ex9_01.htm


    
       

        
          

        

      

Exhibit 10.1

      LOAN
AGREEMENT

       

       

      This
Agreement dated as of December 10, 2008, is between BANK OF AMERICA, N.A., a
national banking association (the "Bank") and KEY TECHNOLOGY, INC., an
Oregon corporation (the "Borrower").

       

      
        	
                1.

              	
                FACILITY
      NO. 1:  REVOLVING LINE OF CREDIT AMOUNT AND
  TERMS

              


      

       

      
        	
                1.1

              	
                Line of Credit
      Amount.

              


      

       

      
        	
                (a)

              	
                During
      the availability period described below, the Bank will provide a line of
      credit to the Borrower.  The amount of the line of credit (the
      "Facility No. 1 Commitment") is Ten Million and No/ Dollars
      ($10,000,000.00).

              


      

       

      
        	
                (b)

              	
                This
      is a revolving line of credit.  During the availability period,
      the Borrower may repay principal amounts and reborrow
  them.

              


      

       

      (c)           The
Borrower agrees not to permit the principal balance outstanding to exceed the
Facility No. 1Commitment.  If the Borrower exceeds this limit, the
Borrower will immediately pay the excess tothe Bank upon the Bank's
demand.

       

      
        	
                1.2

              	
                Availability
      Period.

              


      

       

      The line
of credit is available between the date of this Agreement and December 1, 2009,
or such earlier date as the availability may terminate as provided in this
Agreement (the "Facility No. 1 Expiration Date").

       

      1.3           Repayment
Terms.

       

      
        	
                 (a)

              	
                The
      Borrower will pay interest on February 2, 2009, and then on the first day
      of each month thereafter until payment in full of any principal
      outstanding under this facility.

              


      

       

      
        	
                (b)

              	
                The
      Borrower will repay in full any principal, interest or other charges
      outstanding under this facility no later than the Facility No. 1
      Expiration Date. Any interest period for an optional interest rate (as
      described below) shall expire no later than the Facility No. 1 Expiration
      Date.

              


      

       

      
        	
                1.4

              	
                Interest
      Rate.

              


      

      


      
        	
                (a)

              	
                The
      interest rate is a rate per year equal to the Bank's Prime Rate minus one
      and three-quarter  (-1.75%) percentage
  points.

              


      

       

      
        	
                (b)

              	
                The
      Prime Rate is the rate of interest publicly announced from time to time by
      the Bank as its Prime Rate.  The Prime Rate is set by the Bank
      based on various factors, including the Bank’s costs and desired return,
      general economic conditions and other factors, and is used as a reference
      point for pricing some loans.  The Bank may price loans to its
      customers at, above, or below the Prime Rate.  Any change in the
      Prime Rate shall take effect at the opening of business on the day
      specified in the public announcement of a change in the Bank's Prime
      Rate.

              


      

       

      
        	
                1.5

              	
                Optional Interest
      Rate.

              


      

       

      
        	
                (a)

              	
                Instead
      of the interest rate based on the rate stated in Paragraph 1.4 entitled
      “Interest Rate” above, the Borrower may elect the optional interest rates
      listed below for this Facility No. 1 during interest periods agreed to by
      the Bank and the Borrower.  The optional interest rate shall be
      subject to the terms and conditions described later in this
      Agreement.  Any principal amount bearing interest at an optional
      rate under this Agreement is referred to as a "Portion."  The
      following optional interest rate is available:  The interest
      rate is a rate per year equal to the BBA LIBOR Rate (Adjusted
      Periodically) plus one (1.0%) percentage
point.

              


      

       

      
        
          
          

        

        
          1    
Loan Agreement

          
            

          

        

        
          
          

        

         

      

      
        	
                (b)

              	
                The
      interest rate will be adjusted on any day of the month (the “Adjustment
      Date”) and remain fixed until the next Adjustment Date.  If the
      Adjustment Date in any particular month would otherwise fall on a day that
      is not a banking day then, at the Bank’s option, the Adjustment Date for
      that particular month will be the first banking day immediately following
      thereafter.

              


      

       

      
        	
                (c)

              	
                The
      BBA LIBOR Rate (Adjusted Periodically) is a rate of interest equal to the
      rate per annum equal to the British Bankers Association LIBOR Rate (“BBA
      LIBOR”), as published by Reuters (or other commercially available source
      providing quotations of BBA LIBOR as selected by the Bank from time to
      time) as determined for each Adjustment Date at approximately 11:00 a.m.
      London time two (2) London Banking Days prior to the Adjustment Date, for
      U.S. Dollar deposits (for delivery on the first day of such interest
      period) with a term of one month, as adjusted from time to time in the
      Bank’s sole discretion for reserve requirements, deposit insurance
      assessment rates and other regulatory costs.  If such rate is
      not available at such time for any reason, then the rate for that interest
      period will be determined by such alternate method as reasonably selected
      by the Bank.  A "London Banking Day" is a day on which banks in
      London are open for business and dealing in offshore
    dollars.

              


      

       

      
        	
                (d)

              	
                Each
      prepayment of an amount bearing interest at the rate provided by this
      paragraph, whether voluntary, by reason of acceleration or otherwise, will
      be accompanied by the amount of accrued interest on the amount prepaid,
      and a prepayment fee as described below.  A "prepayment" is a
      payment of an amount on a date other than an Adjustment
    Date.

              


      

       

      
        	
                (e)

              	
                The
      prepayment fee shall be in an amount sufficient to compensate the Bank for
      any loss, cost or expense incurred by it as a result of the prepayment,
      including any loss of anticipated profits and any loss or expense arising
      from the liquidation or reemployment of funds obtained by it to maintain
      the amount prepaid or from fees payable to terminate the deposits from
      which such funds were obtained.  The Borrower shall also pay any
      customary administrative fees charged by the Bank in connection with the
      foregoing.  For purposes of this paragraph, the Bank shall be
      deemed to have funded each prepaid amount by a matching deposit or other
      borrowing in the applicable interbank market, whether or not the amount
      was in fact so funded.

              


      

      


      
        	
                1.6

              	
                Letters of
      Credit.

              


      

      


      
        	
                (a)

              	
                During
      the availability period, at the request of the Borrower, the Bank will
      issue standby letters of credit with a maximum maturity not to extend more
      than 365 days beyond the Facility No. 1 Expiration
  Date.

              


      

      


      
        	
                (b)

              	
                The
      amount of the letters of credit outstanding at any one time (including the
      drawn and unreimbursed amounts of the letters of credit) may not exceed
      Six Million and No/100 Dollars
  ($6,000,000.00).  

              


      

       

      
        	
                (c)

              	
                In
      calculating the principal amount outstanding under the Facility No. 1
      Commitment, the calculation shall include the amount of any letters of
      credit outstanding, including amounts drawn on any letters of credit and
      not yet reimbursed.

              


      

       

      
        	
                (d)

              	
                The
      Borrower agrees:

              


      

       

      
        	
                 
      

              	
                (i)

              	
                Any
      sum drawn under a letter of credit may, at the option of the Bank, be
      added to the principal amount outstanding under this
      Agreement.  The amount will bear interest and be due as
      described elsewhere in this
Agreement.

              


      

       

      
        	
                 
      

              	
                (ii)

              	
                If
      there is a default under this Agreement, to immediately prepay and make
      the Bank whole for any outstanding letters of
  credit.

              


      

       

      
        	
                 
      

              	
                (iii)

              	
                The
      issuance of any letter of credit and any amendment to a letter of credit
      is subject to the Bank's written approval and must be in form and content
      satisfactory to the Bank and in favor of a beneficiary acceptable to the
      Bank.

              


      

       

      
        
          
          

        

        
          2     
Loan Agreement

          
            

          

        

        
          
          

        

         

      

      
        	
                 
      

              	
                (iv)

              	
                To
      pay any issuance and/or other fees that the Bank notifies the Borrower
      will be charged for issuing and processing letters of credit for the
      Borrower.

              


      

       

      
        	
                 
      

              	
                (v)

              	
                To
      allow the Bank to automatically charge its checking account for applicable
      fees, discounts, and other charges.

              


      

       

      
        	
                2.

              	
                FACILITY
      NO. 2:  VARIABLE RATE TERM LOAN AMOUNT AND
  TERMS

              


      

       

      
        	
                2.1

              	
                Loan
      Amount.

              


      

       

      The Bank
agrees to provide a term loan to the Borrower in the amount of Six Million Four
Hundred Thousand and No/100 Dollars ($6,400,000.00) (the "Facility No. 2
Commitment").

       

      
        	
                2.2

              	
                Availability
      Period.

              


      

       

      The loan
is available in one disbursement from the Bank between the date of this
Agreement and December 23, 2008, unless the Borrower is in default.

       

      
        	
                2.3

              	
                Repayment
      Terms.

              


      

       

      
        	
                (a)

              	
                The
      Borrower will repay principal and interest in equal combined installments
      beginning on February 2, 2009, and on the first day of each month
      thereafter, and ending on January 2, 2024 (the “Repayment
      Period”).  Each installment shall be in an amount sufficient to
      fully amortize principal and interest over the Repayment Period, based on
      the assumption that the interest rate would remain
      unchanged.  In any event, on the last day of the Repayment
      Period, the Borrower will repay the remaining principal balance plus any
      interest then due.  Each installment, when paid, will be applied
      first to the payment of interest accrued.  The amount of
      interest due, and the portion of each installment which is applied to
      interest, will change from time to time if there are changes in the
      applicable interest rate.  The balance, if any, of each
      installment will be applied to the repayment of principal.  If
      the accrued interest owing exceeds the amount of any installment, the
      Borrower will pay the excess in addition to the
      installment.  The excess accrued interest will be paid on the
      due date of the installment.

              


      

       

      
        	
                (b)

              	
                The
      Borrower may prepay the loan in full or in part at any
      time.  The prepayment will be applied to the most remote payment
      of principal due under this
Agreement.

              


      

      


      
        	
                2.4

              	
                Interest
      Rate.

