Document:

Exhibit 10.1

 

 

 

U.S. $25,000,000

 

 

CREDIT AGREEMENT

 

 

dated as of August 12, 2005

 

 

among

NATIONAL R.V. HOLDINGS, INC.,

NATIONAL R.V., INC.,

and

COUNTRY COACH, INC.,

 

as the Borrowers,

 

VARIOUS LENDERS,

 

as the Lenders,

 

and

 

 

UPS CAPITAL CORPORATION,

 

as Agent for the Lenders

 

 

 

 

TABLE OF CONTENTS

 

	
  ARTICLE 1    DEFINITIONS

  	
   

  
	
  SECTION 1.1

  	
  Defined Terms

  	
   

  
	
  SECTION 1.2

  	
  Use of Defined Terms

  	
   

  
	
  SECTION 1.3

  	
  Cross-References

  	
   

  
	
  SECTION 1.4

  	
  Accounting and Financial
  Determinations

  	
   

  
	
  ARTICLE 2    COMMITMENTS

  	
   

  
	
  SECTION 2.1

  	
  Commitment

  	
   

  
	
  SECTION 2.1.1

  	
  Commitments

  	
   

  
	
  SECTION 2.1.2

  	
  Agent and Lenders Not
  Required to Extend Credit under Commitments

  	
   

  
	
  SECTION 2.2

  	
  Establishment of Reserves

  	
   

  
	
  SECTION 2.3

  	
  Increase in Working Capital
  Commitment Amount

  	
   

  
	
  SECTION 2.4

  	
  Certain Fees

  	
   

  
	
  SECTION 2.5

  	
  Increased Costs; Capital
  Adequacy

  	
   

  
	
  ARTICLE 3    LOANS
  AND NOTES

  	
   

  
	
  SECTION 3.1

  	
  Borrowing Procedure

  	
   

  
	
  SECTION 3.2

  	
  Notes

  	
   

  
	
  SECTION 3.3

  	
  Principal Payments

  	
   

  
	
  SECTION 3.3.1

  	
  Repayments and Prepayments

  	
   

  
	
  SECTION 3.3.2

  	
  [not used]

  	
   

  
	
  SECTION 3.3.3

  	
  Collections

  	
   

  
	
  SECTION 3.3.4

  	
  Termination Fee

  	
   

  
	
  SECTION 3.3.5

  	
  Working Capital Facility
  Loans on Borrower’s Behalf

  	
   

  
	
  SECTION 3.3.6

  	
  Termination of Commitments

  	
   

  
	
  SECTION 3.3A

  	
  Settlement

  	
   

  
	
  SECTION 3.4

  	
  Interest

  	
   

  
	
  SECTION 3.4.1

  	
  Loan Rates

  	
   

  
	
  SECTION 3.4.2

  	
  Continuation and Conversion Elections

  	
   

  
	
  SECTION 3.4.3

  	
  Post-Default Rates

  	
   

  
	
  SECTION 3.4.4

  	
  Payment Dates

  	
   

  
	
  SECTION 3.4.5

  	
  Rate Determinations

  	
   

  
	
  SECTION 3.4.6

  	
  Limitation on Types of Loans

  	
   

  
	
  SECTION 3.4.7

  	
  Illegality

  	
   

  
	
  SECTION 3.4.8

  	
  Treatment of Affected Loans

  	
   

  
	
  SECTION 3.4.9

  	
  Compensation

  	
   

  
	
  SECTION 3.5

  	
  Taxes

  	
   

  
	
  SECTION 3.6

  	
  Payments, Interest Rate
  Computations, Other Computations, Etc.

  	
   

  
	
  SECTION 3.7

  	
  Proration of Payments

  	
   

  
	
  SECTION 3.8

  	
  Setoff

  	
   

  
	
  SECTION 3.9

  	
  Use of Proceeds

  	
   

  
	
  SECTION 3.10

  	
  Letters of Credit

  	
   

  
	
  SECTION 3.10.1

  	
  Manner of Issuance

  	
   

  

 

 

	
  SECTION 3.10.2

  	
  Terms of Letters of Credit

  	
   

  
	
  SECTION 3.10.3

  	
  Drawings Under Letters of
  Credit.

  	
   

  
	
  SECTION 3.10.4

  	
  Letter of Credit Fees.

  	
   

  
	
  SECTION 3.10.5

  	
  Limitation of Liability With
  Respect to Letters of Credit

  	
   

  
	
  SECTION 3.11

  	
  Defaulting Lenders

  	
   

  
	
  ARTICLE 4    CONDITIONS
  TO LOANS

  	
   

  
	
  SECTION 4.1

  	
  Initial
  Loans and Letters of Credit

  	
   

  
	
  SECTION 4.1.1

  	
  Loan
  Documents

  	
   

  
	
  SECTION 4.1.2

  	
  Resolutions,
  Etc.

  	
   

  
	
  SECTION 4.1.3

  	
  Notes

  	
   

  
	
  SECTION 4.1.4

  	
  No Contest,
  Etc.

  	
   

  
	
  SECTION 4.1.5

  	
  Certificate
  as to Completed Conditions, Warranties, No Default, Etc.

  	
   

  
	
  SECTION 4.1.6

  	
  Compliance
  with Requirements of Law

  	
   

  
	
  SECTION 4.1.7

  	
  Opinions of
  Counsel

  	
   

  
	
  SECTION 4.1.8

  	
  Closing
  Fees, Expenses, Etc.

  	
   

  
	
  SECTION 4.1.9

  	
  Perfection

  	
   

  
	
  SECTION 4.1.10

  	
  Employment
  Agreements; Compensation

  	
   

  
	
  SECTION 4.1.11

  	
  Pension and
  Welfare Liabilities

  	
   

  
	
  SECTION 4.1.12

  	
  Insurance

  	
   

  
	
  SECTION 4.1.13

  	
  Financial
  Information, Etc.

  	
   

  
	
  SECTION 4.1.14

  	
  Review of
  Borrowers’ Operations

  	
   

  
	
  SECTION 4.1.15

  	
  [Intentionally
  not used]

  	
   

  
	
  SECTION 4.1.16

  	
  Material
  Contracts

  	
   

  
	
  SECTION 4.1.17

  	
  Letter to
  Accountants

  	
   

  
	
  SECTION 4.1.18

  	
  Affiliate
  Agreements

  	
   

  
	
  SECTION 4.1.19

  	
  Borrowing
  Base Certificate; Minimum Working Capital Facility Availability

  	
   

  
	
  SECTION 4.1.20

  	
  Real Estate

  	
   

  
	
  SECTION 4.1.21

  	
  [Intentionally
  not used]

  	
   

  
	
  SECTION 4.1.22

  	
  Other
  Documents, Certificates, Etc.

  	
   

  
	
  SECTION 4.2

  	
  Incremental
  Increases; All Loans and Letters of Credit

  	
   

  
	
  SECTION 4.2.1

  	
  Compliance
  with Warranties, No Default, Etc.

  	
   

  
	
  SECTION 4.2.2

  	
  Borrowing
  Request, Letter of Credit Request, Etc.

  	
   

  
	
  SECTION 4.2.3

  	
  Satisfactory
  Legal Form

  	
   

  
	
  SECTION 4.2.4

  	
  Margin Regulation

  	
   

  
	
  SECTION 4.2.5

  	
  Adverse
  Change

  	
   

  
	
  SECTION 4.2.6

  	
  Change in
  Law

  	
   

  
	
  ARTICLE 5    REPRESENTATIONS
  AND WARRANTIES, ETC.

  	
   

  
	
  SECTION 5.1

  	
  Organization,
  Power, Authority, Etc.

  	
   

  
	
  SECTION 5.2

  	
  Due
  Authorization

  	
   

  
	
  SECTION 5.3

  	
  Validity,
  Etc.

  	
   

  
	
  SECTION 5.4

  	
  Financial
  Information; Solvency

  	
   

  
	
  SECTION 5.5

  	
  Material
  Adverse Change

  	
   

  
	
  SECTION 5.6

  	
  Absence of
  Default

  	
   

  

 

ii

 

	
  SECTION 5.7

  	
  Litigation,
  Legislation, Etc.

  	
   

  
	
  SECTION 5.8

  	
  Regulations
  T, U and X

  	
   

  
	
  SECTION 5.9

  	
  Government
  Regulation

  	
   

  
	
  SECTION 5.10

  	
  Taxes

  	
   

  
	
  SECTION 5.11

  	
  Pension and
  Welfare Plans

  	
   

  
	
  SECTION 5.12

  	
  Labor
  Controversies

  	
   

  
	
  SECTION 5.13

  	
  Ownership
  of Properties; Collateral

  	
   

  
	
  SECTION 5.14

  	
  Intellectual
  Property

  	
   

  
	
  SECTION 5.15

  	
  Accuracy of
  Information

  	
   

  
	
  SECTION 5.16

  	
  Insurance

  	
   

  
	
  SECTION 5.17

  	
  Indebtedness

  	
   

  
	
  SECTION 5.18

  	
  Environmental
  Matters

  	
   

  
	
  SECTION 5.19

  	
  No
  Burdensome Agreements

  	
   

  
	
  SECTION 5.20

  	
  Consents

  	
   

  
	
  SECTION 5.21

  	
  Contracts

  	
   

  
	
  SECTION 5.22

  	
  Employment
  Agreements

  	
   

  
	
  SECTION 5.23

  	
  Condition
  of Property

  	
   

  
	
  SECTION 5.24

  	
  Subsidiaries

  	
   

  
	
  SECTION 5.25

  	
  Trade
  Relations

  	
   

  
	
  SECTION 5.26

  	
  Leases

  	
   

  
	
  ARTICLE 6    COVENANTS

  	
   

  
	
  SECTION 6.1

  	
  Affirmative
  Covenants

  	
   

  
	
  SECTION 6.1.1

  	
  Financial
  Information, Etc.

  	
   

  
	
  SECTION 6.1.2

  	
  Maintenance
  of Corporate Existence, Etc.

  	
   

  
	
  SECTION 6.1.3

  	
  Foreign
  Qualification

  	
   

  
	
  SECTION 6.1.4

  	
  Payment of
  Taxes, Etc.

  	
   

  
	
  SECTION 6.1.5

  	
  Insurance

  	
   

  
	
  SECTION 6.1.6

  	
  Notice of
  Default, Litigation, Etc.

  	
   

  
	
  SECTION 6.1.7

  	
  Books and
  Records

  	
   

  
	
  SECTION 6.1.8

  	
  Maintenance
  of Properties, Etc.

  	
   

  
	
  SECTION 6.1.9

  	
  Maintenance
  of Licenses and Permits

  	
   

  
	
  SECTION 6.1.10

  	
  Employee
  Plans

  	
   

  
	
  SECTION 6.1.11

  	
  Compliance
  with Laws

  	
   

  
	
  SECTION 6.1.12

  	
  Real Estate

  	
   

  
	
  SECTION 6.1.13

  	
  Subsidiary
  Guaranty, etc.

  	
   

  
	
  SECTION 6.1.14

  	
  Inventory
  Appraisals

  	
   

  
	
  SECTION 6.2

  	
  Negative
  Covenants

  	
   

  
	
  SECTION 6.2.1

  	
  Business
  Activities

  	
   

  
	
  SECTION 6.2.2

  	
  Indebtedness

  	
   

  
	
  SECTION 6.2.3

  	
  Liens

  	
   

  
	
  SECTION 6.2.4

  	
  Financial
  Condition

  	
   

  
	
  SECTION 6.2.5

  	
  Capital
  Expenditures

  	
   

  
	
  SECTION 6.2.6

  	
  Investments

  	
   

  
	
  SECTION 6.2.7

  	
  Restricted
  Payments, Etc.

  	
   

  
	
  SECTION 6.2.8

  	
  Take or Pay
  Contracts; Sale/Leasebacks

  	
   

  
	
  SECTION 6.2.9

  	
  Consolidation,
  Merger, Subsidiaries, Etc.

  	
   

  

 

iii

 

	
  SECTION 6.2.10

  	
  Asset
  Dispositions, Etc.

  	
   

  
	
  SECTION 6.2.11

  	
  Modification
  of Organic Documents, Etc.

  	
   

  
	
  SECTION 6.2.12

  	
  Transactions
  with Affiliates

  	
   

  
	
  SECTION 6.2.13

  	
  Inconsistent
  Agreements

  	
   

  
	
  SECTION 6.2.14

  	
  Change in
  Accounting Method

  	
   

  
	
  SECTION 6.2.15

  	
  Change in
  Fiscal Year End

  	
   

  
	
  SECTION 6.2.16

  	
  Compliance
  with ERISA

  	
   

  
	
  SECTION 6.2.17

  	
  Amendments
  to Certain Agreements

  	
   

  
	
  SECTION 6.2.18

  	
  Modification
  of Subordinated Debt

  	
   

  
	
  SECTION 6.2.19

  	
  Prohibition
  on Prepayment of Subordinated Debt

  	
   

  
	
  ARTICLE 7    EVENTS
  OF DEFAULT

  	
   

  
	
  SECTION 7.1

  	
  Events of
  Default

  	
   

  
	
  SECTION 7.1.1

  	
  Non-Payment
  of Obligations

  	
   

  
	
  SECTION 7.1.2

  	
  Non-Performance
  of Certain Covenants

  	
   

  
	
  SECTION 7.1.3

  	
  Defaults
  Under Other Loan Documents; Non-Performance of Other Obligations

  	
   

  
	
  SECTION 7.1.4

  	
  Bankruptcy,
  Insolvency, Etc.

  	
   

  
	
  SECTION 7.1.5

  	
  Breach of
  Warranty

  	
   

  
	
  SECTION 7.1.6

  	
  Default on
  Other Indebtedness, Etc.

  	
   

  
	
  SECTION 7.1.7

  	
  Failure of
  Valid, Perfected Lien

  	
   

  
	
  SECTION 7.1.8

  	
  Employee
  Plans.

  	
   

  
	
  SECTION 7.1.9

  	
  Judgments

  	
   

  
	
  SECTION 7.1.10

  	
  Loss of
  Permits, Etc.

  	
   

  
	
  SECTION 7.1.11

  	
  Delisting

  	
   

  
	
  SECTION 7.2

  	
  Action if
  Bankruptcy

  	
   

  
	
  SECTION 7.3

  	
  Action if
  Other Event of Default

  	
   

  
	
  SECTION 7.4

  	
  Application
  of Proceeds Following Default

  	
   

  
	
  ARTICLE 8    THE
  AGENT

  	
   

  
	
  SECTION 8.1

  	
  Actions

  	
   

  
	
  SECTION 8.2

  	
  Funding
  Reliance, Etc.

  	
   

  
	
  SECTION 8.3

  	
  Exculpation

  	
   

  
	
  SECTION 8.4

  	
  Successor

  	
   

  
	
  SECTION 8.5

  	
  Loans and
  other Transactions by the Agent and its Affiliates

  	
   

  
	
  SECTION 8.6

  	
  Credit Decisions

  	
   

  
	
  SECTION 8.7

  	
  Copies,
  Etc.

  	
   

  
	
  ARTICLE 9    MISCELLANEOUS

  	
   

  
	
  SECTION 9.1

  	
  Waivers,
  Amendments, Etc.

  	
   

  
	
  SECTION 9.2

  	
  Notices

  	
   

  
	
  SECTION 9.3

  	
  Costs and
  Expenses

  	
   

  
	
  SECTION 9.4

  	
  Indemnification

  	
   

  
	
  SECTION 9.5

  	
  Survival

  	
   

  
	
  SECTION 9.6

  	
  Severability

  	
   

  
	
  SECTION 9.7

  	
  Headings

  	
   

  
	
  SECTION 9.8

  	
  Counterparts,
  Effectiveness, Etc.

  	
   

  
	
  SECTION 9.9

  	
  Governing
  Law; Entire Agreement

  	
   

  

 

iv

 

	
  SECTION 9.10

  	
  Successors
  and Assigns

  	
   

  
	
  SECTION 9.11

  	
  Sale and
  Transfers, Participations, Etc.

  	
   

  
	
  SECTION 9.12

  	
  Other
  Transactions

  	
   

  
	
  SECTION 9.13

  	
  Confidentiality

  	
   

  
	
  SECTION 9.14

  	
  Change in
  Accounting Principles

  	
   

  
	
  SECTION 9.15

  	
  Waiver of
  Jury Trial, Etc.

  	
   

  
	
  SECTION 9.16

  	
  Limitation
  of Liability

  	
   

  
	
  SECTION 9.17

  	
  Usury
  Savings Clause

  	
   

  
	
  SECTION 9.18

  	
  TM Services

  	
   

  
	
  ARTICLE 10    BORROWING
  AGENCY

  	
   

  
	
  SECTION 10.1

  	
  Borrowing
  Agency Provisions

  	
   

  
	
  SECTION 10.2

  	
  Waiver of
  Subrogation

  	
   

  
	
  SECTION 10.3

  	
  Patriot Act

  	
   

  

 

SCHEDULES
AND EXHIBITS

 

	
  Schedules

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Schedule I

  	
   

  	
  Commitments

  
	
   

  	
   

  	
   

  
	
  Schedule E-1

  	
   

  	
  Locations of
  Inventory

  
	
   

  	
   

  	
   

  
	
  Schedule 5.4

  	
   

  	
  Financial
  Statement Compliance

  
	
   

  	
   

  	
   

  
	
  Schedule 5.6

  	
   

  	
  Compliance with
  Laws

  
	
   

  	
   

  	
   

  
	
  Schedule 5.7

  	
   

  	
  Litigation and
  Government Investigation

  
	
   

  	
   

  	
   

  
	
  Schedule 5.11

  	
   

  	
  Pension and
  Welfare Plans

  
	
   

  	
   

  	
   

  
	
  Schedule 5.13

  	
   

  	
  Existing Liens

  
	
   

  	
   

  	
   

  
	
  Schedule 5.14

  	
   

  	
  Intellectual
  Property

  
	
   

  	
   

  	
   

  
	
  Schedule 5.16

  	
   

  	
  Insurance

  
	
   

  	
   

  	
   

  
	
  Schedule 5.21

  	
   

  	
  Material
  Contracts

  
	
   

  	
   

  	
   

  
	
  Schedule 5.22

  	
   

  	
  Employment
  Contracts

  
	
   

  	
   

  	
   

  
	
  Schedule 5.24

  	
   

  	
  Subsidiaries

  
	
   

  	
   

  	
   

  
	
  Schedule 5.26

  	
   

  	
  Existing Leases

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit A

  	
   

  	
  Form of
  Working Capital Facility Note

  
	
   

  	
   

  	
   

  
	
  Exhibit B

  	
   

  	
  Form of
  Borrowing Request

  
	
   

  	
   

  	
   

  
	
  Exhibit C

  	
   

  	
  Form of
  Borrowing Base Certificate

  
	
   

  	
   

  	
   

  
	
  Exhibit D

  	
   

  	
  Form of
  Compliance Certificate

  
	
   

  	
   

  	
   

  
	
  Exhibit E

  	
   

  	
  Form of
  Continuation/Conversion Notice

  
	
   

  	
   

  	
   

  
	
  Exhibit F

  	
   

  	
  Form of
  Letter of Credit Request

  
	
   

  	
   

  	
   

  
	
  Exhibit G

  	
   

  	
  Form of
  Security Agreement

  

 

v

 

CREDIT AGREEMENT

 

THIS CREDIT AGREEMENT,
dated as of August 12, 2005 (this “Agreement”), is made among
NATIONAL R.V. HOLDINGS, INC., a Delaware corporation (“Holdings”);
NATIONAL R.V., INC., a California corporation (“NRV”); and COUNTRY
COACH, INC., an Oregon corporation (“CCI”), Holdings, NRV and CCI
hereinafter called, individually, a “Borrower” and, collectively with
each other, the “Borrowers”), with Holdings as Borrowers’ representative
acting on Borrowers’ behalf pursuant hereto (in such capacity, “Borrowers’
Representative”), the various lenders from time to time party hereto (the “Lenders”)
and UPS CAPITAL CORPORATION, a Delaware corporation, as a Lender and as agent
for the Lenders (in such capacity, the “Agent”).

 

W I T N E S S E T H:

 

RECITALS.

 

WHEREAS, Holdings is the
sole shareholder and parent company of NRV and CCI; and

 

WHEREAS, Holdings, NRV
and CCI are engaged in a common business enterprise in which extensions of
credit to any one of them will result in direct and substantive economic
benefit to each of them; and

 

WHEREAS, accordingly the
Borrowers have applied jointly and severally to obtain from the Lenders a
senior secured credit facility in an aggregate principal amount of up to Twenty
Five Million Dollars ($25,000,000), subject to increase to up to Forty Million
Dollars ($40,000,000) as provided herein; and

 

WHEREAS, the Lenders are
willing, on the terms and conditions hereinafter set forth (including, without
limitation, Articles 2 and 4), to extend such credit facility and
make extensions of credit pursuant thereto; and

 

WHEREAS, the credit
facility will be used in the manner described in Section 3.9 below;

 

NOW, THEREFORE, the
parties hereto, intending to be legally bound, agree as follows:

 

ARTICLE 1

DEFINITIONS

 

SECTION 1.1         Defined
Terms.  The following terms (whether
or not underscored) when used in this Agreement, including its preamble and
recitals, shall, except where the context otherwise requires, have the
following meanings (such meanings to be equally applicable to the singular and
plural forms thereof):

 

“Account Debtor”
means any Person who is or may become obligated to a Borrower under, with
respect to, or on account of, an Account.

 

 

“Accounts” shall
mean, for any Person, all “accounts” (as defined in the UCC) and all amounts
payable to such Person, now or hereafter owned or acquired by such Person or in
which such Person now or hereafter has or acquires any rights.

 

“Affiliate” of any
Person means any other Person which, directly or indirectly, controls or is
controlled by or under common control with such Person (excluding any trustee
under, or any committee with responsibility for administering, any Plan).  A Person shall be deemed to be “controlled by”
any other Person if such other Person possesses, directly or indirectly, the
power:  (a) to vote ten percent
(10%) or more of the securities having ordinary voting power for the election
of the Board of Directors of such Person; or (b) to direct or cause the
direction of the management or policies of such Person whether by contract or
otherwise; provided, however, that no Lender shall
be deemed to be an Affiliate of any Borrower, and provided
further, notwithstanding the foregoing, with respect to Holdings, “Affiliate”
has the meaning ascribed to such term in Rule 12b-2 of the general Rules and
Regulations under the Securities Exchange Act of 1934.

 

“Agent” means
UPSC, as agent for the Lenders pursuant to the terms of this Agreement, or such
other Person as shall have subsequently been appointed as the successor agent
pursuant to Section 8.4.

 

“Agreement” means
this Credit Agreement as originally in effect on the Closing Date and as
thereafter from time to time amended, supplemented, amended and restated, or
otherwise modified and in effect.

 

“Applicable Margin”
shall have the meaning set forth in Section 3.4.

 

“Approval” means
each and every approval, consent, filing and registration by or with any
federal, state or other regulatory authority (domestic or foreign) necessary to
authorize or permit the execution, delivery or performance of this Agreement,
the Notes or any other Loan Document, the granting of any security contemplated
hereby or thereby, the validity or enforceability hereof or thereof, or the
consummation of the transactions contemplated by the Loan Documents.

 

“Assignment of Claims
Act” means the federal Assignment of Claims Act of 1940, as it may be
amended from time to time; together with all regulations promulgated from time
to time with respect thereto.

 

“Authorized Officer”
means, relative to any Loan Party, the chief executive officer, president,
chief operating officer, chief financial officer, treasurer or chief accounting
officer of such Loan Party (or other officer of such Loan Party approved by
Agent for such purpose) whose signatures, incumbency and authority shall have
been certified to the Agent and the Lenders pursuant to Section 4.1.2(a) or
which are certified after the Closing Date in a certificate conforming to the
requirements of Section 4.1.2(a).

 

“Base Rate” means
a fluctuating rate of interest per annum equal to the higher of:

 

(a)           the
Prime Rate; and

 

2

 

(b)           the
Federal Funds Rate from time to time in effect plus one-half of one
percent (0.50%) per annum.

 

Changes in the rate of
interest on Base Rate Loans shall take effect on the date of each change in the
Base Rate.

 

“Base Rate Loans”
means Loans, or portions thereof, that bear interest on the basis of the Base
Rate.

 

“Blocked Account
Agreement” has the meaning assigned to it in Section 3.3.3.

 

“Board of Directors”
means the board of director of a corporation or any comparable governing body
of any entity that is not a corporation.

 

“Borrower” and “Borrowers”
have the meaning set forth in the preamble to this Agreement.

 

“Borrowers’
Representative” has the meaning set forth in the preamble to this
Agreement.

 

“Borrowing” means
any group of Loans, or portions thereof, of the same type and, in the case of
LIBOR Loans, having the same Interest Period, in each case made, converted or
continued by the Lenders on the same Business Day pursuant to the same
Borrowing Request or Continuation/Conversion Notice in accordance with Sections 3.1
or 3.4.2, respectively.

 

“Borrowing
Base” shall mean a sum determined by Agent, in its credit judgment, from
time to time, equal to: (i) up to eighty-five percent (85%) of the net
dollar amount of Eligible Accounts as at the date of determination; plus
(ii) up to fifty percent (50%) of the dollar amount of the Eligible
Inventory, valued at the lower of cost (computed on a first-in- first-out
(FIFO) basis in accordance with GAAP) or market value, at the date of
determination, not to exceed, in any event as to Eligible Inventory, the lesser
of (A) the Inventory Sublimit, or (B) then current borrowing
availability under the Working Capital Facility Commitment Amount determined by
reference to Eligible Accounts under clause (i) above without regard to
Eligible Inventory; minus (iii) reserves established pursuant to Section 2.2.  Agent shall have the right to adjust the
advance rates hereunder from time to time as it shall deem necessary or
appropriate it in its credit judgment, including, without limitation,
reductions in advance rates against Eligible Inventory determined by Agent to be
necessary or appropriate following its receipt of results of collateral audits
conducted pursuant to Section 6.1.7 or Inventory appraisals
conducted pursuant to Section 6.1.14.

 

“Borrowing Base
Certificate” means a certificate of an Authorized Officer of the Borrowers’
Representative in the form of Exhibit C attached hereto.

 

“Borrowing Request”
means a Loan request and certificate duly executed by an Authorized Officer of
the Borrowers’ Representative in the form of Exhibit B attached
hereto.

 

“Business Day”
means a day other than a Saturday, Sunday or other day on which commercial
banks in Atlanta, Georgia are authorized or required by law to close, provided,
that

 

3

 

with respect to notices and determinations in
connection with, and payments of principal and interest on, LIBOR Loans, such
day is also a day for trading by and between banks in Dollar deposits in the
interbank LIBOR market.

 

“Capital Stock” of
any Person means any and all shares, interests, rights to purchase, warrants,
options, participations or other equivalents of or interests in (however
designated) corporate Stock or other equity participations, including
partnership interests and limited liability company membership interests,
whether general or limited, voting or non-voting, of such Person, including any
preferred Stock.

 

“Capitalized Lease
Liabilities” means all monetary obligations of the Borrowers and their
Subsidiaries under any leasing or similar arrangement which, in accordance with
GAAP, are or would be classified as capitalized leases.

 

“Cash Equivalent
Investment” means, at any time:

 

(c)           any
direct obligation issued or guaranteed by the United States of America or any
agency or instrumentality thereof and backed by the full faith and credit of
the United States of America, or issued by any state or political subdivision
or public instrumentality thereof, (i) which has a remaining maturity at
the time of purchase of not more than one year or (ii) which is subject to
a repurchase agreement with any Lender or any Eligible Lending Institution
exercisable within one year from the time of purchase so long as such direct
obligation remains in the possession of a Borrower or in the possession of such
Lender or Eligible Lending Institution and (iii) which, in the case of
obligations of any state or political subdivision or public instrumentality
thereof, is rated “AA” or better by Moody’s Investors Service, Inc. or the
equivalent thereof by Standard & Poor’s Rating Services;

 

(d)           certificates
of deposit, time deposits, demand deposits and bankers’ acceptances, having a
remaining maturity at the time of purchase of not more than one year, issued by
any Lender or by any Eligible Lending Institution;

 

(e)           corporate
obligations rated Prime-1 by Moody’s Investors Service, Inc. or A-1 by
Standard & Poor’s Corporation, having a remaining maturity at the time
of purchase of not more than one year; and

 

(f)            shares
of funds registered under the Investment Company Act of 1940, as amended,
having assets of at least $100,000,000 which invest only in obligations
described above and which shares are rated by Moody’s Investors Service, Inc.
or Standard & Poor’s Corporation in one of the two highest rating
categories assigned by such agencies for obligations of such nature.

 

“Change in Control”
means the occurrence of one or more of the following: (i) the consummation
of any transaction the result of which is that any Person or “group” (as such
term is used in Section 13(d)(3) of the Securities Exchange Act) (other
than Permitted Holders) is or becomes the “beneficial owner” (as defined in Rule 13d-3
of the Securities Exchange Act), directly or indirectly, of Voting Stock
representing more than thirty percent (30%) of the voting power of the Voting
Stock of Holdings; (ii) Holdings consolidates with, or merges with or
into, another Person or sells, assigns, conveys, transfers, leases or otherwise
disposes of all or

 

4

 

substantially all of the assets of Holdings and its
Subsidiaries taken as a whole to any Person, or any Person consolidates with,
or merges with or into, Holdings, in any such event pursuant to a transaction
in which the outstanding Voting Stock of Holdings is converted into or
exchanged for cash, securities or other property, other than any such
transaction where the outstanding Voting Stock of Holdings is converted into or
exchanged for Voting Stock of the surviving or transferee corporation and the
beneficial owners of the Voting Stock of Holdings immediately prior to such
transaction own, directly or indirectly, Voting Stock representing not less
than a majority of the voting power of the Voting Stock of the surviving or
transferee corporation immediately after such transaction; (iii) during
any consecutive two-year period, individuals who at the beginning of such
period constituted the Board of Directors of Holdings (together with any new
directors whose election by such Board of Directors or whose nomination for
election by the stockholders of Holdings was approved by a vote of two-thirds
of the directors then still in office who were either 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
Board of Directors of Holdings then in office, (iv) the approval by the
holders of Capital Stock of Holdings of any plan or proposal for liquidation or
dissolution of Holdings, (v) Holdings shall own or control less than one
hundred percent (100%) of the issued and outstanding Capital Stock of each of
NRV and CCI.

 

“Charges” means
all federal, state, county, city, municipal, local, foreign or other
governmental (including, without limitation, PBGC) (a) taxes at the
time due and payable, and (b) levies, assessments, charges, liens, claims
or encumbrances upon or relating to (i) the Collateral, (ii) the
Obligations, (iii) the Borrowers’ and their Subsidiaries’ employees,
payroll, income or gross receipts, (iv) the Borrowers’ and their
Subsidiaries’ ownership or use of their assets, or (v) any other aspect of
the Borrowers’ and their Subsidiaries’ respective businesses.

 

“Clearing Banks”
has the meaning assigned to it in Section 3.3.3.

 

“Closing Date”
means the date of this Agreement.

