exv10w2



 





Exhibit 10.2




AMENDED AND RESTATED CREDIT AGREEMENT




     THIS AMENDED AND RESTATED CREDIT AGREEMENT, dated as of June 2, 2004, is
by and between Compex Technologies, Inc., a Minnesota corporation f/k/a
Rehabilicare, Inc. (the “Borrower”), and U. S. Bank National Association, a
national banking association (the “Bank”).



RECITALS




     A.      The Borrower and the Bank are parties to a Credit Agreement dated as of
July 14, 1999, as amended by an Amendment No. 1 to Credit Agreement dated as of
March 31, 2001, an Amendment No. 2 to Credit Agreement dated as of June 30,
2002 and an Amendment No. 3 to Credit Agreement dated as of June 30, 2003 (as
so amended, the “Original Credit Agreement”).



     B.      The Borrower and the Bank desire to amend and restate the Original
Credit Agreement pursuant to this Agreement.



     NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration the receipt and adequacy of which is hereby
acknowledged, the parties hereto hereby agree to amend and restate the Original
Credit Agreement in its entirety as follows:



ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS




     Section 1.1 Defined Terms. In addition to terms defined elsewhere
in this Agreement, the following terms shall have the following respective
meanings (and such meanings shall be equally applicable to both the singular
and plural form of the terms defined, as the context may require):



     “Acquisition Indebtedness”: The balance sheet amount of any
Indebtedness incurred by the Borrower or any of its Subsidiary in connection
with any Permitted Acquisition transaction including obligations or
Indebtedness that do not constitute interest-bearing Indebtedness such as, but
not limited to, any obligation or Indebtedness arising from a covenant- not-to
-compete, consulting agreement, employment agreement or other consideration
payable to the seller of any business or any of its officers, shareholders,
directors or affiliates.



     “Adjusted EBITDA”: For any period, the sum of: (a) the Adjusted
Net Income for such period; plus (b) the sum of the following amounts
deducted in determining the Net Income included in such Adjusted Net Income
(but without duplication for any item): (i) Interest Expense; (ii)
depreciation and amortization; and (iii) income taxes.



     “Adjusted Eurodollar Rate”: The LIBOR Rate.



     “Adjusted Net Income”: For any period, the Borrower’s Net Income
for such period but excluding therefrom non-operating gains and losses
(including extraordinary gains and losses, gains and losses from discontinuance
of operations and gains and losses arising from the sale of assets other than
Inventory) during such period.



     “Adverse Event”: The occurrence of any event that would have a
material adverse effect on the business, operations, property, assets or
condition (financial or otherwise) of the Borrower and its Subsidiaries (taken
as a whole on a consolidated basis) or on the ability of any Loan Party to
perform its obligations under the Loan Documents to which such Loan Party is a
party.



1









 





     “Agreement”: This Credit Agreement, as it may be amended,
modified, supplemented, restated or replaced from time to time.



     “Applicable Margin”: At any date of determination: (a) prior to
April 1, 2004, as determined in accordance with the Original Credit Agreement
as in effect on such date of determination; or (b) on or after April 1, 2004,
the percentage indicated below in accordance with the Cash Flow Leverage Ratio
at such date:



	 	 	 	 	 
	When the Cash Flow	 	 	 	For Revolving Credit
	Leverage Ratio	 	The	 	Loans
	Is
	 	Applicable Margin
	 	Is

	Greater than 2.0 to 1.0

	 	Prime Rate Loans
	 	0.00% per annum
	

	 	LIBOR Rate Loans
	 	2.25% per annum
	Greater than 1.5 to 1.0 but
	 	 	 	 
	less than or equal to 2.0 to

	 	Prime Rate Loans
	 	0.00% per annum
	1.0

	 	LIBOR Rate Loans
	 	2.00% per annum
	Less than or equal to 1.5 to 1.0

	 	Prime Rate Loans
	 	0.00% per annum
	

	 	LIBOR Rate Loans
	 	1.75% per annum







The Applicable Margin on the Effective Date is 0.0% per annum with respect to
Prime Rate Loans and 1.75 % per annum with respect to LIBOR Rate Loans and the
Applicable Margin shall continue at those percentages until changed in
accordance with the terms of this definition. The Cash Flow Leverage Ratio and
the Applicable Margin will be determined at each Quarterly Measurement Date,
commencing with Quarterly Measurement Date occurring on March 31, 2004, as
calculated from the financial statements and Compliance Certificate delivered
by the Borrower pursuant to Sections 8.1(b) and 8.1(c). Any
increase or decrease in the Applicable Margin shall apply to all then existing
or thereafter arising Loan Units and shall become effective as of the first day
of the third month of each fiscal quarter of the Borrower, commencing June 1,
2004, and shall continue to be effective until subsequently changed in
accordance with this definition; provided, however, if the
financial statements required by Section 8.1(b) and Compliance
Certificate required by Section 8.1(c), are not delivered in the time
periods provided therein, the Cash Flow Leverage Ratio for any Quarterly
Measurement Date will be deemed to be greater than 2.0 to 1.0.



     “Bank”: As defined in the preamble hereto.



     “Borrower”: As defined in the preamble hereto.



     “Business Day”: Any day (other than a Saturday, Sunday or legal
holiday in the State of Minnesota) on which national banks are permitted to be
open in Minneapolis, Minnesota.



     “Capital Expenditure”: Any amount debited to the fixed asset
account on the Borrower’s consolidated balance sheet in accordance with GAAP in
respect of the acquisition (including, without limitation, acquisition by entry
into a Capitalized Lease), construction, improvement, replacement or betterment
of land, buildings, machinery, equipment or of any other fixed assets or
capitalized leaseholds.



     “Capitalized Lease”: Any lease which, in accordance with GAAP, is
capitalized on the books of the lessee.



     “Cash Flow Leverage Ratio”: At any Quarterly Measurement Date
occurring on or after March 31, 2004, the ratio of: (a) the Total Debt at such
date; to (b) Pro Forma Adjusted EBITDA for the Measurement Period ending at
such date.



2









 





     “Change of Control”: The occurrence after the date of this
Agreement of any single event (or related series of events) where a majority of
the members of the Borrower’s board of directors as of the date of such single
event (or the date of the first of a related series of events) cease to be
members of the Borrower’s board of directors.



     “Code”: The Internal Revenue Code of 1986, as amended, or any
successor statute , together with regulations thereunder.



     “Collateral”: Any property in which the Bank has been granted a
Lien pursuant to any Loan Document.



     “Commitment”: The agreement of the Bank to make the Loans and of
the Bank to issue the Letters of Credit.



     “Compex”: Compex SA, a Swiss corporation.



     “Compliance Certificate”: As defined in Section 8.1(c).



     “Contingent Obligations:” With respect to any Person at the time
of any determination, without duplication, any obligation, contingent or
otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness of any other Person (the “primary obligor”) in
any manner, whether directly or otherwise; (a) to purchase or pay (or advance
or supply funds for the purchase or payment of) such Indebtedness or to
purchase (or to advance or supply funds for the purchase of) any direct or
indirect security therefor, (b) to purchase property, securities or services
for the purpose of assuring the owner of such Indebtedness of the payment of
such Indebtedness, (c) to maintain working capital, equity capital or other
financial statement condition of the primary obligor so as to enable the
primary obligor to pay such Indebtedness or otherwise to protect the owner
thereof against loss in respect thereof, or (d) entered into for the purpose of
assuring in any manner the owner of such Indebtedness of the payment of such
Indebtedness or to protect the owner against loss in respect thereof; provided,
that the term “Contingent Obligation” shall not include endorsements for
collection or deposit, in each case in the ordinary course of business.



     “Default”: Any event which, with the giving of notice to the
Borrower or lapse of time, or both, would constitute an Event of Default.



     “Default Rate”: The rate applicable to Prime Rate Loans determined
in accordance with Section 3.1(b).



     “Domestic Adjusted EBITDA”: For any Measurement Period, the
Adjusted EBITDA for such Measurement Period adjusted to exclude therefrom any
income or expense item attributable to any Foreign Subsidiary.



     “Domestic Cash Flow Leverage Ratio”: At any Quarterly Measurement
Date occurring on or after March 31, 2004, the ratio of: (a) the difference
between: (i) Total Debt; minus (ii) the Capitalized Leases included
therein that constitute only the Indebtedness of the Foreign Subsidiaries; to
(b) the Domestic Pro Forma Adjusted EBITDA for the Measurement Period ending at
such Quarterly Measurement Date.



     “Domestic Fixed Charge Coverage Ratio”: At any Quarterly
Measurement Date occurring on or after March 31, 2004, the ratio of: (a) the
result of: (i) the Borrower’s Domestic Adjusted EBITDA for the Measurement
Period ending at such date; plus (ii) the Operating Lease Payments made
by the Borrower and its Domestic Subsidiaries, but not by any Foreign
Subsidiary, during such Measurement Period and deducted in determining the Net
Income used in calculating such Domestic Adjusted EBITDA; minus (iii)
the income taxes paid in cash by the Borrower and its Domestic Subsidiaries,
but not by any Foreign Subsidiary, during such Measurement Period; minus
(iv) the Capital Expenditures made by the Borrower or its Domestic
Subsidiaries, but
not by any Foreign Subsidiary, during such Measurement Period; minus
(v) the Permitted Distributions paid in cash by the Borrower, but not by any
Foreign Subsidiary, pursuant to Section 9.15 during such Measurement
Period; to (b) the sum of: (i) the Interest Expense of the Borrower and its
Domestic Subsidiaries, but not any Foreign Subsidiary, for such Measurement
Period; plus (ii)the Mandatory Principal Payments scheduled to have been
paid by the Borrower and its Domestic Subsidiaries, but not any Foreign
Subsidiary, during such Measurement Period; plus (iii) the Operating
Lease Payments scheduled



3









 






to have been paid by the Borrower or its Domestic
Subsidiaries, but not by any Foreign Subsidiary, during such Measurement
Period.



     “Domestic Pro Forma Adjusted EBITDA”: For any Measurement Period,
the Pro Forma Adjusted EBITDA for such Measurement Period adjusted to exclude
therefrom any income, pro forma income, expense or pro forma expense item
attributable to any Foreign Subsidiary.



     “Domestic Subsidiary”: Any Subsidiary of the Borrower which is
not a “controlled foreign corporation” as defined in Code Section 957(a).



     “EBITDA”: For any period, the sum of: (a) the Net Income for
such period; plus (b) the sum of the following amounts deducted in
determining such Net Income: (i) Interest Expense; (ii) depreciation and
amortization; and (iii) income taxes.



     “Effective Date”: The date of this Agreement.



     “ERISA”: The Employee Retirement Income Security Act of 1974, as
amended, or any successor statute, together with regulations thereunder.



     “ERISA Affiliate”: Any trade or business (whether or not
incorporated) that is a member of a group of which the Borrower or any of its
Subsidiaries is a member and which is treated as a single employer under
Section 414 of the Code.



     “Eurodollar Business Day”: A New York Banking Day.



     “Eurodollar Rate Loan Unit”: Each portion of any Revolving Loan
designated as a LIBOR Rate Loan.



     “Event of Default”: Any event described in Section 10.1
which has not been cured to the satisfaction of, or waived by, the Bank in
accordance with Section 11.1.



     “Federal Reserve Board”: The Board of Governors of the Federal
Reserve System or any successor thereto.



     “Fixed Charge Coverage Ratio”: At any Quarterly Measurement Date
occurring on or after March 31, 2004, the ratio of: (a) the result of: (i)
the Borrower’s Adjusted EBITDA for the Measurement Period ending at such date;
plus (ii) the Operating Lease Payments made by the Borrower during such
Measurement Period and deducted in determining the Net Income used in
calculating such Adjusted EBITDA; minus (iii) the income taxes paid in
cash by the Borrower and its Subsidiaries during such Measurement Period;
minus (iv) the Capital Expenditures made by the Borrower or its
Subsidiaries during such Measurement Period; minus (v) the sum of the
following Permitted Distributions paid in cash by the Borrower or its
Subsidiaries pursuant to Section 9.15 during such Measurement Period:
(A) the Permitted Distributions paid in cash by the Borrower; plus (B)
the portion of any Permitted Distribution paid in cash by any of the Borrower’s
Subsidiaries to the holders of minority-interests in such Subsidiary; to (b)
the sum of: (i) the Interest Expense for such Measurement Period; plus
(ii) the Mandatory Principal Payments for such Measurement Period; plus
(iii) the Operating Lease Payments scheduled to have been paid during such
Measurement Period.



     “Foreign Subsidiary”: Any Subsidiary of the Borrower which is a
“controlled foreign corporation” as defined in Code Section 957(a).



     “GAAP”: Generally accepted accounting principles as in effect from
time to time including, without limitation, applicable statements, bulletins
and interpretations of the Financial Accounting Standards Board and applicable
bulletins, opinions and interpretations issued by the American Institute of
Certified Public Accountants or its committees.



     “Indebtedness”: Without duplication, all obligations, contingent
or otherwise, which in accordance with GAAP should be classified upon the
obligor’s balance sheet as liabilities, but in any event including the
following



4









 






(whether or not they should be classified as liabilities upon such
balance sheet): (a) obligations secured by any mortgage, pledge, security
interest, lien, charge or other encumbrance existing on property owned or
acquired subject thereto, whether or not the obligation secured thereby shall
have been assumed and whether or not the obligation secured is the obligation
of the owner or another party; (b) any obligation on account of deposits or
advances; (c) any obligation for the deferred purchase price of any property or
services, except for any Trade Account Payable provided that any Trade Account
Payable which accrues interest or any portion of which is allocable to
interest in accordance with GAAP shall be deemed to constitute Indebtedness;
(d) any obligation as lessee under any Capitalized Lease; (e) all guaranties,
endorsements and other contingent obligations in respect to Indebtedness of
others; (f) undertakings or agreements to reimburse or indemnify issuers of
letters of credit; and (g) all Rate Protection Obligations. For all purposes
of this Agreement, the Indebtedness of any Person shall include the
Indebtedness of any partnership or joint venture in which such Person is a
general partner or a joint venturer unless such Indebtedness is non-recourse to
such Person.



