**Exhibit 10(e)** **ASHWORTH U.K. LTD.**as Borrower  **LOAN AGREEMENT**Dated February 29, 2008$10,000,000  **BANK OF AMERICA, N.A.,**as Lender 
 

 
     SECTION 1 DEFINITIONS; RULES OF CONSTRUCTION  1      1.1 Definitions  1 1.2 Accounting Terms  25 1.3 [intentionally omitted]  25 1.4 Certain Matters of Construction  25 1.5 US Loan Agreement definitions  25 1.6 Third Party rights  25      SECTION 2 CREDIT FACILITIES  26      2.1 Revolver Commitment  26 2.2 [Intentionally Deleted]  26 2.3 Letter of Credit Facility  26      SECTION 3 INTEREST, FEES AND CHARGES  28      3.1 Interest  28 3.2 Fees  30 3.3 Computation of Interest, Fees, Yield Protection  30 3.4 Reimbursement Obligations  30 3.5 Illegality  31 3.6 Inability to Determine Rates  31 3.7 Increased Costs; Capital Adequacy  31 3.8 Mitigation  32 3.9 Funding Losses  32      SECTION 4 LOAN ADMINISTRATION  32      4.1 Manner of Borrowing and Funding Revolver Loans  32 4.2 Number and Amount of LIBOR Loans; Determination of Rate  33 4.3 [Intentionally omitted.]  34 4.4 [Intentionally omitted.]  34 4.5 Effect of Termination  34      SECTION 5 PAYMENTS  34      5.1 General Payment Provisions  34 5.2 Repayment of Revolver Loans  34 5.3 [Intentionally Deleted]  35 5.4 Payment of Other Obligations  35 5.5 Marshaling; Payments Set Aside  35 5.6 Application of Payments  35 5.7 Loan Account; Account Stated  35 5.8 Taxes  35      SECTION 6 CONDITIONS PRECEDENT  36 
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     6.1 Conditions Precedent to Initial Loans  36 6.2 Conditions Precedent to All Credit Extensions  37 6.3 Limited Waiver of Conditions Precedent  38      SECTION 7 COLLATERAL  38      7.1 Debenture  38 7.2 Certain After-Acquired Collateral  38 7.3 No Assumption of Liability  38      SECTION 8 COLLATERAL ADMINISTRATION  38      8.1 Borrowing Base Certificates  38 8.2 Administration of Accounts  39 8.3 Administration of Inventory  40 8.4 Administration of Equipment  40 8.5 Administration of Deposit Accounts  41 8.6 General Provisions  41 8.7 [intentionally omitted]:  42      SECTION 9 REPRESENTATIONS AND WARRANTIES  43      9.1 General Representations and Warranties  43 9.2 Complete Disclosure  46      SECTION 10 COVENANTS AND CONTINUING AGREEMENTS  47      10.1 Affirmative Covenants  47 10.2 Negative Covenants  49      SECTION 11 EVENTS OF DEFAULT; REMEDIES ON DEFAULT  54      11.1 Events of Default  54 11.2 Remedies upon Default  55 11.3 License  56 11.4 Setoff  56 11.5 Remedies Cumulative; No Waiver  56      SECTION 12 MISCELLANEOUS  57      12.1 Consents, Amendments and Waivers  57 12.2 Indemnity  57 12.3 Notices and Communications  57 12.4 Performance of Borrower’s Obligations  58 12.5 Credit Inquiries  59 12.6 Severability  59 12.7 Cumulative Effect; Conflict of Terms  59 12.8 Counterparts  59 
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     12.9 Entire Agreement  59 12.10 No Control; No Advisory or Fiduciary Responsibility  59 12.11 Confidentiality  60 12.12 [Intentionally Omitted]  60 12.13 GOVERNING LAW  60 12.14 [Intentionally Omitted]  60 12.15 Waivers by Borrower  60 12.16 [intentionally omitted]  61 12.17 Judgment Currency  61    LIST OF SCHEDULES  Schedule G-1 Subsidiary GuarantorsSchedule P-1 Permitted Asset DispositionSchedule P-2 Permitted Capital LeasesSchedule P-3 Permitted InvestmentsSchedule 8.5 Deposit AccountsSchedule 8.6.1 Business LocationsSchedule 9.1.4 Names and Capital StructureSchedule 9.1.5 Former Names and CompaniesSchedule 9.1.9 Surety ObligationsSchedule 9.1.12 Patents, Trademarks, Copyrights and LicensesSchedule 9.1.15 Environmental MattersSchedule 9.1.17 LitigationSchedule 9.1.19 Pension PlansSchedule 9.1.21 Labour RelationsSchedule 10.1.11 Post-Closing CovenantsSchedule 10.2.1(d) Borrowed MoneySchedule 10.2.2 Existing LiensSchedule 10.2.17 Existing Affiliate Transactions
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**LOAN AGREEMENT**     **THIS LOAN AGREEMENT**is dated February 29, 2008, between **ASHWORTH U.K. LTD.**, a companyincorporated in England and Wales with its registered office at 21 St. Thomas Street, Bristol BS16JS, United Kingdom and with company number 02862712 (“Borrower”), and **BANK OF AMERICA,N.A.**, a national banking association (“Lender”).**R E C I T A L S:**     Borrower has requested that Lender provide a credit facility to Borrower to finance itsbusiness enterprise. Lender is willing to provide the credit facility on the terms and conditionsset forth in this Agreement.     **NOW, THEREFORE**, for valuable consideration hereby acknowledged, the parties agree as follows:**SECTION 1 DEFINITIONS; RULES OF CONSTRUCTION**     **1.1****DEFINITIONS****.**As used herein, the following terms have the meanings set forthbelow:     Account: any indebtedness of an Account Debtor owed to the Borrower under or pursuantto a Sale Contract, including all rights to payment for goods sold or leased, or for servicesrendered.     Account Debtor: a Person who is obligated under an Account.     Accounts Formula Amount: 85% of the Value of Eligible Accounts; provided,however, that such percentage shall be reduced by 1.0% for each whole percentage point(after rounding any partial percentage point to the nearest whole percentage point) that theDilution Percent exceeds 5.0%.     Affiliate: with respect to any Person, another Person that directly, or indirectlythrough one or more intermediaries, Controls or is Controlled by or is under common Control withthe Person specified. “Control” means the possession, directly or indirectly, of the powerto direct or cause the direction of the management or policies of a Person, whether through theability to exercise voting power, by contract or otherwise. “Controlling” and“Controlled” have correlative meanings.     Applicable Inventory Advance Rate: 70% during each Seasonal Advance Rate Period; and65% at all other times.     Applicable Law: all laws, rules, regulations and governmental guidelines applicableto the Person, conduct, transaction, agreement or matter in question, including all applicablestatutory law, common law and equitable principles, and all provisions of constitutions, treaties,statutes, rules, regulations, orders and decrees of Governmental Authorities.     Applicable Margin: with respect to any Type of Loan, the margin set forth below, asdetermined by the Fixed Charge Coverage Ratio for the last Fiscal Quarter with respect to whichfinancial statements have been delivered pursuant to **Section 10.1.2**:
 

 
           Base Rate LIBOR  Fixed Charge Revolver RevolverLevel Coverage Ratio Loans LoansI > 1.40:1.00 0% 1.25%II  > 1.20:1.00 £ 1.40:1.00 0% 1.50%III £ 1.20:1.00 0% 1.75%Until May 1, 2008, margins shall be determined as if Level I were applicable. Thereafter, themargins shall be subject to increase or decrease upon receipt by Lender pursuant to **Section 10.1.2**of the financial statements and corresponding Compliance Certificate for the last Fiscal Quarter,which change shall be effective on the first day of the calendar month following receipt. If, bythe first day of a month, any financial statements and Compliance Certificate due in the precedingmonth have not been received, then the margins shall be determined as if Level III were applicable,from such day until the first day of the calendar month following actual receipt.     Acquisition Consideration: the purchase consideration for any Permitted Acquisition(other than Equity Interests in Parent) and all other payments paid to or for the benefit of anyseller by Borrower or any Subsidiary in exchange for, or as part of, or in connection with, anyPermitted Acquisition, whether paid in cash or properties or otherwise and whether payable at orprior to the consummation of such Permitted Acquisition or deferred for payment at any future time,whether or not any such future payment is subject to the occurrence of any contingency, andincludes any and all payments representing the purchase price and any assumptions of Debt,“earn-outs” and other agreements to make any payment the amount of which is, or the terms ofpayment of which are, in any respect subject to or contingent upon the revenues, income, cash flowor profits (or the like) of any person or business; provided that any such future payment that issubject to a contingency shall be considered Acquisition Consideration only to the extent of thereserve, if any, required under GAAP at the time of such sale to be established in respect thereofby any Borrower or any Subsidiary.     Asset Disposition: a sale, lease, license, consignment, transfer or other dispositionof Property of an Obligor, including a disposition of Property in connection with a sale-leasebacktransaction or synthetic lease.     Availability: the Borrowing Base minus the principal balance of all Revolver Loans.     Availability Block: $1,000,000.     Availability Reserve: the sum (without duplication) of (a) the Inventory Reserve;(b) the Rent and Charges Reserve; (c) the LC Reserve; (d) the Bank Product Reserve; (e) all accruedRoyalties, whether or not then due and payable by the Borrower; (f) the aggregate amount ofliabilities secured by Liens upon Collateral that are senior to Lender’s Liens (but imposition ofany such reserve shall not waive an Event of Default arising therefrom); (g) the AvailabilityBlock; and (h) such additional reserves, in such amounts and with respect to such matters, asLender in its Credit Judgment may elect to impose from time to time.     Bank Product: any of the following products, services or facilities extended to theBorrower or a Subsidiary by Lender or any of its Affiliates: (a) Cash Management Services;
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(b) products under Hedging Agreements; (c) commercial credit card and merchant card services;and (d) leases and other banking products or services as may be requested by the Borrower or aSubsidiary, other than Letters of Credit or the US Loan Facility.     Bank Product Debt: Debt and other obligations of Borrower or a Subsidiary relating toBank Products.     Bank Product Reserve: the aggregate amount of reserves established by Lender fromtime to time in its reasonable discretion in respect of Bank Product Debt.     Base Rate: the rate of interest announced by Lender from time to time as its primerate. Such rate is a rate set by Lender based upon various factors including its costs and desiredreturn, general economic conditions and other factors, and is used as a reference point for pricingsome loans, which may be priced at, above or below such announced rate. Any change in such rateannounced by Lender shall take effect at the opening of business on the day specified in the publicannouncement of such change or, if no such public announcement is made, on the day on which it isnotified to the Borrower.     Base Rate Revolver Loan: a Revolver Loan that bears interest based on the Base Rate.     Board of Governors: The Board of Governors of the US Federal Reserve System.     Borrowed Money: with respect to any Obligor, without duplication, its (a) Debt that(i) arises from the lending of money by any Person to such Obligor, (ii) is evidenced by notes,drafts, bonds, debentures, credit documents or similar instruments, (iii) accrues interest or is atype upon which interest charges are customarily paid (excluding trade payables or taxes owing inthe ordinary course of business), or (iv) was issued or assumed as full or partial payment forProperty; (b) Capital Leases; (c) reimbursement obligations with respect to letters of credit; and(d) guaranties of any Debt of the foregoing types owing by another Person.     Borrowing: a group of Loans of one Type that are made on the same day or areconverted into Loans of one Type on the same day.     Borrowing Base: on any date of determination, an amount equal to the lesser of(a) the Revolver Commitment, minus the LC Reserve, or (b) the sum of the Accounts FormulaAmount, plus the Inventory Formula Amount, minus the Availability Reserve.     Borrowing Base Certificate: a certificate, in substantially the form agreed to byLender and Borrower prior to the date hereof or otherwise in form and substance reasonablysatisfactory to Lender, by which Borrower certifies calculation of the Borrowing Base.     Business Day: a day (other than a Saturday or Sunday) on which banks are open forgeneral business in London and:     (a) (in relation to any date for payment or purchase of a currency other than Euro) theprincipal financial centre of the country of that currency; or     (b) (in relation to any date for payment or purchase of Euro) any TARGET Day.
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     Capital Expenditures: all liabilities incurred, expenditures made or payments due(whether or not made) by the Borrower or a Subsidiary for the acquisition of any fixed assets, orany improvements, replacements, substitutions or additions thereto with a useful life of more thanone year, including the principal portion of Capital Leases, but excluding proceeds of AssetDispositions re-invested in the business of the Borrower or a Subsidiary making such AssetDisposition to the extent such re-investment is permitted hereunder. For purposes of thisdefinition, the purchase price of equipment or other fixed assets that are purchased simultaneouslywith the trade-in of existing assets or with insurance proceeds shall be included in CapitalExpenditures only to the extent of the net amount by which such purchase price exceeds the creditgranted by the seller of such assets for the assets being traded in at such time or the amount ofsuch insurance proceeds, as the case may be.     Capital Lease: any lease that is required to be capitalized for financial reportingpurposes in accordance with GAAP.     Capital Lease Lien: a Lien that secures a Capital Lease, encumbering only the assetsleased with such Capital Lease and accessions to, and products and proceeds (including insurancecondemnation proceeds) of, such leased assets.     Cash Collateral: cash, and any interest or other income earned thereon, that isdelivered to Lender to Cash Collateralize any Obligations.     Cash Collateral Account: a demand deposit, money market or other account maintainedwith Lender and subject to Lender’s Liens.     Cash Collateralize: the delivery of cash to Lender, as security for the payment ofObligations, in an amount equal to (a) with respect to LC Obligations, 105% of the aggregate LCObligations, and (b) with respect to any other Obligations (including Obligations arising underBank Products) other than contingent Obligations, Lender’s good faith estimate of the amount due orto become due, including all fees and other amounts relating to such Obligations. “CashCollateralization” has a correlative meaning.     Cash Equivalent: at any time:     (a) certificates of deposit maturing within one year after the relevant date of calculationand issued by a bank or financial institution which has a rating for its long-term unsecured andnon credit-enhanced debt obligations of A or higher by Standard & Poor’s Rating Services or FitchRatings Ltd or A-2 or higher by Moody’s Investor Services Limited or a comparable rating from aninternationally recognized credit rating agency;     (b) any investment in marketable debt obligations issued or guaranteed by the government ofthe United States of America, the United Kingdom or by an instrumentality or agency of any of themhaving an equivalent credit rating, maturing within one year after the relevant date of calculationand not convertible or exchangeable to any other security;     (c) commercial paper not convertible or exchangeable to any other security:          (i) for which a recognized trading market exists,
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          (ii) issued by an issuer incorporated in the United States of America or the United Kingdom,          (iii) which matures within one year after the relevant date of calculation, and          (iv) which has a credit rating of either A-1 or higher by Standard & Poor’s Rating Services orF-1 or higher by Fitch Ratings Ltd or P-1 or higher by Moody’s Investor Services Limited, or, if norating is available in respect of the commercial paper, the issuer of which has, in respect of itslong-term unsecured and non-credit enhanced debt obligations, an equivalent rating;     (d) any investment in money market funds which:          (i) have a credit rating of either A-1 or higher by Standard & Poor’s Rating Services or F-1or higher by Fitch Ratings Ltd or P-1 or higher by Moody’s Investor Services Limited,          (ii) invest substantially all their assets in securities of the types described in paragraphs(a) to (d) above, and          (iii) can be turned into cash on not more than 60 days’; notice;     (e) Sterling bills of exchange eligible for rediscount at the Bank of England and accepted bya banking institution which has, in respect of its long-term unsecured debt obligations, a ratingof A-2 or higher by Moody’s Investor Services Limited, a or higher by Standard & Poor’s RatingServices or a or higher by Fitch Ratings Ltd; or     (f) any other debt security approved by the Lender, in each case, denominated in Sterling,Euro or Dollars and to which the Borrower or any Guarantor is alone (or, together with any othersuch Obligor) beneficially entitled at that time and which is not issued or guaranteed by anyObligor or subject to any Lien (other than a Lien in favour of the Lender).     Cash Management Services: any services provided from time to time by Lender or any ofits Affiliates to the Borrower or a Subsidiary in connection with operating, collections, payroll,trust, or other depository or disbursement accounts, including automated clearinghouse, e-payable,electronic funds transfer, wire transfer, controlled disbursement, overdraft, depository,information reporting, lockbox and stop payment services.     Change in Law: the occurrence, after the date hereof, of (a) the adoption or takingeffect of any law, rule, regulation or treaty; (b) any change in any law, rule, regulation ortreaty or in the administration, interpretation or application thereof by any GovernmentalAuthority; or (c) the making or issuance of any request, guideline or directive (whether or nothaving the force of law) by any Governmental Authority.     Change of Control: (a) Parent ceases to own and control, beneficially and of record,directly or indirectly, all Equity Interests in Borrower or any Obligor (except in connection witha merger or consolidation permitted under Section 10.2.9); (b) a change in the majority ofdirectors of Parent, unless approved by the then majority of directors; or (c) all or substantiallyall of the assets of a Subsidiary of the Borrower are sold or transferred (except in connectionwith a merger or consolidation permitted under Section 10.2.9) without providing Lender atleast
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30 days’ prior written notice of such sale and obtaining the written consent of Lender whichconsent shall not be unreasonably withheld.     Claims: all liabilities, obligations, losses, damages, penalties, judgments,proceedings, interest, costs and expenses of any kind (including remedial response costs,reasonable lawyers’ fees and Extraordinary Expenses) at any time (including after Full Payment ofthe Obligations) incurred by or asserted against any Indemnitee in any way relating to (a) anyLoans, Letters of Credit, Loan Documents, or the use thereof or transactions relating thereto,(b) any action taken or omitted to be taken by any Indemnitee in connection with any LoanDocuments, (c) the existence or perfection of any Liens, or realization upon any Collateral,(d) exercise of any rights or remedies under any Loan Documents or Applicable Law, or (e) failureby any Obligor to perform or observe any terms of any Loan Document, in each case including allcosts and expenses relating to any investigation, litigation, arbitration or other proceeding(including an Insolvency Proceeding or appellate proceedings), whether or not the applicableIndemnitee is a party thereto.     Closing Date: as defined in **Section 6.1**.     Collateral: all Property described in any Security Documents as security for anyObligations, and all other Property that now or hereafter secures (or is intended to secure) anyObligations; provided, however, that the term “Collateral” shall not include, and no securityinterest hereunder or any other Loan Documents shall attach to, any Excluded Assets.     Commitment Termination Date: the earliest to occur of (a) the Revolver TerminationDate; (b) the date on which Borrower terminates the Revolver Commitment pursuant to **Section 2.1.3**;or (c) the date on which the Revolver Commitment is terminated pursuant to **Section 11.2**.     Compliance Certificate: a certificate, in form and substance reasonably satisfactoryto Lender, by which Borrower certifies compliance with **Section 10.1.2**and calculates the applicableLevel for the Applicable Margin.     Contingent Obligation: any obligation of a Person arising from a guaranty, indemnityor other assurance of payment or performance of any Debt, lease, dividend or other obligation(“primary obligations”) of another obligor (“primary obligor”) in any manner,whether directly or indirectly, including any obligation of such Person under any (a) guaranty,endorsement, co-making or sale with recourse of an obligation of a primary obligor; (b) obligationto make take-or-pay or similar payments regardless of nonperformance by any other party to anagreement; and (c) arrangement (i) to purchase any primary obligation or security therefor, (ii) tosupply funds for the purchase or payment of any primary obligation, (iii) to maintain or assureworking capital, equity capital, net worth or solvency of the primary obligor, (iv) to purchaseProperty or services for the purpose of assuring the ability of the primary obligor to perform aprimary obligation, or (v) otherwise to assure or hold harmless the holder of any primaryobligation against loss in respect thereof. The amount of any Contingent Obligation shall bedeemed to be the stated or determinable amount of the primary obligation (or, if less, the maximumamount for which such Person may be liable under the instrument evidencing the ContingentObligation) or, if not stated or determinable, the maximum reasonably anticipated liability withrespect thereto.     Credit Judgment: Lender’s judgment exercised reasonably and in good faith, based uponits consideration of any factor that it believes (a) could reasonably be expected to adversely
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affect the quantity, quality, mix or value of Collateral, the enforceability or priority ofLender’s Liens, or the amount that Lender could reasonably be expected to receive in liquidation ofany Collateral (including any such Collateral consisting of Inventory subject to a License thatrestricts Lender’s right to dispose of such Inventory, unless Lender has received an appropriateLien Waiver); (b) demonstrates that any collateral report or financial information delivered by anyObligor is incomplete, inaccurate or misleading in any material respect; (c) materially increasesthe likelihood of any Insolvency Proceeding involving an Obligor; or (d) creates or couldreasonably be expected to result in a Default or Event of Default. In exercising such judgment,Lender may consider any factors related to the Borrower and the business of the Borrower that couldreasonably be expected to increase the credit risk of lending to Borrower on the security of theCollateral.     Debenture: the fixed and floating charge debenture created or to be created byBorrower in favour of Lender in the form or substantially in the form of the draft initialed foridentification purposes by Borrower and Lender.     Debt: as applied to any Person, without duplication, (a) all obligations of suchPerson for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes,loan agreements or other similar instruments; (b) all obligations of such person to pay thedeferred purchase price of property or services (other than deferred compensation and tradeaccounts payable, in each case in the ordinary course of business); (c) Capital Leases; (d) allContingent Obligations; (e) all reimbursement obligations in connection with letters of creditissued for the account of such Person; and (f) in the case of the Borrower, the Obligations. TheDebt of a Person shall include any recourse Debt of any partnership in which such Person is ageneral partner or joint venturer.     Default: an event or condition that, with the lapse of time or giving of notice,would constitute an Event of Default.     Default Rate: for any Obligation (including, to the extent permitted by law, interestnot paid when due), 2% plus the interest rate otherwise applicable thereto.     Deposit Account: a blocked account of Borrower with Lender or other financialinstitution reasonably acceptable to Lender, to which all payments from Account Debtors (other thanas set forth in **Section 8.2.6**) are required to be paid over which Lender has exclusive control forwithdrawal purposes by virtue of the Debenture and the Deposit Account Control Agreements.     Deposit Account Control Agreements: the notices and acknowledgements to be executedby each institution maintaining a Deposit Account pursuant to the Debenture.     Dilution Percent: the percent, determined for Borrower’s most recently completed 12months, equal to (a) all non-cash reductions to Accounts, including, but not limited to, bad debtwrite-downs or write-offs, discounts, returns, promotions, credits, credit memos and other dilutiveitems with respect to Accounts, dividedby (b) gross collections.     Distribution: any declaration or payment of a distribution, interest or dividend onany Equity Interest; any distribution, advance or repayment of Debt to a holder of Equity Interests(in its capacity as such); or any purchase, redemption, or other acquisition or retirement forvalue of any Equity Interest, in each case other than payment-in-kind and other than dividendpayments
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or other distributions payable solely in the common stock or other common equity interests ofthe person making such dividend or other distribution.     Dollars: lawful money of the United States.     EBITDA: determined on a consolidated basis for Parent and its Subsidiaries, netincome, calculated before interest expense, provision for income taxes, depreciation andamortization expense, gains or extraordinary charges or non-cash charges or losses arising from thesale of capital assets, gains arising from the write-up of assets, and any extraordinary gains (ineach case, to the extent included or deducted, as applicable, in determining net income).     Eligible Account: an Account owing to the Borrower that arises in the ordinary courseof business from the sale of goods or rendition of services***,***is payable in Dollars, Euro orSterling and is not excluded by the criteria set forth in the next succeeding sentence. No Accountshall be an Eligible Account if (a) it is unpaid for more than 60 days after the original due date,or more than 120 days after the original invoice date; (b) 50% or more of the Accounts owing by theAccount Debtor are not Eligible Accounts under clause (a) of this definition; (c) when aggregatedwith other Accounts owing by the Account Debtor, it exceeds 20% of the aggregate Eligible Accounts(or such higher percentage as Lender may establish for the Account Debtor from time to time);(d) it does not conform with a covenant or representation herein; (e) it is owing by a creditor orsupplier, or is otherwise subject to a potential offset, counterclaim, dispute, deduction,discount, recoupment, reserve, defense, chargeback, credit or allowance (but ineligibility shall belimited to the amount thereof); (f) an Insolvency Proceeding has been commenced by or against theAccount Debtor; or the Account Debtor has failed, has suspended or ceased doing business, isliquidating, dissolving or winding up its affairs, or is not Solvent; (g) the Account Debtor isorganized or has its principal offices or assets in a jurisdiction which was not in the EuropeanUnion prior to May 1, 2004; (h) it is owing by the United States or United Kingdom or anydepartment, agency or instrumentality of either, unless, as to an Account owing by the UnitedStates, or any department, agency or instrumentality, the Account has been assigned to Lender incompliance with the Assignment of Claims Act; (i) it is not subject to a duly perfected, firstpriority Lien in favor of Lender, or is subject to any other Lien (other than customary chargebackrights, and Permitted Liens specified in Sections 10.2.2(c), (d) and (g) and subject, in the caseof the first priority nature of Lender’s Lien, to such specified Permitted Liens having priority byoperation of applicable law over the Lien of the Lender); (j) the goods giving rise to it have notbeen delivered to and accepted by the Account Debtor, the services giving rise to it have not beenaccepted by the Account Debtor, or it otherwise does not represent a final sale; (k) it isevidenced by Chattel Paper or an Instrument of any kind, or has been reduced to judgment; (l) itspayment has been extended, the Account Debtor has made a partial payment, or it arises from a saleon a cash-on-delivery basis; (m) it arises from a sale to an Affiliate, or from a sale on abill-and-hold, guaranteed sale, sale-or-return, sale-on-approval, consignment, or other repurchaseor return basis; (n) it represents a progress billing or retainage; or (o) it includes a billingfor interest, fees or late charges, but ineligibility shall be limited to the extent thereof. Incalculating delinquent portions of Accounts under clauses (a) and (b), credit balances more than 60days past due or more than 120 days from the invoice date for such Account will be excluded. Forthe purpose of valuing Eligible Accounts denominated in Euro or Sterling, the amount of suchEligible Account shall be converted into the Equivalent Amount thereof in Dollars on the lastBusiness Day of each fiscal month; provided, that Lender reserves the right to adjust, at any timein its reasonable credit judgment, the value of Dollars of such Eligible Accounts to take intoaccount currency rate exchange fluctuations since the last valuation thereof.
