Document:

EXHIBIT 10(e)(1)  

ANNEX
X 

To

SALE
AND CONTRIBUTION AGREEMENT, 

and 

RECEIVABLES
PURCHASE AND SERVICING AGREEMENT 

each
dated as of 

March 28,
2002 

Definitions
and Interpretation 

 

        SECTION
1.    Definitions and Conventions.    Capitalized terms used in the Sale and Contribution Agreement and the
Purchase Agreement shall have (unless otherwise provided elsewhere therein) the following respective meanings: 

        "Accession Agreement" shall mean an Accession Agreement substantially in the form of  Exhibit A to the Collateral Agent Agreement. 

        "Accounting Changes" shall mean, with respect to any Person, (a) changes in accounting principles required by the promulgation of
any rule, regulation, pronouncement or opinion of the Financial Accounting Standards Board of the American Institute of Certified Public Accountants (or any successor thereto or any agency with
similar functions); (b) changes in accounting principles concurred in by such Person's certified public accountants; (c) purchase accounting adjustments under A.P.B. 16 or 17 and EITF
88-16, and the application of the accounting principles set forth in FASB 109, including the establishment of reserves pursuant thereto and any subsequent reversal (in whole or in part) of
such reserves; and (d) the reversal of any reserves established as a result of purchase accounting adjustments. 

        "Accounts" shall mean the Collection Account, the Lockbox Accounts and the Retention Account, collectively. 

        "Accrued Monthly Yield" shall mean, as of any date of determination within a Settlement Period, the sum of the Daily Yields for each day
from and including the first day of the Settlement Period through and including such date. 

        "Accrued Servicing Fee" shall mean, as of any date of determination within a Settlement Period, the sum of the Servicing Fees calculated
for each day from and including the first day of the Settlement Period through and including such date. 

        "Accrued Unused Commitment Fee" shall mean, as of any date of determination within a Settlement Period, the sum of the Unused Commitment
Fees calculated for each day from and including the first day of the Settlement Period through and including such date. 

        "Accumulated Funding Deficiency" shall mean an "accumulated funding deficiency" as defined in Section 412 of the IRC and
Section 302 of ERISA, whether or not waived. 

        "Additional Amounts" shall mean any amounts payable to any Affected Party under  Sections 2.09 or 2.10 of the Purchase
Agreement. 

        "Additional Costs" shall have the meaning assigned to it in Section 2.09(b) of the
Purchase Agreement. 

        "Administrative Agent" shall have the meaning set forth in the Preamble of the Purchase Agreement. 

        "Administrative Services Agreement" shall mean that certain Administrative Services Agreement dated as of March 7, 2000, between
Redwood and the Operating Agent. 

        "Adverse Claim" shall mean any claim of ownership or any Lien, other than any ownership interest or Lien created under the Sale and
Contribution Agreement or the Purchase Agreement or any Lien created under the Collateral Agent Agreement. 

        "Affected Party" shall mean each of the following Persons: the Conduit Purchaser, the Committed Purchaser, the Liquidity Agent, each
Liquidity Lender, the Administrative Agent, the Operating Agent, the Letter of Credit Agent, each Letter of Credit Provider, the Collateral Agent, the Depositary and each Affiliate of the foregoing
Persons. 

        "Affiliate" shall mean, with respect to any Person, (a) each Person that, directly or indirectly, owns or controls, whether
beneficially, or as a trustee, guardian or other fiduciary, ten percent (10%) or 

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more of the Stock having ordinary voting power in the election of directors of such Person, (b) each Person that controls, is controlled by or is under common control with such Person, or
(c) each of such Person's officers, directors, joint venturers and partners. For the purposes of this definition, "control" of a Person shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of its management or policies, whether through the ownership of voting securities, by contract or otherwise. 

        "Ancillary Services and Lease Agreement" shall mean that certain Ancillary Services and Lease Agreement dated as of March 28, 2002
between the Parent and the Seller. 

        "Appendices" shall mean, with respect to any Related Document, all exhibits, schedules, annexes and other attachments thereto, or
expressly identified thereto. 

        "Applicable Purchaser" shall mean (i) prior to the occurrence of a Committed Purchaser Funding Event, the Conduit Purchaser, and
(ii) on and after the occurrence of a Committed Purchaser Funding Event, the Committed Purchaser. 

        "Applicable Servicing Fee" shall mean, as of any Settlement Date, with respect to each Servicer other than the Master Servicer, an amount
equal to (a) the Servicing Fee received by the Master Servicer or its Successor Servicer on such Settlement Date pursuant to  Section 2.07(b) of the Purchase Agreement less the Master Servicer's portion of such Servicing
Fee, multiplied by (b) a percentage equal to (i) the Outstanding Balance of Transferred Receivables, as of the last day of the related
Settlement Period, sold by such Servicer in its capacity as an Originator under the Sale and Contribution Agreement divided by (ii) the
Outstanding Balance of all Transferred Receivables as of the last day of the related Settlement Period. 

        "Authorized Officer" shall mean, with respect to any corporation, the Chairman or Vice-Chairman of the Board, the President,
any Vice President, the Secretary, the Treasurer, any Assistant Secretary, any Assistant Treasurer and each other officer of such corporation specifically authorized in resolutions of the board of
directors of such corporation to sign agreements, instruments or other documents on behalf of such corporation in connection with the transactions contemplated by the Sale and Contribution Agreement,
the Purchase Agreement and the other Related Documents. 

        "Availability" shall mean, as of any date of determination, the amount equal to the lesser of: (a) (i) the Investment Base  multiplied by the Purchase Discount Rate,
minus (ii) the Discount and Servicer Fee Reserve and
(b) the Maximum Purchase Limit. 

        "Available LOC Percentage" shall mean fifteen percent (15.0%) 

        "Bankruptcy Code" shall mean the provisions of title 11 of the United States Code, 11 U.S.C. § § 101  et seq. 

        "Billed Amount" shall mean, with respect to any Receivable, the amount billed on the Billing Date to the Obligor thereunder. 

        "Billing Date" shall mean, with respect to any Receivable, the date on which the invoice with respect thereto was generated. 

        "Breakage Costs" shall have the meaning assigned to it in Section 2.10 of the
Purchase Agreement. 

        "Bringdown Certificate" shall mean and Officer's Certificate substantially in the form of  Exhibit 3.01(a)(ii)(B) and 3.01(a)(iii)(B),
 as applicable, to the Purchase Agreement. 

        "Business Day" shall mean any day that is not a Saturday, a Sunday or a day on which banks are required or permitted to be closed in the
State of New York or the State of California. 

        "Buyer" shall have the meaning assigned to it in the preamble of the Sale and Contribution Agreement. 

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        "Buyer Indemnified Person" shall have the meaning assigned to it in Section 5.01 of
the Sale and Contribution Agreement. 

        "Canadian Obligor Reserve Amount" shall mean, as of any date of determination after giving effect to all Eligible Receivables to be
Transferred on such date and the application of Collections thereon on such date, the amount by which the aggregate Outstanding Balance of Receivables due from Obligors organized and/or domiciled in
Canada (exclusive of Receivables owing by any Canadian Subsidiaries of Wal-Mart Stores, Inc., provided, that if Canada shall fail to have a long-term foreign currency
rating of AA or higher from S&P or Aa1 or higher from Moody's, inclusive of Receivables owing by any Canadian Subsidiaries of Wal-Mart Stores, Inc.) and payable in Dollars exceeds
5.0% of the aggregate Outstanding Balance of Eligible Receivables. 

        "Capital Investment" shall mean, as of any date of determination with respect to any Purchaser, the amount equal to (a) the
aggregate deposits made by such Purchaser to the Collection Account pursuant to Section 2.04(b)(i) of the Purchase Agreement on or before such
date, plus (b) in the case of the Committed Purchaser only, any amounts advanced by the Committed Purchaser (in its capacity as a Liquidity
Lender) to the Conduit Purchaser under the LAPA in respect of Capital Investment when purchasing the Conduit Purchaser's Purchaser Interests, minus
(c) in the case of the Conduit Purchaser only, any amounts advanced by the Committed Purchaser to the Conduit Purchaser under the LAPA in respect of Capital Investment when purchasing the
Conduit Purchaser's Purchaser Interests, minus (d) the sum of all amounts disbursed to such Purchaser in reduction of Capital Investment pursuant
to Sections 6.03, 6.04 or 6.05 of the Purchase Agreement on or before such date. 

        "Capital Investment Available" shall mean, as of any date of determination, the amount, if any, by which Availability exceeds Capital
Investment, in each case as of the end of the immediately preceding day. 

        "Capital Lease" shall mean, with respect to any Person, any lease of any property (whether real, personal or mixed) by such Person as
lessee that, in accordance with GAAP, would be required to be classified and accounted for as a capital lease on a balance sheet of such Person. 

        "Capital Lease Obligation" shall mean, with respect to any Capital Lease of any Person, the amount of the obligation of the lessee
thereunder that, in accordance with GAAP, would appear on a balance sheet of such lessee in respect of such Capital Lease. 

        "Capital Purchase" shall have the meaning assigned to it in Section 2.01 of the
Purchase Agreement. 

        "Capital Purchase Request" shall have the meaning assigned to it in Section 2.03(b)
of the Purchase Agreement. 

        "Change of Control" shall mean, with respect to Parent Guarantor, the SPC, any Servicer, and Originator or the Seller, any event,
transaction or occurrence as a result of which (a) any person or group of persons (within the meaning of the Securities Exchange Act of 1934, as amended) shall have acquired beneficial
ownership (within the meaning of Rule 13d-3 promulgated by the Securities Exchange Commission under the Securities Exchange Act of 1934, as amended) of 50% or more of the issued and
outstanding shares of capital Stock of the Parent Guarantor having the right to vote for the election of directors of the respective entity under ordinary circumstances; (b) during any twelve
(12) consecutive calendar months ending after the Closing Date, individuals who at the beginning of such twelve-month period constituted the board of directors of the Parent or such Person
(together with any new directors whose election by such board or whose nomination for election by the shareholders of the Parent or such Person was approved by a vote of a majority of the directors
still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) shall cease for any reason to constitute a majority
of the board of directors of the Parent or such Person then in office; (c) the Parent shall cease to own and control 

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directly or indirectly all of the economic and voting rights associated with all of the outstanding Stock of the Servicers, the SPC, the Originators or of the Seller, (d) the Parent has sold,
transferred, conveyed, assigned or otherwise disposed of all or substantially all of the assets of the Parent, or (e) the Originators, together with the SPC, shall fail to own 100% of the
outstanding Stock of the Seller. 

        "Charter Documents" shall mean, with respect to any corporation or limited liability company, such Person's articles or certificate of
incorporation or formation and such entity's bylaws or operating agreement. 

        "Closing Date" shall mean March 28, 2002. 

        "Collateral Agent" shall mean GE Capital, in its capacity as collateral agent for the Conduit Purchaser and the Conduit Purchaser Secured
Parties pursuant to the Collateral Agent Agreement. 

        "Collateral Agent Agreement" shall mean that certain Third Amended and Restated Collateral Agent and Security Agreement dated as of
March 7, 2000, among Redwood, the Depositary and GE Capital, in its capacities as (a) the Collateral Agent, (b) the Operating Agent, (c) the Liquidity Agent and
(d) the Letter of Credit Agent. 

        "Collection Account" shall mean (a) prior to a Committed Purchaser Funding Event, that certain segregated deposit account
established by the Conduit Purchaser and maintained with the Depositary designated as the "Redwood Receivables Corporation—Collection Account (K2)," account number
00-386-310, ABA No. 021001033, Attn: Collection Account #33487, or such other account established in accordance with the requirements set forth in  Section 6.01(b) of the Purchase Agreement,
and (b) following the occurrence of a Committed Purchaser Funding Event, an account established
by the Administrative Agent designated as the Purchasers' Collection Account (K2) and otherwise in accordance with the requirements set forth in  Section 6.01(b) of the Purchase Agreement.

        "Collections" shall mean, with respect to any Receivable, all cash collections and other proceeds of such Receivable (including late
charges, fees and interest arising thereon, and all recoveries with respect thereto that have been written off as uncollectible). 

        "Commercial Paper" shall mean those certain short-term promissory notes issued by the Conduit Purchaser (or, with respect to
the Committed Purchaser, by GE Capital), from time to time in the United States of America commercial paper market. 

        "Committed Purchaser" shall mean GE Capital, its successors and assigns. 

        "Committed Purchaser Daily Yield" shall mean, for any day, the product of (i) the sum of the Committed Purchaser Daily Yield Rate
for such day, plus the Daily Margin on such day, plus, if a Termination Event has occurred and is
continuing, the Daily Default Margin, multiplied by (ii) the Committed Purchaser's Capital Investment outstanding on such day. 

        "Committed Purchaser Daily Yield Rate" shall mean, for any day during a Settlement Period after the occurrence of a Committed Purchaser
Funding Event, (a) the weighted average Committed Purchaser Yield Rates applicable to the Committed Purchaser's Capital Investment on such day, weighted by outstanding Capital Investment,  divided by (b) 360. 

        "Committed Purchaser Funding Event" shall mean the occurrence of (a) a Redwood Termination Date, but only if no Termination Event
has occurred and is continuing or (b) the Redwood Transfer Date. 

        "Committed Purchaser Yield Rate" shall mean, with respect to any portion of the Committed Purchaser's Capital Investment on any day during
a Settlement Period, the LIBOR Rate for such Settlement Period or portion thereof, as applicable. 

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        "Commitment Reduction Notice" shall have the meaning assigned to it in  Section 2.02(a) of the Purchase Agreement. 

        "Commitment Termination Notice" shall have the meaning assigned to it in  Section 2.02(b) of the Purchase Agreement. 

        "Computer Hardware" shall mean, with respect to any Person, (i) all computer and other electronic data processing hardware, whether
now or hereafter owned, licenses or leased by such Person, including, without limitation, all integrated computer systems, central processing units, memory units, display terminals, printers,
features, computer elements, card readers, tape drives, hard and soft disk drives, cables, electrical supply hardware, generators, power equalizers, accessories and all peripheral devices and other
related computer hardware, (ii) all firmware associated with the foregoing, whether now or hereafter owned, licenses or leased by such Debtor, and (iii) all documentation for the
hardware and firmware described in the preceding clauses, whether now or hereafter owned, licenses or leased by such Debtor, including, without limitation, flow charts, logic diagrams, manuals,
specifications, training materials, charts and pseudo codes. 

        "Concentration Discount Amount" shall mean, with respect to any Obligor and its Affiliates, and as of any date of determination after
giving effect to all Eligible Receivables to be Transferred on such date and the application of Collections thereon on such date, the amount by which the Outstanding Balance of Eligible Receivables
owing by such Obligor and its Affiliates exceeds the product of (a) the larger of (i) the percentage (the "Concentration Limit") set forth
in the table below based upon the short-term unsecured senior debt rating and the long-term unsecured senior debt rating assigned to them at such time by S&P and Moody's (and,
if such Obligor is rated by both agencies and has a split rating or the long-term debt rating is different from the short-term debt rating, the applicable rating will be the
lower rating) and (ii) the Special Limit, if any, applicable to such Obligor, and (b) the Outstanding Balance of all Eligible Receivables
on such date. 

	S&P RATING/MOODY'S SHORT-TERM RATING
	 	S&P RATING/MOODY'S LONG-TERM RATING
	 	CONCENTRATION LIMIT

	A-1/P-1	 	A/A2 or higher	 	10.0%
	A-2/P-2	 	BBB+/Baa1 or higher	 	8.0%
	A-3/P-3	 	BBB-/Baa3 or higher	 	6.0%
	Below A-3/P-3 or Not Rated by either S&P or Moody's	 	Below BBB-/Baa3 or Not Rated by either S&P or Moody's	 	4.0%

        "Conduit Purchaser" shall mean Redwood and its assigns. 

        "Conduit Purchaser Secured Parties" shall mean the Collateral Agent, the CP Holders, the Depositary, the Liquidity Agent, the Liquidity
Lenders, the Letter of Credit Agent and the Letter of Credit Providers. 

        "Contract" shall mean any agreement (including any invoice or billing statement) pursuant to, or under which, an Obligor shall be
obligated to make payments with respect to any Receivable. 

        "Contributed Receivables" shall have the meaning assigned to it in Section 2.01(d)
of the Sale and Contribution Agreement. 

        "CP Holder" shall mean any Person that holds record or beneficial ownership of Commercial Paper. 

        "Credit and Collection Policies" shall mean the credit, collection, customer relations and service policies of the Master Servicer and the
Originators in effect on the Closing Date, as the same may from time to time be amended, restated, supplemented or otherwise modified with the written consent of the Administrative Agent. 

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        "Credit Facilities" shall mean the Parent Revolver, the 1992 Note Agreement, the 1999 Note Agreement and the other documents executed in
connection therewith, together with such amendments, restatements, supplements or modifications thereto or any refinancings, replacements or refundings thereof as may be agreed to in writing by the
Purchasers and the Administrative Agent. 

        "Credit Facilities' Security Documents" shall mean (i) the Pledge Agreement, dated as of the Closing Date, among the Credit
Facility Agent, the Parent and certain subsidiaries thereof, attached as Exhibit D, (ii) the Membership Interest Pledge Agreement, dated
as of the Closing Date, among the Credit Facility Agent, the Parent and certain subsidiaries thereof, attached as Exhibit E hereto, and
(iii) the Security Agreement, dated as of the Closing Date, among the Credit Facility Agent, the Parent and certain subsidiaries thereof, attached as  Exhibit F hereto, and, in each case,
without giving effect to any amendments, restatements, supplements or other modifications made without the
written consent of Administrative Agent. 

        "Credit Facility Agent" shall mean Bank of America, N.A. or its successor appointed as "Collateral Agent" pursuant to the Credit Facility
Intercreditor Agreement. 

        "Credit Facility Intercreditor Agreement" shall mean that certain Amended and Restated Intercreditor Agreement among various creditors of
Parent Guarantor and the Credit Facility Agent, attached as Exhibit C hereto. 

        "Daily Default Margin" shall mean, for any day on which a Termination Event has occurred and is continuing, two percent (2.0%)  divided by 360. 

        "Daily Margin" shall mean, for any day, the Per Annum Daily Margin on such day divided by
360. 

        "Daily Yield" shall mean, for any day, the sum of (a) the Redwood Daily Yield for such day, and (b) the Committed Purchaser
Daily Yield for such day. 

        "Daily Yield Rate" shall mean the Redwood Daily Yield Rate or the Committed Purchaser Daily Yield Rate, as the case may be. 

        "Dealer" shall mean any dealer party to a Dealer Agreement. 

        "Dealer Agreement" shall mean any dealer agreement entered into by Redwood for the distribution of Commercial Paper. 

        "Debt" of any Person shall mean, without duplication, (a) all indebtedness of such Person for borrowed money or for the deferred
purchase price of property or services payment for which is deferred 90 days or more, but excluding obligations to trade creditors incurred in the ordinary course of business that are not
overdue by more than 90 days unless being contested in good faith, (b) all reimbursement and other obligations with respect to letters of credit, bankers' acceptances and surety bonds,
whether or not matured, (c) all obligations evidenced by notes, bonds, debentures or similar instruments, (d) all indebtedness created or arising under any conditional sale or other
title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to
repossession or sale of such property), (e) all Capital Lease Obligations and Synthetic Lease Obligations, (f) net obligations under any Swap Contract in an amount equal to (i) if
such Swap Contract has been closed out, the termination value thereof or (ii) if such Swap Contract 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 Contract, (g) all liabilities of such Person under Title IV of ERISA, (h) all Guaranteed
Indebtedness of such Person in respect of any of the foregoing, (i) all indebtedness referred to in clauses (a) through  (h) 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 or other assets (including accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such indebtedness,
(j) the "Obligations" as such term is 

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defined in the Parent Revolver, (k) the obligations under the Note Agreements and (l) the Seller Secured Obligations. 

        "Defaulted Receivable" shall mean any Receivable (a) with respect to which any payment, or part thereof, remains unpaid for more
than 90 days from its Maturity Date, (b) with respect to which the Obligor thereunder has taken any action, or suffered any event to occur, of the type described in  Sections 9.01(c) or
9.01(d) of the Purchase Agreement or (c) that otherwise is determined
to be uncollectible and is written off in accordance with the Credit and Collection Policies. 

        "Default Ratio" shall mean, as of any date of determination, the ratio (expressed as a percentage) of: 

        (a)  (i) the
aggregate Outstanding Balances of all Transferred Receivables which constituted Defaulted Receivables as of the last day of the six Settlement Periods
immediately preceding such date, plus (ii) the aggregate Outstanding Balances of Transferred Receivables that were written off as uncollectible
during such six Settlement Periods. 

        to

        (b)  the
aggregate Outstanding Balances of all Transferred Receivables as of the last day of the six Settlement Periods immediately preceding such date. 

        "Delinquency Ratio" shall mean, as of any date of determination, the ratio (expressed as a percentage) of: 

        (a)  the
aggregate respective Outstanding Balances of all Transferred Receivables which remain unpaid for more than 60 days but less than 91 days from their
respective Maturity Date as of the last day of the six Settlement Periods immediately preceding such date 

        to

        (b)  the
aggregate Outstanding Balances of all Transferred Receivables as of the last day of the six Settlement Periods immediately preceding such date. 

        "Depositary" shall mean Bankers Trust Company, or any other Person designated as the successor Depositary pursuant to and in accordance
with the terms of the Depositary Agreement, in its capacity as issuing and paying agent or trustee in connection with the issuance of Commercial Paper. 

        "Depositary Agreement" shall mean that certain Depositary Agreement dated March 15, 1994, by and between Redwood and the Depositary
and consented to by the Liquidity Agent. 

        "Dilution Factors" shall mean, with respect to any Receivable, any credits, rebates, freight charges, cash discounts, volume discounts,
cooperative advertising expenses, royalty payments, warranties, cost of parts required to be maintained by agreement (whether express or implied), warehouse and other allowances, disputes, setoffs,
chargebacks, defective returns, other returned or repossessed goods, inventory transfers, allowances for early payments and other similar allowances that are reflected on the books of each Originator
and made or coordinated with the usual practices of the Originator thereof; provided, that any allowances or adjustments in accordance with the Credit
and Collection Policies made on account of the insolvency of the Obligor thereunder or such Obligor's inability to pay shall not constitute a Dilution Factor. 

        "Dilution Ratio" shall mean, as of any date of determination, the ratio (expressed as a percentage) of: 

        (a)  the
aggregate Dilution Factors during the first Settlement Period immediately preceding such date 

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        to

        (b)  the
aggregate Billed Amount of all Transferred Receivables originated during the fourth Settlement Period immediately preceding such date. 

        "Dilution Reserve Ratio" shall mean, as of any date of determination, the ratio (expressed as a percentage) equal to the greater of
(a) 9.0 percent and (b) the ratio calculated in accordance with the following formula: 

	[(ADR × 2.00) + [(HDR - ADR) ×	 	HDR]]
 ADR	 	×	 	DILHOR
 NRPB

	 	where:	 	 
	 	

ADR =	
 	

the average of the respective Dilution Ratios as of the last day of the 12 Settlement Periods immediately preceding such date.
	 	

HDR =	
 	

the highest Two Month Rolling Dilution Ratio during the 12 Settlement Periods immediately preceding such date.
	 	

DILHOR =	
 	

the aggregate Billed Amount of Transferred Receivables originated during the three Settlement Periods immediately preceding such date.
	 	

NRPB =	
 	

the Outstanding Balance of Transferred Receivables as of the last day of the first Settlement Period immediately preceding such date.

        "Dilution Trigger Ratio" shall mean, as of any date of determination, the ratio (expressed as a percentage) of: 

        (a)  the
aggregate Dilution Factors during the six Settlement Periods immediately preceding such date 

        to

        (b)  the
aggregate Billed Amount of all Transferred Receivables originated during the fourth, fifth, sixth, seventh, eighth and ninth Settlement Periods immediately preceding
such date. 