 

“Collateral” means
all property and interests in property and proceeds thereof now owned or
hereafter acquired by a Borrower or any Subsidiary of a Borrower in and upon
which a Lien is granted to the Agent, for its benefit and the ratable benefit
of the Lenders, under any of the Loan Documents.

 

“Commitment”
means, with respect to any Lender, the commitment of such Lender to make
Working Capital Facility Loans pursuant to Section 2.1 and to
participate in Letters of Credit pursuant to Section 3.10.  Schedule I sets forth the Commitment
of each Lender as of the Closing Date.

 

“Commonly Controlled
Entity” means an entity, trade or business, whether or not incorporated,
which is from time to time a member of a controlled group or a group under
common control with a Borrower within the meaning of Sections 414(b),
414(c), 414(m) or 414(o) of the IRC or Section 4001(a)(14) of ERISA.

 

“Compliance
Certificate” means a certificate duly executed by an Authorized Officer of
the Borrowers’ Representative in the form of Exhibit D attached
hereto.

 

5

 

“Concentration
Accounts” has the meaning assigned to it in Section 3.3.3.

 

“Condition Precedent
Material Adverse Change” means (a) a material adverse change
in the condition (financial or otherwise), operations, performance,
business, properties or prospects of the Borrowers and their Subsidiaries,
taken as a whole, which is reasonably likely to result in a decrease in the
aggregate Net Worth of Borrowers and their Subsidiaries to an amount less than
$50,000,000, or (b) a material adverse change in (i) the rights and
remedies of the Lenders or the Agent under the Loan Documents, the ability of
the Borrowers to repay the Obligations or the ability of any Loan Party to
perform its obligations under the Loan Documents, (iii) the legality,
validity or enforceability of any Loan Document or (iv) the Liens in the
Collateral granted the Agent for its benefit and the ratable benefit of the
Lenders pursuant to the Security Documents.

 

“Consolidated Capital
Expenditures” means, for any period, without duplication, the sum of (a) the
gross dollar amount of additions during such period to property, plant,
equipment and other fixed assets of the Borrowers and their Subsidiaries,
including those additions made in the ordinary course of business, plus (b) (to
the extent not otherwise included in clause (a) of this definition) the
aggregate amount of Capitalized Lease Liabilities incurred during such period
by the Borrowers and their Subsidiaries, all as determined in accordance with
GAAP.

 

“Continuation/Conversion
Notice” means a notice of continuation or conversion and certificate duly
executed by an Authorized Officer of the Borrowers’ Representative in the form
of Exhibit E attached hereto.

 

“Contractual
Obligation” means, relative to any Person, any provision of any security
issued by such Person or of any Instrument or undertaking to which such Person
is a party or by which it or any of its property is bound, excluding, in the
case of any Loan Party, any Loan Document to which it is party.

 

“Default” means
any condition that constitutes an Event of Default, or that, with the giving of
any notice or lapse of time or both, would constitute an Event of Default.

 

“Defaulting Lender”
has the meaning assigned to it in Section 3.11.

 

“Deposit Account”
means any deposit account, as such term is defined in the UCC.

 

“Deposit Account
Control Agreement” means any control agreement executed by and among a Loan
Party, the Agent, for the benefit of itself and the Lenders, and the depository
institution at which such Loan Party maintains a Deposit Account.

 

“Dollar” and the
sign “$” mean lawful money of the United States.

 

“EBITDA” means,
for any fiscal period, an amount equal to Net Income plus (to the extent
deducted in determining Net Income) Interest Expense, provisions for income
taxes, depreciation and amortization of intangible assets for the Borrowers and
their Subsidiaries determined on a consolidated basis in accordance with GAAP.

 

6

 

“Eligible Account”
means that portion of each Borrower’s Accounts consisting of trade accounts
receivable actually billed to, and owing to such Borrower by, its Account
Debtors in the ordinary course of its business (net of any rebates with respect
to the invoice applicable to any Account), which Agent, in its credit judgment,
has determined to be eligible for credit extensions hereunder excluding,
however, in any event, unless otherwise approved by Agent, in its credit
judgment, any such Account:  (i) with
respect to which any portion thereof is more than ninety (90) days past invoice
date; (ii) which is owing by any Affiliate of such Borrower; (iii) which
is owing by any Account Debtor having twenty-five percent (25%) or more in face
value of its then existing accounts with one or more Borrowers ineligible
hereunder pursuant to the operation and effect of clause (i) above; (iv) which
arises from any contract on which such Borrower’s performance is assured by a
performance, completion or other bond; (v) constituting retainage which
has been withheld from such Borrower pending contract completion, to the extent
thereof; (vi) constituting a service, warranty or similar charge, to the
extent thereof; (vii) which is evidenced by a promissory note, other instrument
or chattel paper; (viii) which represents an accord and satisfaction in
respect of any prior account receivable; (ix) the assignment of which is
subject to any requirements set forth in the Assignment of Claims Act (unless
and except to the extent that such Borrower has complied therewith to Agent’s
satisfaction); (x) which does not conform in any respect to the warranties and
representations set forth in the Loan Documents in respect of Accounts;
(xi) which is owing by any Account Debtor (excepting, however, Lazydays RV) whose accounts in face amount with one or more Borrowers
exceed twenty percent (20%) of all Borrowers’ Eligible Accounts, but only to
the extent of such excess; (xii) which is owing by, billed to or paid by any
Account Debtor not located in the United States of America (unless and except
to the extent that it is backed by a letter of credit issued to such Borrower
as beneficiary by or through a bank headquartered in the United States which is
acceptable to Agent), (xiii) as to which a duly perfected, first priority
security interest does not exist at any time in favor of Agent for the ratable
benefit of itself and the Lenders, (xiv) which is subject to any Liens other
than as described in the preceding clause (xiii) and junior Liens permitted by Section 6.2.3;
(xv) as to which any counterclaim, defense, setoff, deduction or contra-account
exists, to the extent thereof; or (xvi) which has otherwise been determined by
Agent in its credit judgment not to be an “Eligible Account” for purposes
hereof.

 

“Eligible Inventory”
shall mean that portion of the Inventory consisting of (A) raw materials, (B) chassis,
(C) if Agent elects in its credit judgment following completion of a field
exam pursuant to Section 6.1.7, Final Stage Work-in-Process Inventory and (D) new,
saleable finished goods inventory of a Borrower, in each case which Agent, in
its credit judgment, has determined to be eligible for credit extensions
hereunder, excluding, however, in any event, unless otherwise
approved by Agent, in its credit judgment, any such Inventory which (i) is
not at all times subject to a duly perfected, first priority security interest
in favor of Agent, for the ratable benefit of itself and Lenders; (ii)  is
subject to any Liens other than as described in the preceding clause (i) and
junior Liens permitted by Section 6.2.3; (iii) is not in good
and saleable condition; (iv) is on consignment from, or is subject to any
purchase money security interest in favor of, any supplier (unless and except
to the extent that a reserve has been imposed in respect of, and in the amount
of, such supplier’s claim); (v) constitutes returned, repurchased,
repossessed, damaged or slow-moving goods (inventory that is more than twelve
(12) months old); (vi) does not conform in all respects to the warranties
and representations set forth in the Loan Documents in respect of Inventory; (vii) is
subject to a negotiable document of title (unless issued or endorsed to Agent);
(viii) is subject to any license or other agreement that limits or

 

7

 

restricts such Borrower’s or Agent’s right to sell or
otherwise dispose of such Inventory; (ix) is not located at one of the
locations in the United States set forth in Schedule E-1 hereto,
(x) is located on real property leased by a Borrower, in a contract
warehouse, or is in the possession of a third party, in each case, unless it is
subject to a landlord’s waiver, warehousemen’s agreement, bailee agreement, or
similar agreement, in each case in form and substance satisfactory to Agent,
executed by the landlord, warehouseman, bailee, or other third party, as the
case may be, or Agent has established a rent or other appropriate reserve, in
its discretion, with respect to such Inventory; and (xi) has otherwise been
determined by Agent in its credit judgment to be excluded from “Eligible
Inventory” for purposes hereof.

 

“Eligible Lending
Institution” means a financial institution having a branch or office in the
United States and having capital and surplus and undivided profits aggregating
at least $100,000,000 and rated Prime-1 or better by Moody’s Investors Service, Inc.
or A-1 or better by Standard & Poor’s Corporation.

 

“Environment”
means soil, surface waters, ground waters, land, streams, sediments, surface or
subsurface strata and ambient air.

 

“Environmental Laws”
means all federal, state, local and foreign laws or regulations, codes, common
law, consent agreements, orders, decrees, judgments or injunctions issued,
promulgated, approved or entered thereunder relating to pollution or protection
of the Environment, natural resource or occupational health and safety.

 

“Environmental
Liabilities and Costs” means all liabilities, obligations,
responsibilities, remedial actions, losses, damages, punitive damages,
consequential damages, treble damages, costs and expenses (including all fees,
disbursements and expenses of counsel, expert and consulting fees and costs of
investigation and feasibility studies), fines, penalties, settlement costs,
sanctions and interest incurred as a result of any claim or demand, by any
Person, whether based in contract, tort, implied or express warranty, strict
liability, criminal or civil statute, any Environmental Law, permit, order,
variance or agreement with a Governmental Authority or other Person, arising
from or related to the administration of any Environmental Law or arising from
environmental, health or safety conditions or a release or threatened release
resulting from the past, present or future operations of the Borrowers or any
of their Subsidiaries or affecting any of their properties, or any release or
threatened release for which any Borrower or any of its Subsidiaries is
otherwise responsible under any Environmental Law.

 

“ERISA” means the
Employee Retirement Income Security Act of 1974, as amended, and any successor
statute of similar import, together with the regulations thereunder, in each
case as in effect from time to time. 
References to Sections of ERISA also refer to any successor sections.

 

“Event of Default”
means any of the events set forth in Section 7.1.

 

“Federal Funds Rate”
means, for any period, a fluctuating interest rate per annum equal for each day
during such period to:

 

(a)           the
weighted average of the rates on overnight federal funds transactions with
members of the Federal Reserve System arranged by federal funds brokers, as
published for such

 

8

 

day (or, if such day is not a Business Day, for the
next preceding Business Day) by the Federal Reserve Bank of New York; or

 

(b)           if
such rate is not so published for any day which is a Business Day, the
arithmetic average of the quotations for such transactions received by the
Agent, in its sole discretion, either from (i) three (3) federal
funds brokers of recognized standing selected by the Agent in its sole
discretion or (ii) the Bank of America, N.A., J.P. Morgan Chase Bank and
Wachovia Bank, N.A.

 

“Fee Letter” means
that certain confidential letter agreement dated between the Agent and the
Borrowers’ Representative, dated on or prior to the Closing Date.

 

“Final Stage
Work-in-Process Inventory”  means
motor coaches which are at least ninety percent (90%) complete.

 

“Financing Statements”
means the UCC-1 financing statements filed with respect to the Security
Documents pursuant to Section 4.1.9.

 

“Fiscal Month”
means any fiscal month of a Fiscal Year.

 

“Fiscal Quarter”
means any fiscal quarter of a Fiscal Year.

 

“Fiscal Year”
means, subject to Sections 6.2.15 and 9.14, each twelve (12)
month accounting period of the Borrowers ending on December 31.

 

“Fixed Charge Coverage
Ratio” means, for any fiscal period, the ratio of (a) EBITDA for such
period minus Consolidated Capital Expenditures for such period to (b) Fixed
Charges for such period.

 

“Fixed Charges”
means, for any period, the sum of (a) Interest Expense for such period, plus
(b) scheduled principal repayments of Indebtedness (including, without
limitation, scheduled payments of principal in respect of Capitalized Lease
Liabilities) of the Borrowers and their Subsidiaries for such period, plus,
(c) provisions for income taxes made by the Borrowers and their
Subsidiaries for such period plus (d) dividends and distributions
paid by the Borrowers during such period, determined on a consolidated basis in
accordance with GAAP.

 

“F.R.S. Board”
means the Board of Governors of the Federal Reserve System (or any successor).

 

“Funded Debt”  means Indebtedness of any Person that by its
terms matures more than one (1) year after the date of its creation or matures
within one (1) year from such date but is renewable or extendible, at the
option of such Person, to a date more than one (1) year after such date or
that arises under a revolving credit or similar agreement that obligates the
lender or lenders to extend credit during a period of more than one (1) year
from such date, including, without limitation, all amounts of Funded
Indebtedness of such Person required to be paid or prepaid within one year from
the date of determination.  For purposes
hereof, in the case of Borrowers, the term “Funded Debt” shall include, without
limitation, all Loans.

 

9

 

“GAAP” means
generally accepted accounting principles in effect from time to time in the
United States.

 

“Governmental
Authority” means any nation or government, any state or other political
subdivision thereof and any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government.

 

“Guarantor” means
each Subsidiary Guarantor (if any) and any other Person who now or hereafter
becomes a party to a Guaranty Agreement with respect to the Obligations.

 

“Guaranty Agreement”
means, individually and collectively, any Subsidiary Guaranty and any other
guaranty of the Obligations now or hereafter made by any other Person in favor
of the Agent and the Lenders, as the same may be amended, restated,
supplemented or otherwise modified from time to time.

 

“herein”, “hereof”,
“hereto”, “hereunder” and similar terms contained in this
Agreement or any other Loan Document refer to this Agreement or such other Loan
Document, as the case may be, as a whole and not to any particular section,
subsection, clause or provision of this Agreement or such other Loan Document.

 

“including” means
including without limiting the generality of any description preceding such
term.

 

“Incremental Increase”
has the meaning set forth in Section 2.3.

 

“Indebtedness” of
any Person means, without duplication,

 

(a)           all
obligations of such Person for borrowed money (including all notes payable and
drafts accepted representing extensions of credit) and all obligations
evidenced by bonds, debentures, notes or other similar instruments on which
interest charges are customarily paid;

 

(b)           all
obligations, contingent or otherwise, relative to the face amount of all
letters of credit, whether or not drawn, and banker’s acceptances issued for
the account of such Person;

 

(c)           all
Capitalized Lease Liabilities of such Person (to the extent required by GAAP to
be included on the balance sheet of such Person);

 

(d)           whether
or not so included as liabilities in accordance with GAAP:

 

(i)            all
obligations of such Person to pay the deferred purchase price of property or
services (excluding trade accounts payable arising in the ordinary course of
business) and Indebtedness secured by a Lien on property owned or being
purchased by such Person (including Indebtedness arising under conditional
sales or other title retention agreements), whether or not such Indebtedness
shall have been assumed by such Person or is limited in recourse; and

 

10

 

(ii)           all
obligations of such Person in respect of, and obligations (contingent or
otherwise) to purchase or otherwise acquire, or otherwise assure a creditor
against loss in respect of, Indebtedness of another Person of the type
described in clause (a), (b), (c) or (d)(i), above, or clause (e) below;

 

(e)           all
obligations of such Person to redeem, purchase or otherwise retire or
extinguish any of its Stock at a fixed or determinable date (whether by
operation of a sinking fund or otherwise), at another’s option or upon the
occurrence of a condition not solely within the control of such Person (e.g., redemption from future earnings).

 

“Indemnified Liabilities”
means any and all actions, causes of action, suits, losses, costs, liabilities,
damages and expenses incurred by or asserted or awarded against any Lender
Party and against which the Borrowers have indemnified the Lender Parties as
provided in Section 9.4.

 

“Insolvency” or “Insolvent”
means, at any particular time, a Multiemployer Pension Plan is insolvent within
the meaning of Section 4245 of ERISA.

 

“Instrument” means
any contract, agreement, letter of credit, indenture, mortgage, warrant, deed,
certificate of title, document or writing (whether by formal agreement, letter
or otherwise) under which any obligation is evidenced, assumed or undertaken,
any Lien (or right or interest therein) is granted or perfected, or any
property (or right or interest therein) is conveyed.

 

“Intellectual Property”
means, collectively, (a) patents, patent rights and patent applications,
copyrights and copyright applications, trademarks, trademark rights, trade
names, trade name rights, service marks, service mark rights, applications for
registration of trademarks, trade names and service marks, fictitious names
registrations and trademarks, trade name and service mark registrations, domain
names and domain name registration agreements, and (b) patent licenses,
trademark licenses, copyright licenses and other licenses to use any of the
items described in clause (a), and any other similar items necessary to
conduct or operate the business of a Borrower and its Subsidiaries.

 

“Interest Expense”
means, for any fiscal period, the interest expense accrued during such period
in respect of Indebtedness of the Borrowers and their Subsidiaries, determined
on a consolidated basis in accordance with GAAP.

 

“Interest Period”
means, relative to any LIBOR Loans comprising part of the same Borrowing, the
period beginning on (and including) the date on which such LIBOR Loans are made
or continued as, or converted into, LIBOR Loans pursuant to Section 3.1
or Section 3.4.2 and ending on (but excluding) the date which
numerically corresponds to such date one (1), three (3) or six (6) months
thereafter (or, if such month has no numerically corresponding date, on the
last Business Day of such month), in either case as the Borrowers
Representative may select in its relevant notice pursuant to Section 3.1
or Section 3.4.2; provided, however,
that:

 

(a)           the
Borrowers Representative shall not be permitted to select Interest Periods to
be in effect at any one time which have expiration dates occurring on more than
five (5) different dates;

 

11

 

(b)           if
such Interest Period would otherwise end on a day which is not a Business Day,
such Interest Period shall end on the next following Business Day (unless such
next following Business Day is the first Business Day of a calendar month, in
which case such Interest Period shall end on the Business Day next preceding
such numerically corresponding date); and

 

(c)           no
such Interest Period with respect to Working Capital Facility Loans may end
later than the Working Capital Facility Maturity Date.

 

“Internal Revenue
Service” means the Internal Revenue Service of the United States of America
(and its successors).

 

“Inventory” means
all “inventory” (as defined in the UCC), now or hereafter owned or acquired by
a Person or in which a Person now or hereafter has or acquires any rights,
wherever located, and, in any event, shall mean and include, without
limitation, all raw materials, packaging materials inventory and other
materials and supplies, work in process, finished goods, and any products made
or processed therefrom and all substances, if any, commingled therewith or
added thereto.

 

“Inventory Sublimit”
means Fifteen Million Dollars ($15,000,000), initially, subject to increase as
provided in Section 2.3.

 

“Investment”
means, relative to any Person:  (a) any
loan or advance made by such Person to any other Person (excluding commission,
travel and similar advances to officers and employees made in the ordinary
course of business); (b) any ownership or similar interest held by such
Person in any other Person; and (c) the purchase of any debt or equity
securities or instruments issued by any other Person (including, without
limitation, Stock, notes, debentures, drafts and acceptances, trust
certificates, partnership interests or units or membership interests in limited
liability companies).  The amount of any
Investment shall be the original principal or capital amount thereof less all
returns of principal or equity thereon (and without adjustment by reason of the
financial condition of such other Person) and shall, if made by the transfer or
exchange of property other than cash, be deemed to have been made in an
original principal or capital amount equal to the fair market value of such
property.

 

“IRC” means the
Internal Revenue Code of 1986, as amended, and any successor statute of similar
import, together with the regulations thereunder, in each case as in effect
from time to time.  References to
Sections of the IRC also refer to any successor sections.

 

“Junction City
Property” means that certain real property that comprises approximately 74
acres located adjacent to 135 E. First Avenue, Junction City, Oregon 97448.

 

“Lender” means
UPSC and any other of the various lenders as are, or may become, parties to
this Agreement as “Lenders” hereunder from time to time.

 

“Lender Default”
has the meaning assigned to it in Section 3.11.

 

“Lender Parties”
means, collectively, the Agent and each Lender, and each of their respective
successors and assigns, and each of the respective officers, directors,
employees, attorneys and agents of the Agent and each Lender and each of their
respective successors and assigns, indemnified by the Borrowers as provided in Section 9.4.

 

12

 

“Letter of Credit”
means an irrevocable standby or commercial letter of credit issued by an
issuing bank selected by Agent for the account of a Borrower or one of its
Subsidiaries pursuant to Section 3.10.

 

“Letter of Credit
Obligation” means, in respect of each Letter of Credit, the undrawn face
amount of such Letter of Credit, plus the amount of all drawings under
such Letter of Credit for which any Lender has not been reimbursed by the
Borrowers pursuant hereto.

 

“Letter of Credit
Sub-Facility” means the letter of credit facility provided by the Lenders
to the Borrowers pursuant to Section 2.1.2 and Section 3.10.

 

“Letter of Credit
Sub-Facility Amount” means Eight Million
Dollars ($8,000,000).

 

“Letter of Credit
Request” means a request and certificate for the issuance of a Letter of
Credit, duly executed by an Authorized Officer of the Borrowers’ Representative
in the form of Exhibit F, delivered to the Agent pursuant to Section 3.10.1,
together with the letter of credit application accompanying such request.

 

“Leverage Ratio”
means, as of any date, the ratio of (a) Funded Debt as of such date to (b) EBITDA
for the period of twelve consecutive months most recently ending on or prior to
such date.

 

“LIBOR Base Rate”
means, with respect to any Interest Period, the interest rate published for
such period under the “Money Rates” section of The Wall Street Journal on
the date which is two (2) Business Days prior to the commencement of such
Interest Period as the London Interbank Offered Rate (LIBOR) for such
period.  If The Wall Street Journal shall
cease to publish such rate (or itself to be published ) then “LIBOR Base Rate”
shall be determined by such comparable method as Agent shall select in its
credit judgment.

 

“LIBOR Loans”
means Loans, or portions thereof, that bear interest on the basis of the LIBOR
Rate.

 

“LIBOR Rate”
means, with respect to any Borrowing of LIBOR Loans for any Interest Period
therefor, the rate per annum (rounded upwards, if necessary, to the nearest
1/16th of 1%) determined by the Agent to be equal to (i) the
LIBOR Base Rate for such Borrowing for such Interest Period divided by (ii) one
(1) minus the Reserve Requirement. 
The LIBOR Rate for any Interest Period will be determined initially by
the Agent on the basis of the Reserve Requirement in effect on the date two (2) Business
Days prior to the commencement of such Interest Period and, from time to time
thereafter during such Interest Period, such LIBOR Rate shall be adjusted
automatically on and as of the effective date of any change in the Reserve
Requirement during such Interest Period.

 

“Lien” means any
security interest, mortgage, pledge, hypothecation, assignment, charge, deposit
arrangement, encumbrance, lien (statutory or otherwise), adverse claim or
preference, priority or other security agreement or preferential arrangement of
any kind or nature whatsoever, including any conditional sale or other title
retention agreement, any financing lease involving substantially the same
economic effect as any of the foregoing and the filing of any financing
statement under the UCC or comparable law of any jurisdiction.

 

13

 

“Loan Documents”
means, collectively, this Agreement, the Notes, each Security Document, the Fee
Letter, each Guaranty Agreement (if any), each Borrowing Request, each
Borrowing Base Certificate, and each other Instrument executed and delivered by
any Loan Party, on or prior to the date hereof or at any time hereafter, in
connection with the transactions contemplated by this Agreement, in each case,
as amended, modified or supplemented from time to time.

 

“Loan Party” means
any of the Borrowers, each Borrower’s Subsidiaries (if any) and any Affiliate
of any of them which is a party to any of the Loan Documents at any time.

 

“Loans” means the
Working Capital Facility Loans made to the Borrowers pursuant to Section 2.1.1.

 

“Loss” means any
loss, damage, destruction, theft, or seizure of, or any other casualty with
respect to, or any condemnation of, any property or asset of any Loan Party in
an amount in excess of Five Hundred Thousand Dollars ($500,000) individually or
One Million Dollars ($1,000,000) in the aggregate for any Fiscal Year; and the “amount”
of any Loss means the greater of (i) the cost to repair or replace the
property or asset that was the subject of such Loss and (ii) the amount of
insurance proceeds or condemnation awards payable as a result of such Loss.

 

“Material Adverse
Change” means a material adverse change in (a) the condition
(financial or otherwise), operations, performance, business, properties or
prospects of the Borrowers and their Subsidiaries, taken as a whole,  (b) the rights and remedies of the
Lenders or the Agent under the Loan Documents, 
(c) the ability of the Borrowers to repay the Obligations or the
ability of any Loan Party to perform its obligations under the Loan Documents, (d) the
legality, validity or enforceability of any Loan Document or (e) the Liens
in the Collateral granted the Agent for its benefit and the ratable benefit of
the Lenders pursuant to the Security Documents.

 

 “Material Contract” has the meaning set
forth in Section 5.21.

 

“Maturity” means
relative to any Working Capital Facility Loan or portion thereof, the earlier
of the Working Capital Facility Maturity Date or such other date when such
Working Capital Facility Loan or portion thereof shall be or become due and
payable in accordance with the terms of this Agreement, whether by required
repayment, prepayment, declaration, acceleration or otherwise.

 

“Maximum Lawful Rate”
shall have the meaning set forth in Section 9.17.

 

“Minimum Excess
Availability” shall mean $5,000,000, provided that such amount shall be
automatically increased proportionally concurrently with any Incremental
Increase.

 

“Monthly Payment Date”
means the first day of each calendar month or, if such day is not a Business
Day, the immediately preceding Business Day.

 

“Multiemployer Pension
Plan” means a Multiemployer Plan which is subject to Subtitle E of
Title IV of ERISA.

 

14

 

“Multiemployer Plan”
means a Plan which is a “multiemployer plan” within the meaning of Section 3(37)
of ERISA.

 

“Net Disposition
Proceeds” means, with respect to any sale or disposition of any asset, (A) the
gross cash proceeds received from such sale or disposition minus (B) the
sum of (x) all reasonable out-of-pocket fees and expenses incurred in
connection with such sale or disposition plus (y) all taxes incurred in
connection with such sale or disposition.

 

“Net Income”
means, as to any Person for any fiscal period, the net income (or loss) of such
Person for such period, determined in accordance with GAAP, but excluding
extraordinary gains or losses for such period.

 

“Net Indebtedness
Proceeds” means, with respect to the
issuance or incurrence by any Loan Party of any Indebtedness, the excess of: (a) the
gross cash proceeds received by such Loan Party from such Indebtedness, minus
(b) all reasonable out-of-pocket fees and expenses incurred in connection
therewith.

 

“Net Securities Proceeds”
means, with respect to the issuance or sale by any Loan Party of any securities
representing Stock of such Loan Party, the excess of (a) the gross cash
proceeds received by such Loan Party from such issuance and sale, minus (b) all
reasonable out-of-pocket fees and expenses incurred in connection with such
issuance and sale and paid or payable to Persons that are not Affiliates of any
Loan Party.

 

“Net Worth” means,
at a particular date, (a) the aggregate amount of all assets of Borrowers
and their Subidiaries on a consolidated basis as may properly be classified as
such in accordance with GAAP, less (b) the aggregate amount of all
liabilities of the Borrowers and their Subsidiaries on a consolidated basis as
may properly be classified as such in accordance with GAAP.

 

“Non-Defaulting Lender”
has the meaning assigned to it in Section 3.11.

 

“Notes” means,
collectively, the Working Capital Facility Notes.

 

“Obligations”
means all obligations of each and every Loan Party with respect to the payment
or performance of any obligations (monetary or otherwise) of such Loan Parties
arising under or in connection with this Agreement, the Notes or any other Loan
Document.

 

“Organic Document”
means, relative to any Person, its articles or certificate of incorporation or
certificate of limited partnership or organization, its bylaws, partnership or
operating agreement or other organizational documents, and all stockholders
agreements, voting trusts and similar arrangements applicable to any of its
Stock, partnership interests, membership interests or other ownership
interests, in each case, as amended.

 

“OSHA” means the
Occupational Safety and Health Act of 1970, as amended from time to time, and
any successor statute.

 

15

 

“Participant”
means the banks or other entities that purchase participating interests in any
Loan, Note, Commitment or other interest hereunder, as provided in subsection (a) of
Section 9.11.

 

“Patent Security
Agreement” means that certain Patent Security Agreement, dated as of the
Closing Date, made by a Loan Party in favor of the Agent, for its benefit and
for the ratable benefit of the Lenders, as such agreement may be amended,
restated, supplemented or otherwise modified from time to time.

 

“PBGC” means the
Pension Benefit Guaranty Corporation and any entity succeeding to any or all of
its functions under ERISA.

 

“Pension Plan”
means any Plan which is subject to the provisions of Title IV of ERISA, or to
the provisions of Section 302 of ERISA or Section 412 of the IRC.

 

“Perfection
Certificate” means that certain Perfection Certificate executed by the
Borrowers Representative and delivered to Agent in connection with the
transactions contemplated herein.

 

“Person” means any
natural person, corporation, partnership, limited liability company, firm,
association, government, governmental agency or any other entity, whether
acting in an individual, fiduciary or other capacity.

 

“Plan” means, at a
particular time, any employee benefit plan (within the meaning of Section 3(3) of
ERISA), which is covered by ERISA and in respect of which the Borrower, a
Subsidiary or a Commonly Controlled Entity is (or, if such plan were terminated
at such time, would under Section 4069 of ERISA be deemed to be) an “employer”
as defined in Section 3(5) of ERISA.

 

“Post-Default Rate”
means the sum of (i) the highest contract rate per annum applicable to any
Loans from time to time pursuant hereto, plus (ii) two percent
(2.00%) per annum.

 

“Prime Rate” shall
mean the interest rate published under the “Money Rates” section of
The Wall Street Journal (on each day on which it is published) as the “prime
rate” on such day, as such rate may change from time to time; provided,
however, that if The Wall Street Journal shall cease to publish such rate (or
itself to be published); then, the “Prime Rate” shall be the highest among the
prime or base rates then publicly announced by Bank of America, N.A., J.P.
Morgan Chase Bank and Wachovia Bank, N.A. (or their respective
successors-in-interest).

 

“Projections”
means, collectively, the projected balance sheets, statements of operations and
changes in cash flows of the Borrowers and their Subsidiaries for the Fiscal
Years 2005 through 2008 inclusive, delivered to Agent from time to time,
prepared by the Borrowers on a monthly basis for the first year and on an
annual basis, together with supporting details and a statement of underlying
assumptions.

 

“Purchase Money
Indebtedness” means Indebtedness incurred to finance part or all of (but
not more than) the purchase price of equipment in which neither a Borrower nor
any of its Subsidiaries had an interest at any time prior to such purchase.

 

16

 

“Purchasing Lender”
means any Person purchasing all or any part of the rights and obligations under
this Agreement and the Notes of any Lender in accordance with Section 9.11.

 

“Register” has the
meaning assigned to it in Section 9.11(c).

 

“Regulatory Change”
means, as to any or all of the Lenders or the Agent, any change (including,
without limitation, any change in the interpretation) occurring after the
Closing Date in, or the adoption after the Closing Date of, (i) any United
States federal or state law or foreign law applicable to the Agent or such
Lender, or (ii) any regulation, interpretation, directive, guideline or
request (whether or not having the force of law) applicable to the Agent or
such Lender of any court or Governmental Authority charged with the
interpretation or administration of any law referred to in clause (i) or
of any central bank or fiscal, monetary or other authority having jurisdiction
over the Agent or a Lender.