     “Interest Expense”: For any period, the aggregate interest expense
(including capitalized interest) of the Borrower for such period including,
without limitation, the interest portion of any Capitalized Lease;
provided, however, that the foregoing shall be adjusted to
reflect only the net effect of any interest rate swap, interest hedging
transaction, or other similar arrangement entered into by the Borrower in order
to reduce or eliminate variations in its interest expenses.



     “Interest Period”: For any LIBOR Rate Loan, its Loan Period.



     “Inventory”: Any goods held for sale or lease by the Borrower or
any of its Subsidiaries.



     “Investment”: The acquisition, purchase, making or holding of any
stock or other security, any loan, advance, contribution to capital, extension
of credit (except for trade and customer accounts receivable for Inventory sold
or services rendered in the ordinary course of business and payable in
accordance with customary trade terms), any acquisitions of real or personal
property (other than real and personal property acquired in the ordinary course
of business) and any purchase or commitment or option to purchase stock or
other debt or equity securities of, or any interest in, another Person or any
integral part of any business or the assets comprising such business or part
thereof.



     “Letter(s) of Credit”: As provided in Section 2.6(a).



     “Letter of Credit Application”: As provided in Section
2.6(c).



     “Letter of Credit Commission”: As provided in Section
2.6(e)(i).



     “Letter of Credit Commitment”: The maximum amount of Letter of
Credit Obligations which may from time to time be outstanding hereunder, being
initially $2,500,000.00 and, as the context may require, the agreement of the
Bank to issue the Letters of Credit for the account of the Borrower, subject to
the terms and conditions of this Agreement.



     “Letter of Credit Commitment Termination Date”: The Revolving
Credit Termination Date.



     “Letter of Credit Obligations”: At any date, the sum of: (a) the
aggregate amount available to be drawn on the Letters of Credit on such date;
plus (b) the aggregate amount owed by the Borrower to the Bank on such
date as a result of draws on the Letters of Credit for which the Borrower has
not reimbursed the Bank.



     “Liabilities”: At any date of determination, the aggregate amount
of liabilities appearing on the Borrower’s balance sheet at such date prepared
in accordance with GAAP.



     “LIBOR Rate”: As provided in Section 3.1(a).



     “LIBOR Rate Loan”: As provided in Section 3.1(a).



5









 





     “Lien”: Any security interest, mortgage, pledge, lien,
hypothecation, judgment lien or similar legal process, charge, encumbrance,
title retention agreement or analogous instrument or device (including, without
limitation, the interest of the lessors under Capitalized Leases and the
interest of a vendor under any conditional sale or other title retention
agreement).



     “Loan Documents”: This Agreement, the Note, the Security
Agreement, the Pledge Agreement, the Letter of Credit Applications, the
Subsidiary Guaranties, the Subsidiary Security Agreements, the Subsidiary
Pledge Agreements and each other instrument, document, guaranty, security
agreement, mortgage, or other agreement executed and delivered by any Loan
Party pursuant to which such Party incurs any liability to the Bank with
respect to the Obligations, agrees to perform any covenant or agreement with
respect to the Obligations or grants any security interest to secure the
Obligations.



     “Loan Party”: The Borrower and the Subsidiary Guarantors.



     “Loan Period”: As provided in Section 3.1(a).



     “Loan Units”: A Prime Rate Loan and a LIBOR Rate Loan (each a
“Type” of Loan Unit).



     “Loans”: The Revolving Loans.



     “Mandatory Principal Payments”: For any period, the regularly
scheduled principal payments (including the portion of any payment on any
Indebtedness comprising part of Total Debt.



     “Maturity”: The earlier of: (a) the date on which the Loans
become due and payable under Section 10.2 upon the occurrence of an
Event of Default; or (b) (i) the Revolving Credit Termination Date for the
Revolving Loans.



     “Measurement Period”: At any Quarterly Measurement Date, the four
fiscal quarters ending on such date.



     “Net Income”: For any period, the Borrower’s after-tax net income
for such period determined in accordance with GAAP.



     “Net Proceeds”: With respect to any sale, transfer or other
disposition of any of the Borrower’s or any of its Subsidiaries’ assets (other
than sales of Inventory in the ordinary course of business) or from the
issuance of any equity interest in the Borrower or any of its Subsidiaries or
of any option, warrant or other right to acquire the same, the cash proceeds
received by the Borrower or any of its Subsidiaries from such transaction less
the sum of: (a) the reasonable costs associated with such transaction; (b) the
amount of any Indebtedness (other than the Obligations) which is required to be
paid in connection with such transaction; and (c) any cash proceeds used to
acquire replacement assets of substantially similar type, nature or function
within 90 days of the receipt of such cash proceeds.



     “Net Worth”: At any date, the total of all assets appearing on the
Borrower’s balance sheet at such date prepared in accordance with GAAP minus
all Liabilities.



     “New York Banking Day”: As provided in Section 3.1(a).



     “Note”: The Revolving Note.



     “Obligations”: All Loans, advances, debts, liabilities,
obligations, covenants and duties owing by any Loan Party to the Bank of any
kind or nature, present or future, which arise under this Agreement or any
other Loan Document or by operation of law, whether or not evidenced by any
note, guaranty or other instrument, whether or not for the payment of money,
whether arising by reason of an extension of credit, opening, guarantying or
confirming of a letter of credit, guaranty, indemnification or in any other
manner, whether joint, several, or joint and several, direct or indirect
(including those acquired by assignment or purchases), absolute or contingent,
due or to become due, and however acquired. The term includes, without
limitation, all principal, interest, fees, charges,



6









 






expenses, attorneys’ fees,
and any other sum chargeable to any Loan Party under this Agreement or any
other Loan Document.



     “Operating Lease Payments”: Rent and other payments made pursuant
to any lease of (or other agreement conveying the right to use) real and/or
personal property other than a Capitalized Lease (an “Operating Lease”)



     “Original Credit Agreement”: As provided in the Recitals hereto.



     “PBGC”: The Pension Benefit Guaranty Corporation, established
pursuant to Subtitle A of Title IV of ERISA, and any successor thereto or to
the functions thereof.



     “Permitted Acquisitions”: Acquisitions permitted by Section
9.9(j) or otherwise approved in writing by the Bank.



     “Permitted Distributions”: The distributions and payments
described in Section 9.15(a) or (b).



     “Permitted Liens”: Liens permitted by the provisions of Section
9.11.



     “Person”: Any natural person, corporation, partnership, joint
venture, firm, association, trust, unincorporated organization, government or
governmental agency or political subdivision, or any other entity, whether
acting in an individual, fiduciary or other capacity.



     “Plan”: An employee benefit plan or other plan, maintained for
employees of the Borrower or of any ERISA Affiliate, and subject to Title IV of
ERISA or Section 412 of the Code.



     “Pledge Agreement: The Pledge Agreement dated as of July 22 1999,
made by the Borrower in favor of the Bank, as amended by an Addendum I to
Stock Pledge Agreement dated September 10, 1999 and an Addendum II to Stock
Pledge Agreement dated as of even date herewith and pursuant to which the
Borrower has pledged 65% of the shares of Compex to the Bank, as originally
executed and as it may be amended, modified, supplemented, restated or replaced
from time to time.



     “Prime Rate”: As provided in Section 3.1(a). The Bank may
lend to its customers at rates that are at, above or below the Prime Rate. For
purposes of determining any interest rate which is based on the Prime Rate,
such interest rate shall change on the effective date of any change in the
Prime Rate.



     “Prime Rate Loan”: As provided in Section 3.1(a).



     “Pro Forma Adjusted EBITDA”: For any Measurement Period occurring
on or after March 31, 2004, the sum of: (a) the Adjusted EBITDA for such
Measurement Period; plus (b) a pro forma amount attributable to all
Permitted Acquisitions closed by the Borrower or any of its Subsidiaries during
such Measurement Period where such pro forma amount is equal to the Adjusted
EBITDA generated by the businesses acquired in such Permitted Acquisitions
during such Measurement Period prior to the date on which such Permitted
Acquisition was
consummated; provided, however, that: (x) such additional pro
forma amount for any Permitted Acquisition shall not exceed the amount approved
by the Bank, in its reasonable business judgment; and (y) the amount of Pro
Forma Adjusted EBITDA contributed by Compex and its Subsidiaries shall be
limited to 33.33% of the total Pro Forma Adjusted EBITDA.



     “Pro Forma Cash Flow Leverage Ratio”: At any Quarterly
Measurement Date occurring on or after March 31, 2004, for purposes of
calculating whether an acquisition is permitted by Section 9.9(j), the
ratio of: (a) the Total Debt at such date adjusted to include any Indebtedness
to be incurred in connection with acquisition; to (b) the sum of: (i) the Pro
Forma Adjusted EBITDA for the Measurement Period ending at such Quarterly
Measurement Date; plus (ii) an additional pro forma amount attributable
to the proposed acquisition equal to the Adjusted EBITDA generated by the
business to be acquired in such acquisition during such Measurement Period as
if such proposed acquisition had been consummated on the first day of such
Measurement Period.



7









 





     “Purchase Money Indebtedness”: Any Indebtedness incurred for the
purchase of personal property where the repayment thereof is secured solely by
an interest in the personal property so purchased.



     “Quarterly Measurement Date”: The last day of each quarter of the
Borrower’s fiscal year, commencing with the fiscal quarter ending March 31,
2004.



     “Quarterly Payment Date”: The last day of March, June, September,
and December of each year.



     “Rate Protection Agreement”: Any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement, interest rate
futures contract, interest rate options contract or similar agreement or
arrangement between the Borrower and the counterparty thereto (the “Rate
Protection Provider”) designed to protect the Borrower against fluctuations in
interest.



     “Rate Protection Obligations”: The liabilities, indebtedness, and
obligations of the Borrower, if any, to the Rate Protection Provider under the
Rate Protection Agreement.



     “Reference Rate”: The Prime Rate.



     “Reference Rate Loan Unit”: Each portion of any Revolving Loan
designated as a Prime Rate Loan.



     “Regulatory Change”: As to the Bank, any change (including any
scheduled change) applicable to a class of banks which includes the Bank in
any:




     (a) federal or state law or foreign law; or




     (b) regulation, interpretation, directive or request (whether or not
having the force of law) of any court or governmental authority charged
with the interpretation or administration of any law referred to in
clause (a) of this definition or of any fiscal, monetary or other
authority having jurisdiction over such class of banks;



or the adoption after the date hereof of any new or final law, regulation,
interpretation, directive or request applicable to a class of banks which
includes the Bank.



     “Related Party”: Any Person (other than a Subsidiary, the Bank or
any other subsidiary or affiliate of U.S. Bancorp): (a) which directly or
indirectly, through one or more intermediaries, controls, or is controlled by,
or is under common control with, the Borrower; (b) which beneficially owns or
holds 10% or more of the equity interest of the Borrower; or (c) 10% or more of
the equity interest of which is beneficially owned or held by the Borrower or a
Subsidiary. The term “control” means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
a Person, whether through the ownership of voting securities or by contract.



     “Reportable Event”: A reportable event, as defined in Section 4043
of ERISA and the regulations issued under such section, with respect to a Plan,
excluding, however, such events as to which the PBGC, by regulation, has waived
the requirement of Section 4043(a) of ERISA that it be notified within 30 days
of the occurrence of such event, provided that a failure to meet the minimum
funding standard of Section 412 of the Code and Section 302 of ERISA shall be a
reportable event regardless of the issuance of any such waivers in accordance
with Section 412(d) of the Code.



     “Revolving Credit Commitment”: $15,000,000.00, as the same may be
reduced from time to time pursuant to Section 4.3 and, as the context
may require, the agreement of the Bank to make Revolving Loans to the Borrower
up to the Revolving Credit Commitment subject to the terms and conditions of
this Agreement.



     “Revolving Credit Commitment Fee”: As provided in Section
3.2.



8









 





     “Revolving Credit Termination Date”: The date which is the earlier
of: (a) March 31, 2007; or (b) the date upon which the obligation of the Bank
to make Revolving Loans is terminated pursuant to Section 4.3 or
Section 10.2.



     “Revolving Loan(s)”: The Loans described in Section 2.1.



     “Revolving Note”: The promissory note of the Borrower described in
Section 2.5, substantially in the form of Exhibit A, as such
promissory note may be amended, modified or supplemented from time to time, and
such term shall include any substitutions for, or renewals of, such promissory
note.



     “SEC”: The Securities and Exchange Commission or any successor
thereto.



     “Security Agreement”: The Amended and Restated Security Agreement
dated as of
March 31, 2001 made by the Borrower in favor of the Bank, as originally
executed and as it may be amended, modified, supplemented, restated or replaced
from time to time.



     “Solvent”: With respect to any Person on any date of
determination, that on such date:




     (a) the fair value of such Person’s tangible and intangible assets
as a going concern is in excess of the total amount of such Person’s
liabilities including, without limitation, Contingent Obligations; and




     (b) such Person is then able to pay its debts as they mature; and




     (c) such Person has capital sufficient to carry on
its business.



     “Subsidiary”: Any Person of which or in which the Borrower and its
other Subsidiaries own directly or indirectly 50% or more of: (a) the combined
voting power of all classes of stock having general voting power under ordinary
circumstances to elect a majority of the board of directors of such Person, if
it is a corporation, (b) the capital interest or profit interest of such
Person, if it is a partnership, joint venture or similar entity, or (c) the
beneficial interest of such Person, if it is a trust, association or other
unincorporated organization.



     “Subsidiary Documents”: Each Subsidiary Guaranty, Subsidiary
Security Agreement, Subsidiary Pledge Agreement, Subsidiary UCC Financing
Statements, Subsidiary Secretary’s Certificate and such other approvals,
opinions or documents as the Bank may request.



     “Subsidiary Guarantor”: Each now existing or hereafter acquired
Subsidiary of the Borrower which may execute a Subsidiary Guaranty, Subsidiary
Security Agreement and/or Subsidiary Pledge Agreement after the date of this
Agreement.



