CONTENTS

 

ARTICLE I.	DEFINITIONS	1
1.1	DEFINED TERMS	1
1.2	ACCOUNTING AND FINANCIAL DETERMINATIONS	19
1.3	HEADINGS	19
1.4	ADDITIONAL DEFINITION PROVISIONS	19
ARTICLE II.	APPOINTMENT OF BORROWERS’ AGENT; JOINT AND SEVERAL LIABILITY	19
2.1	APPOINTMENT OF AGENT	19
2.2	AUTHORIZED REPRESENTATIVES	20
2.3	JOINT AND SEVERAL LIABILITY; RIGHTS OF CONTRIBUTION	20
ARTICLE III.	THE CREDITS	22
3.1	REVOLVING LOANS	22
3.2	SWING LOANS	24
3.3	[RESERVED]	25
3.4	LETTER OF CREDIT FACILITY	25
3.5	INTEREST/FEES	28
3.6	INTEREST OPTIONS	29
3.7	OTHER PAYMENT TERMS	30
3.8	FUNDING	31
3.9	PRO RATA TREATMENT	32
3.10	CHANGE OF CIRCUMSTANCES	32
3.11	TAXES ON PAYMENTS	34
3.12	FUNDING LOSS INDEMNIFICATION	34

 

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ARTICLE IV.	ADMINISTRATION	35
4.1	STATEMENTS	35
4.2	PAYMENTS	35
ARTICLE V.	SECURITY	36
5.1	GRANT OF SECURITY INTEREST	36
5.2	PERFECTION; DUTY OF CARE	36
ARTICLE VI.	REPRESENTATIONS AND WARRANTIES	37
6.1	LEGAL STATUS; SUBSIDIARIES	37
6.2	DUE AUTHORIZATION; NO VIOLATION	37
6.3	GOVERNMENT APPROVAL, REGULATION	37
6.4	VALIDITY; ENFORCEABILITY	38
6.5	CORRECTNESS OF FINANCIAL STATEMENTS	38
6.6	TAXES	38
6.7	LITIGATION, LABOR CONTROVERSIES	38
6.8	TITLE TO PROPERTY, LIENS	38
6.9	ERISA	39
6.10	OTHER OBLIGATIONS	39
6.11	ENVIRONMENTAL MATTERS	39
6.12	NO BURDENSOME RESTRICTIONS; NO DEFAULTS	39
6.13	NO OTHER VENTURES	39
6.14	INSURANCE	40
6.15	FORCE MAJEURE	40
6.16	INTELLECTUAL PROPERTY	40
6.17	CERTAIN INDEBTEDNESS	40
6.18	SOLVENCY	41

 

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6.19	CHIEF EXECUTIVE OFFICE AND OTHER LOCATIONS	41
6.20	FISCAL YEAR	41
6.21	COMPLIANCE WITH LAW	41
6.22	NO SUBORDINATION	41
6.23	TRUTH, ACCURACY OF INFORMATION	41
ARTICLE VII.	CONDITIONS	42
7.1	CONDITIONS OF INITIAL EXTENSION OF CREDIT	42
7.2	CONDITIONS OF EACH EXTENSION OF CREDIT	43
ARTICLE VIII.	AFFIRMATIVE COVENANTS	43
8.1	PAYMENTS	43
8.2	ACCOUNTING RECORDS	44
8.3	INFORMATION AND REPORTS	44
8.4	COMPLIANCE	45
8.5	INSURANCE	45
8.6	FACILITIES	46
8.7	TAXES AND OTHER LIABILITIES	47
8.8	LITIGATION	47
8.9	NOTICE TO ADMINISTRATIVE LENDER	47
8.10	CONDUCT OF BUSINESS	48
8.11	PRESERVATION OF CORPORATE EXISTENCE, ETC.	48
8.12	ACCESS	48
8.13	PERFORMANCE AND COMPLIANCE WITH OTHER COVENANTS	49
8.14	FISCAL YEAR; ACCOUNTING PRACTICES	49
8.15	ENVIRONMENTAL	49
8.16	LIENS	49

 

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8.17	FUTURE SUBSIDIARIES	50
8.18	USE OF PROCEEDS	50
8.19	FURTHER ASSURANCES	50
8.20	LIEN IN REAL PROPERTY	50
ARTICLE IX.	NEGATIVE COVENANTS	50
9.1	LIENS	50
9.2	INDEBTEDNESS	51
9.3	RESTRICTED PAYMENTS, REDEMPTIONS	52
9.4	MERGERS, STOCK ISSUANCES, SALE OF ASSETS, ETC.	52
9.5	INVESTMENTS	53
9.6	CHANGE IN NATURE OF BUSINESS	54
9.7	PLANS	54
9.8	CANCELLATION OF INDEBTEDNESS OWED TO IT	54
9.9	MARGIN REGULATIONS	55
9.10	ENVIRONMENTAL	55
9.11	TRANSACTIONS WITH AFFILIATES	55
9.12	NEW COLLATERAL LOCATION; NAME CHANGE	55
9.13	NO SPECULATIVE TRANSACTIONS	55
ARTICLE X.	FINANCIAL COVENANTS	55
10.1	LEVERAGE RATIO	55
10.2	CURRENT RATIO	56
10.3	DEBT SERVICE COVERAGE RATIO	56
10.4	TANGIBLE NET WORTH	56
ARTICLE XI.	EVENTS OF DEFAULT	56
11.1	EVENTS OF DEFAULT	56

 

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11.2	REMEDIES	58
11.3	ADMINISTRATIVE LENDER AS BORROWERS’ ATTORNEY	60
ARTICLE XII.	ADMINISTRATIVE LENDER	61
12.1	ACTIONS	61
12.2	RELIANCE BY ADMINISTRATIVE LENDER	62
12.3	EXCULPATION	62
12.4	SUCCESSOR	62
12.5	LOANS BY ADMINISTRATIVE LENDER; OTHER ACTIONS	63
12.6	CREDIT DECISIONS	63
12.7	SYNDICATION AGENT	63
ARTICLE XIII.	MISCELLANEOUS	64
13.1	NOTICES	64
13.2	COSTS, EXPENSES, ATTORNEYS’ FEES	64
13.3	INDEMNIFICATION	64
13.4	WAIVERS, AMENDMENTS	65
13.5	SUCCESSORS AND ASSIGNS	66
13.6	SETOFF	68
13.7	NO WAIVER; CUMULATIVE REMEDIES	68
13.8	ENTIRE AGREEMENT	69
13.9	NO THIRD PARTY BENEFICIARIES	69
13.10	CONFIDENTIALITY	69
13.11	TIME	70
13.12	SEVERABILITY OF PROVISIONS	70
13.13	GOVERNING LAW	70
13.14	SUBMISSION TO JURISDICTION	70

 

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13.15	WAIVER OF JURY TRIAL	70
13.16	COUNTERPARTS	71
13.17	OREGON STATUTORY NOTICE	71

 

 

SCHEDULES

 

I	Lenders
II	Pricing Schedule

 

EXHIBITS

 

A	Borrowing Base Certificate
B	Note Forms
C	Notice of Authorized Representatives
D	Notice of Borrowing
E	Notice of Conversion or Continuation
F	Form of Chief Financial Officer’s Certificate
G	Assignment Agreement

 

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SECOND AMENDED AND RESTATED CREDIT AGREEMENT

 

THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT is entered into as of November 17, 2004 by and among MONACO COACH CORPORATION, a Delaware corporation (“Parent”), ROYALE COACH BY MONACO, INC., an Indiana corporation, MCC ACQUISITION CORPORATION, a Delaware corporation, OUTDOOR RESORTS OF LAS VEGAS, INC., a Nevada corporation, OUTDOOR RESORTS MOTORCOACH COUNTRY CLUB, INC., a California corporation, and OUTDOOR RESORTS OF NAPLES, INC., a Florida corporation, (each of the foregoing parties individually referred to as “Borrower” and all collectively referred to as “Borrowers”), each of the financial institutions from time to time listed on Schedule I attached hereto, as amended from time to time, and U.S. BANK NATIONAL ASSOCIATION (“U.S. Bank”), as the administrator for the Lenders (in such capacity, “Administrative Lender”) and BANK OF AMERICA, N.A. as Syndication Agent.

 

RECITALS

 

Borrowers, Administrative Lender and certain of the Lenders are parties to that certain Amended and Restated Credit Agreement dated September 28, 2001 (as amended by three amendments, the “Existing Credit Agreement”).  The parties desire to make certain changes to the Existing Credit Agreement, including, among other changes, removing Washington Mutual Bank as a Lender and adjusting the commitments of the remaining Lenders.  The parties have decided, for ease of reference, to amend and restate the Existing Credit Agreement in its entirety.

 

NOW, THEREFORE, in consideration of the mutual covenants and promises of the parties contained herein, Administrative Lender, Lenders and Borrowers hereby agree as follows:

 

ARTICLE I.                DEFINITIONS

 

1.1                   DEFINED TERMS

 

All terms defined above shall have the meanings set forth above.  The following terms shall have the meanings set forth below (with all such meanings to be equally applicable to both the singular and plural forms of the terms defined):

 

“ Accounts ” means (i) all “accounts” as defined in the Code and (ii) all presently existing and hereafter arising rights to payment of a monetary obligation, whether or not earned by performance.

 

“ Administrative Lender’s Office ” means (i) initially, Administrative Lender’s office designated as such in Schedule I hereto, and (ii) subsequently, such other office designated as such, from time to time, in writing by Administrative Lender to Lenders and Borrower.

 

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“ Agreement ” means this Second Amended and Restated Credit Agreement as amended, modified or supplemented from time to time.

 

“ Applicable Lending Office ” means, with respect to each Lender, (i) initially, its office designated as such in Schedule I hereto, and (ii) subsequently, such other office designated as such from time to time in writing by such Lender to Administrative Lender.

 

“ Applicable Rate ” means, at any date, the lesser of (a) the Highest Lawful Rate or (b) the following:  (i) with respect to each Prime Rate Loan (other than a Swing Loan), a per annum rate equal to the Prime Rate in effect on such date plus the applicable Prime Margin; (ii) with respect to each Swing Loan, a per annum rate equal to Daily LIBOR plus the applicable LIBOR Margin; and (iii) with respect to each LIBOR Loan, a per annum rate equal to the sum of LIBOR plus the applicable LIBOR Margin, both as determined on the second Business Day before the first day of the applicable Fixed Rate Term.

 

“ Approved Dealer Financing Agreement ” means (i) agreements entered into by a Borrower in the ordinary course of business with financial institutions providing floor-plan financing to customers who purchase finished goods inventory of Borrowers, and the terms of which agreements (including repurchase obligations) are both customary in the recreational vehicle industry and are no less favorable in all material respects to Borrowers that those in effect as of the Closing Date.