 

“Reorganization”
means with respect to any Multiemployer Pension Plan, the condition that such
plan is in reorganization within the meaning of such term as used in Section 4241
of ERISA.

 

“Reportable Event”
means (i) a reportable event described in Section 4043 of ERISA and
regulations thereunder (other than any Reportable Event described in Section 4043(c)(2) or
(7) for which notice is waived), (ii) a withdrawal by a “substantial
employer” (within the meaning of Section 4001(a)(2) of
ERISA) from a Single Employer Plan to which more than one employer
contributes, as referred to in Section 4063(b) of ERISA, or (iii) a
cessation of operations at a facility causing more than twenty percent (20%) of
participants under a Single Employer Plan to be separated from employment, as
referred to in Section 4062(e) of ERISA.

 

“Required Lenders”
means, (a) Lenders having, in the aggregate, fifty-one percent (51%) or
more of the aggregate Commitments or (b) if the Commitments shall have
been terminated, whether pursuant to this Agreement or otherwise, Lenders
having, in the aggregate, fifty-one percent (51%) or more of the aggregate of
the outstanding principal amount of the Loans. 
Notwithstanding the foregoing, during any period in which there are less
than three (3) Lenders, “Required Lenders” shall mean all Lenders.

 

“Requirements of Law”
means, as to any Person, the Organic Documents of such Person, and all federal,
state and local laws, rules, regulations, orders, decrees or other
determinations of an arbitrator, court or other Governmental Authority,
including all disclosure and other requirements of ERISA, the requirements of
Environmental Laws and environmental permits, the requirements of OSHA, in each
case applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.

 

“Reserve Requirement”
means, relative to any Interest Period for any LIBOR Loans, from time to time
during such Interest Period, the reserve percentage (expressed as a decimal)
equal to the maximum aggregate reserve requirements (including all basic,
emergency, supplemental, marginal and other reserves and taking into account
any transitional adjustments or other scheduled changes in reserve
requirements) specified under regulations issued from time to time by the
F.R.S. Board and then applicable to assets or liabilities consisting of or
including “LIBOR Liabilities”, as currently defined under Regulation D of the
F.R.S. Board, having a term approximately equal or comparable to such
Interest Period.

 

17

 

“Schedule” means
each Schedule attached hereto, as each may be amended, supplemented or
otherwise modified from time to time by the Borrowers with the consent of the
Required Lenders as provided in Section 4.2.2.

 

“Security Agreement”
means the Security Agreement, dated as of the Closing Date, in the form of Exhibit G
attached hereto, made by the Borrowers in favor of the Agent, for its benefit
and for the ratable benefit of the Lenders, as such agreement may be amended,
restated, supplemented or otherwise modified from time to time.

 

“Security Documents”
means, collectively, the Security Agreement, any Subsidiary Pledge Agreement,
any Subsidiary Security Agreement,  any
Trademark Security Agreement, any Patent Security Agreement, the Financing
Statements, the Perfection Certificate, each of the Deposit Account Control
Agreements, the Blocked Account Agreement, and each other Instrument at any
time delivered in connection with the foregoing to secure the Obligations.

 

“Senior Financial
Officer” shall mean the treasurer or chief financial officer of a Person.

 

“Settlement Date”,
in respect of settlements among Lenders, if UPSC is not the only Lender, shall
mean the Closing Date and thereafter Wednesday of
each calendar week unless such day is not a Business Day in which case it shall
be the next succeeding Business Day.

 

“Single Employer Plan”
means any Plan which is covered by Title IV of ERISA, other than a
Multiemployer Plan.

 

“Solvent” means,
with respect to any Person on a particular date, that on such date (i) the
fair value of the assets of such Person (both at fair valuation and at present
fair saleable value) is greater than the total amount of liabilities, including
contingent and unliquidated liabilities, of such Person, (ii) such Person
is able to pay all liabilities of such Person as they mature, and (iii) such
Person does not have unreasonably small capital with which to carry on its
business.  In computing the amount of
contingent or unliquidated liabilities at any time, 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.

 

“Stock” means all
shares of capital stock of or in a Person which is a corporation, whether
voting or non-voting, and including common stock and preferred stock, all
membership or other equity interests of or in a Person which is a limited
liability company, all partnership and other equity interests of or in a Person
which is a partnership, and all similar equity and other interests of or in any
other Person.

 

“Subordinated Debt”
shall mean any Indebtedness owing by a Borrower from time to time which has
been subordinated to the Obligations pursuant to a Subordination Agreement.

 

“Subordination
Agreement” shall mean an agreement in form and substance satisfactory to
Agent and the Required Lenders among one or more Borrowers, Lenders, Agent and
any other creditor of such Borrower or Borrowers pursuant to which such other
creditor shall agree to subordinate Indebtedness of such Borrower or Borrowers
owing to it to the Obligations.

 

18

 

“Subsidiary” of
any corporation means any other corporation, partnership or limited liability
company of which greater than fifty percent (50%) of the outstanding shares of
Stock or other ownership interests having ordinary voting power for the
election of directors (or others serving equivalent functions) is owned
directly or indirectly by such corporation. 
Except as otherwise indicated herein, references herein and in the Loan
Documents to “Subsidiaries” shall refer to Subsidiaries of each Borrower or all
Borrowers, as the case may be.

 

“Subsidiary Guarantor”
means each Subsidiary of any Borrower which on the Closing Date or subsequent
thereto executes in favor of the Agent and the Lenders a Subsidiary Guaranty.

 

“Subsidiary Guaranty”
means each guaranty of the Obligations which on the Closing or subsequent
thereto may be executed by a Subsidiary Guarantor in favor of the Agent and the
Lenders, as such agreement may be amended, restated, supplemented or otherwise
modified from time to time.

 

“Subsidiary Pledge
Agreement” means a pledge agreement to secure the obligations of the
Subsidiary Guarantors under the Subsidiary Guaranty, which on the Closing Date
or subsequent thereto may be executed by a Subsidiary Guarantor in favor of the
Agent, for its benefit and for the ratable benefit of the Lenders, as such
agreement may be amended, restated, supplemented or otherwise modified from
time to time.

 

“Subsidiary Security
Agreement” means a security agreement or a supplement to the Security
Agreement, to secure the obligations of a Subsidiary Guarantor under its
Subsidiary Guaranty, which on the Closing Date or subsequent thereto may be
executed by a Subsidiary Guarantor in favor of the Agent, for its benefit and
for the ratable benefit of the Lenders, as such agreement may be amended,
restated, supplemented or otherwise modified from time to time.

 

“Taxes” means all
taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding, in the case of each Lender and the
Agent, taxes imposed on its Net Income and franchise taxes imposed on it.

 

“Termination Fee”
means the fee payable by the Borrowers to the Lenders prior to or concurrently
with any early termination by the Borrowers of the Commitment as required under
Section 3.3.2.

 

“Trademark
Security Agreement” means that certain Trademark Security Agreement, dated
as of the Closing Date, made by a Loan Party in favor of the Agent, for its
benefit and for the ratable benefit of the Lenders, as such agreement may be
amended, restated, supplemented or otherwise modified from time to time.

 

“Transfer Supplement”
means a Transfer Supplement in substantially the form of Exhibit H
attached hereto.

 

19

 

“UCC” means the
Uniform Commercial Code of the State of Georgia, as in effect from time to time

 

“United States” or
“U.S.” means the United States of America, its constituent States and the
District of Columbia.

 

“Unused Amount”
shall have the meaning set forth in Section 2.4(c).

 

“UPSC” means UPS
Capital Corporation, a Delaware corporation, and its successors and assigns.

 

“Voting Stock”
means, with respect to any Person, Stock of such Person of the class or classes
pursuant to which the holders thereof have the general voting power under
ordinary circumstances to elect at least a majority of the board of directors,
managers or trustees of such Person (irrespective of whether or not at the time
Stock of any other class or classes shall have or might have voting power by
reason of the happening of any contingency).

 

“Working Capital
Facility Availability” means, on any date, an amount equal to (a) the
lesser of (i) the Working Capital Facility Commitment Amount or (ii) the
Borrowing Base minus (b) the then aggregate outstanding principal
amount of Working Capital Facility Loans minus (c) the then
aggregate outstanding amount of Letter of Credit Obligations.

 

“Working Capital
Facility Commitment Amount” means Twenty-Five Million Dollars
($25,000,000), as such amount may be increased from time to time pursuant to Section 2.3.

 

“Working Capital
Facility Loan” means, relative to any Lender, any Loan made by such Lender
to the Borrower pursuant to Section 2.1.2.

 

“Working Capital
Facility Maturity Date” means the earliest to occur of:

 

(a)                                  the
third (3rd) anniversary of the Closing Date;

 

(b)                                 immediately
and without further action, the date on which any Event of Default described in
Section 7.1.4 occurs;

 

(c)                                  the
date on which any Event of Default other than an Event of Default described in Section 7.1.4
shall have occurred and be continuing and either:

 

(i)            any Loans
are declared to be due and payable pursuant to Section 7.3; or

 

(ii)           in the
absence of such declaration, the Agent, acting at the direction of the Required
Lenders, shall give notice to Borrower that the Commitments shall have been
terminated; and

 

(d)                                 the
date on which a Change in Control occurs.

 

“Working Capital
Facility Note” means the promissory note of the Borrower, dated the date
hereof, and substantially in the form of Exhibit A attached hereto,
as amended, restated, supplemented or otherwise modified from time to time, and
shall also refer to all other promissory notes accepted from time to time in
substitution therefor or renewal thereof.

 

20

 

“Working Capital
Facility Percentage” means, as to any Lender, the percentage equivalent of
a fraction the numerator of which is the amount of such Lender’s Commitment and
the denominator of which is the aggregate amount of the Commitments of all
Lenders.

 

“written” or “in
writing” means any form of written communication or a communication by
means of telex, telecopier device, telegraph or cable.

 

SECTION 1.2         Use
of Defined Terms.  Unless otherwise
defined or the context otherwise requires, terms for which meanings are
provided in this Agreement shall have such meanings when used in the Schedules
and each Note, Borrowing Request, Compliance Certificate, the Borrowing Base
Certificate, notice and other communication delivered from time to time in
connection with this Agreement or any other Loan Document.

 

SECTION 1.3         Cross-References.  Unless otherwise specified, references in
this Agreement and in each other Loan Document to any Article or Section are
references to such Article or Section of this Agreement or such other
Loan Document, as the case may be, and unless otherwise specified, references
in any Article, Section, or definition to any subsection or clause are
references to such subsection or clause of such Section, Article or
definition.

 

SECTION 1.4         Accounting
and Financial Determinations.  Unless
otherwise specified, all accounting terms used herein or in any other Loan
Document shall be interpreted, all accounting determinations and computations
hereunder or thereunder shall be made, and all financial statements required to
be delivered hereunder or thereunder shall be prepared, in accordance with GAAP
consistently applied in accordance with historical practices.

 

ARTICLE 2

COMMITMENTS

 

SECTION 2.1         Commitment.  Subject to the terms and conditions of this
Agreement (including Article 4), each Lender agrees to provide its
Commitment; as more fully described in this Section 2.1.

 

SECTION 2.1.1      Commitments.  Subject to the limitations set forth in this
Agreement, from time to time on any Business Day occurring during the period
commencing on the Closing Date to, but excluding, the Working Capital Facility
Maturity Date, each Lender severally will make its Working Capital Facility
Percentage of any Borrowing of Working Capital Facility Loans on such Business
Day as the Borrowers’ Representative shall request on behalf of itself and the
other Borrowers in accordance with Section 3.1 and shall arrange
for the issuance of Letters of Credit as the Borrowers’ Representative shall
request on behalf of itself and the other Borrowers in accordance with Section 3.10.  Subject to the terms hereof, the Borrowers’
Representative may, on behalf of itself and the other Borrowers, from time to
time borrow, repay, and reborrow Working Capital Facility Loans pursuant to the
Commitments.

 

SECTION 2.1.2      Agent
and Lenders Not Required to Extend Credit under Commitments.  The Agent and the Lenders shall not be
required to make any Working Capital

 

21

 

Facility Loan or
issue or cause the issuance of any Letter of Credit if, after giving effect
thereto, the then aggregate outstanding principal amount of all Working Capital
Facility Loans plus the outstanding amount of all Letter of Credit
Obligations would exceed the lesser of (i) the Working Capital Facility
Commitment Amount or (ii) the Borrowing Base.  The Agent and the Lenders shall not be
required to issue or cause the issuance of any Letter of Credit if, after
giving effect thereto, the then aggregate outstanding amount of all Letter of
Credit Obligations would exceed the Letter of Credit Sub-Facility Amount.

 

SECTION 2.2         Establishment
of Reserves  The Agent shall have the
right to establish, and the Agent shall, at the request of the Required Lenders
establish, in such amounts, and with respect to such matters, as the Agent or
Required Lenders, based on the Agent’s or Required Lenders’ good faith credit
judgment, shall deem necessary or appropriate, reserves with respect to (i) Charges
and Liens; (ii) Environmental Liabilities and Costs, (iii) sums as to
which the Agent and the Lenders are permitted to make Working Capital Facility
Loans on the Borrowers’ behalf under Section 3.3.5 of this
Agreement; (iv) Accounts for which the Agent, based on its customary
credit decisions, reasonably determines that the prospect of payment or
performance is impaired or that there is a reasonable probability that such
Account will not be paid, (v) Requirements of Law, (vi) reductions in
Inventory liquidation value as determined by Agent following its receipt of the
results of any collateral audit pursuant to Section 6.1.7 or
Inventory appraisal pursuant to Section 6.1.14, and (vii) such
other matters, events, conditions or contingencies as to which the Agent or
Required Lenders, based on the Agent’s or Required Lenders’ credit
considerations, determines reserves should be established from time to time
hereunder in the Agent’s or Required Lenders’ credit judgment.

 

SECTION 2.3         Increase
in Working Capital Facility Commitment Amount.  Borrowers’ Representative may at any time or
from time to time after the Closing Date, by written notice to Agent, request
one or more increases in the Working Capital Commitment Amount and
corresponding pro rata increases in the Inventory Sublimit (collectively, “Incremental
Increases”); provided, however, that (a) each Incremental Increase in
the Working Capital Facility Amount shall be in the amount of Five Million
Dollars ($5,000,000) or a multiple of Five Million Dollars ($5,000,000), (b) the
total amount of Incremental Increases in the Working Capital Facility
Commitment Amount during the term of this Agreement shall not exceed Fifteen
Million Dollars $15,000,000), (c)  Lenders shall have consented to the
requested Incremental Increase and shall have agreed to make the requested
Incremental Increase available to Borrowers on a pro rata basis,  and (d) the conditions set forth in Sections 4.2.1,
4.2.3, 4.2.4, 4.2.5 and 4.2.6 shall be
satisfied.  If the conditions set forth
in the preceding sentence are satisfied, the Agent shall determine the
effective date of the Incremental Increase and on such date (a) the
Working Capital Facility Commitment Amount shall be increased by the amount of
the Incremental Increase, (b) the Inventory Sublimit shall be increased on
a pro rata basis with the increase in the Working Capital Facility
Commitment Amount, (c) the Commitments of Lenders shall be increased on a
pro rata basis by the amount of the Incremental Increase, (d) Borrowers
shall deliver to each Lender a Note in the amount of such Lender’s adjusted
Commitment, (e) Borrowers shall pay to each Lender the fee payable to it
pursuant to Section 2.4(b), (f) Borrowers shall join with the Agent
and Lenders in the execution of such amendments as the Agent shall determine to
be necessary or appropriate in connection with such Incremental Increase and (g) Borrowers
shall deliver to the Agent resolutions of their respective Boards of Directors
certified by a secretary or assistant secretary of each Borrower authorizing

 

22

 

Borrowers to
obtain the subject Incremental Increase and to execute and deliver the Notes
and other Loan Documents required hereby in regard thereto, as well as an
opinion of Borrowers’ counsel as to the due execution,  authorization and delivery and enforceability
of such Notes and other Loan Documents as to such other matters as the Agent
shall request, each to be in form and substance satisfactory to the Agent..

 

SECTION 2.4         Certain
Fees.

 

(a)         The
Borrowers agree to pay to each Lender which is a party to this Agreement on the
Closing Date a non-refundable commitment fee equal to such Lender’s Working
Capital Facility Percentage of three hundred seventy-five one-thousandths of
one percent (.375%) of the Working Capital Facility Commitment Amount.  The commitment fee described in this subsection (a) shall
be payable by the Borrowers on the Closing Date.

 

(b)         The
Borrowers agree to pay to each Lender a non-refundable increase fee equal to
one-fourth of one percent (.25%) of such Lender’s portion of each Incremental
Increase pursuant to Section 2.3. 
Such fee shall be payable by the Borrowers on the effective date of an
Incremental Increase.

 

(c)         The
Borrowers agree to pay to each Lender a nonrefundable unused commitment fee
equal to such Lender’s Working Capital Facility Percentage of one-fourth of one
percent (25%) per annum of the amount by which (A) the Working Capital Facility
Commitment Amount exceeds (B) the aggregate outstanding principal amount
of all Working Capital Facility Loans plus the aggregate outstanding
amount of Letter of Credit Obligations (the “Unused Amount”).  The unused commitment fee described in this
subsection (c) shall be calculated on a daily basis and shall be
payable by the Borrowers in arrears on each Monthly Payment Date and on the
Working Capital Facility Maturity Date.

 

(d)         The
Borrowers shall pay to the Agent, for its own account, the fees in the amounts
and at such times as shall be set forth in the Fee Letter.

 

SECTION 2.5         Increased
Costs; Capital Adequacy.

 

(a)         The
Borrowers shall pay to each Lender from time to time on demand such amounts as
such Lender may determine to be reasonably necessary to compensate it or its
holding company for any costs which such Lender determines are attributable to
its making or maintaining Loans, issuing Letters of Credit, or maintaining
Commitments hereunder, or any reduction in any amount receivable by such Lender
hereunder in respect of any such Loans, Letters of Credit or Commitments,
resulting from any Regulatory Change which: (i) changes the basis of
taxation of any amounts payable to such Lender under this Agreement in respect
of any of such Loans, Letters of Credit or Commitments (other than taxes
imposed on the overall net income or franchise taxes of such Lender); or (ii) imposes
or modifies any reserve, special deposit, deposit insurance or assessment,
minimum capital, capital ratio or similar requirement relating to any
extensions of credit or other assets of, or any deposits with or other
liabilities of, such Lender or any holding company of such Lender (including a
request or requirement which affects the manner in which such Lender or the
holding company thereof allocates capital resources to commitments, including
the Commitments).  Each affected Lender
will notify the

 

23

 

Borrowers’
Representative of any event occurring after the date of this Agreement which
will entitle such Lender to compensation pursuant to this subsection (a) as
promptly as practicable after it obtains knowledge thereof and determines to
request such compensation.

 

(b)         Without
limiting the effect of the foregoing provisions of this Section 2.5
(but without duplication), the Borrowers shall pay to each Lender from time to
time upon demand by such Lender such amounts as such Lender may determine to be
reasonably necessary to compensate such Lender for any costs which it
determines are attributable to the maintenance by it or its holding company,
pursuant to any law or regulation of any jurisdiction or any interpretation,
directive or request (whether or not having the force of law) of any court or
governmental or monetary authority, in effect after the date of this Agreement,
of capital in respect of its Loans, Letters of Credit or Commitments (such
compensation to include an amount equal to any reduction in return on assets or
equity of such Lender or its holding company to a level below that which it
could have achieved but for such law, regulation, interpretation, directive or
request).  Each Lender will notify the
Borrowers’ Representative if it is entitled to compensation pursuant to this
subsection (b) as promptly as practicable after it determines to
request such compensation.

 

(c)         Each
notice delivered by a Lender pursuant to this Section 2.5 shall
contain a statement of such Lender as to any such additional amount or amounts
(including calculations thereof in reasonable detail) which shall, in the
absence of manifest error, be presumed correct of the matters stated therein
and be binding upon the Borrowers.  In
determining such amount, each affected Lender may use any method of averaging and
attribution that it in good faith shall deem applicable.

 

ARTICLE 3

LOANS AND NOTES

 

SECTION 3.1         Borrowing
Procedure.  The Borrowers’
Representative may from time to time request that a Borrowing of Working
Capital Facility Loans be made on the Business Day specified in its Borrowing
Request, by delivering such Borrowing Request to the Agent’s office (i) on
or before 2:00 p.m., Atlanta, Georgia time, at least three (3) Business
Days in advance of the requested borrowing date for a LIBOR Loan and (ii) on
or before 12:00 Noon, Atlanta, Georgia time, on the requested borrowing date
for a Base Rate Loan.  Such Borrowings of
Working Capital Facility Loans which are LIBOR Loans shall be in a minimum
aggregate amount equal to One Million Dollars ($1,000,000) and incremental
multiples of One Hundred Thousand Dollars ($100,000); provided, however,
that no LIBOR Loan may be requested when a Default exists or the Leverage Ratio
is greater than 4.00:1.00.  Each
Borrowing shall be made on the Business Day specified in the Borrowing Request
therefor (including the initial Borrowing to be made on the Closing Date, if
any).  On such Business Day, each Lender
shall, on or before 3:00 p.m., Atlanta, Georgia time, deposit same day
funds with the Agent in the amount equal to such Lender’s Working Capital
Facility Percentage of such Borrowing, such deposit to be made to such account
as the Agent shall specify from time to time by notice to the Lenders.  On the Business Day specified by the
Borrowers’ Representative in the Borrowing Request, the proceeds of such Borrowing
shall be made available to the Borrowers by wire transfer of such proceeds to
such transferees, or to such accounts of the Borrowers, as the Borrowers shall
have specified in the Borrowing Request therefor; provided, however, that,
except as provided in

 

24

 

Section 3.3A,
in each case the Agent shall be required to make available to the Borrowers the
proceeds of any Borrowing only to the extent received by it in same day funds
from the Lenders.  No Lender’s obligation
to make any Working Capital Facility Loan shall be affected by any other Lender’s
failure to make any Working Capital Facility Loan.

 

SECTION 3.2         Notes.  All Working Capital Facility Loans made by
any Lender shall be evidenced by a Working Capital Facility Note made by the
Borrowers payable to the order of such Lender in a principal amount equal to
such Lender’s Working Capital Facility Percentage of the Working Capital
Facility Commitment Amount.  The
Borrowers hereby irrevocably authorize each Lender to make (or cause to be
made) appropriate notations on a grid schedule attached to such Lender’s
Notes (or on a continuation of any such grid attached to any Note and made a
part thereof), which notations shall evidence, among other things, the date and
outstanding principal amount of the Loans evidenced thereby.  The notations on any such grid (and on any
such continuation) indicating the outstanding principal amount of a Lender’s
Loans shall be presumptive evidence of the principal amount thereof owing and
unpaid, but the failure to record any such amount on any such grid (or on any
such continuation) shall not limit or otherwise affect the obligations of the
Borrowers hereunder or under such Note to make payments of principal of or
interest on such Loans when due.

 

SECTION 3.3         Principal
Payments.  Repayments and prepayments
of principal of the Loans shall be made in accordance with this Section 3.3.

 

SECTION 3.3.1      Repayments
and Prepayments.  The Borrowers will
make payment in full of all unpaid principal of the Working Capital Facility
Loans on the Working Capital Facility Maturity Date (or such earlier date as
the Loans may become or be declared due and payable pursuant to Article 7).  Prior thereto, the Borrowers:

 

(a)         may,
from time to time on any Business Day, make a voluntary prepayment, in whole or
in part, of the outstanding principal amount of any Working Capital Facility
Loans so long as the Borrowers pay to the Lenders any termination fee required
to be paid pursuant to Section 3.3.4.

 

(b)         shall,
on any Business Day on which the aggregate outstanding principal amount of all
Working Capital Facility Loans plus the then aggregate amount of Letter
of Credit Obligations exceeds the lesser of (i) the Working Capital
Facility Commitment Amount or (ii) the Borrowing Base, make a mandatory
prepayment of the outstanding principal amount of the Working Capital Facility
Loans and provide cash collateral in respect of Letter of Credit Obligations in
an amount equal to such excess amount;

 

(c)         shall,
promptly after receipt by the Borrowers or any Subsidiary or the Agent of any
condemnation awards with respect to any Loss, make a mandatory prepayment of
the Loans in an amount by which such condemnation award proceeds exceed the
actual cost incurred by the applicable Borrower or such Subsidiary to repair or
replace the property or asset which was the subject of the condemnation giving
rise to such condemnation award proceeds;

 

(d)         shall,
promptly after receipt by the Borrowers or any Subsidiary or the Agent of any
insurance proceeds with respect to any Loss resulting from a casualty, make a

 

25

 

mandatory
prepayment of the Loans in an amount by which such insurance proceeds exceed
the actual cost incurred by the applicable Borrower or such Subsidiary to
repair or replace the property or asset which was the subject of the Loss or
deemed Loss giving rise to such insurance proceeds;

 

(e)         shall,
promptly after receipt by the Borrowers or any Subsidiary or the Agent of any
insurance proceeds with respect to any Loss resulting from a liability, make a
mandatory prepayment of the Loans in an amount by which such insurance proceeds
exceed the amount of the liability to be satisfied with such proceeds (to the
extent such liability is so satisfied);

 

(f)          shall,
upon receipt by the Borrowers or any Subsidiary or the Agent of any Net
Disposition Proceeds, make a mandatory prepayment of the Loans in an amount
equal to such Net Disposition Proceeds, provided, that this clause (f) of
Section 3.3.1 shall not in any event be deemed a consent to any
disposition by any Loan Party which is otherwise prohibited by the terms of
this Agreement or of any of the other Loan Documents;

 

(g)         shall,
upon receipt by the Borrowers or any Subsidiary of any Net Securities Proceeds,
make a mandatory prepayment of the Loans in an amount equal to such Net
Securities Proceeds; provided, that this clause (g) of Section 3.3.1
shall not in any event be deemed a consent to any issuance or sale of Stock by
any Loan Party which is otherwise prohibited by the terms of this Agreement or
of any of the other Loan Documents;

 

(h)         shall,
concurrently with receipt by any Loan Party after the Closing Date of any Net
Indebtedness Proceeds during any Fiscal Year (excluding any Indebtedness
incurred by any Loan Party pursuant to Section 6.2.2 or this
Agreement), make a mandatory prepayment of the Loans, in an aggregate amount
equal to such Net Indebtedness Proceeds; provided that this clause (i) of
Section 3.3.1 shall not in any event be deemed a consent to any
incurrence or issuance of Indebtedness by any Loan Party which is otherwise
prohibited by the terms of this Agreement or any of the other Loan Documents;

 

(i)          shall,
concurrently with the delivery of the Borrowing Base Certificate required under
clause (i) of Section 6.1.1, make a mandatory prepayment of
the Working Capital Facility Loans and, if the Working Capital Facility Loans
have been prepaid in full, provide cash collateral for outstanding Letter of
Credit Obligations in the aggregate amount, if any, by which the outstanding
principal amount of Working Capital Facility Loans plus the outstanding amount
of Letter of Credit Obligations exceed the Borrowing Base shown thereon; and

 

(j)          shall,
upon the occurrence of a Change of Control, make a mandatory prepayment of the
entire outstanding principal amount of all Loans together with accrued and
unpaid interest and all other outstanding Obligations.

 

Unless expressly
set forth to the contrary in this Section 3.3.1 or elsewhere in the
Agreement, any mandatory prepayment of Loans required to be made by the
Borrowers pursuant to this Section 3.3.1 shall be applied to the
payment in full of the outstanding Working Capital Facility Loans, but shall
not cause a reduction in the Commitments.

 

SECTION 3.3.2      [not
used]

 

26

 

SECTION 3.3.3      Collections.  Effective not later than the Closing Date,
Borrowers shall have established, and thereafter Borrowers shall maintain, with
Bank of America, N.A. or one or more other banks acceptable to Agent (“Clearing
Banks”), deposit accounts into which all proceeds of Collateral, including,
particularly, payments on Accounts, shall be remitted (“Concentration
Accounts”).  Each Borrower shall instruct
its Account Debtors to remit all payments directly to a Concentration
Account.  In the event that any Borrower
receives any payment or other remittance with respect to any Account or any
Inventory, such Borrower shall hold such payment in trust for the Agent, such
Borrower shall not co-mingle such payment with such Borrower’s other assets,
and such Borrower shall promptly, and in any event within one Business Day,
cause such payment to be deposited into a Concentration Account.  Concentration Accounts shall be maintained in
a Borrower’s name, but for Agent’s benefit, and the applicable Borrower,
Clearing Bank and Agent shall have entered into a tri-party agreement, in form
and substance satisfactory to Agent (a “Blocked Account Agreement”)
pursuant to which, among other things, Clearing Bank shall agree to remit all
collected funds in its Concentration Account directly to Agent for application
to the Obligations as prescribed below. 
All such collected funds shall be applied by Agent in payment of outstanding
Working Capital Facility Loans (in accordance with each Lender’s Working
Capital Facility Percentage of each such payment); provided that if an Event of
Default has occurred and is continuing, such funds shall be applied in
accordance with the provisions of Section 7.4.  The foregoing shall be in addition to, and
not in limitation of, Agent’s rights to collect Accounts directly after an
Event of Default has occurred and while it is continuing, as provided in the
Security Agreement.  Without limitation
of the foregoing, within fifteen (15) Business Days after the date hereof,
Borrowers will deliver to Agent replacement Blocked Account Agreements with
respect to the existing blocked account agreements with Bank of America, N.A.,
as Clearing Bank, signed by Borrowers and Bank of America, N.A. and applicable
to each Concentration Account maintained by Borrowers with Bank of America,
N.A.

 

SECTION 3.3.4      Termination
Fee.

 

(a)         Upon
any cancellation of the Commitments by the Borrowers subsequent to the Closing
Date pursuant to Section 3.3.6, the Borrowers shall pay to the
Lenders prior to or concurrently with such termination a Termination Fee in an
amount equal to the amount of the Working Capital Facility Commitment at the
time of such early termination times (i) two percent (2%) if such
termination occurs on or prior to the first (1st) anniversary of the
Closing Date, (ii) one percent (1%) if such termination occurs after
the first (1st) anniversary of the Closing Date but on or prior to the second
(2nd) anniversary of the Closing Date and (iii) one-half of one
percent (1⁄2%) if such termination occurs after the second (2nd) anniversary
of the Closing Date.  Notwithstanding the
foregoing, if the Commitments are cancelled in connection with Borrowers’
prepayment in full of the Obligations from the proceeds of a replacement
financing provided to Borrowers by UPSC or by a group of lenders for whom UPSC
acts as agent, the portion of the Termination Fee that would otherwise be
payable to any Lender which participates in such replacement financing will not
be payable, it being understood, however, that each Lender which is not
participating in such replacement financing will be entitled to receive the
portion of the Termination Fee payable to such Lender in such event.

 

(b)         Any
Termination Fees shall be paid by the Borrowers to the Lenders as liquidated
damages for the loss of the bargain and shall not constitute a penalty.

