Document:

REDACTED COPY

CONFIDENTIAL TREATMENT REQUESTED

CONFIDENTIAL PORTIONS OF THIS

DOCUMENT HAVE BEEN REDACTED

AND HAVE BEEN SEPARATELY

FILED WITH THE COMMISSION

[AMC LOGO]

Assured Management Company

GOLF CONSULTANT AGREEMENT

	 	 	
This Agreement is made on the 30th day of August, 1999, between THOMAS S.

	
WATSON ("CONSULTANT") and ADAMS GOLF, INC. ("ADAMS").

	 	 	 	 	 
	 	 	
In consideration of the mutual covenants and agreement hereinafter expressed, the 

	
parties hereto do covenant and agree with each other as follows:

	 	 	 	 	 
	
 1.
	 	
GRANT TO ADAMS.

	 	 	 	 	 
	 	 	
CONSULTANT hereby gives and grants to ADAMS the exclusive worldwide right and license to use CONSULTANT'S name, facsimile signature, nickname, voice or likeness upon and in connection with the manufacture, sale, distribution, advertising and promotion of drivers and fairway woods ("EQUIPMENT"), manufactured or sold by ADAMS, its subsidiaries, affiliates or licensees as ADAMS in its sole discretion may determine.  See also Sections 4.1 and 4.2 herein.

	 	 	 	 	 
	
 2.
	 	
COVENANTS BY CONSULTANT.

	 	 	 	 	 
	 	 	
During the term of this Agreement, except as otherwise provided herein, CONSULTANT (a) will not give the right to use or permit the use of CONSULTANT's name, facsimile signature, nickname, voice or likeness to any other manufacturer or seller of golf clubs; (b) will not sponsor or endorse golf clubs made or sold by any other manufacturer or seller; and (c) will not serve as a consultant or advisor of any other manufacturer or seller of golf clubs.  See also Sections 4.1 and 4.2 herein.

	 	 	 	 	 
	
 3.
	 	
DUTIES OF CONSULTANT.

	 	 	 	 	 
	 	 	
During the term of this Agreement, CONSULTANT shall:

	 	 	 	 	 
	 	 	
3.1
	 	
To the extent provided to CONSULTANT by ADAMS, play exclusively with ADAMS EQUIPMENT, carry an ADAMS umbrella, wear an ADAMS visor or cap and carry the ADAMS golf bag.  However,
CONSULTANT will not be required to wear ADAMS visor or cap in advertising for Polo Ralph Lauren.

	 	 	 	 	 
	 	 	
3.2
	 	
Have the option to add golf ball and/or clothing product identification, logo or endorsement of third-party companies that do not manufacture clubs under the same brand to visor or cap and/or golf bag.  No other product identification, logos or endorsements will be added to ADAMS visor or caps or golf bags without the express written consent of both parties, which consent shall not be unreasonably withheld.

1

		 	 	 	 
	 	 	
3.3
	 	
Retain full option to (a) negotiate and enter into contract with any golf ball manufacturer that does not manufacture clubs under the same brand, as well as (b) decide which golf shoes and gloves to endorse.

	 	 	 	 	 
	 	 	
3.4
	 	
Exert best efforts to achieve a satisfactory record of play in a minimum of [*****]
([*****]) events annually, including made-for-television events.  In the event CONSULTANT should play less than [*****]
([*****]) events, then his annual retainer shall be reduced by a fraction of which the numerator is the number of events under
[*****] ([*****]) he has played and the denominator of which is [*****] ([*****]).  For example, if CONSULTANT plays
[*****] ([*****]) events, his annual compensation shall be reduced by [*****].  Both parties agree that in the event illness or other reasons outside the control of CONSULTANT prevent CONSULTANT from playing [*****]
([*****]) events, the parties agree to negotiate to resolve the issue, and if accord cannot be reached, then to refer to Section 15 herein.

	 	 	 	 	 
	 	 	
3.5
	 	
Use best efforts to make [*****] ([*****])appearances in Japan during the term of this Agreement, under his normal fees and conditions.  If, in fact, there are no events that meet normal CONSULTANT conditions, ADAMS will assist in obtaining and/or producing same.  CONSULTANT will not be required to play regular tour events to meet these conditions.  If acceptable events are not available, the obligation is waived.

	 	 	 	 	 
	 	 	
3.6
	 	
Advise and consult with ADAMS, at ADAMS' reasonable request, from time to time, relative to the design, testing and characteristics of EQUIPMENT.

	 	 	 	 	 
	 	 	
3.7
	 	
Demonstrate, discuss and emphasize the newest features of ADAMS EQUIPMENT at every opportunity.

	 	 	 	 	 
	 	 	
3.8
	 	
Be available for such press interviews, radio or TV appearances arranged for CONSULTANT by ADAMS which are compatible with CONSULTANT's own practice, play and personal time requirements.  CONSULTANT will be required to be available after a tournament win for selected interviews, either the Sunday afternoon or Monday morning following the win.  In all such interviews and appearances, CONSULTANT will use his best efforts to make reference to the ADAMS brand.

			
  		
  
	 	 	
3.9
	 	
Cooperate with ADAMS in giving advice, suggestions and recommendations concerning the acceptability and playability of current ADAMS golf lines, the development of new ADAMS golf lines, and information about significant golf product and golf market trends, and meet as reasonably requested with ADAMS' Design/Testing Teams.

	 	 	 	 	 
	 	 	
3.10
	 	
Make himself available on not more than two (2) days per Contract Year (as defined in Section 10 herein) for television and radio commercials and photo shoots, compatible with CONSULTANT's own practice, play and personal time

2

_________________________

             [*****] - Confidential Material redacted and filed separately with the Commission.

		 	 	 	requirements, at no cost to ADAMS, except for expenses for himself and one associate as provided in Section 7.5 hereunder.  Said activities shall be directly related to the promotion of ADAMS golf products.
					
	 	 	
3.11
	 	
Cooperate to the maximum extent possible, compatible with CONSULTANT's practice and play requirements on Tour and personal time requirements, in assisting ADAMS' promotional and public relations activities by making himself available for up to
[*****] ([*****]) days per Contract Year (as defined in Section 10 herein), on no more than [*****]
([*****]) separate occasions, for personal appearances at no cost to ADAMS, except for expenses for himself and one associate as provided in Section 7.5 hereunder.  Said activities shall be directly related to the promotion of ADAMS golf products and shall not conflict with scheduled tournament play.  Each day shall be not more than [*****]
([*****]) hours in length, excluding travel time.  Days must be used during each Contract Year; days do not carryover to subsequent Contract Years.

	 	 	 	 	 
	 	 	
3.12
	 	
In the event ADAMS desires additional personal appearance or production days from CONSULTANT, other than days provided in Sections 3.10 and 3.11 herein, CONSULTANT will make himself available as may be mutually agreed by the parties at his then-current daily rate (which, as of January 1, 1999, is [*****] dollars ($[*****])), plus expenses.  This shall be in addition to any other fees payable as provided in Section 7 hereunder.

	 	 	 	 	 
	
 4.
	 	
DEVELOPMENT OF IRONS AND OTHER CLUBS.

	 	 	 	 	 
	 	 	
4.1
	 	
ADAMS will use best efforts, along with CONSULTANT, to develop irons and other clubs for CONSULTANT's use.  Until such clubs are developed to CONSULTANT's satisfaction, CONSULTANT retains right to use irons, putter and wedge of his choice, made by any manufacturer.

		 	 	 	 
	 	 	
4.2
	 	
ADAMS, along with CONSULTANT, is making best efforts to develop a graphite tip shaft technology to interact with the new iron heads being developed.  CONSULTANT's input and endorsement through his usage on the Tour are a critical element in developing new clubs.

	 	 	 	 	 
	 	 	 	 	
If CONSULTANT plays the iron developed by ADAMS, then he shall be entitled to a royalty of [*****] percent ([*****]%) of sales at ADAMS' wholesale price on sales in excess of [*****] dollars ($[*****]).  Wholesale price shall be defined as used in ADAMS' public accounting practices which are in accordance with GAAP.  By way of example, wholesale price shall be the ADAMS' sales price (less rejects, returns, cancellations, declines, credit card charge-backs, shipping and handling, bad debt, sales discounts, demo clubs, sales specials, sales promotions, net downs and sales taxes) on all sales.  This royalty shall be in addition to compensation provided in Section 7 herein.  If CONSULTANT is playing only the new iron head without the graphite tip, he shall receive a [*****] percent ([*****]%) royalty as set out herein but only on the sales of the steel shafted clubs sold worldwide.

3

_________________________

             [*****] - Confidential Material redacted and filed separately with the Commission.

		 	 	 	 
	 	 	
4.3
	 	
Should ADAMS develop irons subsequently to the new irons contemplated in Section 4.2 above, CONSULTANT's royalty rights in Section 4.2 shall apply even if CONSULTANT chooses to keep playing the new irons contemplated in Section 4.2 above.  For example, if ADAMS develops a second generation of irons to the new irons contemplated in Section 4.2 above and sells the second generation of irons both with and without the graphite tip, and CONSULTANT chooses to continue playing the new irons contemplated in Section 4.2 above without the graphite tip rather than the second generation, CONSULTANT shall nevertheless be entitled to a royalty of [*****] percent ([*****]%) of the wholesale price on all second generation irons sold without the graphite tip on sales in excess of [*****] dollars ($[*****]).  In other words, CONSULTANT is not required to play the latest version of ADAMS' irons in order to receive royalties on all irons, but he must play a version of ADAMS' irons.