        "Discount and Servicer Fee Reserve" shall mean, at any time, the product of (a) the Index Rate, (b) Capital Investment and
(c) a fraction, the numerator of which is the higher of (i) 30 and (ii) the most recently reported Receivables Collection Turnover, and the denominator of which is 360. 

        "Dollars" or "$" shall mean lawful currency of the United States of America. 

        "Dynamic Purchase Discount Rate" shall mean, as of any date of determination, the rate equal to (a) 100%  minus (b) the sum of (i) the Loss Reserve Ratio
plus (ii) the Dilution Reserve
Ratio, plus (c) the Available LOC Percentage. 

        "EBITDA" shall mean, with respect to any Person for any fiscal period, the amount equal to (a) consolidated net income of such
Person for such period, minus (b) the sum of (i) income tax credits, (ii) interest income, (iii) gain from extraordinary
items for such period, (iv) any aggregate net gain (but not any aggregate net loss) during such period arising from the sale, exchange or other disposition of capital assets by such Person
(including any fixed assets, whether tangible or intangible, all inventory sold in conjunction with the disposition of fixed assets and all securities), and (v) any other non-cash
gains that have been added in determining consolidated net income (including LIFO adjustments), in each case to the extent included in the calculation of consolidated net income of such Person for
such period in accordance with GAAP, but without duplication, plus (c) the sum of (i) any provision for income taxes, (ii) Interest
Expense, (iii) loss from extraordinary items for such period, (iv) the amount of depreciation, amortization and LIFO adjustments for such period, (v) amortized 

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debt discount for such period, and (vi) the amount of any deduction to consolidated net income as the result of any grant to any members of the management of such Person of any Stock, in each
case to the
extent included in the calculation of consolidated net income of such Person for such period in accordance with GAAP, but without duplication. For purposes of this definition, the following items
shall be excluded in determining consolidated net income of a Person: (A) the income (or deficit) of any other Person accrued prior to the date it became a Subsidiary of, or was merged or
consolidated into, such Person or any of such Person's Subsidiaries; (B) the income (or deficit) of any other Person (other than a Subsidiary) in which such Person has an ownership interest,
except to the extent any such income has actually been received by such Person in the form of cash dividends or distributions; (C) the undistributed earnings of any Subsidiary of such Person to
the extent that the declaration or payment of dividends or similar distributions by such Subsidiary is not at the time permitted by the terms of any contractual obligation or requirement of law
applicable to such Subsidiary; (D) any restoration to income of any contingency reserve, except to the extent that provision for such reserve was made out of income accrued during such period;
(E) any write-up of any asset; (F) any net gain from the collection of the proceeds of life insurance policies; (G) any net gain arising from the acquisition of any
securities, or the extinguishment, under GAAP, of any Debt, of such Person, (H) in the case of a successor to such Person by consolidation or merger or as a transferee of its assets, any
earnings of such successor prior to such consolidation, merger or transfer of assets, and (I) any deferred credit representing the excess of equity in any Subsidiary of such Person at the date
of acquisition of such Subsidiary over the cost to such Person of the investment in such Subsidiary. 

        "Election Notice" shall have the meaning assigned to it in Section 2.01(d) of the
Sale and Contribution Agreement. 

        "Eligible Receivable" shall mean, as of any "date of determination" (which is the "as of"
date for which any Investment Base Certificate claims to report), a Transferred Receivable: 

        (a)  that
is not a liability of an Excluded Obligor; 

        (b)  that
is not a liability of an Obligor (i) organized under the laws of any jurisdiction outside of the United States of America (including the District of Columbia
but otherwise excluding its territories and possessions) or Canada or (ii) having its principal place of business outside of the United States of America (including the District of Columbia but
otherwise excluding its territories and possessions) or Canada; 

        (c)  that
is only denominated and payable in Dollars in the United States of America; 

        (d)  to
the extent that it is not and will not be subject to any right of rescission, set-off, recoupment, counterclaim or defense, whether arising out of
transactions concerning the Contract therefor or otherwise, except to the extent the Administrative Agent in its reasonable discretion determines that appropriate Reserves have been established
therefore; 

        (e)  that
is not a Defaulted Receivable or an Unapproved Receivable; 

        (f)    that
(i) does not represent "billed but not yet shipped," "bill and hold" or "progress-billed" goods or merchandise, unperformed services, consigned goods or
"sale or return" goods and does not arise from a transaction for which any additional performance by the Originator thereof, or acceptance by or other act of the Obligor thereunder, remains to be
performed as a condition to any payments on such Receivable and (ii) is not generated under a drop-shipment arrangement, except to the extent received by the Obligor thereof and
such delivery can be evidenced by the Originator thereof in a manner satisfactory to the Administrative Agent in its sole discretion; 

        (g)  as
to which the representations and warranties of Sections 4.01(v)(ii)-(iv) of the Sale and Contribution Agreement are
true and correct in all respects as of the Transfer Date therefor; 

10

  

        (h)  to
the extent that it is not the liability of an Obligor that has any claim of a material nature against or affecting the Originator thereof or the property of such
Originator; 

        (i)    that
is a true and correct statement of a bona fide indebtedness incurred in the amount of the Billed Amount of such
Receivable for merchandise sold to or services rendered and accepted by the Obligor thereunder; 

        (j)    that
was originated in accordance with and satisfies all applicable requirements of the Credit and Collection Policies; 

        (k)  that
represents the genuine, legal, valid and binding obligation of the Obligor thereunder enforceable by the holder thereof in accordance with its terms; 

        (l)    that
is entitled to be paid pursuant to the terms of the Contract therefor, has not been paid in full or been compromised, adjusted, extended, satisfied, subordinated,
rescinded or modified, and is not subject to compromise, adjustment, extension, satisfaction, subordination, rescission, or modification by the Originator thereof (except for adjustments to the
Outstanding Balance thereof to reflect Dilution Factors made in accordance with the Credit and Collection Policy); 

        (m)  with
respect to which the Originator thereof has submitted all necessary documentation for payment to the Obligor thereunder and such Originator has fulfilled all of its
other obligations in respect thereof; 

        (n)  the
due date of which, if any, is not greater than 180 days from the date of determination; 

        (o)  that
was created in compliance with and otherwise does not contravene any laws, rules or regulations applicable thereto (including laws, rules and regulations relating
to usury, consumer protection, truth in lending, fair credit billing, fair credit reporting, equal credit opportunity, fair debt collection practices and privacy) and with respect to which no party to
the Contract therefor is in violation of any such law, rule or regulation; 

        (p)  with
respect to which no proceedings or investigations are pending or threatened before any Governmental Authority (i) asserting the invalidity of such Receivable
or the Contract therefor, (ii) asserting the bankruptcy or insolvency of the Obligor thereunder, (iii) seeking payment of such Receivable or payment and performance of such Contract or
(iv) seeking any determination or ruling that might materially and adversely affect the validity or enforceability of such Receivable or such Contract; 

        (q)  with
respect to which the Obligor thereunder is not: (i) bankrupt or insolvent, (ii) unable to make payment of its obligations when due, (iii) a
debtor in a voluntary or involuntary bankruptcy proceeding, or (iv) the subject of a comparable receivership or insolvency proceeding; 

        (r)  that
is an "account" (and is not evidenced by a promissory note or other instrument and does not constitute chattel paper) within the meaning of the UCC of the
jurisdictions in which each of the Originators and the Seller are organized; 

        (s)  that
is payable solely and directly to an Originator and not to any other Person (including any shipper of the merchandise or goods that gave rise to such Receivable),
except to the extent that payment thereof may be made to the Collection Account or otherwise as directed pursuant to Article VI of the Purchase
Agreement; 

        (t)    with
respect to which all material consents, licenses, approvals or authorizations of, or registrations with, any Governmental Authority required to be obtained,
effected or given in connection with the creation of such Receivable or the Contract therefor have been duly obtained, effected or given and are in full force and effect; 

11

 

        (u)  that
is created through the provision of merchandise, goods or services by the Originator thereof in the ordinary course of its business in a current transaction; 

        (v)  that
complies with such other criteria and requirements as the Administrative Agent may from time to time establish using its good faith credit judgment following a
detailed analysis of the Receivables (or upon receipt of additional information with respect thereto) and specify (A) to the Seller or the Originator thereof upon advance written notice,
provided, that no such notice shall be required upon the occurrence and during the continuation of a Termination Event and (B) if so required by any Rating Agency, upon such notice as may be
specified by such Rating Agency; 

        (w)  that
is not the liability of an Obligor that is receiving or, under the terms of the Credit and Collection Policies, should receive merchandise, goods or services on a
"cash on delivery" basis; 

        (x)  that
does not constitute a rebilled amount arising from a deduction taken by an Obligor with respect to a previously arising Receivable or the balance owed on a
Receivable with respect to which one or more partial payments have been made; 

        (y)  with
respect to which no check, draft or other item of payment has previously been received which was returned unpaid or otherwise dishonored; 

        (z)  no
portion of which constitutes sales tax, late fees or similar service charges; and 

        (aa) that
is not subject to any Lien, right, claim, security interest or other interest of any other Person, other than Liens in favor of the Purchasers. 

        "Environmental Laws" shall mean all applicable federal, state, local and foreign laws, statutes, ordinances, codes, rules, standards and
regulations, now or hereafter in effect, and in each case as amended or supplemented from time to time, and any applicable judicial or administrative interpretation thereof, including any applicable
judicial or administrative order, consent decree, order or judgment, imposing liability or standards of conduct for or relating to the regulation and protection of human health, safety, the
environment and natural resources (including ambient air, surface water, groundwater, wetlands, land surface or subsurface strata, wildlife, aquatic species and vegetation). Environmental Laws
include, without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (42 U.S.C. §§ 9601 et
seq.); the Hazardous Materials Transportation Authorization Act of 1994 (49 U.S.C. §§ 5101 et
seq.); the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. §§ 136 et seq.); the
Solid Waste Disposal Act (42 U.S.C. §§6901 et seq.); the Toxic Substance Control Act (15 U.S.C.
§§ 2601 et seq.); the Clean Air Act (42 U.S.C. §§ 7401 et
seq.); the Federal Water Pollution Control Act (33 U.S.C. §§1251 et seq.); the Occupational Safety and
Health Act (29 U.S.C. §§ 651 et seq.); and the Safe Drinking Water Act (42 U.S.C.
§§ 300(f) et seq.), each as from time to time amended, and any and all regulations promulgated thereunder, and all
analogous state, local and foreign counterparts or equivalents and any transfer of ownership notification or approval statutes. 

        "Environmental Permits" shall mean all permits, licenses, authorizations, certificates, approvals, registrations or other written
documents required by any Governmental Authority under any Environmental Laws. 

        "ERISA" shall mean the Employee Retirement Income Security Act of 1974 and any regulations promulgated thereunder. 

        "ERISA Affiliate" shall mean, with respect to Parent Guarantor or any Originator, any trade or business (whether or not incorporated)
that, together with Parent Guarantor or such Originator, are treated as a single employer within the meaning of Sections 414(b), (c), (m) or (o) of the IRC. 

12

 

        "ERISA Event" shall mean, with respect to Parent Guarantor, any Originator or any ERISA Affiliate, (a) any event described in
Section 4043(c) of ERISA with respect to a Title IV Plan; (b) the withdrawal of Parent Guarantor or any Originator or ERISA Affiliate from a Title IV Plan subject to Section 4063
of ERISA during a plan year in which it was a "substantial employer," as defined in Section 4001(a)(2) of ERISA; (c) the complete or partial withdrawal of Parent Guarantor, any
Originator or any ERISA Affiliate from any Multiemployer Plan; (d) the filing of a notice of intent to terminate a Title IV Plan or the treatment of a plan amendment as a termination under
Section 4041 of ERISA; (e) the institution of proceedings to terminate a Title IV Plan or Multiemployer Plan by the PBGC; (f) the failure by Parent Guarantor, any Originator or
ERISA Affiliate to make when due required contributions to a Multiemployer Plan or Title IV Plan unless such failure is cured within 30 days; (g) any other event or condition that might
reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Title IV Plan or Multiemployer Plan or for
the imposition of liability under Section 4069 or 4212(c) of ERISA; (h) the termination of a Multiemployer Plan under Section 4041A of ERISA or the reorganization or insolvency of
a Multiemployer Plan under Section 4241 of ERISA; (i) the loss of a Qualified Plan's qualification or tax exempt status; or (j) the termination of a Plan described in
Section 4064 of ERISA. 

        "ESOP" shall mean a Plan that is intended to satisfy the requirements of Section 4975(e)(7) of the IRC. 

        "Event of Servicer Termination" shall have the meaning assigned to it in  Section 9.02 of the Purchase Agreement. 

        "Excluded Obligor" shall mean any Obligor (a) that is an Affiliate of Parent Guarantor, any Originator or the Seller,
(b) that is a Governmental Authority, or (c) with respect to which 50.0% or more of the aggregate Outstanding Balance of all Receivables owing by such Obligor are Defaulted Receivables. 

        "Extended Terms Reserve Amount" shall mean, with respect to Receivables as of any date of determination after giving effect to all
Eligible Receivables to be Transferred on such date and the application of Collections thereon on such date, an amount equal to the sum of (a) the amount by which the aggregate Outstanding
Balance of Receivables that are due in more than 150 days but less than 181 days exceeds 7.5% of the aggregate Outstanding Balance of Eligible Receivables  plus (b) the amount by which the
aggregate Outstanding Balance of Receivables that are due in more than 120 days but less than
151 days exceeds 10.0% of the aggregate Outstanding Balance of Eligible Receivables. 

        "Facility Termination Date" shall mean the earliest of (a) the date so designated pursuant to  Section 9.01 of the Purchase Agreement, (b) 90 days
prior to the Final Purchase Date, and (c) 30 days prior to the
date of termination of the Maximum Purchase Limit specified in a notice from the Seller to the Purchaser delivered pursuant to and in accordance with  Section 2.02(b) of the Purchase Agreement.

        "Fair Labor Standards Act" shall mean the provisions of the Fair Labor Standards Act, 29 U.S.C. §§ 201  et seq. 

        "Federal Funds Rate" shall mean, for any day, a floating rate equal to the weighted average of the rates on overnight federal funds
transactions among members of the Federal Reserve System, as determined by the Administrative Agent. 

        "Federal Reserve Board" shall mean the Board of Governors of the Federal Reserve System. 

        "Fee Letter" shall mean that certain letter agreement dated February 8, 2002, between Parent Guarantor, the Administrative Agent,
the Collateral Agent, the Committed Purchaser and the Conduit Purchaser, as amended, restated, supplemented or otherwise modified from time to time. 

13

 

        "Final Purchase Date" shall mean the fifth anniversary of the Closing Date. 

        "Financial Statements" shall mean, consolidated and consolidating income statements, statements of cash flows and balance sheets of Parent
Guarantor delivered in accordance with Section 5.02(a) of the Purchase Agreement. 

        "GAAP" shall mean generally accepted accounting principles in the United States of America as in effect on the Closing Date, consistently
applied as such term is further defined in Section 2(a) of this Annex X. 

        "GE Capital" shall mean General Electric Capital Corporation, a Delaware corporation, and its successors and assigns. 

        "General Trial Balance" shall mean, with respect to any Originator and as of any date of determination, such Originator's accounts
receivable trial balance (whether in the form of a computer printout, magnetic tape or diskette) as of such date, listing Obligors and the Receivables owing by such Obligors as of such date together
with the aged Outstanding Balances of such Receivables, in form and substance satisfactory to the Seller and the Purchasers. 

        "Governmental Authority" shall mean any nation or government, any state or other political subdivision thereof, and any agency, department
or other entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. 

        "Guaranteed Indebtedness" shall mean, as to any Person, any obligation of such Person guaranteeing any indebtedness, lease, dividend, or
other obligation ("primary obligation") of any other Person (the "primary obligor") in any manner,
including any obligation or arrangement of such Person to (a) purchase or repurchase any such primary obligation, (b) advance or supply funds (i) for the purchase or payment of
any such primary obligation or (ii) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency or any balance sheet condition of the
primary obligor or any "keep-well" or other arrangement of whatever nature given for the purpose of assuring or holding harmless such primary obligor against loss with respect to any
obligation of such primary obligee, (c) purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary
obligor to make payment of such primary obligation, or (d) indemnify the owner of such primary obligation against loss in respect thereof; provided, however, that the term Guaranteed
Indebtedness shall not include endorsements of instruments for deposit or collection in the ordinary course of business. The amount of any Guaranteed Indebtedness at any time shall be deemed to be the
amount equal to the lesser at such time of (x) the stated or determinable amount of the primary obligation in respect of which such Guaranteed Indebtedness is incurred and (y) the
maximum amount for which such Person may be liable pursuant to the terms of the instrument embodying such Guaranteed Indebtedness; or, if not stated or determinable, the maximum reasonably anticipated
liability (assuming full performance) in respect thereof. 

        "Incipient Servicer Termination Event" shall mean any event that, with the passage of time or notice or both, would, unless cured or
waived, become an Event of Servicer Termination. 

        "Incipient Termination Event" shall mean any event that, with the passage of time or notice or both, would, unless cured or waived, become
a Termination Event. 

        "Indemnified Amounts" shall mean, with respect to any Person, any and all suits, actions, proceedings, claims, damages, losses,
liabilities and expenses (including attorneys' fees and disbursements and other costs of investigation or defense, including those incurred upon any appeal). 

        "Indemnified Person" shall have the meaning assigned to it in Section 12.01(a) of
the Purchase Agreement. 

14

 

        "Indemnified Taxes" shall have the meaning assigned to it in Section 2.08(b) of the
Purchase Agreement. 

        "Index Rate" shall mean, for any day, a floating rate equal to the higher of (i) the rate publicly quoted from time to time by  The Wall Street Journal as the "base
rate on corporate loans at large U.S. money center commercial banks" (or, if The Wall
Street Journal ceases quoting a base rate of the type described, the highest per annum rate of interest published by the Federal Reserve Board in Federal Reserve statistical
release H.15 (519) entitled "Selected Interest Rates" as the Bank prime loan rate or its equivalent), and (ii) the Federal Funds Rate plus fifty (50) basis points per annum. Each
change in any interest rate provided for in the Purchase Agreement based upon the Index Rate shall take effect at the time of such change in the Index Rate. 

        "Interest Expense" shall mean, with respect to any Person and any period, the interest expense of such Person, determined on a
consolidated basis for such period, including in any event the interest portion or payments under Capital Lease Obligations and interest expense for the relevant period that has been capitalized on
the balance sheet of such Person and yield or other amounts due and payable (other than upfront fees) under any accounts receivable securitization facility to which any such Person is a party as
seller or issuer. 

        "Investment Base" shall mean, as of any date of determination, the amount equal to the Outstanding Balance of Eligible Receivables  minus the Reserves with respect
thereto, in each case as disclosed in the most recently submitted Investment Base Certificate or as otherwise determined
by the Purchaser or the Administrative Agent based on Seller Collateral information available to any of them, including any information obtained from any audit or from any other reports with respect
to the Seller Collateral, which determination shall be final, binding and conclusive on all parties to the Purchase Agreement (absent manifest error). 

        "Investment Base Certificate" shall have the meaning assigned to it in  Section 2.03(a) of the Purchase Agreement. 

        "Investment Company Act" shall mean the provisions of the Investment Company Act of 1940, 15 U.S.C. §§ 80a  et seq., and any regulations promulgated
thereunder. 

        "Investment Reports" shall mean the reports with respect to the Transferred Receivables and the Seller Collateral referred to in  Section 5.02(b) to the Purchase
Agreement. 

        "Investments" shall mean, with respect to any Seller Account Collateral, the certificates, instruments, investment property or other
investments in which amounts constituting such collateral are invested from time to time. 

        "IRC" shall mean the Internal Revenue Code of 1986 and any regulations promulgated thereunder. 

        "IRS" shall mean the Internal Revenue Service. 

        "K-2 Corp." shall have the meaning assigned to it in the preamble of the Purchase Agreement. 

        "LAPA" shall mean that certain Liquidity Loan and Asset Purchase Agreement dated as of March 28, 2002, among Redwood and GE
Capital, in its capacities as (a) the Administrative Agent, (b) the Collateral Agent and Operating Agent for Redwood, (c) the initial Liquidity Lender, (d) the Liquidity
Agent, and (e) the Committed Purchaser. 

        "Letter of Credit" shall mean that certain Irrevocable Letter of Credit No. RRC-3 dated March 7, 2000, issued by the
Letter of Credit Providers at the request of Redwood in favor of the Collateral Agent pursuant to the Letter of Credit Agreement. 

15

 

        "Letter of Credit Agent" shall mean GE Capital, in its capacity as agent for the Letter of Credit Providers under the Letter of Credit
Agreement. 

        "Letter of Credit Agreement" shall mean that certain Third Amended and Restated Letter of Credit Reimbursement Agreement dated as of
March 7, 2000, among Redwood, the Letter of Credit Agent, the Letter of Credit Providers and the Collateral Agent 

        "Letter of Credit Providers" shall mean, initially, GE Capital, in its capacity as issuer of the Letter of Credit under the Letter of
Credit Agreement, and thereafter its successors and permitted assigns in such capacity. 

        "LIBOR Business Day" shall mean a Business Day on which banks in the city of London are generally open for interbank or foreign exchange
transactions. 

        "LIBOR Rate" shall mean for each Settlement Period, a rate of interest determined by the Administrative Agent equal to: 

        (a)  the
offered rate for deposits in Dollars for the applicable Settlement Period which appears on Telerate Page 3750 as of 11:00 a.m., London time, on the second
full LIBOR Business Day next preceding the first day of each Settlement Period (unless such date is not a Business Day, in which event the next succeeding Business Day will be used);  divided by

        (b)  a
number equal to 1.0 minus the aggregate (but without duplication) of the rates (expressed as a decimal fraction) of
reserve requirements in effect on the day which is two (2) LIBOR Business Days prior to the beginning of such Settlement Period (including basic, supplemental, marginal and emergency reserves
under any regulations of the Board of Governors of the Federal Reserve system or other governmental authority having jurisdiction with respect thereto, as now and from time to time in effect) for
Eurocurrency funding (currently referred to as "Eurocurrency liabilities" in Regulation D of such Board which are required to be maintained by a member bank of the Federal Reserve System; 

provided, that if the introduction of or any change in any law or regulation (or any change in the interpretation thereof) shall make it unlawful, or
any central bank or other Governmental Authority shall assert that it is unlawful, for the Committed Purchaser to agree to make or to make or to continue to fund or maintain any Purchases or Capital
Investment at the LIBOR Rate, then, unless the Committed Purchaser is able to make or to continue to fund or to maintain such Purchases or Capital Investment at another branch or office of the
Committed Purchaser without, in the Committed Purchaser's opinion, adversely affecting it or its Capital Investment or the income obtained therefrom, the LIBOR Rate shall in all such cases be equal to
the Index Rate. 

        If
such interest rates shall cease to be available from Telerate News Service, the LIBOR Rate shall be determined from such financial reporting service or other information as shall be
mutually acceptable to the Administrative Agent and the Seller. 

        "Lien" shall mean any mortgage or deed of trust, pledge, hypothecation, assignment, deposit arrangement, lien, charge, claim, security
interest, easement or encumbrance, or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including any lease or title retention agreement,
any financing lease having substantially the same economic effect as any of the foregoing, and the filing of, or agreement to give, any financing statement perfecting a security interest under the UCC
or comparable law of any jurisdiction). 

        "Liquidity Agent" shall mean GE Capital, in its capacity as agent for the Liquidity Lenders pursuant to the LAPA. 

