Document:

exv10wxky

 

Exhibit 10(k)

[EXECUTION COPY]

364-DAY REVOLVING CREDIT AGREEMENT

among

POLARIS INDUSTRIES INC.

as Borrower,

AND

CERTAIN SUBSIDIARIES OF THE BORROWER

as Guarantors,

AND

THE LENDERS IDENTIFIED HEREIN,

AND

BANK OF AMERICA, N.A.,

as Administrative Agent and Issuing Lender

AND

U.S. BANK N.A.

as Syndication Agent

AND

THE BANK OF TOKYO-MITSUBISHI, LTD., CHICAGO BRANCH

as Documentation Agent

DATED AS OF JUNE 27, 2003

BANC OF AMERICA SECURITIES LLC

as Sole Book Manager and Sole Lead Arranger

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 	 	 
	SECTION 1	 	DEFINITIONS AND ACCOUNTING TERMS
	 	 	1	 
	 	1.1	 	 	 	 	Definitions
	 	 	1	 
	 	1.2	 	 	 	 	Computation of Time Periods and Other Definitional Provisions
	 	 	15	 
	 	1.3	 	 	 	 	Accounting Terms
	 	 	15	 
	 	1.4	 	 	 	 	Time
	 	 	16	 
	 	1.5	 	 	 	 	References to Agreements and Requirement of Laws
	 	 	16	 
	SECTION 2	 	CREDIT FACILITIES
	 	 	16	 
	 	2.1	 	 	 	 	Loans
	 	 	16	 
	 	2.2	 	 	 	 	Letter of Credit Subfacility
	 	 	17	 
	 	2.3	 	 	 	 	Continuations and Conversions
	 	 	23	 
	 	2.4	 	 	 	 	Minimum Amounts
	 	 	23	 
	SECTION 3	 	GENERAL PROVISIONS APPLICABLE TO LOANS AND LETTERS OF CREDIT
	 	 	23	 
	 	3.1	 	 	 	 	Interest
	 	 	23	 
	 	3.2	 	 	 	 	Place and Manner of Payments
	 	 	23	 
	 	3.3	 	 	 	 	Prepayments
	 	 	24	 
	 	3.4	 	 	 	 	Fees
	 	 	24	 
	 	3.5	 	 	 	 	Payment in full at Maturity
	 	 	25	 
	 	3.6	 	 	 	 	Computations of Interest and Fees
	 	 	25	 
	 	3.7	 	 	 	 	Pro Rata Treatment
	 	 	26	 
	 	3.8	 	 	 	 	Sharing of Payments
	 	 	27	 
	 	3.9	 	 	 	 	Capital Adequacy
	 	 	27	 
	 	3.10	 	 	 	 	Inability To Determine Interest Rate
	 	 	27	 
	 	3.11	 	 	 	 	Illegality
	 	 	28	 
	 	3.12	 	 	 	 	Requirements of Law
	 	 	28	 
	 	3.13	 	 	 	 	Taxes
	 	 	28	 
	 	3.14	 	 	 	 	Compensation
	 	 	30	 
	 	3.15	 	 	 	 	Determination and Survival of Provisions
	 	 	31	 
	SECTION 4	 	GUARANTY
	 	 	31	 
	 	4.1	 	 	 	 	Guaranty of Payment
	 	 	31	 
	 	4.2	 	 	 	 	Obligations Unconditional
	 	 	31	 
	 	4.3	 	 	 	 	Modifications
	 	 	32	 
	 	4.4	 	 	 	 	Waiver of Rights
	 	 	32	 
	 	4.5	 	 	 	 	Reinstatement
	 	 	32	 
	 	4.6	 	 	 	 	Remedies
	 	 	33	 
	 	4.7	 	 	 	 	Limitation of Guaranty
	 	 	33	 
	 	4.8	 	 	 	 	Rights of Contribution
	 	 	33	 
	SECTION 5	 	CONDITIONS PRECEDENT
	 	 	33	 
	 	5.1	 	 	 	 	Closing Conditions
	 	 	33	 
	 	5.2	 	 	 	 	Conditions to All Extensions of Credit
	 	 	35	 
	SECTION 6	 	REPRESENTATIONS AND WARRANTIES
	 	 	35	 
	 	6.1	 	 	 	 	Organization and Good Standing
	 	 	35	 
	 	6.2	 	 	 	 	Due Authorization
	 	 	35	 
	 	6.3	 	 	 	 	Enforceable Obligations
	 	 	35	 
	 	6.4	 	 	 	 	No Conflicts
	 	 	36	 
	 	6.5	 	 	 	 	Consents
	 	 	36	 
	 	6.6	 	 	 	 	Financial Condition
	 	 	36	 
	 	6.7	 	 	 	 	No Material Change
	 	 	36	 
	 	6.8	 	 	 	 	Disclosure
	 	 	36	 
	 	6.9	 	 	 	 	No Default
	 	 	36	 

i

 

	 	 	 	 	 	 	 	 	 	 	 
	 	6.10	 	 	 	 	Litigation
	 	 	37	 
	 	6.11	 	 	 	 	Taxes
	 	 	37	 
	 	6.12	 	 	 	 	Compliance with Law
	 	 	37	 
	 	6.13	 	 	 	 	Licenses, etc
	 	 	37	 
	 	6.14	 	 	 	 	Title to Properties
	 	 	37	 
	 	6.15	 	 	 	 	Insurance
	 	 	37	 
	 	6.16	 	 	 	 	Use of Proceeds
	 	 	37	 
	 	6.17	 	 	 	 	Government Regulation
	 	 	37	 
	 	6.18	 	 	 	 	No Burdensome Restrictions
	 	 	38	 
	 	6.19	 	 	 	 	ERISA
	 	 	38	 
	 	6.20	 	 	 	 	Environmental Matters
	 	 	39	 
	 	6.21	 	 	 	 	Intellectual Property
	 	 	40	 
	 	6.22	 	 	 	 	Subsidiaries
	 	 	40	 
	 	6.23	 	 	 	 	Solvency
	 	 	40	 
	 	6.24	 	 	 	 	Indebtedness
	 	 	40	 
	 	6.25	 	 	 	 	Investments; Liens
	 	 	40	 
	 	6.26	 	 	 	 	Force Majeure
	 	 	40	 
	 	6.27	 	 	 	 	Tax Shelter Regulations
	 	 	40	 
	SECTION 7	 	AFFIRMATIVE COVENANTS
	 	 	41	 
	 	7.1	 	 	 	 	Information Covenants
	 	 	41	 
	 	7.2	 	 	 	 	Financial Covenants
	 	 	43	 
	 	7.3	 	 	 	 	Preservation of Existence and Franchises
	 	 	43	 
	 	7.4	 	 	 	 	Books and Records
	 	 	43	 
	 	7.5	 	 	 	 	Compliance with Law
	 	 	43	 
	 	7.6	 	 	 	 	Payment of Taxes and Other Indebtedness
	 	 	44	 
	 	7.7	 	 	 	 	Insurance
	 	 	44	 
	 	7.8	 	 	 	 	Maintenance of Property
	 	 	44	 
	 	7.9	 	 	 	 	Performance of Obligations
	 	 	44	 
	 	7.10	 	 	 	 	Use of Proceeds
	 	 	44	 
	 	7.11	 	 	 	 	Audits/Inspections
	 	 	44	 
	 	7.12	 	 	 	 	Additional Credit Parties
	 	 	45	 
	SECTION 8	 	 	NEGATIVE COVENANTS
	 	 	45	 
	 	8.1	 	 	 	 	Indebtedness
	 	 	45	 
	 	8.2	 	 	 	 	Guaranty Obligations
	 	 	46	 
	 	8.3	 	 	 	 	Liens
	 	 	47	 
	 	8.4	 	 	 	 	Nature of Business
	 	 	47	 
	 	8.5	 	 	 	 	Consolidation and Merger
	 	 	47	 
	 	8.6	 	 	 	 	Sale or Lease of Assets
	 	 	47	 
	 	8.7	 	 	 	 	Sale Leasebacks
	 	 	48	 
	 	8.8	 	 	 	 	Investments
	 	 	48	 
	 	8.9	 	 	 	 	Foreign Subsidiaries
	 	 	48	 
	 	8.10	 	 	 	 	Transactions with Affiliates
	 	 	48	 
	 	8.11	 	 	 	 	Fiscal Year; Accounting; Organizational Documents
	 	 	48	 
	 	8.12	 	 	 	 	No Limitations
	 	 	48	 
	 	8.13	 	 	 	 	No Other Negative Pledges
	 	 	48	 
	 	8.14	 	 	 	 	PAI Assets
	 	 	48	 
	SECTION 9	 	EVENTS OF DEFAULT
	 	 	49	 
	 	9.1	 	 	 	 	Events of Default
	 	 	49	 
	 	9.2	 	 	 	 	Acceleration; Remedies
	 	 	51	 
	 	9.3	 	 	 	 	Allocation of Payments After Event of Default
	 	 	51	 
	SECTION 10	 	AGENCY PROVISIONS
	 	 	52	 
	 	10.1	 	 	 	 	Appointment
	 	 	52	 
	 	10.2	 	 	 	 	Delegation of Duties
	 	 	53	 
	 	10.3	 	 	 	 	Exculpatory Provisions
	 	 	53	 

ii

 

	 	 	 	 	 	 	 	 	 	 	 
	 	10.4	 	 	 	 	Reliance on Communications
	 	 	53	 
	 	10.5	 	 	 	 	Notice of Default
	 	 	54	 
	 	10.6	 	 	 	 	Non-Reliance on Administrative Agent and Other Lenders
	 	 	54	 
	 	10.7	 	 	 	 	Indemnification
	 	 	55	 
	 	10.8	 	 	 	 	Administrative Agent in Its Individual Capacity
	 	 	55	 
	 	10.9	 	 	 	 	Successor Agent
	 	 	55	 
	 	10.10	 	 	 	 	Administrative Agent May File Proof of Claims
	 	 	56	 
	SECTION 11	 	MISCELLANEOUS
	 	 	56	 
	 	11.1	 	 	 	 	Notices and other Communications; Facsimile Copies
	 	 	56	 
	 	11.2	 	 	 	 	Right of Set-Off, Automatic Debits
	 	 	57	 
	 	11.3	 	 	 	 	Benefit of Agreement
	 	 	57	 
	 	11.4	 	 	 	 	No Waiver; Remedies Cumulative
	 	 	60	 
	 	11.5	 	 	 	 	Payment of Expenses; Indemnification
	 	 	60	 
	 	11.6	 	 	 	 	Amendments, Waivers and Consents
	 	 	60	 
	 	11.7	 	 	 	 	Counterparts
	 	 	61	 
	 	11.8	 	 	 	 	Headings
	 	 	61	 
	 	11.9	 	 	 	 	Defaulting Lender
	 	 	61	 
	 	11.10	 	 	 	 	Survival of Indemnification and Representations and Warranties
	 	 	61	 
	 	11.11	 	 	 	 	Governing Law; Jurisdiction
	 	 	61	 
	 	11.12	 	 	 	 	Waiver of Jury Trial; Waiver of Consequential Damages
	 	 	62	 
	 	11.13	 	 	 	 	Severability
	 	 	62	 
	 	11.14	 	 	 	 	Further Assurances
	 	 	62	 
	 	11.15	 	 	 	 	Confidentiality
	 	 	62	 
	 	11.16	 	 	 	 	Entirety
	 	 	62	 
	 	11.17	 	 	 	 	Binding Effect; Continuing Agreement
	 	 	62	 

	 	 	 
	SCHEDULES	 	 
	 	 	 
	Schedule 1.1(a)	 	
Commitment Percentages/Lending Offices
	Schedule 6.22	 	
Subsidiaries
	Schedule 8.1(k)	 	
Indebtedness
	Schedule 8.2(a)	 	
Repurchase Agreements
	Schedule 8.2(d)	 	
Existing PAI Obligations
	Schedule 8.3	 	
Liens
	Schedule 8.6	 	
Sales of Accounts Receivable
	Schedule 8.8	 	
Investments
	Schedule 11.1	 	
Notices

	 	 	 
	EXHIBITS	 	 
	 	 	 
	Exhibit 2.1(b)	 	
Form of Notice of Borrowing
	Exhibit 2.1(e)	 	
Form of Note
	Exhibit 2.3	 	
Form of Notice of Continuation/Conversion
	Exhibit 7.1(c)	 	
Form of Officer’s Certificate
	Exhibit 7.12	 	
Form of Joinder Agreement
	Exhibit 11.3(b)	 	
Form of Assignment and Assumption

iii

 

364-DAY REVOLVING CREDIT AGREEMENT

     THIS 364-DAY REVOLVING CREDIT AGREEMENT (this “Credit Agreement”), is
entered into as of June 27, 2003 among POLARIS INDUSTRIES INC., a Minnesota
corporation (the “Borrower”), certain of the Subsidiaries of the Borrower
(individually a “Guarantor” and collectively the “Guarantors”), the Lenders (as
defined herein), and BANK OF AMERICA, N.A., as Issuing Lender and
Administrative Agent for the Lenders.

RECITALS

     WHEREAS, the Borrower and the Guarantors have requested the Lenders to
provide a senior credit facility to the Borrower in an aggregate principal
amount of up to $100,000,000; and

     WHEREAS, the Lenders party hereto have agreed to make the requested senior
credit facility available to the Borrower on the terms and conditions
hereinafter set forth.

     NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:

SECTION 1

DEFINITIONS AND ACCOUNTING TERMS

     1.1 Definitions.

     As used herein, the following terms shall have the meanings herein
specified unless the context otherwise requires. Defined terms herein shall
include in the singular number the plural and in the plural the singular:

		
	 	     “Acceptance Partnership” means Polaris Acceptance, an Illinois
general partnership.
	 
	 	     “Acceptance Partnership Agreement” means that certain Partnership
Agreement, dated as of February 7, 1996, between PAI and Transamerica
Joint Ventures, Inc., pursuant to which the Acceptance Partnership was
created, as the same may be amended, restated or otherwise modified from
time to time.
	 
	 	     “Acquisition” means the acquisition by any Person of (a) all or
substantially all of the Capital Stock of another Person, (b) all or
substantially all of the assets of another Person or (c) all or
substantially all of a line of business of another Person, in each case
whether or not involving a merger or consolidation with such other
Person.
	 
	 	     “Additional Credit Party” means each Person that becomes a Guarantor
after the Closing Date, as provided in Section 7.12 or otherwise.
	 
	 	     “Adjusted Eurodollar Rate” means, with respect to Eurodollar Loans,
the Eurodollar Rate plus the Applicable Percentage.
	 
	 	     “Adjusted Leverage Ratio” means, as of the last day of each fiscal
quarter, the ratio of (a) the quotient of (i) the sum of all Funded Debt
for each day during the period of four fiscal quarters ending on such
date, divided by (ii) the number of days in such period to (b) EBITDA for
the period of four fiscal quarters ending on such date.
	 
	 	     “Administrative Agent” means Bank of America, N.A. (or any successor
thereto) or any successor administrative agent appointed pursuant to
Section 10.9.
	 
	 	     “Affiliate” means, with respect to any Person, any other Person
directly or indirectly controlling (including but not limited to all
directors and officers of such Person), controlled by or under direct or
indirect common control with such Person. A Person shall be deemed to
control a corporation if such Person

 

 

		
	 	possesses, directly or indirectly,
the power (a) to vote 10% or more of the securities having ordinary
voting power for the election of directors of such corporation or (b) to
direct or cause direction of the management and policies of such
corporation, whether through the ownership of voting securities, by
contract or otherwise.
	 
	 	     “Agency Services Address” means Bank of America, N.A., 1850 Gateway
Boulevard, Concord, California, Attn: Credit Services, or such other
address as may be identified by written notice from the Administrative
Agent to the Borrower.
	 
	 	     “Agent-Related Person” means the Administrative Agent (including any
successor administrative agent), together with its Affiliates (including,
in the case of Bank of America in its capacity as the Administrative
Agent, BAS), and their respective officers, directors, employees, agents,
counsel and attorneys-in-fact.
	 
	 	     “Applicable Percentage” means the appropriate applicable percentages
corresponding to the Adjusted Leverage Ratio in effect as of the most
recent Calculation Date as shown below:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Applicable	 		 	Applicable
	Pricing	 	 	 	 	 	Percentage for	 	Applicable Percentage for	 	Percentage for
	Level	 	Adjusted Leverage Ratio	 	Eurodollar Loans	 	Letter of Credit Fees	 	Facility Fee
	
	 	
	 	
	 	
	 	

	I
	 	£ .50 to 1.0	 	 	.60	%	 	 	.60	%                     	 	 	.150	%
	 
	 	> .50 to 1.0 but	 	 	 	 	 	 	 	 	 	 	 	 
	II
	 	£ 1.25 to 1.0	 	 	.70	%	 	 	.70	%                     	 	 	.175	%
	 
	 	> 1.25 to 1.0 but	 	 	 	 	 	 	 	 	 	 	 	 
	III
	 	£ 2.0 to 1.0	 	 	.80	%	 	 	.80	%                     	 	 	.200	%
	IV
	 	> 2.0 to 1.0	 	 	1.025	%	 	 	1.025	%                    	 	 	.225	%

		
	 	The Applicable Percentage for Loans, the Letter of Credit Fees and the
Facility Fees shall, in each case, be determined and adjusted quarterly
on the date (each a “Calculation Date”) five Business Days after the date
by which the Borrower is required to provide the officer’s certificate in
accordance with the provisions of Section 7.1(c); provided that the
initial Applicable Percentage for Loans, the Letter of Credit Fees and
the Facility Fees shall be based on Pricing Level I (as shown above) and
shall remain at Pricing Level I until the first Calculation Date
subsequent to the Closing Date and, thereafter, the Pricing Level shall
be determined by the Adjusted Leverage Ratio calculated as of the most
recent fiscal quarter end; provided further that if the Borrower fails to
provide the officer’s certificate required by Section 7.1(c) on or before
the most recent Calculation Date, the Applicable Percentage for Loans,
the Letter of Credit Fees and the Facility Fees from such Calculation
Date shall be based on Pricing Level IV (and the Borrower may be subject
to a default rate of interest, if applicable, pursuant to Section 3.1(b))
until such time as an appropriate officer’s certificate is provided
whereupon the Pricing Level shall be determined by the then current
Adjusted Leverage Ratio. Each Applicable Percentage shall be effective
from one Calculation Date until the next Calculation Date. Any
adjustment in the Applicable Percentage shall be applicable to all
existing Loans and Letters of Credit as well as any new Loans made or
Letters of Credit issued.
	 
	 	     “Approved Fund” means any Fund that is administered or managed by
(a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an
Affiliate of an entity that administers or manages a Lender.
	 
	 	     “Assignment and Assumption” means an assignment and assumption
entered into by a Lender and an Eligible Assignee (with the consent of
any party whose consent is required by Section 11.3(b), and
accepted by the Administrative Agent, in substantially the form of
Exhibit 11.3(b) or any other form approved by the Administrative Agent).
	 
	 	     “Attorney Costs” means all reasonable fees and disbursements of any
law firm or other external counsel and the reasonable allocated cost of
internal legal services and all disbursements of internal counsel.

2

 

		
	 	     “Authorized Officer” means any of the president, chief financial
officer, vice president of finance, treasurer or assistant treasurer of
the Borrower.
	 
	 	     “Bank of America” means Bank of America, N.A. or any successor
thereto.
	 
	 	     “Bankruptcy Code” means the Bankruptcy Code in Title 11 of the
United States Code, as amended, modified, succeeded or replaced from time
to time.
	 
	 	     “BAS” means Banc of America Securities LLC.
	 
	 	     “Base Rate” means, for any day, the rate per annum equal to the
greater of (a) the Federal Funds Rate in effect on such day plus
1⁄2 of
1% or (b) the Prime Rate in effect on such day. If for any reason the
Administrative Agent shall have determined (which determination shall be
conclusive absent manifest error) that it is unable after due inquiry to
ascertain the Federal Funds Rate for any reason, including the inability
or failure of the Administrative Agent to obtain sufficient quotations in
accordance with the terms hereof, the Base Rate shall be determined
without regard to clause (a) of the first sentence of this definition
until the circumstances giving rise to such inability no longer exist.
Any change in the Base Rate due to a change in the Prime Rate or the
Federal Funds Rate shall be effective at the opening of business on the
day specified in the public announcement of such change.
	 
	 	     “Base Rate Loan” means any Loan bearing interest at a rate
determined by reference to the Base Rate.
	 
	 	     “Borrower” means Polaris Industries Inc., a Minnesota corporation,
together with any successors and permitted assigns.
	 
	 	     “Business Day” means any day other than a Saturday, a Sunday, a
legal holiday or a day on which banking institutions are authorized or
required by law or other governmental action to close in San Francisco,
California, Dallas, Texas or Chicago, Illinois; provided that in the case
of Eurodollar Loans, such day is also a day on which dealings between
banks are carried on in Dollar deposits in the London interbank market.
	 
	 	     “Calculation Date” has the meaning set forth in the definition of
Applicable Percentage.
	 
	 	     “Capital Expenditures” means all expenditures of the Borrower and
its Subsidiaries on a consolidated basis which, in accordance with GAAP,
would be classified as capital expenditures, including, without
limitation, Capital Leases.
	 
	 	     “Capital Lease” means, as applied to any Person, any lease of any
property (whether real, personal or mixed) by that Person as lessee
which, in accordance with GAAP, is or should be accounted for as a
capital lease on the balance sheet of that Person and the amount of such
obligation shall be the capitalized amount thereof determined in
accordance with GAAP.
	 
	 	     “Capital Stock” means (a) in the case of a corporation, all classes
of capital stock of such corporation, (b) in the case of a partnership,
partnership interests (whether general or limited), (c) in the case of a
limited liability company, membership interests and (d) any other
interest or participation that confers on a Person the right to receive a
share of the profits and losses of, or distributions of assets of, the
issuing Person.
	 
	 	     “Cash Collateralize” means to pledge and deposit with or deliver to
the Administrative Agent, for the benefit of the Issuing Lender and the
Lenders, as collateral for the LOC Obligations, cash or deposit account
balances pursuant to documentation in form and substance satisfactory to
the Administrative Agent and the Issuing Lender.
	 
	 	     “Cash Equivalents” means (a) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the
United States of America is pledged in support thereof) having maturities
of not more than twelve months from the date of acquisition, (b) Dollar
denominated time and demand deposits, certificates of deposit and

3

 

		
	 	banker’s acceptances of (i) any Lender, (ii) any domestic commercial bank
having capital and surplus in excess of $500,000,000 or (iii) any bank
whose short-term commercial paper rating from S&P is at least A-1 or the
equivalent thereof or from Moody’s is at least P-1 or the equivalent
thereof (any such bank being an “Approved Bank”), in each case with
maturities of not more than 270 days from the date of acquisition, (c)
commercial paper and variable or fixed rate notes issued by any Approved
Bank (or by the parent company thereof) or any variable rate notes issued
by, or guaranteed by, any domestic corporation rated A-1 (or the
equivalent thereof) or better by S&P or P-1 (or the equivalent thereof)
or better by Moody’s and maturing within six months of the date of
acquisition, (d) repurchase agreements with a bank or trust company
(including any of the Lenders) or recognized securities dealer having
capital and surplus in excess of $500,000,000 for direct obligations
issued by or fully guaranteed by the United States of America in which
the Borrower shall have a perfected first priority security interest
(subject to no other Liens) and having, on the date of purchase thereof,
a fair market value of at least 100% of the amount of the repurchase
obligations, (e) Investments in tax-exempt municipal bonds rated AA (or
the equivalent thereof) or better by S&P or Aa2 (or the equivalent
thereof) or better by Moody’s and (f) Investments, classified in
accordance with GAAP as current assets, in money market investment
programs registered under the Investment Company Act of 1940, as amended,
which are administered by reputable financial institutions having capital
of at least $500,000,000 and the portfolios of which are limited to
Investments of the character described in the foregoing subdivisions (a)
through (e).
	 
	 	     “Change of Control” means either of the following events:

		
	 	     (a) any “person” or “group” (within the meaning of Section
13(d) or 14(d) of the Exchange Act) has become, directly or
indirectly, the “beneficial owner” (as defined in Rules 13d-3 and
13d-5 under the Exchange Act), by way of merger, consolidation or
otherwise of 25% or more of the Voting Stock of the Borrower on a
fully-diluted basis, after giving effect to the conversion and
exercise of all outstanding warrants, options and other securities
of the Borrower convertible into or exercisable for Voting Stock of
the Borrower (whether or not such securities are then currently
convertible or exercisable); or
	 
	 	     (b) during any period of twelve calendar months, individuals
who at the beginning of such period constituted the board of
directors of the Borrower together with any new members of such
board of directors whose elections by such board or board of
directors or whose nomination for election by the stockholders of
the Borrower was approved by a vote of a majority of the members of
such board of directors then still in office who either were
directors at the beginning of such period or whose election or
nomination for election was previously so approved cease for any
reason to constitute a majority of the directors of the Borrower
then in office.

		
	 	     “Closing Date” means the date hereof.
	 
	 	     “Code” means the Internal Revenue Code of 1986 and the rules and
regulations promulgated thereunder, as amended, modified, succeeded or
replaced from time to time.
	 
	 	     “Commitment Percentage” means, for each Lender, the percentage
identified as its Commitment Percentage on Schedule 1.1(a), as such
percentage may be modified in connection with any assignment made in
accordance with the provisions of Section 11.3.
	 
	 	     “Commitments” means (a) with respect to each Lender, the Commitment
Percentage of such Lender multiplied by the Revolving Committed Amount
and (b) with respect to the Issuing Lender, the LOC Commitment.
	 
	 	     “Credit Documents” means this Credit Agreement, the Notes, any
Joinder Agreement, the LOC Documents, any Notice of Borrowing, and all
other related agreements and documents issued or delivered hereunder or
thereunder or pursuant hereto or thereto other than Hedging Agreements.
	 
	 	     “Credit Exposure” has the meaning set forth in the definition of
Required Lenders in this Section 1.1.

4

 

		
	 	     “Credit Parties” means the Borrower and the Guarantors and “Credit
Party” means any one of them.
	 
	 	     “Credit Party Obligations” means, without duplication, (a) all of
the obligations of the Credit Parties to the Lenders (including the
Issuing Lender) and the Administrative Agent, whenever arising, under
this Credit Agreement, the Notes, or any of the other Credit Documents to
which any Credit Party is a party and (b) all liabilities and obligations
owing from such Credit Party to any Lender, or any Affiliate of a Lender,
arising under Hedging Agreements.
	 
	 	     “Default” means any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.
	 
	 	     “Defaulting Lender” means, at any time, any Lender that, (a) has
failed to make a Loan or purchase a Participation Interest required
pursuant to the terms of this Credit Agreement (but only for so long as
such Loan is not made or such Participation Interest is not purchased),
(b) has failed to pay to the Administrative Agent or any Lender an amount
owed by such Lender pursuant to the terms of this Credit Agreement (but
only for so long as such amount has not been repaid) or (c) has been
deemed insolvent or has become subject to a bankruptcy or insolvency
proceeding or to a receiver, trustee or similar official.
	 
	 	     “Dollars” and “$” means dollars in lawful currency of the United
States of America.
	 
	 	     “Domestic Subsidiary” means each direct and indirect Subsidiary of
the Borrower that (a) is domiciled or organized under the laws of any
State of the United States or the District of Columbia or (b) maintains
the major portion of its assets in the United States of America.
	 
	 	     “EBIT” means, for any period, with respect to the Borrower and its
Subsidiaries on a consolidated basis, (a) Net Income for such period
(excluding the effect of any extraordinary or other non-recurring gains
(including any gain from the sale of property)) plus (b) an amount which,
in the determination of Net Income for such period, has been deducted for
(i) Interest Expense for such period and (ii) total Federal, state,
foreign or other income taxes for such period.
	 
	 	     “EBITDA” means, for any period, with respect to the Borrower and its
Subsidiaries on a consolidated basis, the sum of (a) EBIT for such period
plus (b) an amount which, in the determination of Net Income for such
period has been deducted for all depreciation and amortization for such
period.
	 
	 	     “Effective Date” means the date on which the conditions set forth in
Section 5.1 shall have been fulfilled (or waived in the sole discretion
of the Lenders) and on which the initial Loans shall have been made
and/or the initial Letters of Credit shall have been issued.
	 
	 	     “Eligible Assets” means any assets or any business (or any
substantial part thereof) used or useful in the same or a similar line of
business as the Borrower and its Subsidiaries are engaged on the Closing
Date.
	 
	 	     “Eligible Assignee” means, unless an assignment to such Person would
result in any increased cost to the Borrower under Section 3.9, Section
3.12 or Section 3.13 on the date of such assignment, (a) a Lender; (b) an
Affiliate of a Lender; (c) an Approved Fund; and (d) any other Person
approved by the Administrative Agent, the Issuing Lender and the Borrower
(such approval not to be unreasonably withheld or delayed); provided that
(i) the Borrower’s consent is not required during the existence and
continuation of a Default or an Event of Default, (ii) approval by the
Borrower shall be deemed given if no objection is received by the
assigning Lender and the Administrative Agent from the Borrower within
five Business Days after notice of such proposed assignment has been
delivered to the Borrower; and (iii) neither the Borrower nor an
Affiliate of the Borrower shall qualify as an Eligible Assignee.
	 
	 	     “Environmental Claim” means any investigation, written notice,
violation, written demand, written allegation, action, suit, injunction,
judgment, order, consent decree, penalty, fine, lien, proceeding, or
written claim whether administrative, judicial, or private in nature
arising (a) pursuant to, or in connection with, an actual or alleged
violation of, any Environmental Law, (b) in connection with any Hazardous
Material, (c) from any assessment, abatement, removal, remedial,
corrective, or other response action in connection with an

5

 

		
	 	Environmental
Law or other order of a Governmental Authority or (d) from any actual or
alleged damage, injury, threat, or harm to health, safety, natural
resources, or the environment.
	 
	 	     “Environmental Laws” means any current or future legal requirement
of any Governmental Authority pertaining to (a) the protection of health,
safety, and the indoor or outdoor environment, (b) the conservation,
management, or use of natural resources and wildlife, (c) the protection
or use of surface water and groundwater or (d) the management,
manufacture, possession, presence, use, generation, transportation,
treatment, storage, disposal, release, threatened release, abatement,
removal, remediation or handling of, or exposure to, any hazardous or
toxic substance or material or (e) pollution (including any release to
land surface water and groundwater) and includes, without limitation, the
Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended by the Superfund Amendments and Reauthorization Act of
1986, 42 USC 9601 et seq., Solid Waste Disposal Act, as amended by the
Resource Conservation and Recovery Act of 1976 and Hazardous and Solid
Waste Amendments of 1984, 42 USC 6901 et seq., Federal Water Pollution
Control Act, as amended by the Clean Water Act of 1977, 33 USC 1251 et
seq., Clean Air Act of 1966, as amended, 42 USC 7401 et seq., Toxic
Substances Control Act of 1976, 15 USC 2601 et seq., Hazardous Materials
Transportation Act, 49 USC App. 1801 et seq., Occupational Safety and
Health Act of 1970, as amended, 29 USC 651 et seq., Oil Pollution Act of
1990, 33 USC 2701 et seq., Emergency Planning and Community Right-to-Know
Act of 1986, 42 USC 11001 et seq., National Environmental Policy Act of
1969, 42 USC 4321 et seq., Safe Drinking Water Act of 1974, as amended,
42 USC 300(f) et seq., any analogous implementing or successor law, and
any amendment, rule, regulation, order, or directive issued thereunder.
	 
	 	     “Equity Issuance” means any issuance for cash by the Borrower or any
of its Subsidiaries to any Person of (a) shares of its Capital Stock or
other equity interests, (b) any shares of its Capital Stock or other
equity interests pursuant to the exercise of options or warrants or (c)
any shares of its Capital Stock or other equity interests pursuant to the
conversion of any debt securities to equity; provided that “Equity
Issuance” shall not include an issuance of equity by such Person pursuant
to the exercise of employee stock options.
	 
	 	     “Equity Reserve” has the meaning assigned to such term in the
Revolving Program Agreement (as defined as of October 15, 2001).
	 
	 	     “ERISA” means the Employee Retirement Income Security Act of 1974,
as amended, and any successor statute thereto, as interpreted by the
rules and regulations thereunder, all as the same may be in effect from
time to time. References to sections of ERISA shall be construed also to
refer to any successor sections.
	 
	 	     “ERISA Affiliate” means an entity, whether or not incorporated,
which is under common control with the Borrower or any Subsidiary of the
Borrower within the meaning of Section 4001(a)(14) of ERISA, or is a
member of a group which includes the Borrower or any Subsidiary of the
Borrower and which is treated as a single employer under Sections 414(b),
(c), (m) or (o) of the Code.
	 
	 	     “ERISA Event” means (a) with respect to any Single Employer or
Multiple Employer Plan, the occurrence of a Reportable Event or the
substantial cessation of operations (within the meaning of Section
4062(e) of ERISA); (b) the withdrawal of the Borrower, any Subsidiary of
the Borrower or any ERISA Affiliate from a Multiple Employer Plan during
a plan year in which it was a substantial employer (as such term is
defined in Section 4001(a)(2) of ERISA), or the termination of a Multiple
Employer Plan; (c) the distribution of a notice of intent to terminate or
the actual termination of a Plan pursuant to Section 4041(a)(2) or 4041A
of ERISA; (d) the institution of proceedings to terminate or the actual
termination of any Plan by the PBGC under Section 4042 of ERISA; (e) any
event or condition which might constitute grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to
administer, any Plan; (f) the complete or partial withdrawal of the
Borrower, any Subsidiary of the Borrower or any ERISA Affiliate from a
Multiemployer Plan or notification that a Multiemployer Plan is in
reorganization; (g) the conditions for imposition of a lien under Section
302(f) of ERISA exist with respect to any Plan; or (h) the adoption of an
amendment to any Plan requiring the provision of security to such Plan
pursuant to Section 307 of ERISA.

6

 

		
	 	     “Eurodollar Loan” means a Loan bearing interest based at a rate
determined by reference to the Eurodollar Rate.
	 