	 	 	 	 	 
	 	 	
4.4
	 	
Within sixty (60) days next following the end of each Contract Year (as defined in Section 10 herein), ADAMS shall deliver to CONSULTANT, at CONSULTANT's address set forth herein, an appropriate itemized statement to CONSULTANT setting forth the total amount of Wholesale Sales for such preceding Contract Year, specifically identifying the products, and at the same time shall pay to CONSULTANT the royalty due for such period.

		 	 	 	 
	
 5.
	 	
REPRESENTATION.

	 	 	 	 	 
	 	 	
CONSULTANT will not have the right or authority to bind ADAMS by any representation or in any other respect whatsoever or to incur any obligation or liability in the name of or on behalf of ADAMS.

	 	 	 	 	 
	
 6.
	 	
ACTIVE STATUS, TERMINATION OR DEMISE.

	 	 	 	 	 
	 	 	
6.1
	 	
Total Termination:  In the event CONSULTANT dies, or is unable to play golf at all, then ADAMS can terminate this Agreement on thirty (30) days' written notice.

	 	 	 	 	 
	 	 	
6.2
	 	
Termination for Cause:  If either party commits any other material breach of this Agreement, the other party may terminate for cause upon giving fifteen (15) days written notice of such cause and provided the breach is not rectified within such fifteen (15) day period.  It shall be considered a material breach if ADAMS is adjudicated insolvent or declares bankruptcy or fails to make payment to CONSULTANT of any amount due hereunder or if CONSULTANT disparages ADAMS or discourages use of ADAMS' EQUIPMENT.

	 	 	 	 	 
	 	 	
6.3
	 	
Behavior:  During the term of this Agreement, CONSULTANT will conduct himself at all times with due regard to public morals and conventions.  If the value of the CONSULTANT endorsement is materially reduced or impaired because CONSULTANT shall have committed or shall commit any public act that 

4

_________________________

             [*****] - Confidential Material redacted and filed separately with the Commission.

		 	 	 	 
					 involves moral turpitude under, or commits or violates any material, foreign, U.S., federal, or other applicable state or local laws, or which brings him into public disrepute, contempt, scandal or ridicule, or which insults or offends the community, or if CONSULTANT shall make any statements in derogation in any material respect of ADAMS or any of its affiliates or any of their respective products or services and such statement is made to the general public or becomes a matter of public knowledge; then at any time after the occurrence of such act, thing or statement, ADAMS shall have the right, in addition to its other legal and equitable remedies, to immediately terminate this Agreement, by giving written notice to CONSULTANT.  ADAMS must exercise its right of termination within ninety (90) days of its senior management becoming aware of the conduct giving rise to the right of termination.
					
	
 7.
	 	
COMPENSATION TO CONSULTANT.

	 	 	 	 	 
	 	 	
7.1
	 	
Personal Use Equipment:  During the term of this Agreement, ADAMS shall supply CONSULTANT with a reasonable quantity of EQUIPMENT for CONSULTANT's personal use and an allowance of ten (10) iron sets and thirty (30) woods per Contract Year for friends and family.

	 	 	 	 	 
	 	 	
7.2
	 	
Annual Retainer:  In addition to any other compensation payable under this Agreement, and except as provided in Section 7.3 below, ADAMS shall pay CONSULTANT an annual minimum retainer, as follows:

	 	
Year 1 (9/1/99-8/31/00)
	 	
[*****] dollars
	 	
$[*****]

	 	 	 	 	 	 
	 	
Year 2 (9/1/00-8/31/01)
	 	
[*****] dollars
	 	
$[*****]

	 	 	 	 	 	 
	 	
Year 3 (9/1/01-8/31/02)
	 	
[*****] dollars
	 	
$[*****]

	 	 	 	 	 	 
	 	
Year 4 (9/1/02-8/31/03)
	 	
[*****] dollars
	 	
$[*****]

	 	 	 	 	 	 
	 	
Year 5 (9/1/03-8/31/04)
	 	
[*****] dollars
	 	
$[*****]

	 	 	 	 	
Payments shall be made in two (2) equal installments on September 1 and March 1 of each respective year, except for Year 1, when the 1st payment shall be due October 1, 1999.

	 	 	 	 	 
	 	 	
7.3
	 	
Tournament Bonus Money:  A minimum of [*****] dollars ($[*****]) per televised win to be paid within thirty (30) days after event concludes.

	 	 	 	 	 
	 	 	
7.4
	 	
Stock.  ADAMS shall grant CONSULTANT the option to purchase  

5

_________________________

             [*****] - Confidential Material redacted and filed separately with the Commission.

			
  		
 
			
  		
[*****] ([*****]) shares of ADAMS' stock at market price at the close of market on the date of execution of this Agreement.  This right will vest
[*****] percent ([*****]%) per year of this Agreement.  If (i) the outstanding shares of Common Stock of ADAMS are increased, decreased or exchanged for a different number or kind of shares or other securities are distributed in respect of such shares of Common Stock (or any stock or securities received with respect to such Common Stock), through merger, consolidation, sale or exchange of all or substantially all of the assets of ADAMS, reorganization,
recapitalization, relcassification, stock dividend, stock split, reverse stock split, spin-off or other distribution with respect to such shares of Common Stock (or any stock or securities received with respect to such Common Stock), or (ii) the value of the outstanding shares of Common Stock of ADAMS is reduced by reason of an extraordinary cash dividend, an appropriate and proportionate adjustment shall be made in (1) the maximum number and kind of shares or securities subject to this Plan as provided in Section 3.1, (2) the number and kind of shares or other securities subject to then outstanding Stock Options and/or (3) the price for each share or other unit of any other securities subject to then outstanding Stock Options. 

			
  		
  
		 	
7.5
	 	
Expenses:  For the personal appearances contemplated in Sections 3.5, 3.10 and 3.11, ADAMS shall reimburse CONSULTANT for travel expenses for CONSULTANT and a companion of choice.  Travel expenses shall include jet fuel or first-class round-trip airfare, lodging, meals and local transportation.

	 	 	 	 	 
	
8.
	 	
ADVERTISING.

	 	 	 	 	 
	 	 	
Prior to publishing or placing any advertising or promotional material which uses CONSULTANT's name, facsimile signature, nickname, voice or likeness, ADAMS shall submit the same to CONSULTANT, or CONSULTANT's designee, for approval, which approval shall not be unreasonably withheld or delayed.  In the absence of any specific disapproval communicated in writing to ADAMS within fourteen (14) days after mailing a copy to CONSULTANT, or CONSULTANT's designee, such advertising or promotional material shall be deemed to have been approved.  CONSULTANT, or CONSULTANT's designee, shall notify ADAMS of specific grounds for disapproval.

	 	 	 	 	 
	
 9.
	 	
MEMBERSHIPS.

	 	 	 	 	 
	 	 	
9.1
	 	
CONSULTANT warrants and represents that during the term of this Agreement he is a member in good standing of SAG, AFTRA or any other organization having jurisdiction over CONSULTANT's services hereunder.  This agreement is subject to all of the terms and conditions of the collective bargaining agreements with SAG, AFTRA, or any other union agreements or codes having jurisdiction over CONSULTANT's services hereunder.  In the event of a conflict between any provision of this Agreement and any such collective bargaining agreement, the latter shall prevail.

6

_________________________

             [*****] - Confidential Material redacted and filed separately with the Commission.

		 	 	 	 
	 	 	
9.2
	 	
All fund payments to the Pension and Health Fund of SAG and/or the Health and Retirement Funds of AFTRA shall be paid directly by an agent designated by ADAMS who is bound by the applicable collective bargaining agreement.  Pension and Health payments shall be made on the dates on which the CONSULTANT's annual retainer payments are made.

	 	 	 	 	 
	
10.
	 	
TERM OF AGREEMENT.

	 	 	 	 	 
	 	 	
This Agreement shall commence as of the 1st day of September, 1999, and shall remain in effect for a period of five (5) years up to and including the 31st day of August 2004. A Contract Year shall be the one-year period beginning September 1, 1999 and each anniversary thereafter.  Unless renewed in writing by the authorized representatives of both parties, this Agreement shall then terminate.

	
  		
  
	
11.
	 	
BOOKS AND RECORDS.

	 	 	 	 	 
	 	 	
ADAMS agrees that it will maintain accurate and complete records and books of account showing all shipments of irons shipped by it and the price thereof. CONSULTANT, or CONSULTANT's representatives, shall have the right at reasonable times (prior to the expiration of two (2) years after each Contract Year) to inspect the books and records of ADAMS insofar as they shall relate to the computation of royalties to be paid to CONSULTANT pursuant to this Agreement.

	 	 	 	 	 
	 	 	
CONSULTANT shall be entitled to any time within two (2) years after the receipt of any statement to question such statement by providing notice in writing of such question.  If ADAMS does not satisfy CONSULTANT within thirty (30) days after said question, CONSULTANT may have an audit made of all books and records of ADAMS which may in any way pertain to Gross Sales and ADAMS does by this Agreement authorize CONSULTANT, or CONSULTANT's representatives, to appear to examine and to make extracts from any bank records, any tax returns, or any accounting records or books which may in any way pertain to the Gross Sales of ADAMS.  If such audit shall be made by a certified public accountant and shall show an error prejudicial to CONSULTANT in an amount greater than five percent (5%) of the applicable Gross Sales reported by ADAMS for the statements being contested, ADAMS shall pay all reasonable expenses of the audit.  Any amount due CONSULTANT as commission or expenses for audit shall be paid upon presentment of a statement by CONSULTANT to ADAMS of amounts due.