16

 

        "Liquidity Lender Expiry Date" shall mean the earlier of (a) March 26, 2003, as such date will be automatically each
364-day period so long as no Termination Event has occurred and is continuing, or as otherwise may be extended in accordance with the LAPA and (b) the Final Purchase Date. 

        "Liquidity Lenders" shall mean, collectively, GE Capital and any other provider of Liquidity Loans under the LAPA. 

        "Liquidity Loans" shall mean any and all borrowings by Redwood under the LAPA. 

        "Litigation" shall mean, with respect to any Person, any action, claim, lawsuit, demand, investigation or proceeding pending or threatened
against such Person before any court, board, commission, agency or instrumentality of any federal, state, local or foreign government or of any agency or subdivision thereof or before any arbitrator
or panel of arbitrators. 

        "Lockbox" shall have the meaning assigned to it in Section 6.01(a)(ii) of the
Purchase Agreement. 

        "Lockbox Account" shall mean each lockbox account listed on Exhibit 4.01(r) to the
Purchase Agreement established in the name of the Seller and held at a Lockbox Account Bank, together with any other segregated deposit account established by the Seller for the deposit of Collections
pursuant to and in accordance with Section 6.01(a) of the Purchase Agreement. 

        "Lockbox Account Agreement" shall mean any agreement among an Originator, the Seller, Administrative Agent and a Lockbox Account Bank with
respect to a Lockbox and Lockbox Account that provides, among other things, that (a) all items of payment deposited in such Lockbox and Lockbox Account are held by such Lockbox Account Bank as
custodian for the Administrative Agent, (b) no Lockbox Account Bank has any rights of setoff or recoupment or any other claim against such Lockbox Account other than for payment of its service
fees and other charges directly related to the administration of such Account and for returned checks or other items of payment and (c) such Lockbox Account Bank agrees to forward all
Collections received in such Lockbox Account to the Collection Account within one Business Day of receipt of available funds, and is otherwise in form and substance acceptable to the Administrative
Agent. 

        "Lockbox Account Bank" shall mean any bank or other financial institution at which one or more Lockbox Accounts are maintained. 

        "Loss Reserve Ratio" shall mean, as of any date of determination, the ratio (expressed as a percentage) calculated in accordance with the
following formula: 

	2 × ARR ×	 	DEFHOR
 NRPB

	 	where:	 	 
	 	

ARR =	
 	

the highest Three Month Aged Receivables Ratio during the 12 Settlement Periods immediately preceding such date.
	 	

DEFHOR =	
 	

the aggregate Billed Amount of Transferred Receivables originated during the WAH.
	 	

NRPB =	
 	

the Outstanding Balance of Transferred Receivables as of the last day of the first Settlement Period immediately preceding such date.
	 	

WAH =	
 	

(i) the weighted average maturity of Transferred Receivables due within the previous 180 days plus (ii) 90.

        "Margin" shall mean, for any day, the product of (i) the Capital Investment and (ii) the sum of the Daily Margin plus Daily
Default Margin, if any, for such day. 

17

 

        "Master Servicer" shall mean the Parent in its capacity as Master Servicer under the Purchase Agreement, or any other Person designated as
a Successor Servicer to the Master Servicer. 

        "Material Adverse Effect" shall mean a material adverse effect on (a) the business, assets, liabilities, operations, prospects or
financial or other condition of (i) Parent Guarantor or any Originator, or Parent Guarantor and Originators and Seller considered as a whole, (ii) the Seller or (iii) any Servicer
and its Subsidiaries considered as a whole, (b) the ability of Parent Guarantor, any Originator, the Seller or any Servicer to perform any of its obligations under the Related Documents in
accordance with the terms thereof, (c) the validity or enforceability of any Related Document or the rights and remedies of the Seller, the Purchasers, the Administrative Agent or the
Collateral Agent under any Related Document, (d) the federal income tax attributes of the sale, contribution or pledge of the Receivables pursuant to any Related Document or (e) the
Transferred Receivables, the Contracts therefor, the Originator Collateral, the Seller Collateral or the ownership interests or Liens of the Seller or the Purchasers or the Administrative Agent
thereon or the priority of such interests or Liens. 

        "Maturity Date" shall mean, with respect to any Receivable, the due date for payment therefor specified in the Contract therefor, or, if
no date is so specified, 30 days from the Billing Date. 

        "Maximum Purchase Limit" shall mean $75,000,000, as such amount may be reduced in accordance with  Section 2.02(a) of the Purchase Agreement. 

        "Monthly Report" shall have the meaning assigned to it in paragraph (a) of  Annex 5.02(a) to the Purchase
Agreement. 

        "Moody's" shall mean Moody's Investors Service, Inc. or any successor thereto. 

        "Multiemployer Plan" shall mean a "multiemployer plan" as defined in Section 4001(a)(3) of ERISA with respect to which Parent
Guarantor, any Originator or ERISA Affiliate is making, is obligated to make, or has made or been obligated to make, contributions on behalf of participants who are or were employed by any of them. 

        "Net Worth Percentage" shall mean a fraction (expressed as a percentage) (a) the numerator of which equals the excess of assets
over liabilities, in each case determined in accordance with GAAP consistently applied and (b) the denominator of which equals the Outstanding Balance of Transferred Receivables. 

        "1992 Note Agreement" shall mean that certain Note Agreement dated as of October 15, 1992, for $40,000,000 8.39% Senior Notes due
November 30, 2004, as amended by that certain First Amendment
dated as of May 1, 1996, and that certain Second Amendment dated as of December 1, 1999, and that certain Third Amendment to Note Purchase Agreement dated as of
[                        ], without giving effect to any amendments, restatements, supplements or modifications thereto or any
refinancings, replacements or refundings thereof unless
agreed to in writing by the Purchasers and the Administrative Agent. 

        "1999 Note Agreement" shall mean that certain Note Purchase Agreement dated as of December 1, 1999, for $50,000,000 8.41%
Series 1999-A Senior Notes due December 1, 2009, as amended by that certain K2 Inc. Fourth Amendment to Note Agreements, dated as of
[                        ], without giving effect to any amendments, restatements, supplements or modifications thereto or any
refinancings, replacements or refundings thereof unless
agreed to in writing by the Purchasers and the Administrative Agent. 

        "Note Agreements" shall mean the 1992 Note Agreement and the 1999 Note Agreement. 

        "Obligor" shall mean, with respect to any Receivable, the Person primarily obligated to make payments in respect thereof. 

18

 

        "Officer's Certificate" shall mean, with respect to any Person, a certificate signed by an Authorized Officer of such Person. 

        "Operating Agent" shall mean GE Capital, in its capacity as operating agent for the Conduit Purchaser under the Administrative Services
Agreement. 

        "Originator" shall have the meaning assigned to it in the preamble of the Sale and Contribution Agreement. 

        "Originator Collateral" shall have the meaning assigned to it in Section 7.01 of the Sale and Contribution Agreement. 

        "Originator Guaranty" shall mean an Originator Guaranty dated as of the Closing Date, executed by an Originator in favor of Buyer,
Purchasers and Administrative Agent, substantially in the form and substance attached as Exhibit B to the Sale and Contribution Agreement. 

        "Other Funding Agreements" shall mean any agreements entered into from time to time by the Purchaser for the purchase or financing of
receivables. 

        "Outstanding Balance" shall mean, with respect to any Receivable and as of any date of determination, the amount (which amount shall not
be less than zero) equal to (a) the Billed Amount thereof, minus (b) all Collections received from the Obligor thereunder,  minus (c) all
discounts to or any other modifications that reduce such Billed Amount. 

        "Parent" shall mean K2 Inc., a Delaware corporation. 

        "Parent Group" shall mean the Parent and each of its Affiliates other than the Seller. 

        "Parent Guarantor" shall have the meaning assigned to it in the preamble of the Sale and Contribution Agreement. 

        "Parent Guaranty" shall mean that certain Parent Guaranty dated as of the Closing Date, by Parent Guarantor in favor of Buyer, Purchasers
and Administrative Agent, substantially in the form and substance attached as Exhibit A to the Sale and Contribution Agreement. 

        "Parent Revolver" shall mean that certain Credit Agreement dated as of December 21, 1999, among Parent, Bank of America, N.A. as
administrative agent, swing line lender and letter of credit issuing lender, and the other financial institutions party thereto, as amended by that certain First Amendment to Credit Agreement, dated
as of [                        ], in form and substance attached as Annex Z to
the Sale and Contribution Agreement, without giving
effect to any amendments, restatements, supplements or modifications thereto or any refinancings, replacements or refundings thereof unless agreed to in writing by the Purchasers and the
Administrative Agent. 

        "PBGC" shall mean the Pension Benefit Guaranty Corporation. 

        "Pension Plan" shall mean a Plan described in Section 3(2) of ERISA. 

        "Per Annum Daily Margin" shall mean (a) with respect to Capital Investment made by the Conduit Purchaser, the "Per Annum Daily
Margin" as defined in the Fee Letter, and (b) with respect to Capital Investment made by the Committed Purchaser, the "Applicable Margin" over "LIBOR" each as defined in and as in effect under
the terms of the Parent Revolver. 

        "Permitted Investments" shall mean any of the following: 

        (a)  obligations
of, or guaranteed as to the full and timely payment of principal and interest by, the federal government of the United States or obligations of any agency or
instrumentality thereof if such obligations are backed by the full faith and credit of the federal government of the United States, in each case with maturities of not more than 90 days from
the date acquired; 

19

 

        (b)  repurchase
agreements on obligations of the type specified in clause (a) of this definition;  provided, that the short-term debt obligations of the party agreeing
to repurchase are rated at least A-1+ or the equivalent by
S&P and P-1 or the equivalent by Moody's; 

        (c)  federal
funds, certificates of deposit, time deposits and bankers' acceptances of any depository institution or trust company incorporated under the federal laws of the
United States or any state, in each case with original maturities of not more than 90 days or, in the case of bankers' acceptances, original maturities of not more than 365 days;  provided,
that the short-term obligations of such depository institution or trust company are rated at least A-1+ or the
equivalent by S&P and P-1 or the equivalent by Moody's; 

        (d)  commercial
paper of any corporation incorporated under the laws of the United States of America or any state thereof with original maturities of not more than
30 days that on the date of acquisition are rated at least A-1+ or the equivalent by S&P and P-1 or the equivalent by Moody's; 

        (e)  securities
of money market funds rated at least Aam or the equivalent by S&P and P-1 or the equivalent by Moody's; and 

        (f)    such
other investments with respect to which each Rating Agency shall have confirmed in writing to the Purchaser and Collateral Agent that such investments shall not
result in a withdrawal or reduction of the then current rating by such Rating Agency of the Commercial Paper. 

        "Permitted Originator Encumbrances" shall mean the following encumbrances: (a) Liens for taxes or assessments or other governmental
charges not yet due and payable (other than with respect to environmental matters); (b) pledges or deposits securing obligations under workmen's compensation, unemployment insurance, social
security or public liability laws or similar legislation (excluding Liens under ERISA); (c) pledges or deposits securing bids, tenders, contracts (other than contracts for the
payment of money) or leases to which any Originator, the Seller or any Servicer is a party as lessee made in the ordinary course of business; (d) deposits securing statutory obligations of any
Originator, the Seller or any Servicer; (e) inchoate and unperfected workers', mechanics', suppliers' or similar Liens arising in the ordinary course of business; (f) carriers',
warehousemen's or other similar possessory Liens with respect the Originator Collateral arising in the ordinary course of business and securing liabilities in an outstanding aggregate amount not in
excess of $1,000,000 at any one time; (g) deposits securing, or in lieu of, surety, appeal or customs bonds in proceedings to which any Originator, the Seller or any Servicer is a party;
(h) any attachment or judgment Lien not constituting a Termination Event under Section 9.01(f) of the Purchase Agreement; (i) Liens
existing on the Closing Date and listed on Schedule 4.03(b) of the Sale and Contribution Agreement or  Schedule 5.03(b) of the Purchase Agreement;
(j) Liens expressly permitted under  Section 4.03(b) of the Sale and Contribution Agreement (except that such Liens shall not be deemed "Permitted Originator Encumbrances" until such
Liens have satisfied the criteria set forth in such section), and (k) presently existing or hereinafter created Liens in favor of the Buyer, the Seller, the Purchasers, the Administrative Agent
or the Collateral Agent. 

        "Permitted Seller Encumbrances" shall mean the following encumbrances: (a) Liens for taxes or assessments or other governmental
charges not yet due and payable (other than with respect to environmental matters); (b) deposits securing statutory obligations of the Seller; and (c) presently existing or hereinafter
created Liens in favor of the Purchasers, the Administrative Agent or the Collateral Agent. 

        "Person" shall mean any individual, sole proprietorship, partnership, joint venture, unincorporated organization, trust, association,
corporation (including a business trust), limited liability company, 

20

 

institution, public benefit corporation, joint stock company, Governmental Authority or any other entity of whatever nature. 

        "Plan" shall mean, at any time, an "employee benefit plan," as defined in Section 3(3) of ERISA, that Parent Guarantor, any
Originator or ERISA Affiliate maintains, contributes to or has an obligation to contribute to on behalf of participants who are or were employed by Parent Guarantor, any Originator or ERISA Affiliate. 

        "Program Documents" shall mean the Letter of Credit Agreement, the LAPA, the Collateral Agent Agreement, the Depositary Agreement, the
Commercial Paper, the Administrative Services Agreement, each Accession Agreement and the Dealer Agreements. 

        "Purchase" shall have the meaning assigned to it in Section 2.01 of the Purchase
Agreement. 

        "Purchase Agreement" shall mean that certain Receivables Purchase and Servicing Agreement dated as of March 28, 2002, among the
Seller, the Conduit Purchaser, the Committed Purchaser, the Servicers and the Administrative Agent. 

        "Purchase Assignment" shall mean that certain Purchase Assignment dated as of the Closing Date by and between the Seller and the
Applicable Purchaser in the form attached as Exhibit 2.04(a) to the Purchase Agreement. 

        "Purchase Date" shall mean each day on which a Purchase is made. 

        "Purchase Discount Rate" shall mean, as of any date of determination, a rate equal to the lesser of (a) the Dynamic Purchase
Discount Rate and (b) the Purchase Discount Rate Cap. 

        "Purchase Discount Rate Cap" shall mean, as of any date of determination, the amount set forth in the table below opposite the applicable
Purchase Rate Ratio: 

	Purchase Rate Ratio
	 	Purchase Discount Rate Cap
	 
	Greater than or equal to 1.25x	 	80.0	%
	Greater than or equal to 1.00x	 	75.0	%
	Greater than or equal to 0.75x	 	70.0	%
	Less than 0.75x	 	65.0	%

        "Purchase Excess" shall mean, as of any date of determination, the extent to which the Capital Investment exceeds the Availability, in
each case as disclosed in the most recently submitted Investment Base Certificate or as otherwise determined by the Applicable Purchaser or the Administrative Agent based on Seller Collateral
information available to any of them, including any information obtained from any audit or from any other reports with respect to the Seller Collateral, which determination shall be final, binding and
conclusive on all parties to the Purchase Agreement (absent manifest error). 

        "Purchase Rate Ratio" shall mean, for Parent Guarantor for any twelve-month period, the ratio of: 

        (a)  (i) EBITDA
as of the end of such period minus (ii) "Capital Expenditures" (as defined in  Annex 4.03(l) to the Sale and Contribution Agreement) incurred
during such period minus
(iii) cash taxes paid during such period plus (without duplication) (iv) for any twelve-month period prior to or including June 30,
2002, $18,000,000 of restructuring charges 

        to

        (b)  (i) scheduled
principal payments by Parent Guarantor and its Subsidiaries on any Debt (including the principal component of payments with respect to Capital
Leases) during such period plus (ii) Interest Expense of Parent Guarantor and its Subsidiaries (including Daily Yield paid under the Purchase
Agreement) accrued during such period plus (iii) any dividends or distributions to Parent Guarantor or any Affiliate made during such period. 

21

   
        "Purchaser Interest" shall mean the undivided percentage ownership interest of the Purchasers in the Transferred Receivables which are
purchased under the Purchase Agreement. The Purchaser Interest of the Purchasers shall be expressed as a fraction of the total Transferred Receivables computed as follows: 

	PI	 	=	 	C + DR
 IB × PDR

        where:

	 	PI =	 	the Purchaser Interest at the time of determination;
	 	

C =	
 	

the aggregate Capital Investment at such time;
	 	

DR =	
 	

the Discount and Servicer Fee Reserve;
	 	

IB =	
 	

the Investment Base at such time; and
	 	

PDR =	
 	

the Purchase Discount Rate at such time.

The
Purchaser Interest shall be calculated (or deemed to be calculated) on each Business Day from the Closing Date through the Facility Termination Date; from and after the Facility Termination Date,
the Purchaser Interest of the Purchasers shall be 100% until the Termination Date, at which time the Purchaser Interest shall equal zero. 

        "Purchasers" shall mean the Conduit Purchaser and the Committed Purchaser 

        "Qualified Plan" shall mean a Pension Plan that is intended to be tax-qualified under Section 401(a) of the IRC. 

        "Rating Agency" shall mean Moody's and S&P. 

        "Rating Agency Condition" shall mean, with respect to any action, that each Rating Agency has notified the Conduit Purchaser and the
Administrative Agent in writing that such action will not result in a reduction or withdrawal of the rating of any outstanding Commercial Paper. 

        "Ratios" shall mean, collectively, the Default Ratio, the Delinquency Ratio, the Dilution Ratio, the Dilution Reserve Ratio, the Dilution
Trigger Ratio, the Loss Reserve Ratio, the Purchase Rate Ratio, the Receivables Collection Turnover, the Three Month Aged Receivables Ratio and the Two Month Rolling Ratio. 

        "Receivable" shall mean, with respect to any Obligor: 

        (a)  indebtedness
of such Obligor (whether constituting an account, chattel paper, document, instrument or general intangible) arising from the provision of merchandise,
goods or services to such Obligor, including the right to payment of any interest or finance charges and other obligations of such Obligor with respect thereto; 

        (b)  all
Liens and property subject thereto from time to time securing or purporting to secure any such indebtedness of such Obligor; 

22

 

        (c)  all
guaranties, indemnities and warranties, insurance policies, financing statements and other agreements or arrangements of whatever character from time to time
supporting or securing payment of any such indebtedness; 

        (d)  all
Collections with respect to any of the foregoing; 

        (e)  all
Records with respect to any of the foregoing; and 

        (f)    all
proceeds (including returned goods) (whether constituting accounts, chattel paper, inventory, goods, documents, instruments or general intangibles) with respect to
the foregoing; 

provided, however, the defined term "Receivables" shall exclude Receivables for which the Obligor is Gershwitz. 

        "Receivables Assignment" and "Receivables Assignments" shall have the meaning assigned to
it in Section 2.01(a) of the Sale and Contribution Agreement. 

        "Receivables Collection Turnover" shall mean, as of any date of determination, the amount (expressed in days) equal to: 

        (a)  a
fraction, (i) the numerator of which is equal to the aggregate Outstanding Balances of Transferred Receivables on the first day of the twelve Settlement Periods
immediately preceding such date and (ii) the denominator of which is equal to aggregate Collections received during such twelve Settlement Periods with respect to all Transferred Receivables, 

        multiplied by

        (b)  the
average number of days contained in each such twelve Settlement Periods. 

        "Records" shall mean all Contracts and other documents, books, records and other information (including tapes, disks and related property
and rights) prepared and maintained by any Originator, any Servicer, any Sub-Servicer or the Seller with respect to the Receivables and the Obligors thereunder, the Originator Collateral
and the Seller Collateral. 

        "Redwood" shall mean Redwood Receivables Corporation, a Delaware corporation. 

        "Redwood Daily Yield" shall mean, for any day, the product of (a) the Redwood Daily Yield Rate for such day,  multiplied by (b) Redwood's Capital Investment
outstanding on such day. 

        "Redwood Daily Yield Rate" shall mean, on any day, a floating per annum rate equal to the sum of (a) the Daily Margin on such day,  plus (b) if a Termination
Event has occurred and is continuing, the Daily Default Margin, plus
(c)(i) to the extent the Conduit Purchaser's Purchases hereunder are being funded by the sale of Commercial Paper, (A) the per annum rate equivalent to the weighted average of the rates
paid or payable by the Conduit Purchaser from time to time as interest on or otherwise (by means of interest rate hedges or otherwise) in respect of Commercial Paper that is allocated, in whole or in
part, to fund or maintain the Conduit Purchaser's Capital Investment during the relevant Settlement Period, which rates shall reflect and give effect to Dealer fees, commissions of placement agents
and other issuance costs in respect of such Commercial Paper, divided by (B) 360 days; provided,
however, that if any component of such rate is a discount rate the rate used shall be the rate resulting from converting such discount rate to an interest bearing equivalent
rate per annum and (ii) to the extent the Conduit Purchaser's Purchases hereunder are not being financed by the sale of Commercial Paper, the daily rate to the Conduit Purchaser of borrowing
such funds under the LAPA. 

        "Redwood Termination Date" shall mean the date elected by Redwood or the Collateral Agent (which election shall be mandatory and immediate
upon the occurrence of an event set forth in clause (c) below), by notice to the Seller and the Administrative Agent as the Redwood Termination Date;  provided, that on such date, one or more of the
following events shall have occurred and be continuing: (a) a Seller LOC Draw; (b) the
obligations of the Liquidity Lenders to make Liquidity 

23

 

Loans shall have terminated and such Liquidity Lenders shall not have otherwise been replaced or the Liquidity Lender Expiry Date shall have occurred; (c) an event of default under the
Collateral Agent Agreement or any other Program Document shall have occurred; (d) the short-term debt rating of a Liquidity Lender shall have been downgraded by a Rating Agency and
such Liquidity Lender shall not have been replaced in accordance with the terms of the LAPA within 30 days thereafter; (e) Redwood or the Collateral Agent shall have determined that the
funding of Transferred Receivables under the Purchase Agreement is impracticable for any reason whatsoever, including as a result of (i) a drop in or withdrawal of any of the ratings assigned
to the Commercial Paper by any Rating Agency, (ii) the imposition of Additional Amounts, (iii) restrictions on the amount of Transferred Receivables Redwood may finance or
(iv) the inability of Redwood to issue Commercial Paper; (f) any change in accounting standards shall occur or any pronouncement or release of any accounting or regulatory body
(including FASB, AICPA or the Securities and Exchange Commission) shall be issued, or any other change in the interpretation of accounting standards shall occur, such that all or any portion of the
Conduit Purchaser's assets and liabilities are deemed to be consolidated with the assets and liabilities of GE Capital or any of its affiliates; (g) a Termination Event shall have occurred and
be continuing; or (h) the outstanding loans to the Conduit Purchaser under the LAPA equal or exceed the Conduit Purchaser's Capital Investment at such time and no interest or other amounts are
owed to the Conduit Purchaser under the Purchase Agreement or the other Related Documents. 

        "Redwood Transfer Date" means the date on which the Conduit Purchaser transfers to the Liquidity Lenders all of the Conduit Purchaser's
right, title and interest in and to its Purchaser Interest in the Transferred Receivables, which transfer may be made at any time when any of the following has occurred: (i) a Termination Event
is continuing, (ii) the Redwood Termination Date or (iii) both (a) the outstanding loans made to the Conduit Purchaser pursuant to the LAPA equal or exceed the Conduit Purchaser's
Capital Investment at such time and (b) no other amounts are owed to the Conduit Purchaser under the Purchase Agreement. 

        "Regulatory Change" shall mean any change after the Closing Date in any federal, state or foreign law or regulation (including
Regulation D of the Federal Reserve Board) or the adoption or making after such date of any interpretation, directive or request under any federal, state or foreign law or regulation (whether
or not having the force of law) by any Governmental Authority charged with the interpretation or administration thereof that, in each case, is applicable to any Affected Party. 

        "Reinvestment Purchase" shall have the meaning assigned to it in Section 2.01 of
the Purchase Agreement. 

