Document:

Exhibit
10.18

 

	
   

  	
  For Bank Use Only

  	
  Reviewed by

  
	
   

  	
   

  
	
   

  	
  Due

  	
  SEPTEMBER 5, 2007

  	
   

  
	
   

  	
   

  
	
   

  	
  Customer #  6517384088

  	
  Loan #  34

  
						

 

AMENDMENT
TO LOAN AGREEMENT AND NOTE

 

This amendment (the “Amendment”), dated as of the date specified below, is by
and between the borrower (the “Borrower”) and
the bank (the “Bank”) identified below,

 

RECITALS

 

A.  The Borrower and the Bank have executed a
Loan Agreement (the “Agreement”)
dated SEPTEMBER 30, 2004 and the Borrower has executed a Note (the “Note”), dated SEPTEMBER 30, 2004, either or both which
may have been amended and replaced from time to time, and the Borrower (and if
applicable, certain third parties) have executed the collateral documents which
may or may not be identified in the Agreement and certain other related documents
(collectively the “Loan Documents”),
setting forth the terms and conditions upon which the Borrower may obtain loans
from the Bank from time to time in the original amount of

$5,000,000.00, as may be amended from time to time.

 

B.  The
Borrower has requested that the Bank permit certain modifications to the
Agreement and Note as described below.

 

C.  The Bank
has agreed to such modifications, but only upon the terms and conditions
outlined in this Amendment.

 

TERMS OF
AGREEMENT

 

In consideration of the mutual covenants contained
herein, and for other good and valuable consideration, the Borrower and the
Bank agree as follows:

 

ý  Change in Maturity Date. If checked here, any references in
the Agreement or Note to the maturity date or date of final payment are hereby
deleted and replaced with “SEPTEMBER 5, 2007”.

 

ý  Change in Maximum Loan Amount. If checked here, all
references in the Agreement and in the Note (whether or not numerically) to the
maximum loan amount are hereby deleted and replaced with “$ 8,000,000.00”, which
evidences an additional $ 3,000,000.00 available to be advanced subject to the
terms and conditions of the Agreement and Note.

 

o  Temporary Increase in Maximum Loan Amount. If checked here,
notwithstanding the maximum principal amount that may be borrowed from time to
time under the Agreement and Note, the maximum principal amount that may be borrowed
thereunder shall increase from $                           to
$                           effective                           
through                           
annually. On                           
through                           annually,
the maximum principal amount that may be borrowed thereunder shall revert to $                           and
any loans outstanding in excess of that amount will be immediately due and
payable without further demand by the Bank.

 

o  Change in Multiple Advance Termination Date. If checked
here, all references in the Agreement and in the Note to the termination date
for multiple advances are hereby deleted and replaced with “                           ”.

 

Change in Financial Covenant(s).

 

(i)  o If checked
here, all references to “$                           ”
in the Agreement as the minimum Net Working Capital amount are hereby deleted
and replaced with “$                           ”
 for the period beginning                           and
thereafter.

 

(ii)  o if
checked here, all references to “$                            ”
in the Agreement as the minimum Tangible Net Worth amount are hereby deleted
and replaced with “$                           ”
for the period beginning                           and
thereafter.

 

(iii)  o If
checked here, all references to “                           ”
in the Agreement as the maximum Debt to Worth Ratio are hereby deleted and
replaced with “                           ”
for the period beginning                           and
thereafter.

 

(iv)  o If
checked here, all references to “                           ”
in the Agreement as the minimum Current Ratio are hereby deleted and replaced
with “                           ”
for the period beginning                           and
thereafter.

 

(v)  o If
checked here, all references to “$                           ”
in the Agreement as the maximum Capital Expenditures amount are hereby deleted
and replaced with “$                          ”
for the period beginning                           and
thereafter.

 

(vi)  o If
checked here, all references to “                           ”
in the Agreement as the minimum Cash Flow Coverage Ratio are hereby deleted and
replaced with “                           ”
for the period beginning                           and
thereafter.

 

(vii)  o If
checked here, all references to “$                           ”
in the Agreement as the maximum Officers, Directors, Partners, and Management
Salaries and Other Compensation amount are hereby deleted and replaced with “$                           ”
for the period beginning                           and
thereafter.

 

o  Change in Payment Schedule. If checked here, effective upon
the date of this Amendment, any payment terms are amended as follows:

 

1

 

o  Change in Late Payment Fee. 
If checked here, subject to applicable law, if any payment is not made
on or before its due date, the Bank may collect a delinquency charge of                           % of the unpaid amount.  Collection of the late payment fee shall not
be deemed to be a waiver of the Bank’s right to declare a default hereunder.

 

o  Change in Closing Fee. 
If checked here and subject to applicable law, the Borrower will pay the
Bank a closing fee of $                           (apart from any prior closing fee)
contemporaneously with the execution of this Amendment. This fee is in addition
to all other fees, expenses and other amounts due hereunder.

 

o  Change in Borrowing Base. If checked here, the Borrowing
Base is hereby changed to an amount equal to the sum of (i) xxxxxxxxxxxx %
of the face amount of Eligible Accounts, and (ii) the lesser of $ xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
or xxxxxxxxxxxxxxx % of the Borrower’s cost of Eligible Inventory, as such
cost may be diminished as a result of any event causing loss or depreciation in
value of Eligible Inventory less (iii) the current outstanding loan balance
on note(s) in the original amount(s) of $ xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx,
and less (iv) undrawn amounts of outstanding letters of credit issued by
Bank or any affiliate thereof. The Borrower will provide the Bank with
information regarding the Borrowing Base in such form and at such times as the
Bank may request. The terms used in this section will have the meanings
set forth in a supplement entitled “Financial Definitions,” a copy of which the
Borrower acknowledges having received with this Amendment, which is
incorporated herein by reference and which replaces any prior Financial
Definitions supplement.

 

ý  Change in Paid-in-Full Period. If checked here, all
revolving loans under the Agreement and the Note must be paid in full for a
period of at least 30 consecutive days during each fiscal year. Any previous
Paid-in-Full provision is hereby replaced with this provision.

 

Default
Interest Rate.
Notwithstanding any provision of this Note to the contrary, upon any default or
at any time during the continuation thereof (including failure to pay upon
maturity), the Bank may, at its option and subject to applicable law, increase
the interest rate on this Note to a rate of 5% per annum plus the interest rate
otherwise payable hereunder. Notwithstanding the foregoing and subject to
applicable law, upon the occurrence of a default, the Borrower or any guarantor involving bankruptcy,
insolvency, receivership proceedings or an assignment for the benefit of
creditors, the interest rate on this Note shall automatically increase to a
rate of 5% per annum plus the rate otherwise payable hereunder.

 

Effectiveness of Prior Documents. Except as specifically amended hereby, the
Agreement, the Note and the other Loan Documents shall remain in full force and
effect in accordance with their respective terms. All warranties and
representations contained in the Agreement and the other Loan Documents are
hereby reconfirmed as of the date hereof. All collateral previously provided to
secure the Agreement and/or Note continues as security, and all guaranties
guaranteeing obligations under the Loan Documents remain in full force and
effect. This is an amendment, not a novation.

 

Preconditions to Effectiveness. This Amendment shall only become effective upon execution by the
Borrower and the Bank, and approval by any other third party required by the
Bank.

 

No Waiver of Defaults; Warranties. This Amendment shall not be construed as or
be deemed to be a waiver by the Bank of existing defaults by the Borrower,
whether known or undiscovered. All agreements, representations and warranties
made herein shall survive the execution of this Amendment.

 

Counterparts.
This Amendment may be signed in any number of counterparts, each of which shall
be considered an original, but when taken together shall constitute one
document.

 

Authorization.
The Borrower represents and warrants that the execution, delivery and
performance of this Amendment and the documents referenced herein are within
the authority of the Borrower and have been duly authorized by all necessary
action.

 

Transferable Record. The agreement and note, as amended, is a “transferable record” as
defined in applicable law relating to electronic transactions. Therefore, the
holder of the agreement and note, as amended,
may, on behalf of Borrower, create a microfilm or optical disk or other
electronic image of the agreement and note, as amended, that is an
authoritative copy as defined in such !aw. The holder of the agreement and
note, as amended, may store the authoritative copy of such agreement and note,
as amended, in its electronic form and then destroy the paper original as part
of the holder’s normal business practices. The holder, on its own behalf, may
control and transfer such authoritative copy as permitted by such law.

 

Attachments. All documents attached
hereto, including any appendices, schedules, riders, and exhibits to this
Amendment, are hereby expressly incorporated herein by reference.

 

[SIGNATURE(S)
ON NEXT PAGE]

 

2

 

	
  Dated as of:

  	
  OCTOBER 18, 2005

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Outdoor Channel Holdings, Inc.

  
	
  (Individual Borrower)

  	
   

  	
  Borrower Name (Organization)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  a

  	
  Delaware Corporation

  
	
   

  	
   

  	
   

  
	
  Borrower Name

  	
  N/A

  	
   

  	
  By:

  	
  /s/William A. Owen

  
	
   

  	
   

  	
   

  	
  William A. Owen

  
	
   

  	
   

  	
  Name and Title:

  	
  Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Borrower Name

  	
  N/A

  	
   

  	
  Name and Title:

  	
   

  
	
   

  	
   

  	
   

  
	
  Agreed to:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  U.S.
  BANK N.A.

  	
   

  	
   

  
	
  (Bank)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/Maureen K. Sullivan

  	
   

  	
   

  	
   

  
	
   

  	
  Maureen K. Sullivan

  	
   

  	
   

  	
   

  
	
  Name and Title:

  	
  Vice President

  	
   

  	
   

  
														

 

3

 

ADDENDUM TO REVOLVING CREDIT
AGREEMENT AND NOTE

 

This Addendum is made part of the Revolving Credit Agreement and Note
(the “Agreement”) made and entered into by and between the undersigned borrower
(the “Borrower”) and the undersigned bank (the “Bank”) as of the date
identified below. The warranties, covenants and other terms described below are
hereby added to the Agreement.

 

Amendments to Financial Covenants.
Financial covenants set forth in the Agreement are modified, added, deleted or
restated as more specifically set forth below. Financial covenants which are
not modified, restated or deleted below shall remain in full force and effect.
Financial terms used in the Amendment which are not specifically defined in the
Amendment shall have the meanings ascribed to them under generally accepted
accounting principles. For any Borrower or Guarantor who does not have a
separate fiscal year end for tax reporting purposes, the fiscal year will be
deemed to be the calendar year.

 

Modification of Borrower Financial Covenants.
All Borrower financial covenants, whether set forth below or in the Agreement,
will be maintained by Borrower (for purposes of all existing, new and amended
financial covenants, the “Subject Party”).

 

Additional or Modified Financial Covenants.
The following covenants are hereby added or restated:

 

Fixed Charge Coverage Ratio
as of the end of each fiscal quarter for the four (4) fiscal quarters then
ended of at least 1.30 to 1.

 

“Fixed Charge Coverage Ratio”
shall mean (a) EBITDAR minus cash taxes, cash dividends and Maintenance
Capital Expenditures divided by (b) the sum of all required principal
payments (on short and long term debt and capital leases), interest and rental
or lease expense.

 

“EBITDAR” shall mean
net income, plus interest expense, plus income tax expense, plus depreciation
expense plus amortization expense plus rent or lease expense.

 

“Maintenance Capital Expenditures”
shall mean the dollar amount of Capital Expenditures that are necessary to
maintain the current level of revenues. For the purposes of the covenant
calculation, at no time shall the amount of the Capital Expenditures used be
less than $560,000.00 per fiscal year, prorated evenly for the measurement
periods required above.

 

“Capital Expenditures”
shall mean the aggregate amount of all purchases or acquisitions of fixed
assets, including real estate, motor vehicles, equipment, fixtures, leases and
any other items that would be capitalized on the books of the Subject Party
under generally accepted accounting principles. The term “Capital Expenditures”
will not include expenditures or charges for the usual and customary
maintenance, repair and retooling of any fixed asset or the acquisition of new
tooling in the ordinary course of business.

 

Senior Funded Debt to EBITDA Ratio
as of the end of each fiscal quarter for the fiscal quarter then ended of not
more than 1.50 to 1.

 

“Senior Funded Debt to EBITDA Ratio”
shall mean the ratio of Senior Funded Debt to EBITDA.

 

“Senior Funded Debt”
shall mean indebtedness for borrowed money, for the deferred purchase price of
property not purchased on ordinary trade terms, for capitalized leases and for
other liabilities evidenced by promissory notes or other instruments, but not
including any indebtedness that has been subordinated to the indebtedness
evidenced by the Note pursuant to a writing that has been accepted by Bank.

 

“EBITDA” shall mean
net income, plus interest expense, plus income tax expense, plus depreciation
expense plus amortization expense.

 

Amendments to Financial Information and
Reporting Requirements. Financial information and
reporting requirements set forth in the Agreement are modified, added, deleted
or restated as more specifically set forth below. Financial information and
reporting requirements which are not modified, restated or deleted below shall
remain in full force and effect. Financial terms used in the Amendment which
are not specifically defined in the Amendment shall have the meanings ascribed
to them under generally accepted accounting principles. For any Borrower or
Guarantor who does not have a separate fiscal year end for tax reporting
purposes, the fiscal year will be deemed to be the calendar year.

 

 

Modification of Borrower Financial
Information and Reporting. All Borrower financial
information and reporting requirements, whether set forth below or in the
Agreement, will be provided by Borrower, in form and content acceptable to
Bank, pertaining to Borrower.

 

Additional or Modified Financial Information
and Reporting Requirements. The following financial
information and reporting requirements are hereby added or restated;

 

Modification of Borrower Financial
Information and Reporting. All Borrower financial
information and reporting requirements, whether set forth below or in the Agreement,
will be provided by Borrower, in form and content acceptable to Bank, pertaining
to  Borrower. The following financial information and reporting
requirements are hereby added or restated:

 

Annual Financial Statements:
Not later than 90 days after the end of each fiscal year, annual financial
statements, audited by a certified public accounting firm acceptable to Bank.

 

Interim Financial Statements:
Not later than 60 days after the end of each fiscal quarter, interim financial
statements, prepared by Borrower.

 

Agings of Accounts Receivable
(this requirement pertains to Borrower only, regardless of whether financial
reports are otherwise required for Borrower together with others hereunder):
Not later than 30 days after the end of each fiscal quarter, a detailed aging
by invoice date of accounts and contracts receivable as of the last day of such
period, together with an explanation of any adjustments made at the end of such
period.

 

Agings of Accounts Payable
(this requirement pertains to Borrower only, regardless of whether financial
reports are otherwise required for Borrower together with others hereunder):
Not later than 30 days after the end of each fiscal quarter, a detailed aging
by invoice date of accounts payable as of the last day of such period, together
with an explanation of any adjustments made at the end of such period.