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     Eligible In-Transit Inventory: Inventory owned by the Borrower that would be EligibleInventory if it were not in transit from a foreign location to a location of the Borrower withinthe United Kingdom and that is not excluded by the following criteria. No Inventory shall beEligible In-Transit Inventory unless it (a) is subject to a negotiable bill of lading showingLender as indorsee, which bill of lading is in the possession of Lender, or held to the order ofLender by such other Person as Lender shall approve; (b) is fully insured in a manner satisfactoryto Lender, with the interests of Lender noted on the policy; (c) has been identified to theapplicable sales contract and title has passed to the Borrower; (d) is not sold by a vendor thathas a right to reclaim, divert shipment of, repossess, stop delivery, claim any reservation oftitle or otherwise assert Lien rights against the Inventory, or with respect to whom the Borroweris in default of any obligations; (e) is subject to purchase orders and other sale documentationsatisfactory to Lender; (f) is shipped by a common carrier that is not affiliated with the vendor;(g) is being handled by a customs broker, freight-forwarder or other handler that has delivered aLien Waiver and (h) is subject to a pledge or charge in favour of Lender in form and substancesatisfactory to Lender.     Eligible Inventory: Inventory owned by the Borrower that is not excluded by thefollowing criteria. No Inventory shall be Eligible Inventory unless it (a) is finished goods, andnot raw materials or work-in-process, packaging or shipping materials, labels, samples, displayitems, bags, replacement parts or manufacturing supplies; (b) is not held on consignment, norsubject to any deposit or down payment; (c) is in new and saleable condition and is not damaged,defective, shopworn or otherwise unfit for sale; (d) is not greater than 12 months old), obsoleteor unmerchantable, and does not constitute returned or repossessed goods; (e) meets all standardsimposed by any Governmental Authority, and does not constitute hazardous materials under anyEnvironmental Law; (f) conforms with the covenants and representations herein; (g) is subject toLender’s duly perfected, first priority Lien, and no other Lien (other than the Permitted Liensspecified in Section 10.2.2(c), (d) and (g) and subject, in the case of the first priority natureof Lender’s Lien, to such specified Permitted Liens having priority by operation of applicable lawover the Lien of the Lender); (h) is within the United Kingdom, is not in transit except betweenlocations of Borrower, and is not consigned to any Person; (i) is not subject to any warehousereceipt or negotiable Document; (j) it is not subject to a retention of title claim by itssupplier; (k) is not located on leased premises or in the possession of a warehouseman, processor,repairman, mechanic, shipper, freight forwarder or other Person, unless the lessor or such Personhas delivered a Lien Waiver or an appropriate Rent and Charges Reserve has been established; and(l) is reflected in the details of a current perpetual inventory report (provided, thatInventory that is in-transit or that is “pack and hold” Inventory does not need to meet theconditions of this clause (l)).     Eligible Slow Moving Inventory: Inventory owned by the Borrower (a) that would beEligible Inventory if it were not greater than 12 months old or (b) that is less than 24 monthsold.     Enforcement Action: any action to enforce any Obligations or Loan Documents or torealize upon any Collateral (whether by judicial action, self-help, notification of AccountDebtors, exercise of setoff or recoupment, or otherwise).     Environmental Laws: any applicable law or regulation which relates to:     (a) the pollution or protection of the environment;
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     (b) harm to or the protection of human health;     (c) the conditions of the workplace; or     (d) any emission or substance capable of causing harm to any living organism or theenvironment.     Environmental Notice: a written notice from any Governmental Authority or otherPerson of any possible noncompliance with, investigation of a possible violation of, litigationrelating to, or potential fine or liability under any Environmental Law, or with respect to anyEnvironmental Release, environmental pollution or hazardous materials, including any complaint,summons, citation, order, claim, demand or request for correction, remediation or otherwise.     Environmental Release: (i) a breach, or alleged breach of, Environmental Law (ii) anyaccident, fire, explosion or other similar event of any type involving an emission or substancewhich is capable of causing harm to any living organism or the environment or (iii) any otherenvironmental contamination.     Equipment: all machinery, fixtures, furniture, office machinery, vehicles, trailers,implements and other equipment of every kind and description now owned or hereafter acquired by andused or useful in connection with the Borrower’s business and all equipment of like kind or typehereafter acquired by Borrower in substitution or replacement thereof, and all additions andaccessions thereto.     Equity Interest: the ownership interest of any (a) shareholder in a corporation;(b) partner in a partnership (whether general, limited, limited liability or joint venture);(c) member in a limited liability company; or (d) other Person having any other form of equitysecurity or ownership interest.     Equivalent Amount: on any date of determination, with respect to obligations orvaluations denominated in Euro or Sterling (the “first currency”), the amount of Dollars (the“second currency”) which would result from the Lender converting the first currency into the secondcurrency at the applicable currency exchange rate as reasonably determined by Lender and set forthon the world wide web. (unless otherwise specified by Lender, the applicable currency exchange ratefor any currency at any time shall be the rate set forth for such currency at such time at thefollowing website link:http://www.oanda.com/cgi/crossrate/crossrateresult.shtml?quotes=GBP"es=CAD"es=EUR"es=JPY"es=CHF"es=USD"es=AUD"es=SEK&go=Get+my+Table)     Euro or €: the single currency for the time being of Participating Member States.     Event of Default: as defined in **Section 11**.     Excluded Assets: (a) real property and any fixtures attached or appurtenant thereto,(b) any rights or property acquired by an Obligor under, or subject to, a lease, contract, orlicense, if and for so long as the grant of a Lien under any Security Document would constitute orresult in (x) the abandonment, invalidation or unenforceability of any right, title or interest ofsuch Obligor therein or (y) a breach or termination pursuant to the terms of, or a default under,
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any such lease, contract, or license (other than to the extent that any restriction on suchassignment would be rendered ineffective pursuant to any Applicable Law or principles of equity),(c) any insurance or condemnation proceeds from any of the foregoing to the extent required to bemaintained for the benefit of, and paid over to, a Person other than Parent, Borrower or theirAffiliates, (d) any insurance or condemnation proceeds covering any real property leased by anObligor or fixtures attached or appurtenant thereto to the extent required to be maintained for thebenefit of, and paid over to, the applicable landlord; any insurance or condemnation proceeds fromany of the foregoing, (e) any insurance or condemnation proceeds covering any real property leasedby an Obligor or fixtures attached or appurtenant thereto to the extent required to be maintainedfor the benefit of, and paid over to, the applicable landlord, and (f) the UK Lease Deposit;provided, however, that at such time as the condition causing such abandonment,invalidation or unenforceability shall be no longer in effect with respect to any property, suchproperty shall no longer constitute Excluded Assets.     Excluded Tax: with respect to Lender or any other recipient of a payment to be madeby or on account of any Obligation, taxes imposed on or measured by its overall net income (howeverdenominated), and franchise taxes imposed on it (in lieu of net income taxes), by the jurisdiction(or any political subdivision thereof) under the laws of which such recipient is organized or inwhich its principal office is located or, in the case of Lender, in which its applicable lendingoffice is located.     Extraordinary Expenses: all costs, expenses or advances that Lender may incur withrespect to the Obligations during a Default or Event of Default, or during the pendency of anInsolvency Proceeding of an Obligor, including those relating to (a) any audit, inspection,repossession, storage, repair, appraisal, insurance, manufacture, preparation or advertising forsale, sale, collection, or other preservation of or realization upon any Collateral; (b) anyaction, arbitration or other proceeding (whether instituted by or against Lender, any Obligor, anyrepresentative of creditors of an Obligor or any other Person) in any way relating to anyCollateral (including the validity, perfection, priority or avoidability of Lender’s Liens withrespect to any Collateral), Loan Documents, Letters of Credit or Obligations, including any lenderliability or other Claims; (c) the exercise, protection or enforcement of any rights or remedies ofLender in, or the monitoring of, any Insolvency Proceeding; (d) settlement or satisfaction of anytaxes, charges or Liens with respect to any Collateral; (e) any Enforcement Action; and(f) negotiation and documentation of any modification, waiver, workout, restructuring orforbearance with respect to any Loan Documents or Obligations. Such costs, expenses and advancesinclude transfer fees, Other Taxes, storage fees, insurance costs, permit fees, utility reservationand standby fees, legal fees, appraisal fees, brokers’ fees and commissions, auctioneers’ fees andcommissions, accountants’ fees, environmental study fees, wages and salaries paid to employees ofany Obligor or independent contractors in liquidating any Collateral, and travel expenses.     Fiscal Quarter: each period of three months, commencing on the first day of a FiscalYear.     Fiscal Year: the fiscal year of Borrower and Subsidiaries for accounting and taxpurposes, ending on October 31 of each year.     Fixed Charge Coverage Ratio: the ratio, determined on a consolidated basis for Parentand its Subsidiaries, of (a) EBITDA minus Capital Expenditures (except those financed with
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Borrowed Money other than Revolver Loans) and cash taxes paid, to (b) Fixed Charges. Suchratio shall be measured on a Fiscal Year to date basis for measurement dates prior to the end ofFiscal Year 2008, and on a most recent four Fiscal Quarter basis for measurement dates thereafter.     Fixed Charges: the sum of interest expense (other than payment-in-kind), principalpayments made by any Obligor on Borrowed Money (other than the Obligations), and Distributions madeby Parent.     Foreign Subsidiary: a Subsidiary that is organized under laws of any jurisdictionother than England and Wales.     FSA: the Financial Services Authority of the United Kingdom.     Full Payment: with respect to any Obligations, (a) if such Obligations areObligations other than (i) LC Obligations, (ii) Obligations arising under Bank Products, or (iii)contingent indemnity Obligations, the full cash payment thereof, including any interest, fees andother charges accruing during an Insolvency Proceeding (whether or not allowed in the proceeding);and (b) if such Obligations are LC Obligations or Obligations arising under Bank Products, CashCollateralization thereof (or delivery of a standby letter of credit acceptable to Lender in itsdiscretion, in the amount of required Cash Collateral). The Revolver Loans shall not be deemed tohave been paid in full until the Revolver Commitment has expired or been terminated.     GAAP: generally accepted accounting principles in effect in the United States fromtime to time, including any changes permitted under such principles as set forth in **Section 1.2**.     Governmental Approvals: all authorizations, consents, approvals, licenses andexemptions of, registrations and filings with, and required reports to, all GovernmentalAuthorities.     Governmental Authority: any national, federal, state, municipal, foreign or othergovernmental department, agency, commission, board, bureau, court, tribunal, instrumentality,political subdivision, or other entity or officer exercising executive, legislative, judicial,regulatory or administrative functions for or pertaining to any government or court, in each casewhether associated with the United Kingdom, the European Union or a foreign entity or government.     Guarantors: Parent and each of Borrower’s Subsidiaries set forth on **Schedule G-1**andeach other Person who guarantees payment or performance of any Obligations.     Guaranty: each guaranty agreement executed by a Guarantor in favor of Lender.     Hedging Agreement: an agreement relating to any swap, cap, floor, collar, option,forward, cross right or obligation, or combination thereof or similar transaction, with respect tointerest rate, foreign exchange, currency, commodity, credit or equity risk.     Immaterial Tax: a state or local Tax obligation of an Obligor, with respect to whichthe amount of all such Taxes is less than $250,000.     Indemnified Taxes: Taxes other than Excluded Taxes.
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     Indemnitees: Lender and its officers, directors, employees, Affiliates, agents andattorneys.     Insolvency Proceeding: any case or proceeding commenced by or against a Person underany law for, or any agreement of such Person to, or any application or petition for the purposes of(a) the entry of an order for relief under any insolvency, debtor relief or debt adjustment law;(b) the appointment of a receiver, trustee, liquidator, provisional liquidator, administrator,conservator or other custodian for such Person or for all or any part of its Property; or (c) anassignment or trust mortgage for the benefit of creditors.     Insurance Assignment: each collateral assignment of insurance pursuant to which anObligor assigns to Lender such Obligor’s rights under business interruption or other insurancepolicies as Lender reasonably deems appropriate, as security for the Obligations.     Intellectual Property: all intellectual Property of a Person, including inventions,designs, patents, copyrights, trademarks, service marks, trade names, trade secrets, confidentialor proprietary information, customer lists, know-how, software and databases; all embodiments orfixations thereof and all related documentation, applications, registrations and franchises; alllicenses or other rights to use any of the foregoing; and all books and records relating to theforegoing.     Intellectual Property Claim: any claim or assertion (whether in writing, by suit orotherwise) that the Borrower’s or Subsidiary’s ownership, use, marketing, sale or distribution ofany Inventory, Equipment, Intellectual Property or other Property violates another Person’sIntellectual Property.     Intercompany Subordination Agreement: the Intercompany Subordination Agreementexecuted by Parent, Borrower and each of their Subsidiaries in form and substance satisfactory toLender.     Interest Period: as defined in **Section 3.1.3**.     Inventory: all goods intended for sale, lease, display or demonstration; all work inprocess; and all raw materials, and other materials and supplies of any kind that are or could beused in connection with the manufacture, printing, packing, shipping, advertising, sale, lease orfurnishing of such goods, or otherwise used or consumed in the Borrower’s business (but excludingEquipment).     Inventory Formula Amount: the least of (i) $10,000,000; (ii) the sum of (x) theApplicable Inventory Advance Rate times the Value of Eligible Inventory; plus (y) the ApplicableInventory Advance Rate times the Value of Eligible In-Transit Inventory plus (z) the Slow MovingInventory Advance Rate times the Value of Eligible Slow Moving Inventory, or (iii) 85% of theproduct of (y) NOLV Percentage multiplied by (z) the sum of (1) the Value of Eligible Inventoryplus (2) the Value of Eligible In-Transit Inventory plus (3) the Value of Eligible Slow MovingInventory.     Inventory Reserve: reserves established by Lender to reflect factors that maynegatively impact the Value of Inventory, including change in salability, obsolescence,seasonality, theft, shrinkage, imbalance, change in composition or mix, markdowns and vendorchargebacks.
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     Inverse Inventory Advance Rate: for LC Obligations relating to documentary Letters ofCredit issued to support Borrower’s purchase of Inventory, a percentage equal to 100% minusthe Applicable Inventory Advance Rate.     Investment: any acquisition of all or substantially all assets of a Person; anyacquisition of record or beneficial ownership of any Equity Interests of a Person; or any advanceor capital contribution to or other investment in a Person.     LC Application: an application by Borrower to Lender for issuance of a Letter ofCredit, in form and substance reasonably satisfactory to Lender.     LC Conditions: the following conditions necessary for issuance of a Letter of Credit:(a) each of the conditions set forth in **Section 6**; (b) after giving effect to such issuance, totalLC Obligations do not exceed the Letter of Credit Subline, no Overadvance exists and, if noRevolver Loans are outstanding, the LC Obligations do not exceed the Borrowing Base (without givingeffect to the LC Reserve for purposes of this calculation); (c) the expiration date of such Letterof Credit is (i) no more than 365 days from issuance, in the case of standby Letters of Credit,(ii) no more than 120 days from issuance, in the case of documentary Letters of Credit, and(iii) at least 20 Business Days prior to the Revolver Termination Date; (d) the Letter of Creditand payments thereunder are denominated in Dollars**,**Euro or Sterling; and (e) the purpose and formof the proposed Letter of Credit is satisfactory to Lender in its reasonable discretion.     LC Documents: all documents, instruments and agreements (including LC Requests and LCApplications) delivered by Borrower or any other Person to Lender in connection with issuance,amendment or renewal of, or payment under, any Letter of Credit.     LC Obligations: the sum (without duplication) of (a) all amounts owing by Borrowerfor any drawings under Letters of Credit (such amounts denominated in Euro or Sterling to be valuedat the Equivalent Amount thereof); (b) the stated amount of all outstanding Letters of Credit(Letters of Credit denominated in Euro or Sterling to be valued at the Equivalent Amount thereof);and (c) all fees and other amounts owing with respect to Letters of Credit.     LC Request: a request for issuance of a Letter of Credit, to be provided by Borrower,in form reasonably satisfactory to Lender.     LC Reserve: the aggregate of all LC Obligations, other than (a) those that have beenCash Collateralized and (b) if no Default or Event of Default exists, those constituting chargesowing to Lender. For purposes of this definition, (x) in the case of documentary Letters of Creditissued to support Borrower’s purchase of Eligible In-Transit Inventory (and so long as such Lettersof Credit have not become bankers acceptances), the reserve shall be limited to (i) the InverseInventory Advance Rate times (ii) the amount of LC Obligations attributable to suchdocumentary Letters of Credit and (y) in the case of all other Letters of Credit and bankersacceptances, the reserve shall equal 100% of the face amount of all outstanding Letters of Creditand bankers acceptances.     Lender Professionals: attorneys, solicitors, counsel, accountants, appraisers,auditors, business valuation experts, environmental engineers or consultants, turnaroundconsultants, and other professionals and experts retained by Lender.