	 	     “Eurodollar Rate” means, for the Interest Period for each Eurodollar
Loan comprising part of the same borrowing (including conversions,
extensions and renewals), a per annum interest rate (rounded upwards to
the nearest 1/100 of 1%) determined pursuant to the following formula:

	 	 	 	 	 
	Eurodollar Rate =	 	          London Interbank Offered Rate
	 	 	

	 	 
	 	 	
         1 - Eurodollar Reserve Percentage	 	 

		
	 	     “Eurodollar Reserve Percentage” means for any day, that percentage
(expressed as a decimal) which is in effect from time to time under
Regulation D, as such regulation may be amended from time to time or any
successor regulation, as the maximum reserve requirement (including,
without limitation, any basic, supplemental, emergency, special, or
marginal reserves) applicable with respect to Eurocurrency liabilities as
that term is defined in Regulation D (or against any other category of
liabilities that includes deposits by reference to which the interest
rate of Eurodollar Loans is determined), whether or not a Lender has any
Eurocurrency liabilities subject to such reserve requirement at that
time. Eurodollar Loans shall be deemed to constitute Eurocurrency
liabilities and as such shall be deemed subject to reserve requirements
without benefits of credits for proration, exceptions or offsets that may
be available from time to time to a Lender. The Eurodollar Rate shall be
adjusted automatically on and as of the effective date of any change in
the Eurodollar Reserve Percentage.
	 
	 	     “Event of Default” shall have the meaning given such term in Section
9.1.
	 
	 	     “Exchange Act” means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder, as
amended, modified, succeeded or replaced from time to time.
	 
	 	     “Extension of Credit” means, as to any Lender, the making of a Loan
by such Lender (or a participation therein by a Lender) or the issuance
of, or participation in, a Letter of Credit by such Lender.
	 
	 	     “Facility Fees” means the fees payable to the Lenders pursuant to
Section 3.4(a).
	 
	 	     “Federal Funds Rate” means for any day the rate per annum (rounded
upwards to the nearest 1/100 of 1%) equal to the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day; provided that (a) if such day is not a
Business Day, the Federal Funds Rate for such day shall be such rate on
such transactions on the next preceding Business Day and (b) if no such
rate is so published on such next preceding Business Day, the Federal
Funds Rate for such day shall be the average rate quoted to the
Administrative Agent on such day on such transactions as determined by
the Administrative Agent.
	 
	 	     “Fee Letter” means that certain letter agreement, dated as of May
19, 2003, among the Borrower, BAS and Bank of America.
	 
	 	     “Foreign Subsidiary” means any Subsidiary of the Borrower that is
not a Domestic Subsidiary.
	 
	 	     “Fuji Contract” means that certain Shareholder Agreement, dated as
of February 3, 1995, between Fuji Heavy Industries, Ltd. and the
Borrower, providing for the Borrower’s acquisition of 40% of the shares
of Robin Manufacturing U.S.A. Inc.
	 
	 	     “Fund” shall mean any Person (other than a natural Person) that is,
or will be, engaged in making, purchasing, holding or otherwise investing
in commercial loans and similar extensions of credit in the ordinary
course of its business.
	 
	 	     “Funded Debt” means, without duplication, the sum of (a) the
principal amount of all obligations of the Borrower and its Subsidiaries
for borrowed money, (b) all purchase money Indebtedness of the Borrower

7

 

		
	 	and its Subsidiaries, (c) the principal portion of all obligations of the
Borrower and its Subsidiaries under Capital Leases and (d) all drawn but
unreimbursed amounts under all letters of credit (other than letters of
credit supporting trade payables in the ordinary course of business)
issued for the account of the Borrower or any of its Subsidiaries.
	 
	 	     “GAAP” means generally accepted accounting principles in the United
States applied on a consistent basis and subject to Section 1.3.
	 
	 	     “Governmental Authority” means any Federal, state, local, provincial
or foreign court or governmental agency, authority, instrumentality or
regulatory body.
	 
	 	     “Guarantor” means each of the Domestic Subsidiaries of the Borrower
and each Additional Credit Party, together with their successors and
assigns.
	 
	 	     “Guaranty” means the guaranty of the Credit Party Obligations
provided by the Guarantors pursuant to Section 4.
	 
	 	     “Guaranty Obligations” means, with respect to any Person, without
duplication, any obligations (other than endorsements in the ordinary
course of business of negotiable instruments for deposit or collection)
guaranteeing any Indebtedness of any other Person in any manner, whether
direct or indirect, and including without limitation any obligation,
whether or not contingent, (a) to purchase any such Indebtedness or other
obligation or any property constituting security therefor, (b) to advance
or provide funds or other support for the payment or purchase of such
Indebtedness or obligation or to maintain working capital, solvency or
other balance sheet condition of such other Person (including, without
limitation, maintenance agreements, comfort letters, take or pay
arrangements, put agreements or similar agreements or arrangements) for
the benefit of the holder of Indebtedness of such other Person, (c) to
lease or purchase property, securities or services primarily for the
purpose of assuring the owner of such Indebtedness or (d) to otherwise
assure or hold harmless the owner of such Indebtedness or obligation
against loss in respect thereof. The amount of any Guaranty Obligation
hereunder shall (subject to any limitations set forth therein) be deemed
to be an amount equal to the outstanding principal amount (or maximum
principal amount, if larger) of the Indebtedness in respect of which such
Guaranty Obligation is made, or, if less, the maximum amount for which
such Person may be liable under the terms of the instruments evidencing
such Guaranty Obligation.
	 
	 	     “Hazardous Materials” means any substance, material or waste defined
in or regulated under any Environmental Laws.
	 
	 	     “Hedging Agreements” means, collectively, interest rate protection
agreements, foreign currency exchange agreements, commodity purchase or
option agreements or other interest or exchange rate or commodity price
hedging agreements, in each case, entered into or purchased by a Credit
Party.
	 
	 	     “Indebtedness” of any Person means, without duplication, (a) all
obligations of such Person for borrowed money, (b) all obligations of
such Person evidenced by bonds, debentures, notes or similar instruments,
or upon which interest payments are customarily made, (c) all obligations
of such Person under conditional sale or other title retention agreements
relating to property purchased by such Person to the extent of the value
of such property (other than customary reservations or retentions of
title under agreements with suppliers entered into in the ordinary course
of business), (d) all obligations, other than intercompany items, of such
Person issued or assumed as the deferred purchase price of property or
services purchased by such Person which would appear as liabilities on a
balance sheet of such Person, (e) all Indebtedness of others secured by
(or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien on, or payable out of
the proceeds of production from, property owned or acquired by such
Person, whether or not the obligations secured thereby have been assumed,
(f) all Guaranty Obligations of such Person, (g) the principal portion of
all obligations of such Person under (i) Capital Leases and (ii) any
synthetic lease, tax retention operating lease, off-balance sheet loan or
similar off-balance sheet financing product of such Person where such
transaction is considered borrowed money indebtedness for tax purposes
but is classified as an operating lease in accordance with GAAP
(collectively, “Synthetic Leases”), (h) all obligations of such Person to
repurchase any securities which repurchase obligation is related to the
issuance

8

 

		
	 	thereof, including, without limitation, obligations commonly
known as residual equity appreciation potential shares, (i) all net
obligations of such Person in respect of Hedging Agreements, (j) the
maximum amount of all performance and standby letters of credit issued or
bankers’ acceptances facilities created for the account of such Person
and, without duplication, all drafts drawn thereunder (to the extent
unreimbursed), and (k) the aggregate amount of uncollected accounts
receivable of such Person subject at such time to a sale of receivables
(or similar transaction) unless such transaction is effected without
recourse to such Person. The Indebtedness of any Person shall include
the Indebtedness of any partnership or unincorporated joint venture to
the extent such Indebtedness is recourse to such Person.
	 
	 	     “Indemnified Liabilities” has the meaning set forth in Section 11.5.
	 
	 	     “Interest Coverage Ratio” means, as of the last day of each fiscal
quarter, the ratio of (a) EBIT for the period of four fiscal quarters
ending on such date to (b) Interest Expense for the period of four
fiscal quarters ending on such date.
	 
	 	     “Interest Expense” means, for any period, with respect to the
Borrower and its Subsidiaries on a consolidated basis, all interest
expense including the interest component under Capital Leases, as
determined in accordance with GAAP.
	 
	 	     “Interest Payment Date” means (a) as to Base Rate Loans, the last
Business Day of each calendar month and the Maturity Date and (b) as to
Eurodollar Loans, the last day of each applicable Interest Period and the
Maturity Date and in addition, where the applicable Interest Period for a
Eurodollar Loan is greater than three months, then also the date three
months from the beginning of the Interest Period and each three months
thereafter.
	 
	 	     “Interest Period” means, as to Eurodollar Loans, a period of one,
two, three or six months’ duration, as the Borrower may elect,
commencing, in each case, on the date of the borrowing (including
continuations and conversions thereof); provided, however, (a) if any
Interest Period would end on a day which is not a Business Day, such
Interest Period shall be extended to the next succeeding Business Day
(except that where the next succeeding Business Day falls in the next
succeeding calendar month, then on the next preceding Business
Day), (b) no Interest Period shall extend beyond the Maturity Date and
(c) where an Interest Period begins on a day for which there is no
numerically corresponding day in the calendar month in which the Interest
Period is to end, such Interest Period shall end on the last Business Day
of such calendar month.
	 
	 	     “Investment” in any Person means (a) the acquisition (whether for
cash, property, services, assumption of Indebtedness, securities or
otherwise, but excluding Capital Expenditures and acquisitions of
inventory in the ordinary course of business) of assets, shares of
Capital Stock, bonds, notes, debentures, partnership, joint ventures or
other ownership interests or other securities of such other Person or (b)
any deposit with, or advance, loan or other extension of credit to, such
Person (other than deposits made in connection with the lease or purchase
of equipment, inventory or other assets in the ordinary course of
business) or (c) any other capital contribution to or investment in such
Person, including, without limitation, any Guaranty Obligation (including
any support for a letter of credit issued on behalf of such Person)
incurred for the benefit of such Person.
	 
	 	     “Issuing Lender” means Bank of America (or any successor thereto) or
such other consenting Lender approved by Bank of America in its sole
discretion.
	 
	 	     “Issuing Lender Fees” has the meaning set forth in Section 3.4(c).
	 
	 	     “Joinder Agreement” means a Joinder Agreement substantially in the
form of Exhibit 7.12.
	 
	 	     “Lender” means any of the Persons identified as a “Lender” on the
signature pages hereto, and any Eligible Assignee which may become a
Lender by way of assignment in accordance with the terms hereof, together
with their successors and permitted assigns.

9

 

		
	 	     “Lending Office” means, as to any Lender, the office or offices of
such Lender described as such on Schedule 1.1(a), or such other office or
offices as a Lender may from time notify to the Borrower and the
Administrative Agent.
	 
	 	     “Letter of Credit” means any letter of credit issued for the account
of the Borrower by the Issuing Lender pursuant to Section 2.2, as such
letter of credit may be amended, modified, extended, renewed or replaced.
	 
	 	     “Letter of Credit Application” means an application and agreement
for the issuance or amendment of a Letter of Credit in the form from time
to time in use by the Issuing Lender.
	 
	 	     “Letter of Credit Expiration Date” means the day that is seven days
prior to the Maturity Date then in effect (or, if such day is not a
Business Day, the next preceding Business Day).
	 
	 	     “Leverage Ratio” means, as of the last day of each fiscal quarter,
the ratio of (a) Funded Debt on such date plus any Guaranty Obligations
permitted by Section 8.2(e) in excess of $30,000,000 to (b) EBITDA for
the period of four fiscal quarters ending on such date.
	 
	 	     “Lien” means any mortgage, pledge, hypothecation, assignment,
deposit arrangement, security interest, encumbrance, lien (statutory or
otherwise), preference, priority or charge of any kind, including,
without limitation, any agreement to give any of the foregoing, any
conditional sale or other title retention agreement, and any lease in the
nature thereof.
	 
	 	     “Loan” or “Loans” means the Loans (or a portion of any Loan),
individually or collectively, as appropriate, made to the Borrower
pursuant to Section 2.1.
	 
	 	     “LOC Commitment” means the commitment of the Issuing Lender to issue
Letters of Credit for the account of the Borrower in an aggregate face
amount any time outstanding (together with the amounts of any
unreimbursed drawings thereon) of up to the LOC Committed Amount.
	 
	 	     “LOC Committed Amount” means ZERO DOLLARS ($0).
	 
	 	     “LOC Documents” means, with respect to any Letter of Credit, such
Letter of Credit, any amendments thereto, any documents delivered in
connection therewith, any application therefor, and any agreements,
instruments, guarantees or other documents (whether general in
application or applicable only to such Letter of Credit) governing or
providing for (a) the rights and obligations of the parties concerned or
at risk or (b) any collateral security for such obligations.
	 
	 	     “LOC Obligations” means, at any time, the sum, without duplication,
of (a) the maximum amount which is, or at any time thereafter may become,
available to be drawn under Letters of Credit then outstanding, assuming
compliance with all requirements for drawings referred to in such Letters
of Credit plus (b) the aggregate amount of all drawings under Letters of
Credit honored by the Issuing Lender but not theretofore reimbursed.
	 
	 	     “London Interbank Offered Rate” means, with respect to any
Eurodollar Loan for the Interest Period applicable thereto:
	 
	 	     (a) the rate per annum equal to the rate determined by the
Administrative Agent to be the offered rate that appears on the page of
the Telerate screen (or any successor thereto) that displays an average
British Bankers Association Interest Settlement Rate for deposits in
Dollars (for delivery on the first day of such Interest Period) with a
term equivalent to such Interest Period, determined as of approximately
11:00 a.m. (London time) two Business Days prior to the first day of such
Interest Period, or
	 
	 	     (b) if the rate referenced in the preceding clause (a) does not
appear on such page or service or such page or service shall not be
available, the rate per annum equal to the rate determined by the
Administrative Agent to be the offered rate on such other page or other
service that displays an average

10

 

		
	 	British Bankers Association Interest
Settlement Rate for deposits in Dollars (for delivery on the first day of
such Interest Period) with a term equivalent to such Interest Period,
determined as of approximately 11:00 a.m. (London time) two Business Days
prior to the first day of such Interest Period, or
	 
	 	     (c) if the rates referenced in the preceding clauses (a) and (b) are
not available, the rate per annum determined by the Administrative Agent
as the rate of interest at which deposits in Dollars for delivery on the
first day of such Interest Period in same day funds in the approximate
amount of the Eurodollar Loan being made, continued or converted by Bank
of America and with a term equivalent to such Interest Period would be
offered by Bank of America’s London Branch to major banks in the London
interbank eurodollar market at their request at approximately 4:00 p.m.
(London time) two Business Days prior to the first day of such Interest
Period.
	 
	 	     “Mandatory Borrowing” has the meaning set forth in Section 2.2(d).
	 
	 	     “Material Adverse Effect” means a material adverse effect on (a) the
business, assets, liabilities (actual or contingent), operations,
condition (financial or otherwise) or prospects of the Borrower and its
Subsidiaries taken as a whole, (b) the ability of the Borrower, or of the
Credit Parties taken as a whole, to perform its or their obligations
under this Credit Agreement or any of the other Credit Documents, or (c)
the validity or enforceability of this Credit Agreement or any of the
other Credit Documents, or the material rights and remedies of the
Lenders hereunder or thereunder taken as a whole.
	 
	 	     “Maturity Date” means June 25, 2004.
	 
	 	     “Moody’s” means Moody’s Investors Service, Inc., or any successor or
assignee of the business of such company in the business of rating
securities.
	 
	 	     “Multiemployer Plan” means a Plan which is a multiemployer plan as
defined in Sections 3(37) or 4001(a)(3) of ERISA.
	 
	 	     “Multiple Employer Plan” means a Plan covered by Title IV of ERISA
(other than a Multiemployer Plan) in which the Borrower, any Subsidiary
of the Borrower or any ERISA Affiliate and at least one employer other
than the Borrower, any Subsidiary of the Borrower or any ERISA Affiliate
are contributing sponsors.
	 
	 	     “Multi-Year Credit Agreement” means that certain Multi-Year
Revolving Credit Agreement, dated as of the Closing Date, among the
Borrower, the Guarantors, the Administrative Agent, as administrative
agent, and the lenders party thereto, as amended, modified, supplemented,
extended, renewed, restated or replaced from time to time.
	 
	 	     “Net Cash Proceeds” means the aggregate cash proceeds received from
an Equity Issuance net of (a) reasonably identifiable transaction costs
payable to third parties, and (b) actual taxes paid or payable with
respect to such proceeds.
	 
	 	     “Net Income” means, for any period, the net income after taxes for
such period of the Borrower and its Subsidiaries on a consolidated basis,
as determined in accordance with GAAP.
	 
	 	     “Net Worth” means, as of any date, the shareholder’s equity or net
worth of the Borrower and its Subsidiaries, on a consolidated basis, as
determined in accordance with GAAP.
	 
	 	     “Note” or “Notes” means the promissory notes of the Borrower in
favor of each of the Lenders evidencing the Loans provided pursuant to
Section 2.1, individually or collectively, as appropriate, as such
promissory notes may be amended, modified, supplemented, extended,
renewed or replaced from time to time and as evidenced in the form of
Exhibit 2.1(e).
	 
	 	     “Notice of Borrowing” means a request by the Borrower for a Loan, in
the form of Exhibit 2.1(b).

11

 

		
	 	     “Notice of Continuation/Conversion” means a request by the Borrower
to continue an existing Eurodollar Loan to a new Interest Period or to
convert a Eurodollar Loan to a Base Rate Loan or a Base Rate Loan to a

Eurodollar Loan, in the form of Exhibit 2.3.
	 
	 	     “PAI” means Polaris Acceptance, Inc., a Minnesota corporation.
	 
	 	     “Participation Interest” means the Extension of Credit by a Lender
by way of a purchase of a participation in Letters of Credit or LOC
Obligations as provided in Section 2.2 or in any Loans as provided in
Section 3.8.
	 
	 	     “Participation Purchaser” shall have the meaning assigned to such
term in Section 11.3(d).
	 
	 	     “PBGC” means the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA and any successor thereto.
	 
	 	     “Permitted Acquisition” means an Acquisition by a Credit Party or
any of its Subsidiaries for consideration no greater than the fair market
value of the Capital Stock or property acquired; provided that (a) the
property acquired (or the property of the Person acquired) in such
Acquisition constitutes Eligible Assets (or goodwill associated
therewith), (b) in the case of an Acquisition of the Capital Stock of
another Person, the board of directors (or other comparable governing
body) of such other Person shall have duly approved such Acquisition, (c)
if the aggregate consideration to be paid for such Acquisition equals or
exceeds $25,000,000 (including, without limitation, the amount of any
Indebtedness assumed in connection with such Acquisition), the Borrower
shall have delivered to the Administrative Agent, prior to the closing of
such Acquisition, a certificate of an Authorized Officer of the Borrower
(i) providing calculations on a pro forma basis of each of the financial
covenants set forth in Section 7.2 by giving effect to such Acquisition
both (A) as of the actual date of such Acquisition and (B) as of the
first day of the most recently ended fiscal quarter, which calculations
shall demonstrate that, as of each such date, the Credit Parties are or
would have been in compliance with all of the financial covenants set
forth in Section 7.2 and (ii) both before and after giving effect to such
Acquisition, no Default or Event of Default exists, (d) the
representations and warranties made by the Credit Parties in any Credit
Document shall be true and correct in all material respects at and as if
made as of the date of such Acquisition (after giving effect thereto)
except to the extent such representations and warranties expressly relate
to an earlier date, (e) subsequent to March 31, 2003, (i) the aggregate
consideration paid and Investments made with respect to all Acquisitions
(including, without limitation, Indebtedness assumed in connection with
such Acquisitions) shall not exceed $300,000,000 and (ii) the aggregate
amount of Indebtedness assumed in connection with all Acquisitions shall
not exceed $150,000,000, (f) if such Acquisition involves the formation
of a new Subsidiary of the Borrower, such Subsidiary shall comply with
Section 7.12 and (g) such Acquisition is undertaken in accordance with
all laws, rules, regulations, orders, writs, judgments, injunctions,
decrees and awards to which any party to such Acquisition may be subject.
	 
	 	     “Permitted Investments” means Investments which are, without
duplication, (a) cash or Cash Equivalents, (b) trade accounts receivable
created, acquired or made in the ordinary course of business and payable
or dischargeable in accordance with customary trade terms, (c) inventory,
raw materials and general intangibles acquired in the ordinary course of
business, (d) Investments by a Credit Party in another Credit Party, (e)
Permitted Acquisitions, (f) travel advances to management personnel and
employees in the ordinary course of business, (g) Investments existing as
of the Closing Date and set forth on Schedule 8.8, (h) additional
Investments in Foreign Subsidiaries that do not exceed $25,000,000 in the
aggregate during the term of this Credit Agreement, (i) additional
Investments made pursuant to the Fuji Contract or pursuant to an
expansion of the engine manufacturing facility contemplated thereby that
do not exceed $10,000,000 in the aggregate during the term of this Credit
Agreement, (j) in accordance with Section 8.2, the existing Investments
on Schedule 8.2(d) plus additional Investments in the form of capital
contributions by PAI in Acceptance Partnership (or by the Borrower in PAI
to make such capital contributions) in an amount not to exceed
$25,000,000 in the aggregate, during the term of this Credit Agreement;
it being understood that the Borrower may not have or make any
Investments in Acceptance Partnership or PAI that constitute Guaranty
Obligations (other than the obligation regarding capital contributions as
set forth herein), (k) Investments in the Equity Reserve as required
under the Revolving Program Agreement and (l) additional Investments (in

12

 

		
	 	addition to those set forth above) not to exceed, in the aggregate,
$15,000,000 during the term of this Credit Agreement.
	 
	 	     “Permitted Liens” means (a) Liens securing all Credit Party
Obligations, (b) Liens for taxes not yet due or Liens for taxes being
contested in good faith by appropriate proceedings for which adequate
reserves determined in accordance with GAAP have been established (and as
to which the property subject to any such Lien is not yet subject to
foreclosure, sale, collection, levy or loss on account thereof), (c)
Liens in respect of property imposed by law arising in the ordinary
course of business such as materialmen’s, mechanics’, warehousemen’s,
carrier’s, landlords’ and other nonconsensual statutory Liens which are
not yet due and payable or which are being contested in good faith by
appropriate proceedings for which adequate reserves determined in
accordance with GAAP have been established (and as to which the property
subject to any such Lien is not yet subject to foreclosure, sale or loss
on account thereof), (d) Liens (other than Liens imposed under ERISA)
consisting of pledges or deposits made in the ordinary course of business
to secure payment of worker’s compensation insurance, unemployment
insurance, pensions or social security programs, (e) Liens arising from
good faith deposits in connection with or to secure performance of
tenders, bids, leases, government contracts, performance and
return-of-money bonds and other similar obligations incurred in the
ordinary course of business (other than obligations in respect of the
payment of borrowed money), (f) Liens arising from good faith deposits in
connection with or to secure performance of statutory obligations and
surety and appeal bonds, (g) easements, rights-of-way, restrictions
(including zoning restrictions), matters of plat,
minor defects or irregularities in title and other similar charges or
encumbrances not, in any material respect, impairing the use of the
encumbered property for its intended purposes, (h) judgment Liens that
would not constitute an Event of Default, (i) Liens in connection with
Indebtedness permitted by Sections 8.1(d), (j) Liens arising by virtue of
any statutory or common law provision relating to banker’s liens, rights
of setoff or similar rights as to deposit accounts or other funds
maintained with a creditor depository institution, (k) Liens existing on
the date hereof and identified on Schedule 8.3 and any renewals and
extensions thereof not otherwise prohibited by this Credit Agreement;
provided that, with respect to Liens identified on Schedule 8.3, (i) no
such Lien shall extend to any property other than the property subject
thereto on the Closing Date and (ii) the principal amount of the
Indebtedness secured by such Liens shall not be increased and (l) Liens
on the Equity Reserve.
	 
	 	     “Person” means any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other
enterprise (whether or not incorporated), or any Governmental Authority.
	 
	 	     “Plan” means any employee benefit plan (as defined in Section 3(3)
of ERISA) which is covered by ERISA and with respect to which the
Borrower, any Subsidiary of the Borrower or any ERISA Affiliate is (or,
if such plan were terminated at such time, would under Section 4069 of
ERISA be deemed to be) an “employer” within the meaning of Section 3(5)
of ERISA.
	 
	 	     “Polaris Participation Fee Shortfall” has the meaning assigned to
such term in the Revolving Program Agreement dated as of October 15, 2001
without giving effect to any amendments, modifications, renewals,
restatements or replacements.
	 
	 	     “Polaris Participation Fee Shortfall Obligations” means (a) actual
amounts paid or deducted from the Equity Reserve in connection with any
Polaris Participation Fee Shortfall plus (b) amounts in the Equity
Reserve.
	 
	 	     “Prime Rate” means the per annum rate of interest established from
time to time by the Administrative Agent at its principal office in
Charlotte, North Carolina (or such other principal office of the
Administrative Agent as communicated in writing to the Borrower and the
Lenders) as its Prime Rate. Any change in the interest rate resulting
from a change in the Prime Rate shall become effective as of 12:01 a.m.
of the Business Day on which each change in the Prime Rate is announced
by the Administrative Agent. The Prime Rate is a reference rate used by
the Administrative Agent in determining interest rates on certain loans
and is not intended to be the lowest rate of interest charged on any
extension of credit to any debtor.
	 
	 	     “Real Property” has the meaning given thereto in Section 6.20.

13

 

		
	 	     “Regulation A, D, T, U or X” means Regulation A, D, T, U or X,
respectively, of the Board of Governors of the Federal Reserve System as
from time to time in effect and any successor to all or a portion
thereof.
	 
	 	     “Reportable Event” means any of the events set forth in Section
4043(c) of ERISA, other than those events as to which the notice
requirement has been waived by regulation or by the PBGC.
	 
	 	     “Required Lenders” means Lenders whose aggregate Credit Exposure (as
hereinafter defined) constitutes more than 50% of the Credit Exposure of
all Lenders at such time; provided, however, that if any Lender shall be
a Defaulting Lender at such time then there shall be excluded from the
determination of Required Lenders the aggregate principal amount of
Credit Exposure of such Lender at such time. For purposes hereof, the
term “Credit Exposure” as applied to each Lender shall mean (a) at any
time prior to the termination of the Commitments, the sum of the
Commitment Percentage of such Lender multiplied by the Revolving
Committed Amount and (b) at any time after the termination of the
Commitments, the sum of (i) the principal balance of the outstanding
Loans of such Lender plus (ii) such Lender’s Participation Interests in
the face amount of the outstanding Letters of Credit.
	 
	 	     “Requirement of Law” means, as to any Person, the articles or
certificate of incorporation and by-laws or other organizational or
governing documents of such Person, and any law, treaty, rule or
regulation or final, non-appealable determination of an arbitrator or a
court or other Governmental Authority, in each case applicable to or
binding upon such Person or to which any of its material property is
subject.
	 
	 	     “Revolving Committed Amount” means ONE HUNDRED MILLION DOLLARS
($100,000,000) or such lesser amount to which the Revolving Committed
Amount may be reduced pursuant to Section 2.1(d).
	 
	 	     “Revolving Program Agreement” means that certain Revolving Program
Agreement entered into as of October 15, 2001 by and between Household
Bank (SB), N.A., a national banking association, and Polaris Sales Inc.,
a Minnesota corporation.
	 
	 	     “S&P” means Standard & Poor’s Ratings Services, a division of The
McGraw-Hill Companies, Inc. or any successor or assignee of the business
of such division in the business of rating securities.
	 
	 	     “Securities Act” means the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder, as amended, modified,
succeeded or replaced from time to time.
	 
	 	     “Single Employer Plan” means any Plan which is covered by Title IV
of ERISA, but which is not a Multiemployer Plan or a Multiple Employer
Plan.
	 
	 	     “Solvent” means, with respect to any Person as of a particular date,
that on such date (a) such Person is able to pay its debts and other
liabilities, contingent obligations and other commitments as they mature
in the normal course of business, (b) such Person does not intend to, and
does not believe that it will, incur debts or liabilities beyond such
Person’s ability to pay as such debts and liabilities mature in their
ordinary course, (c) such Person is not engaged in a business or a
transaction, and is not about to engage in a business or a transaction,
for which such Person’s assets would constitute unreasonably small
capital after giving due consideration to the prevailing practice in the
industry in which such Person is engaged or is to engage, (d) the fair
value of the assets of such Person is greater than the total amount of
liabilities, including, without limitation, contingent liabilities, of
such Person and (e) the present fair saleable value of the assets of such
Person is not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become absolute
and matured. In computing the amount of contingent liabilities at any
time, it is intended that such liabilities will be computed at the amount
which, in light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual
or matured liability.
	 
	 	     “Subsidiary” means, as to any Person, (a) any corporation more than
50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such
corporation (irrespective of whether or not at the time, any class or
classes of such corporation shall have or

14

 

		
	 	might have voting power by
reason of the happening of any contingency) is at the time owned by such
Person directly or indirectly through Subsidiaries, and (b) any
partnership, association, joint venture or other entity in which such
person directly or indirectly through Subsidiaries has more than a 50%
equity interest at any time.
	 
	 	     “Synthetic Leases” has the meaning set forth in the definition of
Indebtedness in this Section 1.1.
	 
	 	     “Tangible Net Worth” means, as of any date, Net Worth less the book
value of those assets on the balance sheet of the Borrower and its
Subsidiaries, on a consolidated basis, that would, in accordance with
GAAP, be treated as intangibles, it being understood that deferred tax
assets do not constitute intangible assets under GAAP.
	 
	 	     “Total Assets” means all items that in accordance with GAAP would be
classified as assets of the Borrower and its Subsidiaries on a
consolidated basis.
	 
	 	     “Total Commitment” means the sum of (a) the Revolving Committed
Amount plus (b) the total committed amount under the Multi-Year Credit
Agreement, in each case as such amounts may be reduced pursuant to the
terms of this Credit Agreement and the Multi-Year Credit Agreement,
respectively.
	 
	 	     “Total Utilization” means, as of any date, the sum of the principal
amounts of (a) Loans outstanding under this Credit Agreement on such date
plus (b) LOC Obligations outstanding under this Credit Agreement on such
date plus (c) loans outstanding under the Multi-Year Credit Agreement on
such date plus (d) the sum, without duplication, of the stated amounts of
all letters of credit, if any, outstanding on such date under the
Multi-Year Credit Agreement plus all drawn but unreimbursed amounts on
such date under such letters of credit.
	 
	 	     “Utilization Fees” means the fees payable to the Lenders pursuant to
Section 3.4(b).
	 
	 	     “Voting Stock” means all classes of the Capital Stock of such Person
then outstanding and normally entitled to vote in the election of
directors (or similar governing authority).

     1.2 Computation of Time Periods and Other Definitional Provisions.

     For purposes of computation of periods of time hereunder, the word “from”
means “from and including” and the words “to” and “until” each mean “to but
excluding.” References in this Credit Agreement to “Articles”, “Sections”,
“Schedules” or “Exhibits” shall be to Articles, Sections, Schedules or Exhibits
of or to this Credit Agreement unless otherwise specifically provided.

     1.3 Accounting Terms.

     Except as otherwise expressly provided herein, all accounting terms used
herein shall be interpreted, and all financial statements and certificates and
reports as to financial matters required to be delivered to the Lenders
hereunder shall be prepared, in accordance with GAAP applied on a consistent
basis. All calculations made for the purposes of determining compliance with
this Credit Agreement shall (except as otherwise expressly provided herein) be
made by application of GAAP applied on a basis consistent with the most recent
annual or quarterly financial statements delivered pursuant to Section 7.1 (or,
prior to the delivery of the first financial statements pursuant to Section
7.1, consistent with the financial statements delivered pursuant to Section
5.1(d)); provided, however, if (a) the Borrower shall object to determining
such compliance on such basis at the time of delivery of such financial
statements due to any change in GAAP or the rules promulgated with respect
thereto or (b) the Administrative Agent or the Required Lenders shall so object
in writing within 30 days after delivery of such financial statements, then
such calculations shall be made on a basis consistent with GAAP as in effect as
of the date of the most recent financial statements delivered by the Borrower
to the Lenders to which no such objection shall have been made.

15

 

     1.4 Time.

     All references to time herein shall be references to Eastern Standard Time
or Eastern Daylight time, as the case may be, unless specified otherwise.

     1.5 References to Agreements and Requirement of Laws.

     Unless otherwise expressly provided herein: (a) references to organization
documents, agreements (including the Credit Documents) and other contractual
instruments shall be deemed to include all subsequent amendments, restatements,
extensions, supplements and other modifications thereto, but only to the extent
that such amendments, restatements, extensions, supplements and other
modifications are not prohibited by any Credit Document and (b) references to
any Requirement of Law shall include all statutory and regulatory provisions
consolidating, amending, replacing, supplementing or interpreting such
Requirement of Law.

SECTION 2

CREDIT FACILITIES

     2.1 Loans.

		
	 	     (a) Loan Commitment. Subject to the terms and conditions set forth
herein, including but not limited to Section 5.2, each Lender severally
agrees to make revolving loans (each a “Loan” and collectively the
“Loans”) to the Borrower, in Dollars, at any time and from time to time,
during the period from and including the Effective Date to but not
including the Maturity Date (or such earlier date if the Revolving
Committed Amount has been terminated as provided herein); provided,
however, that (i) the sum of the aggregate amount of Loans outstanding
plus the aggregate amount of LOC Obligations outstanding shall not exceed
the Revolving Committed Amount and (ii) with respect to each individual
Lender, the Lender’s pro rata share of outstanding Loans plus such
Lender’s pro rata share of outstanding LOC Obligations shall not exceed
such Lender’s Commitment Percentage of the Revolving Committed Amount.
Subject to the terms of this Credit Agreement (including Section 3.3),
the Borrower may borrow, repay and reborrow Loans.
	 
	 	     (b) Method of Borrowing for Loans. By no later than 11:00 a.m. (i)
on the date of the requested borrowing of Loans that will be Base Rate
Loans or (ii) three Business Days prior to the date of the requested
borrowing of Loans that will be Eurodollar Loans, the Borrower shall
provide telephonic notice to the Administrative Agent, followed promptly
by a written Notice of Borrowing in the form of Exhibit 2.1(b) (which may
be submitted by telecopy), each of such telephonic notice and such
written Notice of Borrowing setting forth (A) the amount requested, (B)
whether such Loans shall accrue interest at the Base Rate or the Adjusted
Eurodollar Rate, (C) with respect to Loans that will be Eurodollar Loans,
the Interest Period applicable thereto and (D) certification that the
Borrower has complied in all respects with Section 5.2.
	 