 

27

 

SECTION 3.3.5      Working
Capital Facility Loans on Borrower’s Behalf.  The Agent may, at its option, and at the
request of the Required Lenders, the Agent shall, make Working Capital Facility
Loans on behalf of the Borrowers for payment of all fees, expenses, charges,
costs, principal and interest owed by the Borrowers to the Lenders or the Agent
under this Agreement and the other Loan Documents and to pay such other amounts
as the Agent or the Required Lenders deem necessary in order to protect the
Collateral or the perfection or priority of the Agent’s security interest
therein (including, without limitation, any insurance premium or any
taxes).  Such Working Capital Facility
Loans shall be made when and as the Borrowers fail promptly to pay same, and
all such Working Capital Facility Loans shall constitute Loans made to the
Borrowers and shall be secured by all of the Collateral.  Following the making of any Working Capital
Facility Loans pursuant to this Section 3.3.5, the Agent shall
promptly notify the Borrowers’ Representative of the making of such Working
Capital Facility Loans and the aggregate principal amount of such Loans; provided that the failure by the Agent to give such notice
shall not affect the Borrowers’ obligations under this Agreement or with
respect to such Working Capital Facility Loans. 
Each Lender shall be obligated to make its Working Capital Facility
Percentage of any Working Capital Facility Loans made by the Agent pursuant to
this Section 3.3.5 available to the Agent in accordance with the
provisions of Section 3.3A.

 

SECTION 3.3.6      Termination
of Commitments.  Subject to
compliance with Section 3.3.4 and Section 3.4.9,
Borrowers shall have the right to cancel the Commitments upon three (3) Business
Days prior notice to Agent.

 

SECTION 3.3A     Settlement.  Notwithstanding anything contained herein to
the contrary, at Agent’s election, the following provisions shall apply:

 

(a)         Commencing
with the first Business Day following the Closing Date, each borrowing of
Working Capital Facility Loans shall be advanced by the Agent and each payment
by Borrowers on account of Working Capital Facility Loans shall be applied
first to those Working Capital Facility Loans advanced by Agent.  On or before 1:00 P.M., on each
Settlement Date commencing with the first Settlement Date following the Closing
Date, Agent and Lenders shall make certain payments as follows: (i) if the
aggregate amount of new Working Capital Facility Loans made by the Agent during
the preceding Week (if any) exceeds the aggregate amount of repayments applied
to outstanding Working Capital Facility Loans during such preceding Week, then
each such Lender shall provide Agent with funds in an amount equal to its
applicable Working Capital Facility Percentage of the difference between (1) such
Working Capital Facility Loans and (2) such repayments and (ii) if
the aggregate amount of repayments applied to outstanding Working Capital
Facility Loans during such Week exceeds the aggregate amount of new Working
Capital Facility Loans made during such Week, then Agent shall provide each
such Lender with funds in an amount equal to its applicable Working Capital
Facility Percentage of the difference between (1) such repayments and (2) such
Working Capital Facility Loans.  Each
Lender shall be entitled to earn interest at the applicable rate provided in Section 3.4
on outstanding Working Capital Facility Loans which it has funded.  Promptly following each Settlement Date,
Agent shall submit to each Lender a certificate with respect to payments
received and Working Capital Facility Loans made during the Week immediately
preceding such Settlement Date.  Such
certificate of Agent shall be conclusive in the absence of manifest error.  As used herein, “Week” means a time
period beginning with the opening of business on a Wednesday and ending at the
end of business on the following Tuesday.

 

28

 

(b)         Unless
Agent shall have been notified by telephone, confirmed in writing, by any
Lender having a Working Capital Facility Commitment that such Lender will not make
the amount which would constitute its applicable Working Capital Facility
Percentage of Working Capital Facility Loans available to Agent, Agent may (but
shall not be obligated to) assume that such Lender shall make such amount
available to Agent on the next Settlement Date and, in reliance upon such
assumption, make available to Borrowers a corresponding amount.  Agent will promptly notify Borrowers of its
receipt of any such notice from a Lender. 
If such amount is made available to Agent on a date after such next
Settlement Date, such Lender shall pay to Agent on demand an amount equal to
the product of (i) the daily average Federal Funds Rate (computed on the
basis of a year of 360 days) during such period as quoted by Agent, times (ii) such
amount, times (iii) the number of days from and including such Settlement
Date to the date on which such amount becomes immediately available to
Agent.  A certificate of Agent submitted
to any Lender with respect to any amounts owing under this paragraph (b) shall
be conclusive, in the absence of manifest error.  If such amount is not in fact made available
to Agent by such Lender within three (3) Business Days after such
Settlement Date, Agent shall be entitled to recover such an amount, with
interest thereon at the rate per annum then applicable to such Working Capital
Facility Loans hereunder, on demand from Borrowers; provided, however,
that Agent’s right to such recovery shall not prejudice or otherwise adversely
affect Borrowers’ rights (if any) against such Lender.

 

SECTION 3.4         Interest.  Interest on the outstanding principal amount
of the Loans and other outstanding Obligations shall accrue and be payable in
accordance with this Section 3.4.

 

SECTION 3.4.1      Loan
Rates.  Subject to Section 3.4.3,
each Borrowing of Working Capital Facility Loans shall accrue interest at the
following rates per annum, at the election of the Borrowers pursuant to an
appropriately delivered Borrowing Request or Continuation/Conversion Notice:

 

(a)         during
such periods as such Borrowing consists of Base Rate Loans, the Base Rate as in
effect from time to time plus the Applicable Margin, and

 

(b)         during
such periods as such Borrowing consists of LIBOR Loans, for each Interest
Period relating thereto, the LIBOR Rate for such Interest Period plus the
Applicable Margin; provided, however, that notwithstanding
anything contained herein to the contrary, Borrowers shall have no option to
elect that any Borrowing consist of or be converted into LIBOR Loans if as of
the last day of Borrowers’ most recently ended Fiscal Quarter or Fiscal Year
for which Borrowers have provided financial statements to Agent, Borrowers’
Leverage Ratio was greater than 4.00:1.00.

 

(c)         As
used herein, “Applicable Margin” shall mean, initially, one-half of one
percent (.50%) per annum, in respect of Base Rate Loans (and Borrowers shall
have no option to elect that any Borrowing consist of or be converted to LIBOR
Loans); provided, however, that, notwithstanding the foregoing,
commencing upon receipt by Agent pursuant to Section 6.1 of
Borrowers’ audited financial statements for its Fiscal Year ending December 31,
2005, and continuing thereafter, the Applicable Margin shall be determined
quarterly, based upon Borrower’s Leverage Ratio computed at the end of each
Fiscal Quarter (beginning with the Fiscal Quarter ending December 31,
2005), and then compared to the following table (provided

 

29

 

that if as of any
such date the Leverage Ratio is greater than 4.00:1.00, Borrowers shall have no
option to elect that any Borrowing consist of or be converted into LIBOR
Loans):

 

	
  If Leverage Ratio is:

  	
   

  	
  Applicable Margin for LIBOR

  Loans shall be:

  	
   

  	
  Applicable Margin for Base Rate

  Loans shall be:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  >2.25:1.00

  	
   

  	
  2.50

  	
  %

  	
  .50

  	
  %

  
	
  > .50:1.00; <
  2.25:1.00

  	
   

  	
  2.00

  	
  %

  	
  .25

  	
  %

  
	
  < .5:1.00

  	
   

  	
  1.50

  	
  %

  	
  0

  	
   

  

 

(d)         Except
as set forth hereinabove in respect of Borrowers’ 2005 audited financial
statements, all determinations of Applicable Margin by Agent shall be made from
Borrowers’ unaudited quarterly financial statements delivered to Agent pursuant
to Section 6.1.  If any financial
statements (whether audited or unaudited) used in making the foregoing
determinations of Applicable Margin are not timely delivered in accordance with
Section 6.1, then, unless and until such financial statements are
delivered to Agent (and without waiving any Event of Default resulting from
their non-delivery), the Applicable Margin shall be determined based on a
presumed Leverage Ratio of greater than 2.25:1.00.  In addition, if and so long as any Event of
Default then exists, no downward adjustment to the Applicable Margin otherwise
available to Borrowers hereunder shall be implemented.

 

SECTION 3.4.2      Continuation
and Conversion Elections.  By
delivering a Continuation/Conversion Notice to the Agent on or before 3:00 p.m.,
Atlanta, Georgia time, on a Business Day, the Borrowers’ Representative may
from time to time irrevocably elect, on not less than three (3), and no more
than five (5), Business Days’ notice, that all or any portion of an aggregate
minimum amount of One Million Dollars ($1,000,000) and an aggregate multiple of
One Hundred Thousand ($100,000) of Working Capital Facility Loans be, in the
case of Base Rate Loans, converted into LIBOR Loans or, in the case of LIBOR Loans,
continued as LIBOR Loans; provided, however,
that no portion of the outstanding principal amount of any Working Capital
Facility Loan may be continued as, or converted into, a LIBOR Loan when any
Default has occurred and while it is continuing or when the Leverage Ratio
(determined as of the last day of Borrowers’ most recently ended Fiscal Quarter
or Fiscal Year for which Borrowers have provided financial statements to Agent)
is greater than 4.00:1.00.

 

The Agent shall
give prompt telephonic notice to each Lender of the interest rate determined
pursuant to this Section 3.4.2 with respect to such Loans.  Absent delivery of a Continuation/Conversion
Notice with respect to any LIBOR Loan at least three (3) Business Days
before the last day of the then current Interest Period with respect thereto,
such LIBOR Loan shall, on such last day, automatically convert to a Base Rate
Loan.

 

SECTION 3.4.3      Post-Default
Rates.  From and after the occurrence
of an Event of Default and during the continuance thereof, at the election of
Agent or the Required Lenders,  the
Borrowers shall pay interest (after as well as before judgment) on the
outstanding principal amount of all Loans and other Obligations at a rate per
annum equal to the Post-Default Rate applicable to such Loans and other
Obligations.

 

30

 

SECTION 3.4.4      Payment
Dates.  Accrued interest on the Loans
shall be payable, without duplication:

 

(a)         on
Maturity of such Loans;

 

(b)         with
respect to any portion of any Loan prepaid or repaid pursuant to Section 3.3.1,
on the date of such prepayment or repayment is due as provided in Section 3.3.1
and, in the case of a voluntary prepayment, on the date set forth in any notice
required for such prepayment; and

 

(c)         with
respect to Base Rate Loans, on each Monthly Payment Date, commencing with the
first such day following the Closing Date;

 

(d)         with
respect to LIBOR Loans, on each Monthly Payment Date, commencing with the first
such day following the Closing Date and, if Agent so elects, on the last day of
each applicable Interest Period;

 

(e)         with
respect to any Base Rate Loans converted into LIBOR Loans on a day which is not
a Monthly Payment Date, on the date of such conversion;

 

(f)          on
the date of acceleration of such Loans pursuant to Section 7.2 or Section 7.3;
and

 

(g)         with
respect to interest accruing at any Post-Default Rate and, to the extent
permitted by applicable law, interest on overdue amounts (including overdue
interest), upon demand.

 

SECTION 3.4.5      Rate
Determinations.  All determinations
by the Agent of the rate of interest applicable to any Loan shall be presumed
correct in the absence of manifest error.

 

SECTION 3.4.6      Limitation
on Types of Loans.  (a) Anything
herein to the contrary notwithstanding, if on or prior to the determination of
any LIBOR Rate for any Interest Period, the Agent determines in good faith,
which determination shall be conclusive, that quotations of interest rates for
the relevant deposits referred to in the definition of “LIBOR Rate” are not
being provided in the relevant amounts or for the relevant maturities for
purposes of determining rates of interest for LIBOR Loans as provided herein;
or (b) the Required Lenders determine in good faith, which determination
shall be conclusive, and notify the Agent that the relevant rates of interest
referred to in the definition of “LIBOR Rate” upon the basis of which the rate
of interest for LIBOR Loans for such Interest Period is to be determined are
not likely to cover adequately the cost to such Lenders of making or
maintaining LIBOR Loans for such Interest Period; then the Agent shall give the
Borrowers’ Representative and each Lender prompt notice thereof, and so long as
such condition remains in effect, the Lenders shall be under no obligation to make
additional LIBOR Loans, to continue LIBOR Loans or to convert Base Rate Loans
into LIBOR Loans, and the Borrowers shall, on the last day(s) of the then
current Interest Period(s) for the outstanding LIBOR Loans, either prepay such
Loans or such Loans shall be converted into Base Rate Loans in accordance with Section 3.4.8
hereof.

 

31

 

SECTION 3.4.7      Illegality.  Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Lender to honor its
obligation to make or maintain LIBOR Loans hereunder, then such Lender shall
promptly notify the Borrowers’ Representative thereof (with a copy to the
Agent) and such Lender’s obligation to make or continue, or to convert Base Rate
Loans into, LIBOR Loans shall be suspended until such time as such Lender may
again make and maintain LIBOR Loans (in which case the provisions of Section 3.4.8
hereof shall be applicable).

 

SECTION 3.4.8      Treatment
of Affected Loans.  If the obligation
of any Lender to make LIBOR Loans or continue, or to convert Base Rate Loans
into, LIBOR Loans shall be suspended pursuant to Sections 3.4.6 or 3.4.7
hereof, such Lender’s LIBOR Loans shall be automatically converted into Base
Rate Loans on the last day(s) of the then current Interest Period(s) for LIBOR
Loans (or, in the case of a conversion required by Sections 3.4.6
or 3.4.7 hereof, on such earlier date as such Lender may specify to the
Borrowers with a copy to the Agent) and, unless and until such Lender gives
notice as provided below that the circumstances specified in Sections 3.4.6
or 3.4.7 hereof which gave rise to such conversion no longer exist:

 

(a)         to
the extent that such Lender’s LIBOR Loans have been so converted, all payments
and prepayments of principal which would otherwise be applied to such Lender’s
LIBOR Loans shall be applied instead to its Base Rate Loans; and

 

(b)         all
Loans which would otherwise be made or continued by such Lender as LIBOR Loans
shall be made or continued instead as Base Rate Loans and all Base Rate Loans
of such Lender which would otherwise be converted into LIBOR Loans shall remain
as Base Rate Loans.

 

Promptly after the
circumstances specified in Sections 3.4.6 or 3.4.7 which
gave rise to the conversion of such Lender’s LIBOR Loans pursuant to this Section 3.4.8
no longer exist, such Lender shall give the Agent and the Borrowers notice
thereof, and the Borrowers may thereafter request conversion of such Loans to
LIBOR Loans, subject to the subsequent application of Section 3.4.6
or 3.4.7.

 

SECTION 3.4.9      Compensation.  The Borrowers shall pay to the Agent for the
account of each Lender, upon the request of such Lender through the Agent, such
amount or amounts as shall be sufficient (in the opinion of such Lender) to
compensate it for any loss, cost or expense which such Lender determines is
attributable to:

 

(a)         any
payment, prepayment or conversion of a LIBOR Loan made by Lender for any reason
(including, without limitation, the acceleration of the Loans pursuant to Article 7
hereof) on a date other than the last day of the Interest Period for such Loan;
or

 

(b)         any
failure by the Borrowers for any reason (including, without limitation, the
failure of any of the conditions precedent specified in Article 4
hereof to be satisfied) to borrow a LIBOR Loan from Lenders on the date for
such borrowing specified in the Borrowing Request given pursuant to Section 3.1
hereof.

 

32

 

SECTION 3.5         Taxes.

 

(a)         Any
and all payments by the Borrowers hereunder or under the Notes or any other
Loan Document shall be made, in accordance with this Section 3.5,
free and clear of and without deduction for any and all present or future
Taxes.  If any Borrowers shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder or under any Note to any Lender or the Agent, (i) the sum
payable shall be increased as may be necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section 3.5), such Lender or the Agent (as the case may
be) receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrowers shall make such deductions and (iii) the
Borrowers shall pay the full amount deducted to the relevant taxation authority
or other authority in accordance with applicable law;

 

(b)         In
addition, the Borrowers agree to pay any present or future stamp or documentary
taxes or intangibles taxes or any other excise or property taxes, transfer
taxes, charges or similar levies which arise from any payment made hereunder or
under the Notes or from the execution, delivery or registration of, or
otherwise with respect to this Agreement, the Notes, or any other Loan
Document;

 

(c)         The
Borrowers will indemnify each Lender and the Agent for the full amount of the
taxes, charges and levies described in subsections (a) and (b) of
this Section 3.5 (including, without limitation, any such taxes,
charges and levies imposed by any jurisdiction on amounts payable under this Section 3.5)
paid by such Lender or the Agent (as the case may be) and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto, whether or not such taxes, charges and levies were correctly or
legally asserted.  Payment under this subsection (c) shall
be made within ten (10) days from the date such Lender or the Agent (as
the case may be) makes written demand therefor to the Borrowers’ Representative
and provides a certificate to the Borrowers’ Representative in reasonable
detail of the amount required under Sections 3.5(a) and (b);

 

(d)         Within
ten (10) days after the date of any payment of Taxes by the Borrowers, the
Borrowers’ Representative will furnish to the Agent, at its address referred to
in Section 9.2, the original or a certified copy of any receipt
received by the Borrowers evidencing payment thereof.

 

SECTION 3.6         Payments,
Interest Rate Computations, Other Computations, Etc.  All payments by the Borrowers pursuant to
this Agreement, the Notes or any other Loan Document, in respect of principal
or interest on the Working Capital Facility Notes shall be made by the
Borrowers to the Agent for the account of the Lenders, pro rata according to
their respective Working Capital Facility Percentages.  The payment of the fees referred to in Section 2.4
(except Section 2.4(d)) shall be made by the Borrowers to the Agent for
the account of the Lenders pro rata according to their respective Working
Capital Facility Percentages.  All other
amounts payable to the Agent or any Lender under this Agreement or any other
Loan Document (except under Section 2.5) shall be paid to the Agent
for the account of the Person entitled thereto. 
All such payments required to be made to the Agent shall be made,
without setoff, deduction or counterclaim, not later than 1:00 p.m.,
Atlanta, Georgia time, on the date due, in immediately available funds, to an
account of the Agent specified from time to time in writing to the
Borrowers.  Funds received after that time
shall be deemed to have been received by the Agent on the next following
Business Day.  Subject to the provisions
of Section 3.3A, the Agent shall

 

33

 

promptly remit to
each Lender in the type of funds received such Lender’s share, if any, of such
payments received by the Agent for the account of such Lender.  All interest and fees shall be computed on
the basis of the actual number of days (including the first day but excluding
the last day) occurring during the period for which such interest or fee is
payable over a year comprised of 360 days. 
Whenever any payment to be made shall otherwise be due on a day which is
not a Business Day, such payment shall be made on the immediately preceding
Business Day.

 

SECTION 3.7         Proration
of Payments.  If any Lender shall
obtain any payment or other recovery (whether voluntary, involuntary, by
application of setoff or otherwise) on account of principal of or interest on
any Loan or other Obligations in excess of such Lender’s respective share of
payments then or therewith obtained thereon by all Lenders, such Lender which
has received in excess of its pro rata share shall purchase from the other
Lenders such participations in such Notes or other Obligations held by them as
shall be necessary to cause such purchaser to share the excess payment or other
recovery ratably with each of them; provided, however,
that if all or any portion of the excess payment or other recovery is
thereafter recovered from such purchasing holder, the purchase shall be
rescinded and the purchase price restored to the extent of such recovery, but
without interest.  The Borrowers agree
that any Lender so purchasing a participation from another Lender pursuant to
this Section 3.7 may, to the fullest extent permitted by law,
exercise all its rights of payment (including pursuant to Section 3.8)
with respect to such participation as fully as if such Lender were the direct
creditor of the Borrowers in the amount of such participation.  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 3.7 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 3.7
to share in the benefits of any recovery on such secured claim.

 

SECTION 3.8         Setoff.  In addition to and not in limitation of any
rights of any Lender under applicable law, each Lender shall, upon the
occurrence and during the continuance of any Event of Default, have the right
to appropriate and apply to the payment of the Obligations owing to it (whether
or not then due), and each Borrower hereby grants to each Lender, as security
for such Obligations, a continuing security interest in any and all balances,
credits, deposits, accounts or moneys of such Borrower then or thereafter
maintained with such Lender; provided, however, any such appropriation and
application shall be subject to the provisions of Section 3.7.

 

SECTION 3.9         Use
of Proceeds.

 

(a)         The
Borrowers shall use the proceeds of the Working Capital Facility Loans made on
the Closing Date (i) to refinance existing Indebtedness, (ii) to pay
fees and expenses associated with this Agreement and (iii) for general
corporate purposes (including a Borrower’s purchase of the Junction City
Property).  The Borrowers shall (i) use
the proceeds of the Working Capital Facility Loans made after the Closing Date
to provide for the ongoing working capital needs and general corporate purposes
of the Borrowers and (ii) use Letters of Credit pursuant to the terms of Section 3.10
for the purposes provided therein.

 

(b)         No
part of the proceeds of any Loans shall be used for any purpose which violates
Regulations T, U or X of the F.R.S. Board.

 

34

 

SECTION 3.10       Letters
of Credit.  Upon and subject to the
terms and conditions of this Section 3.10, in addition to the terms
and conditions set forth elsewhere in this Agreement, the Agent shall arrange
for the issuance of Letters of Credit for the account of one or more Borrowers,
in which each Lender severally shall participate as provided herein.

 

SECTION 3.10.1    Manner
of Issuance.  The Borrowers’
Representative shall deliver to the Agent prior to 1:00 p.m. Atlanta,
Georgia at least three (3) Business Days before the requested date of
issuance of a Letter of Credit, a Letter of Credit Request for the issuance of
such Letter of Credit setting forth (i) the beneficiary of the Letter of
Credit, (ii) the stated amount thereof, (iii) the requested issue
date, (iv) the requested expiration date, and (v) the purpose for
such Letter of Credit.  Each such Letter
of Credit Request shall be accompanied by the proposed issuer’s standard form
standby or commercial letter of credit application, duly completed and executed
by the Borrowers’ Representative (which application shall be deemed for
purposes of this Agreement to constitute part of such Letter of Credit
Request), together with all other documents, materials and evidences reasonably
required by the Agent prior to the issuance of such Letter of Credit.

 

SECTION 3.10.2    Terms
of Letters of Credit.  Each Letter of
Credit shall (a) have an expiration date not later than the earlier of (i) 365
days or, in the case of a leap year, 366 days, after the date of issuance
thereof (or such longer period to which the Agent shall consent provided that
the Borrowers agree to pay any additional issuance cost or facing fees arising
by virtue of the issuance of a Letter of Credit for a period longer than the
period specified in this clause (i)) and (ii) the third anniversary
of the Closing Date and (b) be issued solely to secure bid, tender,
surety, payment, performance, litigation or similar bonds required by the
Borrowers and their Subsidiaries in the ordinary course of business.

 

SECTION 3.10.3    Drawings
Under Letters of Credit.

 

(a)         Notice
to Borrowers’ Representative and Lenders. 
Promptly upon receipt by the Agent (from the issuing bank or otherwise)
of any draft upon, or other notice of drawing under, a Letter of Credit, the
Agent shall give the Borrowers’ Representative and each Lender written or
telephonic notice (promptly followed in writing) of the amount of such draft or
notice of drawing, of the Letter of Credit against which it is drawn and of the
date upon which the issuing bank proposes to honor such draft.

 

(b)         Repayment
by Borrowers.  The Borrowers shall
pay to the Agent for the account of the issuing bank the amount of any drawing under
any Letter of Credit on the date of such drawing if notice is received by 1:00 p.m.
on the date of drawing and otherwise on the next Business Day.  The amount of any drawing under a Letter of
Credit that is not paid on the date provided herein shall bear interest,
payable on demand, from the due date thereof until paid, at the Post-Default
Rate.

 

(c)         Repayment
of Letters of Credit with Loans.  On
the date of any drawing under a Letter of Credit, the amount of such drawing
automatically shall be paid with, and the Borrowers hereby authorize the
Lenders to make, a Borrowing of Working Capital Facility Loans in the amount of
such drawing, regardless of whether or not all conditions set forth in Section 4.2
have been satisfied.

 

35

 

(d)         Borrowers’
Obligation Absolute.  The obligation
of the Borrowers to repay any Loans advanced pursuant to the foregoing
clause (c) and any other amounts paid by the Agent or any Lender to
any issuing bank with respect to any Letter of Credit shall be irrevocable,
shall not be subject to any qualification or exception whatsoever and shall be
binding in accordance with the terms and conditions of this Agreement under all
circumstances, including the following circumstances:  (i) any lack of validity or
enforceability of this Agreement or any of the other Loan Documents; (ii) the
existence of any claim, set-off, defense or right which any Borrower or the
account party may have at any time against the issuer of any Letter of Credit,
a beneficiary of any Letter of Credit or any transferee of any Letter of Credit
(or any Person for whom any such transferee may be acting), the Lender or any
other Person, whether in connection with this Agreement, or any Letter of
Credit, the transactions contemplated herein or any unrelated transactions;
(iii)any draft, certificate or any other document presented under any Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any respect
or any statement therein being untrue or inaccurate in any respect; (iv) the
surrender or impairment of any security for the performance or observance of
any of the terms of this Agreement or the other Loan Documents; (v) any
failure of the Agent or any Letter of Credit Issuer to provide notice to any
Borrower of any drawing under any Letter of Credit; (vi) the occurrence or
continuance of any Default; or (vii) any other reason.

 

(e)         Lenders’
Participation Obligations.  In the
event that an issuing bank makes any payment under any Letter of Credit and
Borrowers shall not have reimbursed such amount in full to the issuing bank
pursuant to Section 3.10.3(b) or (c), the issuing bank
shall promptly notify the Agent, which shall promptly notify each Lender of
such failure, and each Lender shall promptly and unconditionally pay to the
Agent for the account of the issuing bank the amount of such Lender’s Working
Capital Facility Percentage of such unreimbursed payment in same day
funds.  If the Agent so notifies, prior
to 11:00 A.M. (Atlanta, Georgia time) on any Business Day, any Lender
required to fund a payment under a Letter of Credit, such Lender shall make
available to the Agent for the account of the issuing bank in Dollars such
Lenders Working Capital Facility Percentage of the amount of such payment on
such Business Day in same day funds.  If
and to the extent such Lender shall not have so made its Working Capital
Facility Percentage of the amount of such payment available to the Agent for
the account of the issuing bank, such Lender agrees to pay to the Agent for the
account of the issuing bank, forthwith on demand, such amount, together with
interest thereon, for each day from such date until the date such amount is
paid to the Agent for the account of the issuing bank at the overnight Federal
Funds Rate.  The failure of any Lender to
make available to the Agent for the account of the issuing bank its Working
Capital Facility Percentage of any payment under any Letter of Credit shall not
relieve any other Lenders of its obligation hereunder to make available to the
Agent for the account of such issuing bank its Working Capital Facility
Percentage of any Letter of Credit on the date required, as specified above,
but no Lender shall be responsible for the failure of any other Lender to make
available to the Agent for the account of such issuing bank such other Lenders’
Working Capital Facility Percentage of any such payment.

 

(f)          Reimbursements.  Whenever the issuing bank receives a payment
of a reimbursement obligation as to which the Agent has received for the
account of the issuing bank any payments from the Lenders pursuant to Section 3.10.3(e),
the issuing bank shall pay to the Agent and the Agent shall promptly pay to
each Lender which has paid its Working Capital Facility Percentage thereof, in
Dollars and in same day funds, an amount equal to such Lender’s

 

36

 

share (based on
the proportionate aggregate amount funded by such Lender to the aggregate
amount funded by all Lenders) of the principal amount of such reimbursement
obligation and interest thereon accruing after the purchase of the respective
participations.

 

(g)         Lenders’
Obligation Absolute.  The obligation
of the Lenders to pay the Agent for any amount paid by it to any issuing bank
in respect of a Letter of Credit shall be irrevocable, shall not be subject to
any qualification or exception whatsoever and shall be binding in accordance
with the terms and conditions of this Agreement under all circumstances,
including the following circumstances:  (i) any
lack of validity or enforceability of this Agreement or any of the other Loan
Documents; (ii) the existence of any claim, set-off, defense or right
which any Lender or the account party may have at any time against a
beneficiary of any Letter of Credit or any transferee of any Letter of Credit
(or any Person for whom any such transferee may be acting), the Lender or any
other Person, whether in connection with this Agreement, or any Letter of
Credit, the transactions contemplated herein or any unrelated transactions;
(iii)any draft, certificate or any other document presented under any Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any respect
or any statement therein being untrue or inaccurate in any respect; (iv) the
surrender or impairment of any security for the performance or observance of
any of the terms of this Agreement or the other Loan Documents; (v) any
failure of the Agent to provide notice to the Lender of any drawing under any
Letter of Credit; (vi) the occurrence or continuance of any Default; or (vii) any
other reason.

 

SECTION 3.10.4    Letter
of Credit Fees.  With respect to each
Letter of Credit, the Borrowers shall pay to the Agent, for the benefit of the
Lenders in accordance with their respective Working Capital Facility
Percentages, a per annum fee equal to the Applicable Margin in effect for LIBOR
Rate Loans times the undrawn face amount of such Letter of Credit.  Such fee shall be calculated on a daily basis
and shall be payable by the Borrowers monthly in arrears on each Monthly
Payment Date and on the Maturity Date. 
In addition Borrowers shall pay (i) the Agent, for the ratable
benefit of Lenders, a fronting fee equal to .125% of the face amount of each
Letter of Credit,  and (ii) Agent’s
and/or the issuing bank’s customary fees with respect to issuance, amendment,
renewal or extension of any Letter of Credit or processing of drawings
thereunder.  From
and after the occurrence of an Event of Default and during the continuance
thereof, the fee payable pursuant to the first sentence hereof shall increase
to a per annum rate equal to the Applicable Margin in effect for LIBOR Rate
Loans plus two percent (2.00%) times the undrawn face amount of
each Letter of Credit, payable on demand. 
All fees payable under this Section 3.10.4 shall be fully
earned and nonrefundable on the date such fees are due.

 

SECTION 3.10.5    Limitation
of Liability With Respect to Letters of Credit.  As among the Borrowers, the Agent, the
issuing bank and Lenders,  the Borrowers
assume all risks of the acts and omissions of, or misuse of any Letter of
Credit by, the beneficiaries of such Letter of Credit.  Without limiting the foregoing, none of the
Agent, any Lender or the issuing bank shall not be responsible for:  (a) the form, validity, sufficiency,
accuracy, genuineness or legal effect of any draft, demand, application or
other documents submitted by any party in connection with any Letter of Credit
even if such document should in fact prove to be in any and all respects invalid,
insufficient, inaccurate, fraudulent or forged; (b) the validity,
genuineness 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; (c) failure of the beneficiary of a
Letter of Credit to

 

37

 

comply fully with
the conditions required in order to draw upon such 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 interpretations of technical terms; (f) any
loss or delay in the transmission or otherwise of any document required to make
a drawing under any Letter of Credit or with respect to the proceeds thereof; (g) the
misapplication by the beneficiary of a Letter of Credit of the proceeds of any
drawing under such Letter of Credit; or (h) any consequences arising from
causes beyond the control of the Agent, the issuing bank or any Lender,
including any act or omission, rightfully or wrongfully, of any present or
future Governmental Authority.  None of
the above circumstances shall affect, impair or prevent the vesting of any of
the Agent’s or any Lender’s rights or powers under this Agreement.