 

Certificate of Compliance
(this requirement pertains to Borrower only, regardless of whether financial
reports are otherwise required for Borrower together with others hereunder):
Not later than 60 days after the end of each fiscal quarter, a certificate,
executed by Borrower (or, if Borrower is an entity, by Borrower’s chief
financial officer or other officer or person acceptable to Bank) certifying
that the representations and warranties set forth in the Agreement are true and
correct as of the date of the certificate and further certifying that, as of
the date of the certificate, no default exists under the Agreement.

 

	
  Dated as of 

  	
  October 18, 2005

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (Individual)

  	
   

  	
   

  	
  (Non-Individual)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Outdoor Channel Holdings, Inc.

  
	
  Borrower Name n/a

  	
   

  	
   

  	
  a/an

  	
  Delaware Corporation

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Borrower Name n/a

  	
   

  	
   

  	
  By:

  	
  /s/ William A. Owen

  	
   

  
	
   

  	
   

  	
   

  	
  Name and Title

  	
  William A. Owen, Chief Financial Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name and Title

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Agreed to:

  	
   

  
	
   

  	
   

  	
   

  	
  U.S. BANK N.A.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Richard Young for

  	
   

  
	
   

  	
   

  	
   

  	
  Name and Title Marueen K. Sullivan, Vice
  President

  
													

 

 

SECOND ADDENDUM TO AMENDMENT TO LOAN AGREEMENT AND NOTE

 

This Second Addendum to Amendment to Loan Agreement and Note (this “Addendum”) is made part of the Amendment to Loan Agreement and Note (the “Amendment”) of even date herewith made and entered into by and between the
undersigned borrower (the “Borrower”) and
U.S. Bank N.A. (the “Bank”). The warranties, covenants and other
terms of this Addendum hereby supplement and amend the provisions of (i) the
Amendment; (ii) the Addendum to Revolving Credit Agreement and Note of
even date herewith (the “First Addendum”) that is attached to and a part of
the Amendment; and (iii) the Interest Rate Rider of even date herewith and
the Payment Schedule Rider of even date herewith (the “Riders”) that are attached to and part of the Amendment. The First
Addendum and this Addendum are (notwithstanding the name of the First Addendum
and the introductory paragraph in the First Addendum) addendums or riders to
the Amendment. Capitalized terms not defined herein shall have the meanings
ascribed to them in the Agreement (as defined in the Amendment). In the event
of any conflict between the provisions of the Agreement, the Amendment, the
First Addendum or the Riders on one hand, and the provisions of this Addendum
on the other, the provisions of this Addendum shall prevail and control.

 

1.             Financial
Covenants. The following financial covenant is in addition to those in the
Agreement, the Amendment and the First Addendum. Financial terms used herein
that are not specifically defined herein, in the Agreement, in the Amendment or
in the First Addendum shall have the meanings ascribed to them under generally
accepted accounting principles.

 

Quarterly Profits. The
Borrower shall have and shall report Net Profit After Taxes of an amount
greater than $250,000.00 for each of its fiscal quarters.

 

2.             Definition.
The following capitalized term used in this Addendum shall have the
following meaning:

 

“Net Profit After Taxes”
shall mean, for any time period, the sum of the
Borrower’s net income (loss) for such period, after the amount of income tax
expense (or benefit) has been deducted (or added).

 

3.             Continuing
Validity. Except as expressly modified above or in other agreements between
Borrower and Bank, the terms of the Agreement, the Amendment, the First
Addendum, the Riders and the other Loan Documents (as defined in the
Agreement), shall remain unchanged and in full force and effect.

 

Dated as of October 18, 2005

 

Borrower:

 

 

Outdoor Channel Holdings, Inc.,

a Delaware corporation

 

 

	
  By:

  	
  /s/ William A. Owen

  	
   

  	
   

  
	
   

  	
  William A. Owen,

  Chief Financial Officer

  	
   

  	
   

  
	
   

  	
   

  
	
  Bank:

  	
   

  
	
   

  	
   

  
	
  U.S. Bank N.A.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Richard Young for

  	
   

  	
   

  
	
   

  	
  Maureen Sullivan,

  Vice PresidentExhibit
10.19

 

TERM LOAN AGREEMENT

 

This
Term Loan Agreement (the “Agreement”) is
made and entered into by and between the undersigned borrower (the “Borrower” and the undersigned bank (the “Bank”) as of the date set forth on the last page of
this Agreement.

 

ARTICLE I. LOANS

 

1.1   Terms for Advance(s). [Choose One:]

 

ý    Single Advance Term Loan.  As of the date hereof, the Borrower has obtained a term loan from the
Bank in the amount of $ -1,950,000.00 (the “Loan
Amount”).  The Term loan is evidenced by a single
promissory note of the Borrower to the order of the Bank in the principal
amount of the Loan Amount and dated as of the date hereof (the “Note”).

 

o    Multiple Advance Term Loan. 
Prior to n/a or the
earlier termination hereof, the Borrower may obtain advances from the Bank in
an aggregate amount not exceeding $ n/a (the “Loan
Amount”). The term loans will be evidenced by
a single promissory note of the Borrower to the Bank in the principal amount of
the Loan Amount and dated as of the date hereof (the “Note”). Although the Note
will be expressed a; payable in the full Loan Amount, the Borrower will be
obligated to pay only the amounts actually disbursed hereunder together with
accrued interest on the outstanding balance at the rates and on the dates specified
therein and such other charges provided for herein.

 

1.2  Advances
and Paying Procedure.  The
Bank is authorized and directed to credit any of the Borrower’s accounts with
the Bank (or to the account the Borrower designates in writing) for all loans made
hereunder, and the Bank is authorized to debit such account any other account
of the Borrower with the Bank for the amount of any principal, interest or
expenses due under the Note or other amount due hereunder on the due date with
respect thereto. If, upon any request by the Borrower to the Bank to issue a
wire transfer, there is an inconsistency between the name of the recipient of
the wire and its identification number as specified by the Borrower, the Bank
may without liability, transmit the payment via wire based solely upon the
identification number.

 

1.3  Closing
Fee.  The Borrower will pay
the Bank a one-time closing fee of $ n/a contemporaneously with execution of
this Agreement. This fee is in addition to all other fees, expenses and other
amounts due hereunder.

 

1.4  Compensating
Balances.  The Borrower will
maintain on deposit with the Bank in non-interest bearing accounts average
daily collected balances, in excess of that required to support account
activity and other credit facilities extended to the Borrower by the Bank an
amount at least equal to the sum of (i) $ n/a and (ii) n/a % of the Loan
Amount as computed on monthly basis. If the Borrower fails to keep and maintain
such balances, it will pay a deficiency fee, payable within five days after
receipt of a statement therefor calculated on the amount by which the Borrower’s
average daily balances are less than the requirements set forth above, computed
at a rate equal to the rate set forth in the Note,

 

1.5  Expenses
and Attorneys’ Fees.  Upon
demand, the Borrower will immediately reimburse the Bank and any participant in
the Obligations (defined below) (“Participant”)
for all attorneys’ fees and all other costs, fees and out-of-pocket
disbursements incurred by the Bank or any Participant in connection with the
preparation, execution, delivery, administration, defense and enforcement of
this Agreement or any of the other Loan Documents (defined below), including
attorneys’ fees and all other costs and fees (a) incurred before or after
commencement of litigation or at trial, on appeal or in any other proceeding, (b) incurred
in any bankruptcy proceeding and (c) related to any waivers or amendments with
respect thereto (examples of costs and fees include but are not limited to fees
and costs for filing, perfecting or confirming the priority of the Bank’s lien,
title searches or insurance, appraisals, environmental audits and other reviews
related to the Borrower, any collateral or the loans, if requested by the
Bank). The Borrower will also reimburse the Bank and any Participant for all
costs of collection, including all attorneys’ fees, before and after judgment,
and the costs of preservation and/or liquidation of any collateral.

 

1.6
Conditions to Borrowing.  The Bank will not be obligated to
make (or continue to make) advances hereunder unless (i) the Bank has
received executed originals of the Note and all other documents or agreements
applicable to the loans described herein, including but not limited to the
documents specified in Article III (collectively with this Agreement the “Loan Documents”), in form and content satisfactory to the Bank; (ii) if the
loan is secured, the Bank has received confirmation satisfactory to it that the
Bank has a properly perfected security interest, mortgage or lien, with the
proper priority; (iii) the Bank has received certified copies of the Borrower’s
governance documents and certification of entity status satisfactory to the
Bank and all other relevant documents; (iv) the Bank has received a
certified copy of a resolution or authorization in form and content
satisfactory to the Bank authorizing the loan and all acts contemplated by this
Agreement and all related documents, and confirmation of proper authorization
of all guaranties and other acts of third parties contemplated hereunder; (v) if
required by the Bank, the Bank has been provided with Opinion of the Borrower’s
counsel in form and content satisfactory to the Bank confirming the matters
outlined in Section 2.2 and such other matters as the Bank requests; (vi) no
default exists under this Agreement or under any other Loan Documents, or under
any other agreements by and between the Borrower and the Bank; and (vii) all
proceedings taken in connection with the transactions contemplated by this Agreement
(including any required environmental assessments), and all instruments,
authorizations and other documents applicable thereto, are satisfactory to the
Bank and its counsel.

 

1

 

ARTICLE II. WARRANTIES AND COVENANTS

 

While
any part of the credit granted to the Borrower under this Agreement or the
other Loan Documents is available or any obligation under any of the Loan
Documents are unpaid or outstanding, the Borrower continuously warrants and
agrees as follows:

 

 2.1  Accuracy of Information.
 All information, certificates or
statements given to the Bank pursuant to this Agreement and the other Loan
Documents will be true and complete when given.

 

 2.2  Organization
and Authority; Litigation.  This
Agreement and the other Loan Documents are the legal, valid and binding
obligation of the Borrower, enforceable against the Borrower in accordance with
their terms.  The execution, delivery and
performance of the Agreement and all other Loan Documents to which the Borrower
is a party (i) are within the borrower’s power; (ii) have been duly authorized
by all appropriate entity action; (iii) do not require the approval of any
governmental agency; and (iv) will not violate any lay agreement or
restriction by which the Borrower is bound. If the Borrower is not an
individual, the Borrower is validly existing and in good standing under the
laws of its state of organization, has all requisite power and authority and
possesses all licenses necessary to conduct its business and own its
properties. There is no litigation or administrative proceeding threatened or
pending against the Borrower which would, if adversely determined, have a
material adverse effect on the Borrower’s financial condition or its property.

 

 2.3  Existence; Business
Activities; Assets; Change of Control.  The Borrower will (i) preserve its
existence, rights and franchises; (ii) not make any material change in the
nature or manner of its business activities; (iii) not liquidate, dissolve,
acquire another entity or merge or consolidate with or into another entity or
change its form of organization; (iv) not amend its organizational
documents in any manner that may conflict with any term or condition of the
Loan Documents; and (v) not sell, lease, transfer or otherwise dispose of
all substantially all of its assets. 
Other than the transfer to a trust beneficially controlled by the
transferor, no event shall occur which cause or results in a transfer of
majority ownership of the Borrower while any Obligations are outstanding or
while the Bank has any obligation to provide funding to the Borrower.

 

 2.4  Use of Proceeds; Margin
Stock; Speculation.  Advances
by the Bank hereunder will be used exclusively by the Borrower for the purposes.
represented to the Bank, The Borrower will not, without the prior written
consent of the Bank, redeem, purchase, or retire any of the capital stock or
declare or pay any dividends, or make any other payments or distributions of a
similar type or nature including withdrawal distributions. The Borrower will
not use any of the loan proceeds to purchase or carry “margin” stock (as
defined in Regulation U of the Board of Governors of the Federal Reserve
System). No part of any of the proceeds will be used for speculative investment
purposes, including, without limitation, speculating or hedging in the
commodities and/or futures market.

 

 2.5  Environmental Matters.
 Except as disclosed in a written schedule attached
to this Agreement (if no schedule is attached, there are no exceptions),
there exists no uncorrected violation by the Borrower of any federal, state or
local laws (including statutes, regulations, ordinances or other governmental
restrictions and requirements) relating to the discharge of air pollutants,
water pollutants or process waste water or otherwise relating to the
environment or Hazardous Substances as hereinafter defined, whether such laws
currently exist are enacted in the future (collectively “Environmental
Laws”). The term “Hazardous Substances”
will mean any hazardous or toxic wastes, chemicals or other substances, the
generation, possession or existence of which is prohibited or governed by any
Environmental Laws.  The Borrower is not
subject to any judgment, decree, order or citation, or a party to (or
threatened with) any litigation administrative proceeding, which asserts that
the Borrower (i) has violated any Environmental Laws; (ii) is
required to clean up, remove take remedial or other action with respect to any
Hazardous Substances (collectively “Remedial Action”);
or (iii) is required to pay all or a portion of the cost of any Remedial
Action, as a potentially responsible party. 
Except as disclosed on the Borrower’s environmental questionnaire
provided to the Bank, there are not now, nor to the Borrower’s knowledge after
reasonable investigation have there even been, any Hazardous Substances (or
tanks or other facilities for the storage of Hazardous Substances) stored,
deposited, recycled disposed of on, under or at any real estate owned or
occupied by the Borrower during the periods that the Borrower owned or occupied
such real estate, which if present on the real estate or in soils or ground
water, could require Remedial Action.  To
the Borrower’s knowledge, there are no proposed or pending changes in Environmental
Laws which would adversely affect the Borrower or its business and there are no
conditions existing currently or likely to exist while the Loan Documents are
in effect which would subject the Borrower to Remedial Action or other
liability.  The Borrower currently
complies with and will continue to timely comply with all applicable Environmental
Laws; and will provide the Bank, immediately upon receipt, copies of any
correspondence, notice, complaint, order or other document from any source
asserting or alleging any circumstance or condition which requires or may
require a financial contribution by the Borrower or Remedial Action or other
response by or on the part of the Borrower under Environmental Laws, or which seeks
damages or civil, criminal or punitive penalties from the Borrower for an
alleged violation of Environmental Laws.

 

 2.6  Compliance with Laws.
 The Borrower has complied with all laws
applicable to its business and its properties, and has all permits licenses and
approvals required by such laws, copies of which have been provided to the
Bank.

 

 2.7  Restriction on
Indebtedness.  The Borrower
will not create, incur, assume or have outstanding any indebtedness for borrowed
money (including capitalized leases) except (i) any indebtedness, owing to
the Bank and its affiliates, and (ii) any other indebtedness outstanding
on the date hereof, and shown on the Borrower’s financial statements delivered
to the Bank prior to the date hereof, provided that such other indebtedness
will not be increased.