	 	 	 	 	 
	
12.
	 	
NOTICE.

	 	 	 	 	 
	 	 	
Every written notice or written report which may be served upon CONSULTANT, according to the terms of this agreement, may be served by enclosing it in a postpaid envelope addressed to:

7

		 	 	 	 
	 	 	 	 	
Charles E. Rubin, Esquire

Assured Management Company

1901 West 47th Place, Suite 200

Westwood, Kansas  66205

  
	 	 	 	 	 
	 	 	
or at such other address as is given in writing to ADAMS by CONSULTANT.

	 	 	 	 	 
	 	 	
Every written notice which may be served upon ADAMS, according to the terms of this Agreement, shall be served by enclosing it in a postpaid envelope addressed to:

	 	 	 	 	 
	 	 	 	 	
Barney H. Adams Golf

Adams Golf, Inc.

2801 East Plano Parkway

Plano, Texas  75074

  
	 	 	 	 	 
	 	 	
or at such other address as is given in writing by ADAMS to CONSULTANT.

	 	 	 	 	 
	
13.
	 	
WARRANTIES AND INDEMNITIES.

	 	 	 	 	 
	 	 	
13.1
	 	
CONSULTANT represents and warrants that CONSULTANT is free of all prior undertakings and obligations which would prevent or tend to impair either the full performance of CONSULTANT's obligations hereunder or ADAMS' full enjoyment of the rights and privileges granted to it by CONSULTANT.

	 	 	 	 	 
	 	 	 	 	
CONSULTANT agrees to protect, indemnify and hold harmless ADAMS from any and all liability, claims, causes of action, suits, damages and expenses (including reasonable attorneys' fees and expenses) for which it becomes liable or is compelled to pay by reason of a breach of any covenant or representation in this agreement.

	 	 	 	 	 
	 	 	
13.2
	 	
ADAMS agrees to defend, indemnify and hold harmless CONSULTANT from any and all liability, claims, causes of action, suits, damages and expenses (including reasonable attorneys' fees and expenses) for which he becomes liable or is compelled to pay by reason of or arising out of any claim or action for personal injury, death or otherwise involving alleged defects in ADAMS' products, provided that ADAMS is promptly given notice in writing and is given complete authority and information required for the defense, and ADAMS shall pay all damages or costs awarded therein against CONSULTANT and any other cost incurred by CONSULTANT in defense of any suit, but shall not be responsible for any cost, expense or compromise incurred or made by CONSULTANT without ADAMS' prior written consent.

	 	 	 	 	 
	
14.
	 	
SIGNIFICANCE OF HEADINGS.

	 	 	 	 	 
	 	 	
Section headings contained herein are solely for the purpose of aiding in speedy location of subject matter and are not in any sense to be given weight in the construction of this 

8

		 	 	 	 
	 	 	
 Agreement.  Accordingly, in case of any question with respect to the construction of this Agreement, it is to be construed as though such section headings had been omitted.

					
	
15.
	 	
APPLICABLE LAW.

	 	 	 	 	 
	 	 	
This Agreement shall be governed and construed according to the laws of the State of Kansas.

	 	 	 	 	 
	 	 	
The parties agree that any dispute arising under or in connection with this Agreement shall be resolved by arbitration in accordance with the Commercial Rules and Regulations then applicable of the American Arbitration Association, and any decision resulting from such arbitration shall be binding upon the parties hereto, and judgment on any decision of the arbitrator(s) may be entered in any court having jurisdiction over the parties.

	 	 	 	 	 
	
16.
	 	
ENTIRE AGREEMENT.

	 	 	 	 	 
	 	 	
The provisions of this Agreement are intended by the parties as a complete, conclusive and final expression of their agreement concerning the subject matter hereof, which Agreement supersedes all prior agreements concerning the subject matter, and no other statement, representation, agreement or understanding, oral or written, made prior to or at the execution hereof, shall vary or modify the written terms hereof.  No amendments, modifications or releases from any provision hereof shall be effective unless in writing and signed by both parties.

	 	 	 	 	 
	
17.
	 	
WAIVER.

	 	 	 	 	 
	 	 	
Unless otherwise mutually agreed in writing, no departure from, waiver of, or omission to require compliance with any of the terms hereof by either party shall be deemed to authorize any prior or subsequent departure or waiver, or obligate either party to continue any departure or waiver.

	 	 	 	 	 
	
18.
	 	
EXECUTION AND DELIVERY REQUIRED.

	 	 	 	 	 
	 	 	
This instrument shall not be considered to be an agreement or contract nor shall not create any obligation whatsoever on the part of CONSULTANT or ADAMS unless and until it has been signed by CONSULTANT, or a duly authorized representative, and by duly authorized representatives of ADAMS and delivery has been made of a fully signed original to both parties.

	 	 	 	 	 
	
19.
	 	
SEVERABILITY.

9

		 	 	 	 
	 	 	
Any provision or part of this Agreement prohibited by applicable law shall be ineffective to the extent of such prohibition without invalidating the remaining provisions or parts hereof.

	 	 	 	 	 
	
20.
	 	
RELATIONSHIP.

	 	 	 	 	 
	 	 	
Both parties agree that this Agreement does not constitute and shall not be construed as a constituting of a partnership or joint venture between ADAMS and CONSULTANT. Neither party shall have any right to obligate or bind the other party in any manner whatsoever, and nothing herein contained shall give or is intended to give any rights of any kind to any third person.

	 	 	 	 	 
	
21.
	 	
ASSIGNMENT AND CHANGE OF CONTROL.

	 	 	 	 	 
	 	 	
21.1
	 	
Neither ADAMS nor CONSULTANT shall have the right to grant sublicenses hereunder or to assign, alienate or otherwise transfer any of its rights or obligations hereunder, except CONSULTANT shall have the right to assign his financial benefits and ADAMS hereby consents to such assignment.

	 	 	 	 	 
	 	 	
21.2
	 	
In the event that ADAMS or its shareholders shall, through any transaction(s), sell or otherwise transfer control (more than fifty percent (50%) of the outstanding stock) of ADAMS to a third party, then CONSULTANT shall have the right to terminate this Agreement in its entirety.  ADAMS shall notify CONSULTANT of the pending transaction(s) in writing, and CONSULTANT shall notify ADAMS within thirty (30) days if he elects to grant his approval of the transfer.

	 	 	 	 	 
	 	 	
21.3
	 	
In the event that Barney Adams leaves ADAMS for any reason, CONSULTANT shall have the right to terminate this Agreement.

	 	 	 	 	 
	
22.
	 	
CONFIDENTIALITY.

	 	 	 	 	 
	 	 	
Both parties understand that the contents of this Agreement, including, but not limited to, all amounts paid or to be paid and any additional consideration, are extremely confidential, and that disclosure of same to any third party could be detrimental to the interests of one or both parties.  Therefore, both parties agree not to disclose the terms of this Agreement, without the permission of the other party, to any third party other than to CONSULTANT's business, legal and financial advisors, and with respect to all such advisors, CONSULTANT shall take all reasonable steps to ensure such confidentiality to ADAMS.

	 	 	 	 	 
	 	 	
CONSULTANT recognizes that during the course of performing his duties hereunder he may become aware of proprietary, confidential information concerning ADAMS, its products, methods, processes, billing practices, financial condition, etc., or information ADAMS designates as confidential (collectively "Confidential Information"). CONSULTANT agrees that he will maintain in confidence and not disclose to any third party at any time any such Confidential Information and shall not use any such information to the detriment of ADAMS or for any purpose not contemplated by the Agreement.

10

 

		 	 	 	 
	 	 	
IN WITNESS WHEREOF, the parties hereto have caused this Agreement  to be 

	
executed as of the date first set forth above.

                /s/Tom Watson      

Tom Watson     (illegible entry)

APPROVED FOR ADAMS GOLF, INC.

By:              /s/B.H. (Barney) Adams   

         Barney H. Adams

11EXHIBIT 10.14
                                                                   -------------

================================================================================
                             BUSINESS LOAN AGREEMENT

BORROWER:    DIRECT FOCUS, INC.          LENDER: U.S. BANK NATIONAL ASSOCIATION
             2200 N.E. 65TH AVENUE       CORPORATE BANKING DIVISION
             VANCOUVER, WA 98661         PL-7 COMMERCIAL LOAN SERVICE WEST
                                         555 S.W. OAK
                                         PORTLAND, OR 97204
--------------------------------------------------------------------------------
THIS BUSINESS LOAN AGREEMENT BETWEEN DIRECT FOCUS, INC. ("BORROWER") AND U.S.
BANK NATIONAL ASSOCIATION ("LENDER") IS MADE AND EXECUTED ON THE FOLLOWING TERMS
AND CONDITIONS. BORROWER HAS RECEIVED PRIOR COMMERCIAL LOANS FROM LENDER OR HAS
APPLIED TO LENDER FOR A COMMERCIAL LOAN OR LOANS AND OTHER FINANCIAL
ACCOMMODATIONS, INCLUDING THOSE WHICH MAY BE DESCRIBED ON ANY EXHIBIT OR
SCHEDULE ATTACHED TO THIS AGREEMENT. ALL SUCH LOANS AND FINANCIAL
ACCOMMODATIONS, TOGETHER WITH ALL FUTURE LOANS AND FINANCIAL ACCOMMODATIONS FROM
LENDER TO BORROWER, ARE REFERRED TO IN THIS AGREEMENT INDIVIDUAL AS THE "LOAN"
AND COLLECTIVELY AS THE "LOANS." BORROWER UNDERSTANDS AND AGREES THAT: (A) IN
GRANTING, RENEWING, OR EXTENDING ANY LOAN, LENDER IS RELYING UPON BORROWER'S
REPRESENTATIONS, WARRANTIES, AND AGREEMENTS, AS SET FORTH IN THIS AGREEMENT: (B)
THE GRANTING, RENEWING, OR EXTENDING OF ANY LOAN BY LENDER AT ALL TIMES SHALL BE
SUBJECT TO LENDER'S SOLE JUDGMENT AND DISCRETION; AND (C) ALL SUCH LOANS SHALL
BE AND SHALL REMAIN SUBJECT TO THE FOLLOWING TERMS AND CONDITIONS OF THIS
AGREEMENT.