              


      

      


      
        	
                (a)

              	
                The
      interest rate is a rate per year equal to the BBA LIBOR Rate (Adjusted
      Periodically) plus one and four-tenths (1.4%) percentage
      points.

              


      

       

      
        	
                (b)

              	
                The
      interest rate will be adjusted on the first day of each month (the
      “Adjustment Date”) and remain fixed until the next Adjustment
      Date.  If the Adjustment Date in any particular month would
      otherwise fall on a day that is not a banking day then, at the Bank’s
      option, the Adjustment Date for that particular month will be the first
      banking day immediately following
thereafter.

              


      

       

      
        	
                (c)

              	
                The
      BBA LIBOR Rate (Adjusted Periodically) is a rate of interest equal to the
      rate per annum equal to the British Bankers Association LIBOR Rate (“BBA
      LIBOR”), as published by Reuters (or other commercially available source
      providing quotations of BBA LIBOR as selected by the Bank from time to
      time) as determined for each Adjustment Date at approximately 11:00 a.m.
      London time two (2) London Banking Days prior to the Adjustment Date, for
      U.S. Dollar deposits (for delivery on the first day of such interest
      period) with a term of one month, as adjusted from time to time in the
      Bank’s sole discretion for reserve requirements, deposit insurance
      assessment rates and other regulatory costs.  If such rate is
      not available at such time for any reason, then the rate for that interest
      period will be determined by such alternate method as reasonably selected
      by the Bank.  A "London Banking Day" is a day on which banks in
      London are open for business and dealing in offshore
    dollars.

              


      

       

      
        
          
          

        

        
          3     
Loan Agreement

          
            

          

        

        
          
          

        

         

      

      
        	
                (d)

              	
                Each
      prepayment of an amount bearing interest at the rate provided by this
      paragraph, whether voluntary, by reason of acceleration or otherwise, will
      be accompanied by the amount of accrued interest on the amount prepaid,
      and a prepayment fee as described below.  A "prepayment" is a
      payment of an amount on a date other than an Adjustment
    Date.

              


      

       

      
        	
                (e)

              	
                The
      prepayment fee shall be in an amount sufficient to compensate the Bank for
      any loss, cost or expense incurred by it as a result of the prepayment,
      including the break-funding or contract breakage fees and costs for any
      LIBOR contracts.  The Borrower shall also pay any customary
      administrative fees, if any, charged by the Bank in connection with the
      foregoing.

              


      

      


      
        	
                3.

              	
                FEES
      AND EXPENSES

              


      

      


      
        	
                3.1

              	
                Fees.

              


      

      


      
        	
                (a)

              	
                Facility No. 1 Loan
      Fee.  The Borrower agrees to pay a loan fee in the amount
      of Five Thousand and No/100 Dollars ($5,000.00) for Facility
      1.  This fee is due on the date of this
    Agreement.

              


      

      


      
        	
                (b)

              	
                Facility No. 2 Loan
      Fee.  The Borrower agrees to pay a loan fee in the amount
      of Twenty-Four Thousand and No/100 Dollars ($24,000.00) for Facility
      2.  This fee is due on the date of this
    Agreement.

              


      

       

      
        	
                (c)

              	
                Unused Commitment
      Fee.  The Borrower agrees to pay a fee on any difference
      between the Facility No. 1 Commitment and the amount of credit it actually
      uses, determined by the average of the daily amount of credit outstanding
      during the specified period.  The fee will be calculated at
      one-eighth of one (0.125%) percent per year.  This fee is due on
      the final day of the availability
period.

              


      

       

      
        	
                (d)

              	
                Waiver
      Fee.  If the Bank, at its discretion, agrees to waive or
      amend any terms of this Agreement, the Borrower will, at the Bank's
      option, pay the Bank a fee for each waiver or amendment in an amount
      advised by the Bank at the time the Borrower requests the waiver or
      amendment.  Nothing in this paragraph shall imply that the Bank
      is obligated to agree to any waiver or amendment requested by the
      Borrower.  The Bank may impose additional requirements as a
      condition to any waiver or
amendment.

              


      

      


      
        	
                (e)

              	
                Late
      Fee.  To the extent permitted by law, the Borrower agrees
      to pay a late fee in an amount not to exceed four percent (4%) of any
      payment that is more than fifteen (15) days late.  The
      imposition and payment of a late fee shall not constitute a waiver of the
      Bank’s rights with respect to the
default.

              


      

       

      
        	
                (f)

              	
                Fee for Late Financial
      Statements.  The Borrower agrees to pay a late fee of
      Five Hundred and No/100 Dollars ($500.00) if any of the financial
      information required by this Agreement is not provided to the Bank within
      the time limits provided in this Agreement. The imposition and payment of
      a late fee shall not constitute a waiver of the Bank’s rights with respect
      to the default.

              


      

       

      
        	
                (g)

              	
                Letters of Credit
      Fee.  Letters of credit fees shall be payable in advance
      and will be equal to, on a per annum basis, one (1.00%) percent of the
      face amount of the letters of
credit.

              


      

       

      
        	
                3.2

              	
                Expenses.

              


      

       

      The
Borrower agrees to immediately repay the Bank for expenses that include, but are
not limited to, filing, recording and search fees, appraisal fees, title report
fees, and documentation fees.

       

      
        	
                3.3

              	
                Reimbursement
      Costs.

              


      

       

      
        	
                (a)

              	
                The
      Borrower agrees to reimburse the Bank for any expenses it incurs in the
      preparation of this Agreement and any agreement or instrument required by
      this Agreement.  Expenses include, but are not limited to,
      reasonable attorneys' fees, including any allocated costs of the Bank's
      in-house counsel to the extent permitted by applicable
  law.

              


      

       

      
        
          
          

        

        
          4     
Loan Agreement

          
            

          

        

        
          
          

        

         

      

      
        	
                (b)

              	
                The
      Borrower agrees to reimburse the Bank for the cost of periodic field
      examinations of the Borrower’s books, records and collateral, and
      appraisals of the collateral, at such intervals as the Bank may reasonably
      require.  The actions described in this paragraph may be
      performed by employees of the Bank or by independent
      appraisers.

              


      

       

      
        	
                4.

              	
                COLLATERAL

              


      

      


      
        	
                4.1

              	
                Personal
      Property.

              


      

      


      The
personal property listed below now owned or owned in the future by the parties
listed below will secure the Borrower’s obligations to the Bank under Facility
No. 1 under this Agreement.  The collateral is further defined in
security agreement(s) executed by the owners of the collateral. In addition, all
personal property collateral owned by the Borrower securing this Agreement shall
also secure all other present and future obligations of the Borrower to the Bank
(excluding any consumer credit covered by the federal Truth in Lending law,
unless the Borrower has otherwise agreed in writing or received written notice
thereof).  All personal property collateral securing any other present
or future obligations of the Borrower to the Bank shall also secure this
Agreement.  Personal property collateral to exclude the Borrower's
European assets securing the Borrower's Abn Amro bank guarantee
facility.

      


       (a)           Equipment
and fixtures owned
by Borrower.

       

      (b)           Inventory
owned by Borrower.

       

      (c)           Receivables
owned by Borrower.

      


      
        	
                4.2

              	
                Real
      Property.

              


      

      


      
        	
                (a)

              	
                The
      Borrower's obligations to the Bank under Facility No. 2 under this
      Agreement will be secured by a lien covering the following real property
      owned by Borrower:  150 Avery Street, Walla Walla, WA 99362 (the
      “Real Property”).  The Bank's lien will be evidenced by a Deed
      of Trust (the “Deed of Trust”) executed by Borrower in favor of
      Bank.  The Deed of Trust covering the Real Property securing
      Facility No. 2 contains provisions that, under certain conditions, give
      the Bank the right to declare the Facility No. 2 Commitment immediately
      due and payable.

              


      

      


      
        	
                (b)

              	
                The
      Bank may require an appraisal or inspections for infestation, structural
      soundness, environmental hazards, ground stability or other matters
      relating to the condition of the real property, as required elsewhere in
      this Agreement or as separately communicated to the
      Borrower.  The Bank's decisions on whether to approve or deny
      the Borrower's request for credit, or to require or not require appraisals
      or inspections, should not be relied upon by the Borrower or any other
      party to determine the fair market value of the property or the condition
      of the property.  The Bank assumes no liability for the accuracy
      of any appraisal or inspection and makes no warranty of any kind about the
      condition or value of the property.  The Borrower and any other
      party should consult with appropriate professionals for an assessment of
      the value and condition of the
property.

              


      

       

      
        	
                 
      

              	
                5.

              	
                DISBURSEMENTS,
      PAYMENTS AND COSTS

              


      

       

      
        	
                 
      

              	
                5.1

              	
                Disbursements and
      Payments.

              


      

       

      
        	
                (a)

              	
                Each
      payment by the Borrower will be made in U.S. Dollars and immediately
      available funds by debit to a deposit account, as described in this
      Agreement or otherwise authorized by the Borrower.  For payments
      not made by direct debit, payments will be made by mail to the address
      shown on the Borrower’s statement or at one of the Bank’s banking centers
      in the United States, or by such other method as may be permitted by the
      Bank.

              


      

       

      
        	
                (b)

              	
                The Bank may honor instructions
      for advances or repayments given by the Borrower (if an individual), or by
      any one of the individuals authorized to sign loan agreements on behalf of
      the Borrower, or any other individual designated by any one of such
      authorized signers (each an “Authorized
    Individual”).

              


      

       

      
        
          
          

        

        
          5     
Loan Agreement

          
            

          

        

        
          
          

        

         

      

      
        	
                (c)

              	
                For
      any payment under this Agreement made by debit to a deposit account, the
      Borrower will maintain sufficient immediately available funds in the
      deposit account to cover each debit.  If there are insufficient
      immediately available funds in the deposit account on the date the Bank
      enters any such debit authorized by this Agreement, the Bank may reverse
      the debit.