 

 2.8  Restriction on Liens.  The Borrower will not create, incur, assume
or permit to exist any mortgage, pledge, encumbrance or other lien or levy upon
or security interest in any of the Borrower’s property now owned or hereafter
acquired, except (i) taxes and assessments which are either not delinquent
or which are being contested in good faith with adequate reserves provided; (ii) easements,
restrictions and minor title irregularities which do not, as a practical
matter, have an adverse effect upon the ownership and use of the affected property;
(iii) liens in favor of the Bank and its affiliates; and (iv) other liens
disclosed in writing to the Bank prior to the date hereof.

 

 2.9
 Restriction on Contingent
Liabilities.  The Borrower
will not guarantee or became a surety or otherwise contingently liable for any
obligations of others, except pursuant to the deposit and collection of checks
and similar matters in the ordinary course of business.

 

2

 

 2.10  Insurance.  The
Borrower will maintain insurance to such extent, covering such risks and with
such insurers as is usual and customary for businesses operating similar
properties, and as is satisfactory to the Bank, including insurance for fire
and other risks insured against by extended coverage, public liability
insurance and workers’ compensation insurance; and will designate the Bank as loss
payee with a “Lender’s Loss Payable” endorsement on any casualty policies and
take such other action as the Bank may reasonably request to ensure that the
Bank will receive (subject to no other interests) the insurance proceeds on the
Bank’s collateral.

 

 2.11  Taxes and Other
Liabilities.  The Borrower will pay and discharge, when
due, all of its taxes, assessments and other liabilities except when the
payment thereof is being contested in good faith by appropriate procedures
which will avoid foreclosure of liens securing such items, and with adequate
reserves provided therefor.

 

 2.12  Financial Statements and
Reporting.  The financial statements and other information
previously provided to the Bank or provided to the Bank in the future are or
will be complete and accurate and prepared in accordance with generally
accepted accounting principles. There has been no material adverse change in
the Borrower’s financial condition since such information was provided to the Bank.
The Borrower will (i) maintain accounting records in accordance with generally
recognized and accepted principles of accounting consistently applied throughout
the accounting periods involved; (ii) provide the Bank with such
information concerning its business affairs and financial condition (including
insurance coverage) as the Bank may request; and (iii) without request,
provide the Bank with management-prepared financial statements:

 

o    quarterly within          days of the end of each quarter;

o    monthly within           days of the end of each month;

 

and
annual

within
             days
of the end of each fiscal year.

 

 2.13  Inspection of Properties
and Records; Fiscal Year.  The
Borrower will permit representatives of the Bank to visit and inspect any of
the properties and examine any of the books and records of the Borrower at any
reasonable time and as often as the Bank may reasonably desire. The Borrower
will not change its fiscal year.

 

 2.14  Financial Status. The Borrower will maintain at all times:

 

(i)  Net
Working Capital in the amount of at least

$XXXXXXXXXXXX.

 

(ii) 
Tangible Net Worth in the amount of at least $X.

 

(iii)
 Debt to Worth Ratio of not more than

XXXXXXXXXXXXXXXXXXXXXX.

 

(iv)  Current Ratio of at least XXXXXXXXXX.

 

(v)  Capital Expenditures not to exceed per $
                 fiscal
year.

 

(vi) 
Cash Flow Coverage Ratio of at least                 
$                  .

 

(vii)
 Officers, Directors, Partners, Members, and Management Salaries and Other
Compensation not to exceed                         
per fiscal year.

 

The
terms used in this Section 2.14 will have the meanings set forth in a
supplement entitled “Financial Definitions,” a copy of which the Borrower
hereby acknowledges having received with this Agreement and which is
incorporated herein by reference.

 

ARTICLE III. COLLATERAL AND GUARANTIES

 

 3.1  Collateral.  This Agreement and the Note are secured by any
and all security interests, pledges, mortgages/deeds of trust (except any
mortgage/deed of trust expressly limited by its terms to a specific obligation
of Borrower to Bank) or liens now or hereafter in existence granted to the Bank
to secure indebtedness of the Borrower to the Bank, including without
limitation as described in the following documents:

 

ý    Real Estate Mortgage(s)/Deed(s) of Trust dated
10/18/05 covering real estate
located at 43455 Business Park Drive, Temecula, CA 92590-3605

o    Security Agreement(s) dated

o    Possessory Collateral Pledge Agreement(s)
dated

o    Other

 

 3.2  Guaranties.  This Agreement and the Note are guarantied by
each and every guaranty now or hereafter in existence guarantying the
indebtedness of the Borrower to the Bank (except for any guaranty expressly
limited by its terms to a specific separate obligation of Borrower to the Bank)
including, without limitation, the following: 
Outdoor Channel Holdings, Inc.

 

 3.3  Credit Balances; Setoff. As additional security for the payment
of the obligations described in the Loan Documents and any other obligations of
the Borrower to the Bank of any nature whatsoever (collectively the “Obligations”), the Borrower hereby grants to the Bank a
security interest in, a lien on and an express contractual right to set off
against all depository account balances, cash and any other property of the
Borrower now or hereafter in the possession of the Bank and the right to refuse
to allow withdrawals from any account (collectively “Setoff”).
The Bank may, at any time upon the occurrence of a default hereunder
(notwithstanding any notice requirements

 

3

 

or
grace/cure periods under this or other agreements between the Borrower and the
Bank) Setoff against the Obligations whether or not the
Obligations (including future installments) are then due or have been
accelerated, all without any advance or contemporaneous notice or demand of any
kind to the Borrower, such notice and demand being expressly waived.

 

 The
omission of any reference to an agreement in Sections 3.1 and 3.2 above will
not affect the validity or enforceability thereof. The rights and remedies of
the Bank outlined in this Agreement and the documents identified above are
intended to be cumulative.

 

ARTICLE IV. DEFAULTS

 

 4.1
Defaults.  Notwithstanding any cure periods described
below, the Borrower will immediately notify the Bank in writing where the
Borrower obtains knowledge of the occurrence of any default specified below. Regardless of whether the Borrower has
given the required notice, the occurrence of one or more of the following will
constitute a default:

 

(a)   Nonpayment.  The Borrower shall fail to pay (i) any
interest due on the Note or any fees, charges, costs or expenses under the Loan
Documents by 5 days after the same becomes due; or (ii) any principal
amount of the Note when due.

 

(b)   Nonperformance.  The Borrower or any guarantor of
Borrower’s Obligations to the Bank (“Guarantor”)
shall fail to perform or observe any agreement, term, provision, condition, or
covenant (other than a default occurring under (a), (c), (d), (e), (f) or (g) of
this Section 4.1) required to be performed or observed by the Borrower or
any Guarantor hereunder or under any other Loan Document or other agreement
with or in favor of the Bank.

 

(c)   Misrepresentation.  Any financial information,
statement, certificate, representation or warranty given to the Bank by the
Borrower or any Guarantor (or any of their representatives) in connection with
entering into this Agreement or the other Loan Documents and/or any borrowing
thereunder, or required to be furnished under the terms thereof, shall prove
untrue or misleading in any material respect (as determined by the Bank in the
exercise of its judgment) as of the time when given.

 

(d)   Default on Other Obligations.  The Borrower or any Guarantor
shall be in default under the terms of any loan agreement, promissory note,
lease, conditional sale contract or other agreement, document or instrument
evidencing, governing or securing any indebtedness owing by the Borrower or any
Guarantor to the Bank or any indebtedness in excess of $10,000 owing by the Borrower
to any third party, and the period of grace, if any, to cure said default shall
have passed.

 

(e)   Judgments.  Any judgment shall be obtained
against the Borrower or any Guarantor which, together with all other
outstanding unsatisfied judgments against the Borrower (or such Guarantor),
shall exceed the sum of $10,000 and shall remain unvacated, unbonded or
unstayed for a period of 30 days following the date of entry thereof.

 

(f)    Inability to Perform;
Bankruptcy/Insolvency.  (i) The
Borrower or any Guarantor shall die or cease to exist; or (ii) any
Guarantor shall attempt to revoke any guaranty of the Obligations described herein,
or any guaranty becomes unenforceable in whole or in part for any reason; or (iii) any
bankruptcy, insolvency or receivership proceedings, or an assignment for the
benefit of creditors, shall be commenced under any Federal or state law by or
against the Borrower or any Guarantor; or (iv) the Borrower or any
Guarantor shall became the subject of any out-of-court settlement with its
creditors; or (v) the Borrower or any Guarantor is unable or admits in writing
its inability to pay its debts as they mature; or (vi) if the Borrower is
a limited liability company, any member thereof shall withdraw or otherwise
become disassociated from the Borrower.

 

(g)   Adverse Change; Insecurity.  (i) There is a material
adverse change in the business, properties, financial condition or affairs of
the Borrower or any Guarantor, or in any collateral securing the Obligations;
or (ii) the Bank in good faith deems itself insecure.

 

 4.2  Termination of Loans;
Additional Bank Rights.  Upon the occurrence of any of the
events identified in Section 4.1, the Bank may at any time
(notwithstanding any notice requirements or grace/cure periods under this or
other agreements between the Borrower and the Bank) (i) immediately
terminate its obligation, if any, to make additional loans to the Borrower; (ii) Setoff;
and/or (iii) take such other steps to protect or preserve the Bank’s
interest in any collateral, including without limitation, notifying account
debtors to make payments directly to the Bank, advancing funds to protect any
collateral and insuring collateral at the Borrower’s expense; all without
demand or notice of any kind, all of which are hereby waived.

 

 4.3  Acceleration of
Obligations.  Upon the
occurrence of any of the events identified in Sections 4.1(a) through 4.1(e) and
4.1(g), and the passage of any applicable cure periods, the Bank may at any
time thereafter, by written notice to the Borrower, declare the unpaid principal
balance of any Obligations, together with the interest accrued thereon and
other amounts accrued hereunder and under the other Loan Documents, to be
immediately due and payable; and the unpaid balance will thereupon be due and
payable, all without presentation, demand, protest or further notice of any
kind, all of which are hereby waived, and notwithstanding anything to the
contrary contained herein or in any of the other Loan Documents.  Upon the occurrence of any event under Section 4.1(f),
the unpaid principal balance of any Obligations, together with all interest
accrued thereon and other amounts accrued hereunder and under the other Loan Documents,
will thereupon be immediately due and payable, all without presentation,
demand, protest or notice of any kind, all of which are hereby waived, and
notwithstanding anything to the contrary contained herein or in any of the
other Loan Documents.  Nothing contained in Section 4.1, Section 4.2 or this section will
limit the Bank’s right to Setoff as provided in Section 3.3 or otherwise
in this Agreement.

 

 4.4  Other Remedies. Nothing in this Article IV is intended
to restrict the Bank’s rights under any of the Loan Documents or at law, and the
Bank may exercise all such rights and remedies as and when they are available.

 

4

 

ARTICLE V. OTHER TERMS

 

 5.1  Financial
Definitions Supplement.  If covenants regarding financial status
apply to this loan, the “Financial
Definitions” Supplement
identified in Section 2.14 of this Agreement is hereby incorporated into
this Agreement. The Borrower acknowledges receiving a copy of such Supplement.

 

 5.2  Additional Terms;
Addendum/Supplements.  The warranties, covenants,
conditions and other terms described in this Section and/or in the Addendum
and/or other attached document(s) referenced in this Section are
incorporated into this Agreement:

 

See attached addendum

 

ARTICLE VI. MISCELLANEOUS

 

 6.1
 Delay; Cumulative Remedies.  No
delay on the part of the Bank in exercising any right, power or privilege
hereunder or under any of the other Loan Documents will operate as a waiver
thereof, nor will any single or partial exercise of any right, power or
privilege hereunder preclude other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies herein
specified are cumulative and are not exclusive of any rights or remedies which
the Bank would otherwise have.

 

 6.2
 Relationship to Other
Documents. The warranties, covenants and other obligations of the
Borrower (and the rights and remedies of the Bank) that are outlined in this
Agreement and the other Loan Documents are intended to supplement each other.
In the event of any inconsistencies in any of the terms in the Loan Documents,
all terms will be cumulative so as to give the Bank the most favorable rights
set forth in the conflicting documents, except that if there is a direct
conflict between any preprinted terms and specifically negotiated terms
(whether included in an addendum or otherwise), the specifically negotiated
terms will control.

 

 6.3  Successors. The
rights, options, powers and remedies granted in this Agreement and the other
Loan Documents shall be binding upon the Borrower and the Bank and their
respective successors and assigns, and shall inure to the benefit of the
Borrower and the Bank and the successors and assigns of the Bank, including
without limitation any purchaser of any or all of the rights and obligations of
the Bank under the Note and the other Loan Documents. The Borrower may not
assign its rights or obligations under this Agreement or any other Loan Documents
without the prior written consent of the Bank,

 

 6.4  Disclosure.  The Bank may, in connection with any sale or
potential sale of all or any interest in the Note and other Loan Documents,
disclose any financial information the Bank may have concerning the Borrower to
any purchaser or potential purchaser. From time to time, the Bank may, in its
discretion and without obligation to the Borrower, any Guarantor or any other
third party, disclose information about the Borrower and this loan to any
Guarantor, surety or other accommodation party. This provision does not
obligate the Bank to supply any information or release the Borrower from its
obligation to provide such information, and the Borrower agrees to keep all
Guarantors, sureties or other accommodation parties advised of its financial
condition and other matters which may be relevant to their obligations to the
Bank,

 

 6.5  Indemnification.  Except for harm arising from the Bank’s
willful misconduct, the Borrower hereby indemnifies and agrees to defend and
hold the Bank harmless from any and all losses, costs, damages, claims and
expenses of any kind suffered by or asserted against the Bank relating to
claims by third parties arising out of the financing provided under the Loan
Documents or related to any collateral (including, without limitation, the
Borrower’s failure to perform its obligations relating to Environmental Matters
described in Section 2.5 above). This indemnification and hold harmless
provision will survive the termination of the Loan Documents and the satisfaction
of the Obligations due the Bank,

 

 6.6  Notice of Claims Against
Bank; Limitation of Certain Damages. 
In order to allow the Bank to mitigate any damages to the Borrower from
the Bank’s alleged breach of its duties under the Loan Documents or any other
duty, if any, to the Borrower, the Borrower agrees to give the Bank immediate
written notice of any claim or defense it has against the Bank, whether in tort
or contract, relating to any action or inaction by the Bank under the Loan
Documents, or the transactions related thereto, or of any defense to payment of
the Obligations for any reason. The requirement of providing timely notice to
the Bank represents the parties’ agreed-to standard of performance regarding
claims against the Bank. Notwithstanding any claim that the Borrower may have
against the Bank, and regardless of any notice the Borrower may have given the
Bank, the Bank will not be liable to the Borrower for
consequential and/or special damages arising therefrom, except those damages
arising from the Bank’s willful misconduct.

