Document:

Exhibit
10.1

SRS Labs,
Inc.

Profit Sharing and Bonus Plan

(Adopted by the SRS Labs, Inc. Board of Directors on December
12, 2006)

This profit sharing and
bonus plan shall be known as the SRS Labs, Inc. Profit Sharing and Bonus Plan
(the “Plan”).  The Plan is intended to
qualify as a compensation or bonus plan that is exempt from the application of
the Employee Retirement Income Security Act of 1974, as amended, by reason of
Section 3 of such Act.

1.             Applicability Period

The Plan applies to the
fiscal year of SRS labs, Inc. (the “Company”) ending December 31, 2007 and to
future fiscal years until the Plan is terminated pursuant to Section 11 below.

2.             Components
of the Plan

The Plan has two components: Profit Sharing and Bonus.

3.                                      Eligibility

All full-time, regular employees of the Company and
its subsidiaries are eligible to participate in the Plan.  Consultants, part-time employees, temporary
employees and non-employee directors are not eligible to participate in any
part of the Plan.  A full time regular
employee is defined as one who regularly works an average of 32 hours weekly.

4.                                      Profit-Sharing
Awards

4.1                                 Eligibility for Profit-Sharing Awards. All eligible employees who were
employed by the Company or its subsidiaries from the first day of any fiscal
quarter in which the Company reports net income through the date the Company
files its Quarterly Report on Form 10-Q with the Securities and Exchange
Commission (the “SEC”) for that quarter or, with respect to the fourth quarter,
the date the Company files with the SEC its Annual Report on Form 10-K for the
fiscal year, will be entitled to a profit-sharing payment determined in
accordance with Sections 4.2 and 4.3 of the Plan.

4.2                               Aggregate Profit-Sharing Awards. 
For each fiscal quarter, the Company shall allocate 5% of the
Company’s net income for the quarter for profit sharing payments (subject to
the discretion of the Board of Directors to change this percentage, at any time
and from time to time, for future fiscal years through a resolution adopted either
before the next fiscal year begins or within the first three months
thereafter).  Net income as defined
throughout this Plan shall include FAS 123 charges.

4.3                                 Allocation and Distribution of Profit-Sharing Awards. The
profit sharing payments for a given fiscal quarter shall be allocated to the
eligible employees entitled thereto under Section 4.1 pro rata in proportion to
their respective base salaries.

 

5.             Quarterly Bonus Awards

5.1                                 Eligibility for Quarterly Bonuses.  All
eligible employees who were employed by the Company from the first day of a
fiscal quarter (other than the fourth fiscal quarter) for which the Company
achieved at least 80% of the Company’s net income target for the quarter
established by the Company’s Board of Directors through the date the Company
files its Quarterly Report on Form 10-Q with the SEC for that quarter will be
entitled to a quarterly bonus payment.

5.2                                 Aggregate Bonus Pool.  For
each of the first three fiscal quarters, the aggregate bonus pool shall be
determined as follows:  using the table
below, take the applicable “% of Net Income Achieved” (actual net income for
the applicable quarter divided by target net income for such quarter, rounded
down to the nearest whole percentage) then calculate the product of the corresponding
“Award %” multiplied by an amount equal to 8% of the Company’s net income for
the applicable quarter (subject to the discretion of the Board of Directors to
change this percentage at any time and from time to time, effective for future
fiscal years through a resolution adopted either before the next fiscal year
begins or within the first three months thereafter).

	
  % of Net Income Achieved

  	
   

  	
  Award %

  	
   

  
	
  <80%

  	
   

  	
  0

  	
  %

  
	
  80%

  	
   

  	
  25

  	
  %

  
	
  90%

  	
   

  	
  50

  	
  %

  
	
  91%

  	
   

  	
  55

  	
  %

  
	
  92%

  	
   

  	
  60

  	
  %

  
	
  93%

  	
   

  	
  65

  	
  %

  
	
  94%

  	
   

  	
  70

  	
  %

  
	
  95%

  	
   

  	
  75

  	
  %

  
	
  96%

  	
   

  	
  80

  	
  %

  
	
  97%

  	
   

  	
  85

  	
  %

  
	
  98%

  	
   

  	
  90

  	
  %

  
	
  99%

  	
   

  	
  95

  	
  %

  
	
  100%

  	
   

  	
  100

  	
  %

  

 

5.3                                 Allocation and Distribution of Quarterly Bonuses.  The aggregate quarterly bonus
payments determined in accordance with Section 5.2 will be allocated and
distributed to eligible employees in accordance with Section 7 of the Plan.

6.                                      Annual
Bonus Awards

6.1                                 Eligibility for Annual Bonuses. All eligible employees who were employed by the Company from the
first day of the fourth fiscal quarter through the date the Company files its
Annual Report on Form 10-K with the SEC for the fiscal year will be entitled to
an annual bonus payment if the Company achieved at least 80% of the Company’s
net income target for the fiscal year established by the Company’s Board of
Directors.

 

6.2                                 Aggregate Bonus Pool.  The
aggregate bonus pool for annual bonuses shall be determined as follows:  using the table below, take the applicable “%
of Net Income Achieved” (actual net income for the fiscal year divided by
target net income for the fiscal year, rounded down to the nearest whole
percentage) then calculate the product of the corresponding “Award %”
multiplied by an amount equal to the sum of (a) 10% of the Company’s net income
for the fourth quarter plus (b) 2% of the Company’s net income for each of the first
three fiscal quarters (subject to the discretion of the Board of Directors to
change these percentages, at any time and from time to time, for future fiscal
years through a resolution adopted either before the next fiscal year begins or
within the first three months thereafter).

	
  % of Net Income Achieved

  	
   

  	
  Award %

  	
   

  
	
  <80%

  	
   

  	
  0

  	
  %

  
	
  80%

  	
   

  	
  25

  	
  %

  
	
  90%

  	
   

  	
  50

  	
  %

  
	
  91%

  	
   

  	
  55

  	
  %

  
	
  92%

  	
   

  	
  60

  	
  %

  
	
  93%

  	
   

  	
  65

  	
  %

  
	
  94%

  	
   

  	
  70

  	
  %

  
	
  95%

  	
   

  	
  75

  	
  %

  
	
  96%

  	
   

  	
  80

  	
  %

  
	
  97%

  	
   

  	
  85

  	
  %

  
	
  98%

  	
   

  	
  90

  	
  %

  
	
  99%

  	
   

  	
  95

  	
  %

  
	
  100%

  	
   

  	
  100

  	
  %

  
	
  110%

  	
   

  	
  120

  	
  %

  
	
  125%

  	
   

  	
  150

  	
  %

  

 

6.3                                 Allocation and Distribution of Annual Bonuses.  The aggregate annual bonus
payments determined in accordance with Section 6.2 will be allocated and
distributed to eligible employees in accordance with Section 7 of the Plan; provided,
however, that (a) the annual bonus paid to any eligible employee who was
not a full-time, regular employee of the Company or one of its subsidiaries for
the entire fiscal year as determined by Section 7.2 shall be reduced pro rata
based upon the number of calendar days that the employee was a full-time,
regular employee of the Company or one of its subsidiaries during the fiscal
year; and (b) any portion of the annual bonus pool not distributed to eligible
employees pursuant to clause (a) shall be re-allocated to all eligible
employees (whether employed for the entire fiscal year or a portion thereof) as
follows: each eligible employee shall be entitled to a percentage of the total
amount to be re-allocated determined by dividing (1) the number of days the
eligible employee was employed as a full-time regular employee during the
fiscal year multiplied by the eligible employee’s base salary by (2) the total
base salaries for all eligible employees multiplied by 365.

 

7.                                      Bonus
Distribution

7.1                                 Allocation to Bonus Pools.  After
the total amount of quarterly or annual bonuses payable for a quarter or the
fiscal year has been determined in accordance with Paragraphs 5 or 6, the total
amount shall be divided into three distribution pools:

7.1.1 – Broad-Based Employee Pool – 50% of the
total amount of the applicable bonus payable shall be allocated to a
Broad-Based Employee Pool.

7.1.2 – Executive Staff Pool – 42.5% of the total
amount of applicable bonus payable shall be allocated into an Executive Staff
Pool.

7.1.3 - Discretionary Pool – 7.5% of the total
amount of applicable bonus payable shall be allocated into a Discretionary
Pool.

7.2                                 Distribution of Bonus Pools. 
Quarterly and annual bonus payments shall be allocated to individual
employees entitled thereto under Sections 5 or 6 out of the applicable bonus
pools as follows:

7.2.1 – Broad-Based Employee Pool – The Broad-Based
Employee Pool shall be distributed to eligible employees other than Executive
Staff (as defined in Section 7.2.2). 
This pool shall be paid out to eligible employees pro-rata in proportion
to their respective base salaries in effect on the payment date.

7.2.2 – Executive Staff Pool – 
The Executive Staff
Pool shall be distributed to eligible members of the Executive Staff pro rata
in proportion to their respective base salaries in effect on the payment
date.   The “Executive Staff” is defined
as the Chief Executive Officer, Chief Financial Officer, all vice presidents
and any other person identified by the Chief Executive Officer as part of the
Executive Staff.

7.3 - Discretionary Pool – The Discretionary Pool
shall be distributed to eligible employees other than the Executive Staff and
employees who are paid part of their compensation in the form of commissions in
such manner and amounts as determined by the Company’s Chief Executive
Officer.  The Chief Executive Officer
shall have discretion to use any or all of the Discretionary Pool to reward
selected employees (other than the Executive Staff) who exhibit exemplary
performance during the applicable period (e.g., the
first, second or third quarter, respectively, and for the final Discretionary
Pool distribution, the fourth quarter or the fiscal year).  The Chief Executive Officer has no obligation
to use any of this pool for a given period if, in the Chief Executive Officer’s
discretion, there has been no exemplary performance.  Any amount not used with respect to a period
carries over into the next period.  Any
amount not used after the fourth quarter of the fiscal year shall no longer be
subject to this Plan.

 

8.                                      Timing
of Payments

Immediately after the
Company files its Form 10-Q or 10-K, as applicable, (a) the Company’s Chief
Financial Officer shall calculate the amounts, if any, to be paid to eligible
employees under the Plan as Profit-Sharing Awards and/or as bonuses from the
Broad-Based Employee Pool and the Executive Staff Pool, and (b) the Company’s
Chief Executive Officer shall determine the amounts, if any, to be paid to
eligible employees under the Plan as bonuses from the Discretionary Pool; provided,
however, that no bonuses from the Discretionary Pool to the Company’s
Executive Staff shall be paid without the prior approval of the Compensation
Committee of the Company’s Board of Directors. 
The Company shall include payments to which an eligible employee is
entitled under the Plan in such employee’s first regular payroll check
following determination of the amounts to which the employee is entitled.

9.                                      Corporate
Transactions and Change in Control

9.1                                 Effect of Change in Control.  The
obligations of the Plan shall be binding on any employer that acquires, through
a stock purchase or merger, or through an asset purchase, or otherwise, part or
all of the Company following a Change in Control.

9.2                                 Definition of Change in Control. 
As used in this Plan, the term “Change in Control” shall mean the occurrence of any of the
following events:

(a)                                  The
Company is merged, consolidated or reorganized into or with another corporation
or other legal person and as a result of such merger, consolidation or reorganization
less than a majority of the combined voting power of the then outstanding
securities of such corporation or person immediately after such transaction are
held in the aggregate by the holders of Voting Stock (as that term is defined
in subsection (c) hereof) of the Company immediately prior to such transaction;

(b)                                  The
Company sells all or substantially all of its assets to any other corporation
or other legal person, less than a majority of the combined voting power of the
then-outstanding voting securities of which are held directly or
indirectly in the aggregate by the holders of Voting Stock of the Corporation
immediately prior to such sale;

(c)                                  Any
person (as the term “person” is used in Section 13(d)(3) or Section 14(d)(2) of
the Securities Exchange Act of 1934 (the “Exchange Act”) has become the
beneficial owner (as the term “beneficial owner” is defined under Rule 13d-3
or any successor rule or regulation promulgated under the Exchange Act) of
securities representing more than 50% of the combined voting power of the then-outstanding
securities of the Company entitled to vote generally in the election of
directors of the Company (“Voting Stock”);

(d)                                  The
Company files a report or proxy statement with the Securities and Exchange
Commission pursuant to the Exchange Act disclosing in, or in response to,

 

Form 8-K or Schedule 14A (or any successor schedule, form or report or
item therein) that a Change in Control of the Company has occurred;

(e)                                  Notwithstanding
the foregoing provisions of (i) subsections (c) or (d) hereof, a “Change
in Control” shall not be deemed to have occurred for purposes of this Plan
solely because the Company, an entity in which the Company directly or
indirectly beneficially owns 50% or more of the voting securities of such entity
(an “Affiliate”), any Company-sponsored employee stock ownership plan or
any other employee benefit plan of the Company either files or becomes
obligated to file a report or a proxy statement under or in response to
Schedule 13D, Schedule 14D-1, Form 8-K or Schedule 14A (or any
successor schedule, form or report or item therein) under the Exchange Act,
disclosing beneficial ownership by it of shares of voting securities of the
Company, whether in excess of 50% or otherwise, or because the Company reports
that a Change in Control of the Company has or may have occurred or will or may
occur in the future by reason of such beneficial ownership or
(ii) subsection (c) hereof, a “Change in Control” shall not be deemed to
have occurred for purposes of this Plan solely because a person who is a holder
of five percent (5%) or more of the Voting Stock and who also is an officer and
director of the Company on the initial effective date of this Plan acquires
more than 50% of the Voting Stock.

(f)                                    Notwithstanding
the foregoing provisions of subsections (a) and (b) hereof, a “Change in
Control” shall not be deemed to have occurred for purposes of this Plan solely
because the Company engages in an internal reorganization, which may include a
transfer of assets to one or more Affiliates, provided  that such
transaction has been approved by at least two-thirds of the Directors of
the Company and as a result of such transaction or transactions, at least 80%
of the combined voting power of the then-outstanding securities of the
Company or its successor are held in the aggregate by the holders of Voting
Stock immediately prior to such transactions.

10.                               Source
of Payments

All payments under the
Plan will be paid in cash from the general consolidated funds of the
Company.  No separate fund will be
established.

11.                               Amendment
or Termination

The Plan may be amended,
modified, suspended or terminated by the Board of Directors of the Company at
any time and without notice to or the consent of any participant in the Plan.

12.                               Severability

If any term or condition
of the Plan shall be invalid or unenforceable, the remainder of the Plan shall
not be affected thereby and shall continue in effect and application to the
fullest extent permitted by law.

 

13.                               No
Employment Rights

Neither the establishment
nor the terms of the Plan shall be held or construed to confer upon any
employee the right to a continuation of employment by the Company, nor
constitute a contract of employment, express or implied.  Subject to any applicable employment agreement,
the Company reserves the right to dismiss or otherwise deal with any employee,
including eligible employees, to the same extent as though the Plan had not
been adopted.  Nothing in the Plan is
intended to alter the “AT-WILL” status of eligible employees, it being
understood that, except to the extent otherwise expressly set forth to the
contrary in a written employment agreement, the employment of any employee can
be terminated at any time by either the Company or the employee with or without
notice, with or without cause.

14.                               Transferability
of Rights

The Company shall have
the right to transfer its obligations under the Plan, with respect to one or
more eligible employees, to any person, including any purchaser of all or any
part of the Company’s business.  No
eligible employee or spouse shall have any right to commute, encumber, transfer
or otherwise dispose of or alienate any present or future right or expectancy
which the eligible employee may have at any time to receive payments of
benefits hereunder, which benefits and the rights thereto are expressly
declared to be nonassignable and nontransferable, except to the extent required
by law.  Any attempt by a Participant to
transfer or assign a benefit or any rights granted hereunder shall (after consideration
of such facts as the Company deems pertinent) be grounds for terminating any
rights of the eligible employee to any portion of the Plan benefits not
previously paid.

15.                               Governing
Law

The Plan shall be
construed, administered and enforced according to the laws of the State of
California.

16.                               Administration

The Compensation
Committee of the Company’s Board of Directors shall administer the Plan in
accordance with its terms.  The
Compensation Committee shall have the discretion to interpret or construe the
terms of this Plan and to make any findings of fact needed in the
administration of this Plan.  The
Compensation Committee’s interpretation and construction of any provision of
the Plan shall be final, binding and conclusive.Exhibit
10.1

LOAN
AGREEMENT

among

CASCADE
CORPORATION

as Borrower

and

BANK OF
AMERICA, N.A.

as Swing Line
Lender, L/C Issuer

and a Lender

and

UNION
BANK OF CALIFORNIA, N.A.

as a

Lender

and

BANK OF
AMERICA, N.A.

as Agent

 

February     ,
2003

 

 

 

TABLE OF CONTENTS

	
  

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE 1. DEFINITIONS

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  Section 1.1
  Certain Defined Terms

  	
   

  	
  1

  
	
  Section 1.2
  General Principles Applicable to Definitions

  	
   

  	
  13

  
	
  Section 1.3
  Accounting Terms

  	
   

  	
  13

  
	
   

  
	
  ARTICLE 2. THE LOANS

  	
   

  	
  13

  
	
   

  	
   

  	
   

  
	
  Section 2.1 The
  Revolving Loans and Commitment Increase Option

  	
   

  	
  13

  
	
  Section 2.2
  Swing Line Loans

  	
   

  	
  14

  
	
  Section 2.3
  Manner of Borrowing

  	
   

  	
  14

  
	
  (a)

  	
  Requests for Revolving Loans

  	
   

  	
  14

  
	
  (b)

  	
  Requests for Swing Line Loans

  	
   

  	
  15

  
	
  Section 2.4
  Disbursement of Loans

  	
   

  	
  15

  
	
  (a)

  	
  Disbursement of Loans

  	
   

  	
  15

  
	
  (b)

  	
  Disbursement of Swing Line Loans

  	
   

  	
  15

  
	
  Section 2.5
  Swing Line Refunded Loans; Participations

  	
   

  	
  16

  
	
  (a)

  	
  Refunded Swing Line Loans

  	
   

  	
  16

  
	
  (b)

  	
  Swing Line Participations

  	
   

  	
  16

  
	
  (c)

  	
  Payments Received by Swing Line Lender

  	
   

  	
  16

  
	
  (d)

  	
  Lender Obligations Unconditional

  	
   

  	
  17

  
	
  Section 2.6
  Repayment of Principal

  	
   

  	
  17

  
	
  Section 2.7
  Agent’s Right to Fund

  	
   

  	
  17

  
	
  Section 2.8
  Interest on Loans

  	
   

  	
  18

  
	
  (a)

  	
  General Provisions

  	
   

  	
  18

  
	
  (b)

  	
  Selection of Alternative Rates

  	
   

  	
  18

  
	
  (c)

  	
  Applicable Days for Computation of Interest

  	
   

  	
  19

  
	
  (d)

  	
  Unavailable Offshore Rate

  	
   

  	
  19

  
	
  (e)

  	
  Compensation for Increased Costs

  	
   

  	
  20

  
	
  Section 2.9
  Notes; Recordation of Loans

  	
   

  	
  21

  
	
  (a)

  	
  Notes

  	
   

  	
  21

  
	
  (b)

  	
  Recordation of Loans

  	
   

  	
  21

  
	
  Section 2.10
  Manner of Payments

  	
   

  	
  21

  
	
  (a)

  	
  Form and Place of Payment

  	
   

  	
  21

  
	
  (b)

  	
  Authorization to Charge Borrower Account

  	
   

  	
  21

  
	
  (c)

  	
  Non-Business Days

  	
   

  	
  22

  
	
  Section 2.11
  Prepayments

  	
   

  	
  22

  
	
  Section 2.12
  Application of Payments

  	
   

  	
  22

  
	
  (a)

  	
  Payments Before Default

  	
   

  	
  22

  
	
  (b)

  	
  Payments After Default

  	
   

  	
  22

  
	
  Section 2.13
  Fees

  	
   

  	
  23

  
	
  (a)

  	
  Commitment Fee

  	
   

  	
  23

  
	
  (b)

  	
  Upfront Fee

  	
   

  	
  23

  
									

 

 i
 

 

 

	
  (c)

  	
  Arrangement Fee

  	
   

  	
  23

  
	
  (d)

  	
  Annual Agency Fees

  	
   

  	
  23

  
	
  Section 2.14
  Sharing of Payments, Etc

  	
   

  	
  23

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3. CONDITIONS TO LOANS

  	
   

  	
  24

  
	
   

  	
   

  	
   

  
	
  Section 3.1
  Conditions to Initial Loan

  	
   

  	
  24

  
	
  (a)

  	
  Loan Documents

  	
   

  	
  24

  
	
  (b)

  	
  Borrower Authority

  	
   

  	
  24

  
	
  (c)

  	
  Guarantor Authority

  	
   

  	
  24

  
	
  (d)

  	
  Certificate

  	
   

  	
  24

  
	
  (e)

  	
  No Material Adverse Change

  	
   

  	
  24

  
	
  (f)

  	
  Payment of Fees and Expenses

  	
   

  	
  24

  
	
  (g)

  	
  Consents

  	
   

  	
  25

  
	
  Section 3.2
  Conditions to All Loans

  	
   

  	
  25

  
	
  (a)

  	
  Prior Conditions

  	
   

  	
  25

  
	
  (b)

  	
  Notice of Borrowing

  	
   

  	
  25

  
	
  (c)

  	
  No Defaults, Etc

  	
   

  	
  25

  
	
  (d)

  	
  Guaranties

  	
   

  	
  25

  
	
  (e)

  	
  Other Information

  	
   

  	
  25

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 4. LETTERS OF CREDIT

  	
   

  	
  25

  
	
   

  	
   

  	
   

  
	
  Section 4.1
  Letters of Credit

  	
   

  	
  25

  
	
  Section 4.2
  Manner of Requesting Letters of Credit

  	
   

  	
  25

  
	
  (a)

  	
  Letter of Credit Requests

  	
   

  	
  25

  
	
  (b)

  	
  Standby Letter of Credit Fees

  	
   

  	
  26

  
	
  (c)

  	
  Other Letter of Credit Fees

  	
   

  	
  26

  
	
  (d)

  	
  Letter of Credit Application Forms

  	
   

  	
  26

  
	
  (e)

  	
  Issuance of Letter of Credit

  	
   

  	
  26

  
	
  Section 4.3
  Compensation For Increased Costs

  	
   

  	
  27

  
	
  Section 4.4
  Applicability of ISP98 and UCP

  	
   

  	
  27

  
	
  Section 4.5
  Payment by Borrower

  	
   

  	
  27

  
	
  Section 4.6
  Funding of Participations; Repayment of Participations

  	
   

  	
  28

  
	
   

  	
   

  	
   

  
	
  ARTICLE 5. REPRESENTATIONS AND WARRANTIES

  	
   

  	
  29

  
	
   

  	
   

  	
   

  
	
  Section 5.1
  Corporate Existence and Power

  	
   

  	
  30

  
	
  Section 5.2
  Borrower Authorization

  	
   

  	
  30

  
	
  Section 5.3
  Guarantor Authorization

  	
   

  	
  30

  
	
  Section 5.4
  Government Approvals, Etc

  	
   

  	
  30

  
	
  Section 5.5
  Binding Obligations, Etc

  	
   

  	
  30

  
	
  Section 5.6
  Litigation

  	
   

  	
  30

  
	
  Section 5.7
  Financial Condition

  	
   

  	
  31

  
	
  Section 5.8
  Solvency

  	
   

  	
  31

  
	
  Section 5.9
  Title and Liens

  	
   

  	
  31

  
	
  Section 5.10 Intellectual
  Property

  	
   

  	
  31

  
	
  Section 5.11
  Environmental Laws, Etc

  	
   

  	
  32

  
	
  Section 5.12
  Taxes

  	
   

  	
  32

  

 

 ii
 

 

 

	
  Section 5.13 Other
  Agreements

  	
   

  	
  32

  
	
  Section 5.14
  Labor and Employee Relations Matters

  	
   

  	
  32

  
	
  Section 5.15
  Federal Reserve Regulations

  	
   

  	
  32

  
	
  Section 5.16
  ERISA

  	
   

  	
  32

  
	
  Section 5.17
  Subsidiaries

  	
   

  	
  33

  
	
  Section 5.18 Not
  Investment Company, Etc

  	
   

  	
  33

  
	
  Section 5.19
  Representations as a Whole

  	
   

  	
  33

  
	
   

  	
   

  	
   

  
	
  ARTICLE 6. AFFIRMATIVE COVENANTS

  	
   

  	
  34

  
	
   

  	
   

  	
   

  
	
  Section 6.1 Use
  of Proceeds from Loans

  	
   

  	
  34

  
	
  Section 6.2
  Payment

  	
   

  	
  34

  
	
  Section 6.3
  Preservation of Corporate Existence, Etc

  	
   

  	
  34

  
	
  Section 6.4
  Visitation Rights

  	
   

  	
  34

  
	
  Section 6.5
  Keeping of Books and Records

  	
   

  	
  34

  
	
  Section 6.6
  Maintenance of Property, Etc

  	
   

  	
  34

  
	
  Section 6.7
  Compliance With Laws, Etc

  	
   

  	
  35

  
	
  Section 6.8
  Other Obligations

  	
   

  	
  35

  
	
  Section 6.9
  Insurance

  	
   

  	
  35

  
	
  Section 6.10
  Financial Information

  	
   

  	
  35

  
	
  (a)

  	
  Annual Financial Statements

  	
   

  	
  35

  
	
  (b)

  	
  Quarterly Financial Statements

  	
   

  	
  35

  
	
  (c)

  	
  Compliance Certificates

  	
   

  	
  36

  
	
  (d)

  	
  Annual Budget

  	
   

  	
  36

  
	
  (e)

  	
  Other

  	
   

  	
  36

  
	
  Section 6.11 New
  Subsidiaries

  	
   

  	
  36

  
	
  Section 6.12
  Notification

  	
   

  	
  36

  
	
  Section 6.13
  Financial Covenants.

