:    Vice  President |
|   |                                                                                                                      |   |
|   | Notice  Information:                                                                                                      |
|   |                                                                                                                      |
|   | Wells Fargo Bank  National Association, acting  through its Wells Fargo Business Credit operating  division               |
|   | MAC N2642-060                                                                                                             |
|   | 400 Northridge  Road, Suite 600                                                                                      |
|   | Atlanta, Georgia  30350                                                                                                   |
|   | Attention:  Portfolio Manager                                                                                             |
|   | Facsimile  Number: 770-992-4720                                                                                           |
|   |                                                                                                                      |
|   | With a copy to:                                                                                                           |
|   |                                                                                                                      |
|   | Stephen D.  Palmer, Esq.                                                                                             |
|   | Greenberg  Traurig, LLP                                                                                                   |
|   | The Forum                                                                                                                 |
|   | 3290 Northside  Parkway, Suite 400                                                                                   |
|   | Atlanta, Georgia  30327                                                                                                   |
|   | Facsimile  Number: 678-553-2261                                                                                           |

 

[Signature Page to CreditAgreement]

 

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**Schedule I**

 

**Commitments as of Closing Date**

 
| UPS Capital  Corporation                                                                                    |   | $      | 15,000,000 |   |
|-------------------------------------------------------------------------------------------------------------|--------|--------|------------|--------|
|                                                                                                        |   |   |       |
| Wells Fargo  Bank, National Association, acting through its Wells Fargo Business Credit  operating division |   | $      | 10,000,000 |   |

 

[Signature Page to Credit Agreement]

 

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