 

 6.7  Notices.  Notice of any record shall be deemed
delivered when the record has been (a) deposited in the United States
Mail, postage pre-paid, (b) received by overnight delivery service, (c) received
by telex, (d) received by telecopy, (e) received through the internet,
or (f) when personally delivered.

 

5

 

 6.8  Payments. 
Payments due under
the Note and other Loan Documents will be made in lawful money of the United
States. All payments may be applied by the Bank to principal, interest and
other amounts due under the Loan Documents in any order which the Bank elects,

 

 6.9  Applicable
Law and Jurisdiction; Interpretation; Joint Liability; Severability. This Agreement and all other Loan Documents will be governed by and Interpreted in
accordance with the internal laws of the State of California                     ,
except to the extent superseded by Federal law. THE BORROWER HEREBY CONSENTS TO
THE EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT SITUATED IN THE COUNTY
OR FEDERAL JURISDICTION OF THE BANK’S BRANCH WHERE THE LOAN WAS ORIGINATED, AND
WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS, WITH REGARD TO ANY
ACTIONS, CLAIMS, DISPUTES OR PROCEEDINGS RELATING TO THIS AGREEMENT, THE NOTE,
THE COLLATERAL, ANY OTHER LOAN DOCUMENT, OR ANY TRANSACTIONS ARISING THEREFROM,
OR ENFORCEMENT AND/OR INTERPRETATION OF ANY OF THE FOREGOING. Nothing herein
will affect the Bank’s rights to serve process in any manner permitted by law,
or limit the Bank’s right to bring proceedings against the Borrower in the
competent courts of any other jurisdiction or jurisdictions.  This Agreement, the other Loan Documents and
any amendments hereto (regardless of when executed) will be deemed effective
and accepted only at the Bank’s offices, and only upon the Bank’s receipt of
the executed originals thereof.  If there is more than one Borrower,
the liability of the Borrowers will be joint and several, and the reference to “Borrower”
will be deemed to refer to all Borrowers. Invalidity of any provision of this Agreement shall not affect the validity
of any other provision.

 

 6.10  Copies;
Entire Agreement; Modification. The Borrower hereby acknowledges the
receipt of a copy of this Agreement and all other Loan Documents.  This Agreement is a “transferable record” as
defined in applicable law relating to electronic transactions. Therefore, the
holder of this Agreement may, on behalf of Borrower, create a microfilm or
optical disk or other electronic image of this Agreement that is an
authoritative copy as defined in such law. The holder of this Agreement may
store the authoritative copy of such Agreement in its electronic form and then
destroy the paper original as part of the holder’s normal business practices.
The holder, on its own behalf, may control and transfer such authoritative copy
as permitted by such law.

 

IMPORTANT: READ BEFORE SIGNING, THE TERMS OF THIS AGREEMENT
SHOULD BE READ CAREFULLY BECAUSE ONLY THOSE TERMS IN WRITING, EXPRESSING
CONSIDERATION AND SIGNED BY THE PARTIES ARE ENFORCEABLE. NO OTHER TERMS OR ORAL
PROMISES NOT CONTAINED IN THIS WRITTEN CONTRACT MAY BE LEGALLY ENFORCED.
THE TERMS OF THIS AGREEMENT MAY ONLY BE CHANGED BY ANOTHER WRITTEN
AGREEMENT. THIS NOTICE SHALL ALSO BE EFFECTIVE WITH RESPECT TO ALL OTHER CREDIT
AGREEMENTS NOW IN EFFECT BETWEEN BORROWER AND THE BANK. A MODIFICATION OF ANY
OTHER CREDIT AGREEMENTS NOW IN EFFECT BETWEEN BORROWER AND THE BANK, WHICH
OCCURS AFTER RECEIPT BY BORROWER OF THIS NOTICE, MAY BE MADE ONLY BY
ANOTHER WRITTEN INSTRUMENT. ORAL OR IMPLIED MODIFICATIONS TO SUCH CREDIT
AGREEMENTS ARE NOT ENFORCEABLE AND SHOULD NOT BE RELIED UPON.

 

 6.11  Waiver of Jury Trial.  TO THE
EXTENT PERMITTED BY LAW, THE BORROWER AND THE BANK HEREBY JOINTLY AND SEVERALLY
WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING RELATING
TO ANY OF THE LOAN DOCUMENTS, THE OBLIGATIONS THEREUNDER, ANY COLLATERAL
SECURING THE OBLIGATIONS, OR ANY TRANSACTION ARISING THEREFROM OR CONNECTED THERETO.
THE BORROWER AND THE BANK EACH REPRESENTS TO THE OTHER THAT THIS WAIVER IS
KNOWINGLY, WILLINGLY AND VOLUNTARILY GIVEN.

 

 6.12
 Attachments.
All documents attached hereto, including any appendices, schedules, riders, and
exhibits to this Agreement, are hereby expressly incorporated by reference.

 

IN
WITNESS WHEREOF, the undersigned have executed this TERM LOAN AGREEMENT as of OCTOBER  18,
2005

 

	
  (Individual
  Borrower)

  	
  43455
  BPD, LLC.

  
	
   

  	
  Borrower
  Name (Organization)

  
	
   

  	
   

  
	
   

  	
   

  	
  a
  

  	
  California
  Limited Liability company

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
  SEE
  ATTACHED SIGNATURE ADDENDUM

  
	
  Borrower
  Name

  	
   

  	
  N/A

  	
   

  	
   

  
	
   

  	
  Name
  and Title

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
  SEE
  ATTACHED SIGNATURE ADDENDUM

  
	
   

  	
   

  
	
  Borrower
  Name

  	
   

  	
  N/A

  	
   

  	
  Name
  and Title

  	
   

  
	
   

  	
   

  
	
   

  	
  U.S.  BANK  N.A.

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name
  and Title

  	
  Maureen
  K. Sullivan, Vice President

  
	
   

  	
   

  
	
  Borrower
  Address:

  	
  43455
  Business Park Drive. Temecula. CA 92590-3605

  
	
  Borrower
  Telephone No.:

  	
   

  
													

 

6

 

SIGNATURE ADDENDUM

 

Addendum
to the Term Loan Agreement dated October 18, 2005, and any Riders or Addenda
attached thereto, as applicable.

 

BORROWER: 43455 BPD, LLC, a California Limited Liability Company

 

	
  By:

  	
  Outdoor
  Channel Holdings, Inc., a Delaware Corporation, Member

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Perry T. Massie

  	
   

  
	
   

  	
  Perry T. Massie, Chief
  Executive Officer

  

 

 

	
   

  	
  For Bank
  Use Only

  	
   

  	
  Reviewed by 

  
	
   

  	
   

  
	
   

  	
  Due

  	
  SEPTEMBER 5,  2015

  
	
   

  	
   

  
	
   

  	
  Customer #6517399995

  	
  Loan # 

  
						

 

TERM NOTE 

(For Term
Loan Agreement)

 

	
  $1,950,000.00

  	
   

  	
  OCTOBER 18, 
  2005

  

 

FOR
VALUE RECEIVED, the undersigned borrower (the “Borrower”),
promises to pay to the order of  U.S.  BANK
N.A, (the “Bank”), the principal sum of ONE MILLION
NINE HUNDRED FIFTY THOUSAND AND NO/100 Dollars ($ 1,950,000.00)

 

Interest.

 

The
unpaid principal balance will bear interest at an annual rate described in the
Inte: Rate Rider attached to this Note.

 

Payment Schedule.

 

Interest
is payable beginning DECEMBER 5, 2005, and on the same date of each
consecutive month thereafter (except that if a given month does not have such a
date, the last day of such month), plus a final interest payment with the final
payment of principal,

 

Principal
is payable in 117 installments of $6,500,00 each, beginning DECEMBER 5, 2005,
on the same data of each consecutive month thereafter (except that if a given
month does not have such a date, the last day of such month), plus a final
payment equal to all unpaid principal on SEPTEMBER 5, 2015, the maturity
date.

 

Interest
will be computed for the actual number of days principal is unpaid, using a
daily factor obtained by dividing the stated interest rate by 360.

 

Notwithstanding
any provision of this Note to the contrary, upon any default or at any time
during the continuation thereof (including failure to pay upon maturity), the
Bank may, at its option and subject to applicable law, increase the interest
rate on this Note to a rate of 5% per annum plus the interest rate otherwise
payable hereunder. Notwithstanding the foregoing and subject to applicable law,
upon the occurrence of a default by the Borrower or any guarantor involving
bankruptcy, insolvency, receivership proceedings or an assignment for the
benefit of creditors, the interest rate on this Note shall automatically
increase to a rate of 5% per annum plus the rate otherwise payable hereunder.

 

In
no event will the interest rate hereunder exceed that permitted by applicable
law. If any interest or other charge is finally determined by a court of
competent jurisdiction to exceed the maximum amount permitted by law, the
interest or charge shall be reduced to the maximum permitted by law, and the
Bank may credit any excess amount previously collected against the balance due or
refund the amount to the Borrower.

 

Subject
to applicable law, if any payment is not made on or before its due date, the
Bank may collect a delinquency charge of 5.00% of the unpaid amount Collection
of the late payment fee shall not be deemed to be a waiver of the Bank’s right
to declare a default hereunder.

 

Without
affecting the liability of any Borrower, endorser, surety or guarantor, the
Bank may, without notice, renew or extend the time for payment, accept partial
payments, release or impair any collateral security for the payment of this
Note, or agree not to sue any party liable on it.

 

This
Term Note constitutes the Note issued under a Term Loan Agreement dated as of
the date hereof between the Borrower and the Bank, to which Agreement reference
is hereby made for a statement of the terms and conditions under which the loan
evidenced hereby was made and a description of the terms and conditions upon
which the maturity of this Note may be accelerated, and for a description of
the collateral securing this Note.

 

 

This
Note is a “transferable record” as defined in applicable law relating to
electronic transactions. Therefore, the holder of this Note may, an behalf of
Borrower, create a microfilm or optical disk or other electronic image of this
Note that is an authoritative copy defined in such law. The holder of this Note
may store the authoritative copy of such Note in its electronic form and then
destroy the paper original as part of the holder’s normal business practices.
The holder, on its own behalf, may control and transfer such authoritative copy
as permitted by such law.

 

All documents attached hereto, including any
appendices, schedules, riders, and exhibits to this Term Note, are hereby
expressly incorporated by reference.

 

	
  The
  Borrower hereby acknowledges the receipt of a copy of this Note.

  
	
   

  
	
  (Individual Borrower)

  	
   

  	
  43455 BPD, LLC

  
	
   

  	
   

  	
  Borrower Name (Organization)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  a 

  	
  California limited liability company

  
	
   

  	
   

  	
   

  
	
  Borrower Name 

  	
   

  	
  N/A

  	
   

  	
  By 

  	
   

  	
  SEE ATTACHED SIGNATURE
  ADDENDUM

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name and Title 

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By 

  	
   

  	
  SEE ATTACHED SIGNATURE
  ADDENDUM

  
	
   

  	
   

  	
   

  
	
  Borrower Name 

  	
   

  	
  N/A

  	
   

  	
  Name and Title

  	
   

  
													

 

 

INTEREST RATE RIDER

 

This
Rider is made part of the Term Note (the “Note”) in the original amount of $1,950,000.00
by the undersigned borrower (the “Borrower”)
in favor of U.S.  BANK. NA.
(the “Bank”) as of the date identified
below. The following interest rate description is hereby added to the Note:

 

Interest
on each advance hereunder shall accrue at an annual rate equal to 1.350% plus
one-month LIBOR rate quoted by the Bank from Telerate Page 3750 or any
successor thereto which shall be that one-month LIBOR rate in effect two New
York Banking Days prior to the beginning of each calendar month adjusted for
any reserve requirement and any subsequent costs arising from a change in
government regulation, such rate to be reset at the beginning of each
succeeding month.  The term ‘New York
Banking Day’ means any day (other than a Saturday or Sunday) on which
commercial banks are open for business in New York, New York If the initial
advance under this Note occurs other than on the first day of the month, the
initial one-month LIBOR rate shall be that one-month LIBOR rate in effect two
New York Banking Days prior to the date of the initial advance, which rate plus
the percentage described above shall be in effect for the remaining days of the
month of the initial advance; such one-month LIBOR rate to be reset at the
beginning of each succeeding month The Bank’s internal records of applicable
interest rates shall be determinative in the absence of manifest error.

 

	
  Dated as of: 

  	
   

  	
  OCTOBER 18, 2005

  	
   

  
	
   

  
	
  (Individual
  Borrower)

  	
   

  	
   

  	
  43455
  BPD, LLC

  
	
   

  	
   

  	
  Borrower
  Name (Organization)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  a
  

  	
  California
  limited liability company

  
	
   

  	
   

  	
   

  
	
  Borrower
  Name 

  	
   

  	
  N/A

  	
   

  	
  By 

  	
   

  	
  SEE
  ATTACHED SIGNATURE ADDENDUM

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name
  and Title 

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By 

  	
   

  	
  SEE
  ATTACHED SIGNATURE ADDENDUM

  
	
   

  	
   

  	
   

  
	
  Borrower
  Name

  	
   

  	
  N/A

  	
   

  	
  Name
  and Title

  	
   

  
															

 

 

SIGNATURE ADDENDUM

 

Addendum to the Term Note dated October 18, 2005, and any Riders
or Addenda attached thereto, as applicable.

 

BORROWER: 43455 BPD. LLC, a California Limited Liability Company 

 

	
  By:

  	
  Outdoor
  Channel Holdings, Inc., a Delaware Corporation, Member

  
	
   

  
	
   

  	
  By:

  	
  /s/ Perry T. Massie

  	
   

  
	
   

  	
  Perry T. Massie, Chief Executive Officer

  	
   

  
					

 

 

ADDENDUM TO TERM LOAN AGREEMENT AND NOTE

 

This
Addendum is made part of the Term Loan Agreement and Note (the “Agreement”)
made and entered into by and between the undersigned borrower (the “Borrower”)
and the undersigned bank (the “Bank”) as of the date identified below. The
warranties, covenants and other terms described below are hereby added to the
Agreement.

 

Financial
Covenants. Financial
terms used herein which are not specifically defined herein shall have the
meanings ascribed to them under generally accepted accounting principles. For
any Borrower who does not have a separate fiscal year end for tax, reporting
purposes, the fiscal year will be deemed to be the calendar year. Borrower
(herein referred to as the “Subject Party”)
will maintain the following:

 

Debt Service
Coverage Ratio as of the end
of each fiscal year for the four (4) fiscal quarters then ended of at
least 1.20 to 1,

 

“Debt
Service Coverage Ratio”
shall mean the relationship, expressed as a numerical ratio, between (i) the
Net Operating Income for a given fiscal period from real property and
improvements securing the Note (the “Real Property Collateral”)
and (ii) the principal and interest due during such period on indebtedness
secured by the Real Property Collateral, For purposes of this definition, “Net Operating Income” means gross rental income for the
relevant period produced from the Real Property Collateral, minus all expenses
applicable to the Real Property Collateral for such period, and less a capital
replacement reserve of 0% of the gross revenue from the Real Property
Collateral for such period.