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     Letter of Credit: any standby or documentary letter of credit issued by Lender forthe account of the Borrower, or any indemnity, guarantee, exposure transmittal memorandum orsimilar form of credit support issued by Lender for the benefit of the Borrower.     Letter of Credit Subline: $2,000,000.     LIBOR: for any Interest Period with respect to a LIBOR Loan, the per annum rate ofinterest (rounded upward, if necessary, to the nearest 1/100th of 1%), determined by Lender atapproximately 11:00 a.m. (London time) two Business Days prior to or, in the case of Sterling, onthe first day of such Interest Period, for a term comparable to such Interest Period, equal to (1)(in the case of Dollars and Sterling) (a) the British Bankers Association Interest Settlement Rate(“BBA LIBOR”) for the relevant currency, as displayed on the appropriate page of theReuters screen (or, if unavailable, such other commercially available source as may be designatedby Lender) or (b) if BBA LIBOR is not available for any reason, the interest rate at which depositsin the relevant currency and in the approximate amount of the LIBOR Loan would be offered byLender’s London branch to major banks in the London interbank market and (2) (in the case of Euro)(a) the percentage rate per annum determined by the Banking Federation of the European Union (“**BFEURate**”) for the relevant Interest Period as displayed on the appropriate page of the Reuters screen(or, if unavailable, such other commercially available source as may be designated by Lender), suchrate being known as “EURIBOR” or (b) if the BFEU Rate is not available for any reason, the interestrate at which deposits in Euro and in the approximate amount of the LIBOR Loan would be offered byLender’s London branch to major banks in the European interbank market.     LIBOR Loan: each set of LIBOR Revolver Loans having a common length and commencementof Interest Period and denominated in the same currency.     LIBOR Revolver Loan: a Revolver Loan that bears interest based on LIBOR.     License: any license or agreement under which an Obligor is authorized to useIntellectual Property in connection with any manufacture, marketing, distribution or disposition ofCollateral, any use of Property or any other conduct of its business.     Licensor: any Person from whom an Obligor obtains the right to use any IntellectualProperty.     Lien: any Person’s interest in Property securing an obligation owed to, or a claimby, such Person, whether such interest is based on common law, statute or contract, includingliens, security interests, pledges, hypothecations, statutory trusts, reservations, exceptions,encroachments, easements, rights-of-way, covenants, conditions, restrictions, leases, and othertitle exceptions and encumbrances affecting Property.     Lien Waiver: an agreement, in form and substance reasonably satisfactory to Lender,by which (a) for any material Collateral located on leased premises, the lessor waives orsubordinates any Lien it may have on the Collateral to the Lien of Lender, and agrees to permitLender to enter upon the premises and remove the Collateral or to use the premises to store ordispose of the Collateral; (b) for any Collateral held by a warehouseman, processor, shipper,customs broker or freight forwarder, such Person waives or subordinates any Lien it may have on theCollateral to the Lien of Lender, agrees to hold any Documents in its possession relating to theCollateral as agent for Lender, and agrees to deliver the Collateral to Lender upon request;
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(c) for any Collateral held by a repairman, mechanic or bailee, such Person acknowledgesLender’s Lien, waives or subordinates any Lien it may have on the Collateral to the Lien of Lender,and agrees to deliver the Collateral to Lender upon request; and (d) for any Collateral subject toa Licensor’s Intellectual Property rights, the Licensor grants to Lender the right, vis-à-vis suchLicensor, to enforce Lender’s Liens with respect to the Collateral, including the right to disposeof it with the benefit of the Intellectual Property, whether or not a default exists under anyapplicable License.     Loan: a Revolver Loan.     Loan Account: the loan account established by Lender on its books pursuant to**Section 5.7**.     Loan Documents: this Agreement, Other Agreements and Security Documents.     Loan Year: each calendar year commencing on the Closing Date and on each anniversaryof the Closing Date.     Mandatory Cost: the percentage rate per annum calculated by Lender as being theaddition to the interest rate required to compensate Lender for the cost of compliance with (a) therequirements of the Bank of England and/or the FSA (or, in either case, any other authority whichreplaces all or any of its functions) or (b) the requirements of the European Central Bank.     Material Adverse Effect: the effect of any event or circumstance that, taken alone orin conjunction with other events or circumstances, (a) has or could be reasonably expected to havea material adverse effect on the business, operations, Properties, prospects or condition(financial or otherwise) of the Obligors taken as a whole, on the value of any material Collateral,on the enforceability of any Loan Documents, or on the validity or priority of Lender’s Liens onany Collateral; (b) impairs the ability of the Obligors taken as a whole, to perform any materialobligations under the Loan Documents, including repayment of any Obligations; or (c) otherwiseimpairs the ability of Lender to enforce or collect any Obligations or to realize upon anyCollateral.     Material Contract: any agreement or arrangement to which the Borrower or a Subsidiaryis party (other than the Loan Documents) (a) for which breach, termination, nonperformance orfailure to renew could reasonably be expected to have a Material Adverse Effect; or (b) thatrelates to Subordinated Debt, or Debt in an aggregate amount of $100,000 or more.     Moody’s: Moody’s Investors Service, Inc., and its successors.     Net Proceeds: with respect to an Asset Disposition, proceeds (including, whenreceived, any deferred or escrowed payments) received by the Borrower or a Subsidiary in cash fromsuch disposition, net of (a) reasonable and customary costs and expenses actually incurred inconnection therewith, including legal fees and sales commissions; (b) amounts applied to repaymentof Debt secured by a Permitted Lien senior to Lender’s Liens on Collateral sold; (c) transfer orsimilar taxes; and (d) reserves for indemnities, until such reserves are no longer needed;provided, that “Net Proceeds” shall not include proceeds of or constituting Excluded Assets.
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     NOLV Percentage: the net orderly liquidation value of Inventory, expressed as apercentage, expected to be realized at an orderly, negotiated sale held within a reasonable periodof time, net of all liquidation expenses, as determined from the most recent appraisal ofBorrower’s Inventory performed by an appraiser and on terms reasonably satisfactory to Lender.     Notice of Borrowing: a Notice of Borrowing to be provided by Borrower to request aBorrowing of Revolver Loans, in form satisfactory to Lender.     Notice of Conversion/Continuation: a Notice of Conversion/Continuation to be providedby Borrower to request a conversion or continuation of any Loans as LIBOR Loans, in formsatisfactory to Lender.     Obligations: all (a) principal of and premium, if any, on the Loans, (b) LCObligations and other obligations of Obligors with respect to Letters of Credit, (c) interest,expenses, fees and other sums payable by Obligors under Loan Documents, (d) obligations of Obligorsunder any indemnity for Claims, (e) Extraordinary Expenses, (f) Bank Product Debt, and (g) otherDebts, obligations and liabilities of any kind owing by any Obligor to Lender pursuant to the LoanDocuments, whether now existing or hereafter arising, whether evidenced by a note or other writing,whether allowed in any Insolvency Proceeding, whether arising from an extension of credit, issuanceof a letter of credit, acceptance, loan, guaranty, indemnification or otherwise, and whether director indirect, absolute or contingent, due or to become due, primary or secondary, or joint orseveral; provided, however, that the Obligations shall not include any obligations under the USLoan Facility. Obligations denominated in Euro or Sterling shall be valued at the Equivalent Amountthereof.     Obligor: the Borrower, each Guarantor, or other Person that is liable for payment ofany Obligations or that has granted a Lien in favor of Lender on its assets to secure anyObligations.     Organic Documents: with respect to any Person, its charter, certificate or articlesof incorporation, by-laws, articles of organization, memorandum and articles of association,constitution (within the meaning of section 257 of the Companies Act 2006), limited liabilityagreement, operating agreement, members agreement, shareholders agreement, partnership agreement,certificate of partnership, certificate of formation, voting trust agreement, or similar agreementor instrument governing the formation or operation of such Person.     Other Agreement: each LC Document; Lien Waiver; Borrowing Base Certificate,Compliance Certificate, the Intercompany Subordination Agreement, financial statement or reportdelivered hereunder; or other document, instrument or agreement (other than this Agreement or aSecurity Document) now or hereafter delivered by an Obligor or other Person to Lender in connectionwith any transactions relating hereto.     Other Taxes: all present or future stamp or documentary taxes or any other excise orproperty taxes, charges or similar levies arising from any payment made under any Loan Document orfrom the execution, delivery or enforcement of, or otherwise with respect to, any Loan Document.     Overadvance: as defined in **Section 2.1.4**.     Parent: Ashworth, Inc., a Delaware corporation.
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     Participating Member State: any member state of the European Communities that adoptsor has adopted the Euro as its lawful currency in accordance with legislation of the EuropeanCommunity relating to Economic and Monetary Union.     Payment Item: each check, draft or other item of payment payable to the Borrower,including those constituting proceeds of any Collateral.     Pension Plan: the Borrower’s personal pension plan and any employee benefit plan orarrangement (a) maintained or contributed to by any Obligor or Subsidiary; (b) mandated by agovernment for employees of any Obligor or Subsidiary.     Permitted Acquisition: any transaction for the (a) acquisition of all orsubstantially all of the property of any Person, or of any business or division of any Person; or(b) acquisition (including by merger or consolidation) of all or substantially all of the EquityInterests of any Person that becomes a Subsidiary after giving effect to such transaction; providedthat each of the following conditions shall be met:     (i) no Default or Event of Default then exists or would result therefrom;     (ii) after giving effect to such transaction, Availability is at least $2,000,000;     (iii) no Borrower or Subsidiary shall, in connection with any such transaction, assumeor remain liable with respect to any Debt of the related seller, except to the extentpermitted under **Section 10.2.1**;     (iv) the Person or business to be acquired shall be, or shall be engaged in, a businessof the type that Borrower and the Subsidiaries are permitted to be engaged in under **Section10.2.16**and the property acquired in connection with any such transaction shall be madesubject to the Lien of the Security Documents and shall be free and clear of any Liens,other than Permitted Liens;     (v) the Board of Directors of the Person to be acquired shall not have indicatedpublicly its opposition to the consummation of such acquisition (which opposition has notbeen publicly withdrawn);     (vi) all transactions in connection therewith shall be consummated in all materialrespects in accordance with all Applicable Law;     (vii) with respect to any transaction, unless Lender shall otherwise agree, Borrowershall have provided Lender with (A) historical financial statements for the last threefiscal years (or, if less, the number of years since formation) of the Person or business tobe acquired (audited if available without undue cost or delay) and unaudited financialstatements thereof for the most recent interim period which are available, (B) reasonablydetailed projections for the succeeding five years pertaining to the Person or business tobe acquired and updated projections for Parent and the Subsidiaries after giving effect tosuch transaction, (C) a reasonably detailed description of all material information relatingthereto and copies of all material documentation pertaining to such transaction, and (D) allsuch other information and data relating to such transaction or the person or business to beacquired as may be reasonably requested by Lender;
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     (viii) at least 10 Business Days prior to the proposed date of consummation of thetransaction, Borrower shall have delivered to Lender a certificate of a Senior Officercertifying that (A) such transaction complies with this definition, and (B) such transactioncould not reasonably be expected to result in a Material Adverse Effect;     (ix) the Acquisition Consideration for such acquisition shall not exceed $2,000,000,and the aggregate amount of the Acquisition Consideration for all Permitted Acquisitionssince the Closing Date shall not exceed $10,000,000;     (x) prior to the date of consummation of the transaction, Lender shall have receivedand approved all acquisition documents, lien searches, opinions and other documents asrequested by Lender;     (xi) For proposed Permitted Acquisitions other than those permitted under subsection(xiii), the Fixed Charge Coverage Ratio immediately prior to and after giving effect to suchPermitted Acquisition shall be no less than 1.10:1.00;     (xii) No more than two Permitted Acquisitions shall be entered into or consummatedduring any Fiscal Year after the first Loan Year;     (xiii) No more than one Permitted Acquisitions shall be entered into or consummatedduring the first Loan Year, and in no event shall such Permitted Acquisition in the FirstLoan Year have a cash portion of any Acquisition Consideration for such acquisition exceed$250,000;     (xiv) Borrower have provided Lender with forecasted balance sheets, profit and lossstatements, and cash flow statements of the Person or related to the assets to be acquired,all prepared on a basis consistent with such Person’s or assets’ historical financialstatements, together with appropriate supporting details and a statement of underlyingassumptions for the 3 year period following the date of the proposed acquisition (on a yearby year basis, and for the 1 year period following the date of the proposed acquisition, ona month by month basis), in form and substance (including as to scope and underlyingassumptions) reasonably satisfactory to Lender;     (xv) the assets being acquired (other than a de minimis amount of assets in relation tothe assets being acquired) are located within Ireland, United Kingdom, mainland Europe orScandinavia or the Person whose Equity Interest is being acquired is organized in ajurisdiction located within Ireland, United Kingdom, mainland Europe or Scandinavia;     (xvi) For proposed acquisitions other than those permitted under subsection (xiii),Borrower has provided Lender with written notice of the proposed acquisition at least 30Business Days prior to the anticipated closing date of the proposed acquisition and, notlater than 5 Business Days prior to the anticipated closing date of the proposedacquisition, copies of the acquisition agreement and other material documents relative tothe proposed acquisition, which agreement and documents must be reasonably acceptable toLender; and     (xvii) the subject assets or Equity Interests, as applicable, are being acquireddirectly by an Obligor, and (i) in the case of an asset acquisition, such Obligor shall have
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executed and delivered or authorized, as applicable, any and all documentationreasonably requested by the Lender in order to include the newly acquired assets within thecollateral hypothecated under the Loan Documents, and (ii) in the case of an acquisition ofEquity Interests, such Obligor shall have complied with **Section 10.1.9**of the Agreement.     Notwithstanding the foregoing, the Accounts and Inventory of the Person being acquired orcomprising the assets being acquired shall not be considered for inclusion in the Borrowing Baseuntil a field audit or appraisal of such Person or such assets has been completed to thesatisfaction of Lender.     Permitted Asset Disposition: as long as no Default or Event of Default exists and allNet Proceeds are remitted to Lender (if and to the extent required by **Section 5.2**), an AssetDisposition that is (a) sale of Inventory in the ordinary course of business; (b) a disposition ofInventory or other Property that is obsolete, unmerchantable or otherwise not used or useful in theordinary course of business; (c) termination of a lease of real or personal Property that is notnecessary for the ordinary course of business, and which termination could not reasonably beexpected to have a Material Adverse Effect; (d) leases of real or personal property in the ordinarycourse of business; (e) mergers and consolidations in compliance with **Section 10.2.9**; (f) theunwinding of any Hedging Agreement; (g) any Asset Disposition from any Subsidiary to the Borrower;(h) Investments in compliance with **Section 10.2.5**; (i) dispositions of Property identified on**Schedule P-1**; (j) Distributions in compliance with **Section 10.2.4**; (k) the creation of anyPermitted Lien; (l) dispositions of Accounts in connection with the compromise, settlement orcollection thereof in the ordinary course of business or in bankruptcy or similar proceedings andexclusive of factoring or similar arrangements; (m) licenses of Intellectual Property granted byBorrower or any Subsidiary in the ordinary course of business; (n) Investments in compliance with**Section 10.2.5**; (n) other dispositions that, in the aggregate during any 12 month period, have afair market or book value (whichever is more) of $250,000 or less; (o) [intentionally omitted]; or(p) approved in writing by Lender.     Permitted Capital Leases: (i) Capital Leases of Borrower and Subsidiaries set forthon **Schedule P-2**, and (ii) other Capital Leases of Borrower and Subsidiaries so long as theaggregate amount of such other Capital Leases does not exceed $250,000 at any time outstanding.     Permitted Contingent Obligations: Contingent Obligations (a) arising fromendorsements of Payment Items for collection or deposit in the ordinary course of business;(b) arising from Hedging Agreements permitted hereunder; (c) existing on the Closing Date, and anyextension or renewal thereof that does not increase the amount of such Contingent Obligation whenextended or renewed; (d) incurred in the ordinary course of business with respect to surety, appealor performance bonds, or other similar obligations; (e) arising from customary indemnificationobligations in favor of purchasers in connection with dispositions of Equipment permittedhereunder; (f) arising under the Loan Documents; (g) in respect of a guaranty of Debt or otherobligations permitted hereunder; (h) product warranties in the ordinary course of business; or(i) in addition to the foregoing, in an aggregate amount of $100,000 or less at any time.     Permitted Distributions: (a) Borrower and Subsidiaries may make Distributions to anofficer or employee for salary, travel expenses, commissions and similar items in the ordinarycourse of business; (b) Borrower and Subsidiaries may purchase, redeem or otherwise acquire
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shares of its common stock or other common equity interests or warrants or options to acquireany such shares with the proceeds received from the substantially concurrent issue of new shares ofits common stock or other common equity interests; and (c) Borrower and Subsidiaries may declareand make other Distributions so long as no Default or Event of Default exists before andimmediately after declaring and making such Distribution, and after giving effect theretoAvailability is at least $2,000,000.     Permitted Investments: (a) Investments existing on the Closing Date and set forth on**Schedule P-3**; (b) Cash Equivalents that, in the case of an Obligor, are subject to Lender’s Lienand control, pursuant to documentation in form and substance reasonably satisfactory to Lender; (c)loans and advances permitted under **Section 10.2.7**; (d) Investments by the Borrower in any otherObligor and Investments by any Obligor in the Borrower; (e) Investments received in connection withthe bankruptcy or reorganization of, or settlement of delinquent accounts and disputes with,customers and suppliers; (f) endorsement of negotiable instruments held for collection in theordinary course of business; (g) lease, utility and other similar deposits in the ordinary courseof business; (h) Investments in Hedging Agreements, (i) Investments made by the Borrower or anySubsidiary as a result of consideration received in connection with a Permitted Asset Dispositionmade in compliance with **Section 10.2.6,**(j) Permitted Contingent Obligations; (k) PermittedAcquisitions (and any deposits required in connection therewith); (l) at any time after the FirstLoan Year, additional Investments which do not exceed $10,000,000.00 in the aggregate at any timeprovided that at the time of such Investment under this clause (l) no Event of Default exists orwould exist after giving effect to such Investment, after giving effect thereto Availability is atleast $2,000,000; (m) deposit accounts that, in the case of an Obligor, are, except as otherwisepermitted hereunder, subject to Lender’s Lien and control, pursuant to documentation in form andsubstance reasonably satisfactory to Lender; and (n) the UK Lease Deposit. The amount of anyInvestment outstanding at any time pursuant to clause (l) hereunder (x) shall not include anyappreciation in the value of any such Investment occurring after the acquisition or making of suchInvestment and (y) shall be deemed to be reduced upon the disposition or repayment of or return onany such Investment, by an amount equal to the return of capital or principal with respect to suchInvestment to the applicable Person, less the reasonable cost of the disposition of such Investmentand net of taxes.     Permitted Lien: as defined in **Section 10.2.2**.     Permitted Purchase Money Debt: Purchase Money Debt of Borrower and Subsidiaries thatis unsecured or secured only by a Purchase Money Lien, as long as the aggregate amount does notexceed $500,000 at any time and its incurrence does not violate **Section 10.2.3**.     Person: any individual, corporation, limited liability company, partnership, jointventure, joint stock company, land trust, business trust, unincorporated organization, GovernmentalAuthority or other entity.     Properly Contested: with respect to any obligation of an Obligor, (a) the obligationis subject to a bona fide dispute regarding amount or the Obligor’s liability to pay; (b) theobligation is being properly contested in good faith by appropriate proceedings promptly institutedand diligently pursued; (c) appropriate reserves have been established in accordance with GAAP;(d) non-payment could not have a Material Adverse Effect, nor result in forfeiture or sale of anyassets of the Obligor; (e) no Lien is imposed on assets of the Obligor, unless bonded and stayed tothe reasonable satisfaction of Lender; and (f) if the obligation results from
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entry of a judgment or other order, such judgment or order is stayed pending appeal or otherjudicial review.     Property: any interest in any kind of property or asset, whether real, personal ormixed, or tangible or intangible.     Purchase Money Debt: (a) Debt (other than the Obligations) for payment of any of thepurchase price of fixed assets; (b) Debt (other than the Obligations) incurred within 180 daysbefore or after acquisition of any fixed assets, for the purpose of financing any of the purchaseprice thereof; and (c) any renewals, extensions or refinancings (but not increases) thereof.     Purchase Money Lien: a Lien that secures Purchase Money Debt, encumbering only thefixed assets acquired with such Debt and accessions to, and products and proceeds (includinginsurance condemnation proceeds) of, such acquired assets.     Real Estate: all right, title and interest (whether as owner, lessor or lessee) inany real Property or any buildings, structures, parking areas or other improvements thereon.     Refinancing Conditions: the following conditions for Refinancing Debt: (a) it is inan aggregate principal amount that does not exceed the principal amount of the Debt being extended,renewed or refinanced (except by an amount equal to a reasonable premium or other reasonable amountpaid, and fees and expenses reasonably incurred, in connection with such refinancing, extension orrenewal and by an amount equal to any existing commitments unutilized thereunder); (b) it has afinal maturity no sooner than the Debt being extended, renewed or refinanced; (c) if applicable, itis subordinated to the Obligations at least to the same extent as the Debt being extended, renewedor refinanced; (d) the representations, covenants and defaults applicable to it are, taken as awhole, no less favorable to Borrower than those applicable to the Debt being extended, renewed orrefinanced as determined in good faith by Parent’s board of directors; (e) no additional Propertyor, if applicable, class of Property is subjected to a Lien to secure it; (f) no additional Personor, if applicable, category of Person is obligated on such Debt (except for Permitted ContingentObligations arising from the guaranty of such Debt); and (g) upon giving effect to it, no Defaultor Event of Default exists.     Refinancing Debt: Borrowed Money that is the result of an extension, renewal orrefinancing of Debt permitted under **Section 10.2.1(b)**, **(d) or (f)**.     Reimbursement Date: as defined in **Section 2.3.2**.     Relevant Interbank Market: in relation to Euro, the European interbank market and, inrelation to any other currency, the London interbank market.     Rent and Charges Reserve: the aggregate of (a) all past due rent and other amountsowing by an Obligor to any landlord, warehouseman, processor, repairman, mechanic, shipper, freightforwarder, broker or other Person who possesses any Collateral or could assert a Lien on anyCollateral; and (b) a reserve at least equal to three months rent and other charges that could bepayable to any such Person, unless it has executed a Lien Waiver; provided,however, that for the first 60 days after the Closing Date, the amount of any Rent andCharges Reserve for any leased location with respect to which the Borrower is still diligentlypursuing a Lien Waiver shall be $0.