TERM. This Agreement shall be effective as of June 15, 2001, and shall continue
thereafter until all indebtedness of Borrower to lender has been performed in
full and the parties terminate this Agreement in writing.

DEFINITIONS. The following words shall have the following meanings when used in
this Agreement. Terms not otherwise defined in this agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code. All references
to dollar amounts shall mean amounts in lawful money of the United States of
America.

         AGREEMENT. The word "Agreement" means this Business Loan Agreement, as
         this Business Loan Agreement may be amended or modified from time to
         time, together with all exhibits and schedules attached to this
         Business Loan Agreement from time to time.

         BORROWER. The word "Borrower" means DIRECT FOCUS, INC. The word
         "Borrower" also includes, as applicable, all subsidiaries and
         affiliates of Borrower as provided below in the paragraph titled
         "Subsidiaries and Affiliates."

         CERCLA. The word "CERCLA" means the Comprehensive Environmental
         Response, Compensation, and liability Act of 1980, as amended.

         CASH FLOW. The words "Cash Flow" mean net income after taxes, and
         exclusive of extraordinary gains and income, plus depreciation and
         amortization.

         COLLATERAL. The word "Collateral" means and includes without limitation
         all property and assets granted as collateral security for a Loan,
         whether real or personal property, whether granted directly or
         indirectly, whether granted now or in the future, and whether granted
         in the form of a security interest, mortgage, deed

<PAGE>

         of trust, assignment, pledge, chattel mortgage, chattel trust, factor's
         lien, equipment trust, conditional sale, trust receipt, lien, charge,
         lien or title retention contract, lease or consignment intended as a
         security device, or any other security or lien interest whatsoever,
         whether created by law, contract, or otherwise.

         DEBT. The word "Debt" means all of Borrower's liabilities excluding
         Subordinated Debt.

         ERISA. The word "ERISA" means the Employee Retirement Income Security
         Act of 1974, as amended.

         EVENT OF DEFAULT. The words "Event of Default" mean and include without
         limitation any of the Events of Default set forth below in the section
         titled "EVENTS OF DEFAULT."

         GRANTOR. The word "Grantor" means and includes without limitation each
         and all of the persons or entities granting a Security Interest in any
         Collateral for the Indebtedness, including without limitation all
         Borrowers granting such a Security Interest.

         GUARANTOR. The word "Guarantor" means and includes without imitation
         each and all of the guarantors, sureties, and accommodation parties in
         connection with any Indebtedness.

         INDEBTEDNESS. The word "Indebtedness" means and includes without
         limitation all Loans, together with all other obligations, debts and
         liabilities of Borrower to Lender, or any one or more of them, as well
         as all claims by Lender against Borrower, or any one or more of them;
         whether now or hereafter existing, voluntary or involuntary, due or not
         due, absolute or contingent, liquidated or unliquidated; whether
         Borrower may be liable individually or jointly with others; whether
         Borrower may be obligated as a Guarantor, surety, or otherwise; whether
         recovery upon such Indebtedness may be or hereafter may become barred
         by any statue of limitations; and whether such Indebtedness may be or
         hereafter may become otherwise unenforceable.

         LENDER. The word "Lender" means U.S. Bank National Association, its
         successors and assigns.

         LIQUID ASSETS. The words "Liquid  Assets" mean  Borrower's cash on hand
         plus Borrower's readily marketable securities.

         LOAN. The word "Loan" or "Loans" means and includes without limitation
         any and all commercial loans and financial accommodations from Lender
         to Borrower, whether nor or hereafter existing, and however evidenced,
         including without limitation those loans and financial accommodations
         described here in or described on any exhibit or schedule attached to
         this Agreement from time to time.

         NOTE. The word "Note" means and includes without limitation Borrower's
         promissory note or notes, if any, evidencing Borrower's Loan
         obligations in favor of Lender, as well as any substitute, replacement
         or refinancing note or notes therefore.

         PERMITTED LIENS. The words "Permitted Liens" mean; (a) liens and
         security interests securing Indebtedness owed by Borrower to lender;
         (b) liens for taxes, assessments, or similar charges either not yet due
         or being contested in good faith; (c) liens of materialmen, mechanics,
         warehousemen, or carriers, or other like liens arising in the ordinary
         course of business and security obligations which are not yet
         delinquent; (d) purchase money liens or purchase money security
         interests upon or in any property acquired or held by Borrower in the
         ordinary course of business to security Indebtedness outstanding on the
         date of this Agreement or permitted to be incurred under the paragraph
         of this agreement titled "Indebtedness and Liens"; (e) liens and
         security interests which, as of the date of this Agreement, have been
         disclosed to and approved by the Lender in writing; and (f) those liens
         and security interests which in the aggregate constitute an immaterial
         and insignificant monetary amount with respect to the net value of
         Borrower's assets.

         RELATED DOCUMENTS. The words "Related Documents" mean and include
         without limitation all promissory notes, credit agreements, loan
         agreements, environmental agreements, guaranties, security agreements,

<PAGE>

         mortgages, deeds of trust, and all other instruments, agreements and
         documents, whether now or hereafter existing, executed in connection
         with the Indebtedness.

         SECURITY AGREEMENT. The words "Security Agreement" mean and include
         without limitation any agreements, promises, covenants, arrangements,
         understandings or other agreements, whether created by law, contract,
         or otherwise, evidencing, governing, representing, or creating a
         Security Interest.

         SECURITY INTEREST. The words "Security Interest" mean and include
         without limitation any type of collateral security, whether in the form
         of a lien, charge, mortgage, deed of trust, assignment, pledge, chattel
         mortgage, chattel trust, factor's lien, equipment trust, conditional
         sale, trust receipt, lien or title retention contract, lease or
         consignment intended as a security device, or any other security or
         lien interest whatsoever, whether created by law, contract or
         otherwise.

         SARA. The word "SARA" means the Superfund Amendments and
         Reauthorization Act of 1986 as now or hereafter amended.

         SUBORDINATED DEBT. The words "Subordinated Debt" mean indebtedness and
         liabilities of Borrower which have been subordinated by written
         agreement to indebtedness owed by Borrower to Lender in form and
         substance acceptable to Lender.

         TANGIBLE NET WORTH. The words "Tangible Net Worth" mean Borrower's
         total assets excluding all intangible assets (i.e., goodwill,
         trademarks, patents, copyrights, organizational expenses, and similar
         intangible items, but including leaseholds and leasehold improvements)
         less total Debt.

         WORKING CAPITAL. The words "Working Capital" mean Borrower's current
         assets, excluding prepaid expenses, less Borrower's current
         liabilities.

CONDITIONS PRECEDENT TO EACH ADVANCE. Lender's obligation to make the initial
Loan Advance and each subsequent Loan Advance under this Agreement shall be
subject to the fulfillment to Lender's satisfaction of all of the conditions set
forth in this Agreement and in the Related Documents.

         LOAN DOCUMENTS. Borrower shall provide to lender in form satisfactory
         to Lender the following documents for the Loan: (a) the Note; (b)
         Security Agreements granting to lender security interests in the
         Collateral; (c) Financing Statements perfecting lender's Security
         Interests; (d) evidence of insurance as required below; and (d) any
         other documents required under this Agreement or by lender or its
         counsel.

         BORROWER'S AUTHORIZATION. Borrower shall have provided in form and
         substance satisfactory to lender properly certified resolutions, duly
         authorizing the execution and delivery of this Agreement, the Note and
         the Related Documents, and such other authorizations and other
         documents and instruments as Lender or its counsel, in their sole
         discretion, may require.

         PAYMENT OF FEES AND EXPENSES. Borrower shall have paid to Lender all
         fees, charges, and other expenses which are then due and payable as
         specified in this Agreement or any Related Document.

         REPRESENTATIONS AND WARRANTIES. The representations and warranties set
         forth in this agreement, in the Related Documents, and in any document
         or certificate delivered to Lender under this Agreement are true and
         correct.

         NO EVENT OF DEFAULT. There shall not exist at the time of any advance a
         condition which would constitute of Event of Default under this
         Agreement.

REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to lender, as
of the date of this Agreement, as of the date of each disbursement of Loan
proceeds, as of the date of any renewal, extension or modification of any Loan,
and at all times any Indebtedness exists:

<PAGE>

         ORGANIZATION. Borrower is a corporation which is duly organized,
         validly existing, and in good standing under the laws of the state of
         Borrower's incorporation and is validly existing and in good standing
         in all states in which Borrower is doing business. Borrower has the
         full power and authority to own its properties and to transact the
         business in which it is presently engaged or presently proposes to
         engage. Borrower also is duly qualified as a foreign corporation and is
         in good standing in all states in which the failure to so qualify would
         have a material adverse effect on its businesses or financial
         condition.