	 	     (c) Funding of Loans. Upon receipt of a Notice of Borrowing, the
Administrative Agent shall promptly inform the Lenders as to the terms
thereof. Each Lender shall make its Commitment Percentage of the
requested Loans available to the Administrative Agent by 1:00 p.m. on the
date specified in the Notice of Borrowing by deposit, in Dollars, of
immediately available funds at the Agency Services Address. The amount
of the requested Loans will then be made available to the Borrower by the
Administrative Agent as directed by the Borrower, to the extent the
amount of such Loans are made available to the Administrative Agent.
	 
	 	     No Lender shall be responsible for the failure or delay by any other
Lender in its obligation to make Loans hereunder; provided, however, that
the failure of any Lender to fulfill its obligations hereunder shall not
relieve any other Lender of its obligations hereunder. Unless the
Administrative Agent shall have been notified by any Lender prior to the
date of any such Loan that such Lender does not intend to make available
to the Administrative Agent its portion of the Loans to be made on such
date, the Administrative Agent may assume that such Lender has made such
amount available to the Administrative Agent on the date of such Loans,
and the Administrative Agent in reliance upon such assumption, may (in
its sole discretion but without

16

 

		
	 	any obligation to do so) make available
to the Borrower a corresponding amount. If such corresponding amount is
not in fact made available to the Administrative Agent, the
Administrative Agent shall be able to recover such corresponding amount
from such Lender. If such Lender does not pay such corresponding amount
upon the Administrative Agent’s demand therefor, the Administrative Agent
will promptly notify the Borrower, and the Borrower shall immediately pay
such corresponding amount to the Administrative Agent. The
Administrative Agent shall also be entitled to recover from such Lender
or the Borrower, as the case may be, interest on such corresponding
amount in respect of each day from the date such corresponding amount was
made available by the Administrative Agent to the Borrower to the date
such corresponding amount is recovered by the Administrative Agent at a
per annum rate equal to (i) from the Borrower at the applicable rate for
such Loan pursuant to the Notice of Borrowing or (ii) from such Lender,
at a rate per annum equal to, during the period to
but excluding the date two Business Days after demand therefor, the
Federal Funds Rate, and, thereafter, the Base Rate plus two percent (2%)
per annum.
	 
	 	     (d) Reductions of Revolving Committed Amount. Upon at least three
Business Days’ prior written notice, the Borrower shall have the right to
permanently reduce, without premium or penalty, all or part of the
aggregate unused amount of the Revolving Committed Amount at any time or
from time to time; provided that (i) each partial reduction shall be in
an aggregate amount at least equal to $5,000,000 and in integral
multiples of $1,000,000 above such amount and (ii) no reduction shall be
made which would reduce the Revolving Committed Amount to an amount less
than the aggregate amount of outstanding Loans plus the aggregate amount
of outstanding LOC Obligations. Any reduction in (or termination of) the
Revolving Committed Amount pursuant to this Section 2.1(d) shall be
permanent and may not be reinstated. The Administrative Agent shall
immediately notify the Lenders of any reduction in the Revolving
Committed Amount pursuant to this Section 2.1(d).
	 
	 	     (e) Notes. The Loans made by each Lender shall be evidenced by a
duly executed promissory note of the Borrower to each Lender in
substantially the form of Exhibit 2.1(e).

     2.2 Letter of Credit Subfacility.

		
	 	     (a) The Letter of Credit Commitment.

		
	 	     (i) Subject to the terms and conditions set forth herein
(including the definition of LOC Committed Amount which as of the
Closing Date is zero dollars) and other terms and conditions that
the Issuing Lender may reasonably require, (A) the Issuing Lender
agrees, in reliance upon the agreements of the Lenders set forth in
this Section 2.2, from time to time on any Business Day during the
period from the Closing Date until the Letter of Credit Expiration
Date, to issue standby Letters of Credit in Dollars for the account
of the Borrower or, subject to the terms of Section 2.2(j), certain
Subsidiaries of the Borrower, and to amend Letters of Credit
previously issued by it, in each case in accordance with subsection
(b) below and (B) the Lenders severally agree to participate in
Letters of Credit issued for the account of the Borrower or,
subject to the terms of Section 2.2(j), certain Subsidiaries of the
Borrower; provided, however, that after giving effect to the
issuance of any Letter of Credit (1) the sum of the aggregate
principal amount of outstanding Loans plus the aggregate principal
amount of outstanding LOC Obligations shall not exceed the
Revolving Committed Amount, (2) with respect to each individual
Lender, the sum of the aggregate principal amount of outstanding
Loans of such Lender plus such Lender’s pro rata share of the
aggregate amount of LOC Obligations shall not exceed such Lender’s
Commitment Percentage of the Revolving Committed Amount and (3) the
aggregate principal amount of outstanding LOC Obligations shall not
at any time exceed the LOC Committed Amount. Within the foregoing
limits, and subject to the terms and conditions hereof, the
Borrower may, during the foregoing period, obtain Letters of Credit
to replace Letters of Credit that have expired or that have been
drawn upon and reimbursed.
	 
	 	     (ii) The Issuing Lender shall not issue or amend any Letter of
Credit if:

		
	 	     (A) any order, judgment or decree of any Governmental
Authority or arbitrator shall by its terms purport to enjoin
or restrain the Issuing Lender from issuing

17

 

		
	 	such Letter of
Credit, or any Requirement of Law applicable to the Issuing
Lender or any request or directive (whether or not having the
force of law) from any Governmental Authority with
jurisdiction over the Issuing Lender shall prohibit, or
request that the Issuing Lender refrain from, the issuance of
letters of credit generally or such Letter of Credit in
particular or shall impose upon the Issuing Lender with
respect to such Letter of Credit any restriction, reserve or
capital requirement (for which the Issuing Lender is not
otherwise compensated hereunder) not in effect on the Closing
Date, or shall impose upon
the Issuing Lender any unreimbursed loss, cost or
expense which was not applicable on the Closing Date and
which the Issuing Lender in good faith deems material to it;

		
	 	     (B) the expiry date of such requested Letter of Credit
would occur more than twelve months after the date of
issuance, unless the Required Lenders have approved such
expiry date;

		
	 	     (C) the expiry date of such requested Letter of Credit
would occur after the Letter of Credit Expiration Date,
unless all the Lenders have approved such expiry date;

		
	 	     (D) the issuance of such Letter of Credit would violate
one or more policies of the Issuing Lender; or

		
	 	     (E) such Letter of Credit is in an initial amount less
than $100,000 (unless otherwise agreed to by the Issuing
Lender), is to be used for a purpose other than as permitted
by Section 7.10, or is denominated in a currency other than
Dollars.

		
	 	         (iii) The Issuing Lender shall be under no obligation to amend
any Letter of Credit if (A) the Issuing Lender would have no
obligation at such time to issue such Letter of Credit in its
amended form under the terms hereof or (B) the beneficiary of such
Letter of Credit does not accept the proposed amendment to such
Letter of Credit.

		
	 	        (b) Procedures for Issuance and Amendment of Letters of Credit.

		
	 	     (i) Each Letter of Credit shall be issued or amended, as the
case may be, upon the request of the Borrower delivered to the
Issuing Lender (with a copy to the Administrative Agent) in the
form of a Letter of Credit Application, appropriately completed and
signed by a Authorized Officer of the Borrower. The Letter of
Credit Application must be received by the Issuing Lender and the
Administrative Agent not later than 11:00 a.m. at least two
Business Days (or such later date and time as the Issuing Lender
may agree in a particular instance in its sole discretion) prior to
the proposed issuance date or date of amendment, as applicable. In
the case of a request for an initial issuance of a Letter of
Credit, such Letter of Credit Application shall specify in form and
detail satisfactory to the Issuing Lender: (A) the proposed
issuance date of the requested Letter of Credit (which shall be a
Business Day), (B) the amount thereof, (C) the expiry date thereof,
(D) the name and address of the beneficiary thereof, (E) the
documents to be presented by such beneficiary in case of any
drawing thereunder, (F) the full text of any certificate to be
presented by such beneficiary in case of any drawing thereunder and
(G) such other matters as the Issuing Lender may require. In the
case of a request for an amendment of any outstanding Letter of
Credit, such Letter of Credit Application shall specify in form and
detail satisfactory to the Issuing Lender (1) the Letter of Credit
to be amended, (2) the proposed date of amendment thereof (which
shall be a Business Day), (3) the nature of the proposed amendment
and (4) such other matters as the Issuing Lender may require.
	 
	 	     (ii) Promptly after receipt of any Letter of Credit
Application, the Issuing Lender will confirm with the
Administrative Agent (by telephone or in writing) that the
Administrative Agent has received a copy of such Letter of Credit
Application from the Borrower and, if not, the Issuing Lender will
provide the Administrative Agent with a copy thereof. Upon receipt
by the Issuing Lender of confirmation from the Administrative Agent
that the requested issuance or

18

 

		
	 	amendment is permitted in accordance
with the terms hereof, then, subject to the terms and conditions
hereof, the Issuing Lender shall, on the requested date, issue a
Letter of Credit for the account of the Borrower or enter into the
applicable amendment, as the case may be, in each case in
accordance with the Issuing Lender’s usual and customary business
practices.
	 
	 	     (iii) Promptly after its delivery of any Letter of Credit or
any amendment to a Letter of Credit to an advising bank with
respect thereto or to the beneficiary thereof, the Issuing Lender
will also deliver to the Borrower and the Administrative Agent a
true and complete copy of such Letter of Credit or amendment.

		
	 	        (c) Participations. Each Lender, upon issuance of a Letter of
Credit, shall be deemed to have purchased without recourse a risk
participation from the Issuing Lender in such Letter of Credit and the
obligations arising thereunder and any collateral relating thereto, in
each case in an amount equal to its Commitment Percentage of the
obligations under such Letter of Credit and be obligated to pay to the
Issuing Lender therefor and discharge when due, its Commitment Percentage
of the obligations arising under such Letter of Credit.
	 
	 	        (d) Reimbursement.

		
	 	     (i) In the event of any drawing under any Letter of Credit,
the Issuing Lender will promptly notify the Borrower in writing.
The Borrower shall reimburse the Issuing Lender on the day of
drawing under any Letter of Credit either with the proceeds of a
Loan obtained hereunder or otherwise in immediately available
funds. If the Borrower shall fail to reimburse the Issuing Lender
as provided hereinabove, the unreimbursed amount of such drawing
shall bear interest at a per annum rate equal to the Base Rate plus
two percent (2%).
	 
	 	     (ii) Subsequent to a drawing under any Letter of Credit,
unless the Borrower shall immediately notify the Issuing Lender of
its intent to otherwise reimburse the Issuing Lender, the Borrower
shall be deemed to have requested a Loan at the Base Rate in the
amount of the drawing as described herein, the proceeds of which
will be used to satisfy the reimbursement obligations. On any day
on which the Borrower shall be deemed to have requested a Loan
borrowing to reimburse a drawing under a Letter of Credit, the
Administrative Agent shall give notice to the Lenders that a Loan
has been deemed requested in connection with a drawing under a
Letter of Credit, in which case a Loan borrowing comprised solely
of Base Rate Loans (each such borrowing, a “Mandatory Borrowing”)
shall be immediately made from all Lenders (without giving effect
to any termination of the Commitments pursuant to Section 9.2 or
otherwise) not later than 1:00 p.m. on the Business Day such notice
by the Administrative Agent is received if such notice is received
before 12:00 Noon, otherwise such payment shall be made at or
before 2:00 p.m. on the next succeeding Business Day. Each Lender
that so makes funds available shall be deemed to have made a Base
Rate Loan to the Borrower in such amount. The Administrative Agent
shall remit the funds so received to the L/C Issuer pro rata based
on each Lender’s respective Commitment Percentage and the proceeds
thereof shall be paid directly to the Issuing Lender for
application to the respective LOC Obligations. Each Lender hereby
irrevocably agrees to make such Loans immediately upon any such
request or deemed request on account of each such Mandatory
Borrowing in the amount and in the manner specified in the
preceding sentence and on the same such date notwithstanding (A)
the amount of Mandatory Borrowing may not comply with the minimum
amount for borrowings of Loans otherwise required hereunder, (B)
the failure of any conditions specified in Section 5.2 to have been
satisfied, (C) the existence of a Default or an Event of Default,
(D) the failure of any such request or deemed request for Loans to
be made by the time otherwise required hereunder, (E) the date of
such Mandatory Borrowing, or (F) any reduction in the Revolving
Committed Amount or any termination of the Commitments.
	 
	 	     (iii) In the event that any Mandatory Borrowing cannot for any
reason be made on the date otherwise required above (including,
without limitation, as a result of the commencement of a proceeding
under the Bankruptcy Code with respect to the Borrower or any other
Credit Party), then each Lender hereby agrees that it shall
forthwith fund (as of the date the Mandatory

19

 

		
	 	Borrowing would
otherwise have occurred, but adjusted for any payments received
from the Borrower on or after such date and prior to such purchase)
its Participation Interest in the
outstanding LOC Obligations; provided, that in the event any
Lender shall fail to fund its Participation Interest on the day the
Mandatory Borrowing would otherwise have occurred, then the amount
of such Lender’s unfunded Participation Interest therein shall bear
interest payable to the Issuing Lender upon demand, at the rate
equal to, if paid within two Business Days of such date, the
Federal Funds Rate, and thereafter at a rate equal to the Base
Rate. Simultaneously with the making of each such payment by a
Lender to the Issuing Lender, such Lender shall, automatically and
without any further action on the part of the Issuing Lender or
such Lender, acquire a participation in an amount equal to such
payment (excluding the portion of such payment constituting
interest owing to the Issuing Lender) in the related unreimbursed
drawing portion of the LOC Obligation and in the interest thereon
and shall have a claim against the Borrower and the other Credit
Parties with respect thereto. Any payment by the Lenders pursuant
to this clause (iii) shall not relieve or otherwise impair the
obligations of the Borrower or any Credit Party to reimburse the
Issuing Lender under a Letter of Credit.

		
	 	     (e) Obligations Absolute. The obligation of the Borrower to
reimburse the Issuing Lender for each drawing under each Letter of Credit
shall be absolute, unconditional and irrevocable, and shall be paid
strictly in accordance with the terms of this Credit Agreement under all
circumstances, including the following:

		
	 	     (i) any lack of validity or enforceability of such Letter of
Credit, this Credit Agreement, or any other agreement or instrument
relating thereto;
	 
	 	     (ii) the existence of any claim, counterclaim, set-off,
defense or other right that the Borrower may have at any time
against any beneficiary or any transferee of such Letter of Credit
(or any Person for whom any such beneficiary or any such transferee
may be acting), the Issuing Lender or any other Person, whether in
connection with this Credit Agreement, the transactions
contemplated hereby or by such Letter of Credit or any agreement or
instrument relating thereto, or any unrelated transaction;
	 
	 	     (iii) any draft, demand, certificate or other document
presented under such Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect; or any loss or
delay in the transmission or otherwise of any document required in
order to make a drawing under such Letter of Credit;
	 
	 	     (iv) any payment by the Issuing Lender under such Letter of
Credit against presentation of a draft or certificate that does not
strictly comply with the terms of such Letter of Credit; or any
payment made by the Issuing Lender under such Letter of Credit to
any Person purporting to be a trustee in bankruptcy,
debtor-in-possession, assignee for the benefit of creditors,
liquidator, receiver or other representative of or successor to any
beneficiary or any transferee of such Letter of Credit, including
any arising in connection with any proceeding under any Bankruptcy
Code; or
	 
	 	     (v) any other circumstance or happening whatsoever, whether or
not similar to any of the foregoing, including any other
circumstance that might otherwise constitute a defense available
to, or a discharge of, the Borrower.

		
	 	The Borrower shall promptly examine a copy of each Letter of Credit and
each amendment thereto that is delivered to it and, in the event of any
claim of noncompliance with the Borrower’s instructions or other
irregularity, the Borrower will immediately notify the Issuing Lender.
The Borrower shall be conclusively deemed to have waived any such claim
against the Issuing Lender and its correspondents unless such notice is
given as aforesaid.
	 
	 	     (f) Role of Issuing Lender. Each Lender and the Borrower agree
that, in paying any drawing under a Letter of Credit, the Issuing Lender
shall not have any responsibility to obtain any

20

 

		
	 	document (other than any
sight draft, certificates and documents expressly required by the Letter
of Credit) or to ascertain or inquire as to the validity or accuracy of
any such document or the authority of the Person executing or delivering
any such document. None of the Issuing Lender, any Agent-Related Person
nor any of the respective correspondents, participants or assignees of
the Issuing Lender shall be liable to any Lender for (i) any action taken
or omitted in connection herewith at the request or with the approval of
the Lenders or the Required Lenders, as applicable, (ii) any action taken
or omitted in the absence of gross negligence or willful misconduct or
(iii) the due execution, effectiveness, validity or enforceability of any
document or instrument related to any Letter of Credit or Letter of
Credit Application. The Borrower hereby assumes all risks of the acts or
omissions of any beneficiary or transferee with respect to its use of any
Letter of Credit; provided, however, that this assumption is not intended
to, and shall not, preclude the Borrower’s pursuing such rights and
remedies as it may have against the beneficiary or transferee at law or
under any other agreement. None of the Issuing Lender, any Agent-Related
Person, nor any of the respective correspondents, participants or
assignees of the Issuing Lender, shall be liable or responsible for any
of the matters described in clauses (i) through (v) of Section 2.2(e);
provided, however, that anything in such clauses to the contrary
notwithstanding, the Borrower may have a claim against the Issuing
Lender, and the Issuing Lender may be liable to the Borrower, to the
extent, but only to the extent, of any direct, as opposed to
consequential or exemplary, damages suffered by the Borrower which the
Borrower proves were caused by the Issuing Lender’s willful misconduct or
gross negligence or the Issuing Lender’s willful failure to pay under any
Letter of Credit after the presentation to it by the beneficiary of a
sight draft and certificate(s) strictly complying with the terms and
conditions of a Letter of Credit. In furtherance and not in limitation
of the foregoing, the Issuing Lender may accept documents that appear on
their face to be in order, without responsibility for further
investigation and the Issuing Lender shall not be responsible for the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign a Letter of Credit or the rights or
benefits thereunder or proceeds thereof, in whole or in part, which may
prove to be invalid or ineffective for any reason.
	 
	 	     (g) Cash Collateral. If, as of the Letter of Credit Expiration
Date, any Letter of Credit for any reason remains outstanding and
partially or wholly undrawn, the Borrower shall immediately Cash
Collateralize the then aggregate principal amount of all LOC Obligations
(in an amount equal to such aggregate principal amount determined as of
the Letter of Credit Expiration Date). The Borrower hereby grants to the
Administrative Agent, for the benefit of the Issuing Lender and the
Lenders, a security interest in all such cash, deposit accounts and all
balances therein and all proceeds of the foregoing. Cash collateral
shall be maintained in blocked, non-interest bearing deposit accounts at
Bank of America.
	 
	 	     (h) Applicability of ISP98 and UCP. Unless otherwise expressly
agreed by the Issuing Lender and the Borrower when a Letter of Credit is
issued, the rules of the “International Standby Practices 1998” published
by the Institute of International Banking Requirement of Law & Practice
(or such later version thereof as may be in effect at the time of
issuance) and the rules of the Uniform Customs and Practice for
Documentary Credits, as most recently published by the International
Chamber of Commerce (the “ICC”) at the time of issuance (including the
ICC decision published by the Commission on Banking Technique and
Practice on April 6, 1998 regarding the European single currency (euro))
shall apply to each Letter of Credit.
	 
	 	     (i) Conflict with Letter of Credit Application. In the event of any
conflict between the terms hereof and the terms of any Letter of Credit
Application, the terms hereof shall control.
	 
	 	     (j) Designation of Subsidiaries as Account Parties. Notwithstanding
anything to the contrary set forth in this Credit Agreement and any LOC
Document, a Letter of Credit issued hereunder may contain a statement to
the effect that such Letter of Credit is issued for the account of a
Subsidiary of the Borrower; provided that notwithstanding such statement,
the Borrower shall be the actual account party for all
purposes of this Credit Agreement for such Letter of Credit and such
statement shall not affect the Borrower’s reimbursement obligations
hereunder with respect to such Letter of Credit.

21

 

		
	 	     (k) Indemnification of Issuing Lender.

		
	 	     (i) In addition to its other obligations under this Credit
Agreement, the Credit Parties hereby agree to protect, indemnify,
pay and hold the Issuing Lender harmless from and against any and
all claims, demands, liabilities, damages, losses, costs, charges
and expenses (including reasonable Attorney Costs) that the Issuing
Lender may incur or be subject to as a consequence, direct or
indirect, of (A) the issuance of any Letter of Credit or (B) the
failure of the Issuing Lender to honor a drawing under a Letter of
Credit as a result of any act or omission, whether rightful or
wrongful, of any present or future de jure or de facto government
or Governmental Authority (all such acts or omissions, herein
called “Government Acts”).
	 
	 	     (ii) As between the Credit Parties and the Issuing Lender, the
Credit Parties shall assume all risks of the acts, omissions or
misuse of any Letter of Credit by the beneficiary thereof. In the
absence of gross negligence or willful misconduct, the Issuing
Lender shall not be responsible for: (A) the form, validity,
sufficiency, accuracy, genuineness or legal effect of any document
submitted by any party in connection with the application for and
issuance of any Letter of Credit, even if it should in fact prove
to be in any or all respects invalid, insufficient, inaccurate,
fraudulent or forged; (B) the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or
assign any Letter of Credit or the rights or benefits thereunder or
proceeds thereof, in whole or in part, that may prove to be invalid
or ineffective for any reason; (C) failure of the beneficiary of a
Letter of Credit to comply fully with conditions required in order
to draw upon a Letter of Credit; (D) errors, omissions,
interruptions or delays in transmission or delivery of any
messages, by mail, cable, telegraph, telex or otherwise, whether or
not they be in cipher; (E) errors in interpretation of technical
terms; (F) any loss or delay in the transmission or otherwise of
any document required in order to make a drawing under a Letter of
Credit or of the proceeds thereof; and (G) any consequences arising
from causes beyond the control of the Issuing Lender, including,
without limitation, any Government Acts. None of the above shall
affect, impair, or prevent the vesting of the Issuing Lender’s
rights or powers hereunder.
	 
	 	     (iii) In furtherance and extension and not in limitation of
the specific provisions hereinabove set forth, any action taken or
omitted by the Issuing Lender, under or in connection with any
Letter of Credit or the related certificates, if taken or omitted
in good faith, shall not put the Issuing Lender under any resulting
liability to the Borrower or any other Credit Party. It is the
intention of the parties that this Credit Agreement shall be
construed and applied to protect and indemnify the Issuing Lender
against any and all risks involved in the issuance of the Letters
of Credit, all of which risks are hereby assumed by the Credit
Parties, including, without limitation, any and all risks of the
acts or omissions, whether rightful or wrongful, of any present or
future Government Acts. The Issuing Lender shall not, in any way,
be liable for any failure by the Issuing Lender or anyone else to
pay any drawing under any Letter of Credit as a result of any
Government Acts or any other cause beyond the control of the
Issuing Lender.
	 
	 	     (iv) Nothing in this subsection (l) is intended to limit the
reimbursement obligation of the Credit Parties contained in this
Section 2.2. The obligations of the Credit Parties under this
subsection (l) shall survive the termination of this Credit
Agreement. No act or omission of any current or prior beneficiary
of a Letter of Credit shall in any way affect or impair the rights
of the Issuing Lender to enforce any right, power or benefit under
this Credit Agreement.

		
	 	     (l) Letter of Credit Amounts. Unless otherwise specified, all
references herein to the amount of a Letter of Credit at any time shall
be deemed to mean the maximum face amount of such Letter of Credit
after giving effect to all increases thereof contemplated by such Letter
of Credit or the Letter of Credit Application therefor, whether or not
such maximum face amount is in effect at such time.

22

 

     2.3 Continuations and Conversions.

     Subject to the terms below, the Borrower shall have the option, on any
Business Day, to continue existing Eurodollar Loans for a subsequent Interest
Period, to convert Base Rate Loans into Eurodollar Loans or to convert
Eurodollar Loans into Base Rate Loans. By no later than 11:00 a.m. (a) on the
date of the requested conversion of a Eurodollar Loan to a Base Rate Loan or
(b) three Business Days prior to the date of the requested continuation of a
Eurodollar Loan or conversion of a Base Rate Loan to a Eurodollar Loan, the
Borrower shall provide telephonic notice to the Administrative Agent, followed
promptly by a written Notice of Continuation/Conversion, in the form of Exhibit
2.3 setting forth (i) whether the Borrower wishes to continue or convert such
Loans and (ii) if the request is to continue a Eurodollar Loan or convert a
Base Rate Loan to a Eurodollar Loan, the Interest Period applicable thereto.
Notwithstanding anything herein to the contrary, (A) except as provided in
Section 3.11, Eurodollar Loans may only be continued or converted into Base
Rate Loans on the last day of the Interest Period applicable thereto, (B)
Eurodollar Loans may not be continued nor may Base Rate Loans be converted into
Eurodollar Loans during the existence and continuation of a Default or an Event
of Default and (C) any request to continue a Eurodollar Loan that fails to
comply with the terms hereof or any failure to request a continuation of a
Eurodollar Loan at the end of an Interest Period shall constitute a conversion
to a Base Rate Loan on the last day of the applicable Interest Period.

     2.4 Minimum Amounts.

     Each request for a borrowing, conversion or continuation shall be subject
to the requirements that (a) each Eurodollar Loan shall be in a minimum amount
of $5,000,000 and in integral multiples of $1,000,000 in excess thereof, (b)
each Base Rate Loan shall be in a minimum amount of the lesser of $5,000,000
(and integral multiples of $1,000,000 in excess thereof) or the remaining
amount available under the Revolving Committed Amount and (c) no more than ten
(10) Eurodollar Loans shall be outstanding hereunder at any one time. For the
purposes of this Section 2.4, all Eurodollar Loans with the same Interest
Periods that begin and end on the same date shall be considered as one
Eurodollar Loan, but Eurodollar Loans with different Interest Periods, even if
they begin on the same date, shall be considered as separate Eurodollar Loans.

SECTION 3

GENERAL PROVISIONS APPLICABLE TO LOANS AND LETTERS OF CREDIT

     3.1 Interest.

		
	 	     (a) Interest Rate. Subject to Section 3.1(b), all Base Rate Loans
shall accrue interest at the Base Rate and all Eurodollar Loans shall
accrue interest at the Adjusted Eurodollar Rate.
	 
	 	     (b) Default Rate of Interest. Upon the occurrence, and during the
continuation, of an Event of Default, the principal of and, to the extent
permitted by law, interest on the Loans and any other amounts owing
hereunder or under the other Credit Documents (including without
limitation fees and expenses) shall bear interest, payable on demand, at
a per annum rate equal to 2% plus the rate which would otherwise be
applicable (or if no rate is applicable, then the Base Rate plus two
percent (2%) per annum).
	 
	 	     (c) Interest Payments. Interest on Loans shall be due and payable
in arrears on each Interest Payment Date. If an Interest Payment Date
falls on a date which is not a Business Day, such Interest Payment Date
shall be deemed to be the next succeeding Business Day, except that in
the case of Eurodollar Loans where the next succeeding Business Day falls
in the next succeeding calendar month, then on the next preceding
Business Day.

     3.2 Place and Manner of Payments.

     All payments of principal, interest, fees, expenses and other amounts to
be made by a Credit Party under this Credit Agreement shall be made
unconditionally and without any setoff, deduction, counterclaim, defense,
recoupment or withholding of any kind and received not later than 2:00 p.m. on
the date when due, in Dollars and in immediately available funds, by the
Administrative Agent at the Agency Services Address. Payments received after
such time shall

23

 

be deemed to have been received on the next Business Day. The
Borrower shall, at the time it makes any payment under this Credit Agreement,
specify to the Administrative Agent the Loans, Letters of Credit, fees or other
amounts payable by the Borrower hereunder to which such payment is to be
applied (and in the event that it fails to specify, or if such application
would be inconsistent with the terms hereof, the Administrative Agent shall,
subject to Section 3.7, distribute such payment to the Lenders in such manner
as the Administrative Agent may reasonably deem appropriate). The
Administrative Agent will distribute such payments to the Lenders on the same
Business Day if any such payment is received at or before 2:00 p.m.; otherwise
the Administrative Agent will distribute such payment to the Lenders on the
next succeeding Business Day. Whenever any payment hereunder shall be stated
to be due on a day which is not a Business Day, the due date thereof shall be
extended to the next succeeding Business Day (subject to accrual of interest
and fees for the period of such extension), except that, in the case of
Eurodollar Loans, if the extension would cause the payment to be made in the
next following calendar month, then such payment shall instead be made on the
next preceding Business Day.

     3.3 Prepayments.

		
	 	     (a) Voluntary Prepayments. The Borrower shall have the right to
prepay Loans in whole or in part from time to time without premium or
penalty; provided, however, that (i) Eurodollar Loans may only be prepaid
on three Business Days’ prior written notice to the Administrative Agent
and any prepayment of Eurodollar Loans will be subject to Section 3.14,
(ii) each such partial prepayment of Eurodollar Loans shall be in the
minimum principal amount of $5,000,000 and integral multiples of
$1,000,000 and (iii) each such partial prepayment of Base Rate Loans
shall be in the minimum principal amount of $5,000,000 and integral
multiples of $1,000,000. Amounts prepaid pursuant to this Section 3.3(a)
shall be applied as the Borrower may elect; however, if the Borrower
fails to specify, such prepayment will be applied in the manner set forth
in Section 3.3(c) below.
	 
	 	     (b) Mandatory Prepayments. If at any time the sum of the aggregate
amount of Loans outstanding plus LOC Obligations outstanding exceeds the
Revolving Committed Amount, the Borrower shall immediately make a
principal payment to the Administrative Agent in the manner and in an
amount such that the sum of the aggregate amount of Loans outstanding
plus LOC Obligations outstanding is less than or equal to the Revolving
Committed Amount.
	 
	 	     (c) Application of Prepayments. All amounts paid pursuant to
Section 3.3(a), if the Borrower has not otherwise elected an application
of such amounts, and all amounts required to be prepaid pursuant to
Section 3.3(b) shall be applied first to Loans and second to a cash
collateral account in respect of LOC Obligations. Within the parameters
of the applications set forth above, prepayments shall be applied first
to Base Rate Loans and then to Eurodollar Loans in direct order of
Interest Period maturities. All prepayments hereunder shall be subject
to Section 3.14.

     3.4 Fees.

		
	 	     (a) Facility Fees. In consideration of the Revolving Committed
Amount being made available by the Lenders hereunder, the Borrower agrees
to pay to the Administrative Agent, for the pro rata benefit of each
Lender (based on such Lender’s Commitment Percentage of the Revolving
Committed Amount), a per annum fee equal to the Applicable Percentage for
Facility Fees (the “Facility Fees”). The Facility Fees shall commence to
accrue on the Effective Date and shall be due and payable in arrears on
the last Business Day of each fiscal quarter of the Borrower (as well as
on the Maturity Date and on any date that the Revolving
Committed Amount is reduced) for the immediately preceding fiscal quarter
(or portion thereof), beginning with the first of such dates to occur
after the Closing Date.
	 
	 	     (b) Utilization Fees.

		
	 	     (i) For each day that Total Utilization exceeds an amount
equal to fifty percent (50%) of the Total Commitment, the Borrower
shall pay to the Administrative Agent, for the pro rata benefit of
each Lender (based on such Lender’s Commitment Percentage), a per
annum fee equal to (A) .250% multiplied by (B) the sum of the
principal amount of Loans outstanding on such day plus the
principal amount of LOC Obligations outstanding on such day (the
“Utilization Fees”).

24

 

		
	 	     (ii) The Utilization Fees, if any, shall commence to accrue on
the Effective Date and shall be due and payable in arrears on the
last Business Day of each fiscal quarter of the Borrower (as well
as on the Maturity Date, on any date that the Revolving Committed
Amount is reduced and on any date that the commitments of the
Lenders under the Multi-Year Credit Agreement are reduced) for the
immediately preceding fiscal quarter (or portion thereof),
beginning with the first of such dates to occur after the Closing
Date.

		
	 	     (c) Letter of Credit Fees.

		
	 	     (i) Letter of Credit Fees. In consideration of the issuance
of Letters of Credit hereunder, the Borrower agrees to pay to the
Administrative Agent, for the pro rata benefit of each Lender
(based on each Lender’s Commitment Percentage), a per annum fee
(the “Letter of Credit Fees”) equal to the Applicable Percentage
for the Letter of Credit Fees on the average daily maximum amount
available to be drawn under each such Letter of Credit from the
date of issuance to the date of expiration. The Letter of Credit
Fees will be payable in arrears on the last Business Day of each
fiscal quarter of the Borrower (as well as on the Maturity Date)
for the immediately preceding fiscal quarter (or portion thereof),
beginning with the first of such dates to occur after the Closing
Date.

		
	 	     (ii) Issuing Lender Fees. The Borrower shall pay directly to
the Issuing Lender for its own account a fronting fee with respect
to each Letter of Credit in an amount equal to 0.125% times the
daily maximum amount available to be drawn under such Letter of
Credit (the “L/C Fronting Fee”). The L/C Fronting Fee shall be
computed on a quarterly basis in arrears and shall be due and
payable on the last Business Day of each fiscal quarter of the
Borrower (as well as on the Letter of Credit Expiration Date) for
the fiscal quarter (or portion thereof) then ending, beginning with
the first of such dates to occur after the issuance of such Letter
of Credit. In addition, the Borrower shall pay directly to the
Issuing Lender for its own account the customary issuance,
presentation, amendment and other processing fees, and other
standard costs and charges, of the Issuing Lender relating to
letters of credit as from time to time in effect. Such customary
fees and standard costs and charges are due and payable on demand
and are nonrefundable.

		
	 	     (d) Other Fees. The Borrower agrees to pay (i) to the
Administrative Agent, for its own account, an annual fee and (ii) to the
Administrative Agent, for the account of each of the Lenders, upfront
fees on the Closing Date, in each case in accordance with the terms of
the Fee Letter.

     3.5 Payment in full at Maturity.

     On the Maturity Date, the entire outstanding principal balance of all
Loans and all LOC Obligations, together with accrued but unpaid interest and
all other sums owing with respect thereto, shall be due and payable in full,
unless accelerated sooner pursuant to Section 9.

     3.6 Computations of Interest and Fees.

		
	 	     (a) Except for Base Rate Loans that are based upon the Prime Rate,
in which case interest shall be computed on the basis of the actual
number of days elapsed over a year of 365 or 366 days, as the case may
be, all computations of interest and fees hereunder shall be made on the
basis of the actual number of days elapsed over a year of 360 days.
Interest shall accrue from and include the date of borrowing (or
continuation or conversion) but exclude the date of payment.