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     Restricted Investment: any Investment by the Borrower or a Subsidiary that is not aPermitted Investment.     Revolver Commitment: Lender’s obligation to make Revolver Loans and to issue Lettersof Credit in an amount up to $10,000,000.     Revolver Loan: a loan made pursuant to **Section 2.1**.     Revolver Termination Date: January 11, 2012.     Royalties: all royalties, fees, expense reimbursement and other amounts payable bythe Borrower under a License.     Sale Contract: a contract or agreement, including a purchase order, between theBorrower and an Account Debtor for the sale of goods to that Account Debtor.     S&P: Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies,Inc., and its successors.     Seasonal Advance Rate Period: the period (but no more than one period) during anyFiscal Year (a) commencing upon notice from Borrower to Lender, which notice may only be given on(x) or after January 1 and before May 15 of such Fiscal Year and (y) so long as no Default or Eventof Default then exists, and (b) continuing until the earliest of (x) 4 months from the giving ofsuch notice, (y) a Default or Event of Default shall occur, or (z) June 1 of such Fiscal Year.     Secured Parties: Lender and providers of Bank Products.     Security Documents: the Guarantees, Debenture, Deposit Account Control Agreements,and all other documents, instruments and agreements now or hereafter securing (or given with theintent to secure) any Obligations.     Senior Officer: the chairman, chief executive officer, finance director, chieffinancial officer, treasurer or assistant treasurer, or other executive director (or person ofequivalent seniority) of the Borrower or, if the context requires, an Obligor.     Slow Moving Inventory Advance Rate: 65% during the first Loan Year; 43% during thesecond Loan Year; 22% during the third Loan Year; and 0% thereafter.     Solvent: as to any Person, such Person (a) owns Property whose fair salable value isgreater than the amount required to pay all of its debts (including contingent, subordinated,unmatured and unliquidated liabilities); (b) owns Property whose present fair salable value (asdefined below) is greater than the probable total liabilities (including contingent, subordinated,unmatured and unliquidated liabilities) of such Person as they become absolute and matured; (c) isable to pay all of its debts as they mature; (d) has capital that is not unreasonably small for itsbusiness and is sufficient to carry on its business and transactions and all business andtransactions in which it is about to engage; (e) is not “deemed unable to pay its debts” within themeaning of Section 123 of the Insolvency Act 1986; and (f) has not incurred (by way of assumptionor otherwise) any obligations or liabilities (contingent or otherwise) under any Loan Documents, ormade any conveyance in connection therewith, with actual intent to hinder, delay
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or defraud either present or future creditors of such Person or any of its Affiliates.“Fair salable value” means the amount that could be obtained for assets within a reasonabletime, either through collection or through sale under ordinary selling conditions by a capable anddiligent seller to an interested buyer who is willing (but under no compulsion) to purchase.     Sterling or £: the lawful currency for the time being of the United Kingdom.     Subordinated Debt: Debt incurred by the Borrower that is expressly subordinate andjunior in right of payment to Full Payment of all Obligations, and is on terms (including maturity,interest, fees, repayment, covenants and subordination) satisfactory to Lender.     Subsidiary: any entity more than 50% of whose voting securities or Equity Interestsis owned by the Borrower (including indirect ownership by the Borrower through other entities inwhich the Borrower directly or indirectly owns more than 50% of the voting securities or EquityInterests).     TARGET: Trans-European Automated Real-time Gross Settlement Express Transfer paymentsystem.     TARGET Day: any day on which TARGET is open for the settlement of payments in Euro.     Taxes: all present or future taxes, levies, imposts, duties, deductions,withholdings, assessments, fees or other charges imposed by any Governmental Authority, includingany interest, additions to tax or penalties applicable thereto.     Type: any type of a Loan (i.e., Base Rate Revolver Loan or LIBOR Loan) that has thesame interest option and, in the case of LIBOR Loans, the same Interest Period.     UK Lease Deposit: deposit of £100,000 paid by Borrower to Juniper DevelopmentsLimited (the “Landlord”) under the terms of a rent deposit deed dated 5 September 2003 between (1)Landlord and (2) Borrower (as Tenant), relating to the premises at Unit 2, Juniper (Phase 2),Fenton Way, Basildon, Essex, United Kingdom (the “Property”), and in respect of an Agreement forLease of the Property between the same parties dated 4 June 2003.     US Loan Document: the US Loan Agreement and any document, agreement, or instrumentevidencing the loans under the US Loan Facility, or any guarantee or security therefor.     US Loan Facility: the loan facility now or in the future provided by Lender to theParent and certain of its Subsidiaries pursuant to the US Loan Agreement.     Upstream Payment: a Distribution by Borrower to Parent.     Value: (a) for Inventory, its value determined on the basis of the lower of cost ormarket, calculated on a first-in, first-out basis, and excluding any portion of cost attributableto intercompany profit among Borrower and its Affiliates; and (b) for an Account, its face amount,net of any returns, rebates, discounts (calculated on the shortest terms), credits, allowances orTaxes (including sales, excise or other taxes) that have been or could be claimed by the AccountDebtor or any other Person.
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     **1.2****ACCOUNTING TERMS**. Under the Loan Documents (except as otherwise specifiedherein), all accounting terms shall be interpreted, all accounting determinations shall be made,and all financial statements shall be prepared, in accordance with GAAP applied on a basisconsistent with the most recent audited financial statements of Borrower delivered to Lenderbefore the Closing Date and using the same inventory valuation method as used in such financialstatements, except for any change required or permitted by GAAP if Borrower’s appointed externalauditors concur in such change, and the change is disclosed to Lender.     **1.3****[INTENTIONALLY OMITTED]**.     **1.4****CERTAIN MATTERS OF CONSTRUCTION**. The terms “herein,” “hereof,” “hereunder” andother words of similar import refer to this Agreement as a whole and not to any particularsection, paragraph or subdivision. Any pronoun used shall be deemed to cover all genders. In thecomputation of periods of time from a specified date to a later specified date, “from” means “fromand including,” and “to” and “until” each mean “to but excluding.” The terms “including” and“include” shall mean “including, without limitation” and, for purposes of each Loan Document, theparties agree that the rule of *ejusdem generis*shall not be applicable to limit any provision.Section titles appear as a matter of convenience only and shall not affect the interpretation ofany Loan Document. All references to (a) laws or statutes include all related rules, regulations,interpretations, amendments and successor provisions; (b) any document, instrument or agreementinclude any amendments, waivers and other modifications, extensions or renewals (to the extentpermitted by the Loan Documents); (c) any section mean, unless the context otherwise requires, asection of this Agreement; (d) any exhibits or schedules mean, unless the context otherwiserequires, exhibits and schedules attached hereto, which are hereby incorporated by reference;(e) any Person include successors and assigns; (f) (unless otherwise specified) time of day meanstime of day in London, England; or (g) discretion of Lender mean its reasonable discretion. Allcalculations of Value, fundings of Loans, issuances of Letters of Credit and payments ofObligations shall be in Dollars and, unless the context otherwise requires, all determinations(including calculations of Borrowing Base and financial covenants) made from time to time underthe Loan Documents shall be made in light of the circumstances existing at such time. BorrowingBase calculations shall be consistent with historical methods of valuation and calculation, andotherwise reasonably satisfactory to Lender (and not necessarily calculated in accordance withGAAP). No provision of any Loan Documents shall be construed against any party by reason of suchparty having, or being deemed to have, drafted the provision. Whenever the phrase “to the best ofBorrower’s knowledge” or words of similar import are used in any Loan Documents, it means actualknowledge of a Senior Officer, or knowledge that a Senior Officer would have obtained if he or shehad engaged in good faith and diligent performance of his or her duties, including reasonablyspecific inquiries of employees or agents and a good faith attempt to ascertain the matter towhich such phrase relates.     **1.5****US LOAN AGREEMENT DEFINITIONS** Unless otherwise defined herein words andexpressions defined in the US Loan Agreement shall, unless the context otherwise requires, havethe same meaning when used herein.     **1.6****THIRD PARTY RIGHTS**: Unless expressly provided to the contrary in a Loan Document,a person who is not a party to this Agreement has no right under the Contracts (Rights of ThirdParties) Act 1999 to enforce or to enjoy the benefit of any term of this
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Agreement. Notwithstanding any term of any Loan Document, the consent of any person who isnot a party to this Agreement is not required to rescind or vary this Agreement at any time.**SECTION 2 CREDIT FACILITIES**     **2.1****Revolver Commitment**.          2.1.1 **REVOLVER LOANS**. Lender agrees, on the terms set forth herein, to make RevolverLoans to Borrower in an aggregate amount up to the Revolver Commitment, from time to time throughthe Commitment Termination Date. The Revolver Loans may be repaid and reborrowed as providedherein. In no event shall Lender have any obligation to honor a request for a Revolver Loan if theunpaid balance of Revolver Loans outstanding (with all Revolver Loans denominated in Euro orSterling valued at the Equivalent Amount thereof), at such time (including the requested Loan)would exceed the Borrowing Base.          2.1.2 **USE OF PROCEEDS**. The proceeds of Revolver Loans shall be used by Borrowersolely (a) to satisfy existing Debt; (b) to pay fees and transaction expenses associated with theclosing of this credit facility; (c) to pay Obligations in accordance with this Agreement; and(d) for working capital and other lawful corporate purposes of Borrower, including PermittedAcquisitions.          2.1.3 **VOLUNTARY TERMINATION OF REVOLVER COMMITMENT**.          (a) The Revolver Commitment shall terminate on the Revolver Termination Date, unless soonerterminated in accordance with this Agreement. Upon at least 15 days prior written notice toLender, Borrower may, at its option, terminate the Revolver Commitment and this credit facility.Any notice of termination given by Borrower shall be irrevocable; provided that a notice oftermination delivered by Borrower may state that such notice is conditioned upon the effectivenessof other credit facilities, in which case such notice may be revoked by Borrower (by notice toLender on or prior to the specified effective date) if such condition is not satisfied. On thetermination date, Borrower shall make Full Payment of all Obligations.          2.1.4 **OVERADVANCES**. If the aggregate Revolver Loans (with all Revolver Loansdenominated in Euro or Sterling valued at the Equivalent Amount thereof) exceed the Borrowing Base(**“****Overadvance**”) or the Revolver Commitment at any time, the excess amount shall be payableby Borrower **on demand**by Lender, but all such Revolver Loans shall nevertheless constituteObligations secured by the Collateral and entitled to all benefits of the Loan Documents. Anyfunding or sufferance of an Overadvance shall not constitute a waiver of the Event of Defaultcaused thereby. Notwithstanding the above, if an Overadvance comes into existence solely as aresult of fluctuations in currency exchange rates and such Overadvance is not greater than 3% ofthe Revolver Commitment, the Overadvance shall be payable by Borrower within 10 days after demandby Lender.     **2.2**[Intentionally Deleted]     **2.3**Letter of Credit Facility.          2.3.1 **ISSUANCE OF LETTERS OF CREDIT**. Lender agrees to issue or extend Letters ofCredit from time to time until 20 Business Days prior to the Revolver
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Termination Date (or until the Commitment Termination Date, if earlier), on the terms setforth herein, including the following:          (a) The Borrower acknowledges that Lender’s willingness to issue any Letter of Credit isconditioned upon its receipt of a LC Application with respect to the requested Letter of Credit, aswell as such other instruments and agreements as Lender may customarily require for issuance of aletter of credit of similar type and amount. Lender shall have no obligation to issue any Letterof Credit unless (i) it receives a LC Request and LC Application at least three Business Days priorto the requested date of issuance; and (ii) each LC Condition is satisfied.          (b) Letters of Credit may be requested by the Borrower only (i) to support obligations of theBorrower incurred in the ordinary course of business; or (ii) for other purposes as Lender mayapprove from time to time in writing. The renewal or extension of any Letter of Credit shall betreated as the issuance of a new Letter of Credit, except that delivery of a new LC Applicationshall be required at the reasonable discretion of Lender.          (c) Borrower assume all risks of the acts, omissions or misuses of any Letter of Credit by thebeneficiary. In connection with issuance of any Letter of Credit, Lender shall not be responsiblefor the existence, character, quality, quantity, condition, packing, value or delivery of any goodspurported to be represented by any Documents; any differences or variation in the character,quality, quantity, condition, packing, value or delivery of any goods from that expressed in anyDocuments; the form, validity, sufficiency, accuracy, genuineness or legal effect of any Documentsor of any endorsements thereon; the time, place, manner or order in which shipment of goods ismade; partial or incomplete shipment of, or failure to ship, any goods referred to in a Letter ofCredit or Documents; any deviation from instructions, delay, default or fraud by any shipper orother Person in connection with any goods, shipment or delivery; any breach of contract between ashipper or vendor and the Borrower; errors, omissions, interruptions or delays in transmission ordelivery of any messages, by mail, cable, telegraph, telex, telecopy, e-mail, telephone orotherwise; errors in interpretation of technical terms; the misapplication by a beneficiary of anyLetter of Credit or the proceeds thereof; or any consequences arising from causes beyond thecontrol of Lender, including any act or omission of a Governmental Authority. Lender shall befully subrogated to the rights and remedies of each beneficiary whose claims against Borrower aredischarged with proceeds of any Letter of Credit.          (d) In connection with its administration of and enforcement of rights or remedies under anyLetters of Credit or LC Documents, Lender shall be entitled to act, and shall be fully protected inacting, upon any certification, documentation or communication in whatever form believed by Lender,in good faith, to be genuine and correct and to have been signed, sent or made by a proper Person.Lender may consult with and employ legal counsel, accountants and other experts to advise itconcerning its obligations, rights and remedies, and shall be entitled to act upon, and shall befully protected in any action taken in good faith reliance upon, any advice given by such experts.Lender may employ agents and attorneys-in-fact in connection with any matter relating to Letters ofCredit or LC Documents, and shall not be liable for the negligence or misconduct of agents andattorneys-in-fact selected with reasonable care.          (e) If the Borrower so requests in any applicable LC Application, the Lender may, in its soleand absolute discretion, agree to issue a Letter of Credit that has automatic extension provisions(each, an “Auto-Extension Letter of Credit”); provided that any such Auto-ExtensionLetter of Credit must permit the Lender to prevent any such extension at least once in
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each twelve-month period (commencing with the date of issuance of such Letter of Credit) bygiving prior notice to the beneficiary thereof not later than a day (the “Non-Extension NoticeDate”) in each such twelve-month period to be agreed upon at the time such Letter of Credit isissued. Unless otherwise directed by the Lender, the Borrower shall be required to make request tothe Lender for any such extension within 5 Business Days prior to the termination date of suchLetter of Credit; provided, however, that the Lender shall not permit any suchextension if (A) the Lender has determined that it would not be permitted, or would have noobligation, at such time to issue such Letter of Credit in its revised form (as extended) under theterms hereof, or (B) one or more of the applicable conditions specified in Section 6 is not thensatisfied.          (f) Notwithstanding the provisions of this **Section 2**(including without limitation **Sections2.3.1**and **2.3.2**), Lender shall not be exonerated from any liability to the Borrower resulting fromits gross negligence or willful misconduct.          2.3.2 **REIMBURSEMENT**. If Lender honors any request for payment under a Letter ofCredit, Borrower shall pay to Lender, without duplication, on the same day (“**REIMBURSEMENTDATE**”), the amount paid under such Letter of Credit, together with interest at the interestrate for Base Rate Revolver Loans from the Reimbursement Date until payment by Borrower. Theobligation of Borrower to reimburse Lender for any payment made under a Letter of Credit shall beabsolute, unconditional, and irrevocable, and shall be paid without regard to any lack of validityor enforceability of any Letter of Credit or the existence of any claim, setoff, defense or otherright that Borrower may have at any time against the beneficiary. Whether or not Borrower submitsa Notice of Borrowing, Borrower shall be deemed to have requested a Borrowing of Base Rate RevolverLoans in an amount necessary to pay all amounts due on any Reimbursement Date.          2.3.3 **CASH COLLATERAL**.               (i) If any LC Obligations, whether or not then due or payable, shall for any reason beoutstanding at any time (a) that an Event of Default exists and is continuing, (b) thatAvailability is less than zero, or (c) after the Commitment Termination Date, then Borrower shall,at Lender’s request, Cash Collateralize the stated amount of all outstanding Letters of Credit andpay to Lender the amount of all other LC Obligations. If Borrower fails to provide Cash Collateralas required herein, Lender may advance, as Revolver Loans, the amount of the Cash Collateralrequired.               (ii) If Borrower requests that any Letter of Credit be renewed pursuant to **Section 2.2.2(e)**which causes the expiration date of such Letter of Credit to be after the Commitment TerminationDate, before such renewal becomes effective, Borrower shall Cash Collateralize the stated amount ofsuch Letter of Credit.**SECTION 3 INTEREST, FEES AND CHARGES**     **3.1****Interest**.          3.1.1 **RATES AND PAYMENT OF INTEREST**.          (a) The Obligations shall bear interest (i) if a Base Rate Revolver Loan, at the Base Rate ineffect from time to time, plus the Applicable Margin; (ii) if a LIBOR Loan, at LIBOR for theapplicable Interest Period, plus the Applicable Margin and Mandatory Cost; and
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(iii) if any other Obligation (other than the LC Obligations and Bank Product Debt)(including, to the extent permitted by law, interest not paid when due), at the Base Rate in effectfrom time to time, plus the Applicable Margin for Base Rate Revolver Loans. Interest shall accruefrom the date the Loan is advanced or the Obligation is incurred or payable, until paid byBorrower. If a Loan is repaid on the same day made, one day’s interest shall accrue.          (b) During an Insolvency Proceeding with respect to the Borrower, or during any other Event ofDefault if Lender in its discretion so elects, Obligations (other than the LC Obligations and BankProduct Debt) shall bear interest at the Default Rate (whether before or after any judgment). TheBorrower acknowledges that the cost and expense to Lender due to an Event of Default are difficultto ascertain and that the Default Rate is a fair and reasonable estimate to compensate Lender forthis.          (c) Interest accrued on the Loans shall be due and payable in arrears, (i) on the first day ofeach month; (ii) on any date of prepayment, with respect to the principal amount of Loans beingprepaid; and (iii) on the Commitment Termination Date. Interest accrued on any other Obligationsshall be due and payable as provided in the Loan Documents and, if no payment date is specified,shall be due and payable **on demand**. Notwithstanding the foregoing, interest accrued at the DefaultRate shall be due and payable **on demand**.          3.1.2 **APPLICATION OF LIBOR TO OUTSTANDING LOANS**.          (a) Borrower may on any Business Day, subject to delivery of a Notice ofConversion/Continuation, elect to convert any portion of the Base Rate Revolver Loans to, or tocontinue any LIBOR Loan at the end of its Interest Period as, a LIBOR Loan. During any Default orEvent of Default, Lender may declare that no Loan may be made, converted or continued as a LIBORLoan.          (b) Whenever Borrower desire to convert or continue Loans as LIBOR Loans, Borrower shall giveLender a Notice of Conversion/Continuation, no later than 11:00 a.m. at least three Business Daysbefore the requested conversion or continuation date. Each Notice of Conversion/Continuation shallbe irrevocable, and shall specify the amount of Loans to be converted or continued, the conversionor continuation date (which shall be a Business Day), and the duration of the Interest Period(which shall be deemed to be one month if not specified). If, upon the expiration of any InterestPeriod in respect of any LIBOR Loans, Borrower shall have failed to deliver a Notice ofConversion/Continuation, they shall be deemed to have elected to convert such Loans into Base RateRevolver Loans.          3.1.3 **INTEREST PERIODS**. In connection with the making, conversion or continuation ofany LIBOR Loans, Borrower shall select an interest period (“**INTEREST PERIOD**”) to apply,which interest period shall be one, two, three or six months; **PROVIDED**, **HOWEVER**,that: the Interest Period shall commence on the date the Loan is made or continued as, or convertedinto, a LIBOR Loan, and shall expire on the numerically corresponding day in the calendar month atits end; if any Interest Period commences on a day for which there is no corresponding day in thecalendar month at its end or if such corresponding day falls after the last Business Day of suchmonth, then the Interest Period shall expire on the last Business Day of such month; and if anyInterest Period would expire on a day that is not a Business Day, the period shall expire on thenext Business Day; and no Interest Period shall extend beyond the Revolver Termination Date.