         AUTHORIZATION. The execution, delivery, and performance of this
         Agreement and all Related Documents by Borrower, to the extent to be
         executed, delivered or performed by Borrower, have been duly authorized
         by all necessary action by Borrower; do not require the consent or
         approval of any other person, regulatory authority or governmental
         body; and do not conflict with, result in a violation of, or constitute
         a default under (a) any provision or its articles of incorporation or
         organization, or bylaws, or any agreement or other instrument binding
         upon Borrower or (b) any law, governmental regulation, court decree, or
         order applicable to Borrower.

         FINANCIAL INFORMATION. Each financial statement of Borrower supplied to
         lender truly and completely disclosed Borrower's financial condition as
         of the date of the statement, and there has been no material adverse
         change in Borrower's financial condition subsequent to the date of the
         most recent financial statement supplied to Lender. Borrower has no
         material contingent obligations except as disclosed in such financial
         statements.

         LEGAL EFFECT. This Agreement constitutes, and any instrument or
         agreement required hereunder to be given by Borrower when delivered
         will constitute legal, valid and binding obligations of Borrower
         enforceable against Borrower in accordance with their respective terms.

         PROPERTIES. Except as contemplated by this Agreement or as previously
         disclosed in Borrower's financial statements or in writing to Lender
         and as accepted by Lender, and except for property tax liens for taxes
         not presently due and payable, Borrower owns and has good title to all
         of Borrower's properties free and clear of all Security Interests, and
         has not executed any security documents or financial statements
         relating to such properties. All of Borrower's properties are titled in
         Borrower's legal name, and Borrower has not used, or filed a financial
         statement under, any other name for at least the last five (5) years.

         HAZARDOUS SUBSTANCES. The terms "hazardous waste," "hazardous
         substance," "disposal," "release," and "threatened release," as used in
         this Agreement, shall have the same meanings as set forth in the
         "CERCLA," "SARA," and the Hazardous Materials Transportation Act, 49
         U.S.C. Section 1801, et seq., the Resource Conservation and Recovery
         Act, 42 U.S.C. Section 6901, et seq., or other applicable state or
         Federal laws, rules or regulations adopted pursuant to any of the
         foregoing or intended to protect human health or the environment
         "Environmental Laws"). Except as disclosed to and acknowledged by
         Lender in writing Borrower represents and warrants that: (a) During the
         period of Borrower's ownership of the properties, there has been no
         use, generation, manufacture, storage, treatment, disposal, release or
         threatened release of any hazardous waste or substance by any person
         on, under, about or from any of the properties; (b) Borrower has no
         knowledge of, or reason to believe that there has been (i) any use,
         generation, manufacture, storage, treatment, disposal, release, or
         threatened release of any hazardous waste or substance on, under, about
         or from the properties b any prior owners or occupants of any of the
         properties, or (ii) any actual or threatened litigation or claims of
         any kind by any person relating to such matters; and (c) Neither
         Borrower nor any tenant, contractor, agent or other authorized user of
         any of the properties shall use, generate, manufacture, store, treat,
         dispose of, or release any hazardous waste or substance on, under,
         about or from any of the properties, and any such activity shall be
         conducted in compliance with all applicable federal, state, and local
         laws, regulations, and ordinances, including without limitation
         Environmental Laws. Borrower authorizes Lender and its agents to enter
         upon the properties to make such inspections and tests as Lender may
         deem appropriate to determine compliance of the properties with this
         section of the Agreement. Any inspections or tests made by Lender shall
         be at Borrower's expense and for lender's purposes only and shall not
         be construed to create any responsibility or liability on the part of
         Lender to Borrower or to any other person. The representations and
         warranties contained herein are based on Borrower's due diligence in
         investigating the properties for hazardous waste and hazardous

<PAGE>

         substances. Borrower hereby: (a) releases and waives any future claims
         against Lender for indemnity or contribution in the event Borrower
         becomes liable for cleanup or other costs under any such laws, and (b)
         agrees to indemnify and hold harmless Lender against any and all
         claims, losses, liabilities, damages, penalties, and expenses which
         Lender may directly or indirectly sustain or suffer resulting from a
         breach of this section of the Agreement or as a consequence of any use,
         generation, manufacture, storage, disposal, release or threatened
         release of a hazardous waste or substance on the properties or as a
         result of a violation of any Environmental Laws. The provisions of this
         section of the Agreement, including the obligation to indemnify, shall
         survive the payment of the Indebtedness and the termination or
         expiration of this agreement and shall not be effective by Lender's
         acquisition of any interest in any of the properties, whether by
         foreclosure or otherwise.

         LITIGATION AND CLAIMS. No litigation, claim, investigation,
         administrative proceeding or similar action (including those for unpaid
         taxes) against Borrower is pending or threatened, and no other event
         has occurred which may materially adversely affect Borrower's financial
         condition or properties, other than litigation, claims, or other
         events, if any, that have been disclosed to and acknowledged by Lender
         in writing.

         TAXES. To the best of Borrower's knowledge, all tax returns and reports
         of Borrower that are or were required to be filed, have been filed, and
         all taxes, assessments and other governmental charges have been paid in
         full, except those presently being or to be contested by Borrower in
         good faith in the ordinary course of business and for which adequate
         reserves have been provided.

         LIEN PRIORITY. Unless otherwise previously disclosed to lender in
         writing, Borrower has not entered into or granted any Security
         Agreements, or permitted the filing or attachment of any Security
         Interests on or affecting any of the Collateral directly or indirectly
         securing repayment of Borrower's Loan and Note, that would be prior or
         that may in any way be superior to Lender's Security Interests and
         rights in and to such Collateral.

         BINDING EFFECT. This Agreement, the Note, all Security Agreements
         directly or indirectly securing repayment of Borrower's Loan and Note
         and all of the Related Documents are binding upon Borrower, as well as
         upon Borrower's successors, representatives and assigns, and are
         legally enforceable in accordance with their respective terms.

         COMMERCIAL PURPOSES. Borrower intends to use the Loan proceeds solely
         for business or commercial related purposes.

         EMPLOYEE BENEFIT PLANS. Each employee benefit plan as to which Borrower
         may have any liability complies in all material respects with all
         applicable requirements of law and regulations, and (i) no Reportable
         Event or Prohibited Transaction (as defined in ERISA) has occurred with
         respect to any such plan; (ii) Borrower has not withdrawn from any such
         plan or initiated steps to do so; (iii) no steps have been taken to
         terminate any such plan; and (iv) there are no unfounded liabilities
         other than those previously disclosed to Lender in writing.

         LOCATION OF BORROWER'S OFFICES AND RECORDS. Borrower's place of
         business, or Borrower's chief executive office, if Borrower has more
         than one place of business, is located at 2200 N.E. 65th Avenue,
         Vancouver, Washington 98661. Unless Borrower has designated otherwise
         in writing, this location is also the office or offices where Borrower
         keeps its records concerning the Collateral.

         INFORMATION. All information heretofore or contemporaneously herewith
         furnished by Borrower to Lender for the purposes of or in connection
         with this Agreement or any transaction contemplated hereby is, and all
         information hereafter furnished by or on behalf of Borrower to Lender
         will be, true and accurate in every material respect on the date as of
         which such information is dated or certified; and none of such
         information is or will be incomplete by omitting to state any material
         fact necessary to make such information not misleading.

<PAGE>

         SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Borrower understands and
         agrees that Lender, without independent investigation, is relying upon
         the above representations and warranties in extending Loan Advances to
         Borrower. Borrower further agrees that the foregoing representations
         and warranties shall be continuing in nature and shall remain in full
         force and effect until such time as Borrower's Indebtedness shall be
         paid in full, or until this Agreement shall be terminated in the manner
         provided above, whichever is the last to occur.

AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, while
this Agreement is in effect, Borrower will:

         LITIGATION. Promptly inform Lender in writing of (a) all material
         adverse changes in Borrower's financial condition, and (b) all existing
         and all threatened litigation, claims, investigations, administrative
         proceedings or similar actions affecting Borrower or any Guarantor
         which could materially affect the financial condition of Borrower or
         the financial condition of any Guarantor.

         Financial Records. MAINTAIN ITS BOOKS AND RECORDS IN ACCORDANCE WITH
         GENERALLY ACCEPTED ACCOUNTING PRINCIPLES, APPLIED ON A CONSISTENT
         BASIS, AND PERMIT LENDER TO EXAMINE AND AUDIT BORROWER'S BOOKS AND
         RECORDS AND HAVE ITS MANAGEMENT MEET WITH LENDER AT ALL REASONABLE
         TIMES.

         Financial Statements. FURNISH LENDER WITH, AS SOON AS AVAILABLE, BUT IN
         NO EVENT LATER THAN NINETY (90) DAYS AFTER THE END OF EACH FISCAL YEAR
         (A) BORROWER'S BALANCE SHEET AND INCOME STATEMENT FOR THE YEAR ENDED,
         AUDITED BY A CERTIFIED PUBLIC ACCOUNTANT SATISFACTORY TO LENDER AND (B)
         A COPY OF BORROWER'S 10K FILED WITH THE S.E.C.; AND AS SOON AS
         AVAILABLE, BUT IN NO EVENT LATER THAN FORTY-FIVE (45) DAYS AFTER THE
         END OF EACH FISCAL QUARTER, (A) BORROWER'S BALANCE SHEET AND PROFIT AND
         LOSS STATEMENT FOR THE PERIOD ENDED, PREPARED AND CERTIFIED AS CORRECT
         TO THE BEST KNOWLEDGE AND BELIEF BY BORROWER'S CHIEF FINANCIAL OFFICER
         OR OTHER OFFICER OR PERSON ACCEPTABLE TO LENDER AND (B) A COPY OF
         BORROWER'S 10Q FILED WITH THE S.E.C. ALL FINANCIAL REPORTS REQUIRED TO
         BE PROVIDED UNDER THIS AGREEMENT SHALL BE PREPARED IN ACCORDANCE WITH
         GENERALLY ACCEPTED ACCOUNTING PRINCIPLES, APPLIED ON A CONSISTENT
         BASIS, AND CERTIFIED BY BORROWER AS BEING TRUE AND CORRECT.