     “Subsidiary Guaranty”: Each Guaranty hereafter made by a
Subsidiary Guarantor in favor of the Bank; in each case, as originally executed
and as it may be amended, modified, supplemented, restated or replaced from
time to time.



     “Subsidiary Pledge Agreement”: Each pledge agreement hereafter
made by a Subsidiary Guarantor in favor of the Bank; in each case, as
originally executed and as it may be amended, modified, supplemented, restated
or replaced from time to time.



     “Subsidiary Security Agreement”: Each Security Agreement
hereafter made by a Subsidiary Guarantor in favor of the Bank; in each case, as
originally executed and as it may be amended, modified, supplemented, restated
or replaced from time to time.



     “Total Debt”: At any date, the outstanding principal balance of
the Loans, the Borrower’s and its Subsidiaries’ Capitalized Leases, other
interest-bearing Indebtedness (other than Trade Accounts Payable not
constituting Indebtedness) and the Acquisition Indebtedness.



9









 





     “Total Usage”: At any date, the sum of: (a) the aggregate
outstanding principal balance of the Revolving Loans; plus (b) the
Letter of Credit Obligations.



     “Trade Accounts Payable”: The trade accounts payable of the
described Person with a maturity of not greater than 90 days after their
respective original due dates and that are incurred in the ordinary course of
such Person’s business and which do not remain unpaid for more than such period
of time.



     Section 1.2 Accounting Terms and Calculations. Except as may be
expressly provided to the contrary herein, all accounting terms used herein
shall be interpreted and all accounting determinations hereunder (including,
without limitation, determination of compliance with financial ratios and
restrictions in Articles VIII and IX hereof) shall be made in
accordance with GAAP consistently applied on a consolidated basis for the
Borrower and its consolidated Subsidiaries as used in the preparations of the
Borrower’s audited financial statements described in Section 7.5(a).



     Section 1.3 Computation of Time Periods. In this Agreement, in
the computation of a period of time from a specified date to a later specified
date, unless otherwise stated, the word “from” means “from and including” and
the words “to” or “until” each means “to but excluding.”



     Section 1.4 Other Definitional Provisions. The words “hereof,”
“herein,” and “hereunder” and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement. References to Sections, Exhibits, Schedules and
like references are to this Agreement unless otherwise expressly provided.



ARTICLE II

TERMS OF LENDING




     Section 2.1 The Loans. Subject to the terms and conditions hereof
and in reliance upon the warranties of the Borrower herein, the Bank agrees to
make loans (each a “Revolving Loan” and collectively the “Revolving Loans”) to
the Borrower from time to time from the date hereof until the Revolving Credit
Termination Date up to an aggregate undrawn amount of the Revolving Credit
Commitment, during which period the Borrower may repay and reborrow in
accordance with the provisions hereof, provided that the Bank shall not
be obligated to make any Revolving Loan if, after giving effect to such
Revolving Loan, the Total Usage would exceed the Revolving Credit Commitment.
On the Effective Date, the Borrower and the Bank acknowledge and agree that the
outstanding principal amount of the “Revolving Loans” under the Original Credit
Agreement is $1,550,000.00 comprised of “Reference Rate Loan Units” and that
such “Revolving Loans” constitute the initial balance of the Revolving Loans
under this Agreement and are accruing interest as a Prime Rate Loan.



     Section 2.2 Loan Units for Loans. Except as otherwise provided
herein, the Revolving Loans shall be comprised of LIBOR Rate Loans and Prime
Rate Loans as shall be selected by the Borrower in accordance with Section
3.1(a). Any combination of Types of Loan Units for the Loans may be
outstanding at the same time; provided, however, that the Loans
may not consist of more than four (4) different LIBOR Rate Loans.



     Section 2.3 Borrowing Procedures. Any request by the Borrower for
Revolving Loans shall be in writing, or by telephone promptly confirmed in
writing if so requested by the Bank, and must be given so as to be received by
the Bank not later than 11:00 a.m., Minneapolis time, on: (a) the date of the
requested Revolving Loans, if such Revolving Loans will not include LIBOR Rate
Loans; or (b) as provided in Section 3.1(a), if such Revolving Loans
will include LIBOR Rate Loans. Each request for Revolving Loans shall specify
the borrowing date (which shall be a Business Day and, in the case of any
request for LIBOR Rate Loans, a New York Banking Day) and the amount of such
Revolving Loans. Each request for Revolving Loans shall be in a minimum amount
of $50,000.00. Each request for Revolving Loans shall be deemed a
representation and warranty by the Borrower that all conditions precedent
specified in Section 6.2 to such Revolving Loans are satisfied on the
date of such request and on the date the requested Revolving Loans are made.
Unless the Bank determines that any applicable condition specified in
Article VI has not been satisfied (in which case the Bank will promptly
notify the Borrower in writing of such determination), the Bank will make the
amount of the requested Revolving Loan available to the Borrower at the



10









 






Bank’s
principal office in Minneapolis, Minnesota in immediately available funds not
later than 2:00 p.m., Minneapolis time, on the date requested. Each written
request or confirmation shall be in the form of Exhibit Battached
hereto.



     Section 2.4 Continuation or Conversion of Loan Units for Loans.
The Borrower may elect to: (i) continue any outstanding LIBOR Rate Loan from
one Loan Period into a subsequent Loan Period to begin on the last day of the
earlier Loan Period; or (ii) convert any outstanding Loan Unit into another
Type or Types of Loan Unit (on the last day of an Loan Period only, in the
instance of a LIBOR Rate Loan), by giving the Bank notice in writing, or by
telephone promptly confirmed in writing if so requested by the Bank, given so
as to be received by the Bank not later than:




     (a) 11:00 a.m., Minneapolis time, on the date of the requested
continuation or conversion, if all or part of the continuing or
converted Loan Unit shall be a Prime Rate Loan ; or




     (b) as provided in Section 3.1(a), if all or part of the
continuing or converted Loan Unit shall be a LIBOR Rate Loan.



     Each notice of continuation or conversion of a Loan Unit shall specify:
(i) the effective date of the continuation or conversion (which shall be a
Business Day and, if the resulting Loan Unit is a LIBOR Rate Loan, a Eurodollar
Business Day); (ii) the amount and the Type or Types of Loan Units following
such continuation or conversion; and (iii) for continuation as, or conversion
into, LIBOR Rate Loans, the Loan Periods for such Loan Units. No Loan Unit
shall be continued as, or converted into, a LIBOR Rate Loan if the shortest
Loan Period for such Loan Unit may not expire prior to the Maturity of the
relevant Loan or if a Default or Event of Default shall exist. Each written
notice of continuation or conversion shall be in the form of Exhibit C
attached hereto.



     Section 2.5 The Note and Maturity. The Revolving Loans made by
the Bank shall be evidenced by a Revolving Note in the initial amount of the
Revolving Credit Commitment. The Revolving Loans and the Revolving Note shall
mature and be payable at Maturity of the Revolving Loans. The Bank shall enter
in its records the amount of each of its Revolving Loans, the rate of interest
borne on such Revolving Loans by each Loan Unit, and the payments of the
Revolving Loans received by the Bank, and such records shall be conclusive
evidence of the subject matter thereof, absent manifest error.



     Section 2.6 Letters of Credit.




     3. (a) Letter of Credit Commitment. Subject to the terms and
conditions hereinafter set forth, the Bank agrees to issue stand-by
letters of credit (the
“Letters of Credit”) from time to time on terms reasonably
acceptable to the Bank on any Business Day during the period from the
date hereof and ending on the Letter of Credit Termination Date;
provided, however, that the Bank shall not be required to
issue any Letter of Credit if, after giving effect to such issuance: (i)
the Letter of Credit Obligations would exceed the Letter of Credit
Commitment; or (ii) the Total Usage would exceed the Revolving Credit
Commitment.




     4. (b) Termination. The obligation of the Bank to issue any
Letter of Credit shall terminate on the Letter of Credit Commitment
Termination Date.




     5. (c) Manner of Issuance of Letters of Credit. Each Letter
of Credit shall be issued for the account of the Borrower within three
(3) Business Days after receipt of notice from the Borrower to the Bank
specifying the date of the requested issuance, the face amount of the
requested Letter of Credit, and the expiry date of the requested Letter
of Credit; provided, however, that such notice and the
required


11









 




accompanying documentation is received before 12:00 noon,
Minneapolis time; any notice received after 12:00 noon (Bank time) on any
Business Day shall be deemed to have been received on the immediately
following Business Day. In no event shall any Letter of Credit have an
expiry date later than: (i) the earlier of twelve (12) months after the
date of issue; or (ii) six (6) months following the Revolving Credit
Termination Date; provided, however, that the Bank, as a
condition to issuing any Letter of Credit which has an expiry date later
than the Revolving Credit Termination Date, may require that the Borrower
deposit cash in the amount of the resulting Letter of Credit Obligations
in an interest-bearing account maintained at the Bank for application to
the Borrower’s reimbursement obligations under Section 2.6(d) as
payments are made on such Letter of Credit, with the balance, if any, to
be applied to the other Obligations. Each request for a Letter of Credit
shall be accompanied by an appropriately completed and duly executed
application for a Letter of Credit in form acceptable to the Bank (a
“Letter of Credit Application”).




     6. (d) Reimbursement on Demand. The Borrower agrees to pay
to the Bank on demand at the Bank’s address shown on the signature page
hereof: (i) the amount of each draft or other request for payment drawn
under any Letter of Credit (whether drawn before, on or after its stated
expiry date), and (ii) interest on all amounts referred to in clause (i)
above from the date of such draw until payment in full at a fluctuating
rate per annum at all times equal to the Default Rate; provided,
however, that so long as the conditions precedent set forth in
Section 2.1 and Article VI are satisfied as of the date of
any draw under the Letter of Credit, the Bank will make Revolving Loans
to pay any draw under a Letter of Credit.




     7. (e) Letter of Credit Fees.




     (i) The Borrower agrees to pay to the Bank a commission (the
“Letter of Credit Commission”) upon the undrawn face amount of the
Letters of Credit outstanding from time to time. The Letter of
Credit Commission shall be computed at a rate equal to the
Applicable Margin for LIBOR Rate Loans (regardless of whether any
Revolving Loans are outstanding on such date) on the date of which
such Letter of Commission is payable under the immediately
following sentence. The Letter of Credit Commission with respect to
each Letter of Credit is
payable in arrears on each Quarterly Payment Date, commencing
on the first such day following the date of this Agreement.




     (ii) The Borrower agrees to pay to the Bank all reasonable and
customary charges, fees and expenses which the Bank may assess in
connection with the issuance, extension, amendment or payment of
any Letter of Credit in accordance with the schedule therefor then
in effect, and any and all reasonable out-of-pocket expenses which
the Bank may pay or incur in connection therewith.



     8. (f) Obligations Absolute. The Obligations of the Borrower
under this Section 2.6 shall be unconditional and irrevocable and
shall be paid strictly in accordance with the terms of this Agreement
under all circumstances, including, without limitation, the following
circumstances: (i) any lack of validity or enforceability of any Letter
of Credit or any other agreement or instrument relating thereto
(collectively, the “Related Documents”); (ii) any amendment or waiver of,
or any consent to departure



12









 






from, all or any of the Related Documents
agreed to by the Borrower; (iii) the existence of any claim, set-off,
defense or other right that the Borrower may have at any time against any
beneficiary or any transferee of any Letter of Credit (or any Persons for
whom any such beneficiary or any such transferee may be acting), the Bank
or any other Person, whether in connection with any Related Document, the
transactions contemplated therein, or any unrelated transaction, except
as set forth in clause (v) below; (iv) any draft, statement or any other
document presented under any Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect, except as set forth in
clause (v) below; (v) payment by the Bank under any Letter of Credit
against presentation of a draft or certificate which does not comply with
the terms of such Letter of Credit, except in the case of payment
resulting from the gross negligence or willful misconduct of the Bank;
(vi) the occurrence of any Default or Event of Default; or (vii) any
other circumstance or event whatsoever, whether or not similar to any of
the foregoing.



ARTICLE III

INTEREST AND FEES




     Section 3.1 Interest.




     (a) Interest Rate Options. Subject to the provisions
of Section 3.1(b), interest on each Loan hereunder shall
accrue at one of the following per annum rates selected by
Borrower: (i) upon notice to the Bank, the Applicable Margin plus
the prime rate (the “Prime Rate”) announced by Bank from time to
time, as and when such rate changes (a “Prime Rate Loan”); or (ii)
upon a minimum of two New York Banking Days prior notice, the
Applicable Margin plus the 1, 2 or 3 month LIBOR rate (the “LIBOR
Rate”) quoted by the Bank from Telerate Page 3750 or any successor
thereto (which shall be the LIBOR rate in effect two New York
Banking Days prior to commencement of the LIBOR Loan advance),
adjusted for any reserve requirement and any subsequent costs
arising from a change in government regulation (a “LIBOR Rate
Loan”). The term “New York Banking Day” means any day (other than
a Saturday or Sunday) on which commercial banks are open for
business in New York, New York. The term “Money Markets” refers to
one or more wholesale funding markets available to and selected by
the Bank, including negotiable certificates of deposit, commercial
paper, eurodollar deposits, bank notes, federal funds, interest
rate swaps or others.


     In
the event the Borrower does not timely select another
interest rate option at least two New York Banking Days before the
end of the Loan Period for a LIBOR Rate Loan, the Bank may at any
time after the end of the Loan Period convert the LIBOR Rate Loan
to a Prime Rate Loan, but until such conversion, the funds advanced
under the LIBOR Rate Loan shall continue to accrue interest at the
same rate as the interest rate in effect for such LIBOR Rate Loan
prior to the end of the Loan Period; subject to any change in the
Applicable Margin. The term “Loan Period” means the period
commencing on the advance date of the applicable LIBOR Rate Loan
and ending on the numerically corresponding day 1, 2, 3 or 6
months thereafter matching the interest rate term selected by the
Borrower; provided, however, (a) if any Loan Period
would otherwise end on a day which is not a New York Banking Day,
then the Loan Period shall end on the next succeeding New York
Banking Day unless the next succeeding New York Banking Day falls
in another calendar month, in which case the Loan Period shall end
on the immediately preceding New York Banking Day; or (b) if any
Loan Period begins on the last New York Banking Day of a calendar
month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of the Loan Period), then the
Loan Period shall end on the last New York Banking Day of the
calendar month at the end of such Loan Period.