 

	
  Dated
  as of

  	
  October 18,2005

  	
   

  	
   

  
	
   

  	
   

  
	
  (Individual)

  	
  (Non-Individual)

  
	
   

  	
   

  
	
   

  	
   

  	
  43455
  BPD, LLC

  
	
  Borrower
  Name n/a

  	
  a/an
  California Limited Liability Company

  
	
   

  	
   

  
	
   

  	
   

  	
  By:
  Outdoor Channel Holdings, Inc.

  
	
  Borrower
  Name n/a

  	
  a/an
  California Corporation, MEMBER

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Perry T.Massie

  	
   

  
	
   

  	
  Name
  and Title Perry T.Massie, Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Agreed
  to:

  
	
   

  	
  U.S.
  BANKN.A.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Maureen K. Sullivan

  	
   

  
	
   

  	
  Name
  and Title Maureen K, Sullivan, Vice President

  
								

 

 

 

MASTER AGREEMENT

 

dated as of October 18, 2005

 

U.S.
Bank National Association and 43455 BPD LLC have entered and/or anticipate
entering into one or more transactions (each a “Transaction”) that are or will
be governed by this Master Agreement, which includes the schedule (the “Schedule”),
and the documents and other confirming evidence (each a “Confirmation”)
exchanged between the parties confirming those Transactions.

 

Accordingly, the parties
agree as follows:

 

1.             Interpretation

 

(a)   Definitions. The
terms defined in Section 12 and in the Schedule will have the
meanings therein specified for the purpose of this Master Agreement.

 

(b)   Inconsistency.  In the event of any inconsistency between the
provision of the Schedule and the other provisions of this Master
Agreement, the Schedule will prevail. 
In the event of any inconsistency between the provision of any
Confirmation and this Master Agreement (including the Schedule), such
Confirmation will prevail for the purpose of the relevant Transaction.

 

(c)   Single Agreement. All Transactions are entered into in reliance
on the fact that this Master Agreement and all Confirmations form a single
agreement between the parties (collectively referred to as this “Agreement”),
and the parties would not otherwise enter into any Transactions,

 

2.             Obligations

 

(a)   General
Conditions.

 

(i)            Each party will make each payment or delivery
specified in each Confirmation to be made by it, subject to the other
provisions of this Agreement.

 

(ii)           Payments under this agreement will be made on
the due date for value on that date in the place of the account specified in
the relevant Confirmation or otherwise pursuant to this Agreement, in freely transferable funds and in the manner
customary for payments in the required currency.

 

(iii)          Each obligation of each party under Section 2(a)(i) is
subject to (1) the condition precedent that no Event of Default or
Potential Event of Default with respect to the other party has occurred and is
continuing; (2) the condition precedent that no Early Termination Date in
respect of the relevant Transaction has occurred or been effectively designated
and (3) each other applicable condition precedent specified in this
Agreement.

 

 

(b)   Change of Account. Either party may change its account for
receiving a payment or delivery by giving notice to the other party at least
five Local Business Days prior to the scheduled date for the payment or
delivery to which such change applies unless such other party gives timely
notice of a reasonable objection to such change.

 

(c)   Netting. If on any date amounts would otherwise be
payable:

 

(i)            in the same currency; and

 

(ii)           in respect of the same Transaction,

 

by each party to the
other, then, on such date, each party’s obligation to make payment of any such
amount will be automatically satisfied and discharged and, if the aggregate
amount that would otherwise have been payable by one party exceeds the
aggregate amount that would otherwise have been payable by the other party,
replaced by an obligation upon the party by whom the larger aggregate amount
would have been payable to pay to the other party the excess of the larger
aggregate amount over the smaller aggregate amount.

 

The parties may elect in
respect of two or more Transactions that a net amount will be determined in
respect of all amounts payable on the same date in the same currency in respect
of such Transactions, regardless of whether such amounts are payable in respect
of the same Transaction. The election may be made in the Schedule or a
Confirmation by specifying that subparagraph (ii) above will not apply to
the Transactions identified as being subject to the election, together with the
starting date (in which case subparagraph (ii) above will not, or will
cease to, apply to such Transactions from such date). This election may be made
separately for different groups of Transactions and will apply separately to
each pairing of branches or offices through which the parties make and receive
payments or deliveries.

 

(d)   Default Interest;  Other Amounts.  Prior
to the occurrence or effective designation of an Early Termination Date in
respect of the relevant Transaction, a party that defaults in the performance
of any payment obligation will, to the extent permitted by law and subject to Section 6(c),
be required to pay interest (before as well, as after judgment) on the overdue
amount to the other party on demand in the same currency as such overdue
amount, for the period from (and including) the original due date for payment
to (but excluding) the date of actual payment, at the Default Rate. Such
interest will be calculated on the basis of daily compounding and the actual
number of days elapsed. If, prior to the occurrence or effective designation of
an Early Termination Date in respect of the relevant Transaction, a party
defaults in the performance of any obligation required to be settled by
delivery, it will compensate the other party on demand if and to the extent
provided for in the relevant Confirmation or elsewhere in this Agreement.

 

3.             Representations

 

Each
party represents to the other party (which representations will be deemed to be
repeated by each party on each date on which a Transaction is entered into)
that:

 

(a)   Basic Representations.

 

(i)            Status.   It is duly organized
and validly existing under the laws of the jurisdiction of its organization or
incorporation and, if relevant under such laws, in good standing; 

 

(ii)           Powers. It has the power to execute this
Agreement and any other documentation relating to this Agreement to which it is
a party, to deliver this Agreement and any other documentation relating to this
Agreement that it is required by this Agreement to deliver and to perform its
obligations under this Agreement and any obligations it has under any Credit
Support Document to which it is a party and has taken all necessary action to
authorize such execution, delivery and performance;

 

(iii)          No Violation or Conflict. Such execution, delivery and performance
do not violate or conflict with any law applicable to it, any provision of its
constitutional documents, any order or judgment of any court or other agency of
government applicable to it or any of its assets or any contractual restriction
binding on or affecting it or any of its assets;

 

2

 

(iv)          Consents. All governmental and other consents that are
required to have been obtained by it with respect to this Agreement or any
Credit Support Document to which it is a party have been obtained and are in
full force and effect and all conditions of any such consents have been
complied with; and

 

(v)           Obligations
Binding. Its obligations
under this Agreement and any Credit Support Document to which it is a party
constitute its legal, valid and binding obligations, enforceable in accordance
with their respective terms (subject to applicable bankruptcy, reorganization,
insolvency, moratorium or similar laws affecting creditors’ rights generally
and subject, as to enforceability, to equitable principles of general application
(regardless of whether enforcement is sought in a proceeding in equity or at
law)).

 

(b)   Absence of Certain Events.  No Event of
Default or Potential Event of Default or, to its knowledge, Termination Event
with respect to it has occurred and is continuing and no such event or
circumstance would occur as a result of its entering into or performing its
obligations under this Agreement or any Credit Support document to which it is
a party.

 

(c)   Absence of Litigation. There is not pending or, to its knowledge,
threatened against it or any of its Affiliates any action, suit or proceeding
at law or in equity or before any court, tribunal, governmental body, agency or
official or any arbitrator that is likely to affect the legality, validity or
enforceability against it of this Agreement or any Credit Support Document to
which it is a party or its ability to perform its obligations under this
Agreement or such Credit Support Document

 

(d)   Accuracy of Specified Information. All applicable information that is furnished
in writing by or on behalf of it to the other party and is identified for the
purpose of this Section 3(d) in the Schedule is, as of the date of
the information, true, accurate and complete in every material respect

 

4.             Agreements

 

Each
party agrees with the other that, so long as either party has or may have any
obligation under this Agreement or under any Credit Support Document to which
it is a party;

 

(a)   Furnish
Specified Information.  It will deliver to the other party any forms,
documents or certificates specified in the Schedule or any Confirmation by
the date specified in the Schedule or such Confirmation or, if none is
specified, as soon as reasonably practicable.

 

(b)   Maintain Authorizations.  It will use all reasonable efforts to maintain
in full force and effect all consents of any governmental or other authority
that are required to be obtained by it with respect to this Agreement or any Credit
Support Document to which it is a party and will use all reasonable efforts to
obtain any that may become necessary in the future.

 

(c)   Comply with Laws.  It will comply in all
material respects with all applicable laws and orders to which it may be
subject if failure so to comply would materially impair its ability to perform
its obligations under this Agreement or any Credit Support Document to which it
is a party.

 

5.             Events of Default and Termination Events

 

(a)   Events of
Default. The occurrence
at any time with respect to a party or, if applicable, any Credit Support
Provider of such party or any Specified Entity of such party of any of the
following events constitutes an event of default (an “Event of Default”) with
respect to such party;

 

(i)            Failure to Pay or Deliver.  Failure by
the party to make, when due, any payment under this Agreement or delivery under
Section 2(a)(i) or 2(d) required to be made by it if such
failure is not remedied on or before the third Local Business Day after notice
of such failure is given to the party;

 

(ii)           Breach of
Agreement.  Failure
by the party to comply with or perform any agreement or obligation (other than
an obligation to make any payment under this Agreement or delivery

 

3

 

under
Section 2(a)(i) or 2(d) or to give notice of a Termination
Event) to be complied with or performed by the party in accordance with this
Agreement if such failure is act remedied on or before the thirtieth day after
notice of such failure is given to the party;

 

(iii)          Credit Support Default.

 

(1)           failure by the party or any Credit Support
Provider of such party to comply with or perform any agreement or obligation to
be complied with or performed by it in accordance with any Credit Support
Document if such failure is continuing after any applicable grace period has
elapsed;

 

(2)           the expiration or termination of such Credit
Support Document or the failing or ceasing of such Credit Support Document to
be in full force and effect for the purpose of this Agreement (in either case
other than in accordance with its terms)
prior to the satisfaction of all obligations of such party under each
Transaction to which such Credit Support Document relates without the written
consent of the other party; or

 

(3)           the party or such Credit Support Provider disaffirms,
disclaims, repudiates or rejects, in whole or in part, or challenges the
validity of, such Credit Support Document;

 

(iv)          Misrepresentation.   A representation made or repeated or deemed to
have been made or repeated by the party or any Credit Support Provider of such
party in this Agreement or any Credit Support Document proves to have been
incorrect or misleading in any material respect when made or repeated or deemed
to have been made or repeated;

 

(v)           Default under
Specified Transaction.  The party, any Credit Support Provider of
such party or any applicable Specified Entity of such party (1) defaults
under a Specified Transaction and, after giving effect to any applicable notice
requirement or grace period, there occurs a liquidation of, an acceleration of
obligations under, or an early termination of, that Specified Transaction, (2) defaults,
after giving effect to any applicable notice requirement or grace period, in
making any payment or delivery due on the last payment, delivery or exchange
date of, or any payment on early termination of, a Specified Transaction (or
such default continues for at least three Local Business Days if there is no
applicable notice requirement or grace period) or (3) disaffirms,
disclaims, repudiates or rejects, in whole or in part, a Specified Transaction (or
such action, is taken by any person or entity appointed or empowered to operate
it or act on its behalf);

 

(vi)          Cross Default.  If “Cross Default” is specified in the Schedule as applying to the
party, the occurrence or existence of (1) a default, event of default or
other similar condition or event (however described) in respect of such party,
any Credit Support Provider of such party or any applicable Specified Entity of
such party under one or more agreements or instruments relating to Specified
Indebtedness of any of them (individually or collectively) in an aggregate
amount of not less than the applicable Threshold Amount (as specified in the
Schedule) which has resulted in such Specified Indebtedness becoming, or
becoming capable at such time of being declared, due and payable under such
agreements or instruments, before it would otherwise have been due and payable
or (2) a default by such party, such Credit Support Provider or such
Specified Entity (individually or collectively) in making one or more payments
on the due date thereof in an aggregate amount of not less than the applicable
Threshold Amount under such agreements or instruments (after giving effect to
any applicable notice requirement or grace period);

 

(vii)         Bankruptcy.   The party, any Credit Support Provider of
such party or any applicable Specified Entity of such party:

 

(1)           is dissolved (other than pursuant to a
consolidation, amalgamation or merger); (2) becomes insolvent or is unable
to pay its debts or fails or admits in writing its inability generally to pay
its debts as they become due; (3) makes a general assignment, arrangement
or composition with or for the benefit of its creditors; (4) institutes or
has instituted against it a proceeding seeking a judgment of insolvency or bankruptcy
or any other relief under any bankruptcy or insolvency law or other similar law
affecting

 

4

 

creditors’ rights, or a
petition is present for its winding-up or liquidation, and, in the case of any
such proceeding or petition instituted or presented against it, such proceeding
or petition (A) results in a judgment of insolvency or bankruptcy or the
entry of an order for relief or the making of an order for its winding-up or
liquidation, or (B) is not dismissed, discharged, stayed or restrained in
each case within

30 days of the institution or presentation thereof; (5) has a resolution
passed for its winding-up, official management or liquidation (other than
pursuant to a consolidation, amalgamation or merger); (6) seeks or becomes
subject to the appointment of an administrator, provisional liquidator,
conservator, receiver, trustee, custodian or other similar official for it or
for all or substantially all its assets; (7) has a secured party take
possession of all or substantially all its assets or has a distress, execution,
attachment, sequestration or other legal process levied, enforced or sued on or
against all or substantially all its assets and such secured party maintains
possession, or any such process is not dismissed, discharged, stayed or
restrained, in each case within 30 days thereafter; (8) causes or is
subject to any event with respect to it which, under the applicable laws of any
jurisdiction, has an analogous effect to any of the events specified in clauses
(1) to (7) (inclusive); or (9) takes any action in furtherance
of, indicating its consent to, approval of, or acquiescence in, any of the
foregoing acts; or

 

(viii)        Merger Without Assumption.  The
party or any Credit Support Provider of such party consolidates or amalgamates
with, or merges with or into, or transfers all or substantially all its assets
to, another entity and, at the time of such consolidation, amalgamation, merger
or transfer:

 

(1)           the
resulting, surviving or transferee entity fails to assume all the obligations
of such party or such Credit Support Provider under this Agreement or any
Credit Support Document to which it or its predecessor was a party by operation
of law or pursuant to an agreement reasonably satisfactory to the other party
to this Agreement; or

 

(2)           the
benefits of any Credit Support Document fail to extend (without the consent of
the other party) to the performance by such resulting, surviving or transforce
entity of its obligations under this Agreement,

 

(b) Termination Events, The
occurrence at any time with respect to a party or, if applicable, any Credit
Support Provider of such party or any Specified Entity of such party of any
event specified below constitutes an Illegality if the event is specified in (i) below,
and, if specified to be applicable, a Credit Event Upon Merger if the event is
specified pursuant to (ii) below or an Additional Termination Event if the
event is specified pursuant to (iii) below:

 

(i)            Illegality.  Due to the
adoption of, or any change in, any applicable law after the date on which a Transaction
is entered into, or due to the promulgation of, or any change in, the
interpretation by any court, tribunal or regulatory authority with competent
jurisdiction of any applicable law after such date, it becomes unlawful (other
than as a result of a breach by the party of Section 4(b)) for such party
(which will be the Affected Party):

 

(1)           to perform
any absolute or contingent obligation to make a payment or delivery or to receive
a payment or delivery in respect of such Transaction or to comply with any other
material provision of this Agreement relating to such Transaction; or

 

(2)           to
perform, or for any Credit Support Provider of such party to perform, any
contingent or other obligation which the party (or such Credit Support
Provider) has under any Credit Support Document relating to such Transaction;

 

(ii)           Credit Event Upon
Merger.  If “Credit Event Upon Merger” is specified in
the Schedule as applying to the party, such party (“X”), any Credit
Support Provider of X or any applicable Specified Entity of X consolidates or
amalgamates with, or merges with or into, or transfers all or substantially all
its assets to, another entity and such action does not constitute an event
described in Section 5(a)(viii) but the creditworthiness of the
resulting, surviving or transferee entity is materially weaker than that of X,
such Credit Support Provider or such Specified Entity,

 

5

 

 

as the case may be,
immediately prior to such action (and, in such event, X or its successor or
transferee, as appropriate, will be the Affected Party); or

 

(iii)          Additional Termination
Event.  If any “Additional Termination Event” is
specified in the Schedule or any Confirmation as applying, the occurrence
of such event (and, in such event, the Affected Party or Affected Parties shall
be as specified for such Additional Termination Event in the Schedule or
such Confirmation).