 

“ Approved Sale ” means a sale by Borrower to a customer evidenced by an account which has been approved for payment by a lender in accordance with an Approved Dealer Financing Agreement.

 

“ Authorized Representative ” means a person designated as such by Borrowers’ Agent in a Notice of Authorized Representatives delivered to Administrative Lender.

 

“ Available Credit ” means, at any time before the Maturity Date, the amount by which (i) the lesser of (A) the total of the Revolving Loan Commitments or (B) the Borrowing Base is greater than (ii) the total of the outstanding principal amount of the Revolving Loans, the Letter of Credit Obligations and Swing Loans, and on and after the Maturity Date, Available Credit shall be zero.

 

“ Bankruptcy Code ” means the Bankruptcy Reform Act, Title 11 of the United States Code, as amended or recodified from time to time, including (unless the context otherwise requires) any rules or regulations promulgated thereunder.

 

“ Borrowers’ Agent ” means Parent in its capacity as agent for the Borrowers.

 

“ Borrowing Base ” means, as of any date of determination, an amount equal to the following amount:

 

(a)            85% of the outstanding Eligible Accounts;

 

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(b)            plus 50% of Eligible Inventory consisting of raw materials, valued at the lower of cost (determined on a “first in, first out” basis) or market value;

 

(c)            plus the lesser of $50,000,000 or 90% of Eligible Inventory consisting of finished goods, valued at the lower of cost (determined on a “first in, first out” basis) or market value; and

 

(d)            less the outstanding balance of all accounts payable with respect to chassis which are secured in whole or in part.

 

“ Borrowing Base Certificate ” means a certificate substantially in the form of Exhibit A attached hereto.

 

“ Business Day ” means (a) for all purposes other than as covered by clause (b) below, any day other than a Saturday, Sunday or other day on which commercial banks are authorized or required to be closed in Portland, Oregon, Minneapolis, Minnesota or New York, New York, and (b) with respect to all notices, determinations, fundings and payments in connection with any LIBOR interest selection or LIBOR Loan, any day that is a Business Day described in clause (a) above and that also is a day for trading by and between banks in U.S. Dollar deposits in the London interbank eurocurrency market.

 

“ Capitalized Lease ” means, as to any Person, any lease of property by such Person as lessee that would be capitalized on a balance sheet of such Person prepared in accordance with GAAP.

 

“ Capitalized Lease Obligations ” means, as to any Person, the capitalized amount of all obligations of such Person and its subsidiaries under Capitalized Leases, as determined on a consolidated basis in accordance with GAAP.

 

“ Cash Equivalent Investment ” means, at any time: (a) any evidence of indebtedness, maturing not more than one year after such time, issued or guaranteed by the United States government; (b) commercial paper, maturing not more than nine months from the date of issue, which is issued by (i) a corporation (other than an affiliate of any Obligor) organized under the laws of any state of the United States or of the District of Columbia and rated at least A-1 by Standard & Poor’s Corporation or P-1 by Moody’s Investors Service, Inc., or (ii) any Lender (or its holding company); (c) any certificate of deposit or bankers acceptance, maturing not more than one year after such time, which is issued by either (i) a commercial banking institution that is a member of the Federal Reserve System and has a combined capital and surplus and undivided profits of not less than $500,000,000, or (ii) any Lender; (d) any repurchase agreement entered into with any Lender (or other commercial banking institution of the stature referred to in clause (c)(i)) which (i) is secured by a fully perfected security interest in any obligation of the type described in any of clauses (a) through (c), and (ii) has a market value at the time such repurchase agreement is entered into of not less than 100% of the repurchase obligation of such Lender (or other commercial banking institution) thereunder; (e) investments permitted under any investment policy adopted by

 

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Borrower and approved by Administrative Lender; or (f) any mutual fund holding investments consisting of at least 95% of the foregoing.

 

“ Change in Control ” means the acquisition by any Person, or two or more Persons acting in concert to acquire securities, of beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934) of 35% or more of the outstanding shares of voting stock of Borrower.

 

“ Change of Law ” means the adoption of any Governmental Rule, any change in any Governmental Rule or the application or requirements thereof (whether such change occurs in accordance with the terms of such Governmental Rule as enacted, as a result of amendment or otherwise), any change in the interpretation or administration of any Governmental Rule by any Governmental Authority, or compliance by any Lender (or any entity controlling a Lender) with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority.

 

“ Closing Date ” means the date of this Agreement.

 

“ Code ” means the Uniform Commercial Code of the State of Oregon, as amended from time to time (including, without limitation, amendments to defined terms).

 

“ Collateral ” means all of Borrowers’ assets (except real property), including, without limitation, (a) all Accounts, Rights to Payment, General Intangibles, Records, goods, fixtures, inventory, equipment, money, letter of credit rights, supporting obligations, instruments, chattel paper, deposit accounts, documents, investment property, and commercial tort claims; (b) all products, proceeds, rents and profits of the foregoing; and (c) all of the foregoing, whether now owned or existing or hereafter acquired or arising or in which Borrower now has or hereafter acquires any rights.

 

“ Commitment ” means any obligation of a Lender to extend credit or any other financial accommodation under any of the Loan Documents.

 

“ Commodity Contracts ” means commodity options, futures, swaps, and other similar agreements and arrangements designed to provide protection against fluctuations in commodity prices.

 

“ Contaminant ” means any pollutant, hazardous substance, toxic substance, hazardous waste or other substance regulated or forming the basis of liability under any Environmental Law.

 

“ Contingent Obligation ” means, as applied to any Person, any direct or indirect liability, contingent or otherwise, of such Person with respect to any Indebtedness or Contractual Obligation of another Person, if the purpose or intent of such Person in incurring the Contingent Obligation is to provide assurance to the obligee of such Indebtedness or Contractual Obligation that such Indebtedness or Contractual Obligation will be paid or discharged, or that any agreement entered into by such other Person relating to such

 

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Indebtedness or Contractual Obligation will be complied with, or that any holder of such Indebtedness or Contractual Obligation will be protected against loss in respect thereof.  Contingent Obligations of a Person include, without limitation, (a) the direct or indirect guarantee, endorsement (other than for collection or deposit in the ordinary course of business), co-making, discounting with recourse or sale with recourse by such Person of an obligation of another Person, and (b) any liability of such Person for an obligation of another Person through any agreement (contingent or otherwise) (i) to purchase, repurchase or otherwise acquire such obligation or any security therefor, or to provide funds for the payment or discharge of such obligation (whether in the form of a loan, advance, stock purchase, capital contribution or otherwise), (ii) to maintain the solvency or any balance sheet item, level of income or financial condition of another Person, (iii) to make take-or-pay or similar payments, if required, regardless of nonperformance by any other party or parties to an agreement, (iv) to purchase, sell or lease (as lessor or lessee) property, or to purchase or sell services, primarily for the purpose of enabling the debtor to make payment of such obligation or to assure the holder of such obligation against loss, or (v) to supply funds to or in any other manner invest in such other Person (including, without limitation, to pay for property or services irrespective of whether such property is received or such services are rendered), if in the case of any agreement or liability described under subclauses (i) through (v) of this sentence the primary purpose or intent thereof is as described in the preceding sentence.  The amount of any Contingent Obligation shall be equal to the lesser of (A) the amount payable under such Contingent Obligation (if quantifiable) or (B) the portion of the obligation so guaranteed or otherwise supported.

 

“ Contractual Obligation ” of any Person means any obligation, agreement, undertaking or similar provision of any security issued by such Person or of any agreement, undertaking, contract, lease, indenture, mortgage, deed of trust or other instrument to which such Person is a party or by which it or any of its property is bound or to which any of its property is subject.

 

“ Current Ratio ” means, as of the end of a fiscal quarter, the ratio of (a) Parent’s consolidated current assets (exclusive of notes and receivables from a Subsidiary or any affiliate, shareholder, officer, director or employee of any Borrower or Subsidiary) to (b) the total of Parent’s consolidated current liabilities and, without duplication, the outstanding principal balance of the Revolving Loans.

 

“ Daily LIBOR ” means a rate of interest fluctuating daily equal on each day to LIBOR that would be applicable on such day for a LIBOR Loan with a Fixed Rate Term of one month beginning on such day.

 

“ Debt ” of any Person means, without duplication, (a) all obligations of such Person for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes, bills or other similar instruments; (b) all obligations, contingent or otherwise, relative to the face amount of all letters of credit, whether or not drawn, and banker’s acceptances issued for such Person’s account; (c) all Capitalized Lease Obligations and Other Lease obligations of such Person; (d) whether or not so included as liabilities in accordance with

 

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GAAP, all obligations of such Person to pay the deferred purchase price of property or services, and indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse; (e) all Contingent Obligations of such Person in respect of any of the foregoing, other than Contingent Obligations in connection with an Approved Dealer Financing Agreement; and, with respect to Parent and its Subsidiaries collectively, (f) the amount by which any outstanding book overdrafts exceed $10,000,000.  For purposes of determining the amount of Debt in a circumstance when the creditor has recourse only to specified assets, the amount shall be the lesser of (i) the amount of such obligation or (ii) the fair market value of such assets.

 

“ Debt Service Coverage Ratio ” means, as of the end of a fiscal quarter, the ratio of (A) EBITDA to (B) the sum of the following for the twelve month period ending with such quarter: (i) Parent’s consolidated interest expense; (ii) scheduled principal payments of Debt of Parent and the Subsidiaries; and (iii) cash dividends and distributions paid in respect of Parent’s Stock.

 

“ Default ” means (i) an Event of Default, (ii) an event or condition that with the giving of notice or the passage of time, or both, would constitute an Event of Default, or (iii) the filing against Borrower of a petition commencing an involuntary case under the Bankruptcy Code.

 

“ Disclosure Letter ” means the Disclosure Letter from Borrowers’ Agent to Administrative Lender dated the Closing Date.

 

“ EBITDA ” means, as of the end of a fiscal quarter, Parent’s consolidated net income after taxes for the twelve months ending with such quarter plus (A) the sum of the amounts for such twelve month period included in determining such net income of (i) interest expense, (ii) income tax expense, (iii) depreciation expense, (iv) amortization expense, and (v) extraordinary non-cash losses and charges and other non-recurring non-cash losses and charges; less (B) gains on sales of assets (excluding sales of inventory in the ordinary course of business) and other extraordinary non-cash gains for such twelve month period.

 

“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended or recodified from time to time, including (unless the context otherwise requires) any rules or regulations promulgated thereunder.