 

SECTION 3.11       Defaulting
Lenders.

 

(a)         Notwithstanding
anything to the contrary contained herein, if any Lender (x) has refused (which
refusal constitutes a breach by such Lender of its obligations under this
Agreement) to make available its portion of any Working Capital Facility Loans
or, such Lender’s participation in any Letter of Credit or (y) notifies either
Agent or Borrowers’ Representative that it does not intend to make available
its portion of any Working Capital Facility Loan or its participation in any
Letter of Credit (if, in each case, the actual refusal to do so then
constitutes a breach by such Lender of its obligations under this Agreement)
(each, a “Lender Default”), all rights and obligations hereunder and
under the Loan Documents of such Lender (a “Defaulting Lender”) as to
which a Lender Default is in effect and of the other parties hereto shall be
modified to the extent of the express provisions of this Section while
such Lender Default remains in effect.

 

(b)         In
such event, Working Capital Facility Loans shall be incurred pro rata from
Lenders (the “Non-Defaulting Lenders”) having Commitments which are not
Defaulting Lenders based on their respective Working Capital Facility
Percentages in regard thereto, and no Working Capital Facility Percentage of
any Lender or any pro rata share of any Working Capital Facility Loans required
to be advanced by any Lender shall be increased as a result of such Lender
Default.  Amounts received in respect of
principal of any type of Working Capital Facility Loans shall be applied to
reduce the applicable Working Capital Facility Loans of each Lender pro rata
based on the aggregate of the outstanding Working Capital Facility Loans of
that type of all Lenders at the time of such application; provided,
however, that, such amount shall not be applied to any Working Capital Facility
Loans of a Defaulting Lender at any time when, and to the extent that, the
aggregate amount of Working Capital Facility Loans of any Non-Defaulting Lender
exceeds such Non-Defaulting Lender’s Working Capital Facility Percentage of all
Working Capital Facility Loans then outstanding.

 

(c)         A
Defaulting Lender shall not be entitled to give instructions to Agent or to
approve, disapprove, consent to or vote on any matters relating to this
Agreement and the other Loan Documents. 
All amendments, waivers and other modifications of this Agreement and
the other Loan Documents may be made without regard to a Defaulting Lender and,
for purposes of the definition of “Required Lenders”, a Defaulting
Lender shall be deemed not to be a Lender and not to have Loans outstanding.

 

38

 

ARTICLE 4

CONDITIONS TO LOANS

 

SECTION 4.1         Initial
Loans and Letters of Credit.  The
obligations of the Lenders to make the initial Loans and to cause the issuance
of the initial Letters of Credit on the Closing Date shall be subject to the
prior or concurrent satisfaction of each of the conditions precedent set forth
in this Section 4.1 each in form and substance satisfactory to the
Agent in its sole discretion, except as the Required Lenders shall otherwise
consent.

 

SECTION 4.1.1      Loan
Documents. Each Loan Party shall have delivered each of the Loan Documents
to which it is a party, each duly executed by an authorized officer of such
Loan Party.

 

SECTION 4.1.2      Resolutions,
Etc.  The Agent shall have received:

 

(a)         a
certificate, dated the date hereof, of the secretary or an assistant secretary
of each Loan Party as to: (i) resolutions of its board of directors (or
comparable body), then in full force and effect authorizing the execution,
delivery and performance of the Loan Documents to which such Loan Party is a
party and the related transactions contemplated thereby, and (ii) the
incumbency and signatures of those of its officers authorized to act with
respect to the Loan Documents to which it is party, upon which certificate the
Agent and the Lenders may conclusively rely until it shall have received
further certificates of the secretary or an assistant secretary of such Loan
Party canceling or amending such prior certificates;

 

(b)         copies
of the Organic Documents of each Loan Party certified by, in the case of the
charters, the appropriate Governmental Authority of the State of such Loan
Party’s incorporation (or organization) and, in the case of its other Organic
Documents, such Loan Party’s secretary or assistant secretary, which documents
shall be satisfactory to the Agent;

 

(c)         a
so-called “good standing” certificate with respect to each Loan Party from the
appropriate Governmental Authority of the State of its incorporation;

 

(d)         evidence
of qualification of each Loan Party to do business in each other jurisdiction
in which such Loan Party is required to qualify;

 

(e)         such
other documents (certified if requested) as Agent may reasonably request, with
respect to this Agreement, the Notes, any other Loan Document, the transactions
contemplated hereby and thereby, or any Organic Document, Contractual
Obligation of any Borrower or any of its Subsidiaries, or Approval.

 

SECTION 4.1.3      Notes.  The Agent shall have received, for the
account of each Lender, such Lender’s Note, in each case duly executed and delivered
pursuant to subsections (a) and (b) of Section 3.2.

 

SECTION 4.1.4      No
Contest, Etc.  On the Closing Date,
no litigation, arbitration, governmental investigation, injunction, proceeding
or inquiry shall be pending or, to the knowledge of any Borrower, threatened
which:  (a) seeks to enjoin or
otherwise prevent the consummation of, or to recover any damages or obtain
relief as a result of, the transactions

 

39

 

contemplated by or
in connection with this Agreement or any other Loan Document; or (b) would,
in the opinion of the Required Lenders, be materially adverse to any of the
parties hereto with respect to the transactions contemplated hereby or give
rise to any liability on the part of the Agent or any Lender in connection with
this Agreement or the other Loan Documents or the transactions contemplated
hereby or thereby.

 

SECTION 4.1.5      Certificate
as to Completed Conditions, Warranties, No Default, Etc.  The Agent shall have received a certificate,
dated the Closing Date, with counterparts for each Lender, of the Authorized
Officer of the Borrowers’ Representative, to the effect that:

 

(a)         all
conditions precedent set forth in this Section 4.1 have been
satisfied;

 

(b)         all
representations and warranties set forth in Article 5 are true and
correct in all material respects;

 

(c)         all
representations and warranties set forth in the other Loan Documents are true
and correct in all material respects; and

 

(d)         no
Default or Event of Default has occurred and is continuing.

 

SECTION 4.1.6      Compliance
with Requirements of Law.  The Agent
shall have received a certificate, dated the Closing Date, with counterparts
for each Lender, of an Authorized Officer of the Borrowers’ Representative, to
the effect that the Borrowers are in compliance in all material respects with
all Requirements of Law except as specified in Section 6.1.11 and have
obtained and maintain in full force and effect (a) all licenses, permits
and approvals issued by Governmental Authorities necessary to carry on their
respective businesses, (b) all permits and consents necessary to
consummate this Agreement and necessary for Agent to have a first priority
perfected security interest in any such permits or licenses, and (c) all
Approvals.

 

SECTION 4.1.7      Opinions
of Counsel.  The Agent shall have
received an opinion letter, dated the Closing Date and addressed to the Agent
and the Lenders from legal counsel to the Borrowers, in form and substance
satisfactory to the Agent.

 

SECTION 4.1.8      Closing
Fees, Expenses, Etc.  The Agent shall
have received, for its own account, the fees payable on the Closing Date
pursuant to this Agreement and all costs and expenses of the Agent which are
payable upon the initial Borrowing pursuant to Section 9.3.

 

SECTION 4.1.9      Perfection.  The Agent shall have received evidence of all
filings of the Financing Statements with respect to the Security Agreement and
other Security Documents; searches or other evidence as to the absence of any
Liens; and evidence that all other actions with respect to the Liens created by
the Security Documents have been taken as are necessary or appropriate to
perfect such Liens;

 

SECTION 4.1.10    Employment
Agreements; Compensation.  The Agent
shall have received copies of all senior management employment agreements to
which any Borrower is a party.

 

40

 

SECTION 4.1.11    Pension
and Welfare Liabilities.  If
requested by the Agent, the Agent shall have received, with counterparts for
each of the Lenders, (i) the most recent actuarial valuation report, if
any, for each Single Employer Plan, if any, and a copy of Schedule B to
the Annual Report on Form 5500 of the Internal Revenue Service, if any,
for each Single Employer Plan, if any, most recently filed with the Internal
Revenue Service, and (ii) a report prepared by the Borrowers in form and
substance satisfactory to the Lenders detailing any liabilities of the Borrower
and each Subsidiary and Commonly Controlled Entity for post-retirement benefits
under Plans which are welfare benefit plans (as defined in Section 3(1) of
ERISA).

 

SECTION 4.1.12    Insurance.  The Agent shall have received evidence
satisfactory to it that the insurance maintained by the Borrowers and their
Subsidiaries is issued by an insurance company with a Best’s rating of “A” or
better (“B+” or better, in the case of Lumbermen’s Underwriting Alliance) and a
financial size category of not less than XII, is in amounts under policies
naming the Agent, for its benefit and for the benefit of the Lenders, as loss
payee (in the case of casualty insurance policies) and as additional insured
(in the case of liability policies), and otherwise complies with the
requirements of this Agreement and the Security Documents.

 

SECTION 4.1.13    Financial
Information, Etc.  The Agent shall
have received, with counterparts for each Lender, the historical financial
statements referred to in Section 5.4, the Projections and a
solvency certificate of each Borrower and its Subsidiaries, and the Agent shall
be satisfied in all respects with such materials.  Additionally, the Agent shall be satisfied in
all respects with materials contained on Schedules.

 

SECTION 4.1.14    Review
of Borrowers’ Operations.  The Agent
or its representatives shall have completed their review of the Borrowers’ and
their Subsidiaries management information systems, accounting, financial
reporting and cash management systems as well as the legal structure of each
Loan Party and the nature of each Loan Party’s asset composition and contingent
liabilities.

 

SECTION 4.1.15    [Intentionally
not used].

 

SECTION 4.1.16    Material
Contracts.  The Agent shall have
received a certificate from an Authorized Officer of the Borrowers’
Representative to the effect that attached thereto are true and correct copies
of each Material Contract.

 

SECTION 4.1.17    Letter
to Accountants.  The Agent shall have
received satisfactory evidence that the Borrowers’ Representative has delivered
a letter to its independent public accountants authorizing such public
accountants to discuss the Borrowers’ financial matters with the Agent and each
Lender or any of their representatives whether or not a representative of any
Borrower is present.

 

SECTION 4.1.18    Affiliate
Agreements.  The Agent shall have
received copies of all management, shared expense or similar agreements between
each Borrower and any of its Affiliates.

 

SECTION 4.1.19    Borrowing
Base Certificate; Minimum Working Capital Facility Availability. The Agent
shall have received a Borrowing Base Certificate dated as of the Closing Date
from an Authorized Officer of the Borrowers’ Representative, and, after giving
effect to any Loans to be made or Letters of Credit to be issued on the Closing
Date, Working Capital Facility Availability shall be at least $5,000,000.

 

41

 

SECTION 4.1.20    Real
Estate.  The Borrowers shall have
delivered to Agent a negative pledge agreement in form and substance
satisfactory to the Agent relative to all real estate owned by the Borrowers.

 

SECTION 4.1.21    [Intentionally
not used].

 

SECTION 4.1.22    Other
Documents, Certificates, Etc.  The
Agent shall have received such other documents, certificates, opinions of
counsel or other materials as it reasonably requests from any Loan Party.

 

SECTION 4.2         Incremental
Increases; All Loans and Letters of Credit. 
Without duplication of any conditions precedent required to be satisfied
pursuant to Section 4.1, the obligations of the Lenders to make
available to Borrowers any Incremental Increase and to make any Loans and to cause
the issuance of Letters of Credit (including the initial Loans and Letter of
Credit), shall be subject to the satisfaction of each of the additional
conditions precedent set forth in this Section 4.2.

 

SECTION 4.2.1      Compliance
with Warranties, No Default, Etc. 
The representations and warranties set forth in Article 5
and all other Loan Documents shall have been true and correct in all material
respects as of the date initially made, and both before and after giving effect
to the effectiveness of any such Incremental Increase or the making of any such
Loan or the issuance of such Letter of Credit (except to the extent expressly
stated to be as of an earlier date), and

 

(a)         after
giving effect to any amendment to the Schedules accepted by Required Lenders
pursuant to Section 4.2.2, such representations and warranties
shall be true and correct in all material respects with the same effect as if
then made (except to the extent expressly stated to be as of an earlier date);

 

(b)         after
giving effect to any amendment to the Schedules accepted by Required Lenders
pursuant to Section 4.2.2, all representations and warranties set
forth in the other Loan Documents shall be true and correct in all material
respects with the same effect as if then made (except to the extent expressly
stated to be as of an earlier date);

 

(c)         no
material adverse development shall have occurred in any litigation, arbitration
or governmental investigation or proceeding which renders such litigation,
arbitration or governmental investigation or proceeding likely to succeed in
the opinion of the Required Lenders and, if successful, could result in a
Material Adverse Change;

 

(d)         no
Default or Event of Default shall have occurred and be continuing or would
result therefrom; and

 

(e)         the
aggregate of all Working Capital Facility Loans plus the aggregate outstanding
amount of all Letter of Credit Obligations does not exceed the Borrowing Base.

 

42

 

SECTION 4.2.2      Borrowing
Request, Letter of Credit Request, Etc. 
The Agent shall have received a duly completed Borrowing Request in the
case of a Borrowing,  a Letter of Credit
Request in the case of the issuance of a Letter of Credit or a request for
Incremental Increase pursuant to Section 2.3 in the case of an
Incremental Increase.  Each delivery of
any such Borrowing Request or Letter of Credit Request or request for
Incremental Increase and the acceptance by the Borrowers of the proceeds of the
Loan or the benefits of a Letter of Credit or the Incremental Increase
requested thereby shall constitute a representation and warranty by the
Borrowers that on the date of such request, and before and after giving effect
to the making of such Loans and the application of any proceeds of such Loans
or the issuance of such Letter of Credit or such Incremental Increase, as the
case may be, all statements set forth in Section 4.2.1 are true and
correct.  In the event that, in
connection with the delivery of any such Borrowing Request or Letter of Credit
Request or request for Incremental Increase, the Borrowers are required to
amend any item on the Schedules attached hereto in order that the statement set
forth in subsection (a) or (b) of Section 4.2.1
shall be true and correct, the Borrowers’ Representative shall deliver to the
Agent at least five (5) Business Days prior to the date of the Borrowing,
Letter of Credit or Incremental Increase requested or to be requested, a
request that such Schedule be amended, and the Agent shall promptly
forward such request to the Lenders.  To
the extent that the Required Lenders agree to such requested amendment or
otherwise agree to make any Loans or issue any Letters of Credit after receipt
of such request, the representations and warranties proposed to be amended by
such requested amendment to the Schedules will be deemed amended for purposes
of this Agreement.

 

SECTION 4.2.3      Satisfactory
Legal Form.  All documents executed
or submitted by or on behalf of any of the Borrowers or any other Loan Party
shall be reasonably satisfactory in form and substance to the Agent and its
counsel; the Required Lenders shall have received all information, and such
counterpart originals or such certified or other copies of such Instruments, as
the Required Lenders may reasonably request; and all legal matters incident to
the transactions contemplated by this Agreement shall be reasonably
satisfactory to the Required Lenders.

 

SECTION 4.2.4      Margin
Regulations.  The making of such Loan
or the issuance of such Letter of Credit and the use of the proceeds thereof
shall not violate Regulations T, U and X of the F.R.S. Board.

 

SECTION 4.2.5      Adverse
Change.  Since March 31, 2005,
no Condition Precedent Material Adverse Change shall have occurred.

 

SECTION 4.2.6      Change
in Law.  On the date of such Borrowing,
no change shall have occurred in applicable law, or in applicable regulations
thereunder or in interpretations thereof by any court or Governmental Authority
which, in the reasonable opinion of any Lender, would make it illegal for such
Lender to make the Loan required to be made on such date.

 

ARTICLE 5

REPRESENTATIONS AND WARRANTIES, ETC.

 

In order to induce the
Lenders and the Agent to enter into this Agreement, to engage in the
transactions contemplated herein and in the other Loan Documents and to make
the Loans and cause the issuance of Letters of Credit, each Borrower represents
and warrants to the Agent

 

43

 

and each Lender as set forth in this Article 5.  Each and all of the representations and warranties
set forth in this Article 5 shall be true and correct, assuming and
after giving effect to the consummation of the transactions contemplated by
this Agreement and the other Loan Documents.

 

SECTION 5.1         Organization,
Power, Authority, Etc.  Each of the
Loan Parties (i) is duly organized and existing and in good standing under
the laws of the jurisdiction of its organization or incorporation, (ii) is
duly qualified to do business and is in good standing as a foreign corporation
in each jurisdiction where the failure to so qualify could reasonably be
expected to result in a Material Adverse Change, and (iii) has full power
and authority, and, holds all governmental licenses, permits, registrations and
other approvals required under all Requirements of Law, to own and hold under
lease its property and to conduct its business as conducted prior to the
Closing Date, including all Approvals. 
Each Loan Party has full power and authority to enter into and perform
its Obligations under this Agreement, the Notes and each other Loan Document
executed or to be executed by it and to obtain Loans hereunder.

 

SECTION 5.2         Due
Authorization.  The execution and
delivery by each Loan Party of this Agreement, the Notes and each other Loan
Document executed or to be executed by it, and the incurrence and performance
by each Loan Party of the Obligations have been duly authorized by all
necessary corporate action, do not require any Approval (except those Approvals
already obtained), do not and will not conflict with, result in any violation
of, or constitute any default under, any provision of any Organic Document or
Contractual Obligation of any Loan Party or any law or governmental regulation
or court decree or order, and will not result in or require the creation or imposition
of any Lien on any Loan Party’s properties pursuant to the provisions of any
Contractual Obligation of any Loan Party other than the Loan Documents.

 

SECTION 5.3         Validity,
Etc.  This Agreement, the Notes and
each other Loan Document executed by such Loan Party constitute the legal,
valid and binding obligations of such Loan Party, enforceable in accordance
with their respective terms subject to the effect of any applicable bankruptcy,
insolvency, moratorium or similar laws affecting creditors’ rights generally,
and the effect of general principles of equity (regardless of whether
considered in a proceeding in equity or at law).

 

SECTION 5.4         Financial
Information; Solvency.

 

(a)         All
balance sheets, all statements of operations, stockholders’ equity and cash
flows, and all other financial information of the Loan Parties which have been
or shall hereafter be furnished by or on behalf of the Borrowers to each Lender
and the Agent for the purposes of or in connection with this Agreement or any
transaction contemplated hereby, have been prepared in accordance with GAAP
consistently applied (except (i) as described in Schedule 5.4
and (ii) to the extent items in the Projections are based upon estimates)
throughout the periods involved and present fairly in all material respects the
matters reflected therein subject, in the case of unaudited statements, to
changes resulting from normal year-end audit adjustments and except as to the
absence of footnotes.  Other than the repurchase
obligations described in Section 6.2.2(h), neither any Borrower nor
its Subsidiaries, has material contingent liabilities or material liabilities
for taxes, long-term leases or unusual forward or long-term commitments.

 

44

 

(b)         Giving
effect to the transactions contemplated by this Agreement and the other Loan
Documents (including, without limitation, the making of Loans, the issuance of
Letters of Credit and the consummation of the Acquisition), each of the Loan
Parties is Solvent.

 

(c)         [Intentionally
not used].

 

(d)         None
of the transactions with respect to the Loan Documents are being entered into
with the intent to delay, hinder or defraud any of the creditors of any
Borrower or any of the Borrowers’ Subsidiaries.

 

SECTION 5.5         Material
Adverse Change.  Since March 31,
2005, there has been no Condition Precedent Material Adverse Change.

 

SECTION 5.6         Absence
of Default.  Neither any Borrower nor
its Subsidiaries is in default in the payment of (or in the performance of any
obligation applicable to) any Indebtedness, or is in default under any
regulation of any Governmental Agency or court decree or order, or, except as
described in Schedule 5.6, is in default under any Requirements of
Law.

 

SECTION 5.7         Litigation,
Legislation, Etc.  Except as set
forth on Schedule 5.7, there is no pending or, to the knowledge of
the Borrowers, threatened litigation, arbitration or governmental
investigation, proceeding or inquiry which, if adversely determined, could
reasonably be expected to result in a Material Adverse Change.  To the knowledge of the Borrowers, there is
no legislation, governmental regulation or judicial decision that could
reasonably be expected to result in a Material Adverse Change.

 

SECTION 5.8         Regulations
T, U and X.  No Loan Party is engaged
principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying Margin Stock (as
defined in F.R.S. Board Regulation U), and no assets of any Loan Party
consist of Margin Stock.  The Loans
hereunder will not be used for a purpose which violates, or would be
inconsistent with, F.R.S. Board Regulation T, U or X.

 

SECTION 5.9         Government
Regulation.  No Loan Party is an “investment
company” within the meaning of the Investment Holding Company Act of 1940, as
amended, or a “holding company,” or a “subsidiary company” of a “holding
company,” or an “affiliate” of a “holding company” or of a “subsidiary company”
of a “holding company,” within the meaning of the Public Utility Holding
Company Act of 1935, as amended, or subject to regulation under the Federal
Power Act, the Interstate Commerce Act or any other federal or state law
limiting its ability to incur Indebtedness or to execute, deliver or perform
the Loan Documents to which it is party.

 

SECTION 5.10       Taxes.  Neither any Borrower nor its Subsidiaries has
failed to file any tax returns and reports required by law to have been filed
by it and has paid all taxes and Charges thereby shown to be owing, except any
such taxes or Charges which are being diligently contested in good faith by
appropriate proceedings and for which adequate reserves in accordance with GAAP
shall have been set aside on its books.

 

45

 

SECTION 5.11       Pension
and Welfare Plans.

 

(a)         No
Loan Party has assumed any liability (other than the liability to pay routine
plan expenses or to make required contributions or premiums) under any employee
benefit plan, fund, program, arrangement, agreement or commitment maintained by
or on behalf of or contributed to by or on behalf of any entity or trade or
business which, together with any of such corporations, is treated as a single
employer under Sections 414(b), (c), (m) or (o) of the IRC.  Except as described in Schedule 5.11,  no Loan Party or Commonly Controlled Entity
will be subject (directly or indirectly) to any liability (other than the
liability to pay routine plan expenses or to make required contributions or
premiums), tax or penalty whatsoever to any person whomsoever with respect to
any employee benefit plan, fund, program, arrangement, agreement or commitment,
described in the immediately preceding sentence.

 

(b)         No
Reportable Event which could result in a Material Adverse Change has occurred
during the six-year period prior to the date as of which this representation is
made or deemed made with respect to any Single Employer Plan.  Each Loan Party, each Commonly Controlled
Entity, Subsidiary, each Plan, and each trust maintained pursuant to any such
Plan have complied in all material respects with the applicable provisions of
ERISA, the IRC, and any other applicable laws. 
The present value of all “benefit liabilities” (within the meaning of Section 4001(a)(16)
of ERISA) under each Single Employer Plan (based on those assumptions that
would be used in a termination of each such Plan, did not, as of the last
annual valuation date for which an actuarial valuation report has been done),
did not, as of such date, exceed the value of the assets of such Plan as of
such date.  No Loan Party nor any
Commonly Controlled Entity has incurred any liability to the PBGC or to any
other Person under Section 4062, 4063 or Section 4064 of ERISA on
account of the termination of, or its withdrawal from, a Single Employer Plan,
and no Lien has been imposed on the assets of any Loan Party or any Commonly
Controlled Entity under Section 4068 of ERISA.  There does not exist any event or condition
which would permit the institution of proceedings to terminate any Single
Employer Plan pursuant to Section 4042 of ERISA.  No “accumulated funding deficiency” (as
defined in Section 302 of ERISA or Section 412 of IRC), whether or
not waived, exists with respect to any Pension Plan.  The Loan Parties and each Commonly Controlled
Entity have timely made in full each quarterly installment payment to any
Pension Plan required under Section 302(e) of ERISA or Section 412(m)
of the IRC and have also made full and timely payment of any other costs or
expenses related to such a Plan.  The
Loan Parties and all Commonly Controlled Entities have made full and timely
payment of all contributions to Multiemployer Plans required under ERISA, the
IRC or applicable collective bargaining agreements.  No Loan Party nor any Commonly Controlled
Entity has had a complete or partial withdrawal from any Multiemployer Pension
Plan and the liability to which such Loan Party or Commonly Controlled Entity
would become subject under ERISA if such Loan Party or any such Commonly
Controlled Entity were to withdraw completely from all Multiemployer Pension
Plans as of the valuation date most closely preceding the date hereof is not in
excess of $250,000.  No such
Multiemployer Pension Plan has been terminated or is in Reorganization or
Insolvent, nor, is any such Multiemployer Pension Plan likely to be terminated
or to become in Reorganization or Insolvent. 
No “accumulated funding deficiency” (as defined in Section 302 of
ERISA or Section 412 of the IRC), whether or not waived, exists with
respect to any Multiemployer Plan.  The
present value (determined using assumptions which are reasonable in respect of
the benefits provided and the employees participating) of the aggregate
liability of the Loan Parties and any Commonly Controlled Entities for
post-retirement benefits to be provided to their current and former employees
under all Plans which are welfare benefit plans (as defined in Section 3(1) of

 

46

 

ERISA) is not in excess of Two Hundred Fifty Thousand Dollars
($250,000).  No written notice of liability
has been received with respect to the Loan Parties, or any Plan for any “prohibited
transaction” (within the meaning of Section 4975 of the IRC or Section 406
of ERISA), nor has any such prohibited transaction resulting in liability to
the Loan Party occurred.  No Loan Party
or Commonly Controlled Entity will, as a result of consummating the
transactions contemplated by this Agreement (pursuant to the provisions of the
Agreement, by operation of law or otherwise) (i) have incurred or become
liable for any tax assessed by the Internal Revenue Service for any alleged
violations of Section 4975 of the IRC or any civil penalty imposed by the
Department of Labor for any alleged violations of Section 406 of ERISA, (ii) have
caused or permitted to occur any “prohibited transaction” within the meaning of
such Section 4975 of the IRC or Section 406 of ERISA with respect to
any Plan for which no exemption is available or (iii) have incurred any
liability to the PBGC (other than ordinary and usual PBGC premium liability) or
any liability for complete or partial withdrawal to any Multiemployer Pension
Plan.  No Loan Party is subject (directly
or indirectly) to, and no facts exist which could subject any Loan Party
(directly or indirectly) to, any other liability, penalty, tax or lien
whatsoever, which could result in a Material Adverse Change and which is
directly or indirectly related to any Plan, including, but not limited to,
liability for any damages or penalties arising under Title I or Title IV of
ERISA, liability for any tax or penalty resulting from a loss of deduction
under Section 404 or 419 of the IRC, any tax or penalty under chapter 43
of the IRC, or any taxes or penalties under any other applicable law, but
excluding any liability to make contributions or pay premiums to or under an
ongoing Plan before the last due date on which such contributions or premiums
could be paid or made without penalty or to pay benefits when due in accordance
with Plan terms.

 

SECTION 5.12       Labor
Controversies.  There are no material
labor controversies pending or, to the best knowledge of the Borrowers,
threatened, relating to any Loan Party. 
There is (i) no unfair labor practice complaint pending against (or
assumed by) any Loan Party or, to the best knowledge of the Borrowers,
threatened against any of them, before the National Labor Relations Board, and
no grievance or arbitration proceeding arising out of or under any collective
bargaining agreement is so pending against any Loan Party or, to the best
knowledge of the Borrowers, threatened against any of them, (ii) no
strike, labor dispute, slowdown or stoppage is pending against any Loan
Party or, to the best knowledge of the Borrowers, threatened against any Loan
Party, and (iii) no union representation question existing with respect to
the employees of any Loan Party.  Each
Loan Party is in compliance in all material respects with all collective
bargaining agreements to which it is subject.

 

SECTION 5.13       Ownership
of Properties; Collateral.

 

(a)         Each
of the Loan Parties shall own good title to, or in the case of leased property
or assets, valid leasehold interests in, all of its material personal
properties and assets of any nature whatsoever, free and clear of all Liens
except as expressly permitted pursuant to Section 6.2.3.  Any Liens attaching to property or assets of
any Loan Party as of the Closing Date and expressly permitted under Section 6.2.3
are identified in Schedule 5.13 (“Existing Liens”).

 

(b)         Except
to the extent otherwise consented to in writing by the Required Lenders, the
provisions of the Security Documents are effective to create in favor of the
Agent for the benefit of the Agent and the Lenders a legal, valid and
enforceable security interest in all

 

47

 

right, title and interest of the Loan Parties in the Collateral
described therein, and, upon the filing of the Financing Statements, the
Security Documents will create a fully perfected first priority security
interest in all right, title and interest of the Loan Parties in all of the
Collateral subject to no other Liens other than Liens permitted by Section 6.2.3.

 

SECTION 5.14       Intellectual
Property.  Each of the Loan Parties
owns or licenses all such Intellectual Property, and has obtained assignments
of all licenses and other rights, as the Borrowers consider necessary for or as
are otherwise material to the conduct of the business of the Loan Parties as
now conducted without, individually or in the aggregate, any infringement upon
rights of other Persons.  All
Intellectual Property owned or licensed from third Persons described in this Section 5.14
is set forth in Schedule 5.14 (“Intellectual Property”).

 

SECTION 5.15       Accuracy
of Information.  Neither this
Agreement nor any document or written statement furnished to the Agent or any
of the Lenders by or on behalf of the Loan Parties in connection with the
negotiation, execution and delivery of this Agreement or any transaction
contemplated hereby contains any untrue statement of a material fact or omits to
state any material fact necessary in order to make the statements contained
herein or therein not misleading.

 

SECTION 5.16       Insurance.  All policies of insurance in effect of any
kind or nature owned by or issued to the Loan Parties, including policies of
fire, theft, product liability, public liability, property damage, other
casualty, employee fidelity, workers’ compensation, property and liability
insurance, (a) as of the Closing Date are listed in Schedule 5.16
(“Insurance”), (b) are, together with all policies of employee
health and welfare and title insurance, in full force and effect, (c) comply
in all material respects with the applicable requirements set forth herein and
in the Security Documents and (d) are of a nature and provide such
coverage as is customarily carried by companies engaged in similar businesses
and owning similar properties in the same general areas in which the Loan
Parties operate.  No Loan Party provides
any of its insurance through self-insurance except as disclosed in Schedule 5.16
and ordinary course insurance deductibles.

 

SECTION 5.17       Indebtedness.  Other than the Obligations, Subordinated
Debt, and other Indebtedness expressly permitted by the terms of this Agreement
and the other Loan Documents, there is no other Indebtedness of any of the Loan
Parties as of the Closing Date.

 

SECTION 5.18       Environmental
Matters.  The Loan Parties are in
compliance in all material respects with all applicable Environmental Laws
except where failure to comply could not reasonably be expected to result in a
Material Adverse Change or to give rise to any environmental Lien, and there
are no conditions or circumstances associated with the currently or previously
owned, operated, used or leased properties or current or past operations of the
Loan Parties or any predecessor interest of the Loan Parties, which may give
rise to Environmental Liabilities and Costs which could reasonably be expected
to result in a Material Adverse Change or which may give rise to any
environmental Lien.