 

(c)   Event of Default and
Illegality.  If an event or circumstance which would
otherwise constitute or give rise to an Event of Default also constitutes an
illegality, it will be treated as an, illegality and will not constitute an
Event of Default

 

6.             Early Termination

 

(a)   Right to Terminate Following Event
of Default.  If at any
time an Event of Default with respect to a party (the “Defaulting Party”) has
occurred and is then continuing, the other party (the “Non-defaulting Party”)
may, by not more than 20 days notice to the Defaulting Party specifying the
relevant Event of Default, designate a day not earlier than the day such notice
is effective as an Early Termination Date in respect of all outstanding Transactions.
If, however, “Automatic Early Termination” is specified in the Schedule as
applying to a party, then an Early Termination Date in respect of all
outstanding Transactions will occur immediately upon the occurrence with
respect to such party of an Event of Default specified in Section 5(a)(vii)(l),
(3), (5), (6) or, to the extent analogous thereof, (8), and as of the time
immediately preceding the institution of the relevant proceeding or the presentation
of the relevant petition upon the occurrence with respect to such party of an
Event of Default specified in Section 5(a)(vii)(4) or, to the extent
analogous thereto, (8).

 

(b)   Right to Terminate Following
Termination Event

 

(i)            Notice.  If
a Termination Event occurs, an Affected Party will, promptly upon becoming
aware of it, notify the other party, specifying the nature of that Termination Event
and each Affected Transaction and will also give such other information about
that Termination Event as the other party may reasonably require.

 

(ii)           Two Affected Parties.  If
an illegality under Section 5(b)(i)(l) occurs and there are two Affected Parties,
each party will use all reasonable efforts to reach agreement within 30 days
after notice thereof is given under Section 6(b)(i) on action to
avoid that Termination Event.

 

(iii)          Right to Terminate.   If:

 

(1)           an
agreement under Section 6(b)(ii) has not been effected with respect
to all Affected Transactions within 30 days after an Affected Party gives
notice under Section 6(b)(i); or

 

(2)           an
Illegality other than that referred to in Section 6(b)(ii), a Credit Event
Upon Merger or an Additional Termination Event occurs,

 

either party in the case
of an Illegality, any Affected Party in the case of an Additional Termination
Event if there is more than, one
Affected Party, or the party which is not the Affected Party in the case of a
Credit Event Upon Merger or an Additional Termination Event if there is only
one Affected Party may, by not more than 20 days notice to the other party and
provided that the relevant Termination Event is then continuing, designate a
day not earlier than the day such notice is effective as an Early Termination
Date in respect of all Affected Transactions.

 

(c)   Effect of Designation.

 

(i)            If
notice designating an Early Termination Date is given under Section 6(a) or
(b), the Early Termination Date will occur on the date so designated, whether
or not the relevant Event of Default or Termination is then continuing.

 

6

 

(ii)           Upon the occurrence or effective designation
of an Early Termination Date, no further payments or deliveries under Section 2(a)(i) or
2(d) in respect of the Terminated Transactions will be required to be
made, but without prejudice to the other provisions of this Agreement. The
amount, if any, payable in respect of an Early Termination Date shall be
determined pursuant to Section 6(e).

 

(d)   Calculations.

 

(i)            Statement.  On or as soon as reasonably practicable
following the occurrence of an Early Termination Date, each party will make the
calculations on its part, if any, contemplated by Section 6(e) and
will provide to the other party a statement (1) showing, in reasonable
detail, such calculations (including all relevant quotations and specifying any
amount payable under Section 6(e)) and (2) giving details of the
relevant account to which any amount payable to it is to be paid. In the
absence of written confirmation from the source of a quotation obtained in
determining a Market Quotation, the records of the party obtaining such
quotation will be conclusive evidence of the existence and accuracy of such
quotation.

 

(ii)           Payment
Date.  An
amount calculated as being due in respect of any Early Termination Date under

Section 6(e) will, be payable on the day that notice of the amount
payable is effective (in the case of an Early Termination Date which is
designated or occurs as a result of an Event of Default) and on the day which
is two Local Business Days after the day on which notice of the amount payable
is effective (in the case of an Early Termination Date which is designated as a
result of a Termination Event). Such amount will be paid together with (to the
extent permitted under applicable law) interest thereon (before as well as
after judgment), from (and including) the relevant Early Termination Date to
(but excluding) the date such amount is paid, at the Applicable Rate. Such
interest will be calculated on the basis of daily compounding and the actual
number of days elapsed.

 

(e) Payments on Early Termination. If
an Early Termination Date occurs, the following provisions shall apply based on
the parties’ election in the Schedule of a payment measure, either “Market
Quotation” or “Loss”, and a payment method, either the “First Method” or the “Second
Method”. If the parties fail to designate a payment measure or payment method
in the Schedule, it will be deemed that “Market Quotation” or the “Second
Method”, as the case may be, shall apply. The amount, if any, payable in
respect of an Early Termination Date and determined pursuant to this Section will
be subject to any Set-off.

 

(i)            Events of
Default. If the Early Termination
Date results from an Event of Default:

 

(1)           First
Method and Market Quotation.  If the First Method and Market Quotation apply, the
Defaulting Party will pay to the Non-defaulting Party the excess, if a positive
number, of (A) the sum of the Settlement Amount (determined by the
Non-defaulting Party) in respect of the Terminated Transactions and the Unpaid
Amounts owing to the Non-defaulting Party over (B) the Unpaid Amounts owing to
the Defaulting Party.

 

(2)           First
Method and Loss,  If the First Method and Loss apply, the Defaulting Party will pay to
the Non-defaulting Party, if a positive number, the Non-defaulting Party’s Loss
in respect of this Agreement,

 

(3)           Second
Method and Market Quotation.  If the Second Method and Market Quotation apply,
an amount will be payable equal to (A) the sum of the Settlement Amount (determined
by the Non-defaulting Party) in respect of the Terminated Transactions and the
Unpaid Amounts owing to the Non-defaulting Party less (B) the Unpaid
Amounts owing to the Defaulting Party. If that amount is a positive number, the
Defaulting Party will pay it to the Non-defaulting Party; if it is a negative
number, the Non-defaulting Party will pay the absolute value of that amount to
the Defaulting Party.

 

(4)           Second
Method and Loss.  If the Second Method and Loss apply, an
amount will be payable equal to the Non-defaulting Party’s Loss in respect of
this Agreement.  If that amount is a
positive number, the Defaulting Party will pay it to the Non-defaulting

 

7

 

Party;
if it is a negative number, the Non-defaulting Party will pay the absolute
value of that amount to the Defaulting Party.

 

(ii)           Termination
Events.   If the
Early Termination Date results from a Termination Event:

 

(1)           One Affected
Party.  If there is one Affected Party, the amount
payable will be determined in accordance with Section 6(e)(i)(3), if
Market Quotation applies, or Section 6(e)(i)(4), if Loss applies, except
that, in either case, references to the Defaulting Party and to the Non-defaulting Party will
be deemed to be references to the Affected Party and the party which is not the
Affected Party, respectively, and, if Loss applies and fewer than all the
Transactions are being terminated, Loss shall be calculated in respect of all
Terminated Transactions.

 

(2)           Two Affected
Parties.  If there
are two Affected Parties:

 

(A)          If Market Quotation applies, each party will
determine a Settlement Amount in respect of the Terminated Transactions, and an
amount will be payable equal to (I) the sum of (a) one-half of the
difference between the Settlement Amount of the party with the higher
Settlement Amount (“X”) and the Settlement Amount of the party with the lower
Settlement Amount (“Y”) and (b) the Unpaid Amounts owing to X less (II)
the Unpaid Amounts owing to Y; and

 

(B)           If Loss applies, each party will determine
its Loss in respect of this Agreement (or, if fewer than all the Transactions
are being terminated, in respect of all Terminated Transactions) and an amount
will be payable equal to one-half of the difference between the Loss of the
party with the higher Loss (“X”) and the Loss of the party with the lower Loss
(“Y”).

 

If
the amount payable is a positive number, Y will pay it to X; if it is a
negative number, X will pay the absolute value of that amount to Y.

 

(iii)          Adjustment for
Bankruptcy.  In
circumstances where an Early Termination Date occurs because “Automatic Early
Termination” applies in respect of a party, the amount determined under this Section 6(e) will
be subject to such adjustments as are appropriate and permitted by law to
reflect any payments or deliveries made by one party to the other under this
Agreement (and retained by such other party) during the period from the
relevant Early Termination Date to the date for payment determined under Section 6(d)(ii).

 

(iv)          Pre-Estimate.   The parties agree that if Market Quotation
applies an amount recoverable under this Section 6(e) is a reasonable
pre-estimate of loss and not a penalty. Such amount is payable for the loss of
bargain and the loss of protection against future risks and except as otherwise
provided in this Agreement neither party will be entitled to recover any
additional damages as a consequence of such losses.

 

7.             Transfer

 

Neither
this Agreement nor any interest or obligation in or under this Agreement may be
transferred (whether by way of security or otherwise) by either party without
the prior written consent of the other party, except that:

 

(a)   a party may make such a transfer of this Agreement pursuant to a
consolidation or amalgamation with, or merger with or into, or transfer of all
or substantially all its assets to, another entity (but without prejudice to
any other right or remedy under this Agreement); and

 

(b)   a party may make such a transfer of all or any part of its interest in
any amount payable to it from a Defaulting Party under Section 6(e).

 

Any purported transfer that is not in compliance with this Section will
be void.

 

8

 

8.             Miscellaneous

 

(a)   Entire Agreement.  This
Agreement constitutes the entire agreement and understanding of the parties
with respect to its subject matter and supersedes all oral communication and
prior writings with respect thereto.

 

(b)   Amendments.  No
amendment modification or waiver in respect of this Agreement will be effective
unless in writing (including a writing evidence by a facsimile transmission)
and executed by each of the parties or confirmed by an exchange of telexes or
electronic messages on an electric messaging system.

 

(c)   Survival of Obligations.  Without prejudice to Sections
2(a)(iii) and 6(c)(ii), the obligations of the parties under this
Agreement will survive the termination of any Transaction.

 

(d)   Remedies Cumulative.  Except as provided in this
Agreement, the rights, powers, remedies and privileges provided in this
Agreement are cumulative and not exclusive of any rights, powers, remedies and
privileges provided by law.

 

(e)   Counterparts and Confirmations.

 

(i)            This
Agreement (and each amendment, modification, and waiver in respect of it) may
be executed and delivered in counterparts (including by facsimile
transmission), each of which will be deemed an original.

 

(ii)           The
parties intend that they are legally bound by the terms of each Transaction
from the moment they agree to those terms (whether orally or otherwise). A
Confirmation shall be entered into as soon as practicable and may be executed
and delivered in counterparts (including by facsimile transmission) or be
created by an exchange of telexes or by an exchange of electronic messages on
an electronic messaging system, which in each case will be sufficient for all
purposes to evidence a binding supplement to this Agreement. The parties will
specify therein or through another effective means that any such counterpart,
telex or electronic message constitutes a Confirmation.

 

(f)    No Waiver of Rights.  A
failure or delay in exercising any right, power or privilege in respect of this
Agreement will not be presumed to operate as a waiver, and a single or partial
exercise of any right power or privilege will not be presumed to preclude any
subsequent or further exercise, of that right power or privilege or the
exercise of any other right power or privilege.

 

(g)   Headings.  The headings used in this
Agreement are for convenience of reference only and are not to affect the
construction of or to be taken into consideration in interpreting this
Agreement.

 

9.             Expenses

 

A Defaulting Party will,
on demand, indemnify and hold harmless the other party for and against all
reasonable out-of-pocket expenses, including legal fees, incurred by such other
party by reason of the enforcement and protection of its rights under this
Agreement or any Credit Support Document to which the Defaulting Party is a
party or by reason of the early termination of any Transaction, including, but
not limited to, costs of collection.

 

10.           Notices

 

(a)   Effectiveness.  Any notice or other
communication in respect of this Agreement may be given in any manner set forth
below (except that a notice or other communication under Section 5 or 6 may
not be given by facsimile transmission or electronic messaging system) to the
address or number or in accordance with the electronic messaging system details
provided (see the Schedule) and will be deemed effective as indicated:

 

(i)            if
in writing and delivered in person or by courier on the date it is delivered;

 

(ii)           if
sent by telex, on the day the recipient’s answerback is received;

 

9

 

(iii)          if sent by facsimile transmission, on the
date that transmission is received by a responsible employee of the recipient
in legible form (it being agreed that the burden of proving receipt will be on
the sender and will not be met
by a transmission report generated by the sender’s facsimile machine);

 

(iv)          if sent by certified or registered mail
(airmail, if overseas) or the equivalent (return receipt requested), on the
date that mail is delivered or its delivery is attempted; or

 

(v)           if sent by electronic messaging system, on
the date that electronic message is received, 

 

unless
the date of that delivery (or attempted delivery) or that receipt, as
applicable, is not a Local Business Day or that communication is delivered (or
attempted) or received, as applicable, after the close of business on a Local
Business Day, in which case that communication shall be deemed given and
effective on the first following day that is a Local Business Day.