         Additional Information. FURNISH SUCH ADDITIONAL INFORMATION AND
         STATEMENTS, LISTS OF ASSETS AND LIABILITIES, AGINGS OF RECEIVABLES AND
         PAYABLES, INVENTORY SCHEDULES, BUDGETS, FORECASTS, TAX RETURNS, AND
         OTHER REPORTS WITH RESPECT TO BORROWER'S FINANCIAL CONDITION AND
         BUSINESS OPERATIONS AS LENDER MAY REQUEST FROM TIME TO TIME.

         Financial Covenants and Ratios. Comply with the following covenants and
         ratios:

                  Net Worth Ratio. MAINTAIN A RATIO OF TOTAL LIABILITIES TO
                  TANGIBLE NET WORTH OF LESS THAN 1.25 to 1.00.

                  Current Ratio. MAINTAIN A RATIO OF CURRENT ASSETS TO CURRENT
                  LIABILITIES IN EXCESS OF 2.00 to 1.00.

         THE FOLLOWING PROVISIONS SHALL APPLY FOR PURPOSES OF DETERMINING
         COMPLIANCE WITH THE FOREGOING FINANCIAL COVENANTS AND RATIOS:
         Compliance with the foregoing ratios/amounts shall be determined by
         calculating the ratios/amounts as of the end of each quarter. EXCEPT AS
         PROVIDED ABOVE, ALL COMPUTATIONS MADE TO DETERMINE COMPLIANCE WITH THE
         REQUIREMENTS CONTAINED IN THIS PARAGRAPH SHALL BE MADE IN ACCORDANCE
         WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES, APPLIED ON A CONSISTENT
         BASIS, AND CERTIFIED BY BORROWER AS BEING TRUE AND CORRECT.

         Insurance. MAINTAIN FIRE AND OTHER RISK INSURANCE, PUBLIC LIABILITY
         INSURANCE, AND SUCH OTHER INSURANCE AS LENDER MAY REQUIRE WITH RESPECT
         TO BORROWER'S PROPERTIES AND OPERATIONS, IN FORM, AMOUNTS, COVERAGES,
         AND WITH INSURANCE COMPANIES REASONABLY ACCEPTABLE TO LENDER. BORROWER,
         UPON REQUEST OF LENDER, WILL DELIVER TO LENDER FROM TIME TO TIME THE
         POLICIES OR CERTIFICATES

<PAGE>

         OF INSURANCE IN FORM SATISFACTORY TO LENDER, INCLUDING STIPULATIONS
         THAT COVERAGES WILL NOT BE CANCELLED OR DIMINISHED WITHOUT AT LEAST TEN
         (10) DAYS' PRIOR WRITTEN NOTICE TO LENDER. EACH INSURANCE POLICY ALSO
         SHALL INCLUDE AN ENDORSEMENT PROVIDING THAT COVERAGE IN FAVOR OF LENDER
         WILL NOT BE IMPAIRED IN ANY WAY BY ANY ACT, OMISSION OR DEFAULT OF
         BORROWER OR ANY OTHER PERSON. IN CONNECTION WITH ALL POLICIES COVERING
         ASSETS IN WHICH LENDER HOLDS OR IS OFFERED A SECURITY INTEREST FOR THE
         LOANS, BORROWER WILL PROVIDE LENDER WITH SUCH LOSS PAYABLE OR OTHER
         ENDORSEMENTS AS LENDER MAY REQUIRE.

         Insurance Reports. FURNISH TO LENDER, UPON REQUEST OF LENDER, REPORTS
         ON EACH EXISTING INSURANCE POLICY SHOWING SUCH INFORMATION AS LENDER
         MAY REASONABLY REQUEST, INCLUDING WITHOUT LIMITATION, THE FOLLOWING:
         (A) THE NAME OF THE INSURER; (B) THE RISKS INSURED; (C) THE AMOUNT OF
         THE POLICY; (D) THE PROPERTIES INSURED; (E) THE THEN CURRENT PROPERTY
         VALUES ON THE BASIS OF WHICH INSURANCE HAS BEEN OBTAINED, AND THE
         MANNER OF DETERMINING THOSE VALUES; AND (F) THE EXPIRATION DATE OF THE
         POLICY.

         Other Agreements. COMPLY WITH ALL TERMS AND CONDITIONS OF ALL OTHER
         AGREEMENTS, WHETHER NOW OR HEREAFTER EXISTING, BETWEEN BORROWER AND ANY
         OTHER PARTY AND NOTIFY LENDER IMMEDIATELY IN WRITING OF ANY DEFAULT IN
         CONNECTION WITH ANY OTHER SUCH AGREEMENTS.

         Loan Fees and Charges. IN ADDITION TO ALL OTHER AGREED UPON FEES AND
         CHARGES, PAY THE FOLLOWING: Borrower agrees to pay Lender, prior to or
         contemporaneously with the initial advance of Loan proceeds, a
         nonrefundable loan fee in the amount of .25% of the Loan amount per
         annum, payable quarterly in arrears, standby letters of credit at 1.0%
         per annum per letter of credit amount (minimum of $250.00) due upon
         issuance of letter of credit, and commercial letters of credit at U.S.
         Bank's published rates and charges.

         Loan Proceeds. USE ALL LOAN PROCEEDS SOLELY FOR THE BORROWER'S BUSINESS
         OPERATIONS, UNLESS SPECIFICALLY CONSENTED TO THE CONTRARY BY LENDER IN
         WRITING.

         Taxes, Charges and Liens. PAY AND DISCHARGE WHEN DUE ALL OF ITS
         INDEBTEDNESS AND OBLIGATIONS, INCLUDING WITHOUT LIMITATION ALL
         ASSESSMENTS, TAXES, GOVERNMENTAL CHARGES, LEVIES AND LIENS OF EVERY
         KIND AND NATURE, IMPOSED UPON BORROWER OR ITS PROPERTIES, INCOME OR
         PROFITS, PRIOR TO THE DATE ON WHICH PENALTIES WOULD ATTACH, AND ALL
         LAWFUL CLAIMS THAT, IF UNPAID, MIGHT BECOME A LIEN OR CHARGE UPON ANY
         OF BORROWER'S PROPERTIES, INCOME, OR PROFITS. PROVIDED HOWEVER,
         BORROWER WILL NOT BE REQUIRED TO PAY AND DISCHARGE ANY SUCH ASSESSMENT,
         TAX, CHARGE, LEVY, LIEN OR CLAIM SO LONG AS (A) THE LEGALITY OF THE
         SAME SHALL BE CONTESTED IN GOOD FAITH BY APPROPRIATE PROCEEDINGS, AND
         (B) BORROWER SHALL HAVE ESTABLISHED ON ITS BOOKS ADEQUATE RESERVES WITH
         RESPECT TO SUCH CONTESTED ASSESSMENT, TAX, CHARGE, LEVY, LIEN, OR CLAIM
         IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRACTICES. BORROWER,
         UPON DEMAND OF LENDER, WILL FURNISH TO LENDER EVIDENCE OF PAYMENT OF
         THE ASSESSMENTS, TAXES, CHARGES, LEVIES, LIENS AND CLAIMS, AND WILL
         AUTHORIZE THE APPROPRIATE GOVERNMENTAL OFFICIAL TO DELIVER TO LENDER AT
         ANY TIME A WRITTEN STATEMENT OF ANY ASSESSMENTS, TAXES, CHARGES,
         LEVIES, LIENS AND CLAIMS AGAINST BORROWER'S PROPERTIES, INCOME, OR
         PROFITS.

         Performance. PERFORM AND COMPLY WITH ALL TERMS, CONDITIONS, AND
         PROVISIONS SET FORTH IN THIS AGREEMENT AND IN THE RELATED DOCUMENTS IN
         A TIMELY MANNER, AND PROMPTLY NOTIFY LENDER IF BORROWER LEARNS OF THE
         OCCURRENCE OF ANY EVENT WHICH CONSTITUTES AN EVENT OF DEFAULT UNDER
         THIS AGREEMENT OR UNDER ANY OF THE RELATED DOCUMENTS.

         Operations. MAINTAIN EXECUTIVE AND MANAGEMENT PERSONNEL WITH
         SUBSTANTIALLY THE SAME QUALIFICATIONS AND EXPERIENCE AS THE PRESENT
         EXECUTIVE AND MANAGEMENT PERSONNEL; PROVIDE WRITTEN NOTICE TO LENDER OF
         ANY CHANGE IN EXECUTIVE AND MANAGEMENT PERSONNEL; CONDUCT ITS BUSINESS
         AFFAIRS IN A REASONABLE AND PRUDENT MANNER AND IN COMPLIANCE WITH ALL
         APPLICABLE FEDERAL, STATE AND MUNICIPAL LAWS, ORDINANCES, RULES AND
         REGULATIONS RESPECTING ITS PROPERTIES, CHARTERS, BUSINESSES AND
         OPERATIONS, INCLUDING WITHOUT LIMITATION, COMPLIANCE WITH THE

<PAGE>

         AMERICANS WITH DISABILITIES ACT AND WITH ALL MINIMUM FUNDING STANDARDS
         AND OTHER REQUIREMENTS OF ERISA AND OTHER LAWS APPLICABLE TO BORROWER'S
         EMPLOYEE BENEFIT PLANS.