13









 






     No LIBOR Rate Loan may extend beyond the maturity of the
relevant Loan. In any event, if the Loan Period for a LIBOR Rate
Loan Rate Loan should happen to extend beyond the maturity of a
Loan, such Loan must be prepaid at the time such Loan matures. The
Bank’s internal records of applicable interest rates shall be
determinative in the absence of manifest error. Each LIBOR Rate
Loan shall be in a minimum principal amount of $100,000.




     The aggregate number of LIBOR Rate Loans in effect at any one
time may not exceed four (4); as also provided in Section
2.2.




     If a LIBOR Rate Loan is prepaid prior to the end of the Loan
Period, as defined above, for such loan, whether voluntarily or
because prepayment is required due to such Loan maturing or due to
acceleration of such Loan upon default or otherwise, the Borrower
agrees to pay all of the Bank’s costs, expenses and Interest
Differential (as determined by the Bank) incurred as a result of
such prepayment. The term ‘Interest Differential’ shall mean that
sum equal to the greater of zero or the financial loss incurred by
the Bank resulting from prepayment, calculated as the difference
between the amount of interest Bank would have earned (from like
investments in the Money Markets as of the first day of the LIBOR
Rate Loan) had prepayment not occurred and the interest the Bank
will actually earn (from like investments in the Money Markets as
of the date of prepayment) as a result of the redeployment of funds
from the prepayment. Because of the short-term nature of this
facility, the Borrower agrees that the Interest Differential shall
not be discounted to its present value. Any prepayment of a LIBOR
Rate Loan shall be in an amount equal to the remaining entire
principal balance of such loan. If the Borrower requests a LIBOR
Rate Loan but such LIBOR Rate Loan is not made for any reason
(other than a reason attributable to a default by the Bank), then
for purposes of the first sentence of this paragraph, such
requested LIBOR Rate Loan shall be deemed to have been made and
prepaid on the requested date of such LIBOR Rate Loan.




     (b) Default Rate. Notwithstanding the provisions of
Section 3.1(a), at all times after the occurrence and during
the continuance of any Event of Default, the Borrower agrees to pay
interest on the outstanding principal amount of each Revolving Loan
from the date on which
the Bank notifies the Borrower of such Event of Default at a
rate per annum at all times equal to the sum of the rate otherwise
in effect on such Revolving Loan plus two percent (2.0%) per annum.




     (c) All Loans.




     (i) Until Maturity of a Loan, interest accrued on each Loan
Unit through the end of a month shall be payable on the last day of
such month, commencing on April 30, 2004. Interest shall also be
payable at the Maturity of a Loan and interest accrued after
Maturity shall be payable on demand.




     (ii) No provision of this Agreement or the Note shall
require the payment of interest in excess of the rate
permitted by applicable law.



     Section 3.2 Revolving Credit Commitment Fee. The Borrower shall
pay to the Bank a fee (the “Revolving Credit Commitment Fee”) in an amount determined by applying the rate set



14









 






forth in the table below (the “Fee Rate”)
to the average daily excess of the Revolving Credit Commitment over the Total
Usage:



	 	 	 
	 	 	The Fee Rate
	When the Cash Flow Leverage Ratio Is
	 	is:

	Greater than 1.50 to 1.0

	 	0.375% per annum
	Less than or equal to 1.50 to 1.0

	 	0.250% per annum.







     The Fee Rate on the Effective Date is 0.250% and shall continue at that
percentage until change in accordance with the terms of this Section.
The Cash Flow Leverage Ratio and the Fee Rate will be determined at the end of
each fiscal quarter, commencing with the fiscal quarter ending March 31, 2004,
as calculated from the financial statements and Compliance Certificate
delivered by the Borrower pursuant to Sections 8.1(b) and 8.1(c).
Any increase or decrease in the Fee Rate shall become effective as of the
first day of the third month of each fiscal quarter of the Borrower,
commencing June 1, 2004, and shall continue to be effective until subsequently
changed in accordance with this definition; provided, however, if
the financial statements required by Section 8.1(b) and Compliance
Certificate required by Section 8.1(c), are not delivered in the time
periods provided therein, the Cash Flow Leverage Ratio will be deemed to be
greater than 1.50 to 1.0. Such Revolving Credit Commitment Fees shall be
payable to the Bank in arrears on each Quarterly Payment Date, commencing on
the first such day following the date of this Agreement, and on the Revolving
Credit Termination Date.



     Section 3.3 Computation. Interest, the Revolving Credit
Commitment Fee and any other fee calculated on a per annum basis shall be
computed on the basis of actual days elapsed and a year of 360 days.



ARTICLE IV

PAYMENTS, PREPAYMENTS, REDUCTION OR

TERMINATION OF THE CREDIT AND SETOFF




     Section 4.1 Repayment. Principal of the Loans shall be due and
payable in accordance with the provisions of Section 2.5 and this
Article IV.



     Section 4.2 Voluntary and Mandatory Prepayments; Scheduled Installment
Payments.




     (a) Optional Prepayments. The Borrower, by giving written or
telephonic notice to the Bank by no later than 2:00 p.m. on the Business
Day of a prepayment, may prepay the Loans, in whole or in part, at any
time, without premium or penalty; provided, however, that:
(i) any prepayment of a LIBOR Rate Loan shall be subject to the
provisions of Section 3.1(a); and/or (ii) no partial prepayment of
an LIBOR Rate Loan shall be permitted. Any such prepayment must be
accompanied by accrued and unpaid interest on the amount prepaid.




     (b) Mandatory Prepayment of Revolving Loans.




     (i) If, at any time, the Total Usage exceeds the Revolving
Credit Commitment, then the Borrower shall immediately prepay the
Revolving Loans and cash collateralize the Letter of Credit
Obligations by the amount of such excess. Any prepayment required
by this subsection (i) shall be applied first to prepay the
Revolving Loans, and the remainder of such prepayment, if any, shall
be deposited in an interest-bearing account maintained at the Bank
for application to the Borrower’s reimbursement obligations under
Section 2.6(d) as payments are made on the Letters of Credit,
with the balance, if any, to be applied to the other Obligations.



15









 






     (ii) During each “365 Day Period” (as hereinafter described)
during the term of this Agreement, the Borrower shall cause the
Total Usage to be no more than $7,500,000.00 for a period of at
least 30 consecutive Business Days. The term “365 Day Period”
shall mean each rolling 365 day period during the term of this
Agreement with the first such period commencing on the Effective
Date.




     (c) Application of Prepayments. Any prepayment required by
Section 4.2 (b) shall be applied first to prepay the Revolving
Loans, and the remainder of such prepayment, if any, shall be deposited
in an interest-bearing account maintained at the Bank for application to
the Borrower’s reimbursement obligations under Section 2.6(d) as
payments are made on the Letters of Credit, with the balance, if any, to
be applied to the other Obligations. The Bank shall apply prepayments
first to Prime Rate Loans, then to LIBOR Rate Loans having an Loan Period
ending on such day of prepayment and then to other LIBOR Rate Loans.



     Section 4.3 Optional Reduction or Termination of Revolving Credit
Commitment. The Borrower may, at any time, upon no less than two (2)
Business Days’ prior written notice received by the Bank, permanently reduce
the Revolving Credit Commitment, with any such reduction in a minimum amount of
$1,000,000.00 or an integral multiple thereof; provided, however,
the Borrower may not reduce the Revolving Credit Commitment below the aggregate
outstanding principal amount of all Revolving Loans. The Borrower may, at any
time when no Revolving Loans are outstanding, upon not less than two (2)
Business Days’ prior written notice to the Bank, terminate the Revolving Credit
Commitment in its entirety. Upon termination of the Revolving Credit
Commitment pursuant to this Section, the Borrower shall pay to the Bank all
accrued and unpaid interest on the Revolving Loans, all unpaid Revolving Credit
Commitment Fees accrued to the date of such termination and all other unpaid
Obligations of the Borrower to the Bank hereunder with respect to the Revolving
Loans and the Revolving Credit Commitment.



     Section 4.4 Payments. Payments and prepayments of principal of,
and interest on, the Note and all fees, expenses and other Obligations under
the Loan Documents payable to the Bank shall be made without deduction,
set-off, or counterclaim in immediately available funds not later than 2:00
p.m., Minneapolis time, on the dates due at the main office of the Bank in
Minneapolis, Minnesota. Funds received on any day after such time shall be
deemed to have been received on the next Business Day. Subject to the
definition of the term “Loan Period”, whenever any payment to be made hereunder
or on the Note shall be stated to be due on a day which is not a Business Day,
such payment shall be made on the next succeeding Business Day and such
extension of time shall be included in the computation of any interest or fees.
The Borrower authorizes the Bank to charge any of the Borrower’s accounts
maintained at the Bank for the amount of any payment or prepayment on the Note
or other amount owing pursuant to any of the other Loan Documents.



ARTICLE V

ADDITIONAL PROVISIONS RELATING TO THE LOANS




     Section 5.1 Increased Costs. If, as a result of any Regulatory
Change:




     (a) any tax, duty or other charge with respect to any Loan, the Note
or the Commitment is imposed, modified or deemed applicable, or the basis
of taxation of payments to the Bank of interest or principal of the Loans
or of the Revolving Credit Commitment Fee (other than taxes imposed on
the overall net income of the Bank by the jurisdiction in which the Bank
has its principal office) is changed;




     (b) any reserve, special deposit, special assessment or similar
requirement against assets of, deposits with or for the account of, or
credit extended by, the Bank is imposed, modified or deemed applicable;




     (c) any increase in the amount of capital required or expected to be
maintained by the Bank or any Person controlling the Bank is imposed,
modified or deemed applicable;



16









 






     (d) any other condition affecting this Agreement or the Commitment
is imposed on the Bank or the relevant funding markets;



and the Bank determines that, by reason thereof, the cost to the Bank of making
or maintaining the Loans or the Commitment is increased, or the amount of any
sum receivable by the Bank hereunder or under the Note is reduced, then, the
Borrower shall pay to the Bank upon demand such additional amount or amounts as
will compensate the Bank (or the controlling Person in the instance of (c)
above) on an after-tax basis for such additional costs or reduction (provided
that the Bank has not been compensated for such additional cost or reduction in
the calculation of the Eurodollar Reserve Percentage). Determinations by the
Bank for purposes of this Section 5.1 of the additional amounts required
to compensate the Bank shall be conclusive in the absence of manifest error.
The Bank’s demand for payment of any amount pursuant to this Section 5.1
shall show the calculation of the amount demanded in reasonable detail. In
determining such amounts, the Bank may use any reasonable averaging,
attribution and allocation methods.



     Section 5.2 Deposits Unavailable or Interest Rate Unascertainable or
Inadequate; Impracticability. If the Bank determines (which determination
shall be conclusive and binding on the parties hereto) that:




     (a) deposits of the necessary amount for the relevant Loan Period
for any LIBOR Rate Loan are not available to the Bank in the relevant
market or that, by reason of circumstances affecting such market,
adequate and reasonable means do not exist for ascertaining the
Eurodollar Rate for such Loan Period;




     (b) the LIBOR Rate will not adequately and fairly reflect the cost
to the Bank of making or funding the LIBOR Rate Loans for its relevant
Loan Period; or




     (c) the making or funding of any LIBOR Rate Loan has become
impracticable as a result of any event occurring after the date of this
Agreement which, in the opinion of the Bank, materially and adversely
affects such Loan Unit or the Bank’s Commitment to make such Loan Unit or
the relevant market;



the Bank shall promptly give notice of such determination to the Borrower and
the Bank, and (A) all Loans made by the Bank shall accrue interest as a Prime
Rate Loan during the period on and after the date of the Bank’s notice through
the date on which the Bank determines that the circumstances giving rise to the
Bank’s determination under subsection (a), (b) or (c) no longer exist; (B) (1)
any notice of a new LIBOR Rate Loan previously given by the Borrower and not
yet borrowed or converted shall be deemed, as to the Bank, to be a notice to
make a Prime
Rate Loan and (2) the Borrower shall be obligated to either prepay in full any
outstanding LIBOR Rate Loans without premium or penalty other than any amount
required by Section 3.1(a) on the last day of the current Loan Period
with respect thereto or convert any such LIBOR Rate Loan to a Prime Rate Loan
or, in either case, on such earlier date as may be required by applicable law.
Any prepayment of any LIBOR Rate Loan prior to the end of its Loan Period shall
be accompanied by any payment required by Section 3.1(a).



     Section 5.3 Changes in Law Rendering LIBOR Rate Loans Unlawful.
If at any time due to the adoption of any law, rule, regulation, treaty or
directive, or any change therein, or in the interpretation or administration
thereof by any court, central bank, governmental authority, agency or
instrumentality, or comparable agency charged with the interpretation or
administration thereof, or for any other reason arising subsequent to the date
of this Agreement, it shall become unlawful or impossible for the Bank to make
or fund any LIBOR Rate Loan, the obligation of the Bank to provide such Loan
Unit shall, upon the happening of such event, forthwith be suspended for the
duration of such illegality or impossibility. If any such event shall make it
unlawful or impossible for the Bank to continue any LIBOR Rate Loan previously
made by it hereunder, the Bank shall, upon the happening of such event, notify
the Borrower and the Bank thereof in writing, and the Borrower shall, at the
time notified by the Bank, either convert each such unlawful Loan Unit to a
Prime Rate Loan Unit or repay such Loan Unit in full, together with accrued
interest thereon and any payment required pursuant to Section 3.1(a).