  	
   

  	
  37

  
	
  (a)

  	
  Consolidated Net Worth

  	
   

  	
  37

  
	
  (b)

  	
  Consolidated Interest Coverage Ratio

  	
   

  	
  37

  
	
  (c)

  	
  Consolidated Leverage Ratio

  	
   

  	
  37

  
	
  Section 6.14
  Additional Payments; Additional Acts

  	
   

  	
  37

  
	
   

  	
   

  	
   

  
	
  ARTICLE 7. NEGATIVE COVENANTS

  	
   

  	
  38

  
	
   

  	
   

  	
   

  
	
  Section 7.1
  Transactions With Affiliates

  	
   

  	
  38

  
	
  Section 7.2
  Liquidation, Merger, Sale of Assets

  	
   

  	
  38

  
	
  Section 7.3
  Indebtedness

  	
   

  	
  39

  
	
  Section 7.4
  Guaranties, Etc

  	
   

  	
  39

  
	
  Section 7.5
  Liens

  	
   

  	
  39

  
	
  Section 7.6
  Investments

  	
   

  	
  39

  
	
  Section 7.7
  Operations

  	
   

  	
  39

  
	
  Section 7.8
  Securities

  	
   

  	
  40

  
	
  Section 7.9
  ERISA Compliance

  	
   

  	
  40

  
	
  Section 7.10
  Accounting Change

  	
   

  	
  40

  
	
   

  	
   

  	
   

  
	
  ARTICLE 8. EVENTS OF DEFAULT

  	
   

  	
  40

  
	
   

  	
   

  	
   

  
	
  Section 8.1
  Events of Default

  	
   

  	
  40

  

 

 iii
 

 

 

	
  (a)

  	
  Payment Default

  	
   

  	
  40

  
	
  (b)

  	
  Breach of Warranty

  	
   

  	
  40

  
	
  (c)

  	
  Breach of Certain Covenants

  	
   

  	
  40

  
	
  (d)

  	
  Breach of Other Covenants

  	
   

  	
  40

  
	
  (e)

  	
  Material Adverse Change

  	
   

  	
  40

  
	
  (f)

  	
  Cross-default

  	
   

  	
  41

  
	
  (g)

  	
  Voluntary Bankruptcy, Etc

  	
   

  	
  41

  
	
  (h)

  	
  Involuntary Bankruptcy, Etc

  	
   

  	
  41

  
	
  (i)

  	
  Insolvency, Etc

  	
   

  	
  41

  
	
  (j)

  	
  Judgment

  	
   

  	
  42

  
	
  (k)

  	
  Involuntary Liens

  	
   

  	
  42

  
	
  (l)

  	
  ERISA

  	
   

  	
  42

  
	
  (m)

  	
  Change in Control

  	
   

  	
  42

  
	
  (n)

  	
  Condemnation

  	
   

  	
  42

  
	
  (o)

  	
  Governmental Approvals

  	
   

  	
  42

  
	
  (p)

  	
  Other Government Action

  	
   

  	
  42

  
	
  (q)

  	
  Guarantor Default; Invalidity of Guaranty

  	
   

  	
  43

  
	
  (r)

  	
  Invalidity of Loan Documents

  	
   

  	
  43

  
	
  Section 8.2
  Consequences of Default

  	
   

  	
  43

  
	
   

  	
   

  	
   

  
	
  ARTICLE 9. THE AGENT

  	
   

  	
  43

  
	
   

  	
   

  	
   

  
	
  Section 9.1
  Authorization and Action

  	
   

  	
  43

  
	
  Section 9.2
  Duties and Obligations

  	
   

  	
  44

  
	
  Section 9.3
  Dealings Between Agent and Borrower

  	
   

  	
  45

  
	
  Section 9.4
  Notice of Default

  	
   

  	
  45

  
	
  Section 9.5 Lender
  Credit Decision

  	
   

  	
  45

  
	
  Section 9.6
  Indemnification

  	
   

  	
  46

  
	
  Section 9.7
  Successor Agent

  	
   

  	
  46

  
	
   

  	
   

  	
   

  
	
  ARTICLE 10. MISCELLANEOUS

  	
   

  	
  47

  
	
   

  	
   

  	
   

  
	
  Section 10.1
  Amendments; Consents

  	
   

  	
  47

  
	
  Section 10.2 No
  Waiver; Remedies Cumulative

  	
   

  	
  47

  
	
  Section 10.3
  Governing Law

  	
   

  	
  47

  
	
  Section 10.4
  Mandatory Arbitration

  	
   

  	
  48

  
	
  Section 10.5
  Waiver of Jury Trial

  	
   

  	
  48

  
	
  Section 10.6
  Consent to Jurisdiction

  	
   

  	
  49

  
	
  Section 10.7
  Notices

  	
   

  	
  49

  
	
  Section 10.8
  Assignments and Participations

  	
   

  	
  49

  
	
  Section 10.9
  Borrower’s Indemnity

  	
   

  	
  50

  
	
  Section 10.10
  Set-Off

  	
   

  	
  51

  
	
  Section 10.11
  Severability

  	
   

  	
  51

  
	
  Section 10.12
  Survival

  	
   

  	
  51

  
	
  Section 10.13
  Executed in Counterparts

  	
   

  	
  51

  
	
  Section 10.14
  Conditions Not Fulfilled

  	
   

  	
  51

  
	
  Section 10.15
  Entire Agreement; Amendment, Etc

  	
   

  	
  51

  
	
  Section 10.16
  Construction

  	
   

  	
  52

  
	
  Section 10.17
  Oral Agreements Not Enforceable

  	
   

  	
  52

  

 

 iv
 

 

 

	
  Schedules

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Schedule 1 

  	
   

  	
  -

  	
   

  	
  Litigation

  
	
  Schedule 2

  	
   

  	
  -

  	
   

  	
  Liens

  
	
  Schedule 3

  	
   

  	
  -

  	
   

  	
  Intellectual Property Claims

  
	
  Schedule 4

  	
   

  	
  -

  	
   

  	
  Environmental Matters

  
	
  Schedule 5

  	
   

  	
  -

  	
   

  	
  Subsidiaries

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibits

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit A

  	
   

  	
  -

  	
   

  	
  Note

  
	
  Exhibit B

  	
   

  	
  -

  	
   

  	
  Continuing Guaranty

  
	
  Exhibit C

  	
   

  	
  -

  	
   

  	
  Compliance Certificate

  
	
  Exhibit D

  	
   

  	
  -

  	
   

  	
  Notice of Borrowing

  

 

 v

 

LOAN
AGREEMENT

THIS
LOAN AGREEMENT (the “Agreement”) is made as of the     
day of February, 2003, by and among CASCADE CORPORATION, an Oregon corporation
(the “Borrower”), BANK OF AMERICA, N.A., a national banking association
(“Bank of America”), UNION BANK OF CALIFORNIA, N.A., a national banking
association (“Union Bank” and together with Bank of America, each a “Lender”,
and together, the “Lenders”), and BANK OF AMERICA, N.A., a national
banking association, as agent for Lenders (in such capacity, the “Agent”)
and swing line lender (in such capacity, the “Swing Line Lender”).

ARTICLE
1.

DEFINITIONS

Section 1.1 Certain Defined Terms.  As used in this Agreement, the following
terms have the following meanings:

“Affiliate”
means any Person who, directly or indirectly, controls or is controlled by or
is under common control with such Person.

“Agent”
means Bank of America, N.A. and any successor thereto or successor agent
selected pursuant to

Section 9.7.

“Aggregate
Commitments” has the meaning given in Section 2.1.

“Agreement”
means this Loan Agreement as it may be amended, restated, supplemented or
otherwise modified from time to time.

“Applicable
Interest Period” means, with respect to any Offshore Rate Loan based on
LIBOR, the period commencing on the first day the Borrower elects to have such
Offshore rate apply to such Loan and ending: one (1), two (2), three (3), or
six (6) months thereafter, as specified in the Interest Rate Notice given in
respect of any Loan; or, with respect to any Offshore Rate Loan based on IBOR,
the period commencing on the first day the Borrower elects to have such
Offshore Rate apply to such Loan and ending not less than seven (7) days, nor
more than one hundred and eighty (180) days thereafter, as specified in the
applicable Interest Rate Notice; or as otherwise determined pursuant to Section
2.8(b); provided, however, that no Applicable Interest Period may
be selected for a Loan if it extends beyond the Maturity Date.

“Applicable
Interest Rate” means the following percentages per annum, based upon the
Consolidated Leverage Ratio as set forth in the most recent Compliance
Certificate received by the Agent pursuant to Section 6.10(c):

 1
 

 

 

Applicable Interest Rate

 

	
  Pricing

  Level

  	
   

  	
  Consolidated

  Leverage Ratio

  	
   

  	
  Commitment

  Fee

  (Basis Points)

  	
   

  	
  Standby

  L/C Fee

  and

  Offshore

  Rate +

  (Basis

  Points)

  	
   

  	
  Base Rate

  +

  (Basis

  Points)

  	
   

  
	
  1

  	
   

  	
  >1.75:1.00

  	
   

  	
  30.0

  	
   

  	
  125.0

  	
   

  	
  0

  	
   

  
	
  2

  	
   

  	
  <1.75:1.00
  but > 1.25:1.00

  	
   

  	
  25.0

  	
   

  	
  100.0

  	
   

  	
  0

  	
   

  
	
  3

  	
   

  	
  <1.25:1.00

  	
   

  	
  22.5

  	
   

  	
  80.0

  	
   

  	
  0

  	
   

  

 

Any
increase or decrease in the Applicable Interest Rate resulting from a change in
the Consolidated Leverage Ratio shall become effective as of the first Business
Day immediately following the date a Compliance Certificate is delivered
pursuant to Section 6.10(c); provided, however, that if a
Compliance Certificate is not delivered when due in accordance with such
Section, then Pricing Level 1 shall apply as of the first Business Day after
the date on which such Compliance Certificate was required to have been
delivered.  The Applicable Rate in effect
from the Closing Date through receipt of the fiscal year-end financial
statements for January 31, 2003, and the accompanying Compliance Certificate,
shall be determined based upon Pricing Level 2.

“Attributable
Indebtedness” means, on any date, (a) in respect of any capital lease of
any Person, the capitalized amount thereof that would appear on a balance sheet
of such Person prepared as of such date in accordance with GAAP, and (b) in
respect of any Synthetic Lease Obligation, the capitalized amount of the
remaining lease payments under the relevant lease that would appear on a
balance sheet of such Person prepared as of such date in accordance with GAAP
if such lease were accounted for as a capital lease.

“Bank
of America” means Bank of America, N.A., a national banking association,
and any Successor.

“Base
Rate” means for any day a fluctuating rate per annum equal to the rate of
interest in effect for such day as the Prime Rate.

“Base
Rate Loan” means a Loan that bears interest based on the Base Rate.

“Borrower”
means Cascade Corporation, an Oregon corporation, and any Successor.

“Borrower
Account” means checking account number [Insert
#] maintained by the Borrower with Bank of America (or such other
ordinary checking account maintained by the Borrower with Bank of America at
its Commercial Accounts Service Center, Seattle,

 2
 

 

Washington, from
time to time designated by the Borrower in a written notice to the Agent and
Bank of America.

“Business
Day” means any day other than Saturday, Sunday or other day on which banks
are authorized or obligated to close in Seattle, Washington, except that in the
context of the selection of a Loan accruing interest at the Offshore Rate or
the calculation of the Offshore Rate for any Applicable Interest Period, in which
event “Business Day” means any day other than Saturday or Sunday on which
dealings in foreign currencies and exchange between banks may be carried on in
London, England and Seattle, Washington.

“Capital
Leases” means for any Person, all obligations of such Person under leases
which shall have been, or in accordance with GAAP, should be recorded as
capital leases.

“Cash
Equivalents” means: (i) marketable direct obligations issued or
unconditionally guaranteed by the United States government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition thereof;
(ii) commercial paper maturing no more than one year from the date issued
and, at the time of acquisition, having a rate of at least A-1 from Standard
& Poor’s Rating Services or at least P-1 from Moody’s Investors Service,
Inc.; (iii) certificates of deposit or bankers’ acceptances maturing
within one year from the date of issuance thereof issued by, or overnight
reverse repurchase agreements from any commercial bank organized under the laws
of the United States of America or any state thereof or the District of
Columbia having combined capital and surplus of not less than One Hundred
Million Dollars ($100,000,000); (iv) time deposits maturing no more than
thirty (30) days from the date of creation thereof and demand deposits with
commercial banks having membership in the Federal Deposit Insurance Corporation
in amounts not exceeding the lesser of One Hundred Thousand Dollars ($100,000)
or the maximum amount of insurance applicable to the aggregate amount of the
Borrower’s deposits at such institution; (v) deposits or investments in
mutual or similar funds offered or sponsored by brokerage or other companies
having membership in the Securities Investor Protector Corporation investing
only in obligations described in clauses (i) through (iv) above;
and (vi) other marketable securities purchased from a licensed broker/dealer.

“Code”
means the Internal Revenue Code of 1986, as amended from time to time.

“Commitment”
means, with respect to each Lender, its obligation to make Revolving Loans
pursuant to Section 2.1 and with respect to the Swing Line Lender, its
obligation to make Swing Line Loans pursuant to Section 2.2.

“Commitment
Amount” has the meaning given to it in Section 2.1.

“Commitment
Period” has the meaning given in Section 2.1.

“Compliance
Certificate” has the meaning given to it in Section 6.10(c) and Exhibit
D.

“Consolidated
Adjusted EBITDA” means, for any period, for the Borrower and its
Subsidiaries on a consolidated basis, an amount equal to Consolidated Net
Income for such period plus  the
following to the extent deducted in calculating such Consolidated Net Income:

 3
 

 

(a) Consolidated
Interest Charges for such period, (b) the provision for federal, state, local
and foreign income taxes payable by the Borrower and its Subsidiaries for such
period and (c) the amount of depreciation and amortization expense, including
goodwill impairment, derivative mark-to-market transactions and other similar
non-cash items, deducted in determining such Consolidated Net Income. “Consolidated
EBITDA” shall exclude all environmental 
charges recognized in the fiscal year ending January 31, 2003.

“Consolidated
Funded Indebtedness” means, means, as of any date of determination, for the
Borrower and its Subsidiaries on a consolidated basis, the sum of (a) the
outstanding principal amount of all obligations, whether current or long-term,
for borrowed money (including Obligations hereunder) and all obligations
evidenced by bonds, debentures, notes, loan agreements or other similar
instruments, (b) all purchase money Indebtedness, (c) all direct obligations
arising under letters of credit (including standby and commercial), bankers’
acceptances, bank guaranties, surety bonds and similar instruments, (d) all
obligations in respect of the deferred purchase price of property or services
(other than trade accounts payable in the ordinary course of business), (e)
Attributable Indebtedness in respect of capital leases and Synthetic Lease
Obligations, (f) without duplication, all Guarantees with respect to
outstanding Indebtedness of the types specified in clauses (a) through (e)
above of Persons other than the Borrower or any Subsidiary, and (g) all
Indebtedness of the types referred to in clauses (a) through (f) above of any
partnership or joint venture (other than a joint venture that is itself a
corporation or limited liability company) in which the Borrower or a Subsidiary
is a general partner or joint venturer, unless such Indebtedness is expressly
made non-recourse to the Borrower or such Subsidiary.

“Consolidated
Interest Charges” means, for any period, for the Borrower and its
Subsidiaries on a consolidated basis, the sum of (a) all interest, premium
payments, debt discount, fees, charges and related expenses of the Borrower and
its Subsidiaries in connection with borrowed money (including capitalized
interest) or in connection with the deferred purchase price of assets, in each
case to the extent treated as interest in accordance with GAAP, and (b) the
portion of rent expense of the Borrower and its Subsidiaries with respect to
such period under capital leases that is treated as interest in accordance with
GAAP.

“Consolidated
Interest Coverage Ratio” means, as of any date of determination, the ratio
of (a) Consolidated EBITDA for the period of the four prior fiscal quarters
ending on such date to (b)
Consolidated Interest Charges for such period.

“Consolidated
Leverage Ratio” means, as of any date of determination, the ratio of (a)
Consolidated Funded Indebtedness as of such date to (b) Consolidated Adjusted EBITDA for the period of the
four fiscal quarters most recently ended for which the Borrower has delivered
financial statements pursuant to Section 6.10(a) or (b).

“Consolidated
Net Income” means, for any period, for the Borrower and its Subsidiaries on
a consolidated basis, the net income of the Borrower and its Subsidiaries
(excluding extraordinary gains but including extraordinary losses) for that
period.

 4
 

 

“Consolidated
Net Worth” means, as of any date of determination, for the Borrower and its
Subsidiaries on a consolidated basis, Shareholders’ Equity of the Borrower and
its Subsidiaries on that date, excluding cumulative adjustments for foreign
currency translation.

“Controlled
Group” means all members of a controlled group of corporations and all
trades or businesses (whether or not incorporated) under common control which,
together with the Borrower, are treated as a single employer under
Section 414(b) or 414(c) of the Code.

“Default”
means any event which but for the passage of time, the giving of notice, or
both would be an Event of Default.

“Default
Rate” has the meaning given in Section 2.8(a).

“Environmental Laws” means all federal, state
and local statutes, regulations, ordinances, and requirements, now or hereafter
in effect, pertaining to environmental protection, contamination or cleanup,
including without limitation (i) the Federal Resource Conservation and
Recovery Act of 1976 (42 U.S.C. § 6901, et seq.), (ii) the
Federal Comprehensive Environmental Response, Compensation, and Liability Act
(42 U.S.C. § 9601, et seq.), (iii) the Federal Hazardous
Materials Transportation Control Act (49 U.S.C. § 1801, et seq.), (iv) the
Federal Clean Air Act (42 U.S.C. § 7401, et seq.), (v) the
Federal Water Pollution Control Act, Federal Clean Water Act (33 U.S.C.
§ 1251, et seq.), (vi) the Federal Insecticide, Fungicide, and
Rodenticide Act, Federal Pesticide Act (7 U.S.C. § 136, et seq.),
(vii) the Federal Toxic Substances Control Act (15 U.S.C. § 2601, et
seq.) and (viii) the Federal Safe Drinking Water Act (42 U.S.C.
§ 300f, et seq.), all as now or hereafter amended.

“ERISA”
means the Employee Retirement Income Security Act of 1974, as amended from time
to time.

“Event
of Default” has the meaning given in Section 8.1.

“Existing
Credit Agreement” means that certain Amended and Restated Credit Agreement
dated as of December 18, 1997 between Borrower, Bank of America, and the other
lenders party thereto, as amended from time to time.

“Existing
Letter of Credit” means Bank of America Standby Letter of Credit #3051606
dated October 2, 2002 in favor of Bank of China, Hengshui Branch for $900,000
and expires November 30, 2004.

“Fee
Letter” has the meaning given in Section 2.13(c).

“GAAP”
has the meaning given in Section 1.3.

“Government
Approval” means an approval, permit, license, authorization, certificate,
or consent of any Governmental Authority.

“Governmental
Authority” means the government of the United States or any State or any
foreign country or any political subdivision of any thereof or any branch,

 5
 

 

department,
agency, instrumentality, court, tribunal or regulatory authority which
constitutes a part or exercises any sovereign power of any of the foregoing.