 

SECTION 5.19       No
Burdensome Agreements.  No Loan Party
is a party to or has assumed any indenture, loan or credit agreement or any
lease or other agreement or instrument or subject to any charter or other
corporate restriction which could reasonably be expected to result in a
Material Adverse Change.

 

48

 

SECTION 5.20       Consents.  The Loan Parties have all material permits
and governmental consents and approvals necessary under Requirements of Law or,
in the reasonable business judgment of the Borrowers, deemed advisable under
Requirements of Law, in connection with the transactions contemplated hereby or
the ongoing business and operations of each Borrower and its Subsidiaries
subsequent to the Acquisition.

 

SECTION 5.21       Contracts.  Set forth in Schedule 5.21 is an
accurate and complete list of all Contractual Obligations of the Loan Parties
required to be filed with the Securities and Exchange Commission with the
filing of the Holdings’ Form 10-K for its Fiscal Year ending December 31,
2004 (such contracts, herein “Material Contracts”).  Each such Contractual Obligation is in full
force and effect in accordance with the terms thereof.  There are no defaults by any Loan Party or,
to the Borrower’s knowledge after due inquiry, any other default in existence
under any such Contractual Obligations.

 

SECTION 5.22       Employment
Agreements.  Set forth in Schedule 5.22
(“Employment Contracts”) is a complete and accurate list of each
employment agreement with any senior officer or senior manager to which any
Loan Party is a party, or by which it is bound.

 

SECTION 5.23       Condition
of Property.  All of the assets and
properties owned by, leased to or used by any Loan Party material to the
conduct of their business are in adequate operating condition and repair,
ordinary wear and tear excepted, and are free and clear of known defects except
for defects which do not substantially interfere with the use thereof in the
conduct of normal operations.

 

SECTION 5.24       Subsidiaries.  There are no Subsidiaries of any Borrower as
of the Closing Date, except as set forth on Schedule 5.24.

 

SECTION 5.25       Trade
Relations.  There exists no actual
or, to the best of the Borrowers’ knowledge, threatened termination,
cancellation or limitation of, or any modification or change in, the business
relationship of any Loan Party with any customer or group of customers of the
Borrowers or any supplier of goods or services to any Loan Party which could
reasonably be expected to result in a Material Adverse Change.

 

SECTION 5.26       Leases.  Schedule 5.26 (“Existing
Leases”) sets forth all of the existing leases of each Loan Party, and no
Loan Party is in default under or respect to any such existing leases
or any other lease of real or personal property entered into by such Loan
Party in the ordinary course of business.

 

ARTICLE 6

COVENANTS

 

SECTION 6.1         Affirmative
Covenants.  The Borrowers agree that
until the Commitments have terminated and all Obligations (other than
Obligations that expressly survive the termination of this Agreement pursuant
to Section 9.5) have been paid and performed in full, the Borrowers
will perform the Obligations set forth in this Section 6.1.

 

49

 

SECTION 6.1.1      Financial
Information, Etc.  The Borrowers’
Representative will furnish, or will cause to be furnished, to each Lender and
to the Agent copies of the following financial statements, reports and
information:

 

(a)         (i) promptly
when available and in any event on or prior to December 15, 2005, with respect
to Borrowers’ Fiscal Year ending December 31, 2004, and within ninety (90)
days after the close of each Fiscal Year thereafter, commencing with Borrowers’
Fiscal Year ending December 31, 2005, a consolidated balance sheet and a
consolidating balance sheet for the Borrowers and their Subsidiaries at the
close of such Fiscal Year, and related consolidated and consolidating
statements of operations, retained earnings, and cash flows for such Fiscal
Year, of the Borrowers and their Subsidiaries (with comparable information at
the close of and for the prior Fiscal Year), in each case certified (in the
case of consolidated statements) without qualification (except that the
certification with respect to the financial statements for Borrowers’ Fiscal
Year ending December 31, 2004 may be subject to a going concern
qualification) by its certified public accountants existing on the Closing
Date, or other independent public accountants reasonably satisfactory to the
Agent, which statements shall be delivered together with a report from
management of the Borrowers containing a description of projected business
prospects (including capital expenditures) and management’s discussion and
analysis of financial condition and results of operation of the Borrowers and
their Subsidiaries; and (ii) promptly when available and in any event
within thirty (30) days after the close of each Fiscal Year, a Compliance
Certificate calculated as of the computation date at the close of such Fiscal
Year; and

 

(b)         promptly
when available and in any event within thirty (30) days after the close of each
calendar month of each Fiscal Year a consolidated balance sheet and a
consolidating balance sheet for the Borrowers and their Subsidiaries at the
close of such month, and consolidated and consolidating statements of
operations, retained earnings, and cash flows for such month and for the period
commencing at the close of the previous Fiscal Year and ending with the close
of such month, of the Borrowers and their Subsidiaries (with comparable information
at the close of and for the corresponding month of the prior Fiscal Year and
for the corresponding portion of such prior Fiscal Year and with comparable
information set forth in the Projections for the relevant period), certified by
the Senior Financial Officer of the Borrowers’ Representative, together with
(x) a description of projected business prospects (including Consolidated
Capital Expenditures), and (y) an explanation of any variation greater than
five percent (5%) from the Projections as updated in accordance with clause (f) of
this Section 6.1.1; and

 

(c)         within
thirty (30) days after the close of each Fiscal Month and forty-five
(45) days after the close of each Fiscal Quarter, a Compliance Certificate
calculated as of the close of such Fiscal Month or Fiscal Quarter and a brief
report containing management’s discussion and analysis of the financial
condition and results of operations of the Borrowers and their Subsidiaries
(together with a report from management of the Borrowers containing management’s
discussion and analysis of any changes compared to prior results and the
Projections as updated in accordance with clause (f) of this Section 6.1.1);

 

(d)         as
soon as available, but in any event, not later than fifteen (15) days
after Holdings’ audit committee has reviewed the same, copies of all final
detailed financial and

 

50

 

management reports submitted to the Borrowers by their independent
public accountants in connection with each annual or interim audit made by such
independent public accountants of the books of the Borrowers and their
Subsidiaries;

 

(e)         within
ten (10) days after the end of each Fiscal Year of the Borrowers, (i) a
report summarizing the insurance coverage (specifying type, amount and carrier)
in effect for each Loan Party and containing such additional information as the
Agent or any Lender may reasonably request, and (ii) written evidence of
payment of all premiums with respect to each policy of such insurance;

 

(f)          when
approved by Holdings’ board of directors but no later than January 31 of
each Fiscal Year of the Borrowers, updates to the Projections containing
projected balance sheets, statements of operations and changes in cash flows of
the Borrowers and their Subsidiaries prepared on a consolidated basis for such
Fiscal Year and each of the three (3) Fiscal Years (but in no event beyond
the end of Fiscal Year 2008) thereafter, prepared on a monthly basis for the
upcoming Fiscal Year and on an annual basis for such Fiscal Years thereafter,
together with (A) supporting details and a statement of underlying
assumptions, (B) a report from management of the Borrowers containing
management’s discussion and analysis of the projected financial condition and
results of operations of the Borrowers’ and their Subsidiaries, (C) projected
trends of business and (D) a detailed schedule of Capital Lease
Obligations and outstanding Indebtedness;

 

(g)         promptly
after approval by the Borrowers’ boards of directors (or comparable body), any
updates or revisions to any business plan described in the preceding
clause (f) of this Section 6.1.1;

 

(h)         promptly
upon the sending or filing thereof, copies of all reports that any Borrower or
any of its Subsidiaries sends to its security holders generally, and copies of
all reports and registration statements that any Borrower or any of its
Subsidiaries files with the Securities and Exchange Commission or any national
securities exchange;

 

(i)          on
or before the twentieth (20th) day of each calendar month (or more frequently
as Agent may require), a completed Borrowing Base Certificate accurate as of
the last day of the immediately preceding calendar month together with all
supporting schedules including but not limited to accounts receivable agings, schedule of
cross-aging, schedule of credits, schedule of contra accounts, schedule detailing
any other ineligible accounts, reconciliation of accounts receivable aging to
general ledger, schedule of type, dollar value and location of inventory,
reconciliation of perpetual inventory to general ledger, including general
ledger trial balance, and listing of supporting documentation for all inventory
reserves;

 

(j)          on
or before the fifteenth (15th) day of each calendar month, an accounts payable
aging certified by a Senior Financial Officer of the Borrowers to be true,
correct and complete;

 

(k)         upon
request from Agent, made at any time hereafter and, in any event, with the last
borrowing Base Certificate delivered in each Fiscal Year, a current Account
Debtor name and address list;

 

51

 

(l)          such
other information with respect to the financial condition, business, property,
assets, revenues and operations of each Borrower or any Subsidiary as any
Lender may from time to time reasonably request.

 

SECTION 6.1.2      Maintenance
of Corporate Existence, Etc.  Except
as permitted by Section 6.2.10, the Borrowers will cause to be done
at all times all things necessary to maintain and preserve the corporate
existences of each Borrower and each Subsidiary.

 

SECTION 6.1.3      Foreign
Qualification.  The Borrowers will,
and will cause each Subsidiary to, cause to be done at all times all things
necessary to be duly qualified to do business and be in good standing as a
foreign corporation in each jurisdiction where the failure to so qualify could
result in a Material Adverse Change.

 

SECTION 6.1.4      Payment
of Taxes, Etc.  The Borrowers will,
and will cause each Subsidiary to, pay and discharge, as the same become due
and payable, (a) all Charges against it or on any of its property, as well
as claims of any kind which, if unpaid, could reasonably be expected to become
a Lien upon any one of its properties, and (b) all lawful claims for
labor, materials, supplies, services or otherwise before any thereof become a
default; provided, however, that the foregoing
shall not require any Borrower or any such Subsidiary to pay or discharge any
such Charge or claim so long as it shall be diligently contesting the validity
thereof in good faith by appropriate proceedings and shall have set aside on
its books adequate reserves in accordance with GAAP with respect thereto.

 

SECTION 6.1.5      Insurance.  In addition to any insurance required to be
maintained pursuant to any other Loan Document, the Borrowers will, and will
cause each Subsidiary to, maintain or cause to be maintained (a) insurance
with respect to its properties and business against such casualties,
contingencies and liabilities and of such types and in such amounts as is
acceptable to the Agent and the Lenders and will furnish to the Agent, annually
at the policy renewal date, a certificate of an Authorized Officer setting
forth the nature and extent of all insurance maintained by the Borrowers and
their Subsidiaries in accordance with this Section 6.1.5, and (b) the
policies referred to in Section 4.1.12.  Each such policy shall be issued by an
insurance company with a Best’s rating of “A” or better (“B+” or better, in the
case of Lumbermen’s Underwriting Alliance) and a financial size category of not
less than XII, shall be in effect on the Closing Date, and the premiums for
each such policy shall be paid as such premiums shall come due.  All policies of casualty insurance shall
contain an endorsement, in the form submitted to the Borrowers’ Representative
by the Agent, showing loss payable to the Agent for its benefit and the ratable
interests of the Lenders, as their interests may appear.  All policies of liability insurance,
including, without limitation, all primary and umbrella liability policies,
shall name the Agent and the Lenders as additional insured.  The Borrowers shall retain all the incidents
of ownership of the insurance maintained pursuant to this Section 6.1.5,
but shall not borrow upon or otherwise impair its right to receive the proceeds
of such insurance, other than customary financing of annual premiums.

 

52

 

SECTION 6.1.6      Notice
of Default, Litigation, Etc.  The
Borrowers’ Representative will give prompt written notice (with a description
in reasonable detail) to the Agent and the Lenders of:

 

(a)         the
occurrence of any Default;

 

(b)         the
occurrence of any litigation, arbitration or governmental investigation or
proceeding not previously disclosed in writing by the Borrowers to the Lenders
which has been instituted or, to the knowledge of any Borrower, is threatened
against, any Loan Party or to which any of its properties, assets or revenues
is subject which, if adversely determined, could reasonably be expected to
result in a Material Adverse Change;

 

(c)         any
material development which shall occur in any litigation, arbitration or
governmental investigation or proceeding previously disclosed by any Borrower
to the Lenders pursuant to Section 5.7 which could reasonably be
expected to result in a Material Adverse Change;

 

(d)         the
occurrence of any other circumstance which could reasonably be expected to
result in a Material Adverse Change;

 

(e)         the
occurrence of any Loss; and

 

(f)          the
occurrence or expected occurrence of any Reportable Event with respect to any
Single Employer Plan (and a statement of a Senior Financial Officer describing
such event and the action, if any, that any Borrower or any Commonly Controlled
Entity has taken and proposes to take with respect thereto), or any withdrawal
from, or the termination, Reorganization or Insolvency of any Multiemployer
Pension Plan, the institution of proceedings or the taking of any other action
by the PBGC or any Borrower or any Commonly Controlled Entity or Subsidiary or
any Multiemployer Pension Plan with respect to the withdrawal from, or the
termination, Reorganization or Insolvency of, any Single Employer Plan or
Multiemployer Pension Plan, or the receipt of notice by any Loan Party or any
Commonly Controlled Entity that the institution of any such proceedings or the
taking of any such action is under consideration or anticipated, the
institution of any proceedings or other action by the Internal Revenue Service
or the Department of Labor with respect to the minimum funding requirements of
any Pension Plan, or the receipt of notice by any Loan Party or any Commonly
Controlled Entity that the institution of any such proceedings or the taking of
any such action is under consideration or anticipated, the occurrence or
expected occurrence of any event which could result in the incurrence of
unpredictable contingent event benefits under Section 302 of ERISA or Section 412
of the IRC with respect to any Pension Plan, any event or condition which could
increase the liability of any Loan Party or any Commonly Controlled Entity with
respect to post-retirement welfare benefits under any Plan, or the occurrence
of any other event or condition with respect to any Plan which could subject
the Borrower or any Subsidiary (directly or indirectly) to any tax, penalty,
lien or liability under Title I or Title IV of ERISA, Section 404 or 419
and Chapter 43 of the IRC, or any other applicable laws, and in each case, such
event or condition, together with all other events or conditions, if any, could
subject any Loan Party (directly or indirectly) to any tax, fine, penalty, lien
or other liabilities in amounts which in the aggregate could result in a
Material Adverse Change.  The Borrowers
will deliver to each of the Lenders a true and complete copy of each annual
report (Form 5500) of each Plan (other than a MultiEmployer Plan) required
to be filed with the Internal Revenue Service, promptly after the filing
thereof; and

 

53

 

(g)         the
condemnation or threat of condemnation with respect to any property used or
necessary in the conduct of the business of any Loan Party.

 

SECTION 6.1.7      Books
and Records.  The Borrowers will, and
will cause each Subsidiary to, keep books and records reflecting all of its
business affairs and transactions in accordance with GAAP and permit the Agent
and each Lender or any of their respective representatives, at reasonable times
and reasonable intervals (upon one Business Day’s notice if no Event of Default
exists and without notice if an Event of Default exists) to visit all of its
offices, to discuss its financial matters with its officers and independent
public accountants and to examine (and, at the expense of the Borrowers,
photocopy extracts from) any of its books or other corporate records.  The Agent may conduct all such field audits
of all Inventory and Accounts of each Borrower as the Agent may reasonably
request, all at reasonable times and upon advance notice to Borrowers’
Representative if no Event of Default exists and without notice if an Event of
Default exists, all such field audits to be conducted by internal auditors of
the Agent or of outside auditors engaged by the Agent, and in form and
substance reasonably satisfactory to the Agent and at such intervals as Agent
shall determine.  Any Lender may
accompany the Agent on any such field audit at such Lender’s expense.  The Borrowers shall pay any fees and expenses
incurred by Agent and Lenders in connection with the exercise of their rights
hereunder; provided that with respect to field audits the following sentence
shall apply.  With respect to field
audits conducted by Agent pursuant hereto based on a one hundred twenty (120)
day audit cycle (which may be increased, in Agent’s discretion, whenever an
Event of Default exists), Borrowers shall reimburse Agent on demand the sum of
$850.00 per auditor per day plus out-of-pocket expenses.

 

SECTION 6.1.8      Maintenance
of Properties, Etc.  The Borrowers
will maintain and preserve, and cause each of their Subsidiaries to maintain
and preserve, all of their material properties (real and personal and including
all intangible assets), except obsolete properties which are not used or
necessary in the conduct of its business, in good working order and condition,
ordinary wear and tear excepted.

 

SECTION 6.1.9      Maintenance
of Licenses and Permits.  The
Borrowers will maintain and preserve, and will cause each of their Subsidiaries
to maintain and preserve, all material Intellectual Property, rights, permits,
licenses, approvals and privileges issued under or arising under any
Requirements of Law.

 

SECTION 6.1.10    Employee
Plans.  The Borrowers will, and will
cause each of their Subsidiaries to, comply in all material respects with the
provisions of ERISA and the IRC which are applicable to any of the Plans.

 

SECTION 6.1.11    Compliance
with Laws.  The Borrowers will, and
will cause each of their Subsidiaries to, comply in all material respects with
all applicable Requirements of Law, subject to the matters set forth in Schedule 5.6.  Holdings will cause all reports described on Schedule 5.6
to be filed with the Securities and Exchange Commission on or prior to December 15,
2005.

 

SECTION 6.1.12    Real
Estate.  If
the Borrowers or any of its Subsidiaries shall own, or acquire, a fee or
leasehold interest in real estate either on the Closing Date or subsequent
thereto, then, the applicable Borrower or such Subsidiary, as the case may be,
will execute in favor of Agent a negative pledge agreement in regard thereto.

 

54

 

SECTION 6.1.13    Subsidiary
Guaranty, etc..  The Borrowers shall
cause each of their Subsidiaries now existing or hereafter formed or acquired
to become a party to a Subsidiary Guaranty, a Subsidiary Security Agreement and
a Security Pledge Agreement, and to enter into such other agreements as the
Agent shall reasonably request with respect thereto and as required under the
laws of the applicable jurisdiction and to provide an opinion of counsel to
such Subsidiary with respect thereto.

 

SECTION 6.1.14    Inventory
Appraisals.  Promptly, upon their
receipt of notice thereof from Agent, which notice may be given by Agent at any
time that either (i) an Event of Default exists or (ii) any Inventory
Advances are outstanding, Borrowers shall, at their own expense, obtain an
appraisal of their inventory from an independent appraiser selected or approved
by, Agent using an appraisal methodology required or approved by Agent.  For purposes hereof, Loans shall be considered
made, first, against Eligible Accounts and, then, against Eligible Inventory
(and repayments of Loans shall be considered made vice  versa).  In such regard, any Loans outstanding made
against Eligible Inventory shall be considered as “Inventory Advances.”

 

SECTION 6.2         Negative
Covenants.  The Borrowers agree that
until all Commitments have terminated and all Obligations (other than
Obligations that expressly survive the termination of this Agreement pursuant
to Section 9.5) have been paid and performed in full, the Borrowers
will perform the Obligations set forth in this Section 6.2.

 

SECTION 6.2.1      Business
Activities.  The Borrowers will not,
and will not permit any Subsidiary to, engage in any business activity, except
those in which a Borrower and its Subsidiaries are engaged on the Closing Date
and such activities as may be incidental or related thereto.

 

SECTION 6.2.2      Indebtedness.  The Borrowers will not, and will not permit
any Subsidiary to, create, incur, assume or suffer to exist or otherwise become
or be liable in respect of any Indebtedness other than:

 

(a)         Indebtedness
in respect of the Loans, Letters of Credit and other Obligations;

 

(b)         obligations
that constitute Indebtedness solely by virtue of being secured by Liens
permitted under Section 6.2.3;

 

(c)         Indebtedness
in respect of liabilities resulting from (i) endorsements of negotiable
instruments in the ordinary course of business; and (ii) surety bonds
issued for the account of any Borrower or any of its Subsidiaries in the
ordinary course of business;

 

(d)         Indebtedness
existing on the Closing Date and secured by Liens set forth on Schedule 5.13
(“Existing Liens”);

 

(e)         unsecured
Indebtedness in respect of trade accounts payable arising from time to time in
the ordinary course of business;

 

55

 

(f)          Subordinated
Debt;

 

(g)         Capitalized
Lease Liabilities and Purchase Money Indebtedness, in addition to the
Indebtedness permitted under clause (d) of this Section 6.2.2,
in an amount not to exceed $2,000,000 in the aggregate at any time outstanding;
and

 

(h)         Indebtedness
arising from repurchase obligations owed to floor plan lenders and dealers in
the ordinary course of business;

 

(i)          intercompany
Indebtedness and intercompany lease obligations among Borrowers;

 

(j)          Indebtedness
under workers’ compensation self-insurance; and

 

(k)         other
Indebtedness (in addition to that described in the preceding clauses (a) through
(j) in principal amount not in excess of $250,000 (as to all Borrowers
combined) at any time.

 

SECTION 6.2.3      Liens.  The Borrowers will not, and will not permit
any Subsidiary to, create, incur, assume or suffer to exist any Lien upon any
of its property, revenues or assets, whether now owned or hereafter acquired,
except:

 

(a)         Liens
in favor of the Agent or the Lenders granted pursuant to any Loan Document;

 

(b)         Liens
evidencing rights of lessors in leased equipment and/or purchase money liens on
specific items of equipment (so long as such purchase money Liens secure only
Indebtedness permitted pursuant to Section 6.2.2(d) and Section 6.6.2(g)),
and any extensions, renewals or replacements of any such Liens, provided that the principal amount of the obligation secured
thereby is not increased and that any such extension, renewal or replacement is
limited to the property originally encumbered thereby.

 

(c)         Liens
for taxes, assessments or other governmental charges or levies not at the time
delinquent or thereafter payable with penalty or being contested in good faith
by appropriate proceedings and for which adequate reserves in accordance with
GAAP shall have been set aside on its books;

 

(d)         Liens
of carriers, warehousemen, mechanics, and materialmen incurred in the ordinary
course of business for sums not overdue or being contested in good faith by
appropriate proceedings (which proceedings have the effect of preventing the
forfeiture or sale of the asset subject to such Lien) and for which adequate
reserves in accordance with GAAP shall have been set aside on its books;

 

(e)         Liens
(other than Liens arising under ERISA or Section 412(n) of the Code)
incurred in the ordinary course of business in respect of deposits made in
connection with workmen’s compensation, unemployment insurance or other forms
of governmental insurance or benefits, or to secure performance of tenders,
statutory obligations, leases and contracts (other than for borrowed money)
entered into in the ordinary course of business or to secure obligations on
surety or appeal bonds;

 

56

 

(f)          typical
restrictions imposed by licenses and leases of software (including location and
transfer restrictions);

 

(g)         judgment
Liens with respect to judgments to the extent such judgments do not constitute
an Event of Default described in Section 7.1.9;

 

(h)         Liens
which arise by operation of law under Article 2 of the UCC in favor of
unpaid sellers of goods, or Liens in items or any accompanying documents or
proceeds arising by operation of law under Article 4 of the UCC in favor
of a collecting bank; and

 

(i)          easements
(including, without limitation, reciprocal easement agreements and utility
agreements), rights-of-way, covenants, consents, reservations, encroachments,
variations and other restrictions, charges or encumbrances (whether or not
recorded) affecting the use of property, which do not materially detract from
the value of such property or impair the use thereof.

 

SECTION 6.2.4      Financial
Condition.  The Borrowers hereby
covenant and agree as set forth below:

 

(a)         Leverage
Ratio.  The Borrowers will not permit
the Leverage Ratio with respect to the twelve consecutive month period ending
on the last day of any Fiscal Month of any Fiscal Year to be greater than
4.00:1.00.

 

(b)         Fixed
Charge Coverage Ratio.  The Borrowers
will not permit the Fixed Charge Coverage Ratio with respect to the twelve
consecutive month period ending on the last day of any Fiscal Month of any
Fiscal Year to be less than 1.10:1.00.

 

Notwithstanding the
foregoing, if and so long as average daily Working Capital Facility
Availability, determined as of the last day of each Fiscal Month for the one
month period ending on such date, equals or exceeds Minimum Excess
Availability, failure of Borrowers to comply with the covenants set forth in
this Section 6.2.4 shall not constitute an Event of Default; provided,
however, that (i) Borrowers shall continue to provide calculations
of such financial covenants in each Compliance Certificate delivered to Agent
pursuant to Section 6.1.1 and (ii) the financial covenant set
forth at Section 6.2.4(a) shall continue to apply for purposes
of determining Applicable Margin.

 

SECTION 6.2.5      Capital
Expenditures.  The Borrowers will
not, and will not permit any Subsidiary to, make or commit to make any
Consolidated Capital Expenditures, except that the Borrowers and their
Subsidiaries may make Consolidated Capital Expenditures during the period from
the Closing Date through December 31, 2005 in an aggregate amount not to
exceed Two Million Dollars ($2,000,000) and during the 2006 Fiscal Year and
each Fiscal Year thereafter in an aggregate amount not to exceed Four Million
Dollars ($4,000,000) plus in the 2005 Fiscal Year and/or 2006 Fiscal Year
additional Consolidated Capital Expenditures in an aggregate amount as to both
such Fiscal Years combined not to exceed Three Million Five Hundred Thousand
Dollars ($3,500,000) solely in connection with a Borrower’s purchase of the
Junction City Property.

 

57

 

SECTION 6.2.6      Investments.  The Borrowers will not, and will not permit
any Subsidiary to, make, incur, assume or suffer to exist any Investment in any
other Person except:  (a) Cash
Equivalent Investments; (b) deposits for utilities, security deposits
under leases and similar prepaid expenses; (c) accounts receivable arising
in the ordinary course of business; (d) loans or advances made to
employees for salary, commissions, travel or the like, made in the ordinary
course of business, not to exceed, in aggregate amount at any time outstanding,
the sum of $500,000 as to all Borrowers combined; (e) intercompany
investments among Borrowers, (f) Investments consisting of deposit
accounts of the Borrowers and their Subsidiaries maintained with banks in the
ordinary course of business; and (g) other Investments not to exceed, in
aggregate amount at any time outstanding, the sum of $500,000 as to all
Borrowers combined.

 

SECTION 6.2.7      Restricted
Payments, Etc.  The Borrowers will
not (a) apply, or permit any Subsidiary to apply, any of its funds,
property or assets to the purchase, redemption, sinking fund or other
retirement of any shares of any class of Stock (now or hereafter outstanding)
of any Borrower or any rights, options or warrants to subscribe for or purchase
any shares of any class of Stock of any Borrower, or make any deposit for any
of the foregoing except that Holdings may accept Stock for payment of shares
underlying its options or (b) declare, pay or make any dividend or
distribution (in cash, property or obligations) on any shares of any class of
Stock (now or hereafter outstanding) of any Borrower or on any warrants,
options or other rights in respect of any class of Stock (now or hereafter
outstanding) of any Borrower unless (a) for a period of thirty (30) days
prior to the payment of any such dividend or distribution and after giving
effect thereto, average Working Capital Facility Availability is in an amount
at least equal to Minimum Excess Availability and (b) no Default or Event
of Default has occurred and is continuing or would result therefrom.

 

SECTION 6.2.8      Take
or Pay Contracts; Sale/Leasebacks.

 

(a)         The
Borrowers will not, and will not permit any Subsidiary to, enter into or be a
party to any arrangement for the purchase of materials, supplies, other
property or services if such arrangement by its express terms requires that
payment be made by a Borrower or such Subsidiary regardless of whether or not
such materials, supplies, other properties or services are delivered or
furnished to it; and

 

(b)         The
Borrowers will not enter into, or permit any Subsidiary to enter into, any
arrangement with any Person providing for the leasing by a Borrower or one or
more Subsidiaries of any property or assets, which property or assets has been
or is to be sold or transferred by a Borrower or such Subsidiary to such
Person.

 

SECTION 6.2.9      Consolidation,
Merger, Subsidiaries, Etc.

 

(a)         The
Borrowers will not, and will not permit any Subsidiary to, liquidate or
dissolve, consolidate with, or merge into or with, any other corporation, or
purchase or otherwise acquire all or substantially all of the assets of any
Person (or of any division or business unit thereof) or otherwise make or agree
to make acquisitions, except for a merger, reorganization or consolidation of
NRV with or into CCI or of CCI with or into NRV or of NRV or CCI with or into
Holdings; and

 

58

 

(b)         The
Borrowers will not, and will not permit any Subsidiary to, create any
Subsidiary or transfer any assets to any Subsidiary.

 

SECTION 6.2.10    Asset
Dispositions, Etc.  The Borrowers
will not, and will not permit any Subsidiary to, sell, transfer, lease or
otherwise dispose of, or grant options, warrants or other rights with respect
to, any of its assets to any Person, unless (a) such disposition
constitutes a disposition of obsolete or retired equipment not used in the
business of any Borrower and its Subsidiaries, (b) such disposition
constitutes a transfer of Inventory in the ordinary course of business, (c) such
disposition constitutes the sale of Inventory in the ordinary course of the
Borrower’s business, (d) such disposition is among Borrowers or (e) such
disposition constitutes the grant of a non-exclusive license relating to a
Borrower’s Intellectual Property in the ordinary course of business.

 

SECTION 6.2.11    Modification
of Organic Documents, Etc.  The
Borrowers will not consent to any amendment, supplement or other modification
of any of the terms or provisions contained in, or applicable to, the Organic
Documents of any Borrower if such amendment supplement or other modification
could reasonably be expected to result in a Material Adverse Change.

 

SECTION 6.2.12    Transactions
with Affiliates.  The Borrowers will
not, and will not permit any Subsidiary to, enter into, or cause, suffer or
permit to exist (a) any management contract or arrangement, consulting
agreement or arrangement, contract or arrangement relating to the allocation of
revenues, expenses or similar contract or arrangement requiring any payments to
be made by the Borrowers or any Subsidiary to any Affiliate (other than
employment agreements with employees of a Borrower or Subsidiary entered into
in the ordinary course of business), or (b) any other transaction,
arrangement or contract with any of its other Affiliates which is on terms
which are less favorable than are obtainable from any Person which is not one
of its Affiliates.

 

SECTION 6.2.13    Inconsistent
Agreements.  The Borrowers will not,
and will not permit any Subsidiary to, enter into any material agreement
containing any provision which would be violated or breached in any material
respect by any Loan or by the performance by any Borrower or any Subsidiary of
its obligations hereunder or under any Loan Document.

 

SECTION 6.2.14    Change
in Accounting Method.  The Borrowers
will not, and will not permit any Subsidiary to, make any change in accounting
treatment and reporting practices except as required by GAAP.

 

SECTION 6.2.15    Change
in Fiscal Year End.  The Borrowers
will not change their Fiscal Year end.

 

SECTION 6.2.16    Compliance
with ERISA.  The Borrowers will not,
and shall not permit any Subsidiary to, take or fail to take any action with
respect to a Plan, including, but not limited to, establishing, amending, or
terminating or withdrawing from any Plan, engaging in any prohibited
transaction (within the meaning of Section 4975 of the IRC or Section 406
or ERISA),

 

59

 

or causing any
occurrence of any Reportable Event, or permitting to exist any accumulated
funding deficiency (as defined in Section 412 of the IRC or Section 302
of ERISA), or engaging or failing to engage in any other activity which could
result in any liabilities under the IRC, ERISA, or any other applicable law
which individually or in the aggregate could result in a Material Adverse
Change, without first obtaining the Required Lenders’ written approval.