     Section 5.4 Discretion of the Bank as to Manner of Funding.
Notwithstanding any provision of this Agreement to the contrary, the Bank shall
be entitled to fund and maintain its funding of all or any part of the Loans



17









 





in
any manner it elects; it being understood, however, that for purposes of this
Agreement, all determinations hereunder shall be made as if the Bank had
actually funded and maintained each LIBOR Rate Loan during the Loan Period for
such Loan Unit through the purchase of deposits having a term corresponding to
such Loan Period and bearing an interest rate equal to the LIBOR Rate (whether
or not the Bank shall have granted any participation in such Loan Units).



     Section 5.5 Funding Through the Sale of Participation. The
Borrower acknowledges that the Bank may fund all or any part of the Loans by
sales of participation to various participants and agrees that the Bank may, in
invoking its rights under this Article V or under Section 2.6,
demand and receive payment for costs and other amounts incurred by, or
allocable to, any such participant, or take other action arising from
circumstances applicable to any such participant, to the same extent that such
participant could demand and receive payments, or take other action, under this
Article V or under Section 3.1(a) if such participant were the
Bank under this Agreement except that no participant’s claims for payment of
costs and other amounts under this Article V or Section 3.1(a) shall
exceed the amount which the Bank would have received had the Bank not sold a
participation to such participant.



     Section 5.6 Funding Through Branch or Affiliate. At the Bank’s
sole option, it may fulfill its commitment to make LIBOR Rate Loans by causing
a foreign branch or an affiliate to make or continue such LIBOR Rate Loans;
provided, that in such instance such LIBOR Rate Loan shall be deemed for
purposes of this Agreement to have been made by the Bank and the obligation of
the Borrower to repay such LIBOR Rate Loans shall be to the Bank and shall be
deemed held by the Bank for the account of such branch or affiliate.



ARTICLE VI

CONDITIONS PRECEDENT




     Section 6.1 Conditions of Initial Loans, etc. The occurrence of
the Effective Date and the obligation of the Bank to make the initial Revolving
Loans hereunder, or of the Bank to issue the initial Letter of Credit
hereunder, shall be subject to the satisfaction of the conditions precedent, in
addition to the applicable conditions precedent set forth in Section 6.2
below, that the Bank shall have received all of the following, in form and
substance satisfactory to the Bank, each duly executed and certified or dated
the date of the initial Loans or such other date as is satisfactory to the
Bank:




     (a) The Note appropriately completed and duly
executed by the Borrower;




     (b) The Security Agreement, the Pledge Agreement appropriately
completed and duly executed by the Borrower;




     (c) UCC-1 Financing Statements in a form acceptable to the Bank;




     (d) Recent UCC searches from the filing offices in all states
required by the Bank which reflect that no Person holds a Lien in any
Loan Party’s assets other than Permitted Liens;




     (e) A certificate of the Secretary of each Loan Party having
attached: (i) a copy of the corporate resolution of such Loan Party
authorizing the execution, delivery and performance of the Loan Documents
to which such Loan Party is a party, certified by the Secretary or an
Assistant Secretary of such Loan Party; (ii) an incumbency certificate
showing the names and titles, and bearing the signatures of, the officers
of such Loan Party authorized to execute the Loan Documents to which such
Loan Party is a party; and (iii) a copy of the bylaws of such Loan Party
with all amendments thereto;




     (f) A copy of the articles or certificate of incorporation of each
Loan Party with all amendments thereto, certified by the appropriate
governmental official of the jurisdiction of its incorporation as of a
date acceptable to the Bank;




     (g) Certificates of good standing for each Loan Party in the
jurisdiction of its incorporation and such other states as, in accordance
with the standards set forth in Section 7.1, such Loan Party is


18









 





required to qualify to do business, certified by the appropriate
governmental officials as of a date acceptable to the Bank;




     (h) An opinion of counsel to the Loan Parties, addressed to the
Bank, in form and substance satisfactory to the Bank;




     (i) Evidence of insurance for all insurance required by the Loan
Documents; and




     (j) Such other approvals, opinions or documents as the Bank may
reasonably request.



     Section 6.2 Conditions Precedent to all Loans. The occurrence of
the Effective Date and the obligation of the Bank to make any Loan hereunder
(including the initial Revolving Loans) or to issue any Letter of Credit
hereunder shall be subject to the satisfaction of the following conditions
precedent:




     (a) Before and after giving effect to such Loan or Letter of Credit,
the representations and warranties contained in Article VII shall
be true and correct, as though made on the date of such Loan except that,
after the delivery of any financial statements to the Bank in accordance
with Section 8.1(a) or (b), the representations and
warranties set forth in Section 7.5 shall be deemed a reference to
the audited or unaudited financial statements then most recently
delivered to the Bank;




     (b) Before and after giving effect to such Loan or Letter of Credit,
no Default or Event of Default shall have occurred and be continuing; and




     (c) The Bank shall have received the Borrower’s request for such
Loan as required by Section 2.3 or the Letter of Credit
Application for such Letter of Credit as required by Section 2.6.



ARTICLE VII

REPRESENTATIONS AND WARRANTIES




     To induce the Bank to enter into this Agreement, to grant the Commitment
and to make Loans and issue Letters of Credit, the Borrower represents and
warrants to the Bank:



     Section 7.1 Organization, Standing, etc. The Borrower and each of
its Subsidiaries are corporations duly incorporated and validly existing and in
good standing under the laws of the State of their respective incorporation and
have all requisite corporate power and authority to carry on their respective
businesses as now conducted, to enter into the Loan Documents to which they are
a party and to perform their obligations under such Loan Documents. The
Borrower and each of its Subsidiaries are duly qualified and in good standing
as a foreign corporation in each jurisdiction in which the character of the
properties owned, leased or operated by it or the business conducted by it
makes such qualification necessary and where the failure to qualify could
constitute an Adverse Event.



     Section 7.2 Authorization and Validity. The execution, delivery
and performance by each Loan Party of the Loan Documents to which it is a party
have been duly authorized by all necessary corporate action by such Loan Party.
The Loan Documents constitute the legal, valid and binding obligations of
each Loan Party which is a party thereto and are enforceable against such Loan
Party in accordance with their respective terms, subject to limitations as to
enforceability which might result from bankruptcy, insolvency, moratorium and
other similar laws affecting creditors’ rights generally and subject to
limitations on the availability of equitable remedies.



     Section 7.3 No Conflict, No Default. The execution, delivery and
performance by each Loan Party of the Loan Documents to which it is a party
will not: (a) violate any provision of any law, statute, rule or regulation or
any order, writ, judgment, injunction, decree, determination or award of any
court, governmental agency or arbitrator presently in effect having
applicability to such Loan Party; (b) violate or contravene any provisions of
the articles (or certificate) of incorporation or bylaws of such Loan Party; or
(c) result in a breach of or constitute a default under any indenture, loan or
credit agreement or any other agreement, lease or instrument to which such Loan
Party is a party or by which it or any of its properties may be bound or result
in the creation of any Lien on any asset of such



19









 






Loan Party except for Liens
created by the Loan Documents. No Loan Party is in default under or in
violation of any such law, statute, rule or regulation, order, writ, judgment,
injunction, decree, determination or award or any such indenture, loan or
credit agreement or other agreement, lease or instrument in any case in which
the consequences of such default or violation could reasonably be expected to
constitute an Adverse Event. No Default or Event of Default has occurred and
is continuing.



     Section 7.4 Government Consent. No order, consent, approval,
license, authorization or validation of, or filing, recording or registration
with, or exemption by, any governmental or public body or authority is required
on the part of any Loan Party to authorize, or is required in connection with
the execution, delivery and performance of, or the legality, validity, binding
effect or enforceability of, the Loan Documents to which such Loan Party is a
party.



     Section 7.5 Financial Statements and Condition. The Borrower’s
audited consolidated financial statements as at June 30, 2003 and unaudited
consolidated financial statements as at December 31, 2003, as heretofore
furnished to the Bank, have been prepared in accordance with GAAP on a
consistent basis (except for the omission of footnotes and prior period
comparative data required by GAAP and for variations from GAAP which in the
aggregate are not material and, in the case of unaudited consolidated financial
statements, subject to year-end adjustments) and fairly present the
consolidated financial condition of the Borrower and its Subsidiaries as at
such dates and the results of their consolidated operations and changes in
financial position for the respective periods then ended. Since June 30, 2003,
no event has occurred which materially, adversely affects the Borrower’s
consolidated condition (financial or otherwise), business operations,
properties or assets.



     Section 7.6 Litigation. Except as described in Schedule
7.6 attached hereto and incorporated herein by reference, there are no
actions, suits or proceedings pending or, to the knowledge of the Borrower,
threatened against or affecting the Borrower or any of its Subsidiaries, or any
of its properties, before any court or arbitrator, or any governmental
department, board, agency or other instrumentality which, if determined
adversely to the Borrower or such Subsidiary, could reasonably be expected to
constitute an Adverse Event.



     Section 7.7 Contingent Obligations. Except as described in
Schedule 7.7 attached hereto and incorporated herein by reference,
neither the Borrower nor any of its Subsidiaries has any Contingent Obligations
which are material.



     Section 7.8 Compliance. The Borrower and each of its Subsidiaries
are in material compliance with all statutes and governmental rules and
regulations applicable to them.



     Section 7.9 Environmental, Health and Safety Laws. There does not
exist any violation by the Borrower or any of its Subsidiaries of any
applicable federal, state or local law, rule or regulation or order of any
government, governmental department, board, agency or other instrumentality
relating to environmental, pollution, health or safety matters which will or
threatens to impose a material liability on such Person or which would require
a material expenditure by such Person to cure except as described in
Schedule 7.9 attached hereto and incorporated herein by reference.
Neither the Borrower nor any of its Subsidiaries has received any notice to the
effect that any part of its operations or properties is not in material
compliance with any such law, rule, regulation or order or notice that it or
its property is the subject of any governmental investigation evaluating
whether any remedial action is needed to respond to any release of any toxic or
hazardous waste or substance into the environment, the consequences of which
non-compliance or remedial action could reasonably be expected to constitute an
Adverse Event except as described in Schedule 7.9.



     Section 7.10 ERISA. Each Plan complies with all material
applicable requirements of ERISA and the Code and with all material applicable
rulings and regulations issued under the provisions of ERISA and the Code
setting forth those requirements. No Reportable Event has occurred and is
continuing with respect to any Plan. All of the minimum funding standards
applicable to such Plans have been satisfied and there exists no event or
condition which would permit the institution of proceedings to terminate any
Plan under Section 4042 of ERISA. The current value of the Plans’ benefits
guaranteed under Title IV of ERISA does not exceed the current value of the
Plans’ assets allocable to such benefits.



20









 





     Section 7.11 Regulation U. Neither the Borrower nor any of its
Subsidiaries is engaged in the business of extending credit for the purpose of
purchasing or carrying margin stock (as defined in Regulation U of the Board of
Governors of the Federal Reserve Board), and no part of the proceeds of any
Loan will be used to purchase or carry margin stock or for any other purpose
which would violate any of the margin requirements of the Board of the
Governors of the Federal Reserve System.



     Section 7.12 Ownership of Property; Liens. The Borrower and each
of its Subsidiaries have good and marketable title to their respective
properties, including all properties and assets referred to in the financial
statements of the Borrower referred to in Section 7.5 (other than
property disposed of since the date of such financial statements in the
ordinary course of business). None of the properties, revenues or assets of
the Borrower or any of its Subsidiaries is subject to a Lien, except for: (a)
Liens listed on Schedule 7.12 attached hereto and incorporated herein by
reference; or (b) Liens allowed under Section 9.11.



     Section 7.13 Indebtedness. Except for Indebtedness permitted by
Section 9.10, neither the Borrower nor any of its Subsidiaries has any
Indebtedness.



     Section 7.14 Guaranty of Suretyship. Except for Contingent
Obligations permitted by Section 9.12, neither the Borrower nor any of
its Subsidiaries is a party to any contract of guaranty or suretyship and none
of its assets is subject to such a contract.



     Section 7.15 Taxes. Except as described on Schedule 7.15
attached hereto and incorporated herein by reference, each of the Borrower and
each of its Subsidiaries has filed all federal, state and local tax returns
required to be filed and has paid or made provision for the payment of all
taxes due and payable pursuant to such returns and pursuant to any assessments
made against it or any of its property and all other taxes, fees and other
charges imposed on it or any of its property by any governmental authority
(other than taxes, fees or charges the amount or validity of which is currently
being contested in good faith by appropriate proceedings and with respect to
which
reserves in accordance with GAAP have been provided on the books of the
Borrower). No tax Liens have been filed and no material claims are being
asserted with respect to any such taxes, fees or charges. The sum of the
charges, accruals and reserves on the books of the Borrower and each of its
Subsidiaries in respect of taxes and other governmental charges are adequate to
pay and discharge all such taxes.



     Section 7.16 Trademarks, Patents. The Borrower and each of its
Subsidiaries possess or have the right to use all of the patents, trademarks,
trade names, service marks and copyrights, and applications therefor, and all
technology, know-how, processes, methods and designs used in or necessary for
the conduct of their respective businesses, without known conflict with the
rights of others. Schedule 7.16 attached hereto and incorporated herein
by reference is a complete list of all such patents and trademarks.



     Section 7.17 Investment Company Act. Neither the Borrower nor any
of its Subsidiaries is an “investment company” and is not “controlled” by an
“investment company” within the meaning of the Investment Company Act of 1940,
as amended.



     Section 7.18 Public Utility Holding Company Act. Neither the
Borrower nor any of its Subsidiaries is a “holding company” or a “subsidiary
company” of a holding company or an “affiliate” of a holding company or of a
subsidiary company of a holding company within the meaning of the Public
Utility Holding Company Act of 1935, as amended.



     Section 7.19 Subsidiaries. The Borrower does not have any
Subsidiaries except for: (a) Subsidiaries in existence on the date of this
Agreement and described on Schedule 7.19; and (b) additional
subsidiaries permitted by Section 9.6.



     Section 7.20 Partnerships and Joint Ventures. Neither the
Borrower nor any of its Subsidiaries is a partner (limited or general) or
joint venturer in any partnerships or joint ventures except: (a) those in
existence on the date of this Agreement and described on Schedule 7.20
attached hereto and incorporated herein by reference; and (b) additional
partnerships and joint ventures permitted by Section 9.7.