 

“ Eligible Accounts ” means those Accounts that Administrative Lender determines in the Good Faith exercise of its discretion to be eligible for inclusion in the Borrowing Base.  General criteria for Eligible Accounts may be established and revised from time to time by Administrative Lender in Good Faith.  Without limiting such discretion as to other Accounts, the following Accounts shall not be Eligible Accounts:

 

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(i)             Accounts that do not consist of ordinary trade accounts receivable owned by Borrower, payable in cash in United States Dollars and arising out of the final sale of recreational vehicles in the ordinary course of Borrower’s business as presently conducted by it;

 

(ii)            Accounts with respect to which Borrower failed to issue an original invoice at the agreed-upon purchase price to the account debtor promptly after delivering such goods to the account debtor;

 

(iii)           Accounts with respect to which more than 60 days have elapsed since the date of the original invoice applicable thereto;

 

(iv)           Accounts with respect to which the account debtor is an affiliate of Borrower or any officer, employee, or agent of the account debtor is an officer, employee or agent of or affiliated with Borrower directly or indirectly by virtue of family membership, ownership, control, management or otherwise;

 

(v)            Accounts with respect to which the account debtor is a Governmental Authority, except for those Accounts as to which Borrower has assigned its right to payment thereof to Administrative Lender, and the assignment has been acknowledged, pursuant to the Assignment of Claims Act of 1940, as amended (31 U.S.C. § 3727);

 

(vi)           the chief executive office of the account debtor with respect to such Account is not located in the United States of America, unless (A) the account debtor has delivered to Borrower an irrevocable letter of credit issued or confirmed by a bank satisfactory to Administrative Lender, sufficient to cover such Account, in form and substance satisfactory to Administrative Lender, and, if required by Administrative Lender, the original of such letter of credit has been delivered to Administrative Lender or Administrative Lender’s agent and the issuer thereof notified of the assignment of the proceeds of such letter of credit to Administrative Lender, (B) such Account is subject to credit insurance payable to Administrative Lender issued by an insurer and on terms and in an amount acceptable to Administrative Lender, (C) the account debtor resides in a province of Canada that recognizes Administrative Lender’s perfection and enforcement rights as to Accounts by reason of the filing of a UCC financing statement in Oregon or by reason of other methods of perfection that have been completed, or (D) such Account is otherwise acceptable in all respects to Administrative Lender;

 

(vii)          Accounts with respect to which Administrative Lender does not have a valid and prior, fully perfected Lien or which are not free of all Liens or other claims (including, without limitation, claims for rebates, credits, allowances or adjustments, but “other claims” shall not include Approved Sales) of all other Persons;

 

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(viii)         Accounts with respect to which the account debtor is the subject of bankruptcy or a similar insolvency proceeding, or has made an assignment for the benefit of creditors, or whose assets have been conveyed to a receiver or trustee, or who has failed or suspended or gone out of business;

 

(ix)            Accounts with respect to which the account debtor’s obligation to pay the Accounts is conditional upon the account debtor’s approval to the extent such Accounts exceed $300,000 in the aggregate;

 

(x)             Accounts from an account debtor to the extent that the account debtor’s indebtedness to Borrowers (whether evidenced by such Accounts or otherwise) exceeds an amount which is greater than 25% of the face amount (less maximum discounts, credits and allowances which may be taken by or granted to account debtors in connection therewith) of all then outstanding Eligible Accounts, but only to the extent of the excess over 25%;

 

(xi)            Accounts owed by a particular account debtor if 25% or more of the aggregate Accounts then owed to Borrowers by that account debtor and its affiliates are not Eligible Accounts;

 

(xii)           Accounts that represent a prepayment or progress payment or a partial payment under an installment contract;

 

(xiii)          Accounts that are evidenced by a promissory note or other instrument; and

 

(xiv)         Accounts with respect to which the account debtor is located in any jurisdiction requiring the timely filing by Borrower of a report or document before such Account is created in order to bring suit or otherwise enforce its remedies against such account debtor in the courts or through any judicial process of such jurisdiction, unless Borrower has filed, or is exempt from filing, such a report.

 

Administrative Lender shall have the right, but not the duty, to declare particular accounts ineligible.  The fact that Administrative Lender has not declared a particular account ineligible shall not be deemed to be a determination or representation by Administrative Lender or any Lender as to the creditworthiness or financial condition of any account debtor.  Because of banking relationships between account debtors of Borrower and Administrative Lender or a Lender, Administrative Lender or a Lender may have information about the creditworthiness of such account debtors; however, neither Administrative Lender nor any Lender shall have any duty to Borrowers to disclose information it may have about any of Borrowers’ account debtors and Borrowers shall have no right to rely upon any action or inaction of Administrative Lender or any Lender concerning the creditworthiness or financial condition of Borrowers’ account debtors.  BORROWERS HEREBY COVENANT NOT TO SUE AND TO HOLD HARMLESS LENDERS AND ADMINISTRATIVE LENDER AND THEIR OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,

 

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SUCCESSORS AND ASSIGNS FOR AND FROM ANY AND ALL DAMAGES, LIABILITY, OR CLAIMS OF LIABILITY, WHETHER KNOWN OR UNKNOWN, OF ANY NATURE ARISING OUT OF OR BASED IN WHOLE OR IN PART UPON ADMINISTRATIVE LENDER’S OR ANY LENDER’S FAILURE TO DISCLOSE UNFAVORABLE INFORMATION ABOUT AN ACCOUNT DEBTOR OF BORROWER TO BORROWERS, OR ADMINISTRATIVE LENDER’S FAILURE TO TREAT AS INELIGIBLE THE ACCOUNT OF AN ACCOUNT DEBTOR OF BORROWER ABOUT WHOM ADMINISTRATIVE LENDER OR ANY LENDER HAS UNFAVORABLE INFORMATION.

 

“ Eligible Inventory ” means inventory that Administrative Lender determines in the Good Faith exercise of its discretion to be eligible for inclusion in the Borrowing Base.  General criteria for Eligible Inventory may be established and revised from time to time by Administrative Lender in Good Faith.  Without limiting such discretion as to other inventory, the following inventory shall in any event not constitute Eligible Inventory:

 

(i)             finished goods that are not held by Borrower for sale as inventory in the ordinary course of Borrower’s business as presently conducted by it or that are obsolete, not in good condition, not of merchantable quality or not salable in the ordinary course of Borrower’s business or that are subject to defects that would affect their market value;

 

(ii)            inventory that Administrative Lender, in the Good Faith exercise of its discretion determines to be unacceptable due to age, type, category or quantity;

 

(iii)           work in process;

 

(iv)           inventory in the possession of any Person other than Borrower, except (subject to any additional requirements imposed by Administrative Lender, in the Good Faith exercise of its discretion to protect Borrower’s title thereto or Administrative Lender’s Lien therein) goods held in storage solely for the account of Borrower, if the Person in possession has acknowledged in writing Administrative Lender’s Lien thereon and has not issued a negotiable document of title as to the goods; provided, that notwithstanding the foregoing, (A) up to $500,000 of inventory located on premises of subcontractors and (B) up to $5,000,000 of finished goods inventory located at trade shows or rallies (or in transit for such purposes) shall not be excluded from Eligible Inventory by virtue of this item (iv);

 

(v)            inventory with respect to which Administrative Lender does not have a valid and prior, fully perfected Lien and that is not free of all other Liens, except Permitted Liens other than Permitted Liens described in items (g) or (n) of the definition of “Permitted Liens;”

 

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(vi)           inventory in the possession of a warehouseman or other bailee if Administrative Lender has not received a bailee letter acceptable to Administrative Lender from such warehouseman or bailee; and

 

(vii)          except as provided in item (iv), inventory located on premises leased by Borrower if Administrative Lender has not received a landlord’s waiver acceptable to Administrative Lender with respect to such premises to the extent the aggregate value of all such inventory exceeds $5,000,000.

 

“ Entity ” has the meaning set forth in Section 9.5(h).

 

“ Environmental Law ” means all applicable federal, state and local laws, statutes, ordinances and regulations, and any applicable judicial or administrative interpretation, order, consent decree or judgment, relating to the regulation and protection of the environment.  Environmental Laws include but are not limited to the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended (42 U.S.C. § 9601 et seq. ); the Hazardous Material Transportation Act, as amended (49 U.S.C. § 180 et seq. ); the Federal Insecticide, Fungicide, and Rodenticide Act, as amended (7 U.S.C. § 136 et seq. ); the Resource Conservation and Recovery Act, as amended (42 U.S.C. § 6901 et seq. ); the Toxic Substance Control Act, as amended (42 U.S.C. § 7401 et seq. ); the Clean Air Act, as amended (42 U.S.C. § 740 et seq. ); the Federal Water Pollution Control Act, as amended (33 U.S.C. § 1251 et seq. ); and the Safe Drinking Water Act, as amended (42 U.S.C. § 300f et seq. ), and their state and local counterparts or equivalents and any applicable transfer of ownership notification or approval statutes.

 

“ Environmental Liabilities and Costs ” means, as to any Person, all liabilities, obligations, responsibilities, Remedial Actions, losses, damages, punitive damages, consequential damages, treble damages, costs and expenses (including, without limitation, all fees, disbursements and expenses of counsel, experts and consultants and costs of investigation and feasibility studies), fines, penalties, sanctions and interest incurred as a result of any claim or demand by any other Person, whether based in contract, tort, implied or express warranty, strict liability, criminal or civil statute, including, without limitation, any thereof arising under any Environmental Law, Permit, order or agreement with any Governmental Authority or other Person, and which relate to any violation or alleged violation of an Environmental Law or a Permit, or a Release or threatened Release.

 

“ Event of Default ” has the meaning set forth in Section 11.1 hereof.

 

“ Federal Funds Rate ” means, for any day, the weighted average of the per annum rates on overnight Federal funds transactions with member banks of the Federal Reserve System arranged by Federal funds brokers as published by the Federal Reserve Bank of New York for such day (or, if such rate is not so published for any day, the average rate quoted to Administrative Lender on such day by three Federal funds brokers of recognized standing selected by Administrative Lender).

 

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“ Fee Percentage ” means the number of basis points determined in accordance with Schedule II .

 

“ Fixed Rate Term ” means a period of one, two, three or six months, as designated by Borrowers’ Agent, during which a Loan bears interest determined in relation to LIBOR; provided, however, that no Fixed Rate Term may extend beyond the Maturity Date, and if the last day of a Fixed Rate Term is not a Business Day, such term shall be extended to the next succeeding Business Day, or if the next succeeding Business Day falls in another calendar month, such term shall end on the next preceding Business Day.

 

“ Foreign Subsidiary ” means any Subsidiary that is a “controlled foreign corporation” as that term is used in the Internal Revenue Code.

 

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

 

“ General Intangibles ” means (i) all “general intangibles” as defined in the Code and (ii) all tax and duty refunds, registered and unregistered patents, trademarks, service marks, copyrights, trade names, applications for the foregoing, trade secrets, goodwill, processes, drawings, blueprints, customer lists, licenses, whether as licensor or licensee, choses in action, causes of action and other claims, judgments in favor of Borrower, leasehold interests in equipment, software and payment intangibles.