 

SECTION 6.2.17    Amendments
to Certain Agreements.  The Borrowers
will not, and shall not permit any Subsidiary to, amend, restate or otherwise
modify any Material Contracts other than those agreements (if any) constituting
sales contracts, which a Borrower or any Subsidiary may modify in the ordinary
course of its business in a manner that would not result in a Material Adverse
Change.

 

SECTION 6.2.18    Modification
of Subordinated Debt.  The Borrowers
shall not amend or modify, or consent to any amendment or modification of, any
of the terms of any Subordinated Debt.

 

SECTION 6.2.19    Prohibition
on Prepayment of Subordinated Debt. 
The Borrowers shall not and shall not permit any Subsidiary to prepay,
redeem, purchase, defease or otherwise satisfy prior to the final scheduled
maturity thereof in any manner (including by setoff or otherwise), or make any
payment in violation of any subordination terms of, the Subordinated Debt.

 

ARTICLE 7

EVENTS OF DEFAULT

 

SECTION 7.1         Events
of Default.  The term “Event of
Default” shall mean any of the events set forth in this Section 7.1.

 

SECTION 7.1.1      Non-Payment
of Obligations.  Any Borrowers shall
default:  (a) in the payment or
prepayment when due of any principal of any Loan; or (b) in the payment
when due of the interest payable in respect of any Loan, the fees provided for
in Section 2.3 hereof or any other Obligations and such default
shall continue unremedied for a period of three (3) Business Days.

 

SECTION 7.1.2      Non-Performance
of Certain Covenants.  Any Borrower
shall default in the due performance and observance of any of its obligations
under Section 3.3,  Section 6.1.1,
Section 6.1.2, Section 6.1.4, Section 6.1.5,
Section 6.1.6, Section 6.1.7, Section 6.1.8,
Section 6.1.10, Section 6.1.11, Section 6.1.12,
Section 6.1.13, Section 6.1.14, or Section 6.2.

 

SECTION 7.1.3      Defaults
Under Other Loan Documents; Non-Performance of Other Obligations.  Any “Event of Default” shall occur under the
other Loan Documents; or any Loan Party or Guarantor shall default in the due
performance and observance of any other obligation, covenant or agreement
contained herein or in any other Loan Document and such default shall continue
unremedied for a period of thirty (30) days after the sooner to occur of
receipt of notice of such default from Agent or the date on which such default
first becomes known to Borrowers.

 

60

 

SECTION 7.1.4      Bankruptcy,
Insolvency, Etc.  Any Loan Party or
any Guarantor shall:

 

(a)         become
insolvent or generally fail to pay, or admit in writing its inability to pay,
debts as they become due;

 

(b)         apply
for, consent to, or acquiesce in, the appointment of a trustee, receiver,
sequestrator or other custodian for itself or any of its property, or make a
general assignment for the benefit of creditors;

 

(c)         in
the absence of such application, consent or acquiescence, permit or suffer to
exist the appointment of a trustee, receiver, sequestrator or other custodian
for itself or for a substantial part of its property and such trustee,
receiver, sequestrator or other custodian shall not be discharged within sixty
(60) days;

 

(d)         permit
or suffer to exist the commencement of any bankruptcy, reorganization, debt
arrangement or other case or proceeding under any bankruptcy or insolvency law,
or any dissolution, winding up or liquidation proceeding, and, if such case or
proceeding is not commenced by the Loan Party, such case or proceeding shall be
consented to or acquiesced in by the Loan Party or shall result in the entry of
an order for relief or shall remain for sixty (60) days undismissed; or

 

(e)         take
any corporate action authorizing, or in furtherance of, any of the foregoing.

 

SECTION 7.1.5      Breach
of Warranty.  Any representation or
warranty of any Loan Party or any Guarantor hereunder or in any other Loan
Document or in any other writing furnished by or on behalf of any Loan Party to
the Agent or any Lender for the purposes of or in connection with this
Agreement or any such Loan Document is or shall be incorrect when made.

 

SECTION 7.1.6      Default
on Other Indebtedness, Etc.  (a) Any
Indebtedness of any Loan Party or any Guarantor in an aggregate principal
amount exceeding Five Hundred Thousand Dollars ($500,000) (i) shall be duly
declared to be or shall become due and payable prior to the stated maturity
thereof, or (ii) shall not be paid as and when the same becomes due and
payable including any applicable grace period; or (b) there shall occur
and be continuing any event which constitutes an event of default under any
Instrument relating to any Indebtedness of any Loan Party in an aggregate
principal amount exceeding Five Hundred Thousand Dollars ($500,000) the effect
of which is to permit the holder or holders of such Indebtedness, or a trustee,
agent or other representative on behalf of such holder or holders, to cause
such Indebtedness to become due prior to its stated maturity.

 

SECTION 7.1.7      Failure
of Valid, Perfected Lien.  Agent’s
Lien in the Collateral, and all proceeds thereof, securing the Obligations
shall cease to be valid or perfected at any time after the Closing Date, or
shall, except as expressly contemplated by the Loan Documents, cease to be a
first-priority security interest, except to the extent any failure to be
perfected or to be a first priority security interest, arises as a result of
the Agent failing to file continuation statements under the Uniform Commercial
Code or inadvertently filing termination statements under the Uniform
Commercial Code.

 

SECTION 7.1.8      Employee
Plans.  Any of the following events
shall occur with respect to any Plan:  (i) any
Person shall engage in any “prohibited transaction” (as defined in

 

61

 

Section 406
of ERISA or Section 4975 of the Code) involving any Plan and such “prohibited
transaction” could result in a Material Adverse Change, (ii) any “accumulated
funding deficiency” (as defined in Section 412 of the Code or Section 302
of ERISA), whether or not waived, shall exist with respect to any Single
Employer Plan, (iii) a Reportable Event shall occur with respect to, or
proceedings shall commence to have a trustee appointed, or a trustee shall be
appointed, to administer or to terminate, any Single Employer Plan, which
Reportable Event or commencement of proceedings or appointment of a trustee is,
in the opinion of the Required Lenders, likely to result in the termination of
such Plan for purposes of Title IV of ERISA, (iv) a notice of intent
to terminate any Single Employer Plan for purposes of Title IV of ERISA is
issued by the plan administrator thereof without the prior written consent of
the Required Lenders, or the PBGC shall commence proceedings to terminate any
Single Employer Plan, (v) any Loan Party or any Commonly Controlled Entity
shall, or in the opinion of the Required Lenders is likely to, incur any
liability in connection with a withdrawal from, or the Insolvency,
Reorganization or termination of, a Multiemployer Plan, (vi) any Loan
Party or any Commonly Controlled Entity shall fail to make any quarterly
installment payment to a Pension Plan required under Section 302(e) of
ERISA or Section 412(m) of the Code, (vii) any Loan Party or any
Commonly Controlled Entity shall fail to make any contribution to a
Multiemployer Plan which is required under ERISA, the Code or applicable
collective bargaining agreements, or (viii) any other event or condition
shall occur or exist with respect to a Plan; and in each case in clauses (i) through
(viii) above, such event or condition, together with all other such events
or conditions, if any, could subject any Loan Party (directly or indirectly) to
any tax, penalty or other liabilities under Title I or Title IV of ERISA, Section 404
or 419 and Chapter 43 of the IRC or any other applicable law which in the
aggregate could result in a Material Adverse Change.

 

SECTION 7.1.9      Judgments.  A final judgment which, with other such
outstanding final judgments against the Loan Parties and Guarantors (in each
case to the extent not covered by insurance), exceeds an aggregate of Five
Hundred Dollars ($500,000), shall be entered against any Loan Party or any
Guarantor and, within thirty (30) days after entry thereof, such judgment shall
not have been discharged or execution thereof stayed pending appeal, or, within
thirty (30) days after the expiration of any such stay, such judgment shall not
have been discharged.

 

SECTION 7.1.10    Loss
of Permits, Etc.  The expiration,
loss, termination, cancellation, revocation, forfeiture, suspension,
diminution, impairment of or failure to renew any Intellectual Property, right,
permit, license or approval, which could result in a Material Adverse Change;
or the entry of any order of a court enjoining, restraining or otherwise
preventing any Loan Party or Guarantor from conducting all or any material part
of its business affairs; or the cessation of business or dissolution of any
Loan Party or Guarantor.

 

SECTION 7.1.11    Delisting.  The Stock of Holdings ceases to be listed for
trading on the New York Stock Exchange.

 

SECTION 7.2         Action
if Bankruptcy.  If any Event of
Default described in Section 7.1.4 shall occur, the outstanding
principal amount of all outstanding Loans and all other Obligations
automatically shall be and become immediately due and payable, without notice
or demand, and the Borrowers will deposit with the Agent, as cash collateral,
an amount equal to the aggregate undrawn face amount of all Letters of Credit,
which amount automatically shall become immediately due and payable by the
Borrowers and to the extent paid by the Borrowers

 

62

 

shall constitute a
prepayment under this Agreement, and the Agent may exercise any and all rights
and remedies available under this Agreement or any other Loan Document, or
available at law or in equity, at any time, in any order and in any
combination.

 

SECTION 7.3         Action
if Other Event of Default.  If any
Event of Default (other than any Event of Default described in Section 7.1.4)
shall occur for any reason, whether voluntary or involuntary, and be
continuing, the Agent may, and upon the direction of the Required Lenders,
shall (a) declare all or any portion of the outstanding principal amount
of the Loans to be due and payable and any or all other Obligations to be due and
payable, whereupon the full unpaid amount of such Loans and any and all other
Obligations which shall be so declared due and payable shall be and become
immediately due and payable, without further notice, demand, or presentment, (b) demand
that the Borrowers deposit with the Agent, as cash collateral, an amount equal
to the aggregate undrawn face amount of all Letters of Credit, which amount
shall become immediately due and payable by the Borrowers and to the extent
paid by the Borrowers shall constitute a prepayment under this Agreement, and (c) to
the extent permitted under any Letter of Credit, require the beneficiary
thereof to draw upon the undrawn face amount thereof, and the Agent may
exercise any and all rights and remedies available under this Agreement or any
other Loan Document, or available at law or in equity, at any time, in any
order and in any combination.

 

SECTION 7.4         Application
of Proceeds Following Default. Notwithstanding anything to the contrary set
forth in this Agreement, following the occurrence of an Event of Default and
the acceleration of the Obligations pursuant to Section 7.3, all
proceeds of Collateral and other payments made by the Borrowers or any
Guarantor, or received from any other source, shall be applied as follows:  (a)  first to the payment of all fees
and reasonable expenses of the Agent then due hereunder or under any of the
other Loan Documents and allocated to the Working Capital Facility until paid
in full; (b) second to the payment of all fees and expenses in respect of
the Working Capital Facility then due to the Lenders having Commitments
hereunder, pro rata based on the outstanding principal balance of each such
Lender’s Working Capital Facility Loan until paid in full; (c) third, to
pay interest due in respect of the Working Capital Facility Loans, pro rata
based on the outstanding principal balance of each such Lender’s Working
Capital Facility Loan until paid in full; (d) fourth, to repay principal
of the Working Capital Facility Loans, pro rata based on the outstanding
principal balance of each such Lender’s Working Capital Facility Loan until
paid in full; (e) fifth, to be held by the Agent as cash collateral in an
amount up to one hundred five percent (105%) of the then outstanding face
amount of all Letters of Credit issued hereunder; (f) sixth, to pay all
other Obligations, including all fees, expenses and interest thereon, in
accordance with the provisions of subsection (ii) hereof, until all
such Obligations are paid in full; and (ii) thereafter, to the Borrowers
or such other Person entitled thereto under applicable law.

 

ARTICLE 8

THE AGENT

 

SECTION 8.1         Actions.  Each Lender and the holder of each Note
authorize the Agent to act on behalf of such Lender or holder under this
Agreement and any other Loan Document and, in the absence of other written
instructions from the Required Lenders received from time to time by the Agent
(with respect to which the Agent agrees that it will, subject to the last two

 

63

 

sentences of this Section 8.1,
comply), to exercise such powers hereunder and thereunder as are specifically
delegated to or required of the Agent by the terms hereof and thereof, together
with such powers as may be reasonably incidental thereto.  Each Lender (including, without limitation,
UPSC in its capacity as a Lender) agrees (which agreement shall survive any
termination of this Agreement) to indemnify the Agent, severally but not
jointly, pro rata according to such Lender’s aggregate percentage of the
Commitments from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever which may at any time be imposed on, incurred
by, or asserted against the Agent in any way relating to or arising out of this
Agreement, the Notes, or any other Loan Document, including the reimbursement
of the Agent for all out-of-pocket expenses (including reasonable attorneys’
fees actually incurred) incurred by the Agent hereunder or in connection
herewith or in enforcing the Obligations of the Borrowers under this Agreement
or any other Loan Document, in all cases as to which the Agent is not
reimbursed by the Borrowers; provided that no Lender shall be liable for the
payment of any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements
determined by a court of competent jurisdiction in a final proceeding to have
resulted primarily from the Agent’s gross negligence or willful
misconduct.  Notwithstanding any other
provision of this Agreement to the contrary, the Agent shall not be required to
take any action hereunder or under any other Loan Document, or to prosecute or
defend any suit in respect of this Agreement or any other Loan Document, unless
it is indemnified to its satisfaction by the Lenders against loss, costs,
liability and expense.  If any indemnity
in favor of the Agent shall become impaired in any material respect, it may
call for additional indemnity and cease to do the acts indemnified against
until such additional indemnity is given.

 

SECTION 8.2         Funding
Reliance, Etc.  Unless the Agent
shall have been notified by telephone, confirmed in writing, by any Lender by
3:00 p.m., Atlanta, Georgia time, on the day prior to a Borrowing that
such Lender will not make available the amount which would constitute its
Working Capital Loan Percentage of the Working Capital Facility Loans on the
date specified therefor, the Agent may assume that such Lender has made such
amount available to the Agent and, in reliance upon such assumption, make
available to the Borrowers a corresponding amount; provided,
however, that the Agent shall have no obligation to do so.  If such amount is made available by such
Lender to the Agent on a date after the date of such Borrowing, such Lender
shall pay to the Agent on demand interest on such amount at the Federal Funds
Rate for the number of days from and including the date of such Borrowing to
the date on which such amount becomes immediately available to the Agent,
together with such other compensatory amounts as may be required to be paid by
such Lender to the Agent pursuant to the Rules for Interbank Compensation
of the Council on International Banking or the Clearinghouse Compensation
Committee, as the case may be, as in effect from time to time.  A statement of the Agent submitted to any
Lender with respect to any amounts owing under this Section 8.2
shall be conclusive, in the absence of manifest error.  If such amount is not in fact made available
to the Agent by such Lender within three (3) Business Days after the date
of such Borrowing, the Agent shall be entitled to recover such amount, with
interest thereon at the rate per annum then applicable to the Loans comprising
such Borrowing, within five Business Days after demand, from the Borrowers.

 

SECTION 8.3         Exculpation.  Neither the Agent nor any of its directors,
officers, employees or agents shall be liable to any Lender for any action
taken or omitted to be taken by

 

64

 

it under this
Agreement, the Notes, or any Loan Document, or in connection herewith or
therewith, except for its own willful misconduct or gross negligence.  The Agent shall not be responsible to any
Lender for any recitals, statements, representations or warranties herein or in
any certificate or other document delivered in connection herewith or for the
authorization, execution, effectiveness, genuineness, validity, enforceability,
perfection, collectibility, or sufficiency of any of the Loan Documents, the
financial condition of the Borrowers or any Subsidiary or the condition or
value of any of the Collateral, or be required to make any inquiry concerning
either the performance or observance of any of the terms, provisions or
conditions of any of the Loan Documents, the financial condition of any
Borrower or any Subsidiary or the existence or possible existence of any
Default.  The Agent shall be entitled to
rely upon advice of counsel concerning legal matters and upon any notice,
consent, certificate, statement or writing which it believes to be genuine and
to have been presented by a proper Person.

 

SECTION 8.4         Successor.  The Agent may resign as such at any time upon
at least thirty (30) days’ prior notice to the Borrowers’ Representative and
all Lenders, such resignation not to be effective until a successor Agent is in
place.  If the Agent at any time resigns,
the Required Lenders may appoint another Lender as a successor Agent which shall
thereupon become the Agent hereunder.  If
no successor Agent shall have been so appointed by the Required Lenders, and
shall have accepted such appointment, within thirty (30) days after the
retiring Agent’s giving notice of resignation, then the retiring Agent may, on
behalf of the Lenders, appoint a successor Agent, which shall be one of the
Lenders or a financial institution reasonably acceptable to the Borrowers
organized under the laws of the United States or any state thereof and having a
combined capital and surplus of at least Five Hundred Million Dollars
($500,000,000).  Upon the acceptance of
any appointment as Agent hereunder by a successor Agent, such successor Agent
shall be entitled to receive from the retiring Agent such documents of transfer
and assignment as such successor Agent may reasonably request, and shall
thereupon succeed to and become vested with all rights, powers, privileges, and
duties of the retiring Agent, and the retiring Agent shall be discharged from
its duties and obligations under this Agreement and the other Loan Documents.

 

SECTION 8.5         Loans
and other Transactions by the Agent and its Affiliates.  The Agent shall have the same rights and
powers with respect to (a) the Loans made by it or any of its Affiliates,
and (b) the Notes held by it or any of its Affiliates, as any Lender and
may exercise the same as if it were not the Agent.  UPSC and its Affiliates may accept deposits
from, lend money to, act as trustee under indentures of, and generally engage
in any kind of business with, any Loan Party or any Person who may do business
with or own securities of the any Loan Party, all as if UPSC were not the Agent
and without any duty to account therefor to the Lenders.

 

SECTION 8.6         Credit
Decisions.  Each Lender acknowledges that
it has, independently of the Agent and each other Lender, and based on such
financial information and such other documents, information and investigations
as it has deemed appropriate, made its own credit decision to extend its
Commitments, to make the Loans.  Each
Lender also acknowledges that it will, independently of the Agent and each
other Lender, and based on such other documents, information and investigations
as it shall deem appropriate at any time, continue to make its own credit
decisions as to exercising or not exercising from time to time any rights and
privileges available to it under this Agreement or any other Loan Document.

 

65

 

SECTION 8.7         Copies,
Etc.  The Agent shall give prompt
notice to each Lender of each notice or request required or permitted to be
given to the Agent by the Borrowers pursuant to the terms of this
Agreement.  The Agent will distribute to
each Lender each Instrument received for its account and copies of all other
communications received by the Agent from the Borrower for distribution to the
Lenders by the Agent in accordance with the terms of this Agreement.  The Agent shall also promptly provide each
Lender with true, correct and complete copies of all appraisals and field audit
reports conducted with respect to any Collateral and any Borrower.  Notwithstanding anything herein contained to
the contrary, all notices and communications to, with or from the Borrowers
under this Agreement and the other Loan Documents shall be effected by the
Borrowers through the Agent.

 

ARTICLE 9

MISCELLANEOUS

 

SECTION 9.1         Waivers,
Amendments, Etc.

 

(a)         The
provisions of this Agreement and of each other Loan Document may from time to
time be amended, modified or waived, if such amendment, modification or waiver
is in writing and, (x) in the case of an amendment or modification, is
consented to by the Borrowers and the Required Lenders or (y) in the case of a
waiver of any obligation of any Loan Party or of compliance by any Loan Party
with any prohibition contained in this Agreement or any other Loan Document, is
consented to by the Required Lenders; provided, however, that no such
amendment, modification or waiver, or any other agreement with respect to the
transactions contemplated hereby:

 

(i)          which
would modify any requirement hereunder that any particular action be taken by
all the Lenders or by the Required Lenders shall be effective unless consented
to in writing by each Lender;

 

(ii)         which
would modify this Section 9.1, change the definition of “Required
Lenders,” “Borrowing Base,” “Eligible Account,” “Eligible Inventory” or “Inventory
Sublimit”; increase the Working Capital Facility Commitment Amount; change any
Working Capital Facility Percentage for any Lender; reduce any fees payable to
the Lenders described in Article 2 or Article 3; extend the Working
Capital Facility Maturity Date; or subject any Lender to any additional
obligations shall be made without the written consent of each Lender;

 

(iii)        which
would extend the due date for, or reduce the amount of, any payment or
prepayment of principal of or interest on any Loan or any fee or other
Obligation (or reduce the principal amount of or rate of interest on any Loan)
shall be made without the written consent of each Lender affected thereby;

 

(iv)        which
would subordinate any of the Obligations or any Lien in favor of the Agent to
any other Indebtedness or any Lien securing any such Indebtedness shall be made
without the written consent of each Lender;

 

(v)         which
would release any Borrower or any Guarantor from liability for all or any part
of the Obligations, or which would release the Agent’s security interest in any
Collateral with a value in excess of $250,000 in the aggregate for any calendar
year, shall be made without the written consent of all Lenders; or

 

66

 

(vi)        which
would affect adversely the interests, rights, compensation or obligations of
the Agent shall be made without the written consent of the Agent.

 

(b)         No
failure or delay on the part of the Agent, any Lender or the holder of any Note
in exercising any power or right under this Agreement or any other Loan
Document shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power or right preclude any other or further exercise
thereof or the exercise of any other power or right.  No notice to or demand on any Borrower in any
case shall entitle any Borrower to any notice or demand in similar or other circumstances.  No waiver or approval by the Agent, any
Lender or the holder of any Note under this Agreement or any other Loan
Document shall, except as may be otherwise stated in such waiver or approval,
be applicable to subsequent transactions. 
No waiver or approval hereunder shall require any similar or dissimilar
waiver or approval thereafter to be granted hereunder.

 

(c)         Neither
any Lender or the Agent shall be under any obligation to marshal any assets in
favor of any Borrower or any other Loan Party or against or in payment of any
or all of the Obligations.  Recourse for
security shall not be required at any time. 
To the extent that any Borrower makes a payment or payments to the Agent
or the Lenders, or the Agent or the Lenders enforce their security interests or
exercise their rights of setoff, and such payment or payments or the proceeds
of such enforcement or setoff or any part thereof are subsequently for any
reason invalidated, set aside or required to be repaid to a trustee, receiver
or any other party under any bankruptcy law, state or federal law, common law
or equitable cause, then to the extent of such recovery, the obligation or part
thereof originally intended to be satisfied, and all Liens, rights and remedies
therefor, shall be revived and continued in full force and effect as if such
payment had not been made or such enforcement or setoff had not occurred.

 

SECTION 9.2         Notices.  All notices hereunder shall be in writing or
by telecopy and shall be sufficiently given to the Agent, the Lenders or the
Borrowers if addressed or delivered to them at the following addresses:

 

	
  If to the
  Lender:

  	
   

  	
  UPS Capital
  Corporation

  
	
   

  	
   

  	
  35 Glenlake
  Parkway

  
	
   

  	
   

  	
  Suite 500

  
	
   

  	
   

  	
  Atlanta, GA
  30328

  
	
   

  	
   

  	
  Attention: Legal
  Department

  
	
   

  	
   

  	
  Telecopier No.:
  (404) 828-3775

  
	
   

  	
   

  	
   

  
	
  with a copy to

  	
   

  	
  King &
  Spalding, LLP

  
	
  (which shall not

  	
   

  	
  191 Peachtree
  Street

  
	
  constitute
  notice):

  	
   

  	
  Atlanta, Georgia
  30303-1763

  
	
   

  	
   

  	
  Attention:
  Albert H. Conrad, Jr., Esq.

  
	
   

  	
   

  	
  Telecopier No.:
  (404) 572-5100

  

 

67

 

	
  If one or more
  Borrowers:

  	
   

  	
  National R.V.
  Holdings, Inc.

  
	
   

  	
   

  	
  3411 North
  Perris Blvd.

  
	
   

  	
   

  	
  Perris,
  California 92571

  
	
   

  	
   

  	
  Attention: Chief
  Financial Officer

  
	
   

  	
   

  	
  Telecopier No.:
  (951) 943-8498

  
	
   

  	
   

  	
   

  
	
  with a copy to

  	
   

  	
  Heller Ehrman,
  LLP

  
	
  (which shall not

  	
   

  	
  Times Square
  Tower

  
	
  constitute
  notice):

  	
   

  	
  7 Times Square

  
	
   

  	
   

  	
  New York, New
  York 10036

  
	
   

  	
   

  	
  Attention:
  Stephen M. Davis, Esq.

  
	
   

  	
   

  	
  Telecopier No.:
  (212) 763-7600

  
	
   

  	
   

  	
   

  
	
  If to a Lender:

  	
   

  	
  In accordance
  with the notice information set forth on the signature page attached
  hereto for such Lender or, for Lenders that become Lenders after the Closing
  Date, in accordance with the notice information set forth in the applicable
  assignment documentation for such Lender

  

 

or at such other
address as any party may designate to any other party by written notice.  All such notices and communications shall be
deemed to have been duly given:  at the
time delivered by hand, if personally delivered; when received, if deposited in
the mail, postage prepaid; when transmission is verified, if telecopied; and on
the next Business Day, if timely delivered to an air courier guaranteeing
overnight delivery.

 

SECTION 9.3         Costs
and Expenses.  The Borrowers agree to
pay all reasonable out-of-pocket expenses of the Agent for the negotiation,
preparation, execution, and delivery of this Agreement and each other Loan
Document, including schedules and exhibits, and any amendments, waivers,
consents, supplements, terminations, releases or other modifications to this
Agreement or any other Loan Document as may from time to time hereafter be
required (including the reasonable fees and expenses of counsel for the Agent,
or of any consultants or other experts retained by the Agent from time to time
in connection therewith) whether or not the transactions contemplated hereby
are consummated, and to pay all expenses of the Lender (including reasonable
fees and expenses of counsel to the Agent, or of any consultants or other
experts retained by the Agent) incurred in connection with the preparation and
review of the form of any Instrument relevant to this Agreement, the Notes or
any other Loan Document.  The Borrowers
also agree to pay and hold the Agent and the Lenders harmless from any stamp,
documentary, intangibles, transfer or similar taxes or charges, and all
recording or filing fees with respect to the Loan Documents or any payments to
be made thereunder, and to reimburse the Agent and each Lender upon demand for
all out-of-pocket expenses (including attorneys’ fees and expenses) incurred by
the Agent or such Lender in enforcing the Obligations of the Borrower or any
Subsidiary under this Agreement or any other Loan Document or related Document
or in connection with any restructuring or “work-out” of any Obligations.  The Agent will provide copies of statements
and invoices with respect to such fees and expenses upon request by the
Borrowers from time to time.

 

68

 

SECTION 9.4         Indemnification.  In consideration of the execution and
delivery of this Agreement by the Agent and each Lender and the extension of
the Commitments, Borrowers hereby, jointly and severally, indemnify, exonerate
and hold the Agent and each Lender, their respective successors and assigns,
each of their respective officers, directors, employees, partners, attorneys
and agents and each of their respective successors and assigns (collectively,
the “Lender Parties”) free and harmless from and against any and all
actions, causes of action, suits, losses, costs, liabilities (including, but
not limited to, Environmental Liabilities and Costs), damages and expenses
(irrespective of whether such Lender Party is a party to the action for which
indemnification hereunder is sought), including attorneys’ fees and
disbursements (the “Indemnified Liabilities”), incurred by the Lender
Parties or any of them or asserted or awarded against the Lender Parties or any
of them as a result of, or arising out of, or relating to:

 

(a)         any
transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of any Loan or Letter of Credit (including,
without limitation, the Acquisition);

 

(b)         the
use of any of the proceeds of any Loan or Letter of Credit by any Borrower or
any of its Subsidiaries or any beneficiary of a Letter of Credit for any other
purpose;

 

(c)         any
information furnished by any Loan Party in connection with the syndication of
this Agreement;

 

(d)         the
making of any claim by any investment banking firm, broker or third party in
each case claiming through any Loan Party or as a result of their relationship
to such parties that it is entitled to compensation from the Agent or any
Lender in connection with this Agreement;

 

(e)         the
entering into and performance of this Agreement and any other Loan Document by
any of the Lender Parties (other than the breach by such Lender Party of this
Agreement);

 

(f)          the
existence of any contaminant, in, under, on or otherwise affecting any property
owned, used, operated, or leased by any Borrower or any Subsidiary in the past,
present, or future or any surrounding areas affected by such property,
regardless of whether the existence of the contaminant is related to the past,
present, or future operations of any Borrower and its Subsidiaries, or their
predecessors in interest or any other Person; any Environmental Liabilities and
Costs related to any property owned, used, operated, or leased by any Borrower
or any Subsidiary in the past, present, or future; any Environmental
Liabilities and Costs related to the past, present, or future operations of any
Borrower or any Subsidiaries; any alleged violations of any Environmental Law
related to any property owned, used, operated, or leased by any Borrower or any
Subsidiary in the past, present, or future; any alleged violations of any
Environmental Law related to the past, present, or future operations of any
Borrower or any Subsidiaries; the performance of any remedial action that is
related to any property owned, used, operated, or leased by any Borrower or any
Subsidiaries in the past, present, or future; the performance of any remedial
action that is related to the past, present, or future operations of any
Borrower or any Subsidiaries; and the imposition of any Lien on any property
affected by this Agreement or any of the other Loan Documents arising from any
Environmental Liabilities or Costs;

 

69

 

(g)         the
breach in any material respect by any Loan Party of any representation or
warranty set forth in this Agreement or any Loan Document;

 

(h)         the
failure of any Loan Party to comply in any material respect with any term,
condition, or covenant set forth in this Agreement or any Loan Document; or

 

(i)          any
claim, litigation, investigation or proceeding relating to any of the
foregoing, whether or not the Agent or any Lender (or any of their respective
officers, directors, partners, employees or agents) is a party thereto;

 

except for any
such Indemnified Liabilities arising for the account of a particular Lender
Party by reason of the relevant Lender Party’s gross negligence or willful
misconduct as determined by a final and nonappealable decision of a court of
competent jurisdiction.  If and to the
extent that the foregoing undertaking may be unenforceable for any reason, the
Borrowers hereby agree to make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is permissible under
applicable law.  The foregoing indemnity
shall become effective immediately upon the execution and delivery hereof and
shall remain operative and in full force and effect notwithstanding the
consummation of the transactions contemplated hereunder, the repayment of any
of the Loans made hereunder, the invalidity or unenforceability of any term or
provision of this Agreement or any other Loan Document, or any investigation
made by or on behalf of any Lender or the Agent.

 

SECTION 9.5         Survival.  The obligations of the Borrowers under Sections 2.4, 3.5, 9.3 and 9.4 in each case survive any termination of
this Agreement and the payment in full of principal, interest and other amounts
payable hereunder and under the Notes and the other Loan Documents.  The representations and warranties made by
the Borrowers in this Agreement, the Notes and in each other Loan Document
shall survive the execution and delivery of this Agreement, the Notes and each
such other Loan Document.