21









 





     Section 7.21 Use of Proceeds. The Revolving Loans will be used to
provide working capital to the Borrower and for other general corporate
purposes.



     Section 7.22 Solvency. Each Loan Party is Solvent after giving
effect to the making of the Loans in the full amount available hereunder, the
incurrence of the Indebtedness pursuant to the Loan Documents, the granting of
Liens pursuant to the Loan Documents.



     Section 7.23 Insurance. Schedule 7.23 attached hereto and
incorporated herein by reference sets forth a summary of the property and
casualty insurance program carried by the Borrower or any of its Subsidiaries
on the date hereof, including any self-insurance or risk assumption agreed to
by such Person or imposed upon such Person by any such insurer.



     Section 7.24 Contracts; Labor Matters. Except as disclosed on
Schedule 7.24 attached hereto and incorporated herein by reference: (a)
neither the Borrower nor any of its Subsidiaries is a party to any contract or
agreement, or subject to any charge, corporate restriction, judgment, decree or
order, the performance of which could reasonably be expected to constitute an
Adverse Event; (b) on the Effective Date: (i) neither the Borrower nor any of
its Subsidiaries is a party to any labor dispute; and (ii) there are no
strikes or walkouts relating to any labor contracts to which the Borrower or
any of its Subsidiaries is subject.



     Section 7.25 Accuracy of Information. All factual information
heretofore or herewith furnished by the Borrower to the Bank for purposes of or
in connection with this Agreement or any transaction contemplated hereby is,
and all other such factual information hereafter furnished by the Borrower to
the Bank will be, true and accurate in every material respect on the date as of
which such information is dated or certified and, when taken as a whole,
no such information contains any material misstatement of fact or omits to
state any fact necessary to make the statements contained therein not
misleading in light of the circumstances in which such statements were made.



     Section 7.26 Survival of Representations. All representations and
warranties contained in this Article VII shall survive the delivery of
the Note, the making of the Loans evidenced thereby, the issuance of the
Letters of Credit and any investigation at any time made by or on behalf of
the Bank shall not diminish the Bank’s rights to rely thereon.



ARTICLE VIII

AFFIRMATIVE COVENANTS




     From the date of this Agreement and thereafter until the Commitment and
each Letter of Credit are terminated or expired and the Loans and all other
Obligations of the Borrower to the Bank hereunder and under the Note and the
other Loan Documents, other than contingent indemnification obligations, have
been paid in full, unless the Bank shall otherwise expressly consent in
writing, the Borrower will do, and cause each of its Subsidiaries to do, all of
the following:



     Section 8.1 Financial Statements and Reports. Furnish to the
Bank:




     (a) As soon as available and in any event within 90 days after the
end of each fiscal year of the Borrower, the annual audit report (which
may be included in the 10K Reports described below) of the Borrower
prepared in conformity with GAAP, consisting of at least consolidated
statements of operations and retained earnings and cash flows, and a
consolidated balance sheet as at the end of such year, setting forth in
each case in comparative form corresponding figures from the previous
annual audit, certified without qualification by independent certified
public accountants of recognized standing selected by the Borrower and
acceptable to the Bank together with: (i) the related consolidating
statements; (ii) any management letters, management reports or other
supplementary comments or reports to the Borrower or its board of
directors furnished by such accountants; and (iii) a statement by the
accounting firm performing such audit stating that it has reviewed this
Agreement and that in performing its examination nothing came to its
attention that caused it to believe that any Default or Event of Default
exists, or, if such Default or Event of Default exists, describing its
nature.



22









 






     (b) As soon as available and in any event within 45 days after the
end of each of the first three fiscal quarters of each fiscal year or 90
days after the end of the last fiscal quarter of each fiscal year, a copy
(which may be included in the 10Q Reports described below) of the
unaudited consolidated financial statements of the Borrower prepared in
conformity with GAAP (except for the omission of footnotes and prior
period comparative data required by GAAP and for variations from GAAP
which in the aggregate are not material and subject to year-end
adjustments) consisting of a consolidated balance sheet as of the close
of such fiscal quarter and related consolidated statements of operations
and retained earnings and cash flow for such fiscal quarter and from the
beginning of such fiscal year to the end of such fiscal quarter and
comparative figures for the corresponding portion of the preceding fiscal
year.




     (c) As soon as available, and in any event with each financial
statement required by Sections 8.1(a) or (b), a compliance
certificate (the “Compliance Certificate”) in the form of Exhibit
D attached hereto signed by the Borrower’s chief financial officer.




     (d) As soon as available and in any event within 10 days after the
filing thereof, a copy of the Borrower’s 10K Report (or any successor
report) filed with the SEC.




     (e) As soon as available and in any event within 10 days after the
filing thereof (but in no event later than 55 days after the end of each
of the first three (3) fiscal quarters of each fiscal year of the
Borrower), a copy of the Borrower’s 10Q Report (or any successor report)
filed with the SEC.




     (f) As soon as available and in any event within 30 days after the
filing thereof, a copy of any other report not described above which is
filed by the Borrower or any of its Subsidiaries with the SEC.




     (g) By no later than five (5) Business Days after becoming aware of
any Default or Event of Default, a notice describing the nature thereof
and what action the Borrower proposes to take with respect thereto.




     (h) By no later than five (5) Business Days after becoming aware of
the occurrence, with respect to any Plan, of any Reportable Event or any
“prohibited transaction” (as defined in Section 4975 of the Code), a
notice specifying the nature thereof and what action the Borrower
proposes to take with respect thereto, and, when received, copies of any
notice from PBGC of intention to terminate or have a trustee appointed
for any Plan.




     (i) By no later than five (5) Business Days after becoming aware of
the occurrence thereof, notice of the institution of any litigation,
arbitration or governmental proceeding against the Borrower, any of its
Subsidiaries or any of their respective property which, if determined
adversely to such Person, would constitute an Adverse Event, or the
rendering of a judgment or decision in such litigation or proceeding
which constitutes an Adverse Event, and the steps being taken by the
Borrower or its Subsidiary with respect thereto.




     (j) By no later than five (5) Business Days after becoming aware of
the occurrence thereof, notice of any violation as to any environmental
matter by the Borrower or any of its Subsidiaries and of the
commencement of any judicial or administrative proceeding relating to
health, safety or environmental matters: (i) in which an adverse
determination or result could reasonably be expected to result in the
revocation of or have a material adverse effect on any operating permits,
air emission permits, water discharge permits, hazardous waste permits or
other permits held by the Borrower or any of its Subsidiaries which are
material to such Person’s operations; or (ii) which will or is
reasonably expected to impose a material liability on the Borrower or any
of its Subsidiaries to any other Person or which will require a material
expenditure by the Borrower or any of its Subsidiaries to cure any
alleged problem or violation.




     (k) By not later than 30 days after the commencement of any of the
Borrower’s fiscal years, the annual plan for the Borrower’s then current
fiscal year consisting of projected consolidated and consolidating
balance sheets and projected consolidated and consolidating statements of
operations and


23









 





cash flows approved by the Borrower’s board of directors
together with the assumptions underlying such projections certified by
the Borrower’s chief financial officer or treasurer as being such annual
plan.




     (l) From time to time, such other information regarding the
business, operation and financial condition of the Borrower or any of its
Subsidiaries as the Bank may reasonably request.



     Section 8.2 Corporate Existence. Except as permitted by
Section 7.1 or Section 9.1, maintain its corporate existence and
good standing under the laws of its jurisdiction of incorporation and its
qualification to transact business in each jurisdiction in which the character
of the properties owned, leased or operated by it or the business conducted by
it makes such qualification necessary and where the failure to so qualify could
reasonably be expected to constitute an Adverse Event.



     Section 8.3 Insurance. Maintain with financially sound and
reputable insurance companies such insurance as may be required by any Loan
Document or by law and such other insurance in such amounts and against such
hazards as is customary in the case of reputable corporations engaged in the
same or similar business and similarly situated.



     Section 8.4 Payment of Taxes and Claims. File all tax returns and
reports which are required by law to be filed by it and pay before they become
delinquent all taxes, assessments and governmental charges and levies imposed
upon it or its property and all claims or demands of any kind (including,
without limitation, those of suppliers, mechanics, carriers, warehouses,
landlords and other like Persons) which, if unpaid, might result in the
creation of a Lien upon its property; provided that the foregoing items need
not be paid if they are being contested in good faith by appropriate
proceedings, and as long as the Borrower’s or any of its Subsidiaries’ title
to its property is not materially adversely affected, its use of such property
in the ordinary course of its business is not materially interfered with and
adequate reserves with respect thereto have been set aside on the Borrower’s or
its Subsidiaries books in accordance with GAAP; provided further that, in all
events, the Borrower and its Subsidiaries shall pay or cause to be paid all
such taxes, assessments, charges or levies forthwith upon the commencement of
foreclosure of any Lien which may have attached as security therefor.



     Section 8.5 Inspection. Permit any Person designated by the Bank
to visit and inspect any of its properties, corporate books and financial
records, to examine and to make copies of its books of accounts and other
financial records, and to discuss the affairs, finances and accounts of the
Borrower or any of its Subsidiaries with, and to be advised as to the same by,
its officers at such reasonable times and intervals as the Bank may designate;
provided, however, that the expenses of the Bank for such visits,
inspections and examinations shall be at the expense of the Bank so long as no
Event of Default exists, but any such visits, inspections, and examinations
made while any Event of Default is continuing shall be at the expense of the
Borrower.



     Section 8.6 Maintenance of Properties. Maintain its properties
used or useful in the conduct of its business in good condition, repair and
working order, and supplied with all necessary equipment, and make all
necessary repairs, renewals, replacements, betterments, and improvements
thereto, all as may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times.



     Section 8.7 Books and Records. Keep adequate and proper records
and books of account in which full and correct entries will be made of its
dealings, business and affairs.



     Section 8.8 Compliance. Comply in all material respects with all
laws, rules, regulations, orders, writs, judgments, injunctions, decrees or
awards to which it may be subject where the failure to do so could reasonably
be expected to constitute an Adverse Event.



     Section 8.9 ERISA. Maintain each Plan in compliance with all
material applicable requirements of ERISA and of the Code and with all material
applicable rulings and regulations issued under the provisions of ERISA and of
the Code.



     Section 8.10 Environmental Matters. Observe and comply with all
laws, rules, regulations and orders of any government or government agency
relating to health, safety, pollution, hazardous materials or other



24









 






environmental matters to the extent non-compliance could result in a material
liability or otherwise could reasonably be expected to constitute or result in
an Adverse Event.



ARTICLE IX

NEGATIVE COVENANTS




     From the date of this Agreement and thereafter until the Commitment and
each Letter of Credit are terminated or expired and the Loans and all other
Obligations of the Borrower to the Bank hereunder and under the Note and the
other Loan Documents, other than contingent indemnification obligations, have
been paid in full, unless the Bank shall otherwise expressly consent in
writing, the Borrower will not do, and will not permit any of its Subsidiaries
to do, any of the following:



     Section 9.1 Merger. Merge or consolidate or enter into any
analogous reorganization or transaction with any Person except for any such
transaction whereby any of the Borrower’s Subsidiaries may merge or consolidate
with the Borrower or any other of the Borrower’s Subsidiaries so long as: (a)
the Borrower is the surviving
corporation in any transaction involving it; and (b) the Borrower gives the
Bank at least 30 days’ prior written notice of such transaction and takes all
action required by the Bank to continue perfection of the Bank’s Lien in such
Subsidiary’s assets following consummation of such transaction.



     Section 9.2 Sale of Assets. Sell, transfer, lease, or otherwise
convey all or any part of its assets except for:




     (a) sales of Inventory in the ordinary course of business and for
the fair market value thereof ;




     (b) sales of equipment or other property for the fair market value
thereof so long as the Net Proceeds to be obtained from any such
transaction (or related series of transactions) does not exceed
$250,000.00 or the aggregate Net Proceeds determined on a consolidated
basis for the Borrower and its Subsidiaries from all such transactions
in any fiscal year does not exceed $500,000.00;




     (c) transfers or issuances of stock or dispositions of assets from a
Subsidiary to the Borrower or another Subsidiary; provided,
however, that if the transferring Person is a Domestic Subsidiary,
then the transferee must be the Borrower or another Domestic Subsidiary;




     (d) sale or settlement of disputed or delinquent accounts receivable
at a discount in the ordinary course of business;




     (e) lease or license real or personal property in the ordinary
course of business; and




     (f) dispositions of property in connection with Investments
permitted under Section 9.9.



     Section 9.3 Change of Fiscal Year. Change its fiscal year-end
from June 30.



     Section 9.4 Plans. Permit any condition to exist in connection
with any Plan which might constitute grounds for the PBGC to institute
proceedings to have such Plan terminated or a trustee appointed to administer
such Plan; permit any Plan to terminate under any circumstances which would
cause the Lien provided for in Section 4068 of ERISA to attach to any property,
revenue or asset of the Borrower or any of its Subsidiaries; or permit the
underfunded amount of Plan benefits guaranteed under Title IV of ERISA to
exceed $50,000.00.



     Section 9.5 Change in Nature of Business. Make any material
change in the nature of its business as carried on at the date hereof.



     Section 9.6 Subsidiaries, Partnerships and Joint Ventures. Except
as otherwise permitted by Section 9.9, either: (a) form or acquire any
corporation or company which would thereby become a Subsidiary; or (b) form or
enter into any partnership as a limited or general partner or form or enter
into any joint venture.



25









 





     Section 9.7 Other Agreements. Enter into any agreement, bond,
note or other instrument with or for the benefit of any Person other than the
Bank which would: (a) prohibit the Borrower or any of its Subsidiaries from
granting, or otherwise limit the ability of the Borrower or any of its
Subsidiaries to grant to the Bank any Lien on any assets or properties of such
Person; or (b) be violated or breached by any Loan Party’s performance of its
obligations under the Loan Documents.



     Section 9.8 Payment Terms. Materially change its selling terms of
payment on accounts as in effect on the date of this Agreement or provide
dating terms.