        "Rejected Amount" shall have the meaning assigned to it in Section 4.04 of Sale and
Contribution Agreement. 

        "Related Documents" shall mean each Lockbox Account Agreement, the Fee Letter, the Side Letter, the Sale and Contribution Agreement, the
Purchase Agreement, each Receivables Assignment, the Purchase Assignment, the Parent Guaranty, each Originator Guaranty, and all other agreements, instruments, documents and certificates identified in
the Schedule of Documents and including all other pledges, powers of attorney, consents, assignments, contracts, notices, and all other written matter whether heretofore, now or hereafter executed by
or on behalf of any Person, or any employee of any Person, and delivered in connection with the Sale and Contribution Agreement, the Purchase Agreement or the transactions contemplated thereby. Any
reference in the Sale and Contribution Agreement, the Purchase Agreement or any other Related Document to a Related Document shall include all Appendices thereto, and all amendments, restatements,
supplements or other modifications thereto, and shall refer to such Related Document as the same may be in effect at any and all times such reference becomes operative. 

        "Repayment Notice" shall have the meaning assigned to it in Section 2.03(c) of the
Purchase Agreement. 

24

 

        "Reportable Event" shall mean any of the events set forth in Section 4043(b) of ERISA. 

        "Reserves" shall mean (a) the aggregate Concentration Discount Amount for all Obligors of Transferred Receivables, (b) the
Extended Terms Reserve Amount, (c) the Canadian Obligor Reserve Amount and (d) such other reserves as the Administrative Agent may establish from time to time in its reasonable good
faith credit judgment following a detailed analysis of the Receivables (or upon receipt of additional information with respect thereto); provided, that, so long as no Termination Event has occurred
and is continuing, the Administrative Agent shall give advance written notice to the Seller in respect of such new reserves. 

        "Retained Monthly Yield" shall mean, as of any date of determination within a Settlement Period, the sum of all amounts transferred to or
retained in the Retention Account with respect to Daily Yield from and including the first day of such Settlement Period through and including such date pursuant to  Sections 6.03(a)(ii)(A) and
(B) of the Purchase Agreement. 

        "Retained Servicing Fee" shall mean, as of any date of determination within a Settlement Period, the sum of all amounts transferred to or
retained in the Retention Account with respect to the Servicing Fee from and including the first day of such Settlement Period through and including such date pursuant to  Sections 6.03(a)(ii)(C)
and (D) of the Purchase Agreement. 

        "Retained Unused Commitment Fee" shall mean, as of any date of determination within a Settlement Period, the sum of all amounts
transferred to or retained in the Retention Account with respect to the Unused Commitment Fee from and including the first day of such Settlement Period through and including such date in accordance
with Sections 6.03(a)(ii)(E) and (F) of the Purchase Agreement. 

        "Retention Account" shall mean, (i) with respect to the Conduit Purchaser, that certain segregated deposit account established by
the Administrative Agent and maintained with the Depositary designated as the "GE Capital/Redwood Receivables Corporation—Retention Account (K2)," account number
00-386-310, ABA No. 021001033, Attn: Retention Account #33488, and (ii) with respect to the Committed Purchaser, such other segregated deposit account as may be
established by the Administrative Agent for the Committed Purchaser. 

        "Retention Account Deficiency" shall mean, as of any Settlement Date, (A) prior to the occurrence of a Committed Purchaser Funding
Event, the amount, if any, by which (1) the amounts necessary to make the payments required under Sections 6.04(a)(i), (ii) and  (iii) of the
Purchase Agreement exceeds (2) the amounts on deposit in the Retention Account or (B) after the occurrence of a Committed
Purchaser Funding Event, the amount, if any, by which (1) the amounts necessary to make the payments required under Sections 6.04(a)(i),
(ii) and (iii) of the Purchase Agreement exceeds (2) the amounts actually disbursed to the Administrative Agent pursuant
to Sections 6.04(a)(i), (ii) and (iii) of the Purchase Agreement. 

        "Retiree Welfare Plan" shall mean, at any time, a Welfare Plan that provides for continuing coverage or benefits for any participant or
any beneficiary of a participant after such participant's termination of employment, other than continuation coverage provided pursuant to Section 4980B of the IRC and at the sole expense of
the participant or the beneficiary of the participant. 

        "Revolving Period" shall mean the period from and including the Closing Date through and including the day immediately preceding the
Facility Termination Date. 

        "S&P" shall mean Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc., or any
successor thereto. 

        "Sale" shall mean a sale of Receivables by an Originator to the Seller in accordance with the terms of the Sale and Contribution
Agreement. 

25

 

        "Sale and Contribution Agreement" shall mean that certain Receivables Sale and Contribution Agreement dated as of March 28, 2002,
between Parent Guarantor, the Originators and the Seller as the Buyer thereunder. 

        "Sale Price" shall mean, with respect to any Sale of Sold Receivables, the price calculated by the Seller and approved from time to time
by the Administrative Agent equal to: 

        (a)  the
Outstanding Balance of such Sold Receivables, minus

        (b)  the
costs expected to be incurred by the Seller in financing the purchase of such Sold Receivables until the Outstanding Balance of such Sold Receivables is paid in
full, minus

        (c)  the
portion of such Sold Receivables that are reasonably expected by such Originator to be reduced by means other than the receipt of Collections thereon,  minus

        (d)  amounts
expected to be paid to the Servicers with respect to the servicing, administration and collection of such Sold Receivables; 

provided, that such calculations shall be determined based on the historical experience of (y) such Originator, with respect to the calculations
required in each of clause (c) above, and (z) the Seller, with respect to the calculations required in  clauses (b) and (d) above. 

        "Satisfactory Intercreditor Agreement" shall mean an intercreditor agreement in form and substance satisfactory to Buyer, Administrative
Agent and Purchasers among (a) each Person holding Debt secured by property of any Originator, or such Person's agent, (b) Parent Guarantor and such Originator, (c) Seller and
(d) Administrative Agent and the Purchasers. 

        "Schedule of Documents" shall mean the schedule, including all appendices, exhibits or schedules thereto, listing certain documents and
information to be delivered in connection with the Sale and Contribution Agreement, the Purchase Agreement and the other Related Documents and the transactions contemplated thereunder, substantially
in the form attached as Annex Y to the Purchase Agreement and the Sale and Contribution Agreement. 

        "Securities Act" shall mean the provisions of the Securities Act of 1933, 15 U.S.C. Sections 77a et
seq., and any regulations promulgated thereunder. 

        "Securities Exchange Act" shall mean the provisions of the Securities Exchange Act of 1934, 15 U.S.C. Sections 78a  et seq., and any regulations promulgated
thereunder. 

        "Seller" shall have the meaning assigned to it in the preamble of the Purchase Agreement. 

        "Seller Account" shall mean a deposit account maintained in the name of the Seller at a commercial bank in the United States of America,
as designated by the Seller from time to time. 

        "Seller Assigned Agreements" shall have the meaning assigned to it in  Section 8.01(b) of the Purchase Agreement. 

        "Seller Collateral" shall have the meaning assigned to it in Section 8.01 of the
Purchase Agreement. 

        "Seller Account Collateral" shall have the meaning assigned to it in  Section 8.01(c) of the Purchase Agreement. 

        "Seller LOC Draws" shall mean any payments made to the Purchaser in connection with the Letter of Credit and allocated to the Seller. 

        "Seller Secured Obligations" shall mean all loans, advances, debts, liabilities, indemnities and obligations for the performance of
covenants, tasks or duties or for payment of monetary amounts (whether or not such performance is then required or contingent, or such amounts are liquidated or determinable) owing by the Seller to
any Affected Party under the Purchase Agreement and any 

26

 

document or instrument delivered pursuant thereto, and all amendments, extensions or renewals thereof, and all covenants and duties regarding such amounts, of any kind or nature, present or future,
whether or not evidenced by any note, agreement or other instrument, arising thereunder, including Capital Investment, Daily Yield, Yield Shortfall, Unused Commitment Fees, Unused Commitment Fee
Shortfall, Margin, amounts in reduction of Purchase Excess, Successor Servicing Fees and Expenses, Additional Amounts and Indemnified Amounts. This term includes all principal, interest (including all
interest that accrues after the commencement of any case or proceeding by or against the Seller in bankruptcy, whether or not allowed in such case or proceeding), fees, charges, expenses, attorneys'
fees and any other sum chargeable to the Seller thereunder, whether now existing or hereafter arising, voluntary or involuntary, whether or not jointly owed with others, direct or indirect, absolute
or contingent, liquidated or unliquidated, and whether or not from time to time decreased or extinguished and later increased, created or incurred, and all or any portion of such obligations that are
paid to the extent all or any portion of such payment is avoided or recovered directly or indirectly from any Purchaser or the Administrative Agent or any transferee of the Purchaser or the
Administrative Agent as a preference, fraudulent transfer or otherwise. 

        "Seller's Share" shall mean the ratio of (a) the Maximum Purchase Limit under the Purchase Agreement  to (b) the aggregate maximum purchase limits or
commitments under the Purchase Agreement and all Other Funding Agreements. 

        "Servicer" shall mean any of the Originators in their capacity as Servicer under the Purchase Agreement and the Parent, in its capacity as
Master Servicer under the Purchase Agreement, or any other Person designated as a Successor Servicer. 

        "Servicer's Certificate" shall mean an Officer's Certificate substantially in the form of  Exhibit 3.01(a)(iii) to the Purchase Agreement. 

        "Servicer Termination Notice" shall mean any notice by the Administrative Agent to any Servicer that (a) an Event of Servicer
Termination has occurred and (b) such Servicer's appointment under the Purchase Agreement has been terminated. 

        "Servicing Fee" shall mean, for any day within a Settlement Period, the amount equal to (a) (i) the Servicing Fee Rate  divided by (ii) 360, multiplied by (b) the Outstanding Balance of Receivables on such day. 

        "Servicing Fee Rate" shall mean 1.00%. 

        "Servicing Fee Shortfall" shall mean, as of any date of determination within a Settlement Period, the amount, if any, by which the Accrued
Servicing Fee exceeds the Retained Servicing Fee, in each case as of such date. 

        "Servicing Officer" shall mean any officer of any Servicer involved in, or responsible for, the administration and servicing of the
Transferred Receivables and whose name appears on any Officer's Certificate listing servicing officers furnished to the Administrative Agent by such Servicer, as such certificate may be amended from
time to time. 

        "Servicing Records" shall mean all documents, books, Records and other information (including Servicing Software, computer programs,
tapes, disks, data processing software and related property and rights) prepared and maintained by the Servicers with respect to the Transferred Receivables and the Obligors thereunder. 

        "Servicing Software" shall mean the data processing software used by the Originators, Servicers and/or Seller for the purpose of
servicing, monitoring, and retaining data regarding the Transferred Receivables and the Obligors thereunder. 

        "Settlement Date" shall mean the tenth Business Day following the end of each Settlement Period. 

27

 

        "Settlement Period" shall mean (a) solely for purposes of determining the Ratios other than the Purchase Rate Ratio,
(i) with respect to all Settlement Periods other than the final Settlement Period, each calendar month, whether occurring before or after the Closing Date, and (ii) with respect to the
final Settlement Period, the period ending on the Termination Date and beginning with the first day of the calendar month in which the Termination Date occurs, and (b) for all other purposes,
(i) with respect to the initial Settlement Period, the period from and including the Closing Date through and including the last day of the calendar month in which the Closing Date occurs,
(ii) with respect to the final Settlement Period, the period ending on the Termination Date and beginning with the first day of the calendar month in which the Termination Date occurs, and
(iii) with respect to all other Settlement
Periods, each calendar month; provided, however, that upon the occurrence of the Committed Purchaser Funding Event, such Settlement Period shall
terminate on the day prior to the Committed Purchaser Funding Event, and the next Settlement Period shall be the period from and including the day of the Committed Purchaser Funding Event through and
including the last day of the calendar month in which the Committed Purchaser Funding Event occurs. 

        "Shakespeare" shall have the meaning assigned to it in the preamble of the Purchase Agreement. 

        "Side Letter" shall mean that certain letter agreement dated as of the Closing Date between the Credit Facility Agent and the
Administrative Agent relating to certain rights of access to the real property of the Parent Guarantor, the Originators and the Seller. 

        "Sold Receivable" shall have the meaning assigned to it in Section 2.01(b) of the
Sale and Contribution Agreement. 

        "Solvency Certificate" shall mean an Officer's Certificate substantially in the form of  Exhibit 3.01(a)(i) to the Purchase Agreement. 

        "Solvent" shall mean, with respect to any Person on a particular date, that on such date (a) the fair value of the property of such
Person is greater than the total amount of liabilities, including contingent liabilities, of such Person; (b) the present fair salable value of the assets of such Person is not less than the
amount that will be required to pay the probable liability of such Person on its Debts as they become absolute and matured; (c) such Person does not intend to, and does not believe that it
will, incur Debts or liabilities beyond such Person's ability to pay as such Debts and liabilities mature; (d) such Person is not engaged in a business or transaction, and is not about to
engage in a business or transaction, for which such Person's property would constitute an unreasonably small capital; and (e) such Person generally is not paying its Debts or liabilities as
such Debts or liabilities become due. The amount of contingent liabilities (such as Litigation, guaranties and pension plan liabilities) at any time shall be computed as the amount that, in light of
all the facts and circumstances existing at the time, represents the amount that can reasonably be expected to become an actual or matured liability. 

        "SPC" shall have the meaning assigned to it in Recital A to the Sale and
Contribution Agreement and in the preamble to the Purchase Agreement. 

        "Special Limit" means (a) for Wal-Mart Stores, Inc. and its Affiliates, 15.0%; provided, however, that such
Special Limit automatically shall be deemed revoked at the time, if any, when Wal-Mart Stores, Inc. and its Affiliates fail to have a short-term unsecured senior debt
rating of higher than "A-1" by S&P and "P-2" by Moody's, and (b) such other "Special Limits" as shall be agreed to in writing by the Administrative Agent for other
Obligors from time to time upon satisfaction of the Rating Agency Condition with respect thereto. 

        "Stearns" shall have the meaning assigned to it in the preamble of the Purchase Agreement. 

        "Stock" shall mean all shares, options, warrants, membership interests, general or limited partnership interests or other equivalents
(regardless of how designated) of or in a corporation, limited liability company, partnership or equivalent entity whether voting or nonvoting, including common 

28

 

stock, preferred stock or any other "equity security" (as such term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the Securities and Exchange
Commission under the Securities Exchange Act). 

        "Stockholder" shall mean, with respect to any Person, each holder of Stock of such Person. 

        "Sub-Servicer" shall mean any Person with whom any Servicer enters into a Sub-Servicing Agreement. 

        "Sub-Servicing Agreement" shall mean any written contract entered into between any Servicer and any Sub-Servicer
pursuant to and in accordance with Section 7.01 of the Purchase Agreement relating to the servicing, administration or collection of the
Transferred Receivables. 

        "Subsidiary" shall mean, with respect to any Person, any corporation or other entity (a) of which securities or other ownership
interests having ordinary voting power to elect a majority of the board of directors or other Persons performing similar functions are at the time directly or indirectly owned by such Person or
(b) that is directly or indirectly controlled by such Person within the meaning of control under Section 15 of the Securities Act. 

        "Successor Servicer" shall have the meaning assigned to it in Section 11.02 of the
Purchase Agreement. 

        "Successor Servicing Fees and Expenses" shall mean the fees and expenses payable to any Successor Servicer as agreed to by the Seller, the
Purchasers and the Administrative Agent. 

        "Swap Contract" shall mean (a) any and all rate swap transactions, basis swaps, forward rate transactions, commodity swaps,
commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index
transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-
currency rate swap transactions, currency options, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or
not such transaction is governed by or subject to any master agreement, or (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions
of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., or any other master agreement (any such master agreement, together with
any related schedules, as amended, restated, extended, supplemented or otherwise modified in writing from time to time, a "Master Agreement"), including
any such obligations or liabilities under any Master Agreement. 

        "Synthetic Lease Obligations" shall mean all monetary obligations 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 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 Debt of such Person (without regard to accounting treatment). 

        "Termination Date" shall mean the date on which (a) Capital Investment has been permanently reduced to zero, (b) all other
Seller Secured Obligations under the Purchase Agreement and the other Related Documents have been indefeasibly repaid in full and completely discharged and (c) the Maximum Purchase Limit has
been irrevocably terminated in accordance with the provisions of Section 2.02(b) of the Purchase Agreement. 

        "Termination Event" shall have the meaning assigned to it in Section 9.01 of the
Purchase Agreement. 

29

 

        "Three Month Aged Receivables Ratio" shall mean, as of any date of determination, the ratio (expressed as a percentage) of: 

        (a)  the
sum of the respective Outstanding Balances of Transferred Receivables (without giving effect to any credits other than Collections on or after March 1, 2002)
with respect to which any payment, or part thereof, remained unpaid for more than 90 but less than 121 days from their respective Billing Dates as of the last day of the three Settlement
Periods immediately preceding such date 

        to

        (b)  the
aggregate Billed Amount of Transferred Receivables originated during the eighth, ninth and tenth Settlement Periods immediately preceding such date. 

        "Title IV Plan" shall mean a Pension Plan (other than a Multiemployer Plan) that is covered by Title IV of ERISA and that Parent
Guarantor, any Originator or ERISA Affiliate maintains, contributes to or has an obligation to contribute to on behalf of participants who are or were employed by any of them. 

        "Transfer" shall mean any Sale or capital contribution of Transferred Receivables by any Originator to the Seller pursuant to the terms of
the Sale and Contribution Agreement. 

        "Transfer Date" shall have the meaning assigned to it in Section 2.01(a) of the
Sale and Contribution Agreement. 

        "Transferred Receivable" shall mean any Sold Receivable or Contributed Receivable;  provided, that any Receivable repurchased by the Originator thereof pursuant to
Section 4.04 of
the Sale and Contribution Agreement shall not be deemed to be a Transferred Receivable from and after the date of such repurchase unless such Receivable has subsequently been repurchased by or
contributed to the Seller. 

        "Two Month Rolling Dilution Ratio" shall mean, as of any date of determination, the ratio (expressed as a percentage) of: 

        (a)  the
aggregate Dilution Factors during the two Settlement Periods immediately preceding such date 

        to

        (b)  the
aggregate Billed Amount of Transferred Receivables originated during the fourth and fifth Settlement Periods immediately preceding such date. 

        "UCC" shall mean, with respect to any jurisdiction, the Uniform Commercial Code as the same may, from time to time, be enacted and in
effect in such jurisdiction. 

        "Unapproved Receivable" shall mean any receivable (a) with respect to which the obligor thereunder is not an Obligor on any
Transferred Receivable and whose customer relationship with an Originator arises as a result of the acquisition by such Originator of another Person or (b) that was originated in accordance
with standards established by another Person acquired by an Originator, in each case, solely with respect to any such acquisitions that have not been approved in writing by the Administrative
Agent and then only for the period prior to any such approval. Following completion by the Administrative Agent of an audit of such Unapproved Receivables with results satisfactory to the
Administrative Agent, such Receivables shall no longer be deemed "Unapproved Receivables". 

        "Underfunded Plan" shall mean any Plan that has an Underfunding. 

        "Underfunding" shall mean, with respect to any Plan, the excess, if any, of (a) the present value of all benefits under the Plan
(based on the assumptions used to fund the Plan pursuant to Section 412 of 

30

 

the IRC) as of the most recent valuation date over (b) the fair market value of the assets of such Plan as of such valuation date. 

        "United States" shall mean the United States of America (including the District of Columbia but otherwise excluding its territories and
possessions). 

        "Unfunded Pension Liability" shall mean, at any time, the aggregate amount, if any, of the sum of (a) the amount by which the
present value of all accrued benefits under each Title IV Plan exceeds the fair market value of all assets of such Title IV Plan allocable to such benefits in accordance with Title IV of ERISA, all
determined as of the most recent valuation date for each such Title IV Plan using the actuarial assumptions for funding purposes in effect under such Title IV Plan, and (b) for a period of five
years following a transaction that might reasonably be expected to be covered by Section 4069 of ERISA, the liabilities (whether or not accrued) that could be avoided by Parent Guarantor, any
Originator or any ERISA Affiliate as a result of such transaction. 

        "Unrelated Amounts" shall have the meaning assigned to it in Section 7.03(b) of the
Purchase Agreement. 

        "Unused Commitment Fee" shall have the meaning assigned to it in the Fee Letter. 

        "Unused Commitment Fee Shortfall" shall mean, as of any date of determination within a Settlement Period, the amount, if any, by which the
Accrued Unused Commitment Fee exceeds the Retained Unused Commitment Fee, in each case as of such date. 

        "Welfare Plan" shall mean a Plan described in Section 3(1) of ERISA. 

        "Yield Shortfall" shall mean, as of any date of determination within a Settlement Period, the amount, if any, by which the Accrued Monthly
Yield exceeds the Retained Monthly Yield, in each case as of such date. 

        SECTION
2.    Other Terms and Rules of Construction.    

        (a)    Accounting Terms.    Unless otherwise specifically provided therein, any accounting term used in any Related
Document shall have the meaning customarily given such term in accordance with GAAP, and all financial computations thereunder shall be computed in accordance with GAAP consistently applied. That
certain items or computations are explicitly modified by the phrase "in accordance with GAAP" shall in no way be construed to limit the foregoing. If any Accounting Changes occur and such changes
result in a change in the calculation of the financial covenants, standards or terms used in any Related Document, then the parties thereto agree to enter into negotiations in order to amend such
provisions so as to equitably reflect such Accounting Changes with the desired result that the criteria for evaluating the financial condition of such Persons and their Subsidiaries shall be the same
after such Accounting Changes as if such Accounting Changes had not been made. If the parties thereto agree upon the required amendments thereto, then after appropriate amendments have been executed
and the underlying Accounting Change with respect thereto has been implemented, any reference to GAAP contained therein shall, only to the extent of such Accounting Change, refer to GAAP consistently
applied after giving effect to the implementation of such Accounting Change. If such parties cannot agree upon the required amendments within 30 days following the date of implementation of any
Accounting Change, then all financial statements delivered and all calculations of financial covenants and other standards and terms in accordance with the Related Documents shall be prepared,
delivered and made without regard to the underlying Accounting Change. 

        (b)    Other Terms.    All other undefined terms contained in any of the Related Documents shall, unless the context
indicates otherwise, have the meanings provided for by the UCC as in effect in the State of New York from time to time to the extent the same are used or defined therein. 

31

 

        (c)    Rules of Construction.    Unless otherwise specified, references in any Related Document or any of the
Appendices thereto to a Section, subsection or clause refer to such Section, subsection or clause as contained in such Related Document. The words "herein," "hereof" and "hereunder" and other words of
similar import used in any Related Document refer to such Related Document as a whole, including all annexes, exhibits and schedules, as the same may from time to time be amended, restated, modified
or supplemented, and not to any particular section, subsection or clause contained in such Related Document or any such annex, exhibit or schedule. Any reference to or definition of any document,
instrument or agreement shall, unless expressly noted otherwise, include the same as amended, restated, supplemented or otherwise modified from time to time. Wherever from the context it appears
appropriate, each term stated in either the singular or plural shall include the singular and the plural, and pronouns stated in the masculine, feminine or neuter gender shall include the masculine,
feminine and neuter genders. The words "including," "includes" and "include" shall be deemed to be followed
by the words "without limitation"; the word "or" is not exclusive; references to Persons include their respective successors and assigns (to the extent and only to the extent permitted by the Related
Documents) or, in the case of Governmental Authorities, Persons succeeding to the relevant functions of such Persons; and all references to statutes and related regulations shall include any
amendments of the same and any successor statutes and regulations. 