		
	 	     (b) It is the intent of the Lenders and the Credit Parties to
conform to and contract in strict compliance with applicable usury law
from time to time in effect. All agreements between the Lenders and the
Credit Parties are hereby limited by the provisions of this paragraph
which shall override and control all such agreements, whether now
existing or hereafter arising and whether written or oral. In no way,
nor in any event or contingency (including but not limited to prepayment
or acceleration of the maturity of any

25

 

		
	 	obligation), shall the interest
taken, reserved, contracted for, charged, or received under this Credit
Agreement, under the Notes or otherwise, exceed the maximum nonusurious
amount permissible under applicable law. If, from any possible
construction of any of the Credit Documents or any other document,
interest would otherwise be payable in excess of the maximum nonusurious
amount, any such construction shall be subject to the provisions of this
paragraph and such documents shall be automatically reduced to the
maximum nonusurious amount permitted under applicable law, without the
necessity of execution of any amendment or new document. If any Lender
shall ever receive anything of value which is characterized as interest
on the Loans under applicable law and which would, apart from this
provision, be in excess of the maximum nonusurious amount, an amount
equal to the amount which would have been excessive interest shall,
without penalty, be applied to the reduction of the principal amount
owing on the Loans and not to the payment of interest, or refunded to the
Borrower or the other payor thereof if and to the extent such amount
which would have been excessive exceeds such unpaid principal amount of
the Loans. The right to demand payment of the Loans or any other
Indebtedness evidenced by any of the Credit Documents does not include
the right to accelerate the payment of any interest which has not
otherwise accrued on the date of such demand, and the Lenders do not
intend to charge or receive any unearned interest in the event of such
demand. All interest paid or agreed to be paid to the Lenders with
respect to the Loans shall, to the extent permitted by applicable law, be
amortized, prorated, allocated, and spread throughout the full stated
term (including any renewal or extension) of the Loans so that the amount
of interest on account of such Indebtedness does not exceed the maximum
nonusurious amount permitted by applicable law.

     3.7 Pro Rata Treatment.

     Except to the extent otherwise provided herein:

		
	 	     (a) Loans. Each Loan borrowing (including, without limitation, each
Mandatory Borrowing), each payment or prepayment of principal of any
Loan, each payment of fees (other than the Issuing Lender Fees retained
by the Issuing Lender for its own account and the Administrative Fees
retained by the Administrative Agent for its own account), each reduction
of the Revolving Committed Amount, and each conversion or continuation of
any Loan, shall (except as otherwise provided in Section 3.11) be
allocated pro rata among the relevant Lenders in accordance with the
respective Commitment Percentages of such Lenders (or, if the Commitments
of such Lenders have expired or been terminated, in accordance with the
respective principal amounts of the outstanding Loans and Participation
Interests of such Lenders); provided that, if any Lender shall have
failed to pay its applicable pro rata share of any Loan, then any amount
to which such Lender would otherwise be entitled pursuant to this
subsection (a) shall instead be payable to the Administrative Agent until
the share of such Loan not funded by such Lender has been repaid;
provided further, that in the event any amount paid to any Lender
pursuant to this subsection (a) is rescinded or must otherwise be
returned by the Administrative Agent, each Lender shall, upon the request
of the Administrative Agent, repay to the Administrative Agent the amount
so paid to such Lender, with interest for the period commencing on the
date such payment is returned by the Administrative Agent until the date
the Administrative Agent receives such
repayment at a rate per annum equal to, during the period to but
excluding the date two Business Days after such request, the Federal
Funds Rate, and thereafter, the Base Rate plus two percent (2%) per
annum; and

		
	 	     (b) Letters of Credit. Each payment of unreimbursed drawings in
respect of LOC Obligations shall be allocated to each LOC Participant pro
rata in accordance with its Commitment Percentage; provided that, if any
LOC Participant shall have failed to pay its applicable pro rata share of
any drawing under any Letter of Credit, then any amount to which such LOC
Participant would otherwise be entitled pursuant to this subsection (b)
shall instead be payable to the Issuing Lender until the share of such
unreimbursed drawing not funded by such Lender has been repaid; provided
further, that in the event any amount paid to any LOC Participant
pursuant to this subsection (b) is rescinded or must otherwise be
returned by the Issuing Lender, each LOC Participant shall, upon the
request of the Issuing Lender, repay to the Administrative Agent for the
account of the Issuing Lender the amount so paid to such LOC Participant,
with interest for the period commencing on the date such payment is
returned by the Issuing Lender until the date the Issuing Lender receives
such repayment at a rate per annum equal to, during the period to but
excluding the date two Business Days after such request, the Federal
Funds Rate, and thereafter, the Base Rate plus two percent (2%) per
annum.

26

 

     3.8 Sharing of Payments.

     The Lenders agree among themselves that, except to the extent otherwise
provided herein, in the event that any Lender shall obtain payment in respect
of any Loan, unreimbursed drawing with respect to any LOC Obligations or any
other obligation owing to such Lender under this Credit Agreement through the
exercise of a right of setoff, banker’s lien or counterclaim, or pursuant to a
secured claim under Section 506 of the Bankruptcy Code or other security or
interest arising from, or in lieu of, such secured claim, received by such
Lender under any applicable bankruptcy, insolvency or other similar law or
otherwise, or by any other means, in excess of its pro rata share of such
payment as provided for in this Credit Agreement, such Lender shall promptly
pay in cash or purchase from the other Lenders a participation in such Loans,
LOC Obligations, and other obligations in such amounts, and make such other
adjustments from time to time, as shall be equitable to the end that all
Lenders share such payment in accordance with their respective ratable shares
as provided for in this Credit Agreement. The Lenders further agree among
themselves that if payment to a Lender obtained by such Lender through the
exercise of a right of setoff, banker’s lien, counterclaim or other event as
aforesaid shall be rescinded or must otherwise be restored, each Lender which
shall have shared the benefit of such payment shall, by payment in cash or a
repurchase of a participation theretofore sold, return its share of that
benefit (together with its share of any accrued interest payable with respect
thereto) to each Lender whose payment shall have been rescinded or otherwise
restored. The Borrower agrees that any Lender so purchasing such a
participation may, to the fullest extent permitted by law, exercise all rights
of payment, including setoff, banker’s lien or counterclaim, with respect to
such participation as fully as if such Lender were a holder of such Loan, LOC
Obligation or other obligation in the amount of such participation. Except as
otherwise expressly provided in this Credit Agreement, if any Lender or the
Administrative Agent shall fail to remit to any other Lender an amount payable
by such Lender or the Administrative Agent to such other Lender pursuant to
this Credit Agreement on the date when such amount is due, such payments shall
be made together with interest thereon for each date from the date such amount
is due until the date such amount is paid to the Administrative Agent or such
other Lender at a rate per annum equal to the Federal Funds Rate. If under any
applicable bankruptcy, insolvency or other similar law, any Lender receives a
secured claim in lieu of a setoff to which this Section 3.8 applies, such
Lender shall, to the extent practicable, exercise its rights in respect of such
secured claim in a manner consistent with the rights of the Lenders under this
Section 3.8 to share in the benefits of any recovery on such secured claim.

     3.9 Capital Adequacy.

		
	 	     (a) If, after the date thereof, the adoption or the becoming
effective of, or any change in, any law, rule or regulation or other
Requirement of Law regarding capital adequacy or any change therein or in
the interpretation thereof, or compliance by any Lender (or its Lending
Office) therewith, has or would have the effect of reducing the rate of
return on the capital or assets of such Lender or any corporation
controlling such Lender as a consequence of such Lender’s obligations
hereunder (taking into consideration
its policies with respect to capital adequacy and such Lender’s
desired return on capital), then from time to time within 10 days of
demand of such Lender setting forth in reasonable detail such change in
law and the calculation of such reduced rate of return (with a copy of
such demand to the Administrative Agent), the Borrower shall pay to such
Lender such additional amounts as will compensate such Lender for such
reduction.

		
	 	     (b) The Borrower shall not be required to compensate a Lender
pursuant to this Section 3.9 for any additional amounts incurred more
than 180 days prior to the date that such Lender notifies the Borrower of
the change in law giving rise to such additional amounts and of such
Lender’s intention to claim compensation therefor.

     3.10 Inability To Determine Interest Rate.

     If the Administrative Agent determines (which determination shall be
conclusive and binding upon the Borrower) in connection with any request for a
Eurodollar Loan or a conversion to or continuation thereof that (a) Dollar
deposits are not being offered to banks in the applicable offshore Dollar
market for the applicable amount and Interest Period of such Eurodollar Loan,
(b) adequate and reasonable means do not exist for determining the Eurodollar
Rate for such Eurodollar Loan, or (c) the Eurodollar Rate for such Eurodollar
Loan does not adequately and fairly reflect the cost to the Lenders of funding
such Eurodollar Loan, the Administrative Agent will promptly

27

 

notify the
Borrower and all the Lenders. Thereafter, the obligation of the Lenders to
make or maintain Eurodollar Loans shall be suspended until the Administrative
Agent revokes such notice. Upon receipt of such notice, the Borrower may
revoke any pending Notice of Borrowing or Notice of Continuation/Conversion
with respect to Eurodollar Loans or, failing that, will be deemed to have
converted such request into a request for a borrowing of or conversion into a
Base Rate Loan in the amount specified therein. The Administrative Agent will
withdraw such determination pursuant to this Section 3.10 promptly as
circumstances allow and no such suspension shall affect the Eurodollar Rate for
any Eurodollar Loan outstanding at the time such suspension is imposed.

     3.11 Illegality.

     If any Requirement of Law has made it unlawful, or that any Governmental
Authority has asserted that it is unlawful, for any Lender or its applicable
Lending Office to make, maintain or fund Eurodollar Loans, then, on notice
thereof by such Lender to the Borrower through the Administrative Agent, any
obligation of such Lender to make or continue Eurodollar Loans or to convert
Base Rate Loans to Eurodollar Loans shall be suspended until such Lender
notifies the Administrative Agent and the Borrower that the circumstances
giving rise to such determination no longer exist. Upon receipt of such
notice, the Borrower shall, upon demand from such Lender (with a copy to the
Administrative Agent), convert all Eurodollar Loans of such Lender to Base Rate
Loans, either on the last day of the Interest Period thereof, if such Lender
may lawfully continue to maintain such Eurodollar Loans to such day, or
immediately, if such Lender may not lawfully continue to maintain such
Eurodollar Loans. Upon any such conversion, the Borrower shall also pay
interest on the amount so converted, together with any amounts due with respect
thereto pursuant to Section 3.14. Each Lender agrees to designate a different
Lending Office if such designation will avoid the need for such notice and will
not, in the good faith judgment of such Lender, otherwise be materially
disadvantageous to such Lender.

     3.12 Requirements of Law.

		
	 	     (a) If, after the date hereof, as a result of the introduction of or
any change in, or in the interpretation of, any Requirement of Law, or a
Lender’s compliance therewith, there shall be any increase in the cost to
such Lender of agreeing to make or making, funding or maintaining
Eurodollar Loans or (as the case may be) issuing or participating in
Letters of Credit, or a reduction in the amount received or receivable by
such Lender in connection with any of the foregoing (excluding for
purposes of this subsection (a) any such increased costs or reduction in
amount resulting from (i) Taxes or Other Taxes (as to which Section 3.13
shall govern) and (ii) reserve requirements utilized in the determination
of the Eurodollar Rate), then from time to time, within 10 days of demand
of such Lender (with a copy of such
demand to the Administrative Agent), the Borrower shall pay to such
Lender such additional amounts as will compensate such Lender for such
increased cost or reduction in yield.
	 
	 	     (b) Each Lender shall promptly notify the Borrower and the
Administrative Agent of any event of which it has knowledge, occurring
after the date hereof, which will entitle such Lender to compensation
pursuant to this Section 3.12 and will designate a different Lending
Office if such designation will avoid the need for, or reduce the amount
of, such compensation and will not, in the reasonable judgment of such
Lender, be otherwise materially disadvantageous to it. Any Lender
claiming compensation under this Section 3.12 shall furnish to the
Borrower and the Administrative Agent a statement setting forth in
reasonable detail the additional amount or amounts to be paid to it
hereunder which shall be conclusive absent manifest error.
	 
	 	     (c) The Borrower shall not be required to compensate a Lender
pursuant to this Section 3.12 for any increased costs or reductions
incurred more than 180 days prior to the date that such Lender notifies
the Borrower of the change of law giving rise to such increased costs or
reductions and of such Lender’s intention to claim compensation therefor.

     3.13 Taxes.

		
	 	     (a) Any and all payments by a Credit Party to or for the account of
the Administrative Agent or any Lender under any Credit Document shall be
made free and clear of and without deduction for any and all present or
future income, stamp or other taxes, duties, levies, imposts, deductions,
assessments,

28

 

		
	 	fees, withholdings or similar charges, and all liabilities
with respect thereto, but excluding, in the case of the Administrative
Agent and each Lender, taxes imposed on or measured by its net income,
and franchise taxes imposed on it (in lieu of net income taxes), by the
jurisdiction (or any political subdivision thereof) under the laws of
which the Administrative Agent or such Lender, as the case may be, is
organized or maintains its Lending Office (all such non-excluded taxes,
duties, levies, imposts, deductions, assessments, fees, withholdings or
similar charges, and liabilities being hereinafter referred to as
“Taxes”). If a Credit Party shall be required by any Requirement of Law
to deduct any Taxes from or in respect of any sum payable under any
Credit Document to the Administrative Agent or any Lender, (i) the sum
payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable
under this Section 3.13(a)), the Administrative Agent and such Lender
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) such Credit Party shall make such deductions,
(iii) such Credit Party shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with
applicable Requirements of Law, and (iv) within 30 days after the date of
such payment, such Credit Party shall furnish to the Administrative Agent
(which shall forward the same to such Lender) the original or a certified
copy of a receipt evidencing payment thereof. Notwithstanding the
foregoing, no additional sums shall be payable pursuant to this Section
3.13(a) with respect to Taxes (A) that are attributable to a Lender’s
failure to comply with Section 3.13(e) or (B) that are United States
withholding taxes imposed on amounts payable to such Lender at the time
the Lender becomes a party to this Credit Agreement.
	 
	 	     (b) In addition, each Credit Party agrees to pay any and all present
or future stamp, court or documentary taxes and any other excise or
property taxes or charges or similar levies which arise from any payment
made under any Credit Document or from the execution, delivery,
performance, enforcement or registration of, or otherwise with respect
to, any Credit Document (hereinafter referred to as “Other Taxes”).
	 
	 	     (c) If a Credit Party shall be required to deduct or pay any Taxes
or Other Taxes from or in respect of any sum payable under any Credit
Document to the Administrative Agent or any Lender, such Credit Party
shall also pay to the Administrative Agent (for the account of such
Lender) or to such Lender, at the time interest is paid, such additional
amount that such Lender specifies as necessary to preserve the
after-tax yield (after factoring in all taxes, including taxes imposed on
or measured by net income) such Lender would have received if such Taxes
or Other Taxes had not been imposed.
	 
	 	     (d) Each Credit Party agrees to indemnify the Administrative Agent
and each Lender for (i) the full amount of Taxes and Other Taxes
(including any Taxes or Other Taxes imposed or asserted by any
jurisdiction on amounts payable under this Section 3.13(d)) paid by the
Administrative Agent and such Lender, (ii) amounts payable under Section
3.13(c) and (iii) any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto, in each case whether
or not such Taxes or Other Taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority.
	 
	 	     (e) Each Lender that is a “foreign corporation, partnership or
trust” within the meaning of the Code shall deliver to the Administrative
Agent, prior to receipt of any payment subject to withholding under the
Code (or after accepting an assignment of an interest herein), two duly
signed completed copies of either IRS Form W-8BEN or any successor
thereto (relating to such Lender and entitling it to an exemption from,
or reduction of, withholding tax on all payments to be made to such
Lender by a Credit Party pursuant to this Agreement) or IRS Form W-8ECI
or any successor thereto (relating to all payments to be made to such
Lender by a Credit Party pursuant to this Agreement) or such other
evidence satisfactory to the Borrower and the Administrative Agent that
such Lender is entitled to an exemption from, or reduction of, U.S.
withholding tax. Thereafter and from time to time, each such Lender
shall (i) promptly submit to the Administrative Agent such additional
duly completed and signed copies of one of such forms (or such successor
forms as shall be adopted from time to time by the relevant United States
taxing authorities) as may then be available under then current United
States laws and regulations to avoid, or such evidence as is satisfactory
to the Borrower and the Administrative Agent of any available exemption
from or reduction of, United States withholding taxes in respect of all
payments to be made to such Lender by a Credit Party pursuant to this
Agreement, (ii) promptly notify the Agent of any change in circumstances
which would modify or render invalid any claimed exemption or reduction,
and (iii) take

29

 

		
	 	such steps as shall not be materially disadvantageous to
it, in the reasonable judgment of such Lender, and as may be reasonably
necessary (including the re-designation of its Lending Office) to avoid
any Requirement of Law that the Credit Parties make any deduction or
withholding for taxes from amounts payable to such Lender. If such
Lender fails to deliver the above forms or other documentation, then the
Administrative Agent may withhold from any interest payment to such
Lender an amount equivalent to the applicable withholding tax imposed by
Sections 1441 and 1442 of the Code, without reduction. If any
Governmental Authority asserts that the Administrative Agent did not
properly withhold any tax or other amount from payments made in respect
of such Lender, such Lender shall indemnify the Administrative Agent
therefor, including all penalties and interest, any taxes imposed by any
jurisdiction on the amounts payable to the Administrative Agent under
this Section 3.13(e), and costs and expenses (including Attorney Costs)
of the Administrative Agent. The obligation of the Lenders under this
Section 3.13(e) shall survive the payment of all Obligations and the
resignation or replacement of the Administrative Agent.
	 
	 	     (f) For any period with respect to which a Lender required to do so
has failed to provide the Borrower and the Administrative Agent with the
appropriate form pursuant to Section 3.13(e) (unless such failure is due
to a change in treaty, law or regulation occurring subsequent to that
date on which a form originally was required to be provided), such Lender
shall not be entitled to indemnification under Section 3.13(a) or 3.13(b)
with respect to Taxes imposed by the United States of America; provided
however, that should a Lender that is otherwise exempt from withholding
tax become subject to Taxes because of its failure to deliver a form
required hereunder, the Borrower shall take such steps as such Lender
shall reasonably request to assist such Lender to recover such Taxes.
	 
	 	     (g) If any Credit Party is required to pay any additional amounts to
or for the account of any Lender pursuant to this Section 3.13, then such
Lender shall use reasonable efforts to change the jurisdiction of its
Lending Office so as to eliminate or reduce any such additional payment
which may thereafter accrue if such change, in the judgment of such
Lender, is not otherwise materially disadvantageous to such Lender.
	 
	 	     (h) If the Administrative Agent or any Lender receives a refund with
respect to Taxes paid by the Borrower that, in the good faith judgment of
such Lender, is allocable to such payment, the Administrative Agent or
such Lender, respectively, shall promptly pay the amount of such refund,
together with any other amounts paid by the Borrower in connection with
such refunded Taxes to the extent such other amounts are received by the
Administrative Agent or such Lender, to the Borrower, net of all
out-of-pocket expenses of such Lender incurred in obtaining such refund,
provided, however, that the Borrower agrees to promptly return such
refund and such other amounts to the Administrative Agent or such Lender,
as applicable, if it receives notice from the Administrative Agent or
such Lender that the Administrative Agent or such Lender is required to
repay such refund to the applicable taxing authority. The Administrative
Agent and each Lender agrees that it will contest such Taxes or
liabilities if the Administrative Agent or such Lender determined, in its
reasonable judgment, that it would not be disadvantaged or prejudiced as
a result of such contest.

     3.14 Compensation.

     Upon the written demand of any Lender, the Borrower shall promptly
compensate such Lender for and hold such Lender harmless from any loss, cost or
expense incurred by it as a result of:

		
	 	     (a) any continuation, conversion, payment or prepayment of any
Eurodollar Loan on a day other than the last day of the Interest Period
for such Eurodollar Loan (whether voluntary, mandatory, automatic, by
reason of acceleration, or otherwise); or

		
	 	     (b) any failure by the Borrower (for a reason other than the failure
of such Lender to make a Eurodollar Loan) to prepay, borrow, continue or
convert any Eurodollar Loan on the date or in the amount previously
requested or notified by the Borrower.

The amount each such Lender shall be compensated pursuant to this Section 3.14
shall include (a) any loss incurred by such Lender in connection with the
re-employment of funds prepaid, repaid, not borrowed or paid, as the case

30

 

may
be, and the amount of such loss shall be the excess, if any, of (i) interest or
other cost to such Lender of the deposit or other source of funding used to
make any such Eurodollar Loan over (ii) the interest earned (or to be earned)
by such Lender upon the re-lending or other re-employment of the amount of such
Eurodollar Loan for the remainder of its respective Interest Period plus (b)
any other loss of anticipated profits and any loss or expense arising from the
liquidation or re-employment of funds obtained by it to maintain such Loan or
from fees payable to terminate the deposits from which such funds were obtained
plus (c) $250 plus (d) any reasonable out-of-pocket expenses (including
Attorney Costs) incurred and reasonably attributable thereto. Any Lender
claiming compensation under this Section 3.14 shall furnish to the Borrower and
the Administrative Agent a statement setting forth in reasonable detail the
calculations of amounts to be paid hereunder, and the Borrower shall not be
required to compensate a Lender pursuant to this Section 3.14 for any such
loss, cost or expense incurred more than 180 days prior to the date that such
Lender notifies the Borrower of the incurrence of such loss, cost or expense.

For purposes of calculating amounts payable by the Borrower to the Lenders
under this Section 3.14, each Lender may deem that it funded each Eurodollar
Loan made by it at the Eurodollar Rate for such Eurodollar Loan by a matching
deposit or other borrowing in the applicable offshore Dollar interbank market
for a comparable amount and for a comparable period, whether or not such
Eurodollar Loan was in fact so funded.

     3.15 Determination and Survival of Provisions.

     All determinations by the Administrative Agent or a Lender of amounts
owing under Sections 3.9 through 3.14, inclusive, shall, absent manifest error,
be conclusive and binding on the parties hereto. In determining such amount,
the Administrative Agent or such Lender may use any reasonable averaging and
attribution methods. Section 3.9 through 3.14, inclusive, shall survive the
termination of this Credit Agreement and the payment of all Credit Party
Obligations.

SECTION 4

GUARANTY

     4.1 Guaranty of Payment.

     Subject to Section 4.7 below, each of the Guarantors hereby, jointly and
severally, unconditionally and irrevocably guarantees to each Lender, each
Affiliate of Lender that enters into a Hedging Agreement and the Administrative
Agent the prompt payment of the Credit Party Obligations in full when due
(whether at stated maturity, as a mandatory prepayment, by acceleration or
otherwise) and the timely performance of all other obligations under the Credit
Documents and such Hedging Agreements. This Guaranty is a guaranty of payment
and not of collection and is a continuing guaranty and shall apply to all
Credit Party Obligations whenever arising.

     4.2 Obligations Unconditional.

     The obligations of the Guarantors hereunder are absolute and
unconditional, irrespective of the value, genuineness, validity, regularity or
enforceability of any of the Credit Documents or the Hedging Agreements, or any
other agreement or instrument referred to therein, to the fullest extent
permitted by applicable law, irrespective of any other circumstance whatsoever
which might otherwise constitute a legal or equitable discharge or defense of a
surety or guarantor. Each Guarantor agrees that this Guaranty may be enforced
by the Lenders without the necessity at any time of resorting to or exhausting
any other security or collateral and without the necessity at any time of
having recourse to the Notes or any other of the Credit Documents or any
collateral, if any, hereafter securing the Credit Party Obligations or
otherwise and each Guarantor hereby waives the right to require the Lenders to
proceed against the Borrower or any other Person (including a co-guarantor) or
to require the Lenders to pursue any other remedy or enforce any other right.
Each Guarantor further agrees that it shall have no right of subrogation,
indemnity, reimbursement or contribution against the Borrower or any other
Guarantor of the Credit Party Obligations for amounts paid under this Guaranty
until such time as the Lenders (and any Affiliates of Lenders entering into
Hedging Agreements) have been paid in full, all Commitments under the Credit
Agreement have been terminated and no Person or Governmental Authority shall
have any right to request any return or reimbursement of funds from the Lenders
in connection with monies received under the Credit Documents. Each Guarantor
further agrees that nothing contained herein shall prevent the Lenders from

31

 

suing on the Notes or any of the other Credit Documents or any of the Hedging
Agreements or foreclosing its security interest in or Lien on any collateral,
if any, securing the Credit Party Obligations or from exercising any other
rights available to it under this Credit Agreement, the Notes, any other of the
Credit Documents, or any other instrument of security, if any, and the exercise
of any of the aforesaid rights and the completion of any foreclosure
proceedings shall not constitute a discharge of any of any Guarantor’s
obligations hereunder; it being the purpose and intent of each Guarantor that
its obligations hereunder shall be absolute, independent and unconditional
under any and all circumstances. Neither any Guarantor’s obligations under
this Guaranty nor any remedy for the enforcement thereof shall be impaired,
modified, changed or released in any manner whatsoever by an impairment,
modification, change, release or limitation of the liability of the Borrower or
by reason of the bankruptcy or insolvency of the Borrower. Each Guarantor
waives any and all notice of the creation, renewal, extension or accrual of any
of the Credit Party Obligations and notice of or proof of reliance of by the
Administrative Agent or any Lender upon this Guarantee or acceptance of this
Guarantee. The Credit Party Obligations, and any of them, shall conclusively
be deemed to have been created, contracted or incurred, or renewed, extended,
amended or waived, in reliance upon this Guarantee. All dealings between the
Borrower and any of the Guarantors, on the one hand, and the Administrative
Agent and the Lenders, on the other hand, likewise shall be conclusively
presumed to have been had or consummated in reliance upon this Guarantee. The
Guarantors further agree to all rights of set-off and automatic debits as set
forth in Section 11.2.

     4.3 Modifications.

     Each Guarantor agrees that (a) all or any part of the collateral, if any,
now or hereafter held for the Credit Party Obligations, if any, may be
exchanged, compromised or surrendered from time to time; (b) the Lenders shall
not have
any obligation to protect, perfect, secure or insure any such security
interests, liens or encumbrances now or hereafter held, if any, for the Credit
Party Obligations or the properties subject thereto; (c) the time or place of
payment of the Credit Party Obligations may be changed or extended, in whole or
in part, to a time certain or otherwise, and may be renewed or accelerated, in
whole or in part; (d) the Borrower and any other party liable for payment under
the Credit Documents may be granted indulgences generally; (e) any of the
provisions of the Notes or any of the other Credit Documents may be modified,
amended or waived; (f) any party (including any co-guarantor) liable for the
payment thereof may be granted indulgences or be released; and (g) any deposit
balance for the credit of the Borrower or any other party liable for the
payment of the Credit Party Obligations or liable upon any security therefor
may be released, in whole or in part, at, before or after the stated, extended
or accelerated maturity of the Credit Party Obligations, all without notice to
or further assent by such Guarantor, which shall remain bound thereon,
notwithstanding any such exchange, compromise, surrender, extension, renewal,
acceleration, modification, indulgence or release.

     4.4 Waiver of Rights.

     Each Guarantor expressly waives to the fullest extent permitted by
applicable law: (a) notice of acceptance of this Guaranty by the Lenders and
of all extensions of credit to the Borrower by the Lenders; (b) presentment and
demand for payment or performance of any of the Credit Party Obligations; (c)
protest and notice of dishonor or of default (except as specifically required
in the Credit Agreement) with respect to the Credit Party Obligations or with
respect to any security therefor; (d) notice of the Lenders obtaining,
amending, substituting for, releasing, waiving or modifying any security
interest, lien or encumbrance, if any, hereafter securing the Credit Party
Obligations, or the Lenders’ subordinating, compromising, discharging or
releasing such security interests, liens or encumbrances, if any; and (e) all
other notices to which such Guarantor might otherwise be entitled.

     4.5 Reinstatement.

     The obligations of the Guarantors under this Section 4 shall be
automatically reinstated if and to the extent that for any reason any payment
by or on behalf of any Person in respect of the Credit Party Obligations is
rescinded or must be otherwise restored by any holder of any of the Credit
Party Obligations, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, and each Guarantor agrees that it will indemnify
the Administrative Agent and each Lender on demand for all reasonable costs and
expenses (including, without limitation, reasonable Attorney Costs) incurred by
the Administrative Agent or such Lender in connection with such rescission or
restoration, including any such costs and expenses incurred in defending
against any claim alleging that such payment constituted a preference,
fraudulent transfer or similar payment under any bankruptcy, insolvency or
similar law.

32

 

     4.6 Remedies.

     The Guarantors agree that, as between the Guarantors, on the one hand, and
the Administrative Agent and the Lenders, on the other hand, the Credit Party
Obligations may be declared to be forthwith due and payable as provided in
Section 9 (and shall be deemed to have become automatically due and payable in
the circumstances provided in Section 9) notwithstanding any stay, injunction
or other prohibition preventing such declaration (or preventing such Credit
Party Obligations from becoming automatically due and payable) as against any
other Person and that, in the event of such declaration (or such Credit Party
Obligations being deemed to have become automatically due and payable), such
Credit Party Obligations (whether or not due and payable by any other Person)
shall forthwith become due and payable by the Guarantors.

     4.7 Limitation of Guaranty.

     Notwithstanding any provision to the contrary contained herein or in any
of the other Credit Documents, to the extent the obligations of any Guarantor
shall be adjudicated to be invalid or unenforceable for any reason (including,
without limitation, because of any applicable state or federal law relating to
fraudulent conveyances or transfers) then the obligations of such Guarantor
hereunder shall be limited to the maximum amount that is permissible under
applicable law (whether federal or state or otherwise and including, without
limitation, the Bankruptcy Code).

     4.8 Rights of Contribution.

     The Credit Parties agree among themselves that, in connection with
payments made hereunder, each Credit Party shall have contribution rights
against the other Credit Parties as permitted under applicable law. Such
contribution rights shall be subordinate and subject in right of payment to the
obligations of the Credit Parties under the Credit Documents and no Credit
Party shall exercise such rights of contribution until all Credit Party
Obligations have been paid in full and the Commitments terminated.

SECTION 5

CONDITIONS PRECEDENT

     5.1 Closing Conditions.

     The obligation of the Lenders to enter into this Credit Agreement and make
the initial Extension of Credit is subject to satisfaction (or waiver) of the
following conditions:

		
	 	     (a) Executed Credit Documents. Receipt by the Administrative Agent
of duly executed copies of: (i) this Credit Agreement; (ii) the Notes;
and (iii) all other Credit Documents, each in form and substance
reasonably acceptable to the Lenders in their sole discretion.
	 
	 	     (b) Authority Documents. Receipt by the Administrative Agent of the
following with respect to each Credit Party:

		
	 	     (i) Organizational Documents. Copies of the articles or
certificates of incorporation or other organizational documents of
each Credit Party certified to be true and complete as of a recent
date by the appropriate Governmental Authority of the state or
other jurisdiction of its formation and certified by a secretary or
assistant secretary of such Credit Party to be true and correct as
of the Closing Date.
	 
	 	     (ii) Bylaws. A copy of the bylaws or other governing
documents of each Credit Party certified by a secretary or
assistant secretary of such Credit Party to be true and correct as
of the Closing Date.
	 
	 	     (iii) Resolutions. Copies of resolutions of the Board of
Directors or other governing body of each Credit Party approving
and adopting the Credit Documents to which it is a party, the

33

 

		
	 	transactions contemplated therein and authorizing execution and
delivery thereof, certified by a secretary or assistant secretary
of such Credit Party to be true and correct and in full force and
effect as of the Closing Date.
	 
	 	     (iv) Good Standing. Copies of certificates of good standing,
existence or its equivalent with respect to each Credit Party
certified as of a recent date by the appropriate Governmental
Authority of the state or other jurisdiction of its formation and,
without duplication, the State of Minnesota except to the extent
that failure to do so could not reasonably be expected to have a
Material Adverse Effect.
	 
	 	     (v) Incumbency. An incumbency certificate of each Credit
Party certified by a secretary or assistant secretary of such
Credit Party to be true and correct as of the Closing Date.

		
	 	     (c) Opinion of Counsel. Receipt by the Administrative Agent of
opinions reasonably satisfactory to the Administrative Agent, addressed
to the Administrative Agent on behalf of the Lenders and dated as of the
Closing Date.
	 
	 	     (d) Financial Statements. Receipt by the Lenders of (i) the annual
consolidated financial statements (including balance sheets, income
statements and cash flow statements) of the Borrower and its Subsidiaries
for the fiscal year 2002 audited by independent public accountants of
recognized national standing, together with the “management letter”
submitted by such accountants in connection with such financial
statements, (ii) the consolidated financial statements (including balance
sheets, income statements and cash flow statements) of the Borrower and
its Subsidiaries for the fiscal quarter ended March 31, 2003 and (iii)
such other financial information regarding the Borrower and its
Subsidiaries as the Administrative Agent or a Lender may request.
	 
	 	     (e) Consents. Receipt by the Administrative Agent of evidence that
all necessary governmental, shareholder and third party consents and
approvals, if any, have been received and no condition or Requirement of
Law exists which would reasonably be likely to restrain, prevent or
impose any material adverse conditions on the transactions contemplated
hereby.
	 
	 	     (f) Officer’s Certificates. The Administrative Agent shall have
received a certificate or certificates executed by an Authorized Officer
of the Borrower as of the Closing Date stating that (i) the Credit
Parties and each of their Subsidiaries are in compliance with all
existing material financial obligations, (ii) no action, suit,
investigation or proceeding is pending or, to the knowledge of any Credit
Party, threatened in any court or before any arbitrator or Governmental
Authority that purports to affect the Credit Parties, any of their
Subsidiaries or any transaction contemplated by the Credit Documents, if
such action, suit, investigation or proceeding would have or would
reasonably be expected to have a Material Adverse Effect, (iii) all
governmental, shareholder and third party consents and approvals, if any,
with respect to the Credit Documents and the transactions contemplated
thereby have been obtained, (iv) the financial statements and information
delivered to the Administrative Agent on or before the Closing Date were
prepared in good faith and in accordance with GAAP and (v) immediately
after giving effect to this Credit Agreement, the other Credit Documents
and all the transactions contemplated herein or therein to occur on such
date, (A) each Credit Party and each of their Subsidiaries is Solvent,
(B) no Default or Event of Default exists, (C) all representations and
warranties contained herein and in the other Credit Documents are true
and correct in all material respects, and (D) the Credit Parties are in
compliance with each of the financial covenants set forth in Section 7.2,
including calculation thereof as of March 31, 2003.
	 