     Section 9.9 Investments. Acquire for value, make, have or hold
any Investments, except:




     (a) Investments outstanding on the date hereof and listed on
Schedule 9.9 attached hereto and incorporated herein by reference;




     (b) Travel advances to officers and employees in the ordinary course
of business;




     (c) Investments in readily marketable direct obligations of the
United States of America having maturities of one year or less from the
date of acquisition;




     (d) Certificates of deposit or bankers’ acceptances, each maturing
within one year from the date of acquisition, issued by the Bank;




     (e) Commercial paper maturing within 270 days from the date of
issuance and given the highest rating by a nationally recognized rating
service;




     (f) Repurchase agreements relating to securities issued or
guaranteed as to principal and interest by the United States of America;




     (g) Money market accounts reasonably acceptable to the Bank;




     (h) Extensions of credit in the nature of accounts or notes
receivable arising from the sale of goods and services in the ordinary
course of business;




     (i) Shares of stock, obligations or other securities received in
settlement of claims arising in the ordinary course of business;




     (j) Acquisitions by the Borrower or any of its Subsidiaries of
assets or businesses related to the Borrower’s lines of business as in
existence on the date hereof so long as: (i) the Bank is given not less
than 15 Business Days’ prior written notice of each such acquisition,
(ii) no Default or Event of Default exists immediately prior to such
acquisition or after giving effect thereto, (iii) the aggregate purchase
price (with the amount of any liabilities which are assumed as part of
such acquisition to be included as part of the purchase price) for all
such acquisitions during any fiscal year of the Borrower does not exceed:
(A) $2,500,000.00 for any one acquisition and $5,000,000.00 for all
acquisitions within the fiscal year, if the Cash Flow Leverage Ratio and
the Pro Forma Cash Flow Leverage Ratio at the most recent Quarterly
Measurement Date was greater than 1.50 to 1.0; (B) $5,000,000.00 for any
one acquisition and $10,000,000.00 for all acquisitions within the fiscal
year, if the Cash Flow Leverage Ratio and the Pro Forma Cash Flow
Leverage Ratio at the most recent Quarterly Measurement Date was less
than or equal to 1.50 to 1.0; and (iv) the acquisition is an asset
acquisition;




     (k) Other Permitted Acquisitions not described in Section 9.9(j);




     (l) Promissory notes acquired in connection with the disposition of
assets described in Section 9.2(b); and



26









 






     (m) Additional Investments in any Subsidiary; provided,
however, that if the additional Investment is in: (i) a Domestic
Subsidiary, the sum of the aggregate amount of such additional
Investments or other extensions of credit (regardless of whether such
extension of credit constitutes an Investment) by the Borrower or any
other Subsidiary in such Domestic Subsidiary does not exceed $500,000.00
during the term of this Agreement; or (ii) Compex or any other Foreign
Subsidiary, the sum of the aggregate amount of such additional
Investments or other extensions of credit (regardless of whether such
extension of credit constitutes an Investment) by the Borrower or any
other Subsidiary in Compex and other Foreign Subsidiaries does not exceed
$1,000,000.00 during the term of this Agreement .



     Section 9.10 Indebtedness. Incur, create, issue, assume or suffer
to exist any Indebtedness except:




     (a) Indebtedness under this Agreement;




     (b) Current liabilities, other than for borrowed money, incurred in
the ordinary course of business;




     (c) Indebtedness owed by a Subsidiary to the Borrower or another
Subsidiary;




     (d) Guaranties by the Borrower or a Subsidiary of Indebtedness
otherwise permitted under this Agreement except that neither the Borrower
nor any other Domestic Subsidiary may guaranty the Indebtedness of
Compex or any other Foreign Subsidiary;




     (e) Indebtedness existing on the date of this Agreement and
disclosed on Schedule 9.10 attached hereto and incorporated herein
by reference; provided, however, that no such Indebtedness
shall be refinanced without the express written consent of the Bank;




     (f) Purchase Money Indebtedness secured by Liens permitted under
Section 9.11(c); and other Indebtedness so long as the aggregate
outstanding principal amount of Indebtedness permitted by this
Section 9.10(d) shall not exceed $2,000,000.00 at any time; and




     (g) Indebtedness consisting of endorsements for collection, deposit
or negotiation and warranties of products or services, in each case
incurred in the ordinary course of business.



     Section 9.11 Liens. Create, incur, assume or suffer to exist any
Lien with respect to any property, revenues or assets now owned or hereafter
arising or acquired, except:




     (a) Liens created by any of the Loan Documents;




     (b) Liens existing on the date of this Agreement and disclosed on
Schedule 7.12 hereto;




     (c) Liens securing Purchase Money Indebtedness incurred in
connection with Capital Expenditures made after the date of this
Agreement by way of purchase money security interest, purchase money
mortgage, conditional sale or other title retention agreement,
Capitalized Lease or other deferred payment contract, and attaching only
to the property being acquired, provided that the Indebtedness secured
thereby is permitted as a Capital Expenditure at the time of such
incurrence and does not exceed the lesser of the purchase price or the
fair market value of such property at the time of its acquisition;




     (d) Liens, deposits or pledges to secure payment of workers’
compensation, unemployment insurance, old age pensions or other social
security obligations, in the ordinary course of business of the Borrower;




     (e) Liens for taxes, fees, assessments and governmental charges not
delinquent or to the extent that payments therefor shall not at the time
be required to be made in accordance with the provisions of Section
8.4;



27









 






     (f) Liens of carriers, warehousemen, mechanics and materialmen, and
other like Liens arising in the ordinary course of business, for sums not
due or to the extent that payment therefor shall not at the time be
required to be made in accordance with the provisions of Section
8.4;




     (g) Liens or deposits to secure the performance of bids, trade
contracts, leases, statutory obligations and other obligations of a like
nature incurred in the ordinary course of business;




     (h) Zoning restrictions, easements, licenses, restrictions on the
use of real property or irregularities in title thereto, which do not
materially impair the use of such property in the operation of the
Borrower’s business or the value of such property for the purpose of such
business;




     (i) Liens arising from judgments, decrees or attachments (or
securing appeal bonds with respect thereto) in circumstances not
constituting a default under Section 10.1(h);




     (j) Licenses or leases granted to other Persons in the ordinary
course of business and not interfering or limiting in any material
respect the business of the Borrower or any Subsidiary; and




     (k) Lender’s Liens, rights of setoff and similar liens incurred on
deposits made in the ordinary course of business.



     Section 9.12 Contingent Liabilities. Except as provided in the
Loan Documents, as described on Schedule 9.12 attached hereto and
incorporated herein by reference or with respect to Indebtedness otherwise
permitted under this Agreement, either: (a) endorse, guarantee, contingently
agree to purchase or to provide funds for the payment of, or otherwise become
contingently liable upon, any obligation of any other Person, except by the
endorsement of negotiable instruments for deposit or collection (or similar
transactions) in the ordinary course of business; or (b) agree to maintain the
net worth or working capital of, or provide funds to satisfy any other
financial test applicable to, any other Person.



     Section 9.13 Transactions with Related Parties. Either: (a) permit
the direct or indirect transfer, distribution or payment of any of its funds,
assets or property to any Related Party, except that the Borrower or any of its
Subsidiaries may pay: (i) bona fide employee compensation (including benefits)
to Related Parties for services actually rendered to such Person; (ii) expenses
incurred by an employee in the ordinary course of business; (iii) expenses or
rents for services or property or the use thereof allocated to such Person;
provided, however, that all such payments pursuant to subsections
(a)(i), (ii) and (iii) shall not exceed the amount which would be payable in a
comparable arm’s length transaction with a third party who is not a Related
Party; (iv) Permitted Distributions to the extent permitted by Section
9.15; and (v) other amounts permitted by other subsections of this
Section; (b) lend or advance money, credit or property to any Related Party
except as permitted by Section 9.9; (c) invest in (by capital
contribution or otherwise) or purchase or repurchase any stock or indebtedness,
or any assets or properties, of any Related Party except as permitted by
Sections 9.9 or 9.15 or otherwise permitted by other subsections of this
Section; or (d) guarantee, assume, endorse or otherwise become responsible for,
or enter into any agreement or instrument for the purpose of discharging or
assuming (directly or indirectly, through the purchase of goods, supplies or
services or otherwise) the indebtedness, performance, capability, obligations,
dividends or agreement for the furnishing of funds of any Related Party or any
officer, director or employee thereof except for the Guaranties permitted by
Section 9.12.



     Section 9.14 Unconditional Purchase Obligations. Enter into or be
a party to any contract for the purchase or lease of materials, supplies or
other property or services if such contract requires that payment be made by it
regardless of whether or not delivery is ever made of such materials, supplies
or other property or services.



     Section 9.15 Restricted Payments. Purchase or redeem or
otherwise acquire for value any shares of the Borrower’s stock, declare or pay
any dividends thereon (other than stock dividends), make any distribution on,
or payment on account of the purchase, redemption, defeasance or other
acquisition or retirement for value of, any shares of the Borrower’s stock or
set aside any funds for any such purpose, or otherwise or make any distribution
of assets to its shareholders as such except that: (a) any of the Borrower’s
direct or indirect wholly-owned Subsidiaries may pay dividends to its corporate
parent; and (b) so long as no Default or Event of Default has occurred and is



28









 






continuing at the time of the following described payment or would result
therefrom, the Borrower and any of its less than wholly-owned Subsidiaries may
pay dividends and/or redeem its shares of its stock so long as the aggregate
amount of all such dividends and redemptions does not exceed $250,000.00 during
any of the Borrower’s fiscal years.



     Section 9.16 Use of Proceeds. Permit any proceeds of the Loans to
be used, either directly or indirectly, for the purpose, whether immediate,
incidental or ultimate, of “purchasing or carrying any margin stock” within the
meaning of Regulation U of the Federal Reserve Board, as amended from time to
time, and furnish to the Bank upon its request, a statement in conformity with
the requirements of Federal Reserve Form U-l referred to in Regulation U.



     Section 9.17 Cash Flow Leverage Ratio. Permit, as of any Quarterly
Measurement Date occurring on or after March 31, 2004, the Cash Flow Leverage
Ratio to be greater than 2.50 to 1.0.



     Section 9.18 Fixed Charge Coverage Ratio. Permit, as of any
Quarterly Measurement Date occurring on or after March 31, 2004, the Fixed
Charge Coverage Ratio to be less than 1.25 to 1.00.



     Section 9.19 Net Worth. Permit, as of any Quarterly Measurement
Date occurring on or after March 31, 2004, the Borrower’s Net Worth to be less
than the greater of: (i) 90% of the actual Net Worth at the immediately
preceding fiscal year-end; or (ii) the minimum amount required by this
Section 9.19 to have been maintained as of such immediately preceding
fiscal year-end.



     Section 9.20 Sale and Lease. Enter into any agreement providing
for the leasing by the Borrower or any of its Subsidiaries of property which
has been or is to be sold or transferred by the Borrower or any of its
Subsidiaries to the lessor thereof, or which is substantially similar in
purpose to property so sold.



     Section 9.21 Domestic Cash Flow Leverage Ratio. Permit, as of any
Quarterly Measurement Date occurring on or after March 31, 2004, the Domestic
Cash Flow Leverage Ratio to be greater than 2.50 to 1.0.



     Section 9.22 Domestic Fixed Charge Coverage Ratio. Permit, as of
any Quarterly Measurement Date occurring on or after March 31, 2004, the
Domestic Fixed Charge Coverage Ratio to be less than 1.25 to 1.00.



ARTICLE X

EVENTS OF DEFAULT AND REMEDIES




     Section 10.1 Events of Default. The occurrence of any one or more
of the following events shall constitute an Event of Default upon the
expiration of the cure period, if any, described in the relevant event:




     (a) The Borrower shall fail to make, within three (3) Business Days
of when due, whether by acceleration or otherwise, (i) any payment of
principal of, or interest on, the Note or (ii) any fee or other amount
required to be made to the Bank pursuant to any Loan Document; or




     (b) Any representation or warranty made or deemed to have been made
by or on behalf of any Loan Party in any of the Loan Documents or by or
on behalf of any Loan Party in any certificate, statement, report or
other writing furnished by or on behalf of any Loan Party to the Bank
pursuant to the Loan Documents shall prove to have been false or
misleading in any material respect on the date as of which the facts set
forth are stated or certified or deemed to have been stated or certified;
or




     (c) The Borrower shall fail to comply with Section 8.1(g),
Section 8.2, Section 8.3 or any Section of Article
IX hereof; or




     (d) Any Loan Party shall fail to comply with any agreement,
covenant, condition, provision or term contained in the Loan Documents on
its part to be performed (and such failure shall not constitute an Event
of Default under any of the other provisions of this Section 10.1)
and such failure to comply shall continue for 30 calendar days after
notice thereof to the Borrower by the Bank; or



29









 






     (e) Any Loan Party shall become insolvent or shall generally not pay
its debts as they mature or shall apply for, shall consent to, or shall
acquiesce in the appointment of a custodian, trustee or
receiver of any Loan Party or for a substantial part of its property or,
in the absence of such application, consent or acquiescence, a custodian,
trustee or receiver shall be appointed for any Loan Party or for a
substantial part of its property and shall not be discharged within 30
days; or




     (f) Any bankruptcy, reorganization, debt arrangement or other
proceedings under any bankruptcy or insolvency law shall be instituted by
or against any Loan Party and, if instituted against any Loan Party,
shall have been consented to or acquiesced in by such Loan Party, or
shall remain undismissed for 60 days, or an order for relief shall have
been entered against any Loan Party, or any Loan Party shall take any
corporate action to approve institution of, or acquiesced in, such a
proceeding; or




     (g) Any dissolution or liquidation proceeding shall be instituted by
or against the Borrower and, if instituted against any Loan Party, shall
be consented to or acquiesced in by any Loan Party or shall remain for 60
days undismissed, or any Loan Party shall take any corporate action to
approve institution of, or acquiescence in, such a proceeding; or