 

(b)   Change of Addresses.  Either party may by notice to the other change the address, telex or
facsimile number or electronic messaging system details at which notices or
other communications are to be given to it.

 

11.          Governing Law and Jurisdiction

 

(a)   Governing Law.  This Agreement will be governed by and construed in accordance with the
law specified in the Schedule.

 

(b)   Jurisdiction.  With respect to any suit, action or proceedings relating to this
Agreement (“Proceedings”), each party irrevocably:

 

(i)            submits to the jurisdiction of the English
courts, if this Agreement is expressed to be governed by English law, or to the
non-exclusive jurisdiction of the courts of the State of New York and the
United States District Court located in the Borough of Manhattan in New York
City, if this Agreement is expressed to be governed by the laws of the State of
New York; and

 

(ii)           waives any objection which it may have at any
time to the laying of venue of any Proceedings brought in any such court,
waives any claim that such Proceedings have been brought in an inconvenient
forum and further waives the
right to object, with respect to such Proceedings, that such court does not
have any jurisdiction over such party.

 

Nothing
in this Agreement precludes either party from bringing Proceedings in any other
jurisdiction (outside, if this Agreement is expressed to be governed by English
law, the Contracting States, as defined in Section 1(3) of the Civil
Jurisdiction and Judgments Act 1982 or any modification, extension or re-enactment
thereof for the time being in force) nor will the bringing of Proceedings in
any one or more jurisdictions preclude the bringing of Proceedings in any other
jurisdiction.

 

(c)   Waiver of Immunities.  Each party irrevocably waives, to the fullest extent permitted by
applicable law, with respect to itself and its revenues and assets
(irrespective of their use or intended use), all immunity on the grounds of
sovereignty or other similar grounds from (i) suit, (ii) jurisdiction
of any court, (iii) relief by way of injunction, order for specific
performance or for recovery of property, (iv) attachment of its assets
(whether before or after judgment) and (v) execution or enforcement of any
judgment to which it or its revenues or assets might otherwise be entitled in
any Proceedings in the courts of any jurisdiction and irrevocably agrees, to
the extent permitted by applicable law, that it will not claim any such
immunity in any Proceedings,

 

12.           Definitions

 

As
used in this Agreement:

 

“Additional Termination Event”
has the meaning specified in
Section 5(b).

 

“Affected Party” has the meaning specified in Section 5(b).

 

10

 

“Affected
Transactions” means
(a) with respect to any Termination Event consisting of an Illegality, all
Transactions affected by the occurrence of such Termination Event and (b) with
respect to any other Termination Event, all Transactions.

 

“Affiliate” means, subject to the Schedule, in
relation to any person, any entity controlled, directly or indirectly, by the
person, any entity that controls, directly or indirectly, the person or any
entity directly or indirectly under common control with the person. For this
purpose, “control” of any entity or person means ownership of a majority of the
voting power of the entity or person.

 

“Applicable Rate” means:

 

(a)   in
respect of obligations payable or deliverable (or which would have been but for
Section 2(a)(iii)) by a Defaulting Party, the Default Rate;

 

(b)   in
respect of an obligation to pay an amount under Section 6(e) of
either party from and after the date (determined in accordance with Section 6(d)(ii))
on which that amount is payable, the Default Rate;

 

(c)   in
respect of all other obligations payable or deliverable (or which would have
been but for Section 2(a)(iii)) by a Non-defaulting Party, the Non-default
Rate; and

 

(d)   in
all other cases, the Termination Rate.

 

“consent” includes a consent, approval, action,
authorization, exemption, notice, filing, registration or exchange control
consent

 

“Credit Event
Upon Merger” has the
meaning specified in Section 5(b).

 

“Credit Support
Document” means
any agreement or instrument that is specified as such in this Agreement.

 

“Credit Support
Provider” has the
meaning specified in the Schedule.

 

“Default Rate” means a rate per annum equal to the cost
(without proof or evidence of any actual cost) to the relevant payee (as
certified by it) if it were to fund or of funding the relevant amount plus 1%
per annum

 

“Defaulting
Party” has
the meaning specified in Section 6(a).

 

“Early
Termination Date” means the date determined in accordance
with Section 6(a) or 6(b)(iii).

 

“Event of Default” has the meaning specified in Section 5(a) and,
if applicable, in the Schedule.

 

“Illegality” has the meaning specified in Section 5(b).

 

“law” includes any treaty, law, rule or
regulation and “lawful” and “unlawful” will be construed accordingly.

 

“Local Business
Day” means,
subject to the Schedule, a day on which commercial banks are open for business
(including dealings in foreign exchange and foreign currency deposits) (a) in
relation to any obligation under Section 2(a)(i), in the place(s)
specified in the relevant Confirmation or, if not so specified, as otherwise
agreed by the parties in writing or determined pursuant to provisions
contained, or incorporated by reference, in this Agreement, (b) in
relation to any other payment, in the place where the relevant account is
located, (c) in relation to any notice or other communication, including
notice contemplated under Section 5(a)(i), in the city specified in the
address for notice provided by the recipient and, in the case of a notice
contemplated by Section 2(b), in the place where the relevant new account
is to be located and (d) in relation to Section 5(a)(v)(2), in the
relevant locations for performance with respect to such Specified Transaction,

 

“Loss” means, with respect to this Agreement or
one or more Terminated Transactions, as the case may be, and a party, an amount
that party reasonably determines in good faith to be its total losses and costs
(or gain, in which case expressed as a negative number) in connection with this
Agreement or that Terminated Transaction or group of Terminated Transactions,
as the case may be, including any loss of bargain, cost of funding or, at the
election of such party but without duplication, loss or cost incurred as a
result of its terminating, liquidating, obtaining or reestablishing any bedge
or related trading position (or any gain resulting from any of them). Loss
includes losses and costs (or gains) in respect of any payment or

 

11

 

delivery required to have
been made (assuming satisfaction of each applicable condition precedent) on or
before the relevant Early Termination Date and not made, except, so as to avoid
duplication, if Section 6(e)(i)(1) or (3) or 6(e)(ii)(2)(A) applies.
Loss does not include a party’s legal fees and out-of-pocket expenses referred
to under Section 9. A party will determine its Loss as of the relevant
Early Termination Date, or, if that is not reasonably practicable, as of the
earliest date thereafter as is reasonably practicable. A party may (but need
not) determine its Loss by reference to quotations of relevant rates or prices
from one or more leading dealers in the relevant markets.

 

“Market
Quotation” means,
with respect to one or more Terminated Transactions and a party making the
determination, an amount determined on the basis of quotations from Reference
Market-makers. Each quotation will be for an amount, if any, that would, be
paid to such party (expressed as a negative number) or by such party (expressed
as a positive number) in consideration of an agreement between such party
(taking into account any existing Credit Support Document with respect to the
obligations of such party) and the quoting Reference Market-maker to enter into
a transaction (the “Replacement Transaction”) that would have the effect of
preserving for such party the economic equivalent of any payment or delivery
(whether the underlying obligation was absolute or contingent and assuming the
satisfaction of each applicable condition precedent) by the parties under Section 2(a)(i) in
respect of such Terminated Transaction or group of Terminated Transactions that
would, but for the occurrence of the relevant Early Termination Date, have been
required after that date. For this purpose, Unpaid Amounts in respect of the
Terminated Transaction or group of Terminated Transactions are to be excluded
but, without limitation, any payment or delivery that would, but for the
relevant Early Termination Date, have been required (assuming satisfaction of
each applicable condition precedent) after that Early Termination Date is to be
included. The Replacement Transaction would be subject to such documentation as
such party and the Reference Market-maker may, in good faith, agree. The party
making the determination (or its agent) will request each Reference
Market-maker to provide its quotation to the extent reasonably practicable as
of the same day and time (without regard to different time zones) on or as soon
as reasonably practicable after the relevant Early Termination Date. The day
and time as of which those quotations are to be obtained will be selected in
good faith by the party obliged to make a determination under Section 6(e),
and, if each party is so obliged, after consultation with the other. If more
than three quotations are provided, the Market Quotation will be the arithmetic
mean of the quotations, without regard to the quotations having the highest and
lowest values. If exactly three such quotations are provided, the Market
Quotation will be the quotation remaining after disregarding the highest and
lowest quotations. For this purpose, if more than one quotation has the same
highest value or lowest value, then one of such quotations shall be
disregarded. If fewer than three quotations are provided, it will be deemed
that the Market Quotation in respect of such Terminated Transaction or group of
Terminated Transactions cannot be determined.

 

“Non-default
Rate” means
a rate per annum equal to the cost (without proof or evidence of any actual
cost) to the Non-defaulting Party (as certified by it) if it were to fund the
relevant amount.

 

“Non-defaulting
Party” has
the meaning specified in Section 6(a).

 

“Potential
Event of Default” means
any event which, with the giving of notice or the lapse of time or both, would
constitute an Event of Default.

 

“Reference Market-makers” means four leading dealers in the
relevant market selected by the party determining a Market Quotation in good
faith (a) from among dealers of the highest credit standing which satisfy
all the criteria that such party applies generally at the time in deciding
whether to offer or to make an extension of credit and (b) to the extent
practicable, from among such dealers having an office in the same city.

 

“Scheduled
Payment Date” means
a date on which a payment or delivery is to be made under Section 2(a)(i) with
respect to a Transaction.

 

“Set-off” means set-off, offset, combination of
accounts, right of retention or withholding or similar right or requirement to
which the payer of an amount under Section 6 is entitled or subject
(whether arising under this Agreement, another contract, applicable law or
otherwise) that is exercised by, or imposed on, such payer.

 

“Settlement
Amount” means with respect to a party and any Early
Termination Date, the sum of:

 

(a)   The
Market Quotations (whether positive or negative) for each Terminated
Transaction or group of Terminated Transactions for which a Market Quotation is
determined; and

 

12

 

(b)   such party’s Loss (whether positive or negative and without reference
to any Unpaid Amounts) for each Terminated Transaction or group of Terminated
Transactions for which Market Quotation cannot be determined or would not (in
the reasonable belief of the party making the determination) produce a
commercially reasonable result.

 

“Specified Entity” has the meaning specified in the Schedule.

 

“Specified Indebtedness” means, subject to the Schedule, any obligation
(whether present or future, contingent or otherwise, as principal or surety or
otherwise) in respect of borrowed money.

 

“Specified Transaction” means, subject to the Schedule, (a) any
transaction (including an agreement with respect thereto) now existing or
hereafter entered into between one party to this Agreement (or any Credit
Support Provider of such party or any applicable Specified Entity of such
party) and the other party to this Agreement (or any Credit Support Provider of
such other party or any applicable Specified Entity of such other party) which,
is a rate swap transaction, basis swap, forward rate transaction, commodity
swap, commodity option, equity or equity index swap, equity or equity index
option, bond option, interest rate option, foreign exchange transaction, cap
transaction, floor transaction, collar transaction, currency swap transaction,
cross-currency rate swap transaction, currency option or any other similar
transaction (including any option with respect to any of these transactions), (b) any
combination of these transactions and (c) any other transaction identified
as a Specified Transaction in this Agreement or the relevant confirmation.

 

“Terminated Transactions” means with respect to any Early Termination
Date (a) if resulting from a Termination Event, all Affected Transactions
and (b) if resulting from an Event of Default, all Transactions (in either
case) in effect immediately before the effectiveness of the notice designating
that Early Termination Date (or, if “Automatic Early Termination” applies,
immediately before that Early Termination Date).

 

“Termination Event” means an Illegality or, if specified to be
applicable, a Credit Event Upon
Merger or an Additional Termination Event.

 

“Termination Rate” means a rate per annum equal to the
arithmetic mean of the cost (without proof or evidence of any actual cost) to
each party (as certified by such party) if it were to fund or of funding such
amounts.

 

“Unpaid Amounts” owing to any parry means, with respect to an
Early Termination Date, the aggregate of (a) in respect of all Terminated
Transactions, the amounts that became payable (or that would have become
payable but for Section 2(a)(iii)) to such party under Section 2(a)(i) on
or prior to such Early Termination Date and which remain unpaid as at such
Early Termination Date and (b) in respect of each Terminated Transaction,
for each obligation under Section 2(a)(i) which was (or would have
been but for Section 2(a)(iii)) required to be settled by delivery to such
party on or prior to such Early Termination Date and which has not been so
settled as at such Early Termination Date, an amount equal to the fair market
value of that which was (or would have been) required to be delivered as of the
originally scheduled date for delivery, in each case together with (to the
extent permitted under applicable law) interest, in the currency of such
amounts, from (and including) the date such amounts or obligations were or
would have been required to have been paid or performed to (but excluding) such
Early Termination Date, at the Applicable Rate. Such amounts of interest will
be calculated on the basis of daily compounding and the actual number of days
elapsed. The fair market value of any obligation referred to in clause (b) above
shall be reasonably determined by the party obliged to make the determination
under Section 6(e) or, if each party is so obliged, it shall be the
average of the fair market values reasonably determined by both parties.

 

[SIGNATURE PAGE TO FOLLOW]

 

13

 

IN WITNESS WHEREOF the parties have executed
this document on the respective dates specified below with effect from the date
specified on the first page of this document.

 

	
  U.U.S. BANK

  	
   

  	
  43455 BPD LLC

  
	
  NATIONAL
  ASSOCIATION

  	
   

  	
  By:

  	
  Outdoor Channel Holdings, Inc., Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Maureen K. Sullivan

  	
   

  	
  By:

  	
  /s/ Perry T. Massie

  
	
  Name:

  	
  Maureen K. Sullivan

  	
   

  	
  Name:

  	
  Perry T. Massie

  
	
  Title:

  	
  Vice
  President

  	
   

  	
  Title:

  	
  CEO

  
	
  Date:

  	
  11/2/05

  	
   

  	
  Date:

  	
  11/2/05

  
											

 

14

 

(Local Currency-Single Jurisdiction)

 

SCHEDULE to the MASTER AGREEMENT

dated as of October 18, 2005

between 

U.S. BANK NATIONAL ASSOCIATION (“Party A”)

and 

43455 BPD LLC (“Party B”)

 

Part 1: Termination Provisions and Certain Other
Matters

 

(a)           “Specified
Entity” means, in
relation to Party A, for the purpose of: 

 

Section 5(a)(v),
none;

 

Section 5(a)(vi),
none; 

 

Section 5(a)(vii),
none; and 

 

Section 5(b)(ii),
none;

 

and, in relation to Party B,
for the purpose of: 

 

Section 5(a)(v),
All Affiliates; 

 

Section 5(a)(vi),
All Affiliates; 

 

Section 5(a)(vii),
All Affiliates; and 

 

Section 5(b)(ii),
All Affiliates.