 

“ Good Faith ” means honesty in fact in the conduct or transaction concerned, without regard to whether standards that might be deemed commercially reasonable have been observed.

 

“ Governmental Authority ” means any domestic or foreign national, state or local government, any political subdivision thereof, any department, agency, authority or bureau of any of the foregoing, or any other entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including the Federal Deposit Insurance Corporation, the Federal Reserve Board, the Comptroller of the Currency, any central bank or any comparable authority.

 

“ Governmental Rule ” means any applicable law, rule, regulation, ordinance, order, code interpretation, judgment, decree, directive, guidelines, policy or similar form of decision of any Governmental Authority.

 

“ Highest Lawful Rate ” means, at the particular time in question, the maximum rate of interest which, under applicable law, Lenders are then permitted to charge Borrowers on the applicable Loan, and if the maximum rate changes at any time, the Highest Lawful Rate shall increase or decrease, as the case may be, as of the effective time of each such change, without notice to Borrowers.

 

“ Indebtedness ” of any Person means, without duplication, (a) all liabilities of such Person as determined in accordance with GAAP, (b) all obligations of such Person created or

 

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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), (c) all lease obligations of such Person (including, without limitation, operating leases, Capitalized Leases and Other Leases), (d) all Contingent Obligations of such Person, (e) all obligations of such Person to purchase, redeem, retire, defease or otherwise acquire for value any Stock or Stock Equivalents of such Person with a mandatory repurchase or redemption date of less than ten years from the date of issuance thereof, (f) all obligations secured by (or for which the holder of such obligations has an existing right, contingent or otherwise, to be secured by) any Lien upon or in property owned by such Person, even though such Person has not assumed or become liable for the payment of such obligations, (g) all liabilities of such Person in connection with the failure to make when due any contribution or payment pursuant to or under any Plan and (h) net liabilities of such Person under all Commodity Contracts, Interest Rate Contracts and foreign exchange agreements.  For purposes of determining the amount of Indebtedness in a circumstance when the creditor has recourse only to specified assets, the amount shall be the lesser of (i) the amount of such obligation or (ii) the fair market value of such assets.

 

“ Indemnitees ” has the meaning set forth in Section 13.3 hereof.

 

“ Indemnified Liabilities ” has the meaning set forth in Section 13.3.

 

“ Interest Rate Contracts ” means interest rate swap agreements, interest rate cap agreements, interest rate collar agreements, interest rate insurance, and other agreements or arrangements designed to provide protection against fluctuations in interest rates.

 

“ Investment ” means, relative to any Person, (a) any loan or advance made by such Person to any other Person (excluding commission, travel and similar advances to officers and employees made in the ordinary course of business) and (b) any ownership or similar interest held by such Person in any other Person.  The amount of any Investment shall be the original principal or capital amount thereof less all returns of principal or equity thereon (and without adjustment by reason of the financial condition of such other Person) and shall, if made by the transfer or exchange of property other than cash, be deemed to have been made in an original principal or capital amount equal to the fair market value of such property.

 

“ L/C Bank ” means U.S. Bank.

 

“ Lenders ” means, collectively, each of the financial institutions from time to time listed on Schedule I , L/C Bank and Swingline Lender, and “ Lender ” means any one of the Lenders.

 

“ Letter of Credit ” means a letter of credit issued by L/C Bank under the Existing Credit Agreement or pursuant to Section 3.4 hereof.

 

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“ Letter of Credit Agreement ” means L/C Bank’s standard letter of credit application and documentation modified to such extent, if any, as L/C Bank deems necessary.

 

“ Letter of Credit Obligations ” means, at any time, all liabilities at such time of Borrowers to L/C Bank with respect to Letters of Credit, whether or not any such liability is contingent.

 

“ Leverage Ratio ” means, as of the end of a fiscal quarter, the ratio of (i) Debt (exclusive of any Contingent Obligations) as of the end of such quarter to (ii) EBITDA.

 

“ LIBOR ” means, for each Fixed Rate Term, the rate per annum (rounded upward if necessary to the nearest whole 1/100 of 1%) and determined pursuant to the following formula:

 

LIBOR =	Base LIBOR
	100% - LIBOR Reserve Percentage

 

As used herein, (a) ”Base LIBOR” means the rate per annum determined by Administrative Lender to be the offered rate for deposits in U.S. Dollars with a term comparable to such Fixed Rate Term that appears on Dow Jones Markets Service, Page 3750 (or any successor page) as the London interbank offered rate for deposits in U.S. Dollars at approximately 11:00 AM (London time) two Business Days prior to the beginning of such Fixed Rate Term, and (b) ”LIBOR Reserve Percentage” means, for any day, the aggregate (without duplication) of the maximum rates (expressed as a decimal) of reserve requirements in effect on such day (including basic, supplemental, marginal and emergency reserves under any regulations of the Federal Reserve Board or other Governmental Authority having jurisdiction with respect thereto) dealing with reserve requirements prescribed for eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of the Federal Reserve Board) maintained by a member bank of the Federal Reserve System.

 

“ LIBOR Loan ” means any Loan that bears interest with reference to LIBOR.

 

“ LIBOR Margin ” means the number of basis points determined in accordance with Schedule II .

 

“ Lien ” means any mortgage, deed of trust, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), security interest, priority or other security agreement or preferential arrangement of any kind or nature whatsoever, including, without limitation, any conditional sale or other title retention agreement or the interest of a lessor under a Capitalized Lease Obligation or any Other Lease.

 

“ Loan ” means an advance made by a Lender to Borrowers pursuant to either Section 3.1 or Section 3.2.

 

“ Loan Documents ” means this Agreement, the Notes, each Letter of Credit Agreement, each Swap Protection Agreement and each other agreement, note, notice,

 

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document, contract or instrument to which Borrower now or hereafter is a party and that is required by Lender in connection with this Agreement, a Note, a Letter of Credit Agreement, a Swap Protection Agreement or any of the obligations arising under any of such agreements or Notes.

 

“ Material Adverse Effect ” means a material adverse effect on (a) the condition (financial or otherwise), business, performance, operations or properties of Borrowers, (b) the ability of Borrowers to perform their obligations under the Loan Documents, or (c) the rights and remedies of any Lender or Administrative Lender under the Loan Documents.

 

“ Maturity Date ” means the earlier of November 17, 2009 or the due date determined pursuant to Section 11.2.

 

“ Note ” means either (i) a master promissory note executed by Borrowers in favor of Administrative Lender for the ratable benefit of Lenders evidencing Revolving Loans or (ii) a promissory note executed by Borrowers in favor of Swingline Lender evidencing the Swing Loans, each substantially in the form of one of the forms attached as Exhibit B .

 

“ Notice of Authorized Representatives ” has the meaning set forth in Section 2.2 hereof.

 

“ Notice of Borrowing ” has the meaning set forth in Section 3.1(c) hereof.

 

“ Notice of Conversion or Continuation ” has the meaning set forth in Section 3.6(c) hereof.

 

“ Obligations ” means all of Borrowers’ obligations under the Loan Documents, whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising.

 

“ Obligor ” means any Borrower or other Person (other than Administrative Lender or any Lender) obligated under, or otherwise a party to, any Loan Document

 

“ Organic Documents ” means, relative to any Obligor, as applicable, its certificate or articles of incorporation, its by-laws, its partnership agreement, its certificate of partnership, certificate of organization, operating agreement and other limited liability company organizational documents and all shareholder agreements, voting trusts and similar arrangements applicable to any of its Stock or Stock Equivalents.

 

“ Other Lease ” means any synthetic lease, tax retention operating lease, financing lease or any other lease having substantially the same economic effect as a conditional sale, title retention agreement or similar arrangement.

 

“ PBGC ” means the Pension Benefit Guaranty Corporation established pursuant to Title IV of ERISA.

 

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“ Permit ” means any permit, approval, authorization, license, variance or permission required from a Governmental Authority under an applicable Governmental Rule.

 

“ Permitted Liens ” means (a) Liens arising by operation of law for taxes, assessments or governmental charges not yet due; (b) statutory Liens of mechanics, materialmen, shippers, warehousemen, carriers, and other similar persons for services or materials arising in the ordinary course of business for which payment is not more than 30 days past due; (c) nonconsensual Liens incurred or deposits made in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other types of social security; (d) Liens for taxes or statutory Liens of mechanics, materialmen, shippers, warehousemen, carriers and other similar persons for services or materials that are due but are being contested in good faith and by appropriate and lawful proceedings promptly initiated and diligently conducted and for which reserves have been established to the extent required by GAAP; (e) Liens listed on the Disclosure Letter; (f) Liens granted in the Loan Documents; (g) purchase money Liens upon or in any property (other than chassis and real property) of Borrower and used by Borrower in the ordinary course of business and Liens to secure Capitalized Lease Obligations and Other Leases and any related payment and performance obligations if, in each case, the incurrence of such Indebtedness is permitted by Section 9.2; provided, however, that: (A) any such Lien is created solely for the purpose of securing Indebtedness representing, or incurred to finance, refinance or refund, the cost (including, without limitation, the cost of construction and the reasonable fees and expenses relating to such Indebtedness) of the property subject thereto, (B) the principal amount of the Indebtedness secured by such Lien does not exceed such cost, and (C) such Lien does not extend to or cover any other property other than such item of property, any improvements on or replacements for such item, and the proceeds from the disposition of such items; (h) zoning restrictions, easements, rights of way, survey exceptions, encroachments, covenants, licenses, reservations, leasehold interests, restrictions on the use of real property or minor irregularities incident thereto which do not in the aggregate materially detract from the value or use of the property or assets of Borrower or impair, in any material manner, the use of such property for the purposes for which such property is held by Borrower; (i) the interests of lessors or lessees of property leased pursuant to leases permitted hereunder; (j) Liens of a depository institution arising solely by virtue of any statutory or common law provision relating to banker’s liens, rights of setoff, or similar rights and remedies as to deposit accounts or other funds maintained with such institution, provided that (A) such deposit account is not a dedicated cash collateral account and is not subject to restrictions against access by Borrower in excess of those set forth by regulations promulgated by any Government Authority, and (B) such deposit account is not intended by Borrower to provide collateral to the depository institution; (k) judgment Liens to the extent the existence of such Liens is not an Event of Default under Section 11.1(g); (l) any of the following arising in the ordinary course of business: deposits or pledges to secure bids, tenders, contracts (other than contracts for the payment of money), leases, statutory obligations, surety and appeal bonds and other obligations of like nature; (m) Liens on chassis purchased by Borrower in the ordinary course of business; (n) Liens not otherwise included in items (a) through (m) that do not encumber real property, do not secure, in the aggregate, amounts in excess of $5,000,000 and do not have priority over the Liens granted by Borrowers to Administrative Lender; and

 

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(o) Liens on the assets of an Entity existing on the date an acquisition transaction permitted by Section 9.5(h) is consummated, provided such Liens were not incurred in anticipation of the acquisition transaction.