     (h) A judgment or judgments for the payment of money in excess of
the sum of $50,000.00 in the aggregate shall be rendered against any or
all of the Loan Parties and such Loan Parties shall not discharge the
same or provide for its discharge in accordance with its terms, or
procure a stay of execution thereof, prior to any execution on such
judgments by such judgment creditor, within 30 days from the date of
entry thereof, and within said period of 30 days, or such longer period
during which execution of such judgment shall be stayed, appeal therefrom
and cause the execution thereof to be stayed during such appeal; or




     (i) The Borrower or any ERISA Affiliate shall terminate any Plan if
the Borrower or any ERISA Affiliate would be required to make a
contribution to such Plan, or would incur a liability or obligation to
such Plan, in excess of $50,000.00, or the PBGC shall terminate any Plan
if such termination causes the Borrower or any of its ERISA Affiliates to
incur any liability or obligation in excess of $50,000.00; or




     (j) The maturity of any Indebtedness of any Loan Party (other than
Indebtedness under this Agreement or the other Loan Documents) in the
aggregate amount of more than $50,000.00 for one or more of the Loan
Parties shall be accelerated, or any one or more Loan Parties shall fail
to pay any such Indebtedness when due and any applicable grace period
shall have expired, or, in the case of such Indebtedness payable on
demand, when demanded, or any event shall occur or condition shall exist
and shall continue for more than the period of grace, if any, applicable
thereto and shall have the effect of causing, or permitting (any required
notice having been given and grace period having expired) the holder of
any such Indebtedness or any trustee or other Person acting on behalf of
such holder to cause such Indebtedness to become due prior to its stated
maturity or to realize upon any collateral given as security therefor; or




     (k) Any Change of Control shall occur; or




     (l) If the validity or enforceability of any of the Loan Documents
shall be challenged by the Borrower or any other party thereto, or shall
fail to remain in full force and effect; or




     (m) The Bank shall have determined in good faith (which
determination shall be conclusive) that (i) an Adverse Event has occurred
or (ii) the Bank’s interest in any material Collateral has been
materially adversely affected or impaired, or the value thereof to the
Lender has been diminished to a material extent, or (iii) the prospect of
payment or performance of any obligation or agreement of the Borrower
under any of the Loan Documents is materially impaired, and the condition
giving rise to such determination does not constitute an Event of Default
under any of the other subsections of this Section 10.1.



30









 





     Section 10.2 Remedies. If: (a) any Event of Default described in
Sections 10.1(e), (f) or (g) shall occur, the Commitment
shall automatically terminate and the outstanding unpaid principal balance of
the Note, the accrued interest thereon, the Letter of Credit Obligations and
all other Obligations under the Loan Documents shall automatically become
immediately due and payable; or (b) any other Event of Default shall occur and
be continuing, then the Bank may take any or all of the following actions: (i)
declare the Commitment terminated, whereupon the Commitment shall terminate;
(ii) declare that the outstanding unpaid principal balance of the Note, the
accrued and unpaid interest thereon, all Letter of Credit Obligations and all
other Obligations under the Loan Documents to be forthwith due and payable,
whereupon the Note, all accrued and unpaid interest thereon, all Letter of
Credit Obligations and all such Obligations shall immediately become due and
payable, in each case without demand or notice of any kind, all of which are
hereby expressly waived, anything in this Agreement or in the Note to the
contrary notwithstanding; (iii) exercise all rights and remedies under any
other instrument, document or agreement between the Borrower and the Bank; and
(iv) enforce all rights and remedies under any applicable law.



     Section 10.3 Prepayment Obligations. The Borrower agrees that if
the Obligations become immediately due and payable in full at a time when one
or more Letters of Credit are outstanding or if the Letter of Credit Commitment
or the Revolving Credit Commitment is terminated at such time, the Borrower
shall thereupon automatically be obligated to pay the Bank, in addition to all
other amounts owing under this Agreement, the aggregate face amount of all
Letters of Credit then outstanding. The foregoing obligation to pay in advance
for amounts which the Bank may later have to pay pursuant to the Letters of
Credit is and shall at all times constitute a part of the “Obligations”.
Amounts paid by the Borrower pursuant to this Section 10.3 shall be made
directly to an interest bearing collateral account maintained at the Bank for
application to the Borrower’s reimbursement obligations under Section
2.6(d) as payments are made on the Letters of Credit, with the balance, if
any, to be applied to the other Obligations.



     Section 10.4 Offset. In addition to the remedies set forth in
Section 10.2, upon the occurrence of any Event of Default or at any time
thereafter while such Event of Default continues, the Bank or any other holder
of the Note may offset any and all balances, credits, deposits (general or
special, time or demand, provisional or final), accounts or monies of the
Borrower then or thereafter with the Bank or such other holder, or any
obligations of the Bank or such other holder of the Note, against the
Indebtedness then owed by the Borrower to the Bank. The Borrower hereby grants
to the Bank and each other Note holder a security interest in all such
balances, credits, deposits, accounts or monies.



ARTICLE XI

MISCELLANEOUS




     Section 11.1 Waiver and Amendment. No failure on the part of the
Bank or the holder of the Note to exercise and no delay in exercising any power
or right hereunder or under any other Loan Document shall operate as a waiver
thereof; nor shall any single or partial exercise of any power or right
preclude any other or further exercise thereof or the exercise of any other
power or right. The remedies herein and in any other instrument, document or
agreement delivered or to be delivered to the Bank hereunder or in connection
herewith are cumulative and not exclusive of any remedies provided by law. No
notice to or demand on the Borrower not required hereunder or under the Note or
any other Loan Document shall in any event entitle the Borrower to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of the right of the Bank or the holder of the Note to any other or
further action in any circumstances without notice or demand. No amendment,
modification or waiver of any provision of this Agreement or consent to any
departure by the Borrower therefrom shall be effective unless the same shall be
in writing and signed by the Bank, and then such amendment, modification,
waiver or consent shall be effective only in the specific instances and for the
specific purpose for which given.



     Section 11.2 Expenses and Indemnities.




     (a) Loan Documents. Whether or not any Loan is made, the
Borrower agrees to pay and reimburse the Bank upon demand for all
reasonable expenses paid or incurred by the Bank (including filing and
recording costs and fees and expenses of legal counsel, who may be
employees of the Bank, and including the costs of any appraisals and
environmental assessments) in connection with the preparation, review,
execution, delivery, amendment, modification or interpretation of the
Loan Documents. The Borrower agrees to pay and reimburse the Bank upon
demand for all reasonable expenses paid or incurred by the Bank
(including reasonable fees and expenses of legal counsel, who may be
employees of the Bank in connection with the collection and enforcement
of the Loan Documents. The



31









 






Borrower agrees to pay, and save the Bank
harmless from all liability for, any stamp or other taxes which may be
payable with respect to the execution or delivery of the Loan Documents.
The Borrower agrees to indemnify and hold the Bank harmless from any loss
or expense which may arise or be created by the acceptance of telephonic
or other instructions for making Loans or disbursing the proceeds
thereof.




     (b) General Indemnity. In addition to the payment of expenses
pursuant to Section 11.2(a), whether or not the transactions
contemplated hereby shall be consummated, the Borrower hereby
indemnifies, and agrees to pay and hold the Bank, its affiliates and any
holder of the Note, and their respective officers, directors, employees,
agents, successors and assigns (collectively called the
“Indemnitees”) harmless from and against, any and all other
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, claims, costs, expenses and disbursements of any kind or nature
whatsoever (including, without limitation, the reasonable fees and
disbursements of counsel for any of such Indemnitees in connection with
any investigative, administrative or judicial proceeding commenced or
threatened, whether or not any of such Indemnitees shall be designated a
party thereto), that may be imposed on, incurred by, or asserted against
the Indemnitees (or any of them), in any manner relating to or arising
out of the Loan Documents, the statements contained in any commitment
letters delivered by the Bank, the Bank’s agreement to make the Loans, or
the use or intended use of the proceeds of any of the Loans (the
“Indemnified Liabilities”); provided, however, that
the Borrower shall have no obligation to an Indemnitee hereunder with
respect to Indemnified Liabilities arising from the gross negligence or
willful misconduct of an Indemnitee. To the extent that the undertaking
to indemnify, pay and hold harmless set forth in the preceding sentence
may be unenforceable because it is violative of any law or public policy,
the Borrower shall contribute the maximum portion that it is permitted to
pay and satisfy under applicable law, to the payment and satisfaction of
all Indemnified Liabilities incurred by the Indemnitees or any of them.




     (c) Survival. The obligations of the Borrower under this
Section 11.2 shall survive any termination of this Agreement.



     Section 11.3 Notices. Except when telephonic notice is expressly
authorized by this Agreement, any notice or other communication to any party in
connection with this Agreement shall be in writing and shall be sent by manual
delivery, telegram, telex, facsimile transmission, overnight courier or United
States mail (postage prepaid) addressed to such party at the address specified
on the signature page hereof, or at such other address as such party shall have
specified to the other party hereto in writing. All periods of notice shall be
measured from the date of delivery thereof if manually delivered, from the date
of sending thereof if sent by telegram, telex or facsimile transmission, from
the first Business Day after the date of sending if sent by overnight courier,
or from four days after the date of mailing if mailed; provided, however, that
any notice to the Bank under Article II hereof shall be deemed to have
been given only when received by the Bank. The Borrower hereby authorizes the
Bank to rely upon the telephone or written instructions of any person
identifying himself as an authorized officer of the Borrower and upon any
signature which the Bank believes to be genuine, and the Borrower shall be
bound thereby in the same manner as if the Borrower were authorized or such
signature were genuine.



     Section 11.4 Successors. This Agreement shall be binding upon the
Borrower, the Bank and their respective successors and assigns, and shall inure
to the benefit of the Borrower, the Bank and the successors and assigns of the
Borrower and the Bank. The Borrower shall not assign its rights or duties
hereunder without the
consent of the Bank. The Bank may assign its rights and obligations under this
Agreement and the Loan Documents to any Person, without the prior consent of
the Borrower.



     Section 11.5 Participations. The Bank may sell participation
interests in any or all of the Loans and in all or any portion of the
Commitment to any Person without the prior consent of the Borrower.



     Section 11.6 Severability. Any provision of this Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without



32









 






invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.



     Section 11.7 Captions. The captions or headings herein and any
table of contents hereto are for convenience only and in no way define, limit
or describe the scope or intent of any provision of this Agreement.



     Section 11.8 Entire Agreement. This Agreement, the Note and the
other Loan Documents embody the entire agreement and understanding between the
Borrower and the Bank with respect to the subject matter hereof and thereof.
This Agreement supersedes all prior agreements and understandings relating to
the subject matter hereof.



     Section 11.9 Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and
the same instrument, and either of the parties hereto may execute this
Agreement by signing any such counterpart.



     Section 11.10 Governing Law. EXCEPT AS OTHERWISE PROVIDED IN ANY
LOAN DOCUMENT, THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS AGREEMENT,
THE NOTE AND THE OTHER LOAN DOCUMENTS TO WHICH THE BORROWER IS A PARTY SHALL BE
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT
TO CONFLICT OF LAWS PRINCIPLES THEREOF, BUT GIVING EFFECT TO FEDERAL LAWS OF
THE UNITED STATES APPLICABLE TO NATIONAL BANKS.



     Section 11.11 Consent to Jurisdiction. AT THE OPTION OF THE BANK,
THIS AGREEMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS TO WHICH THE BORROWER IS
A PARTY MAY BE ENFORCED IN ANY FEDERAL COURT OR MINNESOTA STATE COURT SITTING
IN MINNEAPOLIS OR ST. PAUL, MINNESOTA; AND THE BORROWER CONSENTS TO THE
JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT THAT VENUE IN
SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT THE BORROWER COMMENCES ANY ACTION
IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY ARISING
DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS AGREEMENT, THE
BANK AT ITS OPTION SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF THE
JURISDICTIONS AND VENUES ABOVE-DESCRIBED, OR IF SUCH TRANSFER CANNOT BE
ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT
PREJUDICE.



     Section 11.12 Waiver of Jury Trial. THE BORROWER AND THE BANK
WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR
DEFEND ANY RIGHTS (a) UNDER THIS AGREEMENT OR UNDER ANY AMENDMENT, INSTRUMENT,
DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN
CONNECTION HEREWITH, OR (b) ARISING FROM ANY BANKING RELATIONSHIP EXISTING IN
CONNECTION WITH THIS AGREEMENT, AND AGREE THAT ANY SUCH ACTION OR PROCEEDING
SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.



     Section 11.13 Effect on Original Credit Agreement. On the
Effective Date, the Original Credit Agreement shall be completely amended and
restated by this Agreement, and each reference to the “Credit
Agreement,” “Loan Agreement,” “therein,” “thereof,” “thereby,” or words of like
import referring to the Original Credit Agreement in any Loan Document shall
mean and be a reference to this Agreement.



[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]




33









 







     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above.



	 	 	 
	

	 	Compex Technologies, Inc.,
	

	 	a Minnesota corporation f/k/a Rehabilicare Inc.
	 
	 	 
	

	 	By:/s/ Scott Youngstrom
	

	 	
 
	

	 	Name: Scott Youngstrom
	

	 	Its: Vice President of Finance
	 
	 	 
	

	 	1811 Old Highway Eight
	

	 	New Brighton, MN 55112-3493
	

	 	Attention: Scott Youngstrom
	

	 	Vice President–Finance and Chief Financial Officer
	

	 	Telephone: (651) 631-0590
	

	 	Telecopier: (651) 638-0477
	Subscribed and sworn to
before me this ___day of June, 2004
	 	 
	 
	 	 
	 
	 	
 
	Notary Public
	 	 
	 
	 	 
	

	 	U. S. Bank National Association
	 
	 	 
	

	 	By:
	

	 	
 
	

	 	Name:
	

	 	
 
	

	 	Its:
	

	 	
 
	 
	 	 
	

	 	U. S. Bancorp Center
	

	 	800 Nicollet Mall
	

	 	Minneapolis, MN 55402-0270
	

	 	Attention: Mr. Michael J. Staloch
	

	 	Senior Vice President
	

	 	Telephone: (612) 303-3050
	

	 	Telecopier: (612) 303-2264







34