         Inspection. PERMIT EMPLOYEES OR AGENTS OF LENDER AT ANY REASONABLE TIME
         TO INSPECT AY AND ALL COLLATERAL FOR THE LOAN OR LOANS AND BORROWER'S
         OTHER PROPERTIES AND TO EXAMINE OR AUDIT BORROWER'S BOOKS, ACCOUNTS,
         AND RECORDS AND TO MAKE COPIES AND MEMORANDA OF BORROWER'S BOOKS,
         ACCOUNTS, AND RECORDS. IF BORROWER NOW, OR AT ANY TIME HEREAFTER,
         MAINTAINS ANY RECORDS (INCLUDING WITHOUT LIMITATION COMPUTER GENERATED
         RECORDS AND COMPUTER SOFTWARE PROGRAMS FOR THE GENERATION OF SUCH
         RECORDS) IN THE POSSESSION OF A THIRD PARTY, BORROWER, UPON REQUEST OF
         LENDER, SHALL NOTIFY SUCH PARTY TO PERMIT LENDER FREE ACCESS TO SUCH
         RECORDS AT ALL REASONABLE TIMES AND TO PROVIDE LENDER WITH COPIES OF
         ANY RECORDS IT MAY REQUEST, ALL AT BORROWER'S EXPENSE.

         Compliance Certificate. UNLESS WAIVED IN WRITING BY LENDER, PROVIDE
         LENDER WITH AT LEAST QUARTERLY, DUE WITHIN SIXTY (60) DAYS OF QUARTER
         END AND AT THE TIME OF EACH DISBURSEMENT OF LOAN PROCEEDS WITH A
         CERTIFICATE EXECUTED BY BORROWER'S CHIEF FINANCIAL OFFICER, OR OTHER
         OFFICER OR PERSON ACCEPTABLE TO LENDER, CERTIFYING THAT THE
         REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS AGREEMENT ARE TRUE AND
         CORRECT AS OF THE DATE OF THE CERTIFICATE AND FURTHER CERTIFYING THAT,
         AS OF THE DATE OF THE CERTIFICATE, NO EVENT OF DEFAULT EXISTS UNDER
         THIS AGREEMENT.

         Environmental Compliance and Reports. BORROWER SHALL COMPLY IN ALL
         RESPECTS WITH ALL ENVIRONMENTAL PROTECTION FEDERAL, STATE AND LOCAL
         LAWS, STATUES, REGULATIONS AND ORDINANCES; NOT CAUSE OR PERMIT TO
         EXIST, AS A RESULT OF AN INTENTIONAL OR UNINTENTIONAL ACTION OR
         OMISSION ON ITS PART OR ON THE PART OF ANY THIRD PARTY, ON PROPERTY
         OWNED AND/OR OCCUPIED BY BORROWER, ANY ENVIRONMENTAL ACTIVITY WHERE
         DAMAGE MAY RESULT TO THE ENVIRONMENT, UNLESS SUCH ENVIRONMENTAL
         ACTIVITY IS PURSUANT TO AND IN COMPLIANCE WITH THE CONDITIONS OF A
         PERMIT ISSUED BY THE APPROPRIATE FEDERAL, STATE OR LOCAL GOVERNMENTAL
         AUTHORIZES; SHALL FURNISH TO LENDER PROMPTLY AND IN ANY EVENT WITHIN
         THIRTY (30) DAYS AFTER RECEIPT THEREOF A COPY OF ANY NOTICE, SUMMONS,
         LIEN, CITATION, DIRECTIVE, LETTER OR OTHER COMMUNICATION FROM ANY
         GOVERNMENTAL AGENCY OR INSTRUMENTALITY CONCERNING ANY INTENTIONAL OR
         UNINTENTIONAL ACTION OR OMISSION ON BORROWER'S PART IN CONNECTION WITH
         ANY ENVIRONMENTAL ACTIVITY WHETHER OR NOT THERE IS DAMAGE TO THE
         ENVIRONMENT AND/OR OTHER NATURAL RESOURCES.

         Additional Assurances. MAKE, EXECUTE AND DELIVER TO LENDER SUCH
         PROMISSORY NOTES, MORTGAGES, DEEDS OF TRUST, SECURITY AGREEMENTS,
         FINANCING STATEMENTS, INSTRUMENTS, DOCUMENTS AND OTHER AGREEMENTS AS
         LENDER OR ITS ATTORNEYS MAY REASONABLY REQUEST TO EVIDENCE AND SECURE
         THE LOANS AND TO PERFECT ALL SECURITY INTERESTS.

NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this
Agreement is in effect, Borrower shall not, without the prior written consent of
Lender:

         CAPITAL EXPENDITURES. Make or contract to make capital expenditures,
         including leasehold improvements, in any fiscal year in excess of
         $20,000,000.00 or incur liability for rentals of property (including
         both real and personal property) in an amount which, together with
         capital expenditures, shall in any fiscal year exceed such sum.

         INDEBTEDNESS AND LIENS. Sell with recourse any of Borrower's accounts,
         except to Lender.

         CONTINUITY OF OPERATIONS. (a) Engage in any business activities
         substantially different than those in which Borrower is presently
         engaged, (b) cease all operations, liquidate, transfer, or consolidate
         with any other entity, change ownership, dissolve or transfer or sell
         Collateral out of the ordinary course of business.

         LOANS, ACQUISITIONS AND GUARANTIES. (a) Loan, invest in or advance
         money or assets, (b) purchase, create or acquire any interest in any
         other enterprise or entity, or (c) incur any obligation as surety or
         guarantor other than in the ordinary course of business.

<PAGE>

CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan to
Borrower, whether under this Agreement or under any other agreement, Lender
shall have no obligation to make Loan Advances or to disburse Loan proceeds if:
(a) Borrower or any Guarantor is in default under the terms of this Agreement or
any of the Related Documents or any other agreement that Borrower or any
Guarantor has with Lender; (b) Borrower or any Guarantor becomes insolvent,
files a petition in bankruptcy or similar proceedings, or is adjudged a
bankrupt; (c) there occurs a material adverse change in Borrower's financial
condition, in the financial condition of any Guarantor, or in the value of any
Collateral securing any Loan; (d) any Guarantor seeks, claims or otherwise
attempts to limit, modify or revoke such Guarantor's guaranty of the Loan or any
other loan with Lender; or (e) Lender in good faith deems itself insecure, even
though no Event of Default shall have occurred.

ACCESS LAWS. Without limiting the generality of any provision of this Agreement
requiring Borrower to comply with applicable laws, rules, and regulations,
Borrower agrees that it will, at all times, comply with applicable laws relating
to disabled access including, but not limited to, all applicable titles of the
Americans with Disabilities Act of 1990.

ADDITIONAL DEFINITIONS.

CURRENT ASSETS. The words "Current Assets" mean Borrower's cash on hand plus
Borrower's receivables plus inventory.

CURRENT LIABILITIES. The words "Current Liabilities" mean all Borrower's notes
payable plus borrower's accounts payable plus Borrower's income taxes payable
plus Borrower's accruals plus Borrower's current portion of long-term debt.

CURRENT RATIO. The words "Current Ratio" mean Borrower's total Current Assets
divided by Borrower's total Current Liabilities.

OUT OF DEBT PERIOD. Borrower agrees with Lender that Borrower shall rest the
Line of Credit Facility with no outstanding principal balance (not including
outstanding standby letters of credit) for a minimum of thirty (30) consecutive
days during the term of the loan.

RIGHT OF SETOFF. Borrower grants to Lender a contractual security interest in,
and hereby assigns, conveys, delivers, pledges and transfers to Lender all
Borrower's right, title and interest in and to Borrower's accounts with Lender
(whether checking, savings, or some other account), including, without
limitation, all accounts held jointly with someone else and all accounts
Borrower may open in the future, excluding however all IRA and Keogh accounts,
and all trust accounts for which the grant of a security interest would be
prohibited by law. Borrower authorizes Lender, to the extent permitted by
applicable law, to charge or setoff all sums owing on the Indebtedness against
any and all such accounts.

EVENTS OF DEFAULT. Each of the following shall constitute of Event of Default
under this Agreement:

         DEFAULT ON INDEBTEDNESS. Failure of Borrower to make any payment when
         due on the Loans.

         OTHER DEFAULTS. Failure of Borrower or any Grantor to comply with or to
         perform when due any other term, obligation, covenant or condition
         contained in this Agreement or in any of the Related Documents, or
         failure of Borrower to comply with or to perform any other term
         obligation, covenant or condition contained in any other agreement
         between Lender and Borrower.

         DEFAULT IN FAVOR OF THIRD PARTIES. Should Borrower or any Grantor
         default under any loan, extension of credit, security agreement,
         purchase or sales agreement, or any other agreement, in favor of any
         other creditor of person that may materially affect any of Borrower's
         property or Borrower's or any Grantor's ability to repay the Loans or
         perform their respective obligations under this Agreement or any of the
         Related Documents.