“Guarantee”
means, as to any Person, any (a) obligation, contingent or otherwise, of such
Person guaranteeing or having the economic effect of guaranteeing any
Indebtedness or other obligation payable or performable by another Person (the “primary
obligor”) in any manner, whether directly or indirectly, and including any
obligation of such Person, direct or indirect, (i) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness or
other obligation, (ii) to purchase or lease property, securities or services
for the purpose of assuring the obligee in respect of such Indebtedness or
other obligation of the payment or performance of such Indebtedness or other
obligation, (iii) to maintain working capital, equity capital or any other
financial statement condition or liquidity or level of income or cash flow of
the primary obligor so as to enable the primary obligor to pay such
Indebtedness or other obligation, or (iv) entered into for the purpose of
assuring in any other manner the obligee in respect of such Indebtedness or
other obligation of the payment or performance thereof or to protect such
obligee against loss in respect thereof (in whole or in part), or (b) any Lien
on any assets of such Person securing any Indebtedness or other obligation of
any other Person, whether or not such Indebtedness or other obligation is
assumed by such Person.  The amount of
any Guarantee shall be deemed to be an amount equal to the stated or
determinable amount of the related primary obligation, or portion thereof, in
respect of which such Guarantee is made or, if not stated or determinable, the
maximum reasonably anticipated liability in respect thereof as determined by
the guaranteeing Person in good faith.  The term “Guarantee” as a verb has a
corresponding meaning.

“Guarantor” means Sandy Boulevard Development
Corporation, an Oregon corporation, and any other Subsidiary that from time to
time executes and delivers a counterpart of the Guaranty, and “Guarantor”
means any of them.

“Guaranty” means the Continuing Guaranty of
even date herewith executed by Sandy Boulevard Development Corporation and by
any additional Guarantors from time to time in accordance with this Agreement
in substantially the form of Exhibit C attached hereto, as it may
be amended, restated, supplemented or otherwise modified from time to time.

“Indebtedness”
means, for any Person, without duplication: 
(i) all indebtedness for borrowed money; (ii) all obligations
issued, undertaken or assumed as the deferred purchase price of property or
services (other than indebtedness or liability for borrowed money deferred for
a period of more than six months from the date of incurrence or trade payables
entered into in the ordinary course of business on ordinary terms);
(iii) all non-contingent reimbursement or payment obligations with respect
to letters of credit, bankers acceptances, surety bonds and similar
instruments; (iv) all obligations evidenced by notes, bonds, debentures or
similar instruments, including obligations so evidenced incurred in connection
with the acquisition of property, assets or businesses; (v) the net
obligations of such Person under an interest rate swap agreement or similar
rate swap master agreement in an amount equal to (i) if such swap
agreement has been closed out, the termination value thereof, or (ii) if
such swap agreement has not been closed out, the mark-to-market value thereof
determined on the basis of readily available quotations provided by any recognized
dealer in such swap agreement; (vi) all indebtedness created or arising
under any conditional sale or other title retention agreement

 6
 

 

(excluding any
operating lease), or incurred as financing, in either case with respect to
property acquired by such Person (even though the rights and remedies of the
seller or bank under such agreement in the event of default are limited to
repossession or sale of such property); (vii) all obligations with respect
to Capital Leases or Synthetic Leases; (viii) all indebtedness referred to
in clauses (i) through (vi) above secured by (or for which the
holder of such Indebtedness has an existing right, contingent or otherwise, to
be secured by) any Lien upon or in property (including accounts and contracts
rights) owned by such Person, even though such Person has not assumed or become
liable for the payment of such Indebtedness; and (viii) all liabilities in
respect of indebtedness or obligations of others of the kinds referred to in
clauses (i) through (vii) above for which such Person is
directly or contingently liable as obligor, guarantor, or otherwise, or in
respect of which such Person otherwise assures a creditor against loss.  For purposes of this Agreement, the
Indebtedness of any Person shall include all recourse Indebtedness of any
partnership or joint venture formed as a partnership where such Person is a
general partner or is otherwise liable for the Indebtedness of such partnership
or joint venture, unless such Indebtedness is expressly made non-recourse to
such Person and except for customary exceptions acceptable to Majority Lenders.

“Intellectual
Property” means, as to any Person, all of the following: (i) all
trademarks, service marks, designs, trade names, corporate names, company
names, business names, fictitious business names, trade styles, trade dress,
logos, other source or business identifiers owned or used by such Person in its
business or hereafter adopted or acquired, all registrations and recordings
thereof, and all registration and recording applications filed in connection
therewith, including registrations and pending applications in the United
States Patent and Trademark Office, any State of the United States or any
similar offices in any other country or any political subdivision thereof, and
all extensions or renewals thereof; (ii) all letters patent of the United
States or any other country or any political subdivision thereof, all
registrations and recordings thereof, and all applications for letters patent
of the United States or the equivalent thereof in any other country owned by
such Persons, including registrations, recordings and pending applications in
the United States Patent and Trademark Office or the equivalent thereof in any
similar offices in any other country, and all reissues, continuations,
divisions, continuations-inpart, renewals or extensions thereof, and the
inventions disclosed or claimed therein, including the right to make, use
and/or sell the inventions disclosed or claimed therein; (iii) all
computer programs, computer data bases, other computer software, trade secrets,
trade secret rights, ideas, drawings, designs, schematics, algorithms,
writings, techniques, processes and formulas owned or used by such Person in
its business; and (iv) all copyright rights of such Person in any work
subject to the copyright laws of the United States, any state thereof or any
other country or any political subdivision thereof, whether registered or
unregistered and whether published or unpublished, whether as author, assignee,
transferee or otherwise, and all registrations and applications for
registration of any such copyright in the United States, any state thereof or
any other country or any political subdivision thereof, including
registrations, recordings, supplemental registrations and pending applications
for registration in the United States Copyright Office or in any similar
offices in any other country.

“Interest
Rate Notice” has the meaning given in Section 2.8(b).

“Investments”
has the meaning given in Section 7.6.

 7
 

 

“L/C
Advance” means, with respect to each Lender, such Lender’s funding of its
participation in any L/C Borrowing in accordance with it pro rata share.

“L/C
Borrowing” means an extension of credit resulting from a drawing under any
Letter of Credit which has not been reimbursed on the date when made or
refinanced as a Loan.

“L/C
Credit Extension” means, with respect to any Letter of Credit, the issuance
thereof or extension of the expiry date thereof, or the renewal or increase of
the amount thereof.

“L/C
Issuer” means Bank of America in its capacity as issuer of Letters of
Credit hereunder, or any successor issuer of Letters of Credit hereunder.

“L/C
Obligations” means, as at any date of determination, the aggregate undrawn
amount of all outstanding Letters of Credit plus the aggregate of all
Unreimbursed Amounts, including all L/C Borrowings.

“Lenders”
means Bank of America, N.A., a national banking association, and Union Bank of
California, N.A., a national banking association, and any Successors thereto or
permitted assigns thereof, and the term “Lenders” shall include the Swing Line
Lender unless the context otherwise requires; provided that the term “Lenders,”
when used in the context of a particular Commitment, shall mean Lenders having
that Commitment.

“Letters
of Credit” means any letter of credit issued by L/C Issuer pursuant to the
terms of Article 4 hereof and any Existing Letters of Credit.

“Letter
of Credit Risk Participation” means with respect to each Lender, a risk
participation purchased by such Lender pursuant to Article 4 hereof with
respect to a Letter of Credit (including risk participations deemed purchased
from Agent by Bank of America in its capacity as Lender).

“Letter
of Credit Usage” means, as of any date of determination, the sum of (i) the
aggregate face amount of all outstanding unmatured Letters of Credit plus (ii)
the aggregate amount of all payments made by Agent under Letters of Credit and
not yet reimbursed by Borrower pursuant to Section 4.5.

“Lien”
means, for any Person, any security interest, pledge, mortgage, charge,
assignment, hypothecation, encumbrance, attachment, garnishment, execution or
other voluntary or involuntary lien upon or affecting the revenues of such
Person or any real or personal property in which such Person has or hereafter acquires
any interest.

“Loan
Documents” means, collectively, this Agreement, the Notes, the Guaranty and
all other documents executed by the Borrower or any Guarantor and delivered to
the Agent or the Lenders (or any one of them) in connection with the transactions
contemplated by this Agreement as the same may be amended, restated,
supplemented or otherwise modified from time to time.

“Loans”
means, collectively, the Revolving Loans and the Swing Line Loans.

 8
 

 

“Majority
Lenders” means at any time Lenders having an aggregate Percentage Interest
equivalent to the lesser of (i) any two Lenders voting together, or (ii) more
than fifty percent (50%).

“Maturity
Date” means December 18, 2005

“Notes”
has the meaning given in Section 2.9(a).

“Notice
of Borrowing” means a request for a Loan from the Borrower delivered or
deemed delivered to the Agent in the manner, at the time and containing the
information required or described under Section 2.3 and Exhibit D.

“Officer’s
Certificate” means a certificate executed and delivered on behalf of the
Borrower by a Responsible Officer.

“Offshore
Rate” means for any Interest Period with respect to any Offshore Rate Loan,
a rate per annum determined by Administrative Agent pursuant to the following
formula:

	
  Offshore Rate 

  	
  =

  	
  LIBOR or IBOR

  	
   

  
	
   

  	
   

  	
  1.00 - Eurodollar Reserve Percentage

  	
   

  

 

Where,

“LIBOR”
means, for such Interest Period:

(a)           the rate per annum (carried out to
the fifth decimal place) equal to the rate determined by Administrative Agent
to be the offered rate that appears on the page of the Telerate Screen that
displays an average British Bankers Association Interest Settlement Rate (such
page currently being page number 3750) for deposits in dollars (for delivery on
the first day of such Interest Period) with a term equivalent to such Interest
Period, determined as of approximately 11:00 a.m. (London time) two Business
Days prior to the first day of such Interest Period, or

(b)           in the event the rate referenced in
the preceding subsection (a) does not appear on such page or service or such
page or service shall cease to be available, the rate per annum (carried to the
fifth decimal place) equal to the rate determined by Administrative Agent to be
the offered rate on such other page or other service that displays an average
British Bankers Association Interest Settlement Rate for deposits in dollars
(for delivery on the first day of such Interest Period) with a term equivalent
to such Interest Period, determined as of approximately 11:00 a.m. (London
time) two Business Days prior to the first day of such Interest Period, or

(c)           in the event the rates referenced in
the preceding subsections (a) and (b) are not available, the rate per annum
determined by Administrative Agent as the rate of interest at which dollar
deposits (for delivery on the first day of such Interest Period) in same day
funds in the approximate amount of the applicable Offshore Rate Loan and with a
term equivalent to such Interest Period would be offered by its London Branch
to major banks in the offshore dollar market at their

 9
 

 

request at approximately 11:00 a.m. (London time) two
Business Days prior to the first day of such Interest Period.

“IBOR” means, the
rate of interest per annum determined by the Administrative Agent as the rate
at which dollar deposits in the approximate amount of Bank of America’s
Offshore Rate Loan for such Interest Period would be offered by Bank of America’s
Grand Cayman Branch, Grand Cayman B.W.I. (or such other office as may be
designated for such purpose of Bank of America), to major banks in the offshore
dollar interbank market at their request at approximately 11:00 a.m. (New York
City time) on the same Business Day as the commencement of such Interest
Period.

“Eurodollar Reserve
Percentage” means, for any day during any Interest Period, the reserve
percentage (expressed as a decimal, rounded upward to the next 1/100th of 1%)
in effect on such day, whether or not applicable to any Lender, under
regulations issued from time to time by the Board of Governors of the Federal
Reserve System for determining the maximum reserve requirement (including any
emergency, supplemental or other marginal reserve requirement) with respect to
Eurocurrency funding (currently referred to as “Eurocurrency liabilities”).  The Offshore Rate for each outstanding
Offshore Rate Loan shall be adjusted automatically as of the effective date of
any change in the Eurodollar Reserve Percentage.

“Offshore
Rate Loan” means a Loan bearing interest based on the Offshore Rate.

“Organization
Documents” means, (i) with respect to any corporation, the articles of
incorporation and the bylaws; (ii) with respect to any limited liability
company, the articles of formation and operating agreement; and (iii) with
respect to any partnership, the partnership agreement and any agreement or
notice with respect thereto, in each case as amended from time to time.

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

“Pension
Plan” means an “employee pension benefit plan” (as such term is defined in
ERISA) from time to time maintained by the Borrower or a member of a Controlled
Group.

“Percentage
Interest” has the meaning given in Section 2.1.

“Permitted
Acquisition” means any acquisition, whether by purchase, merger or
otherwise, of all or substantially all of the assets of, or more than fifty
percent (50%) of the equity securities entitled to vote for members of the
board of directors or equivalent governing body of, or a business line or a
division of, any Person; provided that: 
(i) all Persons, assets, business lines or divisions acquired shall
be in the type of business permitted to be engaged in by the Borrower and its
Subsidiaries pursuant to Section 7.7; (ii) no Default or Event of Default
shall then exist or would exist after giving effect to such acquisition; and
(iii) if so requested, the

 10
 

 

Borrower shall
demonstrate to the reasonable satisfaction of the Lenders that, after giving
effect to such acquisition, the Borrower will be in pro forma compliance with
all of the terms and provisions of the financial covenants set forth in Section
6.13.

“Permitted
Liens” means:  (i) Liens
securing Taxes which are not delinquent or which remain payable without penalty
(excluding any Liens imposed pursuant to any of the provisions of ERISA) or the
validity or amount of which is being contested in good faith by appropriate
proceedings, which shall have the effect of staying execution if execution is
threatened or possible; (ii) Liens imposed by law incurred in good faith
in the ordinary course of business which are not delinquent or which remain
payable without penalty or the validity or amount of which is being contested
in good faith by appropriate proceedings, which shall have the effect of
staying execution if execution is threatened or possible; (iii) Liens
arising in connection with worker’s compensation, unemployment insurance and
social security benefits which are not delinquent or which remain payable
without penalty or the validity or amount of which is being contested in good
faith by appropriate proceedings, which shall have the effect of staying
execution if execution is threatened or possible; (iv) customary rights of
set off, revocation, refund or chargeback under deposit agreements or under the
UCC in favor of banks where the Borrower maintains deposits in the ordinary
course of business; and (v) new Liens secured by newly purchased tangible
property (whether real or personal) in an aggregate amount no greater than $5,000,000
outstanding at any time.

“Person”
means any natural person, corporation, unincorporated organization, trust,
joint stock company, joint venture, association, company, limited liability
company, partnership or government, or any agency or political subdivision of
any government.

“Plan”
means, at any time, an employee pension benefit plan which is covered by
Title IV of ERISA or subject to the minimum funding standards under
Section 412 of the Code and is either (i) maintained by the Borrower
or any member of a Controlled Group for employees of the Borrower or any member
of a Controlled Group or (ii) maintained pursuant to a collective
bargaining agreement or any other arrangement under which more than one
employer makes contributions and to which the Borrower or any member of a
Controlled Group is then making or accruing an obligation to make contributions
or has within the preceding five (5) plan years made contributions.

“Prime
Rate” means, on any day, the rate of interest publicly announced from time to
time by Bank of America as its “Prime Rate.” 
The Prime Rate is set based on various factors, including Bank of
America’s costs and desired return, general economic conditions, and other
factors, and is used as a reference point for pricing some loans.  Bank of America may price loans to its
customers at, above, or below the Prime Rate. 
Any change in the Prime Rate shall take effect at the opening of
business on the day specified in the public announcement of a change in the
Prime Rate.

“Refunded
Swing Line Loans” has the meaning given to it in Section 2.5(a).

“Refunding
Date” has the meaning given to it in Section 2.5(b).

 11
 

 

“Responsible
Officer” means any of the President, the Vice President, or the Chief
Financial Officer of the Borrower.

“Revolving
Loans” has the meaning given to it in Section 2.1.

“Shareholders’
Equity” means, as of any date of determination, consolidated shareholders’
equity of the Borrower and its Subsidiaries as of that date determined in
accordance with GAAP.

“Subsidiary”
means Sandy Boulevard Development Corporation and each other business entity
directly or indirectly controlled by the Borrower.  For the purposes of this definition, “controlled
by” shall mean the possession, directly or indirectly of the power to direct or
cause the direction of the management or policies of such Subsidiary, whether
through the ownership of partnership or limited liability company interest,
voting securities, by contract, or otherwise. 
Unless otherwise specified, all references herein to a “Subsidiary”
shall refer to a Subsidiary of the Borrower.

“Successor”
means, for any corporation, banking association or other legal entity, any
successor by merger or consolidation, or by acquisition of substantially all of
the assets of the predecessor, or by conversion to another type of legal
entity, or by continuation after and the occurrence of an event that would
otherwise result in termination under applicable law but for such continuation.

“Swing
Line Loans” has the meaning given to it in Section 2.2.

“Swing
Line Lender” means Bank of America, N.A., a national banking association,
and any Successors thereto or permitted assigns thereof.

“Swing
Line Participation Amount” has the meaning given to it in Section 2.5(b).

“Synthetic
Lease” means (i) a so-called synthetic, off-balance sheet or tax
retention lease, or (ii) an agreement for the use or possession of
property creating obligations which do not appear on the balance sheet of such
Person but which, upon the insolvency or bankruptcy of such Person, would be
characterized as the Indebtedness of such Person (without regard to accounting
treatment).

“Synthetic
Lease Obligations” means the monetary obligation of a Person under (a) a
so-called synthetic, off-balance sheet or tax retention lease, or (b) an agreement
for the use or possession of property creating obligations that do not appear
on the balance sheet of such Person but which, upon the insolvency or
bankruptcy of such Person, would be characterized as the indebtedness of such
Person (without regard to accounting treatment).

“Tax”
means, for any Person, any tax, assessment, duty, levy, impost or other charge
imposed by any Governmental Authority on such Person or on any property,
revenue, income, or franchise of such Person and any interest or penalty with
respect to any of the foregoing.

 12
 

 

“Unfunded
Vested Liabilities” means, with respect to any Plan at any time, the amount
(if any) by which (a) the present value of all vested non-forfeitable
benefits under such Plan exceeds (b) the fair market value of all Plan
assets allocable to such benefits, all determined as of the then most recent
valuation date for such Plan, but only to the extent that such excess
represents a potential liability of the Borrower or any member of a Controlled
Group to the PBGC or the Plan under Title IV of ERISA.

Section 1.2 General Principles
Applicable to Definitions. 
Definitions given herein shall be equally applicable to both singular
and plural forms of the terms therein defined and references herein to “he” or “it”
shall be applicable to Persons whether masculine, feminine or neuter.  References herein to any document including,
but without limitation, this Agreement shall be deemed a reference to such
document as it now exists, and as, from time to time hereafter, the same may be
amended.  References herein to any
section, subsection, Schedule or Exhibit shall, unless otherwise
indicated, be deemed a reference to sections and subsections within and
schedules and Exhibits to this Agreement.

Section 1.3 Accounting Terms.  Except as otherwise provided herein,
accounting terms not specifically defined shall be construed, and all
accounting procedures shall be performed, in accordance with generally accepted
United States accounting principles consistently applied from and after the
date hereof (“GAAP”) and as in effect on the date of application.

ARTICLE
2.

THE LOANS

Section 2.1 The Revolving Loans and
Commitment Increase Option.

(a)           Subject
to the terms and conditions of this Agreement, each Lender hereby severally
agrees during the period from the date hereof until the Maturity Date (the “Commitment
Period”) to make loans duly requested hereunder (the “Revolving Loans”)
to the Borrower in amounts equal to the percentage interest set forth opposite
such Lender’s name below (such Lender’s “Percentage Interest”) of the
aggregate amount requested by the Borrower in a Notice of Borrowing given under
this Agreement; provided that, after giving effect to any such requested
borrowing (i) the aggregate outstanding principal balance of all Loans
from such Lender will not exceed at any one time outstanding the sum set forth
opposite its name below (such Lender’s “Commitment Amount”); and
(ii) the aggregate principal amount of all outstanding Loans and all
Letter of Credit Usage will not exceed the Commitment Amount of all Lenders
(the “Aggregate Commitments”).

	
  

  	
   

  	
  Percentage

  	
   

  	
  Commitment

  	
   

  
	
  Lender

  	
   

  	
  Interest

  	
   

  	
  Amount

  	
   

  
	
  Bank of America

  	
   

  	
  52.00

  	
  %

  	
  $

  	
  13,000,000

  	
   

  
	
  Union Bank

  	
   

  	
  48.00

  	
  %

  	
  $

  	
  12,000,000

  	
   

  
	
  Total

  	
   

  	
  100.00

  	
  %

  	
  $

  	
  25,000,000

  	
   

  

 

The Revolving
Loans described in this Section 2.1 constitute a revolving credit and within
the amount and time specified, the Borrower may pay, prepay and reborrow.

 13

 

(b)           The
Borrower may, at its option, on a single occasion seek to increase the
Aggregate Commitments by up to an aggregate amount of $20,000,000 (resulting in
maximum Aggregate Commitments of $45,000,000) upon written notice to the Agent,
which notice shall specify the amount of any such increase and shall be
delivered at a time when no Default or Event of Default has occurred and is
continuing.  The Agent, subject to the
consent of Borrower, which shall not be unreasonably withheld, may allocate the
increase (which may be declined by any Lender in its sole discretion) in the
Aggregate Commitments on either a ratable basis to the Lenders or on a non
pro-rata basis to one or more Lenders and/or to other banks or entities
reasonably acceptable to the Agent and the Borrower.  No increase in the Aggregate Commitments
shall become effective until the existing or new Lenders extending such
incremental Commitment Amount and the Borrower shall have delivered to the
Agent a document in form reasonably satisfactory to the Agent pursuant to which
any such existing Lender states the amount of its Commitment increase, any such
new Lender states its Commitment Amount and agrees to assume and accept the
obligations and rights of Lender hereunder and the Borrower accepts such
incremental Commitments.  The Lenders
(new or existing) shall accept an assignment from the existing Lenders, and the
existing Lenders shall make an assignment to the new or existing Lender
accepting a new or increased Commitment, of an interest (or participation
interest, as applicable) in all Loans and other credit exposure in respect of
the Aggregate Commitments such that, after giving effect thereto, all Loans and
all such other credit exposure are held ratably by the Lenders in proportion to
their respective Commitments, as may be revised to accommodate the increase in
the Aggregate Commitments.  Assignments
pursuant to the preceding sentence shall be made in exchange for the principal
amount assigned plus accrued and unpaid interest and commitment and other fees.
The Borrower shall make any payments under Section 2.8(e) resulting from such
assignments, and shall pay the Lenders certain fees, such as an arrangement
fee, to be determined by the Lenders at such time as the increase in Aggregate
Commitments is implemented.