	 	     (g) Fees and Expenses. Payment by the Credit Parties of all fees
and expenses owed by them to the Administrative Agent or the Lenders,
including, without limitation, as set forth in the Fee Letter.
	 
	 	     (h) Other. Receipt by the Lenders of such other documents,
instruments, agreements or information as reasonably and timely requested
by any Lender.

34

 

     5.2 Conditions to All Extensions of Credit.

     In addition to the conditions precedent stated elsewhere herein, the
Lenders shall not be obligated to make Loans nor shall the Issuing Lender be
required to issue or extend a Letter of Credit unless:

		
	 	     (a) Notice. (i) In the case of any new Loan, the Borrower shall have
delivered a Notice of Borrowing, duly executed and completed, by the time
specified in Section 2.1 and (ii) in the case of any Letter of Credit,
the Borrower shall have delivered to the Issuing Lender an appropriate
request for issuance in accordance with the provisions of Section 2.2.
	 
	 	     (b) Representations and Warranties. The representations and
warranties made by the Credit Parties in any Credit Document are true and
correct in all material respects at and as if made as of such date except
to the extent they expressly and exclusively relate to an earlier date.
	 
	 	     (c) No Default. No Default or Event of Default shall exist and be
continuing either prior to or after giving effect thereto.
	 
	 	     (d) Availability. Immediately after giving effect to the making of
such Loan (and the application of the proceeds thereof) or to the
issuance of such Letter of Credit, as the case may be, the sum of the
principal amount of Loans outstanding plus LOC Obligations outstanding
shall not exceed the Revolving Committed Amount.

The delivery of each Notice of Borrowing and each request for a Letter of
Credit shall constitute a representation and warranty by the Borrower of the
correctness of the matters specified in subsections (b), (c), and (d) above.

SECTION 6

REPRESENTATIONS AND WARRANTIES

     The Credit Parties hereby represent to the Administrative Agent and each
Lender that:

     6.1 Organization and Good Standing.

     Each Credit Party (a) is either a partnership, a corporation or a limited
liability company duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization, (b) is duly qualified and in
good standing as a foreign organization and authorized to do business in every
other jurisdiction where its ownership or operation of property or the conduct
of its business would require it to be qualified, in good standing and
authorized, unless the failure to be so qualified, in good standing or
authorized would not have or would not reasonably be expected to have a
Material Adverse Effect and (c) has the power and authority to own and operate
its properties and to carry on its business as now conducted and as currently
proposed to be conducted.

     6.2 Due Authorization.

     Each Credit Party (a) has the power and authority to execute, deliver and
perform this Credit Agreement and the other Credit Documents to which it is a
party and to incur the obligations herein and therein provided for and (b) has
duly taken all necessary action to authorize, and is duly authorized, to
execute, deliver and perform this Credit Agreement and the other Credit
Documents to which it is a party.

     6.3 Enforceable Obligations.

     Each Credit Party has duly executed this Credit Agreement and each other
Credit Document to which such Credit Party is a party and this Credit Agreement
and such other Credit Documents constitute legal, valid and binding obligations
of such Credit Party enforceable against such Credit Party in accordance with
their respective terms, except as may be limited by bankruptcy or insolvency
laws or similar laws affecting creditors’ rights generally or by general
equitable principles.

35

 

     6.4 No Conflicts.

     Neither the execution and delivery of the Credit Documents to which it is
a party, nor the consummation of the transactions contemplated herein and
therein, nor the performance of or compliance with the terms and provisions
hereof and thereof by a Credit Party will (a) violate, contravene or conflict
with any provision of such Credit Party’s organizational documents, (b)
violate, contravene or conflict with any Requirement of Law (including, without
limitation, Regulations T, U or X), order, writ, judgment, injunction, decree,
license or permit applicable to such Credit Party, (c) violate, contravene or
conflict with contractual provisions of, or cause an event of default under,
any indenture, loan agreement, mortgage, deed of trust, contract or other
agreement or instrument to which such Credit Party is a party
or by which it or its properties may be bound, or (d) result in or require the
creation of any Lien upon or with respect to the properties of such Credit
Party.

     6.5 Consents.

     Except for consents, approvals and authorizations which have been
obtained, no consent, approval, authorization or order of, or filing,
registration or qualification with, any Governmental Authority, equity owner or
third party in respect of any Credit Party is required in connection with the
execution, delivery or performance of this Credit Agreement or any of the other
Credit Documents, or the consummation of any transaction contemplated herein or
therein by such Credit Party.

     6.6 Financial Condition.

     The financial statements delivered to the Administrative Agent and the
Lenders pursuant to Section 5.1(d) and Sections 7.1(a) and (b): (a) have been
prepared in accordance with GAAP and (b) present fairly the consolidated
financial condition, results of operations and cash flows of the Borrower and
its Subsidiaries as of such date and for such periods. Since December 31,
2002, there has been no sale, transfer or other disposition by the Borrower or
any of its Subsidiaries of any material part of the business or property of the
Borrower and its Subsidiaries, taken as a whole, or purchase or other
acquisition by any such Person of any business or property (including any
Capital Stock of any other Person) material in relation to the consolidated
financial condition of the Borrower and its Subsidiaries, taken as a whole, in
each case, which, is not (i) reflected in the most recent financial statements
delivered to the Lenders pursuant to Section 5.1(d) and Section 7.1 or in the
notes thereto or (ii) otherwise permitted by the terms of this Credit Agreement
and communicated to the Administrative Agent and the Lenders.

     6.7 No Material Change.

     Since December 31, 2002, there has been no development or event relating
to or affecting any Credit Party or any of its Subsidiaries which has had or
would reasonably be expected to have a Material Adverse Effect.

     6.8 Disclosure.

     Neither this Credit Agreement, nor any other Credit Document, nor any
financial statements delivered to the Administrative Agent or the Lenders nor
any other document, certificate or statement furnished to the Administrative
Agent or the Lenders by or on behalf of any Credit Party in connection with the
transactions contemplated hereby contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the
statements contained therein or herein not misleading.

     6.9 No Default.

     No Credit Party nor any of its Subsidiaries is in default under any
contract, lease, loan agreement, indenture, mortgage, security agreement or
other agreement or obligation to which it is a party or by which any of its
properties is bound, which default has had or would reasonably be expected to
have a Material Adverse Effect.

36

 

     6.10 Litigation.

     There are no actions, suits or legal, equitable, arbitration or
administrative proceedings, pending or, to the knowledge of any Credit Party,
threatened against, any Credit Party or any of its Subsidiaries or with respect
to its properties or revenues which (a) purport to affect or pertain to this
Credit Agreement or the other Credit Documents or the transactions contemplated
herein and therein or (b) would have or would reasonably be expected to have a
Material Adverse Effect.

     6.11 Taxes.

     Each Credit Party and each of its Subsidiaries has filed, or caused to be
filed, all material tax returns (federal, state, local and foreign) required to
be filed and has paid (a) all amounts of taxes shown thereon to be due
(including interest and penalties) and (b) all other material taxes, fees,
assessments and other governmental charges (including mortgage recording taxes,
documentary stamp taxes and intangibles taxes) owing by it, except for such
taxes (i) which are not yet delinquent or (ii) that are being contested in good
faith and by proper proceedings, and against which adequate reserves are being
maintained in accordance with GAAP. No Credit Party is aware of any proposed
material tax assessments against any Credit Party or any of its Subsidiaries.

     6.12 Compliance with Law.

     Each Credit Party and each of its Subsidiaries is in compliance with all
material Requirements of Law (including, without limitation, Environmental Laws
and ERISA) and all material orders, writs, injunctions and decrees applicable
to it, or to its properties.

     6.13 Licenses, etc.

     Each Credit Party and each of its Subsidiaries has obtained, and holds in
full force and effect, all franchises, licenses, permits, certificates,
authorizations, qualifications, accreditations, easements, rights of way,
intellectual property rights and other rights, consents and approvals which are
necessary for the operation of its business as presently conducted, except for
such exceptions as would not have or would not reasonably be expected to have a
Material Adverse Effect.

     6.14 Title to Properties.

     Each Credit Party, and each of its Subsidiaries, is the owner of, and has
good and marketable title to, or has a valid license or lease to use, all of
its properties and assets (except for minor defects in title, licenses or
leases that do not materially interfere with its ability to conduct its
business or to utilize its properties or assets for their intended purposes)
and none of such properties or assets is subject to any Liens other than
Permitted Liens.

     6.15 Insurance.

     The properties of each Credit Party and each of its Subsidiaries are
insured with financially sound and reputable insurance companies that are not
Affiliates of the Borrower, in such amounts, with such deductibles and covering
such risks, as are customarily carried by companies engaged in similar
businesses and owning similar properties in localities where the Credit Parties
or their Subsidiaries operate.

     6.16 Use of Proceeds.

     The proceeds of the Loans will be used solely for the purposes specified
in Section 7.10. No proceeds of the Loans will be used for the Acquisition of
another Person unless such Acquisition is a Permitted Acquisition.

     6.17 Government Regulation.

		
	 	     (a) The Borrower is not engaged and will not engage, principally or
as one of its important activities, in the business of purchasing or
carrying margin stock (within the meaning of Regulation U), or extending
credit for the purpose of purchasing or carrying margin stock. Following
the application of the 

37

 

		
	 	proceeds of each Loan or drawing under each Letter
of Credit, not more than 25% of the value of the assets (either of
Borrower only or of Borrower and its Subsidiaries on a consolidated
basis) will be margin stock.
	 
	 	     (b) No Credit Party (i) is a “holding company,” or a “subsidiary
company” of a “holding company,” or an “affiliate” of a “holding company”
or of a “subsidiary company” of a “holding company,”
within the meaning of the Public Utility Holding Company Act of 1935, or
(ii) is or is required to be registered as an “investment company” under
the Investment Company Act of 1940.

     6.18 No Burdensome Restrictions.

     No Credit Party nor any of its Subsidiaries is a party to any agreement or
instrument or subject to any other obligation or any charter or corporate
restriction or any provision of any applicable law, rule or regulation which,
individually or in the aggregate, would have or would reasonably be expected to
have a Material Adverse Effect.

     6.19 ERISA.

     Except as would not result in or would not reasonably be expected to
result in a Material Adverse Effect:

		
	 	     (a) (i) No ERISA Event has occurred, and, to the best knowledge of
the Credit Parties, each of their Subsidiaries and each ERISA Affiliate,
no event or condition has occurred or exists as a result of which any
ERISA Event could reasonably be expected to occur, with respect to any
Plan; (ii) no “accumulated funding deficiency,” as such term is defined
in Section 302 of ERISA and Section 412 of the Code, whether or not
waived, has occurred with respect to any Plan and no application for a
funding waiver or an extension of any amortization period pursuant to
Section 412 of the Code has been made with respect to any Plan; (iii)
each Plan has been maintained, operated, and funded in compliance with
its own terms and in material compliance with the provisions of ERISA,
the Code, and any other applicable federal or state laws; (iv) each Plan
that is intended to qualify under Section 401(a) of the Code has received
a favorable determination letter from the IRS or an application for such

a letter is currently being processed by the IRS with respect thereto
and, to the best knowledge of the Credit Parties, each of their
Subsidiaries and each ERISA Affiliate, nothing has occurred which would
prevent, or cause the loss of, such qualification; and (v) no Lien in
favor or the PBGC or a Plan has arisen or is reasonably likely to arise
on account of any Plan.

		
	 	     (b) The actuarial present value of all “benefit liabilities” (as
defined in Section 4001(a)(16) of ERISA), whether or not vested, under
each Single Employer Plan, as of the last annual valuation date prior to
the date on which this representation is made or deemed made (determined,
in each case, in accordance with Financial Accounting Standards Board
Statement 87, utilizing the actuarial assumptions used in such Plan’s
most recent actuarial valuation report), did not exceed as of such
valuation date the fair market value of the assets of such Plan allocated
to such accrued liabilities.

		
	 	     (c) No Credit Party nor any Subsidiary of a Credit Party nor any
ERISA Affiliate has incurred, or, to the best of each such party’s
knowledge, is reasonably expected to incur, any liability under Title IV
of ERISA with respect to any Single Employer Plan, or any withdrawal
liability under ERISA to any Multiemployer Plan or Multiple Employer
Plan. No Credit Party nor any Subsidiary of a Credit Party nor any ERISA
Affiliate would become subject to any withdrawal liability under ERISA if
any such party were to withdraw completely from all Multiemployer Plans
and Multiple Employer Plans as of the valuation date most closely
preceding the date on which this representation is made or deemed made.
No Credit Party nor any Subsidiary of a Credit Party nor any ERISA
Affiliate has received any notification that any Multiemployer Plan is in
reorganization (within the meaning of Section 4241 of ERISA), is
insolvent (within the meaning of Section 4245 of ERISA), or has been
terminated (within the meaning of Title IV of ERISA), and no
Multiemployer Plan is, to the best of each such Person’s knowledge,
reasonably expected to be in reorganization, insolvent, or terminated.
No Credit Party nor any Subsidiary of a Credit Party nor any ERISA
Affiliate has engaged in a transaction that could be subject to Sections
4069 or 4212(c) of ERISA.

		
	 	     (d) No prohibited transaction (within the meaning of Section 406 of
ERISA or Section 4975 of the Code) or breach of fiduciary responsibility
has occurred with respect to a Plan which has subjected or may subject a
Credit Party, any Subsidiary of a Credit Party or any ERISA Affiliate to
any liability under Sections

38

 

		
	 	406, 409, 502(i), or 502(l) of ERISA or
Section 4975 of the Code, or under any agreement or other instrument
pursuant to which a Credit Party, any Subsidiary of a Credit Party or any
ERISA Affiliate has agreed or is
required to indemnify any person against any such liability. There are
no pending or, to the best knowledge of the Credit Parties, each of their
Subsidiaries and each ERISA Affiliate, threatened claims, actions or
lawsuits, or action by any Governmental Authority, with respect to any
Plan that could reasonably be expected to have a Material Adverse Effect.

		
	 	     (e) No Credit Party nor any Subsidiary of a Credit Party nor any
ERISA Affiliate has any material liability with respect to “expected
post-retirement benefit obligations” within the meaning of the Financial
Accounting Standards Board Statement 106. Each Plan that is a welfare
plan (as defined in Section 3(1) of ERISA) to which Sections 601-609 of
ERISA and Section 4980B of the Code apply has been administered in
compliance in all material respects with such sections.

     6.20 Environmental Matters.

		
	 	     (a) Except as would not result in or would not reasonably be
expected to result in a Material Adverse Effect:

		
	 	     (i) Each of the real properties owned, leased or operated by a
Credit Party or any of its Subsidiaries (the “Real Properties”) and
all operations at the Real Properties are in compliance with all
applicable Environmental Laws, and there is no violation of any
Environmental Law with respect to the Real Properties or the
businesses operated by the Credit Parties or any of their
Subsidiaries (the “Businesses”), and there are no conditions
relating to the Businesses or Real Properties that would reasonably
be expected to give rise to liability under any applicable
Environmental Laws.

		
	 	     (ii) No Credit Party has received any written notice of, or
inquiry from any Governmental Authority regarding, any violation,
alleged violation, non-compliance, liability or potential liability
regarding Hazardous Materials or compliance with Environmental Laws
with regard to any of the Real Properties or the Businesses, nor,
to the knowledge of a Credit Party or any of its Subsidiaries, is
any such notice being threatened.

		
	 	     (iii) Hazardous Materials have not been transported or
disposed of from the Real Properties, or generated, treated, stored
or disposed of at, on or under any of the Real Properties or any
other location, in each case by, or on behalf or with the
permission of, a Credit Party or any of its Subsidiaries in a
manner that would give rise to liability under any applicable
Environmental Laws.

		
	 	     (iv) No judicial proceeding or governmental or administrative
action is pending or, to the knowledge of a Credit Party or any of
its Subsidiaries, threatened, under any Environmental Law to which
a Credit Party or any of its Subsidiaries is or will be named as a
party, nor are there any consent decrees or other decrees, consent
orders, administrative orders or other orders, or other
administrative or judicial requirements outstanding under any
Environmental Law with respect to a Credit Party or any of its
Subsidiaries, the Real Properties or the Businesses.

		
	 	     (v) There has been no release (including, without limitation,
disposal) or threat of release of Hazardous Materials at or from
the Real Properties, or arising from or related to the operations
of a Credit Party or any of its Subsidiaries in connection with the
Real Properties or otherwise in connection with the Businesses
where such release constituted a violation of, or would give rise
to liability under, any applicable Environmental Laws.

		
	 	     (vi) None of the Real Properties contains, or has previously
contained, any Hazardous Materials at, on or under the Real
Properties in amounts or concentrations that, if released,
constitute or constituted a violation of, or could give rise to
liability under, Environmental Laws.

		
	 	     (vii) No Credit Party, nor any of its Subsidiaries, has
assumed any liability of any Person (other than another Credit
Party, or one of its Subsidiaries) under any Environmental Law.

39

 

		
	 	     (b) The Credit Parties have adopted procedures that are designed to
(i) ensure that each Credit Party, any of its operations and each of the
Real Properties complies with applicable Environmental Laws and (ii)
minimize any liabilities or potential liabilities that each Credit Party,
any of its operations and each of the Real Properties may have under
applicable Environmental Laws.

     6.21 Intellectual Property.

     Each Credit Party and each of its Subsidiaries owns, or has the legal
right to use, all patents, trademarks, tradenames, copyrights, technology,
know-how and processes (the “Intellectual Property”) necessary for each of them
to conduct its business as currently conducted, except where failure to own or
have such legal right to use would not have or would not reasonably be expected
to have a Material Adverse Effect. No claim has been asserted and is pending
by any Person challenging or questioning the use of any Intellectual Property
owned by any Credit Party or any of its Subsidiaries or that any Credit Party
or any of its Subsidiaries has a right to use or the validity or effectiveness
of any such Intellectual Property, nor does any Credit Party or any of its
Subsidiaries have knowledge of any such claim, and, to the knowledge of the
Credit Parties and their Subsidiaries, the use of any Intellectual Property by
the Credit Parties and their Subsidiaries does not infringe on the rights of
any Person, except for such claims and infringements that in the aggregate,
would not have or would not reasonably be expected to have a Material Adverse
Effect.

     6.22 Subsidiaries.

     Set forth on Schedule 6.22 is a complete and accurate list of all
Subsidiaries of each Credit Party. Schedule 6.22 may be updated from time to
time by the Borrower by giving written notice thereof to the Administrative
Agent.

     6.23 Solvency.

     Each Credit Party is and, after consummation of the transactions
contemplated by this Credit Agreement, will be Solvent.

     6.24 Indebtedness.

     The Credit Parties and their Subsidiaries have no Indebtedness other than
Indebtedness permitted by Section 8.1.

     6.25 Investments; Liens.

     All Investments of each Credit Party and its Subsidiaries are Permitted
Investments. All Liens on the property or assets of the Credit Parties and
their Subsidiaries are Permitted Liens.

     6.26 Force Majeure.

     Since the date of the financial statements delivered in accordance with
Section 5.1(d) or, if later, the date of the most recent financial statements
delivered in accordance with Section 7.1(a) or Section 7.1(b), no event or
condition has occurred that results from fire or other casualty, strike,
lockout or other labor disruption, embargo, sabotage, confiscation,
condemnation, riot, civil disturbance, activity of armed forces or act of God
that has had or would reasonably be expected to have a Material Adverse Effect.

     6.27 Tax Shelter Regulations.

     The Borrower does not intend to treat the Loans and/or Letters of Credit
and related transactions as being a “reportable transaction” (within the
meaning of Treasury Regulation Section 1.6011-4). In the event the Borrower
determines to take any action inconsistent with such intention, it will
promptly notify the Administrative Agent thereof. If the Borrower so notifies
the Administrative Agent, the Borrower acknowledges that one or more of the
Lenders may treat its Loans and/or its interest in Letters of Credit as part of
a transaction that is subject to Treasury

40

 

Regulation Section 301.6112-1, and
such Lender or Lenders, as applicable, will maintain the lists and other
records required by such Treasury Regulation.

SECTION 7

AFFIRMATIVE COVENANTS

     Each Credit Party hereby covenants and agrees that so long as this Credit
Agreement is in effect and until the Loans and LOC Obligations, together with
interest and fees and other obligations then due and payable hereunder, have
been paid in full and the Commitments and Letters of Credit hereunder shall
have terminated:

     7.1 Information Covenants.

     The Credit Parties will furnish, or cause to be furnished, to the
Administrative Agent (for further distribution to the Lenders):

		
	 	     (a) Annual Financial Statements. As soon as available, and in any
event within 90 days after the close of each fiscal year of the Borrower,
a consolidated balance sheet and income statement of the Borrower and its
Subsidiaries, as of the end of such fiscal year, together with related
consolidated statements of operations, retained earnings, changes in
shareholders’ equity and cash flows for such fiscal year, setting forth
in comparative form consolidated figures for the preceding fiscal year,
all such consolidated financial information described above to be in
reasonable form and detail and audited by independent certified public
accountants of recognized national standing reasonably acceptable to the
Administrative Agent and whose opinion shall be to the effect that such
financial statements have been prepared in accordance with GAAP and shall
not be limited as to the scope of the audit or qualified in any manner.

		
	 	     (b) Quarterly Financial Statements. As soon as available, and in
any event within 45 days after the close of each of the first three
fiscal quarters of the Borrower, an unaudited consolidated balance sheet
and income statement of the Borrower and its Subsidiaries, as of the end
of such fiscal quarter, together with related consolidated statements of
operations and consolidated statements of retained earnings and of cash
flows for such fiscal quarter in each case setting forth in comparative
form consolidated figures for the corresponding period of the preceding
fiscal year, all such financial information described above to be in
reasonable form and detail and reasonably acceptable to the
Administrative Agent, and accompanied by a certificate of an Authorized
Officer of the Borrower to the effect that such quarterly financial
statements fairly present in all material respects the consolidated
financial condition of the Borrower and its Subsidiaries and have been
prepared in accordance with GAAP, subject to changes resulting from audit
and normal year-end audit adjustments.

		
	 	     (c) Officer’s Certificate. At the time of delivery of the financial
statements provided for in Sections 7.1(a) and 7.1(b) above, a
certificate of an Authorized Officer of the Borrower substantially in the
form of Exhibit 7.1(c), (i) demonstrating compliance with the financial
covenants contained in Section 7.2 by calculation thereof as of the end
of each such fiscal period, (ii) demonstrating compliance with any other
terms of this Credit Agreement as reasonably requested by the
Administrative Agent, (iii) stating that no Default or Event of Default
exists, or if any Default or Event of Default does exist, specifying the
nature and extent thereof and what action the Borrower proposes to take
with respect thereto and (iv) calculating the Adjusted Leverage Ratio as
of the end of such fiscal period.

		
	 	     (d) Annual Business Plan and Budgets. Within 90 days after the end
of each fiscal year of the Borrower, an annual business plan and budget
(including budgeted Capital Expenditures) of the Borrower and its
Subsidiaries on a consolidated basis containing, among other things, pro
forma financial projections for the next fiscal year (including income
statements, balance sheets and cash flow statements).
	 
	 	     (e) Reports. Promptly upon transmission or receipt thereof, (a)
copies of any filings and registrations with, and reports to or from, the
Securities and Exchange Commission, or any successor agency, and copies
of all financial statements, proxy statements, notices and reports as a
Credit Party or any of its

41

 

		
	 	Subsidiaries shall send to its shareholders
generally and (b) upon the written request of the Administrative Agent,
all reports and written information to and from the United States
Environmental Protection Agency, or any state or local agency responsible
for environmental matters, the United States Occupational Safety and
Health Administration, or any state or local agency responsible for
health and safety matters, or any successor agencies or authorities
concerning environmental, health or safety matters.

		
	 	     (f) Accountant’s Certificate. Within the period for delivery of the
annual financial statements provided in Section 7.1(a), a certificate of
the accountants conducting the annual audit stating that they have
reviewed this Credit Agreement and stating further whether, in the course
of their audit, they have become aware that the Borrower is not in
compliance with any of the affirmative or negative covenants set forth in
Section 7 or Section 8 of this Credit Agreement, insofar as such
covenants relate to accounting matters or are calculated based upon
audited financial information.

		
	 	     (g) Auditor’s Reports. Promptly upon receipt thereof, a copy of any
other report or “management letter” submitted or presented by independent
accountants to any Credit Party or any of its Subsidiaries in connection
with any annual, interim or special audit of the books of such Person.

		
	 	     (h) Notices. Upon a Credit Party obtaining knowledge thereof, the
Borrower will give written notice to the Administrative Agent promptly
(and in any event within two Business Days) of (a) the occurrence of an
event or condition consisting of a Default or Event of Default,
specifying the nature and existence thereof and what action the Borrower
proposes to take with respect thereto, (b) the occurrence of any of the
following with respect to any Credit Party or any of its Subsidiaries (i)
the pendency or commencement of any litigation, arbitration or
governmental proceeding against a Credit Party or any of its Subsidiaries
which, if adversely determined, would have or would reasonably be
expected to have a Material Adverse Effect, (ii) material non-compliance
with, or the institution of any proceedings against a Credit Party or any
of its Subsidiaries with respect to, or the receipt of written notice by
such Person of potential liability or responsibility for violation, or
alleged violation of, any Requirement of Law (including, without
limitation, Environmental Laws) the violation of which would have or
would reasonably be expected to have a Material Adverse Effect and (iii)
non-compliance with any contractual obligation of a Credit Party or any
of its Subsidiaries which would have or would reasonably be expected to
have a Material Adverse Effect, (c) any change to the financial
information used to calculate the Adjusted Leverage Ratio for the most
recently occurring Calculation Date that would have the effect of
changing the existing Pricing Level pursuant to the definition of
“Applicable Percentage” set forth in Section 1.1 and (d) any intention by
Borrower to treat Loans and/or Letters of Credit and related transactions
as being a “reportable transaction” (within the meaning of Treasury
Regulation Section 1.6011-4), a duly completed copy of IRS Form 8886 or
any successor form.

		
	 	     (i) ERISA. Upon a Credit Party, any Subsidiary of a Credit Party or
any ERISA Affiliate obtaining knowledge thereof, such Person shall give
written notice to the Administrative Agent and each of the Lenders
promptly (and in any event within two Business Days) of: (i) any event or
condition, including, but not limited to, any Reportable Event, that
constitutes, or might reasonably lead to, an ERISA Event; (ii) with
respect to any Multiemployer Plan, the receipt of notice as prescribed in
ERISA or otherwise of any withdrawal liability assessed against a Credit
Party, any Subsidiary of a Credit Party or any ERISA Affiliate, or of a
determination that any Multiemployer Plan is in reorganization or
insolvent (both within the meaning of Title IV of ERISA); (iii) the
failure to make full payment on or before the due date (including
extensions) thereof of all amounts which a Credit Party, any Subsidiary
of a Credit Party or any ERISA Affiliate is required to contribute to
each Plan pursuant to its terms and as required to meet the minimum
funding standard set forth in ERISA and the Code with respect thereto; or
(iv) any change in the funding status of any Plan that could have a
Material Adverse Effect; in each case together with a description of any
such event or condition or a copy of any such notice and a statement by
an Authorized Officer of the Borrower briefly setting forth the details
regarding such event, condition, or notice, and the action, if any, which
has been or is being taken or is proposed to be taken by such Person with
respect thereto. Promptly upon request, the Credit Parties shall furnish
the Administrative Agent and the Lenders with such additional information
concerning any Plan as may be reasonably requested, including, but not
limited to, copies of each annual report/return (Form 5500 series), as
well as all schedules and attachments thereto required to be filed with
the Department of Labor

42

 

		
	 	and/or the Internal Revenue Service pursuant to
ERISA and the Code, respectively, for each “plan year” (within the
meaning of Section 3(39) of ERISA).

		
	 	     (j) Environmental. During the existence of an Event of Default, and
upon the written request of the Administrative Agent, the Credit Parties
will furnish or cause to be furnished to the Administrative Agent, at the
Credit Parties’ expense, a report of an environmental assessment of
reasonable scope, form and depth, including, where appropriate, invasive
soil or groundwater sampling, by a consultant reasonably acceptable to
the Administrative Agent regarding any release or threat of release of
Hazardous Materials on any property owned, leased or operated by a Credit
Party and the compliance by the Credit Parties with Environmental Laws.
If the Credit Parties fail to deliver such an environmental report within
seventy-five (75) days after receipt of such written request, then the
Administrative Agent may arrange for same, and the Credit Parties hereby
grant to the Administrative Agent and its representatives access to the
Real Properties and a license of a scope reasonably necessary to
undertake such an assessment (including, where appropriate, invasive soil
or groundwater sampling). The reasonable cost of any assessment arranged
for by the Administrative Agent pursuant to this provision will be
payable by the Credit Parties on demand.

		
	 	     (k) Other Information. With reasonable promptness upon any such
request, such other information regarding the business, properties or
financial condition of the Credit Parties and their Subsidiaries as the
Administrative Agent or any Lender may reasonably request.

		
	 	7.2 Financial Covenants.

		
	 	     (a) Tangible Net Worth. Tangible Net Worth shall at all times be
greater than or equal to the sum of (i) $190,000,000 plus (ii) 25% of Net
Income (without deduction for losses) earned for each fiscal quarter of
the Borrower (beginning with the quarter ending September 30, 2003)
including the most recent fiscal quarter ending prior to the date of
determination plus (iii) 50% of the amount of Net Cash Proceeds from any
Equity Issuance occurring from the Effective Date to the last day of the
most recent fiscal quarter ending prior to the date of determination.

		
	 	     (b) Leverage Ratio. The Leverage Ratio, as of the last day of each
fiscal quarter of the Borrower, shall be less than or equal to 2.25 to
1.0.

		
	 	     (c) Interest Coverage Ratio. The Interest Coverage Ratio, as of the
last day of each fiscal quarter of the Borrower, shall be greater than or
equal to 4.0 to 1.0.

     7.3 Preservation of Existence and Franchises.

     Each of the Credit Parties will, and will cause its Subsidiaries to, do
all things necessary to preserve and keep in full force and effect its
existence and all material rights, franchises, intellectual property and
authority except as permitted by Section 8.5.

     7.4 Books and Records.

     Each of the Credit Parties will, and will cause its Subsidiaries to, keep
complete and accurate books and records of its transactions in accordance with
GAAP (including the establishment and maintenance of appropriate reserves).

     7.5 Compliance with Law.

     Each of the Credit Parties will, and will cause its Subsidiaries to,
comply with all material Requirements of Law, and all material restrictions
imposed by all Governmental Authorities, applicable to it and its property
(including, without limitation, Environmental Laws and ERISA).

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     7.6 Payment of Taxes and Other Indebtedness.

     Each of the Credit Parties will, and will cause its Subsidiaries to, pay,
settle or discharge (a) all material taxes, assessments and governmental
charges or levies imposed upon it, or upon its income or profits, or upon any
of its properties, before they shall become delinquent, (b) all lawful claims
(including claims for labor, materials and supplies) which, if unpaid, might
give rise to a Lien upon any of its properties, and (c) all of its other
Indebtedness as it shall become due (to the extent such repayment is not
otherwise prohibited by this Credit Agreement); provided, however, that a
Credit Party shall not be required to pay any such tax, assessment, charge,
levy, claim or Indebtedness which is being contested in good faith by
appropriate proceedings and as to which adequate reserves therefor have been
established in accordance with GAAP, unless the failure to make any such
payment (i) would give rise to an immediate right to foreclose or collect on a
Lien securing such amounts or (ii) would have or would reasonably be expected
to have a Material Adverse Effect.

     7.7 Insurance.

     Each of the Credit Parties will, and will cause each of its Subsidiaries
to, at all times maintain in full force and effect insurance (including
liability, casualty and business interruption insurance) with reputable
national companies that are not Affiliates of the Borrower, in such amounts,
covering such risks and liabilities and with such deductibles and
self-insurance retentions as are in accordance with normal industry practice;
provided that the Borrower may maintain a program of self-insurance with
respect to products liability and worker’s compensation liability.

     7.8 Maintenance of Property.

     Each of the Credit Parties will, and will cause its Subsidiaries to,
maintain and preserve its properties and equipment in good repair, working
order and condition, normal wear and tear and damages from casualty excepted,
and will make, or cause to be made, in such properties and equipment from time
to time all repairs, renewals, replacements, extensions, additions, betterments
and improvements thereto as may be needed or proper, to the extent and in the
manner customary for companies in similar businesses.

     7.9 Performance of Obligations.

     Each of the Credit Parties will, and will cause its Subsidiaries to,
perform in all material respects all of its obligations under the terms of all
material contracts, agreements, indentures, mortgages, security agreements or
other debt instruments to which it is a party or by which it or its properties
may be bound.

     7.10 Use of Proceeds.

     The Credit Parties will use the proceeds of the Loans solely (a) to repay
Indebtedness of the Borrower identified in Section 5.1(g), (b) to provide
working capital for the Borrower and (c) for general corporate purposes of the
Borrower. The Borrower will use the Letters of Credit solely for the purposes
set forth in Section 2.2(a).

     7.11 Audits/Inspections.

     Upon reasonable notice and during normal business hours, at the Credit
Parties’ expense, each Credit Party will, and will cause each of its
Subsidiaries to, permit representatives appointed by the Administrative Agent
or any Lender, including, without limitation, independent accountants, agents,
attorneys and appraisers to visit and inspect such Credit Party’s or
Subsidiary’s property, including its books and records, its accounts receivable
and inventory, its
facilities and its other business assets, and to make photocopies or
photographs thereof and to write down and record any information such
representative obtains and shall permit the Administrative Agent, any Lender or
its representatives to investigate and verify the accuracy of information
provided to the Administrative Agent or the Lenders and to discuss all such
matters with the officers, employees and representatives of the Credit Parties
and/or their Subsidiaries; provided however that, unless an Event of Default
shall exist and be continuing, the Administrative Agent and the Lenders shall
not, in the aggregate, exercise their rights under this Section 7.11 more than
two times during any calendar year and only one such time shall be at the
Credit Parties’ expense. Notwithstanding the foregoing, no information
protected by an attorney-client privilege shall be required to be disclosed
pursuant to this Section 7.11; provided however that in the event any Credit
Party claims that any materials requested for review, investigation or

44

 

discussion by the Administrative Agent or any Lender, or any of its
representatives pursuant to this Section 7.11 is protected by an
attorney-client privilege, then such Credit party shall (a) provide the
Administrative Agent or such Lender with a reasonably acceptable basis for the
assertion of the privilege, (b) remove or redact only those portions of the
materials deemed to be privileged and (c) reasonably cooperate with the
Administrative Agent or such Lender to determine a method by which the
information which the Administrative Agent or such Lender reasonably deemed
necessary to review, investigate or discuss may be obtained by the
Administrative Agent in an alternative method which will not jeopardize any
attorney-client privilege.