 

(b)           “Specified Transaction” will have the meaning specified in
Section 12 of this Agreement.

 

(c)           The “Cross-Default”
provisions of Section 5(a)(vi) will apply to Party A
and Party B. In connection therewith,

 

“Specified Indebtedness” will have the meaning specified in
Section 12, except that such term shall not include obligations in respect
of deposits received in the ordinary course of a party’s banking business, and

 

“Threshold Amount” means, in relation to Party A an amount equal
to Ten Million

 

1

 

Dollars ($10,000,000.00), and in relation to Party
B an amount equal to ($0.00).

 

(d)           The “Credit
Event Upon Merger” provisions of Section 5(b)(ii) will
apply to Party A and Party B; provided, however, that the phrase “materially
weaker” means that the actual or implied Credit Rating of (A) the senior
long-term debt of the resulting, surviving or transferee entity is rated less
than BBB- by Standard & Poor’s Corporation or Baa3 by Moody’s
Investors Service Inc., or (B) in the event that there are no such
Standard & Poor’s Corporation or Moody’s Investors Service, Inc.
ratings, the Policies (as defined below) in effect at the time, of the party
which is not the Affected Party, would lead such non-Affected Party, solely as
a result of a change in the nature, character, identity or condition of the
Affected Party from its state (as a
party to this Agreement) prior to such consolidation, amalgamation, merger or
transfer, to decline to make an extension of credit to, or enter into a
Transaction with, the resulting, surviving or transferee entity. “Policies”,
for the purposes of this definition means: (x)(i) internal credit limits
applicable to individual entities or (ii) other limits on doing business with
entities domiciled or doing business in certain jurisdictions or engaging in
certain activities, or (y) internal restrictions on doing business with
entities with whom the party which is not the Affected Party has had prior
adverse business relations.

 

In addition,
Section 5(b)(ii) is hereby amended by:

 

(i)             deleting in the fourth line thereof the words
“another entity” and replacing them with the words “or receives all or
substantially all of the assets of another entity or reorganizes, incorporates,
reincorporates, or reconstitutes into or as, another entity or X, such Credit
Support Provider, or such Specified Entity, as the case may be, effects a
recapitalization, liquidating dividend, leveraged buy-out, other similar
highly-leveraged transaction, redemption of indebtedness, or stock buy-back or
similar call on equity or enters into any agreement providing for the
foregoing.”

 

(ii)            deleting in the fifth line thereof the words
“the resulting, surviving or transferee” and replacing them with the words “X
or any resulting, surviving, transferee, reorganized, or recapitalized”, and

 

(iii)           deleting in the seventh line thereof the words “its successor or
transferee” and replacing them with the words “any resulting, surviving,
transferee, reorganized, or recapitalized entity.”

 

(e)           The “Automatic
Early Termination” provision
of Section 6(a) will not apply to Party A. As to Party B, Automatic
Early Termination shall apply.

 

2

 

(f)            Payments
on Early Termination. For
the purpose of Section 6(e) of this Agreement: 

 

(i)             Market Quotation will apply.

 

(ii)            The Second Method will apply.

 

(g)           Additional
Termination Event will
not apply to Party A.   As to Party B, an Additional Termination Event shall occur upon
(i) payment in full of all loans, advances, indebtedness and other obligations of Party
B (or any Specified Entity of or Credit Support Provider for Party B) to Party
A (or any Affiliate of Party A), and the termination of all commitments
(including revolving loan commitments and letters of credit) by Party A (or any
Affiliate of Party A) to extend credit to Party B (or any Specified Entity of
or Credit Support Provider of Party B) other than under this Agreement, or
(ii) if Party B or any Credit Support Provider of Party B is a natural
person, the death, permanent disability, legal incapacity or incompetence of
Party B or any Credit Support Provider of Party B. For the purpose of the
foregoing Termination Event, the Affected Party shall be Party B and the
non-Affected Party shall be Party A.

 

Part 2: Agreement to Deliver Documents

 

	
  Party Required To

  Deliver Document

  	
   

  	
  Form/Document/

  Certificate

  	
   

  	
  Date By Which To

  Be Delivered

  	
   

  	
  Covered By Section

  3(d) Representation

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Party B

  	
   

  	
  Certified copies of all resolutions
  and authorizations and any other documents with respect to the execution, delivery and performance of this Agreement
  satisfactory to Party A

  	
   

  	
  Upon execution and delivery
  of this Agreement

   

  	
   

  	
  Yes

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Party B

  	
   

  	
  Certificate of authority and
  specimen signatures of individuals executing this Agreement an Confirmations

  	
   

  	
  Upon execution and delivery
  of this Agreement and thereafter, upon request of the other Party

  	
   

  	
  Yes

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Party B

  	
   

  	
  Consolidated and consolidating
  balance sheet and income statements – quarterly (unaudited) and annually
  (audited)

  	
   

  	
  Upon request of Party A

  	
   

  	
  Yes

  

 

3

 

	
  Party B

  	
   

  	
  A cross-collateralization agreement
  satisfactory to Party A from Party B and any Credit Support Providers for
  Party B, plus all other agreements deemed necessary by Party A to evidence
  such cross-collateralization satisfactory to Party A

  	
   

  	
  Upon execution and delivery
  of this Agreement

  	
   

  	
  Yes

  

 

Part 3. Miscellaneous

 

(a)           Address
for Notices. For the
Purpose of Section 10(a) of this Agreement:

 

Any notice shall be delivered to the address
or facsimile or telex number specified in the relevant Confirmation of a
Transaction. For Purposes of Sections 5 and 6 of this Agreement, any notice
shall also be delivered to the following address:

 

Address for notice or communications to Party
A:

 

U.S.
Bank National Association

ATTN: Randy Bailey / Derivative Operations

800 Nicollet Mall

Mail Location: BC-MN-H18S

Minneapolis, Minnesota 55402

(612) 303-4128 Phone

(612) 303-1353 Fax

 

Address for notice or communications to Party
B:

 

43455
BPD LLC

ATTN: William “Bill” Owen 

43455 Business Park Drive 

Temecula, California 92590 

(951) 699-4749 Ext. 109 Phone 

(951) 699-1849 Fax

 

(b)           Calculation Agent. The Calculation Agent is Party A.

 

(c)           Credit
Support Document. Credit
Support Document is not applicable in relation to Party A. Credit Support
Document is applicable in relation to Party B and shall mean each agreement and
instrument, now or hereafter existing, of any kind or nature which secures,
guarantees or otherwise provides direct or indirect assurance of

 

4

 

payment
or performance of any existing or future obligation of Party B under this
Agreement, made by or on behalf of any person or entity (including,
without limiting the generality of the foregoing, any credit or loan agreement,
note, reimbursement agreement, security agreement, mortgage, pledge agreement,
assignment of rents or any other agreement or instrument granting any lien,
security interest, assignment, charge or encumbrance to secure any such
obligation, any guaranty, suretyship, letter of credit or subordination
agreement relating to any such obligation and any “keep well” or other
financial support agreement relating to Party B or any Credit Support Provider)
in favor of Party A or any of its Affiliates. Each Credit Support Document is
incorporated by reference in, constitutes part of, and is made in connection
with, this Agreement and each Confirmation as if set forth in full in this
Agreement or such Confirmation, and each representation, warranty, covenant and
agreement of Party B contained therein is incorporated by reference herein and
is repeated and restated in favor of Party A. Party B grants to Party A a
security interest in all assets and collateral that are subject to a security
interest pursuant to each Credit Support Document of Party B.

 

(d)           Credit Support Provider.  Credit Support Provider is not applicable in relation to Party A.
Credit Support Provider is applicable in relation to Party B and means any
person or entity (other than Party B), that now or hereafter secures,
guarantees or otherwise provides direct or indirect assurance of payment or
performance of any existing or future obligation of Party B under this
Agreement or any Credit Support Document, including but not limited to the
following persons and/or entities: Outdoor Channel Holdings, Inc.

 

(e)           Governing Law. This Agreement will be governed by and
construed in accordance with the laws of the state of New York (without
reference to choice of law doctrine).

 

(f)            “Affiliate” will
have the meaning specified in Section 12 of this Agreement. 

 

Part 4. Other Provisions

 

(a)            Set-off. Any amount (the “Early Termination Amount”)
payable to one party (the “Payee”) by the other party (the “Payer”) under
Section 6(e), in circumstances where there is a Defaulting Party or one
Affected Party in the case where a Termination Event under
Section 5(b)(ii) has occurred, will, at the option of the party (“X”)
other than the Defaulting Party or the Affected Party (and without prior notice
to the Defaulting Party or the Affected Party), be reduced by its set-off
against any amount(s) (the “Other Agreement Amount”) payable (whether at such
time or in the future or upon the occurrence of a contingency) by the Payee to
the Payer (irrespective of the currency, place of payment or booking office of
the obligation) under any other agreement(s) between the Payee and the Payer or
instrument(s) or undertaking(s) issued or executed by one party to, or in favor
of, the other party (and the Other Agreement Amount will be discharged promptly
and in all respects to the extent it is so set-off). X will give notice to the
other party of any set-off effected under this section.

 

5

 

For this purpose, either the Early
Termination Amount or the Other Agreement Amount (or the relevant portion of such
amounts) may be converted by X into the currency in which the other is
denominated at the rate of exchange at which such party would be able, acting
in a reasonable manner and in good faith, to purchase the relevant amount of
such currency.

 

If an obligation is unascertained, X may in
good faith estimate that obligation and set-off in respect of the estimate,
subject to the relevant party accounting to the other when the obligation is
ascertained.

 

Nothing in this section shall be
effective to create a charge or other security interest. This
section shall be without prejudice and in addition to any right of
set-off, combination of accounts, lien or other right to which a party is at
any time otherwise entitled (whether by operation of law, contract or otherwise).

 

(b)           Exchange
of Confirmations. For
each Transaction entered into hereunder, Party A shall promptly send to Party B
a Confirmation, via telex or facsimile transmission. Party B agrees to respond
to such Confirmation within 5 Business Days, either confirming agreement
thereto or requesting a correction of any error(s) contained therein. Failure
by Party B to respond within such period shall not affect the validity or
enforceability of such Transaction and shall be deemed to be an affirmation of
the terms contained in such Confirmation, absent manifest error. The parties
agree that any such exchange of telexes or facsimile transmissions shall
constitute a Confirmation for all purposes hereunder.

 

(c)           Waiver of
Right to Trial by Jury. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHTS TO
TRIAL BY JURY WITH RESPECT TO ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

(d)           Telephonic
Recording.  Each party (i) consents to the recording
of the telephone conversations of trading and marketing personnel of the
parties and their Affiliates in connection with this Agreement or any potential
Transaction and (ii) agrees to obtain any necessary consent of, and give
notice of such recording to, such personnel of it and its Affiliates.

 

(e)           Relationship Between
Parties. Section 3
of the Agreement is amended by adding the following as subsection (e):

 

“(e)         Relationship Between
Parties. Absent a written
agreement to the contrary:

 

(i)            It is not relying on any advice (whether
written or oral) of the other party regarding any Transaction, other than the
representations expressly made by that other party in this Agreement and in the
Confirmation in respect of that Transaction;

 

(ii)           In respect of each Transaction under this
Agreement,

 

6

 

(1)           it has the capacity to evaluate (internally
or through independent professional advice) that Transaction and has made its
own decision to enter into that Transaction;

 

(2)           it understands the terms, conditions and
risks of that Transaction and is willing to accept those terms and conditions
and to assume (financially and otherwise) those risks; and

 

(3)           the other party (a) is not acting as a
investment or commodity trading advisor for it; (b) has not given to it
(directly or indirectly through any other person) any assurance, guaranty or
representation whatsoever as to the merits (either legal, regulatory, tax,
financial, accounting or otherwise) of that Transaction or any documentation
related thereto; and (c) has not committed to unwind that Transaction.”

 

(f)            FDIC Requirements.

 

(i)            Corporate Authority. Each party (“X”) hereby represents and
warrants at all times until termination of this Agreement that X, by
appropriate corporate action, is authorized under applicable law to enter into
this Agreement, as evidenced by the execution hereof by an officer of X of the
level of vice president or higher.

 

(ii)           FIRREA Qualified Financial Contract. Each party recognizes and intends that each
Transaction entered into under this Agreement is, and shall constitute, a
“qualified financial contract” as that term is defined in Section 212 of
the Financial Institutions Reform, Recovery and Enforcement Act of 1989, as the
same may be amended, modified, or supplemented from time to time.

 

(g)           Additional
Representations. In
addition to the representations made in Section 3 of the Agreement, each
party hereby represents and warrants to the other party (which representation
will be deemed to be repeated by each party on each date on which a Transaction
is entered into) as follows:

 

(1)           No Agency. It is entering into this Agreement and each
Transaction as principal (and not as agent or in any other capacity, fiduciary
or otherwise).

 

(2)           Eligible Contract
Participant. It is an “eligible
contract participant” as defined in Section 1 a(12) of the U.S. Commodity
Exchange Act and/or an “eligible swap participant” as defined in Part 35
of the regulations of the Commodity Futures Trading Commission.

 

(3)           Line of Business.  It has
entered into this Agreement (including each

 

7

 

Transaction evidenced hereby) in conjunction with its
line of business or the financing of its business. It represents and warrants
that all transactions effected under this Agreement (i) will be
appropriate in the conduct and management of its business, (ii) will be
entered into for non-speculative purposes, and (iii) constitute
transactions entered into for purposes of hedging or managing risks related to
its assets or liabilities as currently owned or incurred, or likely to be owned
or incurred in the conduct of its business.

 

	
  Accepted and agreed:

  	
   

  
	
   

  	
   

  
	
  U.S. BANK

  	
  43455 BPD LLC

  
	
  NATIONAL ASSOCIATION

  	
  Outdoor Channel Holdings Inc., Member

  
	
   

  	
   

  
	
  By:

  	
  /s/ Maureen K. Sullivan

  	
   

  	
  By:

  	
   /s/ Perry T.
  Massie

  	
   

  
	
  Name:

  	
  Maureen
  K. Sullivan

  	
   

  	
  Name:

  	
  Perry T. Massie

  	
   

  
	
  Title:

  	
  Vice President

  	
   

  	
  Title:

  	
  PRES, CEO

  	
   

  
										

 

8

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