Section 2.2            Swing Line Loans.  Subject
to the terms and conditions of this Agreement, Swing Line Lender hereby agrees
to make a portion of the Commitment Amount available to the Borrower from time
to time during the Commitment Period by making swing line loans (“Swing Line
Loans”) to the Borrower; provided that, after giving effect to any
such requested borrowing (i) the aggregate outstanding principal balance
of all Swing Line Loans will not exceed at any one time outstanding the amount
of Five Million Dollars ($5,000,000) (notwithstanding that the Swing Line Loans
outstanding at any time, when aggregated with the Swing Line Lender’s other
outstanding Revolving Loans hereunder may exceed such amount); and
(ii) the aggregate principal amount of all outstanding Loans will not
exceed the Commitment Amount of all Lenders. 
The Swing Line Loans described in this Section 2.2 constitute a
revolving credit and within the amount and time specified, the Borrower may
pay, prepay and reborrow.  Swing Line
Loans shall be Base Rate Loans only.

Section 2.3            Manner of Borrowing.

(a)           Requests
for Revolving Loans. 
For each requested Loan, the Borrower shall give the Agent a Notice of
Borrowing specifying the date of a requested borrowing (which must be a Business
Day) and the amount thereof.  If Borrower
elects to have interest accrue on a Loan at an Offshore Rate based on LIBOR by
giving an Interest Rate Notice described in Section 2.8(b) in respect of such
borrowing, the Notice of Borrowing shall be given no later than 11:00

 14
 

 

a.m.
three (3) Business Days prior to the date of the requested borrowing.  If the Offshore Rate is based on IBOR, the
Notice of Borrowing may be given on the same day no later than 11:00 a.m.  Requests for borrowing, or confirmations thereof,
received after the designated hour will be deemed received on the next
succeeding Business Day. Each Notice of Borrowing shall be in writing and shall
be given not later than 11:00 a.m. (Seattle time) on the date the Borrower
wishes a Loan to be made.  Each such
notice shall be irrevocable and shall be deemed to constitute a representation
and warranty by the Borrower that as of the date of such notice the statements
set forth in Article 5 hereof are true and correct and that no Default
or Event of Default has occurred and is continuing or will occur as a result of
making the requested Loan.  Each Loan
requested by the Borrower under this Section 2.3(a) shall be in an amount not
less than Five Hundred Thousand Dollars ($500,000).

(b)           Requests
for Swing Line Loans. 
For each requested Swing Line Loan, the Borrower shall give the Agent a
Notice of Borrowing specifying the date of a requested borrowing (which must be
a Business Day) and the amount thereof. 
Each Notice of Borrowing shall be in writing and shall be given not
later than 1:00 p.m. (Seattle time) on the date the Borrower wishes a Swing
Line Loan to be made.  Each such notice
shall be irrevocable and shall be deemed to constitute a representation and
warranty by the Borrower that as of the date of such notice the statements set
forth in Article 5 hereof are true and correct and that no Default or
Event of Default has occurred and is continuing or will occur as a result of
making the requested Loan.  Each Swing
Line Loan requested by the Borrower under this Section 2.3(b) shall be in an
amount not less than One Hundred Thousand Dollars ($100,000).

Section 2.4            Disbursement of Loans

(a)           Disbursement
of Loans.  The Agent,
on receipt of a Notice of Borrowing for a Loan, shall promptly notify each Lender
by telex, facsimile transmission or electronic mail of the date of the
requested borrowing and the amount thereof. 
Each Lender shall before 1:00 p.m. (Seattle time), on the date of the
requested borrowing, pay in U.S. Dollars the lesser of (i) such Lender’s
Percentage Interest of the aggregate principal amount of the requested
borrowing identified in the Notice of Borrowing or (ii) the maximum amount
such Lender is committed to advance pursuant to the terms of Section 2.1 in
immediately available funds to the Agent at its Credit Service Center, Concord,
California.  Upon fulfillment to the
Agent’s satisfaction of the applicable conditions set forth in this Section
2.4(a) and in Article 3 hereof, and after receipt by the Agent of such funds,
the Agent will promptly make such immediately available funds available to the
Borrower by depositing them to the Borrower Account.  Notwithstanding the foregoing, the first
proceeds of the initial Loan will be applied by the Agent to repay Indebtedness
of the Borrower arising under the Existing Credit Agreement and any remainder
will be made available to the Borrower by depositing them to the checking
account described in the preceding sentence.

(b)           Disbursement
of Swing Line Loans.  The
Agent, on receipt of a Notice of Borrowing for a Swing Line Loan, shall
promptly notify the Swing Line Lender by telex, facsimile transmission or
electronic mail of the date of the requested borrowing and the amount
thereof.  Swing Line Lender shall before
2:00 p.m. (Seattle time), on the date of the requested borrowing, pay in U.S.
Dollars the lesser of (i) the requested borrowing identified in the Notice
of Borrowing or (ii) the maximum amount the Swing Line Lender is committed
to advance

 15
 

 

pursuant
to the terms of Section 2.2 in immediately available funds to the Agent at its
Credit Service Center, Concord, California. 
Upon fulfillment to the Agent’s satisfaction of the applicable
conditions set forth in set forth in this Section 2.4(b) and in Article 3
hereof, and after receipt by the Agent of such funds, the Agent will promptly
make such immediately available funds available to the Borrower by depositing
them to the Borrower Account.

Section 2.5            Swing Line Refunded Loans; Participations.

(a)           Refunded
Swing Line Loans.  The
Swing Line Lender may, at any time and from time to time in its sole and
absolute discretion, deliver to Agent (with a copy to the Borrower), not later
than 11:00 a.m. (Seattle time) on the date the Swing Line Lender wishes the
same to be made, request each Lender to make, and each Lender hereby severally
agrees to make, a Revolving Loan, in an amount equal to such Lender’s
Percentage Interest of the aggregate amount of the Swing Line Loans (the “Refunded
Swing Line Loans”) outstanding on the date of such notice, to repay the
Swing Line Lender.  The Agent, on receipt
of such request (which shall be deemed to be a Notice of Borrowing given by the
Borrower), shall promptly notify each Lender by telex, facsimile transmission
or electronic mail of the date of the requested borrowing and the amount
thereof.  Each Lender shall before 1:00
p.m. (Seattle time), on the date of the requested borrowing, pay in U.S.
Dollars the aggregate principal amount of the requested Revolving Loan in immediately
available funds to the Agent at its Credit Service Center, Concord,
California.  After receipt by the Agent
of such funds, the Agent will promptly make such immediately available funds
available to the Swing Line Lender for application by the Swing Line Lender to
the Swing Line Loans.  The Borrower
hereby authorizes the Swing Line Lender to deduct from any or all of the
accounts of the Borrower maintained with Bank of America the amount, if any, by
which the amount of the Refunded Swing Line Loans exceeds the amount of funds
received from the Lenders under this subsection.

(b)           Swing
Line Participations.  If
prior to the time a Revolving Loan would have otherwise been made pursuant to
Section 2.5(a), any of the Events of Default described in Section 8.1(g) or
Section 8.1(h) shall have occurred and be continuing or if for any other
reason, as determined by the Swing Line Lender in its sole discretion,
Revolving Loans may not be made as contemplated by Section 2.5(a), each Lender
shall, on the date such Revolving Loan was to have been made pursuant to the
request referred to in Section 2.5(a) (the “Refunding Date”), purchase
for cash an undivided risk participation in the then outstanding Swing Line
Loans by paying to the Swing Line Lender an amount (the “Swing Line
Participation Amount”) equal to such Lender’s Percentage Interest of the
aggregate amount of the Swing Line Loans then outstanding which were to have
been repaid with such Revolving Loans.

(c)           Payments
Received by Swing Line Lender.  Whenever,
at any time after the Swing Line Lender has received from any Lender such
Lender’s Swing Line Participation Amount, the Swing Line Lender receives any
payment on account of the Swing Line Loans, the Swing Line Lender will
distribute to such Lender its Swing Line Participation Amount (appropriately
adjusted, in the case of interest payments, to reflect the period of time
during which such Lender’s participating interest was outstanding and funded
and, in the case of principal and interest payments, to reflect such Lender’s pro
rata portion of such payment if such payment is not sufficient to pay
the principal of and interest on all Swing Line Loans then due); provided,
however, that in the event that such payment received by the Swing Line
Lender is

 16
 

 

required
to be returned, such Revolving Lender will return to the Swing Line Lender any
portion thereof previously distributed to it by the Swing Line Lender.

(d)           Lender
Obligations Unconditional.  Each
Lender’s obligation to make the Revolving Loans referred to in Section 2.5(a)
and to purchase risk participations pursuant to Section 2.5(b) shall be
absolute and unconditional and shall not be affected by any circumstance,
including, without limitation: (i) any setoff, counterclaim, recoupment,
defense or other right which such Lender or the Borrower may have against the
Swing Line Lender, the Borrower or any other Person for any reason whatsoever;
(ii) the occurrence or continuation of a Default or an Event of Default or
the failure to satisfy any of the other conditions specified in Article 3
hereof; (iii) any adverse change in the business, operations, properties
or financial condition of the Borrower or any Subsidiary; (iv) any failure
by the Borrower, the Guarantor or any other Lender to perform or observe any
covenant, obligation or term of this Agreement or any other Loan Document to
which it is a party; or (v) any other circumstance, happening or event
whatsoever, whether or not similar to any of the foregoing.

Section 2.6            Repayment of Principal.

(a)           The
Borrower shall repay to the Lenders on the Maturity Date the aggregate
principal amount of all Revolving Loans outstanding on such date.

(b)           The
Borrower shall repay each Swing Line Loan on the earlier to occur of (i) the
date five (5) Business Days after such Swing Line Loan is made and (ii) the Maturity
Date.

(c)           All
obligations associated with the Letters of Credit shall be repaid in accordance
with Article 4 herein.

Section 2.7            Agent’s Right to Fund. 
Unless the Agent shall have received notice from a
Lender (i) in the case of a requested Revolving Loan, prior to 12:00 noon
(Seattle time) on the date of the requested borrowing that such Lender will not
make available to the Agent such Lender’s Percentage Interest of the requested
borrowing or (ii) in the case of a requested Swing Line Loan, prior to
2:00 p.m. (Seattle time) on the date of the requested borrowing that the Swing
Line Lender will not make available to the Agent the amount of the requested
borrowing, then in each case the Agent may assume that such Lender has made
such funds available to the Agent on the date such Loan is to be made in
accordance with Section 2.4 and the Agent may, in reliance upon such
assumption, make available to the Borrower on such date a corresponding
amount.  If and to the extent that such
Lender shall not have so made such corresponding amount available to the Agent
and if the Agent shall have advanced such amount to the Borrower, such Lender
agrees to pay to the Agent forthwith on demand such corresponding amount,
together with interest thereon for each day from the date such amount is made
available to the Borrower until the date such amount is repaid to the Agent at
the Federal Funds Rate.  Simultaneous
with the making of such demand on such Lender, the Agent shall give notice of
such demand to the Borrower.  If such
Lender shall pay to the Agent such corresponding amount, the amount so paid
shall constitute such Lender’s Revolving Loans or Swing Line Loans, as
applicable, included in such requested borrowing for purposes of this
Agreement.  If such Lender does not pay
such amount promptly upon the Agent’s demand therefor, the Borrower agrees to
pay to the Agent

 17
 

 

forthwith
on demand such corresponding amount, together with interest thereon for each
day from the date such amount is made available to the Borrower until the date
such amount is repaid to the Agent (i) in the case of a requested
Revolving Loan, at the Applicable Interest Rate or (ii) in the case of a
requested Swing Line Loan, at the Prime Rate. 
Any such repayment by the Borrower shall be without prejudice to any
rights it may have against the Lender that has failed to make available its
funds for any requested borrowing.

Section 2.8            Interest on Loans.

(a)           General Provisions.  The Borrower agrees to pay to the Agent for
the account of Lenders interest on the unpaid principal amount of each Loan
from the date of such Loan until such Loan shall be due and payable at a per
annum rate equal to the Applicable Interest Rate in effect from time to time
with respect to such Loan (or respective portions thereof); provided, however,
that after the occurrence and during the continuation of an Event of Default,
interest shall accrue at a per annum rate equal to two percent (2%) above the
Applicable Interest Rate in effect from time to time with respect to such Loan (changing
as such Prime Rate changes) (the “Default Rate”).  Accrued but unpaid interest on each Offshore
Rate Loan shall be paid in arrears on the last day of the Applicable Interest
Period, and, for each Offshore Rate Loan having an Applicable Interest Period
longer than three months at the end of each three (3) month period during such
Applicable Interest Period.  Accrued but
unpaid interest on each Base Rate Loan shall be paid in arrears on the first
Business Day of each calendar month and at the Maturity Date.  Accrued interest on each Loan shall be
payable on demand after the occurrence of an Event of Default.

(b)           Selection of Alternative Rates.

(i)            The Borrower may, subject to the
requirements of this Section 2.8(b), on three (3) Business Days’ prior notice,
elect to have interest accrue on any Loan (or any portion thereof) at the
Offshore Rate based on LIBOR for an Applicable Interest Period, or on the same
day with no notice for an Offshore Rate Loan based on IBOR.  Such notice (herein, an “Interest Rate
Notice”) shall be deemed delivered when received by the Agent except that
an Interest Rate Notice received by the Agent after 11:00 a.m. (Seattle time)
on any Business Day, shall be deemed to have been delivered or received on the
immediately succeeding Business Day.  All
Interest Rate Notices shall be in writing. 
Each such Interest Rate Notice shall identify, subject to the conditions
of this Section 2.8(b), the Loan or portions thereof to accrue interest at the
Offshore Rate and the Applicable Interest Period which the Borrower
selects.  Each such Interest Rate Notice
shall be irrevocable and shall constitute a representation and warranty by the
Borrower that (1) as of the date of such Interest Rate Notice, the
representations and warranties set forth in Article 5 hereof are
true and correct in all material respects (subject to any waivers of the terms
thereof then in effect in accordance with the terms of this Agreement) as of
the date of such Interest Rate Notice unless such representation and warranty
is made as of a specific date, and (2) no Default or Event of Default has
occurred and is continuing.  Upon receipt
of such Interest Rate Notice, the Agent shall promptly notify each Lender by
telex, facsimile transmission, electronic mail or cable of the date of the
information set forth in the Interest Rate Notice.

 18
 

 

(ii)           The Borrower’s right to select the
Offshore Rate to apply to a Loan (or any portion thereof) shall be subject to
the following conditions:  (1) the
aggregate of all Loans of the same type or portions thereof to accrue interest
at a particular Offshore Rate for the same Applicable Interest Period shall be
an integral multiple of Fifty Thousand Dollars ($50,000) and not less than Five
Hundred Thousand Dollars ($500,000); (2) the Offshore Rate may not be
selected for any Loan or portion thereof which is already accruing interest at
the Offshore Rate unless such selection is only to become effective at the
maturity of the Applicable Interest Period then in effect; (3) Lender
shall not have given notice pursuant to Section 2.8(d) that the selected
Offshore Rate is not available; and (4) no Default or Event of Default
shall have occurred and be continuing.

(iii)          In the absence of an effective request
and acceptance thereof for the application of an Offshore Rate, the Loans (or
remaining portions thereof) shall accrue interest at the Prime Rate.  Any Interest Rate Notice which specifies an
Offshore Rate but fails to identify an Applicable Interest Period shall be
deemed to be a request for the designated Offshore Rate for an Applicable
Interest Period of one month.

(iv)          The Interest Rate Notice may be given
with and contained in any Notice of Borrowing.

(v)           If the Borrower delivers an Interest
Rate Notice with any Notice of Borrowing for a Loan and the Borrower thereafter
declines to take such Loan or a condition precedent to the making of such Loan
is not satisfied or waived, the Borrower shall indemnify each Lender for all
losses and any costs which such Lender may sustain as a consequence thereof
including, without limitation, the costs of re-employment of funds at rates
lower than the cost to such Lender of such funds.  A certificate from Lender setting forth the
amount due to it pursuant to this subparagraph (v) and the basis for, and
the calculation of, such amount shall be, absent a showing by the Borrower of
manifest or demonstrable error, conclusive evidence of the amount due to it
hereunder.  Payment of the amount owed
shall be due within fifteen (15) days after the Borrower’s receipt of such
certificate.

(c)           Applicable
Days for Computation of Interest.  Computations of interest on Base Rate Loans
shall be made on the basis of a year of 365/366 days, for the actual number of
days (including the first day but excluding the last day) occurring in the
period for which such interest is payable. 
All other computations of interest and all computations of fees shall be
made on the basis of a year of 360 days, for the actual number of days
(including the first day but excluding the last day) occurring in the period
for which such interest or fees are payable.

(d)           Unavailable
Offshore Rate.  If any
Lender determines that for any reason, fair and adequate means do not exist for
establishing a particular Offshore Rate or that an Offshore Rate will not adequately
and fairly reflect the cost to such Lender of making or maintaining the
principal amount of a particular Offshore Rate Loan or that accruing interest
on any Offshore Rate Loan has become unlawful or is contrary to any internal
policies (of general application), such Lender may give notice of that fact to
the Agent and the Borrower and such determination shall be conclusive and
binding absent manifest error.  After
such notice has been given and until such Lender notifies the Borrower and the
Agent that the circumstances giving rise to such notice no longer exist, the
interest rate or rates so identified in such notice shall no

 19
 

 

longer
be available.  Any subsequent request by
the Borrower to have interest accrue at such an Offshore Rate shall be deemed
to be a request for interest to accrue at the Prime Rate.  If the circumstances giving rise to the
notice described herein no longer exist, the Lender who had previously given
notice of the unavailability of rate(s) shall notify the Agent and the Borrower
in writing of that fact, and the Borrower shall then once again become entitled
to request that such Offshore Rates apply to the Loans in accordance with
Section 2.8(b).

(e)           Compensation
for Increased Costs. 
In the event that after the date hereof any change occurs in any
applicable law, regulation, treaty or directive or interpretation thereof by
any authority charged with the administration or interpretation thereof, or any
condition is imposed by any authority after the date hereof or any change occurs
in any condition imposed by any authority on or prior to the date hereof which:

(1)           subjects any Lender to any Tax (other
than any Tax measured by such Lender’s net or gross income), or changes the
basis of taxation of any payments to any Lender on account of principal of or
interest on any Offshore Rate Loan, the Notes (to the extent such Note evidence
a Offshore Rate Loan) or fees in respect of such Lender’s obligation to make or
continue any Offshore Rate Loan or other amounts payable with respect to its
Offshore Rate Loans (other than a change in the rate of tax based solely on the
overall net or gross income of the Lender); or

(2)           imposes, modifies or determines
applicable any reserve, deposit or similar requirements against any assets held
by, deposits with or for the account of, or loans or commitments by, any office
of any Lender in connection with its Offshore Rate Loans to the extent the
amount of which is in excess of, or was not applicable at the time of
computation of, the amounts provided for in the definition of such Offshore
Rate; or

(3)           affects the amount of capital
required or expected to be maintained by banks generally or corporations
controlling banks and any Lender determines that the amount by which it or any
corporation controlling it is required or expected to maintain or increase its
capital is increased by, or based upon, the existence of this Agreement or of
any Lender’s Loans or Commitments hereunder;

(4)           imposes upon any Lender any other
condition with respect to its Offshore Rate Loans or its obligation to make or
continue Offshore Rate Loans;

which, as a result
thereof, (i) increases the cost to any Lender of making or maintaining its
Loans or its Commitments hereunder, or (ii) reduces the net amount of any
payment received by any Lender in respect of its Offshore Rate Loans (whether
of principal, interest, commitment fees or otherwise), or (iii) requires
any Lender to make any payment on or calculated by reference to the gross
amount of any sum received by it in respect of its Offshore Rate Loans, in each
case by an amount which any such Lender in its sole judgment deems material,
then and in any such case the Borrower shall pay to the Agent for the account
of such Lender on demand such amount or amounts as will compensate such Lender
for any increased cost, deduction or payment actually incurred or made by such
Lender.  The demand for payment by such
Lender shall be delivered to the Borrower and the Agent and shall state the
subjection or change which occurred or the reserve or deposit requirements or
other conditions which have been imposed

 20
 

 

upon such Lender or the
request, direction or requirement with which it has complied, together with the
date thereof, the amount of such cost, reduction or payment and the manner in
which such amount has been calculated. 
The statement of any Lender as to the additional amounts payable
pursuant to this Section 2.8(e) shall be binding on the Borrower in the absence
of manifest error.

The protection of
this Section 2.8(e) shall be available to each Lender regardless of any
possible contention of invalidity or inapplicability of the relevant law,
regulation, treaty, directive, condition or interpretation thereof.  In the event that the Borrower pays any Lender
the amount necessary to compensate such Lender for any charge, deduction or
payment incurred or made by such Lender as provided in this Section 2.8(e), and
such charge, deduction or payment or any part thereof is subsequently returned
to such Lender as a result of the final determination of the invalidity or
inapplicability of the relevant law, regulation, treaty, directive or
condition, then such Lender shall remit to the Borrower the amount paid by the
Borrower which has actually been returned to such Lender (together with any
interest actually paid to such Lender on such returned amount), less such
Lender’s costs and expenses incurred in connection with such governmental
regulation or any challenge made by such Lender with respect to its validity or
applicability.

Section 2.9            Notes; Recordation of Loans.

(a)           Notes.  The Loans shall be evidenced by promissory
notes of the Borrower substantially in the form of Exhibit A
attached hereto, with appropriate insertions, payable to the order of Lenders,
dated as of the date hereof, and for each Lender in the face amount of such
Lender’s Commitment (each a “Note” and collectively the “Notes”).

(b)           Recordation
of Loans.  Each Lender
is hereby authorized to record the date and amount of the Loans it makes, the
Base Rate or the Offshore Rate, as applicable, and the date and amount of each
payment of principal and interest thereon on a schedule annexed to or kept in
respect of any Note.  Any such
recordation by Lender shall constitute prima facie evidence of the accuracy of
the information so recorded; provided, however, that the failure
to make any such recordation or any error in any such recordation shall not
affect the obligations of the Borrower hereunder or under any Note.

Section 2.10         Manner of Payments.

(a)           Form
and Place of Payment. 
All payments and prepayments of principal and interest on any Loan and
all other amounts payable hereunder by the Borrower to the Agent or any Lender
shall be made by paying the same in United States Dollars and in immediately
available funds to the Agent at its Credit Service Center, Concord, California,
not later than 11:00 a.m. (Seattle time) on the date on which such payment or
prepayment shall become due.  If such
payment is received after 11:00 a.m. (Seattle time), then it will be deemed
received on the next Business Day.  All
payments to be made by the Borrower shall be made without setoff, recoupment or
counterclaim.