              


      

       

      
        	
                (d)

              	
                Each
      disbursement by the Bank and each payment by the Borrower will be
      evidenced by records kept by the Bank.  In addition, the Bank
      may, at its discretion, require the Borrower to sign one or more
      promissory notes.

              


      

       

      
        	
                (e)

              	
                Prior
      to the date each payment of principal and interest and any fees from the
      Borrower becomes due (the "Due Date"), the Bank will mail to the Borrower
      a statement of the amounts that will be due on that Due Date (the "Billed
      Amount").  The calculations in the bill will be made on the
      assumption that no new extensions of credit or payments will be made
      between the date of the billing statement and the Due Date, and that there
      will be no changes in the applicable interest rate.  If the
      Billed Amount differs from the actual amount due on the Due Date (the
      "Accrued Amount"), the discrepancy will be treated as
    follows:

              


      

       

      
        	
                 
      

              	
                (i)

              	
                If
      the Billed Amount is less than the Accrued Amount, the Billed Amount for
      the following Due Date will be increased by the amount of the
      discrepancy.  The Borrower will not be in default by reason of
      any such discrepancy.

              


      

       

      
        	
                 
      

              	
                (ii)

              	
                If
      the Billed Amount is more than the Accrued Amount, the Billed Amount for
      the following Due Date will be decreased by the amount of the
      discrepancy.

              


      

       

      Regardless of any such discrepancy,
interest will continue to accrue based on the actual amount of principal
outstanding without compounding.  The Bank will not pay the Borrower
interest on any overpayment.

       

      
        	
                 

              	
                5.2

              	
                Telephone and Telefax
      Authorization.

              


      

       

      
        	
                (a)

              	
                The
      Bank may honor telephone or telefax instructions for advances or
      repayments given, or purported to be given, by any one of the Authorized
      Individuals.

              


      

       

      
        	
                (b)

              	
                Advances
      will be deposited in and repayments will be withdrawn from account number
      485005354897 owned by the Borrower, or such other of the Borrower’s
      accounts with the Bank as designated in writing by the
      Borrower.

              


      

       

      
        	
                (c)

              	
                The
      Borrower will indemnify and hold the Bank harmless from all liability,
      loss, and costs in connection with any act resulting from telephone or
      telefax instructions the Bank reasonably believes are made by any
      Authorized Individual.  This paragraph will survive this
      Agreement's termination, and will benefit the Bank and its officers,
      employees, and agents.

              


      

       

      
        	
                 
      

              	
                5.3

              	
                Direct
      Debit.

              


      

       

      The
Borrower agrees that on the Due Date the Bank will debit the Billed Amount from
deposit account number 485005354897 owned by the Borrower,
or such other of the Borrower’s accounts with the Bank as designated in writing
by the Borrower (the "Designated Account").

       

      
        	
                 
      

              	
                5.4

              	
                Banking
      Days.

              


      

       

      Unless
otherwise provided in this Agreement, a banking day is a day other than a
Saturday, Sunday or other day on which commercial banks are authorized to close,
or are in fact closed, in the state where the Bank's lending office is located,
and, if such day relates to amounts bearing interest at an offshore rate (if
any), means any such day on which dealings in dollar deposits are conducted
among banks in the offshore dollar interbank market.  All payments and
disbursements which would be due on a day which is not a banking day will be due
on the next banking day.  All payments received on a day which is not
a banking day will be applied to the credit on the next banking
day.

       

      
        
          
          

        

        
          6 Loan
Agreement

          
            

          

        

        
          
          

        

         

      

      
        	
                 
      

              	
                5.5

              	
                Interest
      Calculation.

              


      

       

      Except as
otherwise stated in this Agreement, all interest and fees, if any, will be
computed on the basis of a 360-day year and the actual number of days
elapsed.  This results in more interest or a higher fee than if a
365-day year is used.  Installments of principal which are not paid
when due under this Agreement shall continue to bear interest until
paid.

       

      
        	
                 
      

              	
                5.6

              	
                Default
      Rate.

              


      

       

      Upon the
occurrence of any default or after maturity or after judgment has been rendered
on any obligation under this Agreement, all amounts outstanding under this
Agreement, including any interest, fees, or costs which are not paid when due,
will at the option of the Bank bear interest at a rate which is 6.0 percentage
point(s) higher than the rate of interest otherwise provided under this
Agreement.  This may result in compounding of
interest.  This will not constitute a waiver of any
default.

       

      
        	
                 
      

              	
                6.

              	
                CONDITIONS

              


      

       

      Before
the Bank is required to extend any credit to the Borrower under this Agreement,
it must receive any documents and other items it may reasonably require, in form
and content acceptable to the Bank, including any items specifically listed
below.

       

      
        	
                 
      

              	
                6.1

              	
                Authorizations.

              


      

       

      If the
Borrower or any guarantor is anything other than a natural person, evidence that
the execution, delivery and performance by the Borrower and/or such guarantor of
this Agreement and any instrument or agreement required under this Agreement
have been duly authorized.

       

      
        	
                 
      

              	
                6.2

              	
                Governing
      Documents.

              


      

       

      If
required by the Bank, a copy of the Borrower's organizational
documents.

       

      
        	
                 
      

              	
                6.3

              	
                Security
      Agreement.

              


      

       

      
        	
                 
      

              	
                 Signed
      original security agreement covering the personal property collateral
      which the Bank requires.

              


      

       

      
        	
                 
      

              	
                6.4

              	
                Perfection and
      Evidence of Priority.

              


      

       

      Evidence
that the security interests and liens in favor of the Bank are valid,
enforceable, properly perfected in a manner acceptable to the Bank and prior to
all others' rights and interests, except those the Bank consents to in
writing.  All title documents for motor vehicles which are part of the
collateral must show the Bank's interest.

       

      
        	
                 
      

              	
                6.5

              	
                Payment of
      Fees.

              


      

       

      Payment
of all fees and other amounts due and owing to the Bank, including without
limitation payment of all accrued and unpaid expenses incurred by the Bank as
required by the paragraph entitled "Reimbursement Costs."

       

      
        	
                 
      

              	
                6.6

              	
                Good
      Standing.

              


      

       

      Certificates
of good standing for the Borrower from its state of formation and from any other
state in which the Borrower is required to qualify to conduct its
business.

       

      
        	
                 
      

              	
                6.7

              	
                Insurance.

              


      

       

      Evidence
of insurance coverage, as required in the "Covenants" section of this
Agreement.

       

      
        
          
          

        

        
          7     
Loan Agreement

          
            

          

        

        
          
          

        

      

      


      
        	
                 
      

              	
                6.8

              	
                Environmental
      Information.

              


      

       

      An
environmental site assessment prepared by a qualified third party consultant
approved by the Bank concerning any potential toxic or hazardous condition with
respect to the real property collateral, together with a certification signed by
the Borrower regarding the environmental information provided to the
Bank.

       

      6.9           
Environmental
Indemnification.

       

      An
Environmental Indemnity Agreement executed by the Borrower.

       

      
        	
                 
      

              	
                6.10

              	
                Deed of
      Trust.

              


      

       

      Signed
and acknowledged original Deed of Trust, as required by the Bank, encumbering
the real property collateral.

       

      
        	
                 
      

              	
                6.11

              	
                Title
      Insurance.

              


      

       

      An ALTA
lender's title insurance policy (on a form acceptable to the Bank and from a
title company acceptable to the Bank), for at least Six Million Four Hundred
Thousand and No/100 Dollars ($6,400,000.00), insuring the Bank's interest in the
real property collateral, with only such exceptions as may be approved by the
Bank and together
with such endorsements as the Bank may require.

       

      
        	
                6.12

              	
                Other Required
      Documentation.

              


      

       

      Any other
items that the Bank reasonably requires.

       

      
        	
                 
      

              	
                7.

              	
                REPRESENTATIONS
      AND WARRANTIES

              


      

       

      When the
Borrower signs this Agreement, and until the Bank is repaid in full, the
Borrower makes the following representations and warranties.  Each
request for an extension of credit constitutes a renewal of these
representations and warranties as of the date of the request:

       

      
        	
                 
      

              	
                7.1

              	
                Formation.

              


      

       

      If the
Borrower is anything other than a natural person, it is duly formed and existing
under the laws of the state or other jurisdiction where organized.

       

      
        	
                 
      

              	
                7.2

              	
                Authorization.

              


      

       

      This
Agreement, and any instrument or agreement required hereunder, are within the
Borrower's powers, have been duly authorized, and do not conflict with any of
its organizational papers.

       

      
        	
                 
      

              	
                7.3

              	
                Enforceable
      Agreement.

              


      

       

      This
Agreement is a legal, valid and binding agreement of the Borrower, enforceable
against the Borrower in accordance with its terms, and any instrument or
agreement required hereunder, when executed and delivered, will be similarly
legal, valid, binding and enforceable.

       

      
        	
                 
      

              	
                7.4

              	
                Good
      Standing.

              


      

       

      In each
state in which the Borrower does business, it is properly licensed, in good
standing, and, where required, in compliance with fictitious name
statutes.

       

      
        	
                 
      

              	
                7.5

              	
                No
      Conflicts.

              


      

       

      This
Agreement does not conflict with any law, agreement, or obligation by which the
Borrower is bound.

       

      
        
          
          

        

        
          8     
Loan Agreement

          
            

          

        

        
          
          

        

         

      

      
        	
                 
      

              	
                7.6

              	
                Financial
      Information.

              


      

       

      All
financial and other information that has been or will be supplied to the Bank is
sufficiently complete to give the Bank accurate knowledge of the Borrower's (and
any guarantor's) financial condition, including all material contingent
liabilities.  Since the date of the most recent financial statement
provided to the Bank, there has been no material adverse change in the business
condition (financial or otherwise), operations, properties or prospects of the
Borrower (or any guarantor).  If the Borrower is comprised of the
trustees of a trust, the foregoing representations shall also pertain to the
trustor(s) of the trust.

       

      
        	
                 
      

              	
                7.7

              	
                Lawsuits.