        (d)    Rules of Construction for Determination of Ratios.    The Ratios as of the last day of the Settlement Period
immediately preceding the Closing Date shall be established by the Administrative Agent on or prior to the Closing Date and the underlying calculations for periods immediately preceding the Closing
Date to be used in future calculations of the Ratios shall be established by the Administrative Agent on or prior to the Closing Date in accordance with  Schedule 1 attached to this Annex X. For purposes of calculating the Ratios,
(i) averages shall be computed by rounding to the third decimal place and (ii) the Settlement Period in which the date of determination thereof occurs shall not be included in the
computation thereof and the first Settlement Period immediately preceding such date of determination shall be deemed to be the Settlement Period immediately preceding the Settlement Period in which
such date of determination occurs. 

32QuickLinks
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EXHIBIT 10(f)  

RECEIVABLES
SALE AND CONTRIBUTION AGREEMENT 

Dated
as of March 28, 2002 

by
and between 

K2 INC.

AS PARENT GUARANTOR, 

THE
ENTITIES PARTY HERETO

AS ORIGINATORS 

and 

K2
FINANCE COMPANY, LLC

AS BUYER 

   TABLE OF CONTENTS  

	 
	 	 
	 	Page

	ARTICLE I    DEFINITIONS AND INTERPRETATION	 	1
	 	

Section 1.01.	
 	

Definitions	
 	

1
	 	Section 1.02.	 	Rules of Construction	 	1
	

ARTICLE II    TRANSFERS OF RECEIVABLES	
 	

1
	 	

Section 2.01.	
 	

Agreement to Transfer	
 	

1
	 	Section 2.02.	 	Grant of Security Interest	 	2
	

ARTICLE III    CONDITIONS PRECEDENT	
 	

3
	 	

Section 3.01.	
 	

Conditions to Initial Transfer	
 	

3
	 	Section 3.02.	 	Conditions to all Transfers	 	4
	

ARTICLE IV    REPRESENTATIONS, WARRANTIES AND COVENANTS	
 	

4
	 	

Section 4.01.	
 	

Representations and Warranties of the Originators	
 	

4
	 	Section 4.02.	 	Affirmative Covenants of the Originators	 	10
	 	Section 4.03.	 	Negative Covenants of the Originators	 	15
	 	Section 4.04.	 	Breach of Representations, Warranties or Covenants	 	17
	

ARTICLE V    INDEMNIFICATION	
 	

17
	 	

Section 5.01.	
 	

Indemnification	
 	

17
	

ARTICLE VI    BUYER LOANS	
 	

19
	 	

Section 6.01.	
 	

Buyer Loans	
 	

19
	 	Section 6.02.	 	Notices Relating to Buyer Loans	 	 
	 	Section 6.03.	 	Disbursement of Loan Proceeds	 	 
	 	Section 6.04.	 	The Originator Note	 	 
	 	Section 6.05.	 	Principal Repayments	 	 
	 	Section 6.06.	 	Interest	 	 
	 	Section 6.07.	 	Receipt of Payments	 	 
	 	Section 6.08.	 	Separateness of Buyer Loans From Transfer of Receivables	 	 
	 	Section 6.09.	 	Dividends	 	 
	

ARTICLE VII    COLLATERAL SECURITY	
 	

19
	 	

Section 7.01.	
 	

Security Interest	
 	

19
	 	Section 7.02.	 	Other Collateral; Rights in Receivables	 	20

i

 

	

ARTICLE VIII    MISCELLANEOUS	
 	

20
	 	

Section 8.01.	
 	

Notices	
 	

20
	 	Section 8.02.	 	No Waiver; Remedies	 	21
	 	Section 8.03.	 	Successors and Assigns	 	21
	 	Section 8.04.	 	Termination; Survival of Obligations	 	22
	 	Section 8.05.	 	Complete Agreement; Modification of Agreement	 	22
	 	Section 8.06.	 	Amendments and Waivers	 	22
	 	Section 8.07.	 	GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL	 	23
	 	Section 8.08.	 	Counterparts	 	24
	 	Section 8.09.	 	Severability	 	24
	 	Section 8.10.	 	Section Titles	 	24
	 	Section 8.11.	 	No Setoff	 	24
	 	Section 8.12.	 	Confidentiality	 	24
	 	Section 8.13.	 	Further Assurances	 	25
	 	Section 8.14.	 	Fees and Expenses	 	25

INDEX OF APPENDICES  

	Exhibit 2.01(a)	 	Form of Receivables Assignment
	Exhibit 2.01(b)	 	Form of Request Notice
	Exhibit A	 	Form of Parent Guaranty
	Exhibit B	 	Form of Originator Guaranty
	

Schedule 4.01(a)	
 	

Jurisdictions of Incorporation/Organization
	Schedule 4.01(b)	 	Executive Offices; Collateral Locations; Corporate Names
	Schedule 4.01(d)	 	Litigation
	Schedule 4.01(h)	 	Ventures, Subsidiaries and Affiliates; Outstanding Stock; Debt
	Schedule 4.01(i)	 	Tax Matters
	Schedule 4.01(j)	 	Intellectual Property
	Schedule 4.01(m)	 	ERISA
	Schedule 4.01(t)	 	Deposit and Disbursement Accounts
	Schedule 4.02(g)	 	Trade Names
	Schedule 4.03(b)	 	Existing Liens
	

Annex X	
 	

Definitions
	Annex 4.03(l)	 	Financial Covenants
	Annex Y	 	Schedule of Documents
	Annex Z	 	Parent Revolver

ii

        THIS RECEIVABLES SALE AND CONTRIBUTION AGREEMENT (as amended, supplemented or otherwise modified and in effect from time to time, this
"Agreement") is entered into as of March 28, 2002, by and among K2 FINANCE COMPANY, LLC, a Delaware limited liability company (the
"Buyer"), K2 INC., a Delaware corporation, in its capacity as "Parent Guarantor" ("Parent
Guarantor"), and each of the subsidiaries of Parent Guarantor, listed on the signature pages hereto as an "Originator" (each an
"Originator"). 

RECITALS  

        A.    The
Originators, together with K2 Receivables Corporation, a Delaware corporation (the "SPC"), own all of the outstanding
membership interests of Buyer. 

        B.    Buyer
has been formed for the sole purpose of purchasing, or otherwise acquiring by capital contribution, and reselling to the Purchasers (as defined below), all
Receivables (as defined below) originated by the Originators. 

        C.    Each
Originator intends to sell, and Buyer intends to purchase, all Receivables originated by such Originator, from time to time, as described herein. 

        D.    In
addition, each Originator may, from time to time, contribute capital to Buyer in the form of Contributed Receivables (as defined below) or cash. 

        E.    Parent
Guarantor is the parent of each Originator and as such will receive direct and indirect economic benefits from the sale of the trade receivables described in  Recital C. 

AGREEMENT  

        NOW, THEREFORE, in consideration of the premises and the mutual covenants hereinafter contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 

ARTICLE I

DEFINITIONS AND INTERPRETATION  

        Section 1.01.    Definitions.    Capitalized terms used and not otherwise defined herein shall have the
meanings ascribed to them in Annex X. 

        Section 1.02.    Rules of Construction.    For purposes of this Agreement, the rules of construction set forth
in Annex X shall govern. All Appendices hereto, or expressly identified to this Agreement, are incorporated herein by reference and, taken
together with this Agreement, shall constitute but a single agreement. 

ARTICLE II

TRANSFERS OF RECEIVABLES  

        Section 2.01.    Agreement to Transfer.    

        (a)    Receivables Transfers.    Subject to the terms and conditions hereof, each Originator agrees to sell (without
recourse except to the extent specifically provided herein) or contribute to Buyer on the Closing Date and on each Business Day thereafter until the occurrence of the Facility Termination Date (each
such date, a "Transfer Date") all Receivables owned by it on each such Transfer Date, and Buyer agrees to purchase or acquire as a capital contribution
all such Receivables on each such Transfer Date. Each such Transfer shall be evidenced by a certificate of assignment substantially in the form of  Exhibit 2.01(a) (each, a "Receivables Assignment," and collectively, the
"Receivables Assignments"), and each Originator and Buyer shall execute and deliver a Receivables Assignment on or before the Closing Date. 

        (b)    Determination of Sold Receivables.    On and as of each Transfer Date, all Receivables owned by each Originator
and not previously acquired by Buyer shall be identified for sale to Buyer such that 

 

the Sale Price to be paid by Buyer therefor does not exceed the amount of cash available to Buyer for the payment thereof (each such Receivable identified for sale, individually, a
"Sold Receivable" and, collectively, the "Sold Receivables"). The Sold Receivables will be identified by
reference to the General Trial Balance of each Originator. 

        (c)    Payment of Purchase Price.    In consideration for each Sale of Sold Receivables hereunder, Buyer shall pay to
the Originator thereof on the Transfer Date therefor the Sale Price therefor in Dollars in immediately available funds. All such payments by Buyer under this  Section 2.01(c) shall be effected by
means of a wire transfer on the day when due to such account or accounts as the applicable Originator may
designate. 

        (d)    Determination of Contributed Receivables.    To the extent that, on and as of any Transfer Date, Receivables
owned by any Originator which do not constitute Sold Receivables pursuant to Section 2.01(b) then such Originator shall, unless it has delivered
an Election Notice (as defined below) to Buyer, contribute such Receivables to Buyer as a capital contribution (each such contributed Receivable, individually, a "Contributed
Receivable," and collectively, the "Contributed Receivables"). If any Originator elects not to contribute Receivables to Buyer
on any Transfer Date, or if any Receivables eligible for sale and owned by such Originator are not sold on any Transfer Date, such Originator shall deliver to Buyer not later than 5:00 p.m.
(New York time) on the Business Day immediately preceding such Transfer Date a notice of election thereof (each such notice, an "Election Notice"). 

        (e)    Ownership of Transferred Receivables.    On and after each Transfer Date and after giving effect to the
Transfers to be made on each such date, Buyer shall own the Transferred Receivables and no Originator shall take any action inconsistent with such ownership nor shall any Originator claim any
ownership interest in such Transferred Receivables. 

        (f)    Reconstruction of General Trial Balance.    If at any time any Originator fails to generate its General Trial
Balance, Buyer shall have the right to reconstruct such General Trial Balance so that a determination of the Transferred Receivables can be made pursuant to  Section 2.01(b). Each Originator agrees
to cooperate with such reconstruction, including by delivery to Buyer, upon Buyer's request, of copies of
all Contracts and Records. 

        (g)    Servicing of Receivables.    With respect to each Servicer, so long as no Event of Servicer Termination shall
have occurred and be continuing, and no Successor Servicer has assumed the responsibilities and obligations of such Servicer pursuant to  Section 9.02 of the Purchase Agreement, each Servicer shall
(i) conduct the servicing, administration and collection of the Transferred
Receivables and shall take, or cause to be taken, all such actions as may be necessary or advisable to service, administer and collect the Transferred Receivables, all in accordance with
(A) the terms of the Purchase Agreement, (B) customary and prudent servicing procedures for trade receivables of a similar type and (C) all applicable laws, rules and regulations,
and (ii) hold all Contracts and other documents and incidents relating to the Transferred Receivables in trust for the benefit of Buyer, as the owner thereof, and for the sole purpose of
facilitating the servicing of the Transferred Receivables in accordance with the terms of the Purchase Agreement. 

        Section 2.02.    Grant of Security Interest.    The parties hereto intend that each Transfer shall constitute a
purchase and sale or capital contribution, as applicable, and not a loan. Notwithstanding the foregoing, in addition to and not in derogation of any rights now or hereafter acquired by Buyer under  Section 2.01 hereof, the parties hereto intend that this Agreement shall constitute a security agreement under applicable law and that each
Originator shall be deemed to have granted, and each Originator does hereby grant, to the Buyer a continuing security interest in all of such Originator's right, title and interest in, to and under
the Receivables whether now owned or hereafter acquired by such Originator (whether constituting Transferred Receivables or otherwise) to secure the obligations of such Originator to the Buyer
hereunder (including, if and to the extent that any Transfer is 

2

 

recharacterized as a transfer for security, the repayment of a loan deemed to have been made by the Buyer in the amount of the Sale Price with respect thereto and which secures the Buyer's right to
receive all Collections of the Transferred Receivables as otherwise contemplated under this Agreement). 

        Section 2.03.    License for Use of Software and Other Intellectual Property.    Unless expressly prohibited by
the licensor thereof or any provision of applicable law, if any, each Originator hereby grants to the Buyer a non-exclusive license to use, without charge: 

        (a)  such
Originator's computer programs, software, printouts and other computer materials, technical knowledge or processes, data bases, materials, and licenses thereto, and 

        (b)  such
Originator's trademarks, registered trademarks, trademark applications, service marks, registered service marks, service mark applications, patents, patent
applications, trade names, rights of use of any name, labels fictitious names, inventions, designs, trade secrets, goodwill, registrations, copyrights, copyright applications, permits, franchises,
customer lists, credit files, correspondence, and advertising materials or any property of a similar nature, 

in
each case, as it pertains to the Originator Collateral, or any rights to any of the foregoing, in the advertising for sale, and selling any of the Originator Collateral, or exercising of any other
remedies
hereto. Each Originator agrees that such Originator's rights under all licenses and franchise agreements shall inure to the Buyer's benefit. To the extent the grant of the aforesaid license described
in clause (a) is expressly prohibited by the licensor thereof or the grant of the aforesaid license described in clause (b) is expressly prohibited by the licensor thereof and such
licensor is an Affiliate of Parent Guarantor, the applicable Originator shall obtain the consent of such licensor to Originator's grant to the Buyer of such license. The Buyer agrees not to use any
such license without giving the applicable Originator prior written notice and unless a Termination Event has occurred and is continuing. Each Originator acknowledges and consents to the grant of a
parallel license by the Buyer to the Servicers, the Administrative Agent and the Purchasers pursuant to the Purchase Agreement; and, to the extent third party consent is required in connection with
the grant by the Buyer to the Servicers, Administrative Agent or the Purchasers of the license (i) described in clause (a) or (ii) described in clause (b) where the third
party licensor to the Originator is an Affiliate of Parent Guarantor, each Originator agrees to exercise its best efforts to obtain such third party consent. 

ARTICLE III

CONDITIONS PRECEDENT  

        Section 3.01.    Conditions to Initial Transfer.    The initial Transfer hereunder shall be subject to
satisfaction of each of the following conditions precedent (any one or more of which may be waived in writing by each of Buyer and the Administrative Agent): 

        (a)    Sale and Contribution Agreement; Other Documents.    This Agreement or counterparts hereof shall have been duly
executed by, and delivered to, Parent Guarantor, the Originators and Buyer, and Buyer shall have received such documents, instruments, agreements and legal opinions as Buyer shall request in
connection with the transactions contemplated by this Agreement, including all those identified in the Schedule of Documents, each in form and substance satisfactory to Buyer. 

        (b)    Governmental Approvals.    Buyer shall have received (i) satisfactory evidence that Parent Guarantor and
each Originator have obtained all required consents and approvals of all Persons, including all requisite Governmental Authorities, to the execution, delivery and performance of this Agreement and the
other Related Documents and the consummation of the transactions contemplated hereby and thereby or (ii) an Officer's Certificate from Parent Guarantor and each Originator in form and substance
satisfactory to Buyer affirming that no such consents or approvals are required. 

3

 

        (c)    Compliance with Laws.    Parent Guarantor and each Originator shall be in compliance with all applicable
foreign, federal, state and local laws and regulations, including those specifically referenced
in Section 4.02(f), except to the extent that any failure to so comply would not have a Material Adverse Effect. 

        (d)    Purchase Agreement Conditions.    Each of those conditions precedent set forth in  Sections 3.01 and 3.02 of the Purchase Agreement shall have been satisfied or waived in writing as
provided therein. 

        Section 3.02.    Conditions to all Transfers.    Each Transfer hereunder (including the initial Transfer) shall
be subject to satisfaction of the following further conditions precedent as of the Transfer Date therefor: 

        (a)  the
representations and warranties of Parent Guarantor and each Originator contained herein or in any other Related Document shall be true and correct as of such
Transfer Date, both before and after giving effect to such Transfer and to the application of the Sale Price therefor, except to the extent that any such representation or warranty expressly relates
to an earlier date and except for changes therein expressly permitted by this Agreement; 

        (b)  no
Incipient Termination Event or Termination Event shall have occurred and be continuing or would result after giving effect to such Transfer or the application of the
Sale Price therefor; 

        (c)  Parent
Guarantor and the Originators shall have taken such other action, including delivery of approvals, consents, opinions, documents and instruments to Buyer as Buyer
may reasonably request. 

The
acceptance by any Originator of the Sale Price for any Sold Receivables on any Transfer Date shall be deemed to constitute, as of any such Transfer Date, a representation and warranty by such
Originator that the conditions in this Section 3.02 have been satisfied. On each Transfer Date, Parent Guarantor shall be deemed to have made a
representation and warranty that the conditions in this Section 3.02 have been satisfied. Upon any such acceptance, title to the Transferred
Receivables sold or contributed on such Transfer Date shall be vested absolutely in Buyer, whether or not such conditions were in fact so satisfied. 

ARTICLE IV

REPRESENTATIONS, WARRANTIES AND COVENANTS  

        Section 4.01.    Representations and Warranties of Parent Guarantor and the Originators.    To induce Buyer to
purchase the Sold Receivables and to acquire the Contributed Receivables, Parent Guarantor and each
Originator makes the following representations and warranties to Buyer, each and all of which shall survive the execution and delivery of this Agreement. 

        (a)    Corporate Existence; Compliance with Law.    Parent Guarantor and each Originator (i) is a corporation
or limited liability company duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation or organization as set forth on  Schedule 4.01(a) attached
hereto; (ii) is duly qualified to conduct business and is in good standing in each other jurisdiction where its
ownership or lease of property or the conduct of its business requires such qualification, except where the failure to be so qualified is not reasonably likely to result in a Material Adverse Effect;
(iii) has the requisite power and authority and the legal right to own, pledge, mortgage or otherwise encumber and operate its properties, to lease the property it operates under lease, and to
conduct its business, in each case, as now, heretofore and proposed to be conducted; (iv) has all licenses, permits, consents or approvals from or by, and has made all filings with, and has
given all notices to, all Governmental Authorities having jurisdiction, to the extent required for such ownership, operation and conduct, except where the failure to obtain such licenses, permits,
consents or approvals is not reasonably likely to result in a Material Adverse Effect; (v) is in compliance with its Charter Documents; and (vi) subject 

4

 

to specific representations set forth herein regarding ERISA, Environmental Laws, tax laws and other laws, is in compliance with all applicable provisions of law, except where the failure to comply,
individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. 

        (b)    Executive Offices; Collateral Locations; Corporate or Other Names; FEIN.    As of the Closing Date, the current
location of the Originators' chief executive offices, sole jurisdiction of organization, principal places of business, other offices, the warehouses and premises within which any Originator Collateral
is stored or located, and the locations of all records of the Originators and Parent Guarantor concerning the Originator Collateral are set forth in  Schedule 4.01(b) and none of such locations have
changed within the past 12 months. During the prior five years, except as set forth in  Schedule 4.01(b), no Originator has not been known as or used any corporate, fictitious or trade name. In
addition,  Schedule 4.01(b) lists the organizational identification number issued by each Originator's state of organization or states that no such number
has been issued and lists the federal employer identification number of each Originator. 

        (c)    Corporate Power, Authorization, Enforceable Obligations.    The execution, delivery and performance by Parent
Guarantor and each Originator of this Agreement and the execution, delivery and performance by Parent Guarantor and each Originator of any other Related Documents to which it is a party and the
creation and perfection of all Transfers and Liens provided for herein and therein: (i) are within such Person's power; (ii) have been duly authorized by all necessary or proper action
(corporate, shareholder or otherwise); (iii) do not contravene any provision of such Person's Charter Documents; (iv) do not violate any law or regulation, or any order or decree of any
court or Governmental Authority; (v) do not conflict with or result in the breach or termination of, constitute a default under or accelerate or permit the acceleration of any performance
required by, any indenture, mortgage, deed of trust, lease, agreement or other instrument to which such Person is a party or by which such Person or any of its property is bound; (vi) do not
result in the creation or imposition of any Adverse Claim upon any of the property of such Person; and (vii) do not require the consent or approval of any Governmental Authority or any other
Person, except those which will have been duly obtained, made or complied with prior to the Closing Date as provided Section 3.01(b). The
exercise by Buyer of any of
its rights and remedies under any Related Document to which it is a party, do not require the consent or approval of any Governmental Authority or any other Person (other than consents or approvals
solely relating to or required to be obtained by the Buyer, and subject to the Bankruptcy Code), except those which will have been duly obtained, made or complied with prior to the Closing Date as
provided in Section 3.01(b). On or prior to the Closing Date, each of the Related Documents shall have been duly executed and delivered by Parent
Guarantor and each Originator that is a party thereto and each such Related Document shall then constitute a legal, valid and binding obligation of such Person enforceable against it in accordance
with its terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights and by general principles of equity. 

        (d)    No Litigation.    No Litigation is now pending or, to the knowledge of Parent Guarantor or any Originator,
threatened against any Originator or Parent Guarantor that (i) challenges such Originator's or Parent Guarantor's right or power to enter into or perform any of its obligations under the
Related Documents to which it is a party, or the validity or enforceability of any Related Document or any action taken thereunder, (ii) seeks to prevent the Transfer, Purchase, contribution or
pledge of any Receivable or the consummation of any of the transactions contemplated under this Agreement or the other Related Documents or (iii) if determined adversely to any Originator or
Parent Guarantor, could reasonably be expected to have a Material Adverse Effect. Except as set forth on Schedule 4.01(d), as of the Closing Date
there is no Litigation pending or threatened that seeks damages in excess of $5,000,000 or injunctive relief against, or alleges criminal misconduct by, any Originator or Parent Guarantor. 

5

 

        (e)    Solvency.    Both before and after giving effect to (i) the transactions contemplated by this Agreement
and the other Related Documents and (ii) the payment and accrual of all transaction costs in connection with the foregoing, each Originator and Parent Guarantor is and will be Solvent. 

        (f)    Material Adverse Effect.    Between December 31, 2000, and the Closing Date, (i) neither Parent
Guarantor nor any Originator has incurred any obligations, contingent or non-contingent liabilities, liabilities for charges, long-term leases or unusual forward or
long-term commitments that, alone or in the aggregate, could reasonably be expected to have a Material Adverse Effect, (ii) no contract, lease or other agreement or instrument has
been entered into by Parent Guarantor or any Originator or has become binding upon Parent Guarantor's or such Originator's assets and no law or regulation applicable to Parent Guarantor or any
Originator has been adopted that has had or could reasonably be expected to have a Material Adverse Effect; and (iii) neither Parent Guarantor nor any Originator is in default and no third
party is in default under any material contract, lease or other agreement or instrument to which any of Parent Guarantor or the Originators is a party that alone or in the aggregate could reasonably
be expected to have a Material Adverse Effect. Between December 31, 2000, and the Closing Date no event has occurred that alone or together with other events could reasonably be expected to
have a Material Adverse Effect. 

        (g)    Ownership of Receivables; Liens.    Each Originator owns each Receivable originated or acquired by it free and
clear of any Adverse Claim and, from and after each Transfer Date, Buyer will acquire valid and properly perfected title to and the sole record and beneficial ownership interest in each Transferred
Receivable purchased or otherwise acquired on such date, free and clear of any Adverse Claim or restrictions on transferability. As of the Closing Date, none of the Originator Collateral is subject to
any Adverse Claims other than Permitted Originator Encumbrances, and there are no facts, circumstances or conditions known to any Originator that may result in any Adverse Claims on the Originator
Collateral (including Adverse Claims arising under Environmental Laws) other than Permitted Originator Encumbrances. Each Originator has received all assignments, bills of sale and other documents,
and has duly effected all recordings, filings and other actions necessary to establish, protect and perfect such Originator's right, title and interest in and to the Receivables originated by it and
its other properties and assets. Each Originator has rights in and the power to transfer the Receivables. Each Originator has rights in and the power to transfer each item of the Originator Collateral
upon which it purports to grant a Lien hereunder free and clear of any and all Liens other than Permitted Originator Encumbrances. The Liens granted to
Buyer pursuant to Section 7.01 will at all times be fully perfected first priority Liens in and to the Originator Collateral, subject only to
Permitted Originator Encumbrances. 