(b)           Authorization
to Charge Borrower Account. 
On each date when the payment of any principal, interest or commitment
fees are due hereunder or under any Note, the

 21
 

 

Borrower
agrees to maintain on deposit in the Borrower Account an amount sufficient to
pay such principal, interest or commitment fees in full.  The Borrower hereby authorizes the Agent
(i) to deduct automatically all principal, interest or loan fees when due
hereunder or under the Notes from the Borrower Account, and (ii) if and to
the extent any payment under this Agreement or any other Loan Document is not
made when due, to deduct automatically any such amount from any or all of the
accounts of the Borrower maintained with Bank of America.  The Agent agrees to provide timely notice to
the Borrower of any automatic deduction made pursuant to this Section 2.10(b).

(c)           Non-Business
Days.  Whenever any
payment hereunder or under any other Loan Document shall be stated to be due or
whenever the last day of any Applicable Interest Period would otherwise occur
on a day other than a Business Day, such payment shall be made and the last day
of such Applicable Interest Period shall occur on the next succeeding Business
Day and such extension of time shall in such case be included in the
computation and payment of interest or commitment fees, as the case may be,
unless, in the case of an Applicable Interest Period with respect to a Offshore
Rate Loan, such extension would cause such payment to be made or the last date
of such Applicable Interest Period to occur in the next following calendar
month, in which case such payment shall be made and the last day of such
Applicable Interest Period shall occur on the next preceding Business Day.

Section 2.11         Prepayments.  Base Rate Loans may be repaid at any time
without penalty or premium.  If a
Offshore Rate Loan is paid prior to the end of the Applicable Interest Period,
the Borrower shall compensate each Lender, upon written request by such Lender
(which request shall set forth the basis for requesting such amounts), for all
reasonable losses, expenses and liabilities (including any interest paid by
such Lender to lenders of funds borrowed by it to make or carry its Offshore
Rate Loans and any loss, expense or liability sustained by such Lender in
connection with the liquidation or re-employment of such funds) which such
Lender may sustain as a result of such payment. 
Such amounts shall be payable in all circumstances where a Offshore Rate
Loan is paid prior to the end of the Applicable Interest Period, regardless of
whether such payment is voluntary, mandatory, the result of the Agent’s or any
Lender’s collection efforts.

Section 2.12         Application of Payments.

(a)           Payments
Before Default. 
Payments made by the Borrower in respect of amounts owing by it
hereunder or under any other Loan Document shall be applied in the manner
directed by the Borrower and, in the absence of any such direction, such payments
shall be applied first, against fees, expenses and indemnities due
hereunder or under any other Loan Document; second, against any interest
due on any Loan; third, against any Loan principal then due; and fourth,
against any Loan principal not then due.

(b)           Payments
After Default.  Any
payments received by the Agent or any Lender by any means and from any source
after the occurrence and during the continuation of an Event of Default shall
be applied first, to fees, expenses and indemnities then due hereunder
and under any other Loan Document; second, to interest due then due
under the Loan Documents; third, to repay the outstanding principal
amount of any outstanding Loans; and fourth, to be held (and applied in
the preceding order of priority) as cash collateral to secure the performance
of all

 22
 

 

obligations
of the Borrower owing to the Agent and the Lenders (or any of them) under the
Loan Documents.

Section 2.13         Fees.

(a)           Commitment
Fee.  The Borrower
shall pay to the Agent for the account of each Lender in accordance with its
Percentage Interest, a commitment fee equal to the Applicable Interest Rate times
the actual daily amount by which the Aggregate Commitments exceed the sum of
(i) the outstanding amount of all Revolving Loans and (ii) all Letters of
Credit Usage.  The commitment fee shall
accrue at all times during the Commitment Period, including at any time during
which one or more of the conditions in Article 3 is not met, and shall be due
and payable quarterly in arrears on the last Business Day of each March, June,
September and December, commencing with the first such date to occur after the
date of this Agreement, and on the Maturity Date.  The commitment fee shall be calculated
quarterly in arrears, and if there is any change in the Applicable Interest
Rate during any quarter, the actual daily amount shall be computed and
multiplied by the Applicable Interest Rate separately for each period during
such quarter that such Applicable Interest Rate was in effect.

(b)           Upfront
Fee.  Borrower shall
pay to Bank of America, as Agent for the Lenders, an upfront fee in the amount
of Sixty-two Thousand Five Hundred Dollars ($62,500), or 25 basis points as
applied to the Aggregate Commitments, which shall be shared equally by the
Lenders. This fee shall be due and payable at closing, and shall be fully
earned and non-refundable when paid.

(c)           Arrangement
Fee.  Borrower shall
pay to Bank of America, for its own account, an arrangement fee as set forth in
the fee letter agreement dated as of the date of this Agreement (the “Fee
Letter”). The arrangement fee shall be due and payable at closing, and shall be
fully earned and non-refundable when paid.

(d)           Annual
Agency Fees.  So long
as any Lender shall have any Commitment hereunder and until payment in full of
each Loan, the Borrower agrees to pay to the Agent for its own account, an
annual administrative fee as provided in the Fee Letter.  The annual agency fee shall be payable in
advance on the date of this Agreement on each anniversary date of this
Agreement and shall be deemed fully earned when due and non-refundable when
paid.

Section 2.14         Sharing of Payments, Etc.  Each borrowing of Loans from the Lenders
under Section 2.1 will be made pro rata in accordance with each Lender’s
Percentage Interest.  Each payment and prepayment
of the Loans and each payment of interest on the Loans will be made pro rata to
each Lender in accordance with its Percentage Interest.  If any Lender shall obtain any payment in
respect of the Borrower’s obligations under this Agreement or the Notes
(whether voluntary or involuntary, through the exercise of any right of setoff
or otherwise) in excess of the share which it would have been entitled to
receive had such payment been made to the Agent for the account of the Lenders,
such Lender shall forthwith purchase from the other Lenders such participations
in the Loans made by them as shall be necessary to cause such purchasing Lender
to share the excess payment ratably with each of them, but if any of such
excess payment is afterward recovered from such purchasing Lender, the purchase
shall be rescinded and the purchase price restored, without interest, to the
extent of such recovery.  The 

 23
 

 

Borrower
authorizes the purchase of such participations and agrees that any Lender so
purchasing a participation from another Lender may exercise all its rights to
payment (including the right of setoff) with respect to such participation as
fully as if such Lender were the direct creditor of the Borrower in the amount
of such participation.

ARTICLE
3.

CONDITIONS TO LOANS

Section 3.1            Conditions to Initial Loan.  In addition to the conditions set forth in
Section 3.2, the obligation of each Lender to make any Loan, the obligation of
the Agent to disburse any Loan proceeds, the obligation of the L/C Issuer to
issue Letters of Credit, and the obligation of Swing Line Lender to make any
Swing Line Loans are subject to fulfillment of the following conditions
precedent prior to the initial Loan:

(a)           Loan
Documents.  The Loan
Documents shall have each been duly executed and delivered by the respective
parties thereto, and shall be satisfactory to the Agent and the Lenders in form
and substance.

(b)           Borrower
Authority.  The Agent
shall have received, in form and substance satisfactory to the Lenders, a
certified copy of the Organizational Documents of the Borrower and certified
copies of resolutions adopted by the board of directors of the Borrower
authorizing the execution, delivery and performance of the Loan Documents to
which it is a party, together with evidence that the Borrower is in good
standing in the states of Oregon and evidence of the authority and specimen
signatures of the natural persons who have signed this Agreement and who will
sign the other Loan Documents on behalf of the Borrower and such other evidence
of corporate authority as the Agent or any Lender shall reasonably require.

(c)           Guarantor
Authority.  The Agent
shall have received, in form and substance satisfactory to the Lenders, a
certified copy of the Organizational Documents of each Guarantor and certified
copies of resolutions adopted by the board of directors or equivalent governing
body of such Guarantor authorizing the execution, delivery and performance of
the Loan Documents to which it is a party and evidence of the authority and
specimen signatures of the natural persons who have signed or will sign the
Loan Documents to which such Guarantor is a party on behalf of such Guarantor
and such other evidence of corporate authority as the Agent or any Lender shall
reasonably require.

(d)           Certificate.  The Agent shall have received an Officer’s
Certificate from the Borrower as to the accuracy of the Borrower’s
representations and warranties set forth in Article 5 hereof and as
to the absence of any Default or Event of Default.

(e)           No
Material Adverse Change. 
No event shall have occurred since the date of the Current Balance Sheet
that could reasonably be expected to have a material adverse change in, or a
material adverse effect upon, the business, operations, properties or financial
condition of the Borrower or the Borrower and its Subsidiaries taken as a
whole.

(f)            Payment
of Fees and Expenses. 
The Agent shall have received (i) for the account of the Lenders
the fees set forth in Section 2.13 and (ii) for its own account,
reimbursement for all reasonable expenses, including legal fees, actually
incurred by the Agent

 24
 

 

in
connection with the preparation of this Agreement, the other Loan Documents and
the closing of the transactions contemplated hereby and thereby.

(g)           Consents.  The Agent shall have received evidence
reasonably satisfactory to the Lenders that the Borrower has obtained all
consents, permits and Government Approvals from all Persons (including, without
limitation, Governmental Authorities) which are parties to or the issuer of any
material contract, lease, license or other Government Approval necessary or
advisable to permit the Agent and the Lenders following any Event of Default,
to enjoy the practical realization of the rights and remedies provided in this
Agreement and the other Loan Documents.

Section 3.2            Conditions to All Loans.  The obligation of each Lender to make any
Loan, and the obligation of the Agent to disburse any Loan proceeds are subject
to fulfillment of the following conditions precedent:

(a)           Prior
Conditions.  All of the
conditions set forth in Section 3.1 shall have been satisfied.

(b)           Notice
of Borrowing.  The
Agent shall have received the Notice of Borrowing in respect of each Loan.

(c)           No
Defaults, Etc.  At the
date of the Loan, no Default or Event of Default shall have occurred and be
continuing or will have occurred as the result of the making of the Loan; and
the representations and warranties of the Borrower in Article 5
hereof shall be true on and as of such date with the same force and effect as
if made on and as of such date.

(d)           Guaranties.  Neither the Agent nor any Lender shall have
received from the Borrower or any Guarantor any notice terminating or
purporting to terminate any Guarantor’s obligations under the Guaranty to which
it is a party or claiming that any such Guaranty is not or will in the future
not be fully enforceable against each Guarantor in accordance with their terms.

(e)           Other
Information.  The Agent
and each Lender shall have received such other statements, opinions,
certificates, documents and information as it may reasonably request in order
to satisfy itself that the conditions set forth in this Section 3.2 have been
fulfilled.

ARTICLE
4.

LETTERS OF CREDIT

Section 4.1            Letters of Credit. 
Borrower may request that the L/C Issuer issue letters
of credit for Borrower’s account in accordance with the terms and conditions of
this Article 4.

Section 4.2            Manner of Requesting Letters of Credit.

(a)           Letter
of Credit Requests.  From
time to time during the Commitment Period, Borrower may request that the L/C
Issuer issue standby letters of credit for Borrower’s account or extend or
renew any existing Letters of Credit. 
Such request will be made by delivering a written request for the
issuance, extension or renewal of such a letter of credit to the

 25

 

L/C Issuer, not
later than 12:00 noon (Seattle time) on the date a new letter of credit is to
be issued or an existing letters of credit is scheduled to expire.  Each such request shall be deemed to
constitute a representation and warranty by Borrower that as of the date of
such request the statements set forth in Article 5 hereof are true and
correct and that no Default or Event of Default has occurred and is continuing
or will occur as a result of issuing, extending or renewing the letter of
credit.  Each such request shall
(1) specify the face amount of the requested Letter of Credit,
(2) the proposed date of expiration, (3) the name of the intended
beneficiary thereof, and (4) whether such Letter of Credit is a new
standby letter of credit or an extension or renewal thereof.  Each standby Letter of Credit requested
hereunder shall be in a face amount such that after issuance of such letter of
credit (i) the principal amount of all Revolving Loans outstanding plus
the Letter of Credit Usage will not exceed the Aggregate Commitments; and
(ii) the Letter of Credit Usage will not exceed Five Million Dollars
($5,000,000).  In addition to the
foregoing, unless otherwise approved by Lenders, each Letter of Credit requested
hereunder, shall have an expiration date not later than one year after the
Maturity Date, or one year after the date of issuance of such Letter of Credit.
However, any Letter of Credit that remains outstanding after the Maturity Date
shall be secured by cash or deposit account balances in form and substance
satisfactory to the Agent.  The Lenders
severally agree to participate in Letters of Credit issued for the account of
the Borrower; provided that the L/C Issuer shall not be obligated to
make any L/C Credit Extension with respect to any Letter of Credit, and no
Lender shall be obligated to participate in any Letter of Credit if, as of the
date of such L/C Credit Extension, the limitations set forth above are
exceeded.

(b)           Standby
Letter of Credit Fees. 
Borrower agrees to pay to the L/C Issuer for the account of Lenders in
proportion to their Percentage Interests, a standby letter of credit fee on the
face amount of each standby Letter of Credit from the date such Letter of
Credit is issued until such Letter of Credit shall be terminated at a per annum
rate equal to the Applicable Interest Rate. 
Standby letter of credit fees shall be payable in arrears on the first
Business Day of each calendar quarter and on demand after the occurrence of an
Event of Default.  Computations of
standby letter of credit fees shall be made on the basis of a year of three
hundred sixty (360) days for the actual number of days (including the first day
but excluding the last day) occurring in the period for which such fees are
payable.

(c)           Other
Letter of Credit Fees.  Borrower agrees to pay to the L/C Issuer for
its own account issuance, amendment, negotiation and other standby letter of
credit fees calculated and payable in accordance with the L/C Issuer’s normal
and customary practices.

(d)           Letter of
Credit Application Forms. 
Borrower shall execute an application in the standard form used by the
L/C Issuer (each, a “Letter of Credit Application”) in respect of each
Letter of Credit issued, amended, extended or renewed hereunder.  To the extent any Letter of Credit Application
conflicts with this Agreement, the terms of this Agreement shall control.  Any Letter of Credit Applications now in
effect with respect to the Existing Letters of Credit shall remain in full
force and effect except that, if such existing Letter of Credit is extended or
renewed, the L/C Issuer may, at its option, require Borrower to execute a new
Letter of Credit Application.

(e)           Issuance
of Letter of Credit. 
Subject to the satisfaction of the conditions precedent set forth in
Article 5 hereof and Borrower’s compliance with the terms of this Section 4.2,

 26
 

 

the L/C Issuer shall
issue and deliver its letter of credit to Borrower or to the designated
beneficiary at such address as Borrower may specify.  New Letters of Credit and extensions or
renewals of existing Letters of Credit shall be in a form acceptable to the L/C
Issuer.

Section 4.3 Compensation For
Increased Costs.  The
Borrower agrees to indemnify the L/C Issuer and Lenders on demand for any and
all additional costs, expenses, or damages incurred by the L/C Issuer or such
Lender, directly or indirectly, arising out of the issuance of any Letter of
Credit or the purchase of any Letter of Credit Risk Participation, including,
without limitation, any costs of maintaining reserves in respect thereof and
any premium rates imposed by the Federal Deposit Insurance Corporation in
connection therewith.  A certificate as
to such additional amounts submitted to Borrower by the L/C Issuer or such
Lender shall be final, conclusive, and binding, absent manifest error.

If
at any time after the date hereof the introduction of or any change in
applicable law, rule, or regulation or in the interpretation or the
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof, or compliance by the L/C Issuer or
any Lender with any requests directed by any such Governmental Authority
(whether or not having the force of law) shall, with respect to any Letter of
Credit or Letter of Credit Risk Participation subject the L/C Issuer or such
Lender to any Tax or impose, modify, or deem applicable any reserve, special
deposit, or similar requirements against assets of, deposits with or for the
account of, credit extended by the L/C Issuer or such Lender or shall impose on
the L/C Issuer or such Lender any other conditions affecting the Letters of
Credit or Letter of Credit Risk Participations and the result of any of the
foregoing is to increase the cost to the L/C Issuer or such Lender of issuing a
Letter of Credit or holding a Letter of Credit Risk Participation or to reduce
the amount of any sum received or receivable by the L/C Issuer or such Lender
hereunder with respect to the Letters of Credit or Letter of Credit Risk
Participations, then, upon demand by the L/C Issuer or such Lender, Borrower
shall pay to the L/C Issuer or such Lender such additional amount or amounts as
will compensate the L/C Issuer or such Lender for such increased cost or
reduction.  A certificate submitted to
Borrower by the L/C Issuer or such Lender setting forth the basis for the
determination of such additional amount or amounts shall be final, conclusive,
and binding, absent manifest error.

Section 4.4 Applicability of ISP98
and UCP.  Unless
otherwise expressly agreed by the L/C Issuer and Borrower when a Letter of
Credit is issued, (a) the rules of the “International Standby Practices
1998” published by the Institute of International Banking Law & Practice
(or such later version thereof as may be in effect at the time of issuance)
shall apply to each standby Letter of Credit, and (b) the rules of the
Uniform Customs and Practice for Documentary Credits, as most recently
published by the International Chamber of Commerce (the “ICC”) at the
time of issuance (including the ICC decision published by the Commission on
Banking Technique and Practice on April 6, 1998 regarding the European
single currency (euro)) shall apply to each commercial Letter of Credit.

Section 4.5 Payment by Borrower.  The Borrower agrees to fully reimburse the
L/C Issuer for all amounts paid by the L/C Issuer under any Letter of Credit
together with interest thereon at the Prime Rate from the date the L/C Issuer
makes such payment (the “Honor Date”) until the date the L/C Issuer notifies
Borrower that such payment was made. 
Such reimbursement shall be made to the L/C Issuer in immediately
available funds at its Credit

 27
 

 

Service
Center, Concord, California, not later than 12:00 noon (Seattle time) on the
date Borrower is first notified by the L/C Issuer that the L/C Issuer has made
payment under the Letter of Credit; provided, that, if the L/C Issuer so
elects pursuant to the terms of Section 8.2, following the occurrence of an
Event of Default, the face amount of each Letter of Credit shall become
immediately due and payable.  If Borrower
shall default in its obligations to reimburse the L/C Issuer or make any other
payment required hereunder, interest shall accrue on the unpaid amount thereof
at the Default Rate from the date such amount becomes due and payable until
payment in full by Borrower.  Interest on
such unpaid amounts shall be calculated on the basis of a year of 360 days and
shall be payable on demand.

Section 4.6 Funding of
Participations; Repayment of Participations.

(a)           If
the Borrower fails to reimburse the L/C Issuer in accordance with Section 4.5
above, Agent shall promptly notify each Lender of the Honor Date, the amount of
the unreimbursed drawing (the “Unreimbursed Amount”), and the amount of
such Lender’s pro rata share thereof. Any notice given by the L/C Issuer or the
Agent pursuant to this Section 4.6 may be given by telephone.

(b)           Each
Lender (including the Lender acting as L/C Issuer) shall upon any notice
pursuant to Section 4.6(a) make funds available to the Agent for the account of
the L/C Issuer at the Agent’s Office in an amount equal to its pro rata share
of the Unreimbursed Amount not later than 1:00 p.m. on the Business Day
specified in such notice by the Agent, whereupon, subject to the provisions of
Section 4.6(c), each Lender that so makes funds available shall be deemed to
have made a Base Rate Loan to the Borrower in such amount. The Agent shall
remit the funds so received to the L/C Issuer.

(c)           With
respect to any Unreimbursed Amount that is not fully refinanced by a borrowing
of Base Rate Loans, the Borrower shall be deemed to have incurred from the L/C
Issuer an L/C Borrowing in the amount of the Unreimbursed Amount that is not so
refinanced, which L/C Borrowing shall be due and payable on demand (together
with interest) and shall bear interest at the Default Rate. In such event, each
Lender’s payment to the Agent for the account of the L/C Issuer pursuant to
Section 4.6(b) shall be deemed payment in respect of its participation in such
Loan and shall constitute an L/C Advance from such Lender in satisfaction of
its participation obligation under this Section 4.6.

(d)           Until
each Lender funds its Loan or L/C Advance pursuant to this Section 4.6 to
reimburse the L/C Issuer for any amount drawn under any Letter of Credit,
interest in respect of such Lender’s pro rata share of such amount shall be
solely for the account of the L/C Issuer.

(e)           Each
Lender’s obligation to make Loans or L/C Advances to reimburse the L/C Issuer
for amounts drawn under Letters of Credit, as contemplated by this Section 4.6,
shall be absolute and unconditional and shall not be affected by any
circumstance, including (i) any set-off, counterclaim, recoupment, defense or
other right which such Lender may have against the L/C Issuer, the Borrower or
any other Person for any reason whatsoever; (ii) the occurrence or continuance
of a Default, or (iii) any other occurrence, event or condition, whether or not
similar to any of the foregoing; provided, however, that each Lender’s
obligation to make

 28
 

 

Loans
pursuant to this Section 4.6 is subject to the conditions set forth in Section
3.2 (other than delivery by the Borrower of a Notice of Borrowing). No such
making of an L/C Advance shall relieve or otherwise impair the obligation of
the Borrower to reimburse the L/C Issuer for the amount of any payment made by
the L/C Issuer under any Letter of Credit, together with interest as provided
herein.

(f)            If
any Lender fails to make available to the Agent for the account of the LC
Issuer any amount required to be paid by such Lender pursuant to the foregoing
provisions of this Section 4.6 by the time specified in Section 4.6(b) the L/C
Issuer shall be entitled to recover from such Lender (acting through the
Agent), on demand, such amount with interest thereon for the period from the
date such payment is required to the date on which such payment is immediately
available to the L/C Issuer at a rate per annum equal to the Prime Rate from
time to time in effect. A certificate of the L/C Issuer submitted to any Lender
(through the Agent) with respect to any amounts owing under this subsection (f)
shall be conclusive absent manifest error.

(g)           (i)            At any time after the L/C Issuer has
made a payment under any Letter of Credit and has received from any Lender such
Lender’s L/C Advance in respect of such payment in accordance with Section
4.6(a) through (f), if the Agent receives for the account of the L/C Issuer any
payment in respect of the related Unreimbursed Amount or interest thereon
(whether directly from the Borrower or otherwise, including proceeds of cash
collateral applied thereto by the Agent), the Agent will distribute to such
Lender its pro rata share thereof (appropriately adjusted, in the case of
interest payments, to reflect the period of time during which such Lender’s L/C
Advance was outstanding) in the same funds as those received by the Agent.

(ii)           If any payment received by the Agent
for the account of the L/C Issuer pursuant to Section 4.6(a) is required to be
returned (including pursuant to any settlement entered into by the L/C Issuer
in its discretion), each Lender shall pay to the Agent for the account of the
L/C Issuer its pro rata share thereof on demand of the Agent, plus interest
thereon from the date of such demand to the date such amount is returned by
such Lender, at a rate per annum equal to the Prime Rate from time to time in
effect.