              


      

       

      There is
no lawsuit, tax claim or other dispute pending or threatened against the
Borrower which, if lost, would impair the Borrower's financial condition or
ability to repay the loan, except as have been disclosed in writing to the
Bank.

       

      
        	
                 
      

              	
                7.8

              	
                Collateral.

              


      

       

      All
collateral required in this Agreement is owned by the grantor of the security
interest free of any title defects or any liens or interests of others, except
those which have been approved by the Bank in writing.

       

      
        	
                 
      

              	
                7.9

              	
                Permits,
      Franchises.

              


      

       

      The
Borrower possesses all permits, memberships, franchises, contracts and licenses
required and all trademark rights, trade name rights, patent rights, copyrights,
and fictitious name rights necessary to enable it to conduct the business in
which it is now engaged.

       

      
        	
                 
      

              	
                7.10

              	
                Other
      Obligations.

              


      

       

      The
Borrower is not in default on any obligation for borrowed money, any purchase
money obligation or any other material lease, commitment, contract, instrument
or obligation, except as have been disclosed in writing to the
Bank.

       

      
        	
                 
      

              	
                7.11

              	
                Tax
      Matters.

              


      

       

      The
Borrower has no knowledge of any pending assessments or adjustments of its
income tax for any year and all taxes due have been paid, except as have been
disclosed in writing to the Bank.

      


      
        	
                 
      

              	
                7.12

              	
                No Event of
      Default.

              


      

      


      There is
no event which is, or with notice or lapse of time or both would be, a default
under this Agreement.

      


      
        	
                 
      

              	
                7.13

              	
                Insurance.

              


      

       

      The
Borrower has obtained, and maintained in effect, the insurance coverage required
in the "Covenants" section of this Agreement.

      


      
        	
                 
      

              	
                8.

              	
                COVENANTS

              


      

      


      The
Borrower agrees, so long as credit is available under this Agreement and until
the Bank is repaid in full:

      


      
        	
                 
      

              	
                8.1

              	
                Use of
      Proceeds.

              


      

       

      To use
the proceeds of Facility Nos. 1 and 2 only for working capital, general
corporate purposes, and purchase of real property.

       

      
        
          
          

        

        
          9     
Loan Agreement

          
            

          

        

        
          
          

        

      

      


      
        	
                 
      

              	
                8.2

              	
                Financial
      Information.

              


      

      


      To
provide the following financial information and statements in form and content
acceptable to the Bank, and such additional information as requested by the Bank
from time to time. The Bank reserves the right, upon written notice to the
Borrower, to require the Borrower to deliver financial information and
statements to the Bank more frequently than otherwise provided below, and to use
such additional information and statements to measure any applicable financial
covenants in this Agreement.

      


      
        	
                (a)

              	
                Copies
      of the Form 10-K Annual Report and Form 10-Q Quarterly Report for Borrower
      within one hundred-twenty (120) after the date of filing with the
      Securities and Exchange Commission for the Annual Report and forty-five
      (45) days after the date of filing with the Securities and Exchange
      Commission for the Quarterly
Report.

              


      

       

      
        	
                (b)

              	
                Within
      forty-five (45) days of the filing of the Form 10-K and  each
      10-Q, as the case may be, a compliance certificate of the Borrower, signed
      by an authorized financial officer and setting forth (i) the information
      and computations (in sufficient detail) to establish compliance with all
      financial covenants at the end of the period covered by the financial
      statements then being furnished and (ii) whether there existed as of the
      date of such financial statements and whether there exists as of the date
      of the certificate, any default under this Agreement and, if any such
      default exists, specifying the nature thereof and the action the
      Borrower is
      taking and proposes to take with respect
  thereto.

              


      

       

      
        	
                (c)

              	
                Promptly
      upon the Bank's request, such other books, records, statements, lists of
      property and accounts, budgets, forecasts or reports as to the Borrower
      and as to each guarantor of the Borrower's obligations to the Bank as the
      Bank may request.

              


      

       

      
        	
                 
      

              	
                8.3

              	
                Working
      Capital.

              


      

       

      To
maintain on a consolidated basis current assets in excess of current liabilities
of at least Ten Million and No/100 Dollars ($10,000,000.00), measured
quarterly.

      


      
        	
                 
      

              	
                8.4

              	
                Funded Debt to EBITDA
      Ratio.

              


      

      


      To
maintain on a consolidated basis a ratio of Funded Debt to EBITDA not exceeding
3.50:1.0, measured quarterly.

      


      “Funded
Debt” means all outstanding liabilities for borrowed money and other
interest-bearing liabilities, including current and long term debt, less the
non-current portion of Subordinated Liabilities.

       

      “EBITDA"
means net income, less income or plus loss from discontinued operations and
extraordinary items, plus income taxes, plus interest expense, plus
depreciation, depletion, amortization and other non-cash
charges.  EBITDA will not include any positive or negative
mark-to-market adjustments from derivatives, futures or otherwise, including
gains or losses from foreign exchanges.  This ratio will be calculated
at the end of each reporting period for which the Bank requires financial
statements from Borrower, using the results of the twelve-month period ending
with that reporting period.

       

      “Subordinated
Liabilities” means liabilities subordinated to the Borrower’s obligations to the
Bank in a manner acceptable to the Bank in its sole discretion.

       

      
        	
                 
      

              	
                8.5

              	
                Basic Fixed Charge
      Coverage Ratio.

              


      

       

      To
maintain on a consolidated basis a Basic Fixed Charge Coverage Ratio of at least
1.25:1.0, measured quarterly.

       

      "Basic
Fixed Charge Coverage Ratio" means the ratio of (a) the sum of EBITDA plus lease
expense and rent expense, minus the sum of taxes and dividends, to (b) the sum
of interest expense, lease expense, rent expense, the current portion of long
term debt and the current portion of capitalized lease obligations.

       

      
        
          
          

        

        
          10     
Loan Agreement

          
            

          

        

        
          
          

        

         

      

      "EBITDA"
means net income, less income or plus loss from discontinued operations and
extraordinary items, plus income taxes, plus interest expense, plus
depreciation, depletion, amortization and other non-cash
charges.  EBITDA will not include any positive or negative
mark-to-market adjustments from derivatives, futures or otherwise, including
gains or losses from foreign exchanges.

       

      This
ratio will be calculated at the end of each reporting period for which the Bank
requires financial statements from Borrower, using the results of the
twelve-month period ending with that reporting period.  The current
portion of long-term liabilities will be measured as of the date twelve (12)
months prior to the current financial statement.

      


      
        	
                 
      

              	
                8.6

              	
                Capital
      Expenditures.

              


      

      


      Not to
spend or incur obligations (including the total amount of any capital leases) to
acquire fixed assets for more than Ten Million and No/100 Dollars
($10,000,000.00) in any single fiscal year on a consolidated
basis.  The purchase of the Real Property will not be included in this
calculation.

      


      
        	
                 
      

              	
                8.7

              	
                Intentionally Omitted.
      

              


      

      


      
         8.8           
Intentionally
Omitted.

      

      


      
        	
                 
      

              	
                8.9

              	
                Other
      Debts.

              


      

      


      Not to
have outstanding or incur any direct or contingent liabilities (“Indebtedness”)
or lease obligations (other than those to the Bank), or become liable for the
liabilities of others, without the Bank's written consent.  This does
not prohibit:

      


      
        	
                (a)

              	
                Acquiring
      goods, supplies, or merchandise on normal trade
  credit.

              


      

      
        	
                (b)

              	
                Endorsing
      negotiable instruments received in the usual course of
      business.

              


      

      
        	
                (c)

              	
                Obtaining
      surety bonds in the usual course of
business.

              


      

      
        	
                (d)

              	
                Liabilities,
      lines of credit and leases in existence on the date of this Agreement
      disclosed in writing to the Bank.

              


      

      
        	
                (e)

              	
                Additional
      Indebtedness and lease obligations for the acquisition of fixed assets, to
      the extent permitted elsewhere in this
  Agreement.

              


      

      
        	
                (f)

              	
                Additional
      Indebtedness and lease obligations for business purposes which, together
      with the debts permitted under subparagraphs (a)-(e), above, so long as
      such aggregate Indebtedness, obligations and/or liabilities outstanding at
      any one time do not exceed Borrower’s then available working capital in
      excess of the minimum required working capital of Ten Million and No/100
      Dollars ($10,000,000.00).

              


      

      
        	
                (g)

              	
                Borrower's
      Euro Abn Amro Bank debt in the amount of Two Million Five Hundred Thousand
      Euros (2,500,000).

              


      

      (h)           Existing
operating leases approved by Bank.

      
        	
                (i)

              	
                New
      operating leases so long as the obligations thereunder do not exceed One
      Million
      and                                                No/100
      Dollars ($1,000,000.00) in the
aggregate.

              


      

      


      
        	
                 
      

              	
                8.10

              	
                Other
      Liens.

              


      

      


      Not to
create, assume, or allow any security interest or lien (including judicial
liens) on property the Borrower now or later owns, except:

      


      
        	
                (a)

              	
                Liens
      and security interests in favor of the
Bank.

              


      

      


      
        	
                (b)

              	
                Liens
      for taxes not yet due.

              


      

      


      
        	
                (c)

              	
                Liens
      outstanding on the date of this Agreement disclosed in writing to the
      Bank.

              


      

      


      
        	
                (d)

              	
                Additional
      purchase money security interests in assets acquired after the date of
      this Agreement.

              


      

       

      
        
          
          

        

        
          11     
Loan Agreement

          
            

          

        

        
          
          

        

      

      


      
        	
                 
      

              	
                8.11

              	
                Maintenance of
      Assets.

              


      

      


      
        	
                (a)

              	
                Not
      to sell, assign, lease, transfer or otherwise dispose of any part of the
      Borrower's business or the Borrower's assets except in the ordinary course
      of the Borrower's business.

              


      

      


      
        	
                (b)

              	
                Not
      to sell, assign, lease, transfer or otherwise dispose of any assets for
      less than fair market value, or enter into any agreement to do
      so.