<PAGE>

         FALSE STATEMENTS. Any warranty, representation or statement made or
         furnished to Lender by or on behalf of Borrower or any Grantor under
         this Agreement or the Related Documents is false or misleading in any
         material respect at the time made or furnished, or becomes false or
         misleading at any time thereafter.

         DEFECTIVE COLLATERAL. This Agreement or any of the Related Documents
         ceases to be in full force and effect (including failure of any
         Security Agreement to create a valid and perfected Security Interest)
         at ay time and for any reason.

         INSOLVENCY. The dissolution or termination of Borrower's existence as a
         going business, the insolvency of Borrower, the appointment of a
         receiver for any part of Borrower's property, any assignment for the
         benefit of creditors, any type of creditor workout, or the commencement
         of any proceeding under any bankruptcy or insolvency laws by or against
         Borrower.

         CREDITOR OR FORFEITURE PROCEEDINGS. Commencement of foreclosure or
         forfeiture proceedings, whether by judicial proceeding, self-help,
         repossession or any other method, by any creditor of Borrower, any
         creditor of any Grantor against any collateral securing the
         Indebtedness, or by any governmental agency. This includes a
         garnishment, attachment, or levy on or of any of Borrower's deposit
         accounts with Lender.

         EVENTS AFFECTING GUARANTOR. Any of the preceding events occurs with
         respect to any Guarantor of any of the Indebtedness or any Guarantor
         dies or becomes incompetent, or revokes or disputes the validity of, or
         liability under, any Guaranty of the Indebtedness.

         ADVERSE CHANGE. A material adverse change occurs in Borrower's
         financial condition, or Lender believes the prospect of payment or
         performance of the Indebtedness is impaired.

EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except where
otherwise provided in this Agreement or the Related Documents, all commitments
and obligations of Lender under this Agreement or the Related Documents or any
other agreement immediately will terminate (including any obligation to make
Loan Advances or disbursements), and, at Lender's option, all Indebtedness
immediately will become due and payable, all without notice of any kind to
Borrower, except that in the case of an Event of Default on the type described
in the "Insolvency" subsection above, such acceleration shall be automatic and
not optional. In addition, Lender shall have all the rights and remedies
provided in the Related Documents or available at law, in equity, or otherwise.
Except as may be prohibited by applicable law, all of lender's rights and
remedies shall be cumulative and may be exercised singularly or concurrently.
Election by Lender to pursue any remedy shall not exclude pursuit of any other
remedy, and an election to make expenditures or to take action to perform an
obligation of Borrower or of any Grantor shall not affect Lender's right to
declare a default and to exercise its rights and remedies.

MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:

         AMENDMENTS. This Agreement, together with any Related Documents,
         constitutes the entire understanding and agreement of the parties as to
         the matters set forth in this Agreement. No alteration of or amendment
         to this agreement shall be effective unless given in writing and signed
         by the party or parties sought to be charged or bound by the alteration
         or amendment.

         Applicable Law. This agreement has been delivered to Lender and
accepted by Lender in the State of Oregon. If there is a lawsuit, Borrower
agrees upon Lender's request to submit to the jurisdiction of the courts of
Multnomah County, the State of Oregon. Lender and Borrower hereby waive the
right to any jury trial in any action, proceeding, or counterclaim brought by
either Lender or Borrower against the other. This Agreement shall be governed by
and construed in accordance with the laws of the State of Oregon.

         CAPTION HEADINGS. Caption headings in this Agreement are for
         convenience purposes only and are not to be used to interpret or
         define the provisions of this Agreement.

         CONSENT TO LOAN PARTICIPATION. Borrower agrees and consents to Lender's
         sale or transfer, whether now or later, of one or more participation
         interests in the Loans to one or more purchasers, whether related or

<PAGE>

         unrelated to Lender. Lender may provide, without any limitation
         whatsoever, to any one or more purchasers, or potential purchasers, any
         information or knowledge Lender may have about Borrower or about any
         other matter relating to the Loan, and Borrower hereby waives any
         rights to privacy it may have with respect to such matters. Borrower
         additionally waives any and all notices of sale of participation
         interests, as well as all notices of any repurchaser of such
         participation interests. Borrower also agrees that the purchasers of ay
         such participation interests will be considered as the absolute owners
         of such interests in the Loans and will have all the rights granted
         under the participation agreement or agreements governing the sale of
         such participation interests. Borrower further waives all rights of
         offset or counterclaim that it may have now or later against Lender or
         against any purchaser of such a participation interest and
         unconditionally agrees that either Lender or such purchaser may enforce
         Borrower's obligation under the Loans irrespective of the failure or
         insolvency of any holder of any interest in the Loans. Borrower further
         agrees that the purchaser of any such participation interests may
         enforce its interests irrespective of any personal claims or defenses
         that Borrower may have against Lender.

         COSTS AND EXPENSES. Borrower agrees to pay upon demand all of Lender's
         expenses, including without limitation attorneys' fees, incurred in
         connection with the enforcement, modification and collection of this
         Agreement or in connection with the Loans made pursuant to this
         Agreement. Lender may pay someone else to help collect the Loans and to
         enforce this Agreement, and Borrower will pay that amount. This
         includes, subject to any limits under applicable law, Lender's
         attorneys' fees and Lender's legal expenses, whether or not there is a
         lawsuit, including attorneys' fees for bankruptcy proceedings
         (including efforts to modify or vacate any automatic stay or
         injunction), appeals, and any anticipated post-judgment collection
         services. Borrower also will pay any court costs, in addition to all
         other sums provided by law.

         NOTICES. All notices required to be given under this Agreement shall be
         given in writing, may be sent by telefacsimile (unless otherwise
         required by law), and shall be effective when actually delivered or
         when deposited with a nationally recognized overnight courier or
         deposited in the United States mail, first class, postage prepaid,
         addressed to the party to whom the notice is to be given at the address
         shown above. Any party may change its address for notices under this
         Agreement by giving formal written notice to the other parties,
         specifying that the purpose of the notice is to change the party's
         address. To the extent permitted by applicable law, if there is more
         than one Borrower, notice to any Borrower will constitute notice to all
         Borrowers. For notice purposes, Borrowers will keep Lender informed at
         all times of Borrower's current address(es).

         SEVERABILITY. If a court of competent jurisdiction finds any provision
         of this Agreement to be invalid or unenforceable as to any person or
         circumstance, such finding shall not render that provision invalid or
         unenforceable as to any other persons or circumstances. If feasible,
         any such offending provision shall be deemed to be modified to be
         within the limits of enforceability or validity; however, if the
         offending provision cannot be so modified, it shall be stricken and all
         other provisions of this Agreement in all other respects shall remain
         valid and enforceable.

         SUBSIDIARIES AND AFFILIATES OF BORROWER. To the extent the context of
         any provisions of this Agreement makes it appropriate, including
         without limitation any representation, warranty or covenant, the word
         "Borrower" as used herein shall include all subsidiaries and affiliates
         of Borrower. Notwithstanding the foregoing however, under no
         circumstances shall this Agreement be construed to require Lender to
         make any Loan or other financial accommodation to any subsidiary or
         affiliate of Borrower.

         SUCCESSORS AND ASSIGNS. All covenants and agreements contained by or on
         behalf of Borrower shall bind its successors and assigns and shall
         inure to the benefit of Lender, its successors and assigns. Borrower
         shall not, however, have the right to assign its rights under this
         Agreement or any interest therein, without the prior written consent of
         Lender.

         SURVIVAL. All warranties, representations, and covenants made by
         Borrower in this Agreement or in any certificate or other instrument
         delivered by Borrower to Lender under this Agreement shall be
         considered to have been relied upon by Lender and will survive the
         making of the Loan and delivery to Lender of the Related Documents,
         regardless of any investigation made by Lender or on Lender's behalf.

<PAGE>

         WAIVER. Lender shall not be deemed to have waived any rights under this
         Agreement unless such waiver is given in writing and signed by Lender.
         No delay or omission on the part of Lender in exercising any right
         shall operate as a waiver of such right or any other right. A waiver by
         Lender of a provision of this Agreement shall not prejudice or
         constitute a waiver of Lender's right otherwise to demand strict
         compliance with that provision or any other provision of this
         agreement. No prior waiver by Lender, nor any course of dealing between
         Lender and Borrower, or between Lender and any Grantor, shall
         constitute a waiver of any of Lender's rights or of any obligations of
         Borrower or of any Grantor as to any future transactions. Whenever the
         consent of Lender is required under this Agreement, the granting of
         such consent by Lender in any instance shall not constitute continuing
         consent in subsequent instances where such consent is required, and in
         all cases such consent may be granted or withheld in the sold
         discretion of Lender.

UNDER OREGON LAW, MOST AGREEMENTS PROMISES AND COMMITMENTS MADCE BY US (LENDER)
AFTER OCTOBER 3, 1989 CONCERNING LOANS AND OTHER CREDIT EXTENSIONS WHICH ARE NOT
FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY THE BORROWER'S
RESIDENCE MUST BE IN WRITING, EXPRESS CONSIDERATION AND BE SIGNED BY US TO BE
ENFORCEABLE.

BORROWER ACKNOWLEDGES HAVING READ ALL OF THE PROVISIONS OF THIS BUSINESS LOAN
AGREEMENT, AND BORROWER AGREES TO ITS TERMS. THIS AGREEMENT IS DATED AS OF MAY
15, 2001.

BORROWER:
DIRECT FOCUS, INC.

X___________________________________

LENDER:
U.S. BANK NATIONAL ASSOCIATION

BY: ________________________________
       AUTHORIZED OFFICER

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