        (h)    Ventures, Subsidiaries and Affiliates; Outstanding Stock; Debt.    Except as set forth in  Schedule 4.01(h), neither
Parent Guarantor nor any Originator has any Subsidiaries, is engaged in any joint venture or partnership with any other
Person, or is an Affiliate of any other Person. All of the issued and outstanding Stock of each Originator is owned (directly or indirectly) by Parent Guarantor. There are no outstanding rights to
purchase, options, warrants or similar rights or agreements pursuant to which any Originator may be required to issue, sell, repurchase or redeem any of its Stock or other equity securities or any
Stock or other equity securities of its Subsidiaries. All outstanding Debt of each Originator and Parent Guarantor as of the Closing Date is described in  Schedule 4.01(h). 

        (i)    Taxes.    All material tax returns, reports and statements, including information returns, required by any
Governmental Authority to be filed by Parent Guarantor and its Subsidiaries have been filed with the appropriate Governmental Authority and all charges shown thereon to be due have been paid prior to
the date on which any fine, penalty, interest or late charge may be added thereto for nonpayment thereof (or any such fine, penalty, interest, late charge or loss has been paid), excluding charges or
other amounts being contested in accordance with Section 4.02(l). Proper and accurate amounts have been withheld by Parent Guarantor and each
Originator from its respective employees for all periods in full and complete compliance with all applicable federal, state, local and foreign laws 

6

 

and such withholdings have been timely paid to the respective Governmental Authorities. Schedule 4.01(i) sets forth as of the Closing Date
(i) those taxable years for which Parent Guarantor's and Originators' tax returns are currently being audited by the IRS or any other applicable Governmental Authority and (ii) any
assessments or threatened assessments in connection with such audit or otherwise currently outstanding. Except as described on Schedule 4.01(i),
neither Parent Guarantor nor any Originator has executed or filed with the IRS or any other Governmental Authority any agreement or other document extending, or having the effect of extending, the
period for assessment or collection of any charges. Neither Parent Guarantor nor any of the Originators and their respective predecessors are liable for any charges: (A) under any agreement
(including any tax sharing agreements) or (B) to the best of Parent Guarantor's and each Originator's knowledge, as a transferee. As of the Closing Date, neither Parent Guarantor nor any
Originator has agreed or been requested to
make any adjustment under IRC Section 481(a), by reason of a change in accounting method or otherwise, that would have a Material Adverse Effect. 

        (j)    Intellectual Property.    As of the Closing Date, each Originator owns or has rights to use all intellectual
property necessary to continue to conduct its business as now or heretofore conducted by it or proposed to be conducted by it. To the knowledge of each Originator and the Parent Guarantor after
diligent inquiry, each Originator conducts its business and affairs without infringement of or interference with any intellectual property of any other Person. Except as set forth in  Schedule 4.01(j), no Originator is aware of any infringement or claim of infringement by others of any intellectual property of the Originators.
 

        (k)    Full Disclosure.    All information contained in this Agreement, any of the other Related Documents, or any
written statement furnished by or on behalf of Parent Guarantor or the Originators to Buyer, any Purchaser or the Administrative Agent pursuant to the terms of this Agreement or any of the other
Related Documents is true and accurate in every material respect, and none of this Agreement, any of the other Related Documents, or any written statement furnished by or on behalf of Parent Guarantor
or any Originator to Buyer any Purchaser or the Administrative Agent pursuant to the terms of this Agreement or any of the other Related Documents (including any such statement furnished by Parent
Guarantor or an Originator in its capacity as a Servicer), is misleading as a result of the failure to include therein a material fact. 

        (l)    Notices to Obligors.    Each Originator has directed all Obligors of Transferred Receivables originated by it
to remit all payments with respect to such Receivables for deposit in a Lockbox or Lockbox Account. 

        (m)    ERISA.    

          (i)  Schedule 4.01(m) lists all Plans and separately identifies all Pension Plans, including all Title IV Plans,
Multiemployer Plans, ESOPs and Welfare Plans, including all Retiree Welfare Plans. Each Qualified Plan has been determined by the IRS to qualify under Section 401 of the IRC, the trusts created
thereunder have been determined to be exempt from tax under the provisions of Section 501 of the IRC, and nothing has occurred that would cause the loss of such qualification or
tax-exempt status. Except as otherwise provided in Schedule 4.01(m), (x) each Plan is in compliance with the applicable
provisions of ERISA and the IRC, including the timely filing of all reports required under the IRC or ERISA, (y) neither Parent Guarantor nor any ERISA Affiliate has failed to make any
contribution or pay any amount due as required by either Section 412 of the IRC or Section 302 of ERISA or the terms of any such Plan and (z) neither Parent Guarantor, any
Originator nor any ERISA Affiliate has engaged in a "prohibited transaction," as defined in Section 4975 of the IRC, in connection with any Plan that would subject Parent Guarantor or any
Originator to a material tax on prohibited transactions imposed by Section 4975 of the IRC. 

7

 

        (ii)  Except
as set forth in Schedule 4.01(m): (A) no Title IV Plan has any Unfunded Pension Liability;
(B) no ERISA Event or event described in Section 4062(e) of ERISA with respect to any Title IV Plan has occurred or is reasonably expected to occur; (C) there are no pending or,
to the knowledge of Parent Guarantor or any Originator, threatened claims (other than claims for benefits in the normal course), sanctions, actions or lawsuits, asserted or instituted against any Plan
or any Person as fiduciary or sponsor of any Plan; (D) neither Parent Guarantor nor any ERISA Affiliate has incurred or reasonably expects to incur any liability as a result of a complete or
partial withdrawal from a Multiemployer Plan; (E) within the last five years no Title IV Plan with Unfunded Pension Liabilities has been transferred outside of the "controlled group" (within
the meaning of Section 4001(a)(14) of ERISA) of Parent Guarantor, any Originator or any ERISA Affiliate; (F) Stock of Parent Guarantor and its ERISA Affiliates makes up, in the
aggregate, no more than 10% of the assets of any Plan, measured on the basis of fair market value as of the last valuation date of any Plan; and (G) no liability under any Title IV Plan has
been satisfied with the purchase of a contract from an insurance company that is not rated AAA by S&P or an equivalent rating by another nationally recognized rating agency. 

        (n)    Brokers.    No broker or finder acting on behalf of Parent Guarantor or any Originator was employed or utilized
in connection with this Agreement or the other Related Documents or the transactions contemplated hereby or thereby and neither Parent Guarantor nor any Originator has any obligation to any Person in
respect of any finder's or brokerage fees in connection therewith. 

        (o)    Margin Regulations.    None of the Originators or Parent Guarantor is engaged, nor will it engage, principally
or as one of its important activities, in the business of extending credit for the purpose of "purchasing" or "carrying" any "margin security" as such terms are defined in Regulations T or U of the
Federal Reserve Board as now and from time to time hereafter in effect (such securities being referred to herein as "Margin Stock"). No Originator nor
Parent Guarantor owns any Margin Stock, and no portion of the proceeds of the Sale Price for any Sale hereunder will be used, directly or indirectly, for the purpose of purchasing or carrying any
Margin Stock, for the purpose of reducing or retiring any Debt that was originally incurred to purchase or carry any Margin Stock or for any other purpose that might cause any portion of such proceeds
to be considered a "purpose credit" within the meaning of Regulations T, U or X of the Federal Reserve Board. No Originator nor Parent Guarantor will take or permit to be taken any action that might
cause any Related Document to violate any regulation of the Federal Reserve Board. 

        (p)    Nonapplicability of Bulk Sales Laws.    No transaction contemplated by this Agreement or any of the other
Related Documents requires compliance with any bulk sales act or similar law. 

        (q)    Securities Act and Investment Company Act Exemptions.    Each purchase of Transferred Receivables under this
Agreement constitutes (i) a "current transaction" within the meaning of Section 3(a)(3) of the Securities Act and (ii) a purchase or other acquisition of notes, drafts,
acceptances, open accounts receivable or other obligations representing part or all of the sales price of merchandise, insurance or services within the meaning of Section 3(c)(5) of the
Investment Company Act. 

        (r)    Government Regulation.    None of the Originators nor Parent Guarantor is an "investment company" or an
"affiliated person" of, or "promoter" or "principal underwriter" for, an "investment company," as such terms are defined in the Investment Company Act. None of the Originators nor Parent Guarantor is
subject to regulation under the Public Utility Holding Company Act of 1935, the Federal Power Act, or any other federal or state statute that restricts or limits its ability to incur Debt or to
perform its obligations hereunder or under the other Related Documents. The purchase or acquisition of the Transferred Receivables by Buyer hereunder, the application of the Sale Price for either of
the foregoing and the consummation of the transactions contemplated by this Agreement and 

8

 

the other Related Documents will not violate any provision of any such statute or any rule, regulation or order issued by the Securities and Exchange Commission. 

        (s)    Books and Records; Minutes.    The Charter Documents of Parent Guarantor and each Originator require it to
maintain (i) books and records of account and (ii) minutes of the meetings and other proceedings of its Stockholders and board of directors. 

        (t)    Deposit and Disbursement Accounts.    Schedule 4.01(t)
lists all banks and other financial institutions at which the Originators maintain any deposit accounts established for the receipt of collections on accounts receivable as of the Closing Date,
including any Lockbox Accounts, and such schedule correctly identifies the name, address and telephone number of each depository, the name in which the account is held, a description of the purpose of
the account, and the complete account number therefor, in each case as of the Closing Date. 

        (u)    Representations and Warranties in Other Related Documents.    Each of the representations and warranties of
Parent Guarantor and the Originators contained in the Related Documents (other than this Agreement) is true and correct in all material respects and Parent Guarantor and each Originator hereby makes
each such representation and warranty to, and for the benefit of, the Purchasers and the Administrative Agent as if the same were set forth in full herein, and Parent Guarantor and each Originator
consents to the assignment of Buyer's rights to the Purchasers and the Administrative Agent (and their successors and assigns) as contemplated in  Section 4.02(e). 

        (v)    Receivables.    With respect to each Transferred Receivable designated as an Eligible Receivable in any
Investment Base Certificate delivered on or after the Transfer Date of such Transferred Receivable: 

          (i)  such
Receivable satisfies the criteria for an Eligible Receivable; 

        (ii)  prior
to its Transfer to Buyer such Receivable was owned by the Originator thereof free and clear of any Adverse Claim, and such Originator had the full right, power
and authority to sell, contribute, assign, transfer and pledge its interest therein as contemplated under this Agreement and the other Related Documents and, upon such Transfer, Buyer will acquire
valid and properly perfected title to
and the sole record and beneficial ownership interest in such Receivable, free and clear of any Adverse Claim and, following such Transfer, such Receivable will not be subject to any Adverse Claim as
a result of any action or inaction on the part of such Originator; 

        (iii)  the
Transfer of each such Receivable pursuant to this Agreement and the Receivables Assignment executed by each Originator constitutes, as applicable, a valid sale,
contribution, transfer, assignment, setover and conveyance to Buyer of all right, title and interest of such Originator in and to such Receivable; and 

        (iv)  the
Originator of such Receivable does not have any knowledge of any fact (including any defaults by the Obligor thereunder on any other Receivable) that would cause it
or should have caused it to expect that any payments on such Receivable will not be paid in full when due or to expect any other Material Adverse Effect. 

The
representations and warranties described in this Section 4.01 shall survive the Transfer of the Transferred Receivables to Buyer, any
subsequent assignment of the Transferred Receivables by Buyer, and the termination of this Agreement and the other Related Documents and shall continue until the indefeasible payment in full of all
Transferred Receivables. 

9

 

        Section 4.02.    Affirmative Covenants of Parent Guarantor and each Originator.    Parent Guarantor and each
Originator covenants and agrees that, unless otherwise consented to by Buyer and the Administrative Agent, from and after the Closing Date and until the Termination Date: 

        (a)    Offices and Records.    Each Originator shall maintain its principal place of business and chief executive
office and the office at which it keeps its Records at the respective locations specified in Schedule 4.01(b) or, upon 30 days' prior
written notice to Buyer and the Administrative Agent, at such other location in a jurisdiction where all action requested by Buyer, any Purchaser or the Administrative Agent pursuant to  Section 8.13 shall have been taken with respect to the Transferred Receivables. Each Originator shall, at its own cost and expense, for not less
than three years from the date on which each Transferred Receivable was originated, or for such longer period as may be required by law, maintain adequate Records with respect to such Transferred
Receivable, including records of all payments received, credits granted and merchandise returned with respect thereto. Each Originator will, (A) at all times from and after the date hereof,
clearly and conspicuously mark its computer and master data processing books and records with a legend describing the Buyer's interest in the Receivables, (B) segregate (from all other
receivables then owned or being serviced by the Originators) all contracts relating to each Receivable, (C) from and after the date hereof, so mark the original copy of all chattel paper and
instruments constituting Receivables with any appropriate endorsement or assignment, (D) execute an endorsement to the Buyer for each instrument representing a Receivable, and (E) hold
in trust and safely keep all invoices constituting chattel paper and all other instruments constituting Receivables in separate filing cabinets or other suitable containers at the
Originators' locations or at such other location as Buyer may reasonably specify from time to time, provided that from and after a Termination Event, the Buyer may, in its sole discretion, specify any
other location. 

        (b)    Access.    Parent Guarantor and each Originator shall, during normal business hours, from time to time upon
five Business Days' prior notice and as frequently as Buyer, any Servicer or the Administrative Agent determines to be appropriate: (i) provide Buyer, each Servicer or the Administrative Agent
and any of their respective officers, employees and agents access to its properties (including properties utilized in connection with the collection, processing or servicing of the Transferred
Receivables), facilities, advisors and employees (including officers) and to the Originator Collateral, (ii) permit Buyer, the Servicers or the Administrative Agent and any of their respective
officers, employees and agents, to inspect, audit and make extracts from its books and records, including all Records, (iii) permit Buyer, the Servicers or the Administrative Agent and their
respective officers, employees and agents, to inspect, review and evaluate the Transferred Receivables and other Originator Collateral, as applicable, and (iv) permit Buyer, the Servicers or
the Administrative Agent and their respective officers, employees and agents to discuss matters relating to the Transferred Receivables or Parent Guarantor's or any Originator's performance under this
Agreement or the affairs, finances and accounts of Parent Guarantor and the Originators with any of their respective officers, directors, and, so long as Buyer, the Servicers, or the Administrative
Agent notifies Parent Guarantor or the applicable Originator, as the case may be, and gives Parent Guarantor or the applicable Originator the opportunity to participate in any such communications,
with its employees, representatives or agents (in each case, with those Persons having knowledge of such matters), and, so long as Buyer, the Servicers, or the Administrative Agent notifies Parent
Guarantor or the applicable Originator, as the case may be, and gives Parent Guarantor or the applicable Originator the opportunity to participate in any such communications, with its independent
certified public accountants. If an Incipient Termination Event or a Termination Event shall have occurred and be continuing, or the Administrative Agent, in good faith, believes that an Incipient
Termination Event or a Termination Event is imminent or deems any Purchaser's rights or interests in the Transferred Receivables or the Seller Collateral insecure, Parent Guarantor and each Originator
shall provide such access at all times and without advance notice, each Originator shall provide Buyer, the Servicers or the Administrative Agent with access to its customers and, so long as Buyer,
the Servicers, or the 

10

 

Administrative Agent notifies Parent Guarantor or the applicable Originator, as the case may be, and gives Parent Guarantor or the applicable Originator the opportunity to be present, to Parent
Guarantor's or such Originator's suppliers. Parent Guarantor and each Originator shall make available to Buyer, the Servicers or the Administrative Agent and their respective counsel, as quickly as is
possible under the circumstances, originals or copies of all books and records, including Records, that Buyer, the Servicers or the Administrative Agent may reasonably request. Parent Guarantor and
the Originators shall deliver any document or instrument necessary for Buyer, the Servicers or the Administrative Agent, as they may from time to time reasonably request, to obtain records from any
service bureau or other Person that maintains records for Parent Guarantor and the Originators, and shall maintain duplicate records or supporting documentation on media, including computer tapes and
discs owned by Parent Guarantor and the Originators. 

        (c)    Communication with Accountants.    So long as Buyer, the applicable Servicer, or the Administrative Agent, as
applicable, notifies Parent Guarantor or the applicable Originator, as the case may be, and gives Parent Guarantor or the applicable Originator the opportunity to participate in any such
communications, Parent Guarantor and each Originator authorizes each such Person to communicate
directly with its independent certified public accountants, and authorizes and shall instruct those accountants and advisors to disclose and make available to Buyer, the Servicers and the
Administrative Agent any and all financial statements and other supporting financial documents, schedules and information relating to Parent Guarantor, Originators and their Affiliates (including
copies of any issued management letters) with respect to the business, financial condition and other affairs of Parent Guarantor, Originators and their Affiliates. Parent Guarantor and each Originator
agrees to render to Buyer, the Servicers and the Administrative Agent at Parent Guarantor's or such Originator's, as applicable, own cost and expense, such clerical and other assistance as may be
reasonably requested with regard to the foregoing. If any Termination Event shall have occurred and be continuing, Parent Guarantor and each Originator shall, promptly upon request therefor, assist
Buyer in delivering to the Administrative Agent Records reflecting activity through the close of business on the Business Day immediately preceding the date of such request. 

        (d)    Compliance With Credit and Collection Policies.    Each Originator shall comply in all respects with the Credit
and Collection Policies applicable to each Transferred Receivable and the Contracts therefor, and with the terms of such Receivables and Contracts. 

        (e)    Assignment.    Parent Guarantor and each Originator agrees that, to the extent permitted under the Purchase
Agreement, Buyer may assign all of its right, title and interest in, to and under the Transferred Receivables, and this Agreement, including its right to exercise the remedies set forth in  Section 4.04. Parent Guarantor and each Originator agrees that, upon any such assignment, the assignee thereof may enforce directly, without
joinder of Buyer, all of the obligations of Parent Guarantor and the Originators hereunder, including any obligations of Parent Guarantor or the Originators set forth in  Sections 4.02(o), 4.04, 5.01 and 8.14. 

        (f)    Compliance with Agreements and Applicable Laws.    Parent Guarantor shall and shall cause each of its
Subsidiaries to, and each Originator shall and shall cause each other Originator to, perform each of its obligations under this Agreement and the other Related Documents and comply with all federal,
state and local laws and regulations applicable to it and the Receivables, including those relating to truth in lending, retail installment sales, fair credit billing, fair credit reporting, equal
credit opportunity, fair debt collection practices, privacy, licensing, taxation, ERISA and labor matters and Environmental Laws and Environmental Permits, except to the extent that the failure to so
comply, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. 

        (g)    Maintenance of Existence and Conduct of Business.    Parent Guarantor and each Originator shall: (i) do
or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence and its rights and franchises; (ii) continue to conduct its business substantially
as 

11

 

now conducted or as otherwise permitted hereunder and in accordance with the terms of its Charter Documents; (iii) at all times maintain, preserve and protect all of its assets and properties
used or useful in the conduct of its business, including all licenses, permits, charters and registrations, except to the extent that the failure to so comply, individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect, and keep the same in good repair, working order and condition in all material respects (taking into consideration ordinary wear and tear)
and from time to
time make, or cause to be made, all necessary or appropriate repairs, replacements and improvements thereto consistent with past practices; and (iv) with respect to the Originators only,
transact business only in such corporate and trade names as are set forth in Schedule 4.02(g) or, upon 30 days' prior written notice to
Buyer, the Administrative Agent and each Rating Agency, in such other corporate or trade names with respect to which all action requested by Buyer, any Purchaser or the Administrative Agent pursuant
to Section 8.13 shall have been taken with respect to the Transferred Receivables. No Originator shall change the type of entity it is, its
jurisdiction of incorporation or organization, or its organization number, if any, issued by its state of incorporation or organization, except upon 30 days' prior written notice to Buyer and
the Administrative Agent, and with respect to which jurisdiction all action requested by Buyer, any Purchaser or the Administrative Agent pursuant to  Section 8.13 shall have been taken with respect
to the Transferred Receivables. 

        (h)    Notice of Material Event.    Parent Guarantor and each Originator shall promptly inform Buyer in writing of the
occurrence of any of the following, in each case setting forth the details thereof and what action, if any, Parent Guarantor or such Originator proposes to take with respect thereto: 

          (i)  any
Litigation commenced or threatened in writing against Parent Guarantor or any Originator or with respect to or in connection with all or any portion of the
Transferred Receivables that (A) seeks damages or penalties in an uninsured amount in excess of $5,000,000 in any one instance or in the aggregate, (B) seeks injunctive relief,
(C) is asserted or instituted against any Plan, its fiduciaries or its assets or against Parent Guarantor or any ERISA Affiliate in connection with any Plan, (D) alleges criminal
misconduct by Parent Guarantor or any Originator, (E) alleges the violation of any law regarding, or seeks remedies in connection with, any Environmental Law or Environmental Permit, or
(F) would, if determined adversely, have a Material Adverse Effect; 

        (ii)  the
commencement of a case or proceeding by or against Parent Guarantor or any Originator seeking a decree or order in respect of such Person (A) under the
Bankruptcy Code or any other applicable federal, state or foreign bankruptcy or other similar law, (B) appointing a custodian, receiver, liquidator, assignee, trustee or sequestrator (or
similar official) for Parent Guarantor or any Originator or for any substantial part of such Person's assets, or (C) ordering the winding-up or liquidation of the affairs of Parent
Guarantor or any Originator; 

        (iii)  the
receipt of notice that (A) Parent Guarantor or an Originator is being placed under regulatory supervision, (B) any charter or material license,
permit, registration or approval necessary for the conduct of Parent Guarantor's or an Originator's business is to be, or may be, suspended or revoked, (C) Parent Guarantor, an Originator or
any Subsidiary of Parent has received a material notice relating to ERISA, Environmental Laws or Environmental Permits or (D) Parent Guarantor or any Originator is to cease and desist any
practice, procedure or policy employed by such Person in the conduct of its business if such cessation may have a Material Adverse Effect; 

        (iv)  (A)
any Adverse Claim made or asserted against any of the Transferred Receivables of which it becomes aware or (B) any determination that a Transferred
Receivable designated as an Eligible Receivable in an Investment Base Certificate or otherwise was not an Eligible Receivable at the time of such designation; or 

12

  

        (v)  any
other event, circumstance or condition that has had or could reasonably be expected to have a Material Adverse Effect. 

        (i)    Use of Proceeds.    Each Originator shall utilize the proceeds of the Sale Price obtained by it for each Sale
made by it hereunder solely for general corporate purposes (including the retirement or repayment of third party debt and loans made to Affiliates) and to pay any related expenses payable by such
Originator under this Agreement and the other Related Documents in connection with the transactions contemplated hereby and thereby and for no other purpose. 

        (j)    Separate Identity.    

          (i)  Parent
Guarantor and each Originator shall, and shall cause each of its Affiliates included in the Parent Group to, maintain corporate records and books of account
separate from those of Buyer. 

        (ii)  The
financial statements of Parent Guarantor and its consolidated Subsidiaries shall disclose the effects of the Originators' transactions in accordance with GAAP and,
in addition, disclose that (A) Buyer's sole business consists of the purchase or acceptance through capital contribution of the Receivables from the Originators and the subsequent resale of
such Receivables to the Purchasers, (B) Buyer is a separate corporate entity with its own separate creditors who will be entitled, upon its liquidation, to be satisfied out of Buyer's assets
prior to any value in Buyer becoming available to Buyer's equity holders and (C) the assets of Buyer are not available to pay creditors of Parent Guarantor, the Originators or any of their
Affiliates. 