              


      

       

      
        	
                (c)

              	
                Not
      to enter into any sale and leaseback agreement covering any of its fixed
      assets.

              


      

       

      
        	
                (d)

              	
                To
      maintain and preserve all rights, privileges, and franchises the Borrower
      now has.

              


      

       

      
        	
                (e)

              	
                To
      make any repairs, renewals, or replacements to keep the Borrower's
      properties in good working
condition.

              


      

      


      
        	
                 
      

              	
                8.12

              	
                Investments.

              


      

      


      Not to
have any existing, or make any new, investments in any individual or entity, or
make any capital contributions or other transfers of assets to any individual or
entity, except for:

      


      
        	
                (a)

              	
                Existing
      investments disclosed to the Bank in
writing.

              


      

       

      
        	
                (b)

              	
                Investments
      in the Borrower’s current
subsidiaries.

              


      

       

      
        	
                (c)

              	
                Investments
      in any of the following:

              


      

       

      
        	
                 
      

              	
                (i)

              	
                certificates
      of deposit;

              


      

       

      
        	
                 
      

              	
                (ii)

              	
                U.S.
      treasury bills and other obligations of the federal
      government;

              


      

       

      
        	
                 
      

              	
                (iii)

              	
                readily
      marketable securities (including commercial paper, but excluding
      restricted stock and stock subject to the provisions of Rule 144 of the
      Securities and Exchange
Commission).

              


      

       

      
        	
                (d)

              	
                The
      buy back of up to 750,000 shares in Borrower as authorized under any
      current or future stock   repurchase plan approved in
      writing by Borrower’s board of
directors.

              


      

       

      
        	
                 
      

              	
                8.13

              	
                Loans.

              


      

       

      Not to
make any loans, advances or other extensions of credit to any individual or
entity, except for:

       

      
        	
                (a)

              	
                Existing
      extensions of credit disclosed to the Bank in
  writing.

              


      

       

      
        	
                (b)

              	
                Extensions
      of credit to the Borrower’s current
  subsidiaries.

              


      

       

      
        	
                (c)

              	
                Extensions
      of credit in the nature of accounts receivable or notes receivable arising
      from the sale or lease of goods or services in the ordinary course of
      business to non-affiliated
entities.

              


      

       

      (d)           Extensions
of credit that do not exceed an aggregate amount
of                                                                                                                     One
Million and No/100 Dollars($1,000,000.00) outstanding at any one
time.

      


      


      
        	
                 
      

              	
                8.14

              	
                Additional Negative
      Covenants.

              


      

      


      Not to,
without the Bank's written consent:

      


      
        	
                (a)

              	
                Enter
      into any consolidation, merger, or other combination, or become a partner
      in a partnership, a member of a joint venture, or a member of a limited
      liability company.

              


      

       

      
        
          
          

        

        
          12     
Loan Agreement

          
            

          

        

        
          
          

        

         

      

      
        	
                (b)

              	
                Acquire
      or purchase a business or its
assets.

              


      

       

      
        	
                (c)

              	
                Engage
      in any business activities substantially different from the Borrower's
      present business.

              


      

       

      
        	
                (d)

              	
                Liquidate
      or dissolve the Borrower's
business.

              


      

       

      
        	
                (e)

              	
                Voluntarily
      suspend its business for more than ten (10) days in any three hundred
      sixty-five (365) day period.

              


      

       

      Notwithstanding
subparagraphs (a) and (b), above, Borrower may enter into mergers and
acquisitions without the Bank’s prior written consent so long as (i) the
aggregate amounts of the same do not exceed the lesser of (Y) Fifteen Million
and No/100 Dollars ($15,000,000.00) in any single calendar year, or (Z) Fifty
Million and No/100 Dollars ($50,000,000.00) in the aggregate, and (ii) Borrower
is in compliance, and pro-forma compliance post merger, with the covenants
contained in this Agreement.

       

      
        	
                 
      

              	
                8.15

              	
                Notices to
      Bank.

              


      

       

      To
promptly notify the Bank in writing of:

       

      
        	
                (a)

              	
                Any
      lawsuit over One Million and No/100 Dollars ($1,000,000.00) against the
      Borrower or any Obligor.

              


      

       

      
        	
                (b)

              	
                Any
      substantial dispute between any governmental authority and the Borrower or
      any Obligor.

              


      

       

      
        	
                (c)

              	
                Any
      event of default under this Agreement, or any event which, with notice or
      lapse of time or both, would constitute an event of
    default.

              


      

       

      
        	
                (d)

              	
                Any
      material adverse change in the Borrower's or any Obligor’s business
      condition (financial or otherwise), operations, properties or prospects,
      or ability to repay the credit.

              


      

       

      
        	
                (e)

              	
                Any
      change in the Borrower's or any Obligor’s name, legal structure, principal
      residence (for an individual), state of registration (for a registered
      entity), place of business, or chief executive office if the Borrower or
      any Obligor has more than one place of
business.

              


      

       

      
        	
                (f)

              	
                Any
      actual contingent liabilities of the Borrower or any Obligor, and any such
      contingent liabilities which are reasonably foreseeable, where such
      liabilities are in excess of One Million and No/100 Dollars
      ($1,000,000.00) in the aggregate.

              


      

       

      For
purposes of this Agreement, “Obligor” shall mean any guarantor, any party
pledging collateral to the Bank, or, if the Borrower is comprised of the
trustees of a trust, any trustor.

       

      
        	
                 
      

              	
                8.16

              	
                Insurance.

              


      

      


      
        	
                (a)

              	
                General Business
      Insurance.  To maintain insurance satisfactory to the
      Bank as to amount, nature and carrier covering property damage (including
      loss of use and occupancy) to any of the Borrower's properties, business
      interruption insurance, public liability insurance including coverage for
      contractual liability, product liability and workers' compensation, and
      any other insurance which is usual for the Borrower's
      business.  Each policy shall provide for at least thirty (30)
      days prior notice to the Bank of any cancellation
  thereof.

              


      

      


      
        	
                (b)

              	
                Insurance Covering
      Collateral.  To maintain all risk property damage
      insurance policies (including without limitation windstorm coverage, and
      hurricane coverage as applicable) covering the tangible property
      comprising the collateral.  Each insurance policy must be in an
      amount acceptable to the Bank.  The insurance must be issued by
      an insurance company acceptable to the Bank and must include a lender's
      loss payable endorsement in favor of the Bank in a form acceptable to the
      Bank.  Notwithstanding the foregoing, Bank is not currently
      requiring windstorm or hurricane coverage.  However, Borrower
      agrees to provide such coverages required by the Bank’s internal insurance
      group so long as such coverages are, at such time, commercially reasonable
      and available.  This provision shall prevail over any
      conflicting provisions, if any, in the other loan
    documents.

              


      

       

      
        
          
          

        

        
          13     
Loan Agreement

          
            

          

        

        
          
          

        

         

      

      
        	
                (c)

              	
                Evidence of
      Insurance.  Upon the request of the Bank, to deliver to
      the Bank a copy of each insurance policy, or, if permitted by the Bank, a
      certificate of insurance listing all insurance in
  force.

              


      

       

      
        	
                 
      

              	
                8.17

              	
                Compliance with
      Laws.

              


      

       

      To comply
with the laws (including any fictitious or trade name statute), regulations, and
orders of any government body with authority over the Borrower's
business.  The Bank shall have no obligation to make any advance to
the Borrower except in compliance with all applicable laws and regulations and
the Borrower shall fully cooperate with the Bank in complying with all such
applicable laws and regulations.

       

      
        	
                 
      

              	
                8.18

              	
                ERISA
      Plans. 

              


      

       

      Promptly
during each year, to pay and cause any subsidiaries to pay contributions
adequate to meet at least the minimum funding standards under ERISA with respect
to each and every Plan; file each annual report required to be filed pursuant to
ERISA in connection with each Plan for each year; and notify the Bank within ten
(10) days of the occurrence of any Reportable Event that might constitute
grounds for termination of any capital Plan by the Pension Benefit Guaranty
Corporation or for the appointment by the appropriate United States District
Court of a trustee to administer any Plan.  "ERISA" means the Employee
Retirement Income Security Act of 1974, as amended from time to
time.  Capitalized terms in this paragraph shall have the meanings
defined within ERISA.

      


      
        	
                 
      

              	
                8.19

              	
                Books and
      Records.

              


      

      


      To
maintain adequate books and records.

       

      
        	
                 
      

              	
                8.20

              	
                Audits.

              


      

       

      To allow
the Bank and its agents to inspect the Borrower's properties and examine, audit,
and make copies of books and records at any reasonable time.  If any
of the Borrower's properties, books or records are in the possession of a third
party, the Borrower authorizes that third party to permit the Bank or its agents
to have access to perform inspections or audits and to respond to the Bank's
requests for information concerning such properties, books and
records.

       

      
        	
                 
      

              	
                8.21

              	
                Perfection of
      Liens.

              


      

       

      To help
the Bank perfect and protect its security interests and liens, and reimburse it
for related costs it incurs to protect its security interests and
liens.

       

      
        	
                 
      

              	
                8.22

              	
                Cooperation.

              


      

      


      To take
any action reasonably requested by the Bank to carry out the intent of this
Agreement.

      


      
        	
                 
      

              	
                8.23

              	
                Flood and Other
      Insurance.

              


      

      


      If any
improved real property collateral is located in a designated flood hazard area,
or becomes located in a designated flood hazard area after the date of this
Agreement as a result of any re-mapping of flood insurance maps by the Federal
Emergency Management Agency, the Borrower will be required to maintain flood
insurance on the real property and on any tangible personal property collateral
located on the real property.  In addition, the Borrower shall
maintain such other insurance as the Bank may require to comply with the Bank’s
regular requirements and practices in similar transactions, which may include
earthquake insurance and insurance covering acts of
terrorism.  Notwithstanding the foregoing, Bank is not currently
requiring earthquake or terrorism coverage.  However, Borrower agrees
to provide such coverages required by the Bank’s internal insurance group so
long as such coverages are, at such time, commercially reasonable and
available.  This provision shall prevail over any conflicting
provisions, if any, in the other loan documents.