 

“ Person ” means an individual, partnership, corporation (including, without limitation, a business trust), joint stock company, limited liability company, trust, unincorporated association, joint venture or other entity, or a Governmental Authority.

 

“ Plan ” means an employee benefit plan, as defined in Section 3(3) of ERISA, which Borrower maintains, contributes to or has an obligation to contribute to on behalf of participants who are or were employed by any of them.

 

“ Prime Margin ” means the number of basis points determined in accordance with Schedule II .

 

“ Prime Rate ” means, for any day, an interest rate per annum equal to the rate of interest most recently announced within U.S. Bank at its principal office as its prime rate, with any change in the prime rate to be effective as of the day such change is announced within U.S. Bank and with the understanding that the prime rate is one of U.S. Bank’s base rates used to price some loans and may not be the lowest rate at which U.S. Bank makes any loan, and is evidenced by the recording thereof in such internal publication or publications as U.S. Bank may designate.

 

“ Prime Rate Loan ” means any Loan that bears interest with reference to the Prime Rate.

 

“ Ratable Portion ” means, with respect to any Lender:  (i) with respect to Revolving Loans, the quotient obtained by dividing the total of such Lender’s Revolving Loan Commitment by the total Revolving Loan Commitments of all Lenders; and (ii) with respect to all Loans, the quotient obtained by dividing the total of such Lender’s Revolving Loan Commitment and Swing Loan Commitment by the Total Commitments.  At all times when the Total Commitments are zero, all references in the preceding sentence to “Commitments” shall mean Commitments existing immediately before the Total Commitments became zero.

 

“ Records ” means all of Borrowers’ present and future records and books of account of every kind or nature, purchase and sale agreements, invoices, ledger cards, bills of lading and other shipping evidence, statements, correspondence, memoranda, credit files, electronically stored data and other data, together with the tapes, disks, diskettes, drives and other data and software storage media and devices, file cabinets or containers in or on which the foregoing are stored (including any rights of Borrower with respect to the foregoing maintained with or by any other Person).

 

“ Release ” means, as to any Person, any unpermitted spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching or migration of a Contaminant into the environment, and any “release” as defined in the Comprehensive

 

16

 

Environmental Response, Compensation, and Liability Act of 1980, as amended (42 U.S.C. § 9601 et seq. ).

 

“ Remedial Action ” means all actions required to clean up, remove, prevent or minimize a Release or threat of Release or to perform pre-remedial studies and investigations and post-remedial monitoring and care.

 

“ Required Lenders ” means any non-defaulting Lender or Lenders having more than two-thirds of the Total Commitments.

 

“ Repurchase Obligations ” all obligations of Parent to its dealers incurred in the ordinary course of Parent’s business to repurchase recreational vehicles.

 

“ Responsible Officer ” means any executive officer of Borrower, including, without limitation, president, chief executive officer, chief financial officer, treasurer, controller, general counsel, chief risk management officer, chief environmental officer or any other person performing responsibilities customarily performed by such officers.

 

“ Revolving Loan ” means a Loan made by a Lender to Borrowers pursuant to Section 3.1.

 

“ Revolving Loan Commitment ” means, as to any Lender, the amount set opposite such Lender’s name on Schedule I as its “Revolving Loan Commitment,” as such amount may be reduced from time to time pursuant to this Agreement or as such amount may be adjusted pursuant to Section 13.5(c).

 

“ Rights to Payment ” means all Accounts, General Intangibles, contract rights, chattel paper, documents, instruments, letters of credit, bankers acceptances and guaranties, and all present and future liens, security interests, rights, remedies, title and interest in, to and in respect of Accounts and other Collateral, and shall include without limitation, (a) rights and remedies under or relating to guaranties, contracts of suretyship, letters of credit and credit and other insurance related to the Collateral, (b) rights of stoppage in transit, replevin, repossession, reclamation and other rights and remedies of an unpaid vendor, lienor or secured party, (c) goods described in invoices, documents, contracts or instruments with respect to, or otherwise representing or evidencing, Accounts or other Collateral, including without limitation, returned, repossessed and reclaimed goods, and (d) deposits by and property of account debtors or other persons securing the obligations of account debtors, moneys, securities, credit balances, deposits, deposit accounts and other property of Borrower now or hereafter held or received by or in transit to Administrative Lender, any Lender or any of their affiliates or at any other depository or other institution from or for the account of Borrower, whether for safekeeping, pledge, custody, transmission, collection or otherwise.

 

“ Stock ” means shares of capital stock, membership interests, beneficial or partnership interests, participations or other equivalents (regardless of how designated) of or in a corporation, limited liability company, partnership or other entity, whether voting or nonvoting, and includes, without limitation, common stock and preferred stock.

 

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“ Stock Equivalents ” means all securities convertible into or exchangeable for Stock and all warrants, options or other rights to purchase or subscribe for any Stock, whether or not presently convertible, exchangeable or exercisable.

 

“ Subsidiary ” means any Person required by GAAP to be included in the consolidated financial reporting of Borrower.

 

“ Swap Protection Agreement ” means an Interest Rate Contract between Borrower and a Lender which is entered into by Borrower for hedging purposes with respect to transactions engaged in by Borrower in the ordinary course of business and not for speculative purposes.

 

“ Swing Loan ” means a Loan made by the Swingline Lender to Borrowers pursuant to Section 3.2.

 

“ Swing Loan Balance Amount ” means, at any time, the amount that the outstanding balance of the Swing Loans would need to be so that Swingline Lender’s percentage of the aggregate Revolving Loans and Swing Loans equals the True-Up Percentage.

 

“ Swing Loan Commitment ” means the amount set opposite the Swingline Lender’s name on Schedule I as its “Swing Loan Commitment,” as such amount may be adjusted from time to time pursuant to this Agreement.

 

“ Swingline Lender ” means U.S. Bank.

 

“Tangible Net Worth” means the total of Parent’s shareholders’ equity, plus Debt subordinated in writing to the Obligations on terms acceptable to Required Lenders in favor of the prior payment in full in cash of the Obligations, less consolidated intangible assets.

 

“ Total Commitments ” means the total of all Revolving Loan Commitments and the Swing Loan Commitment.

 

“ Tranche ” means a collective reference to all LIBOR Loans which have a Fixed Rate Term starting on the same day and ending on the same day; provided that if, notwithstanding that all such loans have the same interest term, Borrowers request that a group of such Loans be treated separately for LIBOR calculation purposes, then each such separate group of Loans shall be treated as a separate Tranche.

 

“ True-Up Event ” means the occurrence of both: (i) any of the following: (A) the aggregate outstanding balance of the Swing Loans exceeds the Swing Loan Balance Amount by at least $4,000,000 for ten consecutive Business Days; (B) at any time during the continuation of a Default the balance of the Swing Loans does not equal the Swing Loan Balance Amount; or (C) at any time the balance of the Swing Loans exceeds the Swing Loan Balance Amount and Swingline Lender, by notice to the Administrative Lender, requests that the amount of the Swing Loans be reduced; and (ii) receipt by Administrative Lender before

 

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9:00 AM (Portland time) on a Business Day of a request from a Lender for a settlement under Section 3.2(b).

 

“ True-Up Percentage ” means, with respect to any Lender, the quotient obtained by dividing the total of such Lender’s Revolving Loan Commitment and Swing Loan Commitment by the total of the Revolving Loan Commitments and Swing Loan Commitments of all Lenders.  At all times when the Total Commitments are zero, all references in the preceding sentence to “Commitments” shall mean Commitments existing immediately before the Total Commitments became zero.

 

1.2                                                        ACCOUNTING AND FINANCIAL DETERMINATIONS

 

Any accounting term used in this Agreement that is not specifically defined herein shall have the meaning customarily given to it under GAAP, and all accounting determinations and computations under any Loan Document shall be made, and all financial statements required to be delivered under any Loan Document shall be prepared, in accordance with GAAP applied in the preparation of the financial statements referred to in Section 6.5.

 

1.3                                                        HEADINGS

 

Headings in this Agreement and each of the other Loan Documents are for convenience of reference only and are not part of the substance hereof or thereof.

 

1.4                                                        ADDITIONAL DEFINITION PROVISIONS

 

Whenever the terms “herein,” “hereof,” “hereto,” “hereunder,” “therein,” “thereof,” “thereto,” “thereunder,” and similar terms contained in this Agreement or any Loan Document refer to this Agreement or other Loan Document, such terms refer to the whole of this Agreement or other Loan Document and not to any particular section, paragraph or provision.  All other terms contained in this Agreement that are not defined herein shall, unless the context indicates otherwise, have the meanings provided in the Code to the extent such terms are defined therein.

 

 

ARTICLE II.                                           APPOINTMENT OF BORROWERS’ AGENT; JOINT AND SEVERAL LIABILITY

 

2.1                                                        APPOINTMENT OF AGENT

 

In order to facilitate and insure prompt and accurate communication among Borrowers and Lenders and to insure the efficient and effective distribution of proceeds of the Loans, each Borrower hereby appoints Parent as its agent to perform the functions of Borrowers’ Agent under the Loan Documents, to take such actions and make such elections on such Borrower’s behalf as are delegated to the Borrowers’ Agent in the Loan Documents and for the following purposes: (i) communicating to and receiving communications from Administrative Lender and Lenders; (ii) receiving all proceeds of the Loans and making all

 

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decisions regarding the distribution of such proceeds among the Borrowers as Borrowers’ Agent, in the sole exercise of its discretion, deems fair and appropriate; and (iii) making all decisions and elections with respect to requests for advances of credit, issuance of Letters of Credit and election of interest options.

 

2.2                                                        AUTHORIZED REPRESENTATIVES

 

On the Closing Date, and from time to time subsequent thereto at Borrowers’ Agent’s option, Borrowers’ Agent shall deliver to Administrative Lender a written notice in the form of Exhibit C attached hereto, which designates by name one or more Authorized Representatives and includes each of their respective specimen signatures (each, a “Notice of Authorized Representatives”).  Administrative Lender shall be entitled to rely conclusively on the authority of each person designated as an Authorized Representative in the most current Notice of Authorized Representatives delivered by Borrowers’ Agent to Administrative Lender, to request borrowings, to select interest rate options hereunder, and to give to Administrative Lender such other notices as are specified herein as being made through an Authorized Representative, until such time as Borrowers’ Agent has delivered to Administrative Lender, and Administrative Lender has actual receipt of, a new written Notice of Authorized Representatives.  Administrative Lender shall have no duty or obligation to Borrowers to verify the authenticity of any signature appearing on any Notice of Borrowing, Notice of Conversion or Continuation or any other notice from an Authorized Representative or to verify the authenticity of any person purporting to be an Authorized Representative giving any telephonic notice permitted hereby.