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          3.1.4 **INTEREST RATE NOT ASCERTAINABLE**. If Lender shall determine that on any date fordetermining LIBOR, due to any circumstance affecting the London interbank market, adequate and fairmeans do not exist for ascertaining such rate on the basis provided herein, then Lender shallimmediately notify Borrower of such determination. Until Lender notifies Borrower that suchcircumstance no longer exists, the obligation of Lender to make LIBOR Loans shall be suspended, andno further Loans may be converted into or continued as LIBOR Loans.     **3.2****Fees**.          3.2.1 **[INTENTIONALLY OMITTED]**.          3.2.2 **LC FACILITY FEES**. Borrower shall pay to Lender (a) a fee equal to theApplicable Margin in effect for LIBOR Revolver Loans times the average actual daily stated amountof Letters of Credit, which fee shall be payable monthly in arrears, on the first day of eachmonth; (b) a fronting fee equal to 0.125% per annum on the stated amount of each Letter of Credit,which fee shall be payable monthly in arrears, on the first day of each month; and (c) allcustomary charges associated with the issuance, amending, negotiating, payment, processing,transfer and administration of Letters of Credit, which charges shall be paid as and when incurred.During an Event of Default, the fee payable under clause (a) shall be increased by 2% per annum.     **3.3****COMPUTATION OF INTEREST, FEES, YIELD PROTECTION****.**All interest, as well as feesand other charges calculated on a per annum basis, shall be computed for the actual days elapsed,based on a year of 360 days, or, in any case where the practice in the Relevant Interbank Marketdiffers, in accordance with that market practice. Each determination by Lender of any interest,fees or interest rate hereunder shall be final, conclusive and binding for all purposes, absentmanifest error. All fees shall be fully earned when due and shall not be subject to rebate,refund or proration. All fees payable under **Section 3.2**are compensation for services and arenot, and shall not be deemed to be, interest or any other charge for the use, forbearance ordetention of money. A certificate as to amounts payable by Borrower under **Section 3.4, 3.6, 3.7,3.9**or **5.8**, setting forth the calculation thereof in reasonable detail, submitted to Borrower byLender shall be final, conclusive and binding for all purposes, absent manifest error, andBorrower shall pay such amounts to the appropriate party within 10 Business Days following receiptof the certificate.     **3.4****REIMBURSEMENT OBLIGATIONS****.**Borrower shall reimburse Lender for all ExtraordinaryExpenses. Borrower shall also reimburse Lender for all legal, accounting, appraisal, consulting,and other fees, costs and expenses incurred by it in connection with (a) negotiation andpreparation of any Loan Documents, including any amendment or other modification thereof;(b) administration of and actions relating to any Collateral, Loan Documents and transactionscontemplated thereby, including any actions taken to perfect or maintain priority of Lender’sLiens on any Collateral, to maintain any insurance required hereunder or to verify Collateral; and(c) subject to the limits of **Section 10.1.1(b)**, each inspection, audit or appraisal with respectto any Obligor or Collateral, whether prepared by Lender’s personnel or a third party. If, forany reason (including inaccurate reporting on financial statements or a Compliance Certificate),it is determined that a higher Applicable Margin should have applied to a period than was actuallyapplied, then the proper margin shall be applied retroactively and Borrower shall immediately payto Lender an amount equal to the
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difference between the amount of interest and fees that would have accrued using the propermargin and the amount actually paid. If it is determined within 30 days after an adjustment inthe Applicable Margin that the Applicable Margin should have been adjusted to a lower ApplicableMargin, then the proper margin shall be applied retroactively and Lender shall pay to Borrower anamount equal to the difference between the amount of interest that would have accrued using theproper margin, such adjustment payment shall only be made by Lender if the reason for theapplication of the incorrect Applicable Margin is a result of calculation mistakes made byBorrower on a Compliance Certificate (and not mistakes or inaccurate reporting on financialstatements), and Borrower notifies Lender of such mistake within 30 days after such incorrectadjustment to the Applicable Margin. All amounts payable by Borrower under this Section shall bedue **on demand**.     **3.5****ILLEGALITY****.**If it has become unlawful, or any Governmental Authority hasasserted that it is unlawful, for Lender to make, maintain or fund Loans, then, on notice thereofby Lender to Borrower, any obligation of Lender to make or continue Loans shall be suspended untilLender notifies Borrower that the circumstances giving rise to such determination no longer exist.Upon delivery of such notice, Borrower shall prepay all Loans immediately, save in the case ofLIBOR Loans which may be prepaid on the last day of the Interest Period therefor, if Lender maylawfully continue to maintain such LIBOR Loans to such day. Upon any such prepayment Borrowershall also pay accrued interest on the amount so prepaid.     **3.6****INABILITY TO DETERMINE RATES****.**If Lender notifies Borrower for any reason inconnection with a request for a Borrowing of, conversion to or continuation of, a LIBOR Loan that(a) deposits of Dollars, Sterling or Euro are not being offered to banks in the London interbankmarket for the applicable amount and Interest Period of such Loan, (b) adequate and reasonablemeans do not exist for determining LIBOR for the requested Interest Period, or (c) LIBOR for therequested Interest Period does not adequately and fairly reflect the cost to Lender of fundingsuch Loan, then the obligation of Lender to make or maintain LIBOR Loans shall be suspended untilit revokes the notice. Upon receipt of the notice, Borrower may revoke any pending request for aBorrowing of, conversion to or continuation of a LIBOR Loan or, failing that, will be deemed tohave submitted a request for a Base Rate Revolver Loan.     **3.7****INCREASED COSTS; CAPITAL ADEQUACY**.          3.7.1 **CHANGE IN LAW**. If any Change in Law shall: impose modify or deem applicable anyreserve, special deposit, compulsory loan, insurance charge or similar requirement against assetsof, deposits with or for the account of, or credit extended or participated in by, Lender; subjectLender to any Tax with respect to any Loan, Loan Document or Letter of Credit, or change the basisof taxation of payments to Lender in respect thereof (except for Indemnified Taxes or Other Taxescovered by **Section 5.8**and the imposition of, or any change in the rate of, any Excluded Taxpayable by Lender); or impose on Lender or the London interbank market any other condition, cost orexpense affecting any Loan, Loan Document or Letter of Credit; and the result thereof shall be toincrease the cost to Lender of making or maintaining any LIBOR Loan (or of maintaining itsobligation to make any such Loan), or to increase the cost to Lender of issuing or maintaining anyLetter of Credit (or of maintaining its obligation to issue any Letter of Credit), or to reduce theamount of any sum received or receivable by Lender hereunder (whether of principal, interest or anyother amount) then, upon request by Lender pursuant to a certificate as set forth in **Section 3.3**,Borrower will
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pay to Lender such additional amount or amounts as will compensate Lender for such additionalcosts incurred or reduction suffered.          3.7.2 **CAPITAL ADEQUACY**. If Lender reasonably determines that any Change in Lawaffecting Lender or its holding company regarding capital requirements has or would have the effectof reducing the rate of return on Lender’s or such holding company’s capital as a consequence ofthis Agreement, Revolver Commitments, Loans or Letters of Credit to a level below that which Lenderor such holding company could have achieved but for such Change in Law (taking into considerationLender’s and such holding company’s policies with respect to capital adequacy), then from time totime upon request pursuant to a certificate as set forth in **Section 3.3**Borrower will pay to Lendersuch additional amount or amounts as will compensate it or its holding company for any suchreduction suffered.          3.7.3 **COMPENSATION**. Failure or delay on the part of Lender to demand compensationpursuant to this Section shall not constitute a waiver of its right to demand such compensation,but Borrower shall not be required to compensate Lender for any increased costs incurred orreductions suffered more than nine months prior to the date that Lender notifies Borrower of theChange in Law giving rise to such increased costs or reductions and of Lender’s intention to claimcompensation therefor (except that, if the Change in Law giving rise to such increased costs orreductions is retroactive, then the nine-month period referred to above shall be extended toinclude the period of retroactive effect thereof).     **3.8****MITIGATION**. If Lender gives a notice under **Section 3.5**or requests compensationunder **Section 3.7**, or if Borrower is required to pay additional amounts under **Section 5.8**, thenLender shall use reasonable efforts to designate a different lending office or to assign itsrights and obligations hereunder to another of its offices, branches or Affiliates, if, in thereasonable judgment of Lender, such designation or assignment (a) would eliminate the need forsuch notice or reduce amounts payable in the future, as applicable; and (b) would not subjectLender to any unreimbursed cost or expense and would not otherwise be disadvantageous to Lender.Borrower agrees to pay all reasonable costs and expenses incurred by Lender in connection with anysuch designation or assignment.     **3.9****FUNDING LOSSES****.**If for any reason (a) any Borrowing of, or conversion to orcontinuation of, a LIBOR Loan does not occur on the date specified therefor in a Notice ofBorrowing or Notice of Conversion/Continuation (whether or not withdrawn), (b) any repayment orconversion of a LIBOR Loan occurs on a day other than the end of its Interest Period, or(c) Borrower fails to repay a LIBOR Loan when required hereunder, then Borrower shall pay toLender all losses and expenses that it sustains as a consequence thereof, including loss ofanticipated profits and any loss or expense arising from liquidation or redeployment of funds orfrom fees payable to terminate deposits of matching funds. Lender shall not be required topurchase deposits of Dollars, Sterling or Euro in the London interbank market or any otheroffshore currency market to fund any LIBOR Loan, but the provisions hereof shall be deemed toapply as if Lender had purchased such deposits to fund its LIBOR Loans.**SECTION 4 LOAN ADMINISTRATION**     **4.1**Manner of Borrowing and Funding Revolver Loans.          4.1.1 **NOTICE OF BORROWING**.
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          (a) Whenever Borrower desires funding of a Borrowing of Revolver Loans, Borrower shall giveLender a Notice of Borrowing. Such notice must be received by Lender no later than 11:00 a.m.(i) on the Business Day of the requested funding date, in the case of Base Rate Revolver Loans, and(ii) at least three Business Days prior to the requested funding date, in the case of LIBOR Loans.Notices received after 11:00 a.m. shall be deemed received on the next Business Day. Each Noticeof Borrowing shall be irrevocable and shall specify (A) the amount of the Borrowing, (B) therequested funding date (which must be a Business Day), (C) whether the Borrowing is to be made asBase Rate Revolver Loans or LIBOR Loans, (D) the currency requested (which shall be Dollars, Euroor Sterling) and (E) in the case of LIBOR Loans, the duration of the applicable Interest Period(which shall be deemed to be one month if not specified).          (b) Unless payment is otherwise timely made by Borrower, the becoming due of any Obligations(whether principal, interest, fees or other charges, including Extraordinary Expenses, LCObligations, Cash Collateral and Bank Product Debt) shall be deemed to be a request for Base RateRevolver Loans on the due date, in the amount of such Obligations. The proceeds of such RevolverLoans shall be disbursed as direct payment of the relevant Obligation. In addition, Lender may, atits option, charge such Obligations against any operating, investment or other account of theBorrower maintained with Lender or any of its Affiliates.          (c) If Borrower establishes a controlled disbursement account with Lender or any of itsAffiliates, then the presentation for payment of any check or other item of payment drawn on suchaccount at a time when there are insufficient funds to cover it shall be deemed to be a request forBase Rate Revolver Loans on the date of such presentation, in the amount of the cheque and itemspresented for payment. The proceeds of such Revolver Loans may be disbursed directly to thecontrolled disbursement account or other appropriate account.          4.1.2 **FUNDINGS**. Lender shall fund each Borrowing on the applicable funding date and,subject to the terms of this Agreement, shall disburse the proceeds as directed by Borrower.          4.1.3 **NOTICES**. Borrower authorizes Lender to extend, convert or continue Loans,effect selections of interest rates, and transfer funds to or on behalf of Borrower based on (andLender agrees to honor subject to any conditions set forth herein) telephonic or e-mailedinstructions. Borrower shall confirm each such request by prompt delivery to Lender of a Notice ofBorrowing or Notice of Conversion/Continuation, if applicable, but if it differs in any materialrespect from the action taken by Lender, the records of Lender shall govern. Lender shall not haveany liability for any loss suffered by the Borrower as a result of Lender acting upon itsunderstanding of telephonic or e-mailed instructions from a person believed in good faith to be aperson authorized to give such instructions on the Borrower’s behalf.     **4.2**Number and Amount of LIBOR Loans; Determination of Rate.     No more than six Borrowings of LIBOR Loans may be outstanding at any time, and each Borrowingof LIBOR Loans when made shall be in a minimum amount (or increment, if in excess thereof) asfollows:
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     **4.3** Currency **4.4** Minimum amount **4.5** Increment**4.6 Dollars** **4.7   $100,000** **4.8   $10,000****4.9 Sterling** **4.10 £  50,000** **4.11 £  5,000****4.12 Euro** **4.13 €  75,000** **4.14 €  7,500**Upon determining LIBOR for any Interest Period requested by Borrower, Lender shall promptly notifyBorrower thereof by telephone or electronically and, if requested by Borrower, shall confirm anytelephonic notice in writing.     **4.15**[Intentionally omitted.]     **4.16**[Intentionally omitted.]     **4.17****EFFECT OF TERMINATION****.**On the effective date of any termination of the RevolverCommitment, all outstanding Obligations shall be immediately due and payable, and each SecuredParty may terminate its Bank Products. All undertakings of Borrower contained in the LoanDocuments shall survive any termination until Full Payment of the Obligations, and Lender shallretain its Liens in the Collateral and all of its rights and remedies under the Loan Documentsuntil Full Payment of the Obligations. The provisions of **Sections 2.3, 3.4, 3.6, 3.7, 3.9, 5.5,5.8, 12.2**and this Section, and the obligation of each Obligor with respect to each indemnitygiven by it in any Loan Document, shall survive Full Payment of the Obligations and any releaserelating to this credit facility.**SECTION 5 PAYMENTS**     **5.1****GENERAL PAYMENT PROVISIONS****.**All payments of Obligations shall be made in thecurrency in which they are denominated, without offset, counterclaim or defense of any kind, freeof (and without deduction for) any Indemnified Taxes or Other Taxes, and in immediately availablefunds, not later than 12:00 noon on the due date. Any payment after such time shall be deemedmade on the next Business Day. If any payment under the Loan Documents shall be stated to be dueon a day other than a Business Day, the due date shall be extended to the next Business Day andsuch extension of time shall be included in any computation of interest and fees. Any payment ofa LIBOR Loan prior to the end of its Interest Period shall be accompanied by all amounts due under**Section 3.9**. Any prepayment of Loans shall be applied first to Base Rate Revolver Loans and thento LIBOR Loans; provided, however, that as long as no Event of Default exists,prepayments of LIBOR Loans may, at the option of Borrower and Lender, be held by Lender as CashCollateral and applied to such Loans at the end of their Interest Periods.     **5.2****REPAYMENT OF REVOLVER LOANS****.**Revolver Loans shall be due and payable in full onthe Revolver Termination Date, unless payment is sooner required hereunder. Revolver Loans may beprepaid from time to time, without penalty or premium. If any Asset Disposition includes thedisposition of Accounts or Inventory (other than sales of Inventory in the ordinary course ofbusiness), then Net Proceeds equal to the greater of (a) the net book value of such Accounts andInventory, or (b) the reduction in the Borrowing Base upon giving
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effect to such disposition, shall be applied to the Revolver Loans. Notwithstanding anything herein to the contrary, if an Overadvance exists, Borrower shall, on the sooner of Lender’sdemand or the first Business Day after the Borrower has knowledge thereof, repay the outstandingRevolver Loans in an amount sufficient to reduce the principal balance of Revolver Loans to theBorrowing Base.     **5.3**[Intentionally Deleted].     **5.4****PAYMENT OF OTHER OBLIGATIONS****.**Obligations other than Loans, including LCObligations and Extraordinary Expenses, shall be paid by Borrower as provided in the LoanDocuments or, if no payment date is specified, **on demand**.     **5.5****MARSHALING; PAYMENTS SET ASIDE****.**Lender shall have no obligation to marshal anyassets in favor of any Obligor or against any Obligations. If any payment by or on behalf ofBorrower is made to Lender, or Lender exercises a right of setoff, and such payment or theproceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulentor preferential, set aside or required (including pursuant to any settlement entered into byLender in its discretion) to be repaid to a trustee, receiver or any other Person, then to theextent of such recovery, the Obligation originally intended to be satisfied, and all Liens, rightsand remedies relating thereto, shall be revived and continued in full force and effect as if suchpayment had not been made or such setoff had not occurred.     **5.6****APPLICATION OF PAYMENTS**. At all times commencing on the Closing Date the ledgerbalance in the main Deposit Account as of the end of a Business Day shall be applied to theObligations at the beginning of the next Business Day. If, as a result of such application, acredit balance exists, the balance shall not accrue interest in favor of Borrower and shall bemade available to Borrower as long as no Default or Event of Default exists. Borrower irrevocablywaives the right to direct the application of any payments or Collateral proceeds, and agrees thatLender shall have the continuing, exclusive right to apply and reapply same against theObligations, in such manner as Lender deems advisable, notwithstanding any entry by Lender in itsrecords.     **5.7****LOAN ACCOUNT; ACCOUNT STATED**.          5.7.1 **LOAN ACCOUNT**. Lender shall maintain in accordance with its usual and customarypractices an account or accounts (“**LOAN ACCOUNT**”) evidencing the Debt of Borrower resultingfrom each Loan or issuance of a Letter of Credit from time to time. Any failure of Lender torecord anything in the Loan Account, or any error in doing so, shall not limit or otherwise affectthe obligation of Borrower to pay any amount owing hereunder.          5.7.2 **ENTRIES BINDING**. Entries made in the Loan Account shall constitute presumptiveevidence of the information contained therein. If any information contained in the Loan Account isprovided to or inspected by any Person, then such information shall be conclusive and binding onsuch Person for all purposes absent manifest error, except to the extent such Person notifiesLender in writing within 30 days after receipt or inspection that specific information is subjectto dispute.     **5.8****Taxes**.
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          5.8.1 **PAYMENTS FREE OF TAXES**. Any and all payments by any Obligor on account of anyObligations shall be made free and clear of and without reduction or withholding for anyIndemnified Taxes or Other Taxes, **PROVIDED** that if an Obligor shall be required byApplicable Law to deduct any Indemnified Taxes (including any Other Taxes) from such payments, then(a) the sum payable shall be increased as necessary so that after making all required deductions(including deductions applicable to additional sums payable under this Section) Lender receives anamount equal to the sum it would have received had no such deductions been made; (b) the Obligorshall make such deductions; and (c) Borrower shall timely pay the full amount deducted to therelevant Governmental Authority in accordance with Applicable Law. Without limiting the foregoing,Borrower shall timely pay all Other Taxes to the relevant Governmental Authorities if and to theextent required by Applicable Law.          5.8.2 **PAYMENT**. Borrower shall indemnify, hold harmless and reimburse Lender, within10 days after demand therefor, pursuant to a certificate complying with **Section 3.3**, for the fullamount of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposedor asserted on or attributable to amounts payable under this Section) paid by Lender with respectto any Obligations, Letters of Credit or Loan Documents, and any penalties, interest and reasonableexpenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or OtherTaxes were correctly or legally imposed or asserted by the relevant Governmental Authority. Acertificate as to the amount of such payment or liability setting forth the calculation thereof inreasonable detail delivered to Borrower by Lender shall be conclusive absent manifest error. Assoon as practicable after any payment of Indemnified Taxes or Other Taxes by the Borrower, Borrowershall deliver to Lender a receipt issued by the Governmental Authority evidencing such payment orother evidence of payment reasonably satisfactory to Lender.          5.8.3 **REFUNDS**. If Lender receives a refund of any Indemnified Taxes or Other Taxes asto which it has been indemnified by the Borrower or with respect to which the Borrower has paidadditional amounts hereunder, Lender shall pay to Borrower an amount equal to such refund (but onlyto the extent of indemnity payments made, or additional amounts paid, by Borrower hereunder withrespect to the Indemnified Taxes or Other Taxes giving rise to such refund), net of allout-of-pocket costs and expenses of Lender incurred in obtaining such refund, and without interest(other than any interest paid by the relevant Governmental Authority with respect to such refund).**SECTION 6 CONDITIONS PRECEDENT**     **6.1****CONDITIONS PRECEDENT TO INITIAL LOANS****.**In addition to the conditions set forthin **Section 6.2**, Lender shall not be required to fund any requested Loan, issue any Letter ofCredit or otherwise extend credit to Borrower hereunder, until the date (“Closing Date”)that each of the following conditions has been satisfied or waived in writing by Lender:          (a) Each other Loan Document shall have been duly executed and delivered to Lender by each ofthe signatories thereto, and each Obligor shall be in compliance with all terms thereof.          (b) Lender shall have received acknowledgments of all filings or recordations necessary toperfect its Liens in the Collateral, as well as Lien searches and other evidence
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reasonably satisfactory to Lender that such Liens are the only Liens upon the Collateral,except Permitted Liens. upon making the requested Loan, issuing a Letter of Credit or otherwiseextending credit to Borrower, the sum of all outstanding obligations under the US Loan Facilityplus all Obligations shall not be in excess of $55,000,000.          (c) Lender shall have received duly executed Deposit Account Control Agreements relating toeach Deposit Account in accordance with the Debenture.          (d) Lender shall have received certificates, in form and substance reasonably satisfactory toit, from a knowledgeable Senior Officer of Borrower certifying that, after giving effect to theinitial Loans and transactions hereunder, (i) Borrower together with its Subsidiaries, is Solvent;(ii) no Default or Event of Default exists; (iii) the representations and warranties set forth in**Section 9**are true and correct; and (iv) Borrower and each other Obligor has complied with allagreements and conditions to be satisfied by it under the Loan Documents.          (e) Lender shall have received a certificate of a duly authorized officer of each Obligor,certifying (i) that attached copies of such Obligor’s Organic Documents are true and complete, andin full force and effect, without amendment except as shown; (ii) that an attached copy ofresolutions authorizing execution and delivery of the Loan Documents is true and complete, and thatsuch resolutions are in full force and effect, were duly adopted, have not been amended, modifiedor revoked, and constitute all resolutions adopted with respect to this credit facility; and(iii) to the title, name and signature of each Person authorized to sign the Loan Documents.Lender may conclusively rely on this certificate until it is otherwise notified by the applicableObligor in writing.          (f) Lender shall have received a written opinion of local counsel to Lender in the UnitedKingdom, in form and substance reasonably satisfactory to Lender.          (g) Lender shall have received copies of policies or certificates of insurance for theinsurance policies carried by Borrower, all in compliance with the Loan Documents.          (h) Lender shall have completed its business, financial and legal due diligence of Obligors,including (x) a field examination, with results reasonably satisfactory to Lender and (y) anappraisal of the Borrowers Inventory, with results reasonably satisfactory to Lender. No materialadverse change in the financial condition of any Obligor or in the quality, quantity or value ofany Collateral shall have occurred since October 31, 2007.          (i) Borrower shall have paid all fees and expenses to be paid to Lender on the Closing Date.          (j) Lender shall have received a Borrowing Base Certificate prepared as of January 31, 2008.     **6.2****CONDITIONS PRECEDENT TO ALL CREDIT EXTENSIONS**. Lender shall not be required tofund any Loans, issue any Letters of Credit, or grant any otheraccommodation to or for the benefit of Borrower, unless the following conditions aresatisfied or waived by Lender in writing:          (a) No Default or Event of Default shall exist at the time of, or result from, such funding,issuance or grant;
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          (b) The representations and warranties of each Obligor in the Loan Documents shall be true andcorrect on the date of, and upon giving effect to, such funding, issuance or grant (except forrepresentations and warranties that expressly relate to an earlier date);          (c) All conditions precedent in any other Loan Document shall be satisfied;          (d) No event shall have occurred or circumstance exist that has or could reasonably beexpected to have a Material Adverse Effect; and With respect to issuance of a Letter of Credit, theLC Conditions shall be satisfied.Each request (or deemed request) by Borrower for funding of a Loan, issuance of a Letter of Creditor grant of an accommodation shall constitute a representation by Borrower that the foregoingconditions are satisfied on the date of such request and on the date of such funding, issuance orgrant. As an additional condition to any funding, issuance or grant, Lender shall have receivedsuch other information, documents, instruments and agreements as it reasonably deems appropriate inconnection therewith.     **6.3****LIMITED WAIVER OF CONDITIONS PRECEDENT****.**If Lender funds any Loans, issues anyLetters of Credit or grants any other accommodation when any conditions precedent are notsatisfied (regardless of whether the lack of satisfaction was known or unknown at the time), itshall not operate as a waiver of (a) the right of Lender to insist upon satisfaction of allconditions precedent with respect to any subsequent funding, issuance or grant; nor (b) anyDefault or Event of Default due to such failure of conditions or otherwise.**SECTION 7 COLLATERAL**     **7.1****DEBENTURE****.**To secure the prompt payment and performance of all Obligations,Borrower shall execute and deliver to Lender the Debenture.     **7.2****CERTAIN AFTER-ACQUIRED COLLATERAL**. Borrower shall promptly notify Lender inwriting if, after the Closing Date, Borrower obtains any interest in any Collateral (which in theaggregate exceeds $100,000) consisting of Deposit Accounts, Chattel Paper, Documents, Instruments,Intellectual Property, Investment Property or Letter-of-Credit Rights and, upon Lender’s request,shall promptly take such actions as Lender deems appropriate to effect Lender’s duly perfected,first priority Lien upon such Collateral, including obtaining any appropriate possession, controlagreement or Lien Waiver. If any Collateral is in the possession of a third party, at Lender’srequest, Borrower shall obtain an acknowledgment that such third party holds the Collateral forthe benefit of Lender.     **7.3****NO ASSUMPTION OF LIABILITY****.**The Lien on Collateral to be granted under theDebenture is given as security only and shall not subject Lender to, or in any way modify, anyobligation or liability of Borrower relating to any Collateral.**SECTION 8 COLLATERAL ADMINISTRATION**     **8.1****BORROWING BASE CERTIFICATES****.**By the 15th day of each month (or such later timeas Lender may approve (via e-mail or otherwise)), Borrower shall deliver to Lender a BorrowingBase Certificate prepared as of the close of business of the previous month, and at such othertimes as Lender may request. All calculations of Availability in any
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Borrowing Base Certificateshall originally be made by Borrower and certified by a Senior Officer, provided that Lender mayfrom time to time review and adjust any such calculation (a) to reflect its reasonable estimate ofdeclines in value of any Collateral, due to collections received in the Deposit Account orotherwise; (b)  reflect changes in dilution in accordance with the Dilution Percentage and theAccounts Formula Amount and (c) to the extent the calculation is not made in accordance with thisAgreement or does not accurately reflect the Availability Reserve.     **8.2****ADMINISTRATION OF ACCOUNTS**.          8.2.1 **RECORDS AND SCHEDULES OF ACCOUNTS**. Borrower shall keep accurate and completerecords of its Accounts, including all payments and collections thereon, and shall submit to Lendersales, collection, reconciliation (including a reconciliation from the general ledger to agings)and other reports in form reasonably satisfactory to Lender, on such periodic basis as Lender mayrequest. Borrower shall also provide to Lender, on or before the 15th day of each month, adetailed aged trial balance of all Accounts as of the end of the preceding month, specifying eachAccount’s Account Debtor name and address, amount, invoice date and due date, showing any discount,allowance, credit, authorized return or dispute, and including such proof of delivery, copies ofinvoices and invoice registers, copies of related documents, repayment histories, status reportsand other information as Lender may reasonably request. If Accounts in an aggregate face amount of$200,000 or more cease to be Eligible Accounts, Borrower shall notify Lender of such occurrencepromptly (and in any event within two Business Days) after the Borrower has knowledge thereof.          8.2.2 **TAXES**. If an Account of the Borrower includes a charge for any Taxes, Lender isauthorized, in its discretion, to pay the amount thereof to the proper taxing authority for theaccount of the Borrower and to charge Borrower therefor; provided, however, that Lender shall notbe liable for any Taxes that may be due from Borrower or with respect to any Collateral.          8.2.3 **ACCOUNT VERIFICATION**. Whether or not a Default or Event of Default exists,Lender shall have the right at any time, in the name of Lender, any designee of Lender or theBorrower, to verify the validity, amount or any other matter relating to any Accounts of Borrowerby mail, telephone or otherwise. Borrower shall cooperate fully with Lender in an effort tofacilitate and promptly conclude any such verification process.          8.2.4 **MAINTENANCE OF DEPOSIT ACCOUNTS**. Borrower shall maintain Deposit Accountspursuant to arrangements acceptable to Lender. If a Deposit Account is not maintained with Lender,Lender may require daily transfer of all funds in such account to a Deposit Account maintained withLender. Lender does not assume any responsibility to Borrower for any Deposit Account, includingany claim of accord and satisfaction or release with respect to any Payment Items accepted by anybank.          8.2.5 **PROCEEDS OF COLLATERAL**. Borrower shall request in writing and otherwise takeall commercially reasonable steps to ensure that all payments on Accounts or otherwise relating toCollateral are made directly to a Deposit Account. Except as otherwise set forth in **Section 8.2.6,**if the Borrower or Subsidiary receives cash or Payment Items with respect to any Collateral, itshall hold same in trust for Lender and promptly (not later than the next Business Day) depositsame into a Deposit Account.