       

      
        
          
          

        

        
          14     
Loan Agreement

          
            

          

        

        
          
          

        

         

      

      
        	
                 
      

              	
                8.24

              	
                Inspections and
      Appraisals of Real Property.

              


      

       

      To allow
the Bank and its agents to visit the real property collateral at any reasonable
time for the purpose of inspecting the real property and conducting appraisals,
and deliver to the Bank any financial or other information concerning the real
property as the Bank may request.

       

      
        	
                 
      

              	
                8.25

              	
                Use or Leasing of the
      Real Property Collateral.

              


      

       

      To occupy
the Real Property collateral for the conduct of its regular
business.  Borrower will not change its intended use of the Real
Property without the Bank's prior written approval.  If the Real
Property is leased to an affiliate, the lease will be fully subordinated to the
Bank's lien.  All terms, covenants, representations, and provisions of
this Agreement which pertain or apply to the Borrower will pertain or apply to
an affiliate in addition to, or in lieu of, the Borrower, as the context may
require

       

      
        	
                 
      

              	
                8.26

              	
                Indemnity Regarding
      Use of Real Property.

              


      

       

      To
indemnify, defend with counsel acceptable to the Bank, and hold the Bank
harmless from and against all liabilities, claims, actions, damages, costs and
expenses (including all legal fees and expenses of Bank's counsel) arising out
of or resulting from the construction of any improvements on the real property
collateral, or the ownership, operation, or use of the real property collateral,
whether such claims are based on theories of derivative liability, comparative
negligence or otherwise.  The Borrower's obligations to the Bank under
this Paragraph shall survive termination of this Agreement and repayment of the
Borrower's obligations to the Bank under this Agreement, and shall also survive
as unsecured obligations after any acquisition by the Bank of the real property
collateral or any part of it by foreclosure or any other means.

      


      9.             
HAZARDOUS SUBSTANCES - REAL PROPERTY SECURITY

       

      9.1            Indemnity Regarding
Hazardous Substances.

       

      The
Borrower agrees to indemnify and hold the Bank harmless from and against all
liabilities, claims, actions, foreseeable and unforeseeable consequential
damages, costs and expenses (including sums paid in settlement of claims and all
consultant, expert and legal fees and expenses of the Bank's counsel) or loss
directly or indirectly arising out of or resulting from any of the
following:

       

      (a)           Any
hazardous substance being present at any time, whether before, during or after
any construction, in or around any part of the Real Property collateral securing
this Agreement, or in the soil, groundwater or soil vapor on or under the Real
Property, including those incurred in connection with any investigation of site
conditions or any clean-up, remedial, removal or restoration work, or any
resulting damages or injuries to the person or property of any third parties or
to any natural resources.

       

      (b)           Any
use, generation, manufacture, production, storage, release, threatened release,
discharge, disposal or presence of a hazardous substance.  This
indemnity will apply whether the hazardous substance is on, under or about any
of the Borrower's property or operations or property leased to the Borrower,
whether or not the property has been taken by the Bank as
collateral.

       

      Upon
demand by the Bank, the Borrower will defend any investigation, action or
proceeding alleging the presence of any hazardous substance in any such
location, which affects the Real Property or which is brought or commenced
against the Bank, whether alone or together with the Borrower or any other
person, all at the Borrower's own cost and by counsel to be approved by the Bank
in the exercise of its reasonable judgment.  In the alternative, the
Bank may elect to conduct its own defense at the expense of the
Borrower.  The Borrower's obligations to the Bank under this Article,
except the obligation to give notices to the Bank, shall survive termination of
this Agreement, repayment of the Borrower's obligations to the Bank under this
Agreement, and foreclosure of the deed of trust or mortgage encumbering the Real
Property or similar proceedings.

       

      
        
          
          

        

        
          15     
Loan Agreement

          
            

          

        

        
          
          

        

      

       

      9.2            Representation and Warranty
Regarding Hazardous Substances.

       

      Before
signing this Agreement, the Borrower researched and inquired into the previous
uses and ownership of the Real Property.  Based on that due diligence,
the Borrower represents and warrants that to the best of its knowledge, no
hazardous substance has been disposed of or released or otherwise exists in, on,
under or onto the Real Property, except (a) for hazardous substances in de
minimis amounts not in violation of any Environmental Laws (as hereinafter
defined), or (b) as the Borrower has disclosed to the Bank in
writing.

       

      9.3            Compliance Regarding
Hazardous Substances.

       

      The
Borrower has complied, and will comply and cause all occupants of the Real
Property to comply, with all current and future laws, regulations and ordinances
or other requirements of any governmental authority relating to or imposing
liability or standards of conduct concerning protection of health or the
environment or hazardous substances ("Environmental Laws").  The
Borrower shall promptly, at the Borrower’s sole cost and expense, take all
reasonable actions with respect to any hazardous substances or other
environmental condition at, on, or under the Real Property necessary to (i)
comply with all applicable Environmental Laws; (ii) allow continued use,
occupation or operation of the Real Property; or (iii) maintain the fair market
value of the Real Property.  The Borrower acknowledges that hazardous
substances may permanently and materially impair the value and use of the Real
Property.

       

      9.4            Notices Regarding Hazardous
Substances.

       

      Until
full repayment of the loan, the Borrower will promptly notify the Bank in
writing if it knows, suspects or believes (a) there may be any hazardous
substance in or around the Real Property, or in the soil, groundwater or soil
vapor on or under the Real Property,  except for hazardous substances
in de minimis amounts not in violation of any Environmental Laws,  or
(b) that the Borrower or the Real Property may be subject to any threatened or
pending investigation by any governmental agency under any current or future
law, regulation or ordinance pertaining to any hazardous substance.

       

      9.5            Site Visits, Observations
and Testing.

       

      The Bank
and its agents and representatives will have the right at any reasonable time,
after giving reasonable notice to the Borrower, to enter and visit the Real
Property and any other locations where any personal property collateral securing
this Agreement is located, for the purposes of observing the Real Property and
the personal property collateral, taking and removing environmental samples, and
conducting tests on any part of the Real Property.  The Borrower shall
reimburse the Bank on demand for the costs of any such environmental
investigation and testing, and upon such reimbursement the Bank shall provide
the Borrower with a copy of all reports and supporting documentation relating to
such investigation and testing.  The Bank will make reasonable efforts
during any site visit, observation or testing conducted pursuant this paragraph
to avoid interfering with the Borrower’s use of the Real Property and the
personal property collateral.  The Bank is under no duty, however, to
visit or observe the Real Property or the personal property collateral or to
conduct tests, and any such acts by the Bank will be solely for the purposes of
protecting the Bank's security and preserving the Bank's rights under this
Agreement.  No site visit, observation or testing or any report or
findings made as a result thereof ("Environmental Report") (i) will result in a
waiver of any default of the Borrower; (ii) impose any liability on the Bank; or
(iii) be a representation or warranty of any kind regarding the Real Property or
the personal property collateral (including its condition or value or compliance
with any laws) or the Environmental Report (including its accuracy or
completeness).  In the event the Bank has a duty or obligation under
applicable laws, regulations or other requirements to disclose an Environmental
Report to the Borrower or any other party, the Borrower authorizes the Bank to
make such a disclosure.  The Bank may also disclose an Environmental
Report to any regulatory authority, and to any other parties as necessary or
appropriate in the Bank’s judgment.  The Borrower further understands
and agrees that any Environmental Report or other information regarding a site
visit, observation or testing that is disclosed to the Borrower by the Bank or
its agents and representatives is to be evaluated (including any reporting or
other disclosure obligations of the Borrower) by the Borrower without advice or
assistance from the Bank.

       

      
        
          
          

        

        
          16     
Loan Agreement

          
            

          

        

        
          
          

        

      

       

      9.6             Definition of Hazardous
Substance.

       

      "Hazardous
substance" means any substance, material or waste that is or becomes designated
or regulated as "toxic," "hazardous," "pollutant," or "contaminant" or a similar
designation or regulation under any current or future federal, state or local
law (whether under common law, statute, regulation or otherwise) or judicial or
administrative interpretation of such, including without limitation petroleum or
natural gas.

      


      
        	
                 
      

              	
                10.

              	
                DEFAULT
      AND REMEDIES

              


      

      If any of
the following events of default occurs, the Bank may do one or more of the
following: declare the Borrower in default, stop making any additional credit
available to the Borrower, and require the Borrower to repay its entire debt
immediately and without prior notice.  If an event which, with notice
or the passage of time, will constitute an event of default has occurred and is
continuing, the Bank has no obligation to make advances or extend additional
credit under this Agreement.  In addition, if any event of default
occurs, the Bank shall have all rights, powers and remedies available under any
instruments and agreements required by or executed in connection with this
Agreement, as well as all rights and remedies available at law or in
equity.  If an event of default occurs under the paragraph entitled
"Bankruptcy," below, with respect to the Borrower, then the entire debt
outstanding under this Agreement will automatically be due
immediately.

       

      
        	
                 
      

              	
                10.1

              	
                Failure to
      Pay.

              


      

      


      The
Borrower fails to make a payment under this Agreement when due.

      


      
        	
                 
      

              	
                10.2

              	
                Other Bank
      Agreements.

              


      

      


      Any
non-monetary default occurs under any other agreement the Borrower (or any
Obligor) or any of the Borrower's related entities or affiliates has with the
Bank or any affiliate of the Bank, and is not cured within ten (10) days of the
occurrence of the default.

      


      
        	
                 
      

              	
                10.3

              	
                Cross-default.

              


      

      


      Any
non-monetary default occurs under any agreement in connection with any
Indebtedness the Borrower (or any Obligor) or any of the Borrower's related
entities or affiliates has obtained from anyone else or which the Borrower (or
any Obligor) or any of the Borrower's related entities or affiliates has
guaranteed, and is not cured within ten (10) days of the occurrence of the
default.