 

2.3                                                        JOINT AND SEVERAL LIABILITY; RIGHTS OF CONTRIBUTION

 

(a)            Each Borrower states and acknowledges that:  (i) pursuant to this Agreement, Borrowers desire to utilize their borrowing potential on a consolidated basis to the same extent possible if they were merged into a single corporate entity; (ii) it has determined that it will benefit specifically and materially from the advances of credit contemplated by this Agreement; (iii) it is both a condition precedent to the obligations of Lenders hereunder and a desire of Borrowers that each Borrower execute and deliver to Lenders this Agreement; and (iv) Borrowers have requested and bargained for the structure and terms of the credit contemplated by this Agreement.

 

(b)            Each Borrower hereby irrevocably and unconditionally:  (i) agrees that it is jointly and severally liable to Lenders for the full and prompt payment of the Obligations and the performance by each Borrower of its obligations hereunder in accordance with the terms of the Loan Documents; (ii) agrees to fully and promptly perform all of its obligations under the Loan Documents with respect to each advance of credit hereunder as if such advance had been made directly to it; and (iii) agrees as a primary obligation to indemnify Lenders on demand for and against any loss incurred by Lenders (other than a loss arising any Lender’s willful misconduct or gross negligence) as a result of any of the obligations of any one or more of Borrowers under the Loan Documents being or becoming void, voidable, unenforceable or ineffective for any reason whatsoever, whether or not known to Lenders or

 

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any other Person, the amount of such loss being the amount which Lenders would otherwise have been entitled to recover from any one or more of Borrowers.  Each Borrower hereby irrevocably and unconditionally accepts, not merely as a surety but also as a co-debtor, joint and several liability with each other Borrower with respect to the payment and performance of all of the Obligations.  If and to the extent that any Borrower fails to make any payment with respect to the Obligations as and when due or to perform any of its obligations in accordance with the terms of the Loan Documents, then in each such event the other Borrowers will make such payment with respect to, or perform, such obligations.

 

(c)            The joint and several liability of each Borrower for the Obligations shall be absolute and unconditional irrespective of and shall not be subject to any reduction, limitation, impairment or termination for any reason, including, without limitation, any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to any defense or setoff, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality or unenforceability of any of the Obligations.  Without limiting the generality of the foregoing, the obligations of each Borrower shall not be discharged or impaired or otherwise affected by:

 

(i)             any change in the manner, place or terms of payment or performance and/or any change or extension of the time of payment or performance of, renewal or alteration of, any Obligation, any security therefor, or any liability incurred directly or indirectly in respect thereof, or any rescission of, or amendment, waiver or other modification of, or any consent to departure from any Loan Document, including any increase in the Obligations resulting from the extension of additional credit to any Borrower;

 

(ii)            any sale, exchange, release, surrender, realization upon any property at any time pledged or mortgaged to secure any of the Obligations, and/or any offset against, or failure to perfect, or continue the perfection of, any lien in any such property, or delay in the perfection of any such lien, or any amendment or waiver of or consent to departure from any other guaranty for any of the Obligations;

 

(iii)           the failure of Lenders to assert any claim or demand or to enforce any right or remedy against any Borrower or other Person under the provisions of any Loan Document;

 

(iv)           any settlement or compromise of any Obligation, any security therefor or any liability incurred directly or indirectly in respect thereof, and any subordination of the payment of any part thereof to the payment of any obligation (whether due or not) of any other Borrower to creditors of such other Borrower other than any other Borrower;

 

(v)            any manner of application of any collateral for the Obligations or proceeds thereof, to any of the Obligations, or any manner of sale or other disposition

 

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of any such collateral for all or any of the Obligations or any other assets of any Borrower;

 

(vi)           any change, restructuring or termination of the existence of any Borrower; or

 

(vii)          any other agreement or circumstance of any nature whatsoever that might in any manner or to any extent vary the risk of any Borrower, or that might otherwise at law or in equity constitute a defense available to, or a discharge of, the obligations of any Borrower, or a defense to, or discharge of, any Borrower or other Person relating to any of the Obligations.

 

(d)            The joint and several liability of Borrowers shall continue in full force and effect notwithstanding any absorption, merger, amalgamation or any other change whatsoever in the name, membership, constitution or place of formation of any Borrower.

 

(e)            It is the intent of each Borrower that the indebtedness, obligations and liability hereunder of no one of them be subject to challenge on any basis.  Accordingly, as of the date hereof, the liability of each Borrower under the Loan Documents, together with all of its other liabilities to all Persons as of the date hereof and as of any other date on which a transfer is deemed to occur by virtue of this Agreement, calculated in an amount sufficient to pay its probable net liabilities (including Contingent Obligations) as the same become absolute and matured (“Dated Liabilities”) is, and is to be, less than the amount of the aggregate of a fair valuation of its property as of such corresponding date (“Dated Assets”).  To this end each Borrower hereby (i) grants to and recognizes in each other Borrower, ratably, rights of subrogation and contribution in the amount, if any, by which the Dated Assets of such Borrower, but for the aggregate of subrogation and contribution in its favor recognized herein, would exceed the Dated Liabilities of such Borrower or, as the case may be (ii) acknowledges receipt of and recognizes its right to subrogation and contribution ratably from each of the other Borrowers in the amount, if any, by which the Dated Liabilities of such Borrower, but for the aggregate of subrogation and contribution in its favor recognized herein, would exceed the Dated Assets of such Borrower.  In recognizing the value of the Dated Assets and the Dated Liabilities, it is understood that Borrowers will recognize, to at least the same extent of their aggregate recognition of liabilities hereunder, their rights to subrogation and contribution hereunder.  It is a material objective of this Section that each Borrower recognizes rights to subrogation and contribution rather than be deemed to be insolvent (or in contemplation thereof) by reason of its joint and several obligations hereunder.

 

ARTICLE III.              THE CREDITS

 

3.1                                                        REVOLVING LOANS

 

(a)            On the terms and subject to the conditions contained in this Agreement, each Lender severally agrees to make loans (each a “Revolving Loan”) to Borrowers from time to

 

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time until the Maturity Date in an aggregate amount not to exceed at any time outstanding such Lender’s Revolving Loan Commitment; provided, however, that at no time shall any Lender be obligated to make a Revolving Loan in excess of such Lender’s Ratable Portion of the Available Credit.  Borrowers may from time to time borrow, partially or wholly repay its outstanding borrowings, and reborrow, subject to all the limitations, terms and conditions contained herein.  The Revolving Loans shall be evidenced by a Note, and on the Closing Date the promissory note issued under the Existing Credit Agreement evidencing revolving loans shall be exchanged for a Note.

 

(b)            If at any time the Available Credit is negative, Borrowers, without demand or notice, shall immediately repay that portion of the Revolving Loans necessary to cause the Available Credit to be zero.  Borrowers shall repay the outstanding principal balance of the Revolving Loans, together with all accrued and unpaid interest and related fees on the Maturity Date.

 

(c)            Borrowers’ Agent, through an Authorized Representative, shall request each advance of a Revolving Loan by giving Administrative Lender irrevocable written notice or telephonic notice (confirmed promptly by fax or email), in the form of Exhibit D attached hereto (each, a “Notice of Borrowing”), which specifies, among other things:

 

(i)             the aggregate principal amount of the requested advances (which amount must be a minimum of $1,000,000 and in integral multiples of $100,000 if a LIBOR Loan);

 

(ii)            the proposed date of borrowing, which shall be a Business Day;

 

(iii)           whether such advance is to be a Prime Rate Loan or a LIBOR Loan; and

 

(iv)           if such advance is to be a LIBOR Loan, the length of the Fixed Rate Term applicable thereto.

 

Each such Notice of Borrowing must be received by Administrative Lender not later than 9:00 AM (Portland time) (x) on the date of borrowing if a Prime Rate Loan or (y) at least three Business Days prior to the date of borrowing if a LIBOR Loan.  Administrative Lender shall promptly notify each Lender of the contents of each Notice of Borrowing and of the amount of the advance to be made by such Lender no later than 10:00 AM (Portland time) on the Business Day of receipt for Prime Rate Loans and 1:00 PM (Portland time) the Business Day after receipt with respect to LIBOR Loans.

 

(d)            From time to time before 9:00 AM (Portland time) on any Business Day, Borrowers may make a voluntary prepayment, in whole or in part, of the outstanding principal amount of any Revolving Loan(s) that are Prime Rate Loans.  From time to time before 9:00 AM (Portland time) on any Business Day, Borrowers may make a voluntary prepayment, in whole or in part, of the outstanding principal amount of any Revolving Loan(s) that are LIBOR Loans; provided, however, that (i) Borrowers’ Agent gives

 

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Administrative Lender notice of such prepayment before 2:00 PM (Portland time) on the third Business Day before the date of prepayment (which notice shall be irrevocable), (ii) each voluntary partial prepayment must be in a minimum of $1,000,000 and in integral multiples of $100,000; and (iii) any prepayment shall be subject to the provisions of Section 3.12 hereof.

 

(e)            On one occasion before the Maturity Date at a time when no Default is continuing, Borrowers may request an increase in the aggregate Revolving Loan Commitments of not less than $5,000,000 nor more than $25,000,000 by Borrowers’ Agent delivering notice of such request to Administrative Lender, which notice may also identify one or more banks or other institutional lenders Borrowers believe are willing to become Lenders and make such Revolving Loan Commitments (“Potential Lenders”).  Lenders shall have no obligation to grant any such request, and Administrative Lender and each Lender, in the exercise of their sole discretion, may respond to such request in such manner and with such conditions (including additional fees) as they deem appropriate in their sole discretion.  If any Lender is willing to increase its Revolving Loan Commitment or if any Potential Lender acceptable to Administrative Lender is willing to make a Revolving Loan Commitment, Administrative Lender shall advise Borrowers’ Agent of the terms acceptable to such Lenders and/or Potential Lenders on which the aggregate Revolving Loans may be increased.  If Borrowers, in their sole discretion, notify Administrative Lender that such terms are acceptable, Administrative Lender, at Borrowers’ expense, shall prepare, and the parties shall sign, an amendment to this Agreement reflecting such terms.  Upon the execution of any such amendment and increase in the aggregate Revolving Loan Commitments, the principal portion of each Lender’s outstanding Revolving Loans shall be adjusted so that each Lender holds its Ratable Portion of the aggregate outstanding Revolving Loans.