        (iii)  The
resolutions, agreements and other instruments underlying the transactions described in this Agreement shall be continuously maintained by Parent Guarantor and the
Originators as official records. 

        (iv)  Parent
Guarantor and each Originator shall, and shall cause each Affiliate included in the Parent Group to, maintain an arm's-length relationship with Buyer and shall
not hold itself out as being liable for the Debts of Buyer. 

        (v)  Parent
Guarantor and each Originator shall, and shall cause each member of the Parent Group to, keep its assets and its liabilities wholly separate from those of Buyer. 

        (vi)  Parent
Guarantor and each Originator shall, and shall cause each Affiliate included in the Parent Group to, conduct its business solely in its own name through its duly
Authorized Officers or agents and in a manner designed not to mislead third parties as to the separate identity of the Buyer. 

      (vii)  Parent
Guarantor and each Originator shall not, and shall cause each Affiliate included in the Parent Group not to, mislead third parties by conducting or appearing to
conduct business on behalf of Buyer or expressly or impliedly representing or suggesting that Parent Guarantor or any Originator or Affiliate thereof is liable or responsible for the Debts of Buyer or
that the assets of Parent Guarantor or any Originator or any Affiliate are available to pay the creditors of Buyer. 

      (viii)  Parent
Guarantor and each Originator shall cause operating expenses and liabilities of Buyer to be paid from Buyer's own funds. 

        (ix)  Parent
Guarantor and each Originator shall at all times have, and cause each Affiliate included in the Parent Group at all times to have, stationery and other business
forms and a telephone number separate from those of Buyer. 

        (x)  Parent
Guarantor and each Originator shall, and shall cause each Affiliate included in the Parent Group to, at all times limit its transactions with Buyer only to those
expressly permitted hereunder or under any other Related Document. 

13

 

        (xi)  Parent
Guarantor and each Originator shall, and cause each Affiliate included in the Parent Group to, comply with (and cause to be true and correct) each of the facts
and assumptions contained in the opinion of Gibson Dunn & Crutcher LLP delivered pursuant to the Schedule of Documents. 

        (k)    ERISA.    Parent Guarantor and each Originator shall give Buyer and the Administrative Agent prompt written
notice of any event that could result in the imposition of a Lien under Section 412 of the IRC or Section 302 or 4068 of ERISA. 

        (l)    Payment, Performance and Discharge of Obligations.    

          (i)  Subject
to Section 4.02(l)(ii), Parent Guarantor and each Originator shall, and Parent Guarantor shall cause each
of its Subsidiaries to, pay, perform and discharge or cause to be paid, performed and discharged all of its obligations and liabilities, including all taxes, assessments and governmental charges upon
its income and properties and all lawful claims for labor, materials, supplies and services, promptly when due. 

        (ii)  Parent
Guarantor, its Subsidiaries and any Originator may in good faith contest, by appropriate proceedings, the validity or amount of any charges or claims described
in Sections 4.01(i) and 4.02(l)(i); provided, that (A) adequate reserves with respect to such
contest are maintained on the books of such Person, in accordance with GAAP, (B) such contest is maintained and prosecuted continuously and with diligence, (C) none of the Originator
Collateral could reasonably be expected to become subject to forfeiture or loss as a result of such contest, (D) no Lien could reasonably be expected to be imposed to secure payment of such
charges or claims other than inchoate tax liens and (E) Buyer has affirmatively advised such Parent Guarantor (with respect to Parent Guarantor or its Subsidiaries) or Originator in writing
that Buyer reasonably believes that nonpayment or nondischarge thereof could not reasonably be expected to have or result in a Material Adverse Effect. 

        (m)    Deposit of Collections and Notices to Obligors.    Parent Guarantor and each Originator shall deposit and cause
its Subsidiaries to deposit or cause to be deposited promptly into a Lockbox Account, and in any event no later than the first Business Day after receipt thereof, all Collections it may receive in
respect of Transferred Receivables. Each Originator shall direct all Obligors of Transferred Receivables originated by it to remit all payments with respect to such Receivables for deposit in a
Lockbox or Lockbox Account and shall not make any change in its instructions to such Obligors. 

        (n)    Accounting Changes.    If any Accounting Changes occur and such changes result in a change in the standards or
terms used herein, then the parties hereto agree to enter into negotiations in order to amend such provisions so as to equitably reflect such Accounting Changes with the desired result that the
criteria for evaluating the financial condition of such Persons and their Subsidiaries shall be the same after such Accounting Changes as if such Accounting Changes had not been made. If the parties
hereto agree upon the required amendments to this Agreement, then after appropriate amendments have been executed and the underlying Accounting Change with respect thereto has been implemented, any
reference to GAAP contained herein shall, only to the extent of such Accounting Change, refer to GAAP consistently applied after giving effect to the implementation of such Accounting Change. If such
parties cannot agree upon the required amendments within 30 days following the date of implementation of any Accounting Change, then all financial statements delivered and all standards and
terms used herein shall be prepared, delivered and used without regard to the underlying Accounting Change. 

        (o)    Adjustments to Sale Price.    If on any day the Billed Amount of any Transferred Receivable is reduced as a
result of any Dilution Factors, and the amount of such reduction exceeds the amount, if any, of Dilution Factors taken into account in the calculation of the Sale Price for such Transferred 

14

 

Receivable, the Originator thereof shall make a cash payment to Buyer in the amount of such excess by remitting such amount to the Collection Account in accordance with the terms of the Purchase
Agreement. 

        (p)    Debt.    Prior to any Originator securing any Debt or granting a Lien on its properties in connection thereto,
such Originator shall, and Parent Guarantor shall cause such Originator to, require the creditor or lender of such Debt to execute and deliver a Satisfactory Intercreditor Agreement to Buyer, unless
Buyer and the Administrative Agent determine that execution and delivery of a Satisfactory Intercreditor Agreement is unnecessary. 

        Section 4.03.    Negative Covenants of the Originators.    Parent Guarantor and each Originator covenants and
agrees that, without the prior written consent of Buyer and the Administrative Agent, from and after the Closing Date and until the Termination Date: 

        (a)    Sale of Stock and Assets.    No Originator shall, nor shall any Originator permit any other Originator to, and
Parent Guarantor shall not permit any Originator to, sell, transfer, convey, assign (by operation of law or otherwise) or otherwise dispose of, or assign any right to receive income in respect of, any
Transferred Receivable or Contract therefor, any of its rights with respect to any Lockbox or Lockbox Account or any other Originator Collateral. Parent Guarantor will not, nor will it permit its
Subsidiaries to, and no Originator shall, make any Dispositions (as defined in the Parent Revolver), except as permitted by Section 7.05 of the Parent Revolver. Notwithstanding the foregoing,
each Originator may pledge its equity interest in the SPC and Buyer to the Credit Facility Agent pursuant to the terms set forth in the Credit Facilities' Security Documents. 

        (b)    Liens.    No Originator shall, nor shall Parent Guarantor permit any Originator to, create, incur, assume or
permit to exist any Adverse Claim on or with respect to its Receivables or any other Originator Collateral (whether now owned or hereafter acquired) except for the Liens set forth in  Schedule 4.03(b) and other Permitted Originator Encumbrances. In addition, no Originator shall, nor shall Parent Guarantor permit any Originator
to, become a party to any agreement, note, indenture or instrument or take any other action that would prohibit the creation of a Lien on any of the Originator Collateral in favor of Buyer as
additional collateral for the recourse and indemnity obligations of such Originator to Buyer hereunder, including those obligations set forth in Sections 4.02(o),
4.04 and 5.01, except as otherwise expressly permitted by this Agreement or any of the other Related Documents). 

        (c)    Modifications of Receivables or Contracts.    The Originators shall not, and Parent Guarantor shall not permit
any Originator to, extend, amend, forgive, discharge, compromise, cancel or otherwise modify the terms of any Transferred Receivable, or amend, modify or waive any term or condition of any Contract
therefor to the extent that any such amendment, modification or waiver materially impairs the collectibility of the Receivables; provided, that any
Originator acting as a Servicer may, in its capacity as a Servicer, take such of the foregoing actions to the extent that they are expressly permitted by the terms of Section 8.06(d) of the
Purchase Agreement. 

        (d)    Sale Characterization.    Neither Parent Guarantor nor the Originators shall make statements or disclosures or
prepare any financial statements for any purpose, including for federal income tax, reporting or accounting purposes, that shall account for the transactions contemplated by this Agreement in any
manner other than (i) with respect to the Sale of each Receivable, as a true sale or absolute assignment of its full right, title and ownership interest in such Receivable and (ii) with
respect to the Transfer of each Contributed Receivable under this Agreement, as a contribution to the capital of Buyer. 

        (e)    Capital Structure and Business.    Parent Guarantor shall not, nor shall permit its Subsidiaries to, and no
Originator shall, nor shall permit its Subsidiaries to, (i) make any changes in any of its business objectives, purposes or operations, that could have or result in a Material Adverse Effect;
or (ii) amend, supplement or otherwise modify its Charter Documents in a manner that could have or 

15

 

result in a Material Adverse Effect. Parent Guarantor shall not, nor shall it permit any Originator to, and no Originator shall, change its structure, the type of entity that it is, its official
name, or its jurisdiction of organization except as permitted by Section 4.02(g). No Originator shall make any change in its capital structure as
described on Schedule 4.01(h), including the issuance of any shares of Stock, warrants or other securities convertible into Stock or any revision
of the terms of its outstanding Stock. 

        (f)    Actions Affecting Rights.    Parent Guarantor shall not, and shall not permit any Originator to, and no
Originator shall, (i) take any action, or fail to take any action, if such action or failure to take action may interfere with the enforcement of any rights hereunder or under the other Related
Documents, including rights with respect to the Transferred Receivables; (ii) waive or alter any rights with respect to the Transferred Receivables (or any agreement or instrument relating
thereto); or (iii) subject to Section 4.02(l)(ii), fail to pay any tax, assessment, charge, fee or other obligation of any Originator with respect to the Transferred Receivables, or fail
to defend any action, if such failure to pay or defend may adversely affect the priority or enforceability of the perfected title of Buyer to and the sole record and beneficial ownership interest of
Buyer in the Transferred Receivables or, prior to their Transfer hereunder, the right, title or interest therein of the Originator thereof. 

        (g)    ERISA.    Parent Guarantor shall not, nor shall cause or permit any ERISA Affiliate to, and no Originator
shall, cause or permit to occur an event that could result in the imposition of a Lien under Section 412 of the IRC or Section 302 or 4068 of ERISA or cause or permit to cause an ERISA
Event to the extent such ERISA Event could reasonably be expected to have a Material Adverse Effect.

        (h)    Change to Credit and Collection Policies.    Each Originator shall comply with the Credit and Collection
Policies, and no change shall be made to the Credit and Collection Policies without the prior written consent of Buyer and the Administrative Agent. 

        (i)    Adverse Tax Consequences.    Parent Guarantor shall not, and shall not permit any Originator to, and no
Originator shall, take or permit to be taken any action (other than with respect to actions taken or to be taken solely by a Governmental Authority), or fail or neglect to perform, keep or observe any
of its obligations hereunder or under the other Related Documents, that would have the effect directly or indirectly of subjecting any payment to Buyer, any Purchaser or holders of the Commercial
Paper who are residents of the United States of America to withholding taxation. 

        (j)    No Proceedings.    From and after the Closing Date and until the date one year plus one day following the date
on which the Commercial Paper with the latest maturity has been paid in full in cash, Parent Guarantor shall not, and shall not permit any Originator to, and no Originator shall, directly or
indirectly, institute or cause to be instituted against Buyer or Conduit Purchaser any proceeding of the type referred to in Sections 9.01(c) and  9.01(d) of the Purchase Agreement. 

        (k)    Commingling.    No Originator shall, nor shall Parent Guarantor permit any Originator to, deposit or permit the
deposit of any funds that do not constitute Collections of Transferred Receivables into any Lockbox Account. If such funds are nonetheless deposited into a Lockbox Account and any Originator so
notifies the Applicable Purchaser, the Applicable Purchaser shall notify the Administrative Agent to promptly remit any such amounts as directed by such Originator. 

        (l)    Financial Covenants.    Parent Guarantor shall not breach or fail to comply with any of the financial covenants
set forth in Annex 4.03(l). 

        (m)    Debt.    Parent Guarantor shall not, nor shall it permit its Subsidiaries to, nor shall the Originators create,
assume, suffer to exist or incur or in any manner become liable in respect of any Debt for borrowed money or other Debt described in clauses (a) through (f) of the definition thereof,
except as permitted by Section 7.02 of the Parent Revolver, provided, that no secured Debt refinancing any such permitted Debt shall be permitted unless the refinancier thereof shall have
entered into a 

16

 

Satisfactory Intercreditor Agreement, unless Buyer and the Administrative Agent determine that execution and delivery of a Satisfactory Intercreditor Agreement is unnecessary. 

        (n)    Fundamental Changes.    Parent Guarantor shall not, nor shall it permit any of its Subsidiaries to, and no
Originator shall, merge or consolidate with or into any Person or liquidate, wind-up or dissolve itself, or permit or suffer any liquidation or dissolution or sell all or substantially all
of its assets, except, that so long as no Termination Event or Incipient Termination Event exists or would result therefrom, as permitted by Section 7.04 of the Parent Revolver. 

        (o)    Acquisitions.    Parent Guarantor will not, nor will it suffer or permit any of its Subsidiaries to, and no
Originator shall make any Acquisition unless permitted by Section 7.06 of the Parent Revolver. 

        (p)    Credit Facilities' Security Documents.    Neither Parent Guarantor nor any Originator shall consent to any
amendment, restatement, supplement or other modification to any Credit Facility Security Document to the extent such Credit Facility Security Document requires the consent of the Administrative Agent
to such amendment and such consent is not received by Parent Guarantor and Originators. 

        Section 4.04.    Breach of Representations, Warranties or Covenants.    Upon discovery by Parent Guarantor, any
Originator or Buyer of any breach of any representation, warranty or covenant described in Sections 4.01, 4.02 or  4.03 (other than a representation,
warranty or covenant relating to the absence of Dilution Factors), which breach is reasonably likely to have a
material adverse effect on the value of a Transferred Receivable or the interests of Buyer therein, the party discovering the same shall give prompt written notice thereof to the other parties hereto.
The Originator that breached such representation, warranty or covenant may, at any time on any Business Day, or shall, if requested by notice from Buyer, on the first Business Day following receipt of
such notice, either (a) repurchase such Transferred Receivable from Buyer for cash, (b) transfer ownership of a new Eligible Receivable or new Eligible Receivables to Buyer on such
Business Day, or (c) make a capital contribution in cash to Buyer by remitting the amount (the "Rejected Amount") of such capital contribution to
the Collection Account in accordance with the terms of the Purchase Agreement, in each case in an amount equal to the Billed Amount of such Transferred Receivable  minus the sum of (A) Collections
received in respect thereof and (B) the amount of any Dilution Factors taken into account in the
calculation of the Sale Price therefor. Notwithstanding the foregoing, if any Receivable is not paid in full on account of any Dilution Factors, the applicable Originator's repurchase obligation under
this Section 4.04 with respect to such Receivable shall be reduced by the amount of any such Dilution Factors taken into account in the
calculation of the Sale Price therefor. Each Originator shall ensure that (x) no Collections or other proceeds with respect to a Transferred Receivable so reconveyed to it are paid or deposited
into any Lockbox Account and (y) such reconveyed Transferred Receivables are not included in the reporting materials identifying Eligible Receivables or Transferred Receivables provided by the
Originator to the Buyer or the Administrative Agent and the Purchasers. 

ARTICLE V

INDEMNIFICATION  

        Section 5.01.    Indemnification.    Without limiting any other rights that Buyer or any of its Stockholders,
officers, directors, employees, attorneys, agents or representatives (each, a "Buyer Indemnified Person") may have hereunder or under applicable law,
Parent Guarantor and each Originator hereby agrees to indemnify and hold harmless each Buyer Indemnified Person from and against any and all Indemnified Amounts that may be claimed or asserted against
or incurred by any such Buyer Indemnified Person in connection with or arising out of the transactions contemplated under this Agreement or under any other Related Document, any actions or failures to
act in connection therewith, including any and all legal costs and expenses arising out of or incurred in connection with disputes between or among any parties to any of the Related Documents, or in
respect 

17

 

of any Transferred Receivable or any Contract therefor or the use by Originators of the Sale Price therefor; provided, that neither Parent Guarantor
nor the Originators shall be liable for any indemnification to a Buyer Indemnified Person to the extent that any such Indemnified Amounts result solely from (a) such Buyer Indemnified Person's
gross negligence or willful misconduct, as finally determined by a court of competent jurisdiction, (b) recourse for uncollectible or uncollected Transferred Receivables due to the lack of
creditworthiness of the Obligor or the occurrence of any event of bankruptcy with respect to such Obligor, or (c) any income tax or franchise tax incurred by any Buyer Indemnified Person,
except to the extent that the incurrence of any such tax results from a breach of or default under this Agreement or any other Related Document. Subject to the exceptions set forth in clauses (a),
(b) and (c) of the immediately preceding sentence but otherwise without limiting the generality of the foregoing, each Originator and Parent Guarantor shall pay on demand to each Buyer
Indemnified Person any and all Indemnified Amounts relating to or resulting from: 

          (i)  reliance
on any representation or warranty made or deemed made by Parent Guarantor or any Originator (or any of its respective officers) under or in connection with
this Agreement or any other Related Document or on any other information delivered by Parent Guarantor or an Originator pursuant hereto or thereto that shall have been incorrect in any material
respect when made or deemed made or delivered; 

        (ii)  the
failure by Parent Guarantor or any Originator to comply with any term, provision or covenant contained in this Agreement, any other Related Document or any
agreement executed in connection herewith or therewith, any applicable law, rule or regulation with respect to any Transferred Receivable or Contract therefor, or the nonconformity of any Transferred
Receivable or the Contract therefor with any such applicable law, rule or regulation; 

        (iii)  the
failure to vest and maintain vested in Buyer, or to Transfer to Buyer, valid and properly perfected title to and sole record and beneficial ownership of the
Receivables that constitute Transferred Receivables, together with all Collections in respect thereof, free and clear of any Adverse Claim; 

        (iv)  any
dispute, claim, offset or defense of any Obligor (other than its discharge in bankruptcy) to the payment of any Receivable that is the subject of a Transfer
hereunder (including a defense based on such Receivable or the Contract therefor not being a legal, valid and binding obligation of such Obligor enforceable against it in accordance with its terms),
or any other claim resulting from the sale of the merchandise or services giving rise to such Receivable or the furnishing or failure to furnish such merchandise or services or relating to collection
activities with respect to such Receivable (if such collection activities were performed by Parent Guarantor or any Affiliate acting as the Servicer or a Sub-Servicer), except to the
extent that such dispute, claim, offset or defense results solely from any action or inaction on the part of Buyer; 

        (v)  any
products liability claim or other claim arising out of or in connection with merchandise, insurance or services that is the subject of any Contract; 

        (vi)  the
commingling of Collections with respect to Transferred Receivables by Parent Guarantor or any Originator at any time with its other funds or the funds of any other
Person; 

      (vii)  any
failure by any Originator to cause the filing of, or any delay in filing, financing statements or other similar instruments or documents under the UCC of any
applicable jurisdiction or any other applicable laws with respect to any Receivable that is the subject of a Transfer hereunder, whether at the time of any such Transfer or at any subsequent time; 

      (viii)  any
failure by Parent Guarantor, any Originator or any Servicer to perform, keep or observe any of their respective duties or obligations hereunder, under any other
Related Document or under any Contract related to a Transferred Receivable; 

18

 

        (ix)  any
failure of a Lockbox Account Bank to comply with the terms of the applicable Lockbox Agreement; 

        (x)  any
investigation, Litigation or proceeding related to this Agreement or the use of the Sale Price obtained in connection with any Sale or the ownership of Receivables
or Collections with respect thereto or in respect of any Receivable or Contract, except to the extent any such investigation, Litigation or proceeding relates to a matter involving a Buyer Indemnified
Person for which neither Parent Guarantor nor any Originator nor any of their Affiliates is at fault, as finally determined by a court of competent jurisdiction; or 

        (xi)  any
claim brought by any Person other than a Buyer Indemnified Person arising from any activity by Parent Guarantor, Originators or any of their Affiliates in
servicing, administering or collecting any Transferred Receivables. 

NO BUYER INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR LIABLE TO ANY OTHER PARTY TO THIS AGREEMENT OR ANY OTHER RELATED DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY
BENEFICIARY OF SUCH PERSON OR ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES THAT MAY BE ALLEGED AS A RESULT OF ANY
TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER.

ARTICLE VI

LIMITATIONS ON BUYER  

        Section 6.01.    Dividends.    The Buyer may declare or pay dividends or make other distributions at any time
that, after giving effect to such dividends or other distributions, Buyer's Net Worth Percentage shall be equal to or greater than five percent (5.0%). 

ARTICLE VII

COLLATERAL SECURITY  

        Section 7.01.    Security Interest.    To secure the prompt and complete payment, performance and observance of
any and all recourse and indemnity obligations of each Originator to Buyer, including those set forth in Sections 4.02(o), 4.04, 5.01 and  8.14, and to
induce Buyer to enter into this Agreement in accordance with the terms and conditions hereof, each Originator hereby grants, assigns,
conveys, pledges, hypothecates and transfers to Buyer a Lien upon all of such Originator's right, title and interest in, to and under the following property, whether now owned by or owing to, or
hereafter acquired by or arising in favor of, such Originator (including under any trade names, styles or derivations of such Originator), and whether owned by or consigned by or to, or leased from or
to, such Originator, and regardless of where located (all of which being hereinafter collectively referred to as the "Originator Collateral"): 

        (a)  all
Receivables, Collections, and Contracts, 

        (b)  such
Originator's rights in the merchandise (including returned goods) relating to the Receivables, 

        (c)  all
of the Buyer's credits and balances with such Originator existing at such time, 

        (d)  all
deposit accounts and lockboxes into which Collections are deposited (other than accounts into which Collections are mistakenly deposited) (including, but not limited
to, the Lockboxes and Lockbox Accounts), 

        (e)  such
Originator's rights in the Sale and Contribution Agreement and the Related Documents to which it is a party, 

19

 

        (f)    all
books and records pertaining to the foregoing (including customer lists and other related property and rights), and 

        (g)  all
proceeds and products of the foregoing and all accessions to, and substitutions and replacements for, each of the foregoing (whether constituting accounts, deposit
accounts, equipment, inventory, general intangibles, investment property, chattel paper, documents, supporting obligations and letter of credit rights, or instruments, whether or not constituting
Receivables). 

        Section 7.02.    Other Collateral; Rights in Receivables.    Nothing contained in this  Article VII shall limit the rights of Buyer in
and to any other collateral that may have been or may hereafter be granted to Buyer by any
Originator or any third party pursuant to any other agreement or the rights of Buyer under any of the Transferred Receivables. 

        Section 7.03.    Originators Remain Liable.    It is expressly agreed by each Originator that, anything herein
to the contrary notwithstanding, such Originator shall remain liable under any and all of the Receivables originated by it, the Contracts therefor and all other Originator Collateral to observe and
perform all the conditions and obligations to be observed and performed by it thereunder. The Buyer shall not have any obligation or liability under any such Receivables, Contracts or Originator
Collateral by reason of or arising out of this Agreement or the granting herein of a Lien thereon or the receipt by the Buyer of any payment relating thereto pursuant hereto. The exercise by the Buyer
of any of its respective rights under this Agreement shall not release any Originator from any of its respective duties or obligations under any such Receivables, Contracts or Originator Collateral.
The Buyer shall not be required or obligated in any manner to perform or fulfill any of the obligations of any Originator under or pursuant to any such Receivable, Contract or Originator Collateral,
or to make any payment, or to make any inquiry as to the nature or the sufficiency of any payment received by it or the sufficiency of any performance by any party under any such Receivable, Contract
or Originator Collateral, or to present or file any claims, or to take any action to collect or enforce any performance or the payment of any amounts that may have been assigned to it or to which it
may be entitled at any time or times. 