      


      
        	
                 
      

              	
                10.4

              	
                False
      Information.

              


      

      


      The
Borrower or any Obligor has given the Bank materially false or misleading
information or representations.

      


      
        	
                 
      

              	
                10.5

              	
                Bankruptcy.

              


      

      


      The
Borrower, any Obligor, or any general partner of the Borrower or of any Obligor
files a bankruptcy petition, a bankruptcy petition is filed against any of the
foregoing parties, or the Borrower, any Obligor, or any general partner of the
Borrower or of any Obligor makes a general assignment for the benefit of
creditors.

      


      
        	
                 
      

              	
                10.6

              	
                Receivers.

              


      

       

      A
receiver or similar official is appointed for a substantial portion of the
Borrower's or any Obligor's business, or the business is terminated, or, if any
Obligor is anything other than a natural person, such Obligor is liquidated or
dissolved.

       

      
        
          
          

        

        
          17     
Loan Agreement

          
            

          

        

        
          
          

        

      

       

      
        	
                 
      

              	
                10.7

              	
                Lien
      Priority.

              


      

      


      The Bank
fails to have an enforceable first lien (except for any prior liens to which the
Bank has consented in writing) on or security interest in any property given as
security for this Agreement (or any guaranty).

      


      
        	
                 
      

              	
                10.8

              	
                Lawsuits.

              


      

       

      Any
lawsuit or lawsuits are filed on behalf of one or more trade creditors against
the Borrower or any Obligor in an aggregate amount of One Million and No/100
Dollars ($1,000,000,00) or more in excess of any insurance
coverage.  Notwithstanding the foregoing such lawsuit(s) shall not
constitute a default or event of default unless or until (a) either of the loans
described herein is otherwise in default, (b) Borrower fails to keep Bank
apprised of the status of the lawsuit(s), and/or (c)  Bank reasonably
determines that the lawsuit(s) may, with the passage of time, create a
default.

       

      
        	
                 
      

              	
                10.9

              	
                Judgments.

              


      

       

      Any
judgments or arbitration awards are entered against the Borrower or any Obligor,
or the Borrower or any Obligor enters into any settlement agreements with
respect to any litigation or arbitration, in an aggregate amount of One Million
and No/100 Dollars ($1,000,000.00) or more in excess of any insurance coverage,
and the same remains unsatisfied for thirty (30) days or more without being
promptly appealed by Borrower or Obligor, as the case may be.

       

      
        10.10        
Material Adverse
Change.

      

      


      Bank
reasonably determines that a material adverse change occurs, or is reasonably
likely to occur, in the Borrower's (or any Obligor's) business condition
(financial or otherwise), operations, properties or prospects, or ability to
repay the credit; or the Bank reasonably determines that it is insecure for any
other reason.

      


      
        10.11        
Government
Action.

      

      


      Any
government authority takes action that the Bank reasonably believes materially
adversely affects the Borrower's or any Obligor's financial condition or ability
to repay.

      


      
        10.12        
Default under Related
Documents.

      

       

      Any
default occurs under any guaranty, subordination agreement, security agreement,
deed of trust, mortgage, or other document required by or delivered in
connection with this Agreement or any such document is no longer in effect, or
any guarantor purports to revoke or disavow the guaranty.

      


      
        10.13        
ERISA
Plans.

      

      


      Any one
or more of the following events occurs with respect to a Plan of the Borrower
subject to Title IV of ERISA, provided such event or events could reasonably be
expected, in the judgment of the Bank, to subject the Borrower to any tax,
penalty or liability (or any combination of the foregoing) which, in the
aggregate, could have a material adverse effect on the financial condition of
the Borrower:

      


      
        	
                (a)

              	
                A
      reportable event shall occur under Section 4043(c) of ERISA with respect
      to a Plan.

              


      

       

      
        	
                (b)

              	
                Any
      Plan termination (or commencement of proceedings to terminate a Plan) or
      the full or partial withdrawal from a Plan by the Borrower or any ERISA
      Affiliate.

              


      

       

      
        	
                 
      

              	
                10.14

              	
                Other Breach Under
      Agreement.

              


      

       

      A default
occurs under any other term or condition of this Agreement not specifically
referred to in this Article.  This includes any failure or anticipated
failure by the Borrower (or any other party named in the Covenants section) to
comply with any financial covenants set forth in this Agreement, whether such
failure is evidenced by financial statements delivered to the Bank or is
otherwise known to the Borrower or the Bank.

       

      
        
          
          

        

        
          18     
Loan Agreement

          
            

          

        

        
          
          

        

      

       

      
        	
                 
      

              	
                11.

              	
                ENFORCING
      THIS AGREEMENT; MISCELLANEOUS

              


      

       

      
        	
                 
      

              	
                11.1

              	
                GAAP.

              


      

       

      Except as
otherwise stated in this Agreement, all financial information provided to the
Bank and all financial covenants will be made under generally accepted
accounting principles, consistently applied.

      


      
        	
                 
      

              	
                11.2

              	
                Governing
      Law.

              


      

      


      This
Agreement shall be governed by and construed in accordance with the laws of
Washington.  To the extent that the Bank has greater rights or
remedies under federal law, whether as a national bank or otherwise, this
paragraph shall not be deemed to deprive the Bank of such rights and remedies as
may be available under federal law.

      


      
        	
                 
      

              	
                11.3

              	
                Successors and
      Assigns.

              


      

       

      This
Agreement is binding on the Borrower's and the Bank's successors and
assignees.  The Borrower agrees that it may not assign this Agreement
without the Bank's prior consent.  The Bank may sell participations in
or assign this loan, and may exchange information about the Borrower (including,
without limitation, any information regarding any hazardous substances) with
actual or potential participants or assignees.  If a participation is
sold or the loan is assigned, the purchaser will have the right of set-off
against the Borrower.

      


      
        	
                 
      

              	
                11.4

              	
                Dispute Resolution
      Provision.

              


      

      


      This
paragraph, including the subparagraphs below, is referred to as the “Dispute
Resolution Provision.”  This Dispute Resolution Provision is a
material inducement for the parties entering into this agreement.

      


      
        	
                (a)

              	
                This
      Dispute Resolution Provision concerns the resolution of any controversies
      or claims between the parties, whether arising in contract, tort or by
      statute, including but not limited to controversies or claims that arise
      out of or relate to: (i) this agreement (including any renewals,
      extensions or modifications); or (ii) any document related to this
      agreement (collectively a "Claim").  For the purposes of this
      Dispute Resolution Provision only, the term “parties” shall include any
      parent corporation, subsidiary or affiliate of the Bank involved in the
      servicing, management or administration of any obligation described or
      evidenced by this agreement.

              


      

      


      
        	
                (b)

              	
                At
      the request of any party to this agreement, any Claim shall be resolved by
      binding arbitration in accordance with the Federal Arbitration Act (Title
      9, U.S. Code) (the "Act").  The Act will apply even though this
      agreement provides that it is governed by the law of a specified
      state.

              


      

       

      
        	
                (c)

              	
                Arbitration
      proceedings will be determined in accordance with the Act, the
      then-current rules and procedures for the arbitration of financial
      services disputes of any arbitration service agreed upon in writing by
      both Borrower and Bank or in the absence of such written agreement, then
      the American Arbitration Association or any successor thereof ("AAA"), and
      the terms of this Dispute Resolution Provision.  In the event of
      any inconsistency, the terms of this Dispute Resolution Provision shall
      control.  If AAA is unwilling or unable to (i) serve as the
      provider of arbitration or (ii) enforce any provision of this arbitration
      clause, the Bank may designate another arbitration organization with
      similar procedures to serve as the provider of arbitration.  All
      references herein made to “AAA” shall mean the alternative arbitration
      service if one is so agreed upon in writing by both Bank and
      Borrower.

              


      

       

      
        	
                (d)

              	
                The
      arbitration shall be administered by AAA and conducted, unless otherwise
      required by law, in any U.S. state where real or tangible personal
      property collateral for this credit is located or if there is no such
      collateral, in the state specified in the governing law section of this
      agreement.  All Claims shall be determined by one arbitrator;
      however, if Claims exceed Five Million Dollars ($5,000,000), upon the
      request of any party, the Claims shall be decided by three
      arbitrators.  All arbitration hearings shall commence within
      ninety (90) days of the demand for arbitration and close within ninety
      (90) days of commencement and the award of the arbitrator(s) shall be
      issued within thirty (30) days of the close of the
      hearing.  However, the arbitrator(s), upon a showing of good
      cause, may extend the commencement of the hearing for up to an additional
      sixty (60) days.  The arbitrator(s) shall provide a concise
      written statement of reasons for the award.  The arbitration
      award may be submitted to any court having jurisdiction to be confirmed
      and have judgment entered and
enforced.

              


      

       

      
        
          
          

        

        
          19     
Loan Agreement

          
            

          

        

        
          
          

        

      

       

      
        	
                (e)

              	
                The
      arbitrator(s) will give effect to statutes of limitation in determining
      any Claim and may dismiss the arbitration on the basis that the Claim is
      barred. For purposes of the application of any statutes of limitation, the
      service on AAA under applicable AAA rules of a notice of Claim is the
      equivalent of the filing of a lawsuit.  Any dispute concerning
      this arbitration provision or whether a Claim is arbitrable shall be
      determined by the arbitrator(s), except as set forth at subparagraph (h)
      of this Dispute Resolution Provision.  The arbitrator(s) shall
      have the power to award legal fees pursuant to the terms of this
      agreement.

              


      

       

      
        	
                (f)

              	
                This
      paragraph does not limit the right of any party to: (i) exercise self-help
      remedies, such as but not limited to, setoff; (ii) initiate judicial or
      non-judicial foreclosure against any real or personal property collateral;
      (iii) exercise any judicial or power of sale rights, or (iv) act in a
      court of law to obtain an interim remedy, such as but not limited to,
      injunctive relief, writ of possession or appointment of a receiver, or
      additional or supplementary
remedies.