     7.12 Additional Credit Parties.

     At the time any Person becomes a Domestic Subsidiary, the Borrower shall
so notify the Administrative Agent and promptly thereafter (but in any event
within 30 days) shall cause such Person to (a) execute a Joinder Agreement in
substantially the same form as Exhibit 7.12, (b) deliver such other
documentation as the Administrative Agent may reasonably request in connection
with the foregoing, including, without limitation, certified resolutions and
other organizational and authorizing documents of such Person and favorable
opinions of counsel to such Person (which shall cover, among other things, the
legality, validity, binding effect and enforceability of the documentation
referred to above), all in form, content and scope reasonably satisfactory to
the Administrative Agent and (c) update such schedules to the Credit Agreement
as appropriate to reflect the joinder of such new Domestic Subsidiary.

SECTION 8

NEGATIVE COVENANTS

     Each Credit Party hereby covenants and agrees that so long as this Credit
Agreement is in effect and until the Loans and LOC Obligations, together with
interest, fees and other obligations then due and payable hereunder, have been
paid in full and the Commitments and Letters of Credit hereunder shall have
terminated:

     8.1 Indebtedness.

     Subject to Section 8.2, no Credit Party will, nor will it permit any of
its Subsidiaries to, contract, create, incur, assume or permit to exist any
Indebtedness, other than:

		
	 	     (a) Indebtedness arising under (i) this Credit Agreement and the
other Credit Documents and (ii) the Multi-Year Credit Agreement and the
documents, instruments and agreements executed in connection therewith;

		
	 	     (b) Indebtedness in respect of current accounts payable and accrued
expenses incurred in the ordinary course of business and to the extent
not current, accounts payable and accrued expenses that are subject to
bona fide dispute and against which adequate reserves have been
established in accordance with GAAP;

		
	 	     (c) Indebtedness owing by a Credit Party to another Credit Party;
	 
	 	     (d) purchase money Indebtedness (including Capital Leases) to
finance the purchase of fixed assets (including equipment); provided that
(i) the sum of (A) the total amount of all such Indebtedness outstanding
for the Credit Parties and their Subsidiaries plus (B) the aggregate
amount of Synthetic Leases outstanding pursuant to clause (e) below shall
not exceed an aggregate principal amount of $30,000,000 at any one time
outstanding; (ii) such Indebtedness when incurred shall not exceed the
purchase price of the asset(s) financed; and (iii) no such Indebtedness
shall be refinanced for a principal amount in excess of the principal
balance outstanding thereon at the time of such refinancing;

		
	 	     (e) Indebtedness comprised of Synthetic Leases; provided that the
sum of (i) the total amount of all such Indebtedness for the Credit
Parties and their Subsidiaries outstanding plus (ii) the

45

 

		
	 	aggregate amount
of purchase money Indebtedness outstanding pursuant to clause (d) above
shall not exceed an aggregate principal amount of $30,000,000 at any one
time outstanding.

		
	 	     (f) Indebtedness owing by a Foreign Subsidiary to another Foreign
Subsidiary or to a Credit Party;

		
	 	     (g) Indebtedness of the Foreign Subsidiaries in addition to clause
(f) above in an amount not to exceed $25,000,000 in the aggregate at any
one time outstanding;

		
	 	     (h) reimbursement obligations with respect to draws under letters of
credit issued to (i) provide for, or to ensure, the payment of the
purchase prices of goods acquired by a Credit Party or any of its
Subsidiaries or (ii) support obligations of a Credit Party or any of its
Subsidiaries provided that such reimbursement obligations are paid in
full on the dates the financial institutions that issued such letters of
credit pay the draws;

		
	 	     (i) Guaranty Obligations permitted by Section 8.2;

		
	 	     (j) Indebtedness evidenced by Hedging Agreements entered into in the
ordinary course of business and not for speculative purposes;

		
	 	     (k) Indebtedness set forth on Schedule 8.1(k); and

		
	 	     (l) other unsecured Funded Debt of a Credit Party; provided that the
principal amount of such unsecured Funded Debt, if deemed included in the
calculation of the Leverage Ratio as of the last day of the most recently
ended fiscal quarter, would not cause the Leverage Ratio to exceed 2.25
to 1.0 on such date.

     8.2 Guaranty Obligations.

     Notwithstanding anything in Section 8.1 to the contrary, no Credit Party
will, nor will it permit its Subsidiaries to contract, create, incur, assume or
permit to exist any Guaranty Obligation other than:

		
	 	     (a) the obligation of such Person to purchase the property of
another Person from a creditor of such other Person who has repossessed
such property as a result of a default by such other Person under a
dealer floor-plan financing arrangement with such creditor, pursuant to
those repurchase agreements existing on the Closing Date as set forth on
Schedule 8.2(a);

		
	 	     (b) Guaranty Obligations of any Subsidiary of the Borrower with
respect to any Hedging Agreement entered into by the Borrower with a
Lender or an Affiliate of a Lender;
	 
	 	     (c) Guaranty Obligations of any Subsidiary of the Borrower with
respect to any letter of credit that is issued by a Lender or an
Affiliate of a Lender for the account of the Borrower;

		
	 	     (d) the liability, or potential liability, of (i) PAI as a general
partner of Acceptance Partnership and (ii) the Borrower and PAI
consisting of obligations to make capital contributions, in an amount not
to exceed the sum of (A) the existing obligations set forth on Schedule
8.2(d) plus (B) an additional $25,000,000 incurred during the term of
this Credit Agreement; and

		
	 	     (e) obligations under the Revolving Program Agreement; provided that
the Polaris Participation Fee Shortfall Obligations shall not exceed
$60,000,000, in the aggregate, at any one time; and

		
	 	     (f) other Guaranty Obligations of the Credit Parties in an aggregate
amount not to exceed $15,000,000.

46

 

     8.3 Liens.

     No Credit Party will, nor will it permit its Subsidiaries to, contract,
create, incur, assume or permit to exist any Lien with respect to any of its
property or assets of any kind (whether real or personal, tangible or
intangible), whether now owned or after acquired, other than Permitted Liens.

     8.4 Nature of Business.

     No Credit Party will, nor will it permit its Subsidiaries to, alter the
character of its business from that conducted as of the Effective Date or
engage in any business other than the business conducted as of the Effective
Date and activities which are substantially similar or related thereto.

     8.5 Consolidation and Merger.

     No Credit Party will, nor will it permit any Subsidiary to, enter into any
transaction of merger or consolidation or liquidate, wind up or dissolve
itself, or suffer any such liquidation, wind-up or dissolution; provided that a
Credit Party or a Subsidiary of a Credit Party may merge or consolidate with or
into another Person if the following conditions are satisfied:

		
	 	     (a) the Administrative Agent is given prior written notice of such
action;

		
	 	     (b) if the merger or consolidation involves a Credit Party, the
surviving entity of such merger or consolidation shall either (i) be such
Credit Party or (ii) be a Subsidiary of the Borrower and expressly
assumes in writing all of the obligations of such Credit Party under the
Credit Documents; provided that if the transaction is between the
Borrower and another Person, the Borrower must be the surviving entity;

		
	 	     (c) the Credit Parties execute and deliver such documents,
instruments and certificates as the Administrative Agent may request;

		
	 	     (d) immediately after giving effect to such transaction, no Default
or Event of Default shall have occurred and be continuing; and

		
	 	     (e) the Borrower delivers to the Administrative Agent an officer’s
certificate and an opinion of counsel stating that such consolidation or
merger, and any written agreement entered into in connection therewith,
comply with this Section 8.5.
	 
	 	8.6 Sale or Lease of Assets.

     No Credit Party will, nor will it permit its Subsidiaries to, convey,
sell, lease, transfer or otherwise voluntarily dispose of, in one transaction
or a series of transactions, all or any part of its business or assets whether
now owned or hereafter acquired, including, without limitation, inventory,
receivables, equipment, real property interests (whether owned or leasehold)
and securities, other than a sale, lease, transfer or other disposal (a) by a
Credit Party of any or all of its assets to another Credit Party; (b) of
inventory in the ordinary course of business; (c) of obsolete, slow-moving,
idle or worn-out assets no longer used or useful in the business of such Credit
Party or the trade-in of equipment for equipment in better condition or of
better quality; (d) which constitutes a Permitted Investment in the ordinary
course of business; (e) by PAI of its partnership interest in Acceptance
Partnership if required by Section 3.4 of the Acceptance Partnership Agreement
(without regard to any amendment of such section); (f) of accounts receivable
pursuant to the financing contracts set forth on Schedule 8.6 or any
replacement arrangement with the same economic effect; and (g) of assets of the
Credit Parties and their Subsidiaries after the Closing Date, in addition to
those permitted above in this Section 8.6; provided that (i) the transfer is
for fair market value, (ii) no Default or Event of Default exists either prior
to or after giving effect thereto and (iii) after giving effect thereto, the
aggregate amount of all such transfers during the term of this Credit
Agreement, calculated on a net book value basis, does not exceed ten percent
(10%) of Total Assets, as determined on the last day of the most recently ended
fiscal year of the Borrower.

47

 

     8.7 Sale Leasebacks.

     No Credit Party will, nor will it permit its Subsidiaries to, directly or
indirectly become or remain liable as lessee or as guarantor or other surety
with respect to any lease of any property (whether real or personal or mixed),
whether now owned or hereafter acquired, (a) which such Credit Party or its
Subsidiary has sold or transferred or is to sell or transfer to any other
Person other than a Credit Party or (b) which such Credit Party or its
Subsidiary intends to use for substantially the same purpose as any other
property which has been sold or is to be sold or transferred by such Credit
Party to any Person in connection with such lease, other than such transactions
permitted by the Lenders.

     8.8 Investments.

     No Credit Party will, nor will it permit its Subsidiaries to, make or
permit to exist any Investments except for Permitted Investments.

     8.9 Foreign Subsidiaries.

     No Credit Party will, nor will it permit its Subsidiaries to, permit the
aggregate amount of assets owned by the Foreign Subsidiaries, at any one time,
to constitute more than twenty percent (20%) of Total Assets.

     8.10 Transactions with Affiliates.

     No Credit Party will, nor will it permit its Subsidiaries to, enter into
any transaction or series of transactions, whether or not in the ordinary
course of business, with any officer, director, shareholder, Subsidiary or
Affiliate other than the normal compensation, indemnification and reimbursement
of expenses of officers, employees and directors and transactions on terms and
conditions substantially as favorable as would be obtainable in a comparable
arm’s-length transaction with a Person other than an officer, director,
shareholder, Subsidiary or Affiliate.

     8.11 Fiscal Year; Accounting; Organizational Documents.

     No Credit Party will, nor will it permit its Subsidiaries to, (a) change
its fiscal year, (b) change its accounting procedures, except as a result of
changes in GAAP and in accordance with Section 1.3 or (c) in any manner that
would reasonably be likely to adversely affect the rights of the Lenders,
change its organizational or governing documents.

     8.12 No Limitations.

     No Credit Party will, nor will it permit its Subsidiaries to, directly or
indirectly, create or otherwise cause, incur, assume, suffer or permit to exist
or become effective any consensual encumbrance or restriction of any kind on
the ability of any such Person to (a) pay dividends or make any other
distribution on any of such Person’s Capital Stock, (b) pay any Indebtedness
owed to any other Credit Party, (c) make loans or advances to any other Credit
Party or (d) transfer any of its property to any other Credit Party, except for
encumbrances or restrictions existing under or by reason of (i) customary
non-assignment provisions in any lease governing a leasehold interest and (ii)
this Credit Agreement and the other Credit Documents.

     8.13 No Other Negative Pledges.

     No Credit Party will, nor will it permit its Subsidiaries to, enter into,
assume or become subject to any agreement prohibiting or otherwise restricting
the creation or assumption of any Lien upon its properties or assets, whether
now owned or hereafter acquired, or requiring the grant of any security for
such obligation if security is given for some other obligation except as set
forth in the Credit Documents.

     8.14 PAI Assets.

     No Credit Party will, nor will it permit any Subsidiary to, allow PAI to
own any assets other than equity interests in Acceptance Partnership and
dividends or other distributions derived therefrom; provided that PAI shall
transfer any such dividends or distributions to Polaris Industries Inc. or the
Borrower within 15 Business Days of receipt.

48

 

SECTION 9

EVENTS OF DEFAULT

     9.1 Events of Default.

     An Event of Default shall exist upon the occurrence, and during the
continuation, of any of the following specified events (each an “Event of
Default”):

		
	 	     (a) Payment. Any Credit Party shall default in the payment (i) when
due of any principal of any of the Loans or any reimbursement obligation
arising from drawings under Letters of Credit or (ii) within three
Business Days of when due of any interest on the Loans or any fees or
other amounts owing hereunder, under any of the other Credit Documents or
in connection herewith.

		
	 	     (b) Representations. Any representation, warranty or statement made
or deemed to be made by any Credit Party herein, in any of the other
Credit Documents, or in any statement or certificate delivered or
required to be delivered pursuant hereto or thereto shall prove untrue in
any material respect on the date as of which it was made or deemed to
have been made.

		
	 	     (c) Covenants. Any Credit Party shall:

		
	 	     (i) default in the due performance or observance of any term,
covenant or agreement contained in Sections 7.2, 7.3, 7.5, 7.10,
7.11 or 7.12 or Section 8 inclusive;

		
	 	     (ii) default in the due performance or observance by it of any
term, covenant or agreement contained in Section 7.1 and such
default shall continue unremedied for a period of five Business
Days; or
	 
	 	     (iii) default in the due performance or observance by it of
any term, covenant or agreement (other than those referred to in
subsections (a), (b) or (c)(i) or (ii) of this Section 9.1)
contained in this Credit Agreement and such default shall continue
unremedied for a period of at least 30 days after the earlier of
the President, Chief Executive Officer, Chief Financial Officer or
Treasurer of the Borrower becoming aware of such default or notice
thereof given by the Administrative Agent.

		
	 	     (d) Other Credit Documents. (i) Any Credit Party shall default in
the due performance or observance of any term, covenant or agreement in
any of the other Credit Documents and such default shall continue
unremedied for a period of at least 30 days after the earlier of an
officer of a Credit Party becoming aware of such default or notice
thereof given by the Administrative Agent, (ii) any Credit Document shall
fail to be in full force and effect or any Credit Party shall so assert
or (iii) any Credit Document shall fail to give the Administrative Agent
and/or the Lenders the liens, rights, powers and privileges purported to
be created by such Credit Document.

		
	 	     (e) Guaranties. The guaranty given by the Credit Parties hereunder
or by any Additional Credit Party or any provision thereof shall cease to
be in full force and effect, or any Guarantor or any Person acting by or
on behalf of such Guarantor shall deny or disaffirm such Guarantor’s
obligations under such guaranty or such Guarantor shall default in the
due payment or performance of such guaranty.

		
	 	     (f) Bankruptcy, etc. The occurrence of any of the following with
respect to a Credit Party or any of its Subsidiaries (i) a court or
governmental agency having jurisdiction in the premises shall enter a
decree or order for relief in respect of a Credit Party or any of its
Subsidiaries in an involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or appoint a
receiver, liquidator, assignee, custodian, trustee, sequestrator,
administrator or similar official of a Credit Party or any of its
Subsidiaries or for any substantial part of its property or ordering the
winding up or liquidation of, or an

49

 

		
	 	administrator in respect of, its
affairs; or (ii) an involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect is commenced
against a Credit Party or any of its Subsidiaries and such petition
remains unstayed and in effect for a period of 60 consecutive days; or
(iii) a Credit Party or any of its Subsidiaries shall commence a
voluntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or consent to the entry of an
order for relief in an involuntary case under any such law, or consent to
the appointment or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator, administrator or similar official of
such Person or any substantial part of its property or make any general
assignment for the benefit of creditors; or (iv) a Credit Party or any of
its Subsidiaries shall fail generally, or shall admit in writing its
inability, to pay its debts as they become due or any action shall be
taken by such Person in furtherance of any of the aforesaid purposes.

		
	 	     (g) Defaults under Other Agreements.

		
	 	     (i) A Credit Party or any of its Subsidiaries shall default in
the due performance or observance (beyond any applicable grace
period with respect thereto) of any material obligation or
condition of any contract or lease to which it is a party,
including, but not limited to, any Hedging Agreement; or

		
	 	     (ii) With respect to any Indebtedness in excess of $10,000,000
(other than Indebtedness outstanding under this Credit Agreement)
of a Credit Party or any of its Subsidiaries (A) such Person shall
(x) default in any payment (beyond the applicable grace period with
respect thereto, if any) with respect to any such Indebtedness, or
(y) default (after giving effect to any applicable grace period) in
the observance or performance relating to such Indebtedness or
contained in any instrument or agreement evidencing, securing or
relating thereto, or any other event or condition shall occur or
condition exist, the effect of which default or other event or
condition is to cause, or permit, the holder or holders of such
Indebtedness (or trustee or agent on behalf of such holders, if
any) to require (determined without regard to whether any notice or
lapse of time is required) any such Indebtedness
to become due prior to its stated maturity; or (B) any such
Indebtedness shall be declared due and payable, or required to be
prepaid other than by a regularly scheduled required prepayment
prior to the stated maturity thereof; or (C) any such Indebtedness
shall mature and remain unpaid.

		
	 	     (h) Judgments. One or more judgments, orders, or decrees shall be
entered against any one or more of the Credit Parties and their
Subsidiaries involving a liability of $10,000,000 or more, in the
aggregate, (to the extent not paid or covered by insurance provided by a
carrier who has acknowledged coverage) and such judgments, orders or
decrees (i) are the subject of any enforcement proceeding commenced by
any creditor or (ii) shall continue unsatisfied, undischarged and
unstayed for a period ending on the first to occur of (A) the last day on
which such judgment, order or decree becomes final and unappealable or
(B) 60 days.

		
	 	     (i) ERISA. The occurrence of any of the following events or
conditions: (i) any “accumulated funding deficiency,” as such term is
defined in Section 302 of ERISA and Section 412 of the Code, whether or
not waived, shall exist with respect to any Plan, or any Lien shall arise
on the assets of a Credit Party, any Subsidiary of a Credit Party or any
ERISA Affiliate in favor of the PBGC or a Plan; (ii) an ERISA Event shall
occur with respect to a Single Employer Plan, which is, in the reasonable
opinion of the Administrative Agent, likely to result in the termination
of such Plan for purposes of Title IV of ERISA; (iii) an ERISA Event
shall occur with respect to a Multiemployer Plan or Multiple Employer
Plan, which is, in the reasonable opinion of the Administrative Agent,
likely to result in (A) the termination of such Plan for purposes of
Title IV of ERISA, or (B) a Credit Party, any Subsidiary of a Credit
Party or any ERISA Affiliate incurring any liability in connection with a
withdrawal from, reorganization of (within the meaning of Section 4241 of
ERISA), or insolvency (within the meaning of Section 4245 of ERISA) of
such Plan; (iv) any prohibited transaction (within the meaning of Section
406 of ERISA or Section 4975 of the Code) or breach of fiduciary
responsibility shall occur which may subject a Credit Party, any
Subsidiary of a Credit Party or any ERISA Affiliate to any liability
under Sections 406, 409, 502(i), or 502(l) of ERISA or Section 4975 of
the Code, or under any agreement or other instrument pursuant to which a
Credit Party, any Subsidiary of a Credit Party or any ERISA Affiliate has
agreed or is required to indemnify any Person against any such liability;
or (v) a Credit Party, any Subsidiary of a Credit Party or any ERISA
Affiliate fails to pay when due, after the

50

 

		
	 	expiration of any applicable
grace period, any installment payment with respect to its withdrawal
liability under Section 4201 of ERISA under a Multiemployer Plan in an
aggregate amount in excess of $500,000.

		
	 	     (j) Multi-Year Credit Agreement. An Event of Default (as defined
therein) shall occur under the Multi-Year Credit Agreement.

		
	 	     (k) Ownership. There shall occur a Change of Control.

		
	 	     (l) Condemnation. All or substantially all of the property of a
Credit Party or any of its Subsidiaries shall become subject to a
condemnation, taking or other appropriation action by any Governmental
Authority.

     9.2 Acceleration; Remedies.

     Upon the occurrence and during the continuation of an Event of Default,
the Administrative Agent may or shall, upon the request and direction of the
Required Lenders, take the following actions without prejudice to the rights of
the Administrative Agent or any Lender to enforce its claims against the Credit
Parties, except as otherwise specifically provided for herein:

		
	 	     (a) Termination of Commitments. Declare the Commitments terminated
whereupon the Commitments shall be immediately terminated.

		
	 	     (b) Acceleration of Loans. Declare the unpaid principal of and any
accrued interest in respect of all Loans, any reimbursement obligations
arising from drawings under Letters of Credit and any and all other
Indebtedness or obligations of any and every kind owing by a Credit Party
to any of the Lenders under the
Credit Documents to be due whereupon the same shall be immediately due
and payable without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Credit Parties.

		
	 	     (c) Cash Collateral. Direct the Borrower to Cash Collateralize (and
the Borrower agrees that upon receipt of such notice, or upon the
occurrence of an Event of Default under Section 9.1(f), they will
immediately Cash Collateralize) all then outstanding Letters of Credit in
an amount equal to the maximum aggregate amount which may be drawn under
all Letters of Credits then outstanding. The Borrower will grant to the
Administrative Agent, for the benefit of the Issuing Lender and the
Lenders, a security interest in all such cash, deposit accounts and all
balances therein and all proceeds of the foregoing. The cash collateral
shall be maintained in blocked, non-interest bearing deposit accounts at
Bank of America as additional security for the LOC Obligations.

		
	 	     (d) Enforcement of Rights. Enforce any and all rights and interests
created and existing under the Credit Documents, including, without
limitation, all rights and remedies against a Guarantor and all rights of
set-off.

Notwithstanding the foregoing, if an Event of Default specified in Section
9.1(f) shall occur, then the Commitments shall automatically terminate and all
Loans, all reimbursement obligations under Letters of Credit, all accrued
interest in respect thereof, all accrued and unpaid fees and other indebtedness
or obligations owing to the Lenders hereunder shall immediately become due and
payable without the giving of any notice or other action by the Administrative
Agent or the Lenders, which notice or other action is expressly waived by the
Credit Parties.

Notwithstanding the fact that enforcement powers reside primarily with the
Administrative Agent, each Lender has, to the extent permitted by law, a
separate right of payment and shall be considered a separate “creditor” holding
a separate “claim” within the meaning of Section 101(5) of the Bankruptcy Code
or any other insolvency statute.

     9.3 Allocation of Payments After Event of Default.

     Notwithstanding any other provisions of this Credit Agreement, after the
occurrence and during the continuation of an Event of Default and the exercise
of remedies by the Administrative Agent or the Lenders pursuant to Section 9.2
(or after the Commitments shall automatically terminate and the Loans (with
accrued

51

 

interest thereon) and all other amounts under the Credit Documents
shall automatically become due and payable in accordance with the terms of such
Section), all amounts collected or received by the Administrative Agent or any
Lender on account of amounts outstanding under any of the Credit Documents
shall be paid over or delivered as follows:

		
	 	     FIRST, to the payment of all reasonable out-of-pocket costs and
expenses (including without limitation reasonable Attorney Costs) of the
Administrative Agent or any of the Lenders in connection with enforcing
the rights of the Lenders under the Credit Documents, pro rata as set
forth below;

		
	 	     SECOND, to payment of any fees owed to the Administrative Agent, the
Issuing Lender or any Lender, pro rata as set forth below;

		
	 	     THIRD, to the payment of all accrued interest payable to the Lenders
hereunder, pro rata as set forth below;

		
	 	     FOURTH, to the payment of the outstanding principal amount of the
Loans and unreimbursed drawings under Letters of Credit, and to the
payment or to Cash Collateralize the outstanding LOC Obligations, pro
rata as set forth below;

		
	 	     FIFTH, to all other obligations which shall have become due and
payable under the Credit Documents and not repaid pursuant to clauses
“FIRST” through “FOURTH” above;
	 
	 	     SIXTH, to any principal amounts outstanding under Hedging
Agreements between a Credit Party and a Lender or Affiliate of a Lender,
pro rata as set forth below; and

		
	 	     SEVENTH, to the payment of the surplus, if any, to whoever may be
lawfully entitled to receive such surplus.

In carrying out the foregoing, (a) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category; (b) each of the Lenders shall receive an amount equal to
its pro rata share (based on the proportion that the then outstanding Loans,
and LOC Obligations held by such Lender bears to the aggregate then outstanding
Loans and LOC Obligations, or, in the case of clause “SIXTH” above, the
proportion of then outstanding obligations under Hedging Agreements) of amounts
available to be applied; and (c) to the extent that any amounts available for
distribution pursuant to clause “FOURTH” above are attributable to the issued
but undrawn amount of outstanding Letters of Credit, such amounts shall be held
by the Administrative Agent in a cash collateral account and applied (i) first,
to reimburse the Issuing Lender from time to time for any drawings under such
Letters of Credit and (ii) then, following the expiration of all Letters of
Credit, to all other obligations of the types described in clauses “FOURTH” and
“FIFTH” above in the manner provided in this Section 9.3.

SECTION 10

AGENCY PROVISIONS

     10.1 Appointment.

		
	 	     (a) Each Lender hereby irrevocably appoints, designates and
authorizes the Administrative Agent to take such action on its behalf
under the provisions of this Credit Agreement and each other Credit
Document and to exercise such powers and perform such duties as are
expressly delegated to it by the terms of this Credit Agreement or any
other Credit Document, together with such powers as are reasonably
incidental thereto. Notwithstanding any provision to the contrary
contained elsewhere herein or in any other Credit Document, the
Administrative Agent shall not have any duties or responsibilities,
except those expressly set forth herein, nor shall the Administrative
Agent have or be deemed to have any fiduciary or trustee relationship
with any Lender or participant, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into
this Credit Agreement or any other Credit Document or

52

 

		
	 	otherwise exist
against the Administrative Agent. Without limiting the generality of the
foregoing sentence, the use of the term “agent” herein and in the other
Credit Documents with reference to the Administrative Agent is not
intended to connote any fiduciary or other implied (or express)
obligations arising under agency doctrine of any applicable law.
Instead, such term is used merely as a matter of market custom, and is
intended to create or reflect only an administrative relationship between
independent contracting parties.

		
	 	     (b) The Issuing Lender shall act on behalf of the Lenders with
respect to any Letters of Credit issued by it and the documents
associated therewith until such time (and except for so long) as the
Administrative Agent may agree at the request of the Required Lenders to
act for the Issuing Lender with respect thereto; provided, however, that
the Issuing Lender shall have all of the benefits and immunities (i)
provided to the Administrative Agent in this Section 10 with respect to
any acts taken by or omissions of the Issuing Lender in connection with
Letters of Credit issued by it or proposed to be issued by it and the
application and agreements for letters of credit pertaining to the
Letters of Credit as fully as if the term “Administrative Agent” as used
in this Section 10 included the Issuing Lender with respect to such acts
or omissions, and (ii) as additionally provided herein with respect to
the Issuing Lender.

		
	 	     (c) None of the Lenders identified on the facing page or signature
pages of this Credit Agreement as a “syndication agent”, “documentation
agent”, “book manager” or other title shall have any right, power,
obligation, liability, responsibility or duty under this Credit Agreement
or the other Credit
Documents other than those applicable to all Lenders as such. Without
limiting the foregoing, none of the Lenders so identified shall have or
be deemed to have any fiduciary relationship with any Lender. Each
Lender acknowledges that it has not relied, and will not rely, on any of
the Lenders so identified in deciding to enter into this Credit Agreement
or the other Credit Documents or in taking or not taking action

hereunder.

     10.2 Delegation of Duties.

     The Administrative Agent may execute any of its duties under this Credit
Agreement or any other Credit Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel and other
consultants or experts concerning all matters pertaining to such duties. The
Administrative Agent shall not be responsible for the negligence or misconduct
of any agent or attorney-in-fact that it selects with reasonable care.

     10.3 Exculpatory Provisions.

     No Agent-Related Person shall (a) be liable for any action taken or
omitted to be taken by any of them under or in connection with this Credit
Agreement or any other Credit Document or the transactions contemplated hereby
(except for its own gross negligence or willful misconduct in connection with
its duties expressly set forth herein), or (b) be responsible in any manner to
any Lender or participant for any recital, statement, representation or
warranty made by any Credit Party or any officer thereof, contained herein or
in any other Credit Document, or in any certificate, report, statement or other
document referred to or provided for in, or received by the Administrative
Agent under or in connection with, this Credit Agreement or any other Credit
Document, or the validity, effectiveness, genuineness, enforceability or
sufficiency of this Credit Agreement or any other Credit Document, or for any
failure of any Credit Party or any other party to any Credit Document to
perform its obligations hereunder or thereunder. No Agent-Related Person shall
be under any obligation to any Lender or participant to ascertain or to inquire
as to the observance or performance of any of the agreements contained in, or
conditions of, this Credit Agreement or any other Credit Document, or to
inspect the properties, books or records of any Credit Party or any Affiliate
thereof.

     10.4 Reliance on Communications.

		
	 	     (a) The Administrative Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, communication, signature,
resolution, representation, notice, consent, certificate, affidavit,
letter, telegram, facsimile, telex or telephone message, statement or
other document or conversation believed by it to be genuine and correct
and to have been signed, sent or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to any
Credit Party),

53

 

		
	 	independent accountants and other experts selected by the
Administrative Agent. The Administrative Agent may deem and treat each
Lender as the owner of its interests hereunder for all purposes unless a
written notice of assignment, negotiation or transfer thereof shall have
been delivered to the Administrative Agent in accordance with Section
11.3(b). The Administrative Agent shall be fully justified in failing or
refusing to take any action under any Credit Document unless it shall
first receive such advice or concurrence of the Required Lenders as it
deems appropriate and, if it so requests, it shall first be indemnified
to its satisfaction by the Lenders against any and all liability and
expense which may be incurred by it by reason of taking or continuing to
take any such action. The Administrative Agent shall in all cases be
fully protected in acting, or in refraining from acting, under this
Credit Agreement or any other Credit Document in accordance with a
request or consent of the Required Lenders or all the Lenders, if
required hereunder, and such request and any action taken or failure to
act pursuant thereto shall be binding upon all the Lenders and
participants, and their respective successors and assigns. Where this
Credit Agreement expressly permits or prohibits an action unless the
Required Lenders otherwise determine, the Administrative Agent shall, and
in all other instances, the Administrative Agent may, but shall not be
required to, initiate any solicitation for the consent or a vote of the
Lenders.
	 
	 	     (b) For purposes of determining compliance with the conditions
specified in Section 5.1, each Lender that has signed this Credit
Agreement shall be deemed to have consented to, approved or accepted or
to be satisfied with, each document or other matter either sent by the
Administrative Agent to such Lender for consent, approval, acceptance or
satisfaction, or required thereunder to be consented to or approved by or
acceptable or satisfactory to a Lender.

     10.5 Notice of Default.

     The Administrative Agent shall not be deemed to have knowledge or notice
of the occurrence of any Default or Event of Default, except with respect to
defaults in the payment of principal, interest and fees required to be paid to
the Administrative Agent for the account of the Lenders, unless the
Administrative Agent shall have received written notice from a Lender or the
Borrower referring to this Credit Agreement, describing such Default or Event
of Default and stating that such notice is a “notice of default.” The
Administrative Agent will notify the Lenders of its receipt of any such notice.
The Administrative Agent shall take such action with respect to such Default
or Event of Default as may be reasonably directed by the Required Lenders in
accordance with Section 9.2; provided, however, that unless and until the
Administrative Agent has received any such direction, the Administrative Agent
may (but shall not be obligated to) take such action, or refrain from taking
such action, with respect to such Default or Event of Default as it shall deem
advisable or in the best interest of the Lenders.

     10.6 Non-Reliance on Administrative Agent and Other Lenders.

     Each Lender acknowledges that no Agent-Related Person has made any
representation or warranty to it, and that no act by the Administrative Agent
hereinafter taken, including any consent to and acceptance of any assignment or
review of the affairs of any Credit Party or any Affiliate thereof, shall be
deemed to constitute any representation or warranty by any Agent-Related Person
to any Lender as to any matter, including whether Agent-Related Persons have
disclosed material information in their possession. Each Lender represents to
the Administrative Agent that it has, independently and without reliance upon
any Agent-Related Person or any other Lender and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, prospects, operations, property, financial and
other condition and creditworthiness of the Credit Parties and their respective
Affiliates, and all applicable bank or other regulatory laws relating to the
transactions contemplated hereby, and made its own decision to enter into this
Credit Agreement and to extend credit to the Borrower hereunder. Each Lender
also represents that it will, independently and without reliance upon any
Agent-Related Person or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Credit Agreement and the other Credit Documents, and to make such
investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and
creditworthiness of the Borrower. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the
Administrative Agent herein, the Administrative Agent shall not have any duty
or responsibility to provide any Lender with any credit or other information
concerning the business, prospects, operations, property, financial and other
condition or creditworthiness of any of the Credit Parties or any of their

54

 

respective Affiliates which may come into the possession of any Agent-Related
Person, it being understood that the Administrative Agent shall forward to the
Lenders information it receives pursuant to Section 7.1.

     10.7 Indemnification.

     Whether or not the transactions contemplated hereby are consummated, the
Lenders shall indemnify upon demand each Agent-Related Person (to the extent
not reimbursed by or on behalf of any Credit Party and without limiting the
obligation of any Credit Party to do so), pro rata, and hold harmless each
Agent-Related Person from and against any and all Indemnified Liabilities
incurred by it; provided, however, that no Lender shall be liable for the
payment to any Agent-Related Person of any portion of such Indemnified
Liabilities resulting from such Agent-Related Person’s gross negligence or
willful misconduct; it being understood that no action taken in accordance with
the directions of the Required Lenders (or all Lenders, if applicable) shall be
deemed to constitute gross negligence or willful misconduct for purposes of
this Section 10.7. Without limitation of the foregoing, each
Lender shall reimburse the Administrative Agent upon demand for its ratable
share of any costs or out-of-pocket expenses (including Attorney Costs)
incurred by the Administrative Agent in connection with the preparation,
execution, delivery, administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or legal
advice in respect of rights or responsibilities under, this Credit Agreement,
any other Credit Document, or any document contemplated by or referred to
herein, to the extent that the Administrative Agent is not reimbursed for such
expenses by or on behalf of the Credit Parties. The undertaking in this
Section 10.7 shall survive termination of the Commitments, the payment of all
Obligations hereunder and the resignation or replacement of the Administrative
Agent.