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          8.2.6 **EXCLUDED BANK ACCOUNTS**. Notwithstanding any provision of this **Section 8.2**orany other provision of any Loan Document to the contrary, (A) Borrower and Subsidiaries maymaintain accounts used exclusively for workers compensation, payroll and employee health insuranceand trust accounts that are not a part of the cash management and control systems described herein(and not subject to a Deposit Account Control Agreement) provided that Borrower shall notaccumulate or maintain cash in such accounts as of any date of determination in excess of chequesoutstanding against such accounts as of that date and amounts necessary to meet minimum balancerequirements, (B) Borrower may maintain local collection accounts used exclusively for thecollection of Accounts owed by an Account Debtor located in a jurisdiction other than the UnitedKingdom which collection accounts shall not be a part of the cash management and control systemsdescribed herein (and not subject to a Deposit Account Control Agreement); provided that Borrowershall not accumulate or maintain cash in any such account in excess of €125,000 or in theaggregate in all such accounts in excess of €300,000, as of any date of determination and suchcollection accounts are subject to periodic sweeps to the Deposit Account in such frequency as isacceptable to Lender in its reasonable discretion.     **8.3****ADMINISTRATION OF INVENTORY**.          8.3.1 **RECORDS AND REPORTS OF INVENTORY**. Borrower shall keep accurate and completerecords of its Inventory, including costs and daily withdrawals and additions, and shall submit toLender inventory and reconciliation reports (including a reconciliation from the general ledger tothe perpetual inventory) in form reasonably satisfactory to Lender, on such periodic basis asLender may request. Borrower shall conduct periodic cycle counts consistent with historicalpractices, and shall provide to Lender a report based on each such inventory and count promptlyupon completion thereof, together with such supporting information as Lender may request.          8.3.2 **RETURNS OF INVENTORY**. Borrower shall not return any Inventory to a supplier,vendor or other Person, whether for cash, credit or otherwise, unless (a) such return is in theordinary course of business; (b) no Default, Event of Default or Overadvance exists or would resulttherefrom; (c) Lender is promptly notified if the aggregateValue of all Inventory returned in any month exceeds $200,000; and (d) any payment received bythe Borrower for a return is promptly remitted to Lender for application to the Obligations.          8.3.3 **ACQUISITION, SALE AND MAINTENANCE**. Borrower shall not acquire or accept morethan $50,000 at any one time (valued at Borrower’s cost) of any Inventory on consignment orapproval, unless the same is identified to Lender and excluded from the Borrowing Base, and shalltake all steps to assure that all Inventory is produced in accordance with Applicable Law.Borrower shall not sell any Inventory on consignment or approval or any other basis (other thancustomary rights of return) under which the customer may return or require the Borrower torepurchase such Inventory. Borrower shall use, store and maintain all Inventory with reasonablecare and caution, in accordance with applicable standards of any insurance and in conformity withall Applicable Law, and shall make current rent payments (within applicable grace periods providedfor in leases) at all locations where any Collateral is located.     **8.4****ADMINISTRATION OF EQUIPMENT**.
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          8.4.1 **RECORDS AND SCHEDULES OF EQUIPMENT**. Borrower shall keep accurate and completerecords of its Equipment, including kind, quality, quantity, cost, acquisitions and dispositionsthereof, and at any time a Default or Event of Default exists shall submit to Lender, on suchperiodic basis as Lender may request, a current schedule thereof, in form reasonably satisfactoryto Lender. Promptly upon request, Borrower shall deliver to Lender evidence of their ownership orinterests in any Equipment.          8.4.2 **DISPOSITIONS OF EQUIPMENT**. Borrower shall not sell, lease or otherwise disposeof any Equipment, without the prior written consent of Lender, other than (a) a Permitted AssetDisposition; and (b) disposal, sale or replacement of Equipment that is worn, damaged or obsoletewith Equipment of like function and value, if the replacement Equipment is acquired substantiallycontemporaneously with such disposition and is free of Liens other than Permitted Liens.          8.4.3 **CONDITION OF EQUIPMENT**. The Equipment is in good operating condition andrepair, and all necessary replacements and repairs have been made so that the value and operatingefficiency of the Equipment is preserved at all times, reasonable wear and tear excepted. Borrowershall ensure that the Equipment is mechanically and structurally sound, and capable of performingthe functions for which it was designed, in accordance with manufacturer specifications. Borrowershall not permit any Equipment to become affixed to real Property unless any landlord or mortgageedelivers a Lien Waiver.     **8.5****ADMINISTRATION OF DEPOSIT ACCOUNTS**. **Schedule 8.5**sets forth all Deposit Accountsmaintained by Borrower. Borrower shall take all actions necessary to establish Lender’s controlof each such Deposit Account (except as permitted by **Section 8.2.6**and with respect to any accountcontaining not more than $25,000 at any time.) Except as permitted by **Section 8.2.6**, Borrowershall be the sole account holder of each Deposit Account and shall not allow any other Person(other than Lender) to have control over a Deposit Account or any Property deposited therein.Borrower shall promptly notify Lender of anyopening or closing of a Deposit Account and, with the consent of Lender, will amend **Schedule8.5**to reflect same.     **8.6****GENERAL PROVISIONS**.          8.6.1 **LOCATION OF COLLATERAL**. All tangible items of Collateral, other than Inventoryin transit, shall at all times be kept by Borrower at the business locations set forth in **Schedule8.6.1**, except that Borrower may (a) make sales or other dispositions of Collateral in accordancewith **Section 10.2.6**; and (b) move Collateral to another location in the United Kingdom other than alocation listed on **Schedule 8.6.1**, so long as Borrower gives 30 Business Days prior written noticeto Lender and takes all steps necessary pursuant to **Section 7.6**to perfect Lender’s securityinterest in such Collateral prior to it being moved to a new location.          8.6.2 **INSURANCE OF COLLATERAL; CONDEMNATION PROCEEDS**.          (a) Borrower shall maintain insurance with respect to the Collateral, covering casualty,hazard, public liability, theft, malicious mischief, flood (if necessary) and other risks, inamounts, with endorsements and with insurers (with a Best Rating of at least A7, unless
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otherwiseapproved by Lender) reasonably satisfactory to Lender. All proceeds under each such policy (otherthan proceeds constituting Excluded Assets) shall be payable to Lender. From time to time uponrequest, Borrower shall deliver to Lender the originals or certified copies of its insurancepolicies and updated flood plain searches. Unless Lender shall agree otherwise, each policy shallinclude reasonably satisfactory endorsements (i) showing Lender as sole loss payee or additionalinsured, as appropriate (except with respect to insurance proceeds constituting Excluded Assets);(ii) requiring 30 days prior written notice to Lender in the event of cancellation of the policyfor any reason whatsoever; and (iii) specifying that the interest of Lender shall not be impairedor invalidated by any act or neglect of the Borrower or the owner of the Property, nor by theoccupation of the premises for purposes more hazardous than are permitted by the policy. If theBorrower fails to provide and pay for any insurance required hereunder or under **Section 10.1.7**,Lender may, at its option, but shall not be required to, procure the insurance and charge Borrowertherefor. Borrower agrees to deliver to Lender, promptly as rendered, copies of all reports madeto insurance companies. While no Event of Default exists, Borrower may settle, adjust orcompromise any insurance claim, as long as the proceeds are delivered to Lender. If an Event ofDefault exists, only Lender shall be authorized to settle, adjust and compromise such claims(except claims in respect of Excluded Assets).          (b) Any proceeds of insurance (other than proceeds from workers’ compensation or D&O insuranceand other than proceeds constituting Excluded Assets) and any awards arising from condemnation ofany Collateral shall be paid to Lender. Any such proceeds or awards that relate to Inventory shallbe applied to payment of the Revolver Loans, and then to any other Obligations outstanding.          (c) If requested by Borrower in writing within 60 days after Lender’s receipt of any insuranceproceeds or condemnation awards relating to any loss or destruction ofCollateral consisting of Equipment or Real Estate which are to be payable to Lender pursuantto **clauses (a) and (b)**, Borrower may use such proceeds or awards to repair or replace suchEquipment or Real Estate (and until so used, the proceeds shall be held by Lender as CashCollateral) as long as (i) no Default or Event of Default exists; (ii) such repair or replacementis promptly undertaken and concluded, in accordance with plans reasonably satisfactory to Lender;(iii) replacement buildings are constructed on the sites of the original casualties and are ofcomparable size, quality and utility to the destroyed buildings; (iv) the repaired or replacedProperty is free of Liens, other than Permitted Liens; and (v) Borrower complies with disbursementprocedures for such repair or replacement as Lender may reasonably require.          8.6.3 **PROTECTION OF COLLATERAL**. All expenses of protecting, storing, warehousing,insuring, handling, maintaining and shipping any Collateral, all Taxes payable with respect to anyCollateral (including any sale thereof), and all other payments required to be made by Lender toany Person to realize upon any Collateral, shall be borne and paid by Borrower. Lender shall notbe liable or responsible in any way for the safekeeping of any Collateral, for any loss or damagethereto (except for reasonable care in its custody while Collateral is in Lender’s actualpossession), for any diminution in the value thereof, or for any act or default of anywarehouseman, carrier, forwarding agency or other Person whatsoever, but the same shall be atBorrower’s sole risk.          8.6.4 **DEFENSE OF TITLE TO COLLATERAL**. Borrower shall at all times defend its title toCollateral and Lender’s Liens therein against all Persons, claims and demands whatsoever, exceptPermitted Liens.
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     **8.7****[INTENTIONALLY OMITTED]**:**SECTION 9 REPRESENTATIONS AND WARRANTIES**     **9.1****GENERAL REPRESENTATIONS AND WARRANTIES****.**To induce Lender to enter into thisAgreement and to make available the Revolver Commitments, Loans and Letters of Credit, Borrowerrepresents and warrants that:          9.1.1 **ORGANIZATION AND QUALIFICATION**. Borrower is duly incorporated as a privatelimited company registered in England and Wales and validly existing under the laws of England andWales. Borrower is duly qualified, authorized to do business and in good standing as a foreigncorporation in each jurisdiction where failure to be so qualified could reasonably be expected tohave a Material Adverse Effect. Borrower has no Subsidiaries.          9.1.2 **POWER AND AUTHORITY**. Each Obligor is duly authorized to execute, deliver andperform its Loan Documents. The execution, delivery and performance of the Loan Documents havebeen duly authorized by all necessary action, and do not (a) require any consent or approval of anyholders of Equity Interests of any Obligor, other than those already obtained; (b) contravene theOrganic Documents of any Obligor; (c) violate in any material respect or cause a material defaultunder any Applicable Law or Material Contract; or (d) result in or require the imposition of anyLien (other than Permitted Liens) on any Property of any Obligor.          9.1.3 **ENFORCEABILITY**. Each Loan Document is a legal, valid and binding obligation ofeach Obligor party thereto, enforceable in accordance with its terms, except as enforceability maybe limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rightsgenerally.          9.1.4 **CAPITAL STRUCTURE**. **Schedule 9.1.4**shows, for Borrower, its name, itsjurisdiction of incorporation, its authorized and issued Equity Interests as of the date hereof,the holders of its Equity Interests as of the date hereof, and to the knowledge of Borrower, allagreements as of the date hereof binding on such holders with respect to their Equity Interests.As of the date hereof, except as set forth on **Schedule 9.1.4**, there are no outstanding options topurchase, warrants, subscription rights, agreements to issue or sell, convertible interests,phantom rights or powers of attorney relating to any Equity Interests of the Borrower.          9.1.5 **CORPORATE NAMES; LOCATIONS**. During the five years preceding the Closing Date,except as shown on **Schedule 9.1.5**, Borrower has not been known as or used any corporate, fictitiousor trade names, has been the surviving corporation of a merger or combination, or has acquired anysubstantial part of the assets of any Person. The chief executive offices and other places ofbusiness of Borrower are shown on **Schedule 8.6.1**. For the purposes of The Council of the EuropeanUnion Regulation No. 1346/2000 on Insolvency Proceedings (the “**REGULATION**”), Borrower’scentre of main interests (as that term is used in Article 3(1) of the Regulation) is situated inEngland.          9.1.6 **TITLE TO PROPERTIES; PRIORITY OF LIENS**. Borrower has good and marketable titleto (or valid leasehold interests in) all of its Real Estate, and good title to valid leaseholdinterests in, or valid license to use all of its personal Property, including all Propertyreflected in any financial statements delivered to Lender, in each case free of Liens
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except Permitted Liens. Borrower has paid and discharged all lawful claims that, if unpaid, could becomea Lien on its Properties, other than Permitted Liens. All Liens of Lender in the Collateral areduly perfected, first priority Liens, subject only to Permitted Liens that are expressly allowed tohave priority over Lender’s Liens under this Agreement or that have priority by operation ofApplicable Law.          9.1.7 **ACCOUNTS**. Lender may rely, in determining which Accounts are Eligible Accounts,on all statements and representations made by Borrower with respect thereto. Borrower warrants,with respect to each Account at the time it is shown as an Eligible Account in a Borrowing BaseCertificate, that: it is genuine and in all respects what it purports to be, and is not evidencedby a judgment; it arises out of a completed, *bona fide*sale and delivery of goods or rendition ofservices in the ordinary course of business, and substantially in accordance with any purchaseorder, contract or other document relating thereto; it is for a sum certain, maturing as stated inthe invoice covering such sale or rendition of services, a copy of which has been furnished or isavailable to Lender on request; it is not subject to any offset, Lien (other than Lender’s Lien andPermitted Liens set forth in **Section 10.2.2 (c)**), deduction, defense, dispute, counterclaim orother adverse condition except as arising in the ordinary course of business and disclosed toLender; and it is absolutely owing by the Account Debtor, without contingency inany respect; no purchase order, agreement, document or Applicable Law restricts assignment ofthe Account to Lender (regardless of whether the restriction is, under applicable law,ineffective), and Borrower is the sole payee or remittance party shown on the invoice; noextension, compromise, settlement, modification, credit, deduction or return has been authorizedwith respect to the Account, except discounts or allowances granted in the ordinary course ofbusiness for prompt payment that are reflected on the face of the invoice related thereto and inthe reports submitted to Lender hereunder; and to the best of Borrower’s knowledge, (i) there areno facts or circumstances that are reasonably likely to impair the enforceability or collectibilityof such Account; (ii) the Account Debtor had the capacity to contract when the Account arose,continues to meet Borrower’s customary credit standards, is Solvent, is not contemplating orsubject to an Insolvency Proceeding, and has not failed, or suspended or ceased doing business; and(iii) there are no proceedings or actions threatened or pending against any Account Debtor thatcould reasonably be expected to have a material adverse effect on the Account Debtor’s financialcondition.          9.1.8 **FINANCIAL STATEMENTS**. The balance sheets, and related statements of operationsof Borrower that have been and are hereafter delivered to Lender, are prepared in accordance withGAAP, and fairly present the financial positions and results of operations of Borrower at the datesand for the periods indicated, subject to changes resulting from audit and year-end adjustments andthe absence of footnotes. All projections delivered from time to time to Lender have been preparedin good faith, based on assumptions believed by Borrower to be reasonable at the time made inlight of the circumstances at such time. Since October 31, 2007, there has been no change in thecondition, financial or otherwise, of the Borrower that could reasonably be expected to have aMaterial Adverse Effect. Obligors, taken as a whole, are Solvent.          9.1.9 **SURETY OBLIGATIONS**. Except as set forth in **Schedule 9.1.9**, Borrower is notobligated as surety or indemnitor under any bond or other contract that assures payment orperformance of any obligation of any Person, except as permitted hereunder.
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          9.1.10 **TAXES**. Borrower has filed all tax returns and other reports that it isrequired by law to file, and has paid, or made provision for the payment of, all Taxes upon it, itsincome and its Properties that are due and payable, except to the extent being Properly Contestedor to the extent constituting Immaterial Tax obligations. The provision for Taxes on the books ofBorrower is adequate for all years not closed by applicable statutes, and for its current FiscalYear.          9.1.11 **BROKERS**. There are no brokerage commissions, finder’s fees or investmentbanking fees payable in connection with any transactions contemplated by the Loan Documents.          9.1.12 **INTELLECTUAL PROPERTY**. Borrower owns or has the lawful right to use allIntellectual Property necessary for the conduct of its business, without conflict with any rightsof others. Except as would not reasonably be expected to have a Material Adverse Effect, there isno pending or, to the Borrower’s knowledge, threatened Intellectual Property Claim with respect tothe Borrower or any of its Property (including any IntellectualProperty). Except as disclosed on **Schedule 9.1.12**or as otherwise disclosed to Lender inwriting, Borrower does not pay or owe any Royalty or other compensation to any Person with respectto any Intellectual Property in excess of $100,000 per year with respect to each such Person. AllIntellectual Property owned, used or licensed by, or otherwise subject to any interests of, theBorrower is shown on **Schedule 9.1.12**.          9.1.13 **GOVERNMENTAL APPROVALS**. Except as could not reasonably be expected to have aMaterial Adverse Effect, Borrower has, is in compliance with, and is in good standing with respectto, all Governmental Approvals necessary to conduct its business and to own, lease and operate itsProperties. All necessary import, export or other licenses, permits or certificates for the importor handling of any goods or other Collateral have been procured and are in effect, and Borrowerhave complied with all foreign and domestic laws with respect to the shipment and importation ofany goods or Collateral, except where noncompliance could not reasonably be expected to have aMaterial Adverse Effect.          9.1.14 **COMPLIANCE WITH LAWS**. Borrower has duly complied, and its Properties andbusiness operations are in compliance, in all material respects with all Applicable Law, exceptwhere noncompliance could not reasonably be expected to have a Material Adverse Effect. Except ascould not reasonably be expected to have a Material Adverse Effect, there have been no citations,notices or orders of noncompliance issued to the Borrower under any Applicable Law. No Inventoryhas been produced in violation of the FLSA.          9.1.15 **COMPLIANCE WITH ENVIRONMENTAL LAWS**. Except as disclosed on **Schedule 9.1.15**, oras would not reasonably be expected to have a Material Adverse Effect, Borrower’s past or presentoperations, Real Estate or other Properties are not subject to any investigation to determinewhether any remedial action is needed to address any environmental pollution, hazardous material orenvironmental clean-up. Except as would not reasonably be expected to have a Material AdverseEffect, Borrower has not received any Environmental Notice. Except as would not reasonably beexpected to have a Material Adverse Effect, Borrower has no contingent liability with respect toany Environmental Release, environmental pollution or hazardous material on any Real Estate now orpreviously owned, leased or operated by it.