 

3.2                                                        SWING LOANS

 

(a)            On the terms and subject to the conditions contained in this Agreement, Swingline Lender agrees to make loans (each a “Swing Loan”) to Borrowers from time to time until the Maturity Date in an aggregate amount not to exceed at any time outstanding the Swing Loan Commitment; provided, however, Swingline Lender, in its sole discretion, may elect not to make a Swing Loan at any time that the Available Credit is negative or would become negative upon the making of such Swing Loan.  Each Swing Loan shall be made and prepaid upon such notice as the Swingline Lender and Borrowers’ Agent shall agree; provided that in the absence of a written agreement to the contrary, Swingline Lender must receive each request for a Swing Loan not later than 2:00 PM (Portland time) on the Business Day of borrowing and any prepayment made after 2:00 PM (Portland time) shall be credited on the next Business Day.  Further, Swingline Lender may make Swing Loans without notice from Borrowers’ Agent or any Borrower (A) automatically pursuant to cash management arrangements, if any, made from time to time by Borrowers with Administrative Lender and/or (B) to allow Administrative Lender to pay each Lender its share of fees, interest and other amounts due hereunder to the extent such fees, interest and other amounts are then due and payable.  All Swing Loans shall be evidenced by a Note payable to the order of the Swingline Lender, and on the Closing Date the promissory note issued under the Existing

 

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Credit Agreement evidencing swing loans shall be exchanged for a Note.  Subject to all the limitations, terms and conditions contained herein, Borrowers may from time to time borrow, partially or wholly repay outstanding Swing Loans and reborrow Swing Loans.  Borrower shall repay the outstanding principal balance of the Swing Loans, together with all accrued and unpaid interest and related fees on the Maturity Date.  All interest due on the Swing Loans shall be payable to the Swingline Lender.  After receipt of payment of principal or interest on the Swing Loans, Administrative Lender will promptly distribute the same to the Swingline Lender at its Applicable Lending Office.

 

(b)            On the Business Day that a True-Up Event occurs, regardless of whether the conditions in Section 7.2 exist and without notice or other action by any Borrower, the balance of each Lender’s Revolving Loans shall be increased/decreased and the balance of the Swing Loans decreased/increased by that amount that results in the Swing Loans equaling the Swing Loan Balance Amount.  Administrative Lender, by not later than 11:00 AM (Portland time) on such Business Day, shall notify each Lender whose Loans are increasing of the principal amount of such increase, and each such Lender shall, before 2:00 PM (Portland time) on such Business Day, make available to Administrative Lender, in immediately available funds, the amount of such increase.  Administrative Lender shall use such funds to repay the principal amount of the Loans being reduced.  If Lenders are prohibited by the Bankruptcy Code or any other Governmental Rule from making the adjustment required by the first sentence of this Section, each Lender shall purchase such participation interest in the Loans of the other Lenders as is necessary to effect the same result among the Lenders as the adjustment required by the first sentence of this Section.

 

3.3                                                        [RESERVED]

 

3.4                                                        LETTER OF CREDIT FACILITY

 

(a)            On the terms and subject to the conditions contained in this Agreement, L/C Bank agrees promptly to issue one or more Letters of Credit at the request of Borrowers’ Agent for the account of Borrowers from time to time until ten days before the Maturity Date; provided, however, that L/C Bank shall not issue any Letter of Credit if:

 

(i)             any order, judgment or decree of any Governmental Authority or arbitrator of which L/C Bank is aware shall purport by its terms to enjoin or restrain L/C Bank from issuing such Letter of Credit or any Governmental Rule applicable to L/C Bank or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over L/C Bank shall prohibit, or request that L/C Bank refrain from, the issuance of letters of credit generally or such Letter of Credit in particular or shall impose upon L/C Bank with respect to such Letter of Credit any restriction or reserve or capital requirement (for which L/C Bank is not otherwise compensated) not in effect on the date hereof or result in any loss, cost or expense which (A) was not applicable, in effect or known to L/C Bank on the Closing Date and which L/C Bank in Good Faith deems material to it, and (B) the reimbursement of which is not provided for hereunder;

 

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(ii)            L/C Bank shall have received written notice from Administrative Lender or Borrowers’ Agent, on or before the Business Day prior to the requested date of issuance of such Letter of Credit, that one or more of the applicable conditions contained in Article VII is not then satisfied;

 

(iii)           after giving effect to the issuance of such Letter of Credit, the Letter of Credit Obligations exceed $5,000,000;

 

(iv)           the amount of the Letter of Credit requested exceeds the Available Credit; or

 

(v)            fees due in connection with a requested issuance have not been paid.

 

None of the Lenders (other than the Lender that is L/C Bank) shall have any obligation to issue any Letters of Credit.

 

(b)            In no event shall the expiry date of any Letter of Credit be more than one year for a standby Letter of Credit or fall after ten days before the Maturity Date.

 

(c)            Prior to the issuance of each Letter of Credit, Borrowers’ Agent shall have delivered to L/C Bank, if requested by L/C Bank, a Letter of Credit Agreement, signed by Borrowers, and such other documents or items as L/C Bank may require pursuant to the terms thereof.

 

(d)            In connection with the issuance of each Letter of Credit, Borrowers’ Agent shall give L/C Bank and Administrative Lender at least three Business Days prior written notice of the requested issuance of such Letter of Credit.  Such notice shall be irrevocable and binding on Borrowers and shall specify (i) whether the Letter of Credit is to be a standby or commercial (documentary) Letter of Credit, (ii) the stated amount of the Letter of Credit requested, (iii) the date of issuance of such requested Letter of Credit (which day shall be a Business Day), (iv) the date on which such Letter of Credit is to expire (which date shall be a Business Day), (v) the Person for whose benefit the requested Letter of Credit is to be issued, and (vi) such other terms and conditions of the proposed Letter of Credit as are requested by Borrowers’ Agent and acceptable to L/C Bank.  Such notice, to be effective, must be received by L/C Bank and Administrative Lender not later than 10:00 AM (Portland time) on the last Business Day on which notice can be given under the immediately preceding sentence.

 

(e)            Subject to the terms and conditions of this Section 3.4 and provided that the applicable conditions set forth in Article VII have been satisfied, L/C Bank shall, on the requested date, issue a Letter of Credit on behalf of Borrowers in accordance with the applicable request and L/C Bank’s usual and customary business practices and in a final form reasonably satisfactory to Borrowers’ Agent.

 

(f)             Immediately upon L/C Bank’s issuance of a Letter of Credit, L/C Bank shall be deemed to have sold and transferred to each Lender, and each Lender shall be deemed irrevocably and unconditionally to have purchased and received from L/C Bank, without

 

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recourse or warranty, an undivided interest and participation, to the extent of such Lender’s Ratable Portion, in such Letter of Credit and the obligations of Borrowers with respect thereto (including, without limitation, all Letter of Credit Obligations with respect thereto) and any security therefor and guaranty pertaining thereto and each Lender’s Revolving Loan Commitment shall be deemed used to the extent of such Lender’s Ratable Portion of such Letter of Credit Obligations.

 

(g)            In determining whether to pay under any Letter of Credit, L/C Bank shall not have any obligation relative to Lenders other than to confirm that any documents required to be delivered under such Letter of Credit appear to have been delivered and that they appear to comply on their face with the requirements of such Letter of Credit.  Any action taken or omitted to be taken by L/C Bank under or in connection with any Letter of Credit, if taken or omitted in the absence of gross negligence or willful misconduct, shall not put L/C Bank under any resulting liability to any other Lender.

 

(h)            If L/C Bank makes any payment under any Letter of Credit, L/C Bank shall promptly notify Administrative Lender, who shall promptly notify each Lender, and each Lender shall promptly and unconditionally pay to Administrative Lender for the account of L/C Bank the amount of such Lender’s Ratable Portion of such payment in same day funds (and upon receipt, Administrative Lender shall promptly pay the same to L/C Bank), which payment shall be deemed to be and shall constitute a Revolving Loan that is a Prime Rate Loan made by such Lender to Borrowers; provided, however, that if the Swingline Lender so elects, and if a Swing Loan can be made in such amount, Administrative Lender shall promptly notify the Swingline Lender of such payment by L/C Bank, and the Swingline Lender shall, and Borrowers hereby authorize the Swingline Lender to, pay to Administrative Lender for the account of L/C Bank the amount of such payment in same day funds, which payment shall be deemed to be and shall constitute a Swing Loan made by the Swingline Lender to Borrowers.  The Revolving Loans shall be made, or the Swing Loan may be made, as contemplated in the preceding sentence notwithstanding Borrowers’ failure to satisfy the conditions set forth in Section 7.2.  If Administrative Lender so notifies such Lender prior to 10:00 AM (Portland time) on any Business Day, such Lender shall make available to Administrative Lender for the account of L/C Bank its Ratable Portion of the amount of such payment by 1:00 PM (Portland time) on such Business Day in same day funds.  If and to the extent such Lender does not make its Ratable Portion available to Administrative Lender for the account of L/C Bank, such Lender agrees to repay to Administrative Lender for the account of L/C Bank on demand such amount together with interest thereon at the Federal Funds Rate for each day from such date until the date paid.  The failure of any Lender to make available to Administrative Lender for the account of L/C Bank its Ratable Portion of any such payment shall not relieve any other Lender of its obligations hereunder.

 

(i)             The obligations of Lenders to make payments to Administrative Lender for the account of L/C Bank with respect to Letters of Credit shall be irrevocable and not subject to any qualification or exception whatsoever and shall be made in accordance with the terms and conditions of this Agreement under all circumstances (except as expressly provided in Section 3.4(g)), including, without limitation, any of the following circumstances:

 

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(i)             any lack of validity or enforceability of any of the other Loan Documents;

 

(ii)            the existence of any claim, setoff, defense or other right which Borrowers may have at any time against a beneficiary named in a Letter of Credit, any transferee of any Letter of Credit (or any Person for whom any such transferee may be acting), Administrative Lender, any Lender or any other Person, whether in connection with this Agreement, any Letter of Credit, the transactions contemplated herein or any unrelated transactions (including, without limitation, any underlying transaction between Borrower and the beneficiary named in any Letter of Credit);

 

(iii)           any draft, certificate or any other document presented under the Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; or

 

(iv)           the occurrence of any Default.

 

3.5                   INTEREST/FEES

 

(a)            Interest .  The outstanding principal balance of each Loan shall bear interest at the Applicable Rate.  The foregoing notwithstanding, the rate of interest applicable at all times during the continuation of an Event of Default shall be a fluctuating rate per annum equal to the Prime Rate in effect from time to time, plus 200 basis points.  All fees, expenses and other amounts not paid when due shall bear interest (from the date due until paid) at the rate set forth in the preceding sentence.