     10.8 Administrative Agent in Its Individual Capacity.

     Bank of America and its Affiliates may make loans to, issue letters of
credit for the account of, accept deposits from, acquire equity interests in
and generally engage in any kind of banking, trust, financial advisory,
underwriting or other business with each of the Credit Parties and their
respective Affiliates as though Bank of America were not the Administrative
Agent or the Issuing Lender hereunder and without notice to or consent of the
Lenders. The Lenders acknowledge that, pursuant to such activities, Bank of
America or its Affiliates may receive information regarding any Credit Party or
its Affiliates (including information that may be subject to confidentiality
obligations in favor of such Credit Party or such Affiliate) and that the
Administrative Agent shall be under no obligation to provide such information
to them. With respect to its Loans, Bank of America shall have the same rights
and powers under this Credit Agreement as any other Lender and may exercise
such rights and powers as though it were not the Administrative Agent or the
Issuing Lender, and the terms “Lender” and “Lenders” include Bank of America in
its individual capacity.

     10.9 Successor Agent.

     The Administrative Agent may resign as Administrative Agent upon 30 days’
notice to the Lenders. If the Administrative Agent resigns under this Credit
Agreement, the Required Lenders shall appoint from among the Lenders a
successor administrative agent for the Lenders which successor administrative
agent (such appointment, absent the existence of an Event of Default, to be
subject to the consent of the Borrower, which consent of the Borrower shall not
be unreasonably withheld or delayed). If no successor administrative agent is
appointed prior to the effective date of the resignation of the Administrative
Agent, the Administrative Agent may appoint, after consulting with the Lenders
and the Borrower, a successor administrative agent from among the Lenders.
Upon the acceptance of its appointment as successor administrative agent
hereunder, such successor administrative agent shall succeed to all the rights,
powers and duties of the retiring Administrative Agent and the term
“Administrative Agent” shall mean such successor administrative agent and the
retiring Administrative Agent’s appointment, powers and duties as
Administrative Agent shall be terminated. After any retiring Administrative
Agent’s resignation hereunder as Administrative Agent, the provisions of this
Section 10 and Sections 11.5 and 11.10 shall continue to inure to its benefit
as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Credit Agreement. If no successor
administrative agent has accepted appointment as Administrative Agent by the
date which is 30 days following a retiring Administrative Agent’s notice of
resignation, the retiring Administrative Agent’s resignation shall nevertheless
thereupon become effective and the Lenders shall perform all of the duties of
the Administrative Agent hereunder until such time, if any, as the Required
Lenders appoint a successor agent as provided for above.

55

 

     10.10 Administrative Agent May File Proof of Claims.

     In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to any Credit Party, the Administrative Agent
(irrespective of whether the principal of any Loan shall then be due and
payable as herein expressed or by declaration or otherwise and irrespective of
whether the Administrative Agent shall have made any demand on the Credit
Party) shall be entitled and empowered, by intervention in such proceeding or
otherwise:

		
	 	     (a) to file and prove a claim for the whole amount of the principal
and interest owing and unpaid in respect of the Loans and all other
Credit Party Obligations that are owing and unpaid and to file such other
documents as may be necessary or advisable in order to have the claims of
the Lenders and the Administrative Agent (including any claim for the
reasonable compensation, expenses, disbursements and advances of the
Lenders and the Administrative Agent and their respective agents and
counsel and all other amounts due the Lenders and the Administrative
Agent under Sections 3.4 and 11.5 allowed in such judicial proceeding);
and

		
	 	     (b) to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender to make such payments to the Administrative Agent and, in the event
that the Administrative Agent shall consent to the making of such payments
directly to the Lenders, to pay to the Administrative Agent any amount due for
the reasonable compensation, expenses, disbursements and advances of the Agent
and its agents and counsel, and any other amounts due the Administrative Agent
under Sections 3.4 and 11.5.

     Nothing contained herein shall be deemed to authorize the Administrative
Agent to authorize or consent to or accept or adopt on behalf of any Lender any
plan of reorganization, arrangement, adjustment or composition affecting the
Credit Party Obligations or the rights of any Lender or to authorize the
Administrative Agent to vote in respect of the claim of any Lender in any such
proceeding.

SECTION 11

MISCELLANEOUS

     11.1 Notices and other Communications; Facsimile Copies.

     (a)  General. Unless otherwise expressly provided herein, all notices and
other communications provided for hereunder shall be in writing (including by
facsimile transmission). All written notices and all other communications
expressly permitted hereunder to be given by telephone shall be made to the
applicable address, facsimile number, electronic mail address or telephone
number specified for such Person on Schedule 11.1 or to such other address,
facsimile number, electronic mail address or telephone number as shall be
designated by such party in a notice to the other parties. All such notices
and other communications shall be deemed to be given or made upon the earlier
to occur of (i) actual receipt by the relevant party hereto and (ii) (A) if
delivered by hand or by courier, when signed for by or on behalf of the
relevant party hereto; (B) if delivered by mail, four Business Days after
deposit in the mails, postage prepaid; (C) if delivered by facsimile, when sent
and receipt has been confirmed by telephone; and (D) if delivered by electronic
mail (which form of delivery is subject to the provisions of subsection (c)
below), when delivered; provided, however, that notices and other
communications to the Administrative Agent or the Lenders pursuant to Section 2
shall not be effective until actually received by the Administrative Agent or
the Lenders, as the case may be. In no event shall a voicemail message be
effective as a notice, communication or confirmation hereunder.

     (b)  Effectiveness of Facsimile Documents and Signatures. Credit Documents
may be transmitted and/or signed by facsimile. The effectiveness of any such
documents and signatures shall have the same force and

56

 

effect as
manually-signed originals and shall be binding on the Borrower, the
Administrative Agent and the Lenders. The Administrative Agent may also
require that any such documents and signatures be confirmed by a
manually-signed original thereof; provided, however, that the failure to
request or deliver the same shall not limit the effectiveness of any facsimile
document or signature.

     (c)  Limited Use of Electronic Mail. Electronic mail and Internet and
intranet websites may be used only to distribute routine communications, such
as financial statements and other information as provided in Section 7.1, and
to distribute Credit Documents for execution by the parties thereto, and may
not be used for any other purpose except as deemed reasonable and appropriate
by the Administrative Agent.

     (d)  Reliance by the Administrative Agent and Lenders. The Administrative
Agent and the Lenders shall be entitled to rely and act upon any notices given
by the Borrower even if such notices were not made in a manner specified
herein, were incomplete or were not preceded or followed by any other form of
notice specified herein. All telephonic notices to and other communications
with the Administrative Agent may be recorded by the Agent, and each of the
parties hereto hereby consents to such recording.

     11.2 Right of Set-Off, Automatic Debits.

		
	 	     (a) In addition to any rights now or hereafter granted under
applicable law or otherwise, and not by way of limitation of any such
rights, upon the occurrence of an Event of Default and the commencement
of remedies described in Section 9.2, each Lender is authorized at any
time and from time to time, without presentment, demand, protest or other
notice of any kind (all of which rights being hereby expressly waived),
to set-off and to appropriate and apply any and all deposits (general or
special) and any other indebtedness at any time held or owing by such
Lender (including, without limitation, branches, agencies or Affiliates
of such Lender wherever located) to or for the credit or the account of
any Credit Party against obligations and liabilities of such Credit Party
to the Lenders hereunder, under the Notes, the other Credit Documents or
otherwise, irrespective of whether the Administrative Agent or the
Lenders shall have made any demand hereunder and although such
obligations, liabilities or claims, or any of them, may be contingent or
unmatured, and any such set-off shall be deemed to have been made
immediately upon the occurrence of an Event of Default even though such
charge is made or entered on the books of such Lender subsequent thereto.
The Credit Parties hereby agree that any Participation Purchaser may
exercise all rights of set-off with respect to its participation interest
as fully as if such Person were a Lender hereunder.

		
	 	     (b) In addition to clause (a) above, with respect to any principal
or interest payment, fee, or any other cost or expense (including
Attorney Costs), due and payable to the Administrative Agent or the
Lenders under the Credit Documents, the Credit Parties hereby irrevocably
authorize and direct the Administrative Agent to debit any deposit
account of the Credit Parties with the Administrative Agent (as one of
the Lenders) in an amount such that the aggregate amount debited from all
such deposit accounts does not exceed such payment, fee, or other cost or
expense. If there are insufficient funds in such deposit accounts to
cover the amount of the payment, fee, other cost or expense then due,
such debits will be reversed (in whole or in part, in the Administrative
Agent’s sole discretion) and such amount not debited shall be deemed to
be unpaid. No such debit under this Section 11.2(b) shall be deemed a
set-off.

     11.3 Benefit of Agreement.

		
	 	     (a) The provisions of this Credit Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective
successors and assigns permitted hereby, except that the Borrower may not
assign or otherwise transfer any of its rights or obligations hereunder
without the prior written consent of each Lender and no Lender may assign
or otherwise transfer any of its rights or obligations hereunder except
(i) to an Eligible Assignee in accordance with the provisions of
subsection (b) of this Section, (ii) by way of participation in
accordance with the provisions of subsection (d) of this Section, or
(iii) by way of pledge or assignment of a security interest subject to
the restrictions of subsection (f) of this Section (and any other
attempted assignment or transfer by any party hereto shall be null and
void). Nothing in this Credit Agreement, expressed or implied, shall be
construed to confer upon any Person (other than BAS, the parties hereto,
their respective successors and assigns permitted hereby and

57

 

		
	 	Participation Purchasers to the extent provided in subsection (d) of this
Section) any legal or equitable right, remedy or claim under or by reason
of this Credit Agreement.
	 
	 	     (b) Any Lender may at any time assign to one or more Eligible
Assignees all or a portion of its rights and obligations under this
Credit Agreement (including all or a portion of its Commitment and the
Loans at the time owing to it); provided that (i) except in the case of
an assignment of the entire remaining amount of the assigning Lender’s
Commitment and the Loans at the time owing to it or in the case of an
assignment to a Lender or an Affiliate of a Lender or an Approved Fund
with respect to a Lender, the aggregate amount of the Commitment (which
for this purpose includes Loans outstanding thereunder) subject to each
such assignment, determined as of the date the Assignment and Assumption
with respect to such assignment is delivered to the Administrative Agent
or, if “Trade Date” is specified in the Assignment and Assumption, as of
the Trade Date, shall not be less than $5,000,000 unless each of the
Administrative Agent and, so long as no Event of Default has occurred and
is continuing, the Borrower otherwise consents (each such consent not to
be unreasonably withheld or delayed); (ii) each partial assignment shall
be made as an assignment of a proportionate part of all the assigning
Lender’s rights and obligations under this Credit Agreement with respect
to the Loans or the Commitment assigned; (iii) any assignment of a
Commitment must be approved by the Administrative Agent (which approval
shall not be unreasonably withheld) unless the Person that is the
proposed assignee is itself a Lender (whether or not the proposed
assignee would otherwise qualify as an Eligible Assignee); and (iv) the
parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment and Assumption, together with a
processing and recordation fee of $3,500. Subject to acceptance and
recording thereof by the Administrative Agent pursuant to subsection (c)
of this Section, from and after the effective date specified in each
Assignment and Assumption, the Eligible Assignee thereunder shall be a
party to this Credit Agreement and, to the extent of the interest
assigned by such Assignment and Assumption, have the rights and
obligations of a Lender under this Credit Agreement, and the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Assumption, be released from its obligations under this
Credit Agreement (and, in the case of an Assignment and Assumption
covering all of the assigning Lender’s rights and obligations under this
Credit Agreement, such Lender shall cease to be a party hereto but shall
continue to be entitled to the benefits of Sections 3.9 through 3.15 and
11.5 with respect to facts and circumstances occurring prior to the
effective date of such assignment). Upon request, the Borrower (at its
expense) shall execute and deliver a Note to the assignee Lender. Any
assignment or transfer by a Lender of rights or obligations under this
Credit Agreement that does not comply with this subsection shall be
treated for purposes of this Credit Agreement as a sale by such Lender of
a participation in such rights and obligations in accordance with
subsection (d) of this Section.

		
	 	     (c) The Administrative Agent, acting solely for this purpose as an
agent of the Borrower, shall maintain at one of its offices in the United
States a copy of each Assignment and Assumption delivered to it and a
register for the recordation of the names and addresses of the Lenders,
and the Commitments of, and principal amounts of the Loans owing to, each
Lender pursuant to the terms hereof from time to time (the “Register”).
The entries in the Register shall be conclusive, and the Borrower, the
Administrative Agent and the Lenders may treat each Person whose name is
recorded in the Register pursuant to the terms hereof as a Lender
hereunder for all purposes of this Credit Agreement, notwithstanding
notice to the contrary. The Register shall be available for inspection
by the Borrower and any Lender, at any reasonable time and from time to
time upon reasonable prior notice.

		
	 	     (d) Any Lender may at any time, without the consent of, or notice
to, the Borrower or the Administrative Agent, sell participations to any
Person (other than a natural person or the Borrower or any of the
Borrower’s Affiliates or Subsidiaries) (each, a “Participation
Purchaser”) in all or a portion of such Lender’s rights and/or
obligations under this Credit Agreement (including all or a portion of
its Commitment and/or the Loans owing to it); provided that (i) such
Lender’s obligations under this Credit Agreement shall remain unchanged,
(ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations and (iii) the Borrower,
the Administrative Agent and the other Lenders shall continue to deal
solely and directly with such Lender in connection with such Lender’s
rights and obligations under this Credit Agreement. Any agreement or
instrument pursuant to which a Lender sells such a participation shall
provide that such Lender shall retain the sole right to enforce this
Credit Agreement and to approve any amendment, modification or waiver of
any provision of this Credit

58

 

		
	 	Agreement; provided that such agreement or instrument may provide that
such Lender will not, without the consent of the Participation Purchaser,
agree to any amendment, waiver or other modification described in clauses
(a) through (g) of Section 11.6 that directly affects such Participation
Purchaser. Subject to subsection (e) of this Section, the Borrower
agrees that each Participation Purchaser shall be entitled to the
benefits of Sections 3.9 through 3.15 and 11.5 to the same extent as if
it were a Lender and had acquired its interest by assignment pursuant to
subsection (b) of this Section. To the extent permitted by law, each
Participation Purchaser also shall be entitled to the benefits of Section
11.2 as though it were a Lender, provided such Participation Purchaser
agrees to be subject to Section 3.8 as though it were a Lender.

		
	 	     (e) A Participation Purchaser shall not be entitled to receive any
greater payment under Section 3.9 or 3.13 than the applicable Lender
would have been entitled to receive with respect to the participation
sold to such Participation Purchaser, unless the sale of the
participation to such Participation Purchaser is made with the Borrower’s
prior written consent. A Participation Purchaser that would be a
“foreign corporation, partnership or trust” within the meaning of the
Code if it were a Lender shall not be entitled to the benefits of Section
3.13 unless the Borrower is notified of the participation sold to such
Participation Purchaser and such Participation Purchaser agrees, for the
benefit of the Borrower, to comply with Section 3.13(d) as though it were
a Lender.

		
	 	     (f) Any Lender may at any time pledge or assign a security interest
in all or any portion of its rights under this Credit Agreement
(including under its Note, if any) to secure obligations of such Lender,
including any pledge or assignment to secure obligations to a Federal
Reserve Bank; provided that no such pledge or assignment shall release
such Lender from any of its obligations hereunder or substitute any such
pledgee or assignee for such Lender as a party hereto.

		
	 	     (g) Notwithstanding anything to the contrary contained herein, any
Lender (a “Granting Lender”) may grant to a special purpose funding
vehicle managed or sponsored by the Granting Lender or an Affiliate
thereof (an “SPC”) the option to fund all or any part of any Loan that
such Granting Lender would otherwise be obligated to fund pursuant to
this Credit Agreement; provided that (i) nothing herein shall constitute
a commitment by any SPC to fund any Loan, (ii) if an SPC elects not to
exercise such option or otherwise fails to fund all or any part of such
Loan, the Granting Lender shall be obligated to fund such Loan pursuant
to the terms hereof, (iii) no SPC shall have any voting rights pursuant
to Section 11.6, (iv) with respect to notices, payments and other matters
hereunder, the Borrower, the Administrative Agent and the Lenders shall
not be obligated to deal with an SPC, but may limit their communications
and other dealings relevant to such SPC to the applicable Granting Lender
and (v) each Granting Lender’s obligations under this Credit Agreement
shall remain unchanged. Each party hereto agrees that no SPC will be
entitled to any rights or benefits except as expressly set forth in this
subsection (g). The funding of a Loan by an SPC hereunder shall utilize
the Commitment of the Granting Lender to the same extent that, and as if,
such Loan were funded by such Granting Lender. Each party hereto hereby
agrees that no SPC shall be liable for any indemnity or payment under
this Credit Agreement for which a Lender would otherwise be liable for so
long as, and to the extent, the Granting Lender provides such indemnity
or makes such payment. Notwithstanding anything to the contrary
contained in this Credit Agreement, any SPC may disclose on a
confidential basis any non-public information relating to its funding of
Loans to any rating agency, commercial paper dealer or provider of any
surety or guarantee to such SPC. This subsection (g) may not be amended
without the prior written consent of each Granting Lender, all or any
part of whose Loan is being funded by an SPC at the time of such
amendment.

		
	 	     (h) Notwithstanding anything to the contrary contained herein, any
Lender that is a Fund may create a security interest in all or any
portion of the Loans owing to it and the Note, if any, held by it to the
trustee for holders of obligations owed, or securities issued, by such
Fund as security for such obligations or securities, provided that unless
and until such trustee actually becomes a Lender in compliance with the
other provisions of this Section 11.3, (i) no such pledge shall release
the pledging Lender from any of its obligations under the Credit
Documents and (ii) such trustee shall not be entitled to exercise any of
the
rights of a Lender under the Credit Documents even though such trustee
may have acquired ownership rights with respect to the pledged interest
through foreclosure or otherwise.

59

 

     11.4 No Waiver; Remedies Cumulative.

     No failure or delay on the part of the Administrative Agent or any Lender
in exercising any right, power or privilege hereunder or under any other Credit
Document and no course of dealing between the Borrower or any Credit Party and
the Administrative Agent or any Lender shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, power or privilege hereunder
or under any other Credit Document preclude any other or further exercise
thereof or the exercise of any other right, power or privilege hereunder or
thereunder. The rights and remedies provided herein are cumulative and not
exclusive of any rights or remedies which the Administrative Agent or any
Lender would otherwise have. No notice to or demand on any Credit Party in any
case shall entitle any Credit Party to any other or further notice or demand in
similar or other circumstances or constitute a waiver of the rights of the
Administrative Agent or the Lenders to any other or further action in any
circumstances without notice or demand.

     11.5 Payment of Expenses; Indemnification.

     The Credit Parties agree to: (a) pay all reasonable out-of-pocket costs
and expenses of (i) the Agent-Related Persons in connection with (A) the
negotiation, preparation, execution and delivery and syndication of this Credit
Agreement and the other Credit Documents and the documents and instruments
referred to therein (including, without limitation, the reasonable fees and
expenses of Moore & Van Allen, special counsel to the Administrative Agent) and
(B) any amendment, waiver or consent relating hereto and thereto including, but
not limited to, any such amendments, waivers or consents resulting from or
related to any work-out, renegotiation or restructure relating to the
performance by the Credit Parties under this Credit Agreement, and (ii) the
Agent-Related Persons and the Lenders in connection with (A) enforcement of the
Credit Documents and the documents and instruments referred to therein,
including, without limitation, in connection with any such enforcement, the
reasonable Attorneys’ Costs of the Administrative Agent and each of the Lenders
and (B) any bankruptcy or insolvency proceeding of any Credit Party or any of
its Subsidiaries and (b) indemnify the Agent-Related Persons and each Lender,
its officers, directors, employees, representatives, counsel and agents from
and hold each of them harmless against any and all losses, liabilities, claims,
damages or expenses incurred by any of them as a result of, or arising out of,
or in any way related to, or by reason of, any investigation, litigation or
other proceeding (whether or not such Agent-Related Person or any Lender is a
party thereto) related to the entering into and/or performance of any Credit
Document or the use of proceeds of any Loans (including other extensions of
credit) hereunder or the consummation of any other transactions contemplated in
any Credit Document, including, without limitation, reasonable Attorneys’ Costs
incurred in connection with any such investigation, litigation or other
proceeding (but excluding any such losses, liabilities, claims, damages or
expenses to the extent incurred by reason of gross negligence or willful
misconduct on the part of the Person to be indemnified or from the material
breach by the Person to be indemnified of its obligations under the Credit
Documents) (all of the foregoing, collectively, “Indemnified Liabilities”).
The agreements in this Section 11.5 shall survive the termination of the
Commitments and the repayment of the Credit Party Obligations.

     11.6 Amendments, Waivers and Consents.

     Neither this Credit Agreement nor any other Credit Document nor any of
the terms hereof or thereof may be amended, changed, waived, discharged or
terminated unless such amendment, change, waiver, discharge or termination is
in writing and signed by the Required Lenders and the then Credit Parties;
provided that no such amendment, change, waiver, discharge or termination shall
without the consent of all the Lenders:

		
	 	     (a) extend the Maturity Date, or postpone or extend the time for any
payment or prepayment of principal;

		
	 	     (b) reduce the rate or extend the time of payment of interest (other
than as a result of waiving the applicability of any post-default
increase in interest rates) thereon or fees hereunder;
	 
	 	     (c) reduce or waive the principal amount of any Loan;

		
	 	     (d) increase or extend the Commitment of a Lender (it being
understood and agreed that a waiver of any Default or Event of Default or
a waiver of any mandatory reduction in the Commitments shall not
constitute a change in the terms of any Commitment of any Lender);

60

 

		
	 	     (e) release the Borrower from its obligations or consent to the
assignment or transfer by the Borrower of any of its rights and
obligations under (or in respect of) the Credit Documents or release all
or substantially all of the Guarantors from their respective obligations
under the Credit Documents;

		
	 	     (f) amend, modify or waive any provision of this Section 11.6 or
Section 3.4(a), 3.4(b), 3.4(c)(i), 3.7, 3.8, 9.1(a), 11.2, 11.3 or 11.5;

		
	 	     (g) reduce any percentage specified in, or otherwise modify, the
definition of Required Lenders; or

		
	 	     (h) increase the LOC Committed Amount.

Notwithstanding the above, (i) no provisions of Section 10 may be amended or
modified without the consent of the Administrative Agent and (ii) no provisions
of Section 2.2 may be amended or modified without the consent of the Issuing
Lender.

Notwithstanding the fact that the consent of all the Lenders is required in
certain circumstances as set forth above, (x) each Lender is entitled to vote
as such Lender sees fit on any reorganization plan that affects the Loans or
the Letters of Credit, and each Lender acknowledges that the provisions of
Section 1126(c) of the Bankruptcy Code supersedes the unanimous consent
provisions set forth herein and (y) the Required Lenders may consent to allow a
Credit Party to use cash collateral in the context of a bankruptcy or
insolvency proceeding.

     11.7 Counterparts.

     This Credit Agreement may be executed in any number of counterparts, each
of which where so executed and delivered shall be an original, but all of which
shall constitute one and the same instrument.

     11.8 Headings.

     The headings of the sections and subsections hereof are provided for
convenience only and shall not in any way affect the meaning or construction of
any provision of this Credit Agreement.

     11.9 Defaulting Lender.

     Each Lender understands and agrees that if such Lender is a Defaulting
Lender then notwithstanding the provisions of Section 11.6 it shall not be
entitled to vote on any matter requiring the consent of the Required Lenders or
to object to any matter requiring the consent of all the Lenders; provided,
however, that all other benefits and obligations under the Credit Documents
shall apply to such Defaulting Lender.

     11.10 Survival of Indemnification and Representations and Warranties.

     All indemnities set forth herein and all representations and warranties
made herein shall survive the execution and delivery of this Credit Agreement,
the making of the Loans, the issuance of the Letters of Credit and the
repayment of the Loans, LOC Obligations and other obligations and the
termination of the Commitments hereunder.

     11.11 Governing Law; Jurisdiction.

     THIS CREDIT AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
Each Credit Party irrevocably consents to the service of process in any action
or proceeding with respect to this Credit Agreement or any other Credit
Document by the mailing of copies thereof by registered or certified mail,
postage prepaid, to it at the address for notices pursuant to Section 11.1,
such service to become effective 10 days after such mailing. Nothing herein
shall affect the right of a Lender to serve process in any other manner
permitted by law.

61

 

     11.12 Waiver of Jury Trial; Waiver of Consequential Damages.

     EACH OF THE PARTIES TO THIS CREDIT AGREEMENT HEREBY IRREVOCABLY WAIVES ALL
RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF
OR RELATING TO THIS CREDIT AGREEMENT, ANY OF THE OTHER CREDIT DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY. Each Credit Party agrees not to assert any
claim against the Administrative Agent, the Issuing Lenders, any Lender, any of
their Affiliates, or any of their respective directors, officers, employees,
attorneys or agents, on any theory of liability, for special, indirect,
consequential or punitive damages arising out of or otherwise relating to any
of the transactions contemplated herein.

     11.13 Severability.

     If any provision of any of the Credit Documents is determined to be
illegal, invalid or unenforceable, such provision shall be fully severable and
the remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.

     11.14 Further Assurances.

     The Credit Parties agree, upon the request of the Administrative Agent, to
promptly take such actions, as reasonably requested, as is necessary to carry
out the intent of this Credit Agreement and the other Credit Documents.

     11.15 Confidentiality.

     Each Lender agrees that it will use its reasonable best efforts to keep
confidential and to cause any representative designated under Section 7.11 to
keep confidential any non-public information from time to time supplied to it
under any Credit Document; provided, however, that nothing herein shall prevent
the disclosure of any such information to (a) the extent a Lender in good faith
believes such disclosure is required by Requirement of Law, (b) counsel for a
Lender or to its accountants, (c) bank examiners or auditors or comparable
Persons, (d) any Affiliate of a Lender, (e) any other Lender, or any assignee,
transferee or Participant Purchaser, or any potential assignee, transferee or
Participant Purchaser, of all or any portion of any Lender’s rights under this
Credit Agreement who is notified of the confidential nature of the information
or (f) any other Person in connection with any litigation to which any one or
more of the Lenders is a party. No Lender shall have any obligation under this
Section 11.15 to the extent any such information becomes available on a
non-confidential basis from a source other than a Credit Party or that any
information becomes publicly available other than by a breach of this Section
11.15 by any Lender or representative thereof. Notwithstanding anything herein
to the contrary, “Information” shall not include, and the Administrative Agent
and each Lender may disclose to any and all Persons, without limitation of any
kind, any information with respect to the “tax treatment” and “tax structure”
(in each case, within the meaning of Treasury Regulation Section 1.6011-4) of
the transactions contemplated hereby and all materials of any kind (including
opinions or other tax analyses) that are provided to the Administrative Agent
or such Lender relating to such tax treatment and tax structure; provided that
with respect to any document or similar item that in either case contains
information concerning the tax treatment or tax structure of the transaction as
well as other information, this sentence shall only apply to such portions of
the document or similar item that relate to the tax treatment or tax structure
of the Loans, Letters of Credit and transactions contemplated hereby.

     11.16 Entirety.

     This Credit Agreement together with the other Credit Documents and the Fee
Letter represent the entire agreement of the parties hereto and thereto, and
supersede all prior agreements and understandings, oral or written, if any,
including any commitment letters or correspondence relating to the Credit
Documents or the transactions contemplated herein and therein.

     11.17 Binding Effect; Continuing Agreement.

		
	 	     (a) This Credit Agreement shall become effective at such time when
all of the conditions set forth in Section 5.1 have been satisfied or
waived by the Lenders and it shall have been executed by the Borrower,
the Guarantors and the Administrative Agent, and the Administrative Agent
shall have received

62

 

		
	 	copies hereof (telefaxed or otherwise) which, when
taken together, bear the signatures of each Lender, and thereafter this
Credit Agreement shall be binding upon and inure to the benefit of the
Borrower, the Guarantors, the Administrative Agent and each Lender and
their respective successors and assigns. Upon this Credit Agreement
becoming effective, the Existing Credit Agreement shall be deemed
terminated and the Credit Parties and the lenders party to the Existing
Credit Agreement shall no longer have any obligations thereunder (other
than those obligations in the Existing Credit Agreement that expressly
survive the termination of the Existing Credit Agreement).

		
	 	     (b) This Credit Agreement shall be a continuing agreement and shall
remain in full force and effect until all Loans, LOC Obligations,
interest, fees and other Credit Party Obligations have been paid in full
and all Commitments and Letters of Credit have been terminated. Upon
termination, the Credit Parties shall have no further obligations (other
than the indemnification provisions that survive) under the Credit
Documents; provided that should any payment, in whole or in part, of the
Credit Party Obligations be rescinded or otherwise required to be
restored or returned by the Administrative Agent or any Lender, whether
as a result of any proceedings in bankruptcy or reorganization or
otherwise, then the Credit Documents shall automatically be reinstated
and all amounts required to be restored or returned and all costs and
expenses incurred by the Administrative Agent or any Lender in connection
therewith shall be deemed included as part of the Credit Party
Obligations.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

63

 

     Each of the parties hereto has caused a counterpart of this Credit
Agreement to be duly executed and delivered as of the date first above written.

BORROWER:

	 	 	 	 	 
	 	 	POLARIS INDUSTRIES INC.,

a Minnesota corporation
	 	 	 	 	 
	 	 	
By:
	 	/s/ Michael W. Malone
	 	 	 	

	 	 	
Name:
	 	Michael W. Malone
	 	 	
Title:
	 	Chief Financial Officer, Secretary and
	 	 	 	 	Vice President-Finance

 

 

	 	 	 	 	 
	GUARANTORS:	 	POLARIS REAL ESTATE CORPORATION OF

IOWA, INC., a Delaware corporation
	 	 	 	 	 
	 	 	POLARIS REAL ESTATE CORPORATION,

a Delaware corporation
	 	 	 	 	 
	 	 	POLARIS ACCEPTANCE INC.,

a Minnesota corporation
	 	 	 	 	 
	 	 	POLARIS SALES INC., a Minnesota corporation
	 	 	 	 	 
	 	 	POLARIS DIRECT INC., a Minnesota corporation
	 	 	 	 	 
	 	 	POLARIS INDUSTRIES INC., a Delaware corporation
	 	 	 	 	 
	 	 	POLARIS INDUSTRIES MANUFACTURING LLC,

a Minnesota limited liability company
	 	 	 	 	 
	 	 	
By:
	 	/s/ Michael W. Malone
	 	 	 	

	 	 	
Name:
	 	Michael W. Malone
	 	 	
Title:
	 	Chief Financial Officer, Treasurer, Secretary and
	 	 	 	 	Vice President-Finance of each of the foregoing
	 	 	 	 	entities

 

 

	 	 	 	 	 
	ADMINISTRATIVE AGENT:	          BANK OF AMERICA, N.A.,
	 	 	as Administrative Agent
	 	 	 	 	 
	 	 	
By:
	 	/s/ Jeffrey A. Armitage
	 	 	 	

	 	 	
Name:
	 	     Jeffrey A. Armitage
	 	 	
Title:
	 	     Principal

 

 

	 	 	 	 	 
	LENDERS:	 	BANK OF AMERICA, N.A., individually in its capacity

as a Lender and in its capacity as Issuing Lender
	 	 	 	 	 
	 	 	
By:
	 	/s/ Jeffrey A. Armitage
	 	 	 	

	 	 	
Name:
	 	     Jeffrey A. Armitage
	 	 	
Title:
	 	     Principal

 

 

	 	 	 	 	 
	 	 	U.S. BANK N.A.
	 	 	 	 	 
	 	 	
By:
	 	/s/ Karen E. Weathers
	 	 	 	

	 	 	
Name:
	 	     Karen E. Weathers
	 	 	
Title:
	 	     Vice President

 

 

	 	 	 	 	 
	 	 	MIZUHO CORPORATE BANK, LTD.
	 	 	 	 	 
	 	 	
By:
	 	/s/ Robert Gallagher
	 	 	 	

	 	 	
Name:
	 	     Robert Gallagher
	 	 	
Title:
	 	     VP – Team Leader

 

 

	 	 	 	 	 
	 	 	M&I MARSHALL & ILSLEY BANK
	 	 	 	 	 
	 	 	
By:
	 	/s/ Doug Pudvah
	 	 	 	

	 	 	
Name:
	 	     Doug Pudvah
	 	 	
Title:
	 	     Vice President
	 	 	 	 	 
	 	 	
By:
	 	/s/ Chad Kortgard
	 	 	 	

	 	 	
Name:
	 	     Chad Kortgard
	 	 	
Title:
	 	     AVP

 

 

	 	 	 	 	 
	 	 	COMERICA BANK
	 	 	 	 	 
	 	 	
By:
	 	/s/ Timothy O’Rourke
	 	 	 	

	 	 	
Name:
	 	     Timothy O’Rourke
	 	 	
Title:
	 	     Vice President

 

 

	 	 	 	 	 
	 	 	BARCLAYS BANK PLC
	 	 	 	 	 
	 	 	
By:
	 	/s/ John Giannone
	 	 	 	

	 	 	
Name:
	 	     John Giannone
	 	 	
Title:
	 	     Director

 

 

	 	 	 	 	 
	 	 	WELLS FARGO BANK, NATIONAL ASSOCIATION
	 	 	 	 	 
	 	 	
By:
	 	/s/ Mark H. Halldorson
	 	 	 	

	 	 	
Name:
	 	     Mark H. Halldorson
	 	 	
Title:
	 	     Vice President
	 	 	 	 	 
	 	 	
By:
	 	/s/ James D. Heinz
	 	 	 	

	 	 	
Name:
	 	     James D. Heinz
	 	 	
Title:
	 	     Senior Vice President

 

 

	 	 	 	 	 
	 	 	THE BANK OF TOKYO-MITSUBISHI, LTD.,

CHICAGO BRANCH
	 	 	 	 	 
	 	 	
By:
	 	/s/ Patrick McCue
	 	 	 	

	 	 	
Name:
	 	     Patrick McCue
	 	 	
Title:
	 	     Vice President & Manager

 

 

	 	 	 	 	 
	 	 	ROYAL BANK OF CANADA
	 	 	 	 	 
	 	 	
By:
	 	/s/ Dana Dratch
	 	 	 	

	 	 	
Name:
	 	     Dana Dratch
	 	 	
Title:
	 	     Senior Manager<PAGE>
                                                                   EXHIBIT 10.33

                          EXECUTIVE SEVERANCE AGREEMENT

         This Executive Severance Agreement (this "Agreement") is entered into
to be effective as of May 8, 2003 (the "Effective Date") by and among Michael
Johnston ("Employee" or "you") and GAINSCO, INC., a Texas corporation
("GAINSCO"), National Specialty Lines, Inc., a Florida corporation ("NSL" or the
"Company"), Lalande Financial Group, Inc., a Florida corporation ("Lalande"),
DLT Insurance Adjustors, Inc., a Florida corporation ("DLT"), and MGA Insurance
Company, Inc., a Texas corporation ("MGA"). GAINSCO, NSL, Lalande, DLT and MGA
are sometimes referred to collectively as the "GAINSCO Companies." Employee and
the GAINSCO Companies are sometimes referred to collectively as the "Parties".