ARTICLE
5.

REPRESENTATIONS AND WARRANTIES

The
Borrower represents and warrants to the Lenders and the Agent as follows:

 29
 

 

Section 5.1 Corporate Existence and Power.  The Borrower is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Oregon.  The Borrower is duly
qualified to do business in California, Georgia, Illinois, Michigan, North
Carolina, Ohio, Oregon, Pennsylvania, South Carolina, Texas, and each other
jurisdiction where the failure to so qualify would be likely to have a material
adverse effect on the business, operations, properties or financial condition
of the Borrower.  The Borrower has full
corporate power, authority and legal right to carry on its business as
presently conducted, to own and operate its properties and assets, and to
execute, deliver and perform this Agreement and the other Loan Documents.

Section 5.2 Borrower Authorization.  The execution, delivery and performance by
the Borrower of this Agreement and the other Loan Documents and any borrowing
hereunder, have been duly authorized by all necessary corporate action of the
Borrower, do not require any shareholder approval or the approval or consent of
any trustee or the holders of any Indebtedness of the Borrower, except such as
have been obtained (certified copies thereof having been delivered to the
Agent), do not contravene any law, regulation, rule or order binding on it or
its Organizational Documents and do not contravene the provisions of or
constitute a default under any material indenture, mortgage, contract or other
agreement or instrument to which the Borrower is a party or by which the
Borrower or any of its properties may be bound or affected.

Section 5.3 Guarantor Authorization.  The execution, delivery and performance by
each Guarantor of the Guaranty to which it is a party, has been duly authorized
by all necessary corporate, company or partnership action of such Guarantor, do
not require any shareholder approval or the approval or consent of any trustee
or the holders of any Indebtedness of such Guarantor, except such as have been
obtained (certified copies thereof having been delivered to the Agent), do not
contravene any law, regulation, rule or order binding on it or its
Organizational Documents and do not contravene the provisions of or constitute
a default under any material indenture, mortgage, contract or other agreement
or instrument to which such Guarantor is a party or by which such Guarantor or
any of its properties may be bound or affected.

Section 5.4 Government Approvals,
Etc.  No Government
Approval or filing or registration with any Governmental Authority is required
for the making and performance by the Borrower of the Loan Documents or in
connection with any of the transactions contemplated hereby or thereby, except
such as have been heretofore obtained and are in full force and effect
(certified copies thereof having been delivered to the Agent).

Section 5.5 Binding Obligations, Etc.  This Agreement has been duly executed and
delivered by the Borrower and constitutes, and the other Loan Documents when
duly executed and delivered will constitute, the legal, valid and binding
obligations of the Borrower enforceable against the Borrower in accordance with
their respective terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, similar laws affecting creditors’ rights generally
or general principles of equity.

Section 5.6 Litigation.  Except as specifically disclosed in Schedule 1
attached hereto, there are no actions, proceedings, investigations, or claims
against or affecting the Borrower now pending before any court, arbitrator, or
Governmental Authority (nor to the best of the

 30
 

 

Borrower’s
knowledge has any thereof been threatened nor does any basis exist therefor)
which if determined adversely to the Borrower would (a) have a material
adverse effect on the financial condition or operations of the Borrower,
(b)  impair or defeat the lien of the Agent or any Lender on any of the
Collateral or any rights of the Borrower therein, or (c) result in a
judgment or order against the Borrower (in excess of insurance coverage) for
more than Two Million Five Hundred Thousand Dollars ($2,500,000).

Section 5.7 Financial Condition.  The consolidated balance sheet of the
Borrower as at October 31, 2002 (the “Current Balance Sheet”), and the
related statements of income and retained earnings of the Borrower for the
fiscal year then ended, copies of which have been furnished to Lenders, fairly
present the consolidated financial condition of the Borrower as at such date,
all determined in accordance with GAAP. 
The Borrower did not have on such date any material contingent
liabilities for Taxes, unusual forward or long-term commitments or material
unrealized or anticipated losses from any unfavorable commitments, except as
referred to or reflected or provided for in such balance sheet and in the
related notes.  Since the date of the
Current Balance Sheet there has been no material adverse change in the
financial condition, operations, or business of the Borrower.

Section 5.8 Solvency.  The Borrower and each Guarantor is Solvent
and each shall be Solvent immediately after the consummation of the
transactions contemplated by this Agreement. 
As used herein, a Person is “Solvent” on a particular date, if, on such
date both (i) (a) the then fair saleable value of the property of
such Person on a going concern basis is (1) greater than the total amount
of liabilities (including contingent liabilities) of such Person as they mature
in the ordinary course and (2) not less than the amount that will be
required to pay the probable liabilities on such Person’s then existing debts
as they become absolute and matured considering all financing alternatives and
potential asset sales reasonably available to such Person; (b) such Person’s
capital is not unreasonably small in relation to its business or any
contemplated or undertaken transaction; and (c) such Person does not
intend to incur, or believe) nor should it reasonably believe) that it will
incur, debts beyond its ability to pay such debts as they become due; and
(ii) such Person is “solvent” within the meaning given that term and
similar terms under applicable laws relating to fraudulent transfers and conveyances.  For purposes of this definition, the amount
of any contingent liability at any time shall be computed as the amount that,
in light of all of the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability in the ordinary course.

Section 5.9 Title and Liens.  The Borrower has good and marketable title to
each of the properties and assets reflected in the Current Balance Sheet,
except such as have been since sold or otherwise disposed of in the ordinary
course of business.  No assets or
revenues of the Borrower are subject to any Lien except as required or
permitted by this Agreement or specifically disclosed in Schedule 2
attached hereto.

Section 5.10 Intellectual Property.  The Borrower owns or possesses all
Intellectual Property and all licenses, franchises, permits and rights with
respect to any Intellectual Property necessary to own and operate its
respective properties and to carry on its business as presently conducted and
presently planned to be conducted. 
Except as specifically disclosed in Schedule 3 attached
hereto, no claim or litigation regarding any Intellectual Property or any
license,

 31
 

 

franchise,
permit or other rights with respect thereto is pending (nor to the best of the
Borrower’s knowledge threatened) which if determined adversely to the Borrower
would have a material adverse effect on the business, operations or financial
condition of the Borrower.

Section 5.11 Environmental Laws, Etc.  Except as specifically disclosed in Schedule 4
attached hereto, all properties of the Borrower and its Subsidiaries and its
and their use thereof comply in all material respects with applicable zoning
and use restrictions and with applicable laws and regulations relating to
health, safety and the environment, including, without limitation, all
Environmental Laws, in all jurisdictions in which the Borrower and its
Subsidiaries are doing business.

Section 5.12 Taxes.  The Borrower has filed all tax returns and
reports required of it, has paid all Taxes which are due and payable and before
they have become delinquent, except for Taxes (a) whose amount is not
individually or in the aggregate a Material Amount, or (b) whose amount,
applicability or validity is currently being contested in good faith by
appropriate proceedings where reserves or other appropriate provisions required
by GAAP shall have established therefor. 
The charges, accruals and reserves on the books of the Borrower in
respect of Taxes for all fiscal periods to date are accurate.  There are no questions or disputes between
the Borrower and any Governmental Authority with respect to any Taxes.  As used in this Section 5.12, “Material
Amount” shall mean an amount of One Hundred Thousand Dollars ($100,000) or
more or an amount otherwise material to the business, operations or financial
condition of the Borrower.

Section 5.13 Other Agreements.  The Borrower is not in breach of or default
in any material respect under any material agreement to which it is a party or
which is binding on it or any of its assets.

Section 5.14 Labor and Employee
Relations Matters.  The
Borrower is not and does not expect to be the subject of any union organizing
activity or material labor dispute, and the Borrower has not violated any
applicable federal or state law or regulation relating to labor or labor
practices, except such organizing activity, labor disputes and violations,
which individually or in aggregate, could not reasonably be expected to have a
material adverse effect on the business, operations, properties or financial
condition of the Borrower.

Section 5.15 Federal Reserve
Regulations.  The
Borrower is not engaged principally or as one of its important activities in
the business of extending credit for the purpose of purchasing or carrying any
margin stock (within the meaning of Federal Reserve Regulation U), and no
part of the proceeds of any Loan will be used to purchase or carry any such
margin stock or to extend credit to others for the purpose of purchasing or
carrying any such margin stock or for any other purpose that violates the
applicable provisions of any Federal Reserve Regulation.  The Borrower will furnish to the Agent or any
Lender on request a statement conforming with the requirements of
Regulation U.

Section 5.16 ERISA.

(a)           The
present value of all benefits vested under all Pension Plans did not, as of the
most recent valuation date of such Pension Plans, exceed the value of the
assets of the

 32
 

 

Pension
Plans allocable to such vested benefits by an amount which would represent a
potential material liability of the Borrower or affect materially the ability
of the Borrower to perform the Loan Documents.

(b)           No Plan or trust created thereunder,
or any trustee or administrator thereof, has engaged in a “prohibited
transaction” (as such term is defined in Section 406 of ERISA or  Section 4975 of the Code) which could
subject such Plan or any other Plan, any trust created thereunder, or any
trustee or administrator thereof, or any party dealing with any Plan or any such
trust to the tax or penalty on prohibited transactions imposed by
Section 502 of ERISA or Section 4975 of the Code.

(c)           No Pension Plan or trust has been
terminated, except in accordance with the Code, ERISA, and the regulations of
the Internal Revenue Service and the PBGC as applicable to solvent plans in
which benefits of participants are fully protected.  No “reportable event” as defined in
Section 4043 of ERISA has occurred for which notice has not been waived or
for which alternative notice procedures are permitted.

(d)           No Pension Plan or trust created
thereunder has incurred any “accumulated funding deficiency” (as such term is
defined in Section 302 of ERISA) whether or not waived, since the
effective date of ERISA.

(e)           The required allocations and
contributions to Pension Plans will not violate Section 415 of the Code.

(f)            The Borrower has no withdrawal
liability to any trust created pursuant to a multi-employer pension or benefit
plan nor would it be subject to any such withdrawal liability in excess of One
Hundred Thousand Dollars ($100,000) if it withdrew from any such plan or if its
participation therein were otherwise terminated.

Section 5.17 Subsidiaries.  Except as specifically disclosed in Schedule 5
attached hereto, the Borrower owns no Subsidiaries.  Schedule 5 attached hereto
accurately sets forth the jurisdictions of incorporation or organization of
each Subsidiary, and (a) in the case of a Subsidiary that is a
corporation, the authorized capitalization of each Subsidiary, the number of
shares of each class of capital stock issued and outstanding of each Subsidiary
and the number and percentage of outstanding shares of each such class of
capital stock owned by the Borrower or by any Subsidiary, or (b) in the
case of a Subsidiary that is a limited liability company or partnership, the
number of partnership or membership units of each Subsidiary and the number and
percentage of partnership or membership units owned by the Borrower or by any
Subsidiary.

Section 5.18 Not Investment Company,
Etc.  The Borrower is
not now, and after the application by the Borrower of the proceeds of any Loan
will not be, subject to regulation under the Investment Company Act of 1940,
the Public Utility Holding Company Act of 1935, the Federal Power Act, the Interstate
Commerce Act, any state public utilities code or any federal or state statute
or regulation limiting its ability to incur Indebtedness.

Section 5.19 Representations as a
Whole.  This Agreement,
the other Loan Documents, the financial statements referred to in Section 5.7,
and all other instruments, documents, certificates and statements furnished to
the Agent or any Lender by or on behalf of the Borrower,

 33
 

 

taken
as a whole, do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements contained
herein or therein, in light of the circumstances under which they were made,
not misleading.  The Borrower has
disclosed to the Lenders in writing any and all facts which have a material
adverse effect on the business, operations, properties, financial condition or
prospects of the Borrower or any Guarantor or the ability of the Borrower or
any Guarantor to perform its obligations under the Loan Documents.  Without limiting the foregoing, each of the
representations and warranties made by the Borrower herein and in the other
Loan Documents is true and correct on and as of the date when made, on and as
of the date hereof, and on and as of each date this representation is deemed
made hereunder with the same force and effect as if made on and as of such
dates.

ARTICLE 6.

AFFIRMATIVE COVENANTS

So long as any Lender shall have any Commitment
hereunder and until payment in full of each Loan and performance of all other
obligations of the Borrower under this Agreement and the other Loan Documents,
the Borrower agrees to do all of the following unless the Agent (with the
consent of Majority Lenders) shall otherwise consent in writing.

Section 6.1 Use of Proceeds from
Loans.  The Borrower
will use the proceeds of the Loans to finance general corporate requirements
incurred in the ordinary course of the Borrower’s businesses.

Section 6.2 Payment.  The Borrower will pay the principal of and
interest on the Loans in accordance with the terms of this Agreement and the
Notes and will pay when due all other amounts payable by the Borrower hereunder
and under any other Loan Document

Section 6.3 Preservation of Corporate
Existence, Etc.  The
Borrower will, and will cause each Subsidiary to, preserve and maintain their
existence, rights, franchises and privileges in the jurisdictions of their
organization (subject to any transaction permissible under Section 7.2 below)
and will, and will cause each Subsidiary to, qualify and remain qualified as
foreign corporations or entities in each jurisdiction where qualification is
necessary or advisable in view of their business and operations or the
ownership of their properties.

Section 6.4 Visitation Rights.  The Borrower will permit the Agent or any
Lender at any reasonable time, and from time to time, to examine and make
copies of and abstracts from the records and books of account of and to visit
the properties of the Borrower and to discuss the affairs, finances and
accounts of the Borrower with any of its officers or directors.

Section 6.5 Keeping of Books and
Records.  The Borrower
will, and will cause each Subsidiary to, keep adequate records and books of
account in which complete entries will be made, in accordance with GAAP,
reflecting all financial transactions of the Borrower and its Subsidiaries.

Section 6.6 Maintenance of Property,
Etc.  The Borrower
will, and will cause each Subsidiary to, maintain and preserve all of its
material properties in good working order and condition, ordinary wear and tear
excepted, and will from time to time make all needed repairs, renewals, or
replacements so that the efficiency of such properties shall be fully
maintained and

 34
 

 

preserved.  The Borrower will not take or fail to take
any action, nor permit any action to be taken by others that are subject to the
Borrower’s control which would affect the validity and enforcement of its
Intellectual Property, or impair the value of such Intellectual Property.

Section 6.7 Compliance With Laws,
Etc.  The Borrower
will, and will cause each Subsidiary to, comply in all material respects with
all laws, regulations, rules, and orders of Governmental Authorities applicable
to the Borrower or to its operations or property, except any thereof whose
validity is being contested in good faith by appropriate proceedings upon stay
of execution of the enforcement thereof and with provision having been made to
the satisfaction of Majority Lenders for the payment of any fines, charges,
penalties or other costs in respect thereof in the event the contest is determined
adversely to the Borrower.

Section 6.8 Other Obligations.  The Borrower will, and will cause each
Subsidiary to, pay and discharge before the same shall become delinquent all
Indebtedness, Taxes, and other obligations for which the Borrower is liable or
to which its income or property is subject and all claims for labor and
materials or supplies which, if unpaid, might become by law a lien upon assets
of the Borrower, except any thereof whose validity, applicability or amount is
being contested in good faith by the Borrower in appropriate proceedings with
provision having been made to the satisfaction of Majority Lenders for the
payment thereof in the event the contest is determined adversely to the
Borrower.

Section 6.9 Insurance.  The Borrower will, and will cause each
Subsidiary to, keep in force upon all of its properties and operations policies
of insurance carried with responsible companies in such amounts and covering
all such risks as shall be customary in the industry, including casualty and
business interruption insurance and as shall be reasonably satisfactory to
Majority Lenders.  From time to time, on
request, the Borrower will furnish to the Lenders certificates of insurance or,
at any Lender’s request, duplicate policies evidencing such coverage.

Section 6.10 Financial Information.  The Borrower will deliver to the Agent with
sufficient copies for the Agent and each Lender:

(a)           Annual
Financial Statements. 
As soon as available and in any event within ninety (90) days after the
end of each fiscal year of the Borrower, the consolidated balance sheet of the
Borrower and its Subsidiaries as of the end of such fiscal year and the related
consolidated statements of revenue and expenses, shareholder’s equity and
consolidated statement of cash flow for such year, accompanied by (i) the
audit report thereon by Borrower’s current certified public accountants (or if
a new auditor is chosen, by independent certified public accountants selected
by the Borrower and approved by the Majority Lenders (which approval shall not
be unreasonably withheld)) which report shall be prepared in accordance with
GAAP and shall not be qualified by reason of restricted or limited examination
of any material portion of the records of the Borrower or its Subsidiaries and
shall contain no disclaimer of opinion and (ii) an Officer’s Certificate
of the Borrower certifying that as of the close of such year no Event of
Default or Default had occurred and was continuing;

(b)           Quarterly
Financial Statements. 
As soon as available and in any event within forty-five (45) days after
the end of each of the first three (3) fiscal quarters of the Borrower, the
consolidated CPA-reviewed balance sheet of the Borrower and its Subsidiaries as

 35
 

 

of
the end of such fiscal quarter and the related consolidated statements of
revenue and expenses, shareholder’s equity and consolidated statement of cash
flow for such fiscal quarter; accompanied by an Officer’s Certificate
certifying that such unaudited financial statements have been prepared in conformity
with GAAP (subject to year-end audit adjustments and the absence of footnote
disclosures), in all material respects, present fairly the financial position
and the results of operations of the Borrower and its Subsidiaries as at the
end of and for such fiscal quarter;

(c)           Compliance
Certificates. 
Concurrently with the delivery of the financial statements referred to
in Section 6.10(a) and (b), a Compliance Certificate in substantially the form
of Exhibit C attached hereto (i) stating that as of the close
of such fiscal year or fiscal quarter, as applicable, no Default or Event of
Default had occurred and was continuing, and (ii) demonstrating with
calculations in reasonable detail the Borrower’s compliance as at that date
with the provisions of Section 6.13;

(d)           Annual
Budget.  Within thirty
(30) days of Borrower’s fiscal year-end, Borrower’s annual budget for the
subsequent fiscal year.

(e)           Other.  All other statements, reports and other
information as the Agent or any Lender may reasonably request concerning the
Collateral or the financial condition and business affairs of the Borrower or
any of its Subsidiaries.

Section 6.11 New Subsidiaries.  Promptly after the creation, acquisition or
existence of any new Subsidiary (each, a “New Subsidiary”), the Borrower
will cause such New Subsidiary to execute and deliver to the Agent (a) a
counterpart to the Guaranty, (b) such evidence of the corporate, company
or partnership, existence and authority of such New Subsidiary as the Agent or
any Lender may reasonably require.

Section 6.12 Notification.  Promptly after learning thereof, the Borrower
shall notify the Agent and the Lenders of (a) any action, proceeding,
investigation or claim against or affecting the Borrower instituted before any
court, arbitrator or Governmental Authority or, to the Borrower’s knowledge
threatened to be instituted, which if determined adversely to the Borrower
would be likely to have a material adverse effect on the business, operations,
properties, financial condition or prospects of the Borrower or any Subsidiary,
or to impair or defeat the lien of the Agent or any Lender on any Collateral or
the Borrower’s or any Subsidiary’s rights therein, or to result in a judgment
or order against the Borrower or any Subsidiary (in excess of insurance
coverage) for more than Two Million Five Hundred Thousand Dollars ($2,500,000);
(b) any contingent liability exceeding Two Million Five Hundred Thousand
Dollars ($2,500,000); (c) any substantial dispute between the Borrower or
any Subsidiary and any Governmental Authority; (d) any labor controversy
which has resulted in or, to the Borrower’s knowledge, threatens to result in a
strike which would materially affect the business operations of the Borrower;
(e) if the Borrower or any member of a Controlled Group gives or is
required to give notice to the PBGC of any “reportable event” (as defined in
subsections (b)(1), (2), (5) or (6) of Section 4043 of ERISA) with
respect to any Plan (or the Internal Revenue Service gives notice to the PBGC
of any “reportable event” as defined in subsection (c)(2) of
Section 4043 of ERISA and the Borrower obtains knowledge thereof) which
might constitute grounds for a termination of such Plan under Title IV of
ERISA, or knows that

 36
 

 

the
plan administrator of any Plan has given or is required to give notice of any
such reportable event, a copy of the notice of such reportable event given or
required to be given to the PBGC; (f) the occurrence of any Event of
Default or Default; and (g) the occurrence of an event which results in a
material adverse change the business, operations, properties, financial
condition or prospects of the Borrower or the Borrower and its Subsidiaries
taken as a whole.  In the case of the
occurrence of an Event of Default or Default or the occurrence of an event
which results in a material adverse change in the Borrower’s consolidated
financial condition or operations, the Borrower will deliver to the Agent and
each Lender an Officer’s Certificate specifying the nature thereof, the period
of existence thereof, if applicable, and what action the Borrower proposes to
take with respect thereto.

Section 6.13 Financial Covenants.

(a)           Consolidated
Net Worth.  Permit
Consolidated Net Worth at any time to be less than the sum of (a) $125,000,000,
(b) an amount equal to 50% of the Consolidated Net Income earned in each full
fiscal quarter ending after October 31, 2002 (with no deduction for a net loss
in any such fiscal quarter) and (c) an amount equal to 100% of the aggregate
increases in Shareholders’ Equity of the Borrower and its Subsidiaries after
the date hereof by reason of the issuance and sale of capital stock or other
equity interests of the Borrower  or any
Subsidiary (other than issuances to the Borrower or a wholly-owned Subsidiary),
including upon any conversion of debt securities of the Borrower into such
capital stock or other equity interests.

(b)           Consolidated
Interest Coverage Ratio.  Permit
the Consolidated Interest Coverage Ratio as of the end of any fiscal quarter of
the Borrower to be less than 4.0:1.0.