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          9.1.16 **BURDENSOME CONTRACTS**. Borrower is not a party or subject to any contract,agreement or charter restriction that could reasonably be expected to have a Material AdverseEffect.          9.1.17 **LITIGATION**. Except as shown on **Schedule 9.1.17**, there are no proceedings orinvestigations pending or, to the Borrower’s knowledge, threatened against the Borrower, or any ofits businesses, operations, Properties, prospects or conditions, that (a) relate to any LoanDocuments or transactions contemplated thereby; or (b) could reasonably be expected to have aMaterial Adverse Effect. Borrower is not in default with respect to any order, injunction orjudgment of any Governmental Authority.          9.1.18 **NO DEFAULTS**. No event or circumstance has occurred or exists that constitutesa Default or Event of Default.          9.1.19 **PENSIONS.** Except as set forth in **Schedule 9.1.19**, Borrower is not nor has atany time been an employer (for the purposes of Sections 38 to 51 of the Pensions Act 2004) of anoccupational pension scheme which is not a money purchase scheme (as those terms are defined inthe Pensions Schemes Act 1993) and Borrower is not nor has at any time been “connected” with or an“associate” of (as those terms are used in Sections 39 and 43 of the Pensions Act 2004) such anemployer.          9.1.20 **TRADE RELATIONS**. There exists no actual or threatened termination, limitationor modification of any business relationship between the Borrower and any customer or supplier, orany group of customers or suppliers, who individually or in the aggregate could reasonably beexpected to have a Material Adverse Effect. There exists no condition or circumstance that couldreasonably be expected to impair the ability of the Borrower to conduct its business at any timehereafter in substantially the same manner as conducted on the Closing Date.          9.1.21 **LABOUR RELATIONS**. Except as set forth on **Schedule 9.1.21**, Borrower is notparty to or bound by any collective bargaining agreement, management agreement or consultingagreement which Borrower’s obligations thereunder exceeds $500,000. There are no grievances,disputes or controversies with any union or other organization of the Borrower’s employees, or, tothe Borrower’s knowledge, any asserted or threatened strikes, work stoppages or demands forcollective bargaining that could individually or in the aggregate reasonably be expected to have aMaterial Adverse Effect.          9.1.22 **PAYABLE PRACTICES**. Except as would not reasonably be expected to have aMaterial Adverse Effect, Borrower has made no material change in its historical accounts payablepractices from those in effect on the Closing Date.     **9.2****COMPLETE DISCLOSURE****.**None of the representations or warranties made by theBorrower in the Loan Documents as of the date such representations and warranties are made ordeemed made, considering each of the foregoing in the context in which it was made and togetherwith all other representations, warranties and written statements theretofore furnished by suchObligor to the Lender in connection with the Loan Documents, contains any untrue statement of amaterial fact or omits any material fact required to be stated therein or necessary to make suchrepresentation, warranty or written statement, in light of the circumstances under which it ismade, not misleading as of the time when made or delivered;
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provided that the Borrower’srepresentation and warranty as to any forecast, projection or other statement regarding futureperformance, future financial results or other future development is limited to the fact that suchforecast, projection or statement was prepared in good faith on the basis of information andassumptions that the Borrower believed to be reasonable as of the date such material was prepared(it being understood that the projections are subject to significant uncertainties andcontingencies, many of which are beyond the Borrower’s control, and that no assurance can be giventhat the projections will be realized).**SECTION 10 COVENANTS AND CONTINUING AGREEMENTS**     **10.1****AFFIRMATIVE COVENANTS****.**As long as any Revolver Commitment or Obligations areoutstanding, Borrower shall, and shall cause each Subsidiary to:          10.1.1 **INSPECTIONS; APPRAISALS**.          (a) Permit Lender from time to time, subject (except when a Default or Event of Defaultexists) to reasonable notice and normal business hours, to visit and inspect the Properties of theBorrower or Subsidiary, inspect, audit and make extracts from the Borrower’s or Subsidiary’s booksand records, and discuss on a confidential basis with its officers, employees, agents, advisors andindependent accountants the Borrower’s or Subsidiary’s business, financial condition, assets,prospects and results of operations. Lender shall not have any duty to the Borrower to make anyinspection, nor to share any results of any inspection, appraisal or report with the Borrower.Borrower acknowledges that all inspections, appraisals and reports are prepared by Lender for itspurposes, and Borrower shall not be entitled to rely upon them.          (b) Reimburse Lender for all its reasonable charges, costs and expenses in connection with(i) examinations of any Obligor’s books and records or any other financial or Collateral matters asLender reasonably deems appropriate, up to twice per Loan Year; and (ii) appraisals of Inventory upto one time per Loan Year; provided, however, that if an examination or appraisal is initiatedduring a Default or Event of Default, all charges, costs and expenses therefor shall be reimbursedby Borrower without regard to such limits. Subject to and without limiting the foregoing, Borrowerspecifically agree to pay Lender’s then standard charges (such standard charges as of the ClosingDate are $850 per day per person plus out of pocket expenses) for each day that an employee ofLender or its Affiliates is engaged in any examination activities, and shall pay the standardcharges of Lender’s internal appraisal group. This Section shall not be construed to limitLender’s right to conduct examinations or to obtain appraisals at any time in its reasonablediscretion, nor to use third parties for such purposes.          10.1.2 **FINANCIAL AND OTHER INFORMATION**. Keep adequate records and books of accountwith respect to its business activities, in which proper entries are made in accordance with GAAPreflecting all financial transactions; and furnish to Lender: as soon as available, its annualaccounts prepared pursuant to, and in accordance with, Chapter 4 of Part 1 of the Companies Act2006;          (a) [Intentionally Omitted]; concurrently with the delivery of Borrowing Base Certificatespursuant to **Section 8.1**, a listing of Borrower’s trade payables, specifying the trade creditor andbalance due, and a detailed trade payable aging, all in form satisfactory to Lender;          (b) [Intentionally Omitted];
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          (c) [intentionally omitted]; and such other reports and information (financial or otherwise)as Lender may reasonably request from time to time in connection with any Collateral or theBorrower’s, Subsidiary’s or other Obligor’s financial condition or business.          10.1.3 **NOTICES**. Notify Lender in writing, promptly after the Borrower’s obtainingknowledge thereof, of any of the following that affects Borrower: (a) the threat or commencementof any proceeding or investigation that would reasonably be expected to have a Material AdverseEffect; (b) any pending or threatened labour dispute, strike or walkout, or the expiration of anymaterial labour contract that could reasonably be expected to have a Material Adverse Effect;(c) any default under or termination of a Material Contract; (d) the existence of any Default orEvent of Default; (e) any judgment in an amount exceeding $200,000; (f) the assertion of anyIntellectual Property Claim, that could reasonably be expected to have a Material Adverse Effect;(g) any Environmental Release by an Obligor or on any Property owned, leased or occupied by anObligor; or receipt of any Environmental Notice that could reasonably be expected to have aMaterial Adverse Effect; (h) [intentionally omitted]; (i) the discharge of or any withdrawal orresignation by Borrower’s independent accountants; or (j) any opening of a new office or place ofbusiness where the Borrower’s Accounts, Inventory or Borrower’s books and records are located, atleast 30 days after such opening.          10.1.4 **LANDLORD AND STORAGE AGREEMENTS**. Upon request, provide Lender with copies ofall existing material agreements, and promptly after execution thereof provide Lender with copiesof all future agreements, between an Obligor and any landlord, warehouseman, processor, shipper,bailee or other Person that owns any premises at which any Collateral may be kept or that otherwisemay possess or handle any Collateral.          10.1.5 **COMPLIANCE WITH LAWS**. Comply with all Applicable Laws, including EnvironmentalLaws and laws regarding collection and payment of Taxes, and maintain all Governmental Approvalsnecessary to the ownership of its Properties or conduct of its business, unless failure to complyor maintain could not reasonably be expected to have a Material Adverse Effect.          10.1.6 **TAXES**. Pay and discharge all Taxes prior to the date on which they becomedelinquent or penalties attach, unless such Taxes are being Properly Contested or constituteImmaterial Taxes.          10.1.7 **INSURANCE**. In addition to the insurance required hereunder with respect toCollateral, maintain insurance with insurers (with a Best Rating of at least A7, unless otherwiseapproved by Lender) reasonably satisfactory to Lender, (a) with respect to the Properties andbusiness of Borrower and Subsidiaries of such type (including product liability, workers’compensation, larceny, embezzlement, or other criminal misappropriation insurance), in suchamounts, and with such coverages and deductibles as are customary for companies similarly situated;and (b) business interruption insurance in an amount not less than $4,000,000, with deductibles andsubject to an Insurance Assignment reasonably satisfactory to Lender.          10.1.8 **LICENSES**. Except as would not reasonably be expected to have a MaterialAdverse Effect, keep each material License affecting any Collateral (including the manufacture,distribution or disposition of Inventory) or any other material Property of Borrower andSubsidiaries in full force and effect; promptly notify Lender of any proposed material modificationto any such License, or entry into any new material License, in each case at least 30
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days prior toits effective date; pay all Royalties when due unless being contested in good faith;and notify Lender of any default or breach asserted by any Person to have occurred under anymaterial License.          10.1.9 **FUTURE SUBSIDIARIES**. Promptly notify Lender upon any Person becoming aSubsidiary and, if such Person is not a Foreign Subsidiary, cause it to guaranty the Obligations ina manner satisfactory to Lender, and to execute and deliver such documents, instruments andagreements and to take such other actions as Lender shall reasonably require to evidence andperfect a Lien in favour of Lender on all assets of such Person, including delivery of such legalopinions, in form and substance reasonably satisfactory to Lender, as it shall reasonably deemappropriate.          10.1.10 **PENSIONS.** Ensure that:          (a) Neither Borrower nor any Subsidiary is or has been at any time an employer (for thepurposes of Sections 38 to 51 of the Pensions Act 2004) of an occupational pension scheme which isnot a money purchase scheme (as those terms are defined in the Pension Schemes Act 1993); andNeither Borrower nor any Subsidiary is or has been at any time “connected” with or an “associate”of (as those terms are used in Sections 39 or 43 of the Pensions Act 2004) such an employer.          (b) Borrower shall ensure that all pension schemes operated by or maintained for the benefitof it and its Subsidiaries and/or any of their employees are fully funded based on the minimumfunding requirement under Section 56 of the Pensions Act 1995 or the statutory funding objectiveunder Section 222 of the Pensions Act 2004 and that no action or omission is taken or made by anymember of the Group in relation to such a pension scheme which has or is reasonably likely to havea Material Adverse Effect (including, without limitation, the termination or commencement ofwinding-up proceedings of any such pension scheme or any member of the Group ceasing to employ anymember of such a pension scheme).          (c) Borrower shall deliver to Lender, at such times as those reports are prepared in order tocomply with the then current statutory or auditing requirements (as applicable either to thetrustees of any relevant schemes or to Borrower or any Subsidiary), actuarial reports in relationto all pension schemes mentioned in this **Section 10.1.10**.          (d) Borrower shall promptly notify Lender of any material change in the rate of contributionspaid or recommended to be paid (whether by the scheme actuary or otherwise) or required (by law orotherwise) to be paid in respect of any pension scheme mentioned in this Section 10.1.10.          10.1.11 **POST-CLOSING COVENANTS**. Borrower shall satisfy each of the covenants setforth in **Schedule 10.1.11**within the time periods specified therein.     **10.2****NEGATIVE COVENANTS****.**As long as any Revolver Commitment or Obligations areoutstanding, Borrower shall not, and shall cause each Subsidiary not to:          10.2.1 **PERMITTED DEBT**. Create, incur, guarantee or suffer to exist any Debt, except:the Obligations;          (a) Subordinated Debt;
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          (b) Permitted Purchase Money Debt and Permitted Capital Leases;          (c) Borrowed Money as identified on **Schedule 10.2.1(d)**(other than the Obligations,Subordinated Debt and Permitted Purchase Money Debt), but only to the extent outstanding on theClosing Date and not satisfied with proceeds of the initial Loans;          (d) Bank Product Debt;          (e) Debt that is in existence when a Person becomes a Subsidiary or that is secured by anasset when acquired by the Borrower or Subsidiary, as long as such Debt was not incurred incontemplation of such Person becoming a Subsidiary or such acquisition, and does not exceed$1,000,000 in the aggregate at any time;          (f) Permitted Contingent Obligations;          (g) Refinancing Debt as long as each Refinancing Condition is satisfied;          (h) Investments that are not Restricted Investments;          (i) Hedging Agreements permitted under **Section 10.2.15**;          (j) Debt in respect of (i) workers’ compensation claims or obligations in respect of health,disability or other employee benefits or property, casualty or liability insurance orself-insurance or completion, bid, performance, appeal or surety bonds issued for the account ofthe Borrower or any Subsidiary, bankers acceptances and other similar obligations not constitutingBorrowed Money that are incurred in the ordinary course of business, and (ii) guarantees of, orobligations of the Borrower or any Subsidiary with respect to letters of credit supporting, anyobligations described in clause (m);          (k) Debt arising from the honoring by a bank or other financial institution of a cheque, draftor similar instrument (except in the case of daylight overdrafts) drawn against insufficient fundsin the ordinary course of business; provided, however, that such Debt is extinguished within fiveBusiness Days of incurrence;          (l) Debt arising in connection with endorsement of instruments for deposit in the ordinarycourse of business Debt with respect to the deferred purchase price due to the seller for anyPermitted Acquisition, provided that such Debt is subordinated to the Obligations on termsreasonably acceptable to Lender;          (m) Debt arising from agreements of the Borrower or any Subsidiary providing forindemnification, adjustment of purchase price, earn-outs or similar obligations, in each case,incurred or assumed in connection with the disposition or acquisition of any Subsidiary or anyother business or assets, other than guarantees of Debt incurred by any Person acquiring allor any portion of such Subsidiary, business or assets for the purpose of financing suchacquisition;          (n) Debt owing to Parent or any other Borrower under the US Loan Documents, provided that notmore than $6,000,000 of such loans may be outstanding at any one time; and Unsecured Debt assumedin connection with Permitted Acquisitions in an aggregate amount not to exceed $200,000 at any timeoutstanding;
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          (o) Debt that is not included in any of the preceding clauses of this Section, is not securedby a Lien and does not exceed $500,000 in the aggregate at any time.          10.2.2 **PERMITTED LIENS**. Create or suffer to exist any Lien upon any of its Property,except the following (collectively, “**PERMITTED LIENS**”):          (a) Liens granted pursuant to the Security Documents and other Liens in favor of Lender;          (b) Purchase Money Liens securing Permitted Purchase Money Debt and Capital Lease Lienssecuring Permitted Capital Leases;          (c) Liens for Taxes not yet past due or being Properly Contested; statutory Liens, such ascarriers’, warehousemen’s, materialmen’s, workmen’s, suppliers’, repairmen’s and mechanics’ Liensand other similar Liens (other than Liens for Taxes and Landlord’s and Lessor’s Liens) arising inthe ordinary course of business, but only if (i) payment of the obligations secured thereby is notyet due or is being Properly Contested, and (ii) such Liens do not materially impair the value oruse of the Property or materially impair operation of the business of the Borrower or Subsidiary;          (d) (i) Liens incurred or deposits or pledges made in the ordinary course of business tosecure the performance of tenders, bids, leases, contracts (except those relating to BorrowedMoney), statutory obligations and other similar obligations, or arising as a result of progresspayments under government contracts, as long as such Liens are at all times junior to Lender’sLiens, and (ii) pledges and deposits made in the ordinary course of business in compliance withworkers’ compensation, unemployment insurance and other social security laws or regulations, otherthan any Liens for Taxes;          (e) (i) landlords’ and lessors’ Liens in respect of rent not in default and (ii) Liens arisingin the ordinary course of business that are subject to Lien Waivers;          (f) Liens arising by virtue of a judgment or judicial order against the Borrower or aSubsidiary, or any Property of the Borrower or a Subsidiary, as long as such Liens are adequatelybonded and any appropriate legal proceedings which may have been duly initiated for the review ofsuch judgment have not been finally terminated or the period within which the proceedings may beinitiated has not expired; easements, rights-of-way, restrictions (including zoning restrictions),covenants, licenses, encroachments, protrusions or other agreements of record, and other similarcharges or encumbrances on Real Estate, that do not secure any Debtand do not interfere with the ordinary course of business; normal and customary rights ofsetoff upon deposits in favor of depository institutions, and Liens of a collecting bank on PaymentItems in the course of collection; and existing Liens shown on **Schedule 10.2.2**and any Lien grantedas a replacement or substitute therefor; provided that any such replacement or substitute Lien(i) except as permitted by **Section 10.2.1**, does not secure an aggregate amount of Debt, if any,greater than that secured on the Closing Date and (ii) is not expanded beyond the property orcategories of property subject thereto on the Closing Date; leases or subleases of the propertiesof the Borrower or a Subsidiary granted by such Person to third parties, in each case entered intoin the ordinary course of business so long as such leases or subleases do not, individually or inthe aggregate, (i) interfere in any material respect with the ordinary conduct of the business ofthe Borrower or a Subsidiary or (ii) materially impair the use (for its intended
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purposes) or the value of the property subject thereto; bankers’ Liens, rights of setoff andother similar Liens existing solely with respect to cash and Cash Equivalents on deposit in one ormore accounts maintained by the Borrower or a Subsidiary, in each case granted in the ordinarycourse of business in favour of the bank or banks or security intermediary with which such accountsare maintained, securing amounts owing to such bank or securities intermediary including withrespect to cash management and operating account arrangements, including those involving pooledaccounts and netting arrangements; provided that, unless such Liens are non-consensual and arise byoperation of law, in no case shall any such Liens secure (either directly or indirectly) therepayment of any Debt;          (g) Liens on fixed assets acquired in connection with a Permitted Acquisition so long as suchLiens were existing at the time of such Acquisition by a Borrower or Subsidiary and were notincurred, extended or renewed in contemplation of such Acquisition; provided that (i) theDebt secured by such Lien is permitted under **Section 10.2.1**, (ii) the Lien shall attach solely tothe property acquired, and (iii) at the time of acquisition of such fixed assets, the aggregateamount remaining unpaid on all Debt secured by Liens on such fixed assets whether or not assumed bya Borrower or Subsidiary shall not exceed an amount equal to the fair market value at the time ofacquisition of such fixed assets;          (h) Liens in favour of customs and revenue authorities arising as a matter of law to securepayment of customs duties in connection with the importation of goods;          (i) Liens securing Refinancing Debt permitted sunder **Section 10.2.1**;          (j) Liens on property of and Equity Interests in a Foreign Subsidiary securing Debt of suchForeign Subsidiary permitted under Section 10.2.1(h);          (k) Liens in respect of the UK Lease Deposit; and Liens incidental to the conduct of thebusiness or the ownership of the assets of the Borrower or a Subsidiary that (x) were not incurredin connection with Borrowed Money, (y) do not in the aggregate materially detract from the value ofthe assets subject thereto or materially impair the use thereof in the operation of such businessand (z) do not secure obligations aggregating in excess of $200,000.          10.2.3 **[INTENTIONALLY DELETED]**.          10.2.4 **DISTRIBUTIONS; UPSTREAM PAYMENTS**. Declare or make any Distributions, exceptthe Borrower may declare and pay Upstream Payments.          10.2.5 **RESTRICTED INVESTMENTS**. Make any Restricted Investment.          10.2.6 **DISPOSITION OF ASSETS**. Make any Asset Disposition, except a Permitted AssetDisposition, a disposition of Equipment under **Section 8.4.2**, or a transfer of Property by aSubsidiary or Obligor to the Borrower.          10.2.7 **LOANS**. Make any loans or other advances of money to any Person, except(a) advances to an officer or employee for salary, travel expenses, commissions and similar itemsin the ordinary course of business; (b) prepaid expenses and extensions of trade credit made in theordinary course of business; (c) deposits with financial institutions permitted hereunder; (d) aslong as no Default or Event of Default exists, intercompany loans by a
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Subsidiary to the Borrower, (e) Permitted Investments and (f) a loan by Borrower to Parentprovided that not more than $6,000,000 of such loans may be outstanding at any one time.          10.2.8 **RESTRICTIONS ON PAYMENT OF CERTAIN DEBT**. (a) Make any payments (whethervoluntary or mandatory, or a prepayment, redemption, retirement, defeasance or acquisition) withrespect to any Subordinated Debt, except regularly scheduled payments of principal, interest andfees, but only to the extent permitted under any subordination agreement relating to such Debt (anda Senior Officer of Borrower shall certify to Lender, not less than five Business Days prior to thedate of payment, that all conditions under such agreement have been satisfied); or (b) if an Eventof Default has occurred and is continuing or will result after giving effect thereto, make anyvoluntary prepayment of Borrowed Money (other than the Obligations) prior to the due date for anypayments under the agreements evidencing such Debt as in effect on the Closing Date (or as amendedthereafter with the consent of Lender).          10.2.9 **FUNDAMENTAL CHANGES**. Merge, combine or consolidate with any Person, orliquidate, wind up its affairs or dissolve itself, in each case whether in a single transaction orin a series of related transactions, except for mergers or consolidations of a wholly-ownedSubsidiary into the Borrower; change its name or conduct business under any fictitious name, ormaintain its centre of main interests (as that term is used in Article 3(1) of The Council of theEuropean Union Regulation No. 1346/2000 on Insolvency Proceedings (the “**REGULATION**”), otherthan in England and Wales or have an “establishment” (as that term is used in Article 2(h) of theRegulation) in any other jurisdiction, without, in each such case, giving Lender 30 days advancewritten notice thereof; change its tax, charter or other organizational identification number; orchange its form or country of incorporation without giving Lender 30 days advance written noticethereof.          10.2.10 **SUBSIDIARIES**. Form or acquire any Subsidiary after the Closing Date, exceptin accordance with **Sections 10.1.9**and **10.2.5**.          10.2.11 **ORGANIC DOCUMENTS**. Amend, modify or otherwise change any of its OrganicDocuments except for any amendment, modification or other change that does not adversely affectLender or any duty to pay the Obligations.          10.2.12 **TAX CONSOLIDATION**. File or consent to the filing of any consolidated incometax return with any Person other than Parent and its Subsidiaries.          10.2.13 **ACCOUNTING CHANGES**. Make any material change in accounting treatment orreporting practices, except as required by GAAP and in accordance with **Section 1.2**; or change itsFiscal Year.          10.2.14 **AGGREGATE OUTSTANDINGS**. At no time shall the sum of all outstandingobligations under the US Loan Facility plus all Obligations be in excess of $55,000,000.          10.2.15 **HEDGING AGREEMENTS**. Enter into any Hedging Agreement, except to hedge risksarising in the ordinary course of business and not for speculative purposes.          10.2.16 **CONDUCT OF BUSINESS**. Engage in any business, other than its business asconducted on the Closing Date and any activities incidental thereto and business reasonably relatedand/or complementary thereto.