1.       This Agreement shall become effective and enforceable on the Effective
         Date and shall continue in effect through March 31, 2005 (the
         "Expiration Date"); provided, however, that commencing on March 31,
         2005 and each March 31 thereafter, the Expiration Date shall
         automatically be extended for one additional year unless, not later
         than the June 30 immediately preceding such March 31, any of the
         GAINSCO Companies has given notice that it does not wish to extend this
         Agreement and, provided, further, in no event shall the term of this
         Agreement extend beyond the date Employee attains sixty-five years of
         age. A nonrenewal notice given by any of the GAINSCO Companies shall
         terminate the obligations of all of the GAINSCO Companies under this
         Agreement effective as of the Expiration Date, as such date may be
         extended per this a agreement.

2.       The Parties agree that this Agreement supercedes and replaces any and
         all prior agreements, whether verbal or in writing, between Employee,
         on the one hand, and the GAINSCO Companies or their affiliates, or any
         of them, on the other hand, including without limitation the Employment
         Agreement among GAINSCO, NSL and Employee, dated October 23, 1998, as
         such agreement may have been amended or supplemented (hereinafter
         referred to as the "Employment Agreement") and the Stock Purchase
         Agreement among Employee, GAINSCO, NSL and Lalande dated August 17,
         1998, as such agreement may have been amended or supplemented
         (hereinafter referred to as the "Stock Purchase Agreement").
         Accordingly, Employee hereby acknowledges and agrees that he has no
         claims or rights under the Employment Agreement or the Stock Purchase
         Agreement. The Parties further understand and agree that Employee's
         employment with NSL (or any of the GAINSCO Companies) shall be
         "at-will" following the Effective Date of this Agreement and that
         either Employee or NSL may terminate the employment relationship at
         anytime for any reason not prohibited by law.

3.       Subject to the provisions and during the term of this Agreement, the
         Company will pay Employee, but not in lieu of any other severance
         compensation, if any, that may be offered to Employee pursuant to any
         standard Company severance policy, a total payment equal to one year's
         base salary at Employee's compensation rate as of the date (the
         "Termination Date")

                                       1
<PAGE>

         that Employee's employment with the Company ends, less deductions for
         federal payroll taxes and benefits in accordance with applicable law
         and Company policy (the "Executive Severance Payment"). Employee shall
         be eligible to receive the Executive Severance Payment following the
         end of his employment with the Company, ONLY if:

         a.       Prior to the Expiration Date, Employee's employment has not
                  been terminated by death, disability or retirement; AND

         b.       Prior to the Expiration Date, Employee does not terminate his
                  employment with the Company without "Good Reason" as defined
                  in Section 4; AND

         c.       Prior to the Expiration Date, Employee has not been terminated
                  for "Cause" as defined in Section 5; AND

         d.       Employee executes, and does not revoke, a Separation and
                  Release Agreement in the form attached hereto as Attachment 1
                  after the end of his employment with the Company; AND

         e.       In the event that the Termination Date occurs within five (5)
                  days prior to or within thirty (30) days following a CIC Date
                  (defined below), then not less than (30) days and not more
                  than sixty (60) days following the Termination Date, Employee
                  provides GAINSCO with a good faith written certification that
                  Employee has not received an offer of long-term employment or
                  a long-term consulting relationship, or some combination
                  thereof, from any Acquiring Affiliated Party (defined below)
                  pursuant to which Employee would (i) commence the employment
                  or consulting relationship within (30) days following the
                  Termination Date and (ii) be entitled to a Pay Package (as
                  defined below), and an executive severance agreement in place
                  immediately prior to the Termination Date. For purposes of
                  this Agreement, any employment or consulting relationship
                  shall be deemed "long-term" unless it is governed by a written
                  instrument that provides that the relationship is expected to
                  continue less than three (3) months.

         If Employee is eligible, the Company shall mail, in accordance with the
         procedures set forth in Section 15 of this Agreement, the Executive
         Severance Payment to Employee within fifteen business days following
         the later to occur of (i) the Employee's execution of the Separation
         and Release Agreement attached hereto as Attachment 1, provided that
         the Separation and Release Agreement has not been revoked and (ii) the
         expiration of forty-five (45) days after the Termination Date. Under no
         circumstances shall Employee be eligible to receive both an Executive
         Severance Payment and a Change in Control Payment (defined below).

                                       2
<PAGE>

4.       For purposes of this Agreement, "Good Reason" shall mean the occurrence
         of any of the following without your consent and the continuance
         thereof for thirty (30) days after receipt by the Company of written
         notice from you specifying the facts establishing the occurrence:

         a.       the assignment to you of a job title that is inconsistent with
                  that of an officer of any of the GAINSCO Companies;

         b.       a material reduction by the Company in your Pay Package as in
                  effect immediately prior to the execution of this Agreement;

         c.       the relocation of the your principal place of work to a
                  location that is outside of both the Miami-Dade and Broward
                  Counties, coupled with the failure by the Company to reimburse
                  you for reasonable relocation expenses; or

         d.       the failure by the GAINSCO Companies to pay to you any portion
                  of your current compensation after the same shall have become
                  due and payable.

5.       For purposes of this Agreement, termination by GAINSCO of your
         employment for "Cause" shall mean termination upon:

         a.       the failure by you to perform your assigned duties with any
                  GAINSCO Company, other than any such failure resulting from
                  your incapacity due to physical or mental illness or any such
                  actual or anticipated failure after you have given notice to
                  the Company that you are entitled to terminate your employment
                  for Good Reason pursuant to Section 4;

         b.       your malfeasance, gross negligence or recklessness in the
                  performance of your duties or responsibilities;

         c.       the engaging by you in conduct which is either intentionally,
                  or demonstrably and materially, injurious to any GAINSCO
                  Company, monetarily or otherwise;

         d.       failure by you to obey written directions of the Chief
                  Executive Officer of GAINSCO;

         e.       your conviction of a felony or a crime involving moral
                  turpitude;

         f.       you cease to be eligible to hold your position with any
                  GAINSCO Company as a result of any statute or rule, regulation
                  or interpretation of or by any regulatory agency or other
                  governmental or public authority; or

         g.       your fraud upon any GAINSCO Company.

                                       3
<PAGE>

6.       In the event that a Change of Control occurs during the term of this
         Agreement, the Company shall pay Employee, in lieu of (and not in
         addition to) any Executive Severance Payment that may be owed to
         Employee (but not in lieu of any other severance compensation, if any,
         that may be offered to Employee pursuant to any standard Company
         severance policy, other arrangement or agreement entered into
         subsequent to the Effective Date), a total payment (the "Change in
         Control Payment") equal to one year's base salary at Employee's
         compensation rate as of the Termination Date, less deductions for
         federal payroll taxes and benefits in accordance with applicable law
         and Company policy. Employee shall be eligible to receive the Change in
         Control Payment following the end of his employment with the Company,
         ONLY if:

         a.       Prior to the date the Change in Control occurs (the "CIC
                  Date"), Employee's employment has not been terminated by
                  death, disability or retirement; AND

         b.       Prior to the CIC Date, Employee does not terminate his
                  employment with the Company without "Good Reason" as defined
                  in Section 4; AND

         c.       Prior to the CIC Date, Employee has not been terminated for
                  "Cause" as defined in Section 5; AND

         d.       Employee executes, and does not revoke, a Separation and
                  Release Agreement in the form attached hereto as Attachment 1
                  after the Termination Date; AND

         e.       Employee's employment with the Company has terminated
                  following or contemporaneously with a Change in Control; AND

         f.       Not less than (30) days and not more than sixty (60) days
                  following the Termination Date, Employee provides GAINSCO with
                  a good faith written certification that Employee has not
                  received an offer of long-term employment or a long-term
                  consulting relationship, or some combination thereof, from any
                  Acquiring Affiliated Party pursuant to which Employee would
                  (i) commence the employment or consulting relationship within
                  (30) days following the Termination Date and (ii) be entitled
                  to a Pay Package, and an executive severance agreement, in
                  aggregate, generally comparable to Employee's Pay Package and
                  executive severance agreement in place immediately prior to
                  the Termination Date.

         As used in this Agreement, a "Change in Control" shall be deemed to
         have occurred on the earliest date on which: (i) there shall be any
         sale of all, or substantially all, of the assets of both NSL and DLT
         other than in the usual and regular course of business (as defined in
         Article 5.09B of the Texas Business Corporation Act, as amended) and
         other than to GAINSCO or a subsidiary or affiliate of GAINSCO; or (ii)
         there shall be consummated any stock purchase, consolidation or merger
         of both NSL and DLT pursuant to which GAINSCO

                                       4
<PAGE>

         or a subsidiary or affiliate of GAINSCO no longer owns at least 50% of
         the voting stock of either NSL and DLT.

         As used in this Agreement, an "Acquiring Affiliated Party" means any
         person, entity or group (including any affiliate, assignee or successor
         thereof) that acquires (whether by merger, reorganization or any other
         direct or indirect transaction or series of transactions) (i) all, or
         substantially all, of the assets of either NSL or DLT; or (ii) at least
         50% of the voting stock of either NSL or DLT.

         If Employee is eligible, the Company shall mail, in accordance with the
         procedures set forth in Section 15 of this Agreement, the Change in
         Control Payment to Employee within fifteen business days following the
         later to occur of (i) the Employee's execution of the Separation and
         Release Agreement attached hereto as Attachment 1, provided that the
         Separation and Release Agreement has not been revoked and (ii) the
         expiration of forty-five (45) days after the CIC Date. Under no
         circumstances shall Employee be eligible to receive both an Executive
         Severance Payment and a Change in Control Payment.

7.       Employee agrees to hold confidential and not to disclose to anyone any
         confidential information gained in the course of Employee's employment
         with any GAINSCO Company including, but not limited to, information
         concerning the financial affairs, business plans, strategic
         alternatives, proprietary statistics, pricing, and customer information
         of any GAINSCO Company. Employee agrees to abide by and keep in force
         any confidentiality provisions of any agreement between Employee and
         any of the GAINSCO Companies. Employee further agrees to hold
         confidential, and not to disclose to anyone, the contents of this
         Agreement, including its terms and any monetary consideration provided
         herein, except as required by lawful subpoena or for purposes of
         enforcing this Agreement or for tax advice.

8.       Employee agrees that presently his annualized base salary is $178,000,
         that his dependant medical and dental care insurance premiums of
         $1,095.46 per month are paid by the Company, or an affiliate, and that
         he receives a monthly auto allowance of $500 (in aggregate, the "Pay
         Package").

9.       As a material inducement to the GAINSCO Companies to enter into this
         Agreement and subject to the terms of this paragraph, Employee hereby
         irrevocably and unconditionally releases, acquits and forever
         discharges the GAINSCO Companies and each of their current and former
         parents, owners, shareholders, predecessors, successors, assigns,
         agents, consultants, directors, officers, employees, representatives,
         attorneys, divisions, subsidiaries, affiliates and all persons acting
         by, through, under or in concert with any of them, (collectively the
         "Released Parties"), from any and all charges, complaints, claims,
         liabilities, obligations, promises, agreements, controversies, damages,
         actions, causes of action, suits, rights, demands, costs, losses, debts
         and expenses (including attorneys' fees and costs actually incurred),
         of any nature whatsoever, known or unknown ("Claim" or "Claims")

                                       5
<PAGE>

         which Employee now has, owns, holds, or which Employee at any time
         heretofore had, owned, or held against any of the Released Parties,
         including, but not limited to: (a) all Claims under the AGE
         DISCRIMINATION IN EMPLOYMENT ACT OF 1967, as amended; (b) all Claims
         under Title VII of the Civil Rights Act of 1964, as amended; (c) all
         Claims under the Employee Retirement Income Security Act of 1974, as
         amended; (d) all Claims arising under the Americans With Disabilities
         Act of 1990, as amended; (e) all Claims arising under the Family and
         Medical Leave Act of 1993, as amended; (f) all Claims related to
         Employee's employment with any of the GAINSCO Companies; (g) all Claims
         of unlawful discrimination based on age, sex, race, religion, national
         origin, handicap, disability, equal pay, sexual orientation or
         otherwise; (h) all Claims of wrongful discharge, breach of an implied
         or express employment contract, negligent or intentional infliction of
         emotional distress, libel, defamation, breach of privacy, fraud, breach
         of any implied covenant of good faith and fair dealing and any other
         federal, state, or local common law or statutory claims, whether in
         tort or in contract; (i) all claims arising under any federal, state or
         local regulation, law, code or statute; and (j) all claims for change
         in control, severance, earnout payments, and other amounts under the
         Stock Purchase Agreement or Employment Agreement. IN SHORT, EMPLOYEE IS
         VOLUNTARILY GIVING UP HIS RIGHT TO SUE THE GAINSCO COMPANIES FOR ANY
         ALLEGED WRONGDOING WHICH PRECEDED THE EFFECTIVE DATE, EXCEPT THAT
         EMPLOYEE DOES NOT RELINQUISH HIS RIGHT TO CHALLENGE THIS AGREEMENT ON
         THE BASIS THAT IT WAS NOT KNOWING AND VOLUNTARY. HOWEVER, EMPLOYEE
         HEREBY RE-AFFIRMS THAT THIS AGREEMENT IS KNOWING AND VOLUNTARY. The
         Parties understand and agree that neither the making of this Agreement
         nor the fulfillment of any condition or obligation of this Agreement
         constitutes an admission of any liability or wrongdoing on the part of
         the other or any of the Released Parties. All liability by either Party
         to the others has been and is expressly denied. As a material
         inducement to Employee to enter into this Agreement and subject to the
         terms of this paragraph, the GAINSCO Companies hereby irrevocably and
         unconditionally release, acquit and forever discharge Employee from any
         and all Claims which the GAINSCO Companies now have, own, hold, or
         which the GAINSCO Companies at any time heretofore had, owned, or held
         against Employee.

10.      For a period commencing upon the Effective Date and ending one year
         after the termination of Employee's employment with the Company,
         Employee agrees that he will not solicit any person who is an employee
         or independent contractor of any GAINSCO Company or its successors to
         terminate any relationship such person may have with any GAINSCO
         Company or its successors. Employee hereby represents and warrants that
         he has not entered into any agreement, understanding or arrangement
         with any employee or independent contractor of any GAINSCO Company or
         its successors pertaining either to any business in which Employee has
         participated or plans to participate.

         Notwithstanding the foregoing, in the event that Employee receives a
         Change in Control Payment or an Executive Severance Payment following
         the occurrence of a Change in Control, then as of the date of his
         receipt of such Change in Control Payment or an Executive

                                       6
<PAGE>

         Severance Payment, the provisions of this Section 10 automatically
         shall terminate insofar as they apply to NSL, Lalande and DLT (or any
         of them) but shall continue in full force and effect with respect to
         each other GAINSCO Company.

11.      For a period commencing upon the Effective Date and ending one year
         after the termination of Employee's employment with the Company,
         Employee agrees that he shall not do any of the following:

                  (i) engage directly or indirectly, alone or as a shareholder,
         partner, director, officer, employee of or consultant to any other
         business organization, in any business activities that are in the
         business of writing, claims adjusting, premium financing, selling,
         underwriting, or acting as an agent with respect to private passenger
         automotive insurance (the "Designated Industry") in the geographical
         areas in which such business were conducted by any of the GAINSCO
         Companies as of the date of the termination of this Agreement;

                  (ii) approach any customer of any of the GAINSCO Companies in
         an attempt to divert it to any competitor of any of the GAINSCO
         Companies in the Designated Industry; or

                  (iii) solicit or encourage any officer or employee of any of
         the GAINSCO Companies to end his relationship with the applicable
         GAINSCO Company or commence any such relationship with any competitor
         of any of the GAINSCO Companies.

                  Employee's noncompetition obligations hereunder shall not
         preclude Employee from owning less than five percent of the common
         stock of any publicly traded corporation conducting business activities
         in the Designated Industry. If at any time the provisions of this
         Section 11 are determined to be invalid or unenforceable by reason of
         being vague or unreasonable as to area, duration or scope of activity,
         this Section 11 shall be considered divisible and shall be immediately
         amended to only such area, duration and scope of activity as shall be
         determined to be reasonable and enforceable by the court or other body
         having jurisdiction over the matter, and Employee agrees that this
         Section 11 as so amended shall be valid and binding as though any
         invalid or unenforceable provision had not been included herein.
         EMPLOYEE HAS CAREFULLY READ AND CONSIDERED THE PROVISIONS OF THIS
         AGREEMENT AND, HAVING DONE SO, AGREES THAT THE RESTRICTIONS SET FORTH
         HEREIN ARE REASONABLE AND ARE REASONABLY REQUIRED FOR THE PROTECTION OF
         THE BUSINESS INTERESTS AND GOODWILL OF THE GAINSCO COMPANIES AND THEIR
         BUSINESSES, OFFICERS, DIRECTORS AND EMPLOYEES.

                  Notwithstanding the foregoing, in the event that Employee
         receives a Change in Control Payment or an Executive Severance Payment
         following the occurrence of a Change in Control, then as of the date of
         his receipt of such Change in Control Payment or an Executive Severance
         Payment, the provisions of this Section 11 automatically shall
         terminate

                                       7
<PAGE>

         insofar as they apply to NSL, Lalande and DLT (or any of them) but
         shall continue in full force and effect with respect to each other
         GAINSCO Company.

12.      If deemed necessary by the Company, Employee agrees to render to the
         Company his full and complete cooperation in any investigation,
         proceeding, litigation or other legal proceeding. The Company agrees
         that it will provide reasonable compensation to compensate Employee for
         his time and expense associated with such cooperation. EMPLOYEE AND THE
         COMPANY AGREE THAT ANY WRITTEN OR ORAL STATEMENT OR TESTIMONY GIVEN BY
         EMPLOYEE SHALL BE TRUTHFUL.

13.      Employee understands and agrees that if any provision of this Agreement
         is held to be unenforceable, such provision shall be severed from the
         other remaining provisions of this Agreement and it shall not affect
         the validity or unenforceability of the remaining provisions.

14.      The laws of the State of Florida shall govern the validity of this
         Agreement, the construction of its terms, and the interpretation of the
         rights and duties of the Parties hereto. The Parties agree that venue
         for all disputes SHALL be in Dallas County, Texas. The Parties further
         agree and acknowledge that they are subject to personal jurisdiction in
         Dallas County, Texas.

15.      All communications required or allowed under this Agreement to any of
         the GAINSCO Companies shall be in writing and shall be to:

                                      PRESIDENT
                                      GAINSCO, INC.
                                      1445 ROSS AVENUE, SUITE 5300
                                      DALLAS, TEXAS 76202

         All communications required or allowed under this Agreement to Employee
         shall be in writing and shall be to Employee's last address on file
         with the Company. Employee understands and agrees that if his address
         changes, he shall be responsible for informing the Company of his new
         address in writing within one week of the change of address. If
         Employee fails to comply with this provision, he shall be deemed to
         have received any communication sent to him by the Company or its
         representatives at Employee's last address on file with the Company.

16.      No waiver of any of the terms of this Agreement shall be valid unless
         in writing and signed by all Parties to this Agreement. No waiver or
         default of any term of this Agreement shall be deemed a waiver of any
         subsequent breach or default of the same or similar nature. This
         Agreement may not be changed except by writing signed by the Parties.

17.      The Parties agree that this Agreement may be executed in multiple
         originals.

                                       8
<PAGE>

                  EXECUTED to be effective as of the Effective Date.

                                           ------------------------------------
                                           Michael Johnston

                                           GAINSCO, INC.

                                           By:
                                              ----------------------------------

                                           Its:
                                               ---------------------------------

                                           National Specialty Lines, Inc.

                                           By:
                                              ----------------------------------

                                           Its:
                                               ---------------------------------

                                           Lalande Financial Group, Inc.

                                           By:
                                              ----------------------------------

                                           Its:
                                               ---------------------------------

                                           DLT Insurance Adjustors, Inc.

                                           By:
                                              ----------------------------------

                                           Its:
                                               ---------------------------------

                                           MGA Insurance Company, Inc.

                                           By:
                                              ----------------------------------

                                           Its:
                                               ---------------------------------

                                       9
<PAGE>

                  ATTACHMENT 1 TO EXECUTIVE SEVERANCE AGREEMENT

                        SEPARATION AND RELEASE AGREEMENT

         This Separation and Release Agreement (this "Release Agreement") is
made and entered into to be effective as of ___________, 20__ (the "Effective
Date") by and among Michael Johnston ("Employee" or "you") and GAINSCO, INC., a
Texas corporation ("GAINSCO"), National Specialty Lines, Inc., a Florida
corporation ("NSL" or the "Company"), Lalande Financial Group, Inc., a Florida
corporation ("Lalande"), DLT Insurance Adjustors, Inc., a Florida corporation
("DLT"), and MGA Insurance Company, Inc., a Texas corporation ("MGA"). GAINSCO,
NSL, Lalande, DLT and MGA are sometimes referred to collectively as the "GAINSCO
Companies." Employee and the Company are sometimes referred to collectively as
the "Parties".

                                   WITNESSETH:

         WHEREAS, Employee and the Company agree that Employee was separated
from his employment with the Company (and with every other GAINSCO Company, if
any, with which Employee was employed) on __________________________; and

         WHEREAS, Employee and the GAINSCO Companies understand that this
Release Agreement does not effect a waiver or release of rights or claims that
may arise from events occurring after the Employee executes this Release
Agreement; and

         WHEREAS, Employee and the GAINSCO Companies expressly agree and
understand that the consideration for Employee's waiver of rights or claims is
the Executive Severance Payment described in Section 3 of the Executive
Severance Agreement between Employee and the GAINSCO Companies (the "Executive
Severance Agreement") or the Change in Control Payment described in Section 6 of
the Executive Severance Agreement, as the case may be, of which the form of this
Release Agreement is attached as Attachment 1. The Parties agree that the sum of
money represented by the Executive Severance Payment or the Change in Control
Payment, as the case may be, is a sum of money exceeding that to which Employee
is otherwise entitled; and

         WHEREAS, each of the GAINSCO Companies desires to settle fully and
finally any and all differences that may Employee may have with it; and

         NOW, THEREFORE, in consideration of the premises and mutual promises
herein contained, it is agreed as follows:

1.       The Parties understand and agree that neither the making of this
         Release Agreement nor the fulfillment of any condition or obligation of
         this Release Agreement constitutes an admission of any liability or
         wrongdoing on the part of the other or any Released Party. All
         liability by either Party to the other has been and is expressly
         denied.

                                       1
<PAGE>

2.       Employee Acknowledgments.

         a.       You have been advised by the GAINSCO Companies to consult with
                  the attorney of Your choice prior to signing this Release
                  Agreement.

         b.       You have been given a period of at least twenty-one (21) days
                  within which to consider this Release Agreement.

         c.       You would not be entitled to receive the Executive Severance
                  Payment or the Change in Control Payment, as the case may be,
                  being offered to You but for Your signing this Release
                  Agreement

         d.       You may revoke this Release Agreement within seven (7) days
                  after the date You sign it by providing written notice of the
                  revocation to the Company no later than the seventh day after
                  You sign it. The Company must receive written notice of
                  revocation no later than 5:00 p.m. on the seventh day after
                  you sign the Release Agreement. You may mail written notice of
                  revocation to:

                                        PRESIDENT
                                        GAINSCO SERVICE CORP.
                                        500 COMMERCE STREET
                                        FORT WORTH, TEXAS 76102

         Alternatively, You may fax the written notice of revocation to the
         Company, Attention: President, at (817) 338-1454.

3.       It is further expressly agreed by the Parties that this Release
         Agreement shall become effective and enforceable on the tenth day after
         it is executed (the "Release Agreement Effective Date") by each of the
         Parties if it is not revoked in accordance with Section 2(d) of the
         Release Agreement.

4.       Employee represents that he has carefully read and fully understands
         all the provisions of this Release Agreement, that he is competent to
         execute this Release Agreement, and that he is knowingly voluntarily
         entering into this Release Agreement of his own free will and accord,
         without reliance upon any statement or representation of any person or
         parties released, or their representatives, concerning the nature and
         extent of the damages or legal liability therefore.

5.       Employee represents and acknowledges that in executing this Release
         Agreement, he does not rely and has not relied upon any representation
         or statement made by the GAINSCO Companies or any of their respective
         agents, representatives or attorneys with regard to the subject matter,
         basis or effect of this Release Agreement or otherwise, other than the
         representations contained in this Release Agreement.

                                       2
<PAGE>

6.       As a material inducement to the GAINSCO Companies to enter into this
         Release Agreement, Employee does hereby agree to indemnify and save
         harmless each of the GAINSCO Companies of and from all claims for any
         unpaid federal income taxes, state and federal payroll taxes,
         applicable state and federal withholding tax obligations, penalties or
         interest arising out of this Release Agreement.

7.       Employee's health insurance and all other benefits provided by or
         through any of the GAINSCO Companies will terminate according to the
         terms of the plans. This provision is not, however, intended to waive
         Employee's rights under the Consolidated Omnibus Budget Reconciliation
         Act of 1985, as amended. ("COBRA") One or more of the GAINSCO Companies
         will provide the COBRA notice under which Employee may exercise his
         option in connection with continuation of coverage.

8.       The Parties to this Release Agreement understand that to the extent
         Employee may have vested rights pursuant to the group health insurance
         plans, group life insurance plans, and the 401(k) plan of any of the
         GAINSCO Companies, such rights are excluded from the scope of this
         Release Agreement and are not terminated or released by it.

9.       As a material inducement to the GAINSCO Companies to enter into this
         Release Agreement and subject to the terms of this paragraph, Employee
         hereby irrevocably and unconditionally releases, acquits and forever
         discharges each of the GAINSCO Companies and their respective parents,
         owners, shareholders, predecessors, successors, assigns, agents,
         directors, officers, employees, representatives, attorneys, divisions,
         subsidiaries, affiliates and all persons acting by, through, under or
         in concert with any of them (collectively "Releasees"), from any and
         all charges, complaints, claims, liabilities, obligations, promises,
         agreements, controversies, damages, actions, causes of action, suits,
         rights, demands, costs, losses, debts and expenses (including
         attorneys' fees and costs actually incurred), of any nature whatsoever,
         known or unknown ("Claim" or "Claims") which Employee now has, owns,
         holds, or which Employee at any time heretofore had, owned, or held
         against each of the Releasees, including, but not limited to: (a) all
         Claims under the AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967, as
         amended; (b) all Claims under Title VII of the Civil Rights Act of
         1964, as amended; (c) all Claims under the Employee Retirement Income
         Security Act of 1974, as amended; (d) all Claims arising under the
         Americans With Disabilities Act of 1990, as amended; (e) all Claims
         arising under the Family and Medical Leave Act of 1993, as amended; (f)
         all Claims related to Employee's employment with the Company; (g) all
         Claims of unlawful discrimination based on age, sex, race, religion,
         national origin, handicap, disability, equal pay, sexual orientation or
         otherwise; (h) all Claims of wrongful discharge, breach of an implied
         or express employment contract, negligent or intentional infliction of
         emotional distress, libel, defamation, breach of privacy, fraud, breach
         of any implied covenant of good faith and fair dealing and any other
         federal, state, or local common law or statutory claims, whether in
         tort or in contract; (i) all Claims related to unpaid wages, salary,
         overtime compensation, bonuses, severance pay, vacation pay or other
         compensation

                                       3
<PAGE>

         or benefits arising out of Employee's employment with the Company; and
         (j) all Claims arising under any federal, state or local regulation,
         law, code or statute. Notwithstanding the foregoing, nothing contained
         in this Release Agreement is intended to release the Company from any
         obligation it might have, if applicable, to pay Employee the Executive
         Severance Payment or the Change in Control Payment, as the case may be.

10.      As a material inducement to the GAINSCO Companies to enter into this
         Release Agreement, Employee represents that he has filed no lawsuits
         against any of the GAINSCO Companies and, if he has filed any lawsuits
         against any of the GAINSCO Companies, he will notify the GAINSCO
         Companies of such lawsuits and cause them to be dismissed with
         prejudice.

11.      It is understood and agreed that the release of liability described in
         this Release Agreement is a material provision of this Release
         Agreement. Accordingly, Employee covenants and promises not to sue or
         otherwise pursue legal action against any of the GAINSCO Companies,
         other than for breach of this Release Agreement, and further covenants
         and promises to indemnify and defend each of the GAINSCO Companies from
         any and all such claims, demands and causes of action, including the
         payment of reasonable costs and attorneys' fees relating to any claim,
         demand, or causes of action brought by him. Employee agrees that should
         any legal action be pursued on his behalf by any person or other entity
         against any of the GAINSCO Companies regarding the claims released in
         this Release Agreement, Employee will not accept recovery from such
         action, but will assign such recovery to the Company and agrees to
         indemnify each of the GAINSCO Companies against such claims and
         assessment of damages.

11.      Employee, on the one hand, and the each of the GAINSCO Companies, on
         the other hand, promise and agree that they will not damage, or attempt
         to damage, the business reputation or goodwill of the other.

12.      Employee agrees that in all future litigation involving any of the
         GAINSCO Companies for which any of the GAINSCO Companies requests
         Employee's cooperation that he will fully cooperate with the applicable
         GAINSCO Company. In return for his cooperation, the Company agrees to
         pay Employee for all the reasonable costs incurred by Employee due to
         his cooperation.

13.      If Employee, on the one hand, or any of the GAINSCO Companies, on the
         other hand, determines that the other has breached this Release
         Agreement, the non-breaching Party will notify the Party in breach of
         that fact in writing and the Party in breach will be afforded ten (10)
         days to cure the breach.

14.      Employee acknowledges that by the date Employee executes this Release
         Agreement, he will return to the applicable GAINSCO Company any and all
         property of the GAINSCO Company, such as (but not limited to) marketing
         plans and related information, product development plans and related
         information, trade secret information, pricing information,

                                       4
<PAGE>

         vendor information, financial information, telephone lists, computer
         software and hardware, keys, credit cards, vehicles, telephones, and
         office equipment.

15.      Any action, claim, arbitration or other legal proceedings brought to
         enforce the Release Agreement or otherwise concerning this Release
         Agreement SHALL be brought in a court of competent jurisdiction in
         Dallas County, Texas. It is intended that the provisions of this
         Release Agreement shall be enforced to the fullest extent permissible
         under the laws and public policies of the State of Florida or any other
         jurisdiction in which enforcement of this Release Agreement is sought
         in the event that the choice of forum provision in this Release
         Agreement is found invalid.

16.      The provisions of this Release Agreement shall be construed in
         accordance with the laws of the State of Texas without regard to its
         conflicts of law principles. In the event any term or condition or
         provision of this Release Agreement shall be determined to be invalid,
         illegal or unenforceable by a court of competent jurisdiction, the
         remaining terms, conditions and provisions of this Release Agreement
         shall remain in full force and effect to the extent permitted by law.

17.      No waiver of any of the terms of this Release Agreement shall be valid
         unless in writing and signed by all Parties to this Release Agreement.
         No waiver or default of any term of this Release Agreement shall be
         deemed a waiver of any subsequent breach or default of the same or
         similar nature. This Release Agreement may not be changed except by
         writing signed by the Parties.

18.      The section numbering and ordering in this Release Agreement is
         provided for convenience only and will not affect its construction or
         interpretation. Unless otherwise expressly provided, the word
         "including" does not limit the preceding or following words or terms.

19.      This Release Agreement shall be binding upon Employee and upon
         Employee's heirs, administrators, representatives, executors, trustees,
         successors and assigns, and shall inure to the benefit of Releasees and
         each of them, and to their heirs, administrators, representatives,
         executors, trustees, successors, and assigns.

20.      For the same aforesaid consideration, it is further expressly agreed
         and understood that the Parties will promptly execute any and all
         documents that are necessary and appropriate to effectuate the terms of
         this Release Agreement.

21.      For the same aforesaid consideration, it is expressly agreed and
         understood that the contents of this Release Agreement, including its
         terms, any monetary consideration paid therein, and the Parties
         thereto, shall not be disclosed, released or communicated to any person
         (except their attorneys, spouses, and tax consultants), including
         natural persons, corporations, partnerships, limited partnerships,
         joint ventures, sole proprietorships or other business entities, except
         for the purpose of enforcing this Release Agreement or any provision
         therein

                                       5
<PAGE>

         or pursuant to a lawful subpoena. Each Party agrees to give reasonable
         notice to the other in the event disclosure of this Release Agreement
         is sought by subpoena or otherwise.

22.      This Release Agreement, together with the Executive Severance
         Agreement, contains the entire understanding and agreement between the
         parties with respect to the subject matter herein, and supersedes all
         prior oral or written agreements between the parties with respect to
         that subject matter. The obligations and liabilities of Employee under
         the Executive Severance Agreement shall continue in full force and
         effect and shall survive the making of this Release Agreement.

23.      The Parties agree that the Release Agreement may be executed in
         multiple originals.

                           [Intentionally left blank.]

                                       6
<PAGE>

                  EXECUTED to be effective as of the Effective Date.

                                          --------------------------------------
                                          Michael Johnston

                                          GAINSCO, INC.

                                          By:
                                             -----------------------------------

                                          Its:
                                              ----------------------------------

                                          National Specialty Lines, Inc.

                                          By:
                                             -----------------------------------

                                          Its:
                                              ----------------------------------

                                          Lalande Financial Group, Inc.

                                          By:
                                             -----------------------------------

                                          Its:
                                              ----------------------------------

                                          DLT Insurance Adjustors, Inc.

                                          By:
                                             -----------------------------------

                                          Its:
                                              ----------------------------------

                                          MGA Insurance Company, Inc.

                                          By:
                                             -----------------------------------

                                          Its:
                                              ----------------------------------

                                       7

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