ARTICLE VIII

MISCELLANEOUS  

        Section 8.01.    Notices.    Except as otherwise provided herein, whenever it is provided herein that any
notice, demand, request, consent, approval, declaration or other communication shall or may be given to or served upon any of the parties by any other parties, or whenever any of the parties desires
to give or serve upon any other parties any communication with respect to this Agreement, each such notice, demand, request, consent, approval, declaration or other communication shall be in writing
and shall be deemed to have been validly served, given or delivered (a) upon the earlier of actual receipt and three Business Days after deposit in the United States Mail, registered or
certified mail, return receipt requested, with proper postage prepaid, (b) upon transmission, when sent by telecopy or other similar facsimile transmission (with such telecopy or facsimile
promptly confirmed by delivery of a copy by personal delivery or United States Mail as otherwise provided in this Section 8.01), (c) one
Business Day after deposit with a reputable overnight courier with all charges prepaid or (d) when delivered, if hand-delivered by messenger, all of which shall be addressed to the
party to be notified and sent to the 

20

 

address or facsimile number set forth below in this Section 8.01 or to such other address (or facsimile number) as may be substituted by notice
given as herein provided: 

	 	Parent Guarantor:	 	4900 South Eastern Avenue, #200

Los Angeles, CA 90040

Attention: John J. Rangel

Facsimile: (323) 724-0470
	 	

Buyer:	
 	

4900 South Eastern Avenue, #200

Los Angeles, CA 90040

Attention: John J. Rangel

Facsimile: (323) 724-0355
	 	

Each Originator:	
 	

To the notice address specified on its signature page

provided, that each such declaration or other communication shall be deemed to have been validly delivered to the Administrative Agent under this
Agreement upon delivery to the Administrative Agent in accordance with the terms of the Purchase Agreement. The giving of any notice required hereunder may be waived in writing by the party entitled
to receive such notice. Failure or delay in delivering copies of any notice, demand, request, consent, approval, declaration or other communication to any Person (other than Buyer) designated in any
written communication provided hereunder to receive copies shall in no way adversely affect the effectiveness of such notice, demand, request, consent, approval, declaration or other communication.
Notwithstanding the foregoing, whenever it is provided herein that a notice is to be given to any other party hereto by a specific time, such notice shall only be effective if actually received by
such party prior to such time, and if such notice is received after such time or on a day other than a Business Day, such notice shall only be effective on the immediately succeeding Business Day. 

        Section 8.02.    No Waiver; Remedies.    Buyer's failure, at any time or times, to require strict performance
by any Originator or Parent Guarantor of any provision of this Agreement or any Receivables Assignment shall not waive, affect or diminish any right of Buyer thereafter to demand strict compliance and
performance herewith or therewith. Any suspension or waiver of any breach or default hereunder shall not suspend, waive or affect any other breach or default whether the same is prior or subsequent
thereto and whether the same or of a different type. None of the undertakings, agreements, warranties, covenants and representations of the Originators or Parent Guarantor contained in this Agreement
or any Receivables Assignment, and no breach or default by any Originator or Parent Guarantor hereunder or thereunder, shall be deemed to have been suspended or waived by Buyer unless such waiver or
suspension is by an instrument in writing signed by an officer of or other duly authorized signatory of Buyer and directed to Parent Guarantor or such Originator, as applicable, specifying such
suspension or waiver. Buyer's rights and remedies under this Agreement shall be cumulative and nonexclusive of any other rights and remedies that Buyer may have under any other agreement, including
the other Related Documents, by operation of law or otherwise. Recourse to the Originator Collateral shall not be required. 

        Section 8.03.    Successors and Assigns.    This Agreement shall be binding upon and shall inure to the benefit
of the Originators, Parent Guarantor and Buyer and their respective successors and permitted assigns, except as otherwise provided herein. Neither Parent Guarantor nor any Originator may assign,
transfer, hypothecate or otherwise convey its rights, benefits, obligations or duties hereunder without the prior express written consent of Buyer, the Purchasers and the Administrative Agent and
unless the Rating Agency Condition shall have been satisfied with respect to any such assignment. Any such purported assignment, transfer, hypothecation or other conveyance by any Originator or Parent
Guarantor without the prior express written consent of Buyer, the Purchasers and the Administrative Agent shall be void. Each Originator and Parent Guarantor acknowledges that, to 

21

 

the extent permitted under the Purchase Agreement, Buyer may assign its rights granted hereunder, including the benefit of any indemnities under  Article V and any of its rights in the Originator
Collateral granted under Article VII,
and the license granted under Article II, and upon such assignment, such assignee shall have, to the extent of such assignment, all rights of
Buyer hereunder and, to the extent permitted under the Purchase Agreement, may in turn assign such rights. Each Originator and Parent Guarantor agrees that, upon any such assignment, such assignee may
enforce directly, without joinder of Buyer, the rights set forth in this Agreement. All such assignees, including parties to the Purchase Agreement in the case of any assignment to such parties, shall
be third party beneficiaries of, and shall be entitled to enforce Buyer's rights and remedies under, this Agreement to the same extent as if they were parties hereto. Without limiting the generality
of the foregoing, all notices to be provided to the Buyer hereunder shall be delivered to both the Buyer and the Administrative Agent under the Purchase Agreement, and shall be effective only upon
such delivery to the Administrative Agent. The terms and provisions of this Agreement are for the purpose of defining the relative rights and obligations of each Originator, Parent Guarantor and Buyer
with respect to the transactions contemplated hereby and, except for the Purchasers and the Administrative Agent, no Person shall be a third party beneficiary of any of the terms and provisions of
this Agreement. 

        Section 8.04.    Termination; Survival of Obligations.    

        (a)  This
Agreement shall create and constitute the continuing obligations of the parties hereto in accordance with its terms, and shall remain in full force and effect until
the Termination Date. 

        (b)  Except
as otherwise expressly provided herein or in any other Related Document, no termination or cancellation (regardless of cause or procedure) of any commitment made
by Buyer under this Agreement shall in any way affect or impair the obligations, duties and liabilities of any Originator, Parent Guarantor or the rights of Buyer relating to any unpaid portion of any
and all recourse and indemnity obligations of Originators and Parent Guarantor to Buyer, including those set forth in Sections 4.02(o), 4.04,
5.01 and 8.14, due or not due, liquidated, contingent or unliquidated or any transaction or event occurring prior to such
termination, or any transaction or event, the performance of which is required after the Facility Termination Date. Except as otherwise expressly provided herein or in any other Related Document, all
undertakings, agreements, covenants, warranties and representations of or binding upon Originators and Parent Guarantor, and all rights of Buyer hereunder, all as contained in the Related Documents,
shall not terminate or expire, but rather shall survive any such termination or cancellation and shall continue in full force and effect until the Termination Date;  provided, that the rights and
remedies pursuant to Sections 4.02(o), 4.04, the indemnification
and payment provisions of Article V, and the provisions of Sections 4.03(j), 8.03, 8.12
and 8.14 shall be continuing and shall survive any termination of this Agreement. 

        Section 8.05.    Complete Agreement; Modification of Agreement.    This Agreement and the other Related
Documents constitute the complete agreement between the parties with respect to the subject matter hereof and thereof, supersede all prior agreements and understandings relating to the subject matter
hereof and thereof, and may not be modified, altered or amended except as set forth in Section 8.06. 

        Section 8.06.    Amendments and Waivers.    No amendment, modification, termination or waiver of any provision
of this Agreement or any of the other Related Documents, or any consent to any departure by any Originator or Parent Guarantor therefrom, shall in any event be effective unless the same shall be in
writing and signed by each of the parties hereto and the Purchasers and the Administrative Agent. No consent or demand in any case shall, in itself, entitle any party to any other consent or further
notice or demand in similar or other circumstances. 

22

 

        Section 8.07.    GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL.    

        (a)  THIS AGREEMENT AND EACH RELATED DOCUMENT (EXCEPT TO THE EXTENT THAT ANY RELATED DOCUMENT EXPRESSLY PROVIDES TO THE CONTRARY) AND THE OBLIGATIONS
ARISING HEREUNDER AND THEREUNDER SHALL IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK (INCLUDING SECTION 5-1401 OF THE GENERAL OBLIGATIONS
LAWS BUT OTHERWISE WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES), EXCEPT TO THE EXTENT THAT THE PERFECTION, EFFECT OF PERFECTION OR PRIORITY OF THE INTERESTS OF THE BUYER IN THE RECEIVABLES OR
REMEDIES HEREUNDER OR THEREUNDER, IN RESPECT THEREOF, ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK, AND ANY APPLICABLE LAWS OF THE UNITED STATES OF
AMERICA.

        (b)  EACH PARTY HERETO HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN THE BOROUGH OF MANHATTAN IN NEW YORK CITY SHALL HAVE
EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THEM PERTAINING TO THIS AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY RELATED DOCUMENT;  PROVIDED,
 THAT EACH PARTY HERETO ACKNOWLEDGES THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF THE BOROUGH OF
MANHATTAN IN NEW YORK CITY; PROVIDED FURTHER, THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE BUYER FROM BRINGING SUIT OR TAKING
OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE ORIGINATOR COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS OF ORIGINATORS OR PARENT GUARANTOR ARISING HEREUNDER, OR TO ENFORCE A
JUDGMENT OR OTHER COURT ORDER IN FAVOR OF BUYER. EACH PARTY HERETO SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH PARTY HERETO HEREBY
WAIVES ANY OBJECTION THAT SUCH PARTY MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO
THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. EACH PARTY HERETO HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH
ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH PARTY AT THE ADDRESS SET FORTH BENEATH ITS NAME ON THE
SIGNATURE PAGES HEREOF AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF SUCH PARTY'S ACTUAL RECEIPT THEREOF OR THREE DAYS AFTER DEPOSIT IN THE UNITED STATES MAIL, PROPER POSTAGE
PREPAID. NOTHING IN THIS SECTION SHALL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.

        (c)  BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND
EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE
LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING
BROUGHT TO RESOLVE ANY DISPUTE,  

23

 

 WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS AGREEMENT OR ANY RELATED
DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

        Section 8.08.    Counterparts.    This Agreement may be executed in any number of separate counterparts, each
of which shall collectively and separately constitute one agreement. 

        Section 8.09.    Severability.    Wherever possible, each provision of this Agreement shall be interpreted in
such a manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective only
to the extent of such prohibition or invalidity without invalidating the remainder of such provision or the remaining provisions of this Agreement. 

        Section 8.10.    Section Titles.    The section titles and table of contents contained in this Agreement are
provided for ease of reference only and shall be without substantive meaning or content of any kind whatsoever and are not a part of the agreement between the parties hereto. 

        Section 8.11.    No Setoff.    Except as set forth in  Section 6.05, the Originators' and Parent Guarantor's obligations under this
Agreement shall not be affected by any right of setoff,
counterclaim, recoupment, defense or other right any Originator or Parent Guarantor might have against Buyer, any Purchaser or the Administrative Agent, all of which rights are hereby expressly waived
by the Originators and Parent Guarantor. 

        Section 8.12.    Confidentiality.    

        (a)  Except
to the extent otherwise required by applicable law, as required to be filed publicly with the Securities and Exchange Commission, or unless each Affected Party
shall otherwise consent in writing, the Originators, Parent Guarantor and Buyer agree to maintain the confidentiality of this Agreement (and all drafts hereof and documents ancillary hereto) in its
communications with third parties other than any Affected Party or any Buyer Indemnified Person and otherwise and not to disclose, deliver or otherwise make available to any third party (other than
its directors, officers, employees, accountants or counsel) the original or any copy of all or any part of this Agreement (or any draft hereof and documents ancillary hereto) except to an Affected
Party or an Buyer Indemnified Person. 

        (b)  Each
Originator and Parent Guarantor agrees that it shall not (and shall not permit any of its Subsidiaries to) issue any news release or make any public announcement
pertaining to the transactions contemplated by this Agreement and the Related Documents without the prior written consent of Buyer and each of the Committed Purchaser and the Conduit Purchaser (which
consent shall not be unreasonably withheld) unless such news release or public announcement is required by law, in which case such Originator or Parent Guarantor shall consult with Buyer and each of
the Committed Purchaser and the Conduit Purchaser prior to the issuance of such news release or public announcement. The Originators and Parent Guarantor may, however, disclose the general terms of
the transactions contemplated by this Agreement and the Related Documents to trade creditors, suppliers
and other similarly-situated Persons so long as such disclosure is not in the form of a news release or public announcement. 

        (c)  Except
to the extent otherwise required by applicable law, or in connection with any judicial or administrative proceedings, as required to be filed publicly with the
Securities Exchange Commission, or unless the Originators and Parent Guarantor otherwise consents in writing, the Buyer agrees (i) to maintain the confidentiality of (A) this Agreement
(and all drafts hereof and documents ancillary hereto) and (B) all other confidential proprietary information with respect to Parent Guarantor and its Affiliates and each of their respective
businesses obtained by the Buyer in connection with the structuring, negotiation and execution of the transactions contemplated herein and 

24

 

in the other documents ancillary hereto, in each case, in its communications with third parties other than any Affected Party, Originators or Parent Guarantor and (ii) not to disclose,
deliver, or otherwise make available to any third party (other than its directors, officers, employees, accountants or counsel) the original or any copy of all or any part of this Agreement (or any
draft hereof and documents ancillary hereto) except to an Affected Party, an Originator or Parent Guarantor. 

        Section 8.13.    Further Assurances.    

        (a)  Parent
Guarantor shall, and shall cause each Originator to, and each Originator shall, at its sole cost and expense, upon request of Buyer, any Purchaser or the
Administrative Agent, promptly and duly execute and deliver any and all further instruments and documents and take such further actions that may be necessary or desirable or that Buyer, any Purchaser
or the Administrative Agent may request to carry out more effectively the provisions and purposes of this Agreement or any other Related Document or to obtain the full benefits of this Agreement and
of the rights and powers herein granted, including (i) using its best efforts to secure all consents and approvals necessary or appropriate for the assignment to or for the benefit of Buyer of
any Transferred Receivable or Originator Collateral held by such Originator or in which such Originator has any rights not heretofore assigned, (ii) filing any financing or continuation
statements under the UCC, with respect to the ownership interests or Liens granted hereunder or under any other Related Document, (iii) transferring Originator Collateral to Buyer's possession
if such collateral consists of chattel paper or instruments or if a Lien upon such collateral can be perfected only by possession, or if otherwise requested by Buyer; and (iv) entering into
"control agreements" (as defined in the UCC with respect to any Originator Collateral to the extent that a first priority Lien upon such Originator Collateral can be perfected only by control. Each
Originator hereby authorizes Buyer, each Purchaser and the Administrative Agent to file any such financing or continuation statements without the signature of such Originator to the extent permitted
by applicable law. A carbon, photographic or other reproduction of this Agreement or of any notice or financing statement covering the Transferred Receivables, the Originator Collateral or any part
thereof shall be sufficient as a notice or financing statement where permitted by law. If any amount payable under or in connection with any of the Originator Collateral is or shall become evidenced
by any instrument, such instrument, other than checks and notes received in the ordinary course of business, shall be duly endorsed in a manner satisfactory to Buyer immediately upon any Originator's
receipt thereof and promptly delivered to Buyer. 

        (b)  If
any Originator or Parent Guarantor fails to perform any agreement or obligation under this Section 8.13, Buyer,
any Purchaser or the Administrative Agent may (but shall not be required to) itself perform, or cause performance of, such agreement or obligation, and the reasonable expenses of Buyer, such Purchaser
or the Administrative Agent incurred in connection therewith shall be payable by such Originator or Parent Guarantor upon demand of Buyer, such Purchaser or the Administrative Agent. 

        Section 8.14.    Fees and Expenses.    In addition to its indemnification obligations pursuant to  Article V, each Originator and Parent
Guarantor agrees, jointly and severally, to pay on demand all costs and expenses incurred by Buyer in
connection with the negotiation, preparation, execution and delivery of this Agreement and the other Related Documents, including the fees and out-of-pocket expenses of Buyer's
counsel, advisors, consultants and auditors retained in connection with the transactions contemplated thereby and advice in connection therewith, and each Originator and Parent Guarantor agrees,
jointly and severally, to pay all costs and expenses, if any (including attorneys' fees and expenses but excluding any costs of enforcement or collection of the Transferred Receivables), in connection
with the enforcement of this Agreement and the other Related Documents. 

25

        IN WITNESS WHEREOF, the parties have caused this Sale and Contribution Agreement to be executed by their respective duly authorized representatives, as of the date first above written. 

	BUYER:	 	 	 
	 	 	K2 FINANCE COMPANY, LLC
	

 	
 	

By	

 
	 	 	 	
 Name: John J. Rangel

Title: Vice President
	
ORIGINATORS:	
 	

 	

 
	 	 	K-2 CORPORATION
	

 	
 	

By	

 
	 	 	 	
 Name: John Rangel

Title: Senior Vice President
	

 	
 	
Address:

19215 Vashon Highway, SW

Vashon, Washington 98070

Attention: John J. Rangel

Telecopy: (323) 724-0470
	

 	
 	
With a copy to:

4900 South Eastern Avenue, #200

Los Angeles, California 90040

Attention: John J. Rangel

	 	 	SHAKESPEARE COMPANY, LLC

By K2 INC., its Manager
	

 	
 	

By	

 
	 	 	 	
 Name: John J. Rangel

Title: Senior Vice President—Finance
	

 	
 	
Address:

4900 South Eastern Avenue, #200

Los Angeles, California 90040

Attention: John J. Rangel

Telecopy: (323) 724-0470
	

 	
 	
STEARNS INC.
	

 	
 	

By	

 
	 	 	 	
 Name: John J. Rangel

Title: Senior Vice President
	

 	
 	
Address:

1100 Stearns Drive

Sauk Rapids, Minnesota 56379

Attention: John J. Rangel

Telecopy: (323) 724-0470
	

 	
 	
With a copy to:

4900 South Eastern Avenue, #200

Los Angeles, California 90040

Attention: John J. Rangel

  

EXHIBIT 2.01(a)  

 
 

Form of    
    
    RECEIVABLES ASSIGNMENT    
  

        THIS RECEIVABLES ASSIGNMENT (the "Receivables Assignment") is entered into as of March 28, 2002, by and
between [                        ] (the "Originator") and K2 FINANCE COMPANY, LLC
("Buyer"). 

        1.    We
refer to that certain Receivables Sale and Contribution Agreement (as amended, restated, supplemented or otherwise modified from time to time, the
"Sale and Contribution Agreement") of even date herewith among Originator, the other persons signatory thereto as "Originator", K2 Inc., in its
capacity as parent guarantor, and Buyer. All of the terms, covenants and conditions of the Sale and Contribution Agreement are hereby made a part of this Receivables Assignment and are deemed
incorporated herein in full. Unless otherwise defined herein, capitalized terms or matters of construction defined or established in the Sale and Contribution Agreement shall be applied herein as
defined or established therein. 

        2.    For
good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Originator hereby sells, or sells or contributes, to Buyer, without
recourse, except as provided in Sections 4.02(o) and 4.04 of the Sale and Contribution Agreement, all of the Originator's right, title and interest in, to and under all of its Receivables (including
all Collections, Records and proceeds with respect thereto) existing as of the Closing Date and thereafter created or arising at any time until the Facility Termination Date. 

        3.    Subject
to the terms and conditions of the Sale and Contribution Agreement, the Originator hereby covenants and agrees to sign, sell or contribute, as applicable, execute
and deliver, or cause to be signed, sold or contributed, executed and delivered, and to do or make, or cause to be done or made,
upon request of Buyer and at the Originator's expense, any and all agreements, instruments, papers, deeds, acts or things, supplemental, confirmatory or otherwise, as may be reasonably required by
Buyer for the purpose of or in connection with acquiring or more effectively vesting in Buyer or evidencing the vesting in Buyer of the property, rights, title and interests of the Originator sold or
contributed hereunder or intended to be sold or contributed hereunder. 

        4.    Wherever
possible, each provision of this Receivables Assignment shall be interpreted in such a manner as to be effective and valid under applicable law, but if any
provision of this Receivables Assignment shall be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or the remaining provisions of this Receivables Assignment. 

        5.    THIS
RECEIVABLES ASSIGNMENT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, INCLUDING SECTION
5-1401 OF THE GENERAL OBLIGATIONS LAW BUT OTHERWISE WITHOUT REGARD TO THE PRINCIPLES THEREOF REGARDING CONFLICT OF LAWS, AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. 

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

	[ORIGINATOR]	 	K2 FINANCE COMPANY, LLC
	

By:	

 	
 	

By:	

 
	 	
	 	 	

	Name:

Title:	 	Name:

Title:

ANNEX-1

 
ANNEX 4.03(l)  

 
  Financial Covenants    
  

        Parent Guarantor shall not breach or fail to comply with any of the following financial covenants, each of which shall be calculated in accordance with GAAP
consistently applied: 

        (a)    Fixed Charge Coverage Ratio.    Parent Guarantor and its Subsidiaries shall not permit the ratio of
Consolidated Income Available for Fixed Charges to Fixed Charges for the most recently ended period of four consecutive fiscal quarters of Parent Guarantor ending on the last day of each fiscal
quarter set forth below to be less than the ratio set forth below opposite such day: 

	Fiscal Quarter(s) Ending
 
	 	Minimum Fixed Charges Coverage Ratio

	December 31, 2001	 	1.25 to 1
	March 31, 2002	 	0.70 to 1
	June 30, 2002	 	0.80 to 1
	September 30, 2002	 	0.95 to 1
	December 31, 2002	 	1.25 to 1
	March 31, 2003	 	1.35 to 1
	June 30, 2003	 	1.45 to 1
	September 30, 2003	 	1.55 to 1
	December 31, 2003 and thereafter	 	1.75 to 1.

        (b)    Leverage Ratio.    Parent Guarantor shall not permit the Leverage Ratio at any time during any period set forth
below to be greater than the ratio set forth below opposite such period: 

	Period
 
	 	Maximum Leverage Ratio

	Prior to 6/29/02	 	7.80 to 1
	6/30/02 - 9/29/02	 	7.30 to 1
	9/30/02 - 12/30/02	 	6.75 to 1
	12/30/02 - 3/30/02	 	5.50 to 1
	3/31/03 - 6/29/03	 	5.00 to 1
	6/30/03 - 9/29/03	 	4.75 to 1
	9/30/03 and thereafter	 	4.25 to 1.

        (c)    Capital Expenditures.    Parent Guarantor will not, nor will it suffer or permit any of its Subsidiaries to,
make, or become legally obligated to make, any Capital Expenditures, except Capital Expenditures in any fiscal year of Parent Guarantor not exceeding $20,000,000 in the aggregate. 

        Capitalized
terms used in this Annex 4.03(l) and not otherwise defined below shall have the respective meanings ascribed to them in  Annex X. 

        "Capital Expenditures" shall have the meaning set forth in the Parent Revolver. 

        "Consolidated Income Available for Fixed Charges" shall have the meaning set forth in the Parent Revolver. 

        "Fixed Charges" shall have the meaning set forth in the Parent Revolver. 

        "Leverage Ratio" shall have the meaning set forth in the Parent Revolver. 

ANNEX-2

 
ANNEX Z  

Parent
Revolver 

[see
attached] 

ANNEX-3

QuickLinks

Form of RECEIVABLES ASSIGNMENT

Financial Covenants

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