              


      

       

      
        	
                (g)

              	
                The
      filing of a court action is not intended to constitute a waiver of the
      right of any party, including the suing party, thereafter to require
      submittal of the Claim to
arbitration.

              


      

       

      
        	
                (h)

              	
                Any
      arbitration or trial by a judge of any Claim will take place on an
      individual basis without resort to any form of class or representative
      action (the “Class Action Waiver”).  Regardless of anything else
      in this Dispute Resolution Provision, the validity and effect of the Class
      Action Waiver may be determined only by a court and not by an
      arbitrator.  The parties to this Agreement acknowledge that the
      Class Action Waiver is material and essential to the arbitration of any
      disputes between the parties and is nonseverable from the agreement to
      arbitrate Claims. If the Class Action Waiver is limited, voided or found
      unenforceable, then the parties’ agreement to arbitrate shall be null and
      void with respect to such proceeding, subject to the right to appeal the
      limitation or invalidation of the Class Action Waiver.  The Parties acknowledge and
      agree that under no circumstances will a class action be
      arbitrated.

              


      

      


      
        	
                (i)

              	
                By
      agreeing to binding arbitration, the parties irrevocably and voluntarily
      waive any right they may have to a trial by jury in respect of any
      Claim.  Furthermore, without intending in any way to limit this
      agreement to arbitrate, to the extent any Claim is not arbitrated, the
      parties irrevocably and voluntarily waive any right they may have to a
      trial by jury in respect of such Claim.  This waiver of jury
      trial shall remain in effect even if the Class Action Waiver is limited,
      voided or found unenforceable.  WHETHER THE CLAIM IS DECIDED BY
      ARBITRATION OR BY TRIAL BY A JUDGE, THE PARTIES AGREE AND UNDERSTAND THAT
      THE EFFECT OF THIS AGREEMENT IS THAT THEY ARE GIVING UP THE RIGHT TO TRIAL
      BY JURY TO THE EXTENT PERMITTED BY
LAW.

              


      

      


      
        	
                 
      

              	
                11.5

              	
                Severability;
      Waivers.

              


      

       

      If any
part of this Agreement is not enforceable, the rest of the Agreement may be
enforced.  The Bank retains all rights, even if it makes a loan after
default.  If the Bank waives a default, it may enforce a later
default.  Any consent or waiver under this Agreement must be in
writing.

       

      
        	
                 
      

              	
                11.6

              	
                Attorneys’
      Fees.

              


      

       

      The
Borrower shall reimburse the Bank for any reasonable costs and attorneys' fees
incurred by the Bank in connection with the enforcement or preservation of any
rights or remedies under this Agreement and any other documents executed in
connection with this Agreement, and in connection with any amendment, waiver,
"workout" or restructuring under this Agreement.  In the event of a
lawsuit or arbitration proceeding, the prevailing party is entitled to recover
costs and reasonable attorneys' fees incurred in connection with the lawsuit or
arbitration proceeding, as determined by the court or arbitrator.  In
the event that any case is commenced by or against the Borrower under the
Bankruptcy Code (Title 11, United States Code) or any similar or successor
statute, the Bank is entitled to recover costs and reasonable attorneys' fees
incurred by the Bank related to the preservation, protection, or enforcement of
any rights of the Bank in such a case.  As used in this paragraph,
"attorneys' fees" includes the allocated costs of the Bank's in-house
counsel.

       

      
        
          
          

        

        
          20     
Loan Agreement

          
            

          

        

        
          
          

        

      

      


      
        	
                 
      

              	
                11.7

              	
                Set-Off.

              


      

      


      
        	
                (a)

              	
                In
      addition to any rights and remedies of the Bank provided by law, upon the
      occurrence and during the continuance of any event of default under this
      Agreement, the Bank is authorized, at any time, to set off and apply any
      and all Deposits of the Borrower or any Obligor held by the Bank against
      any and all Obligations owing to the Bank.  The set-off may be
      made irrespective of whether or not the Bank shall have made demand under
      this Agreement or any guaranty, and although such Obligations may be
      contingent or unmatured or denominated in a currency different from that
      of the applicable Deposits.

              


      

      
        	
                (b)

              	
                The
      set-off may be made without prior notice to the Borrower or any other
      party, any such notice being waived by the Borrower (on its own behalf and
      on behalf of each Obligor) to the fullest extent permitted by
      law.  The Bank agrees promptly to notify the Borrower after any
      such set-off and application; provided, however, that
      the failure to give such notice shall not affect the validity of such
      set-off and application.

              


      

       

      
        	
                (c)

              	
                For
      the purposes of this paragraph, “Deposits” means any deposits (general or
      special, time or demand, provisional or final, individual or joint) and
      any instruments owned by the Borrower or any Obligor which come into the
      possession or custody or under the control of the
      Bank.  “Obligations” means all obligations, now or hereafter
      existing, of the Borrower to the Bank under this Agreement and under any
      other agreement or instrument executed in connection with this Agreement,
      and the obligations to the Bank of any
Obligor.

              


      

       

      
        	
                 
      

              	
                11.8

              	
                One
      Agreement.

              


      

       

      This
Agreement and any related security or other agreements required by this
Agreement, collectively:

       

      
        	
                (a)

              	
                represent
      the sum of the understandings and agreements between the Bank and the
      Borrower concerning this credit;

              


      

       

      
        	
                (b)

              	
                replace
      any prior oral or written agreements between the Bank and the Borrower
      concerning this credit; and

              


      

       

      
        	
                (c)

              	
                are
      intended by the Bank and the Borrower as the final, complete and exclusive
      statement of the terms agreed to by
them.

              


      

       

      In the
event of any conflict between this Agreement and any other agreements required
by this Agreement, this Agreement will prevail.  Any reference in any
related document to a “promissory note” or a “note” executed by the Borrower and
dated as of the date of this Agreement shall be deemed to refer to this
Agreement, as now in effect or as hereafter amended, renewed, or
restated.

       

      
        	
                 
      

              	
                11.9

              	
                Indemnification.

              


      

       

      The
Borrower will indemnify and hold the Bank harmless from any loss, liability,
damages, judgments, and costs of any kind relating to or arising directly or
indirectly out of (a) this Agreement or any document required hereunder, (b) any
credit extended or committed by the Bank to the Borrower hereunder, and (c) any
litigation or proceeding related to or arising out of this Agreement, any such
document, or any such credit.  This indemnity includes but is not
limited to attorneys' fees (including the allocated cost of in-house
counsel).  This indemnity extends to the Bank, its parent,
subsidiaries and all of their directors, officers, employees, agents,
successors, attorneys, and assigns.  This indemnity will survive
repayment of the Borrower's obligations to the Bank.  All sums due to
the Bank hereunder shall be obligations of the Borrower, due and payable
immediately without demand.

       

      
        
          
          

        

        
          21     
Loan Agreement

          
            

          

        

        
          
          

        

      

       

      
        	
                11.10

              	
                Notices.

              


      

       

      Unless
otherwise provided in this Agreement or in another agreement between the Bank
and the Borrower, all notices required under this Agreement shall be personally
delivered or sent by first class mail, postage prepaid, or by overnight courier,
to the addresses on the signature page of this Agreement, or sent by facsimile
to the fax numbers listed on the signature page, or to such other addresses as
the Bank and the Borrower may specify from time to time in
writing.  Notices and other communications shall be effective (i) if
mailed, upon the earlier of receipt or five (5) days after deposit in the U.S.
mail, first class, postage prepaid, (ii) if telecopied, when transmitted, or
(iii) if hand-delivered, by courier or otherwise (including telegram, lettergram
or mailgram), when delivered.

       

      
        	
                11.11

              	
                Headings.

              


      

       

      Article
and paragraph headings are for reference only and shall not affect the
interpretation or meaning of any provisions of this Agreement.

       

      
        	
                11.12

              	
                Counterparts.

              


      

       

      This
Agreement may be executed in as many counterparts as necessary or convenient,
and by the different parties on separate counterparts each of which, when so
executed, shall be deemed an original but all such counterparts shall constitute
but one and the same agreement.

       

      
        	
                11.13

              	
                Borrower Information;
      Reporting to Credit Bureaus.

              


      

       

      The
Borrower authorizes the Bank at any time to verify or check any information
given by the Borrower to the Bank, check the Borrower’s credit references,
verify employment, and obtain credit reports.  The Borrower agrees
that the Bank shall have the right at all times to disclose and report to credit
reporting agencies and credit rating agencies such information pertaining to the
Borrower and/or all guarantors as is consistent with the Bank's policies and
practices from time to time in effect.

       

      This
Agreement is executed as of the date stated at the top of the first
page.

      


      BANK
OF AMERICA,
N.A.,                                                                           KEY
TECHNOLGY, INC.

      a
national banking
association                                                                       an
Oregon corporation

      


      By:_____________________                                                                      By: 
/s/ David M. Camp

      


      Its:______________________                                                                    Its:
 President and Chief Executive Officer

      


      


      Address
where notices
to                                                                               
Address where notices to

      the Bank
are to be
sent:                                                                                   
the Borrower are to be sent:

      Bank of
America,
N.A.                                                                                     
150 Avery Street

      1075 Main
Street, 2nd
Floor                                                                              Walla
Walla, Washington 99362

      Waltham,
MA 02451

       

      Federal
law requires Bank of America, N.A. (the “Bank”) to provide the
following notice. The notice is not part of the foregoing agreement or
instrument and may not be altered.  Please read the notice
carefully.

      


      USA
PATRIOT ACT NOTICE

      Federal
law requires all financial institutions to obtain, verify and record information
that identifies each person who opens an account or obtains a
loan.  The Bank will ask for the Borrower’s legal name, address, tax
ID number or social security number and other identifying
information.  The Bank may also ask for additional information or
documentation or take other actions reasonably necessary to verify the identity
of the Borrower, guarantors or other related persons.

       

      22     Loan Agreement