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          10.2.17 **AFFILIATE TRANSACTIONS**. Enter into or be party to any transaction with anAffiliate, except (a) transactions contemplated by the Loan Documents; (b) payment of reasonablecompensation to officers and employees for services actually rendered, and loans and advancespermitted by **Section 10.2.7**; (c) payment of customary directors’ fees and indemnities;(d) transactions solely between Borrower and Parent as set forth in **Section 10.2.7**;(e) transactions with Affiliates that were consummated prior to the Closing Date, as shown on**Schedule 10.2.17**; (f) transactions with Affiliates in the ordinary course of business, upon fairand reasonable terms fully disclosed to Lender and no less favorable than would be obtained in acomparable arm’s-length transaction with a non-Affiliate; (g) Permitted Distributions;(h) Permitted Investments; (i) Permitted Asset Dispositions and (j) payment of administrative orrelated expenses of Borrower in the ordinary course of business and consistent with past practices.          10.2.18 **[INTENTIONALLY OMITTED]**.          10.2.19 **AMENDMENTS TO SUBORDINATED DEBT**. Amend, supplement or otherwise modify anydocument, instrument or agreement relating to any Subordinated Debt, if such modification(a) increases the principal balance of such Debt, or increases any required cash payment payableprior to the Full Payment of all Obligations; (b) accelerates the date on which any installment ofprincipal or any interest is due, or adds any additional redemption, put or prepayment provisions;(c) shortens the final maturity date or otherwise accelerates amortization; (d) increases theinterest rate; (e) increases or adds any fees or charges; (f) modifies any covenant in a manner oradds any representation, covenant or default that is more onerous or restrictive in any materialrespect for the Borrower or Subsidiary, or that is otherwise materially adverse to the Borrower,any Subsidiary or Lender; or (g) results in the Obligations not being fully benefited by thesubordination provisions thereof.**SECTION 11 EVENTS OF DEFAULT; REMEDIES ON DEFAULT**     **11.1****EVENTS OF DEFAULT****.**Each of the following shall be an “Event of Default”hereunder, if the same shall occur for any reason whatsoever, whether voluntary or involuntary, byoperation of law or otherwise:          (a) The Borrower fails to pay (i) when and as required to be paid hereunder, any amount ofprincipal or interest of any Loan or any reimbursement of any drawing under a Letter of Credit, or(ii) within five Business Days after the same becomes due, any other amount payable hereunder orunder any other Loan Document;          (b) Any representation, warranty or other written statement of an Obligor made in connectionwith any Loan Documents or transactions contemplated thereby is incorrect or misleading in anymaterial respect when given;          (c) The Borrower breaches or fail to perform any covenant contained in Sections **2.1.4, 6.3,8.1, 8.2.4, 8.2.5, 8.6.2, 10.1.1(a), 10.1.2,** or **10.2** or **Clause 6**of the Debenture;          (d) An Obligor breaches or fails to perform any other covenant contained in any LoanDocuments, and such breach or failure is not cured within 30 days after a Senior Officer of suchObligor has knowledge thereof or receives notice thereof from Lender, whichever is sooner;
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          (e) A Guarantor repudiates, revokes or attempts to revoke its Guaranty; an Obligor denies orcontests the validity or enforceability of any Loan Documents or Obligations, or the perfection orpriority of any Lien granted to Lender; or any Loan Document ceases to be in full force or effectfor any reason (other than a waiver or release by Lender);          (f) Any “Event of Default” occurs under any US Loan Document, or any other document,instrument or agreement to which an Obligor is a party or by which it or any of its Properties isbound, relating to any Debt (other than the Obligations) in excess of $200,000, if the maturity ofor any payment with respect to such Debt may be accelerated or demanded due to such “Event ofDefault”;          (g) Any judgment or order for the payment of money is entered against an Obligor in an amountthat exceeds, individually or cumulatively with all unsatisfied judgments or orders against allObligors, $500,000 (net of any insurance coverage therefor not disputed by the insurer), and thesame shall remain undischarged, unvacated or unbonded for a period of 30 consecutive daysconsecutive days during which execution shall not be effectively stayed, by reason of a pendingappeal or otherwise;          (h) A loss, theft, damage or destruction occurs with respect to any Collateral if the amountnot covered by insurance exceeds $200,000;          (i) Any Obligor is enjoined, restrained or in any way prevented by any Governmental Authorityfrom conducting any material part of its business; any Obligor suffers the loss, revocation ortermination of any material license, permit, lease or agreement necessary to its business; there isa cessation of any material part of any Obligor’s business for a material period of time; anymaterial Collateral or Property of the Obligors (taken as a whole) is taken or impaired throughcondemnation; any Obligor agrees to or commences any liquidation, dissolution or winding up of itsaffairs; or Obligors, taken as a whole cease to be Solvent;          (j) An Insolvency Proceeding is commenced by any Obligor; any Obligor makes an offer ofsettlement, extension or composition to its unsecured creditors generally; a trustee is appointedto take possession of any substantial Property of or to operate any of the business of any Obligor;or an Insolvency Proceeding is commenced against any Obligor and: the Obligor consents toinstitution of the proceeding, the petition commencing the proceeding is not timely controverted bythe Obligor, the petition is not dismissed within 30 days after filing, or an order for relief isentered in the proceeding;          (k) [intentionally omitted];          (l) [intentionally omitted]; or A Change of Control occurs; or any event occurs or conditionexists that has a Material Adverse Effect.     **11.2****REMEDIES UPON DEFAULT****.**If an Event of Default described in **Section 11.1(j)**occurs with respect to the Borrower, then to the extent permitted by Applicable Law, allObligations shall become automatically due and payable and all Revolver Commitments shallterminate, without any action by Lender or notice of any kind.1 In addition, or if any otherEvent of Default exists, Lender may in its discretion do any one or more of the following from *1 This provision is of doubtful validity under English law.*
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time to time: declare any Obligations immediately due and payable, whereupon they shall bedue and payable without diligence, presentment, demand, protest or notice of any kind, all ofwhich are hereby waived by Borrower to the fullest extent permitted by law; terminate, reduce orcondition any Revolver Commitment, or make any adjustment to the Borrowing Base; require Obligorsto Cash Collateralize the Obligations including the LC Obligations and Obligations in respect ofBank Products but excluding other contingent Obligations such as rights to indemnification as towhich no claim has been made, and, if Obligors fail promptly to deposit such Cash Collateral,Lender may advance the required Cash Collateral as Revolver Loans (whether or not an Overadvanceexists or is created thereby, or the conditions in **Section 6**are satisfied); and exercise anyother rights or remedies afforded under the Debenture, any agreement, by law, at equity orotherwise.     **11.3****LICENSE****.**Except (i) with respect to Intellectual Property constituting ExcludedAssets, or (ii) as prohibited by any agreement (including any License) with respect to anyIntellectual Property, Lender is hereby granted an irrevocable, non-exclusive license or otherright to use, license or sub-license (without payment of royalty or other compensation to anyPerson), effective at any time that a Default or Event of Default has occurred and is continuing,any or all Intellectual Property of Borrower, computer hardware and software, trade secrets,brochures, customer lists, promotional and advertising materials, labels, packaging materials andother Property, in advertising for sale, marketing, selling, collecting, completing manufactureof, or otherwise exercising any rights or remedies with respect to, any Collateral.     **11.4****SETOFF****.**At any time during an Event of Default, Lender and its Affiliates areauthorized, to the fullest extent permitted by Applicable Law, to set off and apply any and alldeposits (general or special, time or demand, provisional or final, in whatever currency) at anytime held and other obligations (in whatever currency) at any time owing by Lender or suchAffiliate to or for the credit or the account of Borrower against any Obligations, irrespective ofwhether or not Lender or such Affiliate shall have made any demand under this Agreement or anyother Loan Document and although such Obligations may be contingent or unmatured or are owed to abranch or office of Lender or such Affiliate different from the branch or office holding suchdeposit or obligated on such indebtedness. The rights of Lender and each such Affiliate underthis Section are in addition to other rights and remedies (including other rights of setoff) thatsuch Person may have.     **11.5****REMEDIES CUMULATIVE; NO WAIVER**.          11.5.1 **CUMULATIVE RIGHTS**. All covenants, conditions, provisions, warranties,guaranties, indemnities and other undertakings of Borrower contained in the Loan Documents arecumulative and not in derogation or substitution of each other. In particular, the rights andremedies of Lender are cumulative, may be exercised at any time and from time to time, concurrentlyor in any order, and shall not be exclusive of any other rights or remedies that Lender may have,whether under any agreement, by law, at equity or otherwise.          11.5.2 **WAIVERS**. The failure or delay of Lender to require strict performance byBorrower with any terms of the Loan Documents, or to exercise any rights or remedies with respectto Collateral or otherwise, shall not operate as a waiver thereof nor as establishment of a courseof dealing. All rights and remedies shall continue in full force and effect until Full Payment ofall Obligations. No modification of any terms of any Loan Documents (including any waiver thereof)shall be effective, unless such modification is
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specifically provided in a writing directed to Borrower and executed by Lender, and suchmodification shall be applicable only to the matter specified. No waiver of any Default or Eventof Default shall constitute a waiver of any other Default or Event of Default that may exist atsuch time, unless expressly stated. If Lender accepts performance by any Obligor under any LoanDocuments in a manner other than that specified therein, or during any Default or Event of Default,or if Lender shall delay or exercise any right or remedy under any Loan Documents, such acceptance,delay or exercise shall not operate to waive any Default or Event of Default nor to precludeexercise of any other right or remedy.**SECTION 12 MISCELLANEOUS**     **12.1**Consents, Amendments and Waivers.          12.1.1 **SUCCESSORS AND ASSIGNS**. This Agreement shall be binding upon and inure to thebenefit of Borrower, Lender, and their respective successors and assigns, except that (i) Borrowershall have no right to assign its rights or delegate its obligations under any Loan Documents and(ii) no assignment by Lender (other than an assignment to Lender’s Affiliates) of its rights andobligations hereunder shall be effective without the prior written consent of Parent which shallnot be unreasonably withheld or delayed and shall be deemed given if no objection is made within 15Business Days after notice of the proposed assignment by Lender; **PROVIDED** that if a Defaultor an Event of Default exists, Lender may assign any of its rights and obligations without Parent’sconsent.          12.1.2 **AMENDMENTS AND OTHER MODIFICATIONS**. No modification of any Loan Document,including any extension or amendment of a Loan Document or any waiver of a Default or Event ofDefault, shall be effective without the prior written agreement of Lender and each Obligor party tosuch Loan Document. However, only the consent of the parties to a Bank Product shall be requiredfor any modification of such agreement, and no Affiliate of Lender that is party to a Bank Productagreement shall have any other right to consent to or participate in any manner in modification ofany other Loan Document. The funding of any Loans or issuance of any Letters of Credit during aDefault or Event of Default shall not be deemed to constitute a waiver of such Default or Event ofDefault, nor to establish a course of dealing. Any waiver or consent granted by Lender hereundershall be effective only if in writing, and then only in the specific instance and for the specificpurpose for which it is given.     **12.2****Indemnity**. BORROWER SHALL INDEMNIFY AND HOLD HARMLESS THE INDEMNITEES AGAINSTANY CLAIMS THAT MAY BE INCURRED BY OR ASSERTED AGAINST ANY INDEMNITEE, INCLUDING CLAIMS ARISINGFROM THE NEGLIGENCE OF AN INDEMNITEE. In no event shall any party to a Loan Document have anyobligation thereunder to indemnify or hold harmless an Indemnitee with respect to a Claim that isdetermined in a final, non-appealable judgment by a court of competent jurisdiction to result fromthe gross negligence or willful misconduct of such Indemnitee.     **12.3****NOTICES AND COMMUNICATIONS**.          12.3.1 **NOTICE ADDRESS**. Subject to **Section 4.1.3**, all notices and other communicationsby or to a party hereto shall be in writing and shall be given to the Borrower, at Borrower’saddress shown on the signature pages hereof, and to any other Person at its address
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shown on the signature pages hereof, or at such other address as a party may hereafter specifyby notice in accordance with this **Section 12.3**. Each such notice or other communication shall beeffective only (a) if given by facsimile transmission, when transmitted to the applicable facsimilenumber, if confirmation of receipt is received; (b) if given by mail, three Business Days afterdeposit in the mail, with first-class postage pre-paid, addressed to the applicable address; or(c) if given by personal delivery, when duly delivered to the notice address with receiptacknowledged; or (d) if given by electronic communication in accordance with **Section 12.3.2**, asprovided in such Section. Notwithstanding the foregoing, no notice to Lender pursuant to **Section2.1.3, 2.3, 3.1.2,**or **4.1.1**shall be effective until actually received by the individual to whoseattention at Lender such notice is required to be sent. Any written notice or other communicationthat is not sent in conformity with the foregoing provisions shall nevertheless be effective on thedate actually received by the noticed party.          12.3.2 **ELECTRONIC COMMUNICATIONS; VOICE MAIL**. Electronic mail and internet websitesmay be used only for routine communications, such as financial statements, Borrowing BaseCertificates and other information required by **Section 10.1.2**, administrative matters, distributionof Loan Documents for execution, and matters permitted under **Section 4.1.3**. Lender makes noassurances as to the privacy and security of electronic communications. Voice mail may not be usedas effective notice under the Loan Documents. Unless Borrower and Lender otherwise agree, (i)notices and other communications sent to an e-mail address shall be deemed received upon thesender’s receipt of an acknowledgement from the intended recipient (such as by the “return receiptrequested” function, as available, return e-mail or other written acknowledgement); provided thatif such notice or other communication is not sent during the normal business hours of therecipient, such notice or communication shall be deemed to have been sent at the opening ofbusiness on the next business day for the recipient, and (ii) notices or communications posted toan Internet or intranet website shall be deemed received upon the deemed receipt by the intendedrecipient at its e-mail address as described in the foregoing clause (i) of notification that suchnotice or communication is available and identifying the website address therefor.          12.3.3 **NON-CONFORMING COMMUNICATIONS**. Lender may rely upon any notices purportedlygiven by or on behalf of the Borrower even if such notices were not made in a manner specifiedherein, were incomplete or were not confirmed, or if the terms thereof, as understood by therecipient, varied from a later confirmation. Borrower shall indemnify and hold harmless eachIndemnitee from any liabilities, losses, costs and expenses arising from any telephoniccommunication purportedly given by or on behalf of the Borrower.     **12.4****PERFORMANCE OF BORROWER’S OBLIGATIONS****.**Lender may, in its reasonable discretionat any time and from time to time, at Borrower’s expense, pay any amount or do any act required ofthe Borrower under any Loan Documents or otherwise lawfully requested by Lender (and, in any suchcase, not paid or performed by an Obligor within 10 days after written request therefor by Lender)to (a) enforce any Loan Documents or collect any Obligations; (b) protect, insure, maintain orrealize upon any Collateral; or (c) defend or maintain the validity or priority of Lender’s Liensin any Collateral, including any payment of a judgment, insurance premium, warehouse charge,finishing or processing charge, or landlord claim, or any discharge of a Lien. All payments,costs and expenses (including Extraordinary Expenses) of Lender under this Section shall bereimbursed by Borrower, **on demand**, with interest from the date incurred to the date of paymentthereof at the Default Rate applicable to Base Rate Revolver Loans. Any payment made or actiontaken by Lender under
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this Section shall be without prejudice to any right to assert an Event of Default or toexercise any other rights or remedies under the Loan Documents.     **12.5****CREDIT INQUIRIES****.**Borrower hereby authorizes Lender (but it shall have noobligation) to respond to usual and customary credit inquiries from third parties concerning theBorrower or any Subsidiary.     **12.6****SEVERABILITY****.**Wherever possible, each provision of the Loan Documents shall beinterpreted in such manner as to be valid under Applicable Law. If any provision is found to beinvalid under Applicable Law, it shall be ineffective only to the extent of such invalidity andthe remaining provisions of the Loan Documents shall remain in full force and effect.     **12.7****CUMULATIVE EFFECT; CONFLICT OF TERMS****.**The provisions of the Loan Documents arecumulative. The parties acknowledge that the Loan Documents may use several limitations, tests ormeasurements to regulate similar matters, and they agree that these are cumulative and that eachmust be performed as provided. Except as otherwise provided in another Loan Document (by specificreference to the applicable provision of this Agreement), if any provision contained herein is indirect conflict with any provision in another Loan Document, the provision herein shall govern andcontrol.     **12.8****COUNTERPARTS****.**Any Loan Document may be executed in counterparts, each of whichshall constitute an original, but all of which when taken together shall constitute a singlecontract. This Agreement shall become effective when Lender has executed it and receivedcounterparts bearing the signatures of all other parties hereto. Delivery of a signature page ofany Loan Document by telecopy or electronic communication (e.g., pdf files delivered via email)shall be effective as delivery of a manually executed counterpart of such agreement.     **12.9****ENTIRE AGREEMENT****.**Time is of the essence of the Loan Documents. The LoanDocuments constitute the entire contract among the parties relating to the subject matter hereof,and supersede any and all previous agreements and understandings, oral or written, relating to thesubject matter hereof.     **12.10****NO CONTROL; NO ADVISORY OR FIDUCIARY RESPONSIBILITY****.**Nothing in any LoanDocument and no action of Lender pursuant to any Loan Document shall be deemed to constitutecontrol of any Obligor by Lender. In connection with all aspects of each transaction contemplatedby any Loan Document, Borrower acknowledges and agrees that (a)(i) this credit facility and allrelated services by Lender or its Affiliates are arm’s-length commercial transactions betweenBorrower and such Person; (ii) Borrower has consulted its own legal, accounting, regulatory andtax advisors to the extent it has deemed appropriate; and (iii) Borrower is capable of evaluatingand understanding, and does understand and accept, the terms, risks and conditions of thetransactions contemplated by the Loan Documents; (b) each of Lender and its Affiliates is and hasbeen acting solely as a principal in connection with this credit facility, is not the financialadvisor, agent or fiduciary for Borrower, any of its Affiliates or any other Person, and has noobligation with respect to the transactions contemplated by the Loan Documents except as expresslyset forth therein; and (c) Lender and its Affiliates may be engaged in a broad range oftransactions that involve interests that differ from Borrower and its Affiliates, and have noobligation to disclose any of such interests to Borrower or its Affiliates. To the fullest extentpermitted by Applicable Law, Borrower hereby waives and releases any
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claims that it may have against Lender and its Affiliates with respect to any breach oralleged breach of agency or fiduciary duty in connection with any aspect of any transactioncontemplated by a Loan Document.     **12.11****CONFIDENTIALITY**. Lender agrees to maintain the confidentiality of allInformation (as defined below), except that Information may be disclosed (a) to its Affiliates andto its and its Affiliates’ respective partners, directors, officers, employees, agents, advisorsand representatives (it being understood that the Persons to whom such disclosure is made will beinformed of the confidential nature of such Information and instructed to keep such Informationconfidential); (b) to the extent requested by any regulatory authority purporting to havejurisdiction over it (including any self-regulatory authority, such as the National Association ofInsurance Commissioners); (c) to the extent required by Applicable Law or by any subpoena orsimilar legal process; (d) to any other party hereto; (e) in connection with the exercise of anyremedies, the enforcement of any rights, or any action or proceeding relating to any LoanDocuments; (f) subject to an agreement containing provisions substantially the same as those ofthis Section, to any potential or actual transferee of any interest in a Loan Document or anyactual or prospective party (or its advisors) to any Bank Product; (g) with the consent of theBorrower; or (h) to the extent such Information (i) becomes publicly available other than as aresult of a breach of this Section or (ii) becomes available to Lender or any of its Affiliates ona non-confidential basis from a source other than Borrower. Notwithstanding the foregoing, Lendermay issue and disseminate to the public general information describing this credit facility,including the names and addresses of Borrower and a general description of Borrower’s businesses,and may use Borrower’s names in advertising and other promotional materials. For purposes of thisSection, “Information” means all information received from an Obligor or Subsidiaryrelating to it or its business, other than any information that is available to Lender on anon-confidential basis prior to disclosure by the Obligor or Subsidiary. Lender acknowledges that(i) Information may include material non-public information concerning an Obligor or Subsidiary;(ii) it has developed compliance procedures regarding the use of material non-public information;and (iii) it will handle such material non-public information in accordance with Applicable Law,including federal and state securities laws.     **12.12****[INTENTIONALLY OMITTED**]     **12.13****GOVERNING LAW**. THIS AGREEMENT, UNLESS OTHERWISE SPECIFIED, SHALL BE GOVERNEDBY THE LAWS OF ENGLAND AND WALES.     **12.14**[Intentionally Omitted].     **12.15****WAIVERS BY BORROWER**. To the fullest extent permitted by Applicable Law,Borrower waives (a) the right to trial by jury (which Lender hereby also waives) in any proceedingor dispute of any kind relating in any way to any Loan Documents, Obligations or Collateral;(b) presentment, demand, protest, notice of presentment, default, non-payment, maturity, release,compromise, settlement, extension or renewal of any commercial paper, accounts, documents,instruments, chattel paper and guaranties at any time held by Lender on which the Borrower may inany way be liable, and hereby ratifies anything Lender may do in this regard; (c) notice prior totaking possession or control of any Collateral; (d) any bond or security that might be required bya court prior to allowing Lender to exercise any rights or remedies; (e) the benefit of allvaluation, appraisement and exemption laws; (f) any claim against Lender, on any theory ofliability, for special, indirect, consequential, exemplary or
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punitive damages (as opposed to direct or actual damages) in any way relating to anyEnforcement Action, Obligations, Loan Documents or transactions relating thereto; and (g) noticeof acceptance hereof. Borrower acknowledges that the foregoing waivers are a material inducementto Lender entering into this Agreement and that Lender is relying upon the foregoing in itsdealings with Borrower. Borrower has reviewed the foregoing waivers with its legal counsel andhas knowingly and voluntarily waived its jury trial and other rights following consultation withlegal counsel. In the event of litigation, this Agreement may be filed as a written consent to atrial by the court.     **12.16****[INTENTIONALLY OMITTED]**.     **12.17****JUDGMENT CURRENCY**. If for the purpose of obtaining judgment in any court it isnecessary to convert an amount due hereunder in the currency in which it is due (the “OriginalCurrency”) into another currency (the “Second Currency”), the rate of exchange applied shall bethat at which, in accordance with normal banking procedures, Lender could purchase in the Londonforeign exchange market, the Original Currency with the Second Currency on the date two (2)Business Days preceding that on which judgment is given. Each Obligor agrees that its obligationin respect of any Original Currency due from it hereunder or under any other Loan Document towhich it is party shall, notwithstanding any judgment or payment in such other currency, bedischarged only to the extent that, on the Business Day following the date Lender receives paymentof any sum so adjudged to be due hereunder in the Second Currency, Lender may, in accordance withnormal banking procedures, purchase, in the London foreign exchange market, the Original Currencywith the amount of the Second Currency so paid; and if the amount of the Original Currency sopurchased or could have been so purchased is less than the amount originally due in the OriginalCurrency, each Obligor agrees as a separate obligation and notwithstanding any such payment orjudgment to indemnify Lender and the Lenders against such loss. The term “rate of exchange” inthis **Section 12.17**means the spot rate at which Lender, in accordance with normal practices, isable on the relevant date to purchase the Original Currency with the Second Currency, and includesany premium and costs of exchange payable in connection with such purchase.
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     EXECUTED AS A DEED on the date set forth above.         **LENDER****:**           **BANK OF AMERICA, N.A.**           By:           /s/ John Tolle     Name:            John Tolle           Title:            Vice President                  Address:           55 South Lake Avenue, Suite 900    Pasadena, California 91011    Attn:     John Tolle    Telecopy: (626) 584-4601                  **BORROWER****:**             **ASHWORTH U.K. LTD.**             /s/ Halina Balys  ,Director           /s/ Greg W. Slack  ,Director           Address:      21 St. Thomas Street      Bristol BS16JS      United Kingdom    S-1