(c)           Consolidated
Leverage Ratio.  Permit
the Consolidated Leverage Ratio at any time during any period of four fiscal
quarters of the Borrower set forth below to be greater than the ratio set forth
below opposite such period:

	
  Four Fiscal Quarters Ending

  	
   

  	
  Maximum

  Consolidated

  Leverage Ratio

  	
   

  
	
  Closing Date
  through January 30, 2004

  	
   

  	
  2.25:1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  January 31, 2004
  and each fiscal

  quarter thereafter

  	
   

  	
  2.00:1.00

  	
   

  

 

Section 6.14 Additional Payments;
Additional Acts.  From
time to time and upon demand by the Agent, (a) pay or reimburse the Agent
and the Lenders for all Taxes (other than Taxes based solely on the overall net
or gross income of the Agent or such Lender) imposed on this Agreement and any
other Loan Document, (b) pay or reimburse the Agent and the Lenders for
all expenses including reasonable out-of-pocket legal fees (including allocated
charges of internal legal counsel) incurred in connection with (i) the
negotiation, preparation and execution of this Agreement, the Notes, the
Guaranty, the Security Documents and the other Loan

 37

 

Documents, and any amendment, waiver, consent or other
modification of the provisions hereof and thereof and the consummation and
administration of the transactions contemplated hereby and thereby and
(ii) the enforcement, attempted enforcement, or preservation of any rights
or remedies under this Agreement, the Notes, the Guaranty, the Security
Documents and each other Loan Document (including all such costs and expenses
incurred during any “workout” or restructuring in respect of the Loans and
during any legal proceeding, including any proceeding under any applicable
bankruptcy, insolvency or other similar law affecting the rights of creditors
generally of the United States of America or any State thereof, (c) obtain
and promptly furnish to the Agent evidence of all such Government Approvals as
may be required to enable the Borrower or any Guarantor to comply with its
obligations under the Loan Documents; and (d) execute and deliver all such
instruments and to perform all such other acts as the Agent or any Lender may
reasonably request to carry out the transactions contemplated by this Agreement
and the other Loan Documents and to maintain the continuous perfection and
priority of the Agent’s Lien on all Collateral. 
If the Borrower shall default in its obligations to reimburse Lender,
interest shall accrue on the unpaid amount thereof at the Default Rate from the
date the Agent makes demand therefor until repaid in full by the Borrower.  The obligations of the Borrower under this
Section 6.14 shall survive the payment of the Loans and the termination of this
Agreement.

ARTICLE 7.

NEGATIVE COVENANTS

So long as any Lender shall have any Commitment
hereunder or there shall be any outstanding Loans and until payment in full of
each Loan and performance of all other obligations of the Borrower under this
Agreement and the other Loan Documents, the Borrower agrees that it will not do
any of the following unless the Agent (with the consent of Majority Lenders)
shall otherwise consent in writing.

Section 7.1 Transactions With Affiliates.  The Borrower shall not, and shall cause each
Subsidiary to not enter into any transaction with any Affiliate of the
Borrower, except upon fair and reasonable terms no less favorable to the
Borrower or such Subsidiary than it would obtain in a comparable arm’s-length
transaction with a Person not an Affiliate of the Borrower or such Subsidiary.

Section 7.2 Liquidation, Merger, Sale of Assets .  The Borrower shall not, and shall cause each
Subsidiary to not, liquidate, dissolve or enter into any merger or
consolidation with or into, or convey, transfer, lease or otherwise dispose of
(whether in one transaction or in a series of transactions) all or
substantially all of its assets to or in favor of, any Person, except:
(a) any Subsidiary may liquidate, dissolve, merge, consolidate with or
into, or transfer any of its assets to the Borrower or any wholly-owned
Subsidiary; provided that Borrower or such wholly-owned Subsidiary shall
be the continuing or surviving corporation or organization; (b) the
Borrower may merge or consolidate with any Person as part of an Permitted
Acquisition; provided that Borrower or such wholly-owned Subsidiary
shall be the continuing or surviving corporation or organization; and
(c) the Borrower or any Subsidiary may convey, transfer, lease or
otherwise dispose of obsolete assets or assets no longer used or useful in the
business of the Borrower and its Subsidiaries.

 38
 

 

Section 7.3 Indebtedness.  The Borrower shall not, and shall cause each
Subsidiary to not, create, incur or become liable for any Indebtedness except:
(a) the Loans; (b) existing Indebtedness reflected on the balance
sheets referred to in Section 5.7; (c) current accounts payable or accrued
expenses incurred by the Borrower in the ordinary course of business;
(d) Indebtedness permitted under Section 7.4; (e) intercompany
Indebtedness owing by the Borrower or any Subsidiary to the Borrower or any
other Subsidiary permitted under Section 7.6; (f) Indebtedness secured by newly
purchased tangible property (whether real or personal) in an aggregate amount
no greater than $5,000,000 outstanding at any time; and (g) additional
unsecured Indebtedness not to exceed twenty percent (20%) of the Borrower’s
Consolidated Net Worth, provided that Borrower remains in compliance with all
covenants set forth herein.

Section 7.4 Guaranties, Etc.  The Borrower shall not, and shall cause each
Subsidiary to not assume, guaranty, endorse or otherwise become directly or
contingently liable for, nor obligated to purchase, pay or provide funds for
payment of, any obligation or Indebtedness of any other Person, except:  (a) guaranties of any Indebtedness
permitted under Section 7.3; (b) by endorsement of negotiable instruments
for deposit or collection or by similar transactions in the ordinary course of
business; (c) with respect to customary indemnification obligations
incurred in connection with title insurance agreements; (d) with respect
to performance, surety, bid, appeal or similar bonds incurred in the ordinary
course of business; and (e) obligations existing as of the date of this
Agreement, reflected in the balance sheet referred to in Section 5.7 and in
amounts not greater than the amounts referred to therein.

Section 7.5 Liens.  The Borrower shall not, and shall cause each
Subsidiary to not create, assume or suffer to exist any Lien on any of its
assets except: (a) Liens in favor of the Agent arising pursuant to the
Security Documents or as otherwise permitted or required under this Agreement;
(b) Liens securing Indebtedness permitted under Section 7.3;
(c) Permitted Liens; and (d) Liens specifically disclosed in Schedule 2
attached hereto.

Section 7.6 Investments.  The Borrower shall not, and shall cause each
Subsidiary to not, make any loan or advance to any Person or purchase or
otherwise acquire the capital stock or obligations of, or any equity or other
interest in, any Person, or all or substantially all of the assets of any
Business Unit or any Person (collectively, “Investments”) or enter into
any agreement to do any of the foregoing, except: (a) Investments held in
the form of Cash Equivalents; (b) Investments made in the form of
(i) short-term loans made by the Borrower in the ordinary course of its
business; (c) Investments existing as of the date of this Agreement,
reflected in the balance sheet referred to in Section 5.7 and in amounts not
greater than the amounts referred to therein; (d) Investments made by any
Subsidiary to the Borrower; (e) Investments made by the Borrower to or in
any wholly-owned Subsidiary; (f) Investments made by any Subsidiary to the
Borrower or to any wholly-owned Subsidiary; (g) Investments made as part
of a Permitted Acquisition; and (h) other Investments directly related to
the business of the Borrower not to exceed Five Million Dollars ($5,000,000) in
the aggregate at any one time outstanding.

Section 7.7 Operations.  The Borrower shall not engage in any activity
which is substantially different from or unrelated to the present business
activities of the Borrower nor discontinue any portion of the Borrower’s
present business activities which constitutes a substantial portion thereof.

 39
 

 

Section 7.8 Securities.  The Borrower shall not issue, sell, or otherwise
distribute any stock, bond, note, debenture or other security of the Borrower,
except (i) notes or other debt instruments evidencing Indebtedness permitted by
this Agreement, and (ii) securities issued pursuant to the conversion of
outstanding convertible securities that are outstanding as of the date of this
Agreement.

Section 7.9 ERISA Compliance.  Neither the Borrower nor any member of the
Controlled Group nor any Plan of any of them will (a) engage in any “prohibited
transaction” (as such term is defined in Section 406 of ERISA or
Section 4975 of the Code; (b) incur any “accumulated funding
deficiency” (as such term is defined in Section 302 of ERISA) whether or
not waived; (c) terminate any Pension Plan in a manner which could result
in the imposition of a Lien on any property of the Borrower or any member of
the Controlled Group pursuant to Section 4068 of ERISA; or
(d) violate state or federal securities laws applicable to any Plan.

Section 7.10 Accounting Change.  The Borrower shall maintain a fiscal year ending
on January 31 and shall not make any significant change in accounting policies
or reporting practices other than changes required by GAAP or otherwise
required by law.

ARTICLE 8.

EVENTS OF DEFAULT

Section 8.1 Events of Default.  The occurrence of any of the following events
shall constitute an “Event of Default” hereunder.

(a)           Payment Default.  The Borrower fails to pay (i) the
principal amount of the Loans on the Maturity Date, or (ii) within five
(5) Business Days after the same becomes due, any interest on any Loan, or
(iii) within five (5) Business Days after the same becomes due, any other
amount payable hereunder or under any other Loan Document; or

(b)           Breach of Warranty.  Any representation or warranty made or deemed
made by the Borrower under or in connection with any Loan Document shall prove
to have been incorrect in any material respect when made or deemed made; or

(c)           Breach of Certain Covenants.  The Borrower shall have failed to comply with
Sections 6.3, 6.9 and 6.12(e) or any provision of Article 7 of this
Agreement;

(d)           Breach of Other Covenants.  The Borrower shall fail to perform or observe
any other covenant, obligation or term of this Agreement, including those set
forth in Section 6.13, or any other Loan Document to which it is a party and
such failure shall continue unremedied for a period of thirty (30) days after
the earlier of (i) the date upon which written notice thereof shall have
been given to the Borrower by the Agent or any Lender or (ii) the date
upon which a Responsible Officer of the Borrower knew or reasonably should have
known of such failure; or

(e)           Material Adverse Change.  An event shall occur which results in a
material adverse change in, or a material adverse effect upon, the operations,
business, properties, condition of the Borrower and its Subsidiaries taken as a
whole; or

 40
 

 

(f)            Cross-default.  The Borrower or any of its Subsidiaries shall
fail (i) to pay when due (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise) any Indebtedness or any interest
or premium thereon and such failure shall continue without waiver after the
applicable grace period, if any, specified in the agreement or instrument
relating to such Indebtedness, or (ii) to perform any term or covenant on
its part to be performed under any agreement or instrument relating to any such
Indebtedness and required to be performed and such failure shall continue
without waiver after the applicable grace period, if any, specified in such
agreement or instrument, if the effect of such failure to perform is to
accelerate or to permit the acceleration of the maturity of such Indebtedness,
or (iii) any such Indebtedness shall be declared to be due and payable or
required to be prepaid (other than by regularly scheduled required prepayment)
prior to the stated maturity thereof; or

(g)           Voluntary Bankruptcy, Etc.  The Borrower or any of its Subsidiaries
shall: (i) file a petition seeking relief for itself under Title 11
of the United States Code, as now constituted or hereafter amended, or file an
answer consenting to, admitting the material allegations of or otherwise not
controverting, or fail timely to controvert a petition filed against it seeking
relief under Title 11 of the United State Code, as now constituted or
hereafter amended; or (ii) file such petition or answer with respect to
relief under the provisions of any other now existing or future applicable
bankruptcy, insolvency, or other similar law of the United States of America or
any State thereof or of any other country or jurisdiction providing for the
reorganization, winding-up or liquidation of corporations or an arrangement,
composition, extension or adjustment with creditors; or

(h)           Involuntary Bankruptcy, Etc.  An order for relief shall be entered against
the Borrower or any of its Subsidiaries under Title 11 of the United States
Code, as now constituted or hereafter amended, which order is not stayed; or
upon the entry of an order, judgment or decree by operation of law or by a
court having jurisdiction in the premises which is not stayed adjudging it a
bankrupt or insolvent under, or ordering relief against it under, or approving
as properly filed a petition seeking relief against it under the provisions of
any other now existing or future applicable bankruptcy, insolvency or other
similar law of the United States of America or any State thereof or of any
other country or jurisdiction providing for the reorganization, winding-up or
liquidation of corporations or any arrangement, composition, extension or
adjustment with creditors; or appointing a receiver, liquidator, assignee,
sequestrator, trustee or custodian of the Borrower or any of its Subsidiaries
or of any substantial part of any of its or their property, or ordering the
reorganization, winding-up or liquidation of any of their affairs; or upon the
expiration of sixty (60) days after the filing of any involuntary petition
against the Borrower or any of its Subsidiaries seeking any of the relief
specified in Section 8.1(g) or this Section 8.1(h) without the petition being
dismissed prior to that time (Lenders shall have no obligation to extend Loans
to Borrower during this sixty (60) day period); or

(i)            Insolvency, Etc.  The Borrower or any of its Subsidiaries shall
(i) make a general assignment for the benefit of its creditors or
(ii) consent to the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, or custodian of all or a substantial part of the
property of the Borrower or any of its Subsidiaries, as the case may be, or
(iii) admit its insolvency or inability to pay its debts generally as they
become due, or (iv) fail generally to pay its debts as they become due, or
(v) take any action (or suffer any action to be taken by its 

 41
 

 

directors or shareholders) looking to the dissolution or
liquidation of the Borrower or any of its Subsidiaries, as the case may be; or

(j)            Judgment.  A final judgment or order for the payment of
money in excess of Five Million Dollars ($5,000,000) not covered by insurance
is entered against Borrower or any of its Subsidiaries, and such judgment or
order shall continue without being discharged, vacated, bonded or execution
thereon stayed pending appeal for a period of thirty (30) consecutive days; or

(k)           Involuntary Liens.  Any involuntary Lien in the sum of One
Hundred Thousand Dollars ($100,000) or more shall attach to any asset or property
of the Borrower which (i) is not discharged within sixty (60) days after such
attachment or within thirty (30) days after notice from the Agent or any
Lender, whichever first occurs, or (ii) constitutes an involuntary Lien for
taxes not yet due.

(l)            ERISA.  The Borrower or any member of the Controlled
Group shall fail to pay when due an amount or amounts aggregating in excess of
One Hundred Thousand Dollars ($100,000) which it shall have become liable to
pay to the PBGC or to a Plan under Section 515 of ERISA or Title IV
of ERISA; or notice of intent to terminate a Plan or Plans (other than a
multi-employer plan, as defined in Section 4001(3) of ERISA), having
aggregate Unfunded Vested Liabilities in excess of One Hundred Thousand Dollars
($100,000) shall be filed under Title IV of ERISA by the Borrower, any
member of the Controlled Group, any plan administrator or any combination of
the foregoing; or the PBGC shall institute proceedings under Title IV of
ERISA to terminate any such Plan or Plans; or

(m)          Change in Control.  There occurs an event or series of events by
which any Person or group of Persons (within the meaning of the Securities
Exchange Act 1934), becomes the legal or beneficial owner, directly or
indirectly, of more than fifty percent (50%) of the equity securities of the
Borrower entitled to vote for members of the board of directors of the
Borrower; or

(n)           Condemnation.  Such portion of the properties of the
Borrower or of the Collateral as in the opinion of Majority Lenders constitutes
a substantial portion thereof shall be condemned, seized or appropriated; or

(o)           Governmental Approvals.  Any Government Approval or registration or
filing with any Governmental Authority now or hereafter required in connection
with the performance by the Borrower of its obligations set forth in the Loan
Documents shall be revoked, withdrawn or withheld or shall fail to remain in
full force and effect unless in the reasonable opinion of Majority Lenders such
revocation, withdrawal or withholding would not be likely to have a material
adverse affect on the ability of the Borrower to perform its obligations under
the Loan Documents; or

(p)           Other Government Action.  Any act of any Governmental Authority shall,
in the reasonable opinion of Lenders, deprive the Borrower of any substantial
right, privilege, or franchise or substantially restrict the exercise thereof
which deprivation would, in the reasonable opinion of Majority Lenders, be
likely to have a material adverse effect on the 

 42
 

 

financial condition or operations of the Borrower and such
act is not revoked or rescinded within sixty (60) days after it becomes
effective or within thirty (30) days after notice from the Agent or any Lender,
whichever first occurs.

(q)           Guarantor Default; Invalidity of
Guaranty.  Any Guarantor
shall fail to perform or observe any other covenant, obligation or term of any
Guaranty or any other Loan Document to which it is a party and such failure
shall continue unremedied after the applicable grace period, if any, specified
in such Guaranty or Loan Document, or any defined “Event of Default” as defined
in such Guaranty or Loan Document shall have occurred and is continuing; or any
Guaranty shall for any reason be revoked or invalidated, or otherwise cease to
be in full force and effect (except as expressly permitted hereunder), or any
Guarantor or any other Person shall contest in any manner the validity or
enforceability thereof or deny that it has any further liability or obligation
thereunder; or

(r)           Invalidity of Loan Documents.  Any other Loan Document or any provision
thereof, at any time after its execution and delivery and for any reason other
than the agreement of all Lenders or payment in full of each Loan and
performance of all other obligations of the Borrower under this Agreement and
the other Loan Documents, ceases to be in full force and effect, or is declared
by a court of competent jurisdiction to be null and void, invalid or
unenforceable in any respect; or the Borrower or any Guarantor denies that it
has any or further liability or obligation under any other Loan Document, or
purports to revoke, terminate or rescind any Loan Document.

Section 8.2 Consequences of Default.  If any of the Events of Default described in
Section 8.1(g) or Section 8.1(h) shall occur, each Lender’s Commitment shall
immediately terminate and, if any Loans shall have been made, the principal of
and interest on the Loans, and all other sums payable by the Borrower under the
Loan Documents shall become immediately due and payable all without protest,
presentment, notice or demand, all of which the Borrower expressly waives.  If any other Event of Default shall occur and
be continuing, then in any such case and at any time thereafter so long as any
such Event of Default shall be continuing, the Agent shall at the request, or
may with the consent, of Majority Lenders immediately terminate each Lender’s
Commitment and, if any Loans shall have been made, the Agent shall at the
request, or may with the consent, of Majority Lenders declare the principal of
and interest on the Loans, and all other sums payable by the Borrower under
this Agreement and the other Loan Documents to be immediately due and payable,
whereupon the same shall become immediately due and payable all without
protest, presentment, notice, or demand, all of which the Borrower expressly
waives.  Regardless of whether the
Borrower’s obligations to repay the Loans have been accelerated pursuant to the
preceding sentences, the Agent may realize on any or all of the Collateral by
exercising any remedies provided in the Security Documents.  The rights and remedies set forth in this
Section 8.2 shall be in addition to any and all rights and remedies set forth
in the other Loan Documents.

ARTICLE 9.

THE AGENT

Section 9.1 Authorization and Action.  Each Lender hereby appoints and authorizes
the Agent to take such action as agent on its behalf and to exercise such
powers under this

 43
 

 

Agreement as are delegated to the
Agent by the terms hereof, together with such powers as are reasonably
incidental thereto.  The Agent shall have
no duties or responsibilities except those expressly set forth in this
Agreement.  The duties of the Agent shall
be mechanical and administrative in nature; the Agent shall not have by reason
of this Agreement a fiduciary relationship in respect of any Lender; and
nothing in this Agreement or the other Loan Documents, expressed or implied, is
intended to or shall be so construed as to impose upon the Agent any
obligations in respect of this Agreement or the other Loan Documents except as
expressly set forth herein.  As to any
matters not expressly provided for by this Agreement, including enforcement or
collection of the Loans, the Agent shall not be required to exercise any
discretion or take any action except upon the instructions of Majority Lenders,
and such instructions shall be binding upon all Lenders and any holders of any
Note; provided that the Agent shall not be required to take any action
which exposes the Agent to personal liability or which is contrary to the Loan
Documents or applicable law.  In the
absence of instructions from the Majority Lenders, the Agent shall have
authority (but no obligation), in its sole discretion, to take or not to take
any action, unless this Agreement specifically requires the consent of all
Lenders or the consent of Majority Lenders and any such action or failure to
act shall be binding on all Lenders and on all holders of the Notes.  Each Lender and each holder of any Note shall
execute and deliver such additional instruments, including powers of attorney
in favor of the Agent, as may be necessary or desirable to enable the Agent to
exercise its powers hereunder.

Section 9.2 Duties and Obligations.

(a)           Neither
the Agent nor any of its directors, officers, employees, agents, counsel or attorneys-in-fact
shall be liable for any action taken or omitted to be taken by it or any of
them under or in connection with this Agreement or any other Loan Document and
the transactions contemplated hereby and thereby, except for its or their own
gross negligence or willful misconduct. 
Without limiting the generality of the foregoing, the Agent (i) may
treat each Lender as the party entitled to receive payments hereunder until the
Agent receives written notice of the assignment of such Lender’s interest herein
signed by such Lender and made in accordance with the terms hereof and a
written agreement of the assignee that it is bound hereby as it would have been
had it been an original party hereto, in each case in form satisfactory to the
Agent; (ii) may consult with legal counsel (including counsel for the
Borrower), independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken in good faith
by it in accordance with the advice of such experts; (iii) makes no
warranty or representation to any Lender and shall not be responsible to any
Lender for any statements, warranties or representations made in or in
connection with this Agreement, the other Loan Documents or in any instrument or
document furnished pursuant hereto or thereto; (iv) shall not have any
duty to ascertain or to inquire as to the performance of any of the terms,
covenants, or conditions of the Loan Documents, or of any instrument or
document furnished pursuant thereto, on the part of the Borrower or as to the
use of the proceeds of any Loan or as to the existence or possible existence of
any Default or Event of Default; (v) shall not be responsible to any
Lender for the due execution, legality, validity, enforceability, genuineness,
effectiveness, or value of this Agreement, of any other Loan Document, or of
any instrument or document furnished pursuant hereto; (vi) may execute any
of its duties by or through its employees, other independent agents or
attorneys-in-fact and shall not be responsible for the negligence or misconduct
of any such agent or attorney-in-fact that it selects with reasonable care; and
(vii) shall incur no liability under or in respect to this Agreement by
acting upon any 

 44
 

 

oral or written notice, consent, certificate or other
instrument or writing (which may be by telex, facsimile transmission, e-mail
or cable) believed by it to be genuine and signed or sent by the proper party
or parties or by acting upon any representation or warranty of the Borrower made
or deemed to be made under this Agreement or in any other Loan Document.

(b)           The
Agent will account to each Lender for its pro rata interest in payments of
principal of and interest on the Loans which are received by the Agent from the
Borrower or for the account of the Borrower and will promptly remit to Lenders
entitled thereto all such payments.  The
Agent will transmit to each Lender copies of all documents received from the
Borrower pursuant to the requirements of this Agreement other than documents which
by the terms of this Agreement the Borrower is obligated to deliver directly to
Lenders.

(e)           Each
Lender and each assignee of a Lender organized outside of the United States
shall furnish to the Agent in a timely fashion such documentation (including,
but not by way of limitation, IRS Forms Nos. 1001 and W-8ECI) as may be
required by applicable law or regulation to establish such Lender’s status for
tax withholding purposes.

Section 9.3 Dealings Between Agent and Borrower.  With respect to its Commitment, the Loans
made by it, the Agent shall have the same obligations, rights and powers under
this Agreement and the other Loan Documents as any other Lender and may
exercise the same as though it were not the Agent hereunder, and the term “Lender”
shall unless otherwise expressly indicated include the Agent in its individual
capacity.  The Agent may accept deposits
from, lend money to, act and generally engage in any kind of business with the
Borrower and any Person which may do business with the Borrower, all as if the
Agent were not the Agent hereunder and without any duty to obtain the consent
of or account therefor to any other Lender. 
Lenders acknowledge that, pursuant to such activities, the Agent may
receive information regarding the Borrower (including information that may be
subject to confidentiality obligations in favor of the Borrower) and
acknowledge that the Agent shall be under no obligation to provide such
information to any Lender.