 

SECTION 9.6         Severability.  Any provision of this Agreement, the Notes or
any other Loan Document which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions of this Agreement, the Notes or such other Loan Document or
affecting the validity or enforceability of such provision in any other
jurisdiction.

 

SECTION 9.7         Headings.  The various headings of this Agreement, the
Notes and of each other Loan Document are inserted for convenience only and
shall not affect the meaning or interpretation of this Agreement, the Notes or
such other Loan Document or any provisions hereof or thereof.

 

SECTION 9.8         Counterparts,
Effectiveness, Etc.  This Agreement
may be executed by the parties hereto in several counterparts, each of which
shall be executed by the Borrowers, the Lenders and the Agent and be deemed to
be an original and all of which shall constitute together but one and the same
agreement.  This Agreement shall become
effective when counterparts hereof executed on behalf of the Borrowers and each
Lender shall have been received by the Agent and notice thereof shall have been
given by the Agent to the Borrowers and each Lender.

 

70

 

SECTION 9.9         Governing
Law; Entire Agreement.

 

(a)         THIS
AGREEMENT AND THE NOTES SHALL EACH BE DEEMED TO BE A CONTRACT MADE UNDER AND
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF GEORGIA.  THIS AGREEMENT, THE NOTES AND THE OTHER LOAN
DOCUMENTS CONSTITUTE THE ENTIRE UNDERSTANDING AMONG THE PARTIES HERETO WITH
RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDE ANY PRIOR AGREEMENTS,
WRITTEN OR ORAL, WITH RESPECT THERETO. 
WITHOUT LIMITATION OF THE FOREGOING, THIS AGREEMENT AMENDS, RESTATES,
SUPERSEDES AND REPLACES THAT CERTAIN LOAN AND SECURITY AGREEMENT, DATED AS OF AUGUST 28
2002, BETWEEN UPSC AND BORROWERS, AS AMENDED TO DATE (“EXISTING AGREEMENT”),
AND UPON THE FUNDING OF THE INITIAL WORKING CAPITAL FACILITY LOAN UNDER THIS
AGREEMENT, THE EXISTING AGREEMENT SHALL BE DEEMED TO BE TERMINATED WITHOUT
FURTHER ACTION BY ANY PARTY THERETO, PROVIDED, HOWEVER, THAT THOSE PROVISIONS
OF THE EXISTING AGREEMENT WHICH BY THEIR TERMS EXPRESSLY SURVIVE TERMINATION OF
THE EXISTING AGREEMENT SHALL CONTINUE IN FULL FORCE AND EFFECT.

 

(b)         EACH
PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY
GEORGIA STATE OR FEDERAL COURT SITTING IN ATLANTA, GEORGIA IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR
RELATED DOCUMENT, AND EACH HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT
OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH GEORGIA
STATE OR FEDERAL COURT.  EACH BORROWER
AGREES THAT SUCH JURISDICTION SHALL BE EXCLUSIVE WITH RESPECT TO ANY SUCH
ACTION OR PROCEEDING BROUGHT BY IT AGAINST THE AGENT OR ANY LENDER.  EACH PARTY TO THIS AGREEMENT HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, THE
DEFENSE OF ANY INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR
PROCEEDING.

 

(c)         EACH
BORROWER HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT OR RELATED DOCUMENT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS
MAY BE MADE BY REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO
BORROWERS’ REPRESENTATIVE AT ITS ADDRESS SET FORTH IN SECTION 9.2 AND
SERVICE SO MADE SHALL BE DEEMED COMPLETED FIVE (5) DAYS AFTER THE SAME
SHALL HAVE BEEN SO DEPOSITED IN THE MAILS OF THE UNITED STATES OF AMERICA, OR,
AT THE AGENT’S AND/OR ANY LENDER’S OPTION, BY SERVICE UPON CSC THE UNITED
STATES CORPORATION COMPANY (OR ANY SUCCESSOR CORPORATION), OR ANY OTHER LIKE
ORGANIZATION WHICH EACH

 

71

 

BORROWER IRREVOCABLY APPOINTS AS SUCH BORROWER’S AGENT FOR THE PURPOSE
OF ACCEPTING SERVICE WITHIN THE STATE OF GEORGIA.  NOTHING HEREIN SHALL AFFECT THE RIGHT TO
SERVE PROCESS IN ANY MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF AGENT
OR ANY LENDER TO BRING PROCEEDINGS AGAINST ANY BORROWER IN THE COURTS OF ANY
OTHER JURISDICTION.  EACH BORROWER WAIVES
ANY OBJECTION TO JURISDICTION AND VENUE OF ANY ACTION INSTITUTED HEREUNDER AND
SHALL NOT ASSERT ANY DEFENSE BASED ON LACK OF JURISDICTION OR VENUE OR BASED
UPON FORUM NON CONVENIENS.

 

SECTION 9.10       Successors
and Assigns.  This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns; provided, however,
that the Borrowers may not assign or transfer their rights or obligations
hereunder without the prior written consent of all Lenders; and the rights of
sale, assignment and transfer of the Lenders are subject to Section 9.11.

 

SECTION 9.11       Sale
and Transfers, Participations, Etc.

 

(a)         Any
Lender may at any time assign, syndicate or sell to one or more Participants
participating interests in any Loan owing to such Lender, any Note held by such
Lender, the Commitment of such Lender, any interest of any Lender in any Letter
of Credit Obligations or any other interest of Lender under this Agreement and
any Loan Document.  In the event of any
such sale by a Lender of participating interests to a Participant, such Lender’s
obligations under this Agreement shall remain unchanged and such Lender shall
remain solely responsible for the performance thereof, such Lender shall remain
the holder of any such Note for all purposes under this Agreement and the other
Loan Documents and the Borrowers and the Agent shall continue to deal solely
and directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement and the other Loan Documents.  The Borrowers agree that if amounts
outstanding under this Agreement and the Notes are due or unpaid, or shall have
been declared or shall have become due and payable upon the occurrence and
continuance of an Event of Default, each Participant shall be deemed to have
the right of setoff in respect of its participating interest in amounts owing
under this Agreement and any Note to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement or any Note, provided that such right of setoff shall be subject to
the approval of the Required Lenders and to the obligations of such Participant
to share with the Lenders, and the Lenders agree to share with such
Participant, as provided in Section 3.7 as if the Participant were
a Lender hereunder.  The Borrowers also
agree that any Participant shall be entitled to the benefits of (i) Section 9.4
and (ii) Sections 2.5 and 3.5, with respect to its
participation in the Commitments and the Loans outstanding from time to time; provided, that no Participant shall be entitled to receive
any greater amount pursuant to the Sections referred to in clause (ii) than
the transferor Lender would have been entitled to receive in respect of the
amount of the participation transferred by such transferor Lender to such
Participant had no such transfer occurred and each Participant shall be subject
to the obligations of such Lender set forth in such Sections.  No Lender shall grant any participation under
which the Participant shall have rights to approve any amendment to or waiver
of this Agreement or any other Loan Document, other than those items which
require the consent of all Lenders hereunder.

 

72

 

(b)         With
the consent of the Agent (and prior to the occurrence of an Event of Default,
with the consent of the Borrowers’ Representative which shall not be
unreasonably withheld or delayed), any Lender may at any time sell to any
Purchasing Lender all or any part in a minimum amount of Five Million Dollars
($5,000,000), of its rights and obligations under this Agreement and the Notes
pursuant to a Transfer Supplement, executed by such Purchasing Lender, such
transferor Lender and the Agent.  Upon (i) such
execution of such Transfer Supplement, and (ii) delivery of a fully
executed copy thereof to the Borrowers’ Representative, such Purchasing Lender
shall for all purposes be a Lender party to this Agreement and shall have all
the rights and obligations of a Lender under this Agreement, to the same extent
as if it were an original party hereto with an Working Capital Facility
Percentage as set forth in such Transfer Supplement, and no further consent or
action by the Borrowers, the Lenders or the Agent shall be required.  Such Transfer Supplement shall be deemed to
amend this Agreement to the extent, and only to the extent, necessary to
reflect the addition of such Purchasing Lender and the resulting adjustment of
Working Capital Facility Percentages arising from the purchase by such
Purchasing Lender of all or a portion of the rights and obligations of such
transferor Lender under this Agreement and the Notes.  Upon the consummation of any transfer to a
Purchasing Lender pursuant to this paragraph (b), the transferor Lender, the
Agent and the Borrowers shall make appropriate arrangements so that, if
required, replacement Notes are issued to such transferor Lender and new Notes
to the Purchasing Lender in the amount equal to their respective Commitments
and outstanding Loans, as appropriately adjusted pursuant to such Transfer
Supplement.

 

(c)         The
Agent shall maintain at its address referred to herein a copy of each Transfer
Supplement delivered to it and a register (“Register”)for the
recordation of the names and addresses of the Lenders and the Commitment of,
and principal amount of the Loans owing to, each Lender from time to time.  The entries in the Register shall be
conclusive, in the absence of manifest error, and the Borrowers, the Agent and
the Lenders may treat each Person whose name is recorded in the Register as the
owner of the Loans recorded therein for all purposes of this Agreement.  The Register shall be available for
inspection by the Borrowers or any Lender at any reasonable time and from time
to time upon reasonable prior notice.

 

(d)         Upon
its receipt of a Transfer Supplement executed by a transferor Lender, the Agent
and a Purchasing Lender together with payment by such Purchasing Lender to the
Agent, for the account of the Agent and not for the account of the Lenders, of
a registration and processing fee of Three Thousand Five Hundred Dollars
($3,500), and the Notes subject to such Transfer Supplement, the Agent shall (i) accept
such Transfer Supplement, (ii) record the information therein in the
Register and (iii) give prompt notice of such acceptance and recordation
to the Lenders and the Borrowers.

 

(e)         If,
pursuant to this Section 9.11, any interest in this Agreement or
any Note is transferred to any Participant or Purchasing Lender which is
organized under the laws of any jurisdiction other than the United States or
any State thereof, the Agent shall cause such Participant or Purchasing Lender,
concurrently with the effectiveness of such transfer, (i) to represent to
the transferor Lender (for the benefit of the transferor Lender, the Agent and
the Borrowers) that under applicable law and treaties no taxes will be required
to be withheld by the Agent, the Borrowers or the transferor Lender with
respect to any payments to be made to such Participant or Purchasing Lender in
respect of the Loans, (ii) to furnish to the transferor Lender,

 

73

 

the Agent and the Borrowers two (2) properly executed original
Internal Revenue Service Forms 4224 or 1001 (or any successor forms) and
properly executed Internal Revenue Service Forms W-8 and W-9, as the case may
be (wherein such Participant or Purchasing Lender claims entitlement to
complete exemption from the United States federal withholding tax on all
interest payments hereunder and all fees payable under Section 2.3),
and (iii) to agree (for the benefit of the transferor Lender, the Agent
and the Borrowers) to provide the transferor Lender, the Agent and the
Borrowers’ Representative new Internal Revenue Service Forms 4224 or 1001 upon
the expiration or obsolescence of any previously delivered form or after the
occurrence of any event requiring a change in the most recent forms delivered
by it to the transferor Lender, the Agent and the Borrowers, and comparable
statements in accordance with applicable United States laws and regulations and
amendments duly executed and completed by such Participant or Purchasing
Lender, and to comply from time to time with all applicable United States laws
and regulations with regard to such withholding tax exemption.

 

(f)          Notwithstanding
anything to the contrary set forth in this Section 9.11, (i) any
Lender may sell to any of its Affiliates all or any part of its rights and
obligations under this Agreement and the Notes, (ii) any Lender may create
a security interest in all or any portion of its rights under this Agreement
(including, without limitation, the Loans owing to it and the Notes held by it)
in favor of the Federal Reserve Bank in accordance with Regulation A of the
F.R.S. Board, and (iii) upon the occurrence and during the continuance of
an Event of Default, any Lender may sell to any Purchasing Lender all or any
part of its rights and obligations under this Agreement and the Notes, in the
case of clauses (i) and (ii) above, notwithstanding that the
Borrowers do not consent to such sale, provided such Lender has obtained the
consent of the Agent (which consent shall not be unreasonably withheld or
delayed) and otherwise meets the requirements of this Section 9.11.

 

SECTION 9.12       Other
Transactions.  Nothing contained
herein shall preclude the Agent or any other Lender from engaging in any
transaction, in addition to those contemplated by this Agreement or any other
Loan Document, with any Borrower or any of its Affiliates in which any Borrower
or such Affiliate is not restricted hereby from engaging with any other Person.

 

SECTION 9.13       Confidentiality.  The Lenders and the Agent shall hold all
non-public, proprietary or confidential information (which has been identified
as such by the Borrowers) obtained pursuant to the requirements of this
Agreement in accordance with their customary procedures for handling
confidential information of this nature and in accordance with safe and sound
lending practices; however, the Lenders and the Agent may make disclosure of
any such information to their examiners, Affiliates, outside auditors, counsel,
consultants, operators and other professional advisors in connection with this
Agreement or as required by any proposed syndicate member, transferee or
participant in connection with the contemplated transfer of any Note,
Obligations or Commitments or the contemplating granting of a participation
therein, as required or requested by any governmental authority or
representative thereof or in connection with the enforcement hereof or of any
other Loan Document or pursuant to legal process; provided,
however, that any such proposed syndicate member or proposed
transferee or participant shall have agreed in writing for the Borrowers’
benefit to be bound by the terms of this Section 9.13.  In no event shall any Lender or the Agent be
obligated or required to return any materials furnished to it by the Borrowers
or any of their Subsidiaries.

 

74

 

SECTION 9.14       Change
in Accounting Principles.  If any
changes in accounting principles from those used in the preparation of the
financial statements referred to in clause (a)(i) of Section 5.4
hereafter occur as a result of the promulgation of rules, regulations,
pronouncements or opinions by the Financial Accounting Standards Board or the
American Institute of Certified Public Accountants (or successors thereto or
agencies with similar functions) result in a change in the method of
calculation of financial covenants, standards or terms found in this Agreement,
the parties hereto agree to enter into negotiations in order to amend such
financial covenants, standards or terms so as to equitably reflect such changes
with the desired result that the evaluations of the Borrowers’ financial
condition shall be the same after such changes as if such changes had not been
made; provided, however, that, until the
parties hereto have reached a definitive agreement on such amendments the
Borrowers shall not change their Fiscal Year and the Borrowers’ financial
condition and operations shall continue to be evaluated on the same principles
as those used in the preparation of the financial statements referred to in
clause (a)(i) of Section 5.4.

 

SECTION 9.15       Waiver
of Jury Trial, Etc.  THE AGENT, THE
LENDERS AND THE BORROWERS HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY
WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS
AGREEMENT, THE NOTES OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF THE
AGENT, SUCH LENDERS OR THE BORROWERS. 
THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE AGENT AND SUCH LENDERS
ENTERING INTO THIS AGREEMENT.

 

SECTION 9.16       Limitation
of Liability.  NEITHER THE AGENT, THE
LENDERS NOR ANY AFFILIATE THEREOF SHALL HAVE ANY LIABILITY WITH RESPECT TO, AND
THE BORROWERS HEREBY WAIVE, RELEASE AND AGREE NOT TO SUE UPON, ANY CLAIM FOR
ANY SPECIAL, INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES SUFFERED BY
ANY BORROWER IN CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO THIS
AGREEMENT, THE LOAN DOCUMENTS, THE TRANSACTIONS CONTEMPLATED HEREIN, OR ANY
ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH.

 

SECTION 9.17       Usury
Savings Clause.  Notwithstanding
anything to the contrary in this Agreement or any other Loan Document, if at
any time any rate of interest accruing on any Obligation, when aggregated with
all amounts payable by any Loan Party under any of the Loan Documents that are
deemed or construed to be interest accrued or accruing on such Obligation under
applicable law, exceeds the highest rate of interest permissible under any law
which a court of competent jurisdiction shall, in a final determination, deem
applicable to such Lender with respect to such Obligation (each a “Maximum
Lawful Rate”), then in such event and so long as the Maximum Lawful Rate
would be so exceeded, such rate of interest shall be reduced to the Maximum
Lawful Rate; provided that if at any time
thereafter such rate of interest accruing on Obligations held by such Lender is
less than the Maximum Lawful Rate, the Borrowers shall continue to pay interest
to such Lender at the Maximum Lawful Rate until such time as the total interest
received by such Lender in respect of the Obligations held by it is equal to
the total interest which such Lender would have received had interest on all
Obligations held

 

75

 

by such Lender
(but for the operation of this Section 9.17) accrued at the rate
otherwise applicable under this Agreement and the other Loan Documents.  Thereafter, interest payable to such Lender
in respect of the Obligations held by it shall accrue at the applicable rate
set forth in this Agreement or other Loan Documents unless and until such rate
again exceeds the Maximum Lawful Rate, in which event this Section 9.17
shall again apply.  In no event, shall
the total interest received by any Lender pursuant to the terms hereof exceed
the amount which such Lender could lawfully have received had interest been
calculated for the full term of this Agreement at the Maximum Lawful Rate.  In the event that the Maximum Lawful Rate is
calculated pursuant to this Section 9.17, (a) if required by
applicable law, such interest shall be calculated at a daily rate equal to the
Maximum Lawful Rate divided by the number of days in the year in which such
calculation is made, and (b) if permitted by applicable law, the Borrowers
and such Lender shall (i) characterize any non-principal payment as an
expense, fee or premium rather than as interest, (ii) exclude voluntary
prepayments and the effect thereof, and (iii) amortize, prorate, allocate
and spread in equal or unequal parts the total amount of interest throughout
the entire contemplated term of the Loans so that interest for the entire term
of the Loans shall not exceed the Maximum Lawful Rate.  In the event that a court of competent
jurisdiction, notwithstanding the provisions of this Section 9.17
shall make a final determination that such Lender has received interest in
excess of the Maximum Lawful Rate, such Lender shall, to the extent permitted
by applicable law, promptly apply such excess, first to any interest due and
outstanding under this Agreement and the other Loan Documents, second to any
principal due and payable under this Agreement and the Notes, third to the
remaining principal amount of the Notes and fourth to other unpaid Obligations
held by such Lender, and thereafter shall refund any excess to the Borrowers or
as a court of competent jurisdiction may otherwise order.

 

SECTION 9.18       TM
Services.  To the extent that at any
time or from time to time hereafter Agent or Lenders arrange for, or give
assurances on Borrowers’ behalf in regard to, any TM Services (as hereinafter
defined), Borrowers acknowledge and agree that: 
(i) neither Agent nor any Lender shall have any duty, obligation or
liability whatsoever to any Borrower in respect thereof, including, without
limitation, as to (A) their initiation, continuation, suspension or
termination, (B) any actions (or omissions) of the party(ies) providing
such services or any other Person, or (C) any charges, fees or other costs
associated therewith; (ii) if this Agreement is terminated, Borrowers
shall cease obtaining all TM Services and if Borrowers shall fail to do so,
Agent may do so itself on behalf of Borrowers under the power of attorney
granted in the Security Agreement; and (iii) the indemnity of Borrowers
granted in Section 9.4 shall extend to and include, without limitation,
any cost, damage, loss or expense occasioned by Agent’s or any Lender’s
arrangement of, or the giving of assurances in regard to, any TM Services.  As used herein, “TM Services” shall
mean all treasury management services, including, without limitation, foreign
exchange, automated clearing house (ACH) services, controlled disbursements and
wire transfer and deposit actively performed by any financial institutions on
behalf of Borrowers.

 

76

 

ARTICLE 10

BORROWING AGENCY

 

SECTION 10.1       Borrowing
Agency Provisions.  If and so long as
there are multiple Borrowers, then:

 

(a)         Each
Borrower acknowledges that it together with each other Borrower make up a
related organization of various entities constituting a single economic and
business enterprise and sharing a substantial identity of interests such that,
without limitation, Borrowers render services to or for the benefit of each
other, purchase or sell and supply goods to or for or forth benefit of each
other, make loans, advances and provide other financial accommodations to or
for the benefit of each other (including the payment of creditors and
guarantees of Indebtedness), provide administrative and management services to
or for the benefit of each other; have centralized accounting, common officers
and directors; and a common business enterprise.  Accordingly, and without limitation, any
credit or other financial accommodation extended to any one Borrower pursuant
hereto will result in direct and substantial economic benefit to each other
Borrower, and each Borrower will likewise benefit from the economic benefit to
each other Borrower, and the Borrowers, as a group, are applying for credit or
other financial accommodations pursuant hereto on a collective basis.

 

(b)         Each
Borrower hereby irrevocably designates Borrowers’ Representative to be its
attorney and agent and in such capacity to borrow, sign and endorse notes, and
execute and deliver all instruments, documents, writings and further assurances
now or hereafter required hereunder, on behalf of such Borrower or Borrowers,
and hereby authorizes Agent to pay over or credit all loan proceeds hereunder
in accordance with the request of Borrowers’ Representative.

 

(c)         The
handling of this credit facility as a co-borrowing facility with a borrowing
agent in the manner set forth in this Agreement is solely an accommodation to
Borrowers and at their specific request. 
None of Agent, any Lender or any other Lender Party shall incur any
liability to Borrowers as a result thereof. 
To induce Agent, the Lenders and each other Lender Party to do so and in
consideration thereof, each Borrower hereby indemnifies Agent, Bank and each
Lender and each other Lender Party and holds Agent, Bank, each issuer of any
Letter of Credit and each Lender harmless from and against any and all
liabilities, expenses, losses, damages and claims of damage or injury asserted
against Agent, any Lender or any other Lender Party by any Person arising from
or incurred by reason of the handling of the financing arrangements of
Borrowers as provided herein, reliance by Agent or any Lender or any other
Lender Party on any request or instruction from Borrowing Representative or any
other action taken by Agent, any Lender or any other Lender Party with respect
to this Section except due to willful misconduct or gross (not mere)
negligence by the indemnified party.

 

(d)         All
Obligations shall be joint and several, and each Borrower shall make payment
upon the maturity of the Obligations by acceleration or otherwise, and such
obligation and liability on the part of each Borrower shall in no way be
affected by any extensions, renewals and forbearance granted by Agent any
Lender or any other Lender Party to any Borrower, failure of Agent or any
Lender, or any other Lender Party to give any Borrower notice of borrowing or
any other notice, any failure of Agent, any Lender to pursue or preserve its
rights against any Borrower, the release by Agent or any Lender or any other
Lender Party of any Collateral now or thereafter acquired from any Borrower,
and such agreement by each Borrower to pay upon any notice issued pursuant
thereto is unconditional and unaffected by prior recourse by Agent, any Lender
or any other Lender Party to the other Borrowers or any Collateral for such
Borrower’s Obligations or the lack thereof.

 

77

 

SECTION 10.2       Waiver
of Subrogation.  Each Borrower
expressly waives any and all rights of subrogation, reimbursement, indemnity,
exoneration, contribution of any other claim which such Borrower may now or
hereafter have against the other Borrowers or other Person directly or
contingently liable for the Obligations hereunder, or against or with respect
to the other Borrowers’ property (including, without limitation, any property
which is Collateral for the Obligations), arising from the existence or
performance of this Agreement, until termination of this Agreement and
repayment in full of the Obligations.

 

SECTION 10.3       Patriot
Act.  Each Lender that is subject to
the Act (as hereinafter defined) and the Agent (for itself and on behalf of any
Lender) hereby notifies the Borrowers that pursuant to the requirements of the
USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26,
2001)) (the “Act”), it is required to obtain, verify and record
information that identifies each Borrower, which information includes the name
and address of each Borrower and other information that will allow such Lender
or the Agent, as applicable, to identify the Borrowers in accordance with the
Act.

 

[signature pages follow]

 

78

 

IN WITNESS WHEREOF, the
parties hereto have caused this Credit Agreement to be executed by their
respective officers thereunto duly authorized as of the day and year first
above written.

 

	
   

  	
  NATIONAL R.V.
  HOLDINGS, INC., as a

  Borrower

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Thomas J.
  Martini

  
	
   

  	
   

  	
   Name:   Thomas
  J. Martini

  
	
   

  	
   

  	
   Title:     Chief
  Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  NATIONAL R.V.,
  INC., as a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Thomas J.
  Martini

  
	
   

  	
   

  	
   Name:   Thomas
  J. Martini

  
	
   

  	
   

  	
   Title:     Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  COUNTRY COACH,
  INC., as a Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Thomas J.
  Martini

  
	
   

  	
   

  	
   Name:   Thomas
  J. Martini

  
	
   

  	
   

  	
   Title:     Treasurer

  

 

[Signature Page to Credit
Agreement]

 

 

	
   

  	
  UPS CAPITAL
  CORPORATION

  
	
   

  	
  as Agent and a
  Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John P.
  Holloway

  
	
   

  	
   

  	
   Name:   John
  P. Holloway

  
	
   

  	
   

  	
   Title:    Director
  of Portfolio Management

  

 

[Signature Page to Credit
Agreement]

 

 

	
   

  	
  WELLS FARGO
  BANK, NATIONAL

  ASSOCIATION, acting through its Wells Fargo

  Business Credit operating division, as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Charlie
  Liles

  
	
   

  	
   

  	
   Name:   Charlie
  Liles

  
	
   

  	
   

  	
   Title:    Vice
  President

  
	
   

  	
   

  	
   

  
	
   

  	
  Notice
  Information:

  
	
   

  	
   

  
	
   

  	
  Wells Fargo Bank
  National Association, acting

  through its Wells Fargo Business Credit operating

  division

  
	
   

  	
  MAC N2642-060

  
	
   

  	
  400 Northridge
  Road, Suite 600

  
	
   

  	
  Atlanta, Georgia
  30350

  
	
   

  	
  Attention:
  Portfolio Manager

  
	
   

  	
  Facsimile
  Number: 770-992-4720

  
	
   

  	
   

  
	
   

  	
  With a copy to:

  
	
   

  	
   

  
	
   

  	
  Stephen D.
  Palmer, Esq.

  
	
   

  	
  Greenberg
  Traurig, LLP

  
	
   

  	
  The Forum

  
	
   

  	
  3290 Northside
  Parkway, Suite 400

  
	
   

  	
  Atlanta, Georgia
  30327

  
	
   

  	
  Facsimile
  Number: 678-553-2261

  

 

[Signature Page to Credit
Agreement]

 

 

Schedule I

 

Commitments as of Closing Date

 

	
  UPS Capital
  Corporation

  	
   

  	
  $

  	
  15,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Wells Fargo
  Bank, National Association, acting through its Wells Fargo Business Credit
  operating division

  	
   

  	
  $

  	
  10,000,000

  	
   

  

 

[Signature Page to Credit Agreement]Exhibit 10.2

 

LOAN MODIFICATION AGREEMENT NO. 1

 

Preamble:  This Loan Modification Agreement (this “Agreement”),
dated as of October 4, 2005 (the “Effective Date”), is made between
UPS Capital Corporation, as Agent; each Person identified as a “Lender” on the
signature page hereof; and each Person identified as “Borrower” on the
signature page hereof, as borrowers (individually and collectively, the “Borrower”),
for the purpose of amending or otherwise modifying the terms of that certain
Loan and Security Agreement, dated as of August 12, 2005 (which, as it has
been, or hereafter may be, modified or amended, the “Loan Agreement”),
among Borrower, the various lenders from time to time party thereto (the “Lenders”)
and UPS Capital Corporation, a Delaware corporation, as a Lender and as agent
for the Lenders (in such capacity, the “Agent”).  Now, therefore, in consideration of the
mutual promises contained herein and in the Loan Agreement, the receipt and
sufficiency of which are hereby acknowledged, Agent, Lenders and Borrower, each
intending to be legally bound, agree as follows:

 

1.             Definitions.  Capitalized terms used herein,
but not expressly defined themselves herein, shall have the meanings given to
such terms in the Loan Agreement.

 

2.             Loan Modifications.  Agent,
Lenders and Borrowers agree to modify Section 1.1 of the Loan
Agreement by deleting the definition of “Condition Precedent Material Adverse
Change” in its entirety and replacing it with the following:

 

“Condition Precedent
Material Adverse Change” means a material adverse change in the
condition (financial or otherwise), operations, performance, business,
properties or prospects of the Borrowers and their Subsidiaries, taken as a
whole, which has resulted in a decrease in the aggregate Net Worth of Borrowers
and their Subsidiaries to an amount less than $50,000,000.

 

3.             Inducing Representations.  To induce
Agent and Lenders to enter into this Agreement, Borrower hereby represents and
warrants that: (i) Borrower is duly authorized to enter into this Agreement,
and this Agreement, upon its execution by Borrower, Agent and each Lender, will
constitute Borrower’s legal, valid and binding obligations enforceable in
accordance with its terms against Borrower; (ii) after giving effect to
this Agreement, no Event of Default exists; (iii) no present right of
setoff, counterclaim, recoupment claim or defense exists in Borrower’s favor in
respect of its payment or performance of any Obligations; and (iv) except
as modified by this Agreement, all terms of the Loan Agreement and each Loan
Document shall remain in full force and effect.

 

4.             Miscellaneous.  Except as otherwise expressly
provided herein, all modifications to the Loan Agreement set forth herein shall
take effect on the Effective Date.  Each
existing Loan Document (including, particularly, any Note) shall be deemed
modified hereby as necessary to conform its terms to the terms of the Loan
Agreement, as modified hereby.  This
Agreement constitutes a Loan Document, and shall be governed and construed
accordingly.  This Agreement constitutes
the entire agreement between Agent, Lenders and Borrower relative to the
subject matter hereof, and supersedes and replaces any prior understandings and
agreements, written or oral, in regard thereto. 
This Agreement shall be binding on, and inure to the benefit of, the
successors and assigns of Borrower, Agent and Lenders.  Borrower shall reimburse Agent for all costs
which Agent incurs, including reasonable attorneys fees, in the preparation,
negotiation, execution and performance of this Agreement, and the recording of
any Loan Documents in connection herewith.

 

 

IN WITNESS
WHEREOF, Agent, Lenders and Borrower have executed this Agreement, by and
through their respective authorized officers, as of the Effective Date.

 

 

	
  “Borrower”:

  	
  “Agent” and “Lender”:

  
	
   

  	
   

  
	
  NATIONAL R.V. HOLDINGS,
  INC.

  	
  UPS CAPITAL CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
    /s/ Thomas
  J. Martini

  	
   

  	
  By:

  	
    /s/ John P.
  Holloway

  
	
   

  	
    Authorized
  Officer

  	
   

  	
   

  	
  Authorized Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  “Lender”:

  
	
   

  	
   

  
	
  NATIONAL R.V., INC.

  	
  WELLS FARGO BANK,
  NATIONAL

  
	
   

  	
  ASSOCIATION, acting
  through its Wells

  
	
   

  	
  Fargo Business Credit
  operating division, as

  
	
   

  	
  a Lender

  
	
  By:

  	
    /s/ Thomas
  J. Martini

  	
   

  	
   

  	
   

  
	
   

  	
    Authorized
  Officer

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Charlie Liles

  
	
   

  	
   

  	
  Name:  Charlie
  Liles

  
	
  COUNTRY COACH, INC.

  	
   

  	
  Title:  Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
    /s/ Thomas
  J. Martini

  	
   

  	
   

  	
   

  
	
   

  	
    Authorized
  Officer

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