 

(b)            Letter of Credit Fees .  With respect to each Letter of Credit, upon the issuance, renewal and/or amendment thereof, Borrowers shall pay to Administrative Lender, for the ratable benefit of Lenders, the following fees, each of which shall be nonrefundable even if any Letter of Credit is terminated or canceled before its stated expiration date:

 

(i)             with respect to each Letter of Credit that is a standby letter of credit, a fee equal to the face amount thereof (or, with respect to an amendment increasing the face amount, the increase in the face amount only) multiplied by a rate per annum equal to the then applicable LIBOR Margin for Revolving Loans for a period equal to the term of such Letter of Credit (or, with respect to an amendment increasing the term, the increase in the term only); and

 

(ii)            with respect to each Letter of Credit that is a commercial (documentary) Letter of Credit, a fee equal to the greater of $350 or a percentage of the face amount thereof equal to the then applicable LIBOR Margin for Revolving Loans for the period it is outstanding.

 

In addition, upon the occurrence of any other activity with respect to any Letter of Credit, Borrowers shall pay to L/C Bank a fee determined in accordance with L/C Bank’s standard fees and charges then in effect for such activity.

 

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(c)            Administrative Lender’s Fees .  Borrowers shall pay to Administrative Lender, for Administrative Lender’s own account, the fees set forth in that certain fee letter from U.S. Bank to Borrowers’ Agent dated November 12, 2004.

 

(d)            Unused Line Fee .  On the last day of each calendar quarter beginning December 31, 2004 and on the Maturity Date, Borrowers shall pay to Administrative Lender, for the ratable benefit of Lenders, an unused line fee equal to (i) the amount by which the Revolving Loan Commitments are greater than the total of the average daily outstanding balance of the Revolving Loans and the average daily face amount of outstanding Letters of Credit for such quarter or period multiplied by (ii) a per annum rate equal to the Fee Percentage.  On the last day of each calendar quarter beginning December 31, 2004 and on the Maturity Date, Borrowers shall pay to Administrative Lender, for the benefit of the Swingline Lender, an unused line fee equal to (i) the amount by which the Swing Loan Commitment is greater than the total of the average daily outstanding balance of the Swing Loans for such quarter or period multiplied by (ii) a per annum rate equal to the Fee Percentage.

 

(e)            Computation and Payment .  All interest and per annum fees shall be computed on the basis of a 360-day year, actual days elapsed, except interest on Prime Rate Loans shall be computed on the basis of a 365/366-day year, actual days elapsed.  Interest on Prime Rate Loans shall be payable monthly, in arrears, on the first day of each month and on the Maturity Date.  Interest on LIBOR Loans shall be paid on the last day of each Fixed Rate Term, at the end of the third month with respect to each Fixed Rate Term of six months and on the Maturity Date.

 

3.6                   INTEREST OPTIONS

 

(a)            Election .  Subject to the requirement that each LIBOR Loan be in a minimum amount of $1,000,000 and in integral multiples of $100,000 and the limitation in Section 3.6(b) regarding the number of Tranches outstanding at any time, (i) except as otherwise provided herein, at any time when a Default is not continuing Borrowers’ Agent may convert all or any portion of a Prime Rate Loan to a LIBOR Loan for a Fixed Rate Term designated by Borrowers’ Agent, and (ii) at any time Borrowers’ Agent may convert all or a portion of a LIBOR Loan at the end of the Fixed Rate Term applicable thereto to a Prime Rate Loan or, if no Default is continuing, to a LIBOR Loan for a new Fixed Rate Term designated by Borrowers’ Agent.  If Borrowers’ Agent has not made the required interest rate conversion or continuation election prior to the last day of any Fixed Rate Term, Borrowers shall be deemed to have elected to convert such LIBOR Loan to a Prime Rate Loan.

 

(b)            Maximum Number of Tranches .  At no time shall there be more than ten Tranches outstanding at any time.

 

(c)            Notice to Administrative Lender .  Borrowers’ Agent shall request each interest rate conversion or continuation by giving Administrative Lender irrevocable written notice or telephonic notice (confirmed promptly in writing), in the form of Exhibit E attached

 

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hereto (a “Notice of Conversion or Continuation”), that specifies, among other things:  (i) the Loan to which such Notice of Conversion or Continuation applies; (ii) the principal amount that is the subject of such conversion or continuation; (iii) the proposed date of such conversion or continuation, which shall be a Business Day; and (iv) if such Notice pertains to a LIBOR Loan, the length of the applicable Fixed Rate Term.  Any such Notice of Conversion or Continuation must be received by Administrative Lender not later than 9:00 AM (Portland time) (i) at least one Business Day prior to the effective date of any Prime Rate interest selection, and (ii) at least three Business Days prior to the effective date of any LIBOR interest selection.  Administrative Lender shall promptly notify each Lender of the contents of each such Notice of Conversion or Continuation, or if timely notice is not received from Borrowers’ Agent prior to the last day of any Fixed Rate Term, of the automatic conversion of such LIBOR Loan to a Prime Rate Loan.

 

3.7                                                        OTHER PAYMENT TERMS

 

(a)            Automatic Debit .  Administrative Lender may, and Borrowers hereby authorize Administrative Lender to, debit any deposit account of Borrower with Administrative Lender for all payments of principal, interest, fees and other amounts due under the Loan Documents as they become due, provided that Administrative Lender shall first debit Borrowers’ Agent’s account no. 1536-9121-3778 with Administrative Lender, before debiting any other account.

 

(b)            Place and Manner .  Borrowers shall make all payments due to each Lender under the Loan Documents by payment to Administrative Lender at Administrative Lender’s Office, for the account of such Lender, in lawful money of the United States and in same day or immediately available funds not later than 11:00 AM (Portland time) on the date due.  Administrative Lender shall promptly disburse to each Lender at such Lender’s Applicable Lending Office each such payment received by Administrative Lender for such Lender no later than 2:00 PM (Portland time) on the Business Day received if received before 11:00 AM (Portland time), or if received later, by 2:00 PM (Portland time) on the next Business Day.

 

(c)            Date .  Whenever any payment due hereunder shall fall due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall be included in the computation of interest or fees, as the case may be.

 

(d)            Application of Payments .  All payments under the Loan Documents (including prepayments) shall be applied first to unpaid fees, costs and expenses then due and payable under the Loan Documents, second to accrued interest then due and payable under the Loan Documents (applied first to interest due and payable on the Swing Loans and then to the other Loans), third to the outstanding principal of the Swing Loans and finally to reduce the principal amount of the other outstanding Loans.

 

(e)            Failure to Pay Administrative Lender .  Unless Administrative Lender shall have received notice from Borrowers’ Agent at least one Business Day prior to the date on which any payment is due to Lenders hereunder that Borrowers will not make such payment

 

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in full, Administrative Lender may assume that Borrowers have made such payment in full to Administrative Lender on such date and Administrative Lender may, in reliance upon such assumption, cause to be distributed to each Lender on such due date an amount equal to the amount then due such Lender.  If and to the extent Borrowers shall not have made such payment in full to Administrative Lender, such Lender shall repay to Administrative Lender on demand the amount distributed to such Lender together with interest thereon at the Federal Funds Rate for each day from the date distributed until the date repaid.  A certificate of Administrative Lender submitted to any Lender with respect to any amounts owing by such Lender under this Section shall be presumptive evidence of such amounts.

 

3.8                   FUNDING

 

(a)            Lender Funding and Disbursement .  Each Lender shall, by 11:00 AM (Portland time) on the date of each borrowing under Section 3.1, make available to Administrative Lender at Administrative Lender’s Office, in same day or immediately available funds, such Lender’s Ratable Portion thereof.  After Administrative Lender’s receipt of such funds and upon fulfillment of the applicable conditions set forth in Article VII hereof, Administrative Lender will promptly disburse such funds in same day or immediately available funds to Borrowers.  Unless otherwise directed by Borrowers’ Agent in writing, Administrative Lender shall disburse the proceeds of each borrowing to Parent by deposit to any demand deposit account maintained by Parent with Administrative Lender designated by Borrowers’ Agent in a notice to Administrative Lender.

 

(b)            Lender Failure to Fund .  Unless Administrative Lender receives notice from a Lender on or before the date of any borrowing hereunder that such Lender will not make available to Administrative Lender such Lender’s Ratable Portion thereof, Administrative Lender may assume that such Lender has made such portion available to Administrative Lender on the date of such borrowing in accordance with Section 3.8(a) hereof, and Administrative Lender may, in reliance upon such assumption, make available to Borrowers (or otherwise disburse) on such date a corresponding amount.  If any Lender does not make the amount of its Ratable Portion of any borrowing available to Administrative Lender on the date of such borrowing, such Lender shall pay to Administrative Lender, on demand, interest which shall accrue on such amount until made available to Administrative Lender at a rate equal to the daily Federal Funds Rate.  A certificate of Administrative Lender submitted to any Lender with respect to any amounts owing under this Section shall be presumptive evidence of such amounts.  If any Lender’s Ratable Portion of any borrowing is not in fact made available to Administrative Lender by such Lender within three Business Days after the date of such borrowing, Borrowers shall pay to Administrative Lender, on demand, an amount equal to such Ratable Portion together with interest thereon, for each day from the date such amount was made available to Borrowers until the date such amount is repaid to Administrative Lender, at the rate of interest then applicable thereto.

 

(c)            Lenders’ Obligations Several .  The obligation of each Lender hereunder is several.  The failure of any Lender to make available its Ratable Portion of any borrowing shall not relieve any other Lender of its obligation hereunder to do so on the date requested,

 

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but no Lender shall be responsible for the failure of any other Lender to make available the Ratable Portion to be funded by such other Lender.

 

3.9                   PRO RATA TREATMENT

 

(a)            Borrowings .  Each Loan, except a Swing Loan, shall be made or shared among Lenders ratably.

 

(b)            Sharing of Payments, Etc.   Except as otherwise provided herein, each payment of principal, interest or fees shall be made or shared among Lenders ratably.  If any Lender obtains any payment (whether voluntary, involuntary, through the exercise of any right of setoff or otherwise) on account of a Loan in excess of its Ratable Portion of payments on the Loans obtained by all Lenders, such Lender (“Purchasing Lender”) shall forthwith purchase from the other Lenders sufficient participations to cause the Purchasing Lender’s interest in the Loans to be in the same proportionate relationship with all Loans as before such payment was received; provided, however, that if all or any portion of such excess payment is thereafter recovered from the Purchasing Lender, the purchased participation shall be rescinded and each other Lender shall repay to the Purchasing Lender (i) the purchase price to the extent of such recovery together with (ii) an amount equal to such other Lender’s ratable share (according to the proportion of (A) the amount of such other Lender’s required repayment to (B) the total amount so recovered from the Purchasing Lender) of any interest or other amount paid or payable by the Purchasing Lender in respect of the total amount so recovered.  Borrowers agree that any Purchasing Lender may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of setoff) with respect to such participation as fully as if the Purchasing Lender were the direct creditor of Borrowers in the amount of such participation.

 

3.10                 CHANGE OF CIRCUMSTANCES

 

(a)            Inability to Determine