Section 9.4 Notice of Default.  The Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default or Event of Default, except with
respect to defaults in the payment of principal, interest and fees required to
be paid to the Agent for the account of Lenders, unless the Agent shall have received
written notice from a Lender or the Borrower referring to this Agreement,
describing such Default or Event of Default and stating that such notice is a “notice
of default.”  The Agent will notify
Lenders of its receipt of any such notice. 
The Agent shall take such action with respect to such Default or Event
of Default as may be directed by Majority Lenders in accordance with Section
8.2; provided, however, that unless and until the Agent has
received any such direction, the Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to such Default
or Event of Default as it shall deem advisable or in the best interest of
Lenders.

Section 9.5 Lender Credit Decision.  Each Lender acknowledges that neither the Agent
nor any of its directors, officers, employees, agents, counsel or
attorneys-in-fact has made any representation or warranty to it, and that no
act by the Agent hereinafter taken, including any consent to and acceptance of
any assignment or review of the affairs of the Borrower or any of its
Subsidiaries, shall be deemed to constitute any representation or warranty by
the Agent to any 

 45
 

 

Lender as to any matter, including
whether the Agent has disclosed material information in its possession.  Each Lender represents to the Agent that it
has, independently and without reliance upon the Agent and based on such
documents and information as it has deemed appropriate, made its own appraisal
of and investigation into the business, prospects, operations, property,
financial and other condition and creditworthiness of the Borrower and its
Subsidiaries, and all applicable bank or other regulatory laws relating to the
transactions contemplated hereby, and made its own decision to enter into this
Agreement and to extend credit to the Borrower hereunder.  Each Lender also represents that it will,
independently and without reliance upon the Agent and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking action
under this Agreement and the other Loan Documents, and make such investigations
as it deems necessary to inform itself as to the business, prospects,
operations, property, financial and other condition and creditworthiness of the
Borrower and its Subsidiaries.  Except
for notices, reports and other documents expressly required to be furnished to
Lenders by the Agent herein, the Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, prospects, operations, property, financial and other
condition or creditworthiness of the Borrower or any of its Subsidiaries which
may come into the possession of the Agent.

Section 9.6 Indemnification.  Each Lender agrees to indemnify the Agent (to
the extent not reimbursed by the Borrower) ratably according to its Percentage
Interest 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 be imposed on, incurred by or
asserted against the Agent in any way relating to or arising out of this
Agreement or any other Loan Document or any action taken or omitted by the
Agent under this Agreement or any other Loan Document, except any such as
result from the Agent’s gross negligence or willful misconduct.  Without limiting the foregoing, each Lender
agrees to reimburse the Agent promptly on demand in proportion to its Percentage
Interest for any out-of-pocket expenses, including legal fees, incurred by the
Agent in connection with the administration or enforcement of or the
preservation of any rights under this Agreement or any other Loan Document (to
the extent that the Agent is not reimbursed for such expenses by the Borrower).

Section 9.7 Successor Agent.  The Agent may give written notice of resignation
at any time to Lenders and the Borrower, and may be removed at any time with
cause by Majority Lenders. If Bank of America resigns as Agent, such
resignation shall also be deemed to constitute a resignation of Bank of America
as the Swing Line Lender and L/C Issuer. 
Upon any such notice of resignation or removal, Majority Lenders shall
have the right to appoint a successor Agent. 
If no successor Agent shall have been so appointed by Majority Lenders
and shall have accepted such appointment within thirty (30) days after the
Agent’s giving of notice of resignation or Majority Lender’s removal of the
Agent, then the Agent may, after consulting with the Lenders and the Borrower,
appoint a successor Agent from among the Lenders.  Upon the acceptance of any appointment as
Agent hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring the Agent, and the retiring Agent shall be discharged from its
duties and obligations under this Agreement. 
If no successor agent has accepted appointment as Agent by the date
which is thirty (30) days following a retiring Agent’s notice of resignation,
the retiring Agent’s resignation shall nevertheless thereupon become effective
and the Lenders shall perform all of 

 46
 

 

the duties of the agent hereunder
until such time, if any, as Majority Lenders appoint a successor agent as
provided above.  Notwithstanding any
retiring Agent’s resignation or removal hereunder as the Agent, the provisions
of this Article 9 shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Agent under this Agreement.

ARTICLE 10.

MISCELLANEOUS

Section 10.1 Amendments; Consents.  No amendment, modification, supplement or waiver
of any provision of this Agreement or any other Loan Document, no approval or
consent thereunder, and no consent to any departure by the Borrower or any
Guarantor therefrom shall be effective unless in writing signed by Majority
Lenders and the Borrower or the respective Guarantors a party thereto and
acknowledged by the Agent, and then any such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; provided, however, that no such waiver, amendment, or consent
shall, unless in writing and signed by the Agent and all Lenders, do any of the
following:  (a) increase or extend
any Commitment of any Lender; (b) postpone or delay any date fixed by this
Agreement or any other Loan Document for any payment of principal, interest,
fees or other amounts due to Lenders (or any of them) hereunder or under any
other Loan Document; (c) reduce the principal of, or the rate of interest
specified herein on any Loan, or any fees or other amounts payable hereunder or
under any other Loan Document; (d) change or modify the definition of “Majority
Lenders”; (e) amend this Section 10.1, or any provision herein providing
for consent or other action by all Lenders; or (f) discharge any
Guarantor, or release all or a material portion of the Collateral except as
otherwise may be provided for herein or where the consent of Majority Lenders
only is specifically provided for herein or therein; provided, further,
that no amendment, waiver or consent shall, unless in writing and signed by the
Agent in addition to Majority Lenders or all Lenders, as the case may be, amend
Article 9 hereof or otherwise affect the rights or duties of the Agent
under this Agreement or any other Loan Document.

Section 10.2 No Waiver; Remedies Cumulative.  No failure by the Agent or any Lender to
exercise, and no delay in exercising, any right, power or remedy under this
Agreement or any other Loan Document shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power or remedy under this
Agreement or any other Loan Document preclude any other or further exercise
thereof or the exercise of any other right, power, or remedy.  The exercise of any right, power, or remedy
shall in no event constitute a cure or waiver of any Event of Default or
prejudice the rights of the Agent or any Lender in the exercise of any right
hereunder or thereunder.  The rights and
remedies provided herein and therein are cumulative and not exclusive of any
right or remedy provided by law.

Section 10.3 Governing Law.  This Agreement and the other Loan Documents
shall be governed by and construed in accordance with the laws of the State of
Oregon (excluding its conflict of laws rules) except in the case of the
Security Documents, where the location of Collateral requires that the
creation, validity, perfection, or enforcement of the security interests
provided for herein be governed by the laws of the jurisdiction where such
Collateral is located.

 47
 

 

Section
10.4 Mandatory Arbitration.

(a)           This Section 10.4 concerns the
resolution of any controversies or claims among or between the Borrower,
Lenders and the Agent, whether arising in contract, tort or by statute,
including but not limited to controversies or claims that arise out of or
relate to this Agreement and the other Loan Documents (collectively a “Claim”).  At the request of the Borrower, any Lender or
the Agent, any Claim shall be resolved by arbitration in accordance with the
Federal Arbitration Act (Title 9, U. S. Code) (the “Act”).  The Act will apply even though this Agreement
provides that it is governed by the law of the state of Oregon.

(b)           Arbitration
proceedings will be determined in accordance with the Act, the rules and
procedures for the arbitration of financial services disputes of
JAMS/Endispute, LLC, a Delaware limited liability company or any successor
thereof (“JAMS”), and the terms of this Section 10.4.  In the event of any inconsistency, the terms
of this Section 10.4 shall control.  The
arbitration shall be administered by JAMS and conducted in Portland, Oregon.  All Claims shall be determined by one
arbitrator; provided, however, that if Claims exceed Two Million
Dollars ($2,000,000), upon the request of any party, the Claims shall be
decided by three arbitrators.  All
arbitration hearings shall commence within ninety (90) days of the demand for
arbitration and close within ninety (90) days of commencement and the award of
the arbitrator(s) shall be issued within thirty (30) days of the close of the
hearing; provided, however, that the arbitrator(s), upon a
showing of good cause, may extend the commencement of the hearing for up to an
additional sixty (60) days.  The
arbitrator(s) shall provide a concise written statement of reasons for the
award.  The arbitration award may be
submitted to any court having jurisdiction to be confirmed and enforced.  The arbitrator(s) will have the authority to
decide whether any Claim is barred by the statute of limitations and, if so, to
dismiss the arbitration on that basis. 
For purposes of the application of the statute of limitations, the
service on JAMS under applicable JAMS rules of a notice of Claim is the
equivalent of the filing of a lawsuit. 
Any dispute concerning this arbitration provision or whether a Claim is
arbitrable shall be determined by the arbitrator(s).  The arbitrator(s) shall have the power to
award legal fees pursuant to the terms of this Agreement.

(c)           This
Section 10.4 does not limit the right of the Borrower, any Lender or the Agent
to: (i) exercise self-help remedies, such as but not limited to, setoff;
(ii) initiate judicial or nonjudicial foreclosure against any real or
personal property collateral; (iii) exercise any judicial or power of sale
rights, or (iv) act in a court of law to obtain an interim remedy, such as
but not limited to, injunctive relief, writ of possession or appointment of a
receiver, or additional or supplementary remedies.  The filing of a court action is not intended
to constitute a waiver of the right of the Borrower, any Lender or the Agent,
including the suing party, thereafter to require submittal of the Claim to
arbitration.

Section 10.5 Waiver of Jury Trial.  THE PARTIES HERETO WAIVE ANY RIGHT TO A TRIAL BY JURY IN
ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER OR RELATING TO
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY AMENDMENT, INSTRUMENT,
DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN
CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY RELATIONSHIP EXISTING IN
CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, AND AGREE THAT
(A) ANY SUCH ACTION OR PROCEEDING SHALL NOT BE TRIED BEFORE A JURY AND
(B) ANY PARTY HERETO MAY FILE AN ORIGINAL 

 48
 

 

COUNTERPART OR COPY OF THIS
AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES
HERETO TO THE WAIVER OF THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY.

Section 10.6 Consent to Jurisdiction.  Each party hereto irrevocably submits to the
nonexclusive jurisdiction of any state or federal court sitting in Portland,
Multnomah County, Oregon, in any action or proceeding brought to enforce or
otherwise arising out of or relating to this Agreement or any other Loan
Document, hereby waives any objection to venue in any such court and any claim
that such forum is an inconvenient forum and agrees that a final judgment in
any such action or proceeding shall be conclusive and may be enforced in any
other jurisdiction by suit on the judgment or in any other manner provided by
law.  Nothing in this Section 10.6 shall
impair the right of any party to bring any action or proceeding hereunder in
the courts of any other jurisdiction.

Section 10.7 Notices.  All notices and other communications provided
for in any Loan Document shall be in writing (unless otherwise specified) and
shall be mailed (with first class postage prepaid) or sent or delivered to each
party by facsimile or courier service at the address or facsimile number set
forth under its name on the signature page hereof, or at such other address as
shall be designated by such party in a written notice to the other
parties.  Except as otherwise specified
all notices sent by mail, if duly given, shall be effective three (3) Business
Days after deposit into the mails, all notices sent by a nationally recognized
courier service, if duly given, shall be effective one Business Day after
delivery to such courier service, and all other notices and communications if
duly given or made shall be effective upon receipt.  Electronic mail may be used by the Agent to
distribute routine communications, such as notices of borrowings as provided in
Section 2.2 and to distribute financial statements and other information as
provided in Section 6.10, and may not be used for any other purpose.  Neither the Agent or any Lender shall incur
any liability to the Borrower for actions taken in reliance on any telephonic
notice referred to in this Agreement which the Agent or such Lender believes in
good faith to have been given by a duly authorized officer or other Person
authorized to borrow or give such telephonic notice hereunder on behalf of the
Borrower.

Section 10.8 Assignments and Participations.

(a)           This
Agreement shall be binding upon and inure to the benefit of the parties and
their respective Successors and assigns; provided that the Borrower may
not assign or otherwise transfer all or any part of its rights or obligations
under this Agreement or any other Loan Document without the prior written
consent of the Agent and all Lenders, and any such assignment or transfer
purported to be made without such consent shall be ineffective.

(b)           Any
Lender may at any time sell to any of Lender’s Affiliates or commercial banks
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) (each, an “Eligible Assignee”) participation interests in
its Loans and Commitment.  Such sales may
be made without the consent of the Agent, any other Lender or the Borrower; provided,
however, that the selling Lender retains the right to vote as a Lender
hereunder in respect of the interest sold without being bound to obtain the
consent of its participant or to exercise its rights in accordance with
instructions received from its participant (except that the participant’s
consent 

 49
 

 

can be required for proposed changes to “money terms”
including, without limitation, matters involving decrease in fees, interest rate
spreads or principal, increase in commitments if the participant’s commitment
is increased, or extension of the final maturity date).  Any Lender may pledge or assign all or any
part of its interest under the Loan Documents for security purposes to any
Federal Reserve Bank.

(c)           Any
Lender may assign or otherwise transfer to any Eligible Assignee all or any
part of its interest under the Loan Documents pursuant to an assignment and
assumption agreement in form and substance reasonably satisfactory to the Agent
with the prior written consent of the Agent and, if no Event of Default shall
have occurred and be continuing, the Borrower, (such consents not to be
unreasonably withheld or delayed) but without the consent of the other Lenders,
to any other Eligible Assignee; provided, however, that in either
case no such assignment (as distinguished from the sale of a participation)
other than an assignment of a Lender’s entire interest under the Loan Documents
(i) shall be made in an amount less than Two Million Five Hundred Thousand
Dollars ($2,500,000) nor (ii) shall be made if after giving effect to such
assignment the aggregate amount of the Loans and unused Commitment of the
assigning Lender would be less than Five Million Dollars ($5,000,000); provided,
further, that in connection with any assignment (as distinguished from
the sale of a participation) the assigning Lender shall pay to the Agent a fee
of Three Thousand Five Hundred Dollars ($3,500) for each proposed assignee that
is not then a Lender or an affiliate thereof. 
The assignee of any permitted sale or assignment (including assignments
for security and sales of participations) shall have the same rights and
benefits against the Borrower under the Loan Documents (excepting however, in
the case of sales of participations, the right to grant or withhold consents or
otherwise vote in respect thereof) including the right of setoff, and in the
case of any outright assignment (as distinguished from an assignment for
security or the sale of a participation) the same obligations in respect
thereof, as if such assignee were an original Lender.

(d)           Except
to the extent otherwise required by the context of this Agreement, the word “Lender”
where used in this Agreement and the other Loan Documents shall mean and include
any holder of a Note originally issued to a Lender hereunder, and each such
holder shall be bound by and have the benefits of this Agreement the same as if
such holder had been a signatory hereto. 
Upon the consummation of any outright assignment pursuant to this
Section 10.8, the assigning Lender, the Agent and the Borrower shall make
appropriate arrangements so that, if required, a new Note is issued to the
assignee.  Any outright assignment of a
Lender’s interest under this Agreement to another Lender made in conformance
with the terms of this Section 10.8 shall result in a corresponding adjustment
to the selling and purchasing Lenders’ Commitments and Percentage Interest.

Section 10.9 Borrower’s Indemnity.  Whether or not the transactions contemplated
hereby shall be consummated, the Borrower shall pay, indemnify and hold the
Agent and each Lender and its officers, directors, employees, counsel, agents
and attorneys-in-fact (each, an “Indemnified Person”) harmless from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, charges, expenses or disbursements (including
reasonable attorney’s fees, which may include, without duplication, the
allocated charges of internal legal counsel) of any kind or nature whatsoever
with respect to any investigation, litigation or proceeding (including any
insolvency proceeding or appellate proceeding) arising out of or related to
this Agreement or any other Loan Document or any 

 50
 

 

actual or proposed use of proceeds
of the Loans made or issued hereunder, whether or not any Indemnified Person is
a party thereto (all of the foregoing, collectively the “Indemnified
Liabilities”); provided, that the Borrower shall have no obligation
hereunder to any Indemnified Person with respect to Indemnified Liabilities
arising from the willful misconduct or gross negligence of such Indemnified
Person.  All amounts owing under this
Section 10.9 shall be paid promptly upon demand.  At the election of any Indemnified Person,
the Borrower shall defend such Indemnified Person in respect of any Indemnified
Liabilities using legal counsel reasonably satisfactory to such Indemnified
Person at the sole cost and expense of the Borrower.

Section 10.10 Set-Off.  In addition to any rights and remedies of the
Agent and Lenders provided by law, if an Event of Default has occurred and is
continuing, the Agent and each Lender is authorized at any time and from time
to time, without prior notice to the Borrower, any such notice being waived by
the Borrower to the fullest extent permitted by law, to set-off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held by, and other indebtedness at any time owing by, the Agent or
such Lender to or for the credit or the account of the Borrower against any and
all obligations owing to the Agent or such Lender, now or hereafter existing,
irrespective of whether or not Agent or such Lender shall have made demand
under this Agreement or any other Loan Document and although such obligations
may be contingent or unmatured.

Section 10.11 Severability.  Any provision of this Agreement 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 hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.  To the extent permitted by
applicable law, the parties waive any provision of law which renders any
provision hereof prohibited or unenforceable in any respect.

Section 10.12 Survival.  The representations, warranties and indemnities
of the Borrower in favor of the Agent and Lenders shall survive indefinitely
and, without limiting the foregoing, shall survive the execution and delivery
of the Loan Documents, the making of any Loans, the expiration of the
Commitment and the repayment of all amounts due under the Loan Documents.

Section 10.13 Executed in Counterparts.  This Agreement and the other Loan Documents may
be executed in any number of counterparts and by different parties in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.

Section 10.14 Conditions Not Fulfilled.  If the Commitment is not borrowed owing to
nonfulfillment of any condition precedent specified in Article 3 hereof,
no party hereto shall be responsible to any other party for any damage or loss
by reason thereof, except that the Borrower shall be in any event liable to pay
the fees, Taxes, and expenses for which it is obligated hereunder.

Section 10.15 Entire Agreement; Amendment, Etc..  This Agreement and the other Loan Documents
comprise the entire agreement of the parties and may not be amended or modified
except by written agreement of the Borrower and the Agent acting with the
consent of 

 51
 

 

Majority Lenders (or where
necessary all Lenders) in accordance with the terms and conditions of Section
10.1.  No provision of this Agreement may
be waived except in writing and then only in the specific instance and for the
specific purpose for which given.

Section 10.16 Construction.  In the event of any conflict between the terms,
conditions and provisions of this Agreement and those of any other Loan
Document, the terms, conditions and provisions of this Agreement shall control.

Section 10.17 Oral Agreements Not Enforceable.

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

IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers or agents thereunto duly authorized as of the date
first above written.

	
  BORROWER:

  	
   

  	
  CASCADE CORPORATION, an Oregon 

  corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attn:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Facsimile:

  
	
   

  	
   

  	
   

  
	
  LENDER,
  SWING LINE

  	
   

  	
   

  
	
  LENDER
  and L/C ISSUER:

  	
   

  	
  BANK OF AMERICA, N.A., a national banking 

  
	
   

  	
   

  	
  association

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attn:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Facsimile:

  
						

 52
 

 

 

	
  LENDER:

  	
   

  	
  UNION BANK OF CALIFORNIA, N.A., a national 

  
	
   

  	
   

  	
  banking association 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address:

  
	
   

  	
   

  	
  Attn:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Facsimile:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Agent:

  	
   

  	
  BANK OF AMERICA, N.A., a national banking 

  
	
   

  	
   

  	
  association

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address:

  
	
   

  	
   

  	
   

  	
  WA1-501-37-20

  800 Fifth Avenue, Floor
  37

  Seattle, WA  98104

  
	
   

  	
   

  	
   

  	
  Attn:

  	
  Dora A. Brown

  
	
   

  	
   

  	
   

  	
   

  	
  Vice President

  
	
   

  	
   

  	
  Facsimile: (206) 358-0971

  
								

 

 53

 

SCHEDULE 1

Litigation

 1

 

SCHEDULE 2

Liens

 1

 

SCHEDULE 3

Intellectual
Property Claims

 1

 

SCHEDULE 4

Environmental
Matters

 1

 

SCHEDULE 5

Subsidiaries

1.                   
Sandy Boulevard Development
Corporation, an Oregon corporation.

2.                   
Cascade Kenhar, Inc., an Oregon
corporation

 1

 

EXHIBIT A

[Form of Note]

 1

 

EXHIBIT B

[Form of
Continuing Guaranty]

 1

 

EXHIBIT C

QUARTERLY
COMPLIANCE CERTIFICATE

THE UNDERSIGNED, being the                                 of
CASCADE CORPORATION, an Oregon corporation, (the “Borrower”) does hereby
certify to BANK OF AMERICA, N.A., UNION BANK OF CALIFORNIA, N.A. (the “Lenders”)
and BANK OF AMERICA, N.A., as agent for Lenders (in such capacity, the “Agent”)
under the Loan Agreement (as hereinafter defined), as follows:

1.             This
Certificate is given pursuant to Section 6.10(c) of that certain Loan
Agreement dated as of December         ,
2002 by and among the Borrower, the Lenders and the Agent (as the same may be
amended, modified or extended from time to time the “Loan Agreement”).  Capitalized terms not otherwise defined in
this Certificate shall have the meanings set forth in the Loan Agreement.

2.             The
financial statements for the Fiscal Quarter ended                   ,
20     delivered with this Certificate pursuant to the
requirements of Section 6.10(c) of the Loan Agreement have been prepared
in accordance with GAAP and present fairly the consolidated financial position
and the results of operations of Borrower and its Subsidiaries as of the end of
and for such fiscal period.

3.             There
has not existed during the fiscal quarter ended                   ,
20     and there does not now exist any Default or Event of
Default under the Loan Agreement.

4.             The
computations and descriptions set forth in Schedule 1 hereto
demonstrate (i) compliance with the financial covenants in Section 6.13
of the Loan Agreement, and (ii) the amount by which the Borrowing Base
exceeds or is less than the aggregate principal amount of all outstanding
Loans.

5.             Capitalized
terms used herein and not otherwise defined shall have the meanings defined in
the Loan Agreement.

DATED this         day
of                        
20     .

	
  

  	
  CASCADE
  CORPORATION, an Oregon 

  corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

 1

 

For the Fiscal
Quarter ended                                         (“Statement
Date”)

SCHEDULE 1

to Quarterly Compliance
Certificate

Insert

 1

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00114-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00114-of-00352.parquet"}]]